REG - Morgan Adv.Materials - Preliminary Results
28/02/2025 07:15
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RNS Number : 7989Y Morgan Advanced Materials PLC 28 February 2025
Preliminary results for the year ended 31 December 2024
£ million 2024 2023 As reported Organic
unless otherwise stated change constant- currency(1) change
Adjusted results
Revenue 1,100.7 1,114.7 (1.3)% 3.7%
Group adjusted operating profit(1) 128.4 120.3 6.7% 16.5%
Group adjusted operating profit margin(1) 11.7% 10.8% +90bps +130bps
Return on invested capital(1) 18.5% 17.6% +90bps
Adjusted EPS(1) 25.5p 25.0p 2.0%
Free cash flow before acquisitions, disposals and dividends(1) 15.0 14.6 2.7%
Net debt(1) (excl. lease liabilities) 226.2 185.2 22.1%
Statutory results
Revenue 1,100.7 1,114.7 (1.3)%
Operating profit 103.6 91.9 12.7%
Profit before taxation 84.6 77.8 8.7%
Continuing EPS(2) 17.7p 16.4p 7.9%
Continuing and discontinued EPS(2) 17.7p 16.6p 6.6%
Cash generated from continued operations 162.9 126.3 29.0%
Total dividend per share 12.2p 12.0p 1.7%
1. Definitions of these non-GAAP measures and reconciliations of the statutory
results to the adjusted measures can be found in the 'Glossary and alternative
performance measures' section, which is included as an appendix to the
condensed consolidated financial statements within this announcement.
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.
2. EPS is presented on a 'continuing' and a combined 'continuing and
discontinued' basis for statutory reporting. Further details are provided in
note 8 to the condensed consolidated financial statements.
Group highlights
• Organic constant-currency* revenue growth of 3.7%, with 7.6% from
our faster growing markets, reflecting challenging market conditions in the
second half
• Simplification programme accelerated; annual savings of £27
million from 2026 now expected (previously £22 million) with total cash costs
of £45 million (unchanged); underpins return to 12.5% margin during 2025
• Adjusted operating profit margin* of 11.7% and ROIC of 18.5%, both
up 90 bps; pricing measures continue to offset inflation, significant
efficiency benefits achieved
• Cash generated from continued operations up 29%, driven by focused
initiatives to improve working capital; free cash flow up 2.7% to £15.0
million reflecting accelerated capital investment plan
• Strong balance sheet with net debt*/EBITDA of 1.4 times
• Absolute CO(2)e emissions (from scope 1 and 2) reduced by 3%
compared with 2023
• Buyback programme progressing well; a second tranche of £10
million to commence immediately on completion of the first tranche 1
Commenting on the results, Chief Executive Officer, Pete Raby said:
"We have delivered robust organic constant currency* revenue growth against a
backdrop of increasingly challenging end-markets, with good progress made in
our business simplification and efficiency initiatives, continuing our track
record of self-help. We remain focused on delivering against our strategic
initiatives and expect a return to a 12.5% adjusted operating profit* margin
during 2025."
Guidance and outlook
Demand in a number of our end-markets is uncertain. Our current outlook for
revenue in 2025 is for a mid single-digit organic decline and assumes no
recovery in H2. Our simplification programme has been accelerated given the
weaker demand which will underpin a return to a 12.5% margin during 2025, with
a broadly similar H1/H2 adjusted operating profit* split.
Demand for semiconductor capacity has been impacted by the slower growth in
BEVs leading to high customer inventory levels in the short term. We have
scaled back investment accordingly and now expect to invest c.£60 million in
semiconductor capacity (prior estimate £100 million) to deliver incremental
revenues of £40 million and adjusted operating profit* of £12 million in
2027 (prior estimate £80 million revenue, £25 million adjusted operating
profit*). We remain confident in the longer-term potential in semiconductors
and we expect to resume our investment as the market recovers.
Our medium term guidance for overall capital expenditure is now around £90
million in 2025, £65 million in 2026 and £60 million in 2027.
We expect our effective tax rate, excluding specific adjusting items, to be
within the 26-28% range.
We remain confident in achieving our medium-term financial framework.
Analyst webcast and conference call today
Morgan Advanced Materials will present its Preliminary Results via live
webcast today from 10.30am to 11.30am GMT. There will be a simultaneous live
conference call.
The live audio webcast and slide presentation of this event will be available
on www.morganadvancedmaterials.com (http://www.morganadvancedmaterials.com) .
We recommend you register by 10:15am GMT.
Enquiries
Pete Raby Morgan Advanced Materials 01753 837 000
Richard Armitage Morgan Advanced Materials
Nina Coad Brunswick 0207 404 5959
Forward looking statements
This announcement contains forward-looking statements. These statements have
been made in good faith based on the information available up to the time of
the approval of this announcement. No assurance can be given that these
expectations will prove to have been correct. By their nature, forward-looking
statements involve risks, uncertainties or assumptions that could cause actual
results to differ materially from those expressed or implied by these
forward-looking statements. As such, undue reliance should not be placed on
forward-looking statements.
The Directors undertake no obligation to update any forward-looking statements
whether as a result of new information, future events or otherwise.
Notes to editors
1. Simplification programme
£ million FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
Adjusted operating profit* benefit (incremental) 1 8 24 27 27
Costs charged to specific adjusting items (7) (13) (25) (45)
2. Capital expenditure
£ million Old 2024 Old 2025 Old 2026 Old 2027 New 2024 New 2025 New 2026 New 2027
Semiconductor 40 40 20 26 30 5
Other capacity 20 10 10 10 10 10 10
Maintenance 60 60 60 60 60 50 50 50
Total 120 110 90 60 96 90 65 60
3. Our financial framework
As previously announced, our financial framework is:
- Organic constant currency revenue growth* of 4% - 7% through the
cycle
- Adjusted operating profit* margin of 12.5% to 15.0%
- Return on invested capital* of 17.0% to 20.0%
- Leverage (net debt/EBITDA*) of 1.0x to 1.5x without M&A, 1.5x to
2.0x with M&A
Operating Review
We continue to execute on our growth strategy; increasing our exposure to
faster growing market segments and targeting investment in our core markets to
opportunities that display higher growth potential
Our core markets provide the group with a strong base and a diversified
portfolio. Within these markets, we aim to maintain our leadership positions
and grow at above market rates by investing in new materials and products,
focusing on market segments that exhibit higher growth potential, such as
Aerospace and Fire Protection, and expanding the reach of our core portfolio
in key geographies, such as India.
We want to accelerate our organic growth by increasing our exposure to faster
growing market segments where we see the potential to achieve higher returns.
We are investing in additional capacity for these markets where we see
attractive returns that support our Group ROIC ambition. Our faster growing
markets of focus are Semiconductors, Healthcare, and Clean transportation and
Clean energy.
The Group reported revenue of £1,100.7 million in 2024, down 1.3% versus 2023
on a reported basis. Revenue was impacted by challenging market
environments, particularly in the second half of the year. We saw a
significant weakening of end markets during the year, with declining and low
order levels in European and Chinese industrial markets, and slowing in those
same markets in the USA. We also saw lower growth in Semiconductors where
demand for our products used in Silicon carbide (SiC) power semiconductor
production reduced in the second half of the year driven by a lower growth
rate in global electric vehicles sales. Reported revenue was significantly
impacted by foreign exchange headwinds; on an organic constant-currency*
basis, revenue for the Group grew by 3.7% compared to the prior year, with
2.5% growth in core markets and 7.6% growth in faster growing markets.
With the slowdown in growth of the EV market we expect lower demand for our
graphite and SiC consumables over the next three years and we have reduced our
Semiconductor capital investment to match our capacity more closely with
demand. Whilst our 2025 guidance reflects our caution around the timing of
market recovery, we expect this investment of c.£60 million in total to
deliver increased revenue of at least £40 million and adjusted operating
profit* of £12 million in 2027. We remain confident in the longer-term growth
potential within the semiconductor market.
We continue to invest in innovation to maintain our materials leadership and
overall capability. In 2024, we spent £31.1 million on research and
development across our four global centres of excellence (2023: £32.9
million).
These market dynamics are reflected in the growth rates delivered across all
of our reporting segments:
Thermal Products reported revenue of £418.2 million in 2024, representing a
decrease of 8.0% compared with £454.4 million in 2023. On an organic
constant-currency* basis, year-on-year revenue decreased by 0.6%.
Revenue performance was impacted by weak market conditions in the second half
of the year across all key markets, particularly industrial and metals markets
in Europe, China and the USA.
Performance Carbon reported revenue of £345.2 million in 2024, representing
an increase of 5.5% compared with £327.2 million in 2023. On an organic
constant-currency* basis, year-on-year revenue increased by 9.3%.
Revenue growth reflects good momentum in Clean energy and clean
transportation, and in Aerospace and Defence markets but more challenging
conditions in Semiconductor markets, with lower demand for our SiC power
semiconductor consumables in the second half of 2024.
Technical Ceramics reported revenue of £337.3 million in 2024, representing
an increase of 1.3% compared with £333.1 million in 2023. On an organic
constant-currency* basis, year-on-year revenue increased by 3.7%.
Revenue growth was driven by Clean energy and Healthcare in our faster growing
markets, and by Defence and Conventional energy in the core, partially offset
by weakness in global industrial markets.
We remain focused on simplifying our organisation and driving operational
efficiency
We remain focused on further simplifying our business to ensure that our
operations are as efficient as possible and to support investment for growth
and margin expansion over time.
During 2024, we announced the initiation of our multi-year Group wide
simplification programme, which reflects operational simplification
opportunities and synergies within supply chain and back office functions.
In total, these plans are expected to deliver a total annual adjusted
operating profit* benefit of £27.0 million by 2026 with a total cash cost to
deliver of £45.0 million recognised within specific adjusting items in the
consolidated income statement.
We have made good progress against these plans during 2024. We have
simplified management structures, reduced the number of reporting segments
that we operate, and consolidated manufacturing plants to provide better
support to our customers and deliver synergies from key operational
activities. We incurred costs of £13.1 million related to these initiatives
in 2024, which were presented as specific adjusting items in the consolidated
income statement. The adjusted operating profit* benefit delivered from these
programmes in 2024 of £8.0 million, compared to our 2023 baseline, was
in-line with our expectations.
Overall, adjusted operating profit* margin of 11.7% in 2024 was 90 bps higher
than prior year, but was below our financial framework guidance of 12.5% -
15.0%. Continued delivery of our business simplification programme is expected
to return the group to the target range during 2025, and ensure that the Group
is well positioned to capture growth and deliver margin expansion as end
markets recover.
We saw improvements in adjusted operating profit* margin across each of our
reporting segments:
Thermal Products delivered operating profit of £31.1 million (2023: £29.5
million) with a 90 bps increase in operating profit margin of 7.4% (2023:
6.5%) reflecting a sustained focus on cost management across the business,
with pricing and cost initiatives more than offsetting the impact of weaker
trading performance. Adjusted operating profit* was £40.0 million (2023:
£40.2 million) with an adjusted operating profit margin* of 9.6% (2023:
8.8%).
Performance Carbon delivered operating profit of £47.2 million (2023: £39.9
million), with a 150 bps increase in operating profit margin of 13.7% (2023:
12.2%). Adjusted operating profit* was £55.1 million (2023: £50.0 million)
with an adjusted operating profit margin* of 16.0% (2023: 15.3%), reflecting
cost synergies and efficiency gains achieved as a result of the merging of the
former Electrical Carbon and Seals and Bearings businesses into one segment.
Technical Ceramics delivered operating profit of £37.9 million (2023: £42.5
million), with a 160 bps decrease in operating profit margin of 11.2% (2023:
12.8%) with the prior year result benefiting from an £7.6 million credit
relating to non-cash items, largely comprising a £5.7m non-cash credit
arising from a reversal of fixed asset impairments and a net £1.9 million
provision release. Adjusted operating profit* was £39.2 million (2023: £36.0
million) with an adjusted operating profit margin* of 11.6% (2023: 10.8%).
Further details regarding specific adjusting items are presented in the
Financial Review and note 4 to the condensed consolidated financial
statements.
We have continued our strategic project to develop a Global ERP which is
intended to replace over 30 different legacy systems across the Morgan
network. The programme, which is expected to complete over the next three
years, will create further opportunities to align business processes,
strengthen information security and the control environment. Further details
regarding are presented in the Financial Review and note 4 to the condensed
consolidated financial statements.
We have clear capital allocation priorities which we apply with discipline
Our capital allocation framework:
· Organic Investment: Investment to enhance growth and returns,
including investment of £61 million of capital in our Semiconductor
manufacturing capacity which is well progressed.
