MAGONTEC LIMITED — Interim / Quarterly Report 2020

Oct 29, 2020

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Suite 1.03, Level 1 46A Macleay St Potts Point NSW 2011 Australia Ph: +61 2 8084 7813 Fax: +61 2 9252 8960

30 October 2020

Company Announcements Office Australian Securities Exchange Limited 20 Bridge Street, Sydney NSW 2000

Dear Sirs,

Appendix 4C – Quarter Ended 30 September 2020

In this letter are –

• Attachment 1 – Unaudited Cash Flow Statement for the 9 months to 30 September 2020

• Attachment 2 – Unaudited Appendix 4C cash flow report for the quarter ended 30 September 2020

Attachment 1 is presented in the format that appears in the Company’s half year and annual reports and is prepared on a basis consistent with the recognition and measurement requirements of accounting standards.

Attachment 2 is presented in the format required by Paragraph 4.7B of Chapter 4 of the ASX listing rules. It is reiterated that all data presented in this report is unaudited.

Yours sincerely

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Nicholas Andrews, Executive Chairman of Magontec Limited has authorised the release of this document to the market on 30 October 2020.

Rounding

The data in this report may indicate apparent errors to the extent of one unit (being $1,000) in the addition of items comprising totals and sub totals and the comparative balances of items from the financial accounts. Such differences arise from the process of converting foreign currency amounts to two decimal places in AUD and subsequent rounding of the AUD amounts to one thousand dollars.

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Executive Chairman’s Commentary

Magontec Limited (ASX: MGL)

Quarterly Update for the 9 months to 30 September 2020 (Unaudited)

Operational Highlights – Third Quarter 2020	9 months to 30-Sep-20 9 months to 30- Sep-19 % Change
Gross Profit EBITDA Underlying Net Profit After Tax Underlying Operational Cashflow****	+$8.746m +$10.430m -16.1% +$2.468m +$1.964m +25.7%
	-$0.493m -$1.053m -53.1% +$2.898m +$2.205m +31.5%

*Excludes the impact of unrealised FX gains and losses

• **Cashflow from operations excluding working capital movements, interest and income tax paid

Highlights Commentary

• In the period to 30 September 2020, Magontec has experienced a 31.5% increase in underlying cash generation* and EBITDA up 25.7% to $2.468m. These results are driven by lower General and Administrative costs, volume growth in specialist metals products and a strong performance from the global Mg anodes business.

• While there have been signs of a recovery in volumes in the European and US magnesium alloy die cast industries, the resurgence of COVID-19 in both jurisdictions dictates a cautious outlook for the coming quarter and a high likelihood that Magontec’s European operations will again be impacted.

• Magontec’s profit results remain heavily and negatively impacted by the Magontec Qinghai magnesium alloy cast house where raw material supply from QSLM remains suspended. The facility continues to produce low volumes and currently operates at a small monthly loss. Furthermore, the original $10m investment continues to be fully depreciated. We expect raw material supply to re-commence in 2021.

• Excluding the impact of significant items and in particular recognising the burden of fully depreciating the Magnesium Alloy Cast House (MACH) in a period when it is not fully operational, the Group recorded a Net Profit After Tax up 10% on the previous corresponding period to $242,766.

Net Profit analysis of significant items	Net Profit analysis of significant items	30-Sep-20 YTD	30-Sep-19 YTD
NPAT	ex unrealised FX	$(493,498)	$(1,052,946)
Add back significant items
-	MAQ depreciation, post tax(non-cash)	$645,433	$609,502
-	One-off finepaid to Golmud authorities1	-	$416,936
-	Long-Term Incentive Plan options accrual(non-cash)2	($59,168)	$97,326
-	Provision for unforeseen costs(non-cash)	$150,000	$150,000
Subtotal		$736,264	$1,273,764
NPAT	ex FX and significant items	$242,766	$220,818

1. Related to commissioning events upon commencement of Magontec’s operation at Golmud.

2. Write back due to lower probability of achieving non market LTI targets

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• Gross Profit of $8.75m Year-to-Date (YTD) is 16.1% lower than the previous corresponding period (PCP) while the Gross Profit margin rose to 12.7% YTD, up from 10.4% in the same period in 2019.

