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Positioned
for growth
Annual Report 2024
Morgan at a glance
Our global footprint
We manufacture an extensive range of specialist carbon and ceramic products.
Established in 1856, we have a proven track record in delivering for our customers,
underpinned by more than 160 years of innovation. We employ approximately
8,600 people worldwide, across 60 operating sites serving a diverse range of
customers across a range of end-markets.
Read more on our website:
www.morganadvancedmaterials.com
Our purpose
is to use advanced materials to make the world more
sustainable and improve the quality of life. Our purpose is at the heart and
soul of everything we do; it is the driving force behind how we advance
our business, our technology and our people.
The Morgan Code
governs how we work
and it is publicly available
in 19 languages: we work
safely, we work ethically,
we treat our people fairly,
we protect our business.
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Code
organ
THE
Strategic report
Annual report 2024
01
Morgan Advanced Materials
Strategic Report
Chair’s statement
02
Our business model
04
Market environment
06
Our core markets
08
Our faster growing markets
10
Our financial framework and
strategic execution
12
CEO’s review
14
Measuring our progress
16
Effective engagement with
our stakeholders
20
Section 172(1) statement
22
Non-financial and sustainability
information statement
25
A responsible business
incorporating TCFD
26
Risk management
43
Review of operations
48
Group financial review
50
Directors’ statements
55
Governance
Chair’s letter to shareholders
58
Board of Directors
59
Governance overview
61
Strategic oversight by the Board
63
Focusing on culture
65
Engaging with our workforce
67
Assessing Board performance
69
UK Corporate Governance
Code 2018 compliance statement
70
Report of the Audit Committee
74
Report of the Nomination Committee
80
Remuneration Report
84
Other disclosures
110
Independent Auditor’s Report
115
Financial Statements
Consolidated income statement
124
Consolidated statement of
comprehensive income
125
Consolidated balance sheet
126
Consolidated statement of
changes in equity
127
Consolidated statement
of cash flows
128
Notes to the consolidated
financial statements
129
Company balance sheet
181
Company statement of
changes in equity
182
Notes to the Company
financial statements
183
Group statistical information
200
Cautionary statement
201
Glossary of terms
201
Alternative performance measures
202
Shareholder information
206
2024 highlights
*
Alternative performance measures (APMs)
Throughout the Annual Report, including the Strategic Report, adjusted measures are used to describe the Group’s financial performance.
These adjusted measures are not recognised under International Financial Reporting Standards (IFRS) as adopted by the UK, or other generally
accepted accounting principles (GAAP). These measures are shown because the Directors consider they provide useful information to shareholders,
including additional insight into ongoing trading and year-on-year comparisons. These non-GAAP measures should be viewed as complementary to,
not replacements for, the comparable GAAP measures. Throughout this Report these non-GAAP measures are clearly identified by an asterisk (
*
)
where they appear in text, and by a footnote where they appear in tables and charts. Definitions of these non-GAAP measures and reconciliations to
the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on pages 201 to 205.
£1,100.7m
Reported revenue (2023: £1,114.7m)
+3.7%
Organic constant-currency
*
revenue growth
3%
Decrease in absolute CO
2
emissions
from scope 1 and scope 2
Chair’s statement
2024 has been a year of further progress for the Group in a difﬁcult end-market environment.
Our industrial end-markets, in particular Europe and China, weakened through the year and
we saw a signiﬁcant slowdown in semiconductor sales as customers for our graphite products
addressed excess inventories, triggered by slower than expected growth in electric vehicles.
Against this difﬁcult trading backdrop, we nonetheless made good progress across the Group.
We expect this to persist in 2025 as excess inventories are
consumed, but the Board remains convinced of the long-term
potential here. We have slowed our investments in this area, but
overall our new capital investment programme is progressing well.
We deployed £96.1 million of capital in 2024 and expect high levels
of investment to continue in 2025 and 2026 as we position the
Group for faster growth.
We were not successful in completing any acquisitions in the year.
This remains a focus for the Executive team and the Board, but we
are being disciplined in our approach. In the absence of acquisitions
we announced a share buyback programme in November 2024
of up to £40.0 million that we expect to execute over 18 months,
with shares to the value of £4.7 million repurchased during 2024.
The Group is well placed as we enter 2025. Our balance sheet is
strong; the importance of our solutions and the long-term growth
driver of providing sustainable solutions to support the energy
transition are still the same. The Board remain confident in the
Group’s long-term structural growth opportunities. While 2024 has
brought some very specific, short-term headwinds, our focus has
been on ensuring that we are managing the business appropriately
to position ourselves for growth in 2025 and beyond as our
end-markets recover.
As we prepare for the future, I am confident in our prospects and
that our team will continue to help deliver on our purpose – to use
advanced materials to make the world more sustainable and to
improve the quality of life.
Performance in 2024
Our first imperative is the safety and wellbeing of our colleagues,
and I am pleased to report that during 2024 our safety performance
continued to improve, reflecting the significant focus on employee
safety and wellbeing. The lost-time accident (LTA) rate, the headline
measure for health and safety, was 0.13 (2023: 0.19). Although we
are pleased that the LTA rate reduced significantly this year, we are
aware that there is more work to be done, particularly in relation to
process safety. My fellow non-executive Directors and I will continue
to support the Executive team to achieve a position of ‘zero harm’.
It has been a challenging year with our end-markets weakening
during the second half of the year, with declining and low order levels
in European and Chinese industrial and metals markets, slowing in
those same markets in the US and lower growth in Semiconductors.
Group revenue was 1.3% lower than in 2023 at reported rates and
3.7% higher on an organic constant-currency basis
*
. Adjusted
operating profit margin
*
was below the bottom of our 12.5%-15%
range, reflecting the sharp reduction in end-market demand, but we
expect to be back in the range during 2025 as the restructuring and
efficiency actions we are taking come through.
We have simplified how we manage our business, consolidating
into three segments (Thermal Products, Performance Carbon,
Technical Ceramics), and we have expanded the restructuring
programme we launched in 2023 to simplify our business further,
reducing the number of sites and improving efficiency. These actions
delivered savings of £8.0 million in 2024 and will deliver a cumulative
adjusted operating profit
*
benefit of £24 million in 2025, compared
to our 2023 baseline. We have made further advances with our IT
systems and infrastructure, continuing the high level of investment
in new capabilities and the replacement of older systems.
Our capital investment programme continues as we increase
capacity in key market segments including semiconductors,
healthcare, clean transportation and aerospace as well as our
faster growing regions, for example in India. We have seen a
slowdown in our largest growth market in silicon carbide (SiC)
power electronics driven by slower demand for electric vehicles.
02
The Board in 2024
In January 2025, Pete Raby announced that he would retire from
the business after a decade as CEO. Pete will be succeeded by
Damien Caby, currently President of the Thermal Products business.
Pete joined Morgan Advanced Materials in 2015 and has steered
the Company through a turbulent period, including the COVID-19
pandemic, the European energy crisis and a cyber security incident
in 2023. We will be sad to see him go. Pete leaves behind a better
business. From a personal perspective, Pete has been a pleasure to
work with and truly a driving force in setting up Morgan Advanced
Materials to have the bright prospects we see ahead. The whole
Board extends its sincere thanks and gratitude to Pete and wishes
him well in the future.
I would like to congratulate Damien on his appointment, a reflection
of his strong contribution and development since joining us in 2022.
We look forward to supporting Damien in his new role and to his
leading the Company to execute on its strategy and deliver against
the medium-term targets.
Laurence Mulliez, our Senior Independent Director, stepped
down in November 2024 after eight years on the Board. Having
served nine years on the Board, Helen Bunch, our Remuneration
Committee Chair, will be stepping down at this year’s AGM.
We are pleased that Alison Wood joined the Board in November
2024 as our new Senior Independent Director and will take over
as Remuneration Committee Chair after the AGM. Alison is an
experienced non-executive director with a significant background
in international industrials. She brings deep governance expertise
gained across numerous listed businesses, having served as Chair,
Senior Independent Director, and Remuneration Committee
Chair in FTSE 350 businesses and is a very capable addition to the
Board. I would like to thank Laurence and Helen for their valued
contribution to the Board.
Responsible business
The Board takes its responsibilities to all its stakeholders seriously
and we are committed to maintaining direct and productive
relationships with our shareholders, colleagues and communities,
taking a range of perspectives and feedback into account in our
decision-making and stewardship.
The wellbeing of our colleagues remained a priority throughout the
year. We have listened to their views through regular engagement
surveys and employee listening sessions. Information on how we as a
Board and business responded to their views and the actions we took
locally and globally to improve their experiences can be found on
pages 66 and 67.
I am pleased by the progress we have made this year in reducing the
Group’s environmental impact. We reduced scope 1 and 2 emissions
during the year and are now 55% below our 2015 baseline. We also
reduced our overall water usage.
We are on track to meet our 2030 goals. Not only are we making
our manufacturing processes more efficient, but more importantly
our products, which have properties to withstand heat and endure
other extreme environments, assist our customers in reducing their
environmental impact, either by lasting longer or improving the
efficient use of resources.
Dividend
The Board is recommending a final dividend for 2024 of 6.8 pence
(2023: 6.7 pence). Combined with the interim dividend of 5.4 pence
(2023: 5.3 pence), the resulting total dividend in respect of 2024 is
12.2 pence (2023: 12.0 pence).
The dividend will be payable on 13 May 2025 to shareholders on
the register on 11 April 2025, subject to shareholder approval.
The Board has committed to grow the ordinary dividend as the
economic environment and the Group’s earnings improve, targeting
a dividend cover of around 2.5 times over the medium term.
Looking forward to 2025
As we enter 2025, we remain cautious about the pressures on some
of our end-markets and heightened geopolitical risks, and we have
positioned the Group prudently as a result.
We are focused on capitalising on the increased capacity in our
business from the capital investment programme and remain open
to inorganic growth opportunities.
We are confident that continued focus on the strengths of the
business, underpinned by our diverse set of product and market
positions, resilient balance sheet and the efficiency and productivity
gains from our restructuring programme, will support the further
progress and the success of the Group in the years ahead.
Ian Marchant
Non-executive Chair
Strategic report
Annual report 2024
03
Morgan Advanced Materials
We are a global manufacturer of advanced carbon and ceramic products.
We use our deep advanced materials expertise to solve complex problems.
We create and manufacture products which make a more sustainable world,
and improve the quality of life.
Our business model
c.450 engineers and materials scientists
in four Centres of Excellence (CoE)
and in our plants
Deep understanding of how and why
materials work, and how to change
their properties
Rich intellectual property protected
through trade secrets and select patents
Broad materials technology portfolio
in ceramics and carbon
Extensive materials testing and
characterisation capability and expertise
Market and sustainability focused
product innovation and technological
ingenuity
Vast process know-how across the
business in systems, process engineers
and plant personnel
Signiﬁcant proprietary equipment
Vertical integration to ensure tight
process and product quality control,
and protect IP
Deep understanding of the interaction
of process steps on material properties
Ability to manufacture bespoke
components and combine into
value-added solutions
Skilled and motivated workforce in
a decentralised and entrepreneurial
organisation
Long relationships with trusted
suppliers and responsible procurement
practices
Extensive process
know-how
D
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04
Dedicated/tailored sales channels for
customer centricity
Deep insights through engineering
relationships and strategic marketing into
customer needs and developments
Signiﬁcant application expertise to allow
solution engineering and co-development
Broad product portfolio for complete
and optimal solutions
Extensive application testing capability,
including simulating actual conditions
A high level of qualiﬁcation and
repeat business
Ability to serve globally with agile and
reliable local marketing
Customer focus and
application expertise
Our decentralised
model enables us to
be agile and improve
service to our
customers.
The strength of
our materials science
platform and our
trusted relationships
make us who we are.
We serve a wide range
of customers in a
diverse set of regional
and global markets.
We solve problems:
ethically, safely and
sustainably.
Read more about how
we engage with our
stakeholders on pages 20
and 21, and read more
about our environmental
focus on pages 26 to 42
Read more about our
reporting segments
on pages 48 and 49
Read more about our
markets on pages 6 to 11
Long-term,
trusted relationships
with customers
Expanding
R&D
opportunities
Product
annuity streams
underpinning
revenue growth
and margin
expansion
Strategic report
Annual report 2024
05
Morgan Advanced Materials
Ceramics and carbon are very versatile
materials and as a result we participate in
a wide range of end-markets; you will find
our products all around you in products and
technologies that enable the modern world.
There are a number of signiﬁcant trends or megatrends shaping our world: climate
change, resource scarcity, urbanisation and migration, a growing middle class, an
ageing population and digitisation. These trends drive an ever greater need for
advanced materials, as our customers push the limits of their process and product
technology. We manufacture an extensive range of specialist products, satisfying a
variety of niche applications across numerous end-markets.
Market environment
06
Core markets
Our core market portfolio is diversified and
differentiated. Our core markets make up
78% of Group revenue. In these core
markets, we are leading, or are among
the market leaders, with strong customer
loyalty, a respected brand and deep
application expertise.
Within our core, we see a mix of growth
rates, from GDP in industrial markets to
5-10% in Aerospace, Fire protection
and Defence.
Faster growing markets
We are specifically targeting our faster
growing markets: Semiconductors,
Healthcare, Clean energy and clean
transportation. We see faster growth in
demand for our products in these markets.
78%
Industrial, Conventional transport, Metals
Petrochemical and Chemical, Security and
defence and Conventional energy
22%
Semiconductors, Healthcare,
Clean energy and clean transportation
19.3%
Clean energy and clean transportation
organic constant currency
*
revenue growth
0.9%
Semiconductors organic constant
currency
*
revenue growth
9.2%
Healthcare organic constant
currency
*
revenue growth
C
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Strategic report
Annual report 2024
07
Morgan Advanced Materials
.
Our core markets provide a strong base and a diversiﬁed portfolio. Within these
markets, we aim to maintain our leadership positions and are focusing on market
segments that exhibit higher growth potential, such as Aerospace and Fire
Protection, and expanding the reach of our core portfolio in key geographies,
such as India.
08
Industrial
There is an increasing need for our customers to improve
operational efficiency and to reduce energy consumption
and carbon dioxide emissions to make their businesses
more sustainable.
Market opportunity
Conventional
Transportation
Growing populations, increasing urbanisation and
the demand for more sustainable and cost-effective
transportation options is driving an increase in demand for
conventional transportation solutions across the globe.
Air travel is increasing with demand from business and leisure
customers. There is a growing need for these systems to run
more efficiently as well as to withstand greater extremes in
temperature.
Petrochemical
and Chemical
In the Petrochemical and Chemical markets our
customers demand high performance insulation and
fire protection solutions.
Security and
Defence
Defence spending is increasing globally, reflecting
geopolitical tensions.
We see a growing need for materials that can withstand
greater strains, pressures and temperatures.
Our core markets
26.7%
of revenue in 2024
18.4%
of revenue in 2024
9.6%
of revenue in 2024
6.7%
of revenue in 2024
C
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s
Strategic report
Annual report 2024
09
Morgan Advanced Materials
We engineer components which are highly resistant to
chemical and physical wear, corrosion and extreme
temperatures. These components sit at the heart of
many industrial processes.
Our thermal ceramic fibres like Superwool
®
XTRA support better
energy consumption.
We produce reduced wear, reliable seals which extend pump life by up
to 4x, (compared to spray coated stainless steel rings), resulting in the
significant reduction of through life costs.
Our Pyro-Bloc
®
modules for regenerative thermal oxidisers reduce
the number of through-joints between modules, resulting in fewer
opportunities for heat loss, and reduced fuel related expenses.
How we add value
How our products are used
We make high-performance components and
sub-assemblies to exacting standards for aerospace,
automotive, marine and rail applications.
Customers come to us for their most demanding
applications, for example when they need to hold
very fine features on small components.
We enable more efficient jet engines through the production of more
complex cores for casting turbine blades.
We make carbon brushes for trains.
We make high-temperature fibre products used for emission control
in vehicles.
Our seals and bearings are used in vehicle fuel and thermal management,
providing near frictionless running and low wear rates.
Our fused silica and mullite rollers enable thermal annealing of
automotive chassis parts.
Our products and materials are routinely chosen to fulfil critical
applications for thermal management and downstream processing,
owing to their resistance to chemical wear, corrosion and extreme heat.
Our self-lubricating seals and bearings and our ceramic shafts reduce
the energy consumption of pumps in chemical plants.
We manufacture a range of components ideally suited
to the uniquely demanding operating environments.
Our components for night vision systems enable superior performance.
Our ceramic tiles are used to build high-performance body and
vehicle armour.
Our ceramic cores are used to make high-performance turbine blades for
aircraft engines.
We supply precision-engineered materials, components
and assemblies to meet the exacting standards of the
global defence and security market.
Our advanced ceramic materials offer superior
dimensional stability, strength, stiffness and chemical
resistance across a wide range of temperatures.
We want to accelerate our organic growth by increasing our exposure
to faster growing market segments where we see the potential to
achieve higher returns.
10
Semiconductors
Our world is rapidly evolving, it is becoming more connected,
smarter, and more energy-efficient by the day. At the heart of this
transformation are semiconductors.
Silicon is the traditional and best known semiconducting material and
growth in this market is propelled by the relentless pace of digitisation
and connectivity, and the recent surge in artificial intelligence.
Newer semiconducting materials, SiC and Gallium Nitride (GaN)
are fuelling even stronger growth in the Wide Band Gap (WBG)
semiconductor market.
SiC and GaN semiconductors have penetrated a wide range of
industries, including electric vehicles, where they allow vehicles
to charge faster and drive further, power infrastructure,
5G telecommunications, data centres and artificial intelligence.
Our faster growing markets
Market trends
Healthcare
The global medical devices sector is undergoing a period of significant
transformation largely driven by demographic shifts, evolving patient
needs and technological advancements.
An ageing population, combined with lifestyle related factors has
resulted in a global increase in the prevalence of chronic diseases.
As a result, early detection, prevention and improved management
of chronic diseases has become an increasing focus for healthcare
systems across the globe.
Technological advancements, including artificial intelligence,
robotics, predictive analytics and wearable medical technology have
revolutionised the landscape of medical diagnostics and treatment.
Clean energy
and clean
transportation
As the world seeks to decarbonise, the demand for clean energy is
growing rapidly, driving demand for wind and solar power, energy
storage and nuclear generation.
Ground transportation is shifting away from fossil fuels to electric
power and fuel cells.
9.6%
of revenue in 2024
7.6%
of revenue in 2024
5.2%
of revenue in 2024
Strategic report
Annual report 2024
11
Morgan Advanced Materials
Morgan’s extensive product portfolio enables the production
of SiC, GaN and silicon chips. Our technology is critical from
crystal growth of the semiconducting material, at the very
beginning of the value chain, on through the many wafer
fabrication steps. We offer a broad portfolio of unique materials
and components that are made from highly purified carbon,
graphite, alumina, silicon carbide, and braze metal alloys.
Our products have been key to facilitating the manufacture of
SiC wafers at sufficient quality, cost and quantity to unlock wide
spread SiC usage in power devices.
We collaborate closely with our customers to develop solutions
that meet their unique needs. Our customers are leading wafer
producers and fabrication original equipment manufacturers.
SiC crystal growth consumables.
ION implantation and etch consumables.
Components in lithography systems.
How we add value
How our products are used
We manufacture a broad variety of components for use in medical
instrumentation as well as in tools for treatment and surgery.
Biocompatibility, excellent chemical and electrical resistance and low
wear rates, plus our high-quality, volume manufacturing means we
are perfectly placed to supply components for medical applications.
Medical engineering demands the highest standards of precision,
accuracy, reliability and performance. Equipment manufacturers
and medical professionals choose our materials for their exceptional
physical characteristics.
Our deep understanding of ceramic material properties, together
with our expertise in braze alloy design, allows us to produce
high-density, highly reliable feedthroughs for medical devices.
Our bare ceramics and metallised components are used
in medical imaging and oncology equipment.
Our ceramic feedthroughs are used in implantable technology
such as cochlear implants and neuro-stimulation.
Our components are also used for critical functions in gear
pumps, blood apheresis systems, microdosing systems and
oxygen compression.
Our expertise in producing tight tolerance and repeatable
quality on small precision parts allows us to produce surgical
equipment from ablation tools to surgical laser waveguides.
Our carbon seals and bearings for cooling pumps are used
in EVs.
Our collector strips and carbon shoes power the electrified
rail market.
Our new ceramic materials are used in the manufacture of
the latest generation of solar panels.
We make leading carbon brush grades for wind turbines.
Our thermal insulation Superwool
®
is used in heat recovery
steam generators, fuel cells, and energy storage walls to
improve energy efficiency.
We enable the conversion of power generation to solar and wind
and the large-scale power storage this requires. Lithium-ion is the
dominating technology for battery-based power storage and we
are the leading supplier of refractories and insulation for the special
furnaces that produce cathode materials for these batteries.
In addition to enabling wind technology, we also drive lower
maintenance activity, and costs, for the wind farm operators,
further reducing their CO
2
footprint.
Our thermal insulation materials are helping to solve complex thermal
runaway and fire protection challenges in hybrid and electric vehicles.
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Our ﬁnancial framework guides
our strategic execution
We are focused on winning in our core markets
and increasing our exposure to faster growing
market segments
Our core markets remain critical, providing the Group with a strong
base and a diversified portfolio. Within these markets, we aim to
maintain our leadership positions and grow by investing selectively
in innovation, focusing on market segments that exhibit higher
growth potential.
We want to accelerate our organic growth by increasing our
exposure to faster growing market segments where we see the
potential to achieve higher returns. We are investing in capacity for
these markets where we see attractive returns that support our
Group ROIC ambition. In 2024, we set out our plans to increase
capital investment in semiconductor capability and capacity,
increasing our ability to address this growing market.
Reflecting lower demand within the Semiconductor market,
we have revised our capital expenditure plans to match our capacity
more closely with demand. In 2024, we invested £26.1 million
in semiconductor capacity, and we expect to spend a further
£35.0 million in total over 2025 and 2026. We remain confident
in the longer-term potential in semiconductors and we expect to
resume our investment as the market recovers.
Read more about our markets on pages 6 to 11
The strength of our materials science
platform and our trusted relationships make
us who we are
We are a leader in materials science for our technology families.
We have built an understanding of the application of our materials
science in our customers’ products and processes, in order to
provide maximum benefit through advanced application engineering.
We build deep and trusted relationships with our customers,
working to understand their businesses, their markets, and their
technical challenges and product roadmaps. We tailor our materials
development to solve our customers problems.
We invest in innovation to maintain our materials leadership and
overall capability. In 2024, we spent £31.1 million in research and
development (R&D) across our four global CoE (2023: £32.9 million).
We are focused on simplifying our organisation
and driving operational efﬁciency
We remain focused on simplifying our business to ensure that
our operations are as efficient as possible to support investment
for growth and margin expansion over time.
During 2024, we expanded the scope of our multi-year Group
wide restructuring programme. In total, these plans are expected
to deliver a total annual adjusted operating profit
*
benefit of
£27.0 million by 2026 with a total cash cost to deliver of £45.0 million
recognised within specific adjusting items in the consolidated
income statement.
We have made good progress during 2024. We have simplified
management structures, reduced the number of reporting segments,
and consolidated manufacturing plants to provide better support to
our customers and deliver synergies from key operational activities.
Our business is now organised into three reporting segments
which bring together businesses and assets with similar processes.
This allows us to maintain an efficient leadership structure across
the Group, and optimise our cost base whilst allowing for flexible
use of capacity.
Read more about our reporting segments on pages 48 and 49
We have continued our strategic project to deploy a Global
Enterprise Resource Planning (ERP) system which is intended to
replace over 30 different legacy systems across the Morgan network.
The programme, which is expected to complete over the next three
years, will create further opportunities to align business processes,
strengthen information security and the control environment.
Read more about our investment in a new Global
ERP system in the Financial Review on page 52
We have clear capital allocation priorities
which we apply with discipline
We have a clear framework to assess M&A targets with stringent
strategic hurdles and robust financial metrics, and we continue to
assess targets against these strict criteria. In November 2024, in the
absence of a clear near term acquisition target, the Group initiated a
share buyback programme of up to £40.0 million. This programme
supplements our ordinary dividend programme, and reflects
the Board’s confidence in the Group’s strong balance sheet and
growth outlook.
Read more about our Capital Allocation Policy on page 24
We remain committed to progressive dividend growth, targeting
adjusted earnings cover of 2.5x throughout the cycle.
Read more about 2024 dividends in the Chair’s statement
on page 3
12
Organic constant-
currency
*
revenue
growth of 4.0% to 7.0%
through the cycle.
Adjusted operating
proﬁt
*
margin of 12.5%
to 15.0%.
Return on invested
capital
*
of 17.0% to
20.0%.
Net debt
*
/EBITDA ratio
of 1.0x to 1.5x without
M&A, 1.5x to 2.0x
with M&A.
Innovate to grow
We will build a sustainable business, getting
to net zero by 2050, and create a fair and
inclusive working environment that is reflective
of the communities we operate in. We want
to be a business where everyone is welcome
and can do their best.
We will make our businesses more
customer-centric. We are making
improvements to customer service,
responsiveness and delivery. We are
simplifying and improving our digital
communication.
We will invest in innovation in our core
markets to help us create and manufacture
more sustainable products.
We will increase our exposure to technologies
and capabilities that address global trends in
our faster growing markets.
We have made good progress against our medium term
strategic execution priorities in 2024
Big positive difference
1.
Delight the customer
2.
3.
2024 progress:
We made good progress against our ESG and sustainability
goals, see pages 26 to 42 for more details.
2024 progress:
In Performance Carbon, following the integration of the
former Seals & Bearings businesses, we have been working to
streamline our internal supply chain to improve responsiveness
and reduce lead times for our customers.
In Thermal Products, North America, we have simplified
our product portfolio and made improvements to our
response times to customers.
In Technical Ceramics, North America, we have worked to
improve yields on certain complex parts to improve efficiency
and delivery performance.
2024 progress:
We have invested in capacity to support growth within core
and faster growing market segments, including capacity in India
and China for Thermal Products and in Semiconductors and
Healthcare for Performance Carbon and Technical Ceramics.
We invested £36.1 million in capacity.
New product development continued across each of our
business segments including new carbon and ceramic materials
for the semiconductor market, new fibre insulation products
for automotive applications, and new wind brush grades and
armour materials.
Strategic report
Annual report 2024
13
Morgan Advanced Materials
CEO’s review
With a challenging market environment we have focused more on self-help
activities in the year as well as in improving our safety and environmental
performance. We have accelerated the restructuring programme we launched
in 2023 to drive a further simpliﬁcation in our business, reducing the number of
sites and improving our efﬁciency.
Investment
We are continuing to invest in capacity to serve our faster growing
markets, as well as in faster growing parts of our core, for example
in India.
With the slowdown in growth of the EV market we expect lower
demand for our graphite and SiC consumables over the next three
years and we have reduced our capital investment to match our
capacity more closely with demand. We are investing around
£60 million in new capacity for the semiconductor market over
2024, 2025 and 2026. We expect this to deliver incremental revenue
of £40 million and adjusted operating profit
*
of £12 million in 2027.
We remain confident in the longer-term potential in semiconductors
and we expect to resume our investment as the market recovers.
Share buyback
We continue to seek acquisition opportunities that can accelerate
our strategy and are systematically working through our pipeline,
exploring opportunities with potential sellers. Following a review of
our pipeline in the fourth quarter we concluded it was less likely that
we would complete a transaction before the second half of 2025.
Reflecting on the low share price during the fourth quarter, the lower
expected capex needs and the slower acquisition timetable, the
Board concluded that a share buyback was an appropriate allocation
of capital. In November we announced a buyback of shares of up to
£40.0 million, with an estimated duration of around 18 months.
Medium-term targets
We have a clear through-cycle financial framework which is set out
on page 12.
With the actions we are taking to reduce costs, we expect to be back
in our framework range for adjusted operating profit margin in 2025,
with ROIC and leverage staying in the range.
Our investment programme is on-track and we are confident
that our growth will accelerate over the next three years as those
investments come online. We expect that margins will drive up
through our guided range and deliver attractive free cash flows as
investment needs reduce.
The Group remains an attractive investment proposition.
We are continuing to invest in capacity to support our growth in key
market segments and we are well placed to grow quickly and expand
margins as markets recover. I am pleased with the progress we made
on safety with our LTA rate 32% better than the prior year at 0.13.
Our CO
2
emissions declined further during the year and our
scope 1 and 2 emissions are now 55% lower than our baseline.
With our strong balance sheet, and reflecting the Board’s confidence
in the prospects of the Group we launched a share buyback in
November 2024.
Group results
During the year we saw declining and low order levels in European
and Chinese industrial and metals markets, and slowing in those
same markets in the USA. We have also seen lower demand for
our products used in SiC power semiconductor production in the
second half of the year driven by the lower growth rate in global
electric vehicle sales.
We have grown 3.7% organically on a constant currency basis
*
during the year, and delivered an adjusted operating profit margin
*
of 11.7%. This margin level is below the bottom of our 12.5% to
15% range and reflects the very weak market conditions in the
second half of the year. We expect margins to be back in the range
during 2025 as the restructuring and efficiency actions we are
taking come through. ROIC was in our target range at 18.5%,
a good performance given the weaker demand, and leverage at
1.4x remains within our 1-1.5x organic range.
Read more about our Group ﬁnancial performance
on pages 50 to 54
Restructuring
We have responded to the lower demand environment by
expanding our restructuring programme. The total benefit from
the restructuring programme is expected to be £27 million per year
from 2026, for a total cost of £45 million.
This continues our track record of self-help and will support rapid
margin expansion as demand recovers and further optimise the
footprint, simplifying our Group.
14
Sustainability
In 2021, we set out five long-term goals for our business together
with the following intermediate goals for 2030:
1.
A 50% reduction in scope 1 and 2 CO
2
emissions. We reduced
scope 1 and 2 emissions by 3% during the year and are now 55%
below our 2015 baseline. As our business grows, continued focus
is needed on process efficiencies and technological advancements
to maintain this.
2.
Reducing water use and water use in high-stress areas by 30%.
Our overall water usage reduced by 6% and water in high-stress
areas increased by 2%. We are 31% and 21% below our 2015
baseline for water and water in high-stress areas.
3.
A 0.10 LTA rate. Our LTA rate was 0.13 (2023: 0.19), a further
improvement over the prior year reflecting the significant
focus on behavioural safety.
4.
A goal of 40% of our leadership population being female.
Our gender diversity position was improved over the year
with 34% females in our leadership population. This reflects
the considerable work done in the prior years and in 2024 to
improve policies, procedures and recruiting approaches and to
deliver a more supportive environment for our female leaders.
5.
A top-quartile engagement score. Our engagement score was
52%, a 2% decline compared to the prior year. We have not
made progress on this metric over the last five years despite
a lot of effort across our business to improve the employee
experience. In 2025, we will be working more closely with a
small number of sites where engagement levels are below
average, looking to understand the root causes more deeply
and work with our people to address those.
Outlook
Geopolitical uncertainty remains significant, as it has in recent years.
Looking at our markets, we are expecting improvements in the USA
reflecting the supportive policy environment in the near term.
In our faster growing segments, we expect growth in Healthcare,
Clean energy and clean transportation, while we expect
Semiconductors are likely to be broadly flat as our customers
work through surplus inventory.
In our core segments, Aerospace and Defence markets are expected
to grow as are industrial markets in India.
The outlook for European and Chinese industrial and metals markets
is more difficult to judge and we are planning for only modest
improvements in demand there.
“While markets have been extremely
challenging this year, we have continued to
invest in our growth opportunities in faster
growing market segments and we remain
conﬁdent in our medium-term prospects.
Our people have shown tremendous
commitment to our business, to each other
and to our customers and I would like to
thank them for their hard work and support.”
Pete Raby
CEO
15
Morgan Advanced Materials
Strategic report
Annual report 2024
22
23
24
11.2%
2.5%
3.7%
22
23
24
33.8p
25.0p
25.5p
22
23
24
13.6%
10.8%
11.7%
16
Measuring our progress
We measure our success by tracking a number of key performance indicators (KPIs)
that reﬂect our strategic execution priorities and growth drivers.
Organic constant-currency
revenue growth
*
(%)
Purpose
Organic constant-currency growth is a
non-statutory measure used by the Board
and Management to monitor the Group’s
performance. It provides an important
indicator of organic like-for-like growth
of the Group reporting businesses
over time. Organic constant-currency
growth eliminates the impact of
acquisitions, divestments and foreign
currency variances.
Performance
Revenue grew by 3.7% on an organic
constant currency basis. Growth rates in
2024 were higher than in 2023.
Refer to pages 48 to 54 for further details
Adjusted operating proﬁt
margin
*
(%)
Purpose
Adjusted operating profit margin is a
non-statutory measure that the Board
and Management monitor to assess the
underlying trading profitability of the
Group, excluding the impact of specific
adjusting items and the amortisation of
intangible assets.
Performance
Adjusted operating profit margin for
2024 has increased by 90 bps to 11.7%,
reflecting a full recovery from the
cyber incident and a continued focus
on cost management and operational
simplification throughout the Group.
Margins for the year were lower than our
financial framework guidance, reflecting
challenging market conditions in the
second half of the year.
Refer to page 48 to 54 for further details
Adjusted EPS
*
(p)
Purpose
Adjusted EPS is a non-statutory measure
used to assess the Group’s underlying
financial performance.
Performance
Adjusted EPS has increased to 25.5 pence
during 2024, reflecting the increase in
adjusted operating profit.
See pages 99 to 102 for details of how Financial KPIs
are reﬂected in Annual Bonus and Long-Term
incentive performance targets
Financial KPIs
22
23
24
23.7%
17.6%
18.5%
22
23
24
0.8x
1.2x
1.4x
22
23
24
(£46.9m)
£14.6m
£15.0m
Strategic report
Annual report 2024
17
Morgan Advanced Materials
Free cash ﬂow before
acquisitions, disposals
and dividends
*
(£m)
Purpose
Free cash flow generation is an important
non-statutory measure used by the
Board and Management to measure the
Group’s ability to support future business
expansion, distributions or financing.
Performance
Cash generated from continued
operations increased by £36.6 million in
the year reflecting a material improvement
in working capital and profitability.
During the year, we have made significant
investments in capacity and capability,
particularly in the semiconductor space.
Return on invested capital
*
(%)
Purpose
Return on invested capital (ROIC) is an
important non-statutory measure used by
the Board and Management to assess the
Group’s profitability and capital efficiency.
Performance
Overall capital employed has increased
by £26.4 million versus 2023 as a result
of increased investments in capacity and
capability. ROIC has increased by 90 bps
to 18.5%, reflecting the increase in
adjusted operating profit.
Net debt
*
to EBITDA
*
(excluding lease liabilities) (x)
Purpose
Net debt to EBITDA ratio is an important
non-statutory metric used by the Board
and Investors to assess the Group’s financial
leverage and capital structure. This key
metric is also covenant under the Group’s
debt facilities.
Performance
Net debt to EBITDA has increased to 1.4x,
driven by increased investment in capacity
and capability during the period.
Performance against these KPIs informs our ﬁnancial, strategic and operating decisions. Successful delivery
against a number of these KPIs forms a component of remuneration for Executive Directors and Senior
Management. The Board have reviewed and streamlined KPIs during the year, reﬂecting ongoing simpliﬁcation
efforts during the year.
Key environmental, social and governance (ESG) KPIs
CO
2
e scope 1 and 2 emissions
(metric tonnes)
Alignment to strategic
execution priorities
1
2
3
Purpose:
Our sustainability agenda includes actions
to reduce greenhouse gas (GHG)
emissions and combat climate change.
In March 2021, we announced a
commitment to reduce absolute GHG
emissions (scope 1 and 2) by 50%
(against 2015 levels) by 2030.
See page 40 for more information
Total water withdrawal
(million m
3
)
Alignment to strategic
execution priorities
1
2
3
Purpose:
By 2030, we will reduce our total
withdrawal of water by 30% (against our
2015 baseline), and we are implementing
water sustainability projects globally to
achieve this goal.
See pages 27 and 38 for
more information
Water withdrawal in water
stressed areas
1
(m
3
)
Alignment to strategic
execution priorities
1
2
3
Purpose:
We recognise that in some instances our
water demands are in areas of increasing
water stress. Approximately 30% of our
manufacturing operations are in these
water stress areas.
Our goal is to deliver a 30% reduction
by 2030. By improving our water use in
these areas, we will positively impact the
local communities in which we operate.
See pages 27, 29 and 38 for
more information
21
24
229,887
211,104
157,574
152,871
Target
171,347
22
23
2030
At Morgan Advanced Materials we are committed to a sustainable future.
In March 2021, we set stretching goals across a number of environmental,
social and governance areas.
1.
2024 Water stressed areas include Australia, Belgium,
Chile, China, India, Italy, Mexico, Singapore, Spain,
Turkey, United Arab Emirates, and the state of
California, USA. Using the most recent World
Resource Institute data 2024 (Aqueduct).
See page 38 for details.
Measuring our progress
continued
21
24
1.73
1.93
1.72
1.61
Target
1.63
22
23
2030
21
24
397,021
390,311
335,961
341,052
Target
301,703
22
23
2030
18
Lost-time accident
(LTA) rate
2
Alignment to strategic
execution priorities
1
2
3
Purpose:
We are working towards our aspiration of
‘zero harm’ to all our employees. We are
committed to conducting all our activities
in a manner that builds a caring safety
culture and develops a world-class safety
system that supports this effort.
See pages 30 and 31 for more information
Female representation
in leadership
3
Alignment to strategic
execution priorities
1
2
3
Purpose:
A greater gender diversity is good for
Morgan Advanced Materials and good
for employees. We are continuing to
take action to achieve a more balanced
proportion of women in senior positions.
See page 32 for more information
Employee engagement rate
Alignment to strategic
execution priorities
1
2
3
Purpose:
We measure the engagement of our
people through an employee engagement
survey called ‘Your Voice’. As a result of
the survey we build tailored engagement
plans to address key issues across our sites,
businesses and the Group.
See page 66 for more information
2.
A lost-time accident (LTA) is defined as an accident or
work-related illness which results in one or more days
of lost-time. Calculated as total number of lost-time
accidents in the year, multiplied by 100,000 hours
worked, divided by total number of hours worked.
4.
New yearly survey introduced.
5.
This was a pulse survey including employees with
a Morgan Advanced Materials email address only.
On a like-for-like basis, engagement went down
by ~1%.
3.
Includes Executive w/o CEO/CFO plus 2nd to 4th tier.
Alignment to strategic execution priorities
To deliver our strategy and to achieve our ESG goals we
align our efforts to our three strategic execution priorities.
1
Big positive difference
2
Delight the customer
3
Innovate to grow
Read more
on page 13
21
24
0.22
0.28
0.19
0.13
Target
0.10
22
23
2030
21
24
50%
4
53%
54%
5
52%
Target
75%
22
23
2030
21
24
29%
29%
30%
34%
Target
40%
22
23
2030
Strategic report
Annual report 2024
19
Morgan Advanced Materials
Our people
Why they are important to us
Our employees are key to driving the business forward and
ensuring that it remains relevant in the future.
What we believe is important to them
Meaningful roles linked to our purpose.
Clear progression, training and development.
Recognition and competitive compensation.
Flexible working opportunities.
A safe, ethical and inclusive working environment.
How we engage
Local and global surveys, including ‘Your Voice’.
In-person and virtual meetings, briefings and training
sessions.
Internal communications to keep employees informed about
Group-wide issues.
Close collaboration our three employee resource groups
(ERGs): PRISM, Women@Morgan and Military@Morgan,
to help shape thinking and inform policies.
Board engagement with a diverse cross-section of employees,
as well as ongoing Board monitoring of culture across the Group.
We are committed to understanding the
perspectives of all our stakeholders: our people,
our customers, our suppliers, our pensioners
and pension trustees, our shareholders and the
communities in which we operate.
Our customers
Why they are important to us
Delivering sustainable growth requires customers who value
the services that we provide and choose us as their supplier.
What we believe is important to them
Reliable and consistent service.
Good value, high-quality products.
Product and process innovation.
Ability to solve complex problems.
Application engineering capabilities.
Transparent and responsible sourcing of raw materials
and componentry.
The environmental impact of the products we make.
How we engage
We are shaping our product and service offerings based on
customer and market needs, using insights gained from our
customers.
We monitor customer service performance, quality control
and delivery metrics across the Group on a regular basis to
ensure that we can meet and exceed our customers’
expectations.
We further our materials science knowledge and solutions
expertise through our ongoing programme of R&D,
centred around our four global CoE.
We share details of our innovation and new product
applications through digital and physical channels.
Effective engagement
with our stakeholders
Delivering long-term value for all our
stakeholders is critical to the long-term
success and sustainability of Morgan.
20
Our shareholders
Why they are important to us
Our shareholders are the owners of the Company and we
have a responsibility to them to be transparent and open about
our strategy, our financial performance and our governance
processes to enable them to make informed investment
decisions.
What we believe is important to them
Strategic focus and business growth.
Share price evolution.
Capital allocation and shareholder returns.
High-quality management and governance.
Protection of the environment through sustainable
working practice.
Delivering a positive contribution to society through our
commitment to our people and the communities in which
we operate.
How we engage
Comprehensive investor programme comprising in-person
and virtual meetings with current and prospective
shareholders, and formal financial results presentations
and market updates.
Periodic Capital Markets events to talk in more detail about
our growth strategy and key aspects of our business model
and market trends.
Attendance at investor conferences.
Complete investor questionnaires as requested.
Dedicated investor section on our website which offers
timely information on how we are performing against our
stated sustainability goals, including full disclosure of metrics
and ratings linked to environmental performance.
Our suppliers
Why they are important to us
To succeed, we need suppliers that understand our business in
order to provide assurance and continuity of supply of goods
and services at the right quality and a fair, market competitive,
price. We strive to use all our resources as efficiently as possible,
minimising our environmental and social impact on the world
around us.
What we believe is important to them
Fair treatment and timely payment.
Growing their business.
Cost efficiency.
Ethical trading policies and sustainable sourcing.
Developing long-term relationships.
Human rights.
Environmental and climate impact.
Quality management.
How we engage
We maintain constant constructive dialogue to address any
issues and ensure productive relationships.
We require our Suppliers to sign up to our ‘Supplier Code
of Conduct’ which defines the minimum standards that
must be met by our suppliers, vendors, subcontractors and
contract manufacturers, and compliance is reviewed at
regular intervals.
Our pensioners and
pension trustees
Why they are important to us
After more than 160 years in business, we would not be as
strong as we are today without the combined efforts of all
those who went before. By keeping our pension commitments,
we honour the hard work and dedication of both current and
past employees.
What we believe is important to them
Pension scheme funding position and investment strategy.
Group performance.
How we engage
We engage with both current pensioners and those yet
to retire through regular pension communications in
conjunction with our pension trustees.
The communities in
which we operate
Why they are important to us
Our people live and work within wider communities and
relationships with these communities are key in supporting
our business for the future.
We aim to have a positive impact on the communities we serve,
from supporting job creation and skills advancement, to
reducing energy and water consumption at our plants.
What we believe is important to them
Our commitment to the local environment.
Our conduct as a socially responsible organisation.
The positive impact we can have on the community living
and working around us.
Employment opportunities.
How we engage
All our efforts and engagements are governed by the Morgan
Code, our purpose and our policies on the environment.
We want our people to have the freedom to support what
they care about most. We share these stories through our
internal social media platform Viva Engage, where you will
often see the generous spirit and nature of our employees –
from bake sales to cultural celebrations and charity donations
to sponsorship events.
Strategic report
Annual report 2024
21
Morgan Advanced Materials
22
All of the Board’s key decisions are subject to a Section 172
(of the Companies Act 2006) evaluation to identify the likely
consequences of any decision in the long term and the impact of
the decision on our stakeholders.
Details of our key stakeholders, how we have engaged with them
during the year and the outcomes of that engagement are set
out on pages 20 and 21 and are incorporated by reference into
this Section 172(1) statement. Engagement activities specifically
carried out by the Board collectively and individually can be
found on page 67.
Key decisions in the year
Application of the capital allocation framework
The Board applied the capital allocation framework (see page 24),
when considering the relative priorities for the use of cash
during 2024.
Section 172(1) statement
Launch of a share buyback
programme
How the Board reached its decisions
In November 2024, we announced a share buyback
programme up to a maximum consideration of £40 million,
split into four tranches of £10 million. There were detailed
discussions, supported by the Company’s brokers, on the
rationale for a buyback programme, including the quantum and
methodology, governance and affordability. Factors discussed
in the decision-making included relative costs and expenses,
execution and the timing of such purchases.
Likely long-term consequences of the decision
The Board received detailed papers on the capital allocation
framework. They considered the cash flow generated during
the year, the strength of the balance sheet, as well as the ability
to support future growth opportunities and increased returns
to shareholders.
Stakeholder considerations
Shareholders
Return of value to shareholders and offsetting the
undervaluation of the shares by the market.
Impact on distributable reserves and ability to pay dividends.
Impact on capital available for future M&A.
Lenders and debt holders
Ability to stay well within financial covenant ratios and
maintain financing headroom, ensuring Revolving Credit
Facility banks and private placement noteholders are
not disadvantaged.
Colleagues
Launch of buyback programme sends a positive signal that
the Company is doing well and has a strong balance sheet.
Outcome and impact of the decision
During the year, a total of 1.8 million shares were purchased
under the buyback programme. The programme is ongoing.
It is not always possible to provide positive outcomes for all
stakeholders and the Board sometimes has to make decisions
based on balancing the competing priorities of stakeholders.
Strategic report
Annual report 2024
23
Morgan Advanced Materials
Expansion of simpliﬁcation
programme
How the Board reached its decisions
Following the announcement of the simplification programme
in March 2024, we announced in November 2024 that the
programme would be expanded to achieve further cost
reductions in our supply chain and back office, and help us
return adjusted operating profit margin to our target range in
2025. Restructuring costs for the year of £13.1 million have
been presented as a specific adjusting item.
Likely long-term consequences of the decision
The Board received detailed papers on the impact of the
restructuring programme, including the potential synergies
arising from the simplification, the approach which will be
taken to manage the programme and the expected payback
from the programme.
Stakeholder considerations
Colleagues
The impact of the changes on affected colleagues, ensuring
the communication is carefully planned and the systems are
in place to support them through the changes.
Management bandwidth to deliver the programme, given
other projects already underway.
The need to allay any concerns that colleagues may
have about the changes and reassure them that they
are a necessary step to deliver on our strategy and
growth ambitions.
Shareholders
The need to explain the restructuring charges to provide
overall context as to the type of restructuring we are doing
and to explain the phasing of estimated savings.
Impact on distributable reserves and ability to pay dividends.
Customers and suppliers
The steps which will be taken to ensure that supply chain
changes are well-planned and we maintain the service levels
for our customers.
Outcome and impact of the decision
The implementation of the programme is underway.
The Board continues to receive regular progress updates
on the programme.
Approval of a progressive
dividend policy
How the Board reached its decisions
We also announced at our capital markets event in December
2022 that we would enhance regular returns via a progressive
dividend policy, by growing the regular dividend through
the cycle with adjusted earnings cover of circa 2.5x, and
provide additional returns of surplus capital to shareholders
as appropriate.
Likely long-term consequences of the decision
When considering the proposals to pay interim and final
dividends during 2024, the Board considered cash generation,
the performance of the underlying business and the long-term
impact of paying the dividends on the liquidity and solvency
positions. The Board also considered the impact of the dividend
decisions on expectations relating to the Dividend Policy.
Stakeholder considerations
Shareholders
Shareholders’ expectations in relation to the payment of
dividends, both from a capital return perspective and as a
signal of future performance.
The Board also considered the impact of the dividend
decisions on expectations relating to the Dividend Policy.
Lenders and debt holders
The impact of paying dividends on whether the business
remained within the financial covenants agreed with lenders.
Colleagues
For colleagues who participate in the Group’s employee
share schemes, the payment of dividends enabled returns
for those colleagues.
Outcome and impact of the decision
Following due consideration of all the matters set out in
Section 172, the Board recommended a full-year dividend of
12.2 pence per share, with payment of a final dividend of 6.8
pence to shareholders in May 2025 and an interim dividend of
5.4 pence in November 2024. This recommendation reflected
the Board’s confidence in the Group’s structural growth
drivers into the future. The Board concluded that it was in
the long-term interest of the Company to proceed with the
payment of the dividends.
24
Section 172(1) statement
continued
Section 172(1) statement
continued
Morgan Advanced Materials’ capital allocation framework is used to
prioritise the use of cash generated by the Group. The framework
addresses the investment needs of the business, regular dividend
payments and additional returns to shareholders.
The framework also seeks to maintain an appropriate capital
structure for the business and a strong balance sheet with solid
investment grade credit metrics.
The diagram below summarises the key priorities.
Reinvest for
organic growth
Maintain a strong balance sheet with solid investment grade credit metrics
Progressive
Dividend Policy
Strategic
investments
Return excess
cash to shareholders
Committed to
maintaining or growing
the dividend through
the cycle with an
adjusted earnings
cover of circa 2.5x.
Deliver regular cash
returns to shareholders.
Review the principal risks of the Group and relevant financial
parameters, both historical and projected, including liquidity,
net debt and measures covering balance sheet strength and
cash flow.
These risks and financial parameters are considered by the
Board when assessing the viability of the Group, as set out
on pages 55 and 56.
Capital spend to increase
capacity in our core and
faster growing markets,
to sustain our existing
operations, drive
efficiency and improve
safety and environmental
performance.
Investment in structural
changes to our business
activities that typically
tend to be infrequent.
Complementary,
disciplined M&A focused
on accelerating revenue
growth opportunities in
faster growing markets.
Return cash through
share buyback
programmes or payment
of special dividends
as appropriate.
Capital allocation framework
Morgan Advanced Materials has applied its capital allocation framework during 2024 as follows:
£96.1m
Capital investment
12.2p
Increased its full-year
dividend to 12.2 pence
£13.1m
Invested £13.1 million in
restructuring of the business
£10.0m
Launch of a share
buyback programme
Strategic report
Annual report 2024
25
Morgan Advanced Materials
Non-ﬁnancial and sustainability
information statement
‘Our business model’ on pages 4 and 5 provides an insight into the key resources and relationships that
support the generation and preservation of value within Morgan Advanced Materials. All of our non-ﬁnancial
KPIs are presented together on pages 18 and 19. A summary of our principal and emerging risks, including
those related to ESG matters, as well as a description of our risk management process, starts at page 43.
Areas of impact
Related
principal risks,
pages 43 to 47
Outcome of policies, due diligence
and impact of activities
Annual Report page references and
relevant sections on our website
Employees
The Group has an overarching
policy designed to attract, develop,
reward, retain and engage talented
people and support an inclusive,
safe and ethical workplace. The
Group policy is supplemented by a
number of people policies specific
to the business or jurisdiction.
Our Environmental, Health and
Safety (EHS) Policy is designed to
promote a culture of ‘zero harm’
for our employees, contractors and
visitors, and eliminate and control
health risks proactively.
Environment,
health and safety
Business change
and development
Employee engagement is at 52%,
from a survey
conducted during the year
LTA rate, the headline
measure for health and
safety, was 0.13
Our people and communities
(pages 30 to 32)
Effective engagement with our
stakeholders (pages 20 and 21)
Focusing on culture
(pages 65 and 66)
Engaging with our workforce
(pages 67 and 68)
ESG policies
ESG goals
Health and safety
DEI
Gender pay gap
Wellbeing
Environmental
matters
Our EHS Policy sets out the
Group’s commitment to the
protection of the environment
in the communities where we
operate, work and live. The Policy
sets out our intention to reduce
energy and water use, reduce our
dependence on natural resources,
protect biodiversity and aim to
maximise the positive impact of our
products. For our TCFD regulation
disclosure, see our Responsible
business section.
External
environment
Environment,
health and safety
Data gathering on
GHG emissions
Audits under the EHS Policy
Annual self-certification
Our ‘Speak Up’ hotline
Internal audit processes
A responsible business,
incorporating TCFD
(pages 26 to 42)
Environmental Policy
Sustainability and
responsibility report
Net zero
Energy
Water
Social and
community
matters
Our sites take ownership of
local community engagement, to
support our strategic priorities
and benefit local communities.
Business
continuity
Our business and our
employees are more
deeply connected to
our local communities
A responsible business,
incorporating TCFD
Effective engagement with
our stakeholders
ESG policies
Community
Human rights
Our Human Rights Policy
establishes our commitment
to protect the human rights of
everyone who works for the
Group and all those who have
dealings with us. The Policy
is supplemented by the
Morgan Code.
Legal and
regulatory
No incidents of human rights
abuse or modern slavery
were identified during 2024
Monitoring of compliance
with the Morgan Code
Supplier due diligence processes
Publication of our Modern Slavery
Statement on our website
Effective engagement with
our stakeholders
A responsible business,
incorporating TCFD
ESG policies
ESG goals
Modern slavery statement
Human rights
Whistleblowing Policy
Anti-bribery,
and anti-
corruption
The Morgan Code; Bribery,
Corruption & Facilitation Payments
Policy; Gifts & Entertainment Policy;
and Donations & Sponsorships
Policy make up our key anti-bribery
and corruption policies. Together
these policies seek to prevent
bribery and ensure that our
business is undertaken in an ethical
manner and in compliance with
all applicable anti-bribery and
anti-corruption laws.
Legal and
regulatory
Regular training provided to
employees, via e-learning
modules, with high
completion rates
Any reports of breaches in
compliance are investigated
and reported to the Audit
Committee, and appropriate
action is taken
Focusing on culture
(pages 65 and 66)
Risk management
(pages 43 to 47)
Ethics and compliance
The Morgan Supplier
Code of Conduct
A responsible business
We are committed to being a responsible business.
Aligned to our purpose and a key element of our strategy, we are taking steps
to protect and preserve the natural environment. Our products and our
manufacturing processes are designed, built and managed in a way that enhances
their value to society and our environment. This beneﬁts our customers
enabling them to adopt and adapt to clean technologies that provide a more
sustainable future.
We manufacture a number of products that make a positive contribution,
making the world more sustainable and improving the quality of life. Through
their life, our products typically save tens or hundreds of times the CO
2
emitted
during manufacture.
Alignment to strategy
To improve the execution of our strategy and deliver our
sustainability goals we have set three strategic execution
priorities for the coming years:
1
Big positive difference
a.
Keep our people safe, aiming for zero harm.
b.
Create a diverse, inclusive and engaged company.
c.
Reduce our environmental impact.
2
Delight the customer
a.
Be the partner of choice for our customers.
3
Innovate to grow
a.
Win in our core business, helping our customers
become more sustainable.
b.
Increase our exposure to four faster growing markets:
Semiconductors, Healthcare, Clean Energy and
Clean Transportation.
Contents
Our environment
27
Our people and communities
30
TCFD reporting
33
26
Our environment
We are making good progress towards our 2030 goals.
2030 environmental goal
2024 progress
Reduce absolute emissions directly from the
company’s operations and indirect emissions
from purchased energy (scope 1 and 2) by 50%
by 2030 from a 2015 baseline.
Total GHG emissions (tCO
2
e) were 152,871 tonnes, a 3% decrease from 2023 and a 55%
decrease over our 2015 baseline. This reduction was achieved through several energy efficiency
projects across the group. See page 28.
Reduce total water withdrawal and water
withdrawal in water stressed areas by 30%
from a 2015 baseline.
Total water withdrawal was 1.61 million m
3
; which is a 6% decrease over 2023 levels and a 31%
decrease over our 2015 baseline.
This reduction was driven by our investment in water recirculation projects through 2023 and
2024, better water management practices and changes in product mix water withdrawal intensity
– measured at 1,459m
3
/£m, compared to 1,543m
3
/£m of 2023.
Total water withdrawal in water stressed areas was 341,052m
3
. This is 2% higher than 2023,
reflecting business growth and some changes in product mix. We have declined by 21% compared
to our 2015 baseline.
Reduce other indirect absolute emissions
related to materials sourcing, logistics and
services (scope 3) by 15% by 2030 from a
2019 baseline.
We completed a comprehensive scope 3 inventory screening exercise with a subsequent
improvement in reporting methodology. Details of our scope 3 screening exercise can be found
on pages 41 and 42 of the annual report.
Procure 80% renewable and nuclear electricity
by 2025 and 100% by 2030.
In 2024, we reached the milestone of 75% green (renewable and nuclear) electricity. Our total
energy consumption (fuel and electricity) was 916.0 GWh for 2024, which is 6% lower than 2023.
We invested in a new solar photovoltaic (PV) system at our US Fostoria site, which is due to
come on line next year and will increase our self-generation capability to 0.52% (of total energy)
next year.
See case study on page 28.
We are committed to decreasing our carbon emissions and
lowering our energy consumption. Our targets were validated
as science-based (SBTi) targets in 2023 and are aligned with the
below 2°C ambition for our scope 1 and 2 commitment.
63% of our manufacturing footprint (38 out of 60 sites in 2024) is
certified to ISO14001 environmental management system standard,
resulting in more efficient use of resources and reduction of waste.
This demonstrates our commitment to continuous improvement
and meeting the expectations of our customers.
Energy performance in 2024
Our scope 1 and 2 greenhouse gas (GHG) emissions come
from our manufacturing operations and represent the part of our
footprint that we can directly influence – by changing the way
we use energy in our facilities.
Scope 1 GHG emissions (tCO
2
e) from stationary fuel
combustion were 109,071 tonnes and scope 1 GHG
emissions (tCO
2
e) from process and mobile emissions were
1,940 tonnes (of which process emissions were 1,693 tonnes).
For 2024, total scope 1 GHG emissions (tCO
2
e) was 111,011
tonnes, which is a 0.4% increase over 2023 values and 46%
decrease over 2015 value.
Market-based scope 2 GHG emissions (tCO
2
e)
1
were
41,860 tonnes, which is a 11% decrease over 2023 values
and 69% decrease over 2015 values.
Our GHG emissions, such as carbon dioxide (CO
2
), are mostly
generated by the combustion of fossil fuels at various stages
of our manufacturing processes. We track these using a
reporting methodology based on Department for Environment,
Food and Rural Affairs (DEFRA), which is applied globally
(2024 Version 1, published 10th June 2024).
Climate Action
Pursuing Carbon Neutral Operations by 2050
1.
The scope 2 emissions figure was calculated using the market-based methodology. The location-based figure for the same period is 149,972 tCO
2
e.
Strategic report
Annual report 2024
27
Morgan Advanced Materials
Our environment
continued
Other energy efficiency and ‘green’ generation
projects in 2024
Energy efficiency
Atlacomulco – compressed air including automatic shut-off of
compressors (previously left running), and air leak monitoring
and repair.
Atlacomulco – Replacement of translucent roof panels –
natural light.
MMTCL Gujarat – moved from natural gas to electric oven
for annealing.
MTCS Shanghai – Recovery of waste heat (air compressors)
to pre-heat domestic water.
Redditch – Production optimisation – compressing of three
shifts into two.
SMC Shanghai – Compressed air external line replacement
– reducing air leaks and air compressor heat recovery
for use in domestic water system.
TCK Korea – Compressed air energy monitoring lead to
improved performance and reduced compressor size.
TCK Korea – Wool-bin fan speed adjustment to reduce
consumption during down periods
Green energy generation
Fostoria – Solar farm on land adjacent to plant.
SMC Shanghai – Solar panel system on the roof
of the production site.
Natural gas
55.5%
Renewable electricity
24.0%
Non-renewable, Standard
Grid electricity
1
0.5%
Nuclear-backed electricity
7
.2%
LPG/propane
2.
1%
Fuel oil
0.5%
Renewable electricity generated
locally and not grid connected
(e.g. solar power)
0.2%
Energy mix
Case study
On-site solar installations reduce
environmental impact
In 2024, at our Fostoria Plant, US, we have completed an
on-site solar power installation, which will generate 3.1MkWh a
year, and result in a 13% reduction in market bought electricity
to support this site. The facility will be in use in 2025.
We aim to continue investment in renewable energy to drive
progress towards our carbon neutral target.
Assurance
Our scope 1 and 2 GHG emissions data is verified to ISAE3000
standard by a third party and can be found on page 42 of
this Report.
We have updated our calculation methodology during the year
to strengthen the quality of our data. Details can be found in
the Basis for Reporting, which is available on request at
investor.relations@morganplc.com.
Our decarbonisation roadmap
We continue to improve the efficiency of our gas-fired kilns and
move to electrically fired options for some kiln types, where
feasible. For further information on our path to net zero, please
see page 39 of our full Task Force on Climate-Related Financial
Disclosures report.
Climate action
(continued)
Pursuing carbon neutral operations by 2050
28
We use water to cool and clean our manufacturing equipment
and components, and for sanitary purposes. In order to ensure
responsible water use and recycling, our conservation initiatives
target water use at manufacturing facilities with the higher
consumption or those located in geographic areas where water
is scarce. By improving our water usage we will positively impact
the local communities in which we operate, and therefore society
more generally.
For 2024, the list of water-stressed countries was revised to also
include Belgium, Chile, and Singapore, in addition to Australia,
China, India, Italy, Mexico, Spain, Turkey, and the UAE. Our sites
in the state of California, USA, are included in our water stress
figures, based on water stress issues within the state. Following
this, we have restated our 2015 baseline and all metrics are now
compared to the new baseline.
We have made investments in water cooling recycling systems
(see case studies overleaf), and upgraded welfare facilities.
We have also implemented rain water harvesting at some sites.
Other water saving projects in 2024
Water-stressed areas:
MMTCL Gujarat: Conversion from conventional cooling tower
to adiabatic cooling.
MMTCL Gujarat: Low temperature evaporator water recycling.
MMTCL Gujarat: Rainwater harvesting storage tank (WIP).
Atlacomulco: Rainwater harvesting for bathrooms services.
Water reduction:
Stourport: Closed loop water cooling of ball mills delivered
significant water use reduction.
Case Study
Saving water through efﬁcient reuse
In 2024, our Fostoria site, USA, successfully installed a new
water cooling system on their high temperature furnace.
This new system not only cools the furnace but also reuses
the water within the system, promoting sustainability and
water conservation.
The previous system was a single pass system that required
large quantities of fresh water, but with the installation
of the new system, we anticipate a saving of approximately
7.5 million gallons of water annually.
Case Study
Steps taken to reduce water
consumption
In late 2023, our Stourport site, UK, invested in a water
recirculation system to reduce water consumption. Site water
consumption was reduced by 29% at the end of 2024
compared to the same period the previous year.
Water conservation
Managing our impact
Strategic report
Annual report 2024
29
Morgan Advanced Materials
LTA Rate
2024
2023
2022
2021
2020
2019
All personnel
0.13
0.19
0.28
0.22
0.18
0.14
Our people and communities
Having people who bring a diverse range of talents and perspectives,
and who feel engaged in their role, is of paramount importance to
our long-term success.
Our Morgan Code is the set of principles which governs our behaviour and guides the actions we take.
We use our ‘Your Voice’ engagement survey to listen to our people and take action where required.
This helps us to achieve our strategic aim of delivering performance and value creation for our stakeholders.
Our aspirations
Our 2030 goals
Progress in 2024
Zero harm to our
employees.
0.10 lost time
accident rate
Our employee
demographics will
be inclusive and
reflective of the
communities in
which we operate.
40% of our
leadership
population will
be female
In 2024, 34% of our leadership population is female, compared to 30% in 2023.
We are supporting women through early careers and at the recruitment stage through
women-centred events. We have female mentoring programmes and a thriving employee
resource group, Women@Morgan, with country-based chapters to empower women
across the globe.
We took part in a female-centred recruitment event in Europe – herCAREER and shared
the inspiring stories of our female leaders.
We became a member of the Society of Women Engineers and a member of Women in
Manufacturing (WiM), to help increase the influence of women in the manufacturing sector.
We helped inspire the next generation of material scientists when our Global Materials
Centre of Excellence for Structural Ceramics, located at our Stourport UK site, hosted two
students for a week of real life materials science experience, in partnership with Nuffield
Research Placement.
You can find examples of our engagement on our website: morganadvancedmaterials.com
A work environment
where all employees
are valued and can
do their best work.
Top quartile
engagement score
We supported our people to gain the valuable skills that help them develop and progress in
their career, for example a targeted English language learning programme for 70 employees
at our Shanghai site.
We are communicating with our people more effectively, providing our site workers
with cross-company communications and helping them to understand the direct actions
we have taken as a result of our ‘Your Voice’ engagement survey.
Our engagement score was 52% (2023 pulse survey 54%, 2022 53%). This was the first
full survey since the 2023 cyber incident.
Although the overall engagement rate has remained similar over the last few years, analysis
shows that where we have focused efforts on specific items we have seen positive changes,
for example, scores linked to reward and safety have seen year-on-year improvements.
We will continue this approach in 2025 and beyond.
30
Health, safety and wellbeing
We believe that everyone in Morgan Advanced Materials has a
responsibility to keep themselves and each other safe. We rely on
the expertise and diligence of our operational and safety team to
uphold safety standards on our sites, ensuring all incidents are
investigated so we can learn from them, and ensure appropriate
controls are in place to prevent reoccurrence. We have biweekly
reviews in place to review all severe incidents with the group CEO.
There were no fatalities in the year, and no fatalities since 2012.
Our Group Environmental, Health and Safety (EHS) policy,
available in local languages, is underpinned by a Company EHS
framework, which provides guidance to our sites on how to put
in place local EHS management processes. We also monitor
compliance through EHS audits. We continue to maintain our
thinkSAFE safety leadership programme, including our Visible
Safety Leadership (VSL) and Don’t Walk By (DWB) leading safety
behavioural programmes, and embed our ‘TAKE 5’ programme
to help employees to carry out simple safety checks to identify
hazards and controls before starting any activity.
Protecting our people from the risks associated with exposure to
hazardous materials is a fundamental part of our EHS management
programme. This includes assessment and monitoring of controls
as well as the provision of associated training. Every site has its own
industrial monitoring plans to identify potential exposure against
regulatory limits, and to set out its control measures to either
reduce or remove exposure.
Progress in 2024
We successfully rolled our quarterly safety topics aligned with the
key EHS challenges we are seeing in the business, whilst continuing
to reinforce the ‘TAKE 5’ message with our teams. Our final
quarterly topic for 2024 was on mental health and wellbeing.
Our people have access to an employee assistance programme in
the UK and US, and we have trained mental health first-aiders or
‘drop in’ wellbeing clinics at other sites. Our sites also run local
programmes to improve wellbeing, for example:
Our New Bedford site invited a selection of furry friends from
Peaceful Paws LLC, to help raise awareness of mental health
issues and encourage people to seek help if needed.
At our Lillebonne site the team organised a health awareness
day, getting together to talk about health and specifically the
prevention of breast and prostate cancer. The day gave our
people the chance to speak to a health professional about
prevention initiatives and support. Each participant left the
day with a health box containing tests and information to help
them monitor their health on a daily basis.
Case study
In 2024 our sites engaged in a number
of community projects as follows:
Our Atlacomulco, Mexico site collected and donated
146 items of winter clothes to the Red Cross, as part of
their ‘Sheltering a Morgan Heart’ donation campaign.
Our Atlacomulco, Mexico site collect bottle caps, donating
these annually to the charity ‘Fundación iEVO’, which supports
children with cancer and children with disabilities. Through
this action the team are also helping to reduce plastic waste.
Our MMTCL India team donated much-needed supplies to
health centres and schools in their local community. The team
demonstrated their commitment to their community through
their support of education and healthcare. Their actions show
the team’s passion for education and healthcare access rights,
to enable a fair start for everyone.
Our safety plans for 2025 and beyond
In 2025, we will continue to embed our ‘TAKE 5’ programme and
maintain our focus on our ergonomics programme.
We will refresh our process safety, working with an external
partner to reassess our process hazards and controls in relation to
our high-risk processes. We will also be reviewing the associated
maintenance programmes and taking the opportunity to roll out
a process safety training programme to upskill local site teams
around process safety risk management. Good process safety
risk management ensures our sites and equipment are in good
working order which helps reduce the risk of failures that could
cause significant injury or harm to the environment.
We will also launch a number of EHS Standards
and guidance in
the business, which will align with our EHS Framework, to provide
enhanced guidance to the sites on how to manage their EHS risks
and controls.
Strategic report
Annual report 2024
31
Morgan Advanced Materials
Community
We aim to have a positive impact on the communities we serve,
from supporting job creation and skills advancement to reducing
energy and water consumption at our plants.
As our sites and operations are spread across the globe, we have
the opportunity to work with many communities. We get involved
at a local level and look to understand each community’s priorities
and concerns.
We want our people to have the freedom to support what they
care about most. We share these stories through our internal social
media platform Viva Engage, where you will often see the generous
spirit and nature of our employees – from bake sales to cultural
celebrations, and charity donations to sponsorship events.
We partner with a number of educational establishments.
In 2024, we were delighted to partner with the University
of Birmingham to award our annual ‘Morgan Advanced
Materials prize’, presented to the highest scoring ceramic
material individual project.
Our Women@Morgan China Chapter organised ‘Pink Healing
Journey’, to care for the mental and emotional health of their
colleagues. Our Thermal Products and Performance Carbon
teams in China joined forces to focus on wellbeing.
Members of our Greenville, South Carolina team gave up their
time to volunteer for ‘Hands on Greenville’ 2024. Our people
were part of a group of over 2,500 volunteers giving back to
their local community. The team had the opportunity to help
the Freetown Community Center clean up, both inside and out,
just in time for their annual summer camp programme.
In June our São Paulo, Brazil team came together in a
month-long awareness campaign about blood donation and to
voluntarily donate blood. June was chosen because it is a time
when donations are often low, due to the arrival of winter with
a greater need for donations and family holiday plans meaning
many regular donors are not available.
Diversity and inclusion
We are committed to creating a diverse and inclusive culture as
our people are the driving force behind our success. We aim to
be open, engaging to all.
In Shanghai the team opened ‘Mommy’s Cottage’; a safe space
for female employees. Employees can use this space as a private
space to express breastmilk or as a place to meet to discuss life as
a new mum.
On Veterans Day our St Marys, Pennsylvania, team celebrated
the incredible service of their veterans with the commissioning of
our new ‘Veterans Tribute Wall’. This display, located in the front
lobby, stands as a symbol of respect and appreciation for those
who have served in the armed forces.
You can find examples of our engagement on LinkedIn.
Gender pay gap reporting
The UK Government introduced gender pay gap reporting
regulations for companies with more than 250 employees.
The phrase ‘gender pay gap’ refers to the difference in the average
earnings of men and women within the same organisation.
In 2024, the average gender pay gap for our UK workforce was
17.6% (18.9% in 2023). Our full Gender Pay Gap Report is
available on our website.
We met the board diversity targets set out in the Financial Conduct
Authority’s Listing Rules: our Board composition was 43% female,
and the role of Senior Independent Director was held by a woman.
Male
Female
Board
4
Male 57% (2023: 57%)
Board
3
Female 43% (2023: 43%)
Executive committee
6
Male 67% (2023: 67%)
Executive committee
3
Female 33% (2023: 33%)
Senior leaders
35
Male 67% (2023: 74%)
Senior leaders
17
Female 33% (2023: 26%)
All leaders
336
Male 66% (2023: 70%)
All leaders
176
Female 34% (2023: 30%)
All Employees
5,419
Male 64% (2023: 67%)
All Employees
3,060
Female 36% (2023: 33%)
Workforce by gender:
Members as at 31 December 2024
32
Our people and communities
continued
Task Force on Climate-Related
Financial Disclosures (TCFD) reporting
We consider our climate related financial disclosures to be
consistent with nine of the recommendations, which are set out in
the table below. We are adopting an explain stance for ‘Strategy’
requirements b) and c).
Scenario analysis has been completed for most risks and
opportunities. From a transitional risk perspective, due to the
business reliance on natural gas we have modelled the financial
impact of GHG taxes using our 10 biggest sites in respect of GHG
emissions output. From a physical risk perspective, the financial
impact of Heat Stress and/or a Water Stress incident has been
considered for the top 25 applicable sites (based on revenue,
GHG emissions, water consumption and where most likely to be
exposed to physical climate change). We also modelled the financial
impact from sea level rise and coastal flooding events for 10 sites
which were selected due to their low lying locations and proximity
to the coast.
It was considered that the potential risk in the short term would
not be material and therefore scenarios were examined over the
medium and long-term time horizon. However, we recognise the
importance of scenario analysis in the development of our strategy.
As part of the 2025 strategy plan review, the glidepath to reduce
reliance on natural gas will be reviewed and the long-term impact
associated mitigation considered.
Following a comprehensive scope 3 inventory exercise and
subsequent development of improved reporting methodology,
we now consider ourselves compliant with ‘Metrics and targets’
requirement b).
The climate-related financial disclosures made by Morgan Advanced
Materials comply with the requirements of the Companies
Act 2006 as amended by the Companies (Strategic Report)
(Climate-related Financial Disclosure) Regulations 2022 and UK
Government Climate-Related Financial Disclosure guidance.
Summary of disclosures:
Section
Requirement
Page
Governance
a) Describe the Board’s oversight of climate-related risks and opportunities.
b) Describe management’s role in assessing and managing climate-related risks and opportunities.
35
Strategy
a)
Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.
b)
Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial
planning.
c)
Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios,
including a 2°C or lower scenario.
37-39
Risk
management
a) Describe the organisation’s processes for identifying and assessing climate related risks.
b) Describe the organisation’s processes for managing climate-related risks.
c)
Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisations
overall risk management.
40
Metrics and
targets
a)
Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy
and risk management processes.
b) Disclose scope 1, 2 and if appropriate, scope 3 GHG emissions and related risks.
c)
Describe the targets used by the organisation to manage climate-related risks and opportunities and performance
against targets.
40-41
Morgan Advanced Materials is reporting in line with UK Listing Rule
6.6.6R(8) by providing climate-related ﬁnancial disclosures consistent
with the TCFD recommendations in this report.
Strategic report
Annual report 2024
33
Morgan Advanced Materials
1.
See metrics and targets section.
2.
Frequency may vary based on the initiative.
3.
The segments of the business are referred to internally and historically as Global Business Units (‘GBUs’) and these terms are used interchangeably in the Annual Report.
