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Sustainable
Growth
Annual Report 2023
We are RHI Magnesita
We offer refractory products, customised services and
innovative solutions that help shape tomorrow’s world.
Our advanced products are essential for our customers in
the steel, cement, metals, glass and chemicals industries to
operate. The end markets driving demand for our products
include the construction, infrastructure, transportation,
machinery, electronics and energy sectors.
Our purpose
Our purpose is to master heat,
enabling global industries to
build sustainable modern life.
Our values
At RHI Magnesita, we believe in an ethical
workplace, performing our roles with integrity,
honesty, reliability and in respectful
collaboration with each other. Extending these
ethical behaviours to interactions with all of our
business partners is vital for the long-term
sustainable success of RHI Magnesita.
Our highlights
Revenue
Adjusted EBITA
Adjusted earnings per share
Adjusted Profit after tax
€3.6bn
2022: €.3.3bn
€409m
2022: €384m
€4.98
2022: €4.82
€241m
2022: €237m
Net debt: Pro forma Adjusted
EBITDA
2.3x
2022: 2.3x
Dividend per share
Adjusted operating cash flow
ROIC
€1.80
2022: €1.60 per share
€413m
2022: €155m
10.7%
2022: 12.3%
Reduced C02 emissions
1.62t CO2/t
2022: 1.71 t CO2/t
Recycling rate
Lost time injury frequency
12.6%
2022: 10.5%
0.16
2022: 0.20
Read more on our APMs1
Page 262
1. Alternative Performance Measures (“APMs”) are used by the Board to monitor underlying performance at a Group and operating segment level, which are applied consistently throughout.
These APMs should be considered in addition to, and not as a substitute for, or as superior to statutory measures. For more information on APMs, see the APM section.
Investment case
01
Sustainability leadership
We are a sustainability leader in the global refractory industry, with proprietary
technology for increasing the use of secondary raw materials without the loss of
refractory performance, significantly reducing CO2 emissions.
02
Investment driven value creation
Successful M&A growth in target markets of India, China and Türkiye. Balanced
and dynamic approach to capital allocation encompassing organic growth, M&A,
sustainability and shareholder returns.
03
Margin resilience and significant
growth opportunity
Market share opportunities in solutions contracts, flow control, non-basic refractories
and emerging geographies of India, China and Türkiye.
04
Leadership in the refractory industry
Leader in the refractory industry with a c.13% share in a €30bn market for industrial
applications exceeding temperatures of 1,200 ° C. Full range of products and services
enables solutions contract offering, paid per tonne of production.
05
Strong competitive position with
vertical integration
Vertical integration with low-cost, high-quality magnesite and dolomite raw material
assets providing security of supply.
Read more about
What we do
on our website
Contents
Strategic report
Investment case
01
02
Refractories are essential for our modern world
03 We are a leading global supplier of refractories
Raw material vertical integration benefits
04
Global refractory production network
05
Sustainability leadership in refractories
06
Delivering sustainability for our customers
07
Business model
08
Capital allocation and M&A strategy
09
Chairman’s statement
10
CEO review
12
14
16
18
28
30
32
37
45
46
48
50
52
58
60
64
65
70
79
83
86
93
99
Delivering our strategy
Our strategic framework
Strategic progress in action
Key performance indicators
Our performance
Operational review
Financial review
Our risk management approach
Effective risk management
Our internal control system
Viability statement
Principal risks
Sustainability
Introduction
Sustainability governance
Our business
Our planet
Our people
Our communities
GRI index
EU Taxonomy
Task Force on Climate-related Financial
Disclosures (TCFD) Report
Governance
108 Chairman’s introduction to corporate
governance
Corporate Governance report
Stakeholder engagement report
Board of Directors
Executive Management Team
Nomination & Governance Committee report
Corporate Sustainability Committee report
110
122
128
132
134
138
140 Audit & Compliance Committee report
Remuneration Committee report
146
Directors’ Remuneration Policy
151
Annual Report on Remuneration
161
Financial statements
175
176
Consolidated Statement of Profit or Loss
Consolidated Statement of Comprehensive
Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial
Statements 2023
177
178
179
181
240 Company Financial Statements of RHI
Magnesita N.V.
242 Notes to the Company Financial Statements
2023
Independent Auditor’s report
Other information
251
262 Alternative performance measures (“APMs”)
264 Glossary
266
Shareholder information
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
0 1
STRATEGIC REPORT Refractories are essential
for our modern world
Refractories are used in industrial processes
involving temperatures of 1,200°C or above
to protect equipment from the effects of
heat and chemical corrosion. Refractories
are made from heat resistant materials that
can withstand extremely high temperatures
whilst maintaining their form and function.
Refractories are consumed during the
production process, with a lifespan ranging
from hours to years, depending on the
application. Every tonne of steel produced
consumes between 10-15kg of refractories,
which must be replenished.
RHI Magnesita produces a broad range
of refractory products using magnesite,
dolomite and alumina based raw materials
for its customers in the steel, cement,
glass, non-ferrous metals and other heavy
industries. The Group has a c.13% market
share in the global steel market and c.30%
market share in cement. The key end
markets which drive demand for refractories
are the construction (45%), transportation
(17%) and electronics and consumer
goods sectors (15%).
Customer industries
Watch our film on
why refractories
are essential for
modern life
Steel
Cement/Lime
Non-ferrous
metals
Glass
Energy,
Environmental
and Chemicals
69%
of revenues
12%
of revenues
8%
of revenues
5%
of revenues
4%
of revenues
Example application
Basic oxygen furnace,
Electric arc furnace, ladles,
flow control
Example application
Rotary kiln
Example application
Copper flash smelter
Example application
Glass furnace
Example application
Secondary reformer
Lifetime and costs
• 20 minutes to 2 months
• c.3% of customers’ costs
Lifetime and costs
• Annually
• c.0.5% of customers’ costs
Lifetime and costs
• 1 to 10 years
• c.0.2% of customers’ costs
Lifetime and costs
• Up to 10 years
• c.1% of customers’ costs
Lifetime and costs
• 5 to 10 years
• c.1.5% of customers’ costs
% of global market share by customer market
c.13%
c. 30%
c.25%
c.15%
c.3%
End markets
Customer
industries
% of 2023 revenue.
Cement/
Lime
12%
Steel
69%
Glass & EEC
Non-ferrous
metals
9%
8%
End markets
45%
17%
10%
15%
8%
5%
Construction
Transportation
Machinery
Electronics and
consumer goods
Other
Energy
0 2
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
We are the leading global
supplier of refractories
RHI Magnesita is the leading global supplier of high-grade
refractory products, systems and solutions.
Electric Arc Furnace (“EAF”) refractories
Injector Area
Slag door area
Slag zone
Working lining
Purging plug
Roof centre piece
Hearth
Taphole
Permanent lining
RHI Magnesita’s comprehensive range
of refractory products and services and
global presence gives us access to a broad
addressable market. We seek to balance
our portfolio globally across customer
industries and geographies to minimise
frictional costs and maximise production
network efficiencies.
Refractory products and services are usually
best supplied from plants close to our
customer sites so we have a regionalised,
local-for-local production strategy,
supported by global functions including
research and development and shared
service centres. As we grow through
acquisition we aim to realise significant
synergies by adding specialist or regional
refractory businesses to our global network.
RHI Magnesita is a clear leader in the supply
of EAF refractory linings with a strong
market share globally. EAF refractory sales
represented 16% of Group revenues in 2023
(2022: 17%). Refractory products are needed
in 13 different zones in every EAF. The typical
specific refractory consumption ranges from
2.5kg to 8kg per tonne of steel produced with
an average working life of weeks to months of
operation between re-linings.
Key product ranges
Bricks
Mixes
Flow
control
Services and
solutions
63% of product revenue
25% of product revenue
12% of product revenue
Average selling price
c.€1,500 per tonne
Average selling price
c.€900 per tonne
Average selling price
c.€2,000 per tonne
27% of Group revenues are via
solutions contracts
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
0 3
STRATEGIC REPORT
Raw material vertical
integration benefits
Owning refractory raw material assets has
been a cornerstone of the Group’s business
model since the discovery of the Veitsch
deposit by Carl Später in Austria in 1881.
RHI Magnesita’s low-cost raw material production represents a
significant advantage versus pure-play refractory producers, who
are purchasing raw materials on the open market at higher prices.
Average invested capital in the Group’s mining assets is low at €483
million versus €2,371 million for the refractory assets and ROIC is
historically higher in raw material production compared to refractory
production. The Group consumes 87% of its own raw material
production internally, with minimal external sales and guaranteed
security of supply.
The contribution of vertical integration to the Group’s margins has
been consistently positive over many years, demonstrating our
structural cost advantage. The benefit is maximised during periods of
high market prices for raw materials (e.g. 2018-19). The increased rate
of use of secondary raw material via recycling represents a further
increase in vertical integration, with additional sustainability benefits.
The 2023 EBITA margin contribution of 1.7ppts from vertical
integration is temporarily lower than normal due to the low level of
refractory raw material prices (caused by reduced global demand for
finished refractories) and relatively high energy costs in Europe, CIS
& Türkiye and the Americas compared to China. Over the long term
the Group expects to generate 2.5-3.5ppts of its EBITA margin from
vertical integration.
Annual production
kt, 2023
345
Raw material margin contribution
Raw material margin
Refractory margin
China DBM 97%
n
o
i
t
u
b
i
r
t
n
o
c
n
g
r
a
m
A
T
B
E
I
i
13.9%
14.0%
5.5%
8.4%
9.7%
3.8%
5.9%
7.7%
2.6%
5.1%
5.0%
11.5%
2.4%
11.0%
3.2%
11.5%
11.4%
2.5%
1.7%
9.0%
9.1%
9.1%
9.7%
7.8%
2016
2017
2018
2019
2020
2021
2022
2023
t
/
€
e
c
i
r
p
M
B
D
Extent of vertical integration
%
Magnesite-and dolomite-based
(basic) raw material volume
Total volume of raw
material usage
Total value of raw
material usage
64
8
52
12
33
6
Own production
Recycling
Purchased
Basic vs non-basic based raw
material usage by value
Magnesite
Non-magnesite
51
28
36
61
49
174
160
159
151
87
Brumado,
Brazil
Eskisehir,
Türkiye
York,
North America
Breitenau,
Austria
Hochfilzen,
Austria
Chizhou,
China
Brumado, Brazil
Net raw material flows from internal sources
exports/(imports) kt, 2023
Key raw material sites and shipment routes 2023
%
111
95
0
0
(50)
Internal raw materials
External raw materials
Plants
South
America
Türkiye
China &
East Asia1
India,
West Asia
& Africa1
North
America
(156)
Europe
1.
Internal raw material sources only. China and India regions obtain raw material from
external sources.
0 4
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Global refractory
production network
Local-for-local strategy
RHI Magnesita owns and operates a global network of 47 refractory
production sites and is capable of supplying a full range of high-quality
refractory products and services anywhere in the world.
Following the merger of RHI and Magnesita in 2017, the production
network was restructured and optimised through the closure of certain
high-cost sites and consolidation of production into modernised low-cost
locations. The Group follows a local-for-local strategy with production
facilities located as close as possible to its customers, to deliver an optimal
customer experience, reduce freight and customs duties and minimise
working capital requirements associated with international shipments.
Our acquisition strategy seeks to address network inefficiencies by filling
regional product gaps or adding plant locations to improve logistics
or position for growth, such as in India. Changes in global refractory
usage, foreign exchange rates, freight and energy costs can impact
the competitiveness of our production network. An agile and forward-
looking approach is required to ensure that we are fully optimised for
changing market conditions from time to time. The Group’s Integrated
Business Planning function seeks to identify and implement optimisation
opportunities to convert volatility from a risk into an opportunity.
Europe finished goods exports
% value by destination region, 2023
China finished goods exports
% value by destination region, 2023
North America
Asia & Australasia
Africa
India
South America
NME
China
Asia & Australasia
India
North America
Africa
Europe
NME
South America
Net finished goods exports/(imports)
€ millions, 2023
Europe, CIS & Türkiye
China & East Asia
South America1
India, West Asia & Africa
Regional finished goods production - local versus imports
North America
38%
22%
16%
9%
8%
5%
2%
35%
18%
12%
12%
9%
9%
5%
€480m
€363m
€35m
€-66m
€-316m
% imported
% produced in region
1. South America finished goods are balanced between €122 million exports and
€86 million imports.
9%
Europe
& Türkiye
445kt
1 00%
Africa
97kt
17
%
China
232kt
2
8
%
India
357kt
1 00%
NME
58kt
1 00%
Asia &
Australasia
218kt
4
2
%
North
America
429kt
15
%
South
America
298kt
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
0 5
STRATEGIC REPORT Sustainability leadership
in refractories
Refractory production is
CO2 intensive
Refractory production is a ‘hard to abate’ industry. Raw material
processing generally uses fossil fuels for ignition and burning
of carbonate rock. In the burning process, around 50% of the
weight of the mineral is converted into CO2, resulting in geogenic
emissions. These geogenic emissions are classified as Scope 1 when
originating from the Group’s own production, or Scope 3 in the case
of externally purchased raw materials. Taken together, our own
geogenic emissions and those associated with the raw materials
that we purchase account for over half our total CO2 footprint.
Significant energy is also required for firing of refractory products in
the manufacturing process and further emissions are generated in the
shipping and distribution of our products to customers worldwide.
RHI Magnesita is pioneering
new technologies to reduce
emissions
Recycling
RHI Magnesita is leading the refractory industry in the use of circular
raw materials. For every tonne of waste material that is reused,
approximately 1.5 tonnes of CO2 can be saved, in addition to circular
economy benefits. Due to the geogenic CO2 emissions and energy
consumption involved in the production of new raw material,
increasing recycling is the most effective way to reduce CO2
emissions in the short term. Recent acquisitions have low rates of
recycling and will temporarily dilute progress until fully integrated.
Sustainability R&D
RHI Magnesita committed to an investment of €50 million over
the period from 2021-25 into the research and development of
new technologies to avoid or capture CO2 emissions.
The fastest success has been achieved in recycling but we are also
progressing other laboratory and pilot scale technologies to meet this
challenge, including the use of alternative fuels and carbon capture
and storage or utilisation. In February 2023 we entered into a long-term
strategic co-operation with MCi Carbon to apply their technology for
the remineralisation of captured CO2 emissions into saleable materials
such as magnesium carbonate and silica.
Carbon emission by Scope
%
Scope 1
of which geogenic emissions
Scope 1
of which fuel-based emissions
Scope 2
electricity
Scope 3
emissions only raw material
23%
25%
3%
49%
Scope 1 of which geogenic emissions
Scope 1 of which fuel-based emissions
Scope 2 electricity
Scope 3 emissions only Raw Material
CO2 emissions intensity savings target
% savings versus 2018 baseline, 2025 target 15% reduction
12%
2%
0.5%
0.5%
15%
Recycling
Renewable
electricity
Fuel
switches
Energy
efficiency
2025 target
Use of secondary raw material
% of total raw material used
12.6
10.5
3.5
4.2
6.8
5.0
2018
2019
2020
2021
2022
2023
More detail on
sustainability R&D from Page 73
Our decarbonisation commitment
1. Lead the refractory industry by
decarbonising our operations as fast
as sustainably possible .
3. Invest in the research and development
of new technologies to avoid or capture
CO2 emissions .
5. Lobby governments to invest
in infrastructure to support
decarbonisation.
2. Annually update our decarbonisation
4. Offer our customers enabling
pathway based on technology,
infrastructure and capex developments .
technologies or solutions for their own
low-carbon production technologies and
low-carbon refractory products to reduce
their Scope 3 emissions.
6. Work with partners in the private
sector to develop new solutions
for decarbonisation.
Full decarbonisation will require
significant capital expenditure, starting in
Europe and subsequently in all regions.
0 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Delivering sustainability
for our customers
We are in a unique position - RHI Magnesita’s customers are amongst
the most energy and emissions intensive industries in the world. Every
unit of energy consumption saved or CO2 emissions avoided that we
can help our customers to achieve could potentially have a major
impact on reducing global emissions.
Data
insight
Ultra-low
CO2
products
Partnering
customers
Refractory product
carbon footprint
Information drives informed decision
making. RHI Magnesita provides its
customers with data on every product
offered, to show the CO2 emissions that are
embedded in its production. This allows
our customers to accurately calculate
their Scope 3 emissions from refractory
consumption and provides them with the
information they need to choose lower CO2
intensity products.
Low CO2 footprint
product range
We have developed a range of ultra-low
CO2 emissions products to offer choice to
customers for whom Scope 3 emissions
from their refractory supplier are a priority.
Customers who are investing in their own
production processes to develop clean
solutions are also interested in obtaining
refractories with low CO2 emissions.
In 2023 we successfully trialled a new range
of ANKERJET gunning mixes made with
100% recycled raw materials.
Sharing the cement
challenge
The cement production process results in
significant geogenic CO2 emissions and
therefore our customers in the cement
industry share the same challenge as RHI
Magnesita does in seeking effective carbon
capture technologies.
Many of the techniques that RHI Magnesita
is assessing for the use of alternative fuels
and the capture, utilisation or storage of
CO2 in refractory production could be
transferable to the cement process.
We are committed to partnering with our
customers to develop large-scale solutions.
Technology
advances
Green steel opportunity
Steel production accounts for around 8% of
global CO2 emissions. Major advancements
are underway in the development of
technologies for manufacturing steel with
low or zero CO2 emissions and over 20 new
plants or trial projects are currently being
developed or under construction worldwide.
Consumption of magnesite-based
refractories is higher in Electric Arc Furnace
(”EAF”) or Electro Smelter Furnace (“ESF”)
facilities, which are likely play a major role
in green steel production. EAF and ESF
refractories are an enabling technology for
this important transition and a major future
business opportunity for RHI Magnesita.
New steel production technologies
+
BF
SS
DRI
ESF
DRI
BF Blast Furnace
BOF Basic Oxygen Furnace
DRI Direct Reduced Iron
EAF Electric Arc Furnace
SS Scrap Steel
ESF Electro Smelter Furnace
EAF steel production from
scrap DRI can reduce CO2
emissions by 92%.
BOF
EAF
BOF
EAF
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
0 7
STRATEGIC REPORT Business model
What we do
Production of refractories
Services and solutions contracts
Research and development
Raw materials are blended and combined
with chemical additives to be sold as mixes,
or subject to further processing into shaped
refractory products. Shaped refractory bricks
are pressed into different sizes and shapes
depending on the specific application,
employing pressures of up to 3,200 tonnes.
After pressing, shaped refractory bricks are
tempered at temperatures of up to 350°C
and may be further subjected to firing at
1,800°C in tunnel kilns for a number of days.
Unfired products are primarily used in the
steel industry, whilst the main applications
for fired products are in the cement,
non-ferrous metals, process and
mineral industries.
Our comprehensive product range and
expertise enables us to offer solutions
contracts to customers who are seeking to
improve production efficiency and reduce
their costs and environmental impacts.
This service offering is one of our key
differentiators. Solutions contracts made up
27% of revenue in 2023 (2022: 32%).
Under a solutions contract RHI Magnesita
is paid a fixed price per unit of customer
production, initially offering a saving to the
customer versus their prior level of refractory
operating expenses. Over time we are able
to deploy more advanced products and
technical expertise to reduce refractory
usage or increase productivity by other
means, which leads to higher margins over
the five to seven year life of the contract.
Solutions contracts are usually renewed
upon expiry with revised productivity goals
for the subsequent period.
Innovation, research and development
are essential drivers of success in the
refractory industry. Refractory products are
highly customised for individual customer
applications, often representing many years
of iterative improvements tailored to specific
customer environments.
Development of new technologies requires
careful testing and trials at pilot scale and
in live production environments, without
impacting customer outcomes.
RHI Magnesita targets R&D and Technical
Marketing spending of 2.2% of annual
revenues, with a total investment of
€83 million in 2023 (2022: €77 million).
The Group has 1,708 active patents and
1,564 active trademarks globally. New
products launched in the last five years
represented 20% of revenue in 2023
(2022: 19%).
Refractory production
Press
Firing and/or heat treatment
Raw material production
Mining
Crushing
Firing in rotary kiln
d d i s t r i bution
n
Logistics
Refractory
production
tory productio n a
Raw
materials
c
a
r
f
e
R
Design
Installation
Monitoring
Recycle
Maintenance
Removal
Optimisation
v i c
S e r
e s a nd solutions
0 8
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Capital allocation and M&A strategy
Balanced approach to capital allocation
RHI Magnesita maintains a purposeful approach to capital
allocation which seeks to balance shareholder returns, acquisitions
and organic investments that will deliver long-term growth and
productivity gains. After maintenance capital expenditures and the
ordinary dividend, M&A, organic investments and share buybacks
compete for capital. We target gearing of 1.0-2.0x EBITDA
with the flexibility to increase to c.2.5x for compelling M&A
opportunities. Our resilient margins, stable profitability throughout
macroeconomic cycles and high levels of cash conversion support
the targeted gearing range. Over the six-year period from 2018 to
2023, capital allocation has been split as follows:
Capital allocation
2018 to 2023 (%)
t m e n t
b a c k
y
u
s
e
v
A
&
Orga nic i n
Share b
M
Gearing
1.0-2.0x
c.2.5x for M&A
Net
operating
cashflow
Dividend
Maintenance
capex
Organic investments
M&A
Maintenance capex
Dividend
Share buyback
29%
27%
23%
17%
4%
M&A strategy momentum
€80m
6 acquisitions
€443m
2024 EBITDA contribution from 2023 M&A
Six transactions completed in 2023
Significant capital allocated to M&A
Our strategy is to grow primarily through
acquisition rather than greenfield expansion
to avoid over-supplying a low growth market.
We see significant M&A synergy potential
from cost savings, network efficiencies, cross
selling and procurement benefits.
Our M&A strategy is focused on
geographies and product areas in which we
are under-represented. We seek to establish
a balanced product portfolio in each region
to service steel and industrial customers
with a comprehensive range of refractory
products and services. The Board believes
that growth through acquisition in the
refractory industry offers some of the highest
potential for returns on capital, driven
by synergies and as the Group develops
its internal capabilities for quickly and
effectively integrating acquired businesses.
RHI Magnesita completed six acquisitions
in the year to 31 December 2023 and a total
of nine transactions since December 2021.
In 2024 the Group will benefit from a full
year contribution from businesses acquired
during 2023 as well as the delivery of initial
synergies as new businesses are integrated
into our global network.
Due to the cash generative nature of the
base business and supported by a €100
million equity raise in India in April 2023,
we have been able to maintain gearing
within the targeted range whilst deploying
€443 million of capital into M&A during the
year, including consideration paid, net debt
assumed and working capital investments.
2022 transactions
2023 transactions
FY 2023
M&A
2022-23
Chongqing
MIRECO
SORMAS
DBRL
Hi-Tech
Dalmia GSB
Jinan New Emei
Seven
P-D Refractories
Feb
22
Mar
22
May
22
July
22
Sept
22
Nov
22
Jan
23
Mar
23
May
23
July
23
Sept
23
Dec
23
Jan
24
Mar
24
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
0 9
STRATEGIC REPORT Chairman’s
statement
I am pleased to report significant progress in our
strategic development in 2023, achieved whilst
navigating difficult market conditions.”
Herbert Cordt
Chairman
Dear Shareholders,
Since the merger of RHI and Magnesita and the
listing of the combined group in 2017, the Group
has benefited from a careful and purposeful
approach to capital allocation which has sought
to balance shareholder returns, acquisitions
and organic investments that will deliver long-
term growth and productivity gains. In 2023
we realised benefits from prior investments in
our existing asset base and deployed capital to
secure our future growth through a substantial
M&A programme.
It is a sign of our resilience that we have been
able to continue our strategic development
during a period of weak external demand,
whilst also delivering an impressive financial
performance based on strong margins and
cash generation.
Health and safety
I am extremely saddened to report two recent
fatalities at our operations in Austria, one in
late 2023 and one in early 2024. The Directors
have spent significant time and effort with
management to understand the root causes
of these accidents and what follow-up steps
are being taken. It is clear that we must see
immediate change in this area and re-establish
our progress towards a “Zero Harm - No Injuries”
working environment.
Executing the strategy
The Board and Executive Management
Team are committed to advancing the
Group’s strategic goals: (i) to maintain our
competitiveness through structural cost
savings, network efficiencies and vertical
integration; (ii) to increase our presence in
geographic and product markets where we
are under-represented, and (iii) to expand our
business model to provide new products and
services to our global customer base.
The outstanding strategic highlight of 2023
is the successful acquisition of six new
businesses across a broad range of geographies
and product areas which have significantly
strengthened our portfolio in India, China, and
Europe and expanded our customer offering in
steel flow control, alumina-based refractories
and in process industries. Unlocking value from
these acquisitions will be the key drivers of our
success in the near and medium term.
Leading the refractory industry in sustainability
remains a guiding principle of our long term
strategy. It is pleasing to see ongoing success
in the use of secondary raw materials whilst
we also prepare for the next stages in the
decarbonisation of our business through the
development of new technologies to avoid
or capture CO2 emissions. We are carefully
preparing for the significant need for investment
capital for decarbonisation.
Market environment
A slowdown in the global construction
industry combined with low demand in the
transportation sector were the main drivers
of lower refractory sales volumes in 2023,
excluding the contribution from M&A.
Weakness in these important end markets was
widespread with the exception of India, where
growth remains strong and the Group has
significantly expanded its presence this year.
Inflationary pressures continued during 2023,
requiring further price increases to maintain
margins. The necessary monetary policy
response of increased interest rates to contain
and reduce inflation presents a new challenge
in the form of higher financing costs, which
in turn demands a higher level of profitability
to generate an acceptable return on invested
capital. The asset intensive nature and high
working capital requirements involved in
operating a global refractory business magnify
the impact of these macro-economic pressures
on our business.
Culture and values
It is important during periods of challenging
market conditions that we remain true to our
values and do not allow the burden to be
unfairly borne by any one of our stakeholders.
As an example of this, our response to increases
in the cost of living for our employees has
been to increase wages across the Group in
an equitable and sustainable fashion. The
resilience of our business model has enabled
us to do this whilst also maintaining profitability,
servicing our debt and delivering consistent and
growing dividend payments to shareholders.
We will continue to be guided by our corporate
culture and values as we welcome new
acquisitions into the Group and expand
our global presence.
1 0
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Tender Offer
Shareholders representing 19.95% of the
Group’s issued and outstanding share capital
chose to accept the tender offer from Rhône
Capital at a price of £28.50 per share that
was launched in May and completed in
December 2023.
The Board supported shareholders in their
assessment of the merits of this transaction
in its public response to the Tender Offer and
through other direct engagements. The Tender
Offer provided shareholders who wished to
partially or fully exit their investment with the
opportunity to do so, depending on their own
individual investment considerations and their
own individual circumstances.
Rhône Capital have indicated that they are
supportive of the Group’s current strategy and
we look forward to working with them in the
future as we continue to grow our business.
Board updates
In September 2023 the Board nominated
Anna Katarina Lindström to be elected as an
independent Non-Executive Director, subject to
the approval of shareholders at the 2024 AGM.
Katarina has been acting as an observer of the
Board since 30 September 2023.
Katarina is an experienced industrial operations
professional who has extensive experience
in managing complex change and driving
performance on both a strategic and tactical
level. We are fortunate to benefit from Katarina’s
extensive logistics and operational expertise
and I am confident that she will make a strong
and positive contribution as a Director in 2024.
We are committed to pursuing diversity on
our Board, including diversity of thought, skills
and experience as well as gender, background
and ethnicity. With Katarina we will reach 33%
female representation on the Board, in line with
our 2025 target and commitment. In the longer
term, we have aspirations to reach 45% gender
diversity at Board level, as stipulated in the
Board Diversity Policy.
Dividend
The Board has recommended a final dividend
of €1.25 per share in respect of the financial
year to 31 December 2023, bringing the total
dividend for the year to €1.80 per share. This
level of dividend is aligned with our policy to
maintain dividend cover of below three times
adjusted earnings whilst taking into account the
other funding requirements of the business as
we manage capital expenditures, M&A spend
and gearing levels through this important
period in our strategic development.
Summary
2023 has been an exciting year of strategic
progress for our Company, with many of the
notable successes in M&A being the result
of multiple years of origination, preparation
and negotiation. The hard work of integrating
acquisitions into our production network,
processes and culture has already begun and I
am confident that we are on a strong trajectory
to deliver value from the capital that has been
invested into these opportunities.
I would like to thank our shareholders,
employees, customers and suppliers for their
support throughout this period of challenging
external market conditions and I look forward
to reporting on further successes in 2024
and beyond.
Herbert Cordt
Chairman of the Board of Directors
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 1
STRATEGIC REPORT CEO review
Stefan Borgas
Chief Executive Officer
We successfully navigated many challenges
in 2023 to deliver a 7% increase in EBITA to
€409 million. M&A, cost-saving initiatives
and resilient pricing offset the underlying
weakness in customer demand.”
RHI Magnesita delivered a strong financial
performance in 2023 despite challenging
market conditions. Our achievements have
been based on stepwise improvements
in operations, prioritising the needs of our
customers at all times, sustainability leadership,
acquisitions and strategic delivery. During the
year we made significant progress on both our
M&A strategy and delivering the strategic cost
savings and sales initiatives targets that were set
in 2019.
In 2023 the key challenge for us has been
to maintain momentum whilst managing
our operations through a very weak demand
environment. To achieve targeted inventory
coverage levels, average plant utilisation
was reduced to 76% in the second half and
production volumes lagged sales volumes
throughout the year, with implications for low
fixed cost absorption.
I am pleased to report that we successfully
navigated these and many other challenges
in 2023, delivering a 7% increase in Adjusted
EBITA to €409 million (2022: €384 million),
as M&A, cost saving initiatives and resilient
pricing offset the underlying weakness in
customer demand.
Health & Safety
It is with deep regret and sorrow that we report
that two fatal incidents occurred at our plants
in Austria in 2023 and early 2024. Thorough
investigations of the root causes of these
incidents will be or are being carried out and
procedural changes implemented worldwide.
A step-up of the safety culture among all RHI
Magnesita business partners will come along
with these new measures.
The health and safety of our employees in the
workplace is a core value for RHI Magnesita. The
Group’s lost time injury frequency rate remained
below our target of 0.50 per 200,000 hours
and was the lowest rate recorded by the Group
since listing in 2017, excluding the pandemic,
at 0.16 per 200,000 hours (2022: 0.20).
We are now adopting a lower target of 0.30,
in line with leading peers in the broader
industrial sector.
Key safety initiatives implemented during the
year included improved inductions and safety
training for new joiners, integration of safety
topics into shift-start meetings and hand and
finger safety communications campaigns.
Operational agility
The investments we have made in our
production network since 2019 combined
with further actions taken in response to global
supply chain and energy market volatility in
2022 have created a more agile and responsive
business. The ongoing focus on operational
excellence, planning, logistics, inventory
management and customer satisfaction are
the key foundations of the improved operating
performance that has been delivered in
2023. Customer surveys reported strong
improvements in our net promoter score.
To further improve operations, increase
productivity, reduce inventory and improve
customer experience, RHI Magnesita is now
embarking on rebuilding its business processes
and radically modernising its IT architecture.
This investment will last three years at a cost
of approximately €100 million.
Operating at our targeted level of working
capital intensity of 25% enabled us to deliver
for our customers, and this is the foundation
for maintaining pricing whilst input costs have
been falling across the refractory industry.
Further investments in our planning processes
and systems as well as a complete overhaul
of our digital architecture in the next three
years is aimed to further improve RHI
Magnesita’s operational delivery capabilities
and customer service.
Strategic progress
The €130 million annual EBITA contribution
from cost saving and sales initiatives set out
in our 2019 strategic targets was realised in
the first half of 2023, following investments in
the rationalisation of our production network,
growth in flow control revenues and M&A led
growth in India, China and Türkiye.
During the year we made significant progress
on our M&A strategy with the completion of
six acquisitions, bringing the total number of
businesses acquired since December 2021
to nine. Our strategy has been to focus on
complementary product areas and geographies
in which we are under-represented. We have
broadened our customer offering through
acquisitions in the alumina-based refractories,
process industries and flow control segments.
The two acquisitions we completed in India are
of great importance due to the unique growth
environment for refractories in this region.
1 2
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Scan here or click here
to watch our CEO’s speech
on the fifth anniversary
of the merger of RHI and
Magnesita in 2017.
The acquisition of Hi-Tech in Jamshedpur and
the Indian refractory business of DBRL have
substantially improved the Group’s regional
footprint. The expanded plant network and
immediately available low-cost production
capacity will increase RHI Magnesita’s
competitiveness in the region for both local
sales and potential new export opportunities
in West Asia, Africa and the Middle East.
A continuation of this M&A strategy to
further complement our global business is
underway, prioritising portfolio additions
before deleveraging.
Sustainability performance
A core element of our strategy is to be the
sustainability leader in the refractory and
refractory raw materials industries. We
committed to six sustainability targets to be
met by 2025 which are in alignment with the
UN sustainable development goals. We are
progressing well in each of the target areas,
although further work is now required to maintain
improvements in energy consumption and CO2
intensity following the recent acquisitions.
We have been leading the industry in the
recycling of refractory raw materials since
we identified this as a key lever to quickly and
permanently reduce CO2 emissions. In 2023 we
recorded a recycling rate of 12.6% (2022: 10.5%)
and we have now increased our target to achieve
a recycling rate of 15% by 2025, (previously
10%). The speed with which we can continue to
increase overall Group recycling rates from this
point may moderate due to the dilution impact
from new acquisitions where recycling rates are
low or zero and as we reach technical limits or
bottlenecks in the availability of suitable waste
material. Since we began our recycling journey
in 2019 and adjusting the baseline for M&A we
have reduced our annual CO2 emissions from
6.2 Mt to 4.6 Mt and improved our CO2 emissions
intensity per tonne of product shipped from 1.84t
to 1.62t, with the majority of these emissions
savings delivered by recycling.
We continue to invest in the research and
development of new technologies to reduce
CO2 emissions in the refractory production
process. During 2023 we decided to invest
another €5 million in MCi Carbon, an Australia
based developer of mineralisation technology
which can efficiently bind CO2 into saleable
solid carbon-negative materials, permanently
removing emissions from the atmosphere. We
are assessing the viability of this technology
at our operational sites in Europe, alongside
nine other pilot plants or trials of alternative
technologies, any combination of which
will help us to progress our decarbonisation
pathway. Such technologies may have wider
applications beyond the refractory industry
and if successful will help the Group to adapt
to the consequences of the Carbon Border
Adjustment Mechanism in Europe, which will be
progressively introduced over the period 2026-
2034 and will significantly increase the cost of
Scope 1 CO2 emissions in our European plants.
We remain committed to investing in the
development of new technologies to deliver
decarbonisation, to offering our customers
low or zero CO2 footprint refractory products
and providing them with information to make
sustainable procurement decisions. It is clear
that this will require significant new capex in
only a few years from now starting in Europe
and subsequently in other geographies.
Ultimately, the necessary investment to achieve
decarbonisation would be very large. We will
continue to lobby governments to provide
the necessary infrastructure support for the
development of renewable energy sources,
hydrogen networks and CO2 transport and
sequestration solutions, whilst working with
partners in the private sector worldwide to
deliver permanent reductions in CO2 emissions
from energy intensive industrial processes. The
cities of the future could be built without CO2
emissions if we and our customers are successful.
Our people
Our strong operational and strategic delivery in
2023 represents the hard work of thousands of
individuals working towards the RHI Magnesita
vision worldwide. We materially increased
the size of the business in 2023 through six
acquisitions and I am excited to welcome into
the Group the diverse range of talented and
experienced people who have joined us this
year. It is heartwarming to experience the
passion, knowledge and new perspectives that
our new colleagues have already brought into
the Group. We have learned a great deal from
each other in a short space of time and I am
sure that the benefits from integrating our efforts
and ideas will continue to deliver value in the
years ahead.
Financial performance
A combination of delivering for our customers,
agility and operational excellence in 2023
enabled us to beat our initial guidance for
financial performance. The Group delivered an
Adjusted EBITA margin of 11.4% compared to
an initial expectation of 10% at the beginning of
the year, resulting in a 7% increase in Adjusted
EBITA to €409 million (2022:€384 million).
This was achieved despite the weakest demand
for refractory products in 15 years in most
regions and a market-driven 5% decline in sales
volumes pre-M&A.
We also generated significant cash flow, with
Adjusted operating cash flow increasing to €413
million (2022: €155 million). Strong cash flow
and growth in EBITDA enabled us to maintain
gearing within our guided range of 2.0-2.5x
whilst allocating €443 million of capital to
acquisitions. The full year annualisation of
earnings from M&A plus synergies will support
financial performance in 2024 and beyond
as we integrate these new businesses into our
global network.
Outlook
Construction and transportation industries are
the main drivers of customer demand and both
end markets remain subdued at present in all
geographies except India. Investment projects,
especially in the glass and non-ferrous markets
have peaked in 2023 and deliveries will decline
in 2024 and beyond. RHI Magnesita has taken
pre-emptive action to preserve margins and
is well positioned to increase output into a
recovery, with significant operational gearing
and fixed cost absorption benefits to be realised
when customer demand returns. The timing of
such recovery remains uncertain. Production
is planned to increase in 2024 to match sales
volumes, as inventory coverage ratios are now
at target levels. Sales volumes in the base
business excluding M&A in 2024 are assumed
to be in line with 2023, whilst the full year effect
of 2023 M&A should increase shipped volumes
in 2024 by up to 10%. RHI Magnesita has
navigated significant challenges in 2023 whilst
also continuing to build a stronger business
through M&A and efficiency improvements,
which will be capable of delivering significant
value in a normal demand environment.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 3
STRATEGIC REPORT €131m
EBITA benefit from 2019 Strategic Initiatives
delivered in H1 2023
€443m
Capital allocated to M&A in 2023
6
New businesses acquired in 2023
1 4
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Delivering our
strategy
RHI Magnesita’s strategy is based
on three pillars, supported by our
people and culture. Each strategic
pillar represents an opportunity to
deliver significant long-term value
for shareholders, building on the
Group’s existing global footprint
and underpinned by our focus
on sustainability.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 5
STRATEGIC REPORT Our strategic framework
RHI Magnesita’s
strategy pillars are:
• To improve competitiveness through
cost control, production network
efficiencies, streamlined process
execution, automation and digitalisation.
• To grow revenues and margins by
enhancing our business model.
• Markets - drive market leadership
through M&A and organic growth to
strategically increase market share in
geographies and applications where the
Group is currently underrepresented.
The three pillars of our strategy are
underpinned by a focus on people, corporate
culture and our commitment to sustainability
leadership in the refractory industry.
Each strategic pillar represents an
opportunity to deliver significant long-
term value for shareholders as a highly
competitive global leader in refractories
with breadth and scale.
The Group’s long-term strategy is aligned
to its purpose of mastering heat to enable
global industries to build sustainable,
modern life. The Board reviews the
strategy annually to dynamically respond
to changing market conditions, industry
developments and stakeholder priorities.
The Board believes that the Group’s strategy
is the optimum route for delivering long-
term value creation for all stakeholders.
More information on how the Group
interacts with its stakeholders to ensure
that strategic priorities are aligned can be
found on page 119.
Our strategic priorities
Competitiveness
Reduce operating costs
Cost-saving initiatives include reducing SG&A, plant
footprint optimisation, automation and digitalisation,
supply chain management and selected capital expenditure
projects to reduce raw material and conversion costs.
Business model
Expand the business model
We seek to maximise value for our customers and increase
margins through the offering of a broad range of products
and services, growing the proportion of revenue derived from
solutions contracts and expanding our recycling activities.
Markets
Grow market share in geographies and products
where we are under-represented
The Group aims to grow its share of the global high-
temperature refractories market via a consolidation strategy
targeting businesses in high-growth markets or market
segments where the Group is currently under-represented.
People and culture
Enablers of our strategy
RHI Magnesita fosters a culture of innovation, openness,
pragmatism and high performance to support the delivery
of its strategy. Hiring and retaining talented teams and
individuals is essential for the Group to grow and maintain
its leadership position.
Sustainability
Sustainability leadership
RHI Magnesita seeks to maintain its leadership position in
sustainability in the refractory industry to gain cost, pricing
and market share advantages over the long term. We are
committed to reducing emissions from our activities and to
assisting our customers with their own transitions.
1 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Progress
Outlook
A detailed review of SG&A was undertaken in 2023
The Group is targeting further structural cost savings in both
with estimated annual savings of €14 million and
€11 million of non-recurring restructuring costs.
The Production Optimisation Plan that was launched in
2019 is now substantially complete, with only the ramp
raw material and refractory production in 2024 with the aim
of restoring vertical integration EBITA margin contribution to
2.5-3.5 ppts in the medium term and increasing refractory EBITA
margins to over 10%.
up of the Brumado rotary kiln and final commissioning of
The ramp up of the Brumado kiln is intended to drive structural
the Manufacturing Execution System implementation at
raw material cost reductions when fully loaded, whilst margins
Radenthein remaining. The 2019 cost-saving initiatives
in refractory production will benefit from the delivery of M&A
contributed €23 million of EBITA in 2023.
synergies in recently acquired businesses.
Freight and energy expenses reduced due to easing
of global supply chain and energy market disruption,
offset by higher labour costs and reduced fixed cost
absorption due to low capacity utilisation.
The achievability of absolute cost reductions and margin increases
will depend on the extent of inflation in labour, raw materials,
freight and energy and whether the Group is able to pass on
additional costs through price increases in 2024.
Read about
this strategic
pillar
Pages
18 & 19
sourcing of secondary raw material through its MIRECO
to increase the use of secondary raw materials to 15% by 2025.
Solutions contracts accounted for 27% of revenue
in 2023 (2022: 32%) as the acquisition of six new
businesses with a lower prevalence of solutions
contracts reduced the overall average for the Group.
The recycling rate was successfully raised to 12.6%
(2022: 10.5%) as the Group was able to increase the
joint venture in Europe and highlight the circular
economy and CO2 emissions benefits of recycling
to its customers.
The market size for refractories is now estimated at
approximately €30 billion. The Group has made
significant M&A progress in 2023, completing six
acquisitions across a range of product segments
and geographies.
€443 million of capital was deployed in M&A in 2023
acquisition and working capital investments.
The M&A strategy will continue to broaden the Group’s product
portfolio and geographic presence, increasing the effectiveness
of solutions contracts.
There is an opportunity to expand recycling activities in North
America where recycling rates are currently 8.3%, below the
global average for the Group. A new higher target has been set
Further improvements to the effectiveness of the business model
are planned including an ongoing product complexity reduction
programme, improvements in supply chain management,
customer segmentation and upgrades to core IT systems.
Read about
this strategic
pillar
Pages
20 & 21
Having completed nine M&A transactions in the period from
December 2021 to date, the immediate priority in 2024 is to
effectively and quickly integrate these businesses into the Group’s
production network and customer offering. Clear synergy targets
have been set for each acquisition and regional management
teams are held accountable for delivery of the integration plan.
Read about
this strategic
pillar
Pages 22-25
M&A opportunities and will seek to execute further transactions
that meet its criteria for complementing the base business with
potential to generate substantial EBITDA synergies.
including equity consideration paid, debt assumed on
The Group continues to evaluate an active pipeline of potential
We welcomed over 3,000 individuals to the Group
Multiple initiatives to identify, recruit and retain talented people
with diverse experience and new technical expertise
and to develop teams through training, cultural engagement and
as a result of acquisitions completed in 2023.
digitalisation of key administration tools.
Wage increases were agreed globally to offset the
increased cost of living due to inflationary pressures.
Read about
people and
culture
Pages
26 & 27
Recycling rate increased to 12.6%, resulting in
CO2 emissions savings of over one million tonnes
compared to 2018. Further development of various
candidate technologies for the avoidance or capture
and utilisation of CO2 emissions. Improvements in
external ESG ratings, received UK and Ireland Chartered
Governance Institute award for Sustainability disclosure
in 2022.
Continue to progress technology solutions for the abatement
of emissions in the refractory production process. Engage with
customers to offer low CO2 footprint products and enabling
technologies for transition to low-emission production processes.
Deliver 2025 sustainability targets and set new targets for 2030
as required under CSRD.
Read more on
sustainability
Page 58
Our strategic priorities
Competitiveness
Reduce operating costs
Cost-saving initiatives include reducing SG&A, plant
footprint optimisation, automation and digitalisation,
supply chain management and selected capital expenditure
projects to reduce raw material and conversion costs.
Business model
Expand the business model
We seek to maximise value for our customers and increase
margins through the offering of a broad range of products
and services, growing the proportion of revenue derived from
solutions contracts and expanding our recycling activities.
Markets
Grow market share in geographies and products
where we are under-represented
The Group aims to grow its share of the global high-
temperature refractories market via a consolidation strategy
targeting businesses in high-growth markets or market
segments where the Group is currently under-represented.
People and culture
Enablers of our strategy
RHI Magnesita fosters a culture of innovation, openness,
pragmatism and high performance to support the delivery
of its strategy. Hiring and retaining talented teams and
individuals is essential for the Group to grow and maintain
its leadership position.
Sustainability
Sustainability leadership
RHI Magnesita seeks to maintain its leadership position in
sustainability in the refractory industry to gain cost, pricing
and market share advantages over the long term. We are
committed to reducing emissions from our activities and to
assisting our customers with their own transitions.
Progress
Outlook
A detailed review of SG&A was undertaken in 2023
with estimated annual savings of €14 million and
€11 million of non-recurring restructuring costs.
The Production Optimisation Plan that was launched in
2019 is now substantially complete, with only the ramp
up of the Brumado rotary kiln and final commissioning of
the Manufacturing Execution System implementation at
Radenthein remaining. The 2019 cost-saving initiatives
contributed €23 million of EBITA in 2023.
Freight and energy expenses reduced due to easing
of global supply chain and energy market disruption,
offset by higher labour costs and reduced fixed cost
absorption due to low capacity utilisation.
Solutions contracts accounted for 27% of revenue
in 2023 (2022: 32%) as the acquisition of six new
businesses with a lower prevalence of solutions
contracts reduced the overall average for the Group.
The recycling rate was successfully raised to 12.6%
(2022: 10.5%) as the Group was able to increase the
sourcing of secondary raw material through its MIRECO
joint venture in Europe and highlight the circular
economy and CO2 emissions benefits of recycling
to its customers.
The market size for refractories is now estimated at
approximately €30 billion. The Group has made
significant M&A progress in 2023, completing six
acquisitions across a range of product segments
and geographies.
€443 million of capital was deployed in M&A in 2023
including equity consideration paid, debt assumed on
acquisition and working capital investments.
The Group is targeting further structural cost savings in both
raw material and refractory production in 2024 with the aim
of restoring vertical integration EBITA margin contribution to
2.5-3.5 ppts in the medium term and increasing refractory EBITA
margins to over 10%.
The ramp up of the Brumado kiln is intended to drive structural
raw material cost reductions when fully loaded, whilst margins
in refractory production will benefit from the delivery of M&A
synergies in recently acquired businesses.
The achievability of absolute cost reductions and margin increases
will depend on the extent of inflation in labour, raw materials,
freight and energy and whether the Group is able to pass on
additional costs through price increases in 2024.
Read about
this strategic
pillar
Pages
18 & 19
The M&A strategy will continue to broaden the Group’s product
portfolio and geographic presence, increasing the effectiveness
of solutions contracts.
There is an opportunity to expand recycling activities in North
America where recycling rates are currently 8.3%, below the
global average for the Group. A new higher target has been set
to increase the use of secondary raw materials to 15% by 2025.
Further improvements to the effectiveness of the business model
are planned including an ongoing product complexity reduction
programme, improvements in supply chain management,
customer segmentation and upgrades to core IT systems.
Read about
this strategic
pillar
Pages
20 & 21
Having completed nine M&A transactions in the period from
December 2021 to date, the immediate priority in 2024 is to
effectively and quickly integrate these businesses into the Group’s
production network and customer offering. Clear synergy targets
have been set for each acquisition and regional management
teams are held accountable for delivery of the integration plan.
The Group continues to evaluate an active pipeline of potential
M&A opportunities and will seek to execute further transactions
that meet its criteria for complementing the base business with
potential to generate substantial EBITDA synergies.
Read about
this strategic
pillar
Pages 22-25
We welcomed over 3,000 individuals to the Group
with diverse experience and new technical expertise
as a result of acquisitions completed in 2023.
Wage increases were agreed globally to offset the
increased cost of living due to inflationary pressures.
Multiple initiatives to identify, recruit and retain talented people
and to develop teams through training, cultural engagement and
digitalisation of key administration tools.
Read about
people and
culture
Pages
26 & 27
Recycling rate increased to 12.6%, resulting in
CO2 emissions savings of over one million tonnes
compared to 2018. Further development of various
candidate technologies for the avoidance or capture
and utilisation of CO2 emissions. Improvements in
external ESG ratings, received UK and Ireland Chartered
Governance Institute award for Sustainability disclosure
in 2022.
Continue to progress technology solutions for the abatement
of emissions in the refractory production process. Engage with
customers to offer low CO2 footprint products and enabling
technologies for transition to low-emission production processes.
Deliver 2025 sustainability targets and set new targets for 2030
as required under CSRD.
Read more on
sustainability
Page 58
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 7
STRATEGIC REPORT Strategic progress in action
Competitiveness
€131m
EBITA contribution realised from 2019 -HY23
cost-saving and sales-strategic initiatives
€27m
Annual SG&A reductions achieved in 2023
15.2%
Group EBITDA margin in 2023 versus average
for businesses acquired in 2023 of 6.6% prior
to acquisition
Improving our
cost position
RHI Magnesita is a cost-competitive global producer of
technologically advanced refractory materials. We seek to
maintain and improve our cost position through adapting
and investing in our production network, controlling SG&A,
streamlining process execution and using automation and
digitalisation to modernise the manufacturing process.
The importance of cost leadership
Maintaining our position as a large scale,
low-cost producer is essential for delivering a
strong return on invested capital through the
cycle. Refractory production is energy and
labour intensive with freight also being a major
component for international sales, creating
an opportunity to drive margin expansion
through scale, network efficiencies, automation
and digitalisation. The refractory market is
fragmented, with many smaller competitors
offering alternatives with varying price
points and product performance. Operating
successfully within this competitive landscape
requires a continuing focus on cost control to
ensure that we can consistently deliver high-
quality products at competitive prices
to maintain and grow market share.
Our strategy for maintaining and
improving our cost position
The Group enjoys an advantage in being able
to source low-cost raw materials internally.
Since the merger of RHI and Magnesita in 2017,
we have also invested in a major production
optimisation programme to rationalise our
global refractory plant network, with the closure
of high-cost locations and consolidation of
production into expanded, low-cost sites.
Approximately €70 million of fixed costs
have been removed from the plant network
over this period following the closure of nine
plants across Europe, North America and
China. The successful automation of our
flagship Radenthein plant in Austria, with final
commissioning of the Manufacturing Execution
System now underway, demonstrates the extent
of cost efficiencies that can be realised through
the application of modern technology to the
production process. We continue to assess
opportunities to realise further efficiencies as we
add new plants to our network through M&A.
Structural cost improvements
delivered in 2023
During the year the Group delivered c.€70
million of annual EBITA savings as a result of
the strategic cost-saving initiatives launched
in 2019.
A cost reduction programme aimed at
delivering SG&A savings to offset the impact
of inflation successfully delivered €14 million
of annualised savings, incurring restructuring
expenses of €11 million. SG&A headcount was
reduced by c.140 globally, before additions
from new M&A.
Variable input costs including energy, freight
and raw materials reduced in 2023 due to
external market movements. However, cost
savings were offset by higher labour costs and
lower fixed cost absorption due to operating at
lower levels of plant capacity. Strategically, the
Group intends to maintain production capacity
even though it is not fully utilised at present, as
demand for refractories is expected to recover
in the medium term, leading to strong potential
for operational gearing in an upturn as fixed cost
absorption improves.
Acquisitions completed during the year create
further network rationalisation opportunities,
such as strengthening newly acquired lower-
cost locations in India, for sales within India and
in surrounding regions.
Industry-wide cost dynamics
Refractories are essential for our customers
to operate, but represent a small proportion
of their operating costs, for example c.3% of
the costs of operating a steel mill. Many of RHI
Magnesita’s competitors operate on a “cost
plus” pricing model (rather than the value
based pricing approach used by the Group) so
if there are widespread increases in input costs
affecting every refractory supplier globally it is
therefore normal for refractory market prices
to increase to offset higher costs. Despite the
ability to pass through cost increases in higher
pricing, we remain vigilant on our cost base and
act where necessary to avoid margin erosion or
loss of market share.
1 8
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
RHI Magnesita has a unique position as a
vertically integrated refractory producer with
global scale that gives us a long-term structural
cost advantage.”
Rajah Jayendran
Chief Technology Officer (CTO)
comparability, improved financial analysis,
standardised production and consistent KPIs.
This will enable real time operations monitoring
and seamless integration with other digital
transformation programmes in planning,
supply chain, logistics and finance. OES will
be rolled out across the production network in
phases, with pilots in progress at Contagem,
Radenthein and York and a second wave
planned for Rajgangpur, Dalian, Urmitz and
Eskisehir in 2024.
The cost of production for magnesite-based raw
materials in Brazil is expected to benefit from the
ramp up of the new rotary kiln at Brumado which
will widen the range of raw materials produced
and enable the processing of previously mined
material with significant cost advantages.
Further development of the Group’s M&A
strategy will bring cost efficiency benefits for the
global refractory plant network as logistics and
production is optimised.
Vertical integration
Global shared services
The Group operates a network of shared service
centres to streamline administrative functions
and improve internal service delivery. Effective
internal processes ultimately support a higher
level of customer service. The Group launched
a multi-year review of its shared service centres
in 2023 with a view to generating further
efficiencies as it continues to grow through
acquisition and into a broader range of products
and services, allowing for faster and more
effective integrations.
Roadmap for delivery of further savings
Future cost efficiencies are planned to be
delivered through a new Operations Excellence
System (“OES”) which will complement
other internal investments over the next four
years to modernise and integrate the Group’s
production processes and operations. OES
will ensure uniformity in processes, standards
and parameters across every plant to allow
The Group derives a structural cost benefit
from its vertical integration in magnesite
and dolomite based raw materials, as well
as chromite, chamotte and silica. The EBITA
contribution from raw material assets accounted
for 1.7ppts of the total Group EBITA margin
in 2023 (2022: 2.5ppts). The EBITA margin
contribution reduced compared to the prior
year, as expected, primarily due to a reduction
in the key raw material prices which are used to
calculate the contribution. The Group expects
the margin contribution from raw material
production to return to 2.5-3.5ppts when
customer demand for refractories recovers.
CO2 emissions costs
During 2023, the European Union confirmed the
implementation of its Carbon Border Adjustment
Mechanism regulations. CBAM will increase
the cost of Scope 1 CO2 emissions in Europe,
as free allocations under the existing Emissions
Trading Scheme are progressively withdrawn
between 2026 and 2034. Other regions are also
considering carbon pricing schemes.
If the Group is unable to reduce its CO2
emissions in Europe over this timeframe, this
could result in additional costs of €80 million
per year in Europe. It may be possible to pass
on approximately half of the additional costs of
CBAM through price increases for European
customers but such increases would not be
possible on the remaining products which are
exported. For further details on our assessment
of the potential financial impacts of CBAM,
please see our TCFD disclosure on page 100
of this Annual Report.
RHI Magnesita is investing in the development
of new technologies to reduce CO2 emissions
in the refractory production process to mitigate
the impact of the potential additional costs from
CBAM. If it is possible to produce lower CO2
products, this new regime would represent an
opportunity, since these products would enjoy
a cost advantage versus higher CO2 footprint
products, whether produced in Europe or
imported from other regions.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 9
STRATEGIC REPORT Strategic progress in action
Business model
Enhancing the
business model
The RHI Magnesita business model is to offer a broad range
of refractory products, associated services and solutions to
our global customer base with a balanced presence across
customer industries and geographies.
1,500
Steel plants worldwide using RHI Magnesita
products
27%
Revenue from solutions contracts in 2023
30%
Global market share in cement kiln refractories
Key strengths of our business model
The future of recycling
RHI Magnesita is a leading global supplier
of high-grade refractory products, systems
and solutions with a vertically integrated
value chain. We are able to offer competitive
solutions contracts to our customers due to
our broad range of refractory products, global
manufacturing footprint and expertise in the
management of heat in modern industrial
processes. Refractories are an essential part of
our customers’ manufacturing processes and
they have the potential to influence costs and
performance in areas that extend far beyond
the refractory contract. As a large scale, global
player we are able to meet our customers’
critical needs to maintain a consistent supply
of high-quality refractory products and
services, without which they would not be able
to operate. Reliability and quality control are
essential foundations of our success.
How we are enhancing our
customer offering
We are pursuing the following initiatives to
enhance our customer offering, and therefore
strengthen our business model:
1. Move customers up the margin curve by
encouraging them to utilise higher value-
added products and services.
2. Increase the proportion of revenue derived
from solutions contracts.
3. Increase the use of recycled secondary
raw material, with significant environmental
benefits for all parties and the potential to act
as a supplier of recycled raw materials to the
wider refractory industry.
4. Offer more sustainable or more efficient
refractory products with a lower CO2
footprint to assist our customers to reduce
their emissions.
5. Reduce product complexity.
6. Supply chain and logistics planning
improvements.
7. Digitalisation of our customer-facing tools
to streamline orders, logistics, invoicing
and payment.
8. R&D of new automation technologies that
could be offered to customers and/or original
equipment manufacturers.
Recycling is a multi-faceted element of our
strategy since it benefits our business model
in several ways. There are clear sustainability
benefits from reducing our CO2 emissions whilst
assisting our customers with reducing landfill
waste and promoting the circular economy.
Recycling has also now reached a scale that
it represents an extension of our vertical
integration model for raw material sourcing,
similar to investing in a new mining asset.
Having exceeded our initial target to reach a
recycling rate of 10% we are now focused on a
new higher target of 15% by 2025. Increasing
recycling rates in acquired companies is more
challenging since in most cases the companies
we acquire are generally not using recycled
raw materials.
Incremental gains in recycling become
progressively harder to deliver and require
advances in sorting and purification
technologies. We are taking a regional
approach, seeking to replicate the success
we have delivered in Europe into other regions
where recycling rates are currently lower than
the Group average.
Solutions contracts
RHI Magnesita is one of few refractory producers
who are able to offer competitive solutions
contracts globally, due to the broad range of
our product portfolio and geographic presence.
Supplying our customers through a solutions
contract brings significant efficiency benefits
for both parties and creates a long-term and
close relationship with the customer that
is more likely to be renewed at the expiry of
each contract.
We set out in 2019 to increase the proportion
of revenue derived from solutions contracts
to 40% by 2025 and in 2023 we reached
27% (2022: 32%). Similar to our experience
in recycling, progress in increasing the
proportion of solutions revenue has been
diluted by the acquisition of multiple new
businesses in 2023 who have generally not
used a solutions contract business model
prior to joining our Group.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
We are adapting and growing our customer
offering to provide innovative solutions in a
highly specialised and mission-critical industry.”
Gustavo Franco
Chief Customer Officer (CCO)
Supply chain and logistics
management
Our experience of supply chain disruption in
2021 and 2022 has led to a review of our supply
chain and logistics planning capabilities. We
have selected O9 as the best-in-class specialist
tool for supply chain planning and a project is
underway to implement this new system. The
project will encompass demand, production,
inventory and supply chain planning with an
integrated approach.
Our investment into this project reflects
the criticality of supply chain and logistics
for managing a refractory business with
international raw material production and
purchasing feeding into a global network of
refractory plants. The project will improve our
ability to plan, forecast, model and mitigate the
supply chain volatility which has been a feature
of post-pandemic global trade.
In the longer term, upgrading the efficiency of
our planning process could potentially reduce
the amount of inventory that is required to
maintain a high level of customer reliability
by removing buffers in the network.
Understanding customer expectations
Delivering for our customers is at the core of our
success and we regularly consult with them to
check that we are meeting expectations and to
gather feedback on our performance. Our latest
customer satisfaction survey indicated a strong
improvement in perceptions of RHI Magnesita,
with the highest Net Promoter Score since we
began tracking this KPI in 2019.
As we invest to enhance our business model we
liaise closely with our customers to check what
their expectations are and understand why they
choose to use RHI Magnesita as their refractory
supplier. The information we gather enables us
to group customers into categories to best align
our offering to match customer expectations.
Digital transformation
Many of the improvements to our business
model that we are seeking to make require
a strong foundation of data management
which is standardised across the Group, fully
interchangeable and scalable. This becomes
increasingly important as we grow through
acquisition, adding new businesses to our
network which must be fully integrated into our
systems to maximise potential synergy benefits.
We are therefore investing to modernise our IT
infrastructure through a major ERP upgrade that
will take place over the next three years.
The acquisitions of Dalmia GSB, Seven
Refractories, Jinan New Emei and Hi-Tech
are all additive to our ability to provide
steel customers with more effective and
comprehensive solutions contracts, adding
lances, non-basic repair mixes and flow
control capacity in Europe, China and India.
Determining the optimum proportion of
revenue from the solutions contract business
model is not an exact science and depends
on market practice and customer preferences
in each of the regions in which we operate.
We will continue to assess progress in this
area, weighing up the benefits of maintaining
market share and getting closer to customers
against margin performance over the lifetime
of the contracts.
Complexity reduction
Historically, RHI Magnesita has offered highly
customised products to its customers with
individual recipes and shapes tailored to specific
applications. Over many years this has led to
the development of multiple product types and
specifications. Some of the specialist products
which are offered for sale in our product
catalogue are lower margin due to small batch
sizes. Complexity can also create inflexibility in
our plants with the potential for inefficiencies
when products are not readily interchangeable.
We have therefore launched a complexity
reduction programme (CoRe) to address this.
In 2023 the CoRe project focused on
complexity reduction in our magnesia carbon
brick product range. Following rationalisation
of product recipes, it has been possible to
release multiple raw material silos, leading to
production efficiency gains.
CoRe is also a customer-facing initiative,
whereby customers are encouraged to migrate
to the core portfolio of standardised products.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
2 1
STRATEGIC REPORT Strategic progress in action
Markets
Driving market
leadership
We see a major opportunity to generate value through
consolidation of the global refractory industry, targeting
businesses in high-growth markets or market segments
where the Group is currently underrepresented.
25%
Revenue growth in India, China and Türkiye
5%
Flow control revenue growth
€56m
EBITDA contribution from businesses acquired in
2022 and 2023
Growth through consolidation
in a fragmented industry
The global refractory industry is a low-
growth market with pockets of high growth in
regions such as India, East Asia and Türkiye.
RHI Magnesita’s strategy to grow through
acquisition recognises that seeking to grow
through the addition of new greenfield capacity
is unlikely to deliver high returns if there is
insufficient demand to support additional
volumes, especially in developed markets.
Meanwhile growth through acquisition offers
the opportunity to create significant value
through synergies.
The refractory market is fragmented with a tail
of smaller players with leadership positions
in specific geographies or product markets.
Selective acquisitions of complementary
businesses which add value to the Group’s
existing portfolio enable us to build a balanced
business with a broad market share across
different refractory applications.
Negotiating an acquisition can take several years
to reach a conclusion resulting in a transaction
and the M&A progress delivered in 2022 and
2023 is the result of an extensive period of
screening, due diligence and negotiation. Over
this time period, RHI Magnesita has taken a
highly selective approach with the number of
rejected deals significantly outnumbering those
which have progressed to completion.
Defining the addressable market
As we assess potential acquisition candidates,
our understanding of the global market for
refractories has evolved and we now estimate
a wider addressable market than when we first
embarked upon our M&A strategy in 2018.
Market size measured by sales values has
also increased due to inflation in the price of
refractories, reflecting higher input costs for
all producers.
We now view the size of the high-temperature
refractory market for the steel sector as
approximately €18 billion, with industrial
markets including cement and lime, non-
ferrous metals, glass, energy, chemicals
accounting for an additional €12 billion.
There is a larger opportunity to grow through
acquisition within this wider addressable market.
Organic growth priorities
Whilst M&A is a primary source of growth
there are still material opportunities for
organic growth in existing markets where
we are already present.
The Group is seeking to further increase
revenues from its steel flow control business
and has available production capacity to
support this.
In South America and Europe where the Group
is already well established, we are seeking to
reduce costs and right-size production volumes
for forecast market demand levels. Growth in
South America is expected to be hindered by
high levels of government debt and political
uncertainty. In Europe, EAF steel production is
under pressure due to high energy costs and
reduced local construction demand. Over the
longer term, European policies towards steel
production and the construction industry could
limit both steel and cement output.
In North America the outlook for steel
production is the strongest amongst developed
markets, despite short-term weakness in 2023.
Some new EAF construction projects have
been delayed but are expected to be realised.
Higher domestic steel consumption intensity in
the medium term is supported by infrastructure
renewal and re-industrialisation trends.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Our M&A strategy has gathered real momentum
in 2023 and we are now well established as the
leading consolidator in the sector.”
Stefan Borgas
Chief Executive Officer
Industry consolidation opportunity
RHI Magnesita is building a clear global leadership position in the refractory industry:
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• Growth in under-represented geographies
• Network or logistics synergies
• Flow control growth
• Alumina based refractories (non-basic)
• Complementary product offering
• Sustainability leadership
We see significant organic growth potential
in East Asia excluding China, Within China,
steel production is forecasted to reduce but
the Group is growing from a low overall market
share position and focusing its efforts on higher
growth and higher value-add segments.
The India, West Asia & Africa business unit
benefits from high growth in India, where
steel production grew by 12% in 2023 and is
forecast to continue to grow at a 7-8% CAGR
until 2030. The existing business combined
with acquisitions added in 2023 result in
an estimated market share of approximately
30% in India, with available spare production
capacity to grow in line with the market.
Date
Consideration
Pro forma revenue 2023 Regional markets
Product markets
DBRL
January 23
27 million shares in
RHI Magnesita India
Ltd.
€132 million
India, West Asia &Africa
Industrial, Steel
Hi-Tech
January 23
€86 million
€25 million
India, West Asia &Africa
Steel Flow Control
Dalmia GSB
April 23
€13 million
€23 million
Europe, CIS & Türkiye
Steel lances and
precast products
Jinan New
Emei
May 23
€40 million
(65% share)
€76 million
China & East Asia
Steel Flow Control
Seven
Refractories
P-D
Refractories
July 23
€84 million
€96 million
Europe, CIS & Türkiye
and North America
Alumina based mixes
October 23
€45 million
€175 million
Europe, CIS & Türkiye
Alumina refractories for
Industrial customers
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
2 3
STRATEGIC REPORT
Products offered range from low-temperature
fireclay to ultra-high-temperature zircon mixes,
high-grade alumina mixes and sustainable
taphole clay with a low CO2 footprint.
P-D Refractories
P-D Refractories is a producer of high-quality
alumina-based refractories for industrial
applications in process industries, with a leading
market position in the glass and aluminium
sectors. Previously part of the Preiss-Daimler
Group, the assets acquired include refractory
plants in Germany and Czechia, and clay,
quartzite and silica raw material sites in
Czechia and Slovenia.
M&A pipeline
RHI Magnesita continues to assess an active
pipeline of potential acquisition targets in
complementary geographies and product
segments to progress its strategy to grow
through consolidation. Our capital allocation
framework includes guidance that we will seek
to maintain gearing, measured as the ratio of Net
Debt to Adjusted Pro Forma EBITDA at between
1.0-2.0x and at higher levels of 2.0-2.5x or
above for compelling M&A opportunities. The
track record to date of successful origination,
execution and integration of acquisitions
supports a continuation of this strategy to
unlock further value from the Group’s global
network and service offering.
Strategic progress in action
2023 M&A review
DBRL
The Group completed the acquisition of the
Indian refractory business of DBRL via a share
swap. DBRL is one of the leading refractory
producers in India with approximately 1,200
employees and production capacity of over 300
ktpa, from five refractory plants and raw material
sites. The location of DBRL sites gives access to
the South and West of India with significantly
improved logistics. Whilst active in both steel
and industrial segments, DBRL’s relatively
stronger market share in industrial refractories
has helped to rebalance the Group’s presence
in India to a broader product portfolio which was
previously more focused on steel.
Hi-Tech
The acquisition of the refractory business
of Hi-Tech was completed in January 2023,
adding a recently constructed steel flow
control plant in Jamshedpur to the Group’s
India production network. Hi-Tech has a strong
offering in thin slab casting flow control products
which is complementary to the Group’s existing
product range.
Dalmia GSB
The Group completed the acquisition of DGSB,
a German subsidiary of the Dalmia Bharat
Group, in April 2023. DGSB is a leading supplier
of monolithic lances and other precast products
to European steel customers for use in the
desulphurisation and homogenisation of molten
steel and represents a complementary addition
to the Group’s existing product range.
Jinan New Emei
Jinan New Emei is a leading producer of steel
flow control products including refractory
slide gate plates and systems, nozzles and
mixes, employing over 1,300 people and
headquartered in Shandong province, China.
Jinan New Emei’s main asset is a recently
commissioned, modern facility in Laiwu.
Seven Refractories
Seven Refractories is a specialist supplier of
alumina-based refractory mixes with broad
applications across all of the Group’s customer
segments including iron and steel, cement,
aluminium and non-ferrous metals. Seven
Refractories has customer relationships in
45 countries and a strong track record of
innovation, including the development of a
range of environmentally sustainable products
and flexible manufacturing technologies.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Pre-2023 M&A integration update
Chongqing
The Group acquired a 51% ownership stake
in Chongqing Boliang Refractory Materials
Co. Ltd. in December 2021. Following the
acquisition, c.€18 million was invested in
expanding production capacity at the site in
2022 and 2023. The new production facilities
are now fully operational and have expanded
the Group’s offering of alumina-based cement
refractories, which is highly complementary to
its existing market share in magnesite-based
refractories for cement kilns.
SÖRMAŞ
RHI Magnesita completed its acquisition of
an 87% stake in SÖRMAŞ, a Türkiye-based
producer of refractories for the cement, steel
and glass industries in September 2022.
SÖRMAŞ was progressively integrated into
the Group’s Europe, CIS & Türkiye business
unit during 2023 and continues to benefit
from network efficiencies resulting from the
localisation of refractory production in Türkiye.
MIRECO
In May 2022, the Group acquired a 51% stake in
Horn & Co. Minerals Recovery GmbH & Co KG,
combining both companies’ recycling activities
in Europe to increase the production, use
and offering of secondary raw material for the
European refractory industry. A newly formed
entity named MIRECO was formed to develop
the recycling business model. Improved
access to secondary raw materials through the
joint venture has been a key feature behind
the Group’s successful increase in its global
recycling rate to 12.6% in 2023 (2022: 10.5%).
The Group is assessing the potential to replicate
the success of the MIRECO business model in
other geographies.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
2 5
STRATEGIC REPORT Strategic progress in action
People and Culture
The driving force
supporting our strategy
The successful implementation of our strategy relies on
a talented and incentivised workforce with a customer-
focused culture.
Our purpose and culture
RHI Magnesita’s culture is built upon our
corporate purpose: to master heat, enabling
global industries to build sustainable modern
lives. Delivering for our customers is at the
centre of everything we do, supported by four
principles of innovation, openness, pragmatism
and performance. We have appointed 170
Culture Champions and 35 employer branding
ambassadors globally to embed our cultural
priorities across the organisation.
Culture is a key part of our performance
assessment and “People Cycle”. Our senior
leaders are assessed as to their cultural
readiness and whether they are living the values
or not, and further, if they are an influencer or
promoter of the cultural values.
We review the desired culture on a regular
basis and our Culture Champions provide a
valuable channel to be able to have two-way
engagement on the extent to which the culture
is lived, as well as our own interactions with
colleagues and observations as management.
Our EMT held a Cultural Pulse Check as part
of its annual People session and considered
more structured feedback gathered as
part of a specialist survey to senior leaders.
Inputs from other surveys in 2023 were also
used and overall, there were over 5,000
comments from colleagues and customers
which helped to guide the EMT and Employee
Engagement team on the effectiveness and
promotion of conduct in the organisation. Our
value of openness supports colleagues in
their compliance with the Code of Conduct,
encouraging “speak-up” behaviours and
supports the effectiveness of the Code of
Conduct throughout the organisation. You can
find our Code of Conduct on the Company
website and more details on compliance with
it can be found on page 64.
The cultural values were established in 2019
and following review, remain the desired
culture for RHI Magnesita. Customer focus
and performance, supported by openness
and pragmatism, are foundational aspects on
which to drive the sustainable and long-term
success of our Group. We see pragmatism,
innovation and openness as the tools to build
confident and supportive relationships with
our customers. Given the climate crisis, we
are focusing on innovation and collaborative
working to find solutions for our customers and
provide a sustainable future for us all. You can
read more about these initiatives on page 74.
Securing our people and
culture advantage
People are our core asset and securing our
people and culture advantage is critical to
our continued success. Labour availability
and retention issues are increasingly different
when compared to previous generations, with
today’s workforce seeking flexible working
arrangements and more able to move to seek
new opportunities if they are not satisfied. Pay is
no longer the only criteria for job satisfaction, as
flexibility, benefits and career development and
job rotation opportunities become more highly
valued. The employee experience is closely
linked to the customer experience, as a highly
motivated and engaged team is more likely to
deliver superior operational outcomes.
Through engaging with our staff we have
observed that employees expect the strategy
and purpose of their employer to be clear and
for incentives and rewards to be linked to the
successful delivery of that strategy. Variable pay
linked to performance is managed uniformly
across the Group, with all bonus-eligible
employees receiving the same annual payout
ratio as senior management, based on the
achievement of clear annual Group bonus
targets (with certain exceptions, e.g. sales team
incentives). The cash bonus payout for 2023
was maximised due to the Group achieving
or exceeding every target including EBITA,
inventory coverage, EBITDA contribution
from M&A, PIFOT performance, and use of
secondary raw materials.
In the inflationary environment of 2023, labour
costs increased significantly in all regions. In
response to this upward pressure on costs we
are seeking to operate as efficiently as possible,
with fully trained workers executing well-
designed processes.
Meeting the challenges of automation
and digitalisation
RHI Magnesita is investing to modernise its
production footprint, through automation and
the implementation of a modern manufacturing
execution system. The skills demanded from our
employees are therefore changing, becoming
increasingly focused on the installation,
maintenance and optimisation of these new
technologies. We are therefore focusing
our recruitment and training activities on
developing these new skill sets.
We are also embracing technology to improve
the efficiency of our people-related processes,
such as candidate screening and talent
acquisition. Our People Cycle performance
review, salary increase, talent management and
goal setting process have been fully digitised,
formalised and rolled out across the Group. A
revised global onboarding procedure for new
joiners was also implemented in 2023. All
people and culture-related KPIs are analysed
and monitored through digital tools, enabling
the Group to adopt a proactive approach to any
warning signs or other leading indicators and
respond accordingly.
Training and development
We are committed to providing high-quality
training and development opportunities to our
employees. The RHIM Academy, delivered
through LinkedIn learning, has provided over
3,000 hours of education for staff since it was
launched in January 2023.
As we grow through acquisition and organic
expansion in high-growth markets, success
becomes highly dependent on the performance
of our leaders. We are investing to develop
leadership skills and to build a strong pipeline
of successors to ensure that we have strength in
depth and that we are developing the leaders of
the future.
Regional accountability and
shared services
From 2022 the Group has established a new
regional management structure, with regional
presidents given increased accountability
and freedom to act to meet customers’ needs
and to achieve the Group’s strategic priorities.
This includes responsibility for attraction and
retention of talent.
Each business unit is led by a Regional
President who is responsible for finance,
sales, operations and R&D. The changes have
empowered regional leaders and enabled them
to make faster and higher quality decisions. We
have moved the business closer to its customers
and we can observe improved operational
performance through “machine room” KPIs that
are reported on a monthly basis by regional
leadership. Having a greater understanding
for local customer needs and cultures of
each region is especially important against a
generally more volatile backdrop.
2 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
People are our core asset and securing our
people and culture advantage is critical to our
continued success. A highly motivated and
engaged team is more likely to deliver superior
operational outcomes.”
Simone Oremovic
EVP, People, Projects, Global Supply Chain and IMO
As a global company, to supplement our
regional structures we are able to locate shared
service centres or administrative functions
in locations where skilled labour is available.
We are currently reviewing and optimising
our network of shared service centres as we
undergo a major initiative to re-design our
global business processes.
•
Improved job adverts with a diversity
statement to communicate our commitment
for future employees.
• Co-operative relationships with institutions
such as Women of Steel, FemTech and
universities and colleges in our regions.
• Reviewed the phrasing of job roles to be
more inclusive.
• Briefing and engagement with headhunters
to focus on finding female candidates.
• Promoted female participation in panel
discussions and job fairs in our regions,
providing support with communication
and briefings.
Diversity, equality and inclusion
• Policy whereby there must be at least one
We aim to foster a diverse and inclusive
environment where all employees are
encouraged to succeed and contribute.
We track gender, age, nationality and other
characteristics where permitted across the
workforce and we have targets to increase
female representation to 45% at Board level and
33% at EMT -1 level of senior management. We
see increasing the diversity of our workforce and
management as an opportunity to tap into new
pools of talent. At the 2023 year end, female
representation at the EMT -1 level had increased
to 28% from 21% in 2022, close to our target to
reach 33% by 2025. We aim to foster a diverse
and inclusive environment where all employees
are encouraged to succeed and contribute.
Given the small population at this level, even
one or two movements can have an effect
and so it is an area we have been focusing on,
targeting our leaders to devise action plans and
scrutinising each appointment at this level to
identify where we can improve. Actions taken
in recent years to improve our gender diversity
have included:
• Global Diversity Framework implemented,
with aligned KPIs to track progress.
• Tracking of organisational diversity via a
dashboard.
• Created Regional Diversity Committees
to drive initiatives in a way which is tailored
and appropriate for the region.
• Workshops with leaders focusing on
reaching the 2025 target, resulting in
commitment to regional action lists to
increase diversity.
• Anti-discrimination/diversity training
module offered to employees with a
current completion rate of 76 %.
• Adopted and rolled out a Diversity Charter
which is endorsed by every EMT member
and Regional President.
female candidate in final interviews,
• Policy implemented to ensure gender
diversity of panel interviewers.
Headcount by region
You can read more about our overall diversity,
equality and inclusion efforts in the policies
available on the Company’s website.
Europe, CIS & Türkiye
South America
India, West Asia & Africa
China & East Asia
North America
34%
29%
17%
11%
9%
Gender distribution1
Board
Executive management team -1
Male
Female
71%
29%
Male
Female
72%
28%
1. With the inclusion of the Board Nominated NED, who will be proposed to the 2024 AGM, the gender diversity of the
Board is 33%.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
2 7
STRATEGIC REPORT Key performance
indicators
The Board and
management have
identified the following
KPIs which they believe
reflect the key indicators of
financial and non-financial
performance.
The non-financial information, as
presented within the Director’s Report,
which in this document, comprises
the Strategic report and Governance
section of this Annual Report,
complies with the Dutch Disclosure
of Non-Financial Information.
Read more on risk management
Page 45
Safety: LTIF
2023
2022
2021
0.16
0.20
0.19
2020
0.13
2019
KPI relevance
0.28
Safety is paramount to the successful running of
our business. Lost Time Injury Frequency (LTIF) is the
main indicator used to measure safety performance.
The Group’s goal is zero accidents.
Relative CO2 emissions1
(t CO2/t)
2023
2022
2021
2020
2019
1.62
1.71
1.76
1.86
1.82
KPI relevance
Climate change poses strategic and operational
risks to our business, as well as opportunities. The
Group’s target is to reduce Scope 1, 2 and 3 (raw
materials) by 15% per tonne of product by 2025
(versus 2018 baseline).
Revenue
Adjusted EBITA margin
Adjusted EPS
€3,572m
€3,317m
2023
2022
2021
€2,551m
2020
€2,259m
2019
€2,922m
2023
2022
2021
2020
2019
11.4%
11.6%
11.0%
11.5%
14.0%
2023
2022
2021
2020
2019
€4.98
€4.82
€4.52
€3.28
€5.57
KPI relevance
KPI relevance
KPI relevance
This demonstrates the growth of the business.
Adjusted EBITA margin provides a measure of profitability
Reflecting the income statement in a clear way and
By increasing our global refractory market share,
and demonstrates the successful execution of the
taking the equity structure into account, the Board
continually enhancing our product and service
Company’s strategy.
offering, the Company is focused on achieving
revenue growth and aims to outperform the
refractories market on an annual basis.
believes Adjusted EPS to be one of the indicators that
demonstrates shareholder value.
How it is measured
How it is measured
How it is measured
How it is measured
How it is measured
The number of accidents resulting in lost time
of more than eight hours, per 200,000 working
hours, determined on a monthly basis.
Tonnes of total Scope 1, 2 and 3 (raw materials) carbon
emissions per tonne of product. Scope 1 emissions
consist of onsite emissions, Scope 2 comprise
purchased electricity, and Scope 3 are measured
from raw materials production.
Total Group revenue, as reported in the
Adjusted EBITA divided by revenue, as reported in the
Earnings per share, excluding other financial income
financial statements.
financial statements.
and expenses.
Adjusted EBITA is an APM and more information can be
Adjusted EPS is an APM and more information can be
Link to strategy
2023 performance
2023 performance
2023 performance
Business model
Competitiveness
Markets
LTIF reached 0.16 in 2023, representing a 20%
improvement compared to 2022.
Total Recordable Injury Frequency (TRIF) decreased
to 0.46 from 0.54 in 2022.
Two fatalities occurred recently in our Austria operations,
one in 2023 and a second in early 2024.
We switched to a fully green electricity supply for our
German recycling plants and at the Sögüt plant in
Türkiye. At the plant in Visakhapatnam, India 0.5 MW
photovoltaic capacity was installed resulting in a CO2
reduction of around 500t CO2 per year. By the end of
2023, 64% of purchased electricity was from
low-carbon or renewable sources.
1. Historical CO2 emissions data were revised to reflect
new acquisitions.
Use of secondary
raw materials
Voluntary employee
turnover
Gender diversity
in leadership
Leverage2
ROIC3
12.6%
10.5%
2023
2022
2021
6.8%
2020
5.0%
2019
4.6%
KPI relevance
Recycling plays a critical role in achieving our 2025
emissions reduction target while also developing the
circularity of our business. Our target is to reach 15%
secondary raw material (SRM) content in refractories
by 2025,
2023
2022
2021
2020
2019
6.5%
6.5%
6.8%
5.1%
6.2%
2023
2022
2021
2020
2019
28%
21%
22%
25%
17%
KPI relevance
KPI relevance
KPI relevance
KPI relevance
Voluntary turnover is one way of measuring the
Group’s success in retaining its employees.
Diversity is important in terms of maintaining our
competitiveness and economic success, and gender
diversity is our first priority. Our target is to increase
female representation in senior leadership to 33%
by 2025.
Appropriate leverage provides the business with
Return on invested capital (“ROIC”) is used to assess the
Excellence in R&D and strong technical marketing
headroom for compelling investment opportunities,
Group’s efficiency in executing its capital allocation
capabilities are key contributors to our competitiveness.
but also enables shareholder distribution.
strategy, which is aimed at enabling organic growth,
This demonstrates our commitment to driving innovation
The Board has defined a long-term leverage target
range of 1.0 to 2.0x (2.5x for M&A).
disciplined M&A and shareholder returns.
and to being the leading provider of services and
solutions within the refractories industries. The
Company aims to invest at least 2.2% of revenue per
annum in R&D and technical marketing.
How it is measured
How it is measured
How it is measured
How it is measured
How it is measured
How it is measured
Share of SRM content as a percentage of total
raw materials.
The percentage of employees who voluntarily left
the Company during the year and were replaced
by new employees.
Number of women as a percentage of all those in
leadership positions (EMT and EMT direct reports).
Net debt to Pro Forma Adjusted EBITDA. Leverage is an
Calculated as net operating profit after tax, divided by
Annual spend on research and development,
APM and more information can be found on page 262.
average invested capital for the year. ROIC is an APM
before subsidies and including opex and capex.
and more information can be found on page 262.
2023 performance
2023 performance
2023 performance
2023 performance
2023 performance
2023 performance
Use of SRM was at 12.6% in 2023, compared with 10.5%
in 2022. The speed in with which we can continue to
increase overall Group recycling rates from this point may
moderate due to dilution impact from new acquisitions.
Voluntary turnover remained broadly unchanged in
2023, at 6.5% and in line with historic averages. The rate
remains relatively low, associated with uncertainty in the
global economic environment.
Gender diversity in leadership increased in 2023
to 28%.
Leverage remained flat at 2.3x at the end of 2023,
ROIC decreased in 2023 to 10.7%, mostly driven
€83 million was committed to R&D and technical
by M&A.
marketing in 2023, equating to 2.3% of revenues,
exceeding the Group’s annual commitment of 2.2%.
2. Historic data were revised to reflect new definition
of Pro Forma Adjusted EBITDA.
3. Historic ROIC data were revised to reflect new definition
of average invested capital for the year.
2 8
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Revenue for 2023 amounted to €3,572 million,
The Group recorded an EBITA margin of 11.4% in 2023,
Adjusted EPS of €4.98 per share was higher than the
8% higher than 2022 (€3,317 million) mostly
and 20bps lower than 2022. This was due to higher
€4.82 per share recorded at 2022 largely given the
driven by M&A (€386 million).
costs driven by wage inflation and operational
substantial revenue growth of the Group. However, EPS
found on page 262.
2023 performance
performance.
found on page 262.
2023 performance
was impacted by below the line items such as higher
SG&A as well as finance charges and unfavourable
foreign exchange movements.
2.3x
2.3x
2.6x
2023
2022
2021
2020
1.5x
2019
1.2x
KPI relevance
2023
2022
2021
10.7%
12.3%
10.8%
2020
10.5%
2019
15.3%
R&D and Technical
Marketing spend
2023
2022
2021
2020
2019
€83m
€79m
€63m
€62m
€64m
The Board and
management have
Safety: LTIF
identified the following
KPIs which they believe
reflect the key indicators of
financial and non-financial
performance.
2023
2022
2021
2019
0.16
0.20
0.19
2020
0.13
0.28
Relative CO2 emissions1
(t CO2/t)
2023
2022
2021
2020
2019
1.62
1.71
1.76
1.86
1.82
Revenue
Adjusted EBITA margin
Adjusted EPS
2023
2022
2021
€3,572m
€3,317m
€2,551m
2020
€2,259m
2019
€2,922m
2023
2022
2021
2020
2019
11.4%
11.6%
11.0%
11.5%
14.0%
2023
2022
2021
2020
2019
€4.98
€4.82
€4.52
€3.28
€5.57
The non-financial information, as
presented within the Director’s Report,
which in this document, comprises
the Strategic report and Governance
section of this Annual Report,
complies with the Dutch Disclosure
of Non-Financial Information.
Read more on risk management
Page 45
KPI relevance
KPI relevance
KPI relevance
KPI relevance
KPI relevance
Safety is paramount to the successful running of
Climate change poses strategic and operational
our business. Lost Time Injury Frequency (LTIF) is the
risks to our business, as well as opportunities. The
main indicator used to measure safety performance.
Group’s target is to reduce Scope 1, 2 and 3 (raw
The Group’s goal is zero accidents.
materials) by 15% per tonne of product by 2025
(versus 2018 baseline).
This demonstrates the growth of the business.
By increasing our global refractory market share,
continually enhancing our product and service
offering, the Company is focused on achieving
revenue growth and aims to outperform the
refractories market on an annual basis.
Adjusted EBITA margin provides a measure of profitability
and demonstrates the successful execution of the
Company’s strategy.
Reflecting the income statement in a clear way and
taking the equity structure into account, the Board
believes Adjusted EPS to be one of the indicators that
demonstrates shareholder value.
How it is measured
How it is measured
How it is measured
How it is measured
How it is measured
The number of accidents resulting in lost time
Tonnes of total Scope 1, 2 and 3 (raw materials) carbon
of more than eight hours, per 200,000 working
emissions per tonne of product. Scope 1 emissions
Total Group revenue, as reported in the
financial statements.
Adjusted EBITA divided by revenue, as reported in the
financial statements.
Earnings per share, excluding other financial income
and expenses.
Link to strategy
2023 performance
2023 performance
2023 performance
2023 performance
2023 performance
Adjusted EBITA is an APM and more information can be
found on page 262.
Adjusted EPS is an APM and more information can be
found on page 262.
Revenue for 2023 amounted to €3,572 million,
8% higher than 2022 (€3,317 million) mostly
driven by M&A (€386 million).
The Group recorded an EBITA margin of 11.4% in 2023,
and 20bps lower than 2022. This was due to higher
costs driven by wage inflation and operational
performance.
Adjusted EPS of €4.98 per share was higher than the
€4.82 per share recorded at 2022 largely given the
substantial revenue growth of the Group. However, EPS
was impacted by below the line items such as higher
SG&A as well as finance charges and unfavourable
foreign exchange movements.
Use of secondary
raw materials
Voluntary employee
turnover
Gender diversity
in leadership
Leverage2
ROIC3
2.3x
2.3x
2.6x
2023
2022
2021
2020
1.5x
2019
1.2x
KPI relevance
2023
2022
2021
10.7%
12.3%
10.8%
2020
10.5%
2019
15.3%
KPI relevance
KPI relevance
R&D and Technical
Marketing spend
2023
2022
2021
2020
2019
€83m
€79m
€63m
€62m
€64m
Appropriate leverage provides the business with
headroom for compelling investment opportunities,
but also enables shareholder distribution.
The Board has defined a long-term leverage target
range of 1.0 to 2.0x (2.5x for M&A).
Return on invested capital (“ROIC”) is used to assess the
Group’s efficiency in executing its capital allocation
strategy, which is aimed at enabling organic growth,
disciplined M&A and shareholder returns.
Excellence in R&D and strong technical marketing
capabilities are key contributors to our competitiveness.
This demonstrates our commitment to driving innovation
and to being the leading provider of services and
solutions within the refractories industries. The
Company aims to invest at least 2.2% of revenue per
annum in R&D and technical marketing.
How it is measured
How it is measured
How it is measured
How it is measured
How it is measured
How it is measured
Share of SRM content as a percentage of total
The percentage of employees who voluntarily left
Number of women as a percentage of all those in
raw materials.
the Company during the year and were replaced
leadership positions (EMT and EMT direct reports).
Net debt to Pro Forma Adjusted EBITDA. Leverage is an
APM and more information can be found on page 262.
Calculated as net operating profit after tax, divided by
average invested capital for the year. ROIC is an APM
and more information can be found on page 262.
Annual spend on research and development,
before subsidies and including opex and capex.
2023 performance
2023 performance
2023 performance
2023 performance
2023 performance
by new employees.
2023 performance
Use of SRM was at 12.6% in 2023, compared with 10.5%
Voluntary turnover remained broadly unchanged in
Gender diversity in leadership increased in 2023
Leverage remained flat at 2.3x at the end of 2023,
ROIC decreased in 2023 to 10.7%, mostly driven
by M&A.
€83 million was committed to R&D and technical
marketing in 2023, equating to 2.3% of revenues,
exceeding the Group’s annual commitment of 2.2%.
2. Historic data were revised to reflect new definition
of Pro Forma Adjusted EBITDA.
3. Historic ROIC data were revised to reflect new definition
of average invested capital for the year.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
2 9
in 2022. The speed in with which we can continue to
2023, at 6.5% and in line with historic averages. The rate
to 28%.
increase overall Group recycling rates from this point may
remains relatively low, associated with uncertainty in the
moderate due to dilution impact from new acquisitions.
global economic environment.
Business model
Competitiveness
Markets
hours, determined on a monthly basis.
consist of onsite emissions, Scope 2 comprise
purchased electricity, and Scope 3 are measured
from raw materials production.
LTIF reached 0.16 in 2023, representing a 20%
We switched to a fully green electricity supply for our
improvement compared to 2022.
Total Recordable Injury Frequency (TRIF) decreased
to 0.46 from 0.54 in 2022.
Two fatalities occurred recently in our Austria operations,
one in 2023 and a second in early 2024.
German recycling plants and at the Sögüt plant in
Türkiye. At the plant in Visakhapatnam, India 0.5 MW
photovoltaic capacity was installed resulting in a CO2
reduction of around 500t CO2 per year. By the end of
2023, 64% of purchased electricity was from
low-carbon or renewable sources.
1. Historical CO2 emissions data were revised to reflect
new acquisitions.
12.6%
10.5%
2023
2022
2021
6.8%
2020
5.0%
2019
4.6%
KPI relevance
2023
2022
2021
2020
2019
6.5%
6.5%
6.8%
5.1%
6.2%
2023
2022
2021
2020
2019
28%
21%
22%
25%
17%
Recycling plays a critical role in achieving our 2025
Voluntary turnover is one way of measuring the
Diversity is important in terms of maintaining our
emissions reduction target while also developing the
Group’s success in retaining its employees.
competitiveness and economic success, and gender
KPI relevance
KPI relevance
circularity of our business. Our target is to reach 15%
secondary raw material (SRM) content in refractories
by 2025,
diversity is our first priority. Our target is to increase
female representation in senior leadership to 33%
by 2025.
STRATEGIC REPORT Our
performance
Our performance in 2023 has been
supported by M&A and resilient pricing,
prioritising the needs of our customers
and sustainability leadership.
3 0
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Gross margin
24%
2023 gross margin increased by 100bps
Shipped volumes
11%
Increase in shipped volumes vs 2022
including M&A
Operational gearing
76%
Average plant capacity in H2 2023
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
3 1
STRATEGIC REPORT Performance
Operational review
Europe, CIS & Türkiye
Revenues and sales volumes increased,
driven by strong performance in the
Industrial segment and the contribution
from M&A. Excluding M&A, refractory
demand was impacted by a 7.4%
decrease in steel production in the
European Union and a 4.0% decrease
in Türkiye. Recycling rates were high
compared to the rest of the Group,
supported by sales initiatives focused on
high-recycling-content product ranges.
North America
Resilient pricing offset a decline in sales
volume, contributing to 2% growth
in revenue. Plant capacity utilisation
remained low, averaging 75% in the
fourth quarter to align with customer
demands, with two large customers idling
operations. Successful new product
launches expanded the Group’s offering
in the region.
India, West Asia & Africa
Revenues grew by 24%, significantly
outperforming steel and industrial
production volumes in the region,
driven by the acquisitions of DBRL and
Hi-Tech. The Group has solidified its
market-leading position and made
good progress in integrating the newly
acquired businesses. Cement refractory
sales volumes increased by 111% and
gross profit increased by 40%.
South America
Revenue increased by 3%, supported
by resilient pricing, despite 6% lower
sales volumes in line with reduced steel
and industrial output in the region. The
Industrial segment recorded significant
revenue growth driven by glass and non-
ferrous metals sales.
China & East Asia
The region faced weakness in the key
end market of construction, leading to
6% lower steel refractory sales volumes,
excluding M&A. Resilient pricing and
the contribution from Jinan New Emei
from May onwards resulted in a 2%
increase in revenues. Shipped volumes
of refractories in East Asia also decreased,
due to inventory de-stocking and other
temporary factors.
Steel
Revenue (€m)
Gross profit (€m)
Gross margin
2023
2,461
550
2022
2,371
521
2022
(constant
currency)
2,311
527
Change
(constant
currency)
6%
4%
Change
4%
6%
22.3%
22.0%
22.8%
30bps
(50)bps
Steel overview
Supplying refractory products and services to
the steel industry accounted for 69% of RHI
Magnesita’s revenues in 2023 and the Group
retained its leading position globally with a
13% market share, or 21% excluding China and
East Asia. Refractory products are required to
protect steel making equipment from extremely
high temperatures of up to 1,800°C, chemical
corrosion and abrasion. Refractory product
applications include iron making (blast furnace
or direct reduction), primary steel-making
(basic oxygen furnace or electric arc furnace)
as well as ingot and continuous casting. RHI
Magnesita offers a complete range of products
and solutions for the steel making process.
The lifespan of refractory products in the steel
making process can range from hours to months
depending on the application, for example
a slide gate is a consumable item that may
need to be replaced every four hours whilst
the lining of a primary steel making furnace
could require re-lining at six month intervals.
Refractory consumption in steel making is
therefore classified as an operating expense by
steel producers and usually accounts for around
2-3% of operating costs, on average.
Steel segment revenues increased by 4%
to €2,461 million (2022: €2,371 million) and
by 6% in constant currency terms (2022:
€2,311 million) as a 3% reduction in volumes
excluding M&A, due to reduced demand in
Europe, China and South America, was offset
by resilient pricing and additional revenue from
M&A. Average price per tonne increased by 7%
compared to 2022.
The 3% reduction in the Group’s shipped
volume of steel refractories excluding M&A
compares to World Steel Association data,
which indicates a small decrease of 0.1%
in global steel output in 2023, due to the
weighting of the Group’s business towards
Europe, North American and South America
where steel production declined by more than
the global average.
Global steel demand in all regions excluding
India, West Asia & Africa and other emerging
markets declined in 2023 due to weakness in the
key end markets of construction, transportation
and consumer goods. High inflation and interest
rate rises impacted consumer demand and the
cost of financing for new capital projects in many
economies. In India, high levels of domestic
economic growth resulted in a 11.8% increase
in steel production compared to the prior year,
reflecting strong conditions in construction and
infrastructure markets.
Conditions in freight, energy and refractory
raw materials markets eased with input costs in
each category reducing versus the prior year,
reflecting lower overall global demand and
relative stability in supply chains, compared to
the disruption in 2021 and 2022.
Industrial Overview
RHI Magnesita is a leading supplier of
refractory products and services to customers
in the cement and lime, non-ferrous metals,
glass, energy, environmental and chemicals
industries. These Industrial customers
accounted for 31% of Group revenues in
2023 and have longer replacement cycles
compared to Steel customers, ranging from
one to 20 years. Refractories are classified as
capital expenditure by Industrial customers and
represent between 0.2% and 1.5% of total costs
over the life cycle of a facility. RHI Magnesita
has a c.30% market share globally in cement
refractories, c.25% market share in non-ferrous
metals applications, 15% in the glass industry
and 3% in other industrial applications such as
energy, environment, chemicals and foundry.
The Industrial segment increased revenues by
17% to €1,111 million (2022: €946 million) or
20% in constant currency terms, with shipped
volumes increasing by 17%. The longer lead
time for Industrial projects and later cycle nature
of the business supported pricing in 2023 as the
Group realised the benefit of price increases for
orders negotiated in prior periods.
Cement and lime revenues of €424 million
represented 12% of Group revenues in 2023
(2022: €378 million) as price increases offset
lower shipped volumes in all regions excluding
India. The acquisition of DBRL in India was
the main driver of a 25% increase in the
shipped volume of cement and lime
refractories versus 2022.
Demand for non-ferrous metals refractories
remained at high levels in 2023, supported by
high prices for non-ferrous metals, underlying
green energy and transportation demand
drivers and scrap production capacity additions.
Non-ferrous metal refractory revenues
increased by 28% to €280 million (2022:
€219 million), driven by a 14% increase in
volumes and higher pricing. The non-ferrous
metal business remained the highest margin
segment for the Group, with a gross margin of
42% in 2023 (2022: 37%).
Glass refractory shipped volumes increased
by 7% in 2023, contributing to an increase
in revenues of 18% from €154 million to
€182 million in 2022.
3 2
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Industrial
Revenue (€m)
Gross profit (€m)
Gross margin
2023
1,111
307
2022
946
242
2022
(constant
currency)
923
232
Change
(constant
currency)
20%
32%
Change
17%
27%
27.7%
25.6%
25.1%
210bps
260bps
Steel revenue
Industrial revenue
€2,461m
€1,111m
2022: €2,371m
2022: €946m
Steel revenue by region
Industrial revenue by region
North America
Europe, CIS & Türkiye
India, West Asia & Africa
South America
China & East Asia
27%
23%
24%
16%
10%
North America
Europe, CIS & Türkiye
India, West Asia & Africa
South America
China & East Asia
Minerals
20%
29%
16%
12%
16%
7%
Revenues from other industrial applications,
including energy, environment, chemicals,
foundry and aluminium increased by 40% to
€143 million (2022: €102 million).
Minerals
The Group consumed 39% of its internally
produced raw materials by value, in line with
its vertical integration strategy. Raw materials
not utilised internally are sold in the open
market and reported under Minerals within
the Industrial segment, generating revenues
of €80 million in 2023 (2022: €92 million).
Mineral sales volumes increased by 0.7% but
revenues reduced due to lower market prices
for raw materials.
Regional business units
In 2022 RHI Magnesita established an
operational governance structure consisting of
five regional business units, which continued
in 2023. Managing the business through a
regional structure enables the Group to serve its
customers better through faster local decision
making and improved accountability, supporting
our local for local production strategy.
Europe, CIS & Türkiye
Europe, CIS & Türkiye revenues increased by
9% to €895 million (2022: €819 million), or by
11% in constant currency terms, due to price
increases and a 5% increase in sales volumes
driven by M&A. Revenue per tonne increased
by 4%.
Gross profit increased by 2% to €177 million
(2022: €173 million) with lower gross margins
of 19.8% (2022: 21.1%) due to higher unit costs
resulting from low capacity utilisation.
Steel revenues increased by 3% in constant
currency on 2% higher shipped volumes, as
M&A supported growth against a backdrop of
reduced customer demand. Steel production
in the European Union decreased by 7.4% and
in Türkiye by 4.0% according to WSA data,
reflecting high energy and other production
costs leading to temporary plant suspensions
and reduced end market demand from the
construction industry.
Industrial segment volumes increased by 14%
and revenues by 30% in constant currency
terms, supported by the acquisition of process
industries focused P-D Refractories in the
fourth quarter and strong cement sales year
on year, with 22% higher shipped volumes in
cement and lime. Industrial customers outside
of cement reduced capital expenditure and
postponed major projects to focus more on
repair and maintenance.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
3 3
STRATEGIC REPORT Performance
Operational review continued
Plant capacity utilisation was 81% on average
in the first half of the year and decreased to 71%
in the fourth quarter as the region successfully
reduced finished goods inventory to optimum
levels, in line with customer demand. This led
to significant under-absorption of fixed costs,
offset by lower energy and raw material prices.
Key operational KPIs including PIFOT and
customer net promoter scores improved during
the year. Close management of receivables
supported regional cash flows, with improved
payment term control and reduced overdues in
the base business, excluding M&A.
New customer wins in the waste to energy
market were achieved, in line with the regional
strategy. New product sales initiatives were
focused on high recycling content product
ranges, to further improve sustainability
performance. A key driver of recycling rates
during the year was the successful launch
of a high-recycling content gunning repair
mix for steel customers, utilising reclaimed
material from cement rotary kiln linings. The
Group continues to develop its automated
sorting capabilities which are expected to
further improve recycling productivity
when implemented.
The Europe, CIS & Türkiye region has acquired
and commenced the integration of five business
in the last two years, comprising SÖRMAS,
MIRECO, Dalmia GSB, Seven Refractories
and P-D Refractories. Integration projects are
proceeding in line with or ahead of expectations
and these businesses together contributed
EBITDA of €25 million in 2023, accounting
for almost half of Group EBITDA from M&A
of €56 million.
North America
Revenues in North America increased by 2% to
€894 million (2022: €874 million) or by 4% in
constant currency terms, as higher pricing offset
a 5% decline in sales volumes. Revenue per
tonne increased by 8% due to higher pricing
year on year, however pricing pressure was
evident towards the end of the period and is
expected to continue 2024.
Gross profit increased to €250 million (2022:
€236 million) at a margin of 27.9% (2022: 27.0%)
as freight and other input costs reduced. Freight
rates per tonne were 17% lower than 2022.
Two large steel customers idled operations
during the year, contributing to the decline
in shipped volumes and a bad debt reserve
relating to €8 million of receivables from a major
customer in Mexico was recorded. Sales of BOF
refractories declined year on year but were
offset by deliveries to greenfield steel projects,
with new plant installations continuing despite
the current low level of steel plant capacity
utilisation, estimated at 75%.
RHI Magnesita’s plant utilisation in Q4 2023
averaged 75% in the region to match customer
demand and reduce inventory volumes
to optimum levels, resulting in fixed cost
under-absorption.
Revenues (€m unless stated otherwise)
2023
2022
(Reported)
2022
(Constant
currency)
Change
(Reported)
Change
(Constant
currency)
Europe, CIS & Türkiye
Steel
Industrial
North America
Steel
Industrial
India, West Asia & Africa
Steel
Industrial
South America
Steel
Industrial
China & East Asia
Steel
Industrial
Minerals
Total
895
575
320
894
673
221
762
582
180
522
393
129
418
239
179
80
819
571
248
874
694
179
617
486
131
505
389
116
410
231
179
92
803
556
247
861
686
175
594
464
130
495
383
112
391
222
168
90
3,572
3,317
3,234
9%
1%
29%
2%
-3%
23%
24%
20%
37%
3%
1%
12%
2%
3%
0%
(13)%
8%
11%
3%
30%
4%
-2%
26%
28%
25%
39%
5%
3%
15%
7%
8%
7%
(11)%
10%
In the Industrial segment, cement and lime
sales volumes declined but gross margins
increased significantly, to 27.4% (2022: 21.4%)
due to higher pricing and lower freight costs.
New customers and applications in non-ferrous
metals and aluminium projects were secured
and will support sales into 2024.
The regional recycling rate increased to 8.3%
(2022: 5.2%) as the Group seeks to replicate its
success in the European market in other regions,
with consumption of secondary raw materials
increasing to 25 kt (2022: 16 kt).
New product developments and launches
included fast-to-cast tundish mixes which allow
shorter pre-heat and lower consumption than
existing technology, two new high-recycling
magnesia carbon brands and new fused
magnesia brick formulations. Market share gains
were realised in Thin Slab Isostatic products and
the Group installed its first monotube changer
in the USA, from the Interstop Systems product
range, with further conversions planned in the
near future.
In July 2023 the Group completed the
acquisition of Seven Refractories, which
included the Seven Lakeway site in Ohio.
RHI Magnesita received three awards in North
America in recognition of innovation and
sustainability: the Manufacturer’s Association
of Pennsylvania 2023 Manufacturing Innovator
Award; the American Ceramic Society
Corporate Environmental Achievement Award;
and the World Refractories Association Safety
Recognition Award.
India, West Asia & Africa
Revenues in the India, West Asia & Africa region
increased by 24% to €762 million (2022:
€617 million) or by 28% in constant currency,
driven by M&A and organic volume growth.
Acquisitions accounted for around 19% of the
revenue increase with the remainder driven by
organic demand growth. Revenue per tonne
decreased by 13%, primarily due to a change in
product mix resulting from M&A.
Gross profit increased by 40% to €187 million
(2022: €133 million) with increased gross
margins of 24.5% (2022: 21.6%) supported
by lower input costs, including freight and
purchased raw materials.
Steel revenues increased by 25% in constant
currency terms, with the majority of the increase
contributed by M&A completed during the year.
Steel revenue per tonne reduced by 9% due
to a reduced weighting of flow control product
sales following the M&A and some increased
competition from China based suppliers and
domestic producers. Gross margin in steel
increased to 22.8% (2022: 20.1%), reflecting
lower input costs.
Steel production in India grew by 11.8% in
2023 according to WSA data, supporting
strong organic sales growth. New steel plant
projects under construction by JSW Group,
JSPL Group, Arcelor Mittal, Tata and NMDC
support further growth in steel output into 2024
and beyond, including ‘green steel’ projects
seeking to reduce CO2 emissions in the steel
making process. Local refractory producers
are increasing output to meet demand and RHI
Magnesita is seeking to differentiate its offering
through solutions contracts, competitive
pricing and a focus on sustainability. In Africa,
the Group was awarded lead supplier status
to a greenfield steel project in Morocco and
expanded its sales in Egypt, Kenya and
South Africa.
3 4
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
The Group’s steel flow control market position
improved following the acquisition of Hi-Tech,
with production network benefits, as well as the
addition of alternative isostatic products and a
cost-effective nozzle filling compound to the
product range.
Industrial revenues increased by 39% to
€180 million (2022: €131 million) largely due to
the contribution of the DBRL acquisition, which
led to an 89% increase in shipped volumes
of industrial refractories and a 111% increase
in cement refractory sales volumes. Industrial
gross margin increased to 30.3% (2022: 27.1%).
Non-ferrous metals sales were also strong,
with a 43% increase in volumes driven by
new projects and repairs in India, West Asia
& Africa, including a major new copper
customer in Gujarat, India. Gross margins
in the Industrial segment increased to 30.3%
(2022: 27.1%) due to resilient pricing and a
favourable industry mix as higher margin
non-ferrous metals sales increased.
The integration of the Hi-Tech and DBRL
acquisitions has progressed in line with
expectations, with sales operations now unified
following a ‘one face to the customer’ principle.
Production of various product ranges has
been relocated within the enlarged network,
to optimise between existing and acquired
plants. The capacity of the Cuttack plant was
successfully increased from 18 ktpa to 30 ktpa.
Supply chain reliability improved considerably
compared to 2022, allowing inventory coverage
to be reduced to targeted levels without
impacting customer deliveries. However,
disruption to Red Sea freight lanes in the fourth
quarter of 2023 continues and may lead to
higher costs and logistical impacts for the
India, West Asia & Africa region in 2024. PIFOT
increased to a record 81% by the end of 2023,
reflecting production and logistics planning and
forecasting improvements.
South America
Revenues in South America increased by
3% to €522 million (2022: €505 million) or
by 5% in constant currency terms, as higher
pricing offset a 6% decline in sales volumes.
Revenue per tonne increased by 10% due
to higher pricing. Gross profit increased to
€146 million (2022: €130 million) at a margin
of 28.0% (2022: 25.7%).
Steel revenues increased by 3% in constant
currency terms to €393 million as price
increases broadly offset a 6% reduction in
shipped volumes, which was in line with the
reduction in steel output for the region. Steel
gross margin improved to 24.5% (2022: 23.5%)
due to better pricing and a reduction in key input
costs, notably freight, energy, raw materials.
New long-term contracts were signed with two
key steel customers in the region and revenue
derived from long-term contracts represented
54% of the total for the region in 2023.
Industrial revenues increased by 15% in
constant currency terms, driven by significantly
higher sales volumes of glass refractories and
higher pricing and volumes in non-ferrous
metals. Cement sales volumes decreased
by 11% but price increases delivered a 6%
increase in revenues in constant currency terms.
Industrial segment gross margins increased to
38.7% (2022: 33.1%), largely due to strong price
realisation in glass and non-ferrous metals.
Significant price increases in Argentina resulted
in loss of purchase power in local currency
which lead to the application of hyperinflation
accounting at Group level in 2023 in line with
IAS 29. The Group is undertaking a review of
its operating model to optimise profitability
and ensure the long-term sustainability of its
business in Argentina, where it is a key supplier
for its customers.
China & East Asia
Revenues in China & East Asia increased to
€418 million (2022: €410 million), an increase
of 2% or 7% in constant currency terms, as the
acquisition of Jinan New Emei offset volume and
revenue decline in steel due to reduced local
demand. Gross profit increased to €88 million
(2022: €83 million) reflecting the revenue
increase and higher gross margin of 21.0%
(2022: 20.0%).
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
3 5
STRATEGIC REPORT Performance
Operational review continued
Shipped volumes of steel refractories excluding
M&A in China reduced by 6%, compared to
flat China steel output year on year according
to WSA data, as weakness in construction was
balanced by growth in the autos and shipping
end markets. Shipped volumes of refractories
in East Asia reduced by 15%, due to inventory
de-stocking and the temporary closure of a
key plant by a steel customer during the year.
Several conventional steelmakers in the region
are planning new EAF projects, which is a
positive development due to the Group’s market
leadership position in EAF refractories.
Industrial sales volumes increased by 2% and
higher pricing supported revenue growth of 7%,
mainly due to strong demand for glass and non-
ferrous metals refractories in China. Industrial
gross margin in the region increased slightly to
28.0% (2022: 27.5%).
The Group’s priority in its China & East Asia
business is to increase margins to higher levels
that are closer to the average for the Group
worldwide. Pricing is therefore being prioritised
ahead of seeking to build further market share
at this stage in the development of the business.
Refractory tenders are highly competitive, with
bids from multiple low-cost competitors and
cost pressures on steel producers holding down
overall pricing levels. The Group’s strategy is
to focus on higher value-added products and
services to differentiate against lower quality
competing suppliers. The region achieved the
highest net promoter score globally from its
customers in internal surveys and operational
excellence was further demonstrated by the
achievement of zero LTIF, PIFOT improvement
and exceeding targets for scrap rates.
A 65% stake in Jinan New Emei, a Shandong
based producer of steel flow control refractories,
was acquired in May 2023 and contributed
€49 million of revenue in the year. Multiple
customer trials are underway in China & East
Asia for Jinan New Emei products which could
lead to sales growth in 2024. Production of
alumina-based refractories at the Group’s newly
constructed facility in Chongqing commenced
during 2023, supporting cement sales during
the period and with potential for further ramp up
and sales to other industrial segments in 2024.
3 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Performance
Financial review
Ian Botha
Chief Financial Officer
(CFO)
In times of economic uncertainty,
we delivered robust financials
through a strong operating cash
flow, bolstered by the value-
accretive acquisitions completed
in the last few years.”
Reporting approach
The Company uses a number of alternative
performance measures (APMs) in addition
to measures reported in accordance with
International Financial reporting Standards
as adopted by the European Union (“IFRS”),
which reflect the way in which the Board and
the Executive Management Team assesses
the underlying performance of the business.
The Group’s results are presented on an
“adjusted” basis, using APMs that are not
defined or specified under the requirements
of IFRS, but are derived from the IFRS financial
statements. The APMs are used to improve
the comparability of information between
reporting periods and to address investors’
requirements for clarity and transparency of the
Group’s underlying financial performance. The
APMs are used internally in the management
of our business performance, budgeting and
forecasting. A reconciliation of key metrics
to the reported financials is presented in the
section titled APMs.
All references to comparative 2022 numbers
in this review are on a reported basis, unless
stated otherwise. Figures presented at constant
currency represent 2022 translated numbers
against average 2023 exchange rates as
disclosed in Note 3 to the Consolidated Financial
Statements. All reported volume changes year-
on-year are excluding mineral sales, which is
reported under the Industrials segment.
Read more on APMs on
Page 262
Revenue
The Group recorded revenues of €3,572
million, a 10% increase from the previous
year’s revenue of €3,236 million on a constant
currency basis. Shipped volumes in the base
business decreased by 5% as expected but
increased by 11% including the contribution
from M&A to 2.6 Mt (2022: 2.3 Mt).
On a reported basis, the increase in revenue was
8% (2022: €3,317 million), mainly due to the
depreciation of three key currencies against the
euro (the US dollar, Chinese yuan and Indian
rupee). Foreign exchange effects impacted
revenues in euro terms by €81 million. The
Brazilian real strengthened slightly against the
euro, with a small positive impact on revenue
but resulting in a net negative impact on EBITA,
due to the increased euro value of the local cost
base in Brazil, where the Group is a net exporter.
Steel revenues increased to €2,461 million, an
increase of 4% on a reported basis (2022: €2,371
million) and 6% on a constant currency basis
(2022: €2,311 million), representing 69% of
Group revenue in 2023. The main driver behind
the increase in revenues in the financial year
2023 was growth via M&A in the China & East
Asia, Europe, CIS & Türkiye and India, West Asia
& Africa regions. Sales volumes and revenues
in North America decreased by 5% and 3%,
respectively. In South America sales volumes
reduced by 6% whilst revenues increased by
1% supported by FX and higher pricing.
Industrial revenues increased by 17% to €1,111
million (2022: €946 million) and by 20% in
constant currency terms (2022: €923 million),
outperforming steel revenue growth due to the
later cycle nature of the business. Cement and
lime revenues increased by 12% to €424 million
(2022: €378 million), while non-ferrous metal
revenues increased by 28% to €280 million
(2022: €219 million) due to strong volume
increases and pricing dynamics. Revenues in
the glass business increased by 18% to €182
million (2022: €154 million) and revenues from
industrial applications increased by 40% to
€143 million (2022: €102 million).
Industrial revenues includes revenue from
mineral sales of €80 million, which were 10.8%
lower than the prior year (2022: €92 million),
due to lower market prices for refractory raw
materials.
Cost of goods sold
Cost of goods sold increased by 6% to €2,714
million from €2,554 million in 2022 and by
10% on a constant currency basis, due to M&A.
The cost of purchased raw materials increased
by 10% to €1,166 million (2022: €1,064
million). Plant-related labour costs increased
significantly by 25% during 2023 from €368
million to €461 million, due to M&A and as the
Group responded to higher costs of living with
wage increases for its staff. Following a period
of disruption and high inflation in 2022, freight
and energy costs decreased by 19% and 10%
respectively in 2023, as both markets returned
to a period of relative stability prior to disruption
of Red Sea shipping lanes in December 2023.
Unit costs in 2023 were impacted negatively by
low production capacity utilisation, leading to
under-absorption of fixed costs. Expenditure on
general supplies including pallets, packaging
and spare parts remained stable at €174 million
compared to €171 million in 2022, despite the
increase in shipped volumes.
Raw material prices
Raw material prices decreased in 2023, with
the price of high-grade dead burned magnesia
(DBM) from China decreasing by 21% from the
beginning of the year and by 14% on average
for medium grade DBM from China. Lower raw
material prices usually result in lower finished
goods pricing for refractories worldwide, as
production costs for non-vertically integrated
competitors are reduced. The cost of production
of refractory raw materials for suppliers in China
remained low due to availability of low-cost
energy, whilst the cost of production of raw
material remained comparatively higher for
the Group, in particular for DBM production in
Türkiye. As guided in the half year results, the
EBITA contribution from vertical integration
remained at approximately the same level
as of the first half of 2023, at 1.7ppts.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
3 7
STRATEGIC REPORT Performance
Financial review continued
Steel
Revenue (€m)
Gross profit (€m)
Gross margin
Adjusted EBITA (€m)
Adjusted EBITA margin
Industrial
Revenue (€m)
Gross profit (€m)
Gross margin
Adjusted EBITA (€m)
Adjusted EBITA margin
2023
2,461
550
22.3%
240
9.7%
2023
1,111
307
27.7%
169
15.2%
2022
2,371
521
22.0%
255
10.8%
2022
946
242
25.6%
128
13.6%
Change
4%
6%
30bps
(6)%
(110)bps
Change
17%
27%
210bps
32%
160bps
Gross profit
SG&A
The Group recorded gross profit of €857 million
(2022: €763 million), an increase of 12% on a
reported basis and 12% in constant currency
terms. Gross margins increased by 100bps to
24.0% (2022: 23.0%), mainly due to resilient
pricing in key customer markets.
On a divisional basis, gross profit excluding M&A
in the Steel segment was stable at €500 million
(2022: €521 million) despite the 5% decline
in shipped volumes, as higher margins offset
reduced sales. The Industrial segment recorded
a strong increase in gross profit excluding M&A
to €266 million (2022: €242 million) with
increased margins of 30.3%, 290bps higher
compared to the prior year. Profitability in the
Industrial segment was supported by strong
pricing dynamics in glass, non-ferrous metal
and industrial applications markets and the later
cycle nature of trading conditions compared
to Steel.
Adjusted EPS
€4.98
2022: €4.82 per share
Adjusted EBITA margin
11.4%
2022: 11.6%
Capital expenditure
€180m
2022: €157m
Selling, general and administrative expenses
(SG&A), before R&D-related expenses,
amounted to €449 million in 2023, a 20%
increase compared to the prior year (2022:
€375 million), driven by broad-based inflation
in particular in the cost of labour and M&A
additions. Personnel and personnel-related
expenses increased by €20 million. The Group
undertook a review of its SG&A expenditures
and implemented a focused reduction in SG&A
headcount during the year, resulting in non-
recurring restructuring costs of €11 million and
estimated annual cost savings of €14 million.
SG&A was negatively impacted by additions
to bad debt provision of €18 million. The
Group takes a prudent approach towards
writing down bad debt in the periods in which
they are incurred but continues to actively
pursue repayment.
Depreciation and amortisation
Depreciation increased by 16% to €134 million
(2022: €116 million), including €14 million
of depreciation relating to assets acquired
during the year. The increase in depreciation
was mainly due to M&A carried out during the
period, with fixed assets increasing to €1,830
million at 31 December 2023 (31 December
2022: €1,886 million). Depreciation in 2024 is
expected to be around €140 million.
Amortisation of intangible assets amounted to
€44 million in 2023 (2022: €29 million) and
is expected to be approximately €40 million
in 2024.
Adjusted EBITDA
The Group recorded Adjusted EBITDA of €543
million, a 9% increase compared to the prior
year (2022: €500 million). Adjusted EBITDA
margin increased to 15.2% (2022: 15.1%) an
increase of 10bps, reflecting higher gross
margins partially offset by increased SG&A.
Adjusted EBITDA margin decreased by 20bps
on a constant currency basis.
Adjusted EBITA
Adjusted EBITA increased to €409 million from
€384 million in 2022, in line with the increase
in Adjusted EBITDA. Adjusted EBITA from
businesses acquired during the year amounted
3 8
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
to €42 million, with the base business excluding
M&A recording a reduction in Adjusted EBITA,
mainly due to lower like for like sales volumes.
Adjusted EBITA margin reduced slightly to
11.4% (2022: 11.6%) as price increases and
higher gross margins were offset by the increase
in SG&A expenses and higher depreciation
charges on the Group’s enlarged asset base.
Vertical integration contributed 1.7ppts of
the total Adjusted EBITA margin of 11.4%,
lower than the 2.5ppts contribution from
vertical integration in 2022, primarily due to
the decline in the price of key refractory raw
materials during the period. Lower raw material
prices negatively impact the calculation of
the contribution from the Group’s raw material
assets, which is based on the theoretical
cost of acquiring those raw materials in the
open market. The Group continues to expect
a contribution of 2.5ppts to 3.5ppts from its
vertical integration over the longer term due
to the competitive cost position of its raw
material assets.
The Group’s refractory business contributed
9.7ppts towards the total Adjusted EBITA margin
of 11.4%, an increase of 70 bps compared to the
9.1ppts contribution in 2022, reflecting resilient
refractory pricing, lower freight and energy
input costs and the benefits of structural cost
reductions resulting from the Group’s strategic
cost-saving initiatives.
Adjusted EBITA and Adjusted EBITDA both
exclude €31 million of Items excluded from
adjusted performance (2022: €11 million),
including restructuring costs, M&A-related
costs and other expenses as set out in “Items
excluded from adjusted performance” below.
Net finance expenses
Net finance expenses, which includes interest
payable on borrowings net of interest income
on cash balances, gains and losses relating to
foreign exchange, pension expenses, present
value adjustments, factoring costs and non-
controlling interest expenses, increased to
€101 million (2022: €73 million).
Net interest expenses increased to €39 million
(2022: €19 million) due to higher base rates
on variable interest rate facilities, higher gross
borrowings and interest costs associated
with M&A bridge financing used to finance
acquisitions in India in the first half of 2023 of
€143 million. Interest expenses on borrowings
of €58 million (2022: €27 million) were offset
by €20 million of interest income on cash
balances on deposit (2022: €8 million).
Other net financial expenses amounted to
€32 million (2022: €31 million) including
factoring costs of €12 million (2022: €7 million),
pension charges of €12 million (2022:
€6 million) and present value adjustments
of €8 million (2022: €9 million).
(€m)
Revenue
Cost of sales
Gross profit
SG&A
R&D expenses
Other income & expenses(OIE)
EBIT
Amortisation
EBITA
Adjusted items
Adjusted EBITA1
Refractory EBITA
Vertical integration EBITA
2022
reported
3,317
(2,554)
763
(375)
(33)
(11)
344
29
372
11
384
303
81
2022
(constant
currency)
3,236
(2,474)
762
(371)
(33)
(11)
348
29
377
11
388
-
-
2023
3,572
(2,714)
857
(449)
(43)
(31)
334
44
378
31
409
348
61
Change
8%
6%
12%
20%
30%
182%
(3)%
52%
2%
182%
7%
15%
(25)%
Change
(constant
currency)
10%
10%
12%
21%
30%
182%
(4)%
52%
0%
182%
5%
(€m)
2023
2022
Net interest expenses
Interest income
Interest expenses
FX effects
Balance sheet translation
Deliverables
Other net financial
expenses
Present value adjustment
Factoring costs
Pension charges
Non-controlling interest
expenses
Other
(39)
20
(58)
(30)
(41)
11
(32)
(8)
(12)
(12)
0
1
(19)
8
(27)
(23)
(10)
(13)
(31)
(9)
(7)
(6)
(1)
(8)
Total
(101)
(73)
1. Adjusted EBITA an APM used by the Group. Refer to page 262 for definitions.
Foreign exchange losses of €30 million were
incurred in 2023 (2022: €23 million), including
gains on embedded currency derivatives in
sales contracts of €11 million (2022: €(13)
million) and net exchange losses on translation
of monetary assets and liabilities of €41 million
(2022: €10 million), largely attributable to
currency movements in Argentina and Türkiye.
Net interest expenses in 2024 are expected
to be approximately €50 million (2023: €39
million) mainly due to higher interest rates on
floating facilities and higher gross borrowings.
Other adjusted net financial expenses are
guided to be approximately €35 million in
2024, resulting in €85 million of adjusted net
finance expenses for 2024.
Items excluded from adjusted
performance
In order to accurately assess the underlying
performance of the business, the Group
excludes certain items from Adjusted EBITA:
• €20 million recorded in “restructuring and
write-down expenses”, including €15 million
of internal business restructuring and plant
closure expenses;
• €8 million of expenses related to M&A
activities;
• €4 million of costs relating to the tender
offer from Rhône Capital launched on
30 May 2023; and
• €44 million amortisation of intangible assets.
Net finance costs are adjusted for €9 million
of other net financial income including a €6
million credit on the unwinding of the discount
used to value the Group’s obligation under the
Oberhausen provision, for further details see
Note 31. Adjusted net interest expense was
€35 million (2022: €19 million) after deducting
€4 million of M&A bridge financing costs.
Adjusting for the above items results in a
€14 million tax effect which is deducted from
the adjusted performance metrics.
Taxation
Total tax for 2023 in the income statement
amounted to €62 million (2022: 104 million),
representing a 27% reported effective tax rate
(2022: 38%).
