Unlocking
our potential
Annual Report 2025
We are a global
leader in advanced
materials
We combine material science, deep application
expertise and process excellence to co-design
and manufacture mission critical solutions.
These solutions are at the heart of society’s most
essential systems today and they will enable the
breakthroughs of tomorrow. Our products help
people move, build and thrive. We help power
human progress, where it matters most.
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 over a
century of innovation. We employ approximately 8,100 people
worldwide, across 57 operating sites serving a diverse range of
customers across a range of end-markets.
See more: morganadvancedmaterials.com
Revenue
£1.0bn
2025 Headline
*
Adj. operating profit
*
£99.1m
2025 Headline
*
Total employees
8,100
*
Non-statutory measures are denoted within an
asterisk (*) through this report. Refer to page 46
for further details.
Strategic Report
Chair’s statement
02
Introducing our new CEO
04
CEO’s review
05
Our strategy
07
Our business model
08
Market environment
10
Key performance indicators (‘KPIs’)
16
Stakeholder engagement
20
Section 172(1) statement
22
Non-financial and sustainability information statement
25
A responsible business incorporating TCFD
26
Risk management
41
Group financial review
46
Directors’ statements
53
Governance
Chair’s letter to shareholders
56
Board of Directors
57
Governance overview
59
Key Board focus areas during the year
60
Board oversight of strategy
62
Monitoring and embedding culture
63
Engaging with our workforce
64
Assessing Board performance
66
UK Corporate Governance Code
compliance statement
67
Report of the Audit Committee
69
Report of the Nomination Committee
75
Remuneration Report
78
Other disclosures
105
Independent Auditor’s Report
110
Financial Statements
Consolidated income statement
119
Consolidated statement of comprehensive income
120
Consolidated balance sheet
121
Consolidated statement of changes in equity
122
Consolidated statement of cash flows
123
Notes to the consolidated financial statements
124
Company balance sheet
178
Company statement of changes in equity
179
Notes to the Company financial statements
180
Group statistical information
198
Cautionary statement
199
Glossary
199
Alternative performance measures
200
Shareholder information
205
The Morgan Code (‘the 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.
See more: morganadvancedmaterials.com
Strategic Report
Governance
Financial Statements
Morgan Advanced Materials
/
Annual Report 2025
01
02
A history
of innovation
Chair’s statement
2025 was a significant year for
Morgan Advanced Materials,
marked by changes in the
Group’s executive leadership
and an evolution of our strategy,
focused on stability, growth
and unlocking our potential.
we are well placed to benefit from rapid margin expansion as markets
recover. We also made further advances with our IT systems and
infrastructure, continuing the high level of investment in new
capabilities, the replacement of older systems and strengthening
our cyber security posture.
A focus on stability and growth means making choices about the
shape of the business. The Board will continue to evaluate
opportunities to improve Morgan Advanced Materials’ portfolio to
deliver faster growth, as we have done most recently, for example,
with the disposal of the non-strategic Molten Metal Systems (MMS)
business. We have now commenced a formal Strategic review of
our Thermal Products division. This is a focus of the executive team
and the Board and further updates will be provided in due course.
We took the decision to pause our share buyback programme as
part of our focus on balance sheet resilience and to prioritise
margin-enhancing growth.
The Board remains confident in the Group’s long-term structural
growth opportunities. The importance of our mission critical
solutions and the long-term growth driver of providing sustainable
solutions to support the energy transition are still the same. Our
focus has been on ensuring that we are managing the business
appropriately to position ourselves for growth as our end-markets
recover and the outcome of our strategy is reflected in our results.
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 2025
Our first imperative is the safety and wellbeing of our colleagues.
During 2025, our safety performance declined, despite the significant
focus on employee safety and wellbeing. Supporting the executive
team, your Board has spent a significant amount of time reviewing
safety performance and challenging the executive team on how
safety performance and culture can be improved. My fellow
non-executive Directors and I will continue to support the executive
team to achieve a position of ‘zero harm’.
Following his appointment as CEO in July 2025, Damien Caby led a
comprehensive review of the business. He and the team developed
a revised strategy for the Group, with input from the Board. The
revised strategy has full Board endorsement and was presented to
analysts and institutional investors at a Strategy Update Event in
December 2025. The teams are already well underway in their
delivery of this strategy.
While the year was characterised by continued global economic and
geopolitical uncertainty and a difficult end-market environment
impacting our performance, we nonetheless made progress across
the Group and delivered our business simplification and efficiency
initiatives, continuing our track record of self-help. Our investment in
semiconductor capacity, scaled back from the original plan to align
with short-term cyclical weakness, is now substantially complete.
We made good progress across our simplification and efficiency
initiatives. The initiatives delivered additional savings of £16 million
in 2025 and are on track to deliver total savings of of £27 million in
2026, compared to our 2023 baseline. These measures will ensure
Ian Marchant
Non-executive Chair
Strategic Report
Governance
Financial Statements
03
Morgan Advanced Materials
/
Annual Report 2025
The business delivered a resilient performance against a backdrop
of challenging markets. Demand for our products used in silicon
carbide (SiC) power semiconductor production reduced during the
year, driven by destocking in the electric vehicle (EV) supply chain
and the shift of SiC material growth towards China. Reflecting these
dynamics, the Group has recognised an impairment charge of
£15.6 million related to certain specialist assets held by Performance
Carbon at a UK site which are dedicated to the Semiconductor
material growth market. This impairment is consistent with the
expectations for our Semiconductor business that the Group set
out in its Strategy Update in December.
We saw a decrease in sales in our Healthcare markets, driven by
tariff-related inventory adjustments and lower demand for certain
mature product lines. Market conditions in European industrial and
global automotive markets also weakened. This was countered in
part by strong performance in our Aerospace markets. Group
revenue was 3.3% lower than in 2024 on an organic constant-
currency basis*. Margin remained below our financial framework
guidance, and is an area of increased focus.
Leverage increased during 2025 as a result of reduced earnings
and our investment in our digital transformation and simplification
initiatives, but will reduce during 2026 as our investment in
simplification comes to a close and upon realisation of the proceeds
from the disposal of MMS.
Your Board has spent a considerable amount of time evaluating
operational and commercial effectiveness, reviewing and challenging
divisional strategies and overseeing the transformation programmes
to improve trading performance. See the CEO’s review on pages 5
to 6 and Group financial review on pages 46 to 52 for more
information on how the business performed during the year.
The Board in 2025
I am pleased to report that your Board is functioning well and focused
on supporting management through strategy development and
operational delivery. We have focused in particular on trading
performance, the CEO succession and revised strategy this year.
Damien has settled well into his new role and strengthened his
leadership team. He is bringing ever intensifying focus to the many
essential aspects of performance delivery that we need to improve
to achieve our aspirations for Morgan Advanced Materials, and he
has refreshed the operating cadence to enhance the delivery of
short-term goals and reinforce the focus and momentum of the
strategic initiatives.
During the year, we welcomed new perspectives to the Board,
further strengthening our strategic, financial and operational
oversight and materials science expertise. Two new non-executive
Directors – Jane Lodge and Professor Mary Ryan CBE FREng – joined
the Board. Jane will take over as Audit Committee Chair after the
2026 AGM, from Jane Aikman who will step down at the AGM after
nine years on the Board.
Pete Raby stepped down as CEO in July 2025. I and the whole Board
would like to thank him for his significant contribution to Morgan
Advanced Materials over his 10-year tenure as CEO. Having served
nine years on the Board, Helen Bunch stepped down in May 2025.
We would also like to thank Helen Bunch and Jane Aikman for
their contributions.
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 64 and 65.
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 58% 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 2025 of 6.8 pence
(2024: 6.8 pence). Combined with the interim dividend of 5.4 pence
(2024: 5.4 pence), the resulting total dividend in respect of 2025 is
12.2 pence (2024: 12.2 pence).
The dividend will be payable on 12 May 2026 to shareholders on
the register on 10 April 2026, subject to shareholder approval.
The Board has committed to maintaining then growing the
Ordinary dividend with adjusted earnings cover of circa 2.5 times.
Looking forward to 2026
As we enter 2026, we note early signs of stabilisation but 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.
The Board is confident that the revised strategy provides a clear
and credible roadmap for delivering sustainable performance
improvement and margin growth. With disciplined capital allocation,
the Board believes that the operating divisions are well placed to
deliver against their strategic mandates and create enduring value for
shareholders. We look forward to updating you on progress against
our strategy in the coming year.
Ian Marchant
Non-executive Chair
Unlocking
our potential
Introducing our new CEO
04
Since my appointment, I have spent time visiting our sites to assess
our operations and I have met with our leaders, our employees
and our customers. The passion of our employees throughout the
organisation is evident. They are proud to be a part of Morgan and
they truly believe in the positive impact our products and solutions
can have on the world. Our customers value the quality and
performance of our products and they trust us to co-design and
manufacture mission critical solutions.
These are strong foundations upon which to build, but we have work
to do to unlock our true potential. With our distinctive capabilities,
Morgan can be the leading force in our chosen markets. As I set out
at our Strategy Update event in December, we have a clear strategy
that is focused on factors within our own control which will create
an efficient and high performing group. Our strategy will return the
Group to a 12% margin by 2028 and will establish a business that
grows faster and delivers more robust margins. Together, we will
transform our operational effectiveness, drive stronger growth in
selected value chains with deeper collaborations and upgraded
positions, and maximise the value of our portfolio.
I am excited about the next phase of our journey, and inspired to
lead the Morgan team through this new chapter.
I am honoured that the Board
selected me to serve as CEO
of Morgan Advanced Materials,
following two and a half years
as president of our Thermal
Products division. Morgan is a
recognised global leader in advanced
materials; our material science,
deep application expertise and
manufacturing excellence power
progress that truly matters.
Morgan’s opportunity:
Damien Caby
CEO
Strong foundations
Positioned in diverse
end-markets
Clear strategy
Will drive higher
margin growth
Unlock potential
Be the leading force in
our chosen markets
Strategic Report
Governance
Financial Statements
05
Morgan Advanced Materials
/
Annual Report 2025
Group results
Organic constant-currency* revenue declined by 3.3% compared
to 2024, driven by the well-publicised challenging conditions in the
Semiconductor market. We saw resilience across our other markets;
weakening market conditions in European Industrial and Global
Automotive markets and lower revenues in Healthcare markets
were largely offset by a strong performance in Aerospace and
Defence markets.
Group headline* adjusted operating profit* margin, which
includes the profit from MMS for our period of ownership, was
down 210 bps to 9.6% (2024: 11.7%). Volume decline and mix
impacts accounted for a 440 bps decrease in margin, but our
continued focus on actions within our control allowed us to offset
a significant portion of this decline. Margin gains from above
inflation pricing and efficiency offered a 170 bps improvement,
further supported by our simplification initiatives which generated
an additional 160 bps improvement. The remaining movement in
margin relates to foreign exchange and other non-trading items.
Operational progress
We have now largely completed our business simplification
programme which has streamlined our management structures,
reduced the number of divisions we operate and consolidated
manufacturing plants to provide better support to our customers
and to deliver synergies from key operational activities. Since 2016,
we have progressively consolidated our smaller sites, reducing the
total number of sites from 85 to 60, before the disposal of MMS.
We have continued our strategic project to develop and deploy
a Global Enterprise Resource Planning (ERP) system which is
intended to replace numerous different legacy systems across
the Morgan network. The programme, which is expected
to complete over the next two years, will create further
opportunities to align business processes, and to further
strengthen information security and the control environment.
Headline* leverage at the balance sheet date of 1.8x (2024: 1.4x)
reflects the reduction in Group profit, the completion of our
Semiconductor capacity investment and our investment in business
simplification. Our ongoing investment in digital transformation
is a key strategic enabler to transform the Group’s operational
effectiveness and leverage its scale. This investment will continue
into 2026 and 2027.
Leverage will reduce towards our target range during 2026 as our
investment in Semiconductor capacity and the business simplification
programme come to a close and upon realisation of the full proceeds
from the disposal of our MMS business.
Sale of MMS
In August 2025, we announced that we had reached an agreement to
sell the majority of our Molten Metal Systems (‘MMS’) business and
the transaction completed on 12 November 2025. The details of the
transaction and consideration mechanisms are set out in the Financial
Review on page 50.
The disposal of MMS is clearly aligned to our strategy, and it
demonstrates our commitment to take decisive action to manage
our portfolio. It simplifies the organisation, reducing the Group’s
operating footprint to 57 sites, and it ensures that our business is
focused on the selected markets where we have a clear right to win
to accelerate organic growth and generate higher returns.
Semiconductor impairment
There is a large and growing market for Silicon Carbide, however,
the supply chain is experiencing a shift towards China. We remain
committed to supplying our customers in the US and Europe and
expect to utilise our US-based assets to address this demand.
We have assessed the carrying value of our assets in light of
these market developments during 2025. As a result of this
exercise, the Group has recognised an impairment charge
of £15.6 million related to certain specialist assets which are
dedicated to the Semiconductor material growth market held by
Performance Carbon at a UK site. This impairment is consistent
with the expectations for our Semiconductor business that we
set out in December. Refer to page 49 for further details.
Moving forwards, our strategy for the Semiconductor market
is focused on the wafer fabrication part of the value chain. This
market is dominated by American, European and Japanese
original equipment manufacturers (‘OEMs’) and we supply most
of these businesses in various parts of the production process.
The barriers to entry in this market are high and Morgan is well-
positioned to win. Our goal is to deepen our collaboration,
working as one enterprise and to expand the scope of our supply.
Progress against our strategy
As outlined at our Strategy Update event in December 2025, the aim
of our strategy is to unlock Morgan’s potential and create a highly
efficient, faster growing company. We will become the leading force
in our chosen markets.
The presentation and a recording are available at
www.morganadvancedmaterials.com
Our strategy is focused on three key levers: Transform operational
effectiveness, Drive stronger growth, and Maximise our portfolio
value. We are focused on executing at pace and we made good early
progress in 2025.
Transform: We are addressing specific gaps in our supply chain
effectiveness which have constrained our growth by holding back our
service levels and we are focused on turning around a small number
of large underperforming sites. We will make more of the Group’s
scale by deploying centrally led procurement.
In respect of site turnaround, work has already commenced to
cross-qualify manufacturing lines, to optimise production and
inventory management.
In procurement, we have assessed the Group’s indirect spend
and our new Group Procurement Lead joined the business in
February 2026.
We deployed our new ERP platform at a pilot site during 2025 and
are set to commence deployment across the business in 2026.
CEO’s review
06
Drive: We are driving stronger growth by focusing on our right
to win to enhance our value proposition and gain market share.
We have initiated focused plans to upgrade our position in selected
value chains to allow us to grow irrespective of market cycles.
Our Performance Carbon division is capitalising on its reputation
and innovation in body armour and trade control capabilities by
expanding into other defence systems. We are making a targeted
investment in incremental capacity during 2026, backed by
multi-year contracts.
Our Technical Ceramics division is building on its leading position
in ceramic cores for engines blades by investing in capacity to meet
the increase in aircraft deliveries and progressive ramp-up of new
generation engines with higher design complexity.
Maximise: We are actively managing our portfolio to maximise its
value through partnerships, divestments and bolt-on M&A.
We have commenced a formal Strategic review of our Thermal
Products division. We will assess a full range of strategic options,
including options for significant business performance
improvement measures and a potential disposal. We will
undertake the necessary preparatory work to ensure that we can
act at pace once the review reaches a conclusion. No decisions
have been made and we will provide further market updates in
due course.
Our strategy will deliver against a clear
medium-term financial framework
Above-market organic constant-currency revenue growth:
We expect to achieve growth in excess of GDP.
Reliable and competitive margins: We expect to achieve an
adjusted operating profit* margin of 12% by 2028 with sustainable
margins of between 12% and 14% beyond 2028.
Sustainable EPS Growth: Achieving sustained growth in adjusted
Earnings per Share*, ahead of organic revenue growth, driven by
a combination of organic growth, margin accretion, shareholder
returns and M&A.
Attractive ROIC: 17% - 20% ROIC*.
Resilient balance sheet: Leverage range of 1.0x to 1.5x, or up to
2.0x adjusted EBITDA* post-acquisition, utilising our strong
balance sheet to fund our organic growth, and then over time
deploying excess capital to fund incremental M&A or additional
shareholder returns as appropriate.
Appropriate dividend cover: Shareholder dividends maintained
then growing with adjusted earnings at around 2.5x cover.
Share buyback
As announced in December 2025, we paused our buyback
programme as part of our focus on balance sheet resilience.
The second £10 million tranche of the buyback has now completed
and the Group has purchased a total of £20 million of shares.
Safety, people, sustainability
We have clear 2030 goals for our business, all of which are measured
against a 2015 baseline.
1.
A 0.10 LTA rate: our LTA rate was 0.18 (2024: 0.13) which is an
increase compared to the prior year. Safety of our employees
is essential and addressing the root causes of lost time and
recordable accidents is a critical focus for the Board and Senior
Management team. We have undertaken a detailed root cause
analysis of 2025 incidents, and as a result, we have developed
a focused plan to reinforce the skills and engagement of our
manufacturing leaders across the Group, and to implement more
focused actions at selected sites during 2026. Alongside, we will
maintain our focus on process safety. We have made significant
progress in this area during 2025, with strong engagement and
momentum in the implementation of the improvement plans in
the first of three waves of deployment.
2. 40% of female leadership: We continue to improve our gender
diversity and 36% of our leadership population are female, a year
on year improvement of 2%. We will continue our focus on
ensuring that our policies, working conditions, development
and support offering, and recruiting approaches deliver a more
supportive environment for our female leaders.
3.
A top quartile engagement score: our engagement score was
75%, an improvement on the prior year. It is pleasing to see
progress on this metric, particularly at the sites where engagement
levels are below average. Our leaders remain focused with site
specific actions.
4.
Reduce scope 1 and 2 CO
2
emissions by 50%: We reduced by 5%
in the year and we are now 58% below our baseline, significantly
ahead of our glidepath. 80% of our power is from low-carbon
sources and going forward, as our business grows, we are focusing
on process efficiency and new technologies in order to sustain this
performance.
5. Reduce water usage and water use in high-stress areas by 30%:
Our overall water usage reduced by 11% and water use in
high-stressed areas has decreased by 3%. We are 39% and
23% below our baseline, respectively.
Outlook
Demand in our end-markets has broadly stabilised and our outlook
for 2026 is in-line with current market expectations. Organic
constant-currency revenue growth is expected to be 1-2% and,
supported by a continued focus on efficiency and the first results of
our Transform initiatives, we expect to deliver an adjusted operating
profit* margin at or around 10%.
As previously reported, our medium-term guidance for overall
capital expenditure is for around £50-£55 million per annum over
the next three years.
We remain confident in achieving our medium-term financial
framework.
Damien Caby
CEO
CEO’s review continued
Strategic Report
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Financial Statements
07
Morgan Advanced Materials
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Annual Report 2025
Transform
We will build a scalable, more efficient and
more agile business. We are going beyond
site consolidation, we are leveraging the
Group’s scale, stepping up supply chain
effectiveness, and turning around our largest
underperforming sites.
We will deploy Group-led category
management across an indirect spend
cost base of £170 million. We will deliver
significant savings and reinforce the
efficiency and reliability of our supply
chain.
We will implement structured and
comprehensive multi-year programmes
to turn around large underperforming
sites that represent more than 20%
of Group revenue. We will optimise
production cycles and supply chains
and simplify the asset base and product
portfolio.
We are investing in digital transformation
to enhance business analytics, make better
informed decisions and act with agility
and confidence. We will streamline and
standardise our back office processes
to focus business teams on delivery
and growth.
Maximise
We will make bold choices. We will invest
selectively to expand our leading positions,
partner where we know we cannot win
alone, and exit markets where we cannot
improve our market position or right to win.
Our Performance Carbon division will
pursue opportunities to supply sub-
systems in Energy and Industrials where
the supply chains are fragmented and
the decarbonisation and digitalisation
trends call for innovation. It will assess
partnerships in China for Semiconductor
SiC material growth.
Our Technical Ceramics division will
leverage its expertise in high-value niches
to expand into new adjacencies, with
priorities in Industrials and Aerospace.
Our Thermal Products division will
expand its structural partnerships in fire
protection. It is a very large market and
we are targeting the geographies and
applications where the value proposition
is compelling.
Becoming the
leading force in our
chosen markets
Our strategy
Drive
We will systematically upgrade our position
in the value chain so that we can grow
profitability irrespective of market cycles
and increase our market share and
addressable market.
Our Performance Carbon division will
innovate to increase performance and
longevity in Rail and Wind. It will capitalise
on its reputation, technology and trade
control capabilities to expand in defence
systems.
Our Technical Ceramics division will
increase its capacity to meet the increasing
aircraft deliveries and the ramp-up of the
new generation of engines.
Our Thermal Products division will
reinforce its outreach in the process
industries to enable the decarbonisation
of Steel and Chemical processes.
Who we
are will help
us succeed
We are a purpose-driven organisation. We are resilient and we thrive when it comes
to solving tough problems. We are curious and innovative and we are committed to
continuous learning. We are collaborative and open minded and we foster a culture of
transparency and humility.
As a business, we are focused on recruiting, developing and retaining the high calibre
of individuals we need to deliver on the next chapter for Morgan. To learn more about
people policies, see page 63.
08
We combine material
science, deep
application expertise
and process excellence
to co-design and
manufacture mission
critical solutions...
Technology leadership
We have a deep understanding
of how and why materials
work, and how to change their
properties. This is underpinned
by a rich intellectual property
estate protected through trade
secrets and select patents.
Customer intimacy
We are trusted by our customers
to co-create and drive innovation.
With our access to customers and
their technical experts, we are
able to anticipate their needs.
Global network
We have a global manufacturing
footprint, allowing us to
match manufacturing
capacity with demand.
Accredited business
We work with regulatory authorities
and customers to become approved
suppliers for high barrier to
entry and high barrier to change
applications. We put quality at the
forefront of everything we do.
Our business model
...supported by our strategic focus areas...
Transform
Drive
...our divisions operate in close proximity with our
markets and customers to achieve optimal solution
performance and effective product delivery...
Technical Ceramics
Value proposition
Co-designs bespoke ceramic and braze
alloy assemblies in high performance,
high specification applications.
We hold leadership positions and several
opportunities to expand our market share
in high barrier to entry, attractive markets.
Benefit to our customers
Enhanced durability, reliability and performance
of our customers’ products in Healthcare,
Aerospace & Defence, Semiconductors and
power generation.
Thermal Products
Value proposition
Provides full scale solutions for high-
temperature insulation and fire protection.
We set the benchmark in insulation
standards and benefit from a large
installed base.
Benefit to our customers
Improved safety of people and equipment
in demanding environments, reduced
emissions and energy costs in energy-
intensive processes industries.
Performance Carbon
Value proposition
Leverages the versatility of carbon, graphite
and silicon carbide materials for mission
critical applications.
We hold leadership positions and have a
large installed base in markets with high
barriers to entry.
Benefit to our customers
Maximised performance, efficiency,
reliability and durability of our customers’
products in Aerospace & Defence, rail,
energy generation, and oil & gas.
Strategic Report
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Annual Report 2025
Our customers
Our superior product performance
and reliability are industry leading
and in many cases, unsurpassed.
We are a global supplier that can
meet the toughest challenges in
materials science.
We maintain and embed strategic
partnerships.
Our people
We keep our employees safe,
aiming for zero harm.
We operate as a responsible and
ethical business.
We attract, develop and retain a
diverse and engaged workforce.
Our investors
Appealing growth drivers
and clear strategy.
Strong financial framework.
Our planet
We care about our impact on the
environment and are reducing
the impact of our own operations.
Our products help reduce the
environmental impact of our
customers’ operations.
...to create value
Maximise
Our products and solutions
Structural ceramic components
Engineered coatings
Ceramic cores
Ceramic-to-metal assemblies
Braze alloys
Ceramic tubes and rollers
Extruded products
Laser products
Semiconductor consumables
MACOR™ machinable glass ceramic
Route to market
We sell our solutions directly to OEMs
and through their suppliers.
Revenue is generated through sales into
new products and for replacement parts.
Our products and solutions
High-temperature insulating and
fire protection fibre products (Low
biopersistent fibres, Superwool®)
Microporous products
(WDS®, Min-K®)
Firebricks and mortars
Heat shield cladding
Route to market
We sell our solutions through our own
global sales force and a network of
trusted distributors.
Revenue is generated through sales into
new build and retrofit projects.
Our products and solutions
Semiconductor consumables
Collector strips and
carbon brushes
Graphite powders
Face seals
Sliding bearings
Rotary seals
Rotary vane pump components
Route to market
We sell our solutions directly to OEMs
and through assembly suppliers.
Revenue is generated through sales into
new products and for replacement parts.
Market
environment
There are a number of megatrends
that are shaping the future of our
world and are driving an ever
greater need for advanced materials.
Our materials and solutions
have an important role to play in
addressing the challenges arising
from climate change, resource
scarcity, urbanisation and migration,
a growing middle class, an ageing
population and digitalisation.
Industrial
41.6%
Aerospace & Defence
20.7%
Oil & Petrochemical
9.7%
Healthcare
7.0%
Energy
6.9%
Semiconductors
6.8%
Rail
4.0%
Other
3.3%
Headline revenue
£1,030.3m
(3.3)% OCC
1
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.
The chart below shows the split of our headline* revenue by
end-market applications. In the following section, we have provided
insight into our most significant markets.
Industrial markets shown below comprise ‘Industrial processes,
Industrial components and Metals.’ The dynamics of these markets
are set out overleaf.
10
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Industrial
Processes
Market trends
Industrial processes are being reshaped by the need for higher
productivity through rapid digitalisation and automation with a
lower impact to the environment.
How we add value
We co-design and manufacture products for use in a broad
range of challenging process and manufacturing environments
for numerous industrial applications such as insulation for
foundry process and kiln furniture for glass and ceramic
production.
Our materials offer superior insulating properties,
dimensional stability, strength and stiffness.
These characteristics support optimised process efficiency
and increases productivity, allowing our customers to
reduce industrial waste, improve safety and lower their
environmental impact.
Examples of our solutions
Superwool
®
Blok improves kiln lining life and thermal
efficiency.
Pyro-Bloc
®
modules for regenerative thermal oxidisers
reduce heat loss and fuel consumption.
Halsinc kiln furniture enable efficient use of energy and an
optimal ratio between kiln furniture and sinter ware.
Examples of our customers
EPCs and specialist technology distributors
Industrial
Components
Market trends
Global manufacturing growth is a primary catalyst for rising
demand in industrial components. As manufacturing output
expands – particularly in emerging economies – demand
increases for bearings, gears, motors, valves, pumps and other
precision-engineered components.
How we add value
We co-design and manufacture products for use in a broad
range of challenging environments. Our materials offer a wide
range of performance characteristics.
Our components are highly resistant to chemical and physical
wear, corrosion and extreme temperatures.
Examples of our solutions
Self-lubricating seals and bearings and ceramic shafts reduce
energy consumption of pumps in chemical plants.
FireMaster
®
insulation for automotive exhaust catalyst,
manages high temperatures, protects surrounding
components and improves the efficiency of the emission
control system.
Laser Reflectors generate diffuse reflectance, which provides
a highly uniform beam profile for use in industrial lasers for
cutting, welding and marking.
Examples of our customers
Automotive suppliers, industrial equipment manufacturers
12
Metals
Market trends
The demand for Iron & Steel remains strong, fuelled by
industrialisation, population growth and urbanisation. Steel
producers seek new solutions to tackle environmental concerns,
rising energy costs and to increase operational efficiency.
How we add value
We support the design phase, including material selection, in
order to reduce energy, improve furnace performance and
ensure that any molten metal transfer vessel melt holds. Our
global network of subject matter experts are ready to support
the commitment from the metals industry, to reduce emissions
in their plants.
Examples of our solutions
Superwool® XTRA for severe atmospheric conditions.
Pyro-Bloc® modules provide the furnace design with a
superior lining.
K™, JM™, TJM™ ranges of insulating fire bricks offer superior
performance to lining designs.
Examples of our customers
Steel mills, Iron & Steel manufacturers, Foundries, aluminum
manufacturers
Market environment
continued
Aerospace
& Defence
Market trends
Demand in air travel is increasing in line with economic growth,
driven by both business and leisure customers across the globe.
There is a growing need for engines to run more efficiently and
at greater extremes in temperature.
Rising geopolitical tensions have resulted in a global increase in
defence spending. There is a growing need for materials that can
withstand greater strains, pressures and temperatures.
How we add value
We make proven high-performance components and
sub-assemblies to exacting standards for aerospace.
We co-design and supply precision-engineered materials
that offer superior dimensional stability, strength, stiffness
and chemical resistance across a wide range of temperatures
to meet the technical demands of the global security and
defence markets.
Examples of our solutions
Complex cores for casting turbine blades to enable more fuel
efficient jet engines.
Components for night vision systems which enable superior
performance.
Ceramic tiles to build high-performance body and vehicle
armour.
Examples of our customers
Aerospace OEMs, sub-system suppliers and Defence
contractors
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Healthcare
Oil &
Petrochemical
Market trends
The global medical devices sector is undergoing a period of
significant transformation, largely driven by demographic shifts,
evolving patient needs and technological advancements. Global
healthcare systems are increasingly focused on early detection,
prevention and improved treatment pathways to manage the
growing burden of chronic disease. Technological advancements,
including artificial intelligence, robotics, predictive analytics and
wearable medical technology, have revolutionised the landscape
of medical diagnostics and treatment.
How we add value
Medical engineering demands the highest standards of
precision, accuracy, reliability and performance.
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 of our materials, combined
with our high-quality, volume manufacturing means we are
perfectly placed to supply components for medical applications.
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.
Examples of our solutions
Bare ceramics and metallised components for medical
imaging and oncology equipment.
Ceramic feedthroughs for implantable technology such as
cochlear implants and neuro-stimulation.
Small precision componentry for use in a range of surgical
equipment from ablation tools to surgical laser waveguides.
Market trends
In the Petrochemical and Chemical markets our customers
demand high performance insulation and fire protection
solutions.
How we add value
We manufacture a range of components ideally suited to the
uniquely demanding operating environments.
Examples of our solutions
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.
Examples of our customers
Major medical equipment and imaging OEMs
Examples of our customers
Energy producers, manufacturers of industrial gases and
refractory builders
14
Semiconductors
Market trends
Our world is rapidly evolving, it is becoming more connected,
smarter and more energy-efficient by the day. Semiconductors
are at the heart of this transformation.
How we add value
Our 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
widespread SiC usage in power devices.
Examples of our solutions
Ultra-high purity consumables for crystal boule growth.
Graphite and ceramics for semiconductor wafer fabrication.
Examples of our customers: Major American, Japanese
and European Wafer Fabrication OEMs, Material Growth
OEMs.
Examples of our customers
Wafer fabrication equipment manufacturers, Crystal boule
growers
Market environment
continued
Energy
Market trends
As society advances, there is a growing need for greater energy
security and cost-effective decarbonisation. The demand for
reliable energy is growing rapidly, driving demand for increased
power generation and energy transition through wind and solar
power, energy storage and nuclear generation.
How we add value
We develop products for renewable and traditional power
generation and insulation materials for heat management.
We produce high-temperature insulation for power plants to
minimise energy loss and reduce CO
2
emissions.
We enable the conversion and of power generation to solar
and wind and the large-scale power storage this requires.
We are the leading supplier of refractories and insulation for
the furnaces which produce cathode materials for Lithium-ion
battery-based power storage.
Our superior product performance drives lower
maintenance activity and cost for wind farm operators.
Examples of our solutions
Ceramic materials for the manufacture of the latest
generation of solar panels.
Carbon brush grades power transmission and grid
infrastructure wind turbines offering, reliable world-leading
performance.
Superwool® thermal insulation for heat recovery steam in
generators, fuel cells, and energy storage walls.
Examples of our customers
Generator Original Equipment Manufacturer, Solar panel
manufacturers
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Uniquely positioned
to power progress that
truly matters
Our strategy in action
Case study
Carbon strips enable
reliable power transmission
in high-speed rail
Whether its fossil fuel or clean energy, the power
demands of rail require high-performance generators
Case study
Carbon cloth in reusable
rocket technology enables
global connectivity
Rockets can be launched into space to put satellites
into orbit – essential for internet access, mobile
communications and earth observation
Case study
Feedthroughs enable
breakthroughs in
implantable pain therapy
Patients with complex medical conditions
require long-term sustainable pain management
methods to avoid over reliance on opioids
16
Organic constant-currency*
revenue growth (%)
Free cash flow before acquisitions,
disposals and dividends* (£m)
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 declined by 3.3% on an organic constant-currency basis,
reflecting challenging market conditions notably in Semiconductor
and industrial and automotive markets.
Refer to pages 46 to 52 for further details
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
Headline* free cash flow has increased to £45.4 million, driven by
lower capital expenditure and by the implementation of focused
working capital initiatives across the Group.
See page 96 for details of how Financial KPIs are reflected in
Annual Bonus and long-term incentive performance targets
Financial KPIs
We measure our success by tracking a number of
key performance indicators (KPIs) that reflect our
strategic execution priorities and growth drivers.
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.
In 2025, certain metrics have also been presented
on a ‘Headline’ basis which includes the results
earned by MMS up to the completion date of
the disposal.
Refer to page 50 for further details
Measuring
our progress
In the year ended 31 December 2025 the results of MMS for the period up to disposal
are presented in discontinued operations in the Consolidated income statement. Prior
year figures have been restated to present results for MMS in discontinued operations.
The income statement metrics used to assess Group performance exclude the results of
MMS and in order to provide meaningful comparison to prior years certain metrics are
presented a ‘Headline’ basis which includes the results of MMS for the period of ownership.
Key performance indicators (KPIs)
23
24
25
2.5%
3.7%
(3.3)%
23
24
25
14.6
15.1
45.4
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Return on invested capital* (%)
Net debt* to EBITDA*
(excluding lease liabilities) (x)
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
ROIC has decreased by 360 bps to 14.1%, reflecting the decrease
in adjusted operating profit.
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 a covenant under the
Group’s debt facilities.
Performance
On a continuing basis, net debt to EBITDA has increased to 1.9x,
driven by reduced adjusted operating profit delivery in the year and
impacted by the disposal of MMS in the year, with full realisation of
proceeds not expected until 2026.
On a headline basis, which includes the results of MMS for our period
of ownership in 2025, net debt to EBITDA was 1.8x.
Purpose
Adjusted EPS is a non-statutory measure used to assess the
Group’s underlying financial performance.
Performance
Adjusted EPS has decreased by 8.3 pence to 15.9 pence during
2025, reflecting the decrease in adjusted operating profit.
23
24
25
10.8%
11.6%
9.4%
23
24
25
25.0p
24.2p
15.9p
23
24
25
17.6%
17.7%
14.1%
23
24
25
1.2x
1.5x
1.4x
1.9x
1.8x
Continuing basis
Headline basis
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
On a continuing basis, adjusted operating profit margin for 2025
has decreased by 220bps to 9.4%, reflecting reduced revenue.
Volume decline and mix drove a significant decrease in margin,
but our continued focus on actions within our control allowed
us to offset a significant portion of this decline.
Refer to page 46 to 52 for further details
Adjusted EPS* (p)
18
CO
2
e scope 1 and 2 emissions (metric tonnes)
Lost-time accident (LTA) rate
2
Alignment to strategy
Purpose
Reducing greenhouse gas (GHG) emissions is an important part
of our strategy. We are committed to reducing our absolute
Scope 1 and 2 emissions by 50% by 2030 from a 2015 baseline.
Performance
Total emissions were 145,137 tCO
2
e, a 5% decrease
from 2024 and 58% decrease over our 2015 baseline.
Alignment to strategy
Purpose
We have an aspiration of ‘zero harm’ to all employees. We commit
to build a caring safety culture and a world class safety system to
achieve a 0.10 LTA rate by 2030.
Performance
Our LTA rate increased to 0.18 in 2025. This is a significant area
of focus for the Board and senior management and we have a
focused plan to address identified root causes during 2026.
See pages 30 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.
Key environmental, social and
governance (ESG) KPIs
As a responsible business, we are committed
to creating a positive impact both on the
environment and society.
We have established ambitious environmental
and social targets for our own operations,
reflecting our role as stewards of the natural
environment and the communities in which
we operate.
Beyond reducing our own footprint, we
design and manufacture products that help our
customers improve efficiency, enhance safety,
and minimise environmental impact.
Through these efforts, we contribute to a more
sustainable world and help improve quality of
life globally.
Key performance indicators (KPIs)
continued
Alignment to our strategy
To deliver our strategy and to achieve our ESG goals we
align our efforts to our three strategic execution priorities.
Transform
Drive
Maximise
Read more on page 7
22
25
211,104
157,574
152,871
145,137
Target
171,347
23
24
2030
22
25
0.28
0.19
0.13
0.18
Target
0.10
23
24
2030
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Female representation in leadership
3
Employee engagement rate
Alignment to strategy
Purpose
A greater gender diversity is good for Morgan Advanced Materials
and good for employees.
Performance
Female representation continues to progress. 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.
See page 31 for more information
3.
Includes Executive w/o CEO/CFO plus 2nd to 4th tier.
Alignment to strategy
Purpose
Maintaining an engaged workforce is critical to delivery of our
strategy. We measure the engagement of our employees through
an employee engagement survey called ‘Your Voice’.
Performance
We are taking direct actions on the things our employees care
about. We hear from employees directly through our ‘Your Voice’
employee engagement survey.
See page 64 for more information
4.
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%.
Alignment to strategy
Purpose
We recognise that in some instances our water demands are in
areas of increasing water stress. Our goal is to deliver a 30%
reduction of water withdrawal in water stressed areas by 2030
from a 2015 baseline.
Performance
Total water withdrawal in water stressed areas was 331,175m
3
.
This is 3% lower than 2024 and 23% lower than our baseline,
reflecting better water management practices
1.
2025 water stressed areas include Chile, China, India, Italy, Luxembourg, Mexico,
South Africa, Spain, Turkey, the UAE. and the state of California, USA. These were
evaluated using the most recent World Resource Institute data 2025 (Aqueduct).
See page 29 for details.
22
25
1.93
1.72
1.61
1.43
Target
1.63
23
24
2030
22
25
390,311
335,961
341,052
331,175
Target
301,703
23
24
2030
22
25
29%
30%
34%
36%
Target
40%
23
24
2030
22
25
53%
54%
4
52%
75%
Target
75%
23
24
2030
Total water withdrawal
(million m
3
)
Alignment to strategy
Purpose
Water is critical to our manufacturing operations. We will reduce our
total water withdrawal by 30% by 2030 from a 2015 baseline.
Performance
Total water withdrawal was 1.43 million m
3
; which is a 11% decrease
over 2024 levels and a 39% decrease over our 2015 baseline.
Water withdrawal in water stressed areas
1
(m
3
)
20
Our employees
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 employees,
our customers, our suppliers, our pensioners
and pension trustees, our shareholders and the
communities in which we operate.
See pages 64 to 65 for details of Board consideration
and oversight of the needs of our stakeholders
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.
Delivering long-term value for all
our stakeholders is critical to the
long-term success and sustainability
of Morgan Advanced Materials.
Effective
engagement
with our
stakeholders
Stakeholder engagement
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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 employees 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 employees 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 employees 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.
22
Section 172(1) statement
Key decisions in the year
Refreshed strategic plan
The Board reviewed and agreed the refreshed strategic plan,
ahead of the Strategy Update Event in December 2025.
When reviewing the plan, during its development, the Board
considered margin enhancement initiatives, financial targets,
portfolio maximisation, internal and external risk factors,
sustainability strategy and divisional growth plans, as well as
the key roles of technology and talent. See page 62 for more
information.
Stakeholder considerations
Shareholders:
An interview-based perception audit of Morgan Advanced
Materials’ investor base was carried out and considered by the
Board to ensure that the investor perspective was considered as
part of the strategic review.
The need to maintain a strong balance sheet and low leverage
from which to invest in growth and increase shareholder returns.
Employees:
Focus on simplifying and improving the Group’s operations and
therefore our employees’ experience.
Empowering our employees to deliver the strategy and best
serve our customers.
Customers:
Enhance customer experience and build strategic partnerships
with our customers.
More rigorous customer focus to ensure that the service we
deliver to our customers matches the best-in-class quality of
our products.
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.
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 65.
Alongside the key decisions outlined below, the table highlights
other sections of this Report which explain how the Directors
have had regard to Section 172(1).
(a) The likely consequences of any decisions
in the long-term
Our business model
08
Our strategy
07
(b) Interests of employees
Our business model
08
Effective engagement with our stakeholders
20
Engaging with our workforce
64
Remuneration Report
78
(c) Fostering the Company’s business relationships
with suppliers, customers and others
Market environment
10
Our business model
08
Effective engagement with our stakeholders
20
Our strategy
07
(d) Impact of operations on the community
and environment
Our business model
08
Effective engagement with our stakeholders
20
Our strategy
07
A responsible business incorporating TCFD
26
(e) Maintaining a reputation for high standards
of business conduct
Our business model
08
A responsible business incorporating TCFD
26
Non-financial and sustainability information statement
25
Risk management
41
Report of the Audit Committee
69
(f) Acting fairly between members of the Company
Our business model
08
Effective engagement with our stakeholders
20
Our strategy
07
Remuneration Report
78
Key to stakeholders
Investors
Customers
Suppliers
Employees
Communities
Lenders and
debt holders
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Sale of MMS business
We announced in August 2025 that we had entered into an
agreement to sell MMS to Vesuvius plc (‘Vesuvius’). The disposal
continued our strategy of simplifying the Group’s operations,
accelerating organic growth and generating higher returns by
focusing on specific faster growing markets, with the proceeds
of the sale intended to further strengthen the balance sheet and
reinvest in the core business. The total consideration payable
to Morgan Advanced Materials was £76.2 million. The sale
completed on 12 November 2025.
Stakeholder considerations
Shareholders
Improves the financial position of the Group and realises
significant value for shareholders.
Provides optionality both for investment in growth and enhanced
shareholder returns in line with our capital allocation priorities.
Employees
Management focus on supporting employees affected by the
disposal.
The staff and senior management team of MMS transferred to
Vesuvius to continue to run the business, providing continuity
and support to affected employees.
Customers
Management focus on ensuring there was no disruption for
customers throughout the transition.
The decision to sell MMS followed a portfolio review. The
review concluded that MMS’s long-term future would be better
served outside of the Group. MMS is highly complementary to
Vesuvius’s existing business, enabling customers to benefit from
synergies with Vesuvius’s existing business.
Pausing of the share buyback programme
In December 2025, we announced the intention to pause our
buyback programme as part of our focus on balance sheet
resilience. The programme was paused in January 2026 after
the completion of the second tranche, by which time we had
purchased £20 million of shares. When considering the proposal
to pause the programme, the Board considered the cash flow
generated during the year, the strength of the balance sheet, as
well as the ability to support future growth opportunities under the
refreshed strategy and deliver increased returns to shareholders.
Stakeholder considerations
Shareholders
Shareholders’ expectations of the programme.
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.
Approval of shareholder dividends
We also announced in December 2025 that we would continue
to provide regular returns to shareholders by maintaining, then
growing the regular dividend with adjusted earnings cover of
circa 2.5x, and provide additional returns of surplus capital to
shareholders as appropriate.
When considering the proposals to pay interim and final
dividends during 2025, 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.
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 2026 and an interim dividend of 5.4 pence
in November 2025. 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.
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.
Employees
For employees who participate in the Group’s employee
share schemes, the payment of dividends enabled returns for
those employees.
Key to stakeholders
Investors
Customers
Suppliers
Employees
Communities
Lenders and
debt holders
24
Section 172(1) statement
continued
Application of the capital allocation framework
The Board applied the capital allocation framework below, when
considering the relative priorities for the use of cash during 2025.
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 then growing
the dividend 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 53 and 54.
Capital spend to sustain
our existing operations,
drive efficiency, address
limited capacity needs,
and improve safety
and environmental
performance.
Complementary,
disciplined M&A focused
on accelerating margin.
Investment in structural
changes and active
portfolio management.
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 2025 as follows:
12.2p
Maintained its full-year dividend
at 12.2 pence
£76.2m
Total consideration for the sale of MMS
£67.1m
Investment in CAPEX
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Annual Report 2025
Non-financial and sustainability
information statement
‘Our business model’ on pages 8 and 9 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 to 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 41.
Areas of impact
Related principal
risks, pages 41 to 45
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
75%, from a survey conducted
during the year
LTA rate, the headline*
measure for health and safety,
was 0.18
Our people and communities
(pages 30 to 31)
Effective engagement with our
stakeholders (pages 20 to 21)
Monitoring and embedding
culture (page 63)
Engaging with our workforce
(pages 64 to 65)
ESG policies
ESG goals
Health, safety and wellbeing
Diversity, equity and inclusion
Gender pay gap
Our people and communities
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 on page 26.
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 40)
Environmental Policy
Sustainability & Responsibility
Report
Climate action
Water conservation
TCFD Reporting
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 2025
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
Ethics hotline
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
Monitoring and embedding
culture
Risk management (pages 41
to 45)
Ethics and compliance
Supplier Code of Conduct
A responsible business
A responsible
business
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:
Transform operational effectiveness through
safer, cleaner operations
a.
Health & Safety: Embedding robust safety practices and
process safety management will reduce incidents, protect
our workforce, and ensure uninterrupted operations,
all critical for efficiency.
b.
Environment: Continued focus on environmental controls
will minimise risks such as spills or emissions, safeguarding
compliance and reputation.
c.
Sustainability: Streamlined operations will lower resource
consumption and waste, driving cost savings and supporting
our ESG commitments.
Drive stronger growth by meeting market
demand for sustainable solutions
a.
Health & Safety: Demonstrating a strong safety culture
builds trust with customers and partners, making us a
preferred choice.
b.
Environment: Offering solutions that reduce environmental
impact aligns with customer sustainability goals, and creates
new revenue streams.
c.
Sustainability: Co-developing sustainable practices through
customer partnerships and supply chain engagement will
support our position as a leader in responsible growth.
Maximise portfolio value
a.
Health & Safety: Many of our products are integral to customer
safety applications, meaning our commitment to safety directly
enhances their operational reliability and risk management.
b.
Environment: Our technologies improve efficiency in customer
processes, reducing energy use and emissions.
c.
Sustainability: By delivering solutions that combine safety,
efficiency, and sustainability, we strengthen customer trust
and differentiate our products.
Contents
Our environment
27
Our people and communities
30
TCFD reporting
32
26
26
Our environment
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 well below 2°C ambition for our Scope 1 and Scope 2
commitment. To achieve this we are focusing on our operational
efficiency and are actively evaluating alternative manufacturing
technologies.
Energy performance in 2025
Our Scope 1 and Scope 2 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 106,088 tonnes and Scope 1 GHG
emissions (tCO
2
e) from process and mobile emissions were
5,976 tonnes (of which process emissions were 5,655 tonnes).
For 2025, total Scope 1 GHG emissions (tCO
2
e) were 112,064
tonnes, which is a 0.9% increase over 2024 values and 45.5%
decrease over 2015 values.
Market-based Scope 2 GHG emissions (tCO
2
e)
1
were
33,072 tonnes, which is a 21% decrease over 2024 values
and 76% 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
(2025 Version 1, published 10 June 2025).
Green energy procurement
As part of our SBTi commitment, we have a target to procure 80%
of our electricity from renewable and nuclear sources by 2025,
reaching 100% by 2030.
In 2025, we reached our SBTi target of 80% renewable and
nuclear electricity. Our total energy consumption (fuel and
electricity) was 897.4 GWh for 2025, which is 2% lower than 2024.
We have put in place a number of long term contracts to secure
our renewable and nuclear energy portfolio and continue to strive
to get these contracts in place where possible.
Assurance
Our Scope 1 and Scope 2 GHG emissions and selected other
environmental metrics for 2025 have been assured by ERM CVS.
A copy of the assurance report can be found on our website at
morganadvancedmaterials.com
Our calculation methodology 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 whilst
actively assessing the feasibility of green technology options for our
material portfolio. For further information on our path to net zero,
see page 38.
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 144,130 tCO
2
e.
Natural gas
55.7%
Renewable and nuclear purchased electricity
33.1%
Non-renewable, Standard Grid electricity
8.6%
LPG/propane
1.7%
Fuel oil
0.4%
Green on site Generation
0.4%
Steam/Other
0.1%
Energy mix
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Our environment
continued
Energy efficiency projects of note in 2025
Thermal Products
One of our major sites in the US has installed a new sitewide
asset energy monitoring system.
One of our sites in India has installed a more energy efficient
water cooling system.
One of our sites in France replaced a gas asset with a new
electric annealing oven.
Performance Carbon
One of our sites in the US installed a more efficient thermal
oxidiser system.
Technical Ceramics
One of our UK sites has installed photosensor controllers and
has been working to systematically reduce firing temperatures.
One of our sites in Germany has been focusing on more
efficient furnace cycles and implemented a new, more efficient
electrical dryer.
Green energy generation projects
Performance Carbon
Solar farm on land adjacent to Performance Carbon plant
in the US was completed.
Climate action
(continued)
Pursuing carbon neutral operations by 2050
Case study
Largest investment
in solar power activated
In 2025 a Performance Carbon site in the US
activated a 1.8 MW solar array which is the largest
in our portfolio. The installation was complex,
taking 13 months to complete and requiring significant
preliminary work to prepare the site before
construction could begin. The field will generate
93,000 MWh of electricity over its lifetime and power
12% of the sites annual electricity requirement.
Case study
Decarbonisation Roadmap
on track
During 2025, a new electric annealing oven was
brought into operation at our Thermal Products site in
France. A key part of our decarbonisation strategy,
alongside other efficiency initiatives, this multi-year
project delivered energy savings of 740 tonnes CO
2
emissions per annum.
28
We aim to use water responsibly across our business. We use this
valuable resource to cool our machines, clean our products and in
our sanitary facilities for our workforce. We have targets to reduce
water across all sites, and in water stressed areas in particular to
ensure we are taking action in the regions where it matters the
most. By improving our water usage, we have a positive impact in
the communities where we operate.
For 2025, the list of water-stressed countries includes Chile, China,
India, Italy, Luxembourg, Mexico, South Africa, 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. We have continued to make investments in closed loop
cooling systems across our sites, making significant strides towards
our 2030 goals.
In 2025 we made further improvement in our total water withdrawal.
This reduction was driven by our investment in water recirculation
projects through 2023 and 2024, better operational efficiency
practices and changes in product mix. Water withdrawal intensity
was 1,383 m
3
/£m (revenue), compared to 1,459 m
3
/£m (revenue)
in 2024.
Examples of water reduction projects:
Thermal Products
One of our major sites in the US has introduced a system to
recycle waste water from one process as an input into another.
One of our major sites in the US has introduced dynamic water
consumption monitoring to identify and reduce waste.
Technical Ceramics
One of our sites in the US has installed a closed loop water
recycling system in plating area.
Water conservation
Managing our impact
Waste performance
Through continuous improvement efforts we are reducing all hazardous and non-hazardous waste streams. Every year we set internal
targets to reduce waste generation and increase recycling. This is achieved through activities such as Kaizen and 6S (Sort, Set in order,
Shine, Standardise, Sustain and Safety) which focus on improving quality and eliminating waste. We are making good progress to reduce
our waste generation, improve recycling and minimise hazardous waste.
Waste and recycling
Units
2025
2024
2023
2022
2021
Total waste generated
metric tonnes
33,889
34,972
36,853
47,879
39,918
Waste generation intensity
metric tonnes/£m
33
32
33
43
42
Total waste recycled
metric tonnes
16,895
16,905
17,384
25,406
21,547
% recycling of total waste
%
50
48
47
53
54
Hazardous waste generated
metric tonnes
1,601
2,106
2,109
2,891
2,509
Case study
Investment in closed loop system
In 2025, our Thermal Products site in India replaced
their conventional cooling system with a closed loop
adiabatic cooling tower. The system will save approximately
3.6m litres of water, 39,600 kWh of energy and requires
far fewer chemicals to treat the water.
Case study
Saving water by enabling reuse
In 2025, one of our Technical Ceramics sites in the USA
invested in a water recirculating system on their wash tanks.
The new system more efficiently purifies the water before
recycling it back to be used again. The new system saves
approximately 2,000 gallons of water a day and the
purification system means that any water that does leave
the system is of a higher standard.
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Our people and communities
Health, safety and wellbeing
At Morgan Advanced Materials, safety is a shared responsibility.
We rely on the expertise and commitment of our operational and
safety teams to uphold high standards across our sites, ensure all
incidents are thoroughly investigated, and implement effective
controls to prevent recurrence. Actual and potentially severe
incidents are reviewed biweekly with the Group CEO and
Divisional Presidents. We recorded no fatalities in 2025 and
have maintained this record since 2012.
Our Group Environmental, Health and Safety (EHS) Policy –
available in local languages – is supported by our Company EHS
Framework, which guides sites in establishing robust local EHS
processes. Compliance is assessed through our annual audit
programme, and our ThinkSAFE programme continues to embed
Visible Safety Leadership, Don’t Walk By, and ‘TAKE 5’ behaviours
across the business.
Protecting our people from hazardous material risks remains central
to our EHS approach. We assess and monitor controls, provide
targeted training, and require each site to maintain an industrial
hygiene monitoring plan to identify potential exposures and define
appropriate mitigation.
Progress in 2025
In 2025, we delivered quarterly safety topics focused on the
business’s key EHS challenges, reinforcing our ThinkSAFE
commitment and the ‘TAKE 5’ programme message.
We were disappointed to see that our LTA rate increased to 0.18
in 2025. Through accident and incident root cause analysis we
identified a skills gap among frontline site leaders in balancing safety
leadership with production and people responsibilities. In response,
we launched the ThinkSAFE Leaders programme to strengthen
safety leadership capability and reinforce expectations for sustaining
a proactive safety culture.
To enhance clarity on safety risk management requirements, we
introduced new safety standards and guidance, supported by
site-level gap analyses. Compliance audits will begin in 2026 to
assess adoption and effectiveness.
We also launched our Process Safety Risk Management framework,
identifying all major accident hazards across the business. We are
now conducting process hazard analyses for all high-risk processes
and providing organisation-wide training to embed strong process
safety practices and reduce the likelihood of serious events.
As a result of this work to clarify and standardise safety
performance, we are now able to report additional safety
metrics. These give additional insight into our safety performance
and will be important in tracking the overall maturity of our
safety programme.
New safety metrics (all rates per 100k hours worked)
Units
2025
Full Year
Total Recordable Injury (TRI) Rate
Rate
0.41
Process Safety Incident Rate
Rate
0.21
Total Recordables included in TRI Rate calculation based on OSHA record keeping criteria
applied globally. Process Safety Incidents only include Actual Process Safety Incidents (not
Near Misses)
Our safety plans for 2026 and beyond
In 2026, we will complete the roll out of the thinkSAFE Leaders
programme, to strengthen our operational safety leadership.
Closing this skills gap will be central to improving our safety
performance and maturing our safety culture. We will also
improve our incident investigation process, through training, by
strengthening root cause analysis capability and ensuring we are
taking the learning opportunities that arise from events and then
provide thorough follow up of corrective actions. We will continue
to perform and build on the findings of Process Hazard Analyses
studies to deepen process safety knowledge, implement
improvement actions, refresh maintenance programmes and roll
out enhanced, localised process safety training. Alongside this,
we will focus on reviewing and improving the actions driving our
leading indicators, to maximise their effectiveness and ensure the
actions taken positively impact on our safety performance.
Community
In 2025 our sites engaged in a number of community projects
as follows:
Our Penn State Carbon Centre of Excellence (CoE) team
were busy igniting curiosity and hands-on learning in local
schools, engaging students from elementary level to college.
The team welcomed students to the CoE to explore cutting-
edge carbon products, from wind turbine brushes to wheel
flange lubricants, while witnessing the science behind them
through dynamic demonstrations.
Our Fostoria, Ohio, USA team came together to support the
Seneca Humane Society through a generous donation drive.
Employees collected essential items to help improve the lives
of animals in need.
Our MMTCL team in India, donated a blood transportation van
to the Red Cross. This contribution represents a meaningful
investment in community health, aligning with the humanitarian
values of our team; to improve the quality of life.
Our Atlacomulco, Mexico team reaffirmed their commitment
to education and development as key pillars for the future, by
hosting a scholarship award ceremony for the children of their
employees. On the day, the scholarship beneficiaries enjoyed
a guided tour of the Atlacomulco facilities, where they learned
about the site’s production processes and saw the effort and
dedication of their family members in action. This programme
recognises the commitment of the families that are part of
Morgan Advanced Materials, while supporting the next
generation in achieving their academic goals.
For safety week,
Our team in Argentina got family members involved. Focusing
on fire safety through creative artwork, the children of the site’s
employees reminded everyone that safety begins at home,
grows at work, and lives in each of us.
While our Jingmen City, China team organised fun games to
promote fire safety knowledge and emergency evacuation.
30
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 and engaging to all.
In 2025, our Women@Morgan employee resource group
tackled key health subjects that face men. Organising health
related talks on prostate cancer and men’s mental health.
Our Erlangen, Germany team welcomed five new apprentices
joining us on a three and a half-year scheme. The 2025
apprentice group will spend half of their time in practical training
with us, and the other half attending college classes. They finish
with an official German government degree and are recognised
as highly skilled co-workers.
You can find examples of our engagement on LinkedIn.
In 2025, Women@Morgan continued empowering women
globally, by increasing internal engagement through topics relevant
to all employees. We marked International Women’s Day with
a well attended online webinar on allyship, alongside on site
celebrations such as female empowerment film screenings and the
King’s Trust ‘Brilliant Breakfast’ initiative. Throughout the year, we
delivered additional virtual sessions covering men’s mental health,
caregivers, and prostate cancer, with plans to address common
female health conditions in 2026. Our Women@Morgan country
chapters also maintained regular meetings and activities focused on
their local priorities and community initiatives.
You can find examples of our engagement on our website:
morganadvancedmaterials.com
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 2025, the average gender pay gap for our UK workforce was
16.0% (17.6% in 2024). 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 50% female,
and the role of Senior Independent Director was held by a woman.
Male
Female
Board
4
Male 50% (2024: 57%)
Board
4
Female 50% (2024: 43%)
Executive Committee
6
Male 75% (2024: 67%)
Executive Committee
2
Female 25% (2024: 33%)
Senior leaders
30
Male 61% (2024: 67%)
Senior leaders
19
Female 39% (2024: 33%)
All leaders
267
Male 64% (2024: 66%)
All leaders
150
Female 36% (2024: 34%)
All Employees
4,896
Male 61% (2024: 64%)
All Employees
3,192
Female 39% (2024: 36%)
Workforce by gender:
Members as at 31 December 2025
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32
Task Force on Climate-related Financial Disclosures (TCFD) reporting
Our disclosures within this Annual Report are consistent with
TCFD recommendations and the recommended disclosures as
required by the UK Listing Rules 6.6.6R(8).
These disclosures also 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.
We consider our climate related financial disclosures to be
consistent with eight of the eleven recommendations, which are
set out in the table below. We are adopting an explain stance
for ‘Strategy’ requirements b) and c), and ‘Metrics and Targets’
requirements b).
Under the strategy pillar we have modelled our most material
risks under a range of scenarios and identified the tactical and
strategic mitigations needed to continue to deliver on our strategy.
Financial impacts have been assessed and are presented in this
Report but do not encompass all transition aspects such as changing
stakeholder expectations.
To improve our metrics and targets reporting, in 2024 we
developed a full Scope 3 inventory, marking a significant
improvement in our reporting methodology and accuracy.
We are continuing to refine this and we will share the results
once appropriate third party validation has been obtained.
Summary of disclosures:
Section
Requirements
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.
33
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 temperature scenario.
34 – 38
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 organisation’s overall risk management.
39
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 process.
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the
related risks.
c) Describe the targets used by the organisation to manage climate-related risks and opportunities and
performance against targets.
39 – 40
Governance
Our climate-related risk and opportunities governance structure
starts with the Board, and cascades down through the organisation,
as outlined in the table below.
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, Health, 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 and Scope 2 CO
2
e
emissions target; and
progress towards our 2030 water withdrawal and water
stress targets.
During 2025 the Board received external training on Corporate
sustainability, including an update on the legislative landscape and
quantitative examples of creating value from climate-related risks
and opportunities. The Board received four internal updates from
the Group Director EHS&S on the Group’s sustainability strategy
and progress against an in-year plan.
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ESG Governance structure
Board
EHS&S leadership teams
Audit
Committee
Remuneration
Committee
Nomination
Committee
Executive Sustainability
Council
Workstream SteerCo
Divisional leadership teams
Initiatives
Board and Management oversight of climate-related risks and opportunities
Board of Directors
Frequency:
Four times per year.
Chair:
Ian Marchant.
Attendees:
Main Board
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
e
and water progress in each meeting.
The competencies of the Board can be found on pages 57 and 58 of the Annual Report, which includes skills and experience
relevant to clim ate matters.
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. GHG emissions targets are part of our Long-Term Incentive Plan (LTIP).
Executive
Sustainability
Council
Frequency:
Four times per year.
Chair:
Damien Caby.
Attendees:
Executive plus Group Function Senior Reps and
Workstream Initiative Leads.
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 Divisional Presidents.
Provides strategic direction, secures investment and resources.
Provides oversight and decision-making across the workstreams, manages escalation with a focus on outcomes and benefits.
Workstream
SteerCo
Frequency:
Bi-monthly
Chair:
Group Finance Director.
Attendees:
Initiative Leads, Group EHS&S Director, Group ESG
Manager, Group Risk Lead, Divisional ESG Leads, Group Head of FP&A, Group Comms Director.
Monitors delivery against our net zero strategy through various workstreams, manages dependencies across projects.
Resolves risks and issued raised and identifies escalations.
Reports to the Executive Sustainability Council.
EHS&S
leadership team
Led by the Group Director EHS&S and comprising EHS&S leads from each of the divisions, the team meets monthly to
review strategy implementation and performance against 2030 targets.
Divisional
leadership teams
Each division 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 divisions 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 divisions monitor their own performance against ESG targets and implement climate-related policies and
projects.
Representatives from the divisional leadership teams are members of the Workstream SteerCo to ensure smooth rollout of
workstream-related projects in the division.
Initiatives
Frequency:
As required.
Chair:
Initiative Lead.
Attendees:
Divisional Functions, Group EHS&S, Finance as appropriate.
34
Task Force on Climate-related Financial Disclosures (TCFD) reporting
continued
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 2025, 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 on page 35
summarises our material risks and opportunities across the
appropriate time horizons.
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 division is developing 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.
Through a review of our Materiality Assessment in 2025 we
have appraised our climate related risks over the short term,
and the potential impacts were concluded to not be material.
We have therefore focused our detailed scenario analysis over
the medium-term and long-term and prepared the management
responses on the same basis.
We recognise the importance of scenario analysis in the
development of our strategy. During the 2025 strategy plan review,
the glidepath to reduce reliance on natural gas was reviewed by all
of the Divisions.
In the short term, the business focus is on efficiency improvements
while the technology teams and global kiln working group conduct
pilot studies to validate emerging green technologies. Development
of a glidepath aligned with the revised group strategy will be a focus
for 2026, where the global kiln working group will be leveraged.
Scenarios chosen
We have assessed the potential likelihood and impact of relevant
climate-related risks and opportunities across a range of scenarios,
as set out in the table below.
Transitional risks: The business reliance on natural gas. We have
modelled the potential financial impact of GHG taxes using our
10 sites that have the highest GHG emissions output.
Physical risks: We consider Heat Stress and Water Stress to be
the most significant physical climate change risks for the Group.
We have considered the financial impact of Heat Stress and/or
a Water Stress incident for the top 25 applicable sites. Our
applicability assessment considers revenue, GHG emissions,
water consumption and whether the site is located in a geography
or region that is likely to be exposed to a water stressed region.
We have also modelled the financial impact from sea level rise
and coastal flooding events for nine sites which were selected
due to their low lying locations and proximity to the coast.
During the 2025 strategy review, each division reviewed their
glidepath to reduce reliance on natural gas. In the short term,
the business remains focused on efficiency improvements. Our
technology teams and global kiln working group are conducting
pilot studies to validate emerging green technologies which may
support more meaningful reductions in the longer term. During
2026, we will focus on developing glidepaths that are aligned to the
Group’s revised strategy and we will leverage the work undertaken
by our global kiln working group.