· Regular Returns via a Progressive Dividend Policy: Grow the regular
dividend through the cycle targeting a dividend cover of c.2.5x over the
medium term.
· Inorganic Investment: Complementary, disciplined M&A focused on
accelerating revenue growth opportunities in faster growing markets.
· Additional Returns: Additional returns of surplus capital to
shareholders as appropriate.
We have a clear framework to assess M&A targets with stringent strategic
hurdles and robust financial metrics, and we continue to assess targets
against this strict criteria. The Group continues to review and evaluate
M&A opportunities, but in the absence of a clear near term acquisition
target, initiated in November 2024 a share buyback programme of up to £40.0
million, excluding expenses, in line with our capital allocation policy.
The Board believes the share buyback programme to be an attractive use of
capital. Further details on the share buyback are included in the Financial
Review.
Our medium term priorities underpin our strategic execution
We continue to make good progress against our strategic objectives:
Big positive difference
We have made good progress in 2024, as summarised in the 'Our environment,
social and governance (ESG) priorities' section below.
Innovate to grow
We have continued to invest in capacity to support growth in our core and in
faster growing segments including capacity in India and in China for Thermal
Products, and capacity to support growth in Semiconductors and Healthcare
across Performance Carbon and Technical Ceramics.
Capital expenditure was £96.1 million during the year of which £36.1 million
was focused on capacity. New product development continued across each of our
business segments including new carbon and ceramic materials for the
semiconductor market, new fibre insulation products for automotive
applications, and new wind brush grades and armour materials.
Delight the customer
We are making changes across the business to improve our performance for
customers.
In Performance Carbon, following the integration of the seals & bearings
business, we have been working to streamline our internal supply chain to
improve responsiveness and reduce lead times for our customers. In our Thermal
business in North America, we have been simplifying our product portfolio and
making improvements to improve response times to customers. In our Technical
Ceramics business in North America, the team have been working to improve
yields on certain complex parts to improve efficiency and improve delivery
performance.
Our environment, social and governance (ESG) priorities
Our ESG priorities and progress against our 2030 goals are as follows:
Protect the environment
· Reduce our scope 1 and 2 CO(2)e emissions by 50% (from a 2015
baseline): during the year we reduced our emissions by 3%. As our business
grows, continued focus is needed on process efficiencies and technological
advancements to maintain this. We are now 55% below our 2015 baseline.
· Reduce our overall water usage, as well as our water usage in high
and extremely high stress areas, by 30% (from a 2015 baseline): our overall
water usage reduced by 6% and water in high-stress areas increased by 2%. We
are 31% below our baseline for water and 21% below our baseline for water
withdrawal in high-stress areas.
Provide a safe, fair and inclusive workplace
· A lost-time accident rate below 0.1 (lost-time accidents per
100,000 hours worked): during 2024, we have continued to embed our 'take 5 for
safety' process. Our LTA rate reduced to 0.13 (2023: 0.19), an improvement
over the prior year reflecting the significant focus on employee safety and
wellbeing. In 2025, we will continue to work on behavioural safety and we are
refreshing our process safety management approach across the Group.
· Our target is for 40% female representation across our leadership
population of our organisation. Our gender diversity position was improved
over the year with 34% females in our leadership population. This reflects the
considerable work done in the prior years and in 2024 to improve policies,
procedures and recruiting approaches and to deliver a more supportive
environment for our female leaders.
· To attain a top quartile employee engagement score. Our engagement
score in 2024 was 52%, a 2% decline compared to the prior year. We have not
made progress on this metric over the last five years despite a lot of effort
across our business to improve the employee experience. In 2025, we will be
working more closely with a small number of sites where engagement levels are
below average, looking to understand the root causes more deeply and work with
our people to address them.
Tariffs
We continue to monitor the situation with regard to potential tariffs. With
such a wide range of potential tariffs being considered, and with the details
of those unknown, it is not possible to estimate the impact at this stage.
We have a global manufacturing footprint and largely we make products where we
sell them which will allow some degree of mitigation, and if necessary we will
consider alternative manufacturing locations. Guidance for 2025 assumes that
there will be no direct impact on financial performance as a result of the
implementation of tariffs.
Leadership changes
In January 2025, we announced that Pete Raby had informed the Board of his
intention to retire following a decade of service as Chief Executive
Officer. The Board would like to thank Pete for his service; he has
transformed the Group and leaves it with a clear direction, a robust financial
position and simplified operating model which will allow it to exploit the
many opportunities for profitable growth in our chosen end markets as they
recover. Pete will step down as Chief Executive Officer and from the Board
on 1 July 2025, and will continue to provide support for the transition until
the end of August 2025.
The Board were pleased to announce that Damien Caby, currently President of
the Thermal Products Division, is appointed Chief Executive Officer Designate.
Damien has been selected following a comprehensive process that considered
internal and external candidates. He brings strong leadership capabilities
and international experience, having successfully led our Thermal Products
business for the last two years and having previously held senior leadership
roles in BASF and Imerys. Damien will join the Board on 8 May 2025, and
will assume role of Chief Executive Officer on 1 July 2025.
Laurence Mulliez stepped down as Senior Independent Director with effect from
1 November 2024. The Board would like to thank Laurence for her extensive
commercial insight and the contribution she has made to Morgan's strategic
thinking over her eight year tenure.
Alison Wood joined the Board as Senior Independent Director with effect from 1
November 2024. Alison was a senior executive at both BAE Systems PLC and
National Grid PLC. She currently is chair of construction firm Galliford Try
Holdings PLC, SID of Oxford Instruments PLC, and a director of TT Electronics
PLC.
Final Dividend
The Board has recommended a final dividend, subject to shareholder approval at
the upcoming AGM, of 6.8 pence per share on the Ordinary share capital of the
Group. Together with the interim dividend of 5.4 pence per share paid in
November 2024, the final dividend, if so approved, brings the total
distribution for the year to 12.2 pence per share (2023: 12.0 pence). A
total dividend of 12.2 pence per share represents a dividend cover of adjusted
EPS* of 2.1 times.
Financial Review
Group financial performance
Summary financial information for the year ended 31 December 2024.
Summary income statement and key metrics 2024 2023 % change
£m
£m
Revenue 1,100.7 1,114.7 (1.3)%
Adjusted operating profit(1) 128.4 120.3 6.7%
Adjusted operating profit margin 11.7% 10.8% 90 bps
Amortisation of intangible assets (1.7) (3.3) (48.5)%
Specific adjusting items(1) (23.1) (25.1) (8.0)%
Operating profit 103.6 91.9 12.7%
Net financing costs (19.0) (14.1) 34.8%
Profit before taxation 84.6 77.8 8.7%
Income tax expense (25.9) (22.2) 16.7%
Profit after taxation from continuing operations 58.7 55.6 5.6%
Basic EPS from continuing and discontinuing operations 17.7p 16.6p 6.6%
Adjusted EPS(1) 25.5p 25.0p 2.0%
Return on invested capital(1) 18.5% 17.6% 90 bps
Summary cash flow and key metrics 2024 2023 % change
£m
£m
Cash generated from continued operations 162.9 126.3 29.0%
Free cash flow before acquisitions, disposals and dividends(1) 15.0 14.6 2.7%
Cash and cash equivalents 120.8 124.5 (3.0)%
Net debt (1) 226.2 185.2 22.1%
Net debt(1) to EBITDA ratio 1.4 1.2 n/a
Total dividend per share 12.2p 12.0p 1.7%
1 Definitions of these non-GAAP measures and reconciliations of the statutory
results to the adjusted measures can be found in the 'Glossary and alternative
performance measures' section, which is included as an appendix to the
condensed consolidated financial statements within this announcement.
Revenue
The Group recognised revenue of £1,100.7 million (2023: £1,114.7 million), a
year on year decrease of 1.3% on a reported basis.
Market conditions were challenging in the second half of the financial year.
In industrial markets, we saw declining order levels in Europe and China and
a slowing of growth in the USA. In our faster growing markets, growth in
semiconductor markets was impacted by stocking in customer supply chains and
slower than anticipated growth in global sales of electric vehicles.
Reported revenue was significantly impacted by foreign exchange headwinds,
largely related to the US dollar and sterling exchange rate.
Reflecting these dynamics, we saw organic constant currency growth of 2.5% in
our core markets, with 7.6% growth in our faster growing markets. As a
result, overall group organic constant currency growth of 3.7% was marginally
below our financial framework guidance of 4 - 7% growth.
Adjusted operating profit
The Group delivered adjusted operating profit* of £128.4 million (2023:
£120.3 million) which was impacted by weaker trading performance in the
second half. Pricing and operational efficiency measures delivered in 2024
more than offset inflation, and margin was also positively impacted by
benefits delivered from our restructuring programmes.
Adjusted operating profit margin* of 11.7% increased by 90 bps versus prior
year (2023: 10.8%), but remained below our financial framework guidance. On
an organic constant-currency* basis, adjusted operating profit margin*
increased by 130 bps compared to the prior year.
Amortisation of intangible assets
The Group amortisation charge was £1.7 million (2023: £3.3 million).
Specific adjusting items from continuing operations
Specific adjusting items were £23.1 million (2023: £25.1 million) and
comprised the following:
2024 2023
£m
£m
Specific adjusting items from continuing operations(1)
Costs associated with the cyber security incident (1.1) (14.7)
Net restructuring charge (13.1) (3.5)
Design, configuration, customisation and implementation of a Global ERP system (5.2) -
Net business closure costs - (1.9)
Credit/(charge) in relation to the impact of Argentina's currency devaluation 0.5 (5.8)
Impairment of non-financial assets (4.2) (7.3)
Reversal of impairment of non-financial assets - 8.1
Total specific adjusting items before income tax (23.1) (25.1)
Income tax credit from specific adjusting items 2.5 3.8
Total specific adjusting items after income tax (20.6) (21.3)
1 Details of specific adjusting items arising during the year and the
comparative period are set out in note 4 to the condensed consolidated
financial statements.
In early 2024, the Group incurred expenditure of £1.1m being the residual
costs associated with the cyber incident which occurred in January 2023 (2023:
£14.7m).
Expenditure of £13.1 million has been recognised in respect of our business
simplification and restructuring programme (2023: £3.5 million). In total,
once fully implemented, our simplification initiatives are expected to deliver
total annual adjusted operating profit* benefits of approximately £27 million
by 2026.
£ million 2023 2024 2025 2026 2027 Total
Adjusted operating profit benefit (incremental) 1 8 24 27 27
Costs charged to specific adjusting items (7) (13) (25) (45)
The Group has accelerated investment in the development of a Global ERP system
which is intended to replace over 30 different legacy systems across the
Morgan network and which will further strengthen information security and the
wider control environment. Expenditure of £5.2 million associated with
the design, customisation, configuration and implementation of the system were
presented as specific adjusting items in the income statement in 2024, in
accordance with the Group's accounting policies (2023: £nil).
In light of challenging trading conditions, the Group has conducted an
impairment review and where necessary performed an impairment assessment in
accordance with 'IAS 36 - Impairment of Assets'. As a result, the Group has
recognised a net impairment charge of £4.2 million related to assets held by
our Thermal Products business in Europe.
The Group has recorded a cumulative total of £18.9 million impairment charges
for assets which it continues to use. These impairments could be reversed if
the businesses were to outperform significantly against their budgets and
strategic plans (2023: £20.6 million). A sensitivity analysis was carried
out using reasonably possible changes to the key assumptions in assessing the
value in use of these non-financial assets. This did not result in a material
reversal of the impaired amounts in 2024.
Refer to note 4 to the condensed consolidated financial statements for details
of the impairment review and key assumptions made.
Statutory operating profit
Statutory operating profit was £103.6 million (2023: £91.9 million).
Net financing costs
Net financing costs of £19.0 million (2023: £14.1 million) comprise net bank
interest and similar charges of £15.8 million (2023: £11.7 million), net
interest on IAS 19 pension obligations of £0.6 million (2023: £nil), and the
interest expense on lease liabilities of £2.6 million (2023: £2.4 million)
resulting from IFRS 16 Leases.
Taxation
The Group tax charge from continuing operations, excluding specific adjusting
items, was £28.4 million (2023: £26.0 million). The effective tax rate,
excluding specific adjusting items, was 26.4% (2023: 25.3%). Note 6 to the
condensed consolidated financial statements provides additional information on
the Group's tax charge.
On a statutory basis, the Group tax charge was £25.9 million (2023: £22.2
million), higher than the previous year reflecting increased taxable profits.
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.
