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Morgan Advanced Materials

2021 was the second challenging  year with the COVID-19 pandemic  driving various restrictions on mobility and activity around the world. Demand recovered strongly across the global economy following the sharp slowdown in 2020, and the combination of high demand and the pandemic led to supply chain disruptions, and inflation in materials and labour in various parts of our business.

Nevertheless, in spite of these challenges, we have made good progress as a business, with further implementation of our strategy and progress against our long-term goals. This resulted in strong growth and saw margins at their highest point in more than 20 years.


We have maintained our COVID-19 controls across the business as needed, in line with the requirements of local jurisdictions and our Group COVID-19 standards. Our employees have been diligent in looking out for one another and following our protocols to keep each other safe. Sadly, we have seen further loss of life due to the pandemic, and our thoughts are with all those affected.


In 2021, we set out five aspirations for our business together with goals for 2030. We have made good progress against each of these, and we are starting to see that reflected in some of our KPIs:

  1. ‘ Zero harm’ to our employees, with a 2030 goal of a lost-time accident rate of 0.1. Our lost-time accident rate in the year was 0.22 compared to 0.18 in the prior year. We launched a major refresh of our approach to safety during the year, with training being deployed to all employees focusing on our safety culture. This formal training will complete during 2022 and the changes will be sustained by our leaders in their daily engagement with our teams, and via follow-up training on specific safety topics through the year. We have also continued to invest in safety improvements across our business to improve the quality and safety of our infrastructure.
  2. A CO2e net zero business by 2050, with a 2030 goal of a 50% reduction in scope 1 and 2 CO2e emissions, additionally we will start to measure scope 3 emissions from 2023 onwards, with coverage increasing over time. Our teams across the business have embraced this challenge and put in place plans to improve our energy efficiency and switch to zero-carbon energy sources. During the year, we reduced our absolute CO2e emissions by 17%.
  3. Use water sustainably across our business, with 2030 goals of reducing water use and water use in high-stress areas by 30%. We have launched a number of capital projects to recycle water and improve water efficiency. They started to deliver some benefits in 2021 and will drive further improvements in 2022. Our water usage in the short-term increased by 15%, driven by business growth and changes in mix. Our water usage in stressed areas increased by 9%. We expect to make progress on reducing water usage in 2022 as our projects start to deliver.
  4. A workforce reflective of the communities in which we operate, with a 2030 goal of 40% of our leadership population being female. At the end of 2021, 29% of our leadership population were female, compared with 30% in the prior year. We are making a wide range of changes to improve our diversity, from amending policies, to training and changes in our approach to recruitment. We have also established our first employee resource group, Women@Morgan. It comprises a diverse group of women from across the business; they will review our approach and develop and drive changes
    to help us support women through their careers in our business.
  5. A welcoming and inclusive environment where employees can grow and thrive with a 2030 goal of a top-quartile engagement score. We conducted an employee engagement survey in the fourth quarter
    of 2021 to understand how our employees are feeling and what we can do to improve. Our engagement score was 50%, a reduction from the 55% we scored when we last surveyed our people in 2019. We have much we can do to improve and will be communicating the results and developing plans in the early part of 2022.

Delivering our strategy

Beyond our focus on sustainability, we have two priority areas where we want to develop our capabilities further:

  • Delighting our customers. Following on from our foundational work on sales effectiveness, we are working to shape our product and service offerings further based on customer needs, with the overall objective of making our business more customer centric. We will be gathering customer feedback during 2022 through a range of channels and using that to understand our customer segments in more detail. This will enable us to tailor our product, service and support offerings more closely to customer needs.
  • Innovating to grow. We want to accelerate our growth, by winning in our core markets and increasing our exposure to four faster-growing market segments: clean energy, clean transportation, semiconductors and healthcare. We have been focusing our product development and business development efforts in these markets over the last several years to develop new and differentiated products that solve hard problems for our customers. During 2021 the organic revenue growth in these segments was 22% (excluding one-off solar projects*), and this represented around 20% of our revenue overall.

We have concluded our restructuring programme during the year by completing the last of our planned site closures as we move volumes to more efficient plants around the Group. This has improved our robustness as a Group, concentrating work where we have more scale and, in line with our targets, has delivered £20 million of annual savings by the end of 2021. Full-year run-rate benefits of
£23 million for 2022 remain unchanged.

Group financial performance

The business grew strongly during the year reflecting good end-market demand and good execution by our teams. This led to a strong overall financial performance with the revenue growth driving expansion in profitability and cash flow.

  • Group revenue in 2021 was £950.5 million, 4.4% ahead of the prior year at reported rates and 10.3% higher on an organic constant-currency* basis;
  • Statutory operating profit was £113.1 million, profit before tax was £104.3 million, basic earnings per share was 25.9p;
  • Adjusted operating profit* was £124.5 million representing adjusted operating profit margin* of 13.1%;
  • Group adjusted earnings per share* was 27.2p (2020: 19.0p);
  • Basic earnings per share from continuing operations was 23.9p (2020: loss per share 8.6p);
  • Net capital expenditure* was £28.1 million (2020: £28.6 million), with investment focused on health, safety and environmental improvements, investments in efficiency, select capacity expansion and improvements to the underlying infrastructure of the Group;
  • Free cash flow before acquisitions,disposals and dividends* was £66.2 million (2020: £72.4 million);
  • Net debt excluding lease liabilities* was £46.7 million, with a net debt* excluding lease liabilities to EBITDA* ratio of 0.3x.

Overall, our results demonstrate the improvements we have made to the business in the last six years, with significant expansion in adjusted operating profit margins arising from both the growth in the business and the benefits of our restructuring programme.


We have seen good order momentum coming into the year and anticipate organic revenue growth of 4 to 7% in 2022, assuming no significant change in market momentum. With our investments in new products and new technologies, we plan to increase further our exposure to our faster growing segments (clean energy, clean transportation, semiconductors and healthcare), and to continue to win in our core markets.

We will see higher inflation in 2022 and expect higher pricing and continuous improvement to offset this. We expect our margins to expand further reflecting the drop-through on our organic growth and the remaining full-year benefits from our restructuring programme.

I would like to thank our employees for their outstanding commitment and support during the year as they have cared for each other while working diligently to meet the increased demand from our customers.