Gross Profit	9 months to 30 Sept 2020	9 months to 30 Sept 2019	% Change
Metals	$3.04m	$3.65m	-16.8%
Anodes	$5.71m	$6.78m	-15.8%

• The impact of COVID-19 has been most pronounced in the metal businesses. Demand for Mg alloy recycling volumes in Europe fell sharply, particularly in the second quarter, while primary Mg alloy volumes in China also declined. The outlook for the fourth quarter is for a slight improvement in volumes in both regions.

• The CCP (anodes) businesses performed well. Mg anode sales were higher into global markets over the period under review. The principal customer, the hot water industry, proved to be highly defensive in a broader environment of consumer decline.

• Head Office costs, excluding movements in unrealised foreign exchange, were 25.3% lower in the period under review compared with the PCP. Lower personnel costs associated with company-wide pay and director fee reductions were the principal contributor to this reduced number. Travel costs were also significantly below PCP.

ABOUT MAGONTEC LIMITED ASX Code: MGL

Magontec is a leading manufacturer of magnesium alloys and Cathodic Corrosion Protection (magnesium and electronic anode) products

Magontec activities

• Converts pure Mg, alloying elements and Mg alloy scrap into Mg alloy ingots

• Casts and extrudes Mg alloys into anodes for supply to the global water heater industry

• Distributes products through a global sales network to customers in Europe, AsiaPacific and North America

Magontec assets

• World’s greenest primary Mg alloy producer at Qinghai PRC

• Premier Mg alloy recycling assets in Europe

• A portfolio of proprietary magnesium alloys and an active R&D program

• Mg & electronic anode manufacturing facilities in Europe and China

Magontec profile

• A leading global magnesium alloy manufacturer and sales organisation

• A pioneer in the field of magnesium alloys and anode products

• Vast experience in production and development of new Mg alloys and anode applications

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Headline numbers
9 months to 9 months to
A$M 30 Sep 2020 30 Sep 2019 $ Chg	% Chg
Underlying Operational Cashflow $2.898 m $2.205 m +$0.694 m*	+31.5%
Work cap movement & other op cashflow ($0.662 m) ($8.032 m) +$7.369 m
Reported Operational Cashflow $2.236 m ($5.827 m) +$8.063 m
Gross Profit $8.746 m $10.430 m ($1.684 m)	(16.1%)
Gross Profit Margin (%) 12.7% 10.4%
Underlying EBITDA $2.468 m $1.964 m +$0.505 m**	25.7%
Underlying EBIT** $0.192 m ($0.315 m) +$0.507 m	(160.8%)
Underlying NPAT ($0.493 m) ($1.053 m) +$0.559 m**	(53.1%)
Reported NPAT ($0.784 m) ($0.875 m) +$0.091 m	(10.4%)
** Excludes unrealised FX effects of ($0.290 m) +$0.178 m ($0.468 m)

Financial Comment

In the third quarter, Magontec recorded underlying operational cash flow* of +$0.55 million bringing the 2020 YTD number to +$2.90 million, up 31.5% on the PCP with reduced G&A cost from pay reductions a key driver.

Net debt was $14.0 million as at 30 September 2020, and net debt to net debt + equity was 34.1%. Both numbers are consistent with historical levels. Working capital as at 30 September 2020 was $33.9 million, meaning Magontec is financing almost $20.0 million of working capital by way of its own equity, particularly in China and the United States. As the Company’s business grows in both regions, management is seeking more traditional working capital borrowing base facilities that are currently only available to Magontec in Germany and Romania. This represents an opportunity to improve returns and funding flexibility.