Revenue and P&L summary
l
e
e
t
S
l
a
i
r
t
s
u
d
n
I
Solutions .............€856m
contacts
Revenue
€3,572m
Product/ .......... €1,605m
Services only
Cement/Lime .....€424m
(Solutions: €9m)
NFM ..................... €280m
(Solutions: €96m)
Glass .....................€182m
Energy,................. €144m
Environment, Chemicals
(Solutions: €20m)
Minerals.................. €81m
Adjusted Profit
attributable to
shareholders €235m
Minorities €6m
Adjusted EBITA1
€409m
Adjusted Profit after Tax
€241m
Operating
Expenses
€492m
Net Interest
expense €35m
Other net financial
expenses €57m
Tax €76m
R&D €43m
SG&A €449m
Gross Profit
€857m
Cost of
goods sold
€2,715m
Purchased
Raw Materials
€1,166m
Personnel €461m
Freight €229m
Energy €255m
Depreciation (COGS) €90m
Supplies €174m
Other €340m
1. Adjusted EBITA excludes amortisation of intangible assets of €44 million, which is partially accounted for in COGS and partly in SG&A.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
3 9
STRATEGIC REPORT Performance
Financial review continued
RHI Magnesita has successfully refinanced over
€600 million of debt facilities in 2023, maintaining
our long-dated amortisation profile and significant
available liquidity of €1.3 billion.”
Rodrigo Guerra
Group Treasurer
Items
excluded
from
adjusted
performance
2023
reported
Items
excluded
from
adjusted
performance
2022
adjusted
2023
adjusted
2022
reported
(€m)
EBITA1
Amortisation
Net financial expenses
Result of profit in joint ventures
Profit before tax
Income tax
Profit after tax
Non-controlling interests
Profit attributable to shareholders
Shares outstanding2
378
(44)
(101)
-
233
(62)
171
7
165
47
Earnings per share (€ per share)
3.50
31
44
9
-
84
-14
70
-
-
-
-
409
-
(92)
-
317
(76)
241
7
235
47
4.98
372
(29)
(73)
-
270
(104)
167
11
156
47
3.31
11
29
7
-
47
24
70
-
70
-
384
-
(66)
-
318
(80)
237
11
226
47
1.51
4.82
1. EBITA reconciled to revenue on page 39. EBITA is an APM, refer to page 262 for definition.
2. Total issued and outstanding share capital as at 31 December 2023 was 47,130,338. The Company held 2,347,367 ordinary
shares in treasury. The weighted average number of shares used for calculating basic earnings per share in FY 2023 is
47,078,254.
The effective tax rate in 2023 decreased
compared to the tax rate in 2022 as the prior
year was impacted by non-cash one-off items
including restructuring, charges following
agreements with tax authorities and a reduction
in the deferred tax asset valuation following the
reduction in the Austrian tax rate. See Note 14 to
the financial statements for further details.
Reported profit before tax amounted to €233
million (2022: €270 million). Adjusted profit
before tax amounted to €317 million (2022:
€318 million), with an adjusted effective tax rate
of 24% (2022: 25%). Adjusted items include
tax expenses related to one-off restructuring
or unrelated business items.
Profit attributable to shareholders is stated after
non-controlling interests of €7 million (2022:
€11 million). The Group, holding a majority stake
of 56% in RHI Magnesita India Ltd., attributes
most of its non-controlling interests to the
earnings consolidated from this subsidiary.
The Group’s shareholding in RHI Magnesita
India Ltd. decreased from 70% at 31 December
2022 to 56% at 31 December 2023 following
the issuance of shares in RHI Magnesita India
Ltd. to the vendor of DBRL and via a QIP in April
2023 to partially fund the acquisitions of DBRL
and Hi-Tech.
Guidance for non-controlling interest expense
in 2024 is approximately €10 million.
The adjusted effective tax rate guidance is
between 23-25% for 2024.
Profit after tax
On a reported basis the Group recorded profit
after tax of €171 million (2022: €167 million),
profit attributable to shareholders of €165
million (2022: €156 million) and earnings
per share of €3.50 (2022: €3.31).
Adjusted profit after tax increased to €241
million (2022: €237 million) and Adjusted
earnings per share was €4.98 (2022: €4.82).
A full reconciliation of EBITA to EPS and
Adjusted EBITA to Adjusted EPS can be
found in the table in the APMs section.
Earnings guidance
The Group’s outlook for revenue, EBITDA and
EBITA in 2024 is in line with current analyst
consensus.
Refractory sales volumes in 2024 are expected
to be broadly in line with 2023, excluding the
positive contribution from M&A due to the full
year contribution from businesses acquired
during 2023, which should increase shipped
volumes in 2024 by up to 10%. Acquisitions
agreed or completed since January 2023
are expected to contribute c.€80 million of
Adjusted EBITDA or c.€65 million of Adjusted
EBITA in 2024.
4 0
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Finished goods pricing in 2024 is forecast to
be up to 5% lower compared to 2023 as non-
vertically integrated competitors benefit from
lower input prices. The Group continues to be
impacted at a unit cost level by low fixed cost
absorption, with plants running at 74% of pro-
duction capacity in the fourth quarter of 2023.
However, production is planned to increase
in 2024 to match sales volumes, as inventory
coverage ratios have now been successfully
reduced to target levels, reducing fixed cost
under-absorption.
The historically low vertical integration EBITA
margin contribution of 1.7ppts recorded 2023
is expected to reduce to approximately 1.0ppts
in 2024 due to continuing low market prices for
magnesite- and dolomite-based raw materials.
Refractory EBITA margins are targeted to be
maintained at 10.0ppts, resulting in guidance
for an Adjusted EBITA margin of approximately
11% in 2024 (2023: 11.4%).
Whilst the timing and extent of the current
period of reduced demand for refractories is
difficult to forecast, the Group is well positioned
for any recovery in demand in its end markets
and customer industries, with significant
operational gearing and potential upside from
higher raw material and finished goods prices
combined with improved fixed cost absorption
if demand returns to prior levels.
Taking into account forecast sales volumes,
lower vertical integration margin contribution
and expected pressure on refractory pricing,
Adjusted EBITA in 2024 is guided to be at least
in line with current analyst consensus
of approximately €410 million.
Working capital
Working capital excluding M&A decreased to
€794 million (31 December 2022: €918 million)
driven by a decrease in inventories. Including
additional working capital resulting from M&A in
2023, working capital increased to €974 million.
Working capital intensity excluding M&A,
measured as a percentage of the last three
months’ annualised revenue, decreased to
23.0% (2022: 25.4%). Accounts receivable
intensity excluding M&A was 10.6% (2022:
10.4%), accounts payable intensity was 11.8%
(2022: 14.0%) and inventory intensity reduced
to 24.3% (2022: 29.0%). Including the impact
of M&A, working capital intensity stood at
24.2%, slightly below levels recorded the
previous year.
Inventories excluding M&A decreased to €837
million (31 December 2022: €1,049 million),
as the Group successfully reduced inventory
volumes and production costs decreased.
Production lagged sales throughout the year
to achieve targeted inventory coverage ratios
based on reduced customer demand. Inventory
volumes excluding M&A decreased to 505kt
from 606kt at 31 December 2022. Including the
effect of M&A, inventories were €996 million.
business is expected to be approximately €60
million, with expansionary capital expenditure
of €80 million (including €10 million carried
over from 2023) and maintenance and
integration capital expenditure in newly
acquired businesses of €30 million.
Capital expenditure will be shifted from fixed
assets improvements to digital architecture
redesign, which will require elevated levels of
spending over the next three years at least.
Acquisitions
The Group invested €443 million in acquisitions
in 2023, comprising cash consideration of €325
million, working capital investments of €30
million and Net debt assumed on acquisition
of €88 million. Expenditure on acquisitions
was partly funded by the proceeds of an equity
issuance by RHI Magnesita India Ltd, raising
approximately €100 million via a QIP in April
2023. Following the QIP, an equity investment
of €22 million by the Group in RHI Magnesita
India Ltd via a Preferential Issue was concluded
in the third quarter of 2023.
Acquisitions agreed or completed since January
2023 are expected to contribute €80 million of
Adjusted EBITDA in 2024.
Cash flow
Adjusted operating cash flow increased
significantly to €413 million (2022: €155
million) representing cash flow conversion from
Adjusted EBITA of 101% (2022: 40%). The
increase in cash conversion was supported by
the increase in Adjusted EBITDA and a release
of working capital of €53 million, compared
to the €195 million increase in working capital
in 2022, when inventories were raised as a
result of and in response to global supply
chain disruption.
ROIC
10.7%
2022: 12.3%
Adjusted EBITA
€409m
2022: €384m
Adjusted operating cash flow
€413m
2022: €155m
Dividend
€1.80 per share
RHI Magnesita delivered
an increase in Adjusted
EBITA and strong cash
generation in 2023,
despite a challenging
demand environment.”
Ian Botha
CFO
Accounts receivable excluding M&A
decreased to €366 million (31 December
2022: €375 million), reflecting successful
initiatives implemented to reduce overdue
customer payments during the year. Accounts
receivable is calculated as trade receivables
excluding factoring plus contract assets less
contract liabilities and downpayments received,
and a full reconciliation can be found in the
APMs section. Including M&A, accounts
receivable increased to €477 million.
Accounts payable excluding M&A reduced
to €409 million (31 December 2022: €507
million) due to lower volumes and pricing
of raw materials purchased, reflecting the
subdued demand environment. Including M&A,
accounts payable decreased to €498 million.
Working capital financing, used to provide
low-cost liquidity and support the Group’s
commercial offering to customers, was €298
million on 31 December 2023 (31 December
2022: €314 million), comprising €259 million
of accounts receivable financing (factoring)
and €39 million of accounts payable financing
(forfeiting). Working capital financing levels
vary according to business activity, and the
Board has set an internal limit of €320 million
on its use.
The increase in overall working capital of €57
million versus 31 December 2022 was driven
by the first-time consolidation and short-term
working capital requirements of newly acquired
businesses of €180 million, offset by a €123
million reduction in working capital in the base
business prior to M&A.
Working capital intensity is targeted to be
approximately 24% in 2024.
Other assets and liabilities
Cash flows from other assets and liabilities
amounted to €(12) million (2022: €(2) million)
comprising indirect and other tax rebates of €14
million (2022: €29 million), employee pension
pay outs and pension provision movements of
€(19) million (2022: €(25) million), employee
variable remuneration and employee-related
provisions of €29 million (2022: €16 million)
and other cash flows of €(36) million (2022:
€(21) million).
Capital expenditure
The Group incurred €180 million of capital
expenditure (2022: €157 million), of which
€86 million was maintenance related (2022:
€77 million), €74 million was expansionary
capital expenditure (2022: €79 million) and
€19 million of maintenance and integration
capital expenditure was incurred at newly
acquired businesses.
Capital expenditure in 2024 is expected to
be around €170 million, closer to the forecast
level of depreciation of €140 million, as
the Group completes the final stages of its
Production Optimisation Plan launched in 2019.
Maintenance capital expenditure in the base
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
4 1
STRATEGIC REPORT Performance
Financial review continued
Free cash flow increased to €258 million
(2022: €43 million) supported by the higher
level of Adjusted operating cash flow, offset by
increased cash tax and interest payments. Cash
income tax payments were €60 million (2022:
€54 million) whilst net interest paid increased
to €56 million (2022: €(36) million) as a result
of higher average interest rates and borrowings.
The Group incurred €355 million of cash
outflow on six acquisitions completed in 2023
including cash consideration of €325 million
and working capital investments of €30 million,
partially funded by the equity raise via QIP in
India of approximately €100 million.
Cash dividends paid in 2023 amounted to
€78 million (2022: €71 million) and the cash
change in Net debt was a decrease of €41
million (2022: €82 million). Net debt increased
by a further €141 million of non-cash items
comprising €87 million of debt in acquired
businesses (2022: €19 million), new lease
obligations of €15 million (2022: €20 million)
and foreign exchange impacts of €1 million
(2022: €33 million).
Financial position
Net debt increased to €1,304 million,
comprising total debt of €1,949 million,
leases of €70 million and cash and cash
equivalents of €704 million.
Total leases of €70 million (2022: €64 million)
are included in the Group’s Net debt position as
required by IFRS 16.
The Group’s leverage position was 2.3x Net debt
to Pro Forma Adjusted EBITDA (31 December
2022: 2.3x), within the Group’s gearing target
range of between 2.0-c.2.5x EBITDA for
compelling M&A opportunities. The main
driver of the increase in gearing was the Group’s
M&A activity in 2023, with six acquisitions
resulting in cash payments to sellers of €325
million, working capital investments in acquired
businesses of €30 million and Net debt from
acquired businesses as at 31 December 2023
of €88 million. Gearing was impacted by a 12%
increase in Net debt, offset by a 9% increase
in Adjusted EBITDA to €543 million and
a 12% increase in Pro Forma Adjusted EBITDA,
which includes 12 months of contribution
from businesses acquired during the year,
to €561 million (2022: €500 million).
The Group was able to maintain gearing
within the guided range despite investing
€443 million in M&A during the period due
to a significant increase in Adjusted operating
cash flow and the successful QIP raising €100
million in India.
Available liquidity at 31 December 2023 was
€1,304 million, comprising undrawn committed
facilities of €600 million and cash and cash
equivalents of €704 million.
Cash flow €m1,2
Adjusted EBITDA
Share based payments – gross non cash
Working capital changes
Changes in other assets and liabilities
Investments in PPE, IA
Adjusted operating cash flow3
Income taxes paid
Cash effects of other income/expenses and restructuring
Investments in financial assets
Cash inflows from the sale of PPE and IA
Cash inflows from the sale of financial assets
Investment subsidies received
Cash inflow from joint ventures and associates
Net interest paid
Net derivative cash outflow
Dividend payments to non-controlling interest
Other investing activities
Free cash flow
Investment in subsidiaries net of cash
Cash in from sales of subsidiaries net of cash
Cash contribution NCI
Investments in NCI
Payment for share issue costs
Treasury stock
Dividend payments
Change financial receivables from joint ventures and associates
Cash change in net debt
Debt from acquisitions
New lease obligations
Exchange effects
Actual change in net debt
2023
543
9
53
(12)
(180)
413
(60)
(32)
(14)
4
0
0
0
(56)
5
(3)
2
258
(313)
0
100
(8)
(3)
0
(78)
3
(41)
(87)
(15)
1
(141)
2022
500
8
(195)
(2)
(157)
155
(54)
(24)
0
2
3
1
0
(36)
(2)
(2)
0
43
(65)
9
0
0
0
0
(71)
2
(82)
(19)
(20)
(33)
(154)
1. The cash flow reconciliation to net debt has been restated to reflect a change in definitions of Adjusted operating cash flow,
Free cash flow and cash change in net debt.
2. A full reconciliation to the change in cash and cash equivalents can be found in the APM section on page 162.
3. Adjusted operating cash flow is an APM. A definition and reconciliation can be found in the APM section on page 162.
The Group refinanced a total of €676 million
of new or existing debt facilities in 2023 to
maintain liquidity levels, extend debt maturities
and further establish links to the Group’s
sustainability performance. In April 2023,
the Group issued a €170 million ESG-linked
Schuldschein bond with average maturity of
five years and refinanced an existing bilateral
Term Loan, increasing the total loan amount
from €115 million to €150 million and extending
the maturity date to 2026. The refinanced Term
Loan is now also ESG-linked. In November
2023 the Group signed a €200 million bilateral
OeKB Term Loan with a final maturity date in
March 2029 and with a variable margin linked to
its ESG performance.
The Group has debt maturities of €149 million
scheduled in 2024, of which €60 million is
short-term debt that can be rolled into 2025,
and €239 million of maturities in 2025. Out of
the total gross debt of €1,949 million, 98% is
denominated in euro. The floating to fixed ratio
of the gross debt is 31% floating to 69% fixed
and the weighted average cost of debt as of
31 December 2023 was 3.34%, including swaps.
The Group will seek to maintain the ratio of Net
debt to Pro Forma Adjusted EBITDA within the
guided range of 2.0-2.5x or above for periods of
compelling M&A.
Return on invested capital
ROIC is used to assess the Group’s efficiency in
executing its capital allocation strategy, which
is aimed at enabling organic growth, disciplined
M&A and shareholder returns. ROIC is an APM,
see the APM section for full details of how ROIC
reconciles to IFRS metrics.
Following significant M&A activity in 2023,
fixed assets have increased by €310 million,
Goodwill has increased by €202 million and
acquired businesses added €180 million to
working capital. Whilst the balance sheet
effects of M&A are captured in the year end
calculation of Invested Capital, earnings from
businesses acquired during the year are not
consolidated prior to the date of completion
under the existing definition of ROIC. The Group
is therefore amending its definition of ROIC to
use average invested capital, being the average
of the level of invested capital at the beginning
and end of the financial year.
4 2
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Following the strong profitability, cash
generation and strategic progress delivered
in 2023, the Board has recommended a final
dividend of €1.25 per share for the full financial
year, and €85 million in aggregate. This
represents a dividend cover of 2.8x Adjusted
earnings per share. Subject to approval at the
AGM on 2 May 2024, the final dividend will be
payable on 13 June 2024 to shareholders on the
register at the close of trading on 17 May 2024.
The ex-dividend date will be 16 May 2024.
Together with the interim dividend of €0.55
per share paid on 22 September 2023, the
recommended final dividend represents a full
year dividend of €1.80 per share in respect of
the 2023 financial year.
The Board’s dividend policy remains to target a
dividend cover of below 3.0x adjusted earnings
over the medium term. Dividends will be paid
on a semi-annual basis with one third of the
prior year’s full year dividend being paid at
the interim.
On 29 March 2023, RHI Magnesita announced
the acquisition of Dalmia GSB Refractories
GmbH (“Dalmia GSB”) for a cash consideration
of approximately €13 million. Dalmia GSB
recorded profit before tax of €1.7 million in the
year to 31 March 2022 and had gross assets of
€18 million at 31 March 2022.
On 21 April 2023, the Group announced
the acquisition of the Europe, India and US
operations of Seven Refractories for a cash on
completion of approximately €84 million.
On 3 October 2023, the Group announced the
acquisition of the Germany, Czech Republic
and Slovenia based refractory businesses of
the Preiss-Daimler Group ((“P-D Refractories)”)
for a cash consideration of approximately
€45 million. Adjusted EBITDA contribution
from the nine businesses acquired during the
period December 2021 to December 2023
(i.e. Chongqing, SÖRMAS, MIRECO and all
businesses acquired during 2023) was €56
million, exceeding guidance for approximately
€40 million of contribution from M&A.
The full year Adjusted EBITDA contribution from
businesses acquired during 2023 (i.e. DBRL,
Jinan New Emei, Hi-Tech, Dalmia GSB, Seven
Refractories and P-D Refractories) is expected to
be approximately €80 million in 2024, or €65
million of EBITA.
Returns to shareholders
The Board’s capital allocation policy remains
to support the long-term Group strategy,
providing flexibility for both organic and
inorganic investment opportunities and
delivering attractive shareholder returns over
the medium term. These opportunities are
assessed against a framework of strategic fit,
risk profile, rates of return, synergy potential
and balance sheet strength.
In 2023, the Group invested €74 million in
expansionary capital expenditure, including
expenditure incurred in relation to the
integration of newly acquired businesses.
The Group’s total capital expenditure for the
year 2023 amounted to €180 million.
Under the new definition, ROIC was 10.7% in
2023 (2022: 12.3%) based on average invested
capital of €2,854 million (2022: €2,439 million)
and NOPAT of €305 million (2022: €301
million). ROIC generated by the Group’s Raw
material assets was 8.9% (2022: 14.1%) and
ROIC from the Refractory business was 11.0%
(2022: 11.9%).
M&A
The Group aims to expand its presence through
acquisitions in geographic markets where it is
under-represented, such as in India, China, and
Türkiye and other countries in South-East Asia.
An additional focus of the Group’s M&A strategy
is to diversify its product portfolio by targeting
new product segments, such as the non-basic
or alumina-based refractory segment.
On 5 January 2023, the Group completed the
acquisition of the Indian refractory business
of Dalmia Bharat Refractories Ltd. (“DBRL”) via
a Share Swap Agreement, in exchange for 27
million shares in RHI Magnesita India Ltd., a 56%
owned subsidiary of the Group which is listed on
the Bombay Stock Exchange and National Stock
Exchange of India. DBRL is one of the leading
refractory producers in India with production
capacity of over 300kpta from five refractory
plants. Following the acquisition and prior to the
QIP, the Group’s shareholding in RHI Magnesita
Ltd. reduced from 70% to 60% and the Dalmia
Bharat Group and minority shareholders in
DBRL received a combined 14% stake in RHI
Magnesita India Ltd. Based on the closing share
price of RHI Magnesita India Ltd. on 18 November
2022 of ₹645 per share, the Consideration
Shares had a value of approximately ₹17,424
million (€212 million). DBRL recorded adjusted
EBITDA of ₹683 million (€8 million) in the year to
31 March 2022. On 13 January 2023, the Group
entered into an agreement to acquire a 65%
shareholding in Jinan New Emei, a company
registered in China, for a total cash consideration
of around c.€23 million plus assumed net debt
and other liabilities of €17 million, with the
payment of €3 million of cash consideration
deferred to 2024.
On 31 January 2023, the Group, through its
listed subsidiary in India, RHI Magnesita India
Ltd., completed the acquisition of the flow
control refractory business of Hi-Tech Chemicals
Ltd. (“Hi-Tech”) for a total consideration of c.€87
million. The acquisition was funded through a
combination of intercompany loans from the
Group and local bank lending.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
4 3
STRATEGIC REPORT 4 4
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Our risk
management
approach
The Group has continued to evolve its
risk management approach with the
objective of identifying, assessing
and controlling uncertainties and risks
which could impact the delivery of RHI
Magnesita’s strategy.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
4 5
STRATEGIC REPORT
Risks
Effective risk management
Herbert Cordt
Chairman of the
Board of Directors
Our risk management approach
helps the Board and EMT to
understand the risks associated
with the adopted strategy,
periodically assess if the strategy
is aligned with our risk appetite
and understand how the chosen
strategy could affect the Group’s
risk profile, specifically the types
and amount of risk to which the
Group is potentially exposed.”
The information from the bottom-up and the
deep-dive risk assessments is integrated into
the top-down risk assessments to ensure that
the Group risk profile is complete and accurate.
Risks and strategy
Our risk management approach helps the
Board and EMT to understand the risks
associated with the adopted strategy,
periodically assess if the strategy is aligned
with our risk appetite and understand how the
chosen strategy could affect the Group’s risk
profile, specifically the types and amount of risk
to which the Group is potentially exposed. As
part of this process, risk scenarios are evaluated
to assess potential outcomes.
The assessment, monitoring and mitigation
of key risks to the strategy are core features of
the established risk management approach.
Risk workshops were conducted with the
EMT and Board to review the Group risk
profile in the context of the 2025 strategy
and the risk appetite of the top risks to the
Group. The Group’s key financial risks are
disclosed under Note 37 to the Consolidated
Financial Statements.
Our approach to risk management
The approach for risk management established
over the past four years was maintained
throughout 2023. A key area of focus in 2023
was introducing the plant risk assessment
process to the new plants added to the
production footprint through the acquisitions.
This was achieved by site visits from the Internal
Audit, Risk & Compliance team combining the
risk assessment with compliance trainings and
other integration activities.
The risk management approach combines
top-down, bottom-up and deep-dive risk
assessments. The top-down risk assessment
is performed by the EMT and reviewed by the
Audit & Compliance Committee and the Board
of Directors. Reporting against these risks is
included periodically within EMT meetings,
Audit & Compliance Committee meetings
and the annual Board-led strategic review.
The bottom-up risk assessment is based on
each of the plants, which maintain ongoing
risk management activity linked to the ISO risk
management practices.
Deep-dive risk assessments are performed for
areas of emerging or prevailing risks, which, in
2023, included capex, plant operations, fraud
management and sustainability, embracing
climate-related risks and opportunities.
Risk management cycle
5
Reporting
Risks that require
immediate action are
reported immediately to
line management for
action. Risks that do not
require immediate action
are reported periodically
to the operational
management and on
a quarterly basis to
the EMT.
4
Monitoring
Risks and associated
mitigating measures are
reassessed quarterly
during the year, with
increased frequency for
those areas experiencing
significant changes in
the risk landscape. The
remaining risk level is
evaluated to ensure that
it is aligned with the
Group’s risk appetite and
reviewed on a quarterly
basis by the EMT.
5
Reporting
1
Identification
4
Monitoring
2
Assessment
3
Mitigation
3
Mitigation
All risks considered to be outside of the
Group risk appetite, due to their nature or
their potential financial or qualitative
impacts, are mitigated by appropriate risk
management strategies. The implementa-
tion and effectiveness of the defined
mitigation measures are reviewed, and
additional actions are defined if necessary.
For this purpose, risks are assessed based
on their likelihood and impact before and
after the implementation of those
mitigation measures.
1
Identification
Starting from all the
possible categories
of risks potentially
impacting the Group,
specific risks relevant
to RHI Magnesita are
identified through
several analytical tools,
including comparative
analysis and risk
benchmarking.
2
Assessment
The risks identified are
linked to potential root
causes and assessed for
their inherent likelihood,
inherent impact, and
velocity. Risk analysis to
develop an understand-
ing of the possible
interdependencies
between risks is
performed.
4 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Risk appetite
We define risk appetite as “the nature and
extent of risk RHI Magnesita is willing to accept
in relation to the pursuit of its objectives”. We
look at risk appetite from different angles, such
as the severity of the consequences should the
risk materialise, any relevant internal or external
factors influencing the risk, and the status of
management actions to mitigate or control the
risk. A scale is used to help determine the risk
appetite threshold for each risk, recognising that
risk appetite will change over time.
If a particular risk exceeds its risk appetite
threshold, it will threaten the delivery of our
objectives and therefore require significant
risk mitigation and potentially a change to the
strategy. Risks that approach the limit of the
Group’s risk appetite may require acceleration
or enhancement of management actions to
ensure that risk remains within appetite levels.
The risk management approach is based on
an assessment of the risk appetite formed
by the Board, covering the key risk categories
(“averse”, “limited”, “moderate” and “high”).
The risk appetite statements are approved by
the Board and are a foundational element of
our risk framework as they provide guidance
to management on the amount and type of
risk we seek to take in pursuing our objectives.
The Board has carried out a robust assessment
of the Group’s principal and emerging risks.
Our principal risks
The principal risks are those the Board considers
may have a significant impact on the results
of the Group and on its ability to achieve its
strategic objectives. This does not represent
an exhaustive list of risks faced by the Group
but encompasses those considered to be most
material to business performance.
The risks can occur independently from each
other or in combination. Extraordinary events
have the potential to crystallise multiple
principal risks simultaneously, significantly
magnifying the adverse impact.
The principal risks included in the 2022 Annual
Report have been confirmed to be equally
relevant for 2023. The risks have been reviewed
throughout the year and changes have been
assessed to the rating or risk appetite relating
to four of the principal risks in 2023. These
changes are described in the section below.
Emerging risks
Identifying emerging risks is a key part of our
risk management process. All risk assessment
sessions at regional or global level include
dedicated time to identify and discuss emerging
risks. These discussions are facilitated by Group
Internal Audit, Risk & Compliance who raise
risk topics apparent from peer companies and
expert studies and combine these with the
input from over 50 Senior Leaders on at least a
six-monthly basis. Emerging risks are assessed
to determine if they need to be added to the
principal risks, Top-20 Group Risk Dashboard,
Group risk chart
d
o
o
h
i
l
e
k
i
L
very likely
likely
possible
unlikely
low
moderate
high
critical
Impact
2
3
2
7
4
6
5
6
8
9
1
10
1
3
4
5
7
8
9
10
Principal risks 2023
1 Macroeconomic and
geopolitical environment
2 Inability to execute key
strategic initiatives
3 Significant changes in the
competitive environment or
speed of disruptive innovation
4 Reliability of the end-to-end
supply chain
5 Sustainability – environmental
and climate risks
6 Sustainability – Health & Safety risks
7 Regulatory and compliance risks
8 Cyber and information security risks
9 Ability to strategically price and
deliver price increases
10 Organisational capacity to execute
strategy, including demonstrating
Company cultural values
lower level risk tracking or retained on a
watchlist. Once added to the formal risk register,
emerging risks are managed in the same
manner as established risks. The consideration
of emerging risks and changing risk landscape
can also lead to changes in the risk appetite
levels. Risks that have emerged in 2023 or
increased in relevance and therefore received
more focus include:
• Structural weaknesses in the production
network.
• Specific focus on reputational risk impacts.
•
Increasing complexity of sanctions regimes.
• Risks relating to approaching deadlines for
achieving environment and climate targets.
These risks have increased due to the
impact on the Group of enhanced legislative
requirements. Additional risk drivers include
the increasing ability of social media to
influence the Group’s reputation and enhanced
production footprint from acquisitions.
Our internal control system
The Board reviews the effectiveness of the
system of internal financial, operational and
compliance controls and the risk management
framework. RHI Magnesita follows the corporate
governance requirements of the regulations of
both the Netherlands, given the location of its
incorporation, and the UK, given the location
of its listing. Where possible, the disclosures
are combined in this report, however there
are certain risk areas where the respective
governance requirements necessitate similar
but separate assessments.
One such risk area is the required disclosure
and description of RHI Magnesita’s control
environment and systems. Therefore, the
Company provides both a Management “In-
Control Statement” as is required by the Dutch
Corporate Governance Code and an internal
control system report as is required under the
UK Corporate Governance Code. Both outline
the measures that RHI Magnesita takes to
ensure a strong control environment.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
4 7
STRATEGIC REPORT Risks
Our internal control system
The Board reviews the
effectiveness of the system of
internal financial, operational and
compliance controls and the risk
management framework.”
Internal control system
The Board is ultimately responsible for
maintaining effective corporate governance,
which includes the Group’s risk management
approach, the Group’s system of internal controls
and the Group’s internal audit approach.
The Board regularly reviews the effectiveness of
the system of internal financial, operational and
compliance controls, and the risk management
framework. The Board examines whether
the system of internal controls operates
effectively throughout the year and will make
recommendations when appropriate.
These systems have been in place throughout
2023 and up to the date of this report and
comply with the UK Financial Reporting
Council’s Guidance on Risk Management,
Internal Control and Related Financial and
Business Reporting. They are based on the
three lines of defence model, supported by an
end-to-end process model and a delegation of
authorities structure reflecting the responsibility
for risk management and internal controls at all
management levels.
The Group’s internal control framework is
designed to enable the application of the
Group’s risk appetite. This typically seeks
to avoid or mitigate risks rather than to
completely eliminate the risks associated
with the accomplishment of the Group’s
strategic objectives. It provides reasonable
but not absolute assurance against material
misstatement or loss.
The Group has in place a specific risk
management approach and an internal control
framework in relation to its financial reporting
process and the process of preparing the
financial statements. These systems include
policies and procedures to ensure that
adequate accounting records are maintained
and transactions are recorded accurately and
fairly to permit the preparation of financial
statements in accordance with the applicable
accounting standards. For the accounting
process, an accounting manual (updated in
2023 and containing a related knowledge
portal and training) is used to structure the
internal controls over the accounting process.
The consistency in application of financial
reporting controls has been increased in 2023
by the introduction of Group-wide Finance
performance dashboard, Finance based “Lunch
and Learn” trainings and a Finance Reporting
Quarterly Newsletter containing relevant
accounting policy and technical updates.
In Q1 2023, Management completed a
review of the regionalisation model, which
was introduced in early 2022, in conjunction
with external consultants. Whilst a number
of improvement points were identified the
core success of the regionalisation model
in bringing decision making and the related
internal controls closer to the customer and
using simpler lines of responsibility and
accountability was recognised. With respect to
financial reporting the respective Groups Heads
of Reporting & Finance and Financial Planning
& Analysis hold monthly reviews with each
regional Head of Finance.
In 2023 the Group established a set of projects
to improve the internal processes and systems
of the Group. A key focus area is to build a
single set of Group-wide processes for key
activities. This will harness the work performed
in recent years on specific processes and in
2024 deliver a complete end to end “process
house” for all major processes. Alongside this
work the Group is also in the early stages of
replacing and upgrading its ERP system. Both
of these activities will lead to a step change
improvement in the consistency and efficiency
of the internal control system.
The Group has an Internal Audit function,
with a reporting line to the Chairman, Audit
& Compliance Committee and a secondary
reporting line, for day-to-day operational
matters, to the CFO. The Internal Audit
function provides assurance to the Audit &
Compliance Committee and the Board on
the design and effectiveness of the internal
control framework. Internal Audit operates
within a single department also comprising
Risk Management and Compliance. The Audit
& Compliance Committee and management
ensure that appropriate safeguards are in place
to maintain the independence of Internal
Audit. The Internal Audit, Risk & Compliance
function is structured into regionally-based
teams providing a locally-focused governance
presence to support regional management in
line with the established Group-wide model.
From April 2023 the internal Head of Internal
Audit, Risk & Compliance role was re-
established and the role re-assumed by the
previous incumbent after 15 months of the
department being overseen by a combination
of a highly experienced Ernst & Young partner
and regional Heads of Finance. The Audit
& Compliance Committee have closely
monitored these transitions to ensure that
the independence of Internal Audit and
the effectiveness of Risk Management and
Compliance have not been compromised.
An External Quality Assessment of the
effectiveness and capability of the Internal Audit
function was performed in 2021. The delivery of
improvement points from this report has been
completed. An internal effectiveness review of
Internal Audit was performed in 2023.
During 2023, Internal Audit conducted 22
planned internal audits and five special
investigations, reporting the most relevant
observations and recommendations to the
Audit & Compliance Committee.
4 8
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Therefore, Management confirms:
•
•
the report provides sufficient insights into
any failings in the effectiveness of the
internal risk manage ment and control
systems with regard to the risks;
the aforementioned systems provide
reasonable assurance that the financial
reporting does not contain any material
inaccuracies;
• based on the current state of affairs, it
is justified that the financial reporting is
prepared on a going concern basis; and
•
the report states the material risks, and the
uncertain ties, to the extent that they are
relevant to the expectation of the company’s
continuity for the period of twelve months
after the preparation of the report.
The reports by management and Internal Audit,
Risk & Compliance also facilitated consideration
by the Audit & Compliance Committee of
management actions in respect of the following
key control framework challenges:
•
Improving management and the internal
controls of capex projects.
• Effective integration of acquired entities
into the Group’s culture and internal
control framework.
• Benchmarking the internal control
performance across the regions.
• Continuing the journey towards global
process standardisation.
The Board considers the Company’s risk
management and internal control system are
appropriate and effective to give reasonable,
but not absolute, assurance against material
misstatement or loss. Improvements on the
internal control systems implemented and
planned have been discussed regularly
between the Board and Audit & Compliance
Committee. Given the dynamic nature of
the Group and the continuing evolution
of the regionalisation model, the Board
emphasises the importance of further internal
control system improvements in 2024, most
notably the completion of global process
standardisation work to drive the new ERP
system implementation.
Management “In-Control Statement”
The Board and EMT are responsible for ensuring
the Company has adequate risk management
and internal controls systems in place.
The core design of the internal control systems
is based on extensive work conducted as part
of the merger activity in 2017 and reassessed
in 2020 to create a more regionally-focused
and agile structure. The regional focus was
further increased in early 2022. A further
step change in process standardisation is
expected in 2024 when work to complete
the new “process house” will be completed
including a refreshed design for the internal
control system. The new internal control system
will be rolled out in the medium term as part of
the new ERP system, implementation.
The key internal control measures include
reviews of financial performance and key
control weaknesses at each Board meeting.
To complement the regionalisation and to
increase the focus on performance, financial
reporting and internal controls, the corporate
meeting structure introduced in 2022 has
been refined and evolved in 2023. Regional
leadership team meetings now review
regional delivery against strategy and financial
performance each month. These outputs are
consolidated in a standard format into a two-day
EMT member-led Monthly Performance Review
(MPR) meeting to review operational financial
performance, strategy delivery and control
weaknesses primarily with a regional focus but
also including Group functions on a rotational
basis. The EMT monthly meetings have now
been re-focused to primarily consider high-
level and Group-wide strategic matters and
those matters reserved for EMT approval in the
Delegation of Authorities.
The EMT continues to monitor the effectiveness
of the adoption of corporate culture and
values especially to the more remote areas
of the Company – the enhancement of the
corporate culture has been accelerated by
the regional approach. Following the easing
of travel restrictions the EMT have visited each
region in 2023 and performed on-site-week
long deep dives into all key aspects of regional
performance. The Code of Conduct was
updated in early 2023 and reinforced through
increased training and communication. The
Board and EMT monitor the response to issues
raised via the whistleblowing process. All key
changes in the internal control framework were
reviewed by the EMT.
Each leader is accountable for the effectiveness
of the internal controls within their areas of
responsibility and is required to complete
a self-certification of their assessment. The
self-certification is also signed-off on a regional
level. Measures are applied in each functional
area and region to assess the effectiveness of
internal controls and to escalate any identified
issues. Control weaknesses identified by
management and those identified through
the quality management system reviews,
risk management activity and internal audit
reports are escalated to the EMT for review and
resolution, all of which is overseen by the Audit
& Compliance Committee. The key control
weaknesses identified from these processes
were addressed within 2023.
In 2023, risk management activity focused
on maintaining the previously established,
mechanisms and integrating acquired entities
into the risk assessment models. Plant risk
management and fraud risk management were
executed in 2023 following the established
approaches. This approach continued to further
strengthen the link between strategy setting
and risk management, enhanced by extensive
collaboration between the respective teams.
The delivery of the risk management
approach and the results of the internal
quality assessment and planned next steps
were reviewed by the Audit & Compliance
Committee. In addition, the risk appetite
was discussed and approved by the Audit
& Compliance Committee and the Board
following a series of discussion workshops.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
4 9
STRATEGIC REPORT Risks
Viability statement
The Directors have a reasonable
expectation that the Group
and Company will be able to
continue in operation and meet
its liabilities as they fall due over
the period to December 2026.”
Assessment period
In accordance with provision 31 of the UK
Corporate Governance Code, the Board has
assessed the prospects and the viability of the
Group over a longer period than the 12 months
required by the ‘Going Concern’ provision. The
Board assesses the business over a number of
time horizons for different reasons, including
the following: one-year detail financial plan
(i.e. 2024) and the long term plan to 2026. The
Board believes that three years assessment
period remains appropriate. It is based on
management’s reasonable expectations of the
position and performance of the Group over
this period, its internal budget and planning
timeframes and the targets and aims that it
has set out.
The assessment process and
key assumptions
The Board assessment included the review
of the potential financial impact of, and the
financial headroom that could be available in
the event of, the most but plausible scenarios
that could threaten the viability of the Group.
The assessment took into consideration the
current financial position of the Group and
the potential mitigations that management
reasonably believes would be available to
the Company over this period.
Mitigations considered include the use of
cash, access to debt facilities and credit lines,
reductions in capital expenditure, divestments
and dividend reductions.
The financial forecast is based on a number of
key assumptions, the most important of which
include product prices, exchange rates, raw
material, energy, freight and labour costs,
estimates of production volumes, future capital
expenditure and delivery of our strategic cost
reduction and sales initiatives. In addition,
the forecast does not assume the renewal of
existing debt facilities or raising of new debt.
A key component of the financial forecast and
strategic plan is the expected growth of steel
production and the output of non-steel clients
in all regions, combined with the development
of the specific refractory consumption taking
account of technological improvements.
Management also performed a reverse stress
test assuming a severe decrease in sales
volumes of 22% sustained over 15 months.
Management analysed the impact of the 2008
Global Financial crisis and the COVID-19
impact over sales volumes and margins. Whilst
the decrease in volumes was notable in those
events, the Group was able to recover the
volumes over the next 12 months.
The scenarios that have been modelled are
based on severe but plausible outcomes
and associated costs are based on actual
experience where possible. The scenarios
have been considered individually and as a
cluster of events.
Scenario
Principal risks
Severity of the impact
Severe macroeconomic
downturn
Severe macroeconomic
downturn with impact of
multiple principal risk
Reverse stress test assuming
significant sustained reduction
in sales volumes
1. Macroeconomic and geopolitical environment.
Low
1. Macroeconomic and geopolitical environment,
2. Inability to deliver strategic projects,
3. Significant changes in the competitive
environment or speed of disruptive innovation,
4. Reliability of end-to-end supply chain,
5. Organisational capacity to execute strategy,
including demonstrating company cultural values.
Medium
1. Macroeconomic and geopolitical environment.
High
5 0
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Assessment of viability
Going concern
In assessing the appropriateness of the
going concern assumption over the period
to 31 December 2025 (the ‘going concern
period’), management have used the viability
assessment to conclude on the going concern
assumption. Management stress-tested RHI
Magnesita’s most recent financial projections to
incorporate a range of potential future outcomes
by considering RHI Magnesita’s principal risks,
further potential downside macroeconomic
conditions and cash preservation measures,
including reduced future operating costs, capital
expenditure and dividend distributions. This
assessment confirmed that RHI Magnesita has
adequate cash and undrawn credit facilities to
enable it to meet its obligations as they fall due
in order to continue its operations during the
going concern period. Therefore, the Directors
consider it appropriate to continue to adopt the
going concern basis of accounting in preparing
the Consolidated Financial Statements.
The Group’s liquidity amounts to €1,304 million
comprising of cash and cash equivalents of
€704 million and undrawn committed credit
facilities of €600 million as of 31 December
2023. This is sufficient to absorb the financial
impact of the risks modelled in the stress and
sensitivity analysis. However, if these risks
were to materialise, the Group also has a
range of additional mitigating actions that
enable it to maintain its financial strength,
including reduction in fixed costs and capital
expenditure, raising debt or reducing or
cancelling the dividend.
Viability statement
The Directors believe that the Group is well-
placed to manage its principal risks successfully.
In making this statement the Directors have
considered the resilience of the Group, taking
account of its current position, the risk appetite,
the principal risks facing the business in severe
but plausible scenarios, and the effectiveness
of any mitigating actions.
The Directors have a reasonable expectation
that the Group and Company will be able to
continue in operation and meet its liabilities as
they fall due over the period to December 2026.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
5 1
STRATEGIC REPORT Risks
Principal risks
Link to strategy
Business model
Competitiveness
Markets
Target risk appetite
High
Moderate
Limited
Averse
1. Macroeconomic and
geopolitical environment
Risk description
Changes in the global economic environment, financial markets conditions and adverse geopolitical developments may
have an impact on the Group’s revenue and profitability.
Link to strategy
The macroeconomic environment changes leading to sales volume reductions can arise from industrial factors or from wider
global issues, such as a global economic downturn or global logistic challenges.
The demand for refractory products is directly influenced by steel, cement and non-ferrous metal production, metal and
energy prices and the production methods used by customers.
Target risk appetite
Due to the Group’s cost structure, fluctuations in sales volumes have an impact on the utilisation of production capacities and
consequently on the Group’s profitability and gearing.
High
KPIs
Revenue, Adjusted EBITA
margin, Adjusted EPS, ROIC
Internally monitored metrics
Key macroeconomic and
financial market indicators,
steel and cement forecasted
production.
Examples of specific risks:
• Decreasing investment in customers’ infrastructure projects (therefore reducing steel and cement demand) leading to
lower refractory consumption and depressed sales volumes.
• Customers focusing on lower-cost and more commoditised refractories.
• Lower sales volumes leading to lower fixed cost absorption.
• Increasing prices of core resources and supplies (e.g., energy, freight and packaging).
Risk mitigation
• Initiatives to increase the Group’s resilience, through
establishing leaner processes and lower fixed cost
structures whilst increasing the Group’s market share
and the value for our customers.
• Diversification of geographies and industries.
• Close monitoring of production costs fluctuations
to guarantee the expected profitability.
• Price increase initiative to pass inflationary costs
to customers.
• Early leading indicators to ensure identification
of emerging macroeconomic trends.
• Treasury Policy and usage of financial instruments
to mitigate risk exposure to financial markets.
Risk movement
During 2023, the macroeconomic environment continues
to be challenging for the refractory industry. The refractory
market experienced a drop in customer demand in most
markets.
Events such as the Russia-Ukraine conflict generated
higher risks relating to input costs such as energy and
through sanctions restrictions, especially in late 2023
when the mixes product group of the Group was subjected
to specific EU sanctions in respect of Russian sales.
Disruption in the global logistics mechanisms, whilst less
marked than in 2022, still presented a risk as demonstrated by
disruptions to Red Sea shipping lanes restrictions in late 2023.
• Agile, experienced, and solution-focused management
teams who can respond quickly and innovatively to
challenges.
The risk appetite remains high (no changes from 2022). The risk
score is within the risk appetite but has the potential to exceed it
and is closely monitored.
5 2
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
2. Inability to execute key
strategic initiatives
Risk description
The Group’s strategic initiatives include sales expansion, new product and service models, production network optimisation,
recycling and M&A projects. In 2023 most focus was dedicated to M&A projects.
Link to strategy
Target risk appetite
Limited
KPIs
Voluntary employee turnover,
Revenue, Adjusted EBITA margin,
Adjusted EPS, Leverage, ROIC
Internally monitored metrics
Adjusted EBITA from strategic
initiatives, ROIC from strategic
initiatives, completion of
strategic initiatives on-time
and on-budget.
Effective prioritisation and execution are key to delivering the Group strategy. The ambition level of these initiatives requires
a high level of management capacity to effectively deliver change management and strategic initiatives execution.
The failure to effectively execute these initiatives because of external or internal circumstances may lead to lower than
planned financial performance, including loss of revenue and margin.
Examples of specific risks:
• Failure to develop the strategy into specific actions.
• Failure to react in a timely manner to a changing environment.
• Failure to effectively deliver projects.
• M&A underperformance.
• Inability to fully realise benefits from capex investments.
Risk mitigation
• Group-wide strategy with a high focus on key priorities.
• Postponement or cessation of strategically non-
important projects.
• Strengthening of project management culture and
approach.
• Leadership capability enhancement programme.
• Deep dive learning-based review on each strategic
initiative.
• Increased focus on the risk-based assessment of potential
capex investments and enhanced financially based
tracking during the capex project delivery phase.
• Re-focus and strengthening of the Group’s strategy
team to have a broader more challenging role across
the Group, concentrated on global strategies for core
product groups.
Risk movement
Since December 2021 the Group has completed nine
acquisitions and much focus has been given to generating
the strategic benefits from integrating these acquisitions.
The Group continues to see success in developing a circular
economy for the refractory industry largely through recycling.
In 2023 the Group re-assessed its digitalisation approach to
place more focus on internal digitalisation improvements to
enhance strategic execution.
The Group has taken many learnings from recent major capex
projects and continues to embed these learnings within a new
a new mindset for capex for future projects.
Considering that the principal risk covers a broad range of
strategic initiatives, the overall risk score remains within the
risk appetite, but requires close monitoring.
3. Significant changes in the
competitive environment
or speed of disruptive
innovation
Risk description
Depending on the ability of the Group to develop adequate products and services, the changes in customers’ preferences
towards innovative products may present either an opportunity or a threat by increasing pressure on demand and margins.
The speed of evolution of customer demand for environmentally-beneficial features, digitalisation and services may be faster
than the pace of implementation of the Group’s digital strategy.
Link to strategy
• Disruptive product technology introduced by a competitor.
• Failure to identify digitalisation trends and technologies.
• Competitors being faster and more agile in responding to changing customer requirements.
Examples of specific risks:
Risk mitigation
• Create a climate that fosters innovation and “out of the
box” thinking.
• Continued investment in R&D, including, importantly,
on sustainability in line with the Group’s strategy.
• Focus development activity on projects aimed at an
agile and fast impact on the market.
• Monitoring of key R&D and innovation metrics.
• Partnering with third-party innovation leaders.
Target risk appetite
Moderate
KPIs
Revenue, Adjusted EBITA margin,
Adjusted EPS, ROIC, R&D &
Technical Marketing Spend
Internally monitored metrics
R&D & technical marketing
spend, ROIC on such spend and
time-to-market, sales of digital
products, cost savings generated
by usage of digital technologies.
Risk movement
During 2023 the Group has taken a broader approach to
address this risk. Following the outcomes of a major project
to understand how different customer segments value
the Group’s offerings, the Group has aligned its digital
developments more closely to customer expectations.
The development of digital solutions has been reassessed
with more emphasis now being placed on the more traditional
aspects of meeting customer expectations (e.g. price,
delivery reliability, product quality and shared expertise).
The success of this approach has been seen in the customer
satisfaction surveys.
The Group retains the capability and ambition to develop
customer facing digital solutions but aligned to the pace
of change sought by our customers.
The risk remains within the risk appetite and is consistently
monitored.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
5 3
STRATEGIC REPORT Risks
Principal risks continued
4. Reliability of the end-to-
end supply chain
Link to strategy
Target risk appetite
Limited
KPIs
Revenue, Adjusted EBITA margin,
Adjusted EPS, ROIC
Internally monitored metrics
Refractory lead times, plants’
capacity utilisation, Supply in
Full On Time, Inventory levels,
customer surveys.
Risk description
The journey from raw material to finished goods can span several months and might require shipments across the globe.
The ability to react quickly to changes prompted by internal and external factors is therefore key to ensuring value delivery
to our customers.
In addition, the ability to forecast the demand for the Group’s products is key to enabling efficient and effective planning
of production-related activities, including procurement, inventory planning and the size and locations of the plants in our
production network.
Our global operations can be disrupted by issues in a specific geography or by industry-wide challenges. However, the ability
to transfer some of the production between geographies to mitigate the risk of business interruption can be deployed as a risk
mitigation strategy.
Examples of specific risks:
• Structural weakness in production network.
• Production interruption at a single-source manufacturing site.
• Inability to accurately predict customer demand leading to missed sales opportunities, inefficient production planning
and additional costs.
• Global logistic challenges impacting the stability, speed and cost of our end-to-end supply chain.
• A natural disaster or major political crisis in one or more countries or regions.
Risk mitigation
• Supply chain initiatives to improve and address specific
operational challenges.
• Regular reviews of sales, production and financial plans,
as well as longer-term portfolio decisions, are based on
extensive research.
• Additional people and system resources leading to
improvements in delivery reliability and reduction of
production backlog.
• Geographical diversification of the production network.
• Implementation of an optimised production footprint to
meet planned requirements.
• Risk-based investment policy.
• Global insurance coverage.
• Focus on the minimisation of sole-source materials and
strategically increasing stock levels.
• Concentrated efforts on increasing transparency and
enhancing the communication flow.
Risk movement
In 2023 the external logistic situation continued its trend
from the second half of 2022 of becoming more stable, and
internally the Group continued to improve its visibility over
the dynamics of the logistics industry.
In 2023 the Group achieved its highest ever customer
satisfaction ratings and the highest PIFOT rating for
on-time deliveries.
Localised logistics challenges are still monitored and
mitigated, such as the Red Sea shipping lane issues in
late 2023.
The focus has evolved to assessing how well the acquired
sites and a more local-for-local production approach fit with
legacy sites together to form an optimum production network.
This is being evaluated in a single approach led by global
product strategies.
Therefore, the overall risk level reduced, and the risk remains
within the risk appetite.
5 4
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
5. Sustainability –
environmental and
climate risks
Link to strategy
Risk description
Controlled emissions and use of potentially hazardous materials are inherent to the production of refractory products.
The risk of failing to meet environmental regulatory targets or uncontrolled emissions at our production sites exists and
may result in high financial losses and liabilities.
The evolving regulatory environment, the increased stakeholders’ focus, and the Group’s commitment to sustainability led
to increasing investment and effort being dedicated to achieving environmental and climate goals.
There are future environmental and climate targets that can only be met by new technological solutions to change the
Group’s production processes and by the delivery of environmental improvements by the Group’s suppliers and customers.
Target risk appetite
Limited
KPIs
Relative CO2 emissions,
Use of secondary raw material,
Revenue, Adjusted EBITA margin,
Adjusted EPS, ROIC
Internally monitored metrics
Relative CO2 emissions, use
of secondary raw material,
progress towards the
achievement of environmental
and climate targets.
Examples of specific risks:
• Uncontrolled emissions.
• Inability to meet sustainability targets.
• Failure in meeting stakeholders’ expectations.
Risk mitigation
• Regular environmental audits and risk monitoring
at all sites.
• Well-established Board-level Corporate Sustainability
Committee (CSC) to oversee and challenge
management’s environmental and climate strategy.
• We manage, measure and report our climate- related
risks and opportunities according to the Task Force on
Climate – related Financial Disclosures (TCFD)
recommendations (as described on pages 100 to 105).
• A climate strategy focused on recycling, carbon capture
and usage, fuel switch, energy efficiency, and innovative
customer solutions. Read more in Tackling Climate
Change on pages 70 to 78.
• Increased focus on the use of secondary raw material
as a core element of the Group’s strategy.
• The geographical diversity of the Group’s operations and
the ability to shift production reduce the impact of single
events impacting specific geographies.
• Increased focus on sustainable procurement. Executive
Long - Term Incentive Plan (LTIP) and employee bonus
linked to achievement of the Group’s CO2 reduction and
recycling targets.
Risk movement
As a result of the increasing regulatory complexity and rising
risk of potential fines it was decided to change the risk appetite
from moderate to limited and have a more rigorous control
framework on Environment and Climate.
A continuing major risk for the Group is the proposed
introduction of CBAM. For the refractory industry, it could
create a significant impact.
The medium-term R&D programme focused on sustainability
improvement initiatives continued during 2023.
This risk was a key topic in the 2023 Board strategy workshop
and it is anticipated that wide reaching decisions will be taken
in 2024 to define the next phase of mitigating this risk.
The risk is within the Group’s risk appetite and is continuously
monitored by management.
6. Sustainability –
Health & Safety risks
Risk description
Employees and contractors may be exposed to Health & Safety (H&S) hazards in our plants of which inherent risks cannot
be completely eliminated.
Our activities and products may potentially cause accidents at our customers’ sites.
Link to strategy
Beyond the harm to individuals, H&S incidents can lead to high financial penalties, site closure and a loss in reputation
for the Group.
The health of our employees and contractors, both mental and physical, is a significant area of risk to the Group.
Target risk appetite
Averse
KPIs
LTIF, Revenue, Adjusted EBITA
margin, Adjusted EPS, ROIC
Internally monitored metrics
Total Recordable Injury
Frequency (TRIF), Lost Time
Injury Frequency (LTIF),
Preventive Ratio, Near Misses,
Unsafe Situations.
Examples of specific risks:
• Fatal or serious accident at manufacturing or customer site.
• Site shut down due to H&S incidents.
• Loss in reputation for the Group due to severe H&S accidents.
Risk mitigation
• H&S objectives are defined as a core Company objective,
and the performance is constantly monitored.
• H&S approach is based on leading global standards and
practices, including regular risk monitoring, emphasis on
“near miss” reporting and root cause analysis.
• Focus on collaboratively enhancing the H&S approach
at customer and supplier sites.
• Extensive focus on H&S at the Corporate Sustainability
Committee.
• Specific action plans in the event of employee or
contractor H&S incidents.
• Globally harmonised safety instruction videos
• Global personal protective equipment (PPE)
standards implemented.
Risk movement
The risk level has increased since 2022 and is now outside the
risk appetite.
The fatal accidents in November 2023 and February 2024
show the risk level and the challenge of maintaining high H&S
standards across the wide range of risk factors at the diverse
Group locations. This has led to an increase in the likelihood
rating of this risk.
Safety remains the top priority for the Group with increased
focus, investment and management efforts seeking to improve
the overall H&S performance and bring the risk back to within
the risk appetite.
The broad range of measures enacted following the
comprehensive root cause analysis of the recent accidents
will include external specialist-led reviews and initiatives
to improve working practices and drive significant cultural
change in relation to H&S.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
5 5
STRATEGIC REPORT Risks
Principal risks continued
7. Regulatory and
compliance risks
Risk description
The Group faces increasing regulatory complexity and operates in some geographies with inherently high corruption risks.
We strive to establish a culture of compliance throughout the organisation.
Link to strategy
Target risk appetite
Averse
KPIs
Revenue, Adjusted EBITA margin,
Adjusted EPS, ROIC
Internally monitored metrics
Completion rate of various
internal compliance trainings,
whistleblowing reports, data
privacy incidents.
We are exposed to regulatory and compliance risks which may result in financial losses or operational restrictions.
Regulatory changes could impact the profitability of our operations and require investment to achieve compliance.
Examples of specific risks:
• Failure to act in accordance with our Code of Conduct.
• Violation of anti-corruption laws by employees or third-party representatives.
• Violation of data privacy regulations.
• Violation of sanctions and export controls regulations.
Risk mitigation
• Ethical values supported by strong corporate culture.
• Code of Conduct and compliance policies and
procedures.
• Enhancement of global training, documentation of
compliance matters and communication.
• Various whistleblowing channels are available to
employees and external parties to report compliance
concerns. Concerns can also be reported anonymously,
and all reports are followed up by qualified professionals.
• Range of interventions performed in conjunction with
each acquired business to assess regulatory risk and
introduce and embed the Group’s compliance approach.
Risk movement
The likelihood of this risk (and therefore the overall assessment)
has increased due to a consistently more complex regulatory
environment, particularly ensuring the Group’s compliance
with all relevant sanction packages. Additionally, ensuring
and demonstrating that acquired entities have a consistent
approach to compliance increases the risk level until the
integration processes are significantly progressed.
The overall risk level is within the Group’s risk appetite but
requires close monitoring. The risk continues to be monitored
by management.
8. Cyber and information
security risks
Risk description
The Group’s reliance on IT systems and the greater focus on digitalisation result in a growing exposure to cyber and
information security risks.
Link to strategy
Target risk appetite
Limited
KPIs
Revenue, Adjusted EBITA margin,
Adjusted EPS, ROIC
Internally monitored metrics
Security incidents classified by
severity, phishing test fail rates,
triage escalation time.
The possible impact of cyber and information security risks could range from operational disruptions, loss of intellectual
property, legal compliance issues and frauds, to significant reputation losses.
Examples of specific risks:
• Intellectual property or confidential data theft.
• Personal data breach.
• Software or hardware failure leading to critical business process interruption.
• Cyber-attacks on office and production IT leading to financial losses (e.g. ransomware, sabotage).
Risk mitigation
• EMT crisis management simulation exercise held
focusing on cyber security.
• Global information and cyber security policies in
line with information security best practices, standards
and frameworks.
• Continuous awareness campaign and training.
• Regular risk assessment and penetration testing.
• Cyber security detection and response team.
• Network, device and application protection.
• Audit & Compliance Committee oversight and specific
focus on cyber security-related controls.
• Email security (phishing and malware protection).
• Operations Technology (OT) security monitoring to
protect our production.
• Security oriented approach when integrating newly
acquired companies.
Risk movement
The Group experienced a continued increase in the inherent
risk level of cyber and information security risks due to the
fast-evolving cyber and information security global landscape.
The Group continued to implement additional risk-mitigating
measures to respond to this rising threat, including awareness
campaigns, data encryption and OT security monitoring. The
crisis management simulations will be extended to each region
in 2024. Due to a continuous and strong development of
several mitigation measures, the overall residual risk score
remained unchanged from 2022.
The risk was evaluated to be within the Group’s risk appetite
and closely monitored to enable fast to drive fast responses to
changing external threats.
5 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
9. Ability to strategically
price and deliver price
increases
Link to strategy
Target risk appetite
Moderate
KPIs
Revenue, Adjusted EBITA margin,
Adjusted EPS, ROIC
Internally monitored metrics
Price increase realised,
price fulfilment, leading
cost indicators.
Risk description
The Group is exposed to increases in its variable costs such as raw materials, energy, logistics and labour costs.
To achieve the Group’s margin targets, it is crucial that rising costs are identified early through the monitoring of leading
indicators and that these are effectively passed on to the Group’s customers.
The Group can suffer significant financial loss should these costs not be fully passed on in a timely manner whilst preserving
customers’ relationships and our market share.
Examples of specific risks:
• Inability to identify early signs of increases in the variable costs.
• Inability to effectively negotiate price increases with customers.
Risk mitigation
• Consistent monitoring of leading indicators to identify
early signs of externally driven cost inflation.
• Management focuses on effectively negotiating price
increases with customers without compromising
relationships and market share.
• Close management monitoring of progress towards
price increase implementation.
• Mitigation of energy cost increases through a
combination of strategies which include energy hedging,
alternate fuel supplies and energy supply guarantees.
Risk movement
2023 saw the continued positive impact of the measures
taken in 2022 to improve the management of this risk.
The challenge in 2023 evolved into maintaining the price
levels and margins established in 2022 as cost pressures
have eased.
The significant progress made in risk mitigation ensures
this outlook remains within the Group’s risk appetite. Lead
indicators and mitigation methods are continually monitored
by management to enable a fast reaction to additional
changes in external costs. Focus remains on structural
process improvements to enhance visibility over internal
and external costs changes.
10. Organisational capacity
to execute strategy,
including demonstrating
Company cultural values
Risk description
The Group’s corporate culture, combined with an optimal internal structure, adequate skills and resources, are key to
ensuring the delivery of the Group strategy. To ensure access to adequate skills, the Group is focused on being able to retain
talent as well as attract talent from the market.
A key focus of the Group’s corporate culture is gender, ethnic and generational diversity, which is seen as an important driver
to enhance performance.
Link to strategy
Target risk appetite
Limited
KPIs
Gender diversity in leadership,
Voluntary employee turnover,
Adjusted EBITA, Adjusted EPS,
ROIC
Internally monitored metrics
Gender diversity in leadership,
Voluntary Employee Turnover,
Adjusted EBITA from strategic
initiatives, ROIC on strategic
initiatives.
Examples of specific risks:
• Inability to attract and retain top talent.
• Lack of accountability and responsibility.
• Inconsistent behaviour across the Group.
Risk mitigation
• Specific focus on People and Culture strategy in the
Board and EMT 2023 strategy workshops.
• Continuous emphasis on the Company culture as a key
enabler of performance and driver of strategy execution.
• Range of other awareness-based leadership training and
initiatives to support the attraction and retention of
“Generation Z” talent.
• Dedicated leadership capability enhancement
programme.
• “Tone from the Top” leadership culture.
• Developing talent, enhancing diversity and promoting
Company culture as significant components in the
People Cycle.
• Trainee programme to develop graduates into future
leaders.
Risk movement
The risk has decreased due to improved business
performance and the demonstrated positive outcomes from
the regionalisation organisation model supported by the
successful implementation of other key internal initiatives to
promote effective strategy delivery and enhance the overall
capability levels of RHI Magnesita management.
The risk appetite was tightened to ensure focus on people
retention and managing any impact within acceptable levels.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
5 7
STRATEGIC REPORT Driving change
Delivering transition
Shaping tomorrow
RHI Magnesita is committed to sustainability
leadership in the refractory industry. Facing
multiple challenges including disruption to
supply chains, cost inflation, energy market and
geopolitical instability and climate uncertainty,
we respond with innovation and adaptability to
deliver value for all stakeholders.
5 8
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Recycling rate
12.6%
2018: 3.5%
RHI Magnesita has developed proprietary technology
for increasing the use of secondary raw materials with
no loss in refractory performance. This reduces customer
waste and eliminates CO2 emissions which would
otherwise be released in the mining and processing
of new raw materials. Since 2018, the Group has
accumulated over 1Mt of CO2 savings.
CO2 intensity reduced by
12%
2022: 8%
RHI Magnesita has made strong progress against its
goal to reduce CO2 intensity by 15% by 2025, through
improving recycling rates, switching to alternative
fuels and increasing its use of electricity generated
from renewable sources. Our 12% intensity reduction
compares to a 2018 baseline adjusted for 2023 M&A,
or 16% excluding M&A adjustment.
Female representation in senior leadership
28%
2018: 12%
RHI Magnesita seeks to improve diversity to create a more
inclusive workplace and benefit from a broader range
of experience and perspectives. Female representation
at Board level was 29% (2022: 33%) and at EMT plus
direct reports level gender diversity increased to 28%
(2022: 21%), against a target of 33% by 2025. Board
diversity will be restored to 33% if shareholders approve
the nomination of Katarina Lindström to the Board at the
2024 AGM.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
5 9
STRATEGIC REPORT Sustainability
Introduction
Our sustainability objectives are based on our core values.
We believe that long-term financial success is only
possible if we also deliver our sustainability goals.”
Herbert Cordt
Chairman
Highlights
RHI Magnesita was pleased to receive the
“Sustainability Disclosure of the Year” award
for its 2022 reporting from the Chartered
Governance Institute UK & Ireland, which was
independently judged against sustainability
reporting published by all FTSE 250 and
FTSE 100 index constituents. We are proud
to maintain high standards and we have
sought to further enhance our disclosure
this year in line with market practice and
developing regulations.
Key highlights include a further reduction in
CO2 emissions intensity driven by recycling,
investment into innovative technology solutions
for carbon capture and utilisation, SOx and
NOx emissions abatement and a growing
share of procurement expenditures now
managed through the EcoVadis ESG platform,
to incentivise better sustainability practices
amongst our suppliers.
The Group is undergoing a period of significant
change with nine acquisitions completed in the
period since December 2021. M&A presents
us with new challenges as we extend our
sustainable business practices into acquired
entities, seeking to deliver “Sustainable Growth”
for all stakeholders.
Our purpose
RHI Magnesita’s purpose is to master heat,
enabling global industries to build sustainable
modern life. Our advanced products are
essential for our customers in the steel, cement,
metals, glass, energy and chemicals industries.
Through the reliable supply of innovative
refractory products and services, we enable
our customers to sustainably deliver the basic
materials that are essential for modern life. We
aim to be our customers’ partner of choice on
their own decarbonisation journeys.
Our sustainability strategy
Our sustainability strategy is based on the ten
Principles of the UN Global Compact (UNGC).
RHI Magnesita’s sustainability strategy is
focused on:
• Excellent workplace Health & Safety.
• Climate change and environmental impact
mitigation.
•
Increased use of secondary raw materials
to reduce CO2 emissions.
• R&D investment to develop emissions
avoidance, alternative fuels, and carbon
capture, storage and utilisation technologies.
• Partnering with our customers to reduce
their emissions through innovative
refractory products or solutions contract,
including enabling technologies such as
EAF refractories.
• Sustainable procurement practices.
• Upholding diversity in the workplace.
• Building strong relationships with all
stakeholders including communities,
employees and governments
• Linking debt facilities and management
compensation to sustainability performance.
Our 2025 targets
Our 2025 sustainability targets are based
on engagement with internal and external
stakeholders and encompass CO2, energy,
recycling, diversity, Health & Safety and NOx
and SOx emissions.
Materiality
The Group conducts a formal materiality
assessment every other year to define the focus
of its sustainability management efforts and
the content to be reported. The assessment
identifies issues judged to have the greatest
impact on our business, people, communities
and the environment, and issues that matter
most to our stakeholders.
The most recent materiality assessment was
carried out in 2022 and reaffirmed the material
topics identified in 2019. The assessment
included an extensive online survey completed
by internal stakeholders including executive
Board members and employees and external
stakeholders including suppliers, investors,
customers, NGOs and business associations.
Contribution to the SDGs
We support the UN Sustainable Development Goals (“SDGs”) and have identified these as the goals our business is best placed to actively support.
Ensuring safe
working
environments
in its operations
Sponsoring
Education
and Youth
Development
CSR projects
Committed
to supporting
gender equity in
our workplace
on all levels
Committed to
continually
improve
the energy
efficiency of
its operations
and the use of
cleaner energy
sources
Offering
apprenticeship
opportunities,
investment
on skill
development
programs
Developing R&D
projects, setting
key partnerships
to enhance
Recycling and
Decarbonisation
(e.g. ReSOURCE
and CCUS –
MCi Carbon)
Investing
directly and
indirectly to
Education
& Youth
Development,
Health &
Medical
care and
Environment
Committed
to increase
the usage
of recycled
materials
and promote
and develop
the circular
economy
wherever
possible
Committed to
minimize direct
and indirect CO2
and other
greenhouse
gas emissions
Committed to
minimize any
other emissions,
pollution, during
operation or at
our customers
sites which
could adversely
affect humans,
or the
environment
6 0
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
The assessment also considered RHI Magnesita’s
risk management approach, to assess potential
impacts of the material topics. The impact of
each material topic was rated as low, medium
or high based on the highest rating of the risk
assessment, which considers four risk areas
(compliance, strategy, financial, and operations)
and the likelihood of occurrence. The potential
impact on the Group is represented by different
bubble sizes in the materiality matrix.
Standards, frameworks and
scope of report
RHI Magnesita is committed to transparency
and reports its sustainability performance
according to leading standards and frameworks.
In the year to December 2023 the main basis of
our sustainability reporting is GRI Standards.
As a supporter of the Taskforce on Climate-
Related Financial Disclosures (TCFD), we
have reviewed, identified, and quantified the
climate-related risks and opportunities relevant
to our business, with full details available in our
separate TCFD report for 2023. A summary of
our TCFD disclosures can be found on pages 99
to 105 of this Annual Report.
Materiality
t
n
a
t
r
o
p
m
I
y
l
e
m
e
r
t
x
E
9
2
1
10
8
5
6
4
3
7
The Group submits annual climate reports to
CDP and in 2023 the Group has maintained
an A- rating, which underscores the Group’s
leadership on climate action.
In accordance with EU taxonomy regulations,
we report the proportion of our revenue,
operating expenditure and capital expenditure
that are taxonomy-non eligible, eligible and
aligned according to Taxonomy delegated acts.
EU taxonomy disclosure can be found on pages
93 to 98 of this Annual Report.
This non-financial report for 2023 reporting year
(1 January 2023 to 31 December 2023) covers all
activities, sites and industrial assets operated or
contractually managed by RHI Magnesita N.V. or
one of its subsidiaries, except otherwise specified.
Assurance
RHI Magnesita commissioned Deloitte Audit
Wirtschaftsprüfungs GmbH to carry out an
independent third-party limited assurance
engagement on the Taxonomy Regulation
(EU) 2020/852) and GRI Standards.
Further details on the
assurance process and its
conclusions are available in
the Sustainability section
of the RHI Magnesita website.
RHI Magnesita’s integrated management
system is compliant with ISO standards
14001 (environmental), 50001 (energy),
45001 (occupational health and safety) and
9001 (quality).
We report gender diversity statistics to the
FTSE Women Leaders Review annually.
As a signatory of the UNGC since 2018, we
report annually on our progress, engagement,
and contribution to the UN Sustainable
Development Goals that are most relevant to our
business and operations. This report acts as our
Communication on Progress.
15
22
18
23
14
13
12
11
16
17
27
26
28
19
20
21
25
24
1
Biodiversity
2
3
4
5
Net zero
target
Public Affairs
Anticipation to
climate risks
Social impact on
supply chain
6
Partnerships
7
Communities
8
9
Sustainable
Supply Chain
Water
Management
10
Labour rights and
labour relationship
11
12
13
14
Extremely Important
Other Air
Emissions
Waste
Management
Human Rights,
Diversity and Inlusion
Benefits and
compensations
28
Risk
15
16
17
Climate change
and decarbonization
Energy
Efficiency
Data
Protection
18
Customer
19
20
21
22
23
24
25
26
27
Information
security
Business model
resilience
Legal
Compliance
Health &
Safety
SRM
(Recycling)
Governance and
Business Ethics
Talent attraction
and retention
Innovation and
digitalisation
Operational
Perfomance
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
6 1
STRATEGIC REPORTImportance RHI MagnesitaImportance StakeholdersImportantImportant
Sustainability
Introduction continued
Our 2025 targets
Material issue
Targets by
2025 vs 2018 baseline year
Progress in 2023
Units
1.
CO2 emissions
Reduce by 15% per
tonne of product –
Scope 1, 2, 3
(raw materials)
CO2 intensity has been reduced by 12% versus the revised 2018
baseline year as the Group increases the use of recycled raw
materials, shifts to more CO2 efficient energy sources and
increases renewable electricity usage.
Absolute (kt CO2)1
Relative (t CO2/t)2
2018
6,169
1.84
2019
5,381
1.82
2020
4,972
1.86
2021
5,691
1.76
2022
4,887
2023
4,583
1.71
1.62
SDG
2.
Energy
Reduce by 5% per
tonne of product
64% of purchased electricity was from low-carbon or renewable
sources in 2023. Scope 2 emissions increased
to 119kt due to M&A.
Absolute energy
consumption (GWh)
6,484
5,635
5,165
5,912
5,423
5,055
In 2023, operational energy intensity was 8% lower than 2018,
exceeding the target to reduce energy intensity
by 5% by 2025. Energy intensity is influenced by M&A, changes
to the extent of vertical integration and product mix changes as
well as the impact of energy efficiency initiatives.
Relative (MWh/t)2
1.94
1.91
1.93
1,83
1.89
1.79
3.
Recycling
4.
Diversity
Increase use
of secondary raw
materials to 15%
Recycling rate increased to 12.6% in 2023, with incremental
avoidance of 393kt CO2. Progress was diluted by M&A during
the year.
Use of secondary
raw materials %
3.8%
4.6%
5.0%
6.8%
10.5%
12.6%
Increase women on
our Board and in
senior leadership
to 33%
Gender diversity at Board level decreased to 29% and
increased to 28% at EMT + direct reports level, from 12% in
the 2018 baseline year and 21% in 2022.5 Board diversity will
be restored to 33% if shareholders approve the nomination of
Katarina Lindström to the Board at the 2024 AGM.
5.
Safety
Maintain LTIF at <0.5
(goal: Zero Harm
No Injuries)
LTIF reduced further to 0.16 (2022:0.20). Improvement in
frequency rates overshadowed by one fatality (2022: 1) and
two serious injury incidents.
6.
NOx and
SOx emissions
Reduce by 30%
by 2027 (vs 2018)
NOx and SOx reductions proceeding on track. China target
achieved in 2021 and US target in 2023 through installation
of NOx and SOx abatement technologies.
Board %
EMT and EMT
direct reports %
per 200,000
hours worked
7%
12%
23%
17%
25%
25%
38%
22%
33%
21%
29%
28%
0.43
0.28
0.13
0.19
0.20
0.16
NAM achieved
in 2023 (Europe
and SAM 2027)
1. CO2 emission data are calculated based on GHG Protocol methodology. Historical data have been adjusted to reflect new acquisitions in the baseline and methodology changes following
an external verification process that took place in July 2022. All assets acquired in 2023 are considered in the performance data except three minor production sites at Huron, Bussalla and
Bochum which are still undergoing integration.
2. Adjustments in line with the Greenhouse Gas protocol and refinement in reporting resulted in energy efficiency figures for 2018-2023.
3. Safety KPIs incorporate 7 new manufacturing plants: Jinan (New Emai)/China, Jamshedpur, Bhilai, Rajgangpur, Dalmiapuram, Khambalia/India.
4. Recycling KPI does not include newly acquired sites, which are foreseen to be fully integrated over 2024.
5. With the inclusion of the Board Nominated NED, who will be proposed to the 2024 AGM, the gender diversity of the Board is 33%.
6 2
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Material issue
2025 vs 2018 baseline year
Progress in 2023
Units
Targets by
1.
CO2 emissions
Reduce by 15% per
tonne of product –
CO2 intensity has been reduced by 12% versus the revised 2018
baseline year as the Group increases the use of recycled raw
Scope 1, 2, 3
(raw materials)
materials, shifts to more CO2 efficient energy sources and
increases renewable electricity usage.
Absolute (kt CO2)1
Relative (t CO2/t)2
2018
6,169
1.84
2019
5,381
1.82
2020
4,972
1.86
2021
5,691
1.76
2022
4,887
2023
4,583
1.71
1.62
SDG
2.
Energy
Reduce by 5% per
64% of purchased electricity was from low-carbon or renewable
tonne of product
sources in 2023. Scope 2 emissions increased
Absolute energy
consumption (GWh)
to 119kt due to M&A.
6,484
5,635
5,165
5,912
5,423
5,055
In 2023, operational energy intensity was 8% lower than 2018,
Relative (MWh/t)2
1.94
1.91
1.93
1,83
1.89
1.79
exceeding the target to reduce energy intensity
by 5% by 2025. Energy intensity is influenced by M&A, changes
to the extent of vertical integration and product mix changes as
well as the impact of energy efficiency initiatives.
Recycling
3.
4.
Diversity
Increase use
of secondary raw
materials to 15%
the year.
Recycling rate increased to 12.6% in 2023, with incremental
avoidance of 393kt CO2. Progress was diluted by M&A during
Use of secondary
raw materials %
Increase women on
Gender diversity at Board level decreased to 29% and
Board %
our Board and in
senior leadership
to 33%
increased to 28% at EMT + direct reports level, from 12% in
the 2018 baseline year and 21% in 2022.5 Board diversity will
be restored to 33% if shareholders approve the nomination of
Katarina Lindström to the Board at the 2024 AGM.
EMT and EMT
direct reports %
5.
Safety
Maintain LTIF at <0.5
LTIF reduced further to 0.16 (2022:0.20). Improvement in
(goal: Zero Harm
frequency rates overshadowed by one fatality (2022: 1) and
per 200,000
hours worked
No Injuries)
two serious injury incidents.
6.
NOx and
SOx emissions
Reduce by 30%
by 2027 (vs 2018)
NOx and SOx reductions proceeding on track. China target
achieved in 2021 and US target in 2023 through installation
of NOx and SOx abatement technologies.
1. CO2 emission data are calculated based on GHG Protocol methodology. Historical data have been adjusted to reflect new acquisitions in the baseline and methodology changes following
an external verification process that took place in July 2022. All assets acquired in 2023 are considered in the performance data except three minor production sites at Huron, Bussalla and
Bochum which are still undergoing integration.
2. Adjustments in line with the Greenhouse Gas protocol and refinement in reporting resulted in energy efficiency figures for 2018-2023.
3. Safety KPIs incorporate 7 new manufacturing plants: Jinan (New Emai)/China, Jamshedpur, Bhilai, Rajgangpur, Dalmiapuram, Khambalia/India.
4. Recycling KPI does not include newly acquired sites, which are foreseen to be fully integrated over 2024.
5. With the inclusion of the Board Nominated NED, who will be proposed to the 2024 AGM, the gender diversity of the Board is 33%.
3.8%
4.6%
5.0%
6.8%
10.5%
12.6%
7%
12%
23%
17%
25%
25%
38%
22%
33%
21%
29%
28%
0.43
0.28
0.13
0.19
0.20
0.16
NAM achieved
in 2023 (Europe
and SAM 2027)
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
6 3
STRATEGIC REPORT Sustainability
Governance
Governance structure
At Board level, a dedicated Corporate
Sustainability Committee supports the Board,
acting as an advisory body to ensure the long-
term sustainability of the business. The CSC
monitors performance against relevant KPIs
and assesses risks and opportunities associated
with climate change, environmental, Health
& Safety, stakeholder relations and other
ESG risks.
At EMT level, the Chief Technology Officer is
accountable for driving sustainable practices
within the organisation and delivering the
Group’s sustainability targets. The CTO
actively engages in overseeing and integrating
technologies and methodologies across various
aspects of our operations. Strategic decisions and
technological initiatives contribute significantly
to the achievement of the Group’s sustainability
targets, ensuring that innovation and R&D is
aligned with our commitment to sustainability.
Reporting to the CTO, the Global Sustainability
Team collaborates closely with the CTO and
CSC to monitor progress against targets, advise
on regulatory developments, compile reporting
materials and engage with external ratings
agencies. A collaborative approach ensures
co-ordination with key functional areas such
as Health & Safety, environment, sustainable
technology and decarbonisation, recycling,
finance, risk management and compliance,
and procurement. This governance framework
facilitates a comprehensive and integrated
approach to sustainability.
At the operational level, plant managers
and regional presidents are accountable for
the day-to-day performance of the Group’s
assets, including delivering progress towards
sustainability goals. Regional presidents report
to the Chief Customer Officer who in turn
reports to the Chief Executive Officer.
This governance structure combines
transparency and accountability with functional
expertise.
Ethics and compliance
In 2023 we continued to embed and evolve
our compliance policies and procedures. We
take a zero-tolerance approach to incidents of
fraud, bribery or corruption in our business. This
approach is set out in our Code of Conduct,
which was updated and re-launched in 2023,
and in our Supplier Code of Conduct. Code
of Conduct has been streamlined with a
heightened emphasis on key areas, including
business ethics, integrity, health and safety,
anti-corruption, legal compliance, data privacy,
sustainability, and conflict of interest avoidance.
This revision aims to ensure stakeholders align
with our values, incorporating feedback gathered
from across the Group. All 114 governance
body members and employees have been
informed about AC policies and procedures
and received e-learning to be completed as
mandatory training. Region-wise breakdown
indicates the following completion rates: Europe/
CIS/TR at 87%, China & East Asia at 99%,
Americas (North and South America) at 93%,
and India & West Asia at 93%. All business
partners have acknowledged and agreed to
the Company’s standard contract terms, which
include adherence to both RHI Magnesita’s code
of conduct and the supplier code of conduct.
These documents are easily accessible through
its website, ensuring a thorough communication
reach to all business partners.
Comprehensive mandatory online training is
used for topics such as business ethics, data
privacy, and sanctions and export controls, and
regular monitoring of completion rates ensures
that all office-based employees, including
new hires, are adequately trained. In 2023 a
Human Rights module was added to the training
syllabus and updated Business Ethics training
was implemented to accompany the Code of
Conduct re-launch.
We regularly conduct compliance risk
assessments, such as fraud risk assessments, with
results presented to management and the Audit
& Compliance Committee each year. The regular
risk assessments conducted at Group, regional
and plant level cover Compliance risks (including
corruption risks). The plant risk assessment
carried out in 2023 included 47 plants and
mines (100% coverage). We use digital
registers, workflows and employee guidelines
to address, document and monitor conflicts of
interest declarations, gifts and invitations, and
community investment approvals.
Business partners (e.g. customers, sales
intermediaries and suppliers) and transactions
such as mergers or acquisitions are subject
to a separate due diligence process. All sales
agents are certified by Ethixbase360 (formerly
TRACE International), a leading international
organisation specialised in third-party due
diligence solutions.
Our focus on human rights and labour rights
is being expanded to include suppliers via a
programme of supplier audits. In 2024, we
will continue to strengthen our human rights
due diligence processes within the Group and
in the supply chain. Following recent M&A
activity, certain German legal entities within the
Group are now subject to the requirements of
the German Supply Chain Due Diligence Act.
In compliance with this legislation, a Human
Rights Officer has been appointed. The Board
approves an annual statement in accordance
with the UK Modern Slavery Act 2015 and the
California Transparency in Supply Chains Act.
In 2023 particular attention was given to the
integration of acquired entities in respect of
ethics and compliance standards. Extensive
work was conducted during M&A integration
plans to understand the compliance culture
of each new entity and work to harmonise
their approach with Group practices.
Emphasis was placed on face-to-face
interaction and discussion to jointly evolve
Business Ethics approaches.
We encourage anyone with ethics or
compliance concerns to report them to an
independently operated hotline, which is
confidential and can be used anonymously.
We are firmly committed to whistleblower
protection, including to the principle of
non-retaliation. Reports are independently
investigated and appropriate follow-up actions
taken. The Audit & Compliance Committee
receives regular data on cases submitted via
the hotline and other channels.
In 2023, the hotline and additional reporting
channels generated 166 reports (versus 64 in
2022). Out of these, eight cases are classified
under the category ‘Bribery & Corruption’.
All cases are investigated internally by IA,
R&C department with external legal support
if deemed necessary. In case a complaint
substantiates, RHIM takes appropriate action
to address the immediate risk and implement
preventive actions with immediate effect. The
significant rise in cases results primarily from
the whistleblowing hotline being used in
Brazil as a primary channel to escalate human
resource related concerns. Additional cases
were reported through recently acquired
entities and as staff returned to working
patterns in office locations after COVID-19
restrictions ended.
6 4
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Sustainability
Our business
Related SDGs
Our customers
Our customers
Product carbon footprint
To increase transparency for our customers and
to enable them to accurately calculate their own
Scope 3 supplier emissions, the CO2 footprint
of each of our c.200,000 refractory products
is made available in our Customer Portal.
The calculations adhere to the ISO 14067
standard, encompassing “cradle-to-gate”
greenhouse gas emissions, including raw
material extraction and processing, refractory
production and packaging.
The carbon footprint includes all Scope 1 and
Scope 2 emissions and part of the Scope 3
emissions associated with the manufacturing
of the product. The largest share of Scope 3
emissions arises from the purchase of refractory
raw materials that are not sourced from within
the Group. Limited data is available from
suppliers for the carbon footprint of externally
purchased raw material, although the Group
has extensive knowledge of its own raw material
production process. We are continuing to
work with suppliers to refine our estimates of
emissions from purchased raw materials.
CO2 footprint data enables us to (i) better
address customer needs by providing the most
suitable technical and sustainable products
and solutions; (ii) gain a competitive edge via
sustainability criteria in tender processes, and
(iii) incorporate sustainability and environmental
indicators into our product design and
production cycles.
RHI Magnesita has taken several steps in
digital customer solutions in 2023 to reduce
carbon emissions and promote sustainability.
These include:
• Launching a Minimum Viable Product
concept on its Customer Portal, which
provides customers with access to the
product carbon footprint and a yearly
report on sustainable refractory materials.
This creates initial awareness of the CO2
footprint of refractories.
• Consolidating the Lining Evaluation
Scan product for cement rotary kilns,
which improves material selection and
lifetime, reduces waste, and lowers overall
carbon footprint.
• Supporting customers in reducing energy
and specific refractory consumption in steel
ladles through the Ladle Slag Model, which
optimises the slag conditioning process.
• Applying digital solutions for the operation
of rotary kilns in our own production plants,
delivering production optimisation and
efficiency gains.
• Collaborating with customers on research
projects to minimise energy losses and
reduce emissions.
Other solutions and products which directly
contribute to CO2 emissions reductions at
customer sites include cold setting mixes,
EAF direct purging plugs and converter gas
purging products.
Low-carbon products
The progressive reduction of CO2 emissions has
become a fundamental target for our customers
and RHI Magnesita aims to be the preferred
refractory partner as this transition is realised.
We are also committed to developing a circular
economy in the refractory industry, aiming at
a zero-waste product life cycle to preserve
natural resources.
RHI Magnesita has developed low-carbon
footprint products to address both customer
priorities: to reduce CO2 emissions whilst
maintaining refractory performance. In 2023,
the Group launched a new basic gunning
mix with high recycled material content.
Branded ANKERJET X, this low-carbon
gunning mix achieves an 85% reduction in
carbon footprint from refractory consumption
with no loss of performance compared to
conventional products.
Increased use of recycled materials improves
raw material availability, reduces the cost and
resource-intensive process of raw material
extraction and processing and significantly
reduces CO2 emissions, with each tonne of
recycled material used saving approximately
1.5 tonnes of CO2 emissions. Further examples
of CO2 savings from recycling can be found in
the case studies on pages 66 and 67.
Digital solutions
RHI Magnesita offers digital solutions and
associated physical equipment which achieve
CO2 emission reductions through process
efficiencies, such as wear monitoring and
gunning repairs to extend the safe working life of
refractory linings. Safely extending the working
life of refractory linings can achieve significant
energy savings for steel producers by reducing
the number of heating and cooling cycles
required per unit of steel output.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
6 5
STRATEGIC REPORT Sustainability
Our business continued
CASE STUDY – LOW CARBON PRODUCTS
ANKRAL LC Series
Containing up to 50% recycled
materials, RHI Magnesita’s Ankral
LC Series has been designed to help
cement producers reduce emissions
in their supply chain, without
compromising technical requirements
and specifications.
The Group offers a circular economy
service to transform used refractory
bricks into valuable secondary raw
materials. The removal process,
pre-separation and transportation to
recycling hubs are usually performed
by the customer team, supported by
RHI Magnesita recycling experts or
partners from the Group’s MIRECO joint
venture. At recycling hubs, chemical
analysis, sorting and a patented cleaning
process transform waste into usable
secondary raw materials.
In 2023, the Ankral LC Series was
confirmed to have equivalent
performance to non-recycled products
under challenging conditions:
Case Study A, Central Europe: Ankral
LC installed in January 2022, exhibited
uniform wear after a one year campaign.
The product was installed in the upper
part of the central burning zone, where
high thermal load in combination with
occasional clinker melt infiltration
and coating loss are the typical wear
mechanisms. The lining’s residual
thickness after a one year campaign
surpassed expectations, confirming
its equivalent performance to other
iron-rich central burning zone bricks
on the market.
Case Study B, European Kiln: Ankral
LC in the lower transition zone showed
a comparable performance to the
standard Ankral product after a one
year campaign.
The Ankral LC Series showcases a
successful synergy of sustainability
and performance, addressing modern
clinker production challenges. By
recycling used bricks into new refractory
products, this series contributes to
a circular economy, reduces waste,
and minimises the carbon footprint
in refractory production.
6 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
CASE STUDY – LOW-CARBON PRODUCTS
Sustainable Gunning Mixes
The use of RHI Magnesita’s sustainable
gunning mixes offers potential to reduce
customer Scope 3 emissions from
refractory usage in steel plants.
The customer transitioned from a
standard basic gunning mix with a
product carbon footprint of 1.66 tCO2e/
tprod to a recycling gunning mix with
a significantly lower footprint of 0.979
tCO2e/tprod. This resulted in a 42
tonne decrease in CO2e emissions
associated with the 62 tonnes of product
consumed by the customer. This quantity
of avoided emissions is comparable
CASE STUDY – DIGITAL SOLUTIONS
to those produced by a diesel truck
circumnavigating the globe.
This case study illustrates the tangible
environmental benefits that can be
obtained through the use of sustainable
gunning mixes and the wider potential
for our customers to make significant CO2
emissions savings by focusing on the
footprint of high CO2-intensive items in
their supply chains. As Scope 3 emissions
become more closely analysed the
attractiveness of low-carbon footprint
products increases.
Lining Evaluation Scan
RHI Magnesita offers innovative digital
solutions designed to reduce CO2
emissions through enhanced process
efficiencies. Our solutions, such as wear
monitoring and gunning repairs, extend
the safe working life of refractory linings,
contributing to a lower carbon footprint.
A key component of our approach in the
cement industry is the Lining Evaluation
Scan for rotary kilns, which improves
material selection and lifetime, reduces
waste, and lowers the overall carbon
footprint of the operation.
The Lining Evaluation Scan addresses
the shortcomings of current scanning
methods for lining evaluation. Traditional
methods, involving drilling and manual
measurement, pose safety risks and are
time-consuming. RHI Magnesita’s LEICA
RTC 360 scanner revolutionises this
process. Mounted on a specialised tripod,
and featuring portable lighting, it ensures
efficient and safe scanning. Equipped
with lidar technology, the scanner swiftly
captures detailed information, creating
a 3D-point cloud and high-definition
pictures simultaneously, covering a
wide range.
The scanning process requires minimal
preparation time and takes around 45
minutes to map the entire kiln. A Rapid
Evaluation Report is delivered within two
hours, facilitating quick decision-making.
Additionally, through the customer
portal, the scanning system provides a
visual representation of remaining lining
thickness, customisable acceptable
thickness criteria, and a comprehensive
exploration of the lining history. This
empowers users to make informed
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Read
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decisions about kiln maintenance, with
graphical trends and detailed insights
into each zone.
With a customer-focused and innovative
approach, RHI Magnesita underscores its
commitment to providing solutions that
enhance sustainability, efficiency, and
customer satisfaction.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
6 7
STRATEGIC REPORT
Sustainability
Our business continued
Related SDGs
Our suppliers
Our suppliers
Supply chain due diligence
RHI Magnesita’s top 20 suppliers account for
approximately 20% of our expenditure and the
top 200 around 55%. Procurement extends to
suppliers producing refractory raw materials,
energy suppliers facilitating the conversion of
raw materials to finished products, transport
suppliers, and manufacturing suppliers.
While contractual commitments generally
do not exceed one year, the Group may enter
into longer contracts on an exception bases
for critical raw materials and energy. Our
operational focus is on capital and energy
intensive processes, especially in equipment for
raw material and finished product production.
Most specific raw materials are sourced from
China, resulting in a lengthy supply chain.
Procurement spending in our industry equates
to about two-thirds of revenue, on average.
Despite a high reliance on Chinese raw
materials in the broader refractory industry,
RHI Magnesita’s suppliers are predominantly
situated in the regions where its production
facilities operate. Europe leads in supplier
concentration, followed by China, Brazil,
the USA, and India. In our commitment to
sustainable procurement, RHI Magnesita
aims to integrate sustainability priorities
into our procurement processes.
Since 2022, RHI Magnesita has established
a framework for supply chain due diligence,
to ensure ethical and compliant practices across
the Group’s supplier network. A comprehensive
Supplier Code of Conduct outlines the
standards and expectations the Group holds
for all partners in the supply chain. Supplier
desktop evaluations and on-site inspections
are also used to proactively identify and address
any potential risks, fostering a sustainable and
resilient supply chain.
Supplier Code of Conduct
The Supplier Code of Conduct requires
suppliers to follow the same principles as set
out in RHI Magnesita’s own Code of Conduct.
It is distributed to all suppliers who are required
to confirm compliance.
Supplier assessments through EcoVadis
An assessment system developed with
EcoVadis is used to rate potential suppliers for
sustainability impacts such as energy use, CO2
emissions and waste. The ratings resulting from
this assessment form an important part of the
Group’s procurement decision-making process.
The initial phase of supplier assessments was
started in 2021 based on contract size and risk
mapping. The process has continued in 2023,
now covering 41% of spend. Our target is to
cover two-thirds of the supplier base by spend
by 2025, including all suppliers delivering raw
materials with a high CO2 intensity.
Supplier on-site assessments
The Group conducts on-site assessments to
evaluate suppliers based on product quality,
Health & Safety and ESG aspects.1 In 2023,
RHI Magnesita has significantly increased the
number of on-site assessments to 42, compared
to nine in 2022. The assessments were
conducted worldwide, including 16 in India
and ten in China.
Supplier product carbon footprint
Since the contribution of raw material extraction
and processing is the largest single source of
CO2 emissions in the refractory value chain,
the Group is seeking to increase the accuracy
of its supplier CO2 emissions data. In 2023
our specific focus with selected raw material
suppliers included raising their awareness of
our data requirements and providing support
on the required calculation methodology.
Accurate information enables the Group to
prioritise suppliers with lower emissions in order
to minimise Scope 3 emissions. Engagement on
the subject of emissions also demonstrates to
potential suppliers that CO2 reduction is a key
priority for the Group, which is expected to drive
long-term changes in supplier behaviour and
energy use.
Supplier collaboration
RHI Magnesita is committed to shaping a
more resilient and sustainable supply chain.
Therefore, the Group seeks collaborations
with strategic suppliers to create more
sustainable goods and services, with lower
environmental impact. Several collaborations in
2023 resulted in projects with positive impacts
such as emission reduction in our packaging
materials and optimisation of transport routes
to reduce emissions.
1. RHI Magnesita’s supplier assessment comprise of 6 modules covering business ethics, social and environment aspects, climate change, responsible sourcing,legal compliance, Health & Safety.
6 8
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
CASE STUDY – SUPPLIER ENGAG EMENT
Recycled Packaging Solutions
Suitable packaging materials are essential
to ensuring the safe transportation of our
products whilst protecting them from damage.
We are committed to continuously improving
the efficiency of the materials and products
which we use in our packaging process.
With this aim in mind RHI Magnesita launched
a project to increase the use of recycled
plastic (“PCR” or Post-Consumer-Recycled)
in its packaging materials, resulting in multiple
benefits from a sustainability perspective.
Firstly, increasing the share of recycled
content leads to lower greenhouse gas
emissions and energy consumption
associated with the packaging life cycle.
Secondly, the introduction of recycled
materials results in a reduction of the
amount of waste that ends up in landfills or
incinerators, which reduces the negative
impact on the environment.
The project included two different types of
packaging materials: stretchfoils and big bags.
A stretchfoil is a thin plastic film stretched
around our finished shaped refractory
products to ensure safe transport. Big bags
are used in the transportation of unshaped
products. The goal of the project was to
convert the entire stretchfoil and big bag
demand in Europe to 30% PCR content while
preventing any potential negative impacts
on the packaging process or transport safety.
Following collaboration between the Group
and its suppliers, new packaging materials
were successfully developed and tested to
fulfil our high-quality standards.
Since Q4 2023 for stretch foil and from the
beginning of 2024 for big bags (up to 1.5t),
packaging for products manufactured in
Europe must now contain a minimum 30%
of recycled plastic. The CO2 savings from this
change are calculated to be 480 tonnes per
year (an equivalent of 54 homes energy use
for one year) and total emissions from these
materials has reduced by 23%.
The project to increase the use of recycled
content in product packaging has been
a successful initiative that has improved
our environmental performance and
strengthened our relationships with
our suppliers.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
6 9
STRATEGIC REPORT Sustainability
Our planet
Related SDGs
Carbon Emissions per Scope1
Scope 1 of which geogenic emissions
Scope 1 of which fuel-based emissions
Scope 2 electricity
Scope 3 emissions only Raw Material
Carbon Emissions Reduction
2018 vs. 2023
33%
50%
14%
2018
2023
Scope 3 (only raw material)
Scope 2
Scope 1
Tackling Climate Change
Driving down carbon emissions is a key priority
for RHI Magnesita. In addition to charting our
own transition, we want to be a trusted partner
to our customers on their journey to a low-
carbon economy.
The Group’s emission reduction plans target
a 15% reduction in CO2 emissions intensity for
Scope 1, 2 and 3 (raw materials) emissions by
2025, compared to 2018. Our climate strategy
is based on:
1) reducing the carbon footprint of our raw
materials, including through the increased
use of circular raw materials;
2) increasing energy efficiency in our
operations;
3) reducing the carbon intensity of our
energy sources; and
4) providing innovative solutions to reduce
customer emissions.
In 2023, total CO2 emissions (Scope 1, 2 and
3 - raw materials) were 4.6 million tonnes and
our emissions intensity has reduced by 12%.
Since the baseline year of 2018, the Group has
exceeded its initial targets in recycling, offset
by delayed progress in switching to alternative
fuels. Biofuel switches have progressed but
the original strategy to convert from solid fuels
to natural gas is now being reassessed due to
capital expenditure constraints, infrastructure
availability, changes in the market outlook for
natural gas and new possibilities for cost-
effective carbon capture and sequestration
which offer much higher CO2 savings.
Achieving our short term objectives is
therefore reliant on the continued success
of our recycling initiatives.
The Group is currently pursuing a substantial
M&A programme, in line with its growth
objectives. In the short term, acquisitions can
present a potential downside for sustainability
targets such as recycling rates or CO2
emissions intensity until they are integrated.
Harmonising diverse standards, supply chains,
and operational processes poses challenges
and can affect overall environmental KPIs in
the short term. To mitigate this impact, the
Group seeks to align sustainability practices
and implement efficient transition strategies
as soon as possible following acquisition.
A comprehensive disclosure of our climate
governance, strategy, and risk assessment can
be found in the Task Force on Climate-related
Financial Disclosures (TCFD) on pages 99-105
of this report.
Decarbonisation of refractory
production
Refractory production is a ‘hard to abate’
industry. Raw material processing generally
uses fossil fuels for ignition and burning of
carbonate rock, which results in significant
geogenic CO2 emissions. These geogenic
emissions are classified as Scope 1 when
resulting from the Group’s own production or
Scope 3 in the case of externally purchased
raw materials.
Significant energy is also required for firing
of products in the refractory manufacturing
stage. Further emissions are generated in the
shipping and distribution of refractory products
to customers worldwide.
Through its investment in research and
development of emissions avoidance or
reduction technologies, the Group has
developed a theoretical pathway to decrease its
Scope 1, Scope 2 and Scope 3 (raw materials)
carbon emissions from refractory production to
close to zero. The required measures have been
prioritised in order of deliverability, with those
items that are fully within the control of the
Group to be expedited.
The first stage of CO2 emissions reduction
is to be delivered through measures which
can be implemented by the Group without
significant external support, including
increased use of recycled raw materials, fuel
switches and energy efficiency measures. It is
estimated that these measures could deliver
an absolute reduction of around one and half
million tonnes of CO2 emissions, or 24% of
the baseline total by 2035. Beyond this initial
reduction, decarbonisation measures become
progressively harder to deliver. Recycling has a
natural ceiling since refractories are consumed
during use and only residual materials can be
reclaimed, whilst fuel switches to natural gas
only offer a partial reduction. The pathway for
stages 2 to 4 is reliant on the provision of (i) new
infrastructure or renewable energy sources
such as hydrogen by outside parties; (ii) the
use of technologies which do not yet exist or
are not proven at pilot or production scale; and
1.
In accordance with GHG Protocol, biogenic emissions are reported independently from the scopes. In 2023, our biogenic emissions were 17 thousand tonnes.
7 0
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
(iii) significant capital expenditure, which may
not be possible for the Group to generate from
its existing operations, obtain from its finance
providers or receive via government funding.
2. Annually updating its decarbonisation
pathway based on the latest developments
in technology, infrastructure and estimated
capital expenditure.
The costs of emitting carbon, which could
provide an incentive to accept higher capital
expenditure and operating costs for the
purposes of reducing CO2 emissions, apply
in certain jurisdictions and may provide a
business case for reducing emissions in those
geographies. Estimates of future potential
CO2 costs are built into the Group’s financial
forecasts and planning decisions. However, the
Group has a global production and customer
network and competes with other refractory
producers who are not subject to additional
CO2 costs.
Our decarbonisation commitment
Working within these limitations, the Group
is committed to:
1. Leading the refractory industry by
decarbonising its operations as fast
as sustainably possible.
3. Continuing to invest in the development of
new technologies to avoid CO2 emissions,
proving our technical readiness to use
alternative low-carbon energy sources
and to capture CO2 emissions for storage
or utilisation.
4. Offering our customers enabling
technologies for their own low-carbon
production technologies together with low-
carbon products and solutions contracts
(with full transparency on carbon footprint)
to enable them to reduce their Scope 3 CO2
emissions from the purchase of refractories.
5. Lobbying governments to invest in the
necessary infrastructure to decarbonise
the refractory industry and other energy
intensive industries, including additional
renewable energy generation, hydrogen
supply networks, CO2 transportation and
storage and carbon capture and utilisation
technologies.
6. Working with partners in the private sector
to develop new renewable energy solutions,
hydrogen energy networks and carbon
capture and utilisation technologies.
Offsetting carbon emissions
The Group has significant CO2 emissions
within its own value chain and there are large
emissions savings that can be delivered for
its customers through improved solutions
contracts or other solutions. The Board therefore
considers that the priority should be to allocate
capital and other resources to reducing the
Group’s own CO2 footprint and the emissions
of its customers rather than investing in carbon
offset projects. The Board believes that taking
this approach will deliver a faster, greater and
more sustainable decrease in net CO2 emissions
than could be delivered by allocating capital
to offsets.
Theoretical decarbonisation pathway
7,000
6,000
5,000
4,000
3,000
2,000
1,000
)
t
k
(
s
e
n
n
o
t
d
n
a
s
u
o
h
t
2
O
C
0
2018
2025
2030
2035
2040
2045
2050
2055
2060
CO2 Avoidance
CCSU
Green Energy
Sustainable Supply Chain
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
7 1
STRATEGIC REPORT
Sustainability
Our planet continued
Recycling and the circular economy
RHI Magnesita maintains its industry leadership
in utilising recycled minerals and recycling has
been the major contributor to the Group’s CO2
emissions reductions to date. For every tonne
of recycled refractory material that is re-used,
approximately 1.5 tonnes of CO2 emissions are
avoided compared to the processing of virgin
raw material. Recyling is the most effective
route to reduce CO2 emissions in the short term
towards our 2025 emissions intensity target.
Recycling also has significant waste
management and circular economy benefits
for our customers.
Historically, recycling rates for refractories
were low due to reduced performance levels
for finished products containing reclaimed
materials. RHI Magnesita has now demonstrated
using its innovative processes to improve purity
and real-world operational examples that
recycled materials can now be incorporated
without compromising refractory performance.
In 2023, the Company achieved a recycling
rate of 12.6%, representing a 20% increase
from 2022. This significant progress has been
driven by continuous efforts and substantial
investments in recycling infrastructure and
translates to a CO2 saving of 393 ktpa.
Over €4 million has been invested in capital
expenditure projects related to recycling to
date, focused on adopting new technologies
and upgrading collection, sorting and
storage facilities.
Having achieved the initial recycling rate
target of 10% three years early, the Group
has now adopted a new target of 15% by
2025. Recycling has a natural ceiling since
refractories are largely consumed during use
and only residual materials can be reclaimed.
In the short term recycling rates will also be
reduced following the addition of multiple
new acquisitions to the Group, with lower
levels of recycling usage compared to the
Group average.
CERO-Waste concept and regional
initiatives
In the SAM region, RHI Magnesita achieved
a 10% increase in recycling utilisation in
2023 through collaborative efforts between
technical, operational and sales teams to
develop and market products with high
recycled content. A recognition campaign
was also launched to acknowledge customers
in the region who are most active in the
collection of spent refractories.
In Europe, recycled material consumption
also increased by 10%, incorporating 70kt
through MIRECO-supported initiatives such
as the ‘CERO-Waste’ concept and new R&D
developments.
In North America, dedicated efforts to
strengthen partnerships with customers and
suppliers and the promotion of high-recycling
content products delivered a 50% increase
in secondary raw material usage. The NAM
product portfolio now contains brands with
between 20%-100% recycled materials,
reducing the CO2 footprint by up to 85%.
CERO Waste Concept - green steel, circular economy and carbon footprint
Material
Sorting
Re-use
Customer
Collection
Point
Management
Disposal
Sustainable and long-term concept
Offering complete sustainability in the
refractory value chain
7 2
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
In China RHI Magnesita increased recycled
material consumption by over 15%, with
new products marketed to both steel and
industrial customers.
India also increased secondary raw material
usage by 15%, driven by the sales team focus
on prioritising products with recycled content.
Following M&A completed in 2023, the region’s
production capacity has increased significantly
and new acquisitions will now be integrated into
the Group’s recycling activities.
Technical teams continue to innovate with over
100 recycling-related product developments,
tailoring products for optimal performance and
maximising circular mineral usage.
The Ankral LC series, initially created in Europe,
has expanded into SAM, addressing both
cement and lime markets with brands that
deliver a CO2 footprint up to 25% lower than
original brands, decreasing scope 3 emissions
for our customers. For further details on Ankral
LC see case study on page 66 of this report.
On the processing side, the Group had 15 active
R&D projects in 2023 focused on enhancing
circular material quality and availability. Notable
achievements include the processing of
Magnesia-Carbon recycled brick material in the
Breitenau raw material kiln in Austria, obtaining
a new high-quality MgO recycled raw material.
In Brazil, two innovative technologies were
implemented to address material treatment
from the steel industry and the removal of
infiltrations in circular materials from the cement
industry, increasing quality and stability of the
end product.
ReSoURCE - Innovative solution
in refractory recycling
In 2022, the Group initiated the ReSoURCE
project, a 42 month initiative under the Horizon
Europe framework. As project coordinator,
RHI Magnesita leads technical framing and
coordination, focusing on automated multi-
sensor-based sorting for the refractory industry.
The project aims to develop reliable, robust
automated sorting solutions with high accuracy
for spent refractories, validated sustainability
benefits, and facilitation of material usage for
alternative products. The initiative accelerates
RHI Magnesita’s own technology development,
whilst contributing to improved sustainability for
the wider refractory industry.
Achieving the ReSoURCE project goals would
deliver the following benefits:
• 800 ktpa reduction in CO2 emissions.
• 760 GWh energy saving per year.
• Conservation of 800 ktpa of landfill
waste capacity.
• Digital and robotic transformation of
manual processes.
• Workforce upskilling.
• Reinforcement of the EU’s raw material
supply chain resilience.
Progress in 2023 included detailed
examination of raw material feedstocks,
adapting sensor setups for spent refractory
sorting and establishing classification
criteria. In 2024 the first demonstrator will
be commissioned, intended to sort up to 10
tons of waste material per hour at the Group’s
facility in Mitterdorf, Austria, marking a pivotal
step towards automation of the sorting process
chain. Learn more about the ReSoURCE
project here.
Sustainable Technology
Partnership and industry co-operation
The Group continues to build partnerships
with start-ups, universities, and industrial
companies outside the refractory sector to
expand its network and learnings in the field
of decarbonisation. These include the K1-MET
consortium with the Austrian steel industry and
the Industrial Advisory Board of the EU-funded
MOF4AIR project, a development of new
materials for capturing CO2 using membranes.
RHI Magnesita also has a collaborative program
with the University of Leoben focused on
carbon capture, utilisation and storage (CCUS)
technologies, which is carrying out research to
explore the viability and potential applications
of different CCUS technologies.
RHI Magnesita is proactively positioning itself for
the potential use of hydrogen as an alternative
fuel to deliver the future decarbonisation of
high-temperature industrial processes which
currently use fossil fuels. As a participant in the
Hydrogen Import Alliance Austria, the Group’s
primary focus to ensure reliable access to
hydrogen in the coming years.
Aligning with key customers in the cement,
steel, and chemical industries who share similar
challenges, we collectively strive to develop and
implement innovative technologies. Discussions
around the future development of industrial
hubs capable of leveraging CO2 utilisation and
pipeline access for hydrogen and CO2 transport
are ongoing, with the aim of delivering broad
benefits across diverse industries.
The potential to produce Green Hydrogen
on site is being examined. However, large-
scale production with regional distribution,
and importation via pipelines is likely to be
a more efficient solution in the long run. If
national and regional plans unfold as expected,
RHI Magnesita anticipates having access to
hydrogen and CO2 pipelines in the early 2030s.
Carbon capture and utilisation
In 2023, further progress has been made in
the evaluation of technologies for CO2 capture
at the Group’s raw material production sites.
Research of potential technology solutions
includes cryogenic, chemical separation, and
membrane-based techniques. The Group has
acquired equipment for CO2 capture through
membrane separation intended for installation
at its Breitenau plant in Austria in 2024.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
7 3
STRATEGIC REPORT Sustainability
Our planet continued
Addressing climate change
RHI Magnesita Decarbonisation Plan
s
n
o
i
t
a
l
u
g
e
r
s
e
t
a
d
y
e
K
1
s
e
n
o
t
s
e
l
i
m
y
e
K
• Bonn Climate
Change Conference
• Year of climate
extremes
• US National Climate
Assessment
• UN Emissions
Gap Report
•
IPCC Special
Report on 1.5°C
• UN Climate
Change Conference
in Madrid
• Bonn Climate
Conference
• EU Sustainable
Finance Disclosure
Regulation (SFDR)
• COVID 19 Pandemic
• UN Climate Change
Dialogues (Virtuals)
• Adoption EU
Hydrogen Strategy
• EU Taxonomy
• TCFD – Aligned
Disclosures
mandatory in UK
• Establishment
of International
Sustainability
Standards Board
(ISSB)
• Chinese Emissions
Trading Scheme
(ETS) – power
sector only
2018
2019
2020
2021
• Set up 2018
as baseline
• Set up 10%
reduction target
of our CO2 emissions
by 2025
• Set up 10%
recycling
rate of SRM
• Committed to invest
€50 million in new
and emerging
technologies
• Austrian sites
operate with 100%
green electricity
• Upgraded CO2
emission target to
-15% by 2025
• Launched Ankrall
low carbon bricks
• Project Railway in
Hochfilzen, Austria
• Rated B at CDP
Climate report –
first submission
• Performed climate
risk assessment for
all sites
• Launched net-zero
brick project
• Achieved 48%
of purchased
electricity from
low-carbon or
renewable sources
(German sites
operate 100% with
green electricity)
• Performed oxyfuel
trials in Breitenau
1. Future milestones may vary depending on technology development and external support, provided for illustrative purposes only.
7 4
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
• COP 28
• EU CBAM
• CDP Methodology
changes
• EU CSRD
• Aluminium and
Cement included
in Chinese ETS
• CSRD applies from
2024 financial year
• 55% GHG emission
reduction against
1990 levels in EU
• Paper and chemicals
• 50-52% GHG
to be included
in Chinese ETS
from 2024
Emissions reduction
against 2005 levels
in US
• Net-zero targets for
US, EU and UK
2023
2025
2030
2050
•
Implement fuel switch
projects in Brumado
and Chizhou
•
Increase recycling rate
• Further use of SRM
in rotary kilns
• Achieve 100% green
electricity
•
Increase the rate of
hydrogen firing in
tunnel kilns
• Achieve oxyfuel firing
in all rotary kilns
•
Implement green
energy (H2 and
electrification) for
tunnel kilns
•
Implement CCUS
technologies
• Address sustainable
supply chain
(Scope 3)
• MIRECO growth
continues
•
Implement fuel
switch at Hochfilzen
• Examine CCUS at York
• Achieve 15%
recycling rate
•
•
Increase the use of
green electricity
Implement the use of
SRM in rotary kilns
• New 2025 recycling
target of 15% set
•
Implemented fuel
switch project in
Ponte Alta, Brazil.
(charcoal use)
• 105 products
containing up to 80%
recycled material are
part of RHI Magnesita’s
portfolio
• CCU Partnership with
MCi Carbon for CO2
mineralisation
• Rated A- by CDP
Climate report
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
7 5
STRATEGIC REPORT Sustainability
Our planet continued
In the area of Carbon Capture and Utilization
(CCU), the Group has agreed a partnership with
MCi Carbon to develop technologies focused on
the direct mineralisation of CO2 from flue gases,
through a process which can efficiently transform
gaseous waste CO2 into a solid mineral. The MCi
process offers opportunities for utilisation in other
industries, such as the cement sector, which
faces similar challenges with process emissions
of CO2 not originating from the use of fossil fuels.
2023 activity was concentrated on locating and
assessing potential raw materials to use in the
mineralisation process. Testing and development
programmes with MCi Carbon are set to continue
until mid-2025.
Alternative fuels including hydrogen
and biofuels
Hydrogen produced using renewable energy
is a promising alternative fuel for use in high
temperature industrial processes such as those
undertaken by RHI Magnesita. The Group is
actively addressing the technical challenges
associated with the use of hydrogen in its plants
and new concepts are being developed for
measurement, transportation, storage and firing
to prepare for a future shift to hydrogen use. The
first pilot project to evaluate the use of hydrogen
in a refractory plant is planned to commence at
Marktredwitz in the fourth quarter of 2024.
A comprehensive evaluation is also underway
to assess the feasibility of generating hydrogen
on-site at the Group’s own facilities. Initial
conclusions are that on-site production would
be highly capital intensive and therefore
unlikely to be economic unless supported
by public subsidies.
Understanding our reduction measures
If hydrogen is not generated on-site, securing a
reliable and economic supply of green hydrogen
would be an essential pre-cursor to large scale
adoption of hydrogen use in quantities that
would make a material difference to the Group’s
Scope 1 emissions.
RHI Magnesita is also exploring other non-fossil
fuel options including biofuels. In Q4 2023,
the Breitenau raw material plant in Austria
conducted successful trials using sunflower
husks as a supplementary non-fossil fuel.
Further trials with this fuel source will be
undertaken in 2024 to assess the practical
operation of the kiln and any impacts on raw
material quality.
Environment
Energy mix
Currently, natural gas provides approximately
40% of the Group’s total energy usage, with
coal and heavy oil the next largest sources,
followed by diesel, gasoline, LPG, light fuel
and propane. The Groups is assessing all
possibilities to strategically increase the share
of renewables (currently at 8%, considering
green electricity and charcoal) in its energy
mix, to create a more sustainable and diversified
energy portfolio.
Reducing the carbon intensity of energy
RHI Magnesita is seeking to reduce the carbon
intensity of its energy sources through switching
to lower intensity alternatives where possible.
In Europe, plans to transition from CO2 intensive
petroleum coke to more CO2 efficient natural
gas in our plants have been postponed due
to delays in natural gas pipeline construction.
Exploring biofuels as an alternative is
dependent upon local availability and cost
competitiveness. We continue to monitor
energy markets and alternative fuel sources
to reduce emissions.
At the Ponte Alta raw material production site
in Brazil we have successfully switched away
from petroleum coke to sustainably sourced
charcoal. In 2023 this delivered 11kt of CO2
emissions compared to petroleum coke use
(2022: 18kt).
We continue to reduce the CO2 intensity of
purchased electricity. In 2023, we established
a fully green electricity supply for our German
recycling plants and at the Sögüt plant in
Türkiye. At Visakhapatnam, India, 0.5 MW of
photovoltaic capacity was installed, resulting in
a CO2 reduction of around 500t CO2 per year.
The Group is investigating the potential for solar
generation at several other sites. By the end of
2023, 64% of purchased electricity was from
low-carbon or renewable sources.
Energy use
In 2023, RHI Magnesita consumed 5,055
GWh of energy, an absolute decrease of
approximately 7% compared to the prior year.
(2022: 5,423GWh). The main reason for lower
energy consumption was a lower production
volume in 2023 compared to 2022.
The Group has a target to reduce its energy
intensity by 5% by 2025 compared to 2018.
Raw
material &
Refractory
production
Avoidance
Recycling
Non-carbonate based raw materials
Electrification
Green fuels
(H2 bio-fuels)
CCUS
Zero air combustion
7 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Storage
in depleted gas or oil fields or saline aquifers
Utilisation
Transformation to bio-fuels
(eg methane, ethanol, polyols)
or direct use
(sell to CO2 market)
Post-combustion
in proximity to our raw material sites
Mineralisation
Our energy use by source
Energy use from
non-renewable sources
Energy use from
renewable sources
92%
8%
Our Water Use
Water consumption
in non-scarce areas
Water consumption
in water scarce areas
84%
16%
Energy use
Total consumption (GWh)1
MWh/t1
2018
6,484
1.94
2019
5,635
1.91
2020
5,165
1.93
2021
5,912
1.83
2022
5,423
1.89
2023
5,055
1.79
1. The historical data has been refined to incorporate new acquisitions in 2023. Total energy consumption and energy intensity
now align with the current plant footprint, and historical data has been adjusted accordingly. Changes in the originally
reported figures - 2022:12%; 2021:15%;2020: 13%; 2019: 8%; 2018:13%.
In 2023, energy intensity decreased by 6%
compared to 2022 and was 8% lower compared
to 2018, exceeding the target. The energy
intensity KPI is affected by M&A, changes to the
extent of vertical integration and product mix
changes (e.g. production of flow control and
shaped products consumes more energy ).
Energy efficiency measures in Hochfilzen,
Austria resulted in 21 GWh of energy savings.
In Tlalnepantla, Mexico the capture of waste
heat from the tunnel kiln saved 350 MWh.
Across all ISO 50001 plants, improvements
made to compressed air systems result in 1 GWh
of energy saving and other energy efficiency
measures resulted in 33 GWh of energy savings.
We are continuing to roll out ISO 50001
standards across all operations and by end of
2023, 38% of energy was consumed at plants
which have implemented ISO 50001. 88%
of energy consumption was used for heating
and 12% for electricity. No steam is used in
our production process and for cooling, some
climate-chambers are in use for ISO-production
that is reported under electricity.
Reducing NOx and SOx emissions
The Group has a target to reduce nitrogen oxide
(NOx) and sulphur oxide (SOx) emissions by
30% by 2025 compared to 2018. The target
was achieved in China in 2021 and recent focus
has been in North America, where we have
realised the 30% reduction goal for NOx in by
implementing a two-stage combustion process
in the rotary kilns at the largest plant in the
region. The North America SOx reduction target
has also been achieved, with DeSOx equipment
now operational and delivering almost a 50%
reduction of emissions compared to 2018.
Waste management
Applying the principles of a circular economy
is key for our waste management approach,
shifting away from the linear take-make-waste
model, minimizing environmental impact.
In 2023, our production sites generated 7kt
hazardous and 84kt of non-hazardous waste,
By fostering a circular economy mindset, we
can not only mitigate the environmental impact
but also contribute to a more resilient and
responsible industrial landscape.
Water stewardship
RHI Magnesita’s production processes are not
inherently water-intensive. In 2023 the Group
withdrew 12,400 megaliters of water. 92%
of water comes from underground sources,
followed by third party water. Around 16% of
this consumption occurred in areas considered
to be at risk of possible water scarcity. The
Group has updated its water risk assessment,
to include newly acquired in 2023.
The Group takes steps to reduce its water
consumption where possible. In India, Bhiwadi
plant installed a sewage treatment system
to recycle domestic wastewater, utilizing
reclaimed water for on-site irrigation.
Protecting biodiversity
The Group is dedicated to preserving
biodiversity at its operational sites and is
actively working to minimise its impacts. A new
screening of biodiversity risks was conducted in
H2 2023 and further assessments are planned
for 2024 at the Group’s key mining sites to
provide a more detailed understanding of
biodiversity risks or potential dependencies.
At the Brumado mine and raw material
processing site in Brazil, the Group adheres
to licence requirements to restore land to
its original state after use. This includes the
planting of native vegetation, which must match
species found in the local area. For this purpose
and to provide broader community benefits,
over 20,000 seedlings were cultivated at the
on-site nursery and planted both within and
outside RHI Magnesita properties by employees
and community members in 2023. Over 1,000
trees were planted near the Bhiwadi, India, and
Eskisehir, Türkiye plants and across various local
initiatives the Group planted a total of 7,000
trees in 2023.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
7 7
STRATEGIC REPORT Sustainability
Our planet continued
CASE STUDY – ENVIRONMENTAL PROTECTION
Reforestation and water safeguarding
RHI Magnesita is committed to
environmental recovery and protection
in the Brumado region of Brazil, where it
operates a magnesite based raw material
production facility and open cast mine.
Compensatory planting over a
recovered area of 9 hectares included
over 18,000 seedlings of 35 different
species. Of these, five species are
consider by law as protected or
immune to cutting, necessitating
greater compensatory planting.
Anadenanthera macrocarpa (angico),
Handroanthus spongiosus (sete casca),
and Spondias tuberosa (umbuzeiro) were
planted in a 15:1 compensation ratio as
required by legislation.
The Serra das Éguas area, home to
RHIM Magnesita’s Brumado facility,
encompasses 22 water springs. RHI
Magnesita acknowledges, protects
and recovers if necessary these
water resources. Our comprehensive
environmental strategies aim to
preserve water sources to ensure that
ecological balance is maintained in
the local area.
Through the Degraded Areas Recovery
Project (“PRADA”), the Group has
demonstrated its dedication to restoring
ecological balance, in compliance with
environmental legislation and as part of
its commitment to the responsible
extraction of natural resources.
Developed by a multidisciplinary
team, PRADA focuses on reforestation
and rehabilitation of areas previously
impacted by mining activities. Over
a six-month period, RHI Magnesita
implemented maintenance and
stabilisation actions for recovered
areas, including the direct planting
of native seedlings. The process for
effective seedling planting involves
clearing, mounding, monitoring, insect
control and the application of fertiliser
and hydrating gel.
Photo: © Laercio de Moraes, Serra das Eguas, 2024
7 8
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Sustainability
Our people
Related SDGs
Health and safety
Maintaining a safe and healthy workplace
is fundamental to RHI Magnesita’s culture
and mindset. The Group assigns the highest
importance to the health and safety of its
employees and contractors. Our operations
by necessity involve hazardous and higher risk
activities and maintaining high safety standards
is a minimum expectation for all stakeholders.
Our approach to safety centres on people and
safe work practices, seeking to promote a safety-
oriented mindset based on clear operating
procedures and management of key risks.
New joiners including contractors are trained
according to RHI Magnesita’s safety principles,
which underline the shared responsibility to
contribute to safety at work.
To deliver continuous improvement in our safety
culture and performance, we monitor leading
indicators in addition to key trailing performance
indicators including Lost Time Injury Frequency
(“LTIF”) and Total Recordable Injury Frequency
(“TRIF”) – Total Recordable Injury Frequency.
Assessing trends and parameters guides future
improvement initiatives.
Safety performance
LTIF improved to 0.16 (2022: 0.20),
representing a downward trend since 2021
and the lowest level of lost time injuries since
the COVID-19 pandemic in 2020.
A fatal incident occurred at one of the Group’s
plants in Austria in November 2023 during
material handling. A thorough investigation of
the root causes of this incident has been carried
out and changes to operating procedures and
standards are being implemented worldwide
to prevent recurrence. Based on a detailed
analysis of the circumstances and underlying
causes of the incident, ‘lessons learned’ have
been communicated globally. Senior leaders
are committed and engaged in the follow up
and operational sites will receive further tools to
audit compliance with operating procedures.
A fatal accident occurred at the Breitenau
mine in Austria due to rock fall in February
2024. Consideration of this incident and
follow up measures was ongoing as at the
date of this document
RHI Magnesita encourages a culture of
communication, benchmarking and knowledge
sharing across its regional business units which
is underpinned by regional Health & Safety
coordination and execution. Following any
major incident, including those resulting in
serious injuries or a fatality, or that are defined
as potentially life-threatening or life-changing,
detailed analysis of root causes is carried out and
appropriate countermeasures implemented.
During 2023 we continued to progress
our existing occupational health & safety
programmes, seeking to balance leading and
lagging indicators in order to be more pro-
active in the prevention of incidents before they
occur. Leading indicators assist our leaders and
employees in understanding the strengths and
weaknesses of their safety performance, giving
direction and insights into the typical behaviours
and conditions that usually precede any incident.
The Group closely monitors its Preventive
Rate, which indicates the number of reported
near-misses or unsafe situations per person,
which remained stable in 2023 but at a high
level compared to previous years. The Group
also monitors the closing rate of actions that are
assigned to prevent repeat accidents caused by
similar unsafe situations. The actions closing rate
increased to 93% in 2023 (2022: 88%).
RHI Magnesita Global Health
and Safety Guidelines
RHI Magnesita is a manufacturer of refractories
operating 47 refractory and raw material
production facilities worldwide as well as
providing services at customer sites. To
manage Health & Safety on a global basis
the Group has developed a set of mandatory
Global Guidelines as part of its Health & Safety
Management System. The Global Guidelines
are regularly reviewed and updated to consider
best practices and learnings from incidents
as well as from internal and external audits
for ISO45001. Every employee or contractor
who works within the Group at a controlled
location is expected to comply with the
Global Guidelines.
Health & Safety performance
1.10
1.10
0.88
0.88
0.66
0.66
0.44
0.44
0.22
0.22
LTIF1
TRIF2
0.00
0.00
2018
2019
2020
2021
2022
2023
1.
Lost time injury frequency rate per 200,000 hours.
2. Total Recordable Injury Frequency.
Target 2025: Maintain LTIF at <0.3 (goal: Zero Harm - No Injuries).
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
7 9
STRATEGIC REPORT Sustainability
Our people continued
It’s our goal that everyone returns home from
work safe and sound. Everyday.”
Stefan Borgas
Chief Executive Officer
Workplace risk assessments
RHI Magnesita’s business includes high-risk
activities for which hazard identification and risk
assessments are carried out, documented, and
shared. Following a continuous improvement
approach, the Group performs risk assessments
in multidisciplinary teams which include
team leaders, workplace personnel, local
health & safety experts and locally assigned
occupational health or occupational physician
representatives and worker representatives,
depending on local legal requirements.
A “Hierarchy of Controls” approach is applied to
the risk assessment process, including but not
limited to:
RHI Magnesita provides training on safety
awareness and a “Stop Work” procedure, which
leads to the application of a pre-defined “Quick
Check” for assessing unsafe situations. A “Quick
Check” can either be carried out directly by the
worker assigned to the task or there can be a call
for further support.
All employees and contractors are required
to immediately report any “Unsafe Situation”
to supervisors so that corrective actions can
be put in place to avert harm. Both “Unsafe
Situation” information and a report of a near miss
are flagged in RHI Magnesita’s safety reporting
system for further follow-up and analysis.