Summary of scenarios
A range of scenarios were chosen to explore the impact from a range of possible outcomes. The likelihood in each case was assessed and
factored into the results.
Scenario
Deep and rapid cuts
Current trajectory
Unchecked pollution
Temperature
<2°C
2–4°C
>4°C
Description
the optimistic trajectory based
on government pledges.
medium-case scenario where
warming is somewhat limited.
no steps are taken to limit
warming. Global collaboration
focuses on protecting the
population.
Likelihood
High
Medium
Low
IEA/IPCC*
APS**, SSP 1-2.6
SSP 3-7.0
SSP 5-8.5
*
IEA – International Energy Agency, RCP – Representative Concentration Pathway
** Announced Pledges
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Negligible
(£0–£0.1m)
Low
(£0.1–£1m)
Moderate
(£1–£5m)
Significant
(£10–£20m)
High
(£5–£10m)
Critical
(>£20m)
Financial impact
Current Trajectory
Low
Low
Climate change action
is limited initially but
stronger actions follow
Risk
T
Reliance on natural gas
P
Heat stress
P
Water stress
P
Sea level rise
Medium term
Long term
High
Low
Low
Low to moderate
Significant
Low to moderate
Low to moderate
Deep and Rapid Cuts
Medium term
Long term
High
Low
Low to moderate
Low to moderate
Significant
Low
Low
Optimistic trajectory
based on current
government pledges
Risk
T
Reliance on natural gas
P
Heat stress
P
Water stress
P
Sea level rise
Risk likelihood (
T
ransitional or
P
hysical)
Very limited steps are
taken and warming
continues unchecked
Risk
T
Reliance on natural gas
P
Heat stress
P
Water stress
P
Sea level rise
Medium term
Long term
High
Low
Negligible
Low to moderate
Significant
Moderate
Negligible
Unchecked Pollution
36
Task Force on Climate-related Financial Disclosures (TCFD) reporting
continued
Risk/opportunity description
Management response
Reliance on natural gas
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 taxation
and 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. As global energy markets evolve, we recognise the increasing impact of our reliance on natural gas. Our
strategic and financial planning models reflect rising wholesale prices and we look to mitigate these in the
short term through multi-year contracts and robust financial planning. We continue to monitor long-term
trends closely.
Under the scenarios analysed, GHG pricing instruments are anticipated to come into force closer to 2030.
Based on current guidance, most of our sites operate below the emissions thresholds, but we remain
proactive in preparing for expected future regulatory changes. We expect the timing of these regulatory
changes to be phased across political and geographical jurisdictions over the medium to long-term. This is
reflected in our transition plan and our approach to investments.
Internally, our operational excellence programmes focus on optimising gas consumption and improving
process efficiency. Aligned to our commitment to decarbonisation and ensuring long-term resilience of the
business, we remain committed to sourcing renewable and nuclear energy.
2. We are progressing our transition to low carbon manufacturing through strategic investments and
research that supports decarbonisation across key product families. In 2025, we invested in another new
electrical furnace, see page 28, to enhance operational efficiency and reduce emissions. We also piloted a
shadow carbon price for capital expenditure proposals and have a global rollout planned for 2026. This
approach ensures future impacts of carbon pricing mechanisms are integrated into investment decisions.
Our cross-divisional global kiln working group is focused on identifying and driving efficiency
improvements and evaluating the readiness of the next-generation of low-carbon technologies. We are
also proud to be signatories of the Ceramics UK Towards Net Zero initiative and are active participants in
its hydrogen research programme.
3. Managing stakeholder expectations relies on us articulating Morgan Advanced Materials’ value
proposition by communicating the broad role that Morgan Advanced Materials products play in the
energy transition. Through transparent and consistent disclosure and embedding our strategy, we can
demonstrate our commitment, supporting the development of long-term customer partnerships and
an attractive shareholder proposition.
Relevant metrics:
Commitment to reduce Scope 1 and Scope 2 GHG emissions by 50% by 2030 from a 2015 baseline.
Commitment to source 80% renewable and nuclear electricity by the end of 2025, which was achieved.
Heat stress
Heat stress at our manufacturing
facilities could negatively affect our staff,
plant and materials.
Extreme heat events are becoming more frequent, with the highest impact in the Unchecked Pollution
scenario. To safeguard our workforce and maintain operational continuity, we have implemented
targeted measures at sites most exposed to rising temperatures. These include air-conditioned rest areas,
cooling equipment, and revised shift patterns to avoid peak heat hours.
Our global manufacturing footprint and diversified supply chain provide flexibility to relocate production
if necessary. Heat related stress assessments are integrated into our manufacturing strategy.
Relevant metrics:
We are now monitoring heat stress incidents through our H&S reporting system.
Water stress
Water is used in the manufacture of
our materials. Drought events where
process water is limited could impact
our sites.
Drought events increase in duration in the Unchecked Pollution scenario, underscoring the importance of
water stewardship in our operations. As part of our transition plan to 2030, we are investing in R&D to
reduce water use across key product families and share best practices in conservation.
Operational projects are already delivering results. For example, at our Gujarat facility in India, a new
recirculating cooling tower will save approximately 3.6m litres of water annually. These initiatives help us
reduce consumption and avoid potential operational disruptions.
We have set Group-level targets to cut total water withdrawal and withdrawal at water-stressed sites
by 30% by 2030, with progress reviewed regularly by management and the Board. Water stress
assessments are integrated into our manufacturing strategy.
Relevant metrics:
30% reduction in water withdrawal by 2030 from a 2015 baseline and a 30% reduction in water
withdrawal at water stressed sites by 2030 from a 2015 baseline.
Sea level rise
Some of our factories are in low lying
locations. Flood events could damage
plant and interrupt supply of product
to customers.
Our analysis shows that the impact of sea level rise alone is low. However, risk increases when combined
with coastal flooding events, which could lead to flood damage, production loss, and potential protection
or relocation costs.
We assessed exposure across our most at-risk sites. Of our 57 manufacturing locations, 4 have more than
a 1% annual flood risk before 2050. We considered scenarios ranging from annual floods to once-in-a-
thousand-year events.
This risk is actively managed through our risk framework and ongoing review of our physical asset
portfolio to ensure resilience and continuity.
Relevant metrics:
Impact analysis will be updated as new data becomes available. Metrics not currently developed.
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Opportunities
Climate driven opportunities and their impact on our strategy
Our customers’ exposure to carbon pricing creates opportunities for Morgan Advanced Materials. Our thermal management solutions
help customers maximise efficiency and minimise carbon footprints. This is a critical advantage in regulated markets.
We also see significant transition opportunities in sectors affected by global climate policy. Success depends on understanding customer
needs and tailoring our offering accordingly. Some markets seek partners aligned with their sustainability goals, while others focus on
regulatory compliance. Our strategy is to serve both ends of this spectrum – and everything in between.
Opportunity description
Management response
Energy Generation
Our growth opportunity in the energy sector extends beyond supplying components for wind
turbines and solar panels. Many of our products also enhance the efficiency of traditional
energy generation, helping operators reduce emissions and improve performance. This
positions us to benefit from both the expansion of renewable energy and the modernisation
of conventional power infrastructure.
Transport
We are a recognised leader in electrified rail, a sector where demand is accelerating as
governments and operators invest in low-carbon transport. Our recent innovations such as
integrated heating systems are helping rail networks reduce energy consumption and improve
reliability. These technologies position us to capture significant growth as electrification
projects expand globally.
Beyond rail, we are well placed to support the next generation of aerospace and automotive
platforms. Through deep customer relationships and advanced engineering capabilities,
we enable the transition toward greater efficiency, sustainable fuels, and ultimately green
alternatives.
Metal Processing
In markets already impacted by carbon pricing and cross-border tariffs, we deliver value
through our market-leading thermal management solutions. Using advanced heat-flow
modelling, we help customers maximise energy efficiency, reducing both operating costs
and emissions. These capabilities position us as a strategic partner for businesses seeking to
maintain competitiveness while meeting tightening environmental regulations.
Impact of risks and opportunities on the
business strategy
Climate-related risks
As we execute our strategy, we recognise that increased
production could lead to higher emissions, creating long-term
exposure to carbon taxes across all scenarios. To mitigate this,
we are strengthening our transition plan, ensuring robust
management of emissions and other critical resources such as
water. Failure to proactively implement our decarbonisation
roadmap could impact our ability to execute strategy effectively.
Currently, only two sites operate under emissions trading schemes.
However, we anticipate broader exposure to carbon pricing
instruments and potential challenges in accessing affordable
renewable energy in the future. Proactive planning is essential
to safeguard our ability to deliver on strategy.
In the short to medium term, climate considerations are embedded
in financial planning decisions, including:
Renewable and nuclear electricity tariffs: Continuing investment
where feasible, despite rising energy costs. In 2025, our
consumption of renewable and nuclear electricity rose to 80%
from 75% in 2024.
Self-generation projects: In 2025, we commissioned a 1.8 MW
solar field at a Performance Carbon site in the US which is our
largest investment to date. The project, costing £2.8 million,
includes 4,264 panels and significantly boosts our renewable
capacity.
On-site renewable generation: In total, we generated 3.5 GWh
of renewable electricity in 2025, more than double the level of
renewable electricity generated in 2024.
Physical risks such as heat stress, water stress, and sea level rise
currently have limited impact on business strategy but remain
integral to decisions.
38
Task Force on Climate-Related Financial Disclosures (TCFD) reporting
continued
Business resilience
In considering our climate-related risks and opportunities under
these scenarios, we believe our business model and strategy is
sufficiently resilient to climate change. Our current assessment
indicates that the impact of climate-related issues has not
significantly impacted our financial performance or financial
position, and we do not anticipate that it will in the short to
medium term.
Our global footprint, strong market positions, and diverse portfolio
are our strengths. 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 division or Group.
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 process in 2025, we have further
embedded climate considerations into our financial and strategic
planning processes through the piloting of a shadow internal carbon
price (ICP) on capex. 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. During 2025, the ICP was trialled
as part of our capital investment business case assessment process.
This will be rolled out to all capital investment business cases
reviewed at an executive level in 2026.
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 risk 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 mindful that external factors may have an impact on
our transition plan and we are monitoring geopolitical trends with
respect to climate change commitments.
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 have reduced water usage considerably
through recycling. We are utilising the global kiln working group to
develop decarbonisation pathways for key products, gaining an
improved understanding of the technology availability and the cost.
We now understand our Scope 3 position and the opportunities in
more detail, leveraging supplier assessments to understand their
maturity and ensure alignment with our ambition.
Our net zero roadmap
Our net zero roadmap also incorporates Scope 3 emissions. In the near term, we are focused on identifying the largest
Scope 3 contributors and the solutions that will help us decarbonise. Over this period we will:
Convert some low temperature furnaces to electricity.
Develop Scope 3 emissions strategy.
Undertake lifecycle assessment on key products.
Refine divisional decarbonisation glidepaths.
80% of our electricity will be renewable and nuclear.
Develop engineering solutions to increase energy
efficiency and water recycling.
Include a shadow carbon price in capex business cases.
Invest in R&D for carbon-free furnaces.
Preparing for the future
We will begin to invest in decarbonising our business and value chain. We will:
Install pilot carbon-free furnaces.
Increase conversion of lower temperature furnaces
to electricity.
Work with our value chain to reduce Scope 3
emissions.
Invest in new technologies to transition the business to a greener future.
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%.
We will convert higher temperature furnaces to
electricity/alternative low carbon fuel.
We will work with our value chain to further
reduce Scope 3 emissions.
We will convert remaining furnaces to carbon-free
alternatives.
Our ambition is to reach net zero Scope 1 and Scope 2
emissions by 2050.
2025
2027
2030
2050
Scaling up
Invest in key technologies
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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 divisions 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 41 and 42, 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 divisions 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 43 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 2025. Additionally, the Audit Committee
carried out a focused risk review of each division. 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 management response table on page 36
and and their values are summarised here. We have had our
Scope 1, Scope 2 & Scope 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
2°C scenario.
Our commitments are as follows:
Morgan Advanced Materials commits to reduce absolute
Scope 1 and Scope 2 GHG emissions 50% by 2030 from a
2015 base year
1
;
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.
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 Scope 2 GHG emissions. The balance
of the award is focused on financial performance measures.
Metric description
Target type
Baseline year
Baseline value
FY 2030 target
2025 progress
Scope 1 and Scope 2 GHG emissions (tonnes)
Absolute
2015
342,694
171,347
145,137
Water Withdrawal in Water Stressed Areas (m
3
)
Absolute
2015
431,004
301,703
331,175
Commitment to source 80% renewable and nuclear electricity
by the end of 2025
Intensity
2019
1%
100%
80%
1.
The target boundary includes biogenic land-related emissions and removals from bioenergy feedstocks.
Our Scope 1 and Scope 2 GHG emissions and selected other
environmental metrics for 2025 have been assured by ERM CVS.
A copy of the assurance report can be found on our website
2
.
Scope 1 and Scope 2 GHG emissions are reported from
manufacturing/production sites only, accounting for approximately
93.6% of Morgan Advanced Materials’ 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 which was retrieved from
the Company’s ERP
3
systems and/or finance systems, with updated
emission factors taken from appropriate sources. Following the
improvement to our methodology, we will take steps to validate
this data before re-validating with SBTi and publishing the values.
2.
www.morganadvancedmaterials.com/ESGAssurance/
3.
Enterprise Resource Planning.
40
Task Force on Climate-Related Financial Disclosures (TCFD) reporting
continued
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 below. 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 is 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 Scope 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 (2024
version) where available for European countries, and IEA 2024
emission factors in all other cases globally. DEFRA Emissions Factor
Database 2025 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 2025.
Responsible business
Scope 1 and Scope 2 emissions and streamlined energy and carbon reporting
Units
2025
2024
2023
2022
2021
Scope 1 energy consumption
MWh
519,890
533,674
574,531
636,583
648,833
UK
MWh
30,596
34,655
38,316
37,988
37,358
Global excluding UK
MWh
489,294
499,019
536,215
598,595
611,475
Scope 1 GHG emissions
tCO
2
e
112,064
111,011
110,563
121,989
122,817
UK
tCO
2
e
6,625
7,357
7,374
5,657
6,880
Global excluding UK
tCO
2
e
105,440
103,654
103,189
116,332
115,937
Scope 2 energy consumption
MWh
377,493
382,356
395,366
423,955
417,835
UK
MWh
12,873
13,584
14,198
15,205
15,083
Global excluding UK
MWh
364,620
368,772
381,168
408,750
402,752
Scope 2 GHG emissions (market-based)
tCO
2
e
33,072
41,860
47,011
89,115
107,070
UK
tCO
2
e
0
0
0
0
0
Global excluding UK
tCO
2
e
33,072
41,860
47,011
89,115
107,070
GHG intensity
tCO
2
e/£m
141
139
141
190
242
UK
tCO
2
e/£m
100
104
169
106
179
Global excluding UK
tCO
2
e/£m
144
141
140
194
245
Biogenic CO
2
emissions
4
tCO
2
e
668
543
719
978
877
4.
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 (2025 version).
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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 divisions 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 internal control frameworks, 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 discussed 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
Divisional-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
Divisional management
and central functions
(Divisional leadership team and
Group-level functions)
Independent assurance
(Internal audit and other independent
assurance providers)
Executive Management
Audit reports
‘Speak Up’ hotline
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 led discussions on risk appetite,
taking into account principal risk trends and movements, ensuring
alignment with the Group’s strategic objectives and the evolving
risk landscape.
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 are 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.
42
Risk management
continued
Risk trends
Adverse
Unchanged
Favourable
Risk analysis during the year
2025 risk and control assessments
During 2025, the Board undertook a comprehensive review of the
Group’s overall risk profile, which involved detailed discussion of
risk assessment outputs provided by the divisions and central
functions. This included deep dives into principal risks and horizon
scanning, identifying emerging risk themes. The Board actively
engaged in discussions on risk trends and mitigation strategies,
ensuring alignment with the Group’s strategic objectives for 2025
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 throughout the year, supplemented
by thematic reviews and assurance reports from internal and
external sources.
Material control activities
In preparation for compliance with Provision 29 of the 2024 UK
Corporate Governance Code, the Board oversaw readiness efforts
that included:
Setting up a project team to identify material controls and link
them to principal risks.
Conducting gap analyses and implementing enhancements to
control frameworks as needed.
Advancing documentation of controls and assurance processes.
Planning internal controls assessment “dry runs” ahead of the
formal declaration included in the 2026 Annual Report &
Accounts.
Changes in principal risk disclosures
There were no fundamental changes to the Group’s principal risks
during the year; however, risk narratives were refreshed to reflect
evolving external conditions and internal priorities. Specific updates
included:
Enhanced commentary on IT infrastructure and security,
reflecting increased sophistication of cyber threats.
Greater emphasis on supply chain resilience and cost inflation
pressures.
Following enhancements to control frameworks, contract
management risk has been removed as a standalone principal
risk. It continues to be managed as part of our operational risk
framework.
Principal risks heatmap
The heatmap below illustrates the relative residual positioning of
our principal risks from the perspective of potential impact, and
potential probability after mitigating controls.
Risk category
Strategic
Compliance and legal
Operational
Financial
Risk heatmap (net risks)
Probability
Impact
Key
Risk title
Risk trend since last Annual Report
2025
2024
A
External environment
Adverse
B
Business change and development
Adverse
C
Business continuity
Favourable
D
Environment, health and safety (EHS)
Unchanged
E
IT infrastructure and security
Unchanged
F
Legal and regulatory
Unchanged
G
Key finance processes
Unchanged
A
C
E
F
G
D
B
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A. External environment
Strategic impact:
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.
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. This 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 medium-term and
longer-term challenges for our business. Climate-related risks
are addressed in greater detail on pages 32 to 40.
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.
Trend commentary
Escalating geopolitical tensions and macro-economic instability are
creating a highly volatile operating environment. Conflicts and
political uncertainty are leading to the introduction of tariffs and
taxes, while global events such as natural disasters add further
unpredictability. These factors are driving fluctuations in commodity
prices, sustained inflationary pressures, and sudden disruptions to
supply chains, all of which can adversely impact customer demand,
financial performance, and the Group’s ability to maintain
operational continuity.
B. Business change and development
Strategic impact:
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 divisional 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.
Trend commentary
The Group has a number of significant transformation programmes
underway. They introduce complex changes to systems, processes
and organisational structures. These initiatives increase execution
risk and resource strain, creating potential for delays, cost overruns
and disruption to core operations. While strong governance and
dedicated project management are in place, the scale and
interdependencies of these projects mean the risk will remain
heightened until stabilisation and benefits realisation are achieved.
Principal risks and uncertainties
Strategic impact
Transform
Drive
Maximise
Risk trends
Adverse
Unchanged
Favourable
44
Risk management
continued
Principal risks and uncertaintie
s
(continued)
C. Business continuity
Strategic impact:
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.
There are single-point (key supplier/key site) exposure risks
within the Group’s supply chain.
Rising cost inflation across raw materials, energy and logistics
adds pressure to operational resilience and profitability.
Some of the products manufactured by the Group are used
in potentially high-risk applications, for example in the
Aerospace, Automotive, Electric vehicle, Healthcare and
Power industries.
If this risk was to materialise, it could lead to supply chain
disruption, increased operating costs, loss of customers and/or
market share, and reduced competitiveness, ultimately affecting
the Group’s current and future financial performance.
Key controls and mitigation
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.
Trend commentary
The implementation of an enhanced property risk management
framework has helped reduce exposure to facility-related
vulnerabilities, favourably impacting the risk trend. However,
residual risks remain due to single-point dependencies (key supplier/
key site) and the critical nature of products used in high-risk sectors
such as Aerospace and Healthcare. While dual sourcing and quality
management systems provide additional resilience, the complexity
of manufacturing operations and supply chain interdependencies
mean continued attention is required.
D. Environment, health and safety (EHS)
Strategic impact:
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
which complement the Group’s ‘thinkSAFE’ behavioural safety
programme.
KPIs are monitored by the Executive Committee and the Board.
Our LTA rate was 0.18 (2024: 0.13); which is an increase
compared to the prior year. Safety of our employees is a critical
focus. We have performed root cause analyses and developed
a targeted plan for 2026. This is addressed in greater detail on
page 30.
Trend commentary
There is no material change to the risk trend.
Strategic impact
Transform
Drive
Maximise
Risk trends
Adverse
Unchanged
Favourable
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E. IT infrastructure and security
Strategic impact:
Risk trend:
Risk description and drivers
It is critical that the Group’s information technology and
operational technology infrastructure remain cyber resilient,
ensuring that proprietary, confidential and otherwise protected
information, intellectual property and personal data held and
processed on these systems are appropriately secured. The
increasing sophistication and frequency of cyber threats, including
targeted attacks and advanced persistent threats, heightens the
risk environment and demands continuous improvement in our
defence posture.
Failure to prevent or respond effectively to a cyber security event
could compromise the availability, confidentiality and integrity of
our IT systems, disrupt key operations, impede recovery of
critical data or services, and cause irrevocable damage to assets
and reputation.
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.
Trend commentary
There is no material change to the risk trend. Although our controls
are strengthening, the broader threat landscape continues to
intensify in both volume and complexity.
F. Legal and regulatory
Strategic impact:
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 requires ongoing focus.
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.
Trend commentary
There is no material change to the risk trend.
G. Key finance processes
Strategic impact:
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 divisions.
Quarterly internal financial control self-assessments for all
relevant locations.
Trend commentary
There is no material change to the risk trend.
Strategic impact
Transform
Drive
Maximise
Risk trends
Adverse
Unchanged
Favourable
(3.3)%
Organic constant-currency
revenue decline
9.6%
Headline adjusted operating
profit
*
margin
14.1%
Return on invested capital
*
1.8x
Net debt
*
/Headline EBITDA*
leverage ratio
Group financial review
“We have delivered a robust financial
performance against a challenging market
backdrop.
Demand in our end-markets has now broadly
stabilised. The work we have done to reduce
our manufacturing cost base over the last three
years, coupled with our planned optimisation
opportunities, leaves us well placed to deliver
margin growth as end-markets recover.”
Richard Armitage
CFO
Discontinued operations and Alternative
Performance Metrics
In August 2025, the Group announced that it had reached an
agreement to sell the majority of its MMS business which was
reported within the Thermal Products reporting segment. The
transaction completed on 12 November 2025. The disposal
represented a major line of business for the Group and accordingly,
it is classified as a discontinued operation under ‘IFRS 5 – Non-
current Assets Held for Sale and Discontinued Operations.’ In
accordance with IFRS 5, current year results for MMS are shown
as one line ‘profit from discontinued operations’ on the face of the
income statement and prior year results have been restated on the
same basis.
In addition to statutory metrics, the Group monitors business
performance through alternative performance measures (APMs)
which are non-GAAP measures not defined under IFRS. The
Directors consider that these APMs provide useful information
to stakeholders, including additional insight into ongoing trading
and year-on-year comparisons. These APMs are not intended
as a substitute for IFRS measures and should be considered as
providing complementary insight.
The Group defines each APM and therefore they may not be
directly comparable with similarly named metrics in other
businesses. The purpose and definition of each APM, along with a
reconciliation to the equivalent statutory metric are included in the
‘Glossary of Terms and Alternative Performance Metrics’ sections
on pages 199 to 204.
In order to help users of these financial statements understand
the performance of the Group during 2025, where relevant,
the Directors have presented ‘Headline’ metrics which include
the results earned by MMS up to the date of the disposal. These
metrics are clearly denoted by the use of the term ‘Headline’ and
they are presented alongside statutory results and in addition to
the usual APMs presented by the business.
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.
Unless otherwise stated, all financial information reported in the
Financial review relates to continuing operations.
46
Group financial performance
Summary financial information for the year ended 31 December 2025
Summary income statement and key metrics
2025
£m
2024
2
£m
Change
%
Headline
1
metrics
Headline
1
Revenue
1,030.3
1,100.7
(6.4)%
Headline
1
Adjusted operating profit
1
99.1
128.4
(22.8)%
Headline
1
Adjusted operating profit
1
margin
9.6%
11.7%
(210) bps
Net debt
1
to Headline EBITDA
1
ratio
1.8x
1.4x
n/m
2
Results from continuing operations
Revenue
996.6
1,060.1
(6.0)%
Adjusted operating profit
1
93.8
123.3
(23.9)%
Adjusted operating profit
1
margin
9.4%
11.6%
(220)bps
Amortisation of intangible assets
(1.0)
(1.7)
(41.2)%
Specific adjusting items
4
(47.6)
(22.4)
112.5%
Operating profit from continuing operations
45.2
99.2
(54.4)%
Net financing costs
(22.2)
(19.0)
16.8%
Profit before taxation from continuing operations
23.0
80.2
(71.3)%
Income tax expense
(17.9)
(24.7)
(27.5)%
Profit after taxation from continuing operations
5.1
55.5
(90.8)%
Profit after taxation from discontinued operations
23.7
3.3
618.2%
Profit for the year
28.8
58.8
(51.0)%
Basic EPS from continuing and discontinuing operations
7.5p
17.7p
(57.6)%
Adjusted EPS
1
15.9p
24.2p
(34.3)%
Return on invested capital
1
14.1%
17.7%
(360)bps
Summary cash flow and key metrics
2025
£m
2024
£m
Change
%
Headline
1
cash generated from operations
168.6
163.0
3.4%
Headline
1
free cash flow
1
45.4
15.1
200.7%
Cash and cash equivalents
79.3
120.8
(34.4)%
Net debt
1
232.2
226.2
2.7%
Headline
1
net debt
1
to EBITDA
1
ratio
1.8x
1.4x
n/m
3
Total dividend per share
12.2p
12.2p
–
1
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary and Alternative Performance Metrics’ section on pages 199
to 204.
2
Statutory financial results have been restated for the year ended 31 December 2024 to present the results of MMS within discontinued operations.
3
Movements where the percentage movement is not meaningful are represented by n/m.
4
Details of specific adjusting items arising during the year and the comparative period are given in note 6 to the consolidated financial statements.
Strategic Report
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Financial Statements
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Annual Report 2025
Group financial review
continued
Revenue
Revenue
2025
£m
2024
£m
Change
%
OCC
Change
%
Performance Carbon
306.8
345.2
(11.1)%
(8.9)%
Technical Ceramics
341.6
337.3
1.3%
3.4%
Thermal Products
348.2
377.6
(7.8)%
(4.2)%
Revenue from
continuing operations
996.6
1,060.1
(6.0)%
(3.3)%
Discontinued operations
– MMS
33.7
40.6
n/m
n/m
Headline revenue
1,030.3
1,100.7
(6.4)%
(3.3)%
On a headline* basis, the Group recognised revenue of £1,030.3
million (2024: £1,100.7 million), a year on year decrease of 6.4%
at reported currency rates. Revenue was significantly impacted by
foreign exchange headwinds, largely related to the US Dollar and
sterling exchange rates. On an organic constant currency* basis,
Group revenue decreased by 3.3% year-on-year.
Performance Carbon
was heavily impacted by the well-
publicised conditions within the Semiconductor market and in total
the division delivered revenue of £306.8 million, an 8.9% decline
versus the prior year on an organic constant currency* ‘(OCC’)
basis. Lower Semiconductor sales drove the year on year decline,
although we note that revenue has stabilised in the second half of
the year. Across other markets, the business has demonstrated a
resilient revenue performance. The business saw a smaller decline
in Aerospace & Defence sales which reflects the timing of some
large defence orders which are now expected in 2026. This was
largely offset by increased demand in Rail and Energy markets.
Technical Ceramics
has demonstrated good resilience over the
year, delivering revenue of £341.6 million, a 3.4% increase on an
OCC* basis. The business saw strong demand in Aerospace &
Defence markets, driven by demand for new aircraft along with
robust maintenance revenue driven by increased fleet utilisation.
This growth was partially offset by the impact of Semiconductor
market dynamics and notably lower sales into Healthcare markets
driven by customer inventory adjustments.
Thermal Products
delivered revenue of £348.2 million, a 4.2%
decline on an OCC* basis. This performance was impacted by
regional economic dynamics, primarily driven by continued
challenging conditions in European industrial markets. Overall,
we note revenues have remained broadly stable since the second
half of 2024.
Adjusted operating profit*
Adjusted operating profit
1
2025
2024
Profit
£m
Margin
%
2024
£m
Margin
%
Performance Carbon
41.2
13.4%
55.1
16.0%
Technical Ceramics
39.4
11.5%
39.2
11.6%
Thermal Products
23.5
6.7%
37.5
9.9%
Central costs
(10.3)
n/m
(8.5)
n/m
Adjusted operating
profit
1
from
continuing
operations
93.8
9.4%
123.3
11.6%
Discontinued operations
– MMS
5.3
n/m
5.1
n/m
Headline Adjusted
operating profit
1
99.1
9.6%
128.4
11.7%
1
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory
measure can be found in the ‘Glossary and Alternative Performance Metrics’ section on
pages 199 to 204.
The Group delivered headline adjusted operating profit* of
£99.1 million (2024: £128.4 million) and a headline adjusted
operating profit* margin of 9.6% (2024: 11.7% reported; 11.3% on
an OCC* basis). Whilst volume and mix impacts drove a 440 bps
decrease in margins, our overall margin delivery was positively
impacted by our continued focus on simplification and efficiency.
On a combined basis, the net impact of pricing, inflation and
efficiency initiatives contributed 170 bps improvement to margin
with simplification initiatives providing a further 160 bps margin.
The remaining movement in margin relates to foreign exchange
and other non-trading items.
Performance Carbon
delivered an adjusted operating profit*
margin of 13.4%, a 260 bps decrease compared to the prior year.
The impact of lower volume and an adverse sales mix was partially
offset by substantial gains from efficiency and simplification
initiatives. Margin was further supported by £5.2 million of
trading receipts that will not repeat in 2026.
Technical Ceramics
delivered an adjusted operating profit*
margin of 11.5% which was broadly in-line with the prior year.
Thermal Products
delivered an adjusted operating profit*
margin of 6.7%, a 320 bps decrease compared to the prior year.
Performance reflects challenging market conditions and foreign
exchange headwinds and hyperinflation accounting.
On a continuing operations basis,
Central costs
of £10.3 million
have increased by £1.8 million compared to 2024. This increase
reflects the build out of our central ERP team who will support
the new system on an ongoing basis. Central costs for the prior
year have been restated to include central costs which were
previously allocated to MMS that have remained with the Group
post deal close.
Adjusted profit* margins for the discontinued MMS business
are not considered meaningful since they exclude central costs
previously allocated to the division, thus artificially increasing the
profit attributable to the operating unit.
48
Specific adjusting items
Specific adjusting items from continuing operations were
£47.6 million (2024: £22.4 million) and comprised the following:
2025
£m
2024
£m
Specific adjusting items from
continuing operations
1
Impairment of non-financial assets
(15.6)
(4.2)
Business simplification restructuring
(13.4)
(12.4)
Design, configuration, customisation and
implementation of a Global ERP system
(13.3)
(5.2)
Reversal of prior year impairments following
Argentina’s currency devaluation
1.9
0.5
Residual costs associated with the cyber
security incident
–
(1.1)
Movement in fair value of consideration
shares held at FVTPL
(7.2)
–
Total specific adjusting items from
continuing operations before
income tax
(47.6)
(22.4)
Income tax credit from specific
adjusting items
1.5
2.3
Total specific adjusting items from
continuing operations after
income tax
(46.1)
(20.1)
1
Details of specific adjusting items arising during the year and the comparative period are
given in note 6 to the consolidated financial statements.
During 2025, the Group has recognised an impairment charge of
£15.6 million related to certain specialist assets at a UK site which
are dedicated to the Semiconductor market. Our current view of
future demand for this market subsegment indicates that these
assets will not be utilised. Since this specialist machinery cannot
be redeployed to fulfil other demand in the near-term without
further investment, we have fully impaired the asset, in-line with
the requirements of ‘IAS 36 – Impairment of assets’. There is no
change to our previously communicated expectations for the
Semiconductor market opportunity for Morgan.
The Group has recorded a cumulative total of £28.6 million
impairment charges recognised in current and prior periods, for
assets which it continues to use. These impairments could be
reversed if the businesses were to outperform significantly against
their budgets and strategic plans, or if market conditions materially
change. 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 remaining impaired amounts in 2025 (2024: £nil);
the only impairment reversed during the year relates to trading
assets in Argentina, as noted overleaf. Refer to note 6 to the
consolidated financial statements for details of the impairment
review and key assumptions made.
The Group incurred total expenditure of £14.3 million in respect
of our business simplification and restructuring programme during
the year (2024: £13.1 million). Of this total, £13.4 million relates
to continuing operations (2024: £12.4 million) with the balance of
£0.9 million incurred by MMS and included within discontinued
operations (2024: £0.7 million).
As at 31 December 2025, the Group’s business simplification
initiatives have delivered total cumulative adjusted operating profit*
benefits of £24 million, compared to our 2023 baseline, for a total
cost total of £35 million. During 2025, we have rephased certain
planned activities to ensure clear prioritisation and execution
throughout the business. We continue to expect to deliver total
cumulative savings of £27 million by 2026, compared to the 2023
baseline, for a total cost of approximately £40 million.
The Group incurred £13.3 million of exceptional costs associated
with the design, configuration, customisation and implementation
of a Global ERP system (2024: £5.2 million). We made good
progress in 2025, completing a pilot system roll-out and finalising
design and build ahead of a go-live of material sites across North
America and Europe during 2026. We anticipate that roll-out and
implementation will be completed by the end of 2027. Alongside
our investment in implementation, we are building out a dedicated
ERP and project team that will remain with the business post-
implementation and these costs are recognised within underlying
results. We expect to incur ERP implementation costs of between
£22-24 million in 2026 which will be recognised within specific
adjusting items.
The Group recognised a credit of £1.9 million relating to the
reversal of a fixed asset impairment associated with operations in
Argentina. The impairment was recognised in 2023, following a
currency devaluation of more than 50%. During 2025, we have
successfully repatriated a cash dividend from Argentina to the
UK via the Bopreal mechanism and the business has continued
to operate profitably despite ongoing economic uncertainty.
Accordingly, the Group has recognised a full reversal of its
previous fixed asset impairment.
Within ‘specific adjusting items’ from continuing operations, the
Group recognised a fair value and foreign exchange loss on
consideration shares received in a listed Indian business as part of
the consideration received for the disposal of MMS. Further details
of the MMS transaction are set out below.
2025
£m
2024
£m
Specific adjusting items from
discontinuing operations
1
Net restructuring charge
(0.9)
(0.7)
Gain on disposal of MMS
28.5
–
Other
–
0.1
Total specific adjusting items from
discontinuing operations before
income tax
27.6
(0.6)
Income tax credit from specific
adjusting items
(7.7)
0.2
Total specific adjusting items from
discontinuing operations after
income tax
19.9
(0.4)
1
Details of specific adjusting items arising during the year and the comparative period are
given in note 6 to the consolidated financial statements.
Strategic Report
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49
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Annual Report 2025
Group financial review
continued
Gain on disposal of MMS
During the year the Group announced the sale of its MMS business
to Vesuvius plc. MMS was previously reported within the Thermal
Products reporting segment. The business represents a major line
of business and therefore meets the criteria of a disposal group
under IFRS 5. The results of MMS for the year ended 31 December
2024 and the period up to the completion of the transaction on
12 November 2025 are presented as discontinued operations in
the Group’s audited financial statements.
MMS was sold for total consideration of £76.2 million. The
transaction was structured as an acquisition of Morgan’s 75%
shareholding in its Indian listed subsidiary, Morganite Crucible
(India) Limited (‘MCIL’), by Vesuvius’ Indian listed subsidiary, Foseco
India Ltd (‘FIL’), with consideration for the acquisition being the
issuance of new FIL shares to Morgan, plus a cash acquisition for
the remainder of the MMS business (‘Rest of World’).
At completion, Morgan received 1.2 million consideration shares
in FIL, which represents a circa 15% shareholding in FIL valued
at approximately £55.7 million. These shares are subject to a
six-month lock-up period post-initial listing, in accordance with
applicable Indian regulations.
In addition, Morgan received £20.5 million in cash as gross
consideration for the Rest of World Transaction, which was subject
to customary post-completion cash, debt and working capital
adjustments and prior to any taxes, fees and other expenses
related to the overall MMS transaction.
The calculation of the gain on disposal of MMS is presented in the
table below. The gain on disposal has been included in ‘specific
adjusting items’ within discontinued operations in the consolidated
income statement.
It is our intention to sell the consideration shares and therefore they
have been designated as held for trading and are recognised at fair
value through profit and loss and revalued at the balance sheet date
by reference to the publicly listed share price. Movements in share
price and associated foreign exchange movements are recognised in
specific adjusting items due to their nature and size. In accordance
with applicable accounting standards, the fair value movement in
the consideration shares held is recognised within continuing
operations as it relates to an asset held by the continuing business.
£m
Share consideration
55.7
Cash consideration
20.5
Total consideration
76.2
Goodwill and other intangibles
(8.8)
Other non-current assets
(21.6)
Current assets
(18.7)
Liabilities
10.6
Net assets disposed
(38.5)
Transaction costs
(7.0)
Cumulative foreign exchange
(5.1)
Non-controlling interest
2.9
Pre-tax gain on disposal
28.5
Statutory operating profit
Statutory operating profit from continuing operations was
£45.2 million (2024 restated: £99.2 million), a significant reduction
compared to the prior year, driven by reduced revenues and
increased charges from specific adjusting items as a result of our
investment in the Global ERP programme, the fair value and foreign
exchange loss on consideration shares held following the disposal of
MMS and the impairment of certain Semiconductor related assets.
Net financing costs
Net financing costs of £22.2 million (2024: £19.0 million) comprise
net bank interest and similar charges of £17.8 million (2024:
£15.8 million), interest payable on supplier finance arrangements of
£1.2 million (2024: £nil), net interest on IAS 19 pension obligations
of £0.4 million (2024: £0.6 million), and interest expense on lease
liabilities of £2.8 million (2024: £2.6 million) resulting from IFRS 16
Leases.
The impacts of potential changes in interest rates on profit or loss
are stated in note 22 to the consolidated financial statements.
Net financing costs for 2026 are expected to be within the range
of £22-26 million.
Taxation
The Group tax charge from continuing operations, excluding
specific adjusting items, was £19.4 million (2024: £27.0 million).
The effective tax rate, excluding specific adjusting items, was 27.5%
(2024: 26.3%). 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 £17.9 million
(2024: £24.7 million), lower than the previous year due to lower
taxable profits.
We expect our effective tax rate, excluding specific adjusting items,
to be within the 27-28% range in 2026.
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.
50
Earnings per share
Basic earnings per share from continuing operations was a loss of
(1.0) pence per share (2024: 16.5 pence) and adjusted earnings
per share* was 15.9 pence (2024: 24.2 pence).
Basic earnings per share from continuing operations was impacted
by overall trading performance and increased charges associated
with specific adjusting items, as noted above.
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.
For illustrative purposes, the table below provides details of the
impact on 2025 revenue and Group adjusted operating profit* if
the actual reported results, calculated using 2025 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 2025 revenue/
adjusted operating profit
1
if:
Revenue
£m
Adjusted
operating
profit
1
£m
GBP weakens by 10c against the US Dollar
in isolation
39.0
3.8
GBP weakens by 10c against the Euro
in isolation
17.8
2.5
1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory
measure can be found in the ‘Glossary and Alternative Performance Metrics’ section on
pages 199 to 204.
The principal exchange rates used in the translation of the results of
overseas subsidiaries were as follows:
GBP to:
2025
2024
Closing
rate
Average
rate
Closing
rate
Average
rate
US Dollar
1.35
1.32
1.25
1.28
Euro
1.15
1.17
1.21
1.18
The potential impact of changes in foreign exchange rates is given in
note 22 to the consolidated financial statements.
Cash flow
2025
£m
Restated
2024
£m
Adjusted operating profit
1
from continuing
operations
93.8
123.3
Adjusted operating profit
1
from
discontinued operations
5.3
5.1
Headline
1
adjusted operating profit
1
99.1
128.4
Adjusted for:
Depreciation
42.0
42.7
‘Specific adjusting items’ cash outflows
(22.8)
(20.4)
Loss/(Profit) on sale of PPE
0.5
(3.0)
Equity-settled share-based payments
2.0
2.8
Net working capital movements
50.4
14.6
Other items
(2.6)
(2.1)
Cash generated from operations
168.6
163.0
Net capital expenditure
(65.9)
(90.2)
Net interest on cash and borrowings
(18.8)
(15.3)
Tax paid
(26.4)
(29.2)
Lease payments and interest
(12.1)
(13.2)
Free cash flow before acquisitions,
disposals and dividends
45.4
15.1
MMS cash proceeds, net of tax paid
10.0
–
Dividends paid to external shareholders
(34.1)
(34.5)
Net cash flows from other investing and
financing activities
(12.1)
(16.9)
Share buyback
(15.2)
(4.7)
Movement in net debt
1
(6.0)
(41.0)
Opening net debt
1
(226.2)
(185.2)
Closing net debt
1
(232.2)
(226.2)
Lease liabilities
(49.2)
(47.1)
Closing net debt
1
and lease liabilities
(281.4)
(273.3)
1.
Definitions of these non-GAAP measures can be found in the glossary of terms on page
199, reconciliations of the statutory results to the adjusted measures can be found on
pages 200 to 204.
The Group generated cash from operations of £168.6 million
(2024: £163.0 million) which was £5.6 million higher than the
previous year, with lower headline adjusted operating profit*
materially offset by a continued focus on working capital
management as a result of focused initiatives across the Group.
Working capital initiatives included the initiation of a focused
Supplier Financing arrangement for those areas of the business
where supplier terms are materially below standard industry levels
and an extension of our non-recourse debt factoring programme.
These initiatives improve the Group’s diversification and cost of
liquidity, and the total benefit from these arrangements as at
31 December 2025 was £37.2 million.
Free cash flow before acquisitions, disposals and dividends* was
£45.4 million (2024: £15.1 million). The increase in free cashflow
was driven by a significant reduction in capital expenditure
compared to the prior year following the reduction of the scope
of our investment in Semiconductor capacity.
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Annual Report 2025
Group financial review
continued
For the purposes of compliance with external debt covenants, net
debt* is calculated excluding IFRS 16 lease liabilities. On this basis,
net debt* was £232.2 million (2024: £226.2million), representing
a net debt* to continuing operations EBITDA* ratio of 1.9 times
(2024: 1.5 times). On a headline basis, which includes the profits
earned from MMS up to the date of disposal, net debt* to headline
EBITDA* ratio was 1.8 times (2024: 1.4 times). The Group has yet
to receive the majority of the consideration associated with the
sale of MMS and the value of these consideration shares was
£47.2 million at the balance sheet date. Leverage on a continuing
basis will begin to return towards our target range during 2026
upon realisation of these proceeds. We expect leverage to be at
or around 1.7x by the end of 2026.
Commitments for property, plant and equipment and computer
software for which no provision has been made are set out in
note 26 to the consolidated financial statements. Treasury and risk
management policies, which remain unchanged from the prior year,
are set out in note 22 to the consolidated financial statements.
Liquidity
At the balance sheet date, the Group had net cash and cash
equivalents* of £74.2 million (2024: £111.5 million) and undrawn
headroom on its revolving credit facility of £295.3 million (2024:
£279.3 million).
Capital structure
At the year end total equity was £348.9 million (2024:
£389.3 million) with closing net debt* of £232.2 million
(2024: £226.2 million).
Non-current assets were £568.5 million (2024: £597.3 million)
and total assets were £984.8 million (2024: £1,077.1 million).
Details of undiscounted contracted maturities of financial liabilities
and capital management are set out in note 22 to the consolidated
financial statements on page 157 and 163.
Capital structure is further discussed in note 22 to the consolidated
financial statements under the heading Capital management.
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 12 May 2026 to
Ordinary shareholders on the register at the close of business
on 10 April 2026. The ex-dividend date is 9 April 2026.
Together with the interim dividend of 5.4 pence per share
paid on 17 November 2025, this final dividend, if approved
by shareholders, brings the total distribution for the year to
12.2 pence per share (2024: 12.2 pence).
A total dividend of 12.2 pence per share represents a dividend
cover of adjusted EPS* of 1.3 times.
The Board has committed
to maintaining then growing the Ordinary dividend with adjusted
earnings cover of circa 2.5 times.
Note 14 to the Company financial statements provides additional
information on the Company’s distributable reserves.
Share buyback
On 5 November 2024, the Group announced its intention to
undertake a buyback programme of up to a maximum £40 million,
excluding expenses. In December 2025, we announced our
intention to pause the buyback programme after the second
£10.0 million tranche had been completed in order to support our
focus on balance sheet resilience. As at 31 December 2025, the
Group had purchased 8,576,587 shares, for total consideration of
£19.9 million including fees and stamp duty. The second tranche
completed in January 2026.
Refer to note 19 in the consolidated financial statements for further
details about the share buyback programme.
Post balance sheet events
There are no reportable balance sheet events.
We note the emerging situation in the Middle East. Whilst the
Group has a small footprint in the region, with a relatively low profit
exposure we are mindful that the situation could have an impact
on broader trade and cost inflation. It is too early to assess the
potential impact for 2026 and our primary focus is the safety of
our employees.
52
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Financial Statements
53
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Annual Report 2025
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 54. The financial position
of the Group, its cash flows, liquidity position and borrowing
facilities, are described in the Financial review on pages 46 to 52.
In addition, note 22 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 million unsecured multi-currency revolving credit facility,
which matures in November 2029. As at 31 December 2025,
the Group had both significant available liquidity and headroom
on its covenants. Total committed borrowing facilities were
£601.7 million. The amount drawn under these facilities was
£306.4 million, which together with net cash and cash equivalents
of £74.2 million, gave a total headroom of £369.5 million. The
€150 million delayed draw Term Loan was €75 million drawn
and
the multi-currency revolving credit facility was undrawn at
31 December 2025. The Group has scheduled debt maturities of
$97 million and €25 million due in October 2026. We expect to
repay these facilities using existing facilities.
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 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 22 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 25% and an increase in net debt* of 30%
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 2030 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 41 to 45 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 2030.
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.
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 crystallising 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.
54
Scenarios modelled
Link to Combined
Principal Risks
Macroeconomic uncertainty
The risk of adverse impact on our business from macroeconomic factors that affect the performance of
Morgan Advanced Materials or investments in specific countries or regions. The sensitivity analysis performed
considered impacts on the Group’s revenue, EBITA and Working Capital following a worldwide downturn in
trading due to Macroeconomic dislocation.
External environment
Competitive positioning
Key risk drivers include heightened competitive pressure within markets the Group operates in, or restrictions
on certain markets. The sensitivity analysis performed considered impacts on the Group’s revenue, EBITA and
Working Capital following a loss of business in certain markets.
Business change and
development
Organisation change
The possibility of adverse impacts of changes in Morgan Advanced Materials’ structure, culture, processes,
systems or strategies. The sensitivity analysis performed considered impacts on the Group’s revenue, EBITA
and Working capital following unexpected staffing shortages caused by inadequate change management.
Business change and
development
Trade compliance breach
The failure of the sanctions screening programme and non-compliance with export regulations. The sensitivity
analysis performed considered impacts on the Group’s revenue, EBITA and Working Capital as well as
additional legal costs.
Legal and regulatory
The combined impact of the above 4 scenarios results in 15%
reduction in Group’s revenue and 44% reduction in Group’s EBITA
in 2026 before taking mitigating actions. In this worst-case scenario,
the Group remains within banking covenants.
Whilst 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 2030.
This Strategic Report, as set out on pages 2 to 54, has been
approved by the Board.
On behalf of the Board
Richard Armitage
Chief Financial Officer
2 March 2026
Directors’ statements
continued
Governance
Contents
Chair’s letter to shareholders
56
Board of Directors
57
Governance overview
59
Key Board focus areas during the year
60
Board oversight of strategy
62
Monitoring and embedding culture
63
Engaging with our workforce
64
Assessing Board performance
66
UK Corporate Governance Code
compliance statement
67
Report of the Audit Committee
69
Report of the Nomination Committee
75
Remuneration Report
78
Other disclosures
105
Independent Auditor’s Report
110
Strategic Report
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Financial Statements
55
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Annual Report 2025
56
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.
The 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 initiatives 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 that the Board itself continues to be effective,
including undertaking an internal Board performance review which
is set out on page 66.
2025 was another busy year for the Board and, in addition to our
standard agenda items, we considered a breadth of matters such as
succession planning, the evolution of our strategy and business plan,
portfolio reviews and the disposal of Molten Metal Systems (MMS).
We have continued our dialogue with our stakeholders throughout
the year, details of which can be found on pages 20 and 21 and
64 and 65. Some of our key decisions and our consideration of
stakeholders in making those decisions are described in our
Section 172 statement on pages 22 to 24.
Further details on our activities during the year can be found on
pages 60 to 62.
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 reviewed our compliance with the
2024 UK Corporate Governance Code (‘2024 Code’) and
readiness for reporting against Provision 29. Further information
on the Committee’s work can be found on pages 69 to 74.
The Nomination Committee has supported the Board with
succession planning activities, including the CEO transition from
Pete Raby to Damien Caby and the appointment and induction
of two non-executive Directors – Jane Lodge and Professor
Mary Ryan CBE FREng. Details of the Committee’s work is set
out on pages 75 to 77.
The Remuneration Committee has reviewed the implementation
of the Group’s Remuneration Policy (approved by shareholders
at the 2025 AGM). Details of the Committee’s work is set out on
pages 78 to 104.
More detail on the Board and Committee activities during the year
can be found in the remainder of the Report.
Focus for 2026
Some of the key priorities for the Board in 2026 will be continuing
to oversee trading performance and the delivery of our revised
strategy. The Board will continue to support Damien in his new
role as well as ensuring that the new non-executive Directors are
successfully onboarded.
Ian Marchant
Non-executive Chair
“The guiding principle of the
Board is to do the right thing with
respect to all our stakeholders
and the environment.”
Chair’s letter to shareholders
Ian Marchant
Non-executive Chair
Strategic Report
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Financial Statements
57
Morgan Advanced Materials
/
Annual Report 2025
Appointed:
Chair Designate and non-executive Director in 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 and a member
of the Prince’s Council of the Duchy of Cornwall.
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 and Chair of the Audit Committee at
NWF Group plc.
Board of Directors
Appointed:
Non-executive Director and Audit Committee Chair
in July 2017. Jane will retire from the Board following the AGM in May 2026.
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:
Executive Director and CEO Designate in May 2025. CEO in
July 2025.
Skills and contribution:
Damien brings strong leadership skills and extensive business experience in
specialities across several markets. He has an established track record of
strategic organic and inorganic growth, innovation and transformation of
global advanced materials and processing aids and a strong technical and
international background, having lived and worked in the United States,
Germany and France.
Past experience:
Before joining Morgan Advanced Materials in 2022 as President of the
Thermal Products division, Damien held senior business group and business
leadership roles at BASF from 2017 to 2022 and Imerys from 2011 to 2016.
External appointments:
None.
Ian Marchant
Non-executive Chair
Committees
N
R
Damien Caby
CEO
Richard Armitage
CFO
Jane Aikman
Independent
non-executive Director
Committees
A
N
R
Committees
Committee Chair
Audit
Nomination
Remuneration
Directors who resigned during the year
Helen Bunch, who was appointed as non-executive Director from February
2016 and as Remuneration Committee Chair from January 2019, retired from
the Board following the Company’s AGM in May 2025.
Pete Raby, who was CEO from August 2015, retired from the Board on
1 July 2025 and left the Company on 31 August 2025.
58
Board of Directors
continued
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.
Appointed:
November 2024. Remuneration Committee Chair in
May 2025.
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. Alison was a
non-Executive Director of TT Electronics plc from 2016 to 2025 and served
as Chair of their Remuneration Committee.
External appointments:
Chair of Galliford Try Holdings plc, Senior Independent Director and
Remuneration Committee Chair of Oxford Instruments plc.
Appointed:
June 2025. Jane will succeed Jane Aikman as Audit Committee
Chair following the AGM in May 2026.
Skills and contribution:
Jane is a highly experienced non-executive Director and Audit Committee
Chair with a significant background in international businesses in the
industrial/manufacturing sector. Jane is a Chartered Accountant with
substantial audit, risk and financial experience.
Past experience:
In her executive career, Jane spent 35 years at Deloitte & Touche LLP,
progressing to a Senior Audit Partner working for major corporates and acted
as the manufacturing and industry lead Partner, providing best practice and
insights across tax, auditing, consulting and corporate finance. Jane was
previously a non-executive Director and Audit Committee Chair of TI Fluid
Systems plc from 2022 to 2025, non-executive Director of DCC plc from
2012 to 2022, Senior Independent Director and Audit Committee Chair of
Costain Group plc from 2012 to 2021, non-executive Director and Audit
Committee Chair of Devro plc from 2012 to 2021.
External appointments:
Non-executive Director and Audit Committee Chair of First Group plc,
non-executive Director and Remuneration Committee Chair of Glanbia plc
and non-executive Director and Audit and Risk Committee Chair of
Bakkavor Group Plc.
Appointed:
November 2025.
Skills and contribution:
Mary brings significant materials science expertise to the Board. She is a
leading materials scientist at Imperial College London (‘Imperial’), where
she currently serves as Vice-Provost for Research and Enterprise and the
Armourers & Brasiers’ Chair in Materials Science. She has significant industry
exposure, having led Imperial’s partnerships with several major corporates
including Shell, Rio Tinto and Hitachi. She is a Fellow of the Royal Academy
of Engineering and Fellow of the Institute of Materials, Minerals and Mining
(IoM3).
Past experience:
Mary has held various senior positions in Imperial, since joining Imperial
in 1998.
External appointments:
Vice-Provost for Research and Enterprise and the Armourers and Brasiers’
Chair for Materials Science at Imperial, non-executive director of the UK
Atomic Energy Authority Board, Board member of the Francis Crick Institute
and Governing Board member of the Henry Royce Institute.
Alison Wood
Senior Independent Director
Committees
A
N
R
Clement Woon
Independent
non-executive Director
Committees
A
N
R
Jane Lodge
Independent
non-executive Director
Committees
A
N
R
Professor Mary Ryan
CBE FREng
Independent
non-executive Director
Committees
A
N
R
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Desired/required skills, experience, attributes
Ian
Marchant
Damien
Caby
Richard
Armitage
Jane
Aikman
Jane
Lodge
Mary
Ryan
Alison
Wood
Clement
Woon
Strategy development and oversight
Accounting and financial reporting oversight
Major change and transformation
Innovation, disruption and R&D
Materials science, semiconductor and other key growth materials
Engineering and Industrial sector
Leadership, commercial and business operations
Technology
Remuneration, talent and culture oversight
Corporate governance
International business
M&A/Portfolio management
Safety/Environmental/Sustainability
Risk management and assurance oversight
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
3/3
4/4
Damien Caby
2
6/6
2/2
1
2/2
1
3/3
1
Pete Raby
3
3/3
2/2
1
2/2
1
2/2
1
Richard Armitage
8/8
4/4
1
–
–
Jane Aikman
8/8
4/4
3/3
4/4
Helen Bunch
4
3/3
2/2
2/2
1/1
Jane Lodge
5
4/5
2/2
1/1
2/2
Mary Ryan
6
3/3
0/1
1/1
2/2
Alison Wood
8/8
3/4
3/3
4/4
Clement Woon
8/8
4/4
3/3
4/4
The table above shows individual attendance at Board and Committee meetings, out of the maximum possible number of meetings each Director could have attended.
1.
Attended by invitation.
2.
Damien Caby was appointed to the Board on 8 May 2025.
3.
Pete Raby resigned from the Board on 1 July 2025.
4.
Helen Bunch resigned from the Board on 8 May 2025.
5.
Jane Lodge was appointed to the Board on 1 June 2025. Jane was unable to attend a Board meeting because of a pre-existing commitment arranged before she was appointed to the Board.
6.
Professor Mary Ryan CBE FREng joined the Board on 1 November 2025. Mary was unable to attend an Audit Committee meeting because of a pre-existing commitment arranged before
she was appointed to the Board.
Board composition
Female
4
Male
4
Gender
Chair (independent
on appointment)
1
Executive Directors
2
Senior Independent
Director
1
Independent
non-executive Directors
4
Board balance of roles
Ethnic origin
White British
6
White European
1
Southeast Asian
1
Non-executive Director
tenure
0–3 years
4
4–6 years
1
7–9 years
1
Governance overview
60
The table below sets out the key areas of Board focus during the year and how these
align with the Group’s principal risks. It also highlights the key stakeholders considered
in the Board’s discussions and decision-making. Some of the principal decisions of the
Board during 2025 are included in the Strategic Report on pages 22 to 24.
Key Board focus areas during the year
Strategy and
operations
Board strategy discussions held to consider in-depth strategic direction, priorities and
investment (see case study on page 62)
CEO report presented to each Board meeting, including EHS&S, key stakeholder, technology
and innovation updates
EHS&S report, including safety performance and initiatives and progress against the
sustainability targets
Divisional business updates, including divisional strategy, performance, risks and opportunities
Deep dives on key customers for each division
Group structure considerations, including M&A strategy and MMS divestment
Deep dives on each of Morgan Advanced Materials’ strategic priorities
Updates on the IT transformation programme, cyber security posture and ERP roll-out
Approval of capital expenditure investment programme
Defence and shareholder activism strategy
People
and culture
Annual Board talent review and succession planning
Monitoring progress on the Group’s global diversity, equality and inclusion strategy
Update on employee engagement activities
Monitoring and embedding culture
‘Your Voice’ survey results
Finance
CFO report and financial performance update at each Board meeting, including KPI Dashboard
Investor relations updates
Interim and full-year results and trading updates
Interim and full-year report and accounts
Business planning review and 2026 budget approval
Interim and final dividends approval
Funding and refinancing, including pension funding update
Capital allocation, including share buyback programme updates
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
Key finance processes
Key to stakeholders
Investors
Customers
Suppliers
Employees
Communities
A
A
B
B
B
D
D
E
F
C
G
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Risk management
Reviews of principal risks, including risk profile and appetite
Review of internal controls framework and the preparations for Provision 29
Updates from management on whistleblowing cases
Emerging risk trends
Macro environment trends
Review of escalated significant operational risks, where required
Governance
Annual effectiveness review and evaluation
Annual Report and Accounts review and approval
Annual General Meeting
Company Secretary report including Litigation Updates
Modern Slavery Statement review and approval
Review of insurance programme and Directors’ Deed of Indemnity
UK Corporate Governance Code compliance
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
Key finance processes
Key to stakeholders
Investors
Customers
Suppliers
Employees
Communities
Board oversight
of cyber threat
Bi-annual updates from the Chief Information
Officer on the cyber security posture and IT
transformation programme covering:
progress of cyber security strategy and
IT transformation programme
updates on incidents and key industry developments
detailed progress updates on cyber risk reduction
programmes and key initiatives
insights provided on cyber threat landscape and
relevant threats linked to Morgan Advanced
Materials’ business and technology strategy
A
B
C
D
E
F
G
F
Board oversight of strategy
Board strategy discussions ahead of the December 2025 Strategy Update Event
Purpose
To review and agree the revised strategic plan, ahead of the Strategy Update Event in
December 2025.
To build on the Group’s strong foundations and develop a clear strategy that will drive higher margin
growth and unlock our potential to be the leading force in our chosen markets.
Process
The Directors shared their views about the direction of the strategy to enable the executive team to
incorporate this into their thinking for the refreshed plan in the Board meeting in May 2025.
The CEO outlined the process which would be used to review the strategy and the key questions
which would be addressed in the Board meeting in July 2025.
Two-day strategy away-day in September 2025, attended by the Board, Executive Committee,
members of the finance and strategy teams, to discuss the medium- and long-term strategy and
growth opportunities, including challenges and risks, and determine Morgan Advanced Materials’
key strategic levers.
The changes to the strategy, including the portfolio strategy and financial framework, were discussed
in the Board meeting in November 2025. Two further Board calls were held in November 2025 to
finalise the strategy and presentation for the Strategy Update Event.
Reviewing the
external context
The Board discussion was in the context of a challenging operating environment and downturn in some
of the Group’s key markets. This has been driven by macro-economic and geopolitical factors, including
newly introduced tariffs, inflationary pressures and political uncertainty across several key markets.
In this context, we considered the short-, medium- and long-term impact on our markets, supply chain
and stakeholders, as well as the impact on our sustainability strategy.
Confirming the
strategic options
We agreed that our revised strategic plan aims to create value for our shareholders by aligning with our
purpose and guiding us to:
Identify our three strategic levers for margin enhancing growth:
– Transform: Driving a step change in operational effectiveness by implementing new initiatives that
leverage group scale.
– Drive: Expanding our market share and addressable market by leveraging right to win and
upgrading our position in the value chain.
– Maximise: Actioning clear portfolio choices, aligned to capital allocation for margin enhancing
growth.
Adopt a sustainable capital structure to enable continued investment to sustain growth, and deliver
strong shareholder returns.
Enhance the experience of our customers and build strategic partnerships.
Outcomes and
next step
We agreed to make sure upcoming Board work includes:
Making sure innovation, cost optimisation and sustainability continues to underpin our strategy.
Reviewing the execution of the distinctive strategic mandates for each division.
Regularly reviewing our capital allocation framework to prioritise growth and returns.
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Monitoring and embedding 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
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 EHS&S 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 divisions, proposals for capital
expenditure, key risks and other ad hoc presentations to the
Board. This enables the Board to gauge ‘tone at the top’.
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 Audit
Committee reviewed the key themes and trends in the Speak Up
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.
Workforce engagement and survey – the non-executive
Directors heard directly from employees during employee
listening sessions held in 2025. Together with the annual
employee engagement survey, ‘Your Voice’, 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.
See page 64 and 65 for information on workforce engagement
See page 64 for information on the 2025 ‘Your Voice’ survey
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.
See page 81 to 89 for information on the Remuneration Policy
Sources of Morgan Advanced Materials Culture Insights and Metrics
received by the Board
(as identified in the 2024 Code Guidance)
Diversity, equity
and inclusion
initiatives
and strategy
Women in Leadership update
FTSE Women Leaders and Parker Review
submissions
Recruitment,
reward and
promotion decisions
Annual update on talent and leadership
development
Oversight of the Group reward and incentive
mechanisms
Gender pay reporting
Employee listening sessions on remuneration
Whistleblowing,
grievance and
‘Speak Up’
arrangements
and findings
Ethics reporting including compliance with
the Morgan Code and whistleblowing,
grievance and ‘Speak Up’ data
Employee surveys
and direct
engagement
‘Your Voice’ survey results
Employee listening sessions
Leadership Conference attendance
Board interaction
with senior
management
and workforce
Presentations from Executive Committee
members and their direct reports
Board site visits
Health and safety
incidents and near
misses
Health and safety performance reports
Promptness of
payments to
suppliers
Payments to suppliers report
Attitudes to
regulators,
internal audit
and employees
Discussions with the Head of Internal Audit,
Director of Ethics and Compliance and
Deloitte without the Executives present
Internal audit reports and report on review
of effectiveness of Internal Audit
Turnover,
absenteeism rates
and exit interviews
Attrition rates
Data analytics,
including learning
and development
Safety leading and lagging indicators
Ethics training completion rates
Survey response rates
Management KPIs
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.
64
Engaging with our workforce
The Board is at the forefront of the journey to Morgan Advanced Materials
having a winning culture and is keen to understand employee views and the
impact its decisions have on them.
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 65.
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 at 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 2024 Code. Its effectiveness will be kept under review.
Feedback received from employee listening sessions
Positive feedback
Improvement areas
Actions taken
Safety culture
Employees were very positive about the safety culture,
recognising the priority we give to health and safety.
They welcomed the continued focus of site and senior
management on their safety and wellbeing.
Some employees at one site felt that
the messaging and communication at
their site had become less prominent
over time and that it needed to be
reinforced.
In addition to actions taken specific to the site, a
company-wide reinforcement of the ‘thinkSAFE’
behaviour-based safety programme is being
undertaken. The ‘thinkSAFE’ leaders programme,
focused on-site leadership teams, and the process
safety programme are also underway.