Governance
Our climate-related risk and opportunities governance structure
starts with the Board, and cascades down through the organisation,
as outlined in the table overleaf.
Our Board has oversight of our climate change, environmental and
corporate responsibility matters and ensures that our Executive
team progresses as planned to meet our commitments and goals.
The Board receives a written update from the Group Director for
Environment, Safety and Sustainability four times a year on progress
against climate-related activities and actions. A presentation and
discussion of climate related matters is included as a standing topic
in the CEO’s report to the Board. The impact of major capital
expenditure projects on our 2030 environment goals is also
assessed as part of the Board review process.
The metrics reviewed at each meeting include:
Progress towards our 2030 absolute scope 1 & 2 CO
2
e
emissions target
1
; and
Progress towards our 2030 water withdrawal and water
stress targets
1
.
During 2024 the Board received external training on the Corporate
Sustainability Reporting Directive (CSRD), and four internal updates
from the Group Director EHS&S on the Group’s strategy and
progress against an in-year plan.
During 2024, a new structure for ESG governance was introduced
to provide a more robust, tiered structure to governance. This new
structure provides a more focused review process and a better
escalation pathway to ensure our key ESG priorities are delivered.
ESG Governance structure
Board
Executive Sustainability Council
Initiatives
Workstream SteerCo
Frequency:
Four times per year
Chair:
Ian Marchant
Attendees:
Main Board
Frequency:
Reports four times per year (prior to Board meeting)
Chair:
Pete Raby
Attendees:
Executive plus Group Function Senior Reps and Workstream Initiative Leads
Frequency:
Monthly
2
Chair:
Initiative Lead
Attendees:
GBU
3
Functional subject matter experts where required
Group EHS&S, Finance members where appropriate
Frequency:
Monthly
Chair:
Group Finance Director
Attendees:
Initiative Leads, Group EHS&S Dir., Group ESG Manager,
Group Risk Lead, Group Director of Finance, GBU
3
ESG leads,
Head of Financial Planning & Analysis, Group Comms Director
Reporting
Direction
& Decisions
Decisions
Reporting &
Escalations
Reporting &
Escalations
34
Task Force on Climate-Related Financial Disclosures (TCFD) reporting
continued
Table 1 – Board and Management oversight of climate-related risks and opportunities
Board of
Directors
Has oversight of our climate change, environmental and corporate responsibility matters to ensure our Executive team
progresses as planned to meet our commitments and goals.
Climate-related risks and opportunities are a scheduled Board agenda item four times per year and progress on
environmental matters is reviewed four times per year, with updates on CO
2
and water progress in each meeting.
The competencies of the Board can be found on pages 59 and 60 of the Annual Report, which included skills
and experience relevant to climate matters.
Chief Executive
Officer
Has overall responsibility for climate risk management and delivery of the sustainability strategy.
Environmental performance metrics, including CO
2
emissions and water usage, are reviewed each month with the GBU
presidents as part of the monthly performance review cadence.
Nomination
Committee
Ensures the Board possesses the correct depth and balance of capabilities to support the Group’s long-term position,
including the expertise to assess the impact of climate change.
Audit
Committee
Supports the Board on matters relating to financial reporting, internal control and risk management. The Committee
reviews the integrity of the Group’s climate-related financial reporting and the process used to develop our TCFD-aligned
disclosures and assesses climate-related risks for the purpose of monitoring management’s progress in addressing them.
Remuneration
Committee
Responsible for remuneration policy, including the inclusion of sustainability-linked metrics and targets within
performance-related pay. Greenhouse gas emissions targets are part of our Long-Term Incentive Plan (LTIP).
4
Executive
Sustainability
Council
Responsible for execution and monitoring of the sustainability strategy, including environmental and corporate responsibility
matters, and the processes and controls regarding climate risks at a Group level. Includes GBU presidents.
Provides strategic direction, secures investment and resources.
Provides oversight and decision-making across the workstreams, manages escalation with a focus on outcomes an benefits.
Workstream
SteerCo
Monitors delivery against our net zero strategy through various workstreams, manages dependencies across projects.
Resolves risks and issued raised and identifies escalations.
Reports back to the Executive Sustainability Council.
Group Director,
Environment
Health, Safety
and Sustainability
(EHS&S)
Reporting to the CEO, is responsible for developing further, and driving execution of, the ESG strategy. Manages and
reports progress on environment and sustainability matters to the Executive team and to the Board of Directors.
Is a key part of the Group risk review process – which reviews current and emerging risks every six months and reports
these to the Executive team.
Is a member of both the Workstream SteerCo and Executive Sustainability Council.
EHS&S
Leadership Team
Led by the Group Director EHS&S and comprising EHS&S leads from each of the GBUs, the team meets monthly to review
strategy implementation and performance against 2030 targets.
Group Finance
Director
Reporting to the Group CFO, is responsible for overseeing ESG Compliance and reporting for the Group.
Chairs the Workstream SteerCo. and is a member of the Executive Sustainability Council.
Responsible for overseeing the risk management process for the Group, ensuring climate related risks are managed
appropriately and reviewed on a six monthly basis.
GBU leadership
teams
Each GBU has a leadership team and they are responsible for sharing, reviewing and managing of both principal and
emerging risks including climate risks. This includes related policy, guidelines and process, and is subject to Board oversight.
The GBUs develop business-specific risk registers and business continuity plans which are used in their annual strategic
planning. These are presented to the Audit Committee and Executive Committees.
The individual GBUs monitor their own performance against ESG targets and implement climate-related policies and projects.
Representative from the GBU leadership team is a member of the Workstream SteerCo to ensure smooth rollout of
workstream-related projects in the GBUs.
4.
See Directors Remuneration Report pages 84 to 109.
Strategic report
Annual report 2024
35
Morgan Advanced Materials
Strategy
Identification of risks and opportunities
In late 2020, we conducted a comprehensive materiality assessment
to establish our ESG priorities up to 2030. We obtained feedback
from our Board and surveyed over 160 senior business leaders to
determine what ESG means to our organisation. Additionally, we
gathered input from internal and external stakeholders and assessed
our business performance against key ESG topics. Based on this
information we identified our sustainability impacts on the environment
and society as well as the risks and opportunities that were material
to our business, and set ambitious goals for the future.
During 2024, we reviewed this materiality assessment. We engaged
a number of key internal and external stakeholders, to ensure the
topics identified remained relevant, and to better understand our
business strategy and resilience. Having considered the all-sector
and sector-specific risks and opportunities in Tables A1.1 and A1.2
in the TCFD guidance, the information in the Table 2 summarises
our material risks and opportunities across the appropriate
time horizons.
Scenarios Chosen
1.5
°
C model considers swift implementation of the necessary
regulatory measures to limit global temperature rise to 1.5C
by 2100 in line with the Paris Agreement.
<2
°
C model considers the current trajectory based on
government pledges.
2–4
°
C model considers a medium-case scenario where warming
is somewhat limited.
>4
°
C model considers a scenario where no steps are taken to
limit warming.
Transition scenarios
were chosen to explore different potential
approaches that governments and the international community
could take when setting carbon prices, and how this could impact
us in different regions. These were taken from World Energy
Outlook 2022 – published by the International Energy Agency.
The Net Zero Emissions (NZE) scenario was chosen to understand
the effect on the business of rapid implementation, and the
Announced Pledges Scenario (APS) was chosen to explore the
current trajectory. Likelihood scores were assessed based on
anticipated speed of adoption of these measures across the
international community.
Physical scenarios
were chosen to explore best (<2°C) ,
medium (2–4°C) and worse (4°C) impacts from physical climate
change at individual sites. These were modelled using different
Intergovernmental Panel on Climate Change (IPCC) Shared
Socioeconomic Pathways (SSPs). For the physical risks, the
likelihood of reaching each global temperature rise was considered.
For example, it was considered to be almost certain that the world
will experience a temperature rise of 1.5°C, whereas it is less likely
that 4°C would be reached. This likelihood was then combined
with the likelihood of an incident occurring at a Morgan Advanced
Materials site to give a final result.
Climate-related materiality impacts
Climate-related materiality impacts are aligned with our broader
risk assessment criteria, which is defined using adjusted operating
profit
*
impact as follows:
1 – Negligible financial impact
(£0–£0.1 million), the lowest
level are those risks where the Company can absorb the
financial impact, and the reputational impact is relatively
non-existent or negligible.
2 – Low financial impact
(£0.1–£1 million), with a potential to
be made public via notices from regulatory bodies.
3 – Moderate financial impact
(£1–£5 million), with the
potential to be known by the public or to damage our
Company’s reputation.
4 – High financial impact
(£5–£10 million), with the potential
to impact customer confidence.
5 – Significant financial impact
(£10–£20 million) and/or
reputational damage.
6 – Critical financial impact
(>£20 million) and/or
reputational damage.
Likelihood assessments are aligned with our broader risk
assessment criteria, and reflects the likelihood of the scenario and
incident occurrence, where the risk probability is defined as follows:
1 – Rare 0–5%
2 – Low 5–10%
3 – Moderate 15–25%
4 – High 25–50%
5 – Significant 50–75%
6 – Inevitable >75%
Climate-related risks and opportunities
Climate-related risks and opportunities could impact the Group
strategy over the short, medium and long term. These are aligned
with our broader risk assessment criteria and are defined as follows:
Short term (0–3 years).
Detailed financial plans are developed,
incorporating the strategic spending requirements to decarbonise
our business and realise growth opportunities.
Medium term (3–10 years).
Aligns with our 2030 ESG targets.
Each GBU develops transition plans within this time horizon to
realise these targets.
Long term (10–25 years).
Aligns with our 2050 ESG ambitions.
In this time horizon we expect to see a significant shift in
technologies to allow us to decarbonise our business but realise
that significant uncertainties exist and must be considered when
developing long-term transition plans.
36
Task Force on Climate-Related Financial Disclosures (TCFD) reporting
continued
Table 2 – Summary of our material risks and opportunities
Risk/opportunity
& time horizon
How it impacts
Morgan Advanced
Materials
Link to our
strategy/associated
opportunity
Scenario
likelihood/impact
Comments and response
Related metrics
and targets
Transition risks & opportunities
Reliance on
natural gas
Medium term
1.
Impact of
rising
wholesale
costs and
GHG pricing
instruments.
2.
New
manufacturing
technology to
reduce natural
gas use and
lower carbon
output.
3.
Damage to
reputation.
Natural gas is widely
used across the Group
especially in our
high-temperature
furnaces.
1.
Continued reliance
on natural gas
increases the
Group’s financial
exposure with
increasing
wholesale costs.
2.
Transitioning to lower
carbon manufacturing
processes requires
investment. In many
cases, the technology
is not yet available
to enable either
electrification or
other low carbon
fuels (such as green
hydrogen).
3.
The reputational
impact from being a
carbon intensive
business may deter
potential employees
and third parties that
want to work with us.
1
2
3
Reducing
the carbon
footprint of key
products will
support our
customers with
their net zero
ambitions.
Investing in new
and existing
manufacturing
processes
to drive efficiency
improvements
will help mitigate
financial exposure.
Medium term
1.5°C
5
Likelihood 4
Impact 3
<2°C
6
Likelihood 3
Impact 3
Long term
<2°C
6
Likelihood 2
Impact 4
The results show an increasing likelihood
and impact from reliance on natural gas
across both scenarios. The modelling
does not include rising wholesale prices,
as this is already included in our strategic
and financial planning which mitigates
any significant risk.
Our reputational damage has not been
modelled. The long-term modelling has
focused on below 2°C scenario under
the basis that temperatures are already
at 1.5°C in 2024 and we have assumed
that, although in the medium-term
temperatures might remain at 1.5°C,
in the long-term temperatures will be
above 1.5°C.
GHG pricing instruments will likely
begin to come into force closer to 2030.
Based on current guidance the majority
of our sites produce CO
2
emissions at
a level lower than the thresholds.
A key part of our transition plan before
2030 is our investment in R&D for
key product families to establish their
decarbonisation pathway. The cross-GBU
furnace working group is working to
establish efficiency improvement
and decarbonisation opportunities.
As an example, we are signatories of
the Ceramics UK ‘Towards Net Zero’
initiative and are part of their Hydrogen
research project.
Our products help our customers to save
energy. The impact from high fuel prices
in recent years has been passed these on
to our customers and we would expect
to pass on carbon costs in the same way,
enabling our customers to choose the
most carbon efficient technology.
Operational excellence plans are focused
on efficiencies to run our processes to
enable optimisation of gas consumption.
Our pledge to increasingly source
renewable and nuclear energy
demonstrates our commitment
to decarbonisation.
Commitment to
reduce scope 1
and 2 emissions
by 50% by 2030
from a 2015
baseline.
Commitment to
source 80%
renewable and
nuclear electricity
by the end of
2025.
Growth in
our faster
growing
markets
Short to
medium term
Increasing demand
for semiconductors,
healthcare, clean
energy and clean
transportation solutions
to support the global
net zero transition offers
growth opportunity
for Morgan Advanced
Materials.
1
2
3
These markets
align well with
both our purpose
and strategy.
Our products
support the global
transition to a
more sustainable
future.
These segments
contribute 22%
of total sales.
Increasing decarbonisation drivers
will increase demand for our products.
We are investing in capacity to better
serve these growing markets and have
dedicated market specialists to ensure
we address their needs. In these
markets, We have newer products
with high levels of differentiation and
we continue to invest in R&D to
develop products which meet the
needs of tomorrow.
Revenue and %
growth in our
faster growing
market.
Investment in
R&D.
5.
Net Zero Emissions (NZE) scenario from World Energy Outlook 2022 – International Energy Agency.
6.
Announced Pledges Scenario (APS) from World Energy Outlook 2022 – International Energy Agency.
Strategic impact
1
Big positive difference
2
Delight the customer
3
Innovate to grow
Strategic report
Annual report 2024
37
Morgan Advanced Materials
Table 2 – Summary of our material risks and opportunities
(continued)
Risk/opportunity
& time horizon
How it impacts
Morgan Advanced
Materials
Link to our
strategy/associated
opportunity
Scenario
likelihood/impact
Comments and response
Related metrics
and targets
Physical risks & opportunities
Heat stress
Medium term
Heat stress at our
manufacturing
facilities could
negatively affect
our staff, plant
and materials.
1
The health
and safety
of our employees
is our top priority.
Medium term
<2°C
7
Likelihood 3
Impact 2
2–4°C
8
Likelihood 4
Impact 2
>4°C
9
Likelihood 2
Impact 2
Long term
<2°C
7
Likelihood 2
Impact 2
2–4°C
8
Likelihood 2
Impact 3
>4°C
9
Likelihood 2
Impact 3
Extreme heat events become more likely and
impactful in the >4% scenario.
Mitigations to protect employee health
are relatively straightforward to implement.
Our global manufacturing footprint and
diversified supply chain means products could
be manufactured at other facilities.
The potential impacts from heat stress is considered
as part of our ongoing manufacturing strategy.
Mitigations such as the provision of air-conditioned
rest rooms, cooling vests, alterations to shift
working patterns to avoid working in the hottest
hours of the day have been implemented at
our sites which are most impacted by rising
temperatures. This has enabled us to protect
our employee health, but also maintain current
productivity levels. These adjustments have
been taken into account in our most up-to-date
scenario analysis.
We are now
monitoring heat
stress incidents
through our H&S
reporting system.
A 0.10 lost-time
accident rate
by 2030.
Top quartile
engagement
score.
Water stress
Medium term
Water is used in
the manufacture
of our materials.
Drought
events where
process water is
limited could
impact our sites.
3
Innovating to
reduce the process
water used in our
manufacturing
processes reduces
both the cost of
the water and the
energy required to
dry the product.
Medium term
<2°C
7
Likelihood 3
Impact 2
2–4°C
8
Likelihood 4
Impact 2
>4°C
9
Likelihood 2
Impact 1
Long term
<2°C
7
Likelihood
2 Impact 2
2–4°C
8
Likelihood 2
Impact 3
>4°C
9
Likelihood 2
Impact 1
Drought events increase in duration in the
>4% scenario.
A key part of our transition plan before 2030 is
our investment in R&D for key product families
to reduce water use and share best practice in
water conservation.
Water conservation projects are ongoing
at our facilities as part of our Operational
Excellence programmes. In Gujarat, India we
have begun installation of a recirculating cooling
tower which will be commissioned in 2025.
By reducing our consumption across our
locations we mitigate the possibility of being
forced to reduce operations.
The water stress at a location is evaluated as
part of our ongoing manufacturing strategy.
30% reduction in
water withdrawal
by 2030 from a
2015 baseline.
30% reduction in
water withdrawal
at water stressed
sites by 2030
from a 2015
baseline.
Sea level rise
Medium to
long term
Some of our
factories are in
low lying
locations. Flood
events could
damage plant and
interrupt supply
of product to
customers.
2
Our global
manufacturing
footprint
means products
could be
manufactured at
other facilities,
supporting
our customers
through any
interruptions.
Medium term
<2°C
10
Likelihood 3
Impact 3
2–4°C
10
Likelihood 4
Impact 3
>4°C
10
Likelihood 2
Impact 3
The impact from sea level rise and coastal
flooding events was found to be moderate with
flood damage, loss of production and potential
protection or relocation costs the key impact.
We have undertaken an analysis of our exposure
to sea level rise and coastal events in our sites
most at risk. Of our 60 manufacturing sites,
four were identified as having >1% annual risk
of flooding before 2050. Our analysis has shown
the impact from sea level rise alone is low.
This increases when coupled with the possibility
of coastal events where we have considered
the impact of annual to once in a thousand
year flooding events. This risk is being actively
considered as part of our risk management
and ongoing review of our physical portfolio.
Impact analysis
will be updated
as new data
becomes
available. Metrics
not developed.
7.
Shared Socioeconomic Pathway 2.6 (SSP1-2.6).
8.
Shared Socioeconomic Pathway 7.0 (SSP3-7.0).
9.
Shared Socioeconomic Pathway 8.5 (SSP5-8.5).
10. Climate Central Coastal Screening Tool – https//coastal.climatecentral.org/
Strategic impact
1
Big positive difference
2
Delight the customer
3
Innovate to grow
38
Task Force on Climate-Related Financial Disclosures (TCFD) reporting
continued
Impact of risks and opportunities on the
business strategy
The first transition risk explored was our reliance on natural gas
in the manufacturing process. Although only two of our sites are
currently exposed to an emissions trading scheme, there is risk in
the future that more of our operations will be exposed to carbon
pricing instruments and the rising wholesale cost of natural gas,
as well as potential access to affordable renewable energy and/or
carbon-free energy. In the short to medium term financial planning
decisions have already been made with climate in mind, including:
Continuing investment in our green electricity tariff, where
feasible, despite increasing energy costs.
Investing in self-generation energy projects. In 2023 three
solar PV systems were committed, with an additional PV system
commissioned at our Fostoria, USA plant, which is due to come
on line in 2025. In total Morgan Advanced Materials generated
1.7GWh renewable electricity on-site, an increase of 9%
compared to 2023.
Engagement of external support to create a roadmap to explore
opportunities to invest further in renewable power purchasing
agreements (PPAs) to secure renewable energy at a fixed price
to gain energy price certainty.
Assuming annual growth in emissions linked to business growth,
both the 1.5°C and >2°C scenarios predicted a similar impact in
2030, but increasingly diverged in 2040 and 2050, with higher
impact in the 1.5°C scenario. The impacts of both scenarios
continue to worsen in the longer term. The impact shows the
potential costs to Morgan Advanced Materials of not being
proactive in planning for decarbonisation and enacting our
decarbonisation roadmap.
Our customer’s exposure to carbon pricing mechanisms could
also be an opportunity. Our products help our customers to
become more efficient, by reducing losses in their manufacturing
operations or in the operation of their product. For example,
we can demonstrate how our thermal management solutions are
supporting our customers to maximise throughput efficiency and
minimise their carbon footprints.
We have significant transition opportunity in our faster growing
market segments of semiconductors, healthcare, clean energy
and clean transportation, over the short-term. Given the relatively
short time horizon we have not run scenario analysis on these
growth rates.
Heat stress and water stress scenario analysis examined potential
changes in peak temperatures and drought months at 25 of our
largest sites. Sea level rise risk was assessed for sites with a higher
risk of flooding before 2050. Impact scorings were based on
potential temporary interruptions to manufacturing operations.
Changing physical risks are being actively considered as part of
the ongoing review of our physical portfolio.
Preparing for the future
Scaling up
Investment in key technologies
Identifying the big scope 3
contributors and solutions to
help us decarbonise. GBU
Glidepaths to decarbonise.
We will also deliver on our
water usage commitments.
Conversion of some low
temperature furnaces to
electricity.
Development of scope 3
emissions strategy.
Life cycle assessment
on some products.
Engineering solutions to
increase energy efficiency
and water recycling.
Inclusion of a shadow
carbon price in capex
business cases.
Investing in R&D for
carbon-free furnaces.
Starting to invest in
decarbonising our business
and value chain.
Installation of pilot
carbon-free furnaces.
Further conversion of
lower temperature
furnaces to electricity.
Working with our value
chain to reduce scope 3
emissions.
By 2026, 80% of our
electricity will be
renewable and nuclear.
Investing in new technologies to transition the business to
a greener future.
Our net zero roadmap
By 2030 we will
reduce our
scope 1 and 2
emissions
by 50%.
We will source
100%
renewable and
nuclear-backed
electricity.
We will reduce
our scope 3
emissions
by 15%.
Conversion
of higher
temperature
furnaces to
electricity/
alternative low
carbon fuel.
Working with
our value chain
to further
reduce scope 3
emissions.
Conversion of
remaining
furnaces to
carbon-free
alternatives.
Our ambition is
to reach net
zero scope 1
and 2 emissions
by 2050.
2024–2026
2026–2030
2030
2040
2050
Strategic report
Annual report 2024
39
Morgan Advanced Materials
Business resilience
The resilience of the Group to these climate risks has been
assessed. Our global footprint, strong market positions, and diverse
portfolio is our strength. Our customer base is widely spread.
We largely make products where we sell them with localised
supply chains. In the event of a local shock, manufacturing of
product could be transferred to other sites within the GBU.
Our scenario analysis around our natural gas reliance allows us
to plan for changes in operating costs and balance our global
manufacturing strategy.
As part of our strategic planning in 2025, we will look to further
embed climate considerations into our financial and strategic
planning processes. Our current assessment indicates that the
impact of climate-related issued has not significantly impacted
our financial performance or financial position, and we do not
anticipate it will in the short to medium term.
Therefore, the climate-related threats and opportunities identified
are emerging and/or operational risks that will continue to be
monitored and evaluated. The most significant risks have been
integrated into functional and divisional risk registers and they are
reviewed by their functional owners.
Transition plan
The risks and opportunities considered by the Board have directly
informed our strategy to deliver on our 2030 goals. These form
the foundation of our net zero roadmap to ensure we achieve
our targets.
We are making good progress. We have transitioned a number of
lower temperature furnaces and ovens from natural gas to electric
firing with good results and reduced water usage considerably
through recycling. We have started to understand our scope 3
position and the opportunities in more detail.
Risk management
The Board recognises the need to understand and assess climate
related risks. Risk management and internal control are fundamental
to achieving the Group’s strategic objectives.
Principal and emerging risks are identified both ‘top-down’ by the
Board and the Executive Committee and ‘bottom-up’ through the
GBUs and central functions. Senior executives including the CEO
and Executive Committee are responsible for the management
of the Group’s principal risks, including climate related risks.
Further details on our procedures for identifying, assessing,
and managing risk can be found on pages 43 to 47, in the Risk
Management section of our Annual Report.
Our Workstream Steering Committee meets bi-monthly to
oversee management of our most significant environmental and
climate related risks.
The senior management teams for the different GBUs are
responsible for developing risk mitigation and management
strategies for the risks identified for their individual businesses.
Each risk is assessed to determine its potential financial impact, and
potential likelihood of materialising. Mitigating controls are identified
and assessed to derive a net risk score, used for risk prioritisation.
Climate change is captured as part of the new combined principal
risk, External environment, which covers transition and physical
term risks listed on page 45 in the ‘Risk Management’ section of
this Report.
The Board reviewed the preparedness of Morgan Advanced
Materials to the principal risks with a significant potential impact at
Group level twice during 2024. Additionally, the Audit Committee
carried out a focused risk review of each GBU. These reviews
included an analysis of the principal risks, and the controls,
monitoring and assurance processes established to mitigate those
risks to acceptable levels. The overall risk from climate change
was assessed to have a high severity rating.
Metrics and targets
We have reflected on the most appropriate metrics and targets
to help us manage our climate risks and opportunities effectively.
These are identified in the climate impact tables on pages 37 and 38
and their values are summarised here. We have had our scope 1, 2
& 3 targets independently verified by the Science-based Targets
initiative to ensure that our ambition is aligned with the UN Paris
Agreement on climate change well below the 2°C scenario.
Our commitments are as follows:
Morgan Advanced Materials commits to reduce absolute scope 1
and 2 GHG emissions 50% by 2030 from a 2015 base year
11
;
Morgan Advanced Materials also commits to increase active
annual sourcing of renewable and nuclear-backed electricity from
0% in 2015 to 80% in 2025 and 100% by 2030; and
Morgan Advanced Materials further commits to reduce absolute
scope 3 GHG emissions 15% by 2030 from a 2019 base year.
11.
Climate central coastal risk screening tool – based on IPCC RCPs.
Metric description
Target type
Baseline year
Baseline value
FY 2030 target
2024 progress
Scope 1 & scope 2 GHG (tonnes)
Absolute
2015
342,694
171,347
152,871
Scope 3 GHG purchased goods & services (tonnes)
Absolute
2019
1,171,941
996,150
369,825
Water consumed in regions of high baseline
water stress (m
3
)
Absolute
2015
431,004
301,703
341,052
Commitment to source 80% renewable and
nuclear electricity by 2025
Intensity
2019
1%
100%
75%
40
Task Force on Climate-Related Financial Disclosures (TCFD) reporting
continued
12. www.morganadvancedmaterials.com/ESGAssurance/
13. Enterprise Resource Planning systems.
14. UK government GHG conversion factors for company reporting, IEA emission factors 2024, EcoInvent 3.0. Last reviewed in Oct. 2024.
Our scope 1, scope 2 and selected environmental metrics have
been assured by ERM CVS. A copy of the assurance statement can
be found on our website
12
. Scope 1 and 2 GHG emissions are
reported from manufacturing/production sites only, accounting for
approximately 93.6% of Morgan’s operational control based on
personnel headcount distributed by sites globally.
In 2024, a comprehensive scope 3 inventory exercise and
subsequent development of improved reporting methodology
was completed. Our screening exercise, across all relevant
categories, used spend and/or volume based data was retrieved
from the Company’s ERP
13
and/or finance systems, and emission
factors
14
applied matched to activities in 2024 only.
Remuneration Committee integration of
targets into Long-Term Incentive Plan
Sustainability measures represent 15% of total LTIP awards for
Executive Directors, and these are linked directly to the business
metrics for scope 1 and 2 GHG emissions. The balance of the
award is focused on financial performance measures.
Introducing internal carbon pricing
In the next year, we will be introducing a shadow internal carbon
price (ICP) to our capital investment business case assessment
process. Although the ICP is not a real cost of the investment,
it demonstrates what the impact would be of carbon taxation
forecast for 2030, and we will use it to evaluate and compare
potential investments.
Streamlined energy and carbon report
This report summarises our energy usage, associated emissions,
energy efficiency actions and energy performance under the
government policy Streamlined Energy & Carbon Reporting
(SECR); see table in Appendix, page 42. This is implemented by the
Companies (Directors’ Report) and Limited Liability Partnerships
(Energy and Carbon Report) Regulations 2018. Also, it summarises
in the appendix, the methodologies utilised for all calculations
related to the elements reported under energy and carbon.
Morgan Advanced Materials plc are a UK incorporated business and
is also a main-market listed company. Under SECR legislation we
are mandated to include energy consumption, emissions, intensity
metrics and all energy efficiency improvements implemented in our
most recent financial year, for our UK operations. An operational
boundary has been applied for the purposes of the reporting.
For specific examples of actions taken within the year to reduce
energy consumption please refer to page 28.
Methodology
This report (including the scope 1 and 2 consumption and CO
2
e
emissions data) have been developed and calculated using the
GHG Protocol – A Corporate Accounting and Reporting Standard
(World Business Council for Sustainable Development and World
Resources Institute, 2004); Greenhouse Gas Protocol – Scope 2
Guidance (World Resources Institute, 2015); Environmental
Reporting Guidelines: Including Streamlined Energy and Carbon
Reporting Guidance (HM Government, 2019). Global scope 2
calculations have been developed using a combination of sources
– e-Grid for US locations; AIB (2023 version) where available for
European countries, and IEA 2023 emission factors in all other
cases globally. DEFRA Emissions Factor Database 2024 version 1
has been used across the majority of scope 1, utilising the published
kWh calorific value (CV) and kgCO
2
e emissions factors relevant for
reporting period for the year ending 31 December 2024.
Strategic report
Annual report 2024
41
Morgan Advanced Materials
Scope 1 and 2 emissions and streamlined energy and carbon reporting
Units
2024
2023
2022
2021
2020
2015
Scope 1 energy consumption
MWh
533,674
574,531
636,583
648,833
592,325
UK
MWh
34,655
38,316
37,988
37,358
36,277
Global excluding UK
MWh
499,019
536,215
598,595
611,475
556,048
Scope 1 GHG emissions
tCO
2
e
111,011
110,563
121,989
122,817
116,552
205,570
UK
tCO
2
e
7,357
7,374
5,657
6,880
6,686
Global excluding UK
tCO
2
e
103,654
103,189
116,332
115,937
109,866
Scope 2 energy consumption
MWh
382,356
395,366
423,955
417,835
387,177
UK
MWh
13,584
14,198
15,205
15,083
15,673
Global excluding UK
MWh
368,772
381,168
408,750
402,752
371,504
Scope 2 GHG emissions
(market-based)
tCO
2
e
41,860
47,011
89,115
107,070
160,126
137,124
UK
tCO
2
e
0
0
0
0
3,657
Global excluding UK
tCO
2
e
41,860
47,011
89,115
107,070
156,469
GHG intensity
tCO
2
e/£m
139
141
190
242
304
391
UK
tCO
2
e/£m
104
169
106
179
276
Global excluding UK
tCO
2
e/£m
141
140
194
245
305
Biogenic CO
2
emissions
15
tCO
2
e
543
719
978
877
501
1,368
Scope 3 emissions screening results
Morgan Advanced Materials scope 3 GHG emissions results (tCO
2
e)
2024
2023
2022
2021
2020
Category 1
Purchased goods and services
223,768
410,641
474,257
439,775
394,744
Category 2
Capital goods
49,763
100,351
75,768
49,794
42,816
Category 3
Fuel and energy related activities
30,751
31,567
30,497
52,118
61,163
Category 4
Upstream transport
13,598
46,613
71,143
58,777
48,935
Category 5
Waste generated in operations
15,293
9,597
12,344
11,889
11,210
Category 6
Business travel
8,427
13,903
9,360
5,509
3,953
Category 7
Employee commuting
27,914
12,750
12,750
12,750
12,750
Category 8
Upstream leased assets
–
–
–
–
–
Category 9
Downstream transport
190
22,705
18,780
18,052
15,912
Category 10
Processing of sold products
5
26,995
30,361
28,116
28,477
Category 11
Use of sold products
–
53,146
49,843
43,389
39,837
Category 12
End of life of sold products
148
81,107
57,050
58,062
53,725
Category 13
Downstream leased assets
–
–
–
–
–
Category 14
Franchises
–
–
–
–
–
Category 15
Investments
–
–
–
–
–
Total scope 3 GHG emissions (tCO
2
e)
369,857
809,375
842,153
778,231
713,522
Total scope 1 and 2 GHG emissions (tCO
2
e)
152,871
157,574
211,104
229,887
276,678
Total GHG emissions (tCO
2
e)
522,728
966,949
1,053,257
1,008,118
990,200
Waste and recycling
Units
2024
2023
2022
2021
2020
2019
2018
Total waste generated
metric tonnes
34,972
36,853
47,879
39,918
35,660
48,676
46,605
Waste generation intensity
metric tonnes/£m
32
33
43
42
39
46
45
Total waste recycled
metric tonnes
16,905
17,384
25,406
21,547
18,214
27,833
25,943
% recycling of total waste
%
48
47
53
54
51
57
56
Appendix – Responsible business
15. Biogenic emissions result from the combustion of biological materials. These are considered carbon neutral and therefore reported separately. Emissions were calculated using the
UK Government GHG Conversions Factors for Company Reporting (2024 version).
42
Strategic report
Annual report 2024
43
Morgan Advanced Materials
Risk management
Identifying and managing risk
The Board considers that risk management and internal control
are fundamental to achieving the Group’s strategic objectives.
Principal and emerging risks are identified both ‘top-down’ by the
Board and the Executive Committee and ‘bottom-up’ through the
GBUs and central functions. Senior executives are responsible for
the strategic management of the Group’s principal and emerging
risks, including related policy, guidelines and processes, subject to
Board oversight.
Not all the risks identified as part of our risk management processes
are considered principal risks. Principal risks are individual risks,
or a combination of risks, which could result in circumstances that
might threaten the Group’s reputation or business model, its future
performance, solvency or liquidity. As with all businesses operating
in a dynamic environment, some risks may not yet be known,
whilst other low-level risks could become material in the future.
We have an established risk management methodology which seeks
to identify, prioritise and manage risks, underpinned by a ‘three lines
of defence’ model comprising an internal control framework, internal
monitoring and independent assurance processes.
Risk management governance
First line of defence
Board and Audit Committee
Principal and emerging risks formally reviewed throughout the year by the Board and the Audit Committee.
Risk appetite set and threshold for principal risks agreed. Overall system of risk management
reviewed by the Audit Committee on behalf of the Board.
Executive Management analyses risks and control
effectiveness, sets policies and procedures, and has
oversight of Group-level risk register.
Implement policies
Operate controls
Employee behaviours in line
with the Morgan Code
Policy self-certifications
Fraud risk assessments
GBU-level risk registers
Risk and control monitoring
Test of design and effectiveness
of procedures and controls
Frontline business operations
(Site leaders and shared service
centre managers)
Second line of defence
Third line of defence
GBU management and
central functions
(GBU leadership team and
Group-level functions)
Independent assurance
(Internal audit and other independent
assurance providers)
Executive Management
Audit reports
‘Speak Up’ hotline
44
Risk management
continued
Risk appetite
Our process aims to mitigate the significant risks faced by the Group
in accordance with our risk appetite. During the biannual Board risk
review, the Board concluded that its risk appetite remains largely
unchanged from previous years.
Emerging risks
Emerging risks are ‘new’ risks that have the potential to crystallise
in the future, but are unlikely to impact the Group during the next
year. The potential future impact of such risks is often uncertain.
They may begin to evolve rapidly or simply not materialise.
Key emerging risk
Generative artificial intelligence:
The Group is monitoring
developments in regulatory requirements of generative artificial
intelligence, its potential wider impacts on our business model
and strategy, as well as evaluating appropriate mitigating measures.
Risk analysis during the year
2024 risk and control assessments
During 2024, the Board reviewed the overall risk profile for the
Group, which involved detailed discussion of risk assessment
outputs provided by the GBUs and central functions. The Board
shared its perspective on emerging risk areas, and principal risks
relating to the Group’s strategy for 2024 and beyond.
Members of the Board, Audit and Executive Committee received
regular updates on the Group’s principal risks and the steps taken
to mitigate any potential impacts.
Changes in principal risk disclosures
The Group’s principal risks are interconnected and should be
evaluated in a holistic manner. To gain a more comprehensive
understanding of the risks, the Board has combined the principal
risk disclosures for the Group, compared to previous years,
as follows:
Previous stand-alone risk
New combined principal risk
Macro-economic and
political environment
External environment
Climate change
Pandemic
Technical leadership
Business change and
development
Operational execution/
organisational change
Portfolio management
Product quality, safety
and liability
Business continuity
Supply chain/business
continuity
Environment, health
and safety (EHS)
Environment, health
and safety (EHS)
IT, cyber security and
data management
IT infrastructure and security
Compliance
Legal and regulatory
Contract management
Contract management
Treasury
Key finance processes
Tax
Pension funding
Principal risks heatmap
The heatmap below illustrates the relative inherent positioning of our principal risks from the perspective of potential impact, and potential
probability after mitigating controls.
Key
A
External environment
B
Business change and development
C
Business continuity
D
Environment, health and safety (EHS)
E
IT infrastructure and security
F
Legal and regulatory
G
Contract management
H
Key finance processes
Risk category
Strategic
Compliance and legal
Operational
Financial
A
B
C
D
E
F
H
G
Risk heatmap (net risks)
Probability
Impact
Strategic report
Annual report 2024
45
Morgan Advanced Materials
Strategic impact
Big positive difference
Delight the customer
Innovate to grow
Risk trends
Adverse
Unchanged
Favourable
A. External environment
Strategic impact:
1
2
3
Risk trend:
Risk description and drivers
Events outside of the Group’s control, such as geopolitical
and macro-economic concerns, as well as other global events,
such as pandemics and natural disasters, could adversely affect
the environment in which we operate, and we may not be able
to manage our exposure to these conditions and/or events.
Current geopolitical uncertainty is increasing the risk trend.
These events could lead to; fluctuation in commodity prices
and high inflation, potential for conflict or broader political
issues, as well as introduction of tariffs and/or taxes which
could adversely affect customer demand, the financial
performance of the Group or cause sudden and unanticipated
disruption to the Group’s supply chain and wider operations.
Global climate change poses a number of short-term and
longer-term challenges for our business. The expected changes
are far-reaching and irreversible. Climate-related risks are
addressed in greater detail on pages 35 to 44.
Key controls and mitigation
We remain alert to the current geopolitical and macro-economic
uncertainty and continue to monitor the potential impact on our
business operations, as well as the broader markets we serve.
The Group’s diversified global footprint mitigates against
geopolitical shocks.
Regular monitoring of order books, cash performance,
cost-control and other leading indicators to identify adverse
trading conditions.
Onboarding of dual source suppliers and alternative materials
where available.
Group Business Continuity Plan Policy, requiring appropriate
planning at our highest risk sites.
B. Business change and development
Strategic impact:
1
2
3
Risk trend:
Risk description and drivers
The Group has a number of high-impact, strategically
important transformation initiatives underway, temporarily
increasing the risk trend; these initiatives require changes to
systems, operational processes and organisational structures.
Failure to manage these projects successfully could result in
disruption to daily operations, employee fatigue and could
require significant execution involvement from management,
serving as a distraction from other strategic priorities.
If this risk was to materialise, it could mean that anticipated
benefits were not delivered, or were not delivered in
accordance with anticipated timelines.
Key controls and mitigation
Central and GBU project governance deployed, including
Executive Committee and Board oversight of changes
where required.
Dedicated project managers overseeing project implementations.
Regular monitoring and challenge of project overruns,
expected improvements and savings against budgets.
Principal risks and uncertainties
1
2
3
46
Risk management
continued
Principal risks and uncertaintie
s
(continued)
Strategic impact
Big positive difference
Delight the customer
Innovate to grow
Risk trends
Adverse
Unchanged
Favourable
C. Business continuity
Strategic impact:
1
2
3
Risk trend:
Risk description and drivers
The Group’s manufacturing processes, supply chain and product
profiles introduce risks to the business continuity of the Group:
Property facilities and processes might not be adequately
maintained, making them unsuitable for our complex
manufacturing operations. A number of property damage
incidents have temporarily increased the risk trend.
There are single-point (key supplier/key site) exposure risks
within the Group’s supply chain.
Some of the products manufactured by the Group are used in
potentially high-risk applications, for example in the aerospace,
automotive, electric vehicle, medical and power industries.
If this risk was to materialise, it could lead to lack of competitive
insurance including premiums and deductible levels, supply chain
disruption, loss of customers and/or market share, adversely
impacting the current and future financial performance of
the Group.
Key controls and mitigation
Development of Group property risk management framework.
Onboarding of dual source suppliers and alternative materials
where available.
Quality management systems across the Group.
Group insurance programme ensuring adequate protection.
Maintaining strong customer relationships built on technical
expertise and product quality.
Continue building market differentiation capabilities
and key partnerships.
D. Environment, health and safety (EHS)
Strategic impact:
1
2
3
Risk trend:
Risk description and drivers
The Group operates a number of manufacturing facilities around
the world, often involving risks related to heavy duty machinery,
chemical use, movement of parts such as lifting or transportation,
as well as energy, such as electricity and pressurised systems.
A serious accident in the workplace could lead to environmental
damage or have a major impact on employees, their families,
colleagues and communities. Such an incident could also result
in legal claims, reputational damage and financial loss.
Key controls and mitigation
The Group has a comprehensive EHS programme managed by
the Group EHS and Sustainability Director, with clear standards
and a comprehensive programme of audits to assess compliance.
The Executive Committee approves annual priorities for EHS.
These form the basis for individual sites’ own priorities and
plans and complement the Group’s ‘thinkSAFE’ behavioural
safety programme.
KPIs are monitored by the Group Executive Committee and
the Board. Our LTA rate was 0.13 (2023: 0.19); with the
improvement reflecting our continued focus on employee
safety and wellbeing.
E. IT infrastructure and security
Strategic impact:
1
2
3
Risk trend:
Risk description and drivers
It is critical that the Group’s information technology and
operational technology infrastructure are cyber resilient and
the proprietary, confidential or otherwise protected information,
intellectual property and personal data held and processed on
them are appropriately secured.
Failure to defend ourselves against a cyber security threat/event
could disrupt the availability, confidentiality and integrity of
our IT systems. This could disrupt our key operations, make
it difficult to recover critical data or services and irrevocably
damage our assets.
Key controls and mitigation
The IT strategy is reviewed by the Board annually.
Regular external reviews to reduce the risk of successful cyber
attacks, including vulnerability and penetration tests.
Comprehensive cyber security framework to prevent,
detect and respond to incidents, including hardware, Group
policies and procedures on passwords and data management,
and IT disaster recovery plan.
Mandatory ‘thinkSECURE’ information security training
programme for all employees.
1
2
3
Strategic report
Annual report 2024
47
Morgan Advanced Materials
F. Legal and regulatory
Strategic impact:
1
2
3
Risk trend:
Risk description and drivers
The Group must comply with relevant national and international
laws and regulations, including those related to anti-bribery and
corruption, trade/export compliance and competition/anti-trust
activities, as well as data privacy laws. The increasing global
legislative environment is adversely impacting the risk trend.
Failure to comply with such laws and regulations could result
in civil or criminal liabilities and/or individual or corporate fines,
debarment from government-related contracts or rejection by
financial market counterparties and reputational damage.
Key controls and mitigation
The Morgan Code outlines the Group’s commitment to doing
business ethically, and is implemented through a global suite of
policies, standards and guidance.
Mandatory ethics training for staff covers topics including
anti-bribery and anti-corruption, anti-trust and trade controls.
We provide a confidential ethics ‘Speak Up’ hotline to
allow employees to raise concerns or possible wrongdoing.
To strengthen export control, the Group runs a global
‘thinkTRADE’ programme.
G. Contract management
Strategic impact:
1
2
3
Risk trend:
Risk description and drivers
The Group supplies components used in critical applications,
which increases the risk of significant liabilities arising from a
product fault.
Failure to manage contracts effectively could result in unlimited
or high-liability contracts, financial loss and damage to
customer relationships.
Key controls and mitigation
The Group has an in-house legal function, supplemented by
specialist external lawyers.
High-risk contracts are subject to Group Legal review.
Unlimited and high-liability contracts are subject to
CEO approval.
Group insurance programme ensuring adequate product
liability protection.
H. Key finance processes
Strategic impact:
1
2
3
Risk trend:
Risk description and drivers
The Group follows defined finance processes, including those
over financial control, treasury, tax and pensions. There is a risk
of errors in existing processes, or from new processes as a result
of the ongoing change activities which inherently increases the
risk profile.
Failure of key finance processes and controls could lead to
misstatements of financial results due to error, omission, fraud or
non-compliance with accounting standards and other applicable
regulations. This could affect the reputation and performance of
the Group, as well as expose it to legal and regulatory sanctions.
Key controls and mitigation
Group policies and procedures including Internal Financial
Controls Policy, treasury and tax policies, as well as a
well-established pensions strategy and accompanying
framework.
Annual policy self-certification process for all GBUs.
Quarterly internal financial control self-assessments for all
relevant locations.
Strategic impact
Big positive difference
Delight the customer
Innovate to grow
Risk trends
Adverse
Unchanged
Favourable
1
2
3
48
Review of operations
During 2024, the Group continued its focus on operational
simplification by streamlining management structures and optimising
plant operations. As part of this programme, the Group now
manages performance across three distinct reporting segments,
as detailed below.
The strategy for each of our segments aligns with the strategic
execution priorities of the Group. Refer to pages 12 and 13 for
details of our strategy. Refer to the Financial Review and note 3 to
the consolidated financial statements for details regarding changes
in segmental reporting under ‘IFRS 8 – Operating Segments’
arising as a result of this simplification.
Reporting segment
Nature of business
Products include
Thermal
Products
Thermal Products manufactures high-performing products,
systems and solutions for high-temperature environments.
Our solutions are engineered to improve the safety of
people and equipment in demanding environments, reduce
emissions, energy consumption and costs in energy-intensive
processes. Our products are used in industrial processing
of metals, petrochemicals, cement, ceramics and glass,
and by manufacturers of equipment for aerospace,
automotive, marine and domestic applications.
The business generates sales through a well-established
distributor network as well as its own network of
sales offices.
High-performing crucibles
Foundry products
Furnace Industries furnace range
High-temperature insulating fibre
products
(Low biopersistent fibres, Superwool
®
family, RCF, Polycrystalline)
Microporous products (WDS
®
, Min-K
®
)
Firebricks and mortars
Heat shields
Performance
Carbon
Performance Carbon specialises in developing and
manufacturing cutting-edge carbon, graphite, and carbide
products that deliver outstanding performance. Our expertise
drives innovation, helping our customers achieve exceptional
performance and efficiency. Our products and technologies
are used to enable EVs to charge faster and drive longer, to
maximise the efficiency of wind turbines, to support power
generation across the world and to deliver water to drought
affected regions. Our products for the security and defence
sector help protect lives on land and in the air.
The business has manufacturing sites across the world,
supported by a comprehensive network of sales offices.
Semiconductor consumables
Collector strips and carbon brushes
Graphite powders
Face seals
Sliding bearings
Shafts
Rotary vane pump components
Technical
Ceramics
Technical Ceramics designs and manufactures advanced
technical ceramics components from a portfolio of
cutting-edge materials to address customer-specific
technical challenges. Our products are designed to withstand
demanding environments and we offer a wide range of
advanced ceramic and glass materials, together with in-depth
materials expertise and vast applications experience in a
broad range of markets.
Structural ceramic components
Engineered coatings
Ceramic cores
Ceramic-to-metal assemblies
Braze alloys
Ceramic tubes and rollers
Extruded products
Laser products
Semiconductor products
MACOR™ machinable glass ceramic
*
The segments of the business are referred to internally and historically as Global Business Units (‘GBUs’) and these terms are used interchangeably in the Annual Report.
Strategic report
Annual report 2024
49
Morgan Advanced Materials
Key statistics
2024 Performance
At 31 December 2024, Thermal Products had
24 operating sites employing approximately
2,800 people globally.
Revenue
2024
£418.2 million
2023: £454.4 million
Adjusted operating profit
*
2024
£40.0 million
2023: £40.2 million
Thermal Products reported revenue of £418.2 million in 2024, representing a decrease
of 8.0% compared with £454.4 million in 2023. On an organic constant-currency
*
basis, year-on-year revenue decreased by 0.6%. Revenue performance was impacted
by weak market conditions in the second half of the year across all key markets,
particularly industrial and metals markets in China, Europe and the USA.
Thermal products delivered operating profit of £31.1 million (2023: £29.5 million),
with a 90 bps increase in operating profit margin of 7.4% (2023: 6.5%). This
performance reflects a sustained focus on cost management across the business, with
pricing and cost initiatives more than offsetting the impact of weaker trading
performance. Adjusted operating profit
*
was £40.0 million (2023: £40.2 million) with
an adjusted operating profit margin
*
of 9.6% (2023: 8.8%).
Details of the specific adjusting items charge of £8.1 million (2023: £9.3 million) are
included in note 6 to the consolidated financial statements.
As at 31 December 2024, Performance Carbon
had 19 operating sites employing approximately
2,600 people globally.
Revenue
2024
£345.2 million
2023: £327.2 million
Adjusted operating profit
*
2024
£55.1 million
2023: £50.0 million
Performance Carbon reported revenue of £345.2 million in 2024, representing
an increase of 5.5% compared with £327.2 million in 2023. On an organic
constant-currency
*
basis, year-on-year revenue increased by 9.3%.
Revenue growth reflects good momentum in Clean energy and clean transportation,
and in Aerospace and Defence markets, but more challenging conditions in
semiconductor markets. Within Semiconductor markets, we saw lower demand
for our SiC power semiconductor consumables in the second half of 2024.
Performance Carbon delivered operating profit of £47.2 million (2023: £39.9 million),
with a 150 bps increase in operating margin of 13.7% (2023: 12.2%). Adjusted
operating profit
*
was £55.1 million (2023: £50.0 million) with an adjusted operating
profit margin
*
of 16.0% (2023: 15.3%), reflecting cost synergies and efficiency gains
achieved as a result of the merging of the former Electrical Carbon and Seals and
Bearings businesses into one reporting segment.
Details of the specific adjusting items charge of £7.6 million (2023: £9.3 million) are
included in note 6 to the consolidated financial statements.
As at 31 December 2024, Technical Ceramics
had 17 operating sites employing approximately
3,200 people globally.
Revenue
2024
£337.3 million
2023: £333.1 million
Adjusted operating profit
*
2024
£39.2 million
2023: £36.0 million
Technical Ceramics reported revenue of £337.3 million in 2024, representing
an increase of 1.3% compared with £333.1 million in 2023. On an organic
constant-currency
*
basis, year-on-year revenue increased by 3.7%.
Revenue growth was driven by Clean Energy and Healthcare in our faster growing
markets, and Defence and Conventional Energy in the core, partially offset by
weakness in global Industrial markets.
Technical Ceramics delivered operating profit of £37.9 million (2023: £42.5 million),
with a 160 bps decrease in operating margin of 11.2% (2023: 12.8%) with the prior
year result benefiting from a £7.6 million credit relating to non-cash items, largely
comprising a £5.7 million non-cash credit arising from a reversal of fixed asset
impairments and a net £1.9 million provision release. Adjusted operating profit
*
was
£39.2 million (2023:36.0 million) with an adjusted operating profit margin
*
of 11.6%
(2023: 10.8%).
Details of the specific adjusting items charge of £0.7 million (2023: credit of
£7.6 million) are included in note 6 to the consolidated financial statements.
*
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on
pages 201 to 205.
50
3.7%
Organic constant-currency
revenue growth
11.7%
Adjusted operating
profit margin
18.5%
Return on invested capital
1.4x
Net debt/EBITDA
leverage ratio
Group ﬁnancial review
Summary financial information for the year ended 31 December 2024
Summary income statement and key metrics
2024
£m
2023
£m
% change
Revenue
1,100.7
1,114.7
(1.3)%
Adjusted operating profit
1
128.4
120.3
6.7%
Adjusted operating profit margin
1
11.7%
10.8%
90 bps
Amortisation of intangible assets
(1.7)
(3.3)
(48.5)%
Specific adjusting items
1
(23.1)
(25.1)
(8.0)%
Operating profit
103.6
91.9
12.7%
Net financing costs
(19.0)
(14.1)
34.8%
Profit before taxation from continuing operations
84.6
77.8
8.7%
Income tax expense
(25.9)
(22.2)
16.7%
Profit after taxation from continuing operations
58.7
55.6
5.6%
Basic EPS from continuing and discontinuing operations
17.7p
16.6p
6.6%
Adjusted EPS
1
25.5p
25.0p
2.0%
Return on invested capital
1
18.5%
17.6%
90 bps
Summary cash ﬂow and key metrics
2024
£m
2023
£m
% change
Cash generated from continued operations
162.9
126.3
29.0%
Free cash flow before acquisitions, disposals and dividends
1
15.0
14.6
2.7%
Cash and cash equivalents
120.8
124.5
(3.0)%
Net debt
1
226.2
185.2
22.1%
Net debt
1
to EBITDA ratio
1.4
1.2
n/a
Total dividend per share
12.2p
12.0p
1.7%
1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on
pages 201 to 205.
Revenue
The Group recognised revenue of £1,100.7 million (2023:
£1,114.7 million), a year-on-year decrease of 1.3% on a
reported basis.
Market conditions were challenging in the second half of the
financial year. In industrial markets, we saw declining order levels
in Europe and China and a slowing of growth in the USA. In our
faster growing markets, growth in semiconductor markets was
impacted by stocking in customer supply chains and slower than
anticipated growth in global sales of EVs. Reported revenue
was significantly impacted by foreign exchange headwinds,
largely related to the US dollar and sterling exchange rate.
Reflecting these dynamics, we saw organic constant-currency
*
growth of 2.5% in our core markets, with 7.6% growth in
our faster growing markets. As a result, overall Group organic
constant-currency
*
growth of 3.7% was marginally below our
financial framework guidance of 4–7% growth.
Adjusted operating profit
The Group delivered adjusted operating profit
*
of £128.4 million
(2023: £120.3 million) which was impacted by weaker trading
performance in the second half. Pricing and operational efficiency
measures delivered in 2024 more than offset inflation, and margin
was also positively impacted by benefits delivered from our
restructuring programmes.
“We have delivered robust ﬁnancial
performance against a challenging market
backdrop, particularly in the second half of
the year. We have continued our focus on
cost management and extended business
simpliﬁcation programme, which will return
the Group to target adjusted operating
margins in 2025 and ensure we are well
placed to capture growth as markets
recover.”
Richard Armitage
CFO
Strategic report
Annual report 2024
Morgan Advanced Materials
51
Adjusted operating profit margin
*
of 11.7% increased by 90 bps
versus prior year (2023: 10.8%), but remained below our financial
framework guidance. On an organic constant-currency
*
basis,
adjusted operating profit margin
*
increased by 130 bps compared
to the prior year.
Amortisation of intangible assets
The Group amortisation charge was £1.7 million (2023:
£3.3 million).
Specific adjusting items from continuing
operations
Specific adjusting items were £23.1 million (2023: £25.1 million)
and comprised the following:
2024
£m
2023
£m
Specific adjusting items from
continuing operations
1
Costs associated with the
cyber security incident
(1.1)
(14.7)
Net restructuring charge
(13.1)
(3.5)
Design, configuration,
customisation and implementation
of a Global ERP system
(5.2)
–
Credit/(charge) in relation to the
impact of Argentina’s currency
devaluation
0.5
(5.8)
Net business closure costs
–
(1.9)
Impairment of non-financial assets
(4.2)
(7.3)
Reversal of impairment of
non-financial assets
–
8.1
Total specific adjusting
items before income tax
(23.1)
(25.1)
Income tax credit from
specific adjusting items
2.5
3.8
Total specific adjusting
items after income tax
(20.6)
(21.3)
1.
Details of specific adjusting items arising during the year and the comparative period are
set out in note 6 to the consolidated financial statements.
In early 2024, the Group incurred expenditure of £1.1 million
being the residual costs associated with the cyber incident which
occurred in January 2023 (2023: £14.7 million).
52
Group ﬁnancial review
continued
Expenditure of £13.1 million has been recognised in respect of
our business simplification and restructuring programme (2023:
£3.5 million). In total, once fully implemented, our simplification
initiatives are expected to deliver cumulative annual benefits of
approximately £27 million by 2026.
£ million
2023
2024
2025
2026
2027
Total
Adjusted operating
profit benefit
(incremental)
1
8
24
27
27
Costs charged
to specific
adjusting items
(7)
(13)
(25)
(45)
The Group has accelerated investment in the development of a
Global ERP system which is intended to replace over 30 different
legacy systems across the Morgan network and which will further
strengthen information security and the wider control environment.
Expenditure of £5.2 million (2023: £nil) associated with the design,
configuration, customisation and implementation of the system
were presented as specific adjusting items in the income statement
in 2024, in accordance with the Group’s accounting policies.
In light of challenging trading conditions, the Group has conducted
an impairment review and, where necessary, performed an
impairment assessment in accordance with ‘IAS 36 – Impairment
of Assets’. As a result, the Group has recognised a net impairment
charge of £4.2 million related to fixed assets held by our Thermal
Products business in Europe.
The Group has recorded a cumulative total of £18.9 million
impairment charges for assets which it continues to use (2023:
£20.6 million). These impairments could be reversed if the
businesses were to outperform significantly against their budgets
and strategic plans.
A sensitivity analysis was carried out using reasonably possible
changes to the key assumptions in assessing the value in use of
these non-financial assets. This did not result in a material reversal
of the impaired amounts in 2024.
Refer to note 6 to the consolidated financial statements for further
details regarding specific adjusting items, including further details of
the impairment review and key assumptions made.
Statutory operating profit
Statutory operating profit was £103.6 million (2023: £91.9 million).
Net financing costs
Net financing costs of £19.0 million (2023: £14.1 million)
comprise net bank interest and similar charges of £15.8 million
(2023: £11.7 million), net interest on IAS 19 pension obligations
of £0.6 million (2023: £nil) and the interest expense on lease
liabilities of £2.6 million (2023: £2.4 million) resulting from
IFRS 16 – Leases.
Taxation
The Group tax charge from continuing operations, excluding
specific adjusting items, was £28.4 million (2023: £26.0 million).
The effective tax rate, excluding specific adjusting items, was 26.4%
(2023: 25.3%). Note 8 to the consolidated financial statements
provides additional information on the Group’s tax charge.
On a statutory basis, the Group tax charge was £25.9 million
(2023: £22.2 million), higher than the previous year reflecting
increased taxable profit.
Tax risks
The Group follows a tax policy to fulfil local and international tax
requirements, maintaining accurate and timely tax compliance
whilst seeking to maximise long-term shareholder value.
The Group adopts an open and transparent approach to
relationships with tax authorities and continues to monitor and
adopt new reporting requirements, for example those arising from
the implementation of the OECD Base Erosion and Profit Shifting
proposals within tax legislation across various jurisdictions.
The tax strategy is aligned to the Group’s business strategy
and ensures that tax affairs have strong commercial substance.
Tax risks are set out in the ‘Risk management’ section, under the
heading ‘Key finance processes’ on page 47.
Earnings per share
Basic earnings per share from continuing operations was 17.7 pence
(2023: 16.4 pence) and adjusted earnings per share
*
was
25.5 pence (2023: 25.0 pence). Details of these calculations can
be found in note 10 to the consolidated financial statements.
Foreign currency impact
The Group receives revenue and incurs expenses in a number of
foreign currencies and, as such, movements in foreign exchange
rates can materially impact the Group’s financial results. Had foreign
currency rates in 2024 remained consistent with 2023, the Group’s
adjusted operating profit would have been £10.7 million higher.
For illustrative purposes, the table below provides details of the
impact on 2024 revenue and Group adjusted operating profit
*
if
the actual reported results, calculated using 2024 average exchange
rates, were restated for GBP weakening by 10 cents against the
US Dollar in isolation and 10 cents against the Euro in isolation:
Increase in 2024 revenue/
adjusted operating proﬁt
1
if:
Revenue
£m
Adjusted
operating
proﬁt
1
£m
GBP weakens by 10c against the
US Dollar in isolation
42.3
4.4
GBP weakens by 10c against the
Euro in isolation
19.8
3.2
1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory
measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section
on pages 201 to 205.
Strategic report
Annual report 2024
53
Morgan Advanced Materials
The principal exchange rates used in the translation of the results of
overseas subsidiaries were as follows:
GBP to:
2024
2023
Closing rate
Average rate
Closing rate
Average rate
USD
1.25
1.28
1.27
1.24
Euro
1.21
1.18
1.15
1.15
The potential impact of changes in foreign exchange rates is given in
note 21 to the consolidated financial statements.
Changes in segmental reporting under
IFRS 8 – Operating segments
As disclosed in the 2023 Annual Report and Accounts, during 2024
the Group has simplified its operating structure in order to support
strategic execution. The business is now managed through three
distinct segments, being Thermal Products, Performance Carbon
and Technical Ceramics. These segments have been identified
as the Group’s reportable segments for the purposes of IFRS 8.
Segmental reporting disclosures, including a restatement
of prior year disclosures in accordance with the new segmental
reporting structure, are set out in note 3 to the consolidated
financial statements.
Cash flow
2024
£m
2023
£m
Cash generated from
continuing operations
162.9
126.3
Net capital expenditure
(90.2)
(58.5)
Net interest on cash and borrowings
(15.3)
(11.6)
Tax paid
(29.2)
(30.3)
Lease payments and interests
(13.2)
(11.3)
Free cash flow before acquisitions,
disposals and dividends
15.0
14.6
Dividends paid to external plc
shareholders
(34.5)
(34.2)
Net cash flows from other
investing and financing activities
(19.6)
(17.8)
Net cash flows from
discontinued operations
0.1
0.4
Exchange movement and
other non-cash movements
(2.0)
0.3
Movement in net debt
2
(41.0)
(36.7)
Opening net debt
2
(185.2)
(148.5)
Closing net debt
2
(226.2)
(185.2)
Lease liabilities
(47.1)
(47.1)
Closing net debt
2
and lease liabilities
(273.3)
(232.3)
2.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory
measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section
on pages 201 to 205.
The Group generated cash from continuing operations of
£162.9 million (2023: £126.3 million) was £36.6 million higher than
the previous year, reflecting a material improvement in working
capital inflows as a result of focused initiatives across the Group.
Free cash flow before acquisitions, disposals and dividends
*
was
£15.0 million (2023: £14.6 million). The Group incurred net capital
expenditure of £90.2 million (2023: £58.5 million), reflecting
strategic investments in semiconductor capacity and capability,
investments in efficiency and continued investment in health,
safety and environmental improvement programmes.
For the purposes of compliance with external debt covenants, net
debt
*
is calculated excluding IFRS 16 lease liabilities. On this basis,
net debt was £226.2 million (2023: £185.2 million), representing
a net debt
*
to EBITDA
*
ratio of 1.4 times (2023: 1.2 times).
Commitments for property, plant and equipment and computer
software for which no provision has been made are set out in
note 25 to the consolidated financial statements. Treasury and risk
management policies, which remain unchanged from the prior year,
are set out in note 21 to the consolidated financial statements.
Liquidity
The Group had net cash and cash equivalents
*
of £111.5 million
(2023: £124.5 million) and undrawn headroom on its available
credit facilities of £279.3 million (2023: £187.9 million).
Capital structure
At the year end total equity was £389.3 million (2023:
£398.6 million) with closing net debt
*
of £226.2 million
(2023: £185.2 million).
Non-current assets were £597.3 million (2023: £544.3 million)
and total assets were £1,077.1 million (2023: £1,038.2 million).
Details of undiscounted contracted maturities of financial liabilities
and capital management are set out in note 21 to the consolidated
financial statements.
Capital structure is further discussed in note 21 to the consolidated
financial statements under the heading ‘Capital management’.
54
Group ﬁnancial review
continued
Final dividend
The Board is recommending a final dividend, subject to shareholder
approval, of 6.8 pence per share on the Ordinary share capital
of the Group, payable on 13 May 2025 to Ordinary shareholders
on the register at the close of business on 11 April 2025.
The ex-dividend date is 10 April 2025.
Together with the interim dividend of 5.4 pence per share
paid on 15 November 2024, this final dividend, if approved
by shareholders, brings the total distribution for the year to
12.2 pence per share (2023: 12.0 pence).
A total dividend of 12.2 pence per share represents a dividend
cover of adjusted EPS
*
of 2.1 times, which is lower than the
medium-term target of 2.5 times dividend cover set out in our
progressive dividend policy.
The Board remains committed to progressively growing the
Ordinary dividend over the medium term.
Note 42 to the Company financial statements provides additional
information on the Company’s distributable reserves.
Share buyback
On 5 November 2024, Morgan Advanced Materials announced its
intention to undertake a buyback programme of up to a maximum
£40.0 million, excluding expenses. Shares purchased pursuant to
the buyback programme will be cancelled and, as a result, it is
expected that the buyback programme will enhance earnings per
share over time.
On the same date, we entered into a non-discretionary agreement
with Investec Bank plc (‘Investec’), acting as riskless principal, to
enable the Company to purchase up to £10.0 million, excluding
expenses, of the Company’s Ordinary shares. Under the
terms of the agreement, Investec makes its trading decisions
independently of and uninfluenced by the Company, in accordance
with certain preset parameters. Tranche 1 will end no later than
31 March 2025.
As at 31 December 2024, the Group had purchased 1,825,090
shares, for total consideration of £4.7 million excluding fees and
stamp duty. A liability for the value of shares contracted but not
purchased at the balance sheet date has been recognised on the
balance sheet, in accordance with ‘IAS 32 – Financial Instruments:
Presentation’, with a corresponding adjustment to equity.
The Board is committed to commencing the second £10 million
tranche of the buyback immediately after the first tranche
has completed.
Post balance sheet events
There were no reportable post balance sheet events following
the balance sheet date.
Guidance and outlook
Demand in a number of our end-markets is uncertain. Our current
outlook for revenue in 2025 is for mid single digit organic decline
and assumes no recovery in H2. Our simplification programme has
been accelerated given the weaker demand which will underpin
a return to a 12.5% margin during 2025, with a broadly similar
H1/H2 adjusted operating profit
*
split.
Demand for semiconductor capacity has been impacted by the
slower growth in BEVs leading to high customer inventory levels
in the short term. We have scaled back investment accordingly
and now expect to invest c.£60 million in semiconductor capacity
(prior estimate £100 million) to deliver incremental revenues of
£40 million and adjusted operating profit
*
of £12 million in 2027
(prior estimate £80 million revenue, £25 million adjusted operating
profit
*
). We remain confident in the longer-term potential in
semiconductors and we expect to resume our investment as the
market recovers.
Our medium term guidance for overall capital expenditure is now
around £90 million in 2025, £65 million in 2026 and £60 million
in 2027.
We expect our effective tax rate, excluding specific adjusting items,
to be within the 26-28% range.
We remain confident in achieving our medium-term financial
framework.
Our financial framework is set out on page 12 of the Strategic Report.
We continue to monitor the situation with regard to potential
tariffs. With such a wide range of potential tariffs being considered,
and with the details of those unknown, it is not possible to estimate
the impact at this stage. We have a global manufacturing footprint
and largely we make products where we sell them which will allow
some degree of mitigation, and if necessary we will consider
alternative manufacturing locations. Guidance for 2025 assumes
that there will be no direct impact on financial performance as a
result of the implementation of tariffs.
Strategic report
Annual report 2024
55
Morgan Advanced Materials
Directors’ statements
Going concern statement
The Group’s business activities, together with the factors likely to
affect its future development, performance and position, are set
out in the Strategic Report on pages 2 to 56. The financial position
of the Group, its cash flows, liquidity position and borrowing
facilities, are described in the Financial Review on pages 50 to 54.
In addition, note 21 to the consolidated financial statements
includes the Group’s policies and processes for managing financial
risk, details of its financial instruments and hedging activities, and
details of its exposures to credit risk and liquidity risk.
The Group meets its day-to-day working capital requirements
through local banking arrangements underpinned by the Group’s
£230.0 million unsecured multi-currency revolving credit facility,
which matures in November 2029. As at 31 December 2024,
the Group had both significant available liquidity and headroom
on its covenants. Total committed borrowing facilities were
£617.4 million. The amount drawn under these facilities was
£338.1 million, which together with net cash and cash equivalents
of £111.5 million, gave a total headroom of £390.8 million.
The multi-currency revolving credit facility was £12.8 million
drawn. The Group has no scheduled debt maturities until 2026.
The principal borrowing facilities are subject to covenants that are
measured biannually in June and December, being net debt
*
to
EBITDA
*
of a maximum of 3 times and interest cover of a minimum
of 4 times, based on measures defined in the facilities agreements
which are adjusted from the equivalent IFRS amounts.
The Group has carefully modelled its cash flow outlook, taking
account of reasonably possible changes in trading performance,
exchange rates and plausible downside scenarios. This review
indicated that there was sufficient headroom and liquidity for the
business to continue for the 18-month period based on the facilities
available as discussed in note 21 to the financial statements.
The Group was also expected to be in compliance with the
required covenants discussed above.
The Board has also reviewed the Group’s reverse stress testing
performed to demonstrate how much headroom is available on
covenant levels in respect of changes in net debt
*
, EBITDA
*
and
underlying revenue
*
. Based on this assessment, a combined
reduction in EBITDA
*
of 35% and an increase in net debt of 35%
would still allow the Group to operate within its financial covenants.
The Directors do not consider either of these scenarios to be
plausible given the diversity of the Group’s end-markets and its
broad manufacturing base.
The Board and Executive Committee have regular reporting and
review processes in place in order to closely monitor the ongoing
operational and financial performance of the Group. As part of the
ongoing risk management process, principal and emerging risks are
identified and reviewed on a regular basis. In addition, the Directors
have assessed the risk of climate change and do not consider that it
will impact the Group’s ability to operate as a going concern for the
period under consideration.
After making enquiries, and in the absence of any material
uncertainties, the Directors have a reasonable expectation that
the Company and the Group have adequate resources to continue
in operational existence for a period of 18 months from the date of
signing this Annual Report and Accounts. Accordingly, they continue
to adopt the going concern basis in preparing the Annual Report
and Accounts.
Viability statement
In accordance with provision 31 of the UK Corporate Governance
Code, the Directors have assessed the prospects of the Company
over a period significantly longer than 12 months. The viability
assessment period remained at five years to 31 December 2029 in
the line with impairment review testing and the strategic planning
process. The Directors consider this an appropriate period over
which to provide its viability statement based on management’s
reasonable expectations of the position and performance of the
Company and the dynamics in the markets in which it operates.
Taking into account the Group’s current position and the potential
impact of the principal risks documented on pages 43 to 47 of the
Annual Report, the Directors have a reasonable expectation that
the Company will be able to continue in operation and meet its
liabilities as they fall due over the period to 31 December 2029.
To allow the Directors to make this assessment, a business base
case has been built up, initially using a detailed, bottom-up
approach, and then applying what the Directors consider to be
an appropriate set of assumptions in respect of growth, margins,
working capital flows, capital expenditure, dividends, refinancing
of borrowing facilities and all other matters that could have a
significant impact on the financial performance and liquidity of
the Group. The resulting base case provides the Directors with
EBITDA
*
, net debt
*
and finance charge headroom relative to
current bank covenants.
56
The Directors’ assessment also included a review of the financial
impact on revenue, EBITDA
*
, net debt
*
, and the adequacy of the
financial headroom, relative to a severe but plausible combination
of principal risks crystalising that could threaten the viability of the
Company. The Directors also considered the likely effectiveness
of the potential mitigations that management reasonably believes
would be available to the Company over this period.
While the review has considered all the principal risks identified
by the Group, the following were focused on for enhanced
stress testing:
Scenarios modelled
Link to principal risks
and uncertainties
Macro-economic
The risk of adverse impact on our business from macro-economic factors that affect the performance of
Morgan or investments in specific countries or regions. The sensitivity analysis performed considered impacts
on the Group’s revenue, adjusted operating profit
*
and working capital following a worldwide downturn in
trading due to macro-economic dislocation.
External environment
risk
Political
The possibility that Morgan could suffer losses or disruptions due to political changes or events in a country
or region. The sensitivity analysis performed considered impacts on the Group’s revenue, adjusted operating
profit
*
and working capital following the sudden cessation of business within a material geography.
External environment
risk
Organisation change
The possibility of adverse impacts of changes in Morgans structure, culture, processes, systems or strategies.
The sensitivity analysis performed considered impacts on the Group’s revenue, adjusted operating profit
*
and working capital following unexpected staffing shortages caused by inadequate change management.
Business change and
development risk
Trade compliance breach
The failure of a sanctions screening programme and non-compliance with export regulations. The sensitivity
analysis performed considered impacts on the Group’s revenue, adjusted operating profit
*
and working
capital as well as additional legal costs.
Legal and regulatory risk
The combined impact of the above four scenarios results is a 12.0%
reduction in the Group’s revenue and 46.0% reduction in the
Group’s adjusted operating profit
*
in 2025 before taking mitigating
actions. In this worst-case scenario the Group remains within
banking covenants.
As part of the ongoing risk management process, principal and
emerging risks are identified and reviewed on a regular basis.
There are a number of mitigating actions the Group takes to
manage and reduce risk, further details of which can be found
in the ‘Risk management’ section on pages 43 to 47.
The Group has significant financial resources including committed
and uncommitted banking and debt facilities, as outlined in the
going concern statement. In assessing the Group’s viability, the
Directors have assumed availability of debt capital markets and
that the existing banking and debt facilities will remain in place or
mature as intended.
While this review does not consider all of the possible risks that
the Group could face, the Directors consider that the approach
adopted, and the work performed, is reasonable in the
circumstances of the inherent uncertainty involved and that
it allows the Board to confirm that they have a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the period to
31 December 2029.
This Strategic Report, as set out on pages 2 to 56, has been
approved by the Board.
On behalf of the Board
Winifred Chime
Company Secretary
27 February 2025
Directors’ statements
continued
Governance
Annual report 2024
Morgan Advanced Materials
57
Governance
“The guiding principle of the Board is to
do the right thing with respect to all our
stakeholders and the environment.”
Ian Marchant
Non-executive Chair
Contents
Chair’s letter to shareholders
58
Board of Directors
59
Governance overview
61
Strategic oversight by the Board
63
Focusing on culture
65
Engaging with our workforce
67
Assessing Board performance
69
UK Corporate Governance Code 2018
compliance statement
70
Report of the Audit Committee
74
Report of the Nomination Committee
80
Remuneration Report
84
Other disclosures
110
Independent Auditor’s Report
115
58
Board’s focus during the year
We understand that robust governance practices are essential in
supporting our business objectives. The Board has continued
to ensure progress is being made against our strategic priorities
and towards our medium-term targets, whilst maintaining an
appropriate engagement in near-term operational and commercial
matters. We have also spent time engaging with the business, and
taken steps to ensure the Board itself continues to be appropriately
effective, including undertaking an external board performance
review which is set out on page 69.
We have continued our dialogue with our stakeholders throughout
the year, details of which can be found on pages 20 and 21
and 67 and 68. Our stakeholders remain front of mind in our
decision-making.
The Board visited seven Morgan Advanced Materials sites in
North America in September 2024, meeting with the local
management team and holding employee listening sessions at each
site to enhance our understanding of the business and operational
culture and the opportunities to improve the employee experience.
Details of the visits can be found on page 63.
We continued to oversee the acceleration of our IT modernisation
programme. The Board received several presentations during
the year from management on advances with our IT systems and
infrastructure, acceleration of our Group ERP programme and
tools which have been deployed to improve the security posture
of the business.
Board Committees’ focus during the year
The work of the Board is supported by the hard work of our
Committees, who have assisted with important governance
matters during the year. For example:
The Audit Committee has led the review of our approach
to compliance with the requirements of the Corporate
Sustainability Reporting Directive (CSRD) and 2024 UK
Corporate Governance Code (‘2024 Code’).
The Nomination Committee has supported the Board with the
CEO succession plan that was announced in January 2025 and is
set out on page 82, and we look forward to achieving a seamless
transition from Pete to Damien in July 2025.
The Remuneration Committee has reviewed our Remuneration
Policy to ensure it remains appropriate prior to its renewal at the
forthcoming AGM, and details of the Committee’s work is set
out on pages 84 to 86.
More detail on the Board and Committee activities during the
year can be found in the remainder of the report.
Focus for 2025
One of the key priorities for the Board in 2025 will be supporting
Damien in his new role as well as ensuring that the new
non-executive Directors are successfully onboarded and there
is a smooth transition with the outgoing Directors.
The Board will also continue to oversee the delivery of our strategy
and in particular the delivery of the capital investment programme,
restructuring programme and strategic priorities.
Ian Marchant
Non-executive Chair
Chair’s letter to shareholders
I am pleased to present our Governance Report, setting out the Board’s
activities during the year, as we continue to drive long-term value creation
for all our stakeholders.
Governance
Annual report 2024
59
Morgan Advanced Materials
Appointed:
Chair Designate and non-executive
Director from February 2023. Non-executive Chair and
Nomination Committee Chair in June 2023.
Skills and contribution:
Ian is a highly strategic and successful leader with more than 35 years
of wide-ranging experience at major businesses, bringing a strong
track record of value creation and listed board experience. Ian has
signiﬁcant expertise in governance, ﬁnance, regulation, renewable
energy and climate change mitigation.
Past experience:
Ian served as CEO of SSE plc from October 2002 to June 2013; prior to this
he was Finance Director of SSE and Southern Electric plc. He is a seasoned
non-executive Director and Chair, having served as Chair of Thames Water
Utilities Ltd and John Wood Group plc and on the board of Aggreko plc.
External appointments:
Non-executive Director of Fred. Olsen Ltd and arbnco Ltd.
Appointed:
May 2022.
Skills and contribution:
Richard has broad experience including ﬁnancial management,
investor relations, capital markets, M&A and commercial
management, gained through roles at several listed and privately
owned chemicals and consumer goods companies.
Past experience:
Prior to joining Morgan Advanced Materials, Richard was CFO at Victrex
Group plc from 2018 to 2022. During this time, he was responsible for
ﬁnance, IT, legal and corporate development, as well as the development
of the Group’s Chinese businesses. Richard was CFO of Samworth
Brothers from 2014 to 2018 and CFO of McBride plc from 2009 to 2014.
External appointments:
Senior Independent Director, Chair of the Audit Committee and
interim Chair of the Remuneration Committee at NWF Group plc.