Earnings per share
Basic earnings per share from continuing operations was 17.7 pence (2023: 16.4
pence) and adjusted earnings per share* was 25.5 pence (2023: 25.0 pence).
Details of these calculations can be found in note 8 to the condensed
consolidated financial statements.
Foreign currency impact
The Group receives revenue and incurs expenses in a number of foreign
currencies and, as such, movements in foreign exchange rates can materially
impact the Group's financial results. Had foreign currency rates in 2024
remained consistent with 2023, the Group's adjusted operating profit* would
have been £10.7 million higher.
For illustrative purposes, the table below provides details of the impact on
2024 revenue and Group adjusted operating profit* if the actual reported
results, calculated using 2024 average exchange rates were restated for GBP
weakening by 10 cents against the US dollar in isolation and 10 cents against
the Euro in isolation:
Increase in 2024 revenue/adjusted operating profit(1) if: Revenue Adjusted operating profit(1)
£m
£m
GBP weakens by 10c against the US dollar in isolation 42.3 4.4
GBP weakens by 10c against the Euro in isolation 19.8 3.2
1 Definitions of these non-GAAP measures and reconciliations of the statutory
results to the adjusted measures can be found in the 'Glossary and alternative
performance measures' section, which is included as an appendix to the
condensed consolidated financial statements within this announcement.
The principal exchange rates used in the translation of the results of
overseas subsidiaries were as follows:
GBP to: 2024 2023
Closing rate Average rate Closing rate Average rate
US dollar 1.25 1.28 1.27 1.24
Euro 1.21 1.18 1.15 1.15
Changes in Segmental Reporting under 'IFRS 8 - Operating Segments'
As disclosed in the 2023 Annual Report and Accounts, during 2024 the Group has
simplified its operating structure in order to support strategic execution.
The business is now managed through three distinct segments, being Thermal
Products, Performance Carbon and Technical Ceramics. These segments have
been identified as the Group's reportable segments for the purposes of IFRS
8. Segmental reporting disclosures, including a restatement of prior year
disclosures in accordance with the new segmental reporting structure, are set
out in note 3 to the condensed consolidated financial statements.
Cash flow
2024 2023
£m
£m
Cash generated from continuing operations 162.9 126.3
Net capital expenditure (90.2) (58.5)
Net interest on cash and borrowings (15.3) (11.6)
Tax paid (29.2) (30.3)
Lease payments and interests (13.2) (11.3)
Free cash flow before acquisitions, disposals and dividends 15.0 14.6
Dividends paid to external plc shareholders (34.5) (34.2)
Net cash flows from other investing and financing activities (19.6) (17.8)
Net cash flows from discontinued operations 0.1 0.4
Exchange movement and other non-cash movements (2.0) 0.3
Movement in net debt(1) (41.0) (36.7)
Opening net debt(1) (185.2) (148.5)
Closing net debt(1) (226.2) (185.2)
Lease liabilities (47.1) (47.1)
Closing net debt(1) and lease liabilities (273.3) (232.3)
1 Definitions of these non-GAAP measures and reconciliations of the statutory
results to the adjusted measures can be found in the 'Glossary and alternative
performance measures' section, which is included as an appendix to the
condensed consolidated financial statements within this announcement.
The Group generated cash from continuing operations of £162.9 million (2023:
£126.3 million) which was £36.6 million higher than the previous year
reflecting a material improvement in working capital inflows as a result of
focused initiatives across the Group.
Free cash flow before acquisitions, disposals and dividends* was £15.0
million (2023: £14.6 million). The Group incurred net capital expenditure
of £90.2 million (2023: £58.5 million), reflecting strategic investments in
semiconductor capacity and capability, investments in efficiency and continued
investment in health, safety and environmental improvement programmes.
For the purposes of compliance with external debt covenants, net debt* is
calculated excluding IFRS 16 lease liabilities. On this basis, net debt was
£226.2 million (2023: £185.2 million), representing a net debt* to EBITDA*
ratio of 1.4 times (2023: 1.2 times).
Commitments for property, plant and equipment and computer software for which
no provision has been made are set out in note 9 to the condensed consolidated
financial statements.
Liquidity
The Group had net cash and cash equivalents* of £111.5 million (2023: £124.5
million) and undrawn headroom on its available credit facilities of £279.3
million (2023: £187.9 million).
Capital structure
At the year end total equity was £389.3 million (2023: £398.6 million) with
closing net debt* of £226.2 million (2023: £185.2 million).
Non-current assets were £597.3 million (2023: £544.3 million) and total
assets were £1,077.1 million (2023: £1,038.2 million).
Final dividend
The Board is recommending a final dividend, subject to shareholder approval,
of 6.8 pence per share on the Ordinary share capital of the Group, payable on
13 May 2025 to Ordinary shareholders on the register at the close of business
on 11 April 2025. The ex-dividend date is 10 April 2025.
Together with the interim dividend of 5.4 pence per share paid on 15 November
2024, this final dividend, if approved by shareholders, brings the total
distribution for the year to 12.2 pence per share (2023: 12.0 pence).
A total dividend of 12.2 pence per share represents a dividend cover of
adjusted EPS* of 2.1 times, which is lower than the medium term target of 2.5
times dividend cover set out in our progressive dividend policy. The Board
remains committed to progressively growing the Ordinary dividend over the
medium term.
Share buyback
On 5 November 2024, Morgan Advanced Materials plc announced its intention to
undertake a buyback programme of up to a maximum £40.0 million, excluding
expenses. Shares purchased pursuant to the buyback programme will be
cancelled and as a result, it is expected that the buyback programme will
enhance earnings per share over time.
On the same date, Morgan entered into a non-discretionary agreement with
Investec Bank plc ("Investec"), acting as riskless principal, to enable the
Company to purchase up to £10.0 million, excluding expenses, of the
Company's ordinary shares. Under the terms of the agreement, Investec make
its trading decisions independently of and uninfluenced by the Company, in
accordance with certain pre-set parameters. Tranche 1 will end no later than
31 March 2025.
As at 31 December 2024, the Company had purchased 1,825,090 shares, for total
consideration of £4.7 million, excluding fees and stamp duty. A liability
for the value of shares contracted but not yet purchased has been recognised
on the balance sheet, in accordance with 'IAS 32 - Financial Instruments:
Presentation', with a corresponding adjustment to equity.
As separately announced today, the Board is committed to commencing the second
£10 million tranche of the buyback programme immediately after the first
tranche has completed.
Post balance sheet events
There were no reportable post balance sheet events following the balance sheet
date.
Consolidated income statement
Year ended 31 December 2024 Year ended 31 December 2023
Results before specific adjusting items Specific adjusting items(1) Total Results before specific adjusting items Specific adjusting items(1) Total
Note £m £m £m £m £m £m
3 1,100.7 - 1,100.7 1,114.7 - 1,114.7
Revenue
Operating costs before amortisation of intangible assets, impairments and (972.3) (18.9) (991.2) (994.4) (25.9) (1,020.3)
reversal of impairments of non-financial assets
Profit from operations before amortisation of intangible assets, impairments 3 128.4 (18.9) 109.5 120.3 (25.9) 94.4
and reversal of impairments of non-financial assets
Amortisation of intangible assets (1.7) - (1.7) (3.3) - (3.3)
Impairment of non-financial assets 4 - (4.2) (4.2) - (7.3) (7.3)
Reversal of impairments of non-financial assets 4 - - - - 8.1 8.1
Operating profit 3 126.7 (23.1) 103.6 117.0 (25.1) 91.9
Finance income 2.6 - 2.6 3.9 - 3.9
Finance expense (21.6) - (21.6) (18.0) - (18.0)
Net financing costs 5 (19.0) - (19.0) (14.1) - (14.1)
Profit before taxation 107.7 (23.1) 84.6 102.9 (25.1) 77.8
Income tax expense 6 (28.4) 2.5 (25.9) (26.0) 3.8 (22.2)
Profit from continuing operations 79.3 (20.6) 58.7 76.9 (21.3) 55.6
Profit from discontinued operations(2) 7 - 0.1 0.1 - 0.7 0.7
Profit for the year 79.3 (20.5) 58.8 76.9 (20.6) 56.3
Profit for the year attributable to:
Shareholders of the Company 70.8 (20.5) 50.3 67.9 (20.6) 47.3
Non-controlling interests 8.5 - 8.5 9.0 - 9.0
Profit for the year 79.3 (20.5) 58.8 76.9 (20.6) 56.3
Earnings per share 8
Continuing and discontinued operations
Basic earnings per share 17.7p 16.6p
Diluted earnings per share 17.5p 16.5p
Continuing operations
Basic earnings per share 17.7p 16.4p
Diluted earnings per share 17.5p 16.3p
Dividends(3)
Interim dividend - pence 5.4p 5.3p
15.4 15.1
- £m
Proposed final dividend - pence 6.8p 6.7p
19.3 19.1
- £m
1 Details of specific adjusting items from continuing operations are given in
note 4 to the condensed consolidated financial statements.
2 Profits from discontinued operations are entirely attributable to the
Shareholders of the Company.
3 The proposed final dividend is based upon the number of Ordinary shares
outstanding at the balance sheet date.