* This is defined as cashflow from operations excluding working capital movements, interest and income tax paid

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Underlying operational cashflow Net debt (A$ m)
$2.898 m
19.1
$2.205 m 18.0
15.8 15.3
13.9 [15.0 ] 14.0
12.2
11.1 [12.2 ]
9.1 8.9 9.5
6.5
5.2
3Q19 YTD 3Q20 YTD 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
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Review of Operations

In the September 2020 Quarter Magontec experienced a small recovery in production volumes and sales as the COVID19 pandemic began to recede, particularly in China. Third quarter sales to automotive OEMs and Tier 1’s, which were most heavily impacted, experienced higher volumes than in the second quarter, boosting magnesium alloy sales of primary material from Qinghai, PRC and recycled material from Europe. While we expect this to continue into the fourth quarter the rising COVID-19 caseloads in Europe and North America are a concern.

As we have noted through the year, Magontec’s CCP (Cathodic Corrosion Protection) business has maintained global sales volumes on a relatively even keel throughout 2020. This is a seasonal business that is generally weaker in the (northern) summer months and stronger into the (northern) autumn and winter.

In terms of headline Year-To-Date Gross Profit, the metals business is down 16.8% compared with the same period in 2019 and the CCP business is down 15.8%. These numbers are impacted by:

• the continued absence of liquid pure magnesium raw material supply to the Magontec Qinghai magnesium alloy cast house since the end of March 2019, which is a major negative factor. That has been offset at the margin in the aggregate metals profit number by higher specialist metal sales from European plants through 2020, and

• slower sales of high-end CCP products into the US markets throughout 2020 compared with the previous corresponding period, to some extent counter-balanced by higher volumes of lower value CCP products into Middle Eastern, US and Chinese markets

The effect of declines in Gross Profit from operations have been largely offset by cost savings and various COVID-19 support mechanisms. In the 9 months to 30 September 2020 General and Administrative costs were down 17% to $8.76 million.

Adjusting for unrealised changes in foreign exchange, the high levels of depreciation at the Magontec Qinghai plant and other one-off significant items, Net Profit After Tax rose 10% to $242,766.

Despite the challenges of COVID-19 Magontec continues to record strong underlying cash generation. This is cash generated by the operating business before taking into account interest paid, tax paid and movements in working capital associated with varying levels of debtors, inventory and goods in transit. In the period to the end of September 2020, underlying cash generation was $2.9m compared with $2.2m for the same period in 2019.

The company continues to maintain low levels of debt. As at the end of September 2020 net debt stood at $14 million, reflecting a slightly larger Mg alloy inventory than at the same time in the previous corresponding period. Net Debt to Net Debt-plus-Equity is 31.4% rising in recent weeks as sales volumes in the magnesium alloys business have picked up.

In the quarter under review Magontec entered negotiations to re-new its banking facilities in Europe with Commerzbank and entered into a new banking facility in China with Zheshang Bank.

Qinghai Salt Lake Magnesium (QSLM) – Raw Material Supply

Investors will be aware that Magontec’s Qinghai primary magnesium alloy cast house has been operating at well below rated capacity for the last 18 months.

Magontec’s largest shareholder and supplier of liquid pure magnesium raw material, the Qinghai Salt Lake Magnesium Co Ltd, has been undergoing a corporate and financial restructuring following the sale of the company by its previous owner, the Qinghai Salt Lake Industry Co Ltd (QSLIC). Both entities are owned by the Chinese state, however QSLIC is also a listed entity on the Shenzhen Stock Exchange (SSX) and was required to divest itself of QSLM to meet SSX local listing requirements.

The new owner of QSLM is Qinghai Huixin Asset Management (QHAM), also a Chinese state-owned enterprise. While the COVID-19 pandemic has delayed QSLM’s progress towards a re-start of the electrolytic magnesium smelter, company officials announced at the China Magnesium Association conference on 23 September 2020 that they expect to re-commence production of pure magnesium at the Qinghai facility in 2021.