Occupational health
• Assessing whether the risk can be
eliminated, e.g. purchasing equipment
which is not noisy.
In addition to prevention of workplace
accidents, RHI Magnesita seeks to safeguard the
long term health and wellbeing of its people.
•
Implementation of engineered solutions to
eliminate or reduce the risk, e.g. automated
processes which reduce manual work.
• Organisational measures, such as training
and auditing.
• Standard operating procedures and work
instructions defined with the involvement
of the team who performs the task, with
illustrations and in local languages.
• Providing personal protective equipment
according RHIM global minimum standard
to employees.
Corrective and preventive actions and further
upgrades identified by the risk assessment
are documented.
A variety of measures and programmes are in
place to establish a safe work environment with
minimal potential adverse effects on health
and wellbeing.
Occupational health aspects are covered in
risk assessments of workplaces which include
areas such as noise monitoring and emissions
of volatile organic compounds or dust. To fulfil
local legal obligations and the Group procedure
for Hazard Identification and Risk Assessment
the participation of an Occupational Physician
is obligatory.
Healthcare, health awareness campaigns
and medical support are made available for
operational teams, often managed locally
according legal or regulatory obligations.
For all employees, including office locations,
RHI Magnesita also provides awareness and
information campaigns for common illness
and health issues such as nutrition, hydration,
ergonomics, and other medical screenings.
RHI Magnesita reports on frequency-rates
based on 200,000 hours worked, considering
the LTIs – Lost Time Injuries (37 cases in 2023)
and TRI – Total Recordable Injuries (105
cases for 2023), – including employees and
non-employees (temporary workers/leased
personnel, contractors). Thereof, 1 fatality
(temporary worker) and 2 high-consequence
workrelated injuries (employee) are considered
in the LTIF and TRIF. The fatal accident rate
(FAR) for RHIM Group results in 0.004 per
200,000 hrs whereas the FAR calculated
for the affected category of workers is at 0.01
per 200,000 hrs worked. The calculation of
the rate for “High consequence work-related
injuries, incl. fatalities” (2 high consequence-
cases and 1 fatality) gives back the groupwide
result of 0.013 and for the affected category of
“Employees and temporary workers” at 0.015.
Global standardisation for health
and safety excellence
Standardisation is an effective tool to improve
health & safety performance. RHI Magnesita
has a global Health & Safety Management
System and seeks certification through external
auditors. Safety aspects are also incorporated
into standard operating procedures.
The following locations achieved a successful
initial certification against ISO 45001
Occupational Health & Safety Management
System in 2023:
• Jinan New Emei Plant in Shandong, China.
• Regional headquarters in Shanghai, China.
• RHIM Trading Co Ltd. based in Dalian, China.
RHI Magnesita health and safety guidelines
and standards were implemented in newly
acquired facilities in China (Jinan New Emei)
and India (five plants) during 2023. Due to
the ongoing expansion of Group’s production
network, the integration of other plants has also
commenced. We seek to engage with local
senior management and the workforce from
the beginning to ensure that our values and
standards are adopted.
8 0
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Diversity & inclusion is not a tick-the-box exercise, it’s a
reflection of the world around us.”
Claudia Bergner
Head of People & Culture
Goal
RHI Magnesita seeks to
create an environment
where every form of
diversity is cherished, every
voice resonates, and every
talent is fostered.
29%
Female representation on Board of directors1
28%
Women in leadership roles (EMT + EMT -1)
18%
Senior female roles
1. With the inclusion of the Board Nominated NED, who will
be proposed to the 2024 AGM, the gender diversity of the
Board is 33%.
Diversity, equity and inclusion
RHI Magnesita is committed to fostering an
inclusive culture across its global operations.
The Group introduced a new Global Equality
Policy in 2023 setting out its commitment to
diversity and inclusion irrespective of race, age,
gender and sexual orientation.
We are committed to upholding human rights
and labour rights. 74% of our employees belong
to unions, are represented by works councils or
are subject to collective bargaining agreements.
The Group has made significant strides in
advancing female representation at senior
leadership levels through various initiatives
implemented across all regions.
Other noteworthy campaigns and initiatives
were launched relating to mental health,
including the “RHIMindset” Channel which aims
to cultivate a positive and resilient mindset and
promotes overall wellbeing at work. Weekly
articles on mental health topics, monthly action
calendars on wellbeing and other proactive
measures further contribute to our employee
wellbeing programme.
To improve employee engagement a new
employee app was launched in 2023, providing
a tailored and de-centralised experience
that caters for the diverse needs of our global
workforce. Unlike previous platforms with more
limited scope, the app is fully accessible for plant
employees, including those without a corporate
email address. A smart activity feed facilitates
personalised and efficient communication, while
collaboration sub-spaces promote teamwork
and resource sharing.
A culture that supports people in
reaching their potential
At RHI Magnesita, our people-centric approach
places customer experience and satisfaction
at the core of every decision and activity. This
customer-centric culture is supported by our
four cultural pillars: innovation, openness,
pragmatism, and performance. To sustain this
culture, we seek to attract, develop, and retain
the best talent, embracing a diverse and high-
performing workforce. We believe that a diverse
and inclusive environment leads to better,
faster, and more courageous decision making,
resulting in overall improved performance.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
8 1
STRATEGIC REPORT Sustainability
Our people continued
Our employees from over 90 countries bring
a wide range of experiences, backgrounds,
and perspectives with them. We support and
encourage a mindset of lifelong learning, and
personal and professional growth.
In 2018, we introduced the “culture champions”
network with over 60 employees worldwide
engaging with colleagues on a regular basis
to promote our corporate culture and this work
continued in 2023. The Group also promoted
unconscious bias training which addresses
biases that may impact decision making.
Developing our leaders
Developing an internal talent pool of future
leaders has always been a key focus at RHI
Magnesita and we are building our leadership
pipeline through strategic succession
management. Succession planning secures a
sustainable pipeline of internal high performers
for our most senior and critical positions,
which also includes future female leaders.
With a global footprint, we aim to reflect the
geographic diversity of our business and we
have appointed female leaders to senior roles
in each of our five regions. We also seek to
increase representation from different age
groups to enable us to benefit from a multi-
generational workforce.
Through our global trainee programme, we
aim to attract and retain young talent as the
future leaders of our business. In 2023, we
introduced a third cohort of global trainees
with a 60% female intake. On average, female
representation in the three most recent trainee
cohorts is 50%.
In 2023, we submitted a report to the FTSE
Women Leaders Review, an independent,
business-driven framework providing
recommendations to enhance the
representation of women on the Boards
and Leadership teams of the FTSE 350 and
50 of the UK’s largest private companies.
Our new Leadership Onboarding Programme
equips managers with all the necessary
attributes of a leader at RHI Magnesita, covering
leadership principles, change management,
general business acumen and systems
and tools.
Building a diverse and inclusive
workforce
At RHI Magnesita we want to reflect the diversity
of the world around us and to be a company
that is open to receiving the best and brightest
talent the world has to offer. Diversity is
embedded in our corporate culture. We believe
that an inclusive workplace and employee
experience covers all aspects of diversity: age,
gender, race, ethnic minority, LGBTQIA+ and
persons with disabilities.
In 2023, the Group introduced a new Gender
Equality Policy. Our Diversity, Equity, and
Inclusion (DEI) committee meets regularly to co-
ordinate the creation of a workplace that values
and supports individuals of all backgrounds.
We want our business to be innovative and
productive so we can deliver the best products
and services to our customers, and we need
diversity to help us achieve this. Our diversity
and inclusion strategy provides us with a road
map to create an inclusive workplace.
Gender diversity
As part of the Group’s ongoing efforts to
promote gender diversity, a partnership with
Female Factor has been established to boost
leadership skills and confidence among our
female colleagues, while raising awareness
of gender balance through workshops and
webinars. RHI Magnesita further reinforces
these efforts through initiatives such as
EmpowerHER, an internal development
academy for female talents, and maintaining
a gender balance ratio in our Global Trainee
Programme for 2024. Our collaboration
with “SHEgoesDIGITAL” aligns with our
commitment to promoting the role of women
in the digital sector, helping young talents of
all backgrounds to develop an interest in careers
in information technology.
The Group also launched a Global Internal
Mentoring Programme, an initiative designed to
empower and elevate careers at RHI Magnesita,
with a special focus in 2023 on encouraging
female leadership within our organisation.
As of the end of 2023, board female
representation stood at 29%, while 28% of all
senior leadership positions, including the EMT
and direct reports, are held by females. Our goal
is to increase the share of female leaders at EMT
-1 level to 33% by 2025. Board diversity will be
restored to 33% if shareholders approve the
nomination of Katarina Lindström to the Board
at the 2024 AGM.
8 2
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Sustainability
Our communities
Related SDGs
As our Group continues to expand, maintaining
robust and positive relationships with our local
communities is integral to our ongoing success.
Our sites are located in diverse and sometimes
remote regions and it is essential for us to
understand local context. We regularly
engage and consult with our stakeholders,
seeking to understand and respect their
interests and priorities.
In 2023, ‘Health and medical care’ was approved
by the Corporate Sustainability Committee as
a new community investment pillar to align the
Group’s community strategy with the practical
reality of local spending priorities.
The Group funded more than 220 community
initiatives globally during the year, focused
on the three main pillars of (i) education and
youth development; (ii) health and medical
care, and (iii) environment. Depending on local
needs, we may also support projects in other
areas including wellbeing, arts and culture,
and emergency relief. The Group encourages
employees to participate in and support
volunteering activities.
The community investment programme is
often carried out in partnership with local
non-governmental organisations and reputable
entities who implement projects aimed at
fostering enduring social and environmental
improvements in communities close to
our operations.
Our pillars
Our approach to community investment has
been developed based on the UN Global
Compact, focusing on three main pillars:
Education and youth development
RHI Magnesita recognises the importance
of empowering individuals through education
and skill development initiatives. Our focus
is on supporting programmes that promote
access to high quality education, vocational
training, and lifelong learning opportunities.
By investing in education, the Group aims
to support community members with the
necessary tools to succeed and contribute to
the growth of their communities.
Community spend 2022 by focus area
Education and Youth development
Environment
Health and Medical care
Other
50%
4%
20%
26%
We aim to create and support programmes that
engage young people in intentional, dynamic
and valuable ways while recognising and
enhancing their strengths.
Health and medical care
The Group is committed to improving the
health and medical care of communities where
it operates. Investments are directed towards
initiatives that address healthcare accessibility,
disease prevention, mental health support,
and promoting healthy lifestyles. By prioritising
health and medical care, the Group aims to
create healthier and more resilient communities
and improve community relations.
Environment
RHI Magnesita is committed to addressing
climate change and the protection of the
environment. The Group’s investments focus
on supporting projects that promote
environmental protection, waste reduction,
conservation of natural resources, and other
sustainable practices.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
8 3
STRATEGIC REPORT Sustainability
Our communities continued
CASE STUDY – EMPOWERMENT & VOLUNTEERING
Brazil social
empowerment projects
A social empowerment project engaged over 180 women
from vulnerable economic situations in a unique Christmas
decoration course, resulting in the manual creation of more
than 5,000 decorations using recyclable materials. Women
from various communities in Contagem and Brumado were
empowered through training in upcycling techniques,
encouraging creativity and providing a potential source
of income.
“Magic Christmas” extended its impact, reaching over 700
children from social projects in Contagem, Ponte Alta, and
Brumado. In this initiative, children express wishes for gifts
which are matched through an internal campaign within the
company. Employees enthusiastically embrace the initiative
which has a clear positive impact for local children.
The campaign was orchestrated by the Volunteer Programme
of the Company, with the support of 80 volunteers and over
200 “godparents”. RHI Magnesita’s “Magic Christmas” project
combines sustainability, community support, and festive spirit,
creating lasting memories and fostering goodwill.
On behalf of the communities, I would like to
thank you for everything you have done for our us.
What a beautiful moment, what enchantment,
what fun, what love, what smiles, our children
were overflowing with joy. Thank you to all the
volunteers, for their commitment, for the beauty
of the event, thank you all.”
Katiane Leite
Community leader, Brumado-Bahia-Brazil
Our initiatives
Youth development, Casa de Apoio,
Contagem, Brazil
RHI Magnesita’s partnership with Casa de
Apoio has been in place since 2019 and
yielded tangible results for local young people,
with numerous initiatives contributing to the
education and empowerment of vulnerable
communities.
In 2023, RHI Magnesita supported 64 talented
students from the Casa de Apoio social project
with sewing classes and fully equipped facilities,
in a fashion design project called “Ponto da
Moda”. The project celebrated local culture, art
and cuisine.
RHI Magnesita’s partnership with Casa de Apoio
goes beyond education, encompassing sport,
music and artistic workshops, digital inclusion,
and holistic support for children, teenagers,
and families in need. Since 2019, more than
2,160 children and teenagers have been served
directly. 60 elderly people and more than
10,000 adults benefited indirectly.
Education, Jinan, China
RHI Magnesita sponsored a primary school
located in Laiwu District, Jinan City, including
the donation of 400 school bags to students
Supporting primary education contributes to
academic development as well as improving
community relations.
Volunteering
RHI Magnesita encourages staff volunteering to
increase community engagement and to make
a positive impact on the communities in which
we operate.
A volunteering programme in the Vienna
Headquarters was fully implemented in 2023,
serving as a pilot scheme for other regions
and paving the way for the establishment of
a permanent volunteering programme. Each
employee in Vienna is granted one day of paid
volunteering leave per year.
“When the Others Plant Trees”,
Pfaffstätten, Austria
Volunteers engaged in a conservation initiative
within the Glaslauterriegel-Heferlberg-
Fluxberg nature reserve in Austria.
Partnering with the Landschaftspflegeverein
Thermenlinie-Wienerwald-Wiener Becken
(LPV), RHI Magnesita volunteers removed
hazelnut bushes, rowan trees, and barberries,
significantly contributing to the preservation of
8 4
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
CASE STUDY – YOUTH DEVELOPMENT
India youth
development projects
The Group funded an initiative in India with
Don Bosco Tech focusing on short-term skill
training spanning two months followed by
job placements for underprivileged youth.
Participants included 380 girls and 340 boys,
with training programmes encompassing
customer care, sewing machine operation,
data quality analysis, desktop publishing, food
& beverage service, domestic electrician, and
general duty assistant roles. These vocational
skills align with market demands, offering
direct pathways to gainful employment.
Trained individuals will be contributing to the
local economy by meeting skill gaps in various
industries. This helps businesses thrive and
stimulates economic growth in these regions.
The initiative is supported by a strategic MoU
signed in 2023. RHI-Magnesita’s committed
contribution is approximately €200,000.
Objectives are scheduled for accomplishment
by March 2024, aligning with the end of the
India financial year.
I completed the Food & Beverage Service course from Don
Bosco Tech Society. Now I have been selected by Paradise
Food Court in Hyderabad as team member, so I am thankful to
Don Bosco Tech Society and RHI Magnesita for helping me to
get this opportunity!”
Ahtesham Ali
2023, Chaibasa, India
for Indigenous territories including protection
against illegal mining and guaranteeing
Indigenous people a strong voice in local and
global dialogues that affect their future.
dry grasslands. These grasslands are renowned
as one of Austria’s most species-rich habitats,
playing a pivotal role in supporting various
insects and rare species of butterflies.
Engaging in this initiative heightened awareness
of biodiversity and climate protection, as the
preservation of grasslands is positive for CO2
sequestration.
RHI Magnesita and environment
protection, Dalian, China
Over 200 employees in China participated
in a project themed “Reduce the use of
plastic bottles. Protect our Environment.” This
collective commitment involves saying “No” to
plastic water bottles and other plastic products,
advocating the use of reusable containers made
from glass or ceramics.
Internal records indicate that prior to the project,
the Dalian plant generated over 60,000 waste
plastic water bottles, highlighting the pressing
issue of plastic pollution. To address this, the
initiative provides practical tips for reducing
plastic waste in daily life, such as rejecting
plastic straws, opting for eco-friendly bags,
choosing cartons or glass containers over
plastic, and buying food in bulk to minimise
packaging waste.
Indigenous people
RHI Magnesita recognises and respects
Indigenous peoples, their rights and heritage,
knowledge, and practices. None of the
Group’s operational sites are located close to
any Indigenous communities. RHI Magnesita
supports the strengthening of legal recognition
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
8 5
STRATEGIC REPORT Sustainability
GRI Index
RHI Magnesita Global Reporting Initiative Standards Index 2023
Disclosure number
Description
GRI 1 Foundation 2021
Statement of use
Location/page
Annual Report 2023 Additional content
RHI Magnesita has reported in accordance with GRI Standards for the
period 1 January 2023 to 31 December 2023.
Applicable GRI Sector Standards
None
GRI 2 General Disclosures
The Organisation and its reporting practices
GRI-2-1
GRI-2-2
GRI-2-3
GRI-2-4
GRI-2-5
Organisational details
5, 265
See Global refractory production network
Entities included in the organisation’s
sustainability reporting
Reporting period, frequency and
contact point
Restatement of information
External assurance
61
61
62,77
61
See details in the management of material topics
Contact: sustainability@rhimagnesita.com
See 2025 Targets table; Energy Use
RHI Magnesita commissioned Deloitte Audit Wirtschaftsprüfungs GmbH
for an independent third-party limited assurance engagement on the
non-financial report for the year ended 31 December 2023, according
to the Taxonomy Regulation ((EU) 2020/852) and GRI Standards. For
more information, click here for more details on the assurance process
and conclusions.
Activities and workers
GRI-2-6
Activities, value chain and other
business relationships
2-5, 65-69
GRI-2-7
Employees
–
a. Total number of employees by employment contract (permanent
and temporary) and by gender (headcount):
• Permanent: 13,285 (of which 11,560 male, 1,725 female)
• Temporary: 1,492 (of which 1,096 male, 326 female )
b. Total number of employees by employment contract (permanent
and temporary), by region (headcount):
• Western Europe: Permanent: 3,175; Temporary: 472
• Eastern Europe: Permanent:172; Temporary: 20
• Near and Middle East: Permanent: 508; Temporary: 22
• South America: Permanent: 4,410; Temporary: 190
• North America: Permanent 1,320; Temporary: 88
• Asia Pacific: Permanent: 3,652; Temporary: 697
• Africa: Permanent: 48; Temporary: 3
c. Total number of employees by employment type (full-time and
part-time), by gender (headcount):
• Full time: 15,659
• Part time: 227
• Full time male: 13,568
• Full time female 2,091
• Part time male: 66
• Part time female: 161
GRI-2-8
Workers who are not workers
–
For 2023, an estimation would result in an average FTE of 1.100 without
newly acquired sites. The Group is evaluating a methodology to compile
this KPI.
8 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Disclosure number
Description
Location/page
Annual Report 2023 Additional content
Governance
GRI-2-9
GRI-2-10
GRI-2-11
GRI-2-12
GRI-2-13
GRI-2-14
GRI-2-15
GRI-2-16
GRI-2-17
GRI-2-18
GRI-2-19
GRI-2-20
GRI-2-21
Governance structure and
composition
Nomination and selection of the
highest governance body
Chair of the highest governance
body
Role of the highest governance body
in overseeing the management of
impacts
Delegation of responsibility for
managing impacts
Role of the highest governance body
in sustainability reporting
107-146, 64
See Governance Chapter, Sustainability Governance
108
See The Board in 2023
108,130
Herbert Cordt, Chairman of the Board of Directors
61
115
See Board powers, responsibilities and representation
See EMT and delegation of authority
119, 140-141
See Chairman of Corporate Sustainability Committee
Conflict of interest
66, 115
See Business & Ethics, Conflicts of Interest
Communication of critical concerns
66,117
See Business & Ethics, Whistleblowing
Collective knowledge of highest
governance body
Evaluation of the performance of
highest governance body
116
111
See Skills and experience
See Board performance review
Remuneration policies
146-172
See Remuneration Committee Report
Process to determine remuneration
148,151
See Implementation of the Remuneration Policy for 2024
Annual total compensation ratio
148
See Annual bonus, 2024 LTIP; Performance metrics
Strategy, policies and practices
GRI-2-22
Statement on sustainable
development strategy
GRI-2-23
Policy commitments
108
114,141
See Sustainability, stakeholder and strategy
See Culture and purpose; Compliance programme
For more details, see also here
GRI-2-24
GRI-2-25
GRI-2-26
GRI-2-27
Embedding policy commitments
45-57
See Risk management approach
Processes to remediate negative
impacts
118
Mechanisms for seeking advice and
raising concerns
Compliance with laws and
regulations
143
–
See Board operation
RHI Magnesita follows the precautionary principle in all its operations.
All major operations in the EU follow the requirements of the EU IPPC
Directive on the precautionary principle. Operations outside the EU follow
the precautionary principle in line with national regulatory requirements.
For more details, see also here
See Whistleblowing programme
There were no significant instances of non-compliance with laws and
regulations that resulted in fines or sanctions during the reporting period
according to Management. Provisions for potential litigations can be seen
on Annual Report 2023, Notes 39. The Group will work to establish a
comprehensive approach to report this indicator.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
8 7
STRATEGIC REPORT Sustainability
GRI Index continued
RHI Magnesita Global Reporting Initiative Standards Index 2023 continued
Disclosure number
Description
Location/page
Annual Report 2023 Additional content
GRI-2-28
Membership of associations
–
• World Refractories Association (WRA)
• European Refractories Producers Federation (PRE), via the Austrian Mining
and Steel Association of the Austrian Federal Economic Chamber
• Austrian Mining and Steel Association
• The Austrian Society for Metallurgy and Materials (ASMET)
• German Refractory Industry e.V (DFFI)
• Brazilian Association of Metallurgy, Materials & Mining (ABM)
• Brazilian Association of Refractories Producers (ABRAFAR)
• SIRef/MG (Minas Gerais State Refractory Industry Union)
• Latin-American Association of Refractories Producers (ALAFAR)
• SIR (Brazilian Refractory Industry Union)
• Industriellenvereinigung (Federation of Austrian Industries)
• The European Ceramic Industry Association (Cerame-Unie)
• Euromines
• European Technical Platform of Sustainable Mineral Resources (ETPSMR)
• European Cement Research Academy (ECRA)
• American Ceramic Society
• Bergmännischer Verband Österreichs (BVÖ)
• US National Lime Association
• Respact
• Global Compact Network Austria
• Transparency International
Stakeholder engagement
GRI-2-29
Approach to stakeholder
engagement
122-127
See Stakeholder engagement report
GRI-2-30
Collective bargaining agreements
81
See Diversity, Equity and Inclusion
GRI 3 Material topics 2021
GRI-3-1
GRI-3-2
Process to determine material topics
60-61
List of material topics
61
See Materiality
See Materiality
Economic Performance 2016
GRI-201-1
GRI-201-2
Direct economic value generated
and distributed
Financial implications and other
risks and opportunities due to
climate change
83-85
See Our communities
99-105
See TCFD Report
Anti-corruption 2016
GRI-3-3
Management of material topics
–
RHI Magnesita’s Code of Conduct outlines anti-corruption, conflicts of
interest, and gifts & invitations policies. There are digital workflows in
place to report potential conflicts of interest, seek pre-approval for gifts
& invitations, and process proposals for community contributions. An
independently operated whistleblowing hotline is available for employees
and third parties to report potential violations. Regular reporting to executive
management, regional management, and the Audit & Compliance
Committee is conducted regarding key compliance issues. There is an
annual audit of anti-bribery & corruption controls. Business partners (e.g.
customers, sales intermediaries and suppliers) and transactions such as
mergers or acquisitions are subject to a due diligence process. All sales
agents are certified by Ethixbase360 (former TRACE International), a leading
international organisation specialised in third-party due diligence solutions
and all suppliers are expected to follow the Supplier Code of Conduct.
GRI-205-1
GRI-205-2
GRI-205-3
Operations assessed for the risk of
corruption
Communication and training about
anti-corruption policies and
procedures
Confirmed incidents of corruption
and actions taken
64
64
64
See Business & Ethics
See Business & Ethics
See Business & Ethics
8 8
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Disclosure number
Description
Materials 2016
Location/page
Annual Report 2023 Additional content
GRI-3-3
Management of material topics
–
• Base year 2018
• New acquisitions conducted in 2022-2023 not considered
GRI-301-1
Materials used by weight or volume –
Not available
GRI-301-2
GRI-301-3
Energy 2016
Percentage of recycled input
materials used to manufacture the
organization’s primary
products and services
Reclaimed products and their
packaging materials
72
–
See Recycling
Not available
GRI-3-3
Management of material topics
–
Base year 2018
• Acquisitions conducted in 2023 for the most part included (two small sites in
USA and Italy not considered)
• Transportation, sales offices and other administrative buildings not included
GRI-302-1
GRI-302-2
Energy consumption within the
organisation
Energy consumption outside the
organisation
GRI-302-3
Energy intensity
77
–
77
See Energy Use
Not applicable
See Energy Use
GRI-302-4
Reduction of energy consumption
77
See Energy Use
GRI-302-5
Emissions 2016
Reductions in energy requirements
of products and services
77
The Group strives to have all sites supplied with renewable sources of
electricity; 64% of our sites have green electricity.
GRI-3-3
Management of material topics
–
GRI-305-1
Direct (Scope 1) GHG emissions
70
GRI-305-2
GRI-305-3
GRI 305-4
GRI 305-5
GRI 305-6
GRI 305-7
Energy indirect (Scope 2) GHG
emissions
Other indirect (Scope 3) GHG
emissions
GHG emissions intensity
Reduction of GHG emissions
Emissions of ozone-depleting
substances (ODS)
Nitrogen oxides (NOx), sulfur
oxides (SOx), and other significant
air emissions
70
70
63
59
–
63
• Base year 2018
• Acquisitions conducted in 2023 for the most part included (two small sites in
USA and Italy not considered)
• Transportation, sales offices and other administrative buildings not included.
• Historical CO2 emission data were revised to reflect new acquisitions.
Biogenic emissions (thousand tonnes): 2018: 5; 2019: 8; 2020: 10;
2021: 13; 2022: 13; 2023:17
For questions on the emission factors and calculation methods, please
contact: sustainability@rhimagnesita.com
For questions on the emission factors and calculation methods, please
contact: sustainability@rhimagnesita.com
Reported Scope 3 covers only CO2 emissions from purchased raw materials.
For questions on the emission factors and calculation methods, please
contact: sustainability@rhimagnesita.com
See 2025 Targets table
See Our planet
Not applicable
Not available
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
8 9
STRATEGIC REPORT Sustainability
GRI Index continued
RHI Magnesita Global Reporting Initiative Standards Index 2023 continued
Disclosure number
Description
Location/page
Annual Report 2023 Additional content
Employment 2016
GRI-401-1
New employee hires and employee
turnover
–
a. Total number and rate of new employee hires during the reporting period,
by age group, gender and region.
i. Age group
Under 30 years old: 1,311 (51.5% - headcount 2,546)
30 - 50 years old: 2,603 (26.5% - headcount 9,818)
Over 50 years old: 1,038 (29.5% - headcount 3,521)
Excluding seasonal staff
Total: 4,952 (31.2%)
ii. Gender
Male: 4,258 (31.2%)
Female: 694 (30.8%)
iii. Region
Western Europe: 929 (22.7%)
Eastern Europe: 790 (92.4%)
Near and Middle East: 123 (23.2%)
South America: 862 (18.7%)
North America: 436 (31.0%)
Asia Pacific: 1,802 (41.4%)
Africa: 10 (19.6%)
Excluding seasonal staff
Total: 4,952 (31.2%)
b. Total number and rate of employee turnover during the reporting period,
by age group, gender and region.
i. Age group
Under 30 years old: 880 (34.6%)
30 - 50 years old: 1,609 (16.4%)
Over 50 years old: 617 (17.5%)
ii. Gender
Male: 2,633 (19.3%)
Female: 473 (21.0%)
iii. Region
Western Europe: 705 (17.2%)
Eastern Europe: 5 (0.6%)
Near and Middle East: 101 (19.1%)
South America: 1,239 (26.9%)
North America: 404 (28.7%)
Asia Pacific: 648 (14.9%)
Africa: 5 (9.8%)
Benefits vary across locations. Full data is not available
b. Total number of employees that took parental leave, by gender.
Total: 73 (Male: 46 (63%); Female: 27 (44%))
c. Total number of employees that returned to work in the reporting period
after parental leave ended, by gender.
Total: 72 (Male: 43 (60%); Female: 29 (40%))
d. Total number of employees who returned to work after parental leave
ended were still employed 12 months after their return, by gender.
Total: 50 (Male: 34 (68%); Female: 16 (32%))
e. Return to work and retention rates of employees that took parental leave,
by gender.
Return to work rate:
Total: 70 (Male: 41 (58%); Female: 29 (42%))
Retention rate: see GRI401-3 c
All RHI Magnesita employees and contracted workers under direct control
as well as contracted workers without direct control considered. For 2023,
Health & Safety data are partially considering following acquisitions: One
plant in China (Jinan New Emei) and further 5 plants in India (Jamshedpur,
Bhilai, Rajgangpur, Dalmiapuram Khambalia). Further sites are starting the
integration of data reporting during 2024.
GRI-401-2
Benefits provided to full-time
employees that are not provided to
temporary or part-time employees
GRI-401-3
Parental leave
–
–
Occupational Health & Safety 2018
GRI-3-3
Management of material topics
–
GRI-403-1
Occupational Health & Safety
Management System
79
Occupational Health & Safety is part of RHI Magnesita’s Integrated
Management System (IMS) with respective policy and procedures.
9 0
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Disclosure number
Description
Location/page
Annual Report 2023 Additional content
GRI-403-2
Hazard identification, risk assessment,
and incident investigation
80
GRI-403-3
Occupational Health Services
80
GRI-403-4
Worker participation, consultation,
and communication on occupational
health and safety
–
GRI-403-5
Worker training on occupational
Health & Safety
14,80
GRI-403-6
Promotion of worker health
GRI-403-7
Prevention and mitigation of
occupational health and safety
impacts directly linked by business
relationships
80
79
Global procedure for hazard identification and risk assessment as part of IMS
implemented. For incident investigations the methodology of 5-Whys and
Fishbone are commonly applied.
For global aspects to be considered as well as for local, detailed information
RHIM provides Safety boards, daily/weekly safety talks, participation of
workforce-representatives in Safety Committees (also represented at the
CSC – Corporate Sustainability Committee).
Beside legally required trainings for specific tasks and exposures,
all persons visiting our operational sites need to attend a standardised
basic Safety-training.
RHI Magnesita provides in every location a set of health promotion offers
and activities for which the participation rate for employees is measured.
Health Projects Rate (HPR) =8,68.
RHIM performs onsite services (OSS) at customer operational facilities for
which the same global requirements as per IMS (integrated management
system) and respective Global H&S Guidelines apply (unless the customers’
requirements are even more stringent than RHI Magnesita’s.
GRI-403-8
Workers covered by an occupation
Health & Safety Management System
79
All RHI Magnesita employees (incl. trainees, interns), temporary workers and
(sub-) contractors under direct control and supervision of RHI Magnesita.
GRI-403-9
Work-related injuries
80
GRI-403-10
Work-related ill health
80
Diversity and equal opportunity 2016
GRI-3-3
Management of material topics
GRI-405-1
Diversity of governance bodies and
employees
–
–
a. i.: 1 work-related fatality, employee. RHIM Group FAR = 0.04; ii.: 3
high-consequence cases = 1 FAT + 2 “Serious Injuries”; iii.: Total number of
recordable work-related injuries = 326; (incl. FAT, LTI, MTI, FAI); iv.: About 1/3
of all injuries resulted in contusion and another 1/3 in cut/stitch and sprain/
strain. In addition, 12.5% of injuries were fractures; v.: Hours Worked Total
(Group): 45,817,391 hrs, split into 26,475,317 for Employees/Temporary
Workers and 19,342,074 for Contractors.
b. i -iv.:Not available; v: see item a.
c. i-iv.: Not available; v: see item a.
d., e., f. and g.: see page 80
a. Not available
b. Not available
c. and d. RHIM monitors all H&S-related hazards, especially also those
posing a risk of ill-health, like noise, dust, volatile organic compounds;
implementation of actions and provision of information to all affected
workforce included.
e. Not available
• Base year: 2018
• Focus on Gender Diversity (Board and senior levels)
a.
Percentage of individuals within organization’s governance bodies in each
of the following diversity categories:
i. Gender
Executive Management Team (including the Executive Directors):
Male: 4 (67%)
Female: 2 (33%)
ii. Age group: under 30 years old, 30-50 years old, over 50 years old
Under 30 years old: 0 (0%)
30 - 50 years old: 2 (33%)
Over 50 years old: 4 (67%)
b. Percentage of employees per employee category in each of the following
diversity categories:
i. Gender
Male: 13,634 (86%)
Female: 2,252 (14%)
Salaried staff: Male: 5,458 (40%); Female: 1,784 (79.21%)
Wage earners: Male 7,969 (58.45%): Female: 362 (16%)
ii. Age group: under 30 years old, 30-50 years old, over 50 years old;
Salaried staff: Under 30 years old: 1,062 (42%); 30-50 years old:
4,674 (47.6%); over 50 years old: 1,506 (43%)
Wage earners: Under 30 years old: 1,174 (46%); 30-50 years old:
4,674 (47.6%); over 50 years old: 1,506 (43%)
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
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STRATEGIC REPORT
Sustainability
GRI Index continued
RHI Magnesita Global Reporting Initiative Standards Index 2023 continued
Disclosure number
Description
Location/page
Annual Report 2023 Additional content
GRI-405-2
Ratio of basic salary and
remuneration women to men
–
Non-discrimination 2016
GRI-3-3
Management of material topics
—
Considering positions Professional Junior positions and above (BPG 10 and
above) and information registered for December 31 2023, the average of
compa-ratio (the ratio between employee current salary to the salary range
midpoint assigned to the position) split by men and women was: Men:93,3%
and Women: 89,9%
The Code of Conduct of an organisation covers the topic of human rights,
such as non-discrimination, prohibition of child or forced labour. RHIM’s
Code of Conduct is available in 10 different languages and was last reviewed
in November 2022. In addition, the organization provides a whistleblowing
hotline and other reporting channels for employees and third parties to
report any violations of the Code of Conduct. All reports are investigated
by the Internal Audit, Risk & Compliance department.
GRI-406-1
Incidents of discrimination and
corrective actions taken
–
No incidents in 2023.
Human rights assessment
GRI-412-1
GRI-412-2
GRI-412-3
Operations that have been subject to
human rights reviews
or impact assessments
Employee training on human rights
policies or procedures
Significant investment agreements
and contracts that include
human rights clauses or that
underwent human rights screening
Supplier Social Assessment 2016
GRI-414-1
GRI-414-2
New suppliers that were screened
using social criteria
Negative social impacts in the supply
chain and actions taken
Supplier Environmental Assessment 2016
GRI-308-1
GRI-308-2
New suppliers that were screened
using environmental criteria
Negative environmental impacts in
the supply chain and actions taken
-
–
64
–
68
68
68
See more details here, available on our website
Human rights e-learning was launched in Dec 2023. Approx 1700
employees have already completed the training.
Not available
Supplier assessments through EcoVadis
Supplier assessments through EcoVadis and on-site audits
Supplier assessments through EcoVadis
a. Number of suppliers assessed for environmental impacts: 817
b. Number of suppliers identified as having significant actual and potential
negative environmental impacts: 1(One)
c. Significant actual and potential negative environmental impacts identified
in the supply chain: 1(one)
d. Percentage of suppliers identified as having significant actual and
potential negative environmental impacts with which improvements were
agreed upon as a result of assessment: 0.001%
e. Percentage of suppliers identified as having significant actual and
potential negative environmental impacts with which relationships were
terminated as a result of assessment, and why: 0%
9 2
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Sustainability
ESG/EU Taxonomy
Our performance in ESG rankings
AA
Gold
Prime C+
A-
DISCLOSURE INSIGHT ACTION
ESG ratings and recognitions
RHI Magnesita was recognised for its
sustainability disclosure in 2023 by the UK
and Ireland Corporate Governance Institute.
The Group achieved an A- rating from CDP,
placing it in the esteemed Leadership band.
The Group has also been industry top-rated
by Sustainalytics and maintains a “AA” rating
from MSCI. RHI Magnesita kept its existing
“Gold” status rating from EcoVadis, achieving
an overall ESG score of 72 out of 100, amongst
the top 5% of rated companies. Regionally,
RHI Magnesita was awarded the Corporate
Environmental Achievement Award from the
American Ceramic Society (ACerS), recognising
the impact RHI Magnesita has on sustainability
within the refractory industry and beyond.
EU Taxonomy
The EU Taxonomy Regulation (“EU Taxonomy”)
applies in respect of the financial year to
31 December 2023 and requires the Group to
report annually on the proportion of its turnover,
operating expenditure and capital expenditure
attaching to economic activities that are
considered to be environmentally sustainable.
The EU Taxonomy identifies the six
environmental objectives: climate change
mitigation; climate change adaptation; the
sustainable use and protection of water and
marine resources; the transition to a circular
economy; pollution prevention and control; and
the protection and restoration of biodiversity
and ecosystems. In respect of the 2023 financial
year, the Group, RHI Magnesita has reviewed
its activities that qualify as eligible and aligned
according to the published technical screening
criteria for climate change mitigation and
adaptation, including amendments to Article 8.
Additionally, the Group is reporting eligibility
on the other four EU environmental objectives
according to the technical screening criteria
specified in the Taxonomy Environmental
Delegated Act. As no sector-specific guidance
for the refractory industry has been published
yet and therefore the Group is required to use its
own judgement against the eligibility criteria.
The NACE (the statistical classification
of economic activities in the European
Community) codes most closely describing
the activities of the Company are “23.20
Manufacture of refractory products” and “08.99
Other mining and quarrying”. These NACE
codes are not listed in Annex I or Annex II of
the Taxonomy Regulation, but certain activities
carried out by the Group do meet the definitions
of economic activities listed in Annex I of
the Regulation. As elaborated further by the
Commission on Taxonomy, if the NACE code
of an economic activity is not mentioned in
the Climate Delegated Act, but the economic
activity corresponds to the description of the
activity, it can qualify as Taxonomy eligible.
The EU Taxonomy distinguishes between
taxonomy eligibility and taxonomy alignment.
An economic activity can be considered
eligible if it is listed in the annexes of Taxonomy
regulation. However, in order to be considered
“aligned”, further Technical Screening Criteria
(TSC) must be met. This requires a further
assessment of the eligible activities identified.
The TSC comprise of Substantial Contribution
plus the Do-No-Significant-Harm criteria
(DNSH) for each of the environmental objectives
associated with the relevant business activities.
Additionally, the Minimum Social Safeguards
(MSS) at the corporate level have to be met. The
overall aim of this process is to establish the
taxonomy-eligibility and alignment.
The EU Taxonomy Alignment refers to the
process of aligning the EU’s Taxonomy
Regulation with existing and proposed national
and international sustainable finance initiatives.
Accounting policy
RHI Magnesita N.V. prepares consolidated
financial information in accordance with
generally accepted accounting principles under
IFRS, as adopted by the EU and the financial
information for turnover, operating expenditure
and capital expenditure presented under the EU
Taxonomy has been prepared under the same
accounting principles.
Taxonomy eligible activities
of RHI Magnesita
The following RHI Magnesita’s economic
activities are outlined in the annexes of EU
Taxonomy Delegated Acts and therefore, are
deemed eligible:
• CCM 3.6 Manufacture of other low carbon
technologies.
• CCM 5.9 Material recovery from non-
hazardous waste.
• CE 2.7 Sorting and material recovery of non-
hazardous waste.
•
BIO 1.1 Conservation and restoration of
habitats, ecosystems, and species.
R&D supports eligible economic activities,
allocated accordingly. GHG emission avoidance
related to R&D is not material, and therefore, not
reported separately.
Manufacture of other low carbon
technologies
The economic activity CCM 3.6 “Manufacture
of other low carbon technologies” covers
the “Manufacture of technologies aimed at
substantial GHG emission reductions in other
sectors of the economy”.1
EAF refractories
RHI Magnesita provides refractory products
specifically designed for EAFs. Additionally, RHI
Magnesita provides solutions and services to
its customers to reduce their GHG emissions,
including digital solutions as well as advanced
refractory products.
EAFs are a vital enabling technology for the
reduction of CO2 emissions in the steel industry.
EAFs can be powered using electricity sourced
partially or wholly from renewable electricity
and replace the BOF phase of the traditional
integrated steel manufacturing process,
which pairs a blast furnace with a BOF and is
highly CO2 intensive. To replace a BOF, EAF
steelmaking requires scrap steel, and a source
of virgin iron like DRI or pig iron produced from
the reduction of iron ore. EAF steelmaking
requires a source of scrap steel or sponge iron
produced from the reduction of iron ore.
DRI using elevated levels of or exclusively
hydrogen and is a new technology under
development that seeks to eliminate CO2
emissions from the reduction of iron ore in blast
furnaces using coke. If sufficient quantities
of hydrogen manufactured from renewable
sources can be accessed and if a DRI furnace
can be paired with an EAF for the second stage
of the steelmaking process that is also powered
by renewable energy, CO2 emissions from steel
production can be largely eliminated. A key
limiting factor for increased DRI production is
currently the availability of suitable iron ore, as
DRI production requires highest quality iron
ore pellets while blast furnaces can consume
almost any kind of iron ore facing no restrictions.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
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STRATEGIC REPORT Sustainability
EU Taxonomy continued
RHI Magnesita has a leading market position
in EAF-specific refractories, services and
solutions, in part due to the unique chemical
composition of the Group’s vertically integrated
raw material supply. EAF refractories produced
by RHI Magnesita directly enable substantial
reductions in CO2 emissions at steel plants, as
the EAF output is displacing steel that would
otherwise have been produced using a blast
furnace and BOF.
In its EU taxonomy disclosure for the year to
31 December 2022, RHI Magnesita used its
own judgement to categorise the sale of EAF
refractories as both an eligible and aligned
activity according to CCM 3.6 “Manufacture of
other low carbon technologies”. This assessment
was based on widely available public information
from multiple sources which substantiated that
the production of steel through scrap or DRI fed
Electric Arc Furnaces could result in significantly
lower CO2 emissions than the traditional
integrated steelmaking process, using blast
furnaces and basic oxygen furnaces.
On 20 October 2023, the EU Commission
published guidance on the implementation
and interpretation of the EU Taxonomy Climate
Delegated Act which specified verification
requirements for certain activities. The
verification requirements in the guidance
stipulate that an external verifier must provide
an independent report to support compliance
with alignment criteria. The Group is unable to
fulfil this verification requirement in respect of
the 2023 financial year but intends to obtain
suitable independent verification in the future.
For the financial year to 31 December 2023,
sales of Electric Arc Furnaces have been
excluded from its Taxonomy aligned activities
and have also been removed from the 2022
comparative year disclosure. Sales of Electric
Arc Furnaces remain Taxonomy eligible and
continue to be disclosed as eligible activities in
both 2023 and 2022.
Digital solutions and other products that
increase energy efficiency
RHI Magnesita offers digital solutions and
associated physical equipment which achieve
CO2 emissions reductions through process
efficiencies, such as wear monitoring and
gunning repairs to extend the safe working life of
refractory linings. Safely extending the working
life of refractory linings can achieve significant
energy savings for steel producers by reducing
the number of heating and cooling cycles
required per unit of steel output.
The Group also offers advanced refractory
products which enable its customers to
substantially reduce GHG emissions by
reducing electricity consumption, improving
yield and reducing oxygen consumption, saving
up to 13kg CO2 per tonne of steel produced.
Other solutions and products which directly
contribute to CO2 emissions reductions at
customers’ sites include cold setting mixes,
EAF direct purging plugs and converter inert
gas purging.
Material recovery from
non-hazardous waste
The activity CCM 5.9 Material recovery from
non-hazardous waste covers the “construction
and operation of facilities for the sorting and
processing of separately collected non-
hazardous waste streams into circular raw
materials involving mechanical reprocessing,
except for backfilling purposes.”
RHI Magnesita increased its SRM input to
12,6% of raw material used in production of
refractories. As part of this effort, RHI Magnesita
operates facilities for the sorting and processing
of spent refractories from customers’ industries.
Circular raw materials which are mechanically
processed by RHI Magnesita and transformed
from waste to raw material are eligible for
consideration under the EU Taxonomy, whilst
circular raw material processed by a third party
and purchased externally by the Group are
non-eligible.
Sorting and material recovery of non-
hazardous waste
The activity CE 2.7 “Sorting and material
recovery of non-hazardous waste” covers
“Construction, upgrade, and operation of
facilities for the sorting or recovery of non-
hazardous waste streams into high quality
secondary raw materials using a mechanical
transformation process”.
RHI Magnesita actively collaborates in the
transition to a circular economy through the
sorting and material recovery of non-hazardous
waste. This encompasses the construction,
upgrade, and operation of facilities for sorting
or recovering non-hazardous waste streams
into high-quality secondary raw materials
using mechanical transformation processes.
Across various sites, RHI Magnesita engages
in sorting non-hazardous waste, recovering
materials for use as secondary raw materials in
its refractory production, aligning with the EU
taxonomy criteria.
Conservation and restoration of
habitats, ecosystems and species
The activity BIO 1.1 “Conservation and restoration
of habitats, ecosystems and species” covers
in-situ conservation and restoration activities
aligned with Convention on Biological Diversity”.
RHI Magnesita is committed to the protection
and restoration of biodiversity and ecosystems,
specifically through the conservation and
restoration of habitats, ecosystems, and
species. RHI Magnesita’s engagement in-situ
conservation and restoration activities aligns
with the Convention on Biological Diversity’s
definition and applies to its open-pit mining
operations, where recovery of ecosystems and
habitats is planned and executed.
The Group operates multiple mines, where
a crucial aspect of open-pit mining involves
restoring ecosystems and habitats. In 2023,
recultivation activities occurred at seven sites.
KPIs
Share of Taxonomy-eligible revenue, operating
expenditure and capital expenditure – climate
change mitigation, transition to circular
economy, and protection and restoration
of biodiversity and ecosystems.
Turnover
The turnover KPI is calculated as the ratio of
turnover associated with taxonomy-eligible
and/or aligned economic activities in the
reporting period to total turnover in that period.
The total turnover of the financial year 2023
of €3.6 billion forms the denominator of the
turnover key figure and can be taken from the
Consolidated Income Statement on page 2 of
this Annual Report.
The following eligible and/or aligned activities
have been identified as relevant in view of
turnover:
• CCM 3.6 Manufacture of other low carbon
technologies.
• CCM 5.9 Material recovery from non-
hazardous waste.
•
CE 2.7 Sorting and material recovery of non-
hazardous waste.
Most of our Taxonomy-eligible turnover
(numerator) are reported under Activity
CCM 3.6. “Manufacture of other low carbon
technologies”. The only portion of our turnover
Taxonomy-aligned is reported under Activity
CCM 5.9 “Material recovery from non-
hazardous waste”. A thorough analysis of
turnover KPI drivers during the reporting period
considered diverse revenue sources, including
customer contracts and lease income. About
90% of materials recovered by the Group from
non-hazardous waste are consumed internally.
Therefore, the 2023 financials now include
external Turnover from material recovery in
non-hazardous waste.
Capital expenditure
The capex KPI is defined as Taxonomy-eligible
capex (numerator) divided by total capex
(denominator), for the financial year, ended
December 31, 2023.
The following eligible activities have been
identified as relevant regarding the capital
expenditure KPI:
• CCM 3.6 Manufacture of other low carbon
technologies.
• CCM 5.9 Material recovery from non-
hazardous waste.
1. RHI Magnesita offers products and services which help to make CO2-intensive processes in the steel industry more efficient and therefore achieve emissions reductions in the global steel industry.
9 4
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
• CE 2.7 Sorting and material recovery of non-
hazardous waste.
The project descriptions of the additions of
assets in the reporting year served as a basis
for the necessary identification.
Taxonomy-eligible capex (numerator) is an
aggregation of addition to property, plant
and equipment reported under Activity CCM
5.9 “Material recovery from non-hazardous
waste” and Activity CE 2.7 “Sorting and
material recovery of non-hazardous waste”;
and to internally generated intangible assets
reported under Activity CCM 3.6 “Manufacture
of other low carbon technologies”. No eligible
capex related to acquisitions through business
combinations is reported. There is neither
a capex plan to expand RHI Magnesita’s
Taxonomy-aligned economic activities nor to
upgrade Taxonomy eligible economic activities
to render them Taxonomy-aligned. The total
capital expenditures in line with point 1.1.2.1.
Annex 1 of the Disclosure Delegated Act equal
the denominator.
Total capex consists of additions to tangible
and intangible fixed assets during the financial
year, before depreciation, amortisation and any
re-measurements, including those resulting
from revaluations and impairments, as well
as excluding changes in fair value. It includes
acquisitions of tangible fixed assets (IAS 16),
intangible fixed assets (IAS 38), right-of-use
assets (IFRS 16) and investment properties
(IAS 40).
Operating expenditure
The denominator of the operating expenditure
KPI shall cover direct non-capitalised costs that
relate to R&D, building renovation measures,
short-term lease, maintenance and repair, and
any other direct expenditures relating to the
day-to-day servicing of assets of property, plant
and equipment by the undertaking or third
party to whom activities are outsourced that are
necessary to ensure the continued and effective
functioning of such assets.
The following eligible activities have been
identified as relevant regarding the operating
expenditure KPI:
• CCM 3.6 Manufacture of other low carbon
technologies.
• CCM 5.9 Material recovery from non-
hazardous waste.
• CE 2.7 Sorting and material recovery of
non-hazardous waste.
•
BIO 1.1 Conservation and restoration of
habitats, ecosystems, and species.
Most of our Taxonomy-eligible opex (numerator)
is related to assets or processes associated with
taxonomy-eligible activities reported under
Activity CCM 3.6. “Manufacture of other low
carbon technologies”. We have also reported
a portion of our turnover under Activity 5.9
“Material recovery from non-hazardous
waste”. There is neither a capex plan to expand
taxonomy-aligned activities nor related to
the purchase of output of taxonomy-aligned
activities. An analysis of key elements of change
in opex KPI during the reporting period has
been conducted and as a result, recultivation
opex has been reported under the activity
BIO 1.1 “Conservation, including restoration,
of habitats, ecosystems and species”. Opex
related to activity CE 2.7 “Sorting and material
recovery of non-hazardous waste is overlapping
with opex reported under activity CCM 5.9 “
Material recovery from non-hazardous waste”
therefore, not reported. Total applicable opex is
in line with the Taxonomy legislation consisting
of maintenance opex and R&D opex. Other
Opex categories such as short-term lease are
excluded as they are immaterial.
Avoidance of double counting
To avoid double counting, data sources for
the various reported items are individually
crosschecked to identify overlapping
classifications. Where double counting is
identified, overlapping data is removed from
the eligible amount.
Taxonomy aligned activities of RHI
Magnesita
For the eligible economic activities of RHI
Magnesita previously described, the following
activity are considered aligned:
• Material recovery from non-hazardous waste.
In respect to alignment criteria, RHI Magnesita
considered its activities under “Material recovery
from non-hazardous waste” aligned because for
each raw material recovery site, monthly yield
reports demonstrate a constant yield above
50% which fulfil the alignment criteria.
Do No Significant Harm (DNSH)
To fulfil the DNSH criteria for the identified
taxonomy-eligible economic activities,
corresponding analyses and surveys were
carried out in accordance with (EU) 2021/2139
to establish taxonomy alignment.
For the economic activity Material recovery from
non-hazardous waste (5.9), the DNSH criteria
to climate change adaptation and to protection
and restoration of biodiversity and ecosystems
need to be met.
DNSH to climate change adaptation
Activity 5.9
For the climate risk and vulnerability analysis
for objective 2 “climate change adaptation”,
potential climate hazards were analysed and
assessed for their risk potential in accordance
with the requirements of Appendix A (EU)
2021/2139. RHI Magnesita conducted
climate risk assessment considering both
physical and transitional climate risks
aligned with TCFD. Four climate scenarios
(representative concentration pathways 2.6,
4.5, 6.0 and 8.5) were considered based on
the Intergovernmental Panel on Climate
Change Fifth Assessment Report and the
International Energy Agency (“IEA”) Sustainable
Development Scenario. The results of the
assessment indicated that the impact for
physical risks is limited, since measures are
in place to assess on a regular basis the risk
of physical damage of assets. Insurance
policies are covering physical damaged by
natural catastrophes.
DNSH to protection and restoration
of biodiversity and ecosystems
Activity 5.9
The requirements for objective 6 “Biodiversity”
according to Appendix D of Regulation (EU)
2021/2139 are ensured due to the legal
framework within the EU. For sites outside the
EU, the national legal framework was analysed.
RHI Magnesita considers its mining sites as the
part of the production process with the highest
potential for adverse effects on biodiversity.
Therefore, the assessment focuses on mining
sites. For all RHI Magnesita’s mining sites an
environmental impact screening has been
conducted. Out of the six mining sites. The
mining sites operate within or near IUCN
category Ia, II, IV, VI and unclassified (Natura
2000) protected areas. All mining sites fulfil
general environmental protection requirements
in line with legal requirements. “Material
recovery from non-hazardous waste” replaces
virgin materials with secondary raw materials;
thus, contributes in an effective way to reduce
the environmental impact associated with raw
material extraction.
Minimum Social Safeguards
To ensure compliance with minimum social
safeguards RHI Magnesita established a due
diligence process. According to Article 8
(EU) 2020/852, the OECD Guidelines for
Multinational Enterprises, the UN Guiding
Principles on Business and Human Rights,
including the principles and rights set out in
the eight fundamental conventions identified
in the Declaration of the International Labour
Organisation on Fundamental Principles and
Rights at Work and the International Bill of
Human Right were considered by RHI Magnesita.
In 2023, a Human Rights Officer was appointed.
Policies on global gender equality, and
anti-discrimination/harassment are available
online. The Code of Conduct is available in
11 languages and available on the Company
website, intranet, and Compliance Portal.
The Anti-Slavery Statement is updated and
published annually on the Company’s website.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
9 5
STRATEGIC REPORT Sustainability
EU Taxonomy continued
Our suppliers shall adhere to the same
principles as outlined in our Supplier Code
of Conduct, which includes laws related to
the protection of human rights. Furthermore,
RHI Magnesita has implemented processes
to continuously screen business partners
in high-risk countries for compliance with
fundamental human and labour rights. RHI
Magnesita has established an independent
whistleblowing hotline and web-based system,
which allows both employees and third parties
to make reports anonymously. Additionally,
other reporting channels are available. All
cases reported are investigated by the Internal
Audit, Risk and Compliance department in
conjunction with other relevant departments.
Moreover, business partners (e.g. customers,
sales intermediaries and suppliers) and
transactions such as mergers or acquisitions
are subject to a due diligence process. All sales
agents are certified by Ethixbase360 (formerly
TRACE International), a leading international
organisation specialised in third-party due
diligence solutions, which is updated annually
and includes a reputational screening that can
detect any human rights violations that may
have occurred.
With all these measures, RHI Magnesita ensures
compliance with the minimum safeguards
for itself and its suppliers, and processes are
implemented to become aware of suspicious
cases of human rights violations, corruption,
and bribery and to be able to react accordingly.
EU Taxonomy reporting in the year
to 31 December 2023
RHI Magnesita commissioned Deloitte Audit
Wirtschaftsprüfungs GmbH for an independent
third-party limited assurance engagement
on the Taxonomy Regulation (EU) 2020/852)
and GRI Standards. For more information, click
here for more details on the assurance process
and conclusions.
9 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Taxonomy disclosure table¹
Turnover
Substantial contribution criteria
Economic activities
Code(s)
Absolute turnover
Proportion of
turnover
Climate
change
mitigation
Climate
change
adaptation
Water and
maritime
resources
Circular
Economy
Pollution
Biodiversity and
ecosystems
A. Taxonomy-eligible activities
A.1 Environmentally sustainable activities (Taxonomy-aligned)
Material recovery from non-hazardous waste
Turnover of environmentally sustainable activities
(Taxonomy-aligned)
of which enabling
of which transitional
A.2 Taxonomy-Eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities)
Manufacture of other low carbon technologies
Sorting and material recovery of non-hazardous waste
Conservation, including restoration, of habitats, ecosystems
and species
Turnover of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities) (A.2)
Total A.1 + A.2
B. Taxonomy non-eligible activities
Total A+B
CCM 5.9
€6,058,974
0.2%
Y
N
N/EL
N/EL
N/EL
N/EL
€6,058,974
0.2% 100.0%
0.2% 100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
CCM 3.6
CE 2.7
€577,068,237
€–
16.2%
0.0%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
EL
N/EL
N/EL
BIO 1.1
€–
0.0%
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
EL
€577,068,237
€583,127,211
€2,988,655,729
16.2% 100.0%
16.3%
83.7%
€3,571,792,940
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
opex
Substantial contribution criteria
Economic activities
Code(s)
Absolute opex
Proportion of
opex
Climate
change
mitigation
Climate
change
adaptation
Water and
maritime
resources
Circular
Economy
Pollution
Biodiversity and
ecosystems
A. Taxonomy-eligible activities
A.1 Environmentally sustainable activities (Taxonomy-aligned)
Material recovery from non-hazardous waste
Opex of environmentally sustainable activities
(Taxonomy-aligned)
of which enabling
of which transitional
A.2 Taxonomy-Eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities)
Manufacture of other low carbon technologies
Sorting and material recovery of non-hazardous waste
Conservation, including restoration, of habitats, ecosystems
and species
Opex of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities) (A.2)
Total A.1 + A.2
B. Taxonomy non-eligible activities
Total A+B
CCM 5.9
€1,218,114
0.8%
Y
N
N/EL
N/EL
N/EL
N/EL
€1,218,114
0.8% 100.0%
0.8% 100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
CCM 3.6
CE 2.7
€17,606,412
- €
11.6%
0.0%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
EL
N/EL
N/EL
BIO 1.1
€498,138
0.3%
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
EL
€18,104,550
€19,322,664
€132,526,437
11.9%
12.7%
87.3%
€151,849,101
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%
capex
Substantial contribution criteria
Economic activities
Code(s)
Absolute capex
Proportion of
capex
Climate
change
mitigation
Climate
change
adaptation
Water and
maritime
resources
Circular
Economy
Pollution
Biodiversity and
ecosystems
A. Taxonomy-eligible activities
A.1 Environmentally sustainable activities (Taxonomy-aligned)
Material recovery from non-hazardous waste
Capex of environmentally sustainable activities
(Taxonomy-aligned)
of which enabling
of which transitional
A.2 Taxonomy-Eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities)
Manufacture of other low carbon technologies
Sorting and material recovery of non-hazardous waste
Conservation, including restoration, of habitats, ecosystems
and species
Capex of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities) (A.2)
Total A.1 + A.2
B. Taxonomy non-eligible activities
Total A+B
CCM 5.9
€4,295,970
0.8%
Y
N
N/EL
N/EL
N/EL
N/EL
€4,295,970
0.8% 100.0%
0.8% 100.0%
0.0%
0,0%
0,0%
0.0%
0,0%
0.0%
0,0%
0.0%
0,0%
0.0%
0,0%
0.0%
CCM 3.6
CE 2.7
€5,281,500
- €
1.0%
0.0%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
EL
N/EL
N/EL
BIO 1.1
- €
0.0%
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
EL
€5,281,500
€9,577,470
€495,922,530
1.0%
1.9%
98.10%
€505,500,000
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
1. Restatement of information: EU Taxonomy 2022 – the revenue, Opex reported as part of the EU Taxonomy disclosure table from the economic activity CCM 5.9 “Material recovery from non-
hazardous waste” as eligible and aligned in 2022 is restated. Originally reported: Revenue 2022 at 1.9% and Opex 2022 at 1.4%; Restated: Revenue at 0.0% and Opex at 0.9%.
EU Taxonomy 2022 – the revenue, opex and capex reported as part of the EU Taxonomy disclosure table from the economic activity CCM 3.6 “Manufacture of other low carbon technologies” as
eligible and aligned in 2022 is restated. Originally reported: Revenue 2022 at 16.8%, Opex 2022 at 12.5% and Capex at 2.7% Restated: Revenue at 0.0%; Opex at 0.0% and Capex at 0.0%.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
9 7
STRATEGIC REPORT
Sustainability
EU Taxonomy continued
Taxonomy disclosure table continued
Economic activities
A. Taxonomy-eligible activities
A.1 Environmentally sustainable activities
(Taxonomy-aligned)
Material recovery from non-hazardous waste
Turnover of environmentally sustainable activities
(Taxonomy-aligned)
of which enabling
of which transitional
A.2 Taxonomy-Eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities)
Manufacture of other low carbon technologies
Sorting and material recovery of non-hazardous
waste
Conservation, including restoration, of habitats,
ecosystems and species
Turnover of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
Total A.1 + A.2
B. Taxonomy non-eligible activities
Total A+B
Economic activities
A. Taxonomy-eligible activities
DNSH criteria (‘Does Not Significantly Harm’)
Climate
change
mitigation
Climate
change
adaptation
Water and
maritime
resources
Circular
economy
Pollution
Biodiversity
and
ecosystems
Minimum
safeguards
Taxonomy aligned
proportion of
turnover year 2023
Taxonomy aligned
proportion of
turnover year 2022
Category
(enabling
activity)
Category
(transitional
activity)
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
0.2%
0.2%
100%
0.0%
E
0.0%
0.0%
0.0%
E
0.0%
0.0%
0.0%
0.0%
DNSH criteria
Climate
change
mitigation
Climate
change
adaptation
Water and
maritime
resources
Circular
economy
Pollution
Biodiversity
and
ecosystems
Minimum
safeguards
Taxonomy aligned
proportion of Opex
year 2023
Taxonomy aligned
proportion of Opex
year 2022
Category
(enabling
activity)
Category
(transitional
activity)
A.1 Environmentally sustainable activities
(Taxonomy-aligned)
Material recovery from non-hazardous waste
Opex of environmentally sustainable activities
(Taxonomy-aligned)
of which enabling
of which transitional
A.2 Taxonomy-Eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities)
Manufacture of other low carbon technologies
Sorting and material recovery of non-hazardous
waste
Conservation, including restoration, of habitats,
ecosystems and species
Opex of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities) (A.2)
Total A.1 + A.2
B. Taxonomy non-eligible activities
Total A+B
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
0.8%
0.9%
E
0.8%
100.0%
0.9%
100.0%
0.0%
E
0.0%
0.0%
0.0%
0.9%
Economic activities
A. Taxonomy-eligible activities
A.1 Environmentally sustainable activities
(Taxonomy-aligned)
Material recovery from non-hazardous waste
Capex of environmentally sustainable activities
(Taxonomy-aligned)
of which enabling
A.2 Taxonomy-Eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities)
Manufacture of other low carbon technologies
Sorting and material recovery of non-hazardous
waste
Conservation, including restoration, of habitats,
ecosystems and species
Capex of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
Total A.1 + A.2
B. Taxonomy non-eligible activities
Total A+B
DNSH criteria
Climate
change
mitigation
Climate
change
adaptation
Water and
maritime
resources
Circular
economy
Pollution
Biodiversity
and
ecosystems
Minimum
safeguards
Taxonomy aligned
proportion of Opex
year 2023
Taxonomy aligned
proportion of Opex
year 2022
Category
(enabling
activity)
Category
(transitional
activity)
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
0.8%
0.8%
1.5%
E
1.5%
100.0%
0.0%
E
0.0%
0.0%
0.0%
1.5%
9 8
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Sustainability
TCFD
Task Force on Climate-Related
Financial Disclosures (TCFD)
Introduction
RHI Magnesita is committed to transparency
about its climate-related risks and opportunities.
In line with this commitment, we support
the Task Force on Climate-related Financial
Disclosures (TCFD) and the EU Taxonomy. We
have made it a priority to identify, evaluate, and
manage climate-related risks and opportunities,
and we are always striving to improve our
process while providing essential information to
our stakeholders to make informed decisions.
RHI Magnesita has reported according to the
TCFD recommendations since 2019 and has
updated its climate-related risk assessment,
including the newly acquired sites in China,
India, Europe and the USA, and enlarged its
disclosure in 2023.
The TCFD recommendations are the
world’s most commonly accepted standard
for disclosing climate-related risks and
opportunities. They focus on four key pillars
of Governance, Strategy, Risk Management
and Metrics and Targets.
Board oversight
The Board of RHI Magnesita guides the
development of our strategy and appetite
towards risk. It also has oversight of other
material matters such as regulatory
developments or reputational and financial
topics. Responsibility for and oversight of
climate-related risks and opportunities has
been assigned to the Corporate Sustainability
Committee (CSC).
Magnesita managers and employees on
climate topics as required between the regular
Committee meetings. Certain members of
the Executive Management Team regularly
attend the Committee meetings. The
Committee Chairman reports to the Board on
climate-related matters on a regular basis.
The CSC regularly reviews climate risks and
opportunities, strategy and performance, while
the Remuneration Committee reviews and
approves bonus payment linked to climate.
Climate-related progress is discussed at
every CSC meeting, with the Chair engaging
directly with those driving the CO2 strategy in
between CSC meetings as needed. The Audit &
Compliance Committee oversees any material
ESG risks, including climate-related risks.
The Chairman of the Committee, who is
responsible for overseeing RHI Magnesita’s
climate strategy, engages directly with RHI
In 2023, the corporate Sustainability
Committee (CSC) met five times and addressed
the following issues related to climate change:
Table 1. TCFD Recommendations
Pillar of TCFD
Recommendations
Description
Governance
• Describe the Board’s oversight of climate related risks and opportunities
• Describe the management’s role in assessing and managing climate related risks and opportunities
Page 99
Page 100
Strategy
• Describe the climate -related risks and opportunities the organisation has identified over the short, medium and long term
Page 100
• Describe the impact of climate-related risks and opportunities on the organisation’s business, strategy and financial planning
Page 101
• Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including
Page 102
a 2°C or lower scenario
Risk Management
• Describe the organisation’s processes for identifying and assessing climate-related risks
• Describe the organisation’s processes for managing climate-related risks
Page 102
Page 102
• Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s
Page 102
overall risk management
Metrics and Targets
• Disclose the metrics used by the organisation to assess climate related risks and opportunities, in line with its strategy and risk
Page 105
management process
• Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks
Page 105
• Describe the targets used by the organisation to manage climate-related risks, opportunities and performances against targets
Page 105
Climate Governance
Board of Directors
Corporate Sustainability
Committee
Audit & Compliance
Committee
Remuneration Committee
CTO
Executive Management Team (EMT)
Global
Sustainability Team
Health, Safety &
Environment
R&D
Finance
Supply Chain
Communications
Internal Audit, Risk and
Compliance
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
9 9
STRATEGIC REPORT Sustainability
TCFD continued
• Reviewed progress against 2025 targets
including the CO2 emissions intensity
reduction target.
• Received reports on the methodology of
the CO2 roadmap, which is based on three
pillars: Carbon avoidance, Carbon Capture
Storage & Utilization and Scope 3 emissions
reduction, highlighting RHI Magnesita’s
strategies for reducing carbon emissions
and adopting sustainable practices.
• Received reports on the Group’s
participation in carbon capture technology
initiatives and strategic partnerships such as
its investment in and co-operation with MCi
Carbon, a technology provider specialising
in the mineralisation of CO2 emissions.
• Received reports on the Carbon Border
Adjustment Mechanism (CBAM), an
important climate protection instrument
of the European Union (EU), and its
associated potential impacts on RHI
Magnesita’s operations.
Additionally, the corporate Sustainability
Committee (CSC) addressed the following
issues related to climate in the supply chain:
• Received an overview of RHI Magnesita
supply chain due diligence that includes
the country-specific risk assessment
tool, EcoVadis supplier assessments,
and on-site supplier ESG audits and risk
mitigation efforts.
• Enhanced monthly monitoring of CO2
emissions (Scope 1 and 2) was integrated
into the Group’s enterprise resource
planning tool.
In addition to that, we are continuously
evolving our approach to engage with
suppliers to fully integrate sustainability
aspects, including emission transparency,
into our procurement process.
Our goal is that by 2025 two-thirds of
our suppliers will be rated by EcoVadis.
Engagement on the subject of emission
transparency is ongoing, particularly with our
raw material suppliers, which accounts for
approximately. 70% of our Scope 3 emissions.
Through meetings, follow up calls, the Group
highlights to potential suppliers that reducing
CO2 emissions is a key priority for the Group,
which is expected to drive changes in supplier
behaviour and energy use in the long term.
Climate strategy
Driving down carbon emissions is a key priority
for RHI Magnesita. Besides mapping out our own
transition path, we would like to be a reliable ally
to our customers as they venture into a carbon-
reduced economy.
The Group’s emission reduction plans target
a 15% reduction in CO2 emissions intensity for
Scope 1, 2 and 3 (raw materials) emissions by
2025, compared to 2018. Our climate strategy
is based on:
• Reviewed the status quo of data gathering
for product carbon footprint (PCF) data and
the outlook for 2024.
1) reducing the carbon footprint of our raw
materials, including through the increased
use of circular raw materials;
Management
At management level, in the C-Suite, the
CTO reports regularly to both the CEO and
Board CSC on a quarterly basis and anytime
in-between as necessary. The CTO is also on
the Executive Management Team. He directly
oversees the development of the Company’s
CO2 strategy and its implementation across the
organisation. The Global Sustainability Team
reports to the CTO and manages and facilitates
sustainability across RHI Magnesita.
Driven by our Board and led by our Executive
Management Team, we engage widely with
stakeholders, investigate risks, and identify
opportunities aligned with our sustainability
strategy. Our climate governance is outlined
in Figure 1.
In 2023 we further integrated carbon
considerations into key processes:
• 25% of the Long-Term Incentive Plan (LTIP)
payout criteria is linked to the Group’s target
to reduce CO2 emissions per tonne against
a 2018 baseline year.
•
Increase the use of secondary raw material
accounts for 10% of the annual bonus for
all eligible employees.
2) increasing energy efficiency in our
operations;
3 reducing the carbon intensity of our energy
sources; and
4) providing innovative solutions to reduce
customer emissions.
In 2023, the Group has updated the modelling
and analysis of climate-related transitional risks
and opportunities that are foreseen to impact
the Group over the short-, medium-, and long-
term horizons.
Short term (2025)
For short-term risks (between 0-2 years, 2025),
Group’s first set of sustainability targets are
planned within this timeframe. In addition,
we are actively monitoring emerging trends
and opportunities that may require us to
adjust our strategic plans. We are committed
to staying agile and adapting our plans as
needed to ensure that we remain competitive
in the marketplace and continue to meet
our sustainability targets, specially our 2025
climate-related ones.
In 2023, total CO2 emissions (Scope 1, 2 and
3 – raw materials) were 4.6 million tonnes and
our emissions intensity has reduced by 12%
compared to 2018 base year. This progress is
a result of recycling overperformance, but this
has been offset by slower progress on switching
to alternative fuels which is now uncertain due
to capex constraints. Achieving our target is
intricately tied to the effectiveness and success
of our recycling initiatives, a key lever of our
strategic approach.
While mergers and acquisitions (M&A)
can bring strategic advantages, the Group
anticipates a potential downside in terms of
carbon footprint and target achievement. The
integration of new entities may disrupt existing
sustainability initiatives, causing a temporary
setback. Harmonising diverse standards, supply
chains, and operational processes poses
challenges, affecting the overall environmental
performance. To mitigate this impact, the Group
is seeking to align sustainability practices and
implementing efficient transition strategies to
incorporate newly acquired sites while keeping
carbon intensity goal.
Medium term (2030)
For Medium term risks (between 2-5 years,
2030), it is the most likely horizon for the
regulatory frameworks (such as the EU
Emissions Trading System and Carbon Border
Adjustment Mechanism) currently over a three-
years transition period, and to be expanded
to all sectors within EU ETS in the future thus
having partial effect on to RHI Magnesita’s
operations due to the gradual phase out of free
allocations. We are anticipating and considering
major adjustments to our industrial footprint.
Long term (2050)
For the long-term risks, the Group considered
the deadline that has been set by the UN
and many policy-making bodies to meet
decarbonisation goals, being the year 2050.
During 2021 and 2022, we completed a
detailed assessment of all possible measures to
reduce CO2 emissions in our operations based
on proven technology and available financial
resources. Whilst it may be possible to reduce
emissions in line with a “well below 2 degrees”
scenario, it is our current assessment that it is
not possible to set a target that is aligned with
a 1.5-degree scenario which is not dependent
on the development of as-yet-unknown
technologies or significant external financial
and infrastructure support.
We are committed to reduce our carbon
footprint and we will continue to monitor
the variables which support this conclusion
and update our transition plan accordingly if
the Group’s own R&D activities result in the
development of new technologies that could
deliver a faster reduction in CO2 emissions that
is financially achievable.
Impact of climate-related risks on the
Group’s strategy
RHI Magnesita defines “substantive financial or
strategic impact” as impact which is classified as
“high” (score 4) or “critical” (score 5) impact.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Main affected
Time Horizon
Medium-
Long Term
Related metrics and targets
We have set a 15%
emissions intensity
reduction target by 2025 on
a 2018 baseline of Scope 1,
2 and 3 raw materials
emissions. By the end of
2023, our emissions
intensity was 13% lower
than the 2018 baseline
Short-
Medium-
Long Term
Sales of refractory products
supporting EAFs, associated
with the lower carbon
production of steel,
was 577 million in 2023
Short-
Medium-
Long Term
We have set a target of 15%
SRM content in refractory
products by 2025. We
achieved 12.6% of SRM
content in 2023 (2022:
10.5%)
Table 2. Climate-related transitional risks and opportunities
Climate
drivers
Policy-
making &
Regulatory
pressure
Risk/Opportunity
Category
Impact (see reference table)
RHI Magnesita response and strategy
Carbon Pricing
Risk
RHI Magnesita foresees an
impact due to the increase in
operating costs because of
increase in level or scope of
carbon pricing
• The Group integrates carbon permit price
projections into its financial planning and
has a hedging programme in place to fix
future exposures
• RHI Magnesita supports industry
partnerships for the development of
carbon capture and usage technologies.
These include the K1-MET consortium in
the Austrian steel industry and the
Industrial Advisory Board of the EU-funded
MOF4AIR project, a development of the
new Metal Organic Framework for
capturing CO2. The Group also progressed
a joint programme with the University of
Leoben to research the possibility of
re-mineralisation of captured CO2.
• The Group aims to increase the use of
secondary raw materials which will reduce
CO2 emissions compared to the mining or
purchase of fresh raw material
• We will continue to invest in fuel switching,
renewable energy and energy efficiency as
additional methods to reduce our carbon
intensity
• We are already providing our customers
with refractory products that support
low carbon production processes. This
includes our steel and cement customers
who account for 70% of our business.
For example, we provide products
supporting EAFs for the steel industry,
which is an enabling technology for CO2
emissions reduction
• RHI Magnesita has a higher market share in
lower CO2 emitting applications (such as
EAF) and a lower relative market share
in high emitting applications (e.g. BOF,
Blast Furnace)
• We will continue to offer our low energy
and carbon services and product offering
including process optimisation, recycling
services, coating technologies and
digital solutions
• In the short term, increasing the share of
SRM in our products will help us to reduce
our geogenic emissions from raw materials
and create attractive low-carbon products
• In the longer term, if the Group is
successful at developing and operating
carbon capture and sequestration or
utilisation technologies and switching
to renewable energy sources, refractory
products could be manufactured with low
or potentially zero CO2 emissions
• This is expected to translate into a pricing
and/or market share advantage compared
to competitor products with high
emissions, particularly as customers focus
more on their Scope 3 emissions
Market &
Customers
Increased
demand for the
Group’s products
arising from the
development of
or transition to
lower-carbon
emitting
industrial
processes by
our customers
Opportunity RHI Magnesita foresees
a low financial impact
regarding the increased
demand from customers
for refractory products that
help them reduce their
emissions is considered
low (e.g. EAF)
Market &
Customers
Increased
demand for
RHI Magnesita
products that
are produced
with lower
carbon footprint
Opportunity Higher revenue due to
increased demand for
low-carbon (e.g. recycled)
refractory products
Opportunities
High
>€875m
Risks
High
>€875m
Medium
€175m-€875m
Medium
€175m-€875m
Low
<€175m
Low
<€175m
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STRATEGIC REPORT
Sustainability
TCFD continued
RHI Magnesita defines the impact of a risk,
including those related to climate change,
on a scale of 1 (minor) to 5 (critical). Each of
these five ratings has specific definition and
quantifiable indicators based on the potential
to compromise the ability of RHI Magnesita in
achieving its strategic, operational, financial and
compliance goals.
• A score of 1 represents minor impact on
our ability to achieve these goals.
• A score of 2 represents low impact in
achieving such goals.
• A score of 3 represents moderate impact
(for example the potential for one strategic
deliverable to be slightly delayed).
• A score of 4 represents high impact on the
achievement of our goals, which might result
in one objective not being achieved or being
significantly delayed.
• Finally, a score of 5 represents a critical
impact on RHI Magnesita’s ability to deliver
more than one goal.
With specific reference to climate-related risks,
the following four quantifiable indicators are
used by RHI Magnesita to define a substantive
strategic or financial impact:
• An impact that would compromise the
ability of RHI Magnesita to achieve (or
achieve in a timely fashion) one or more
objectives defined in the Group’s 2025
company strategy, which includes climate-
related targets.
• An impact that would compromise our
ability to achieve our financial objectives by
more than 15% group budgeted EBITA.
• An impact that would compromise our ability
to meet climate regulatory requirements
applicable to our company resulting in
negative international media attention and/
or reputational damage to RHI Magnesita.
• An impact that would create a substantial
disruption to a) our plants (i.e., the inability
to continue operations in more than one
of RHI Magnesita key locations across four
global regional areas) and b) our ability to
fulfil contracts with customers comprising
a negative impact of more than 15% group
budgeted EBITA for the year and/or c)
compromise the safety of our employees.
We have conducted our analyses across three
different time horizons. The short-term (2025)
sits within our short-term business plan, while
the medium (2030) and long-term (2050)
time horizons are oriented towards the broader
international policy developments, including
the Paris Agreement and the EU Green Deal.
Having reviewed the analysis, the Group
believes and endorsed by CSC that it is well
positioned to mitigate the risks and embrace
the opportunities associated with the climate-
change related developments across the
different scenarios. These could range from
disruptive regulatory developments, physical
hazards for our operations or new business
opportunities, for example, to earn a Green
Premium for low/no-CO2 refractories. The
Group believes that through monitoring market
developments and enhancing its business
adaptability, innovation and planning, RHI
Magnesita can maintain a strong level of
climate resilience over the short, medium
and long- term across different scenarios.
We remain committed to supporting our
customers’ decarbonisation efforts as well
as actively managing our own climate-related
risks and opportunities.
Climate risks management
The Group has an established risk management
approach with the objective of identifying,
assessing, mitigating, monitoring and reporting
uncertainties and risks that could impact
the delivery of RHI Magnesita’s strategy.
Since the environment and climate change
represents both strategic and operational
risk to our business, they are considered as
RHI Magnesita’s principal risks (see our risk
management approach on our Annual Report
2023, on pages 45-57). Several mitigation
measures are in place to ensure that the
risk is appropriately managed and within
the Group’s risk appetite.
The risk management process at RHI Magnesita
combines top-down, bottom-up and subject-
specific risk assessments. The top-down risk
assessment is performed by the Executive
Management Team and reviewed by the
Audit Committee, and reporting against these
risks is included in Board meetings, Executive
Management Team meetings and strategic
reviews. The bottom-up risk assessment is based
on operational sites that maintain ongoing risk
management activity and is linked to the quality
management-based governance practices.
Subject-specific risk assessments are performed
for areas of emerging or important risks such
as climate change. These risk assessments
are reviewed by the CEO, the Executive
Management Team and the Audit Committee.
Climate-related risks are grouped as physical
risks and transitional risks and are fully
integrated within the RHI Magnesita risk
management system.
Physical risks include greater severity of
flooding, droughts or other extreme weather
events which could disrupt our operations or
supply chain.
Transitional risks arise from the uncertainty in
the global move towards a more sustainable,
low-carbon economy. These risks involve
shifts in the regulations, market dynamics,
technology and investor expectations related
to climate change.
The process of identifying and assessing all
Groups risks, including climate-related risks,
is as follows.
Starting from the risk universe (comprising all
risk categories that could impact businesses
in the next ten years), categories which are not
applicable to our business are excluded from
the risk analysis. Categories of risks identified as
applicable to our Group are analysed to identify
specific risks that impact (or potentially impact)
our business. These are linked to potential
root-causes and assessed for their inherent
likelihood, impact, and velocity.
For climate-change risks, the following
categories are considered: acute and chronic
physical risk, legal, current and emerging
regulations, technology, market, and
reputational risks. Within each category,
specific risks impacting direct operations,
downstream and upstream, are identified
and assessed based on the Company’s risk
management processes.
Risk impact is evaluated based on a scale of 1
(minor) to 5 (critical). Each rating has a specific
definition based on the impact of the risk on RHI
Magnesita’s strategic, operational, financial and
compliance goals.
Risks are also rated according to their inherent
likelihood on a scale of 1 (rare) to 5 (very likely)
based on their probability or expected frequency.
Once likelihood, impact and velocity of a risk
has been assessed, an appropriate response is
determined. This ranges from mitigating the risk
to transferring or avoiding the risk based on the
level of “risk appetite” defined by the Board.
Appropriate initiatives to reduce the level
of inherent risk are then identified and
implemented. The level of residual likelihood
and impact after mitigation is assessed for
each risk using the scoring system above (i.e.
impact on a scale of 1 “minor” to 5 “critical” and
likelihood on a scale of 1 “rare” to 5 “very likely”).
The overall level of residual risk is evaluated
to ensure that it is aligned with the Company’s
risk appetite and risk tolerance. Effectiveness
of mitigating measures is monitored over time
and risks are re-assessed at least on an annual
basis and as needed in the case of significant
changes in the risk landscape.
Risks
The Group has updated the modelling and
analysis of climate related transitional risks
and opportunities that are foreseen to impact
the Group over the short, medium, and long-
term horizons.
RHI Magnesita’s main risk is the additional
operating expense resulting from carbon pricing
developments. The financial impact of this risk
has increased due to implementation of CBAM
in Europe, which is an EU policy instrument
designed to level the playing field for domestic
producers subject to carbon pricing by
implementing a carbon-based import tariff
on goods from countries without equivalent
carbon pricing.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Table 3. Climate-related physical risks
Country
Brazil
China
Germany
India
Kosovo
Mexico
Switzerland
Türkiye
US
Legend
No risk
Low risk
Medium risk
High risk
Red flag
No data
Climate Hazards High Risk Exposure
Site
RCP 2.6
RCP 4.5
RCP 6.0
RCP 8.5
2030-2050
Heat stress
Sea level rise
Soil erosion
Brumado
Terminal Maritimo Aratu
Contagem
Coronel Frabriciano - Recycling
Fazenda Funchal, clay mine
Retiro Pd Domingo-mine
Fazenda Serra dos Ferreiras
Changing air temperature
Heat stress
Soil erosion
Flood
Changing air temperature
Soil erosion
Flood
Uberaba
Uberaba
Uberaba
Chizhou
Chongqing
Chongqing
Jinan
Niederdollendorf
Urmitz
Changing air temperature
Venkatapuram
Soil erosion
Drought
Rajnandgaon
Dalian
Devbhumi (mining)
Changing air temperature
Jamshedpur
Heat stress
Soil erosion
Jamshedpur
Jamshedpur
Changing air temperature
Katni
Bhikampali
Cuttack
Patrapalli, Mine
Dalmiapuram
Visakhaptnam
Maharashtra
Maharashtra
Maharashtra
Maharashtra
Decan
Water stress
Heavy precipitation
Soil erosion
Water stress
Changing air temperature
Tlalnepantla
Water stress
Water stress
Water stress
Soil erosion
Changing air temperature
Pfäffikon/Interstop
Sörmas
Eskisehir
Pevely
York
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STRATEGIC REPORT
Sustainability
TCFD continued
CBAM is designed to protect domestic
producers from competitive disadvantages
resulting from carbon pricing by making imports
from countries without equivalent carbon
pricing more expensive. This mechanism
would help to ensure that domestic producers
and consumers are not put at an economic
disadvantage by having to bear the cost
of carbon pricing, while their international
competitors do not. The CBAM is intended to
incentivise countries to adopt similar carbon
pricing policies, thereby reducing the global
emissions of greenhouse gases.
The implementation of the Carbon Border
Adjustment Mechanism (CBAM) is expected
to have a financial impact on the Group from
2030 onwards as free carbon allowances under
EU-ETS are phased-out. This is due to levies
on imported materials, which are designed
to protect the EU domestic business. This is
expected to increase refractory pricing for
all suppliers selling into the EU. Additionally,
products manufactured in the EU and then
exported will incur higher costs, as there are
currently no compensation mechanisms for
exporters. The financial impacts of the CBAM
have been included in the Group’s updated
TCFD modelling, resulting in impact on
equity value ranging from €180 million
to €350 million.
Opportunities
Three opportunities were identified: (i)
increased demand for products that customers
will require for technology transition, e.g. EAF
refractories; and (ii) increased demand for low-
carbon refractory products containing recycled
raw materials; and (iii) increased recycling rate
and absorption of carbon expenses via recycling
for EU operations.
The steel industry is undergoing a
decarbonisation process which is predicted
to continue into 2050 and beyond. This
megatrend has led to an increased demand
for electric arc furnaces (EAF) and electric
smelter furnaces. As the pressure to reduce
carbon emissions intensifies, RHI Magnesita is
well-positioned to benefit from this growing
trend. With its vertically integrated model,
RHI Magnesita has access to the raw material
required for an electric arc furnace from
its European mines in Austria, Hochfilzen
and Breitenau. This gives RHI Magnesita a
competitive edge and makes it the leading
refractory partner of choice in the green
transition of the steel industry.
2023 Valuation Bridge
42
223
-183
123
-12
Equity Value
Base Case
Carbon
Pricing
Recycling
Technology
Enabling
Customers
Low Carbon
Products
Recycling
Premium
Incorporating
Carbon Expenses
Via Recycling
Equity
Value
Including
Parameters
Additionally, RHI Magnesita’s joint venture
with Horn & Co., MIRECO, combines recycling
activities in Europe and increases the
production, use and offering of secondary raw
materials. This results in a significant decrease
in CO2 emissions. MIRECO is well positioned at
the forefront of the circular economy, providing
services to customers in steel, cement, glass
and other process industries (read more on
recycling and circular economy on page 72).
The net impact on equity value of these
opportunities combined is +€388 million
(2022:+123 million; 2021:+€352 million).
Physical-related risks and opportunities
The Group has undertaken a comprehensive
update of risk assessments at its production
sites across a broad range of physical climate
hazards, to cover newly acquired sites. The
analysis considered 70 sites, including all
production sites, recycling facilities and
mining locations.
The assessment considered four distinct climate
scenarios—RCP2.6, RCP4.5, RCP6.0, and
RCP8.5—taken from the Intergovernmental
Panel on Climate Change Fifth Assessment
Report. These scenarios project varying
greenhouse gas concentration trajectories,
indicating potential outcomes such as staying
below a 2°C temperature increase, reaching
approximately 2°C above the modern climate
baseline, a global temperature rise of about 3–4
°C by 2100, and an exceeding 4°C increase in
the global average surface temperature by 2100.
The assessment focused on evaluating future
exposure of RHI Magnesita sites to climate-
related hazards across temperature, wind, water,
and solid matter, encompassing a total of 29
categories. Due to data availability, some climate
dimensions had risks calculated over different
time periods. The estimation of future climate-
related risks was rooted in probability, gauging
the likelihood, expressed as the relative number
of years in the data ensemble, that future climate
values would surpass the mean values of the
current climate at specified locations.
Results revealed some sites are susceptible
to physical climate hazards. The Group will
perform a further detailed risk assessment
for 32 flagged sites in 2024. This approach
ensures that the Group is addressing climate-
related risks and improving the resilience of its
operations. Separately, a three-year programme
dedicated to assessing physical damage
risks of any origin is being implemented.
This assessment involves site visits by
experts to evaluate preparedness for various
risks, encompassing structural conditions
and geographical exposure to extreme
weather events such as storms, hurricanes,
and earthquakes. Newly acquired sites are
integrated into the three-year programme.
Insurance policies provide coverage,
encompassing protection for our assets against
physical damage and losses, including damage
arising from natural catastrophes.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Metrics and targets
The Group’s emission reduction plans target
a 15% reduction in CO2 emissions intensity for
Scope 1, 2 and 3 (raw materials) emissions by
2025, compared to 2018.
In 2023, total CO2 emissions (Scope 1, 2 and
3 - raw materials) were 4.6 million tonnes
and our emissions intensity has reduced by
12% compared to the baseline year of 2018.
This progress is largely a result of recycling
performance. There has been slower progress
on switching to alternative fuels due to capex
constraints, public infrastructure delays and
uncertainty in energy markets. The Group is on
track to achieve its 2025 CO2 intensity reduction
target, mainly through its successful efforts to
increase the use of recycled raw materials.
The Group has increased transparency for its
customers by disclosing the carbon footprint
of its c.200,000 refractory products in the
Customer Portal.
CO2 emissions calculations follow the principles
of ISO 14067 standard and include all Scope
1 and 2 emissions, as well as relevant Scope 3
emissions related to the manufacturing process
(known as “cradle-to-gate” greenhouse gases
from raw material extraction to production
and packaging).
The Group is undertaking a substantial M&A
programme which may affect the achievement
of its environmental targets. The integration of
new entities may disrupt existing sustainability
initiatives. Harmonising diverse standards,
supply chains, and operational processes
poses challenges which may affect overall
environmental performance. To mitigate
this impact, the Group is seeking to align
sustainability practices and implementing
efficient transition strategies to incorporate
new acquired sites.
Tracking our progress
We use metrics and targets to track our progress
in relation to our material climate-related risks
and opportunities.
Outlook
We recognise the importance of understanding
our risk and opportunity landscape in guiding our
climate strategy. In addition to charting our own
transition, we want to be a trusted partner to our
customers on their journey to net zero. We will
further deepen our climate-related initiatives in
the coming years to help us to continue to be a
sustainability leader within the sector.
Table 4. Metrics and Targets1
Scope 1
of which geogenic emissions
of which fuel-based emissions
of which other emissions
Scope 2
Scope 3 (only raw material)
TOTAL
Carbon Intensity (t CO2/t product)2
Biogenic Scope 1 emissions
Absolute emissions (thousand tonnes of CO2)
2018
2,540
1,305
1,184
50
240
3,389
6,169
1.84
5
2019
2,151
1,066
918
168
223
3,008
5,382
1.82
8
2020
2,113
1,075
873
165
177
2,682
4,973
1.86
10
2021
2,643
1,277
1,146
220
147
2,901
5,691
1.76
13
2022
2,347
1,124
1,223
–
120
2,420
4,887
1.71
13
2023
2,191
1,052
1,138
-
119
2,272
4,583
1.62
17
1. CO2 emission data are calculated based on GHG Protocol methodology. Historical data have been adjusted to reflect new acquisitions in the baseline and methodology changes following an
external verification process that took place in July 2022. All assets acquired in 2023 are considered in the performance data except three minor production sites at Huron, Bussalla and Bochum
which are still undergoing integration.
2. Adjustments in line with the Greenhouse Gas protocol and refinement in reporting resulted in energy efficiency figures for 2018-2023.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
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STRATEGIC REPORT 1 0 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Our
Governance
“How corporations are governed has
consequences for our economies and
our societies, and ultimately for all of
us as individuals”
Rethinking Good Governance, Lynn Paine and Joseph Bower
Harvard Business School
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 0 7
GOVERNANCE Chairman’s introduction
to corporate governance
Herbert Cordt
Chairman
In 2023, the Board has been
pleased to see the results
of management’s focus on
operational excellence, the
establishment of stronger
financial performance, and
the development of our
regional businesses.”
Dear Shareholder,
On behalf of the Board, I am pleased to present
the corporate governance report for the year
ended 31 December 2023, summarising the role
of the Board in providing effective leadership
to promote the long-term sustainable success
of RHI Magnesita. I have taken the opportunity
to highlight some of the key points of this
section below.
Sustainability, stakeholders,
and strategy
Throughout the 2023 Board schedule we
continued to devote considerable time to
the deliberation of the Company’s strategy,
particularly to assessing progress against our
2025 strategy, the execution capability required
to deliver it and starting to think about the
wider time horizon. The Board ensured it
heard from a variety and diversity of voices
to create a balanced understanding of both
external macroeconomic context and internal
specialist matters.
RHI Magnesita has had an active period of
acquisitions in the last 24 months and the
Board’s focus has been to steer management
to ensure that synergies and benefits are fully
leveraged through an effective integration
process. To ensure this, a dedicated function
has been established to enable local teams to
successfully deliver an integrated organisation
in order to service our customers to the
highest standard. In addition to the acquisition
strategy pursued, the Board have encouraged
management to improve the operational
foundations of the Company to form a strong
basis and ensure new assets can be integrated
in a consistent and effective fashion to deliver
synergies and benefits to our shareholders.
Environmental, social and governance (ESG)
and sustainability matters have been a constant
seam throughout many of our conversations
as a Board and also with stakeholders, given its
centrality to our future operations. We listen
to feedback from investors and customers on
such topics and incorporate their views to form
the Company’s approach. It continues to be a
cornerstone of the annual strategy discussions,
with Directors recognising it as both a risk and
opportunity for the business, and our wider
communities. The Corporate Sustainability
Committee (CSC) supports the Board with its
deliberations on sustainable initiatives and
investments and supports the Remuneration
Committee with priorities to be incentivised.
Sustainable development continues to be key
for our strategic success and management is
focusing on building a resilient and responsible
business foundation, creating value for all
stakeholders, particularly shareholders. We
were pleased to be recognised by the Chartered
Governance Institute of UK & Ireland for our
Sustainability disclosure in our 2022 report.
The judges determined that RHI Magnesita, as
the winner of this category, had demonstrated
that sustainability is at the heart of our
business, showed the Board’s commitment
to sustainability, and had communicated
the relationship between sustainability
and strategy. You can read more about our
sustainability strategy on pages 58 to 105.
At RHI Magnesita, we recognise the role we
play in the lives of our employees, customers,
suppliers, shareholders, and the communities
in which we operate. We have been extremely
saddened that there have been two recent
fatalities, one in late 2023 and one in early
2024, in two different locations in Austria.
This is clearly not aligned with our safety
culture and the Non-Executive Directors spent
significant time with the executive management
to understand the root cause and the follow
up action to continue our progress towards a
safe working environment with “Zero Harm -
No Injuries”. It is clear to all involved that we
must see immediate change in this arena. We
will continue to address Health & Safety with
our management colleagues and challenge
ourselves on how we live, promote and realise
our desired safety culture. The CSC considered
the Company’s Health & Safety KPIs at every
meeting and these events in detail. The CSC
will monitor progress in this area on a regular
basis and report back to the Board to provide
Directors with the opportunity to ask questions
and challenge management. You can
read more about the CSC’s consideration
of this matter on pages 138 to 139.
The Board took every opportunity it could to
meet with stakeholders and was delighted
to meet customers in Arizona, USA and to
meet with employee cultural champions in
various locations. Our Executive Directors met
frequently with shareholders and our Deputy
Chairman & Senior Independent Director (who
is also the Chairman of Audit & Compliance
Committee) and our Chairman of the CSC and
Remuneration Committee met with investors
in our annual ESG roadshow. Each interaction
was a valuable opportunity to hear the opinions
of our stakeholders. You can read more about
our stakeholder engagement, and how our
understanding of stakeholder expectations feeds
into our decision making, on pages 122 to 127.
The Board in 2023
Sigalia Heifetz had communicated her intention
to step down at the Annual General Meeting
(AGM) 2023 and we initiated the search for a
new Independent Non-Executive Director (NED)
in February 2023. At the time, we considered
that there were two vacancies on the Board, as
detailed in our 2022 report, and the Nomination
& Governance Committee embarked on the
search for new Directors with the help of Egon
Zehnder. In our search we were delighted to
identify Katarina Lindström as an excellent fit for
our Board and management team, both culturally
and in terms of the experience and skills she
1 0 8
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Our Remuneration Committee has been
engaging with shareholders on the new
Remuneration Policy to be proposed to the
AGM in 2024. Over 80% of our shareholders
were consulted and we are pleased to have their
broad support for the new Policy which will be
voted upon in May 2024. We were pleased to
increase our compliance with the UKCGC with
this new Policy, and more details can be found
on pages 151 to 160.
In recent years, we have enjoyed the ability
to hold our AGM virtually, seeing it as an
opportunity for an efficient and cost-effective
way of engaging with as many shareholders
as possible, given the disparate locations of
shareholders and Directors. We have seen
good levels of representation at these virtual
and hybrid AGMs and our Investor Relations
team work tirelessly throughout the year
to ensure there are also plenty of other
opportunities for shareholders to engage
with the Company. At our AGM in 2023, we
proposed a change to the Articles of Association
to give the Company flexibility should the Dutch
law enabling virtual AGMs be implemented in
the future. In 2024, we will facilitate a hybrid
AGM again, enabling virtual attendance for
our shareholders and Directors.
As well as all Directors seeking re-election at
our 2024 AGM, Katarina Lindström will seek
election as an Independent Non-Executive
Director. We all look forward to engaging with
our shareholders at that event.
Herbert Cordt
Chairman of the Board of Directors
brings. Katarina was nominated by the Board
on 30 September 2023 as an observer until
such time as she can be formally appointed as a
Director by the shareholders at our 2024 AGM.
corporate governance, macro-economic and
geopolitical matters, and internally with our
growing operations. You can read more about
this review and our findings on page 134.
As Chairman, with responsibility for setting
NED fees in alignment with our Remuneration
Policy, I considered the factors raised and the
increased workload, which is expected to be
sustained, particularly of the Deputy Chairman
& SID, whose input and guidance I value highly
and has guided us well in recent years in his
role as my deputy. Considering benchmarks
and aspirations in our relevant regions, and the
factors particular to our Company, I will propose
to shareholders the increases as laid out on
page 170 which we hope you are supportive of
the reasoning for and I remain available to you,
should you wish to discuss.
Governance
The report of our compliance in respect of
each of the UK Corporate Governance Code
2018 (the “UKCGC”) and the Dutch Corporate
Governance Code 2022 (the “DCGC”), and
together (“the Codes”) can be found on page
110. The Nomination & Governance Committee
considered the new DCGC, receiving reports of
the actions taken by management to increase
and evidence RHI Magnesita’s compliance with
the DCGC. We are pleased we will maintain the
same high standard of conformity.
As in our 2022 report, we have reported
against the UK Listing Rules diversity targets
on page 136. We responded to the Financial
Reporting Council’s (FRC) consultation on
the new UKCGC in September 2023. The
updated UKCGC will begin to apply to us
from 1 January 2025. We will be assessing
our compliance and will report to you on
progress in our future reporting.
The search for a second Non-Executive Director
(NED) remains ongoing. The requirements of
the Board, directed by the Company’s strategy
and needs of management, have evolved
throughout 2023 and whilst the Nomination &
Governance Committee saw some excellent
candidates in their initial search, it was felt that
it would be sensible to consider if the defined
role scope was appropriate and fit for future.
The Nomination & Governance Committee
will continue to keep the positions and skill
set of the Board under review.
Full details of our Board and executive
succession planning and the recruitment
process for NEDs can be found on pages 113
and 137. We continue to review the skills and
experience needed on the Board, as well the
diversity expectations that are important to
us and our key stakeholders and which will
underpin our future success. We remain open
to feedback from our shareholders on the
composition of the Board, as agents of their
capital. The Board and Executive Management
Team (EMT) biographies are on pages 128 to 133.
Board site visits
In 2023, we held in-person meetings for
the majority of our sessions, and the Board
were delighted to be able to travel across the
global network more widely, engaging with
colleagues, observing the culture at different
locations, seeing the results of Board decisions
and the successes of management, as well as
areas for improvement. The main Board visit
was to our North America region, visiting the
York plant, in Pennsylvania and a customer in
Arizona, and certain Directors made individual
trips to other locations in the year. You can read
more about this on page 113.
Board performance review
The Board performance review for 2022,
performed by EY in the first quarter of 2023,
confirmed that the Board and its Committees
have continued to perform effectively. An
action plan was developed by EY as the
external provider for the Board to consider.
In our Nomination & Governance Committee
report, we outline the progress made in 2023
on these actions. Details can be found on pages
118, 119 and 135. Our performance reviews take
place in the first quarter of the year and so our
consideration of the Board’s performance in
2023 is in the process of concluding at the
time of reporting. We will report fully on the
output next year.
Non-Executive Director fees
The Nomination & Governance Committee
considered the time spent and the scope of
NED roles in an increasingly complex and higher
risk environment, both externally in regard to
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 0 9
GOVERNANCE Corporate governance report
Compliance with the Dutch Corporate
Governance Code 2022 (DCGC) and
the UK Corporate Governance Code
2018 (UKCGC)
The Board has applied the principles of,
complies with and intends to continue
to comply with the provisions of both the
DCGC and the UKCGC, save in respect of
the exceptions outlined below accompanied
by our explanations.
The Company does not comply with Provisions
9, 19 and 24, and reports partial compliance with
Provisions 15, 40 and 41 of the UKCGC. Through
our new Remuneration Policy, we are pleased
to now be able to report full compliance with
Provision 36 on post-termination shareholdings.
The Company does not comply with best
practice provision 2.2.2. of the DCGC but
is comfortable it is in compliance with the
remainder of the DCGC.
You can find the DCGC at www.mccg.nl and
the UKCGC at www.frc.org.uk.
Deviations from the UK Corporate
Governance Code in 2023
Provision 9 and 19
Provision 9 states that the Chairman of the Board
should be independent on appointment. The
Chairman was not considered independent
on appointment, having served for more than
nine years (including time on the Board of RHI
AG prior to the merger with Magnesita) by the
time he became Chairman. The Chairman’s
length of service also means the Company
is not compliant with Provision 19. The Board
continues to see the value that Herbert Cordt
brings to the Company, being most notably
continuity of corporate memory, which
contextualises, and drives focus on, operational
performance improvements through detailed
organisational and business knowledge.
Provision 15
Given the size of the Board and schedule of
meetings, the Board has delegated authority to
the Nomination & Governance Committee to
approve the additional external appointments
of its Directors. The Nomination & Governance
Committee considers proposed appointments,
with the support of the Company Secretary, to
assess for conflicts of interest and overboarding.
The Board is comfortable this provides oversight
and governance, whilst providing a flexible and
responsive approach for our Directors.
Provision 24
Provision 24 envisages that all members of an
Audit Committee will be independent non-
executive directors. Wolfgang Ruttenstorfer
is not deemed to be independent under the
criteria outlined in the UKCGC, as a result of
his time on the Board, which includes his role
on the RHI AG Supervisory Board from 2012.
However, the Board considers that Wolfgang
is independent in character and judgement
and that it continues to benefit greatly from his
financial experience, the continuity he provides,
his challenge to management using experience
from the past, his detailed consideration of
business cases, and ingrained understanding
of the refractory business. He contributes
diligently and intelligently to the Audit &
Compliance Committee, and as such, Wolfgang
will continue to be a member of the Committee.
Provisions 40 and 41
Since the introduction of the current UKCGC in
2018, the Company has taken steps in order to
be able to report compliance with the principles
and provisions relating to remuneration.
Following the publication of FRC guidance in
2021 titled, “Improving the quality of ‘comply or
explain’ reporting”, we report partial compliance
with Provisions 40 and 41, giving explanation in
the following paragraphs.
The Company benefits from employee
representation on the Board, and the Board
annually approves executive remuneration
on the recommendation of the Remuneration
Committee. This provides a mechanism
for our Employee Representative Directors
(ERDs) to understand and engage on behalf
of the workforce regarding the alignment of
executive remuneration with wider Company
pay policy and to provide feedback. As part of
their induction, they met with the Chairman
of the Remuneration Committee, which gave
background to executive remuneration and
outlined the key matters the Board are required
to decide upon in respect of remuneration.
Our remuneration policies and practices,
including our approach to salary increases and
annual bonus structure, are aligned throughout
the business. Given this alignment, and the
extant mechanism for engagement with the
ERDs, the Board is comfortable with the existing
approach and does not consider it necessary
to provide any additional forms of engagement
with the workforce to explain how executive
remuneration aligns with wider Company pay
policy. The Remuneration Committee will
continue to keep this under review.
Deviations from the Dutch Corporate
Governance Code in 2023
Best practice provision 2.2.2 of the DCGC
recommends that, on a one-tier board, a
Non-Executive Director should be appointed
for a period of four years. The appointment of
the NEDs (other than ERDs) has been made on
the basis of nominations for three-year terms,
subject to performance and annual re-election
at the AGM, which is consistent with UK listed
company practice. The Board feels that it does
not compromise the spirit of the DCGC provision.
The information required to be included in
this statement (which also fulfils UK reporting
requirements) can be found in the following
sections and pages of this Annual Report and
are deemed to be included and repeated in
this statement:
•
•
•
•
•
•
the information concerning compliance
with the DCGC can be found on page 110;
the information concerning the main
features of the Company’s internal risk
management and control systems relating
to the financial reporting process can be
found on pages 46 to 49;
the information regarding the functioning
of the General Meeting and its main
authorities, and the rights of the Company’s
shareholders and holders of depositary
interests in respect of shares in the Company
and how they can be exercised can be found
on pages 111 to 113, 117, and 250;
the information regarding the composition
and functioning of the Board and its
Committees can be found on pages 112
to 171;
the Board Diversity Policy with regard
to the composition of the Board and its
Committees, can be found on page 135; and
the information concerning the disclosure of
the following items, where they exist, may be
found on pages 110 to 127:
– participations in the Company for which
a disclosure obligation exists;
– special control rights attached to shares
and the name of the person entitled to
such rights;
– any limitation of voting rights, deadlines
for exercising voting rights and the issue
of depository interests for shares with the
co-operation of the Company;
– the regulations in respect of the
appointment and dismissal of Executive
Directors and NEDs and amendments to
the Articles of Association;
– the powers of the Board, in particular to
issue shares and to acquire own shares
by the Company; and
– the number of shares without voting
rights and the number of shares that
do not give any, or only a limited, right
to share in the profits or reserves of the
Company, with an indication of the
powers which they confer.
Corporate governance declaration
Listing Rules information
In complying with the requirements of
the DCGC, the Company publishes this
corporate governance statement including
information relating to its compliance with
the DCGC, including a further explanation of
the Company’s Board Diversity Policy and the
way in which it is implemented in practice.
Certain information is required to be published
by the Listing Rules (LR 9.8.4 R and LR 9.8.4C R)
and this information can be found in the Annual
Report as set out in the table overleaf:
1 1 0
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Item
1.
Interest capitalised
2. Publication of unaudited
financial information
Location in this
Annual Report
Page 204
N/A
3. Details of long-term incentive
schemes
Pages 147
to 171
4. Waiver of emoluments by
Page 150
a Director
5. Waiver of future emoluments
by a Director
6. Non pre-emptive issues
of equity for cash
N/A
N/A
7.
Item (6) in relation to major
subsidiary undertakings
Page 42
8. Parent participation in a
Page 42
placing by a listed subsidiary
9. Contracts of significance
10. Provision of services by a
controlling shareholder
11. Shareholder waiver of
dividends
12. Shareholder waiver of future
dividends
N/A
Refer to
Note 43
N/A
N/A
13. Agreements with controlling
shareholders
Refer to
Note 43
Information on capital structure
and rights of shareholders
The Company has one class of shares, being
ordinary shares. On 31 December 2023, the
issued capital of the Company comprised
49,477,705 ordinary shares. Each ordinary
share (other than the ordinary shares held by
the Company) carries one vote. Depositary
interests in respect of the Company’s shares
have been issued by the Company with the
Company’s co-operation, which can be settled
electronically through, and held in the system
of, CREST. The depositary interest holders hold
the beneficial ownership in the shares instead
of legal title. Nederlands Centraal Instituut
voor Giraal Effectenverkeer B.V. (also known as
Euroclear Nederland) holds the legal title to the
underlying shares.
Shares may be issued pursuant to a resolution
of the General Meeting or of the Board, if and
insofar as, the Board has been designated for
that purpose by a resolution of the General
Meeting. Such designation shall be as set out
in the Company’s Articles of Association. The
Company shall notify each issuance of shares in
the relevant calendar quarter to the Dutch Trade
Register, stating the number of shares issued.
There are no restrictions on voting and profit
rights and no holders of any securities with
special control rights. There is no restriction in
force by the Company on the transfer of shares
or depositary receipts issued for shares and
there is no agreement in so far as the Company
is aware of, which would give rise to the same
such restrictions or restrictions on voting rights.
Shareholders who individually or collectively
represent at least 3% of the issued capital are
entitled to propose items for the agenda, within
the boundaries of the law. Every shareholder is
entitled to attend a General Meeting. Subject to
certain exceptions provided by Dutch law and/
or the Articles of Association, resolutions of the
General Meeting of shareholders are passed
by an absolute majority of votes cast and do
not require a quorum. General Meetings are
convened by public notice via the company’s
website, and registered shareholders are
notified by letter or electronic communication
at least 42 days prior to the day of the relevant
meeting. Shareholders who wish to exercise
the rights attached to their shares in respect
of a shareholders’ meeting are required to
register for such meeting. Shareholders may
attend a meeting in person, vote by proxy (via
an independent third party) or grant a power of
attorney to a third party to attend the meeting
and vote on their behalf.
Pursuant to Dutch law, the record date for the
exercise of voting rights and rights relating
to shareholders’ meetings is set at the 28th
day prior to the day of the relevant meeting.
Shareholders registered on such date are
entitled to attend the meeting and to exercise
the other shareholder rights (at the relevant
meeting), despite any subsequent sale of their
shares after the record date.
Major shareholdings
The Dutch Financial Supervision Act requires
institutions and individuals holding a (potential)
capital and/or voting interest of 3% or more in
the Company, to disclose such interest to the
Dutch Authority for the Financial Markets (AFM).
Shareholder7
MSP Stiftung
Rhône Capital L.L.C6
Fidelity Management & Research Company LLC
E. Prinzessin zu Sayn-Wittgenstein-Berleburg2
K.A. Winterstein3
FEWI Beteiligungsgesellschaft mbH4
GLG Partners LP5
Shareholders only have to update their filings if
their capital and/or voting interest crosses the
3% or a subsequent 5% threshold.
The AFM processes these disclosures in its
publicly available register, which can be
found at www.afm.nl. In providing the table
of shareholdings below, the Company has
included the total interests registered at the
AFM on 26 February 2024, or where the
Company has been made aware of more up-to-
date information through a direct notification
by the shareholder, it has used this information.
The total percentage of issued share capital in
the table is calculated excluding treasury shares
held by the Company.
These stated interests may differ from the
current interests of the relevant shareholders
as these interests are based on the number of
shares owned at the time of the notification and
are not adjusted for any purchases or sales since
that date.
In May 2023, Ignite Luxembourg Holdings S.à
r.l. (a wholly owned subsidiary of a number
of limited partnerships which are indirectly
managed by Rhône Holdings VI L.L.C. Rhône
Holdings VI L.L.C. indirectly manages a series
of parallel investment and co-investment
vehicles, ultimately controlled by Rhône Capital
L.L.C.) (“Rhône Capital”) embarked on a Partial
Offer for Shares and as a result of this process
became a major shareholder of the Company
on 13 December 2023, holding just under 20%
of the Company’s shares.
Number of shares
13,333,340
9,399,144
2,722,409
2,088,461
2,088,461
1,891,292
1,788,605
Total % of issued
and outstanding
capital 1
28.29%
19.94%
5.78%
4.43%
4.43%
4.01%
3.80%
1. These percentages have been calculated using the number of shares notified by the relevant shareholder to the AFM or the
Company and the current issued and outstanding share capital of the Company (and therefore excluding treasury shares). It is
noted that for purposes of the Dutch Financial Supervision Act, the calculation must be made on the basis of the issued share
capital, and therefore including treasury shares, and therefore the AFM’s register will refer to other percentages.
2. According to the AFM register, the shares are held indirectly via Chestnut Beteiligungsgesellschaft mbH (Chestnut)
Ms. E. Prinzessin zu Sayn-Wittgenstein-Berleburg, is a related party to the Company as the spouse of Stanislaus Prinz zu
Sayn-Wittgenstein-Berleburg who sits on the Board of Directors. Ms. E. Sayn-Wittgenstein made an agreement with
Mr. K. A. Winterstein which allows Chestnut to exercise the voting rights of Silver Beteiligungsgesellschaft mbH (Silver)
in the Company. Ms. Sayn-Wittgenstein and Mr. K.A. Winterstein share a family relationship.
3. According to the AFM register, the shares are held indirectly via Silver. The Company has been informed that Mr. Winterstein
and Ms. Sayn-Wittgenstein made an agreement which allows Chestnut to exercise the voting rights of Silver in the Company.
Ms. Sayn-Wittgenstein and Mr. Winterstein share a family relationship.
4. The Company has been informed that FEWI Beteiligungsgesellschaft mbH (FEWI) is owned by Ms. Sayn-Wittgenstein and
Mr Winterstein in equal proportions.
5. GLG Partners LP have notified voting rights of 1,487,887 held directly and 300,718 held via a swap agreement.
6. Rhône Capital took legal ownership of the shares on 13 December 2023.
7. The Company currently holds 2,346,506 (4.74%) of its own shares in Treasury as a result of the buybacks undertaken during
the period 2019 to 2021. Shares held in Treasury cannot be voted.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 1 1
GOVERNANCE Corporate governance report continued
Transactions with majority shareholders
There have been no transactions between
the Company and MSP Stiftung, or between
the Company and Rhône Capital within the
meaning of best practice provision 2.7.5 of the
DCGC. Since there are no other legal or natural
persons who hold at least 10% of the shares in
the capital of the Company, no declaration in
accordance with best practice provision 2.7.5
of the DCGC has to be published.
Share authorities
Share authorities for the Board of Directors to
issue and to repurchase shares are generally
requested at each AGM. You can find the
resolutions under the AGM section of our
website.
The Company last undertook share buybacks
during the course of 2021 under the authority
given by shareholders at the AGM. In 2023,
no such share buybacks have been undertaken
and the authority received under the 2023
AGM remains at 10%, less the amount
of shares held by the Company and its
subsidiaries in Treasury.
As at 31 December 2023, the Company held a
total of 2,347,367 ordinary shares in Treasury,
which represented 4.74% of the issued
share capital (including treasury shares). The
Company continues to assess the treatment
of these treasury shares and they may be used
to satisfy awards made under the terms of the
Company’s Long-Term Incentive Plan (LTIP)
or cancelled, subject to shareholder approval,
in due course. This number is reduced through
the satisfaction of the 2020 LTIP award in 2023,
and will shortly be further reduced with
the 2021 award vesting. You can find more
details about this in the Remuneration Report
on page 165.
The Board kept the capital allocation of the
Company, including the potential for share
buybacks, under review in 2023, considering
the medium-term liquidity, leverage profile,
outlook and going concern of the Company.
The Board will continue to evaluate the
potential for additional share buyback
programmes and/or tender offers to further
enhance shareholder returns, after taking
into account market conditions and the
Group’s wider capital allocation priorities.
Prime listing in Vienna
In December 2022 the Company upgraded
its secondary listing on the Vienna Stock
Exchange (Wiener Börse) to the prime market.
This has increased the Company’s visibility and
accessibility to its Austrian investor base. This
does not affect the Company’s Premium Listing
on the London Stock Exchange, which remains
our primary listing venue.
As the Company already declares compliance
with a Corporate Governance Code in an
EU Member State, the DCGC, it is not a
requirement to report compliance with the
Austrian Corporate Governance Code. The
Company’s compliance with the ongoing
obligations of the prime market of the
Wiener Börse can be found on the Corporate
Governance section of the Company’s website
and within this report.
Outline of anti-takeover measures
No anti-takeover measures have been
implemented. The Company acquired a
secondary listing in 2019 on the Wiener
Börse to extend regulatory protections to its
shareholders, which could have been lost as a
result of the UK’s exit from the EU. Austria has
become the Company’s sole host member
state and the Netherlands continues to be the
Company’s home member state.
The main effect of this is that the Company
notifies disclosures, such as share dealing,
to each of the three authorities in the UK,
the Netherlands and Austria. The Company
complies with the relevant corporate and listing
regulations across all three jurisdictions. The
Company’s governance structure continues
to be primarily derived from its primary listing
status in the UK, although there are minor
areas in which regulations in other jurisdictions
take precedence.
Board powers, responsibilities
and representation
The Board is collectively responsible for the
leadership and management of the Company
and its business. Its role is to establish the
strategy, purpose and values to ensure the
Group’s long-term and sustainable success.
The Board assesses the strategic risks it is
willing to take in pursuit of this strategy,
ensures sufficient resources, and measures the
performance of the management team against
agreed objectives, aligned with the strategy.
The Board ensures that appropriate controls
and systems are in place to manage risk and
considers the Company culture and practices,
reviewing alignment with the purpose, values
and strategy.
The Board Rules and Matters Reserved to the
Board, which are available on the Company’s
website, set out those matters that are reserved
Corporate governance structure
for the Board to consider, including, among
other items, overall responsibility for strategy
and management, major acquisitions and
investments, structure and capital, financial
reporting and controls, and corporate
governance. The Board Rules were refreshed
in 2023 to ensure compliance with the
DCGC. You can read more about the matters
considered by the Board in 2023 on pages
119 to 120.
The Board has delegated certain responsibilities
to Committees of the Board, which are
outlined in the respective Committee Terms
of Reference, available on the Company’s
website, and summarised in their individual
reports on pages 134 to 171. The Committee
Chairmen provide reports to the following Board
meeting on the matters discussed and resolved
upon in the Committee meetings.
Each Board Committee has considered
the required matters from the respective
Terms of Reference in 2023 and has met the
requisite number of times. The composition
of the Committees, the number of meetings,
attendance at those meetings and key items
discussed can be found in each Committee
Report on pages 134 to 171.
Pursuant to the Articles of Association, the
Board may, if it elects to do so, assign duties
and powers to individual Directors and/or
committees that are composed of two or more
Directors, with the day-to-day management
of the Company entrusted to the Executive
Directors. Both Executive Directors and NEDs
must perform such duties as are assigned to
them pursuant to the Articles of Association
and the Board Rules or a resolution of the
Board. Each Director has a duty towards the
Company to properly perform the duties
assigned to them. Tasks that have not been
specifically allocated to a specific Director fall
within the power of the Board as a whole. The
Directors share responsibility for all decisions
and acts of the Board, and for the acts of each
individual member of the Board, regardless
of the allocation of tasks. Furthermore, each
Director has a duty to act in the corporate
interests of the Company and its business.
RHI Magnesita Board
Chief
Executive
Officer
Remuneration
Committee
Nomination
&
Governance
Committee
Audit &
Compliance
Committee
Corporate
Sustainability
Committee
Executive
Management
Team
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Under Dutch law, corporate interest extends to
the interests of all stakeholders of the Company,
such as shareholders, creditors, employees and
other stakeholders. You can read more about
stakeholder engagement on pages 122 to 127.
The Board as a whole is entitled to represent
the Company. Additionally, (i) the CEO and the
Chairman, (ii) the Senior Independent Director
(SID) and Deputy Chairman1 and the Chairman
and (iii) two Executive Directors, acting jointly,
are also authorised to represent the Company.
Pursuant to the Articles of Association, the
Board may appoint officers who are authorised
to represent the Company within the limits of
the specific powers delegated to them. You
can find our Articles of Association and the role
profiles of the above roles on our website.
The Board has delegated responsibility for
day-to-day management of the Company
to the CEO and the EMT. There is a clear
separation of responsibilities between the Board
and the EMT, and the main responsibilities
of the EMT are to assist the Board with its
oversight of strategy, which involves making
strategic recommendations to the Board, being
accountable for implementing the Board’s
decisions, and being responsible for directing
and overseeing the Company’s operations,
investments, resources, and delivering the
Company’s purpose and value to stakeholders.
EMT and delegation of authority
The Board has documented the matters
reserved for its approval, including approvals
of major expenditure, investments, and key
policies. This provides as much clarity as
possible to the Board, and the organisation
as a whole, to enable effective delegation
of authority. The EMT then work within this
delegation of authority, as approved by the
Board, and set out parameters for the rest
of the organisation to work within.
The EMT comprises senior managers reporting
to the CEO who are accountable for the key
functions in the business. The CFO and CEO
sit on the EMT. There are meetings held, on
a minimum of a monthly basis, to discuss key
business performance indicators, to drive
operational performance and to agree strategic
initiatives to be proposed to the Board. The
EMT members attend each Board meeting,
giving reports on both standing items and
ad-hoc initiatives, per the approved forward
agenda planner. Individual EMT members
are responsible for the reporting to the Board
Committees and leading the organisation in
meeting objectives as set out by the Executive
Directors and NEDs of the Board. As part of this,
they meet and discuss matters one on one with
the Chairmen of the Board Committees.
1. A dual role held by one individual, John Ramsay.
Board appointment
Board site visits
Pursuant to the Articles of Association, the
Directors, other than the ERDs, are appointed
by the General Meeting by a majority of votes
cast, irrespective of the represented capital.
The Board makes nominations to the General
Meeting for such appointments. A resolution
to appoint a Director other than in accordance
with a nomination by the Board may be adopted
by the General Meeting by an absolute majority
of votes cast representing more than one-third
of the Company’s issued capital.
NEDs (other than ERDs) will be nominated for
a term of three years, subject to satisfactory
performance and annual reappointment by
the General Meeting. ERDs are appointed for
a term of not more than four years. The term
of office for each Director (other than ERDs)
will end on the day of the AGM in the year
following appointment. Pursuant to the Articles
of Association, Directors may be reappointed
for an unlimited number of terms, but the
Board’s consideration of NEDs (other than
ERDs) for reappointment for a third term
would always take into account overall
Board independence and stakeholder views,
as well as relevant Corporate Governance
Codes and associated guidance.
The General Meeting has the power to suspend
or remove a Director at any time, by means of a
resolution for suspension or removal as outlined in
the Articles of Association. The General Meeting
is authorised to resolve to amend the Articles of
Association, on the proposal of the Board.
Conflicts of interest
Dutch law provides that a director may not
participate in the discussions and decision-
making by the Board if such director has a direct
or indirect personal interest conflicting with
the interests of the Company or the business
connected with it.
Pursuant to the Articles of Association and the
Board Rules, the Board has adopted procedures
under which each Director is required to
declare the nature and extent of any personal
conflict of interest to the other Directors. At the
beginning of each Board meeting, the Directors
are reminded to consider the business of the
meeting and declare any potential conflicts
with their own personal interests. There are no
transactions under best practice provision 2.7.4
DCGC to be reported.
The agreed Board pattern is that one Board
session per annum, typically over a week in
April, is held at a location other than the Vienna
headquarters. In April 2023, the Board travelled
to the North America region. Starting in York,
Pennsylvania they visited the plant of c. 350
employees, meeting colleagues with focus on
quality control, production and maintenance.
The visit ended in Arizona at a customer plant
where the Board received a full and detailed
tour and met customers to hear their priorities
and plans.
At the sites, Board members met employees
involved in a variety of different tasks from
mining, Health & Safety, plant management,
lean process management, quality assessment,
supply chain management, production,
capex investments as well as works council
representatives. They also met cultural
champions and had the opportunity to observe
working practices, with a focus on Health &
Safety. Topics with management included
customer and employee focus areas, capex
investments, market share and progress
against KPIs. Feedback on the overall trip was
very positive and the experience was felt to
be extremely valuable for the Board and the
colleagues whom they met.
Other site visits by certain Directors took place
throughout 2023 and reports were provided
to the rest of the Board at the following Board
meetings to share learnings and perspectives
from the experiences:
• One NED joined the Executive Directors
on their trip to China and Japan, meeting
customers in the steel industry and potential
future partners. They had the opportunity
to observe a townhall and see a recently
completed fully automated plant.
• Two NEDs visited Interstop operations in
Switzerland meeting colleagues from the
flow control business unit and sales and
production teams to understand more about
automation, robotics and digitalisation and
the role of this trend in the industrialisation
of the developed technologies and how
it is planned to contribute to flow control
innovations. They also discussed Health &
Safety and quality control focus.
• The Chairman joined the CEO and other
EMT members on a week-long trip to Brazil.
He heard from colleagues there on the
region’s current position, the projected
inflation and growth of SAM countries;
main political-economic impacts; steel,
cement and industrial production; the
current market share; and competitors’
behaviours. He addressed staff in the new
SAM headquarters in a townhall and was
delighted to meet two major customers
of the region. He also addressed senior
colleagues at the annual leadership
conference in Austria.
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GOVERNANCE Corporate governance report continued
• One NED, who has been coaching and
guiding our Supply Chain team, visited the
Rotterdam office, the Netherlands. They
heard updates and input from third parties
on the sustainable changes which had been
wrought in the teams and how such progress
would be monitored and maintained.
Culture has remained an integral element of NED
discussions, and the Board and its Committees
use many sources to assess culture. Given that
culture can arguably best be described as “the
way we do things around here”, it is difficult
to use quantitative metrics that accurately
communicate the culture to the Board.
• A NED with specific experience in digital
initiatives took time to directly discuss
with management their work in the digital
space designed to improve employee and
customer experiences, suggesting useful
perspectives and routes for progress.
Others also shared their experience
with Enterprise Resource Planning (ERP)
implementation projects directly with
management to assist in bringing the
benefit of broader experience.
• The CSC visited Breitenau, Austria as part
of its planned schedule and considered
Health & Safety, including a response to
an Lost Time Injury at the plant, the use of
secondary raw materials (SRM), customers
served, processes and ways of working, as
well as understanding the culture of the
workforce there.
In April 2024, the Board’s intention is to visit
the India, West Asia and Africa region, with a
particular focus on the recently acquired assets.
Culture and purpose
Cultural values support the Company purpose,
underpinning the Company’s engagement with
stakeholders, demonstrating the Company’s
place within our wider environment and society.
You can read more about how the Board
incorporates stakeholder viewpoints into its
decision-making process on pages 122 to 127.
In 2023, the Board took all available
opportunities to engage with colleagues in the
business in order to observe and understand the
culture within the Company. Some examples
are given above in the description of the Board
site visits.
Nonetheless, inputs used by the Directors
to measure culture include whistleblowing
reports, Code of Conduct compliance
reports, reports from the Internal Audit and
Compliance teams, talent assessment and
succession planning, Health & Safety reports,
responses to Internal Audit reports and the
corresponding outstanding actions, and
workforce remuneration. Directors engage
directly with management at EMT and below,
throughout the meeting cycle and also
beyond, which enables their assessment of
management culture, being that which sets the
tone from the top of the organisation, in more
intangible ways. When receiving presentations
in meetings, the Board uses these opportunities
to seek input from management, asking direct
questions, particularly of those at the level
below EMT, focusing on how a team operated or
a region approached problems to broaden their
understanding.