Consolidated statement of comprehensive income
31 December 2024 31 December 2023
Note £m £m
Profit for the year 58.8 56.3
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to income statement:
Remeasurement gain/(loss) on defined benefit plans 14 1.3 (11.5)
Tax effect of components of other comprehensive income not reclassified 6 (0.6) (0.5)
0.7 (12.0)
Items that may be reclassified subsequently to income statement:
Foreign exchange translation differences (11.0) (32.8)
Cash flow hedges:
Change in fair value (0.3) 1.1
Transferred to income statement (1.0) 0.2
Net investment hedges:
Change in fair value 1.7 (0.3)
(10.6) (31.8)
Total other comprehensive expense (9.9) (43.8)
Total comprehensive income 48.9 12.5
Attributable to:
Shareholders of the Company 41.4 6.7
Non-controlling interests 7.5 5.8
48.9 12.5
Total comprehensive income attributable to shareholders of the Company arising
from:
Continuing operations 41.3 6.0
Discontinued operations 0.1 0.7
41.4 6.7
Consolidated balance sheet
As at As at
31 December 2024 31 December
2023
Note £m £m
Assets
Property, plant and equipment 9 344.9 293.8
Right-of-use assets 10 32.5 31.6
Intangible assets: goodwill 11 176.9 177.5
Intangible assets: other 11 3.0 4.7
Investments 2.0 2.2
Trade and other receivables 3.6 3.4
Employee benefits: pensions(1) 14 13.0 13.5
Deferred tax assets 21.4 17.6
Total non-current assets 597.3 544.3
Inventories 165.9 175.1
Derivative financial assets 13 1.2 1.5
Trade and other receivables 189.6 191.6
Current tax receivable 2.3 1.2
Cash and cash equivalents 12 120.8 124.5
Total current assets 479.8 493.9
Total assets 1,077.1 1,038.2
Liabilities
Borrowings 337.7 309.1
Lease liabilities 36.1 36.6
Employee benefits: pensions(1) 14 34.5 38.7
Provisions 15 10.9 11.5
Non-trade payables 2.8 2.4
Deferred tax liabilities 2.7 1.8
Total non-current liabilities 424.7 400.1
Borrowings and bank overdrafts 9.3 0.6
Lease liabilities 11.0 10.5
Trade and other payables 204.1 192.0
Current tax payable 26.6 25.6
Provisions 15 9.5 10.3
Derivative financial liabilities 13 2.6 0.5
Total current liabilities 263.1 239.5
Total liabilities 687.8 639.6
Total net assets 389.3 398.6
Equity
Share capital 70.9 71.3
Share premium 111.7 111.7
Reserves (8.2) 6.5
Retained earnings 179.3 170.8
Total equity attributable to shareholders of the Company 353.7 360.3
Non-controlling interests 35.6 38.3
Total equity 389.3 398.6
1 In the prior year published results the pension assets were presented net
within pension liabilities. The prior year figures above have been
re-presented to show the pension assets within non current assets and a
corresponding increase to the pension liabilities. There is no impact on net
profit, net assets or cash flows
Consolidated statement of changes in equity
Share capital Share premium Translation Hedging Fair value reserve Capital redemption reserve Other reserves Retained earnings Total parent equity Non-controlling interests Total
reserve reserve equity
£m £m £m £m £m £m £m £m £m £m £m
At 1 January 2023 71.3 111.7 - (0.2) (1.0) 35.7 0.6 170.9 389.0 40.6 429.6
Profit for the year - - - - - - - 47.3 47.3 9.0 56.3
Other comprehensive income/(expense):
Remeasurement loss on defined benefit plans and related taxes - - - - - - - (12.0) (12.0) - (12.0)
Foreign exchange differences and related taxes - - (29.6) - - - - - (29.6) (3.2) (32.8)
Cash flow hedging fair value changes and transfers - - - 1.3 - - - - 1.3 - 1.3
Net investment hedging fair - - (0.3) - - - - - (0.3) - (0.3)
value changes and transfers
Total other comprehensive income/(expense) - - (29.9) 1.3 - - - (12.0) (40.6) (3.2) (43.8)
Total comprehensive income/(expense) - - (29.9) 1.3 - - - 35.3 6.7 5.8 12.5
Transactions with owners:
Dividends - - - - - - - (34.2) (34.2) (8.1) (42.3)
Equity-settled share-based payments - - - - - - - 2.9 2.9 - 2.9
Own shares acquired for share incentive schemes (net) - - - - - - - (4.1) (4.1) - (4.1)
At 31 December 2023 71.3 111.7 (29.9) 1.1 (1.0) 35.7 0.6 170.8 360.3 38.3 398.6
At 1 January 2024 71.3 111.7 (29.9) 1.1 (1.0) 35.7 0.6 170.8 360.3 38.3 398.6
Profit for the year - - - - - - - 50.3 50.3 8.5 58.8
Other comprehensive income/(expense):
Remeasurement gain on defined benefit plans and related taxes - - - - - - - 0.7 0.7 - 0.7
Foreign exchange differences and related taxes - - (10.0) - - - - - (10.0) (1.0) (11.0)
Cash flow hedging fair value changes and transfers - - - (1.3) - - - - (1.3) - (1.3)
Net investment hedging fair - - 1.7 - - - - - 1.7 - 1.7
value changes and transfers
Total other comprehensive income/(expense) - - (8.3) (1.3) - - - 0.7 (8.9) (1.0) (9.9)
Total comprehensive income/(expense) - - (8.3) (1.3) - - - 51.0 41.4 7.5 48.9
Transactions with owners:
Dividends - - - - - - - (34.5) (34.5) (8.1) (42.6)
Equity-settled share-based payments - - - - - - - 2.8 2.8 - 2.8
Own shares acquired for share incentive schemes (net) - - - - - - - (3.3) (3.3) - (3.3)
Purchase of own shares for share buyback programme - - - - - - (10.0) - (10.0) - (10.0)
Cancellation of own shares under share buyback programme (0.4) - - - - 0.4 4.5 (4.5) - - -
Purchase of non-controlling interest - - - - - - - (3.0) (3.0) (2.1) (5.1)
At 31 December 2024 70.9 111.7 (38.2) (0.2) (1.0) 36.1 (4.9) 179.3 353.7 35.6 389.3
Consolidated statement of cash flows
Year ended Year ended
31 December 2024 31 December 2023
Note £m £m
Operating activities
Profit for the year from continuing operations 58.7 55.6
Profit for the year from discontinued operations 7 0.1 0.7
Adjustments for:
Depreciation - property, plant and equipment 34.1 31.9
Depreciation - right-of-use assets 8.6 7.6
Amortisation 1.7 3.3
Net financing costs 5 19.0 14.1
Non-cash specific adjusting items included in operating profit 4.5 (2.5)
Fair value gain on equity instruments held at FVTPL (1.9) (0.9)
Profit on sale of property, plant and equipment (3.0) (1.6)
Income tax expense 6 25.9 22.2
Equity-settled share-based payment expense 2.8 2.9
Cash generated from operations before changes in working capital and 150.5 133.3
provisions
Increase in trade and other receivables (0.5) (4.0)
Decrease/(increase) in inventories 6.7 (12.3)
Increase in trade and other payables 8.4 13.3
Decrease in provisions (1.0) (3.4)
Payments to defined benefit pension plans (net of IAS 19 pension charges) 14 (1.1) (0.2)
Cash generated from operations 163.0 126.7
Interest paid - borrowings and overdrafts (17.9) (15.5)
Interest paid - lease liabilities (2.6) (2.4)
Income tax paid (29.2) (30.3)
Net cash from operating activities 113.3 78.5
Investing activities
Purchase of property, plant and equipment and software (96.1) (60.4)
Purchase of investments (0.1) (5.6)
Proceeds from sale of property, plant and equipment 5.4 1.8
Grants received for purchase of equipment 0.5 0.1
Interest received 2.6 3.9
Disposal of investments 1.7 -
Net cash from investing activities (86.0) (60.2)
Financing activities
Purchase of own shares for share incentive schemes (3.5) (4.7)
Proceeds from exercise of share options 0.2 0.6
Purchase of own shares for share buyback programme (4.7) -
Purchase of non-controlling interest (5.1) -
Increase in borrowings 121.3 247.2
Repayment of borrowings (88.0) (193.9)
Payment of lease liabilities (10.6) (8.9)
Dividends paid to shareholders of the Company (34.5) (34.2)
Dividends paid to non-controlling interests (8.1) (8.1)
Net cash from financing activities (33.0) (2.0)
Net (decrease)/increase in cash and cash equivalents and overdrafts (5.7) 16.3
Cash and cash equivalents at start of the year 124.5 117.7
Effect of exchange rate fluctuations on cash held (7.3) (9.5)
Net cash and cash equivalents at year end 111.5 124.5
Notes to the condensed consolidated financial statements
Note 1. Basis of preparation, changes in accounting policies and areas of
significant judgement and estimate
The preliminary announcement for the year ended 31 December 2024, which is an
abridged statement of the full Annual Report and Accounts, has been prepared
in accordance with the requirements of the Companies Act 2006 and
International Financial Reporting Standards ('IFRSs') as adopted by the UK.
Except for the changes set out in the adoption of new and revised standards
section, there has been no other significant impact arising from new
accounting policies adopted in the year.
Certain line items in the primary statements have been disaggregated to
provide greater clarity, and accordingly, the corresponding prior year
comparative amounts have been re-presented for consistency and comparability
between periods. The comparative period includes £13.5 million of pension
assets that were previously presented net within pension liabilities. There is
no impact on net profit, net assets or cash flows.
The financial information set out in this report does not constitute the
Company's statutory accounts for the years ended 31 December 2024 or 31
December 2023. Statutory accounts for the year ended 31 December 2023 have
been delivered to the registrar of companies, and those for the year ended 31
December 2024 will be delivered in due course.
The auditors have reported on those accounts; their report was (i)
unqualified, (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under Section 498(2) or (3) of the Companies
Act 2006 in respect of the accounts for 2024 and 2023.
Critical accounting judgements and key sources of estimation uncertainty
In preparing these consolidated financial statements, management has made
judgements, estimates and assumptions that affect the application of the
Group's accounting policies and the reported amounts of assets, liabilities,
income and expenses. Final outcomes may differ from these estimates. Estimates
and underlying assumptions are reviewed on an ongoing basis.
Critical accounting judgements
Information about judgements made in applying accounting policies that have
the most significant effects on the amounts recognised in the consolidated
financial statements is included in the following notes:
Note 4: Specific adjusting items
The Group separately presents specific adjusting items in the consolidated
income statement which, in the Directors' judgement, need to be disclosed
separately by virtue of their size and incidence in order for users of the
consolidated financial statements to obtain an alternative understanding of
the financial information and the underlying performance of the business.
These are items which occur infrequently and include (but are not limited to):
· Individual restructuring projects which are material or relate to the
closure of a part of the business and are not expected to recur;
· Impairment of non-financial assets which are material;
· Gains or losses on disposal or exit of businesses;
· Significant costs incurred as part of the integration of an acquired
business;
· Gains or losses arising on significant changes to or closures of
defined benefit pension plans; and
· Design, customisation, configuration and implementation of a Global
ERP system.
For the year ended 31 December 2023, costs associated with our response to the
cyber security incident and charges in relation to the impact of Argentina's
currency devaluation were also classified as specific adjusting items, due to
their size and nature.
Determining whether an item is part of specific adjusting items requires
judgement to determine the nature and the intention of the transaction.
Note 15: Provisions and contingent liabilities
Due to the nature of its operations, the Group holds provisions for its
environmental obligations. Judgement is needed in determining whether a
contingent liability has crystallised into a provision. Management assesses
whether there is sufficient information to determine that an environmental
liability exists and whether it is possible to estimate with sufficient
reliability what the cost of remediation is likely to be. For environmental
remediation matters, this tends to be at the point in time when a remediation
feasibility study has been completed, or sufficient information becomes
available through the study to estimate the costs of remediation.
The Group will recognise a legal provision at the point when the outcome of a
legal matter can be reliably estimated. Estimates are based on past experience
of similar issues, professional advice received and the Group's assessment of
the most likely outcome. The timing of the utilisation of these provisions is
frequently uncertain, reflecting the complexity of issues and the outcome of
various court proceedings and associated negotiations.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation
uncertainty at the reporting period that may have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are included in the notes below.
Management has assessed the potential financial impacts relating to climate
change-related 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 are
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.
Note 14: Pensions and other post-retirement employee benefits: key actuarial
assumptions
The principal actuarial assumptions applied to pensions are shown in note 14.
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 net pension liability included in the balance sheet.
Adoption of new and revised accounting standards
Newly adopted standards
In the current year, the Group has applied a number of amendments to IFRS
Accounting Standards as adopted by the UK that are mandatorily effective for
an accounting period that begins on or after 1 January 2024. Their adoption
has not had any material impact on the disclosures or on the amounts reported
in these financial statements.
· Amendments to IAS 1 Non-current Liabilities with Covenants.
· Amendments to IAS 1 Classification of liabilities as current or
non-current.
· Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements.
· Amendments to IFRS 16 Lease Liability in a Sale and Leaseback.
Accounting developments and changes
New accounting standards in issue but not yet effective
New standards and interpretations that are in issue but not yet effective are
listed below.
· IFRS S1 'General requirements for Disclosure of
Sustainability-related Financial Information'.
· IFRS S2 'Climate-related Disclosures'.
· Amendment to IFRS 9 and IFRS 7 'Classification and Measurement of
Financial Instruments'.
· Amendments to IAS 21 Lack of Exchangeability.
· IFRS 18: Presentation and Disclosure in Financial Statements.
The adoption of amendments to IAS 21 is effective for the period beginning 1
January 2025 and adoption is not expected to lead to any material changes to
the Group's accounting policies or have any other material impact on the
financial position or performance of the Group. IFRS 18 is effective for
periods beginning on or after 1 January 2027 and replaces IAS 1 Presentation
of Financial Statements. The standard requires the classification of income
and expenditure in the income statement to be split between operating,
investing and financing, introduces disclosures around management defined
performance measures (MPMs) and aggregation and disaggregation of other
disclosure information. The impact of the standard on the Group is currently
being assessed and it is not yet practicable to quantify the effect of IFRS 18
on these consolidated financial statements.
There are no other upcoming accounting standards or amendments that are
applicable to the Group.
Non-GAAP measures
Where non-GAAP measures have been referenced these have been identified by an
asterisk (*) where they appear in the text and by a footnote where they appear
in a table. Definitions of these non-GAAP measures and reconciliations to the
equivalent statutory measure can be found in the 'Glossary and Alternative
Performance Measures' section included as an appendix to the condensed
consolidated financial statements within this announcement.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Strategic
Report contained in the Annual Report and Accounts. The financial position of
the Group, its cash flows, liquidity position and borrowing facilities, are
described in the Financial Review. In addition, note 21 to the consolidated
financial statements contained within the Annual Report and Accounts, 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 2024, the Group had both significant available liquidity and
headroom on its covenants. Total committed borrowing facilities were £617.4
million. The amount drawn under these facilities was £338.1 million, which
together with net cash and cash equivalents of £111.5 million, gave a total
headroom of £390.8 million. The multi-currency revolving credit facility was
£12.8 million drawn. The Group has no scheduled debt maturities until 2026.
The principal borrowing facilities are subject to covenants that are measured
semi-annually in June and December, being net debt to EBITDA* of a maximum of
3 times and interest cover of a minimum of 4 times, based on measures defined
in the facilities agreements which are adjusted from the equivalent IFRS
amounts.
The Group has carefully modelled its cash flow outlook, taking account of
reasonably possible changes in trading performance, exchange rates and
plausible downside scenarios. This review indicated that there was sufficient
headroom and liquidity for the business to continue for the 18 month period
based on the facilities available as discussed in note 21 to the consolidated
financial statements included within the Annual Report and Accounts. The Group
was also expected to be in compliance with the required covenants discussed
above.