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At the current time QSLM has two key tasks to resolve prior to commencing a restart at Qinghai; it must resolve outstanding creditor claims and it must find a new investor to fund the cost of plant remediation and recommissioning.

A meeting to resolve outstanding creditor claims was due to be held on 15 April 2020. Prior to that date it was delayed, with court approval, until the middle of June 2020 but then postponed, again with the consent of the Xining Court, to 15[th] October 2020. On 9[th] October 2020 the court allowed for a further 2-month delay and the creditors meeting will now take place on 15[th] December 2020. One of the reasons the court gave was that the restructuring process has been disrupted by the COVID-19 pandemic. Prior to the December 2020 creditors meeting QSLM is obliged to release a plan for the re-structure of the business and the re-start of the magnesium operations.

In the meantime, QSLM has been seeking new funds from the Chinese Government. While we cannot know what the outcome of this process will be, Magontec’s understanding is that the sum required to re-start the Qinghai smelter is relatively small compared to the sunk capital cost.

Magontec is of the view that re-starting the Qinghai smelter is a core element in China’s national magnesium industry strategy. The entire Chinese magnesium industry currently relies on Pidgeon process magnesium production facilities, which emit very high levels of CO2 - around 5 times the emissions per tonne of product manufactured at QSLM’s Qinghai plant. China currently manufactures around 85% of global pure magnesium and supplies that as raw material to the aluminium alloying, magnesium alloying, steel desulphurisation and titanium nodule manufacturing industries. In the coming years production of high CO2 emission Pidgeon process magnesium is likely to become decreasingly acceptable for downstream manufacturers and the consumers for whom their products are made. For China to retain a prominent global position in the magnesium manufacturing industry the re-commencement of the Qinghai plant is a critical step.

As we have discussed in previous documents, Magontec has a central role at the Qinghai complex. It holds exclusive rights to manufacture magnesium alloys at Qinghai and it has an agreement to take up to 60,000 metric tonnes a year from the 100,000 metric tonnes a year facility.

While the delays to the project have been frustrating and costly to Magontec shareholders over the last 18 months - and will continue to be a burden for some months to come – the company is established at Qinghai with an experienced team and strong relationships. We remain of the view that the magnesium smelter will re-start and that Magontec Qinghai will become a major profit contributor for Magontec Limited shareholders.

CCP - Mg and Electronic anodes

In the three months to 30 September 2020 the Magontec global CCP business recorded Gross Profit 38.7% above the previous corresponding period. This included a particularly significant improvement from the Xi’an-based Chinese business, where volumes in the first three quarters of 2020 were 34% ahead of the same period in 2019. The impact of higher volumes and process changes have been evident throughout this year at the Xi’an plant.

Magontec’s Xi’an CCP plant is now a stronger competitor in China and into North American export markets.

In Europe the Mg anodes business has also seen growth in volumes compared with the previous corresponding period, particularly in the most recent quarter. Despite COVID-19 closures in the second quarter, overall volumes from the Romanian plant in the 9 months to 30 September 2020 are up 4% compared with the same period in 2019.

Chart 1 displays both the improvement in underlying profitability of the European CCP business and the strong rise in Chinese CCP profit contribution in the current year to date. It also shows the muted impact of COVID-19 closures,

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Chart 1 Global CCP Volumes & Gross Profit
$3.0 1,500
$2.0 1,000
$1.0 500
$0.0 -
1Q 2Q 3Q
2019 volumes 2020 volumes 2019 GP 2020 GP
Gross Profit
Metric Tonnes
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the rising profitability of the overall Mg anodes business in 2020 and the step-change in Mg anode volumes through the period under review.

In March and April factory closures in Europe and China impacted sales and profitability for both businesses while weaker volumes of high-end anodes into the North American markets heavily influenced profit comparisons in the first and second quarters

Metals – Primary Magnesium Alloy, Magnesium Alloy Recycling & Specialist Metals

The metals business was much more dramatically impacted by the COVID-19 induced slump in demand than the CCP business. The principal customer for magnesium alloys is the automotive industry where consumer demand fell sharply in the second quarter and remained at lower levels through to the end of August.