Observations of the relationship and interaction
between the EMT and their reports can also
assist with the perception and understanding
of cultural tone from the top. You can read more
about reporting on culture in the strategic report
by management on pages 26 to 27.
The Matters Reserved to the Board include
monitoring Group culture and workforce
policies and practices to ensure these are
aligned with the purpose, values and strategy
of the Group, and seeking assurance that
management has taken corrective action where
this is not the case. In 2023, the Directors have
discussed with management what corrective
action has been proposed to improve culture
in response to reports from compliance
investigations and to improve health & safety
customer
focus
innovative
We live innovation to create
value for our customers, by
being bold and providing
the best digital and
sustainable solutions.
performing
Our high performance
is rooted in accountability
and responsibility. We are
a reliable partner that
decides and delivers
based on our
customers' needs.
open
Our open mindset and
transparent way of working is
flanked by a diverse, respectful
and friendly business
environment, where we care
about our customers
and colleagues.
pragmatic
We act pragmatically to
enable fast and simple
collaboration across functions
and regions to serve
our customers best.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
culture following serious incidents and the
fatalities (which are reported in our H&S
statistics on page 79). This has included revised
processes and communication flows, direct
engagement with individual regional leaders
to communicate expectations and open
and transparent communication from EMT
members with the global senior leadership
team to prompt reflection and consideration
of individuals’ actions and their contribution to
the corporate culture. These items continue
to be reported on and the Directors will use
the tools described in this section to assess
and monitor progress and outcomes. Policies
reserved for Board approval include the Code
of Conduct and the Whistleblowing Policy,
being foundational tools through which to
deliver the desired culture.
As the Board considered the various
operational difficulties and changes in the year,
management were prompted to consider how
culture contributed to root causes of issues
and the solutions. In 2023 this was particularly
relevant for Health & Safety. The CSC
specifically considers behaviour and culture
as key tools in Health & Safety campaigns. On
business-critical projects, the EMT ensured the
Board had face time with colleagues working
directly on key matters who could communicate
and demonstrate the culture of the Company.
The Board met cultural champions as they went
to different locations across the Group and in
January 2023 had an extended, informal session
with Culture Champions based in Austria
where they heard about the role, the centrally
coordinated champion global programme and
the journey to a strong and consistent culture,
all the more important as the Company
continues to grow through acquisitions.
Culture continues to be a central part of
performance evaluations for employees and
the Company’s internal communications are
underpinned by our cultural values. Given the
multiple global locations of operations, local
culture is also discussed by the Board when
considering the impact and likely success
of initiatives, particularly when planning the
integration of newly acquired businesses.
The Internal Audit reports to the Audit &
Compliance Committee demonstrate that
organisational culture is a key factor in achieving
good audit results and, where there are
improvements to be made, culture is a focus
to enable successful implementation. Culture
is considered in discussions to identify trends
and challenges facing the business.
The consideration of culture at Board level
has provided context to performance in
teams such as supply chain management,
finance and sales, as well as on the ground
in our plants and operations. The Board has
considered the culture of different teams,
and discussed with management how that
culture has contributed to decision making
and performance levels of the business.
The Board continues to consider how best
to effectively measure and assess culture at
Board level. The key cultural themes (page
114) determine the actions of the Company
and specifically feed into performance reviews
across the Group, succession planning and
risk management.
Whistleblowing
Potential concerns about ethical misconduct
or any compliance matters can be reported by
all stakeholders (both internal and external) to
an independently operated, confidential, and
anonymous whistleblowing hotline, available in
areas where the Company operates as well as
other locations, in several languages. Contact
details are communicated throughout the
business and are available externally on the
Company’s website. In addition to the hotline,
whistleblowing reports can also be submitted
via other channels, such as to a dedicated email
address. All reports are assessed by the Internal
Audit, Risk & Compliance team and then
addressed on a case-by-case basis.
The Audit & Compliance Committee and Board
reviews this process and the reports arising from
it, ensuring there are arrangements in place for
the appropriate and independent investigation
of these cases and that follow-up actions to
address the root causes are completed.
Board workforce engagement
RHI Magnesita’s governance structure has,
from the beginning, included ERDs. This was
a requirement from the merger between RHI
AG and Magnesita in 2017 and reflects the
approach in continental Europe, particularly
the DACH region. The ERDs, currently Michael
Schwarz, Karin Garcia, and Martin Kowatsch,
have been appointed by their respective works
councils in line with the Company’s Articles
of Association, and, with experience of the
frontline of operations, seek to directly represent
the views of the workforce at the highest level
of the Company. Discussions on conduct and
culture with the works councils tend to focus
on the role to be played in Health & Safety
improvements, as well as the implementation
of corporate change.
The Board welcomes the different viewpoints
they provide, bringing increased opportunity
for challenge of the executive management,
and holding them to account from a different
perspective, being that of the workforce
who are on the ground. The ERDs can attest
to the impact of the executives’ actions
within the business and contribute to the
Board accordingly. Not only do the ERDs
have the ability to challenge management,
but they can also contribute to the NEDs’
view of management and understanding
of the Company culture, strengthening the
independence the NEDs have, through
providing a broader knowledge of the Company.
The information and discussions at Board
meetings helps the ERDs’ support of the
workforce and provides a mutually beneficial
link between colleagues and the Board. Specific
details are included in the Board stakeholder
engagement report on pages 122 to 127.
The effectiveness of this approach to workforce
engagement is considered from time to time by
the Directors.
Board composition
The Board is composed of 14 Directors, which
includes two Executive Directors, three ERDs
and nine NEDs. At the 2024 AGM, Katarina
Lindström will be proposed for election as an
Independent NED, bringing the Board to a total
of 15 Directors.
In their Partial Offer document in May 2023
intending to reach 29.9% share of the
Company, Rhône Capital indicated their
intention to seek Board representation. The
Board looks forward to an open and constructive
dialogue with them and welcomes the fresh
perspective they will no doubt contribute as
major shareholders. At the date of publication
the Board has received no proposal from
them for the appointment of shareholder
representative directors.
At the date of this Annual Report, the Board is composed as follows:
Name
Herbert Cordt
John Ramsay
Stefan Borgas
Ian Botha
Position
Chairman1, 3
Deputy Chairman and Senior Independent
Director2,3
Executive Director (CEO)4,5
Executive Director (CFO)4,5
Gender
Nationality
Male
Male
Male
Male
Austrian
British
German
British/South
African
Janet Ashdown
Independent Non-Executive Director2,3
Female
David Schlaff
Non-Independent Non-Executive Director4,5
Stanislaus Prinz zu
Sayn-Wittgenstein-
Berleburg
Jann Brown
Karl Sevelda
Non-Independent Non-Executive Director4,5
Independent Non-Executive Director2,3
Independent Non-Executive Director2,3
Marie-Hélène Ametsreiter
Independent Non-Executive Director2,3
Male
Male
Female
Male
Female
Wolfgang Ruttenstorfer
Non-Independent Non-Executive Director6
Male
Katarina Lindström
Board Nominated Independent Non-
Executive Director7
Karin Garcia
Employee Representative Director4,5
Martin Kowatsch
Employee Representative Director4,5
Female
Female
Male
Year of
birth
1947
1957
1964
1971
1959
1978
1965
1955
1950
1970
1950
1965
Date of
appointment
Expiry/
reappointment date
20 June 2017
6 October 2017
20 June 2017
6 June 2019
6 June 2019
6 October 2017
6 October 2017
10 June 2021
6 October 2017
10 June 2021
20 June 2017
–
2024 AGM
2024 AGM
2024 AGM
2024 AGM
2025 AGM
2024 AGM
2024 AGM
2024 AGM
2024 AGM
2024 AGM
2024 AGM
–
British
Austrian
German
British
Austrian
Austrian
Austrian
Swedish
Spanish
1970
9 December 2021
9 December 2025
Austrian
1972
14 December 2021
14 December
2025
Michael Schwarz
Employee Representative Director4,5
Male
German
1966
8 December 2017
9 December 2025
1. Herbert Cordt is not deemed to be independent on appointment under the criteria
of the UKCGC on the grounds of his length of service (including time served on the
Supervisory Board of RHI AG).
2.
3.
Independent within the meaning of the UKCGC.
Independent within the meaning of the DCGC.
4. Non-Independent within the meaning of the UKCGC.
5. Non-Independent within the meaning of the DCGC.
6. Wolfgang Ruttenstorfer is considered Independent under the DCGC and Non-Independent
under the criteria of the UKCGC.
7. Katarina Lindström is proposed for appointment by shareholders at the 2024 AGM.
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GOVERNANCE Corporate governance report continued
The size of the Board continues to be a
challenge, as seen in findings of the Board
performance reviews. However, this is
mitigated by the careful behaviour of Directors
in meetings, the dedicated work of the
Committees, who then feed their pre-work
on matters into the Board meetings, and the
familiarity of the Board with the nuances of
being a dual-listed Company with obligations
in three jurisdictions.
Independence
When assessing independence under the
UKCGC, the Board has included time served
by that Director on the board of RHI AG prior
to the merger with Magnesita in 2017. On this
basis, Wolfgang Ruttenstorfer exceeds nine
years of service. He meets no other criteria
in Provision 10 of the UKCGC and the Board
continues to be comfortable that he provides
strong, independent challenge to management,
particularly on financial business cases, balance
sheet management and risk assessments.
Given their longstanding service and also
their connections to major shareholders,
David Schlaff and Stanislaus Prinz zu Sayn-
Wittgenstein-Berleburg are also not considered
as Independent Non-Executive Directors.
Additionally, per previous reports, as European
corporate law requires the Company to allow for
a significant portion of the Board to be ERDs, the
Board feels it is appropriate to follow the process
of calculating independence as it is undertaken
in the relevant jurisdiction. Which is to say
that only Directors who can be appointed by
shareholders are counted in the calculation
and ERDs are excluded from the denominator.
Accordingly, including Katarina Lindström who
will be proposed for election at the 2024 AGM,
the Board has six out of 11 eligible Directors, who
are deemed independent (as set out in the table
on the previous page), thereby constituting a
Board that is composed of at least half NEDs
(excluding the Chairman) considered by the
Board to be independent for the purposes of
the UKCGC. Without Katarina, the Board is
at exactly 50% independence under the
criteria of the UKCGC. Under the criteria
of the DCGC, the current Board can be
considered as 58% independent.
The Board has considered the independence
of the NEDs, including any potential conflicts
of interest. Each of these Directors has
also confirmed that there is no reason why
they should not continue to be considered
independent. In the opinion of the Board, the
DCGC independence requirements referred to
in the best practice provisions 2.1.7 to 2.1.9 have
been fulfilled. You can find the details of which
Directors are deemed to be independent or
non-independent in the table on page 115.
Skills and experience
Individual roles
Roles of Chairman, Deputy Chairman
and SID and CEO
The roles of Chairman, Deputy Chairman and
SID, and CEO have been formally recorded by
the Board. All of these documents can be found
on the Company’s website. The composition of
the Board has been structured such that no one
individual can dominate the decision-making
processes of the Board.
Non-Executive roles
The Employee Representative, Non-
Independent and Independent NEDs engage
with the business of the Board from different
perspectives, enabling multifaceted scrutiny
to be applied to the Board’s decision-making,
ensuring that the viewpoints of the Company’s
key stakeholders are represented. All Directors
are required to exercise their independent
judgement and act in the best interests of the
Company, taking into account the interests of
its stakeholders, in their decision making.
Non-Independent Non-Executive
Director roles
Herbert Cordt, Stanislaus Prinz zu Sayn-
Wittgenstein-Berleburg, David Schlaff and
Wolfgang Ruttenstorfer are not considered
independent under the UKCGC, for a
combination of reasons including length of
service (including time served with RHI AG
prior to the merger in 2017 with Magnesita) and
connections to significant shareholdings of the
Company. However, because of that experience,
they contribute strongly to the Board’s culture
and personality, adding valuable insight gained
through experience of the markets in which the
Group operates and corporate memory. They
can constructively challenge the Executive
Directors and scrutinise the performance
of management in meeting their objectives
with the benefit of historical experience of
the operations and industry of the business.
Stanislaus Prinz zu Sayn-Wittgenstein-
Berleburg and David Schlaff can provide an
investor perspective to the management team
and challenge them accordingly. The detail of
all the Directors’ independence and the detail of
compliance with the criteria of each Code can
be found above and on page 115.
The Nomination & Governance Committee
seeks to ensure the right balance of skills,
knowledge and experience on the Board,
taking account of the business model, long-
term strategy and the sectors and geographic
locations in which the Group operates.
The Board is structured so that the following
experience and capabilities are adequately
represented across the Board:
• knowledge and understanding of the
business and products of the Company and
its subsidiaries, the markets and geographies
in which the Company and its subsidiaries
operate, in particular the trends and
future developments of these markets and
geographies;
• an international background and geopolitical
exposure;
• broad Board experience, including
knowledge of corporate governance issues
at main Board level as appropriate for the
Company with reference to its size and
international spread of activities;
• understanding of HSE, corporate social
responsibility and sustainability matters,
particularly decarbonisation and other areas
of focus as per the Company’s commitment
to the UN Sustainable Development Goals
(SDGs);
• practical experience in, and relating to,
financing and accounting and/or experience
in relation to IFRS, as well as in the areas of
risk management and internal controls;
• understanding of the markets where the
Company is active, in particular emerging
markets;
• expertise in science, technology and
innovation, as well as practical experience
in operations, manufacturing and logistics;
• experience and understanding of human
resources and remuneration-related
matters; and
• personal qualities such as impartiality,
integrity, tolerance of other points of view,
ability to challenge constructively and act
critically and independently.
The Nomination & Governance Committee
considers that all of these aspects are well
represented across the Board, whilst continuing
to keep Board composition under review. The
Board is committed to encouraging diversity
to deliver long-term sustainable success for
the Company and will continue to pursue its
programme in this regard.
You can read about Board diversity in the
Nomination & Governance Committee report
on pages 135 and 136.
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The Chairman’s other significant commitments
are set out in the following table:
Name of company
Function
CORDT & PARTNER
Management- und
Finanzierungs consulting
GesmbH.
Managing Partner
Watermill Group Boston Advisory Board member
Georgetown University’s
School of Foreign Service
for its MSFS Program
Quality Metalcraft/
Experi-Metal, Inc.
Advisory Board member
Advisory Board member
Cooper & Turner Group Advisory Board member
Time commitment
On appointment, and each subsequent year,
NEDs are asked to assess if they have sufficient
time to devote to the Company’s affairs.
The Nomination & Governance Committee
considers any additional external commitments,
and the Board is advised of any changes. In
2023 the Board considered the sustained
increased time required by the Company from
the NEDs and the Nomination & Governance
Committee agreed that the time stated in the
letters of appointment should be adjusted.
You can read more about the review by the
Nomination & Governance Committee and
their conclusions on page 134.
The Board is satisfied that, having considered
the demands of the external appointments of
each NED and the time requirements from the
Company, all NEDs standing for re-election at
the upcoming AGM are contributing effectively
to the operation of the Board. Whilst the
NEDs are re-elected each year at the AGM,
their letters of appointment state a term of
three years.
Executive Directors
In accordance with Dutch law, an Executive
Director may not be allocated the tasks of:
(i) serving as Chairman; (ii) participating in
the adoption of resolutions (including any
deliberations in respect of such resolutions)
related to the remuneration of Executive
Directors or instructing an auditor to audit the
Company’s annual accounts if the General
Meeting fails to do so; or (iii) nominating
Directors for appointment.
The role of an Executive Director is, amongst
other things, to bring commercial and internal
perspectives to the boardroom. The Executive
Directors, being the CEO and CFO, are
responsible for the leadership and management
of the Company according to the strategic
direction set by the Board.
Company Secretary
Sally Caswell was appointed by the Board
as Company Secretary in January 2020.
All Directors have access to the advice and
services of the Company Secretary, whose
responsibilities include ensuring that Board
procedures are followed, assisting the Chairman
in relation to corporate governance matters
and, in conjunction with the General Counsel,
ensuring the compliance of the Company with
legal and regulatory requirements.
Board and Committee structure
The Company has a one-tier board structure,
with a Board consisting of both Executive
Directors and NEDs (collectively the “Directors”
or the “Board”). As at the date of this Annual
Report, the provisions of Dutch law that are
commonly referred to as the “large company
regime” (structuurregime) do not apply to
the Company.
The Board has four Board Committees to
ensure a strong governance framework
for decision making and assessment of
performance against the Company’s strategy:
the Audit & Compliance Committee, the
Remuneration Committee, the Corporate
Sustainability Committee, and the Nomination
& Governance Committee. Each Committee
receives support from the Company Secretary.
The Terms of Reference of these Committees
can be found on our website and the reports of
each Committee, including membership and
attendance at meetings in 2023, can be found
on pages 134 to 171.
Information and support for Directors
There is an established procedure for Directors
to seek independent professional advice in
the furtherance of their duties if they consider
this necessary.
The Company maintains Directors’ and Officers’
liability insurance, which provides appropriate
cover for legal action brought against its
Directors. In line with Dutch best practice and
corporate law, at each AGM there is a resolution
to release the Directors from liability for the
exercise of their respective duties during the
financial year.
In order to build and increase the NEDs’
appreciation and understanding of the
Group’s people, businesses, and markets,
senior managers are regularly invited to make
presentations at Board meetings. The strategy
meeting involved multiple break-out sessions to
provide detail on certain areas of business focus
such as digital transformation, simplification of
products, improving excellence in operations
and the M&A outlook and capacity.
Training and discussion sessions were held with
the Directors throughout 2023 on topics such
as macroeconomic and geopolitical factors,
and how they would impact on the business
and markets. They received several focused
briefings from specialists in matters such as the
EU’s digital strategy, decarbonisation in steel,
the cost of capital and associated trends, and
factors to consider for sustainability in business.
Additional information sessions took place with
certain Directors as desired, e.g. on detailed
areas relating to the digital transformation work.
Directors also maintain their own individual
training schedule based on their known needs
and interests.
Induction
Upon joining the Board, new Directors are
offered a comprehensive and tailored induction
programme covering the value chain, with visits
to key sites and meetings with senior managers
and other colleagues or advisers as required.
New members to Committees are provided with
the opportunity for a full and detailed induction,
even if they are existing members of the Board.
In advance of her formal appointment as a
NED at the 2024 AGM, Katarina followed an
induction programme which covered the
Company’s strategy, the details of the products
it makes and where, key market factors, the
details of the Operations department, supply
chain processes, recent M&A and strategic
considerations, finance, and balance sheet
management. She was fully briefed by each
EMT member about their area, the priorities and
challenges and key team members. She also
met with the Company Secretary to discuss
duties of a Director of a dual-listed company,
the Company’s corporate make-up, listing
requirements in London and Vienna, disclosure
requirements and corporate governance matters
pertinent to the Company. She also covered
Board processes and procedures, with reference
to the Matters Reserved and Board Rules.
Katarina also met with the Chairmen of the
Board Committees to discuss the Committee
functions, recent topics and ongoing
discussions and key areas of focus.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 1 7
GOVERNANCE Corporate governance report continued
Board attendance
Seven Board meetings were planned for the
year (2022: seven). An additional five ad-hoc
meetings were required in the year on topics
such as discussion and approval of M&A
opportunities and activities, the Partial Offer
for shares by Rhône Capital announced
in May 2023, and on matters that received
insufficient time in the previous meetings to
reach a decision. These ad-hoc meetings took
place in a hybrid or entirely virtual setting and
were naturally shorter meetings, given their
focused agendas.
Where meetings are called on short notice,
it is not always possible for them to be at a
time suitable for all Directors to attend. As per
Dutch law and the Board Rules, Directors can
nominate, in writing, a proxy and prior to the
meeting the Director will have the opportunity
to provide any comments to their proxy or
the Chairman and they will receive a briefing
following the meeting on key points discussed
and any votes taken.
The table below shows the number of scheduled
meetings attended and the maximum number
of scheduled meetings that the Directors were
eligible to attend.
Board attendance 2023
Total
attended
Total
meetings 1
Herbert Cordt
John Ramsay
Stefan Borgas
Ian Botha
Janet Ashdown
David Schlaff
Stanislaus Prinz zu
Sayn-Wittgenstein-
Berleburg
Jann Brown
Karl Sevelda
Marie-Hélène Ametsreiter
Sigalia Heifetz 2
Katarina Lindström 3
Wolfgang Ruttenstorfer
Karin Garcia
Martin Kowatsch
Michael Schwarz
12
12
12
12
12
12
12
12
12
12
3
1
12
12
12
12
12
12
12
12
12
12
12
12
12
12
6
1
12
12
12
12
1.
In the year, four Board sub-committees were held to
approve matters specifically delegated by the Board in
accordance with Article 17.5 of the Company’s Articles of
Association. These are not included in the table above.
2. Sigalia Heifetz did not stand for re-election at the
2023 AGM.
3. Katarina Lindström joined on 30 September 2023
and until her appointment at the 2024 AGM will attend
Board meetings as a Board Nominated Independent
Non-Executive Director.
Only in exceptional circumstances would
Directors not attend Board and Committee
meetings. Whilst the attendance level of
our NEDs is very high, the Nomination &
Governance Committee is cognisant of
feedback that the time stated in the letter of
appointment of 25 to 30 days per annum is
no longer sufficient to meet the Company’s
requirements. This will be addressed in 2024
accordingly. All of our NEDs are comfortable
they have the availability to meet this revised
time commitment to fulfil their duties and
the Nomination & Governance Committee
considered the time required of NEDs as part
of its regular programme.
Board operation
The Board meets regularly throughout the
year at Board and Committee sessions,
which are usually spread over two days, in
person in Vienna. Board meetings can also
be convened as deemed necessary by the
Chairman or the SID and Deputy Chairman.
In the meetings, the Chairman takes care to
ensure that each Director has opportunity to
comment and be heard, whilst enabling an
orderly flow and healthy discussion.
At the end of each Board meeting, the NEDs
generally meet, without the Executive Directors
and management, to enable an open and
frank exchange of views and assessment
of performance. Additionally, in 2023, the
SID held a meeting with the other NEDs
(not including the Chairman) to discuss the
Chairman’s performance, in conjunction with
the Board review process. Further details on
the Board review are available on page 135.
The Chairman and other NEDs hold regular
informal, individual, meetings with the
Executive Directors and other senior managers
in the business, providing the opportunity to
raise questions and cover points of interest,
which contributes to the development of
both the NEDs and the management.
Board papers are circulated in advance of
meetings, using a secure web-based portal, to
allow Directors sufficient time to consider the
content prior to the meeting. The Chairman is
assisted in this responsibility by the Company
Secretary and CEO. The management team
continues to take feedback from the Board
via the review process on how papers and
presentations can be improved to assist the flow
of the meeting as well as direct feedback either
in the meeting or in an informal way outside of
meetings. An information room within the portal
provides access to useful information, including
corporate governance reference materials,
analyst reports, and Company finance, treasury,
and strategy information.
The Board takes the views of its key stakeholder
groups into account when challenging
management, and in its discussions and
decision making. Inputs to this process include
the Company’s Net Promoter Score, the ERDs’
views, regular Investor Relations reports,
analyst coverage and views of the two Non-
Independent NEDs who represent shareholders.
The Board recognises the importance of
balancing stakeholder views, whilst acting in
the best interests of the Company. In the event
of a decision which has a potentially negative
impact on a specific stakeholder group, efforts
are made to mitigate these. As an example, in
the event of an organisational restructure, which
does not benefit certain employees, a detailed
communications strategy is designed to explain
the decision and employees are treated in a
respectful and generous manner. This aligns
with the Company values to be open in decision
making and accountable for actions taken.
Board performance review
As reported in the Chairman’s letter, the findings
of the 2022 Board review were that the Board
continued to operate effectively and that there
was positive progress and improvement from
prior years. The Board engaged EY to conduct
interviews for the Board review of 2022 which
found areas to focus on included, meeting
effectiveness, feedback loops on NED-only
sessions and engendering greater business
stability and focus on organisational execution.
The quality of Board papers were felt to have
improved and certain individuals on the Board
such as the Chairman and SID were again
commended for their hard work in ensuring
cohesion and good standards of governance
More detail on actions from the 2022 review
and progress can be found on page 135.
The 2023 review is ongoing at the time of
publication and will be reported on in full in our
2024 Annual Report; the initial indications are
the Board can be comfortable that it is operating
effectively. It has been conducted through
questionnaires to Directors and EMT issued by
the Company Secretary in Q1 2024. The scope
of the review will focus on:
• Chairman, Board and Board Committees
performance
• Relationships between the executive and
the Board, as well as between key roles on
the Board
•
Individual self-assessment of performance
• Support for Directors
• Assessment of governance
• Strategic review and proposed areas
of focus for the year ahead.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Key areas of Board focus and activity
in 2023
Amongst other matters, the Board focused on
the following areas in the year:
• Participated in a risk management
workshop, discussing risks aligned with the
strategic opportunities, how the Group was
benchmarked against its peers, and agreeing
changes to risk appetite.
• Received reports throughout the year
outlining potential business development
opportunities as they arose, including
strategic M&A.
• Approved acquisitions, with reference to
the Company’s strategic intent and the
balance sheet capacity. The Board focused
on the synergies to be leveraged, which will
support a sustainable business model, the
success factors for integration, and any risks
to be mitigated. Furthermore, the impact on
the Company’s sustainability strategy was
considered with each potential acquisition.
• Considered geopolitical and
macroeconomic trends and factors,
particularly those impacting employees,
costs of production, delivery to customers
and the implementation of the strategy.
• Discussed the Company’s raw materials
strategy, the strategy for provision of
products and services to customers.
Group strategy and long-term sustainable
value creation/preservation
• Conducted an annual two-day strategy
meeting session with members of the EMT
and senior management team to assess
the current strategy and ensure it was fit for
purpose. As part of these discussions, the
Board considered the global outlook and
macroeconomic trends, developments in
key markets in each region, structural trends,
technical innovation, sustainable product
initiatives, review of the business model,
and the competitive environment.
• Management presented its annual strategic
review, with qualitative and quantitative data,
on how the strategy was being implemented.
The Non-Executive Directors provided
challenge to management about the
direction and emphasis of the strategy and
suggested areas for focus and refinement
based on their experience from being
executives themselves and their experience
from their other appointments. The Board
reviewed data on the achievement of the
2025 strategic goals; the CSC reviews and
assesses the sustainability strategic goals
at each meeting and the Remuneration
Committee considers how to incentivise
behaviours to reach the strategic outcomes.
You can read more about how the NEDs
ensure the incentives are aligned with the
Strategic pillars on page 155.
People, succession and leadership
• Board composition, diversity, and the
skills and experience desired to guide and
challenge the EMT. Resolved to approve
the nomination for appointment of Katarina
Lindström.
• Considered the capability and capacity
of various EMT and senior management
members, as well as the talent pipeline,
and EMT succession plans.
• Considered the 2022 Board performance
review and the actions relating to the review,
including progress against the actions
identified in the year. Agreed the scope and
approach of the 2023 Board review.
• Reviewed and approved the bonus for 2022
performance and the remuneration of the
Chairman, Executive Directors and EMT.
• Approved the LTIP 2020 award vesting,
the conditions of the LTIP 2023 and its grant
to participants, the new LTIP Rules to be
proposed to shareholders for approval,
and the Bonus 2023 targets.
• Heard management’s proposals for
organisational restructure and cost
savings, giving feedback and advice on the
communication approach to ensure fairness
and transparency to employees. Following
revisions based on the feedback, approved
the organisational restructure.
• Discussed resourcing levels, employee
engagement, morale and well-being,
particularly in the context of various
significant internal projects.
• Received presentations on organisational
diversity and agreed the focus areas for
improvement to drive greater gender
diversity.
•
In approving acquisitions, considered the
talent profile of new assets and the approach
in integration to retaining and motivating
those talents to ensure synergies would be
achieved, recognising the importance of
people in reaching the strategic aims.
• Considered various deep dive reports
from Regional Presidents on the current
position of their regions and the priorities
for employees there.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 1 9
GOVERNANCE Stakeholder engagement and governance
• Approved the Notice and business of the
AGM, including the appointment of the
external auditor.
• Approved the Board response to Rhône
Capital’s proposed Partial Offer.
• Received input from the ERDs with their views
on various proposals and initiatives presented
by management.
• Considered the Company culture as an
ongoing matter and its influence across a
variety of topics.
• Received reports on investor engagement,
including verbatim feedback and
the discussions held as part of the
annual roadshow.
• Approved the annual statement for
the Modern Slavery Act and California
Transparency in Supply Chains Act.
• Received reports on customer satisfaction
levels, including Net Promoter Scores and
feedback from customers.
• Reviewed and agreed the proposed
Remuneration Policy consultation.
• Received a report from the Remuneration
Committee on the workforce remuneration
and operation of various bonus schemes in
the organisation designed to incentivise
good behaviours.
• Received regular updates on corporate
governance and other matters from the
Company Secretary, including on the
operation of the Share Dealing Policy.
See Stakeholder Report
for more details
Pages 122 to 127
Corporate governance report continued
Financial performance
• Approved the annual budget for 2023.
Operational performance
• Received updates at each meeting on
• Reviewed and approved the Group’s
full-year 2022 and half-year 2023 results
together with the 2022 Annual Report,
including ensuring that it was fair, balanced
and understandable, and confirming that the
Group was a going concern. As part of this,
the Board considered the external auditor’s
reports and the key matters raised.
• Approved the quarterly trading updates
on recommendation from the Audit &
Compliance Committee.
• Received regular financial updates covering
revenue, gearing, working capital, margins,
costs, performance year-to-date and outlook
on a monthly basis.
• Reviewed the Group’s debt, capital, and
funding arrangements, particularly in
respect of ensuring the ability to take
advantage of any opportunities as they arise,
such as acquisitions that were considered at
various points in 2023.
• Approved entry into various financing
instruments and loans to raise the Group’s
liquidity.
• Approved the launch of the QIP in India
and the Company’s participation in it via
its subsidiaries.
• Reviewed liquidity, cash flow and scenario
planning, particularly with reference to
macro factors such as inflation and labour
costs.
• Considered analysis of capital allocation
and payment of dividends, including the
approval of the interim dividend at H1 2023,
and how to drive more value for shareholders
from the asset base.
• Considered disclosures to the market and
noted the work of the Disclosure Committee
to continually monitor matters at hand.
• Received updates on the Company’s tax
position and matters at hand with local
authorities in various locations.
Markets and sales
• Received updates at each meeting on sales
performance, market share and progress
against sales initiatives, particularly with
reference to customers.
• Considered strategic pricing and costs of
production with the context of inflation.
• Discussed with management the strategic
market and the sizing of market shares across
the regions.
operational performance, reported against
regular and consistent KPIs, including any
impacts to customers, and current Health
& Safety levels.
• Received briefings on operational
excellence projects, including project
management processes, business cases
for payback, timescales, and any barriers
to completion.
• Considered reviews of completed projects,
which included lessons learned by
management for use in future projects
and planning.
• Considered individual plant performance
as appropriate and, with reference to
the Company’s strategy, noted capacity
at certain plants and the consequent
actions required.
• Received reports on the end-to-end value
chain and customer segmentation.
• Appraised the principal risks, mitigating
actions and controls around operational
performance.
• Approved further capex for construction at
the Brumado plant along with associated
compensatory actions.
• Approved entry into certain contracts as
required under the Delegation of Authority.
• Considered extensively the management’s
approach to a new ERP system and shared
experiences of such change projects.
Technical innovation and sustainability
• Received updates on the development
of low-carbon products and market
developments in carbon capture and storage.
• Received reports on sustainable recycling
and digital initiatives designed to meet
customer expectations and develop the
Company’s offering.
• Considered future strategy, partnerships
with external parties, and processes to
encourage innovation.
Legal and compliance matters
• Received regular updates on
whistleblowing, including an annual review
of the process.
• Received updates on the Group’s
compliance and cyber security programmes.
• Considered compliance reports, and also
received a benchmarking report on the
number of compliance cases compared
with peers.
• Considered and approved the revised
Board Rules, Board Profile and Delegation
of Authority.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
After conducting a review of management’s
analysis, the Directors have reasonable
expectation that the Group has adequate
resources to continue in operational existence
for the foreseeable future and for the period of
at least twelve months from the date of approval
of the financial statements. For this reason, the
Directors consider it appropriate to adopt the
going concern basis in preparing the Annual
Report. Directors are also required to provide
a broader assessment of viability over a longer
period which can be found on pages 50 to 51
(the “Viability statement”) of the integrated
report and accounts. The Consolidated
Financial Statements on pages 174 to 249
were approved and signed by the Board on
28 February 2024. There are no special events
that should be taken into account for these
Consolidated Financial Statements.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the
Company’s Annual Report. The Company’s
Annual Report comprises, among others, the
Strategic Report, the Governance Report,
and the Consolidated Financial Statements.
The Directors are responsible for preparing
the Annual Report for each financial year
in accordance with applicable law and
regulations, including in accordance with IFRS
as adopted by the EU and the provisions of
Book 9 of Part 2 of the Dutch Civil Code. The
Directors must not approve the Annual Report
unless they are satisfied that it gives a true and
fair view of the state of affairs of the Company
and its consolidated Group companies, and of
the profit or loss of the Group for that period. In
preparing the Annual Report, the Directors are
required to:
a) select suitable accounting policies and then
apply them consistently;
b) make judgements and accounting estimates
that are reasonable and prudent;
c) state whether applicable IFRS as adopted
by the EU and the relevant provisions of
the Dutch Civil Code have been followed,
subject to any material departures disclosed
and explained in the Annual Report; and
d) prepare the Annual Report on the going
concern basis, unless it is inappropriate to
presume that the Company will continue
in business.
The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Company’s transactions
and disclose, with reasonable accuracy at any
time, the financial position of the Company
and the Group, and enable them to ensure that
the Annual Report complies with applicable
law and, as regards the Consolidated Financial
Statements, the IAS Regulation. They are also
responsible for safeguarding the assets of
the Company and the Group and hence for
taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Each of the Directors, whose names and
functions are listed on page 249 confirm that,
to the best of their knowledge:
•
•
the Company’s financial statements and the
Consolidated Financial Statements, which
have been prepared in accordance with
IFRS as adopted by the EU and the relevant
provisions of the Dutch Civil Code, give a
true and fair view of the assets, liabilities,
financial position and profit or loss of the
Group; and
the Annual Report gives a true and fair view
on the situation on the balance sheet date,
the development and performance of the
business and the position of the Company
and its consolidated Group companies and
includes a description of the principal risks
and uncertainties that they face; and having
taken all matters considered by the Board and
brought to the attention of the Board during
the financial year into account, the Directors
consider that the Annual Report, taken as a
whole is fair, balanced and understandable.
The Directors believe that the disclosures
set out in the Annual Report provide the
information necessary for shareholders to
assess the Company’s position, performance,
business model and strategy.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 2 1
GOVERNANCE Stakeholder engagement report
By maintaining an effective and regular dialogue with
stakeholders, the Group not only enriches its own
understanding and perspectives, but also stimulates public
debate on contemporary societal demands and concerns.”
RHI Magnesita’s Global Stakeholder Dialogue Policy.
Shareholders
Why they are important
As providers of capital and owners of the business, our shareholders play
a central role in the Company’s growth and development. By fostering
and maintaining their support, we are able to implement our strategy
and objectives.
How the Company engages
The Company issues consistent, fair, balanced and understandable information
to the stock exchanges on which it is listed to ensure efficient and fair functioning
of financial markets. Care is taken to ensure messaging is consistent and
publications are compliant with the Market Abuse Regime, UK Listing Rules,
Austrian Stock Exchange Act, and Corporate Governance Codes and guidance.
The Company is listed on the respective premium and prime segments of the
London and Vienna Stock Exchanges, with London as its primary listing location.
The Investor Relations department maintains an ongoing dialogue with
shareholders and analysts which is fed back to senior management.
Regular engagement with our shareholders is facilitated via one-on-one
meetings, investor presentations and webcasts, the AGM, industry conferences
and events, capital markets days and site visits.
How the Board engages
The Executive Directors meet regularly with investors and analysts (both in
person and via digital channels).
The Investor Relations team regularly provides analyst coverage of the market
and shareholder sentiment to the Board. This includes shareholder feedback,
often verbatim, and comparison of the Company’s performance against its peers.
The Company’s brokers also provided valuable and pertinent perspectives from
their wider experience base.
The relevant Board Committee Chairmen and SID participated in the annual
Board/shareholder roadshow. This year it focused on the proposed Remuneration
Policy as well as covering ESG matters. Over 80% of the shareholder base were
consulted on the proposed Remuneration Policy and offered the chance to give
their perspectives. The Board received a detailed report on the responses and the
Company Secretary and Chairman of Remuneration Committee ensured that all
feedback was acknowledged and considered.
The Chairman and Deputy Chairman and SID also engaged with significant
shareholders, notably Rhône Capital during the course of the Partial Offer process.
The Board benefits from long-term shareholder representative Directors,
who share their perspective and priorities to guide management and reflect the
shareholder experience, whilst also taking care to recognise minority shareholder
interests and priorities.
Priority topics raised by stakeholders
• Partial Offer by Rhône Capital
• Remuneration Policy
• Company strategy and implementation, particularly regarding M&A
• Operational and financial performance including cash flow, pricing, market
position, and trading outlook
• Capital structure and liquidity, particularly working capital and gearing
• Capital allocation
• Sustainability agenda and activities, specifically science-based targets,
gender diversity at both the Board and organisational levels, climate strategy
and associated capex investment, and human rights
Incentives linked to reduction of CO2 emissions and other ESG matters.
•
Outcomes
Shareholder perspectives were fundamental considerations in Board discussions on
a wide range of topics including the response to the Partial Offer by Rhône Capital,
capital allocation decisions, gearing and leverage, remuneration, sustainability
governance and ESG strategy. It was particularly important to the Board that
shareholders were made aware of the risks as well as opportunities in a balanced
fashion in the response to the Partial Offer. The Board also took care to ensure that
business performance was understood and that existing shareholders were provided
with sufficient information when making their decisions.
The proposed Remuneration Policy and the operation of it for 2024 was guided
by shareholder interests and the market expectations to align interests of the
Executive Directors with shareholders and ensure a motivating incentive
programme for senior management to deliver the desired business performance.
The Policy also ensures progress in the sustainability agenda is maintained in line
with general investor expectations.
Feedback about the Group’s acquisition strategy from shareholders informs
the strategy and planning for the future in terms of liquidity and business
capacity. A number of acquisitions were made in 2022 and 2023 and the
priorities of shareholders will continue to be a driving factor in the future
acquisition approach.
Two dividends, final and interim, were paid in 2023, in line with the dividend
policy and shareholder expectations.
Management have been guided by shareholder priorities on gearing and
therefore have focused on working capital and inventory accordingly.
A Global Gender Equality Policy was adopted in 2023 to build a stronger culture
for gender diversity in the workplace. The annual Leadership Conference also
had specific breakout sessions, with the mainly male attendees, on how to
improve and sustain gender diversity.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Debt holders and lenders
Customers and innovation partners
Why they are important
Our lenders and debt holders are an important source of the financial liquidity
that the Group requires to operate. They are integral to the long-term
sustainable success and growth initiatives of the business.
How the Company engages
The Group CFO and Group Treasurer execute strategies approved by
the Board by regularly engaging with debt holders and lenders to secure
favourable terms, mitigate risks and ensure sustainable and solid relationships.
How the Board engages
The Treasury department maintains an ongoing, transparent dialogue with its
debt holders and lenders, and reports regularly to the Audit & Compliance
Committee and Board.
Regular engagement with these stakeholders is facilitated via one-on-one
and Group meetings and presentations.
The Board has a clearly defined approval and delegation of authorities matrix
for the contracting of debt instruments, and actively contributes and engages
in discussions with the CFO and Group Treasurer.
Priority topics raised by stakeholders
• Company strategy and implementation
• Operational and financial performance and outlook
• Capital structure and liquidity
• Sustainability initiatives
• Risk management
Outcomes
In 2023, the Treasury department engaged with RHI Magnesita’s debt holders
to raise further liquidity, comprising a €170 million ESG-linked Schuldschein
(“German Bond”) and a €200 million OeKB-backed term loan (which was
partially used to refinance a €70 million OeKB-backed term loan and has
its final maturity in March 2029). The team also refinanced a €115 million
bilateral term loan, extending its maturity to 2026 and increasing the notional
to €150 million.
All these new debt facilities are ESG-linked and have been financed at
competitive rates to support the Group’s capital allocation strategy and
preserve financial liquidity.
Why they are important
Our customers are at the heart of our business model. They are fundamental
to the sustainable future of the Group. We collaborate with external partners
such as accelerators, start-ups, open innovation platforms, companies and
institutions to foster innovation and drive developments in R&D.
How the Company engages
The Company connects with partners from the private and public sector,
innovators and academia to exchange ideas and build trust. Our R&D teams,
amongst others, collaborate and engage with innovation partners on an
ongoing basis. Our specialists are invited to present at expert symposiums
and technical conferences, typically focusing on sustainability innovations
and refractory technology.
The business is well represented at trade fairs across different industries,
such as steel and cement, and geographies across the world.
We work closely with our customers to ensure we are aware of their needs
through day-to-day contact fact-finding, technical consulting, installation
and operations supervision and site visits.
The Company runs Customer Satisfaction surveys and the Company’s Net
Promoter Score is measured regularly. It is used as a key metric for customer-
facing teams, to ensure focus on providing a positive customer experience in
every interaction.
How the Board engages
Customers continue to be at the heart of the Company’s values and culture,
and as such form a central part of every Board decision. Directors meets customers
wherever possible and as part of the Board site visit in April, the Board was delighted
to have the chance to visit one of CMC Steel’s steel mini mills in Arizona, USA, and
see first-hand how RHI Magnesita works side by side to support and deliver their
results. The Chairman took the opportunity to meet with key South American
customers on his visit to Brazil, finding their perspective helpful and informative
of priorities and the overall regional market.
The Executive Directors meet regularly with customers to discuss joint
strategies, at industry congresses, seminars and webinars, and at technology
events and fairs.
The CSC hears from management on their work with innovation partners on the
development of the Company’s sustainability strategy, and feedback to the Board.
Priority topics raised by stakeholders
• Response to climate change
• Health & Safety
• Service levels and lead times
• Price increases in response to widespread inflationary costs
Outcomes
Increased investment in production sites to strengthen supply and quality of
products for customers and restructured teams and processes to deliver better
customer service. The Company’s Net Promoter Score showed a continued
upward trend in 2023, with increased participation, showing the benefits of
focus on areas such as customer service and technical support.
Reports from customer relationship teams informed the Board’s decisions
around product pricing to manage inflationary pressure, as well as the strategy
for developing the service offering and product portfolio, particularly with
regard to sustainable and tailored products. The Group is increasingly the
partner of choice in the green transition of steel and cement in Europe.
Management’s work to improve operational processes will ultimately result in
improved customer outcomes with a more efficient organisation. The regional
structure continued to be embedded to deliver strong customer experience
and alignment between local teams.
The esteemed scientific trade journal, Bulletin, shares the latest research on
refractory innovations. Bulletin is available for download on the Company
website and demonstrates the Company’s continued development and
coordination with innovation partners.
Partnerships were established with MCi Carbon and Compact Membrane
Systems to embark on pilot schemes to develop technology to eventually bring
benefits in carbon capture and utilisation (CCU).
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GOVERNANCE Stakeholder engagement report continued
Communities
Why they are important
Wherever we operate, our business depends on maintaining the trust of local
communities. In return for this social licence to operate, we must conduct our
business ethically and responsibly. We must also strive towards sustainability,
not only in our own operations but also to support socioeconomic development
and environmental protection.
How the Company engages
As a member of the UN Global Compact, we support the UN SDGs and
implement the Global Compact principles (anti-corruption, human rights,
labour rights and environment). These commitments drive our engagement
with policymakers, non-governmental organisations (NGOs), and others at a
national and international level.
In 2023, our CEO attended the UNIDO General Conference as the only business
delegate amongst 200 diplomats to discuss industrial decarbonisation, hydrogen
supply and carbon pricing.
At a local level, each operation engages with local communities and other
stakeholders to understand their concerns and how we can support them. In
South America inclusivity and diversity events in 2023 were held, focusing on
those with disabilities and those related to employees in our Contagem plant.
In 2023, we specifically focused on education, youth development and
environmental protection across the communities in which we operate.
How the Board engages
The CSC considered, and reported back to the Board, on community
engagement, including charitable fundraising for local communities and
received updates from management on projects in communities in India
and Brazil.
The CSC gave feedback on where Directors felt focus should be directed
and noted the relevant legal requirements.
Priority topics raised by stakeholders
• Health and wellbeing
• Climate change
• Education, youth development and employment programmes
• Protecting existing programmes and partners
Outcomes
The employee volunteering programme, established in 2022, continued
in 2023 through which we are partnering with six non-profit organisations.
We increased our spend on community programmes and had greater
engagement with NGOs.
We made further progress on our decarbonisation plan to help improve the world
we live in for future generations and were pleased to see an increase in our use of
SRM to 12.6% in 2023.
Celebration of international cultures in our headquarters, sharing food and music
from different countries to recognise and celebrate that there are employees from
over 60 nationalities across the Group.
RHI Magnesita was the main partner at the 2023 St. Gallen Symposium, taking
part in cross-generational dialogue, where young minds meet experienced
professionals from over 100 countries in the fields of business, politics, and
academia, helping to shape discussion on diversity and the workforce of the
next generation.
The India region received recognition as one of India’s: ‘Best organisations for
Women’ from The Economic Times. A new vocational training project was also
embarked upon.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Employees
Why they are important
Attracting, retaining and developing talent is central to the success of the
Company. People & Culture is a key pillar in our corporate strategy, recognising it
as a crucial tool in delivering the strategic goals. We aim to cultivate an engaged,
innovative and collaborative workforce, with a strong focus on diversity.
How the Company engages
Communication channels include townhall meetings, conferences for different
functions and seniority levels, social media, and in 2023, a new corporate
communications mobile application (Workvivo) was launched which allowed
colleagues from all levels and locations to be connected and to hear consistently
from senior leaders, as well as express themselves, and highlight their own
concerns and achievements.
Colleagues throughout the Company, who are designated as Culture Champions,
engage with the workforce on an ongoing basis to embed our culture and values.
Regional leadership teams hold townhalls to address regional specific issues,
e.g., local supply chain issues, employee health and wellbeing, and site changes.
How the Board engages
Three ERDs sit on the Board, feeding in on a range of workforce issues such as
remuneration, feedback on executives, the operational footprint, and Health
& Safety.
The Board meets with plant employees and management, as well as holding
direct conversations with senior management on detailed topics outside of Board
meetings. They also had a dedicated session with Culture Champions in the
Vienna Headquarters in early 2023. More details can be found on page 114.
Local and global townhalls and Q&A sessions are run both virtually and in
person, at both regular intervals and when there are specific communications
to be delivered, such as the full and half year financial results. On the Board’s visit
to the York plant, all Directors attended the townhall and the Chairman of the
Board addressed colleagues, alongside the CEO. As detailed on page 113 other
Directors have attended townhalls as part of their visits to certain locations.
The CSC considers employee safety KPIs at each meeting, including a root cause
analysis of any major accidents. The Board also receives a report of Health &
Safety statistics from the CEO at each meeting. The CSC, as well as the broader
Board, focused on the fatalities, lessons learned, as well as hearing about the
business’s response and the support for affected colleagues at the plants.
Guidance and encouragement were given by Board members to improve
processes taken from their own experiences elsewhere.
In late 2023 a mentoring programme for female talent in the organisation
was initiated and supported by female Board Directors who shared their own
experiences and advice for a establishing a good mentoring relationship.
This will develop further in 2024.
Priority topics raised by stakeholders
• Technical knowledge and product training
• Operational performance improvement programmes including process and
controls improvement
• Production halts and plant closures
• Health and Safety
• Business restructuring and job security, within the wider macroeconomic
backdrop (specific to certain regions)
• Responding to green steel transformation and delivering environment
related solutions.
• Salary/wage growth, especially with reference to inflation
• Recruitment, talent development and retention
• Work/life balance
• Regional investment and the impact of new assets and additional colleagues.
• Leadership behaviours and communication, with cultural role modelling, and
leading by example
• Change resilience and employee wellbeing
Outcomes
In 2023 the Company participated in the “SheGoesDigital” initiative in Austria,
under the patronage of Austria’s First Lady, Doris Schmidauer, serving as a bridge
between companies and women interested in exploring the digital opportunities,
including apprentices, returners, and those aged 50+. The Company has made a
conscious effort to refocus its brand to prospective employees with the intention
of attracting more female talent.
The global trainee programme, across different regions and functions, continues to be
a valuable support to the business in establishing a solid pipeline of talent. In 2023
there were 1,500 applications for the programme; the intake was c. 60% female.
A Learning Academy was launched in 2023 to develop and enhance colleagues’
knowledge about the business but also give wider instruction on key business
tools. This tool has increased the understanding of technical matters, important
processes and KPIs, giving colleagues tools and support to make daily work easier
and connecting them more with their colleagues across the globe.
A global Employee Engagement team was set up in Q4 2022 and is continuing to
implement digital tools to develop management skills and the Company culture,
which should lead to improved retention.
New or improved regional headquarters have been established in Tampa, USA
and in Contagem, Brazil, investing in the local operations, providing employees
with a better workplace environment which includes breastfeeding facilities and
gender-neutral toilets.
Workvivo provides tips and recommendations for health and wellbeing, and
hosts sessions to boost wellbeing and improve work/life balance. In certain
locations there are employee assistance programmes providing free therapy,
counselling and coaching sessions to support colleagues.
Overall average remuneration increased, taking into account inflation, and
collective and union agreements. A strata approach to pay increases was taken to
support lower paid employees and in various locations there were engaged and
detailed discussions between trade unions and works councils and management
in a structured and transparent manner to deliver a fair outcome for employees.
The CSC encouraged management to improve Health & Safety performance
and gave thorough challenge of the performance reported. The CSC especially
encouraged focus on the reporting of Health & Safety in newly acquired plants
and regions perceived as being high-risk to ensure colleagues are aware of the
H&S culture and to improve their own safety performance levels. Overall Health
& Safety performance generally improved, with certain sites in Germany and
China reaching historic lows in Lost Time Injury rates. You can read more about
Health & Safety performance on pages 79 to 80.
Post-acquisition, integration of new assets is undertaken, led by the regions and
supported by a global department, to support and retain employees following
completion of M&A transactions. The global function ensures consistency of
approach and delivers a coordinated and comprehensive overview to the
executive management and senior leaders, whilst ensuring the new assets are
supported effectively by the corporate functions. The lead of integrations by
the regional teams enables a tailored and detailed integration which will be
sustainable and effective.
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GOVERNANCE Stakeholder engagement report continued
Governments and authorities
Why they are important
Governments and authorities set the regulatory framework within which we
operate. They also set out national and international strategies wherein RHI
Magnesita plays a part. There is vital interplay between industry and political
stakeholders and this relationship is the linchpin that propels us towards a
cleaner, more sustainable future.
How the Company engages
We engage on multiple levels with regional authorities. We list a few examples
here.
In India we have ongoing dialogue with key government agencies such as Invest
India, the nodal investment facilitation agency of the Government of India, and
Industrial Promotion & Investment Corporation of Odisha.
In Europe, we engage with the European Commission, through intense
discussion with relevant Director Generals and Members of European Parliament.
Our numerous roles in EU associations showcase our commitment to influencing
policies related to CO2 costs (EU-ETS), process emissions, the CBAM,carbon
capture, utilisation and storage (CCUS), Critical Raw Materials, and green energy
sources. In Austria we were pleased to meet with and host Government and
Federal ministers, including Markus Brunner and Leonore Gewessler, to discuss
topics of sustainable transformation of industries and decarbonisation in Europe.
Representatives from Austria’s Green Party were also welcomed to Breitenau,
Austria, to discuss enhanced energy efficiency and fuel switches.
In North America, RHI Magnesita welcomed Pennsylvania state legislators and
local economic council members to the York plant and quarry and discussed the
Company’s commitment to the local community and ways in which our focus on
a circular economy align with state priorities regarding alternative energy and
emissions reductions.
The Company engages promptly and transparently as required with regulators
and governance bodies across the world, including anti-trust authorities, SEBI
(India), AFM and SER (the Netherlands), FMA (Austria) and the FCA and FRC (UK).
You can find a list of our industry associations on page 87 which help us to
communicate our viewpoints as part of a wider industry to global authorities.
How the Board engages
The Board considers responses to authorities such as the FRC (UK) and
encourages management to research and consider the consultations which
are issued.
The Board approves the Code of Conduct which has a zero-tolerance approach
to any illegality.
Wolfgang Ruttenstorfer attended the 2023 AFM seminar for Audit Committees
and you can read more about this on page 141.
Priority topics raised by stakeholders
• Local investment
• Compliance with new governance and regulatory frameworks
• Alternative energies, sustainability, climate change, and decarbonisation
Outcomes
The Board approved an averse risk appetite to non-compliance with laws and
regulations. They endorsed management’s approach to public affairs and
political engagement, and guided attention to the new assets, asking
management to ensure Group standards were implemented and maintained.
The Company has provided information on request to governments and
agencies, actively engaging in open dialogue.
All relationships with Russian sanctioned customers have been terminated and
newly acquired assets are promptly assessed to ensure their relationships are also
compliant with the Group Sanctions Policy.
By actively engaging in regional discussions and initiatives with political bodies
and governmental agencies, we address unique challenges and contribute to
environmentally responsible industrial practices on a global scale. Transparent
communication and open information sharing progresses our goal of securing a
sustainable infrastructure for a clean and efficient industry to secure refractory
production in Europe. In India the Group has communicated its dedication
to aligning business objectives with national policies and has leveraged
opportunities to show the important role the Company plays in a
fast-growing economy.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Suppliers
Why they are important
Strong relationships with our suppliers are vital for the effective running of our
operations. We rely on our suppliers to deliver services and materials, and we recognise
that the availability of these goods impacts how we operate as a Company.
How the Company engages
The Company evaluates its suppliers through:
• a sustainability risk matrix that assesses suppliers according to country risk; and
• a goal-based framework to evaluate the majority of RHI Magnesita’s purchase
spend by supplier under its sustainability criteria, until 2025.
All suppliers are requested to sign the Supplier Code of Conduct, and a
Sustainable Procurement Guideline and Supplier Audit Guidelines are
implemented consistently across our operations.
A risk-based approach is taken with external parties undertaking audits on behalf
of the Company in higher risk areas and internally conducted on-site supplier
audits have been completed across all five of the Group’s regions.
The Company has focused on building some longer-term partnerships with
certain strategic suppliers to establish more stable and reliable supply chains.
The Company operates fair payment terms for suppliers, whilst leveraging
benefits for its own financial health.
In 2023, the Procurement team concluded its initiative to digitalise and bring
efficiencies to its relationship with suppliers through the implementation of
SAP Ariba.
How the Board engages
The CSC received reports from management on supplier audits and
engagement and considered progress on the Company’s sustainable
procurement initiatives.
The Board receives regular updates on the business’s work to future-proof our
supply chain and the work undertaken to adapt our processes to an increasingly
volatile environment. In 2023, the Board approved contracts in South America
with certain suppliers, considering risk mitigation and any key-man
dependencies, in line with its delegation of authority framework.
In 2023, the Board considered and approved the Modern Slavery Act Statement
for publication. The statement can be found on the Company’s website.
Priority topics raised by stakeholders
•
Inventory levels
• Shipment delays
• Climate action
• Safety
• Raw materials
• Sustainable procurement
Outcomes
The efforts to improve tactical and strategic supply chain management
continued in 2023 and the next steps will be to upgrade the systems and tools for
use in the teams’ work driving efficiencies and improving supplier and employee
experience. The Group engaged in a partnership with o9 Solutions to deliver an
advanced and automated integrated business planning process. In Europe we
initiated a new railway line in partnership with MSC Mediterranean Shipping
Company to further ensure the supply of refractory products to international
customers quickly, reliably, and sustainably.
Greater numbers of suppliers are signed up to the Supplier Code of Conduct and
are increasingly more aware of the Company’s expectations on product carbon
footprint data and about the on-site audit process. This has led to greater
adoption across associated industries and, it is hoped, will have driven
improvements in ESG matters.
Tools used led to increased supply chain transparency which then resulted in a
blacklisting, following discovery of practices which were not aligned with RHI
Magnesita’s Code of Conduct.
The insights from on-site audits in 2023 have led to improvements in quality,
transparency and supplier relationships.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
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GOVERNANCE Board of Directors
Herbert Cordt
N
Chairman
Herbert was Chairman of the
Supervisory Board of RHI AG from 2010
until 2017, as well as Vice-Chairman
from 2007 to 2010. He is Managing
Partner at CORDT & PARTNER GmbH,
his international boutique corporate
finance consultancy, which advises
clients on corporate finance matters.
In the course of his career he has
held a variety of senior executive
and managing director positions in
telecommunications and financial
institutions in European firms, providing
a wide range of business acumen
and international experience. He
has also served as a non-executive
director on the boards of a number
of industrial companies.
Herbert obtained a Doctorate in
Law from the University of Vienna,
graduated from the Diplomatic
Academy of Vienna and received a
Master’s of Science degree in Foreign
Service from Georgetown University
Washington D.C.
Current external appointments:
Watermill Group Boston (Advisor),
Cooper & Turner Group (Advisory
Board Member), Quality Metalcraft/
Experi-Metal, Inc. (Advisory
Board Member), CORDT &
PARTNER Management- und
Finanzierungsconsulting GesmbH
(Managing Partner)and Georgetown
University’s School of Foreign
Service for its MSFS Program
(Advisory Board Member).
Board Committee member
Nomination & Governance Committee
S
R
Audit & Compliance Committee
Corporate Sustainability Committee
Remuneration Committee
Chairman of Committee
John Ramsay
A N
Stefan Borgas
Ian Botha
Chief Executive Officer
Chief Financial Officer
Stefan’s career has focused on business
transformations. He was CEO at RHI
AG from December 2016 until October
2017, when he became CEO of RHI
Magnesita, following the merger.
Prior to that, he was president and CEO
at Israel Chemicals Ltd and between
2004 and 2012, he was CEO at Lonza
Group. In his early career, he worked
at BASF Group, where he held various
management positions.
Stefan has a business administration
degree from the University
Saarbrücken and an MBA from
the University of St. Gallen-HSG.
Ian enjoyed a highly successful career
with FTSE listed Anglo American
plc in the related mining and metals
industry for over 20 years. Whilst
there, he held a variety of international
executive roles including as Group
Financial Controller and divisional
Chief Financial Officer, and most
recently as Finance Director of listed
Anglo American Platinum. Ian has
significant experience in finance and
accounting, investor relations, strategy,
M&A and governance, as well as
excellent business acumen and a track
record in financial and performance
improvements.
Current external appointments:
Afyren SAS (Chairman) and borgas
advisory GmbH (owner).
Ian holds a Bachelor’s degree in
Commerce from the University of Cape
Town and is a Chartered Accountant.
Current external appointments: none.
Senior Independent Director
and Deputy Chairman
John has held senior financial
executive roles across the world,
including serving as Chief Financial
Officer of Syngenta AG, as well as
being their Interim CEO for a period.
John started with Syngenta AG as
Group Financial Controller in 2000
and prior to that was Finance Head of
Asia Pacific for Zeneca Agrochemicals.
Earlier in his career he was a Financial
Controller of ICI Malaysia and regional
controller for Latin America. He
started his career working in audit
and tax at KPMG and his knowledge
in accounting and finance provides
valuable practical experience.
John is a Chartered Accountant and
also holds an Honours Degree in
Accounting.
Current external appointments:
DSM-Firmenich AG (Supervisory Board
Member), Croda International plc
(Non-Executive Director, Chair
of Audit) and Babcock International plc
(Non-Executive Director, Chair
of Audit).
Board gender diversity 1
Board independence 1
Male
Female
67%
33%
Independent
Not independent
55%
45%
1. As calculated by reference to the UK Corporate Governance Code, at the date of this
report, including Directors nominated for appointment at the 2024 AGM. Does not include
Employee Representative Directors.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Stanislaus Prinz zu Sayn-
Wittgenstein-Berleburg
S
Non-Independent
Non-Executive Director
Stanislaus was a member of the
Supervisory Board of RHI AG from
2001. He has been a Supervisory
Board member on several “Stadtwerke”
(municipality owned utilities) as well
as undertaking senior executive roles,
including CEO and CFO, in the energy
industry. He has deployed industrial
knowledge combined with financial
detail throughout his career, and
was an Investment Banking Director
at Deutsche Bank AG. Over the past
five years he has focused on private
equity work in a German mid-cap
environment and also engages in a
broad range of asset management
activities in a family office environment.
Stanislaus holds a Sloan Fellows
Master’s in Business Administration
from MIT Sloan School of Management
and studied Business Administration
and Economics at Université de
Fribourg. He is a Chartered Financial
Analyst (CFA).
Current external appointments:
STUV Holding GmbH (CEO), STUV
Beteiligungs GmbH (CEO)
David Schlaff
Non-Independent
Non-Executive Director
Wolfgang Ruttenstorfer
A
Janet Ashdown
S R
Non-Independent
Non-Executive Director
Independent
Non-Executive Director
David was a member of the Supervisory
Board at RHI AG from 2010 until 2017.
Currently Chief Investment Officer and
joint Managing Director at M-Tel, he
has key management and supervisory
experience in international financial
and manufacturing institutions. He
has undertaken roles at LH Financial
Services Corporation and Forstmann-
Leff Associates Inc, and he has held
advisory and supervisory board
positions at Latrobe Specialty Steel
Company and A/S Ventspils Nafta.
David holds a Bachelor’s degree in
Business Administration from the
Interdisciplinary Center Herzliya
in Israel.
Current external appointments: M-Tel
Holding GmbH (Chief Investment
Officer and Joint Managing Director).
Wolfgang was a member of the
Supervisory Board of RHI AG from
2012 to 2017, where he acted as the
Interim CEO for six months, following
the sickness-related absence of the
CEO. He started his professional
career in oil and gas at OMV, where he
became CEO and then Chairman of
the Management Board. He has held
numerous supervisory board roles,
including as Chairman, in industries
such as telecommunications, real
estate, healthcare and insurance.
Wolfgang also served as Secretary of
State in the Austrian Federal Ministry
of Finance. His varied career brings a
wide range of strategic and business
management experience.
Wolfgang graduated from the Vienna
University of Economics and Business.
Current external appointments:
Erne Group GmbH (Supervisory
Board member).
Janet has had a distinguished career
working for BP plc for over 30 years,
holding a number of international
executive positions throughout the
value chain. Until the end of 2012,
Janet was CEO of Harvest Energy
Ltd and throughout her career has
provided leadership through change.
Janet also has a wide range of board
and committee experience as a non-
executive director, including the UK
Nuclear Decommissioning Authority,
a public body where she chairs the
Safety and Sustainability Committee.
Her experience in the energy sector
has provided her with significant
skills in general management,
particularly in environmental and
sustainability matters.
Janet holds a BSc in Energy
Engineering from Swansea University.
Current external appointments:
Nuclear Decommissioning Authority
UK (Senior Independent Director and
Chair of Safety and Sustainability),
Victrex plc (Non-Executive Director,
Chair of Remuneration) and Stolt-
Nielsen Limited (Non-Executive
Director).
Directors
by length of tenure
Directors
by ethnicity
Directors
by age
Directors
by nationality
0–3
3–5
5–9
9+
18%
18%
27%
37%
White
Prefer not to say
86%
14%
40–49
50–59
60–69
70–80
8%
42%
25%
25%
Austrian
British
German
Swedish
South African / British
42%
25%
17%
8%
8%
As described in the Corporate Governance report, these statistics do not include the Employee Representative Directors.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
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GOVERNANCE Board of Directors continued
Janice “Jann” Brown
A R
Karl Sevelda
R N
Marie-Hélène Ametsreiter S
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Jann started her career with KPMG,
where she qualified as a Chartered
Accountant and a Chartered Tax
Adviser, moving into industry in
1998 and since then has worked in a
number of roles, both executive and
non-executive, primarily in the energy
sector but also in engineering services,
manufacturing and investment
management. As a result of these
roles, Jann has extensive international
business experience, particularly in
India and the Middle East. Her listed
company board experience, both as
an executive and a non-executive,
brings an awareness of the importance
of governance, culture and strong
ethics. She is an experienced financial
professional and is a Past President of
the Institute of Chartered Accountants
of Scotland.
Jann is a Chartered Accountant,
and also holds an Honours Degree
in History from Edinburgh University.
Current external appointments:
Pharos Energy plc (Managing Director),
and ICAS Foundation (Trustee and
board member).
Karl progressed to CEO of Raiffeisen
Bank International AG after being
Deputy CEO and undertaking
management roles in the Raiffeisen
Bank group where he was responsible
for corporate customers and corporate
trade and export finance worldwide.
Prior to this he held several senior
management positions in Creditanstalt-
Bankverein where he focused
on corporate and export finance.
Additionally, he has held the position
of Secretary to the Federal Minister for
Trade and Industry of Austria.
Karl holds a Master’s and Doctorate
Degree from Vienna University of
Economics and Business.
Current external appointments:
SIGNA Prime Selection AG
(Supervisory Board member),
SIGNA Development Selection
AG (Supervisory Board member),
Liechtensteinische Landesbank AG
(Non-Executive Director), and Custos
Privatstiftung (Chairman).
Marie-Hélène has been a General
Partner with Speedinvest, a leading
European Venture Capital firm,
since 2014. As the lead partner of
the Industrial Tech team, she drives
seed stage investments in start-
ups supporting the digitisation of
Europe’s industrial sector, including
manufacturing, logistics, construction
and climate technology. Before
Speedinvest, Marie-Hélène was
responsible for the Corporate
Sustainability Program at OMV, a
leading Austrian oil and gas producer,
and prior to that was CEO of the
Croatian mobile telecom operator
Vipnet. She has extensive skills and
experience in sustainability, digitisation
and automation.
Marie-Hélène graduated in Business
Administration from the Vienna
University of Economics and studied
at the University of California.
Current external appointments:
Greyparrot.ai Ltd (Non-Executive
Director), AMODO, Inc. (Non-Executive
Director) and Speedinvest Deutschland
GmbH (Managing Director).
Anna Katarina Lindström
Board Nominated Independent
Non-Executive Director
Katarina has her foundation in
Operations and, over her extensive
international career, has led the
transformation of operations and
the value-chain at executive and
board level, always structuring
organisations in a lean and efficient
manner. She relishes pragmatic and
pro-active problem solving with focus
on continuous improvements both
structurally and incrementally. She
has had a long international career at
Volvo Group with positions in Sweden
and Japan as well as in Munters AB in
Sweden and Hempel A/S in Denmark.
Katarina holds an M.Sc. in Material
Science from Royal Institute of
Technology in Sweden.
Current external appointments:
Hempel A/S (Executive Vice President
and COO), Gränges AB (Board
Member) and the Swedish Royal
Engineering Academy (Elected
member).
Board Committee member
Nomination & Governance Committee
S
R
Audit & Compliance Committee
Corporate Sustainability Committee
Remuneration Committee
Chairman of Committee
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Karin Garcia
Martin Kowatsch
Michael Schwarz
Sigalia Heifetz
Employee Representative Director
Employee Representative Director
Employee Representative Director
Independent Non-Executive Director
Karin studied at the University of
Oviedo and finished her degree in
computer science in 1994, specialising
in systems support. She started with
the Group at RHI in 1997, first working
in the commercial execution team
and then transferring to the IT on-site
support in Oviedo as a Regional
Site Service Coordinator where she
continues to work as a Senior Site
Coordinator.
Karin has been appointed as an
Employee Representative Director by
the Spanish Works Council.
Current external appointments: none.
Martin has been with the Company
since 1987. He is Chairman of the
Group Works Council, as well as the
Chairman of the Works Council at the
Digital Plant Flagship in Radenthein.
He is a trained industrial electrician,
and has completed a one-year
Chamber of Labour/trade union
training. He successfully completed
a Master’s degree programme in
Education and Group Dynamics.
Martin received his doctorate in history
(focusing on educational development)
from the Alpen-Adria-Universität
Klagenfurt.
Current external appointments: none.
Appointment date: 6 June 2019
Resignation date: 24 May 2023
Michael has been with the Group
since 1983 and is a member of the
Works Council at RHI Magnesita
Deutschland AG.
Michael has been appointed as an
Employee Representative Director by
the German Works Council.
Current external appointments: none.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 3 1
GOVERNANCE Executive Management Team
The EMT combines broad experience
and complementary skill sets to deliver
the Group’s strategic priorities.”
Stefan Borgas
Ian Botha
Gustavo Franco
Chief Executive Officer
Chief Financial Officer
Chief Customer Officer
For full biographies, see
Page 128
Gustavo joined Magnesita in 2001,
after graduating from the Federal
Center for Technological Education
of Minas Gerais and since then has
developed his career in the refractory
industry. During the first years of his
career, he progressed through various
technical and sales managerial roles in
South and North America, and became
part of the Executive Committee in
2014 as Global Sales VP.
In 2017 he led the go to market
integration of RHI and Magnesita and
in 2018 he completed the Senior
Executive Programme with the London
Business School.
Gustavo was appointed Chief Sales
Officer in 2019 and since 2023 the
Regional Presidents, responsible for
the regional P&Ls, have reported to him
in his role as Chief Customer Officer,
1 3 2
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Rajah Jayendran
Chief Technology Officer
Rajah has held various senior
operational and strategic development
roles at multinational companies
such as Thyssen-Krupp Uhde GmbH,
Bayer MaterialScience AG, Lonza
AG, and ChemChina-Bluestar Group
Co, working in China, Singapore
and Switzerland. He has valuable
experience in the industry in Asia.
He also has experience in renewable
solutions and operational performance
management. In 2018, Rajah became
a key team member at RHI Magnesita,
holding the position of Senior Vice
President Operations Europe, CIS
& Türkiye until, in October 2021, he
joined the EMT as Chief Operations
Officer (COO), before his role became
Chief Technical Officer. Rajah brings a
detailed knowledge of the Company’s
global operations and expertise in
production efficiencies.
Rajah graduated in engineering from
TU – Ruhr-Universität Bochum.
Simone Oremovic
Ticiana Kobel
Executive Vice President, People,
Projects, Global Supply Chain & IMO
Simone joined RHI Magnesita in an
executive capacity in November 2017,
and her role covers People & Culture,
Global Supply Chain and Integration
Management Office, as well as the
Global Project Group.
Simone has 25 years of experience
in various global industries and is a
certified Six Sigma Master Black Belt.
She started her career at General
Electric where her main focus was on
leadership and talent management,
as well as Human Resources process.
She has held leading Human
Resources roles in Telekom Austria
Group, IBM Austria and Baxter AG.
Simone has a degree from the
European Business School (Paris)
and from the Economic University
of Vienna.
Executive Vice President,
Legal & Digital Transformation
Ticiana has extensive legal experience
in a wide range of global businesses,
such as SR Technics Group and Bühler
Group, leading legal departments in
manufacturing, aviation, technology,
the service sector and engineering
industries. In these roles. She was in
charge of crucial projects pertaining
to varied matters, such as complex
strategic procurement, spin-offs,
sales and acquisitions, IT matters,
and corporate governance issues,
and assisted with the design and
implementation of compliance
functions, mergers and acquisitions,
and partnerships.
Ticiana has a law degree with an
emphasis in corporate law from the
Federal University of Minas Gerais and
an LLM in International Economic Law
and European Law at the University
of Geneva.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 3 3
GOVERNANCE Nomination & Governance
Committee report
• Review the results of the Board effectiveness
review relating to composition of the Board
or the effectiveness of any individual
Director.
• Consider annually the Company’s
compliance with the UK and Dutch
Corporate Governance Codes, review key
Company documents related to corporate
governance and consider changes as they
occur in the Company’s compliance with
corporate governance standards.
More detail on the duties of the Committee
can be found in its Terms of Reference on the
corporate governance section of our website.
Activities in 2023
The Committee met four times in 2023,
covering the roles and responsibilities set
out above and in particular, the Committee
considered the following matters:
Governance
The Company reports against two corporate
governance codes, in the Netherlands and
the UK, and there are an increasing number of
matters for consideration in respect of corporate
governance, such as those arising from the new
Dutch Corporate Governance Code 2022, and
the ongoing matters from UK Government’s
Corporate Governance & Audit reforms and UK
Listing Rules changes. The Committee received
a detailed report from the Company Secretary
on the Company’s compliance with the DCGC,
being its first year of application, and the actions
taken to ensure RHI Magnesita could evidence
compliance. As the new DCGC is embedded
the Committee may revisit aspects as it deems
necessary to improve disclosure where possible.
In early 2024, the Committee received a
briefing from the Company Secretary on the
updated UK Corporate Governance Code,
which will begin applying to the Company from
2025, and, in the same way as with the DCGC,
the Committee will oversee the Company’s
actions to apply the updated UKGC and
evidence compliance.
NED role scope and time
commitment review
The Committee considered, as it does annually,
the time required from the NEDs to fulfil
their duties satisfactorily. This review covers
meetings, required preparation time and any
additional time Directors spent outside of
meetings in discussion with management,
as well as Directors’ self-assessment of their
time spent as part of the year-end processes.
Part of this review includes the external
appointments held by Directors and the
Committee was comfortable that none of the
Directors or Board nominated Directors are
compromised by their other commitments in
the time they can dedicate to the Company.
For 2023, the Committee undertook an
in-depth assessment of the scope and time
required of the NEDs on the Board of RHI
Magnesita and as part of that the Committee
considered several factors which are felt to
have increased the scope and time over a
sustained period. These factors include the
ongoing volatility in the macro-economic
environment, the increased time required
from the Board to consider M&A opportunities
in the year, and then arising from this substantial
M&A programme, the additional complexity
of Company operations, risk assessment
and customer offering which comes with
an increased operational footprint requiring
careful oversight.
NEDs are asked annually to confirm the time
they have spent on RHI Magnesita business and
their feedback was that the time requested of
them in recent years, including 2023, exceeded
that anticipated by their letters of appointment.
This is further borne out by the meetings
scheduled in addition to the planned Board
timetable (see page 118).
The Committee also took into consideration the
substantial growth, expansion and complexity
of the business since its admission to the
London Stock Exchange in 2017, followed by
the admission to the Vienna Stock Exchange in
2019 and the growing corporate governance
and legal requirements in the wider governance
landscape across these jurisdictions. This
has particularly been the case in topics of
Audit and Sustainability reporting, involving
a changing and complex suite of regulations
and expectations across different stakeholder
groups and jurisdictions.
Furthermore, additional time was required to
support shareholders in their assessment of
the Partial Offer by Rhône Capital, and now to
engage constructively with Rhône Capital as
a new significant shareholder. This has led to a
significant increase of time required from both
the Chairman and Deputy Chairman & SID.
The responsibility for setting NED fees sits with
the Chairman, as outlined in the Remuneration
Report (page 149), and he took this review of
time and scope into consideration when setting
the fees for 2024, as well as considering the
wider conversation on the role of Non-Executive
Directors becoming more complex in recent
years, with the UK Investment Association
supporting increased NED fees that reflect the
increased time commitment and complexity of
their roles, accompanied by proper explanation.
In reflection of the above, the Committee has
instructed the Company Secretary to review the
letters of appointment for NEDs to increase the
time to a maximum of 45 days per annum.
Herbert Cordt
Chairman of the Committee
Committee members and
meeting attendance
Member
in 2023 Member since
Attendance
Herbert Cordt
(Chairman)
John Ramsay
Karl Sevelda
4/4
4/4
4/4
October
2017
October
2020
June 2021
Committee purpose, roles
and responsibilities
The Committee’s purpose is to oversee
the Company’s corporate governance
arrangements and ensure that the Company
has the competencies and depth of skills within
the Board and senior executives to meet the
demands of a global business and to support
the development of the Group’s strategy, whilst
paying particular attention to independence
and diversity. The Company Secretary acts as
Secretary to the Committee.
Roles and responsibilities:
• Review the structure, size and composition
(including the skills, knowledge, experience
and diversity) of the Board and its
Committees, recommending any changes
to the Board.
• Consider succession planning for Directors
and the senior executives.
• Lead the process for recruitment of any new
Directors, including the Chairman, and their
recommendation to shareholders.
• Assess annually the time commitment
required from NEDs, including the approval
of any additional external appointments on
behalf of the Board.
1 3 4
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Board performance review
The Committee takes responsibility for the
preparation of the annual Board performance
reviews. In 2022, EY assisted the Board with its
performance review through interviews with
each Director, including those who had recently
left, and the Board considered the findings
in April 2023. EY also provides internal audit
and tax compliance and advice services to the
Company. The Board were satisfied that the
services were provided from EY teams which
were independent from each other as well as
being in different geographies. EY does not have
any other connections with the Company or any
individual director.
The findings were that the Board is cohesive,
works effectively, with good relationships, open
and robust discussions, and members feel
comfortable voicing their views and providing
challenge. The Company’s governance
structure was felt to be working well and the
consensus was that the Board composition
provides balance and challenge. The 2022
review reported that all Directors felt Board
Committees supported the Board in discharging
its duties. The strong performance of the
Committees was commented on, particularly
that they provided the possibility for longer,
deeper debates and challenge, arising from
the smaller membership and focused remit.
After a few years of low-hanging fruit in terms of
improvements which could be made, the Board
found that the identified areas for improvement
were more complex. Actions to improve such
areas are therefore expected to manifest over
a longer period. The Board agreed actions for
focus in 2023, with a view to further improving
its effectiveness. In the table below is an
update on progress against themes from
prior years, alongside new areas identified
in the 2022 review.
For the 2023 review, the Board will complete
a questionnaire which covers Board dynamics,
performance of the Board and its Committees,
overall support of the Directors, self-assessment
of their individual performance, and strategic
focus areas. The EMT will be asked to
complete their assessment of the Board and its
performance also. The findings and conclusions
will be considered by the Board when it meets
in April 2024.
Board diversity
The Committee and the Board have dedicated
time in the annual schedule to discussing
diversity, both at Board level and within the
organisation. Board female representation
slipped to 29% but with Katarina’s proposed
appointment by shareholders at the 2024 AGM
this would increase to 33%. As the Committee
continues to assess the needs of the Board and
the expectation of shareholders, the diversity
profile of the Board will be a primary factor in
selecting candidates.
The Board Diversity Policy (available here on
our website) outlines an aspiration of 45%
female representation within the Board, which
continues to be the aim. The policy also takes
account of diversity represented through an
individual’s background and ethnicity. It outlines
an aspiration of 45% female representation
within the Board, which continues to be the
aim. The policy also takes account of diversity
represented through an individual’s background
and ethnicity. It is being implemented through
ensuring female representation on any shortlists
for the open positions, and engagement with
the executive search firms used to ensure
diverse candidates are found. Ethnicity as a
further key consideration, providing the required
experience and skills can be also identified
in the candidates.
Of the collective Board Committee member
positions, 42% are held by women and two
of the Committees have a female Chairman,
in part as a result of the Board’s focus on the
importance and benefits of gender diversity
in recent years. Committee composition is
considered carefully by the Committee and
extant Company commitments, experience and
skills are considered when making changes.
Organisational diversity
After successive decreases in gender diversity
within senior management (being EMT and their
direct reports) in 2021 and 2022, the Board has
been pleased to see an uptick this year to 28%
after its encouragement and re-emphasis on
the topic to management. The CSC considered
organisational diversity as part of its scope and
heard from People & Culture leaders on the
action plan to reach the strategic goal of 33%
by 2025, including how the regions would take
steps to drive diversity in a way which suits and
takes account of the regional culture. These
actions can be found in more detail on pages
138 to 139. We were pleased to see one of our
major subsidiaries recognised as one of India’s
“Best organisations for Women” from India’s
The Economic Times.
The responsible leader for diversity in the
People & Culture department outlined the
initiatives being taken by the organisation
to promote diversity, particularly gender, in
recruitment processes and networking support
for existing female leaders. Information on
the gender diversity of the EMT and its direct
reports is on page 28. Female Board members
have offered their assistance with mentoring of
female leaders and this Group wide mentoring
programme started in January 2024. In
preparation, they joined kick off sessions with
the mentors in late 2023 to describe their
experiences of mentoring, the benefits it
brings and ensuring colleagues understood
the focus and support that the Board gives to
such an initiative to develop diversity. You can
read about further steps taken by the Group to
improve diversity in senior management and the
organisation as a whole on pages 27 and 82.
Board Review
improvement area
Stakeholder oversight
Progress made and further actions
ERDs were encouraged and expressly invited to speak directly on topics to give the employee voice at the Board table. As well as speaking
in Board meetings, there are suitably frequent informal interactions as a group that the NEDs and ERDs can discuss topics which then help
shape discussion around the Board table.
The Directors are appreciative of the wide range of site visits and the opportunity to see the stakeholder experience across different
regions. The intention is that these site visits will continue to take place, ensuring that the Directors have a broad understanding of
regions and management will aim to ensure that the broader workforce meet and interact with the Board.
Delivery of the 2025
strategy
Progress continues with pace to execute and deliver projects which improve the foundational basis of the Company’s operations. The
Directors continued to recommend that management’s priorities be to execute the core business functions to the highest standards in
order to be able to progress the strategic vision for the Company which focuses on customers, driving shareholder value and various
sustainability focus areas such as decarbonisation.
Board papers/meeting
organisation
Improvements are observed over recent years, but feedback is still that papers could be more considerate of risks and be more concise.
Interim materials to be provided in between meetings as appropriate to try and streamline meeting business. Board members to provide
specific feedback on papers, e.g. where they found a paper to be of high quality and to provide observed and timely feedback to presenters
where they felt there could be improvements.
Meeting structure should be considered, including breaks, use of NED only sessions and the level of detail considered on business matters.
Board skills/composition The Board has had focused sessions led by external experts in a particular field on strategic topics related to the Board discussion such
as steel decarbonisation and macroeconomic briefings. Directors continue to pursue their own structured learning and useful resources
such as webinars and articles are circulated by the Company Secretary to keep members up to date on governance or technical matters.
Greater Board diversity should continue to be sought.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 3 5
GOVERNANCE Nomination & Governance
Committee report continued
Reporting on diversity
In 2022, the UK Financial Conduct Authority
introduced new Listing Rules relating to
diversity (LR 9.8.6R(9) to (11)). The Company’s
position against these items is set out within this
report (right).
The Company agreed on a reference date of
31 October to align with reporting to the FTSE
Women Leaders Review, which it reported to in
November 2023. The Company’s reported data
(right) shows the position as at 31 October 2023
which remained unchanged as at 31 December
2023. The two male Executive Directors are
included under the Board reporting.
As discussed in the Corporate governance
report, the ERDs are appointed by the workforce,
with no input by the Board or shareholders,
who are not able to influence in terms of
appointment. Therefore, the Board’s view is that
it is inappropriate to include the ERDs in any
calculation of Board diversity, unless required
by law. The Board were pleased that the Works
Council in Spain chose to nominate Ms. Karin
Garcia to the Board in December 2021.
The Company reported the data it holds on
its ethnic diversity to the UK’s Parker Review
in late 2023 and also reported to the Sociaal-
Economische Raad in the Netherlands, as
required by Dutch law, on the gender diversity
of its senior management and Board, the future
targets and the methods through which the
Company expected to reach these targets. As
at 31 December 2023, there was 28% female
leadership, in a population of 53, of which 15
were women and 38 were men.
The Committee and the Board will continue to
support the Company’s approach in facilitating
people development, ensuring that talent,
regardless of age, gender and background,
enjoys career progression within the Group.
Diversity of nationality, culture and ethnicity
are all important factors to engender diversity
of thought. The Committee believes that
the diversity of nationalities and culture
represented amongst the Board, EMT and
senior management provides a diverse and
global perspective. More details on the Group’s
diversity and inclusion work can be found on
pages 27 and 82.
Listing Rule target
At least 40% of the
board are women.
At least one of the
senior board positions
(Chair, Chief Executive
Officer (CEO), Senior
Independent Director
(SID) or Chief Financial
Officer (CFO)) is
a woman.
At least one member
of the board is from
a minority ethnic
background
(which is defined by
reference to categories
recommended by
the UK Office for
National Statistics).
Company’s
position
Comment
29%
(Target
not yet
met)
Our aspiration is to achieve 45% female representation, recognising
that it requires a careful and measured approach to accommodate
Board attrition, whilst maintaining the existing profile of desired skills
and experience. After a peak of 38% in 2022, the Committee has
been focusing on the benefits of diversity in selecting candidates
to fill vacancies. On the expected composition at the 2024 AGM,
the Board should be at 33% women and we will continue to be
mindful of the 45% target when considering further appointments.
0
(Target
not yet
met)
This is an area that would require sudden and significant change
and cannot be immediately implemented without disruption to the
organisation. The intention is to take this into consideration as part of
succession planning.
0
(Target
not yet
met)
The Board continues to take ethnic diversity into account when
considering appointments, as per its Diversity Policy, whilst noting it
will continue to consider diversity of the Board and the Company as a
whole, based on our global footprint and operations, in a way which is
best aligned with our growth agenda. Being an international company,
we naturally reflect many different nationalities in the Board and
senior management. This is a valuable input to ensure different
cultures are represented within decision makers, warding against
groupthink. The Company has reported to the UK Government’s
Parker Review in 2023.
Table 1: Reporting table on sex/gender representation
Number
of board
members
Percentage
of the board
Number of senior
positions on the
board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage
of executive
management
10
4
71%
29%
4
0
2
2
50%
50%
Men
Women
Not specified/prefer not to say
Table 2: Reporting table on ethnicity representation
Number
of Board
members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage
of executive
management
12
86%
4
3
1
75%
25%
White British or other White
(including minority -white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/
Black British
Other ethnic groups, including Arab
Not specified/Prefer not to say
2
14%
Notes on data collection and the tables:
1. Data collection of the Board and the EMT was undertaken in 2022. The Board and EMT were provided with the categories
above and asked to advise how they identified. The personal data has been collected once and it will be up to the individuals
to advise of any changes. There have been no additions to the Board and EMT since the data was collected.
2. Katarina Lindström was not included in these figures as under Dutch law she can only be appointed as a director by
shareholders at the 2024 AGM.
3. The two Executive Directors are included in the Board figures and not in the executive management column,
1 3 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Succession planning
EMT succession planning
The Committee monitors the development
of the EMT to ensure that there is a diverse
supply of senior executives and potential future
Executive Directors with appropriate skills and
experience. Individual Committees play their
role in this, for example the Audit & Compliance
Committee receives a report on the Global
Finance talent profile, and informal interaction
between Directors and senior management can
also help form inputs to the People & Culture
team to enable development focus areas.
The Committee considers the skills and
experience of individuals at different levels
in the organisation with an indication of their
expected time to develop to the next level,
and requirements in order to achieve that
progression, such as experience of a different
business function or additional training.
Furthermore, it considered how succession
planning would be treated in different scenarios
(e.g., in an immediate scenario or in an orderly
fashion) which has been discussed as a
Board. Diversity is considered as a vital part of
succession planning, and management are
encouraged to incorporate tools and measures
to further generate and encourage diversity in
the pipeline of the organisation.
In the 2022 report the Committee reported
on changes to the EMT as result of the
regionalisation and the SG&A cost reduction
programme. The Board has continued
to monitor regionalisation and feels the
organisation has benefited from fresh
perspectives and reinvigorated approaches,
being closer to customers and other
stakeholders, leveraging local reputation
and knowledge whilst encouraging
responsibility for the regional P&L.
Board succession planning and
composition
In its last report to shareholders, the Committee
advised that it was leading a search for two
new Independent NEDs. Egon Zehnder was
engaged to assist in a comprehensive search,
providing candidates, with a diversity of skills
and experience, based in a wide range of
locations, to suit the Company’s needs and
focus areas with reference to the Board Diversity
Policy and the Board Profile, both available
on the Company’s website. Egon Zehnder is
signatory to the Voluntary Code of Conduct
for Executive Search Firms and has confirmed
it has no other connection to the Company or
individual Directors.
A range of profiles of a significant number of
candidates were considered for the vacancies,
and a shortlist was created. This shortlist
of candidates was then interviewed by the
Committee and the members shared feedback
which covered the skill set and experience
of the candidates, their personal style and
cultural fit with both the Company and the
Board itself, considering how they would
influence and contribute to the workings of
the Board, as well as how they would provide
input to management and the development
of the strategy. Certain of the candidates met
other Directors, and detailed references were
obtained before the finalisation of the Board’s
nomination to shareholders.
We were delighted to attract someone of
the calibre and experience profile of Katarina
Lindström, who has joined the Board as an
observer from 30 September 2023 and
has already made a strong impression and
contribution to the work of management,
providing specific and incisive operational
guidance. The Committee is focused on
ensuring a full and detailed, open search for
the right persons for the roles who meet the
business’ needs and does not want to conclude
any second appointment with undue haste.
The Committee considers succession planning
for key roles such as the CEO and CFO on an
ongoing basis, both on the basis of immediate
and orderly succession. The development of
internal candidates for these roles is considered
by the Committee and the Board, along with
the wider assessment of talent and resources
to enable consideration of succession planning
in the organisation. Mapping of the skills and
experience needed for the roles is used to
consider the profile of candidates, their level
of readiness and areas for progression. This is
discussed with the EVP of People & Culture
to ensure the individuals receive support and
development accordingly.
On an ongoing basis, the Committee considers
the tenure of Directors with reference to the
retirement and resignation profile, which can
be found on the Company website. In thinking
about future recruitment to the Board, the
Committee continues to monitor Directors’
skills and experiences, as well as diversity, to
engender constructive debate and a varied mix
of ideas. The Board profile is published on the
Company website and was updated in 2023 to
reflect the desired expertise in a more tangible
way and with the skills sought and expected to
be represented on the Board.
In 2023, there have been no changes to Board
Committee composition and the Committee,
in conjunction with the Committee Chairmen,
continues to keep the composition of the
Committees under review.
The membership of Board Committees can
be found on pages 128 to 131.
Herbert Cordt
Chairman of the Board of Directors
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 3 7
GOVERNANCE Corporate Sustainability
Committee report
Janet Ashdown
Chairman of the Committee
Committee members and
meeting attendance
Member
in 20231 Member since
Attendance
Janet Ashdown
(Chairman)
Marie-Hélène
Ametsreiter2
Stanislaus Prinz zu
Sayn-Wittgenstein
6/6
June 2019
5/6
June 2021
6/6
November
2022
1. The annual joint Committee of the Corporate
Sustainability Committee and Audit & Compliance
Committee was held in early 2023 and another in
November 2023.
2. Where a Director is unable to attend a meeting he/she
receives papers in advance and has the opportunity to
provide comments to the Committee Chairman. Marie-
Hélène was unable to join one meeting due to illness.
Committee purpose, role,
and responsibilities
The Committee supports and advises the Board,
aiming to ensure the long-term sustainability
of the business and its positive impact on
communities where the Group operates. The
Committee promotes a culture of sustainability
within the Company, believing it leads to better
performance and sustained success. It oversees
risk management related to ESG topics including
but not limited to Health & Safety, environment,
and socioeconomic development on behalf of
the Board, striving to minimise the Company’s
negative impacts on people and the environment
and to deliver benefits for its various stakeholders.
The Committee Chairman reports to the Board,
as a separate agenda item, on the activity of the
Committee and matters of particular relevance.
The Board has access to the Committee’s papers
and receives copies of the meeting minutes.
In addition to the members of the Committee,
the CTO, the Head of Investor Relations &
Sustainability, the Head of Internal Audit, Risk
& Compliance and specialists in Sustainability
matters attend the Committee meetings and
the Company Secretary acts as Secretary to
the Committee. Board Directors who are not
members of the Committee are invited to attend
at their discretion. The Committee and executive
management together play a key role in steering
organisational initiatives towards sustainable
practices. In this interactive partnership, the CTO
assumes a central role, with ownership of the
ESG agenda. The CTO has responsibility for the
implementation and execution of the Company’s
sustainability strategy.
More details on the Committee’s scope and role
can be found in the Terms of Reference for the
CSC in the corporate governance section of
our website.
Activities in 2023
The CSC met six times in 2023 (including
joint Committee meetings with the Audit
and Compliance Committee). In addition
to performing the duties listed above, the
Committee:
Health & Safety
• Received reports on the new organisation,
strategy and roadmap for Health & Safety.
• Monitored RHI Magnesita’s Health & Safety
KPIs against the prior year, 2025 targets
and benchmarking.
• Monitored performance at operational
sites of both employees and contractors,
including a site visit in Breitenau, Austria.
• Reviewed the incident reporting process,
followed by recommendations for
improvement and setting a high priority
on engaging the entire workforce in
Health & Safety, including newly
acquired sites and leading and striving
for continual improvement in Health &
Safety performance.
• Reviewed safety KPIs at each meeting,
including root cause analysis of any serious
occurrence. The CSC discussed with
executive management Health & Safety
processes, lessons learned, actions to
reduce the potential for work-related injuries
and ways to improve Health & Safety culture.
• Reviewed in detail the circumstances leading
up to the fatal accident which occurred at
the Veitsch plant in Austria in November
2023, and the subsequent actions which
are being taken in response to this incident.
The Committee recommended changes
to incident reporting and investigation and
a review of operational procedures. Other
measures discussed included additional
training, behavioural role modelling and
the need to share learnings across the
global network.
• Reviewed initial root cause analysis of
the fatal accident which occurred at the
Breitenau mine in Austria in February 2024.
Consideration of this incident and follow
up measures was ongoing as at the date
of this document.
Governance
• Reviewed the terms of reference to address
changes to the DCGC in 2022.
• Considered the Committee’s performance
in its annual review.
•
Interacted regularly with the CTO, Head
of Sustainability, and other members of
senior management outside of formal
meetings to engage on matters arising,
steer and guide activity and ensure
relevant topics were considered.
Sustainability Risks
• Reviewed RHI Magnesita’s sustainability risk
assessment for 2023.
• The likelihood rating of Health & Safety
risks has increased due to the accidents in
November 2023 and February 2024. Health
& Safety risk is now outside the risk appetite.
• Climate and environment risks remain focus
areas, and the risk appetite was reduced
during the year, i.e. the Group has raised its
expectations in this area.
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•
In comparison to 2022, sustainability risks
increased overall due to the rise in Health
& Safety risk level and the acquisitions in
2022 and 2023 which require integration
into the Group’s recycling and environment
management approaches.
Conducting a yearly sustainability risk
assessment enables the Group to identify,
evaluate, and address potential risks
associated with environmental, social, and
economic factors. Through this assessment,
RHI Magnesita can proactively mitigate risks,
enhance resilience, and align with sustainability
goals. This safeguards the environment and
communities but also contributes to long-
term business viability, fostering a positive
reputation and well-managed relationships
with stakeholders.
Climate Change
• Reviewed progress against 2025 targets
including the CO2 emissions intensity
reduction target of 15%.
• Received reports on the methodology of the
CO2 roadmap, which is based on three pillars:
Carbon avoidance, Carbon capture storage
and utilisation and Scope III emissions
reduction, highlighting RHI Magnesita’s
strategies for reducing carbon emissions
and adopting sustainable practices.
• Received reports on the Group’s
participation in carbon capture technology
initiatives and strategic partnerships such as
its investment in and co-operation with MCi
Carbon, a technology provider specialising
in the mineralisation of CO2 emissions.
• Received reports on the CBAM, an important
climate protection instrument of the EU,
and its associated potential impacts on
RHI Magnesita’s operations.
Recycling
• Reviewed progress on the increased use of
SRM, including the status of recycling rates
and partnerships in various regions.
• Received reports on the strategy, roadmap
and capex needs to achieve the new
2025 recycling target of 15% due to
early achievement of the original 10%
target in 2022.
• Received reports on the challenges related
to the ending of the system of internal CO2
subsidies and the need to consider product
mix adjustments as well as innovative
processing techniques to enhance quality
and recovery, which will be crucial for
achieving the new target of 15% by 2025.
Communities
• Received reports on RHI Magnesita’s
community investment spending in different
regions and respective CSR (corporate social
responsibility) planning to reinforce RHI
Magnesita’s presence and partnerships
in the areas where it operates.
• Approved a new community investment
pillar, Health & Medical Care, to align Group
community strategy with the practical reality
of local spending priorities .
Diversity
• Received an overview of RHI Magnesita’s
initiatives to reach the goal of 33% women
in leadership positions by 2025.
• Reviewed the status of gender diversity
within the Group, actions and progress
since 2021, encompassing both gender
and broader diversity and the strategic
plans for 2023 and beyond to further
promote diversity within the Group.
Sustainable Procurement
• Received an overview of RHI Magnesita
supply chain due diligence that includes
the country-specific risk assessment tool,
EcoVadis supplier assessments, and on-site
supplier ESG audits and risk mitigation efforts.
• Reviewed the status quo of data gathering
for product carbon footprint data and the
outlook for 2024.
• Reviewed, endorsed and recommended for
the Board’s approval, the Modern Slavery
and California Transparency in Supply
Chains Act Statement.
Sustainability data
• Received a comprehensive sustainability
reporting gap analysis and implementation
plan for upcoming legal obligations and
various reporting frameworks such as the
Corporate Sustainability Reporting Directive
(CSRD), EU Taxonomy Environmental
Delegated Act, the DCGC and the UKCGC.
Group Policies
• Reviewed and approved the Global
Stakeholder Dialogue Policy
External ESG ratings
The Committee acknowledged RHI Magnesita’s
leading ESG ratings provided by independent
analysts.
• CDP – A-
• EcoVadis – Gold (96th percentile)
• MSCI – AA
• Sustainalytics – medium risk exposure
Janet Ashdown
Chairman of the Committee
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GOVERNANCE Audit & Compliance
Committee report
Committee purpose, roles
and responsibilities
The Committee monitors the effectiveness of
the Group’s corporate reporting, systems of
internal control and risk management and the
integrity and quality of the Group’s external
and internal audit processes.
The Committee’s key responsibilities include
but are not limited to:
Financial reporting
•
reviewing the potential impact on the
consolidated financial statements of the
implementation of the Company’s strategy,
climate change and energy transition work;
• advising the Board on whether, taken as a
whole, the reported financial information
is fair, balanced, and understandable and
provides the information necessary for
shareholders to assess RHI Magnesita’s
position and performance, business model
and strategy; and
John Ramsay
Chairman of the Committee
Committee members and
meeting attendance
Attendance
in 20231 Member since
Member
John Ramsay
(Chairman)
Jann Brown
Wolfgang
Ruttenstorfer
6/6 October 2017
6/6
June 2021
5/6 October 2017
•
reviewing and discussing with management
the appropriateness of judgements involving
estimates, the application of accounting
principles and associated disclosure
requirements.
1. The annual joint Committee of the Corporate
Sustainability Committee and Audit & Compliance
Committee was held in early 2023 and another in
November 2023.
2. Where a Director is unable to attend a meeting he/she
receives papers in advance and has the opportunity to
provide comments to the Committee Chairman. Wolfgang
Ruttenstorfer was unable to attend one meeting, due to an
unavoidable commitment.
Risk management and internal control
•
advising the Board on the Group’s overall risk
appetite, tolerance, current risk exposures
and future risk mitigation strategy; and
• evaluating and advising the Board on
the effectiveness of the system of risk
management and internal control.
Internal audit
• monitoring the functioning and quality
of the Internal Audit;
•
reviewing and approving the annual
Internal Audit work plan and taking note
of the findings and considerations of the
Internal Audits;
• supervising compliance with
recommendations and observations
of the internal auditors; and
• assessing annually Internal Audit’s
performance and effectiveness.
Compliance and governance
•
overseeing compliance with applicable
legal and regulatory requirements, including
monitoring ethics and compliance risks;
•
monitoring the changes in different
jurisdictions as they applied to the scope of
the Committee, with particular attention paid
to the UK Audit reform programme and the
changes arising from the DCGC 2022; and
•
reviewing the adequacy and effectiveness
of the Group’s Compliance function.
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External audit
•
considering the annual external audit plan,
approving related remuneration, including
fees for audit and non-audit services;
• assessing the performance, qualifications,
effectiveness and independence of the
external auditor and the audit process,
including assessing the quality of the audit;
• supervising compliance with
recommendations and observations
of the external auditors; and
•
recommending the appointment of the
external auditor to the Board for annual
approval at the AGM.
Financial management
•
advising the Board on the appropriateness of
management Capital Allocation Policy; and
•
reviewing, on behalf of the Board,
Treasury debt and Funding proposals from
management.
Committee governance
Committee meetings normally take place the
day before the Board meetings. The Committee
Chairman reports to the Board, as a separate
agenda item, on the activity of the Committee
and matters of particular relevance. The Board
has access to the Committee’s papers and
receives copies of the meeting minutes.
In addition to the members of the Committee,
the CFO, the Head of Financial Reporting, the
Head of Internal Audit, Risk & Compliance and
the external auditor attend the Committee
meetings and the Company Secretary
acts as Secretary to the Committee. Board
Directors who are not members of the Audit &
Compliance Committee are invited to attend
at their discretion; the Company Chairman and
the CEO typically attend each meeting and
other Company executives are invited to attend
for specific agenda items. The Committee has
had private sessions without the presence of
management throughout the year with the
external auditor and Chief Audit Executive to
discuss views on management and responses
to issues raised in the meetings. The Committee
Chairman has had regular private discussions
with the external auditor, the CFO, the Head
of Financial Reporting and the Chief Audit
Executive (being the Head of Internal Audit,
Risk & Compliance) during the year.
Wolfgang Ruttenstorfer, a member of the
Committee, is not independent under Provision
24 of the UKCGC in view of his long service.
He is, however, independent under the DCGC.
The Committee’s Terms of Reference clarify that
a member must be independent under either
Code and the Directors remain comfortable
that Wolfgang remains independent in his
approach and actions as a Director and
member of the Committee.
Whistleblowing programme
The whistleblowing programme, which is
monitored by the Committee and overseen by
the Board of Directors, is designed to enable
employees, customers, suppliers, managers,
or other stakeholders to raise concerns on a
confidential basis where conduct is deemed
to be in violation of our Code of Conduct or
contrary to our values.
The Committee discussed with management
the whistleblower reports received in 2023 and
the significant increase in reported cases. The
Committee made enquiries of management
in relation to the reports received on the
whistleblowing programme in order to conclude
its effectiveness during 2023. The Committee
enquired into the root causes for the increase in
reported cases, noting the significant proportion
being individual grievances by employees
against their line manager. For the cases with
broader relevance the Committee sought clarity
on the root causes, the links to Group culture
and the measures taken by management to
address the root causes.
Further explanation of the position under
Provision 24 of the UKCGC can be found
on page 110.
Activities during the year
Contact with regulators
In November 2023, Wolfgang Ruttenstorfer
attended an in-person seminar run by the
Authority of Financials Market (AFM) on Dutch
Companies’ Audit Committees to discuss two
important topics that are relevant for Audit
Committees: new regulation in the form of
the CSRD and the European Sustainability
Reporting Standards and the role of the Audit
Committee in relation to fraud risk factors.
Wolfgang provided the Committee with a
summary of key considerations discussed at
the seminar and how the Committee should
prepare to deal with these topics.
Financial reporting
Financial disclosures
The Committee reviewed the half-year and
annual financial statements and challenged
management particularly in relation to:
a) Integrity of the Group’s financial reporting
process
b) Compliance with the relevant legal and
financial reporting standards
c) Application of significant judgements
and estimates
d) Clarity of disclosures
As part of its review, the Committee received and
challenged regular updates from management
and the external auditor in relation to accounting
judgements and estimates, including those
relating to recoverability of asset carrying
values, provisions and uncertain tax treatments.
Furthermore, the Committee received an update
as to how management have complied with
the European Single Electronic Format (ESEF)
requirements in 2023.
Alternative performance measures
RHI Magnesita uses APMs to provide greater
insights into its financial and operating
results and provide readers with a more
understandable and comparable view on
underlying performance. The Committee
regularly considers the APMs used in RHI
Magnesita’s reporting, the reconciliations to
IFRS financial statements and explanations
for changes from the previous quarter. The
Committee reviews the overall presentation
of APMs with management to ensure they are
not given undue prominence in relation to IFRS
financial measures. The Committee approves
adjusting items proposed by management
including any changes to methodology.
Fair, balanced and understandable
The Group’s Annual Report should be fair,
balanced, understandable and provide the
information necessary for shareholders to assess
the Group’s position, performance, business
model and strategy. The Committee and the
Board are satisfied that the 2023 Annual Report
meets this requirement, with appropriate weight
having been applied to both positive and
negative developments throughout the year.
To arrive at this conclusion, the Committee
critically assessed drafts of the 2023 Annual
Report, including the financial statements,
and sought assurances from management
that the process undertaken was appropriate
to ensure that the relevant requirements were
met. This process included: review structural
changes to the financial statements in 2023
to make them clear, concise and focusing on
enhancing the disclosure on key accounting
judgement and estimates, verifying the
consistency of the narrative disclosures as well
as reviewing the adequacy and appropriateness
of the disclosures on the assurance received
for non-financial reporting and reviewing
the independent assurances received on the
accuracy of the information. Further actions
included comparing the contents of the 2023
Annual Report to ensure it is consistent with
the information shared with the Board and with
disclosures to shareholders during the year to
support the Committee’s assessment of the
Group’s position and performance; ensuring
that consistent materiality thresholds are
applied for favourable and unfavourable items;
and receiving assurance from management.
Compliance
Compliance programme
The Committee reviewed and challenged the
annual Compliance programme as presented
by management. The Committee sought
to ensure that the Compliance programme
remained effective and fit for purpose, as well
as challenging management to ensure that
adequate resources, capabilities and training
are applied to the Compliance Programme.
The Committee placed particular emphasis
in 2023 on challenging the integration of
acquired entities into the Group’s compliance
framework. The Committee discussed
investigations of cases involving alleged ethics
and compliance breaches. The Committee
discussed management’s findings in such cases
to satisfy itself that a rigorous process had been
followed, and that appropriate disciplinary
action had been taken where necessary and
management had embedded learnings into RHI
Magnesita’s systems and controls. Furthermore,
the Committee reviewed and approved the
anti-corruption policy and updates to the Code
of Conduct.
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GOVERNANCE Audit & Compliance
Committee report continued
Examples of how accounting judgements and estimates were considered and addressed
Significant financial judgements
and areas of estimation
How the Committee addressed these judgements and areas of estimation
Assessment of the fair
value consideration in a
business combination
The Committee was presented with management’s assessment of the fair valuation of a purchase commitment to
buy the non-controlling interest in Jinan New Emei business combination. The calculation involves estimation of the
future performance of the acquire business as well as estimating the timing when the commitment will be exercised.
The Committee enquired about and challenged management’s growth assumption rate, seeking understanding on
whether or not management applied conservatism in their estimations.
Conclusion: The Committee was satisfied with management’s estimation and concurred with the liability estimated.
Carrying value of property,
plant and equipment (PP&E)
The Committee reviewed the assessment prepared by management on certain assets. In particular, management
presented a detailed overview of the assessment in relation to the impairment and impairment reversal indicators.
Impact on inflationary
pressures on the viability
and going concern of
the Group
The Committee enquired on the judgements made and the sensitivities to the Group weighted average cost of capital.
Conclusion: The Committee concurred with management’s assessment and ensured there was an adequate
disclosure of this judgement in the Annual Report and Accounts.
The Group continues to experience inflationary pressures in supply chains and energy, exacerbated since the Ukraine/
Russia conflict. and to a lesser extent due to the Red Sea shipping lane restrictions in late 2023. A detailed cash flow
analysis was prepared by management and provided to the Committee, including a number of sensitivity scenarios.
The Committee then reviewed and challenged the assumptions and judgements in the underlying going concern and
viability statement forecast cash flows. As in prior years, management undertook a reverse stress test as part of their
analysis. The Committee discussed with management the risks, sensitivities and mitigations identified to ensure the
Company can continue as a viable, going concern.
Conclusion: The Committee concluded that the judgements and the stress-testing scenarios and assumptions are
appropriate and adequate.
Goodwill
Management provided the Committee with an update on the goodwill impairment review that it is performed annually.
Management makes use of various estimates and assumptions in determining the cash flow forecasts used in the
impairment testing for goodwill, including terminal value, inflation, and discount rates.
In addition, management provided detailed assessment of the negative goodwill recognised as part of the P-D
Refractories acquisition and the impairment assessment of the assets, including the rationale for the transaction,
judgements and estimates taken in relation to the fair value reassessment of the initial book value of the assets acquired
to arrive to the negative goodwill calculation. The Committee critically assessed the calculation and challenged the
inputs used by management.
Conclusion: The Committee concurred with management’s assessment and ensured there was an adequate
disclosure of this judgement in the Annual Report and Accounts.
Customer relationships
Management identifies and recognises customer relationships as part of the business combinations. The estimation
and measurement of these intangible assets involves judgement which usually involves assessing the historical sales
and the attrition of these customers over a period of time.
The impact of climate
change on the Group’s
financial reporting and
financial statements
Conclusion: The Committee challenged the rationale for the different periods of amortisation of the customer
relationship and agreed with the conclusions reached by management.
The Committee was briefed on key regulatory requirements including the FRC and EU disclosure requirements and
their implications for RHI Magnesita’s external disclosures.
The Committee reviewed the new Note 4 of the financial statements summarising the key climate risks impacts on
the Financial Statements as well as the new impairment sensitivity disclosures using carbon price outlooks based
on different external climate change scenarios.
The Committee challenged PwC as to whether the impact of climate change has been a key audit matter for their
audit. PwC continues to disclose in their audit opinion the extent of the procedures carried out in relation to climate
change, and they have incorporated the climate change risks and considerations for the valuation of Goodwill and
Intangible Assets in their key audit matter.
Conclusion: The Committee, recognising the evolving nature of climate change risks and responses, concluded
that climate change has been appropriately considered by management and agreed with the disclosure made
by management. The relevant disclosures are set out in Note 4 of the financial statements.
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Risk management
How risk management was assessed
The Internal Audit, Risk & Compliance team
provides key assurance to the Committee on
the Group’s governance, risk management
and internal control. Throughout the year,
the Committee discussed the reports on risk
management and challenged management on
whether risks had been sufficiently considered
and reflected. Management took onboard
the comments and adjusted assessments
as necessary.
The Committee also received reports with an
overview of the effectiveness of the programme
to manage ethics and compliance risks in
the Group’s business activities, regulatory
developments, and compliance activities. The
Committee also discussed investigations of
cases where ethics and compliance concerns
were highlighted. The Committee discussed
management’s findings in such cases to satisfy
itself that a rigorous process had been followed,
that appropriate disciplinary action had been
taken, where necessary, and management
had embedded learnings into RHI Magnesita’s
systems and controls.
Internal control
In order to monitor the effectiveness of the
procedures for internal control over financial
reporting, compliance and operational matters,
the Committee reviews reports on risks and
controls, including the annual assessment of
the system of risk management and internal
control. This annual assessment includes
the Committee’s review of outcomes from
the Group management representation
letter process. The Group management
representation letter process involves each
EMT member and Regional President and
their direct reports conducting a structured
internal assessment of compliance with internal
controls, legal and ethical requirements.
The Committee discussed a number of areas
where further strengthening of internal control
can be achieved. These are noted on pages 48
and 49 of the Annual Report.
Internal audit
Reviewing the results of Internal Audit
work and the 2024 plan
The Committee reviewed the effectiveness
and resources of the Internal Audit department
and concluded that the Internal Audit function
is effective and has adequate resources.
The Committee gave particular focus to the
assessment of the independence of Internal
Audit within the combined departmental model
of Internal Audit, Risk & Compliance. The
Committee recognised the range of findings
from Internal Audit work which demonstrated the
required level of Internal Audit independence
and the overall high quality of the audit work
performed. The Committee satisfied itself that
the 2023 internal audit plan was on track and
discussed areas where control improvement
opportunities were identified, particularly
enquiring into the root causes and the embedding
of internal control improvements. The Committee
also reviewed progress in completion of agreed
management actions.
In April 2023, the role of the Chief Audit
Executive passed back to the previous
incumbent, having been outsourced to EY
for 15 months. The Committee reviewed the
effectiveness of this transition and handover
and concluded it to be effective.
The Committee reviewed the proposed 2024
Internal Audit plan. The Committee raised
a series of challenges to the plan, focusing
on any impact to Internal Audit quality and
independence and, after receiving appropriate
assurances and supplementary information, the
Committee approved the proposed approach.
The Committee approved the 2024 Internal
Audit plan, having discussed the scope of work
and its relationship to the Group’s risks.
External audit
PricewaterhouseCoopers Accountants N.V.
(PwC) have been the External Auditor since
2017 when RHI Magnesita N.V was incorporated
in the Netherlands following the merger. Prior to
the merger, in 2016, PricewaterhouseCoopers
Österreich were appointed auditors following a
competitive tender process.
How the Committee assessed audit risk
and audit effectiveness
PricewaterhouseCoopers Accountants N.V.
(PwC) set out its audit plan for 2023, identifying
significant audit risks to be addressed during the
course of the audit. These included:
•
•
•
•
•
significant assumptions used to estimate the
impairment of goodwill are not reasonable;
assumptions used to estimate the fair value
of consideration transferred in a business
combination are not appropriate/reasonable;
significant assumptions used in the valuation
of tax contingencies in various jurisdictions
are not reasonable;
management override of controls; and
fraud in revenue recognition.
The Committee reviewed and discussed the
external audit plan and evaluated whether
the planned materiality levels and proposed
resources to execute the audit plan were
consistent with the scope of the audit. The
Committee received updates throughout the
year on the audit process, including how the
external auditor had challenged the Group’s
assumptions on the significant audit risks.
As part of its oversight of the external auditor,
the Committee annually assesses the
performance and effectiveness of the external
auditor and the audit process. This includes
assessing the fulfilment of the agreed audit plan
and variations from it, how the auditor handled
key judgements, and the auditor’s response
to the Committee questions. The external
auditor was asked to explain the risks present
to audit quality and how they took action to
mitigate these risks. Risk to audit quality, such
as audit quality governance in PwC, audit team
resourcing, continuity and coaching were
disccused and explained.
In 2023, given the increased M&A activity,
the Committee directed the external auditor
to enhance their testing on the purchase price
allocations (PPAs) performed by management
given the number of PPAs performed during the
year and the judgments and estimation involved
in the calculation. You can refer to pages 251
to 259 for the audit procedures PwC have
performed to audit the PPAs.
After each year end, colleagues having contact
with the auditor are asked to give feedback on
the audit process. This helps to improve the
effectiveness of both management and the
external auditor. The Committee receives a
summary of suggested areas for improvement
to financial reporting processes or internal
controls, management’s response to those
recommendations and progress made against
prior year recommendations.
In the course of the Committee meetings
throughout the year, the Committee is able to
observe relationships between management
and the external auditor and can gain a sense
of the working environment and culture of
the teams. The Committee considers the
approach and mind-set of the external audit
team through observing how they challenge
aspects of the Group’s internal controls, and
how they respond to queries and feedback from
the Committee, Directors and management
themselves. The Committee also considers, as
part of its review of the management letter, and
the discussions both in meetings and around
topics outside of formal meeting engagement,
the depth of knowledge of the external auditors
and their understanding of the business of
RHI Magnesita, as well as the read across and
broader knowledge they can bring from their
depth and breadth of experience with industrial
manufacturing companies.
The Committee observed challenge by
the external auditor of management on
matters relating to tax, shared service centre
processes, segregation of duties, goodwill
and whistleblowing cases. In each case the
challenge was considered, and a resolution on
the approach was found which, the Committee
feels, improved the standard of reporting to
the Company’s stakeholders and will be taken
forward to improve management’s processes.
The actions suggested by the external auditor
are tracked by the Internal Audit function and
progressed with encouragement from the EMT.
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Committee report continued
How the Committee assessed
the audit fees
The Committee reviews the fee structure,
resourcing, and terms of engagement for the
external auditor once a year; in addition, it
reviews the non-audit services that the auditor
provides to the Group half-yearly. As part of
this review, the Committee considers the
size of the Group, the number and location
of subsidiaries, the complexity of the
businesses being audited with respect to
products, customers and regulation, and their
own experience of auditor fees at different
companies where they are appointed.
How the auditor independence
and objectivity were assessed
The Committee considers the reappointment
of the external auditor each year before
making any recommendation to the Board.
The Committee assesses the independence
and objectivity of the external auditor on an
ongoing basis, taking into account various
aspects such as the assurances provided by
the external auditor and the level of non-audit
fees, input from the management on their
perception of the working relationship, private
meetings with the external auditor, as well as
regular check ins between the Chairman of
the Committee and the lead audit partner.
Furthermore, the external auditor is required to
rotate the lead partner every five years and other
senior staff every five to seven years. The lead
partner, Antoine Westerman, was appointed to
the audit in 2022.
The Committee reviews, annually, updates to
the Company’s auditor independence policy
in respect of the provision of services by the
external auditor for necessary changes in
response to changes in related standards and
regulatory requirements. A report is provided
annually to give an overview of compliance
with this policy.
During 2023, non-audit work mainly related to
the interim review of the Consolidated Financial
Statements at 30 June 2023 amounting to
€0.5 million (2022: €0.2 million).
Recommendation to reappoint
In consideration of all the above, the Committee
agreed to recommend the reappointment of the
external auditor to the Board for inclusion as an
item at the 2024 AGM. Mandatory firm rotation
is expected after 2026 and management will
run a tender process with sufficient time to
ensure an orderly transition.
Other matters:
Regulatory developments
The Committee received updates throughout
the year on the DCGC and developments in
the UK regulatory environment.
The Committee revised its terms of reference to
ensure the Company met the standards required
by the DCGC. It also anticipated the changes
in the UK governance sphere by making the
scope of the Committee more explicit with
respect to non-financial data and outlined
the interaction with the CSC. Management
updated the Committee on the progress and
timeline to address the expected internal
control requirements in the UK. The Committee
reviewed its remit and operation for consistency
with the guidance published by the FRC
“Minimum Standards for Audit Committees”.
The Committee also considered the FRC’s Audit
Committee Standard Consultation relating to
the external audit, published on 8 November
2022, and provided a response. The Committee
has considered and incorporated its application
to the scope and work of the Committee
accordingly. The Committee is aware of
and reviewing the updated UK Corporate
Governance Code 2024.
Disclosure Committee
The Disclosure Committee, chaired by
the CFO, ensures compliance with the EU
Market Abuse Regime. It shares the minutes
and matters considered with the Committee
on an ongoing basis to provide transparency
of matters considered by the management
to keep the Company compliant with its
disclosure requirements.
Committee effectiveness
As part of the overall Board effectiveness review
of 2022, it was noted that the Committee
performed strongly, through substantial
discussions, debates and challenges. It had
worked well and effectively, supporting the
Board in its oversight with a focused remit.
As outlined on page 135, the 2023 review is
ongoing at the time of publication of this report
and will be reported on in full next year.
Integration in India
During the year management integrated two
new businesses in India into the Group, which
doubled the number of employees in the
region. The Committee sought understanding
of the integration activities, the timing and the
challenges faced by management and sought
assurances on the management of the risks
regarding associated with data transfer, ERP
integration and plans to transition to the
shared service organisations of certain activities.
They received reports from regional and
specialist colleagues on the IT and Finance
systems integration, as well as the wider
cultural integration.
Tax
Management provided the Committee with a
general update of the tax position of the group
and more specifically on (i) the impact of, and
the steps management is implementing to
comply with the OECD ‘Pillar 2’ regulations that
are applicable as of 2024, and (ii) the status of
the discussions with the Brazilian tax authorities
to obtain certain tax benefits.
Information security risks
The Committee continued to focus on
information security risks, particularly as
specified in the DCGC. Cyber and information
security risk is included as one of the Group’s
principal risks on pages 52 to 57. Multiple
presentations were given to inform the
Committee of the emerging risks and outline
the internal controls. The Committee gave
specific attention to the overview and changes
in the security controls. The Committee was
also informed of the first Cyber Crisis Exercise
performed by the EMT during the year, as
well as the activities conducted as part of the
Cybersecurity month to increase awareness of
the topic amongst the employees.
Treasury
The Committee was presented with an
overview of the Group’s capital structure and
liquidity planning, as well as the Group’s risk
management and hedging strategies for interest
rates, foreign exchange, and commodities
exposures. The Committee reviewed the results
and the proposed strategies and agreed that the
current Treasury Policy remains appropriate and
with suitable delegation of authority levels. The
Committee noted that there are some areas that
have experienced volatile currencies, such as
Argentina, and asked management to provide a
report on the status and the mitigating actions
implemented to address such volatility.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Site visit during the year
Joint Committee meetings
In April 2023, the Directors of the Board
conducted a week-long visit to sites in the USA,
and a Committee meeting took place in the
course of the trip. Key areas of discussion during
the site visit included regional P&L oversight,
revenue ambitions for North America region, the
structure of the regional finance team and the
initiatives they were focusing on such as pricing,
margin and cost management. The Committee
benefitted from meeting the Regional President,
the Regional CFO and key members of their
team, as well as stakeholders from the wider
employee population and customers of the
Group. More details on the Board site visit are
provided on page 113.
As in prior years, the Committee joined with
the CSC to consider matters of mutual interest
(the “Joint Committee”). The Joint Committee
was provided with an update on the Internal
Audit report on sustainability key measures,
the ESG regulatory update covering the
key requirements of the CSRD, the new EU
Taxonomy requirements and the potential UK
Corporate Governance regime requirements in
relation to internal controls over non-financial
information and assurance.
The Joint Committee was also updated on the
status and actions of the areas covered by the
AFM in a letter received during the year. In the
letter the AFM summarised their review of 27
listed companies to assess compliance with
the CSRD.
Finally, the Joint Committee approved
management’s recommendation to appoint
Deloitte Austria to perform the limited assurance
review of the Group’s non-financial data in 2023.
Non-financial reporting
The Committee started developing process
and understanding the impact of non-financial
reporting disclosures in the Annual Report and
Accounts. For the sustainability disclosures, the
Committee received support from the CSC on
the adequacy of these, as well as the external
assurance received from Deloitte Austria.
John Ramsay
Chairman, Audit & Compliance Committee
The primary role of the Committee is to assist the Board
in fulfilling its oversight responsibilities in relation to the
Group’s audit, the effectiveness of the risk management
processes and system of internal control, the integrity of the
financial reporting as well as consideration of compliance
and ethics matters.”
John Ramsay
Chairman of the Committee
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
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GOVERNANCE Remuneration Committee report
Current Committee membership
and operation
Janet Ashdown is the Chairman of the
Committee. Jann Brown and Karl Sevelda
are the members of the Committee. All
Committee members are Independent NEDs
within the meaning of the UK and Dutch
Corporate Governance Codes. The Company
Secretary is the secretary to the Committee.
Other individuals, such as the Chairman of
the Board, the CEO, the CFO, the EVP People,
Projects, Global Supply Chain and IMO (who is
responsible for Human Resources), and external
professional advisers may be invited to attend
for all or part of any meeting as and when
appropriate and necessary, whilst ensuring no
individual is involved in discussions regarding
their own remuneration. The Committee meets
at least three times a year and at such other
times as the Chairman of the Committee shall
require or as the Board may direct.
Committee purpose, roles
and responsibilities
The Committee’s purpose is to develop a reward
package for Executive Directors and senior
managers that supports the delivery of our
vision and strategy as a Group, and to ensure
the rewards are performance based, encourage
long-term shareholder value creation, and
take account of the remuneration of the whole
workforce. In addition, the Committee also
reviews and sets the fee for the Chairman of
the Board. Please click here to see the Terms
of Reference.
Activities in 2023
The Committee met six times in 2023 and its
activities included:
Janet Ashdown
Chairman of the Committee
Our remuneration is
designed to reward
performance in line with
the delivery of RHI
Magnesita’s strategy,
making sure that business
performance is translated
into the remuneration of
our Executive Directors”.
Committee members and
meeting attendance
Member
in 2023 Member since
Attendance
• Committee effectiveness review and actions
agreed.
Janet Ashdown
(Chairman)
Karl Sevelda
Jann Brown
6/6
6/6
6/6
October
2020
October
2017
December
2022
• Reviewing and revising our Remuneration
Policy for 2024-27, including consulting
with our shareholders about our proposals.
• Considering the outturn of incentives
being the 2022 and 2023 bonus and the
performance against targets of in-flight
Long Term Incentive Plan (LTIPs).
• Reviewing and determining the 2023
bonus and LTIP performance conditions
and targets.
• Reviewing the remuneration of the
Executive Directors, Executive Management
Team (EMT), and senior management
within the context of wider global
workforce remuneration.
• Reviewing the fee for the Chairman
of the Board.
• Overview of the incentivisation and
remuneration of the Group’s wider
workforce to ensure that it aligns with
Company culture.
• Review of the performance of remuneration
advisors and their scope of services.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Dear Shareholders
On behalf of the Board, I present our 2023
Directors’ Remuneration Report. This report
includes my letter to the shareholders, our
Directors’ Remuneration Policy and our Annual
Report on Remuneration for the year ending
31 December 2023.
RHI Magnesita is incorporated and registered
in the Netherlands, making it subject to Dutch
corporate law. It has its primary listing on the
London Stock Exchange and a secondary
listing on the Vienna Stock Exchange. We
have compliance obligations across our three
main corporate regulatory geographies, UK,
Netherlands and Austria. You can read more
about our Corporate Governance compliance
with the UK and Dutch corporate governance
codes on page 109. Our Remuneration Report
is therefore presented on this basis and,
recognising transparency of reporting, includes
certain voluntary disclosures for example, those
that apply to UK incorporated companies and
which are followed by RHI Magnesita, where
practicable, to align to market practice. This
letter on pages 146 to 149, the summary on page
150 and the Annual Report on Remuneration on
pages 161 to 171 will be presented for approval
by an advisory vote at our May 2024 AGM and
our Directors’ Remuneration Policy on pages
151 to 160 will be presented for approval by a
binding vote.
RHI Magnesita’s performance
during 2023
RHI Magnesita showed operational and financial
strength to deliver a strong and robust business
performance, along with strategic progress,
despite the difficult conditions in our key end
markets which has included the impact of rising
costs and more general inflationary pressures.
The Group has benefited from the strategic
investments made to reduce the cost base and
cost of manufacturing, together with improved
planning and careful management of Group
assets through this period of weaker demand.
RHI Magnesita has made excellent progress
on its M&A strategy, with six acquisitions
completed during the year.
The Group recorded an Adjusted EBITDA
of €543 million, revenues of €3,572 million
(an 8% increase) and Adjusted operating
cashflows of €413 million (a 167% increase). It
has been within this context that the Committee
has considered the outcome under the
incentive schemes and overall remuneration
for 2023. The outlook for 2024 to 2026 has
been considered in detail when setting the
performance conditions and targets for 2024
bonus and LTIP awards.
Executive Directors’ remuneration 2023
Set out below is an overview of remuneration for
2023 with further details available in the Annual
Report on Remuneration.