Roll-out of the new ERP system
Employees welcomed the roll-out of the new ERP
system and the opportunities to further streamline
processes, improve efficiencies and collaboration.
The planned deployment of the system
should be further reviewed to ensure
the readiness of the sites. The teams at
the pilot site shared their learnings on
the deployment, identifying areas for
improvement.
The timetable for future deployments was reviewed.
The learnings from the deployment at the pilot site
were incorporated into the plans for future
deployments, including the need for increased
training and extended hypercare support post-
implementation.
Training and development
Several employees praised the access to training and
development opportunities at Morgan Advanced
Materials. Leadership development courses were
described as enabling collaboration across divisions,
functions and countries.
Some employees requested additional
training in areas such as artificial
intelligence (AI).
Better signposting of the training and development
opportunities including AI on the skills and
development platform, Skillsoft Percipio, would
be considered.
‘Your Voice’ survey
The ‘Your Voice’ survey 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’ 2025 was conducted in June 2025 as an all-employee digital survey. The outcome of the survey was
presented to the Board in July 2025. The overall engagement score was 75%, up from 52% in 2024, with a response rate of 81%
(2024: 81%). 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 Morgan Code, our strategy and the desired culture.
Focus is now on maintaining this momentum. Next steps and action plans were developed at Group, division and site levels.
Broad initiatives in response to the survey were communicated to our employees throughout the year.
Your Voice
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Engagement with employees and other stakeholders
Non-executive Directors and
employee listening activities
2025
Engagement with other stakeholders
Virtual listening session with
Technical Ceramics site employees
in Auburn, California, USA attended
by Helen Bunch and Ian Marchant.
Feb
Jane Aikman and Clement Woon
attended a virtual listening session
with Group Finance and Shared
Service Centre employees.
Mar
Apr
Following publication of the 2024 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 2024 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.
Site visits by Alison Wood to
Technical Ceramics sites in
Rugby, Stourport and Corby, UK
and Thermal Ceramics site in
St Marcellin, France.
May
The 2025 AGM was held in Windsor. 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.
Site visit by Jane Lodge to Thermal
Ceramics site in Augusta, Georgia,
USA.
Jun
Alison Wood and Jane Aikman
attended a virtual listening session
with the Performance Carbon team
in Martinsicuro, Italy.
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 2025 interim results.
Site visits by Jane Lodge to
Performance Carbon site in
Redditch, UK and Technical
Ceramics sites in Rugby and
Stourport, UK.
Ian Marchant and Jane Lodge
attended the Leadership
Conference.
Sep
Board site visit and listening
sessions with Performance Carbon
employees in Swansea, UK.
Nov
Following publication of the Q3 trading update, meetings were
held with institutional shareholders and potential investors.
Virtual listening session with
Thermal Products employees in
Tamil Nadu, India, attended by Ian
Marchant and Clement Woon.
Dec
Strategy Update Event to provide institutional investors and
analysts with updates on the revised strategy.
Ad hoc meetings
were held with
brokers and
institutional investors
throughout the year
Quarterly
leadership calls
held for the
senior leaders
with the CEO and
members of the
executive team
66
Assessing Board performance
Following the externally facilitated review in 2024, an internal review of the
Board’s performance was undertaken during the year, led by the Board Chair.
This year’s review built on the learnings and outputs from the
last three years’ performance reviews, and focused on the
following areas:
the Board’s strengths and areas for improvement
identification of important topics to be prioritised for discussion
by the Board
progress on the actions from the 2024 Board performance
review
committee effectiveness, considering factors such as
membership, meetings, work and remit.
The review was conducted by way of a bespoke questionnaire sent
to the Board, which collected both quantitative and qualitative data.
A report was produced and shared with the Board at its meeting in
December 2025, summarising the responses received, highlighting
areas for the Board’s consideration and recommended actions
which were agreed by the Board.
The Board Chair met with each of the Directors to discuss 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 2025.
Strengths identified
While there have been changes to the Board composition, it
has strong foundations. The Board Chair is an effective leader
and the Board has a good culture with a balance of cohesion
and challenge.
The Board’s work and approach to succession planning,
Board composition and renewal were areas rated highly by
respondents.
The Board’s approach to workforce engagement continues to be
a strength. The Board receives good insights and feedback from
these sessions, which help the Board to understand employee
sentiment and to have employee views in mind during Board
decision-making.
All Board members rated the progress made on the actions
arising from the 2024 external review highly, with all actions
from 2024 either complete or in progress.
Areas of focus and actions proposed
The Board calendar and agendas would be reviewed to ensure
that the topics suggested by the Board members are covered
in 2026.
More in-person employee engagement sessions would be
arranged to take place during Board site visits, in addition to
the virtual engagement sessions.
The Board site visits will cover on-site innovations and
technologies, to provide more insight into innovation,
technology and R&D.
Recommendations from the 2024 Board performance review
Actions taken during 2025
Pivot the Board’s composition more towards the strategic needs
of the business, now and for the future
The Nomination Committee was cognisant of the need to
focus on the strategic needs of the business when making its
recommendations to the Board for the appointment of Professor
Mary Ryan CBE FREng and Jane Lodge.
Enhance the customer updates provided to the Board
Deep dives were held on key customers for each division during
the year, covering what was working well, opportunities for
improvement and to enhance customer experience and build
strategic partnerships with our customers.
Further develop the Board training programme
The training requirements were discussed with each Director
during the year. Training provided included Value Creation from
Sustainability, Provision 29 Requirements, Product Stewardship
and Market Abuse Regulation Update.
Review the Board KPIs
The Board KPIs were enhanced and incorporated into the CFO
Reports to the Board.
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UK Corporate Governance Code
2024 compliance statement
Board leadership and Company purpose
A.
The role of the Board
The Board provides strategic and entrepreneurial leadership within a framework of strong governance, effective controls and an open and transparent culture.
Governance framework
Board
Audit Committee
See page 69
Nomination Committee
See page 75
Remuneration Committee
See page 78
Executive Committee
Drives Group and divisional strategic
implementation.
Delivers operational, financial and non-financial
performance.
Reviews health, safety and environmental
performance, drives improvement and embeds
the 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.
Approves arrangements with financial institutions.
Approves guarantees and indemnities.
Approves substantive intra-Group loans.
Approves intra-Group dividends and capital
restructuring.
Approves 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 2024 (‘the Code’), which is available at frc.org.uk, throughout the year ended
31 December 2025. The table below sets out how the Board has applied the Code principles during 2025.
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. The Board is responsible for defining our values and setting clear standards from the top. Information on how the
Board monitors and assesses culture can be found on pages 60 to 65.
C.
Governance reporting
Board decisions made during the year, the outcomes and the link to our strategy and objectives can be found on pages 22, 23, 60 and 61.
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 2025 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 60 to 65.
Further detail on how the Board considers the impact of decisions on relevant stakeholders can be found in our Section 172 statement on pages 22 to 24.
Engagement with our stakeholders can be found on pages 20 to 21 and an outline of the Board’s engagement with shareholders and our workforce can be found
on pages 60 and 65.
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. Information on how the Audit Committee reviews reports generated
from the disclosures and ensures that arrangements are in place for investigation and follow-up action as appropriate can be found on pages 72 - 73.
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. The 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.
Information on the Board’s activities in 2025 are set out on page 60, including
attendance on page 59.
A description of Morgan Advanced Materials’ business model is set out on
pages 8 and 9. An assessment of the principal risks facing the Group is included
on pages 41 to 45.
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.
68
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 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.
G and H.
Balance of the Board
The roles of the Chair and CEO are separate, with distinct accountabilities set out in their role profiles.
The expected time commitment of the Chair and non-executive Directors is agreed, set out in writing in a Letter of Appointment and has not changed during
the year. 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 was the case with the appointment of Jane Lodge and Professor Mary Ryan CBE FREng. 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.
The Board undertakes an annual review of the independence of each non-executive Director and in 2025 continued to consider each non-executive Director to
be independent.
I.
The Company Secretary
The Group Company Secretary ensures 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 process for the appointments of Jane Lodge and Professor Mary Ryan CBE FREng is set out on page 77. Information on succession planning can be found on
page 77.
All Directors retire at each AGM and may offer themselves for re-election or election by shareholders. With the exception of Jane Aikman who will be retiring
following the Company’s AGM in May 2026, all the Directors will retire at the 2026 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
Information on Board skills, experience and knowledge can be found on page 59.
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. The training provided during the year can
be found on page 66.
L.
Annual evaluation
A summary of the 2025 performance review can be found on page 66.
Audit, risk and internal control
M.
Audit functions
Information on the work of the Audit Committee can be found on pages 69 to 74.
N.
Fair, balanced and understandable assessment
The process which supports the Board’s confirmation that the Annual Report is fair, balanced and understandable is set out in the Audit Committee Report on
page 71.
O.
Risk management and internal control framework
Information on the risk management and internal control framework, as well as the extent and nature of the Group’s principal risks, can be found on pages 41
to 45.
The Board and Audit Committee monitor the Group’s risk management and internal control framework and conduct an annual review of its effectiveness.
See pages 72 to 73.
Remuneration
P.
Remuneration policies and practices
The Directors’ Remuneration Policy, approved by the shareholders in 2025, is set out on pages 81 to 89.
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 employees. No Director is involved in determining their own remuneration outcome.
See from page 78 for more information on the work of the Remuneration Committee.
R.
Remuneration outcomes
Details of remuneration outcomes can be found on pages 80 and 81.
UK Corporate Governance Code 2024 compliance statement
continued
Strategic Report
Governance
Financial Statements
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Annual Report 2025
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 divisional 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.
Further information on the matters considered by the Committee
throughout the year can be found on page 70.
Deloitte completed their sixth full audit of the Group, which was
James Hunter’s first year as lead audit partner. 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
internal Board performance review. The outcomes from the Board
performance review, including the Committee’s review, can be
found on page 66 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 2026 will be continuing
to monitor progress on our controls improvement activities and
readiness for reporting against Provision 29 of the 2024 Code from
the next financial year.
Jane Aikman
Committee Chair
I am pleased to present the Audit Committee Report for 2025, 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
(member
until 8 May 2025)
Jane Lodge
(member
from 1 June 2025)
Professor Mary Ryan
CBE FREng
(member
from 1 November 2025)
Alison Wood
Clement Woon
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. Jane Lodge will
take over as Committee Chair following the
AGM in 2026.
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 57 and 58.
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 59.
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.
70
Report of the Audit Committee
continued
Key activities in 2025
Financial reporting
Reviewed and discussed reports from the CFO on the financial statements, considered
management’s significant accounting judgements and the accounting 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. Further detail on the accounting policies can be found in note 1 to the
consolidated financial statements from page 124.
Reviewed the 2025 Annual Report and Accounts and provided a recommendation to the
Board that, as a whole, it complied with Provision 27 of the 2024 Code (see ‘Fair, balanced and
understandable reporting’ on page 71).
Received updates on the 2024 Code requirements including in relation to Provision 29.
Risk management and
internal controls
Reviewed the effectiveness of the Group’s risk management and internal control framework and
integration of the components of the framework into Board and Committee reporting, prior
to making a recommendation to the Board. The Committee also reviewed reports from the
Division 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
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 2025 and the internal audit plan and
approach for 2026.
Reviewed the quality and effectiveness of the internal audit function.
External audit
Approved the 2025 full-year audit plan. Oversaw the 2025 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 2025 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 2025 audit.
Reviewed and approved the non-audit services, and related fees, provided by Deloitte for 2025.
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.
Strategic focus areas
Transform
Drive
Maximise
Strategic Report
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Financial Statements
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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, complies with Provision 27 of the
2024 Code and is fair, balanced and
understandable and 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 108 and 109 of this Annual Report.
Significant matters
The Audit Committee gives attention to matters it considers to be
important by virtue of their size, complexity, level of judgement
required or potential impact on the financial statements and wider
business model, and matters pertaining to governance.
The Committee considered the significant matters set out below.
Papers were presented to the Committee by management,
setting out the relevant facts, material accounting estimates and
the judgements associated with each item. The external auditor
provided papers setting out its views on each key area of
judgement.
The Committee discussed the papers with management,
challenged the underlying assumptions and sought the views of
the external auditor on each matter. For each area of judgement
considered, following review and challenge, the Committee
concurred with the treatment adopted by management and the
related disclosure presented in the Annual Report.
Provision 29 readiness activities
A recurring item for the Board and the Committee has been the
business’s readiness activities to achieve compliance with
Provision 29. This provision is applicable to the Group for the
year ending 31 December 2026, requiring the Board to issue an
annual formal declaration on the effectiveness of material
internal controls. Management provided the Board and
Committee with activity updates throughout the year:
1. Gap analysis – review of the business’s current risk and
control frameworks to determine where these can be
leveraged or where enhancements are needed to meet the
requirements of the 2024 Code.
2. Risk management workstream – to review principal risks,
risk drivers and to develop the maturity of risk management
processes in targeted areas and continue to embed the risk
management framework.
3. Definition of ‘materiality’ for controls – proposed approach
agreed by the Committee, to be kept under review.
4. Identification and scoping of material controls – proposed
controls agreed by the Committee, to be kept under review.
5. Consolidated view of the designed material controls –
confirm ownership and documentation requirements and
implementation.
72
Report of the Audit Committee
continued
Risk management and internal control
The Group’s framework 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 framework and did so
again for the year under review. The review conducted in February
2026 comprised:
a review of the relevant Principles and Provisions in 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,
reporting and compliance controls, and risk management
systems, including the improvements achieved in 2025 and
identification of further areas for improvement.
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 framework 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
division and the Group leadership team.
The main features of the Group’s framework 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 division 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.
Significant matters and judgements
Impairment of non-financial
assets (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 disclosures are included in note 6 to the consolidated
financial statements.
Inventory valuation
At a number of our sites, local management used a manual
process to calculate the inventory provision as at 31 December
2025 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 is designed
to replicate the provision calculation that would have been
automated within our other ERP systems.
How the Committee addressed the issues
The Committee reviewed and considered the reasonableness of
the key assumptions that underpin the value-in-use calculations.
They considered the consistency of the key assumption against
other materials provided to the Board as part of routine
performance updates and the Strategic review process.
How the Committee addressed the issues
The Committee reviewed they key assumptions underpinning the
inventory valuation process and considered overall balance sheet
prudence. They considered the views of Deloitte on the matter.
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Financial Statements
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The divisional 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.
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. Divisional
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 divisional and Group perspective. The Executive Committee
collectively reviews the risk management and internal control
framework for all principal Group risks. The Group’s risk
management system, which is described in more detail on pages 41
to 45, supports the Directors’ statements on going concern and
viability on pages 53 and 54.
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 41 to 45.
Internal audit
The Group’s internal audit function provides objective assurance
of the adequacy and effectiveness of the risk management and
internal control framework. It may also 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 2025, the Committee reviewed the
effectiveness of the function by way of surveys completed by
Committee members and key management personnel. This is the
approach taken in those years that the review is not externally
facilitated. The last externally facilitated review was in 2024, and an
external review is recommended for 2029. 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. The outcome of the review was discussed
at the Committee’s meeting in December 2025. The Committee
is 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. The Committee
also monitored management’s response to internal audits during
the year. The Committee is satisfied that improvements are being
implemented promptly in response to the findings and believe that
management supports the effective working of the function.
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.
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Report of the Audit Committee
continued
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 its own work, make any management
decisions, create a mutuality of interest and/or put itself 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 Director of Finance. 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.
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 2025, the proportion of the auditor’s fees for non-audit work
relative to the audit fee was 0.3% (or £11,000), (2024: 1.2%).
Audit and non-audit fees paid to Deloitte are set out in note 4
to the consolidated financial statements, on page 137.
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 2025.
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 2026. The
Committee conducted a full review following the 2025 year
end to gather feedback and look for continuous improvement
opportunities. The Committee reviewed the effectiveness of the
external audit process, using a questionnaire which took into
consideration relevant professional and regulatory requirements,
and was completed by each divisional 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
the FRC’s Audit Quality Review findings for Deloitte for the
2024–25 cycle of reviews and Deloitte’s proposed actions to
address these findings as a firm. The conclusion of the FRC’s
regulatory inspection of the 2024 audit file resulted in no
key findings.
In addition to receiving written reports from the external auditor
and from management, the Audit Committee also conducted
private meetings with the external auditor and other meetings
separately with management. These meetings provided the
opportunity for open discussion and feedback on the audit process,
the responsiveness of management and the effectiveness of both
the internal and external audit teams.
Meetings with the external auditor included challenge from the
Committee around the efficiency and effectiveness of the audit
process, including use of data analytic techniques and opportunities
to place more reliance on controls as part of the audit approach.
Enhanced data analytic techniques were successfully implemented
during the year, with the objective of enhancing audit quality
alongside creating efficiencies in the audit process.
The Committee concluded that the external audit process in
respect of the financial statements for the year ended 31 December
2025 was effective. The Committee confirmed Deloitte’s
independence before recommending its reappointment for
approval by shareholders at the AGM on 7 May 2026.
External audit rotation
Deloitte was appointed by shareholders as the Group’s statutory
auditor in 2020 following a formal tender process. For 2025
Deloitte continued to provide external audit services to the Group.
This year was James Hunter’s first year as lead audit partner.
James Hunter took over from Jane Makrakis 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 and the recommendation is
free from third-party influence. 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. Following the Committee’s annual
assessment of the external auditor’s independence, objectivity and
effectiveness, no matters have been identified which would warrant
an earlier tender.
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’.
The activities taken to meet the requirements of the Minimum
Standard are set out throughout this Report.
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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.
We continued our search for non-executive Directors, to replace
Directors reaching the end of their nine-year tenure, and
recommended to the Board that it appoint two Directors during
the year – Jane Lodge (as Audit Committee Chair Designate) and
Professor Mary Ryan CBE FREng. Further details on the selection,
appointment and induction process can be found on pages 77.
Jane and Mary’s biographical details can be found on pages 58.
The Board and Committee oversaw the comprehensive induction
of, and handover of responsibilities to Damien Caby following his
appointment as CEO during the year. As President of the Thermal
Products business, Damien already had strong knowledge and
visibility of the Group and he took the opportunity to deepen his
knowledge of the other businesses through meetings with the other
divisional presidents and their teams, business reviews and visits to
their manufacturing sites. His induction also covered his additional
responsibilities as CEO. He also met with the Group’s stakeholders
including colleagues, major shareholders and advisors. Details of
the CEO succession process can be found on page 82 of the 2024
Annual Report.
The Board also 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 76 and 77
and details of our succession planning activities can be found on
pages 77.
The Committee’s performance was reviewed as part of this year’s
internal Board performance review, which I led, with areas for
development identified for the Committee and action plans agreed
at our meeting in February 2026. 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.
In 2026, our main areas of focus will be on continuing to support
Damien in his new role and ensuring that the new non-executive
Directors settle into their respective roles.
Ian Marchant
Committee Chair
I am pleased to present the Nomination Committee Report for 2025, 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.
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 57 and 58.
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 59.
The Committee’s terms of reference are available on the
Company’s website, morganadvancedmaterials.com.
Committee members
Ian Marchant
(Chair)
Jane Aikman
Helen Bunch
(member
until 8 May 2025)
Jane Lodge
(member
from 1 June 2025)
Professor Mary Ryan
CBE FREng
(member
from 1 November 2025)
Alison Wood
Clement Woon
76
Report of the Nomination Committee
continued
Key activities in 2025
Board and
Committee
composition
Continued a global search for independent non-executive Directors and considered potential Board candidates.
Recommended the appointment of two new non-executive Directors – Jane Lodge and Professor Mary Ryan
CBE FREng.
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 progress in meeting the target for the number of women in senior management and the target
for senior management positions to be occupied by ethnic minority executives by 2027.
Reviewed and endorsed updates to the Board’s skills matrix.
Board
performance
reviews
Monitored implementation of recommendations following the 2024 internal Board and Committee
performance reviews.
Carried out the 2025 internal performance review of the Board and its Committees.
Corporate
governance
Monitored the fulfilment of the requirements, principles and provisions of the 2024 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 2026 AGM.
Reviewed the Committee’s terms of reference.
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.
At 31 December 2025, the percentage of women on the
Group’s Executive Committee is 25%. 37% (2024: 33%) of senior
management, defined in accordance with the 2024 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.
Inclusion and Diversity Policy
The Board has agreed objectives for achieving gender, ethnic and
cultural diversity on the Board and its Committees.
The Board’s Inclusion and Diversity Policy (which also applies to
its committees) informs and steers 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
review and challenge the goals and progress of senior
management in improving inclusion and diversity.
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Annual Report 2025
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
deliver the revised strategy.
Non-executive Director appointments and
induction
During the year, the Committee continued to manage a phased
succession programme for non-executive Directors. 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.
The Committee devised candidate specifications for both roles.
The desired skills and experience included international experience,
materials science experience, technology expertise and an individual
with financial and/or auditing experience to take over the role of
Audit Committee Chair. Korn Ferry produced a longlist of candidates
for the roles. Shortlisted candidates were interviewed by Committee
members and later by other Board members.
Following recommendations by the Committee, Jane Lodge and
Professor Mary Ryan CBE FREng were appointed and received a
thorough induction, which included:
A comprehensive pack of documentation and materials relevant
to Morgan Advanced Materials’ business and each Director’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 division
strategy updates.
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. As Jane will
be taking on the role of Audit Committee Chair in 2026, her
induction also included additional meetings on risk management
and internal audit at Morgan Advanced Materials.
Their inductions also included visits to several sites, touring the
sites and participating in employee engagement sessions, to help
build their understanding of Morgan Advanced Materials’ business
and to hear directly from employees about their experience of
working at Morgan Advanced Materials.
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- 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.
Board and Executive Committee diversity
as at 31 December 2025
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
50
3
6
75
Women
4
50
1
2
25
Not specified/Prefer not to say
–
–
–
–
–
White British or other White (including minority-white groups)
7
87
4
8
100
Mixed/Multiple ethnic groups
–
–
–
–
–
Asian/Asian British
1
13
–
–
–
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.
Statement on compliance against regulatory Board diversity targets
The Board confirms that as at 31 December 2025, 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 6.6.6(9)(a) of the FCA’s UK Listing Rules (UKLRs) sourcebook.
As at that date, 50% 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 2025. There have been no changes to the Board’s diversity since 31 December 2025
and the date on which this Annual Report is approved.
78
The business delivered a resilient performance against a backdrop
of challenging markets in 2025. The year was characterised by
continued global economic and geopolitical uncertainty and a
difficult end-market environment impacting our performance.
Nonetheless, the Company continued its track record of self-help
with our business simplification and efficiency initiatives. The focus
is now on stability, growth and margin improvement. We are well
placed to benefit from rapid margin expansion as markets recover.
2025 Committee activity
As a Committee, we remain focused on ensuring that senior
executive remuneration is fit for purpose and aligned with the
interests of key stakeholders (our employees and shareholders in
particular), and that our governance practices and processes adhere
to the provisions of the UK Corporate Governance Code 2024.
During the year, the Committee met four times, with its
responsibilities including determination of incentive outcomes,
approving remuneration packages for the Company’s Chair and
Executive Directors, and reviewing the implementation of the
Group’s Remuneration Policy (which was approved by 97.9% of
shareholders at the 2025 AGM). This review concluded that the
current framework continues to support Group strategy and
culture, as well as providing strong alignment of Executive Director
and stakeholder interests. As a result, no changes are proposed to
our approach to implementing the policy in 2026. Further details
regarding the activities of the Committee can be found in the
‘Remuneration governance’ section at the end of this Report on
page 104.
2025 remuneration outcomes
Following a comprehensive review of performance in 2025 and the
drivers of these outturns, the Committee approved payouts of 57%
of the maximum bonus opportunity for the Executive Directors.
For the new CEO, this payout is based on the performance of the
Thermal Products division for the period 8 May to 30 June, and
Group performance from 1 July to 31 December following his
appointment as CEO. Bonuses for the CEO and CFO will be
deferred in line with Policy, and the Committee welcomes the
indication from the new CEO that a portion of the cash bonus
payable to him will be used to progress further his shareholding
in the Group. The former CEO will receive a pro-rated bonus
payment based on the proportion of the year worked. Further
details are set out on page 90.
Remuneration Report
I am pleased to present the Directors’ Remuneration Report for the year ended
31 December 2025, my first as Committee Chair. As in previous years, this
report is split into three sections: this Annual Statement, the Policy Report and
the Annual Report on Remuneration.
The Group continues to focus on delivering its strategic
objectives to ensure a strong platform for realising future
growth opportunities. The Remuneration Committee
seeks to ensure that reward is aligned with performance
outcomes and supports the Group in attracting and
retaining talent. We have been mindful of the stakeholder
experience, including of our employees who we are
focused on supporting fully, and we have also maintained
our focus on the safety measures that protect our
employees while they work. Our ‘thinkSAFE’ programme,
Morgan Code and Respect at Morgan are well-embedded
into the organisation, and we have continued to roll out
leadership development programmes to give our leaders
the skills necessary for them – and by extension the
Group – to succeed.
Committee members
Alison Wood
(Chair – from 8 May 2025)
Helen Bunch
(Chair – until 8 May 2025)
Jane Aikman
Ian Marchant
Clement Woon
Jane Lodge
(from 1 June 2025)
Professor Mary Ryan
CBE FREng
(from 1 November 2025)
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Annual Report 2025
As committed to in last year’s Report, the Committee also
reviewed the value at vesting (in May 2025) of the 2022 Long Term
Incentive Plan (LTIP) award to ensure that any gain reflected the
Group’s performance rather than a windfall due to general stock
market rises since the time of grant. As the vesting price was below
the original grant price, the Committee concluded that the value
realised on vesting of the 2022 LTIP award did not represent a
windfall gain.
The Committee also determined that the 2023 LTIP award will
partially vest, at 15% of the maximum for the new CEO (whose
2023 LTIP award was based on the performance of the Thermal
Products division). The 2023 LTIP awards for the CFO and former
CEO (this award being pro-rated for time) will also partially vest at
15%, based on performance against the Group targets set at the
time of their grant. The Committee will again review the value of
the 2023 LTIP award at vesting, to ensure that any gain reflects the
Group’s performance rather than a windfall due to general stock
market rises since the time of grant; however, the Committee
presently considers the risk of windfall gain unlikely given Morgan
Advanced Materials’ share price at the time of grant.
In all cases and in keeping with its usual approach, the Committee
reviewed the formulaically derived incentive outcomes in the
context of the Group’s underlying performance. Following a
rigorous discussion, the Committee concluded from this review
that a bonus outturn around target levels and modest vesting under
the 2023 LTIP appropriately reflects Morgan Advanced Materials’
underlying performance over the relevant time horizons and is
aligned with the stakeholder experience. As a result, the
Committee determined that no discretion needed to be applied
in respect of 2025 remuneration outcomes. In addition, the
Committee determined there was no requirement to enact its
Malus and Clawback Policy (as described in more detail in the
Policy on page 84) in 2025.
Implementation of Policy in 2026
Salary increases have been determined by the Committee in the
context of the continued performance of the Group in 2025, labour
market conditions, and the average salary increase awarded to the
wider workforce. The process for reviewing Executive Director
salaries takes into account individual and Group performance,
demonstration of the defined Leadership Behaviours and salary
position relative to the relevant market, and remains consistent with
the approach taken for the entire professional population. In this
context, the Committee determined to award salary increases of
4% for the CEO and 3% for the CFO (compared to the average
budgeted increases of 3.5% for colleagues in the wider UK
workforce with similar performance ratings to the CEO and CFO).
The CEO increase reflects the discount applied on appointment
and our previously disclosed intention to right-size his salary subject
to performance and development in role. The Committee also
approved a 3.5% increase to the Chairman’s fee, and the Chairman
and Executive Directors approved a similar 3.5% increase to the
non-executive Directors’ base fee for 2026.
The Committee also reviewed the structure of the annual bonus
and LTIP to ensure that the framework remains appropriately
aligned with our strategic aims and culture, motivates and
rewards management for delivering sustainable performance,
and supports retention.
No changes are proposed to the performance linkage of the annual
bonus for 2026 as measures remain aligned to Morgan Advanced
Materials’ key objectives, including ESG measures being covered in
the Executive Directors’ personal objectives and therefore reflected
in the personal performance element of the bonus. The annual
bonus performance ranges for adjusted operating profit* and
year-end working capital have been set to reflect the Group’s
budget as well as the continued economic volatility externally (and
the potential impact this may have on performance outcomes).
Annual bonus targets are considered to be commercially sensitive
at this time but will ordinarily be disclosed in next year’s
Remuneration Report. For the LTIP, carbon intensity targets will
be set at -3% to -7% carbon intensity reduction per year over the
three-year performance period, to balance our stated longer-term
ambition to reduce carbon emissions by 50% by 2030 (from a 2015
baseline) with our strategy to realise the Group’s growth potential
(which will increase absolute emissions even as the Group becomes
more efficient in its use of carbon). The EPS performance range for
the 2026 LTIP will be set at 7% to 13% annualised growth over the
three-year performance period. The Committee considers this to
be appropriately challenging in the context of the Group’s strategic
plan, external market factors and broker forecasts. No changes
are proposed to the Total Shareholder Return (TSR) benchmarks
and relative TSR performance range (median-upper quartile). It is
proposed to maintain the return on invested capital (ROIC)* range
for that element of the Executive Directors’ 2026 LTIP at 17% to
20%, to reflect our latest expectations for performance over the
three-year performance period.
Maximum annual bonus opportunities for 2026 will be unchanged
at 150% of salary. Following the one-off reduction to LTIP award
opportunities to recognise the Group’s cost-efficiency measures
last year, LTIP awards in 2026 will revert to their normal levels
of 175% of salary for the CEO (below the Policy limit, and the
award level for the former CEO) and 150% of salary for the CFO.
Details of the awards to be granted are set out on page 90.
This Report is consistent with the current reporting regulations for
Executive Director remuneration and, as in prior years, includes a
‘Remuneration at a glance’ section summarising the key elements of
Executive Director remuneration. I hope we have been successful
in continuing to achieve the clarity and transparency that will be
of help to our shareholders. The Committee believes that the
approach we adopt in implementing the Remuneration Policy
continues to drive the right behaviours and align closely with
strategy, the delivery of which will underpin success for all
stakeholders.
Alison Wood
Committee Chair
80
Components of remuneration
Salary
+
Pension and benefits
=
Fixed total
+
=
Total remuneration
Annual bonus
+
LTIP
=
Variable total
Key features of how our executive Remuneration Policy will be implemented in 2026
Fixed components
Base salary
Policy
Executive Directors’ salaries are generally reviewed
each January, with reference to individual and Group
performance, experience and salary levels at companies
of similar sector, size and complexity.
Damien Caby
(CEO)
€749,000
Richard Armitage
(CFO)
£487,680
Pension and other benefits
Pension
Benefits (estimated values)
Policy
Pension contributions (and/or cash in lieu thereof) for
Executive Directors are aligned with the level of
contributions available to the UK workforce. Other
benefits can include company car/car allowance,
health insurance and, where appropriate, relocation
allowances and other expenses.
Damien Caby
(CEO)
8% of salary
Damien Caby
(CEO)
€16,500
1
Richard Armitage
(CFO)
8% of salary
Richard Armitage
(CFO)
£14,023
Variable components, annual bonuses
Maximum opportunities
for 2026
Performance measures
weighting
Policy
Maximum award opportunity: 150% of base salary
Performance measures are set by the Committee at the
start of the year and are weighted to reflect a balance
of financial and strategic objectives. Up to 67% of
any annual bonus paid is delivered in cash with the
remainder deferred into shares and released after
a further period of three years. 50% of the bonus
opportunity is paid for on-target performance.
Damien Caby
(CEO)
150% of salary
Adjusted operating profit*
40%
Year-end working capital
40%
Strategic personal objectives
20%
Richard Armitage
(CFO)
150% of salary
LTIP
Maximum opportunities
for 2026
Performance measures
weighting
Policy
Maximum award opportunity: 200% of base salary
The award levels and performance conditions on which
vesting depend are reviewed prior to the start of each
award cycle to ensure they remain appropriate. Vested
shares are subject to a post-vesting holding period of
two years. The vesting of awards is usually subject to
continued employment and to the Group’s performance
over a three-year performance period. 25% of an
award vests for achievement of the threshold level
of performance.
Damien Caby
(CEO)
175% of salary
TSR vs FTSE All-Share
Industrials Index
15%
TSR vs peer group
15%
EPS growth
27.5%
Group ROIC*
27.5%
ESG (carbon intensity)
15%
Richard Armitage
(CFO)
150% of salary
1.
Excludes health insurance – payments are equivalent to employer national insurance contributions.
Remuneration at a glance
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Annual Report 2025
This Report covers the period 1 January 2025 to 31 December
2025 and provides details of how the Remuneration Committee
has operated and implemented the Remuneration Policy, approved
by shareholders at the 2025 AGM, during the year under review.
The proposed implementation of this Policy for the 2026 financial
year is summarised on page 86.
1. Policy report
Key principles of the Remuneration Policy
The Remuneration Committee aims to ensure that all executive
remuneration packages offered by Morgan Advanced Materials are
competitive and designed to promote the long-term success of
the Company by ensuring that we are able to attract, retain and
motivate Executive Directors and senior executives of the right
calibre to create value for shareholders.
The Committee ensures that a significant proportion of the
total remuneration opportunity is performance-related, with
an appropriate balance between short-term and long-term
performance, and is based on the achievement of measurable
targets that are relevant to, and support, the business strategy
through the execution of the Policy.
The Remuneration Committee keeps the Remuneration Policy
under periodic review to ensure it remains aligned with the
Group’s strategy, reinforces the Group’s culture, and is in line with
the principles set out in the UK Corporate Governance Code in
relation to Directors’ remuneration. This includes ensuring that
performance-related elements are transparent, stretching and
rigorously applied, as well as reflecting the views and guidance of
institutional investors and their representative bodies.
Summary of Morgan Advanced
Materials plc’s Remuneration Policy
This section of the Report sets out the current Remuneration Policy
for Executive Directors and non-Executive Directors. This Policy
remains unchanged (except for the minor updates outlined below)
from that which was approved by shareholders at the Company’s
AGM on 8 May 2025, and which is effective for a period of up to
three years from that date. The only updates to the Policy report
published in the 2024 Annual Report are: (i) page numbers; (ii)
the section on performance measure selection (which has been
updated to relate to 2026 incentive cycles); (iii) the pay scenario
charts (which have been updated to reflect the implementation of
Policy for the 2026 financial year): and (iv) the inclusion of service
contract and letter of appointment details for new Directors.
Pay at risk
Illustrations of the potential future reward opportunity for Executive Directors, and the potential mix between the different elements
of remuneration under different performance scenarios can be found on page 86.
Shareholding requirements
Damien Caby (CEO) 200% of salary
(current shareholding 23.5%)
Richard Armitage (CFO) 200% of salary
(current shareholding 102%)
1.
Excludes health insurance – payments are equivalent to employer national insurance contributions.
Annual bonus
35%
LTIP
40%
Variable
75%
Fixed
25%
Damien Caby (as CEO)
1
Annual bonus
36.5%
LTIP
36.5%
Variable
73%
Fixed
27%
Richard Armitage
82
Remuneration Report
continued
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Fixed pay
Base salary
Provides the fixed
element of the
remuneration package.
Set at competitive levels
against the market.
Base salaries are generally
reviewed each January, with
reference to an individual’s
performance (and that of
the Group as a whole), their
experience, and the range
of salary increases applying
across the Group.
The Committee also considers
salary levels at companies of
similar sector, size and complexity
when determining increases.
Our policy is to pay salaries that are broadly
market-aligned, with increases applied in
line with the outcome of the annual review.
Salaries in respect of the year under review
(and for the following year) are disclosed
in the Annual Report on Remuneration.
Salary increases for Executive Directors will
normally be within the range of increases
for the general employee population
over the period of this Policy. Where
increases are awarded in excess of those
for the wider employee population,
for example in instances of sustained
strong individual performance, if there
is a material change in the responsibility,
size or complexity of the role, or if an
individual was intentionally appointed on
a below-market salary, the Committee
will provide the rationale in the relevant
year’s Annual Report on Remuneration.
An Executive Director’s performance
(and that of the Group as a whole)
and also their demonstration of the
defined Leadership Behaviours, are
taken into account when making
decisions in relation to base salary.
Pension
Provides post-retirement
benefits for participants
in a cost-efficient
manner.
Defined contribution
scheme (and/or a cash
allowance in lieu thereof).
Contributions (or cash in lieu thereof)
are – and, for any new appointments, will
be – aligned with the level of contribution
available to the UK workforce at that time.
Not applicable.
Benefits
Designed to be
competitive in the
market in which the
individual is employed
and to reflect individual
circumstances.
Can include company car/car
allowance, health insurance and,
where appropriate, relocation
allowances and other expenses.
Benefits and their values vary by role and are
reviewed periodically relative to the market.
It is not anticipated that the cost of
benefits provided will change materially
year-on-year over the period for
which this Policy will apply.
The Committee retains the discretion
to approve a higher cost in exceptional
circumstances (for example, relocation
expenses, expatriate allowances, etc) or in
circumstances where factors outside the
Group’s control have changed materially (for
example, market increases in insurance costs).
Benefits in respect of the year under
review are disclosed in the Annual
Report on Remuneration.
Not applicable.
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Purpose and link to strategy
Operation
Opportunity
Performance metrics
Variable pay
Annual bonus
Provides a direct link
between annual
performance and
reward.
Incentivises the
achievement of specific
goals over the short
term that are also aligned
to the long-term
business strategy.
Deferred bonus
supports retention and
provides additional
alignment with the
interests of shareholders.
Performance measures are set
by the Committee at the start
of the year and are weighted
to reflect a balance of financial
and strategic objectives.
At the end of the year, the
Remuneration Committee
determines the extent to which
these have been achieved.
To the extent that the
performance criteria have been
met, up to 67% of the resulting
annual bonus is paid in cash. The
remaining balance is deferred into
shares and released after a further
period of three years, subject to
continued employment only.
Cash and deferred share bonuses
awarded for performance will be
subject to malus and clawback until
the end of the deferral period.
Further details of our Malus and
Clawback Policy are set out below.
Dividends may accrue over the
deferral period on deferred
shares that vest. Any dividends
that accrue will be paid in shares
at the end of the vesting period.
Up to 150% of salary.
The payout for threshold performance
may vary year-on-year but will not exceed
25% of the maximum opportunity.
Bonuses for the Executive Directors
may be based on a combination of
financial and non-financial measures.
The weighting of non-financial
performance will be capped at 30%
of the maximum opportunity.
The Committee retains discretion
to adjust the bonus outcome if
it considers that the payout is
inconsistent with the Company’s
underlying performance when
taking into account any factors
it considers relevant.
Further details are set out in the
Annual Report on Remuneration
on pages 89 to 104.
Long-Term Incentive
Plan (LTIP)
Aligns the interests
of executives and
shareholders with
sustained long-term
value creation.
Incentivises participants
to manage the business
for the long term and
deliver the Company’s
strategy.
The Remuneration Committee
has the authority each year to
grant an award under the LTIP.
The award levels and performance
conditions on which vesting
depends are reviewed prior to the
start of each award cycle to ensure
they remain appropriate. Vested
shares are subject to a post-vesting
holding period of two years.
Awards are subject to malus and/
or clawback for a period of five
years from the date of grant.
Further details of our Malus and
Clawback Policy are set out below.
Dividends may accrue on vested
shares during the holding period.
Under the Policy, the LTIP provides
for a conditional award of shares up to
an annual limit of 200% of salary.
25% of an award vests for achievement
of the threshold level of performance.
The vesting of awards is usually
subject to continued employment
and the Group’s performance
over a three-year performance
period. This is currently based
on a combination of TSR, EPS,
ROIC* and ESG measures.
The Committee has discretion to
extend the performance period
and adjust the measures, their
weighting, and performance
targets prior to the start of each
cycle, to ensure they continue to
align with the Group’s strategy.
The Committee also retains
discretion to adjust the vesting
outcome if it considers that the level
of vesting is inconsistent with the
Company’s underlying performance
when taking into account any
factors it considers relevant.
Further details of the measures
attached to the LTIP awarded in
the year under review (and the
coming year) are set out in the
Annual Report on Remuneration
on pages 89 to 104.
84
Remuneration Report
continued
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Sharesave
A voluntary scheme,
open to all UK
employees, which aligns
the interests of
participants with those of
shareholders through
any growth in the value
of shares.
An HMRC-approved scheme
where employees may save
up to a monthly savings limit
out of their own pay towards
options granted at up to a 20%
discount. Options may not be
exercised for three years.
Up to the savings limit as determined
by HMRC from time to time, across
all Sharesave schemes in which
an individual has enrolled.
None.
Malus and Clawback Policy
Malus and clawback will apply to the annual bonus and LTIP (as set
out above) in cases of error in determining performance, corporate
failure, misconduct or material misstatement in the published
results of the Group or where, as a result of an appropriate review
of accountability, a participant has been deemed to have caused in
full or in part a material loss for the Group as a result of reckless,
negligent or willful actions or inappropriate values or behaviour,
including (but not limited to) significant breaches of EHS codes,
fraud, or other events which may cause serious reputational
damage. Cash bonuses will be subject to clawback, with deferred
shares subject to malus over the deferral period. LTIP awards are
subject to malus and clawback over the vesting period to the fifth
anniversary of grant. These timeframes reflect the periods over
which the Company’s processes and systems are likely to uncover
any of the listed trigger events.
Payments under existing awards
The Company will honour any commitment entered into, and
Directors will be eligible to receive payment from any award
granted, prior to the approval and implementation of the
Remuneration Policy detailed in this Report (that is, before 8 May
2025), even if these commitments and/or awards fall outside the
above Policy. The Company will also honour any commitment
entered into at a time prior to an individual becoming a Director
if, in the opinion of the Committee, the payment was not in
consideration of the individual becoming a Director of the
Company. Details of these awards will be disclosed in the
Annual Report on Remuneration.
Difference in policy between Executive
Directors and other employees
The Remuneration Policy for other employees is based on
principles broadly consistent with those described in this Report
for the Executive Directors’ remuneration. Annual salary reviews
across the Group take into account individual and business
performance, demonstration of the defined Leadership Behaviours,
experience, local pay and market conditions, and salary levels for
similar roles in comparable companies. All executives are eligible
to participate in an annual bonus scheme. Opportunities and
performance measures vary by organisational level, geographical
region and an individual’s role. Other senior executives participate
in the LTIP on similar terms to the Executive Directors, although
award sizes and performance measures may vary according to each
individual, and by organisational level. Below this level, executives
are eligible to participate in the LTIP and other share-based
incentives by annual invitation.
Use of discretion
To ensure fairness and align Executive Director remuneration with
underlying individual and Group performance, the Committee
may exercise its discretion to adjust, upwards or downwards, the
outcome of any short- or long-term incentive plan payment (within
the limits of the relevant Plan Rules) for corporate or exceptional
events including, but not limited to: corporate transactions; changes
in the Group’s accounting policies; minor or administrative matters;
internal promotions; external recruitment; and terminations. Any
adjustments in light of corporate events will be made on a neutral
basis, meaning that they will not be to the benefit or detriment
of participants.
Any use of discretion by the Committee during the financial year
under review will be detailed in the relevant Annual Report on
Remuneration.
Strategic Report
Governance
Financial Statements
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/
Annual Report 2025
Performance measure selection
The Committee considers carefully the selection of performance
measures at the start of each performance cycle, taking into
consideration the macro-economic environment as well as specific
Group strategic objectives.
Annual bonus measures are selected to reinforce the Group’s
short-term KPIs. Because these can change from year to year (in
line with the Remuneration Policy), information on the rationale
for the selection of bonus measures for each year will be detailed
in the relevant year’s Annual Report on Remuneration.
LTIP performance measures are reviewed periodically to ensure
they continue to align with the Company’s strategy, as well as
provide an appropriate balance between growth and returns,
internal and external performance, and absolute and relative
performance.
For 2026 awards, the TSR element of the LTIP award will continue
to comprise two parts. One-half of the TSR element will vest
subject to the Group’s performance relative to a TSR benchmark
comprising the 77 constituents of the FTSE All-Share Industrials
Index, as at the start of the performance period.
This benchmark is robust to merger and acquisition activity and
comprises companies that are subject to the same market
influences as Morgan Advanced Materials plc. The remaining half of
the TSR element will vest subject to our performance relative to a
TSR benchmark comprising 15 listed international carbon, ceramics
and other materials companies. This benchmark was selected to
complement the FTSE All-Share Industrials Index with a group of
companies that better reflect our business, the markets in which
we operate and the geographical footprint of the Group. For each
part of the TSR award, the vesting performance range is calibrated
to be stretching and in line with common market practice for FTSE
TSR-based long-term incentives.
EPS targets are set taking account of multiple relevant reference
points, including internal forecasts, external expectations for future
EPS performance at both Morgan Advanced Materials plc and its
closest sector peers, and typical EPS performance ranges at other
FTSE 350 companies. LTIP EPS performance ranges are set to
represent demanding and challenging performance targets over
the three-year performance period.
ROIC* targets are set using a similar approach to the EPS targets,
after consideration of external reference points and reflecting
the returns required to meet and exceed the Group’s internal
strategic plan.
The ESG measure is based on carbon intensity, with targets aligned
to Morgan Advanced Materials’ overall strategic goals.
Share ownership guidelines
In order to encourage alignment with shareholders, Executive
Directors are required to build and maintain an individual
shareholding in the Company equivalent to at least 200% of base
salary. The required level of shareholding is expected to be
achieved within five years of an Executive Director’s appointment.
Executive Directors’ shareholdings are reviewed annually by the
Committee to ensure progress is being made towards achievement
of the guideline level of shareholding. If it becomes apparent to
the Committee that the guideline is unlikely to be met within the
timeframe, the Committee will discuss with the Director a plan to
ensure that the guideline is met over an acceptable timeframe.
From 2019, Executive Directors have also been subject to a
post-employment shareholding requirement. Executive Directors
are required to hold shares at a level equal to the lower of the
share ownership requirement or the actual shareholding on
departure for a period of one year from departure date. The
Group’s relatively short business cycle ensures the Board has good
visibility within a 12-month period of the quality of decision-making
and, in addition, unvested awards for good leavers subsist to the
normal vesting date (albeit pro-rated for time), ensuring incentive
outcomes remain linked to the Group’s performance beyond
the date of cessation. The Committee retains the discretion to
modify the post-employment shareholding requirement in certain,
extraordinary circumstances; for example, on a change of control
during the period, or if a conflict of interest arises with an Executive
Director’s next appointment.
Current Executive Director shareholdings are set out in the Annual
Report on Remuneration on page 101.
External appointments
With the approval of the Board in each case, and subject to the
overriding requirements of the Group, Executive Directors may
accept external appointments as non-executive Directors of
other companies and retain any fees received. Details of external
directorships held by Executive Directors along with fees retained
are provided in the Annual Report on Remuneration on pages 89
to 104.
86
Remuneration Report
continued
Pay for performance: scenario analysis
The graphs below provide detailed illustrations of the potential future reward opportunity for Executive Directors, and the potential mix
between the different elements of remuneration under four different performance scenarios: ‘Below threshold’, ‘Target’, ‘Stretch’ and
‘Stretch with 50% share price increase. These have been updated to illustrate the potential opportunity under the 2026 packages
approved for Executive Directors.
0
1,000
2,000
3,000
4,000
€3,915k
21%
29%
50%
25%
48%
33%
19%
100%
34%
40%
€3,260k
€1,715k
€825k
Damien Caby (CEO)
Below threshold
Target
Stretch
Stretch with 50%
share price increase
0
500
1,000
1,500
2,000
2,500
£2,370k
23%
31%
46%
27%
50%
34%
17%
100%
37%
37%
£2,004k
£1,089k
£541k
Richard Armitage (CFO)
Below threshold
Target
Stretch
Stretch with 50%
share price increase
Fixed total (base salary, pension and benefits)
Annual bonus
LTIP
The potential reward opportunities illustrated above are based on the Policy, applied to the annualised base salary in effect at 1 January
2026. For the annual bonus, the amounts illustrated are those potentially receivable in respect of performance for 2026 (before mandatory
deferral into shares). The LTIP is based on the face value of awards to be granted in 2026 (175% of salary for the CEO and 150% for the
CFO). It should be noted that any awards granted under the LTIP in a year do not normally vest until the third anniversary of the date
of grant. This illustration is intended to provide further information to shareholders on the relationship between executive pay and
performance. The value of the LTIP assumes no change in the underlying value of the shares once an award is made, apart from in the
‘Stretch with 50% share price increase’ scenario. The following assumptions have been made in compiling the above charts:
Scenario
Annual bonus
LTIP
Fixed pay
Stretch with 50%
share price increase
Maximum annual bonus
Performance warrants full
vesting (100% of the award).
LTIP award value has additionally
been uplifted by 50%.
Latest disclosed base salary,
pension and benefits.
Stretch
Maximum annual bonus
Performance warrants full
vesting (100% of the award).
Target
On-target annual bonus
Performance warrants threshold
vesting (25% of the award).
Below threshold
No annual bonus payable
Nil vesting.
Details of Executive Directors’ service contracts
The Executive Directors are employed under contracts of employment with Morgan Advanced Materials plc. Contracts may be terminated
on 12 months’ notice given by the Company or on six months’ notice given by the Executive Director concerned. The following table
shows the date of the contract for each Executive Director who served during the year:
Executive Director
Position
Date of appointment
Date of service
agreement
Notice period
1
From employer
From employee
Damien Caby
CEO
1
1 July 2025
15 January 2025
12 months
6 months
Richard Armitage
CFO
30 May 2022
16 September 2021
12 months
6 months
Pete Raby
Former CEO
(stepped down from
the Board 01.07.25)
1 August 2015
30 January 2015
12 months
6 months
1.
Damien Caby was appointed as an Executive Director and CEO Designate on 8 May 2025 and became CEO on 1 July 2025.
Strategic Report
Governance
Financial Statements
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Annual Report 2025
Exit Payments Policy
The Group’s policy on exit payments is to limit severance payments
on termination to pre-established contractual arrangements
comprising base salary and any other statutory payments only.
In the event that the employment of an Executive Director is
terminated, any compensation payable will be determined in
accordance with the terms of the service contract between
the Company and the employee, as well as the rules of any
incentive plans.
The Group may terminate the employment of an Executive
Director by making a payment in lieu of notice equal to base salary,
together with the fair value of any other benefits to which the
executive is contractually entitled under their service agreement,
for the duration of the notice period.
The Remuneration Committee will exercise discretion in making
appropriate payments in the context of outplacement or the settling
of legal claims or potential legal claims by the departing Executive
Director, including any other amounts reasonably owing to the
Executive Director, for example, to meet legal fees incurred by
the Executive Director in connection with the termination of
employment, where the Company wishes to enter into a
settlement agreement and the individual must seek independent
legal advice.
On termination of an Executive Director’s service contract, the
Remuneration Committee will consider the departing Director’s
duty to mitigate their loss when determining the timing of any
payment in lieu of notice. There is no automatic entitlement to
bonus or the vesting of long-term incentives on termination.
However, the table that follows summarises the Policy on how
awards under the annual bonus, LTIP and Deferred Bonus Plan
will normally be treated in specific circumstances, with the final
treatment remaining subject to Committee discretion.
Treatment of awards on cessation of employment and a change of control
Reason for cessation
Calculation of vesting/payment
Time of vesting
Annual bonus
All reasons
The Committee may determine that a bonus is payable on cessation of employment, and the
Committee retains discretion to determine that the bonus should be paid wholly in cash. The
amount of bonus payable will be determined in the context of the time served during the
performance year, the performance of the Group and of the individual over the relevant period,
and the circumstances of the Director’s loss of office. If Group or individual performance has been
poor, or if the individual’s employment has been terminated in circumstances amounting to
misconduct, no bonus will be payable.
Mandatory deferred bonus share awards
Injury, disability, death, redundancy,
retirement, or other such event as
the Committee determines
Awards will normally vest in full (that is, not pro-rated
for time).
At the normal vesting date, unless the
Committee decides that awards should
vest earlier (for example, in the event
of death)
Change of control
Awards will normally vest in full (that is, not pro-rated for
time). Awards may alternatively be exchanged for
equivalent replacement awards, where appropriate.
On change of control
All other reasons
Awards normally lapse.
Not applicable
LTIP awards
Injury, disability, death, redundancy,
retirement, or other such event as
the Committee determines
Awards will normally be pro-rated for time and will vest
based on performance over the original performance
period (unless the Committee decides to measure
performance to the date of cessation).
At the normal vesting date, unless the
Committee decides that awards should
vest earlier (for example, in the event
of death)
Change of control
LTIP awards will be pro-rated for time and will vest
subject to performance over the performance period to
the change of control. LTIP awards may alternatively be
exchanged for equivalent replacement awards, where
appropriate.
On change of control
All other reasons
Awards normally lapse.
Not applicable
The Remuneration Committee retains discretion, where permitted by the plan rules, to alter these default provisions on a case-by-case
basis, following a review of circumstances and to ensure fairness for both shareholders and participants.
88
Remuneration Report
continued
Approach to recruitment remuneration
External appointment
In cases of hiring or appointing a new Executive Director from outside the Group, the Committee may make use of all existing
components of remuneration, as follows:
Pay element
Policy on recruitment
Maximum
Salary
Based on: the size and nature of the responsibilities of the proposed role, current
market pay levels for comparable roles, the candidate’s experience, implications for total
remuneration, internal relativities, and the candidate’s current salary.
–
Pension
Option to join the defined contribution scheme available to the wider workforce. If the
Executive Director is ineligible to join the standard defined contribution scheme, the
Company may grant a cash allowance of equivalent value.
In line with
Policy limits.
Benefits
As described in the Policy table and may include, but are not limited to, car, medical
insurance, and relocation expenses and/or allowances.
–
Sharesave
New appointees will be eligible to participate on identical terms to all other UK
employees.
Up to HMRC limits.
Annual bonus
As described in the Policy table and typically pro-rated for the proportion of the year
served; performance measures may include strategic and operational objectives tailored
to the individual in the financial year of joining.
Up to 150% of salary.
LTIP
New appointees may be granted awards under the LTIP on similar terms to other
executives.
Up to 200% of salary.
Other
The Remuneration Committee may make an award under a different structure under
the relevant Listing Rule to replace incentive arrangements forfeited on leaving a
previous employer. Any such award would have a fair value no higher than that of the
awards forfeited, taking into account relevant factors including performance conditions,
the likelihood of those conditions being met and the proportion of the vesting period
remaining. Details of any such award will be disclosed in the first Annual Report on
Remuneration following its grant.
–
Internal promotion to the Board
In cases of appointing a new Executive Director via internal promotion, the Policy will be consistent with that for external appointees
detailed above. Where an individual has contractual commitments made prior to their promotion to Executive Director, the Company
will continue to honour these arrangements, even if there are instances where they would not otherwise be consistent with the prevailing
Executive Director Remuneration Policy at the time of promotion.
Chairman and non-executive Directors’ Remuneration Policy
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Annual fee
1
To attract and retain
high-calibre non-executive
Directors.
Annual fees paid to the Chairman and
non-executive Directors are reviewed
periodically. An additional fee is payable to
the Senior Independent Director, and also
in respect of chairing a Board Committee.
Currently paid 100% in cash.
Annual fees are applied in
line with the outcome of
each periodic review.
None.
1.
The maximum aggregate annual fee for all non-Executive Directors (including the Chairman) as provided in the Company’s Articles of Association is £750,000.
None of the non-executive Directors has a service contract with the Company. They do have letters of appointment. The non-executive
Directors do not participate in any of the incentive, share or share option plans. The dates relating to the appointments of the Chairman
and non-executive Directors who served during the reporting period are as follows:
Non-executive
Director
Position
Date of appointment
Date of letter
of appointment
Date of
election/re-election
Ian Marchant
Chairman
1 February 2023
17 January 2023
8 May 2025
Helen Bunch
Non-executive Director (until 8 May 2025)
24 February 2016
19 January 2016
9 May 2024
Alison Wood
Senior Independent Director
1 November 2024
23 July 2024
8 May 2025
Jane Aikman
Non-Executive Director
31 July 2017
27 April 2017
8 May 2025
Clement Woon
Non-Executive Director
10 May 2019
7 May 2019
8 May 2025
Jane Lodge
Non-Executive Director
1 June 2025
27 February 2025
n/a
Professor Mary Ryan CBE FREng
Non-Executive Director
1 November 2025
3 October 2025
n/a
Strategic Report
Governance
Financial Statements
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Annual Report 2025
89
Consideration of stakeholder views
The executive management team seeks to promote and maintain
good relations with employee representative bodies – including
trade unions and works councils – as part of its broader employee
engagement strategy, and consults on matters affecting employees
and business performance as required in each case by law and
regulation in the jurisdictions in which the Group operates. When
making decisions on executive remuneration, the Committee
considers the pay and employment conditions across the Group.
Engagement with employees on remuneration is currently achieved
through non-executive Director employee listening sessions where
employees have the opportunity to raise issues. The non-executive
Directors held several employee listening sessions in 2025, to
ensure that the Board understands the views of employees and
the impact its decisions have on them. They engaged with the
employees on a broad range of topics, including reward and
benefits. Details of these employee sessions can be found on
pages 64 and 65. In addition, we undertake an annual engagement
survey, ‘Your Voice’, in order to better understand the views of a
wider range of employees. The engagement survey includes a
range of specific questions on the Company’s pay practices and
presents an opportunity for the workforce to share feedback
and ask its own questions about employee or executive reward.
Through the feedback from the engagement survey, supplemented
with the learnings from the employee listening sessions, the views
of Morgan Advanced Materials’ employees are represented at
Board and Remuneration Committee meetings. This enables the
Remuneration Committee to take into account those views when
considering executive remuneration and the pay and employment
conditions throughout the wider workforce.
In the UK, engagement is further facilitated by the Sharesave
programme, which enables UK employees to become shareholders
and provides them with the same voting rights as other
shareholders in relation to resolutions for approval at the AGM
(and which include executive remuneration matters). Prior to the
annual salary review, the Committee is provided with pay increase
data that individual business units consider when deciding local
pay awards for their specific businesses and countries. The
Committee is also kept fully informed of Remuneration Policy
and implementation decisions affecting the wider workforce.
This important context forms part of the Committee’s
considerations for determining Executive Director remuneration.
The Committee considers shareholder views received during
the year and at the AGM each year, as well as guidance from
investor representative bodies more broadly, when shaping and
implementing Morgan Advanced Materials’ Remuneration Policy.
The Committee keeps the Remuneration Policy under regular
review, to ensure it continues to reinforce the Group’s long-term
strategy and aligns Executive Directors’ interests with those of
shareholders. It is the Committee’s policy to consult with major
shareholders prior to any major changes to its Remuneration Policy.
During the year, the Remuneration Committee Chair wrote to
the top 20 shareholders to understand their views on our
approach to the 2025 Remuneration Policy and Executive Director
remuneration in general, ahead of the Policy being put to a
shareholder vote at the 2025 AGM.
During 2025, the Board received updates on matters concerning
the global defined benefit pension schemes.
The following section provides details of how the Remuneration Policy was implemented during 2025 and will be implemented in 2026.
Single total figure of remuneration for Executive Directors (audited)
The table below sets out a single figure for the total remuneration received by each Executive Director for the year ended 31 December
2025 and the prior year.
Damien Caby 1 |
Pete Raby 2 |
Richard Armitage |
||||
2025 |
2024 |
2025 |
2024 |
2025 |
2024 |
|
1. Salary |
€428,102 |
n/a |
£333,785 |
£645,000 |
£473,470 |
£459,680 |
2. Pension |
€28,800 |
n/a |
£26,703 |
£51,600 |
£37,878 |
£36,774 |
3. Benefits |
€10,690 |
n/a |
£7,447 |
£14,642 |
£14,023 |
£13,579 |
Fixed pay subtotal |
€467,592 |
n/a |
£367,935 |
£711,242 |
£525,371 |
£510,033 |
4. Bonus |
€366,027 |
n/a |
£285,386 |
£580,500 |
£404,817 |
£393,026 |
5. LTIP |
€32,518 |
n/a |
£114,064 |
£238,117 |
£68,610 |
£118,259 |
6. Other |
– |
n/a |
– |
– |
£1,825 |
– |
Variable pay subtotal |
€398,545 |
n/a |
£399,450 |
£818,617 |
£475,252 |
£511,285 |
Total |
€866,137 |
n/a |
£767,385 |
£1,529,859 |
£1,000,623 |
£1,021,318 |
1.
Damien Caby joined the Board on 8 May 2025 as an Executive Director and CEO Designate and was appointed as CEO on 1 July 2025. His remuneration for 2025 reflects the period
8 May to 31 December 2025, with the exception of LTIP which reflects the full value of the 2023 LTIP award (awarded prior to his appointment as an Executive Director, and based on his
prior business unit results) that is expected to vest during 2026. His 2023 LTIP award value has been converted to EUR using the three-month average exchange rate to 31 December 2025.
2.
Pete Raby stepped down from the Board on 1 July 2025 and retired from the Group on 31 August 2025. His remuneration for 2025 in the table above reflects the period 1 January to
1 July 2025, with the exception of the LTIP which reflects the full value of the pro-rated 2023 LTIP award that is expected to vest during 2026.
Remuneration Report
continued
90
The figures have been calculated as follows:
1. Base salary: amount earned for the year.
2.
Pension: the figure is a cash allowance in lieu of pension (8% of
base salary, aligned with the level of contributions available to the
UK workforce). For the period 8 May to 30 June, Damien Caby
received statutory social security contributions in line with the
wider workforce in Germany.
3.
Benefits: the taxable value of benefits received in the year.
Includes private medical insurance, company car (or car
allowance) and commuting.
4.
Bonus: the total bonus earned for performance during the year
(before any mandatory deferral into shares). In accordance with
the Remuneration Policy, 67% of the amount shown above will
be paid in cash, with the remaining 33% deferred into shares
for three years. Pete Raby was eligible for a pro-rata bonus in
relation to the 2025 financial year – his payment will be made
wholly in cash in line with the Remuneration Policy and past
practice, and recognising the meaningful level of ongoing share
ownership that he built up in the Group’s shares. Damien
Caby’s 2025 bonus payment is based on the performance of the
Thermal Products division for the period up to 30 June, and on
Group performance (on the same basis as applied to the other
Executive Directors) from 1 July to 31 December.
5.
LTIP: the estimated value on 31 December 2025 of 2023 LTIP
shares vesting in 2026, subject to performance over the three-
year period ended 31 December 2025. Figures are based on
the average share price for the three months to 31 December
2025 of 207.25 pence. Damien Caby’s 2023 LTIP was granted
in respect of his previous role and vests based on the results of
the Thermal Products division; his 2023 LTIP value has been
converted to EUR using the three-month average exchange rate
to 31 December 2025. Pete Raby’s award has been pro-rated
for time based on the proportion of the performance period
worked. The figures for 2024 have been trued up from that
disclosed in last year’s Remuneration Report to reflect the share
price on the vesting date (13 May 2025 for Pete Raby and 30 May
2025 for Richard Armitage) of 213.57 pence and 211.70 pence
for Pete Raby and Richard Armitage respectively (414,320 shares
x 26.91% x 213.57 pence = £238,117 and 207,587 shares x
26.91% x 211.70 pence = £118,259). The impact of share price
movement on the vesting value of the Executive Directors’
2023 LTIP awards is as follows (Pete Raby’s figures have been
pro-rated):
Damien Caby | Pete Raby | Richard Armitage | |
Value of awards vesting using share price at award (300.40p) | €47,134 | £165,331 | £99,447 |
(91,544 shares x | (366,917 shares x | (220,705 shares x | |
15% x 300.40p) x | 15% x 300.40p) | 15% x 300.40p) | |
1.1427 FX rate | |||
Value of awards vesting using three-month average share price at | €32,518 | £114,064 | £68,610 |
31 December 2025 (207.25p) | (91,544 shares x | (366,917 shares x | (220,705 shares x |
15% x 207.25p) x | 15% x 207.25p) | 15% x 207.25p) | |
1.1427 FX rate | |||
Impact of share price movements on vesting values | –€14,616 | –£51,267 | –£30,837 |
6.