The largest part of the metals business is reliant on high volume throughput. As volumes decreased the impact on profitability was profound.

In the current year output comparisons are strongly impacted by the decline in volumes produced at the Qinghai primary Mg alloy facility with the key raw material supplier, QSLM, remaining off-line throughout the period under review.

In all regions of the world we are have seen an uptick in activity and demand in September. Magontec’s recycling business in Romania and Germany, which struggled through much of the second and third quarters, expect to operate at higher output levels through the fourth quarter, but are unlikely to reach the levels of 2019.

In this current period of lower than optimal volumes, profitability will struggle to recover to 2019 levels in the fourth quarter while

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Chart 2
Global Metals Volumes & Gross Profit
$2.5 9,000
8,000
$2.0
7,000
6,000
$1.5
5,000
4,000
$1.0
3,000
$0.5 2,000
1,000
$0.0 -
1Q 2Q 3Q
2019 volumes 2020 volumes 2019 GP 2020 GP
Metric Tonnes
Gross Profit ($M)
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overall profitability remains heavily impacted by the loss of Qinghai volumes, which made a strong profit contribution in 1Q 2019. While 4Q 2020 volumes at Qinghai are expected to return to higher levels, without supply of raw material from the adjacent pure magnesium electrolytic plant this cast house is required to source raw material from third party suppliers and, as a result, operates at a loss of around $50,000 per month.

With the resurgence of COVID-19 cases in Europe and the unrelenting progress of the pandemic in the USA, we remain cautious on the outlook for the metals business in the immediate future. On the brighter side China is emerging as a more buoyant economy in the final quarter of 2020 and demand is picking among domestic auto manufacturers in that country.

Nic Andrews

Executive Chairman 30 October 2020

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Attahment 1

UNAUDITED STATEMENT OF CASH FLOWS

Unaudited Consolidated Cash Flow Statement
Source: Magontec Limited Consolidated Management Accounts
6 months to 3 months to 9 months to
$000 30-Jun-20 30-Sep-20 30-Sep-20
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from/ (utilised in) underlying operating activities 2,350 548 2,898
Net working capital assets
- Trade and other receivables 10,304 (5,487) 4,817
- Inventory (2,553) 2,426 (127)
- Trade and other payables (5,742) 1,212 (4,529)
- Other (3) (94) (97)
Cash generated from/ (utilised in) net working capital assets 2,006 (1,943) 64
Other operating activities
- Net Interest paid (278) (229) (507)
- Income tax paid (222) 3 (219)
Cash generated from/ (utilised in) other operating activities (500) (226) (726)
Net Cash generated from/ (utilised in) all operating activities 3,856 (1,620) 2,236
CASH FLOW FROM INVESTING ACTIVITIES
Net cash out on purchase/disposal of property, plant & equipment (389) (109) (498)
Group information technology (3) 0 (3)
Security deposit (47) 22 (25)
Other including leased assets (132) (1) (132)
Net cash provided by / (used in) investing activities (571) (88) (659)
CASH FLOW FROM FINANCING ACTIVITIES
Bank Debt (5,642) 4,438 (1,204)
Net capital raised from issue of securities 260 (249) 11
Other (8) - (8)
Net cash provided by / (used in) financing activities (5,390) 4,189 (1,201)
Net increase / (decrease) in cash and cash equivalents (2,105) 2,481 376
Foreign exchange effects on total cash flow movement 142 (36) 105
Cash and cash equivalents at the beginning of the period 4,303 2,340 4,303
Cash and cash equivalents at the end of theperiod 2,340 4,784 4,784

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Attachment 2

APPENDIX 4C

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Limited

QUARTERLY UNAUDITED CASH FLOW APPENDIX 4C

for the Period Ended 30 September 2020

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms. Quarterly report for 30 September 2020

Page 1

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

Magontec Limited

ABN

51 010 441 666

Quarter ended (“current quarter”)