Salary and benefits
Long-Term Incentive Plan (LTIP)
Executive Director salaries were increased by
4% from January 2023, significantly below
the year on year ( YoY) increase for the wider
Austrian workforce of 8.9%.
Annual bonus plan
Our Executive Directors’ maximum annual
bonus opportunity remained at 150% of salary
with performance assessed against Adjusted
EBITA (45%), inventory coverage (25%)
and strategic deliverables (30%). As noted
above, the EMT delivered strong and robust
performance in challenging market conditions
against all of the bonus metrics. Our EBITA
performance was robust, particularly given
the market challenges in the year. Inventory
coverage was a significant area of focus for us
during 2023, with excellent progress being
made on inventory management and a good
discipline now embedded in the business.
Exceptional progress was also made against
our strategic objectives; the Committee noted
another year of improvement against our use
of secondary raw materials targets, delivering
significantly over the maximum target. Last
year we introduced PIFOT and EBITDA on
M&A as strategic metrics for the business and,
in a similar way to inventory management,
the introduction of these metrics has worked
effectively to embed focus and discipline within
the entire business on these critical areas and
deliver healthy performance (see pages 22
to 36). This strong and robust performance
across the business is evidenced in performance
against the specific metrics of the annual bonus
which result in formulaic bonus outcome of
100% of the maximum bonus opportunity.
Further details of our performance against the
2023 targets can be found on page 164.
The Committee reviewed the formulaic
outcome of the annual bonus and noted the
strong performance achieved during the year
despite the challenging economic environment.
As referred to earlier in this Annual Report
there have been two recent fatalities in the
business, one in 2023 and one in early 2024.
The Committee and management have been
greatly saddened by these events. At the time
of publication, the investigation and follow up
actions of the latter incident are still ongoing,
and the Committee will consider it as part of
the 2024 remuneration outcomes. For 2023,
the Committee considered very carefully the
circumstances and findings of the resulting
Health & Safety review. While the business was
not found to be at fault, the EMT, in consultation
with the Board of Directors, has established a
Health & Safety fund which will be available
to support individuals and families affected by
health & safety incidents. The Committee and
the EMT have agreed that 5% of the formulaic
bonus outcome for 2023 will be contributed
to this fund. The Non-Executive Directors will
be contributing a similar percentage from their
2024 fee and employees will also be able to
voluntarily donate to the fund. Contributions
will be matched by the Company.
The 2020 LTIP Award vested on 5 May 2023
with performance assessed against earnings per
share (EPS) (50%) and total shareholder return
(TSR) (50%). The EPS targets were assessed
against performance to 31 December 2022 and
there was maximum vesting under this element.
The TSR performance period for the award
was three years ending on 7 April 2023 and as
a result the 2022 Remuneration Report only
provided indicative vesting. The TSR element
was tested shortly following the end of the
performance period with zero vesting of this
element and overall vesting was confirmed at
50% of the total award.
The award was granted in April 2020, when
the share price was £19.98 with a vesting
share price of £22.88 and the Committee is
comfortable that the share price on vesting does
not represent a “wind fall” or that there are any
circumstances that result in the Committee
needing to exercise any discretion to reduce
the overall formulaic vesting outcome.
The 2021 LTIP Award will vest to the extent
that the EPS (50%), TSR (25%) and use of
Secondary raw material targets (SRM) (25%)
are met. The EPS and use of SRM targets were
assessed against performance to 31 December
2023 and, as there is an indicative TSR vesting
level of zero (with a performance period
ending in mid-March 2024), it is anticipated
this award will vest at 62% of maximum.
The Committee has reviewed the indicative
formulaic vesting outcome, considering both
business performance and the potential for
any windfall gains. The award was granted at a
share price of £41.38 which is above the share
price of £34.62 on 7 February 2024 when the
Committee considered the outcome. As a
result, the Committee is comfortable there is no
windfall gain arising. While the share price has
fallen over the vesting period, the Committee is
comfortable overall with the formulaic vesting
of the award, noting that the TSR element of the
award is not expected to vest, that the value of
the vested award reflects the lower share price,
that there is volatility in the share price more
generally reflecting external market factors,
and that the Executive Directors are required to
retain the vested shares for a further two year
period aligning to longer term shareholder
interests. The actual TSR and vesting level
will be provided in the 2024 Directors’
Remuneration Report.
More details are available on pages 164 to 166.
The Committee is comfortable that the Policy
operated as intended during the year and
that there were no deviations from the Policy
or decision making process required for any
exceptional circumstances.
Our Remuneration Policy for 2024-27
The current Directors’ Remuneration Policy was
approved by shareholders at the 2021 AGM
and in line with UK regulation, which we follow
as a matter of best practice, the revised policy
will be put to shareholders for approval again at
the 2024 AGM. The Committee has spent time
carefully reviewing the Policy and concluded
that it has worked well and that only very limited
changes are required. These are to remove the
requirement to use TSR as a performance metric
in our LTIP, to provide the ability to use upward
discretion in addition to downward, as currently
provided for, and to update our approach to
post-employment shareholding requirements.
Further detail of these changes are set out below.
LTIP performance measures
TSR has been removed as a required
performance condition for LTIP awards to
give the Committee the flexibility to select
performance measures for the LTIP awards
that provide the greatest alignment to business
strategy. The proposed performance measures
for the 2024 LTIP Award, are set out on page 171.
Discretion
Under the current Policy, the Committee may
only use their discretion to scale back the
formulaic outcome of the annual bonus and
LTIP awards. The amended Policy provides the
ability to exercise both upward and downward
discretion in line with market practice. The
Committee understands that some investors
have concerns about the exercise of discretion
but believes it is fair and equitable for the
Policy to permit both upward and downward
discretion. Where any discretion is exercised
the Committee would provide an explanation of
the reasoning in the following Annual Report.
Post-employment shareholding
requirement
Currently the Policy is limited to requiring the
continuation of holding periods post cessation
of employment in respect of bonus shares
acquired with 2021 bonus and LTIP awards
granted in 2021 and future years.
The new Policy will require Executive Directors
to hold the lower of, the shares they actually
hold on ceasing to be an Executive Director
or shares equivalent to 100% of salary for one
year, following the cessation of their position.
It is noted that our Policy is less than the UK
Investment Association’s preferred Policy for
the in-service shareholding requirement to
be maintained for two years post cessation.
However, the Committee is comfortable that
the Executive Directors, with this new Policy,
have good alignment, post-employment, with
the longer-term performance of the Company
and shareholder interests, noting that holding
periods for bonus shares and vested LTIP awards
will continue post-employment and that there
will be, in addition, in-flight unvested LTIP
awards for good leavers.
The Committee reviewed the annual bonus
deferral as a part of the Policy review process.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
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GOVERNANCE Remuneration Committee report continued
The Committee is comfortable that the current
arrangements, when taken with the current
shareholdings of the Executive Directors, post-
vesting holding requirements, and in-flight
LTIP awards, provide sufficient alignment to
shareholder interests and the ability to operate
clawback and malus. The Committee will, of
course, keep this matter under review but note
in addition that the Executive Directors meet
their in service shareholding requirement.
There are a small number of other
“housekeeping” changes which are
summarised on pages 151 to 152 of the Directors’
Remuneration Policy section of this report.
LTIPs
How our remuneration practices support our strategy
Element of reward
Bonus
Metrics
Profit
Strategic Pillar-
Market Leadership
Strategic Pillar-
Enhance Business
Model
Strategic Pillar-
Execute Cost
Reductions
Free Cash Flow
Use of Secondary
Raw Materials
Strategic initiatives
Earnings Per Share
Total Shareholder Return
Economic Profit
ROIC
Use of Secondary
Raw Materials
Reduction of
CO2 emissions
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Implementation of the Remuneration
Policy for 2024
Base salaries
The base salaries of the CEO and CFO have
been increased by 6% with effect from
1 January 2024 compared to average
employee increase in Austria of 7.0%.
Annual bonus
With the removal of TSR from the LTIP
(see below), the Committee has taken the
opportunity to review both LTIP and Annual
Bonus metrics to ensure that there is strong
alignment between business strategy and
shareholder interests.
The maximum bonus opportunity for 2024 is
unchanged at 150% of salary for Executive
Directors. In line with the approach in 2023,
the bonus will continue to be based on adjusted
EBITA (45%) and strategic objectives (30%).
Following the above-mentioned review, the
Committee will add operating cash flow (“OCF”)
(25%) for the bonus.
Under the 2023 Annual Bonus, management
have been incentivised to deliver on inventory
coverage targets and performance in the year
has shown considerable progress on inventory
management. Given the focus and discipline
now embedded in the business on inventory
management, the Committee is returning
to the broader measure of cash generation
with OCF instead of inventory coverage.
The Committee believes that this ensures
management are incentivised to deliver cash
flows to support the longer-term growth
in value of the business, thereby providing
alignment to shareholder interests.
The strategic element of the Annual Bonus
continues to be focused on PIFOT and use of
Secondary Raw Material, with the remaining
10% based on performance against key
strategic initiatives for the year. These are
already tracked from year to year with 2024
being the first year they are incorporated into
our Annual Bonus.
2024 LTIP
The CEO and CFO’s LTIP awards for 2024
remain unchanged at 200% and 150% of
salary, respectively.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
As a part of the Policy review process conducted
during the year, the Committee reviewed the
performance measures for the LTIP to ensure
that they align with RHI Magnesita’s long-term
strategy. The Committee concluded that the
EPS (50%) and carbon emissions reduction
(25%) targets remain appropriate but that the
TSR element should be replaced with Return on
Invested Capital (ROIC) (25%). The Committee
believes that the proposed change to focus on
ROIC as a key performance metric more closely
aligns new LTIP awards with RHI Magnesita’s
overall strategy execution. Management are
committed to delivering shareholder value and
a key mechanism through which this can be
achieved over the long term is to consistently
generate increased levels of ROIC. The
Committee has thought very carefully about
the removal of TSR and is comfortable that
the Executive Directors remain significantly
aligned to shareholder interests through their
in-flight LTIP awards, bonus deferral and their
personal shareholdings. ROIC is a critical
measure for the business that will deliver
shareholder returns and provides a clearer
line of sight for the LTIP participants than the
current TSR measure. In addition, investors
should note that the Committee has the
discretion to adjust the formulaic outcome of
incentives and that, as part of its considerations,
in determining whether it should exercise
discretion, the Committee will have regard,
among other matters, to the Group’s TSR over
the performance period.
The performance targets for the LTIP awards are
set out on page 171.
When setting the 2024 LTIP performance
targets, the Committee noted the following
status of each of the performance conditions.
Our CO2 reduction targets at -15.2%, -
15.5%, - 15.8% against a 2018 baseline
require significant improvement on our 2023
performance of -12%, particularly when
considering the challenges in integrating
M&A. Our EPS targets require significant
improvement at all levels of vesting on the
targets set for the 2023 LTIP awards and require
strong improvement in the macro environment
and business performance by 2026. ROIC
targets are based on the average ROIC for the
last two years of the three-year performance
period (being 2025 and 2026). This ensures
management focus on returns for the first full
year of all invested capital from M&A as well
as the final year of our performance period.
The target range of 10.2% for 25% threshold
vesting, 10.9% for 75% vesting and 12% for
maximum vesting requires significant stretch
for maximum vesting. Although the threshold
vesting point is marginally less than our 2023
ROIC of 10.7%, it requires significant business
performance, taking into account the recovery
needed through 2024 to manage lower raw
material prices and considering the projected
growth rates in many of our markets for 2024.
You can read more on the Company’s outlook
on page 40. The Committee is committed to
ensuring progressive ROIC growth rates are set
for future LTIP awards.
Performance metrics measurements
An explanation of the approach to measuring
the metrics for the Annual Bonus and LTIP
awards, or references to definitions elsewhere
in this Annual Report, are given below:
• Adjusted EBITA – see page 38.
• Adjusted operating cash flow – Adjusted
operating cash flow is calculated by taking
adjusted EBITDA plus changes in working
capital and in other assets/liabilities minus
capex spend.
• Use of Secondary Raw Material – see
page 28.
• Strategic initiatives – various initiatives,
some details of which are provided
over pages 1 to 25. These cover
digitalisation, operational improvement,
and complexity reduction.
• Adjusted EPS – see page 29.
These include townhalls, webcasts and direct
engagement through Directors’ site visits, where
possible. In 2023, the Board visited several
plants and offices in the US in April 2023,
where they took the opportunity to engage with
employees across the Company on a number
of topics relevant to our strategy and business
operations. You can read more about this on
page 109. Jann Brown and I were also delighted
to play a part in the launch of RHI Magnesita’s
global mentoring programme. We will, together
with Marie-Hélène Ametsreiter, be mentors in
this initiative, which focuses for the year 2024
on developing young female talent.
Our conversations with our
shareholders
Ahead of the 2024 AGM, I engaged with our
largest shareholders as well as Institutional
Shareholder Services, UK IA and Glass Lewis,
to understand their views on our proposed new
Policy and implementation in FY 2024. Based
on the feedback received shareholders were
supportive overall of the changes proposed and
I am grateful for their engagement.
As outlined in the Corporate Governance report
on page 151, we are reporting partial compliance
with Provisions 40 and 41 of the UK Corporate
Governance Code on Remuneration. We
explain our partial compliance in the Corporate
Governance report and will continue to keep
our practices under review in respect of these
provisions. Shareholders will note we have
addressed compliance with Provision 36 as part
of our Policy review and the introduction of a
post-employment shareholding Policy.
We hope you find this report informative. We
maintain an open dialogue on remuneration
matters and welcome any comments and
feedback. At the 2024 AGM, shareholders will
be asked to vote on the Directors’ Remuneration
Report (excluding our new Policy) and our new
Remuneration Policy. I hope that the Committee
will have your support.
Janet Ashdown
Chairman, Remuneration Committee
• TSR – a measure of share price appreciation
plus dividends. This is calculated by the
change in the Net Return Index for a
company (as calculated by reference to
Datastream or such other independent
financial information provider) expressed
as a percentage over the Performance
Period calculated by reference to an agreed
formula based on a two month average at the
commencement and end of the three year
performance period.
• ROIC – see page 29. For the LTIP 2024
performance condition, as outlined above,
this will be taken as an average of 2025
and 2026.
• Reduction of CO2 emissions – see page 28.
• PIFOT – a measure which checks the
delivery against customer promise and
internal process adherence. It measures two
dimensions in one metric i.e., shipping as
per our ex-work date on-time and in full and
execution of the customer order fulfilment
process as per the process against a
customer sales order line). It is calculated as
(Number of sales order lines with deliveries
issued in full or before confirmed customer
ex-work date) ÷ (Total sales order lines), as
well as the use of Secondary Raw Materials
and reducing conversion costs.
NED fees for 2024
As outlined in the Nomination & Governance
Committee report (page 134), during the year
there was an in-depth review of the time
required of the Non-Executive Directors and
scope of roles. This review was carried out by
the Remuneration Committee in respect of the
fee for the Chairman of the Board and by the
Chairman of the Board in respect of the fees
for the other Non-Executive Directors, with
recommendations made to the Board in respect
of the fees to be applied from 1 January 2024.
As Chairman of the Remuneration Committee,
I have set out below the process followed in
respect of the review of the fee for the Chairman
of the Board. For completeness, the proposed
increase in NED fees is included in the Directors’
Remuneration Report given it is part of the
operation of Policy. You can find the details
of the time and scope of role review in the
Nomination & Governance Committee report
which informed the Chairman of the Board’s
decision. Although this is not a matter for the
Remuneration Committee, the Remuneration
Report sets out the remuneration for all Directors
and it is therefore appropriate for the Non-
Executive Director fees to be referenced here.
The aim of the in-depth review of the fee for
the Chairman of the Board was to ensure that
the fee level is appropriate and reflective of
the skills and experience required for the role,
as well as to account for the complexity of the
business and the time required to effectively
carry out the responsibilities of the role. The
Committee additionally took into consideration
the substantial growth, expansion and
complexity of the business since its admission
to the London Stock Exchange in 2017, followed
by the admission to the Vienna Stock Exchange
in 2019 and the growing corporate governance
and legal requirements in the wider governance
landscape across these jurisdictions. The
operational footprint and complexity of RHI
Magnesita has increased through a substantial
M&A programme and additional time was
required to support shareholders in their
assessment of the Partial Offer by Rhône Capital
and now to engage with Rhône Capital as a
new significant shareholder. This has led to a
significant increase of time required from both
the Chairman and Deputy Chairman.
The first increase to the Chairman fee since
listing in 2017, was made in 2020 and increases
have been aligned to, or have been less than,
the increases in the remuneration of the wider
workforce. This has not reflected the significantly
increased time commitment and complexity of
the role, or the skills and experience required for
the role.
The Committee considered a wider
understanding in the market generally
(as acknowledged by the UK Investment
Association (UK IA) in its Principles of
Remuneration) that the role of Non-Executive
Directors has become more complex in recent
years with the UK IA supporting increased NED
fees that reflect the increased time commitment
and complexity of their roles, so long as such
fees are properly explained.
The Committee has also been keen to ensure
that the fee level remains competitive within
the broader market, noting that RHI Magnesita
is a Dutch incorporated company, listed in the
UK and Austria, with a global footprint and
significant operations in the United States, as
well as Asia, India, and South America, and the
importance of being able to recruit and retain
Non-Executive Directors, noting the fee levels
paid across all relevant markets.
As a result of the Committee’s review, the Non-
Executive Directors resolved that the fee for the
Chairman of the Board should be increased from
£261,700 to £325,000 p.a. As a Committee
we feel that this c. 25% increase is appropriate,
taking into account all of the factors noted above
for the role of the Chairman of the Board.
The Chairman of the Board has carried out
a similar review of other Non-Executive
fees and the increased fee levels resulting
from that review are set out in the Annual
Report of Remuneration in the section on
the implementation of Policy for 2024. As in
previous years, all of these fees will be put to
shareholders for their vote in the 2024 AGM.
Engagement with the workforce
The Board keeps up to date with the current
views of our workforce through a combination
of engagement methods across multiple
channels at different levels of our organisation.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
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GOVERNANCE Remuneration Committee report continued
At a glance: Operation of Remuneration Policy for the financial year ending 31 December 2023
Policy element
Annual Base salary from 1 January 2023
% Increase from prior year
Retirement allowance
Annual bonus
Annual bonus metrics
Implementation
CEO – €1,142,700
CFO – €668,000
4%1
Allowance of 15% of base salary
Up to 150% of base salary
Adjusted EBITA (45%), inventory coverage (25%) and strategic deliverables (30%). The strategic
element was equally weighted on PIFOT improvement, Adjusted M&A EBITDA on signed transactions,
and the Use of SRM.
Amount paid for threshold performance
25% of maximum annual bonus
Amount paid for target performance
50% of maximum annual bonus
Actual bonus result for 2023 performance
95% of maximum (€1,628,3483 for the CEO and €951,9003 for the CFO).
Payment of bonus in shares
50% of annual bonus in excess of target after tax is used by the Executive Directors to acquire shares
that are held for a minimum of three years.
LTIP award
LTIP metrics
Payment for threshold performance
2021 LTIP vesting
CEO – 200% of salary
CFO – 150% of salary
50% of the award: Adjusted EPS (cumulative for the three-year performance period)
25% of the award: Absolute TSR
25% of the award: Reduce CO2 emissions per tonne
25%
62% of maximum vesting2
Performance and post vesting holding periods
3 years and 2 years respectively
Malus and clawback
Dividends on vested awards
Shareholding requirement
Shareholding as % of salary at 2023 year-end
Malus applies to the period prior to vesting for LTIP awards and payment of the annual bonus. Clawback
applies to cash bonus and LTIP awards for a period of three years following the date of vesting and three
years following any cash payment.
Participants are eligible for dividend equivalents on performance shares awarded under the LTIP.
200% of base salary to be met within five years
CEO – 259%
CFO – 242%
1. Salary increases are 4% rounded down to the nearest 100.
2. The performance period for the TSR element of the award was not complete at the time of writing and so the level of vesting provided is estimated. The actual vesting level will be provided in the
2024 Directors’ Remuneration Report.
3. 5% of formulaic outcome of the bonus was contributed to the newly established special fund for Health & Safety issues. Prior to the contribution, the bonus outturn for 2023 was 100% of
maximum (€1,714,050 and €1,002,000 respectively).
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Directors’ Remuneration Policy
This Directors’ Remuneration Policy will be
presented to shareholders at the May 2024
AGM. Subject to shareholder approval, the
Policy will be effective from 1 January 2024
and is intended to operate for the three-year
period to 1 January 2027.
Decision making process for
determination, review and
implementation of the Directors’
Remuneration Policy
The Committee is responsible for the
development, implementation and review of the
Directors’ Remuneration Policy and provides
recommendations for the approval by the Board.
The Committee has, during the course of 2023,
reviewed the current Remuneration Policy to
ensure it supports the Group’s business and
remuneration strategy. The aim of the Group’s
remuneration strategy is to provide a level
of fixed pay that, together with incentives,
will attract, retain and motivate high-calibre,
high-performing executives, aligning them
to the long-term sustainable performance
of the Company and long-term share price
performance, while rewarding them for creating
and delivering shareholder value.
The Committee follows the process set out
below when reviewing the Remuneration
Policy and operation of Policy:
• The Committee reviews the Policy and
operation of Policy, in light of the business
and remuneration strategy, to ensure it
continues to support and is aligned to
business and remuneration strategy and
considers whether any changes are required.
• The Committee considers market and
governance developments (including the
UK and Dutch Corporate Governance
Codes and regulations) as well as wider
pay context, such as pay ratios and group
reward arrangements.
• The Committee considers the guidelines of
shareholder representative bodies and proxy
agencies and investor expectations.
• The Committee consults with shareholders
and considers their feedback as well as those
of the workforce as a result of feedback from
our Employee Representative Directors
Alignment of the Policy to RHI
Magnesita’s values, mission, and
long-term value creation
The Policy is aligned to and supports our
cultural values which are set out below:
• Customer-focused and innovative
• Open and respectful
• Pragmatic and collaborative
• Performance driven and accountable
RHI Magnesita views itself as driving force of the
refractory industry, taking innovation to 1200°C
and beyond. Achieving our mission requires
high-performing senior management and the
Policy is designed to motivate them to perform
to a high standard and reach the stretching
goals set. In addition, the remuneration
arrangements for the Executive Directors
contribute to long-term value creation by:
• providing a fair and appropriate level of
fixed remuneration that does not result in
overreliance on variable pay and undue
risk-taking, thereby encouraging the
executives to focus on sustained long-term
value creation.
• providing a balance of short- and long-term
incentives to ensure there is focus on short-
term objectives that will over time build to
create long-term value creation as well as
long-term goals.
•
requiring executives to acquire and retain
shares in the Company.
• offering long-term incentives where the
reward is delivered in shares which aligns
executives to shareholder interests and
value, as well as the performance of the
Company over the longer term.
•
•
requiring performance measures in our
long-term incentives to be measured over
the longer term and for shares to be held
post-vesting for a further two-year period.
incorporating metrics focused on long-
term shareholder value, such as return
on invested capital and reduction of both
our and our customers’ carbon emissions
through the increased use of secondary
raw materials.
Factors considered in reviewing the
Policy
The Committee has considered as part
of its review, and is comfortable that, the
Remuneration Policy and its implementation
are fully consistent with the factors set out
in Provision 40 of the 2018 UK Corporate
Governance Code (set out below) and the
aspects in section 3.1.2 of the 2022 Dutch
Corporate Governance Code which comprise:
long term value creation, scenario analyses, ratio
of fixed to variable remuneration components,
market price of shares, terms and conditions
governing share and share option awards.
• Clarity: The Policy and the way it is
implemented is clearly disclosed in this
section of the Remuneration Report and the
Annual Statement and supporting reports,
with full transparency of all elements of
Directors’ remuneration.
• Simplicity: The Policy is simple and
straightforward, based on a mix of fixed and
variable pay. The annual bonus and LTIP
include performance conditions which are
aligned with key strategic objectives and
drivers of the RHI Magnesita business.
• Risk: The Committee believes that the
performance targets in place for the
incentive schemes provide appropriate
rewards for stretching levels of performance
without driving behaviour which is
inconsistent with the Company’s risk profile.
Potential reward is aligned with market levels
of peer companies and the reputational risk
from a perception of “excessive” pay-outs is
limited by the maximum award levels set out
in the Policy and the Committee’s discretion
to adjust formulaic remuneration outcomes.
To avoid conflicts of interest, Committee
members are required by the Board Rules to
disclose any conflicts or potential conflicts.
No Executive Director or other member of
management is present when their own
specific remuneration is under discussion.
• Predictability: The Policy includes full
details of the individual limits in place for
the incentive schemes as well as “scenario
charts” which set out potential pay-outs in
the event of different levels of performance,
based on a number of reasonable
assumptions. Any discretion exercised
by the Committee in implementing the
Policy will be fully disclosed.
• Proportionality: The link between the
delivery of strategy, long-term performance,
shareholder returns, and the remuneration
of the Executive Directors is set out in the
Remuneration Report.
• Alignment to culture: As explained above
and in the rest of this report, the approach
to Directors’ remuneration is consistent with
the Group’s culture and values.
Conclusion of the review and
key changes to the Policy
The Committee concluded that the
Remuneration Policy has operated as intended
over the past three years and has provided a
good overall link between pay and performance.
Following the review, the Committee concluded
that the Policy was fit for purpose and only minor
amendments were needed to align the Policy
with market practice. The proposed changes to
the Policy are set out below:
Post cessation shareholding
requirement:
In line with the UK Corporate Governance
Code, a post-cessation shareholding Policy
is introduced to the new Policy. Executive
Directors are expected, on ceasing to be an
Executive Director, to retain the lower of the
shares held on ceasing to be an Executive
Director and shares to the value of 100% of
salary for one year, following their ceasing to be
an Executive Director.
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GOVERNANCE Directors’ Remuneration Policy continued
Discretion
LTIP
Currently, the Committee may only apply
downward discretion to the formulaic bonus
and LTIP outcomes. Under the new Policy, the
Committee will have the ability to exercise
upward and downward discretion, in line with
market practice. Where discretion is exercised
this will be disclosed and explained in the
Remuneration Report.
Policy table for Executive Directors
The requirement for at least 25% of the LTIP
to be determined by TSR is removed under
the new Policy. Consistent with wider market
practice this provides the Committee with
the flexibility to select the most appropriate
performance measures for LTIP awards.
Other wording changes to clarify
the Policy:
• Wording to clarify the treatment of Executive
Director incentive awards in the event of a
change of control.
• Wording to confirm that the Employee
Representatives that sit on the Board are
not eligible for Non-Executive Director fees.
Element and purpose
How it operates
Maximum opportunity
Performance related framework and recovery
There is no
prescribed
maximum annual
base salary or
salary increase.
Salaries will normally be reviewed by the Committee
annually, taking into account the various factors noted
in the “How it operates” section of the Policy.
None
Pension is capped
at the rate
applicable to
the majority of
employees in
the country of
appointment for
the Executive
Director (currently
Austria where it is
15% of salary)
None
There is no
maximum level
of benefits provided
to an Executive
Director.
Base salary
To assist in the
recruitment and
retention of
appropriate talent.
To provide a fair
fixed level of pay
commensurate for the
role ensuring no over
reliance on variable pay.
Retirement allowance
To provide competitive
retirement benefits
for recruitment and
retention purposes.
Salaries are normally paid monthly and
reviewed annually.
The Company’s Policy is to set salaries at market
competitive levels taking into account salaries at
companies of a similar size by market capitalisation,
revenue and any other factors considered relevant
by the Committee such as international business mix
and complexity.
Decisions on salary are influenced by:
• The performance and experience of the individual
• The performance of the Group
• The individual’s role and responsibilities and any
change in those responsibilities
• Pay and employment conditions of the workforce
across the Group including salary increases rates
of inflation and market-wide increases across
international locations
• The geographic location of the Executive Director
Executive Directors may participate in a defined
contribution plan, and/or receive cash in lieu of
all or some of such benefit.
Only base salary is pensionable. The pension
will be set at a rate aligned to the majority of the
workforce in the country of the Executive Director’s
appointment, structured as required by the local
regulation in the country of appointment, and in
line with industry norms.
Other benefits
To provide a competitive
benefit package
for recruitment and
retention purposes as
well as to support the
personal health and
well-being of the
Executive Director.
Benefits currently provided include, but are not limited
to, private health insurance, life insurance, tax advisory
support, car/car allowance and fuel allowance.
Additional benefits and tax payable as a result of
reimbursement of reasonable business expenses
may be provided from time to time if the Committee
decides payment of such benefits and tax is
appropriate and in line with market practice.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Policy table for Executive Directors continued
Element and purpose
How it operates
Maximum opportunity
Performance related framework and recovery
Annual bonus
To provide focus on the
short-term performance
of the Company and to
provide a reward for
achieving short-term
personal, strategic and
financial Company
performance.
To provide a
mechanism for
alignment with longer-
term performance and
shareholder objectives.
The requirement for
Executive Directors to
acquire shares with their
bonus aligns them to
the “development of
the market price of the
shares” in the Company
as provided in the Dutch
Corporate Governance
Code (as amended).
The annual bonus is based on the Group’s
performance as set and assessed by the
Committee on an annual basis.
The annual bonus is paid in cash and the
Executive Directors are required to acquire shares
in the Company with 50% of the amount paid in
excess of target (after tax) which will be held for a
minimum period of three years.
Up to 150%
of base salary.
Target potential
opportunity is
50% of maximum
opportunity.
Details of the performance targets set for the year
under review and performance against them will
normally be provided each year in the Annual Report
on Remuneration. If for reasons of commercial
sensitivity, the targets cannot be disclosed then
they will be disclosed in the following year.
Performance will normally be measured over a
one-year period.
Targets will be based on the Group’s annual financial
and non-financial performance for the particular
performance year. At least 70% of the bonus will be
subject to financial performance metrics.
The Committee may adjust the formulaic outcome of
the annual bonus that is payable (both upward and
downward) if the Committee considers the outcome to
be reasonably unacceptable or if, for example, among
other matters, it is not a fair and accurate reflection
of business performance and/or there have been
regulatory, environmental or health and safety
issues that the Committee considers are of such
severity that a scale back of the bonus is appropriate.
For the financial targets, not more than 25%
of the maximum potential bonus opportunity
will be payable for achieving threshold performance
rising on a graduated scale to 100% for maximum
performance. Threshold performance being the level
of performance required for the bonus to start paying.
In relation to strategic targets the structure of the
target will vary based on the nature of the target set
and it will not always be practicable to set targets using
a graduated scale. Vesting may therefore take place in
full if specific criteria are met in full.
Payments under the annual bonus plan may be
subject to clawback/malus for a period of three years
from payment in the event of a material misstatement
of the Company’s financial results, an error in
calculating the level of grant or level of vesting or
payment, a failure of risk management including the
liquidation of the Group, if the participant has been
guilty of fraud or gross misconduct or the Company
has been brought into disrepute. The clawback/malus
provisions as set out above do not limit Article 2:135 of
the Dutch Civil Code.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
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GOVERNANCE Directors’ Remuneration Policy continued
Policy table for Executive Directors continued
Element and purpose
How it operates
Maximum opportunity
Performance related framework and recovery
200% of salary
(face value of
award) annually
(normal limit),
where the face
value is the market
value of the shares
subject to an award
at the time it is
awarded.
In exceptional
circumstances on
recruitment 250%
of salary (face value
of award).
LTIP awards may take the form of nil-cost options
or conditional awards.
Awards are normally made annually.
Awards normally vest after three years subject
to performance and continued service. Where
Executive Directors cease employment or are under
notice prior to the three-year vesting date, different
rules may apply.
Shares resulting from the exercise of an option or
vesting of a conditional award cannot be sold until
five years have elapsed from the date of award, other
than to pay tax.
To the extent an award vests, the Committee may
permit dividend equivalents to be paid either in the
form of cash or shares representing the dividends
that would have been paid on those shares during
the vesting period (and where the award is a nil-cost
option to the fifth anniversary of award). Dividend
equivalents are payments in cash or shares equal to
the value of the dividends that would have been paid
during the period referred to above, on the number of
shares that vest.
Awards granted under
the RHI Magnesita
Long-Term Incentive
Plan (LTIP awards)
To incentivise and
reward execution
of the longer-term
business strategy.
To provide alignment
to shareholders and
the longer-term
performance of the
Company and to
recognise and reward
value creation over the
longer term.
The “development of
the market price of the
shares” in the Company
is, as required by the
Dutch Corporate
Governance Code, taken
into account by providing
a long-term incentive
using shares as the
delivery mechanism.
In addition, part of the
award is determined by
Total Shareholder Return
which is a measure of
share price performance.
Awards vest based on three-year (or longer)
performance measured against a range of
challenging targets set and assessed by the
Remuneration Committee.
The Committee will determine the specific metrics
and targets that will apply to each award prior to the
date of award.
The targets for each award will be set out in the
Annual Report on Remuneration.
In relation to financial targets not more than 25% of
the total award will vest for threshold performance
rising on a graduated scale to 100% for maximum
performance. Threshold performance being the level
of performance required for the LTIP award to start to
vest. In relation to strategic targets the structure of the
target will vary based on the nature of the target set
and it will not always be practicable to set targets using
a graduated scale and so vesting may take place in full
if specific criteria are met in full.
The Committee may adjust the formulaic outcome of
the LTIP if the Committee considers the outcome to
be reasonably unacceptable or if, for example, among
other matters, it is not a fair and accurate reflection
of business performance and/or there have been
regulatory, environmental or health and safety issues
that the Committee considers are of such severity that
a scale back of the bonus is appropriate.
LTIP may be subject to clawback/malus for three years
from the date of vesting in the event of a material
misstatement of the Company’s financial results, an
error in calculating the level of grant or level of vesting
or payment, a failure of risk management including the
liquidation of the Group, if the participant has been
guilty of fraud or gross misconduct or the Company
has been brought into disrepute. The clawback/malus
provisions as set out above do not limit Article 2:135 of
the Dutch Civil Code.
Share ownership
To increase alignment
between management
and shareholders and to
promote the longer-term
performance of the
Company.
Requirement for the Executive Directors is to normally
retain all of the shares acquired from annual bonus
payments following expiry of the three-year holding
period and normally 50% of vested Performance
Shares (net of tax) following the two-year holding
period until the shareholding requirement is achieved.
N/A
None.
Executive Directors are expected to hold 200% of
salary in shares while they are Executive Directors
and the lower of the shares they actually hold on
ceasing to be an Executive Director and 100% of
salary for one year following their ceasing to be an
Executive Director.
The Committee normally expects the in-service
requirement to be met within five years of appointment
and for the CEO 7 June 2018 being the date of
approval of the Company’s first Directors’
Remuneration Policy.
The Policy that applies on ceasing to be an Executive
Director applies to shares acquired with annual bonus
earned in respect of FY24 and future years and LTIP
awards granted in 2024 and future years. The Policy
does not apply to shares purchased from the
executive’s own funds. The Committee has the
discretion in exceptional circumstances to amend
these requirements.
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
The table below sets out the Remuneration Policy for the Non-Executive Directors (including the Chairman).
Policy table for Non-Executive Directors
Element and purpose
How it operates
Maximum opportunity
Performance related framework and recovery
To provide fees reflecting
the time commitments
and responsibilities of each
role to enable recruitment
of the right calibre of
Non-Executive Directors
who can further the
interests of the Group
through their experience,
stewardship and
contribution to the strategic
development of the Group.
The Non-Executive Directors are paid a
basic fee. Supplemental fees may be paid
for additional responsibilities and activities,
including for a Committee Chairman and
member of the main Board Committees
and the Senior Independent Director and,
if deemed appropriate by the Board, in respect of
travel time. Employee Representative Directors
do not receive a fee for being an Employee
Representative Director as they are remunerated
as an employee of the business.
The cash fee is normally paid quarterly
in arrears. The Chairman’s fee is inclusive
of all of his responsibilities.
Reasonable expenses incurred by the
Non-Executive Directors in carrying out their
duties may be reimbursed by the Company
including any personal tax payable by the
Non-Executive Directors as a result of
reimbursement of those expenses. The
Company may also pay an allowance in lieu
of expenses if it deems this is appropriate.
Fees are reviewed periodically.
There is no prescribed
maximum annual fee
or fee increase.
None.
The Board is guided
by the general increase in
the Non-Executive market
and the Group’s global
workforce, but may
decide to award a lower
or higher fee increase to
recognise, for example, an
increase in the scale, scope
or responsibility of the role
and/or take account of
relevant market movements.
Performance criteria
The Committee assesses annually at the beginning of the relevant performance period, which performance measures, or combination and weighting
of performance measures, are most appropriate for both annual bonus and any LTIP awarded to reflect the Company’s strategic initiatives for the
performance period. The Committee has the discretion to change the performance measures for awards granted in future years based upon the
strategic plans of the Company. The Committee sets what it considers are demanding targets for variable pay, in the context of the Company’s trading
environment and strategic objectives, and considering the Company’s internal financial planning, and market forecasts. Any non-financial goals will
be well defined, and the performance against the goals will be independently assured.
The financial and non-financial criteria of our variable remuneration may, as noted above, vary from year to year to ensure alignment with the strategic
plans of the Company. Set out below is a summary of the measures for 2024 and other measures that have been used since the approval of our first
Directors’ Remuneration Policy in 2018 and may be incorporated again (in addition to other measures) for future incentives:
Annual Bonus financial criteria
Financial criteria
• Adjusted EBIT, EBITA and EBITDA are a reflection of the Company’s operating profits, operating performance and business efficiency supporting
the value of RHI Magnesita for the shareholders. They reflect the way in which management assesses the underlying performance of the business,
excluding certain non-recurring items from the adjusted figures.
• Operating cash flow supports the Company’s capacity to expand its operations or investment in additional assets/acquisitions, as well as dividends
paid to shareholders. It is calculated by taking adjusted EBITDA plus changes in working capital and in other assets/liabilities minus capex spend.
•
Inventory coverage which covers Finished Goods and Raw Material.
– Finished Goods Coverage Ratio is a supply chain metric that shows the period expressed in months during which a company can meet
customer demand with the available inventory. To calculate, we divide the amount of stock by the average demand of a specific period
in the future.
– Raw Material Coverage Ratio is a supply chain metric that shows the period expressed in months during which a company can meet production
demands for raw materials with the available inventory. To calculate, we divide the amount of stock by the average consumption for a specific
period in the past. The coverage ranges lead to more sustainable inventory management and customer service levels.
Non-financial criteria
Strategic Deliverables are those which support financial targets through initiatives and strategic projects, such as enhancing the current business
model or the Company’s footprint and global value market share, and ESG measures, such as CO2 emissions intensity reduction, and PIFOT
(see pages 58-105 for an explanation of these metrics).
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
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GOVERNANCE Directors’ Remuneration Policy continued
LTIP
Financial criteria
• TSR – combination of movements in share price and dividends earned on shares reflecting the total return earned by holding the Company’s shares.
• Adjusted EPS – reflects the income statement in a clear way and takes the equity structure into account, the Board believes adjusted EPS to be
one of the indicators which demonstrates the value created for its shareholders.
• Economic Profit Growth – measures value creation, considering all economic resources employed within the business, taking into account the
costs of making and selling a product/service.
• ROIC– assesses the Group’s efficiency in executing its capital allocation strategy, which is aimed at enabling organic growth, disciplined M&A
and shareholder return.
Bonus & LTIP
Non-financial criteria
• Use of SRM measures the rate at which secondary raw material is used in our production network compared to virgin raw materials which will be
independently verified by an external provider.
• Reduction of CO2 emissions intensity – reduce the tonnes of CO2 emitted per tonne of production with incentive targets that take into account
our longer term ambitions.
The criteria listed above directly link to the Company’s strategy, long-term interests and sustainability. Performance targets are set at a level to
maintain good financial health. This enables the Company to perform well, deliver shareholder returns and invest sustainably to achieve strategic
deliverables. The assessment of the fulfilment of performance criteria for the annual bonus and for LTIP awards is set out on pages 164 and 165.
Discretions retained by the Committee
The Committee operates the Group’s variable pay plans according to their respective rules. In administering these plans, the Committee may apply
certain operational discretions.
These include the following:
• determining the extent of vesting based on the assessment of performance.
• determining the status of leavers and, where relevant, the extent of vesting.
• determining the extent of vesting of LTIP awards under share-based plans in the event of a change of control.
• making appropriate adjustments required in certain circumstances (e.g., rights issues, corporate restructuring events, variation of capital and
special dividends); and
• adjusting existing targets if events occur that cause the Committee to determine that the targets set are no longer appropriate and that amendment
is required so the relevant award can achieve its original intended purpose, provided that the new targets are not materially less difficult to satisfy.
The Committee also retains discretion to make non-significant changes to the Policy without reverting to shareholders (for example, for regulatory, tax,
legislative or administrative purposes).
Malus & Clawback
The Committee may, at any time within three years from the date of LTIP awards vesting or payments under the annual bonus plan, determine that
malus or clawback provisions may apply. Malus enables the Committee to reduce bonus or share awards (including to nil) before they vest. Clawback
enables the Committee to reclaim shares acquired from share awards and/or bonuses paid including the cash value of shares and dividends. The
Committee can also operate clawback through the reduction, including to nil, of other awards held by the individual before they vest or bonus before
it is paid. The provisions apply in the following circumstances: (i) material misstatement of the Company’s financial results; (ii) an error in calculating
the level of grant or level of vesting or payment; (iii) a failure of risk management including the liquidation of the Group; (iv) if the participant has been
guilty of fraud or gross misconduct, or the Company has been brought into disrepute. The malus/clawback provisions as set out above do not limit
Article 2:135 of the Dutch Civil Code.
In 2023, there was no application of any malus and clawback provisions for the executive management.
Executive Directors’ service contracts and payments for loss of office
Service contracts and letters of appointment are available for inspection at the Company’s registered office.
Service contracts and loss of office
It is the Company’s Policy that notice periods for Executive Directors will not exceed 12 months and the service contracts for the Executive Directors
are terminable by either the Company or the Executive Director on 12 months’ notice.
Name
Stefan Borgas
Ian Botha
Position
CEO
CFO
Date of Appointment
20 June 2017
1 April 2019
Notice Period
12 months
12 months
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The Committee’s Policy in relation to termination of service contracts is to deal with each case on its merits, having regard to the circumstances of
the individual, the termination of employment, any legal advice received and what is in the best interests of the Company and its shareholders. An
Executive Director’s service contract may be terminated early (other than for cause) by payment in lieu of salary in equal monthly instalments over
the notice period. The Company may include pension contributions and benefits within the payment in lieu of notice if this is deemed appropriate
or is specifically provided for in the service contract. Unless a contract specifically provides otherwise, all payments would discontinue or reduce to
the extent that alternative employment is obtained. There are no enhanced provisions on a change of control and there are no specific severance
arrangements. Whilst not part of the formal Policy, in the event of a change of control, LTIP awards will vest based on performance to the change of
control. In addition, awards will normally be scaled back pro-rata to the proportion of the performance or vesting period served, with the Committee
having the discretion to reduce the scale back in exceptional circumstances if it deems it to be appropriate.
An Executive Director’s service contract may be terminated without notice for certain events such as gross misconduct in which case no payments or
compensation beyond sums accrued to the date of termination will be paid.
The Company may also pay outplacement costs, legal costs and other reasonable relevant costs associated with termination and may settle any claim
or potential claim relating to the termination.
Treatment of variable pay awards on termination
Annual bonuses and LTIP awards are dealt with in accordance with the rules of the relevant plans.
At the discretion of the Committee, in certain circumstances, for example, to incentivise short-term retention and completion of key business
deliverables, and where poor performance is not relevant to the cessation, a pro-rata bonus may become payable at the normal payment date
for the period of employment with financial performance targets based on full-year performance. Where the Committee decides to make a payment,
the rationale will be fully disclosed in the Annual Report on Remuneration.
The default treatment for share-based awards is that any unvested award will lapse on termination of employment or, in certain circumstances on the
executive giving notice. However, under the rules of the LTIP under which awards will be made, in certain prescribed circumstances, such as death,
injury, ill-health, retirement with the Company’s agreement, redundancy, leaving the Group because the employer company or business leaves the
Group or where the Committee determines otherwise, awards are eligible to vest subject to the performance conditions being met over the normal
performance period (or a shorter period where the participant has died) and with the award being reduced (unless the Committee considers, in
exceptional circumstances, a different treatment is appropriate) by an amount to reflect the proportion of the performance period not actually served.
Change of control
There are no enhanced contractual provisions on a change of control and there are no specific severance arrangements.
Executive Directors’ incentive awards will be treated in accordance with the rules of the relevant plans. In summary, LTIP awards will normally vest
on a change of control to the extent the performance conditions have been satisfied and pro-rated for service, unless the Board determines otherwise,
with the Committee having the discretion to reduce the scale back in exceptional circumstances if it deems it to be appropriate.
Approach to recruitment and promotions
The recruitment package for a new Director will be set in accordance with the terms of our Policy. On recruitment, the salary may be set below the
normal market rate, with phased increases as the Executive Director demonstrates performance within the Company.
Annual bonus opportunity will reflect the period of service for the year. The maximum annual bonus opportunity will be 150% of salary, in line with
the Policy maximum.
The normal annual LTIP award limit is 200% of salary face value in a financial year (face value being the market value of the shares subject to an award
at the time it is awarded). A higher limit of 250% of salary (face value) is included for use in exceptional circumstances for the Company to be able to
attract and secure the right candidate if required. An LTIP award may be made shortly after an appointment if the usual annual award date has passed.
With internal appointments, any variable pay element awarded in respect of the candidate’s prior role will normally be allowed to continue according
to its terms.
The Policy enables the Committee to include those benefits it deems appropriate for an Executive Director. On recruitment, this may include benefits
such as relocation, housing or schooling expenses. In arriving at a benefits package, the Committee’s prevailing consideration will be to pay only what
is considered necessary and appropriate, taking into account the importance of securing the right candidate for the job, acting in the best interests of
the Company’s stakeholders and limiting certain benefits to a specified period where possible.
On recruitment, the Company may compensate for incentive pay (or benefit arrangements) foregone from a previous employer. Replacement share
awards would be made under the Company’s LTIP and any subsequently adopted share plans using the separate specific limit for these purposes
of 250% of salary (face value) or as necessary and as permitted under the Listing Rules. The new awards would take account of the structure of
awards being forfeited (cash or shares), quantum foregone, the extent to which performance conditions apply, the likelihood of meeting any existing
performance conditions and the time left to vesting.
Policy for Executive Directors on external appointments
Subject to Board approval, Executive Directors may accept external non-executive positions and retain the fees payable for such appointments.
Non-Executive Directors
Letters of appointment and Policy on recruitment
All Non-Executive Directors have letters of appointment for a fixed period of three years, subject to reappointment each year at the AGM. No
additional compensation is payable on termination, with fees being payable to the date of termination. The appointments are terminable by either
party on three months’ written notice.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 5 7
GOVERNANCE AGM 2024
AGM 2024
AGM 2024
AGM 2024
AGM 2025
AGM 2024
AGM 2024
AGM 2024
AGM 2024
9 December 20251
9 December 20251
Directors’ Remuneration Policy continued
On appointment of a new Non-Executive Director2, the fee arrangement will be set in accordance with the approved remuneration policy in force
at that time.
Position
Date of initial appointment
Expiry date of current term
Name
Herbert Cordt
John Ramsay
David Schlaff
Stanislaus Prinz zu Sayn-Wittgenstein
-Berleburg
Non-Independent Non-Executive Director, Chairman
20 June 2017
Independent Non-Executive Director
6 October 2017
Non-independent Non-Executive Director
6 October 2017
Non-independent Non-Executive Director
6 October 2017
Janet Ashdown
Independent Non-Executive Director
Marie-Hélène Ametsreiter
Independent Non-Executive Director
Jann Brown
Independent Non-Executive Director
6 June 2019
10 June 2021
10 June 2021
Wolfgang Ruttenstorfer
Non-independent Non-Executive Director
20 June 2017
Karl Sevelda
Michael Schwarz
Karin Garcia
Martin Kowatsch
Independent Non-Executive Director
Employee Representative Director
Employee Representative Director
6 October 2017
8 December 2017
9 December 2021
Employee Representative Director
14 December 2021
14 December 20251
1. Michael Schwarz, Karin Garcia and Martin Kowatsch are the Employee Representative Directors and have been selected in accordance with the applicable local law provisions by the employee
representatives. They are appointed for a term of not more than four years.
2. Katarina Lindström will be proposed to shareholders for appointment as an independent Non-Executive Director at the AGM 2024.
How the views of shareholders and employees are taken into account
Owing to the Board members’ wide range of experience and backgrounds, and with works councils and shareholders represented in person at the
Board, there is ample opportunity for stakeholder feedback on the Policy and its implementation on an ongoing basis.
The Committee consults with employees on executive pay via the Employee Representative Directors appointed to the Board. Other engagement
activities include employee surveys, CEO calls, regular townhall meetings and an active CEO Channel, as part of the Workvivo Corporate
Communications App, where employees can ask questions on any issues including executive pay. The Committee receives periodic updates from
the EVP People, Projects, Global Supply Chain and IMO, which includes employee feedback received on remuneration practices across the Group.
No substantive questions have been raised on executive remuneration as part of this feedback channel via the EMT. The Committee takes due account
of the overall approach to remuneration and the remuneration structures for employees in the Group when setting pay for the Executive Directors.
There are representatives of two of the Company’s major shareholders on the Board and thus regular consultation on all elements of remuneration
is ongoing. The Committee Chairman meets directly with representatives of various institutional shareholders on remuneration and appreciates the
opportunity to understand their questions, seek to understand their expectations and then provide those views to the Committee and to the wider
Board as required.
The Committee Chairman seeks feedback from shareholders on any substantive remuneration matters and any consultation exercise would typically
cover over 70% of shareholders. This feedback, best practice in the market, and any views also received from time to time, as well as guidance
from shareholder representative bodies more generally, will be considered as part of the Company’s annual review of remuneration Policy and
implementation of that Policy.
During November and December 2023, the Committee Chairman engaged with c.82% of shareholders regarding the changes proposed to the
Directors’ Remuneration Policy and the proposed operation of Policy for 2024. The Committee, and the wider Board, found the feedback from
shareholders very helpful in considering the final proposals for the Policy and operation of Policy for 2024.
In addition to this, the website provides an important tool for investor engagement. It contains a wide range of information on our Company and has
a section dedicated to investors, which includes certain remuneration information, such as our LTIP rules, our investor calendar, financial results,
presentations, press releases, with news relating to RHI Magnesita’s financial and operational performance and contact details.
Remuneration market data for companies of a comparable size and complexity to the Company was considered as part of the Committee’s formulation
of our current Policy. This remuneration data was only one of many factors considered by the Committee.
The Committee has taken note of the views of the Executive Directors with regard to the amount and structure of their remuneration and the provisions
of 3.1.2 of the Dutch Corporate Governance Code (matters that should be taken into consideration when formulating the Remuneration Policy) have
been brought to their attention.
You can read more on our stakeholder engagement on page 149.
How the Executive Directors’ Remuneration Policy relates to the wider Group
The Policy described above applies specifically to the Company’s Executive and Non-Executive Directors. The Committee is aware of and provides
feedback on the wider Group remuneration structures. Base salaries for the whole Group are operated under broadly the same Policy as for the
Executive Directors and are reviewed annually.
1 5 8
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
The remuneration package elements for our Executive Directors are, with some minor differences, the same as for the next level of management,
our senior leaders. In the operation of the annual bonus since 2019, the bonus targets have been the same for Executive Directors and for all eligible
white-collar employees. All our employees take part in annual discretionary bonus schemes, which are based on the same metrics as those applicable
to the Executive Directors as shown in Annual Report on Remuneration. Our approach is to incentivise our employees to focus on and contribute to the
Company’s key goals.
LTIP awards are awarded to those employees identified as having the greatest potential to influence strategic outcomes. Given the cost of operating
such a plan, the Committee considers this is the right approach and in the best interests of the Company and its shareholders.
A comparison of the remuneration structure between the wider workforce and the Board is illustrated in the table below.
Competitive pay and cascade of incentives
Organisational level
Executive Directors1
Executive Management Team2
Senior Leaders3
Functional Directors
Senior Managers
Managers
Specialists
Professionals
Other bonused employees4
Number of
employees
Maximum bonus as
percentage of salary
Maximum
proportion of bonus
payable in cash (%
of maximum award)
Maximum
proportion of bonus
deferred in shares
(% of maximum
award)
2
4
c.28
c.80
c.126
c.430
c.2,400
c.2,150
c.10,200
150%
140%
40%
30%
25%
20%
10%
5%
various4
75%1
85%2
100%
100%
100%
100%
100%
100%
100%
25%1
15%2
0%
0%
0%
0%
0%
0%
0%
Maximum LTIP
award based on
annual salary
150-200%
80-150%
20-50%
0%
0%
0%
0%
0%
0%
1. Half of annual bonus in excess of target, after tax, is used by the Executive Directors to acquire shares that must be held for a minimum of three years.
2. EMT members are required to acquire shares in the Company with 30% of the amount above target (after tax) which must be held for a minimum of three years.
3. For clarity, this category is defined differently to the senior leadership group over which gender diversity is measured.
4. Various local bonus programmes are in place for the operational, administrative and blue-collar employees of the Company.
Summary of remuneration structure for employees below the Board
Element
Salary
Read more on
Page 152
Policy features for the wider workforce
Comparison with Executive Director remuneration
RHI Magnesita’s salary is the basis for a competitive total reward
package for all employees, and we conduct an annual salary
review for all employees. As we determine salaries in this review,
we take account of comparable pay rates from market references,
skills, knowledge and experience of everyone, individual
performance, and the overall budget we set for each country.
In setting the budget each year, we forecast inflation and
incorporate discussions with unions collective agreements and
business context related to growth plans, workforce turnover
and affordability.
We review the salaries of our Executive Directors and EMT
annually. The primary purpose of the review is to stay aligned
with relevant market comparators and stay competitive, as well
as to ensure any increases are aligned with the wider workforce in
Europe and North America, except in exceptional circumstances.
Pensions and benefits
Read more on
Page 153
We offer market-aligned benefits packages reflecting normal
practice in each of our countries in which we operate such as
pension, worldwide accidental insurance (leisure/work), health
insurance, meal allowance/voucher,
Annual bonus and LTIP
Read more on
Page 154
Our white collar global workforce participate in an annual
cash bonus plan. The plan is based on our Company KPIs.
This structure places equal emphasis on the importance of an
employee’s personal contribution to the success of RHI Magnesita.
We also operate different bonus plans for those employees of our
business where remuneration models in the market are markedly
different, such as M&A and production areas.
We have differences in the Executive Directors’ benefits to reflect
market practice and role differentiation.
Our incumbent Executive Directors’ pension allowance (and that
for new appointments) is aligned to that of the workforce in their
country of appointment.
Annual bonus for Executive Directors is directly related
to the same performance measures and outcomes as the
wider workforce.
LTIP are provided to our senior executives and senior roles who
have influence on the overall performance of the Company.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 5 9
GOVERNANCE Directors’ Remuneration Policy continued
Pay ratios
The Dutch Corporate Governance Code recommended from the financial year 2018, and the UK Directors’ Reporting Regulations required from
2019, that the Committee report pay ratios, including changes from the prior year as part of its determination of executive pay and wider executive
remuneration decisions. The total employee remuneration figure used for the ratio below is for all employees in all Group companies and includes
countries with significantly lower levels of pay than Europe and the United States. RHI Magnesita only has around 150 employees in the UK and falls
below the required threshold for UK pay ratio reporting requirements. As UK employees represent less than 1% of RHI Magnesita’s employees, the
Committee considers that the above approach is appropriate in the circumstances.
A significant proportion of the ’Executive Directors’ remuneration is delivered through incentives, annual bonus and LTIP, where awards are linked to
company performance and share price movement over the longer term. This means that the pay ratio will depend on the incentive outcome.
The table below shows the pay ratio in respect of each year from 2018 to 2023:
Pay ratio
CEO
CFO
2023
80:1
44:1
20221,2
20213
20204
2019
70:1
47:1
21:1
13:1
41:1
25:1
34:1
16:15
2018
49:1
N/A
1. The ratios for 2022 have been updated based on the value of the 2020 LTIP award at vesting (see page 164 for more details).
2. The CEO and CFO pay ratio increased in 2022. This is predominantly due to the vesting of the 2020 LTIP and a higher bonus outturn in 2022.
3. Pay ratio is lower due to not achieving target bonus KPIs.
4. The pay ratio rose due to the increase in base salary for the CEO and CFO in 2020.
5. CFO pay ratio is lower as Ian Botha joined the Company on 1 April 2019; with the full salary and bonus, the ratio would be 21:1.
The pay ratios have increased in 2023, due to the incentive outturns in 2023. Executive Directors receive higher levels of variable pay opportunity than
other employees to reflect their roles in the business
The proportion of fixed and variable remuneration
To support the Policy’s objectives to deliver long-term sustainable success of the Company, the remuneration package of our Executive Directors
includes a mix of fixed and variable remuneration. The proportion for 2023 is approximately 40% for fixed pay and 60% variable remuneration on a
target basis (calculated on the same basis as the target scenario shown below). Variable pay is split between the annual bonus, with 50% of payment
over target being held in shares, and long-term incentive.
Remuneration scenarios for Executive Directors
The Policy provides that a significant proportion of remuneration is determined by Group performance. The graph below illustrates how the total pay
opportunities vary under four different performance scenarios: minimum, target, maximum and maximum assuming a share price appreciation of 50%
for the LTIP award during the performance period.
Assumptions
Minimum: Fixed pay only (base salary, pension and benefits, excluding relocation benefits).
Target: Fixed pay plus 50% of 2024 maximum annual bonus opportunity for the CEO and CFO with 50% vesting of the 2024 LTIP award.
Maximum: Fixed pay plus maximum annual bonus opportunity and 100% vesting of 2024 LTIP award.
Maximum with share price increase: Fixed pay plus maximum annual bonus opportunity and 100% vesting of 2024 LTIP award with an assumed share
price appreciation of 50% for the LTIP award during the performance period.
As required under the Dutch Corporate Governance Code, scenario analysis was carried out as part of the formulation of the Policy and to establish
that the Policy results in appropriate and fair levels of remuneration, including that the level and ratio of fixed to variable pay does not encourage
inappropriate risk-taking or overreliance on variable pay while ensuring there is sufficient alignment to investors, the long-term performance of the
Company and development of the market value of the shares of the Company.
All values below are in euros.
Stefan Borgas (CEO)
€3,527,488
34%
26%
40%
€1,407,888
100%
Ian Botha (CFO)
€6,858,288
18%
€5,647,088
43%
35%
32%
26%
€814,508
€2,938,508
36%
€3,469,508
15%
31%
36%
31%
€1,876,508
34%
26%
25%
21%
100%
40%
28%
23%
Minimum
Target
Maximum
Fixed pay
Annual bonus
LTIP
LTIP value with 50% share price growth
Maximum
with share
price
increase
Minimum
Target
Maximum
Fixed pay
Annual bonus
LTIP
LTIP value with 50% share price growth
Maximum
with share
price
increase
1 6 0
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Annual Report on Remuneration
Annual Report on Remuneration
The following section provides details of how the Company’s Directors were paid during the financial year to 31 December 2023 and will be paid
during the financial year to 31 December 2024.
As a Dutch incorporated and UK and Austrian dual-listed company RHI Magnesita is required to comply with UK, Dutch and Austrian disclosure and
reporting requirements, including the UK and Dutch Corporate Governance Codes. Our Remuneration Report is therefore presented on this basis and,
recognising transparency of reporting, includes certain additional voluntary disclosures for example, those that apply to UK incorporated companies
and which are followed by RHI Magnesita where practicable to align to market practice.
The Committee, together with the Board, has determined to provide certain voluntary disclosures recognising the importance of transparency of
reporting and investor expectations as a UK listed company to comply with the UK Directors’ Remuneration Reporting Regulations. This Annual Report
is compiled on this basis.
The Remuneration Committee members (Janet Ashdown, Karl Sevelda and Jann Brown), activities and meetings during the year are set out on page
146, along with the Committee’s purpose, roles and responsibilities and are thereby included in this part of the report by reference.
Advisers
Korn Ferry (“KF ”), signatories to the UK Remuneration Consultants Group’s Code of Conduct (“Code of Conduct”), was appointed by the Committee
in 2017 having submitted a proposal which demonstrated their skills and experience in executive remuneration. KF’s appointment is subject to annual
review by the Committee. KF provides advice to the Committee on matters relating to UK governance, including consulting on the remuneration
report and analysing market trends.
The Committee was satisfied that the advice provided by KF was objective and independent having noted their commitment to the Code of Conduct.
KF’s fees for advice to the Committee in 2023 were £55,010. KF’s fees were charged on the basis of the time spent advising the Committee. The
Committee is comfortable that the controls in place at KF do not result in the potential for any conflicts of interest to arise.
Statement of voting at AGM
The Committee considers a number of inputs from shareholders to guide its decisions on the review and implementation of Policy. This includes the
outcomes of Remuneration resolutions put to shareholders shown as follows:
Resolutions
24 May 2023 AGM
Advisory vote on the 2022 Directors’ Remuneration Report
(excluding the Directors’ Remuneration Policy)
Binding vote on Directors’ Remuneration Policy which takes
effect from 1 January 2021
Votes for
% of votes
cast
Votes
against
% of votes
cast
Total votes
validly cast
Total votes
cast as a % of
the relevant
shares in
issue
Number
of votes
withheld
35,339,783
97.57
881,190
2.43
36,262,449
77.13
41,476
37,487,854
95.95
1,582,904
4.05
39,070,758
81.53
0
The positive levels of support informed the Committee’s decision to make limited changes to the Policy and to continue with the operation of Policy
in a similar manner as in previous years. For the 2023 AGM, the total voting rights of the Company on the day on which shareholders had to be on the
register in order to be eligible to vote was 46,999,019 and for the 2021 AGM 47,924,771. A “Vote withheld” is not a vote in law and is not counted in the
calculation of the % of shares voted “For” or “Against” a resolution.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 6 1
GOVERNANCE Annual Report on Remuneration continued
Single total figure table (audited)
The following table shows a single total figure of remuneration in respect of qualifying services for the 2023 financial year for each Executive and
Non-Executive Director of the Company, together with comparative figures for 2022.
Salary/fees
Taxable benefits2
Bonus
LTIP
Pension3
Other
Total remuneration
Total fixed remuneration
Total variable remuneration
2023
2022
2023
2022
20239
2022
20234
20225
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
€1,142,700
€1,098,800
€15,008
€15,064
€1,628,348
€695,286
€1,030,823
€1,312,246
€171,405
€164,820
– €3,988,285
€3,286,216
€1,329,114
€1,278,684
€2,659,171
€2,007,532
€668,000
€642,300
€308
€11,029
€951,900
€406,427
€451,964
€575,514
€100,200
€96,345
€489,68710
€2,172,373
€2,212,302
€768,509
€749,674
€1,403,864
€1,471,628
–
–
Director1
Executive Directors
Stefan Borgas
Ian Botha
Non-Executive Directors
Herbert Cordt
John Ramsay
Janet Ashdown
David Schlaff
Stanislaus Prinz zu Sayn-
Wittgenstein-Berleburg
Jann Brown
Karl Sevelda
£261,700
£251,700
£133,100
£128,200
£118,300
£114,000
£77,100
£74,200
£82,900
£74,698
£94,700
£83,456
£91,700
£88,611
Marie-Hélène Ametsreiter
£88,700
£85,400
Katarina Lindström6
£19,275
–
Sigalia Heifetz7
£30,681
£79,800
Wolfgang Ruttenstorfer
£85,900
£82,700
Michael Schwarz8
Karin Garcia8
Martin Kowatsch8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
£261,700
£251,700
£261,700
£251,700
£133,100
£128,200
£133,100
£128,200
£118,300
£114,000
£118,300
£114,000
£77,100
£74,200
£77,100
£74,200
£82,900
£74,698
£82,900
£74,698
£94,700
£83,456
£94,700
£83,456
£91,700
£88,611
£91,700
£88,611
£88,700
£85,400
£88,700
£85,400
£19,275
–
£19,275
£30,681
£79,800
£30,681
£79,800
£85,900
£82,700
£85,900
£82,700
–
–
–
–
–
–
–
–
–
–
–
–
–
1. All amounts are disclosed in the currencies in which the relevant elements of pay are set. Actual payment may be made in the currency where the recipient resides using the exchange rate at
the time of payment.
2. Benefits in 2023 for Stefan Borgas comprise benefits of tax advice, private health insurance and car benefits. The benefits for Ian Botha included a car benefit and insured benefits.
3. Pension figures represent the 15% of salary cash allowance received by Executive Directors.
4. Value of shares based on a three-month average share price of £28.70 to 31 December 2023 and an exchange rate of 0.86691. Grant share price was £41.38 and vesting share price is estimated
to be £28.70 (using three-month average share price to 31 December 2023). As the share price at the time of grant is higher than the estimated share price on vesting, none of the value is
attributable to share price appreciation. Further details are set out on page 165.
5. The 2020 LTIP Award vested on 5 May 2023 at a closing price of £22.88. The grant share price was £19.976 and so the increase in share price between grant and vesting was £2.90. As a result,
the value attributable to share price appreciation is £145,322 (€166,554) for Stefan Borgas and £63,734 (€73,046) for Ian Botha. Further details are set out on page 165.
6. Katarina Lindström was nominated by the Board as a Non-Executive Director to be proposed to shareholders at the AGM 2024. She was nominated with effect from 30 September 2023 and
received a pro-rated fee from that date.
7. Sigalia Heifetz stepped down from her Board position on 24 May 2023 and fees were pro-rated accordingly.
8. Employee Representative Directors do not receive additional remuneration for this role as they are remunerated as employees of the Group.
9. As set out in the Committee Chairman’s letter, 5% of the bonus outcome was forgone by the CEO and CFO and paid into a Health & Safety fund, therefore the amount shown reflects the amount
paid to the CEO and CFO.
10. Ian Botha was appointed as CFO on 1 April 2019 and as set out in the 2019 Remuneration Report, he received a Conditional Share award to compensate for deferred bonus share awards forfeited
on joining RHI Magnesita. This award vested on the third anniversary of grant. More details can be found in the 2022 Annual Report.
No loans, advances or guarantees have been provided to any Director.
1 6 2
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Single total figure table (audited)
The following table shows a single total figure of remuneration in respect of qualifying services for the 2023 financial year for each Executive and
Non-Executive Director of the Company, together with comparative figures for 2022.
Director1
Executive Directors
Stefan Borgas
Ian Botha
Non-Executive Directors
Herbert Cordt
John Ramsay
Janet Ashdown
David Schlaff
Stanislaus Prinz zu Sayn-
Wittgenstein-Berleburg
Jann Brown
Karl Sevelda
Michael Schwarz8
Karin Garcia8
Martin Kowatsch8
the time of payment.
£261,700
£251,700
£133,100
£128,200
£118,300
£114,000
£77,100
£74,200
£82,900
£74,698
£94,700
£83,456
£91,700
£88,611
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Marie-Hélène Ametsreiter
£88,700
£85,400
Katarina Lindström6
£19,275
Sigalia Heifetz7
£30,681
£79,800
Wolfgang Ruttenstorfer
£85,900
£82,700
1. All amounts are disclosed in the currencies in which the relevant elements of pay are set. Actual payment may be made in the currency where the recipient resides using the exchange rate at
2. Benefits in 2023 for Stefan Borgas comprise benefits of tax advice, private health insurance and car benefits. The benefits for Ian Botha included a car benefit and insured benefits.
3. Pension figures represent the 15% of salary cash allowance received by Executive Directors.
4. Value of shares based on a three-month average share price of £28.70 to 31 December 2023 and an exchange rate of 0.86691. Grant share price was £41.38 and vesting share price is estimated
to be £28.70 (using three-month average share price to 31 December 2023). As the share price at the time of grant is higher than the estimated share price on vesting, none of the value is
attributable to share price appreciation. Further details are set out on page 165.
5. The 2020 LTIP Award vested on 5 May 2023 at a closing price of £22.88. The grant share price was £19.976 and so the increase in share price between grant and vesting was £2.90. As a result,
the value attributable to share price appreciation is £145,322 (€166,554) for Stefan Borgas and £63,734 (€73,046) for Ian Botha. Further details are set out on page 165.
6. Katarina Lindström was nominated by the Board as a Non-Executive Director to be proposed to shareholders at the AGM 2024. She was nominated with effect from 30 September 2023 and
received a pro-rated fee from that date.
7. Sigalia Heifetz stepped down from her Board position on 24 May 2023 and fees were pro-rated accordingly.
8. Employee Representative Directors do not receive additional remuneration for this role as they are remunerated as employees of the Group.
9. As set out in the Committee Chairman’s letter, 5% of the bonus outcome was forgone by the CEO and CFO and paid into a Health & Safety fund, therefore the amount shown reflects the amount
paid to the CEO and CFO.
10. Ian Botha was appointed as CFO on 1 April 2019 and as set out in the 2019 Remuneration Report, he received a Conditional Share award to compensate for deferred bonus share awards forfeited
on joining RHI Magnesita. This award vested on the third anniversary of grant. More details can be found in the 2022 Annual Report.
No loans, advances or guarantees have been provided to any Director.
Salary/fees
Taxable benefits2
Bonus
LTIP
Pension3
Other
Total remuneration
Total fixed remuneration
Total variable remuneration
2023
2022
2023
2022
20239
2022
20234
20225
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
€1,142,700
€1,098,800
€15,008
€15,064
€1,628,348
€695,286
€1,030,823
€1,312,246
€668,000
€642,300
€308
€11,029
€951,900
€406,427
€451,964
€575,514
€171,405
€164,820
€100,200
€96,345
–
–
– €3,988,285
€3,286,216
€1,329,114
€1,278,684
€2,659,171
€2,007,532
€489,68710
€2,172,373
€2,212,302
€768,509
€749,674
€1,403,864
€1,471,628
£261,700
£251,700
£261,700
£251,700
£133,100
£128,200
£133,100
£128,200
£118,300
£114,000
£118,300
£114,000
£77,100
£74,200
£77,100
£74,200
£82,900
£74,698
£82,900
£74,698
£94,700
£83,456
£94,700
£83,456
£91,700
£88,611
£91,700
£88,611
£88,700
£85,400
£88,700
£85,400
£19,275
–
£19,275
–
£30,681
£79,800
£30,681
£79,800
£85,900
£82,700
£85,900
£82,700
–
–
–
–
–
–
–
–
–
–
–
–
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 6 3
GOVERNANCE Annual Report on Remuneration continued
2023 Annual bonus performance against targets (audited)
The targets set for the annual bonus and performance against them are set out below.
Measure
Adjusted EBITA EBITA1 €m
(excluding 2023
completed M&As)
Weighting
45%
Inventory
25%
Finished goods coverage
12.5%
Raw material coverage
12.5%
30%
10%
10%
10%
100%
Strategic Initiatives
PIFOT Improvement
Adjusted M&A EBITDA
on signed Transactions
Use of SRM
Formulaic outcome
Bonus paid to Executive
Directors after 5%
payment to Health
& Safety fund
Threshold
(25% of
maximum)
Target
(50% of
maximum)
Max
(100% of
maximum)3
Actual
performance
Pay-out
(% of max)2
Pay-out
(% of salary)
CEO
CFO
282
313
345
383
100%
67.5%
€771,323
€450,900
Pay-out
1.91x-2.00 or
1.65-1.70x
2.31x-2.40 or
2.0-2.1x
1.81x-1.90
1.71x-1.80
1.75x
100%
19%
€214,256
€125,250
2.21-2.30x
2.1-2.20x
2.15x
100%
19%
€214,256
€125,250
0-5%
€22m
5-10%
€24m
>10%
20.3%
€26m
€29.3m
10.5%
11.5%
12.5%
12.6%
100%
100%
100%
100%
15%
15%
€171,405
€100,200
€171,405
€100,200
15%
€171,405
€100,200
150% €1,714,050 €1,002,000
95%
142.5% €1,628,348
€951,900
1. Adjusted EBITA has been adjusted for FX as the bonus is determined on a constant currency basis.
2. The maximum CEO and CFO annual bonus in 2023 was 150% of salary.
The bonus earned is in excess of target and therefore the Executive Directors are required to acquire shares in the Company with 50% of the amount
paid in excess of target (after tax) which will be held for a minimum period of three years, in line with the Policy. No further performance conditions apply.
LTIP awards vesting
LTIP 2020 award where vesting based on the performance periods (substantially) ending 31 December 2022 (audited)
The satisfaction of the Company’s LTIP awards to date have been completed using the shares the Company holds in treasury. You can find the details
of these on page 112. As disclosed in last year’s report the performance period for the TSR element of the 2020 LTIP award ended on 7 April 2023 with
the vesting outcome of the 2020 awards determined on 5 May 2023. The table below sets out the performance targets and final level of vesting.
Performance measure
Absolute TSR
Weighting
50%
Threshold1
(25% vesting)
Intermediate1
(75% of vesting)
Maximum1
(100% vesting)
Performance
period2
Performance
Vesting % of
that element
30%
cumulative
TSR growth
over the
3 years
50%
cumulative
TSR growth
over the
3 years
70%
cumulative
TSR growth
over the
3 years
8 April 2020
to 7 April 2023
9.28%
0%
Cumulative Underlying
Earnings Per Share
50%
€6.50/share
€8.00/share
€9.50/share
€12.62/share
100%
1 January
2020 to
31 December
2022
1. Awards vest on a straight-line basis between threshold, intermediate and maximum.
2. For the TSR element, performance was assessed for a period of three years to 7 April 2023, being three years from the date of grant.
1 6 4
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
The table below sets out details of the LTIP awards granted in 2020 and the number of shares vesting. A two-year post-vesting holding period applies
to vested shares.
Executive
Stefan Borgas
Ian Botha
Grant date
Vest date
Number of shares
granted
Number of shares
to vest
Estimated number
of dividend
equivalents2
8 April 2020
5 May 2023
8 April 2020
5 May 2023
90,396
39,647
45,198
19,823
4,844
2,124
Total estimated
value1
€1,312,246
€575,514
1. The Company was in a closed period at the time the performance period ended and vesting was therefore determined on 5 May 2023. The value is based on the closing share price on this date
(£22.88) converted to €26.223.
2. Dividend equivalents is based on the number of dividends earned to 5 May 2023.
LTIP 2021 award where vesting is based on the performance periods ending (or substantially ending) during the financial
year ending 31 December 2023 (audited)
Performance against targets and vesting of the LTIP awards granted on 15 March 2021 which are due to vest in 2024 is set out below.
Performance measure
Weighting
Threshold1
(25% vesting)
Intermediate1
(75% of vesting)
Maximum1
(100% vesting)
Performance
period2
Performance2
Vesting % of that
element
Absolute TSR
25%
13%
20%
25%
Adjusted EPS (cumulative for the
three-year performance period)
50%
€12.00/share
€14.50/share
€16.89/share
Use of SRM3
25%
6.5%
7.5%
8.0%
15 March 2021
to 14 March
2024
1 January
2021 to
31 December
2023
1 January
2021 to
31 December
2023
2%
€14.43/share
0%
73.6%
12.6%
100%
1. Awards vest on a straight-line basis between threshold, intermediate and maximum.
2. The targets for the EPS and Use of SRM elements were assessed against performance to 31 December 2023. For the TSR element, performance is assessed for a period of three years to 14 March
2023, three years from grant. The estimated outcome under the TSR element is based on TSR performance to 26 January 2024. The actual TSR and vesting level will be provided in the 2024
Remuneration report.
3. Use of SRM as a percentage of total raw materials used, evaluated at the end of 2023 based on the current production network (and excluding any changes in raw material usage due to any
future M&A activity).
The table below sets out details of the LTIP awards granted in 2021 and the number of shares vesting. A two-year post-vesting holding period applies
to vested shares.
Executive
Stefan Borgas
Ian Botha
Grant date
Vest date
Number of shares
granted
Number of shares
to vest
Estimated number
of dividend
equivalents1
Total estimated
value2
15 March 2021
14 March 2024
15 March 2021
14 March 2024
43,579
19,107
27,018
11,846
4,119
€1,030,823
1,806
€451,964
1. The estimated number of dividend equivalents is based on the number of dividends earned to 31 December 2023.
2. Value of shares based on a three-month average share price of £28.70 to 31 December 2023 and an exchange rate of 0.86691 (based on the exchange rate on 29 December 2023).
2023 LTIP awards awarded during the financial year ending 31 December 2023 (audited)
During the year, the CEO and CFO received LTIP awards as set out below.
Director
Scheme
Basis of award
Date of award
Percentage of
salary award
Share price
used €1
Face value
€000
Percentage
vesting at
threshold
performance
Number of
shares
End of
performance
period3
Stefan Borgas
Ian Botha
LTIP
LTIP
Annual
award2
Annual
award2
6 March
2023
6 March
2023
200%
29.707
2,285,4
25%
76,929
150%
29.707
1,002,0
25%
33,728
6 March
2026
6 March
2026
1. The face value of the awards was calculated using the average closing price for the five trading days prior to the award being granted being £26.24 converted to € (using average FX rate over the
same five-day period of £0.8832 to €1 = €29.707).
2. Awards are structured as nil cost options.
3.
In line with the Policy, a two-year holding period applies after the date of vesting.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 6 5
GOVERNANCE Annual Report on Remuneration continued
Performance targets for the 2023 LTIP awards4
Performance measure
TSR1
Adjusted EPS (cumulative for the three-year performance period)2
Reduce CO2 emissions against 20182
Weighting
Threshold
(25% vesting)3
Intermediate
(75% of vesting)3
Maximum
(100% vesting)3
Performance
period2
25%
50%
25%
15%
€11.90
-11%
22%
€12.65
-11.5%
27% and
above
6 March 2023
to 6 March
2026
€13.40 1 January 2023
to 31 December
2025
-12%
1. Measured from the date of grant to third anniversary with a two-month average before each date.
2. Measured over the three financial years to 31 December 2025.
3. Awards vest on a straight-line basis between threshold, intermediate and maximum.
4. A two-year post vesting holding period applies.
Performance targets for 2022 LTIP awards4
Performance measure
TSR1
Adjusted EPS (cumulative for the three-year performance period)²
Reduce CO2 emissions against 2018²
Weighting
Threshold
(25% vesting)1
Intermediate
(75% of vesting)1
Maximum
(100% vesting)1
Performance
period2
25%
50%
25%
15%
€14.25
-11.5%
22%
€16.50
27% and
above
€19.25
-12.5%
-13.0%
8 March 2022
to 7 March
2025
1 January 2022
to 31 December
2024
1. Measured from the date of grant to third anniversary with a two-month average before each date.
2. Measured over the three financial years to 31 December 2024.
3. Awards vest on a straight-line basis between threshold, intermediate and maximum.
4. A two-year post vesting holding period applies.
1 6 6
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Statement of Directors’ shareholding and share interests (audited)
Under the share ownership requirements set out in the Directors’ Remuneration Policy, the Executive Directors are normally required to build and
maintain over five years a shareholding equivalent to at least 200% of salary.
At the 2023 year-end, the Executive Directors each held shares in the Company as detailed below. Shares are valued using the Company’s closing
market share price on 29 December 2023 of £34.60 ((converted to Euro using FX rate of 0.8669 to = €39.91191).
The table below shows how each Director complies with the shareholding guidelines on 31 December 2023:
Shares
held at
31 December
20222
Shares
held at
31 December
20232
Shares
held by
connected
persons
Unvested
and not
subject to
performance
conditions
Unvested
and
subject to
performance
conditions7
Vested but
unexercised
Exercised
during the
year6
Shareholding
requirement
(% of salary)
Current
shareholding
(% of salary)1
Requirement
met?
Options5
Executive Directors
Stefan Borgas
24,350
74,392
1,150
Ian Botha
18,676
40,623
Non-Executive Directors
Herbert Cordt
John Ramsay
Janet Ashdown
David Schlaff3
Stanislaus Prinz zu
Sayn-Wittgenstein
-Berleburg4
Jann Brown
Karl Sevelda
Marie-Hélène
Ametsreiter
Sigalia Heifetz
Wolfgang Ruttenstorfer
Karin Garcia
Martin Kowatsch
Michael Schwarz
350,000
350,000
4,890
4,890
–
–
–
–
1,071,722
3,160,183
2,000
2,000
–
–
–
–
–
–
–
–
1,223
–
1,223
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
190,880
83,687
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
50,042
21,947
200%
200%
255%
242%
–
–
–
–
–
–
–
–
–
–
–
–
–
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Yes
Yes
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1. Shareholding determined using an FX rate of 0.8669 for £ to € on 31 December 2023. This is then used to assess the whether the shareholding requirement has been met.
2.
Includes shareholdings of connected persons.
3. According to the latest disclosures by the shareholder in the AFM register, 13,333,340 shares are held directly by MSP Stiftung. MSP Stiftung is a foundation under Liechtenstein law, whose
founder is Mag. Martin Schlaff.
4. According to the AFM register, Ms. E. Prinzessin zu Sayn-Wittgenstein Berleburg, who is a related party and person connected to Stanislaus Prinz zu Sayn-Wittgenstein Berleburg, holds these
shares indirectly via Chestnut Beteiligungsgesellschaft mbH (“Chestnut”) and via partial ownership of FEWI Beteiligungsgesellschaft mbH (“FEWI”). She holds a further holding of 126,076
shares held directly which is included in the above number. With disclosures made in the course of year-end verification, the Company has been able to update the figure held from the 2022
report. Furthermore, per the disclosures on page 111 she has an agreement with Mr. K.A. Winterstein which allows Chestnut to exercise the voting rights of Silver Beteiligungsgesellschaft mbH
(“Silver”) in the Company.
5. There are no unvested scheme interests in the form of shares.
6. The aggregate gain for Stefan Borgas in the year from the exercise of awards granted under the LTIP 2020 was £1,268,064 (€1,466,360) based on the share price on the date of exercise
of £25.340 (€29.302). The gain for Ian Botha in the year of exercise of awards granted under the LTIP 2020 was £556,137 (€643,104) based on the share price on the date of exercise of
£25.34 (€29.302).
7. The unvested options and subject to performance conditions includes the inflight LTIP awards.
There were no changes in the Directors’ shareholdings and share interests between the end of the year and 26 February 2024, being the latest
possible date for the finalisation of this report.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 6 7
GOVERNANCE Annual Report on Remuneration continued
Directors’ interests in RHI Magnesita’s LTIP
The table below details outstanding share awards, including the annual LTIP awards granted to the CEO and CFO during 2023.
Scheme
Award Date
Share price
used to
grant the
award
€
Share
awards
held at
1 January
2023
Awarded
during
the year
Vested
during
the year
Dividend
equivalents
awarded
during
the year
Exercised
during
the year
Lapsed
during
the year
Share awards
held at
31 December
2023
Vesting date
Stefan Borgas Performance shares 8 April 2020
22.71
90,396
50,042
4,8445
50,042 45,198
–
8 April 2023
Performance shares 15 March 2021
48.282
43,579
Performance shares 8 March 2022
31.2283
70,372
Performance shares 6 March 2023
29.7074
76,929
43,579
15 March 2024
70,372
8 March 2025
76,929
6 March 2026
Ian Botha
Performance shares 8 April 2020
22.71
39,647
21,947
2,1245
21,947
19,824
8 April 2023
Performance shares 15 March 2021
48.282
19,107
Performance shares 8 March 2022
31.2283
30,852
Performance shares 6 March 2023
29.7074
33,728
19,107
15 March 2024
30,852
8 March 2025
33,728
6 March 2026
1. Award levels were calculated using the average closing price for the five trading days prior to the award being granted being £19.976 converted to € (using average FX rate over the same five-
day period of £0.881 to €1 = €22.7).
2. Award levels were calculated using the average closing price for the five trading days prior to the award being granted being £41.38 converted to € (using average FX rate over the same five-day
period of £0.857 to €1 = € 48.28).
3. Award levels were calculated using the average closing price for the five trading days prior to the award being granted being £25.90 converted to € (using average FX rate over the same five-day
period of £0.8295 to €1 = € 31.228).
4. Award levels were calculated using the average closing price for the five trading days prior to the LTIP award being granted being £26.24 converted to € (using average FX rate over the same five
days period of £0.8569 to €1 = €29.707).
5. Dividend equivalents awarded during the year (see page 43) for more details.
Review of past performance and CEO remuneration table (unaudited)
Share price performance
Shares are valued using the Company’s closing market share price on 29 December 2023 of £34.60 (converted to € using FX rate of 0.8669 to =
€39.92) (2022: £22.24). During 2023, the shares traded in the range of £20.50– £35.64.
RHI Magnesita total shareholder return
The graph below compares the Total Shareholder Return of the Company with the FTSE 350 Index from Admission date of 27 October 2017 to
31 December 2023. This is considered an appropriate comparator for RHI Magnesita because it is a constituent of the index.
180
160
140
120
100
80
60
40
27/10/17 31/12/17
RHI Magnesita
31/12/18
31/12/19
31/12/20
31/12/21
31/12/22
31/12/23
FTSE 350
Remuneration of the CEO
Single figure of total remuneration1
2017
2018
2019
2020
2021
2022
2023
Stefan Borgas
€476,981 €2,073,350
€1,490,427
€1,892,862
€1,584,758
€3,286,216 €3,988,285
Annual bonus payout as % of maximum2, 3
Stefan Borgas
83.16%
88.04%
38.9%
50%
24%
42%
95%
Long-term incentive vesting rates as % of maximum4
Stefan Borgas
N/A
N/A
N/A
0%
0%
50%
62%
1. The 2017 Single figure of Total Remuneration relates to the period 27 October 2017 to 31 December 2017.
2. The 2017 Annual bonus payout as a % of maximum relates to bonus targets set prior to the merger of the two companies that now form RHI Magnesita NV.
3. The percentage of maximum shown for the 2020 Annual bonus is the amount paid to the CEO. The formulaic bonus outcome was 100% of maximum. However, the bonus was capped at 50%
of maximum due to the impact of the pandemic.
4. A long-term incentive plan was introduced when the Company was formed in October 2017. The first 2018 LTIP award was eligible to vest in 2021.
5. The formulaic outcome under the 2023 bonus was 100% of maximum. However, 5% of the bonus was paid to a Health & Safety fund with 95% of maximum paid to the CEO.
1 6 8
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Annual percentage change in remuneration of the CEO (unaudited)
The table below illustrates the percentage change in annual salary, benefits and bonus between 2022 and 2023 for the CEO and the average for all
Austrian employees of the Company. The CEO is an Austrian-based employee; therefore, the Committee feels that a comparator based on all Austrian
employees is appropriate for the purposes of this analysis.
CEO
Average of employees
Salary change
(2022-2023)
Benefits change
(2022 to 2023)
Annual
bonus change
(2022 to 2023)
4%
7.9%
-0.37%
-0.7%
134.2%
86.0%
Directors and employee remuneration over time (unaudited)
The table below shows the Directors’ total remuneration year on year change (on a full-time equivalent basis) and includes comparators of company
performance and average FTE remuneration.
Year
Executive Directors
Stefan Borgas
Ian Botha
Non-Executive Directors
Herbert Cordt
John Ramsay
Janet Ashdown
David Schlaff
Stanislaus Prinz zu Sayn-Wittgenstein-Berleburg3
Jann Brown3
Karl Sevelda
Marie-Héléne Ametsreiter
Sigalia Heifetz6
Katarina Lindström7
Wolfgang Ruttenstorfer
Karin Garcia4
Martin Kowatsch4
Michael Schwarz4
Company performance
Adjusted EPS
Reported EBIT in € million
Adjsuted operating cash flow in € million
Average remuneration
(on a full-time equivalent basis)
Employees of the Company5
Total
Remuneration in
FY 2023
€3,988,285
€2,172,373
£261,700
£133,700
£118,300
£77,100
£82,900
£94,700
£91,700
£88,700
£30,681
£19,275
£85,900
–
–
–
4.98
334
413
Change % 2022
to 2023
Change %
2021 to 20221
Change %
2020 to 20211
Change %
2019 to 20201
Change % from
2018 to 20191
21.36%
-2.2%
3.97%
3.82%
3.77%
3.91%
10.98%
3.49%
3.49%
5.09%
N/A2
N/A2
3.87%
–
–
–
3.42%
-2.9%
167%
90.3%2
124.1%2
-16.28%
-16.45%
4.4%
4.3%
9.1%
4.4%
5.1%
N/A2
7.6%
N/A2
N/A2
N/A2
4.3%
–
–
–
6.6%
60.7%
165.7%
6.09%
31.92%
19.92%
5.98%
5.98%
N/A2
10.02%
N/A2
N/A2
–
–
–
–
36.0%
77.3%
-18.7%
27%
N/A2
3.2%
12.9%
N/A2
3.2%
3.2%
–
3.2%
–
–
–
–
–
–
-28.1%
N/A2
–
6.4%
N/A2
–
–
–
–
–
–
–
–
–
–
–
-41.1%
-55.8%
4.8%
-4.4%
1.7%
-23.0%
5.99%
3.2%
€93,694
15.6%
8.7%
-3.4%
7.7%
4.1%
1. For notes on the change from 2018 to 2019, please see the 2019 Annual Report, for the change from 2019 to 2020 the 2020 Annual Report,2020 to 2021 the 2021 Annual Report and 2021
to 2022 the 2022 Annual Report.
2. Where the incumbent did not serve for the full year, the calculation has not been made as it is unrepresentative.
3. Stanislaus Prinz zu Sayn-Wittgenstein-Berleburg was appointed as a member of the Corporate Sustainability Committee in November 2022. Jann Brown was appointed as a member of the
Remuneration Committee in December 2022. As a result, the total fees paid increased YoY.
4. Employee Representative Directors do not receive remuneration for that role as they are remunerated as employees of the Group.
5. The group of RHI Magnesita’s employees covers the parent company, namely all employees within the Austrian subsidiaries.
6. Sigalia Heifetz stepped down from her Board role on 24 May 2023 and fees were pro-rated accordingly.
7. Katarina Lindström was nominated by the Board as an Independent Non-Executive Director with effect from 30 September 2023 and received a pro-rated fee from that date.
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 6 9
GOVERNANCE Annual Report on Remuneration continued
Relative importance of spend on pay (unaudited)
The following table sets out the change in distributions to shareholders by way of dividend and overall spend on pay in the financial year ended
31 December 2022 compared with the financial year ended 31 December 2023.
Total gross employee pay
Dividends
2023
€ million
747.3
77.7
2022
€ million
Percentage
change
627.8
70.5
19.03%
10.21%
Payments for loss of office and to past directors (audited)
Sigalia Heifetz stepped down from the Board on 24 May 2023 and received fees to that date (£30,681). There were no additional payments.
2024 remuneration (unaudited)
Set out below is how the Directors’ Remuneration Policy will be implemented during 2024.
Salaries and fees for 2024
Directors’ salaries and fees (on a full-time equivalent basis)
Subject to approval at the 2024 AGM, the Executive Directors’ salaries will be increased from 1 January 2024 by 6%. This compares to the increase to
the wider workforce in Austria of an average of 7.0%.
The Committee Chairman’s letter (page 149) and Nomination & Governance Committee report (page 134) set out the process and rationale for the
increase in the Non-Executive Director fees.
As outlined above the increases to Non-Executive fees for 2024 will be reduced by the amount to be contributed to the Health & Safety fund.
Executives
Stefan Borgas
Ian Botha
Non-Executives
Chairman of the Board (inclusive of all Committee fees)
Non-Executive Directors
Deputy Chairman & Senior Independent Director
Chairmen of Audit & Compliance Committee, Remuneration Committee, Nomination & Governance
Committee (unless held by the Chairman of the Board) and Corporate Sustainability Committee
Membership of the Audit & Compliance, Corporate Sustainability and Remuneration Committees
Membership of the Nomination & Governance Committee
2024
2023
Change
€1,211,200
€1,142,700
€68,500
€708,000
€668,000
€40,000
£325,000
£261,700
£63,300
£85,000
£77,100
£7,900
£120,000
£29,600
£90,400
£25,000
£20,600
£10,000
£6,000
£8,800
£5,800
£4,400
£1,200
£200
The Company does not contribute to defined benefit pension schemes on behalf of Executive Directors or Non-Executive Directors. No Director has a
prospective entitlement under a defined benefit scheme.
1 7 0
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Annual bonus for 2024
The maximum bonus opportunity for 2024 is unchanged at 150% of salary. In line with the 2023 bonus, the 2024 bonus will be based on Adjusted
EBITA (45%) and strategic objectives (30%). The remainder of the bonus will be subject to Adjusted operating cash flow (replacing the previous
inventory measure). The Committee believes that this ensures management are incentivised to deliver cash flows to maximise the longer-term value
of the business, thereby providing alignment to shareholder interests. Both the CEO and the CFO are required to use 50% of any bonus earned in
excess of target (net of tax) to acquire shares in the Company that will be held for a minimum of three years.
Performance criteria
Adjusted EBITA
Adjusted operating cash flow
Inventory Coverage
Strategic Initiatives1
Strategic projects
Adjusted M&A EBITDA on signed transaction
PIFOT
Use of SRM
2024
45%
25%
–
10%
–
10%
10%
2023
45%
N/A
25%
N/A
10%
10%
10%
1. The specific targets relating to the 2024 bonus have not been disclosed at this stage as they are considered by the Committee to be commercially sensitive, and it is not considered in the
interests of shareholders to disclose further details on a prospective basis. Details will be provided on a retrospective basis in next year’s Annual Report on Remuneration.
2024 LTIP awards
The CEO will be granted an LTIP award over shares with a value at grant of 200% and the CFO will be granted an LTIP award over shares with a value
at grant of 150% of salary. As set out in the Committee Chairman’s statement on pages 146 to 147, the Committee reviewed the performance measures
during the year as part of the overall Policy review and concluded that the 2024 LTIP should continue to use EPS and CO2 emissions performance
conditions and move from TSR to ROIC. The measures and the targets are set out below.
Performance measure
ROIC
Adjusted EPS (cumulative for the three-year performance period)2
Reduce CO2 emissions per tonne against 2018
1. Awards vest on a straight-line basis between threshold, intermediate and maximum.
2. Two-year post vesting holding period applies.
Weighting
Threshold
(25% vesting)1
Intermediate
(75% of vesting)1
Maximum
(100% vesting)1
Performance
period
25%
50%
25%
10.2%
€14.60
-15.2%
10.9%
€15.10
-15.5%
12.0%
€15.40
-15.8%
1 January 2024
to 31 December
20262
This report was reviewed and approved by the Board on 28 February 2024 and signed on its behalf by order of the Board.
Janet Ashdown
Chairman of the Remuneration Committee
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 7 1
GOVERNANCE 1 7 2
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Our
Financial
Statements
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 7 3
FINANCIAL STATEMENTS Consolidated Financial Statements 2023
1 7 4
174
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Consolidated Financial Statements 2023
Consolidated Statement of Profit or Loss
for the year ended 31 December 2023
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
in € million
Revenue
Cost of sales
Gross profit
Selling and marketing expenses
General and administrative expenses
Result from operating joint ventures and associates
Restructuring
Other income
Other expenses
EBIT
Interest income
Interest expenses on borrowings
Net expense on foreign currency effects
Other net financial expenses
Net finance costs
Profit before income tax
Income tax
Profit after income tax
RHI Magnesita N.V. shareholders
Non-controlling interests
in €
Earnings per share - basic
Earnings per share - diluted
Note
(5)
(5)
(6)
(7)
(8)
(11)
(12)
(13)
(14)
(26)
(15)
(15)
2023
3,571.8
(2,714.4)
857.4
(153.0)
(339.2)
0.1
(19.6)
27.1
(38.9)
333.9
19.7
(58.2)
(30.4)
(31.7)
(100.6)
233.3
(62.0)
171.3
164.6
6.7
2022
3,317.2
(2,553.8)
763.4
(131.3)
(277.2)
0.1
6.8
4.8
(23.0)
343.6
8.3
(27.4)
(23.3)
(30.7)
(73.1)
270.5
(103.7)
166.8
155.7
11.1
3.50
3.42
3.31
3.26
174
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 7 5
175
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
in € million
Profit after income tax
Currency translation differences
Unrealised results from currency translation
Unrealised results from net investment hedge and foreign operations
Deferred taxes thereon
Current taxes thereon
Reclassification to profit or loss - Disposal subsidiaries
Cash flow hedges
Unrealised fair value changes
Reclassification to profit or loss
Deferred taxes thereon
Items that may be reclassified to profit or loss in later periods
Remeasurement of defined benefit plans
Remeasurement of defined benefit plans
Deferred taxes thereon
Items that are not reclassified to profit or loss in later periods
Other comprehensive (loss)/income after income tax
Total comprehensive income
RHI Magnesita N.V. shareholders
Non-controlling interests
Note
(14)
(14)
(36)
(14)
(29)
(14)
(26)
2023
171.3
(22.5)
(10.4)
0.4
0.0
(0.6)
(25.2)
(10.0)
8.0
(60.3)
(22.5)
6.1
(16.4)
2022
166.8
49.9
(5.4)
(3.2)
4.1
0.7
58.0
(7.2)
(11.9)
85.0
58.0
(18.5)
39.5
(76.7)
124.5
94.6
97.9
(3.3)
291.3
282.7
8.6
1 7 6
176
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
Consolidated Statement of Financial Position
as at 31 December 2023
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
in € million
Profit after income tax
Currency translation differences
Unrealised results from currency translation
Unrealised results from net investment hedge and foreign operations
Reclassification to profit or loss - Disposal subsidiaries
Deferred taxes thereon
Current taxes thereon
Cash flow hedges
Unrealised fair value changes
Reclassification to profit or loss
Deferred taxes thereon
Items that may be reclassified to profit or loss in later periods
Remeasurement of defined benefit plans
Remeasurement of defined benefit plans
Deferred taxes thereon
Items that are not reclassified to profit or loss in later periods
Total comprehensive income
RHI Magnesita N.V. shareholders
Non-controlling interests
Note
(14)
(14)
(36)
(14)
(29)
(14)
(26)
2023
171.3
(22.5)
(10.4)
0.4
0.0
(0.6)
(25.2)
(10.0)
8.0
(60.3)
(22.5)
6.1
(16.4)
94.6
97.9
(3.3)
2022
166.8
49.9
(5.4)
(3.2)
4.1
0.7
58.0
(7.2)
(11.9)
85.0
58.0
(18.5)
39.5
291.3
282.7
8.6
in € million
ASSETS
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments in joint ventures and associates
Other non-current financial assets
Other non-current assets
Deferred tax assets
Current assets
Inventories
Trade and other current receivables
Income tax receivables
Other current financial assets
Cash and cash equivalents
Other comprehensive (loss)/income after income tax
(76.7)
124.5
EQUITY AND LIABILITIES
Equity
Share capital
Group reserves
Equity attributable to shareholders of RHI Magnesita N.V.
Non-controlling interests
Non-current liabilities
Borrowings
Other non-current financial liabilities
Deferred tax liabilities
Provisions for pensions
Other personnel provisions
Other non-current provisions
Other non-current liabilities
Current liabilities
Borrowings
Other current financial liabilities
Trade payables and other current liabilities
Income tax liabilities
Current provisions
Note
31.12.2023
31.12.2022
(17)
(18)
(19)
(35)
(20)
(14)
(21)
(22)
(14)
(35)
(23)
(24)
(25)
(26)
(27)
(28)
(14)
(29)
(30)
(31)
(27)
(28)
(32)
(14)
(31)
339.2
469.8
1,360.1
6.2
43.4
36.7
152.0
136.9
316.6
1,203.7
5.7
55.1
40.0
128.2
2,407.4
1,886.2
995.9
685.7
43.5
13.6
703.5
2,442.2
4,849.6
49.5
1,152.2
1,201.7
161.8
1,363.5
1,049.1
578.9
38.7
1.3
520.7
2,188.7
4,074.9
49.5
951.7
1,001.2
47.4
1,048.6
1,799.5
1,404.9
133.4
62.5
241.5
55.2
91.6
7.3
92.8
62.0
214.7
51.7
80.0
6.3
2,391.0
1,912.4
149.3
40.9
820.2
50.8
33.9
1,095.1
4,849.6
215.1
50.1
780.3
38.3
30.1
1,113.9
4,074.9
176
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 7 7
177
FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
for the year ended 31 December 2023
in € million
Cash generated from operations
Income tax paid less refunds
Net cash flow from operating activities
Investments in property, plant and equipment and intangible assets
Investments in subsidiaries net of cash acquired
Cash receipts from the sale of equity instruments of interests in joint ventures
Cash inflows from the sale of property, plant and equipment
(Cash outflows) / Cash inflows from investments/ from the sale of financial assets
Dividends received from non-consolidated entities, joint ventures and associates
Investment subsidies received and cash inflows from non-current receivables
Interest received
Net cash used in investing activities
Payment for share issue costs in subsidiary
Proceeds from share issue in subsidiary
Acquisition of non-controlling interests
Dividends paid to RHI Magnesita N.V. shareholders
Dividend paid to non-controlling interests
Proceeds from long-term financing
Repayments of long-term financing
Changes in current borrowings and financial liabilities to joint ventures and associates
Interest payments
Repayment of lease obligations
Interest payments from lease obligations
Cash flows from derivatives
Net cash provided by/(used in) financing activities
Total cash flow
Change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Reclassification of Cash and Cash equivalents
Foreign exchange impact
Cash and cash equivalents at end of period
Note
(33)
(34)
(23)
(23)
2023
560.1
(60.4)
499.7
(179.5)
(313.3)
0.0
3.6
(13.8)
0.5
1.9
18.9
(481.7)
(2.6)
100.2
(8.2)
(77.7)
(2.9)
336.0
(15.9)
(60.6)
(72.7)
(20.3)
(2.4)
5.1
178.0
196.0
196.0
520.7
(9.3)
(3.9)
703.5
2022
287.5
(53.7)
233.8
(156.7)
(63.2)
8.7
1.8
2.8
0.0
0.8
6.1
(199.7)
0.0
0.0
(1.4)
(70.5)
(1.5)
344.4
(278.0)
(12.2)
(41.0)
(20.6)
(1.3)
(1.8)
(83.9)
(49.8)
(49.8)
580.8
0.0
(10.3)
520.7
1 7 8
178
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Consolidated Statement of Cash Flows
for the year ended 31 December 2023
in € million
Cash generated from operations
Income tax paid less refunds
Net cash flow from operating activities
Investments in property, plant and equipment and intangible assets
Investments in subsidiaries net of cash acquired
Cash receipts from the sale of equity instruments of interests in joint ventures
Cash inflows from the sale of property, plant and equipment
(Cash outflows) / Cash inflows from investments/ from the sale of financial assets
Dividends received from non-consolidated entities, joint ventures and associates
Investment subsidies received and cash inflows from non-current receivables
Changes in current borrowings and financial liabilities to joint ventures and associates
Interest received
Net cash used in investing activities
Payment for share issue costs in subsidiary
Proceeds from share issue in subsidiary
Acquisition of non-controlling interests
Dividends paid to RHI Magnesita N.V. shareholders
Dividend paid to non-controlling interests
Proceeds from long-term financing
Repayments of long-term financing
Interest payments
Repayment of lease obligations
Interest payments from lease obligations
Cash flows from derivatives
Net cash provided by/(used in) financing activities
Total cash flow
Change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Reclassification of Cash and Cash equivalents
Foreign exchange impact
Cash and cash equivalents at end of period
Note
(33)
(34)
(23)
(23)
2023
560.1
(60.4)
499.7
(179.5)
(313.3)
0.0
3.6
(13.8)
0.5
1.9
18.9
(481.7)
(2.6)
100.2
(8.2)
(77.7)
(2.9)
336.0
(15.9)
(60.6)
(72.7)
(20.3)
(2.4)
5.1
178.0
196.0
196.0
520.7
(9.3)
(3.9)
703.5
2022
287.5
(53.7)
233.8
(156.7)
(63.2)
8.7
1.8
2.8
0.0
0.8
6.1
(199.7)
0.0
0.0
(1.4)
(70.5)
(1.5)
344.4
(278.0)
(12.2)
(41.0)
(20.6)
(1.3)
(1.8)
(83.9)
(49.8)
(49.8)
580.8
0.0
(10.3)
520.7
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STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
Notes
to the Consolidated Financial Statements 2023
Principles and Methods
1. Authorisation of Financial Statements and Statement of Compliance with International Financial Reporting Standards
The Consolidated Financial Statements of RHI Magnesita N.V. and its subsidiaries (collectively referred to as “RHIM” or “the Group” for the year ended 31
December 2023, were approved and authorised for issue by the Board of Directors on 28 February 2024 and will be submitted for adoption to the Annual
General Meeting of shareholders in May 2024. RHIM is a public limited company incorporated under the laws of the Netherlands (naamloze vennootschap),
having its official seat (statutaire zetel) in Arnhem, the Netherlands, and its office at Kranichberggasse 6, 1120 Vienna, Austria, registered with the Dutch Trade
Register under number 68991665 and listed on the London Stock Exchange, with a secondary listing on the Vienna Stock Exchange (Wiener Börse).
The Group is a global industrial group whose core activities include the development and production, sale, installation and maintenance of high-grade
refractory products and systems used in industrial high-temperature processes exceeding 1,200°C.
Basis for preparation
The Consolidated Financial Statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by
the European Union. The Consolidated Financial Statements also comply with the financial reporting requirements included in Title 9 of Book 2 of the Dutch
Civil Code.
The accounting policies that follow have been consistently applied to all years presented, except where otherwise indicated. With the exception of specific
items such as derivative financial instruments, plan assets for defined benefit obligations, financial assets measured at Fair Value through Profit or Loss (FVPL) or
Other Comprehensive Income (FVOCI) and financial liabilities measured at FVPL, the Consolidated Financial Statements are prepared on a historical cost basis.
The financial year of RHI Magnesita N.V. and the Group corresponds to the calendar year. Subsidiaries with a financial year different to the Group, due to local
legal requirements, provide financial information to allow consolidation consistent with the Group’s financial year. The Consolidated Financial Statements are
presented in Euros and all values are rounded to the nearest € million with one decimal, except where otherwise indicated. The Group has availed of the
exemption provided by section 264 paragraph 3 HGB of the German Commercial Code for the following entities: RHI Urmitz AG & Co. KG (Koblenz), Magnesita
Refractories GmbH (Wiesbaden), RHI Magnesita Sales Germany GmbH (Wiesbaden), RHI Refractories Site Services GmbH (Wiesbaden), RHI Magnesita
Deutschland AG (Wiesbaden), RHI Magnesita Wetro GmbH (Puschwitz) and RHI Magnesita Bochum GmbH (Bochum). According to this provision, the
mentioned companies are exempt from preparing statutory financial statements, if required by the German Commercial Code, since they are included in the
Consolidated Financial Statements of the Group.
Basis of consolidation
The Consolidated Financial Statements consolidate the Financial Statements of the Group. Subsidiaries are consolidated from the date on which the Group
obtains control, including when control is obtained via potential voting rights, and continue to be consolidated until the date that control ceases.
The financial information of subsidiaries is prepared for the same reporting year as the parent company, using consistent accounting policies. When the Group
ceases to have control, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in the Statement of Profit
or Loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or
financial asset. In addition, any amounts previously recognised in Other Comprehensive Income (OCI) in respect of that entity are accounted for as if the Group
had directly disposed of the related assets or liabilities. This treatment may mean that amounts previously recognised in OCI are recycled through the
Statement of Profit or Loss. Intercompany balances and transactions, including unrealised profits arising from intragroup transactions, are eliminated in full.
Unrealised losses are eliminated in the same way as unrealised gains except that they are only eliminated to the extent that there is no evidence of impairment.
Non-controlling interests represent the equity in subsidiaries that is not attributable, directly or indirectly, to the Group’s shareholders.
Please refer to the Company Financial Statements of RHI Magnesita N.V. for a list of the Company’s subsidiaries, joint ventures and associates in which it holds
more than 20%.
Going concern
In considering the appropriateness of adopting the going concern basis in preparing the Consolidated Financial Statements, the Directors have assessed the
potential cash generation of the Group and considered a range of downside scenarios that model different degrees of potential economic downturn, using the
same model performed for the viability assessment. This assessment covers the period to 31 December 2025.
The scenarios considered by the Directors include a severe but plausible downside and a reverse stress test which determines the level of EBITDA that could
breach the Group’s debt covenant. Further mitigating actions within management control would be undertaken in such scenarios, including but not limited to:
working capital and SG&A reduction, deferring capital expenditure, or reducing or cancelling the dividend, but these were not incorporated in the downside
modelling.
The Directors have also considered the Group’s current liquidity and available facilities. As of 31 December 2023, the Consolidated Statement of Financial
Position reflects cash and cash equivalents of €703.5 million (2022: €520.7 million). In addition, the Group has access to a €600.0 million (2022: €600.0
million) Revolving Credit Facility (RCF), which is currently undrawn and not relied upon for the purpose of the going concern assessment. The Group has
complied with the financial covenants of the Group’s loan agreements (refer to Note (27)).
In the scenarios assessed and taking into account liquidity, available resources and before the inclusion of all mitigating actions, the Directors consider it is
appropriate to continue to adopt the going concern basis in preparing the Consolidated Financial Statements for the period ended 31 December 2023.
180
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
1 8 1
181
FINANCIAL STATEMENTS
Notes continued
2. Impact of new financial reporting standards and interpretations
Management has assessed the impact of new or amended IFRS and interpretations issued by the IASB and IFRS endorsed by the European Union effective on
or after 1 January 2023. Management assessed that application of these has not had a material impact on the Consolidated Financial Statements for 2023.
Refer to Note (3) on the results of the impact analysis on the implementation of a minimum taxation for income taxes under the new Pillar II legislation.
Furthermore, management has assessed the impact of new or amended IFRS and interpretations issued by the IASB that have not yet become effective. No
new or amended IFRS or interpretations have been early adopted. Except for the amendments to IAS 7 & IFRS 7 covering new disclosure requirements for the
Group’s existing liabilities related to supply finance arrangements, management does not anticipate any significant impact on the Consolidated Financial
Statements in the period of initial application after the adoption of these amendments.
Since supplier financing arrangements related to trade payables (see Note (32)) exist in the Group, and are expected to continue in the coming years, the
amendments to IAS 7 & IFRS 7 will bring additional disclosures on the effects of these arrangements on the Group’s liabilities, cash flows and exposure to
liquidity risk. The Group is analysing the impacts of the additional disclosures in terms of content and scope.
3. Significant Accounting Policies, Judgements and Estimates
Interests in other entities
Business combinations
Business combinations are accounted for using the acquisition method. The identifiable assets acquired and liabilities assumed, including any contingent
consideration, are recognised at their fair values at the acquisition date. The amount of the purchase consideration and value of non-controlling interest on
acquisition, if any, above the fair value of assets and liabilities is recognised as goodwill. A bargain purchase gain, if any, is recognised within other income
immediately. Transaction costs related to a business combination are expensed as incurred. The acquisition of a non-controlling interest in a subsidiary and the
sale of an interest are accounted for as transactions within equity unless they result in the loss of control. Sales of interests accounted for as equity transactions
also include share issues in subsidiaries which dilute RHI Magnesita N.V.’s share in the subsidiary’s net assets and where the dilution does not result in the loss of
control. The difference between the purchase consideration or sale proceeds after tax and the relevant proportion of the non-controlling interest, measured by
reference to the carrying amount of the interest’s net assets at the date of acquisition or sale, is recognised in retained earnings as a movement in equity
attributable to the shareholders of RHI Magnesita N.V.
Where the Group acquires less than 100% of shares in a business combination, IFRS 3 ‘Business Combinations’ allows an accounting policy choice whereby
non-controlling interest is either reflected at the proportionate share of the acquired identifiable net assets (excluding goodwill) or at fair value. This accounting
policy choice can be exercised individually for each acquisition. If a non-wholly owned subsidiary of RHI Magnesita N.V. is the deemed acquirer in a business
combination, goodwill is measured either as the excess of the full consideration transferred plus non-controlling interests, if any, over the acquired identifiable
net assets or as the excess of RHI Magnesita N.V.’s share in the consideration transferred plus non-controlling interests, if any, over the acquired identifiable net
assets. This accounting policy choice can be exercised individually for each acquisition too. For business combinations achieved in stages, the Group’s
previously held equity interest is remeasured to fair value at the acquisition date. Any gains and losses arising from such remeasurement are recognised in profit
or loss.
Net assets of subsidiaries not attributable to the Group are shown separately in equity as non-controlling interests.
As part of a business acquisition or subsequently, the Group may enter into agreements with non-controlling interests in the form of a call option, a put option
or a forward contract to acquire the outstanding shares. A call option provides the Group with the right to acquire the outstanding shares not already owned,
while a written put option allows the non-controlling interest to sell their shares to the Group. A forward contract creates a commitment for the Group to
purchase and for the non-controlling interest to sell the outstanding shares at a later date. The option or forward price may be based on an earnings multiple
such as EBITDA subject to contractual limits, if any, or may be fixed and exercisable at a future date. A financial liability is recognised on the written put option at
the present value of the estimated redemption amount. Where the option is assessed to result in the non-controlling interest transferring the risks and rewards
of ownership to the Group, on acquisition, the financial liability forms part of the purchase consideration with no value assigned to non-controlling interests. For
fixed price call and put options, the risks and rewards of ownership relating to the outstanding shares are assumed to have transferred to the Group.
Where the risks and rewards of ownership under the option are not transferred to the Group, the financial liability is not considered as part of the purchase
consideration and a non-controlling interest is recognised on acquisition. The financial liability is initially recognised against equity attributable to shareholders
of RHI Magnesita N.V. The Group applies the provisions of IAS 32 ‘Financial Instruments: Presentation’ and subsequently derecognises the non-controlling
interest to the extent that it is equal or less than the financial liability, against equity attributable to shareholders of RHI Magnesita N.V.
The subsequent measurement of the financial liability is conditional on the nature of the underlying cash consideration. If the option or forward contract will be
settled at a fixed cash consideration, the financial liability is subsequently measured at amortised cost. If the option or forward contract will be settled at a
variable cash consideration (e.g. EBITDA multiple or similar P&L measures) the financial liability is subsequently measured at fair value through profit or loss
(FVPL). Fair value changes resulting from the remeasurement of the financial liability are reflected within other net financial expenses.
Dividends paid to non-controlling interest with a fixed price or option are reflected as an expense within other finance expenses unless there is a contractual
right to reduce the liability.
Goodwill may also arise upon investments in joint ventures and associates, being the surplus of the cost of investment over the Group’s share of the net fair
value of the identifiable net assets. Any such goodwill is recorded within the corresponding investment in joint ventures and associates.
1 8 2
182
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Notes continued
2. Impact of new financial reporting standards and interpretations
Management has assessed the impact of new or amended IFRS and interpretations issued by the IASB and IFRS endorsed by the European Union effective on
or after 1 January 2023. Management assessed that application of these has not had a material impact on the Consolidated Financial Statements for 2023.
Refer to Note (3) on the results of the impact analysis on the implementation of a minimum taxation for income taxes under the new Pillar II legislation.
Furthermore, management has assessed the impact of new or amended IFRS and interpretations issued by the IASB that have not yet become effective. No
new or amended IFRS or interpretations have been early adopted. Except for the amendments to IAS 7 & IFRS 7 covering new disclosure requirements for the
Group’s existing liabilities related to supply finance arrangements, management does not anticipate any significant impact on the Consolidated Financial
Statements in the period of initial application after the adoption of these amendments.
Since supplier financing arrangements related to trade payables (see Note (32)) exist in the Group, and are expected to continue in the coming years, the
amendments to IAS 7 & IFRS 7 will bring additional disclosures on the effects of these arrangements on the Group’s liabilities, cash flows and exposure to
liquidity risk. The Group is analysing the impacts of the additional disclosures in terms of content and scope.
3. Significant Accounting Policies, Judgements and Estimates
Interests in other entities
Business combinations
Business combinations are accounted for using the acquisition method. The identifiable assets acquired and liabilities assumed, including any contingent
consideration, are recognised at their fair values at the acquisition date. The amount of the purchase consideration and value of non-controlling interest on
acquisition, if any, above the fair value of assets and liabilities is recognised as goodwill. A bargain purchase gain, if any, is recognised within other income
immediately. Transaction costs related to a business combination are expensed as incurred. The acquisition of a non-controlling interest in a subsidiary and the
sale of an interest are accounted for as transactions within equity unless they result in the loss of control. Sales of interests accounted for as equity transactions
also include share issues in subsidiaries which dilute RHI Magnesita N.V.’s share in the subsidiary’s net assets and where the dilution does not result in the loss of
control. The difference between the purchase consideration or sale proceeds after tax and the relevant proportion of the non-controlling interest, measured by
reference to the carrying amount of the interest’s net assets at the date of acquisition or sale, is recognised in retained earnings as a movement in equity
attributable to the shareholders of RHI Magnesita N.V.
Where the Group acquires less than 100% of shares in a business combination, IFRS 3 ‘Business Combinations’ allows an accounting policy choice whereby
non-controlling interest is either reflected at the proportionate share of the acquired identifiable net assets (excluding goodwill) or at fair value. This accounting
policy choice can be exercised individually for each acquisition. If a non-wholly owned subsidiary of RHI Magnesita N.V. is the deemed acquirer in a business
combination, goodwill is measured either as the excess of the full consideration transferred plus non-controlling interests, if any, over the acquired identifiable
net assets or as the excess of RHI Magnesita N.V.’s share in the consideration transferred plus non-controlling interests, if any, over the acquired identifiable net
assets. This accounting policy choice can be exercised individually for each acquisition too. For business combinations achieved in stages, the Group’s
previously held equity interest is remeasured to fair value at the acquisition date. Any gains and losses arising from such remeasurement are recognised in profit
or loss.
Net assets of subsidiaries not attributable to the Group are shown separately in equity as non-controlling interests.
As part of a business acquisition or subsequently, the Group may enter into agreements with non-controlling interests in the form of a call option, a put option
or a forward contract to acquire the outstanding shares. A call option provides the Group with the right to acquire the outstanding shares not already owned,
while a written put option allows the non-controlling interest to sell their shares to the Group. A forward contract creates a commitment for the Group to
purchase and for the non-controlling interest to sell the outstanding shares at a later date. The option or forward price may be based on an earnings multiple
such as EBITDA subject to contractual limits, if any, or may be fixed and exercisable at a future date. A financial liability is recognised on the written put option at
the present value of the estimated redemption amount. Where the option is assessed to result in the non-controlling interest transferring the risks and rewards
of ownership to the Group, on acquisition, the financial liability forms part of the purchase consideration with no value assigned to non-controlling interests. For
fixed price call and put options, the risks and rewards of ownership relating to the outstanding shares are assumed to have transferred to the Group.
Where the risks and rewards of ownership under the option are not transferred to the Group, the financial liability is not considered as part of the purchase
consideration and a non-controlling interest is recognised on acquisition. The financial liability is initially recognised against equity attributable to shareholders
of RHI Magnesita N.V. The Group applies the provisions of IAS 32 ‘Financial Instruments: Presentation’ and subsequently derecognises the non-controlling
interest to the extent that it is equal or less than the financial liability, against equity attributable to shareholders of RHI Magnesita N.V.
The subsequent measurement of the financial liability is conditional on the nature of the underlying cash consideration. If the option or forward contract will be
settled at a fixed cash consideration, the financial liability is subsequently measured at amortised cost. If the option or forward contract will be settled at a
variable cash consideration (e.g. EBITDA multiple or similar P&L measures) the financial liability is subsequently measured at fair value through profit or loss
(FVPL). Fair value changes resulting from the remeasurement of the financial liability are reflected within other net financial expenses.
Dividends paid to non-controlling interest with a fixed price or option are reflected as an expense within other finance expenses unless there is a contractual
right to reduce the liability.
Goodwill may also arise upon investments in joint ventures and associates, being the surplus of the cost of investment over the Group’s share of the net fair
value of the identifiable net assets. Any such goodwill is recorded within the corresponding investment in joint ventures and associates.
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Significant judgement: Recognition of non-controlling interest of Jinan New Emei
The acquisition of Jinan New Emei Industries Co Ltd. includes a commitment for the Group to acquire the outstanding shares (35%), see Note (42). The
Group has concluded, based on the terms and pricing of the commitment, that the risks and rewards of ownership associated with the outstanding shares
have not been transferred to the Group. Therefore, the financial liability was not considered as part of the purchase consideration and a non-controlling
interest was recognised on acquisition. The financial liability arising from the commitment has been recognised in accordance with the Group’s accounting
policy related to fixed-term or puttable non-controlling interests. Being that the financial liability was initially recognised against equity attributable to
shareholders of RHI Magnesita N.V, while the said non-controlling interests were derecognised to zero – also against equity attributable to shareholders of
RHI Magnesita N.V.
Significant estimate: Measurement of assets acquired and liabilities assumed in business combinations
Estimates relating to the calculation of fair values of acquired assets, liabilities and contingent liabilities are required within the context of business
combinations disclosed in Note (42).
Where intangible assets are identified, estimates are necessary for the determination of fair values by means of discounted cash flows, including the
duration, amount of future cash flows, and discount rate. Fair values of physical assets are estimated with reference to comparable assets in the market.
When making estimates in the context of purchase price allocations on major acquisitions, the Group consults with independent experts who accompany
the execution of the discretionary decisions and record this in appraisal documents. The Group has a period of one year from the date of control of the
acquired businesses to update initial fair value estimates. The Group does not expect changes in these fair value estimates to have a significant impact on
the recognised assets and liabilities over the remaining measurement period.
Goodwill and Other intangible assets
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities
and contingent liabilities of a subsidiary at the date of acquisition. Goodwill is initially recognised at cost and is subsequently measured at cost less any
accumulated impairment losses. Goodwill recognised as an asset is reviewed for impairment at least annually.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Other intangible assets
Mining rights
Mining rights were recognised in the course of the purchase price allocation for former Magnesita Group and are amortised based on the depletion of the
related mines. Depletion is calculated based on the volume mined in the period in proportion to the total estimated economically viable volume.
Customer relationships
Customer relationships arise from the acquisition of business and are measured at assigned fair values on acquisition, less accumulated amortisation and
impairments. These intangibles are amortised on a straight-line basis over their expected useful lives.
Development costs
Research costs are expensed in the year incurred and included in general and administrative expenses. Development costs, including internally developed
software, are only capitalised if the costs can be measured reliably and are expected to result in future economic benefits either through use or sale.
Capitalisation will also only arise when the product or process development can be clearly defined and is feasible in technical, economic and capacity terms.
For internally developed software, costs are capitalised when these can be directly and conclusively allocated to individual programmes and represent a
significant extension or improvement on existing software. All other internally developed software costs are expensed. Development costs are amortised on a
straight-line basis over their expected useful lives of up to ten years, with internally developed software amortised over a period of up to four years. Amortisation
is recognised in cost of sales.
Other intangible assets
These mainly represent purchased third-party software, land-use rights and patent fees and are recognised when future associated economic benefits are
expected to accrue to the Group. These intangibles are initially measured at their acquisition cost and amortised over their expected useful lives.
The useful lives of the Group’s main classes of intangible assets are:
Customer relationships
Internally generated intangible assets
Other intangible assets
6 to 20 years
4 to 18 years
4 to 65 years
The useful economic lives of intangible assets are reviewed regularly and adjusted if necessary.
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Notes continued
The carrying value of other intangible assets are assessed at each reporting period for indicators of impairments. See below for the accounting policy relating to
impairment of non-current assets other than goodwill and intangible assets with indefinite useful life.
Significant judgement: Measurement of mining rights
Management has assessed that given the few or no viable alternatives for the Group’s refractory products, which are extracted from the Group’s mines and
used in the construction and automotive industries, together with their continued use in the transition to a green economy, no indicators of impairment have
arisen and as a consequence the useful lives remain unchanged.
Property, plant and equipment
Property, plant and equipment is measured at acquisition or construction cost, less accumulated depreciation and accumulated impairment losses. These
assets are depreciated on a straight-line basis over their expected useful life to their estimated residual values and from when they are available for use in the
manner intended by management.
Construction costs of assets comprise of direct costs as well as a proportionate share of capitalisable overhead costs and borrowing costs. If borrowed funds are
directly attributable to an investment, borrowing costs are capitalised as a cost of the assets. If no direct connection between an investment and borrowed funds
can be demonstrated, the average rate on borrowed capital of the Group is used as the capitalisation rate due to the central funding of the Group.
Expected demolition and disposal costs at the end of an asset’s useful life are capitalised as part of its acquisition cost and recorded as a provision. The
recognition criteria are a legal or constructive obligation towards a third-party and the ability to reliably estimate future cost.
Land and plant under construction are not depreciated. Depreciation of property, plant and equipment is based on the following useful lives:
Real estate, land and buildings
Technical equipment and machinery
Other plant, office equipment, furniture and fixtures
8 to 60 years
8 to 50 years
3 to 35 years
The carrying value of property, plant and equipment is assessed at each reporting period for indicators of impairments. See below for accounting policy relating
to impairment of non-current assets other than goodwill and intangible assets with indefinite useful life.
The residual values and economic useful lives of property, plant and equipment, are reviewed regularly and adjusted if necessary.
When components of plant or equipment have to be replaced at regular intervals, the relevant replacement costs are capitalised when economic benefits are
expected to arise for the Group. The carrying amount of the replaced components is derecognised. Regular maintenance and repair costs are expensed as
incurred.
Gains or losses from the disposal of property, plant and equipment, which result from the difference between the net realisable value and the carrying amount,
are recognised as income or expense in the Consolidated Statement of Profit or Loss.
Significant estimate: Useful lives of property, plant and equipment and intangible assets
Management uses its experience to estimate the remaining useful life of an asset. The actual useful life of an asset may be impacted by an unexpected
event that may result in an adjustment to the carrying amount of the asset. No such events are expected to arise which would have a material impact on
carrying values within 12 months from the balance sheet date.
Leases
A contract, or part of a contract, that conveys the right to control the use of an identified asset for a period of time in exchange for payments to be made to the
owners (lessors) is accounted for as a lease. Contracts are assessed to determine whether it is or contains, a lease at inception or when the terms and conditions
of a contract are significantly changed. The lease term is the non-cancellable period of a lease, together with contractual options to extend or to terminate the
lease early, where it is reasonably certain that an extension option will be exercised, or a termination option will not be exercised. At the commencement of a
lease contract, a right-of-use asset and a corresponding lease liability are recognised, except for low-value items or for lease terms of less than 12 months. The
commencement date of a lease is the date on which the underlying asset is made available for use. The lease liability is measured at an amount equal to the
present value of the lease payments during the lease term that are not paid at that date. The lease liability includes contingent rentals and variable lease
payments that depend on an index, rate, or where they are fixed payments in substance.