Board of Directors
Appointed:
Non-executive Director and Audit Committee Chair
in July 2017.
Skills and contribution:
Jane is a Chartered Accountant with signiﬁcant ﬁnancial experience
and knowledge of growing manufacturing, technology and marketing
businesses, gained in a variety of senior executive positions. Jane brings
a valuable perspective from her role as CFO of Inside Ideas Group Limited.
Past experience:
Jane previously held CFO positions at Arqiva Group Limited, KCOM
Group plc, Inﬁnis plc, Wilson Bowden plc, Pressac plc and Phoenix IT
Group plc, latterly where she was also Chief Operating Ofﬁcer. Jane
was a non-executive Director of Halma plc from 2007 and chaired
its Audit Committee from 2009 until her departure in July 2016.
External appointments:
Group Director and Group CFO of Inside Ideas Group Limited.
Appointed:
August 2015. Pete will retire as CEO on 1 July 2025.
Skills and contribution:
Pete has a strong technical background and extensive experience in planning
and executing business strategy across global technology and manufacturing
operations. As CEO, he leads the Executive Committee and is responsible
for our overall performance. The Group’s environment, health, safety
and sustainability team reports directly to Pete, enabling him to keep the
Board apprised on the establishment of goals, management of risks and
opportunities, reporting and related governance procedures in that area.
Past experience:
Before joining Morgan Advanced Materials, Pete was President of
the Communications and Connectivity sector of Cobham plc. Pete
demonstrated strong leadership across a range of senior strategy,
technology and operational positions at Cobham over a nine-year
period. Prior to Cobham, Pete was a partner at McKinsey & Company,
specialising in strategy and operations in the aerospace, defence
and power and gas sectors.
External appointments:
Non-executive Director of Hill & Smith plc.
Ian Marchant
Non-executive Chair
Committees
N
R
Pete Raby
CEO
Richard Armitage
CFO
Jane Aikman
Independent
non-executive Director
Committees
A
N
R
60
Committees
Committee Chair
Audit
Nomination
Remuneration
Appointed:
Non-executive Director from February 2016.
Remuneration Committee Chair in January 2019. Helen will retire
from the Board following the Company’s AGM in May 2025.
Skills and contribution:
Helen has signiﬁcant experience of driving business performance,
forging long-term relationships and building businesses in new markets,
with a background encompassing corporate governance and customer
relations. Helen is Executive Managing Director of Wates Residential and
a member of the Wates Group Executive Committee, a construction
sector pioneer in creating social value, with strong ESG credentials.
Past experience:
Helen joined Wates in 2006 and has undertaken a variety of roles including
Group Strategy Director, Managing Director of Wates Retail Limited and
Managing Director of Wates Smartspace Limited. Prior to Wates, Helen
gained knowledge and experience in global businesses including ICI.
External appointments:
Executive Managing Director of Wates Residential Limited, non-executive
Director of Modulaire Group.
Appointed:
November 2024.
Skills and contribution:
Alison is a highly experienced non-executive Director with a
signiﬁcant background in international industrials. She brings deep
governance expertise gained across numerous listed businesses,
having served as Chair, Senior Independent Director and
Remuneration Committee Chair of several FTSE 350 businesses.
Past experience:
In her executive career, Alison was Global Director of Strategy and
Corporate Development at National Grid plc from 2008 to 2013.
She was central to the strategic development of BAE Systems plc in
her role as Group Strategic Development Director from 2004 to 2008.
External appointments:
Chair of Galliford Try Holdings plc, Senior Independent Director and
Remuneration Committee Chair of Oxford Instruments plc and Chair of
Remuneration Committee of TT Electronics plc. Alison will step down
from the board of TT Electronics plc after its AGM in May 2025.
Appointed:
May 2019.
Skills and contribution:
Clement has broad managerial experience in globally operating technology
and consumer-related industries. He has a strong track record of
renewing traditional industries and revitalising growth through strategic
interventions, and in-depth experience and knowledge of markets
within the Asia Paciﬁc region.
Past experience:
From August 2016 to March 2020, Clement was Group CEO of
Saurer Intelligent Technology Co. Ltd, a €1 billion textile machinery
and components business listed on the Shanghai Stock Exchange. Clement
continued to serve on the board of Saurer as non-executive Director until
August 2021. Prior to this, Clement was Advisor and Co-CEO of Jinsheng
Industry Co Ltd, an industrial company in China with diverse interests
including biotech, automotive and textiles. Previously Clement held various
senior positions including Division CEO of Leica Geosystems AG, President
and CEO of SATS Ltd, and CEO Textile division of OC Oerlikon AG.
External appointments:
Non-executive Director and Remuneration Committee Chair of Elementis plc.
Helen Bunch
Independent
non-executive Director
Committees
A
N
R
Alison Wood
Senior Independent Director
Committees
A
N
R
Clement Woon
Independent
non-executive Director
Committees
A
N
R
Directors who resigned during the year
Laurence Mulliez, who was appointed as a non-executive
Director from May 2016 and then Senior Independent Director in
December 2017, resigned from the Board in November 2024.
Board of Directors
continued
Governance
Annual report 2024
61
Morgan Advanced Materials
Desired/required skills, experience, attributes
Ian
Alison
Helen
Jane
Clement
Pete
Richard
Leadership and business operations
Strategy development
Commercial
Accounting and finance
Audit, risk management and assurance
Remuneration/People
Corporate governance
Engineering and Industrial sector
Technology/Innovation/ R+D
International business
M&A/Portfolio management
Safety/Environmental/Sustainability
Significant change/Large transformation
Director attendance at meetings of the Board and its Committees
Director
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
Ian Marchant
8/8
4/4
1
4/4
4/4
Pete Raby
8/8
4/4
1
4/4
1
4/4
1
Richard Armitage
8/8
4/4
1
–
–
Jane Aikman
8/8
4/4
4/4
4/4
Helen Bunch
8/8
4/4
4/4
4/4
Laurence Mulliez
2
6/6
2/3
3/3
2/2
Clement Woon
8/8
4/4
4/4
4/4
Alison Wood
3
2/2
1/1
1/1
2/2
1.
Attended by invitation.
2.
Laurence Mulliez resigned from the Board on 1 November 2024.
3.
Alison Wood joined the Board on 1 November 2024.
Board composition
Female
3
Male
4
Gender
Chair (independent
on appointment)
1
Executive Directors
2
Senior Independent
Director
1
Independent
non-executive Directors
3
Board balance of roles
Ethnic origin
White British
6
Southeast Asian
1
Non-executive Director
tenure
0–3 years
2
4–6 years
1
7–9 years
2
Governance overview
62
Key Board activity
The table below summarises some of the key matters the Board
considered in 2024.
Activity
Link to
strategic
execution
priorities
Link to
stakeholders
Link to
principal risks
Strategy
GBU strategy reviews
1
2
3
I,C,S,E,Co
A,B,C,D,E
IT strategy
2
3
I,E,C,S
B,C,E
M&A strategy
3
I,C,S
A,B,C
Group portfolio strategy
3
I,C,S,E
A,B,C
ESG strategy
1
2
I,C,S,E,P,Co
A,C,D,F
Defence strategy
3
I,E
A,B,C
Capital allocation
3
I,C,S E,Co
A,B,C
Geographical markets –
outlook and implications
3
I,C,S,E
A,B,C
Operational and
commercial
IT transformation and
cyber security posture
1
2
3
E,C,S,I
B,C,E
ERP transformation update
2
3
E,S,C
B,C,E,H
Approval of capital
expenditure
2
3
C,S
A,B,C,D,H
Financial and risk
management
Approval of 2025 budget
1
3
I,E,S
A,B,C,D,
E,F,G,H
Approval of 2023 annual
results and 2024 interim
results and dividends
3
I,E,P
A,B,C,F,H
Brokers updates and
investor feedback
1
3
I
A,B,C
Approval of £40.0 million
share buyback programme
1
2
3
I,E,P
A,B,C,H
Approval of new
debt facility
1
2
3
I,E
A,B,C,H
Insurance renewal
1
E,S,C
C,G
Treasury update
3
I,C,S,E,P
A,B,C,H
Principal risks review
1
2
3
I,C,S,E,C,P
A,B,C,D,
E,F,G,H
People
2023 and 2024 ‘Your
Voice’ survey results
1
E
B,C,F
Pension update
1
E,P
C,F,H
Talent, leadership,
capability and succession
update
1
E
A,B,C
Governance
AGM
1
I
F
Modern slavery &
supplier engagement
1
S
F
External board
performance review
1
I,E
F
Monitoring and
assessment of culture
1
E
F
UK Corporate Governance
Code compliance
1
I,C,S,E,P,Co
F
Standing agenda items
CEO’s report
Covering topics such as:
safety and environmental progress and
performance;
strategy;
business, markets and customers;
acquisitions and divestments;
investor relations;
information systems and technology;
key project and GBU updates;
EHS and sustainability matters; and
people updates.
CFO’s report
Covering topics such as:
Group and GBU ﬁnancial performance;
Dividend Policy;
investor engagement and feedback;
capital allocation;
reﬁnancing; and
pensions.
Company
Secretary’s
report
Covering topics such as:
governance and regulatory matters;
Board process;
NED employee engagement;
litigation update; and
share register analysis.
Non-executive
Directors-only
session
The non-executive Directors meet without
management present.
Key to strategic
execution priorities
1
Big positive difference
2
Delight the customer
3
Innovate to grow
Key to stakeholders
I
Investors
C
Customers
S
Suppliers
E
Employees
P
Pensioners and pension trustees
Co
Communities
Key to principal risks
A
External environment
B
Business change and
development
C
Business continuity
D
EHS
E
IT infrastructure and security
F
Legal and regulatory
G
Contract management
H
Key ﬁnance processes
Governance overview
continued
Governance
Annual report 2024
63
Morgan Advanced Materials
Setting strategy
The Board reviews and agrees the strategy for the Group and
reviews aspects of strategy at Board meetings during the year.
The Board considers a wide range of matters when setting
Group strategy including, but not limited to:
Market overview;
Trends, including megatrends and those affecting
customer behaviour;
Competitor environment;
Investor sentiment and shareholder returns;
GBU strategies;
ESG and sustainability matters;
Finance;
Capital allocation; and
People and talent.
How governance contributes to the delivery
of strategy
Details of how opportunities and risks to the future success of the
business have been considered and addressed can be found in the
Strategic Report on pages 2 to 56. Details of the sustainability of
the Company’s business model can be found in the Strategic Report
on pages 4 and 5. Details of the Group’s governance framework
which underpins the delivery of strategy can be found on page 70.
An overview of our strategy can be found in the Strategic Report
on pages 12 and 13.
The Board monitors progress against the strategic execution
priorities underpinning delivery of the Group strategy:
1
Big positive difference
2
Delight the customer
3
Innovate to grow
Strategic oversight by the Board
Board meeting and visit to North
American sites – September 2024
In September, the Board visited seven sites in North
America: Augusta; East Stroudsburg; Fairfield; Fostoria;
Greenville; Hudson; and New Bedford, to immerse the
Board in, and deepen their understanding of, the Group’s
business. The Directors also took part in a series of
employee engagement sessions across the seven sites, which
helped the Board to build a picture of workforce sentiment
and to see Morgan Advanced Materials’ culture ‘in action’.
The engagement sessions also provide a valuable opportunity
and platform for the workforce to share their views and
perspectives directly with the Board. Outcomes following
the engagement sessions were shared with the Board and
follow-up actions agreed and prioritised.
The Board meeting covered the strategic reviews for the
Performance Carbon and Technical Ceramics GBUs.
The GBU Presidents and Finance Directors attended the
meeting to provide a comprehensive update on their
strategies, covering performance against their strategic
priorities, key markets, macro-economic factors including
challenges and growth opportunities, and workforce
engagement and talent management.
The more we understand our customers, their businesses,
markets and technical challenges, the more effective we can
be at providing them with a solution.
Image features Edie Venezia, celebrating 50 years at Morgan Advanced
Materials’ Fairﬁeld site, with Pete Raby, CEO.
64
Strategic execution priorities
Progressing 2030 goals
Protect the environment
50% reduction in scope 1 and scope 2
CO
2
e emissions.
30% reduction in water use in high
and extremely high-stress areas.
30% reduction in total water usage.
Provide a safe, fair and
inclusive workplace
0.10 lost-time accident rate.
40% of our leadership population
will be female.
Top-quartile engagement score.
What did the Board consider
and approve?
Monitored progress against 2030 goals,
ensuring clear and continued linkage to
sustainable outcomes.
Reports from the EHS&S Director on the
progress towards ‘zero harm’, training
being deployed to all employees focusing
on our safety culture, process safety risk
management approach, investment in safety
improvements and progress against our
commitments to reduce waste, manage our
water consumption and reduce our emissions.
Succession plans for the Executive Committee
members and senior management.
The results of the 2023 and 2024 ‘Your
Voice’ employee engagement surveys.
Updates on workforce planning, focusing on
critical talent and targeted programmes for
diversity, pipelines, training and development.
What were the material
stakeholder considerations?
Full stakeholder beneﬁt
The ability of the Group’s 2030 goals to
deliver value for shareholders, stakeholders
and society by driving towards net zero at
pace, and in a socially just way.
Embedded in culture
Employees and GBUs continue to embrace
the long-term vision and make progress
against our 2030 goals.
Clear tracking of progress
Shareholders engaged on the Group’s
2030 goals, citing the importance of
quantiﬁable criteria and meaningful
linkage including when considering
remuneration metrics.
Big positive difference
1.
Investment in product and
service offerings
Shape our product and service offerings
further based on customer needs, with the
overall objective of making our business
more customer-centric.
What did the Board consider
and approve?
Opportunities to better align our product
and service offerings to meet the needs of
our customers.
Capital investments to tailor our product,
service and support offerings more closely
to customer needs, based on customer
feedback gathered during 2024 which
enabled us to understand our customer
segments in more detail.
Reports from the GBU Presidents as part of
their updates to the Board and in the CEO
Report on changes affecting key customers
and their markets.
What were the material
stakeholder considerations?
Addressing customer needs
The outputs and performance levels
to deliver on stated customer priorities,
including customer service, maintaining
focus on safety, quality, delivery, inventory
and productivity.
Delight the customer
2.
64
Sustainable solutions to support
the energy transition
Develop a diversiﬁed portfolio of
sustainable solutions including:
Aerospace:
Leading material for high
efﬁciency engines.
Clean energy:
Increasing lifetime and
performance of solar, wind and energy storage.
Clean transportation:
Superior materials
for longer lifetimes.
Healthcare:
Best-in-class materials and
miniaturisation technology.
Semiconductors:
Higher performance
materials for the most demanding process steps.
Industrial:
Higher efﬁciency solutions for
industrial customers.
What did the Board consider
and approve?
Opportunities to support the growth of the
Group’s portfolio of sustainable solutions
and to maintain a sustained pipeline of
development opportunities.
Capital investments in our core markets to
provide our customers with products and
solutions that make them more sustainable.
Capital investments to increase our exposure
to our four faster growing markets that reﬂect
global trends: semiconductors, healthcare,
clean energy and clean transportation.
What were the material
stakeholder considerations?
Strategic proposition
To ensure an acceptable investment
case, the opportunities and risks of each
investment are assessed across a range
of criteria, including: ﬁt with strategy,
geographic and market economics, policy
and societal context, revenue certainty
and future return proﬁle.
Risk and portfolio diversiﬁcation
Diversiﬁcation across geographies and
technologies creates optionality, mitigates
development risk and exploits existing
in-house capabilities.
Innovate to grow
3.
Governance
Annual report 2024
65
Morgan Advanced Materials
Focusing on culture
How the Board measures and assesses culture
The Board is responsible for monitoring and assessing our culture.
The Chair ensures that the Board is operating appropriately and
sets the Board’s culture which in turn forms the culture of the
Company. The CEO, supported by the Executive Committee,
is responsible for ensuring the right culture and behaviours are
embedded throughout the business, its operations and in all
dealings with our stakeholders.
At least annually, the Board measures the culture of the Group
using internal and external metrics which also enable it to identify
further actions to ensure our culture remains appropriate.
The 2024 Code reiterates the importance of culture. The Board
reviewed the 2024 Code guidance during the year to ensure that
the Company is taking a holistic and broad approach to aligning
culture and strategy and ensuring it remains embedded within
the Group. The Board considered the following:
Safety
– an area of paramount importance to our people,
customers and partners. The CEO updates the Board on safety
progress and performance in every Board meeting. The Board
receives an update from the EHSS Director at Board meetings
through the year which contains safety statistics, both leading and
lagging indicators, progress on safety initiatives and against the
plan of work for the year, and details of serious incidents and root
cause analysis. Safety performance is also part of presentations
to the Board by the Presidents of the GBUs, proposals for capital
expenditure, key risks and other ad hoc presentations to the
Board. This enables the Board to gauge ‘tone at the top’.
Employee engagement
– we conduct an annual employee
engagement survey, ‘Your Voice’. The survey was conducted
in June 2024 to provide feedback to senior management and the
Board on employee satisfaction. Group-wide and site-specific
actions are identified and implemented to address the issues
raised. This provides the Board with rich insight into culture,
areas of strong performance and areas of improvement across
the Group.
We have not made progress on the overall engagement rate over
the last five years despite a lot of effort across our business to
improve the employee experience. In 2025, we will be working
more closely with a small number of sites where engagement
levels are below average, looking to understand the root causes
more deeply and work with our people to address them as well
as taking action on a Group wide basis.
Further information on the actions taken during the year in relation
to the 2023 ‘Your Voice’ survey can be found on page 66
Whistleblowing
– we have an independent ‘Speak Up’ service
through EQS to enable employees, customers, suppliers and
other third parties to report any concerns or wrongdoing
anonymously without any fear of retaliation. The whistleblowing
service and related internal procedures are structured to ensure
that all reports are reviewed and investigated independently
from the area of the business to which they relate. All reports
are copied to and reviewed by the global ethics and compliance
function. This helps to ensure transparency and enables
any trends to be identiﬁed and addressed. Comprehensive
information on the whistleblowing reports made is provided
to the Audit Committee at each meeting and to the Ethics
and Compliance Steering Committee, which comprises the
members of the Executive Committee, Ethics and Compliance
Director, Head of Internal Audit and Group Company Secretary.
The updates to the Audit Committee include details of incident
reports received in the period between meetings as well as
details of ongoing investigations. The summary of reports to
the ‘Speak Up’ hotline presented to the Audit Committee
provided an insight into the frequency and type of issues
being raised by employees and whether safety or ethics was
a particular concern.
Workforce engagement
– the non-executive Directors heard
directly from employees during employee listening sessions held
during 2024. The non-executive Directors asked open questions
and listened to the feedback from employees. Together with the
Board site visits and presentations to the Board by those below
the Executive Committee, this helps the Board to gauge the
culture of the organisation.
Further information on workforce engagement can be found
on pages 67 and 68
Alignment of remuneration and culture
– the
Remuneration Committee sets remuneration for the Executive
Directors and Executive Committee members and oversees
remuneration for senior leaders and the wider organisation,
with incentives designed to support delivery of the strategy and
the establishment of the appropriate culture, desired behaviours
and values. The Board, through some listening sessions, discusses
Executive Director remuneration with employees as a further
input to the impact on culture.
Further information on the Remuneration Policy can be found
on pages 88 to 96
Our culture is underpinned by our purpose: to use advanced materials to make the world
more sustainable, and to improve the quality of life.
We work together to deliver our strategy and reliably solve problems in an ethical, safe and
sustainable way. As a business with a global footprint, we strive to work collaboratively, value
our differences and treat each other fairly to deliver a positive outcome for our stakeholders.
66
Culture in action
‘Your Voice’ survey
Our annual employee engagement survey, ‘Your Voice’, provides
employees with the opportunity to give feedback on what is
working well and what we could be doing differently to make
Morgan Advanced Materials a great place to work. The results of
the survey provide actionable feedback to improve the employee
experience and offer the Board a Group-wide snapshot of how
employees rate our culture and employee engagement.
Your Voice
‘Your Voice’ 2023 was run as a ‘pulse’ survey during late 2023,
with the results presented at the Board meeting in February 2024.
The outcome of the June 2024 survey was presented to the
Board in December 2024. The results showed that employees
recognise the priority we give to health and safety, that our
strategy and purpose are clear and that we work hard to exceed
the expectations of our customers with innovative products and
solutions. Based on these results, there continues to be strong
alignment with our purpose, the Code, our strategy and the
desired culture. Next steps and action plans were developed at
Group, GBU and site levels. Broad initiatives in response to the
surveys were communicated to our employees throughout
the year.
Our people said
What we did
Talent acquisition
We need to do more to attract
people to Morgan Advanced Materials
We launched a new employer brand featuring case studies on our employees.
We raised our employer profile by attending global career events.
Performance management
Our performance management
system is too complicated
We launched a refreshed performance management system, emphasising coaching
and development.
Employee retention
We need to do more to retain people
to deliver our strategy
We reviewed reasons employees may leave and improved our hiring processes,
so potential employees have a better understanding of Morgan Advanced Materials
and our expectations before they join.
We expanded our ERGs and highlighted their activities through internal
communications and sharing platforms.
We introduced childcare concierge services in the USA and Germany.
Reward and recognition
Get reward and recognition
right everywhere
We rolled out an employee discount scheme.
We introduced a real-time recognition programme as part of our refreshed
performance management system.
We regularly benchmark the compensation packages we offer.
We gave all employees an additional vacation day as a ‘thank you’ following the
cyber incident in 2023.
Technology
Provide better technology to allow
our people to be as productive
as possible
We are improving IT provisions at our sites.
We replaced ageing laptops.
We rolled out cloud software, ran training sessions to upskill employees and
enabled access to artiﬁcial intelligence (AI) tools for certain users.
We are implementing a global data platform to support GBUs with core reporting
capabilities and to act as a data backbone for future requirements.
We developed a new ERP solution to replace ageing Group systems.
Focusing on culture
continued
Governance
Annual report 2024
67
Morgan Advanced Materials
Engaging with our workforce
For this reason, the Board took the decision that all non-executive
Directors should have the opportunity to engage with the
workforce, rather than limit this important role to a designated
non-executive Director. Furthermore, given the global nature of
the business, having all of the non-executive Directors participate
increases the Board’s reach.
The non-executive Directors participated in employee engagement
initiatives and carried out a full programme of activities during the
year, further details of which can be found on page 68.
Typically, at each engagement session the non-executive Directors
have informal sessions with the site teams without managers
present. No specific topics for discussion are set and teams are
encouraged to share their work experiences, challenges and ideas.
The engagement sessions provide valuable insights for Board
discussions, ensuring employee voices are considered in decisions
shaping the future of Morgan Advanced Materials.
The outputs from the sessions are fed back to the leadership team
for further discussion with the CEO and Group HR Director and
are then reported to the next Board meeting. Follow-up discussions
are held with site managers/function leads to convey key themes,
foster a positive culture and, where specific matters are raised,
to ensure they are considered and addressed appropriately.
In addition to employee engagement sessions, the Board also
undertakes other meetings with employees, for example, during
Board visits to Group facilities and other events.
The Board finds the engagement methods described to be
effective, despite not being one of the suggested methods in
the Code. Its effectiveness will be kept under review.
Feedback received from employee listening sessions
Positive feedback
Improvement areas
Actions taken
Reward and recognition
Colleagues welcomed receiving information
on the role of the Remuneration Committee
in setting executive pay, the procedure
for determining executive remuneration
and how executive remuneration aligns
with wider Company pay policy.
Adjustments made by Group to pay/pay
structures were well received, recognising
that this helped to attract talent.
Receiving information on the process used
to review blue- and white-collar pay
rates was also welcomed.
More clarity on the pay and grading
structure, rationale for annual increases
and bonus calculation was raised.
The need to regularly review
the pay benchmarking data,
particularly in regions affected by
high inﬂation, was recognised.
Communication is issued explaining our
reward philosophy and how we set annual
increases. We take into account our market
position, inﬂation, market movement and
affordability. Our intention is to be competitive
in every market in which we operate.
Changes are being made to the performance
management system and bonus communication.
Speciﬁc rules for reviewing salaries in high inﬂation
countries/environments like Argentina and Turkey
are in place, allowing the Company to implement
multiple salary increases per year, as necessary.
Training and career progression
Several colleagues praised the access to training
and development opportunities at Morgan
Advanced Materials. Leadership development
courses were described as enabling collaboration
across GBUs, functions and countries.
They were diverse and inclusive, with positive
acknowledgement of the encouragement and
support for the courses from managers.
Some colleagues raised a lack of
understanding on the opportunities
for career and salary progression.
Changes to the performance management system
would encourage better conversations on career
progression. Better signposting of the information
on career development available on the intranet
would be considered.
Culture
Colleagues were engaged, positive about
management and expressed a good sense
of unity amongst colleagues in many sites,
emphasising the ‘family and caring’ culture.
Some colleagues at a site expressed
concern in terms of how people
were spoken to.
We want to ensure that every person at Morgan
is treated with respect and feels valued.
Site-speciﬁc actions were taken to address concerns
about standards of ethical behaviour at the site. The
‘Respect at Work’ initiative is being rolled out to
ensure every person at Morgan Advanced Materials
is treated with respect and feels valued.
The Board is at the forefront of the journey to Morgan Advanced
Materials making a ‘big positive difference’ and is keen to understand
employee views and the impact its decisions have on them.
68
Engagement with employees and other stakeholders
Non-executive Directors and
employee listening activities
2024
Engagement with other stakeholders
Feb
The Chair met with the Chair of the independent trustee of
the UK pension scheme.
The Chair visited the site
in Kempten, Germany and
attended the Catalyst Leadership
Development Programme
in Germany.
Virtual listening session with IT
function, attended by Laurence
Mulliez and Clement Woon.
Mar
Virtual listening sessions with
non-executive Directors and
colleagues on the Ignite/Spark
Leadership Development
Programme on executive pay.
Apr
Following publication of the 2023 results, one-to-one
meetings were held with institutional investors and potential
investors. The Board reviewed the feedback from investors
and potential investors to gauge investor sentiment and
establish whether their expectations have been met.
Meetings were held with banks to present 2023 results.
The Chair met with major shareholders to understand their
views on governance and performance against the strategy.
He provided feedback on those meetings to the Board.
May
The 2024 AGM was held in London. Shareholders were able
to ask questions in person or submit them in advance of the
meeting. The Board encouraged shareholders to appoint
the Chair of the AGM as their proxy and provide voting
instructions in advance of the meeting in accordance with the
instructions in the Notice of AGM. At the AGM, all resolutions
were passed.
The Chair and Jane Aikman attended
a virtual listening session with
the Thermal Products team in
Daegu, Korea.
Jun
Helen Bunch and Clement Woon
attended a virtual listening session
with the Performance Carbon team
in Luxembourg.
Jul
Aug
Following publication of the interim results, meetings were
held with institutional shareholders and potential investors.
The Board reviewed the feedback from investors to gauge
investor sentiment and establish whether their expectations
have been met.
Meetings were held with banks to present 2024 interim results.
The Board attended the Augusta,
East Stroudsburg, Fairﬁeld,
Fostoria, Greenville, Hudson and
New Bedford sites in the USA
and participated in employee
engagement sessions in persons.
Sep
Board site visit and employee
listening sessions with Technical
Ceramics colleagues in Rugby, UK.
Nov
Following publication of the Q3 trading update, meetings were
held with institutional shareholders and potential investors.
The Remuneration Chair wrote to the top 20 shareholders
to understand their views on our approach to 2025
Remuneration Policy and Executive Director remuneration
in general.
Virtual listening session with
Technical Ceramics colleagues
in San Juan del Rio, Mexico,
attended by Jane Aikman and
Helen Bunch.
Dec
Ad hoc meetings
were held with
brokers and
institutional investors
throughout the year
Quarterly
leadership calls
held for the top
100 leaders with
the CEO and
members of the
Executive team
Engaging with our workforce
continued
Governance
Annual report 2024
69
Morgan Advanced Materials
Assessing Board performance
This year’s review built upon the learnings and outputs from
the last three years performance reviews, and focused on the
following areas:
The practical arrangements of the Board;
The Board’s decision-making process;
How well-placed the Board is to add value to the business
(how it inputs to and oversees strategy, risk management,
people and culture, and performance); and
How well it considers the Company’s stakeholders (including
workforce engagement and remuneration, shareholder
engagement, ESG and sustainability, customers and suppliers).
The review, which also covered the performance of the Board’s
Committees and individual Directors, was conducted using a
multi-faceted approach, which is detailed below.
An external review of the Board’s performance was undertaken during
the year, facilitated by Clare Chalmers Limited (CCL), which has no other
relationship with the Company or the individual Directors and is independent.
Step one
Step two
Step three
CCL:
Observed the November 2024 Board
meeting to witness the Board ‘in action’;
Interviewed the Board Directors,
Group Company Secretary, Group HR
Director, President of Thermal Products
and Group Finance Director; and
R
eviewed documentation, including
Board and Committee papers.
Upon conclusion of the activities described in
step one, CCL met with the Chair to discuss
the draft report and presented the ﬁnal report
of their ﬁndings and recommendations to the
Board, following which actions were agreed.
The Chair met with individual Directors to
evaluate their performance.
Led by the Senior Independent Director, the
non-executive Directors met without the Chair
present to appraise the Chair’s performance.
The Board Committees reviewed the
outcome of the Committee-speciﬁc
performance review ﬁndings.
The Board concluded that it, its Committees
and the individual Directors had continued
to operate effectively and fully discharged
their responsibilities during 2024.
Strengths identified
The Board is well balanced with good dynamics, openness
and diversity. Plenty of attention is paid to succession planning,
with a view to carefully manage transitions and handovers.
The wider Management team get good access to the Board.
Changes to meeting arrangements have enabled the Board to
be more agile and effective, generating more focused meetings
and greater time for discussion.
The Board’s approach to workforce engagement continues to be
a strength, enhanced with the addition of virtual listening sessions
led by two directors, supplementing in-person visits. The Board
receives good insights and feedback from these sessions.
Areas of focus and actions proposed
Use the opportunity of upcoming non-executive Director
appointments to pivot the Board’s composition more towards
the strategic needs of the business, now and for the future.
Consider opportunities for the Board to hear more about
customers.
Further develop the Board training programme, with a focus
on strategic and operational areas.
Review the KPIs to track the main drivers of performance in
each area.
Recommendations from the 2023 Board performance review
Actions taken during 2024
Continued development of quality of HR data available to the Board.
The Group HR Director provided an update to the Board at its meeting in
July, which also covered progress on collaboration, retention and reward.
Further discussions on risk and risk appetite should take place,
in light of the worsening macro-economic environment, the
advancement of technology and increasing regulation.
The Group’s principal and emerging risks were reviewed by the Board in
July and December, during which the Board members were able to discuss
risks and concerns not fully captured or recognised on the risk register.
Individual non-executive Directors should visit more of the
Company’s sites, where possible.
The non-executive Directors visited seven sites in North America and
the Rugby, UK site. The Chair also visited the Kempten site in Germany.
Review how to help the Board better understand the progress
of customer focus and Morgan Advanced Materials’ social and
community impact.
Detail was provided to the Board on the various activities underpinning
the ‘delight the customer’ execution priority by the GBU Presidents.
The Board received updates on the Company’s social and community
impact and supplier matters at its meetings. Brieﬁngs were also
provided by site management teams during Board site visits in
September (USA) and November (Rugby, UK), to help the Board better
understand Morgan Advanced Materials’ impact in these areas.
70
UK Corporate Governance Code
2018 compliance statement
Application of Code principles
The table below sets out how the Board has applied the Code principles during 2024.
Board leadership and Company purpose
A.
The role of
the Board
The Board is responsible for Morgan Advanced Materials’ system of corporate governance. As such, Directors
are committed to developing and maintaining high standards of governance that reﬂect evolving good practice.
The Board provides strategic and entrepreneurial leadership within a framework of strong governance, effective
controls and an open and transparent culture. This enables opportunities and risks to be assessed and managed
appropriately. The Board also sets our strategic aims and risk appetite, makes sure that we have the ﬁnancial
and human resources in place to meet our objectives, and monitors our compliance and performance against
targets. Lastly, the Board ensures that we engage effectively with all our stakeholders and consider their views
in setting our strategic priorities. The Section 172 statement detailing how the Board has engaged with the
Group’s stakeholders and approached decisions made during the year can be found on pages 22 to 24.
Governance framework
Board
Audit Committee
Helps the Board monitor decisions
and processes designed to
ensure the integrity of ﬁnancial
reporting, the independence and
effectiveness of the external auditor
and robust systems of internal
control and risk management.
Nomination Committee
Helps the Board determine
its composition, and that of
its Committees, which is
regularly reviewed and refreshed,
so they can operate effectively
and have the right mixture of
skills, experience and background.
Remuneration Committee
Helps the Board ensure that
Remuneration Policy and
practices reward employees and
executives fairly and responsibly,
with a clear link to corporate
and individual performance.
Executive Committee
Drives Group and segment
strategic implementation.
Delivers operational, financial
and non-financial performance.
Reviews health, safety and
environmental performance,
drives improvement and embeds
our safety culture.
Approves Group policies and
reviews their implementation
and effectiveness.
Leads on assessment and
control of risk.
Oversees prioritisation and
allocation of resources.
Disclosure Committee
Assists and informs the Board
concerning the identification
of inside information.
Recommends how and when
the Company should disclose
such information.
Ensures any such information
is managed and disclosed
in accordance with all
applicable legal and
regulatory requirements.
General Purpose Committee
Approves:
Opening of/changes to
bank accounts;
Arrangements with financial
institutions;
Guarantees and indemnities;
Substantive intra-Group loans;
Intra-Group dividends and
capital restructuring; and
Awards under the Company’s
share schemes (after Remuneration
Committee approval) and any
Employee Benefit Trust-related
loans.
The Corporate Governance Report, which includes the principal Committee
Reports and Directors’ Report, explains how the Board has applied the
principles and complied with the provisions of the UK Corporate Governance
Code 2018 (‘the Code’), which is available at frc.org.uk, throughout the year
ended 31 December 2024.
Governance
Annual report 2024
71
Morgan Advanced Materials
Board leadership and Company purpose
(continued)
A.
The role of the
Board
(continued)
There is a formal schedule of matters reserved for the Board, reviewed and approved annually, that sets out the
structure under which the Board manages its responsibilities, providing guidance on how it discharges its authority
and manages the Board’s activities. Our governance framework means we have a robust decision-making process
and a clear framework within which decisions can be made and strategy can be delivered. Our delegated authority
framework ensures that decisions are taken by the right people at the right level, with accountability up to the Board,
and enables an appropriate level of debate, challenge and support in the decision-making process.
The Board met eight times in 2024. All Directors continue to act in what they consider to be in the best interests of
the Company, consistent with their statutory duties. Further details of 2024 Board meetings, including information
on the Board’s assessment of strategic and operational matters, are set out on page 63, attendance on page 61,
and skills, experience and biographical information on pages 59 and 60.
A description of Morgan Advanced Materials’ business model is set out on pages 4 and 5. An assessment of the
principal risks facing the Group is included on pages 43 to 47.
Potential conﬂicts of interest are reviewed annually and powers of authorisation are exercised in accordance with
the Companies Act 2006 and the Company’s Articles of Association. During the year, if any Director has unresolved
concerns about the operation of the Board or the management of the Company, these would be recorded in the
minutes of the meeting.
B.
The Company’s
purpose, values
and strategy
Our purpose is to use advanced materials to make the world more sustainable and to improve the quality of life.
The Board believes that a healthy culture, which drives the right behaviours, protects and generates value, and helps
employees engage with the Morgan Code, will lead to the successful delivery of our strategy. It is responsible for
deﬁning our values and setting clear standards from the top. Our Chair leads the way by ensuring the Board operates
correctly and with a clear culture of its own which can be promoted to our wider operations and dealings with all
stakeholders. Our CEO, with the help of the Executive Committee, is responsible for the culture within our wider
operations. The Board regularly receives reports that enable it to assess our culture, ensuring it consistently supports
our strategy and purpose. For more information, see pages 65 and 66.
C.
Resources and
controls
The Board approves the Group’s annual budget ensuring that sufﬁcient resources are available to achieve objectives.
The Board retains ultimate responsibility for risk management and internal controls, with detailed oversight carried
out by the Audit Committee.
The Board sets the Group’s risk appetite. This sets out the principal risks facing the Group and the nature and extent
of risk the Board is willing for the Group to take to achieve the Group’s strategic objectives.
For more information, see pages 43 to 47.
D.
Shareholders and
stakeholders
The Board acknowledges the importance of forming and retaining sound relationships with all stakeholder groups.
Accordingly, the Board reviewed and discussed the Group’s key stakeholders along with the engagement mechanisms
in place to ensure that they support effective, two-way communication. These are kept under periodic review to
ensure ongoing effectiveness.
The Board engaged actively throughout 2024 with shareholders and other stakeholders. A full programme of formal
and informal events, institutional investor meetings and presentations is held throughout the year. This programme
of shareholder engagement aims to ensure that the performance, strategies and objectives of the Group are clearly
communicated to the investment community and provides a forum for institutional shareholders to address any
issues. Morgan Advanced Materials engages proactively with the investment community and sell-side and buy-side
analysts and accommodates requests for meetings and calls with senior management from existing and potential
institutional investors. The programme is led by the Executive Directors. The Board is regularly kept informed of
investor feedback, stockbroker updates and detailed analyst reports. For more information, see pages 61 and 68.
The Board receives regular management information and considers the impact of decisions on relevant stakeholders,
as described further in the Section 172 statement on pages 20 to 22. Across the Group, there is an active programme
of engagement with our key stakeholders including our colleagues. For more information, see page 68.
E.
Workforce
policies and
practices
The Board has overarching responsibility for the Group’s workforce policies and practices and delegates day-to-day
responsibility to the CEO and Group HR Director to ensure that they are consistent with the Company’s values and
support its long-term success.
Employees can report matters of concern conﬁdentially through our ‘Speak Up’ hotline. The Audit Committee
routinely reviews reports generated from the disclosures and ensures that arrangements are in place for investigation
and follow-up action as appropriate.
Division of responsibilities
F.
Role of the Chair
Ian Marchant leads the Board in an open and transparent manner, encouraging debate and challenge. He plays
a pivotal role in fostering the effectiveness of the Board and the individual Directors both in and outside the
boardroom. He joined the Board on 1 February 2023 and became the Chair in June 2023. He was considered
independent upon his appointment as Chair.
The Chair works with the Group Company Secretary to ensure that sufﬁcient time is available to discuss agenda
items for each Board meeting and to ensure that papers are of a high standard and circulated in a timely manner.
72
Division of responsibilities
(continued)
G.
Balance of
the Board
The Board comprises the CEO, CFO, Chair and four independent non-executive Directors. For more information,
see page 61.
The roles of the Chair and CEO are separate, with distinct accountabilities set out in their role proﬁles.
The CEO is responsible for the day-to-day leadership and management of the business, in line with the strategic
framework, risk appetite and annual and long-term objectives approved by the Board. The CEO cascades his
authority through a delegated authority framework which is approved by the Board.
The Board undertakes an annual review of the independence of each non-executive Director and in 2024 continued
to consider each non-executive Director to be independent.
H.
Non-executive
Directors
The non-executive Directors provide an independent view on the running of our business, governance and
boardroom best practice. They oversee and constructively challenge management in its implementation of strategy
within the Group’s system of governance and the risk appetite set by the Board. The expected time commitment of
the Chair and non-executive Directors is agreed and set out in writing in a Letter of Appointment. Prior to any new
Director appointment, the Board considers whether each non-executive Director has sufﬁcient time to devote to
their role with the Company. This is reassessed by the Nomination Committee annually and considering any changes
to a non-executive Director’s external commitments during the year. The Committee is satisﬁed that their other
duties and time commitments do not conﬂict with those as Directors.
Alison Wood was appointed as Senior Independent Director in November 2024. She is available to liaise with
shareholders who have concerns that they feel have not been addressed through the normal channels of the Chair,
CEO and CFO. She also leads the annual performance review of the Chair (see page 69), and as necessary, provides
advice and judgement to the Chair, and serves as an intermediary for other Directors.
The Board considered Alison Wood’s other external commitments and was comfortable that she had sufﬁcient
time to devote to her role before agreeing her appointment as a Senior Independent Director.
After each Board meeting, the non-executive Directors and the Chair meet without the Executive Directors.
I.
The Company
Secretary
As Group Company Secretary, Winifred Chime is responsible to the Chair for ensuring that all Board and Board
Committee meetings are properly conducted, that Directors receive appropriate information prior to meetings to
enable them to make an effective contribution, and that governance requirements are considered and implemented.
The appointment and removal of the Group Company Secretary is a matter for the Board.
Composition, succession and evaluation
J.
Board
appointments
The Nomination Committee and, where appropriate, the full Board, regularly review the composition of the Board
and the status of succession to both senior executive management and Board-level positions. Directors have regular
contact with, and access to, succession candidates for senior executive management positions.
The process for Alison Wood’s appointment is set out on page 83. The Nomination Committee continues the search
for two new non-executive Directors. The Company engaged the independent executive search agency Korn Ferry
to assist with the search. For further information on the search process, see pages 82 and 83.
All Directors retire at each AGM and may offer themselves for re-election or election by shareholders. With the
exception of Helen Bunch who will be retiring following the Company’s AGM in May 2025, all the Directors will
retire at the 2025 AGM and offer themselves for re-election or election (as appropriate). The Notice of AGM will give
biographical details of those Directors seeking re-election or election, including their experience and the contribution
each Director brings to the Board and its Committees. The terms of appointment for non-executive Directors and
service contracts for Executive Directors are available for inspection at the Company’s registered ofﬁce and will be
available to view at the AGM.
K.
Skills, experience
and knowledge of
the Board
The Nomination Committee regularly reviews the balance, composition and structure of the Board, including
reviewing the skills of each non-executive Director against a skills matrix. This identiﬁes the key skills, knowledge and
experience relevant to the markets in which we operate and for the effective operation of the Board and leadership
of the Group, as well as any focus areas in terms of succession planning. For more information on Board skills,
experience and knowledge, see page 61.
The Nomination Committee keeps the length of service of each Board member under review and recommends the
reappointment of the non-executive Directors and any extensions to their term. It ensures that Board recruitment
is commenced in a timely manner to regularly refresh the membership of the Board.
The Chair and Group Company Secretary ensure that new Directors receive a full induction and that all Directors
continually update their skills and have the requisite knowledge and familiarity with the Group to fulﬁl their role.
The individual training and development needs of each Director are considered by the Chair on an annual basis.
The Board receives detailed technical updates on corporate governance and other regulatory changes, presentations
from external specialists or internal managers, training via online platforms, and takes part in site visits to ensure its
skills, knowledge and experience are kept up to date.
UK Corporate Governance Code 2018 compliance statement
continued
Governance
Annual report 2024
73
Morgan Advanced Materials
Composition, succession and evaluation
(continued)
L.
Annual evaluation
Each year, the Board undertakes either an internal or external Board performance review. An external Board
performance review is required at least every three years. In any year where an external Board performance
review does not take place, an internal performance review is conducted instead. An external performance review
of the Board, its Committees and individual Directors, was conducted this year. Performance reviews of individual
Directors, including the Chair, are carried out on an annual basis. A summary of the 2024 performance review can
be found on page 69.
Audit, risk and internal control
M.
Audit functions
The Audit Committee comprises four independent non-executive Directors and the Board delegates several
responsibilities to the Audit Committee, including oversight of the Group’s ﬁnancial reporting processes and internal
control, and the work undertaken by the external and internal auditor. The Committee also supports the Board’s
consideration of the Company’s viability statement and its ability to operate as a going concern. The Audit Committee
Chair provides regular updates to the Board on key matters discussed by the Committee. For more information,
see page 75.
N.
Fair, balanced and
understandable
assessment
The Strategic Report, set out on pages 2 to 56, sets out the performance of the Company, the business model,
strategy, and the risks and uncertainties relating to the Company’s future prospects. When taken as a whole, the
Directors consider the Annual Report is fair, balanced and understandable and provides information necessary for
shareholders to assess the Company’s performance, business model and strategy. The process which supports
the Board’s conﬁrmation that the presentation of results is fair, balanced and understandable is set out in the Audit
Committee Report on page 76.
O.
Risk management
The Board determines the nature and extent of the principal risks the organisation is willing to take to achieve its
strategic objectives. A robust assessment of the principal and emerging risks facing the Group was carried out during
the year, including those risks that would threaten the Group’s business model, future performance, solvency or
liquidity and reputation. Further details on the principal risks can be found on pages 43 to 47.
The Board and Audit Committee monitor the Group’s risk management and internal controls systems and conduct an
annual review of their effectiveness. Throughout the year, the Board has directly, and through delegated authority to
the Executive Committee and the Audit Committee, overseen and reviewed all material controls, including ﬁnancial,
operational and compliance controls. See pages 43 to 47 and 77 and 78.
Remuneration
P.
Remuneration
policies and
practices
The Company aims to reward employees fairly and its Remuneration Policy is designed to promote the long-term
success of the Company while aligning the interests of both the Directors and shareholders. The Remuneration
Policy was last approved by shareholders at the 2022 AGM. Our proposed new Remuneration Policy, following
consultation with key investors and obtaining their views, will be put to a shareholder vote at the AGM in May 2025.
The Directors’ Remuneration Policy is set out on pages 88 to 96.
Q.
Policy on
executive
remuneration
The Remuneration Committee, on behalf of the Board, sets the remuneration of the Chair, the Executive Directors
and Executive Committee members. It also reviews the remuneration of certain senior management. In setting
remuneration, the Remuneration Committee seeks to ensure it is aligned with the Group’s remuneration principles
which are applicable to all colleagues. No Director is involved in determining their own remuneration outcome.
See from page 108 for more information on the work of the Remuneration Committee.
R.
Remuneration
outcomes
When determining remuneration outcomes, the Remuneration Committee takes account of wider circumstances
relevant to that decision, including Group and individual performance. The Remuneration Committee has discretion
to amend the ﬁnal vesting level of incentives if it does not believe that it reﬂects underlying performance and may also
apply malus and clawback in certain circumstances.
74
Report of the Audit Committee
While the Committee’s primary focus centred on the accuracy of
the Group’s financial reporting, during the year, the Committee also
oversaw and received regular updates on work across functional
areas of Morgan Advanced Materials such as ethics and compliance,
risk and internal audit. Several segment risk reviews took place,
in addition to the annual internal controls and risk review that is
undertaken, providing the Committee with a holistic view of risk.
We monitored reports raised through the ethics hotline and
ensured that executive management responded to these quickly
and appropriately. The Committee reviewed the key themes and
trends in the number, type and source of these reports to gain an
understanding of how effectively the Morgan Code is embedded.
This information has been used by the Board as part of its
assessment of Morgan Advanced Materials’ culture.
The Committee continues to monitor external ESG and
climate-related reporting which either applies to Morgan Advanced
Materials or which we may need to report on in future years,
to both ensure readiness and that appropriate disclosures are
made. In July, the Committee received a briefing on the Corporate
Sustainability Reporting Directive (CSRD). A CSRD roadmap has
been put in place, to ensure readiness for reporting in 2026.
Further information on the matters considered by the Committee
throughout the year can be found overleaf.
Deloitte completed their fifth full audit of the Group, which was
Jane Makrakis’s final year as lead audit partner. Jane worked closely
with James Hunter, the new lead audit partner, to facilitate a
comprehensive handover, with James shadowing Jane throughout
the 2024 year-end audit process. The Committee also reviewed
and agreed the independence and effectiveness of the audit
process, in establishing positive relationships and providing a
good level of service to the Group, while seeking continual
improvements in the audit of Morgan Advanced Materials.
The Committee’s performance was reviewed as part of this year’s
external Board performance review. The outcomes from the Board
performance review, including the Committee’s review, can be
found on page 69 and show that the Committee is continuing
to work well, is fully discharging its responsibilities and contributing
effectively to the Group’s overall governance framework.
One of the Committee’s areas of focus for 2025 will be considering
any actions required ahead of our reporting against the 2024
UK Corporate Governance Code (‘2024 Code’), particularly
in relation to provision 29. Controls implementation work is
underway to streamline controls across the Group.
Jane Aikman
Committee Chair
Jane Aikman, a Chartered Accountant, has
chaired the Committee since July 2017 and
has recent and relevant ﬁnancial experience
and competence in accounting and auditing
gained from her current external executive
role and prior CFO roles.
The Committee as a whole has competence in the sectors
in which the Group operates. All Committee members
are independent non-executive Directors. Committee
member biographies are set out on pages 59 and 60.
The Board Chair, the Executive Directors, key members
of Senior Management and senior representatives of
the external auditor attend Committee meetings by
invitation. Meeting attendance can be found on page 61.
At the end of each meeting, Committee members meet
with the external auditor, the Head of Internal Audit and
the Ethics and Compliance Director without the Executive
Directors or other members of management present.
Between meetings, the Committee Chair keeps in
contact with the CFO, the Group Finance Director,
the external auditor, the Head of Internal Audit and
the Ethics and Compliance Director as necessary.
The Committee’s terms of reference are available on the
Company’s website, morganadvancedmaterials.com.
I am pleased to present the Audit Committee Report for 2024, which provides
insight into key areas considered by the Committee during the year in discharging
its responsibilities in relation to ﬁnancial reporting, risk management, internal
control, the internal audit function and interaction with the Group’s external
auditor, Deloitte LLP.
Committee members
Jane Aikman
(Chair)
Helen Bunch
Clement Woon
Alison Wood
(member
from 1 November 2024)
Laurence Mulliez
(member until
1 November 2024)
Governance
Annual report 2024
75
Morgan Advanced Materials
Key activities in 2024
Financial reporting
1
2
3
Reviewed and discussed reports from the CFO on the ﬁnancial statements, considered
management’s signiﬁcant accounting judgements and the policies being applied, and assessed
the ﬁndings of the statutory audit in respect of the integrity of the ﬁnancial reporting of
full- and half-year results.
Reviewed the 2024 Annual Report and Accounts and provided a recommendation to the Board
that, as a whole, it complied with the 2018 UK Corporate Governance Code principle to be
“…fair, balanced and understandable and provide the information necessary for shareholders to
assess the Company’s position, performance, business model and strategy”.
Received updates on the 2024 Code requirements and a brieﬁng on the CSRD.
Internal controls and
risk management
1
2
3
Reviewed the effectiveness of the Group’s risk management and internal control systems and
integration of the components of the risk framework into Board and Committee reporting, prior
to making a recommendation to the Board. The Committee also reviewed reports from the
GBU Presidents and Finance Directors on their key risks, how these risks are managed and an
assessment of the control environment, on an annual basis.
Monitored fraud reporting and incidents of whistleblowing, including a review of the adequacy
of the Group’s whistleblowing processes and procedures, prior to reporting to the Board on
this activity.
Oversight of the Group’s ethics and compliance programme and monitored progress in compliance
with the Morgan Code across the Group.
Oversight and monitoring of the Group’s key taxation issues and tax strategy.
Internal audit
1
2
3
Considered internal audit reports presented to the Committee and satisﬁed itself that management
had resolved or was in the process of resolving any outstanding issues or actions.
Reviewed and approved the updated internal audit plan for 2024 and the internal audit plan and
approach for 2025.
Reviewed the quality and effectiveness of the internal audit function.
External audit
1
2
3
Approved the 2024 full-year audit plan. Oversaw the 2024 statutory audit, including the key audit
risks and level of materiality applied by Deloitte, audit reports from Deloitte on the ﬁnancial
statements and the areas of particular focus for the 2024 audit.
Assessed the effectiveness of Deloitte and made a recommendation to the Board on the
reappointment of Deloitte as the external auditor.
Agreed the statutory audit fee for the 2024 audit.
Reviewed and approved the non-audit services, and related fees, provided by Deloitte for 2024.
Reviewed the ﬁndings of the Financial Reporting Council’s (FRC) Audit Quality Inspection in
relation to Deloitte.
Oversaw the transition to the new lead audit partner, James Hunter, from 2025.
Strategic impact
Big positive difference
Delight the customer
Innovate to grow
1
2
3
76
Financial reporting
Fair, balanced and
understandable reporting
At the request of the Board, the Committee
has considered whether, in its opinion,
this Annual Report and Accounts, taken
as a whole, is “…fair, balanced and
understandable…” and whether it
provides the “…information necessary for
shareholders to assess the Company’s
position, performance, business model
and strategy”.
In making its assessment, the Committee undertook the following process:
Considered the questions which need to be answered to evaluate whether the
Annual Report and Accounts meets the fair, balanced and understandable test;
Considered the steps taken to ensure integrity and completeness of the
accounting records;
Reviewed the methodology used to construct the narrative sections of the
Annual Report;
Reviewed the disclosure judgements made by the authors of each section and
considered the overall balance and consistency of the Annual Report;
Received conﬁrmation from external advisors that all regulatory requirements
are satisﬁed;
Received conﬁrmation of veriﬁcation of content from the authors of each section;
Received conﬁrmation from the CFO that the narrative reports and consolidated
ﬁnancial statements are consistent; and
Made a recommendation to the Board to assist it in determining whether it is able
to make the statement that the Annual Report and Accounts taken as a whole is fair,
balanced and understandable.
The Board approved the Committee’s recommendation that the ‘fair, balanced and
understandable’ statement could be made, which can be found in the Directors’
Responsibility Statement on pages 113 and 114 of this Annual Report.
Signiﬁcant issues
The Committee considered aspects of the financial statements
that require significant accounting judgements or where there is
estimation uncertainty, including the appropriateness of those
judgements and estimates by management, and made an
assessment as to whether suitable accounting policies have
been adopted and applied. Details of accounting policies can
be found in note 1.
The significant areas of judgement considered by the Committee
in relation to the 2024 consolidated financial statements, and how
these were addressed, are described below. Deloitte provided
detailed reports on these areas to the Committee.
Significant issues and judgements
Specific adjusting items
In the consolidated income statement, the Group presents
specific adjusting items separately. In the judgement of the
Directors, as a result of the nature and value of these items
they should be disclosed separately from the underlying results
of the Group.
The Group believes that these alternative performance
measures, which are not considered to be a substitute for,
or superior to, IFRS measures, provide stakeholders with
additional helpful information on the performance of
the business.
Details of specific adjusting items arising during the year and
the comparative period are given in note 6 to the consolidated
financial statements.
How the Committee addressed these issues
The Committee reviewed the key assumptions underpinning
the accounting for specific adjusting items for the half- and
full-year results, including receiving presentations from
Deloitte on this matter.
Inventory valuation
At a number of our sites, local management used a manual
process to calculate the inventory provision at 31 December 2024
due to system limitations following the cyber security incident in
early 2023.
The manual process followed was consistent across these sites
and in line with Group policy. The methodology used replicated
the provision calculation that would have been automated within
our ERP systems.
How the Committee addressed these issues
The Committee reviewed the key assumptions underpinning the
inventory valuation process and overall balance sheet prudence.
They also received the views of Deloitte on these matters.
Report of the Audit Committee
continued
Governance
Annual report 2024
77
Morgan Advanced Materials
Signiﬁcant issues and judgements
(continued)
Impairment of non-financial asset (excluding goodwill)
The Group monitors the performance of individual assets and
cash-generating units at each balance sheet date to determine
whether there is any indication of impairment. An impairment
loss is recognised in the income statement where the carrying
amount of an asset exceeds its recoverable amount.
Additional disclosure is included in note 6 to the consolidated
financial statements.
How the Committee addressed these issues
The Committee reviewed the key assumptions that underpin the
value-in-use calculations, including receiving the views of Deloitte
on these matters.
Internal control and risk management
The Committee assists the Board in fulfilling its responsibilities
relating to the adequacy and effectiveness of the control
environment and risk management systems. The Group’s systems
of risk management and internal control has been in place for the
year under review and up to the date of approval of the Annual Report.
The Committee, on behalf of the Board, undertakes an annual
review of the effectiveness of the Group’s systems of risk
management and internal control and did so again for the year
under review. These systems are consistent with the FRC’s
guidance on internal control requirements contained within
the Code. The review conducted in February 2025 comprised:
A review of the relevant Principles and Provisions in the
Code and the changes arising from the 2024 Code;
A review of the Company’s governance structures;
A review of the sources of assurance and the Company’s
three lines of defence model, including policies, annual
self-certiﬁcation process, reports from specialist functions such
as the ethics and compliance, tax, treasury and legal functions,
and internal audit reports;
A review of all material controls, including ﬁnancial, operational
and compliance controls, and risk management systems, including
the improvements achieved in 2024 and identiﬁcation of further
areas for improvement; and
The Committee and Board receive regular risk management
reports and together they ensure that there are adequate internal
controls in place and that these are functioning effectively.
The Directors consider that the Group’s systems of risk
management and internal control provides reasonable, but not
absolute, assurance in the following areas: that the assets of the
Group are safeguarded; that transactions are authorised and
recorded in a correct and timely manner; and that such controls
would prevent or detect, within a timely period, material errors or
irregularities. The systems are designed to mitigate and manage
risk, rather than eliminate it, and to address key business and
financial risks. The majority of internal financial controls are
manual; this is driven by a diverse IT landscape and the Group’s
geographical breadth; as such, there is a heavy reliance on central
review controls. The Directors are satisfied that an appropriate
amount of time and consideration is dedicated to the review and
challenge of results, judgements and estimates – both by the
segment and the Group leadership team.
The main features of the Group’s systems of risk management and
internal control and for assessing the potential risks to which the
Group is exposed are summarised as follows.
Control environment
The Group’s control environment is underpinned by the Morgan
Code and its associated policies and guidelines. The Group policies
cover: financial procedures; environmental, health and safety
practice; ethics and compliance (for example, anti-bribery and
anti-corruption, anti-trust and anti-competitive behaviour and
trade compliance); and other areas such as IT and HR. There is a
Limits of Authority Policy, which describes the matters reserved
for the Board and the delegations granted to the CEO and other
executives. The Group operates various programmes to improve
the control environment and management of risk. These include
the Group’s ethics and compliance programme and the Group
internal audit function, which present updates to the Committee at
each meeting. In addition, the Committee receives reports from
the Presidents and Finance Directors of each segment on their
key risks, how these risks are managed and an assessment of the
control environment, on an annual basis.
Part of the ethics and compliance programme is the provision of
an externally managed, independent whistleblower (‘Speak Up’)
hotline which is made available for the workforce to raise concerns.
Any reports made to the hotline are investigated by senior
management, with reports made to the Committee at each
meeting. The Committee oversees the progress and outcome
of any investigations arising from reports made to the hotline or
directly to management, where there is a concern regarding ethical
conduct. The reports investigated have varied in their nature and
materiality, with certain matters requiring the support of external
advisors and giving rise to disciplinary action against employees for
breaches of Group policies.
The segment Presidents and other senior operational and functional
management make an annual statement of compliance to the
Board confirming that, for each of the businesses for which they
are responsible, the consolidated financial statements are fairly
presented in all material respects, appropriate systems of internal
controls have been developed and maintained, and the businesses
comply with Group policies and procedures or have escalated
known exceptions to an appropriate level of management.
78
Financial reporting
Risk management systems and internal controls are in place in
relation to the Group’s financial reporting processes and the
process for preparing consolidated accounts. These include
policies and procedures which require the maintenance of
records which accurately and fairly reflect transactions and
disposals of assets, provide reasonable assurance that transactions
are recorded as necessary to allow the preparation of consolidated
financial statements in accordance with IFRS, and the review and
reconciliation of reported data. Representatives of the businesses
are required to certify that their reported information gives a true
and fair view of the state of affairs of the business and its results
for the period. The Committee is responsible for monitoring
these systems and controls.
Performance monitoring
The Board and the Executive Committee hold regular, scheduled
meetings, at which they monitor performance and consider a
comparison of forecast and actual results, including cash flows
and comparisons against budget and the prior year. Segment
management teams also meet regularly to review performance.
Executive Committee members visit sites on a regular basis.
Risk management
The Board undertakes a formal assessment of the Group’s principal
and emerging risks at least twice a year. The identification,
assessment and reporting of risks is a continuous process carried
out in conjunction with operational management. Appropriate steps
are taken to mitigate and manage all material risks, including those
relating to the Group’s business model, solvency and liquidity.
The Board, either directly or through the Committee, receives
updates on risks, internal controls and future actions from both
a segment and Group perspective. The Executive Committee
collectively reviews risk management and internal controls for
all principal Group risks. The Group’s risk management system,
which is described in more detail on pages 43 to 47, supports
the Directors’ statements on going concern and viability on
pages 55 and 56.
Risk factors
The Group’s businesses are affected by several factors, many of
which are influenced by macro-economic trends beyond Morgan
Advanced Materials’ control; nevertheless, as described above and
in the Strategic Report, the identification and mitigation of such risks
are regularly reviewed by the Executive Committee and the Board.
These risk factors are further discussed in the ‘Risk management’
section on pages 43 to 47.
Internal audit
The Group’s internal audit function provides objective assurance
of the adequacy and effectiveness of risk management and
internal control systems. It also may recommend improvements.
While the Head of Internal Audit reports administratively to the
CFO, appointment to, or removal from, this role requires the
consent of the Committee Chair. The Head of Internal Audit
is accountable to the Committee Chair, attends all scheduled
Committee meetings and meets with Committee members
without the presence of executive management.
Each year’s internal audit plan is approved by the Committee.
The plan is focused on higher-risk areas and any specific areas or
processes chosen by the Committee. It is also aligned with any
risks identified by the external auditor and ethics and compliance
team. The Committee is given regular updates on progress,
including any material findings, and can refine the plans as needed.
The Committee ensures that there are adequate resources in place
for the function to carry out the plan. Reports showing the ratings
and key findings from each audit are provided to the Committee.
The Committee challenges management over the key findings,
discusses key themes identified by the internal audits and guides
management in identifying areas of focus to continuously improve
controls. Actions arising from internal audit reviews are agreed
with management and the Committee monitors progress on any
outstanding actions.
In the latter part of 2024, the Committee reviewed the
effectiveness of the function by way of an externally facilitated
review carried out by BDO LLP. The review evaluated the
function’s compliance with the Internal Audit Standards and
assessed the wider performance of the function and its ability to
add value to the organisation. The review was conducted through
a questionnaire taking into consideration relevant professional
and regulatory requirements, interviews carried out with key
stakeholders and a review of the work of the function and its
reports to the Committee. The outcome of the review was
discussed at the Committee’s meeting in February 2025. We are
satisfied that the quality, experience and expertise of the internal
audit function are appropriate for the business and that the function
was objective and performed its role effectively. We also
monitored management’s response to internal audits during the
year. We are satisfied that improvements are being implemented
promptly in response to the findings and believe that management
supports the effective working of the function.
Report of the Audit Committee
continued
Governance
Annual report 2024
79
Morgan Advanced Materials
External auditor
External auditor, including independence
and Non-Audit Services Policy
The external auditor, Deloitte, has processes in place to safeguard
its independence and objectivity, including specific safeguards where
it is providing permissible non-audit services, and has confirmed in
writing to the Committee that, in its opinion, it is independent.
No Committee member has declared any connection with the
external auditor. In addition, the Company has a Non-Audit
Services Policy (‘Policy’) which was revised in 2025 and is in line
with the FRC’s revised Ethical Standard 2024. The Policy states that:
Certain non-audit services may not be provided. The external
auditor may not review their own work, make any management
decisions, create a mutuality of interest and/or put themselves
in the position of advocate;
Any permissible non-audit work proposed to be placed with
the external auditor with a total fee between £50,000 and
£200,000 must be approved in advance by the Committee
Chair. Projects above £200,000 must be approved in advance
by the Committee, with any such proposal being submitted
in writing to the CFO, who would in turn seek approval from
the Committee. All permissible non-audit work, regardless of
value, must be approved by the Group Financial Controller.
Work which includes multiple phases is treated as a single
project for approval purposes;
The prior approval of the Committee is required for any
non-audit work which, when added to the fees paid for other
non-audit work, would total more than 60% (previously 80%)
of the audit fee; and
The value of non-audit fees must not under any circumstances
exceed 70% of the average Group statutory audit fee incurred
in the last three consecutive financial years.
To safeguard the objectivity and independence of the external
auditor, the Company ensures that any non-audit services to be
provided by the auditor are given prior approval by the Committee
where required under the Policy.
In 2024 the proportion of the auditor’s fees for non-audit work
relative to the audit fee was 1.2% (or £41,000), (2023: 0.7%).
In the opinion of the Committee, the auditor’s objectivity and
independence were safeguarded despite the provision of a limited
number of non-audit services by Deloitte during 2024.
Auditor effectiveness
The Committee discussed the quality of the audit during the
year and considered the performance of the external auditor
as a separate agenda item at its meeting in February 2025.
The Committee conducted a full review following the 2024 year
end to gather feedback and look for continuous improvement
opportunities. The Committee considered all aspects of the
auditor’s performance, based on a review of the effectiveness
of the external audit process, which was conducted through a
questionnaire taking into consideration relevant professional and
regulatory requirements. The questionnaire was completed by
each Segment Finance Director and relevant Group functional
teams. In addition to the questionnaire, the following external
auditor areas were reviewed:
Independence conﬁrmation;
Audit methodology, use of a component auditor and audit scope
and coverage;
Assessment of materiality and areas of audit focus, consideration
of appropriate audit procedures, professional scepticism,
appropriate management challenge, clarity and candour in
reporting; and
The FRC’s Audit Quality Review findings for Deloitte for the
2023–24 cycle of reviews and Deloitte’s proposed actions to
address these findings as a firm.
The Committee concluded that the external audit process in
respect of the financial statements for the year ended 31 December
2024 was effective. The Committee confirmed Deloitte’s
independence before recommending its reappointment for
approval by shareholders at the AGM on 8 May 2025.
External audit rotation
Deloitte was appointed by shareholders as the Group’s statutory
auditor in 2020 following a formal tender process. For 2024,
Deloitte continued to provide external audit services to the Group.
This year was Jane Makrakis’s fifth year as lead audit partner. James
Hunter will take over from Jane as lead audit partner from 1 January
2025. The Audit Committee considers annually the need to tender
the audit for audit quality or independence reasons. There are no
contractual obligations in place that restrict the Group’s choice of
statutory auditor. The external audit contract will be put out to
tender at least every 10 years. The Committee considers that it
would be appropriate to conduct an external audit tender by no
later than 2030.
The Company has complied with the provisions of the Statutory
Audit Services for Large Companies Market Investigation
(Mandatory Use of Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014 and the FRC’s ‘Audit
Committees and the External Audit: Minimum Standard’.
80
Report of the Nomination Committee
The Committee performs a vital role in reviewing the composition
and balance of skills and experience on the Board, enabling it to
lead the process for appointments to the Board, keep under review
the leadership needs of the Group and ensure plans are in place
for orderly succession to Board and senior management positions.
During the year, the Committee led the succession planning
process for Pete Raby resulting in the appointment of Damien Caby
as CEO designate. The Committee also supported the search
to identify Laurence Mulliez’s successor as Senior Independent
Director, Alison Wood, who joined the Board in November 2024.
Further information on the recruitment processes for both roles
can be found on pages 82 and 83.
Succession planning will continue to be a key focus for the
Committee in the coming year, to replace existing Directors
reaching the end of their nine-year tenure. Further information
on our succession planning activities can be found on pages 82
and 83.
During the year, the Board reviewed succession planning and
talent strategy for the Executive Committee members, with a
particular focus on our aim to foster diversity within the leadership
population, to ensure that our leadership is representative of the
Group’s stakeholders. Details of our diversity progress can be
found on pages 81 and 82.
The Committee’s performance was reviewed as part of the
external Board performance review, with areas for development
identified for the Committee and action plans agreed. I am pleased
to report that the Committee continues to work well and is fully
discharging its responsibilities, while contributing effectively to the
Group’s overall governance framework.
Ian Marchant
Committee Chair
The Committee is comprised solely of
non-executive Directors and is chaired by
the Chair of the Board. Biographies of the
Committee members can be found on
pages 59 and 60.
The Group Company Secretary is secretary to the
Committee and attends all meetings.
The CEO and Group HR Director attend all scheduled
meetings by invitation. Meeting attendance
can be found on page 61.
The Committee’s terms of reference are available on the
Company’s website, morganadvancedmaterials.com.
I am pleased to present the Nomination Committee Report for 2024, which
provides insight into key areas considered by the Committee during the year in
discharging its responsibilities to ensure that the Board has the requisite mixture
of skills, knowledge and expertise to provide robust oversight, and to identify
and respond effectively to current and future opportunities and challenges.
Committee members
Ian Marchant
(Chair)
Jane Aikman
Helen Bunch
Clement Woon
Alison Wood
(member
from 1 November 2024)
Laurence Mulliez
(member until
1 November 2024)
Governance
Annual report 2024
81
Morgan Advanced Materials
Key activities in 2024
Board and
Committee
composition
Continued a global search for independent non-executive Directors and considered potential Board candidates.
Recommended the appointment of Alison Wood as Senior Independent Director, following the departure
of Laurence Mulliez this year.
Reviewed Director independence.
Reviewed Board and Committee structure, size and composition, ensuring that they remain appropriate.
Reviewed the Board’s Inclusion and Diversity Policy, and assessed progress against its objectives.
Succession
planning
Reviewed and endorsed succession plans for the Board and its Committees.
Recommended the appointment of Damien Caby as CEO designate.
Continued to provide input to the succession plans for the Executive Committee (excluding the CEO),
ensuring alignment with the Group’s Inclusion and Diversity Policy.
Discussed the percentage target for senior management positions to be occupied by ethnic minority executives
by 2027 and progress in meeting its target for the number of women in senior management positions by 2030.
Reviewed and endorsed updates to the Board’s skills matrix.
Board
performance
reviews
Monitored implementation of recommendations following the 2023 internal Board and Committee
performance reviews.
Appointed CCL to undertake the 2024 external performance review of the Board and its Committees.
Corporate
governance
Monitored the fulﬁlment of the requirements, principles and expectations of the Code.
Reviewed Directors’ declarations on potential conﬂicts of interest.
Considered each Director’s capacity to allocate sufﬁcient time to discharge their responsibilities effectively.
Considered the annual re-election and election of Directors at the 2025 AGM.
Reviewed the Committee’s terms of reference.
Statement on compliance against
regulatory Board diversity targets
The Board confirms that as at 31 December 2024, being
the reference date selected by the Board for the purposes
of this disclosure, the Company met the regulatory
Board diversity targets set out in LR 6.6.6(9)(a) of the
FCA’s Listing Rules (LRs).
As at that date, 43% of Board members were women,
exceeding the FTSE Women Leaders Review target.
One of the senior Board positions (Senior Independent
Director) is held by a woman. Both the Audit Committee
Chair and the Remuneration Committee Chair are women.
The Board currently has one Director of Southeast Asian
origin, meeting the Parker Review target. The Company
submitted data to both the FTSE Women Leaders Review
and the Parker Review during 2024. There have been no
changes to the Board’s diversity since 31 December 2024
and the date on which this Annual Report is approved.
Inclusion and diversity
The Board’s Inclusion and Diversity Policy, which also applies to all
Board Committees, reflects the Board’s belief in the benefits of
diversity and that more diverse companies attract and retain the
best talent and achieve stronger overall performance.
The Board considers an extensive definition of diversity when
setting policies and appointing Directors, including diversity of
age, gender, ethnicity, sexual orientation, disability, nationality,
educational and professional experience, socio economic
background, personality type, culture and perspective.
The Committee takes diversity into account in broader discussions
on succession planning and talent development, and supports
management in its wider commitment to promoting diversity.
Our intention is to at least maintain the current level of diversity,
in order that the Board’s composition can more closely reflect
the Group’s workforce, stakeholders and society more generally.
It is however acknowledged that in periods of Board change,
there may be times when this balance is not maintained.
The percentage of women on the Group’s Executive Committee
is 33%. At 31 December 2024, 33% (2023: 31%) of senior
management, defined in accordance with the Code as the
members of the Executive Committee including the Company
Secretary and their direct reports, were women. Our aim is to
have at least 40% of senior leadership roles held by women by
end of 2030 and at least 18% held by individuals from an ethnic
minority by the end of 2027.
82
Board and Executive Committee diversity as at 31 December 2024
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (CEO, CFO,
Chair and SID)
Number
in executive
management
Percentage
in executive
management
Men
4
57
3
6
67
Women
3
43
1
3
33
Not specified/Prefer not to say
–
–
–
–
–
White British or other White
(including minority-white groups)
6
86
4
8
89
Mixed/Multiple ethnic groups
–
–
–
–
–
Asian/Asian British
1
14
–
1
11
Black/African/Caribbean/Black British
–
–
–
–
–
Other ethnic group
–
–
–
–
–
Not specified/Prefer not to say
–
–
–
–
–