30 September 2020

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	19,011 (148) (17,366) (0) - (1,525) (1,395) - 6 (235) 3 30	78,944 (367) (67,351) (74) - (5,314) (3,583) - 39 (547) (219) 708
	(1,620)	2,236
2. Cash flows from investing activities 2.1 Payments to acquire or for: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property (f) other non-current assets	(109) 0	(498) (3)

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms. Quarterly report for 30 September 2020

Page 2

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
2.2 Proceeds from disposal of: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property (f) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities		21	(157)
		(88)	(659)
3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) 3.2 Proceeds from issue of convertible debt securities 3.3 Proceeds from exercise of options 3.4 Transaction costs related to issues of equity securities or convertible debt securities 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities		(143) (106) 4,626 (188) -	117 (106) 8,902 (10,106) (8)
		4,189	(1,201)
4. 4.1 4.2 4.3 4.4	Net increase / (decrease) in cash and cash equivalents for the period Cash and cash equivalents at beginning of period Net cash from / (used in) operating activities (item 1.9 above) Net cash from / (used in) investing activities (item 2.6 above) Net cash from / (used in) financing activities (item 3.10 above)	2,340 (1,620) (88) 4,189	4,303 2,236 (659) (1,201)

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms. Quarterly report for 30 September 2020

Page 3

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
4.5 4.6	Effect of movement in exchange rates on cash held Cash and cash equivalents at end of period	(36)	105
		4,784	4,784

5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	4,784 - - -	2,340 - - -
	4,784	2,340

6. Payments to related parties of the entity and their associates	Current quarter $A'000
6.1 Aggregate amount of payments to related parties and their associates included in item 1 - 6.2 Aggregate amount of payments to related parties and their associates included in item 2 - Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments. Explanation During the quarter ended 30 September 2020, there were no payments for purchase of pure Mg from the Qinghai Salt Lake Magnesium Co Ltd.	-
	-

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms. Quarterly report for 30 September 2020

Page 4

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

7. 7.1 7.2 7.3 7.4 7.5 7.6		Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 Loan facilities 21,727 20,336 Credit standby arrangements Other (please specify) Total financing facilities Unused financing facilities available at quarter end $1,391,663 Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
			21,727	20,336
		Borrowings facilities as at 30 September 2020
		Interest Limit Drawn Security
		Lender Maturity % $A 000 $A 000 status
		Commerzbank Germany* 30-Nov-20 1.55% 11,289 9,958 Secured
		ING Romania Open 4.20% 4,706 4,700 Secured
		ZheshangBank China 09-Jul-21 3.80% 4,113 4,113 Secured
		Total borrowings on balance sheet 20,109 18,771
		Postbank(factoring) 30-Nov-20 1.06% 1,619 1,565
		Total facilities 21,727 20,336

8.	Estimated cash available for future operating activities	$A’000
8.1 8.2 8.3 8.4 8.5 8.6	Net cash from / (used in) operating activities (item 1.9) (1,620) Cash and cash equivalents at quarter end (item 4.6) 4,784 Unused finance facilities available at quarter end (item 7.5) 1,392 Total available funding (item 8.2 + item 8.3) 6,176 Estimated quarters of funding available (item 8.4 divided by item 8.1) 3.8 Note: if the entity has reported positive net operating cash flows in item 1.9, answer item 8.5 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.5. If item 8.5 is less than 2 quarters, please provide answers to the following questions: 8.6.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?	(1,620) 4,784 1,392
		6,176
	Answer: N/A

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms. Quarterly report for 30 September 2020

Page 5

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

• 8.6.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?

Answer: N/A

8.6.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?

Answer: N/A

Note: where item 8.5 is less than 2 quarters, all of questions 8.6.1, 8.6.2 and 8.6.3 above must be answered.

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Date: 30 October 2020

Authorised by: Nicholas Andrews, Executive Chairman

(Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms. Quarterly report for 30 September 2020

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