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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Morgan Advanced Materials Plc | LSE:MGAM | London | Ordinary Share | GB0006027295 | ORD 25P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-4.50 | -1.55% | 285.00 | 287.00 | 287.50 | 289.50 | 287.00 | 288.50 | 729,680 | 16:35:07 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Carbon And Graphite Products | 1.12B | 47.3M | 0.1663 | 17.26 | 816.52M |
TIDMMGAM
RNS Number : 0046V
Morgan Advanced Materials PLC
03 April 2019
Morgan Advanced Materials plc
3 April 2019
Publication of 2018 Annual Report and Notice of 2019 Annual General Meeting
The following documents have today been posted or otherwise made available to shareholders:
a. Annual Report and Financial Statements for the year ended 31 December 2018 (2018 Annual Report);
b. Notice of the 2019 Annual General Meeting (AGM) to be held at the offices of Addleshaw Goddard LLP, Milton Gate, 60 Chiswell Street, London EC1Y 4AG on Friday 10 May 2019 at 10.30 am; and
c. Form of Proxy for the 2019 AGM.
In accordance with Listing Rule 9.6.1, a copy of each of these documents has been uploaded to the National Storage Mechanism and will be available for viewing shortly at: www.morningstar.co.uk/uk/NSM
The documents are also available in the 'Investors' section of the Company's website at: www.morganadvancedmaterials.com.
The Company's preliminary results announcement of 26 February 2019 contained a management report as well as audited financial statements which were prepared in accordance with the applicable accounting standards. The financial information set out in the Company's preliminary results announcement of 26 February 2019 does not constitute the Company's statutory accounts for the year ended 31 December 2018. Statutory accounts for 2018 are included in the 2018 Annual Report, which will be delivered to the registrar of companies following the Company's 2019 AGM. 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 2018.
The information below, which is extracted from the 2018 Annual Report, is included solely for the purpose of complying with DTR 6.3.5. This information should be read in conjunction with the Company's preliminary results announcement issued on 26 February 2019 (available at www.morganadvancedmaterials.com). This announcement is not a substitute for reading the full 2018 Annual Report. All page numbers and cross-references in the extracted information below refer to page numbers in the 2018 Annual Report.
Related party transactions
There are no related party transactions requiring disclosure.
Risk management
Morgan has an established risk management methodology which seeks to identify, prioritise and mitigate risks, underpinned by a 'three lines of defence' model comprising an internal control framework, internal monitoring, and independent assurance processes.
The Board considers that risk management and internal control are fundamental to achieving the Group aim of delivering long-term sustainable growth in shareholder value.
Risks are identified both 'top down' by the Board and the Executive Committee, and 'bottom up' through the Group's global business units (GBUs) and Divisions, and are quantified by assessing their inherent impact and mitigated probability to ensure that residual risk exposures are understood and prioritised for control throughout the Group.
Senior executives are responsible for the strategic management of the Group's principal risks, including related policy, guidelines and process, subject to Board oversight.
Throughout 2018, the Board reviewed the status of all principal risks with a significant potential impact at Group level. Additionally, the Audit Committee carried out focused risk reviews of each Division/GBU. These reviews included an analysis of the principal risks, and the controls, monitoring and assurance processes established to mitigate those risks to acceptable levels. As a result of these reviews, a number of actions were identified to continue to improve internal controls and the management of risk.
High-level guidance on the Board's appetite for different risks is included again this year. The Group is willing to take considered risks to develop new technologies, applications, partnerships and markets for its products, and to meet customer needs. The Group strives to eliminate risks to product quality and health and safety, which are essential to the success of our products and the safety of our people and contractors.
The appetite for risk in the areas of legal and regulatory compliance is extremely low and the Group expects its businesses to comply with all laws and regulations in the countries where they operate. The Group has a low appetite for financial risk. Certain risks, such as pension funding, are likely to take a longer period of time to be mitigated. During the year the Board monitored the Group's current risk exposure relative to the Board's appetite for different risks. There were no risks where the current risk exposure exceeded the Board's risk appetite.
As in 2017, an indication of the Board's assessment of the trend of each risk - whether the potential impact has increased, decreased or is broadly unchanged over the past year - is included. The Board has also identified new risks to the delivery of the Group's strategy and these are indicated in the table below.
The following are the Group's principal risks and uncertainties, representing those risks that the Board feels could have the most significant impact on achieving the Group's strategy of building a sustainable business for the long-term and delivering strong returns to the Group's shareholders.