The lease liability is remeasured when the contractual cash flows of variable lease payments change due to a change in an index or rate when the lease term
changes following a reassessment. Lease payments are discounted using the interest rate implicit in the lease. If that rate is not readily available, the incremental
borrowing rate is applied. The incremental borrowing rate reflects the rate of interest that the lessee would have to pay to borrow over a similar term and similar
security, the funds necessary to obtain an asset of a similar nature and value to the right-of-use asset in a similar economic environment.
In general, a corresponding right-of-use asset is recognised for an amount equal to each lease liability, adjusted by the amount of any pre-paid lease payment
relating to the specific lease contract, less any lease incentives, and for any estimated restoration and removal costs. The depreciation on right-of-use assets is
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The carrying value of other intangible assets are assessed at each reporting period for indicators of impairments. See below for the accounting policy relating to
impairment of non-current assets other than goodwill and intangible assets with indefinite useful life.
recognised in the Statement of Profit or Loss. Right-of-use assets are assessed for impairment indicators (see accounting policy on impairment of non-current
assets).
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OTHER
INFORMATION
Impairment of goodwill, property, plant and equipment and other intangible assets
Goodwill
Goodwill is reviewed at least annually for impairment. Any impairment loss is recognised as an expense immediately. For the purpose of impairment testing,
goodwill is allocated to groups of individual Cash-Generating Units (CGUs) expected to benefit from the combination. If the recoverable amount of the CGU is
less than the carrying amount of the CGU (including goodwill) allocated to it, the resulting impairment loss is applied first to the allocated goodwill and then to
the other assets on a pro-rata basis of the carrying amount of each asset. Reversals of impairment losses on goodwill are not permitted. The cash flows used to
determine the recoverable amount of the CGU, including goodwill, is consistent with the description provided below for property, plant and equipment and
other intangibles.
Significant estimate: Determination of recoverable amounts of CGUs which include goodwill
Management makes use of various estimates and assumptions in determining the cash flow forecasts used to determine the recoverable amounts of CGUs
to which goodwill is allocated for the annual impairment test. Key assumptions include discount rates used to discount cash flows, the perpetual annuity
growth rate, projected revenue and projected EBIT margin of the associated CGU. For further details on impairment tests for CGUs which include goodwill,
refer to Note (17).
Property, plant and equipment and other intangibles
Property, plant and equipment, including right-of-use assets and intangible assets are tested for impairment if there is any indication that the value of these
items may be impaired. An asset is considered to be impaired if its recoverable amount is less than its carrying amount. In the Group, individual assets do not
generate cash inflows independent of one another and assets are combined in CGUs, which largely generate independent cash inflows. These CGUs are
combined in strategic business units and reflect the market presence and appearance and drive cash inflows. The organisational structures of the Group reflect
these units. In addition to the joint management and control of the business activities in each unit, the sales know-how, the knowledge of the long-standing
customer relationships or knowledge of the customer’s production facilities and processes further support these units. Product knowledge is manifested in the
application-oriented knowledge of chemical, physical and thermal properties of RHI Magnesita products. The services offered extend over the life cycle of
products at the customer’s plant, from the appropriate installation and support of optimal operations, to environmentally sound disposal with the customer or
sustainable reuse in the Group’s production process. These factors determine cash inflow to a significant extent and consequently form the basis for the CGU
structures.
The CGUs of the strategic business unit Steel are Linings and Flow Control. These two CGUs are determined according to the production stages in the process
of steel production. In the Industrial business unit, each industry line of business (Glass, Cement/Lime, Non-Ferrous Metals and Environment, Energy,
Chemicals) forms a separate CGU. All raw material producing facilities are combined in one CGU.
According to IAS 36 'Impairment of Assets' the recoverable amount of a CGU is defined as the higher of its fair value less costs of disposal and its value in use
(present value of future cash flows). For the purpose of testing CGUs for impairment the Group determines the recoverable amount of the CGUs solely on the
basis of value in use. In assessing value in use, the estimated future cash flows of the CGU in its present condition are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks, including country, specific to the CGU.
The cash flows projections used for impairment testing are based on the strategic business and financial planning model of the Group including the 2024
budget, as approved by the Board, and the Long-Term Plan covering a four-year period. The terminal value is based on a growth rate derived from the
difference of the current and the possible degree of utilisation of the assets. To forecast the CGUs’ cash flows, management predicts the growth rate using
external sources for the development of the customers’ industries and expert assumptions, including forecasts about the regional growth of steel production
and the output of the non-steel clients. Growth rates are also influenced by the development of the specific refractory consumption patterns, including
technological improvements.
If the carrying amount is higher than the recoverable amount, an impairment loss equivalent to the resulting difference is recognised in the Statement of Profit
or Loss. If the reason for an impairment loss recognised in the past for property, plant and equipment or for other intangible assets ceases to exist, a reversal of
the impairment is recognised in profit or loss. An impairment loss is reversed only to the extent that the CGUs carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised in prior years.
Significant judgement: Identification of impairment indicators related to CGUs without goodwill
Management reviewed CGUs for indicators of impairment. These indicators included both external factors affecting the CGUs, such as laws and regulations
in specific countries and global and local economic conditions and internal factors, including but not limited to, useful lives of assets, major breakdowns or
decisions to divest from certain businesses. Based on the impairment indicator review, no impairment indicators were identified at any of the CGUs, that did
not have goodwill allocated to them.
Additionally, management has assessed the useful lives of assets and these continue to be appropriate due to the limited refractory and other product
alternatives available and as the steel and industrial sectors in which the Group operates, continue to play a significant part in the transition towards
sustainable output and the transition to a green economy.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. In general,
financial instruments can be classified to be measured subsequently at amortised cost, fair value through profit or loss or fair value through other
comprehensive income. Classification of financial assets depends on the contractual terms of the cash flows as well as on the entity’s business model for
Notes continued
Significant judgement: Measurement of mining rights
Management has assessed that given the few or no viable alternatives for the Group’s refractory products, which are extracted from the Group’s mines and
used in the construction and automotive industries, together with their continued use in the transition to a green economy, no indicators of impairment have
arisen and as a consequence the useful lives remain unchanged.
Property, plant and equipment
manner intended by management.
Property, plant and equipment is measured at acquisition or construction cost, less accumulated depreciation and accumulated impairment losses. These
assets are depreciated on a straight-line basis over their expected useful life to their estimated residual values and from when they are available for use in the
Construction costs of assets comprise of direct costs as well as a proportionate share of capitalisable overhead costs and borrowing costs. If borrowed funds are
directly attributable to an investment, borrowing costs are capitalised as a cost of the assets. If no direct connection between an investment and borrowed funds
can be demonstrated, the average rate on borrowed capital of the Group is used as the capitalisation rate due to the central funding of the Group.
Expected demolition and disposal costs at the end of an asset’s useful life are capitalised as part of its acquisition cost and recorded as a provision. The
recognition criteria are a legal or constructive obligation towards a third-party and the ability to reliably estimate future cost.
Land and plant under construction are not depreciated. Depreciation of property, plant and equipment is based on the following useful lives:
Real estate, land and buildings
Technical equipment and machinery
Other plant, office equipment, furniture and fixtures
8 to 60 years
8 to 50 years
3 to 35 years
The carrying value of property, plant and equipment is assessed at each reporting period for indicators of impairments. See below for accounting policy relating
to impairment of non-current assets other than goodwill and intangible assets with indefinite useful life.
The residual values and economic useful lives of property, plant and equipment, are reviewed regularly and adjusted if necessary.
When components of plant or equipment have to be replaced at regular intervals, the relevant replacement costs are capitalised when economic benefits are
expected to arise for the Group. The carrying amount of the replaced components is derecognised. Regular maintenance and repair costs are expensed as
Gains or losses from the disposal of property, plant and equipment, which result from the difference between the net realisable value and the carrying amount,
are recognised as income or expense in the Consolidated Statement of Profit or Loss.
Significant estimate: Useful lives of property, plant and equipment and intangible assets
Management uses its experience to estimate the remaining useful life of an asset. The actual useful life of an asset may be impacted by an unexpected
event that may result in an adjustment to the carrying amount of the asset. No such events are expected to arise which would have a material impact on
carrying values within 12 months from the balance sheet date.
incurred.
Leases
A contract, or part of a contract, that conveys the right to control the use of an identified asset for a period of time in exchange for payments to be made to the
owners (lessors) is accounted for as a lease. Contracts are assessed to determine whether it is or contains, a lease at inception or when the terms and conditions
of a contract are significantly changed. The lease term is the non-cancellable period of a lease, together with contractual options to extend or to terminate the
lease early, where it is reasonably certain that an extension option will be exercised, or a termination option will not be exercised. At the commencement of a
lease contract, a right-of-use asset and a corresponding lease liability are recognised, except for low-value items or for lease terms of less than 12 months. The
commencement date of a lease is the date on which the underlying asset is made available for use. The lease liability is measured at an amount equal to the
present value of the lease payments during the lease term that are not paid at that date. The lease liability includes contingent rentals and variable lease
payments that depend on an index, rate, or where they are fixed payments in substance.
The lease liability is remeasured when the contractual cash flows of variable lease payments change due to a change in an index or rate when the lease term
changes following a reassessment. Lease payments are discounted using the interest rate implicit in the lease. If that rate is not readily available, the incremental
borrowing rate is applied. The incremental borrowing rate reflects the rate of interest that the lessee would have to pay to borrow over a similar term and similar
security, the funds necessary to obtain an asset of a similar nature and value to the right-of-use asset in a similar economic environment.
In general, a corresponding right-of-use asset is recognised for an amount equal to each lease liability, adjusted by the amount of any pre-paid lease payment
relating to the specific lease contract, less any lease incentives, and for any estimated restoration and removal costs. The depreciation on right-of-use assets is
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Notes continued
managing the financial assets. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets,
or both.
Financial assets are classified as amortised cost, if the contractual cash flows include solely payments of principal and interest and which are held in order to
collect the contractual cash flows. If the contractual cash flows include solely payments of principal and interest, but are held to collect both the contractual
cash flows and sell the financial asset, then they are classified as fair value through other comprehensive income. If the contractual cash flows do not solely
include payments of principal and interest, then they are classified as fair value through profit or loss.
The Group initially recognises securities on the trading date when it becomes a party to the contractual provisions of the instruments. All other financial assets
and financial liabilities are initially recognised on the date when they are originated. Financial instruments, except for trade receivables, are initially recognised
at fair value. Financial assets are derecognised if the entity transfers substantially all the risks and rewards or if the entity neither transfers nor retains substantially
all the risks and rewards and has not retained control. Financial liabilities are derecognised when the contractual obligations are settled, withdrawn or have
expired.
Investments in debt securities are subsequently measured at fair value through profit and loss if the contractual terms of cash flows do not solely include
payments of principal and interest. Otherwise, they are subsequently carried at amortised cost.
Investments in equity securities, including non-consolidated subsidiaries, are of minor importance and recognised and measured either at fair value through
profit or loss, or at fair value through OCI, if the latter option was exercised.
Financial assets at amortised costs are measured by applying the effective interest method.
Trade and other current receivables
Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components when they
are recognised at fair value and, depending on the business model, subsequently carried either at amortised cost minus any valuation allowances or at fair
value through other comprehensive income minus any valuation allowances for expected or incurred credit losses. Irrespective of the measurement category,
any impairment losses are recognised in the Statement of Profit or Loss. Valuation allowances for expected credit losses are calculated in accordance with the
simplified approach of the impairment model for financial instruments (see accounting policy on impairment of financial assets below).
The Group sells trade receivables to financial institutions in the scope of factoring arrangements on a recurring basis based on its liquidity needs. Prospectively,
the extent and the specific trade receivables impacted by future sales cannot be identified. Therefore, trade receivables which qualify for a future sale under the
terms of existing factoring agreements are allocated to a portfolio whose objective is collecting the contractual cash flows and selling them. These trade
receivables are carried at fair value through other comprehensive income minus any valuation allowances. Whereas trade receivables which do not qualify for a
future sale under the terms of existing factoring agreements are allocated to a portfolio whose objective is only to collect the contractual cash flows and are
therefore carried at amortised cost minus any valuation allowances.
In factoring arrangements, trade receivables are derecognised where the Group transfers substantially all the risks and rewards associated with the financial
assets. Payments received from customers following the sale are recognised in current borrowings until repaid to the factorer.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, cheques received, cash at banks and short-term cash deposits with an original term of up to three months.
Moreover, investments in money market funds exposed to insignificant value fluctuations due to their high credit rating and investments in short-term money
market instruments that can be converted to defined cash amounts within a few days at any time, are also reflected as cash equivalents.
Borrowings
Financial liabilities include liabilities to financial institutions and other lenders and are measured at fair value less directly attributable transaction costs at initial
recognition. In subsequent periods, these liabilities are measured at amortised cost applying the effective interest rate method.
A financial liability is derecognised when the obligation under the liability is discharged (by payment or legal release), cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The terms
are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and
discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original
financial liability. The difference in the respective carrying amounts is subsequently recognised in the Statement of Profit or Loss, including any costs or fees.
Trade payables and other current liabilities
These liabilities are initially recognised at fair value, and subsequently measured at amortised cost. The Group may participate in supply chain finance
arrangements whereby suppliers may elect to receive a discounted early payment of their invoice from a bank as opposed to the agreed contractual payment
terms. Where this arises, the Group settles the amount owed to the bank. The invoice due date as well as the value of the original liability remains unaltered.
Financial liabilities subject to supply chain finance arrangements continue to be classified as trade payables since they represent liabilities to pay for goods or
services, are invoiced or formally agreed with the supplier and are part of the working capital used in the Group's normal operating cycle.
Derivative financial instruments and hedging activities
Derivative financial instruments not designated as hedges
Derivative contracts are used in the management of interest rate risk, commodity price risk and foreign currency risk. These derivative financial instruments,
which are not designated in an effective hedging relationship in accordance with IFRS 9 ‘Financial Instruments’, are recognised initially at fair value on the date
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Notes continued
managing the financial assets. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets,
on which a derivative contract is entered into and subsequently remeasured at fair value with changes in fair value reflected in the Statement of Profit or Loss.
Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.
Financial assets are classified as amortised cost, if the contractual cash flows include solely payments of principal and interest and which are held in order to
collect the contractual cash flows. If the contractual cash flows include solely payments of principal and interest, but are held to collect both the contractual
cash flows and sell the financial asset, then they are classified as fair value through other comprehensive income. If the contractual cash flows do not solely
include payments of principal and interest, then they are classified as fair value through profit or loss.
Derivative financial instruments include forward exchange contracts and embedded derivatives in open orders denominated in a currency other than the
functional currency of either contracting party, with the assessment made on a case-by-case basis at the respective forward rate on the reporting date. These
forward rates are based on spot rates, including forward premiums and discounts. Unrealised valuation gains or losses and results from the realisation are
recognised in the Statement of Profit or Loss in net expense of foreign exchange effects and related derivatives.
The Group initially recognises securities on the trading date when it becomes a party to the contractual provisions of the instruments. All other financial assets
and financial liabilities are initially recognised on the date when they are originated. Financial instruments, except for trade receivables, are initially recognised
at fair value. Financial assets are derecognised if the entity transfers substantially all the risks and rewards or if the entity neither transfers nor retains substantially
all the risks and rewards and has not retained control. Financial liabilities are derecognised when the contractual obligations are settled, withdrawn or have
Forward purchase or sale arrangements for the physical delivery of non-financial assets that are entered into in line with the Group’s expected purchase, sale or
usage requirements (“own use”) and are normally entered into to hedge the associated price risk are not recognised or measured at fair value. These forward
contracts are assessed to be off-balance-sheet executory contracts due to their own use features. If the own use exemption is not met, the forwards will be
recognised at fair value, with fair value remeasurement recorded in the Statement of Profit or Loss.
or both.
expired.
Significant Judgement: Own use exemption on gas and power forward purchase and physical delivery CO2-certificate forwards
Due to the reduction of free CO2 emission certificates and the expected increase in CO2 market prices, the Group hedges the associated price risk by use of
physical delivery forward purchases for own use. The Group also enters into fixed price and quantity forward gas and power contracts to secure supply for its
production process and reduce price volatility. The own use exemption does not require fair value recognition and measurement of the forward purchases
and thus volatility in the Statement of Profit of Loss can be avoided. The own use exemption requires contracts to be entered into and continued to be held
for delivery and usage requirements of the Group. The Group settles the forwards through physical delivery and does not expect to sell any (unexpected)
surplus of either gas, power or CO2 emission certificates. Management have judged that these forward purchases based on current and expected future
requirements satisfy the own use exemption and have not applied fair value recognition and measurement.
Derivative financial instruments designated as cash flow hedges
For derivative financial instruments which are designated as an effective cash flow hedge in accordance with IFRS 9 ‘Financial Instruments’, hedge accounting
is applied. The hedging instruments, used to hedge the underlying items, are measured at fair value with the effective part of the fair value changes recorded in
OCI as an unrealised gain or loss. At the time of the realisation of the underlying transaction, the fair value changes of the hedging instrument recognised in
OCI is recycled to the Statement of Profit or Loss. Ineffective parts of the cash flow hedges are recognised immediately in the Statement of Profit or Loss. Where
the hedged item is a non-financial asset or liability, the amount accumulated in OCI is transferred to the initial carrying amount of the asset or liability. If the
hedged transaction is no longer expected to take place, the accumulated amount recorded in OCI is reclassified to the Statement of Profit or Loss. All
relationships between hedging instruments and hedged items are documented, as well as risk management objectives and strategies for undertaking hedge
transactions. The effectiveness of hedges is also continually assessed and hedge accounting is discontinued when there is a change in the risk management
strategy.
Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the
effective portion of the hedge are recognised in OCI and presented in the currency translation difference reserve within equity while any gains or losses relating
to the ineffective portion are recognised in the Statement of Profit or Loss. On disposal of the foreign operation, the cumulative amount of any such gains or
losses in OCI is reclassified to the Statement of Profit or Loss.
Impairment of financial assets
Impairment of certain financial assets is based on expected credit losses (ECL). ECL is defined as the difference between all contractual cash flows the entity is
entitled under the contract and the cash flows expected to be received. The measurement of expected credit losses is generally a function of the probability of
default, loss given default and the exposure at default.
Financial liabilities include liabilities to financial institutions and other lenders and are measured at fair value less directly attributable transaction costs at initial
recognition. In subsequent periods, these liabilities are measured at amortised cost applying the effective interest rate method.
Loss allowance is measured for expected credit losses on debt instruments, trade receivables and contract assets measured at amortised cost. The amount of
ECL is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
The Group recognises lifetime ECL for trade receivables and contract assets by applying the simplified approach. The ECL on these financial assets are
generally estimated using a provision matrix based on the Group’s historical credit loss experience for customer groups located in different geographic regions.
Forward-looking information is incorporated in the determination of the applicable loss rates for trade receivables. For the Group, the general economic
development of the countries in which it sells its goods and services is relevant in determining if the adjustment of the historical loss rates is necessary.
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However,
if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial
instrument at an amount equal to 12-month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-
month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after
the reporting date.
The Group makes use of the practical expedient for financial instruments with an ‘investment grade’ rating that it is assumed to be of low credit risk and with no
significant increase in the credit risk. Under the practical expedient, the expected credit loss is calculated using the 12-month ECL. Among other factors, the
Group considers a significant increase in credit risk to have taken place when contractual payments are more than 30 days past due.
The Group assumes that a default event has occurred when trade receivables are 180 days past due unless reasonable and supportable information confirms
otherwise. For those financial instruments where objective evidence of default is present, an individual assessment of ECL takes place.
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Investments in debt securities are subsequently measured at fair value through profit and loss if the contractual terms of cash flows do not solely include
payments of principal and interest. Otherwise, they are subsequently carried at amortised cost.
Investments in equity securities, including non-consolidated subsidiaries, are of minor importance and recognised and measured either at fair value through
profit or loss, or at fair value through OCI, if the latter option was exercised.
Financial assets at amortised costs are measured by applying the effective interest method.
Trade and other current receivables
Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components when they
are recognised at fair value and, depending on the business model, subsequently carried either at amortised cost minus any valuation allowances or at fair
value through other comprehensive income minus any valuation allowances for expected or incurred credit losses. Irrespective of the measurement category,
any impairment losses are recognised in the Statement of Profit or Loss. Valuation allowances for expected credit losses are calculated in accordance with the
simplified approach of the impairment model for financial instruments (see accounting policy on impairment of financial assets below).
The Group sells trade receivables to financial institutions in the scope of factoring arrangements on a recurring basis based on its liquidity needs. Prospectively,
the extent and the specific trade receivables impacted by future sales cannot be identified. Therefore, trade receivables which qualify for a future sale under the
terms of existing factoring agreements are allocated to a portfolio whose objective is collecting the contractual cash flows and selling them. These trade
receivables are carried at fair value through other comprehensive income minus any valuation allowances. Whereas trade receivables which do not qualify for a
future sale under the terms of existing factoring agreements are allocated to a portfolio whose objective is only to collect the contractual cash flows and are
therefore carried at amortised cost minus any valuation allowances.
In factoring arrangements, trade receivables are derecognised where the Group transfers substantially all the risks and rewards associated with the financial
assets. Payments received from customers following the sale are recognised in current borrowings until repaid to the factorer.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, cheques received, cash at banks and short-term cash deposits with an original term of up to three months.
Moreover, investments in money market funds exposed to insignificant value fluctuations due to their high credit rating and investments in short-term money
market instruments that can be converted to defined cash amounts within a few days at any time, are also reflected as cash equivalents.
Borrowings
A financial liability is derecognised when the obligation under the liability is discharged (by payment or legal release), cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The terms
are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and
discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original
financial liability. The difference in the respective carrying amounts is subsequently recognised in the Statement of Profit or Loss, including any costs or fees.
Trade payables and other current liabilities
These liabilities are initially recognised at fair value, and subsequently measured at amortised cost. The Group may participate in supply chain finance
arrangements whereby suppliers may elect to receive a discounted early payment of their invoice from a bank as opposed to the agreed contractual payment
terms. Where this arises, the Group settles the amount owed to the bank. The invoice due date as well as the value of the original liability remains unaltered.
Financial liabilities subject to supply chain finance arrangements continue to be classified as trade payables since they represent liabilities to pay for goods or
services, are invoiced or formally agreed with the supplier and are part of the working capital used in the Group's normal operating cycle.
Derivative financial instruments and hedging activities
Derivative financial instruments not designated as hedges
Derivative contracts are used in the management of interest rate risk, commodity price risk and foreign currency risk. These derivative financial instruments,
which are not designated in an effective hedging relationship in accordance with IFRS 9 ‘Financial Instruments’, are recognised initially at fair value on the date
FINANCIAL STATEMENTS
Notes continued
Generally, financial instruments are written off when there is no reasonable expectation of recovering amounts due.
Inventories
Inventories are stated at the lower of cost or net realisable value as of the reporting date. The determination of acquisition cost of purchased materials is based
on the average cost. Finished goods and work in progress are valued at fixed and variable production cost. The net realisable value is the estimated selling price
in the ordinary course of business minus any estimated cost to complete and to sell the goods. Impairments due to reduced usability are reflected in the
calculation of the net realisable value.
Provisions and contingent liabilities
Provisions are recognised when the Group incurs a legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be
required to meet this obligation, and the amount of the obligation can be reliably estimated.
Provisions for warranties are created for individual contracts at the time of the sale of goods or after the service has been provided. The amounts of the provisions
are based on the expected or actual warranty claims.
Provisions for restructuring are recognised once a detailed formal restructuring plan has been developed and announced prior to the reporting date or whose
implementation was commenced prior to the reporting date.
The Group recognises provisions for demolition and disposal costs and environmental damages. The Group’s facilities and its refractory, exploration and mining
operations are subject to environmental and governmental laws and regulations in each of the jurisdictions in which it operates. These laws govern, among
other things, reclamation or restoration of the environment in mined areas and the clean-up of contaminated properties. These provisions include the
estimated demolition and disposal costs of plants and buildings as well as environmental restoration costs arising from mining activities, based on the present
value of estimated cash flows of the expected costs. The estimated future costs of asset retirements are reviewed annually and adjusted, if appropriate.
A provision for an onerous or unfavourable contract is recognised when the expected benefits to be derived from a contract are lower than the unavoidable cost
of meeting its obligations under the contract. Provisions are measured at the present value of the unavoidable costs of meeting the obligation under the
contract which exceed the economic benefits expected to arise from that contract.
Provisions for labour and civil contingencies are recognised for all risks referring to legal proceedings that represent a probable loss. Assessment of the
likelihood of loss includes an analysis of available evidence, including the opinion of internal and external legal advisors of the Group.
Provisions are measured at their discounted settlement value as of the reporting date if the discounting effect is material.
If maturities cannot be estimated, they are shown within current provisions.
Significant estimate: Measurement of other provisions
The recognition and measurement of other provisions disclosed in Note (31) are based on best estimates using the information available at the reporting
date. The estimates take into account the underlying legal or constructive obligation and are performed by internal experts or, when appropriate, also by
external experts. Despite the best possible assumptions and estimates, cash outflows expected at the reporting date may deviate from actual cash outflows.
As soon as additional information is available, the estimates made are reviewed and provisions are also adjusted. The majority of other provisions refers to an
unfavourable contract which was recognised in the course of the acquisition of former Magnesita Group and is mainly based on an estimate of forgone profit
margins compared to market conditions. Moreover, restructuring provisions and provisions related the rehabilitation and restoration of the mining sites or for
environmental damages are recorded within other provisions. These are subject to measurement uncertainties in terms of the estimated costs to settle the
obligation, estimated term until rehabilitation and restoration, discount rate and inflation rate. Changes in these parameters may result in higher or lower
provisions.
A contingent liability is disclosed, where material, if the existence of the obligation will only be confirmed by future events or where the amount of the
obligation cannot be measured with reasonable reliability. A contingent liability is not disclosed if the likelihood of a material cash outflow is considered remote.
The Group's contingent liabilities are reviewed on a regular basis.
Employee related benefits
Provisions for post-employment benefits
Pension plans
With respect to post-employment benefits relating to pensions, a differentiation is made between defined contribution and defined benefit plans.
Defined contribution plans limit the Group’s obligation to the agreed contributions to earmarked pension schemes. The contributions are expensed as incurred.
Defined benefit plans require the Group to provide agreed benefits to active and former employees and their dependents.
Pension obligations are measured using the projected unit credit method and is netted against the fair value of the plan assets, if any. If the plan assets are not
sufficient to cover the obligation, the net obligation is recognised as a liability. However, if the plan assets exceed the obligations, the net surplus recognised is
limited to reductions of future contribution payments to the plan and is presented as other non-current assets in the Statement of Financial Position. The Group
applies the requirements of IFRIC 14 and restricts recognition of the net surplus by applying an asset recognition ceiling where the Group does not have an
unconditional right to a refund, assuming full settlement of the liabilities. Changes in the asset ceiling are recorded in OCI.
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Generally, financial instruments are written off when there is no reasonable expectation of recovering amounts due.
The present value of defined benefit obligations is determined separately for each plan, annually, by independent qualified actuaries. The present value of
future benefits is based on the length of service, expected wage/salary developments and pension adjustments.
Inventories are stated at the lower of cost or net realisable value as of the reporting date. The determination of acquisition cost of purchased materials is based
on the average cost. Finished goods and work in progress are valued at fixed and variable production cost. The net realisable value is the estimated selling price
in the ordinary course of business minus any estimated cost to complete and to sell the goods. Impairments due to reduced usability are reflected in the
The expense to be recognised in a period includes current and past service costs, settlement gains and losses, interest expenses from the interest accrued on
obligations, interest income from plan assets and administration costs paid from plan assets. The net interest expense is shown separately in net finance costs.
All other expenses related to defined benefit plans are allocated to the costs of the relevant functional areas.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
Actuarial assumptions required to calculate these obligations include the discount rate, increases in wages/salaries and pensions, retirement starting age and
probability of employee turnover and actual claims. The calculation is based on local demographic parameters.
Interest rates, which are based on high-quality corporate bonds issued with comparable maturities and currencies, are applied to determine the present value of
pension obligations. In countries where there is not a sufficiently liquid market for high-quality corporate bonds, the returns on government bonds are used as a
basis.
The rates of increase for wages/salaries are based on an average of past years, which is also considered to be realistic for the future, while the retirement age is
based on the respective statutory provisions of the country concerned.
Remeasurement gains and losses are recorded net of deferred taxes under OCI in the period incurred.
Other post-employment benefits
Includes provisions for termination benefits primarily related to obligations to employees whose employment is subject to Austrian law.
Employees who joined an Austrian company before 31 December 2002 receive a one-off lump-sum termination benefit as defined by the Austrian labour
legislation if the employer terminates the employment or when the employee retires. It is regarded as a post employment benefit and classified as a defined
benefit plan under IAS 19 ‘Employee Benefits’. The termination payment depends on the relevant salary at the time of the termination as well as the number of
years of service and ranges between two and 12 monthly salaries. These defined benefit obligations are measured using the projected unit credit method
applying an accumulation period of 25 years. Remeasurement gains and losses are recorded directly to OCI after considering tax effects.
For employees who joined an Austrian company after 31 December 2002, employers are required to make regular contributions equal to 1.53% of the monthly
wage/salary to a statutory termination benefit scheme. The Company has no further obligations. Claims by employees to termination benefits are filed with the
statutory termination benefit scheme, while the continuous contributions are treated as defined contribution plans and included in the personnel expenses of
the functional areas.
Significant estimate: Pension plans and other post-employment benefits classified as defined benefit plans
The measurement of defined benefit obligation and plan assets requires use of estimates such as discount rates, mortality rates, salary increases and
inflation. These estimates are reviewed and update when a valuation is performed by third-party experts. Further details of the estimates and assumptions
together with sensitivities on changes to assumptions is reflected in Note (29). Changes in these assumptions may result in differences between cash
outflows expected at the reporting date and actual cash outflows.
Other employee benefits
This includes service anniversary bonuses, payments to semi-retirees and lump-sum settlements.
Service anniversary bonuses are one-time special payments that are dependent on the employee’s wage/salary and length of service. The employer is required
by collective bargaining agreements or company agreements to make these payments after an employee has reached a certain number of years of
uninterrupted service with the same company. Obligations are mainly related to service anniversary bonuses in Austrian and German group companies.
Provisions for service anniversary bonuses are calculated based on the projected unit credit method. Remeasurement gains or losses are recorded in the
personnel costs of the functional areas.
Local labour laws and other similar regulations require individual group companies to create provisions for semi-retirement obligations. The obligations are
partially covered by qualified plan assets and are reported on a net basis in the Statement of Financial Position.
Income taxes
Income tax expense represents the sum of current tax and deferred tax.
Income tax is recognised in the Statement of Profit or Loss, except to the extent that it relates to items recognised in OCI or directly in equity, including tax-
related impacts.
Current tax is based on the taxable profit for the period and is determined in accordance with the rules applicable in the relevant jurisdictions and includes
taxes relating to prior periods. The liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted at the balance
sheet date.
Deferred tax is provided, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences except:
• Where the deferred tax liability arises on initial recognition of goodwill
Notes continued
Inventories
calculation of the net realisable value.
Provisions and contingent liabilities
Provisions are recognised when the Group incurs a legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be
required to meet this obligation, and the amount of the obligation can be reliably estimated.
Provisions for warranties are created for individual contracts at the time of the sale of goods or after the service has been provided. The amounts of the provisions
are based on the expected or actual warranty claims.
Provisions for restructuring are recognised once a detailed formal restructuring plan has been developed and announced prior to the reporting date or whose
implementation was commenced prior to the reporting date.
The Group recognises provisions for demolition and disposal costs and environmental damages. The Group’s facilities and its refractory, exploration and mining
operations are subject to environmental and governmental laws and regulations in each of the jurisdictions in which it operates. These laws govern, among
other things, reclamation or restoration of the environment in mined areas and the clean-up of contaminated properties. These provisions include the
estimated demolition and disposal costs of plants and buildings as well as environmental restoration costs arising from mining activities, based on the present
value of estimated cash flows of the expected costs. The estimated future costs of asset retirements are reviewed annually and adjusted, if appropriate.
A provision for an onerous or unfavourable contract is recognised when the expected benefits to be derived from a contract are lower than the unavoidable cost
of meeting its obligations under the contract. Provisions are measured at the present value of the unavoidable costs of meeting the obligation under the
contract which exceed the economic benefits expected to arise from that contract.
Provisions for labour and civil contingencies are recognised for all risks referring to legal proceedings that represent a probable loss. Assessment of the
likelihood of loss includes an analysis of available evidence, including the opinion of internal and external legal advisors of the Group.
Provisions are measured at their discounted settlement value as of the reporting date if the discounting effect is material.
If maturities cannot be estimated, they are shown within current provisions.
Significant estimate: Measurement of other provisions
The recognition and measurement of other provisions disclosed in Note (31) are based on best estimates using the information available at the reporting
date. The estimates take into account the underlying legal or constructive obligation and are performed by internal experts or, when appropriate, also by
external experts. Despite the best possible assumptions and estimates, cash outflows expected at the reporting date may deviate from actual cash outflows.
As soon as additional information is available, the estimates made are reviewed and provisions are also adjusted. The majority of other provisions refers to an
unfavourable contract which was recognised in the course of the acquisition of former Magnesita Group and is mainly based on an estimate of forgone profit
margins compared to market conditions. Moreover, restructuring provisions and provisions related the rehabilitation and restoration of the mining sites or for
environmental damages are recorded within other provisions. These are subject to measurement uncertainties in terms of the estimated costs to settle the
obligation, estimated term until rehabilitation and restoration, discount rate and inflation rate. Changes in these parameters may result in higher or lower
provisions.
A contingent liability is disclosed, where material, if the existence of the obligation will only be confirmed by future events or where the amount of the
obligation cannot be measured with reasonable reliability. A contingent liability is not disclosed if the likelihood of a material cash outflow is considered remote.
The Group's contingent liabilities are reviewed on a regular basis.
Employee related benefits
Provisions for post-employment benefits
Pension plans
With respect to post-employment benefits relating to pensions, a differentiation is made between defined contribution and defined benefit plans.
Defined contribution plans limit the Group’s obligation to the agreed contributions to earmarked pension schemes. The contributions are expensed as incurred.
Defined benefit plans require the Group to provide agreed benefits to active and former employees and their dependents.
Pension obligations are measured using the projected unit credit method and is netted against the fair value of the plan assets, if any. If the plan assets are not
sufficient to cover the obligation, the net obligation is recognised as a liability. However, if the plan assets exceed the obligations, the net surplus recognised is
limited to reductions of future contribution payments to the plan and is presented as other non-current assets in the Statement of Financial Position. The Group
applies the requirements of IFRIC 14 and restricts recognition of the net surplus by applying an asset recognition ceiling where the Group does not have an
unconditional right to a refund, assuming full settlement of the liabilities. Changes in the asset ceiling are recorded in OCI.
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FINANCIAL STATEMENTS
Notes continued
• Where the deferred tax liability arises on the initial recognition of an asset or liability in a transaction that is not a business combination, at the time of the
transaction, affects neither accounting profit nor taxable profit or loss and, at the time of the transaction, does not give rise to equal taxable and deductible
temporary differences
• In respect of taxable temporary differences associated with investments in subsidiaries and associates and interest in joint arrangements, where the Group is
able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future
• For financial instruments which were issued by subsidiaries to non-controlling interests and which are classified as a financial liability in accordance with IFRS
Deferred tax assets are recognised for deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is
probable that taxable profit will be available against which these can be utilised, except where the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor
taxable profit and loss and, at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interest in joint arrangements, deferred tax assets are
recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against
which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable or increased to the
extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based
on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Deferred taxes of the Group’s Austrian subsidiaries are
determined at the corporation tax rate which is expected to be applicable when the temporary differences reverse (24.0% if the temporary difference is
reversing in 2023 and 23.0% if the temporary difference reverses in 2024 or later). Deferred tax assets and liabilities of the Group’s Brazilian subsidiaries are
measured at 34.0%.
Deferred tax assets and liabilities are offset only when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the
deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where
there is an intention to settle the current tax assets and liabilities on a net basis or to realise the assets and settle the liabilities simultaneously.
Where tax legislation may not be clear or result in uncertainty, the Group will determine its tax obligations and resulting income tax expense using an approach
which it believes has a probable chance of being accepted by the tax authorities based on historical experience, legal advice and communication with the tax
authorities, as appropriate. Where the Group adopts an approach to an uncertain tax position that it regards as having a less than probable chance of being
accepted by the tax authorities, the income tax expense and resulting income and deferred tax balances are adjusted to reflect this uncertainty using either the
most likely outcome method or the expected value method.
Based on the Organisation for Economic Co-operation and Development (OECD) initiative, numerous jurisdictions are in the process of introducing a global
minimum tax whose aim is to ensure that multinational groups with revenue of over €750.0 million are subject to a minimum taxation of 15%. The Pillar Two
legislation was enacted in Austria in 2023 and is coming into effect for financial years starting after 31 December 2023. If the Pillar Two legislation were
effective as per the reporting date, a top-up tax of maximum €0.3m would be required in relation to one subsidiary. In addition, there are subsidiaries operating
in other countries which might qualify as low tax jurisdictions but are not included in the above estimate since they have incurred an IFRS loss before taxes in
2023. Even if these companies had generated reasonably estimated IFRS profits before taxes the estimated top-up tax would not have exceeded €0.5 million
in 2023. With regards to deferred taxes the Group has applied the accounting policy according to the amendment of not recognising or disclosing information
about deferred tax assets and liabilities as a result of the Pillar Two legislation.
Significant judgement: Uncertain tax treatments and recognition of deferred tax assets
Management makes judgements in relation to the recognition of current and deferred income taxes. In making judgements, management believes that the
tax positions the Group adopts are in line with the applicable legislation and reflect the probable outcome. The tax obligations and receivables, upon audit
by the tax authorities at a future date, may differ as a result of differing interpretations. These interpretations may impact the expected timing and quantum of
taxes payable and recoverable.
Significant estimates: Recognition of deferred tax assets
Income tax expense is based on the tax laws applicable in the individual countries. Due to their complexity, the tax items presented may be subject to
different interpretations by local tax authorities. When determining the amount of the deferred tax assets to be recognised, mainly relating to tax losses, an
estimate is required of future taxable income which is influenced by factors such as prices, gross profit margins and interest rates. A 10% change in the future
taxable profit from the assumption made on the reporting date within the planning period defined for the accounting and measurement of deferred taxes
would not result in a significant change in the carrying amount of deferred tax assets on recognised tax losses, over a 12-month period from the date of these
Consolidated Financial Statements. Refer to Note (14) for details on recognised deferred tax assets.
Revenue, income and expenses
Revenue from contracts with customers
Revenue from the sale of goods and services is recognised at an amount that reflects the consideration to which the Group expects to be entitled in exchange
for those goods or services. Revenue is recognised to the extent that it is highly probable that there will not be a significant reversal of revenue in future periods.
If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled at inception and limits
the recognition of revenue subject to the variability, until it is highly probable that a significant reversal of cumulative revenue recognised will not occur. The
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Notes continued
• Where the deferred tax liability arises on the initial recognition of an asset or liability in a transaction that is not a business combination, at the time of the
transaction, affects neither accounting profit nor taxable profit or loss and, at the time of the transaction, does not give rise to equal taxable and deductible
temporary differences
• In respect of taxable temporary differences associated with investments in subsidiaries and associates and interest in joint arrangements, where the Group is
able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future
• For financial instruments which were issued by subsidiaries to non-controlling interests and which are classified as a financial liability in accordance with IFRS
Deferred tax assets are recognised for deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is
probable that taxable profit will be available against which these can be utilised, except where the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor
taxable profit and loss and, at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interest in joint arrangements, deferred tax assets are
recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against
which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable or increased to the
extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based
on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Deferred taxes of the Group’s Austrian subsidiaries are
determined at the corporation tax rate which is expected to be applicable when the temporary differences reverse (24.0% if the temporary difference is
reversing in 2023 and 23.0% if the temporary difference reverses in 2024 or later). Deferred tax assets and liabilities of the Group’s Brazilian subsidiaries are
measured at 34.0%.
Deferred tax assets and liabilities are offset only when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the
deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where
there is an intention to settle the current tax assets and liabilities on a net basis or to realise the assets and settle the liabilities simultaneously.
Where tax legislation may not be clear or result in uncertainty, the Group will determine its tax obligations and resulting income tax expense using an approach
which it believes has a probable chance of being accepted by the tax authorities based on historical experience, legal advice and communication with the tax
authorities, as appropriate. Where the Group adopts an approach to an uncertain tax position that it regards as having a less than probable chance of being
accepted by the tax authorities, the income tax expense and resulting income and deferred tax balances are adjusted to reflect this uncertainty using either the
most likely outcome method or the expected value method.
Based on the Organisation for Economic Co-operation and Development (OECD) initiative, numerous jurisdictions are in the process of introducing a global
minimum tax whose aim is to ensure that multinational groups with revenue of over €750.0 million are subject to a minimum taxation of 15%. The Pillar Two
legislation was enacted in Austria in 2023 and is coming into effect for financial years starting after 31 December 2023. If the Pillar Two legislation were
effective as per the reporting date, a top-up tax of maximum €0.3m would be required in relation to one subsidiary. In addition, there are subsidiaries operating
in other countries which might qualify as low tax jurisdictions but are not included in the above estimate since they have incurred an IFRS loss before taxes in
2023. Even if these companies had generated reasonably estimated IFRS profits before taxes the estimated top-up tax would not have exceeded €0.5 million
in 2023. With regards to deferred taxes the Group has applied the accounting policy according to the amendment of not recognising or disclosing information
about deferred tax assets and liabilities as a result of the Pillar Two legislation.
Significant judgement: Uncertain tax treatments and recognition of deferred tax assets
Management makes judgements in relation to the recognition of current and deferred income taxes. In making judgements, management believes that the
tax positions the Group adopts are in line with the applicable legislation and reflect the probable outcome. The tax obligations and receivables, upon audit
by the tax authorities at a future date, may differ as a result of differing interpretations. These interpretations may impact the expected timing and quantum of
taxes payable and recoverable.
Significant estimates: Recognition of deferred tax assets
Income tax expense is based on the tax laws applicable in the individual countries. Due to their complexity, the tax items presented may be subject to
different interpretations by local tax authorities. When determining the amount of the deferred tax assets to be recognised, mainly relating to tax losses, an
estimate is required of future taxable income which is influenced by factors such as prices, gross profit margins and interest rates. A 10% change in the future
taxable profit from the assumption made on the reporting date within the planning period defined for the accounting and measurement of deferred taxes
would not result in a significant change in the carrying amount of deferred tax assets on recognised tax losses, over a 12-month period from the date of these
Consolidated Financial Statements. Refer to Note (14) for details on recognised deferred tax assets.
Revenue, income and expenses
Revenue from contracts with customers
Revenue from the sale of goods and services is recognised at an amount that reflects the consideration to which the Group expects to be entitled in exchange
for those goods or services. Revenue is recognised to the extent that it is highly probable that there will not be a significant reversal of revenue in future periods.
If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled at inception and limits
the recognition of revenue subject to the variability, until it is highly probable that a significant reversal of cumulative revenue recognised will not occur. The
STRATEGIC REPORT
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FINANCIAL
STATEMENTS
OTHER
INFORMATION
Group applies the practical expedient in IFRS 15 ‘Revenue from Contracts with Customers’ and does not recognise the impact of financing for payment terms as
the average credit terms is currently 60 days. At contract inception, the Group identifies the goods or services promised in the contract and assesses which of
the promised goods or services shall be identified as separate performance obligation. Promised goods or services give rise to separate performance obligations
if they are capable of being distinct. Revenue is recognised as control is transferred, either over time or at a point of time. Control is defined as the ability to direct
the use of and obtain substantially all of the economic benefits from an asset.
For the delivery of refractory products, the goods promised are distinct and control of the goods is passed to the customer typically when physical possession
has been transferred. The transport service does not give rise to a separate performance obligation to which a part of revenue would have to be allocated, as this
service is usually performed before control of the products is transferred to the customer.
In consignment arrangements, the Group retains control of the goods generally until a withdrawal of the products from the consignment occurs. Most of the
products within consignment arrangements have a high stock turnover rate.
The Group provides services (e.g. supervision, installation) that are either sold separately or bundled together with the sale of products to a customer. Contracts
for bundled sales of products and installation services usually comprise of two performance obligations being (1) the promise to transfer products and (2)
provide services which are capable of being distinct and separately identifiable in the context of the contract. Accordingly, the transaction price is allocated
based on the relative stand-alone selling prices of the product and service. Revenue from services is recognised over time using an input method to measure
progress towards completion of the service as the customer simultaneously receives and consumes the benefits provided by the Group.
Contracts for bundled sales of refractory products and non-refractory products (e.g. machines) provided to the customer free of charge comprise two
performance obligations that are separately identifiable. Consequently, the Group allocates the transaction price based on the relative stand-alone selling
prices of these performance obligations and allocates revenue to the non-refractory product which is delivered free of charge.
Expected penalty fees from guaranteed durabilities on refractory products are considered as a variable consideration in the form of a contract or a refund
liability. However, the estimation of the variable consideration is not subject to a constraint as the Group has significant experience with promising durabilities
and as a consequence does not expect significant reversal of revenue recognised in prior periods. All other product warranties issued by the Group guarantee
that the transferred products correspond to the contractually agreed specifications and are classified as assurance type warranties. Consequently, no separate
distinct performance obligation to the customer exists.
If transfer of goods or services to a customer is performed before the customer pays consideration or before payment is due and is conditional on something
other than the passage of time, a contract asset, excluding any amounts presented as a receivable, is recognised.
If a customer pays consideration before the entity transfers a good or service to the customer, the entity shall present the contract as a contract liability when
the payment is made.
Contract costs, which are defined as the incremental costs of obtaining a contract, are recognised as an asset where the Group expects to recover those costs,
except for those costs which are expected to be recovered within 12 months.
As the term of customer contracts is less than one year, the Group adopted the practical expedient not to disclose performance obligations for contracts with
original expected duration of less than one year.
Significant Judgement: Revenue recognition
For customer contracts in the Steel segment with variable payment arrangements where the transaction price depends on the customer’s production
performance, (e.g. quantity of steel produced) management has determined that the commitment to transfer each of the products and services to the
customer is not separately identifiable from the other commitments in the context of such contracts. The customer expects complete refractory
management for the agreed product areas in the steel plant in order to enable steel production. Thus, only one performance obligation, being the
performance of a management refractory service, exists.
Cost of sales
Cost of sales comprises the production cost of goods sold as well as the purchase price of merchandise sold. In addition to direct material and production costs,
it also includes overheads including depreciation charges on production equipment, amortisation charges of intangible assets as well as impairment losses and
reversals of impairment losses of inventories. Moreover, cost of sales also includes the costs of services provided by the Group or services received.
Selling and marketing expenses
This item includes personnel expenses for the sales staff as well as depreciation charges and other operating expenses related to the market and sales
processes.
General and administrative expenses
General and administrative expenses primarily consist of personnel expenses for the administrative functions, legal and other consulting costs, expenses for
research and non-capitalisable development costs.
Interest income and expenses
Interest income and expenses are recognised in accordance with the effective interest method.
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Notes continued
Dividends
Dividends from investments that are not accounted for using the equity method are recognised in the Statement of Profit or Loss at the time the legal claim
arises.
Foreign currency translation and hyperinflation accounting
Functional currency and presentation currency
The Consolidated Financial Statements are presented in Euro, which represents the functional and presentation currency of RHI Magnesita N.V.
Consolidated subsidiary financial information is based on the currency of the primary economic environment in which it operates (functional currency).
Hyperinflation accounting
Financial Statements of subsidiaries which operate in a country whose functional currency is considered hyperinflationary are restated for the changes in the
general purchasing power before translation to the reporting currency of the Group and before consolidation in order to reflect the same value of money for all
items. The Group has started to account for the restatements required by IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ on the Financial
Statements of the subsidiary operating in Argentina as from the current reporting period, as the cumulative impact of applying this Standard has become
material in 2023.
The cumulative impact from changes in the general purchasing power of its functional currency until 1 January 2023 on the opening balances of non-
monetary items has been recorded directly in equity attributable to the shareholders of RHI Magnesita N.V.
In 2023, the closing balances of the non-monetary items as well as all items of the Statement of Profit of Loss are restated for the changes in the general
purchasing power of its functional currency in 2023 as follows. Items recognised in the Statement of Financial Position which are not measured at the
applicable year-end measuring unit are restated based on the general price index. All non-monetary items measured at cost or amortised cost are restated for
the changes in the general price index from the later of transaction date or the first-time application date to the reporting date. Monetary items are not restated.
All items of the Statement of Profit of Loss are restated for the change in a general price index from the date of initial recognition to the reporting date. Gains and
losses resulting from the net-position of monetary items are reported in the Consolidated Statement of Profit or Loss in Net finance costs. The Financial
Statements of the subsidiary in Argentina are therefore reported at the applicable measuring unit on the reporting date.
The price index IPIM published by the Argentinian “National Institute of Statistics and Censuses (INDEC)” is applied to determine the changes in the general
purchasing power. The following table provides the level and changes of the price index for the current and the previous reporting period:
Price level
Index movement (in %)
31.12.2023
3,533.19
211.41
31.12.2022
1,134.59
94.79
Foreign currency transactions and balances
In individual subsidiaries, joint ventures and associates, transactions in foreign currency are translated into the functional currency at the rate of exchange
prevailing on the dates of the transaction. Gains and losses arising from the settlement of such transactions and the measurement of monetary assets and
liabilities in foreign currencies at the closing rate are recognised in the Statement of Profit or Loss under net expense on foreign exchange effects and related
derivatives. Unrealised currency translation differences from monetary items which form part of a net investment in a foreign operation are recognised in OCI in
equity. When a non-derivative financial instrument is designated as the hedging instrument in a net investment hedge in a foreign operation, the effective
portion of the foreign exchange gains and losses is recognised in the currency translation difference reserve within equity. Non-monetary items, other than
those measured at fair value, are carried at historical rates and not retranslated subsequent to initial recognition.
Group companies
Financial information of foreign subsidiaries with a functional currency different to the Euro are translated as follows:
Assets and liabilities of foreign subsidiaries outside the scope of hyperinflation accounting under IAS 29 are translated at the closing rate on the reporting date
of the Group, while monthly income and expenses and consequently the profit or loss for the year as presented in the Statement of Profit or Loss are translated
at the respective closing rates of the previous month. Differences resulting from this translation process and differences resulting from the translation of
amounts carried forward from the prior year are recorded under OCI without recognition to profit or loss. Monthly cash flows are translated at the respective
closing rates of the previous month. Goodwill and adjustments to the fair value of assets and liabilities related to the purchase price allocations of a subsidiary
outside the European currency area are recognised as assets and liabilities of the respective subsidiary and translated at the closing rate.
Assets and liabilities of foreign subsidiaries in the scope of hyperinflation accounting under IAS 29 as well as income and expenses and consequently the profit
or loss for the year are translated at the respective closing rate on the reporting date of the Group.
On disposal of a non-Euro functional currency subsidiary, joint venture or associate, the related accumulated exchange gains and losses recognised in equity
are reclassified to the Statement of Profit or Loss. In addition, when monetary items cease to form part of a net investment in a foreign operation or when in case
of a net investment hedge the foreign operation is disposed, the currency translation differences previously recognised in OCI are reclassified to profit or loss.
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Dividends from investments that are not accounted for using the equity method are recognised in the Statement of Profit or Loss at the time the legal claim
The Euro exchange rates of the currencies of the Group’s significant operations are shown in the following table:
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
Currencies
Brazilian Real
Canadian Dollar
Chinese Renminbi Yuan
Indian Rupee
US Dollar
1) Arithmetic mean of the monthly closing rates.
Closing rate
Average rate1)
1 € =
BRL
CAD
CNY
INR
USD
31.12.2023
31.12.2022
5.37
1.46
7.87
92.58
1.11
5.63
1.45
7.42
88.26
1.07
2023
5.42
1.46
7.65
89.20
1.08
2022
5.47
1.37
7.09
82.50
1.06
4. Climate change and energy transition
In 2019 the Group announced its commitment to reduce Scope 1, 2 and 3 (raw materials) CO2 emissions intensity by 15% by 2025, compared to a 2018
baseline. The below describes how the Group has considered climate related impacts in some key areas of the Consolidated Financial Statements and how this
translates into the valuation of its assets and measurement of liabilities, as progress is made in reducing its own CO2 emissions and RHIM prepares for the energy
transition and technological changes that are likely to affect its customer industries.
Note (3) includes the significant accounting estimates, judgements and key sources of estimation uncertainties and how those uncertainties have the potential
to have a material effect on the Consolidated Statement of Financial Position in the next 12 months. This note describes the key areas of climate impacts that
potentially have longer-term effects on amounts recognised at 31 December 2023.
Financial planning assumptions
As disclosed in the Sustainability section on page 58, climate-related risks faced by the Group include physical and transitional risks. The most material
transitional risk impact is expected to be higher operating costs due to an increase in the level or scope of carbon pricing and changes to regulatory frameworks.
This risk is most prominent in Europe where the existing system of allowances is to be replaced by the Carbon Border Adjustment Mechanism (‘CBAM’), with all
existing CO2 emissions allowances to be progressively phased out by 2034. The Group has also identified climate-related opportunities, such as increased
demand for its products arising from the transition by its customers to lower-carbon emitting industrial processes and increased demand for refractory products
that are produced with a lower-carbon footprint.
The Consolidated Financial Statements are based on reasonable and supportable assumptions that represent management’s current best estimate of the
range of economic conditions that may exist in the foreseeable future. The Group has performed an assessment of the potential future impact of climate
change on key elements of its Consolidated Financial Statements utilising the Paris-aligned Mitigation and Hot House World Limited mitigation scenarios. The
largest impact from higher carbon prices as contained in these scenarios is from 2026 onwards. The negative impacts are concentrated within the Group’s
assets located in Europe whilst opportunities are expected to be global in nature.
The Group is investing in the research and development of new technologies for the manufacturing of refractories which may enable it over the long term to
avoid or capture its CO2 emissions and thereby mitigate the impact of higher carbon prices.
Impairment of CGUs and goodwill
The nominal growth rate used in the value in use determination is equal to the long-term rate of growth in steel/cement and/or inflation (depending on the
country and business involved) and in any case no higher than the average long-term growth rate of the reference market. The Group has also taken account of
the long-term impact of climate change, in particular by considering in the estimation of the terminal value a long-term growth rate in line with the change in
steel/cement demand in 2030-2050 based on the specific characteristics of the businesses involved.
The Group is currently already subject to the first phase (‘Transitional Period’) of the CBAM. Imported minor consumables made out of steel (<1% of revenue) are
currently covered and RHIM complies with existing regulations and follows their development. Management is pursuing a number of strategies to
accommodate the impact of CBAM to the EU assets, such as integrating carbon pricing in our financial planning, actively managing a hedging programme to fix
future prices, increase the use of secondary raw materials and investing in fuel switching, renewable energy and energy efficiency. Absent to any mitigating
action by management, it is expected that the gross profit could reduce by 23% from 2030, on average across the EU assets and increase by 17% in regions
outside the EU.
Restoration provisions
Management recognises liabilities that are expected to be incurred in relation to rehabilitation and restoration of the mining sites. As of the balance sheet date,
the Group’s mines have an expected life between 8 and 100 years. The introduction of more stringent legislation could result in our mining operations
becoming uneconomical earlier than anticipated, thus affecting the timing of our restoration liabilities. The discount rate used to measure asset restoration
provisions is between 8-37 years term, in line with available government bond rates.
Management does not expect any reasonably possible change in the expected timing of restoration of our mines to have a material effect on the Group total
provisions, assuming cash flows remain unchanged.
Deferred tax assets
In jurisdictions where new or additional climate change related legislation is enacted, our taxable profits could be affected thereby impacting the recoverability
of deferred tax assets. It is expected that sufficient deferred tax liabilities and forecasted taxable profits are available for recovery of the deferred tax assets
Notes continued
Dividends
arises.
Foreign currency translation and hyperinflation accounting
Functional currency and presentation currency
The Consolidated Financial Statements are presented in Euro, which represents the functional and presentation currency of RHI Magnesita N.V.
Consolidated subsidiary financial information is based on the currency of the primary economic environment in which it operates (functional currency).
Hyperinflation accounting
material in 2023.
Financial Statements of subsidiaries which operate in a country whose functional currency is considered hyperinflationary are restated for the changes in the
general purchasing power before translation to the reporting currency of the Group and before consolidation in order to reflect the same value of money for all
items. The Group has started to account for the restatements required by IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ on the Financial
Statements of the subsidiary operating in Argentina as from the current reporting period, as the cumulative impact of applying this Standard has become
The cumulative impact from changes in the general purchasing power of its functional currency until 1 January 2023 on the opening balances of non-
monetary items has been recorded directly in equity attributable to the shareholders of RHI Magnesita N.V.
In 2023, the closing balances of the non-monetary items as well as all items of the Statement of Profit of Loss are restated for the changes in the general
purchasing power of its functional currency in 2023 as follows. Items recognised in the Statement of Financial Position which are not measured at the
applicable year-end measuring unit are restated based on the general price index. All non-monetary items measured at cost or amortised cost are restated for
the changes in the general price index from the later of transaction date or the first-time application date to the reporting date. Monetary items are not restated.
All items of the Statement of Profit of Loss are restated for the change in a general price index from the date of initial recognition to the reporting date. Gains and
losses resulting from the net-position of monetary items are reported in the Consolidated Statement of Profit or Loss in Net finance costs. The Financial
Statements of the subsidiary in Argentina are therefore reported at the applicable measuring unit on the reporting date.
The price index IPIM published by the Argentinian “National Institute of Statistics and Censuses (INDEC)” is applied to determine the changes in the general
purchasing power. The following table provides the level and changes of the price index for the current and the previous reporting period:
Price level
Index movement (in %)
31.12.2023
3,533.19
211.41
31.12.2022
1,134.59
94.79
Foreign currency transactions and balances
In individual subsidiaries, joint ventures and associates, transactions in foreign currency are translated into the functional currency at the rate of exchange
prevailing on the dates of the transaction. Gains and losses arising from the settlement of such transactions and the measurement of monetary assets and
liabilities in foreign currencies at the closing rate are recognised in the Statement of Profit or Loss under net expense on foreign exchange effects and related
derivatives. Unrealised currency translation differences from monetary items which form part of a net investment in a foreign operation are recognised in OCI in
equity. When a non-derivative financial instrument is designated as the hedging instrument in a net investment hedge in a foreign operation, the effective
portion of the foreign exchange gains and losses is recognised in the currency translation difference reserve within equity. Non-monetary items, other than
those measured at fair value, are carried at historical rates and not retranslated subsequent to initial recognition.
Group companies
Financial information of foreign subsidiaries with a functional currency different to the Euro are translated as follows:
Assets and liabilities of foreign subsidiaries outside the scope of hyperinflation accounting under IAS 29 are translated at the closing rate on the reporting date
of the Group, while monthly income and expenses and consequently the profit or loss for the year as presented in the Statement of Profit or Loss are translated
at the respective closing rates of the previous month. Differences resulting from this translation process and differences resulting from the translation of
amounts carried forward from the prior year are recorded under OCI without recognition to profit or loss. Monthly cash flows are translated at the respective
closing rates of the previous month. Goodwill and adjustments to the fair value of assets and liabilities related to the purchase price allocations of a subsidiary
outside the European currency area are recognised as assets and liabilities of the respective subsidiary and translated at the closing rate.
Assets and liabilities of foreign subsidiaries in the scope of hyperinflation accounting under IAS 29 as well as income and expenses and consequently the profit
or loss for the year are translated at the respective closing rate on the reporting date of the Group.
On disposal of a non-Euro functional currency subsidiary, joint venture or associate, the related accumulated exchange gains and losses recognised in equity
are reclassified to the Statement of Profit or Loss. In addition, when monetary items cease to form part of a net investment in a foreign operation or when in case
of a net investment hedge the foreign operation is disposed, the currency translation differences previously recognised in OCI are reclassified to profit or loss.
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FINANCIAL STATEMENTS
Notes continued
recognised at 31 December 2023. The assessment of deferred taxes is described in Note (14). For certain deferred tax assets recognised in Brazil, the period
extends beyond 5 years. Currently, no legislation is in place in Brazil that could limit the timing and, or the extent of the recognised deferred tax assets.
ESG-linked loans
The Group has taken out loans from financial institutions based on terms which are linked to Group EcoVadis ESG rating performance. On the reporting date
the carrying amount of such ESG-linked financial liabilities amounts to €1,512.0 million. The financing costs may increase or decrease depending on future
changes in the Group’s ESG rating. The ESG rating is determined by multiple criteria covering not only the climate-related aspects but also sustainability and
governance related aspects. The Group’s ESG rating on the reporting date shows a considerable headroom to the ESG rating assumed in a worst case scenario.
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Notes continued
recognised at 31 December 2023. The assessment of deferred taxes is described in Note (14). For certain deferred tax assets recognised in Brazil, the period
extends beyond 5 years. Currently, no legislation is in place in Brazil that could limit the timing and, or the extent of the recognised deferred tax assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ESG-linked loans
The Group has taken out loans from financial institutions based on terms which are linked to Group EcoVadis ESG rating performance. On the reporting date
the carrying amount of such ESG-linked financial liabilities amounts to €1,512.0 million. The financing costs may increase or decrease depending on future
changes in the Group’s ESG rating. The ESG rating is determined by multiple criteria covering not only the climate-related aspects but also sustainability and
governance related aspects. The Group’s ESG rating on the reporting date shows a considerable headroom to the ESG rating assumed in a worst case scenario.
5. Segmental analysis
The Group comprises two reportable segments Steel and Industrial which have been determined by aggregation of the underlying operating segments for
Steel and Industrial. The segmentation of the business activities reflects the internal control and reporting structures and is regularly monitored by the Chief
Executive Officer (Chief Operating Decision Maker (CODM)), who has the responsibility over allocation of resources and evaluates the performance of each
segment.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
The reportable segment Steel specialises in supporting customers in the steel-producing and steel-processing industry. The reportable segment Industrial
serves customers in the glass, cement/lime, non-ferrous metals and environment, energy and chemicals industries. The main activities of the two segments
consist of market development, global sales of high-grade refractory bricks, mixes and special products as well as providing services at the customers’ sites and
are described in detail in the Strategic Report.
The globally located manufacturing sites, which extract and process raw materials, are combined in one strategic business unit. The allocation of
manufacturing cost of the production plants to the Steel and Industrial segments is based on the supply flow.
Statements of Profit or Loss up to gross profit are available for each segment. Revenues and Gross profit are the key internal performance measures provided to
and used by the CODM. Selling and marketing expenses, general and administrative expenses, restructuring and write-down expenses, other income and
expenses, profit of joint ventures, net finance costs and income taxes are managed centrally and separately and thus not allocated to the segments.
Segment assets include trade receivables and inventories, which are available to the operating segments and are reported to the CODM for control and
measurement; property, plant and equipment, goodwill and other intangible assets, are allocated to the segments based on the capacity of the productive
assets base. All other assets are not allocated.
The following tables show the financial information for the reportable segments for the year 2023 and the previous year:
2023 in € million
Revenue
Gross profit
EBIT
Net finance costs
Profit before income tax
Steel
2,460.7
Industrial
Group 2023
1,111.1
3,571.8
549.9
307.5
857.4
333.9
(100.6)
233.3
Depreciation and amortisation charges
(125.7)
(51.8)
(177.5)
Segment assets 31.12.2023
Investments in joint ventures and associates 31.12.2023
Reconciliation to total assets
Total assets
2,607.1
1,099.0
Additions to property, plant and equipment and intangible assets
128.9
66.1
3,706.1
6.2
1,137.3
4,849.6
195.0
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FINANCIAL STATEMENTS
Notes continued
2022 in € million
Revenue
Gross profit
EBIT
Net finance costs
Profit before income tax
Steel
2,371.4
Industrial
Group 2022
945.8
3,317.2
521.0
242.4
763.4
343.6
(73.1)
270.5
Depreciation and amortisation charges
(101.2)
(43.3)
(144.5)
Segment assets 31.12.2022
Investments in joint ventures and associates 31.12.2022
Reconciliation to total assets
Total assets
2,231.9
911.3
Additions to property, plant and equipment and intangible assets
128.6
68.8
3,143.2
5.7
926.0
4,074.9
197.4
No single customer contributed 10% or more to consolidated revenue in 2023 and in 2022. Companies that are known to be part of a group are treated as one
customer.
When allocating revenue to product groups, a distinction is made between shaped products (e.g. hydraulically pressed bricks, fused cast bricks, isostatically
pressed products), unshaped products (e.g. repair mixes, construction mixes and castables), management refractory services (e.g. full line service, contract
business, cost per performance) as well as other revenue. Other mainly includes revenue from the sale of non-group refractory products.
In the reporting year, revenue is classified by product group as follows:
in € million
Shaped products
Unshaped products
Management refractory services
Other
Revenue
In 2022, revenue was classified by product group as follows:
in € million
Shaped products
Unshaped products
Management refractory services
Other
Revenue
Segment reporting by country
The Revenue is based on the locations of the customers.
In € million
Netherlands
USA
India
Brazil
PR China
Other countries
Revenue
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Steel
1,142.9
530.3
712.2
75.3
2,460.7
Steel
1,100.4
449.3
755.7
66.0
2,371.4
Industrial
Group 2023
815.1
212.0
8.3
75.7
1,111.1
1,958.0
742.3
720.5
151.0
3,571.8
Industrial
Group 2022
692.6
192.1
0.2
60.9
945.8
2023
14.0
612.2
476.6
371.1
259.5
1,838.4
3,571.8
1,793.0
641.4
755.9
126.9
3,317.2
2022
11.2
586.5
344.0
367.8
221.6
1,786.1
3,317.2
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
Steel
2,371.4
Industrial
Group 2022
945.8
3,317.2
521.0
242.4
763.4
The carrying amounts of goodwill, other intangible assets and property, plant and equipment are classified based on the location of the Group companies:
in € million
Brazil
India
Austria
USA
Germany
PR China
Other countries
31.12.2023
31.12.2022
502.7
383.2
368.5
224.6
212.3
200.5
277.2
464.8
69.7
352.9
234.1
187.1
171.4
177.2
Goodwill, intangible assets and property, plant and equipment
2,169.0
1,657.2
6. Restructuring
Summary of restructuring and write-down expenses/income recognised as follows:
Additions to property, plant and equipment and intangible assets
128.6
68.8
in € million
Restructuring (expenses)/income
2023
(19.6)
2022
6.8
2023
Restructuring includes €11.5 million of termination costs following the transfer of certain global functions to the regions. In addition, it includes €4.9 million of
plant closure costs, which mainly reflect €2.0 million of costs in Dashiqiao plant, China.
In Brazil, an impairment loss was recognised on fixed assets of €1.3 million which was partially caused by a flood at the Contagem plant.
2022
Following the approval by the regional government in Germany for the repair, upgrade and connection of the railway infrastructure to the Mainzlar plant, the
Group committed to continue with its operations. The commitment was regarded as an indicator of an impairment reversal, following the write down of the
non-current assets in 2020 of €7.7 million. The reversal of the write down amounted to €5.3 million in 2022. Additionally, around €6.4 million in employee
restructuring and plant dismantling provisions were reversed.
The Group decided to close the operations at the plant in Dashiqiao, China, resulting in employee restructuring expenses of €2.2 million. Plant idling costs
incurred during 2022 of €3.4 million were included within restructuring expenses. The Group continues its negotiations with the joint venture partner to exit its
share of the net assets and amounts due of €22.9 million, see Note (28).
7. Other income
in € million
Net amortisation of Oberhausen provision
Bargain purchase gain
Income from the disposal of non-current assets
Miscellaneous income
Other income
2023
10.8
7.5
3.4
5.4
27.1
2022
2.0
0.0
0.5
2.3
4.8
The net amortisation of the Oberhausen provision mainly includes a release of €9.6 million (2022: €9.2 million) following a reassessment. €7.5 million refers to
the preliminary bargain purchase gain from acquisition of P-D Refractories. Miscellaneous income mainly includes non-operational gains from the disposal of a
joint venture as well as reimbursement of the stamp duty tax from Chile.
8. Other expenses
in € million
Expenses for strategic projects
Losses from the disposal of non-current assets
Miscellaneous expenses
Other expenses
2023
(16.0)
(6.7)
(16.2)
(38.9)
2022
(10.1)
(1.7)
(11.2)
(23.0)
Expenses for strategic projects amounting to €16.0 million (2022: €10.1 million) mainly include legal and consulting fees related to business development
activities as well as costs related to integrate the newly acquired companies. Miscellaneous expenses mainly consist of increase in onerous provisions in Austria
and Türkiye as well as legal and consultancy fees paid to evaluate Rhône Capital’s Partial Offer for Shares in the Company.
Notes continued
2022 in € million
Revenue
Gross profit
EBIT
Net finance costs
Profit before income tax
Depreciation and amortisation charges
(101.2)
(43.3)
(144.5)
Segment assets 31.12.2022
Investments in joint ventures and associates 31.12.2022
Reconciliation to total assets
Total assets
2,231.9
911.3
No single customer contributed 10% or more to consolidated revenue in 2023 and in 2022. Companies that are known to be part of a group are treated as one
customer.
When allocating revenue to product groups, a distinction is made between shaped products (e.g. hydraulically pressed bricks, fused cast bricks, isostatically
pressed products), unshaped products (e.g. repair mixes, construction mixes and castables), management refractory services (e.g. full line service, contract
business, cost per performance) as well as other revenue. Other mainly includes revenue from the sale of non-group refractory products.
In the reporting year, revenue is classified by product group as follows:
Industrial
Group 2023
In 2022, revenue was classified by product group as follows:
Industrial
Group 2022
343.6
(73.1)
270.5
3,143.2
5.7
926.0
4,074.9
197.4
1,958.0
742.3
720.5
151.0
3,571.8
1,793.0
641.4
755.9
126.9
3,317.2
2022
11.2
586.5
344.0
367.8
221.6
1,786.1
3,317.2
Steel
1,142.9
530.3
712.2
75.3
2,460.7
Steel
1,100.4
449.3
755.7
66.0
2,371.4
815.1
212.0
8.3
75.7
1,111.1
692.6
192.1
0.2
60.9
945.8
2023
14.0
612.2
476.6
371.1
259.5
1,838.4
3,571.8
in € million
Shaped products
Unshaped products
Management refractory services
Other
Revenue
in € million
Shaped products
Unshaped products
Management refractory services
Other
Revenue
In € million
Netherlands
USA
India
Brazil
PR China
Other countries
Revenue
Segment reporting by country
The Revenue is based on the locations of the customers.
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FINANCIAL STATEMENTS
Notes continued
9. Expense categories
The presentation of the Consolidated Statement of Profit or Loss is based on the function of expenses. The following table shows a classification by expense
category for 2023 and the previous year:
in € million
Cost of materials
Personnel costs
Energy costs
Freight expenses
Depreciation and amortisation charges
External services
Changes in inventories, own work capitalised
Write-down expenses
Other income and expenses
Total expenses
2023
(1,374.5)
(747.3)
(256.8)
(229.0)
(177.5)
(164.1)
(53.6)
(1.4)
(233.8)
(3,238.0)
2022
(1,365.0)
(627.8)
(285.7)
(285.3)
(144.5)
(136.7)
64.3
0.0
(193.0)
(2,973.7)
Cost of materials includes expenses for raw materials and supplies and purchased goods of €1,310.4 million (2022: €1,317.6 million) and expenses for services
received amounting to €64.1 million (2022: €47.4 million). Research and development costs amounted to €51.0million (2022: €41.9 million), of which €8.1
million (2022: €8.6 million) in development costs were capitalised. Amortisation and impairment of development costs recognised within cost of sales was €3.1
million (2022: €3.5 million).
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised as an expense in the Consolidated
Statement of Profit or Loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment, office furniture and
other small items. Expenses for short-term, low-value and variable lease payments in 2023 amount to €5.3 million (2022: €3.5 million).
Other income and expenses include other income of €35.5 million (2022: €27.1 million); this is mainly comprised of: a preliminary bargain purchase gain of
€7.5 million (2022: €0.0 million), income from research grants which amounted to €4.2 million (2022: €4.3 million), profit on disposal of non-current assets,
insurance reimbursements and amortisation of grants related to assets. Other expenses mainly include commissions, repairs and maintenance, travel costs,
external consulting and information technology costs.
10. Personnel costs
Personnel costs consist of the following components:
in € million
Wages and salaries
Social security contribution
Fringe benefits
Pension and other post-employment benefits
Defined contribution plans
Defined benefit plans
Other expenses termination benefits
Personnel expenses (without interest expenses)
Average employee numbers
The average number of employees of the Group based on full time equivalents amounts to:
Salaried employees
Waged workers
Number of employees on annual average
2023
(579.5)
(113.0)
(33.4)
(10.9)
(3.6)
(6.9)
(747.3)
2023
7,063
7,953
15,016
2022
(478.5)
(99.2)
(28.7)
(11.4)
(4.8)
(5.2)
(627.8)
2022
6,391
7,119
13,510
120 full time equivalents of salaried employees work in the Netherlands (2022: 124 employees). Total includes average employees of newly acquired
businesses from the date of acquisition.
11. Interest income
Includes interest income on cash at banks and similar income amounting to €19.3 million (2022: €8.0 million).
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The presentation of the Consolidated Statement of Profit or Loss is based on the function of expenses. The following table shows a classification by expense
Cost of materials includes expenses for raw materials and supplies and purchased goods of €1,310.4 million (2022: €1,317.6 million) and expenses for services
received amounting to €64.1 million (2022: €47.4 million). Research and development costs amounted to €51.0million (2022: €41.9 million), of which €8.1
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised as an expense in the Consolidated
Statement of Profit or Loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment, office furniture and
other small items. Expenses for short-term, low-value and variable lease payments in 2023 amount to €5.3 million (2022: €3.5 million).
Other income and expenses include other income of €35.5 million (2022: €27.1 million); this is mainly comprised of: a preliminary bargain purchase gain of
€7.5 million (2022: €0.0 million), income from research grants which amounted to €4.2 million (2022: €4.3 million), profit on disposal of non-current assets,
insurance reimbursements and amortisation of grants related to assets. Other expenses mainly include commissions, repairs and maintenance, travel costs,
Notes continued
9. Expense categories
category for 2023 and the previous year:
in € million
Cost of materials
Personnel costs
Energy costs
Freight expenses
External services
Depreciation and amortisation charges
Changes in inventories, own work capitalised
Write-down expenses
Other income and expenses
Total expenses
million (2022: €3.5 million).
external consulting and information technology costs.
10. Personnel costs
Personnel costs consist of the following components:
in € million
Wages and salaries
Social security contribution
Fringe benefits
Pension and other post-employment benefits
Defined contribution plans
Defined benefit plans
Other expenses termination benefits
Personnel expenses (without interest expenses)
Salaried employees
Waged workers
Number of employees on annual average
businesses from the date of acquisition.
11. Interest income
2023
(1,374.5)
(747.3)
(256.8)
(229.0)
(177.5)
(164.1)
(53.6)
(1.4)
(233.8)
(3,238.0)
2022
(1,365.0)
(627.8)
(285.7)
(285.3)
(144.5)
(136.7)
64.3
0.0
(193.0)
(2,973.7)
2023
(579.5)
(113.0)
(33.4)
(10.9)
(3.6)
(6.9)
(747.3)
2023
7,063
7,953
15,016
2022
(478.5)
(99.2)
(28.7)
(11.4)
(4.8)
(5.2)
(627.8)
2022
6,391
7,119
13,510
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
12. Net expense on foreign currency effects
The net expense comprising the foreign currency effects from translating foreign currency balances into the functional currency, the results from forward
exchange contracts and derivatives in open orders as well as the gain on the net monetary position related to hyperinflation accounting (IAS 29) consists of the
following items:
in € million
Foreign currency losses
Gains/(losses) on forward exchange contracts and derivatives in open orders
Gain on net monetary position
Net expense on foreign currency effects
2023
(43.6)
10.7
2.5
(30.4)
2022
(10.0)
(13.3)
0.0
(23.3)
The foreign currency losses in the current reporting period mainly result from the appreciation of the functional currencies against major foreign currencies
related to subsidiaries with a net asset foreign currency exposure and the devaluation of the functional currencies against major foreign currencies related to
subsidiaries with a net liability foreign currency exposure. Moreover, the restatement of foreign currency losses in accordance with hyperinflation accounting
(IAS 29) has increased the reported foreign currency losses of the subsidiary in Argentina.
13. Other net financial expenses
Other net financial expenses consist of the following items:
million (2022: €8.6 million) in development costs were capitalised. Amortisation and impairment of development costs recognised within cost of sales was €3.1
in € million
Net interest expense relating to personnel provisions
Unwinding of discount of provisions and payables
Interest expense on non-controlling interest liabilities
Interest expense on lease liabilities
Income from the revaluation of NCI put options
Other interest and similar income and expenses1)
Other net financial expenses
1) Mainly includes costs associated with the trade receivables factoring programme of €11.7 million (2022: €7.2 million).
14. Taxation
Income tax
Income tax consists of the following items:
in € million
Current tax expense
Deferred tax (expense)/income relating to
temporary differences
tax loss carryforwards
Income tax
2023
(12.4)
(7.7)
(6.5)
(2.4)
6.6
(9.3)
(31.7)
2023
(66.7)
8.6
(3.9)
4.7
(62.0)
2022
(5.7)
(8.5)
(5.3)
(1.3)
4.7
(14.6)
(30.7)
2022
(52.7)
(11.9)
(39.1)
(51.0)
(103.7)
Average employee numbers
The average number of employees of the Group based on full time equivalents amounts to:
120 full time equivalents of salaried employees work in the Netherlands (2022: 124 employees). Total includes average employees of newly acquired
Includes interest income on cash at banks and similar income amounting to €19.3 million (2022: €8.0 million).
The current tax expense includes net income tax expense for previous periods of €4.5 million (2022: €2.3 million net income).
In recognising deferred tax assets, the Group has considered (i) the impacts of the global economic environment in which it operates, (ii) uncertainties and
potential adverse effects of economic volatility and (iii) the Group’s latest forecasts and assumptions used for goodwill impairment testing and viability
statement assessment. The Group’s forecasted period is four years with the fifth year being the final year, consistent with goodwill impairment testing. In Brazil, a
longer time frame is used due to the annual limitation for use of losses (30% of the taxable profits of the relevant year) which requires a longer-term prediction.
Information on tax contingencies is provided under Note (39).
In addition to the income taxes recognised in the Consolidated Statement of Profit or Loss, a tax income of €14.5 million (2022: €29.5 million income tax
expense), was recognised in OCI mainly relating to cash flow hedges and measurement gains and losses on employee post-employment benefits.
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FINANCIAL STATEMENTS
Notes continued
A reconciliation of the difference between the income tax expense, which would result from the application of the Austrian corporate tax rate of 24% on the
profit before income tax (the Austrian tax rate being used as holding company RHI Magnesita N.V. is tax resident in Austria), and the income tax reported is
shown below:
in € million
Profit before income tax
Income tax expense calculated at 24% (2022: 25%)
Different foreign tax rates
Expenses not deductible for tax purposes, non-creditable taxes
Non-taxable income and tax benefits
Tax losses and temporary differences of the financial year not recognised
Utilisation of previously unrecognised loss carryforwards and temporary differences
Recognition of previously unrecognised loss carryforwards and temporary differences
Change in write down of deferred tax assets
Deferred tax expense due to tax rate changes
Deferred tax assets derecognised
Deferred income tax relating to prior periods
Income tax relating to foreign currency translation of local currency to functional currency
Current income tax relating to prior periods
Other
Recognised tax expense
Effective tax rate (in %)
2023
233.3
56.0
2.1
28.0
(27.9)
1.2
(1.0)
(0.2)
0.0
2.0
0.0
(6.9)
4.0
4.5
0.2
2022
270.5
67.6
5.9
21.4
(25.7)
2.3
0.0
(3.1)
3.0
2.7
23.6
5.2
2.8
(2.3)
0.3
62.0
26.6%
103.7
38.4%
Below is the summary of major effects on the effective tax rate reconciliation:
In 2023, expenses not deductible for tax purposes mainly includes: transfer pricing adjustments and inventory revaluations in Brazil of €5.4 million (2022: €3.4
million); share-based payments and other employee costs and write up of treasury shares in Austria of €5.1 million (2022: €2.9 million); inflation, inventory and
FX adjustments, asset impairment and exempt income in South America of €4.1 million (2022: €5.0 million); non-creditable withholding taxes in Austria of
€1.6 million (2022: €2.4 million); non-deductible expense for debt waivers of €1.2 million (2022: €0.0 million) and non-deductible subsidiary recharged
expenses of €1.1 million (2022: €1.2 million).
In 2023, non-taxable income and tax benefits mainly include: tax incentives in Brazil of €7.9 million (2022: €7.4 million); additional tax depreciation in Austria
of €7.2 million (€2022: €7.5 million) relating to historical acquisitions; non-taxable preliminary bargain purchase gain in newly acquired companies of €2.2
million (2022: €0.0 million); income of foreign permanent establishments in Austria of €0.6 million (2022: €1.0 million); and inflationary adjustments in South
America of €4.0 million (2022: €3.1 million). Furthermore, other non-taxable income in 2022 includes non-taxable income from the write up of shares of €2.1
million in Austria.
The change in the tax rate in Austria from 25% to 24% in 2023 and 23% in 2024, resulted in a deferred tax income of €0.3 million from deferred taxes on
taxable and deductible temporary differences (2022: €2.4 million deferred tax expense). In the United States a change in the tax rate from 25.65% to 24.19%
led to a deferred tax income of €0.6 million (2022: deferred tax expense due to a tax rate change from 24.15% to 25.65% amounting to €0.9 million). In
Türkiye an increase of the tax rate from 20% to 25% led to a deferred tax expense of €2.3 million (2022: deferred tax income due to a tax rate change from
22% to 20% of €0.3 million).
Deferred taxes expense relating to prior periods based on information obtained in the reporting period, arises mainly from Mexico amounting to a deferred tax
expense of €1.0 million (2022: deferred tax expense of €4.6 million). In Germany there is a deferred tax income relating to prior periods amounting to €7.3
million (2022: deferred tax expense of €2.3 million). Deferred income tax relating to foreign currency translation of local currency tax base is due to the
devaluation of the Turkish Lira against the Euro of €4.0 million (2022: €2.8 million).
The current income tax expense relating to prior periods of €4.5 million arose mainly in Austria of €2.6 million (2022: current income tax income of €2.2
million) and the United States of €1.2 million (2022: income tax expense of €1.0 million). In 2022 there was an additional charge of €1.4 million following the
allocation of certain Group functions and responsibilities to Austria.
In 2022 deferred tax assets derecognised pursuant to a tax position reassessment of €23.6 million included an income adjustment following agreement with
the tax authorities on the allocation of certain Group functions, including €8.7 million adjustment in relation to an intercompany debt waiver. These tax impacts
had the primary effect of reducing previously recognised tax losses and the cash tax impact was €1.4 million. The Group’s effective tax rate was 38.3%. Drivers
for the 2022 effective tax rate were mainly the non-cash (€23.6 million) and cash (€1.4 million) tax impacts as mentioned above, deferred tax adjustments from
Mexico of €4.6 million and the lower income tax rate in Austria of €2.7 million. In 2023, the Group’s effective tax rate was not showing such big one-off effects,
decreasing it to 26.6%.
2 0 0
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OTHER
INFORMATION
Notes continued
shown below:
in € million
Profit before income tax
Different foreign tax rates
Income tax expense calculated at 24% (2022: 25%)
Expenses not deductible for tax purposes, non-creditable taxes
Non-taxable income and tax benefits
Tax losses and temporary differences of the financial year not recognised
Utilisation of previously unrecognised loss carryforwards and temporary differences
Recognition of previously unrecognised loss carryforwards and temporary differences
Change in write down of deferred tax assets
Deferred tax expense due to tax rate changes
Deferred tax assets derecognised
Deferred income tax relating to prior periods
Other
Recognised tax expense
Effective tax rate (in %)
Income tax relating to foreign currency translation of local currency to functional currency
Current income tax relating to prior periods
A reconciliation of the difference between the income tax expense, which would result from the application of the Austrian corporate tax rate of 24% on the
profit before income tax (the Austrian tax rate being used as holding company RHI Magnesita N.V. is tax resident in Austria), and the income tax reported is
Deferred taxes
Deferred taxes are related to the following significant balance sheet items and tax loss carryforwards:
2023
233.3
56.0
2.1
28.0
(27.9)
1.2
(1.0)
(0.2)
0.0
2.0
0.0
(6.9)
4.0
4.5
0.2
2022
270.5
67.6
5.9
21.4
(25.7)
2.3
0.0
(3.1)
3.0
2.7
23.6
5.2
2.8
(2.3)
0.3
in € million
Deferred tax assets
Deferred tax
liabilities
(Expense)/Income
Deferred tax assets
Deferred tax
liabilities
(Expense)/Income
31.12.2023
2023
31.12.2022
2022
Property, plant and
equipment, intangible assets
Inventories
Trade receivables, other
assets
Pensions and other personnel
provisions
Other provisions
Trade payables, other
liabilities
Tax loss carried forward
Offsetting
Deferred taxes
29.2
24.3
12.0
45.0
29.6
27.9
67.3
(83.3)
152.0
119.8
10.1
9.2
0.3
0.4
6.0
0.0
(83.3)
62.5
3.1
0.1
11.5
(4.8)
1.6
(2.9)
(3.9)
0.0
4.7
25.1
20.8
11.0
41.9
27.4
22.2
68.8
(89.0)
128.2
113.3
9.0
21.1
0.3
0.6
6.7
0.0
(89.0)
62.0
(6.1)
6.3
(17.2)
(4.6)
0.2
9.5
(39.1)
0.0
(51.0)
62.0
26.6%
103.7
38.4%
For temporary differences and tax loss carryforwards of subsidiaries which have generated tax losses either in the current or previous reporting period deferred
tax assets amounting to €5.3 million (2022: €1.9 million) have been recognised in the Consolidated Statement of Financial Position, as sufficient taxable
income is expected to be generated in the future.
Tax loss carryforwards totalled €401.9 million at 31 December 2023 (2022: €407.7 million). A significant part of the tax loss carryforwards originated in Brazil
and Austria where their deduction can be carried forward indefinitely. Furthermore, there are tax loss carryforwards in China expiring within the next five years.
The annual utilisation of tax loss carryforwards is limited to 75% in Austria and 30% in Brazil of their respective taxable profits. Deferred tax assets were not
recognised on tax losses and tax loss carryforwards of €181.0 million (2022: €179.2 million). Thereof €60.7 million (2022: €53.4 million) relate to Brazil, €60.7
million (2022: €63.7 million) relate to Luxembourg, €23.6 million (2022: €23.2 million) relate to China, €19.4 million (2022: €18.8 million) relate to the UK,
€3.6 million (2022: €5.9 million) relate to Dubai, €5.9 million (2022: 5.9 million) relate to Germany, €4.4 million (2022: €3.6 million) relate to France, €0.0
million (2022: €2.0 million) relate to Denmark and €2.7 million (2022: €2.7 million) relate to other countries.
in € million
Year of expiry
2022
2023
2024
2025
2026
2027
2028
2029 or later
Not subject to expiration
Total unrecognised tax losses
31.12.2023
31.12.2022
0.0
0.0
5.9
1.7
2.0
8.4
5.8
0.5
156.7
181.0
0.4
0.2
7.4
1.8
2.1
11.9
0.8
0.0
154.6
179.2
No deferred tax assets were recognised on temporary differences totalling €176.2 million (2022: €209.0 million), which are expected to reverse by 2034.
Thereof €150.8 million (2022: €180.9 million) relate to Austria, €24.9 million (2022: €26.2 million) relate to China and €0.5 million (2022: €1.9 million) relate
to other countries.
Taxable temporary differences of €1,240.6 million (2022: €1,113.7 million) and temporary deductible differences of €49.9 million (2022: €7.2 million) were not
recognised on shares in subsidiaries as the distributions of profit or the sale of the investments are controlled by the Group.
Income tax receivables
Income tax receivables amounting to €43.5 million (2022: €38.7 million) are mainly related to tax prepayments and deductible withholding taxes.
Income tax liabilities
Income tax liabilities amounting to €50.8 million (2022: €38.3 million) primarily include income taxes for the current year and previous years.
Below is the summary of major effects on the effective tax rate reconciliation:
In 2023, expenses not deductible for tax purposes mainly includes: transfer pricing adjustments and inventory revaluations in Brazil of €5.4 million (2022: €3.4
million); share-based payments and other employee costs and write up of treasury shares in Austria of €5.1 million (2022: €2.9 million); inflation, inventory and
FX adjustments, asset impairment and exempt income in South America of €4.1 million (2022: €5.0 million); non-creditable withholding taxes in Austria of
€1.6 million (2022: €2.4 million); non-deductible expense for debt waivers of €1.2 million (2022: €0.0 million) and non-deductible subsidiary recharged
expenses of €1.1 million (2022: €1.2 million).
In 2023, non-taxable income and tax benefits mainly include: tax incentives in Brazil of €7.9 million (2022: €7.4 million); additional tax depreciation in Austria
of €7.2 million (€2022: €7.5 million) relating to historical acquisitions; non-taxable preliminary bargain purchase gain in newly acquired companies of €2.2
million (2022: €0.0 million); income of foreign permanent establishments in Austria of €0.6 million (2022: €1.0 million); and inflationary adjustments in South
America of €4.0 million (2022: €3.1 million). Furthermore, other non-taxable income in 2022 includes non-taxable income from the write up of shares of €2.1
million in Austria.
The change in the tax rate in Austria from 25% to 24% in 2023 and 23% in 2024, resulted in a deferred tax income of €0.3 million from deferred taxes on
taxable and deductible temporary differences (2022: €2.4 million deferred tax expense). In the United States a change in the tax rate from 25.65% to 24.19%
led to a deferred tax income of €0.6 million (2022: deferred tax expense due to a tax rate change from 24.15% to 25.65% amounting to €0.9 million). In
Türkiye an increase of the tax rate from 20% to 25% led to a deferred tax expense of €2.3 million (2022: deferred tax income due to a tax rate change from
22% to 20% of €0.3 million).
Deferred taxes expense relating to prior periods based on information obtained in the reporting period, arises mainly from Mexico amounting to a deferred tax
expense of €1.0 million (2022: deferred tax expense of €4.6 million). In Germany there is a deferred tax income relating to prior periods amounting to €7.3
million (2022: deferred tax expense of €2.3 million). Deferred income tax relating to foreign currency translation of local currency tax base is due to the
devaluation of the Turkish Lira against the Euro of €4.0 million (2022: €2.8 million).
The current income tax expense relating to prior periods of €4.5 million arose mainly in Austria of €2.6 million (2022: current income tax income of €2.2
million) and the United States of €1.2 million (2022: income tax expense of €1.0 million). In 2022 there was an additional charge of €1.4 million following the
allocation of certain Group functions and responsibilities to Austria.
In 2022 deferred tax assets derecognised pursuant to a tax position reassessment of €23.6 million included an income adjustment following agreement with
the tax authorities on the allocation of certain Group functions, including €8.7 million adjustment in relation to an intercompany debt waiver. These tax impacts
had the primary effect of reducing previously recognised tax losses and the cash tax impact was €1.4 million. The Group’s effective tax rate was 38.3%. Drivers
for the 2022 effective tax rate were mainly the non-cash (€23.6 million) and cash (€1.4 million) tax impacts as mentioned above, deferred tax adjustments from
Mexico of €4.6 million and the lower income tax rate in Austria of €2.7 million. In 2023, the Group’s effective tax rate was not showing such big one-off effects,
decreasing it to 26.6%.
200
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FINANCIAL STATEMENTS
Notes continued
15. Earnings per share
Earnings per share is calculated by dividing the profit or loss attributable to the shareholders of the Group by the weighted average number of shares
outstanding during the financial year.
Profit after income tax attributable to RHI Magnesita N.V. shareholders (in € million)
Weighted average number of shares for basic EPS
Effects of dilution from share options
Weighted average number of shares for dilutive EPS
Earnings per share basic (in €)
Earnings per share diluted (in €)
2023
164.6
2022
155.7
47,078,254
47,000,708
1,014,964
793,302
48,093,218
47,794,010
3.50
3.42
3.31
3.26
The weighted average number of shares for basic and dilutive EPS considers the weighted average effect of the newly issued ordinary shares as well the effect
of changes in treasury shares during the reporting period. As of 31 December 2023, there are 1,049,347 diluting options (2022: 849,046).
16. Dividend payments and proposed dividend
The final proposed dividend is subject to the approval of the Annual General Meeting in May 2024 and was not recognised as a liability in these Consolidated
Financial Statements. The final proposed dividend for 2023 will amount to €1.25 per share (2022: €1.10 per share).
In line with the Group’s dividend policy, the Board paid out an interim dividend in September 2023 of €0.55 per share for the first half of 2023 amounting to
€26.0 million. The total dividend for 2023, which includes the proposed final dividend, yet to be approved by shareholders, amounts to €1.80 per share (2022:
€1.60 per share).
Based on a resolution adopted by the Annual General Meeting of RHI Magnesita N.V. on 24 May 2023, the final dividend for 2022 amounted to €1.10 per share
and was paid out in July 2023, amounting to €51.7 million. The total dividend for 2022 amounted to €1.60 per share.
17. Goodwill
in € million
Carrying amount at beginning of the year
Newly acquired businesses
Currency translation
Hyperinflation adjustment
Carrying amount at year-end
2023
136.9
197.0
(1.6)
6.9
339.2
2022
114.4
20.6
1.9
0.0
136.9
Impairment of CGUs with significant goodwill
Goodwill is tested for impairment at least annually based on the CGU to which it is allocated. The Group’s significant goodwill is assigned to the Steel CGUs
and to the Industrial Cement & Lime CGU as shown in the table below.
The impairment test is based on the value in use; the recoverable amount is determined using the discounted cash flow method and incorporates the terminal
value. The Group is subject to environmental and other laws and regulations and has established environmental policies and procedures aimed at compliance
with these laws. Impairment testing incorporated considerations for increased energy and raw material prices in its budget and the Long-Term Plan and
estimates the total increase in investments in research and development costs at approximately €47.8 million. Current technology used by the customer
industries requiring advanced heat-resistant materials for their production depend on refractory materials and in our view will remain in use in the observable
future.
The cash flows projections used for impairment testing are based on the strategic business and financial planning model of the Group including the 2024
budget, as approved by the Board, and the Long-Term Plan, covering a four-year period. The cash flows are geared to a steady-state business development,
which balances out possible economic or other non-sustainable fluctuations in the detailed planning period and forms the basis for the calculation of the
terminal value.
The key assumptions used in determining the value in use are:
• Revenue: projected sales were built up with reference to markets and product categories. incorporating projections of developments in key markets.
• EBIT margin: projected margins reflect historical performance, our expectations for future cost inflation and the impact of all completed projects to improve
operational efficiency.
• Discount rate before tax: a discount rate that is calculated taking into account the weighted average cost of capital of comparable companies; the
corresponding parameters are derived from capital market information. In addition, country-specific risk premiums are considered in the weighted average cost
of capital.
• Perpetual annuity growth rate: for the purposes of the Group’s value in use calculations, a long-term growth rate into perpetuity was applied immediately at
the end of the fifth-year detailed planning period comprising the 2024 budget and the subsequent four-year period covered by the Long-Term Plan. As in the
previous year, the terminal value is based on a growth rate derived from the difference between the current and possible degree of asset capacity and utilisation.
2 0 2
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Earnings per share is calculated by dividing the profit or loss attributable to the shareholders of the Group by the weighted average number of shares
Forecast EBIT has been projected using:
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
• Expected future sales are based on the strategic plan, which was constructed at a market level with input from regional commercial managers. An assessment
of the market using external sources for the development of the customer’s industries; regional growth rates of the steel production and output of the non-steel
clients in combination with the development of the specific refractory consumption including technological improvements.
• Current cost structure and production capacity, which include our expectations for future cost inflation. The assumptions were updated considering the latest
economic developments, including energy, freight and raw material prices. The forecasts include cash flows from future investments related to capacity
maintenance while expansion investments are excluded.
Working capital is included in the carrying amount of the CGUs; therefore, the recoverable amount only takes into account changes in working capital.
The following table shows the perpetual annuity growth rates and discount rates before tax applied in the value in use determination for CGUs to which
significant goodwill is allocated:
Discount rate
before Tax
Perpetual annuity
growth rate
Goodwill
in € million
Discount rate
before Tax
Perpetual annuity
growth rate
2023
Steel - Linings
Steel - Flow Control
Industrial - Cement & Lime
9.9%
10.0%
10.5%
0.9%
0.9%
0.9%
212.8
66.5
55.1
10.8%
11.1%
11.2%
0.9%
0.9%
0.9%
2022
Goodwill
in € million
107.2
28.5
0.1
As a sensitivity, the effect of the following downside scenarios to the key assumptions would, in isolation, not result in an impairment of goodwill:
• increase of the estimated discount rate by 10%
• decrease of the perpetual annuity growth rate by 50%
• decrease of revenue by 5%
• decrease of EBIT margin by 10%.
18. Other intangible assets
in € million
Mining rights
Customer
relationship
Internally
generated
intangible assets
Other intangible
assets
Prepayments made
and intangible
assets under
construction
Cost at 31.12.2022
Currency translation
Additions
Additions initial consolidation
Retirements and disposals
Reclassifications
Cost at 31.12.2023
Accumulated amortisation
31.12.2022
Currency translation
Amortisation charges
Retirements and disposals
Reclassifications
Accumulated amortisation
31.12.2023
Carrying amounts at
31.12.2023
151.9
1.5
0.0
0.0
(1.0)
0.0
152.4
14.5
0.0
2.5
0.0
0.0
17.0
132.1
(5.1)
0.0
158.9
0.2
(1.8)
284.3
45.4
(0.5)
20.2
0.2
(0.5)
64.8
135.4
219.5
78.5
(0.1)
8.0
0.0
(0.6)
0.0
85.8
48.8
0.0
3.6
(0.2)
0.0
52.2
33.6
156.8
(2.4)
2.0
6.4
(1.0)
8.4
170.2
94.0
0.5
17.3
(0.3)
(0.5)
111.0
59.2
0.0
(0.2)
0.1
8.0
0.0
14.2
22.1
0.0
0.0
0.0
0.0
0.0
0.0
22.1
Total
519.3
(6.3)
10.1
173.3
(2.4)
20.8
714.8
202.7
0.0
43.6
(0.3)
(1.0)
245.0
469.8
Notes continued
15. Earnings per share
outstanding during the financial year.
Profit after income tax attributable to RHI Magnesita N.V. shareholders (in € million)
Weighted average number of shares for basic EPS
Effects of dilution from share options
Weighted average number of shares for dilutive EPS
Earnings per share basic (in €)
Earnings per share diluted (in €)
47,078,254
47,000,708
1,014,964
793,302
48,093,218
47,794,010
2023
164.6
3.50
3.42
2022
155.7
3.31
3.26
The weighted average number of shares for basic and dilutive EPS considers the weighted average effect of the newly issued ordinary shares as well the effect
of changes in treasury shares during the reporting period. As of 31 December 2023, there are 1,049,347 diluting options (2022: 849,046).
16. Dividend payments and proposed dividend
The final proposed dividend is subject to the approval of the Annual General Meeting in May 2024 and was not recognised as a liability in these Consolidated
Financial Statements. The final proposed dividend for 2023 will amount to €1.25 per share (2022: €1.10 per share).
In line with the Group’s dividend policy, the Board paid out an interim dividend in September 2023 of €0.55 per share for the first half of 2023 amounting to
€26.0 million. The total dividend for 2023, which includes the proposed final dividend, yet to be approved by shareholders, amounts to €1.80 per share (2022:
Based on a resolution adopted by the Annual General Meeting of RHI Magnesita N.V. on 24 May 2023, the final dividend for 2022 amounted to €1.10 per share
and was paid out in July 2023, amounting to €51.7 million. The total dividend for 2022 amounted to €1.60 per share.
€1.60 per share).
17. Goodwill
in € million
Carrying amount at beginning of the year
Newly acquired businesses
Currency translation
Hyperinflation adjustment
Carrying amount at year-end
2023
136.9
197.0
(1.6)
6.9
339.2
2022
114.4
20.6
1.9
0.0
136.9
Impairment of CGUs with significant goodwill
and to the Industrial Cement & Lime CGU as shown in the table below.
Goodwill is tested for impairment at least annually based on the CGU to which it is allocated. The Group’s significant goodwill is assigned to the Steel CGUs
The impairment test is based on the value in use; the recoverable amount is determined using the discounted cash flow method and incorporates the terminal
value. The Group is subject to environmental and other laws and regulations and has established environmental policies and procedures aimed at compliance
with these laws. Impairment testing incorporated considerations for increased energy and raw material prices in its budget and the Long-Term Plan and
estimates the total increase in investments in research and development costs at approximately €47.8 million. Current technology used by the customer
industries requiring advanced heat-resistant materials for their production depend on refractory materials and in our view will remain in use in the observable
The cash flows projections used for impairment testing are based on the strategic business and financial planning model of the Group including the 2024
budget, as approved by the Board, and the Long-Term Plan, covering a four-year period. The cash flows are geared to a steady-state business development,
which balances out possible economic or other non-sustainable fluctuations in the detailed planning period and forms the basis for the calculation of the
The key assumptions used in determining the value in use are:
• Revenue: projected sales were built up with reference to markets and product categories. incorporating projections of developments in key markets.
• EBIT margin: projected margins reflect historical performance, our expectations for future cost inflation and the impact of all completed projects to improve
• Discount rate before tax: a discount rate that is calculated taking into account the weighted average cost of capital of comparable companies; the
corresponding parameters are derived from capital market information. In addition, country-specific risk premiums are considered in the weighted average cost
• Perpetual annuity growth rate: for the purposes of the Group’s value in use calculations, a long-term growth rate into perpetuity was applied immediately at
the end of the fifth-year detailed planning period comprising the 2024 budget and the subsequent four-year period covered by the Long-Term Plan. As in the
previous year, the terminal value is based on a growth rate derived from the difference between the current and possible degree of asset capacity and utilisation.
future.
terminal value.
operational efficiency.
of capital.
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FINANCIAL STATEMENTS
Notes continued
in € million
Cost at 31.12.2021
Currency translation
Additions
Additions initial consolidation
Retirements and disposals
Reclassifications
Cost at 31.12.2022
Accumulated amortisation 31.12.2021
Currency translation
Amortisation charges
Retirements and disposals
Reclassifications
Accumulated amortisation 31.12.2022
Carrying amounts at 31.12.2022
Mining rights
Customer
relationship
Internally
generated
intangible assets
Other intangible
assets
139.3
12.6
0.0
0.0
0.0
0.0
151.9
11.1
0.9
2.5
0.0
0.0
14.5
137.4
99.2
4.4
0.0
28.5
0.0
0.0
132.1
35.3
0.7
9.4
0.0
0.0
45.4
86.7
70.9
0.1
8.7
0.0
(0.8)
(0.4)
78.5
44.8
0.0
4.0
0.0
0.0
48.8
29.7
145.4
1.0
7.2
0.0
(0.7)
3.9
156.8
81.0
0.3
13.0
(0.7)
0.4
94.0
62.8
Total
454.8
18.1
15.9
28.5
(1.5)
3.5
519.3
172.2
1.9
28.9
(0.7)
0.4
202.7
316.6
Internally generated intangible assets comprise capitalised software and product development costs.
The intangible assets resulting from customer relationships of former Magnesita Group have a carrying amount of €55.0 million (2022: €61.1 million) and a
remaining useful life between five to nine years. Information on the customer relationships of the acquired entities in 2023 is provided in Note (42).
Other intangible assets include in particular acquired patents, trademark rights, software, and land-use rights. The land-use rights have a carrying amount of
€23.8 million (2022: €20.9 million) and a remaining useful life between 14 to 54 years.
There are no restrictions on the sale of intangible assets.
19. Property, plant and equipment
in € million
Cost at 31.12.2022
Currency translation
Additions1)
Additions initial consolidation
Retirements and disposals
Reclassifications
Cost at 31.12.2023
Accumulated depreciation
31.12.2022
Currency translation
Depreciation charges
Impairment charges
Reversal of impairment
charges
Retirements and disposals
Reclassifications
Accumulated depreciation
31.12.2023
Carrying amounts at
31.12.2023
Real
estate,
land and
buildings
712.2
(0.6)
13.5
52.3
(35.0)
15.5
757.9
317.4
(0.4)
16.9
0.0
0.0
(30.1)
0.0
303.8
454.1
Technical
equipment,
machinery
1,143.1
(1.5)
18.6
51.0
(23.9)
43.7
1,231.0
767.5
0.5
66.5
0.4
0.0
(21.0)
0.2
814.1
416.9
Other plant,
furniture and
fixtures
Prepayments
made and
plant under
construction
Right-of-use assets
392.7
1.2
10.9
6.3
(15.0)
20.5
416.6
252.1
0.0
29.7
1.0
0.0
(12.9)
0.5
270.4
146.2
231.6
3.0
127.1
5.8
0.0
(100.5)
267.0
1.3
0.0
0.0
0.0
0.0
0.0
0.0
1.3
265.7
112.4
0.2
14.8
21.8
(14.7)
0.0
134.5
50.0
0.7
20.8
0.0
(0.4)
(13.8)
0.0
57.3
77.2
Total
2,592.0
2.3
184.9
137.2
(88.6)
(20.8)
2,807.0
1,388.3
0.8
133.9
1.4
(0.4)
(77.8)
0.7
1,446.9
1,360.1
1) Including €7.9 million capitalised borrowing costs.
2 0 4
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Internally generated intangible assets comprise capitalised software and product development costs.
The intangible assets resulting from customer relationships of former Magnesita Group have a carrying amount of €55.0 million (2022: €61.1 million) and a
remaining useful life between five to nine years. Information on the customer relationships of the acquired entities in 2023 is provided in Note (42).
Other intangible assets include in particular acquired patents, trademark rights, software, and land-use rights. The land-use rights have a carrying amount of
€23.8 million (2022: €20.9 million) and a remaining useful life between 14 to 54 years.
Notes continued
in € million
Cost at 31.12.2021
Currency translation
Additions
Additions initial consolidation
Retirements and disposals
Reclassifications
Cost at 31.12.2022
Accumulated amortisation 31.12.2021
Currency translation
Amortisation charges
Retirements and disposals
Reclassifications
Accumulated amortisation 31.12.2022
Carrying amounts at 31.12.2022
Mining rights
139.3
151.9
12.6
0.0
0.0
0.0
0.0
11.1
0.9
2.5
0.0
0.0
14.5
137.4
There are no restrictions on the sale of intangible assets.
19. Property, plant and equipment
in € million
Cost at 31.12.2022
Currency translation
Additions1)
Additions initial consolidation
Retirements and disposals
Reclassifications
Cost at 31.12.2023
Accumulated depreciation
31.12.2022
Currency translation
Depreciation charges
Impairment charges
Reversal of impairment
charges
Retirements and disposals
Reclassifications
Accumulated depreciation
31.12.2023
Carrying amounts at
31.12.2023
1) Including €7.9 million capitalised borrowing costs.
Real
estate,
land and
buildings
712.2
(0.6)
13.5
52.3
(35.0)
15.5
757.9
317.4
(0.4)
16.9
0.0
0.0
(30.1)
0.0
303.8
454.1
Technical
equipment,
machinery
1,143.1
(1.5)
18.6
51.0
(23.9)
43.7
1,231.0
767.5
0.5
66.5
0.4
0.0
(21.0)
0.2
814.1
416.9
Customer
relationship
Internally
generated
intangible assets
Other intangible
99.2
4.4
0.0
28.5
0.0
0.0
132.1
35.3
0.7
9.4
0.0
0.0
45.4
86.7
392.7
1.2
10.9
6.3
(15.0)
20.5
416.6
252.1
0.0
29.7
1.0
0.0
(12.9)
0.5
270.4
146.2
70.9
0.1
8.7
0.0
(0.8)
(0.4)
78.5
44.8
0.0
4.0
0.0
0.0
48.8
29.7
231.6
3.0
127.1
5.8
0.0
(100.5)
267.0
1.3
0.0
0.0
0.0
0.0
0.0
0.0
1.3
265.7
assets
145.4
1.0
7.2
0.0
(0.7)
3.9
156.8
81.0
0.3
13.0
(0.7)
0.4
94.0
62.8
112.4
0.2
14.8
21.8
(14.7)
0.0
134.5
50.0
0.7
20.8
0.0
(0.4)
(13.8)
0.0
57.3
77.2
Total
454.8
18.1
15.9
28.5
(1.5)
3.5
519.3
172.2
1.9
28.9
(0.7)
0.4
202.7
316.6
Total
2,592.0
2.3
184.9
137.2
(88.6)
(20.8)
2,807.0
1,388.3
0.8
133.9
1.4
(0.4)
(77.8)
0.7
1,446.9
1,360.1
Other plant,
furniture and
fixtures
Prepayments
made and
plant under
construction
Right-of-use assets
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
in € million
Cost at 31.12.2021
Currency translation
Additions2)
Additions initial consolidation
Retirements and disposals
Reclassifications
Cost at 31.12.2022
Accumulated depreciation
31.12.2021
Currency translation
Depreciation charges
Reversal of impairment
charges
Retirements and disposals
Reclassifications
Accumulated depreciation
31.12.2022
Carrying amounts at
31.12.2022
Real
estate,
land and
buildings
670.3
11.0
8.2
6.0
(10.8)
27.5
712.2
311.5
0.3
15.1
(1.5)
(8.0)
0.0
317.4
394.8
Technical
equipment,
machinery
Other plant,
furniture and
fixtures
Prepayments
made and
plant under
construction1) Right-of-use assets
1,143.6
13.2
14.9
2.9
(85.0)
53.5
1,143.1
793.4
5.7
54.1
(3.0)
(82.7)
0.0
767.5
375.6
379.4
4.9
15.1
0.6
(34.5)
27.2
392.7
260.3
1.1
26.2
(0.9)
(34.2)
(0.4)
252.1
140.6
209.7
11.2
122.6
0.3
(0.5)
(111.7)
231.6
1.5
0.1
0.0
(0.3)
0.0
0.0
1.3
230.3
87.1
2.6
20.7
7.0
(5.0)
0.0
112.4
33.7
1.2
20.2
(0.3)
(4.8)
0.0
50.0
62.4
Total
2,490.1
42.9
181.5
16.8
(135.8)
(3.5)
2,592.0
1,400.4
8.4
115.6
(6.0)
(129.7)
(0.4)
1,388.3
1,203.7
1) Prepayments made and plant under construction include €10.2 million relating to intangible assets. €3.5 million was transferred to intangibles assets during the year.
2) Including €1.5 million capitalised borrowing costs.
Prepayments made and plant under construction includes €258.7 million (2022: €212.0 million) mainly relating to the expansion and production optimisation
of the plants in Brazil during 2023. The spent in 2022 mainly related to the expansion of a production plant in Austria and a magnesite plant in Brazil.
Please refer to Note (27) for the restrictions on the sale of property, plant and equipment.
The Right-of-use assets per category developed as follows as of 31 December 2023:
in € million
Cost at 31.12.2022
Currency translation
Additions
Additions initial consolidation
Retirements and disposals
Cost at 31.12.2023
Accumulated depreciation 31.12.2022
Currency translation
Depreciation charges
Reversal of impairment charges
Retirements and disposals
Accumulated depreciation 31.12.2023
Carrying amounts at 31.12.2023
Right-of-use assets
land and buildings
Right-of-use assets
technical
equipment and
machinery
Right-of-use assets
other equipment,
furniture and
fixtures
68.8
(0.3)
8.7
20.9
(7.5)
90.6
25.3
0.0
11.9
0.0
(7.2)
30.0
60.6
33.0
0.4
0.8
0.7
(4.8)
30.1
19.2
0.5
5.3
(0.4)
(4.6)
20.0
10.1
10.6
0.1
5.3
0.2
(2.4)
13.8
5.5
0.2
3.6
0.0
(2.0)
7.3
6.5
Total
112.4
0.2
14.8
21.8
(14.7)
134.5
50.0
0.7
20.8
(0.4)
(13.8)
57.3
77.2
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FINANCIAL STATEMENTS
Notes continued
The Right-of-use assets per category developed as follows as of 31 December 2022:
in € million
Cost at 31.12.2021
Currency translation
Additions
Additions initial consolidation
Retirements and disposals
Cost at 31.12.2022
Accumulated depreciation 31.12.2021
Currency translation
Depreciation charges
Reversal of impairment charges
Retirements and disposals
Right-of-use assets
land and buildings
Right-of-use assets
technical
equipment and
machinery
Right-of-use assets
other equipment,
furniture and
fixtures
47.8
1.0
16.7
5.1
(1.8)
68.8
15.4
0.4
11.2
0.0
(1.7)
31.9
1.5
1.2
0.1
(1.7)
33.0
14.4
0.6
6.1
(0.2)
(1.7)
7.4
0.1
2.8
1.8
(1.5)
10.6
3.9
0.2
2.9
(0.1)
(1.4)
Total
87.1
2.6
20.7
7.0
(5.0)
112.4
33.7
1.2
20.2
(0.3)
(4.8)
The average lease term is 11 years for land and buildings, six years for technical equipment and three years for other equipment, furniture and fixtures. Impacts
resulting from extension and termination options, as well as residual value guarantees are immaterial. Detail on lease liabilities is in Note (28).
20. Other non-current assets
in € million
Tax receivables
Other non-current assets
Other non-current assets
31.12.2023
31.12.2022
13.9
22.8
36.7
18.7
21.3
40.0
Tax receivables relate to input tax credits, which are expected to be utilised in the medium term. Other non-current assets mainly include deferred mine
stripping costs.
21. Inventories
in € million
Raw materials and supplies
Work in progress
Finished products and goods
Prepayments made
Inventories
31.12.2023
31.12.2022
274.0
220.5
488.6
12.8
995.9
303.3
206.7
526.3
12.8
1,049.1
Net write-down expenses amount to €11.6 million (2022: €8.0 million). Please refer to Note (27) for the restrictions of the disposal of inventories.
2 0 6
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The Right-of-use assets per category developed as follows as of 31 December 2022:
Right-of-use assets
Right-of-use assets
technical
other equipment,
Right-of-use assets
land and buildings
equipment and
machinery
furniture and
fixtures
47.8
1.0
16.7
5.1
(1.8)
68.8
15.4
0.4
11.2
0.0
(1.7)
31.9
1.5
1.2
0.1
(1.7)
33.0
14.4
0.6
6.1
(0.2)
(1.7)
7.4
0.1
2.8
1.8
(1.5)
10.6
3.9
0.2
2.9
(0.1)
(1.4)
Total
87.1
2.6
20.7
7.0
(5.0)
112.4
33.7
1.2
20.2
(0.3)
(4.8)
Notes continued
in € million
Cost at 31.12.2021
Currency translation
Additions
Additions initial consolidation
Retirements and disposals
Cost at 31.12.2022
Accumulated depreciation 31.12.2021
Currency translation
Depreciation charges
Reversal of impairment charges
Retirements and disposals
in € million
Tax receivables
Other non-current assets
Other non-current assets
stripping costs.
21. Inventories
in € million
Raw materials and supplies
Work in progress
Finished products and goods
Prepayments made
Inventories
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
22. Trade and other current receivables
in € million
Trade receivables
Contract assets
Other tax receivables
Prepaid expenses
Other current receivables
Trade and other current receivables
thereof financial assets
thereof non-financial assets
31.12.2023
31.12.2022
537.6
3.5
95.4
8.4
40.8
685.7
541.4
144.3
433.4
3.5
106.4
5.9
29.7
578.9
433.9
145.0
The average lease term is 11 years for land and buildings, six years for technical equipment and three years for other equipment, furniture and fixtures. Impacts
resulting from extension and termination options, as well as residual value guarantees are immaterial. Detail on lease liabilities is in Note (28).
Other tax receivables include primarily VAT, as well as receivables from energy tax refunds, and tax research subsidies.
20. Other non-current assets
Other current receivables mainly relate to advances for insurance, IT services as well as custom and import-related services and costs.
The Group enters into factoring agreements and sells trade receivables to financial institutions. Trade receivables sold at the end of the year was €259.4 million
(2022: €245.1 million). These have been derecognised as substantially all risks and rewards as well as control have been transferred. Payments received from
customers following the sale are recognised in current borrowings until repaid to the factorer.
Tax receivables relate to input tax credits, which are expected to be utilised in the medium term. Other non-current assets mainly include deferred mine
Net write-down expenses amount to €11.6 million (2022: €8.0 million). Please refer to Note (27) for the restrictions of the disposal of inventories.
31.12.2023
31.12.2022
13.9
22.8
36.7
18.7
21.3
40.0
31.12.2023
31.12.2022
274.0
220.5
488.6
12.8
995.9
303.3
206.7
526.3
12.8
1,049.1
23. Cash and cash equivalents
in € million
Cash at banks and in hand
Money market funds
Cash and cash equivalents
31.12.2023
31.12.2022
644.4
59.1
703.5
471.8
48.9
520.7
Cash and cash equivalents include amounts not available for use by the Group totalling €9.9 million at 31 December 2023 (2022: €23.2 million). Cash not
available for use by the Group is mainly related to deposits for bank guarantees.
Money market funds with an opening balance of €9.3 million have been reclassified to other current financial assets since their value has significantly changed
in the current reporting period and thus do no longer meet the definition of cash equivalents. The reclassification is shown separately in the Consolidated
Statement of Cash Flows.
24. Share capital
At 31 December 2023, the authorised share capital of RHI Magnesita N.V. amounts to €100,000,000 divided into 100,000,000 ordinary shares unchanged
to prior year. Thereof 47,130,338 (2022: 47,017,695) fully paid-in ordinary shares are issued. In addition, there are 2,347,367 (2022: 2,460,010) treasury shares
held by the Company. All issued RHI Magnesita shares grant the same rights. The shareholders are entitled to dividends and have one voting right per share at
the Annual General Meeting. There are no shares with special control rights.
25. Group reserves
Treasury shares
At 31 December 2023, RHI Magnesita treasury shares amount to 2,347,367 (2022: 2,460,010).
Additional paid-in capital
At 31 December 2023, as well as at 31 December 2022, additional paid-in capital comprised premiums on the issue of shares less issue costs by RHI Magnesita
N.V.
Mandatory reserve
The Articles of Association stipulate a mandatory reserve of €288,699,230.59 which was created in connection with the merger between former RHI Group
and former Magnesita Group in 2017. No distributions, allocations or additions may be made and no losses of the Company may be allocated to the mandatory
reserve.
Retained earnings
Retained earnings includes the result of the financial year and results that were earned by consolidated companies during prior periods, but not distributed. The
difference between the purchase consideration or sale proceeds after tax and the relevant proportion of the non-controlling interest, measured by reference to
the carrying amount of the interest’s net assets at the date of acquisition or sale, is recognised in retained earnings too.
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FINANCIAL STATEMENTS
Notes continued
Accumulated other comprehensive income
Cash flow hedge reserves includes gains and losses from the effective part of cash flow hedges less tax effects. The accumulated gain or loss from the hedge
allocated to reserves is only reclassified to the Statement of Profit or Loss if the hedged transaction also influences the result or is terminated.
Reserves for defined benefit plans include the gains and losses from the remeasurement of defined benefit pension and termination benefit plans taking into
account tax effects. No reclassification of these amounts to the Statement of Profit or Loss will be made in future periods.
Currency translation includes the accumulated currency translation differences from translating the Financial Statements of foreign subsidiaries, unrealised
currency translation differences from monetary items which are part of a net investment in a foreign operation, net of related income taxes, as well as the
effective portion of foreign exchange gains or losses when a financial instrument is designated as the hedging instrument in net investment hedge in a foreign
operation.
26. Non-controlling interests
Subsidiaries with material non-controlling interests
RHI Magnesita India Ltd., based in New Delhi, India is a listed company on the BSE Limited and NSE Limited. RHI Magnesita India Ltd., including the acquired Hi-
Tech business, is the (direct or ultimate) parent company of Dalmia OCL Ltd. (Dalmia OCL), Dalmia Seven Refractories Ltd. and Intermetal which together form
the Subgroup India. This Subgroup India is included in the Steel and Industrial segments and the share of the non-controlling interests amounts to 43.9%
(2022: 29.8%). Aggregated financial information of Subgroup India as of 31 December 2023 is provided below:
in € million
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets before intragroup eliminations
Intragroup eliminations
Net assets
31.12.2023
31.12.20221)
420.3
257.9
(18.4)
(151.8)
508.0
(1.6)
506.4
50.4
168.3
(2.5)
(71.7)
144.5
0.1
144.6
Carrying amount of non-controlling interests
148.6
43.1
1) The disclosed financial information as of 31 December 2022 only relates to RHI Magnesita India Ltd. which is why it is not comparable to this year’s financial information.
The aggregated Statement of Profit or Loss and Statement of Comprehensive Income of Subgroup India for financial year 2023 are shown below:
in € million
Revenue
Operating expenses, net finance costs and income tax
Profit after income tax before intragroup eliminations
Intragroup eliminations
Profit after income tax
thereof attributable to non-controlling interests
in € million
Profit after income tax
Other comprehensive (expense)/income
Total comprehensive income
thereof attributable to non-controlling interests
2023
426.9
(410.3)
16.6
(1.8)
14.8
6.6
2023
14.8
(32.7)
(17.9)
(7.9)
1) The disclosed financial information for 2022 only relates to RHI Magnesita India Ltd. which is why it is not comparable to this year’s financial information.
The following table shows the summarised Statement of Cash Flows of Subgroup India for financial year 2023:
in € million
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
Total cash flow
2023
38.2
(123.0)
75.3
(9.5)
1) The disclosed financial information for 2022 only relates to RHI Magnesita India Ltd. which is why it is not comparable to this year’s financial information.
2 0 8
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20221)
294.6
(257.4)
37.2
0.6
37.8
11.3
20221)
37.8
(8.2)
29.6
8.8
20221)
21.5
(6.9)
(6.4)
8.2
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
Accumulated other comprehensive income
Cash flow hedge reserves includes gains and losses from the effective part of cash flow hedges less tax effects. The accumulated gain or loss from the hedge
allocated to reserves is only reclassified to the Statement of Profit or Loss if the hedged transaction also influences the result or is terminated.
Reserves for defined benefit plans include the gains and losses from the remeasurement of defined benefit pension and termination benefit plans taking into
account tax effects. No reclassification of these amounts to the Statement of Profit or Loss will be made in future periods.
Net cash flow from financing activities includes dividend payments to non-controlling interests amounting to €2.6million (2022: €1.5 million).
Change of non-controlling interests without a change of control
In 2023 the Group has acquired 100% of the shares of Dalmia OCL Ltd, India, through the non-wholly owned subsidiary RHI Magnesita India Ltd. and 51% of
the shares of Dalmia Seven Refractories Ltd ('DSR'), India, in exchange for 27,000,000 newly issued equity shares in RHI Magnesita India Ltd. worth €270.0
million and a cash consideration worth €55.2 million (see Note (42)).
Currency translation includes the accumulated currency translation differences from translating the Financial Statements of foreign subsidiaries, unrealised
currency translation differences from monetary items which are part of a net investment in a foreign operation, net of related income taxes, as well as the
effective portion of foreign exchange gains or losses when a financial instrument is designated as the hedging instrument in net investment hedge in a foreign
The share issue which has diluted the Group’s share in RHI Magnesita India Ltd. resulted in an increase of non-controlling interests by €122.3 million and has
created a dilution gain of €147.7 million reported within equity attributable to shareholders of RHI Magnesita N.V. The share issue is a non-cash transaction
which had no impact on the Consolidated Statement of Cash Flows.
Subsequently, the increase of non-controlling interests because of the share issue was offset with the decrease of non-controlling interests as result of
acquisition of Dalmia OCL and DSR of €68.8 million (refer to Note (42)) resulting in a net increase of non-controlling interests of €53.7 million as presented in
the Consolidated Statement of Changes in Equity.
In April 2023, RHI Magnesita India Ltd. issued 15,715,034 equity shares through a Qualified Institutional Placement which raised cash proceeds amounting to
€100.0 million. The share issue which has diluted the Group’s share in RHI Magnesita India Ltd. resulted in an increase of non-controlling interests by €63.8
million and has created a dilution gain amounting to €36.2 million reported within equity attributable to shareholders of RHI Magnesita N.V. The cash inflow
from this share issue is reported within the cash flow from financing activities in the Consolidated Statement of Cash Flows.
in € million
Consideration received
Carrying value of the sold interest in RHI Magnesita India Ltd.
Dilution gain recognised in retained earnings
January 2023
April 2023
270.0
122.3
147.7
100.0
63.8
36.2
In June 2023, RHI Magnesita India Ltd. issued 2,790,061 equity shares on a preferential basis which raised cash proceeds amounting to €22.5 million. The
share issue has diluted the non-controlling shareholder’s share in RHI Magnesita India Ltd. and insofar a purchase of non-controlling interests occurred which
has decreased non-controlling interests by €3.2 million and increased equity attributable to shareholders of RHI Magnesita N.V. by the same amount. The
share issue had no impact on the Consolidated Statement of Cash Flows since the cash proceeds were fully funded by the Group.
Following the acquisition of 51% of the shares of Dalmia Seven Refractories Ltd in January 2023 (see Note (42)) the company was renamed to RHI Magnesita
Seven Refractories Ltd. Within the Seven Refractories' business combination which was closed on 24 July 2023, the Group acquired the remaining shares
(49%) of RHI Magnesita Seven Refractories Ltd held by the non-controlling shareholders for a cash consideration of €6.9 million (including directly
attributable transaction costs of €0.8 million). The difference between the carrying amount of the non-controlling interests’ portion of equity acquired and the
consideration paid was recorded in retained earnings within equity.
In addition, the Group has acquired non-controlling interests of Seven Refractories' Group and Söğüt Refrakter Malzemeleri Anonim Şirketi (Sörmaş) for a cash
consideration of €1.3 million with the difference between the carrying amount of the non-controlling interests’ portion of equity acquired and the consideration
paid recorded in retained earnings within equity.
27. Borrowings
Borrowings include all interest-bearing liabilities due to financial institutions and other lenders.
In April 2023, the Group successfully issued a Bonded loan (“Schuldscheindarlehen”) in the amount of €170.0 million with an average tenor of five years and at
competitive pricing. Additionally, the Group has successfully refinanced a bilateral Term Loan, increasing the total loan amount from €115.0 million to €150.0
million and extending the maturity date to 2026.
In November 2023, the Group has issued a new €200.0 million bilateral OeKB-backed Term Loan with final maturity in March 2029, to partially refinance a
€70.0 million Term Loan otherwise maturing in February 2024.
All above mentioned instruments are ESG-linked and the margin payable is adjusted based on the Group’s EcoVadis ESG rating performance. The proceeds of
the new instruments will be used for general corporate purposes, including refinancing and acquisitions.