This disclosure, and the calculation as to whether targets have been met, is based on data collected from the individuals on joining Morgan Advanced Materials.
Inclusion and Diversity Policy
The Board has agreed objectives for achieving gender, ethnic and
cultural diversity on the Board and its Committees. Fulfilling these
objectives will enable Morgan Advanced Materials to achieve its
three strategic execution priorities.
With the planned refreshment of the Board into future years, the
Inclusion and Diversity Policy will inform and steer the Committee
in identifying candidates and sets the tone for the wider Group’s
diversity aspirations, in particular in the context of developing
its leadership population. To promote diversity and inclusion,
the Board will:
Consider all aspects of diversity when reviewing the composition
and effectiveness of the Board and its Committees;
Only engage with executive search ﬁrms which are accredited
under the Voluntary Code of Conduct for Executive Search
Firms, or which have a proven track record in sourcing diverse
candidates, when seeking to make new appointments;
Ensure that candidate lists include individuals from a broad and
diverse range of backgrounds and that all candidates with the
requisite skills and capability are considered, including those with
less ‘traditional’ track records than the corporate mainstream;
Agree new Board appointments based on merit against the
objective criteria set;
Review senior management succession planning annually
and monitor the development of a diverse pipeline of future
senior leaders, reﬂecting the composition of Morgan Advanced
Materials’ workforce;
Set the tone and provide visible support for the Group’s diversity
and inclusion objectives, including the fostering of an inclusive
culture, role-modelling and promoting inclusive leadership; and
Review and challenge the goals and progress of senior
management in improving inclusion and diversity.
Succession
The Committee continued to review the plans for orderly
succession so that the right balance of appropriate skills, diversity
and experience is represented on the Board, building on the
work previously undertaken. The Committee also recognises that
building a broad and diverse talent pipeline for executive succession
is a key priority to lead the growth of Morgan Advanced Material’s
business going forward.
In addition to executing the CEO succession plan, the Committee
continued to manage a phased succession programme for
non-executive Directors, with two Directors to be recruited in
2025. Korn Ferry, an external search consultancy, was selected
to lead the search for the Directors, following a tender process.
Korn Ferry is independent and has no other connection with the
Company or individual Directors.
CEO succession
The Committee led a thorough and inclusive process to
identify Pete Raby’s successor as CEO during the year. All the
non-executive Directors were involved in the process which
began by reviewing the skills and experience that would be
required in any potential successor.
Russell Reynolds (RR) were then engaged as search
consultants to help support the process and identify suitable
external candidates. RR is independent and has no other
connection with the Company or individual Directors.
RR compiled a longlist of candidates which was considered
before being reduced to a proposed shortlist. To ensure
fairness and consistency, RR interviewed both the internal
and external shortlisted candidates before they were
interviewed by members of the Board. The non-executive
Directors collaborated closely during the process, regularly
regrouping to discuss progress and views on the candidates.
The shortlist was very strong, and after a final discussion,
the Committee recommended to the Board that Damien
Caby succeed Pete as CEO. Damien’s appointment was
subsequently approved by the Board.
Report of the Nomination Committee
continued
Governance
Annual report 2024
83
Morgan Advanced Materials
The usual recruitment process for a non-executive Director is
described below.
Stage 5
Directors receive a comprehensive induction programme
following their appointment, comprising a balance of
knowledge-based sessions with internal functions and
external advisors and site visits to provide exposure to
Morgan Advanced Materials’ businesses and working
environments. Delivery is in phases, with information
material to the role provided in the early stages.
The Committee makes a recommendation for the
appointment to the Board, considering Board members’
views. Any new Director appointed must be elected
by shareholders at the next AGM.
Stage 4
Shortlisted candidates are interviewed by Committee
members and later by other Board members. Background
and due diligence checks are undertaken for the preferred
candidate(s), including consideration of whether
the individual(s) would have sufficient time
to devote to their role with the Company.
Stage 3
A longlist of candidates for the role is produced, taking the
identified requirements into consideration.
Stage 2
The Committee devises a candidate specification,
factoring in the balance of skills, knowledge,
experience, diversity and geographical representation
on the Board, and the desired skills and experience required
to complement the existing membership and support
the implementation of the Group’s strategy.
Stage 1
Senior Independent Director induction
Following Alison Wood’s appointment in November,
she received a thorough induction, which encompassed:
A comprehensive pack of documentation and materials
relevant to Morgan Advanced Materials’ business and
Alison’s role, including information such as key contacts,
Board Committee Terms of Reference, the Schedule
of Matters Reserved for the Board, the Share Dealing
Code, Board and Committee meeting dates and forward
planner, and Group and GBU strategy updates. As Alison
will be taking on the role of Remuneration Committee
Chair in 2025, her induction also included materials on
the approach to remuneration at Morgan Advanced
Materials; and
One-to-one meetings scheduled with the Executive
Directors, the Executive Committee members,
certain senior management personnel and with senior
representatives of the Company’s external auditor,
remuneration advisor and brokers.
Alison attended the November Board meeting which took
place at the Technical Ceramics site in Rugby, UK. Alison
joined her Board colleagues on a tour of the site and
participated in employee engagement sessions, to help build
her understanding of Morgan Advanced Materials’ business
and to hear directly from employees about their experience
of working at Morgan Advanced Materials. Alison will visit
other sites in 2025.
Senior management succession
The Committee reviewed the Group’s senior management talent
pipeline during the year, their development and own succession
plans, as well as progress against the talent and development
framework. The Committee has visibility of emergency successors
and those identified as medium-term and long-term successors,
and reviews the development programme for these individuals to
understand their strengths and skill gaps.
Board members engaged with Executive Committee members and
their direct reports throughout the year during formal presentations
at Board meetings, as well as at Board dinners. This provided the
opportunity for them to get to know some of the individuals
identified in the succession plans.
The Committee monitors the impact of the diversity and inclusion
strategy on appointments that are made and their progress
within the Company, including at the level of those who report
to the Executive Committee, to develop a pipeline of diverse
talent that will serve to widen the pool of candidates for Board
and leadership positions in the future. The Committee will
continue to work with the CEO and Group HR Director on
senior management succession.
84
It has been a challenging year for Morgan Advanced Materials
and the wider industry, with markets weakening sharply during
the second half of the year. Despite these challenges we have
delivered 3.7% organic revenue
*
growth for the 2024 financial
year. We continue to invest in our faster growing markets and are
well-placed to grow quickly and expand margins as markets recover.
2024 Committee activity
As a Committee, we remain focused on ensuring that senior
executive remuneration is fit for purpose and aligned with the
interests of key stakeholders (our employees and shareholders in
particular), and that our governance practices and processes adhere
to the provisions of the UK Corporate Governance Code. During
the year, the Committee met four times, with its responsibilities
including determination of incentive outcomes, and approving
remuneration packages for the Company’s Chair and Executive
Directors. With the requirement to put the Remuneration Policy
to a binding vote at the 2025 AGM, the Committee also conducted
a thorough review of the current Remuneration Policy (which was
approved by 96.5% of shareholders at the 2022 AGM) in the
context of our pay philosophy, the UK Corporate Governance
Code, and recent developments in remuneration governance and
best practice. This review concluded that the current framework
continues to support Group strategy and culture, as well as
providing strong alignment of Executive Director and stakeholder
interests. As a result, and having consulted with our largest
shareholders in November 2024, no material changes are
proposed to the Remuneration Policy which we intend to operate
for up to a further three years. Further details regarding the
activities of the Committee can be found in the ‘Remuneration
governance’ section at the end of this Report.
2024 remuneration outcomes
Following a comprehensive review of performance in 2024, the
Committee determined that payouts of 60% of the 2024 annual
bonus opportunity for the CEO and 57% for the CFO were
appropriate. Further details are set out on pages 97 to 99.
As committed to in last year’s report, the Committee also reviewed
the value at vesting (in March 2024) of the 2021 LTIP award to
ensure that any gain reflected the Group’s performance rather than
a windfall due to general stock market rises since the time of grant.
Given the relatively strong share price position at the time of the
grant, the Committee concluded that the value realised on vesting
of the 2021 LTIP award did not represent a windfall gain.
The Committee also determined that the 2022 LTIP award will
partially vest, at 26.9% of the maximum, based on performance
The cost of living remains a challenge in many countries
and during the year we have continued to keep our direct
labour remuneration packages in each location under
review. Where appropriate we have again implemented
additional salary increases during 2024 to support our
colleagues – with a particular focus on lower-paid
employees. We have also maintained our focus on the
safety measures that protect our employees while they
work, leading to a reduction in LTAs. Our ‘thinkSAFE’
programme and the Morgan Code are well-embedded
into the organisation, and we have continued to roll out
leadership development programmes to give our leaders
the skills necessary for them – and by extension the
Group – to succeed.
Remuneration Report
I am pleased to present the Directors’ Remuneration Report for the year ended
31 December 2024. As in previous years, this report is split into three sections:
this Annual Statement, the Policy Report – which will be subject to a binding
shareholder vote at the 2025 AGM – and the Annual Report on Remuneration.
Committee members
Helen Bunch
(Chair)
Jane Aikman
Ian Marchant
Laurence Mulliez
(until 1 November 2024)
Alison Wood
(from 1 November 2024)
Clement Woon
Governance
Annual report 2024
85
Morgan Advanced Materials
against the targets set at the time of grant. The Committee will
again review the value of the 2022 LTIP award at vesting, to ensure
that any gain reflects the Group’s performance rather than a
windfall due to general stock market rises since the time of grant;
however, the Committee presently considers the risk of windfall
gain unlikely given Morgan Advanced Materials’ share price at the
time of grant.
In all cases and in keeping with its usual approach, the Committee
reviews the formulaically derived incentive outcomes in the context
of the Group’s underlying performance. The Committee concluded
from this review that a bonus outturn around target levels and
modest vesting under the 2022 LTIP appropriately reflects Morgan
Advanced Materials’ underlying performance over the relevant time
horizons. As a result, the Committee determined that no discretion
needed to be applied in respect of 2024 remuneration outcomes.
Changes to the leadership team
On 16 January 2025, the Board announced Pete Raby’s intention
to step down from the Board on 1 July 2025 and retire from the
Group on 31 August 2025. In line with the Remuneration Policy,
Pete will be eligible to receive a 2025 annual bonus (pro-rated
for his period of service and subject to the achievement of the
performance targets set at the start of the year). He will not receive
a 2025 LTIP award. A further announcement regarding the terms
of Pete’s departure will be made later in the year and disclosed fully
in next year’s report.
It was also announced that, following a rigorous internal and
external search and selection process, Damien Caby will be
promoted from his current position as President, Thermal Products
Division to succeed Pete as CEO. The Committee has set Damien’s
package in line with the Remuneration Policy and, in doing so, has
taken into account Damien’s experience but also the fact that this
will be his first Executive Director role. Accordingly, Damien’s salary
on appointment has been set at €720,000 (a circa 10% discount
to his predecessor), which the Committee intends to increase to
market levels over the next two years subject to his performance
and development in role (noting that this may necessitate higher
percentage increases than awarded to the wider employee
population over this timeframe). Damien’s maximum annual
bonus opportunity will be set at 150% of salary (in line with his
predecessor) and his annual LTIP opportunity will be 175% of
salary (below the Policy limit of 200% of salary at which Pete Raby’s
LTIP opportunity was set). Damien, a French national resident
in Germany, has agreed to be appointed as CEO under a UK
service contract consistent with that used for the other Executive
Directors. He will be eligible for a pension contribution of 8% of
salary (aligned to the pension contribution levels available to the
wider UK workforce), whilst his other benefits will include the
grossed up value of reimbursing reasonable and proper travel
expenses incurred in commuting to the Group’s head office
in Windsor.
Implementation of Policy in 2025
In keeping with our usual approach, salary increases have been
determined by the Committee in the context of the continued
performance of the Group in 2024, labour market conditions,
and the average salary increase awarded to the wider workforce.
The process for reviewing Executive Director salaries takes into
account individual and Group performance, demonstration of
the defined Leadership Behaviours and salary position relative to
the relevant market, and remains consistent with the approach
taken for the entire professional population. In this context, the
Committee determined to award salary increases of 3% for
both the CEO and CFO (compared to the average increases of
4.75% and 3% for colleagues in the wider UK workforce with
similar performance ratings to the CEO and CFO respectively).
Notwithstanding his upcoming retirement, the Committee
considered it appropriate to award the CEO a salary increase given
that he will remain employed in active service for the majority of
the financial year. The Committee also approved a 3% increase
to the Chairman’s fee, and the Chairman and Executive Directors
approved a similar 3% increase to the non-Executive Directors’
base fee for 2025.
The Committee also reviewed the structure of the annual
bonus and LTIP to ensure that the framework remains appropriately
aligned with our strategic aims and culture, motivates and rewards
management for delivering sustainable performance, and
supports retention.
No changes are proposed to the performance linkage of the annual
bonus for 2025 as measures remain aligned to Morgan Advanced
Materials’ key objectives including ESG measures being covered
in the Executive Directors’ personal objectives and therefore
reflected in the personal performance element of the bonus.
The annual bonus performance ranges for adjusted operating
profit
*
and year-end working capital have been set to reflect
the Group’s budget as well as the continued economic volatility
externally (and the potential impact this may have on performance
outcomes) Annual bonus targets are considered to be commercially
sensitive at this time but will ordinarily be disclosed in next year’s
Remuneration Report. For the LTIP, it is proposed to amend the
ESG measure from carbon reduction to carbon intensity, to balance
our stated longer-term ambition to reduce carbon emissions by
50% by 2030 (from a 2015 baseline) with our strategy to realise the
Group’s growth potential (which will increase absolute emissions
even as the Group becomes more efficient in its use of carbon).
86
Remuneration Report
continued
Under this element, targets will be set at -3% to -7% carbon
intensity reduction per year over the three-year performance
period. The EPS performance range for the 2025 LTIP will be set
at 4% to 11% per annum over the three-year performance period.
This is in line with the performance range pre-cyber incident
(having been temporarily increased in 2024 to take into account
the previously reduced base level resulting from the impact of
the cyber incident). The Committee considers this to be
appropriately challenging in the context of the Group’s strategic
plan, external market factors and broker forecasts. No changes
are proposed to the TSR (Total Shareholder Return) benchmarks
and relative TSR performance range (median-upper quartile).
It is proposed to maintain the ROIC
*
range for that element of
the Executive Directors’ 2025 LTIP at 17% to 20%, to reflect
our latest expectations for performance over the three-year
performance period.
Maximum annual bonus opportunities for 2025 will be unchanged
at 150% of salary. However, in recognition of the Group’s
cost-efficiency measures, the Committee approved a proposal by
the management team to apply a one-off 30% reduction to LTIP
award opportunities for the 2025 cycle. Details of the awards to
be granted are set out within this on page 102.
This report is consistent with the current reporting regulations for
Executive Director remuneration and, as in prior years, includes a
‘Remuneration at a glance’ section summarising the key elements of
Executive Director remuneration. I hope we have been successful
in continuing to achieve the clarity and transparency that will be of
help to our shareholders. The Committee believes that the Group’s
Remuneration Policy remains fit for purpose for the next three
years, and that the approach we adopt in implementing the Policy
continues to drive the right behaviours and align closely with
strategy, the delivery of which will underpin success for all
stakeholders. We look forward to your support at the upcoming
AGM, my last as Committee Chair and following which Alison
Wood will succeed me in this role. I would like to extend my
personal thanks to my fellow Committee members for their
valuable contribution and counsel over the past six years, as well
as to shareholders for their continued support for the Group’s
Remuneration Policy and the Committee’s approach to its
implementation.
Helen Bunch
Committee Chair
Governance
Annual report 2024
87
Morgan Advanced Materials
Components of remuneration
Salary
+
Pension and benefits
=
Fixed total
+
=
Total remuneration
Annual bonus
+
LTIP
=
Variable total
Key features of how our executive Remuneration Policy will be implemented in 2025
Fixed components
Base salary
Policy
Executive Directors’ salaries are generally reviewed
each January, with reference to individual and Group
performance, experience and salary levels at companies
of similar sector, size and complexity.
Pete Raby
(CEO)
£664,000
1
Damien Caby
(as CEO)
€720,000
1
(on appointment)
Richard Armitage
(CFO)
£473,470
Pension and other benefits
Pension
Benefits (estimated values)
Policy
Pension contributions (and/or cash in lieu thereof)
for Executive Directors are aligned with the level
of contributions available to the UK workforce.
Other benefits can include company car/car allowance,
health insurance and, where appropriate, relocation
allowances and other expenses.
Pete Raby
(CEO)
8% of salary
1
Pete Raby
(CEO)
£14,815
1
Damien Caby
(as CEO)
8% of salary
1
Damien Caby
(as CEO)
€16,500
1,3
Richard Armitage
(CFO)
8% of salary
Richard Armitage
(CFO)
£13,579
Variable components, annual bonuses
Maximum opportunities
for 2025 (no change)
Performance measures
weighting
Policy
Maximum award opportunity: 150% of base salary
Performance measures are set by the Committee at the
start of the year and are weighted to reflect a balance
of financial and strategic objectives. Sixty-seven per cent
of any annual bonus paid is delivered in cash with the
remainder deferred into shares and released after a
further period of three years. Fifty per cent of the bonus
opportunity is paid for on-target performance.
Pete Raby
(CEO)
150% of salary
1
Adjusted operating profit
*
40%
Year-end working capital
40%
Strategic personal objectives
20%
Damien Caby
(as CEO)
150% of salary
1
Richard Armitage
(CFO)
150% of salary
LTIP
Maximum opportunities
for 2025
Performance measures
weighting
Policy
Maximum award opportunity: 200% of base salary
The award levels and performance conditions on which
vesting depend are reviewed prior to the start of each
award cycle to ensure they remain appropriate. Vested
shares are subject to a post-vesting holding period of
two years. The vesting of awards is usually subject to
continued employment and to the Group’s performance
over a three-year performance period. Twenty-five per
cent of an award vests for achievement of the threshold
level of performance.
Pete Raby
(CEO)
No award
2
TSR vs FTSE All-Share
Industrials Index
15%
TSR vs peer group
15%
EPS growth
27.5%
Group ROIC
*
27.5%
ESG (carbon intensity)
15%
Damien Caby
(as CEO)
122.5% of salary
(one-off reduction
from 175%)
Richard Armitage
(CFO)
105% of salary
(one-off reduction
from 150%)
1.
All figures above are annualised and will be pro-rated according to service in the year.
2.
Pete Raby will not receive a 2025 LTIP Award.
3.
Excludes health insurance – payments are equivalent to employer national insurance contributions.
Remuneration at a glance
88
Remuneration Report
continued
This report covers the period 1 January 2024 to 31 December
2024 and provides details of how the Remuneration Committee
has operated and implemented the Remuneration Policy, approved
by shareholders at the 2022 AGM, during the year under review.
The Policy Report sets out the Policy that is proposed to apply for
up to the next three years from 8 May 2025, subject to shareholder
approval at the 2025 AGM. The proposed implementation of this
Policy for the 2025 financial year is summarised on pages 85 to 87.
1. Policy report
Key principles of the Remuneration Policy
The Remuneration Committee aims to ensure that all executive
remuneration packages offered by Morgan Advanced Materials
are competitive and designed to promote the long-term success
of the Company by ensuring that we are able to attract, retain
and motivate Executive Directors and senior executives of the
right calibre to create value for shareholders.
The Committee ensures that a significant proportion of the
total remuneration opportunity is performance-related, with
an appropriate balance between short-term and long-term
performance, and is based on the achievement of measurable
targets that are relevant to, and support, the business strategy
through the execution of the Policy.
The Remuneration Committee keeps the Remuneration Policy
under periodic review to ensure it remains aligned with the
Group’s strategy, reinforces the Group’s culture, and is in line with
the principles set out in the UK Corporate Governance Code in
relation to Directors’ remuneration. This includes ensuring that
performance-related elements are transparent, stretching and
rigorously applied, as well as reflecting the views and guidance
of institutional investors and their representative bodies.
Summary of Morgan Advanced Materials plc’s
proposed 2025 Remuneration Policy
This section of the Report sets out the proposed Remuneration
Policy for Executive Directors and non-executive Directors which,
since it still effectively supports Group strategy and provides strong
alignment of Executive Director and stakeholder interests, remains
unchanged (except from the minor updates outlined below) from
that which was approved by shareholders at the Company’s AGM
on 5 May 2022. This Policy will be submitted for approval by
shareholders at the Company’s AGM on 8 May 2025 and,
if approved, it is intended that it will be effective for a period of
up to three years from that date. The only updates to the Policy
report published in the 2021 Annual Report are: (i) page numbers;
(ii) the section on performance measure selection (which has been
updated to relate to 2025 incentive cycles); and (iii) the pay scenario
charts (which have been updated to reflect the implementation of
Policy for the 2025 financial year).
Pay at risk
Annual bonus
58%
LTIP
0%
Variable
58%
Fixed
42%
Pete Raby (outgoing CEO)
1,2
Illustrations of the potential future reward opportunity for Executive Directors, and the potential mix between the different elements
of remuneration under different performance scenarios can be found on page 93
Shareholding requirements
Pete Raby (CEO) 200% of salary (current shareholding 318.3%)
Damien Caby (as CEO) 200% of salary
Richard Armitage (CFO) 200% of salary (current shareholding
93.3%)
1.
All figures above are annualised and will be pro-rated according to service in the year.
2.
Pete Raby will not receive a 2025 LTIP Award.
3.
Excludes health insurance – payments are equivalent to employer national insurance contributions.
Annual bonus
39%
LTIP
32%
Variable
71%
Fixed
29%
Damien Caby (as CEO)
1,3
Annual bonus
41%
LTIP
29%
Variable
70%
Fixed
30%
Richard Armitage
Governance
Annual report 2024
89
Morgan Advanced Materials
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Fixed pay
Base salary
Provides the fixed
element of the
remuneration package.
Set at competitive levels
against the market.
Base salaries are generally
reviewed each January, with
reference to an individual’s
performance (and that of
the Group as a whole), their
experience, and the range
of salary increases applying
across the Group.
The Committee also
considers salary levels at
companies of similar sector,
size and complexity when
determining increases.
Our policy is to pay salaries that are broadly
market-aligned, with increases applied in
line with the outcome of the annual review.
Salaries in respect of the year under review
(and for the following year) are disclosed
in the Annual Report on Remuneration.
Salary increases for Executive Directors
will normally be within the range of
increases for the general employee
population over the period of this Policy.
Where increases are awarded in excess of
those for the wider employee population,
for example in instances of sustained
strong individual performance, if there
is a material change in the responsibility,
size or complexity of the role, or if an
individual was intentionally appointed on
a below-market salary, the Committee
will provide the rationale in the relevant
year’s Annual Report on Remuneration.
An Executive Director’s performance
(and that of the Group as a whole)
and also their demonstration of the
deﬁned Leadership Behaviours, are
taken into account when making
decisions in relation to base salary.
Pension
Provides post-retirement
benefits for participants
in a cost-efficient
manner.
Deﬁned contribution scheme
(and/or a cash allowance in
lieu thereof).
Contributions (or cash in lieu thereof)
are – and, for any new appointments, will
be – aligned with the level of contribution
available to the UK workforce at that time.
Not applicable.
Benefits
Designed to be
competitive in the
market in which the
individual is employed
and to reflect individual
circumstances.
Can include company car/car
allowance, health insurance
and, where appropriate,
relocation allowances
and other expenses.
Beneﬁts and their values vary by role and
are reviewed periodically relative to
the market.
It is not anticipated that the cost of
beneﬁts provided will change materially
year-on-year over the period for
which this Policy will apply.
The Committee retains the discretion
to approve a higher cost in exceptional
circumstances (for example, relocation
expenses, expatriate allowances etc.)
or in circumstances where factors
outside the Group’s control have
changed materially (for example,
market increases in insurance costs).
Beneﬁts in respect of the year under
review are disclosed in the Annual
Report on Remuneration.
Not applicable.
90
Remuneration Report
continued
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Variable pay
Annual bonus
Provides a direct link
between annual
performance and
reward.
Incentivises the
achievement of
specific goals over the
short term that are
also aligned to the
long-term business
strategy.
Deferred bonus
supports retention and
provides additional
alignment with the
interests of shareholders.
Performance measures are set
by the Committee at the start
of the year and are weighted
to reﬂect a balance of ﬁnancial
and strategic objectives.
At the end of the year, the
Remuneration Committee
determines the extent to which
these have been achieved.
To the extent that the performance
criteria have been met, up to
67% of the resulting annual bonus
is paid in cash. The remaining
balance is deferred into shares
and released after a further
period of three years, subject to
continued employment only.
Cash and deferred share bonuses
awarded for performance will be
subject to malus and clawback
until the end of the deferral
period. Further details of our
Malus and Clawback Policy are
set out at the end of this table.
Dividends may accrue over the
deferral period on deferred
shares that vest. Any dividends
that accrue will be paid in shares
at the end of the vesting period.
Up to 150% of salary.
The payout for threshold
performance may vary year-on-
year but will not exceed 25% of
the maximum opportunity.
Bonuses for the Executive Directors
may be based on a combination of
ﬁnancial and non-ﬁnancial measures.
The weighting of non-ﬁnancial
performance will be capped at 30%
of the maximum opportunity.
The Committee retains discretion
to adjust the bonus outcome if
it considers that the payout is
inconsistent with the Company’s
underlying performance when
taking into account any factors
it considers relevant.
Further details are set out in the
Annual Report on Remuneration
on pages 96 to 109.
Long-Term Incentive
Plan (LTIP)
Aligns the interests
of executives and
shareholders with
sustained long-term
value creation.
Incentivises participants
to manage the business
for the long term and
deliver the Company’s
strategy.
The Remuneration Committee
has the authority each year to
grant an award under the LTIP.
The award levels and
performance conditions on
which vesting depends are
reviewed prior to the start
of each award cycle to ensure
they remain appropriate.
Vested shares are subject
to a post-vesting holding
period of two years.
Awards are subject to malus
and/or clawback for a period
of ﬁve years from the date of
grant. Further details of our
Malus and Clawback Policy are
set out at the end of this table.
Dividends may accrue on vested
shares during the holding period.
Under the Policy, the LTIP provides
for a conditional award of shares up
to an annual limit of 200% of salary.
25% of an award vests for achievement
of the threshold level of performance.
The vesting of awards is usually
subject to continued employment
and the Group’s performance
over a three-year performance
period. This is currently based
on a combination of TSR, EPS,
ROIC
*
and ESG measures.
The Committee has discretion to
extend the performance period
and adjust the measures, their
weighting, and performance
targets prior to the start of each
cycle, to ensure they continue to
align with the Group’s strategy.
The Committee also retains
discretion to adjust the vesting
outcome if it considers that the level
of vesting is inconsistent with the
Company’s underlying performance
when taking into account any
factors it considers relevant.
Further details of the measures
attached to the LTIP awarded in
the year under review (and the
coming year) are set out in the
Annual Report on Remuneration
on pages 96 to 109.
Governance
Annual report 2024
91
Morgan Advanced Materials
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Sharesave
A voluntary scheme,
open to all UK
employees, which
aligns the interests of
participants with those
of shareholders through
any growth in the value
of shares.
An HMRC-approved scheme
where employees may save
up to a monthly savings limit
out of their own pay towards
options granted at up to a 20%
discount. Options may not be
exercised for three years.
Up to the savings limit as determined
by HMRC from time to time, across
all Sharesave schemes in which
an individual has enrolled.
None.
Malus and Clawback Policy
Malus and clawback will apply to the annual bonus and LTIP (as set
out above) in cases of error in determining performance, corporate
failure, misconduct or material misstatement in the published
results of the Group or where, as a result of an appropriate review
of accountability, a participant has been deemed to have caused in
full or in part a material loss for the Group as a result of reckless,
negligent or wilful actions or inappropriate values or behaviour,
including (but not limited to) significant breaches of EHS codes,
fraud, or other events which may cause serious reputational
damage. Cash bonuses will be subject to clawback, with deferred
shares subject to malus over the deferral period. LTIP awards are
subject to malus and clawback over the vesting period to the
fifth anniversary of grant. These timeframes reflect the periods
over which the Company’s processes and systems are likely to
uncover any of the listed trigger events.
Payments under existing awards
The Company will honour any commitment entered into,
and Directors will be eligible to receive payment from any
award granted, prior to the approval and implementation of
the Remuneration Policy detailed in this Report (i.e. before 8 May
2025), even if these commitments and/or awards fall outside the
above Policy. The Company will also honour any commitment
entered into at a time prior to an individual becoming a Director
if, in the opinion of the Committee, the payment was not in
consideration of the individual becoming a Director of the
Company. Details of these awards will be disclosed in the
Annual Report on Remuneration.
Difference in policy between Executive
Directors and other employees
The Remuneration Policy for other employees is based on
principles broadly consistent with those described in this Report
for the Executive Directors’ remuneration. Annual salary reviews
across the Group take into account individual and business
performance, demonstration of the defined Leadership Behaviours,
experience, local pay and market conditions, and salary levels for
similar roles in comparable companies.
All executives are eligible to participate in an annual bonus scheme.
Opportunities and performance measures vary by organisational
level, geographical region and an individual’s role. Other senior
executives participate in the LTIP on similar terms to the Executive
Directors, although award sizes and performance measures may
vary according to each individual, and by organisational level.
Below this level, executives are eligible to participate in the LTIP
and other share-based incentives by annual invitation.
Use of discretion
To ensure fairness and align Executive Director remuneration
with underlying individual and Group performance, the Committee
may exercise its discretion to adjust, upwards or downwards,
the outcome of any short- or long-term incentive plan payment
(within the limits of the relevant Plan Rules) for corporate or
exceptional events including, but not limited to: corporate
transactions, changes in the Group’s accounting policies, minor or
administrative matters, internal promotions, external recruitment
and terminations. Any adjustments in light of corporate events will
be made on a neutral basis, meaning that they will not be to the
benefit or detriment of participants.
Any use of discretion by the Committee during the financial year
under review will be detailed in the relevant Annual Report
on Remuneration.
92
Remuneration Report
continued
Performance measure selection
The Committee considers carefully the selection of performance
measures at the start of each performance cycle, taking
into consideration the macro-economic environment as well
as specific Group strategic objectives.
Annual bonus measures are selected to reinforce the Group’s
short-term KPIs. Because these can change from year to
year (in line with the Remuneration Policy), information on the
rationale for the selection of bonus measures for each year will
be detailed in the relevant year’s Annual Report on Remuneration.
LTIP performance measures are reviewed periodically to ensure
they continue to align with the Company’s strategy, as well as
provide an appropriate balance between growth and returns,
internal and external performance, and absolute and relative
performance.
For 2025 awards, the TSR element of the LTIP award will
continue to comprise two parts. One-half of the TSR element
will vest subject to the Group’s performance relative to a TSR
benchmark comprising the 80 constituents of the FTSE All-Share
Industrials Index.
This benchmark is robust to merger and acquisition activity
and comprises companies that are subject to the same market
influences as Morgan Advanced Materials plc. The remaining half of
the TSR element will vest subject to our performance relative to a
TSR benchmark comprising 15 listed international carbon, ceramics
and other materials companies. This benchmark was selected to
complement the FTSE All-Share Industrials Index with a group of
companies that better reflect our business, the markets in which we
operate and the geographical footprint of the Group. For each part
of the TSR award, the vesting performance range is calibrated to
be stretching and in line with common market practice for FTSE
TSR-based long-term incentives.
EPS targets are set taking account of multiple relevant reference
points, including internal forecasts, external expectations for future
EPS performance at both Morgan Advanced Materials plc and its
closest sector peers, and typical EPS performance ranges at other
FTSE 350 companies. LTIP EPS performance ranges are set to
represent demanding and challenging performance targets over
the three-year performance period.
ROIC
*
targets are set using a similar approach to the EPS targets,
after consideration of external reference points and reflecting
the returns required to meet and exceed the Group’s internal
strategic plan.
The ESG measure is based on carbon intensity, with targets
aligned to Morgan Advanced Materials’ overall strategic goals.
Share ownership guidelines
In order to encourage alignment with shareholders, Executive
Directors are required to build and maintain an individual
shareholding in the Company equivalent to at least 200% of
base salary. The required level of shareholding is expected to be
achieved within five years of an Executive Director’s appointment.
Executive Directors’ shareholdings are reviewed annually by the
Committee to ensure progress is being made towards achievement
of the guideline level of shareholding. If it becomes apparent to
the Committee that the guideline is unlikely to be met within the
timeframe, the Committee will discuss with the Director a plan to
ensure that the guideline is met over an acceptable timeframe.
From 2019, Executive Directors have also been subject to a
post-employment shareholding requirement. Executive Directors
are required to hold shares at a level equal to the lower of the
share ownership requirement or the actual shareholding on
departure for a period of one year from departure date.
The Group’s relatively short business cycle ensures the Board
has good visibility within a 12-month period of the quality of
decision-making and, in addition, unvested awards for good
leavers subsist to the normal vesting date (albeit pro-rated for
time), ensuring incentive outcomes remain linked to the Group’s
performance beyond the date of cessation. The Committee
retains the discretion to modify the post-employment shareholding
requirement in certain, extraordinary circumstances; for example,
on a change of control during the period or if a conflict of interest
arises with an Executive Director’s next appointment.
Current Executive Director shareholdings are set out in the
Annual Report on Remuneration on page 106.
External appointments
With the approval of the Board in each case, and subject to the
overriding requirements of the Group, Executive Directors
may accept external appointments as non-executive Directors
of other companies and retain any fees received. Details of
external directorships held by Executive Directors along with
fees retained are provided in the Annual Report on Remuneration
on page 101.
Governance
Annual report 2024
93
Morgan Advanced Materials
Pay for performance: scenario analysis
The graphs below provide detailed illustrations of the potential future reward opportunity for Executive Directors, and the potential mix
between the different elements of remuneration under four different performance scenarios; ‘Below threshold’, ‘Target’, ‘Stretch’ and
‘Stretch with 50% share price appreciation’. These have been updated to illustrate the potential opportunity under the 2025 packages
approved for Executive Directors.
Pete Raby (outgoing CEO)
1,2
0
500
1,000
1,500
2,000
£1,728k
42%
58%
42%
60%
40%
100%
58%
£1,728k
£1,230k
£732k
Below threshold
Target
Stretch
Stretch with 50%
share price increase
0
500
1,000 1,500 2,000 2,500 3,000 3,500
€3,197k
25%
34%
41%
29%
51%
35%
14%
100%
39%
32%
€2,756k
€1,555k
€794k
Damien Caby (as CEO)
1,3
Below threshold
Target
Stretch
Stretch with 50%
share price increase
0
500
1,000
1,500
2,000
2,500
£1,981k
26%
36%
38%
30%
52%
35%
13%
100%
41%
29%
£1,732k
£1,004k
£525k
Richard Armitage (CFO)
Below threshold
Target
Stretch
Stretch with 50%
share price increase
Fixed total (base salary, pension and benefits)
Annual bonus
LTIP
1.
All figures above are annualised and will be pro-rated according to service in the year.
2.
Pete Raby will not receive a 2025 LTIP Award.
3.
Excludes health insurance – payments are equivalent to employer national insurance
contributions.
The potential reward opportunities illustrated above are based on the Policy, which will be submitted for approval at the 2025 AGM,
applied to the annualised base salary in effect at 1 January 2025 (or, for Damien Caby, his salary on appointment as CEO). Annualised
figures are shown for the incoming and outgoing CEOs; these will be pro-rated for time served in the role. For the annual bonus, the
amounts illustrated are those potentially receivable in respect of performance for 2025 (assuming a full year of tenure in role, and before
mandatory deferral into shares). The LTIP is based on the face value of awards to be granted in 2025 (these have been reduced for 2025
on a one-off basis, from 175% to 122.5% of salary for the incoming CEO and from 150% to 105% for the CFO; Pete Raby will not receive
a 2025 LTIP award). It should be noted that any awards granted under the LTIP in a year do not normally vest until the third anniversary
of the date of grant. This illustration is intended to provide further information to shareholders on the relationship between executive pay
and performance. The value of the LTIP assumes no change in the underlying value of the shares once an award is made, apart from in
the ‘Stretch with 50% share price increase’ scenario. The following assumptions have been made in compiling the above charts:
Scenario
Annual bonus
LTIP
Fixed pay
Stretch with 50%
share price increase
Maximum annual bonus
Performance warrants full
vesting (100% of the award).
LTIP award value has additionally
been uplifted by 50%.
Latest disclosed base salary,
pension and benefits.
Stretch
Maximum annual bonus
Performance warrants full
vesting (100% of the award).
Target
On-target annual bonus
Performance warrants threshold
vesting (25% of the award).
Below threshold
No annual bonus payable
Nil vesting.
Details of Executive Directors’ service contracts
The Executive Directors are employed under contracts of employment with Morgan Advanced Materials plc. Contracts may be terminated
on 12 months’ notice given by the Company or on six months’ notice given by the Executive Director concerned. The following table
shows the date of the contract for each Executive Director who served during the year:
Executive Director
Position
Date of appointment
Date of service
agreement
Notice period
1
From employer
From employee
Pete Raby
CEO
1 August 2015
30 January 2015
12 months
6 months
Richard Armitage
CFO
30 May 2022
16 September 2021
12 months
6 months
1.
The incoming CEO, Damien Caby, will also have a notice period of 12 months from the employer and 6 months from the employee.
94
Remuneration Report
continued
Exit Payments Policy
The Group’s policy on exit payments is to limit severance payments
on termination to pre-established contractual arrangements
comprising base salary and any other statutory payments only.
In the event that the employment of an Executive Director is
terminated, any compensation payable will be determined in
accordance with the terms of the service contract between
the Company and the employee, as well as the rules of any
incentive plans.
The Group may terminate the employment of an Executive
Director by making a payment in lieu of notice equal to base
salary, together with the fair value of any other benefits to which
the executive is contractually entitled under his or her service
agreement, for the duration of the notice period.
The Remuneration Committee will exercise discretion in making
appropriate payments in the context of outplacement or the
settling of legal claims or potential legal claims by the departing
Executive Director, including any other amounts reasonably owing
to the Executive Director, for example, to meet legal fees incurred
by the Executive Director in connection with the termination
of employment, where the Company wishes to enter into a
settlement agreement and the individual must seek independent
legal advice.
On termination of an Executive Director’s service contract, the
Remuneration Committee will consider the departing Director’s
duty to mitigate his or her loss when determining the timing of
any payment in lieu of notice. There is no automatic entitlement
to bonus or the vesting of long-term incentives on termination.
However, the table that follows summarises the Policy on how
awards under the annual bonus, LTIP and deferred bonus plan
will normally be treated in specific circumstances, with the final
treatment remaining subject to Committee discretion:
Treatment of awards on cessation of employment and a change of control
Reason for cessation
Calculation of vesting/payment
Time of vesting
Annual bonus
All reasons
The Committee may determine that a bonus is payable
on cessation of employment, and the Committee retains
discretion to determine that the bonus should be paid
wholly in cash. The amount of bonus payable will be
determined in the context of the time served during the
performance year, the performance of the Group and
of the individual over the relevant period, and the
circumstances of the Director’s loss of office. If Group
or individual performance has been poor, or if the
individual’s employment has been terminated in
circumstances amounting to misconduct, no bonus
will be payable.
Mandatory deferred bonus share awards
Injury, disability, death, redundancy,
retirement, or other such event as
the Committee determines
Awards will normally vest in full (i.e. not pro-rated
for time).
At the normal vesting date, unless the
Committee decides that awards should
vest earlier (for example, in the event
of death).
Change of control
Awards will normally vest in full (i.e. not pro-rated
for time). Awards may alternatively be exchanged for
equivalent replacement awards, where appropriate.
On change of control.
All other reasons
Awards normally lapse.
Not applicable.
LTIP awards
Injury, disability, death, redundancy,
retirement, or other such event as
the Committee determines
Awards will normally be pro-rated for time and will vest
based on performance over the original performance
period (unless the Committee decides to measure
performance to the date of cessation).
At the normal vesting date, unless the
Committee decides that awards should
vest earlier (for example, in the event
of death).
Change of control
LTIP awards will be pro-rated for time and will vest
subject to performance over the performance period
to the change of control. LTIP awards may alternatively
be exchanged for equivalent replacement awards,
where appropriate.
On change of control.
All other reasons
Awards normally lapse.
Not applicable.
The Remuneration Committee retains discretion, where permitted by the plan rules, to alter these default provisions on a case-by-case
basis, following a review of circumstances and to ensure fairness for both shareholders and participants.
Governance
Annual report 2024
95
Morgan Advanced Materials
Approach to recruitment remuneration
External appointment
In cases of hiring or appointing a new Executive Director from outside the Group, the Committee may make use of all existing
components of remuneration, as follows:
Pay element
Policy on recruitment
Maximum
Salary
Based on: the size and nature of the responsibilities of the proposed role, current
market pay levels for comparable roles, the candidate’s experience, implications for
total remuneration, internal relativities and the candidate’s current salary.
–
Pension
Option to join the defined contribution scheme available to the wider workforce.
If the Executive Director is ineligible to join the standard defined contribution scheme,
the Company may grant a cash allowance of equivalent value.
In line with
Policy limits.
Benefits
As described in the Policy table and may include, but are not limited to, car, medical
insurance, and relocation expenses and/or allowances.
–
Sharesave
New appointees will be eligible to participate on identical terms to all other UK employees.
Up to HMRC limits.
Annual bonus
As described in the Policy table and typically pro-rated for the proportion of the year
served; performance measures may include strategic and operational objectives
tailored to the individual in the financial year of joining.
Up to 150% of salary.
LTIP
New appointees may be granted awards under the LTIP on similar terms to
other executives.
Up to 200% of salary.
Other
The Remuneration Committee may make an award under a different structure under
the relevant Listing Rule to replace incentive arrangements forfeited on leaving a
previous employer. Any such award would have a fair value no higher than that of the
awards forfeited, taking into account relevant factors including performance conditions,
the likelihood of those conditions being met and the proportion of the vesting period
remaining. Details of any such award will be disclosed in the first Annual Report on
Remuneration following its grant.
–
Internal promotion to the Board
In cases of appointing a new Executive Director via internal promotion, the Policy will be consistent with that for external appointees
detailed above. Where an individual has contractual commitments made prior to their promotion to Executive Director, the Company
will continue to honour these arrangements even if there are instances where they would not otherwise be consistent with the prevailing
Executive Director Remuneration Policy at the time of promotion.
Chairman and non-executive Directors’ Remuneration Policy
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Annual fee
1
To attract and retain high-calibre
non-executive Directors.
Annual fees paid to the Chairman
and non-executive Directors
are reviewed periodically.
An additional fee is payable to
the Senior Independent Director,
and also in respect of chairing a
Board Committee.
Currently paid 100% in cash.
Annual fees are applied in
line with the outcome of
each periodic review.
None.
1.
The maximum aggregate annual fee for all non-executive Directors (including the Chairman) as provided in the Company’s Articles of Association is £750,000.
None of the non-executive Directors has a service contract with the Company. They do have letters of appointment. The non-executive
Directors do not participate in any of the incentive, share or share option plans. The dates relating to the appointments of the Chairman
and non-executive Directors who served during the reporting period are as follows:
Non-executive
Director
Position
Date of appointment
Date of letter
of appointment
Date of
election/re-election
Ian Marchant
Chairman
1 February 2023
17 January 2023
9 May 2024
Helen Bunch
Non-executive Director
24 February 2016
19 January 2016
9 May 2024
Laurence Mulliez
Senior Independent Director (until 1 November 2024)
6 May 2016
4 April 2016
9 May 2024
Alison Wood
Senior Independent Director (from 1 November 2024)
1 November 2024
23 July 2024
n/a
Jane Aikman
Non-executive Director
31 July 2017
27 April 2017
9 May 2024
Clement Woon
Non-executive Director
10 May 2019
7 May 2019
9 May 2024
96
Remuneration Report
continued
Consideration of stakeholder views
The Executive Management team seeks to promote and maintain
good relations with employee representative bodies – including
trade unions and works councils – as part of its broader employee
engagement strategy and consults on matters affecting employees
and business performance as required in each case by law and
regulation in the jurisdictions in which the Group operates. When
making decisions on executive remuneration, the Committee
considers the pay and employment conditions across the Group.
Engagement with employees on remuneration is currently achieved
through non-executive Director employee listening sessions where
employees have the opportunity to raise issues. The non-executive
Directors held several employee listening sessions in 2024, to
ensure that the Board understands the views of employees and
the impact its decisions have on them. They engaged with the
employees on a broad range of topics, including reward and
benefits. Details of these employee sessions can be found on
page 68. In addition, we undertake an annual engagement survey,
‘Your Voice’, in order to better understand the views of a wider
range of employees. The engagement survey includes a range of
specific questions on the Company’s pay practices and presents
an opportunity for the workforce to share feedback and ask its
own questions about employee or executive reward. Through
the feedback from the engagement survey, supplemented with
the learnings from the employee listening sessions, the views
of Morgan Advanced Materials employees are represented at
Board and Remuneration Committee meetings. This enables the
Remuneration Committee to take into account those views when
considering executive remuneration and the pay and employment
conditions throughout the wider workforce.
The non-executive Directors met with employees on the Ignite/
Spark Leadership Development Programme in March 2024 to
discuss reward and executive remuneration matters. It was a useful
session; the employees were reassured to hear about the Board’s
rigour around fairness for the consideration of reward for the
Executive Directors in line with that of the wider workforce. In the
UK, engagement is further facilitated by the Sharesave programme,
which enables UK employees to become shareholders and
provides them with the same voting rights as other shareholders in
relation to resolutions for approval at the AGM (and which include
executive remuneration matters). Prior to the annual salary review,
the Committee is provided with pay increase data that individual
business units consider when deciding local pay awards for their
specific businesses and countries. The Committee is also kept fully
informed of Remuneration Policy and implementation decisions
affecting the wider workforce. This important context forms part
of the Committee’s considerations for determining Executive
Director remuneration.
The Committee considers shareholder views received during
the year and at the AGM each year, as well as guidance from
investor representative bodies more broadly, when shaping and
implementing Morgan Advanced Materials’ Remuneration Policy.
The Committee keeps the Remuneration Policy under regular
review, to ensure it continues to reinforce the Group’s long-term
strategy and aligns Executive Directors’ interests with those of
shareholders. It is the Committee’s policy to consult with major
shareholders prior to any major changes to its Remuneration
Policy. During the year, the Remuneration Committee Chair
wrote to the top 20 shareholders to understand their views on
our approach to the 2025 Remuneration Policy and Executive
Director remuneration in general, ahead of the Policy being put
to a shareholder vote at the 2025 AGM.
During 2024, the Board received an update from the Group
Pensions Director on matters concerning the global defined benefit
pension schemes and the Chair met with the Chair of trustees of
the Group pension trusts in February 2024 to ensure the views
of the trustees on key pension matters are understood and taken
into consideration.
2. Annual Report on Remuneration
The following section provides details of how the Remuneration Policy was implemented during 2024 and will be implemented in 2025.
Single total ﬁgure of remuneration for Executive Directors (audited)
The table below sets out a single figure for the total remuneration received by each Executive Director for the year ended 31 December
2024 and the prior year.
Pete Raby
Richard Armitage
2024
2023
2024
2023
1. Salary
£645,000
£620,000
£459,680
£442,000
2. Pension
£51,600
£49,600
£36,774
£35,360
3. Benefits
£14,642
£14,031
£13,579
£13,320
Fixed pay subtotal
£711,242
£683,631
£510,033
£490,680
4. Bonus
£580,500
£399,193
£393,026
£291,216
5. LTIP
£290,863
£116,865
£145,730
n/a
6. Other
–
–
–
–
Variable pay subtotal
£871,363
£516,058
£538,756
£291,216
Total
£1,582,605
£1,199,689
£1,048,789
£781,896
Governance
Annual report 2024
97
Morgan Advanced Materials
The figures have been calculated as follows:
1. Base salary: amount earned for the year.
2.
Pension: the ﬁgure is a cash allowance in lieu of pension
(8% of base salary, aligned with the level of contributions
available to the UK workforce).
3.
Beneﬁts: the taxable value of beneﬁts received in the year.
Includes private medical insurance and a company car
(or car allowance).
4.
Bonus: the total bonus earned for performance during the
year (before any mandatory deferral into shares). In accordance
with the Remuneration Policy, 67% of the amount shown
above will be paid in cash, with the remaining 33% deferred
into shares for three years.
5.
LTIP: the estimated value on 31 December 2024 of 2022
LTIP shares vesting in 2025, subject to performance over
the three-year period ended 31 December 2024. Figures
are based on the average share price for the three months
to 31 December 2024 of 260.88 pence. The ﬁgure for Pete
Raby for 2023 has been trued up from that disclosed in last
year’s Remuneration Report (£102,093) to reﬂect the share
price on the vesting date (22 March 2024) of 285.21 pence
(276,486 shares x 14.82% x 285.21p = £116,865).
The impact of share price movement on the vesting value of the
Executive Directors’ 2022 LTIP awards is as follows:
Pete Raby
Richard Armitage
Value of awards vesting
using share price at award
(287.70p for Pete Raby’s
award and 307.10p for
Richard Armitage’s award,
which was granted later,
on appointment)
£320,765
(414,320 shares x
26.91% x 287.70p)
£171,549
(207,587 shares x
26.91% x 307.10p)
Value of awards vesting
using 3-month
average share price
at 31 December 2024
(260.88p)
£290,863
(414,320 shares x
26.91% x 260.88p)
£145,730
(207,587 shares x
26.91% x 260.88p)
Impact of share
price movements
on vesting values
-£29,902
-£25,819
6.
Other: comprises the value of Sharesave options granted in the
year, based on the embedded value at grant (20% of the grant
date share price multiplied by the number of options granted).
Incentive outcomes for the year ended
31 December 2024
Annual bonus in respect of 2024 performance
Targets for the annual bonus are set by the Remuneration
Committee, taking into account the short- and long-term
requirements of the Group. Challenging goals are set, which
must be met before any bonus is paid. This approach is intended
to align executive reward with shareholder returns by rewarding
the achievement of ‘stretch’ targets.
For 2024, the bonus targets for the Executive Directors were
split between adjusted operating profit
*
before restructuring
(weighted 40%), year-end working capital
*
(weighted 40%) and
individual strategic personal objectives (weighted 20%). The targets
were set to incentivise the Executive Directors to deliver stretching
profit and cash performance for the Group. Performance in line
with target results in a payout of 50% of maximum.
The table that follows sets out retrospectively the assessment of
performance relative to the 2024 bonus targets for the Executive
Directors. Actual bonus payments are shown in the single total
figure of remuneration table on page 96. In accordance with the
Remuneration Policy, 67% of the amount reported will be paid in
cash, with the remaining 33% deferred into shares for three years.
Performance measure
% of maximum
bonus element
Performance range
Actual
performance
outcome
% payout
of element
% salary
earned
Threshold
(0% payout)
Maximum
(100% payout)
Adjusted operating profit
*1
40%
£145.0m
£164.4m
£140.8m
0%
0%
Year-end working capital
*1
40%
£208.9m
£179.7m
£175.8m
100%
60%
Personal objectives
Pete Raby
20%
Please see narrative below for
further details on objectives and
performance against these
100%
30%
Richard Armitage
20%
85%
25.5%
Overall outcome
Maximum bonus
(% salary)
% of salary earned
Total outcome
Total payable
Adjusted
operating
proﬁt
*1
Year-end
working
capital
*1
Personal
objectives
Pete Raby
150%
0%
60%
30%
90%
£580,500
Richard Armitage
150%
0%
60%
25.5%
85.5%
£393,026
1.
For the financial measures in the 2024 bonus, the payout curve included an additional on-target performance level at which the payout was calibrated to be 50% of each element.
On-target adjusted operating profit
*
was £161.2 million and on-target year-end working capital
*
was £200.6 million. For both elements, there was a straight-line payout between threshold
and on-target, and between on-target and maximum. All figures were calculated using 2024 budgeted exchange rates.
98
Remuneration Report
continued
For 2024, Executive Directors’ personal objectives continued
to be set to reinforce Morgan Advanced Materials’ key strategic
execution priorities (Big positive difference, Innovate to grow
and Delight the customer), and improving the Group’s
operational performance.
Collective goals for 2024 (which applied to each Executive
Director) included:
(1) Progressing the ESG roadmap: develop and embed a safety
culture (to be evidenced by a continued reduction in the
Group LTA rate, to below 0.18 by year end); drive a 3-point
improvement in employee engagement over 2023; and
reduce absolute CO
2
emissions by 5% year-on-year;
(2) Delivering on investment and growth plans, to support
£50 million incremental revenue growth in 2025 from
faster growing segments per budgets for 2025 and inorganic
prospects for future growth; and
(3) Developing and executing a successful Investor Relations
campaign to refresh investor understanding of the equity
story following the capital markets event.
In addition to the above, the individual objectives set for
Pete Raby were to:
(1) Develop the capabilities of the leadership team, and improve
wider diversity within the senior leader population by increasing
the percentage of women in leadership by 4% (from year-end
2023) by the end of the year; and
(2) Deliver the successful implementation of the Group ERP
solution to plan during the year.
In addition to the collective goals identified above, Richard
Armitage’s individual objectives for 2024 were to:
(1) Strengthen cash management across the Group (strengthening
working capital capabilities, reducing Group working capital
by £30 million, progressing actions to get China cash pooled by
the end of Q1, and negotiating Yixing and SMC JV agreements
to free up cash by year end); and
(2) Drive the successful design and initial deployment of the
Group ERP solution, supporting the testing and deployment
of Highlander leading to a system that supports reporting
and shared services needs and embeds the appropriate
control environment.
The performance of our Executive Directors, in line with that of
the wider leadership team, is assessed against all expectations of the
role, the specific personal objectives set, and how outcomes are
delivered with reference to our defined Leadership Behaviours.
The collective goals set at the start of the year were met to the
extent summarised below:
Objective
Assessment of objective
Outcome
Group LTA rate below
0.18 by year end
Group LTA rate at
year end of 0.13
Objective
met
3-point improvement in
employee engagement
Score of 52%
(2023 pulse survey
54%, 2022 53%)
Objective
not met
5% reduction in
absolute CO
2
emissions
CO
2
emissions reduced
by 3% year-on-year
Objective
not met
Deliver on investment
and growth plans
Executed planned
investment in capacity to
underpin a strong balance
sheet at year end, support
further growth in key
segments, and position us
well to grow quickly and
expand margins as markets
recover
Objective
met
Develop and execute
successful IR campaign
Actioned in line with the
Board’s expectations, and
the quality of the campaign
evidenced by feedback
received by the Board
during its scheduled and ad
hoc investor interactions
during the year
Objective
met
The Committee assessed Pete Raby’s individual objectives as being
partially met, noting the following:
In relation to developing further the Group’s leadership
capabilities, the strength of the talent pipeline and succession
planning. As a result, the Board was able to identify Damien
Caby as its preferred candidate to succeed Pete Raby on his
retirement as Group CEO and ensure a smooth leadership
transition in 2025;
The development of the ERP solution was completed to plan;
and
Pete’s leading role in driving a further improvement year-on-year
in diversity within the leadership team; the percentage of women
has increased by 4% to 34% at the end of 2024.
The Committee assessed in the round the extent to which the
collective and individual objectives were achieved. The Committee
took into account that the employee engagement objective was
not met, which ordinarily would result in a deduction to the
overall outcome. However, the Committee also reflected on the
Chairman’s annual assessment of Pete’s performance, including
his exemplary role in navigating the sharp change in economic
environment in the second half of the year whilst maintaining
the Group’s ongoing investment to ensure the Group remains
well-positioned to benefit from increased capacity in key market
segments and faster growing regions. In this context, and also
Pete’s achievement against his individual objectives, the Committee
determined a payout of 100% of the personal performance
element of Pete’s bonus for 2024.
Governance
Annual report 2024
99
Morgan Advanced Materials
Richard Armitage’s performance against his individual objectives
was also assessed by the Committee, taking into account:
His critical role in strengthening cash management across the
Group during the year (and which is also reﬂected in the strong
year-end working capital position reported elsewhere in this
Annual Report); and
The successful deployment of Highlander (ERP) to plan, to
provide a strengthened control environment for the Group
going forward.
Reflecting these considerations alongside Richard’s valued
contributions to the extent to which the collective goals identified
above were achieved, the Committee assessed the personal
performance element of Richard’s bonus to be 85% of
the maximum.
In addition to the achievement of the targets set, in considering any
awards to be made, the Committee took into account the quality
of the overall performance of the Group despite the challenging
operating environment that persisted in 2024. This included
continued organic revenue growth and, through good focus and
discipline on operating margin, underlying profit growth (albeit the
outturn was below the stretching threshold set for this element of
the bonus at the start of 2024). The Committee concluded from
this review that, in the round, an around target bonus outturn
(together with the broadly threshold vesting outcome under the
2022 LTIP reported below) balances appropriately the range of
perspectives for remuneration decision-making. As a result, the
Committee determined that no discretion needed to be applied
in respect of the 2024 bonus outcome.
2021 Deferred Bonus Plan vesting
In 2021, 33% of the annual bonus earned by the incumbent
Executive Directors at the time (for performance in the 2020
financial year) was deferred into shares under the Deferred
Bonus Plan (DBP), in line with the Group’s Remuneration Policy.
Dividends accrued over the deferral period on the deferred shares
that vested, and the dividends were paid in shares at the end of the
vesting period. Details of Pete Raby’s DBP awards which vested in
2024 are set out in the table below. Richard Armitage, who joined
Morgan Advanced Materials in 2022, did not participate in this
DBP cycle.
Director
Date of grant
Number of DBP
shares granted
Number
of dividend
reinvestment
shares
Total number
of DBP shares
vested
Market value
at grant
£
Market value
at vesting
£
Date of vesting
Pete Raby
22 March 2021
7,916
895
8,811
3.153
2.852
22 March 2024
2022 LTIP award vesting
Awards granted to Executive Directors in 2022 were subject
to relative TSR performance, EPS growth, Group ROIC
*
and ESG (CO
2
reduction) over a three-year period ended
31 December 2024.
The EPS target (applying to 27.5% of each award) required
three-year EPS growth of 6% per annum for 25% of that element
to vest, rising to full vesting for EPS growth of 13% per annum or
higher. Over the period Morgan Advanced Materials plc’s actual
EPS growth was -1.62% per annum, and accordingly the EPS
element of the award will not vest.
The TSR element (applying to 30% of each award) required
Morgan Advanced Materials plc’s three-year TSR performance
to rank at median against two comparator groups (equally split)
– the FTSE All-Share Industrials Index and a tailored comparator
group comprising 15 listed international carbon, ceramics and
other materials companies – for 25% of that element to vest,
rising to full vesting if Morgan Advanced Materials plc’s TSR ranked
at or above the upper quartile against these two comparators.
Morgan Advanced Materials plc’s TSR was -15.7%, which was
below median versus the FTSE All-Share Industrials Index
and the tailored comparator group. Accordingly, the TSR
element of the award will not vest.
The Group ROIC
*
target (applying to 27.5% of each award)
required Group ROIC
*
of 17% for 25% of that element to vest,
rising to full vesting for Group ROIC
*
of 20% or higher. Morgan
Advanced Materials plc’s Group ROIC
*
was 17.73%, and
accordingly this results in a 11.91% vesting for the ROIC
*
element
of the award.
The ESG target (applying to the remaining 15% of each award)
required scope 1 and 2 CO
2
emissions to reduce by 5% over the
performance period for 25% of that element to vest, rising to full
vesting for a reduction of 15% or higher. Over the performance
period, Morgan Advanced Materials plc’s actual scope 1 and 2
CO
2
emissions reduced by 15%, and accordingly this results in
a 15% vesting for the ESG element of the award.
This combined performance resulted in a partial vesting of the 2022
awards, equivalent to 26.91% of maximum. The vesting outcome is
considered by the Committee to appropriately reflect business
performance. Executive Directors’ 2022 LTIP awards were granted
when Morgan Advanced Materials’ share price was 287.7 pence
and 307.1 pence for Pete Raby and Richard Armitage respectively.
It is presently not expected that the vesting of awards will give rise
to a windfall gain, but the Committee will review this again at the
time of vesting.
Details of the awards held by Pete Raby and Richard Armitage are
set out in the table below.
Director
Maximum
potential
LTIP award
Maximum
potential LTIP-
CSOP
1
award
Estimated LTIP
award vesting
Estimated
LTIP-CSOP
1
award vesting
LTIP-CSOP
1
award
exercising
Date of vesting
Pete Raby
414,320
–
111,493
–
–
13 May 2025
Richard Armitage
207,587
–
55,861
–
–
30 May 2025
1.
CSOP refers to the Company Share Option Plan – further information is included in the ‘Details of plans’ section later on in this report.
100
Remuneration Report
continued
Share dilution
The Company manages dilution rates within the standard guidelines of 10% of issued Ordinary share capital in respect of all-employee
schemes and 5% in respect of discretionary schemes. Only market purchased shares, held in the Company’s Employee Benefit Trust
(EBT), have been used for the purpose of satisfying awards under these schemes that have vested since 2012. It is the Company’s intention
to use market purchased shares to satisfy awards vesting in 2025. Further information regarding the EBT can be found on pages 112, 135,
186 and 194.
Pension (audited)
In 2024, Pete Raby and Richard Armitage each received a cash allowance in lieu of pension of 8% of base salary, which is in line with the
pension contribution available to the wider UK workforce.
Non-executive Director fees (audited)
The table below sets out the fees received by each non-executive Director in respect of the year ended 31 December 2024 and the
prior year.
Ian Marchant
Helen Bunch
Laurence Mulliez
(until 1 November)
Jane Aikman
Clement Woon
Alison Wood
(from 1 November)
2024
1
2023
1
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
£218,400
£128,649
£67,013
£62,820
£56,104
£62,820
£67,013
£62,820
£57,013
£54,820
£11,169
n/a
1.
Ian Marchant’s 2023 fee reflects an annualised fee of £54,820 from 1 February 2023 to 28 June 2023, and an annualised fee of £210,000 on becoming Chairman on 29 June 2023.
Ian Marchant also received an £18,000 annual contribution towards the cost of administrative support in 2024.
Non-executive Directors do not receive any other fixed or variable pay, or benefits, in addition to their fee. Figures shown are inclusive of
additional fees of £10,000 per annum payable to Laurence Mulliez as Senior Independent Director (up to 1 November 2024), Alison
Wood as Senior Independent Director (from 1 November 2024) and to Helen Bunch and Jane Aikman as Committee Chairs.
Scheme interests awarded in 2024
2024 LTIP awards
In 2024, Pete Raby and Richard Armitage were granted awards under the LTIP as shown in the table below. The performance period for
the 2024 LTIP awards is 1 January 2024 to 31 December 2026. Vesting outcomes will continue to be assessed to ensure they reflect
business performance and will be adjusted as appropriate.
Executive Director
Number of LTIP
shares granted
1
Value of awards at grant
£
As % of 2024 salary
Date of vesting
Pete Raby
446,366
1,290,000
200%
26 March 2027
Richard Armitage
238,588
689,520
150%
26 March 2027
1.
Calculated using the award price of £2.89, being the average share price for the five dealing days prior to the award date (26 March 2024).
The Committee discusses and reviews the performance criteria for new three-year LTIP awards before they are granted. For the awards
granted in 2024, the Committee considered the balance of measures in light of the Group’s business plan and shareholder feedback and
decided to maintain the current weightings of the four performance criteria, with the TSR element continuing to be split into two parts.
One-half of this element will vest based on Morgan Advanced Materials’ TSR performance relative to the constituents of the FTSE
All-Share Industrials Index and one-half will vest based on Morgan Advanced Materials’ TSR performance relative to a tailored comparator
group of 15 industry comparators.
The table below sets out the targets attaching to the 2024 LTIP awards:
TSR vs FTSE All-Share
Industrials Index
% of award
that vests
TSR performance
vs peer group
% of award
that vests
EPS
growth
% of award
that vests
Group
ROIC
*
% of award
that vests
ESG (carbon
reduction)
% of award
that vests
Upper quartile
15%
Upper quartile
15%
16% pa
27.5%
20%
27.5%
15%
15%
Median
3.7%
Median
3.7%
9% pa
6.9%
17%
6.9%
5%
3.7%
Below median
Nil
Below median
Nil
<9% pa
Nil
<17%
Nil
<5%
Nil
For Executive Directors, a two-year holding period applies to any shares that vest in relation to the 2024 LTIP. Dividends accrue over this
holding period and will be paid on any shares that vest.
Governance
Annual report 2024
101
Morgan Advanced Materials
2024 Deferred Bonus Plan awards
In 2024, 33% of the total annual bonus earned by Pete Raby and Richard Armitage (for performance in the 2023 financial year)
was deferred into shares under the DBP, in line with Morgan Advanced Materials’ Remuneration Policy. The following DBP awards
were granted:
Executive Director
Value of awards at grant
Number of DBP shares granted
1
Value of award £
Date of vesting
Pete Raby
46,043
133,064
26 March 2027
Richard Armitage
33,588
97,072
26 March 2027
1.
Calculated using the award price of £2.89, being the average share price for the five dealing days prior to the award date (26 March 2024).
Exit payments made in year (audited)
No exit payments were made to Executive Directors during the 2024 financial year.
Payments to past Directors (audited)
As mentioned in the 2022 and 2023 reports, former CFO Peter Turner stepped down from the Board on 30 May 2022 and retired from
the Group on 30 June 2022. Peter was treated as a ‘good leaver’ in respect of outstanding LTIP awards. Vesting of previously granted
awards during the 2024 financial year were as follows: 6,491 shares (inclusive of dividend) granted under the 2021 DBP on 22 March 2024,
and 15,023 shares granted under the 2021 LTIP cycle on 22 March 2024 (equivalent to 14.82% of the pro-rated maximum). In addition,
he retains interests granted under the DBP in 2022, details of which will be disclosed on vesting in future reports.
External appointments
Details of external appointments held by Executive Directors and the fees retained in 2024 are provided in the table below:
Executive Director
Company
Role
Date of appointment
Fees paid & retained
Pete Raby
Hill & Smith PLC
Non-executive Director
2 December 2019
£58,000
Richard Armitage
NWF Group PLC
Senior Independent Director and
Chair of the Audit Committee
5 July 2020
£52,571
Implementation of Remuneration Policy for 2025
Base salary
In line with the Remuneration Policy, Executive Directors’ salaries were reviewed by the Remuneration Committee and increased for
2025 at the rates set out in the table below. As in previous years, the Group maintained the formal link between performance and pay
within the senior leadership population in 2024; specifically, taking into account individual and Group performance, as well as salary
relative to the relevant market. The increases awarded to the Executive Directors were calibrated in line with this. The Committee
considered the strong performance in their roles, as well as the market positioning of their salaries, in determining to award increases.
Although the current CEO is intending to retire from the Group on 31 August 2025, a salary increase is considered fair and appropriate as
he will remain employed and in active service for the majority of the year. The increases awarded to Pete Raby and Richard Armitage in
2025 were broadly in line with the average increases awarded to colleagues in the wider workforce who received similar performance
ratings (3–4.75% in the UK). The table below shows the base salaries in 2024, and those that took effect from 1 January 2025
(or which takes effect on appointment as CEO in the case of Damien Caby):
Executive Director
Base salary at:
Increase
1 January (or on
appointment
in) 2025
1 January 2024
Pete Raby
£664,000
£645,000
3%
Damien Caby (as CEO)
€720,000
n/a
n/a
Richard Armitage
£473,470
£459,680
3%
The rationale for any future increases will continue to be disclosed in the relevant Annual Report on Remuneration.
Pension
Pete Raby and Richard Armitage will continue to receive a cash allowance in lieu of pension in 2025. These are aligned to the pension
contribution levels available to the wider workforce (8% of salary, based on our UK population). On appointment, Damien Caby
will also receive a cash allowance in lieu of pension of 8% of salary in line with the standard provisions of the UK service agreements
and employment contracts, under which we employ our workforce in this jurisdiction.
102
Remuneration Report
continued
Annual bonus in respect of 2025 performance
The maximum bonus opportunity remains at 150% of salary for
all Executive Directors (with the payout for on-target performance
continuing to be 50% of the maximum).
33% of any bonus result will ordinarily be deferred into shares for a
further three-year period. The performance measures attached to
the annual bonus remain unchanged from 2024, and are as follows:
Adjusted operating proﬁt
*
– 40%
Year-end working capital
*
– 40%
Strategic personal objectives
– 20%
The actual performance targets set at the beginning of the
performance period are not disclosed as they are considered
commercially sensitive at this time, given the close link between
performance measures and the Group’s longer-term strategy.
This is particularly relevant in the context of some of the Group’s
close and unlisted competitors who are not required to disclose
such information, and for whom the assumptions in our targets
would provide valuable information in the current trading year.
These targets will be disclosed retrospectively, at such time as
they have become less commercially sensitive, and within three
years of the end of the performance year.
2025 LTIP awards
In March 2025, Richard Armitage will be granted an award under
the 2025 LTIP with a face value of 105% of his 2025 base salary
(reflecting a one-off reduction referred to earlier in this report).
The incoming CEO, Damien Caby, will also be granted a 2025
LTIP award of 122.5% of base salary (similarly reflecting a one-off
reduction from a normal award level of 175% of base salary).
Pete Raby will not receive a 2025 LTIP Award. Formulaic vesting
outcomes will continue to be evaluated by the Committee to
ensure they reflect business performance, and will be adjusted
as appropriate. The three-year performance period over which
performance will be measured began on 1 January 2025 and will
end on 31 December 2027. Further details of the awards will be
disclosed in next year’s Remuneration Report.
The performance measures are detailed below:
Each TSR element will operate independently, with vesting
determined based on Morgan Advanced Materials’ TSR
rank relative to constituents of each TSR benchmark.
The performance range for each element will remain median
to upper quartile;
The EPS performance range has been set at 4% to 11%
per annum in line with the performance range set prior to the
cyber incident (having been temporarily increased in 2024 to
take into account the previously reduced base level resulting
from the impact of the cyber incident);
The ROIC
*
range will remain unchanged at 17% to 20%;
The ESG measure (now based on carbon intensity) will have a
performance range of -3% to -7% carbon intensity reduction
per year over the three-year performance period, to balance
our stated longer-term ambition to reduce carbon emissions by
50% by 2030 (from a 2015 baseline) with our strategy to realise
the Group’s growth potential;
The Committee believes these ranges appropriately support
the Group’s strategy for sustainable long-term growth over
the next three years while continuing to represent suitably
demanding targets;
For all four measures, weightings are unchanged and awards will
continue to vest on a straight-line basis between threshold and
maximum, with 25% of each element vesting at threshold; and
For the 2025 LTIP cycle, Executive Directors will be required to
hold any vested 2025 LTIP awards for an additional two-year
period. Vested awards that are subject to the holding period will
remain subject to clawback in line with our Policy but will not be
forfeitable on cessation of employment.
Chairman and non-executive Director fees
The Chairman’s and non-executive Directors’ fees were reviewed
in December 2024. Increases are based on salary market
movements and are in line with the average increases awarded to
the wider workforce (3.0% in the UK). The table below shows
the fees in 2024, and those that were agreed for 2025:
Role
2025 fee pa
2024 fee pa
Chairman
1
£224,952
£218,400
Non-executive Director
£58,723
£57,013
Committee Chair (additional fee)
£10,000
£10,000
Senior Independent Director (additional fee)
£10,000
£10,000
1.
Ian Marchant receives an £18,000 annual contribution towards the cost of administrative support.
Governance
Annual report 2024
103
Morgan Advanced Materials
Percentage change in Directors’ remuneration
The table below shows, for each individual who was an Executive or non-executive Director during 2024, the annual percentage change in
their remuneration over the past five years compared to the average percentage change in remuneration for other employees of Morgan
Advanced Materials plc over the same period, in accordance with the guidelines. Note that individuals who were Directors during the
period under review, but not at any point during 2024, have not been included. The percentage changes in their remuneration for prior
years (and in which they were a Director) are disclosed in relevant previous Annual Reports.
2023–24 change
8
2022–23 change
2021–22 change
2020–21 change
2,7
2019–20 change
3
Salary or fees
Pete Raby
4.0%
4.0%
2.6%
32.3% (2.5%)
-19.4%
Richard Armitage
4.0%
4.0%
1
n/a
n/a
n/a
Ian Marchant
4.0%
9
n/a
n/a
n/a
n/a
Helen Bunch
6.7%
10
2.6%
2.2%
26.3% (1.7%)
-18.1%
Laurence Mulliez
6.7%
10
2.6%
2.2%
26.3% (1.7%)
-18.1%
Jane Aikman
6.7%
10
2.6%
2.2%
26.3% (1.7%)
-18.1%
Alison Wood
n/a
n/a
n/a
n/a
n/a
Clement Woon
4.0%
3.0%
2.5%
31.6% (2.0%)
-20.9%
Average per employee
5.2%
6.7%
3.4%
3.6% (2.6%)
3.0%
Benefits (excluding pension)
4,5
Pete Raby
4.4%
2.9%
-0.1%
-0.5%
1.9%
Richard Armitage
1.9%
2.8%
1
n/a
n/a
n/a
Average per employee
4.4%
2.6%
-1.2%
0.9%
-5.8%
6
Annual bonus
5
Pete Raby
45.4%
61.8%
-70.8%
1,029.3%
-89.1%
Richard Armitage
35.0%
65.5%
1
n/a
n/a
n/a
Average per employee
13.9%
-2.73%
-44.1%
53.6%
-2.1%
1.
Richard Armitage joined the Board on 30 May 2022. The percentages above are based on annualised figures for 2022 remuneration.
2.
Figures in brackets reflect the percentage increase from the original 2020 salary/fee prior to reductions implemented in response to the COVID-19 pandemic.
3.
Percentages reflect the temporary Board salary/fee reductions implemented in response to the pandemic. All figures are based on full-time equivalent comparisons.
4.
Benefits figures include private medical insurance and car allowance. Decreases in benefits reflect a reduction in private medical premium in certain years.
5.
Non-executive Directors do not receive any additional benefits or bonus payments.
6.
Decrease reflects a change in the type of medical cover required by individual employees.
7.
The personal performance element of the 2020 bonus was cancelled for Executive Directors (as a result of the pandemic), contributing to the higher percentage increase in 2021 bonus for
Executive Directors compared to other employees.
8.
Employee average bonus based on an estimate of 2024 bonus paid in 2025 (final bonus award data was not available at the time of publication). The percentage change in 2024 bonus for the
Executive Directors differs from that for other employees, based on their differing bonus structures.
9.
Ian Marchant joined the Board on 1 February 2023 and, as disclosed in last year’s report, his annual fee was increased from £54,820 to £210,000 on becoming Chairman on 29 June 2023.
The percentage above is based on his annualised Chairman fee for 2023 remuneration. Ian Marchant also receives an £18,000 annual contribution towards the cost of administrative support
– this value has not changed between 2023 and 2024.
10. Percentage fee increase for Helen Bunch, Laurence Mulliez and Jane Aikman includes a 4% increase to the NED fee and an increase to the additional committee Chair/SID fee to align more
closely with market rates, as disclosed in last year’s report.
104
Remuneration Report
continued
CEO pay ratio
Year
Method
25th percentile
pay ratio
Median
(50th percentile)
pay ratio
75th percentile
pay ratio
2024
Option B
58:1
53:1
30:1
2024 (excluding variable)
Option B
26:1
26:1
14:1
2023
1
Option B
54:1
42:1
26:1
2023 (excluding variable)
Option B
31:1
24:1
15:1
2022
Option B
61:1
37:1
31:1
2022 (excluding variable)
Option B
32:1
22:1
16:1
2021
Option B
91:1
59:1
48:1
2021 (excluding variable)
Option B
32:1
24:1
17:1
2020
Option B
35:1
25:1
20:1
2020 (excluding variable)
Option B
25:1
20:1
14:1
2019
Option B
74:1
62:1
41:1
2019 (excluding variable)
Option B
34:1
27:1
19:1
1.
Ratios trued up from those disclosed in last year’s Remuneration Report to reflect final value of LTIP vesting for CEO.
Details of the salary and total pay and benefits figures for each of the individuals identified in the table is set out below:
Year
Salary
Total pay and beneﬁts
CEO
25th percentile
Median
(50th percentile)
75th percentile
CEO
25th percentile
Median
(50th percentile)
75th percentile
2024
£645,000
£25,507
£24,425
£44,799
£1,582,605
£27,523
£29,722
£53,214
2023
£620,000
£21,164
£21,164
£39,605
£1,199,689
£22,345
£28,591
£45,426
2022
£596,000
£21,414
£23,225
£41,202
£1,551,838
£25,451