Other: for Richard Armitage, comprises the value of Sharesave
options granted in the year, based on the embedded value at
grant (20% of the grant date share price multiplied by the
number of options granted).
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Incentive outcomes for the year ended
31 December 2025
Annual bonus in respect of 2025 performance
Targets for the annual bonus are set by the Remuneration
Committee, taking into account the short- and long-term
requirements of the Group. Challenging goals are set, which
must be met before any bonus is paid. This approach is intended
to align executive reward with shareholder returns by rewarding
the achievement of ‘stretch’ targets.
The bonus targets for Pete Raby, Richard Armitage and (from 1 July)
Damien Caby were split between adjusted operating profit* before
restructuring (weighted 40%), year-end working capital* (weighted
40%) and individual strategic personal objectives (weighted 20%).
The targets were set to incentivise the Executive Directors to
deliver stretching profit and cash performance for the Group.
Performance in line with target results in a payout of 50% of
maximum.
The table that follows sets out retrospectively the assessment of
performance relative to the 2025 bonus targets for the Executive
Directors. Actual bonus payments are shown in the Single total
figure of remuneration table on page 89. In accordance with the
Remuneration Policy, 67% of the amount reported will be paid in
cash, with the remaining 33% deferred into shares for three years.
Performance range | Actual | |||||
% of maximum | Threshold | Maximum | performance | % payout | % salary | |
Performance measure | bonus element | (0% payout) | (100% payout) | outcome | of element | earned |
Adjusted operating profit* 1 | 40% | £124.6m | £135.3m | £95.3m | 0% | 0% |
Year-end working capital* 1 | 40% | £163.1m | £151.4m | £98.2m | 100% | 60% |
Personal objectives | ||||||
Damien Caby | 20% | Please see narrative below for | 85% | 25.5% | ||
Pete Raby 3 | 20% | further details on objectives and | 85% | 25.5% | ||
| performance against these | ||||||
Richard Armitage | 20% | 85% | 25.5% | |||
| % of salary earned | ||||||
Adjusted | Year-end | |||||
Maximum bonus | operating | working | Personal | |||
Overall outcome | (% salary) | profit* 1 | capital* 1 | objectives | Total outcome | Total payable |
Damien Caby 2 (1 July–31 December) | 150% | 0% | 60% | 25.5% | 85.5% | €307,800 |
Pete Raby 3 | 150% | 0% | 60% | 25.5% | 85.5% | £285,386 |
Richard Armitage | 150% | 0% | 60% | 25.5% | 85.5% | £404,817 |
1.
For the financial measures in the 2025 bonus, the payout curve included an additional on-target performance level at which the payout was calibrated to be 50% of each element. On-target
adjusted operating profit* was £132.6 million and on-target year-end working capital* was £155.6 million. For both elements, there was a straight-line payout between threshold and
on-target, and between on-target and maximum. All figures were calculated using 2025 budgeted exchange rates.
2.
Damien Caby’s annual bonus for the first half of the financial year was based 80% on the financial performance of the Thermal Products division and 20% on personal objectives. In addition
to the amount shown in the table above, Damien earned an annual bonus of €58,227 in respect of the period 8 May to 30 June when he served as an Executive Director. Financial targets
for the Thermal Products division are deemed by the Committee to be commercially sensitive and have not been disclosed. Details of the assessment of Damien’s personal objectives are
set out below.
3.
Pete Raby stepped down from the Board on 1 July 2025, and retired from the Group on 31 August 2025 – he was eligible for a pro-rated bonus payment based on the proportion of the
year worked. The bonus payment value in the table above relates to the period 1 January to 1 July 2025, remuneration for the period 2 July to 31 August 2025 is covered in the ‘Exit
payments made in year’ section on page 95.
Prior to approving the outcome of the financial element of the
bonus, the Committee reviewed in detail the drivers of the
working capital improvement. Given the outperformance of the
stretch target, the Committee wished to reconfirm that the
performance range was stretching when originally set and the
outturn representative of a sustainable underlying performance
improvement. In approving the formulaic outturn, the Committee
noted that the business had delivered a significant underlying
reduction in working capital of circa £20 million ahead of the
approved targets, and that other budgeted actions were successfully
and properly executed to further reduce working capital and
support delivery of leverage targets.
For 2025, Executive Directors’ personal objectives continued to be
set to reinforce Morgan Advanced Materials’ key execution
priorities, and improving the Group’s operational performance.
Collective goals for 2025 (which applied to each Executive
Director) included:
1.
progressing the ESG roadmap: develop and embed a safety
culture (to be evidenced by a continued reduction in the
Group LTA rate, to below 0.12 by year end); drive a 3-point
improvement in employee engagement over 2024 across
the priority sites; improve the gender diversity of the senior
leadership population by increasing the percentage of women
in leadership to 35% by year end; and reduce scope 1 and 2
CO
2
intensity by 4% year-on-year
2.
progressing rationalisation projects to deliver planned savings
in 2025
3.
ensuring readiness of candidate pipeline for all executive team
roles and key roles on their leadership teams
4.
driving the successful first deployment of the Group ERP solution
in the Martinsicuro site by the end of April 2025.
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continued
92
In addition to the collective goals identified above, Richard
Armitage’s individual objectives for 2025 were to:
1.
further strengthen working capital management across the
Group and deliver a £20 million improvement in working capital
intensity by the end of 2025
2.
conclude the MMS divestment project in the first half of 2025 to
deliver at least £20 million of cash consideration by 30 June 2025
3.
deliver a successful deployment of the Group’s ERP solution in
National Electrical Carbon Products Inc by the end of the year.
In view of the CEO transition during the year, no individual
objectives were set for either Pete Raby or Damien Caby; the
personal objectives element of their 2025 bonus opportunity
was based only on the achievement of the collective goals
outlined above.
The performance of our Executive Directors, in line with that of the
wider leadership team, is assessed against all expectations of the
role, the specific personal objectives set, and how outcomes are
delivered with reference to our defined Leadership Behaviours.
The collective goals set at the start of the year were met to the
extent summarised below.
Objective | Assessment of objective | Outcome |
Group LTA rate below | Group LTA rate at year | Objective |
0.12 by year end | end of 0.18 | not met |
3-point improvement in | Score of 75% (2024 | Objective |
employee engagement | survey 52%) | met |
across priority sites | ||
4% reduction in scope 1 | Scope 1 and 2 CO 2 | Objective |
and 2 CO 2 intensity | intensity reduced by 5% | met |
year-on-year | ||
Percentage of women in | Percentage of women in | Objective |
leadership increased to | leadership 36% at year | met |
35% by year end | end | |
Deliver planned savings | £25 million achieved in | Objective |
in 2025 from | line with target | met |
rationalisation projects | ||
Candidate pipeline ready | During 2025, two | Objective |
for all executive team/ | presidents were | met |
key leadership team | appointed and a | |
roles | renewed focus was | |
placed on talent | ||
pipelining | ||
Successful first | Successfully deployed, | Objective |
deployment of ERP | but with a late | partially met |
solution in Martinsicuro | deployment date | |
by the end of April 2025 |
The Committee assessed Damien Caby’s individual objectives as
being partially met, noting the following:
In
relation to developing the Group’s leadership capabilities,
the strength of the talent pipeline and succession planning, two
Global Business Division Presidents were appointed during 2025,
supporting a smooth leadership transition for Damien Caby as
Group CEO. A renewed focus was placed on talent management
in the second half of 2025 to support the successful delivery of
Morgan Advanced Materials’ revised strategy.
A step change was achieved in overall employee engagement,
increasing from 52% to 75%.
Damien played a key role in driving further year-on-year
improvement in diversity within the leadership team; the
percentage of women increased to 36% at the end of 2025,
and women in the wider workforce increased to 39%, with the
Group well on track to deliver against its 2030 intermediate goal
in this area.
The Committee assessed, in the round, the extent to which the
collective and individual objectives were achieved. The Committee
took into account the successful first deployment of the ERP
solution in Martinsicuro but noted that the deployment occurred
later than planned. The Committee also noted that, although the
safety objectives had not been met relative to a strong performance
baseline in 2024, a rigorous plan of action was being implemented,
including quarterly safety topics, reinforcing our ‘thinkSAFE’
commitments and the launch of a process safety risk management
framework.
The Committee also reflected on the Chairman’s annual
assessment of Damien’s performance, including his transition into
the role of Group CEO and the development of Morgan Advanced
Materials’ new strategy, designed to unlock the Group’s full
potential and drive growth regardless of the prevailing economic
environment. In this context and taking into account Damien’s
achievement against his individual objectives, the Committee
concluded that a payout of 85% of the personal performance
element of Damien’s bonus for 2025 would be appropriate.
Richard Armitage’s performance against his individual objectives
was also assessed by the Committee, taking into account:
his critical role in strengthening cash management across the
Group during the year, including the strong year-end working
capital position (as reported elsewhere in this Annual Report)
the successful first deployment of Highlander (ERP), albeit slightly
later than planned, which will provide a strengthened control
environment for the Group going forward.
Reflecting these considerations, alongside Richard Armitage’s valued
contributions towards achieving the collective goals identified
above, the Committee assessed the personal performance element
of Richard’s bonus to be 85% of the maximum.
In addition to the achievement of the targets set, when considering
any payouts to be made, the Committee took into account the
quality of the Group’s overall performance despite the challenging
operating environment that persisted in 2025. This included the full
achievement of planned savings from rationalisation projects and
significant improvement in working capital (which the Committee
examined in depth to ensure its sustainability going forward).
The Committee concluded from this review that, in the round, an
around target bonus outturn (together with a 15% of maximum
vesting outcome under the 2023 LTIP reported below)
appropriately balances the range of perspectives required for
remuneration decision-making and reflects the experience of
stakeholders over the periods concerned. As a result, the
Committee determined that no discretion needed to be applied
in respect of the 2025 bonus outcome.
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2022 Deferred Bonus Plan vesting
In 2022, 33% of the annual bonus earned by the incumbent
Executive Directors at the time (for performance in the 2021
financial year) was deferred into shares under the Deferred Bonus
Plan (DBP), in line with the Group’s Remuneration Policy.
Dividends accrued over the deferral period on the deferred shares
that vested, and the dividends were paid in shares at the end of the
vesting period. Details of Pete Raby’s DBP awards which vested in
2025 are set out in the table below. Richard Armitage, who joined
Morgan Advanced Materials in 2022, did not participate in this
DBP cycle.
Number | |||||||
of dividend | Total number | Market value | Market value | ||||
Number of DBP | reinvestment | of DBP shares | at grant | at vesting | |||
Director | Date of grant | shares granted | shares | vested | £ | £ | Date of vesting |
Pete Raby | 21 March 2022 | 89,853 | 12,452 | 102,305 | 3.137 | 2.037 | 21 March 2025 |
2023 LTIP award vesting
Awards granted to Executive Directors in 2023 were subject to
relative TSR performance, EPS growth, Group ROIC* and ESG
(CO
2
reduction) over a three-year period ended 31 December
2025.
The EPS target (applying to 27.5% of each award) required
three-year EPS growth of 4% per annum for 25% of that element
to vest, rising to full vesting for EPS growth of 11% per annum or
higher. Over the period Morgan Advanced Materials plc’s actual
EPS growth was below threshold, and accordingly the EPS element
of the award will not vest.
The TSR element (applying to 30% of each award) required
Morgan Advanced Materials plc’s three-year TSR performance to
rank at median against two comparator groups (equally split) – the
FTSE All-Share Industrials Index and a tailored comparator group
comprising 15 listed international carbon, ceramics and other
materials companies – for 25% of that element to vest, rising to
full vesting if Morgan Advanced Materials plc’s TSR ranked at or
above the upper quartile against these two comparators. Morgan
Advanced Materials plc’s TSR was below median versus the FTSE
All-Share Industrials Index and the tailored comparator group.
Accordingly, the TSR element of the award will not vest.
The Group ROIC* target (applying to 27.5% of each award)
required Group ROIC* of 17% for 25% of that element to vest,
rising to full vesting for Group ROIC* of 20% or higher. Morgan
Advanced Materials plc’s Group ROIC* was below threshold, and
accordingly the ROIC element of the award will not vest.
The ESG target (applying to the remaining 15% of each award)
required scope 1 and 2 CO
2
emissions to reduce by 5% over the
performance period for 25% of that element to vest, rising to full
vesting for a reduction of 15% or higher. Over the performance
period, Morgan Advanced Materials plc’s actual scope 1 and 2
CO
2
emissions reduced by 31%, and accordingly this results in
a 15% vesting for the ESG element of the award.
This combined performance will result in a partial vesting of the
2023 awards, equivalent to 15% of maximum. The vesting
outcome is considered by the Committee to appropriately reflect
business performance and the significant progress made on our
ESG roadmap.
Damien Caby’s 2023 LTIP award was granted prior to his
appointment as an Executive Director and was based on stretching
targets for the Thermal Products division. Taking into account
performance over the three-year period, Damien’s 2023 LTIP
will vest as to 15% of maximum. As with the annual bonus, the
Committee considers that divisional targets applying to this award
are commercially sensitive and has elected not to disclose them
as these relate to an award granted in respect of Damien Caby’s
former role. Vested shares under Damien’s 2023 LTIP are not
subject to an additional two-year holding period.
Details of the awards held by Executive Directors are set out in the
table below.
Maximum | Maximum | Estimated | LTIP-CSOP 1 | |||
potential | potential LTIP- | Estimated LTIP | LTIP-CSOP 1 | award | ||
Director | LTIP award | CSOP 1 award | award vesting | award vesting | exercising | Date of vesting |
Pete Raby 2 | 366,917 | – | 55,037 | – | – | 10 May 2026 |
Richard Armitage | 220,705 | – | 33,105 | – | – | 10 May 2026 |
Damien Caby | 91,544 | – | 13,731 | – | – | 23 March 2026 |
1.
CSOP refers to the Company Share Option Plan – further information is included in the ‘Details of plans’ section later on in this Report.
2.
In line with the provisions of the Policy for retirements, Pete Raby was treated as a good leaver in respect of outstanding LTIP awards. Pete Raby’s award therefore has been pro-rated for
the proportion of the performance period worked. Figures in the table reflect pro-ration to his retirement from the Group on 31 August 2025.
Remuneration Report
continued
94
Share dilution
The Company manages dilution rates within the standard guidelines of 10% of issued Ordinary share capital in respect of all-employee
schemes and 5% in respect of discretionary schemes. Only market purchased shares, held in the Company’s Employee Benefit Trust
(EBT), have been used for the purpose of satisfying awards under these schemes that have vested since 2012. It is the Company’s intention
to use market purchased shares to satisfy awards vesting in 2026. Further information regarding the EBT can be found on pages 108, 130,
183 and 196.
Pension (audited)
In 2025, Damien Caby (as CEO), Pete Raby and Richard Armitage each received a cash allowance in lieu of pension of 8% of base salary,
which is in line with the pension contribution available to the wider UK workforce. The value included in the Single figure table for Damien
Caby reflects a pro-rated amount from appointment as CEO on 1 July. For Pete Raby, the reported value reflects a pro-rated amount for
the period from 1 January to 1 July, when he stepped down from the Board. Pete Raby’s remuneration for the period 2 July to 31 August
2025 is covered in the ‘Exit payments made in year’ section on page 95.
Non-executive Director fees (audited)
The table below sets out the fees received by each non-executive Director in respect of the year ended 31 December 2025 and the
prior year.
Professor Mary Ryan | |||||||||||||
Helen Bunch | Jane Lodge | CBE FREng (from | |||||||||||
Ian Marchant | (until 8 May 2025) 2 | Alison Wood | Jane Aikman | Clement Woon | (from 1 June 2025) 3 | 1 November 2025) 3 | |||||||
2025 1 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 |
£ 224,952 | £218,400 | £24,494 | £67,013 | £75,210 | £11,169 | £68,723 | £67,013 | £58,723 | £57,013 | £34,255 | – | £9,787 | – |
1.
Ian Marchant also received an £18,000 annual contribution towards the cost of administrative support in 2025.
2.
Fees for Helen Bunch, who resigned on 8 May 2025, have been pro-rated to reflect the period Helen served on the Board.
3.
Fees for Jane Lodge (from 1 June 2025) and Professor Mary Ryan CBE FREng (from 1 November 2025) have been pro-rated to reflect the period they were appointed from.
Non-executive Directors do not receive any other fixed or variable pay, or benefits, in addition to their fee. Figures shown are inclusive
of additional fees of £10,000 per annum payable to Alison Wood as Senior Independent Director and to Helen Bunch (until 8 May 2025),
Alison Wood (from 8 May 2025) and Jane Aikman as Committee Chairs. Additional fees have been pro-rated for Helen and Alison, to
reflect the part of the year served in those roles.
Scheme interests awarded in 2025
2025 LTIP awards
In 2025, Damien Caby and Richard Armitage were granted awards under the LTIP as shown in the table below. As disclosed in last year’s
report, award levels were reduced for 2025 on a one-off basis, from 175% to 122.5% of salary for Damien Caby and from 150% to 105%
for Richard Armitage. Pete Raby did not receive a 2025 LTIP award. The performance period for the 2025 LTIP awards is 1 January 2025
to 31 December 2027. Vesting outcomes will continue to be assessed to ensure they reflect business performance and will be adjusted
as appropriate.
Number of LTIP | Value of awards at grant | |||
Executive Director | shares granted 1 | Value of award | As % of 2025 salary | Date of vesting |
Damien Caby 2 | 356,166 | €882,000 | 122.5% | 26 March 2028 |
Richard Armitage | 239,934 | £497,145 | 105% | 26 March 2028 |
1.
Calculated using the award price of £2.072, being the average share price for the five dealing days prior to the award date (26 March 2025).
2.
Damien Caby’s award was converted from EUR to GBP using the average exchange rate (1.19516) for the five days preceding the award date (26 March 2025).
The Committee discusses and reviews the performance criteria for new three-year LTIP awards before they are granted. For the awards
granted in 2025, the Committee considered the balance of measures in light of the Group’s business plan and shareholder feedback and
decided to maintain the current weightings of the four performance criteria, with the ESG metric being amended from carbon reduction to
carbon intensity, as disclosed in last year’s report to balance our stated longer-term ambition to reduce carbon emissions by 50% by 2030
(from a 2015 baseline) with our strategy to realise the Group’s growth potential (which will increase absolute emissions even as the Group
becomes more efficient in its use of carbon). The TSR element continues to be split into two parts. One-half of this element will vest
based on Morgan Advanced Materials’ TSR performance relative to the constituents of the FTSE All-Share Industrials Index and one-half
will vest based on Morgan Advanced Materials’ TSR performance relative to a tailored group of 15 industry comparators.
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The table below sets out the targets attaching to the 2025 LTIP awards:
TSR vs FTSE All-Share | % of award | TSR performance | % of award | EPS | % of award | Group | % of award | ESG (carbon | % of award |
Industrials Index | that vests | vs peer group | that vests | growth | that vests | ROIC | that vests | intensity) | that vests |
Upper quartile | 15% | Upper quartile | 15% | 11% pa | 27.5% | 20% | 27.5% | –7% | 15% |
Median | 3.75% | Median | 3.75% | 4% pa | 6.9% | 17% | 6.9% | –3% | 3.75% |
Below median | Nil | Below median | Nil | <4% pa | Nil | <17% | Nil | <–3% | Nil |
For Executive Directors, a two-year holding period applies to any shares that vest in relation to the 2025 LTIP. Dividends accrue over this
holding period and will be paid on any shares that vest.
2025 Deferred Bonus Plan awards
In 2025, 33% of the total annual bonus earned by Pete Raby and Richard Armitage (for performance in the 2024 financial year) was
deferred into shares under the DBP, in line with Morgan Advanced Materials’ Remuneration Policy. The following DBP awards
were granted:
| Value of awards at grant | |||
Executive Director | Number of DBP shares granted 1 | Value of award £ | Date of vesting |
Pete Raby | 93,388 | 193,500 | 26 March 2028 |
Richard Armitage | 63,228 | 131,009 | 26 March 2028 |
Damien Caby 2 | 2,101 | 4,353 | 26 March 2028 |
1.
Calculated using the award price of £2.072, being the average share price for the five dealing days prior to the award date (26 March 2025).
2.
Damien Caby’s DBP was granted before his appointment as CEO.
Exit payments made in year (audited)
Payments made to Pete Raby from 1 January to 1 July 2025 (when he stepped down from the Board) are captured in the Single total
figure of remuneration for Executive Directors’ table on page 89, and include the full estimated value of his pro-rated 2023 LTIP award
which is due to vest in May 2026. In relation to the period between 2 July 2025 and when he retired from the Group on 31 August 2025,
Pete Raby received a total of £213,115 in remuneration, comprising salary, pension allowance, benefits and bonus pro-rated for this period.
No other exit payments were made to Pete Raby or other Executive Directors during the 2025 financial year.
Payments to past Directors (audited)
As mentioned in the 2022, 2023 and 2024 reports, former CFO Peter Turner stepped down from the Board on 30 May 2022 and retired
from the Group on 30 June 2022. Peter was treated as a ‘good leaver’ in respect of outstanding share awards. Vesting of previously
granted awards during the 2025 financial year included 75,017 shares (inclusive of dividend) granted under the 2022 DBP on 21 March
2025. No other payments (other than those captured in the Single total figure of remuneration for Executive Directors’ table and above
in relation to Pete Raby) were made to past Directors during the 2025 financial year.
External appointments
Details of external appointments held by Executive Directors and the fees retained in 2025 are provided in the table below:
Executive Director | Company | Role | Date of appointment | Fees paid and retained |
Pete Raby | Hill & Smith PLC | Non–executive Director | 2 December 2019 | £60,000 |
Richard Armitage | NWF Group PLC | Senior Independent Director and | 5 July 2020 | £53,027 |
Chair of the Audit Committee |
Remuneration Report
continued
96
Implementation of Remuneration Policy for 2026
Base salary
In line with the Remuneration Policy, Executive Directors’ salaries
were reviewed by the Remuneration Committee and increased for
2026 at the rates set out in the table below. As in previous years,
the Group maintained the formal link between performance and
pay within the senior leadership population in 2025; specifically,
taking into account individual and Group performance, as well as
salary relative to the relevant market. The increases awarded to the
Executive Directors were calibrated in line with this. The
Committee considered the strong performance in their roles, as
well as the market positioning of their salaries, in determining to
award increases. The increases awarded to Damien Caby and
Richard Armitage in 2026 were broadly in line with the average
increases awarded to employees in the wider workforce who
received similar performance ratings (3.5% in the UK). The table
below shows the base salaries in 2025, and those that took effect
from 1 January 2026.
Base salary at: | |||
1 January | |||
2025 (or on | |||
appointment | |||
Executive Director | 1 January 2026 | in 2025) | Increase |
Damien Caby 1 | €749,000 | €720,000 | 4% |
Richard Armitage | £487,680 | £473,470 | 3% |
1.
Damien Caby was appointed to the Board as an Executive Director and CEO Designate on 8 May 2025 and to the role of CEO on 1 July 2025. The above figure for 2025 is an annualised
amount based on his CEO salary for the year.
The rationale for any future increases will continue to be disclosed
in the relevant Annual Report on Remuneration.
Pension
Damien Caby and Richard Armitage will continue to receive a
cash allowance in lieu of pension in 2026. These are aligned to
the pension contribution levels available to the wider workforce
(8% of salary, based on our UK population).
Annual bonus in respect of 2026 performance
The maximum bonus opportunity remains at 150% of salary for
all Executive Directors (with the payout for on-target performance
continuing to be 50% of the maximum).
Of any bonus result 33% will ordinarily be deferred into shares
for a further three-year period. The performance measures
attached to the annual bonus remain unchanged from 2025,
and are as follows:
Adjusted operating profit*
– 40%
Year-end working capital
– 40%
Strategic personal objectives
– 20%
The actual performance targets set at the beginning of the
performance period are not disclosed as they are considered
commercially sensitive at this time, given the close link between
performance measures and the Group’s longer-term strategy.
This is particularly relevant in the context of some of the Group’s
close and unlisted competitors who are not required to disclose
such information, and for whom the assumptions in our targets
would provide valuable information in the current trading year.
These targets will be disclosed retrospectively, at such time as
they have become less commercially sensitive, and within three
years of the end of the performance year.
2026 LTIP awards
In March 2026, Damien Caby and Richard Armitage will be granted
awards under the 2026 LTIP with face values of 175% and 150% of
their 2026 base salaries, respectively. Formulaic vesting outcomes
will continue to be evaluated by the Committee to ensure they
reflect business performance, and will be adjusted as appropriate.
The three-year performance period over which performance
will be measured began on 1 January 2026 and will end on
31 December 2028. Further details of the awards will be disclosed
in next year’s Remuneration Report.
The performance measures are detailed below:
Each TSR element will operate independently, with vesting
determined based on Morgan Advanced Materials’ TSR
rank relative to constituents of each TSR benchmark. The
performance range for each element will remain median to
upper quartile.
The EPS performance range has been set at 7% to 13%
per annum.
The ROIC* range will remain unchanged at 17% to 20%.
The ESG measure (carbon intensity) will have a performance
range of -3% to -7% carbon intensity reduction per year over
the three-year performance period, to balance our stated longer-
term ambition to reduce carbon emissions by 50% by 2030
(from a 2015 baseline) with our strategy to realise the Group’s
growth potential.
The Committee believes these ranges appropriately support
the Group’s strategy for sustainable long-term growth over
the next three years while continuing to represent suitably
demanding targets.
For all four measures, weightings are unchanged and awards will
continue to vest on a straight-line basis between threshold and
maximum, with 25% of each element vesting at threshold.
Executive Directors will be required to hold any vested 2026
LTIP awards for an additional two-year period. Vested awards
remain subject to clawback in line with our Policy but will not
be forfeitable on cessation of employment.
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Chairman and non-executive Director fees
The Chairman’s and non-executive Directors’ fees were reviewed in December 2025. Increases are based on salary market movements
and are in line with the average increases awarded to the wider workforce (3.5% in the UK). The table below shows the fees in 2025,
and those that were agreed for 2026.
Role | 2026 fee pa | 2025 fee pa |
Chairman 1 | £232,825 | £224,952 |
Non-executive Director | £60,778 | £58,723 |
Committee Chair (additional fee) | £10,000 | £10,000 |
Senior Independent Director (additional fee) | £10,000 | £10,000 |
1.
Ian Marchant receives an £18,000 annual contribution towards the cost of administrative support.
Percentage change in Directors’ remuneration
The table below shows, for each individual who was an Executive or non-executive Director during 2025, the annual percentage change in
their remuneration over the past five years compared to the average percentage change in remuneration for other employees of Morgan
Advanced Materials plc over the same period, in accordance with the regulations. Note that individuals who were Directors during the
period under review, but not at any point during 2025, have not been included. The percentage changes in their remuneration for prior
years (and in which they were a Director) are disclosed in relevant previous Annual Reports.
2024–25 change 9 | 2023–24 change | 2022–23 change | 2021–22 change | 2020–21 change 5,8 | |
Salary or fees | |||||
Damien Caby 11 | n/a | n/a | n/a | n/a | n/a |
Pete Raby | 3.0% 1 | 4.0% | 4.0% | 2.6% | 32.3% (2.5%) |
Richard Armitage | 3.0% | 4.0% | 4.0% 2 | n/a | n/a |
Ian Marchant | 3.0% | 4.0% 3 | n/a | n/a | n/a |
Helen Bunch | 2.6% 4 | 6.7% 10 | 2.6% | 2.2% | 26.3% (1.7%) |
Jane Aikman | 2.6% | 6.7% 10 | 2.6% | 2.2% | 26.3% (1.7%) |
Jane Lodge | n/a | n/a | n/a | n/a | n/a |
Alison Wood | 17.5% 4 | n/a | n/a | n/a | n/a |
Clement Woon | 3.0% | 4.0% | 3.0% | 2.5% | 31.6% (2.0%) |
Professor Mary Ryan CBE FREng | n/a | n/a | n/a | n/a | n/a |
Average per employee | 5.7% | 5.2% | 6.7% | 3.4% | 3.6% (2.6%) |
Benefits (excluding pension) 6,7 | |||||
Damien Caby | n/a | n/a | n/a | n/a | n/a |
Pete Raby | 1.2% 1 | 4.4% | 2.9% | –0.1% | –0.5% |
Richard Armitage | 3.3% | 1.9% | 2.8% 2 | n/a | n/a |
Average per employee | 3.3% | 4.4% | 2.6% | -1.2% | 0.9% |
Annual bonus 7 | |||||
Damien Caby | n/a | n/a | n/a | n/a | n/a |
Pete Raby | -2.2% 1 | 45.4% | 61.8% | –70.8% | 1,029.3% |
Richard Armitage | 3% | 35.0% | 65.5% 2 | n/a | n/a |
Average per employee | 24.3% | 13.9% | -2.73% | -44.1% | 53.6% |
1.
Pete Raby stepped down from the Board on 1 July 2025 and retired from the Group on 31 August 2025. The percentages above are based on annualised figures.
2.
Richard Armitage joined the Board on 30 May 2022. The percentages above are based on annualised figures for 2022 remuneration.
3.
Ian Marchant joined the Board on 1 February 2023 and, as disclosed in prior reports, his annual fee was increased from £54,820 to £210,000 on becoming Chairman on 29 June 2023.
The percentage above is based on his annualised Chairman fee for 2023 remuneration. Ian Marchant also receives an £18,000 annual contribution towards the cost of administrative support
– this value has not changed between 2023 and 2025.
4.
Alison Wood joined the Board on 1 November 2024. The percentage change from 2024 to 2025 reflects Alison’s annualised fee for 2024 and, from 8 May 2025, the additional fee payable
following her appointment to Remuneration Committee Chair. Helen Bunch (the prior Remuneration Committee Chair) stepped down from the Board on 8 May 2025. The percentage
change from 2024 to 2025 for Helen is based on annualised figures.
5.
Figures in brackets reflect the percentage increase from the original 2020 salary/fee prior to reductions implemented in response to the COVID-19 pandemic.
6.
Benefits figures include private medical insurance and car allowance. Decreases in benefits reflect a reduction in private medical premium in certain years.
7.
Non-executive Directors do not receive any additional benefits or bonus payments.
8.
The personal performance element of the 2020 bonus was cancelled for Executive Directors (as a result of the pandemic), contributing to the higher percentage increase in 2021 bonus for
Executive Directors compared to other employees.
9.
Employee average bonus based on an estimate of 2025 bonus paid in 2026 (final bonus award data was not available at the time of publication). The percentage change in 2025 bonus for
the Executive Directors differs from that for other employees, based on their differing bonus structures.
10. Percentage fee increase for Helen Bunch and Jane Aikman includes both a 4% increase to the non-executive Director fee and an increase to the additional committee Chair/Senior
Independent Director fee to align more closely with market rates, as disclosed in the 2023 report.
11. Damien Caby joined the Board on 8 May 2025 and was appointed to CEO on 1 July 2025 – as such no percentage change in his remuneration is reportable in this year’s Report.
Remuneration Report
continued
98
CEO pay ratio
Median | ||||
25th percentile | (50th percentile) | 75th percentile | ||
Year | Method | pay ratio | pay ratio | pay ratio |
2025 1 | Option B | 52:1 | 35:1 | 34:1 |
2025 (excluding variable) 1 | Option B | 26:1 | 19:1 | 17:1 |
2024 2 | Option B | 56:1 | 51:1 | 29:1 |
2024 (excluding variable) | Option B | 26:1 | 26:1 | 14:1 |
2023 | Option B | 54:1 | 42:1 | 26:1 |
2023 (excluding variable) | Option B | 31:1 | 24:1 | 15:1 |
2022 | Option B | 61:1 | 37:1 | 31:1 |
2022 (excluding variable) | Option B | 32:1 | 22:1 | 16:1 |
2021 | Option B | 91:1 | 59:1 | 48:1 |
2021 (excluding variable) | Option B | 32:1 | 24:1 | 17:1 |
2020 | Option B | 35:1 | 25:1 | 20:1 |
2020 (excluding variable) | Option B | 25:1 | 20:1 | 14:1 |
2019 | Option B | 74:1 | 62:1 | 41:1 |
2019 (excluding variable) | Option B | 34:1 | 27:1 | 19:1 |
1.
The CEO pay ratio reflects a combination of the single figure of remuneration received by Pete Raby (the outgoing CEO) for the period 1 January to 1 July 2025, and Damien Caby (the new
CEO) for the period 2 July – 31 December 2025. Prior to calculation of the CEO pay ratio, Damien Caby’s remuneration was converted from EUR to GBP using the three-month average
exchange rate to 31 December 2025.
2.
Ratios trued up from those disclosed in last year’s Remuneration Report to reflect final value of LTIP vesting for CEO.
Details of the salary and total pay and benefits figures for each of the individuals identified in the table is set out below:
| Salary | Total pay and benefits | |||||||
Median | Median | |||||||
Year | CEO | 25th percentile | (50th percentile) | 75th percentile | CEO | 25th percentile | (50th percentile) | 75th percentile |
2025 | £633,785 1 | £23,589 | £31,102 | £32,617 | £1,395,441 1 | £26,992 | £39,325 | £40,914 |
2024 | £645,000 | £25,507 | £24,425 | £44,799 | £1,529,859 | £27,523 | £29,722 | £53,214 |
2023 | £620,000 | £21,164 | £21,164 | £39,605 | £1,199,689 | £22,345 | £28,591 | £45,426 |
2022 | £596,000 | £21,414 | £23,225 | £41,202 | £1,551,838 | £25,451 | £42,005 | £49,371 |
2021 | £581,175 | £17,379 | £29,129 | £37,989 | £2,041,667 | £22,533 | £34,725 | £42,442 |
2020 | £439,425 | £21,000 | £23,960 | £36,900 | £791,238 | £22,464 | £31,550 | £38,723 |
2019 | £545,000 | £17,599 | £24,300 | £30,610 | £1,618,605 | £21,958 | £25,927 | £39,926 |
1.
Figures reflect a combination of the single figure of remuneration received by Pete Raby (the outgoing CEO) for the period 1 January to 1 July 2025, and Damien Caby (the new CEO) for
the period 2 July – 31 December 2025. Damien Caby’s remuneration has been converted from EUR to GBP using the three-month average exchange rate to 31 December 2025.
In line with the CEO pay ratio regulations, the table above shows
for 2025 the ratio of the CEO’s single total figure of remuneration
to that of UK employees at the 25th, 50th (median) and 75th
percentiles. This year’s figures reflect a combination of the single
figure of remuneration received by the incoming CEO (Damien
Caby) and outgoing CEO (Pete Raby) for their respective service
periods in the CEO role during 2025. In addition to the mandatory
calculation using total remuneration, ratios have also been
calculated excluding variable pay elements such as bonus and share
awards.
Of the three reporting options available to companies, Morgan
Advanced Materials has applied Option B, where the most recent
gender pay gap reporting data (as at 5 April 2025) has been
used to identify the 25th, 50th and 75th percentile employees.
The 25th, 50th and 75th percentile pay ratios are based on the
remuneration of representative employees who fall on each of
these pay percentiles. Option B has been used to calculate the
CEO pay ratios, as Option A requires the ability to calculate a
single total remuneration figure for each UK employee, and
Morgan Advanced Materials does not currently have the systems
in place to support this methodology. The ‘best equivalent’
employees identified using the gender pay gap information are
representative of the 25th, 50th and 75th percentiles of Company
remuneration, since base pay constitutes a large proportion of the
remuneration package for the majority of employees, so it is likely
that a similar set of employees would have been identified using
Option A. The calculation covers base pay, annual bonus, pension
and, where applicable, share awards and benefits, including car
allowance and private medical insurance. Total remuneration
figures used in the calculation for 25th, 50th and 75th percentile
employees include annual bonus relating to 2025 performance,
in order to be consistent with the methodology used for the
CEO’s total remuneration figure.
Strategic Report
Governance
Financial Statements
Morgan Advanced Materials
/
Annual Report 2025
99
Notwithstanding the year-on-year change in pay ratio, pay and
benefits for the CEO and wider employee population are based on
the same philosophies, for example driving pay for performance
and alignment to external benchmarks, in order to promote
consistency, fairness and equity across all levels in the organisation.
As the same methodology underpins the remuneration used in
the above calculations, the resulting median pay ratio is consistent
with the Company’s wider policies on employee pay, reward and
progression. Pay ratios are significantly reduced and more stable
over time when variable pay elements are excluded, so the gap
between CEO and employee pay is largely attributable to non-fixed
pay elements, some of which (for example, share awards) the
majority of the wider workforce would not typically be eligible for
(reflecting competitive external market practice). The range of
levels and types of roles found in a manufacturing environment such
as at Morgan Advanced Materials may also result in a higher CEO
pay ratio than companies which have predominantly professional
and/or more senior staff. It is therefore important to compare
Morgan Advanced Materials’ data to companies in similar industries.
Retirement of the outgoing CEO
As disclosed earlier in this Report, Pete Raby stepped down from the Board on 1 July 2025 and retired from the Group on 31 August
2025. As he retired, Pete did not receive any severance payment when he left the Company; however, he was treated as a ‘good leaver’
for variable pay purposes. Salary, bonus and outstanding incentive awards were treated in accordance with the shareholder-approved
Remuneration Policy and consistent with past practice.
Remuneration element | Summary of treatment |
Annual Bonus | 2025 bonus paid wholly in cash at normal payment date, pro-rated for time, and subject to Group |
and personal performance. | |
LTIP (2023 and 2024 cycles) | Awards will be pro-rated for time and will vest based on performance over the original |
performance periods, vesting on the normal vesting dates. The post-vesting holding periods will | |
continue to apply. No LTIP award was granted in 2025. | |
DBP | Awards will vest in full at the normal vesting dates. |
Executive Directors are required to maintain a shareholding equal to the lower of the share ownership requirement (200%) or the actual
shareholding on departure for a period of one year from departure. Pete Raby will be required to maintain a 200% shareholding for the
defined period.
Remuneration arrangements for incoming CEO
Damien Caby joined the Board on 8 May 2025 and succeeded Pete Raby as CEO on 1 July 2025. A summary of his remuneration as CEO
is set out below:
Remuneration element | Details | Notes |
Base salary | €720,000 per annum | Positioned below median to reflect Damien’s |
experience in the role, with the intent to increase to | ||
market median over time, subject to performance. | ||
Pension | Cash allowance in lieu of pension – 8% of | Aligned with pension contributions for the Morgan |
base salary | Advanced Materials UK workforce, reflecting Damien | |
now being on a UK service agreement. | ||
Benefits | Company Vehicle Lease – €16,500 | |
Annual Bonus | 150% of base salary | |
LTIP | 175% of base salary | This will be kept under review and, subject to |
performance, may increase within Policy limits | ||
over time. |
Remuneration Report
continued
100
The treatment of Damien Caby’s in-flight annual bonus and LTIP awards is summarised in the table below:
Remuneration element | Summary of treatment |
Annual Bonus | 2025 bonus – From 1 January to 30 June 2025 – calculated based on the terms of Damien’s |
previous role. From appointment to CEO (1 July 2025) to 31 December 2025 – calculated on | |
CEO terms and performance metrics. Any bonus earned in respect of Damien’s tenure in 2025 | |
as an Executive Director is subject to the requirement for one-third to be deferred into shares for | |
three years. | |
LTIP | 2023 LTIP – will vest based on the performance of the Thermal Products division. |
2024 and 2025 LTIP – will vest based on the same Group metrics as the current Executive | |
Director LTIP awards. Damien’s 2025 LTIP (and any subsequent awards) will be subject to the | |
post-vesting holding period and shareholding requirements set out in the Remuneration Policy. | |
Restricted Stock Unit (RSU) | Damien also retains an unvested interest in an RSU award made to offset LTIP awards forfeited |
on his joining the Company. The award comprised RSUs with an award face value of €400,000, | |
vesting 25% annually over four years. At the time of appointment to CEO, only the final tranche | |
(which vests in May 2026) remained unvested. This will vest on the usual vesting date. |
Relative importance of spend on pay
The graphs below show shareholder distributions (that is, dividends
and share buybacks) and total employee pay expenditure for the
financial years ended 31 December 2024 and 31 December 2025.
Total employee pay
expenditure (£m)
375.4
385.5
2024
2025
Shareholder
distributions (£m)
49.3
39.2
2024
2025
Shareholder distributions increased by 25.8% during 2025 to
£49.3 million (2024: £39.2 million). Total employee pay across
the Group has decreased by 2.6% to £375.4 million (2024:
£385.5 million).
Comparison of Company performance
The graph below shows the value, at 31 December 2025, of
£100 invested in Morgan Advanced Materials plc’s shares on 31
December 2015 compared with the current value of the same
amount invested in the FTSE 350 Index. The FTSE 350 Index – of
which the Company is a constituent – has been chosen because it
is widely followed by the UK’s investment community and easily
tracked over time.
FTSE 350 Index
Morgan Advanced Materials plc
£223
£129
£0
£50
£100
£150
£200
£250
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
The table below details the CEO’s ‘single figure’ of remuneration over the 10-year period to 31 December 2025.
Damien | |||||||||||
| Pete Raby | Caby | ||||||||||
CEO | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 1 | 2025 1 |
CEO single | |||||||||||
figure | £787,492 £1,210,856 £1,479,738 £1,618,605 | £791,238 £2,041,667 £1,551,838 £1,199,689 £1,529,859 | £767,385 | €737,367 | |||||||
Annual bonus | |||||||||||
(% of maximum) | 29.5% | 71.3% | 67.4% | 84.3% | 9% | 97% | 27.6% | 42.9% | 60% | 57% | 57% |
LTIP vesting (% | |||||||||||
of maximum) | n/a | 15.4% | 42.9% | 61.3% | 21.8% | 52.2% | 67.9% | 14.8% | 26.9% | 15% | 15% |
1.
Values shown for 2025 reflect the period 1 January – 1 July for Pete Raby and 1 July – 31 December for Damien Caby. Damien’s 2025 LTIP vesting outcome reflects his 2023 LTIP which
was granted prior to his appointment to the Board and which was based on divisional performance targets.
Strategic Report
Governance
Financial Statements
Morgan Advanced Materials
/
Annual Report 2025
101
Executive Directors’ interests in shares and shareholding guidelines (audited)
The table below shows the shareholding of each Executive Director against their respective shareholding guideline as at 31 December 2025
(or date of leaving in the case of Pete Raby).
Shares owned outright | ||||||||||
As at | Shares | Options | ||||||||
1 January | As at | Performance- | Shares | subject to | granted but | Current | ||||
Shareholding | 2025 or | 31 December | Shares | tested but | subject | post- | subject to | shareholding | ||
guideline (% | date of | 2025 or date | subject to | unvested | to DBP | vesting | continued | (% of 2025 | Guideline | |
2025 salary) | joining | of leaving | performance 1 | shares 2 | deferral 3 | holding 4 | employment 5 | salary) 6 | met | |
Damien Caby | 200% | 48,644 | 62,965 | 451,321 | 13,731 | 5,746 | – | – | 23.5% | Building |
Richard Armitage | 200% | 136,215 | 165,728 | 478,522 | 33,105 | 57,346 | 29,606 | 9,849 | 102% | Building |
Pete Raby | 200% | 696,099 | 827,525 | 247,981 | 55,037 | 88,405 | 80,808 | 4,285 | 287.2% | Yes |
1.
2024 and 2025 LTIP awards.
2.
The expected number of shares due to vest under the 2023 LTIP.
3.
Estimated number of shares, net of tax (47%/49%), deferred under the DBP.
4.
Shares vested (net of tax) but subject to two-year post-vesting holding period.
5.
Options granted under the Sharesave scheme.
6.
Based on an Executive Director’s annualised 2025 salary and the average share price for the three months to 31 December 2025 of 207.25 pence, comprising shares owned outright and
shares subject to deferral. Shares underlying Sharesave scheme options are also included in the calculation.
As at 19 February 2026, the Executive Directors’ interests in shares had not changed since the end of the period under review. Unless
otherwise stated, figures given in the tables on pages 101 to 103 are for shares or interests in shares.
Non-executive Directors’ interests in shares (audited)
The table below shows the shareholding of each non-executive Director as at 31 December 2025.
As at | ||
As at | 31 December | |
1 January | 2025 or date | |
2025 | of leaving | |
Jane Aikman | 1,000 | 1,000 |
Clement Woon | 70,000 | 70,000 |
Ian Marchant | 45,000 | 45,000 |
Alison Wood | – | – |
Jane Lodge | – | 25,000 |
Professor Mary Ryan CBE FREng | – | – |
Helen Bunch | 2,028 | 2,028 |
As at 19 February 2026, the non-executive Directors’ interests in shares had not changed since the end of the period under review.
Post-employment share ownership guideline mechanics
All Executive Directors, including future Directors, are required to build their shareholding through vesting of executive share awards
in a Global Nominee over time to ensure policy compliance with share ownership guidelines, including post-employment guidelines.
Mechanisms are in place to restrict the sale or transfer of vested shares held in the Nominee that are subject to (i) post-vesting holding
periods and (ii) shareholder ownership guidelines on cessation of employment. This arrangement applies to Pete Raby.
Executive Directors’ share plans (audited)
Damien Caby
LTIP
As at | Allocations | Vested | Lapsed | As at | Market price | Market price | |||
1 January | during the | during the | during the | 31 December | at date of | at date of | Performance | ||
Plan | 2025 | year | year | year | 2025 | allocation | vesting | period | |
No further performance | 2023 | 91,544 | – | – | 91,544 | 300.40p | – | 01.01.23 – | |
conditions, not yet vested | 31.12.25 | ||||||||
Subject to performance | 2024 | 95,155 | – | – | 95,155 | 289.00p | – | 01.01.24 – | |
conditions | 31.12.26 | ||||||||
2025 | – | 356,166 | – | – | 356,166 | 207.20p | – | 01.01.25 – | |
31.12.27 |
Recruitment award
As at | Granted | Exercised | Lapsed | As at | Market price | Market price | |||
1 January | during the | during the | during the | 31 December | at date of | at date of | Vesting | ||
Plan | 2025 | year | year | year | 2025 | allocation | vesting | period | |
Subject to continued service 3 | 2022 | 58,676 | – | 29,337 | – | 29,339 | 296.40p | 211.70p | 30.05.23 – |
30.05.26 |
Total interests in share plans
As at 1 January 2025 | As at 31 December 2025 |
255,003 1 | 583,933 1,2 |
1.
Includes 2024 deferred bonus award.
2.
Includes 2024 and 2025 deferred bonus award.
3.
In 2022, Damien was granted an award in the form of restricted shares to compensate for forfeited long-term incentive awards on leaving his previous employer. There are no performance
conditions attached. The award vests in four tranches, with the final tranche due to vest in May 2026.
Pete Raby
LTIP
As at | Allocations | Vested | Lapsed | As at | Market price | Market price | |||
1 January | during the | during the | during the | date of | at date of | at date of | Performance | ||
Plan | 2025 | year | year | year | leaving | allocation | vesting | period | |
No further performance | 2022 | 414,320 | – | 111,493 | 302,827 | – | 287.70p | 213.57p | 01.01.22 – |
conditions, vested (subject to | 31.12.24 | ||||||||
two year post-vesting holding) | |||||||||
No further performance | 2023 | 412,782 | – | – | 45,865 | 366,917 | 300.40p | – | 01.01.23 – |
conditions, not yet vested | 31.12.25 | ||||||||
Subject to performance | 2024 | 446,366 | – | – | 198,385 | 247,981 | 289.00p | – | 01.01.24 – |
conditions | 31.12.26 |
Share options
Market price | |||||||||
As at | Granted | Exercised | Lapsed | at date of | |||||
1 January | during the | during the | during the | As at date | Option price | vesting/ | Maturity | ||
Plan | 2025 | year | year | year | of leaving | at grant | exercise | period | |
Subject to continued service | Sharesave | 4,285 | – | – | – | 4,285 | 210.00p | – | 01.12.25 – |
31.05.26 |
Total interests in share plans
As at 1 January 2025 | As at date of leaving |
1,441,024 1,2 | 785,989 2,3 |
1. Includes 2022 deferred bonus award.
2. Includes 2023 and 2024 deferred bonus awards.
3. Includes 2025 deferred bonus award.
/
Richard Armitage
LTIP
As at | Allocations | Vested | Lapsed | As at | Market price | Market price | |||
1 January | during | during the | during the | 31 December | at date of | at date of | Performance | ||
Plan | 2025 | the year | year | year | 2025 | allocation | vesting | period | |
No further performance | 2022 | 207,587 | – | 55,861 | 151,726 | – | 307.10p | 211.7p | 01.01.22 – |
conditions, vested (subject to | 31.12.24 | ||||||||
two year post-vesting holding) | |||||||||
No further performance | 2023 | 220,705 | – | – | – | 220,705 | 300.40p | – | 01.01.23 – |
conditions, not yet vested | 31.12.25 | ||||||||
Subject to performance | 2024 | 238,588 | – | – | – | 238,588 | 289.00p | – | 01.01.24 – |
conditions | 31.12.26 | ||||||||
2025 | – | 239,934 | – | – | 239,934 | 207.20p | – | 01.01.25 – | |
31.12.27 |
Share options
As at | Granted | Exercised | Lapsed | As at | Market price | ||||
1 January | during the | during the | during the | 31 December | Option price | at date of | Maturity | ||
Plan | 2025 | year | year | year | 2025 | at grant | vesting | period | |
Subject to continued service | Sharesave | 4,285 | – | – | – | 4,285 | 210.00p | – | 01.12.25 – |
31.05.26 | |||||||||
Sharesave | – | 5,564 | – | – | 5,564 | 164.00p | – | 01.12.28 – | |
31.05.29 |
Total interests in share plans
As at 1 January 2025 | As at 31 December 2025 |
716,140 1 | 817,279 1,2 |
1.
Includes 2023 and 2024 deferred bonus award.
2.
Includes 2024 and 2025 deferred bonus award.
Details of plans
LTIP | |
Details | |
LTIP | The performance conditions attached to the 2023 awards are set out on page 90. |
The performance conditions attached to the 2024 awards are on the same basis as the 2023 awards, except that | |
the EPS range was amended to 9%–16%. | |
The performance conditions attached to the 2025 awards are set out on page 91. | |
LTIP-CSOP | LTIP 2023, 2024 and 2025: The awards were structured as LTIP awards in the form of a conditional award of free |
shares. |
UK Sharesave | |
Details | |
HMRC-approved all-employee Sharesave scheme. Exercise price set at 20% discount to share price on date of | |
grant. Options mature after the three-year savings period and must be exercised within six months of vesting. | |
Details of options held by Directors under Sharesave are outlined in the individual Director shareholding tables | |
above. |
Deferred Bonus Plan | |
Details | |
Mandatory deferral of one-third of gross bonus result relating to the previous year, which is provided as a | |
conditional award of shares of equivalent value. The award vests on the third anniversary of the award date and is | |
subject to forfeiture if the Executive Director leaves before the vesting date, unless deemed to be a good leaver. | |
The award is also subject to malus and clawback provisions. |
Other transactions involving Directors are set out in note 27 (Related parties) to the consolidated financial statements. This Report was
approved by the Board on 2 March 2026.
Remuneration Report
continued
104
Remuneration governance
Remuneration Committee role
The Remuneration Committee determines, and agrees with the
Board, the framework and policy for the remuneration, including
pension rights and any compensation payments, of the Group’s
Executive Directors and the Chairman. The Committee also
reviews the remuneration in relation to other senior executives and
is kept fully informed of Remuneration Policy decisions impacting
the wider workforce. The Committee’s terms of reference are
available on the Group’s website.
The Remuneration Committee consults the CEO and invites
him to attend meetings when appropriate. The Group Human
Resources Director, the Group Head of Reward and Ellason,
the Committee’s independent advisor, attend meetings of the
Committee by invitation.
The Committee also has access to advice from the CFO. The
Company Secretary acts as secretary to the Committee. No
Executive Director or other attendee is present when their own
remuneration is being discussed.
Remuneration Committee membership
The Remuneration Committee is currently composed of five
non-executive Directors and the Chairman of the Company.
Each of the non-executive Directors is regarded by the Board as
independent. The Chairman of the Company was considered
independent upon appointment. Attendance at meetings by
individual members is detailed in the Corporate Governance
Report on page 59.
Key activities during 2025
During 2025, the key areas of focus for the Committee were:
determining whether targets for the 2024 bonus and 2022 LTIP
were achieved, and, if so, to what extent (plus assessment of any
windfall gains associated with the 2022 LTIP).
having reviewed the remuneration of the wider workforce,
determining remuneration for Executive Directors and other
senior executives, applying consistent guiding principles.
approving the remuneration of the Company’s incoming CEO,
and reviewing the terms of the retiring CEO’s retirement.
reviewing whether the measures and structure for the bonus and
share incentive schemes remain appropriate, as well as reviewing
the overall effectiveness of such schemes.
reviewing and agreeing Executive Director personal objectives
for 2026.
receiving reports on share awards to employees, and employee
participation in the Sharesave scheme.
reviewing feedback from institutional investors ahead of the
Company’s 2025 AGM.
reviewing Executive Director share ownership guidelines, and
Directors’ holdings against the guidelines.
receiving regulatory and governance updates, and receiving
reports on external market remuneration practices.
reviewing and discussing the Company’s annual Gender Pay
Gap Report.
appraising the independent remuneration advisor’s performance
and reviewing the terms of engagement.
approving the Chair’s 2026 fees.
determining performance targets for the 2025 bonus.
determining performance targets for the 2025 share incentive
schemes.
reviewing the Committee’s terms of reference.
Committee performance evaluation
The Committee’s performance was reviewed as part of the Board
performance review (see page 66 for details). It was concluded
that the Committee had operated effectively during the period
under review.
Committee advisor
Ellason was appointed as the Committee’s executive remuneration
advisor from 1 January 2021. Ellason specialises in executive
remuneration advice and during 2025 provided independent advice
on Remuneration Policy, performance measurement, the setting
of incentive targets, TSR analysis and the structure of long-term
incentives, and provided market data in respect of senior executive
remuneration and non-executive Director fees. Ellason reports
directly to the Chair of the Remuneration Committee, does not
provide any non-remuneration-related services to the Group, has
no other connections either with Morgan Advanced Materials or
any of its individual Directors, and is considered to be independent.
Ellason is a signatory to the Remuneration Consultants Group’s
voluntary Code of Conduct.
Fees paid during the year to advisors for advice to the
Remuneration Committee, charged on a time and materials basis,
were as follows:
Advisor |
Fees (including expenses, excluding VAT) |
Ellason |
£39,120 |
Summary of shareholder voting
The following table shows the results of the binding vote on the
2025 Remuneration Policy (at the 2025 AGM) and the advisory
vote on the 2024 Annual Report on Remuneration at the 2025
AGM:
Resolution |
For |
Against |
Withheld |
Remuneration Policy |
97.88% |
2.12% |
667,527 |
Annual Report on |
|||
Remuneration |
99.74% |
0.26% |
672,358 |
Compliance statement
During the year under review, the Company has complied with the
provisions relating to Directors’ remuneration in the UK Corporate
Governance Code 2024. This Remuneration Report has been
prepared in accordance with the Companies Act 2006 (as
amended) and Schedule 8 of the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008
(as amended). In accordance with Section 439 of the Companies
Act 2006, an advisory resolution to approve the Annual Report on
Remuneration will be proposed at the AGM on 7 May 2026.
Signed on behalf of the Board
Alison Wood
Strategic Report
Governance
Financial Statements
105
Morgan Advanced Materials
/
Annual Report 2025
Other disclosures
The Directors’ Report is required to be produced
by law. The Financial Conduct Authority (FCA)
Disclosure Guidance and Transparency Rules (DTRs)
and UK Listing Rules (UKLRs) also require the
Company to make certain disclosures.
Pages 55 to 109 inclusive (together with the sections of the Annual
Report incorporated by reference) constitute a Directors’ Report
that has been drawn up and presented in accordance with
applicable law, and the liabilities of the Directors in connection with
that report are subject to the limitations and restrictions provided
by that law.
The Company
Legal form of the Company
Morgan Advanced Materials plc is a company incorporated in
England and Wales with company number 00286773.
Name change
The Company changed its name to Morgan Advanced Materials plc
(from The Morgan Crucible Company plc) on 27 March 2013.
Annual General Meeting (AGM)
The Company’s 2025 AGM will be held on 7 May 2026,
commencing at 10.30am at Slaughter and May’s offices, One Bunhill
Row, London EC1Y 8YY. A circular incorporating the 2026 Notice
of AGM is available in the ‘Invest in us’ section of
morganadvancedmaterials.com.
Statutory disclosures
Amendment of the Articles of Association
The Company’s constitution, known as the Articles of Association
(‘the Articles’), is essentially a contract between the Company and
its shareholders, governing many aspects of the management of the
Company. It deals with matters such as the rights of shareholders,
the appointment and removal of Directors, the conduct of the
Board and general meetings and communications by the Company.
The Articles may be amended by special resolution of the
Company’s shareholders.
Appointment and replacement of Directors
The Articles provide that the Company may by ordinary resolution
at a general meeting appoint any person to act as a Director,
provided that notice is given of the resolution identifying the
proposed person by name and that the Company receives written
confirmation of that person’s willingness to act as a Director if they
have not been recommended by the Board. The Articles also
empower the Board to appoint as a Director any person who is
willing to act as such.
The maximum possible number of Directors under the Articles
is 15. The Articles provide that the Company may by special
resolution, or by ordinary resolution of which special notice is
given, remove any Director before the expiration of his or her
period of office. The Articles also set out the circumstances in
which a Director shall vacate office. The Articles require that at
each AGM any Director who was appointed after the previous
AGM must be proposed for election by the shareholders.
Additionally, any other Director who has not been elected or
re-elected at one of the previous two AGMs must be proposed for
re-election by the shareholders. The Articles also allow the Board
to select any other Director to be proposed for re-election. In each
case, the rules apply to Directors who were acting as Directors on
a specific date selected by the Board. This is a date not more than
14 days before, and no later than, the date of the Notice of AGM.
Notwithstanding the provisions of the Articles, all the Directors will
stand for election or re-election on an annual basis in compliance
with the provisions of the UK Corporate Governance Code (the
Code). Details of the skills, experience and career history of
Directors in post as at the date of this Report, and the Board
Committees on which they serve, can be found on pages 57
and 58.
Results and dividends
Revenue was £996.6 million (2024: £1,060.1 million) on a
continuing basis and operating profit was £45.2 million (2024: £99.2
million).
Total profit (attributable to owners of the parent and non-
controlling interests) for the year ended 31 December 2025 was
£28.8 million (2024: £58.8 million). Profit before taxation for the
same period was £23.0 million (2024: £80.2 million).
Basic earnings per share from continuing operations was (1.0)
pence (2024: 16.5 pence). Capital and reserves at the end of the
year were £348.9 million (2024: £389.3 million). The total profit of
£28.8 million (2024: £58.8 million) will be transferred to equity.
The Directors recommend the payment of a final dividend of 6.8
pence per share on the Ordinary share capital of the Company,
payable on 12 May 2026 to shareholders on the register at the
close of business on 10 April 2026. Together with the interim
dividend of 5.4 pence per share paid on 17 November 2025, this
final dividend, if approved by shareholders, brings the total
distribution for the year to 12.2 pence per share (2024:
12.2 pence).
Directors
All those who served as Directors at any time during the year under
review are set out on pages 57 and 58. Helen Bunch also served as
a Director up until 8 May 2025 and Pete Raby served as CEO until
1 July 2025.
Powers of the Directors
Subject to the Company’s Articles, UK legislation and any directions
given by special resolution, the business of the Company is
managed by the Board, which may exercise all the powers of the
Company.
106
Other disclosures
continued
Directors’ interests
Details of Directors’ interests (and their connected persons’
beneficial interests) in the share capital of the Company are listed
on page 101.
Directors’ indemnities
The Company has entered into separate indemnity deeds with
each Director, containing qualifying indemnity provisions, as defined
in Section 236 of the Companies Act 2006, under which the
Company has agreed to indemnify each Director in respect of
certain liabilities which may attach to each of them as a Director or
as a former Director of the Company or any of its subsidiaries.
The indemnity deeds were in force during the financial year to
which this Directors’ Report relates and are in force as at the date
of approval of the Directors’ Report.
Engagement with customers, suppliers and
others
Details of how the Directors have had regard to the need to foster
the Company’s business relationships with customers, suppliers and
others, and the effect of that regard, including on the principal
decisions taken by the Group during the year, are set out on pages
20 and 21 and pages 22 and 24 of the Strategic Report and on page
65 of the Corporate Governance Report.
Information required by UKLR 6.6.1
The information required to be disclosed by UK Listing Rule 6.6.1
can be found in the following locations:
Publication of unaudited
financial information
On 14 October 2025, the Company
published its trading update stating that
adjusted operating profit margin* for
the year was expected to be circa
10%. Actual AOP margin was 9.4%.
Details of any long-term
incentive schemes
Remuneration Report.
Shareholder waiver
of dividends
Financial Statements, note 20.
Shareholder waiver
of future dividends
Financial Statements, note 20.
The remaining disclosures required by UKLR 6.6.1 are not
applicable to the Company.
Overseas branches
As at 31 December 2025, the Company had branches as follows:
Morgan AM&T BV (Sweden)
Carbo San Luis SA (Chile)
Morgan Advanced Materials Industries Ltd (UAE)
Morganite Luxembourg SA (Belgium)
Morganite Brasil Ltda (Brazil).
People
There are no agreements between the Company and its Directors
or employees providing for compensation for loss of office or
employment (whether through resignation, purported redundancy
or otherwise) that occurs because of a takeover bid.
Engagement with employees – principal
decisions
Details of how the Directors have engaged with UK employees can
be found on page 20 of the Strategic Report. Details of how the
Directors had regard to the interests of UK employees and the
effect of that regard on principal decisions taken by the Group
during the financial year can be found on pages 22 to 24 of the
Strategic Report.
Details of how Morgan Advanced Materials encourages employee
involvement can be found in pages 20, 22 to 24, 30 to 31 and 63 to
65.
Employment of disabled people
The Group has a range of employment policies which set out the
standards, processes, expectations and responsibilities of its people
and the organisation. These policies are designed to ensure that
everyone, including those with existing or new disabilities, visible or
invisible, are dealt with fairly and have equal opportunity.
Morgan Advanced Materials promotes equal opportunities for all
employees and job applicants and does not unlawfully discriminate.
The Group makes reasonable adjustments to accommodate any
employee who may have a disability within the meaning of all global
equality legislation, and where the Group is aware of such disability.
Research and development
The Group incurred £28.9 million in operating costs in respect of
research and development (R&D) (2024: £29.7 million) on a
continuing basis. The Group did not capitalise any development
costs in 2025 (2024: £nil). The Group has established four Centres
of Excellence (CoEs), which are dedicated to driving materials
development, to exacting customer specifications, and delivering
performance through materials and production process innovation.
The CoEs consolidate the Group’s R&D efforts around its core
technologies, to increase the effectiveness of our R&D spend,
accelerate key projects and increase technical differentiation. The
CoEs focus on the strategic execution priorities for the divisions and
the Group.
GHG emissions, energy consumption and
energy efficiency
Details of the Group’s annual greenhouse gas (GHG) emissions,
energy consumption and energy efficiency are shown in the
Strategic Report on page 40.
Strategic Report
Governance
Financial Statements
107
Morgan Advanced Materials
/
Annual Report 2025
Political donations
No political donations have been made. Morgan Advanced
Materials has a policy of not making donations to any political party,
representative or candidate in any part of the world.
Charitable donations
Morgan Advanced Materials made donations of £93,252 (2024:
£162,180) to local charities and community activities in various
countries.
Future developments
An indication of likely future developments of the Group is included
in the ‘Our strategy’ and ‘Market environment’ sections of the
Strategic Report.
Financial instruments
Details of the Group’s use of financial instruments, together with
information on policies and exposure to price, liquidity, cash flow,
credit, interest rate and currency risks, can be found in note 22 to
the consolidated financial statements. All information detailed in this
note is incorporated into the Directors’ Report by reference and is
deemed to form part of the Directors’ Report.