To further support acquisition financing, the Group has additionally entered into two bilateral Term Loans in December 2022 and January 2023 amounting to
INR 13.25 billion (€149.1 million) and which are fully repaid as at 31 December 2023, to fund the Group’s acquisition of Hi-Tech and Dalmia OCL (renamed to
RHI Magnesita India Refractories Ltd.).
Net debt excluding lease liabilities/Adjusted EBITDA is the key financial covenant of the loan agreements and is shown under Note (38). Compliance with the
covenants is measured on a semi-annual basis. In line with the covenant requirements, net debt excluding lease liabilities to Adjusted EBITDA cannot exceed
3.5x. Breach of covenants leads to an anticipated maturity of loans. During 2023 and 2022, the Group met all covenant requirements.
The breakdown of borrowings is presented in the following table:
420.3
257.9
(18.4)
(151.8)
508.0
(1.6)
506.4
2023
426.9
(410.3)
16.6
(1.8)
14.8
6.6
2023
14.8
(32.7)
(17.9)
(7.9)
2023
38.2
(123.0)
75.3
(9.5)
50.4
168.3
(2.5)
(71.7)
144.5
0.1
144.6
20221)
294.6
(257.4)
37.2
0.6
37.8
11.3
20221)
37.8
(8.2)
29.6
8.8
20221)
21.5
(6.9)
(6.4)
8.2
operation.
26. Non-controlling interests
Subsidiaries with material non-controlling interests
RHI Magnesita India Ltd., based in New Delhi, India is a listed company on the BSE Limited and NSE Limited. RHI Magnesita India Ltd., including the acquired Hi-
Tech business, is the (direct or ultimate) parent company of Dalmia OCL Ltd. (Dalmia OCL), Dalmia Seven Refractories Ltd. and Intermetal which together form
the Subgroup India. This Subgroup India is included in the Steel and Industrial segments and the share of the non-controlling interests amounts to 43.9%
(2022: 29.8%). Aggregated financial information of Subgroup India as of 31 December 2023 is provided below:
31.12.2023
31.12.20221)
Carrying amount of non-controlling interests
148.6
43.1
1) The disclosed financial information as of 31 December 2022 only relates to RHI Magnesita India Ltd. which is why it is not comparable to this year’s financial information.
The aggregated Statement of Profit or Loss and Statement of Comprehensive Income of Subgroup India for financial year 2023 are shown below:
Notes continued
in € million
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Intragroup eliminations
Net assets
Net assets before intragroup eliminations
in € million
Revenue
Operating expenses, net finance costs and income tax
Profit after income tax before intragroup eliminations
Intragroup eliminations
Profit after income tax
thereof attributable to non-controlling interests
in € million
Profit after income tax
Other comprehensive (expense)/income
Total comprehensive income
thereof attributable to non-controlling interests
in € million
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
Total cash flow
1) The disclosed financial information for 2022 only relates to RHI Magnesita India Ltd. which is why it is not comparable to this year’s financial information.
The following table shows the summarised Statement of Cash Flows of Subgroup India for financial year 2023:
1) The disclosed financial information for 2022 only relates to RHI Magnesita India Ltd. which is why it is not comparable to this year’s financial information.
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FINANCIAL STATEMENTS
Notes continued
in € million
Syndicated & Term Loan
Bonded loans ("Schuldscheindarlehen")
Other credit lines and other loans
Total liabilities to financial institutions
Other financial liabilities
Capitalised transaction costs
Borrowings
in € million
Syndicated & Term Loan
Bonded loans ("Schuldscheindarlehen")
Other credit lines and other loans
Total liabilities to financial institutions
Other financial liabilities
Capitalised transaction costs
Borrowings
Total
31.12.2023
current
non-current
45.5
35.0
60.3
140.8
8.9
(0.4)
149.3
1,068.6
720.0
2.6
1,791.2
9.4
(1.1)
1,799.5
1,114.1
755.0
62.9
1,932.0
18.3
(1.5)
1,948.8
Total
31.12.2022
current
non-current
942.4
585.0
84.6
1,612.0
9.0
(1.0)
1,620.0
130.7
0.0
84.6
215.3
0.1
(0.3)
215.1
811.7
585.0
0.0
1,396.7
8.9
(0.7)
1,404.9
Considering interest swaps, 69% (2022: 73%) of the liabilities to financial institutions carry fixed interest and 31% (2022: 27%) carry variable interest.
The following table shows fixed interest terms and conditions, taking into account interest rate swaps, without liabilities from deferred interest:
Interest
terms fixed
until
2024
2025
2026
2027
2028
2029
2031
Effective annual
interest rate
EURIBOR +
margin
3.10%
Various -
Variable rate
0.50%
3.63%
2.44%
1.90%
1.52%
1.28%
Currency
EUR
EUR
Various
EUR
EUR
EUR
EUR
EUR
EUR
31.12.2023
Carrying amount
in € million
Interest terms fixed
until
Effective annual
interest rate
573.6
35.0
34.3
150.0
264.0
743.6
118.5
8.0
5.0
1,932.0
2023
2024
2025
2027
2028
2029
2031
EURIBOR +
margin
Variable rate +
margin
Various -
Variable rate
0.25%
3.10%
0.59%
2.72%
0.92%
1.52%
1.28%
Currency
EUR
EUR
Various
EUR
EUR
EUR
EUR
EUR
EUR
EUR
31.12.2022
Carrying amount
in € million
372.3
34.0
27.4
115.0
35.0
177.0
751.8
86.5
8.0
5.0
1,612.0
The table above shows how long the interest rates are fixed, rather than the maturity of the underlying instruments.
Property, plant and equipment and inventories in the amount of €6.9 million (2022: €0.0 million) have been pledged as security for loans.
28. Other financial liabilities
Other financial liabilities include the negative fair value of derivative financial instruments as well as lease liabilities and fixed-term and puttable non-
controlling interests payable in Group companies. Additional explanation on derivative financial instruments is provided under Note (36).
2 1 0
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Notes continued
in € million
Syndicated & Term Loan
Bonded loans ("Schuldscheindarlehen")
Other credit lines and other loans
Total liabilities to financial institutions
Other financial liabilities
Capitalised transaction costs
Borrowings
in € million
Syndicated & Term Loan
Bonded loans ("Schuldscheindarlehen")
Other credit lines and other loans
Total liabilities to financial institutions
Other financial liabilities
Capitalised transaction costs
Borrowings
Total
1,114.1
755.0
62.9
1,932.0
18.3
(1.5)
1,948.8
Total
942.4
585.0
84.6
1,612.0
9.0
(1.0)
1,620.0
45.5
35.0
60.3
140.8
8.9
(0.4)
149.3
130.7
0.0
84.6
215.3
0.1
(0.3)
215.1
Various
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
1,068.6
720.0
2.6
1,791.2
9.4
(1.1)
1,799.5
811.7
585.0
0.0
1,396.7
8.9
(0.7)
1,404.9
372.3
34.0
27.4
115.0
35.0
177.0
751.8
86.5
8.0
5.0
1,612.0
Considering interest swaps, 69% (2022: 73%) of the liabilities to financial institutions carry fixed interest and 31% (2022: 27%) carry variable interest.
The following table shows fixed interest terms and conditions, taking into account interest rate swaps, without liabilities from deferred interest:
Currency
in € million
until
interest rate
Currency
Carrying amount
Interest terms fixed
Effective annual
31.12.2022
Carrying amount
in € million
Interest
terms fixed
until
2024
2025
2026
2027
2028
2029
2031
Effective annual
interest rate
EURIBOR +
margin
3.10%
Various -
Variable rate
0.50%
3.63%
2.44%
1.90%
1.52%
1.28%
Various
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
31.12.2023
573.6
35.0
34.3
150.0
264.0
743.6
118.5
8.0
5.0
1,932.0
2023
2024
2025
2027
2028
2029
2031
EURIBOR +
margin
Variable rate +
margin
Various -
Variable rate
0.25%
3.10%
0.59%
2.72%
0.92%
1.52%
1.28%
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
31.12.2023
current
non-current
in € million
Current
Non-current
Forward exchange contracts
Interest rate derivatives
Commodity swaps
Derivatives in open orders
Derivative financial liabilities
Lease liabilities
Fixed-term or puttable non-
controlling interests
Other financial liabilities
0.8
0.0
1.1
2.9
4.8
18.1
18.0
40.9
0.0
2.4
9.9
0.0
12.3
51.8
69.3
133.4
31.12.2023
31.12.2022
Total
0.8
2.4
11.0
2.9
17.1
69.9
87.3
174.3
Current
Non-current
0.6
0.0
0.9
9.5
11.0
17.5
21.6
50.1
0.0
0.0
0.2
0.0
0.2
46.4
46.2
92.8
Total
0.6
0.0
1.1
9.5
11.2
63.9
67.8
142.9
31.12.2022
current
non-current
In line with the Group’s accounting policy, the carrying amount of non-controlling interest is reduced to nil and replaced with a financial liability where the
Group has provided a written put option (usually together with a call option) or has entered into a forward contract to acquire the shares not controlled by the
Group. The carrying amount of the financial liabilities represents the discounted value of the expected settlement for the following non-controlling interest:
Ownership interest held by NCI in € million
Horn & Co. Minerals Recovery GmbH & Co.KG
RHI Magnesita (Chongqing) Refractory Materials Co., Ltd.
Jinan New Emei Industries Co. Ltd.
Liaoning RHI Jinding Magnesia Co., Ltd.
RHI Refractories Liaoning Co., Ltd.
Other financial liabilities
49.00%
49.00%
35.00%
16.67%
34.00%
31.12.2023
31.12.2022
7.7
15.2
30.9
22.9
10.6
87.3
8.4
21.3
0.0
26.4
11.7
67.8
During the period, €6.5 million (2022: €5.3 million) was recognised as an interest expense on the liability and €6.6 million income (2022: €4.7 million
income) was recognised within other net financial expenses as an adjustment to the amount payable where the written put option price or forward price is
based on earnings multiple or is affected by a change in the discount rate. See Note (13). Dividends paid to non-controlling interest amounting to €7.4 million
(2022: €2.1 million) have reduced the liability in the current reporting period since there is a contractual right to reduce the liability.
29. Provisions for pensions
The net liability from pension obligations in the Consolidated Statement of Financial Position is as follows:
in € million
Present value of pension obligations
Fair value of plan assets
Deficit of funded plans
Asset ceiling
Net liability from pension obligations
Overfunded pension plans
Other pension plans
The table above shows how long the interest rates are fixed, rather than the maturity of the underlying instruments.
Property, plant and equipment and inventories in the amount of €6.9 million (2022: €0.0 million) have been pledged as security for loans.
28. Other financial liabilities
Other financial liabilities include the negative fair value of derivative financial instruments as well as lease liabilities and fixed-term and puttable non-
controlling interests payable in Group companies. Additional explanation on derivative financial instruments is provided under Note (36).
The present value of pension obligations by beneficiary groups is as follows:
in € million
Active beneficiaries
Vested terminated beneficiaries
Retirees
Present value of pension obligations
31.12.2023
31.12.2022
420.7
(186.4)
234.3
5.2
239.5
2.0
241.5
395.5
(186.6)
208.9
3.8
212.7
2.0
214.7
31.12.2023
31.12.2022
61.5
44.0
315.2
420.7
64.2
43.4
287.9
395.5
210
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211
FINANCIAL STATEMENTS
Notes continued
The pension obligations are measured using the following actuarial assumptions for the key countries in which the Group operates:
in %
Interest rate
Austria and Germany
Brazil
United Kingdom
USA
Future salary increase
Austria
Germany
Brazil
United Kingdom1)
USA
Future pension increase
Austria
Germany
Brazil
United Kingdom
USA
31.12.2023
31.12.2022
3.3%
10.1%
4.5%
4.8%
3.9%
2.5%
4.5%
n/a
3.3%
5.3%
2.2%
4.5%
3.0%
2.0%
3.8%
10.5%
4.8%
5.0%
4.5%
2.5%
4.3%
3.3%
3.3%
3.0%
2.2%
4.3%
3.4%
2.0%
1) No active plan members at 31.12.2023.
These are average values which were weighted with the present value of the respective pension obligation.
The calculation of the actuarial interest rate for the Eurozone countries is based on a yield curve for returns of high-quality corporate bonds denominated in
EUR with an average rating of AA, which is derived from pooled index values. The calculation of the actuarial interest rate for the USD and GBP currency area is
based on a yield curve for returns of high-quality corporate bonds denominated in USD and GBP with an average rating of AA, which is derived from pooled
index values. Where there are very long-term maturities, the yield curve follows the performance of bonds without credit default risk. The interest rate is
calculated annually at 31 December, taking into account the expected future cash flows which were determined based on the current personal and
commitment data.
The calculation in Austria was based on the AVÖ 2018-P demographic calculation principles for salaried employees from the Actuarial Association of Austria.
In Germany, the Heubeck Richttaffeln 2018 G actuarial tables were used as a basis. In the other countries, country-specific mortality tables were applied.
The main pension regulations are described below:
The Austrian group companies account for €80.3 million (2022: €81.2 million) of the present value of pension obligations and for €8.8 million (2022:
€18.1 million) of the plan assets. The agreed benefits include pensions, invalidity benefits and benefits for surviving dependents. Commitments in the form of
company or individual agreements depend on the length of service and the salary at the time of retirement. For the majority of commitments, the amount of the
pension subsidy is limited to 75% of the final remuneration including a pension pursuant to the General Social Insurance Act (ASVG). The Group has
concluded pension reinsurance policies for part of the commitments. The pension claims of the beneficiaries are limited to the coverage capital required for
these commitments. Pensions are predominantly paid in the form of annuities and are partially indexed. For employees joining the company after 1 January
1984, no defined benefits were granted. Rather, a defined contribution pension model is in place. In addition, there are commitments based on the deferred
compensation principle, which are fully covered by pension reinsurance policies and commitments for preretirement benefits for employees in mining
operations.
The pension plans of the German group companies account for €107.2 million (2022: €107.7 million) of the present value of pension obligations and for
€0.7 million (2022: €0.7 million) of the plan assets. The benefits included in company agreements comprise pensions, invalidity benefits and benefits for
surviving dependents. The amount of the pension depends on the length of service for the majority of the commitments and is calculated as a percentage of
the average monthly wage/salary of the last 12 months prior to retirement. In some cases, commitments to fixed benefits per year of service have been made.
The pensions are predominantly paid in the form of annuities and are adjusted in accordance with the development of the consumer price index for Germany.
The pension plans are closed for new entrants, except one contribution-based plan. There is no defined contribution model on a voluntary basis. Individual
commitments have been made, with major part of them being retired beneficiaries.
The pension plan of the US group company Magnesita Refractories Company, York, USA, accounts for €71.2 million (2022: €71.6 million) of the present value
of pension obligations and for €63.0 million (2022: €63.3 million) of the plan assets. The pension plan is a non-contributory defined benefit plan covering a
portion of the employees of the company. The plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Effective 21
June 1999, the company offered the participants the opportunity to elect to participate in a single enhanced defined contribution plan. Participants who made
this election are no longer eligible for future accruals under this plan. All benefits accrued as of the date of transfer will be retained. Employees hired after 21
June 1999 and employees that did not meet the plan’s eligibility requirements as of 21 June 1999 are not eligible for this plan. The pensions are predominantly
paid in the form of annuities and are adjusted annually based on the US consumer price index. The company’s contributions for the year ended 31 December
2021 met, or exceeded, the minimum funding requirements of ERISA.
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The pension obligations are measured using the following actuarial assumptions for the key countries in which the Group operates:
Notes continued
in %
Interest rate
Austria and Germany
Brazil
USA
United Kingdom
Future salary increase
Austria
Germany
Brazil
United Kingdom1)
USA
Future pension increase
Austria
Germany
Brazil
United Kingdom
USA
31.12.2023
31.12.2022
3.3%
10.1%
4.5%
4.8%
3.9%
2.5%
4.5%
n/a
3.3%
5.3%
2.2%
4.5%
3.0%
2.0%
3.8%
10.5%
4.8%
5.0%
4.5%
2.5%
4.3%
3.3%
3.3%
3.0%
2.2%
4.3%
3.4%
2.0%
1) No active plan members at 31.12.2023.
These are average values which were weighted with the present value of the respective pension obligation.
The calculation of the actuarial interest rate for the Eurozone countries is based on a yield curve for returns of high-quality corporate bonds denominated in
EUR with an average rating of AA, which is derived from pooled index values. The calculation of the actuarial interest rate for the USD and GBP currency area is
based on a yield curve for returns of high-quality corporate bonds denominated in USD and GBP with an average rating of AA, which is derived from pooled
index values. Where there are very long-term maturities, the yield curve follows the performance of bonds without credit default risk. The interest rate is
calculated annually at 31 December, taking into account the expected future cash flows which were determined based on the current personal and
commitment data.
The calculation in Austria was based on the AVÖ 2018-P demographic calculation principles for salaried employees from the Actuarial Association of Austria.
In Germany, the Heubeck Richttaffeln 2018 G actuarial tables were used as a basis. In the other countries, country-specific mortality tables were applied.
The main pension regulations are described below:
The Austrian group companies account for €80.3 million (2022: €81.2 million) of the present value of pension obligations and for €8.8 million (2022:
€18.1 million) of the plan assets. The agreed benefits include pensions, invalidity benefits and benefits for surviving dependents. Commitments in the form of
company or individual agreements depend on the length of service and the salary at the time of retirement. For the majority of commitments, the amount of the
pension subsidy is limited to 75% of the final remuneration including a pension pursuant to the General Social Insurance Act (ASVG). The Group has
concluded pension reinsurance policies for part of the commitments. The pension claims of the beneficiaries are limited to the coverage capital required for
these commitments. Pensions are predominantly paid in the form of annuities and are partially indexed. For employees joining the company after 1 January
1984, no defined benefits were granted. Rather, a defined contribution pension model is in place. In addition, there are commitments based on the deferred
compensation principle, which are fully covered by pension reinsurance policies and commitments for preretirement benefits for employees in mining
operations.
The pension plans of the German group companies account for €107.2 million (2022: €107.7 million) of the present value of pension obligations and for
€0.7 million (2022: €0.7 million) of the plan assets. The benefits included in company agreements comprise pensions, invalidity benefits and benefits for
surviving dependents. The amount of the pension depends on the length of service for the majority of the commitments and is calculated as a percentage of
the average monthly wage/salary of the last 12 months prior to retirement. In some cases, commitments to fixed benefits per year of service have been made.
The pensions are predominantly paid in the form of annuities and are adjusted in accordance with the development of the consumer price index for Germany.
The pension plans are closed for new entrants, except one contribution-based plan. There is no defined contribution model on a voluntary basis. Individual
commitments have been made, with major part of them being retired beneficiaries.
The pension plan of the US group company Magnesita Refractories Company, York, USA, accounts for €71.2 million (2022: €71.6 million) of the present value
of pension obligations and for €63.0 million (2022: €63.3 million) of the plan assets. The pension plan is a non-contributory defined benefit plan covering a
portion of the employees of the company. The plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Effective 21
June 1999, the company offered the participants the opportunity to elect to participate in a single enhanced defined contribution plan. Participants who made
this election are no longer eligible for future accruals under this plan. All benefits accrued as of the date of transfer will be retained. Employees hired after 21
June 1999 and employees that did not meet the plan’s eligibility requirements as of 21 June 1999 are not eligible for this plan. The pensions are predominantly
paid in the form of annuities and are adjusted annually based on the US consumer price index. The company’s contributions for the year ended 31 December
2021 met, or exceeded, the minimum funding requirements of ERISA.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
The pension plan of the UK group company Magnesita Refractories Ltd., Dinnington, United Kingdom, accounts for €41.2 million (2022: €39.0 million) of the
present value of pension obligations and holds €45.7 million (2022: €41.2 million) of assets, although no plan assets are reflected on the balance sheet due to
the application of International Financial Reporting Interpretations Committee 14 (IFRIC 14) (asset ceiling). The company sponsors a funded defined benefit
pension plan for qualifying UK employees. The plan is administered by a separate Board of Trustees which is legally separate from the company. The trustees
are composed of representatives of both the employer and employees, plus an independent professional trustee. The trustees are required by law to act in the
interest of all relevant beneficiaries and are responsible for the investment policy with regard to the assets plus the day-to-day administration of the benefits.
Under the plan, employees are entitled to annual pensions on retirement at age 65. During 2022, the Board of Trustees agreed to a buy-in of the defined
benefit obligation with a third-party insurer in the United Kingdom. In terms of the buy-in, the insurer assumed the obligations relating to the plan from July
2022 while the plan assets were liquidated and transferred to the insurer at a value of around €61.7 million. Until the defined benefit scheme is wound up (the
buy-out), the Group will continue to recognise the pension obligation and the value of the insurance policy as a plan asset equal to the pension obligation. The
surplus plan assets of €4.5 million, at 31 December 2023 are not recognised due to the application of IFRIC 14 and the asset ceiling requirements. It is expected
that the remaining surplus, net of adjustments, tax payments and other minor expenses will be refunded to the Group once the plan will be wound up.
The pension liabilities of the Brazilian group company Magnesita Refratários S.A. account for €54.9 million (2022: €49.9 million) of the present value of
pension obligations and for €30.6 million (2022: €29.1 million) of the plan assets. The pension plan qualifies as an optional benefit plan. Employees are
entitled to contribute to the plan, with the company contributing 1.5 times this value. The agreed benefits include pensions, invalidity benefits and benefits for
surviving dependents. Commitments in the form of company or individual agreements depend on the length of service and salary at the time of retirement. For
the majority of commitments, the amount of the company pension obligation is limited to 75% of the final remuneration. At retirement, the employee may
choose to receive up to 25% of his/her amount at once or receive it on a pro-rata base with different options of monthly quotes.
The following table shows the development of net liability from pension obligations:
in € million
Net liability from pension obligations at beginning of year
Currency translation
Additions initial consolidation
Pension cost
Remeasurement losses/(gains)
Benefits paid
Employers' contributions to external funds
Net liability from pension obligations at year-end
The present value of pension obligations developed as follows:
in € million
Present value of pension obligations at beginning of year
Currency translation
Additions initial consolidation
Current service cost
Interest cost
Remeasurement losses/(gains)
from changes in demographic assumptions
from changes in financial assumptions
due to experience adjustments
Benefits paid
Employee contributions to external funds
Plan amendments
Present value of pension obligations at year-end
2023
212.7
2.1
11.3
11.8
22.5
(16.8)
(4.1)
239.5
2023
395.5
4.0
11.3
2.2
19.3
(0.5)
27.7
(3.1)
(35.2)
0.6
(1.1)
420.7
2022
268.1
4.5
0.0
8.8
(48.1)
(17.3)
(3.3)
212.7
2022
495.0
11.7
0.0
3.4
11.8
0.0
(107.5)
13.5
(33.0)
0.6
0.0
395.5
212
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
2 1 3
213
FINANCIAL STATEMENTS
Notes continued
The movement in plan assets is shown in the table below:
in € million
Fair value of plan assets at beginning of year
Currency translation
Interest income
Administrative costs (paid from plan assets)
Gains/(losses) on plan assets less interest income
Benefits paid
Employers' contributions to external funds
Employee contributions to external funds
Fair value of plan assets at year-end
The changes in the asset ceiling are shown below:
in € million
Asset ceiling at beginning of year
Currency translation
Interest expense
Losses/(gains) from changes in asset ceiling less interest expense
Asset ceiling at year-end
At 31 December 2023, the weighted average duration of pension obligations amounts to 10.5 years (2022: 10.5 years).
The following amounts were recorded in the Consolidated Statement of Profit or Loss:
in € million
Current service cost
Interest cost
Interest income
Interest expense from asset ceiling
Administrative costs (paid from plan assets)
Pension expense recognised in profit or loss
The remeasurement results recognised in OCI are shown in the table below:
in € million
Accumulated remeasurement losses at beginning of year
Remeasurement losses/(gains) on present value of pension obligations
(Gains)/losses on plan assets less interest income
Losses/(gains) from changes in asset ceiling less interest expense
Accumulated remeasurement losses at year-end
The present value of plan assets is distributed to the following classes of investments:
2023
186.6
2.0
9.3
(0.4)
2.6
(18.4)
4.1
0.6
186.4
2023
3.8
0.1
0.1
1.2
5.2
2023
1.2
19.4
(9.3)
0.1
0.4
11.8
2023
95.4
24.1
(2.6)
1.2
118.1
2022
255.5
6.2
6.8
(0.4)
(69.7)
(15.7)
3.3
0.6
186.6
2022
28.6
(0.9)
0.0
(23.9)
3.8
2022
3.4
11.8
(6.8)
0.0
0.4
8.8
2022
143.6
(94.0)
69.7
(23.9)
95.4
31.12.2023
31.12.2022
in € million
Insurances
Equity instruments
Debt instruments
Cash and cash equivalents
Other assets
Fair value of plan assets
Active market
No active market
22.0
39.9
44.0
9.5
14.6
130.0
54.9
0.0
0.4
0.9
0.2
56.4
2 1 4
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R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Total
76.9
39.9
44.4
10.4
14.8
Active market
No active market
0.0
34.4
22.0
11.8
32.0
82.1
0.0
2.5
0.7
1.1
86.4
186.4
100.2
Total
82.1
34.4
24.5
12.5
33.1
186.6
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
The present value of the insurances to cover the Austrian pension plans corresponds to the coverage capital. Insurance companies predominantly invest in
debt instruments and to a low extent in equity instruments and properties.
Plan assets do not include own financial instruments or assets utilised by the Group.
The Group works with professional fund managers for the investment of plan assets. They act on the basis of specific investment guidelines adopted by the
pension fund committee of the respective pension plans. The committees consist of management staff of the finance department and other qualified
executives. They meet regularly in order to approve the target portfolio with the support of independent actuarial experts and to review the risks and the
performance of the investments. In addition, they approve the selection or the extension of contracts of external fund managers.
The largest part of the other assets is invested in pension reinsurance, which creates a low counterparty risk towards insurance companies. In addition, the
Group is exposed to interest risks and longevity risks resulting from defined benefit commitments.
The Group generally endows the pension funds with the amount necessary to meet the legal minimum allocation requirements of the country in which the
fund is based. Moreover, the Group makes additional allocations at its discretion from time to time. In the financial year 2024, the Group expects employer
contributions to external plan assets to amount to €5.1 million and direct payments to entitled beneficiaries to €17.3 million. In the previous year, employer
contributions of €3.1 million and direct pension payments of €16.2 million had been expected for the financial year 2023.
The following sensitivity analysis shows the change in present value of the pension and termination benefit obligations if one key parameter changes, while the
other influences are maintained constant. In reality, it is rather unlikely that these influences do not correlate. The present value of the pension obligations for
the sensitivities shown was calculated using the same method as for the actual present value of the pension obligations (projected unit credit method).
in € million
Present value of the obligations
Change of assumption
in percentage points
or years
Pension plans
420.7
Interest rate
Salary increase
Pension increase
Life expectancy
+0.25
(0.25)
+0.25
(0.25)
+0.25
(0.25)
+ 1 year
(1) year
(9.6)
10.2
0.6
(0.1)
7.8
(6.6)
2.7
(1.9)
31.12.2023
Termination
benefits
36.2
(0.9)
0.9
0.9
(0.9)
0.0
0.0
0.0
0.0
Pension plans
395.5
(9.7)
10.1
0.3
(0.3)
8.0
(7.4)
9.1
(8.1)
31.12.2022
Termination
benefits
31.5
(1.4)
0.5
0.5
(1.4)
0.0
0.0
0.0
0.0
These changes would have no immediate effect on the result of the period as remeasurement gains and losses are recorded in OCI without impact on profit or
loss. The assumptions regarding the interest rate are reviewed semi-annually; all other assumptions are reviewed at the end of the year.
The remeasurement results recognised in OCI are shown in the table below:
30. Other personnel provisions
in € million
Accumulated remeasurement losses at beginning of year
Remeasurement losses/(gains) on present value of pension obligations
(Gains)/losses on plan assets less interest income
Losses/(gains) from changes in asset ceiling less interest expense
Accumulated remeasurement losses at year-end
The present value of plan assets is distributed to the following classes of investments:
Active market
No active market
Active market
No active market
31.12.2023
31.12.2022
in € million
Insurances
Equity instruments
Debt instruments
Cash and cash equivalents
Other assets
Fair value of plan assets
22.0
39.9
44.0
9.5
14.6
130.0
54.9
0.0
0.4
0.9
0.2
56.4
Total
76.9
39.9
44.4
10.4
14.8
0.0
34.4
22.0
11.8
32.0
186.4
100.2
in € million
Termination benefits
Service anniversary bonuses
Semi-retirements
Other personnel provisions
31.12.2023
31.12.2022
33.8
18.7
2.7
55.2
31.5
17.9
2.3
51.7
Provisions for termination benefits
The provision for termination benefits relates mainly to employees that joined an Austrian company before 1 January 2003 and are subject to a one-off lump-
sum termination benefit under Austrian legislation. This is regarded as a post-employment benefit and accounted for consistently with pensions benefits
described above.
Provision for the Austrian termination benefits, which accounts for over 80.0% of the balance (2022: 90.0%) were based on the following measurement
assumptions:
in %
Interest rate
Future salary increase
31.12.2023
31.12.2022
3.3%
3.3%
3.8%
3.9%
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215
Notes continued
The movement in plan assets is shown in the table below:
Fair value of plan assets at beginning of year
in € million
Currency translation
Interest income
Administrative costs (paid from plan assets)
Gains/(losses) on plan assets less interest income
Benefits paid
Employers' contributions to external funds
Employee contributions to external funds
Fair value of plan assets at year-end
The changes in the asset ceiling are shown below:
in € million
Asset ceiling at beginning of year
Currency translation
Interest expense
Losses/(gains) from changes in asset ceiling less interest expense
Asset ceiling at year-end
in € million
Current service cost
Interest cost
Interest income
Interest expense from asset ceiling
Administrative costs (paid from plan assets)
Pension expense recognised in profit or loss
At 31 December 2023, the weighted average duration of pension obligations amounts to 10.5 years (2022: 10.5 years).
The following amounts were recorded in the Consolidated Statement of Profit or Loss:
2023
186.6
2.0
9.3
(0.4)
2.6
(18.4)
4.1
0.6
186.4
2023
3.8
0.1
0.1
1.2
5.2
2023
1.2
19.4
(9.3)
0.1
0.4
11.8
2023
95.4
24.1
(2.6)
1.2
118.1
82.1
0.0
2.5
0.7
1.1
86.4
2022
255.5
6.2
6.8
(0.4)
(69.7)
(15.7)
3.3
0.6
186.6
2022
28.6
(0.9)
0.0
(23.9)
3.8
2022
3.4
11.8
(6.8)
0.0
0.4
8.8
2022
143.6
(94.0)
69.7
(23.9)
95.4
Total
82.1
34.4
24.5
12.5
33.1
186.6
FINANCIAL STATEMENTS
Notes continued
The interest rate for the measurement of termination benefit obligations in the Euro area was determined taking into account the Company specific duration of
the portfolio.
Provisions for termination benefits developed as follows:
in € million
Provisions for termination benefits at beginning of year
Currency translation
Additions initial consolidation
Current service cost
Interest cost
Remeasurement (gains)
Benefits paid
Provisions for termination benefits at year-end
2023
31.5
0.0
2.0
1.9
1.6
(0.1)
(3.1)
33.8
2022
44.1
0.1
0.4
1.0
0.5
(9.9)
(4.7)
31.5
Payments for termination benefits are expected to amount to €2.4 million in the year 2024. In the previous year, the payments for termination benefits
expected for 2023 amounted to €1.3 million.
The following remeasurement gains and losses were recognised in OCI:
in € million
Accumulated remeasurement losses at beginning of year
Remeasurement (gains)
Accumulated remeasurement losses at year-end
2023
17.8
(0.1)
17.7
2022
27.7
(9.9)
17.8
At 31 December 2023 the average duration of termination benefit obligations amounted to 10.6 years (2022: 12.6 years).
Provisions for service anniversary bonuses
The measurement of provisions for service anniversary bonuses relating to employees in Austria and Germany is based on an interest rate of 3.3% (2022: 3.8%)
in Austria and 4.2% (2022: 3.8%) in Germany and considers salary increases of 5.2% (2022: 5.6%) in Austria and 2.5% in Germany (2022: 2.5%).
Provisions for semi-retirement
The funded status of provisions for obligations to employees with semi-retirement contracts is shown in the table below:
in € million
Present value of semi-retirement obligations
Fair value of plan assets
Provisions for semi-retirement obligations
31.12.2023
31.12.2022
4.2
(1.5)
2.7
5.8
(3.4)
2.4
External plan assets are ring-fenced from all creditors and exclusively serve to meet semi-retirement obligations.
2 1 6
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Notes continued
Provisions for termination benefits developed as follows:
Provisions for termination benefits at beginning of year
the portfolio.
in € million
Currency translation
Additions initial consolidation
Current service cost
Interest cost
Remeasurement (gains)
Benefits paid
Provisions for termination benefits at year-end
expected for 2023 amounted to €1.3 million.
The following remeasurement gains and losses were recognised in OCI:
in € million
Accumulated remeasurement losses at beginning of year
Remeasurement (gains)
Accumulated remeasurement losses at year-end
Payments for termination benefits are expected to amount to €2.4 million in the year 2024. In the previous year, the payments for termination benefits
At 31 December 2023 the average duration of termination benefit obligations amounted to 10.6 years (2022: 12.6 years).
Provisions for service anniversary bonuses
The measurement of provisions for service anniversary bonuses relating to employees in Austria and Germany is based on an interest rate of 3.3% (2022: 3.8%)
in Austria and 4.2% (2022: 3.8%) in Germany and considers salary increases of 5.2% (2022: 5.6%) in Austria and 2.5% in Germany (2022: 2.5%).
Provisions for semi-retirement
The funded status of provisions for obligations to employees with semi-retirement contracts is shown in the table below:
in € million
Present value of semi-retirement obligations
Fair value of plan assets
Provisions for semi-retirement obligations
31.12.2023
31.12.2022
4.2
(1.5)
2.7
5.8
(3.4)
2.4
External plan assets are ring-fenced from all creditors and exclusively serve to meet semi-retirement obligations.
2023
31.5
0.0
2.0
1.9
1.6
(0.1)
(3.1)
33.8
2023
17.8
(0.1)
17.7
2022
44.1
0.1
0.4
1.0
0.5
(9.9)
(4.7)
31.5
2022
27.7
(9.9)
17.8
The interest rate for the measurement of termination benefit obligations in the Euro area was determined taking into account the Company specific duration of
31. Other Provisions
The development of provisions is shown in the tables below for 2023 and 2022:
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
in € million
31.12.2022
Currency translation
Reversals
Additions
Additions interest
Use
Reclassifications
31.12.2023
non-current
current
in € million
31.12.2021
Currency translation
Reversals
Additions
Additions interest
Use
Reclassifications
31.12.2022
non-current
current
Onerous/unfavoura
ble contracts
Labour and civil
contingencies
Demolition/disposa
l costs,
environmental
damages
Restructuring costs
Other
62.3
2.8
(2.0)
11.4
5.6
(12.6)
0.0
67.5
52.4
15.1
8.4
0.4
(2.6)
6.3
1.1
(1.8)
(0.6)
11.2
11.2
0.0
23.2
(0.3)
(1.0)
7.7
1.0
(1.0)
0.0
29.6
28.0
1.6
12.0
0.0
(0.7)
3.1
0.0
(5.7)
0.0
8.7
0.0
8.7
Onerous/unfavourable
contracts
Labour and civil
contingencies
Demolition/disposal
costs,
environmental
damages
Restructuring
costs
53.9
5.8
(2.6)
9.4
6.0
(10.2)
0.0
62.3
49.9
12.4
7.1
0.9
(2.4)
5.8
1.0
(5.2)
1.2
8.4
8.4
0.0
19.5
0.5
(0.4)
4.3
1.4
(2.5)
0.4
23.2
21.7
1.5
33.5
0.0
(10.5)
3.5
0.0
(14.2)
(0.3)
12.0
0.0
12.0
4.2
0.0
(1.3)
7.5
0.0
(1.9)
0.0
8.5
0.0
8.5
Other
4.6
(0.1)
0.0
1.4
0.1
(1.7)
(0.1)
4.2
0.0
4.2
Total
110.1
2.9
(7.6)
36.0
7.7
(23.0)
(0.6)
125.5
91.6
33.9
Total
118.6
7.1
(15.9)
24.4
8.5
(33.8)
1.2
110.1
80.0
30.1
In November 2017, the Group sold a plant located in Oberhausen, Germany, in order to satisfy the conditions imposed by the European Commission in their
approval of the merger of RHI Refractories and Magnesita. Under the terms, the Group remains obligated to provide raw materials at cost and recognised a
provision for unfavourable contracts as part of the purchase price allocation to reflect the foregone profit margin and is reflected within onerous/unfavourable
contracts. The non-current portion of this contract obligation amounts to €47.7 million as of 31 December 2023 (2022: €49.9 million) and the current portion
to €10.6 million (2022: €10.7 million). The unwinding of the discount led to a credit of €5.6 million in 2023 (2022: €6.0 million). In addition, provisions for
other unfavourable contracts amount to €9.1 million (2022: €1.7 million), the increase was driven by additional onerous contracts identified mainly in Türkiye,
China and Europe.
The provision for labour and civil contingencies primarily comprises labour and civil litigation amounting to €7.8 million (2022: €3.6 million) arising mainly in
Brazil.
The provision for demolition and disposal costs and environmental damages primarily includes provisions for the estimated costs of mining site restoration of
several mines in Brazil amounting to €9.4 million (2022: €4.7 million) and various sites in the USA amounting to €6.2 million (2022: €7.2 million).
Provisions for restructuring costs amounting to €8.7 million at 31 December 2023 (2022: €12.0 million) primarily consist of estimated benefit obligations to
employees due to termination of employment and dismantling costs. €2.8 million (2022: €6.2 million) relates to the remaining redundancy costs at Mainzlar,
Germany for employees not subject to the restart of operations, €3.2 million (2022: €3.5 million) relates to the plant closure in Trieben, Austria and €2.0
million (2022: €0.0 million) pertains to the termination of employment as a result of the Group’s reorganisation of certain global functions to regional ones.
Other consists mainly of provisions for claims arising from warranties and other similar obligations from the sale of refractory products.
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217
FINANCIAL STATEMENTS
Notes continued
32. Trade payables and other current liabilities
in € million
Trade payables
Contract liabilities
Liabilities to employees
Capital expenditure payable
Taxes other than income tax
Payables from commissions
Other current liabilities
Trade payables and other current liabilities
thereof financial liabilities
thereof non-financial liabilities
31.12.2023
31.12.2022
497.9
64.6
136.4
33.0
32.6
9.4
46.3
820.2
561.2
259.0
506.5
61.8
97.2
43.1
35.0
7.7
29.0
780.3
566.4
213.9
Trade payables include an amount of €84.1
million (2022: €68.8
million) for raw material purchases subject to supply chain finance arrangements.
Contract liabilities mainly consist of prepayments received on orders. In 2023 €61.8 million (2022: €57.9 million) revenue was recognised that was included in
the contract liability balance at the beginning of the period.
The item liabilities to employees primarily consists of obligations for wages and salaries, payroll taxes and employee-related duties, performance bonuses,
unused vacation and flextime credits. The increase in liabilities to employees is primarily driven by the newly acquired entities, higher bonus accruals and
underlying inflationary effects in wages and salaries.
33. Cash generated from/(used in) operations
in € million
Profit after income tax
Adjustments for
income tax
depreciation
amortisation
write down/(write-up) of property, plant and equipment and intangible assets
income from the reversal of investment subsidies
(write ups)/impairment losses/loss from sale on securities
losses from the disposal of property, plant and equipment
losses from the disposal of subsidiaries
net interest expense, derivatives and valuation call/put options
result from disposal of joint ventures and associates
other non-cash changes
Changes in working capital
inventories
trade receivables
contract assets
trade payables
contract liabilities
Changes in other assets and liabilities
other receivables and assets
provisions
other liabilities
Cash generated from operations
2023
171.3
62.0
133.9
43.6
1.0
(1.3)
(22.5)
4.4
0.6
58.3
(2.7)
46.0
182.7
1.7
0.0
(118.0)
(13.9)
13.1
(24.6)
24.5
560.1
2022
166.8
103.7
115.6
28.9
(6.0)
(0.7)
1.5
2.4
1.1
47.3
(0.2)
26.1
(30.0)
(12.5)
0.0
(156.8)
4.5
25.7
(49.4)
19.5
287.5
Other non-cash changes include: expenses of the employee long-term incentive programme of €8.7 million (2022: €8.3 million); net interest expenses for
defined benefit pension plans amounting to €12.4 million (2022: €5.7 million) and net remeasurement gains of monetary foreign currency positions and
derivative financial instruments of €35.6 million (2022: €13.2 million).
2 1 8
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Trade payables include an amount of €84.1
million (2022: €68.8
million) for raw material purchases subject to supply chain finance arrangements.
Contract liabilities mainly consist of prepayments received on orders. In 2023 €61.8 million (2022: €57.9 million) revenue was recognised that was included in
the contract liability balance at the beginning of the period.
The item liabilities to employees primarily consists of obligations for wages and salaries, payroll taxes and employee-related duties, performance bonuses,
unused vacation and flextime credits. The increase in liabilities to employees is primarily driven by the newly acquired entities, higher bonus accruals and
Notes continued
32. Trade payables and other current liabilities
in € million
Trade payables
Contract liabilities
Liabilities to employees
Capital expenditure payable
Taxes other than income tax
Payables from commissions
Other current liabilities
Trade payables and other current liabilities
thereof financial liabilities
thereof non-financial liabilities
underlying inflationary effects in wages and salaries.
33. Cash generated from/(used in) operations
in € million
Profit after income tax
Adjustments for
income tax
depreciation
amortisation
write down/(write-up) of property, plant and equipment and intangible assets
income from the reversal of investment subsidies
(write ups)/impairment losses/loss from sale on securities
losses from the disposal of property, plant and equipment
losses from the disposal of subsidiaries
net interest expense, derivatives and valuation call/put options
result from disposal of joint ventures and associates
other non-cash changes
Changes in working capital
inventories
trade receivables
contract assets
trade payables
contract liabilities
Changes in other assets and liabilities
other receivables and assets
provisions
other liabilities
Cash generated from operations
31.12.2023
31.12.2022
497.9
64.6
136.4
33.0
32.6
9.4
46.3
820.2
561.2
259.0
506.5
61.8
97.2
43.1
35.0
7.7
29.0
780.3
566.4
213.9
2023
171.3
62.0
133.9
43.6
1.0
(1.3)
(22.5)
4.4
0.6
58.3
(2.7)
46.0
182.7
1.7
0.0
(118.0)
(13.9)
13.1
(24.6)
24.5
560.1
2022
166.8
103.7
115.6
28.9
(6.0)
(0.7)
1.5
2.4
1.1
47.3
(0.2)
26.1
(30.0)
(12.5)
0.0
(156.8)
4.5
25.7
(49.4)
19.5
287.5
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
34. Net cash flow from financing activities
The reconciliation of movements of financial liabilities and assets to cash flows arising from financing activities for the current and the prior year is shown in the
tables below:
Cash
changes
Non-cash changes
Changes in
foreign
exchange
rates
Interest
and other
fair value
changes
Reclassifications
Additions from
initial
consolidation
Additions and
modifications
of leases (IFRS
16)
0.9
0.7
(3.9)
(2.3)
0.6
(2.4)
0.0
(1.8)
0.0
0.0
(9.3)
(9.3)
(73.3)
(12.2)
0.0
(85.5)
0.0
(14.8)
0.0
(14.8)
31.12.2023
(1,948.8)
(69.9)
703.5
(1,315.2)
in € million
31.12.2022
Borrowings1)
(1,620.0)
(257.0)
Lease liabilities
(63.9)
22.7
520.7
(1,163.2)
196.0
(38.3)
Cash and cash
equivalents
Net debt
Liabilities to
fixed-term or
puttable non-
controlling
interests
(67.8)
7.4
4.3
0.3
0.0
(31.5)
0.0
(87.3)
1) As from 1 January 2023 “Borrowings” excludes “financial liabilities from accrued interest” which are now presented under “other current liabilities”. Prior period comparatives have
been revised to conform with current year presentation.
Cash
changes
Non-cash changes
Changes in
foreign
exchange
rates
Interest
and other
fair value
changes
Reclassifications
Additions from
initial
consolidation
in € million
31.12.2021
(1,534.7)
(55.5)
580.8
(1,009.4)
(52.5)
20.6
(49.8)
(81.7)
(19.5)
(1.3)
(10.3)
(31.1)
(1.3)
0.0
0.0
(1.3)
0.0
0.0
0.0
0.0
(12.0)
(7.0)
0.0
(19.0)
Additions and
modifications
of leases (IFRS
16)
0.0
(20.7)
31.12.2022
(1,620.0)
(63.9)
0.0
520.7
(20.7)
(1,163.2)
Borrowings1)
Lease liabilities
Cash and cash
equivalents
Net debt
Liabilities to
fixed-term or
puttable non-
controlling
interests
(60.0)
2.1
1.6
(0.6)
0.0
(10.9)
0.0
(67.8)
1) As from 1 January 2023 “Borrowings” excludes “financial liabilities from accrued interest” which are now presented under “other current liabilities”. Prior period comparatives have
been revised to conform with current year presentation.
Other non-cash changes include: expenses of the employee long-term incentive programme of €8.7 million (2022: €8.3 million); net interest expenses for
defined benefit pension plans amounting to €12.4 million (2022: €5.7 million) and net remeasurement gains of monetary foreign currency positions and
derivative financial instruments of €35.6 million (2022: €13.2 million).
218
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FINANCIAL STATEMENTS
Notes continued
35. Additional disclosures on financial instruments
The following tables show the carrying amounts and fair values of financial assets and liabilities by measurement category and level and the allocation to the
measurement category. In addition, carrying amounts are shown aggregated according to measurement category.
in € million
Non-current financial assets
Marketable securities
Shares
Shares
Interest rate derivatives and commodity swaps designated as
cash flow hedges
Investments in non-consolidated subsidiaries
Other non-current financial assets
Trade and other current receivables
Trade and other current receivables
Current financial assets
Marketable securities
Derivatives in open orders and Forward exchange contracts
Commodity swaps designated as cash flow hedges
Other current financial receivables
Cash and cash equivalents
Financial assets
Non-current and current borrowings
Liabilities to financial institutions
Other financial liabilities
Non-current and current other financial liabilities
Lease liabilities
Commodity swaps designated as cash flow hedges
Derivatives in open orders and Forward exchange contracts
Interest rate derivatives designated as cash flow hedges
Liabilities to fixed-term or puttable non-controlling interests
Liabilities to fixed-term or puttable non-controlling interests
Trade payables and other current liabilities
Financial liabilities
Aggregated according to measurement category
Financial assets measured at amortised cost
Financial assets measured at FVOCI
Financial assets measured at FVPL
Financial liabilities measured at amortised cost
Financial liabilities measured at FVPL
Measurement
category
IFRS 91)
Level
Carrying
amount
Fair value
Carrying
amount
Fair value
31.12.2023
31.12.2022
FVPL
FVPL
FVOCI
-
FVPL
AC
AC
FVOCI
FVPL
FVPL
-
AC
AC
AC
AC
-
-
FVPL
-
AC
FVPL
AC
1
3
3
2
-
-
-
-
1
2
2
-
-
2
-
-
2
2
2
2/3
3
-
11.8
0.5
4.6
20.5
2.4
3.6
510.4
31.0
11.3
0.4
0.4
1.6
703.5
1,302.0
11.8
0.5
4.6
20.5
2.4
31.0
11.3
0.4
0.4
9.0
0.5
0.0
42.4
3.0
0.2
387.7
46.2
0.0
1.1
0.0
0.2
520.7
1,011.0
9.0
0.5
0.0
42.4
3.0
46.2
0.0
1.1
0.0
1,932.0
1,919.8
1,612.0
1,578.1
1.1
10.1
0.0
38.1
29.7
16.8
69.9
11.0
3.8
2.4
33.5
53.7
561.2
2,684.3
1,219.1
35.6
26.4
2,543.5
57.5
11.0
3.8
2.4
33.5
53.7
8.0
63.9
1.1
10.1
0.0
38.1
29.7
566.4
2,329.3
908.8
46.2
13.6
2,224.5
39.8
1) FVPL: Financial assets/financial liabilities measured at fair value through profit or loss.
FVOCI: Financial assets measured at fair value through other comprehensive income.
AC: Financial assets/financial liabilities measured at amortised cost.
In the Group, marketable securities, derivative financial instruments and shares are measured at fair value. Interests in subsidiaries not consolidated are
recognised at cost, which due to materiality reasons, is considered a reasonable approximation of fair value.
Fair value is defined as the amount for which an asset could be exchanged, or a liability settled, between market participants in an arm's length transaction on
the day of measurement. When the fair value is determined it is assumed that the transaction in which the asset is sold or the liability is transferred takes place
either in the main market for the asset or liability, or in the most favourable market if there is no main market. The Group considers the characteristics of the asset
or liability to be measured which a market participant would consider in pricing. It is assumed that market participants act in their best economic interest.
2 2 0
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35. Additional disclosures on financial instruments
The following tables show the carrying amounts and fair values of financial assets and liabilities by measurement category and level and the allocation to the
measurement category. In addition, carrying amounts are shown aggregated according to measurement category.
Notes continued
Interest rate derivatives and commodity swaps designated as
cash flow hedges
Investments in non-consolidated subsidiaries
Derivatives in open orders and Forward exchange contracts
Commodity swaps designated as cash flow hedges
in € million
Non-current financial assets
Marketable securities
Shares
Shares
Other non-current financial assets
Trade and other current receivables
Trade and other current receivables
Current financial assets
Marketable securities
Other current financial receivables
Cash and cash equivalents
Financial assets
Non-current and current borrowings
Liabilities to financial institutions
Other financial liabilities
Non-current and current other financial liabilities
Lease liabilities
Commodity swaps designated as cash flow hedges
Derivatives in open orders and Forward exchange contracts
Interest rate derivatives designated as cash flow hedges
Liabilities to fixed-term or puttable non-controlling interests
2/3
Liabilities to fixed-term or puttable non-controlling interests
Trade payables and other current liabilities
Financial liabilities
Aggregated according to measurement category
Financial assets measured at amortised cost
Financial assets measured at FVOCI
Financial assets measured at FVPL
Financial liabilities measured at amortised cost
Financial liabilities measured at FVPL
1) FVPL: Financial assets/financial liabilities measured at fair value through profit or loss.
FVOCI: Financial assets measured at fair value through other comprehensive income.
AC: Financial assets/financial liabilities measured at amortised cost.
Measurement
category
IFRS 91)
Level
Carrying
amount
Fair value
Fair value
Carrying
amount
31.12.2023
31.12.2022
FVPL
FVPL
FVOCI
-
FVPL
AC
AC
FVOCI
FVPL
FVPL
-
AC
AC
AC
AC
-
-
-
FVPL
AC
FVPL
AC
9.0
0.5
0.0
42.4
3.0
46.2
0.0
1.1
0.0
1.1
10.1
0.0
38.1
29.7
1
3
3
2
-
-
-
-
1
2
2
-
-
2
-
-
2
2
2
3
-
11.8
0.5
4.6
20.5
2.4
3.6
510.4
31.0
11.3
0.4
0.4
1.6
703.5
1,302.0
16.8
69.9
11.0
3.8
2.4
33.5
53.7
561.2
2,684.3
1,219.1
35.6
26.4
2,543.5
57.5
11.8
0.5
4.6
20.5
2.4
31.0
11.3
0.4
0.4
11.0
3.8
2.4
33.5
53.7
9.0
0.5
0.0
42.4
3.0
0.2
387.7
46.2
0.0
1.1
0.0
0.2
520.7
1,011.0
8.0
63.9
1.1
10.1
0.0
38.1
29.7
566.4
2,329.3
908.8
46.2
13.6
2,224.5
39.8
1,932.0
1,919.8
1,612.0
1,578.1
In the Group, marketable securities, derivative financial instruments and shares are measured at fair value. Interests in subsidiaries not consolidated are
recognised at cost, which due to materiality reasons, is considered a reasonable approximation of fair value.
Fair value is defined as the amount for which an asset could be exchanged, or a liability settled, between market participants in an arm's length transaction on
the day of measurement. When the fair value is determined it is assumed that the transaction in which the asset is sold or the liability is transferred takes place
either in the main market for the asset or liability, or in the most favourable market if there is no main market. The Group considers the characteristics of the asset
or liability to be measured which a market participant would consider in pricing. It is assumed that market participants act in their best economic interest.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
The Group takes into account the availability of observable market prices in an active market and uses the following hierarchy to determine fair value:
Level 1:
Level 2:
Level 3:
Prices quoted in active markets for identical financial instruments.
Measurement techniques in which all important data used are based on observable market data.
Measurement techniques in which at least one significant parameter is based on non-observable market data.
The fair value of securities and shares is based on price quotations at the reporting date (Level 1), where such quotations exist. In other cases, a valuation model
(Level 3) would be used for such instruments with an exception if such instruments are immaterial to the Group, in which case cost serves as an approximation
of fair value.
The fair value of interest derivatives in a hedging relationship (interest rate swaps) is determined by calculating the present value of future cash flows based on
current yield curves taking into account the corresponding terms (Level 2).
The fair value of foreign currency derivative contracts correspond to the market value of the forward exchange contracts and the embedded derivatives in open
orders denominated in a currency other than the functional currency. These derivatives are measured using quoted forward rates that are currently observable
(Level 2).
The fair value of commodity swaps for natural gas reflects the difference between the fixed contract price and the closing quotation of the natural gas price (EEX
Base) as of the respective due date of the transaction. The closing price on the stock exchange is used as the input (Level 2).
Liabilities to financial institutions and other financial liabilities are carried at amortised cost in the Consolidated Statement of Financial Position. Liabilities related
to fixed-term or puttable non-controlling interests based on a fixed consideration are recognised at amortised cost whereas those liabilities based on a variable
consideration are recognised at fair value. The fair values of the liabilities to financial institutions are only disclosed in the Notes and calculated at the present
value of the discounted future cash flows using yield curves that are currently observable (Level 2). The carrying amount of other financial liabilities approximate
their fair value at the reporting date. In April 2023, the Group recognised a liability related to the commitment to acquire the remaining shares in Jinan New
Emei held by other shareholders (see Note 42), amounting to €31.5 million, which will be due in 2026 at the earliest. The fair value is based on the present
value of Jinan New Emei’s EBITDA performance and certain other variables (see Note 42). The principal valuation parameters are deemed to be non-
observable (Level 3).
The carrying amounts of other financial assets approximately correspond to their fair value. Due to the low amounts no material deviation between the fair value
and the carrying amount is assumed and the credit default risk is accounted for by forming valuation allowances.
Trade and other current receivables and liabilities as well as cash and cash equivalents are predominantly short-term. Therefore, the carrying amounts of these
items approximate fair value at the reporting date.
No contractual netting agreement of financial assets and liabilities were in place as at 31 December 2023 and 31 December 2022.
Net results by measurement category in accordance with IFRS 9
The effect of financial instruments on the income and expenses recognised in 2023 and 2022 is shown in the following table, classified according to the
measurement categories defined in IFRS 9:
in € million
Net gain/(loss) from financial assets and liabilities measured at fair value through profit or loss
Net (loss)/gain from financial assets and liabilities measured at amortised cost
2023
18.1
(4.1)
2022
(14.6)
4.6
The net gain from financial assets and liabilities measured at fair value through profit or loss includes income from securities and shares, income from the
disposal of securities and shares, impairment losses and income from reversals of impairment losses, fair value gains and losses on the measurement of liabilities
to fixed-term or puttable non-controlling interests, fair value gains and losses and realised results of derivative financial instruments outside the scope of hedge
accounting.
The net loss from financial assets and liabilities measured at amortised cost includes changes in valuation allowances and losses on derecognitions. Net finance
costs include interest income amounting to €19.7 million (2022: €8.3 million) and interest expenses of €75.2 million (2022: €47.5 million), which result from
financial assets and liabilities measured at amortised cost.
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FINANCIAL STATEMENTS
Notes continued
Other non-current financial assets
Other non-current financial assets consist of the following items:
in € million
Interest rate derivatives and commodity swaps
Marketable securities and shares
Non-current portion of restricted cash
Interests in subsidiaries not consolidated
Non-current portion of non-current loans
Other non-current financial assets
31.12.2023
31.12.2022
20.5
16.9
3.4
2.4
0.2
43.4
42.4
9.5
0.0
3.0
0.2
55.1
Accumulated impairments on investments, securities and shares amount to €3.7 million (2022: €4.3 million). The increase in marketable securities and shares
includes a €4.6 million investment representing a minority stake in MCi Carbon Pty Ltd.
Other current financial assets
This item of the Consolidated Statement of Financial Position consists of the following components:
in € million
Marketable securities1)
Derivatives in open orders and forward exchange contracts
Current portion of non-current loans
Current portion of restricted cash
Other current financial assets
31.12.2023
31.12.2022
11.3
0.7
1.3
0.3
13.6
0.0
1.1
0.2
0.0
1.3
1) Money market funds held for trading have been reclassified to other current financial assets in 2023. Refer to Note (23) for details.
36. Derivative financial instruments
Interest rate derivatives
The Group has concluded interest rate swaps and one interest rate collar to hedge the cash flow risk associated with financial liabilities carrying variable interest
rates. The combination of the interest rate swaps and the variable interest debt instruments creates synthetic fixed interest debt instruments without exposure to
variability in cash flows due to changes of interest rates. The combination of the interest rate collar and the variable interest debt instruments limits the variability
of the debt instruments’ cash flows due to changes of interest rates to a predetermined range. The Group has designated all interest rate swaps and the interest
rate collar as hedging instruments with the variable interest cash flows of the debt instruments as hedged items in individual hedging relationships recognised
as cash flow hedges. The economic relationship between the hedging instrument and the hedged item is determined by comparing the critical terms (nominal
value, currency, interest payment date, interest reset dates, etc.) of both items. If the critical terms of the hedging instrument and the hedged item are either the
same or closely aligned an economic relationship is assumed to exist. The Group has established a hedge ratio of 1:1 and the cash flow changes of the
underlying hedged items are balanced out by the cash flow changes of the hedging instruments. Potential hedge ineffectiveness could arise out of differences
in critical terms between the hedging instruments and hedged items. Credit risk may affect hedge effectiveness. However, this risk is assessed to be very low as
only international banks with high credit ratings are the counterparties to the hedging instruments.
The fair value of all interest rate derivatives was €17.9 million at the reporting date (2022: €42.4 million) and is shown in other non-current financial assets
(liabilities) in the Consolidated Statement of Financial Position. For the reporting period of 2023, €14.5 million loss (2022: €59.1 million gain) has been
recognised in OCI as fair value movements of the hedging instrument and €10.0 million (2022: €7.2 million) has been reclassified from OCI to profit or loss and
recognised within other net financial expenses reflecting the settlement of the hedging instrument when interest on the underlying debt instrument is paid. No
ineffectiveness has been recognised in the Consolidated Statement of Profit or Loss.
The financial effect of the hedged item and the hedging instrument for the year 2023 and 2022 is shown as follows:
in € million
Carrying amount
Statement of Financial Position
Change in fair value recognised
in Other Comprehensive
Income
17.9
42.4
Other non-current
financial assets (liabilities)
Other non-current
financial assets
(14.5)
59.1
Nominal amount
EUR 1,081.1 million
EUR 709.2 million
Cash flow hedge reserve within
Equity
Balance net of deferred tax
17.9
42.4
13.8
32.7
2023
2022
in € million
2023
2022
2 2 2
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Notes continued
Other non-current financial assets
Other non-current financial assets consist of the following items:
in € million
Interest rate derivatives and commodity swaps
Marketable securities and shares
Non-current portion of restricted cash
Interests in subsidiaries not consolidated
Non-current portion of non-current loans
Other non-current financial assets
31.12.2023
31.12.2022
20.5
16.9
3.4
2.4
0.2
43.4
11.3
0.7
1.3
0.3
13.6
42.4
9.5
0.0
3.0
0.2
55.1
0.0
1.1
0.2
0.0
1.3
Accumulated impairments on investments, securities and shares amount to €3.7 million (2022: €4.3 million). The increase in marketable securities and shares
includes a €4.6 million investment representing a minority stake in MCi Carbon Pty Ltd.
Other current financial assets
This item of the Consolidated Statement of Financial Position consists of the following components:
31.12.2023
31.12.2022
Derivatives in open orders and forward exchange contracts
in € million
Marketable securities1)
Current portion of non-current loans
Current portion of restricted cash
Other current financial assets
36. Derivative financial instruments
Interest rate derivatives
1) Money market funds held for trading have been reclassified to other current financial assets in 2023. Refer to Note (23) for details.
The Group has concluded interest rate swaps and one interest rate collar to hedge the cash flow risk associated with financial liabilities carrying variable interest
rates. The combination of the interest rate swaps and the variable interest debt instruments creates synthetic fixed interest debt instruments without exposure to
variability in cash flows due to changes of interest rates. The combination of the interest rate collar and the variable interest debt instruments limits the variability
of the debt instruments’ cash flows due to changes of interest rates to a predetermined range. The Group has designated all interest rate swaps and the interest
rate collar as hedging instruments with the variable interest cash flows of the debt instruments as hedged items in individual hedging relationships recognised
as cash flow hedges. The economic relationship between the hedging instrument and the hedged item is determined by comparing the critical terms (nominal
value, currency, interest payment date, interest reset dates, etc.) of both items. If the critical terms of the hedging instrument and the hedged item are either the
same or closely aligned an economic relationship is assumed to exist. The Group has established a hedge ratio of 1:1 and the cash flow changes of the
underlying hedged items are balanced out by the cash flow changes of the hedging instruments. Potential hedge ineffectiveness could arise out of differences
in critical terms between the hedging instruments and hedged items. Credit risk may affect hedge effectiveness. However, this risk is assessed to be very low as
only international banks with high credit ratings are the counterparties to the hedging instruments.
The fair value of all interest rate derivatives was €17.9 million at the reporting date (2022: €42.4 million) and is shown in other non-current financial assets
(liabilities) in the Consolidated Statement of Financial Position. For the reporting period of 2023, €14.5 million loss (2022: €59.1 million gain) has been
recognised in OCI as fair value movements of the hedging instrument and €10.0 million (2022: €7.2 million) has been reclassified from OCI to profit or loss and
recognised within other net financial expenses reflecting the settlement of the hedging instrument when interest on the underlying debt instrument is paid. No
ineffectiveness has been recognised in the Consolidated Statement of Profit or Loss.
The financial effect of the hedged item and the hedging instrument for the year 2023 and 2022 is shown as follows:
in € million
Carrying amount
Statement of Financial Position
Income
Nominal amount
17.9
financial assets (liabilities)
Other non-current
42.4
Other non-current
financial assets
Change in fair value recognised
in Other Comprehensive
(14.5)
59.1
17.9
42.4
EUR 1,081.1 million
EUR 709.2 million
13.8
32.7
Cash flow hedge reserve within
Equity
Balance net of deferred tax
2023
2022
in € million
2023
2022
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
Commodity swaps
To hedge the cash flow risk associated with commodity price of gas and oil the Group has entered into financial commodity swaps. The Group has designated
all commodity swaps as hedging instruments with expected purchases of commodities used in the production as hedged items in individual hedging
relationships recognised as cash flow hedges. The economic relationship between the hedged item and the hedging instrument is deemed upright based on
the expectations that the values of the hedged item and the hedging instrument will typically move in opposite directions in response to the hedged risk
determined by comparing the critical terms (nominal value, currency, commodity purchase date, commodity swaps settlement dates, etc.) of both items. If the
critical terms of the hedging instrument and the hedged item are either the same or closely aligned an economic relationship is assumed to exist. The Group
has established a hedge ratio of 1:1 and the cash flow changes of the underlying hedged items are balanced out by the cash flow changes of the hedging
instruments. Potential hedge ineffectiveness could arise out of differences in critical terms between the hedging instruments and the hedged items. For oil
hedges a source of potential ineffectiveness is different but similar underlyings (crude oil vs fuel oil). Credit risk may affect hedge effectiveness. However, this
risk is assessed to be very low as only international banks with high credit ratings are the counterparties to the hedging instruments.
The fair value of all commodity swaps was €10.5 million loss at the reporting date and is shown in other non-current and current financial assets (liabilities) in
the Consolidated Statement of Financial Position. For the reporting period of 2023, €10.8 million loss has been recognised in OCI as fair value movements of
the hedging instrument and €1.4 million has been removed from cash flow hedge reserve and included directly in the carrying amount of the inventory
reflecting the net settlement of the hedging instrument when the underlying inventory is purchased. No ineffectiveness has been recognised in the
Consolidated Statement of Profit or Loss.
The financial effect of the hedged items and the hedging instruments for the year 2023 is shown as follows:
in € million
2023
in € million
2023
Carrying amount
Statement of Financial Position
Change in fair value recognised
in Other Comprehensive
Income
(10.5)
Other current and non-current
financial assets (liabilities)
(10.8)
Nominal amount
Gas 1,141 GWh
Oil 700,297 bbl
Cash flow hedge reserve
within Equity
Balance net of deferred tax
(10.5)
(7.9)
Forward exchange contracts
Foreign exchange forward contracts are entered into to reduce the Group’s cash flow exposure to currency movements based on the internal risk assessment
and analysis conducted. Hedge accounting is not applied to these economic hedges.
The nominal value and fair value of forward exchange contracts as of 31 December 2023 are shown in the table below:
Purchase
EUR
MXN
USD
EUR
BRL
CLP
EUR
CZK
Forward exchange contracts
Sale
ZAR
USD
INR
USD
USD
USD
INR
EUR
Nominal in
Nominal value
in million
ZAR
MXN
USD
USD
USD
USD
EUR
EUR
175.0
670.0
20.0
150.0
30.0
18.5
33.0
16.0
31.12.2023
Fair value
in € million
0.0
0.0
(0.1)
(0.6)
(0.1)
0.2
(0.1)
0.2
(0.5)
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2 2 3
223
FINANCIAL STATEMENTS
Notes continued
The nominal value and fair value of forward exchange contracts as of 31 December 2022 are shown in the table below:
Purchase
EUR
USD
INR
Forward exchange contracts
Sale
USD
INR
EUR
Nominal in
Nominal value
in million
EUR
USD
INR
25.0
8.5
4,000.0
31.12.2022
Fair value
in € million
0.1
0.0
(0.6)
(0.5)
37. Financial risk management
Financial risks are incorporated in the Group’s corporate risk management framework and are centrally controlled by Corporate Treasury.
None of the following risks have a significant influence on the going concern premise of the Group.
Credit risks
The maximum credit risk from recognised financial assets amounts to €1,302.0 million (2022: €1,011.0 million) and is primarily related to investments with
banks and receivables due from customers.
The credit risk with banks related to investments (especially cash and cash equivalents) is reduced as business transactions are only carried out with prime
financial institutions with a good credit rating. Individual counterpart exposures limits are assigned to each financial institution based on a matrix composed of
the credit rating (S&P or Moody’s) and balance sheet assets.
Trade Receivables are hedged as far as possible through credit insurance and collateral arranged through banks (guarantees, letters of credit) in order to
mitigate credit and default risk. Credit and default risks are monitored continuously, and valuation allowance are recognised for risks that have occurred and are
identifiable.
This credit risk from trade receivables and contract assets, which is hedged by existing credit insurance and letters of credit, is shown by customer segment in
the following table:
in € million
Steel
Industrial
Gross credit exposure
Credit insurance and letters of credit
Net credit exposure
31.12.2023
31.12.2022
360.0
181.1
541.1
(235.4)
305.7
284.6
148.8
433.4
(214.5)
218.9
The movement in the valuation allowance in respect of trade receivables and contract assets during the year and the previous year was as follows:
in € million
2023
2022
Accumulated valuation allowance at beginning of year
Currency translation
Additions initial consolidation
Addition
Use
Reversal
Accumulated valuation allowance at year-end
Individually
assessed -
credit impaired
Collectively
assessed -
not credit impaired
Individually
assessed -
credit impaired
Collectively
assessed -
not credit impaired
29.4
0.1
9.1
18.4
(4.3)
(0.7)
52.0
0.9
-
-
-
-
(0.1)
0.8
23.2
0.8
0.3
7.0
(1.3)
(0.6)
29.4
0.6
-
-
0.3
-
-
0.9
The increase in the valuation allowance in 2023 is mainly driven by €13.4 million from acquired entities in 2023.
For trade receivables and contract assets, for which no objective evidence of impairment exists, lifetime expected credit losses have been calculated using a
provision matrix as shown below. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk
characteristics and the days past due.
2 2 4
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Notes continued
Purchase
EUR
USD
INR
Forward exchange contracts
37. Financial risk management
Credit risks
banks and receivables due from customers.
identifiable.
the following table:
in € million
Steel
Industrial
Gross credit exposure
Credit insurance and letters of credit
Net credit exposure
in € million
31.12.2023
31.12.2022
360.0
181.1
541.1
(235.4)
305.7
284.6
148.8
433.4
(214.5)
218.9
The movement in the valuation allowance in respect of trade receivables and contract assets during the year and the previous year was as follows:
Accumulated valuation allowance at beginning of year
Currency translation
Additions initial consolidation
Addition
Use
Reversal
Accumulated valuation allowance at year-end
Individually
assessed -
Individually
assessed -
credit impaired
not credit impaired
credit impaired
not credit impaired
2022
Collectively
assessed -
2023
Collectively
assessed -
29.4
0.1
9.1
18.4
(4.3)
(0.7)
52.0
0.9
-
-
-
-
(0.1)
0.8
23.2
0.8
0.3
7.0
(1.3)
(0.6)
29.4
0.6
0.3
-
-
-
-
0.9
The increase in the valuation allowance in 2023 is mainly driven by €13.4 million from acquired entities in 2023.
For trade receivables and contract assets, for which no objective evidence of impairment exists, lifetime expected credit losses have been calculated using a
provision matrix as shown below. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk
characteristics and the days past due.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
The nominal value and fair value of forward exchange contracts as of 31 December 2022 are shown in the table below:
in € million
Trade receivables and contract assets
Sale
USD
INR
EUR
Nominal in
Nominal value
in million
EUR
USD
INR
25.0
8.5
4,000.0
31.12.2022
Fair value
in € million
0.1
0.0
(0.6)
(0.5)
31.12.2023
not past due
less than 30 days more than 31 days
Expected credit loss rate in %
0.01 - 0.57%
0.05-1.22%
0.30 - 59.13%
Gross carrying amount invoiced
Lifetime expected credit loss
Valuation allowance - credit impaired
Carrying amount with either expected
credit loss or incurred loss allowance
Carrying amount without expected
credit loss or incurred loss allowance
Total trade receivables and contract
assets
414.2
(0.6)
-
-
-
27.8
(0.1)
-
-
-
17.0
(0.1)
-
-
-
Financial risks are incorporated in the Group’s corporate risk management framework and are centrally controlled by Corporate Treasury.
None of the following risks have a significant influence on the going concern premise of the Group.
The maximum credit risk from recognised financial assets amounts to €1,302.0 million (2022: €1,011.0 million) and is primarily related to investments with
in € million
The credit risk with banks related to investments (especially cash and cash equivalents) is reduced as business transactions are only carried out with prime
financial institutions with a good credit rating. Individual counterpart exposures limits are assigned to each financial institution based on a matrix composed of
the credit rating (S&P or Moody’s) and balance sheet assets.
31.12.2022
not past due
less than 30 days more than 31 days
Expected credit loss rate in %
0.02 - 0.34%
0.07-0.81%
0.31-49.48%
Trade Receivables are hedged as far as possible through credit insurance and collateral arranged through banks (guarantees, letters of credit) in order to
mitigate credit and default risk. Credit and default risks are monitored continuously, and valuation allowance are recognised for risks that have occurred and are
This credit risk from trade receivables and contract assets, which is hedged by existing credit insurance and letters of credit, is shown by customer segment in
Gross carrying amount invoiced
Lifetime expected credit loss
Valuation allowance - credit impaired
Carrying amount with either expected
credit loss or incurred loss allowance
Carrying amount without expected
credit loss or incurred loss allowance
Total trade receivables and contract
assets
385.6
(0.5)
-
-
-
10.8
(0.1)
-
-
-
3.0
(0.4)
-
-
-
Collectively
assessed -
not credit
impaired
459.0
-
-
-
-
Collectively
assessed -
not credit
impaired
399.4
-
-
-
-
Individually
assessed -
credit impaired
89.5
-
(52.0)
-
-
Total
548.5
(0.8)
(52.0)
495.7
45.4
541.1
Trade receivables and contract assets
Individually
assessed -
credit impaired
30.1
-
(29.3)
-
-
Total
429.5
(1.0)
(29.3)
399.2
37.7
436.9
Liquidity risk
Liquidity risk refers to the risk that financial obligations cannot be met when due. The Group’s financial policy is based on long-term financial planning and is
centrally controlled and monitored continuously at the Group. The liquidity requirements resulting from budget and medium-term planning are secured by
concluding appropriate financing agreements. As of 31 December 2023, the Group has a committed Revolving Credit Facility (RCF) of €600.0 million, which
was unutilised (2022: committed RCF was €600.0 million and was also unutilised). The RCF is a syndicated facility with multiple international banks and
matures in 2028. The liquidity of the Group’s subsidiaries is managed regionally but with central steering. Access to liquidity and optimised cash levels is
ensured by Corporate Treasury, which supports business needs and lowers borrowing costs. Refer to Note (27) for a description of the consequences if financial
covenants embedded in loan agreements are breached. Refer to Note (4) for a description of the potential impacts on the finance costs of ESG-linked loans if
the Group's ESG rating gets downgraded.
Non-derivative financial liabilities
An analysis of the terms of non-derivative financial liabilities based on undiscounted cash flows including the related interest payments shows the following
expected cash outflows:
in € million
Borrowings
fixed interest
variable interest
Other financial liabilities
Lease liabilities
Liabilities to fixed-term or puttable non-controlling interests
Trade payables and other current liabilities
Non-derivative financial liabilities
Carrying amount
31.12.2023
433.1
1,498.9
16.8
69.9
87.3
561.2
Cash
outflows
454.5
1,736.0
22.5
77.2
181.2
561.2
2,667.2
3,032.6
Remaining term
up to 1 year
2 to 5 years
over 5 years
48.4
154.5
13.7
17.9
18.0
561.2
813.7
391.0
1,363.8
8.8
33.8
13.1
0.0
15.1
217.7
0.0
25.5
150.1
0.0
1,810.5
408.4
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FINANCIAL STATEMENTS
Notes continued
in € million
Borrowings
fixed interest
variable interest
Other financial liabilities
Lease liabilities
Liabilities to fixed-term or puttable non-controlling interests
Trade payables and other current liabilities
Non-derivative financial liabilities
Carrying amount
31.12.2022
469.0
1,143.1
8.0
63.9
67.8
506.5
2,258.3
Cash
outflows
481.4
1,284.7
8.1
70.2
182.8
506.5
2,533.7
Remaining term
up to 1 year
2 to 5 years
over 5 years
118.5
132.9
(0.2)
18.5
21.6
506.5
797.8
274.3
1,129.1
8.3
33.6
15.7
0.0
1,461.0
88.6
22.7
0.0
18.1
145.5
0.0
274.9
Derivative financial instruments
The remaining terms of derivative financial instruments as of 31 December 2023 and 31 December 2022 are shown in the table below:
in € million
Receivables from derivatives with net settlement
Interest rate derivatives
Commodity swaps
Forward exchange contracts
Liabilities from derivatives with net settlement
Commodity swaps
Derivatives in open orders
Interest rate derivatives
Carrying amount
31.12.2023
Cash flows
up to 1 year
2 to 5 years
over 5 years
Remaining term
20.3
0.5
0.4
11.0
2.9
2.4
20.3
0.5
0.4
11.0
2.9
2.4
0.0
0.4
0.4
1.1
2.9
0.0
20.3
0.1
0.0
9.9
0.0
1.5
Remaining term
0.0
0.0
0.0
0.0
0.0
0.9
in € million
Receivables from derivatives with net settlement
Interest rate swaps
Forward exchange contracts
Derivatives in open orders
Liabilities from derivatives with net settlement
Derivatives in open orders
Carrying amount
31.12.2022
Cash flows
up to 1 year
2 to 5 years
over 5 years
42.4
0.1
1.0
9.5
42.4
0.1
1.0
9.5
0.0
0.1
1.0
9.5
40.6
0.0
0.0
0.0
1.8
0.0
0.0
0.0
Foreign currency risks
Foreign currency risks arise where business transactions (operating activities, investments, financing) are conducted in a currency other than the functional
currency of a company. They are monitored at Group level and analysed with respect to hedging options. Usually, the net position of the Group in the
respective currency serves as the basis for decisions regarding the use of hedging instruments.
Foreign currency risks arise in financial instruments which are denominated in a currency other than the functional currency and are monetary in nature. These
include trade receivables and payables, cash and cash equivalents as well as financial liabilities as shown in the Consolidated Statement of Financial Position.
Investments in equity instruments are not of a monetary nature, and therefore not linked to a foreign currency risk in accordance with IFRS 7 ‘Financial
Instruments: Disclosures’.
The majority of foreign currency financial instruments in the Group result from operating activities and intragroup financing transactions. The Group may
designate intragroup balances as part of a net investment hedge in accordance with IAS 21 ‘The Effects of Changes in Foreign Exchange Rates’ with the
effective portion of exchange gains and losses recognised in equity. Significant provisions denominated in foreign currencies are also included in the analysis of
risk.
2 2 6
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Notes continued
in € million
Borrowings
fixed interest
variable interest
Other financial liabilities
Lease liabilities
Liabilities to fixed-term or puttable non-controlling interests
Trade payables and other current liabilities
Non-derivative financial liabilities
Carrying amount
31.12.2022
469.0
1,143.1
8.0
63.9
67.8
506.5
2,258.3
Cash
outflows
481.4
1,284.7
8.1
70.2
182.8
506.5
2,533.7
up to 1 year
2 to 5 years
over 5 years
118.5
132.9
(0.2)
18.5
21.6
506.5
797.8
274.3
1,129.1
8.3
33.6
15.7
0.0
1,461.0
88.6
22.7
0.0
18.1
145.5
0.0
274.9
Derivative financial instruments
The remaining terms of derivative financial instruments as of 31 December 2023 and 31 December 2022 are shown in the table below:
in € million
Cash flows
up to 1 year
2 to 5 years
over 5 years
Carrying amount
31.12.2023
Receivables from derivatives with net settlement
Liabilities from derivatives with net settlement
Interest rate derivatives
Commodity swaps
Forward exchange contracts
Commodity swaps
Derivatives in open orders
Interest rate derivatives
Receivables from derivatives with net settlement
Interest rate swaps
Forward exchange contracts
Derivatives in open orders
Liabilities from derivatives with net settlement
Derivatives in open orders
Remaining term
20.3
0.1
0.0
9.9
0.0
1.5
40.6
0.0
0.0
0.0
Remaining term
0.0
0.4
0.4
1.1
2.9
0.0
0.0
0.1
1.0
9.5
0.0
0.0
0.0
0.0
0.0
0.9
1.8
0.0
0.0
0.0
20.3
0.5
0.4
11.0
2.9
2.4
42.4
0.1
1.0
9.5
20.3
0.5
0.4
11.0
2.9
2.4
42.4
0.1
1.0
9.5
Foreign currency risks
Foreign currency risks arise where business transactions (operating activities, investments, financing) are conducted in a currency other than the functional
currency of a company. They are monitored at Group level and analysed with respect to hedging options. Usually, the net position of the Group in the
respective currency serves as the basis for decisions regarding the use of hedging instruments.
Foreign currency risks arise in financial instruments which are denominated in a currency other than the functional currency and are monetary in nature. These
include trade receivables and payables, cash and cash equivalents as well as financial liabilities as shown in the Consolidated Statement of Financial Position.
Investments in equity instruments are not of a monetary nature, and therefore not linked to a foreign currency risk in accordance with IFRS 7 ‘Financial
Instruments: Disclosures’.
risk.
The majority of foreign currency financial instruments in the Group result from operating activities and intragroup financing transactions. The Group may
designate intragroup balances as part of a net investment hedge in accordance with IAS 21 ‘The Effects of Changes in Foreign Exchange Rates’ with the
effective portion of exchange gains and losses recognised in equity. Significant provisions denominated in foreign currencies are also included in the analysis of
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
Remaining term
The following table shows the foreign currency positions in the Group’s major currencies as of 31 December 2023 and 31 December 2022:
in € million
Financial assets
Financial liabilities, provisions
Net foreign currency position
in € million
Financial assets
Financial liabilities, provisions
Net foreign currency position
USD
729.3
(469.8)
259.5
USD
813.3
(664.5)
148.8
EUR
59.6
(95.3)
(35.7)
EUR
69.5
(100.7)
(31.2)
GBP
8.2
(14.8)
(6.6)
GBP
11.2
(15.4)
(4.2)
INR
2.6
(0.8)
1.8
INR
5.2
(0.4)
4.8
Other
47.8
(22.4)
25.4
Other
60.3
(28.7)
31.6
Total
847.5
(603.1)
244.4
Total
959.5
(809.7)
149.8
The disclosures required by IFRS 7 for foreign exchange risks include a sensitivity analysis that shows the effects of hypothetical changes in the relevant risk
variables on profit or loss and equity. In general, all non-functional currencies in which Group companies enter into financial instruments are considered to be
relevant risk variables. The effects on a particular reporting period are determined by applying the hypothetical changes in these risk variables to the financial
instruments held by the Group as of the reporting date. It is assumed that the positions on the reporting date are representative for the entire year. The sensitivity
analysis does not include the foreign exchange differences that result from translating the net asset positions of the group companies with a functional
currency other than Euro into the Group’s reporting currency, the Euro.
A 10% appreciation or devaluation of the relevant functional currency against the following major currencies as of 31 December 2023 would have had the
following effect on profit or loss and equity (both excluding income tax):
in € million
US Dollar
Euro
Indian Rupee
Other currencies
Appreciation of 10%
Devaluation of 10%
(Loss)/gain
(22.0)
1.5
(0.2)
(1.7)
Equity
(20.3)
6.1
(0.2)
(1.7)
Gain/(loss)
26.8
(1.9)
0.2
2.1
Equity
24.9
(7.4)
0.2
2.1
in € million
Cash flows
up to 1 year
2 to 5 years
over 5 years
Carrying amount
31.12.2022
The effect in equity also includes the exchange effects recorded directly in OCI in line with the Group’s policy.
The hypothetical effect on profit or loss and on equity at 31 December 2022 can be summarised as follows:
in € million
US Dollar
Euro
Indian Rupee
Other currencies
Appreciation of 10%
Devaluation of 10%
(Loss)/gain
Equity
Gain/(loss)
Equity
(12.9)
1.3
(0.4)
(2.5)
(12.9)
5.9
(0.4)
(2.5)
15.8
(1.6)
0.5
3.0
15.8
(7.2)
0.5
3.0
The effect in equity also includes the exchange effects recorded directly in OCI in line with the Group’s policy.
Interest rate risks
The interest rate risk in the Group is primarily related to debt instruments carrying variable interest rates, which may lead to fluctuations in results and cash flows.
At 31 December 2023, one interest rate collar with a nominal value of €180.0 million and interest rate swaps with a nominal value of €901.1 million (2022:
€709.2 million) existed with the interest rate swaps converting the variable interest rate of the hedged debt instrument into a fixed interest rate. Further
information is provided in Note (36).
The exposure to interest rate risks is presented through sensitivity analysis in accordance with IFRS 7. This analysis show the effects of changes in market interest
rates on interest payments, interest income and interest expense and on equity.
The Group measures fixed interest financial assets and financial liabilities at amortised cost and did not use the fair value option - a hypothetical change in the
market interest rates for these financial instruments at the reporting date would have had no effect on profit and loss or equity.
Changes in market interest rates on debt instruments designated as cash flow hedges to protect against interest rate-related payment fluctuations within the
scope of hedge accounting have an effect on equity and are therefore included in the equity-related sensitivity analysis. If the market interest rate as of
31 December 2023 had been 25 basis points higher or lower, equity would have been €1.7 million (2022: €1.1 million) higher or lower considering tax effects.
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Notes continued
Changes in market interest rates have an effect on the interest result of primary variable interest debt instruments whose interest payments are not designated
as hedged items as a part of cash flow hedge relationships against interest rate risks and are therefore included in the calculation of the result-related
sensitivities. If the market interest rate as of 31 December 2023 had been 25 basis points higher or lower, the interest result would have been €0.2 million (2022:
€0.1 million) lower or higher.
Commodity price risk
The Group manages its exposure to commodity prices, namely gas and electricity purchases in Europe, by entering into forward fixed price take or pay contracts
with various suppliers to mitigate and reduce the impact of price volatility and secure the energy supply for its production process. These contracts are
accounted for as executory contracts as the commodities purchases are for own use purposes. The Group’s Energy Risk policy sets out thresholds for fixing
quantities based on the expected usage which is usually over a five-year period with lower levels of forward purchases in the outer years.
In line with the above strategy, the Group may also enter into financial commodity swap contracts to fix prices for expected purchases not covered by the fixed
price take or pay contracts within the overall defined thresholds. Further information is provided under Note (36).
Other market price risk
The Group holds certificates in an investment fund amounting to €11.8 million (2022: €9.0 million) in order to provide the legally required coverage of
personnel provisions of its Austrian subsidiaries. The market value of these certificates is influenced by fluctuations of the worldwide volatile stock and bond
markets.
38. Capital management
The objectives of the capital management strategy of the Group are to continue as a going concern and to provide a capital base from which to finance growth
and investments, to service debt, and to increase shareholders value, including the payment of dividends to shareholders.
The Group manages its capital structure through careful monitoring and assessment of the overall economic framework conditions, credit, interest rate and
foreign exchange risks and the requirements and risks related to operations and strategic projects.
Net debt (in € million)1)2)
Net gearing ratio (in %)
Net debt to Adjusted EBITDA
31.12.2023
31.12.2022
1,303.9
95.6%
2.40x
1,163.2
110.9%
2.33x
1) Further information is provided under Note (34).
2) As from 1 January 2023 “Net debt” excludes “financial liabilities from accrued interest” which are now presented under “other current liabilities”. Prior period comparatives have been
revised to conform with current year presentation.
Net debt, which reflects borrowings and lease liabilities net of cash and cash equivalents and short-term marketable securities held for trading, is managed by
Corporate Treasury. The main task of the Corporate Treasury department is to execute the capital management strategy as well as to secure liquidity to support
business operations on a sustainable basis, to use banking and financial services efficiently and to limit financial risks while at the same time optimising earnings
and costs.
The net gearing ratio is the ratio of net debt to total equity.
2 2 8
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Notes continued
€0.1 million) lower or higher.
Commodity price risk
Other market price risk
markets.
38. Capital management
The Group manages its exposure to commodity prices, namely gas and electricity purchases in Europe, by entering into forward fixed price take or pay contracts
with various suppliers to mitigate and reduce the impact of price volatility and secure the energy supply for its production process. These contracts are
accounted for as executory contracts as the commodities purchases are for own use purposes. The Group’s Energy Risk policy sets out thresholds for fixing
quantities based on the expected usage which is usually over a five-year period with lower levels of forward purchases in the outer years.
In line with the above strategy, the Group may also enter into financial commodity swap contracts to fix prices for expected purchases not covered by the fixed
price take or pay contracts within the overall defined thresholds. Further information is provided under Note (36).
The Group holds certificates in an investment fund amounting to €11.8 million (2022: €9.0 million) in order to provide the legally required coverage of
personnel provisions of its Austrian subsidiaries. The market value of these certificates is influenced by fluctuations of the worldwide volatile stock and bond
The objectives of the capital management strategy of the Group are to continue as a going concern and to provide a capital base from which to finance growth
and investments, to service debt, and to increase shareholders value, including the payment of dividends to shareholders.
Net debt (in € million)1)2)
Net gearing ratio (in %)
Net debt to Adjusted EBITDA
1) Further information is provided under Note (34).
revised to conform with current year presentation.
2) As from 1 January 2023 “Net debt” excludes “financial liabilities from accrued interest” which are now presented under “other current liabilities”. Prior period comparatives have been
Net debt, which reflects borrowings and lease liabilities net of cash and cash equivalents and short-term marketable securities held for trading, is managed by
Corporate Treasury. The main task of the Corporate Treasury department is to execute the capital management strategy as well as to secure liquidity to support
business operations on a sustainable basis, to use banking and financial services efficiently and to limit financial risks while at the same time optimising earnings
and costs.
The net gearing ratio is the ratio of net debt to total equity.
31.12.2023
31.12.2022
1,303.9
95.6%
2.40x
1,163.2
110.9%
2.33x
Changes in market interest rates have an effect on the interest result of primary variable interest debt instruments whose interest payments are not designated
as hedged items as a part of cash flow hedge relationships against interest rate risks and are therefore included in the calculation of the result-related
sensitivities. If the market interest rate as of 31 December 2023 had been 25 basis points higher or lower, the interest result would have been €0.2 million (2022:
Net debt excluding lease liabilities/Adjusted EBITDA is the main financial covenant of loan agreements. The key performance indicator for net debt in the
Group is the group leverage, which reflects the ratio of Net debt to Adjusted EBITDA, including lease liabilities. It is calculated as follows:
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
in € million
EBIT
Amortisation
Restructuring and write-down expenses
Other operating income and expenses
Adjusted EBITA
Depreciation
Adjusted EBITDA
Total debt1)
Lease liabilities
Less: Cash and cash equivalents
Less: Marketable securities
Net debt1)
Net debt excluding IFRS 16 lease liabilities
The Group manages its capital structure through careful monitoring and assessment of the overall economic framework conditions, credit, interest rate and
foreign exchange risks and the requirements and risks related to operations and strategic projects.
Net debt to Adjusted EBITDA
31.12.2023
31.12.2022
333.9
43.6
19.6
11.8
408.9
133.9
542.8
1,948.8
69.9
703.5
11.3
1,303.9
343.6
28.9
(6.8)
18.2
383.9
115.6
499.5
1,620.0
63.9
520.7
0.0
1,163.2
1,234.0
1,099.3
2.40x
2.33x
Net debt to Adjusted EBITDA excluding IFRS 16 lease liabilities
2.27x
2.20x
1) As from 1 January 2023 “Net debt” excludes “financial liabilities from accrued interest” which are now presented under “other current liabilities”. Prior period comparatives have been
revised to conform with current year presentation.
In both 2023 and 2022, all externally imposed financial covenants have been complied with. The Group has sufficient liquidity headroom within its committed
debt facilities.
39. Contingent liabilities
At 31 December 2023, warranties, performance guarantees and other guarantees amount to €70.9 million (2022: €61.9 million). Contingent liabilities have a
remaining term of between two months and three years. Based on past experience, the probability that contingent liabilities are realised is considered to be low.
The Group is subject to lawsuits and disputes in the normal course of the business; the Group has assessed these positions and recorded provisions where
necessary.
Uncertain tax treatments
The calculation of income taxes is based on the tax laws applicable in the individual countries in which the Group operates. Due to their complexity, the tax
items presented in the Consolidated Financial Statements may be subject to different interpretations by local finance authorities. In this context it should be
noted that a tax provision is generally recognised when the Group has a present obligation as a result of a past event, and when it is considered probable that
there will be a future outflow of funds.
The Group is continually adapting its global presence to improve customer service and maintain its competitive advantage, and leads open discussions with tax
authorities about, for example, transfer of functions and related profit between related parties and exit taxation. In this regard, disputes may arise, where the
Group management’s understanding differs from the positions of the local tax authorities. In such cases, where an appeal is available, management’s
judgements are based on a likely outcome approach, taking into consideration advice from professional firms and previous experiences when assessing the
risks.
The Group is party to several tax proceedings in Brazil which involve estimated contingent liabilities amounting to €271.8 million (2022: €243.0 million). These
tax proceedings are as follows:
Income Tax relating to historical corporate transactions
There are three proceedings in which Brazilian Federal Tax Authorities issued tax assessments which rejected the deduction of goodwill generated in two
corporate transactions that were undertaken 2007 and 2008, for Corporate Income Taxes. The tax authorities issued assessments arguing that such
transactions cannot generate deductions as they do not fulfil the requirements provided by law. Although the Group has been broadly successful, the tax
authorities have appealed those outcomes. The final outcome of these proceedings is expected within one and three years. The exposure of €177.2 million
(2022: €157.0 million) is limited to the fiscal tax years ended 2018 at which stage all available goodwill tax deductions had been made.
Royalties
The Group is party to 38 proceedings where the Brazilian Mining Authorities (“ANM”) challenged the criteria used for calculating and paying the Financial
Compensation for Exploration of Mineral Resources (“CFEM”), which are mining royalties payable by every mining company. The authorities have mainly
disputed the basis of production costs estimates used in the determination of the royalties that are payable. The claims relate to fiscal years up to 2017, following
which the legislation for royalties was changed. The Group, together with its technical and legal advisors continues to challenge ANM assessments. Most of
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Notes continued
the procedures are ongoing within the ANM administrative courts. Final decisions of the first cases are expected within four to five years. As of 31.12.2023, the
potential risk amounts to €31.5 million (2022: €28.2 million), including interest and penalties.
Corporate income and other taxes
There are several tax audits ongoing in Brazil mainly relating to: offsetting federal tax payables and receivables, social security contributions, as well as offsetting
certain federal tax debts with corporate income tax credits. The potential cash outflow resulting from the outcome of these tax audits amount to €63.1 million
(2022: €57.8 million).
Civil litigation contingencies
Magnesita Refratários S.A., Contagem, Brazil, is party to a public civil action for damages allegedly caused by overloaded trucks in contravention of Brazilian
traffic legislation. In 2017, a decision was rendered in favour of Magnesita Refratários S.A. in the trial court. The decision is being appealed by the Public Attorney
of Minas Gerais which requested the suspension of the proceeding until the Brazilian Superior Court of Justice can assess other similar cases. The potential loss
from this proceeding amounts to €18.3 million as of 31 December 2023 (2022: €15.5 million).
There are other minor proceedings and lawsuits in which subsidiaries are involved that have no significant impact on the financial position and performance of
the Group.
40. Other financial commitments
Capital commitments amount to €9.3 million at 31 December 2023 (2022: €20.4 million) and are exclusively due to third parties. They are shown at nominal
value.
In addition, the Group has purchase commitments related to the supply of raw materials, especially for electricity, natural gas, strategic raw materials as well as
for the transport of raw materials within the Group. This results in other financial commitments of the nominal value of €307.9 million at the reporting date
(2022: €399.7 million). The remaining terms of the contracts amount to up to four years. Purchases from these arrangements are recognised in accordance
with the usual course of business. Purchase contracts are regularly reviewed for imminent losses, which may occur, for example, when requirements fall below
the agreed minimum purchase volume or when contractually agreed prices deviate from the current market price level.
41. Independent Auditor’s remuneration
in € million
Fees in respect of the audit of the Consolidated and Parent Company Financial Statements1)
Other audit fees, in respect of subsidiaries' audit, to PwC network firms
Total audit fees
Non-audit services - Interim review1)
Other non-audit services
Total fees
2023
(1.1)
(2.0)
(3.1)
(0.2)
(0.3)
(3.6)
2022
(1.1)
(1.8)
(2.9)
(0.2)
0.0
(3.1)
1) Total fees to PricewaterhouseCoopers Accountants N.V. totalled €1.3 million (2022: €1.3 million).
42. Business Combinations
The aggregated transaction costs expensed in the Consolidated Statement of Profit or Loss relating to all business combinations closed in 2023 amounted to
€4.5 million.
Acquisition of Horn & Co Minerals Recovery Group (MIRECO)
The purchase price allocation was finalised in 2023 and did not materially differ from the preliminary purchase price allocation disclosed in the last year’s
Consolidated Financial Statements.
Acquisition of Sörmaş
Last year the Group completed the acquisition of Sörmaş. The preliminary amounts recognised for the acquired assets and liabilities at the acquisition date have
been adjusted compared to the Consolidated Financial Statements 2022 during the measurement period in accordance with IFRS 3. The final amounts
recognised for each major class of assets and liabilities as a result of this acquisition are the following:
2 3 0
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Notes continued
Corporate income and other taxes
(2022: €57.8 million).
Civil litigation contingencies
the procedures are ongoing within the ANM administrative courts. Final decisions of the first cases are expected within four to five years. As of 31.12.2023, the
potential risk amounts to €31.5 million (2022: €28.2 million), including interest and penalties.
There are several tax audits ongoing in Brazil mainly relating to: offsetting federal tax payables and receivables, social security contributions, as well as offsetting
certain federal tax debts with corporate income tax credits. The potential cash outflow resulting from the outcome of these tax audits amount to €63.1 million
Magnesita Refratários S.A., Contagem, Brazil, is party to a public civil action for damages allegedly caused by overloaded trucks in contravention of Brazilian
traffic legislation. In 2017, a decision was rendered in favour of Magnesita Refratários S.A. in the trial court. The decision is being appealed by the Public Attorney
of Minas Gerais which requested the suspension of the proceeding until the Brazilian Superior Court of Justice can assess other similar cases. The potential loss
from this proceeding amounts to €18.3 million as of 31 December 2023 (2022: €15.5 million).
There are other minor proceedings and lawsuits in which subsidiaries are involved that have no significant impact on the financial position and performance of
the Group.
value.
40. Other financial commitments
Capital commitments amount to €9.3 million at 31 December 2023 (2022: €20.4 million) and are exclusively due to third parties. They are shown at nominal
In addition, the Group has purchase commitments related to the supply of raw materials, especially for electricity, natural gas, strategic raw materials as well as
for the transport of raw materials within the Group. This results in other financial commitments of the nominal value of €307.9 million at the reporting date
(2022: €399.7 million). The remaining terms of the contracts amount to up to four years. Purchases from these arrangements are recognised in accordance
with the usual course of business. Purchase contracts are regularly reviewed for imminent losses, which may occur, for example, when requirements fall below
the agreed minimum purchase volume or when contractually agreed prices deviate from the current market price level.
41. Independent Auditor’s remuneration
in € million
Fees in respect of the audit of the Consolidated and Parent Company Financial Statements1)
Other audit fees, in respect of subsidiaries' audit, to PwC network firms
2023
(1.1)
(2.0)
(3.1)
(0.2)
(0.3)
(3.6)
2022
(1.1)
(1.8)
(2.9)
(0.2)
0.0
(3.1)
Total audit fees
Non-audit services - Interim review1)
Other non-audit services
Total fees
42. Business Combinations
€4.5 million.
Consolidated Financial Statements.
Acquisition of Sörmaş
1) Total fees to PricewaterhouseCoopers Accountants N.V. totalled €1.3 million (2022: €1.3 million).
The aggregated transaction costs expensed in the Consolidated Statement of Profit or Loss relating to all business combinations closed in 2023 amounted to
Acquisition of Horn & Co Minerals Recovery Group (MIRECO)
The purchase price allocation was finalised in 2023 and did not materially differ from the preliminary purchase price allocation disclosed in the last year’s
Last year the Group completed the acquisition of Sörmaş. The preliminary amounts recognised for the acquired assets and liabilities at the acquisition date have
been adjusted compared to the Consolidated Financial Statements 2022 during the measurement period in accordance with IFRS 3. The final amounts
recognised for each major class of assets and liabilities as a result of this acquisition are the following:
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
in € million
Property plant and equipment
Intangible assets: Customer relationships
Intangible assets: Order backlogs
Inventories
Other assets
Total assets acquired
Deferred tax liabilities
Other liabilities
Total liabilities assumed
Net identifiable assets acquired
Less: Non-controlling interests
Goodwill
Consideration paid
preliminary value
fair value
adjustments
final value
3.6
10.5
5.9
14.1
16.2
50.3
3.8
8.9
12.7
37.6
(5.0)
13.8
46.4
16.7
(3.0)
(1.1)
0.7
0.0
13.3
3.0
0.3
3.3
10.0
(1.6)
(8.4)
20.3
7.5
4.8
14.8
16.2
63.6
6.8
9.2
16.0
47.6
(6.6)
5.4
46.4
Compared to the preliminary valuation a positive fair value adjustment on property, plant and equipment has been recognised which mainly results from the
reassessment of the useful lives of machinery & equipment in use with a carrying amount of close to zero at the acquisition date. The machinery & equipment’s
fair value was measured using the replacement cost approach based on current cost obtained from third parties and internal information. The negative fair
value adjustments related to the order backlog and the customer relationships result from an increase in contributory asset charges associated with the fair
value adjustment on property, plant and equipment compared to the preliminary valuation.
Acquisition of Dalmia OCL
In November 2022, the Group signed a share swap agreement stipulating its acquisition of 100% of the shares of Dalmia OCL Ltd, India, through the non-
wholly owned subsidiary RHI Magnesita India Ltd. Dalmia OCL owns 51% of the shares of Dalmia Seven Refractories Ltd (‘DSR’), India, which were also acquired
in the scope of this business combination. The acquisition was closed on 5 January 2023 which is the acquisition date. The remaining 49% of DSR’s shares
were acquired on 24 July 2023 by the Group, see Note (26). After the acquisition, Dalmia OCL was renamed to RHI Magnesita India Refractories Ltd. and
Dalmia Seven Refractories Ltd. (’DSR’) was renamed to RHI Magnesita Seven Refractories Ltd.
The acquired companies are one of the leading refractory producers in India engaged in the business of manufacturing and selling alumina bricks as well as
basic bricks, non-basic bricks and flow control products with a focus on customers in the Industrial and Steel segments. Dalmia OCL and DSR have five
manufacturing facilities.
The acquisition enables the Group to increase its presence in the high growth Indian refractory market considering a forecast steel production growth in India of
12% per annum and a compound annual growth rate of 7-8% until 2030. The production footprint and product offering of the acquired companies is highly
complementary to the Group's existing plant locations (four plants) and product range with focus in the Industrial segment, where the Group had been under-
represented. Moreover, significant synergies are expected through network benefits and additional production capacities in important industrial locations in the
south and west of India, where the Group had no assets.
The consideration transferred amounting to €325.2 million comprises two elements: issued equity shares and cash. RHI Magnesita India Ltd. issued
27,000,000 equity shares with a fair value equivalent of €270.0 million based on the quoted share price (Level 1). The cash consideration amounts to €55.2
million.
The following table shows the final amounts recognised for each major class of assets and liabilities and the fair value adjustments as a result of the acquisition:
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FINANCIAL STATEMENTS
Notes continued
in € million
Property plant and equipment and other intangible assets
Intangible assets: Customer relationships
Intangible assets: prepayments on mining rights
Inventories
Trade and other receivables (gross contractual amounts: €42.2 million)
Cash and cash equivalents
Total assets acquired
Trade and other liabilities
Lease Liabilities
Provisions and deferred tax liabilities
Borrowings
Total liabilities assumed
Net identifiable assets acquired
Plus: net decrease in non-controlling interests1)
Goodwill
Consideration
Consideration paid, net of cash acquired for purposes of the Consolidated Statement of
Cash Flows
Equity shares issued and transferred
1) The net decrease in non-controlling interests is explained below.
book value
fair value
adjustments
(adjusted) value
30.1
0.0
0.0
42.7
38.8
0.1
111.7
53.3
9.9
1.6
19.7
84.5
27.2
17.5
106.9
8.0
0.0
0.0
0.0
132.4
0.0
0.0
0.0
0.0
0.0
132.4
47.6
106.9
8.0
42.7
38.8
0.1
244.1
53.3
9.9
1.6
19.7
84.5
159.6
68.8
96.8
325.2
55.1
270.0
The fair value of the customer relationships was measured using the multi-period excess earnings method. Under this method, the fair value of the customer
relationships is calculated by determining the present value of earnings after tax attributable to the acquired companies’ existing customers. The customer
relationships in the Industrial segment are amortised over the estimated useful life of 10 years, while the customer relationships in the Steel segment are
amortised over the estimated useful life of 20 years.
The goodwill recognised as a result of this acquisition is attributable to the expected synergies mentioned above and is not tax deductible.
The Group measures goodwill as the excess of RHI Magnesita N.V.’s share in the consideration transferred plus non-controlling interests over the acquired
identifiable net assets. RHI Magnesita N.V.’s share in the consideration transferred amounts to €189.2 million which has been determined on the basis of its
calculated ownership interests in Dalmia OCL and DSR under a ‘look-through’ approach immediately after the share swap. Accordingly, RHI Magnesita N.V.’s
share of the consideration attributable to Dalmia OCL amounts to 60.11%, whereas its share of the consideration attributable to DSR amounts to 30.66%.
Consistent with the ‘look-through’ approach the Group recognises non-controlling interests for this acquisition amounting to €67.2 million which were
measured at the calculated share in Dalmia OCL’s and DSR’s net assets attributable to the non-controlling shareholders (39.89% for Dalmia OCL and 69.34%
for DSR). The consideration transferred attributable to the non-controlling shareholders amounting to €136.0 million is eliminated against non-controlling
interests. Both the recognition and the elimination have decreased non-controlling interests on acquisition by €68.8 million.
The impact of the share swap on the non-controlling interests in RHI Magnesita India Ltd. is described in Note (26).
Since the date of inclusion of the acquired companies in the Group’s Consolidated Financial Statements, revenues have increased by €115.3 million, Adjusted
EBITA has increased by €9.5 million and net income has decreased by €2.8 million. The acquired companies form part of the Steel and Industrial reportable
segments.
Acquisition of Hi-Tech
In October 2022, the Group signed an agreement stipulating its acquisition of the refractory business of Hi-Tech Chemicals Ltd (‘Hi-Tech'), India, via an asset
deal. The acquisition was closed on 31 January 2023 which is the acquisition date.
Hi-Tech is a leading specialty refractory producer in India engaged in the business of manufacturing and selling of premium flow control products like ISO,
slide-gate plates, shrouds, plugs apart from castables, nozzle opening compound or tundish monolithics with a focus on customers in the Steel segment. Hi-
Tech operates a state-of-the-art manufacturing facility in the city of Jamshedpur, India.
This acquisition enables the Group to expand its presence and participate in the high growth refractory market in India and the wider region considering a
forecast steel production growth in India of 12% per annum and a compound annual growth rate of 7-8% until 2030. Through the acquisition the Group can
expand its flow control product offering and enlarge its production capacities based on a low cost and semi-automised production. Moreover, substantial
synergies are expected through economies of scale and additional production capacities for a strategic market segment.
The cash consideration paid upon closing of the acquisition amounts to €87.0 million.
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STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
book value
(adjusted) value
fair value
adjustments
The following table shows the final amounts recognised for each major class of assets and liabilities and the fair value adjustments as a result of the acquisition:
in € million
Property plant and equipment
Intangible assets: Customer relationships
Inventories
Trade and other receivables
Total assets acquired
Trade and other liabilities
Deferred tax liabilities
Total liabilities assumed
Net identifiable assets acquired
Goodwill
Consideration
Consideration paid, net of cash acquired for purposes of the Consolidated Statement of
Cash Flows
book value
fair value
adjustments
(adjusted) value
11.7
0.0
7.8
0.1
19.6
0.3
0.0
0.3
19.3
10.7
23.8
0.0
0.0
34.5
0.0
1.9
1.9
32.6
22.4
23.8
7.8
0.1
54.1
0.3
1.9
2.2
51.9
35.1
87.0
87.0
The fair value of the customer relationships was measured using the multi-period excess earnings method. Under this method, the fair value of the customer
relationships is calculated by determining the present value of earnings after tax attributable to the acquired refractory business’ existing customers. The
customer relationships are amortised over the estimated useful life of 20 years.
The goodwill recognised as a result of this acquisition is attributable to the expected synergies mentioned above and is not tax deductible.
Since the date of inclusion of the acquired refractory business in the Consolidated Financial Statements, revenues have increased by €25.8 million, Adjusted
EBITA has increased by €2.8 million and net income has increased by €0.6 million. The acquired refractory business forms part of the Steel reportable
segment.
Acquisition of Jinan New Emei
In January 2023, the Group signed a share purchase agreement stipulating its acquisition of 65% of the shares of Jinan New Emei Industries Co Ltd. (‘Jinan
New Emei’), China. Jinan New Emei owns 100% of the shares of Jinan Emei Metallurgical Materials Co Ltd (‘JEMM’), China, which were also acquired in the
scope of this acquisition. The acquisition was closed on 26 April 2023 which is the acquisition date.
The acquired companies are leading manufacturers of refractory slide gate plates and systems, nozzles and mixes for steel flow control applications serving
customers in the Steel segment. The recently commissioned state-of-the-art and highly automated plant in Laiwu, Shandong province, is a major part of the
acquisition.
The acquisition enables the Group to expand its flow control product range and its solutions contract offering in the Chinese domestic market, both of which
are key strategic priorities. Moreover, the acquisition gives access to substantial new customer relationships in China and deliver additional production capacity
for increasing supply of refractories in both China and the wider East Asia region.
The consideration payable in cash amounts to €22.9 million. Thereof an amount of €19.8 million was paid upon closing of the acquisition. The remaining
amount of €3.1 million is a liability towards the former owner which reflects deferred cash consideration and estimated post-closing adjustments related to
working capital and net debt, payable one year after the closing date.
Notes continued
in € million
Inventories
Property plant and equipment and other intangible assets
Intangible assets: Customer relationships
Intangible assets: prepayments on mining rights
Trade and other receivables (gross contractual amounts: €42.2 million)
Cash and cash equivalents
Total assets acquired
Trade and other liabilities
Lease Liabilities
Provisions and deferred tax liabilities
Borrowings
Total liabilities assumed
Net identifiable assets acquired
Plus: net decrease in non-controlling interests1)
Goodwill
Consideration
30.1
0.0
0.0
42.7
38.8
0.1
111.7
53.3
9.9
1.6
19.7
84.5
27.2
17.5
106.9
132.4
8.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
132.4
47.6
106.9
8.0
42.7
38.8
0.1
244.1
53.3
9.9
1.6
19.7
84.5
159.6
68.8
96.8
325.2
55.1
270.0
Consideration paid, net of cash acquired for purposes of the Consolidated Statement of
Cash Flows
Equity shares issued and transferred
1) The net decrease in non-controlling interests is explained below.
The fair value of the customer relationships was measured using the multi-period excess earnings method. Under this method, the fair value of the customer
relationships is calculated by determining the present value of earnings after tax attributable to the acquired companies’ existing customers. The customer
relationships in the Industrial segment are amortised over the estimated useful life of 10 years, while the customer relationships in the Steel segment are
amortised over the estimated useful life of 20 years.
The goodwill recognised as a result of this acquisition is attributable to the expected synergies mentioned above and is not tax deductible.
The Group measures goodwill as the excess of RHI Magnesita N.V.’s share in the consideration transferred plus non-controlling interests over the acquired
identifiable net assets. RHI Magnesita N.V.’s share in the consideration transferred amounts to €189.2 million which has been determined on the basis of its
calculated ownership interests in Dalmia OCL and DSR under a ‘look-through’ approach immediately after the share swap. Accordingly, RHI Magnesita N.V.’s
share of the consideration attributable to Dalmia OCL amounts to 60.11%, whereas its share of the consideration attributable to DSR amounts to 30.66%.
Consistent with the ‘look-through’ approach the Group recognises non-controlling interests for this acquisition amounting to €67.2 million which were
measured at the calculated share in Dalmia OCL’s and DSR’s net assets attributable to the non-controlling shareholders (39.89% for Dalmia OCL and 69.34%
for DSR). The consideration transferred attributable to the non-controlling shareholders amounting to €136.0 million is eliminated against non-controlling
interests. Both the recognition and the elimination have decreased non-controlling interests on acquisition by €68.8 million.
The impact of the share swap on the non-controlling interests in RHI Magnesita India Ltd. is described in Note (26).
Since the date of inclusion of the acquired companies in the Group’s Consolidated Financial Statements, revenues have increased by €115.3 million, Adjusted
EBITA has increased by €9.5 million and net income has decreased by €2.8 million. The acquired companies form part of the Steel and Industrial reportable
segments.
Acquisition of Hi-Tech
In October 2022, the Group signed an agreement stipulating its acquisition of the refractory business of Hi-Tech Chemicals Ltd (‘Hi-Tech'), India, via an asset
deal. The acquisition was closed on 31 January 2023 which is the acquisition date.
Hi-Tech is a leading specialty refractory producer in India engaged in the business of manufacturing and selling of premium flow control products like ISO,
slide-gate plates, shrouds, plugs apart from castables, nozzle opening compound or tundish monolithics with a focus on customers in the Steel segment. Hi-
Tech operates a state-of-the-art manufacturing facility in the city of Jamshedpur, India.
This acquisition enables the Group to expand its presence and participate in the high growth refractory market in India and the wider region considering a
forecast steel production growth in India of 12% per annum and a compound annual growth rate of 7-8% until 2030. Through the acquisition the Group can
expand its flow control product offering and enlarge its production capacities based on a low cost and semi-automised production. Moreover, substantial
synergies are expected through economies of scale and additional production capacities for a strategic market segment.
The cash consideration paid upon closing of the acquisition amounts to €87.0 million.
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FINANCIAL STATEMENTS
Notes continued
The following table shows the final amounts recognised for each major class of assets and liabilities and the fair value adjustments as a result of the acquisition:
in € million
Property plant and equipment
Intangible assets: Customer relationships
Other intangible assets
Inventories
Trade and other receivables (gross contractual amounts: €64.8 million)
Cash and cash equivalents
Total assets acquired
Trade and other liabilities
Borrowings
Total liabilities assumed
Net identifiable assets acquired
Less: Non-controlling interests
Goodwill
Consideration
Consideration paid, net of cash acquired for purposes of the Consolidated Statement of
Cash Flows
Liability towards former owner
book value
fair value
adjustments
(adjusted) value
19.3
0.0
4.8
16.4
64.5
5.7
110.7
66.4
15.2
81.6
29.1
0.3
5.9
0.0
(0.3)
(3.9)
0.0
2.0
2.7
0.0
2.7
(0.7)
19.6
5.9
4.8
16.1
60.6
5.7
112.7
69.1
15.2
84.3
28.4
(9.9)
4.4
22.9
14.1
3.1
The fair value of the customer relationships was measured using the multi-period excess earnings method. Under this method, the fair value of the customer
relationships is calculated by determining the present value of earnings after tax attributable to the acquired companies’ existing customers. The customer
relationships are amortised over the estimated useful life of around eight years.
The goodwill recognised as a result of this acquisition is attributable to synergies resulting from the integration of the acquired companies into the existing
refractories business in China and is not tax deductible.
The Group recognises non-controlling interests for this acquisition measured at the present ownership instruments’ proportionate share in Jinan New Emei’s
net assets. These were derecognised to zero in line with the Group’s accounting policy related to fixed term or puttable non-controlling interests, see Note (3).
Since the date of inclusion of the acquired companies in the Consolidated Financial Statements, revenues have increased by €49.3 million, Adjusted EBITA
has decreased by €1.1 million and net income has decreased by €0.9 million. Had the inclusion of the acquired companies taken place as of 1 January 2023,
revenues would have increased by €74.8 million, Adjusted EBITA would have increased by €0.1 million and net income would have decreased by €1.7 million.
The acquired companies form part of the Steel reportable segment.
The Group has also signed a commitment to purchase the remaining shares (35%) of Jinan New Emei in exchange for a contingent consideration. The
purchase may be executed no earlier than three years after the closing date and no later than four years after the closing date. The contingent consideration is
calculated based on an agreed multiple of the average annual EBITDA delivered by Jinan New Emei over the three-year period from 2023 to 2025 (assuming
that the purchase is executed in 2026), its future net debt and its future working capital compared to a target working capital. Due to a contractual cap the
contingent consideration cannot exceed an amount equivalent to €127.8 million (CNY 1 billion).
For this contingent consideration on the closing date the Group recognised a financial liability amounting to €31.5 million, subsequently measured at fair value
through profit or loss and payable in 2026 at the earliest. The Group has concluded, based on the terms and pricing of the commitment, that the risks and
rewards of ownership associated with the outstanding shares have not been transferred to the Group; refer to Note (3).
Acquisition of Dalmia GSB
In March 2023, the Group signed an agreement stipulating its acquisition of 100% of the shares of Dalmia GSB Refractories GmbH (‘Dalmia GSB’), Germany.
The acquisition was closed on 28 April 2023 which is the acquisition date.
Dalmia GSB is a leading supplier of monolithic lances and other precast products to European steel customers for use in the desulphurisation and
homogenisation of molten steel, based in Bochum, Germany.
The acquisition enables the Group to expand its product range offered to customers in the Steel segment and to gain a market share in the European lances
market. Moreover, attractive potential synergies are expected to be realised through the inclusion of additional products within the Group’s heat management
solutions offering and from cross-selling, procurement and logistics benefits.
The consideration paid in cash amounts to €13.1 million. Additionally, the Group repaid borrowings on behalf of Dalmia GSB in the amount of €7.2 million upon
closing of the acquisition. Since under the purchase agreement the Group is obliged to repay the borrowings, the repaid amounts are included in the net cash
outflow related to the acquisition which after deduction of the cash acquired amounts to €18.1 million.
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GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
The fair value adjustments of assets and liabilities based on the final purchase price allocation as a result of the acquisition have decreased the net assets of
Dalmia GSB from €1.6 million to €-1.7 million. The difference between the consideration paid and the (adjusted) negative net assets is allocated to goodwill
amounting to €14.8 million. The goodwill recognised as a result of this acquisition reflects the acquired market share and expected synergies mentioned above
and is allocated to the Steel segment. The goodwill is not tax deductible. The acquired company forms part of the Steel reportable segment.
Acquisition of Seven Refractories Group
In April 2023, the Group signed a share purchase agreement for the acquisition of 75.5% of the shares of Seven Refractories Deutschland GmbH, Germany
and 100% of the shares of Seven Refractories d.o.o, Slovenia. Seven Refractories d.o.o owns equity investments with non-controlling interests in six companies
located in Italy, Cyprus, the USA and the United Kingdom which were also acquired in the scope of this business combination.
The acquisition was closed on 17 July 2023 which is the acquisition date.
Seven Refractories Group is a specialist supplier of non-basic monolithic refractory mixes serving customers in the Industrial and Steel segments. Products
offered by Seven Refractories Group range from low temperature fireclay to ultra-high temperature zircon mixes, high-grade alumina mixes and sustainable
taphole clay with a low CO2 footprint. Seven Refractories Group has three production sites in Slovenia, India and the US and sales offices and service centres in
Cyprus, Germany, Italy and the United Kingdom.
The acquisition will enable the Group to offer a broader range of non-basic refractory mixes and is expected to be highly complementary to the Group's existing
non-basic portfolio. Attractive potential synergies are expected through cross-selling opportunities, logistics improvements, increased recycling usage,
procurement efficiencies and low capital intensity brownfield expansion projects. Lastly, the acquisition gives access to substantial new customer relationships
in 45 countries.
Consideration paid, net of cash acquired for purposes of the Consolidated Statement of
The consideration paid in cash amounts to €84.4 million.
Until the date the Consolidated Financial Statements were authorised for issue, the initial consolidation is incomplete because the purchase price allocation
and the measurement of assets and liabilities has not been finalised. The outstanding measurement considerations mainly relate to customer relationships and
trade receivables. The fair value adjustments of assets and liabilities based on the preliminary purchase price allocation as a result of the acquisition are the
following:
in € million
Property plant and equipment and other intangible assets
Intangible assets: Customer relationships
Loan receivables
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets acquired
Trade and other liabilities
Deferred tax liabilities
Borrowings
Total liabilities assumed
Net identifiable assets acquired
Less: Non-controlling interests
Goodwill
Consideration
Consideration paid, net of cash acquired for purposes of the Consolidated Statement of
Cash Flows
book value
fair value
adjustments
(adjusted) value
10.5
0.0
8.9
11.0
34.2
6.7
71.3
22.6
0.1
29.6
52.3
19.0
0.0
26.4
(7.6)
0.0
0.0
0.0
18.8
0.0
5.1
0.0
5.1
13.7
10.5
26.4
1.3
11.0
34.2
6.7
90.1
22.6
5.2
29.6
57.4
32.7
(3.0)
54.7
84.4
77.7
The amounts recognised for the acquired assets and liabilities on the closing date and the resulting goodwill are preliminary and subject to adjustment for a
period of one year from the closing date as allowed under the accounting standards. On finalisation of the purchase price allocation, adjustments, including tax
impacts, if any, will be reflected against goodwill. The initial accounting for this acquisition including the purchase price allocation is expected to be finalised by
the end of June 2024.
The following table shows the final amounts recognised for each major class of assets and liabilities and the fair value adjustments as a result of the acquisition:
Trade and other receivables (gross contractual amounts: €64.8 million)
Notes continued
in € million
Property plant and equipment
Intangible assets: Customer relationships
Other intangible assets
Inventories
Cash and cash equivalents
Total assets acquired
Trade and other liabilities
Borrowings
Total liabilities assumed
Net identifiable assets acquired
Less: Non-controlling interests
Goodwill
Consideration
Cash Flows
Liability towards former owner
book value
(adjusted) value
fair value
adjustments
19.3
0.0
4.8
16.4
64.5
5.7
110.7
66.4
15.2
81.6
29.1
0.3
5.9
0.0
(0.3)
(3.9)
0.0
2.0
2.7
0.0
2.7
(0.7)
19.6
5.9
4.8
16.1
60.6
5.7
112.7
69.1
15.2
84.3
28.4
(9.9)
4.4
22.9
14.1
3.1
The fair value of the customer relationships was measured using the multi-period excess earnings method. Under this method, the fair value of the customer
relationships is calculated by determining the present value of earnings after tax attributable to the acquired companies’ existing customers. The customer
relationships are amortised over the estimated useful life of around eight years.
The goodwill recognised as a result of this acquisition is attributable to synergies resulting from the integration of the acquired companies into the existing
refractories business in China and is not tax deductible.
The Group recognises non-controlling interests for this acquisition measured at the present ownership instruments’ proportionate share in Jinan New Emei’s
net assets. These were derecognised to zero in line with the Group’s accounting policy related to fixed term or puttable non-controlling interests, see Note (3).
Since the date of inclusion of the acquired companies in the Consolidated Financial Statements, revenues have increased by €49.3 million, Adjusted EBITA
has decreased by €1.1 million and net income has decreased by €0.9 million. Had the inclusion of the acquired companies taken place as of 1 January 2023,
revenues would have increased by €74.8 million, Adjusted EBITA would have increased by €0.1 million and net income would have decreased by €1.7 million.
The acquired companies form part of the Steel reportable segment.
The Group has also signed a commitment to purchase the remaining shares (35%) of Jinan New Emei in exchange for a contingent consideration. The
purchase may be executed no earlier than three years after the closing date and no later than four years after the closing date. The contingent consideration is
calculated based on an agreed multiple of the average annual EBITDA delivered by Jinan New Emei over the three-year period from 2023 to 2025 (assuming
that the purchase is executed in 2026), its future net debt and its future working capital compared to a target working capital. Due to a contractual cap the
contingent consideration cannot exceed an amount equivalent to €127.8 million (CNY 1 billion).
For this contingent consideration on the closing date the Group recognised a financial liability amounting to €31.5 million, subsequently measured at fair value
through profit or loss and payable in 2026 at the earliest. The Group has concluded, based on the terms and pricing of the commitment, that the risks and
rewards of ownership associated with the outstanding shares have not been transferred to the Group; refer to Note (3).
Acquisition of Dalmia GSB
In March 2023, the Group signed an agreement stipulating its acquisition of 100% of the shares of Dalmia GSB Refractories GmbH (‘Dalmia GSB’), Germany.
The acquisition was closed on 28 April 2023 which is the acquisition date.
Dalmia GSB is a leading supplier of monolithic lances and other precast products to European steel customers for use in the desulphurisation and
homogenisation of molten steel, based in Bochum, Germany.
The acquisition enables the Group to expand its product range offered to customers in the Steel segment and to gain a market share in the European lances
market. Moreover, attractive potential synergies are expected to be realised through the inclusion of additional products within the Group’s heat management
solutions offering and from cross-selling, procurement and logistics benefits.
The preliminary fair value of the customer relationships was measured using the multi-period excess earnings method. Under this method, the fair value of the
customer relationships is calculated by determining the present value of earnings after tax attributable to the acquired companies’ existing customers. The
customer relationships are amortised over the estimated useful life of 15 years.
The consideration paid in cash amounts to €13.1 million. Additionally, the Group repaid borrowings on behalf of Dalmia GSB in the amount of €7.2 million upon
closing of the acquisition. Since under the purchase agreement the Group is obliged to repay the borrowings, the repaid amounts are included in the net cash
outflow related to the acquisition which after deduction of the cash acquired amounts to €18.1 million.
The preliminary goodwill recognised as a result of this acquisition is attributable to the synergies mentioned above and is not tax deductible.
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FINANCIAL STATEMENTS
Notes continued
The Group recognises non-controlling interests for this acquisition measured at the present ownership instruments’ proportionate share in the acquired
companies’ net assets.
Since the date of inclusion of the acquired companies in the Consolidated Financial Statements, revenues have increased by €41.8 million, Adjusted EBITA has
increased by €0.9 million and net income has decreased by €0.5 million. Had the inclusion of the acquired companies taken place as of 1 January 2023,
revenues would have increased by €94.2 million and net income would have decreased by €1.6 million. The acquired companies form part of the Steel and
Industrial reportable segments.
Acquisition of P-D Refractories
In August 2023, the Group signed a purchase agreement for the acquisition of the refractory business of Wetro GmbH (‘Wetro'), Germany, via an asset deal, of
100% of the shares of P-D Refractories GmbH, Germany, and 86.77% of the shares of P-D Refractories CZ a.s., Czech Republic. P-D Refractories CZ a.s. owns
50% of the shares of P-D Kremen d.o.o, Slovenia, which were also acquired in the scope of this business combination. P-D Kremen d.o.o unlike the other P-D
companies is a joint venture under IFRS 11 and the Group therefore accounts for the investment in this company under the equity method.
The acquisition was closed on 2 October 2023 which is the acquisition date.
P-D Refractories is a producer of high-quality alumina-based refractories for industrial applications in process industries, with a leading market position in the
glass and aluminium sectors. Previously part of the Preiss-Daimler Group, the assets acquired include refractory plants in Germany and Czech Republic and
clay, quartzite and silica raw material sites in Czech Republic and Slovenia.
The acquisition will increase the Group’s capabilities in alumina-based refractories and its presence in process industries, where the Group had been under-
represented compared to other customer sectors. Substantial synergies are expected to be generated through access to new customers and cross-selling
opportunities, production network and logistics efficiencies, vertical integration benefits, recycling, technology transfer and procurement savings.