Risk description, assessment Mitigation and trend from 2017 STRATEGIC AND EXTERNAL RISKS ------------------------------------------ 1. Technical leadership The Group has a dedicated The Group's strategic success technology team within each depends on maintaining and Global Business Unit which developing its technical leadership monitors relevant technology in materials science over and business its competitors. developments using technology roadmaps linked to 20 major Unforeseen/unmitigated technology technology families to ensure obsolescence, the emergence it remains at the leading of competing technologies, edge of the loss of control of proprietary development. Three global technology or the loss of intellectual Centres of Excellence were property/know-how would impact previously established, with the Group's business and its a fourth Centre opened at ability to deliver on its strategic Penn State University, Pennsylvania, goals. US, in 2018. These Centres focus Morgan's expertise and The advanced technological research resources on core nature of the Group requires technologies. They are supported people with highly differentiated by a Technical Advisory Board skillsets. Any inability to comprising some of the world's recruit, retain and develop leading academics in relevant the right people would negatively fields, who provide continuing impact the Group's ability insight, advice and challenge to achieve its strategic goals. to inform the Group's technology plans. Trend The technology team proactively Unchanged manages the Group's technology pipeline and R&D investment in existing technologies, as well as actively managing the technology lifecycle. The technology pipeline and key R&D projects are regularly reviewed by the Executive Committee and the Board. Where Group products are designed for a specific customer, they are developed in partnership with the customer in order to maintain leading-edge differentiation. The Group seeks to secure intellectual property protection, where appropriate, for its existing and emerging portfolio of products; external advisers manage this protection globally. The Group continued its global leadership programme adding an advanced programme to develop more high-potential commercial, functional and technical leaders. The graduate leadership programme continued to run in 2018. ------------------------------------------ 2. Operational execution / Changes to operational processes organisational change / sales are carefully considered by
effectiveness site, GBU and Divisional management As part of the Group's strategy before implementation. Operational to improve the efficiency of improvements and savings are its operations and organisation, monitored against budget by various changes have been made the Executive Committee to to operational processes at ensure that changes deliver individual sites, to the Group's the savings promised without structure, and the structure disruption to business operations. of and incentives for our sales New capital investments are force. Further improvements approved at appropriate levels and changes are planned for of the Group and delivery future years. Failure to adequately of these overseen by GBU and manage these changes could Group management. result in interruption to operations or customer service, or a failure Organisational changes are to maximise the Group's opportunities. assessed by the CEO, the Executive Committee and sometimes the Trend Board before being implemented Unchanged in line with local employment regulations. Changes to our sales structures and incentives are reviewed at various levels of the organisation before being launched. Further activities to improve sales effectiveness are being rolled out in 2019, including sales force training, more targeted incentives and pricing initiatives. ------------------------------------------ 3. Portfolio management The Board performs regular The Group operates across a reviews of the Group's portfolio. range of product and technology During 2018 the Group disposed families. These are subject of the Composites and Defence to long-term market trends Systems business and exited which may lead to either obsolescence its Thermal Ceramics site or opportunities to further in Brazil, and announced the expand the Group. Failure to closure of its China ceramics proactively manage the Group's cores business and Venezuelan portfolio of businesses in Thermal Ceramics business. line with this technology profile could lead to the value of Opportunities to acquire businesses the Group's businesses being are reviewed on a continuing eroded over time or to a failure basis. to exploit opportunities to acquire businesses with the capability to add further value to the Group. Trend Decreased ------------------------------------------ 4. Macro-economic and political The Group's broad market and environment geographic spread helps to The Group operates in a range mitigate the effects of political of markets and geographies and economic changes. around the world and could be affected by political, economic, Budgets and forecasts for social or regulatory developments Morgan's different businesses or instability, for example are used to monitor delivery an economic slowdown or issues against expectations and anticipate stemming from oil and natural potential external risks to resources price shocks. performance. These are subject to regular review by the Executive The UK's exit from the EU may Committee and the Board. have an impact on the Group if subsequent tariff changes, The overall macro-economic or border effects, negatively environment has improved during impact the profitability of the course of the year as the Group's products. The current shown by the Group's strong value of Group UK exports to organic sales growth. However the EU is approximately GBP25 some longer-term metrics are million, and imports into the showing signs of potential UK from the EU are approximately weakness. GBP15 million. Global issues considered by Trend the Board this year include Increased the impact of the UK's exit from the EU and US / China trade relations. The impact of the UK's exit from the EU could be mitigated in the medium term by moving production to alternative sites where tariffs are not applied to products. ------------------------------------------ OPERATIONAL RISKS ------------------------------------------ 5. Environment, health and Managing its operations safely safety (EHS) is the Group's number one The Group operates a number priority. The Group has a of manufacturing facilities comprehensive EHS programme around the world. A failure managed by the Group EHS Director, in the Group's EHS procedures with clear EHS standards and could lead to environmental a refreshed programme