£42,005
£49,371
2021
£581,175
£17,379
£29,129
£37,989
£2,041,667
£22,533
£34,725
£42,442
2020
£439,425
£21,000
£23,960
£36,900
£791,238
£22,464
£31,550
£38,723
2019
£545,000
£17,599
£24,300
£30,610
£1,618,605
£21,958
£25,927
£39,926
In line with the CEO pay ratio regulations, the table above shows
for 2024 the ratio of the CEO’s single total figure of remuneration
to that of UK employees at the 25th, 50th (median) and 75th
percentiles. In addition to the mandatory calculation using total
remuneration, ratios have also been calculated excluding variable
pay elements such as bonus and share awards.
Of the three reporting options available to companies, Morgan
Advanced Materials has applied Option B, where the most recent
gender pay gap reporting data (as at 5 April 2024) has been used to
identify the 25th, 50th and 75th percentile employees. The 25th,
50th and 75th percentile pay ratios are based on the remuneration
of a representative employee who falls on each of these pay
percentiles. Option B has been used to calculate the CEO pay
ratios, as Option A requires the ability to calculate a single total
remuneration figure for each UK employee, and Morgan Advanced
Materials does not currently have the systems in place to support
this methodology. The ‘best equivalent’ employees identified
using the gender pay gap information are representative of the
25th, 50th and 75th percentiles of Company remuneration, since
base pay constitutes a large proportion of the remuneration
package for the majority of employees, so it is likely that a similar
set of employees would have been identified using Option A.
The calculation covers base pay, annual bonus, pension and,
where applicable, share awards and benefits, including car
allowance and private medical insurance.
Total remuneration figures used in the calculation for 25th, 50th
and 75th percentile employees include annual bonus relating to
2024 performance, in order to be consistent with the methodology
used for the CEO’s total remuneration figure.
The 2024 median, 25th and 75th percentile CEO pay ratios
are higher than those reported in 2023. 2023 median CEO pay
ratios were lower than those reported in 2024 as a consequence
of the impact of inflationary headwinds and the 2023 cyber security
incident on business results (and therefore on levels of variable
pay last year), especially with variable pay representing a greater
proportion of the CEO’s package compared to the wider
workforce.
Notwithstanding the year-on-year change in pay ratio, pay and
benefits for the CEO and wider employee population are based
on the same philosophies, for example driving pay for performance
and alignment to external benchmarks, in order to promote
consistency, fairness and equity across all levels in the organisation.
Governance
Annual report 2024
105
Morgan Advanced Materials
As the same methodology underpins the remuneration used in
the above calculations, the resulting median pay ratio is consistent
with the Company’s wider policies on employee pay, reward and
progression. Pay ratios are significantly reduced and more stable
over time when variable pay elements are excluded, so the gap
between CEO and employee pay is largely attributable to non-fixed
pay elements, some of which (for example, share awards) the
majority of the wider workforce would not typically be eligible for
(reflecting competitive external market practice). The range of
levels and types of roles found in a manufacturing environment such
as at Morgan Advanced Materials may also result in a higher CEO
pay ratio than companies which have predominantly professional
and/or more senior staff. It is therefore important to compare
Morgan Advanced Materials’ data to companies in similar industries.
Relative importance of spend on pay
The graphs below show the shareholder dividend distributions
and total employee pay expenditure for the financial years ended
31 December 2023 and 31 December 2024.
Shareholder distributions increased by 0.9% during 2024 to
£34.5 million (2023: £34.2 million). Total employee pay
across the Group has decreased by 0.9% to £397.3 million
(2023: £401.1 million).
Total employee pay
expenditure (£m)
397.3
401.1
2023
2024
Shareholder
distributions (£m)
34.5
34.2
2023
2024
Comparison of Company performance
The graph below shows the value, at 31 December 2024, of
£100 invested in Morgan Advanced Materials plc’s shares on
31 December 2014 compared with the current value of the same
amount invested in the FTSE 350 Index. The FTSE 350 Index –
of which the Company is a constituent – has been chosen because
it is widely followed by the UK’s investment community and easily
tracked over time.
FTSE 350 Index
Morgan Advanced Materials plc
£180
£122
£0
£50
£100
£150
£200
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
.
The table below details the CEO’s ‘single figure’ of remuneration over the 10-year period to 31 December 2024.
CEO
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
P Raby
CEO single figure
£788,252
£787,492 £1,210,856 £1,479,738 £1,618,605
£791,238 £2,041,667
£1,551,838 £1,199,689 £1,582,605
Annual bonus
(% of maximum)
50%
29.5%
1
71.3%
67.4%
84.3%
9%
97%
27.6%
42.9%
60%
LTIP vesting
(% of maximum)
n/a
n/a
15.4%
42.9%
61.3%
21.8%
52.17%
67.94%
14.82%
26.91%
1.
Figure represents percentage achievement of maximum opportunity. Bonus maximum as a percentage of salary increased to 150% of base salary in 2016 compared to 100% in
previous years.
106
Remuneration Report
continued
Executive Directors’ interests in shares and shareholding guidelines (audited)
The table below shows the shareholding of each Executive Director against their respective shareholding guideline as at 31 December 2024.
Shareholding
guideline (%
2024 salary)
Shares owned outright
Shares
subject to
performance
1
Performance-
tested but
unvested
shares
2
Shares
subject
to DBP
deferral
3
Shares
subject to
post-
vesting
holding
4
Options
granted but
subject to
continued
employment
5
Current
shareholding
(% of 2024
salary)
6
Guideline
met
As at
1 January
2024
As at
31 Dec 2024
Pete Raby
200% 653,991
696,099
859,148
111,493
86,532
151,727
4,285
318.3%
Yes
Richard Armitage
200%
136,215
136,215
459,293
55,861
23,836
–
4,285
93.3%
Building
1.
2023 and 2024 LTIP awards.
2.
The expected number of shares due to vest under the 2022 LTIP.
3.
Estimated number of shares, net of tax (47%), deferred under the DBP.
4.
Shares vested (net of tax) but subject to two-year post-vesting holding period.
5.
Options granted under the Sharesave scheme.
6.
Based on an Executive Director’s annualised 2024 salary and the average share price for the three months to 31 December 2024 of 260.88 pence, comprising shares owned outright and
shares subject to deferral. Shares underlying Sharesave scheme options are also included in the calculation.
As at 27 February 2025, the Executive Directors’ interests in shares had not changed since the end of the period under review.
Unless otherwise stated, figures given in the tables on pages 106 and 107 are for shares or interests in shares.
Non-executive Directors’ interests in shares (audited)
The table below shows the shareholding of each non-executive Director as at 31 December 2024.
As at
1 January
2024
As at
31 December
2024 or date
of leaving
Laurence Mulliez
7,336
7,492
Helen Bunch
2,028
2,028
Jane Aikman
1,000
1,000
Clement Woon
55,000
70,000
Ian Marchant
35,000
45,000
Alison Wood
0
0
As at 27 February 2025, the non-executive Directors’ interests in shares had not changed since the end of the period under review.
Post-employment share ownership guideline mechanics
All Executive Directors, including future Directors, are required to build their shareholding through vesting of executive share award
in a Global Nominee over time to ensure policy compliance with share ownership guidelines, including post-employment guidelines.
Mechanisms are in place to restrict the sale or transfer of vested shares held in the Nominee that are subject to (i) post-vesting holding
periods and (ii) shareholder ownership guidelines on cessation of employment.
Executive Directors’ share plans (audited)
Pete Raby
LTIP
Plan
As at
1 January
2024
Allocations
during the
year
Vested
during the
year
Lapsed
during the
year
As at
31 Dec 2024
Market price
at date of
allocation
Market price
at date of
vesting
Performance
period
No further performance
conditions, vested (subject to
2-year post-vesting holding)
2021
276,486
–
40,975
235,511
–
315.30p
285.20p
01.01.21 –
31.12.23
No further performance
conditions, not yet vested
2022
414,320
–
–
–
414,320
287.70p
–
01.01.22 –
31.12.24
Subject to performance
conditions
2023
412,782
–
–
–
412,782
300.40p
–
01.01.23 –
31.12.25
2024
–
446,366
–
–
446,366
289.00p
–
01.01.24 –
31.12.26
Governance
Annual report 2024
107
Morgan Advanced Materials
Share options
Plan
As at
1 January
2024
Granted
during the
year
Exercised
during the
year
Lapsed
during the
year
As at
31 Dec 2024
Option price
at grant
Market price
at date of
vesting/
exercise
Maturity
period
Subject to continued service
Sharesave
4,285
–
–
–
4,285
210.00p
–
01.12.25 –
31.05.26
Total interests in share plans
As at 1 January 2024
As at 31 December 2024
1,233,017
1,2
1,441,024
2,3
1.
Includes 2021 deferred bonus award.
2.
Includes 2022 and 2023 deferred bonus awards.
3.
Includes 2024 deferred bonus award.
Richard Armitage
LTIP
Plan
As at
1 January
2024
Allocations
during the
year
Vested
during the
year
Lapsed
during the
year
As at
31 Dec 2024
Market price
at date of
allocation
Market price
at date of
vesting
Performance
period
No further performance
conditions, not yet vested
2022
207,587
–
–
–
207,587
307.10p
–
01.01.22 –
31.12.24
Subject to performance
conditions
2023
220,705
–
–
–
220,705
300.40p
–
01.01.23 –
31.12.25
2024
–
238,588
–
–
238,588
289.00p
–
01.01.24 –
31.12.26
Share options
Plan
As at
1 January
2024
Granted
during the
year
Exercised
during the
year
Lapsed
during the
year
As at
31 Dec 2024
Option price
at grant
Market price
at date of
vesting
Maturity
period
Subject to continued service
Sharesave
4,285
–
–
–
4,285
210.00p
–
01.12.25 –
31.05.26
Total interests in share plans
As at 1 January 2024
As at 31 December 2024
443,964
1
716,140
2
1.
Includes 2023 deferred bonus award.
2.
Includes 2023 and 2024 deferred bonus award.
108
Remuneration Report
continued
Details of plans
LTIP
Details
LTIP
The performance conditions attached to the 2022 awards are set out on page 99.
The performance conditions attached to the 2023 awards are on the same basis as the 2022 awards, except that
the EPS range was amended to 4–11%.
The performance conditions attached to the 2024 awards are set out on page 100.
LTIP-CSOP
LTIP 2022, 2023 and 2024: The awards were structured as LTIP awards in the form of a conditional award of
free shares.
UK Sharesave
Details
HMRC-approved all-employee Sharesave scheme. Exercise price set at 20% discount to share price on date of
grant. Options mature after the three-year savings period and must be exercised within six months of vesting.
Details of options held by Directors under Sharesave are outlined in the individual Director shareholding
tables above.
Deferred Bonus Plan
Details
Mandatory deferral of one-third of gross bonus result relating to the previous year, which is provided as a
conditional award of shares of equivalent value. The award vests on the third anniversary of the award date and is
subject to forfeiture if the Executive Director leaves before the vesting date. The award is also subject to malus
and clawback provisions.
Other transactions involving Directors are set out in note 26
(Related parties) to the consolidated financial statements.
This Report was approved by the Board on 27 February 2025.
Remuneration governance
Remuneration Committee role
The Remuneration Committee determines, and agrees with the
Board, the framework and policy for the remuneration, including
pension rights and any compensation payments, of the Group’s
Executive Directors and the Chairman. The Committee also
reviews the remuneration in relation to other senior executives
and is kept fully informed of Remuneration Policy decisions
impacting the wider workforce. The Committee’s terms of
reference are available on the Group’s website.
The Remuneration Committee consults the CEO and invites
him to attend meetings when appropriate. The Group Human
Resources Director, the Group Head of Reward and Ellason LLP,
the Committee’s independent advisor, attend meetings of the
Committee by invitation.
The Committee also has access to advice from the CFO.
The Company Secretary acts as secretary to the Committee.
No Executive Director or other attendee is present when his
or her own remuneration is being discussed.
Remuneration Committee membership
The Remuneration Committee is currently composed of four
non-executive Directors and the Chairman of the Company.
Each of the non-executive Directors is regarded by the Board as
independent. The Chairman of the Company was considered
independent upon appointment. Attendance at meetings by
individual members is detailed in the Corporate Governance
Report on page 61.
Key activities during 2024
During 2024, the key areas of focus for the Committee were:
Reviewing the Remuneration Policy, and consulting with our
largest shareholders, ahead of presenting it to shareholders
for approval at the 2025 Annual General Meeting. Following
its review, the Committee concluded that the Policy remains
appropriate and relevant in supporting the Company’s strategy
and promoting long-term sustainable success;
Determining whether targets for the 2023 bonus and 2021 LTIP
were achieved, and, if so, to what extent (plus assessment of
any windfall gains associated with the 2021 LTIP);
Having reviewed the remuneration of the wider workforce,
determining remuneration for Executive Directors and other
senior executives, applying consistent guiding principles;
Reviewing whether the measures and structure for the bonus
and share incentive schemes remain appropriate, as well as
reviewing the overall effectiveness of such schemes;
Reviewing and agreeing Executive Director personal objectives
for 2025;
Receiving reports on share awards to employees, and employee
participation in the Sharesave scheme;
Reviewing feedback from institutional investors ahead of the
Company’s 2024 AGM;
Reviewing Executive Director share ownership guidelines,
and Directors’ holdings against the guidelines;
Receiving regulatory and governance updates, and receiving
reports on external market remuneration practices;
Reviewing and discussing the Company’s annual Gender Pay
Gap Report;
Governance
Annual report 2024
109
Morgan Advanced Materials
Appraising the independent remuneration advisor’s performance
and reviewing the terms of engagement;
Approving the Chair’s 2025 fees;
Determining performance targets for the 2024 bonus;
Determining performance targets for the 2025 share incentive
schemes; and
Reviewing the Committee’s terms of reference.
Committee performance evaluation
The Committee’s performance was reviewed as part of the
Board evaluation (see page 69 for details). It was concluded
that the Committee had operated effectively during the period
under review.
Committee advisor
Ellason LLP was appointed as the Committee’s executive
remuneration advisor from 1 January 2021. Ellason specialises
in executive remuneration advice and during 2024 provided
independent advice on Remuneration Policy, performance
measurement, the setting of incentive targets, TSR analysis
and the structure of long-term incentives, and provided
market data in respect of senior executive remuneration and
non-executive Director fees. Ellason reports directly to the
Chair of the Remuneration Committee, does not provide any
non-remuneration-related services to the Group, has no other
connections either with Morgan Advanced Materials or any of
its individual Directors, and is considered to be independent.
Ellason is a signatory to the Remuneration Consultants Group’s
voluntary Code of Conduct.
Fees paid during the year to advisors for advice to the
Remuneration Committee, charged on a time and materials basis,
were as follows:
Advisor
Fees (including expenses, excluding VAT)
Ellason
£50,403
Summary of shareholder voting
The following table shows the results of the binding vote on the
2022 Remuneration Policy (at the 2022 AGM) and the advisory
vote on the 2023 Annual Report on Remuneration at the
2024 AGM:
Resolution
For
Against
Withheld
Remuneration Policy
96.45%
3.55%
98,036
Annual Report on
Remuneration
99.11%
0.89%
11,637
Compliance statement
During the year under review, the Company has complied with
the provisions relating to Directors’ remuneration in the UK
Corporate Governance Code. This Remuneration Report has
been prepared in accordance with the Companies Act 2006
(as amended) and Schedule 8 of the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008
(as amended). In accordance with Section 439 of the Companies
Act 2006, an advisory resolution to approve the Annual Report
on Remuneration will be proposed at the AGM on 8 May 2025.
Signed on behalf of the Board
Helen Bunch
Committee Chair
110
Other disclosures
The Directors’ Report is required to be produced
by law. The Financial Conduct Authority (FCA)’s
Disclosure Guidance and Transparency Rules (DTRs)
and Listing Rules (LRs) also require the Company to
make certain disclosures.
Pages 57 to 114 inclusive (together with the sections of the
Annual Report incorporated by reference) constitute a Directors’
Report that has been drawn up and presented in accordance with
applicable law, and the liabilities of the Directors in connection with
that Report are subject to the limitations and restrictions provided
by that law.
The Company
Legal form of the Company
Morgan Advanced Materials plc is a company incorporated in
England and Wales with company number 00286773.
Name change
The Company changed its name to Morgan Advanced Materials plc
(from The Morgan Crucible Company plc) on 27 March 2013.
Annual General Meeting (AGM)
The Company’s 2025 AGM will be held on 8 May 2025,
commencing at 10:30am at York House, Sheet Street, Windsor,
SL4 1DD. A circular incorporating the 2025 Notice of AGM is
available in the ‘Invest in us’ section of morganadvancedmaterials.com.
Statutory disclosures
Amendment of the Articles of Association
The Company’s constitution, known as the Articles of Association
(‘the Articles’), is essentially a contract between the Company and
its shareholders, governing many aspects of the management of the
Company. It deals with matters such as the rights of shareholders,
the appointment and removal of Directors, the conduct of the
Board and general meetings and communications by the Company.
The Articles may be amended by special resolution of the
Company’s shareholders.
Appointment and replacement of Directors
The Articles provide that the Company may by ordinary resolution
at a general meeting appoint any person to act as a Director,
provided that notice is given of the resolution identifying the
proposed person by name and that the Company receives written
confirmation of that person’s willingness to act as Director if he or
she has not been recommended by the Board. The Articles also
empower the Board to appoint as a Director any person who is
willing to act as such.
The maximum possible number of Directors under the Articles
is 15. The Articles provide that the Company may by special
resolution, or by ordinary resolution of which special notice is
given, remove any Director before the expiration of his or her
period of office. The Articles also set out the circumstances in
which a Director shall vacate office. The Articles require that at
each AGM any Director who was appointed after the previous
AGM must be proposed for election by the shareholders.
Additionally, any other Director who has not been elected or
re-elected at one of the previous two AGMs must be proposed for
re-election by the shareholders. The Articles also allow the Board
to select any other Director to be proposed for re-election. In each
case, the rules apply to Directors who were acting as Directors on
a specific date selected by the Board. This is a date not more than
14 days before, and no later than, the date of the Notice of AGM.
Notwithstanding the provisions of the Articles, all the Directors will
stand for election or re-election on an annual basis in compliance
with the provisions of the UK Corporate Governance Code
(‘the Code’). Details of the skills, experience and career history
of Directors in post as at the date of this Report, and the Board
Committees on which they serve, can be found on pages 59
and 60.
Results and dividends
Revenue was £1,100.7 million (2023: £1,114.7 million) and
operating profit was £103.6 million (2023: £91.9 million).
Total profit (attributable to owners of the parent and
non-controlling interests) for the year ended 31 December 2024
was £58.8 million (2023: £56.3 million). Profit before taxation
for the same period was £84.6 million (2023: £77.8 million).
Basic earnings per share
from continuing operations was 17.7 pence
(2023: 16.4 pence). Capital and reserves at the end of the year
were £389.3 million (2023: £398.6 million). The total profit of
£58.8 million (2023: £56.3 million) will be transferred to equity.
The Directors recommend the payment of a final dividend of
6.8 pence per share on the Ordinary share capital of the Company,
payable on 13 May 2025 to shareholders on the register at the
close of business on 11 April 2025. Together with the interim
dividend of 5.4 pence per share paid on 15 November 2024,
this final dividend, if approved by shareholders, brings the total
distribution for the year to 12.2 pence per share (2023: 12.0 pence).
Directors
All those who served as Directors at any time during the year
under review are set out on pages 59 and 60. Laurence Mulliez
also served as a Director up until 1 November 2024.
Powers of the Directors
Subject to the Company’s Articles, UK legislation and any directions
given by special resolution, the business of the Company is
managed by the Board, which may exercise all the powers of
the Company.
Directors’ interests
Details of Directors’ interests (and their connected persons’
beneficial interests) in the share capital of the Company are
listed on page 106.
Directors’ indemnities
The Company has entered into separate indemnity deeds with
each Director containing qualifying indemnity provisions, as defined
in Section 236 of the Companies Act 2006, under which the
Company has agreed to indemnify each Director in respect of
certain liabilities which may attach to each of them as a Director
or as a former Director of the Company or any of its subsidiaries.
Governance
Annual report 2024
111
Morgan Advanced Materials
The indemnity deeds were in force during the financial year to
which this Directors’ Report relates and are in force as at the date
of approval of the Directors’ Report.
Engagement with customers, suppliers
and others
Details of how the Directors have had regard to the need to foster
the Company’s business relationships with customers, suppliers
and others, and the effect of that regard including on the principal
decisions taken by the Group during the year, are set out on
pages 20 and 21 and pages 22 and 23 of the Strategic Report and
on page 68 of the Corporate Governance Report.
Information required by LR 6.6.1
The information required to be disclosed by Listing Rule 6.6.1 can
be found in the following locations:
Publication of unaudited
financial information
On 5 November 2024, the Company
published its trading update stating
that adjusted operating profit margin
*
(AOP) for the year was expected to
be c.11.4%. Actual AOP margin was
11.7%.
Details of any long-term
incentive schemes
Remuneration Report.
Shareholder waiver
of dividends
Financial Statements, note 19.
Shareholder waiver
of future dividends
Financial Statements, note 19.
The remaining disclosures required by LR 6.6.1 are not applicable
to the Company.
Overseas branches
As at 31 December 2024, the Company had branches as follows:
Morgan AM&T BV (Sweden and Belgium).
Carbo San Luis SA (Chile).
Carbo San Luis SA (Peru) (in liquidation).
Morgan Advanced Materials Industries Ltd (UAE).
Morgan Advanced Materials plc (Belgium).
Thermal Ceramics UK Limited (Sweden).
People
There are no agreements between the Company and its Directors
or employees providing for compensation for loss of office or
employment (whether through resignation, purported redundancy
or otherwise) that occurs because of a takeover bid.
Engagement with employees –
principal decisions
Details of how the Directors have engaged with UK employees can
be found on page 20 of the Strategic Report. Details of how the
Directors had regards to the interests of UK employees and
the effect of that regard on principal decisions taken by the Group
during the financial year can be found on pages 22 to 24 of the
Strategic Report.
Details of how Morgan Advanced Materials encourages employee
involvement can be found in pages 20, 22 to 23, 30 to 32 and 63
to 64.
Employment of disabled people
The Group has a range of employment policies which set out the
standards, processes, expectations and responsibilities of its people
and the organisation. These policies are designed to ensure that
everyone, including those with existing or new disabilities, visible
or invisible, are dealt with fairly and have equal opportunity.
Morgan Advanced Materials promotes equal opportunities for all
employees and job applicants and does not unlawfully discriminate.
The Group makes reasonable adjustments to accommodate any
employee who may have a disability within the meaning of all global
equality legislation, and where the Group is aware of such disability.
Research and development
The Group incurred £31.1 million in operating costs in respect
of research and development (2023: £32.9million). The Group
did not capitalise any development costs in 2024 (2023: £nil).
The Group has established four Centres of Excellence (CoE),
which are dedicated to driving materials development, to exacting
customer specifications, and delivering performance through
materials and production process innovation. The CoEs consolidate
the Group’s R&D efforts around its core technologies, to increase
the effectiveness of our R&D spend, accelerate key projects and
increase technical differentiation. The CoE focus on the strategic
execution priorities for the global business units and the Group.
Greenhouse gas emissions, energy
consumption and energy efficiency
Details of the Group’s annual greenhouse gas emissions, energy
consumption and energy efficiency are shown in the Strategic
Report on page 42.
Political donations
No political donations have been made. Morgan Advanced
Materials has a policy of not making donations to any political party,
representative or candidate in any part of the world.
Charitable donations
Morgan Advanced Materials made donations of £162,180
(2023: £42,825) to local charities and community activities in
various countries.
Future developments
An indication of likely future developments of the Group is
included in the ‘Market Environment’ and the ‘Our financial
framework guides our strategic execution’ sections of the
Strategic Report.
112
Other disclosures
continued
Financial instruments
Details of the Group’s use of financial instruments, together with
information on policies and exposure to price, liquidity, cash flow,
credit, interest rate and currency risks, can be found in note 21
to the consolidated financial statements. All information detailed in
this note is incorporated into the Directors’ Report by reference
and is deemed to form part of the Directors’ Report.
Share capital and related matters
Share capital
The Company’s share capital as at 31 December 2024 is set out
in note 19 to the consolidated financial statements. The rights and
obligations attaching to the Company’s Ordinary shares, and
restrictions on the transfer of shares in the Company (which include
specific circumstances in which the Board is entitled to refuse to
register the transfer of shares), are set out in the Articles.
Shareholders’ rights
The holders of Ordinary shares are entitled to receive dividends,
when declared, to receive the Company’s reports and accounts,
to attend and speak at general meetings of the Company, to appoint
proxies and to exercise voting rights.
No person holds securities in the Company carrying special rights
with regard to control of the Company. The Company is not aware
of any agreements between holders of securities that may result
in restrictions on the transfer of securities or on voting rights.
Additionally the Company has authorised, issued and fully
paid 437,281 (2023: 437,281) cumulative Preference shares
classified as borrowings totalling £0.4 million (2023: £0.4 million).
The Preference shares comprise 125,327 of 5.5% Cumulative
First Preference shares of £1 each and 311,954 issued 5.0%
Cumulative Second Preference shares of £1 each.
Details of the structure of the Company’s Preference share capital
and the rights attaching to the Company’s Preference shares are
set out in note 19 to the consolidated financial statements.
Share allotment and repurchase authorities
The Directors were granted authority at the 2024 AGM to allot
shares in the Company and to grant rights to subscribe for or
convert any securities into shares in the Company up to an
aggregate nominal amount of £23,780,832 in any circumstances.
This amount represented approximately one-third of the
Company’s issued share capital prior to that meeting. The Directors
were also authorised to allot shares and to grant rights up to
an aggregate nominal amount of £47,561,664 in connection
with a rights issue only (but such amount to be reduced by any
allotments made under the first limb of the authority). This amount
represented approximately two-thirds of the Company’s issued
share capital prior to the meeting.
The Directors were also empowered at the 2024 AGM to allot
shares for cash on a non-pre-emptive basis, both in connection
with a rights issue or similar pre-emptive issue and, otherwise
than in connection with any such issue, up to a maximum
aggregate nominal amount of £7,134,249. Such amount represented
approximately 10% of the Company’s issued share capital as it
stood prior to the meeting in line with the Pre-Emption Group’s
Statement of Principles on disapplying pre-emption rights. As
permitted by those Principles, the Directors were also empowered
to allot shares for cash on a non-pre-emptive basis up to the same
amount for use only in connection with an acquisition or a specified
capital investment.
The Directors were also authorised at the 2024 AGM to repurchase
shares in the capital of the Company up to a maximum aggregate
number of 28,536,998 shares. This represented approximately
10% of the Company’s issued share capital prior to the meeting.
During the year, the Company utilised the above authority to
undertake market purchases in relation to the share buyback
programme announced on 5 November 2024 of 1,825,090
Ordinary shares (representing 0.64% of the issued share capital
of the Company as at 31 December 2024). The aggregate nominal
value of the shares purchased was £0.4 million and the total
aggregate amount paid was £4.7 million (excluding expenses).
Of the total purchased, 1,745,423 shares were cancelled in 2024
and the remaining 79,667 were cancelled in early 2025.
These share capital authorities and powers are due to lapse at the
2025 AGM at which time the Board will seek fresh authorities
and powers.
Employee share and share option schemes
The Company operates a number of employee share and share
option schemes. Details of outstanding share awards and share
options are given in note 23 to the consolidated financial
statements.
All the Company’s share schemes contain provisions relating to a
change of control. Outstanding options and awards would normally
vest and become exercisable on a change of control, subject to
being pro-rated for time and to the satisfaction of any performance
conditions at that time.
The trustees of the Morgan Advanced Materials General Employee
Benefit Trust have absolute and unfettered discretion in relation
to voting any shares held in the Trust at any general meeting.
Their policy is not to vote the shares. If any offer is made to
shareholders to acquire their shares, the trustees will have
absolute and unfettered discretion as to whether to accept or
reject the offer in respect of any shares held by them.
Transactions, contractual arrangements
and post balance sheet events
Signiﬁcant agreements – change of control
The Group has a number of borrowing facilities provided by
various financial institutions.
The facility agreements generally include change of control
provisions which, in the event of a change in ownership of the
Company, could result in their renegotiation or withdrawal.
The most significant of such agreements are the UK £230 million
multi-currency revolving credit facility agreement, which was signed
on 18 November 2022, the privately placed Note Purchase and
Guarantee Agreements signed on 27 October 2016, 20 March
2017 and 23 May 2023, for which the aggregate outstanding loan
amounts are US$172 million, €60 million, the €92 million
Schuldschein loan agreement signed on 16 June 2023 and the
€150 million Term loan agreement signed on 4 December 2024.
Governance
Annual report 2024
113
Morgan Advanced Materials
There are a number of other agreements that would take effect,
alter or terminate upon a change of control of the Company
following a takeover bid, such as commercial contracts and joint
venture agreements. No such individual contract is considered to
be significant in terms of its potential impact on the business of the
Group as a whole.
Post balance sheet events
There were no reportable subsequent events following the
balance sheet date.
Major shareholdings
As at the date of this Report, insofar as it is known to the
Company by virtue of notifications made in accordance with
DTR 5, the table below sets out holders of notifiable interests
representing 3% or more of the issued Ordinary share capital of
the Company (such holdings may have changed since notification
to the Company).
As at 31 December 2024
Number of
Ordinary
shares
Percentage
of issued
share capital
Ameriprise Financial Inc., and its group
24,186,489
8.53
GLG Partners LP
18,207,124
6.42
BlackRock, Inc.
17,664,857
6.23
Janus Henderson Group plc
14,540,443
5.13
Aberforth Partners LLP
14,338,459
5.06
Black Creek Investment Management Inc.
14,269,458
5.03
FIL Limited
14,270,501
5.03
M&G Plc
14,251,115
5.02
AXA Investment Managers SA
14,039,985
4.95
Changes that have been notified to the Company pursuant to
Chapter 5 of the Disclosure Guidance and Transparency Rules
between the end of the period under review and 27 February
2025, the latest practicable date prior to the date of this Report,
are set out below:
Number of
Ordinary
shares
Percentage
of issued
share capital
BlackRock, Inc.
17,955,074
6.36
Reporting, accountability and audit
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and
the Group and Parent company financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent
company financial statements for each financial year. Under that
law they are required to prepare the Group consolidated financial
statements in accordance with United Kingdom adopted
international accounting standards and applicable law and have
elected to prepare the Parent company financial statements in
accordance with UK Accounting Standards, including FRS 101
Reduced Disclosure Framework.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Parent company and
of their profit or loss for that period.
In preparing each of the Group and Parent company financial
statements, the Directors are required to:
Select suitable accounting policies and then apply them
consistently.
Make judgements and estimates that are reasonable and prudent.
For the Group consolidated financial statements, state whether
they have been prepared in accordance with United Kingdom
adopted international accounting standards.
Assess the Group and Parent company’s ability to continue as
a going concern, disclosing, as applicable, matters related to
going concern.
For the Parent company financial statements, state whether
applicable UK Accounting Standards have been followed, subject
to any material departures disclosed and explained in the Parent
company financial statements. They are responsible for such
internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities.
Prepare the financial statements on the going concern basis
of accounting unless they intend to liquidate the Group or the
Parent company or to cease operations or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
company’s transactions and disclose with reasonable accuracy at
any time the financial position of the Parent company and enable
them to ensure that its financial statements comply with the
Companies Act 2006. They have general responsibility for taking
such steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and other
irregularities. They are responsible for such internal control as
they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due
to fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of
the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Remuneration Report and Corporate Governance Statement that
comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
114
Other disclosures
continued
In its reporting to shareholders, the Board is satisfied that the
Annual Report and Accounts, taken as a whole, is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy as required by the Code.
The Directors as at the date of this Report, whose names and
functions are set out on pages 59 and 60, confirm that, to the best
of their knowledge:
The Group’s consolidated financial statements, which have
been prepared in accordance with United Kingdom adopted
international accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit of the
Group; and
The management report (comprising the Directors’ Report and
the Strategic Report) includes a fair review of the development
and performance of the business and the position of the Group,
together with a description of the principal risks and uncertainties
that it faces.
Scope of the reporting in this Annual Report
The Board has prepared a Strategic Report which provides an
overview of the development and performance of the Group’s
business in the year ended 31 December 2024.
For the purposes of DTR 4.1.5R(2) and DTR 4.1.8, the Directors’
Report on pages 58 to 114 and the Strategic Report on pages 2 to
56 comprise the management report, including the sections of the
Annual Report and consolidated financial statements incorporated
by reference.
Each Director holding office at the date of approval of this
Directors’ Report confirms that, so far as they are aware, there is
no relevant audit information of which the Company’s auditor is
unaware, and that they have taken all steps that they ought to have
taken as a Director to make themselves aware of any relevant audit
information and to establish that the Company’s auditor is aware of
that information.
The Strategic Report, the Directors’ Report and the Remuneration
Report were approved by the Board on 27 February 2025.
For and on behalf of the Board
Winifred Chime
Company Secretary
27 February 2025
Morgan Advanced Materials plc
York House
Sheet Street
Windsor
Berkshire SL4 1DD
Registered in England and Wales,
No. 00286773
Report on the audit of the financial statements
1. Opinion
In our opinion:
The ﬁnancial statements of Morgan Advanced Materials
plc (the ‘Company’) and its subsidiaries (the ‘Group’) give
a true and fair view of the state of the Group’s and of the
Company’s affairs as at 31 December 2024 and of the
Group’s proﬁt for the year then ended;
The Group ﬁnancial statements have been properly
prepared in accordance with United Kingdom adopted
international accounting standards;
The Company ﬁnancial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, including Financial Reporting
Standard 101 “Reduced Disclosure Framework”; and
The ﬁnancial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
We have audited the financial statements which comprise:
The consolidated income statement;
The consolidated statement of comprehensive income;
The consolidated and Company balance sheets;
The consolidated and Company statements of changes in equity;
The consolidated statement of cash ﬂows;
The consolidated material accounting policy information;
The Company material accounting policy information; and
The related notes 1 to 45.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law
and United Kingdom adopted international accounting standards.
The financial reporting framework that has been applied in the
preparation of the Company financial statements is applicable law
and United Kingdom Accounting Standards, including FRS 101
“Reduced Disclosure Framework” (United Kingdom Generally
Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in
the auditor’s responsibilities for the audit of the financial statements
section of our report.
We are independent of the Group and the Company in
accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the Financial
Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to
listed public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
We confirm that we have not provided any non-audit services
prohibited by the FRC’s Ethical Standard to the Group or the
Company. The non-audit services provided to the Group and
the Company for the year are disclosed in note 4 to the
financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit
matters
The key audit matters that we identified in the
current year were:
Inventory valuation; and
Revenue recognition cut off.
Within this report, key audit matters are
identified as follows:
!
Newly identiﬁed
Similar level of risk
Materiality
The materiality that we used for the Group
financial statements was £5.6m which was
determined on the basis of 5.2% of profit before
tax and specific adjusting items.
Scoping
We performed audit procedures across 29
reporting components in accounting for 74% of
revenue, 74% of profit before tax, and 75% of
net assets.
Significant
changes in
our approach
We determined that revenue recognition cut off
is a key audit matter for 2024 driven by the
trading update issued towards the end of the
financial year on 5 November 2024, which
identified a weakening of market conditions.
We also concluded that impairment of
non-financial assets is not a key audit matter in
the current year as the value of assets subject to
impairment was significantly reduced following
impairments incurred in previous years.
The key audit matter identified last year relating
to the cyber security incident is no longer a key
audit matter. This follows the restoration of
access to some of the affected systems and
implementation of new systems at the other
sites including those most impacted.
Independent Auditor’s Report
Governance
Annual report 2024
115
Morgan Advanced Materials
Independent Auditor’s Report
continued
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and
Company’s ability to continue to adopt the going concern basis
of accounting included:
Obtaining an understanding of the ﬁnancing facilities including
nature of facilities, repayment terms and covenants;
Obtaining an understanding of the key controls around the
budgeting and forecasting process used in the preparation
of the going concern analysis and disclosures;
Challenging the assumptions used in the Board approved
forecasts by reference to historical performance and other
supporting evidence such as market data;
Recalculation of the amount of headroom in the forecasts
(in liquidity terms and against the relevant covenant limits);
Assessing the appropriateness of the sensitivity analysis
and reverse stress tests performed by management;
Assessing the impact of macro-economic conditions on
the business; and
Assessing the appropriateness of the disclosures in the
financial statements.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s
and Company’s ability to continue as a going concern for a period
of at least twelve months from when the financial statements are
authorised for issue.
In relation to the reporting on how the Group has applied the UK
Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the Directors’ statement in the
financial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of
this report.
5. Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which
had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts
of the engagement team.
These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on
these matters.
5.1. Inventory valuation
!
Key audit
matter
description
The Group manufactures various thermal,
carbon and technical ceramic products for a
diverse range of end-markets. The Group had
a material inventory balance of £165.9m as at
31 December 2024 (FY23: £175.1m). There is
a risk that inventory is not accurately valued
because of system limitations at local
manufacturing sites, thereby incorrectly applying
the Group’s provisioning accounting policy and
applying judgement when determining net
realisable value of excess and obsolete stock.
Significant manual intervention is required
and applied to record and value inventory in
the Group.
In the Consolidated Financial Statements, note 1
sets out the Group’s accounting policy for
inventory valuation and note 15 provides further
analysis of the account balance.
How the
scope
of our audit
responded
to the
key audit
matter
We have performed the following audit
procedures in respect of this key audit matter:
Understood local management’s inventory
provisioning process and obtained an
understanding of the relevant controls in
management’s review of the inventory
provision;
Assessed any unusual manual adjustments
to inventory;
Assessed the inventory ageing report and
evaluated whether the Group accounting
policy of fully providing for inventory aged over
12 months has been applied. For inventory
aged less than 12 months, we assessed the
breakdown of the inventory report by age
to evaluate the completeness of applying the
Group’s policy;
Challenged management’s key assumptions
in determining inventory provisions, with
reference to past data and forecast demand;
and
Assessed the mathematical accuracy of the
provision by reperforming the calculation
based on the key assumptions.
Key
observations
Based on the procedures performed, we are
satisfied that the valuation of inventory as at
31 December 2024 is appropriate.
116
5.2. Revenue recognition cut off
!
Key audit matter
description
The Group recognised £1,100.7 million of revenue in the year ended 31 December 2024 (2023: £1,114.7 million).
The Group’s approach to revenue recognition varies within each global business unit “GBU” of the Group,
depending on the specific circumstances of contractual arrangements or terms. Most of the revenue typically
arises from short-term arrangements and is satisfied at a point in time when the customer takes control of
the products.
We have specifically focused on whether sales transactions recorded towards the end of the financial year,
including manual adjustments have been recorded in the correct accounting period at certain sites indicating
increased risk from trading and performance patterns when compared to earlier in the financial year.
Pressure to meet stakeholder expectations following the trading update provided to the market on 5 November
2024, which highlighted weakening market conditions, could provide incentives to record revenues where the
performance obligations have not been satisfied and therefore, we consider this to be a key audit matter and a
risk of fraud.
Note 1 to the consolidated financial statements sets out the Group’s accounting policy for revenue recognition
and note 3 includes details of the Group’s revenue by segment.
How the scope
of our audit
responded to
the key audit
matter
We have performed the following audit procedures in respect of this key audit matter:
Understood local management’s revenue recognition process and obtained an understanding of the relevant
controls in management’s review of when revenue should be recognised;
Performed testing on a sample of sales transactions, inspecting supporting documentation such as delivery
notes, sales invoices and customer orders to identify if the transactions were recorded in the correct ﬁnancial
year, with a focus around the year-end;
Assessed manual adjustments made to revenue at year end and traced them to appropriate audit evidence
evaluating whether revenue was recorded in the appropriate accounting period; and
Evaluated credits notes issued to customers just after the ﬁnancial year end to determine if they are valid,
supported by appropriate audit evidence and recorded in the correct ﬁnancial period.
Key observations
Based on the procedures performed, we are satisfied that revenue has been recognised appropriately for the
financial year ended 31 December 2024.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and
in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group ﬁnancial statements
Company ﬁnancial statements
Materiality
£5.6 million (2023: £5.5 million)
£3.4 million (2023: £3.3 million)
Basis for
determining
materiality
Materiality was based on 5.2% (FY23: 5.3%) of
profit before tax and specific adjusting items
described in note 6.
Materiality was determined based on the Company’s net assets
(3%). This was then capped at 60% of Group materiality
(FY23: 3% of net assets capped at 60% of Group materiality).
Rationale
for the
benchmark
applied
Profit before tax and specific adjusting items is a
key metric for users of the financial statements
and reflects the way business performance is
reported and assessed by external users of the
financial statement.
The Company is non-trading and contains investments in
the Group’s trading components. As a result, we have
determined net assets for the current year to be the
appropriate basis.
Governance
Annual report 2024
117
Morgan Advanced Materials
Independent Auditor’s Report
continued
6. Our application of materiality
(continued)
6.1. Materiality
(continued)
Profit before tax and specific adjusting items
Group materiality
Group materiality £5.6 million
Component performance materiality
range £1.6 million to £2.2 million
Profit before tax and
specific adjusting items
£107.7 million
Audit Committee reporting
threshold £0.3 million
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as a whole.
Group ﬁnancial statements
Company ﬁnancial statements
Performance
materiality
65% (2023: 65%) of Group materiality
65% (2023: 65%) of Company materiality
Basis and
rationale for
determining
performance
materiality
In determining performance materiality, we considered the following factors:
a. our risk assessment, including our understanding of the entity and its overall control environment;
b. the quality of the control environment over certain business processes and IT systems;
c.
the disaggregated nature of the Group and the likelihood of an individually material error; and
d. our cumulative experience from prior year audits and level of corrected and uncorrected misstatements
identified.
6.3 Error reporting threshold
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of £0.3 million (2023:
£0.3 million), as well as differences below that threshold that, in our
view, warranted reporting on qualitative grounds. We also report
to the Audit Committee on disclosure matters that we identified
when assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Identiﬁcation and scoping of components
The Group operates and manufactures in 60 sites in 20 countries
spread across five continents with the largest footprint being in
North America, Asia, and Europe. Our Group audit was scoped
by obtaining an understanding of the Group and its environment,
including Group-wide controls, and assessing the risks of material
misstatement at the Group and component level.
Based on that assessment, we focused our Group audit scope
across all of the Global Business Units: Thermal Products,
Performance Carbon and Technical Ceramics.
These business units are composed of many individual reporting
components, which are the lowest level at which management
prepares financial information that is included in the Financial
Statements. The Company is located in the UK and is audited
directly by the UK Group audit team.
A total of 29 (2023: 29) components were subject to audit
procedures on one or more classes of transactions or account
balances. Each reporting component in scope for audit procedures,
including the Company, was subject to an audit performance
materiality level between £1.6 million and £2.2 million (FY23:
£1.6 million and £2.2 million). Reporting components in our
Group audit scope where procedures were applied on one or
more classes of transactions or account balance covered 74% of
Group revenue (FY23: 73%), 74% of Group profit before tax
(FY23: 74%), and 75% of net assets (FY23: 74%).
At a Group level, we also applied audit procedures on the
consolidation and performed analytical review procedures on
components and other account balances that were not subject
to direct audit procedures.
118
7.2. Our consideration of the control environment
The Group uses a number of different IT systems across the
reporting components and the control environment continues to
be decentralised and reliant on manual processes. We involved our
IT specialists to obtain an understanding of the general IT controls
relating to systems relevant to the audit, specifically on access and
change management areas of information security.
We obtained an understanding of relevant controls over revenue
business processes, inventory valuation, impairment reviews, the
financial close and reporting process, and management’s review of
judgements and estimates. We did not place reliance on controls at
any site this year as the control environment continues to mature
following the cyber security incident in 2023. Management are
continuing work to align the systems of financial control and
reporting across the Group, with further improvements required
to the IT environment for us to adopt a controls reliance approach
to our audit.
Where control deficiencies and improvements were identified
in relation to, impairment reviews, IT systems, balance sheet
reconciliations and journals review , these were reported
to management and the Audit Committee as appropriate.
The group continues to invest time in responding to, and
addressing, our observations.
7.3. Our considerations of climate-related risks
In planning our audit, we have considered the potential impact of
climate change on the Group’s business and its financial statements.
The Group has assessed the risk and opportunities relevant to
climate change and maintained the climate change related risk,
highlighted under the external environment principal risk, across the
Group. This risk grading has been maintained at the same level as
the prior year and has been considered and embedded into the
business as noted in the Strategic Report.
As part of our audit procedures, we have reviewed the Group’s
environment related risk assessment and held direct enquiries
with those charged with governance to understand the process of
identifying climate-related risks, the determination of mitigating
actions and the impact on the Group’s financial statements.
While management has acknowledged that the transition and
physical risks posed by climate change have the potential to impact
the medium to long-term success of the business, they have
assessed that there is no material impact arising from climate
change on the judgements and estimates made in the Group
Financial Statements as at 31 December 2024 as explained in
Note 1 on page 137.
We performed our own qualitative risk assessment of the potential
impact of climate change on the Group’s account balances and
classes of transactions and did not identify any additional risks of
material misstatement. Our procedures included reviewing
disclosures included in the Strategic Report to consider whether
they are materially consistent with the Financial Statements and
our knowledge obtained in the audit.
7.4. Working with other auditors
The planned programme which we designed as part of our
involvement in the component auditors’ work was delivered over
the course of the Group audit. The extent of our involvement
which commenced from the planning phase included:
Setting the scope of the component auditors work and
assessment of their independence;
Providing direction on enquiries made by the component
auditors at the interim and year end stages through online and
telephone conversations, and in-person meetings;
Group engagement partner-led discussion being held with all
component auditors, and involvement in the appropriateness
of the design and performance of further audit procedures on
higher and signiﬁcant risk areas, including issuing Group audit
instructions detailing the nature and form of the reporting
required from component auditors; and
A review of the component auditors’ engagement files by a
senior member of the Group engagement team.
Revenue
Subject to audit procedures
74%
Review at group level
26%
Profit before tax
Subject to audit procedures
74%
Review at group level
26%
Net assets
Subject to audit procedures
75%
Review at group level
25%
Governance
Annual report 2024
119
Morgan Advanced Materials
Independent Auditor’s Report
continued
8. Other information
The other information comprises the information included in the
annual report other than the financial statements and our auditor’s
report thereon. The Directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements, or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the statement of directors’
responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Directors are responsible
for assessing the Group’s and the Company’s ability to continue as
a going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Company or
to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of
the financial statements
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 level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
11. Extent to which the audit was considered
capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is
detailed below.
11.1. Identifying and assessing potential
risks related to irregularities
In identifying and assessing risks of material misstatement in respect
of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
The nature of the industry and sector, control environment
and business performance including the design of the Group’s
remuneration policies, key drivers for Directors’ remuneration,
bonus levels and performance targets;
Results of our enquiries of management, internal audit, the
Directors and the audit committee about their own identiﬁcation
and assessment of the risks of irregularities, including those that
are speciﬁc to the Group’s sector;
Any matters we identiﬁed having obtained and reviewed
the Group’s documentation of their policies and procedures
relating to:
– Identifying, evaluating and complying with laws and regulations
and whether they were aware of any instances of
non-compliance;
– Detecting and responding to the risks of fraud and whether
they have knowledge of any actual, suspected or alleged fraud;
– The internal controls established to mitigate risks of fraud or
non-compliance with laws and regulations; and
The matters discussed among the audit engagement team
including component audit teams and relevant internal specialists,
including tax, valuations, pensions, IT, and industry specialists
regarding how and where fraud might occur in the financial
statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities
and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in the following area:
revenue recognition cut off. In common with all audits under
ISAs (UK), we are also required to perform specific procedures
to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory
frameworks that the Group operates in, focusing on provisions
of those laws and regulations that had a direct effect on the
determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this
context included the UK Companies Act, UK Listing Rules,
pensions legislation and tax legislation.
In addition, we considered provisions of other laws and regulations
that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the Group’s ability
to operate or to avoid a material penalty. These included the
Group’s environmental regulations.
120
11.2. Audit response to risks identiﬁed
As a result of performing the above, we identified revenue
recognition cut off as a key audit matter related to the potential risk
of fraud or non-compliance with laws and regulations. The key
audit matters section of our report explains the matter in more
detail and also describes the specific procedures we performed
in response to that key audit matter.
In addition to the above, our procedures to respond to risks
identified included the following:
Reviewing the ﬁnancial statement disclosures and testing to
supporting documentation to assess compliance with provisions
of relevant laws and regulations described as having a direct
effect on the ﬁnancial statements;
Enquiring of management, the audit committee and in-house
legal counsel concerning actual and potential litigation and claims;
Performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud;
Reading minutes of meetings of those charged with governance,
reviewing internal audit reports and reviewing correspondence
with HMRC; and
In addressing the risk of fraud through management override of
controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making
accounting estimates are indicative of a potential bias; and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members including
internal specialists and component audit teams and remained
alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
Report on other legal and regulatory
requirements
12. Opinions on other matters prescribed
by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
The information given in the strategic report and the directors’
report for the ﬁnancial year for which the ﬁnancial statements
are prepared is consistent with the ﬁnancial statements; and
The strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group
and the Company and their environment obtained in the course
of the audit, we have not identiﬁed any material misstatements in
the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement
in relation to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to the Group’s
compliance with the provisions of the UK Corporate Governance
Code speciﬁed for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
The Directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identiﬁed set out on pages 55 and 56;
The Directors’ explanation as to its assessment of the Group’s
prospects, the period this assessment covers and why the period
is appropriate set out on pages 55 to 64;
The Directors’ statement on fair, balanced and understandable
set out on page 113;
The board’s conﬁrmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page 43;
The section of the annual report that describes the review of
effectiveness of risk management and internal control systems
set out on page 77; and
The section describing the work of the audit committee set out
on page 74.
14. Matters on which we are required to report
by exception
14.1. Adequacy of explanations received and
accounting records
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
We have not received all the information and explanations we
require for our audit; or
Adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
The Company financial statements are not in agreement with
the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report
if in our opinion certain disclosures of Directors’ remuneration
have not been made or the part of the directors’ remuneration
report to be audited is not in agreement with the accounting
records and returns.
We have nothing to report in respect of these matters.
Governance
Annual report 2024
121
Morgan Advanced Materials
15. Other matters which we are required
to address
15.1. Auditor tenure
Following the recommendation of the audit committee, we were
appointed by the Board of Directors in June 2019 to audit the
financial statements for the year ending 31 December 2020 and
subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of
the firm is five years, covering the years ending 31 December 2020
to 31 December 2024.
15.2. Consistency of the audit report with the
additional report to the audit committee
Our audit opinion is consistent with the additional report to the
audit committee we are required to provide in accordance
with ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state
to the Company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure
Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R,
these financial statements form part of the Electronic Format
Annual Financial Report filed on the National Storage Mechanism
of the FCA in accordance with DTR 4.1.15R – DTR 4.1.18R.
This auditor’s report provides no assurance over whether the
Electronic Format Annual Financial Report has been prepared
in compliance with DTR 4.1.15R – DTR 4.1.18R.
Jane Makrakis, ACA
(Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Reading, United Kingdom
27 February 2025
Independent Auditor’s Report
continued
122
Financial statements
Contents
Consolidated income statement
124
Consolidated statement of
comprehensive income
125
Consolidated balance sheet
126
Consolidated statement of changes in equity
127
Consolidated statement of cash flows
128
Notes to the consolidated financial statements
129
Company balance sheet
181
Company statement of changes in equity
182
Notes to the Company financial statements
183
Group statistical information
200
Cautionary statement
201
Glossary of terms
201
Alternative performance measures
202
Shareholder information
206
123
Morgan Advanced Materials
Financial statements
Annual report 2024
Consolidated income statement
FOR THE YEAR ENDED 31 DECEMBER 2024
Note
31 December 2024
31 December 2023
Results
before
speciﬁc
adjusting
items
£m
Speciﬁc
adjusting
items
1
£m
Total
£m
Results
before
speciﬁc
adjusting
items
1
£m
Speciﬁc
adjusting
items
£m
Total
£m
Revenue
3
1,100.7
–
1,100.7
1,114.7
–
1,114.7
Operating costs before amortisation
of intangible assets, impairments
and reversal of impairments of
non-financial assets
4
(972.3)
(18.9)
(991.2)
(994.4)
(25.9)
(1,020.3)
Profit from operations before
amortisation of intangible
assets, impairments and
reversal of impairments of
non-financial assets
3
128.4
(18.9)
109.5
120.3
(25.9)
94.4
Amortisation of intangible assets
13
(1.7)
–
(1.7)
(3.3)
–
(3.3)
Impairment of non-financial assets
6
–
(4.2)
(4.2)
–
(7.3)
(7.3)
Reversal of impairment of
non-financial assets
6
–
–
–
–
8.1
8.1
Operating profit
3
126.7
(23.1)
103.6
117.0
(25.1)
91.9
Finance income
2.6
–
2.6
3.9
–
3.9
Finance expense
(21.6)
–
(21.6)
(18.0)
–
(18.0)
Net financing costs
7
(19.0)
–
(19.0)
(14.1)
–
(14.1)
Profit before taxation
107.7
(23.1)
84.6
102.9
(25.1)
77.8
Income tax expense
8
(28.4)
2.5
(25.9)
(26.0)
3.8
(22.2)
Profit from continuing
operations
79.3
(20.6)
58.7
76.9
(21.3)
55.6
Profit from discontinued
operations
2
9
–
0.1
0.1
–
0.7
0.7
Profit for the year
79.3
(20.5)
58.8
76.9
(20.6)
56.3
Profit for the year
attributable to:
Shareholders of the Company
70.8
(20.5)
50.3
67.9
(20.6)
47.3
Non-controlling interests
8.5
–
8.5
9.0
–
9.0
79.3
(20.5)
58.8
76.9
(20.6)
56.3
Earnings per share
10
Continuing and
discontinued operations
Basic earnings per share
17.7p
16.6p
Diluted earnings per share
17.5p
16.5p
Continuing operations
Basic earnings per share
17.7p
16.4p
Diluted earnings per share
17.5p
16.3p
Dividends
3
Interim dividend
– pence
5.4p
5.3p
– £m
15.4
15.1
Proposed final dividend
– pence
6.8p
6.7p
– £m
19.3
19.1
1.
Details of specific adjusting items from continuing operations are given in note 6 to the consolidated financial statements.
2.
Profits from discontinued operations are entirely attributable to the shareholders of the Company.
3.
The proposed final dividend is based upon the number of Ordinary shares outstanding at the balance sheet date.
124
Consolidated statement
of comprehensive income
FOR THE YEAR ENDED 31 DECEMBER 2024
Note
31 December
2024
£m
31 December
2023
£m
Profit for the year
58.8
56.3
Other comprehensive expense:
Items that will not be reclassified subsequently to income statement:
Remeasurement gain/(loss) on defined benefit plans
22
1.3
(11.5)
Tax effect of components of other comprehensive income not reclassified
8
(0.6)
(0.5)
0.7
(12.0)
Items that may be reclassified subsequently to income statement:
Foreign exchange translation differences
(11.0)
(32.8)
Cash flow hedges:
Change in fair value
(0.3)
1.1
Transferred to income statement
(1.0)
0.2
Net investment hedges:
Change in fair value
1.7
(0.3)
(10.6)
(31.8)
Total other comprehensive expense
(9.9)
(43.8)
Total comprehensive income
48.9
12.5
Attributable to:
Shareholders of the Company
41.4
6.7
Non-controlling interests
7.5
5.8
48.9
12.5
Total comprehensive income attributable to shareholders of the
Company arising from:
Continuing operations
41.3
6.0
Discontinued operations
0.1
0.7
41.4
6.7
Financial statements
Annual report 2024
125
Morgan Advanced Materials
Consolidated balance sheet
AS AT 31 DECEMBER 2024
Note
2024
£m
2023
£m
Assets
Property, plant and equipment
11
344.9
293.8
Right-of-use assets
12
32.5
31.6
Intangible assets: goodwill
13
176.9
177.5
Intangible assets: other
13
3.0
4.7
Investments
2.0
2.2
Trade and other receivables
16
3.6
3.4
Employee benefits: pensions
1
22
13.0
13.5
Deferred tax assets
14
21.4
17.6
Total non-current assets
597.3
544.3
Inventories
15
165.9
175.1
Derivative financial assets
1.2
1.5
Trade and other receivables
16
189.6
191.6
Current tax receivable
2.3
1.2
Cash and cash equivalents
17
120.8
124.5
Total current assets
479.8
493.9
Total assets
1,077.1
1,038.2
Liabilities
Borrowings
20
337.7
309.1
Lease liabilities
20
36.1
36.6
Employee benefits: pensions
1
22
34.5
38.7
Provisions
24
10.9
11.5
Non-trade payables
18
2.8
2.4
Deferred tax liabilities
14
2.7
1.8
Total non-current liabilities
424.7
400.1
Borrowings and bank overdrafts
20
9.3
0.6
Lease liabilities
20
11.0
10.5
Trade and other payables
18
204.1
192.0
Current tax payable
26.6
25.6
Provisions
24
9.5
10.3
Derivative financial liabilities
2.6
0.5
Total current liabilities
263.1
239.5
Total liabilities
687.8
639.6
Total net assets
389.3
398.6
Equity
Share capital
19
70.9
71.3
Share premium
111.7
111.7
Reserves
(8.2)
6.5
Retained earnings
179.3
170.8
Total equity attributable to shareholders of the Company
353.7
360.3
Non-controlling interests
35.6
38.3
Total equity
389.3
398.6
The financial statements were approved by the Board of Directors on 27 February 2025 and were signed on its behalf by:
Pete Raby
Richard Armitage
Chief Executive Ofﬁcer
Chief Financial Ofﬁcer
1.
In the prior year published results the pension assets were presented net within pension liabilities. The prior year figures above have been re-presented to show the pension assets within
non current assets and a corresponding increase to the pension liabilities. There is no impact on net profit, net assets or cash flows.
126
Consolidated statement of changes in equity
FOR THE YEAR ENDED 31 DECEMBER 2024
Share
capital
£m
Share
premium
£m
Translation
reserve
£m
Hedging
reserve
£m
Fair value
reserve
£m
Capital
redemption
reserve
£m
Other
reserves
£m
Retained
earnings
£m
Total
parent
equity
£m
Non-
controlling
interests
£m
Total
equity
£m
At 1 January 2023
71.3
111.7
–
(0.2)
(1.0)
35.7
0.6
170.9
389.0
40.6
429.6
Profit for the year
–
–
–
–
–
–
–
47.3
47.3
9.0
56.3
Other comprehensive
expense:
Remeasurement loss on
defined benefit plans and
related taxes
–
–
–
–
–
–
–
(12.0)
(12.0)
–
(12.0)
Foreign exchange differences
and related taxes
–
–
(29.6)
–
–
–
–
–
(29.6)
(3.2)
(32.8)
Cash flow hedging fair value
changes and transfers
–
–
–
1.3
–
–
–
–
1.3
–
1.3
Net investment hedging fair
value changes and transfers
–
–
(0.3)
–
–
–
–
–
(0.3)
–
(0.3)
Total other
comprehensive
income/(expense)
–
–
(29.9)
1.3
–
–
–
(12.0)
(40.6)
(3.2)
(43.8)
Total comprehensive
income/(expense)
–
–
(29.9)
1.3
–
–
–
35.3
6.7
5.8
12.5
Transactions with owners:
Dividends
–
–
–
–
–
–
–
(34.2)
(34.2)
(8.1)
(42.3)
Equity-settled
share-based payments
–
–
–
–
–
–
–
2.9
2.9
–
2.9
Own shares acquired for
share incentive schemes (net)
–
–
–
–
–
–
–
(4.1)
(4.1)
–
(4.1)
At 31 December 2023
71.3
111.7
(29.9)
1.1
(1.0)
35.7
0.6
170.8
360.3
38.3
398.6
Profit for the year
–
–
–
–
–
–
–
50.3
50.3
8.5
58.8
Other comprehensive
expense:
Remeasurement gain on
defined benefit plans and
related taxes
–
–
–
–
–
–
–
0.7
0.7
–
0.7
Foreign exchange differences
and related taxes
–
–
(10.0)
–
–
–
–
–
(10.0)
(1.0)
(11.0)
Cash flow hedging fair value
changes and transfers
–
–
–
(1.3)
–
–
–
–
(1.3)
–
(1.3)
Net investment hedging fair
value changes and transfers
–
–
1.7
–
–
–
–
–
1.7
–
1.7
Total other
comprehensive
income/(expense)
–
–
(8.3)
(1.3)
–
–
–
0.7
(8.9)
(1.0)
(9.9)
Total comprehensive
income/(expense)
–
–
(8.3)
(1.3)
–
–
–
51.0
41.4
7.5
48.9
Transactions with
owners:
Dividends
–
–
–
–
–
–
–
(34.5)
(34.5)
(8.1)
(42.6)
Equity-settled
share-based payments
–
–
–
–
–
–
–
2.8
2.8
–
2.8
Own shares acquired for
share incentive schemes (net)
–
–
–
–
–
–
–
(3.3)
(3.3)
–
(3.3)
Purchase of own shares for
share buyback programme
–
–
–
–
–
–
(10.0)
–
(10.0)
–
(10.0)
Cancellation of own shares
under share buyback
programme
(0.4)
–
–
–
–
0.4
4.5
(4.5)
–
–
–
Purchase of non-controlling
interest
–
–
–
–
–
–
–
(3.0)
(3.0)
(2.1)
(5.1)
At 31 December 2024
70.9
111.7
(38.2)
(0.2)
(1.0)
36.1
(4.9)
179.3
353.7
35.6
389.3
Details of the reserves are provided in note 19.
Financial statements
Annual report 2024
127
Morgan Advanced Materials
Consolidated statement of cash ﬂows
FOR THE YEAR ENDED 31 DECEMBER 2024
Note
31 December
2024
£m
31 December
2023
£m
Operating activities
Profit for the year from continuing operations
58.7
55.6
Profit for the year from discontinued operations
9
0.1
0.7
Adjustments for:
Depreciation – property, plant and equipment
11
34.1
31.9
Depreciation – right-of-use assets
12
8.6
7.6
Amortisation
13
1.7
3.3
Net financing costs
7
19.0
14.1
Non-cash specific adjusting items included in operating profit
4.5
(2.5)
Fair value gain on equity instruments held at FVTPL
(1.9)
(0.9)
Profit on sale of property, plant and equipment
(3.0)
(1.6)
Income tax expense
8
25.9
22.2
Equity-settled share-based payment expense
23
2.8
2.9
Cash generated from operations before changes in working capital and provisions
150.5
133.3
Increase in trade and other receivables
(0.5)
(4.0)
Decrease/(increase) in inventories
6.7
(12.3)
Increase in trade and other payables
8.4
13.3
Decrease in provisions
(1.0)
(3.4)
Payments to defined benefit pension plans (net of IAS 19 pension charges)
22
(1.1)
(0.2)
Cash generated from operations
163.0
126.7
Interest paid – borrowings and overdrafts
(17.9)
(15.5)
Interest paid – lease liabilities
(2.6)
(2.4)
Income tax paid
(29.2)
(30.3)
Net cash from operating activities
113.3
78.5
Investing activities
Purchase of property, plant and equipment and software
(96.1)
(60.4)
Purchase of investments
(0.1)
(5.6)
Proceeds from sale of property, plant and equipment
5.4
1.8
Grants received for purchase of equipment
0.5
0.1
Interest received
2.6
3.9
Disposal of investments
1.7
–
Net cash from investing activities
(86.0)
(60.2)
Financing activities
Purchase of own shares for share incentive schemes
19
(3.5)
(4.7)
Proceeds from exercise of share options
19
0.2
0.6
Purchase of own shares for share buyback programme
(4.7)
–
Purchase of non-controlling interest
(5.1)
–
Increase in borrowings
17
121.3
247.2
Repayment of borrowings
17
(88.0)
(193.9)
Payment of lease liabilities
17
(10.6)
(8.9)
Dividends paid to shareholders of the Company
(34.5)
(34.2)
Dividends paid to non-controlling interests
(8.1)
(8.1)
Net cash from financing activities
(33.0)
(2.0)
Net (decrease)/increase in cash and cash equivalents and overdrafts
(5.7)
16.3
Cash and cash equivalents at the start of the year
124.5
117.7
Effect of exchange rate fluctuations on cash held
(7.3)
(9.5)
Net cash and cash equivalents at the end of the year
111.5
124.5
128
Financial statements
Annual report 2024
Notes to the consolidated ﬁnancial statements
Morgan Advanced Materials
129
1. Material accounting policies, estimates and judgements
Morgan Advanced Materials plc (the ‘Company’) is a public company limited by shares incorporated in the UK under the Companies
Act and is headquartered in the UK. The address of the registered office is given in Shareholder information on page 206. The principal
activities of the Company and its subsidiaries and the nature of the Group’s operations are set out in the Strategic Report.
The Group’s financial statements consolidate those of the Company and its subsidiaries (together referred to as the ‘Group’). The Parent
Company financial statements present information about the Company as a separate entity and not about its Group. These consolidated
financial statements have been drawn up to 31 December 2024. The Group maintains a 12-month calendar financial year ending on
31 December.
The Group financial statements have been prepared and approved by the Directors in accordance with the requirements of the
Companies Act 2006 and International Financial Reporting Standards (‘IFRS’) as adopted by the UK. The Company has elected to
prepare its Parent Company financial statements in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework;
these are presented on pages 181 to 199.
Certain line items in the primary statements have been disaggregated to provide greater clarity, and accordingly, the corresponding prior
year comparative amounts have been re-presented for consistency and comparability between periods. The comparative period includes
£13.5 million of pension assets that were previously presented net within pension liabilities. There is no impact on net profit, net assets or
cash flows.
Except for the changes set out in the adoption of new and revised standards section, the accounting policies set out below have been
applied consistently to all periods presented in these Group financial statements.
Material accounting policies
Measurement convention
The financial statements are prepared on the historical cost basis except for derivative financial instruments and financial instruments
designated as fair value through other comprehensive income (‘FVOCI’).
Functional and presentation currency
The Group’s financial statements are presented in pounds sterling, which is the Company’s functional currency.
Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements
of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which
control ceases.
(ii) Acquisitions
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is
transferred to the Group. The Group measures goodwill as the acquisition-date fair value of the consideration transferred, including the
amount of any non-controlling interest in the acquiree, less the net of the acquisition-date fair values of the identifiable assets acquired and
liabilities assumed, including contingent liabilities as required by IFRS 3.
Consideration transferred includes the fair values of assets transferred, liabilities incurred by the Group to the previous owners of the
acquiree, equity interests issued by the Group, contingent consideration and share-based payment awards of the acquiree that are replaced
in the business combination. Any contingent consideration payable is recognised at fair value at the acquisition date. Subsequent changes to
the fair value of contingent consideration that is not classified as equity is recognised in the income statement.
Transaction costs that the Group incurs in connection with a business combination, such as finder’s fees, legal fees, due diligence fees and
other professional and consulting fees, are expensed as incurred.
(iii) Transactions eliminated on consolidation
Intra-Group balances and any unrealised gains and losses or income and expenses arising from intra-Group transactions are eliminated
in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated against the
investment to the extent of the Group’s interest in the associate. Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is no evidence of impairment.
Notes to the consolidated ﬁnancial statements
continued
1. Material accounting policies, estimates and judgements
(continued)
130
Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the balance sheet date are translated to pounds sterling at the foreign exchange rate ruling
at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair
value are translated to pounds sterling at foreign exchange rates ruling at the dates the fair values are determined.
(ii) Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to
pounds sterling at foreign exchange rates ruling at the balance sheet date. The revenue, expenses and cash flows of foreign operations are
translated to pounds sterling at an average rate for the period where this approximates to the foreign exchange rates ruling at the dates
of the transactions. Foreign exchange differences arising on retranslation since the adoption of IFRS are recognised directly in other
comprehensive income and accumulated in the translation reserve.
Speciﬁc adjusting items
The Group presents specific adjusting items separately in the consolidated income statement. These are items which occur infrequently
and are presented separately in the consolidated income statement due to their nature and size. The Directors consider disclosure of
specific adjusting items necessary for the users of the financial statements to obtain an alternative understanding of the financial information
and underlying performance of the business.
Revenue
Revenue is recognised as or when the Group satisfies a contractual performance obligation by transferring a promised good or service to a
customer. The Group’s principal performance obligation is the provision of products and components, and is satisfied at a point in time and
subject to payment terms typical to the geography in which the business operates. For goods that are collected by the customer, revenue
is recognised at the point the customer has taken physical possession of the goods. For contracts that include delivery of goods, the
delivery element of the contract constitutes a separate performance obligation because it is distinct. For these contracts, control of the
goods does not transfer to the customer until the goods have been delivered and therefore both performance obligations are satisfied
simultaneously. Revenue for these contracts is therefore recognised on delivery.
Substantially, all of the Group’s revenue is derived from short-term contracts for the provision of products and components. A smaller
portion of the Group’s revenue relates to project-based business, principally within the Thermal Products GBU. Revenue for these
contracts is recognised in line with fulfilment of contractual performance obligations stated in the contract.
Revenue is only recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised
will not occur. The transaction price is determined as the amount receivable for the provision of products and components excluding
rebates, discounts and similar items. Determining the transaction price does not require significant judgement. The costs incurred in
obtaining contracts are not material and the Group acts as a principal in its transactions with customers.
IFRS 15 Revenue from Contracts with Customers requires revenue to be disaggregated into categories that depict how the nature,
amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Group discloses revenue disaggregated
by geography, end-market and by GBU, which are aligned by product type, in note 3 to the consolidated financial statements.
Research and development
The Group undertakes research and development activities as part of continual improvement of existing products and exploring new
products. Expense relating to the research phase is recognised in the income statement as incurred. During the development phase
the Group applies the research to improve existing products or offer new products by solving technical problems. Expense relating to
development is capitalised where the expense can be reliably measured, the asset created is technically and commercially feasible,
the Group intends to complete and use or sell the asset and future economic benefits are probable. Expense which does not meet
the capitalisation criteria is expensed as incurred.
Finance income and expense
Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, interest receivable on
funds invested, gains and losses on hedging instruments that are recognised in the income statement, interest on IFRS 16 lease liabilities
and net interest on IAS 19 pension assets and IAS 19 obligations. Interest income is recognised in the income statement as it accrues,
using the effective interest method.
Financial statements
Annual report 2024
1. Material accounting policies, estimates and judgements
(continued)
Morgan Advanced Materials
131
Taxation
Income tax on the profit for the year comprises current and deferred tax. Income tax is recognised in the income statement except to
the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised in equity
or other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance
sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are
not provided for: the initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable
profit and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset
can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Discontinued operations
Where the Group has disposed of or has classified as held-for-sale a business component which represents a separate major line of
business or geographical area of operations, it classifies such operations as discontinued. The post-tax profit or loss of the discontinued
operations is shown as a single line on the face of the consolidated income statement, separate from the results of the rest of the Group.
Hedge accounting
The Group designates certain derivatives as hedging instruments in respect of foreign currency risk cash flow hedges. Hedges of foreign
exchange risk on firm commitments are accounted for as cash flow hedges. At the inception of the hedge relationship, the Group
documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its
strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group
documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable
to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:
There is an economic relationship between the hedged item and the hedging instrument;
The effect of credit risk does not dominate the value changes that result from that economic relationship; and
The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management
objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship
(for example rebalances the hedge) so that it meets the qualifying criteria again. The Group designates the full change in the fair value of
a forward contract (for example including the forward elements) as the hedging instrument for all of its hedging relationships involving
forward contracts.
Note 21 sets out details of the fair values of the derivative instruments used for hedging purposes.
Movements in the hedging reserve in equity are detailed in note 19.
Fair value hedges
The fair value change on qualifying hedging instruments is recognised in the income statement.
Where hedging gains or losses are recognised in income statement, they are recognised in the same line as the hedged item.
Cash ﬂow hedges
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify
as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of hedging reserve, limited to
the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion is
recognised immediately in the income statement.
Notes to the consolidated ﬁnancial statements
continued
1. Material accounting policies, estimates and judgements
(continued)
Cash ﬂow hedges
(continued)
132
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to the income statement in the
periods when the hedged item affects the income statement, in the same line as the recognised hedged item. However, when the hedged
forecast transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised
in other comprehensive income and accumulated in equity are removed from equity and included in the initial measurement of the cost
of the non-financial asset or non-financial liability. This transfer does not affect other comprehensive income. Furthermore, if the Group
expects that some or all of the loss accumulated in the hedging reserve will not be recovered in the future, that amount is immediately
reclassified to the income statement.
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria
(after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised.
The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in the
cash flow hedge reserve at that time remains in equity and is reclassified to the income statement when the forecast transaction occurs.
When a forecast transaction is no longer expected to occur, the gain or loss accumulated in the cash flow hedge reserve is reclassified
immediately to the income statement.
Net investment hedge accounting
The Group uses foreign currency denominated borrowings as a hedge against translation exposure on the Group’s net investment in
overseas companies. Where the hedge is fully effective at hedging, the variability in the net assets of such companies caused by changes
in exchange rates and the changes in value of borrowings are recognised in other comprehensive income and accumulated in the
translation reserve. The ineffective part of any changes in value caused by changes in exchange rates is recognised immediately in the
income statement.
Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses. The cost of
self-constructed assets includes the cost of materials, direct labour and an appropriate proportion of production overheads. Where parts
of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and
equipment.
Gains and losses on the disposal of property, plant and equipment are determined by comparing the proceeds from disposal with the
carrying amount of the asset. Gains and losses on the disposal of property, plant and equipment are recognised in ‘Operating costs before
amortisation of intangible assets, impairments and reversal of impairments of non-financial assets’ in the income statement.
(ii) Depreciation of owned assets
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property,
plant and equipment. Land is not depreciated. Depreciation methods, useful lives and residual values are reviewed at each balance sheet
date. The estimated useful lives are as follows:

Buildings | 50 years
Plant, equipment and fixtures | 3–20 years

Leasing
The Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognises a right-of-use asset and
a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as
leases with a lease term of 12 months or less) and leases of low-value assets (defined as leases of a value of less than USD5,000 at lease
commencement). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the
term of the lease.
(i) Lease liabilities
The lease liability is initially measured at the present value of future lease payments, discounted by using an incremental borrowing rate for
the relevant geographical region. The lease payments included in the lease liability comprise fixed lease payments, variable payments that
depend on an index or rate and any payments due under lease extension, termination or purchase options to the extent they are assessed
as reasonably certain.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective
interest method) and by reducing the carrying amount to reflect the lease payments made. The Group remeasures the lease liability
(and makes a corresponding adjustment to the related right-of-use asset) whenever there is a lease modification, a change in lease term or
there is a significant event or change in circumstances resulting in a change in the assessment or exercise of other lease variables, such as
purchase options. A remeasurement will also occur when the lease payments change due to changes in index rates.
Financial statements
Annual report 2024
1. Material accounting policies, estimates and judgements
(continued)
Morgan Advanced Materials
133
(ii) Right-of-use assets
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement date, less any lease incentives received and initial direct costs. They are subsequently measured at cost less accumulated
depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or
restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured
under IAS 37. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those
costs are incurred to produce inventories.
(iii) Depreciation of right-of-use assets
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. The depreciation starts at
the commencement date of the lease.
Goodwill
All business combinations are accounted for by applying the purchase method. Goodwill represents the difference between the cost of the
acquisition and the fair value of assets, liabilities and contingent liabilities acquired.
Goodwill is allocated to groups of cash-generating units and is not amortised but tested at least annually for impairment. If the recoverable
amount of the cash-generating unit or group of cash-generating units is less than the carrying amount of the unit or group, the impairment
loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit or group and then to reduce the carrying amount
of the other intangibles and other assets of the unit or group on a pro-rata basis. An impairment loss recognised for goodwill is not
reversed in a subsequent period.
Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation (see below) and impairment losses.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such
lives are indefinite. Intangible assets with an indefinite useful life are systematically tested for impairment at each balance sheet date.
Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

Capitalised development costs | 3 years
Computer software | 3–10 years
Customer relationships | 15–20 years
Technology and trademarks | 15–20 years

When the Group incurs configuration and customisation costs as part of a cloud-based software-as-a-service agreement which do not
result in the creation of an asset that the Group has control over, then these costs are expensed.
Impairment of non-ﬁnancial assets, excluding goodwill
The carrying amounts of the Group’s assets and cash-generating units are reviewed at each balance sheet date to determine whether
there is any indication of impairment. If any such indication exists, the asset or cash-generating unit’s recoverable amount is estimated.
The recoverable amount of other assets and cash-generating units is the greater of their value in use and fair value less costs to sell.
In assessing value in use, the estimated future cash flows 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 specific to the asset or cash-generating unit. An impairment loss is
recognised immediately in the income statement.
An impairment loss is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after
the impairment loss was recognised. A reversal of an impairment loss is recognised immediately in the income statement to the extent
that the asset’s or cash-generating unit’s 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.
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and selling expenses.
The cost of inventories is based on the first-in-first-out principle and includes expenditure incurred in acquiring the inventories and bringing
them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate
share of overheads based on normal operating capacity.
Notes to the consolidated ﬁnancial statements
continued
1. Material accounting policies, estimates and judgements
(continued)
134
Trade and other receivables
The Group’s trade receivables are held for collection under IFRS 9 and are initially recorded at transaction price and subsequently
measured at amortised cost less allowances for expected credit losses (‘ECL’).
The ECL are calculated in accordance with the simplified approach under IFRS 9 by applying lifetime historical credit loss experience to
trade receivables. The expected credit loss rate is adjusted to account for overdue debts and to reflect current economic conditions and
future default rates. Trade receivables more than 180 days past due are generally considered not recoverable and a 100% loss allowance
is recognised, except where historical experience with certain customers or geographies indicates otherwise. The loss is recognised in
the income statement.
Trade receivables are written off when recoverability is assessed as being remote. Subsequent recoveries of amounts previously written
off are credited to the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise bank balances and cash deposits. Cash deposits include demand deposits and short-term
investments with maturities of three months or less. Bank overdrafts that are repayable on demand form an integral part of the Group’s
cash management and are included as a component of cash and cash equivalents for the purposes of the Group statement of cash flows.
Trade and other payables
Trade and other payables are recognised initially at transaction price. Subsequent to initial recognition, they are measured at amortised
cost using the effective interest method.
Borrowings
Borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, borrowings are stated
at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of
the borrowings on an effective interest basis.
Pensions and other long-term service beneﬁts
(i) Deﬁned contribution plans
For defined contribution plans, the Group pays contributions to either publicly or privately administered pension plans, and the Group
has no further payment obligations once the contributions have been paid. Obligations for contributions to defined contribution pension
plans are recognised as an expense in the income statement as incurred.
(ii) Deﬁned beneﬁt plans
A defined benefit plan is any retirement plan which is not a defined contribution plan. Typically, defined benefit plans define an amount of
retirement benefit that an employee will receive, usually depending on one or more factors such as age, years of service and earnings.
The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount
of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to
determine its present value, and the fair value of any plan assets is deducted. The discount rate is the yield at the balance sheet date on
AA-credit-rated bonds that have maturity dates approximating the terms of the Group’s obligations. The calculation is performed by a
qualified actuary using the projected unit credit method.
When the calculation results in a benefit to the Group, the recognised asset is limited to the total of the present value of economic benefits
available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available
to the Group if it is realisable during the life of the plan, or on settlement of the plan liabilities. Remeasurement gains and losses, differences
between the interest income and actual returns on assets, and the effect of changes in actuarial assumptions, are recognised in full in other
comprehensive income in the year in which they arise.
Financial statements
Annual report 2024
1. Material accounting policies, estimates and judgements
(continued)
Morgan Advanced Materials
135
(iii) Long-term service beneﬁts
The Group’s net obligation in respect of long-term service benefits, other than pension plans, is the amount of future benefit that
employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected
unit credit method, or similar approximation, and is discounted to its present value and the fair value of any related assets is deducted.
The discount rate is the yield at the balance sheet date on AA-credit-rated bonds that have maturity dates approximating the terms of the
Group’s obligations.
Share-based payment transactions
The grant date fair value of share-based payment awards granted to employees is recognised as an expense, with a corresponding increase
in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognised as an expense is
adjusted to reflect the actual number of awards for which the related service and non-market performance conditions are met, such
that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market
performance conditions at the vesting date.
Provisions, contingent liabilities and contingent assets
A provision is recognised in the consolidated balance sheet when the Group has a present legal or constructive obligation as a result of
a past event and there is probable outflow of resources which can be reliably measured and will be required to settle the obligation.
Provisions are recognised at an amount equal to the best estimate of the expenditure required to settle the Group’s liability. If the effect
is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate reflective of the current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
A contingent liability is disclosed, where significant, 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
outflow in excess of any amounts provided is considered remote. Obligations arising from restructuring plans are recognised when detailed
formal plans have been established and when there is a valid expectation that such a plan will be carried out. The Group’s contingent
liabilities are reviewed on a regular basis.
A contingent asset is not recognised but is disclosed, where significant, if an inflow of economic benefit is probable.
Preference share capital
Preference share capital is classified as a financial liability within borrowings if the substance of the shares does not contain an equity
element. Dividends on Preference share capital are classified as finance charges within the consolidated income statement.
Share capital
Ordinary shares are classified as equity.
Purchase of own shares
Shares purchased by The Morgan General Employee Benefit Trust (‘the Trust’) are used to satisfy share awards under the Group share
scheme plans. The consideration paid which includes directly attributable costs is net of any tax effects and is recognised as a deduction
from equity. Shares purchased by the Company as part of the share buyback programme are cancelled, the nominal value of the shares is
transferred from share capital to the capital redemption reserve and retained earnings are reduced by the value of the consideration paid.
Dividends
Equity dividends on Ordinary share capital are recognised as a liability in the Company’s financial statements on the date that the
shareholder’s right to receive payment is established. Dividends declared after the balance sheet date are not recognised as there is no
present obligation at the balance sheet date.
Notes to the consolidated ﬁnancial statements
continued
1. Material accounting policies, estimates and judgements
(continued)
136
Critical accounting judgements and key sources of estimation uncertainty
In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the
application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.
Critical accounting judgements
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the
consolidated financial statements is included in the following notes:
Note 6: Speciﬁc adjusting items
The Group separately presents specific adjusting items in the consolidated income statement which, in the Directors’ judgement,
need to be disclosed separately by virtue of their size and incidence in order for users of the consolidated financial statements to obtain
an alternative understanding of the financial information and the underlying performance of the business. These are items which occur
infrequently and include (but are not limited to):
Individual restructuring projects which are material or relate to the closure of a part of the business and are not expected to recur;
Impairment of non-financial assets which are material;
Gains or losses on disposal or exit of businesses;
Significant costs incurred as part of the integration of an acquired business;
Gains or losses arising on significant changes to or closures of defined benefit pension plans; and
Design, configuration, customisation and implementation of a Global ERP system.
Determining whether an item is part of specific adjusting items requires judgement to determine the nature and the intention of
the transaction.
Note 24: Provisions and contingent liabilities
Due to the nature of its operations, the Group holds provisions for its environmental obligations. Judgement is needed in determining
whether a contingent liability has crystallised into a provision. Management assesses whether there is sufficient information to determine
that an environmental liability exists and whether it is possible to estimate with sufficient reliability what the cost of remediation is likely to
be. For environmental remediation matters, this tends to be at the point in time when a remediation feasibility study has been completed,
or sufficient information becomes available through the study to estimate the costs of remediation.
The Group will recognise a legal provision at the point when the outcome of a legal matter can be reliably estimated. Estimates are based
on past experience of similar issues, professional advice received and the Group’s assessment of the most likely outcome. The timing of the
utilisation of these provisions is frequently uncertain, reflecting the complexity of issues and the outcome of various court proceedings and
associated negotiations.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are included in
the notes below.
Note 22: Pensions and other post-retirement employee beneﬁts: key actuarial assumptions
The principal actuarial assumptions applied to pensions are shown in note 22, including a sensitivity analysis of the reasonably possible
changes for the inflation, discount rate and mortality rate assumptions. The actuarial evaluation of pension assets and liabilities is based
on assumptions in respect of inflation, future salary increases, discount rates, returns on investments and mortality rates. Relatively small
changes in the assumptions underlying the actuarial valuations of pension schemes can have a significant impact on the pension asset and
liability included in the balance sheet.
Financial statements
Annual report 2024
1. Material accounting policies, estimates and judgements
(continued)
Morgan Advanced Materials
137
Other assumptions and estimates which have a lower risk of resulting in a material adjustment
to the carrying amounts of assets and liabilities within the next 12 months include:
Notes 8 and 14: Taxation
The level of current tax and deferred tax recognised is dependent on the tax rates in effect at the balance sheet date, and on subjective
judgements as to the outcome of decisions to be made by the tax authorities in the various tax jurisdictions around the world in which
the Group operates.
The Group periodically assesses its liabilities and contingencies for all tax years open to audit based on the latest information available.
The Group records its best estimate of these tax liabilities, including related interest charges. While management believes it has adequately
provided for the probable outcome of these matters, future results may include adjustments to these estimated tax liabilities and the final
outcome of tax examinations may result in a materially different outcome than that assumed in the tax liabilities. Provisions are made
against individual exposures taking into account the specific circumstances of each case, including the strengths of technical arguments,
past experience with tax authorities, recent case law or rulings on similar issues and external advice received.
Note 21: Credit risk
Note 21 contains information about the Group’s exposure to credit risk, including a sensitivity analysis. The Group establishes a loss
allowance for its estimate of expected credit losses against receivables.
Climate change-related risks and opportunities
The potential climate change-related risks and opportunities to which the Group is exposed, as identified by management, are disclosed in
the Group’s TCFD disclosures on pages 33 to 42. Management has assessed the potential financial impacts relating to the identified risks,
primarily considering the useful lives of property, plant and equipment, the possibility of impairment of goodwill and other long-lived
assets, and the recoverability of the Group’s deferred tax assets. Management has exercised judgement in concluding that there are
no further material financial impacts of the Group’s climate-related risks and opportunities on the consolidated financial statements.
These judgements will be kept under review by management as the future impacts of climate change depend on environmental,
regulatory and other factors outside of the Group’s control, which are not all currently known.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in
the Strategic Report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities, are described in the
Financial Review on pages 50 to 54. In addition, note 21 to the consolidated financial statements includes the Group’s policies and
processes for managing financial risk, details of its financial instruments and hedging activities, and details of its exposures to credit risk
and liquidity risk.
The Group meets its day-to-day working capital requirements through local banking arrangements. The principal borrowing facilities are
subject to covenants that are measured semi-annually with reference to net debt to EBITDA and interest cover as at 31 December 2024.
The Group had both significant available liquidity and headroom on its covenants and no scheduled debt maturities until 2026.
A number of stress test scenarios have been performed to demonstrate the decline in business performance required in order for the
Group to breach its banking covenants. The Directors do not consider these scenarios to be plausible given the diversity of the Group’s
end-markets and its broad manufacturing base.
The Board and Executive Committee regularly review principal and emerging risks including climate change risk and consider the impact
of these risks in the context of the viability and going concern assessments on pages 55 and 56. The Directors have a reasonable
expectation that the Company and the Group have adequate resources to continue in operational existence for a period of 18 months
from the date of signing this Annual Report and Accounts. Accordingly, they continue to adopt the going concern basis in preparing the
Annual Report and Accounts.
Notes to the consolidated ﬁnancial statements
continued
1. Material accounting policies, estimates and judgements
(continued)
138
Alternative performance measures
The Group monitors business performance through alternative performance measures (APMs) which are not defined under IFRS and are
therefore non-GAAP measures. The APMs provide useful information to stakeholders, including additional insight into ongoing trading and
year-on-year comparisons. These APMs are not a substitute for IFRS measures but are complementary to them. The Group defines each
APM and therefore they may not be directly comparable with similarly named metrics in other businesses. The definition, purpose and
reconciliation to statutory figures where applicable are included on pages 202 to 205.
Newly adopted standards
In the current year, the Group has applied a number of amendments to IFRS Accounting Standards as adopted by the UK that are
mandatorily effective for an accounting period that begins on or after 1 January 2024. Their adoption has not had any material impact
on the disclosures or on the amounts reported in these financial statements.
Amendments to IAS 1 Non-current Liabilities with Covenants.
Amendments to IAS 1 Classification of liabilities as current or non-current.
Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements.
Amendments to IFRS 16 Lease Liability in a Sale and Leaseback.
Accounting developments and changes
New accounting standards in issue but not yet effective
New standards and interpretations that are in issue but not yet effective are listed below.
IFRS S1 ‘General requirements for Disclosure of Sustainability-related Financial Information’.
IFRS S2 ‘Climate-related Disclosures’.
Amendment to IFRS 9 and IFRS 7 ‘Classification and Measurement of Financial Instruments’.
Amendments to IAS 21 Lack of Exchangeability.
IFRS 18: Presentation and Disclosure in Financial Statements.
The adoption of amendments to IAS 21 is effective for the period beginning 1 January 2025 and adoption is not expected to lead to any
material changes to the Group’s accounting policies or have any other material impact on the financial position or performance of the
Group. IFRS 18 is effective for periods beginning on or after 1 January 2027 and replaces IAS 1 Presentation of Financial Statements.
The standard requires the classification of income and expenditure in the income statement to be split between operating, investing and
financing, introduces disclosures around management defined performance measures (MPMs) and aggregation and disaggregation of other
disclosure information. The impact of the standard on the Group is currently being assessed and it is not yet practicable to quantify the
effect of IFRS 18 on these consolidated financial statements.
There are no other upcoming accounting standards or amendments that are applicable to the Group.
2. Acquisitions and disposals
In March 2024 the Group acquired the remaining 7% of the shares in Morgan Korea Company Ltd, a manufacturing business which
services all three segments of the Group, for consideration of £5.1 million. The Group had previously owned 93% of the business and
included the entity in the Group consolidation.
There were no acquisitions or disposals of businesses by the Group in 2023.
Financial statements
Annual report 2024
Morgan Advanced Materials
139
3. Segmental reporting
As part of the restructuring programme to streamline and simplify the Group a change was implemented, effective from 1 January 2024,
to manage the Group through three distinct reporting segments, Thermal Products, Performance Carbon and Technical Ceramics.
The internal management information, regularly reviewed by the Group’s Board of Directors (the Chief Operating Decision Maker) in
order to allocate resources and assess performance, is presented on the basis of these reporting segments.
Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis. Unallocated items comprise mainly investments and related income, borrowings and related expenses, corporate assets
and head office expenses, and income tax assets and liabilities.
The information presented below represents the reporting segments of the Group. Comparative figures have been presented based on
the new reporting segments.

| Thermal Products | Performance Carbon | Technical Ceramics
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023
Continuing operations | £m | £m | £m | £m | £m | £m
Revenue from external customers | 418.2 | 454.4 | 345.2 | 327.2 | 337.3 | 333.1
Segment adjusted operating profit 1 | 40.0 | 40.2 | 55.1 | 50.0 | 39.2 | 36.0
Corporate costs 2 |  |  |  |  |  |
Group adjusted operating profit 1 |  |  |  |  |  |
Amortisation of intangible assets | (0.8) | (1.4) | (0.3) | (0.8) | (0.6) | (1.1)
Operating profit before specific adjusting items | 39.2 | 38.8 | 54.8 | 49.2 | 38.6 | 34.9
Specific adjusting items included in operating profit 3 | (8.1) | (9.3) | (7.6) | (9.3) | (0.7) | 7.6
Operating profit/(loss) | 31.1 | 29.5 | 47.2 | 39.9 | 37.9 | 42.5
Finance income |  |  |  |  |  |
Finance expense |  |  |  |  |  |
Profit before taxation |  |  |  |  |  |
Segment assets | 373.4 | 376.2 | 316.3 | 278.2 | 222.7 | 217.6
Segment liabilities | 103.9 | 101.0 | 54.0 | 55.0 | 85.0 | 80.4
Segment capital expenditure | 22.8 | 17.2 | 52.3 | 27.2 | 21.0 | 15.9
Segment depreciation – property, plant and equipment | 14.6 | 13.9 | 10.9 | 11.2 | 8.6 | 6.8
Segment depreciation – right-of-use assets | 3.8 | 3.5 | 1.5 | 1.3 | 3.3 | 2.8
Segment impairment reversals of non-financial assets | – | 2.4 | – | – | – | 5.7
Segment impairment of non-financial assets | 4.2 | – | – | 7.0 | – | 0.3

1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on pages 201
to 205.
2.
Corporate costs consist of central head office costs.
3.
Details of specific adjusting items from continuing operations are given in note 6 to the consolidated financial statements.
Notes to the consolidated ﬁnancial statements
continued
3. Segmental reporting
(continued)
140

| Segment totals | Corporate costs | Group
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023
Continuing operations | £m | £m | £m | £m | £m | £m
Revenue from external customers | 1,100.7 | 1,114.7 | – | – | 1,100.7 | 1,114.7
Segment adjusted operating profit 1 | 134.3 | 126.2 | – | – | 134.3 | 126.2
Corporate costs 2 |  |  | (5.9) | (5.9) | (5.9) | (5.9)
Group adjusted operating profit 1 |  |  |  |  | 128.4 | 120.3
Amortisation of intangible assets | (1.7) | (3.3) | – | – | (1.7) | (3.3)
Operating profit before specific adjusting items | 132.6 | 122.9 | (5.9) | (5.9) | 126.7 | 117.0
Specific adjusting items included in operating profit /(loss) 3 | (16.4) | (11.0) | (6.7) | (14.1) | (23.1) | (25.1)
Operating profit/(loss) | 116.2 | 111.9 | (12.6) | (20.0) | 103.6 | 91.9
Finance income |  |  |  |  | 2.6 | 3.9
Finance expense |  |  |  |  | (21.6) | (18.0)
Profit before taxation |  |  |  |  | 84.6 | 77.8
Segment assets | 912.4 | 872.0 | 164.7 | 166.2 | 1,077.1 | 1,038.2
Segment liabilities | 242.9 | 236.4 | 444.9 | 403.2 | 687.8 | 639.6
Segment capital expenditure | 96.1 | 60.3 | – | – | 96.1 | 60.3
Segment depreciation – property, plant and equipment | 34.1 | 31.9 | – | – | 34.1 | 31.9
Segment depreciation – right-of-use assets | 8.6 | 7.6 | – | – | 8.6 | 7.6
Segment impairment reversals of non-financial assets | – | 8.1 | – | – | – | 8.1
Segment impairment of non-financial assets | 4.2 | 7.3 | – | – | 4.2 | 7.3

1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on pages 201
to 205.
2.
Corporate costs consist of central head office costs.
3.
Details of specific adjusting items from continuing operations are given in note 6 to the consolidated financial statements.
Revenue from external customers and non-current assets by geography

| Revenue from | Non-current assets (excluding
| external customers | pension and deferred tax assets)
| 2024 | 2023 | 2024 | 2023
Continuing operations | £m | £m | £m | £m
USA | 451.8 | 427.4 | 263.9 | 219.8
China | 97.7 | 114.8 | 44.6 | 43.4
Germany | 83.2 | 88.7 | 42.3 | 41.9
UK (the Group’s country of domicile) | 44.2 | 43.6 | 110.1 | 101.6
Other Asia, Australasia, Middle East and Africa | 192.9 | 197.1 | 55.5 | 54.6
Other Europe | 165.6 | 173.2 | 33.1 | 37.1
Other North America | 37.1 | 44.9 | 1.9 | 2.1
South America | 28.2 | 25.0 | 11.5 | 12.7
| 1,100.7 | 1,114.7 | 562.9 | 513.2

Revenue from external customers is based on geographic location of the end-customer. Segment assets are based on geographical
location of the assets. In the current and prior year no single customer represented more than 5% of revenue.
Financial statements
Annual report 2024
3. Segmental reporting
(continued)
Morgan Advanced Materials
141
Revenue from external customers by end-market

| 2024 | 2023
Continuing operations | £m | £m
Semiconductors | 105.7 | 108.6
Healthcare | 84.1 | 78.7
Clean energy and clean transportation | 57.6 | 50.0
Faster growing markets | 247.4 | 237.3
Industrial | 294.2 | 315.9
Conventional transportation | 202.8 | 200.2
Metals | 140.0 | 150.2
Petrochemical and chemical | 106.0 | 110.8
Security and defence | 73.9 | 68.5
Conventional energy | 36.4 | 31.8
Core markets | 853.3 | 877.4
| 1,100.7 | 1,114.7

Intercompany sales to other segments

| Thermal Products | Performance Carbon | Technical Ceramics | Segment totals
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m | £m | £m | £m | £m
Intercompany sales to |  |  |  |  |  |  |  |
other segments | 1.7 | 1.0 | 0.5 | 0.1 | 0.5 | 0.7 | 2.7 | 1.8

4. Operating costs before speciﬁc adjusting items

|  | 2024 | 2023
Continuing operations | Note | £m | £m
Change in stocks of finished goods and work in progress |  | 3.9 | (2.9)
Raw materials and consumables |  | 283.6 | 305.6
Other operating costs |  | 158.2 | 164.9
|  | 445.7 | 467.6
Employee costs: |  |  |
Wages and salaries |  | 313.7 | 315.3
Equity-settled share-based payment expense | 23 | 2.8 | 2.9
Social security costs and other benefits |  | 64.6 | 66.5
Pension costs | 22 | 16.2 | 16.4
|  | 397.3 | 401.1
Depreciation – property, plant and equipment | 11 | 34.1 | 31.9
Depreciation – right-of-use assets | 12 | 8.6 | 7.6
|  | 42.7 | 39.5
Short-term leases and leasing of low-value assets: |  |  |
Plant and equipment |  | 0.1 | 0.1
Other leases |  | 0.4 | 0.4
|  | 0.5 | 0.5
Other operating charges and income: |  |  |
Net foreign exchange (gains)/losses |  | (3.1) | 2.3
Net other operating charges |  | 89.2 | 83.4
|  | 86.1 | 85.7
Total operating costs before specific adjusting items and amortisation of intangible assets |  | 972.3 | 994.4
Amortisation of intangible assets | 13 | 1.7 | 3.3
Total operating costs before specific adjusting items |  | 974.0 | 997.7

Notes to the consolidated ﬁnancial statements
continued
4. Operating costs before speciﬁc adjusting items
(continued)
142
The following costs are included in total operating costs before specific adjusting items.
1. Research and development
The Group recognised £31.1 million in expense in respect of research and development (2023: £32.9 million). These costs are included
in employee costs and other operating costs. There are no individually material project costs.
2. Audit and non-audit fees
A summary of the audit and non-audit fees in respect of services provided by the auditor, which are included in net other operating
costs, is set out below. The prior year includes additional audit fees incurred for the audit of the Company’s annual accounts and the
audits of the subsidiaries of the Company in relation to the cyber security incident. Fees in relation to non-audit services were £41,000
(2023: £38,000).

| 2024 | 2023
| £m | £m
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts: |  |
in respect of the current year | 1.0 | 1.2
in respect of the prior year | – | 1.2
Fees payable to the Company’s auditor and its associates for other services: |  |
the auditing of accounts of any subsidiaries of the Company | 2.3 | 2.8
| 3.3 | 5.2

5. Staff numbers
The monthly average number of persons employed by the Group (including Directors) during the year, analysed by reporting segment,
was as follows:

| Number of employees
| 2024 | 2023
Reportable operating segments |  |
Thermal Products | 2,810 | 2,910
Performance Carbon | 2,570 | 2,570
Technical Ceramics | 3,160 | 3,140
Segment total | 8,540 | 8,620
Corporate | 50 | 50
Group | 8,590 | 8,670

Average employee numbers have been rounded to the nearest 10.
6. Speciﬁc adjusting items

| 2024 | 2023
Continuing operations | £m | £m
Costs associated with the cyber security incident | (1.1) | (14.7)
Net restructuring charge | (13.1) | (3.5)
Design, configuration, customisation and implementation of a Global ERP system | (5.2) | –
Net business closure costs | – | (1.9)
Credit/(charge) in relation to the impact of Argentina’s currency devaluation | 0.5 | (5.8)
Impairment of non-financial assets | (4.2) | (7.3)
Reversal of impairment of non-financial assets | – | 8.1
Total specific adjusting items before income tax | (23.1) | (25.1)
Income tax credit from specific adjusting items | 2.5 | 3.8
Total specific adjusting items after income tax | (20.6) | (21.3)

The total cash outflow in respect of specific adjusting items excludes impairment of non-financial assets and reversal of impairment of
non-financial assets, and is reported within cash flows from operating activities in the consolidated cash flows.
Financial statements
Annual report 2024
6. Speciﬁc adjusting items
(continued)
Morgan Advanced Materials
143
Specific adjusting items from continuing operations
Specific adjusting items are items which occur infrequently and are presented separately in the consolidated income statement due to their
nature and size. The Directors consider disclosure of specific adjusting items necessary for the users of the financial statements to obtain an
alternative understanding of the financial information and underlying performance of the business.
Costs associated with the cyber security incident
The Group incurred a residual £1.1 million (2023: £14.7 million) of exceptional costs and charges in relation to the cyber security incident
which took place in January 2023.
Net restructuring charge
During the year the business continued its previously announced simplification and restructuring programme, and expanded the
programme to achieve further cost reductions and efficiencies. A total charge of £13.1 million was recognised in relation to these
programmes.
In 2023, a charge of £6.5 million was recognised in respect of restructuring programmes, which was partially offset by the release of
a £3.0 million restructuring provision following settlement of a multi-employer pension plan and the re-letting of a site held by
Technical Ceramics.
Design, conﬁguration, customisation and implementation of a Global ERP system
During the year the Group accelerated the development of its Global ERP intended to replace over 30 legacy systems across the Group.
The programme is expected to complete over three years and will create further opportunities to align business processes, strengthen
information security and the control environment. The costs of £5.2 million associated with the design, configuration and implementation
of the system are classified as specific adjusting items due to their nature and size.
Net business closure costs
During 2024, the Group did not incur any costs relating to business closures.
During 2023, the Group incurred £1.9 million for decommissioning, advisory and severance costs relating to the liquidation of a Thermal
Products business in China. In addition, a provision of £2.4 million was recognised relating to the environmental remediation of a Thermal
Products business in France which was sold in 2015. This charge was offset by a gain of £2.4 million recognised on disposal of land and
buildings for a Thermal Products business in China which was closed in 2020.
Credit/(charge) in relation to the impact of Argentina’s currency devaluation
In December 2023, Argentina devalued its currency by more than 50% and restrictions on imports limited the flow of raw materials to
the site. As a result the Group incurred a charge of £5.8 million in the year ended 31 December 2023, which consisted of £2.6 million for
the impact of the currency devaluation on the trading results of the Argentina business, impairment of property, plant and equipment of
£1.9 million and impairment of inventories of £1.3 million.
During the year ended 31 December 2024 an impairment charge of £0.5 million was reversed which related to the inventories sold in
the year.
2024 Impairment of non-ﬁnancial assets
Thermal Products
In light of challenging trading conditions, the Group has conducted an impairment review and where necessary performed an impairment
assessment in accordance with IAS 36 Impairment of Assets. As a result, the Group has recognised a net impairment charge of £4.2 million
related to fixed assets held by our Thermal Products business in Europe. The value-in-use calculation used a pre-tax discount rate of
13.5–17.2% and a long-term growth rate of 1.1–1.7% to derive the terminal value.
2023 Impairment of non-ﬁnancial assets
Performance Carbon
The Group recognised an impairment charge of £7.3 million related to fixed assets held by Performance Carbon businesses in Europe
(£3.2 million), North America (£1.5 million) and Asia (£2.6 million) as a result of underutilised assets and assets developed which were not
commercially viable. The value-in-use calculation used a pre-tax discount rate of 13.9–17.3% and a long-term growth rate of 1.0% to
derive the terminal value.
Notes to the consolidated ﬁnancial statements
continued
6. Speciﬁc adjusting items
(continued)
144
2023 Reversal of impairment of non-ﬁnancial assets
In 2023 the Group identified businesses within Thermal Products and Technical Ceramics, which previously incurred charges for
impairment of fixed assets, where the business had demonstrated sustained recovery. Consequently a reversal of impairment of
£8.1 million was recognised which consisted of £2.4 million for a partial reversal in Thermal Products and £5.7 million in respect of a full
reversal in Technical Ceramics. The value in use calculation used a pre-tax discount rate of 13.6% and a long-term growth rate of 1.0%
to derive the terminal value.
Review of cumulative impairment of non-ﬁnancial assets
Impairment charges of £18.9 million (2023: £20.6 million) for non-financial assets which the business continues to use have been
recorded during the current and previous years. These impaired amounts could be reversed if the related businesses were to outperform
significantly against their budget. A sensitivity analysis was carried out using reasonably possible changes to the key assumptions in assessing
the value in use of these non-financial assets. This did not result in a material reversal of the impaired amounts.
7. Finance income and expense

| 2024 | 2023
Continuing operations | £m | £m
Interest on bank balances and cash deposits | 2.6 | 3.9
Finance income | 2.6 | 3.9
Interest expense on borrowings and overdrafts | (18.4) | (15.6)
Interest expense on lease liabilities | (2.6) | (2.4)
Net interest on IAS 19 defined benefit pension obligations | (0.6) | –
Finance expense | (21.6) | (18.0)
Net financing costs | (19.0) | (14.1)

No finance income or expense related to discontinued operations in either the current or preceding year.
8. Taxation – income tax expense

| 2024 | 2023
Continuing operations | £m | £m
Current tax |  |
Current year | 29.7 | 25.5
Current tax associated with Pillar Two income taxes | 0.2 | –
| 29.9 | 25.5
Deferred tax |  |
Current year | (2.4) | (2.5)
Adjustments for prior years | (1.6) | (0.8)
| (4.0) | (3.3)
Total income tax expense recognised in the income statement | 25.9 | 22.2
Recognised in other comprehensive income |  |
Tax effect on components of other comprehensive income: |  |
Deferred tax associated with defined benefit schemes | 0.6 | 0.5
Total tax recognised in other comprehensive income | 0.6 | 0.5

There was no deferred tax associated with share schemes recognised in other comprehensive income (2023: none).
Financial statements
Annual report 2024
8. Taxation – income tax expense
(continued)
Morgan Advanced Materials
145
Reconciliation of effective tax rate

| 2024 | 2024 | 2023 | 2023
| £m | % | £m | %
Profit before tax | 84.6 |  | 77.8 |
Income tax charge using the domestic corporation tax rate | 21.1 | 24.9 | 18.3 | 23.5
Effect of different tax rates in other jurisdictions | 0.3 | 0.4 | 1.4 | 1.8
Local taxes including withholding tax suffered | 3.7 | 4.4 | 1.3 | 1.7
Permanent differences | (0.1) | (0.1) | 0.1 | 0.1
Movements related to unrecognised temporary differences | 2.5 | 2.9 | 2.0 | 2.6
Adjustments in respect of prior years | (1.6) | (1.9) | (0.9) | (1.2)
Statutory effective rate of tax | 25.9 | 30.6 | 22.2 | 28.5

The effective rate of tax before specific adjusting items is 26.4% (2023: 25.3%).
The Group operates in many jurisdictions around the world and is subject to factors that may impact future tax charges implementation of
the Organisation for Economic Co-operation and Development (OECD)’s BEPS actions, tax rate and legislation changes, expiry of the
statute of limitations and resolution of tax audits and disputes.
The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) published the Pillar Two model rules designed to ensure
that large multinational enterprises pay a minimum tax of 15% on their profits in each jurisdiction they operate in.
On 11 July, 2024, the UK enacted the Pillar Two income inclusion rules (IIR). The legislation implements a domestic top-up tax and a
multinational top-up tax which is effective for the financial year beginning 1 January 2024. The Group is in scope of the enacted legislation.
The Group has also applied the exception under the IAS 12 – Income Taxes as issued in May 2023, for the amendment in recognising and
disclosing information about deferred tax assets and liabilities. Accordingly, the Group neither recognises nor discloses information about
deferred tax assets or liabilities related to Pillar Two taxes.
The assessment of the potential exposure to Pillar Two income taxes indicate that the transitional safe harbour rules apply to most
jurisdictions in which the Group operates, with the exception of France, Singapore and the United Arab Emirates.
The amendments per IAS 12 requires Groups to disclose separately their current tax expense in relation to Pillar Two tax. The group
estimates a current tax expense related to Pillar Two taxes of £0.2 million for the territories where the safe harbour rules do not apply.
The Group continues to monitor Pillar Two legislative developments across the territories in which we operate to evaluate the future
impact on our business.
Notes to the consolidated ﬁnancial statements
continued
146
9. Discontinued operations
The Group disposed of its Composites and Defence Systems business on 20 November 2018. The business represented a separate
reportable segment and therefore, in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations,
the disposal group was classified as discontinued. During the year the Group recognised a gain of £0.1 million (2023: £0.7 million)
from a long-term contract.
The results from discontinued operations, which have been disclosed in the consolidated income statement, are set out below:

|  | 31 December 2024 | 31 December 2023
|  | Results |  |  | Results |  |
|  | before |  |  | before |  |
|  | speciﬁc | Speciﬁc |  | speciﬁc | Speciﬁc |
|  | adjusting | adjusting |  | adjusting | adjusting |
|  | items | items | Total | items | items | Total
| Note | £m | £m | £m | £m | £m | £m
Revenue |  | – | 0.1 | 0.1 | – | 0.7 | 0.7
Operating income |  | – | – | – | – | – | –
Profit before taxation |  | – | 0.1 | 0.1 | – | 0.7 | 0.7
Income tax expense |  | – | – | – | – | – | –
Profit from |  |  |  |  |  |  |
discontinued operations |  | – | 0.1 | 0.1 | – | 0.7 | 0.7
Basic earnings per share from |  |  |  |  |  |  |
discontinued operations | 10 |  |  | – |  |  | 0.2p
Diluted earnings per share from |  |  |  |  |  |  |
discontinued operations | 10 |  |  | – |  |  | 0.2p

There is no income tax expense in relation to the discontinued operations in either the current or preceding year.
Cash flows from discontinued operations are set out below:

| 31 December | 31 December
| 2024 | 2023
| £m | £m
Net cash generated from operating activities | 0.1 | 0.4
Net cash generated from investing activities | – | –
Net cash used in financing activities | – | –
| 0.1 | 0.4

Financial statements
Annual report 2024
Morgan Advanced Materials
147
10. Earnings per share

| 31 December 2024 | 31 December 2023
|  | Basic | Diluted |  | Basic | Diluted
|  | earnings | earnings |  | earnings | earnings
| Earnings | per share | per share | Earnings | per share | per share
| £m | pence | pence | £m | pence | pence
Profit for the year attributable to |  |  |  |  |  |
shareholders of the Company | 50.3 | 17.7p | 17.5p | 47.3 | 16.6p | 16.5p
Profit from discontinued operations | (0.1) | – | – | (0.7) | (0.2)p | (0.2)p
Profit from continuing operations | 50.2 | 17.7p | 17.5p | 46.6 | 16.4p | 16.3p
Specific adjusting items | 23.1 | 8.1p | 8.0p | 25.1 | 8.8p | 8.7p
Amortisation of intangible assets | 1.7 | 0.6p | 0.6p | 3.3 | 1.2p | 1.1p
Tax effect of the above 1 | (2.5) | (0.9)p | (0.9)p | (3.8) | (1.3)p | (1.3)p
Non-controlling interests’ share |  |  |  |  |  |
of the above adjustments | – | – | – | – | – | –
Adjusted profit for the year from |  |  |  |  |  |
continuing operations as used in |  |  |  |  |  |
adjusted earnings per share | 72.5 | 25.5p | 25.2p | 71.2 | 25.0p | 24.8p

1.
The tax effect of the amortisation of intangible assets was £nil (2023: £nil).

Number of shares (millions) | 2024 | 2023
Weighted average number of Ordinary shares for the purposes of basic earnings per share 1 | 284.5 | 284.8
Effect of dilutive potential Ordinary shares: |  |
Share options | 2.8 | 2.5
Weighted average number of Ordinary shares for the purposes of diluted earnings |  |
per share | 287.3 | 287.3

1.
The calculation of the weighted average number of shares excludes the shares held by The Morgan General Employee Benefit Trust, on which the dividends are waived.
Notes to the consolidated ﬁnancial statements
continued
148
11. Property, plant and equipment

|  | Plant, |
| Land and | equipment |
| buildings | and ﬁxtures | Total
| £m | £m | £m
Cost |  |  |
Balance at 1 January 2023 | 219.2 | 770.2 | 989.4
Additions | 7.3 | 54.0 | 61.3
Disposals | (0.3) | (12.4) | (12.7)
Transfers between categories | 0.4 | (0.4) | –
Effect of movement in foreign exchange | (10.5) | (34.0) | (44.5)
Balance at 31 December 2023 | 216.1 | 777.4 | 993.5
Balance at 1 January 2024 | 216.1 | 777.4 | 993.5
Additions | 13.2 | 81.1 | 94.3
Disposals | (11.5) | (35.0) | (46.5)
Transfers between categories | 0.8 | (0.8) | –
Effect of movement in foreign exchange | (2.0) | (4.8) | (6.8)
Balance at 31 December 2024 | 216.6 | 817.9 | 1,034.5
Depreciation and impairment losses |  |  |
Balance at 1 January 2023 | 117.7 | 588.5 | 706.2
Depreciation charge for the year | 6.0 | 25.9 | 31.9
Impairment losses | 1.7 | 8.3 | 10.0
Impairment reversals | (0.1) | (5.4) | (5.5)
Disposals | (0.2) | (11.6) | (11.8)
Effect of movement in foreign exchange | (6.1) | (25.0) | (31.1)
Balance at 31 December 2023 | 119.0 | 580.7 | 699.7
Balance at 1 January 2024 | 119.0 | 580.7 | 699.7
Depreciation charge for the year | 5.4 | 28.7 | 34.1
Impairment losses | – | 4.6 | 4.6
Disposals | (10.3) | (34.2) | (44.5)
Transfers between categories | (0.5) | 0.5 | –
Effect of movement in foreign exchange | (0.4) | (3.9) | (4.3)
Balance at 31 December 2024 | 113.2 | 576.4 | 689.6
Carrying amounts |  |  |
At 1 January 2023 | 101.5 | 181.7 | 283.2
At 31 December 2023 | 97.1 | 196.7 | 293.8
At 31 December 2024 | 103.4 | 241.5 | 344.9

No assets were pledged as security for liabilities in the current or prior year. The net book value includes assets under construction of
£51.0 million (2023: £24.2 million) comprising of £2.8 million of land and buildings (2023: £3.3 million) and £48.2 million of plant,
equipment and fixtures (2023: £20.9 million).
Financial statements
Annual report 2024
Morgan Advanced Materials
149
12. Right-of-use assets

| Land and | Plant and |
| buildings | equipment | Total
| £m | £m | £m
Cost |  |  |
Balance at 1 January 2023 | 82.4 | 12.4 | 94.8
Additions | 0.6 | 5.1 | 5.7
Disposals | (1.6) | (5.2) | (6.8)
Remeasurements | 0.9 | (0.2) | 0.7
Effect of movement in foreign exchange | (1.8) | (0.2) | (2.0)
Balance at 31 December 2023 | 80.5 | 11.9 | 92.4
Balance at 1 January 2024 | 80.5 | 11.9 | 92.4
Additions | 5.7 | 2.8 | 8.5
Disposals | (5.4) | (2.5) | (7.9)
Remeasurements | 2.4 | – | 2.4
Effect of movement in foreign exchange | (1.0) | (0.6) | (1.6)
Balance at 31 December 2024 | 82.2 | 11.6 | 93.8
Depreciation and impairment losses |  |  |
Balance at 1 January 2023 | 53.4 | 7.8 | 61.2
Depreciation charge for the year | 4.8 | 2.8 | 7.6
Impairment losses | – | 0.4 | 0.4
Impairment reversals | (1.3) | – | (1.3)
Disposals | (1.6) | (5.2) | (6.8)
Effect of movement in foreign exchange | – | (0.3) | (0.3)
Balance at 31 December 2023 | 55.3 | 5.5 | 60.8
Balance at 1 January 2024 | 55.3 | 5.5 | 60.8
Depreciation charge for the year | 5.6 | 3.0 | 8.6
Impairment losses | – | 0.8 | 0.8
Disposals | (5.4) | (2.5) | (7.9)
Effect of movement in foreign exchange | (0.8) | (0.2) | (1.0)
Balance at 31 December 2024 | 54.7 | 6.6 | 61.3
Carrying amounts |  |  |
At 1 January 2023 | 29.0 | 4.6 | 33.6
At 31 December 2023 | 25.2 | 6.4 | 31.6
At 31 December 2024 | 27.5 | 5.0 | 32.5

The weighted average lease term is 10.2 years for land and buildings and 1.9 years for plant and equipment (2023: 10.8 years and 3.7 years
respectively). The maturity analysis of lease liabilities is presented in note 20.
The Group recognised expense relating to short-term leases and leasing of low-value assets of £0.5 million (2023: £0.5 million).
Notes to the consolidated ﬁnancial statements
continued
150
13. Intangible assets

|  |  |  | Capitalised |  |
|  | Customer | Technology and | development | Computer |
| Goodwill | relationships | trademarks | costs | software | Total
| £m | £m | £m | £m | £m | £m
Cost |  |  |  |  |  |
Balance at 1 January 2023 | 181.9 | 63.9 | 4.3 | 0.8 | 37.8 | 288.7
Additions (externally purchased) | – | – | – | – | 0.6 | 0.6
Disposals | – | – | – | – | (1.0) | (1.0)
Effect of movement in foreign exchange | (4.4) | (3.0) | (0.1) | – | (1.2) | (8.7)
Balance at 31 December 2023 | 177.5 | 60.9 | 4.2 | 0.8 | 36.2 | 279.6
Balance at 1 January 2024 | 177.5 | 60.9 | 4.2 | 0.8 | 36.2 | 279.6
Additions (externally purchased) | – | – | – | – | 0.3 | 0.3
Disposals | – | – | – | – | (0.8) | (0.8)
Effect of movement in foreign exchange | (0.6) | 0.9 | (0.2) | – | 0.2 | 0.3
Balance at 31 December 2024 | 176.9 | 61.8 | 4.0 | 0.8 | 35.9 | 279.4
Amortisation and impairment losses |  |  |  |  |  |
Balance at 1 January 2023 | – | 63.1 | 3.8 | 0.8 | 32.0 | 99.7
Amortisation charge for the year | – | 0.4 | 0.1 | – | 2.8 | 3.3
Impairment losses | – | – | – | – | 0.7 | 0.7
Impairment reversals | – | (0.6) | (0.7) | – | – | (1.3)
Disposals | – | – | – | – | (1.0) | (1.0)
Effects of movement in foreign exchange | – | (3.1) | – | – | (0.9) | (4.0)
Balance at 31 December 2023 | – | 59.8 | 3.2 | 0.8 | 33.6 | 97.4
Balance at 1 January 2024 | – | 59.8 | 3.2 | 0.8 | 33.6 | 97.4
Amortisation charge for the year | – | 0.3 | 0.2 | – | 1.2 | 1.7
Disposals | – | – | – | – | (0.8) | (0.8)
Effects of movement in foreign exchange | – | 0.9 | (0.1) | – | 0.4 | 1.2
Balance at 31 December 2024 | – | 61.0 | 3.3 | 0.8 | 34.4 | 99.5
Carrying amounts |  |  |  |  |  |
At 1 January 2023 | 181.9 | 0.8 | 0.5 | – | 5.8 | 189.0
At 31 December 2023 | 177.5 | 1.1 | 1.0 | – | 2.6 | 182.2
At 31 December 2024 | 176.9 | 0.8 | 0.7 | – | 1.5 | 179.9

Financial statements
Annual report 2024
13. Intangible assets
(continued)
Morgan Advanced Materials
151
Impairment test for cash-generating units or groups of cash-generating units containing goodwill
In accordance with the requirements of IAS 36 Impairment of Assets, goodwill is allocated to the Group’s cash-generating units or
groups of cash-generating units that are expected to benefit from the synergies of the business combination that gave rise to the goodwill.
Goodwill impairment testing is performed at the operating segment level as defined by IFRS 8 Operating segments, as this is the lowest
level at which goodwill is monitored.
Goodwill is attributed to each operating segment as follows:

| 2024 | 2023
| £m | £m
Thermal Products | 95.6 | 96.0
Performance Carbon | 46.1 | 46.2
Technical Ceramics | 35.2 | 35.3
| 176.9 | 177.5

Each operating segment is assessed for impairment annually and whenever there is an indication of impairment.
The carrying value of goodwill has been assessed with reference to its value in use, reflecting the projected discounted cash flows of each
operating segment to which goodwill has been allocated. The key assumptions used in determining value in use relate to short and
long-term growth rates and discount rates.
The cash flow projections in year one are based on the most recent Board approved budget, cash flow projections for years two to
five are based on the most recent forecasts. The key assumptions that underpin these cash flow projections relate to sales and operating
margins, which are based on past experience, taking into account the effect of known or likely changes in market or operating conditions.
The growth rates have been calculated using GDP growth forecasts published by the International Monetary Fund for the Group’s
end-markets. These GDP growth forecasts have been weighted to reflect the Group’s weighted average sales in each end-market
during 2024.
In 2024, a 2.1% growth rate (2023: 1.0%) has been used for years beyond 2029 and to calculate a terminal value. Management has
assessed these growth rates, including the terminal growth rate as reasonable for each operating segment.
In 2024, the Group has used the following pre-tax discount rates for calculating the value in use of each of the operating segments:
Thermal Products: 15.1%, Performance Carbon: 14.1% and Technical Ceramics 13.6%. The 2023 pre-tax discount rates on an equivalent
basis were Thermal Products: 14.5%, Performance Carbon: 15.2% and Technical Ceramics 14.1%.
A sensitivity analysis was performed in order to quantify the impact of possible adverse changes in key assumptions used in the discounted
cash flows; the results are presented in the table below.

|  | Decrease in recoverable value |
|  | Assuming 10% |  |  |
|  | decrease in | Assuming 10% |  |
|  | growth rate and | increase in | Assuming 10% |
| Long-term | no terminal | pre-tax discount | decrease in cash | Impairment
| growth rates | growth | rate | ﬂows | arising
| % | £m | £m | £m | £m
Thermal Products | 1.9 | 35.4 | 39.9 | 39.6 | None
Performance Carbon | 2.3 | 117.0 | 120.1 | 108.7 | None
Technical Ceramics | 2.0 | 53.2 | 53.7 | 47.7 | None

Notes to the consolidated ﬁnancial statements
continued
152
14. Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:

| Assets | Assets | Liabilities | Liabilities | Net | Net
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m | £m | £m
Property, plant and equipment | – | – | (9.3) | (10.6) | (9.3) | (10.6)
Right-of-use assets and lease liabilities | 2.2 | 2.7 | – | – | 2.2 | 2.7
Intangible assets | – | – | (0.4) | (0.4) | (0.4) | (0.4)
Employee benefits | 7.6 | 8.3 | – | – | 7.6 | 8.3
Provisions | 8.6 | 8.9 | – | – | 8.6 | 8.9
Tax value of loss carried |  |  |  |  |  |
forward recognised | 9.3 | 6.0 | – | – | 9.3 | 6.0
Other items | 0.7 | 0.9 | – | – | 0.7 | 0.9
Offset | (7.0) | (9.2) | 7.0 | 9.2 | – | –
| 21.4 | 17.6 | (2.7) | (1.8) | 18.7 | 15.8

Deferred tax assets and liabilities are offset when there is a legally enforceable right to do so and when they relate to taxes levied by the
same tax authority on either the same entity or on different entities where it is intended to settle the tax on a net basis.
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:

| 2024 | 2023
| £m | £m
Tax losses | 169.5 | 139.2
Capital losses | 46.4 | 43.4
Other deductible temporary differences | 103.1 | 121.3
| 319.0 | 303.9

Deferred tax assets have not been recognised in relation to these temporary differences due to uncertainty surrounding future utilisation.
Based on current tax legislation, the tax losses will not expire. Although the Group as a whole is profitable, the unrecognised losses relate
to entities where it is not probable that there will be future taxable profits against which these losses can be utilised.
Movements in temporary differences during the year

| Recognised | Recognised |  | Recognised | Recognised |
| in the income | directly | 31 December | in the income | directly | 31 December
| statement | in equity | 2023 | statement | in equity | 2024
| £m | £m | £m | £m | £m | £m
Property, plant and equipment | 2.1 | – | (10.6) | 1.3 | – | (9.3)
Right-of-use assets and lease liabilities | (0.9) | – | 2.7 | (0.5) | – | 2.2
Intangible assets | – | – | (0.4) | – | – | (0.4)
Employee benefits | (1.4) | (0.5) | 8.3 | (0.1) | (0.6) | 7.6
Provisions | (2.5) | – | 8.9 | (0.3) | – | 8.6
Tax value of loss carried forward recognised | 4.3 | – | 6.0 | 3.3 | – | 9.3
Others | 1.7 | (0.3) | 0.9 | 0.3 | (0.5) | 0.7
| 3.3 | (0.8) | 15.8 | 4.0 | (1.1) | 18.7

Deferred income tax of £4.1 million (2023: £4.2 million) is provided on the potential unremitted earnings of overseas subsidiary
undertakings. Where the remittance of dividends is not anticipated, deferred tax is not currently recognised or disclosed as it is
considered immaterial.
Financial statements
Annual report 2024
Morgan Advanced Materials
153
15. Inventories

| 2024 | 2023
| £m | £m
Raw materials and consumables | 50.4 | 52.2
Work in progress | 55.2 | 56.5
Finished goods | 60.3 | 66.4
| 165.9 | 175.1

Inventories include a provisions of £6.9 million (2023: £5.8 million) recognised in operating costs.
At the year end the Group held consignment inventory of £27.5 million (2023: £25.6 million) which was not included in the balance sheet.
The majority of this balance is for precious metals, which are held on consignment by a subsidiary and are invoiced only when the material
is required.
16. Trade and other receivables

| 2024 | 2023
| £m | £m
Non-current |  |
Trade receivables | 0.6 | 0.3
Prepayments | 0.6 | 0.6
Other receivables | 2.4 | 2.5
| 3.6 | 3.4
Current |  |
Gross trade receivables | 165.1 | 169.0
Expected credit losses | (8.3) | (9.0)
Net trade receivables | 156.8 | 160.0
Contract assets | 0.5 | 0.3
Prepayments | 17.5 | 15.6
VAT, goods and sales taxes receivable | 7.3 | 9.3
Other non-trade receivables | 7.5 | 6.4
| 189.6 | 191.6

The Group’s exposure to credit and currency risks related to trade and other receivables is disclosed in note 21.
Contract assets relate to the Group’s right to consideration for project-based business which was completed but not billed at the end of
the year.
Notes to the consolidated ﬁnancial statements
continued
154
17. Cash and cash equivalents

| 2024 | 2023
| £m | £m
Bank balances | 110.8 | 112.5
Cash deposits | 10.0 | 12.0
Cash and cash equivalents | 120.8 | 124.5

In 2024, the Group had restricted cash of £2.2 million (2023: £1.6 million) as a result of exchange controls in Argentina.
Reconciliation of net cash and cash equivalents to net debt

| 2024 | 2023
| £m | £m
Opening borrowings | (309.7) | (266.2)
Increase in borrowings | (121.3) | (247.2)
Repayment of borrowings | 88.0 | 193.9
Effect of movements in foreign exchange | 5.3 | 9.8
Closing borrowings | (337.7) | (309.7)
Net cash 1 and cash equivalents | 111.5 | 124.5
Closing net debt 1 | (226.2) | (185.2)
Opening lease liabilities | (47.1) | (51.9)
Payment of lease liabilities | 10.6 | 8.9
New leases and lease remeasurement | (10.9) | (6.4)
Effect of movements in foreign exchange | 0.3 | 2.3
Closing lease liabilities | (47.1) | (47.1)
Closing net debt 1 and lease liabilities | (273.3) | (232.3)

1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on pages 201
to 205.
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes.

|  | Net cash |  |  | Net debt 1
|  | and cash | Movement | Lease | and lease
| Borrowings | equivalents | in net debt 1 | liabilities | liabilities
| £m | £m | £m | £m | £m
At 1 January 2023 | (266.2) | 117.7 | (148.5) | (51.9) | (200.4)
Cash inflow | – | 38.9 | 38.9 | – | 38.9
Borrowings and lease liability cash (outflow)/inflow | (53.3) | – | (53.3) | 8.9 | (44.4)
Net interest paid | – | (17.9) | (17.9) | – | (17.9)
Net cash inflow/(outflow) | (53.3) | 21.0 | (32.3) | 8.9 | (23.4)
Share purchases | – | (4.7) | (4.7) | – | (4.7)
New leases and lease remeasurement | – | – | – | (6.4) | (6.4)
Exchange and other movements | 9.8 | (9.5) | 0.3 | 2.3 | 2.6
At 31 December 2023 | (309.7) | 124.5 | (185.2) | (47.1) | (232.3)
At 1 January 2024 | (309.7) | 124.5 | (185.2) | (47.1) | (232.3)
Cash inflow | – | 23.0 | 23.0 | – | 23.0
Borrowings and lease liability cash (outflow)/inflow | (33.3) | – | (33.3) | 10.6 | (22.7)
Net interest paid | – | (20.5) | (20.5) | – | (20.5)
Net cash inflow/(outflow) | (33.3) | 2.5 | (30.8) | 10.6 | (20.2)
Share purchases | – | (8.2) | (8.2) | – | (8.2)
New leases and lease remeasurement | – | – | – | (10.9) | (10.9)
Exchange and other movements | 5.3 | (7.3) | (2.0) | 0.3 | (1.7)
At 31 December 2024 | (337.7) | 111.5 | (226.2) | (47.1) | (273.3)

1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on pages 201
to 205.
Financial statements
Annual report 2024
Morgan Advanced Materials
155
18. Trade and other payables

| 2024 | 2023
| £m | £m
Non-current |  |
Accruals | 0.7 | 0.7
Other payables | 2.1 | 1.7
| 2.8 | 2.4
Current |  |
Trade payables | 87.4 | 78.1
Contract liabilities | 6.7 | 8.6
Accruals | 72.6 | 72.5
Other tax and social security | 13.0 | 15.6
Creditors in relation to capital expenditure | 10.1 | 9.7
Other payables | 14.3 | 7.5
| 204.1 | 192.0

The Directors consider that the carrying amount of trade payables approximates to their fair value.
Contract liabilities relate to payments received from customers for project-based business in advance of the performance obligation
being satisfied. During the year the Group recognised contract liabilities of £8.6 million as revenue and the Group expects to recognise
£6.7 million of contract liabilities in 2025.
During the year the Group entered into a non-discretionary agreement with Investec, acting as riskless principal, to enable the Company
to purchase up to £10.0 million, excluding expenses, of the Company’s ordinary shares. During the year 1,825,090 shares with a nominal
value of £0.5 million were purchased for consideration of £4.7 million, The Group recognised a liability in other payables for the remaining
£5.3 million of shares which will be purchased under tranche 1 of the agreement.
19. Capital and reserves
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign
operations and the cumulative foreign exchange differences deferred into the net investment hedge. The movements of the translation
reserve are as follows:

| 2024 | 2023
| £m | £m
Balance at 1 January | (29.9) | –
Foreign exchange differences and related taxes | (10.0) | (29.6)
Gain/(loss) arising on changes in fair value of net investment hedges during the period | 1.7 | (0.3)
Balance at 31 December | (38.2) | (29.9)

Hedging reserve
The cash flow hedge reserve represents the cumulative amount of gains and losses on hedging instruments deemed effective in cash flow
hedges. The cumulative deferred gain or loss on the hedging instrument is recognised in the income statement only when the hedged
transaction impacts the income statement, or is included directly in the initial cost or other carrying amount of the hedged non-financial
items (basis adjustment).

| 2024 | 2023
| £m | £m
Balance at 1 January | 1.1 | (0.2)
(Loss)/gain arising on changes in fair value of hedging instruments during the period | (0.3) | 1.1
(Loss)/gain reclassified to income statement | (1.0) | 0.2
Balance at 31 December | (0.2) | 1.1

Fair value reserve
The fair value reserve includes the cumulative net change in the fair value of FVOCI investments until the investment is derecognised.
Notes to the consolidated ﬁnancial statements
continued
19. Capital and reserves
(continued)
156
Capital redemption reserve
The capital redemption reserve relates to the purchase of own shares. During the year the Group entered into a non-discretionary
agreement with Investec, acting as riskless principal, to enable the Company to purchase up to £10.0 million, excluding expenses, of the
Company’s ordinary shares. Under the terms of the agreement, Investec make its trading decisions independently of and uninfluenced by
the Company, in accordance with certain preset parameters. Tranche 1 will end no later than 31 March 2025. During the year 1,825,090
shares with a nominal value of £0.5 million were purchased for consideration of £4.7 million, 1,745,423 were subsequently cancelled as at
31 December 2024 under the share buyback programme and the remainder were cancelled after the year end. The Group recognised a
liability and a reduction in equity to reflect the remaining £5.3 million of shares which will be purchased under tranche 1 of the agreement.
The nominal value of the shares cancelled was £0.4 million which was transferred to the capital redemption reserve.
Retained earnings
The Company has acquired its own shares to satisfy the requirements of the various share option incentive schemes. At 31 December
2024, 464,405 shares (2023: 807,911) were held by the Trust and are treated as a deduction from equity. No treasury shares were held
by the Company (2023: none). All rights conferred by those shares are suspended until they are reissued.
A summary of the movements in own shares held by the Trust is set out in the table below:

| 2024 | 2023
|  | Cost |  | Cost
| Shares | £m | Shares | £m
At 1 January | 807,911 | 2.1 | 1,173,686 | 3.1
New shares purchased | 1,285,000 | 3.5 | 1,774,145 | 4.7
Exercise of share options | (1,628,506) | (4.4) | (2,139,920) | (5.7)
At 31 December | 464,405 | 1.2 | 807,911 | 2.1

Consideration received in respect of shares transferred to participants of employee share schemes was £0.2 million (2023: £0.6 million).
The market value of shares held by the Trust at 31 December 2024 was £1.3 million (2023: £2.3 million).
Dividends
The following Ordinary dividends were declared and paid by the Company:

| Per share | Total
| 2024 | 2023 | 2024 | 2023
| pence | pence | £m | £m
2023 final | – | 6.7 | – | 19.1
2023 interim | – | 5.3 | – | 15.1
2024 final | 6.8 | – | 19.3 | –
2024 interim | 5.4 | – | 15.4 | –
| 12.2 | 12.0 | 34.7 | 34.2

After 31 December 2024 the following dividends were proposed by the Directors for 2024. These dividends have not been provided for
and there are no income tax consequences. The proposed 2024 final dividend is based upon the number of shares outstanding at the
balance sheet date.