The consideration paid in cash amounts to €44.5 million. Additionally, the Group repaid borrowings on behalf of P-D Refractories GmbH in the amount of
€22.3 million upon closing of the acquisition. Since under the purchase agreement the Group is obliged to repay the borrowings, the repaid amounts are
included in the net cash outflow related to the acquisition.
Until the date the Consolidated Financial Statements were authorised for issue, the initial consolidation is incomplete because the purchase price allocation
and the measurement of assets and liabilities has not been finalised. The outstanding measurement considerations mainly relate to property, plant and
equipment and inventories. The fair value adjustments of assets and liabilities based on the preliminary purchase price allocation as a result of the acquisition
are the following:
in € million
Property plant and equipment and Investments
Deferred tax assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets acquired
Trade and other liabilities
Other provisions
Provisions for pensions
Deferred tax liabilities
Borrowings
Total liabilities assumed
Net identifiable assets acquired
Less: Non-controlling interests
Bargain purchase gain
Consideration
Consideration paid less cash acquired plus repaid borrowings for purposes of the
Consolidated Statement of Cash Flows
book value
fair value
adjustments
(adjusted) value
53.2
0.0
81.7
38.2
3.6
176.7
41.9
3.1
14.5
1.3
28.3
89.1
87.6
(32.5)
10.5
(12.6)
0.0
0.0
(34.6)
0.0
0.0
(3.2)
(1.3)
0.0
(4.5)
(30.1)
20.7
10.5
69.1
38.2
3.6
142.1
41.9
3.1
11.3
0.0
28.3
84.6
57.5
(5.5)
(7.5)
44.5
63.2
The amounts recognised for the acquired assets and liabilities on the closing date and the resulting bargain purchase gain are preliminary and subject to
adjustment for a period of one year from the closing date as allowed under the accounting standards. On finalisation of the purchase price allocation,
adjustments, including tax impacts, if any, will be reflected against the bargain purchase gain. The initial accounting for this acquisition including the purchase
price allocation is expected to be finalised by the end of June 2024.
The fair value adjustments of assets and liabilities based on the preliminary purchase price allocation as a result of the acquisition have decreased the net assets
of the acquired companies from €87.6 million to €57.5 million. These include the devaluation of obsolete inventories, an adjustment of the acquired fixed
assets’ carrying amount and the impact from the remeasurement of assumed provisions for pensions. Taking into account these adjustments and the respective
2 3 6
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GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
Notes continued
Property plant and equipment and Investments
are the following:
in € million
Deferred tax assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets acquired
Trade and other liabilities
Other provisions
Provisions for pensions
Deferred tax liabilities
Borrowings
Total liabilities assumed
Net identifiable assets acquired
Less: Non-controlling interests
Bargain purchase gain
Consideration
The Group recognises non-controlling interests for this acquisition measured at the present ownership instruments’ proportionate share in the acquired
companies’ net assets.
tax impacts the acquisition has resulted in the recognition of a preliminary bargain purchase gain amounting to €7.5 million within other income. This gain
mainly reflects the expected tax benefits resulting from the future reversal of temporary differences associated with the mentioned adjustments.
Since the date of inclusion of the acquired companies in the Consolidated Financial Statements, revenues have increased by €41.8 million, Adjusted EBITA has
increased by €0.9 million and net income has decreased by €0.5 million. Had the inclusion of the acquired companies taken place as of 1 January 2023,
revenues would have increased by €94.2 million and net income would have decreased by €1.6 million. The acquired companies form part of the Steel and
Industrial reportable segments.
Acquisition of P-D Refractories
In August 2023, the Group signed a purchase agreement for the acquisition of the refractory business of Wetro GmbH (‘Wetro'), Germany, via an asset deal, of
100% of the shares of P-D Refractories GmbH, Germany, and 86.77% of the shares of P-D Refractories CZ a.s., Czech Republic. P-D Refractories CZ a.s. owns
50% of the shares of P-D Kremen d.o.o, Slovenia, which were also acquired in the scope of this business combination. P-D Kremen d.o.o unlike the other P-D
companies is a joint venture under IFRS 11 and the Group therefore accounts for the investment in this company under the equity method.
The acquisition was closed on 2 October 2023 which is the acquisition date.
P-D Refractories is a producer of high-quality alumina-based refractories for industrial applications in process industries, with a leading market position in the
glass and aluminium sectors. Previously part of the Preiss-Daimler Group, the assets acquired include refractory plants in Germany and Czech Republic and
clay, quartzite and silica raw material sites in Czech Republic and Slovenia.
The Group recognises non-controlling interests for this acquisition measured at the present ownership instruments’ proportionate share in P-D Refractories CZ
a.s.’s net assets.
Since the date of inclusion of the acquired companies in the Consolidated Financial Statements, revenues have increased by €32.3 million, Adjusted EBITA
has decreased by €0.6 million and net income has decreased by €1.7 million. Had the inclusion of the acquired companies taken place as of 1 January 2023,
revenues would have increased by €164.1 million and net income would have decreased by €1.0 million. The acquired companies mainly form part of the
Industrial reportable segment.
43. Transactions with related parties
Related companies include subsidiaries that are not consolidated, joint ventures, associates and MSP Foundation, Liechtenstein, as a shareholder of RHI
Magnesita N.V., since it exercises significant influence based on its shareholding of more than 25% in RHI Magnesita N.V. The personnel welfare foundation of
Stopinc AG, Switzerland, as well as Chestnut Beteiligungs GmbH, Germany and FEWI Beteiligungs GmbH, Germany (shareholders of the Group, which are
related to a director) are considered related companies.
Related persons are persons having authority and responsibility for planning, directing and controlling the activities of the Group (key management personnel)
and their close family members. Key management personnel comprises members of the Board of Directors of RHI Magnesita N.V. and the Executive
Management Team (EMT).
The acquisition will increase the Group’s capabilities in alumina-based refractories and its presence in process industries, where the Group had been under-
represented compared to other customer sectors. Substantial synergies are expected to be generated through access to new customers and cross-selling
opportunities, production network and logistics efficiencies, vertical integration benefits, recycling, technology transfer and procurement savings.
Related companies
In 2023 and 2022, the Group conducted the following transaction with its related companies:
The consideration paid in cash amounts to €44.5 million. Additionally, the Group repaid borrowings on behalf of P-D Refractories GmbH in the amount of
€22.3 million upon closing of the acquisition. Since under the purchase agreement the Group is obliged to repay the borrowings, the repaid amounts are
included in the net cash outflow related to the acquisition.
Until the date the Consolidated Financial Statements were authorised for issue, the initial consolidation is incomplete because the purchase price allocation
and the measurement of assets and liabilities has not been finalised. The outstanding measurement considerations mainly relate to property, plant and
equipment and inventories. The fair value adjustments of assets and liabilities based on the preliminary purchase price allocation as a result of the acquisition
book value
(adjusted) value
fair value
adjustments
53.2
0.0
81.7
38.2
3.6
176.7
41.9
3.1
14.5
1.3
28.3
89.1
87.6
(32.5)
10.5
(12.6)
0.0
0.0
(34.6)
0.0
0.0
(3.2)
(1.3)
0.0
(4.5)
(30.1)
20.7
10.5
69.1
38.2
3.6
142.1
41.9
3.1
11.3
0.0
28.3
84.6
57.5
(5.5)
(7.5)
44.5
63.2
in € million
Revenue from the sale of goods and services
Purchase of raw materials
Interest income
Trade liabilities
Joint ventures
Associates
2023
2.2
5.5
0.0
1.0
2022
0.7
4.0
0.0
0.5
2023
0.0
0.0
0.0
0.0
2022
0.0
0.0
0.7
0.0
In 2023 and 2022, no transactions were carried out between the Group and MSP Foundation, FEWI Beteiligungs GmbH or Chestnut Beteiligungs GmbH, with
the exception of the dividend paid.
A service relationship with respect to the company pension scheme of the employees of Stopinc AG exists between the personnel welfare foundation of
Stopinc AG and the fully consolidated subsidiary Stopinc AG. Stopinc AG makes contribution payments to the plan assets of the foundation to cover pension
obligations. The pension plan is recognised as a defined benefit plan and is included in Note (29). At 31 December 2023, no current accounts receivable existed
(2022: €0.0 million). In the past reporting period, employer contributions amounting to €0.6 million (2022: €0.6 million) were made to the personnel welfare
foundation. At 31 December 2023, a net asset from overfunded pension plans of €1.7 million (2022: €1.7 million) is recognised.
Related persons
Remuneration of key management personnel of the Group comprises the remuneration of the active Board of Directors and the EMT.
in € million
Executive Directors and EMT
Short-term employee benefits
Share-based payments
Total
Non-Executive Directors1)
2023
2022
9.7
6.4
16.1
1.2
7.9
4.6
12.5
1.1
(1) Compensation paid to Non-Executive Directors mainly reflects fees for services as Directors.
Employee representatives acting as Non-Executive Directors do not receive additional compensation for these services and are not included in the above table.
Share dealing reports of persons discharging managerial responsibilities are published on the website of RHI Magnesita N.V. and announced via regulatory
news services. The Group maintains Directors’ & Officers’ liability insurance for the Board of Directors and Company officers.
The Group and a close relative of a Non-Executive Director agreed a non-remunerated consultancy agreement to advise the Group on the economic and
political framework in countries in which it does not yet have strong business links.
Consideration paid less cash acquired plus repaid borrowings for purposes of the
Consolidated Statement of Cash Flows
The amounts recognised for the acquired assets and liabilities on the closing date and the resulting bargain purchase gain are preliminary and subject to
adjustment for a period of one year from the closing date as allowed under the accounting standards. On finalisation of the purchase price allocation,
adjustments, including tax impacts, if any, will be reflected against the bargain purchase gain. The initial accounting for this acquisition including the purchase
price allocation is expected to be finalised by the end of June 2024.
The fair value adjustments of assets and liabilities based on the preliminary purchase price allocation as a result of the acquisition have decreased the net assets
of the acquired companies from €87.6 million to €57.5 million. These include the devaluation of obsolete inventories, an adjustment of the acquired fixed
assets’ carrying amount and the impact from the remeasurement of assumed provisions for pensions. Taking into account these adjustments and the respective
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FINANCIAL STATEMENTS
Notes continued
44. Material events after the reporting date
After the reporting date on 31 December 2023, there were no events of special significance which may have a material effect on the financial position and
performance of the Group.
2 3 8
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Notes continued
44. Material events after the reporting date
performance of the Group.
After the reporting date on 31 December 2023, there were no events of special significance which may have a material effect on the financial position and
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
Statement of the Board of Directors
Statement pursuant to Article 5:25c, paragraph 2, subsection c. of the Dutch Financial Markets Supervision Act (“Wet op het financieel toezicht”).
The Consolidated Financial Statements for the year ended 31 December 2023, have been prepared on a going concern basis and in accordance with IFRSs, as
issued by the IASB and interpretations issued by the IFRIC, and as endorsed by the European Union (EU).
To our knowledge,
• the Consolidated Financial Statements referred to above give a true and fair view of the assets, liabilities, financial position, and profit of RHI
Magnesita N.V. and the undertakings included in the consolidation as a whole; and
• the Annual Report for RHI Magnesita Group (comprising RHI Magnesita NV and its affiliated companies whose details are included in its Financial
Statements) for the year ended 31 December 2023 gives a true and fair view of the state of affairs as of the balance sheet date, the development and
course of business during the financial year, and that the Annual Report describes the material risks that the RHI Magnesita Group faces.
Vienna, 28 February 2024
Executive Directors
Stefan Borgas
Non-Executive Directors
Herbert Cordt
Janet Ashdown
Ian Botha
John Ramsay
David Schlaff
Stanislaus Prinz zu Sayn-Wittgenstein Berleburg
Janice “Jann” Brown
Karl Sevelda
Wolfgang Ruttenstorfer
Employee Representative Directors
Karin Garcia
Michael Schwarz
Marie-Hélène Ametsreiter
Martin Kowatsch
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FINANCIAL STATEMENTS
Company Financial Statements of RHI Magnesita N.V.
Company Balance Sheet as at 31 December 2023
(before appropriation of result)
in € million
ASSETS
Non-current assets
Property, plant and equipment
Non-current financial assets
Securities
Deferred tax assets
Total non-current assets
Current assets
Receivables from group companies
Other current receivables
Cash and cash equivalents
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Treasury shares
Additional paid-in capital
Legal and mandatory reserves
Other reserves
Result for the period
Shareholders' Equity
Non-current liabilities
Non-current liabilities
Current liabilities
Current liabilities
Total liabilities
Total equity and liabilities
Note
31.12.2023
31.12.2022
(A)
(B)
(C)
(D)
(E)
(F)
(L)
(G)
(H)
0.3
1,196.2
0.5
6.9
1,203.9
8.6
1.3
0.8
10.7
0.2
943.3
0.5
10.8
954.8
52.2
0.4
1.6
54.2
1,214.6
1,009.0
49.5
(110.7)
361.3
86.3
650.7
164.6
49.5
(116.1)
361.3
86.3
464.5
155.7
1,201.7
1,001.2
0.3
0.2
12.6
12.9
7.6
7.8
1,214.6
1,009.0
Company Statement of Profit or Loss for the period 1 January 2023 to 31 December 2023
in € million
General and administrative expenses
Result before taxation
Net financial result
Loss before income tax
Income tax
Net result from investments
Net result for the period
2 4 0
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Note
(I)
(J)
(K)
(L)
2023
(29.7)
(29.7)
(0.4)
(30.1)
(3.3)
198.0
164.6
2022
(22.0)
(22.0)
0.0
(22.0)
(18.8)
196.5
155.7
Company Financial Statements of RHI Magnesita N.V.
Company Balance Sheet as at 31 December 2023
(before appropriation of result)
Movements in Shareholders’ Equity
Note
31.12.2023
31.12.2022
Legal and mandatory reserves
Other
reserves
in € million
Share
capital
Treasury
shares
Additional
paid-in
capital
Cash flow
hedges
Currency
translation
Mandatory
reserve
Retained
earnings
Net result
Equity
attributable to
shareholders
31.12.2022
49.5
(116.1)
361.3
31.8
(148.6)
288.7
378.9
155.7
1,001.2
Appropriation of prior
year result
Net result
Share transfer / Vested
LTIP
Share-based expenses
Dividends
Net income / (expense)
recognised directly in
equity
-
-
-
-
-
-
-
-
5.4
-
-
-
-
-
-
-
-
-
31.12.2023
49.5
(110.7)
361.3
-
-
-
-
-
-
-
-
-
-
(25.8)
6.0
(14.0)
(162.6)
-
-
-
-
-
-
155.7
-
(155.7)
164.6
(5.4)
8.7
(77.7)
144.7
-
-
-
-
288.7
604.9
164.6
-
164.6
-
8.7
(77.7)
104.9
1,201.7
in € million
Share
capital
Treasury
shares
Additional
paid-in
capital
Cash flow
hedges
Currency
translation
Mandatory
reserve
Retained
earnings
Net result
Equity
attributable to
shareholders
Legal and mandatory reserves
Other
reserves
31.12.2021
49.5
(117.0)
361.3
(7.1)
(197.3)
288.7
164.7
243.1
785.9
Appropriation of prior year
result
Net result
Share transfer / Vested LTIP
Share-based expenses
Dividends
Net income / (expense)
recognised directly in
equity
-
-
-
-
-
-
-
-
0.9
-
-
-
-
-
-
-
-
-
31.12.2022
49.5
(116.1)
361.3
-
-
-
-
-
38.9
31.8
-
-
-
-
-
48.7
-
-
-
-
-
-
(148.6)
288.7
243.1
-
(0.9)
8.3
(70.5)
34.2
378.9
(243.1)
155.7
-
-
-
-
-
155.7
-
8.3
(70.5)
121.8
155.7
1,001.2
in € million
ASSETS
Non-current assets
Property, plant and equipment
Non-current financial assets
Securities
Deferred tax assets
Total non-current assets
Current assets
Receivables from group companies
Other current receivables
Cash and cash equivalents
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Treasury shares
Additional paid-in capital
Legal and mandatory reserves
Other reserves
Result for the period
Shareholders' Equity
Non-current liabilities
Non-current liabilities
Current liabilities
Current liabilities
Total liabilities
Total equity and liabilities
in € million
General and administrative expenses
Result before taxation
Net financial result
Loss before income tax
Income tax
Net result from investments
Net result for the period
Company Statement of Profit or Loss for the period 1 January 2023 to 31 December 2023
(A)
(B)
(C)
(D)
(E)
(F)
(L)
(G)
(H)
Note
(I)
(J)
(K)
(L)
0.3
1,196.2
0.5
6.9
1,203.9
8.6
1.3
0.8
10.7
49.5
(110.7)
361.3
86.3
650.7
164.6
0.2
943.3
0.5
10.8
954.8
52.2
0.4
1.6
54.2
49.5
(116.1)
361.3
86.3
464.5
155.7
1,214.6
1,009.0
1,201.7
1,001.2
0.3
0.2
12.6
12.9
7.6
7.8
1,214.6
1,009.0
2023
(29.7)
(29.7)
(0.4)
(30.1)
(3.3)
198.0
164.6
2022
(22.0)
(22.0)
0.0
(22.0)
(18.8)
196.5
155.7
240
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
2 4 1
241
FINANCIAL STATEMENTS
Notes
to the Company Financial Statements 2023
General
RHI Magnesita N.V. (the “Company”), is a public limited company incorporated under the laws of the Netherlands (naamloze vennootschap), having its official
seat (statutaire zetel) in Arnhem, the Netherlands, and its office at Kranichberggasse 6, 1120 Vienna, Austria, registered with the Dutch Trade Register under
number 68991665.
The shares of RHI Magnesita N.V. (ISIN code NL0012650360) are listed on the Main Market of the London Stock Exchange and are included in the FTSE 250
index. The Company holds a secondary listing on the Vienna Stock Exchange (Wiener Börse).
Basis of preparation
The Company Financial Statements have been prepared in accordance with the provisions of Part 9 of Book 2 of the Dutch Civil Code. The Company uses the
option of Section 362, subsection 8 of Part 9, Book 2, of the Dutch Civil Code to prepare the Company Financial Statements on the basis of the same
accounting principles as those applied for the Consolidated Financial Statements. Valuation is based on recognition and measurement requirements of
accounting standards adopted by the EU (i.e. only IFRS that is adopted for use in the EU at the date of authorisation) as explained further in the Notes to the
Consolidated Financial Statements.
Fiscal Unity
For corporate income tax purposes, RHI Magnesita N.V., Vienna Branch, acts as the head of a corporate tax group in Austria with the following companies:
•
•
•
•
•
•
•
•
RHI Magnesita GmbH
Veitscher Vertriebsgesellschaft m.b.H
Veitsch-Radex Vertriebgesellschaft m.b.H
Refractory Intellectual Property GmbH
Veitsch-Radex GmbH
Radex Vertriebsgesellschaft m.b.H
RHI Refractories Raw Material GmbH
Lokalbahn Mixnitz-St. Erhard GmbH
According to the Group and tax compensation agreement, which forms a legal requirement for the Austrian corporate tax group, tax compensation payments
within the corporate tax group are calculated based on the stand-alone method, without charging negative tax compensations. In case of a taxable profit, the
respective tax group member has to pay a tax compensation to RHI Magnesita N.V. as the head of the corporate tax group amounting to the legally applicable
corporate tax rate (24.0% for 2023). In case of a taxable loss, the respective tax group member does not receive a negative tax compensation by RHI Magnesita
N.V., but rather the taxable loss is carried forward internally and reduces the calculation base for any future tax compensation payment by the respective tax
group member to RHI Magnesita N.V. (group internal carry forward of losses). Any tax compensation payment by tax group members to RHI Magnesita N.V. is
reduced by withholding taxes paid by the respective group member, which RHI Magnesita N.V. could credit against any corporate income tax due in Austria. For
cases of termination of the corporate tax group or cases in which a tax group member leaves the corporate tax group, the group and tax compensation
agreement foresees a final tax compensation true-up.
The corporate income tax rate for the Company is 24.0% (2022: 25.0%). The effective tax rate is 2.0% (2022: 86.0%) with an income tax expense of €3.3
million (2022: €18.8 million expense) on a loss before income tax of €30.1 million (2022: €22.0 million loss). The low effective income tax rate is mainly
attributable to a substantial non-taxable income derived from investments in subsidiaries (€198.0 million). Still, the Company, as head of a fiscal unity,
consolidated the taxable results of the other unity members and recognised a tax expense of €3.3 million.
All income and expenses are settled through their intercompany (current) accounts.
Significant accounting policies
Non-current financial assets
In the Company Financial Statements, investments in Group companies are stated at net asset value, in accordance with the equity method, if the Company
effectively exercises influence of significance over the operational and financial activities of these investments. The net asset value is determined on the basis of
the accounting principles applied by the Company. In case the net asset value of an investment in a Group company is negative, any existing loans to Group
companies considered as net investment are impaired. A provision for any remaining equity deficit is recognised when an outflow of resources is probable and
can be reliably estimated.
Receivables from Group companies
Accounts receivables are measured at fair value and are subsequently measured at amortised cost, less allowance for credit losses. The carrying amount of the
accounts receivable approximates the fair value.
Net result from investments
The share in the result of investments comprises the share of the Company in the result of these investments.
2 4 2
242
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
RHI Magnesita N.V. (the “Company”), is a public limited company incorporated under the laws of the Netherlands (naamloze vennootschap), having its official
Non-current financial assets
(A) Non-current financial assets
seat (statutaire zetel) in Arnhem, the Netherlands, and its office at Kranichberggasse 6, 1120 Vienna, Austria, registered with the Dutch Trade Register under
The financial fixed assets comprise investments in:
Name and registered office of the company
RHI Magnesita Deutschland AG, Wiesbaden, Germany
RHI Refractories Raw Material GmbH, Vienna, Austria
RHI Magnesita GmbH, Vienna, Austria
The investments have developed as follows:
in € million
At beginning of year
Transactions with non-controlling interests without change of control
Changes from currency translation and cash flow hedges
Changes from defined benefit plans
Dividend distribution
Net result from investments
Balance at year-end
Country of core
activity
Germany
Austria
Austria
31.12.2023
31.12.2022
Share in %
Share in %
12.5
25.0
100.0
2023
943.3
161.0
(39.8)
(16.3)
(50.0)
198.0
1,196.2
12.5
25.0
100.0
2022
644.8
(5.2)
87.7
39.5
(20.0)
196.5
943.3
Notes
to the Company Financial Statements 2023
General
number 68991665.
Basis of preparation
Consolidated Financial Statements.
Fiscal Unity
•
•
•
•
•
•
•
•
RHI Magnesita GmbH
Veitscher Vertriebsgesellschaft m.b.H
Veitsch-Radex Vertriebgesellschaft m.b.H
Refractory Intellectual Property GmbH
Veitsch-Radex GmbH
Radex Vertriebsgesellschaft m.b.H
RHI Refractories Raw Material GmbH
Lokalbahn Mixnitz-St. Erhard GmbH
The shares of RHI Magnesita N.V. (ISIN code NL0012650360) are listed on the Main Market of the London Stock Exchange and are included in the FTSE 250
index. The Company holds a secondary listing on the Vienna Stock Exchange (Wiener Börse).
The Company Financial Statements have been prepared in accordance with the provisions of Part 9 of Book 2 of the Dutch Civil Code. The Company uses the
option of Section 362, subsection 8 of Part 9, Book 2, of the Dutch Civil Code to prepare the Company Financial Statements on the basis of the same
accounting principles as those applied for the Consolidated Financial Statements. Valuation is based on recognition and measurement requirements of
accounting standards adopted by the EU (i.e. only IFRS that is adopted for use in the EU at the date of authorisation) as explained further in the Notes to the
For corporate income tax purposes, RHI Magnesita N.V., Vienna Branch, acts as the head of a corporate tax group in Austria with the following companies:
According to the Group and tax compensation agreement, which forms a legal requirement for the Austrian corporate tax group, tax compensation payments
within the corporate tax group are calculated based on the stand-alone method, without charging negative tax compensations. In case of a taxable profit, the
respective tax group member has to pay a tax compensation to RHI Magnesita N.V. as the head of the corporate tax group amounting to the legally applicable
corporate tax rate (24.0% for 2023). In case of a taxable loss, the respective tax group member does not receive a negative tax compensation by RHI Magnesita
N.V., but rather the taxable loss is carried forward internally and reduces the calculation base for any future tax compensation payment by the respective tax
group member to RHI Magnesita N.V. (group internal carry forward of losses). Any tax compensation payment by tax group members to RHI Magnesita N.V. is
reduced by withholding taxes paid by the respective group member, which RHI Magnesita N.V. could credit against any corporate income tax due in Austria. For
cases of termination of the corporate tax group or cases in which a tax group member leaves the corporate tax group, the group and tax compensation
agreement foresees a final tax compensation true-up.
The corporate income tax rate for the Company is 24.0% (2022: 25.0%). The effective tax rate is 2.0% (2022: 86.0%) with an income tax expense of €3.3
million (2022: €18.8 million expense) on a loss before income tax of €30.1 million (2022: €22.0 million loss). The low effective income tax rate is mainly
attributable to a substantial non-taxable income derived from investments in subsidiaries (€198.0 million). Still, the Company, as head of a fiscal unity,
consolidated the taxable results of the other unity members and recognised a tax expense of €3.3 million.
All income and expenses are settled through their intercompany (current) accounts.
Significant accounting policies
Non-current financial assets
In the Company Financial Statements, investments in Group companies are stated at net asset value, in accordance with the equity method, if the Company
effectively exercises influence of significance over the operational and financial activities of these investments. The net asset value is determined on the basis of
the accounting principles applied by the Company. In case the net asset value of an investment in a Group company is negative, any existing loans to Group
companies considered as net investment are impaired. A provision for any remaining equity deficit is recognised when an outflow of resources is probable and
Accounts receivables are measured at fair value and are subsequently measured at amortised cost, less allowance for credit losses. The carrying amount of the
can be reliably estimated.
Receivables from Group companies
accounts receivable approximates the fair value.
Net result from investments
The share in the result of investments comprises the share of the Company in the result of these investments.
242
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
2 4 3
243
FINANCIAL STATEMENTS
Notes
to the Company Financial Statements 2023
The following list, prepared in accordance with the relevant legal requirements (Dutch Civil Code, Book 2, Sections 379), shows all companies in which RHI
Magnesita N.V. holds a direct or indirect share of at least 20%:
31.12.2023
31.12.2022
Share-
holder
Share in
%
Share-
holder
Share in
%
39.
28.
3.
53.
53.
99.
53.
99.
103.
39.
104.
54.
12.,78.
55.
49.
39.
76.
103.
103.
20.
7.,35.
24.,103.
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
51.0
100.0
100.0
65.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
39.
28.
3.
-
53.
99.
53.
99.
100.0
100.0
100.0
0.0
100.0
100.0
100.0
100.0
103.
100.0
39.
100.0
104.
100.0
54.
12.
55.
-
39.
76.
103.
103.
51.0
100.0
99.9
0.0
83.3
100.0
100.0
100.0
20.
100.0
7.
100.0
24.,103.
100.0
29.,103.
100.0
29.,103.
100.0
22.,35.
100.0
3.
100.0
22.
40.
100.0
100.0
103.
100.0
3.
100.0
3.,4.
100.0
35.
100.0
3.
100.0
22.
40.
100.0
100.0
103.
100.0
3.
100.0
3.,4.
100.0
22.
100.0
22.
100.0
20.,103.
100.0
20.,103.
100.0
103.
100.0
7.
100.0
21.,49.
100.0
54.
86.8
103.
100.0
7.
100.0
49.
100.0
-
0.0
Ser. no.
Name and registered office of the company
RHI Magnesita N.V., Arnhem, Netherlands
Agellis Group AB, Lund, Sweden
Baker Refractories Holding Company, Delaware, USA
Baker Refractories I.C., Inc., Delaware, USA
Dalmia GSB Refractories GmbH, Bochum, Germany
Didier Société Industrielle de Production et de Construction - "D.S.I.P.C.",
Valenciennes, France
Dutch Brasil Holding B.V., Arnhem, Netherlands
Dutch MAS B.V., Arnhem, Netherlands
Dutch US Holding B.V., Arnhem, Netherlands
Feuerfestwerk Bad Hönningen GmbH, Wiesbaden, Germany
Foreign Enterprise “VERA", Dnepropetrovsk, Ukraine
GIX International Limited, Dinnington, United Kingdom
Horn & Co. RHIM Minerals Recovery GmbH, Siegen, Germany
Indresco U.K. Limited, Dinnington, United Kingdom
Intermetal Engineers (India) Private Limited, Mumbai, India
Jinan New Emei Industries Co. Ltd., Jinan, PR China
Liaoning RHI Jinding Magnesia Co., Ltd, Dashiqiao, PR China 1)
Lokalbahn Mixnitz-St. Erhard GmbH, Vienna, Austria
LWB Refractories Hagen GmbH, Wiesbaden, Germany
LWB Refractories Holding France S.A.S., Valenciennes, France
Magnesita Asia Refractory Holding, Limited, Hong Kong, Hong Kong
Magnesita Finance S.A., Luxembourg, Luxembourg
Magnesita Malta Finance Ltd., St. Julians, Malta
Magnesita Malta Holding Ltd., St. Julians, Malta
Magnesita Mineração S.A., Brumado, Brazil
Magnesita Refractories (Canada) Inc., Montreal, Canada
Magnesita Refractories (Dalian) Co., Ltd., Dalian, PR China
Magnesita Refractories Company, York, USA
Magnesita Refractories GmbH, Wiesbaden, Germany
Magnesita Refractories Limited, Dinnington, United Kingdom
Magnesita Refractories México, S.A. de C.V., Monterrey, Mexico
Magnesita Refractories Middle East Free Zone Establishment, Dubai, United Arab
Emirates
Magnesita Refractories S.C.S., Valenciennes, France
Magnesita Refractories S.R.L., Milano, Italy
Magnesita Refratários S.A., Contagem, Brazil
Magnesita Resource (Anhui) Company Ltd., Chizhou, PR China
P-D Refractories CZ a.s., Velké Opatovice, Czech Republic
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
2 4 4
244
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
R H I M A G N E S I T A A N N U A L R E P O R T 2 0 2 3
Producción RHI México, S. de R.L. de C.V., Ramos Arizpe, Mexico
71.,104.
100.0
71.,104.
100.0
Radex Vertriebsgesellschaft m.b.H., Leoben, Austria
Rearden G Holdings Eins GmbH, Wiesbaden, Germany
Refractarios Argentinos S.A, Industrial Comercial Y Minera (I.C.M.), San Nicolás,
Argentina 2)
Refractarios Magnesita Colombia S.A.S., Sogamoso, Colombia
Refractarios Magnesita Perú S.A.C., Lima, Peru
Refractory Intellectual Property GmbH, Vienna, Austria
101.
22.
100.0
100.0
101.
22.
100.0
100.0
7.,9.,104.
100.0
7.,42.
100.0
7.,35.
7.,35.
100.0
100.0
54.
100.0
7.
100.0
7.,42.
100.0
54.
100.0
Notes
to the Company Financial Statements 2023
Ser. no.
Name and registered office of the company
RHI Magnesita N.V., Arnhem, Netherlands
Agellis Group AB, Lund, Sweden
Baker Refractories Holding Company, Delaware, USA
Baker Refractories I.C., Inc., Delaware, USA
Dalmia GSB Refractories GmbH, Bochum, Germany
Valenciennes, France
Dutch Brasil Holding B.V., Arnhem, Netherlands
Dutch MAS B.V., Arnhem, Netherlands
Dutch US Holding B.V., Arnhem, Netherlands
Didier Société Industrielle de Production et de Construction - "D.S.I.P.C.",
Feuerfestwerk Bad Hönningen GmbH, Wiesbaden, Germany
Foreign Enterprise “VERA", Dnepropetrovsk, Ukraine
GIX International Limited, Dinnington, United Kingdom
Horn & Co. RHIM Minerals Recovery GmbH, Siegen, Germany
Indresco U.K. Limited, Dinnington, United Kingdom
Intermetal Engineers (India) Private Limited, Mumbai, India
Jinan New Emei Industries Co. Ltd., Jinan, PR China
Liaoning RHI Jinding Magnesia Co., Ltd, Dashiqiao, PR China 1)
Lokalbahn Mixnitz-St. Erhard GmbH, Vienna, Austria
LWB Refractories Hagen GmbH, Wiesbaden, Germany
LWB Refractories Holding France S.A.S., Valenciennes, France
Magnesita Asia Refractory Holding, Limited, Hong Kong, Hong Kong
Magnesita Finance S.A., Luxembourg, Luxembourg
Magnesita Malta Finance Ltd., St. Julians, Malta
Magnesita Malta Holding Ltd., St. Julians, Malta
Magnesita Mineração S.A., Brumado, Brazil
Magnesita Refractories (Canada) Inc., Montreal, Canada
Magnesita Refractories (Dalian) Co., Ltd., Dalian, PR China
Magnesita Refractories Company, York, USA
Magnesita Refractories GmbH, Wiesbaden, Germany
Magnesita Refractories Limited, Dinnington, United Kingdom
Magnesita Refractories México, S.A. de C.V., Monterrey, Mexico
Emirates
Magnesita Refractories S.C.S., Valenciennes, France
Magnesita Refractories S.R.L., Milano, Italy
Magnesita Refratários S.A., Contagem, Brazil
Magnesita Resource (Anhui) Company Ltd., Chizhou, PR China
P-D Refractories CZ a.s., Velké Opatovice, Czech Republic
Magnesita Refractories Middle East Free Zone Establishment, Dubai, United Arab
Radex Vertriebsgesellschaft m.b.H., Leoben, Austria
Rearden G Holdings Eins GmbH, Wiesbaden, Germany
Refractarios Argentinos S.A, Industrial Comercial Y Minera (I.C.M.), San Nicolás,
Argentina 2)
Refractarios Magnesita Colombia S.A.S., Sogamoso, Colombia
Refractarios Magnesita Perú S.A.C., Lima, Peru
Refractory Intellectual Property GmbH, Vienna, Austria
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
31.12.2023
31.12.2022
Share-
holder
Share in
%
Share-
holder
Share in
%
39.
28.
3.
53.
53.
99.
53.
99.
103.
39.
104.
54.
55.
49.
39.
76.
103.
103.
20.
12.,78.
7.,35.
24.,103.
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
51.0
100.0
100.0
65.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
22.,35.
100.0
3.
100.0
22.
40.
100.0
100.0
103.
100.0
3.
100.0
3.,4.
100.0
39.
28.
3.
-
53.
99.
53.
99.
54.
12.
55.
-
39.
76.
103.
103.
100.0
100.0
100.0
0.0
100.0
100.0
100.0
100.0
51.0
100.0
99.9
0.0
83.3
100.0
100.0
100.0
103.
100.0
39.
100.0
104.
100.0
20.
100.0
7.
100.0
24.,103.
100.0
35.
100.0
3.
100.0
22.
40.
100.0
100.0
103.
100.0
3.
100.0
3.,4.
100.0
29.,103.
100.0
29.,103.
100.0
22.
100.0
22.
100.0
20.,103.
100.0
20.,103.
100.0
103.
100.0
7.
100.0
21.,49.
100.0
54.
86.8
103.
100.0
7.
100.0
49.
100.0
-
0.0
101.
22.
100.0
100.0
101.
22.
100.0
100.0
7.,9.,104.
100.0
7.,42.
100.0
7.,35.
7.,35.
100.0
100.0
54.
100.0
7.
100.0
7.,42.
100.0
54.
100.0
Producción RHI México, S. de R.L. de C.V., Ramos Arizpe, Mexico
71.,104.
100.0
71.,104.
100.0
The following list, prepared in accordance with the relevant legal requirements (Dutch Civil Code, Book 2, Sections 379), shows all companies in which RHI
Magnesita N.V. holds a direct or indirect share of at least 20%:
Ser. no.
Name and registered office of the company
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.
80.
81.
82.
83.
84.
85.
86.
87.
88.
Refractory Intellectual Property GmbH & Co KG, Vienna, Austria
RHI Canada Inc., Burlington, Canada
RHI Chile S.A., Santiago, Chile
RHI Italia S.R.L., Brescia, Italy
RHI Magnesita (China) Co., Ltd., Shanghai, PR China
RHI Magnesita (Chongqing) Refractory Materials Co., Ltd. , Chongqing, PR China
RHI Magnesita Belgium NV , Evergem, Belgium
RHI Magnesita Bochum GmbH, Bochum, Germany
RHI Magnesita Deutschland AG, Wiesbaden, Germany
RHI Magnesita GmbH, Vienna, Austria
RHI Magnesita India Limited, New Delhi, India
RHI Magnesita India Refractories Limited, Rajgangpur, India
RHI Magnesita RE Limited, Guernsey, United Kingdom
RHI Magnesita Sales Germany GmbH, Wiesbaden, Germany
RHI Magnesita Seven Refractories Limited, Dseven, India
RHI Magnesita Switzerland AG, Hünenberg, Switzerland
RHI Magnesita Trading B.V., Rotterdam, Netherlands
RHI Magnesita Turkey Refrakter Ticaret Anonim Sirketi, Eskisehir, Türkiye 3)
RHI Magnesita Vietnam Company Limited, Ho Chi Minh City, Vietnam
RHI Magnesita Wetro GmbH, Puschwitz, Germany
RHI Marvo S.R.L., Bucharest, Romania
RHI Refractories (Dalian) Co., Ltd., Dalian, PR China
RHI Refractories (Site Services) Limited, Dinnington, United Kingdom
RHI Refractories Africa (PTY) LTD, Sandton, South Africa
RHI Refractories Andino, C.A., Puerto Ordaz, Venezuela
RHI Refractories Asia Pacific Pte. Ltd, Singapore, Singapore
RHI Refractories España, S.L., Lugones, Spain
RHI Refractories France SA, Valenciennes, France
RHI Refractories Ibérica, S.L., Oviedo, Spain
RHI Refractories Liaoning Co., Ltd., Bayuquan, PR China
RHI Refractories Nord AB, Stockholm, Sweden
RHI Refractories Raw Material GmbH, Vienna, Austria
RHI Refractories Site Services GmbH, Wiesbaden, Germany
RHI Refractories UK Limited, Bonnybridge, United Kingdom
RHI Refratãrios Brasil Ltda., Contagem, Brazil
RHI Trading (Dalian) Co., Ltd, Dalian, PR China
RHI Ukraina LLC, Dnepropetrovsk, Ukraine
RHI United Offices America, S.A. de C.V., Monterrey, Mexico
RHI Urmitz AG & Co. KG, Mülheim-Kärlich, Germany
RHI US Ltd., Delaware, USA
RHI Wostok Limited Liability Company, Moscow, Russia
RHI Wostok Service Limited Liability Company, Moscow, Russia
RHIM Mireco Mitterdorf GmbH, St.Barbara im Mürztal, Austria
RHI-Refmex, S.A. de C.V., Ramos Arizpe, Mexico
31.12.2023
31.12.2022
Share-
holder
Share in
%
Share-
holder
Share in
%
44.
100.0
44.,54.
100.0
104.
100.0
104.
100.0
41.,12.,104.
100.0
12.,104.
100.0
54.
39.
49.
100.0
100.0
51.0
54.
39.
49.
100.0
100.0
51.0
58.,83.
100.0
58.,83.
100.0
53.
100.0
-
0.0
1.,39.
100.0
1.,39.
100.0
1.
100.0
1.
100.0
7.,9.,104.
56.1
7.,9.,104.
55.
39.
83.
56.
100.0
100.0
100.0
100.0
-
39.
83.
-
70.2
0.0
100.0
100.0
0.0
39.,53.
100.0
39.,53.
100.0
1.,54.
100.0
18.,39.,99.
100.0
70.
54.
100.0
100.0
54.
39.
70.
-
100.0
100.0
100.0
0.0
39.,99.
100.0
39.,99.
100.0
39.,49.
100.0
78.
39.
100.0
100.0
104.
100.0
54.
100.0
39.
14.
39.
100.0
100.0
100.0
104.
100.0
54.
100.0
8.,53.
100.0
8.,53.
100.0
53.,58.,89.
100.0
89.
100.0
39.,49.
100.0
89.
100.0
89.
89.
39.
89.
100.0
100.0
66.0
100.0
1.,39.,54.
100.0
1.,39.,54.
100.0
53.
53.
100.0
100.0
53.
53.
100.0
100.0
7.,35.,104.
100.0
9.,35.
100.0
39.,49.
100.0
39.
100.0
39.,99.
100.0
39.,99.
100.0
61.,71.
100.0
61.,71.
100.0
53.,77.
100.0
53.,77.
100.0
9.
100.0
9.
100.0
39.,54.
100.0
39.,54.
100.0
39.,54.
100.0
39.,54.
100.0
13.
100.0
13.
100.0
71.,104.
100.0
71.,104.
100.0
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FINANCIAL STATEMENTS
31.12.2023
31.12.2022
Share-
holder
Share in
%
Share-
holder
Share in
%
104.
100.0
104.
100.0
92.,94.
100.0
92.
54.
76.0
100.0
54.,92.
100.0
92.
92.
92.
92.
39.
54.
54.
54.
54.
100.0
51.0
100.0
52.0
91.0
100.0
100.0
100.0
100.0
40.
100.0
-
-
-
-
-
-
-
-
39.
54.
54.
54.,100.
54.
40.
39.,54.
100.0
39.,54.
53.
53.
13.
35.
100.0
100.0
100.0
98.7
53.
53.
13.
35.
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
89.2
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
98.7
100.0
100.0
100.0
100.0
100.0
100.0
100.0
51.0
50.0
0.0
Notes
to the Company Financial Statements 2023
Ser. no.
Name and registered office of the company
Sapref AG für feuerfestes Material, Basel, Switzerland
Seven Lakeway Refractories LLC, Huron, USA
Seven Refractories (UK) Ltd, Rotherham, United Kingdom
Seven Refractories d.o.o, Divača, Slovenia
Seven Refractories Deutschland GmbH, Düsseldorf, Germany
Seven Refractories Holding, Inc., Huron, USA
Seven Refractories Limited, Nicosia, Cyprus
Seven Refractories S.r.l., Castellazzo Bormida, Italy
Sipra S.p.A., Bergamo, Italy
Sörmaş Söğüt Refrakter Malzemeleri Anonim Şirketi, Söğüt / Bilecik, Türkiye
Veitscher Vertriebsgesellschaft m.b.H., Vienna, Austria
Veitsch-Radex GmbH, Vienna, Austria
Veitsch-Radex GmbH & Co OG, Vienna, Austria
Veitsch-Radex Vertriebsgesellschaft m.b.H., Vienna, Austria
Vierte LWB Refractories Holding GmbH, Hilden, Germany
VRD Americas B.V., Arnhem, Netherlands
Zimmermann & Jansen GmbH, Wiesbaden, Germany
Dr.-Ing. Petri & Co. Unterstützungs-Gesellschaft m.b.H., Wiesbaden, Germany
Horn & Co Polska sp. z o.o., Chorzów, Poland
Mag Tec Participações Ltda., Contagem, Brazil i.l.
89.
90.
91.
92.
93.
94.
95.
96.
97.
98.
99.
100.
101.
102.
103.
104.
105.
106.
107.
108.
109.
110.
111.
112.
113.
114.
115.
116.
117.
118.
1) In accordance with IAS 32, fixed-term or puttable non-controlling interests are shown under liabilities.
2) Further shareholder is Magnesita Refratários S.A., Contagem, Brazil.
3) Further shareholders are VRD Americas B.V., Arnhem, Netherlands and Dutch MAS B.V., Arnhem, Netherlands.
i.l. in liquidation
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Magnesita Refractories Private Limited, Mumbai, India
40.,103.
100.0
40.,103.
Magnesita Refractories S.A. (Pty) Ltd., Middleburg, South Africa
29.
100.0
Minerals and Metals Recovering - Mireco Aktiebolag, Fagersta, Sweden
Mireco SARL, Entzheim, France
Mireco SH.P.K, Lebushe, Kosovo
RHI Réfractaires Algérie, Sidi Amar, Algeria
Rudgruvans Industrier Aktiebolag, Fagersta, Sweden
Equity-accounted joint ventures and associated companies
Chongqing Boliang Refractory Materials Co., Ltd., Chongqing, PR China
Magnesita-Envoy Asia Ltd., Kaohsiung, Taiwan
P-D Kremen d.o.o., Šentjernej, Slovenia
13.
13.
13.
72.
13.
.
49.
3.
37.
100.0
100.0
100.0
100.0
100.0
51.0
50.0
50.0
29.
13.
13.
13.
72.
13.
.
49.
3.
-
Notes
to the Company Financial Statements 2023
Ser. no.
Name and registered office of the company
Sapref AG für feuerfestes Material, Basel, Switzerland
Seven Lakeway Refractories LLC, Huron, USA
Seven Refractories (UK) Ltd, Rotherham, United Kingdom
Seven Refractories d.o.o, Divača, Slovenia
Seven Refractories Deutschland GmbH, Düsseldorf, Germany
54.,92.
100.0
31.12.2023
31.12.2022
Share-
holder
Share in
%
Share-
holder
Share in
%
104.
100.0
104.
100.0
92.,94.
100.0
89.
90.
91.
92.
93.
94.
95.
96.
97.
98.
99.
100.
101.
102.
103.
104.
105.
106.
107.
108.
109.
110.
111.
112.
113.
114.
115.
116.
117.
118.
Sörmaş Söğüt Refrakter Malzemeleri Anonim Şirketi, Söğüt / Bilecik, Türkiye
Seven Refractories Holding, Inc., Huron, USA
Seven Refractories Limited, Nicosia, Cyprus
Seven Refractories S.r.l., Castellazzo Bormida, Italy
Sipra S.p.A., Bergamo, Italy
Veitscher Vertriebsgesellschaft m.b.H., Vienna, Austria
Veitsch-Radex GmbH, Vienna, Austria
Veitsch-Radex GmbH & Co OG, Vienna, Austria
Veitsch-Radex Vertriebsgesellschaft m.b.H., Vienna, Austria
Vierte LWB Refractories Holding GmbH, Hilden, Germany
VRD Americas B.V., Arnhem, Netherlands
Zimmermann & Jansen GmbH, Wiesbaden, Germany
Dr.-Ing. Petri & Co. Unterstützungs-Gesellschaft m.b.H., Wiesbaden, Germany
Horn & Co Polska sp. z o.o., Chorzów, Poland
Mag Tec Participações Ltda., Contagem, Brazil i.l.
Mireco SARL, Entzheim, France
Mireco SH.P.K, Lebushe, Kosovo
RHI Réfractaires Algérie, Sidi Amar, Algeria
Rudgruvans Industrier Aktiebolag, Fagersta, Sweden
Equity-accounted joint ventures and associated companies
Chongqing Boliang Refractory Materials Co., Ltd., Chongqing, PR China
Magnesita-Envoy Asia Ltd., Kaohsiung, Taiwan
P-D Kremen d.o.o., Šentjernej, Slovenia
1) In accordance with IAS 32, fixed-term or puttable non-controlling interests are shown under liabilities.
2) Further shareholder is Magnesita Refratários S.A., Contagem, Brazil.
3) Further shareholders are VRD Americas B.V., Arnhem, Netherlands and Dutch MAS B.V., Arnhem, Netherlands.
i.l. in liquidation
54.,100.
40.
100.0
39.,54.
100.0
39.,54.
92.
54.
92.
92.
92.
92.
39.
54.
54.
54.
54.
53.
53.
13.
35.
13.
13.
13.
72.
13.
.
49.
3.
37.
76.0
100.0
100.0
51.0
100.0
52.0
91.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
98.7
100.0
100.0
100.0
100.0
100.0
51.0
50.0
50.0
-
-
-
-
-
-
-
-
39.
54.
54.
54.
40.
53.
53.
13.
35.
29.
13.
13.
13.
72.
13.
.
49.
3.
-
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
89.2
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
98.7
100.0
100.0
100.0
100.0
100.0
100.0
100.0
51.0
50.0
0.0
Magnesita Refractories Private Limited, Mumbai, India
40.,103.
100.0
40.,103.
Magnesita Refractories S.A. (Pty) Ltd., Middleburg, South Africa
29.
100.0
Minerals and Metals Recovering - Mireco Aktiebolag, Fagersta, Sweden
Current assets
(B) Cash and cash equivalents
Cash and cash equivalents are at RHI Magnesita N.V.’s free disposal.
Equity
(C) Share capital
The Company’s authorised share capital amounts to €100.000.000, comprising 100,000,000 ordinary shares, each of €1 nominal value. As at 31 December
2023, RHI Magnesita N.V.’s issued and fully paid-in share capital consists of 47,130,338 ordinary shares (2022: 47,017,695 ordinary shares). For additional
information on treasury shares see (D).
(D) Treasury shares
As at 31 December 2023, RHI Magnesita treasury shares amount to 2,347,367 (2022: 2,460,010).
(E) Additional paid-in capital
Additional paid-in capital comprises premiums on the issue of shares less issue costs by RHI Magnesita N.V.
(F) Legal, mandatory and other reserves
Cash flow hedges
The item cash flow hedges include gains and losses from the effective part of cash flow hedges less tax effects. Further information on hedge accounting is
included in Note (36) and Note (37) of the Consolidated Financial Statements.
Currency translation
Currency translation includes the accumulated currency translation differences from translating the Financial Statements of foreign subsidiaries as well as
unrealised currency translation differences from monetary items which are part of a net investment in a foreign operation, net of related income taxes. If foreign
companies are deconsolidated, the currency translation differences are recognised in the Statement of Profit or Loss as part of the gain or loss from the sale of
shares in subsidiaries. In addition, when monetary items cease to form part of a net investment in a foreign operation, the currency translation differences of
these monetary items previously recognised in OCI are reclassified to profit or loss.
The cash flow hedge reserve and the currency translation reserve are legal reserves and are restricted for distribution.
Legal and mandatory reserve
The Articles of Association stipulate a mandatory reserve of €288,699,230.59 which was created in connection with the merger of RHI Refractories and
Magnesita in 2017.
No distributions, allocations or additions may be made, and no losses of the Company may be allocated to the mandatory reserve.
Legal and mandatory reserves represent legal and statutory reserves in line with Chapter 7 ‘Decree on financial statements formats’ of the Dutch Civil Code.
Retained earnings
Retained earnings includes the result of the financial year and results that were earned by consolidated companies during prior periods, but not distributed. The
difference between the purchase consideration or sale proceeds after tax and the relevant proportion of the non-controlling interest, measured by reference to
the carrying amount of the interest’s net assets at the date of acquisition or sale, is recognised in retained earnings too.
Net income recognised directly in equity represents the additions to consolidated companies and change of non-controlling interests without a change of
control through the year (€181.8 million), netted of by other changes as described in the Group Consolidated Statement of Changes in Equity (€22.8 million)
and by the defined benefit plan (€16.3 million).
Non-Current liabilities
(G) Non-current liabilities
in € million
Personnel provisions
Provisions for pensions
Total non-current liabilities
Current liabilities
(H) Current liabilities
in € million
Trade payables
Payables to group companies
Accrued liabilities
Total current liabilities
31.12.2023
31.12.2022
0.1
0.2
0.3
0.1
0.1
0.2
31.12.2023
31.12.2022
1.2
4.7
6.7
12.6
1.2
0.4
6.0
7.6
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The current liabilities are due in less than one year. The fair value of other current liabilities approximates the book value, due to their short-term character.
FINANCIAL STATEMENTS
Notes
to the Company Financial Statements 2023
(I) General and administrative expenses
in € million
External services/consulting expenses
Personnel expenses
Other expenses
Total general and administrative expenses
in € million
Wages and salaries
Social security charges
Pension contributions
Other employee costs
Total wages and salaries
2023
(5.5)
(21.1)
(3.1)
(29.7)
2023
(18.7)
(1.4)
(0.5)
(0.5)
(21.1)
2022
(2.0)
(18.4)
(1.6)
(22.0)
2022
(16.5)
(1.1)
(0.4)
(0.4)
(18.4)
(J) Net financial result
The 2023 net financial result amounts to €0.4 million (2022: €0.0 million).
(K) Net results from investments
In 2023, the full year results of the investments amount to a profit of €198.0 million (2022: €196.5 million) and are recognised in the Company Statement of
Profit or Loss.
(L) Net result for the period
In 2023, there are no differences in the result between the Company Financial Statements and the Consolidated Financial Statements.
Proposed appropriation of result
It is proposed that, pursuant to Article 27 clause 1 of the Articles of Association of the Company, as approved in the AGM 2023, the result shown in RHI
Magnesita N.V. income statement is appropriated as follows:
in € million
Profit attributable to shareholders
In accordance with Article 27 clause 1 to be transferred to reserves
At the disposal of the General Meeting of Shareholders
2023
164.6
0.0
164.6
For 2023, the Board of Directors will propose a final dividend of €1.25 per share for the shareholders of RHI Magnesita N.V. The proposed dividend is subject to
approval by the Annual General Meeting in May 2024.
Other notes
Number of employees
The average number of employees of RHI Magnesita N.V. during 2023 amounts to 9 (2022: 8); all employees are working outside the Netherlands.
Off balance sheet commitments
RHI Magnesita N.V. as an ultimate parent company, provided a corporate guarantee of €2,008.4 million (2022: €1,549.4 million) for the borrowings of the
Group. The Borrowings are as disclosed in Note (27). Additionally €20.0 million (2022: €20.1 million) of corporate guarantees are issued in favour of customers
and suppliers of the Group.
The Company has issued a declaration of joint and several liability as referred to in section 403, Book 2 of the Dutch Civil Code in respect of one of its
consolidated participations, namely RHI Magnesita Trading B.V.
Other information
Information regarding independent auditor's fees, the number of employees of RHI Magnesita Group and the remuneration of the Board of Directors is included
in Note (41), (10) and (43) of the Consolidated Financial Statements.
The Company opened a branch (RHI Magnesita N.V.) in Vienna, Austria and, as of February 2020, started to employ staff in the branch office and undertake
services.
Material events after the reporting date
There were no material events after the reporting date other than those disclosed in Note (44) of the Consolidated Financial Statements.
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Vienna, 28 February 2024
Board of Directors
Executive Directors
Stefan Borgas
Non-Executive Directors
Herbert Cordt
Janet Ashdown
Ian Botha
John Ramsay
David Schlaff
(J) Net financial result
The 2023 net financial result amounts to €0.4 million (2022: €0.0 million).
Stanislaus Prinz zu Sayn-Wittgenstein Berleburg
Janice “Jann” Brown
Karl Sevelda
Marie-Hélène Ametsreiter
In 2023, the full year results of the investments amount to a profit of €198.0 million (2022: €196.5 million) and are recognised in the Company Statement of
Wolfgang Ruttenstorfer
In 2023, there are no differences in the result between the Company Financial Statements and the Consolidated Financial Statements.
It is proposed that, pursuant to Article 27 clause 1 of the Articles of Association of the Company, as approved in the AGM 2023, the result shown in RHI
Employee Representative Directors
Karin Garcia
Michael Schwarz
Martin Kowatsch
Notes
to the Company Financial Statements 2023
(I) General and administrative expenses
in € million
External services/consulting expenses
Personnel expenses
Other expenses
Total general and administrative expenses
in € million
Wages and salaries
Social security charges
Pension contributions
Other employee costs
Total wages and salaries
(K) Net results from investments
Profit or Loss.
(L) Net result for the period
Proposed appropriation of result
Magnesita N.V. income statement is appropriated as follows:
in € million
Profit attributable to shareholders
In accordance with Article 27 clause 1 to be transferred to reserves
At the disposal of the General Meeting of Shareholders
2023
(5.5)
(21.1)
(3.1)
(29.7)
2023
(18.7)
(1.4)
(0.5)
(0.5)
(21.1)
2022
(2.0)
(18.4)
(1.6)
(22.0)
2022
(16.5)
(1.1)
(0.4)
(0.4)
(18.4)
2023
164.6
0.0
164.6
For 2023, the Board of Directors will propose a final dividend of €1.25 per share for the shareholders of RHI Magnesita N.V. The proposed dividend is subject to
approval by the Annual General Meeting in May 2024.
Other notes
Number of employees
Off balance sheet commitments
and suppliers of the Group.
The average number of employees of RHI Magnesita N.V. during 2023 amounts to 9 (2022: 8); all employees are working outside the Netherlands.
RHI Magnesita N.V. as an ultimate parent company, provided a corporate guarantee of €2,008.4 million (2022: €1,549.4 million) for the borrowings of the
Group. The Borrowings are as disclosed in Note (27). Additionally €20.0 million (2022: €20.1 million) of corporate guarantees are issued in favour of customers
The Company has issued a declaration of joint and several liability as referred to in section 403, Book 2 of the Dutch Civil Code in respect of one of its
consolidated participations, namely RHI Magnesita Trading B.V.
Other information
Information regarding independent auditor's fees, the number of employees of RHI Magnesita Group and the remuneration of the Board of Directors is included
in Note (41), (10) and (43) of the Consolidated Financial Statements.
The Company opened a branch (RHI Magnesita N.V.) in Vienna, Austria and, as of February 2020, started to employ staff in the branch office and undertake
services.
Material events after the reporting date
There were no material events after the reporting date other than those disclosed in Note (44) of the Consolidated Financial Statements.
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FINANCIAL STATEMENTS
Other information
Provisions of the articles of association on profit and distributions
The stipulations of Article 27 and 28 of the Articles of Association concerning profit and distributions are:
27 Profit and distributions
27.1 The Board may resolve that the profits realised during a financial year will fully or partially be appropriated to increase and/or form reserves. With due regard
to Article 26.2, a deficit may only be offset against the reserves prescribed by law to the extent this is permitted by law.
27.2 The allocation of profits remaining after application of Article 27.1 shall be determined by the General Meeting. The Board shall make a proposal for that
purpose. A proposal to make a distribution of profits shall be dealt with as a separate agenda item at the General Meeting.
27.3 Distribution of profits shall be made after adoption of the annual accounts if permitted under the law given the contents of the annual accounts.
27.4 The Board may resolve to make interim distributions and/or to make distributions at the expense of any reserve of the Company, other than the Mandatory
Reserve.
27.5 Distributions on shares may be made only up to an amount which does not exceed the amount of the Distributable Equity. If it concerns an interim
distribution, the compliance with this requirement must be evidenced by an interim statement of assets and liabilities as referred to in Section 2:105 paragraph 4
of the Dutch Civil Code. The Company shall deposit the statement of assets and liabilities at the Dutch Trade Register within eight days after the day on which
the resolution to make the distribution is published.
27.6 Distributions on shares payable in cash shall be paid in Euro, unless the Board determines that payment shall be made in another currency.
27.7 The Board is authorised to determine that a distribution on shares will not be made in cash but in kind or in the form of shares, or to determine that
shareholders may choose to accept the distribution in cash and/or in the form of shares, all this out of the profits and/or at the expense of reserves, other than
the Mandatory Reserve, and all this if and in so far the Board has been designated by the General Meeting in accordance with Article 6.1. The Board shall set the
conditions under which such a choice may be made.
28 Release for payment
Distributions of profits and other distributions shall be made payable four weeks after adoption of the relevant resolution, unless the Board or the General
Meeting at the proposal of the Board determine another date.
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Other information
Independent auditor’s report
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
Provisions of the articles of association on profit and distributions
The stipulations of Article 27 and 28 of the Articles of Association concerning profit and distributions are:
To: the general meeting of RHI Magnesita N.V.
Report on the audit of the financial statements 2023
27 Profit and distributions
27.1 The Board may resolve that the profits realised during a financial year will fully or partially be appropriated to increase and/or form reserves. With due regard
to Article 26.2, a deficit may only be offset against the reserves prescribed by law to the extent this is permitted by law.
Our opinion
In our opinion:
27.2 The allocation of profits remaining after application of Article 27.1 shall be determined by the General Meeting. The Board shall make a proposal for that
purpose. A proposal to make a distribution of profits shall be dealt with as a separate agenda item at the General Meeting.
27.3 Distribution of profits shall be made after adoption of the annual accounts if permitted under the law given the contents of the annual accounts.
27.4 The Board may resolve to make interim distributions and/or to make distributions at the expense of any reserve of the Company, other than the Mandatory
Reserve.
27.5 Distributions on shares may be made only up to an amount which does not exceed the amount of the Distributable Equity. If it concerns an interim
distribution, the compliance with this requirement must be evidenced by an interim statement of assets and liabilities as referred to in Section 2:105 paragraph 4
of the Dutch Civil Code. The Company shall deposit the statement of assets and liabilities at the Dutch Trade Register within eight days after the day on which
the resolution to make the distribution is published.
27.6 Distributions on shares payable in cash shall be paid in Euro, unless the Board determines that payment shall be made in another currency.
•
•
the consolidated financial statements of RHI Magnesita N.V. together with its subsidiaries (‘the Group’) give a true and fair view of the financial
position of the Group as at 31 December 2023 and of its result and cash flows for the year then ended in accordance with International Financial
Reporting Standards as adopted in the European Union (‘EU-IFRS’) and with Part 9 of Book 2 of the Dutch Civil Code;
the company financial statements of RHI Magnesita N.V. (‘the Company’) give a true and fair view of the financial position of the Company as at 31
December 2023 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.
What we have audited
We have audited the accompanying financial statements 2023 of RHI Magnesita N.V., Arnhem. The financial statements comprise the consolidated financial
statements of the Group and the company financial statements.
The consolidated financial statements comprise:
•
•
•
the consolidated statement of financial position as at 31 December 2023;
the following statements for 2023: the consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows; and
the notes to the consolidated financial statements, including material accounting policy information and other explanatory information.
27.7 The Board is authorised to determine that a distribution on shares will not be made in cash but in kind or in the form of shares, or to determine that
shareholders may choose to accept the distribution in cash and/or in the form of shares, all this out of the profits and/or at the expense of reserves, other than
the Mandatory Reserve, and all this if and in so far the Board has been designated by the General Meeting in accordance with Article 6.1. The Board shall set the
The company financial statements comprise:
conditions under which such a choice may be made.
28 Release for payment
Meeting at the proposal of the Board determine another date.
Distributions of profits and other distributions shall be made payable four weeks after adoption of the relevant resolution, unless the Board or the General
•
•
•
the company balance sheet as at 31 December 2023;
the company statement of profit or loss for the period 1 January 2023 to 31 December 2023; and
the notes, comprising a summary of the accounting policies applied and other explanatory information.
The financial reporting framework applied in the preparation of the financial statements is EU-IFRS and the relevant provisions of Part 9 of Book 2 of the Dutch
Civil Code for the consolidated financial statements and Part 9 of Book 2 of the Dutch Civil Code for the company financial statements.
The basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. We have further described our responsibilities under those
standards in the section ‘Our responsibilities for the audit of the financial statements’ of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of RHI Magnesita N.V. in accordance with the European Union Regulation on specific requirements regarding statutory audit of public-
interest entities, the ‘Wet toezicht accountantsorganisaties’ (Wta, Audit firms supervision act), the ‘Verordening inzake de onafhankelijkheid van accountants bij
assuranceopdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence
regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics).
Our audit approach
We designed our audit procedures with respect to the key audit matters, fraud and going concern, and the matters resulting from that, in the context of our
audit of the financial statements as a whole and in forming our opinion thereon. The information in support of our opinion, such as our findings and observations
related to individual key audit matters, the audit approach fraud risk and the audit approach going concern was addressed in this context, and we do not provide
separate opinions or conclusions on these matters.
Overview and context
RHI Magnesita N.V. is a global supplier of high-grade refractory products, systems and solutions. The Group is comprised of several components and therefore
we considered our group audit scope and approach as set out in the section ‘The scope of our group audit’. We paid specific attention to the areas of focus
driven by the operations of the Group, as set out below.
In 2023, the Group experienced challenging conditions resulting from reduced demand from steel and cement customers for refractories. The Group
responded by focussing on operational excellence, strategic cost-saving initiatives, strict cashflow management and resilient pricing. They also focused on
acquiring and integrating new businesses as part of the overall growth strategy. The six acquisitions concluded by the Group in 2023 resulted in an overall
growth of revenues, gross profit and operational results compared to 2022. These developments affected the scope of our group audit and our audit
procedures, as described in section ‘The scope of our audit’ and ‘Key audit matters’.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we
considered where the board of directors made important judgements, for example, in respect of significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain. In these considerations, we paid attention to, amongst others, the assumptions
underlying the physical and transition risk related to climate change.
In note 3 of the consolidated financial statements, the Company describes the areas of judgement in applying accounting policies and the key sources of
estimation uncertainty. Given the significant estimation uncertainty and the related higher inherent risks of material misstatement in respect of the valuation of
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goodwill, the recognition and valuation of purchase price allocation balances resulting from acquisitions and the valuation of uncertain tax positions, we
considered these matters as key audit matters as set out in the section ‘Key audit matters’ of this report.
RHI Magnesita N.V. assessed the possible effects of climate change and its plans to meet a zero-waste product life cycle strategy on its financial position; refer
to the sections ‘Principal risks’ and ‘Sustainability’ of the Group’s Strategic Report where management defined potential physical as well as transitional risks, risk
mitigating activities, risk governance, strategy and metrics.
We discussed RHI Magnesita N.V.’s climate risk impact assessment and governance thereof with the board of directors as well as the audit committee and
evaluated the potential impact on the financial position including underlying assumptions and estimates, for example with respect to the valuation of goodwill.
Please also refer to the Key audit matter ‘Valuation of goodwill’ where the impact and the approach thereon is described.
Management acknowledged that the inherent likelihood of the climate change related risk has risen over the years due to the increasing regulatory complexity
in various countries and stakeholders’ expectations. The potential reputational risk remains high and the financial impact of this risk was further assessed during
2023.
Climate change initiatives and commitments impact the preparation of the Group’s financial statements in a variety of ways, all with inherent uncertainties. In
the reporting period management further expanded its analysis of the impact of climate related risks (physical and transitional) on major assumptions
incorporated in forecasts and disclosures in the financial statements. The Company assessed specific financial risks, in particular the introduction of the
European Carbon Border Adjustment Mechanism (‘CBAM’), as well as the opportunities from recycling and other initiatives to lower carbon emissions for its
customers.
In note 4 of the consolidated financial statements, management highlighted that it incorporated considerations around climate change and the energy
transition in its financial planning assumptions. The most important transitional risk impact is expected to be higher operating costs due to an increase in the
level or scope of carbon pricing and changes to regulatory frameworks, particularly in Europe. Management also sees climate-related opportunities, such as
increased demand for its products arising from the transition by its customers to lower-carbon emitting industrial processes and increased demand for
refractory products that are produced with a lower carbon footprint. The Group is also investing in the research and development of new technologies for the
manufacturing of refractories which may enable it over the long term to avoid or capture its CO2 emissions and thereby mitigate the impact of higher carbon
prices. In the context of the financial statements management assessed the key areas of climate impacts that potentially have longer-term effects on amounts
recognised at 31 December 2023. These areas are impairment of CGUs and goodwill, recognition of restoration provisions, valuation of deferred tax assets and
the finance cost with respect to ESG linked loans.
As we have not been engaged in expressing assurance over the sustainability reporting, our procedures in this context consisted primarily of making inquiries
with officers of the entity and determining the plausibility of the information reported.
During our planning procedures we made enquiries of management to understand and assess the extent of potential impact of climate related risk on the
Group’s financial statements. We challenged the appropriateness of management’s assessment of the potential impact (e.g. estimated useful life of assets,
potential diminished access to financing) on major accounting estimates.
Apart from key audit matters and the impact from the climate change on our audit, as described above, other areas of focus in our audit were the asset
impairment considerations on ongoing construction projects and the application of the own use exemption for energy supply contracts. In addition, we
performed audit procedures on the items marked ‘audited’ in the 2023 Directors’ Remuneration Report.
We ensured that the audit teams at both group and component level included the appropriate skills and competences which are needed for the audit of an
international industrial products company. We therefore included experts and specialists in the areas of, among others, valuations, employee benefits, IT and
corporate income taxes in our team.
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goodwill, the recognition and valuation of purchase price allocation balances resulting from acquisitions and the valuation of uncertain tax positions, we
The outline of our audit approach was as follows:
considered these matters as key audit matters as set out in the section ‘Key audit matters’ of this report.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
RHI Magnesita N.V. assessed the possible effects of climate change and its plans to meet a zero-waste product life cycle strategy on its financial position; refer
to the sections ‘Principal risks’ and ‘Sustainability’ of the Group’s Strategic Report where management defined potential physical as well as transitional risks, risk
mitigating activities, risk governance, strategy and metrics.
We discussed RHI Magnesita N.V.’s climate risk impact assessment and governance thereof with the board of directors as well as the audit committee and
evaluated the potential impact on the financial position including underlying assumptions and estimates, for example with respect to the valuation of goodwill.
Please also refer to the Key audit matter ‘Valuation of goodwill’ where the impact and the approach thereon is described.
Management acknowledged that the inherent likelihood of the climate change related risk has risen over the years due to the increasing regulatory complexity
in various countries and stakeholders’ expectations. The potential reputational risk remains high and the financial impact of this risk was further assessed during
2023.
customers.
Climate change initiatives and commitments impact the preparation of the Group’s financial statements in a variety of ways, all with inherent uncertainties. In
the reporting period management further expanded its analysis of the impact of climate related risks (physical and transitional) on major assumptions
incorporated in forecasts and disclosures in the financial statements. The Company assessed specific financial risks, in particular the introduction of the
European Carbon Border Adjustment Mechanism (‘CBAM’), as well as the opportunities from recycling and other initiatives to lower carbon emissions for its
In note 4 of the consolidated financial statements, management highlighted that it incorporated considerations around climate change and the energy
transition in its financial planning assumptions. The most important transitional risk impact is expected to be higher operating costs due to an increase in the
level or scope of carbon pricing and changes to regulatory frameworks, particularly in Europe. Management also sees climate-related opportunities, such as
increased demand for its products arising from the transition by its customers to lower-carbon emitting industrial processes and increased demand for
refractory products that are produced with a lower carbon footprint. The Group is also investing in the research and development of new technologies for the
manufacturing of refractories which may enable it over the long term to avoid or capture its CO2 emissions and thereby mitigate the impact of higher carbon
prices. In the context of the financial statements management assessed the key areas of climate impacts that potentially have longer-term effects on amounts
recognised at 31 December 2023. These areas are impairment of CGUs and goodwill, recognition of restoration provisions, valuation of deferred tax assets and
the finance cost with respect to ESG linked loans.
As we have not been engaged in expressing assurance over the sustainability reporting, our procedures in this context consisted primarily of making inquiries
with officers of the entity and determining the plausibility of the information reported.
During our planning procedures we made enquiries of management to understand and assess the extent of potential impact of climate related risk on the
Group’s financial statements. We challenged the appropriateness of management’s assessment of the potential impact (e.g. estimated useful life of assets,
potential diminished access to financing) on major accounting estimates.
Apart from key audit matters and the impact from the climate change on our audit, as described above, other areas of focus in our audit were the asset
impairment considerations on ongoing construction projects and the application of the own use exemption for energy supply contracts. In addition, we
performed audit procedures on the items marked ‘audited’ in the 2023 Directors’ Remuneration Report.
We ensured that the audit teams at both group and component level included the appropriate skills and competences which are needed for the audit of an
international industrial products company. We therefore included experts and specialists in the areas of, among others, valuations, employee benefits, IT and
corporate income taxes in our team.
Materiality
•
Overall materiality: €14 million.
Audit scope
• We conducted audit work in 11 locations. We paid particular attention to the significant acquisitions that
were concluded in 2023.
•
•
Site visits were conducted to Austria, China, India and the Global Shared Services (Oviedo, Spain). We
have also performed (remote) file reviews for Austria, Brazil, China, India and the United States of America.
Audit coverage: 79% of consolidated revenue, 79% of consolidated total assets and 86% of consolidated
profit before tax.
Key audit matters
•
•
•
Recognition and valuation of purchase price allocation balances resulting from acquisitions;
Recognition and valuation of uncertain tax positions; and
Valuation of goodwill.
Materiality
The scope of our audit was influenced by the application of materiality, which is further explained in the section ‘Our responsibilities for the audit of the financial
statements’.
Based on our professional judgement we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements
as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and to evaluate the effect of identified misstatements, both individually and in
aggregate, on the financial statements as a whole and on our opinion.
OOvveerraallll ggrroouupp mmaatteerriiaalliittyy
€14.0 million (2022: €14.0 million).
BBaassiiss ffoorr ddeetteerrmmiinniinngg mmaatteerriiaalliittyy
We used our professional judgement to determine overall materiality. As a basis for our judgement, we used 5% of
profit before tax adjusted for exceptional items.
RRaattiioonnaallee ffoorr bbeenncchhmmaarrkk aapppplliieedd
We used profit before tax adjusted for exceptional items (i.e. restructuring, certain items included in other income
and expenses and financial expenses as well as amortization of intangible assets) as the primary benchmark, a
generally accepted auditing practice, based on our analysis of the common information needs of the users of the
financial statements. On this basis, we believe that profit before tax adjusted for exceptional items is the most
relevant metric for the financial performance of the Group.
CCoommppoonneenntt mmaatteerriiaalliittyy
Based on our judgement, we allocate materiality that is less than our overall group materiality to each component
in our audit. The range of materiality allocated across components was between €1.5 million and €12.5 million.
We also take misstatements and/or possible misstatements into account that, in our judgement, are material for qualitative reasons.
We agreed with the board of directors and the audit committee that we would report to them any misstatement identified during our audit above €1.0 million
(2022: €0.8 million) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
The scope of our group audit
RHI Magnesita N.V. is the parent company of a group of entities. The financial information of this group is included in the consolidated financial statements of
RHI Magnesita N.V.
We tailored the scope of our audit to ensure that we, in aggregate, performed sufficient work on the financial statements to enable us to provide an opinion on
the financial statements as a whole, taking into account the management structure of the Group, the nature of operations of its components, the accounting
processes and controls, and the markets in which the components of the Group operate. In establishing the overall group audit strategy and plan, we
determined the type of work required to be performed at component level by the group engagement team and by each component auditor.
Our audit primarily focussed on the significant components of the Group: RHI Magnesita GmbH (Austria), RHI US Ltd (United States of America), and Magnesita
Refratários S.A. (Brazil). We subjected these three components to audits of their complete financial information since these components are individually
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financially significant to the Group. Another eight components were also subjected to audits of their complete financial information to achieve appropriate
coverage on financial statements line items in the consolidated financial statements.
Finally, we selected fifteen components to perform specified audit procedures on selected financial statements line items to achieve appropriate coverage on
those financial statements line items in the consolidated financial statements.
In total, in performing these procedures, we achieved the following coverage on the financial line items:
RReevveennuuee
TToottaall aasssseettss
PPrrooffiitt bbeeffoorree ttaaxx
79%
79%
86%
None of the remaining components individually represented more than 3% of total group revenue or total group assets. For those remaining components we
performed, among other things, analytical procedures to corroborate our assessment that there were no significant risks of material misstatements within those
components.
Where component auditors performed the work, we determined the level of involvement we needed to have in their work to be able to conclude whether we
had obtained sufficient and appropriate audit evidence as a basis for our opinion on the consolidated financial statements as a whole.
We issued instructions to the component audit teams in our audit scope. These instructions included amongst others our risk analysis, materiality and the
scope of the work. We explained to the component audit teams the structure of the Group, the main developments that were relevant for the component
auditors, the risks identified, the materiality levels to be applied and our global audit approach. We had individual calls with each of component audit teams in
full audit scope both during the year and upon conclusion of their work. During these calls, we discussed the financial performance of the components,
significant accounting and audit issues identified by the component auditors, their reports, the findings of their procedures and other matters, that could be of
relevance for the consolidated financial statements.
The group engagement team visits the component teams and local management on a rotational basis. In the current year, the group engagement team visited
the RHI Magnesita finance functions in Austria, China and India given the size of these operating locations or the conclusion of significant acquisitions. We also
visited the Global Shared Services location in Spain in view of the centralised transactional processing function carried out for the Group. During these visits we
met with local management and component auditors, discussed significant business developments, accounting matters and the areas of significant risks.
Furthermore, we reviewed selected working papers of the component auditors in Austria, Brazil, China, India and the United States of America. We also
conducted a series of video conference meetings with local management along with our component teams. During these meetings we discussed the strategy
and financial performance of the local businesses as well as the audit plan and execution, significant risks and other relevant audit topics.
The group engagement team performed full scope audit procedures for the parent company RHI Magnesita N.V., specified audit procedures for the subsidiaries
RHI Magnesita Trading B.V. and Seven Refractories d.o.o., and specified audit procedures for the Global Shared Services activities in Spain on areas such as
property, plant & equipment, cash and cash equivalents and certain aspects of accounts payable and accounts receivable. In addition, the group engagement
team performed audit work over the headquarter-related activities in Vienna.
This includes the audit of IT systems, group consolidation, inventory valuation, financial statement disclosures, remuneration disclosures and several complex
accounting items, such as goodwill impairment testing, share based compensation and compliance of accounting positions taken by the Group in accordance
with EU-IFRS.
By performing the procedures outlined above at the components, combined with the additional procedures exercised at Group level, we have been able to
obtain sufficient and appropriate audit evidence on the Group’s financial information, to provide a basis for our opinion on the financial statements.
Audit approach fraud risks
We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding of the
entity and its environment and the components of the internal control system. This included the board of directors’ risk assessment process, the board of
directors’ process for responding to the risks of fraud and monitoring the internal control system and how the board of directors exercised oversight, as well as
the outcomes. We refer to section ‘Effective risk management’ of the Group’s Strategic report for management’s fraud risk assessment and section
‘Sustainability governance – Ethics and Compliance’ of the Strategic report in which management reflects on this fraud risk assessment.
We evaluated the design and relevant aspects of the internal control system with respect to the risks of material misstatements due to fraud and in particular
the fraud risk assessment, as well as the code of conduct, whistle-blower procedures, incident registration process, among other things. We evaluated the
design and the implementation of internal controls designed to mitigate fraud risks.
As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery
and corruption. We evaluated whether these factors indicate that a risk of material misstatement due to fraud is present.
Our evaluation included the following procedures:
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STATEMENTS
OTHER
INFORMATION
financially significant to the Group. Another eight components were also subjected to audits of their complete financial information to achieve appropriate
• We performed an inquiry of the audit committee as to fraud risks and related party transactions to identify the areas of their concerns in relation to
coverage on financial statements line items in the consolidated financial statements.
fraud.
• We inquired with the Chief Audit Executive about fraud cases identified throughout the year and reviewed the reports of the Internal Audit Function
relevant to the reporting period. Where we deemed appropriate, we performed followed-up procedures on these fraud cases. We also assessed the
matters reported through the Group’s whistleblowing and complaints procedure and results of management’s investigation and follow-up on such
matters.
• We inquired with board of directors, Group and local executives and sales managers, and other members of management as to whether they have
any knowledge of (suspected) fraud, their views on overall fraud risks within the Group and their perspectives on the Group’s mitigating controls
addressing the risk of fraud.
• We assessed the IT environment around key systems. We paid specific attention to the access safeguards in the IT system and the possibility that
these lead to violations of the segregation of duties.
We identified the following fraud risks and performed the following specific procedures:
Identified fraud risks
Our audit work and observations
RRiisskk ooff mmaannaaggeemmeenntt oovveerrrriiddee ooff ccoonnttrroollss
It is generally presumed that management is in a unique position to perpetrate
fraud because of the available opportunity to manipulate accounting records
and prepare fraudulent financial statements by overriding manual controls,
such as those related to journal entries, related party transactions, significant
accounting estimates, etc.
Adjusted EBITDA and adjusted EBITA are key financial measures that the
executive management and Directors use to assess the performance of the
Group. Adjusted EBITA and adjusted operating cash flow are also a key
financial target for executive management. Focus on meeting financial targets
could provide to management an incentive for bypassing of controls.
Where relevant to our audit, we evaluated the design and effectiveness of
controls in the processes of generating and processing journal entries. We
assessed whether deficiencies in controls may create additional opportunities
for fraud and incorporated respective corroborative procedures in our audit
approach. We paid specific attention to non-routine transactions and areas of
significant management judgement. We also paid specific attention to the
access safeguards in the IT system, possibility of functional segregation and
together with management followed up on business rationale for conflicting
user rights granted within the IT environment.
We considered the outcome of our audit procedures over the estimates and
significant accounting areas and assessed whether control deficiencies and
misstatements identified could be indicative of fraud. Where necessary, we
planned and performed additional auditing procedures to ensure that fraud
risks are sufficiently addressed in our audit.
We evaluated key accounting estimates and judgements used in accounting
areas where management judgement is applied (e.g., timing of acquisition of
group companies, valuation of provisions) for biases, including retrospective
reviews of prior year’s estimates where available.
We performed data analysis focused on journal entries using defined fraud
risk-criteria identified as part of our fraud risk assessment. Where we identified
instances of unexpected journal entries, we performed additional audit
procedures.
We evaluated whether the business rationale (or lack thereof) of the
significant transactions concluded in 2023 suggests that the Group may have
entered into those to engage in fraudulent financial reporting or to conceal
misappropriation of assets.
We incorporated an element of unpredictability in the nature, timing, and
extent of audit procedures.
We performed substantive testing procedures over the consolidation entries.
Our audit procedures did not identify indications of specific fraud or
suspicions of fraud with respect to management override of controls.
RRiisskk ooff ffrraauudd iinn rreevveennuuee rreeccooggnniittiioonn
As part of our risk assessment and based on a presumption that there are risks
of fraud in revenue recognition, we considered the risk of fraud in revenue
recognition.
We discussed and inquired with the audit committee and executive
management about their views on overall fraud risks within the Group, their
perspectives on the Group’s mitigating controls addressing the risk of fraud in
revenue and whether they have any knowledge of (suspected) fraud.
Where relevant to our audit, we have evaluated the design of the internal
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Finally, we selected fifteen components to perform specified audit procedures on selected financial statements line items to achieve appropriate coverage on
those financial statements line items in the consolidated financial statements.
In total, in performing these procedures, we achieved the following coverage on the financial line items:
RReevveennuuee
TToottaall aasssseettss
PPrrooffiitt bbeeffoorree ttaaxx
components.
79%
79%
86%
None of the remaining components individually represented more than 3% of total group revenue or total group assets. For those remaining components we
performed, among other things, analytical procedures to corroborate our assessment that there were no significant risks of material misstatements within those
Where component auditors performed the work, we determined the level of involvement we needed to have in their work to be able to conclude whether we
had obtained sufficient and appropriate audit evidence as a basis for our opinion on the consolidated financial statements as a whole.
We issued instructions to the component audit teams in our audit scope. These instructions included amongst others our risk analysis, materiality and the
scope of the work. We explained to the component audit teams the structure of the Group, the main developments that were relevant for the component
auditors, the risks identified, the materiality levels to be applied and our global audit approach. We had individual calls with each of component audit teams in
full audit scope both during the year and upon conclusion of their work. During these calls, we discussed the financial performance of the components,
significant accounting and audit issues identified by the component auditors, their reports, the findings of their procedures and other matters, that could be of
relevance for the consolidated financial statements.
The group engagement team visits the component teams and local management on a rotational basis. In the current year, the group engagement team visited
the RHI Magnesita finance functions in Austria, China and India given the size of these operating locations or the conclusion of significant acquisitions. We also
visited the Global Shared Services location in Spain in view of the centralised transactional processing function carried out for the Group. During these visits we
met with local management and component auditors, discussed significant business developments, accounting matters and the areas of significant risks.
Furthermore, we reviewed selected working papers of the component auditors in Austria, Brazil, China, India and the United States of America. We also
conducted a series of video conference meetings with local management along with our component teams. During these meetings we discussed the strategy
and financial performance of the local businesses as well as the audit plan and execution, significant risks and other relevant audit topics.
The group engagement team performed full scope audit procedures for the parent company RHI Magnesita N.V., specified audit procedures for the subsidiaries
RHI Magnesita Trading B.V. and Seven Refractories d.o.o., and specified audit procedures for the Global Shared Services activities in Spain on areas such as
property, plant & equipment, cash and cash equivalents and certain aspects of accounts payable and accounts receivable. In addition, the group engagement
team performed audit work over the headquarter-related activities in Vienna.
This includes the audit of IT systems, group consolidation, inventory valuation, financial statement disclosures, remuneration disclosures and several complex
accounting items, such as goodwill impairment testing, share based compensation and compliance of accounting positions taken by the Group in accordance
with EU-IFRS.
By performing the procedures outlined above at the components, combined with the additional procedures exercised at Group level, we have been able to
obtain sufficient and appropriate audit evidence on the Group’s financial information, to provide a basis for our opinion on the financial statements.
Audit approach fraud risks
We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding of the
entity and its environment and the components of the internal control system. This included the board of directors’ risk assessment process, the board of
directors’ process for responding to the risks of fraud and monitoring the internal control system and how the board of directors exercised oversight, as well as
the outcomes. We refer to section ‘Effective risk management’ of the Group’s Strategic report for management’s fraud risk assessment and section
‘Sustainability governance – Ethics and Compliance’ of the Strategic report in which management reflects on this fraud risk assessment.
We evaluated the design and relevant aspects of the internal control system with respect to the risks of material misstatements due to fraud and in particular
the fraud risk assessment, as well as the code of conduct, whistle-blower procedures, incident registration process, among other things. We evaluated the
design and the implementation of internal controls designed to mitigate fraud risks.
As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery
and corruption. We evaluated whether these factors indicate that a risk of material misstatement due to fraud is present.
Our evaluation included the following procedures:
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This relates to the presumed management incentive that exists to overstate
revenue in order to meet financial targets, guidance provided to the market or
shareholder expectations.
control measures that are intended to mitigate the risk of fraud in revenue
recognition and assessed the effectiveness of those measures.
In this context, we consider this as a risk of fraud focussed to overstate revenue
through the recording of non-existent transactions.
We also paid specific attention to the processes surrounding the relevant IT
systems. Through data analysis using defined risk- criteria, we tested
unexpected journal entries across all relevant revenue streams.
We tested, on a sample basis, the performance and transaction prices of the
revenue transactions based on sales agreements, delivery documents, sales
invoices and/or cash receipts. We tested the receivable balances at year end
via external confirmations or alternative procedures if these were not received.
We did not identify specific indications of fraud or suspicion of fraud in respect
of revenue recognition.
We incorporated an element of unpredictability in our audit. We reviewed lawyer’s letters and correspondence with regulators. During the audit, we remained
alert to indications of fraud. Furthermore, we considered the outcome of our other audit procedures and evaluated whether any findings were indicative of fraud
or non-compliance with laws and regulations.
Audit approach going concern
As disclosed in section ‘Principles and Methods’’ on page 181 of the consolidated financial statements, the board of directors performed their assessment of the
entity’s ability to continue as a going concern for at least 12 months from the date of preparation of the financial statements and has not identified events or
conditions that may cast significant doubt on the entity’s ability to continue as a going concern (hereafter: going concern risks).
Our procedures to evaluate the board of directors’ going concern assessment included, amongst others:
•
•
•
•
•
•
Review of the board of directors’ going-concern assessment and sensitivity analysis. We corroborated the board of directors’ analysis with the
approved budget 2024 and facts and circumstances that came to our attention from our auditing procedures.
Review of the board of directors’ analysis of the forecasted levels of net debt, available undrawn borrowing facilities, compliance with debt covenants
and the debt maturity profile.
Corroboration of consistency between the board of directors’ going-concern analysis, the analysis of the forecasted levels of net debt with the future
cash flow forecast as incorporated in the goodwill impairment test. In evaluating the board of directors’ forecasts and cash flows we performed a
look-back analysis to assess the accuracy of the forecasting process.
An analysis of the financial position at balance sheet date in comparison to prior year to assess whether events or circumstances exist that may lead
to a going-concern risk.
Consideration of the potential indications of the component’s going-concern uncertainty based on audit procedures performed by the component
auditors. We evaluated the impact of such indications on the overall use of the going-concern assumption applied by the Group.
Inquiries of the board of directors, other Group and local management as to their knowledge of going-concern risks beyond the period of the board
of directors’ assessment.
Our procedures did not result in outcomes contrary to the board of directors’ assumptions and judgements used in the application of the going concern
assumption.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements. We have
communicated the key audit matters to the board of directors and the audit committee. The key audit matters are not a comprehensive reflection of all matters
identified by our audit and that we discussed. In this section, we described the key audit matters and included a summary of the audit procedures we performed
on those matters.
We addressed the key audit matters in the context of our audit of the financial statements as a whole, and in forming our opinion thereon. We do not provide
separate opinions on these matters or on specific elements of the financial statements. Any comment or observation we made on the results of our procedures
should be read in this context.
Compared to the key audit matters identified in previous year’s report, a new key audit matter is introduced with respect to the recognition and valuation of
purchase price allocation balances resulting from acquisitions. This is the result of the significant increase in acquisitions realised by the Group during 2023,
which required significant attention from the group engagement team and component auditors in view of the judgements involved with respect the
accounting for such business combinations. On the other hand the key audit matter related to the recognition and valuation of uncertain tax positions covers,
contrary to last year’s key audit matter, solely the work performed over uncertain tax positions and no longer the deferred tax asset position in view of the
reduced level of judgement involved. The key audit matter with respect to the valuation of goodwill identified in the previous year's report continues to be
relevant and important for the audit of the Group's financial statements.
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GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
KKeeyy aauuddiitt mmaatttteerr
OOuurr aauuddiitt wwoorrkk aanndd oobbsseerrvvaattiioonnss
RReeccooggnniittiioonn aanndd vvaalluuaattiioonn ooff ppuurrcchhaassee pprriiccee aallllooccaattiioonn bbaallaanncceess rreessuullttiinngg
ffrroomm aaccqquuiissiittiioonnss
With support of our internal valuation experts, we performed the following
Refer to notes 3, 26 and 42 of the consolidated financial statements
The Group concluded 6 acquisitions of subsidiaries throughout the year, most
notably a 100% interest in Dalmia OCL Ltd. in India for a consideration of
€325.2 million, a 65% interest in Jinan New Emei Industries Co Ltd. in China
for a consideration of €22.9 million, business acquired through an asset deal
regarding Hi-Tech Chemicals Ltd. in India for a consideration of €87.0 million,
a majority interest in Seven Refractories companies in various territories for a
consideration of €84.4 million and a majority interest in P-D Refractories
companies in Europe for a consideration of €44.5 million.
In accordance with IFRS 3, ‘Business Combinations’ the accounting for these
acquisitions requires management to perform a purchase price allocation
which requires significant judgement by management to determine the fair
value of the identifiable assets and liabilities and the resulting goodwill. As
part of the valuation process, management involved external valuation
experts to assist in the determination of the purchase price allocation and
valuation of identified assets and liabilities. The purchase price allocations
performed for these six acquisitions resulted in the recognition of intangible
assets of €173.3 million and goodwill of €197.0 million.
Furthermore, the structure of the Dalmia acquisition in India, whereby the
Group applied the partial goodwill allocation method, resulted in a complex
non-controlling interest calculation.
For the P-D Refractories acquisition that was concluded in December 2023,
the Group performed a preliminary purchase price allocation that resulted in
a bargain purchase. As such a bargain purchase gain of €7.5 million was
recorded in the consolidated statement of profit or loss.
The valuation of the purchase price allocation balances arising as a result of
acquisitions was a matter of significance due to the judgement and
complexity involved in performing the purchase price allocations, specifically
the underlying estimates involved in forecasting cash flows and other
significant assumptions used in the valuation. Therefore, we considered the
accounting for the recognition and valuation of the purchase price allocation
balances resulting from acquisitions as a key audit matter.
procedures:
We agreed transaction details to supporting documentation such as signed
purchase agreements and proof of payment. And evaluated the competence,
capabilities and objectivity of valuation experts engaged by the Group.
We assessed the appropriateness of the identifiable intangible assets
identified by management and their valuation experts based on our
knowledge of the business models of acquired businesses. We furthermore
assessed the reasonableness of the fair value measurements prepared by
management and their valuation experts by corroborating and where
appropriate benchmarking key data and assumptions used in the valuation
model, such as pre-acquisition carrying values, royalty rates and retention
rates for identified intangible assets.
We compared the assumptions and data underlying the weighted average
cost of capital (WACC) with our own assumptions and publicly available data
and tested the computational accuracy of the fair value measurement
calculations prepared by management and their valuation experts.
We tested the reasonability of future cash flow forecasts and underlying
management assumptions by reconciling the resulting valuation to the
purchase consideration. We furthermore assessed and discussed with
management the rationale for the bargain purchase realised in connection
with the P-D Refractories acquisition. We also assessed and recalculated the
non-controlling interest balances for the acquisitions whereby minority
interests were to be accounted for.
We tested the related financial statement disclosures against the disclosure
requirements of IFRS 3.
In respect of the audit procedures specified above, no material findings were
identified.
RReeccooggnniittiioonn aanndd vvaalluuaattiioonn ooff uunncceerrttaaiinn ttaaxx ppoossiittiioonnss
Refer to notes 3, 14, and 39 of the consolidated financial statements
As described in Note 39 of the consolidated financial statements the Group is
party to several tax proceedings in Brazil which involve estimated contingent
liabilities amounting to €271.8 million. Given that the tax legislation in Brazil is
complex and unpredictable, this could give rise to significant uncertainties
and the Group’s estimate of tax liabilities may differ from interpretations by the
relevant tax authorities as to how regulations should be applied to actual
transactions.
Judgement is therefore required by management to determine whether it is
probable that an uncertain tax position should be recognised and or will not
be sustained. Due to the inherent level of uncertainty, significant judgement
involved, potential limitations in the recoverability of uncertain tax positions,
we considered the recognition and valuation of uncertain tax positions to be a
key audit matter for our audit.
With regard to recognition and valuation of uncertain tax positions we have
requested and obtained management’s valuation of tax positions, reviewed
correspondence with the tax authorities, independent legal and tax opinions
and latest available tax filings. We also corroborated tax assessment with the
group management and local auditors. We analysed the outcomes of
resolution of tax disputes within the territory (Brazil) where uncertain tax
positions were identified.
Where significant management estimates and judgements involved are
susceptible to management bias, we have critically reviewed the underlying
facts to assess recognition and assessed the recoverability of the deferred tax
assets and uncertain tax positions.
Based on the audit procedures performed, we found the Group’s estimates
and judgement used in the recognition and valuation of uncertain tax
positions to be supported by the available evidence.
We assessed and corroborated the adequacy and appropriateness of the
disclosures made in the consolidated financial statements.
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This relates to the presumed management incentive that exists to overstate
control measures that are intended to mitigate the risk of fraud in revenue
revenue in order to meet financial targets, guidance provided to the market or
recognition and assessed the effectiveness of those measures.
shareholder expectations.
In this context, we consider this as a risk of fraud focussed to overstate revenue
systems. Through data analysis using defined risk- criteria, we tested
through the recording of non-existent transactions.
unexpected journal entries across all relevant revenue streams.
We also paid specific attention to the processes surrounding the relevant IT
We tested, on a sample basis, the performance and transaction prices of the
revenue transactions based on sales agreements, delivery documents, sales
invoices and/or cash receipts. We tested the receivable balances at year end
via external confirmations or alternative procedures if these were not received.
We did not identify specific indications of fraud or suspicion of fraud in respect
of revenue recognition.
We incorporated an element of unpredictability in our audit. We reviewed lawyer’s letters and correspondence with regulators. During the audit, we remained
alert to indications of fraud. Furthermore, we considered the outcome of our other audit procedures and evaluated whether any findings were indicative of fraud
or non-compliance with laws and regulations.
Audit approach going concern
As disclosed in section ‘Principles and Methods’’ on page 181 of the consolidated financial statements, the board of directors performed their assessment of the
entity’s ability to continue as a going concern for at least 12 months from the date of preparation of the financial statements and has not identified events or
conditions that may cast significant doubt on the entity’s ability to continue as a going concern (hereafter: going concern risks).
Our procedures to evaluate the board of directors’ going concern assessment included, amongst others:
•
•
•
•
•
•
Review of the board of directors’ going-concern assessment and sensitivity analysis. We corroborated the board of directors’ analysis with the
approved budget 2024 and facts and circumstances that came to our attention from our auditing procedures.
Review of the board of directors’ analysis of the forecasted levels of net debt, available undrawn borrowing facilities, compliance with debt covenants
and the debt maturity profile.
Corroboration of consistency between the board of directors’ going-concern analysis, the analysis of the forecasted levels of net debt with the future
cash flow forecast as incorporated in the goodwill impairment test. In evaluating the board of directors’ forecasts and cash flows we performed a
look-back analysis to assess the accuracy of the forecasting process.
An analysis of the financial position at balance sheet date in comparison to prior year to assess whether events or circumstances exist that may lead
Consideration of the potential indications of the component’s going-concern uncertainty based on audit procedures performed by the component
auditors. We evaluated the impact of such indications on the overall use of the going-concern assumption applied by the Group.
Inquiries of the board of directors, other Group and local management as to their knowledge of going-concern risks beyond the period of the board
to a going-concern risk.
of directors’ assessment.
Our procedures did not result in outcomes contrary to the board of directors’ assumptions and judgements used in the application of the going concern
assumption.
Key audit matters
on those matters.
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements. We have
communicated the key audit matters to the board of directors and the audit committee. The key audit matters are not a comprehensive reflection of all matters
identified by our audit and that we discussed. In this section, we described the key audit matters and included a summary of the audit procedures we performed
We addressed the key audit matters in the context of our audit of the financial statements as a whole, and in forming our opinion thereon. We do not provide
separate opinions on these matters or on specific elements of the financial statements. Any comment or observation we made on the results of our procedures
should be read in this context.
Compared to the key audit matters identified in previous year’s report, a new key audit matter is introduced with respect to the recognition and valuation of
purchase price allocation balances resulting from acquisitions. This is the result of the significant increase in acquisitions realised by the Group during 2023,
which required significant attention from the group engagement team and component auditors in view of the judgements involved with respect the
accounting for such business combinations. On the other hand the key audit matter related to the recognition and valuation of uncertain tax positions covers,
contrary to last year’s key audit matter, solely the work performed over uncertain tax positions and no longer the deferred tax asset position in view of the
reduced level of judgement involved. The key audit matter with respect to the valuation of goodwill identified in the previous year's report continues to be
relevant and important for the audit of the Group's financial statements.
OTHER INFORMATION
VVaalluuaattiioonn ooff ggooooddwwiillll
Refer to notes 3, 14, and 17 of the consolidated financial statements
The Group recognised goodwill of €339.2 million, mainly related to the
historical acquisition of the Magnesita Group in 2017 and the new acquisitions
concluded in 2023, which increased goodwill by €197.0 million. This
goodwill forms part of cash- generating units (‘CGUs’) to the extent that they
independently generate cash inflows. If and to the extent to which these
CGUs include goodwill, or show signs of impairment, the recoverable amount
is assessed.
Annual planning process data is used to make assumptions on the discount
rates, profitability as well as growth rates and sensitivity analysis are carried out
regarding any accounting effects. The assessment did not result in an
impairment.
As disclosed in note 4 of the consolidated financial statements, the Group has
considered the long-term impact of climate change, in particular by
considering a long-term growth rate in the estimation of the terminal value in
line with the change in steel and cement demand on the longer term based
on the specific characteristics of the businesses involved.
Management also considered and modelled the potential impact of the
European Carbon Border Adjustment Mechanism (CBAM) regulation on its
assets located within Europe and modelled the impact thereof.
As part of our audit procedures, we have evaluated and challenged the
composition of management’s future cash flow forecast and process applied
to identify and define cash-generating units, recalculated the recoverable
amount, tested for impairment, recalculated the capital cost rate and the
growth rate as well as evaluated the calculation model.
We have reconciled the assumed future cash flows used in the budget
planning with the information included in the forecast made by management.
Given that the areas where significant management estimates and
judgements involved are susceptible to management bias and creates
opportunities for fraud, we, with the support of our valuation specialists, have
evaluated management’s assumptions such as revenue and margin, the
discount rate, terminal value, operational and capital expenditure. We have
obtained corroborative evidence for these assumptions.
We performed analysis to assess the reasonableness of forecasted revenues
and margins and obtained further explanations when considered necessary.
We also compared the forecast to prior year’s forecast and actuals. We
compared the long-term growth rates used in determining the terminal value
with economic and industry forecasts. We have reperformed calculations,
compared the methodology applied with generally accepted valuation
techniques, assessed appropriateness of the cost of capital for the company
and comparable assets, as well as considered territory specific factors. Finally,
we assessed the appropriateness of the disclosure of the key assumptions and
sensitivities underlying the tests.
We identified the valuation of goodwill as a key audit matter due to significant
estimates and assumptions used with respect to, among others, discount
rates, profitability forecasts and growth rates.
Based on the audit procedures performed, we found the assumptions to be
reasonable and supported by the available evidence.
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Refer to notes 3, 14, and 17 of the consolidated financial statements
to identify and define cash-generating units, recalculated the recoverable
Based on the procedures performed as set out below, we conclude that the other information:
Report on the other information included in the annual report
The annual report contains other information. This includes all information in the annual report in addition to the financial statements and our auditor’s report
thereon.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL
STATEMENTS
OTHER
INFORMATION
•
•
is consistent with the financial statements and does not contain material misstatements; and
contains all the information regarding the directors’ report and the other information that is required by Part 9 of Book 2 and regarding the
remuneration report required by the sections 2:135b and 2:145 subsection 2 of the Dutch Civil Code.
We have read the other information. Based on our knowledge and the understanding obtained in our audit of the financial statements or otherwise, we have
considered whether the other information contains material misstatements.
By performing our procedures, we comply with the requirements of Part 9 of Book 2 and section 2:135b subsection 7 of the Dutch Civil Code and the Dutch
Standard 720. The scope of such procedures was substantially less than the scope of those procedures performed in our audit of the financial statements,
except for the audit procedures performed on information in the Annual report on remuneration marked ‘audited’.
The board of directors is responsible for the preparation of the other information, including the directors’ report and the other information in accordance with
Part 9 of Book 2 of the Dutch Civil Code. The board of directors is responsible for ensuring that the remuneration report is drawn up and published in
accordance with sections 2:135b and 2:145 subsection 2 of the Dutch Civil Code.
Report on other legal and regulatory requirements and ESEF
Our appointment
We were appointed as auditors of RHI Magnesita N.V. This followed the passing of a resolution by the shareholders at the annual general meeting held on 4
October 2017. Our appointment has been renewed annually by shareholders and now represents a total period of uninterrupted engagement of seven years.
European Single Electronic Format (ESEF)
RHI Magnesita N.V. has prepared the annual report in ESEF. The requirements for this are set out in the Delegated Regulation (EU) 2019/815 with regard to
regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the RTS on ESEF).
In our opinion, the annual report prepared in XHTML format, including the marked-up consolidated financial statements, as included in the reporting package
by RHI Magnesita N.V., complies in all material respects with the RTS on ESEF.
The board of directors is responsible for preparing the annual report, including the financial statements in accordance with the RTS on ESEF, whereby the board
of directors combines the various components into a single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package complies with the RTS on ESEF.
We performed our examination in accordance with Dutch law, including Dutch Standard 3950N ‘Assuranceopdrachten inzake het voldoen aan de criteria voor
het opstellen van een digitaal verantwoordingsdocument’ (assurance engagements relating to compliance with criteria for digital reporting).
Our examination included amongst others:
VVaalluuaattiioonn ooff ggooooddwwiillll
As part of our audit procedures, we have evaluated and challenged the
composition of management’s future cash flow forecast and process applied
The Group recognised goodwill of €339.2 million, mainly related to the
growth rate as well as evaluated the calculation model.
historical acquisition of the Magnesita Group in 2017 and the new acquisitions
concluded in 2023, which increased goodwill by €197.0 million. This
We have reconciled the assumed future cash flows used in the budget
goodwill forms part of cash- generating units (‘CGUs’) to the extent that they
planning with the information included in the forecast made by management.
amount, tested for impairment, recalculated the capital cost rate and the
independently generate cash inflows. If and to the extent to which these
CGUs include goodwill, or show signs of impairment, the recoverable amount
Given that the areas where significant management estimates and
judgements involved are susceptible to management bias and creates
opportunities for fraud, we, with the support of our valuation specialists, have
Annual planning process data is used to make assumptions on the discount
evaluated management’s assumptions such as revenue and margin, the
rates, profitability as well as growth rates and sensitivity analysis are carried out
discount rate, terminal value, operational and capital expenditure. We have
regarding any accounting effects. The assessment did not result in an
obtained corroborative evidence for these assumptions.
is assessed.
impairment.
As disclosed in note 4 of the consolidated financial statements, the Group has
and margins and obtained further explanations when considered necessary.
considered the long-term impact of climate change, in particular by
We also compared the forecast to prior year’s forecast and actuals. We
considering a long-term growth rate in the estimation of the terminal value in
compared the long-term growth rates used in determining the terminal value
line with the change in steel and cement demand on the longer term based
with economic and industry forecasts. We have reperformed calculations,
We performed analysis to assess the reasonableness of forecasted revenues
on the specific characteristics of the businesses involved.
compared the methodology applied with generally accepted valuation
techniques, assessed appropriateness of the cost of capital for the company
Management also considered and modelled the potential impact of the
and comparable assets, as well as considered territory specific factors. Finally,
European Carbon Border Adjustment Mechanism (CBAM) regulation on its
we assessed the appropriateness of the disclosure of the key assumptions and
assets located within Europe and modelled the impact thereof.
sensitivities underlying the tests.
We identified the valuation of goodwill as a key audit matter due to significant
Based on the audit procedures performed, we found the assumptions to be
estimates and assumptions used with respect to, among others, discount
reasonable and supported by the available evidence.
rates, profitability forecasts and growth rates.
• Obtaining an understanding of the entity’s financial reporting process, including the preparation of the reporting package.
•
Identifying and assessing the risks that the annual report does not comply in all material respects with the RTS on ESEF and designing and
performing further assurance procedures responsive to those risks to provide a basis for our opinion, including:
o
obtaining the reporting package and performing validations to determine whether the reporting package, containing the Inline XBRL instance
document and the XBRL extension taxonomy files, has been prepared in accordance with the technical specifications as included in the RTS
on ESEF;
examining the information related to the consolidated financial statements in the reporting package to determine whether all required mark-
ups have been applied and whether these are in accordance with the RTS on ESEF.
o
No prohibited non-audit services
To the best of our knowledge and belief, we have not provided prohibited non-audit services as referred to in article 5(1) of the European Regulation on specific
requirements regarding statutory audit of public-interest entities.
Services rendered
The services, in addition to the audit, that we have provided to the Company or its controlled entities, for the period to which our statutory audit relates, are
disclosed in note 41 to the consolidated financial statements.
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OTHER INFORMATION
Responsibilities for the financial statements and the audit
Responsibilities of the board of directors
The board of directors is responsible for:
•
•
the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code; and for
such internal control as the board of directors determines is necessary to enable the preparation of the financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the board of directors is responsible for assessing the Company’s ability to continue as a going concern. Based on the
financial reporting frameworks mentioned, the board of directors should prepare the financial statements using the going-concern basis of accounting unless
the board of directors either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.
The board of directors should disclose in the financial statements any event and circumstances that may cast significant doubt on the Company’s ability to
continue as a going concern.
The audit committee is responsible for overseeing the Company’s financial reporting process.
Our responsibilities for the audit of the financial statements
Our responsibility is to plan and perform an audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence to provide a basis
for our opinion. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are 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 but not absolute level of assurance, and
is not a guarantee that an audit conducted in accordance with the Dutch Standards on Auditing will always detect a material misstatement when it exists.
Misstatements may arise due to fraud or error. They 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 the financial statements.
Materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.
A more detailed description of our responsibilities is set out in the appendix to our report.
Rotterdam, 28 February 2024
PricewaterhouseCoopers Accountants N.V.
Original has been signed by A. F. Westerman RA
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FINANCIAL
STATEMENTS
OTHER
INFORMATION
Responsibilities for the financial statements and the audit
Responsibilities of the board of directors
The board of directors is responsible for:
Appendix to our auditor’s report on the financial statements 2023 of RHI Magnesita N.V.
In addition to what is included in our auditor’s report, we have further set out in this appendix our responsibilities for the audit of the financial statements and
explained what an audit involves.
•
•
the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code; and for
such internal control as the board of directors determines is necessary to enable the preparation of the financial statements that are free from
material misstatement, whether due to fraud or error.
The auditor’s responsibilities for the audit of the financial statements
We have exercised professional judgement and have maintained professional scepticism throughout the audit in accordance with Dutch Standards on
Auditing, ethical requirements and independence requirements. Our audit consisted, among other things of the following:
In preparing the financial statements, the board of directors is responsible for assessing the Company’s ability to continue as a going concern. Based on the
financial reporting frameworks mentioned, the board of directors should prepare the financial statements using the going-concern basis of accounting unless
the board of directors either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.
The board of directors should disclose in the financial statements any event and circumstances that may cast significant doubt on the Company’s ability to
continue as a going concern.
The audit committee is responsible for overseeing the Company’s financial reporting process.
Our responsibilities for the audit of the financial statements
Our responsibility is to plan and perform an audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence to provide a basis
for our opinion. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are 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 but not absolute level of assurance, and
is not a guarantee that an audit conducted in accordance with the Dutch Standards on Auditing will always detect a material misstatement when it exists.
Misstatements may arise due to fraud or error. They 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 the financial statements.
Materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.
A more detailed description of our responsibilities is set out in the appendix to our report.
Rotterdam, 28 February 2024
PricewaterhouseCoopers Accountants N.V.
Original has been signed by A. F. Westerman RA
•
Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing
audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the intentional override of internal control.
• Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
•
•
•
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
board of directors.
Concluding on the appropriateness of the board of directors’ use of the going-concern basis of accounting, and based on the audit evidence
obtained, concluding whether a material uncertainty exists related to events and/or conditions that may cast significant doubt on the Company’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report and are made in the context of our opinion on the financial statements as a whole. However,
future events or conditions may cause the Company to cease to continue as a going concern.
Evaluating the overall presentation, structure and content of the financial statements, including the disclosures, and evaluating whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Considering our ultimate responsibility for the opinion on the consolidated financial statements, we are responsible for the direction, supervision and
performance of the group audit. In this context, we have determined the nature and extent of the audit procedures for components of the Group to ensure that
we performed enough work to be able to give an opinion on the financial statements as a whole. Determining factors are the geographic structure of the Group,
the significance and/or risk profile of group entities or activities, the accounting processes and controls, and the industry in which the Group operates. On this
basis, we selected group entities for which an audit or review of financial information or specific balances was considered necessary.
We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit. In this respect, we also issue an additional report to the audit
committee in accordance with article 11 of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. The information
included in this additional report is consistent with our audit opinion in this auditor’s report.
We provide the board of directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate
with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related actions taken to
eliminate threats or safeguards applied.
From the matters communicated with the board of directors, we determine those matters that were of most significance in the audit of the financial statements
of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
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OTHER INFORMATION
Alternative performance
measures (“APMs”)
Definitions of APMs used by the Group are
set out below. The purpose and usefulness of
each APM and a reconciliation to the nearest
IFRS equivalent measure, or a reference to
a reconciliation appearing elsewhere in this
document. In general, APMs are presented
externally to meet investor and analyst
requirements for clarity and transparency
of the Group’s underlying financial
performance. APMs are also used internally
in the management of the Group’s business
performance, budgeting and forecasting.
APMs are non-IFRS measures which enable
investors and other readers to review alternative
measurements of financial performance, but
they should not be used in isolation from the
main financial statements. Commentary within
the Annual Report, including the Financial
Review, the Consolidated Financial Statements
and the accompanying notes, should be
referred to in order to fully appreciate all the
factors and context affecting the Group’s
financial performance. Readers are strongly
encouraged not to rely on any single financial
measure and to carefully review the Group’s
reporting in its entirety.
Performance APMs
Adjusted EBITDA
Adjusted EBITDA is a key non-IFRS measure
that the Executive Management Team (EMT)
and Directors use internally to assess the
underlying financial performance of the
Group and is viewed as relevant to capital
intensive industries. The ratio of Net Debt
to Adjusted EBITDA is used as a measure of
financial gearing.
Adjusted EBITDA is defined as EBIT, as presented
in the Condensed Consolidated Statement of
Profit or Loss, before amortisation, depreciation,
and Excluded Items (see definition below).
Pro Forma Adjusted EBITDA
Pro Forma Adjusted EBITDA is used to assess
financial gearing and includes a full year of
Adjusted EBITDA contribution from businesses
acquired during the year.
Adjusted EBITA
Adjusted EBITA is a key non-IFRS measure that
the EMT and Directors use internally to assess
the underlying performance of the Group.
Adjusted EBITA is determined consistently with
Adjusted EBITDA, but includes depreciation
expense of property, plant and equipment
to reflect the wear and tear cost and future
replacement of productive assets.
Adjusted EPS
Adjusted EPS is a key non-IFRS measure and
one of the Group’s KPIs. Adjusted EPS is used
to assess the Group’s underlying operational
performance, post tax and non-controlling
interests on a per share basis.
This measure is based on Adjusted EBITA after
finance income and expenses, taxes, share of
profit or loss from associates and joint ventures
and non-controlling interest. Share of profit
or loss from associates and joint ventures is
adjusted to exclude impairments and gains or
losses recognised on disposals.
Adjusted EPS excludes finance income
and expenses and certain foreign exchange
effects, that are not directly related to
operational performance. This includes
the non-cash present value adjustments
for the Oberhausen provision.
Taxes are calculated by applying the effective
tax rate normalised for restructuring expenses
and impairments.
Excluded items
Items that are excluded (Excluded Items) in
arriving at the Group’s Adjusted measures of
Adjusted EBITA, EBITDA and EPS include:
Other income, other expenses and restructuring
expenses as reflected on the Consolidated
Statement of Profit or Loss as well as gains and
losses within interest income, interest expenses
and other net financial expenses that are
non-recurring in nature and not reflective of
the underlying operational performance of the
business. Excluded items include restructuring
related provisions, costs in relation to corporate
transactions and other non-recurring costs. The
tax impacts of the above Excluded Items are also
adjusted for.
This APM is reconciled to Net Cash flow from
operating activities as follows:
€m
2023
2022
Adjusted operating cash
flow (APM)
Add: Capital expenditure1
Less: Income Taxes paid1
Other income/expenses
and restructuring items1
Net cash flow from
operating activities1
413
180
(60)
(32)
155
157
(54)
(24)
500
234
1. As reflected in the Consolidated Statement of Cash Flows.
Free cash flow is determined from the IFRS
measures of Net cash flow from operating
activities, net cash used in investing activities
and net cash (used in)/provided by financing
activities and excludes the cash impacts
of purchases and disposals of business
and subsidiaries, dividends paid to equity
shareholders of the Group, share capital
transactions with shareholders, proceeds
and repayment of borrowings and current
borrowings and repayment of leases.
Free cash flow is reconciled to Cash changes
in Net debt in the table in the Cash flow and
working capital section. Cash changes in Net
debt is reconciled to Change in cash and cash
equivalents in the Net Debt APM reconciliation.
Balance sheet
Liquidity
Liquidity comprises cash and cash equivalents,
short term marketable securities and undrawn
committed credit facilities.
€m
Cash and cash equivalents1
Add: Revolving credit facility
(RCF)
2023
704
600
1,304
2022
521
600
1,121
Cash flow performance measures
Liquidity (APM)
Adjusted operating cash flow and Free
cash flow
Adjusted operating cash flow is a key non-IFRS
measure used by the EMT and the Directors
to reflect the operational cash generation
capacity of the Group before the cash impacts
of Excluded Items (see definition above).
Adjusted operating cash flow is defined as
Adjusted EBITDA adjusted for working capital
items, changes in other assets and liabilities and
capital expenditure and other non-cash items,
such as share based payments.
1. As reflected in the Consolidated Statement of
Financial Position.
Net Debt
Net Debt is the excess of current and non-
current borrowings, associated debt derivatives
for which hedge accounting is applied and
lease liabilities over cash and cash equivalents
and short-term marketable securities. The
Board uses this measure for the purpose of
capital management. A reconciliation of Net
Debt is included in Note 34 to the Condensed
Consolidated Interim Financial Statements.
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€m
2023
2022
Invested Capital €m
2023
2022
(82)
Goodwill3
Other intangible assets3
Property, plant and
equipment3
Investments in joint
ventures and associates3
Other non-current assets3
Deferred tax assets3
Inventories3
Trade and other receivables3
Income tax receivables3
Deferred tax liabilities3
Trade and other current
liabilities3
Income tax liabilities3
Current provisions3
339
470
137
317
1,360
1,204
6
37
152
996
686
43
(63)
6
40
128
1,049
579
39
(62)
(820)
(780)
(51)
(34)
(38)
(30)
Cash changes in net debt
Proceeds from borrowings1
Repayment of borrowings1
Change in current
borrowings1
Repayment of lease
obligations1
Change in cash and
cash equivalents1
(41)
336
(16)
(63)
(20)
344
(278)
(14)
(21)
196
(50)
1. As reflected in the Consolidated Statement of Cash Flows.
Working capital
Working capital consists of inventories plus trade
receivables and other receivables minus trade
payables and other payables. Working capital
intensity provides a measure of how efficient
the Company is in managing operating cash
conversion cycles. It is measured as Working
capital divided by trailing three-month revenues
(annualised) and is expressed as a percentage.
€m
Inventories (Note 21)
Trade receivables (Note 22)
Contract assets (Note 22)
Contract liabilities (Note 32)
Accounts receivables
2023
996
538
4
(65)
477
2022
1,049
433
4
(62)
375
Trade payables (Note 32)
(498)
(507)
Total working capital
974
918
Return on invested capital (ROIC)
ROIC reflects the annualised return on invested
capital of the Group. The Group has amended
its definition of ROIC to use Average Invested
Capital, being the average of the level of
Invested Capital at the beginning and end of
the financial year. ROIC is calculated as NOPAT
(net operating profit after tax) divided by average
invested capital of the year.
€m
Revenue1
Cost of sales1
Selling and marketing
expenses1
General and administrative
expenses1
Income taxes paid2
NOPAT
2023
3,572
2022
3,317
(2,714)
(2,554)
(153)
(131)
(339)
(60)
305
(277)
(54)
301
1. As reflected in the Consolidated Statement of Profit
and Loss.
2. As reflected in the Consolidated Statement of Cash Flows.
Invested Capital
3,122
2,587
Average invested capital
2,854
2,439
Return on average
invested capital
10.7%
12.3%
3. As reflected in the Consolidated Statement of
Financial Position.
4. NOPAT divided by average invested capital of the year.
Invest Capital in 2021 €2,291 million
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OTHER INFORMATION Audit & Compliance Committee
DNSH
Do-No-Significant-Harm criteria
Glossary
AC
AFM
AGM
AI
APM
BF
BOF
CAE
CAGR
capex
CBAM
CCO
CCUS
CDP
CEO
CERO
CFO
CIA
CO
CO2
CoGS
CoRe
Dutch Authority for the Financial Markets
Annual General Meeting
Artificial Intelligence
Alternative Performance Measures
Blast Furnace
Basic Oxygen Furnace
Chief Audit Executive
Compound Annual Growth Rate
Capital Expenditure
Carbon Border Adjustment Mechanism
Chief Customer Officer
Carbon Capture, Utilisation & Storage
Global disclosure system for investors, companies,
cities, states and regions to manage their environmental
impacts
Chief Executive Officer
Continuous Economic Recycling Optimisation
Chief Financial Officer
Certified Internal Auditor
Carbon monoxide
Carbon dioxide
Cost of Goods Sold
Complexity Reduction Program
COP 27
The 2022 United Nations Climate Change Conference
COVID-19
Coronavirus disease 2019
CIS
Commonwealth of Independent States
CREST
Certificateless Registry for Electronic Share Transfer
CSC
CSR
CSRD
CTO
DACH
DBM
DBRL
DEI
DGSB
DCGC
Corporate Sustainability Committee
Corporate Social Responsibility
Corporate Sustainability Reporting Directive
Chief Technology Officer
Three Central European countries of Germany (D),
Austria (A), and Switzerland (CH)
Dead Burned Magnesia
Dalmia Bharat Refractories Limited
Diversity, equity and inclusion
Dalmia GSB Refractories GmbH
Dutch Corporate Governance Code 2016
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DRI
DSR
DTR
E2E
EAF
EBIT
EBITA
EBITDA
ED
EEC
EMT
EPS
ERD
ERP
ESEF
ESF
ESG
ETR
ETS
EU
FRC
FTSE
FX
Direct Reduced Iron
Dalmia Seven Refractories Ltd
Disclosure & Transparency Rules (UK)
End-to-End
Electric Arc Furnace
Earnings Before Interest and Taxes
Earnings Before Interest, Taxes and Amortisation
Earnings Before Interest, Taxes, Depreciation
and Amortisation
Executive Director
Environment, Energy and Chemicals
Executive Management Team
Earnings Per Share
Employee Representative Director
Enterprise Resource Planning system
European Single Electronic Format
Electric Smelting Furnace
Environmental Social Governance
Effective Tax Rate
Emissions Trading Schemes
European Union
UK Financial Reporting Council
Financial Times Stock Exchange
Foreign Exchange
GAAP
Generally Accepted Accounting Principles
GHG
GRI
GSS
Greenhouse Gas Protocol
Global Reporting Initiative
Global Shared Services
Hi-Tech
Hi-Tech Chemicals Ltd
IAS
IEA
IFRS
IMS
IPCC
IPO
ISO
ISSB
International Accounting Standards
International Energy Agency
International Financial Reporting Standards
Integrated Management System
Intergovernmental Panel on Climate Change
Initial Public Offering
Isostatically pressed
International Sustainability Standards Board
Jinan New Emei Industries Co. Ltd
PROIL
Jinan New
Emei
Ktpa
KPI
LES
LPG
LTIF
LTIP
Thousand tonnes per annum
Key Performance Indicator
Lining Evaluation Scan
Liquefied Petroleum Gas
Lost Time Injury Frequency
Long-Term Incentive Plan
MCi Carbon Mineral Carbonation International Pty Ltd.
M&A
MES
Mergers and Acquisitions
Manufacturing Execution Systems
MIRECO
Horn & Co. RHIM Minerals Recovery GmbH
MSCI
MSS
NAM
NCI
NED
NFM
NG
NGO
NMEA
NOx
Morgan Stanley Capital International
Minimum Social Safeguards
one of the RHIM strategic regions including North
America and Central America
Non-Controlling Interest
Non-Executive Directors
Non-Ferrous Metals
Natural Gas
Non-governmental Organisation
Near Middle East and Africa
Nitrogen oxides
NOPAT
Net Operating Profit After Tax
NPS
OCF
Net Promoter Score
Operating Cash Flow
Oberhausen
Unfavourable contract required to satisfy EU remedies at
the time of the combination of RHI and Magnesita to form
RHI Magnesita
OeKB
Oesterreichische Kontrollbank AG
Operations Excellence System
Other Income and Expenses
A digital solution offered by RHIM that optimises steel
or metal flow to reduce scrap rate and achieve higher
quality, improve energy and CO2 efficiency
Present Value Adjustment
Qualified Institutional Placement, a mechanism used for
equity issuance in India
Research & Development
Revolving Credit Facility
Refers to the group of a number of limited partnerships,
parallel investment and co-investment vehicles which
are ultimately controlled by Rhône Capital L.L.C.
Return On Invested Capital
Recycling Rate
One of the RHIM strategic regions: South America
Refractory Application System
United Nations Sustainable Development Goals
PVA
QIP
R&D
RCF
Rhône
Capital
ROIC
RR
SAM
SAR+
SDGs
Seven
Refractories
Seven Refractories d.o.o.
SFDR
SG&A
SID
SMART
Sustainable Finance Disclosure Regulation
Selling, General and Administrative Expenses
Senior Independent Director
SMART maintenance uses digital tools to make
maintenance and servicing more efficient
SOx
Sulphur oxides
SÖRMAŞ
Söğüt Refrakter Malzemeleri Anonim Şirketi
SRM
SS
TCFD
TRACE
TRIF
TRL
TSR
UK
Secondary Raw Materials
Scrap Steel
Task Force on Climate-related Financial Disclosures
A leading anti-bribery standard-setting organisation.
Total Recordable Injury Frequency
Technology Readiness Level
Total Shareholder Return
United Kingdom
Austrian petroleum company – OMV AG
UKCGC
UK Corporate Governance Code 2018
UK office for National Statistics
UN
United Nations
Operations Technology
Product Carbon Footprint
Post-Consumer Recycled
P-D Refractories CZ a.s.
Process In Full On Time
Property Plants & Equipment/Personal Protective
Equipment
UNGC
United Nations Global Compact
US/USA
United States of America
WRA
WSA
World Refractories Association
World Steel Association
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OES
OIE
OMV
ONS
OT
PCF
PCR
P-D
Refractories
PIFOT
PPE
OTHER INFORMATION Shareholder information
RHI Magnesita N.V. is a public company
with limited liability under Dutch law and
was incorporated on 20 June 2017.
Investor Relations department
Kranichberggasse 6,
1120 Vienna,
Austria
T: +43 699 1870 6490
Email: investor.relations@rhimagnesita.com
Corporate brokers
Peel Hunt LLP
100 Liverpool Street
London EC2M 2AT
United Kingdom
T: +44 20 7418 8900
www.peelhunt.com
Barclays Bank PLC
1 Churchill Place
Canary Wharf
London E14 5HP
United Kingdom
T: +44 20 7623 2323
www.barclays.com
Auditor
PricewaterhouseCoopers Accountants N.V,
Thomas R. Malthusstraat 5
1066 JR Amsterdam
P.O. Box 90357
T: +31 88 792 00 20
www.pwc.nl
Follow us
It has its corporate seat in Arnhem, the Netherlands, its administrative
seat in Vienna, Austria and its registered office at Kranichberggasse 6,
1120 Vienna, Austria.
The telephone number of the Issuer is +43 50 2136200.
The Company shares, represented by depository interests, of RHI
Magnesita N.V, are listed on the Premium Segment of the Official List
on the Main Market of the London Stock Exchange and RHI Magnesita
N.V holds a secondary listing on the Prime Segment of the Vienna Stock
Exchange (Wiener Börse).
Ticker symbol: RHIM
ISIN Code: NL 0012650360
Investor information
The Company’s website www.rhimagnesita.com provides information
for shareholders and should be the first port of call for general queries.
The Investors section here contains details. contains details on the
current and historical share price, analyst presentations, shareholder
meetings as well as a “Shareholders Information” section. Annual and
Interim Reports can also be downloaded from this section.
You can also subscribe to an “Investors mail alert service” to automatically
receive an email when significant announcements are made.
Shareholding information
Please contact our Registrar, Computershare for all administrative
enquiries about your shareholding, such as dividend payments, or
a change of address:
Computershare Investor Services PLC
The Pavilions,
Bridgwater Road
Bristol BS99 6ZZ
United Kingdom
www.computershare.com/uk
T: +44 (0) 370 702 0003
Financial calendar
Q1 Trading Update
Annual General Meeting
Half Year Results
2 May 2024
2 May 2024
24 July 2024
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