Share capital and related matters
Share capital
The Company’s share capital as at 31 December 2025 is set out in
note 20 to the consolidated financial statements. The rights and
obligations attaching to the Company’s Ordinary shares, and
restrictions on the transfer of shares in the Company (which include
specific circumstances in which the Board is entitled to refuse to
register the transfer of shares), are set out in the Articles.
Shareholders’ rights
The holders of Ordinary shares are entitled to receive dividends,
when declared, to receive the Company’s reports and accounts, to
attend and speak at general meetings of the Company, to appoint
proxies and to exercise voting rights.
No person holds securities in the Company carrying special rights
with regard to control of the Company. The Company is not aware
of any agreements between holders of securities that may result in
restrictions on the transfer of securities or on voting rights.
Additionally the Company has authorised, issued and fully paid
437,281 (2024: 437,281) cumulative Preference shares classified as
borrowings totalling £0.4 million (2024: £0.4 million). The
Preference shares comprise 125,327 of 5.5% Cumulative First
Preference shares of £1 each and 311,954 issued 5.0% Cumulative
Second Preference shares of £1 each.
Details of the structure of the Company’s Preference share capital
and the rights attaching to the Company’s Preference shares are set
out in note 20 to the consolidated financial statements.
Share allotment and repurchase authorities
The Directors were granted authority at the 2025 AGM to allot
shares in the Company and to grant rights to subscribe for or
convert any securities into shares in the Company up to an
aggregate nominal amount of £23,449,742 in any circumstances.
This amount represented approximately one-third of the
Company’s issued share capital prior to that meeting. The Directors
were also authorised to allot shares and to grant rights up to an
aggregate nominal amount of £46,899,484 in connection with a
rights issue only (but such amount to be reduced by any allotments
made under the first limb of the authority). This amount
represented approximately two-thirds of the Company’s issued
share capital prior to the meeting.
The Directors were also empowered at the 2025 AGM to allot
shares for cash on a non-pre-emptive basis, both in connection
with a rights issue or similar pre-emptive issue and, otherwise than
in connection with any such issue, up to a maximum aggregate
nominal amount of £7,034,922. This amount represented
approximately 10% of the Company’s issued share capital as it
stood prior to the meeting in line with the Pre-Emption Group’s
Statement of Principles on disapplying pre-emption rights.
As permitted by those Principles, the Directors were also
empowered to allot shares for cash on a non-pre-emptive basis up
to the same amount for use only in connection with an acquisition
or a specified capital investment.
The Directors were also authorised at the 2025 AGM to
repurchase shares in the capital of the Company up to a maximum
aggregate number of 28,139,688 shares. This represented
approximately 10% of the Company’s issued share capital prior to
the meeting. During the year, the Company utilised the above
authority to undertake market purchases in relation to the share
buyback programme announced on 5 November 2024 of
6,751,497 Ordinary shares (representing 2.4% of the issued share
capital of the Company as at 31 December 2025). The aggregate
nominal value of the shares purchased was £1.7 million and the
total aggregate amount paid was £15.2 million (excluding expenses).
Of the total purchased, 6,698,073 shares were cancelled in 2025
and the remaining 53,424 were cancelled in early 2026.
These share capital authorities and powers are due to lapse at the
2026 AGM at which time the Board will seek fresh authorities and
powers.
108
Other disclosures
continued
Employee share and share option schemes
The Company operates a number of employee share and share
option schemes. Details of outstanding share awards and share
options are given in note 24 to the consolidated financial
statements.
All the Company’s share schemes contain provisions relating to a
change of control. Outstanding options and awards would normally
vest and become exercisable on a change of control, subject to
being pro-rated for time and to the satisfaction of any performance
conditions at that time.
The trustees of the Morgan Advanced Materials General Employee
Benefit Trust (‘the Trust’) have absolute and unfettered discretion in
relation to voting any shares held in the Trust at any general
meeting. Their policy is not to vote the shares. If any offer is made
to shareholders to acquire their shares, the trustees will have
absolute and unfettered discretion as to whether to accept or reject
the offer in respect of any shares held by them.
Transactions, contractual arrangements and
post balance sheet events
Significant agreements – change of control
The Group has a number of borrowing facilities provided by various
financial institutions.
The facility agreements generally include change of control
provisions which, in the event of a change in ownership of the
Company, could result in their renegotiation or withdrawal.
The most significant of such agreements are the UK £230 million
multi-currency revolving credit facility agreement, which was signed
on 18 November 2022, the privately placed Note Purchase and
Guarantee Agreements signed on 27 October 2016, 20 March
2017 and 23 May 2023, for which the aggregate outstanding loan
amounts are USD$147 million, €60 million, the €92 million
Schuldschein loan agreement signed on 16 June 2023 and the
€150 million term loan agreement signed on 4 December 2024.
There are a number of other agreements that would take effect,
alter or terminate upon a change of control of the Company
following a takeover bid, such as commercial contracts and joint
venture agreements. No such individual contract is considered to
be significant in terms of its potential impact on the business of the
Group as a whole.
Post balance sheet events
There were no reportable subsequent events following the balance
sheet date.
Major shareholdings
As at the date of this Report, insofar as it is known to the Company
by virtue of notifications made in accordance with DTR 5, the table
below sets out holders of notifiable interests representing 3% or
more of the issued Ordinary share capital of the Company (such
holdings may have changed since notification to the Company).
As at 31 December 2025
Voting rights
notified
Percentage
of voting
rights
FIL Ltd
1
33,610,700
12.14%
Ameriprise Financial Inc
24,186,489
8.74%
GLG Partners LP
1
18,207,124
6.58%
Black Creek Investment
Management Inc
16,922,235
6.11%
Janus Henderson Group plc
14,540,443
5.25%
Aberforth Partners LLP
14,338,459
5.18%
M&G plc
1
14,251,115
5.15%
AXA Investment Managers
14,039,985
5.07%
Perpetual Limited
1
14,006,979
5.06%
BlackRock Inc
1
Below 5%
Below 5%
1.
Includes financial instruments
Changes that have been notified to the Company pursuant to
Chapter 5 of the Disclosure Guidance and Transparency Rules
between the end of the period under review and 2 March 2026,
the latest practicable date prior to the date of this Report, are set
out below.
Voting rights
notified
Percentage
of voting
rights
Black Creek Investment Management
16,558,058
5.98%
Ameriprise Financial Inc
13,024,192
4.71%
Reporting, accountability and audit
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and
the Group and Parent Company financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent
Company financial statements for each financial year. Under that
law they are required to prepare the Group consolidated financial
statements in accordance with UK-adopted international accounting
standards and applicable law and have elected to prepare the
Parent Company financial statements in accordance with UK
accounting standards, including ‘FRS 101 – Reduced Disclosure
Framework’.
Strategic Report
Governance
Financial Statements
109
Morgan Advanced Materials
/
Annual Report 2025
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Parent company and of
their profit or loss for that period.
In preparing each of the Group and Parent Company financial
statements, the Directors are required to:
select suitable accounting policies and then apply them
consistently
make judgements and estimates that are reasonable and prudent
for the Group consolidated financial statements, state whether
they have been prepared in accordance with UK-adopted
international accounting standards
assess the Group’s and Parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern
for the Parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject
to any material departures disclosed and explained in the Parent
Company financial statements. The Directors are responsible for
such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities
prepare the financial statements on the going concern basis of
accounting unless they intend to liquidate the Group or the
Parent Company or to cease operations or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
company’s transactions and disclose with reasonable accuracy at
any time the financial position of the Parent Company and enable
them to ensure that its financial statements comply with the
Companies Act 2006. They have general responsibility for taking
such steps as are reasonably open to them to safeguard the assets
of the Group and to prevent and detect fraud and other
irregularities. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due
to fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Remuneration Report and Corporate Governance Statement that
comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
In its reporting to shareholders, the Board is satisfied that the
Annual Report and Accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy as required by the 2024 Code.
The Directors as at the date of this Report, whose names and
functions are set out on pages 57 and 58, confirm that, to the best
of their knowledge:
the Group’s consolidated financial statements, which have been
prepared in accordance with UK-adopted international
accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit of the Group
the management report (comprising the Directors’ Report and
the Strategic Report) includes a fair review of the development
and performance of the business and the position of the Group,
together with a description of the principal risks and uncertainties
that it faces
the Annual Report and financial statements, taken as a whole, are
fair, balanced and understandable and provide the information
necessary for shareholders to assess the Group’s position,
performance, business model and strategy.
Scope of the reporting in this Annual Report
The Board has prepared a Strategic Report which provides an
overview of the development and performance of the Group’s
business in the year ended 31 December 2025.
For the purposes of DTR 4.1.5R(2) and DTR 4.1.8, the Directors’
Report on pages 55 to 109 and the Strategic Report on pages 2 to
54 comprise the management report, including the sections of the
Annual Report and consolidated financial statements incorporated
by reference.
Each Director holding office at the date of approval of this
Directors’ Report confirms that, so far as they are aware, there is
no relevant audit information of which the Company’s auditor is
unaware, and that they have taken all steps that they ought to have
taken as a Director to make themselves aware of any relevant audit
information and to establish that the Company’s auditor is aware of
that information.
The Strategic Report, the Directors’ Report and the Remuneration
Report were approved by the Board on 2 March 2026.
For and on behalf of the Board
Winifred Chime
Company Secretary
2 March 2026
Morgan Advanced Materials plc
York House
Sheet Street
Windsor
Berkshire SL4 1DD
Registered in England and Wales,
No. 00286773
Report on the audit of the financial statements
1. Opinion
In our opinion:
the financial statements of Morgan Advanced Materials
plc (the ‘Company’) and its subsidiaries (the ‘Group’) give
a true and fair view of the state of the Group’s and of the
Company’s affairs as at 31 December 2025 and of the
Group’s profit for the year then ended;
the Group financial statements have been properly
prepared in accordance with United Kingdom adopted
international accounting standards;
the Company financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, including Financial Reporting
Standard 101 “Reduced Disclosure Framework”; and
the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
the consolidated income statement;
the consolidated statement of comprehensive income;
the consolidated and Company balance sheets;
the consolidated and Company statements of changes in equity;
the consolidated statement of cash flows;
the consolidated material accounting policy information;
the Company material accounting policy information;
the related consolidated notes 1 to 29; and
the related Company notes 1 to 16.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law
and United Kingdom adopted international accounting standards.
The financial reporting framework that has been applied in the
preparation of the Company financial statements is applicable law
and United Kingdom Accounting Standards, including FRS 101
“Reduced Disclosure Framework” (United Kingdom Generally
Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
auditor’s responsibilities for the audit of the financial statements
section of our report.
We are independent of the Group and the Company in
accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the Financial
Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to
listed public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
The non-audit services provided to the Group and Company
for the year are disclosed in note 4 to the consolidated financial
statements. We confirm that we have not provided any non-audit
services prohibited by the FRC’s Ethical Standard to the Group or
the Company.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit
matters
The key audit matters that we identified in the
current year were:
inventory valuation; and
revenue recognition cut off.
Materiality
The materiality that we used for the Group
financial statements was £4.0m which was
determined on the basis of 5.7% of continuing
profit before tax and specific adjusting items.
Scoping
We performed audit procedures across 28
reporting components which represent 77% of
revenue, 77% of continuing profit before tax and
specific adjusting items and 71% of net assets.
Independent Auditor’s Report
110
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and
Company’s ability to continue to adopt the going concern basis of
accounting included:
obtaining an understanding of the financing facilities including
nature of facilities, repayment terms and covenants;
obtaining an understanding of the relevant controls around the
budgeting and forecasting process used in the preparation of the
going concern analysis and disclosures;
challenging the assumptions used in the Board approved
forecasts by reference to historical performance and other
supporting evidence such as market data;
recalculation of the amount of headroom in the forecasts (in
liquidity terms and against the relevant covenant limits);
assessing the ability for the Company to repay debt due for
repayment within the going concern period;
assessing the appropriateness of the sensitivity analysis and
reverse stress tests performed by management;
assessing the impact of macro-economic conditions on the
business; and
assessing the appropriateness of the disclosures in the financial
statements.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s
and Company’s ability to continue as a going concern for a period
of at least twelve months from when the financial statements are
authorised for issue.
In relation to the reporting on how the Group has applied the UK
Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the Directors’ statement in the
financial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of
this report.
5. Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which
had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts
of the engagement team.
These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
5.1. Inventory valuation
Key audit
matter
description
The Group manufactures various thermal,
carbon and technical ceramic products for a
diverse range of end-markets. The Group had a
material inventory balance of £146.5 million as at
31 December 2025 (2024: £165.9 million) and
a provision of £8.0 million (2024: £6.9 million)
calculated with reference to the inventory ageing
report. There is a risk that inventory is not
accurately valued because of system limitations
at local manufacturing sites, thereby incorrectly
applying the Group’s provisioning accounting
policy and applying judgement using past data
and forecast demand data when determining net
realisable value of excess and obsolete stock.
Significant manual intervention is required
and applied to record and value inventory in
the Group.
In the consolidated financial statements, note 1
sets out the Group’s accounting policy for
inventory valuation and note 16 provides further
analysis of the account balance.
How the
scope
of our audit
responded
to the
key audit
matter
We have performed the following audit
procedures in respect of this key audit matter:
understood local management’s inventory
provisioning process and obtained an
understanding of the relevant controls in
management’s review of the inventory
provision;
assessed any unusual manual adjustments
to inventory;
assessed the inventory ageing report and
evaluated whether the Group accounting
policy of fully providing for inventory aged over
12 months has been applied. For inventory
aged less than 12 months, we assessed the
breakdown of the inventory report by age
to evaluate the completeness of applying the
Group’s policy;
challenged management’s key assumptions
in determining inventory provisions, with
reference to past data and forecast demand;
and
assessed the mathematical accuracy of the
provision by reperforming the calculation based
on the key assumptions.
Key
observations
Based on the procedures performed, we are
satisfied that the valuation of inventory as at
31 December 2025 is appropriate.
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Independent Auditor’s Report
continued
5.2. Revenue recognition cut-off
Key audit matter
description
The Group recognised £996.6 million of revenue in the year ended 31 December 2025 (2024 restated:
£1,060.1 million).
The Group’s approach to revenue recognition varies within each division of the Group, depending on the specific
circumstances of contractual arrangements or terms. Most of the revenue typically arises from short-term
arrangements and is satisfied at a point in time when the customer takes control of the products.
We have specifically focused on whether sales transactions recorded towards the end of the financial year,
including manual adjustments, have been recorded in the correct accounting period pinpointed to those sites
indicating increased risk from trading and performance patterns when compared to earlier in the financial year.
This takes into consideration the current challenging market conditions.
Note 1 to the consolidated financial statements sets out the Group’s accounting policy for revenue recognition
and note 3 includes details of the Group’s revenue by segment.
How the scope
of our audit
responded to
the key audit
matter
We have performed the following audit procedures in respect of this key audit matter:
understood local management’s revenue recognition process and obtained an understanding of the relevant
controls in management’s review of when revenue should be recognised;
performed testing on a sample of sales transactions, inspecting supporting documentation such as delivery
notes, sales invoices and customer orders to identify if the transactions were recorded in the correct financial
year, with a focus around the year-end;
assessed manual adjustments made to revenue at year end and traced them to appropriate audit evidence
evaluating whether revenue was recorded in the appropriate accounting period; and
evaluated credits notes issued to customers just after the financial year end to determine if they are valid,
supported by appropriate audit evidence and recorded in the correct financial period.
Key observations
Based on the procedures performed, we are satisfied that the revenue has been recognised appropriately for the
financial year ended 31 December 2025.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Company financial statements
Materiality
£4.0 million (2024: £5.6 million)
£2.4 million (2024: £3.4 million)
Basis for
determining
materiality
Materiality represents 5.7% (2024: 5.2%) of
continuing profit before tax and specific adjusting
items described in note 6.
Materiality represents 3% (2024: 3%) of net assets. This was
then capped at 60% (2024: 60%) of Group materiality.
Rationale
for the
benchmark
applied
Continuing profit before tax and specific
adjusting items is a key metric for users of the
financial statements and reflects the way business
performance is reported and assessed by external
users of the financial statements.
The Company is non-trading and contains investments in the
Group’s trading components. As a result, we have determined
net assets to be the appropriate basis.
112
6. Our application of materiality
(continued)
6.1. Materiality
(continued)
Continuing profit before tax and specific adjusting items
Group materiality
Group materiality £4.0 million
Component performance materiality
range £1.2 million to £1.6 million
Continuing profit
before tax and
specific adjusting items
£70.6 million
Audit Committee reporting
threshold £0.2 million
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as a whole.
Group financial statements
Company financial statements
Performance
materiality
65% (2024: 65%) of Group materiality
65% (2024: 65%) of Company materiality
Basis and
rationale for
determining
performance
materiality
In determining performance materiality, we considered the following factors:
a. our risk assessment, including our understanding of the entity and its overall control environment;
b. the quality of the control environment over certain business processes and IT systems;
c.
the disaggregated nature of the Group and the likelihood of an individually material error; and
d. our cumulative experience from prior year audits and level of corrected and uncorrected misstatements
identified.
6.3 Error reporting threshold
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of £0.2 million (2024:
£0.3 million), as well as differences below that threshold that, in our
view, warranted reporting on qualitative grounds. We also report
to the Audit Committee on disclosure matters that we identified
when assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
The Group operates and manufactures in 56 sites in 20 countries
spread across five continents with the largest footprint being in
North America, Asia, and Europe. Our Group audit was scoped
by obtaining an understanding of the Group and its environment,
including Group-wide controls, and assessing the risks of material
misstatement at the Group and component level.
Based on that assessment, we focused our Group audit scope
across all divisions: Performance Carbon, Technical Ceramics and
Thermal Products.
These divisions are composed of many individual reporting
components, which are the lowest level at which management
prepares financial information that is included in the consolidation
financial statements. The Company is located in the UK and is
audited directly by the UK Group audit team.
With the disposal of its Molten Metal Systems (“MMS”) business
(detail included in note 2) reflected in our scoping, a total of 28
(2024: 29) components were subject to audit procedures on one
or more classes of transactions or account balances. Each reporting
component in scope for audit procedures, including the Company,
was subject to an audit performance materiality level between
£1.2 million and £1.6 million (2024: £1.6 million and £2.2 million).
Reporting components in our Group audit scope where
procedures were applied on one or more classes of transactions or
account balance covered 77% of revenue (2024: 74%), 77% of
continuing profit before tax and specific adjusting items (2024: 74%)
and 71% of net assets (2024: 75%).
At a Group level, we also applied audit procedures on the
consolidation and performed analytical review procedures on
components and other account balances that were not subject to
direct audit procedures.
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Annual Report 2025
Independent Auditor’s Report
continued
7.2. Our consideration of the control environment
The Group uses a number of different IT systems across the
reporting components and the control environment continues to
be decentralised and reliant on manual processes. We involved our
IT specialists to obtain an understanding of the general IT controls
relating to systems relevant to the audit, specifically on access and
change management areas of information security.
We obtained an understanding of relevant controls over revenue
business processes, inventory valuation, impairment reviews, the
financial close and reporting process, and management’s review of
judgements and estimates. Management is continuing work to align
the systems of financial control and reporting across the Group,
with further improvements required to the IT environment for us
to adopt a controls reliance approach to our audit.
Where control deficiencies and improvements were identified in
relation to IT systems, impairment reviews and journals review,
these were reported to management and the Audit Committee as
appropriate. The Group continues to invest time in responding to,
and addressing, our observations.
7.3. Our consideration of climate-related risks
In planning our audit, we have considered the potential impact of
climate change on the Group’s business and its financial statements.
The Group has assessed the risk and opportunities relevant to
climate change and maintained the climate change related risk,
highlighted under the external environment principal risk, across the
Group. This risk grading has been maintained at the same level as
the prior year and has been considered and embedded into the
business as noted in the Strategic Report.
As part of our audit procedures, we have reviewed the Group’s
environment related risk assessment and held direct enquiries
with those charged with governance to understand the process of
identifying climate-related risks, the determination of mitigating
actions and the impact on the consolidated financial statements.
While management has acknowledged that the transition and
physical risks posed by climate change have the potential to impact
the medium to long-term success of the business, they have
assessed that there is no material impact arising from climate
change on the judgements and estimates made in the consolidated
financial statements as at 31 December 2025 as explained in note 1
on page 132.
We performed our own qualitative risk assessment of the potential
impact of climate change on the Group’s account balances and
classes of transactions and did not identify any additional risks of
material misstatement. Our procedures included reviewing
disclosures included in the Strategic Report to consider whether
they are materially consistent with the consolidated financial
statements and our knowledge obtained in the audit.
7.4. Working with other auditors
The planned programme which we designed as part of our
involvement in the component auditors’ work was delivered over
the course of the Group audit. The extent of our involvement
which commenced from the planning phase included:
setting the scope of the component auditors work and
assessment of their independence;
providing direction on enquiries made by the component
auditors at the interim and year end stages through online
and telephone conversations, and in-person meetings;
Group engagement partner-led discussion being held with all
component auditors, and involvement in the appropriateness
of the design and performance of further audit procedures on
higher and significant risk areas, including issuing Group audit
instructions detailing the nature and form of the reporting
required from component auditors; and
a review of the component auditors’ engagement files by
a senior member of the Group engagement team.
Revenue
Subject to audit procedures
77%
Review at group level
23%
Profit before tax
Subject to audit procedures
77%
Review at group level
23%
Net assets
Subject to audit procedures
71%
Review at group level
29%
114
8. Other information
The other information comprises the information included
in the Annual Report, other than the financial statements and
our auditor’s report thereon. The Directors are responsible for
the other information contained within the annual report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements, or our knowledge obtained in the
course of the audit, or otherwise appears to be materially
misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement,
the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view,
and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible
for assessing the Group’s and the Company’s ability to continue as
a going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Company or
to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of
the financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis
of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
11. Extent to which the audit was considered
capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is
detailed below.
11.1. Identifying and assessing potential
risks related to irregularities
In identifying and assessing risks of material misstatement in respect
of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
the nature of the industry and sector, control environment
and business performance including the design of the Group’s
remuneration policies, key drivers for Directors’ remuneration,
bonus levels and performance targets;
results of our enquiries of management, internal audit,
the Directors and the Audit Committee about their own
identification and assessment of the risks of irregularities,
including those that are specific to the Group’s sector;
any matters we identified having obtained and reviewed the
Group’s documentation of their policies and procedures
relating to:
– identifying, evaluating and complying with laws and regulations
and whether they were aware of any instances of non-
compliance;
– detecting and responding to the risks of fraud and whether
they have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or
non-compliance with laws and regulations; and
the matters discussed among the audit engagement team
including component audit teams and relevant internal specialists,
including tax, valuations, pensions, IT and industry specialists
regarding how and where fraud might occur in the financial
statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities
and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in the following area:
revenue recognition cut-off. In common with all audits under ISAs
(UK), we are also required to perform specific procedures to
respond to the risk of management override.
We also obtained an understanding of the legal and regulatory
frameworks that the Group operates in, focusing on provisions
of those laws and regulations that had a direct effect on the
determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this
context included the UK Companies Act, UK Listing Rules,
pensions legislation and tax legislation.
In addition, we considered provisions of other laws and regulations
that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the Group’s ability
to operate or to avoid a material penalty. These included the
Group’s environmental regulations.
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Independent Auditor’s Report
continued
11.2. Audit response to risks identified
As a result of performing the above, we identified revenue
recognition cut-off as a key audit matter related to the potential risk
of fraud. The key audit matters section of our report explains the
matter in more detail and also describes the specific procedures we
performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks
identified included the following:
reviewing the financial statement disclosures and testing to
supporting documentation to assess compliance with provisions
of relevant laws and regulations described as having a direct
effect on the financial statements;
enquiring of management, the Audit Committee and in-house
legal counsel concerning actual and potential litigation and claims;
performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud;
reading minutes of meetings of those charged with governance,
reviewing internal audit reports and reviewing correspondence
with HMRC; and
in addressing the risk of fraud through management override
of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made in
making accounting estimates are indicative of a potential bias; and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members including
internal specialists and component audit teams and remained
alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
Report on other legal and regulatory
requirements
12. Opinions on other matters prescribed
by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
the information given in the Strategic Report and the Directors’
Report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been
prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and
the Company and their environment obtained in the course of the
audit, we have not identified any material misstatements in the
Strategic Report or the Directors’ Report.
13. Corporate Governance Statement
The Listing Rules require us to review the Directors’ statement
in relation to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to the Group’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
the Directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on page 53;
the Directors’ explanation as to its assessment of the Group’s
prospects, the period this assessment covers and why the period
is appropriate set out on page 53;
the Directors’ statement on fair, balanced and understandable set
out on page 109;
the Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on pages
43-45;
the section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems set
out on pages 43-45; and
the section describing the work of the Audit Committee set out
on page 69.
14. Matters on which we are required to report
by exception
14.1. Adequacy of explanations received and
accounting records
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
we have not received all the information and explanations we
require for our audit; or
adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
the Company financial statements are not in agreement with the
accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report
if in our opinion certain disclosures of Directors’ remuneration
have not been made or the part of the directors’ remuneration
report to be audited is not in agreement with the accounting
records and returns.
We have nothing to report in respect of these matters.
116
15. Other matters which we are required
to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were
appointed by the Board of Directors in June 2019 to audit the
financial statements for the year ending 31 December 2020 and
subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of the
firm is six years, covering the years ending 31 December 2020 to
31 December 2025.
15.2. Consistency of the audit report with the
additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the
audit committee we are required to provide in accordance with
ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure
Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R,
these financial statements form part of the Electronic Format
Annual Financial Report filed on the National Storage Mechanism
of the FCA in accordance with DTR 4.1.15R – DTR 4.1.18R. This
auditor’s report provides no assurance over whether the Electronic
Format Annual Financial Report has been prepared in compliance
with DTR 4.1.15R – DTR 4.1.18R.
James Hunter, FCA
(Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Reading, United Kingdom
2 March 2026
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Contents
Consolidated income statement
119
Consolidated statement of comprehensive income
120
Consolidated balance sheet
121
Consolidated statement of changes in equity
122
Consolidated statement of cash flows
123
Notes to the consolidated financial statements
124
Company balance sheet
178
Company statement of changes in equity
179
Notes to the Company financial statements
180
Group statistical information
198
Cautionary statement
199
Glossary
199
Alternative performance measures
200
Shareholder information
205
Financial
statements
118
Consolidated income statement
FOR THE YEAR ENDED 31 DECEMBER 2025
Note
31 December 2025
31 December 2024
Results
before
specific
adjusting
items
£m
Specific
adjusting
items
3
£m
Total
£m
Restated
results
before
specific
adjusting
items
1
£m
Restated
specific
adjusting
items
1,3
£m
Restated
total
1
£m
Revenue
3
Operating costs before amortisation
of intangible assets, impairments
and reversal of impairments of
non-financial assets
4
(902.8 )
(32.0 )
(934.8 )
(936.8 )
(18.2 )
(955.0 )
Profit from operations before
amortisation of intangible
assets, impairments and
reversal of impairments of
non-financial assets
3
(32.0 )
(18.2 )
Amortisation of intangible assets
13
(1.0 )
(1.0 )
(1.7 )
(1.7 )
Impairment of non-financial assets
6
(15.6 )
(15.6 )
(4.2 )
(4.2 )
Reversal of impairment of
non-financial assets
6
Operating profit
3
(47.6 )
(22.4 )
Finance income
Finance expense
(25.1 )
(25.1 )
(21.6 )
(21.6 )
Net financing costs
7
(22.2 )
(22.2 )
(19.0 )
(19.0 )
Profit before taxation
(47.6 )
(22.4 )
Income tax expense
8
(19.4 )
(17.9 )
(27.0 )
(24.7 )
Profit from continuing
operations
(46.1 )
(20.1 )
Profit from discontinued
operations
9
(0.4 )
Profit for the year
(26.2 )
(20.5 )
Profit for the year attributable to:
Shareholders of the Company
(26.2 )
(20.5 )
Non-controlling interests
(26.2 )
(20.5 )
Earnings per share
10
Continuing and
discontinued operations
Basic earnings per share
Diluted earnings per share
Continuing operations
Basic earnings per share
(1.0 )p
Diluted earnings per share
(0.9 )p
Dividends
2
Interim dividend
– pence
– £m
Proposed final dividend
– pence
– £m
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
2.
The proposed final dividend is based upon the number of Ordinary shares outstanding at the balance sheet date.
3.
Details of specific adjusting items are given in note 6 to the consolidated financial statements.
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Annual Report 2025
Consolidated statement
of comprehensive income
FOR THE YEAR ENDED 31 DECEMBER 2025
Note
31 December
2025
£m
Restated
31 December
2024
1
£m
Profit for the year
Other comprehensive expense:
Items that will not be reclassified subsequently to income statement:
Remeasurement (loss)/gain on defined benefit plans
23
(0.1 )
Tax effect of components of other comprehensive income not reclassified
8
(0.1 )
(0.6 )
(0.2 )
Items that may be reclassified subsequently to income statement:
Foreign exchange translation differences
(23.2 )
(11.0 )
Cash flow hedges:
Change in fair value
(0.3 )
Transferred to income statement
(1.0 )
Net investment hedges:
Change in fair value
(19.5 )
(10.6 )
Total other comprehensive expense
(19.7 )
(9.9 )
Total comprehensive income
Attributable to:
Shareholders of the Company
Non-controlling interests
Total comprehensive income attributable to shareholders of the
Company arising from:
Continuing operations
(19.7 )
Discontinued operations
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
120
Consolidated balance sheet
AS AT 31 DECEMBER 2025
Note
2025
£m
2024
£m
Assets
Property, plant and equipment
11
Right-of-use assets
12
Intangible assets: goodwill
13
Intangible assets: other
13
Investments
14
Trade and other receivables
17
Employee benefits: pensions
23
Deferred tax assets
15
Total non-current assets
Inventories
16
Derivative financial assets
Trade and other receivables
17
Investments
14
Current tax receivable
Cash and cash equivalents
18
Total current assets
Total assets
Liabilities
Borrowings
21
Lease liabilities
21
Employee benefits: pensions
23
Provisions
25
Non-trade payables
19
Deferred tax liabilities
15
Total non-current liabilities
Borrowings and bank overdrafts
21
Lease liabilities
21
Trade and other payables
19
Current tax payable
Provisions
25
Derivative financial liabilities
Total current liabilities
Total liabilities
Total net assets
Equity
Share capital
20
Share premium
Reserves
(13.7 )
(8.2 )
Retained earnings
Total equity attributable to shareholders of the Company
Non-controlling interests
Total equity
Damien Caby
Richard Armitage
Chief Executive Officer
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Annual Report 2025
Consolidated statement of changes in equity
FOR THE YEAR ENDED 31 DECEMBER 2025
Share
capital
£m
Share
premium
£m
Translation
reserve
£m
Hedging
reserve
£m
Fair value
reserve
£m
Capital
redemption
reserve
£m
Other
reserves
£m
Retained
earnings
£m
Total
parent
equity
£m
Non-
controlling
interests
£m
Total
equity
£m
At 1 January 2024
(29.9 )
(1.0 )
Profit for the year
Other comprehensive income
and expense:
Remeasurement gain on defined
benefit plans and related taxes
Foreign exchange differences and
related taxes
(10.0 )
(10.0 )
(1.0 )
(11.0 )
Cash flow hedging fair value changes
and transfers
(1.3 )
(1.3 )
(1.3 )
Net investment hedging fair value
changes and transfers
Total other comprehensive
income/(expense)
(8.3 )
(1.3 )
(8.9 )
(1.0 )
(9.9 )
Total comprehensive
income/(expense)
(8.3 )
(1.3 )
Transactions with owners:
Dividends
(34.5 )
(34.5 )
(8.1 )
(42.6 )
Equity-settled
share-based payments
Own shares acquired for share
incentive schemes (net)
(3.3 )
(3.3 )
(3.3 )
Purchase of own shares for share
buyback programme
(10.0 )
(10.0 )
(10.0 )
Cancellation of own shares under
share buyback programme
(0.4 )
(4.5 )
Purchase of non-controlling interest
(3.0 )
(3.0 )
(2.1 )
(5.1 )
At 31 December 2024
(38.2 )
(0.2 )
(1.0 )
(4.9 )
Profit for the year
Other comprehensive income
and expense:
Remeasurement loss on defined
benefit plans and related taxes
(0.2 )
(0.2 )
(0.2 )
Foreign exchange differences and
related taxes
(21.1 )
(21.1 )
(2.1 )
(23.2 )
Cash flow hedging fair value changes
and transfers
Net investment hedging fair value
changes and transfers
Total other comprehensive
income/(expense)
(18.2 )
(0.2 )
(17.6 )
(2.1 )
(19.7 )
Total comprehensive
income/(expense)
(18.2 )
Transactions with owners:
Dividends
(34.1 )
(34.1 )
(6.0 )
(40.1 )
Equity-settled
share-based payments
Own shares acquired for share
incentive schemes (net)
(3.5 )
(3.5 )
(3.5 )
Purchase of own shares for share
buyback programme
(10.0 )
(10.0 )
(10.0 )
Cancellation of own shares under
share buyback programme
(1.7 )
(15.1 )
Reclassified to income statement
on disposal of businesses
(2.9 )
At 31 December 2025
(51.3 )
(1.0 )
Details of the reserves are provided in note 20.
122
Consolidated statement of cash flows
FOR THE YEAR ENDED 31 DECEMBER 2025
Note
31 December
2025
£m
Restated
31 December
2024
1
£m
Operating activities
Profit for the year from continuing operations
Profit for the year from discontinued operations
9
Adjustments for:
Depreciation – property, plant and equipment
11
Depreciation – right-of-use assets
12
Amortisation
13
Net financing costs
7
Profit on disposal of business
2
(28.5 )
Non-cash specific adjusting items included in operating profit
Fair value loss/(gain) on equity instruments held at FVTPL
(1.9 )
Loss/(profit) on sale of property, plant and equipment
(3.0 )
Income tax expense
8,9
Equity-settled share-based payment expense
24
Cash generated from operations before changes in working capital and provisions
Decrease/(increase) in trade and other receivables
(0.5 )
Decrease in inventories
Increase in trade and other payables
Decrease in provisions
(2.0 )
(1.0 )
Payments to defined benefit pension plans (net of IAS 19 pension charges)
23
(0.6 )
(1.1 )
Cash generated from operations
Interest paid – borrowings and overdrafts
(21.6 )
(17.9 )
Interest paid – lease liabilities
(2.8 )
(2.6 )
Income tax paid
(26.4 )
(29.2 )
Net cash from operating activities
Investing activities
Purchase of property, plant and equipment, and software
(67.1 )
(96.1 )
Purchase of investments
(0.4 )
(0.1 )
Proceeds from sale of property, plant and equipment
Grants received for purchase of equipment
Interest received
Disposal of investments
Disposal of business
Tax paid on disposal of business
(7.4 )
Net cash from investing activities
(52.2 )
(86.0 )
Financing activities
Purchase of own shares for share incentive schemes
20
(3.6 )
(3.5 )
Proceeds from exercise of share options
20
Purchase of own shares for share buyback programme
(15.2 )
(4.7 )
Purchase of non-controlling interest
(5.1 )
Increase in borrowings
18
Repayment of borrowings
18
(70.1 )
(88.0 )
Payment of lease liabilities
18
(9.3 )
(10.6 )
Dividends paid to shareholders of the Company
(34.1 )
(34.5 )
Dividends paid to non-controlling interests
(6.0 )
(8.1 )
Net cash from financing activities
(99.5 )
(33.0 )
Net decrease in cash and cash equivalents, and overdrafts
(33.9 )
(5.7 )
Cash and cash equivalents at the start of the year
Effect of exchange rate fluctuations on cash held
(3.4 )
(7.3 )
Net cash and cash equivalents at the end of the year
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
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124
Notes to the consolidated financial statements
Act and is headquartered in the UK. The address of the registered office is given in Shareholder information on page 205. The principal
activities of the Company and its subsidiaries, and the nature of the Group’s operations, are set out in the Strategic Report.
The Group’s financial statements consolidate those of the Company and its subsidiaries (together referred to as the ‘Group’). The
Company financial statements present information about the Company as a separate entity and not about the Group. These consolidated
financial statements have been drawn up to 31 December 2025 . The Group maintains a 12-month calendar financial year ending on
31 December.
prepare its financial statements in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework; these are presented
on pages 178 to 197.
Except for the changes set out in the adoption of new and revised standards section, the accounting policies set out below have been
Material accounting policies
The financial statements are prepared on the historical cost basis except for financial assets and financial liabilities (including derivatives)
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements
of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which
Intra-Group balances and any unrealised gains and losses or income and expenses arising from intra-Group transactions are eliminated
in preparing the consolidated financial statements.
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is
transferred to the Group. The Group measures goodwill as the acquisition-date fair value of the consideration transferred, including the
amount of any non-controlling interest in the acquiree, less the net of the acquisition-date fair values of the identifiable assets acquired and
liabilities assumed, including contingent liabilities as required by ‘IFRS 3 – Business Combinations’.
Consideration transferred includes the fair values of assets transferred, liabilities incurred by the Group to the previous owners of the
acquiree, equity interests issued by the Group, contingent consideration and share-based payment awards of the acquiree that are replaced
in the business combination. Any contingent consideration payable is recognised at fair value at the acquisition date. Subsequent changes to
the fair value of contingent consideration that is not classified as equity is recognised in the income statement.
Transaction costs that the Group incurs in connection with a business combination, such as finder’s fees, legal fees, due diligence fees and
(i) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the balance sheet date are translated to pounds sterling at the foreign exchange rate ruling
at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair
value are translated to pounds sterling at foreign exchange rates ruling at the dates the fair values are determined.
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(ii) Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to
pounds sterling at foreign exchange rates ruling at the balance sheet date. The revenue, expenses and cash flows of foreign operations
are translated to pounds sterling at an average rate for the period where this approximates to the foreign exchange rates ruling at the
dates of the transactions. Foreign exchange differences arising on retranslation since the adoption of IFRS are recognised directly in other
The Group presents specific adjusting items separately in the consolidated income statement. These are items which occur infrequently
and are presented separately in the consolidated income statement due to their nature and size. The Directors consider disclosure of
specific adjusting items necessary for the users of the financial statements to obtain an alternative understanding of the financial information
Revenue is recognised as or when the Group satisfies a contractual performance obligation by transferring goods or services to a
customer. The Group’s principal performance obligation is the provision of products and components which is satisfied at a point in time
and is subject to payment terms typical to the geography in which the business operates. Revenue is recognised when control of the goods
or services provided passes to the customer.
Substantially, all of the Group’s revenue is derived from short-term contracts for the provision of products and components. Where goods
are collected by the customer, revenue is recognised at the point the customer takes physical possession of the items. Where a contract
includes delivery of goods, the delivery element is a distinct performance obligation and therefore revenue is only recognised once the
goods have been delivered to the customer as both performance obligations are satisfied simultaneously.
A small portion of the Group’s revenue relates to project-based business, principally within the Thermal Products division. Revenue for
these contracts is recognised in line with fulfilment of contractual performance obligations stated in the contract.
Revenue is only recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised
will not occur. The transaction price is determined as the amount receivable for the provision of products and components excluding
rebates, discounts and similar items. Determining the transaction price does not require significant judgement. The costs incurred in
obtaining contracts are not material and the Group acts as a principal in its transactions with customers.
‘IFRS 15 – Revenue from Contracts with Customers’ requires revenue to be disaggregated into categories that depict how the nature,
amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Group discloses revenue disaggregated
The Group undertakes research and development activities as part of continual improvement of existing products and exploring new
products. Expenses relating to the research phase are recognised in the income statement as incurred. During the development phase
the Group applies the research to improve existing products or offer new products by solving technical problems. Expenses relating to
development are capitalised where the expense can be reliably measured, the asset created is technically and commercially feasible,
the Group intends to complete and use or sell the asset and future economic benefits are probable. Expenses which do not meet
Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, interest receivable on
funds invested, gains and losses on hedging instruments that are recognised in the income statement, interest on ‘IFRS 16 – Lease
liabilities,’ interest on supplier finance arrangements and net interest on ‘IAS 19 – Employee benefit’ pension assets and obligations.
Income tax on the profit for the year comprises current and deferred tax. Income tax is recognised in the income statement except to
the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised in equity
or other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance
sheet date, and any adjustment to tax payable in respect of previous years.
Notes to the consolidated financial statements
continued
1. Material accounting policies, estimates and judgements
(continued)
126
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are
not provided for: the initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable
profit and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset
Where the Group has disposed of or has classified as held-for-sale a business component which represents a separate major line of
business or geographical area of operations, it classifies such operations as discontinued. The post-tax profit or loss of the discontinued
operations and the gain or loss on disposal of the discontinued operations, is shown as a single line on the face of the consolidated income
The Group designates certain derivatives as hedging instruments in respect of foreign currency risk cash flow hedges. Hedges of foreign
exchange risk on firm commitments are accounted for as cash flow hedges. At the inception of the hedge relationship, the Group
documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its
strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group
documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable
to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:
There is an economic relationship between the hedged item and the hedging instrument.
The effect of credit risk does not dominate the value changes that result from that economic relationship.
The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management
objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship
(for example rebalances the hedge) so that it meets the qualifying criteria again. The Group designates the full change in the fair value of
a forward contract (for example including the forward elements) as the hedging instrument for all of its hedging relationships involving
forward contracts.
Note 22 sets out details of the fair values of the derivative instruments used for hedging purposes.
Fair value hedges
The fair value change on qualifying hedging instruments is recognised in the income statement.
Where hedging gains or losses are recognised in the income statement, they are recognised in the same line as the hedged item.
Cash flow hedges
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify
as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of hedging reserve, limited to
the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion is
recognised immediately in the income statement.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to the income statement in the
periods when the hedged item affects the income statement, in the same line as the recognised hedged item. However, when the hedged
forecast transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised
in other comprehensive income and accumulated in equity are removed from equity and included in the initial measurement of the cost
of the non-financial asset or non-financial liability. This transfer does not affect other comprehensive income. Furthermore, if the Group
expects that some or all of the loss accumulated in the hedging reserve will not be recovered in the future, that amount is immediately
reclassified to the income statement.
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Financial Statements
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(continued)
Cash flow hedges
(continued)
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The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria
(after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised.
The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in the
cash flow hedge reserve at that time remains in equity and is reclassified to the income statement when the forecast transaction occurs.
When a forecast transaction is no longer expected to occur, the gain or loss accumulated in the cash flow hedge reserve is reclassified
immediately to the income statement.
Net investment hedge accounting
The Group uses foreign currency denominated borrowings as a hedge against translation exposure on the Group’s net investment in
overseas companies. Where the hedge is fully effective at hedging, the variability in the net assets of such companies caused by changes
in exchange rates and the changes in value of borrowings are recognised in other comprehensive income and accumulated in the
translation reserve. The ineffective part of any changes in value caused by changes in exchange rates is recognised immediately in the
income statement. Gains and losses on the hedging instrument accumulated in the foreign currency translation reserve are reclassified to
(i) Owned assets
Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses. The cost of
self-constructed assets includes the cost of materials, direct labour and an appropriate proportion of production overheads. Where parts
of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and
equipment.
Gains and losses on the disposal of property, plant and equipment are determined by comparing the proceeds from disposal with the
carrying amount of the asset. Gains and losses on the disposal of property, plant and equipment are recognised in ‘Operating costs before
amortisation of intangible assets, impairments and reversal of impairments of non-financial assets’ in the income statement.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property,
plant and equipment. Land is not depreciated. Depreciation methods, useful lives and residual values are reviewed at each balance sheet
date. The estimated useful lives are as follows:
Buildings | 50 years |
Plant, equipment and fixtures | 3–20 years |
The Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognises a right-of-use asset and
a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as
leases with a lease term of 12 months or less) and leases of low-value assets (defined as leases of a value of less than USD5,000 at lease
commencement). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the
term of the lease.
(i) Lease liabilities
The lease liability is initially measured at the present value of future lease payments, discounted by using an incremental borrowing rate for
the relevant geographical region. The lease payments included in the lease liability comprise fixed lease payments, variable payments that
depend on an index or rate and any payments due under lease extension, termination or purchase options to the extent they are assessed
as reasonably certain.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective
interest method) and by reducing the carrying amount to reflect the lease payments made. The Group remeasures the lease liability
(and makes a corresponding adjustment to the related right-of-use asset) whenever there is a lease modification, a change in lease term or
there is a significant event or change in circumstances resulting in a change in the assessment or exercise of other lease variables, such as
purchase options. A remeasurement will also occur when the lease payments change due to changes in index rates.
(ii) Right-of-use assets
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement date, less any lease incentives received and initial direct costs. They are subsequently measured at cost less accumulated
depreciation and impairment losses.
Notes to the consolidated financial statements
continued
1. Material accounting policies, estimates and judgements
(continued)
128
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or
restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured
under ‘IAS 37 – Provisions, Contingent Liabilities and Contingent Assets’. To the extent that the costs relate to a right-of-use asset, the
costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. The depreciation starts at
All business combinations are accounted for by applying the acquisition method. Goodwill represents the difference between the cost of
the acquisition and the fair value of assets, liabilities and contingent liabilities acquired.
Goodwill is allocated to groups of cash-generating units and is not amortised but tested at least annually for impairment. If the recoverable
amount of the cash-generating unit or group of cash-generating units is less than the carrying amount of the unit or group, the impairment
loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit or group and then to reduce the carrying amount
of the other intangibles and other assets of the unit or group on a pro-rata basis. An impairment loss recognised for goodwill is not
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation (see below) and impairment losses.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such
lives are indefinite. Intangible assets with an indefinite useful life are systematically tested for impairment at each balance sheet date.
Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:
Capitalised development costs |
3 years |
Computer software |
3–10 years |
Customer relationships |
15–20 years |
Technology and trademarks |
15–20 years |
When the Group incurs configuration and customisation costs as part of a cloud-based software-as-a-service agreement which do not
Investments
The Group holds equity investments which are traded in active markets and held for short-term trading. These investments are therefore
classified as financial assets and measured at FVTPL. Fair value at the balance sheet date is determined with reference to quoted market
prices. Dividends received from investments are recognised in the income statement when the right to receive the dividend is established.
At each balance sheet date non-financial assets and cash-generating units are reviewed for indicators of impairment, the recoverable
amount of the assets or cash-generating units are determined where such indicators exist.
The recoverable amount is the higher of the value in use and fair value less costs to sell. The value in use represents the future cash flows
expected to be derived from the asset or cash-generating unit, discounted to their present value using a pre-tax discount rate that reflects
time value of money and the risks specific to the asset or cash-generating unit. An impairment loss is recognised in the income statement
to the extent that the carrying value exceeds its recoverable amount.
An impairment loss is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after
the impairment loss was recognised. A reversal of an impairment loss is recognised immediately in the income statement to the extent
that the asset’s or cash-generating unit’s carrying amount does not exceed the carrying amount that would have been determined, net of
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and selling expenses.
The cost of inventories is based on the first-in-first-out principle and includes expenditure incurred in acquiring the inventories and bringing
them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate
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The Group’s trade receivables are held for collection under ‘IFRS 9 – Financial Instruments’ and are initially recorded at transaction price
and subsequently measured at amortised cost less allowances for expected credit losses (‘ECL’).
The ECL are calculated in accordance with the simplified approach under IFRS 9 by applying lifetime historical credit loss experience to
trade receivables. The expected credit loss rate is adjusted to account for overdue debts and to reflect current economic conditions and
future default rates. Trade receivables more than 180 days past due are generally considered not recoverable and a 100% loss allowance
is recognised, except where historical experience with certain customers or geographies indicates otherwise. The loss is recognised in
the income statement.
Trade receivables are written off when recoverability is assessed as being remote. Subsequent recoveries of amounts previously written
off are credited to the income statement.
The Group enters into non-recourse factoring arrangements whereby certain trade receivables are sold to a third-party factoring provider.
Under these arrangements, the factoring provider bears the risk of loss if the customer fails to pay and therefore the Group transfers
substantially all risks and rewards of ownership at the point of sale.
Under IFRS 9, receivables subject to factoring are derecognised when the balance is transferred to the factoring provider, with the Group
no longer retaining control of the asset. The costs associated with the arrangement are recognised in the income statement within
operating costs and cash received from the factoring provider is presented within operating cash flows in the consolidated statement
Cash and cash equivalents comprise bank balances and cash deposits. Cash deposits include demand deposits and short-term
investments with maturities of three months or less. Bank overdrafts that are repayable on demand form an integral part of the Group’s
Trade and other payables are recognised initially at transaction price. Subsequent to initial recognition, they are measured at amortised
cost using the effective interest method.
The Group uses supplier finance arrangements whereby a third-party provider settles certain accounts payable balances on behalf of the
Borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, borrowings are stated
at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of
(i) Defined contribution plans
For defined contribution plans, the Group pays contributions to either publicly or privately administered pension plans, and the Group
has no further payment obligations once the contributions have been paid. Obligations for contributions to defined contribution pension
plans are recognised as an expense in the income statement as incurred.
(ii) Defined benefit plans
A defined benefit plan is any retirement plan which is not a defined contribution plan. Typically, defined benefit plans define an amount of
retirement benefit that an employee will receive, usually depending on one or more factors such as age, years of service and earnings.
The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount
of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to
determine its present value, and the fair value of any plan assets is deducted. The discount rate is the yield at the balance sheet date on
AA-credit-rated bonds that have maturity dates approximating the terms of the Group’s obligations. The calculation is performed by a
qualified actuary using the projected unit credit method.
When the calculation results in a benefit to the Group, the recognised asset is limited to the total of the present value of economic benefits
available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available
to the Group if it is realisable during the life of the plan, or on settlement of the plan liabilities. Remeasurement gains and losses, differences
between the interest income and actual returns on assets, and the effect of changes in actuarial assumptions are recognised in full in other
comprehensive income in the year in which they arise.
Notes to the consolidated financial statements
continued
1. Material accounting policies, estimates and judgements
(continued)
130
(iii) Long-term service benefits
The Group’s net obligation in respect of long-term service benefits, other than pension plans, is the amount of future benefit that
employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected
unit credit method, or similar approximation, and is discounted to its present value and the fair value of any related assets is deducted.
The discount rate is the yield at the balance sheet date on AA-credit-rated bonds that have maturity dates approximating the terms of the
The grant date fair value of share-based payment awards granted to employees is recognised as an expense, with a corresponding increase
in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognised as an expense is
adjusted to reflect the actual number of awards for which the related service and non-market performance conditions are met, such
that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market
A provision is recognised in the consolidated balance sheet when the Group has a present legal or constructive obligation as a result of
a past event and there is probable outflow of resources which can be reliably measured and will be required to settle the obligation.
Provisions are recognised at an amount equal to the best estimate of the expenditure required to settle the Group’s liability. If the effect
is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate reflective of the current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
A contingent liability is disclosed, where significant, if the existence of the obligation will only be confirmed by future events or where the
amount of the obligation cannot be measured with reasonable reliability. A contingent liability is not disclosed if the likelihood of a material
outflow in excess of any amounts provided is considered remote. Obligations arising from restructuring plans are recognised when detailed
formal plans have been established and when there is a valid expectation that such a plan will be carried out. The Group’s contingent
liabilities are reviewed on a regular basis.
Preference share capital is classified as a financial liability within borrowings if the substance of the shares does not contain an equity
Ordinary shares are classified as equity.
Shares purchased by the Morgan General Employee Benefit Trust (‘the Trust’) are used to satisfy share awards under the Group share
scheme plans. The consideration paid, which includes directly attributable costs, is net of any tax effects and is recognised as a deduction
from equity. Shares purchased by the Company as part of the share buyback programme are cancelled, the nominal value of the shares is
Equity dividends on Ordinary share capital are recognised as a liability in the Company’s financial statements on the date that the
shareholder’s right to receive payment is established. Dividends declared after the balance sheet date are not recognised as there is no
In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the
application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.
Critical accounting judgements
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the
consolidated financial statements is included in the following notes:
Strategic Report
Governance
Financial Statements
1. Material accounting policies, estimates and judgements
(continued)
Morgan Advanced Materials
/
Annual Report 2025
131
Note 6: Specific adjusting items
The Group separately presents specific adjusting items in the consolidated income statement which, in the Directors’ judgement,
need to be disclosed separately by virtue of their size and incidence in order for users of the consolidated financial statements to obtain
an alternative understanding of the financial information and the underlying performance of the business. These are items which occur
infrequently and include (but are not limited to):
Individual restructuring projects which are material or relate to the closure of a part of the business and are not expected to recur;
Impairment of non-financial assets which are material;
Gains or losses on disposal or exit of businesses;
Significant costs incurred as part of the integration of an acquired business;
Gains or losses arising on significant changes to or closures of defined benefit pension plans;
Expenses related to the design, configuration, customisation and implementation of a Global ERP system; and
Changes in the fair value and associated foreign exchange on shares in Foseco India Limited (‘FIL’).
Determining whether an item is part of specific adjusting items requires judgement to determine the nature and the intention of
the transaction.
Note 25: Provisions and contingent liabilities
Due to the nature of its operations, the Group holds provisions for its environmental obligations. Judgement is needed in determining
whether a contingent liability has crystallised into a provision. Management assesses whether there is sufficient information to determine
that an environmental liability exists and whether it is possible to estimate with sufficient reliability what the cost of remediation is likely to
be. For environmental remediation matters, this tends to be at the point in time when a remediation feasibility study has been completed,
or sufficient information becomes available through the study to estimate the costs of remediation.
The Group recognises a legal provision at the point when the outcome of a legal matter can be reliably estimated. Estimates are based on
past experience of similar issues, professional advice received and the Group’s assessment of the most likely outcome. The timing of the
utilisation of these provisions is frequently uncertain, reflecting the complexity of issues and the outcome of various court proceedings and
associated negotiations.
The key assumptions concerning the future, and other key sources of estimation uncertainty in the reporting period that may have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are included in
the notes below.
The principal actuarial assumptions applied to pensions are shown in note 23, including a sensitivity analysis of the reasonably possible
changes for the inflation, discount rate and mortality rate assumptions. The actuarial evaluation of pension assets and liabilities is based
on assumptions in respect of inflation, future salary increases, discount rates, returns on investments and mortality rates. Relatively small
changes in the assumptions underlying the actuarial valuations of pension schemes can have a significant impact on the pension asset and
Other assumptions and estimates which have a lower risk of resulting in a material adjustment
to the carrying amounts of assets and liabilities within the next 12 months include:
Notes 8 and 15: Taxation
The level of current tax and deferred tax recognised is dependent on the tax rates in effect at the balance sheet date, and on subjective
judgements as to the outcome of decisions to be made by the tax authorities in the various tax jurisdictions around the world in which
the Group operates.
The Group periodically assesses its liabilities and contingencies for all tax years open to audit based on the latest information available.
The Group records its best estimate of these tax liabilities, including related interest charges. While management believes it has adequately
provided for the probable outcome of these matters, future results may include adjustments to these estimated tax liabilities and the final
outcome of tax examinations may result in a materially different outcome than that assumed in the tax liabilities. Provisions are made
against individual exposures taking into account the specific circumstances of each case, including the strengths of technical arguments,
past experience with tax authorities, recent case law or rulings on similar issues and external advice received.
132
1. Material accounting policies, estimates and judgements
(continued)
Note 22: Credit risk
Note 22 contains information about the Group’s exposure to credit risk, including a sensitivity analysis. The Group establishes a loss
Climate change-related risks and opportunities
The potential climate change-related risks and opportunities to which the Group is exposed, as identified by management, are disclosed in
the Group’s TCFD disclosures on pages 32 to 40. Management has assessed the potential financial impacts relating to the identified risks,
primarily considering the useful lives of property, plant and equipment, the possibility of impairment of goodwill and other long-lived
assets, and the recoverability of the Group’s deferred tax assets. Management has exercised judgement in concluding that there are
no further material financial impacts of the Group’s climate-related risks and opportunities on the consolidated financial statements.
These judgements will be kept under review by management as the future impacts of climate change depend on environmental,
regulatory and other factors outside of the Group’s control, which are not all currently known.
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in
the Strategic Report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities, are described in the
Group Financial Review on pages 46 to 52. In addition, note 22 to the consolidated financial statements includes the Group’s policies and
processes for managing financial risk, details of its financial instruments and hedging activities, and details of its exposures to credit risk
and liquidity risk.
The Group meets its day-to-day working capital requirements through local banking arrangements. The principal borrowing facilities are
subject to covenants that are measured semi-annually with reference to net debt* to EBITDA* and interest cover at June and December.
The Group had both significant available liquidity and headroom on its covenants.
A number of stress test scenarios have been performed to demonstrate the decline in business performance required in order for the
Group to breach its banking covenants. The Directors do not consider these scenarios to be plausible given the diversity of the Group’s
end-markets and its broad manufacturing base.
The Board and Executive Committee regularly review principal and emerging risks including climate change risk and consider the impact
of these risks in the context of the viability and going concern assessments on pages 53 to 54. 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 of this Annual Report and Accounts. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report
Alternative performance measures
The Group monitors business performance through alternative performance measures (APMs) which are not defined under IFRS and are
therefore non-GAAP measures. The APMs provide useful information to stakeholders, including additional insight into ongoing trading and
year-on-year comparisons. These APMs are not a substitute for IFRS measures but are complementary to them. The Group defines each
APM and therefore they may not be directly comparable with similarly named metrics in other businesses. The definition, purpose and
reconciliation to statutory figures where applicable are included on pages 199 to 204.
In the current year, the Group has applied the following amendment to IFRS Accounting Standards as adopted by the UK that are
mandatorily effective for an accounting period that begins on or after 1 January 2025. The adoption has not had any material impact
on the disclosures or on the amounts reported in these financial statements.
Amendments to ‘IAS 21 – The Effects of Changes in Foreign Exchange Rates’: Lack of Exchangeability.
Accounting developments and changes
New accounting standards in issue but not yet effective
New standards and interpretations that are in issue but not yet effective are listed below.
Amendment to ‘IFRS 9 – Financial Instruments’ and ‘IFRS 7 – Financial Instruments: Disclosures’.
Amendment to IFRS 9 and IFRS 7 ‘Contracts Referencing Nature-dependent Electricity’.
‘IFRS 18 – Presentation and Disclosure in Financial Statements’.
Notes to the consolidated financial statements
continued
Strategic Report
Governance
Financial Statements
1. Material accounting policies, estimates and judgements
(continued)
Morgan Advanced Materials
/
Annual Report 2025
133
The adoption of amendments to IAS 21 is effective for the period beginning 1 January 2025, the adoption has not led to any material
changes to the Group’s accounting policies or had any other material impact on the financial position or performance of the Group. For
amendments to ‘IFRS 9 – Financial Instruments’ and ‘IFRS 7 – Financial Instruments: Disclosures‘ that are in issue, but not yet effective,
the Group does not anticipate that their adoption will have a material impact on the consolidated financial statements. IFRS 18 is effective
for periods beginning on or after 1 January 2027 and replaces ‘IAS 1 – Presentation of Financial Statements’. The standard requires the
classification of income and expenditure in the income statement to be split between operating, investing and financing, introduces
disclosures around management defined performance measures (MPMs) and aggregation and disaggregation of other disclosure
information. The impact of the standard on the Group is currently being assessed and it is not yet practicable to quantify the effect of
the standard on these consolidated financial statements.
On 22 August 2025, the Group announced it had reached an agreement to sell its MMS business to Vesuvius plc for total consideration of
£76.2 million.
The transaction was structured as an acquisition of Morgan Advanced Materials’ 75% shareholding in its Indian listed subsidiary, Morganite
Crucible (India) Ltd, by Vesuvius’ Indian listed subsidiary, Foseco India Ltd (‘FIL’), with consideration for the acquisition being the issuance of
new FIL shares to Morgan Advanced Materials (the ‘Indian Transaction’), plus a cash acquisition of the remainder of the MMS business by
Vesuvius (the ‘Rest of World Transaction’). The transaction completed on 12 November 2025.
As consideration for the Indian Transaction, the Group received 1.2 million shares in FIL, which represents a circa 15% shareholding in
FIL valued at approximately £55.7 million. Morgan Advanced Materials’ FIL shares are subject to a six-month lock-up period post listing, in
accordance with applicable Indian regulations. In addition, the Group received £20.5 million in cash as gross consideration for the Rest of
World Transaction, which was subject to customary post-completion cash, debt and working capital adjustments and prior to any taxes,
fees and other expenses related to the overall MMS transaction.
The MMS business disposed of formed part of the Thermal Products reporting segment and represented a major line of business and
therefore, in accordance with ‘IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations’, the Group’s results have been
restated to reflect MMS as a discontinued operation. Refer to note 9 for further information.
The calculation of the gain on disposal of MMS is presented in the table below. The gain on disposal has been included in discontinued
operations in the consolidated income statement.
£m |
|
Share consideration |
55.7 |
Cash consideration |
20.5 |
Total consideration |
76.2 |
Goodwill and other intangibles |
(8.8) |
Other non-current assets |
(21.6) |
Current assets |
(18.7) |
Liabilities |
10.6 |
Net assets disposed |
(38.5) |
Transaction costs |
(7.0) |
Cumulative foreign exchange |
(5.1) |
Non-controlling interest |
2.9 |
Pre-tax gain on disposal |
28.5 |
In March 2024, the Group acquired the remaining 7% of the shares in Morgan Korea Company Ltd, a manufacturing business which
services all three segments of the Group, for consideration of £5.1 million. The Group had previously owned 93% of the business and
included the entity in the Group consolidation. The change in ownership is reflected in the non-controlling interest included in the
Notes to the consolidated financial statements
continued
134
The Group is managed through three distinct reporting segments, Thermal Products, Performance Carbon and Technical Ceramics.
Internal management information on the reporting segments is regularly reviewed by the Group’s Board of Directors (the Chief Operating
Decision Maker) in order to allocate resources and assess performance.
Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis. Unallocated items comprise mainly investments and related income, borrowings and related expenses, corporate assets
and head office expenses, and income tax assets and liabilities.
The information presented below represents the reporting segments of the Group.
Thermal Products |
Performance Carbon |
Technical Ceramics |
||||
Restated |
||||||
2025 |
2024 4 |
2025 |
2024 |
2025 |
2024 |
|
Continuing operations |
£m |
£m |
£m |
£m |
£m |
£m |
Revenue from external customers |
348.2 |
377.6 |
306.8 |
345.2 |
341.6 |
337.3 |
Segment adjusted operating profit 1 |
23.5 |
37.5 |
41.2 |
55.1 |
39.4 |
39.2 |
Corporate costs 2 |
||||||
Group adjusted operating profit 1 |
||||||
Amortisation of intangible assets |
(0.3) |
(0.8) |
(0.2) |
(0.3) |
(0.5) |
(0.6) |
Operating profit before specific adjusting items |
23.2 |
36.7 |
41.0 |
54.8 |
38.9 |
38.6 |
Specific adjusting items included in operating profit 3 |
(5.9) |
(7.4) |
(20.4) |
(7.6) |
(1.0) |
(0.7) |
Operating profit/(loss) |
17.3 |
29.3 |
20.6 |
47.2 |
37.9 |
37.9 |
Finance income |
||||||
Finance expense |
||||||
Profit before taxation |
||||||
Segment assets |
304.9 |
373.4 |
300.9 |
316.3 |
201.8 |
222.7 |
Segment liabilities |
96.5 |
103.9 |
50.1 |
54.0 |
88.5 |
85.0 |
Segment capital expenditure |
15.9 |
22.8 |
31.3 |
52.3 |
17.1 |
21.0 |
Segment depreciation – property, plant and equipment |
11.3 |
12.7 |
11.7 |
10.9 |
8.8 |
8.6 |
Segment depreciation – right-of-use assets |
3.3 |
3.5 |
1.7 |
1.5 |
3.3 |
3.3 |
Segment impairment reversals of non-financial assets |
– |
– |
– |
– |
– |
– |
Segment impairment of non-financial assets |
– |
4.2 |
15.6 |
– |
– |
– |
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 199 to 204.
2.
Corporate costs consist of central head office costs.
3.
Details of specific adjusting items from continuing operations are given in note 6 to the consolidated financial statements.