The Board has also reviewed the Group's reverse stress testing performed to
demonstrate how much headroom is available on covenant levels in respect of
changes in net debt, EBITDA*, and underlying revenue. Based on this
assessment, a combined reduction in EBITDA* of 35% and an increase in net debt
of 35% would still allow the Group to operate within its financial covenants.
The Directors do not consider either of these scenarios to be plausible given
the diversity of the Group's end-markets and its broad manufacturing base.
The Board and Executive Committee have regular reporting and review processes
in place in order to closely monitor the ongoing operational and financial
performance of the Group. As part of the ongoing risk management process,
principal and emerging risks are identified and reviewed on a regular basis.
In addition, the Directors have assessed the risk of climate change and do not
consider that it will impact the Group's ability to operate as a going concern
for the period under consideration.
After making enquiries, and in the absence of any material uncertainties, the
Directors have a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for a period of 18
months from the date of signing this Annual Report and Accounts. Accordingly,
they continue to adopt the going concern basis in preparing the Annual Report
and Accounts.
Directors' Responsibility Statement
The 2024 Annual Report and Accounts, which will be issued in March 2025,
contains a responsibility statement in compliance with DTR 4.1.12 of the
Listing Rules which sets out that as at the date of approval of the Annual
Report on 27 February 2025, the directors confirm to the best of their
knowledge:
- the Group and unconsolidated Company financial statements,
prepared in accordance with the applicable set of accounting standards, give a
true and fair view of the assets, liabilities, financial position and profit
or loss of the Group and Company, and the undertakings included in the
consolidation taken as a whole; and
- the performance review contained in the Annual Report and
Accounts includes a fair review of the development and performance of the
business and the position of the Group and the undertakings including the
consolidation taken as a whole, together with a description of the principal
risks and uncertainties they face.
Note 2. Acquisitions and disposals
In March 2024, the Group acquired the remaining 7% of the shares in Morgan
Korea Company Ltd, a manufacturing business which services all three segments
of the Group, for consideration of £5.1 million. The Group previously owned
93% of the business and included the entity in the Group consolidation.
There were no acquisitions or disposals of businesses by the Group in 2023.
Note 3. Segmental reporting
As part of the restructuring programme to streamline and simplify the Group a
change was implemented, effective from 1 January 2024, to manage the Group
through three distinct reporting segments, Thermal Products, Performance
Carbon and Technical Ceramics. The internal management information, regularly
reviewed by the Group's Board of Directors (the Chief Operating Decision
Maker) in order to allocate resources and assess performance, is presented on
the basis of these reporting segments.
Segment results, assets and liabilities include items directly attributable to
a segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly investments and related income, borrowings
and related expenses, corporate assets and head office expenses, and income
tax assets and liabilities.
The information presented below represents the reporting segments of the
Group. Comparative figures have been presented based on the new reporting
segments.
Year ended 31 December 2024
Thermal Products Performance Carbon Technical Ceramics Segment total Corporate costs Group
Continuing operations £m £m £m £m £m £m
Revenue from external customers 418.2 345.2 337.3 1,100.7 - 1,100.7
Segment adjusted operating profit(1) 40.0 55.1 39.2 134.3 - 134.3
Corporate costs(2) (5.9) (5.9)
Group adjusted operating profit(1) 128.4
Amortisation of intangible assets (0.8) (0.3) (0.6) (1.7) - (1.7)
Operating profit before specific adjusting items 39.2 54.8 38.6 132.6 (5.9) 126.7
Specific adjusting items included in operating profit/(loss)(3) (8.1) (7.6) (0.7) (16.4) (6.7) (23.1)
Operating profit/(loss) 31.1 47.2 37.9 116.2 (12.6) 103.6
Finance income 2.6
Finance expense (21.6)
Profit before taxation 84.6
Segment assets 373.4 316.3 222.7 912.4 164.7 1,077.1
Segment liabilities 103.9 54.0 85.0 242.9 444.9 687.8
Segment capital expenditure 22.8 52.3 21.0 96.1 - 96.1
Segment depreciation - property, plant and equipment 14.6 10.9 8.6 34.1 - 34.1
Segment depreciation - right-of-use assets 3.8 1.5 3.3 8.6 - 8.6
Segment net impairment of non-financial assets 4.2 - - 4.2 - 4.2
Segment reversal of impairment of non-financial assets - - - - - -
1. Definitions of these non-GAAP measures and reconciliations of the
statutory results to the adjusted measures can be found in the 'Glossary and
alternative performance measures' section, which is included as an appendix to
the condensed consolidated financial statements within this announcement.
2. Corporate costs consist of central head office costs.
3. Details of specific adjusting items from continuing operations are
given in note 4 to the condensed consolidated financial statements.
Year ended 31 December 2023
Thermal Products Performance Carbon Technical Ceramics Segment Corporate Group
totals costs
Continuing operations £m £m £m £m £m £m
Revenue from external customers 454.4 327.2 333.1 1,114.7 - 1,114.7
Segment adjusted operating profit(1) 40.2 50.0 36.0 126.2 - 126.2
Corporate costs(2) (5.9) (5.9)
Group adjusted operating profit(1) 120.3
Amortisation of intangible assets (1.4) (0.8) (1.1) (3.3) - (3.3)
Operating profit before specific adjusting items 38.8 49.2 34.9 122.9 (5.9) 117.0
Specific adjusting items included in operating profit/(loss)(3) (9.3) (9.3) 7.6 (11.0) (14.1) (25.1)
Operating profit/(loss) 29.5 39.9 42.5 111.9 (20.0) 91.9
Finance income 3.9
Finance expense (18.0)
Profit before taxation 77.8
Segment assets 376.2 278.2 217.6 872.0 166.2 1,038.2
Segment liabilities 101.0 55.0 80.4 236.4 403.2 639.6
Segment capital expenditure 17.2 27.2 15.9 60.3 - 60.3
Segment depreciation - property, plant and equipment 13.9 11.2 6.8 31.9 - 31.9
Segment depreciation - right-of-use assets 3.5 1.3 2.8 7.6 - 7.6
Segment impairment of non-financial assets - 7.0 0.3 7.3 - 7.3
Segment reversal of impairment of non-financial assets 2.4 - 5.7 8.1 - 8.1
1. Definitions of these non-GAAP measures and reconciliations of the
statutory results to the adjusted measures can be found in the 'Glossary and
alternative performance measures' section, which is included as an appendix to
the condensed consolidated financial statements within this announcement.
2. Corporate costs consist of central head office costs.
3. Details of specific adjusting items from continuing operations are
given in note 4 to the condensed consolidated financial statements.
Revenue from external customers and non-current assets by geography
Revenue from Non-current assets
external customers
(excluding pension and deferred tax assets)
Continuing operations 2024 2023 2024 2023
£m £m £m £m
USA 451.8 427.4 263.9 219.8
China 97.7 114.8 44.6 43.4
Germany 83.2 88.7 42.3 41.9
UK (the Group's country of domicile) 44.2 43.6 110.1 101.6
Other Asia, Australasia, Middle East and Africa 192.9 197.1 55.5 54.6
Other Europe 165.6 173.2 33.1 37.1
Other North America 37.1 44.9 1.9 2.1
South America 28.2 25.0 11.5 12.7
1,100.7 1,114.7 562.9 513.2
Revenue from external customers is based on geographic location of the
end-customer. Segment assets are based on geographical location of the assets.
In the current and prior year no single customer represented more than 5% of
revenue.
Revenue from external customers by end-market
Continuing operations 2024 2023
£m £m
Semiconductors 105.7 108.6
Healthcare 84.1 78.7
Clean energy and clean transportation 57.6 50.0
Faster growing markets 247.4 237.3
Industrial 294.2 315.9
Conventional transportation 202.8 200.2
Metals 140.0 150.2
Petrochemical and chemical 106.0 110.8
Security and defence 73.9 68.5
Conventional energy 36.4 31.8
Core markets 853.3 877.4
1,100.7 1,114.7
Intercompany sales to other segments
Thermal Products Performance Carbon Technical Ceramics Total
Continuing operations 2024 2023 2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m £m £m
Intercompany sales to other segments 1.7 1.0 0.5 0.1 0.5 0.7 2.7 1.8
Note 4. Specific adjusting items
2024 2023
Continuing operations £m £m
Costs associated with the cyber security incident (1.1) (14.7)
Net restructuring charge (13.1) (3.5)
Design, configuration, customisation and implementation of a Global ERP system (5.2) -
Net business closure costs - (1.9)
Credit/(charge) in relation to the impact of Argentina's currency devaluation 0.5 (5.8)
Impairment of non-financial assets (4.2) (7.3)
Reversal of impairment of non-financial assets - 8.1
Total specific adjusting items before income tax (23.1) (25.1)
Income tax credit from specific adjusting items 2.5 3.8
Total specific adjusting items after income tax (20.6) (21.3)
The total cash outflow in respect of specific adjusting items excludes
impairment of non-financial assets and reversal of impairment of non-financial
assets, and is reported within cash flows from operating activities in the
consolidated cash flows.
Costs associated with the cyber security incident
The Group incurred expenditure of £1.1 million (2023: £14.7 million) being
the residual charges in relation to the cyber security incident which took
place in January 2023.
Net restructuring charge
During the year, the business continued the simplification process and
announced the expansion of the programme to achieve further cost reductions
and efficiencies. A charge of £13.1 million was recognised in relation to the
programmes. In 2023, a charge of £6.5 million was recognised in respect of
restructuring which was partially offset by a £3.0 million release of a
restructuring provision following settlement of a multi-employer pension plan
and the re-letting of a site held by one of our Technical Ceramics businesses.
Design, configuration, customisation and implementation of a Global ERP system
During the year, the Group continued to develop a Global ERP intended to
replace over 30 legacy systems across the Group. The programme is expected to
complete over three years and will create further opportunities to align
business processes, strengthen information security and the control
environment. The costs of £5.2 million associated with the design,
development, configuration and implementation of the system are classified as
specific adjusting items due to their nature and size.
Net business closure and exit costs
During 2024, the Group did not incur any costs relating to business closures.
In 2023, the Group incurred £1.9 million for decommissioning, advisory and
severance costs relating to the liquidation of a Thermal Products business in
China. In addition, a provision of £2.4 million was recognised relating to
the environmental remediation of a Thermal Products business in France which
was sold in 2015. This charge was offset by a gain of £2.4 million recognised
on disposal of land and buildings for a Thermal Products business in China
which was closed in 2020.
Credit/(charge) in relation to the impact of Argentina's currency devaluation
In December 2023, Argentina devalued its currency by more than 50% and
restrictions on imports limited the flow of raw materials to the site. As a
result the Group incurred a charge of £5.8 million in the year ended 31
December 2023, which consisted of £2.6 million for the impact of the currency
devaluation on the trading results of the Argentina business, impairment of
property, plant and equipment of £1.9 million and impairment of inventories
of £1.3 million.
During the year ended 31 December 2024, an impairment charge of £0.5 million
was reversed which related to the inventories sold in the year.
2024 Impairment of non-financial assets
Thermal Products
In light of challenging trading conditions, the Group has conducted an
impairment review and where necessary performed an impairment assessment in
accordance with 'IAS 36 - Impairment of Assets'. As a result, the Group has
recognised a net impairment charge of £4.2 million related to fixed assets
held by our Thermal Products business in Europe. The value in use calculation
used a pre-tax discount rate of 13.5-17.2% and a long-term growth rate of
1.1-1.7% to derive the terminal value.
2023 Impairment of non-financial assets
Performance Carbon
The Group recognised an impairment charge of £7.3 million related to fixed
assets held by Performance Carbon businesses in Europe (£3.2 million), North
America (£1.5 million) and Asia (£2.6 million) as a result of underutilised
assets and assets developed which were not commercially viable. The value in
use calculation used a pre-tax discount rate of 13.9-17.3% and a long-term
growth rate of 1.0% to derive the terminal value.
2023 Reversal of impairment of non-financial assets
In 2023, the Group identified businesses within Thermal Products and Technical
Ceramics, which previously incurred charges for impairment of fixed assets,
where the business had demonstrated sustained recovery. Consequently a
reversal of impairment of £8.1 million was recognised which consisted of
£2.4 million for a partial reversal in Thermal Products and £5.7 million in
respect of a full reversal in Technical Ceramics. The value in use calculation
used a pre-tax discount rate of 13.6% and a long-term growth rate of 1.0% to
derive the terminal value.
Review of cumulative impairment of non-financial assets
Impairment charges of £18.9 million (2023: £20.6 million) for non-financial
assets which the business continues to use have been recorded during the
current and previous years. These impaired amounts could be reversed if the
related businesses were to outperform significantly against their budget. A
sensitivity analysis was carried out using reasonably possible changes to the
key assumptions in assessing the value in use of these non-financial assets.