| £m
6.8 pence per qualifying Ordinary share | 19.3
| 19.3

Financial statements
Annual report 2024
19. Capital and reserves
(continued)
Morgan Advanced Materials
157
Called-up share capital

|  | Nominal value
| Number of shares | £m
Issued and fully paid Ordinary shares of 25 pence each |  |
At 1 January 2023 and 31 December 2023 | 285,369,988 | 71.3
Shares purchased and cancelled under share buyback scheme | (1,745,423) | (0.4)
At 31 December 2024 | 283,624,565 | 70.9

As at the date of this Report 282,148,476 Ordinary shares were in issue (2023: 285,369,988).
Details of options outstanding in respect of Ordinary shares are given in note 23.
Additionally the Company has authorised, issued and fully paid 437,281 (2023: 437,281) cumulative Preference shares classified as
borrowings totalling £0.4 million (2023: £0.4 million). The Preference shares comprise 125,327 of 5.5% Cumulative First Preference shares
of £1 each and 311,954 issued 5.0% Cumulative Second Preference shares of £1 each. The voting rights of these shares are set out below.
Dividends on the cumulative Preference shares are presented within finance costs in the Group’s consolidated income statement.
Voting rights of shareholders
Ordinary shares
The holders of Ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at
meetings of the Company.
Preference shares
The 5.5% Cumulative First Preference shares of £1 each and the 5.0% Cumulative Second Preference shares of £1 each confer on the
holders thereof the right to receive a cumulative preferential dividend at the rate of 5.5% and 5.0% respectively, calculated up to 30 June
and 31 December in every year. The First and Second Cumulative Preference shares shall not entitle the holders thereof to attend or vote
at any general meeting unless either:
(i)
the meeting is convened to consider any resolutions for reducing the capital, or authorising any issue of debentures or debenture stock,
or increasing the borrowing powers of the Board under the Articles of Association of the Company, or winding up, or sanctioning a sale
of the undertaking, or altering the Articles in any manner affecting their respective interests, or any other resolutions directly altering
their respective rights and privileges; or
(ii) at the date of the notice convening the general meeting, the Preference dividend is upwards of one month in arrears from the payment
date of any half-yearly instalment.
On a return of capital on a winding-up, the assets of the Company available for distribution shall be applied:
First, in payment to the holders of the First Preference shares of the amounts paid up on such shares, together with interest at the rate
of 5.5% per annum.
Second, in payment to the holders of the Second Preference shares of the amounts paid up on such shares, together with interest at the
rate of 5.0% per annum.
Third, in repaying the capital paid up or credited as paid up on the Ordinary shares.
Fourth, any surplus shall be distributed rateably amongst the holders of the Ordinary shares in proportion to the nominal amount paid
up on their respective holdings of shares in the Company.
Notes to the consolidated ﬁnancial statements
continued
158
20. Borrowings and lease liabilities
This note provides information about the contractual terms of the Group’s borrowings and lease liabilities which are measured at
amortised cost.
At 31 December 2024, the Group is committed to future payments of £0.4 million (2023: £0.5 million) for short-term leases and leasing
of low-value assets.
At 31 December 2024, future cash flows in respect of leases which the Group had entered into but which had not yet commenced was
£7.9 million (2023: £nil).
The total of future minimum lease income under non-cancellable leases, where the Group is a lessor is £nil (2023: £nil).
For more information about the Group’s exposure to interest rate and foreign currency risk, see note 21.
Borrowing facilities and liquidity
All of the Group’s borrowing facilities are arranged by Group Treasury with Morgan Advanced Materials plc as the principal obligor.
Where ancillary credit facilities are provided to operating subsidiaries, they are authorised and supervised by Group Treasury in accordance
with the Group’s Treasury Policy. Group Treasury seeks to obtain certainty of access to funding in the amounts, diversity of maturities and
diversity of counterparties as required to support the Group’s medium-term financing requirements and to minimise the impact of poor
credit market conditions.

| 2024 | 2023
| £m | £m
Non-current liabilities |  |
Senior Notes | 188.2 | 188.2
Bank and other borrowings | 149.1 | 120.5
Cumulative Preference shares | 0.4 | 0.4
Lease liabilities | 36.1 | 36.6
| 373.8 | 345.7
Current liabilities |  |
Bank and other borrowings | 9.3 | 0.6
Lease liabilities | 11.0 | 10.5
| 20.3 | 11.1

During the year the Group entered into a new €150.0 million delayed draw Term Loan Facility with maturity in December 2029.
€75.0 million of the Facility had been utilised as at 31 December 2024. During the prior year, the Group entered into a €92.0 million
Schuldschein Loan Agreement with maturity in June 2028. Cash flows associated with these arrangement are included in ‘Cash flows
associated with non-derivative financial liabilities’ section of note 21 in ‘Bank and other borrowings’.
As at 31 December 2024 the Group had available headroom on its borrowing facilities of £279.3 million (2023: £187.9 million).
In 2024, bank and other borrowings did not include any borrowings secured on the assets of the Group (2023: £nil).
21. Financial risk management
This note presents information about the Group’s exposure to a variety of financial risks: credit risk, liquidity risk, market risk and
foreign currency risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated
financial statements.
Financial risk management and Treasury Policy
The Group Treasury function acts as a service centre for Morgan Advanced Materials plc’s businesses. The function works within a
framework of Board approved policies and procedures, which are aligned to the wider goals, objectives and philosophy of the Group.
These policies and procedures are focused on managing and controlling risk in the treasury environment, and include strict control over
the use of financial instruments to hedge foreign currencies and interest rates. Speculative trading in derivatives and other financial
instruments is not permitted.
The function is responsible for all of the Group’s funding, liquidity, cash management, interest rate risk, foreign exchange risk and other
treasury matters.
Financial statements
Annual report 2024
21. Financial risk management
(continued)
Morgan Advanced Materials
159
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
The Group is exposed to credit risk on financial instruments such as liquid assets, derivative assets and trade receivables.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting
date was:

| Carrying amount
| 2024 | 2023
| £m | £m
FVTPL – equity instruments | 2.0 | 2.2
Trade receivables | 157.4 | 160.3
Cash and cash equivalents | 120.8 | 124.5
Derivatives | 1.2 | 1.5
| 281.4 | 288.5

FVTPL – equity instruments
In 2023, the Group purchased an equity instrument in Argentina for £5.0 million, designated in Argentine pesos. The equity instrument
has been classified as fair value through profit and loss (‘FVTPL’). During the year, a fair value gain of £1.9 million (2023: £0.9 million) was
recognised, offset by a foreign exchange loss of £0.4 million (2023: £3.7 million) and a disposal of £1.7 million (2023: £nil). At the year end,
the carrying amount of the equity instrument was £2.0 million (2023: £2.2 million).
Trade receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the
Group’s customer base, including the default risk of the industries and countries in which customers operate, have less influence on
credit risk.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are
performed on all customers requiring credit over a certain amount. The Group does not require collateral in respect of financial assets.
The Group serves thousands of customers. Many of these have purchased the same product for several years and in some cases
decades. Others have modified and enhanced designs or adopted the same components into new products, extending the lifecycle
of the components that the Group supplies. The Group’s level of customer retention is very high, particularly with its major accounts
and, although the top 20 ranking will alter from year to year, many of the names remain consistent over time.
The Group establishes a provision that represents its estimate of expected credit losses in respect of trade and other receivables and
investments. At the point the amount is considered irrecoverable it is written off against the financial asset directly.
Movements on the provision for expected credit losses were as follows:

| 2024 | 2023
| £m | £m
Balance at 1 January | (9.0) | (9.1)
Net remeasurement of loss allowance | 0.3 | (0.6)
Amounts written off | 0.3 | 0.4
Effect of movement in foreign exchange | 0.1 | 0.3
Balance at 31 December | (8.3) | (9.0)

Notes to the consolidated ﬁnancial statements
continued
21. Financial risk management
(continued)
160
There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing
the loss allowance for these financial assets. The loss allowance for trade receivables by ageing category is as follows:

| 2024 | 2023
| Expected | Gross trade | Expected | Net trade | Expected | Gross trade | Expected | Net trade
| credit loss rate | receivables | credit losses | receivables | credit loss rate | receivables | credit losses | receivables
| % | £m | £m | £m | % | £m | £m | £m
Not past due | 0.1% | 134.5 | (0.1) | 134.4 | 0.2% | 133.3 | (0.2) | 133.1
Past due |  |  |  |  |  |  |  |
0–30 days | 1.2% | 17.2 | (0.2) | 17.0 | 1.0% | 19.9 | (0.2) | 19.7
Past due |  |  |  |  |  |  |  |
31–60 days | 0.0% | 3.5 | – | 3.5 | 0.0% | 3.7 | – | 3.7
Past due |  |  |  |  |  |  |  |
61–90 days | 4.3% | 2.3 | (0.1) | 2.2 | 6.3% | 1.6 | (0.1) | 1.5
Past due more |  |  |  |  |  |  |  |
than 90 days | 96.3% | 8.2 | (7.9) | 0.3 | 81.0% | 10.5 | (8.5) | 2.0
|  | 165.7 | (8.3) | 157.4 |  | 169.0 | (9.0) | 160.0

Cash, cash equivalents and derivatives
Cash balances held by companies representing over 66% of the Group’s revenue are managed centrally through a number of pooling
arrangements. These arrangements principally cover the USA, Eurozone and UK and are represented by both zero balancing and notional
pooling arrangements. The notional cash pooling arrangements are presented on a gross basis. Credit risk is managed by investing in liquid
assets and acquiring derivatives in a diversified way from high-credit-quality financial institutions. Counterparties are reviewed through the
use of rating agencies, systemic risk considerations and through regular review of the financial press. The Group policy requires bank
accounts to be setup with banks and financial institutions with a Moody’s long term international credit rating of at least A3. There are
limited instances such as in certain jurisdictions where this is not practically possible.
Offsetting financial assets and liabilities
The following table shows the amounts recognised for forward exchange contracts, which are subject to offsetting arrangements on
a gross basis, and the amounts offset in the balance sheet.
The Group also has cash pooling agreements which cannot be offset under IFRS, but which could be settled net under the terms of
master netting agreements, and are also presented in the table below to show the total net exposure of the Group.

| Gross amounts |  | Net amounts | Financial |
| of recognised |  | presented | instruments not |
| ﬁnancial assets/ | Amounts | on the | offset in the | Net
| (liabilities) | offset | balance sheet | balance sheet | amount
| £m | £m | £m | £m | £m
2024 |  |  |  |  |
Derivative financial assets | 1.2 | – | 1.2 | – | 1.2
Derivative financial liabilities | (2.6) | – | (2.6) | – | (2.6)
Cash and cash equivalents | 120.8 | – | 120.8 | (9.3) | 111.5
Bank and other borrowings | (9.3) | – | (9.3) | 9.3 | –
2023 |  |  |  |  |
Derivative financial assets | 1.5 | – | 1.5 | – | 1.5
Derivative financial liabilities | (0.5) | – | (0.5) | – | (0.5)
Cash and cash equivalents | 124.5 | – | 124.5 | (0.6) | 123.9
Bank and other borrowings | (0.6) | – | (0.6) | 0.6 | –

Financial statements
Annual report 2024
21. Financial risk management
(continued)
Morgan Advanced Materials
161
Liquidity and funding risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are
settled by cash.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions.
The Group seeks a balance between certainty of funding and a flexible, cost-effective borrowing structure. The policy is to ensure that
the Group has sufficient borrowings and committed facilities to meet its medium-term financing requirements.
The following are the undiscounted contracted maturities of financial liabilities, including interest payments:
Cash flows associated with non-derivative financial liabilities

| 31 December 2024
|  |  | Carrying | Contractual | Less than |  |  | More than
| Effective | Year of | amount | cash ﬂows | 1 year | 1–2 years | 2–5 years | 5 years
| interest rate | maturity | £m | £m | £m | £m | £m | £m
Non-derivative |  |  |  |  |  |  |  |
financial liabilities |  |  |  |  |  |  |  |
US Dollar |  |  |  |  |  |  |  |
Senior Notes 2026 | 3.37% | 2026 | 77.9 | 82.7 | 2.6 | 80.1 | – | –
Euro |  |  |  |  |  |  |  |
Senior Notes 2026 | 1.55% | 2026 | 20.8 | 21.3 | 0.3 | 21.0 | – | –
US Dollar Senior Notes |  |  |  |  |  |  |  |
2026 | 4.87% | 2026 | 20.4 | 21.5 | 1.0 | 20.5 | – | –
Euro |  |  |  |  |  |  |  |
Senior Notes 2028 | 1.74% | 2028 | 8.3 | 8.8 | 0.1 | 0.1 | 8.6 | –
Euro |  |  |  |  |  |  |  |
Senior Notes 2030 | 2.89% | 2030 | 20.7 | 24.3 | 0.6 | 0.6 | 1.8 | 21.3
US Dollar |  |  |  |  |  |  |  |
Senior Notes 2031 | 5.47% | 2031 | 8.0 | 10.7 | 0.4 | 0.4 | 1.3 | 8.6
US Dollar |  |  |  |  |  |  |  |
Senior Notes 2033 | 5.53% | 2033 | 8.0 | 11.6 | 0.4 | 0.4 | 1.3 | 9.5
US Dollar |  |  |  |  |  |  |  |
Senior Notes 2035 | 5.61% | 2035 | 24.1 | 38.0 | 1.3 | 1.3 | 4.0 | 31.4
Bank and other |  |  |  |  |  |  |  |
borrowings |  | Up to 2029 | 158.4 | 162.8 | 11.7 | – | 151.1 | –
Cumulative |  |  |  |  |  |  |  |
First Preference shares | 5.50% |  | 0.1 | – | – | – | – | –
Cumulative Second |  |  |  |  |  |  |  |
Preference shares | 5.00% |  | 0.3 | – | – | – | – | –
Lease liabilities | 5.93% | Up to 2044 | 47.1 | 54.7 | 11.0 | 9.1 | 19.3 | 15.3
Trade payables |  |  | 87.4 | 87.4 | 87.4 | – | – | –
Creditors in relation to |  |  |  |  |  |  |  |
capital expenditure |  |  | 10.1 | 10.1 | 10.1 | – | – | –
Other payables |  |  | 16.4 | 16.4 | 14.3 | 2.1 | – | –
|  |  | 508.0 | 550.3 | 141.2 | 135.6 | 187.4 | 86.1

Bank and other borrowings includes an unsecured multi-currency revolving credit facility set to mature in November 2029, an unsecured
Euro Term Loan set to mature in December 2029 and a Schuldschein Euro Loan Agreement set to mature in June 2028.
Notes to the consolidated ﬁnancial statements
continued
21. Financial risk management
(continued)
Cash flows associated with non-derivative financial liabilities
(continued)
162

| 31 December 2023
|  |  | Carrying | Contractual | Less than |  |  | More than
| Effective | Year of | amount | cash ﬂows | 1 year | 1–2 years | 2–5 years | 5 years
| interest rate | maturity | £m | £m | £m | £m | £m | £m
Non-derivative |  |  |  |  |  |  |  |
financial liabilities |  |  |  |  |  |  |  |
US Dollar |  |  |  |  |  |  |  |
Senior Notes 2026 | 3.37% | 2026 | 76.6 | 84.0 | 2.6 | 2.6 | 78.8 | –
Euro |  |  |  |  |  |  |  |
Senior Notes 2026 | 1.55% | 2026 | 21.7 | 22.6 | 0.3 | 0.3 | 22.0 | –
US Dollar Senior Notes |  |  |  |  |  |  |  |
2026 | 4.87% | 2026 | 20.0 | 22.1 | 1.0 | 1.0 | 20.1 | –
Euro |  |  |  |  |  |  |  |
Senior Notes 2028 | 1.74% | 2028 | 8.7 | 9.5 | 0.2 | 0.2 | 9.1 | –
Euro |  |  |  |  |  |  |  |
Senior Notes 2030 | 2.89% | 2030 | 21.7 | 26.0 | 0.6 | 0.6 | 1.9 | 22.9
US Dollar |  |  |  |  |  |  |  |
Senior Notes 2031 | 5.47% | 2031 | 7.9 | 11.0 | 0.4 | 0.4 | 1.3 | 8.9
US Dollar |  |  |  |  |  |  |  |
Senior Notes 2033 | 5.53% | 2033 | 7.9 | 11.9 | 0.4 | 0.4 | 1.3 | 9.8
US Dollar |  |  |  |  |  |  |  |
Senior Notes 2035 | 5.61% | 2035 | 23.7 | 38.8 | 1.3 | 1.3 | 4.0 | 32.2
Bank and other |  |  |  |  |  |  |  |
borrowings |  | Up to 2028 | 121.1 | 123.0 | 1.1 | – | 121.9 | –
Cumulative |  |  |  |  |  |  |  |
First Preference shares | 5.50% |  | 0.1 | – | – | – | – | –
Cumulative Second |  |  |  |  |  |  |  |
Preference shares | 5.00% |  | 0.3 | – | – | – | – | –
Lease liabilities | 5.03% | Up to 2044 | 47.1 | 58.6 | 10.5 | 9.0 | 18.3 | 20.8
Trade payables |  |  | 78.1 | 78.1 | 78.1 | – | – | –
Creditors in relation to |  |  |  |  |  |  |  |
capital expenditure |  |  | 9.7 | 9.7 | 9.7 | – | – | –
Other payables |  |  | 9.2 | 9.2 | 7.5 | 1.7 | – | –
|  |  | 453.8 | 504.5 | 113.7 | 17.5 | 278.7 | 94.6

Financial statements
Annual report 2024
21. Financial risk management
(continued)
Morgan Advanced Materials
163
Cash flows associated with derivatives
The following table indicates the periods in which cash flows associated with cash flow hedges are expected to occur. This is matched with
the periods in which cash flows associated with cash flow hedges are expected to impact the income statement.

| Carrying | Contractual | Less than |  |  | More than
| amount | cash ﬂows | 1 year | 1–2 years | 2–5 years | 5 years
| £m | £m | £m | £m | £m | £m
2024 |  |  |  |  |  |
Cash flow hedges |  |  |  |  |  |
Forward exchange contracts – liabilities inflow |  | 30.6 | 30.6 | – | – | –
Forward exchange contracts – liabilities outflow |  | (31.7) | (31.7) | – | – | –
Forward exchange contracts – liabilities | (1.0) | (1.1) | (1.1) | – | – | –
Forward exchange contracts – assets | 0.5 | 0.5 | 0.5 | – | – | –
Total Cash flow hedges | (0.5) | (0.6) | (0.6) | – | – | –
Fair value flow hedges |  |  |  |  |  |
Forward exchange contracts – liabilities inflow |  | 78.0 | 78.0 | – | – | –
Forward exchange contracts – liabilities outflow |  | (79.0) | (79.0) | – | – | –
Forward exchange contracts – liabilities | (1.6) | (1.0) | (1.0) | – | – | –
Forward exchange contracts – assets | 0.7 | 0.1 | 0.1 | – | – | –
Total Fair value flow hedges | (0.9) | (0.9) | (0.9) | – | – | –
Total fair value and cash flow hedges | (1.4) | (1.5) | (1.5) | – | – | –
2023 |  |  |  |  |  |
Cash flow hedges |  |  |  |  |  |
Forward exchange contracts – liabilities inflow |  | 37.7 | 37.7 | – | – | –
Forward exchange contracts – liabilities outflow |  | (37.9) | (37.9) | – | – | –
Forward exchange contracts – liabilities | (0.4) | (0.2) | (0.2) | – | – | –
Forward exchange contracts – assets | 1.5 | 1.8 | 1.8 | – | – | –
Total Cash flow hedges | 1.1 | 1.6 | 1.6 | – | – | –
Fair value flow hedges |  |  |  |  |  |
Forward exchange contracts – liabilities inflow |  | 7.7 | 7.7 | – | – | –
Forward exchange contracts – liabilities outflow |  | (7.6) | (7.6) | – | – | –
Forward exchange contracts – liabilities | (0.1) | 0.1 | 0.1 | – | – | –
Forward exchange contracts – assets | – | – | – | – | – | –
Total Fair value flow hedges | (0.1) | 0.1 | 0.1 | – | – | –
Total fair value and cash flow hedges | 1.0 | 1.7 | 1.7 | – | – | –

Notes to the consolidated ﬁnancial statements
continued
21. Financial risk management
(continued)
164
Market risk
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices, will affect the Group’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return on risk.
The Group enters into derivatives for hedging purposes, and also incurs financial liabilities, in order to manage market risks. All such
transactions are carried out in accordance with the Treasury Policy, which has been approved by the Board. Generally the Group seeks
to apply hedge accounting in order to manage volatility in the income statement.
Interest rate risk
The Group seeks to reduce the volatility in its interest charge caused by rate fluctuations. The proportions of fixed and floating rate debt
are determined having regard to a number of factors, including prevailing market conditions, interest rate cycle, the Group’s interest cover
and leverage position, and any perceived correlation between business performance and rates.
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

| Fixed-rate instruments | Variable rate instruments
| carrying amount | carrying amount
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Financial assets | – | – | 120.8 | 124.5
Financial liabilities | (235.7) | (235.7) | (158.4) | (121.1)
| (235.7) | (235.7) | (37.6) | 3.4

The fixed-rate financial liabilities comprise the currency equivalent of £188.2 million (2023: £188.2 million) of Senior Notes, £0.4 million
(2023: £0.4 million) of cumulative Preference shares and lease liabilities of £47.1 million (2023: £47.1 million). The average cost of the
Group’s fixed-rate instruments is 4.11% (2023: 3.93%) including lease liabilities and 3.67% (2023: 3.65%) excluding lease liabilities.
The variable rate financial assets include the bank balances and cash deposits detailed in note 17 and the variable rate financial liabilities
include bank borrowings detailed in note 20. Where cash and overdrafts are included in Group cash pool arrangements, interest is charged
on net bank balances and borrowings. The average rate of the Group’s variable rate instruments is 4.32% (2023: 5.6%).
An increase of 100 basis points in interest rates on the variable element of the Group’s net floating-rate liabilities and cash at the reporting
date would have increased profit by £0.3 million (2023: £0.9 million). A decrease of 100 basis points would have decreased profit by
£0.4 million (2023: £0.7 million). This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
Foreign currency risk
Due to the international reach of the Group, currency transaction exposures exist. The Group has a policy in place to hedge all material
firm commitments and a large proportion of highly probable forecast foreign currency exposures in respect of sales and purchases over
the following 12 months, and achieves this through the use of the forward foreign exchange markets. A significant proportion of the
forward exchange contracts have maturities of less than one year after the balance sheet date. The Group continues its practice of not
hedging income statement translation exposure.
There are exchange control restrictions which affect the ability of a small number of the Group’s subsidiaries to transfer funds to the
Group. The Group does not believe such restrictions have had or will have any material adverse impact on the Group as a whole or
the ability of the Group to meet its cash flow requirements.
The table below shows the Group’s currency exposures, being exposures on currency transactions that give rise to net currency gains
and losses recognised in the income statement. Such exposures comprise the monetary assets and liabilities of the Group that are not
denominated in the functional currency of the operating company involved.

| 2024 | 2023
| GBP | USD | Euro | GBP | USD | Euro
Functional currency of Group operations | £m | £m | £m | £m | £m | £m
Trade receivables | 11.7 | 0.4 | 1.7 | 12.4 | (6.9) | (2.8)
Trade payables | (10.3) | (0.9) | (1.4) | (9.3) | 5.0 | 3.5
Net debt 1 | (2.9) | 0.9 | 0.4 | (8.8) | 1.5 | 0.3
Net balance sheet exposure | (1.5) | 0.4 | 0.7 | (5.7) | (0.4) | 1.0

1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on pages 201
to 205.
The amounts shown in the table take into account the effect of the forward contracts entered into to manage these currency exposures.
Financial statements
Annual report 2024
21. Financial risk management
(continued)
Morgan Advanced Materials
165
In respect of other monetary assets and liabilities held in currencies other than the currency of the reporting unit, the Group ensures that
the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term
imbalances.
The Group classifies its forward exchange contracts which hedge forecasted transactions as cash flow hedges and states them at fair value.
The fair value of forward exchange contracts used as hedges of forecasted transactions at 31 December 2024 was a liability of £0.5 million
(2023: asset of £1.1 million).
The contractual cash flows associated with the forward exchange contracts that are designated as cash flow hedges are shown in the
section on liquidity risk. The impact on the income statement is expected to occur at the same time as the associated cash flows.
Currency translation risks are controlled centrally. To defend against the impact of a permanent reduction in the value of its overseas net
assets through currency depreciation, the Group seeks to match the currency of financial liabilities with the currency in which the net
assets are denominated. This is achieved by raising funds in different currencies and through the use of hedging instruments such as swaps,
and is implemented only to the extent that the Group’s gearing covenant under the terms of its borrowing documents, as well as its facility
headroom, are likely to remain comfortably within limits. In this way, the currency of the Group’s financial liabilities becomes more aligned
to the currency of the trading cash flows that service them.
The Group’s currency split of total borrowings was as follows:

| 2024 | 2023
| £m | £m
GBP | 7.8 | (0.4)
USD | 151.2 | 156.5
Euro | 188.0 | 153.6
| 347.0 | 309.7

The Group’s sensitivity to changes in foreign exchange rates on financial assets and liabilities as at 31 December 2024 is set out below.
Based upon the currency profile of the Group’s net financial assets and liabilities, if GBP had strengthened by 10%, reported net financial
liabilities would have decreased by £23.3 million (2023: £18.9 million). Conversely, if GBP had weakened by 10%, reported net financial
liabilities would have increased by £32.9 million (2023: £27.9 million). Assuming the change occurred on the balance sheet date, there
would be no impact on reported profit, as either the net financial liabilities are in the same currency as that of the respective Group entity,
or the change would be offset by an equal and opposite change in the foreign currency monetary items in the Group’s holding company.
The amounts generated from the sensitivity analysis are forward-looking estimates of market risk assuming certain adverse market
conditions occur. Actual results in the future may differ materially from those projected results. The impact of a weakening in GBP on
the Group’s financial assets and liabilities would be more than offset in equity and income by its impact on the Group’s overseas net assets
and earnings respectively.
Hedging instruments

|  |  |  |  | Change in fair value | Carrying amount of the
|  |  | Notional value: | for recognising hedge | hedging instruments
| Maturity date | Local currency | ineffectiveness | assets/(liabilities)
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m | £m | £m | £m | £m
Cash flow hedges |  |  |  |  |  |  |  |
| to Dec | to Dec |  |  |  |  |  |
Highly probable forecast sales | 2025 | 2024 | 32.3 | 37.7 | 0.7 | (1.0) | 0.2 | (0.5)
| to Dec | to Dec |  |  |  |  |  |
Highly probable forecast purchases | 2025 | 2024 | 17.9 | 35.6 | 0.2 | (0.7) | (0.4) | (0.6)

Weighted average hedge rates for the year were as follows:

| Weighted average exchange rates
| 2024 | 2023
| £m | £m
EUR/GBP | 1.18 | 1.16
AUD/GBP | 1.97 | 1.99
SGD/GBP | n/a | 1.68
USD/GBP | 1.30 | 1.27

Notes to the consolidated ﬁnancial statements
continued
21. Financial risk management
(continued)
166
Hedged items

|  | Balance in cash ﬂow hedge reserve/
| Change in value used for | foreign currency translation
| calculating hedge ineffectiveness | reserve for continuing hedges
| 2024 | 2023 | 2024 | 2023
| £m | £m | £m | £m
Cash flow hedges |  |  |  |
Forecast sales | (0.7) | 1.0 | (0.2) | 0.5
Forecast purchases | (0.2) | 0.7 | 0.4 | 0.6

As at 31 December 2024 there were no amounts in the hedging reserve and translation reserve arising from hedging relationships for
which hedge accounting is no longer applied.
The Group expects highly probable sales and purchases in UK, Europe, North America, Australia and Asia. The Group has entered into
foreign exchange forward contracts (for terms not exceeding 18 months) to hedge the exchange rate risk arising from these anticipated
future transactions. It is anticipated that the transactions will take place during the next financial year, at which time the amount deferred
in equity will be reclassified to the income statement.
All hedging instruments are presented within derivative financial instruments on the Group balance sheet.
Exchange rates
The principal exchange rates used in the translation of the results of overseas subsidiaries were as follows:

| 2024 | 2023
| Closing rate | Average rate | Closing rate | Average rate
GBP to: |  |  |  |
USD | 1.25 | 1.28 | 1.27 | 1.24
Euro | 1.21 | 1.18 | 1.15 | 1.15

For illustrative purposes, the table below provides details of the impact on 2024 revenue, Group adjusted operating profit and profit
before tax if the actual reported results, calculated using 2024 average exchange rates, were restated for GBP weakening by 10 cents
against USD in isolation and 10 cents against the Euro in isolation:

| 2024 | 2023
|  | Group adjusted |  |  | Group adjusted |
|  | operating | Proﬁt |  | operating | Proﬁt
| Revenue | proﬁt 1 | before tax | Revenue | proﬁt 1 | before tax
| £m | £m | £m | £m | £m | £m
Increase in revenue/Group adjusted |  |  |  |  |  |
operating profit/profit before tax if: |  |  |  |  |  |
GBP weakens by 10c against USD |  |  |  |  |  |
in isolation | 42.3 | 4.4 | 3.6 | 42.8 | 4.9 | 4.1
GBP weakens by 10c against |  |  |  |  |  |
the Euro in isolation | 19.8 | 3.2 | 0.5 | 21.5 | 2.5 | 2.2

1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on pages 201
to 205.
Other market price risk
Equity price risk arises from FVOCI equity instruments held for meeting partially the unfunded portion of the Group’s defined benefit
pension obligations. The primary goal of the Group’s investment strategy is to maximise returns in order to meet partially the Group’s
unfunded defined benefit obligations.
Capital management
The Board’s policy is to maintain a strong capital base (total equity) so as to maintain investor, creditor and market confidence and to
sustain future development of the business. The Board uses a number of measures, identified as KPIs, to ensure the continued success
of the Group.
The Board encourages employees of the Group to hold the Company’s Ordinary shares. The Group operates a number of employee
share and share option schemes. The Company purchases its own shares on the market which are primarily intended to be used for
issuing shares under the Group’s various share option incentive schemes. During the year the Group purchased its own shares which
were subsequently cancelled as part of the share buyback scheme. The timing of these purchases depends on market prices.
Financial statements
Annual report 2024
21. Financial risk management
(continued)
Capital management
(continued)
Morgan Advanced Materials
167
The Board seeks to maintain a balance between the advantages and security afforded by a sound capital position, and the higher returns
that might be possible with higher levels of borrowings.
The Group monitors capital using the indicators set out in the table below. These indicators are also presented excluding the impact of
IFRS 16 Leases as these adjusted measures are more closely aligned to the Group’s covenants.
Debt to adjusted capital

| 2024 | 2023
| Excluding | IFRS 16 |  | Excluding | IFRS 16 |
| IFRS 16 | impact | As stated | IFRS 16 | impact | As stated
| £m | £m | £m | £m | £m | £m
Borrowings and overdrafts | 347.0 | – | 347.0 | 309.7 | – | 309.7
Lease liabilities | – | 47.1 | 47.1 | – | 47.1 | 47.1
Less: cash and cash equivalents | (120.8) | – | (120.8) | (124.5) | – | (124.5)
Net debt 1 | 226.2 | 47.1 | 273.3 | 185.2 | 47.1 | 232.3
Total equity | 389.3 | – | 389.3 | 398.6 | – | 398.6
Less: amounts accumulated in equity |  |  |  |  |  |
relating to cash flow hedges | 0.2 | – | 0.2 | (1.1) | – | (1.1)
Adjusted capital | 389.5 | – | 389.5 | 397.5 | – | 397.5
Net debt 1 to adjusted capital ratio | 0.6x | n/a | 0.7x | 0.5x | n/a | 0.6x

1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on pages 201
to 205.
Net debt to EBITDA

| 2024 | 2023
| Excluding | IFRS 16 |  | Excluding | IFRS 16 |
| IFRS 16 | impact | As stated | IFRS 16 | impact | As stated
| £m | £m | £m | £m | £m | £m
Net debt 1 | 226.2 | 47.1 | 273.3 | 185.2 | 47.1 | 232.3
Operating profit before specific |  |  |  |  |  |
adjusting items | 122.1 | 4.6 | 126.7 | 113.3 | 3.7 | 117.0
Depreciation and amortisation | 35.8 | 8.6 | 44.4 | 35.2 | 7.6 | 42.8
EBITDA 1 | 157.9 | 13.2 | 171.1 | 148.5 | 11.3 | 159.8
Net debt 1 to EBITDA 1 ratio | 1.4x | n/a | 1.6x | 1.2x | n/a | 1.5x

1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on pages 201
to 205.
Interest cover

| 2024 | 2023
| Excluding | IFRS 16 |  | Excluding | IFRS 16 |
| IFRS 16 | impact | As stated | IFRS 16 | impact | As stated
| £m | £m | £m | £m | £m | £m
EBITDA 1 | 157.9 | 13.2 | 171.1 | 148.5 | 11.3 | 159.8
Net finance costs (excluding IAS 19 |  |  |  |  |  |
pension charge) | 15.8 | 2.6 | 18.4 | 11.7 | 2.4 | 14.1
Interest cover | 10.0x | n/a | 9.3x | 12.7x | n/a | 11.3x

1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on pages 201
to 205.
There were no changes in the Group’s approach to capital management during the year. Neither the Company nor any of its subsidiaries
are subject to externally imposed capital requirements.
Notes to the consolidated ﬁnancial statements
continued
21. Financial risk management
(continued)
168
Fair values

| 31 December 2024 | 31 December 2023
|  | Carrying | Fair value | Carrying | Fair value
| Effective | amount | Level 1 | Level 2 | Total | amount | Level 1 | Level 2 | Total
| interest rate | £m | £m | £m | £m | £m | £m | £m | £m
Financial assets and |  |  |  |  |  |  |  |  |
liabilities held at |  |  |  |  |  |  |  |  |
amortised cost |  |  |  |  |  |  |  |  |
US Dollar |  |  |  |  |  |  |  |  |
Senior Notes 2026 | 3.37% | (77.9) | – | (74.2) | (74.2) | (76.6) | – | (71.6) | (71.6)
Euro |  |  |  |  |  |  |  |  |
Senior Notes 2026 | 1.55% | (20.8) | – | (19.9) | (19.9) | (21.7) | – | (20.3) | (20.3)
US Dollar |  |  |  |  |  |  |  |  |
Senior Notes 2026 | 4.87% | (20.4) | – | (20.1) | (20.1) | (20.0) | – | (19.4) | (19.4)
Euro |  |  |  |  |  |  |  |  |
Senior Notes 2028 | 1.74% | (8.3) | – | (7.7) | (7.7) | (8.7) | – | (8.0) | (8.0)
Euro |  |  |  |  |  |  |  |  |
Senior Notes 2030 | 2.89% | (20.7) | – | (18.8) | (18.8) | (21.7) | – | (19.6) | (19.6)
US Dollar |  |  |  |  |  |  |  |  |
Senior Notes 2031 | 5.47% | (8.0) | – | (7.6) | (7.6) | (7.9) | – | (7.7) | (7.7)
US Dollar |  |  |  |  |  |  |  |  |
Senior Notes 2033 | 5.53% | (8.0) | – | (7.4) | (7.4) | (7.9) | – | (7.6) | (7.6)
US Dollar |  |  |  |  |  |  |  |  |
Senior Notes 2035 | 5.61% | (24.1) | – | (22.0) | (22.0) | (23.7) | – | (22.8) | (22.8)
Cumulative |  |  |  |  |  |  |  |  |
First Preference shares | 5.50% | (0.1) | – | (0.1) | (0.1) | (0.1) | – | (0.1) | (0.1)
Cumulative |  |  |  |  |  |  |  |  |
Second Preference shares | 5.00% | (0.3) | – | (0.3) | (0.3) | (0.3) | – | (0.3) | (0.3)
|  | (188.6) | – | (178.1) | (178.1) | (188.6) | – | (177.4) | (177.4)
Financial assets held at FVTPL |  | 2.0 | 2.0 | – | 2.0 | 2.2 | 2.2 | – | 2.2
Derivative financial assets |  |  |  |  |  |  |  |  |
held at fair value |  | 1.2 | – | 1.2 | 1.2 | 1.5 | – | 1.5 | 1.5
|  | 3.2 | 2.0 | 1.2 | 3.2 | 3.7 | 2.2 | 1.5 | 3.7
Derivative financial liabilities |  |  |  |  |  |  |  |  |
held at fair value |  | (2.6) | – | (2.6) | (2.6) | (0.5) | – | (0.5) | (0.5)

The table above analyses the fair values of financial instruments held by the Group, by valuation method, together with the carrying
amounts shown in the balance sheet.
The fair value of cash and cash equivalents, current trade and other receivables/payables and floating-rate bank and other borrowings
are excluded from the preceding table as their carrying amount approximates their fair value.
Fair value hierarchy
The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: not traded in an active market but the fair values are based on quoted market prices or alternative pricing sources with
reasonable levels of price transparency. Fair value is calculated using discounted cash flow methodology, future cash flows are
estimated based on forward exchange rates.
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
There have been no transfers between Level 1 and Level 2 during 2024 and 2023 and there were no Level 3 financial instruments in
either 2024 or 2023.
Financial statements
Annual report 2024
21. Financial risk management
(continued)
Morgan Advanced Materials
169
The major methods and assumptions used in estimating the fair values of financial instruments reflected in the preceding table are as follows:
Equity securities
Fair value is based on quoted market prices at the balance sheet date.
Derivatives
Forward exchange contracts are marked to market either using listed market prices or by discounting the contractual forward price and
deducting the current spot rate.
Fixed-rate borrowings
Fair value is calculated based on discounted expected future principal and interest cash flows. The interest rates used to determine the
fair value of borrowings are 3.7–6.6% (2023: 3.7–6.3%).
22. Pensions and other post-retirement employee beneﬁts
The Group operates a number of defined benefit arrangements as well as defined contribution plans. The defined benefit plans
are primarily in the UK, USA and Europe and predominantly provide pensions based on service and career average pay. In addition
post-retirement medical plans are operated in the USA.
Summary of net defined benefit obligations

| 2024 | 2023
| £m | £m
Present value of unfunded defined benefit obligations | (32.8) | (36.9)
Present value of funded defined benefit obligations | (429.5) | (479.2)
Fair value of plan assets | 440.8 | 490.9
| (21.5) | (25.2)

Amounts recognised in income statement

|  | 2024 | 2023
| Note | £m | £m
Current service cost |  | (2.1) | (2.4)
Administrative expenses recognised outside of the pension liability |  | (0.7) | (1.1)
Curtailments and settlements |  | 0.1 | –
Total expense within operating costs relating to defined benefit plans |  | (2.7) | (3.5)
Defined contribution plans |  | (13.5) | (12.9)
Total expense within operating costs | 4 | (16.2) | (16.4)
Net interest on net defined benefit liability | 7 | (0.6) | –
Total expense recognised in income statement |  | (16.8) | (16.4)

Amounts recognised in other comprehensive income

| 2024 | 2023
| £m | £m
Experience gain on plan obligations | 2.0 | 1.2
Changes in financial assumptions underlying the present value of plan obligations – gain/(loss) | 39.1 | (12.7)
Changes in demographic assumptions underlying the present value of plan obligations – gain | 1.4 | 2.9
Actual return on plan assets (excluding amounts included in net interest expense) | (41.2) | (2.9)
Remeasurements recognised in other comprehensive income | 1.3 | (11.5)
Deferred tax associated with the above | (0.6) | (0.5)
Total amount recognised in other comprehensive income | 0.7 | (12.0)

Notes to the consolidated ﬁnancial statements
continued
22. Pensions and other post-retirement employee beneﬁts
(continued)
170
Defined contribution plans
The Group operates a number of defined contribution pension plans. The total expense relating to these plans in the current year
was £13.5 million (2023: £12.9 million). The expense includes ongoing contributions to the one remaining US Multi-Employer Plan of
£0.1 million (2023: £0.2 million). The Group expects to contribute £13.8 million to ongoing defined contribution arrangements in 2025.
Defined benefit plans
UK Schemes
In the UK, the Group operates two defined benefit pension schemes, the Morgan Pension Scheme and the Morgan Group Senior Staff
Pension and Life Assurance Scheme (‘the UK Schemes’). The two UK Schemes provide a benefit based upon an employee’s total service
and their career average earnings (including allowance for consumer price inflation), although historically benefits were based upon an
employee’s final salary. Once in payment, pensions receive increases as set out in the rules, at either a fixed level, or in line with the
Retail Price Index. The overall duration of the UK Schemes is around 12 years.
The UK Schemes’ assets are held in trustee-administered funds which are governed by UK regulations, as is the nature of the relationship
between the Group and the Trustees. Responsibility for the governance of the UK Schemes – including investment decisions and
contribution schedules – lies with the Board of Trustees which must consult with the Group in such matters. The Board of Trustees
must be composed of representatives of the Company, plan participants and independent trustee directors, in accordance with the
UK Scheme’s governing documents.
Funding legislation in the UK requires that schemes are fully funded on a scheme-specific basis, and this must be assessed at least every
three years. To the extent that there is a deficit against this measure, a payment schedule must be agreed such that the deficit is removed
over a reasonable period of time.
The most recent full actuarial valuations of the UK Schemes were undertaken as at 31 March 2022 and resulted in combined assessed
deficits of £49.7 million on the ‘Technical Provisions’ basis. The Company subsequently agreed with the Trustees to make a lump sum
contribution to the Schemes of £67.0 million on 29 December 2022 in lieu of the remaining contributions that would otherwise have been
due under the existing recovery plans from the 31 March 2019 valuations. The sum paid also represented the value of the deficit on the
more prudent ‘Long Term Objective’ basis. The next valuations are due as at 31 March 2025 and will be the first undertaken under the
new statutory funding regime introduced via the Pension Schemes Act 2021. The impact of the new regime is currently being assessed.
However, no further contributions to the Schemes are expected to be required.
The UK Schemes were closed to new entrants on 1 August 2011, with any new employees receiving benefits through the Morgan Group
Personal Pension Plan, a defined contribution arrangement. The Morgan Group Senior Staff Pension and Life Assurance Scheme was
closed to the future accrual of benefits on and with effect from 6 April 2016. The Morgan Pension Scheme was closed to the future
accrual of benefits with effect from 6 April 2018. Current employees, including those who were active in the Schemes at closure,
are auto-enrolled into the Morgan Group Personal Pension Plan for their future pension benefits.
The Group has considered third-party powers and does not believe the Trustees have any powers that would prevent the Group
obtaining a refund of any surplus on wind-up of the Scheme following gradual settlement of the plan obligations. As such the Group’s
interpretation is that the current version of IFRIC 14 does not have an impact and, as a result, any IAS 19 surplus can be recognised as
an asset and it is not necessary to recognise additional liabilities in respect of contribution agreements reached with the pension scheme
Trustees, managers or any third party.
The Trustees and the Group have considered the impact of the recent Virgin Media court case on the Morgan Pension Scheme and, in
particular, the extent to which actuarial confirmation was provided that any changes made to the Scheme between 1997 and 2016 did not
adversely impact members’ contracted out benefits. Reasonable due diligence has concluded that no additional liability requires disclosure.
The Morgan Group Senior Staff Pension and Life Assurance Scheme was not contracted out over this period and therefore is not affected
by the ruling.
The Group has recognised a liability in relation to Guaranteed Minimum Pensions (GMPs), an initiative to remove inequalities in scheme
benefits that arise from GMPs being unequal between men and women. A project to equalise members’ benefits in the Morgan Pension
Scheme is currently being progressed by a Joint Trustee and Employer Working Group and is expected to be completed in 2025.
Financial statements
Annual report 2024
22. Pensions and other post-retirement employee beneﬁts
(continued)
Morgan Advanced Materials
171
US Schemes
The Group operates a tax qualified defined benefit pension scheme in the USA (‘MUSE DB Scheme’), and a Supplemental Executive
Retirement Plan (‘SERP’) which is not tax approved (together ‘the US Schemes’). The MUSE DB Scheme is frozen, and therefore
employees accrue benefits within a 401k arrangement.
The US Schemes provide a benefit based upon an employee’s service and earnings. The benefits are level both prior to, and while in,
payment. Overall, the US Schemes’ duration is around nine years.
The qualified MUSE DB Scheme’s assets are held in a trust separately from the Group’s assets. For the SERP the Group holds an asset
to meet the obligations; however, due to its nature this is accounted for as a Group asset, rather than an asset of the SERP. Responsibility
for the governance of the US Schemes, including investment decisions and contribution schedules, lies with a management committee,
all of whose members are appointed by the Group.
The funding requirements in the USA, ERISA, require schemes to be fully funded at all times, and if not to target full funding within a
period of seven years.
The most recent full actuarial valuation of the MUSE DB Scheme was undertaken as at 1 January 2024 and the Scheme was 96% funded
on this basis.
On the Defined Benefit Obligation (DBO) basis used for IAS 19 purposes, the Scheme was 100% funded with a surplus as at
31 December 2024 of £0.2 million (2023: £0.3 million deficit).
No further significant contributions to the MUSE DB Scheme are anticipated in the medium term.
European schemes
In Europe (excluding UK), the Group operates a number of retirement schemes, with the bulk of the obligations relating to arrangements
for employees in Germany. In line with local practice, these arrangements are not funded in advance, with benefits being met by the
Group as they fall due.
Notes to the consolidated ﬁnancial statements
continued
22. Pensions and other post-retirement employee beneﬁts
(continued)
172

| 31 December 2024
|  |  |  | Rest of |
| UK | USA | Europe | the World | Total
| £m | £m | £m | £m | £m
Summary of net obligations |  |  |  |  |
Present value of unfunded defined benefit obligations | – | (4.0) | (24.9) | (3.9) | (32.8)
Present value of funded defined benefit obligations | (318.1) | (101.3) | (1.2) | (8.9) | (429.5)
Fair value of plan assets | 330.4 | 101.5 | 0.2 | 8.7 | 440.8
Net obligations | 12.3 | (3.8) | (25.9) | (4.1) | (21.5)
Represented by: |  |  |  |  |
Surpluses | 12.3 | 0.1 | – | 0.6 | 13.0
Obligations | – | (3.9) | (25.9) | (4.7) | (34.5)
Movements in present value of defined benefit obligation |  |  |  |  |
At 1 January 2024 | (362.8) | (112.2) | (28.4) | (12.7) | (516.1)
Current service cost | – | – | (0.7) | (1.4) | (2.1)
Interest cost | (15.8) | (5.2) | (1.0) | (0.3) | (22.3)
Actuarial gain/(loss) |  |  |  |  |
Experience gain/(loss) on plan obligations | 2.8 | (0.8) | 0.3 | (0.3) | 2.0
Changes in financial assumptions – gain/(loss) | 33.0 | 5.8 | 0.7 | (0.4) | 39.1
Changes in demographic assumptions – gain | 1.3 | – | – | 0.1 | 1.4
Benefits paid | 23.4 | 8.8 | 1.7 | 1.1 | 35.0
Effect of curtailment or settlement | – | – | 0.1 | 0.1 | 0.2
Exchange adjustments | – | (1.7) | 1.2 | 1.0 | 0.5
At 31 December 2024 | (318.1) | (105.3) | (26.1) | (12.8) | (462.3)
Movements in fair value of plan assets |  |  |  |  |
At 1 January 2024 | 375.3 | 106.7 | 0.2 | 8.7 | 490.9
Interest on plan assets | 16.5 | 4.9 | – | 0.3 | 21.7
Remeasurement gain/(loss) | (37.7) | (3.5) | (0.1) | 0.1 | (41.2)
Contributions by employer | – | 0.5 | 1.7 | 1.6 | 3.8
Benefits paid | (23.4) | (8.8) | (1.7) | (1.1) | (35.0)
Administrative cost | (0.3) | – | – | – | (0.3)
Effect of curtailment or settlement | – | – | – | (0.1) | (0.1)
Exchange adjustments | – | 1.7 | 0.1 | (0.8) | 1.0
At 31 December 2024 | 330.4 | 101.5 | 0.2 | 8.7 | 440.8
Actual return on assets | (21.2) | 1.4 | (0.1) | 0.4 | (19.5)
Fair value of plan assets by category |  |  |  |  |
Equities | – | 4.8 | – | – | 4.8
Growth assets 1 | 43.8 | – | – | – | 43.8
Bonds | 28.8 | 94.7 | – | – | 123.5
Liability-driven investments (LDI) 2 | 166.4 | – | – | – | 166.4
Matching insurance policies | 90.1 | 1.4 | 0.2 | 6.2 | 97.9
Other | 1.3 | 0.6 | – | 2.5 | 4.4
| 330.4 | 101.5 | 0.2 | 8.7 | 440.8

1.
Growth assets include investment in Multi-Asset Funds as well as UK property.
2.
The LDI assets are pooled funds in the UK that provide a leveraged return linked to long duration fixed interest and index-linked government bonds valued at the bid price of the units.
This provides interest rate and inflation hedging equivalent in size to circa 100% of the invested assets of the UK Schemes measured on the ‘Long Term Objective’ basis (Gilts +50bps)
(excluding matching insurance policies).
Financial statements
Annual report 2024
22. Pensions and other post-retirement employee beneﬁts
(continued)
Morgan Advanced Materials
173
The Group expects to contribute £4.0 million to these arrangements in 2025.

|  |  |  | Rest of |
| UK | USA | Europe | the World | Total
| £m | £m | £m | £m | £m
Estimate of employer contributions to be paid into the plans |  |  |  |  |
during the 12-month period beginning 1 January 2025 | – | 0.5 | 1.7 | 1.8 | 4.0

| 31 December 2023
|  |  |  | Rest of |
| UK | USA | Europe | the World | Total
| £m | £m | £m | £m | £m
Summary of net obligations |  |  |  |  |
Present value of unfunded defined benefit obligations | – | (5.2) | (27.1) | (4.6) | (36.9)
Present value of funded defined benefit obligations | (362.8) | (107.0) | (1.3) | (8.1) | (479.2)
Fair value of plan assets | 375.3 | 106.7 | 0.2 | 8.7 | 490.9
Net obligations | 12.5 | (5.5) | (28.2) | (4.0) | (25.2)
Represented by: |  |  |  |  |
Surpluses | 12.5 | – | – | 1.0 | 13.5
Obligations | – | (5.5) | (28.2) | (5.0) | (38.7)
Movements in present value of defined benefit obligation |  |  |  |  |
At 1 January 2023 | (359.5) | (121.9) | (28.3) | (12.1) | (521.8)
Current service cost | – | – | (0.8) | (1.6) | (2.4)
Interest cost | (16.7) | (5.6) | (1.0) | (0.3) | (23.6)
Actuarial gain/(loss) |  |  |  |  |
Experience gain/(loss) on plan obligations | (0.3) | 2.0 | – | (0.5) | 1.2
Changes in financial assumptions – gain/(loss) | (10.4) | (1.9) | (0.6) | 0.2 | (12.7)
Changes in demographic assumptions – gain | 2.9 | – | – | – | 2.9
Benefits paid | 21.2 | 9.2 | 1.7 | 0.9 | 33.0
Exchange adjustments | – | 6.0 | 0.6 | 0.7 | 7.3
At 31 December 2023 | (362.8) | (112.2) | (28.4) | (12.7) | (516.1)
Movements in fair value of plan assets |  |  |  |  |
At 1 January 2023 | 384.7 | 112.7 | 0.4 | 8.4 | 506.2
Interest on plan assets | 17.9 | 5.4 | – | 0.3 | 23.6
Remeasurement gain/(loss) | (6.1) | 2.9 | – | 0.3 | (2.9)
Contributions by employer | – | 0.6 | 1.6 | 1.2 | 3.4
Benefits paid | (21.2) | (9.2) | (1.7) | (0.9) | (33.0)
Exchange adjustments | – | (5.7) | (0.1) | (0.6) | (6.4)
At 31 December 2023 | 375.3 | 106.7 | 0.2 | 8.7 | 490.9
Actual return on assets | 11.8 | 8.3 | – | 0.6 | 20.7
Fair value of plan assets by category |  |  |  |  |
Equities | – | 6.3 | – | – | 6.3
Growth assets 1 | 48.9 | – | – | – | 48.9
Bonds | 26.5 | 97.7 | – | – | 124.2
Liability-driven investments (LDI) 2 | 196.6 | – | – | – | 196.6
Matching insurance policies | 101.9 | 1.4 | 0.2 | 6.3 | 109.8
Other | 1.4 | 1.3 | – | 2.4 | 5.1
| 375.3 | 106.7 | 0.2 | 8.7 | 490.9

1.
Growth assets include investment in Global Diversified and Multi-Asset Funds as well as UK property.
2.
The LDI assets are pooled funds in the UK that provide a leveraged return linked to long duration fixed interest and index-linked government bonds valued at the bid price of the units.
This provides interest rate and inflation hedging equivalent in size to circa 100% of the invested assets of the UK Schemes.
Notes to the consolidated ﬁnancial statements
continued
22. Pensions and other post-retirement employee beneﬁts
(continued)
174
Actuarial assumptions
The actual liability in respect of global employee benefits will not be known until the last payments have been made. In placing a current
estimate on the Group’s past service benefit obligations, a number of assumptions about the future are required. For defined benefit
schemes, the Directors make annual estimates and assumptions in respect of discount rates, future changes in salaries, employee turnover,
inflation rates, life expectancy and several other assumptions. In making these estimates and assumptions, the Directors consider advice
provided by external advisors, such as actuaries.
The assumptions used are best estimate assumptions chosen from a reasonable range and which may not be borne out in practice.
The principal assumptions are the discount rate and inflation assumptions which are long-term and measured on external factors, based
upon each plan’s duration. In addition to these, the mortality assumption in the UK and the USA is material to the cost of the promised
benefits. In both the UK and Europe, where relevant, the assumed increases in salaries and pensions in payment are derived from
assumed future inflation.
The rates shown below are single equivalents for the obligations as a whole derived from discounting along the yield curve. In line with
IAS 19, in determining the value of the annuity contract held in the UK we have reflected the same methodology as used to value the
corresponding obligations, reflecting the actual cash flow profile and duration of the insured obligations, rather than those of the Schemes
as a whole.
Actuarial assumptions were:

|  |  |  | Rest of
| UK | USA | Europe | the World
| % | % | % | %
2024 |  |  |  |
Discount rate | 5.45 | 5.47 | 3.50 | 4.66
Salary increase | n/a | n/a | 2.00 | 4.50
Inflation (UK: RPI/CPI) | 3.15/2.52 | n/a | 2.00 | n/a
Pensions increase 1 | 3.00/3.02/3.66 | n/a | 2.00 | n/a
Mortality – post-retirement: |  |  |  |
Life expectancy of a male aged 60 in accounting year (years) | 25.51 | 25.00 | 25.48 | n/a
Life expectancy of a male aged 60 in accounting year +20 (years) | 27.02 | 25.90 | 28.25 | n/a
2023 |  |  |  |
Discount rate | 4.52 | 4.80 | 3.40 | 5.52
Salary increase | n/a | n/a | 2.10 | 4.50
Inflation (UK: RPI/CPI) | 3.05/2.31 | n/a | 2.10 | n/a
Pensions increase 1 | 3.00/2.94/3.62 | n/a | 2.10 | n/a
Mortality – post-retirement: |  |  |  |
Life expectancy of a male aged 60 in accounting year (years) | 25.62 | 25.00 | 25.33 | n/a
Life expectancy of a male aged 60 in accounting year +20 (years) | 27.10 | 25.80 | 28.12 | n/a

1.
Pension increases in the UK reflect both fixed-rate and RPI-related increases to different elements of members’ pensions.
The accounting assumptions noted above are used to calculate the year-end net pension liability in accordance with the relevant
accounting standard, IAS 19 (revised) Employee Benefits. Changes in these assumptions have no impact on the Group’s cash payments to
their arrangements. The payments due are calculated based on local funding requirements, or in the case of the Group’s unfunded
arrangements on the incidence of benefit payments falling due.
Financial statements
Annual report 2024
22. Pensions and other post-retirement employee beneﬁts
(continued)
Morgan Advanced Materials
175
The table below demonstrates the sensitivity of the defined benefit obligations to changes in the significant assumptions used for
the schemes.

|  | 2024 | 2023
|  | Increase on |  | Increase on |
|  | deﬁned beneﬁt | Increase | deﬁned beneﬁt | Increase
|  | obligation | on deﬁcit | obligation | on deﬁcit
| Change in assumption | £m | £m | £m | £m
Discount rate | Decrease by 0.1% | 4.6 | 4.1 | 5.6 | 4.9
Discount rate 1 | Decrease by 0.5% | 23.9 | 21.0 | 29.2 | 25.6
Inflation | Increase by 0.1% | 1.5 | 1.5 | 1.8 | 1.7
Inflation 1 | Increase by 0.5% | 7.8 | 7.3 | 9.7 | 9.1
Mortality – post-retirement 1 | Pensioners live 1 year longer | 18.1 | 11.6 | 20.5 | 13.4
Exchange rates | GBP weakens against USD by 10% | 11.7 | 0.4 | 12.5 | 0.6
| GBP weakens against EUR by 10% | 2.9 | 2.9 | 3.1 | 3.1

1.
Sensitivities included as reasonably possible changes under IAS1.
These sensitivities have been calculated to show the movement in the net balance sheet in isolation, and assume no other changes in
market conditions at the accounting date. This is unlikely in practice – for example, a change in discount rate is unlikely to occur without
any movement in the value of the assets held by the Group’s Schemes, particularly in the UK and USA where liability movements are
effectively fully hedged.
Risks
The net pension liability is a snapshot view which can be significantly influenced by short-term market factors. The calculation of the
surplus or deficit depends, therefore, on factors which are beyond the control of the Group – principally the value at the balance sheet
date of assets in which the Scheme has invested and long-term interest rates which are used to discount future liabilities. The funding of the
Scheme is based on long-term trends and assumptions relating to market growth, as advised by qualified actuaries and investment advisors.
The most significant risks to which the Group is exposed are:
Investment returns
: The Group’s net balance sheet and contribution requirements are heavily dependent upon the return on the
assets invested in by the Schemes.
Longevity:
The cost to the Group of the pensions promised to members is dependent upon the expected term of these payments.
To the extent that members live longer than expected, this will increase the cost of these arrangements.
Inflation rate risk:
In the UK, the pension promises are, in the main, linked to inflation, and higher inflation will lead to higher liabilities.
The above risks have been mitigated for the majority of the UK Schemes’ pensioner population through the purchase of an insurance
policy, the payments from which exactly match the promises made to employees. Remaining investment risks have also been mitigated
to a significant extent by a diversification of the return-seeking assets and backing uninsured pensioner liabilities via bonds and various
hedging instruments. In the UK, the bonds and LDI mandates target an interest rate hedge against movements in government bond yields
(including providing protection against changes to future inflation expectations) for an amount equal to approximately 100% of the liabilities
valued on the ‘Long Term Objective’ basis. In the USA, the bond mandates provide an interest rate hedge of approximately 100% of the
liabilities for funded plans.
In addition, the IAS 19 defined benefit obligation is linked to yields on AA-rated corporate bonds; however some of the Group’s
arrangements invest in a number of other assets which will move in a different manner from these bonds. Therefore, changes in market
conditions may lead to volatility in the Group’s balance sheet and in other comprehensive income, and to a lesser extent in the IAS 19
pension expense in the Group’s income statement.
Regulatory Risk:
The Group also closely monitors the external legal and regulatory pension environment to ensure continued
compliance with all relevant requirements.
Notes to the consolidated ﬁnancial statements
continued
176
23. Share-based payments
The Group operates various share option programmes that allow Group employees to acquire shares in the Company. During 2024,
awards were made to executives and senior employees under the Morgan Advanced Materials plc Long-Term Incentive Plan (LTIP),
the Morgan Advanced Materials plc Deferred Bonus Plan (DBP) and the Morgan Advanced Materials plc Restricted Stock Units (RSU).
The Company also maintains a UK all-employee Sharesave scheme (‘Sharesave’). Further details can be found in the Remuneration
Report on pages 84 to 109.
The grant date fair value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity,
over the period that the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted to
reflect the actual number of share options for which the related service and non-market vesting conditions are met.
The charge expensed to the income statement in 2024 was £2.8 million (2023: £2.9 million).
The following options and awards were outstanding at 31 December 2024 in respect of Ordinary shares:

|  |  |  | Number | Exercise dates ranging
| Employees |  | Exercise/award | of shares |  |
| entitled | Vesting conditions | price(s) | outstanding | from | to
LTIP | Senior | Continued employment | – | 7,254,150 | 13 May 2025 | 5 September
| employees | plus satisfaction of |  |  |  | 2027
|  | performance metrics |  |  |  |
Sharesave | All UK | Continued employment | 209.00p–321.00p | 1,085,754 | 1 December 2024 | 31 May 2028
| employees |  |  |  |  |
DBP | Senior | Continued employment | – | 418,844 | 26 March 2025 | 26 March 2027
| employees |  |  |  |  |
RSU | Select | Continued employment | – | 463,373 | 26 May 2025 | 26 March 2027
| employees |  |  |  |  |

The numbers and weighted average exercise prices of share options are as follows:

| 2024 | 2023
| Weighted |  | Weighted |
| average | Number of | average | Number of
| exercise price | options | exercise price | options
Outstanding at the beginning of the period | 27.63p | 8,785,347 | 28.30p | 7,517,706
Granted during the period | 15.00p | 3,153,808 | 29.62p | 4,240,455
Forfeited during the period | 23.54p | (459,351) | 24.87p | (580,988)
Exercised during the period | 21.63p | (1,623,698) | 33.06p | (2,138,502)
Lapsed during the period | 5.96p | (633,985) | 41.30p | (253,324)
Outstanding at the end of the period | 26.06p | 9,222,121 | 27.63p | 8,785,347
Exercisable at the end of the period | 139.21p | 120,602 | 170.65p | 222,637

The weighted average share price at the date of exercise during the period was 283.16 pence (2023: 276.49 pence).
Financial statements
Annual report 2024
23. Share-based payments
(continued)
Morgan Advanced Materials
177
Measurement of fair values
The DBP is an award of deferred shares which include the accumulated value of any dividends which fall during the period from the date of
grant to the vesting date. The RSU is an award of shares, which are released in tranches to the participant over a specified period of time
with no performance conditions except continued employment by the Group. As such, the grant-date fair value of the DBP and RSU are
equal to the share price at the date of grant.

| Awards made in 2024
| LTIP | Sharesave | DBP | RSU
Share price at award date | 282.89p–302.50p | 271.75p | 282.89p | 282.89p–302.50p
Exercise price | n/a | 247.00p | n/a | n/a
Fair value at measurement date | 105.00p–250.00p | 42.00p | 282.89p | 282.89p–302.50p
Fair value measurement method | Actuarial | Actuarial | n/a | n/a
| binomial | binomial |  |
| method | method |  |
Fair value model inputs: |  |  |  |
Expected volatility (expressed as weighted average | 30% | 30% |  |
volatility used in the model) |  |  |  |
Option life (expressed as weighted average life | 3.0 years | 3.3 years |  |
used in the model) |  |  |  |
Expected dividends | 4.20% | 4.40% |  |
Risk-free interest rate | 4.00% | 3.70% |  |

The expected volatility is based on the historical volatility (calculated based on the weighted average remaining life of the share options)
adjusted for any expected changes to future volatility due to publicly available information.
The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted.
The weighted average fair value of options issued during 2024 was 202.98 pence (2023: 211.70 pence).
Notes to the consolidated ﬁnancial statements
continued
178
24. Provisions and contingent liabilities

| Closure and |  |  |
| restructuring | Legal and other | Environmental |
| provisions | provisions | provisions | Total
| £m | £m | £m | £m
Balance at 1 January 2024 | 7.9 | 5.6 | 8.3 | 21.8
Provisions made during the year | 2.9 | 2.4 | 0.1 | 5.4
Provisions used during the year | (2.9) | (1.1) | (1.6) | (5.6)
Provisions reversed during the year | (0.4) | (0.4) | – | (0.8)
Effect of movements in foreign exchange | (0.1) | (0.2) | (0.1) | (0.4)
Balance at 31 December 2024 | 7.4 | 6.3 | 6.7 | 20.4
Current | 5.4 | 1.9 | 2.2 | 9.5
Non-current | 2.0 | 4.4 | 4.5 | 10.9
| 7.4 | 6.3 | 6.7 | 20.4

Closure and restructuring provisions
Closure and restructuring provisions relate to the Group’s restructuring programmes and represent committed expenditure at the balance
sheet date. The amounts provided are based on the costs of terminating relevant contracts, under the contract terms, and management’s
best estimate of other associated restructuring costs including professional fees. The provisions are expected to be utilised in the next one
to two years.
We have a provision for a multi-employer pension obligation for a site which was closed during 2021. The cash outflows relating to the
pension obligation may continue for up to 16 years, subject to any settlement being reached in advance of that date.
Legal and other provisions
Legal and other provisions mainly comprise amounts provided against open legal and contractual disputes arising in the normal course of
business and long-service costs. Provisions are made for the expected costs associated with such matters, based on past experience of
similar items and other known factors, taking into account professional advice received, and represent management’s best estimate of the
most likely outcome. The timing of utilisation of these provisions is frequently uncertain, reflecting the complexity of issues and the
outcome of various court proceedings and associated negotiations.
Where obligations are not capable of being reliably estimated, or if a material outflow of economic resources is considered not probable, it
is classified as a contingent liability. The Group is of the opinion that any associated claims that might be brought can be defeated
successfully and, therefore, the possibility of any material outflow in settlement is assessed as remote.
Subsidiary undertakings within the Group have given unsecured guarantees of £9.5 million (2023: £10.3 million) in the ordinary course
of business.
Environmental provisions
Environmental provisions are made for quantifiable environmental liabilities arising from known environmental issues. The amounts
provided are based on the best estimate of the costs required to remedy these issues. The provisions are expected to be utilised in the
next five to ten years.
Financial statements
Annual report 2024
24. Provisions and contingent liabilities
(continued)
Morgan Advanced Materials
179
Tax contingent liabilities
The Group is subject to periodic tax audits by various fiscal authorities covering corporate, employee and sales taxes in the various
jurisdictions in which it operates. We have provided for estimates of the Group’s likely exposures where these can be reliably estimated.
These are disclosed in notes 8 and 14.
Environmental and other contingent liabilities
Due to the international footprint of the Group and the nature of its manufacturing operations it is subject to a wide range of local health
and safety, environmental and employment laws and regulations. At any point in time the Group has a number of ongoing environmental
or employment cases for which there is uncertainty due to the wide range of possible outcomes and associated costs. Possible outcomes
include the case being settled, withdrawn or dismissed.
25. Capital commitments
In 2024, commitments for property, plant and equipment and computer software expenditure for which no provision has been made in
these accounts amount to £13.8 million (2023: £5.2 million) for the Group.
26. Related parties
Identification of related parties
The Group has related party relationships with its subsidiaries (a list of all related undertakings and associates is shown in note 44), and
with its Directors, executive officers and their close family members.
Transactions with key management personnel
The Company has written service contracts or letters of appointment with each of its Directors, under which the Directors receive a
salary or a fee and other emoluments.
The key management of the Group and Parent Company consists of the Board of Directors (including non-executive Directors) and
members of the Executive Committee.
The compensation for the executive and non-executive Directors and members of the Executive Committee charged in the year was:

| 2024 | 2023
| £m | £m
Short-term employee benefits | 6.2 | 5.9
Employer national insurance contributions | 0.5 | 0.6
Pension and other post-employment costs | 0.3 | 0.3
Share-based payment expense | 1.1 | 0.9
Non-executive Directors’ fees and benefits | 0.5 | 0.5
Total compensation of key management personnel | 8.6 | 8.2

Other related party transactions
During the year the Group incurred an annual fee of £18,000 (2023: £13,500) to Dunelm Energy for administrative support, a company in
which Ian Marchant, the Group Chairman, has an interest.
Notes to the consolidated ﬁnancial statements
continued
180
27. Non-controlling interests
Non-controlling interests represent the portion of equity of subsidiaries which is not owned by the Parent Company. The total profit
attributable to non-controlling interests for the year ended 31 December 2024 is £8.5 million (2023: £9.0 million), £7.5 million (2023:
£8.1 million) relates to the subsidiaries listed below, the remaining amount relates to other subsidiaries which are not considered material.