4.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
Strategic Report
Governance
Financial Statements
3. Segmental reporting
(continued)
Morgan Advanced Materials
/
Annual Report 2025
135
Segment totals | Corporate costs | Group | ||||
Restated | Restated | Restated | ||||
2025 | 2024 4 | 2025 | 2024 4 | 2025 | 2024 4 | |
Continuing operations | £m | £m | £m | £m | £m | £m |
Revenue from external customers | 996.6 | 1,060.1 | – | – | 996.6 | 1,060.1 |
Segment adjusted operating profit 1 | 104.1 | 131.8 | – | – | 104.1 | 131.8 |
Corporate costs 2 | (10.3) | (8.5) | (10.3) | (8.5) | ||
Group adjusted operating profit 1 | 93.8 | 123.3 | ||||
Amortisation of intangible assets | (1.0) | (1.7) | – | – | (1.0) | (1.7) |
Operating profit before specific adjusting items | 103.1 | 130.1 | (10.3) | (8.5) | 92.8 | 121.6 |
Specific adjusting items included in operating profit /(loss) 3 | (27.3) | (15.7) | (20.3) | (6.7) | (47.6) | (22.4) |
Operating profit/(loss) | 75.8 | 114.4 | (30.6) | (15.2) | 45.2 | 99.2 |
Finance income | 2.9 | 2.6 | ||||
Finance expense | (25.1) | (21.6) | ||||
Profit before taxation | 23.0 | 80.2 | ||||
Segment assets | 807.6 | 912.4 | 177.2 | 164.7 | 984.8 | 1,077.1 |
Segment liabilities | 235.1 | 242.9 | 400.8 | 444.9 | 635.9 | 687.8 |
Segment capital expenditure | 64.3 | 96.1 | – | – | 64.3 | 96.1 |
Segment depreciation – property, plant and equipment | 31.8 | 32.2 | – | – | 31.8 | 32.2 |
Segment depreciation – right-of-use assets | 8.3 | 8.3 | – | – | 8.3 | 8.3 |
Segment impairment reversals of non-financial assets | – | – | – | – | – | – |
Segment impairment of non-financial assets | 15.6 | 4.2 | – | – | 15.6 | 4.2 |
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 199 to 204.
2.
Corporate costs consist of central head office costs.
3.
Details of specific adjusting items from continuing operations are given in note 6 to the consolidated financial statements.
4.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
Revenue from external customers and non-current assets by geography
Revenue from | Non-current assets (excluding | |||
external customers | pension and deferred tax assets) | |||
Restated | ||||
2025 | 2024 1 | 2025 | 2024 | |
Continuing operations | £m | £m | £m | £m |
USA | 421.4 | 447.5 | 262.2 | 263.9 |
China | 84.8 | 95.5 | 35.5 | 44.6 |
Germany | 67.2 | 79.8 | 42.4 | 42.3 |
UK (the Group’s country of domicile) | 42.7 | 42.7 | 97.9 | 110.1 |
Other Asia, Australasia, Middle East and Africa | 171.0 | 175.3 | 44.3 | 55.5 |
Other Europe | 156.7 | 157.3 | 35.3 | 33.1 |
Other North America | 33.5 | 35.3 | 1.8 | 1.9 |
South America | 19.3 | 26.7 | 13.5 | 11.5 |
996.6 | 1,060.1 | 532.9 | 562.9 | |
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
Revenue from external customers is based on geographic location of the end-customer. Segment assets are based on geographical
location of the assets. In the current and prior year no single customer represented more than 5% of revenue.
Notes to the consolidated financial statements
continued
3. Segmental reporting
(continued)
136
Revenue from external customers by end-market
Restated |
||
2025 |
2024 1 |
|
Continuing operations |
£m |
£m |
Industrial |
394.5 |
419.1 |
Aerospace & Defence |
213.5 |
200.4 |
Oil & Petrochemicals |
100.3 |
102.7 |
Healthcare |
72.2 |
84.1 |
Energy |
70.9 |
69.5 |
Semiconductors |
69.8 |
105.7 |
Rail |
41.0 |
39.7 |
Other |
34.4 |
38.9 |
996.6 |
1,060.1 |
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
Intercompany sales to other segments
Thermal Products |
Performance Carbon |
Technical Ceramics |
Segment totals |
|||||
2025 |
2024 |
2025 |
2024 |
2025 |
2024 |
2025 |
2024 |
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Intercompany sales to |
||||||||
other segments |
1.7 |
1.7 |
0.5 |
0.5 |
0.3 |
0.5 |
2.5 |
2.7 |
Restated |
|||
2025 |
2024 1 |
||
Continuing operations |
Note |
£m |
£m |
Change in stocks of finished goods and work in progress |
21.5 |
3.7 |
|
Raw materials and consumables |
274.5 |
271.8 |
|
Other operating costs |
114.7 |
151.4 |
|
410.7 |
426.9 |
||
Employee costs: |
|||
Wages and salaries |
294.8 |
303.6 |
|
Equity-settled share-based payment expense |
24 |
2.0 |
2.8 |
Social security costs and other benefits |
62.0 |
63.1 |
|
Pension costs |
23 |
16.6 |
16.0 |
375.4 |
385.5 |
||
Depreciation – property, plant and equipment |
31.8 |
32.2 |
|
Depreciation – right-of-use assets |
8.3 |
8.3 |
|
40.1 |
40.5 |
||
Short-term leases and leasing of low-value assets: |
|||
Plant and equipment |
0.1 |
0.1 |
|
Other leases |
0.3 |
0.4 |
|
0.4 |
0.5 |
||
Other operating charges and income: |
|||
Net foreign exchange (gains)/losses |
0.6 |
(2.8) |
|
Net other operating charges |
75.6 |
86.2 |
|
76.2 |
83.4 |
||
Total operating costs before specific adjusting items and amortisation of intangible assets |
902.8 |
936.8 |
|
Amortisation of intangible assets |
13 |
1.0 |
1.7 |
Total operating costs before specific adjusting items |
903.8 |
938.5 |
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
Strategic Report
Governance
Financial Statements
4. Operating costs before specific adjusting items
(continued)
Morgan Advanced Materials
/
Annual Report 2025
137
The following costs are included in total operating costs before specific adjusting items.
The Group recognised £28.9 million (2024: £29.7 million) in expense in respect of research and development. These costs are included
A summary of the audit and non-audit fees in respect of services provided by the auditor, which are included in net other operating
costs, is set out below. Fees in relation to non-audit services were £11,000 (2024: £41,000).
2025 |
2024 |
|
£m |
£m |
|
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts: |
||
in respect of the current year |
1.1 |
1.0 |
Fees payable to the Company’s auditor and its associates for other services: |
||
the auditing of accounts of any subsidiaries of the Company |
2.1 |
2.3 |
3.2 |
3.3 |
The monthly average number of persons employed by the Group (including Directors) during the year, analysed by division, was
as follows:
Number of employees |
||
Restated |
||
2025 |
2024 1 |
|
Reportable operating segments |
||
Thermal Products |
2,260 |
2,440 |
Performance Carbon |
2,450 |
2,570 |
Technical Ceramics |
3,310 |
3,160 |
Segment total |
8,020 |
8,170 |
Corporate |
50 |
50 |
Group continuing |
8,070 |
8,220 |
Discontinued operations |
290 |
370 |
8,360 |
8,590 |
|
Average employee numbers have been rounded to the nearest 10.
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
Notes to the consolidated financial statements
continued
138
Specific adjusting items are items which occur infrequently and are presented separately in the consolidated income statement due to their
nature and size. The Directors consider disclosure of specific adjusting items necessary for the users of the financial statements to obtain an
alternative understanding of the financial information and underlying performance of the business.
Continuing |
Discontinued |
|||||
Continuing |
Discontinued |
operations |
operations |
Total |
||
operations |
operations |
Total |
Restated |
Restated |
Restated |
|
2025 |
2025 |
2025 |
2024 1 |
2024 1 |
2024 1 |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Restructuring charge |
(13.4) |
(0.9) |
(14.3) |
(12.4) |
(0.7) |
(13.1) |
Design, configuration, customisation and implementation |
||||||
of a Global ERP system |
(13.3) |
– |
(13.3) |
(5.2) |
– |
(5.2) |
Credit in relation to the impact of Argentina’s currency |
||||||
devaluation |
1.9 |
– |
1.9 |
0.5 |
– |
0.5 |
Impairment of non-financial assets |
(15.6) |
– |
(15.6) |
(4.2) |
– |
(4.2) |
Gain on disposal of MMS |
– |
28.5 |
28.5 |
– |
– |
– |
Movement in fair value of consideration shares held at |
||||||
FVTPL |
(7.2) |
– |
(7.2) |
– |
– |
– |
Costs associated with the cyber security incident |
– |
– |
– |
(1.1) |
– |
(1.1) |
Discontinued operations associated with the disposal of |
||||||
Composites and Defence Systems |
– |
– |
– |
– |
0.1 |
0.1 |
Total specific adjusting items before income tax |
(47.6) |
27.6 |
(20.0) |
(22.4) |
(0.6) |
(23.0) |
Income tax |
1.5 |
(7.7) |
(6.2) |
2.3 |
0.2 |
2.5 |
Total specific adjusting items after income tax |
(46.1) |
19.9 |
(26.2) |
(20.1) |
(0.4) |
(20.5) |
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
Restructuring charge
During the year the business continued its previously announced simplification and restructuring programmes. A total charge of
£14.3 million (2024: £13.1 million) was recognised in relation to these programmes.
Design, configuration, customisation and implementation of a Global ERP system
During the year the Group continued development of its Global ERP system and started the implementation phase. The programme
will create opportunities to align business processes, and strengthen information security and the control environment. The costs of
£13.3 million (2024: £5.2 million) associated with the design, configuration, customisation and implementation of the system are classified
as specific adjusting items due to their nature and size.
Credit in relation to the impact of Argentina’s currency devaluation
In December 2023, Argentina devalued its currency by more than 50% and restrictions on imports limited the flow of raw materials to
the site. As a result the Group incurred a charge of £5.8 million in the year ended 31 December 2023, which consisted of £2.6 million for
the impact of the currency devaluation on the trading results of the Argentina business, impairment of property, plant and equipment of
£1.9 million and impairment of inventories of £1.3 million.
During the year ended 31 December 2024 the business was able to sell inventories which were previously impaired and as a result
reversed impairment of £0.5m. In the year ended 31 December 2025 the business continued to perform well and economic changes
in the country allowed the business to remit a dividend. As a result of the strong performance and dividend payment an impairment
charge of £1.9 million which related to property, plant and equipment used in the manufacturing process was reversed in the year ended
31 December 2025.
Strategic Report
Governance
Financial Statements
6. Specific adjusting items
(continued)
Morgan Advanced Materials
/
Annual Report 2025
139
Impairment of non-financial assets
Performance Carbon
During 2025, the Group has recognised an impairment charge of £15.6 million related to certain assets at a UK site which are dedicated to
the Semiconductor market. Our current view of future demand indicates that these assets will not be commissioned. Since this specialist
machinery cannot be redeployed to fulfil other demand in the near-term without further investment, we have fully impaired the asset,
in-line with the requirements of ‘IAS 36 – Impairment of assets’.
Thermal Products
In the prior year, in light of challenging trading conditions, the Group recognised a net impairment charge of £4.2 million related to fixed
assets held by our Thermal Products business in Europe. The value-in-use calculation used a pre-tax discount rate of 13.5–17.2% and a
long-term growth rate of 1.1–1.7% to derive the terminal value.
Review of cumulative impairment of non-financial assets
Impairment charges of £28.6 million (2024: £18.9 million) for non-financial assets which the business continues to use have been
recorded during the current and previous years. These impaired amounts could be reversed if the related businesses were to outperform
significantly against their budget. A sensitivity analysis was carried out using reasonably possible changes to the key assumptions in assessing
the value in use of these non-financial assets. This did not result in a material reversal of the impaired amounts.
Gain on disposal of MMS
During the year the Group disposed of its MMS business, recognising a gain on disposal of £28.5 million, which was classified as a specific
adjusting item due to its nature and size. Refer to note 2 for further information.
Movement in fair value of consideration shares held at FVTPL
Consideration for the disposal of MMS comprised cash and shares in FIL, a business publicly listed in India. The shares are held for trading
and recognised at FVTPL and revalued at the balance sheet date. Changes in the value of the shares and associated foreign exchange
movements are recognised in specific adjusting items due to their nature and size. Refer to note 14 for further information.
Costs associated with the cyber security incident
During the prior year the Group incurred a residual £1.1 million of exceptional costs and charges in relation to the cyber security incident
2025 |
2024 |
|
Continuing operations |
£m |
£m |
Interest on bank balances and cash deposits |
2.9 |
2.6 |
Finance income |
2.9 |
2.6 |
Interest expense on borrowings and overdrafts |
(20.7) |
(18.4) |
Interest expense on lease liabilities |
(2.8) |
(2.6) |
Interest on supplier finance arrangements |
(1.2) |
– |
Net interest on IAS 19 defined benefit pension obligations |
(0.4) |
(0.6) |
Finance expense |
(25.1) |
(21.6) |
Net financing costs |
(22.2) |
(19.0) |
Notes to the consolidated financial statements
continued
140
Restated |
||
2025 |
2024 1 |
|
Continuing operations |
£m |
£m |
Current tax |
||
Current year |
22.2 |
28.5 |
Current tax associated with Pillar Two income taxes |
0.1 |
0.2 |
Adjustments for prior years |
(0.4) |
– |
21.9 |
28.7 |
|
Deferred tax |
||
Current year |
(2.6) |
(2.4) |
Adjustments for prior years |
(1.4) |
(1.6) |
(4.0) |
(4.0) |
|
Total income tax expense recognised in the income statement |
17.9 |
24.7 |
Recognised in other comprehensive income |
||
Tax effect on components of other comprehensive income: |
||
Deferred tax associated with defined benefit schemes |
0.1 |
0.6 |
Total tax recognised in other comprehensive income |
0.1 |
0.6 |
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
There was no deferred tax associated with share schemes recognised in other comprehensive income (2024: none).
Reconciliation of effective tax rate
Restated |
||||
2025 |
2025 |
2024 1 |
2024 |
|
£m |
% |
£m |
% |
|
Profit before tax from continuing operations |
23.0 |
80.2 |
||
Income tax charge using the domestic corporation tax rate |
5.8 |
25.0 |
20.0 |
25.0 |
Effect of different tax rates in other jurisdictions |
(0.4) |
(1.7) |
0.3 |
0.4 |
Local taxes including withholding tax suffered |
4.2 |
18.3 |
3.7 |
4.6 |
Permanent differences |
2.4 |
10.4 |
(0.2) |
(0.2) |
Movements related to unrecognised temporary differences |
7.7 |
33.5 |
2.5 |
3.1 |
Adjustments in respect of prior years |
(1.8) |
(7.8) |
(1.6) |
(2.0) |
Statutory effective rate of tax |
17.9 |
77.7 |
24.7 |
30.9 |
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
The effective rate of tax before specific adjusting items is 27.5% (2024: 26.3%).
The Group operates in many jurisdictions around the world and is subject to factors that may impact future tax charges, including the
implementation of the Organisation for Economic Co-operation and Development (OECD) BEPS actions, changes in tax rates and
legislation, the expiry of statutes of limitation, and the resolution of tax audits and disputes.
For the year ended 31 December 2025, the Group has continued to assess the impact of the OECD Pillar Two Global Anti-Base
Erosion (GloBE) Model Rules, which introduce a 15% global minimum tax. In accordance with the IAS 12 amendments issued in 2023,
the Group has applied the mandatory temporary exception from recognising deferred tax assets and liabilities arising from the
potential future application of Pillar Two top-up tax. As a result, no deferred taxes have been recognised in respect of GloBE-related
temporary differences.
The IAS 12 amendments require groups to disclose separately their current tax expense related to Pillar Two taxes. A Pillar Two top-up tax
charge of £0.1 million has been recognised for the current year, reflecting the application of enacted or substantively enacted legislation in
the jurisdictions in which the Group operates. Germany, Singapore, France, Mexico and the United Arab Emirates have been identified as
jurisdictions falling outside the Transitional Country-by-Country Reporting (CbCR) Safe Harbour for this period.
The Group will continue to monitor legislative developments, the expiry of transitional safe harbour reliefs, and the evolving geographic
During the year the Group announced the disposal of its Molten Metal Systems business, an operating segment included in the Thermal
Products reporting segment. The business represents a major line of business and therefore meets the criteria of a disposal group
under IFRS 5. The results of MMS for the year ended 31 December 2024 and the period up to the completion of the transaction on
12 November 2025 have been presented as discontinued operations.
The Group received £0.3 million (2024: £0.1 million) cash related to the final payment under a contract associated with a historical disposal
in 2018 of its Composites and Defence Systems business. The balance had been fully recognised as receivables in prior periods and
therefore no amounts were recognised in the income statement in the year.
The results from discontinued operations, which have been disclosed in the consolidated income statement, are set out below:
| 31 December 2025 |
31 December 2024 |
||||||
Results |
Results |
||||||
before |
before |
||||||
specific |
Specific |
specific |
Specific |
||||
adjusting |
adjusting |
adjusting |
adjusting |
||||
items |
items |
Total |
items |
items |
Total |
||
Note |
£m |
£m |
£m |
£m |
£m |
£m |
|
Revenue |
33.7 |
– |
33.7 |
40.6 |
0.1 |
40.7 |
|
Operating costs |
(28.4) |
27.6 |
(0.8) |
(35.5) |
(0.7) |
(36.2) |
|
Profit before taxation |
5.3 |
27.6 |
32.9 |
5.1 |
(0.6) |
4.5 |
|
Income tax expense |
(1.5) |
(7.7) |
(9.2) |
(1.4) |
0.2 |
(1.2) |
|
Profit from |
|||||||
discontinued operations |
3.8 |
19.9 |
23.7 |
3.7 |
(0.4) |
3.3 |
|
Basic earnings per share from |
|||||||
discontinued operations |
10 |
8.5p |
1.2p |
||||
Diluted earnings per share from |
|||||||
discontinued operations |
10 |
8.4p |
1.1p |
||||
Cash flows from discontinued operations are set out below:
31 December |
31 December |
|
2025 |
2024 |
|
£m |
£m |
|
Net cash generated from operating activities |
5.7 |
7.8 |
Net cash generated from investing activities |
(2.5) |
(6.1) |
Net cash used in financing activities |
(0.1) |
(0.4) |
3.1 |
1.3 |
Strategic Report
Governance
Financial Statements
141
Morgan Advanced Materials
/
Annual Report 2025
Notes to the consolidated financial statements
continued
142
| 31 December 2025 |
31 December 2024 |
|||||
Restated |
||||||
Basic |
Diluted |
Restated basic |
diluted |
|||
earnings |
earnings |
Restated |
earnings |
earnings |
||
Earnings |
per share |
per share |
earnings 1 |
per share |
per share |
|
£m |
pence |
pence |
£m |
pence |
pence |
|
Profit for the year attributable to |
||||||
shareholders of the Company |
21.1 |
7.5p |
7.5p |
50.3 |
17.7p |
17.5p |
Profit from discontinued operations |
(23.7) |
(8.5)p |
(8.4)p |
(3.3) |
(1.2)p |
(1.1)p |
Profit from continuing operations |
(2.6) |
(1.0)p |
(0.9)p |
47.0 |
16.5p |
16.4p |
Specific adjusting items |
47.6 |
17.0p |
16.9p |
22.4 |
7.9p |
7.8p |
Amortisation of intangible assets |
1.0 |
0.4p |
0.4p |
1.7 |
0.6p |
0.6p |
Tax effect of the above 2 |
(1.5) |
(0.5)p |
(0.5)p |
(2.3) |
(0.8)p |
(0.8)p |
Non-controlling interests’ share |
||||||
of the above adjustments |
– |
– |
– |
– |
– |
– |
Adjusted profit for the year from |
||||||
continuing operations as used in |
||||||
adjusted earnings per share |
44.5 |
15.9p |
15.9p |
68.8 |
24.2p |
24.0p |
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
2.
The tax effect of the amortisation of intangible assets was £nil (2024: £nil).
Number of shares (millions) |
2025 |
2024 |
Weighted average number of Ordinary shares for the purposes of basic earnings per share 1 |
279.6 |
284.5 |
Effect of dilutive potential Ordinary shares: |
||
Share options |
1.3 |
2.8 |
Weighted average number of Ordinary shares for the purposes of diluted earnings |
||
per share |
280.9 |
287.3 |
1.
Strategic Report
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Financial Statements
Morgan Advanced Materials
/
Annual Report 2025
143
Plant, |
|||
Land and |
equipment |
||
buildings |
and fixtures |
Total |
|
£m |
£m |
£m |
|
Cost |
|||
Balance at 1 January 2024 |
216.1 |
777.4 |
993.5 |
Additions |
13.2 |
81.1 |
94.3 |
Disposals |
(11.5) |
(35.0) |
(46.5) |
Transfers between categories |
0.8 |
(0.8) |
– |
Effect of movement in foreign exchange |
(2.0) |
(4.8) |
(6.8) |
Balance at 31 December 2024 |
216.6 |
817.9 |
1,034.5 |
Balance at 1 January 2025 |
216.6 |
817.9 |
1,034.5 |
Additions |
3.5 |
61.6 |
65.1 |
Disposals |
(0.4) |
(19.5) |
(19.9) |
Disposal of business |
(11.7) |
(36.4) |
(48.1) |
Transfers between categories |
7.2 |
(7.2) |
– |
Effect of movement in foreign exchange |
(8.3) |
(31.3) |
(39.6) |
Balance at 31 December 2025 |
206.9 |
785.1 |
992.0 |
Depreciation and impairment losses |
|||
Balance at 1 January 2024 |
119.0 |
580.7 |
699.7 |
Depreciation charge for the year |
5.4 |
28.7 |
34.1 |
Impairment losses |
– |
4.6 |
4.6 |
Disposals |
(10.3) |
(34.2) |
(44.5) |
Transfers between categories |
(0.5) |
0.5 |
– |
Effect of movement in foreign exchange |
(0.4) |
(3.9) |
(4.3) |
Balance at 31 December 2024 |
113.2 |
576.4 |
689.6 |
Balance at 1 January 2025 |
113.2 |
576.4 |
689.6 |
Depreciation charge for the year |
5.3 |
28.3 |
33.6 |
Impairment losses |
1.0 |
15.8 |
16.8 |
Impairment reversals |
(0.6) |
(1.6) |
(2.2) |
Disposals |
(0.4) |
(18.0) |
(18.4) |
Disposal of business |
(3.5) |
(24.0) |
(27.5) |
Transfers between categories |
1.0 |
(1.0) |
– |
Effect of movement in foreign exchange |
(5.0) |
(20.9) |
(25.9) |
Balance at 31 December 2025 |
111.0 |
555.0 |
666.0 |
Carrying amounts |
|||
At 1 January 2024 |
97.1 |
196.7 |
293.8 |
At 31 December 2024 |
103.4 |
241.5 |
344.9 |
At 31 December 2025 |
95.9 |
230.1 |
326.0 |
No assets were pledged as security for liabilities in the current or prior year. The net book value includes assets under construction of
£43.8 million (2024: £51.0 million) comprising £2.8 million of land and buildings (2024: £2.8 million) and £41.0 million of plant, equipment
Notes to the consolidated financial statements
continued
144
Land and |
Plant and |
||
buildings |
equipment |
Total |
|
£m |
£m |
£m |
|
Cost |
|||
Balance at 1 January 2024 |
80.5 |
11.9 |
92.4 |
Additions |
5.7 |
2.8 |
8.5 |
Disposals |
(5.4) |
(2.5) |
(7.9) |
Remeasurements |
2.4 |
– |
2.4 |
Effect of movement in foreign exchange |
(1.0) |
(0.6) |
(1.6) |
Balance at 31 December 2024 |
82.2 |
11.6 |
93.8 |
Balance at 1 January 2025 |
82.2 |
11.6 |
93.8 |
Additions |
11.6 |
2.3 |
13.9 |
Disposals |
(2.5) |
(1.9) |
(4.4) |
Disposal of business |
(0.1) |
(1.0) |
(1.1) |
Remeasurements |
0.2 |
(0.2) |
– |
Effect of movement in foreign exchange |
(2.5) |
(0.1) |
(2.6) |
Balance at 31 December 2025 |
88.9 |
10.7 |
99.6 |
Depreciation and impairment losses |
|||
Balance at 1 January 2024 |
55.3 |
5.5 |
60.8 |
Depreciation charge for the year |
5.6 |
3.0 |
8.6 |
Impairment losses |
– |
0.8 |
0.8 |
Disposals |
(5.4) |
(2.5) |
(7.9) |
Effect of movement in foreign exchange |
(0.8) |
(0.2) |
(1.0) |
Balance at 31 December 2024 |
54.7 |
6.6 |
61.3 |
Balance at 1 January 2025 |
54.7 |
6.6 |
61.3 |
Depreciation charge for the year |
5.8 |
2.6 |
8.4 |
Disposals |
(2.0) |
(1.9) |
(3.9) |
Disposal of business |
– |
(0.4) |
(0.4) |
Effect of movement in foreign exchange |
(1.9) |
(0.3) |
(2.2) |
Balance at 31 December 2025 |
56.6 |
6.6 |
63.2 |
Carrying amounts |
|||
At 1 January 2024 |
25.2 |
6.4 |
31.6 |
At 31 December 2024 |
27.5 |
5.0 |
32.5 |
At 31 December 2025 |
32.3 |
4.1 |
36.4 |
The weighted average lease term is 10.1 years (2024: 10.2 years) for land and buildings and 3.7 years (2024: 1.9 years) for plant and
equipment. The maturity analysis of lease liabilities is presented in note 21.
Strategic Report
Governance
Financial Statements
Morgan Advanced Materials
/
Annual Report 2025
145
Capitalised |
||||||
Customer |
Technology and |
development |
Computer |
|||
Goodwill |
relationships |
trademarks |
costs |
software |
Total |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Cost |
||||||
Balance at 1 January 2024 |
177.5 |
60.9 |
4.2 |
0.8 |
36.2 |
279.6 |
Additions (externally purchased) |
– |
– |
– |
– |
0.3 |
0.3 |
Disposals |
– |
– |
– |
– |
(0.8) |
(0.8) |
Effect of movement in foreign exchange |
(0.6) |
0.9 |
(0.2) |
– |
0.2 |
0.3 |
Balance at 31 December 2024 |
176.9 |
61.8 |
4.0 |
0.8 |
35.9 |
279.4 |
Balance at 1 January 2025 |
176.9 |
61.8 |
4.0 |
0.8 |
35.9 |
279.4 |
Additions (externally purchased) |
– |
– |
– |
– |
0.5 |
0.5 |
Disposals |
– |
– |
– |
– |
(2.0) |
(2.0) |
Disposal of business |
(8.8) |
(0.7) |
– |
– |
(1.1) |
(10.6) |
Effect of movement in foreign exchange |
(4.4) |
(3.9) |
0.5 |
(0.1) |
(1.1) |
(9.0) |
Balance at 31 December 2025 |
163.7 |
57.2 |
4.5 |
0.7 |
32.2 |
258.3 |
Amortisation and impairment losses |
||||||
Balance at 1 January 2024 |
– |
59.8 |
3.2 |
0.8 |
33.6 |
97.4 |
Amortisation charge for the year |
– |
0.3 |
0.2 |
– |
1.2 |
1.7 |
Disposals |
– |
– |
– |
– |
(0.8) |
(0.8) |
Effects of movement in foreign exchange |
– |
0.9 |
(0.1) |
– |
0.4 |
1.2 |
Balance at 31 December 2024 |
– |
61.0 |
3.3 |
0.8 |
34.4 |
99.5 |
Balance at 1 January 2025 |
– |
61.0 |
3.3 |
0.8 |
34.4 |
99.5 |
Amortisation charge for the year |
– |
0.2 |
0.2 |
– |
0.6 |
1.0 |
Impairment reversal |
– |
– |
– |
– |
(0.3) |
(0.3) |
Disposals |
– |
– |
– |
– |
(2.0) |
(2.0) |
Disposal of business |
– |
(0.7) |
– |
– |
(1.1) |
(1.8) |
Effects of movement in foreign exchange |
– |
(4.0) |
0.5 |
(0.1) |
(1.4) |
(5.0) |
Balance at 31 December 2025 |
– |
56.5 |
4.0 |
0.7 |
30.2 |
91.4 |
Carrying amounts |
||||||
At 1 January 2024 |
177.5 |
1.1 |
1.0 |
– |
2.6 |
182.2 |
At 31 December 2024 |
176.9 |
0.8 |
0.7 |
– |
1.5 |
179.9 |
At 31 December 2025 |
163.7 |
0.7 |
0.5 |
– |
2.0 |
166.9 |
Notes to the consolidated financial statements
continued
13. Intangible assets
(continued)
146
In accordance with the requirements of ‘IAS 36 – Impairment of Assets’, goodwill is allocated to the Group’s cash-generating units or
groups of cash-generating units that are expected to benefit from the synergies of the business combination that gave rise to the goodwill.
Goodwill impairment testing is performed at the operating segment level as defined by ‘IFRS 8 – Operating segments’, as this is the lowest
level at which goodwill is monitored. Each operating segment is assessed for impairment annually and whenever there is an indication of
impairment.
Goodwill is attributed to each operating segment as follows:
2025 |
2024 |
|
£m |
£m |
|
Thermal Products |
84.5 |
95.6 |
Performance Carbon |
44.9 |
46.1 |
Technical Ceramics |
34.3 |
35.2 |
163.7 |
176.9 |
During the year the Group disposed of its MMS business which was previously reported within Thermal Products. As a result the Group
disposed of £8.8 million of goodwill. Refer to note 2 for further information.
The carrying value of goodwill has been assessed with reference to its value in use, reflecting the projected discounted cash flows of each
operating segment to which goodwill has been allocated. The key assumptions used in determining value in use relate to short-term and
long-term growth rates and discount rates.
The cash flow projections in year one are based on the most recent Board-approved budget; cash flow projections for years two to
five are based on the most recent forecasts. The key assumptions that underpin these cash flow projections relate to sales and operating
margins, which are based on past experience, taking into account the effect of known or likely changes in market or operating conditions.
The growth rates have been calculated using GDP growth forecasts published by the International Monetary Fund for the Group’s
end-markets. These GDP growth forecasts have been weighted to reflect the Group’s weighted average sales in each end-market
during 2025.
A growth rate of 2.8% (2024: 2.1%) has been used for years beyond 2030 and to calculate a terminal value. Management has assessed
these growth rates, including the terminal growth rate, as reasonable for each operating segment.
The Group has used the following pre-tax discount rates for calculating the value in use of each of the operating segments: Thermal
Products: 13.7% (2024: 15.1%), Performance Carbon: 13.8% (2024: 14.1%) and Technical Ceramics 13.4% (2024: 13.6%).
A sensitivity analysis was performed in order to quantify the impact of possible adverse changes in key assumptions used in the discounted
cash flows; the results are presented in the table below.
Decrease in recoverable value |
|||||
Assuming 10% |
|||||
decrease in |
Assuming 10% |
||||
growth rate and |
increase in |
Assuming 10% |
|||
Long-term |
no terminal |
pre-tax discount |
decrease in cash |
Impairment |
|
growth rates |
growth |
rate |
flows |
arising |
|
% |
£m |
£m |
£m |
£m |
|
Thermal Products |
3.1 |
56.8 |
36.8 |
31.8 |
None |
Performance Carbon |
2.7 |
72.6 |
53.7 |
48.2 |
None |
Technical Ceramics |
2.5 |
88.0 |
61.8 |
54.5 |
None |
Strategic Report
Governance
Financial Statements
Morgan Advanced Materials
/
Annual Report 2025
147
The Group holds equity investments which are held for trading in the short term and therefore classified as FVTPL in accordance with
IFRS 9. The investments are revalued at the balance sheet date with changes in value recognised in the income statement.
During the year the Group received £55.7 million of shares in FIL in consideration for the disposal of its MMS business. FIL is listed on
the Indian Stock Exchange and operates in foundry consumables and solutions. The shares received represented a 15% holding in the
business, at completion. The shares are measured at FVTPL, with reference to quoted market prices. The Group recognised a fair value
loss of £7.1 million and associated foreign exchange, from the period of acquisition of the shares up to 31 December 2025, which has been
included in specific adjusting items. Refer to note 6 for more information.
During the year the Group held an equity investment in Argentina designated in Argentine Pesos. A fair value loss of £0.2 million (2024:
fair value gain of £1.9 million) and foreign exchange loss of £0.2 million (2024: loss of £0.4 million) was recognised with the investment
disposed of during the year.
2025 |
2024 |
|
£m |
£m |
|
Balance at 1 January |
2.0 |
2.2 |
Additions |
56.1 |
– |
Changes in fair value |
(7.3) |
1.9 |
Disposal |
(1.3) |
(1.7) |
Exchange differences |
(1.8) |
(0.4) |
Balance at 31 December |
47.7 |
2.0 |
Recognised deferred tax assets
Deferred tax assets and liabilities are attributable to the following:
Assets |
Assets |
Liabilities |
Liabilities |
Net |
Net |
|
2025 |
2024 |
2025 |
2024 |
2025 |
2024 |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Property, plant and equipment |
– |
– |
(8.4) |
(9.3) |
(8.4) |
(9.3) |
Right-of-use assets and lease liabilities |
2.0 |
2.2 |
– |
– |
2.0 |
2.2 |
Intangible assets |
– |
– |
(1.1) |
(0.4) |
(1.1) |
(0.4) |
Employee benefits |
8.0 |
7.6 |
– |
– |
8.0 |
7.6 |
Provisions |
8.8 |
8.6 |
– |
– |
8.8 |
8.6 |
Tax value of loss carried |
||||||
forward recognised |
12.6 |
9.3 |
– |
– |
12.6 |
9.3 |
Other items |
0.3 |
0.7 |
– |
– |
0.3 |
0.7 |
Offset |
(8.5) |
(7.0) |
8.5 |
7.0 |
– |
– |
23.2 |
21.4 |
(1.0) |
(2.7) |
22.2 |
18.7 |
Deferred tax assets and liabilities are offset when there is a legally enforceable right to do so and when they relate to taxes levied by the
same tax authority on either the same entity or on different entities where it is intended to settle the tax on a net basis.
Notes to the consolidated financial statements
continued
15. Deferred tax assets and liabilities
(continued)
148
Movements in temporary differences during the year
Recognised |
Recognised |
Recognised |
Recognised |
|||
in the income |
directly |
31 December |
in the income |
directly |
31 December |
|
statement |
in equity |
2024 |
statement |
in equity |
2025 |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Property, plant and equipment |
1.3 |
– |
(9.3) |
0.9 |
– |
(8.4) |
Right-of-use assets and lease liabilities |
(0.5) |
– |
2.2 |
(0.2) |
– |
2.0 |
Intangible assets |
– |
– |
(0.4) |
(0.7) |
– |
(1.1) |
Employee benefits |
(0.1) |
(0.6) |
7.6 |
0.5 |
(0.1) |
8.0 |
Provisions |
(0.3) |
– |
8.6 |
0.2 |
– |
8.8 |
Tax value of loss carried forward recognised |
3.3 |
– |
9.3 |
3.3 |
– |
12.6 |
Others |
0.3 |
(0.5) |
0.7 |
– |
(0.4) |
0.3 |
4.0 |
(1.1) |
18.7 |
4.0 |
(0.5) |
22.2 |
|
Recognised in: |
||||||
Continuing operations |
4.0 |
(1.1) |
18.7 |
4.0 |
(0.5) |
22.2 |
Discontinued operations |
– |
– |
– |
– |
– |
– |
Deferred income tax of £4.1 million (2024: £4.1 million) is provided on the potential unremitted earnings of overseas subsidiary
undertakings. Where the remittance of dividends is not anticipated, deferred tax is not currently recognised or disclosed as it is
considered immaterial.
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
2025 |
2024 |
|
£m |
£m |
|
Tax losses |
205.8 |
169.5 |
Capital losses |
52.2 |
46.4 |
Other deductible temporary differences |
98.8 |
103.1 |
356.8 |
319.0 |
Deferred tax assets have not been recognised in relation to these temporary differences due to uncertainty surrounding future utilisation.
Based on current tax legislation, the tax losses will not expire. Although the Group as a whole is profitable, the unrecognised losses relate
2025 |
2024 |
|
£m |
£m |
|
Raw materials and consumables |
42.8 |
50.4 |
Work in progress |
48.8 |
55.2 |
Finished goods |
54.9 |
60.3 |
146.5 |
165.9 |
2025 |
2024 |
|
£m |
£m |
|
Non-current |
||
Trade receivables |
0.7 |
0.6 |
Prepayments |
0.5 |
0.6 |
Other receivables |
1.9 |
2.4 |
3.1 |
3.6 |
|
Current |
||
Gross trade receivables |
109.8 |
165.1 |
Expected credit losses |
(4.5) |
(8.3) |
Net trade receivables |
105.3 |
156.8 |
Contract assets |
1.7 |
0.5 |
Prepayments |
15.1 |
17.5 |
VAT, goods and sales taxes receivable |
7.9 |
7.3 |
Other non-trade receivables |
9.1 |
7.5 |
139.1 |
189.6 |
The Group’s exposure to credit and currency risks related to trade and other receivables is disclosed in note 22.
Contract assets relate to the Group’s right to consideration for project-based business which was completed but not billed at the end of
2025 |
2024 |
|
£m |
£m |
|
Bank balances |
68.6 |
110.8 |
Cash deposits |
10.7 |
10.0 |
Cash and cash equivalents |
79.3 |
120.8 |
Reconciliation of net cash and cash equivalents to net debt*
2025 |
2024 |
|
£m |
£m |
|
Opening borrowings |
(337.7) |
(309.7) |
Increase in borrowings |
(38.8) |
(121.3) |
Repayment of borrowings |
70.1 |
88.0 |
Effect of movements in foreign exchange |
– |
5.3 |
Closing borrowings |
(306.4) |
(337.7) |
Net cash 1 and cash equivalents |
74.2 |
111.5 |
Closing net debt 1 |
(232.2) |
(226.2) |
Opening lease liabilities |
(47.1) |
(47.1) |
Payment of lease liabilities |
9.3 |
10.6 |
New leases and lease remeasurement |
(13.9) |
(10.9) |
Disposal of business |
0.7 |
– |
Effect of movements in foreign exchange |
1.8 |
0.3 |
Closing lease liabilities |
(49.2) |
(47.1) |
Closing net debt 1 and lease liabilities |
(281.4) |
(273.3) |
1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on
pages 199 to 204.
Strategic Report
Governance
Financial Statements
Morgan Advanced Materials
/
Annual Report 2025
149
Notes to the consolidated financial statements
continued
18. Cash and cash equivalents
(continued)
150
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes.
Net cash |
Net debt 1 |
||||
and cash |
Movement |
Lease |
and lease |
||
Borrowings |
equivalents |
in net debt 1 |
liabilities |
liabilities |
|
£m |
£m |
£m |
£m |
£m |
|
At 1 January 2024 |
(309.7) |
124.5 |
(185.2) |
(47.1) |
(232.3) |
Cash inflow |
– |
23.0 |
23.0 |
– |
23.0 |
Borrowings and lease liability cash (outflow)/inflow |
(33.3) |
– |
(33.3) |
10.6 |
(22.7) |
Net interest paid |
– |
(20.5) |
(20.5) |
– |
(20.5) |
Net cash inflow/(outflow) |
(33.3) |
2.5 |
(30.8) |
10.6 |
(20.2) |
Share purchases |
– |
(8.2) |
(8.2) |
– |
(8.2) |
New leases and lease remeasurement |
– |
– |
– |
(10.9) |
(10.9) |
Exchange and other movements |
5.3 |
(7.3) |
(2.0) |
0.3 |
(1.7) |
At 31 December 2024 |
(337.7) |
111.5 |
(226.2) |
(47.1) |
(273.3) |
At 1 January 2025 |
(337.7) |
111.5 |
(226.2) |
(47.1) |
(273.3) |
Cash outflow |
– |
(8.1) |
(8.1) |
– |
(8.1) |
Borrowings and lease liability cash outflow |
31.3 |
– |
31.3 |
9.3 |
40.6 |
Net interest paid |
– |
(24.4) |
(24.4) |
– |
(24.4) |
Net cash inflow/(outflow) |
31.3 |
(32.5) |
(1.2) |
9.3 |
8.1 |
Share purchases |
– |
(18.8) |
(18.8) |
– |
(18.8) |
Business disposal |
– |
17.4 |
17.4 |
0.7 |
18.1 |
New leases and lease remeasurement |
– |
– |
– |
(13.9) |
(13.9) |
Exchange and other movements |
– |
(3.4) |
(3.4) |
1.8 |
(1.6) |
At 31 December 2025 |
(306.4) |
74.2 |
(232.2) |
(49.2) |
(281.4) |
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
2025 |
2024 |
|
£m |
£m |
|
Non-current |
||
Accruals |
0.3 |
0.7 |
Other payables |
2.4 |
2.1 |
2.7 |
2.8 |
|
Current |
||
Trade payables |
84.3 |
87.4 |
Contract liabilities |
5.0 |
6.7 |
Accruals |
69.3 |
72.6 |
Other tax and social security |
11.5 |
13.0 |
Creditors in relation to capital expenditure |
3.1 |
10.1 |
Other payables |
21.4 |
14.3 |
194.6 |
204.1 |
The Directors consider that the carrying amount of trade payables approximates to their fair value.
Strategic Report
Governance
Financial Statements
19. Trade and other payables
(continued)
Morgan Advanced Materials
/
Annual Report 2025
151
Contract liabilities relate to payments received from customers for project-based business in advance of the performance obligation
being satisfied. During the year the Group recognised contract liabilities of £6.7 million as revenue and the Group expects to recognise
£5.0 million of contract liabilities in 2026.
During the year the Company concluded the first tranche of its share buyback programme and entered into a non-discretionary agreement
with Investec for the second tranche of the programme. Investec acts as riskless principal, to enable the Company to purchase up to
£10.0 million of the Company’s Ordinary shares, excluding expenses. During the year 6,751,497 shares (2024: 1,825,090 shares) with a
nominal value of £1.7 million (2024: £0.5 million) were purchased for consideration of £15.2 million (2024: £4.7 million). The Group
recognised a liability in other payables for the remaining £0.1 million (2024: £5.3 million) of shares which will be purchased on completion
of the second tranche.
The Group has a supplier finance programme which allows the Group to achieve standardised payment terms equivalent to comparable
businesses in the geographies where it operates. Under this arrangement the trade payable is derecognised at the point it is settled by the
supplier finance provider and a liability due to the supplier finance provider is recognised in other payables. The arrangement allows the
Group to achieve payment days similar to comparable businesses operating in similar markets.
The Group does not face a significant liquidity risk as a result of its supplier finance arrangements.
2025 |
|
£m |
|
Supplier finance liability |
|
Presented within trade and other payables |
12.8 |
Of which amounts suppliers have received payment from finance provider |
12.8 |
Range of payment due dates |
|
Liabilities part of the supplier finance arrangement |
0 to 95 days after |
invoice date |
|
Liabilities not part of the arrangement |
60 to 95 days after |
invoice date |
Number |
Nominal value |
|
of shares |
£m |
|
Issued and fully paid Ordinary shares of 25 pence each |
||
At 1 January 2024 |
285,369,988 |
71.3 |
Shares purchased and cancelled under share buyback scheme |
(1,745,423) |
(0.4) |
At 31 December 2024 |
283,624,565 |
70.9 |
Shares purchased and cancelled under share buyback scheme |
(6,777,740) |
(1.7) |
At 31 December 2025 |
276,846,825 |
69.2 |
As at the date of this Report 276,676,409 Ordinary shares were in issue (2024: 282,148,476).
Details of options outstanding in respect of Ordinary shares are given in note 24.
The Company has 437,281 (2024: 437,281) of authorised, issued and fully paid Preference shares of £1 each. The Preference shares
consist of 125,327 5.5% Cumulative First Preference shares and 311,954 5.0% Cumulative Second Preference shares. Dividends on the
cumulative Preference shares are presented within finance costs in the Group’s consolidated income statement. The voting rights of these
Notes to the consolidated financial statements
continued
20. Capital and reserves
(continued)
152
Ordinary shares
The holders of Ordinary shares are entitled to receive dividends and are entitled to one vote per share at meetings of the Company.
Preference shares
The Cumulative First Preference and Cumulative Second Preference shareholders are entitled to a cumulative preferential dividend at the
rate of 5.5% and 5.0% respectively, calculated up to 30 June and 31 December each year. The Preference shareholders are not entitled to
attend or vote at any general meeting unless either:
(i)
the meeting is convened to consider any resolutions for reducing the capital, or authorising any issue of debentures or debenture stock,
or increasing the borrowing powers of the Board under the Articles of Association of the Company, or winding up, or sanctioning a sale
of the undertaking, or altering the Articles in any manner affecting their respective interests, or any other resolutions directly altering
their respective rights and privileges; or
(ii)
at the date of the notice convening the general meeting, the Preference dividend is upwards of one month in arrears from the payment
date of any half-yearly instalment.
On a return of capital on a winding-up, the assets of the Company available for distribution shall be applied:
First, in payment to the holders of the First Preference shares of the amounts paid up on such shares, together with interest at the rate of
5.5% per annum.
Second, in payment to the holders of the Second Preference shares of the amounts paid up on such shares, together with interest at the
rate of 5.0% per annum.
Third, in repaying the capital paid up or credited as paid up on the Ordinary shares.
Fourth, any surplus shall be distributed rateably amongst the holders of the Ordinary shares in proportion to the nominal amount paid up
The translation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign operations
and foreign exchange differences deferred into the net investment hedge.
Hedging reserve
The cash flow hedge reserve represents the cumulative amount of gains and losses on hedging instruments deemed effective in cash flow
hedges. The cumulative deferred gain or loss on the hedging instrument is recognised in the income statement only when the hedged
transaction impacts the income statement, or is included directly in the initial cost or other carrying amount of the hedged non-financial
items (basis adjustment).
Fair value reserve
The fair value reserve includes the cumulative net change in the fair value of FVOCI investments until the investment is derecognised.
Capital redemption reserve
The capital redemption reserve represents the cumulative nominal value of share capital purchased and subsequently cancelled. During
Strategic Report
Governance
Financial Statements
20. Capital and reserves
(continued)
Morgan Advanced Materials
/
Annual Report 2025
153
Retained earnings
The Company has acquired its own shares to satisfy the requirements of the various share option incentive schemes. At 31 December
2025, 261,617 shares (2024: 464,405) were held by the Trust and are treated as a deduction from equity. No treasury shares were held
A summary of the movements in own shares held by the Trust is set out in the table below:
2025 |
2024 |
|||
Cost |
Cost |
|||
Shares |
£m |
Shares |
£m |
|
At 1 January |
464,405 |
1.2 |
807,911 |
2.1 |
New shares purchased |
1,379,110 |
3.6 |
1,285,000 |
3.5 |
Exercise of share options |
(1,581,898) |
(4.1) |
(1,628,506) |
(4.4) |
At 31 December |
261,617 |
0.7 |
464,405 |
1.2 |
Consideration received in respect of shares transferred to participants of employee share schemes was £nil (2024: £0.2 million).
The market value of shares held by the Trust at 31 December 2025 was £0.6 million (2024: £1.3 million).
The following Ordinary dividends were declared and paid by the Company:
Per share |
Total |
|||
2025 |
2024 |
2025 |
2024 |
|
pence |
pence |
£m |
£m |
|
2023 final |
– |
6.8 |
– |
19.3 |
2024 interim |
– |
5.4 |
– |
15.4 |
2024 final |
6.8 |
– |
19.1 |
– |
2025 interim |
5.4 |
– |
15.0 |
– |
12.2 |
12.2 |
34.1 |
34.7 |
|
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting on 7 May 2026 and has not been
This note provides information about the contractual terms of the Group’s borrowings and lease liabilities which are measured at
amortised cost.
At 31 December 2025, the Group is committed to future payments of £0.4 million (2024: £0.4 million) for short-term leases and leasing
of low-value assets.
At 31 December 2025, future cash flows in respect of leases which the Group had entered into but which had not yet commenced was
£0.4 million (2024: £7.9 million).
The total of future minimum lease income under non-cancellable leases, where the Group is a lessor is £nil (2024: £nil).
For more information about the Group’s exposure to interest rate, foreign currency risk, and the Group’s covenants, see note 22.
Notes to the consolidated financial statements
continued
21. Borrowings and lease liabilities
(continued)
154
Borrowing facilities and liquidity
All of the Group’s borrowing facilities are arranged by Group Treasury with Morgan Advanced Materials plc as the principal obligor.
Where ancillary credit facilities are provided to operating subsidiaries, they are authorised and supervised by Group Treasury in accordance
with the Group’s Treasury Policy. Group Treasury seeks to obtain certainty of access to funding in the amounts, diversity of maturities and
diversity of counterparties as required to support the Group’s medium-term financing requirements and to minimise the impact of poor
credit market conditions.
2025 |
2024 |
|
£m |
£m |
|
Non-current liabilities |
||
Senior Notes |
67.9 |
188.2 |
Bank and other borrowings |
143.8 |
149.1 |
Cumulative Preference shares |
0.4 |
0.4 |
Lease liabilities |
38.1 |
36.1 |
250.2 |
373.8 |
|
Current liabilities |
||
Senior Notes |
94.3 |
– |
Bank and other borrowings |
5.1 |
9.3 |
Lease liabilities |
11.1 |
11.0 |
110.5 |
20.3 |
During the prior year the Group entered into a €150.0 million delayed draw Term Loan Facility with maturity in December 2029.
€75.0 million of the Facility had been utilised as at 31 December 2024 and 31 December 2025.
As at 31 December 2025 the Group had available headroom on its borrowing facilities of £295.3 million (2024: £279.3 million).
This note presents information about the Group’s exposure to a variety of financial risks: credit risk, liquidity risk, market risk and
foreign currency risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated
financial statements.
Financial risk management and Treasury Policy
The Group Treasury function acts as a service centre for Morgan Advanced Materials plc’s businesses. The function works within a
framework of Board-approved policies and procedures, which are aligned to the wider goals, objectives and philosophy of the Group.
These policies and procedures are focused on managing and controlling risk in the treasury environment, and include strict control over
the use of financial instruments to hedge foreign currencies and interest rates. Speculative trading in derivatives and other financial
instruments is not permitted.
The function is responsible for all of the Group’s funding, liquidity, cash management, interest rate risk, foreign exchange risk and other
treasury matters.
Strategic Report
Governance
Financial Statements
22. Financial risk management
(continued)
Morgan Advanced Materials
/
Annual Report 2025
155
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
The Group is exposed to credit risk on financial instruments such as liquid assets, derivative assets and trade receivables.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting
date was:
Carrying amount |
||
2025 |
2024 |
|
£m |
£m |
|
Investments |
47.7 |
2.0 |
Trade receivables |
106.0 |
157.4 |
Cash and cash equivalents |
79.3 |
120.8 |
Derivatives |
2.0 |
1.2 |
235.0 |
281.4 |
|
Trade receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the
Group’s customer base, including the default risk of the industries and countries in which customers operate, have less influence on
credit risk.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are
performed on all customers requiring credit over a certain amount. The Group does not require collateral in respect of financial assets.
The Group serves thousands of customers. Many of these have purchased the same product for several years and in some cases
decades. Others have modified and enhanced designs or adopted the same components into new products, extending the lifecycle
of the components that the Group supplies. The Group’s level of customer retention is very high, particularly with its major accounts
and, although the top 20 ranking will alter from year to year, many of the names remain consistent over time.
The Group establishes a provision that represents its estimate of expected credit losses in respect of trade and other receivables and
investments. At the point the amount is considered irrecoverable it is written off against the financial asset directly.
Movements on the provision for expected credit losses were as follows:
2025 |
2024 |
|
£m |
£m |
|
Balance at 1 January |
(8.3) |
(9.0) |
Net remeasurement of loss allowance |
2.5 |
0.3 |
Amounts written off |
1.1 |
0.3 |
Effect of movement in foreign exchange |
0.2 |
0.1 |
Balance at 31 December |
(4.5) |
(8.3) |
Notes to the consolidated financial statements
continued
22. Financial risk management
(continued)
156
There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing
the loss allowance for these financial assets. The loss allowance for trade receivables by ageing category is as follows:
| 2025 | 2024 | |||||||
Expected | Gross trade | Expected | Net trade | Expected | Gross trade | Expected | Net trade | |
credit loss rate | receivables | credit losses | receivables | credit loss rate | receivables | credit losses | receivables | |
% | £m | £m | £m | % | £m | £m | £m | |
Not past due | 0.1% | 90.6 | (0.1) | 90.5 | 0.1% | 134.5 | (0.1) | 134.4 |
Past due | ||||||||
0–30 days | 0.9% | 11.7 | (0.1) | 11.6 | 1.2% | 17.2 | (0.2) | 17.0 |
Past due | ||||||||
31–60 days | 5.0% | 2.0 | (0.1) | 1.9 | 0.0% | 3.5 | – | 3.5 |
Past due | ||||||||
61–90 days | 0.0% | 0.8 | – | 0.8 | 4.3% | 2.3 | (0.1) | 2.2 |
Past due more | ||||||||
than 90 days | 77.8% | 5.4 | (4.2) | 1.2 | 96.3% | 8.2 | (7.9) | 0.3 |
110.5 | (4.5) | 106.0 | 165.7 | (8.3) | 157.4 | |||
Cash, cash equivalents and derivatives
Cash balances held by companies representing over 79% of the Group’s revenue are managed centrally through a number of pooling
arrangements. These arrangements principally cover the USA, Eurozone and UK and are represented by both zero balancing and notional
pooling arrangements. The notional cash pooling arrangements are presented on a gross basis. Credit risk is managed by investing in
liquid assets and acquiring derivatives in a diversified way from high-credit-quality financial institutions. Counterparties are reviewed
through the use of rating agencies, systemic risk considerations and through regular review of the financial press. The Group policy
requires bank accounts to be set up with banks and financial institutions with a Moody’s long-term international credit rating of at least A3.
There are limited instances, such as in certain jurisdictions, where this is not practically possible.
The following table shows the amounts recognised for forward exchange contracts, which are subject to offsetting arrangements on
a gross basis, and the amounts offset in the balance sheet.
The Group also has cash pooling agreements which cannot be offset under IFRS, but which could be settled net under the terms of
master netting agreements, and are also presented in the table below to show the total net exposure of the Group.
Gross amounts |
Net amounts |
Financial |
|||
of recognised |
presented |
instruments not |
|||
financial assets/ |
Amounts |
on the |
offset in the |
Net |
|
(liabilities) |
offset |
balance sheet |
balance sheet |
amount |
|
£m |
£m |
£m |
£m |
£m |
|
2025 |
|||||
Derivative financial assets |
2.0 |
– |
2.0 |
– |
2.0 |
Derivative financial liabilities |
(0.5) |
– |
(0.5) |
– |
(0.5) |
Cash and cash equivalents |
79.3 |
– |
79.3 |
(5.1) |
74.2 |
Bank and other borrowings |
(5.1) |
– |
(5.1) |
5.1 |
– |
2024 |
|||||
Derivative financial assets |
1.2 |
– |
1.2 |
– |
1.2 |
Derivative financial liabilities |
(2.6) |
– |
(2.6) |
– |
(2.6) |
Cash and cash equivalents |
120.8 |
– |
120.8 |
(9.3) |
111.5 |
Bank and other borrowings |
(9.3) |
– |
(9.3) |
9.3 |
– |
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Financial Statements
22. Financial risk management
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Annual Report 2025
157
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are
settled by cash.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions.
The Group seeks a balance between certainty of funding and a flexible, cost-effective borrowing structure. The policy is to ensure that
the Group has sufficient borrowings and committed facilities to meet its medium-term financing requirements.
The following are the undiscounted contracted maturities of financial liabilities, including interest payments:
Cash flows associated with non-derivative financial liabilities
| 31 December 2025 |
||||||||
Carrying |
Contractual |
Less than |
More than |
|||||
Effective |
Year of |
amount |
cash flows |
1 year |
1–2 years |
2–5 years |
5 years |
|
interest rate |
maturity |
£m |
£m |
£m |
£m |
£m |
£m |
|
Non-derivative |
||||||||
financial liabilities |
||||||||
US Dollar |
||||||||
Senior Notes 2026 |
3.37% |
2026 |
72.4 |
74.4 |
74.4 |
– |
– |
– |
Euro |
||||||||
Senior Notes 2026 |
1.55% |
2026 |
21.9 |
22.1 |
22.1 |
– |
– |
– |
Euro |
||||||||
Senior Notes 2028 |
1.74% |
2028 |
8.7 |
9.3 |
0.2 |
0.2 |
8.9 |
– |
Euro |
||||||||
Senior Notes 2030 |
2.89% |
2030 |
21.8 |
24.9 |
0.6 |
0.6 |
23.7 |
– |
US Dollar |
||||||||
Senior Notes 2031 |
5.47% |
2031 |
7.5 |
9.6 |
0.4 |
0.4 |
1.2 |
7.6 |
US Dollar |
||||||||
Senior Notes 2033 |
5.53% |
2033 |
7.5 |
10.4 |
0.4 |
0.4 |
1.2 |
8.4 |
US Dollar |
||||||||
Senior Notes 2035 |
5.61% |
2035 |
22.4 |
34.0 |
1.2 |
1.2 |
3.7 |
27.9 |
Bank and other |
||||||||
borrowings |
Up to 2029 |
148.9 |
151.1 |
5.4 |
– |
145.7 |
– |
|
Cumulative |
||||||||
First Preference shares |
5.50% |
0.1 |
– |
– |
– |
– |
– |
|
Cumulative Second |
||||||||
Preference shares |
5.00% |
0.3 |
– |
– |
– |
– |
– |
|
Lease liabilities |
6.11% |
Up to 2044 |
49.2 |
61.0 |
11.1 |
9.3 |
19.7 |
20.9 |
Trade payables |
84.3 |
84.3 |
84.3 |
– |
– |
– |
||
Creditors in relation to |
||||||||
capital expenditure |
3.1 |
3.1 |
3.1 |
– |
– |
– |
||
Other payables |
23.8 |
23.8 |
21.4 |
2.4 |
– |
– |
||
471.9 |
508.0 |
224.6 |
14.5 |
204.1 |
64.8 |
|||
Bank and other borrowings includes an unsecured multi-currency revolving credit facility set to mature in November 2029, an unsecured
Euro Term Loan set to mature in December 2029 and a Schuldschein Euro Loan Agreement set to mature in June 2028.
Notes to the consolidated financial statements
continued
22. Financial risk management
(continued)
Cash flows associated with non-derivative financial liabilities
(continued)
158
| 31 December 2024 | ||||||||
Carrying | Contractual | Less than | More than | |||||
Effective | Year of | amount | cash flows | 1 year | 1–2 years | 2–5 years | 5 years | |
interest rate | maturity | £m | £m | £m | £m | £m | £m | |
Non-derivative | ||||||||
financial liabilities | ||||||||
US Dollar | ||||||||
Senior Notes 2026 | 3.37% | 2026 | 77.9 | 82.7 | 2.6 | 80.1 | – | – |
Euro | ||||||||
Senior Notes 2026 | 1.55% | 2026 | 20.8 | 21.3 | 0.3 | 21.0 | – | – |
US Dollar | ||||||||
Senior Notes 2026 | 4.87% | 2026 | 20.4 | 21.5 | 1.0 | 20.5 | – | – |
Euro | ||||||||
Senior Notes 2028 | 1.74% | 2028 | 8.3 | 8.8 | 0.1 | 0.1 | 8.6 | – |
Euro | ||||||||
Senior Notes 2030 | 2.89% | 2030 | 20.7 | 24.3 | 0.6 | 0.6 | 1.8 | 21.3 |
US Dollar | ||||||||
Senior Notes 2031 | 5.47% | 2031 | 8.0 | 10.7 | 0.4 | 0.4 | 1.3 | 8.6 |
US Dollar | ||||||||
Senior Notes 2033 | 5.53% | 2033 | 8.0 | 11.6 | 0.4 | 0.4 | 1.3 | 9.5 |
US Dollar | ||||||||
Senior Notes 2035 | 5.61% | 2035 | 24.1 | 38.0 | 1.3 | 1.3 | 4.0 | 31.4 |
Bank and other | ||||||||
borrowings | Up to 2029 | 158.4 | 162.8 | 11.7 | – | 151.1 | – | |
Cumulative | ||||||||
First Preference shares | 5.50% | 0.1 | – | – | – | – | – | |
Cumulative Second | ||||||||
Preference shares | 5.00% | 0.3 | – | – | – | – | – | |
Lease liabilities | 5.93% | Up to 2044 | 47.1 | 54.7 | 11.0 | 9.1 | 19.3 | 15.3 |
Trade payables | 87.4 | 87.4 | 87.4 | – | – | – | ||
Creditors in relation to | ||||||||
capital expenditure | 10.1 | 10.1 | 10.1 | – | – | – | ||
Other payables | 16.4 | 16.4 | 14.3 | 2.1 | – | – | ||
508.0 | 550.3 | 141.2 | 135.6 | 187.4 | 86.1 | |||
Strategic Report
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Financial Statements
22. Financial risk management
(continued)
Morgan Advanced Materials
/
Annual Report 2025
159
Cash flows associated with derivatives
The following table indicates the periods in which cash flows associated with cash flow hedges are expected to occur. This is matched with
the periods in which cash flows associated with cash flow hedges are expected to impact the income statement.
Carrying |
Contractual |
Less than |
More than |
|||
amount |
cash flows |
1 year |
1–2 years |
2–5 years |
5 years |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
2025 |
||||||
Cash flow hedges |
||||||
Forward exchange contracts – liabilities inflow |
11.3 |
11.3 |
– |
– |
– |
|
Forward exchange contracts – liabilities outflow |
(11.4) |
(11.4) |
– |
– |
– |
|
Forward exchange contracts – liabilities |
(0.1) |
(0.1) |
(0.1) |
– |
– |
– |
Forward exchange contracts – assets |
0.4 |
1.1 |
1.1 |
– |
– |
– |
Total cash flow hedges |
0.3 |
1.0 |
1.0 |
– |
– |
– |
Fair value flow hedges |
||||||
Forward exchange contracts – liabilities inflow |
102.5 |
102.5 |
– |
– |
– |
|
Forward exchange contracts – liabilities outflow |
(102.9) |
(102.9) |
– |
– |
– |
|
Forward exchange contracts – liabilities |
(0.4) |
(0.4) |
(0.4) |
– |
– |
– |
Forward exchange contracts – assets |
1.6 |
1.0 |
1.0 |
– |
– |
– |
Total fair value flow hedges |
1.2 |
0.6 |
0.6 |
– |
– |
– |
Total fair value and cash flow hedges |
1.5 |
1.6 |
1.6 |
– |
– |
– |
2024 |
||||||
Cash flow hedges |
||||||
Forward exchange contracts – liabilities inflow |
30.6 |
30.6 |
– |
– |
– |
|
Forward exchange contracts – liabilities outflow |
(31.7) |
(31.7) |
– |
– |
– |
|
Forward exchange contracts – liabilities |
(1.0) |
(1.1) |
(1.1) |
– |
– |
– |
Forward exchange contracts – assets |
0.5 |
0.5 |
0.5 |
– |
– |
– |
Total cash flow hedges |
(0.5) |
(0.6) |
(0.6) |
– |
– |
– |
Fair value flow hedges |
||||||
Forward exchange contracts – liabilities inflow |
78.0 |
78.0 |
– |
– |
– |
|
Forward exchange contracts – liabilities outflow |
(79.0) |
(79.0) |
– |
– |
– |
|
Forward exchange contracts – liabilities |
(1.6) |
(1.0) |
(1.0) |
– |
– |
– |
Forward exchange contracts – assets |
0.7 |
0.1 |
0.1 |
– |
– |
– |
Total fair value flow hedges |
(0.9) |
(0.9) |
(0.9) |
– |
– |
– |
Total fair value and cash flow hedges |
(1.4) |
(1.5) |
(1.5) |
– |
– |
– |
Notes to the consolidated financial statements
continued
22. Financial risk management
(continued)
160
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices, will affect the Group’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return on risk.