This did not result in a material reversal of the impaired amounts.
Note 5. Finance income and expense
2024 2023
Continuing operations £m £m
Interest on bank balances and cash deposits 2.6 3.9
Finance income 2.6 3.9
Interest expense on borrowings and overdrafts (18.4) (15.6)
Interest expense on lease liabilities (2.6) (2.4)
Net interest on IAS 19 defined benefit pension obligations (0.6) -
Finance expense (21.6) (18.0)
Net financing costs (19.0) (14.1)
No finance income or expense related to discontinued operations in either the
current or preceding year.
Note 6. Taxation
2024 2023
Continuing operations £m £m
Current tax
Current year 29.7 25.5
Current tax associated with Pillar Two income taxes 0.2 -
29.9 25.5
Deferred tax
Current year (2.4) (2.5)
Adjustments for prior years (1.6) (0.8)
(4.0) (3.3)
Total income tax expense recognised in the income statement 25.9 22.2
Recognised in other comprehensive income
Tax effect on components of other comprehensive income:
Deferred tax associated with defined benefit schemes 0.6 0.5
Total tax recognised in other comprehensive income 0.6 0.5
There was no deferred tax associated with share schemes recognised in other
comprehensive income (2023: none).
Reconciliation of effective tax rate 2024 2024 2023 2023
£m % £m %
Profit before tax 84.6 77.8
Income tax charge using the domestic corporation tax rate 21.1 24.9 18.3 23.5
Effect of different tax rates in other jurisdictions 0.3 0.4 1.4 1.8
Local taxes including withholding tax suffered 3.7 4.4 1.3 1.7
Permanent differences (0.1) (0.1) 0.1 0.1
Movements related to unrecognised temporary differences 2.5 2.9 2.0 2.6
Adjustments in respect of prior years (1.6) (1.9) (0.9) (1.2)
Statutory effective rate of tax 25.9 30.6 22.2 28.5
The effective rate of tax before specific adjusting items is 26.4% (2023:
25.3%).
The Group operates in many jurisdictions around the world and is subject to
factors that may impact future tax charges including the US tax reform,
implementation of the Organisation for Economic Co-operation and Development
(OECD)'s BEPS actions, tax rate and legislation changes, expiry of the statute
of limitations and resolution of tax audits and disputes.
The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS)
published the Pillar Two model rules designed to ensure that large
multinational enterprises pay a minimum tax of 15% on their profits in each
jurisdiction they operate in.
On 11 July 2024, the UK enacted the Pillar Two income inclusion rules (IIR).
The legislation implements a domestic top-up tax and a multinational top-up
tax which is effective for the financial year beginning 1 January 2024. The
Group is in scope of the enacted legislation.
The Group has also applied the exception under the 'IAS 12 - Income Taxes' as
issued in May 2023, for the amendment in recognising and disclosing
information about deferred tax assets and liabilities. Accordingly, the Group
neither recognises nor discloses information about deferred tax assets or
liabilities related to Pillar Two taxes.
The assessment of the potential exposure to Pillar Two income taxes indicate
that the transitional safe harbour rules apply to most jurisdictions in which
the Group operates, with the exception of France, Singapore and the United
Arab Emirates.
The amendments per IAS 12 requires Group's to disclose separately its current
tax expense in relation to Pillar Two tax. The Group estimates a current tax
expense related to Pillar Two taxes of £0.2 million for the territories where
the safe harbour rules do not apply.
The Group continues to monitor Pillar Two legislative developments across the
territories in which we operate to evaluate the future impact on our business.
Note 7. Discontinued operations
The Group disposed of its Composites and Defence Systems business on 20
November 2018. The business represented a separate reportable segment and
therefore, in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations, the disposal group was classified as
discontinued.
The results from discontinued operations, which have been disclosed in the
consolidated income statement, are set out below:
Year ended 31 December 2024 Year ended 31 December 2023
Results before specific adjusting items Specific adjusting items Total Results before Specific adjusting Total
specific adjusting items
items
Note £m £m £m £m £m £m
Revenue - 0.1 0.1 - 0.7 0.7
Operating income - - - - - -
Profit before taxation - 0.1 0.1 - 0.7 0.7
Income tax expense - - - - - -
Profit from discontinued operations - 0.1 0.1 - 0.7 0.7
Basic earnings per share from discontinued operations 8 - 0.2p
Diluted earnings per share from discontinued operations 8 - 0.2p
There is no income tax expense in relation to the discontinued operations in
either the current or preceding year.
Cash flows from discontinued operations are set out below:
Year ended Year ended
31 December 2024 31 December 2023
£m £m
Net cash generated in operating activities 0.1 0.4
Net cash generated from investing activities - -
Net cash flow used in financing activities - -
0.1 0.4
Note 8. Earnings per share
Year ended 31 December 2024 Year ended 31 December 2023
Earnings Basic earnings per share Diluted earnings per share Earnings Basic Diluted earnings per share
earnings per share
£m pence pence £m pence pence
Profit for the year attributable to shareholders of the Company 50.3 17.7p 17.5p 47.3 16.6p 16.5p
Profit from discontinued operations (0.1) - - (0.7) (0.2)p (0.2)p
Profit from continuing operations 50.2 17.7p 17.5p 46.6 16.4p 16.3p
Specific adjusting items 23.1 8.1p 8.0p 25.1 8.8p 8.7p
Amortisation of intangible assets 1.7 0.6p 0.6p 3.3 1.2p 1.1p
Tax effect of the above(1) (2.5) (0.9)p (0.9)p (3.8) (1.3)p (1.3)p
Adjusted profit for the year from continuing operations as used in 72.5 25.5p 25.2p 71.2 25.0p 24.8p
adjusted earnings
per share(2)
1 The tax effect of the amortisation of intangible assets was £nil (2023:
£nil).
2 Definitions of these non-GAAP measures and reconciliations of the statutory
results to the adjusted measures can be found in the 'Glossary and alternative
performance measures' section, which is included as an appendix to the
condensed consolidated financial statements within this announcement.
2024 2023
Number of shares (millions)
Weighted average number of Ordinary shares for the purposes of basic earnings 284.5 284.8
per share(1)
Effect of dilutive potential Ordinary shares:
Share options 2.8 2.5
Weighted average number of Ordinary shares for the purposes of diluted 287.3 287.3
earnings per share
1 The calculation of the weighted average number of shares excludes the shares
held by The Morgan General Employee Benefit Trust, on which the dividends are
waived.
Note 9. Property, plant and equipment
Plant, Total
Land and equipment
buildings £m and fixtures
£m £m
Cost
Balance at 1 January 2023 219.2 770.2 989.4
Additions 7.3 54.0 61.3
Disposals (0.3) (12.4) (12.7)
Transfers between categories 0.4 (0.4) -
Effect of movement in foreign exchange (10.5) (34.0) (44.5)
Balance at 31 December 2023 216.1 777.4 993.5
Balance at 1 January 2024 216.1 777.4 993.5
Additions 13.2 81.1 94.3
Disposals (11.5) (35.0) (46.5)
Transfers between categories 0.8 (0.8) -
Effect of movement in foreign exchange (2.0) (4.8) (6.8)
Balance at 31 December 2024 216.6 817.9 1,034.5
Depreciation and impairment losses
Balance at 1 January 2023 117.7 588.5 706.2
Depreciation charge for the year 6.0 25.9 31.9
Impairment losses 1.7 8.3 10.0
Impairment reversals (0.1) (5.4) (5.5)
Disposals (0.2) (11.6) (11.8)
Effect of movement in foreign exchange (6.1) (25.0) (31.1)
Balance at 31 December 2023 119.0 580.7 699.7
Balance at 1 January 2024 119.0 580.7 699.7
Depreciation charge for the year 5.4 28.7 34.1
Impairment losses - 4.6 4.6
Disposals (10.3) (34.2) (44.5)
Transfers between categories (0.5) 0.5 -
Effect of movement in foreign exchange (0.4) (3.9) (4.3)
Balance at 31 December 2024 113.2 576.4 689.6
Carrying amounts
At 1 January 2023 101.5 181.7 283.2
At 31 December 2023 97.1 196.7 293.8
At 31 December 2024 103.4 241.5 344.9
No assets were pledged as security for liabilities in the current or prior
year. The net book value includes assets under construction of £51.0 million
(2023: 24.2 million), comprising £2.8 million of land and buildings (2023:
£3.3 million), and £48.2 million of plant, equipment and fixtures (2023:
£20.9 million).
Commitments for property, plant and equipment and computer software
expenditure for which no provision has been made in these financial statements
amount to £13.8 million for the Group (2023: £5.2 million).
Note 10. Right-of-use assets
Land and Plant and
buildings £m equipment £m Total £m
Cost
Balance at 1 January 2023 82.4 12.4 94.8
Additions 0.6 5.1 5.7
Disposals (1.6) (5.2) (6.8)
Remeasurements 0.9 (0.2) 0.7
Effect of movement in foreign exchange (1.8) (0.2) (2.0)
Balance at 31 December 2023 80.5 11.9 92.4
Balance at 1 January 2024 80.5 11.9 92.4
Additions 5.7 2.8 8.5
Disposals (5.4) (2.5) (7.9)
Remeasurements 2.4 - 2.4
Effect of movement in foreign exchange (1.0) (0.6) (1.6)
Balance at 31 December 2024 82.2 11.6 93.8
Depreciation and impairment losses
Balance at 1 January 2023 53.4 7.8 61.2
Depreciation charge for the year 4.8 2.8 7.6
Impairment losses - 0.4 0.4
Impairment reversals (1.3) - (1.3)
Disposals (1.6) (5.2) (6.8)
Effect of movement in foreign exchange - (0.3) (0.3)
Balance at 31 December 2023 55.3 5.5 60.8
Balance at 1 January 2024 55.3 5.5 60.8
Depreciation charge for the year 5.6 3.0 8.6
Impairment losses - 0.8 0.8
Disposals (5.4) (2.5) (7.9)
Effect of movement in foreign exchange (0.8) (0.2) (1.0)
Balance at 31 December 2024 54.7 6.6 61.3
Carrying amounts
At 1 January 2023 29.0 4.6 33.6
At 31 December 2023 25.2 6.4 31.6
At 31 December 2024 27.5 5.0 32.5
The weighted average lease term is 10.2 years for land and buildings and 1.9
years for plant and equipment (2023: 10.8 years and 3.7 years respectively).
The Group recognised expense relating to short-term leases and leasing of
low-value assets of £0.5 million (2023: £0.5 million).
Note 11. Intangible assets
Goodwill Customer Technology Capitalised Computer Total
relationships and development software
trademarks costs
£m £m £m £m £m £m
Cost
Balance at 1 January 2023 181.9 63.9 4.3 0.8 37.8 288.7
Additions (externally purchased) - - - - 0.6 0.6
Disposals - - - - (1.0) (1.0)
Effect of movement in foreign exchange (4.4) (3.0) (0.1) - (1.2) (8.7)
Balance at 31 December 2023 177.5 60.9 4.2 0.8 36.2 279.6
Balance at 1 January 2024 177.5 60.9 4.2 0.8 36.2 279.6
Additions (externally purchased) - - - - 0.3 0.3
Disposals - - - - (0.8) (0.8)
Effect of movement in foreign exchange (0.6) 0.9 (0.2) - 0.2 0.3
Balance at 31 December 2024 176.9 61.8 4.0 0.8 35.9 279.4
Amortisation and impairment losses
Balance at 1 January 2023 - 63.1 3.8 0.8 32.0 99.7
Amortisation charge for the year - 0.4 0.1 - 2.8 3.3
Impairment losses - - - - 0.7 0.7
Impairment reversals - (0.6) (0.7) - - (1.3)
Disposals - - - - (1.0) (1.0)
Effects of movement in foreign exchange - (3.1) - - (0.9) (4.0)
Balance at 31 December 2023 - 59.8 3.2 0.8 33.6 97.4
Balance at 1 January 2024 - 59.8 3.2 0.8 33.6 97.4
Amortisation charge for the year - 0.3 0.2 - 1.2 1.7
Disposals - - - - (0.8) (0.8)
Effects of movement in foreign exchange - 0.9 (0.1) - 0.4 1.2
Balance at 31 December 2024 - 61.0 3.3 0.8 34.4 99.5
Carrying amounts
At 1 January 2023 181.9 0.8 0.5 - 5.8 189.0
At 31 December 2023 177.5 1.1 1.0 - 2.6 182.2
At 31 December 2024 176.9 0.8 0.7 - 1.5 179.9
Impairment test for cash-generating units or groups of cash-generating units
containing goodwill
In accordance with the requirements of IAS 36 Impairment of Assets, goodwill
is allocated to the Group's cash-generating units or groups of cash-generating
units that are expected to benefit from the synergies of the business
combination that gave rise to the goodwill. Goodwill impairment testing is
performed at the operating segment level as defined by IFRS 8 Operating
Segments, as this is the lowest level at which goodwill is monitored.
