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
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
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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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
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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
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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
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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.