The Group enters into derivatives for hedging purposes, and also incurs financial liabilities, in order to manage market risks. All such
transactions are carried out in accordance with the Treasury Policy, which has been approved by the Board. Generally the Group seeks
The Group seeks to reduce the volatility in its interest charge caused by rate fluctuations. The proportions of fixed and floating rate debt
are determined having regard to a number of factors, including prevailing market conditions, interest rate cycle, the Group’s interest cover
and leverage position, and any perceived correlation between business performance and rates.
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
Fixed-rate instruments |
Variable rate instruments |
|||
carrying amount |
carrying amount |
|||
2025 |
2024 |
2025 |
2024 |
|
£m |
£m |
£m |
£m |
|
Financial assets |
– |
– |
79.3 |
120.8 |
Financial liabilities |
(211.8) |
(235.7) |
(148.9) |
(158.4) |
(211.8) |
(235.7) |
(69.6) |
(37.6) |
|
The fixed-rate financial liabilities comprise the currency equivalent of £162.2 million (2024: £188.2 million) of Senior Notes, £0.4 million
(2024: £0.4 million) of cumulative Preference shares and lease liabilities of £49.2 million (2024: £47.1 million). The average cost of the
Group’s fixed-rate instruments is 4.09% (2024: 4.11%) including lease liabilities and 3.48% (2024: 3.67%) excluding lease liabilities.
The variable rate financial assets include the bank balances and cash deposits detailed in note 18 and the variable rate financial liabilities
include bank borrowings detailed in note 21. Where cash and overdrafts are included in Group cash pool arrangements, interest is charged
on net bank balances and borrowings. The average rate of the Group’s variable rate instruments is 3.66% (2024: 4.32%).
An increase of 100 basis points in interest rates on the variable element of the Group’s net floating-rate liabilities and cash at the reporting
date would have decreased profit by £0.8 million (2024: £0.3 million). A decrease of 100 basis points would have increased profit by
£0.8 million (2024: £0.4 million). This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
Foreign currency risk
Due to the international reach of the Group, currency transaction exposures exist. The Group has a policy in place to hedge all material
firm commitments and a large proportion of highly probable forecast foreign currency exposures in respect of sales and purchases over
the following 12 months, and achieves this through the use of the forward foreign exchange markets. A significant proportion of the
forward exchange contracts have maturities of less than one year after the balance sheet date. The Group continues its practice of not
hedging income statement translation exposure.
There are exchange control restrictions which affect the ability of a small number of the Group’s subsidiaries to transfer funds to the
Group. The Group does not believe such restrictions have had or will have any material adverse impact on the Group as a whole or
the ability of the Group to meet its cash flow requirements.
The table below shows the Group’s currency exposures, being exposures on currency transactions that give rise to net currency gains
and losses recognised in the income statement. Such exposures comprise the monetary assets and liabilities of the Group that are not
denominated in the functional currency of the operating company involved.
| 2025 |
2024 |
|||||
GBP |
USD |
Euro |
GBP |
USD |
Euro |
|
Functional currency of Group operations |
£m |
£m |
£m |
£m |
£m |
£m |
Trade receivables |
13.5 |
(6.0) |
0.3 |
11.7 |
0.4 |
1.7 |
Trade payables |
(15.9) |
3.7 |
(2.2) |
(10.3) |
(0.9) |
(1.4) |
Net debt 1 |
2.2 |
1.4 |
0.3 |
(2.9) |
0.9 |
0.4 |
Net balance sheet exposure |
(0.2) |
(0.9) |
(1.6) |
(1.5) |
0.4 |
0.7 |
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 199
to 204.
Strategic Report
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Financial Statements
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/
Annual Report 2025
161
The amounts shown in the table take into account the effect of the forward contracts entered into to manage these currency exposures.
In respect of other monetary assets and liabilities held in currencies other than the currency of the reporting unit, the Group ensures that
the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term
imbalances.
The Group classifies its forward exchange contracts which hedge forecasted transactions as cash flow hedges and states them at fair value.
The fair value of forward exchange contracts used as hedges of forecasted transactions at 31 December 2025 was an asset of £0.3 million
(2024: liability of £0.5 million).
The contractual cash flows associated with the forward exchange contracts that are designated as cash flow hedges are shown in the
section on liquidity risk. The impact on the income statement is expected to occur at the same time as the associated cash flows.
Currency translation risks are controlled centrally. To defend against the impact of a permanent reduction in the value of its overseas net
assets through currency depreciation, the Group seeks to match the currency of financial liabilities with the currency in which the net
assets are denominated. This is achieved by raising funds in different currencies and through the use of hedging instruments such as swaps,
and is implemented only to the extent that the Group’s gearing covenant under the terms of its borrowing documents, as well as its facility
headroom, are likely to remain comfortably within limits. In this way, the currency of the Group’s financial liabilities becomes more aligned
to the currency of the trading cash flows that service them.
The Group’s currency split of total borrowings was as follows:
2025 | 2024 | |
£m | £m | |
GBP | 4.3 | 7.8 |
USD | 109.8 | 151.2 |
Euro | 197.4 | 188.0 |
311.5 | 347.0 |
The Group’s sensitivity to changes in foreign exchange rates on financial assets and liabilities as at 31 December 2025 is set out below.
Based upon the currency profile of the Group’s net financial assets and liabilities, if GBP had strengthened by 10%, reported net financial
liabilities would have decreased by £23.4 million (2024: £23.3 million). Conversely, if GBP had weakened by 10%, reported net financial
liabilities would have increased by £32.2 million (2024: £32.9 million). Assuming the change occurred on the balance sheet date, there
would be no impact on reported profit, as either the net financial liabilities are in the same currency as that of the respective Group entity,
or the change would be offset by an equal and opposite change in the foreign currency monetary items in the Group’s holding company.
The amounts generated from the sensitivity analysis are forward-looking estimates of market risk assuming certain adverse market
conditions occur. Actual results in the future may differ materially from those projected results. The impact of a weakening in GBP on
the Group’s financial assets and liabilities would be more than offset in equity and income by its impact on the Group’s overseas net assets
and earnings respectively.
Hedging instruments
Change in fair value | Carrying amount of the | |||||||
Notional value: | for recognising hedge | hedging instruments | ||||||
Maturity date | Local currency | ineffectiveness | assets/(liabilities) | |||||
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Cash flow hedges | ||||||||
Highly probable forecast sales | to Dec | to Dec | 28.3 | 32.3 | (0.4) | 0.7 | (0.2) | 0.2 |
2026 | 2025 | |||||||
Highly probable forecast purchases | to Dec | to Dec | 41.3 | 17.9 | 0.4 | 0.2 | – | (0.4) |
2026 | 2025 | |||||||
Weighted average hedge rates for the year were as follows:
Weighted average exchange rates | ||
2025 | 2024 | |
EUR/GBP | 1.13 | 1.18 |
AUD/GBP | 2.09 | 1.97 |
USD/GBP | 1.34 | 1.30 |
Notes to the consolidated financial statements
continued
22. Financial risk management
(continued)
162
Hedged items
Balance in cash flow hedge reserve/ |
||||
Change in value used for |
foreign currency translation |
|||
calculating hedge ineffectiveness |
reserve for continuing hedges |
|||
2025 |
2024 |
2025 |
2024 |
|
£m |
£m |
£m |
£m |
|
Cash flow hedges |
||||
Forecast sales |
0.4 |
(0.7) |
0.2 |
(0.2) |
Forecast purchases |
(0.4) |
(0.2) |
– |
0.4 |
As at 31 December 2025 there were no amounts in the hedging reserve and translation reserve arising from hedging relationships for
which hedge accounting is no longer applied.
The Group expects highly probable sales and purchases in the UK, Europe, North America, Australia and Asia. The Group has entered
into foreign exchange forward contracts (for terms not exceeding 18 months) to hedge the exchange rate risk arising from these anticipated
future transactions. It is anticipated that the transactions will take place during the next financial year, at which time the amount deferred
in equity will be reclassified to the income statement. All hedging instruments are presented within derivative financial instruments on the
Group balance sheet.
The principal exchange rates used in the translation of the results of overseas subsidiaries were as follows:
2025 |
2024 |
|||
Closing rate |
Average rate |
Closing rate |
Average rate |
|
GBP to: |
||||
USD |
1.35 |
1.32 |
1.25 |
1.28 |
Euro |
1.15 |
1.17 |
1.21 |
1.18 |
For illustrative purposes, the table below provides details of the impact on 2025 revenue, Group adjusted operating profit* and profit
before tax if the actual reported results, calculated using 2025 average exchange rates, were restated for GBP weakening by 10 cents
against USD in isolation and 10 cents against the Euro in isolation, on a continuing basis:
| 2025 |
Restated 2024 |
|||||
Group adjusted |
Group adjusted |
|||||
operating |
Profit |
operating |
Profit |
|||
Revenue |
profit 1 |
before tax |
Revenue 2 |
profit 1,2 |
before tax 2 |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Increase in revenue/Group adjusted |
||||||
operating profit 1 /profit before tax if: |
||||||
GBP weakens by 10c against USD |
||||||
in isolation |
39.0 |
3.8 |
2.7 |
41.8 |
4.4 |
3.6 |
GBP weakens by 10c against |
||||||
the Euro in isolation |
17.8 |
2.5 |
1.7 |
18.6 |
3.1 |
0.5 |
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 199 to 204.
2.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
Strategic Report
Governance
Financial Statements
22. Financial risk management
(continued)
Morgan Advanced Materials
/
Annual Report 2025
163
Other market price risk
Equity price risk arises from FVOCI equity instruments held for meeting partially the unfunded portion of the Group’s defined benefit
pension obligations. The primary goal of the Group’s investment strategy is to maximise returns in order to meet partially the Group’s
The Board’s policy is to maintain a strong capital base (total equity) so as to maintain investor, creditor and market confidence and to
sustain future development of the business. The Board uses a number of measures, identified as KPIs, to ensure the continued success
of the Group.
The Board encourages employees of the Group to hold the Company’s Ordinary shares. The Group operates a number of employee
share and share option schemes. The Company purchases its own shares on the market which are primarily intended to be used for
issuing shares under the Group’s various share option incentive schemes. During the year the Group purchased its own shares which
were subsequently cancelled as part of the share buyback scheme. The timing of these purchases depends on market prices.
The Board seeks to maintain a balance between the advantages and security afforded by a sound capital position, and the higher returns
that might be possible with higher levels of borrowings.
The Group monitors capital using the indicators set out in the table below. These indicators are also presented excluding the impact of
IFRS 16 Leases as these adjusted measures are more closely aligned to the Group’s covenants. In the year ended 31 December 2025 the
results of MMS for the period up to disposal are presented in discontinued operations in the consolidated income statement. Prior year
figures have been restated to present results for MMS in discontinued operations. In order to provide meaningful comparison to prior
years the net debt* to EBITDA* and interest cover are presented on an IFRS basis and a ‘Headline’ basis to include the result of MMS up to
| 2025 |
2024 |
|||||
Excluding |
IFRS 16 |
Excluding |
IFRS 16 |
|||
IFRS 16 |
impact |
As stated |
IFRS 16 |
impact |
As stated |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Borrowings and overdrafts |
311.5 |
– |
311.5 |
347.0 |
– |
347.0 |
Lease liabilities |
– |
49.2 |
49.2 |
– |
47.1 |
47.1 |
Less: cash and cash equivalents |
(79.3) |
– |
(79.3) |
(120.8) |
– |
(120.8) |
Net debt 1 |
232.2 |
49.2 |
281.4 |
226.2 |
47.1 |
273.3 |
Total equity |
348.9 |
– |
348.9 |
389.3 |
– |
389.3 |
Less: amounts accumulated in equity |
||||||
relating to cash flow hedges |
(0.6) |
– |
(0.6) |
0.2 |
– |
0.2 |
Adjusted capital |
348.3 |
– |
348.3 |
389.5 |
– |
389.5 |
Net debt 1 to adjusted capital ratio |
0.7x |
n/a |
0.8x |
0.6x |
n/a |
0.7x |
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 199 to 204.
Notes to the consolidated financial statements
continued
22. Financial risk management
(continued)
164
Net debt* to EBITDA*
2025 | Restated 2024 2 | |||||
Excluding | IFRS 16 | Excluding | IFRS 16 | |||
IFRS 16 | impact | As stated | IFRS 16 | impact | As stated | |
£m | £m | £m | £m | £m | £m | |
Net debt 1 | 232.2 | 49.2 | 281.4 | 226.2 | 47.1 | 273.3 |
Operating profit before specific | ||||||
adjusting items | 89.1 | 3.7 | 92.8 | 117.1 | 4.5 | 121.6 |
Depreciation and amortisation | 32.8 | 8.3 | 41.1 | 33.9 | 8.3 | 42.2 |
EBITDA 1 | 121.9 | 12.0 | 133.9 | 151.0 | 12.8 | 163.8 |
Net debt 1 to EBITDA 1 ratio | 1.9x | n/a | 2.1x | 1.5x | n/a | 1.7x |
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 199 to 204.
2.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
2025 Headline 1 | 2024 Headline 1 | |||||
Excluding | IFRS 16 | Excluding | IFRS 16 | |||
IFRS 16 | impact | As stated | IFRS 16 | impact | As stated | |
£m | £m | £m | £m | £m | £m | |
Net debt 1 | 232.2 | 49.2 | 281.4 | 226.2 | 47.1 | 273.3 |
Operating profit before specific | ||||||
adjusting items | 94.4 | 3.7 | 98.1 | 122.1 | 4.6 | 126.7 |
Depreciation and amortisation | 34.6 | 8.4 | 43.0 | 35.8 | 8.6 | 44.4 |
EBITDA 1 | 129.0 | 12.1 | 141.1 | 157.9 | 13.2 | 171.1 |
Net debt 1 to EBITDA 1 ratio | 1.8x | n/a | 2.0x | 1.4x | n/a | 1.6x |
1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on
pages 199 to 204.
Interest cover
| 2025 |
Restated 2024 2 |
|||||
Excluding |
IFRS 16 |
Excluding |
IFRS 16 |
|||
IFRS 16 |
impact |
As stated |
IFRS 16 |
impact |
As stated |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
EBITDA 1 |
121.9 |
12.0 |
133.9 |
151.0 |
12.8 |
163.8 |
Net finance costs (excluding IAS 19 |
||||||
pension charge) |
19.0 |
2.8 |
21.8 |
15.8 |
2.6 |
18.4 |
Interest cover |
6.4x |
n/a |
6.1x |
9.6x |
n/a |
8.9x |
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 199 to 204.
2.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
| 2025 Headline 1 |
2024 Headline 1 |
|||||
Excluding |
IFRS 16 |
Excluding |
IFRS 16 |
|||
IFRS 16 |
impact |
As stated |
IFRS 16 |
impact |
As stated |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
EBITDA 1 |
129.0 |
12.1 |
141.1 |
157.9 |
13.2 |
171.1 |
Net finance costs (excluding IAS 19 |
||||||
pension charge) |
19.0 |
2.8 |
21.8 |
15.8 |
2.6 |
18.4 |
Interest cover |
6.8x |
n/a |
6.5x |
10.0x |
n/a |
9.3x |
1.
Definitions of these non-GAAP measures and reconciliations to the equivalent statutory measure can be found in the ‘Glossary’ and ‘Alternative performance measures’ section on
pages 199 to 204.
There were no changes in the Group’s approach to capital management during the year. Neither the Company nor any of its subsidiaries
Strategic Report
Governance
Financial Statements
22. Financial risk management
(continued)
Morgan Advanced Materials
/
Annual Report 2025
165
| 31 December 2025 | 31 December 2024 | ||||||||
Carrying | Fair value | Carrying | Fair value | ||||||
Effective | amount | Level 1 | Level 2 | Total | amount | Level 1 | Level 2 | Total | |
interest rate | £m | £m | £m | £m | £m | £m | £m | £m | |
Financial assets and | |||||||||
liabilities held at | |||||||||
amortised cost | |||||||||
US Dollar | |||||||||
Senior Notes 2026 | 3.37% | (72.4) | – | (71.2) | (71.2) | (77.9) | – | (74.2) | (74.2) |
Euro | |||||||||
Senior Notes 2026 | 1.55% | (21.9) | – | (21.5) | (21.5) | (20.8) | – | (19.9) | (19.9) |
US Dollar | |||||||||
Senior Notes 2026 | 4.87% | – | – | – | – | (20.4) | – | (20.1) | (20.1) |
Euro | |||||||||
Senior Notes 2028 | 1.74% | (8.7) | – | (8.2) | (8.2) | (8.3) | – | (7.7) | (7.7) |
Euro | |||||||||
Senior Notes 2030 | 2.89% | (21.8) | – | (19.8) | (19.8) | (20.7) | – | (18.8) | (18.8) |
US Dollar | |||||||||
Senior Notes 2031 | 5.47% | (7.5) | – | (7.3) | (7.3) | (8.0) | – | (7.6) | (7.6) |
US Dollar | |||||||||
Senior Notes 2033 | 5.53% | (7.5) | – | (7.2) | (7.2) | (8.0) | – | (7.4) | (7.4) |
US Dollar | |||||||||
Senior Notes 2035 | 5.61% | (22.4) | – | (21.3) | (21.3) | (24.1) | – | (22.0) | (22.0) |
Cumulative | |||||||||
First Preference shares | 5.50% | (0.1) | – | (0.1) | (0.1) | (0.1) | – | (0.1) | (0.1) |
Cumulative | |||||||||
Second Preference shares | 5.00% | (0.3) | – | (0.3) | (0.3) | (0.3) | – | (0.3) | (0.3) |
(162.6) | – | (156.9) | (156.9) | (188.6) | – | (178.1) | (178.1) | ||
Financial assets held at FVTPL | 47.2 | 47.2 | – | 47.2 | 2.0 | 2.0 | – | 2.0 | |
Derivative financial assets | |||||||||
held at fair value | 2.0 | – | 2.0 | 2.0 | 1.2 | – | 1.2 | 1.2 | |
49.2 | 47.2 | 2.0 | 49.2 | 3.2 | 2.0 | 1.2 | 3.2 | ||
Derivative financial liabilities | |||||||||
held at fair value | (0.5) | – | (0.5) | (0.5) | (2.6) | – | (2.6) | (2.6) | |
The table above analyses the fair values of financial instruments held by the Group, by valuation method, together with the carrying
amounts shown in the balance sheet.
The fair value of cash and cash equivalents, current trade and other receivables/payables and floating-rate bank and other borrowings
are excluded from the preceding table as their carrying amount approximates their fair value.
Fair value hierarchy
The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: not traded in an active market but the fair values are based on quoted market prices or alternative pricing sources with
reasonable levels of price transparency. Fair value is calculated using discounted cash flow methodology, future cash flows are
estimated based on forward exchange rates.
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
There have been no transfers between Level 1 and Level 2 during 2025 and 2024 and there were no Level 3 financial instruments in
either 2025 or 2024.
Notes to the consolidated financial statements
continued
22. Financial risk management
(continued)
166
The major methods and assumptions used in estimating the fair values of financial instruments reflected in the preceding table are as follows:
Equity securities
Fair value is based on quoted market prices at the balance sheet date.
Forward exchange contracts are marked to market either using listed market prices or by discounting the contractual forward price and
Fixed-rate borrowings
Fair value is calculated based on discounted expected future principal and interest cash flows. The interest rates used to determine the
The Group operates a number of defined benefit arrangements as well as defined contribution plans. The defined benefit plans are
primarily in the UK, USA and Europe and predominantly provide pensions based on service and career average pay. In addition, post-
retirement medical plans are operated in the USA.
Summary of net defined benefit obligations
2025 |
2024 |
|
£m |
£m |
|
Present value of unfunded defined benefit obligations |
(31.9) |
(32.8) |
Present value of funded defined benefit obligations |
(418.8) |
(429.5) |
Fair value of plan assets |
428.7 |
440.8 |
(22.0) |
(21.5) |
Amounts recognised in income statement
Restated |
|||
2025 |
2024 1 |
||
Continuing operations |
Note |
£m |
£m |
Current service cost |
(2.8) |
(2.1) |
|
Administrative expenses recognised outside of the pension liability |
(1.0) |
(0.7) |
|
Curtailments and settlements |
0.1 |
0.1 |
|
Total expense within operating costs relating to defined benefit plans |
(3.7) |
(2.7) |
|
Defined contribution plans |
(12.9) |
(13.3) |
|
Total expense within operating costs |
4 |
(16.6) |
(16.0) |
Net interest on net defined benefit liability |
7 |
(0.4) |
(0.6) |
Total expense recognised in income statement |
(17.0) |
(16.6) |
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
Amounts recognised in other comprehensive income
2025 |
2024 |
|
£m |
£m |
|
Experience gain on plan obligations |
(5.3) |
2.0 |
Changes in financial assumptions underlying the present value of plan obligations – gain |
4.5 |
39.1 |
Changes in demographic assumptions underlying the present value of plan obligations – (loss)/gain |
(2.8) |
1.4 |
Actual return on plan assets (excluding amounts included in net interest expense) |
3.5 |
(41.2) |
Remeasurements recognised in other comprehensive income |
(0.1) |
1.3 |
Deferred tax associated with the above |
(0.1) |
(0.6) |
Total amount recognised in other comprehensive income |
(0.2) |
0.7 |
Strategic Report
Governance
Financial Statements
23. Pensions and other post-retirement employee benefits
(continued)
Morgan Advanced Materials
/
Annual Report 2025
167
Defined contribution plans
The Group operates a number of defined contribution pension plans. The total expense relating to these plans in the current year
was £12.9 million (2024: £13.3 million) on a continuing basis. The Group expects to contribute £13.1 million to ongoing defined
contribution arrangements in 2026.
Defined benefit plans
UK schemes
In the UK, the Group operates two defined benefit pension schemes, the Morgan Pension Scheme and the Morgan Group Senior Staff
Pension and Life Assurance Scheme (‘the UK Schemes’). The two UK Schemes provide a benefit based upon an employee’s total service
and their career average earnings (including allowance for consumer price inflation), although historically benefits were based upon an
employee’s final salary. Once in payment, pensioners receive increases as set out in the rules, at either a fixed level, or in line with the
Retail Price Index. The overall duration of the UK Schemes is around 11 years.
The UK Schemes’ assets are held in trustee-administered funds which are governed by UK regulations, as is the nature of the relationship
between the Group and the Trustees. Responsibility for the governance of the UK Schemes, including investment decisions and
contribution schedules, lies with the Board of Trustees which must consult with the Group in such matters. The Board of Trustees is
composed of representatives of the Company, plan participants and independent trustee directors, in accordance with the UK Schemes’
governing documents.
Funding legislation in the UK requires that schemes are fully funded on a scheme-specific basis, and this must be assessed at least every
three years. To the extent that there is a deficit against this measure, a payment schedule must be agreed such that the deficit is removed
over a reasonable period of time.
The most recent full actuarial valuations of the UK Schemes have an effective date of 31 March 2025 and resulted in combined assessed
surpluses of £7.8 million. These are the first to be undertaken under the new statutory funding regime introduced by the Pension Schemes
Act 2021. The next valuations are due as at 31 March 2028.
The UK Schemes were closed to new entrants on 1 August 2011, with any new employees receiving benefits through the Morgan Group
Personal Pension Plan, a defined contribution arrangement. The Morgan Group Senior Staff Pension and Life Assurance Scheme was
closed to the future accrual of benefits on and with effect from 6 April 2016. The Morgan Pension Scheme was closed to the future
accrual of benefits with effect from 6 April 2018. Current employees, including those who were active in the Schemes at closure,
are auto-enrolled into the Morgan Group Personal Pension Plan for their future pension benefits.
The Group has considered third-party powers and does not believe the Trustees have any powers that would prevent the Group
obtaining a refund of any surplus on wind-up of the Scheme following gradual settlement of the plan obligations. As such the Group’s
interpretation is that the current version of IFRIC 14 does not have an impact and, as a result, any IAS 19 surplus can be recognised as
an asset and it is not necessary to recognise additional liabilities in respect of contribution agreements reached with the pension scheme
Trustees, managers or any third party.
The Trustees and the Group have considered the impact of the recent Virgin Media court case on the Morgan Pension Scheme and, in
particular, the extent to which actuarial confirmation was provided that any changes made to the Scheme between 1997 and 2016 did not
adversely impact members’ contracted out benefits. Reasonable due diligence has concluded that no additional liability requires disclosure.
The Morgan Group Senior Staff Pension and Life Assurance Scheme was not contracted out over this period and therefore is not affected
by the ruling.
The Group has recognised a liability in relation to Guaranteed Minimum Pension (GMP) equalisation, an initiative to remove inequalities in
Morgan Pension Scheme benefits that arise from GMPs being unequal between men and women. A project to equalise members’ benefits
in the Morgan Pension Scheme is currently being progressed by a Joint Trustee and Employer Working Group.
Notes to the consolidated financial statements
continued
23. Pensions and other post-retirement employee benefits
(continued)
168
US schemes
The Group operates a tax qualified defined benefit pension scheme in the USA (‘MUSE DB Scheme’), and a Supplemental Executive
Retirement Plan (‘SERP’) which is not tax approved (together ‘the US Schemes’). The MUSE DB Scheme is frozen, and therefore
employees accrue benefits within a 401k arrangement.
The US Schemes provide a benefit based upon an employee’s service and earnings. The level of benefits remains the same, both prior to,
and while in payment. Overall, the US Schemes’ duration is around nine years.
The qualified MUSE DB Scheme’s assets are held in a trust separately from the Group’s assets. For the SERP, the Group holds an asset
to meet the obligations; however, due to its nature this is accounted for as a Group asset, rather than an asset of the SERP. Responsibility
for the governance of the US Schemes, including investment decisions and contribution schedules, lies with a management committee,
all of whose members are appointed by the Group.
The funding requirements in the USA, ERISA, require schemes to be fully funded at all times, and if not to target full funding within a
period of 15 years.
The most recent full actuarial valuation of the MUSE DB Scheme was undertaken as at 1 January 2025 and the Scheme was 100% funded
on this basis.
On the Defined Benefit Obligation (DBO) basis used for IAS 19 purposes, the Scheme was 99% funded with a shortfall as at
31 December 2025 of £1.0 million (2024: £0.2 million surplus).
No further significant contributions to the MUSE DB Scheme are anticipated in the medium term.
European schemes
In Europe (excluding the UK), the Group operates a number of retirement schemes, with the bulk of the obligations relating to
arrangements for employees in Germany. In line with local practice, these arrangements are not funded in advance, with benefits being
met by the Group as they fall due.
Strategic Report
Governance
Financial Statements
23. Pensions and other post-retirement employee benefits
(continued)
Morgan Advanced Materials
/
Annual Report 2025
169
| 31 December 2025 | |||||
Rest of | |||||
UK | USA | Europe | the World | Total | |
£m | £m | £m | £m | £m | |
Summary of net surplus/(obligations) | |||||
Present value of unfunded defined benefit obligations | – | (3.5) | (23.9) | (4.5) | (31.9) |
Present value of funded defined benefit obligations | (315.6) | (94.2) | (0.7) | (8.3) | (418.8) |
Fair value of plan assets | 327.1 | 93.2 | – | 8.4 | 428.7 |
Net surplus/(obligations) | 11.5 | (4.5) | (24.6) | (4.4) | (22.0) |
Represented by: | |||||
Surpluses | 11.5 | – | – | 0.9 | 12.4 |
Obligations | – | (4.5) | (24.6) | (5.3) | (34.4) |
Movements in present value of defined benefit obligation | |||||
At 1 January 2025 | (318.1) | (105.3) | (26.1) | (12.8) | (462.3) |
Current service cost | – | – | (0.8) | (2.0) | (2.8) |
Interest cost | (16.7) | (5.3) | (0.9) | (0.2) | (23.1) |
Actuarial gain/(loss) | |||||
Experience gain/(loss) on plan obligations | (4.3) | (0.9) | 0.2 | (0.3) | (5.3) |
Changes in financial assumptions – gain/(loss) | 4.6 | (2.3) | 2.0 | 0.2 | 4.5 |
Changes in demographic assumptions – loss | (2.8) | – | – | – | (2.8) |
Benefits paid | 21.7 | 8.6 | 1.7 | 1.2 | 33.2 |
Curtailments and settlements | – | – | – | 0.1 | 0.1 |
Business disposal | – | – | 0.5 | 0.6 | 1.1 |
Exchange adjustments | – | 7.5 | (1.2) | 0.4 | 6.7 |
At 31 December 2025 | (315.6) | (97.7) | (24.6) | (12.8) | (450.7) |
Movements in fair value of plan assets | |||||
At 1 January 2025 | 330.4 | 101.5 | 0.2 | 8.7 | 440.8 |
Interest on plan assets | 17.4 | 5.0 | – | 0.3 | 22.7 |
Remeasurement gain | 1.3 | 2.0 | – | 0.2 | 3.5 |
Contributions by employer | – | 0.5 | 1.6 | 1.4 | 3.5 |
Benefits paid | (21.7) | (8.6) | (1.7) | (1.2) | (33.2) |
Administrative cost | (0.3) | – | – | – | (0.3) |
Business disposal | – | – | (0.2) | (0.4) | (0.6) |
Exchange adjustments | – | (7.2) | 0.1 | (0.6) | (7.7) |
At 31 December 2025 | 327.1 | 93.2 | – | 8.4 | 428.7 |
Actual return on assets | 18.7 | 7.0 | – | 0.5 | 26.2 |
Fair value of plan assets by category | |||||
Equities | – | 4.6 | – | – | 4.6 |
Growth assets 1 | 29.3 | – | – | – | 29.3 |
Bonds | 44.4 | 85.5 | – | – | 129.9 |
Liability-driven investments (LDI) 2 | 164.0 | – | – | – | 164.0 |
Matching insurance policies | 88.2 | 1.3 | – | 6.4 | 95.9 |
Other | 1.2 | 1.8 | – | 2.0 | 5.0 |
327.1 | 93.2 | – | 8.4 | 428.7 | |
1.
Growth assets include investment in Multi-Asset Funds as well as UK property.
2.
The LDI assets are pooled funds in the UK that provide a leveraged return linked to long duration fixed interest and index-linked government bonds valued at the bid price of the units.
This provides interest rate and inflation hedging equivalent in size to circa 100% of the invested assets of the UK Schemes measured on the ‘Long-Term Objective’ basis (Gilts +50 bps)
(excluding matching insurance policies).
Notes to the consolidated financial statements
continued
23. Pensions and other post-retirement employee benefits
(continued)
170
Rest of | |||||
UK | USA | Europe | the World | Total | |
£m | £m | £m | £m | £m | |
Estimate of employer contributions to be paid into the plans | |||||
during the 12-month period beginning 1 January 2026 | – | 0.5 | 1.8 | 1.3 | 3.6 |
| 31 December 2024 | |||||
Rest of | |||||
UK | USA | Europe | the World | Total | |
£m | £m | £m | £m | £m | |
Summary of net surplus/(obligations) | |||||
Present value of unfunded defined benefit obligations | – | (4.0) | (24.9) | (3.9) | (32.8) |
Present value of funded defined benefit obligations | (318.1) | (101.3) | (1.2) | (8.9) | (429.5) |
Fair value of plan assets | 330.4 | 101.5 | 0.2 | 8.7 | 440.8 |
Net surplus/(obligations) | 12.3 | (3.8) | (25.9) | (4.1) | (21.5) |
Represented by: | |||||
Surpluses | 12.3 | 0.1 | – | 0.6 | 13.0 |
Obligations | – | (3.9) | (25.9) | (4.7) | (34.5) |
Movements in present value of defined benefit obligation | |||||
At 1 January 2024 | (362.8) | (112.2) | (28.4) | (12.7) | (516.1) |
Current service cost | – | – | (0.7) | (1.4) | (2.1) |
Interest cost | (15.8) | (5.2) | (1.0) | (0.3) | (22.3) |
Actuarial gain/(loss) | |||||
Experience gain/(loss) on plan obligations | 2.8 | (0.8) | 0.3 | (0.3) | 2.0 |
Changes in financial assumptions – gain/(loss) | 33.0 | 5.8 | 0.7 | (0.4) | 39.1 |
Changes in demographic assumptions – gain | 1.3 | – | – | 0.1 | 1.4 |
Benefits paid | 23.4 | 8.8 | 1.7 | 1.1 | 35.0 |
Effect of curtailment or settlement | – | – | 0.1 | 0.1 | 0.2 |
Exchange adjustments | – | (1.7) | 1.2 | 1.0 | 0.5 |
At 31 December 2024 | (318.1) | (105.3) | (26.1) | (12.8) | (462.3) |
Movements in fair value of plan assets | |||||
At 1 January 2024 | 375.3 | 106.7 | 0.2 | 8.7 | 490.9 |
Interest on plan assets | 16.5 | 4.9 | – | 0.3 | 21.7 |
Remeasurement gain/(loss) | (37.7) | (3.5) | (0.1) | 0.1 | (41.2) |
Contributions by employer | – | 0.5 | 1.7 | 1.6 | 3.8 |
Benefits paid | (23.4) | (8.8) | (1.7) | (1.1) | (35.0) |
Administrative cost | (0.3) | – | – | – | (0.3) |
Effect of curtailment or settlement | – | – | – | (0.1) | (0.1) |
Exchange adjustments | – | 1.7 | 0.1 | (0.8) | 1.0 |
At 31 December 2024 | 330.4 | 101.5 | 0.2 | 8.7 | 440.8 |
Actual return on assets | (21.2) | 1.4 | (0.1) | 0.4 | (19.5) |
Fair value of plan assets by category | |||||
Equities | – | 4.8 | – | – | 4.8 |
Growth assets 1 | 43.8 | – | – | – | 43.8 |
Bonds | 28.8 | 94.7 | – | – | 123.5 |
Liability-driven investments (LDI) 2 | 166.4 | – | – | – | 166.4 |
Matching insurance policies | 90.1 | 1.4 | 0.2 | 6.2 | 97.9 |
Other | 1.3 | 0.6 | – | 2.5 | 4.4 |
330.4 | 101.5 | 0.2 | 8.7 | 440.8 | |
1.
Growth assets include investment in Global Diversified and Multi-Asset Funds as well as UK property.
2.
The LDI assets are pooled funds in the UK that provide a leveraged return linked to long duration fixed interest and index-linked government bonds valued at the bid price of the units.
This provides interest rate and inflation hedging equivalent in size to circa 100% of the invested assets of the UK Schemes.
Strategic Report
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Financial Statements
23. Pensions and other post-retirement employee benefits
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Morgan Advanced Materials
/
Annual Report 2025
171
Actuarial assumptions
The actual liability in respect of global employee benefits will not be known until the last payments have been made. In placing a current
estimate on the Group’s past service benefit obligations, a number of assumptions about the future are required. For defined benefit
schemes, the Directors make annual estimates and assumptions in respect of discount rates, future changes in salaries, employee turnover,
inflation rates, life expectancy and several other assumptions. In making these estimates and assumptions, the Directors consider advice
provided by external advisors, such as actuaries.
The assumptions used are best estimate assumptions chosen from a reasonable range and which may not be borne out in practice.
The principal assumptions are the discount rate and inflation assumptions which are long-term and measured on external factors, based
upon each plan’s duration. In addition to these, the mortality assumption in the UK and the USA is material to the cost of the promised
benefits. In both the UK and Europe, where relevant, the assumed increases in salaries and pensions in payment are derived from
assumed future inflation.
The rates shown below are single equivalents for the obligations as a whole derived from discounting along the yield curve. In line with
IAS 19, in determining the value of the annuity contract held in the UK we have reflected the same methodology as used to value the
corresponding obligations, reflecting the actual cash flow profile and duration of the insured obligations, rather than those of the Schemes
as a whole.
Actuarial assumptions were:
Rest of | ||||
UK | USA | Europe | the World | |
% | % | % | % | |
2025 | ||||
Discount rate | 5.47 | 5.17 | 4.20 | 5.22 |
Salary increase | n/a | n/a | 2.00 | 4.30 |
Inflation (UK: RPI/CPI) | 2.79/2.22 | n/a | 2.00 | n/a |
Pensions increase 1 | 3.00/2.73/3.53 | n/a | 2.00 | n/a |
Mortality – post-retirement: | ||||
Life expectancy of a male aged 60 in accounting year (years) | 25.56 | 25.10 | 25.62 | n/a |
Life expectancy of a male aged 60 in accounting year +20 (years) | 27.08 | 26.00 | 28.38 | n/a |
2024 | ||||
Discount rate | 5.45 | 5.47 | 3.50 | 4.66 |
Salary increase | n/a | n/a | 2.00 | 4.50 |
Inflation (UK: RPI/CPI) | 3.15/2.52 | n/a | 2.00 | n/a |
Pensions increase 1 | 3.00/3.02/3.66 | n/a | 2.00 | n/a |
Mortality – post-retirement: | ||||
Life expectancy of a male aged 60 in accounting year (years) | 25.51 | 25.00 | 25.48 | n/a |
Life expectancy of a male aged 60 in accounting year +20 (years) | 27.02 | 25.90 | 28.25 | n/a |
1.
Pension increases in the UK reflect both fixed-rate and RPI-related increases to different elements of members’ pensions.
The accounting assumptions noted above are used to calculate the year-end net pension liability in accordance with the relevant accounting
standard, ‘IAS 19 – Employee Benefits’. Changes in these assumptions have no impact on the Group’s cash payments to its arrangements.
The payments due are calculated based on local funding requirements, or in the case of the Group’s unfunded arrangements on the
incidence of benefit payments falling due.
Notes to the consolidated financial statements
continued
23. Pensions and other post-retirement employee benefits
(continued)
172
The table below demonstrates the sensitivity of the defined benefit obligations to changes in the significant assumptions used for
the schemes.
2025 |
2024 |
||||
Increase in |
Increase in |
||||
defined benefit |
Increase in |
defined benefit |
Increase in |
||
obligation |
net deficit |
obligation |
net deficit |
||
Change in assumption |
£m |
£m |
£m |
£m |
|
Discount rate |
Decrease by 0.1% |
4.3 |
3.7 |
4.6 |
4.1 |
Discount rate 1 |
Decrease by 0.5% |
22.2 |
19.3 |
23.9 |
21.0 |
Inflation |
Increase by 0.1% |
1.4 |
1.3 |
1.5 |
1.5 |
Inflation 1 |
Increase by 0.5% |
7.0 |
6.6 |
7.8 |
7.3 |
Mortality – post-retirement 1 |
Pensioners live 1 year longer |
16.5 |
11.0 |
18.1 |
11.6 |
Exchange rates |
GBP weakens against USD by 10% |
10.9 |
0.5 |
11.7 |
0.4 |
GBP weakens against EUR by 10% |
2.7 |
2.7 |
2.9 |
2.9 |
|
1.
Sensitivities included as reasonably possible changes under IAS 1.
These sensitivities have been calculated to show the movement in the net balance sheet in isolation, and assume no other changes in
market conditions at the accounting date. This is unlikely in practice – for example, a change in discount rate is unlikely to occur without
any movement in the value of the assets held by the Group’s Schemes, particularly in the UK and USA where liability movements are
effectively hedged.
Risks
The net pension liability is a snapshot view which can be significantly influenced by short-term market factors. The calculation of the
surplus or deficit depends, therefore, on factors which are beyond the control of the Group – principally the value at the balance sheet
date of assets in which the Schemes have invested and long-term interest rates which are used to discount future liabilities. The funding of
the Schemes is based on long-term trends and assumptions relating to market growth, as advised by qualified actuaries and investment
advisors.
The most significant risks to which the Group is exposed are:
Investment returns
: The Group’s net balance sheet and contribution requirements are heavily dependent upon the return on the
assets invested in by the Schemes.
Longevity:
The cost to the Group of the pensions promised to members is dependent upon the expected term of these payments.
To the extent that members live longer than expected, this will increase the cost of these arrangements.
Inflation rate risk:
In the UK, the pension promises are, in the main, linked to inflation, and higher inflation will lead to higher liabilities.
The above risks have been mitigated for a significant proportion of the UK Schemes’ pensioner population through the purchase of an
insurance policy, the payments from which exactly match the promises made to employees. Remaining investment risks have also been
mitigated to a significant extent by a diversification of the return-seeking assets and backing uninsured pensioner liabilities via bonds and
various hedging instruments. In the UK, the bonds and LDI mandates target an interest rate hedge against movements in government
bond yields (including providing protection against changes to future inflation expectations) for an amount equal to approximately 100% of
the liabilities valued on the ‘Long-Term Objective’ basis. In the USA, the bond mandates provide an interest rate hedge of approximately
100% of the liabilities for funded plans.
In addition, the IAS 19 defined benefit obligation is linked to yields on AA-rated corporate bonds; however some of the Group’s
arrangements invest in a number of other assets which will move in a different manner from these bonds. Therefore, changes in market
conditions may lead to volatility in the Group’s balance sheet and in other comprehensive income, and to a lesser extent in the IAS 19
pension expense in the Group’s income statement.
Regulatory risk:
The Group also closely monitors the external legal and regulatory pension environment to ensure continued
Strategic Report
Governance
Financial Statements
Morgan Advanced Materials
/
Annual Report 2025
173
The Group operates various share option programmes that allow Group employees to acquire shares in the Company. During 2025,
awards were made to executives and senior employees under the Morgan Advanced Materials plc Long-Term Incentive Plan (LTIP),
the Morgan Advanced Materials plc Deferred Bonus Plan (DBP) and the Morgan Advanced Materials plc Restricted Stock Units (RSU).
The Company also maintains a UK all-employee Sharesave scheme (‘Sharesave’). Further details can be found in the Remuneration
Report on pages 78 to 104.
The grant date fair value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity,
over the period that the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted to
reflect the actual number of share options for which the related service and non-market vesting conditions are met.
The charge expensed to the income statement in 2025 was £2.0 million (2024: £2.8 million).
The following options and awards were outstanding at 31 December 2025 in respect of Ordinary shares:
Number |
Exercise dates ranging |
|||||
Employees |
Exercise/award |
of shares |
||||
entitled |
Vesting conditions |
price(s) |
outstanding |
from |
to |
|
LTIP |
Senior |
Continued employment |
– |
6,919,293 |
22 March 2026 |
25 March 2028 |
employees |
plus satisfaction of |
|||||
performance metrics |
||||||
Sharesave |
All UK |
Continued employment |
164.00p–247.00p |
1,360,827 |
1 December 2025 |
1 June 2028 |
employees |
||||||
DBP |
Senior |
Continued employment |
– |
296,460 |
10 May 2026 |
26 March 2028 |
employees |
||||||
RSU |
Select |
Continued employment |
– |
571,205 |
26 March 2026 |
26 March 2028 |
employees |
||||||
The numbers and weighted average exercise prices of share options are as follows:
2025 |
2024 |
|||
Weighted |
Weighted |
|||
average |
Number of |
average |
Number of |
|
exercise price |
options |
exercise price |
options |
|
Outstanding at the beginning of the period |
26.06p |
9,222,121 |
27.63p |
8,785,347 |
Granted during the period |
33.12p |
3,825,992 |
15.00p |
3,153,808 |
Forfeited during the period |
81.28p |
(1,179,314) |
23.54p |
(459,351) |
Exercised during the period |
0.18p |
(1,581,898) |
21.63p |
(1,623,698) |
Lapsed during the period |
14.49p |
(1,139,116) |
5.96p |
(633,985) |
Outstanding at the end of the period |
27.81p |
9,147,785 |
26.06p |
9,222,121 |
Exercisable at the end of the period |
202.69p |
229,537 |
139.21p |
120,602 |
The weighted average share price at the date of exercise during the period was 187.16 pence (2024: 283.16 pence).
Notes to the consolidated financial statements
continued
24. Share-based payments
(continued)
174
The DBP is an award of deferred shares, which include the accumulated value of any dividends which fall during the period from the date
of grant to the vesting date. The RSU is an award of shares, which are released in tranches to the participant over a specified period of
time with no performance conditions except continued employment by the Group. As such, the grant-date fair value of the DBP and RSU
are equal to the share price at the date of grant.
| Awards made in 2025 |
||||
LTIP |
Sharesave |
DBP |
RSU |
|
Share price at award date |
207.89p–211.59p |
216.75p |
207.89p |
207.89p–211.59p |
Exercise price |
n/a |
164.00p |
n/a |
n/a |
Fair value at measurement date |
55.00p–171.00p |
43.00p |
207.89p |
207.89p–211.59p |
Fair value measurement method |
Actuarial |
Actuarial |
n/a |
n/a |
binomial |
binomial |
|||
method |
method |
|||
Fair value model inputs: |
||||
Expected volatility (expressed as weighted average |
30% |
30% |
||
volatility used in the model) |
||||
Option life (expressed as weighted average life |
3.0 years |
3.3 years |
||
used in the model) |
||||
Expected dividends |
6.00% |
5.60% |
||
Risk-free interest rate |
4.10% |
3.90% |
||
The expected volatility is based on the historical volatility (calculated based on the weighted average remaining life of the share options)
adjusted for any expected changes to future volatility due to publicly available information.
The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted.
Closure and |
||||
restructuring |
Legal and other |
Environmental |
||
provisions |
provisions |
provisions |
Total |
|
£m |
£m |
£m |
£m |
|
Balance at 1 January 2025 |
7.4 |
6.3 |
6.7 |
20.4 |
Provisions made during the year |
3.6 |
0.7 |
0.8 |
5.1 |
Provisions used during the year |
(3.1) |
(0.3) |
(0.6) |
(4.0) |
Provisions reversed during the year |
(1.6) |
(0.8) |
(0.5) |
(2.9) |
Business disposal |
– |
(0.2) |
– |
(0.2) |
Effect of movements in foreign exchange |
(0.3) |
(0.2) |
0.1 |
(0.4) |
Balance at 31 December 2025 |
6.0 |
5.5 |
6.5 |
18.0 |
Current |
4.4 |
1.3 |
2.4 |
8.1 |
Non-current |
1.6 |
4.2 |
4.1 |
9.9 |
6.0 |
5.5 |
6.5 |
18.0 |
Strategic Report
Governance
Financial Statements
25. Provisions and contingent liabilities
(continued)
Morgan Advanced Materials
/
Annual Report 2025
175
Closure and restructuring provisions
Closure and restructuring provisions relate to the Group’s restructuring programmes and represent committed expenditure at the balance
sheet date. The amounts provided are based on the costs of terminating relevant contracts, under the contract terms, and management’s
best estimate of other associated restructuring costs including professional fees. Of the total, £4.5 million of the provisions are expected to
be utilised in the next one to two years.
We have a provision for a multi-employer pension obligation for a site which was closed during 2021. The cash outflows relating to the
pension obligation may continue for up to 15 years, subject to any settlement being reached in advance of that date.
Legal and other provisions
Legal and other provisions mainly comprise amounts provided against open legal and contractual disputes arising in the normal course of
business and long-service costs. Provisions are made for the expected costs associated with such matters, based on past experience of
similar items and other known factors, taking into account professional advice received, and represent management’s best estimate of the
most likely outcome. The timing of utilisation of these provisions is frequently uncertain, reflecting the complexity of issues and the
outcome of various court proceedings and associated negotiations.
Where obligations are not capable of being reliably estimated, or if a material outflow of economic resources is considered not probable,
it is classified as a contingent liability. The Group is of the opinion that any associated claims that might be brought can be defeated
successfully and, therefore, the possibility of any material outflow in settlement is assessed as remote.
Subsidiary undertakings within the Group have given unsecured guarantees of £16.3 million (2024: £9.5 million) in the ordinary course
of business.
Environmental provisions
Environmental provisions are made for quantifiable environmental liabilities arising from known environmental issues. The amounts
provided are based on the best estimate of the costs required to remedy these issues. The provisions are expected to be utilised in the
next five to ten years.
Tax contingent liabilities
The Group is subject to periodic tax audits by various fiscal authorities covering corporate, employee and sales taxes in the various
jurisdictions in which it operates. We have provided for estimates of the Group’s likely exposures where these can be reliably estimated.
These are disclosed in notes 8 and 15.
Environmental and other contingent liabilities
Due to the international footprint of the Group and the nature of its manufacturing operations it is subject to a wide range of local health
and safety, environmental and employment laws and regulations. At any point in time the Group has a number of ongoing environmental
or employment cases for which there is uncertainty due to the wide range of possible outcomes and associated costs. Possible outcomes
In 2025, commitments for property, plant and equipment and computer software expenditure for which no provision has been made in
Notes to the consolidated financial statements
continued
176
Identification of related parties
The Group has related party relationships with its subsidiaries (a list of all related undertakings and associates is shown in note 6 to the
Company financial statements), and with its Directors, executive officers and their close family members.
The Company has written service contracts or letters of appointment with each of its Directors, under which the Directors receive a
salary or a fee and other emoluments.
The key management of the Group and Parent Company consists of the Board of Directors (including non-executive Directors) and
members of the Executive Committee.
The compensation for the Executive and non-executive Directors and members of the Executive Committee charged in the year was:
2025 |
2024 |
|
£m |
£m |
|
Short-term employee benefits |
6.0 |
6.2 |
Employer national insurance contributions |
0.6 |
0.5 |
Pension and other post-employment costs |
0.3 |
0.3 |
Share-based payment expense |
0.6 |
1.1 |
Non-executive Directors’ fees and benefits |
0.6 |
0.5 |
Total compensation of key management personnel |
8.1 |
8.6 |
Other related party transactions
During the year the Group incurred an annual fee of £18,000 (2024: £18,000) to Dunelm Energy for administrative support, a company in
Non-controlling interests represent the portion of equity of subsidiaries which is not owned by the Parent Company. The total profit
attributable to non-controlling interests for the year ended 31 December 2025 is £7.7 million (2024: £8.5 million), £7.3 million (2024:
£7.5 million) relates to the subsidiaries listed below, the remaining amount relates to other subsidiaries which are not considered material.
Name of entity |
Registered address |
Ownership % |
Morgan AM&T (Shangai) Co., Ltd |
4250 Long Wu Road, Shanghai, 200241, China |
30% |
Murugappa Morgan Thermal Ceramics Ltd |
PO Box 1570, Dare House Extension, V Floor, No. 2, |
49% |
NSC Bose Road, Chennai, Tamil Nadu, 600001, India |
||
Ciria India Limited |
P-11 Pandav Nagar, Mayur Vihar Phase 1, Delhi, 110091, India |
30% |
Shin-Nippon Thermal Ceramics Corporation |
Portus Center Building 12F, 4-45-1 Ebisujimacho, Sakai-Ku, |
50% |
Sakai-Shi, Osaka, 590-0985, Japan |
||
Yixing Morgan Thermal Ceramics Co Ltd |
2 Beidan Road, Taodu Industrial Park, Dingshu Town, |
49% |
Yixing City, Jiangsu Province, 214222, China |
||
Morgan Kailong (Jingmen) Thermal Ceramics Co Ltd |
20-1 Quankou Road, Jingmen City, Hubei Province, |
30% |
448032, China |
Strategic Report
Governance
Financial Statements
28. Non-controlling interests
(continued)
Morgan Advanced Materials
/
Annual Report 2025
177
The summarised financial information of the material non-controlling interests is shown below.
Morgan Kailong |
||||||
Murugappa |
Shin-Nippon |
Yixing Morgan |
(Jingmen) |
|||
Morgan AM&T |
Morgan |
Thermal |
Thermal |
Thermal |
||
(Shanghai) |
Thermal |
Ciria India |
Ceramics |
Ceramics |
Ceramics |
|
Co., Ltd |
Ceramics Ltd |
Limited |
Corporation |
Co Ltd |
Co Ltd |
|
2025 |
£m |
£m |
£m |
£m |
£m |
£m |
Profit after tax |
5.7 |
3.4 |
1.6 |
1.9 |
2.6 |
3.7 |
Profit for the year attributable |
||||||
to non-controlling interest |
1.7 |
1.7 |
0.5 |
1.0 |
1.3 |
1.1 |
Dividends paid to |
||||||
non-controlling interest |
1.8 |
0.6 |
0.4 |
1.3 |
0.6 |
1.0 |
Non-current assets |
5.0 |
9.8 |
0.1 |
0.7 |
7.3 |
11.7 |
Current assets |
33.7 |
10.6 |
5.0 |
8.7 |
7.7 |
8.0 |
Current liabilities |
(13.4) |
(3.8) |
(1.4) |
(3.0) |
(3.0) |
(4.9) |
Total net assets |
25.3 |
16.6 |
3.7 |
6.4 |
12.0 |
14.8 |
Morgan Kailong |
||||||
Murugappa |
Shin-Nippon |
Yixing Morgan |
(Jingmen) |
|||
Morgan AM&T |
Morgan |
Thermal |
Thermal |
Thermal |
||
(Shanghai) |
Thermal |
Ciria India |
Ceramics |
Ceramics |
Ceramics |
|
Co., Ltd |
Ceramics Ltd |
Limited |
Corporation |
Co Ltd |
Co Ltd |
|
2024 |
£m |
£m |
£m |
£m |
£m |
£m |
Profit after tax |
6.1 |
4.6 |
2.3 |
1.9 |
1.3 |
3.3 |
Profit for the year attributable |
||||||
to non-controlling interest |
1.9 |
2.2 |
0.7 |
1.0 |
0.7 |
1.0 |
Dividends paid to |
||||||
non-controlling interest |
2.3 |
0.7 |
0.7 |
1.8 |
1.0 |
1.0 |
Non-current assets |
5.1 |
9.0 |
– |
– |
8.4 |
12.3 |
Current assets |
34.3 |
11.3 |
5.7 |
10.5 |
6.3 |
7.6 |
Current liabilities |
(13.0) |
(3.8) |
(1.8) |
(3.0) |
(3.7) |
(5.0) |
Total net assets |
26.4 |
16.5 |
3.9 |
7.5 |
11.0 |
14.9 |
178
Company balance sheet
AS AT 31 DECEMBER 2025
Note
2025
£m
2024
£m
Non-current assets
Intangible assets
3
–
–
Property, plant and equipment
4
3.2
3.3
Right-of-use assets
5
0.3
0.3
Investments in subsidiary undertakings
6
588.5
605.2
Other receivables – amounts due after more than one year
7
479.8
489.1
Employee benefits: pensions
11
2.0
3.1
1,073.8
1,101.0
Current assets
Other receivables – amounts due within one year
7
98.5
65.6
Cash and cash equivalents
2.8
22.1
101.3
87.7
Total assets
1,175.1
1,188.7
Current liabilities
Trade and other payables – amounts falling due within one year
8
328.9
178.5
Provisions
12
0.9
0.9
329.8
179.4
Net current liabilities
(228.5)
(91.7)
Total assets less current liabilities
845.3
1,009.3
Non-current liabilities
Other payables – amounts falling due after more than one year
9
281.8
429.5
Provisions
12
1.6
2.0
283.4
431.5
Net assets
561.9
577.8
Capital and reserves
Equity shareholders’ funds
Share capital
13
69.2
70.9
Share premium
111.7
111.7
Merger reserve
17.0
17.0
Capital redemption reserve
37.8
36.1
Other reserves
(0.4)
(5.5)
Retained earnings
326.6
347.6
Shareholders’ funds
561.9
577.8
Under Section 408 of the Companies Act 2006, the Company is exempt from the requirement to present its own income statement.
The profit for the Company for the year ended 31 December 2025 was £30.9 million (2024: profit of £21.5 million).
The financial statements were approved by the Board of Directors on 2 March 2026 and were signed on its behalf by:
Damien Caby
Richard Armitage
Chief Executive Officer
Chief Financial Officer
Strategic Report
Governance
Financial Statements
179
Morgan Advanced Materials
/
Annual Report 2025
Company statement of changes in equity
FOR THE YEAR ENDED 31 DECEMBER 2025
Called-up
share capital
£m
Share
premium
account
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Other
reserves
£m
Retained
earnings
£m
Total
equity
£m
Balance at 1 January 2024
71.3
111.7
17.0
35.7
–
365.7
601.4
Total comprehensive income
for the year:
Profit for the year
–
–
–
–
–
21.5
21.5
Other comprehensive income
–
–
–
–
–
(0.1)
(0.1)
Transactions with owners:
–
Dividends
–
–
–
–
(34.5)
(34.5)
Equity-settled share-based
payment transactions
–
–
–
–
–
2.8
2.8
Own shares acquired for share
incentive schemes (net)
–
–
–
–
–
(3.3)
(3.3)
Purchase of own shares for shares
buyback programme
–
–
–
–
(10.0)
–
(10.0)
Cancellation of own shares under
share buyback programme
(0.4)
–
–
0.4
4.5
(4.5)
–
Balance at 31 December 2024
70.9
111.7
17.0
36.1
(5.5)
347.6
577.8
Balance at 1 January 2025
70.9
111.7
17.0
36.1
(5.5)
347.6
577.8
Total comprehensive income
for the year:
Profit for the year
–
–
–
–
–
30.9
30.9
Other comprehensive income
–
–
–
–
–
(1.1)
(1.1)
Transactions with owners:
Dividends
–
–
–
–
–
(34.1)
(34.1)
Equity-settled share-based
payment transactions
–
–
–
–
–
1.9
1.9
Own shares acquired for share
incentive schemes (net)
–
–
–
–
–
(3.5)
(3.5)
Purchase of own shares for shares
buyback programme
–
–
–
–
(10.0)
–
(10.0)
Cancellation of own shares under
share buyback programme
(1.7)
–
–
1.7
15.1
(15.1)
–
Balance at 31 December 2025
69.2
111.7
17.0
37.8
(0.4)
326.6
561.9
180
Notes to the Company financial statements
1. Material accounting policies
Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’)
and the Companies Act 2006.
The separate financial statements of the Company are presented as required by the Companies Act 2006. The Company meets the
definition of a qualifying entity under ‘FRS 100 Application of Financial Reporting Requirements’ issued by the FRC. Accordingly, these
financial statements are prepared in accordance with FRS 101.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
A cash flow statement and related notes.
Comparative period reconciliations for share capital, tangible fixed assets and intangible assets.
Transactions with wholly-owned subsidiaries.
The effects of new but not yet effective IFRS.
The compensation of key management personnel.
Capital management.
Disclosures required by ‘IFRS 15 – Revenue from Contracts with Customers’ relating to customer contracts.
Disclosures required by ‘IFRS 16 – Leases’ relating to lessors.
As the consolidated financial statements of Morgan Advanced Materials plc include the equivalent disclosures, the Company has also taken
the exemptions under FRS 101 available in respect of the following disclosures:
‘IFRS 2 – Share-Based Payments’ in respect of Group-settled share-based payments.
The disclosures required by ‘IFRS 7 – Financial Instruments: Disclosures’.
Disclosures required by ‘IAS 12 – Income Taxes’ in periods when Pillar Two legislation is enacted.
Certain disclosures required by ‘IFRS 13 – Fair Value Measurement’ relating to the fair value of assets and liabilities.
In the current year, the Company has applied the following amendment to IFRS Accounting Standards as adopted by the UK that are
mandatorily effective for an accounting period that begins on or after 1 January 2025. The adoption has not had any material impact on
the disclosures or on the amounts reported in these financial statements.
Amendments to ‘IAS 21 – The Effects of Changes in Foreign Exchange Rates’: Lack of Exchangeability.
The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next financial statements.
Under Section 408(4) of the Companies Act 2006 the Company is exempt from the requirement to present its own income statement
or statement of comprehensive income.
The Company’s financial statements are presented in pounds sterling, which is the Company’s functional currency.
The Company’s financial statements are prepared on a going concern basis as set out in note 1 of the consolidated financial statements
of the Group.
The accounting policies set out below have, unless otherwise stated, been applied consistently to the period presented in these
financial statements.
Measurement convention
The financial statements are prepared on the historical cost basis except for certain financial instruments that are measured at fair value.
Foreign currency
Transactions in foreign currencies are translated to the Company’s functional currency at the foreign exchange rate ruling at the date of
transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional
currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income
statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair
value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined.
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1. Material accounting policies
(continued)
Intangible assets
Intangible assets that are acquired by the Company are stated at cost less accumulated amortisation and less accumulated impairment losses.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives
are indefinite. Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each balance sheet
date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:
Software:
3–7 years
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of tangible
fixed assets. Land is not depreciated. The estimated useful lives are as follows:
Plant, equipment and fixtures: 3–20 years
Buildings:
50 years
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.
Leasing
The Company assesses whether a contract is or contains a lease at inception of the contract. The Company recognises a right-of-use asset
and a corresponding lease liability with respect to all lease arrangements in which it is the lessee.
The lease liability is initially measured at the present value of future lease payments including adjustments for any lease incentives
receivable. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
Lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the
case of leases in the Company, the lessee’s incremental borrowing rate is used, being the rate the individual lessee would have to pay to
borrow the funds necessary to obtain an asset of similar value on similar terms.
The right-of-use-assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement date, less any lease incentives received and initial direct costs. They are subsequently measured at cost less accumulated
depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of the lease term and useful life of the underlying asset. The depreciation starts
at the commencement date of the lease.
Investments in subsidiaries
Investments in subsidiaries are carried at cost less provision for impairment. The Company tests the investment balances for impairment
annually or when there are indicators of impairment. If any such indication of impairment exists, the Company makes an estimate of its
recoverable amount. Where the carrying amount of an investment exceeds its recoverable amount, the investment is considered impaired
and is written down to its recoverable amount. Where these circumstances have reversed, the impairment previously made is reversed to
the extent of the original cost of the investment.
Financial instruments
Financial instruments and financial liabilities are recognised in the Company balance sheet when the Company becomes party to the
contractual provisions of the instrument.
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other debtors, cash and cash
equivalents, loans and borrowings, and trade and other creditors.
Trade and other debtors
Trade and other debtors are recorded initially at transaction price and subsequently measured at amortised cost. This results in
their recognition at nominal value less an allowance for any doubtful debts. The allowance for doubtful debts is recognised based
on management’s expectation of losses without regard to whether an impairment trigger happened or not (an ‘expected credit loss’
(ECL) model). The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECL.
182
Notes to the Company financial statements
continued
1. Material accounting policies
(continued)
Non-derivative financial instruments
(continued)
Trade and other creditors
Trade and other creditors are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using
the effective interest method. The Directors consider that the carrying amount of trade payables approximates to their fair value.
Interest-bearing borrowings
Interest-bearing bank loans and overdrafts are initially recorded at fair value of the consideration received, net of direct issue costs.
They are subsequently held at amortised cost using the effective interest method. Finance charges, including premiums payable on
settlement or redemption and direct issue costs, are accounted for using an effective interest rate method and are added to or deducted
from the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Impairment of financial assets
The Company recognises provisions for ECLs on financial assets measured at amortised cost. The amount of ECLs is updated at each
reporting date to reflect changes in credit risk with lifetime ECL recognised when there has been a significant increase in credit risk since
initial recognition. Lifetime ECL represents the expected credit losses that will result from all possible defaults over the expected life of the
financial instrument.
To assess whether the credit risk has increased significantly since initial recognition, the Company compares the risk of default occurring
at the reporting date with the risk of default at the date of initial recognition. The Company utilises both quantitative and qualitative
information to support this assessment, including historical experience and forward-looking information.
The Company considered amounts due from Group undertakings to be in default when the borrower is unlikely to pay its credit
obligations to the Company in full. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on
the estimated future cash flows of the financial asset have occurred.
Derivative financial instruments
Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised immediately
in the income statement. The Group enters into derivative financial instruments to manage its exposure to foreign exchange rate risks
including non-designated foreign exchange forward contracts as detailed in note 16.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a
financial liability. Derivatives are not offset in the financial statements unless the Group has both a legally enforceable right and intention
to offset. The impact of the Master Netting Agreements on the Group’s financial position is disclosed in note 22. A derivative is presented
as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not due to be
realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the Company pays fixed contributions into a separate entity
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension
plans are recognised as an expense in the income statement in the periods during which services are rendered by employees.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obligation in respect
of defined benefit pension plans and other post-employment benefits is calculated separately for each plan by estimating the amount
of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to
determine its present value, and the fair value of any plan assets (at bid price) and any unrecognised past service costs are deducted.
The liability discount rate is the yield at the balance sheet date on AA-credit-rated bonds denominated in the currency of, and having
maturity dates approximating to, the terms of the Company’s obligations. The calculation is performed by a qualified actuary using the
projected unit credit method. When the calculation results in a benefit to the Company, the recognised asset is limited to the total of any
unrecognised past service costs and the present value of benefits available in the form of any future refunds from the plan, reductions in
future contributions to the plan or on settlement of the plan, and takes into account the adverse effect of any minimum funding requirements.