Name of entity | Registered address | Ownership %
Morgan AM&T (Shangai) Co., Ltd | 4250 Long Wu Road, Shanghay, 200241, China | 30%
Murugappa Morgan Thermal Ceramics Ltd | PO Box 1570, Dare House Extension, V Floor, No. 2, | 49%
| NSC Bose Road, Chennai, Tamil Nadu, 600001, India |
Ciria India Limited | P-11 Pandav Nagar, Mayur Vihar Phase 1, Delhi, 110091, India | 30%
Shin-Nippon Thermal Ceramics Corporation | Portus Center Building 12F, 4-45-1 Ebisujimacho, Sakai-Ku, | 50%
| Sakai-Shi, Osaka, 590-0985, Japan |
Yixing Morgan Thermal Ceramics Co Ltd | 2 Beidan Road, Taodu Industrial Park, Dingshu Town, | 49%
| Yixing City, Jiangsu Province, 214222, China |
Morgan Kailong (Jingmen), Thermal Ceramics Co Ltd | 20-1 Quankou Road, Jingmen City, Hubei Province, | 30%
| 448032, China |

The summarised financial information of the material non-controlling interests are shown below.

|  |  |  |  |  | Morgan Kailong
|  | Murugappa |  | Shin-Nippon | Yixing Morgan | (Jingmen)
| Morgan AM&T | Morgan |  | Thermal | Thermal | Thermal
| (Shanghai) | Thermal | Ciria India | Ceramics | Ceramics | Ceramics
| Co., Ltd | Ceramics Ltd | Limited | Corporation | Co Ltd | Co Ltd
2024 | £m | £m | £m | £m | £m | £m
Profit after tax | 6.1 | 4.6 | 2.3 | 1.9 | 1.3 | 3.3
Profit for the year attributable | 1.9 | 2.2 | 0.7 | 1.0 | 0.7 | 1.0
to non-controlling interest |  |  |  |  |  |
Dividends paid to | 2.3 | 0.7 | 0.7 | 1.8 | 1.0 | 1.0
non-controlling interest |  |  |  |  |  |
Non-current assets | 5.1 | 9.0 | – | – | 8.4 | 12.3
Current assets | 34.3 | 11.3 | 5.7 | 10.5 | 6.3 | 7.6
Current liabilities | (13.0) | (3.8) | (1.8) | (3.0) | (3.7) | (5.0)
Total net assets | 26.4 | 16.5 | 3.9 | 7.5 | 11.0 | 14.9

|  |  |  |  |  | Morgan Kailong
|  | Murugappa |  | Shin-Nippon | Yixing Morgan | (Jingmen)
| Morgan AM&T | Morgan |  | Thermal | Thermal | Thermal
| (Shanghai) | Thermal | Ciria India | Ceramics | Ceramics | Ceramics
| Co., Ltd | Ceramics Ltd | Limited | Corporation | Co Ltd | Co Ltd
2023 | £m | £m | £m | £m | £m | £m
Profit after tax | 7.4 | 4.3 | 2.8 | 1.9 | 1.9 | 3.1
Profit for the year attributable | 2.2 | 2.1 | 0.9 | 1.0 | 0.9 | 1.0
to non-controlling interest |  |  |  |  |  |
Dividends paid to | 2.1 | 0.7 | 0.8 | 0.9 | 1.8 | 1.1
non-controlling interest |  |  |  |  |  |
Non-current assets | 6.0 | 5.9 | – | 0.2 | 8.9 | 12.1
Current assets | 34.0 | 11.1 | 6.2 | 12.7 | 6.6 | 7.0
Current liabilities | (11.6) | (3.6) | (2.2) | (2.9) | (3.8) | (4.3)
Total net assets | 28.4 | 13.4 | 4.0 | 10.0 | 11.7 | 14.8

28. Subsequent events
There were no reportable subsequent events following the balance sheet date.
Financial statements
Annual report 2024
Morgan Advanced Materials
181
Company balance sheet
AS AT 31 DECEMBER 2024

|  | 2024 | 2023
| Note | £m | £m
Non-current assets |  |  |
Intangible assets | 31 | – | –
Property, plant and equipment | 32 | 3.3 | 3.5
Right-of-use assets | 33 | 0.3 | 0.4
Investments in subsidiary undertakings | 34 | 605.2 | 716.4
Debtors – amounts due after more than one year | 35 | 489.1 | 252.8
Employee benefits: pensions | 39 | 3.1 | 3.1
|  | 1,101.0 | 976.2
Current assets |  |  |
Debtors – amounts due within one year | 35 | 65.6 | 135.2
Cash and cash equivalents |  | 22.1 | 15.6
|  | 87.7 | 150.8
Current liabilities |  |  |
Creditors – amounts falling due within one year | 36 | 178.5 | 126.8
Provisions | 40 | 0.9 | 1.1
|  | 179.4 | 127.9
Net current (liabilities)/assets |  | (91.7) | 22.9
Total assets less current liabilities |  | 1,009.3 | 999.1
Non-current liabilities |  |  |
Creditors – amounts falling due after more than one year | 37 | 429.5 | 394.7
Provisions | 40 | 2.0 | 3.0
|  | 431.5 | 397.7
Net assets |  | 577.8 | 601.4
Capital and reserves |  |  |
Equity shareholders’ funds |  |  |
Share capital | 41 | 70.9 | 71.3
Share premium |  | 111.7 | 111.7
Merger reserve |  | 17.0 | 17.0
Capital redemption reserve |  | 36.1 | 35.7
Other reserves |  | (5.5) | –
Retained earnings |  | 347.6 | 365.7
Shareholders’ funds |  | 577.8 | 601.4

Under Section 408 of the Companies Act 2006, the Company is exempt from the requirement to present its own income statement.
The profit for the Company for the year ended 31 December 2024 was £21.5 million (2023: loss of £36.6 million).
The financial statements were approved by the Board of Directors on 27 February 2025 and were signed on its behalf by:

Pete Raby | Richard Armitage
Chief Executive Ofﬁcer | Chief Financial Ofﬁcer

182
Company statement of changes in equity
FOR THE YEAR ENDED 31 DECEMBER 2024

|  | Share |  | Capital |  |  |
| Called-up | premium | Merger | redemption | Other | Retained | Total
| share capital | account | reserve | reserve | reserves | earnings | equity
| £m | £m | £m | £m | £m | £m | £m
Balance at 1 January 2023 | 71.3 | 111.7 | 17.0 | 35.7 | – | 441.3 | 677.0
Total comprehensive income |  |  |  |  |  |  |
for the year: |  |  |  |  |  |  |
Loss for the year | – | – | – | – | – | (36.6) | (36.6)
Other comprehensive income | – | – | – | – | – | (3.6) | (3.6)
Transactions with owners: |  |  |  |  |  |  |
Dividends | – | – | – | – | – | (34.2) | (34.2)
Equity-settled share-based |  |  |  |  |  |  |
payment transactions | – | – | – | – | – | 2.9 | 2.9
Own shares acquired for share |  |  |  |  |  |  |
incentive schemes (net) | – | – | – | – | – | (4.1) | (4.1)
Balance at 31 December 2023 | 71.3 | 111.7 | 17.0 | 35.7 | – | 365.7 | 601.4
Balance at 1 January 2024 | 71.3 | 111.7 | 17.0 | 35.7 | – | 365.7 | 601.4
Total comprehensive income |  |  |  |  |  |  |
for the year: |  |  |  |  |  |  |
Profit for the year | – | – | – | – | – | 21.5 | 21.5
Other comprehensive income | – | – | – | – | – | (0.1) | (0.1)
Transactions with owners: |  |  |  |  | – |  |
Dividends | – | – | – | – |  | (34.5) | (34.5)
Equity-settled share-based |  |  |  |  |  |  |
payment transactions | – | – | – | – | – | 2.8 | 2.8
Own shares acquired for share |  |  |  |  |  |  |
incentive schemes (net) | – | – | – | – | – | (3.3) | (3.3)
Purchase of own shares for shares |  |  |  |  |  |  |
buyback programme | – | – | – | – | (10.0) | – | (10.0)
Cancellation of own shares under |  |  |  |  |  |  |
share buyback programme | (0.4) | – | – | 0.4 | 4.5 | (4.5) | –
Balance at 31 December 2024 | 70.9 | 111.7 | 17.0 | 36.1 | (5.5) | 347.6 | 577.8

Financial statements
Annual report 2024
Morgan Advanced Materials
183
Notes to the Company ﬁnancial statements
29. Accounting policies
Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’)
and the Companies Act 2006.
The separate financial statements of the Company are presented as required by the Companies Act 2006. The Company meets the
definition of a qualifying entity under FRS 100 Application of Financial Reporting Requirements issued by the FRC. Accordingly, these
financial statements are prepared in accordance with FRS 101.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
A cash flow statement and related notes;
Comparative period reconciliations for share capital, tangible fixed assets and intangible assets;
Transactions with wholly-owned subsidiaries;
The effects of new but not yet effective IFRS;
The compensation of key management personnel;
Capital management;
Disclosures required by IFRS 15 Revenue from Contracts with Customers relating to customer contracts; and
Disclosures required by IFRS 16 Leases relating to lessors.
As the consolidated financial statements of Morgan Advanced Materials plc include the equivalent disclosures, the Company has also taken
the exemptions under FRS 101 available in respect of the following disclosures:
IFRS 2 Share-Based Payments in respect of Group-settled share-based payments;
The disclosures required by IFRS 7 Financial Instruments Disclosures;
Disclosures required by IAS 12 Income Taxes in periods when Pillar Two legislation is enacted; and
Certain disclosures required by IFRS 13 Fair Value Measurement relating to the fair value of assets and liabilities.
The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next financial statements.
Under Section 408(4) of the Companies Act 2006 the Company is exempt from the requirement to present its own income statement
or statement of comprehensive income.
The Company’s financial statements are presented in pounds sterling, which is the Company’s functional currency.
The Company’s financial statements are prepared on a going concern basis as set out in note 1 of the consolidated financial statements
of the Group.
The accounting policies set out below have, unless otherwise stated, been applied consistently to the period presented in these
financial statements.
Measurement convention
The financial statements are prepared on the historical cost basis except for certain financial instruments that are measured at fair value.
Foreign currency
Transactions in foreign currencies are translated to the Company’s functional currency at the foreign exchange rate ruling at the date of
transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional
currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income
statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair
value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined.
Notes to the Company ﬁnancial statements
continued
29. Accounting policies
(continued)
184
Intangible assets
Intangible assets that are acquired by the Company are stated at cost less accumulated amortisation and less accumulated impairment losses.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives
are indefinite. Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each balance sheet
date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:
Software:
3–7 years
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of tangible
fixed assets. Land is not depreciated. The estimated useful lives are as follows:
Plant, equipment and fixtures: 3–20 years
Buildings:
50 years
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.
Leasing
The Company assesses whether a contract is or contains a lease at inception of the contract. The Company recognises a right-of-use asset
and a corresponding lease liability with respect to all lease arrangements in which it is the lessee.
The lease liability is initially measured at the present value of future lease payments including adjustments for any lease incentives
receivable. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
Lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the
case of leases in the Company, the lessee’s incremental borrowing rate is used, being the rate the individual lessee would have to pay to
borrow the funds necessary to obtain an asset of similar value on similar terms.
The right-of-use-assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement date, less any lease incentives received and initial direct costs. They are subsequently measured at cost less accumulated
depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of the lease term and useful life of the underlying asset. The depreciation starts
at the commencement date of the lease.
Investments in subsidiaries
Investments in subsidiaries are carried at cost less provision for impairment. The Company tests the investment balances for impairment
annually or when there are indicators of impairment. If any such indication of impairment exists, the Company makes an estimate of its
recoverable amount. Where the carrying amount of an investment exceeds its recoverable amount, the investment is considered impaired
and is written down to its recoverable amount. Where these circumstances have reversed, the impairment previously made is reversed to
the extent of the original cost of the investment.
Financial instruments
Financial instruments and financial liabilities are recognised in the Company balance sheet when the Company becomes party to the
contractual provisions of the instrument.
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other debtors, cash and cash
equivalents, loans and borrowings, and trade and other creditors.
Trade and other debtors
Trade and other debtors are recorded initially at transaction price and subsequently measured at amortised cost. This results in
their recognition at nominal value less an allowance for any doubtful debts. The allowance for doubtful debts is recognised based
on management’s expectation of losses without regard to whether an impairment trigger happened or not (an ‘expected credit loss’ (ECL)
model). The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECL.
Financial statements
Annual report 2024
29. Accounting policies
(continued)
Non-derivative financial instruments
(continued)
Morgan Advanced Materials
185
Trade and other creditors
Trade and other creditors are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using
the effective interest method. The Directors consider that the carrying amount of trade payables approximates to their fair value.
Interest-bearing borrowings
Interest-bearing bank loans and overdrafts are initially recorded at fair value of the consideration received, net of direct issue costs.
They are subsequently held at amortised cost using the effective interest method. Finance charges, including premiums payable on
settlement or redemption and direct issue costs, are accounted for using an effective interest rate method and are added to or deducted
from the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Impairment of ﬁnancial assets
The Company recognises provisions for ECLs on financial assets measured at amortised cost. The amount of ECLs is updated at each
reporting date to reflect changes in credit risk with lifetime ECL recognised when there has been a significant increase in credit risk since
initial recognition. Life ECL represents the expected credit losses that will result from all possible defaults over the expected life of the
financial instrument.
To assess whether the credit risk has increased significantly since initial recognition, the Company compares the risk of default occurring
at the reporting date with the risk of default at the date of initial recognition. The Company utilises both quantitative and qualitative
information to support this assessment, including historical experience and forward-looking information.
The Company considered amounts due from Group undertakings to be in default when the borrower is unlikely to pay its credit
obligations to the Company in full. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on
the estimated future cash flows of the financial asset have occurred.
Derivative ﬁnancial instruments
Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised immediately
in the income statement. The Group enters into derivative financial instruments to manage its exposure to foreign exchange rate risks
including non-designated foreign exchange forward contracts as detailed in note 45.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a
financial liability. Derivatives are not offset in the financial statements unless the Group has both a legally enforceable right and intention to
offset. The impact of the Master Netting Agreements on the Group’s financial position is disclosed in note 21. A derivative is presented as
a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not due to be
realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
Employee benefits
Deﬁned contribution plans
A defined contribution plan is a post-employment benefit plan under which the Company pays fixed contributions into a separate entity
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension
plans are recognised as an expense in the income statement in the periods during which services are rendered by employees.
Deﬁned beneﬁt plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obligation in respect
of defined benefit pension plans and other post-employment benefits is calculated separately for each plan by estimating the amount of
future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to
determine its present value, and the fair value of any plan assets (at bid price) and any unrecognised past service costs are deducted.
The liability discount rate is the yield at the balance sheet date on AA-credit-rated bonds denominated in the currency of, and having
maturity dates approximating to the terms of the Company’s obligations. The calculation is performed by a qualified actuary using the
projected unit credit method. When the calculation results in a benefit to the Company, the recognised asset is limited to the total of any
unrecognised past service costs and the present value of benefits available in the form of any future refunds from the plan, reductions in
future contributions to the plan or on settlement of the plan, and takes into account the adverse effect of any minimum funding requirements.
Notes to the Company ﬁnancial statements
continued
29. Accounting policies
(continued)
186
Actuarial gains and losses that have arisen since the adoption of FRS 101 are recognised in the period that they occur directly into equity
through the statement of comprehensive income.
The Company is the sponsoring and principal employer of two UK defined benefit pension schemes, the Morgan Pension Scheme and the
Morgan Group Senior Staff Pension and Life Assurance Scheme (‘the UK Schemes’). The Company also guarantees certain obligations and
liabilities to the employees that currently participate in the two UK Schemes. During 2016, the Company adopted a new policy to allocate
costs associated with the UK pension schemes between itself, as Principal Employer, and the various Participating Employers, based on an
evaluation of each entity’s share of overall Scheme liabilities. This ensures that the pension liability is reflected in the entity that employed
the participant. Previously all of the Scheme assets and liabilities were recognised on the balance sheet of the Company only. Further
details are provided in note 39.
Share-based payment transactions
Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are
accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Company.
The grant date fair value of share-based payments awards granted to employees is recognised as an employee expense, with a corresponding
increase in equity, over the period in which the employees become unconditionally entitled to the awards. Share-based payment charges
and credits relating to awards granted to employees of subsidiaries are recharged to those subsidiaries with a corresponding entry in the
Company’s income statement. The fair value of the awards granted is measured using an option valuation model, taking into account the
terms and conditions upon which the awards were granted. The amount recognised as an expense is adjusted to reflect the actual number
of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately
recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at
the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
Share-based payment transactions in which the Company receives goods or services by incurring a liability to transfer cash or other assets
that is based on the price of the Company’s equity instruments are accounted for as cash-settled share-based payments. The fair value of
the amount payable to employees is recognised as an expense, with a corresponding increase in liabilities, over the period in which the
employees become unconditionally entitled to payment. The liability is remeasured at each balance sheet date and at settlement date.
Any changes in the fair value of the liability are recognised as personnel expense in the income statement.
Disclosure of the share-based payment transactions can be found in note 23 to the Group financial statements.
Own shares held by the Morgan General Employee Beneﬁt Trust
Transactions of the Group-sponsored Morgan General Employee Benefit Trust are treated as being those of the Company and are
therefore reflected in the Company’s financial statements. In particular, the Trust’s purchases and sales of shares in the Company are
debited and credited to equity.
Provisions
A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event
that can be reliably measured, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions
are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability where the effect of
discounting is expected to be material.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent
that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or
other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill;
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and
differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount
of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
temporary difference can be utilised.
Financial statements
Annual report 2024
29. Accounting policies
(continued)
Morgan Advanced Materials
187
Dividends on shares presented within shareholders’ funds
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately approved
and are no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the
financial statements.
Financial guarantee contracts
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its Group, the
Company considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats the guarantee
contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the
guarantee, at which point a liability would be recognised.
Use of judgements and estimates
In preparing these financial statements, management has made judgements, estimates, and assumptions that affect the application of the
Company’s accounting policies and the reported amount of assets, liabilities, income and expenses.
In addition to the areas of judgement and estimates outlined in note 1 to the consolidated Group financial statements, the Company
also identifies the assumptions required in investments impairment assessments as a source of significant risk of resulting in a material
adjustment to the asset carrying values of the Company. Assessment of impairment relies on the use of estimates of the future profitability
in a multiple-based valuation which may differ from the actual results achieved. Due to global economic uncertainty, there is an increased
level of risk and therefore a key source of estimate uncertainty in these assumptions, see note 34 for sensitivity analysis.
30. Staff numbers and costs
The monthly average number of persons employed by the Company (including Directors) during the year was as follows:

Number of employees | 2024 | 2023
Number of employees including Directors | 76 | 69

Full details of the Directors’ remuneration for the period can be found in the Remuneration Report on pages 96 to 109.
Aggregate employee-related costs were as follows:

|  | 2024 | 2023
| Note | £m | £m
Wages and salaries |  | 10.6 | 7.6
Equity-settled share-based payments | 23 | 2.8 | 2.9
Social security costs |  | 1.5 | 2.1
Other pension costs |  | 0.9 | 1.2
|  | 15.8 | 13.8

In 2024, £2.6 million (2023: £3.0 million) of the equity-settled share-based payments amount was recharged to other Morgan Group
companies.
Notes to the Company ﬁnancial statements
continued
188
31. Intangible assets

| Software
| £m
Cost |
Balance at 1 January 2024 and 31 December 2024 | 10.0
Amortisation |
Balance at 1 January 2024 and 31 December 2024 | 10.0
Carrying amounts |
At 31 December 2023 | –
At 31 December 2024 | –

32. Property, plant and equipment

|  | Plant, |
| Land and | equipment |
| buildings | and ﬁxtures | Total
| £m | £m | £m
Cost |  |  |
Balance at 1 January 2024 | 6.5 | 2.3 | 8.8
Additions | – | 0.3 | 0.3
Disposals | – | (0.2) | (0.2)
Balance at 31 December 2024 | 6.5 | 2.4 | 8.9
Depreciation and impairment losses |  |  |
Balance at 1 January 2024 | 3.8 | 1.5 | 5.3
Depreciation charge for the year | – | 0.3 | 0.3
Balance at 31 December 2024 | 3.8 | 1.8 | 5.6
Carrying amounts |  |  |
At 31 December 2023 | 2.7 | 0.8 | 3.5
At 31 December 2024 | 2.7 | 0.6 | 3.3

Financial statements
Annual report 2024
Morgan Advanced Materials
189
33. Right-of-use assets
The reconciliation in the movement of the carrying value of right-of-use assets is set out in the table below:

|  | Plant, |
| Land and | equipment |
| buildings | and ﬁxtures | Total
| £m | £m | £m
Cost |  |  |
Balance at 1 January 2024 | 0.8 | 0.1 | 0.9
Disposals | – | (0.1) | (0.1)
Balance at 31 December 2024 | 0.8 | – | 0.8
Depreciation |  |  |
Balance at 1 January 2024 | 0.4 | 0.1 | 0.5
Charge for the year | 0.1 | – | 0.1
Disposals | – | (0.1) | (0.1)
Balance at 31 December 2024 | 0.5 | – | 0.5
Carrying amounts |  |  |
At 31 December 2023 | 0.4 | – | 0.4
At 31 December 2024 | 0.3 | – | 0.3

The Company leases several assets including buildings and IT equipment. The average lease term at 31 December 2024 is 0.8 years
(2023: 0.9 years).
At 31 December 2024, the Company has not applied any exemptions for short-term leases or leases of low-value assets.
34. Investment in subsidiary undertakings

| Shares |  |
| in Group |  |
| undertakings | Loans | Total
| £m | £m | £m
Cost |  |  |
Balance at 1 January 2024 | 449.4 | 432.4 | 881.8
Additions | 4.9 | – | 4.9
Repayment of capital | – | (137.2) | (137.2)
Effect of movement in foreign exchange | – | 2.9 | 2.9
Balance at 31 December 2024 | 454.3 | 298.1 | 752.4
Provisions |  |  |
Balance at 1 January 2024 | 64.8 | 100.6 | 165.4
Provided in the year | – | – | –
Reclassification | – | (17.9) | (17.9)
Effect of movement in foreign exchange | – | (0.3) | (0.3)
Balance at 31 December 2024 | 64.8 | 82.4 | 147.2
Carrying amounts |  |  |
At 31 December 2023 | 384.6 | 331.8 | 716.4
At 31 December 2024 | 389.5 | 215.7 | 605.2

Notes to the Company ﬁnancial statements
continued
34. Investment in subsidiary undertakings
(continued)
190
In December 2024, management conducted a review of the Company’s investment in subsidiary undertakings and identified impairment
losses of £nil (2023: £43.2 million). In addition, management identified £nil (2023: £17.8 million) impairment losses against loans.
The impairment assessment of shares in Group undertakings uses the 2024 results in an EBITDA
*
multiple valuation, which is sensitive
to changes in the principal assumptions. In line with the fair value hierarchy in note 21, this has been classified as a Level 2 valuation.
A 2% increase in either EBITDA
*
or the multiple would increase the carrying value of the share in Group undertakings by £3.0 million at
31 December 2024. A 2% decrease would result in an impairment of £3.0 million. Management considers these changes in assumptions
to be reasonably possible.
Note 44 to the financial statements gives details of the Company’s shares held in related undertakings.
35. Debtors

|  | 2024 | 2023
| Note | £m | £m
Due within one year |  |  |
Amounts owed by Group undertakings |  | 59.8 | 127.1
Other debtors |  | 1.1 | 3.3
Derivative financial assets | 45 | 1.4 | 1.6
Prepayments |  | 3.3 | 3.2
|  | 65.6 | 135.2
Due after more than one year |  |  |
Derivative financial assets | 45 | – | 0.4
Amounts owed by Group undertakings |  | 489.1 | 252.4
|  | 489.1 | 252.8

Amounts owed by Group undertakings relate to subsidiary undertakings, are unsecured and accrue interest at rates up to 18.3% (2023:
11.8%). Amounts owed by Group in more than one year are due in up to three years.
36. Creditors: amounts falling due within one year

|  | 2024 | 2023
| Note | £m | £m
Bank overdrafts |  | 2.6 | 0.8
Lease liabilities |  | 0.1 | 0.2
Trade creditors |  | 10.2 | 2.9
Amounts owed to Group undertakings |  | 150.5 | 109.4
Other creditors |  | 3.8 | 3.0
Accruals |  | 8.9 | 8.8
Derivative financial liabilities | 45 | 2.4 | 1.7
|  | 178.5 | 126.8

Amounts owed to Group undertakings relate to subsidiary undertakings and are unsecured, repayable on demand and accrue interest at
rates up to 12.0% (2023: 10.5%).
Financial statements
Annual report 2024
Morgan Advanced Materials
191
37. Creditors: amounts falling due after more than one year

|  | 2024 | 2023
| Note | £m | £m
Amounts owed to Group undertakings |  | 85.8 | 83.4
Borrowings | 38 | 337.7 | 308.5
Lease liabilities |  | – | 0.1
Derivative financial liabilities | 45 | 6.0 | 2.7
|  | 429.5 | 394.7

Amounts owed to Group undertakings relate to subsidiary undertakings and are unsecured and accrue interest at rates up to 8.0%
(2023: 8.3%).
38. Borrowings
Terms and debt repayment schedule

| 31 December 2024 | 31 December 2023
|  | Fair value |  | Fair value
| Carrying |  |  |  | Carrying |  |  |
| amount | Level 1 | Level 2 | Total | amount | Level 1 | Level 2 | Total
| £m | £m | £m | £m | £m | £m | £m | £m
Financial assets and |  |  |  |  |  |  |  |
liabilities held at |  |  |  |  |  |  |  |
amortised cost |  |  |  |  |  |  |  |
3.37% US Dollar |  |  |  |  |  |  |  |
Senior Notes 2026 | (77.9) | – | (74.2) | (74.2) | (76.6) | – | (71.6) | (71.6)
1.55% Euro |  |  |  |  |  |  |  |
Senior Notes 2026 | (20.8) | – | (19.9) | (19.9) | (21.7) | – | (20.3) | (20.3)
4.87% US Dollar |  |  |  |  |  |  |  |
Senior Notes 2026 | (20.4) | – | (20.1) | (20.1) | (20.0) | – | (19.4) | (19.4)
1.74% Euro |  |  |  |  |  |  |  |
Senior Notes 2028 | (8.3) | – | (7.7) | (7.7) | (8.7) | – | (8.0) | (8.0)
2.89% Euro |  |  |  |  |  |  |  |
Senior Notes 2030 | (20.7) | – | (18.8) | (18.8) | (21.7) | – | (19.6) | (19.6)
5.47% US Dollar |  |  |  |  |  |  |  |
Senior Notes 2031 | (8.0) | – | (7.6) | (7.6) | (7.9) | – | (7.7) | (7.7)
5.53% US Dollar |  |  |  |  |  |  |  |
Senior Notes 2033 | (8.0) | – | (7.4) | (7.4) | (7.9) | – | (7.6) | (7.6)
5.61% US Dollar |  |  |  |  |  |  |  |
Senior Notes 2035 | (24.1) | – | (22.0) | (22.0) | (23.7) | – | (22.8) | (22.8)
5.50% Cumulative |  |  |  |  |  |  |  |
First Preference shares | (0.1) | – | (0.1) | (0.1) | (0.1) | – | (0.1) | (0.1)
5.00% Cumulative |  |  |  |  |  |  |  |
Second Preference shares | (0.3) | – | (0.3) | (0.3) | (0.3) | – | (0.3) | (0.3)
| (188.6) | – | (178.1) | (178.1) | (188.6) | – | (177.4) | (177.4)
Derivative financial assets |  |  |  |  |  |  |  |
held at fair value | 1.4 | – | 1.4 | 1.4 | 2.0 | – | 2.0 | 2.0
| 1.4 | – | 1.4 | 1.4 | 2.0 | – | 2.0 | 2.0
Derivative financial liabilities |  |  |  |  |  |  |  |
held at fair value | (8.4) | – | (8.4) | (8.4) | (4.4) | – | (4.4) | (4.4)

The fair value of cash and cash equivalents, current trade and other receivables/payables and floating-rate bank and other borrowings are
excluded from the preceding table as their carrying amount approximates to their fair value.
In 2024, none of the borrowings were secured on the assets of the Company (2023: £nil).
Notes to the Company ﬁnancial statements
continued
192
39. Employee beneﬁts: pensions
Defined benefit plans
The Company participates in two defined benefit pension schemes, the Morgan Pension Scheme and the Morgan Group Senior Staff
Pension and Life Assurance Scheme (‘the UK Schemes’). The UK Schemes were closed to new entrants on 1 August 2011, with any
new employees receiving benefits through the Morgan Group Personal Pension Plan, a defined contribution arrangement. The Morgan
Group Senior Staff Pension and Life Assurance Scheme was closed to the future accrual of benefits on and with effect from 6 April 2016.
The Morgan Pension Scheme was closed to the future accrual of benefits on and with effect from 6 April 2018. Current employees,
including those who were active in the Schemes at closure, were auto-enrolled into the Morgan Group Personal Pension Plan for their
future pension benefits.

| 2024 | 2023
| £m | £m
Pension plans and employee benefits |  |
Present value of funded defined benefit obligations | (104.1) | (119.1)
Fair value of plan assets | 107.2 | 122.2
Net assets | 3.1 | 3.1
Movements in present value of defined benefit obligation |  |
At 1 January | (119.1) | (118.9)
Interest cost | (5.1) | (5.5)
Remeasurement gains/(losses): |  |
Changes in financial assumptions | 10.3 | (3.6)
Changes in demographic assumptions | 0.4 | 1.1
Experience adjustments on benefit obligations | 0.8 | 0.3
Benefits paid | 8.6 | 7.5
At 31 December | (104.1) | (119.1)
Movements in fair value of plan assets |  |
At 1 January | 122.2 | 125.3
Interest on plan assets | 5.3 | 5.8
Remeasurement losses | (11.6) | (1.4)
Contributions by employer | – | –
Administrative expenses | (0.1) | –
Benefits paid | (8.6) | (7.5)
At 31 December | 107.2 | 122.2
Actual return on assets | (6.3) | 4.4
| 2024 | 2023
| £m | £m
Expense recognised in the income statement |  |
Administrative expenses (including administration expenses incurred by the Company directly) | (0.6) | (0.8)
Net interest on net defined benefit asset | 0.2 | 0.3
Total expense recognised in the income statement | (0.4) | (0.5)
The fair values of the plan assets were as follows: |  |
| 2024 | 2023
| £m | £m
Equities and growth assets | 47.6 | 56.9
Bonds | 8.3 | 7.6
Matching insurance policies | 38.2 | 43.1
Other | 13.1 | 14.6
Total | 107.2 | 122.2

Financial statements
Annual report 2024
Morgan Advanced Materials
193
39. Employee beneﬁts: pensions
(continued)
The assumptions used are best estimate assumptions chosen from a range of possible actuarial assumptions which may not be borne out in
practice. The principal assumptions are the discount rate and inflation assumptions which are long-term and measured on external factors,
based upon each plan’s duration. In addition to these, the mortality assumption in the UK is material to the cost of the promised benefits.
The assumed increases in salaries and pensions in payment are derived from assumed future inflation.
Principal actuarial assumptions at the year end were as follows:

| 2024 | 2023
Assumptions: | % | %
Inflation (RPI/CPI) | 3.15/2.52 | 3.05/2.31
Discount rate | 5.45 | 4.52
Pensions increase | 3.00/3.02/3.66 | 3.00/2.94/3.62
Salary increase | n/a | n/a
Mortality – post-retirement: |  |
Life expectancy of a male aged 60 in accounting year (years) | 25.5 | 25.6
Life expectancy of a male aged 60 in accounting year +20 (years) | 27.0 | 27.1

Funding
The most recent full actuarial valuations of the UK Schemes were undertaken as at 31 March 2022 and resulted in combined assessed
deficits of £49.7 million on the ‘Technical Provisions’ basis. The Company subsequently agreed with the Trustees to make a lump sum
contribution to the Schemes of £67.0 million on 29 December 2022 in lieu of the remaining contributions that would otherwise have
been due under the existing recovery plans from the 31 March 2019 valuations. The sum paid represented the value of the deficit on the
more prudent ‘Long Term Objective’ basis on the date of that agreement, 25 October 2022. As a result, no further contributions to the
Schemes are expected to be required pending the results of the next full valuations as at 31 March 2025.
The Trustees and the Group have considered the impact of the recent Virgin Media court case on the Morgan Pension Scheme and, in
particular, the extent to which actuarial confirmation was provided that any changes made to the Scheme between 1997 and 2016 did not
adversely impact members’ contracted out benefits. Reasonable due diligence has concluded that no additional liability requires disclosure.
The Morgan Group Senior Staff Pension and Life Assurance Scheme was not contracted out over this period and therefore is not affected
by the ruling.
Sensitivity analysis
The table below demonstrates the sensitivities of the net defined benefit asset to changes in the significant assumptions used for the scheme.

|  | 2024 | 2023
|  | Decrease effect | Decrease effect
| Change in assumption | £m | £m
Discount rate | Decrease by 0.1% | 0.8 | 1.0
Inflation | Increase by 0.1% | 0.3 | 0.4
Mortality – post-retirement | Pensioners live 1 year longer | 2.1 | 2.6

These sensitivities have been calculated to show the movement in the net balance sheet in isolation, and assuming no other changes in
market conditions at the accounting date (except where a fully matching insurance policy is held where this asset is assumed to change in
value to match the change in obligations). This is unlikely in practice – for example, a change in discount rate is unlikely to occur without
any movement in the value of the assets held by the Company’s schemes.
Defined contribution plans
The Group operates a defined contribution pension plan (‘the Morgan Group Personal Pension Plan’). The total Company expense
relating to this plan in 2024 was £0.9 million (2023: £0.7 million).
Notes to the Company ﬁnancial statements
continued
194
40. Provisions and contingent liabilities

| Dilapidation | Other |
| provisions | provisions | Total
| £m | £m | £m
Balance at 1 January 2024 | 0.1 | 4.0 | 4.1
Provisions used during the year | (0.1) | (1.1) | (1.2)
Balance at 31 December 2024 | – | 2.9 | 2.9
Current | – | 0.9 | 0.9
Non-current | – | 2.0 | 2.0
| – | 2.9 | 2.9

Other provisions relate to legal claims and environmental provisions and are based on the Company’s assessment of the probable cost of
these activities.
Contingent liabilities and guarantees
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its Group, the
Company considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats the guarantee
contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the
guarantee, at which point a liability would be recognised.
The Group has been subject to legal claims in a number of countries. In some cases it will not be possible to form a view, either because
the facts are unclear or because further time is needed to properly assess the merits of the case, and no provisions are held against such
cases. The Board, having taken legal advice, is of the opinion that the remainder of these actions will not have a material impact on the
Company’s financial position.
There are no other contingent liabilities in the Company as at 31 December 2024.
41. Share capital
The details of the Company’s share capital and the nature of the reserves are disclosed in note 19 of the consolidated financial statements.
42. Share premium and reserves
The merger reserve comprises the balance associated with the premium of shares issued during previous acquisitions. Further details on
share premium and reserves are given in note 19.
Apex Financial Services (Trust Company) Limited administer the Morgan General Employee Benefit Trust (‘the Trust’) in which shares are
held to satisfy awards granted under the Company’s share plans. The shares are distributed via discretionary settlement governed by the
rules of the Trust deed dated 1 March 1996 (as amended).
The total number of own shares held by the Trust at 31 December 2024 was 464,405 (2023: 807,911) and at that date had a market value
of £1.3 million (2023: £2.3 million).
In 2024, the amount of reserves of Morgan Advanced Materials plc that may be distributed under Section 831(4) of the Companies Act
2006 was £165.6 million (2023: £189.1 million). This comprises a portion of the profit and loss account.
43. Related parties
The Company has related party relationships with its subsidiaries, its Directors and executive officers and their close family members.
The Company is exempt from providing information relating to these parties with the exception of transactions with entities where the
Company does not directly or indirectly own 100% of the shareholding; these are set out in the table below:

| 2024 | 2023
| £m | £m
Transactions with subsidiaries |  |
Income from management services | 1.7 | 4.0
Net interest income | 3.7 | 3.8
Dividend income | 11.1 | 14.0
Loans owed to related parties | 10.9 | 4.6
Other amounts owed by related parties | 2.7 | 2.6
Other amounts owed to related parties | 1.3 | 1.0

Financial statements
Annual report 2024
Morgan Advanced Materials
195
44. Shares held in related undertakings
In accordance with Section 409 of the Companies Act 2006, a full list of related undertakings as at 31 December 2024 is disclosed
below. Related undertakings include subsidiary undertakings, all significant holdings (being 20% or more interest), associated undertakings,
joint ventures and qualifying partnerships. Unless otherwise stated the Group’s shareholding represents Ordinary shares held indirectly by
the Company.

|  |  | % shareholding
| Country of |  | owned by
Name of undertaking | incorporation | Registered ofﬁce address | the Group
Carbo San Luis S.A. 11 | Argentina | Talcahuano 736, 4th Floor, Buenos Aires, C1013AAP, Argentina | 100.00%
Morgan Technical Ceramics | Australia | 4 Redwood Drive, Clayton, VIC 3168, Australia | 100.00%
Australia Pty Ltd 15 |  |  |
Morganite Australia Pty Ltd 14 | Australia | 30–36 Birralee Road, Regency Park, SA 5010, Australia | 100.00%
Morgan Mechanical Carbon | Australia | Riverwood Business Park, Unit 4, 92–100 Belmore Rd, Riverwood, | 100.00%
Australasia Pty Ltd 1,5 |  | NSW 2210, Australia |
Morganite Brasil Ltda 15 | Brazil | Avenida do Taboão 3265, Taboão, São Bernardo do Campo, | 100.00%
|  | São Paulo, CEP 09656-000, Brazil |
Morgan Advanced Materials | Canada | 1185 Walkers Line, Burlington, ON L7M 1L1, Canada | 100.00%
Canada Inc. 11 |  |  |
Carbo Chile S.A. 15 | Chile | Avenida San Eugenio 12462, Sitio 3, Loteo Estrella del Sur, | 100.00%
|  | Santiago, Chile |
Dalian Morgan Ceramics | China | Zhenxing Road, Pulandian Economic Development Zone, | 100.00%
Company Ltd 18 |  | Dalian, Liaoning Province, 116200, China |
Morgan Guangzhou Trading | China | No. A163 Room 326, Scientific Research Office Building, 63 Pu | 100.00%
Company Limited 15,20 |  | South Road, Huangpu District, Guangzhou, China |
Morgan Haldenwanger Technical | China | Hongwei New Village No. 92, Dingshu Town, Yixing City, Jiangsu | 100.00%
Ceramics (Wuxi) Co. Ltd 18 |  | Province, 214221, China |
Morgan Molten Metal Systems | China | 108 Tongsheng Road, Suzhou Industrial Park, Suzhou, | 100.00%
(Suzhou) Co. Ltd 1,12 |  | Jiangsu Province, 215126, China |
Morgan Technical Ceramics | China | Room 09, 28th Floor (2809), 288 LongShan Road, | 100.00%
(Suzhou) Co. Ltd 11 |  | Kanhu Plaza, Suzhou New District, Suzhou, 215163, China |
Morgan Thermal Ceramics | China | 18 Kang An Road, Kang Qiao Industrial Zone, Shanghai, Pudong | 100.00%
(Shanghai) Co. Ltd 1,18 |  | New District, 201315, China |
Morgan International Trading | China | Room 6015, 6th Floor, Great Wall Mansion, No.333 Fute Xi Yi | 100.00%
(Shanghai) Co. Ltd 1,18 |  | Road, China (Shanghai) Pilot Free Trade Zone, Shanghai, China |
Shanghai Morgan Advanced Material | China | 4250 Long Wu Road, Shanghai, 200241, China | 100.00%
and Technology Co. Ltd 1,12 |  |  |
Morgan AM&T (Shanghai) Co. Ltd 4,17 | China | 4250 Long Wu Road, Shanghai, 200241, China | 70.00%
Morgan Kailong (Jingmen) Thermal | China | 20-1 Quankou Road, Jingmen City, Hubei Province, 448032, China | 70.00%
Ceramics Co. Ltd 4,18 |  |  |
Dalian Morgan Refractory Co. Ltd 4,18,20 | China | Zhenxing Road, Pulandian Economic Development Zone, Dalian, | 70.00%
|  | Liaoning Province, 116200, China |
Yixing Morgan Thermal Ceramics | China | 2 Beidan Road, Taodu Industrial Park, Dingshu Town, Yixing City, | 51.00%
Co. Ltd 5,18 |  | Jiangsu Province, 214222, China |
Morgan Carbon France S.A.S 15 | France | 6 Rue du Réservoir, 68420 Eguisheim, France | 100.00%
Thermal Ceramics de France S.A.S 15 | France | Centre de Vie BP 75, 3 Rue du 18 Juin 1827, | 100.00%
|  | 42162 Andrézieux-Bouthéon, France |
Thermal Ceramics S.A. 8,15 | France | Centre de Vie BP 75, 3 Rue du 18 Juin 1827, | 100.00%
|  | 42162 Andrézieux-Bouthéon, France |
Morgan Advanced Materials | Germany | Teplitzerstraße 27, 84478 Waldkraiburg, Germany | 100.00%
Haldenwanger GmbH 16 |  |  |
Morgan Electrical Carbon | Germany | Zeppelinstraße 26, 53424 Remagen, Germany | 100.00%
Deutschland GmbH 15 |  |  |
Morgan Thermal Ceramics | Germany | Weidenbaumsweg 103, 21035, Hamburg, Germany | 100.00%
Deutschland GmbH 15 |  |  |

Notes to the Company ﬁnancial statements
continued
44. Shares held in related undertakings
(continued)
196

|  |  | % shareholding
| Country of |  | owned by
Name of undertaking | incorporation | Registered ofﬁce address | the Group
Morgan Molten Metal Systems GmbH 15 | Germany | Noltinastraße 29, 37297 Berkatal-Frankenhain, Germany | 100.00%
Morgan Deutschland Holding GmbH 15 | Germany | Zeppelinstraße 26, 53424 Remagen, Germany | 100.00%
Porextherm Dämmstoffe GmbH 15 | Germany | Heisinger Straße 8/10, 87437 Kempten (Allgäu), Germany | 100.00%
Morgan Holding GmbH 15 | Germany | Zeppelinstraße 26, 53424 Remagen, Germany | 100.00%
The Morgan Crucible | Germany | Zeppelinstraße 26, 53424 Remagen, Germany | 100.00%
Management GmbH 15 |  |  |
Wesgo Ceramics GmbH 15 | Germany | Willi-Grasser-Straße 11, 91056 Erlangen, Germany | 100.00%
Refractarios Nacionales S.A 15 | Guatemala | Km. 34.5, Carretera al Pacífico, Palín, Escuintla, Guatemala | 100.00%
Morgan AM&T Hong Kong | Hong Kong | Units 4–6, 11/F, Siu Wai Industrial Centre, 29–33 Wing Hong | 100.00%
Company Ltd 15 |  | Street, Cheung Sha Wan, Kowloon, Hong Kong |
Morgan Materials Hungary Limited | Hungary | Csillagvirág utca 7, Budapest, 1106, Hungary | 100.00%
Liability Company 15 |  |  |
Morgan Advanced Materials India | India | P-11, Pandav Nagar, Mayur Vihar Phase 1, Delhi, 110091, India | 100.00%
Private Ltd 15 |  |  |
Morganite Crucible (India) Ltd 12 | India | B-11, MIDC Industrial Area, Waluj, Aurangabad, Maharashtra, | 75.00%
|  | 431136, India |
Ciria India Limited 18 | India | P-11, Pandav Nagar, Mayur Vihar Phase 1, Delhi, 110091, India | 70.00%
Murugappa Morgan Thermal | India | PO Box 1570, Dare House Extension, V Floor, No. 2, NSC Bose | 51.00%
Ceramics Ltd 5,12 |  | Road, Chennai, Tamil Nadu, 600001, India |
Thermal Ceramics Italiana S.R.L 17 | Italy | Via Vittori Pisani 20, 20124, Milan, Italy | 100.00%
Morgan Carbon Italia S.R.L 15 | Italy | Via Vittori Pisani 20, 20124, Milan, Italy | 100.00%
Morganite Carbon Co. Ltd 15 | Japan | 1–5, Isogamidori 7-chome, Chuo-ku, Kobe-shi, Hyogo, Japan | 100.00%
Shin-Nippon Thermal | Japan | Portus Center Building 12F, 4-45-1 Ebisujimacho, Sakai-ku, | 50.00%
Ceramics Corporation 6,15 |  | Sakai-shi, Osaka 590-0985, Japan |
Morgan Korea Company Ltd 1,10 | Korea | 27 Nongongjoongang-ro 46 gil, Nongong-eup, Dalseong-gun, | 100.00%
|  | Daegu-si, Korea |
Morganite Luxembourg S.A 15 | Luxembourg | BP 15, Capellen, L-8301, Luxembourg | 100.00%
Grafitos y Maquinados S.A. de C.V. 2,19 | Mexico | Cerrada de la Paz No. 101, Fraccionamiento Industrial La Paz, | 100.00%
|  | Mineral de la Reforma, Hidalgo, CP. 42181, Mexico |
Grupo Industrial Morgan | Mexico | Cerrada de la Paz No. 101, Fraccionamiento Industrial La Paz, | 100.00%
S.A. de C.V. 2,19 |  | Mineral de la Reforma, 42181 Hidalgo, 42092, Mexico |
Morgan Technical Ceramics | Mexico | Av. Fulton 20, Fraccionamiento Industrial Valle de Oro, | 100.00%
S.A. de C.V. 19 |  | San Juan del Rio, Queretaro, CP. 76802, Mexico |
Morgan Holding Netherlands B.V. 15 | Netherlands | Oude Veiling 3, Zwaag, 1689 AA, The Netherlands | 100.00%
Morgan Terrassen B.V. 15 | Netherlands | Oude Veiling 3, Zwaag, 1689 AA, The Netherland | 100.00%
Morgan AM&T B.V. 15 | Netherlands | Oude Veiling 3, Zwaag, 1689 AA, The Netherland | 100.00%
Morgan Carbon Polska Spolka z | Poland | ul. Iskry 26, 01-472 Warszawa, Poland | 100.00%
ograniczona odpowiedzialnoscia 15 |  |  |
Thermal Ceramics Polska Sp.zoo 15 | Poland | Ul. Aleja Walentego Rozdzienskiego nr 1, Lok. KTW 1, P.2, Miejsc, | 100.00%
|  | KOD 40-202, Katowice, Poczta Katowice, Poland |
Morgan Ceramics Asia Pte Ltd 2,15 | Singapore | 150 Kampong Ampat, #05-06A, KA Centre, 368324, Singapore | 100.00%
Morganite Ujantshi (Pty) Ltd 15 | South Africa | 149 South Rand Road, Tulisa Park, Johannesburg 2197, South Africa | 74.90%
Thermal Ceramics South Africa | South Africa | 149 South Rand Road, Tulisa Park, Johannesburg 2197, South Africa | 100.00%
(Pty) Ltd 15 |  |  |
Morganite South Africa (Pty) Ltd 15 | South Africa | 149 South Rand Road, Tulisa Park, Johannesburg 2197, South Africa | 100.00%
Thermal Ceramics España S.L 15 | Spain | Av. de Europa, 106, 12006, Castellón, Spain | 100.00%
Morganite Española S.A 15 | Spain | Av. de Europa, 106, 12006, Castellón, Spain | 100.00%
Morgan Matroc S.A 15,20 | Spain | Roger de Lluria 104 5º-2ª, 08037 Barcelona, Spain | 100.00%

Financial statements
Annual report 2024
44. Shares held in related undertakings
(continued)
Morgan Advanced Materials
197

|  |  | % shareholding
| Country of |  | owned by
Name of undertaking | incorporation | Registered ofﬁce address | the Group
Morgan Advanced Materials | Taiwan | 25 Hsin-Yeh Street, Hsiao Kang, Kaohsiung 81208, Taiwan | 100.00%
(Taiwan) Co. Ltd 15 |  |  |
Morganite Thermal Ceramics | Taiwan | c/o Baker & McKenzie, 15/f, 168 Tun Hwa North Road, | 88.00%
(Taiwan) Ltd 15 |  | Taipei 105, Taiwan |
Morgan Holdings | Thailand | 98 Sathorn Square Office Tower, 37th Floor, North Sathorn Road, | 100.00%
(Thailand) Ltd 2,14 |  | Silom, Bangrak, Bangkok, 10500, Thailand |
MKGS Morgan Karbon Grafit | Turkey | Mahmutbey M. Tasocagi Yolu C. No. 3, Agaoglu MyOffice 212 Is | 100.00%
Sanayi Anonim Sirketi 15 |  | Mrk. B-BI. K:1 D:7, Bagcilar, Istanbul, 34218, Turkey |
Morgan Advanced Materials | United Arab | Plot No. KHIA4–07A, Khalifa Industrial Zone Abu Dhabi (KIZAD), | 100.00%
Industries Ltd 15 | Emirates | Abu Dhabi, United Arab Emirates |
Certech International Limited 1,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
MCCo Limited 6,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
MNA Finance Limited 1,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
Morgan Electro Ceramics Limited 1,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
Morgan Europe Holding Limited 1,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
Morgan European Finance Limited 1,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
Morgan Finance Management Limited 15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
Morgan Holdings Limited 1,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
Morgan International | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
Holding Limited 1,15 | Kingdom |  |
Morgan North America | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
Holding Limited 15 | Kingdom |  |
Morgan Technical Ceramics Limited 15 | United | Morgan Advanced Materials – Technical Ceramics, Morgan Drive, | 100.00%
| Kingdom | Stourport-on-Severn, Worcestershire DY13 8DW, UK |
Morgan Trans Limited 1,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
Morganite Carbon Limited 1,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
Morganite Crucible Limited 1,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
Morganite Electrical Carbon Limited 15 | United | Upper Fforest Way, Morriston, Swansea, West Glamorgan, | 100.00%
| Kingdom | SA6 8PP, UK |
Morganite Special Carbons Limited 2,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
Petty France Investment | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
Nominees Limited 1,15 | Kingdom |  |
TCG Guardian 1 Limited 15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 99.01%
| Kingdom |  |
TCG Guardian 2 Limited 15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 99.01%
| Kingdom |  |
Terrassen Holdings Limited 7,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |

Notes to the Company ﬁnancial statements
continued
44. Shares held in related undertakings
(continued)
198

|  |  | % shareholding
| Country of |  | owned by
Name of undertaking | incorporation | Registered ofﬁce address | the Group
The Morgan Crucible | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
Company Limited 15 | Kingdom |  |
Thermal Ceramics Limited 6,15 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00%
| Kingdom |  |
Thermal Ceramics UK Limited 15 | United | Tebay Road, Bromborough, Wirral, Merseyside, CH62 3PH, UK | 100.00%
| Kingdom |  |
Clearpower Ltd 3,13 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 99.01%
| Kingdom |  |
Certech, Inc. 11 | United States | 550 Stewart Road, Hanover Township, PA 18706, USA | 100.00%
Graphite Die Mold, Inc. 11 | United States | 18 Air Line Park, Durham, Connecticut 06422-1000, USA | 100.00%
Morgan Advanced Ceramics, Inc. 11 | United States | 2425 Whipple Road, Hayward, California 94544, USA | 100.00%
Morgan Advanced Materials and | United States | 441 Hall Avenue, St Marys, Pennsylvania 15857, USA | 100.00%
Technology Inc. 11 |  |  |
Morganite Crucible Inc. 11 | United States | 2102 Old Savannah Road, Augusta, Georgia 30906, USA | 100.00%
Morganite Industries Inc. 11 | United States | 4000 West Chase Boulevard, Suite 170, Raleigh, | 100.00%
|  | North Carolina 27607, USA |
National Electrical Carbon | United States | 251 Forrester Drive, Greenville, SC 29607, USA | 100.00%
Products, Inc. 11 |  |  |
Thermal Ceramics Inc. 11 | United States | 2102 Old Savannah Road, Augusta, GA 30906, United States | 100.00%
Thermal Ceramics de | Venezuela | Zona Ind. El Recreo, Av. 87 N°105–121, Flor Amarillo, | 100.00%
Venezuela C.A 15 |  | Valencia Edo. Carabobo, Venezuela |

1.
Directly owned by Morgan Advanced Materials plc.
2.
99.99% owned by Morgan Advanced Materials plc.
3.
99.01% owned by Morgan Advanced Materials plc.
4.
70% owned by Morgan Advanced Materials plc.
5.
51% owned by Morgan Advanced Materials plc.
6.
50% owned by Morgan Advanced Materials plc.
7.
8.18% owned by Morgan Advanced Materials plc.
8.
1.98% owned by Morgan Advanced Materials plc.
9.
0.001% owned by Morgan Advanced Materials plc.
10. Ownership held in Common and Preference shares.
11. Ownership held in Common stock/shares.
12. Ownership held in Equity shares.
13. Ownership held in Ordinary A, B and C and Preference A and B shares.
14. Ownership held in Ordinary and Preference shares.
15. Ownership held in Ordinary shares.
16. Ownership held in Partnership shares.
17. Ownership held in Quotas.
18. Ownership held in Registered Capital.
19. Ownership held in Series A and Series B shares.
20. In liquidation.
Financial statements
Annual report 2024
44. Shares held in related undertakings
(continued)
Morgan Advanced Materials
199
UK incorporated subsidiaries which have taken exemption from audit per Section 479A of the Companies Act 2006 for the year ended
31 December 2024 are listed below.
Morgan Advanced Materials plc will guarantee the debts and liabilities of the companies claiming the statutory audit exemption at the
balance sheet date in accordance with Section 479C of the Companies Act 2006. The Company has assessed the probability of loss
under the guarantee as remote.

| Registered
Name of undertaking | number
Clearpower Limited | 06247523
MCCO Limited | 03246886
MNA Finance Limited | 10423297
Morgan Europe Holding Limited | 02540399
Morgan European Finance Limited | 09910922
Morgan Finance Management Limited | 10423619
Morgan Holdings Limited | 01956134
Morgan International Holding Limited | 10677668
Morgan North America Holding Limited | 08789720
Morgan Trans Limited | 02557161
Morganite Carbon Limited | 00679647
Morganite Crucible Limited | 02133533
TCG Guardian 2 Limited | 05564065
Terrassen Holdings Limited | 01352995
The Morgan Crucible Company Limited | 07328730

45. Derivative ﬁnancial assets and liabilities

| 2024 | 2023
| £m | £m
Derivative financial assets |  |
Forward foreign exchange contracts non-designated |  |
– amounts falling due within one year | 1.4 | 1.6
– amounts falling due after more than one year | – | 0.4
| 1.4 | 2.0
Derivative financial liabilities |  |
Forward foreign exchange contracts non-designated |  |
– amounts falling due within one year | (2.4) | (1.7)
– amounts falling due after more than one year | (6.0) | (2.7)
| (8.4) | (4.4)

Fair values are measured using a hierarchy where the inputs are:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – not traded in an active market but the fair values are based on quoted market prices or alternative pricing sources with
reasonable levels of price transparency. Fair value is calculated using discounted cash flow methodology; future cash flows are estimated
based on forward exchange rates.
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The derivative financial assets and liabilities are all measured using Level 2 inputs. The fair value of forward foreign exchange contracts is
estimated by discounting the future cash flows using appropriate market-sourced data at the balance sheet date.
200
2020
Results before
speciﬁc adjusting
items
£m
2021
Results before
speciﬁc adjusting
items
£m
2022
Results before
speciﬁc adjusting
items
£m
2023
Results before
speciﬁc adjusting
items
£m
2024
Results before
speciﬁc
adjusting items
£m
Revenue
910.7
950.5
1,112.1
1,114.7
1,100.7
Profit from operations before
amortisation of intangible assets
91.7
124.5
151.0
120.3
128.4
Amortisation of intangible assets
(6.1)
(6.0)
(4.7)
(3.3)
(1.7)
Operating profit
85.6
118.5
146.3
117.0
126.7
Net financing costs
(11.9)
(9.2)
(9.2)
(14.1)
(19.0)
Share of profit of associate (net of income tax)
0.6
0.4
–
–
–
Profit before taxation
74.3
109.7
137.1
102.9
107.7
Income tax expense
(20.2)
(29.7)
(37.1)
(26.0)
(28.4)
Profit after taxation before
discontinued operations
54.1
80.0
100.0
76.9
79.3
Profit for the year for continuing operations
54.1
80.0
100.0
76.9
79.3
Assets employed
Property, plant and equipment
267.6
248.1
283.2
293.8
344.9
Right-of-use assets
35.5
31.9
33.6
31.6
32.5
Intangible assets
185.4
183.1
189.0
182.2
179.9
Investments and other receivables
11.2
2.9
3.2
5.6
5.6
Employee benefits: pensions
–
–
–
13.5
13.0
Deferred tax assets
14.4
15.9
15.3
17.6
21.4
Net current assets
136.7
202.8
212.6
254.4
216.7
Total assets less current liabilities
650.8
684.7
736.9
798.7
814.0
Employee benefits: pensions
176.3
102.7
15.6
38.7
34.5
Non-current provisions and other items
234.0
231.2
289.7
359.6
387.5
Deferred tax liabilities
0.5
1.2
2.0
1.8
2.7
Total net assets
240.0
349.6
429.6
398.6
389.3
Equity
Total equity attributable to equity holders
of the Parent Company
202.3
310.6
389.0
360.3
353.7
Non-controlling interests
37.7
39.0
40.6
38.3
35.6
Total equity
240.0
349.6
429.6
398.6
389.3
Ordinary dividends per share
5.5p
9.1p
12.0p
12.0p
12.2p
Earnings per share
Continuing and discontinued operations
Basic earnings/(loss) per share
(7.9)p
25.9p
31.0p
16.6p
17.7p
Diluted earnings/(loss) per share
(7.9)p
25.7p
30.7p
16.5p
17.5p
Adjusted earnings per share
19.0p
27.2p
33.8p
25.0p
25.5p
Diluted adjusted earnings per share
18.9p
27.0p
33.5p
24.8p
25.2p
Group statistical information
Financial statements
Annual report 2024
This document has been prepared for and only for the members of the Company as a body and no other persons. Its purpose is to assist
members in assessing how the Directors have performed their duties, the Company’s strategies and the potential for those strategies to
succeed and for no other purpose. Save as would otherwise arise under British law, the Company, its Directors, employees, agents or
advisors do not accept or assume responsibility or liability to any third parties to whom this document is shown or into whose hands it
may come and any such responsibility or liability is expressly disclaimed.
This document contains forward-looking statements that are subject to risk factors associated with, amongst other things, the economic
and business circumstances occurring from time to time in the countries, sectors and markets in which the Group operates. These and
other factors could adversely affect the outcome and financial effects of the plans and events described. Forward-looking statements by
their nature involve a number of risks, uncertainties and assumptions because they relate to events and/or depend on circumstances that
may or may not occur in the future and could cause actual results and outcomes to differ materially from those expressed in or implied by
the forward-looking statements.
It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a wide range of such
variables. No assurances can be given that the forward-looking statements in this document will be realised. The forward-looking
statements reflect the knowledge and information available at the date this document was prepared and will not be updated during
the year but will be considered in the Annual Report for next year. Nothing in this document should be construed as a profit forecast.
Constant-currency
1
Constant-currency revenue and Group adjusted operating profit are derived by translating
the prior year results at current year average exchange rates.
Corporate costs
Corporate costs consist of the costs of the central head office.
Free cash flow before acquisitions,
disposals and dividends
1
Cash generated from continuing operations less net capital expenditure, net interest paid,
tax paid and lease payments.
Group earnings before interest,
tax, depreciation and
amortisation (EBITDA)
1
EBITDA is defined as operating profit before specific adjusting items, amortisation of
intangible assets and depreciation.
Earnings before interest,
tax and amortisation (EBITA)
EBITA is defined as operating profit before specific adjusting items and amortisation of
intangible assets.
Group adjusted operating profit
1
Operating profit adjusted to exclude specific adjusting items and amortisation of
intangible assets.
Group organic
1
The Group results excluding acquisition, disposal and business exit impacts at
constant-currency.
Adjusted earnings
per share (EPS)
1
Adjusted earnings per share is defined as operating profit adjusted to exclude specific
adjusting items and amortisation of intangible assets, less net financing costs, income tax
expense and non-controlling interests, divided by the weighted average number of
Ordinary shares during the period.
Net debt
1
Borrowings, bank overdrafts less cash and cash equivalents.
Net cash and cash equivalents
1
Net cash and cash equivalents is defined as cash and cash equivalents less bank overdrafts.
Return on invested
capital (ROIC)
1
Group adjusted operating profit (operating profit excluding specific adjusting items and
amortisation of intangible assets) divided by the average adjusted net assets (excludes long-term
employee benefits, deferred tax assets and liabilities, current tax payable, provisions, cash and
cash equivalents, borrowings, bank overdrafts and lease liabilities).
Specific adjusting items
See note 6 and note 1 to the consolidated financial statements for further details.
Underlying
Reference to underlying reflects the trading results of the Group without the impact of specific
adjusting items and amortisation of intangible assets that would otherwise impact the users’
understanding of the Group’s performance. The Directors believe that adjusted results provide
additional useful information on the core operational performance of the Group, and review
the results of the Group on an adjusted basis internally.
1.
Reconciliations of these non-GAAP measures to GAAP measures can be found on pages 202 to 205.
Glossary
Cautionary statement
201
Morgan Advanced Materials
The Group monitors business performance through alternative performance measures (APMs) which are not defined under IFRS and are
therefore non-GAAP measures. The APMs provide useful information to stakeholders, including additional insight into ongoing trading and
year-on-year comparisons. These APMs are not a substitute for IFRS measures but are complementary to them. The Group defines each
APM and therefore they may not be directly comparable with similarly named metrics in other businesses. The definition, purpose and
reconciliation to statutory figures where applicable are included below.
Constant-currency
Constant-currency figures are derived by translating the prior year results at current year average exchange rates. These measures are
used as they allow key metrics such as revenue to be compared year on year excluding the impact of foreign exchange rates.
Organic growth
The growth of the business excluding the impacts of acquisitions, divestments and foreign currency impacts. This measure is used as it
allows revenue and adjusted operating profit to be compared on a like-for-like basis.
Thermal
Products
£m
Performance
Carbon
£m
Technical
Ceramics
£m
Segment
total
£m
2023 revenue
454.4
327.2
333.1
1,114.7
Impact of foreign currency movements
(32.8)
(11.5)
(7.8)
(52.1)
Impact of acquisitions, disposals and business exits
(1.0)
–
–
(1.0)
Organic constant-currency change
(2.4)
29.5
12.0
39.1
Organic constant-currency change %
(0.6)%
9.3%
3.7%
3.7%
2024 revenue
418.2
345.2
337.3
1,100.7
Thermal
Products
£m
Performance
Carbon
£m
Technical
Ceramics
£m
Segment
total
£m
Corporate
costs
£m
Group
£m
2023 adjusted operating profit
40.2
50.0
36.0
126.2
(5.9)
120.3
Impact of foreign currency movements
(7.1)
(2.6)
(1.0)
(10.7)
–
(10.7)
Impact of acquisitions, disposals and business exits
0.6
–
–
0.6
–
0.6
Organic constant-currency change
6.3
7.7
4.2
18.2
–
18.2
Organic constant-currency change %
18.7%
16.2%
12.0%
15.7%
–
16.5%
2024 adjusted operating profit
40.0
55.1
39.2
134.3
(5.9)
128.4
Corporate costs
Corporate costs consist of the costs of the central head office.
Specific adjusting items
Specific adjusting items are items which occur infrequently and are presented separately in the consolidated income statement due to their
nature and size. They typically include but are not limited to:
Individual restructuring projects which are material or relate to the closure of a part of the business and are not expected to recur;
Impairment of non-financial assets which are material;
Gains or losses on disposal or exit of businesses;
Significant costs incurred as part of the integration of an acquired business;
Gains or losses arising on significant changes to or closures of defined benefit pension plan; and
Design, configuration and implementation of a Global ERP system.
The Directors consider disclosure of specific adjusting items necessary for the users of the financial statements to obtain an alternative
understanding of the financial information and underlying performance of the business.
Note 6 provides details of the specific adjusting items in the current and prior year.
Alternative performance measures
202
Financial statements
Annual report 2024
Group earnings before interest, tax, depreciation and amortisation (EBITDA)
Group EBITDA is defined as operating profit before specific adjusting items, amortisation of intangible assets and depreciation.
The Group uses this measure as it is a key metric in covenants over debt facilities; these covenants use EBITDA excluding IFRS 16 Leases.
The following table reconciles operating profit to Group EBITDA:
2024
£m
2023
£m
Operating profit
103.6
91.9
Add back: specific adjusting items included in operating profit
23.1
25.1
Add back: depreciation – property, plant and equipment
34.1
31.9
Add back: depreciation – right-of-use assets
8.6
7.6
Add back: amortisation of intangible assets
1.7
3.3
Group EBITDA
171.1
159.8
Group EBITDA excluding IFRS 16 Leases impact
Group EBITDA excluding IFRS 16 Leases impact is defined as Group EBITDA less interest expense on lease liabilities and capital payments
on lease liabilities.
The Group uses this measure as it is a key metric in covenants over debt facilities; these covenants use EBITDA on an IAS 17 basis
(pre-IFRS 16 basis) and this metric is used as a proxy for the charge that would have been attributable to operating leases recognised in
EBITDA under the now defunct IAS 17.
The following table reconciles Group EBITDA to Group EBITDA excluding IFRS 16 Leases impact:
2024
£m
2023
£m
Group EBITDA
171.1
159.8
Interest expense on lease liabilities
(2.6)
(2.4)
Capital payments on lease liabilities
(10.6)
(8.9)
Group EBITDA excluding IFRS 16 Leases impact
157.9
148.5
Adjusted operating profit
Adjusted operating profit is defined as operating profit excluding specific adjusting items and amortisation of intangible assets.
Specific adjusting items are excluded on the basis that they distort trading performance. The exclusion of amortisation of intangible assets is
to allow for consistent comparability internally and externally between our businesses.
The following table reconciles operating profit to adjusted operating profit:
2024
Thermal
Products
£m
Performance
Carbon
£m
Technical
Ceramics
£m
Segment
total
£m
Corporate
costs
£m
Group
£m
Operating profit
31.1
47.2
37.9
116.2
(12.6)
103.6
Add back specific adjusting items included in
operating profit
8.1
7.6
0.7
16.4
6.7
23.1
Add back amortisation of intangible assets
0.8
0.3
0.6
1.7
–
1.7
Adjusted operating profit
40.0
55.1
39.2
134.3
(5.9)
128.4
Adjusted operating profit margin
9.6%
16.0%
11.6%
11.7%
203
Morgan Advanced Materials
Alternative performance measures
continued
Adjusted operating profit
(continued)
2023
Thermal
Products
£m
Performance
Carbon
£m
Technical
Ceramics
£m
Segment
total
£m
Corporate
costs
£m
Group
£m
Operating profit
29.5
39.9
42.5
111.9
(20.0)
91.9
Add back specific adjusting items
included in operating profit
9.3
9.3
(7.6)
11.0
14.1
25.1
Add back amortisation of intangible assets
1.4
0.8
1.1
3.3
–
3.3
Adjusted operating profit
40.2
50.0
36.0
126.2
(5.9)
120.3
Adjusted operating profit margin
8.8%
15.3%
10.8%
10.8%
Adjusted earnings per share (EPS)
Adjusted earnings per share is defined as profit for the year attributable to shareholders of the Company adjusted to exclude profit from
discontinued operations, specific adjusting items and amortisation of intangible assets and the tax effects of the excluded items, divided by
the weighted average number of Ordinary shares during the year.
Whilst amortisation of intangible assets is a recurring charge, it is excluded from these measures on the basis that it primarily arises on
externally acquired intangible assets and therefore does not reflect consistently the benefit that all of the Group’s businesses realise from
their intangible assets, which may not be recognised separately.
This measure of earnings is shown because the Directors consider that it provides a helpful indication of the Group’s financial performance
excluding material non-recurring expenses or gains and non-financial asset impairments and impairment reversals, and therefore facilitates
the evaluation of the Group’s performance over time. A reconciliation from IFRS profit to the profit used to calculate adjusted earnings per
share is included in note 10 to the consolidated financial statements.
Free cash flow before acquisitions, disposals and dividends
Free cash flow before acquisitions, disposals and dividends is defined as cash generated from continuing operations less net capital
expenditure, net interest (interest paid on borrowings, overdrafts and lease liabilities, net of interest received), tax paid and
lease payments.
The Group discloses free cash flow as this provides readers of the consolidated financial statements with a measure of the cash flows
from the business before corporate-level cash flows (acquisitions, disposals and dividends).
The following table reconciles cash generated from continuing operations to free cash flow before acquisitions, disposals and dividends:
2024
£m
2023
£m
Cash generated from operations
162.9
126.3
Net capital expenditure
(90.2)
(58.5)
Net interest on cash borrowings
(15.3)
(11.6)
Tax paid
(29.2)
(30.3)
Lease payments and interest
(13.2)
(11.3)
Free cash flow before acquisitions, disposals and dividends
15.0
14.6
204
Financial statements
Annual report 2024
Net debt
Net debt is defined as borrowings, and bank overdrafts less cash and cash equivalents.
The Group discloses net debt because this is the measure used in the covenants over the Group’s debt facilities. It helps readers of the
consolidated financial statements assess its ability to meet its financial obligations, manage debt and its capacity to invest in growth
opportunities.
2024
£m
2023
£m
Cash and cash equivalents
120.8
124.5
Non-current borrowings
(337.7)
(309.1)
Current borrowings and bank overdrafts
(9.3)
(0.6)
Closing net debt
(226.2)
(185.2)
Net cash and cash equivalents
Net cash and cash equivalents is defined as cash and cash equivalents less bank overdrafts. The Group discloses this measure as it provides
an indication of the net short-term liquidity available to the Group.
2024
£m
2023
£m
Cash and cash equivalents
120.8
124.5
Bank overdrafts
(9.3)
(0.6)
Net cash and cash equivalents
111.5
123.9
Return on invested capital (ROIC)
ROIC is defined as 12-month adjusted operating profit divided by the average capital employed. The Group discloses ROIC to assess its
efficiency in generating profits from the capital it has invested in its operations. Third-party working capital includes inventories, trade and
other receivables, and trade and other payables.
2024
£m
2023
£m
Operating profit
103.6
91.9
Add back: specific adjusting items
23.1
25.1
Add back: amortisation of intangible assets
1.7
3.3
Group adjusted operating profit
128.4
120.3
Third-party working capital
151.4
174.7
Property, plant and equipment
344.9
293.8
Right-of-use-assets
32.5
31.6
Goodwill
176.9
177.5
Other intangible assets
3.0
4.7
Capital employed
708.7
682.3
Average capital employed
695.5
684.9
ROIC
18.5%
17.6%
205
Morgan Advanced Materials
Analysis of Ordinary shareholdings as at 31 December 2024
Number of
holdings
% of total
holdings
Number of shares
% of share capital
Size of holding
1–2,000
3,224
75.94
1,674,336
0.59
2,001–5,000
495
11.66
1,575,648
0.56
5,001–10,000
170
4.00
1,192,113
0.42
10,001–50,000
167
3.93
3,523,423
1.24
50,001–100,000
54
1.27
3,880,199
1.37
100,001 and above
136
3.20
271,778,846
95.82
4,246
100.00
283,624,565
100.00
Holding classification
Individuals
3,838
90.39
6,172,044
2.18
Nominee companies
295
6.95
224,548,536
79.17
Trusts (pension funds etc.)
3
0.07
1,882
0.00
Others
110
2.59
52,902,103
18.65
4,246
100.00
283,624,565
100.00
Key dates
8 May 2025
2025 Annual General Meeting (AGM), commencing at 10.30am.
2024 and 2025 dividend payment dates
1 October 2024
Dividend payment date in respect of the 5.5% Cumulative First Preference shares of £1 each
and the 5.0% Cumulative Second Preference shares of £1 each.
15 November 2024
An interim cash dividend of 5.4 pence per Ordinary share of 25 pence each was paid to
shareholders registered at the close of business on 25 October 2024.
1 April 2025
Dividend payment date in respect of the 5.5% Cumulative First Preference shares of £1 each
and the 5.0% Cumulative Second Preference shares of £1 each.
13 May 2025
Subject to shareholders’ approval at the 2025 AGM, a final cash dividend of 6.8 pence per
Ordinary share of 25 pence each will be paid to shareholders registered at the close of business
on 11 April 2025.
Other information
Capital gains tax
The market values of quoted shares and stocks at 31 March 1982 were:
Ordinary shares of 25 pence each: 122.5 pence
5.5% Cumulative First Preference shares of £1 each: 30.5 pence
5.0% Cumulative Second Preference shares of £1 each: 28.5 pence
For capital gains tax purposes, the cost of Ordinary shares is adjusted to take account of rights
issues. Any capital gains arising on disposal will also be adjusted to take account of indexation
allowances. Since the adjustments will depend on individual circumstances, shareholders are
recommended to consult their professional advisors.
Share price
The price can be obtained on the Company’s website: morganadvancedmaterials.com
ISIN Code
GB0006027295
LEI
I4K14LL95N2PHDL7EG85
Ticker symbol
MGAM
Shareholder information
206
Financial statements
Annual report 2024
Company details
Registered
office
York House, Sheet Street, Windsor, SL4 1DD
Registered in England and Wales No. 286773. Telephone: +44 (0)1753 837000.
morganadvancedmaterials.com
Website
The Company’s website provides information about the Group including the markets in which it operates, its strategy and
recent news from the Group. The ‘Investors’ section is a key source of information for shareholders, containing details of
financial results, shareholder meetings and dividends, and providing access to frequently asked questions. Current and past
annual half-year and sustainability and responsibility/EHS reports are also available to view and download.
Company
registrars
Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
www.shareview.co.uk
Shareview
portfolio
The most efficient way to communicate with Equiniti is by registering for a portfolio at
www.shareview.co.uk
.
This is a service which enables shareholders to manage their shareholdings online.
Dividend
payments
You can choose to receive your dividend in a number of ways. Dividends will automatically be paid to you by cheque
in UK pounds sterling and sent to your registered address unless you have chosen one of the options below:
Direct payment to your bank
Cash dividends can be paid directly to a UK bank or building society account. This means that your dividend reaches
your bank account on the payment date, it is more secure (cheques can sometimes get lost in the post), you avoid the
inconvenience of depositing a cheque and cheque fraud is reduced. If you are a shareholder who has a UK bank or
building society account you can arrange to have dividends paid directly via a bank/building society mandate. You can
add or change your mandate online at
www.shareview.co.uk
, or by contacting Equiniti.
Overseas payments
If you live overseas and would like dividends paid to an overseas account, please contact Equiniti by post to set up or
amend a mandate. They offer an overseas payment service for 90 countries worldwide. Please see further information
at
www.shareview.co.uk
.
Multiple
accounts
on the
shareholder
register
If a shareholder receives two or more sets of AGM documents, or multiple dividend payments, this means that there is
more than one account in their name on the shareholder register, perhaps because the name or the address appears
on each account in a slightly different way. If you have multiple accounts and would like them to be combined, please
contact Equiniti.
Buying
and selling
shares
Equiniti offers a service to buy and sell shares in UK listed companies. For more information, visit
www.shareview.co.uk
or call +44 (0)3456 037 037. Providing this information is not a recommendation to buy or sell shares and this service
may not be suitable for all shareholders. The price and value of any investments and income from them can fluctuate and
may fall. Therefore, you may get back less than the amount you invested. Past performance is not a guide to
future performance.
Neither the Company nor Equiniti provides advice or makes recommendations about investments. If you have any doubts
about the suitability of an investment, you should seek advice from a suitably qualified professional advisor.
Donate your
shares to
charity
If you have only a small number of shares which are uneconomical to sell, you may wish to consider donating them to
charity, free of charge, through ShareGift (registered charity 1052686), a charity that specialises in the donation of small,
unwanted shareholdings to good causes. You can find out more by visiting
www.sharegift.org
or by telephoning
+44 (0)20 7930 3737.
Unsolicited
telephone
calls
and mail
Shareholders in companies may receive unsolicited phone calls or correspondence concerning investment matters.
If you are offered unsolicited investment advice, discounted shares, a premium price for shares you own, or free company
or research reports, please check the company or person contacting you is properly authorised by the Financial Conduct
Authority before getting involved. Further information about what you should do is available on our website in the
‘Shareholder Centre’ within the ‘Investors’ section.
Asset
Reunification
Programme
Morgan Advanced Materials has launched a tracing programme with the aim of reuniting ‘lost’ shareholders or their
estates with unclaimed cash entitlements in respect of Morgan Advanced Materials dividend payments. Cash entitlements
may not have been claimed due to an address change, or where a shareholder is deceased and the beneficiaries or
executors of an estate are not aware of the holding. If you would like to clarify whether you or a deceased person for
whose estate you act holds shares in Morgan Advanced Materials, please contact Equiniti for further assistance.
207
Morgan Advanced Materials
208
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Financial statements
Annual report 2024