Goodwill is attributed to each operating segment as follows:
2024 2023
£m £m
Thermal Products 95.6 96.0
Performance Carbon 46.1 46.2
Technical Ceramics 35.2 35.3
176.9 177.5
Each operating segment is assessed for impairment annually and whenever there
is an indication of impairment.
The carrying value of goodwill has been assessed with reference to its value
in use, reflecting the projected discounted cash flows of each operating
segment to which goodwill has been allocated. The key assumptions used in
determining value in use relate to short- and long-term growth rates and
discount rates.
The cash flow projections in year one are based on the most recent Board
approved budget, cash flow projections for years two to five are based on the
most recent forecasts. The key assumptions that underpin these cash flow
projections relate to sales and operating margins, which are based on past
experience, taking into account the effect of known or likely changes in
market or operating conditions.
The growth rates have been calculated using GDP growth forecasts published by
the International Monetary Fund for the Group's end-markets. These GDP growth
forecasts have been weighted to reflect the Group's weighted average sales in
each end-market during 2024.
In 2024, the Group has used the following pre-tax discount rates for
calculating the value in use of each of the operating segments: Thermal
Products: 15.1%, Performance Carbon: 14.1% and Technical Ceramics: 13.6%. The
2023 pre-tax discount rates on an equivalent basis were Thermal Products:
14.5%, Performance Carbon: 15.2% and Technical Ceramics: 14.1%.
A sensitivity analysis was performed in order to quantify the impact of
possible adverse changes in key assumptions used in the discounted cash flows;
the results are presented in the table below.
Decrease in recoverable value
Assuming 10%
decrease in Assuming 10%
Long-term growth rates growth rate and increase in Assuming 10%
no terminal pre-tax decrease in Impairment arising
growth discount rate cash flows
% £m £m £m £m
Thermal Products 1.9 35.4 39.9 39.6 None
Performance Carbon 2.3 117.0 120.1 108.7 None
Technical Ceramics 2.0 53.2 53.7 47.7 None
Note 12. Cash and cash equivalents
2024 2023
£m £m
Bank balances 110.8 112.5
Cash deposits 10.0 12.0
Cash and cash equivalents 120.8 124.5
In 2024, the Group had restricted cash of £2.2 million (2023: £1.6 million)
as a result of exchange controls in Argentina.
Reconciliation of net cash and cash equivalents to net debt(1)
2024 2023
£m £m
Opening borrowings (309.7) (266.2)
Increase in borrowings (121.3) (247.2)
Repayment of borrowings 88.0 193.9
Effect of movement in foreign exchange 5.3 9.8
Closing borrowings (337.7) (309.7)
Net cash and cash equivalents 111.5 124.5
Closing net debt (226.2) (185.2)
Opening lease liabilities (47.1) (51.9)
Payment of lease liabilities 10.6 8.9
New leases and lease remeasurement (10.9) (6.4)
Effect of movements in foreign exchange 0.3 2.3
Closing lease liabilities (47.1) (47.1)
Closing net debt and lease liabilities (273.3) (232.3)
1 Definitions of these non-GAAP measures and reconciliations of the statutory
results to the adjusted measures can be found in the 'Glossary and alternative
performance measures' section, which is included as an appendix to the
condensed consolidated financial statements within this announcement.
The table below details changes in the Group's liabilities arising from
financing activities, including both cash and non-cash changes.
Net cash and cash equivalents
£m Movement in net debt Lease liabilities Net debt and lease liabilities
Borrowings £m £m £m
£m
At 1 January 2023 (266.2) 117.7 (148.5) (51.9) (200.4)
Cash inflow - 38.9 38.9 - 38.9
Borrowings and lease liability cash (outflow)/inflow (53.3) - (53.3) 8.9 (44.4)
Net interest paid - (17.9) (17.9) - (17.9)
Net cash inflow/(outflow) (53.3) 21.0 (32.3) 8.9 (23.4)
Share purchases - (4.7) (4.7) - (4.7)
New leases and lease remeasurement - - - (6.4) (6.4)
Exchange and other movements 9.8 (9.5) 0.3 2.3 2.6
At 31 December 2023 (309.7) 124.5 (185.2) (47.1) (232.3)
At 1 January 2024 (309.7) 124.5 (185.2) (47.1) (232.3)
Cash inflow - 23.0 23.0 - 23.0
Borrowings and lease liability cash (outflow)/inflow (33.3) - (33.3) 10.6 (22.7)
Net interest paid - (20.5) (20.5) - (20.5)
Net cash inflow/(outflow) (33.3) 2.5 (30.8) 10.6 (20.2)
Share purchases - (8.2) (8.2) - (8.2)
New leases and lease remeasurement - - - (10.9) (10.9)
Exchange and other movements 5.3 (7.3) (2.0) 0.3 (1.7)
At 31 December 2024 (337.7) 111.5 (226.2) (47.1) (273.3)
1 Definitions of these non-GAAP measures and reconciliations of the statutory
results to the adjusted measures can be found in the 'Glossary and alternative
performance measures' section, which is included as an appendix to the
condensed consolidated financial statements within this announcement.
Note 13. Financial risk management
Fair Values
31 December 2024 31 December 2023
Carrying Fair value Carrying Fair value
amount amount
£m £m
Level 1 Level 2 Total Level 1 Level 2 Total
£m £m £m £m £m £m
Financial assets and liabilities held at amortised cost
3.37% US Dollar Senior Notes 2026 (77.9) - (74.2) (74.2) (76.6) - (71.6) (71.6)
1.55% Euro Senior Notes 2026 (20.8) - (19.9) (19.9) (21.7) - (20.3) (20.3)
4.87% US Dollar Senior Notes 2026 (20.4) - (20.1) (20.1) (20.0) - (19.4) (19.4)
1.74% Euro Senior Notes 2028 (8.3) - (7.7) (7.7) (8.7) - (8.0) (8.0)
2.89% Euro Senior Notes 2030 (20.7) - (18.8) (18.8) (21.7) - (19.6) (19.6)
5.47% US Dollar Senior Notes 2031 (8.0) - (7.6) (7.6) (7.9) - (7.7) (7.7)
5.53% US Dollar Senior Notes 2033 (8.0) - (7.4) (7.4) (7.9) - (7.6) (7.6)
5.61% US Dollar Senior Notes 2035 (24.1) - (22.0) (22.0) (23.7) - (22.8) (22.8)
5.50% Cumulative First Preference shares (0.1) - (0.1) (0.1) (0.1) - (0.1) (0.1)
5.00% Cumulative Second Preference shares (0.3) - (0.3) (0.3) (0.3) - (0.3) (0.3)
(188.6) - (178.1) (178.1) (188.6) - (177.4) (177.4)
Financial assets held at FVTPL 2.0 2.0 - 2.0 2.2 2.2 - 2.2
Derivative financial assets held at fair value 1.2 - 1.2 1.2 1.5 - 1.5 1.5
3.2 2.0 1.2 3.2 3.7 2.2 1.5 3.7
Derivative financial liabilities held at fair value (2.6) - (2.6) (2.6) (0.5) - (0.5) (0.5)
The table above analyses the fair values of financial instruments held by the
Group, by valuation method, together with the carrying amounts shown in the
balance sheet.
The fair value of cash and cash equivalents, current trade and other
receivables/payables and floating-rate bank and other borrowings are excluded
from the preceding table as their carrying amount approximates their fair
value.
Fair value hierarchy
The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: not traded in an active market but the fair values are based on
quoted market prices or alternative pricing sources with reasonable levels of
price transparency. Fair value is calculated using discounted cash flow
methodology, future cash flows are estimated based on forward exchange rates.
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
There have been no transfers between Level 1 and Level 2 during 2024 and 2023
and there were no Level 3 financial instruments in either 2024 or 2023.
The major methods and assumption used in estimating the fair values of
financial instruments reflected in the preceding table are as follows:
Equity securities
Fair value is based on quoted market prices at the balance sheet date.
Derivatives
Forward exchange contracts are marked to market either using listed market
prices or by discounting the contractual forward price and deducting the
current spot rate.
Fixed-rate borrowings
Fair value is calculated based on discounted expected future principal and
interest cash flows. The interest rates used to determine the fair value of
borrowings are 3.7-6.6% (2023: 3.7-6.3%).
Note 14. Pensions and other post-retirement employee benefits
31 December 2024
UK USA Europe Rest of World Total
£m £m £m £m £m
Summary of net obligations
Present value of unfunded defined benefit obligations - (4.0) (24.9) (3.9) (32.8)
Present value of funded defined benefit obligations (318.1) (101.3) (1.2) (8.9) (429.5)
Fair value of plan assets 330.4 101.5 0.2 8.7 440.8
Net obligations 12.3 (3.8) (25.9) (4.1) (21.5)
Represented by:
Surpluses 12.3 0.1 - 0.6 13.0
Obligations - (3.9) (25.9) (4.7) (34.5)
Movements in present value of defined benefit obligation
At 1 January 2024 (362.8) (112.2) (28.4) (12.7) (516.1)
Current service cost - - (0.7) (1.4) (2.1)
Interest cost (15.8) (5.2) (1.0) (0.3) (22.3)
Actuarial gain/(loss)
Experience gain/(loss) on plan obligations 2.8 (0.8) 0.3 (0.3) 2.0
Changes in financial assumptions - gain/(loss) 33.0 5.8 0.7 (0.4) 39.1
Changes in demographic assumptions - gain 1.3 - - 0.1 1.4
Benefits paid 23.4 8.8 1.7 1.1 35.0
Effect of curtailment or settlement - - 0.1 0.1 0.2
Exchange adjustments - (1.7) 1.2 1.0 0.5
At 31 December 2024 (318.1) (105.3) (26.1) (12.8) (462.3)
Movements in fair value of plan assets
At 1 January 2024 375.3 106.7 0.2 8.7 490.9
Interest on plan assets 16.5 4.9 - 0.3 21.7
Remeasurement gain/(loss) (37.7) (3.5) (0.1) 0.1 (41.2)
Contributions by employer - 0.5 1.7 1.6 3.8
Benefits paid (23.4) (8.8) (1.7) (1.1) (35.0)
Administrative cost (0.3) - - - (0.3)
Effect of curtailment or settlement - - - (0.1) (0.1)
Exchange adjustments - 1.7 0.1 (0.8) 1.0
At 31 December 2024 330.4 101.5 0.2 8.7 440.8
Actual return on assets (21.2) 1.4 (0.1) 0.4 (19.5)
31 December 2024
UK USA Europe Rest of World Total
£m £m £m £m £m
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 measured on the 'Long-Term Objective' basis (Gilts +50bps)
(excluding matching insurance policies).
The Group expects to contribute £4.0 million to these arrangements in 2025.
31 December 2023
UK USA Europe Rest of Total
World
£m £m £m £m £m
Summary of net
obligations
Present value of unfunded defined benefit obligations - (5.2) (27.1) (4.6) (36.9)
Present value of funded defined benefit obligations (362.8) (107.0) (1.3) (8.1) (479.2)
Fair value of plan assets 375.3 106.7 0.2 8.7 490.9
Net obligations 12.5 (5.5) (28.2) (4.0) (25.2)
Represented by:
Surpluses 12.5 - - 1.0 13.5
Obligations - (5.5) (28.2) (5.0) (38.7)
UK USA Europe Rest of World
Principal actuarial assumptions at 31 December 2024 were: % % % %
Discount rate 5.45 5.47 3.50 4.66
Inflation (UK: RPI/CPI) 3.15/2.52 n/a 2.00 n/a
Principal actuarial assumptions at 31 December 2023 were: % % % %
Discount rate 4.52 4.80 3.40 5.52
Inflation (UK: RPI/CPI) 3.05/2.31 n/a 2.10 n/a
Note 15. Provisions and contingent liabilities
Closure and Legal and other Environmental Total
restructuring provisions provisions
provisions
£m £m £m £m
Balance at 1 January 2024 7.9 5.6 8.3 21.8
Provisions made during the year 2.9 2.4 0.1 5.4
Provisions used during the year (2.9) (1.1) (1.6) (5.6)
Provisions reversed during the year (0.4) (0.4) - (0.8)
Effect of movements in foreign exchange (0.1) (0.2) (0.1) (0.4)
Balance at 31 December 2024 7.4 6.3 6.7 20.4
Current 5.4 1.9 2.2 9.5
Non-current 2.0 4.4 4.5 10.9
7.4 6.3 6.7 20.4
Closure and restructuring provisions
Closure and restructuring provisions relate to the Group's restructuring
programmes and represent committed expenditure at the balance sheet date. The
amounts provided are based on the costs of terminating relevant contracts,
under the contract terms, and management's best estimate of other associated
restructuring costs including professional fees. The provisions are expected
to be utilised in the next one to two years.