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1. Material accounting policies
(continued)
Actuarial gains and losses that have arisen since the adoption of FRS 101 are recognised in the period that they occur directly into equity
through the statement of comprehensive income.
The Company is the sponsoring and principal employer of two UK defined benefit pension schemes, the Morgan Pension Scheme and
the Morgan Group Senior Staff Pension and Life Assurance Scheme (‘the UK Schemes’). The Company also guarantees certain obligations
and liabilities to the employees that currently participate in the two UK Schemes. During 2016, the Company adopted a new policy to
allocate costs associated with the UK pension schemes between itself, as Principal Employer, and the various Participating Employers,
based on an evaluation of each entity’s share of overall Scheme liabilities. This ensures that the pension liability is reflected in the entity
that employed the participant. Previously all of the Scheme assets and liabilities were recognised on the balance sheet of the Company
only. Further details are provided in note 11.
Share-based payment transactions
Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are
accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Company.
The grant date fair value of share-based payments awards granted to employees is recognised as an employee expense, with a corresponding
increase in equity, over the period in which the employees become unconditionally entitled to the awards. Share-based payment charges
and credits relating to awards granted to employees of subsidiaries are recharged to those subsidiaries with a corresponding entry in the
Company’s income statement. The fair value of the awards granted is measured using an option valuation model, taking into account the
terms and conditions upon which the awards were granted. The amount recognised as an expense is adjusted to reflect the actual number
of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately
recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at
the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
Share-based payment transactions in which the Company receives goods or services by incurring a liability to transfer cash or other assets
that is based on the price of the Company’s equity instruments are accounted for as cash-settled share-based payments. The fair value of
the amount payable to employees is recognised as an expense, with a corresponding increase in liabilities, over the period in which the
employees become unconditionally entitled to payment. The liability is remeasured at each balance sheet date and at settlement date.
Any changes in the fair value of the liability are recognised as personnel expense in the income statement.
Disclosure of the share-based payment transactions can be found in note 24 to the Group financial statements.
Own shares held by the Morgan General Employee Benefit Trust
Transactions of the Group-sponsored Morgan General Employee Benefit Trust are treated as being those of the Company and are
therefore reflected in the Company’s financial statements. In particular, the Trust’s purchases and sales of shares in the Company are
debited and credited to equity.
Provisions
A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event
that can be reliably measured, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions
are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability where the effect of
discounting is expected to be material.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent
that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or
other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill;
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and
differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount
of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
temporary difference can be utilised.
184
Notes to the Company financial statements
continued
1. Material accounting policies
(continued)
Dividends on shares presented within shareholders’ funds
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately approved
and are no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the
financial statements.
Financial guarantee contracts
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its Group, the
Company considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats the guarantee
contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the
guarantee, at which point a liability would be recognised.
Critical accounting judgements and key sources of estimation uncertainty
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of the
Company’s accounting policies and the reported amount of assets, liabilities, income and expenses.
In addition to the areas of judgement and estimates outlined in note 1 to the consolidated Group financial statements, the Company
also identifies the assumptions required in investments impairment assessments as a source of significant risk of resulting in a material
adjustment to the asset carrying values of the Company. Assessment of impairment relies on the use of estimates of the future profitability
and EBITDA* multiple to determine the valuation, which may differ from the actual results achieved. Due to global economic uncertainty,
there is an increased level of risk and therefore a key source of estimate uncertainty in these assumptions, see note 6 for sensitivity analysis.
2. Staff numbers and costs
The monthly average number of persons employed by the Company (including Directors) during the year was as follows:
Number of employees
2025
2024
Number of employees including Directors
79
76
Full details of the Directors’ remuneration for the period can be found in the Remuneration Report on pages 78 to 104.
Aggregate employee-related costs were as follows:
Note
2025
£m
2024
£m
Wages and salaries
11.8
10.6
Equity-settled share-based payments
24
2.0
2.8
Social security costs
1.3
1.5
Other pension costs
1.1
0.9
16.2
15.8
In 2025, £1.4 million (2024: £2.6 million) of the equity-settled share-based payments amount was recharged to other Group companies.
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Financial Statements
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Annual Report 2025
3. Intangible assets
Software
£m
Cost
Balance at 1 January 2025 and 31 December 2025
10.0
Amortisation
Balance at 1 January 2025 and 31 December 2025
10.0
Carrying amounts
At 31 December 2024
–
At 31 December 2025
–
4. Property, plant and equipment
Land and
buildings
£m
Plant,
equipment
and fixtures
£m
Total
£m
Cost
Balance at 1 January 2025
6.5
2.4
8.9
Additions
–
0.1
0.1
Balance at 31 December 2025
6.5
2.5
9.0
Depreciation and impairment losses
Balance at 1 January 2025
3.8
1.8
5.6
Depreciation charge for the year
–
0.2
0.2
Balance at 31 December 2025
3.8
2.0
5.8
Carrying amounts
At 31 December 2024
2.7
0.6
3.3
At 31 December 2025
2.7
0.5
3.2
186
Notes to the Company financial statements
continued
5. Right-of-use assets
The reconciliation in the movement of the carrying value of right-of-use assets is set out in the table below:
Land and
buildings
£m
Cost
Balance at 1 January 2025
0.8
Additions
0.2
Disposals
(0.2)
Balance at 31 December 2025
0.8
Depreciation
Balance at 1 January 2025
0.5
Charge for the year
0.2
Disposals
(0.2)
Balance at 31 December 2025
0.5
Carrying amounts
At 31 December 2024
0.3
At 31 December 2025
0.3
The Company leases several assets including buildings and IT equipment. The average lease term at 31 December 2025 is 1.7 years
(2024: 0.8 years).
At 31 December 2025, the Company has not applied any exemptions for short-term leases or leases of low-value assets.
6. Investment in subsidiary undertakings
Shares
in Group
undertakings
£m
Loans
£m
Total
£m
Cost
Balance at 1 January 2025
454.3
298.1
752.4
Disposals
(3.0)
–
(3.0)
Effect of movement in foreign exchange
–
(13.5)
(13.5)
Balance at 31 December 2025
451.3
284.6
735.9
Provisions
Balance at 1 January 2025
64.8
82.4
147.2
Effect of movement in foreign exchange
–
0.2
0.2
Balance at 31 December 2025
64.8
82.6
147.4
Carrying amounts
At 31 December 2024
389.5
215.7
605.2
At 31 December 2025
386.5
202.0
588.5
In the year ended 31 December 2025, the Company disposed of its investment Morgan Molten Metal Systems (Suzhou) China Co. Ltd,
which was a 100% owned subsidiary. The disposal forms part of the Group’s disposal of the majority of its Molten Metal Systems business.
Refer to note 2 in the consolidated financial statements for further information.
Strategic Report
Governance
Financial Statements
(continued)
In December 2025, management conducted a review of the Company’s investment in subsidiary undertakings and identified impairment
losses of £nil (2024: £nil). In addition, management identified £nil (2024: £nil) impairment losses against loans.
The impairment assessment of shares in Group undertakings uses the 2025 results in an EBITDA* multiple valuation, which is sensitive
to changes in the principal assumptions. A 2% increase in either EBITDA* or the multiple would increase the carrying value of the share in
Group undertakings by £3.3 million at 31 December 2025. A 2% decrease would result in a decrease in the carrying value of the shares in
Group undertakings by £3.3 million. Management considers these changes in assumptions to be reasonably possible.
In accordance with Section 409 of the Companies Act 2006, a full list of related undertakings as at 31 December 2025 is disclosed below.
Related undertakings include subsidiary undertakings, all significant holdings (being 20% or more interest), associated undertakings, joint
ventures and qualifying partnerships. Unless otherwise stated the Group’s shareholding represents Ordinary shares held indirectly by
the Company.
% shareholding | |||
Country of | owned by | ||
Name of undertaking | incorporation | Registered office address | the Group |
Carbo San Luis S.A. 10 | Argentina | Talcahuano 736, 4th Floor, Buenos Aires, C1013AAP, Argentina | 100.00% |
Morgan Technical Ceramics | Australia | 4 Redwood Drive, Clayton, VIC 3168, Australia | 100.00% |
Australia Pty Ltd 14 | |||
Morganite Australia Pty Ltd 13 | Australia | Riverwood Business Park, Unit 4, 92-100 Belmore Rd, Riverwood | 100.00% |
NSW 2210, Australia | |||
Morgan Mechanical Carbon | Australia | Riverwood Business Park, Unit 4, 92–100 Belmore Rd, Riverwood, | 100.00% |
Australasia Pty Ltd 1,5 | NSW 2210, Australia | ||
Morgan Advanced Materials | Belgium | 1210 Saint-Josse-Ten-Noode, Boulevard Saint-Lazare, 4-10, | 100.00% |
Belgium BV | Brussels, Belgium | ||
Morganite Brasil Ltda 14 | Brazil | Rua Jose Versolato, 111-Sala 3608, Torre B – Centro, Sao Bernardo | 100.00% |
do Campo, Sao Paulo, Brazil | |||
Morgan Advanced Materials | Canada | 1185 Walkers Line, Burlington, ON L7M 1L1, Canada | 100.00% |
Canada Inc. 10 | |||
Carbo Chile S.A. 14 | Chile | Avenida San Eugenio 12462, Sitio 3, Loteo Estrella del Sur, | 100.00% |
Santiago, Chile | |||
Dalian Morgan Ceramics | China | Zhenxing Road, Pulandian Economic Development Zone, | 100.00% |
Company Ltd 17 | Dalian, Liaoning Province, 116200, China | ||
Morgan Haldenwanger Technical | China | Hongwei New Village No. 92, Dingshu Town, Yixing City, Jiangsu | 100.00% |
Ceramics (Wuxi) Co. Ltd 17 | Province, 214221, China | ||
Morgan Technical Ceramics | China | Room 09, 28th Floor (2809), 288 LongShan Road, | 100.00% |
(Suzhou) Co. Ltd 10 | Kanhu Plaza, Suzhou New District, Suzhou, 215163, China | ||
Morgan Thermal Ceramics | China | 18 Kang An Road, Kang Qiao Industrial Zone, Shanghai, Pudong | 100.00% |
(Shanghai) Co. Ltd 1,17 | New District, 201315, China | ||
Morgan International Trading | China | Room 6015, 6th Floor, Great Wall Mansion, No.333 Fute Xi Yi | 100.00% |
(Shanghai) Co. Ltd 1,17 | Road, China (Shanghai) Pilot Free Trade Zone, Shanghai, China | ||
Shanghai Morgan Advanced Material | China | 4250 Long Wu Road, Shanghai, 200241, China | 100.00% |
and Technology Co. Ltd 1,11 | |||
Morgan AM&T (Shanghai) Co. Ltd 4,16 | China | 4250 Long Wu Road, Shanghai, 200241, China | 70.00% |
Morgan Kailong (Jingmen) Thermal | China | 20-1 Quankou Road, Jingmen City, Hubei Province, 448032, China | 70.00% |
Ceramics Co. Ltd 4,17 | |||
Dalian Morgan Refractory Co. Ltd 4,17,19 | China | Zhenxing Road, Pulandian Economic Development Zone, Dalian, | 70.00% |
Liaoning Province, 116200, China | |||
Yixing Morgan Thermal Ceramics | China | 2 Beidan Road, Taodu Industrial Park, Dingshu Town, Yixing City, | 51.00% |
Co. Ltd 5,17 | Jiangsu Province, 214222, China | ||
Morgan Carbon France S.A.S 14 | France | 6 Rue du Réservoir, 68420 Eguisheim, France | 100.00% |
Thermal Ceramics de France S.A.S 14 | France | Centre de Vie BP 75, 3 Rue du 18 Juin 1827, | 100.00% |
42162 Andrézieux-Bouthéon, France | |||
Thermal Ceramics S.A. 8,14 | France | Centre de Vie BP 75, 3 Rue du 18 Juin 1827, | 100.00% |
42162 Andrézieux-Bouthéon, France | |||
Morgan Advanced Materials | Germany | Teplitzerstraße 27, 84478 Waldkraiburg, Germany | 100.00% |
Haldenwanger GmbH 15 |
Notes to the Company financial statements
continued
6. Investment in subsidiary undertakings
(continued)
188
% shareholding | |||
Country of | owned by | ||
Name of undertaking | incorporation | Registered office address | the Group |
Morgan Electrical Carbon | Germany | Zeppelinstraße 26, 53424 Remagen, Germany | 100.00% |
Deutschland GmbH 14 | |||
Morgan Deutschland Holding GmbH 14 | Germany | Zeppelinstraße 26, 53424 Remagen, Germany | 100.00% |
Morgan Thermal Ceramics Porextherm | Germany | Heisinger Straße 8/10, 87437 Kempten (Allgäu), Germany | 100.00% |
GmbH 14 | |||
Morgan Holding GmbH 14 | Germany | Zeppelinstraße 26, 53424 Remagen, Germany | 100.00% |
The Morgan Crucible | Germany | Zeppelinstraße 26, 53424 Remagen, Germany | 100.00% |
Management GmbH 14 | |||
Wesgo Ceramics GmbH 14 | Germany | Willi-Grasser-Straße 11, 91056 Erlangen, Germany | 100.00% |
Refractarios Nacionales S.A 14 | Guatemala | Km. 34.5, Carretera al Pacífico, Palín, Escuintla, Guatemala | 100.00% |
Morgan AM&T Hong Kong | Hong Kong | Flat/RM 1003, 10F, Boss Commercial Centre, 28 Ferry Street, | 100.00% |
Company Ltd 14 | Yaumatie, Kowloon, Hong Kong | ||
Morgan Materials Hungary Limited | Hungary | Csillagvirág utca 7, Budapest, 1106, Hungary | 100.00% |
Liability Company 14 | |||
Morgan Advanced Materials India | India | P-11, Pandav Nagar, Mayur Vihar Phase 1, Delhi, 110091, India | 100.00% |
Private Ltd 14 | |||
Ciria India Limited 17 | India | P-11, Pandav Nagar, Mayur Vihar Phase 1, Delhi, 110091, India | 70.00% |
Murugappa Morgan Thermal | India | PO Box 1570, Dare House Extension, V Floor, No. 2, NSC Bose | 51.00% |
Ceramics Ltd 5,11 | Road, Chennai, Tamil Nadu, 600001, India | ||
Thermal Ceramics Italiana S.R.L 16 | Italy | Via Vittori Pisani 20, 20124, Milan, Italy | 100.00% |
Morgan Carbon Italia S.R.L 14 | Italy | Via Vittori Pisani 20, 20124, Milan, Italy | 100.00% |
Morganite Carbon Co. Ltd 14 | Japan | 5-10-23 Kamikoshien, Nishinomiya-city, Hyogo-pref. 663-8114., | 100.00% |
Japan | |||
Shin-Nippon Thermal | Japan | Portus Center Building 12F, 4-45-1 Ebisujimacho, Sakai-ku, | 50.00% |
Ceramics Corporation 6,14 | Sakai-shi, Osaka 590-0985, Japan | ||
Morgan Co., Ltd 1,9 | Korea | 27 Nongongjoongang-ro 46 gil, Nongong-eup, Dalseong-gun, | 100.00% |
Daegu-si, Korea | |||
Morganite Luxembourg S.A 14 | Luxembourg | BP 15, Capellen, L-8301, Luxembourg | 100.00% |
Grafitos y Maquinados S.A. de C.V. 2,18 | Mexico | Cerrada de la Paz No. 101, Fraccionamiento Industrial La Paz, | 100.00% |
Mineral de la Reforma, Hidalgo, CP. 42181, Mexico | |||
Grupo Industrial Morgan | Mexico | Cerrada de la Paz No. 101, Fraccionamiento Industrial La Paz, | 100.00% |
S.A. de C.V. 2,18 | Mineral de la Reforma, 42181 Hidalgo, 42092, Mexico | ||
Morgan Technical Ceramics | Mexico | Av. Fulton 20, Fraccionamiento Industrial Valle de Oro, | 100.00% |
S.A. de C.V. 18 | San Juan del Rio, Queretaro, CP. 76802, Mexico | ||
Morgan Holding Netherlands B.V. 14 | Netherlands | Oude Veiling 3, Zwaag, 1689 AA, The Netherlands | 100.00% |
Morgan Terrassen B.V. 14 | Netherlands | Oude Veiling 3, Zwaag, 1689 AA, The Netherland | 100.00% |
Morgan AM&T B.V. 14 | Netherlands | Oude Veiling 3, Zwaag, 1689 AA, The Netherland | 100.00% |
Morgan Carbon Polska Spolka z | Poland | ul. Iskry 26, 01-472 Warszawa, Poland | 100.00% |
ograniczona odpowiedzialnoscia 14 | |||
Thermal Ceramics Polska Sp.zoo 14 | Poland | Ul. Aleja Walentego Rozdzienskiego nr 1, Lok. KTW 1, P.2, Miejsc, | 100.00% |
KOD 40-202, Katowice, Poczta Katowice, Poland | |||
Morgan Ceramics Asia Pte Ltd 2,14 | Singapore | 150 Kampong Ampat, #05-06A, KA Centre, 368324, Singapore | 100.00% |
Morganite Ujantshi (Pty) Ltd 14 | South Africa | 149 South Rand Road, Tulisa Park, Johannesburg 2197, South Africa | 74.90% |
Thermal Ceramics South Africa | South Africa | 149 South Rand Road, Tulisa Park, Johannesburg 2197, South Africa | 100.00% |
(Pty) Ltd 14 | |||
Morganite South Africa (Pty) Ltd 14 | South Africa | 149 South Rand Road, Tulisa Park, Johannesburg 2197, South Africa | 100.00% |
Thermal Ceramics España S.L 14 | Spain | Av. de Europa, 106, 12006, Castellón, Spain | 100.00% |
Morganite Española S.A 14 | Spain | Av. de Europa, 106, 12006, Castellón, Spain | 100.00% |
Morgan Matroc S.A 14,19 | Spain | Roger de Lluria 104 5º-2ª, 08037 Barcelona, Spain | 100.00% |
Strategic Report
Governance
Financial Statements
6. Investment in subsidiary undertakings
(continued)
Morgan Advanced Materials
/
Annual Report 2025
189
% shareholding | |||
Country of | owned by | ||
Name of undertaking | incorporation | Registered office address | the Group |
Morgan Advanced Materials | Taiwan | 25 Hsin-Yeh Street, Hsiao Kang, Kaohsiung 81208, Taiwan | 100.00% |
(Taiwan) Co. Ltd 14 | |||
Morganite Thermal Ceramics | Taiwan | c/o Baker & McKenzie, 15/f, 168 Tun Hwa North Road, | 88.00% |
(Taiwan) Ltd 14 | Taipei 105, Taiwan | ||
Morgan Holdings | Thailand | 98 Sathorn Square Office Tower, 37th Floor, North Sathorn Road, | 99.99% |
(Thailand) Ltd 2,13 | Silom, Bangrak, Bangkok, 10500, Thailand | ||
MKGS Morgan Karbon Grafit | Turkey | Mahmutbey M. Tasocagi Yolu C. No. 3, Agaoglu MyOffice 212 Is | 100.00% |
Sanayi Anonim Sirketi 14 | Mrk. B-BI. K:1 D:7, Bagcilar, Istanbul, 34218, Turkey | ||
Morgan Advanced Materials | United Arab | Plot No. KHIA4–07A, Khalifa Industrial Zone Abu Dhabi (KIZAD), | 100.00% |
Industries Ltd 14 | Emirates | Abu Dhabi, United Arab Emirates | |
Certech International Limited 1,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
MCCo Limited 6,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
MNA Finance Limited 1,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
Morgan Electro Ceramics Limited 1,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
Morgan Europe Holding Limited 1,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
Morgan European Finance Limited 1,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
Morgan Finance Management Limited 14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
Morgan Holdings Limited 1,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
Morgan International | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Holding Limited 1,14 | Kingdom | ||
Morgan North America | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Holding Limited 14 | Kingdom | ||
Morgan Technical Ceramics Limited 14 | United | Morgan Advanced Materials – Technical Ceramics, Morgan Drive, | 100.00% |
Kingdom | Stourport-on-Severn, Worcestershire DY13 8DW, UK | ||
Morgan Trans Limited 1,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
Morganite Carbon Limited 1,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
Morganite Crucible Limited 1,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
Morganite Electrical Carbon Limited 14 | United | Upper Fforest Way, Morriston, Swansea, West Glamorgan, | 100.00% |
Kingdom | SA6 8PP, UK | ||
Morganite Special Carbons Limited 2,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
Petty France Investment | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Nominees Limited 1,14 | Kingdom | ||
TCG Guardian 1 Limited 14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 99.01% |
Kingdom | |||
TCG Guardian 2 Limited 14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 99.01% |
Kingdom | |||
Terrassen Holdings Limited 7,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom |
Notes to the Company financial statements
continued
6. Investment in subsidiary undertakings
(continued)
190
% shareholding | |||
Country of | owned by | ||
Name of undertaking | incorporation | Registered office address | the Group |
The Morgan Crucible | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Company Limited 14 | Kingdom | ||
Thermal Ceramics Limited 6,14 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 100.00% |
Kingdom | |||
Thermal Ceramics UK Limited 14 | United | Tebay Road, Bromborough, Wirral, Merseyside, CH62 3PH, UK | 100.00% |
Kingdom | |||
Clearpower Ltd 3,12 | United | York House, Sheet Street, Windsor, Berkshire, SL4 1DD, UK | 99.01% |
Kingdom | |||
Certech, Inc. 10 | United States | 550 Stewart Road, Hanover Township, PA 18706, USA | 100.00% |
Graphite Die Mold, Inc. 10 | United States | 18 Air Line Park, Durham, Connecticut 06422-1000, USA | 100.00% |
Morgan Advanced Ceramics, Inc. 10 | United States | 2425 Whipple Road, Hayward, California 94544, USA | 100.00% |
Morgan Advanced Materials and | United States | 441 Hall Avenue, St Marys, Pennsylvania 15857, USA | 100.00% |
Technology Inc. 10 | |||
Morganite Industries Inc. 10 | United States | 4000 West Chase Boulevard, Suite 170, Raleigh, | 100.00% |
North Carolina 27607, USA | |||
National Electrical Carbon | United States | 251 Forrester Drive, Greenville, SC 29607, USA | 100.00% |
Products, Inc. 10 | |||
Thermal Ceramics Inc. 10 | United States | 2102 Old Savannah Road, Augusta, GA 30906, United States | 100.00% |
Thermal Ceramics de | Venezuela | Zona Ind. El Recreo, Av. 87 N°105–121, Flor Amarillo, | 100.00% |
Venezuela C.A 14 | Valencia Edo. Carabobo, Venezuela |
1.
Directly owned by Morgan Advanced Materials plc.
2.
99.99% owned by Morgan Advanced Materials plc.
3.
99.01% owned by Morgan Advanced Materials plc.
4.
70% owned by Morgan Advanced Materials plc.
5.
51% owned by Morgan Advanced Materials plc.
6.
50% owned by Morgan Advanced Materials plc.
7.
8.18% owned by Morgan Advanced Materials plc.
8.
1.98% owned by Morgan Advanced Materials plc.
9.
Ownership held in Common and Preference shares.
10. Ownership held in Common stock/shares.
11. Ownership held in Equity shares.
12. Ownership held in Ordinary A, B and C and Preference A and B shares.
13. Ownership held in Ordinary and Preference shares.
14. Ownership held in Ordinary shares.
15. Ownership held in Partnership shares.
16. Ownership held in Quotas.
17. Ownership held in Registered Capital.
18. Ownership held in Series A and Series B shares.
19. In liquidation.
Strategic Report
Governance
Financial Statements
6. Investment in subsidiary undertakings
(continued)
Morgan Advanced Materials
/
Annual Report 2025
191
UK incorporated subsidiaries which have taken exemption from audit per Section 479A of the Companies Act 2006 for the year ended
31 December 2025 are listed below.
Morgan Advanced Materials plc will guarantee the debts and liabilities of the companies claiming the statutory audit exemption at the
balance sheet date in accordance with Section 479C of the Companies Act 2006. The Company has assessed the probability of loss
under the guarantee as remote.
Registered | |
Name of undertaking | number |
Certech International Limited | 01893781 |
Clearpower Limited | 06247523 |
MCCO Limited | 03246886 |
MNA Finance Limited | 10423297 |
Morgan Electro Ceramics Limited | 00112286 |
Morgan Europe Holding Limited | 02540399 |
Morgan European Finance Limited | 09910922 |
Morgan Finance Management Limited | 10423619 |
Morgan Holdings Limited | 01956134 |
Morgan International Holding Limited | 10677668 |
Morgan North America Holding Limited | 08789720 |
Morgan Trans Limited | 02557161 |
Morganite Carbon Limited | 00679647 |
Morganite Crucible Limited | 02133533 |
Morganite Special Ceramics Limited | 01034654 |
Petty France Investments Nominees Limited | 01296533 |
TCG Guardian 1 Limited | 05564034 |
TCG Guardian 2 Limited | 05564065 |
Terrassen Holdings Limited | 01352995 |
The Morgan Crucible Company Limited | 07328730 |
Thermal Ceramics Limited | 01274806 |
7. Other receivables
Note
2025
£m
2024
£m
Due within one year
Amounts owed by Group undertakings
91.0
59.8
Other receivables
2.2
1.1
Derivative financial assets
16
0.8
1.4
Prepayments
4.5
3.3
98.5
65.6
Due after more than one year
Derivative financial assets
16
8.2
–
Amounts owed by Group undertakings
471.6
489.1
479.8
489.1
Amounts owed by Group undertakings relate to subsidiary undertakings, are unsecured and accrue interest at rates up to 16.4%
(2024: 18.3%). Amounts owed by Group undertakings in more than one year are due in up to three years.
192
Notes to the Company financial statements
continued
8. Trade and other payables: amounts falling due within one year
Note
2025
£m
2024
£m
Bank overdrafts
0.2
2.6
Borrowings
94.3
–
Lease liabilities
0.1
0.1
Trade payables
10.3
10.2
Amounts owed to Group undertakings
210.5
150.5
Other payables
2.4
3.8
Accruals
11.1
8.9
Derivative financial liabilities
16
–
2.4
328.9
178.5
Amounts owed to Group undertakings relate to subsidiary undertakings and are unsecured, repayable on demand and accrue interest at
rates up to 8.8% (2024: 12.0%).
The Company has a supplier finance programme which allows its suppliers to be paid to agreed terms whilst providing extended payment
terms for the Company. Under this arrangement the trade payable is derecognised at the point it is settled by the supplier finance provider
and a liability due to the supplier finance provider is recognised. The arrangement allows the Company to achieve payment days similar to
comparable businesses.
The Company does not face a significant liquidity risk as a result of its supplier finance arrangements.
2025
£m
Supplier finance liability
Presented within trade and other payables
2.0
Of which amounts suppliers have received from finance provider
2.0
Range of payment due dates
Liabilities part of the supplier finance arrangement
0 to 45 days after
invoice date
Liabilities not part of the arrangement
60 days after
invoice date
9. Other payables: amounts falling due after more than one year
Note
2025
£m
2024
£m
Amounts owed to Group undertakings
68.7
85.8
Borrowings
212.1
337.7
Lease liabilities
0.1
–
Derivative financial liabilities
16
0.9
6.0
281.8
429.5
Amounts owed to Group undertakings relate to subsidiary undertakings and are unsecured and accrue interest at rates up to 6.0%
(2024: 8.0%). Amounts owed to Group undertakings in more than one year are due in up to four years.
Strategic Report
Governance
Financial Statements
193
Morgan Advanced Materials
/
Annual Report 2025
10. Borrowings
Fair Values
31 December 2025
31 December 2024
Carrying
amount
£m
Fair value
Carrying
amount
£m
Fair value
Level 1
£m
Level 2
£m
Total
£m
Level 1
£m
Level 2
£m
Total
£m
Financial assets and
liabilities held at
amortised cost
3.37% US Dollar
Senior Notes 2026
(72.4)
–
(71.2)
(71.2)
(77.9)
–
(74.2)
(74.2)
1.55% Euro
Senior Notes 2026
(21.9)
–
(21.5)
(21.5)
(20.8)
–
(19.9)
(19.9)
4.87% US Dollar
Senior Notes 2026
–
–
–
–
(20.4)
–
(20.1)
(20.1)
1.74% Euro
Senior Notes 2028
(8.7)
–
(8.2)
(8.2)
(8.3)
–
(7.7)
(7.7)
2.89% Euro
Senior Notes 2030
(21.8)
–
(19.8)
(19.8)
(20.7)
–
(18.8)
(18.8)
5.47% US Dollar
Senior Notes 2031
(7.5)
–
(7.3)
(7.3)
(8.0)
–
(7.6)
(7.6)
5.53% US Dollar
Senior Notes 2033
(7.5)
–
(7.2)
(7.2)
(8.0)
–
(7.4)
(7.4)
5.61% US Dollar
Senior Notes 2035
(22.4)
–
(21.3)
(21.3)
(24.1)
–
(22.0)
(22.0)
5.50% Cumulative
First Preference shares
(0.1)
–
(0.1)
(0.1)
(0.1)
–
(0.1)
(0.1)
5.00% Cumulative
Second Preference shares
(0.3)
–
(0.3)
(0.3)
(0.3)
–
(0.3)
(0.3)
(162.6)
–
(156.9)
(156.9)
(188.6)
–
(178.1)
(178.1)
Derivative financial assets
held at fair value
9.0
–
9.0
9.0
1.4
–
1.4
1.4
Derivative financial liabilities
held at fair value
(0.9)
–
(0.9)
(0.9)
(8.4)
–
(8.4)
(8.4)
The fair value of cash and cash equivalents, current trade and other receivables/payables and floating-rate bank and other borrowings are
excluded from the preceding table as their carrying amount approximates to their fair value.
In 2025, none of the borrowings were secured on the assets of the Company (2024: £nil).
194
Notes to the Company financial statements
continued
11. Employee benefits: pensions
Defined benefit plans
The Company participates in two defined benefit pension schemes, the Morgan Pension Scheme and the Morgan Group Senior Staff
Pension and Life Assurance Scheme (‘the UK Schemes’). The UK Schemes were closed to new entrants on 1 August 2011, with any
new employees receiving benefits through the Morgan Group Personal Pension Plan, a defined contribution arrangement. The Morgan
Group Senior Staff Pension and Life Assurance Scheme was closed to the future accrual of benefits on and with effect from 6 April 2016.
The Morgan Pension Scheme was closed to the future accrual of benefits on and with effect from 6 April 2018. Current employees,
including those who were active in the Schemes at closure, were auto-enrolled into the Morgan Group Personal Pension Plan for their
future pension benefits.
2025
£m
2024
£m
Pension plans and employee benefits
Present value of funded defined benefit obligations
(104.8)
(104.1)
Fair value of plan assets
106.8
107.2
Net assets
2.0
3.1
Movements in present value of defined benefit obligation
At 1 January
(104.1)
(119.1)
Interest cost
(5.5)
(5.1)
Remeasurement gains/(losses):
Changes in financial assumptions
1.1
10.3
Changes in demographic assumptions
(2.3)
0.4
Experience adjustments on benefit obligations
(1.7)
0.8
Benefits paid
7.7
8.6
At 31 December
(104.8)
(104.1)
Movements in fair value of plan assets
At 1 January
107.2
122.2
Interest on plan assets
5.6
5.3
Remeasurement gain/(loss)
1.8
(11.6)
Contributions by employer
–
–
Administrative expenses
(0.1)
(0.1)
Benefits paid
(7.7)
(8.6)
At 31 December
106.8
107.2
Actual return on assets
7.4
(6.3)
2025
£m
2024
£m
Expense recognised in the income statement
Administrative expenses (including administration expenses incurred by the Company directly)
(1.0)
(0.6)
Net interest on net defined benefit asset
0.1
0.2
Total expense recognised in the income statement
(0.9)
(0.4)
The fair values of the plan assets were as follows:
2025
£m
2024
£m
Equities and growth assets
46.9
47.6
Bonds
12.8
8.3
Matching insurance policies
38.3
38.2
Other
8.8
13.1
Total
106.8
107.2
Strategic Report
Governance
Financial Statements
195
Morgan Advanced Materials
/
Annual Report 2025
11. Employee benefits: pensions
(continued)
The assumptions used are best estimate assumptions chosen from a range of possible actuarial assumptions which may not be borne out in
practice. The principal assumptions are the discount rate and inflation assumptions which are long-term and measured on external factors,
based upon each plan’s duration. In addition to these, the mortality assumption in the UK is material to the cost of the promised benefits.
The assumed increases in salaries and pensions in payment are derived from assumed future inflation.
Principal actuarial assumptions at the year end were as follows:
Assumptions:
2025
%
2024
%
Inflation (RPI/CPI)
2.79/2.22
3.15/2.52
Discount rate
5.47
5.45
Pensions increase
3.00/2.73/3.53
3.00/3.02/3.66
Salary increase
n/a
n/a
Mortality – post-retirement:
Life expectancy of a male aged 60 in accounting year (years)
25.6
25.5
Life expectancy of a male aged 60 in accounting year +20 (years)
27.1
27.0
Funding
The most recent full acturial valuations of the UK Schemes have an effective date of 31 March 2025 and resulted in combined assessed
surpluses of £7.8 million. These are the first to be undertaken under the new statutory funding regime introduced by the Pension Schemes
Act 2021. The next valuations are due as at 31 March 2028.
The Trustees and the Group have considered the impact of the recent Virgin Media court case on the Morgan Pension Scheme and, in
particular, the extent to which actuarial confirmation was provided that any changes made to the Scheme between 1997 and 2016 did not
adversely impact members’ contracted out benefits. Reasonable due diligence has concluded that no additional liability requires disclosure.
The Morgan Group Senior Staff Pension and Life Assurance Scheme was not contracted out over this period and therefore is not affected
by the ruling.
The Group has recognised a liability in relation to Guaranteed Minimum Pension (GMP) equalisation, an initiative to remove inequalities in
Morgan Pension Scheme benefits that arise from GMPs being unequal between men and women. A project to equalise members’ benefits
in the Morgan Pension Scheme is currently being progressed by a Joint Trustee and Employer Working Group.
Sensitivity analysis
The table below demonstrates the sensitivities of the net defined benefit asset to changes in the significant assumptions used for the scheme.
Change in assumption
2025
Decrease effect
£m
2024
Decrease effect
£m
Discount rate
Decrease by 0.1%
0.8
0.8
Inflation
Increase by 0.1%
0.3
0.3
Mortality – post-retirement
Pensioners live 1 year longer
2.0
2.1
These sensitivities have been calculated to show the movement in the net balance sheet in isolation, and assuming no other changes in
market conditions at the accounting date (except where a fully matching insurance policy is held where this asset is assumed to change in
value to match the change in obligations). This is unlikely in practice – for example, a change in discount rate is unlikely to occur without
any movement in the value of the assets held by the Company’s schemes.
Defined contribution plans
The Group operates a defined contribution pension plan (‘the Morgan Group Personal Pension Plan’). The total Company expense
relating to this plan in 2025 was £1.1 million (2024: £0.9 million).
196
Notes to the Company financial statements
continued
12. Provisions and contingent liabilities
Other
provisions
£m
Balance at 1 January 2025
2.9
Provisions reversed during the year
(0.4)
Balance at 31 December 2025
2.5
Current
0.9
Non-current
1.6
2.5
Other provisions relate to legal claims and environmental provisions and are based on the Company’s assessment of the probable cost of
these activities.
Contingent liabilities and guarantees
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its Group, the
Company considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats the guarantee
contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the
guarantee, at which point a liability would be recognised.
The Group has been subject to legal claims in a number of countries. In some cases it will not be possible to form a view, either because
the facts are unclear or because further time is needed to properly assess the merits of the case, and no provisions are held against such
cases. The Board, having taken legal advice, is of the opinion that the remainder of these actions will not have a material impact on the
Company’s financial position.
There are no other contingent liabilities in the Company as at 31 December 2025.
13. Share capital
The details of the Company’s share capital and the nature of the reserves are disclosed in note 20 of the consolidated financial statements.
14. Share premium and reserves
The merger reserve comprises the balance associated with the premium of shares issued during previous acquisitions. Further details on
share premium and reserves are given in note 20 of the consolidated financial statements.
Apex Financial Services (Trust Company) Limited administer the Morgan General Employee Benefit Trust (‘the Trust’) in which shares are
held to satisfy awards granted under the Company’s share plans. The shares are distributed via discretionary settlement governed by the
rules of the Trust deed dated 1 March 1996 (as amended).
The total number of own shares held by the Trust at 31 December 2025 was 261,617 (2024: 464,405) and at that date had a market value
of £0.6 million (2024: £1.3 million).
In 2025, the amount of reserves of Morgan Advanced Materials plc that may be distributed under Section 831(4) of the Companies Act
2006 was £149.8 million (2024: £165.6 million). This comprises a portion of the profit and loss account.
The capital redemption reserve represents the cumulative nominal value of share capital purchased and subsequently cancelled. During
the year, 6,777,740 (2024: 1,745,423) shares were cancelled with a nominal value of £1.7 million (2024: £0.4 million).
Where the Group has a contractual obligation under the share buyback, the present obligation to purchase the shares is recognised as a
financial liability with the corresponding entry recorded in other reserves. When the shares are cancelled, the full cost of the cancelled
shares is reversed from the other reserves. In 2025, £10.0 million (2024: £10.0 million) was recognised for the contractual obligation for
the purchase of the shares, with £15.1 million (2024: £4.5 million) representing the full cost of the cancelled shares during the year.
Strategic Report
Governance
Financial Statements
197
Morgan Advanced Materials
/
Annual Report 2025
15. Related parties
The Company has related party relationships with its subsidiaries, its Directors and executive officers and their close family members.
The Company is exempt from providing information relating to these parties with the exception of transactions with entities where the
Company does not directly or indirectly own 100% of the shareholding; these are set out in the table below:
2025
£m
2024
£m
Transactions with subsidiaries
Income from management services
0.8
1.7
Net interest income
4.3
3.7
Dividend income
9.1
11.1
Loans owed to related parties
2.0
10.9
Other amounts owed by related parties
2.3
2.7
Other amounts owed to related parties
0.9
1.3
16. Derivative financial assets and liabilities
2025
£m
2024
£m
Derivative financial assets
Forward foreign exchange contracts non-designated
– amounts falling due within one year
0.8
1.4
– amounts falling due after more than one year
8.2
–
9.0
1.4
Derivative financial liabilities
Forward foreign exchange contracts non-designated
– amounts falling due within one year
–
(2.4)
– amounts falling due after more than one year
(0.9)
(6.0)
(0.9)
(8.4)
Fair values are measured using a hierarchy where the inputs are:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – not traded in an active market but the fair values are based on quoted market prices or alternative pricing sources with
reasonable levels of price transparency. Fair value is calculated using discounted cash flow methodology; future cash flows are estimated
based on forward exchange rates.
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The derivative financial assets and liabilities are all measured using Level 2 inputs. The fair value of forward foreign exchange contracts is
estimated by discounting the future cash flows using appropriate market-sourced data at the balance sheet date.
198
2021
Results before
specific
adjusting items
£m
2022
Results before
specific
adjusting items
£m
2023
Results before
specific
adjusting items
£m
Restated 2024
1
Results before
specific
adjusting items
£m
2025
Results before
specific
adjusting items
£m
Revenue
950.5
1,112.1
1,114.7
1,060.1
996.6
Profit from operations before
amortisation of intangible assets
124.5
151.0
120.3
123.3
93.8
Amortisation of intangible assets
(6.0)
(4.7)
(3.3)
(1.7)
(1.0)
Operating profit
118.5
146.3
117.0
121.6
92.8
Net financing costs
(9.2)
(9.2)
(14.1)
(19.0)
(22.2)
Share of profit of associate (net of income tax)
0.4
–
–
–
–
Profit before taxation
109.7
137.1
102.9
102.6
70.6
Income tax expense
(29.7)
(37.1)
(26.0)
(27.0)
(19.4)
Profit after taxation before
discontinued operations
80.0
100.0
76.9
75.6
51.2
Profit for the year for continuing operations
80.0
100.0
76.9
75.6
51.2
Assets employed
Property, plant and equipment
248.1
283.2
293.8
344.9
326.0
Right-of-use assets
31.9
33.6
31.6
32.5
36.4
Intangible assets
183.1
189.0
182.2
179.9
166.9
Investments and other receivables
2.9
3.2
5.6
5.6
3.6
Employee benefits: pensions
–
–
13.5
13.0
12.4
Deferred tax assets
15.9
15.3
17.6
21.4
23.2
Net current assets
202.8
212.6
254.4
216.7
78.6
Total assets less current liabilities
684.7
736.9
798.7
814.0
647.1
Employee benefits: pensions
102.7
15.6
38.7
34.5
34.4
Non-current provisions and other items
231.2
289.7
359.6
387.5
262.8
Deferred tax liabilities
1.2
2.0
1.8
2.7
1.0
Total net assets
349.6
429.6
398.6
389.3
348.9
Equity
Total equity attributable to equity holders
of the Parent Company
310.6
389.0
360.3
353.7
316.6
Non-controlling interests
39.0
40.6
38.3
35.6
32.3
Total equity
349.6
429.6
398.6
389.3
348.9
Ordinary dividends per share
9.1p
12.0p
12.0p
12.2p
12.2p
Earnings per share
Continuing and discontinued operations
Basic earnings per share
25.9p
31.0p
16.6p
17.7p
7.5p
Diluted earnings per share
25.7p
30.7p
16.5p
17.5p
7.5p
Continuing operations
Adjusted earnings per share
27.2p
33.8p
25.0p
24.2p
15.9p
Diluted adjusted earnings per share
27.0p
33.5p
24.8p
24.0p
15.9p
1
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the years ended 31 December 2024 and 2025 have been presented as discontinued operations throughout this Report.
Group statistical information
Strategic Report
Governance
Financial Statements
199
Morgan Advanced Materials
/
Annual Report 2025
This document has been prepared for and only for the members of the Company as a body and no other persons. Its purpose is to assist
members in assessing how the Directors have performed their duties, the Company’s strategies and the potential for those strategies to
succeed and for no other purpose. Save as would otherwise arise under British law, the Company, its Directors, employees, agents or
advisors do not accept or assume responsibility or liability to any third parties to whom this document is shown or into whose hands it
may come and any such responsibility or liability is expressly disclaimed.
This document contains forward-looking statements that are subject to risk factors associated with, amongst other things, the economic
and business circumstances occurring from time to time in the countries, sectors and markets in which the Group operates. These and
other factors could adversely affect the outcome and financial effects of the plans and events described. Forward-looking statements by
their nature involve a number of risks, uncertainties and assumptions because they relate to events and/or depend on circumstances that
may or may not occur in the future and could cause actual results and outcomes to differ materially from those expressed in or implied by
the forward-looking statements.
It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a wide range of such
variables. No assurances can be given that the forward-looking statements in this document will be realised. The forward-looking
statements reflect the knowledge and information available at the date this document was prepared and will not be updated during
the year but will be considered in the Annual Report for next year. Nothing in this document should be construed as a profit forecast.
Constant-currency
1
Constant-currency revenue and Group adjusted operating profit are derived by translating
the prior year results at current year average exchange rates.
Corporate costs
Corporate costs consist of the costs of the central head office.
Free cash flow before acquisitions,
disposals and dividends
1
Cash generated from continuing operations less net capital expenditure, net interest paid, tax
paid and lease payments.
Group earnings before interest,
tax, depreciation and
amortisation (EBITDA)
1
EBITDA is defined as operating profit before specific adjusting items, amortisation of intangible
assets and depreciation.
Earnings before interest,
tax and amortisation (EBITA)
EBITA is defined as operating profit before specific adjusting items and amortisation of
intangible assets.
Group adjusted operating profit
1
Operating profit adjusted to exclude specific adjusting items and amortisation of
intangible assets.
Group organic
1
The Group results excluding acquisition, disposal and business exit impacts at
constant-currency.
Adjusted earnings
per share (EPS)
1
Adjusted earnings per share is defined as operating profit adjusted to exclude specific
adjusting items and amortisation of intangible assets, less net financing costs, income tax
expense and non-controlling interests, divided by the weighted average number of
Ordinary shares during the period.
Net debt
1
Borrowings, bank overdrafts less cash and cash equivalents.
Net cash and cash equivalents
1
Net cash and cash equivalents is defined as cash and cash equivalents less bank overdrafts.
Return on invested
capital (ROIC)
1
Group adjusted operating profit (operating profit excluding specific adjusting items and
amortisation of intangible assets) divided by the average adjusted net assets (excludes long-term
employee benefits, deferred tax assets and liabilities, current tax payable, provisions,
investments, cash and cash equivalents, borrowings, bank overdrafts and lease liabilities).
Specific adjusting items
See note 6 and note 1 to the consolidated financial statements for further details.
Underlying
Reference to underlying reflects the trading results of the Group without the impact of specific
adjusting items and amortisation of intangible assets that would otherwise impact the users’
understanding of the Group’s performance. The Directors believe that adjusted results provide
additional useful information on the core operational performance of the Group, and review
the results of the Group on an adjusted basis internally.
1.
Reconciliations of these non-GAAP measures to GAAP measures can be found on pages 200 to 204.
Glossary
Cautionary statement
200
The Group monitors business performance through alternative performance measures (APMs) which are not defined under IFRS and are
therefore non-GAAP measures. The APMs provide useful information to stakeholders, including additional insight into ongoing trading and
year-on-year comparisons. These APMs are not a substitute for IFRS measures but are complementary to them. The Group defines each
APM and therefore they may not be directly comparable with similarly named metrics in other businesses. The definition, purpose and
reconciliation to statutory figures where applicable are included below.
In the year ended 31 December 2025 the results of MMS for the period up to disposal are presented in discontinued operations in the
consolidated income statement. Prior year figures have been restated to present results for MMS in discontinued operations. The income
statement metrics used to assess Group performance exclude the results of MMS but in order to provide meaningful comparison to prior
years, certain metrics are presented on a ‘Headline’ basis, which includes the results of MMS for the period of ownership.
Constant-currency
Constant-currency figures are derived by translating the prior year results at current year average exchange rates. These measures are
used as they allow key metrics such as revenue to be compared year-on-year excluding the impact of foreign exchange rates.
Organic growth
The growth of the business excluding the impacts of acquisitions, divestments and foreign currency impacts. This measure is used as it
allows revenue and adjusted operating profit to be compared on a like-for-like basis.
Organic constant-currency revenue growth
Thermal
Products
£m
Performance
Carbon
£m
Technical
Ceramics
£m
Segment
total
£m
2024 revenue
1
377.6
345.2
337.3
1,060.1
Impact of foreign currency movements
(14.1)
(8.5)
(6.8)
(29.4)
Impact of acquisitions, disposals and business exits
–
–
–
–
Organic constant-currency change
(15.3)
(29.9)
11.1
(34.1)
Organic constant-currency change %
(4.2)%
(8.9)%
3.4%
(3.3)%
2025 revenue
348.2
306.8
341.6
996.6
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
Adjusted operating profit constant-currency growth
Thermal
Products
£m
Performance
Carbon
£m
Technical
Ceramics
£m
Segment
total
£m
Corporate
costs
£m
Group
£m
2024 adjusted operating profit
1
37.5
55.1
39.2
131.8
(8.5)
123.3
Impact of foreign currency movements
(3.9)
(2.3)
(0.8)
(7.0)
–
(7.0)
Impact of acquisitions, disposals and business exits
–
–
–
–
–
–
Organic constant-currency change
(10.1)
(11.6)
1.0
(20.7)
(1.8)
(22.5)
Organic constant-currency change %
(30.1)%
(22.0)%
2.6%
(16.6)%
–
(19.3)%
2025 adjusted operating profit
23.5
41.2
39.4
104.1
(10.3)
93.8
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
Headline organic growth
Headline organic constant-currency revenue growth
Thermal
Products
£m
Performance
Carbon
£m
Technical
Ceramics
£m
Segment
total
£m
2024 revenue
1
418.2
345.2
337.3
1,100.7
Impact of foreign currency movements
(15.3)
(8.5)
(6.8)
(30.6)
Impact of acquisitions, disposals and business exits
(5.1)
–
–
(5.1)
Organic constant-currency change
(15.9)
(29.9)
11.1
(34.7)
Organic constant-currency change %
(4.0)%
(8.9)%
3.4%
(3.3)%
2025 revenue
381.9
306.8
341.6
1,030.3
Alternative performance measures
Strategic Report
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Financial Statements
201
Morgan Advanced Materials
/
Annual Report 2025
Headline adjusted operating profit constant-currency growth
Thermal
Products
£m
Performance
Carbon
£m
Technical
Ceramics
£m
Segment
total
£m
Corporate
costs
£m
Group
£m
2024 adjusted operating profit
1
42.6
55.1
39.2
136.9
(8.5)
128.4
Impact of foreign currency movements
(4.2)
(2.3)
(0.8)
(7.3)
–
(7.3)
Impact of acquisitions, disposals and business exits
(0.8)
–
–
(0.8)
–
(0.8)
Organic constant-currency change
(8.8)
(11.6)
1.0
(19.4)
(1.8)
(21.2)
Organic constant-currency change %
(23.4)%
(22.0)%
2.6%
(15.1)%
–
(17.6)%
2025 adjusted operating profit
28.8
41.2
39.4
109.4
(10.3)
99.1
Corporate costs
Corporate costs consist of the costs of the central head office.
Specific adjusting items
Specific adjusting items are items which occur infrequently and are presented separately in the consolidated income statement due to their
nature and size. They typically include but are not limited to:
Individual restructuring projects which are material or relate to the closure of a part of the business and are not expected to recur;
Impairment of non-financial assets which are material;
Gains or losses on disposal or exit of businesses;
Significant costs incurred as part of the integration of an acquired business;
Gains or losses arising on significant changes to or closures of defined benefit pension plan;
Expenses related to the design, configuration, customisation and implementation of a Global ERP system; and
Changes in the fair value and associated foreign exchange on shares in Foseco India Limited (‘FIL’).
The Directors consider disclosure of specific adjusting items necessary for the users of the financial statements to obtain an alternative
understanding of the financial information and underlying performance of the business.
Note 6 provides details of the specific adjusting items in the current and prior year.
Group earnings before interest, tax, depreciation and amortisation (EBITDA)
Group EBITDA is defined as operating profit before specific adjusting items, amortisation of intangible assets and depreciation.
The Group uses this measure as it is a key metric in covenants over debt facilities; these covenants use EBITDA excluding IFRS 16 Leases.
The following table reconciles operating profit to Group EBITDA:
2025
£m
2025
Headline
£m
Restated
2024
1
£m
2024
Headline
£m
Operating profit
45.2
49.6
99.2
103.6
Add back: specific adjusting items included in operating profit
47.6
48.5
22.4
23.1
Add back: depreciation – property, plant and equipment
31.8
33.6
32.2
34.1
Add back: depreciation – right-of-use assets
8.3
8.4
8.3
8.6
Add back: amortisation of intangible assets
1.0
1.0
1.7
1.7
Group EBITDA
133.9
141.1
163.8
171.1
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
202
Alternative performance measures
continued
Group EBITDA excluding IFRS 16 Leases impact
Group EBITDA excluding IFRS 16 Leases impact is defined as Group EBITDA less interest expense on lease liabilities and capital payments
on lease liabilities.
The Group uses this measure as it is a key metric in covenants over debt facilities; these covenants use EBITDA on an ‘IAS 17 – Leases’
basis (pre-IFRS 16 basis) and this metric is used as a proxy for the charge that would have been attributable to operating leases recognised
in EBITDA under the defunct IAS 17.
The following table reconciles Group EBITDA to Group EBITDA excluding IFRS 16 Leases impact:
2025
£m
2025
Headline
£m
Restated
2024
1
£m
2024
Headline
£m
Group EBITDA
133.9
141.1
163.8
171.1
Interest expense on lease liabilities
(2.8)
(2.8)
(2.6)
(2.6)
Capital payments on lease liabilities
(9.2)
(9.3)
(10.2)
(10.6)
Group EBITDA excluding IFRS 16 Leases impact
121.9
129.0
151.0
157.9
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
Adjusted operating profit
Adjusted operating profit is defined as operating profit excluding specific adjusting items and amortisation of intangible assets.
Specific adjusting items are excluded on the basis that they distort trading performance. The exclusion of amortisation of intangible assets is
to allow for consistent comparability internally and externally between our businesses.
The following table reconciles operating profit to adjusted operating profit:
2025
Thermal
Products
£m
Performance
Carbon
£m
Technical
Ceramics
£m
Segment
total
£m
Corporate
costs
£m
Group
£m
Discontinued
1
£m
Headline
Group
£m
Operating profit
17.3
20.6
37.9
75.8
(30.6)
45.2
4.4
49.6
Add back: specific adjusting
items included in
operating profit
5.9
20.4
1.0
27.3
20.3
47.6
0.9
48.5
Add back: amortisation of
intangible assets
0.3
0.2
0.5
1.0
–
1.0
–
1.0
Adjusted operating
profit
23.5
41.2
39.4
104.1
(10.3)
93.8
5.3
99.1
Adjusted operating
profit margin
6.7%
13.4%
11.5%
9.4%
9.6%
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the years ended 31 December 2024 and 2025 have been presented as discontinued operations throughout this Report.
Restated 2024
Thermal
Products
£m
Performance
Carbon
£m
Technical
Ceramics
£m
Segment
total
£m
Corporate
costs
£m
Group
£m
Discontinued
1
£m
Headline
Group
£m
Operating profit
29.3
47.2
37.9
114.4
(15.2)
99.2
4.4
103.6
Add back: specific adjusting
items included in
operating profit
7.4
7.6
0.7
15.7
6.7
22.4
0.7
23.1
Add back: amortisation of
intangible assets
0.8
0.3
0.6
1.7
–
1.7
–
1.7
Adjusted operating profit
37.5
55.1
39.2
131.8
(8.5)
123.3
5.1
128.4
Adjusted operating profit
margin
9.9%
16.0%
11.6%
11.6%
11.7%
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the years ended 31 December 2024 and 2025 have been presented as discontinued operations throughout this Report.
Strategic Report
Governance
Financial Statements
203
Morgan Advanced Materials
/
Annual Report 2025
Adjusted earnings per share (EPS)
Adjusted earnings per share is defined as profit for the year attributable to shareholders of the Company adjusted to exclude profit from
discontinued operations, specific adjusting items and amortisation of intangible assets and the tax effects of the excluded items, divided by
the weighted average number of Ordinary shares during the year.
Whilst amortisation of intangible assets is a recurring charge, it is excluded from these measures on the basis that it primarily arises on
externally acquired intangible assets and therefore does not reflect consistently the benefit that all of the Group’s businesses realise from
their intangible assets, which may not be recognised separately.
This measure of earnings is shown because the Directors consider that it provides a helpful indication of the Group’s financial performance
excluding material non-recurring expenses or gains and non-financial asset impairments and impairment reversals, and therefore facilitates
the evaluation of the Group’s performance over time. A reconciliation from IFRS profit to the profit used to calculate adjusted earnings
per share is included in note 10 to the consolidated financial statements.
Free cash flow before acquisitions, disposals and dividends
Free cash flow before acquisitions, disposals and dividends is defined as cash generated from continuing operations less net capital
expenditure, net interest (interest paid on borrowings, overdrafts, supplier finance arrangements, and lease liabilities, net of interest
received), tax paid and lease payments.
The Group discloses free cash flow as this provides readers of the consolidated financial statements with a measure of the cash flows
from the business before corporate-level cash flows (acquisitions, disposals and dividends).
The following table reconciles cash generated from operations to free cash flow before acquisitions, disposals and dividends:
2025
£m
2025
Headline
£m
Restated
2024
1
£m
2024
Headline
£m
Cash generated from operations
162.0
168.6
154.8
163.0
Net capital expenditure
(63.4)
(65.9)
(84.1)
(90.2)
Net interest on cash borrowings
(18.8)
(18.8)
(15.3)
(15.3)
Tax paid
(25.5)
(26.4)
(28.8)
(29.2)
Lease payments and interest
(12.0)
(12.1)
(12.8)
(13.2)
Free cash flow before acquisitions, disposals and dividends
42.3
45.4
13.8
15.1
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
Net debt
Net debt is defined as borrowings, and bank overdrafts less cash and cash equivalents.
The Group discloses net debt because this is the measure used in the covenants over the Group’s debt facilities. It helps readers of the
consolidated financial statements assess its ability to meet its financial obligations, and manage debt and its capacity to invest in growth
opportunities.
2025
£m
2024
£m
Cash and cash equivalents
79.3
120.8
Non-current borrowings
(212.1)
(337.7)
Current borrowings and bank overdrafts
(99.4)
(9.3)
Closing net debt
(232.2)
(226.2)
204
Alternative performance measures
continued
Net cash and cash equivalents
Net cash and cash equivalents is defined as cash and cash equivalents less bank overdrafts. The Group discloses this measure as it provides
an indication of the net short-term liquidity available to the Group.
2025
£m
2024
£m
Cash and cash equivalents
79.3
120.8
Bank overdrafts
(5.1)
(9.3)
Net cash and cash equivalents
74.2
111.5
Return on invested capital (ROIC)
ROIC is defined as 12-month adjusted operating profit divided by the average capital employed. The Group discloses ROIC to assess its
efficiency in generating profits from the capital it has invested in its operations. Third-party working capital includes inventories, trade and
other receivables, and trade and other payables.
2025
£m
Restated
2024
1
£m
Operating profit
45.2
99.2
Add back: specific adjusting items
47.6
22.4
Add back: amortisation of intangible assets
1.0
1.7
Group adjusted operating profit
93.8
123.3
Third-party working capital
91.0
151.4
Property, plant and equipment
326.0
344.9
Right-of-use-assets
36.4
32.5
Goodwill
163.7
176.9
Other intangible assets
3.2
3.0
Capital employed
620.3
708.7
Average capital employed
664.5
695.5
ROIC
14.1%
17.7%
1.
The Group disposed of the majority of its MMS business in 2025. The disposal group formed part of the Thermal Products segment and has been classified as a discontinued operation
under IFRS 5. Financial results for the year ended 31 December 2024 have been restated to present the results of the disposal group as discontinued operations.
Strategic Report
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Financial Statements
205
Morgan Advanced Materials
/
Annual Report 2025
Analysis of Ordinary shareholdings as at 31 December 2025
Number of
holdings
% of total
holdings
Number of shares
% of share capital
Size of holding
1–2,000
3,114
76.19
1,581,805
0.57
2,001–5,000
481
11.77
1,536,168
0.55
5,001–10,000
155
3.79
1,074,500
0.39
10,001–50,000
174
4.26
3,629,381
1.31
50,001–100,000
37
0.91
2,624,612
0.95
100,001 and above
126
3.08
266,400,359
96.23
4,087
100.00
276,846,825
100.00
Holding classification
Individuals
3,697
90.46
5,790,297
2.09
Nominee companies
273
6.68
211,392,204
76.36
Trusts (pension funds etc)
2
0.05
1,782
0.00
Others
115
2.81
59,662,542
21.55
4,087
100.00
276,846,825
100.00
Key dates
7 May 2026
2026 Annual General Meeting (AGM), commencing at 10.30am.
2025 and 2026 dividend payment dates
1 October 2025
Dividend payment date in respect of the 5.5% Cumulative First Preference shares of £1 each and
the 5.0% Cumulative Second Preference shares of £1 each.
17 November 2025
An interim cash dividend of 5.4 pence per Ordinary share of 25 pence each was paid to
shareholders registered at the close of business on 24 October 2025.
1 April 2026
Dividend payment date in respect of the 5.5% Cumulative First Preference shares of £1 each and
the 5.0% Cumulative Second Preference shares of £1 each.
12 May 2026
Subject to shareholders’ approval at the 2026 AGM, a final cash dividend of 6.8 pence per
Ordinary share of 25 pence each will be paid to shareholders registered at the close of business
on 10 April 2026.
Company details
Registered office and company
registration number
Telephone: +44 (0)1753 837000
Registered in England and Wales No. 00286773
ISIN Code
GB0006027295
LEI
I4K14LL95N2PHDL7EG85
Ticker symbol
MGAM
Website
www.morganadvancedmaterials.com
The Company’s website provides information about the Group including the markets in which it
operates, its strategy and recent news from the Group. The ‘Invest in us’ section is a key source of
information for shareholders, containing details of financial results, and shareholder meetings and
dividends. Current and past annual half-year and sustainability and responsibility/EHS reports are
also available to view and download from the ‘Being responsible’ section.
Shareholder information
206
Shareholder information
continued
Your shareholding
Company
registrars
Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
www.shareview.co.uk
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This is a service which enables shareholders to manage their shareholdings online.
Dividend
payments
Morgan Advanced Materials is committed to reducing our impact on the environment. As such, from November 2026
payments to shareholders will no longer be made by cheque. Receiving dividends by direct payment rather than cheque
is quicker, more secure and better for the environment.
To continue to receive dividends and any other money payable to you in connection with your Morgan Advanced
Materials plc Ordinary shares, you will need to provide your bank or building society account details so that payments
can be made directly to your nominated account by direct payment. Cash dividends can be paid directly to a UK
bank or building society account. You can add or change your mandate online at
www.shareview.co.uk
, or by
contacting Equiniti.
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If you live overseas and would like dividends paid to an overseas account, please contact Equiniti by post to set up or
amend a mandate. They offer an overseas payment service for over 83 countries worldwide. Please see further
information at
www.shareview.info/products/overseaspayment
.
Multiple
accounts
on the
shareholder
register
If a shareholder receives two or more sets of AGM documents, or multiple dividend payments, this means that there is
more than one account in their name on the shareholder register, perhaps because the name or the address appears
on each account in a slightly different way. If you have multiple accounts and would like them to be combined, please
contact Equiniti.
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and selling
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or call +44 (0)3456 037 037. Providing this information is not a recommendation to buy or sell shares and this service may
not be suitable for all shareholders. The price and value of any investments and income from them can fluctuate and may
fall. Therefore, you may get back less than the amount you invested. Past performance is not a guide to future performance.
Neither the Company nor Equiniti provides advice or makes recommendations about investments. If you have any doubts
about the suitability of an investment, you should seek advice from a suitably qualified professional advisor.
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If you are offered unsolicited investment advice, discounted shares, a premium price for shares you own, or free company
or research reports, please check the company or person contacting you is properly authorised by the Financial Conduct
Authority before getting involved. Further information about what you should do is available on our website in the
‘Shareholder Centre’ within the ‘Invest in us’ section.
Asset
Reunification
Programme
Morgan Advanced Materials has launched a tracing programme with the aim of reuniting ‘lost’ shareholders or their
estates with unclaimed cash entitlements in respect of Morgan Advanced Materials dividend payments. Cash entitlements
may not have been claimed due to an address change, or where a shareholder is deceased and the beneficiaries or
executors of an estate are not aware of the holding. If you would like to clarify whether you or a deceased person for
whose estate you act holds shares in Morgan Advanced Materials, please contact Equiniti for further assistance.
Other information
Capital gains
tax
The market values of quoted shares and stocks at 31 March 1982 were:
Ordinary shares of 25 pence each: 122.5 pence
5.5% Cumulative First Preference shares of £1 each: 30.5 pence
5.0% Cumulative Second Preference shares of £1 each: 28.5 pence
For capital gains tax purposes, the cost of Ordinary shares is adjusted to take account of rights issues. Any capital gains
arising on disposal will also be adjusted to take account of indexation allowances. Since the adjustments will depend on
individual circumstances, shareholders are recommended to consult their professional advisors.
Share price
The share price can be obtained on the Company’s website:
morganadvancedmaterials.com
This Report has been printed in the UK.
Our printers are a Carbon/Neutral
®
printing
company. They are FSC
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certified and
ISO 14001 accredited and Forest Stewardship
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The report’s cover is coated using a
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If you have finished reading this Report and
no longer wish to retain it, please pass it
on to other interested readers, return it to
Morgan Advanced Materials or dispose of it
in your recycled paper waste. Thank you.
This Annual Report is available at
morganadvancedmaterials.com
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