This is looking good, a profit for the Q.In the first quarter of...

This is looking good, a profit for the Q.


In the first quarter of our new financial year Magontec Limited (MGL or the Company)
recorded an unaudited Net Profit After Tax of $75,356 (refer Attachment A).
While this represents only a small step towards an acceptable result, shareholders will be
pleased to note that MGL has moved from an operating loss to an operating profit in this
period.
This result reflects –
• the positive effects of restructuring undertaken over the last 12 months;
• the commencement of production at new facilities in Europe and China;
• a cost review; and
• a significant reduction in interest cost following the conclusion of a debt restructuring
package finalised in early January 2013.
As at 31 March 2013 Interest Cover stood at 4.26 times, up from 2.28 times at 31 December
2012.
Earnings before net interest, tax, depreciation and amortisation (EBITDA – one measure for
cash generated from operations) was positive $594,374 for the quarter ended 31 March
2013. The Appendix 4C cash flow statement released to the market simultaneously with this
report shows operational cash flow for the quarter ended 31 March 2013 at a positive
$514,195 (inclusive of net interest and taxation).
Negative impacts on profitability in the quarter include:
-­- On-going provisions for restructuring of the European anode business
-­- Carrying costs associated with an anode inventory build-up in Europe to smooth the
transfer of manufacturing equipment between facilities
-­- Start-up losses at the new Romanian anode manufacturing facility
-­- Operating losses at the Xi’an alloy facility associated with existing contracts prior to a final
transfer of all generic alloy manufacturing activity to the new Shanxi facility
-­- Costs associated with upgrading the new Shanxi facilities to a Magontec standard for
international customer qualification
-­- Refurbishment costs at the Xi’an facility to accommodate relocated Chinese anode
manufacturing activities
Most of these are non-recurring items and generated a total “one-off” cost in excess of
$500,000 in the first quarter.