We have a provision for a multi-employer pension obligation for a site which
was closed during 2021. The cash outflows relating to the pension obligation
may continue for up to 16 years, subject to any settlement being reached in
advance of that date.
Legal and other provisions
Legal and other provisions mainly comprise amounts provided against open legal
and contractual disputes arising in the normal course of business and
long-service costs. Provisions are made for the expected costs associated with
such matters, based on past experience of similar items and other known
factors, taking into account professional advice received, and represent
management's best estimate of the most likely outcome. The timing of
utilisation of these provisions is frequently uncertain, reflecting the
complexity of issues and the outcome of various court proceedings and
associated negotiations.
Where obligations are not capable of being reliably estimated, or if a
material outflow of economic resources is considered not probable, it is
classified as a contingent liability. The Group is of the opinion that any
associated claims that might be brought can be defeated successfully and,
therefore, the possibility of any material outflow in settlement is assessed
as remote.
Subsidiary undertakings within the Group have given unsecured guarantees of
£9.5 million (2023: £10.3 million) in the ordinary course of
business.
Environmental provisions
Environmental provisions are made for quantifiable environmental liabilities
arising from known environmental issues. The amounts provided are based on the
best estimate of the costs required to remedy these issues. The provisions are
expected to be utilised in the next five to ten years.
Environmental and other contingent liabilities
Due to the international footprint of the Group and the nature of its
manufacturing operations it is subject to a wide range of local health and
safety, environmental and employment laws and regulations. At any point in
time the Group has a number of ongoing environmental or employment cases for
which there is uncertainty due to the wide range of possible outcomes and
associated costs. Possible outcomes include the case being settled, withdrawn
or dismissed.
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.
Note 16. Subsequent events
There were no reportable subsequent events following the balance sheet date.
Glossary and alternative performance measures
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 EBITDA is defined as operating profit before specific adjusting items,
and amortisation (EBITDA)(1) amortisation of intangible assets and depreciation.
Group adjusted operating profit(1) Operating profit adjusted to exclude specific adjusting items and amortisation
of intangible assets.
Group organic(1) The Group results excluding acquisition, disposal and business exit impacts at
constant-currency.
Adjusted earnings per share (EPS)(1) Adjusted earnings per share is defined as operating profit adjusted to exclude
specific adjusting items and amortisation of intangible assets, less net
financing costs, income tax expense and non-controlling interests, divided by
the weighted average number of Ordinary shares during the period.
Net debt(1) Borrowings, bank overdrafts less cash and cash equivalents.
Net cash and cash equivalents(1) Net cash and cash equivalents is defined as cash and cash equivalents less
bank overdrafts.
Return on invested capital (ROIC)(1) Group adjusted operating profit (operating profit excluding specific adjusting
items and amortisation of intangible assets) divided by the average adjusted
net assets (excludes long-term employee benefits, deferred tax assets and
liabilities, current tax payable, provisions, cash and cash equivalents,
borrowings, bank overdrafts and lease liabilities).
Specific adjusting items See note 4 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.
The Group monitors business performance through alternative performance
measures (APMs) which are not defined under IFRS and are therefore non-GAAP
measures. The APMs provide useful information to stakeholders, including
additional insight into ongoing trading and year-on-year comparisons. These
APMs are not a substitute for IFRS measures but are complementary to them. The
Group defines each APM and therefore they may not be directly comparable with
similarly named metrics in other businesses. The definition, purpose and
reconciliation to statutory figures where applicable are included below.
Constant-currency
Constant-currency figures are derived by translating the prior year results at
current year average exchange rates. These measures are used as they allow key
metrics such as revenue to be compared year on year excluding the impact of
foreign exchange rates.
Organic growth
The growth of the business excluding the impacts of acquisitions, divestments
and foreign currency impacts. This measure is used as it allows revenue and
adjusted operating profit to be compared on a like-for-like basis.
Thermal Products Performance Carbon Technical Segment
Ceramics totals
£m £m £m £m
2023 revenue 454.4 327.2 333.1 1,114.7
Impact of foreign currency movements (32.8) (11.5) (7.8) (52.1)
Impact of acquisitions, disposals and business exits (1.0) - - (1.0)
Organic constant-currency change (2.4) 29.5 12.0 39.1
Organic constant-currency change % (0.6)% 9.3% 3.7% 3.7%
2024 revenue 418.2 345.2 337.3 1,100.7
Thermal Products Performance Carbon Technical Ceramics Segment Corporate
totals Costs Group
£m £m £m £m £m £m
2023 adjusted operating profit 40.2 50.0 36.0 126.2 (5.9) 120.3
Impact of foreign currency movements (7.1) (2.6) (1.0) (10.7) - (10.7)
Impact of acquisitions, disposals and business exits 0.6 - - 0.6 - 0.6
Organic constant-currency change 6.3 7.7 4.2 18.2 - 18.2
Organic constant-currency change % 18.7% 16.2% 12.0% 15.7% - 16.5%
2024 adjusted operating profit 40.0 55.1 39.2 134.3 (5.9) 128.4
Corporate costs
Corporate costs consist of the costs of the central head office.
Specific adjusting items
Specific adjusting items are items which occur infrequently and are presented
separately in the consolidated income statement due to their nature and size.
They typically include but are not limited to:
· individual restructuring projects which are material or relate to the
closure of a part of the business and are not expected to recur;
· impairment of non-financial assets which are material;
· gains or losses on disposal or exit of businesses;
· significant costs incurred as part of the integration of an acquired
business;
· gains or losses arising on significant changes to or closures of
defined benefit pension plan; and
· design, development, configuration and implementation of a Global ERP
system.
The Directors consider disclosure of specific adjusting items necessary for
the users of the financial statements to obtain an alternative understanding
of the financial information and underlying performance of the business. Note
4 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:
2024 2023
£m £m
Operating profit 103.6 91.9
Add back: specific adjusting items included in operating profit 23.1 25.1
Add back: depreciation - property, plant and equipment 34.1 31.9
Add back: depreciation - right-of-use assets 8.6 7.6
Add back: amortisation of intangible assets 1.7 3.3
Group EBITDA 171.1 159.8
Group EBITDA excluding IFRS 16 Leases impact
Group EBITDA excluding IFRS 16 Leases impact is defined as Group EBITDA less
interest expense on lease liabilities and capital payments on lease
liabilities.
The Group uses this measure as it is a key metric in covenants over debt
facilities; these covenants use EBITDA on an IAS 17 basis (pre-IFRS 16 basis)
and this metric is used as a proxy for the charge that would have been
attributable to operating leases recognised in EBITDA under the now defunct
IAS 17.
The following table reconciles Group EBITDA to Group EBITDA excluding IFRS 16
Leases impact:
2024 2023
£m £m
Group EBITDA 171.1 159.8
Interest expense on lease liabilities (2.6) (2.4)
Capital payments on lease liabilities (10.6) (8.9)
Group EBITDA excluding IFRS 16 Leases impact 157.9 148.5
Adjusted operating profit
Adjusted operating profit is defined as operating profit excluding specific
adjusting items and amortisation of intangible assets.
Specific adjusting items are excluded on the basis that they distort trading
performance. The exclusion of amortisation of intangible assets is to allow
for consistent comparability internally and externally between our businesses.
The following table reconciles operating profit to adjusted operating profit:
Thermal Products Performance Carbon Technical Ceramics Segment Corporate
total costs Group
2024 £m £m £m £m £m £m
Operating profit 31.1 47.2 37.9 116.2 (12.6) 103.6
Add back specific adjusting items included in 8.1 7.6 0.7 16.4 6.7 23.1
operating profit
Add back amortisation of intangible assets 0.8 0.3 0.6 1.7 - 1.7
Adjusted operating profit 40.0 55.1 39.2 134.3 (5.9) 128.4
Adjusted operating profit margin 9.6% 16.0% 11.6% 11.7%
Thermal Products Performance Carbon Technical Ceramics Segment Corporate
totals costs Group
2023 £m £m £m £m £m £m
Operating profit 29.5 39.9 42.5 111.9 (20.0) 91.9
Add back specific adjusting items included in 9.3 9.3 (7.6) 11.0 14.1 25.1
operating profit
Add back amortisation of intangible assets 1.4 0.8 1.1 3.3 - 3.3
Adjusted operating profit 40.2 50.0 36.0 126.2 (5.9) 120.3
Adjusted operating profit margin 8.8% 15.3% 10.8% 10.8%
Adjusted earnings per share (EPS)
Adjusted earnings per share is defined as profit for the year attributable to
shareholders of the Company adjusted to exclude profit from discontinued
operations, specific adjusting items and amortisation of intangible assets and
the tax effects of the excluded items, divided by the weighted average number
of Ordinary shares during the year.
Whilst amortisation of intangible assets is a recurring charge, it is excluded
from these measures on the basis that it primarily arises on externally
acquired intangible assets and therefore does not reflect consistently the
benefit that all of the Group's businesses realise from their intangible
assets, which may not be recognised separately.
This measure of earnings is shown because the Directors consider that it
provides a helpful indication of the Group's financial performance excluding
material non-recurring expenses or gains and non-financial asset impairments
and impairment reversals, and therefore facilitates the evaluation of the
Group's performance over time. A reconciliation from IFRS profit to the profit
used to calculate adjusted earnings per share is included in note 8.
Free cash flow before acquisitions, disposals and dividends
Free cash flow before acquisitions, disposals and dividends is defined as cash
generated from continuing operations less net capital expenditure, net
interest (interest paid on borrowings, overdrafts and lease liabilities, net
of interest received), tax paid and lease payments.
The Group discloses free cash flow as this provides readers of the
consolidated financial statements with a measure of the cash flows from the
business before corporate-level cash flows (acquisitions, disposals and
dividends).
The following table reconciles cash generated from continuing operations to
free cash flow before acquisitions, disposals and dividends:
2024 2023
£m £m
Cash generated from operations 162.9 126.3
Net capital expenditure (90.2) (58.5)
Net interest on cash borrowings (15.3) (11.6)
Tax paid (29.2) (30.3)
Lease payments and interest (13.2) (11.3)
Free cash flow before acquisitions, disposals and dividends 15.0 14.6
Net debt
Net debt is defined as borrowings, and bank overdrafts less cash and cash
equivalents.
The Group discloses net debt because this is the measure used in the covenants
over the Group's debt facilities. It helps readers of the consolidated
financial statements assess its ability to meet its financial obligations,
manage debt and its capacity to invest in growth opportunities.
2024 2023
£m £m
Cash and cash equivalents 120.8 124.5
Non-current borrowings (337.7) (309.1)
Current borrowings and bank overdrafts (9.3) (0.6)
Closing net debt (226.2) (185.2)
Net cash and cash equivalents
Net cash and cash equivalents is defined as cash and cash equivalents less
bank overdrafts. The Group discloses this measure as it provides an indication
of the net short-term liquidity available to the Group.
2024 2023
£m £m
Cash and cash equivalents 120.8 124.5
Overdrafts (9.3) (0.6)
Net cash and cash equivalents 111.5 123.9
Return on invested capital (ROIC)
ROIC is defined as 12-month adjusted operating profit divided by the average
capital employed. The Group discloses ROIC to assess its efficiency in
generating profits from the capital it has invested in its operations.
Third-party working capital includes inventories, trade and other receivables,
and trade and other payables.
2024 2023
£m £m
Operating profit 103.6 91.9
Add back: specific adjusting items 23.1 25.1
Add back: amortisation of intangible assets 1.7 3.3
Group adjusted operating profit 128.4 120.3
Third-party working capital 151.4 174.7
Property, plant and equipment 344.9 293.8
Right-of-use-assets 32.5 31.6
Goodwill 176.9 177.5
Other intangible assets 3.0 4.7
Capital employed 708.7 682.3
Average capital employed 695.5 684.9
ROIC 18.5% 17.6%
1 Further detail regarding the second tranche of the buyback is provided in
a separate RNS released today.
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