of audits damage or to injury or death to assess compliance. of employees or third parties, with a consequential impact The Group EHS Director sets on operations and increased annual priorities for EHS risk of regulatory or legal which are approved by the action being taken against EHS Steering Group (comprising the Group. Any such action the Executive Committee and could result in both financial global business unit leads) damages and damage to reputation. These form the basis for individual Given the long history of many sites' own EHS priorities of the operations of the Group, and plans, and complement there is also a risk that historical the Group's 'thinkSAFE' behavioural operating and environmental safety programme. standards may not have met today's environmental regulations. EHS performance is monitored In addition, the Group may by the EHS Steering Group have obligations relating to and the Board. prior asset sales or closed facilities. As at 31 December 2018, the Group was managing projects Trend to remediate legacy contamination Unchanged at a number of former operational sites in conjunction with external specialists and relevant authorities. ------------------------------------------ 6. Product quality, safety Many of the Group's products and liability are designed to customer specifications. Products used in applications Our businesses' quality management for which they were not intended systems and training help or inadequate quality control/over ensure that all of Morgan's commitment on customer specifications products meet or exceed customer could result in products not requirements and national/international meeting customer requirements, standards. which could in turn lead to significant liabilities and The Group Legal Policy requires reputational damage. that contracts relating to products used in potential Some of our products are used high-risk applications are in potentially higher risk subject to legal review to applications, for example in ensure that appropriate protections the aerospace, automotive, are in place for product quality medical and power industries. risks. Trend The Group insurance programme Unchanged includes product liability insurance; this Group-level insurance is reviewed annually by the Board. ------------------------------------------ 7. IT and cyber security The Group has an IT Policy
Information security/cyber and guidelines in place as risks are dynamic and ever-present well as Group and business in the external environment. IT teams to manage the Group's If the Group were to lose critical infrastructure, IT systems data or information, including and information security risks. proprietary technology information, A new Chief Information Officer through inadequate data management was appointed in 2018 to further or compromised information develop the Group's IT strategy. security, the business would be impacted and could suffer In 2018 the Group was required reputational damage. to comply with the National Institute of Standards and The effective management of Technology (NIST) cybersecurity the Group's Information Technology framework in the US and the (IT) infrastructure is important EU's General Data Protection in enabling our businesses Regulations. The Group has to reliably deliver customer successfully implemented programmes requirements. If a key business to deliver compliance with system were to fail or core these requirements. systems implementation were to be ineffective, the ability The Group continues to deploy of the business to deliver and upgrade enhanced enterprise on its strategic goals might resource planning (ERP) systems be impacted. in those businesses where a need for improvement is Trend identified. These deployments Unchanged are managed in line with IT project management standards. ------------------------------------------ 8. Supply chain / business The Group has a diversified continuity manufacturing, customer and The Group has a number of potential geographic base which provides single-point exposure risks, a level of resilience against which include: single-point exposures. Were any site to be unavailable, >> Single-point supplier - production in many cases could a significant interruption be switched to other sites. of a key internal or external supply could impact business Management of these risks continuity. also involves monitoring and reviewing supply chains (internal >> Single-point customer - and external), dual/multiple the unmitigated loss of a major sourcing of materials or strategic customer could have an impact stock, site security and safety on Group profit. The Group's mechanisms, business continuity largest customer represents plans, maintenance of product circa 2% of Group revenue. quality and strong customer relationships. >> Single-point site - a key site exposed to a strike, a The Group insurance programme natural catastrophe or serious includes business interruption incident, such as fire, could cover and specific cover in impact relation to the impact of business continuity. One Group an earthquake in California, site, Hayward, is situated US; this Group-level insurance in the California earthquake is reviewed annually by the zone, (US). Certain of the Board. Group's businesses are important for intercompany supply purposes. Trend Unchanged ------------------------------------------ FINANCIAL RISKS ------------------------------------------ 9. Treasury The Group's treasury function The Group's global reach means operates on a risk-averse that it is exposed to uncertainties basis. Required controls over in the financial markets, the selection of banks, cash management fiscal jurisdictions where and other treasury practices it operates, and the banking and payments globally are sector. These heighten the documented in Morgan's Treasury Group's funding, foreign exchange, Policy and related procedures. tax, interest rate, credit The Group treasury team manages and liquidity risks as well the Group's funding, liquidity, as the risk that a bank cash management, interest failure could impact the Group's rate, foreign exchange, counterparty cash. credit and other treasury-related risks. Treasury matters are Trend regularly reviewed by the Decreased Board and Audit Committee. In 2018 the Group successfully refinanced its GBP200 million Revolving Credit Facility for a five-year term. Additionally the Group concluded a US Private Placement transaction, utilising shelf agreements already held with Private Placement lenders, raising $25 million and EUR25 million. The initial EUR25 million was funded on 27 December 2018, with the funding of the $25 million completed in January 2019. ------------------------------------------ 10. Tax The Group's tax function, The Group operates in many working in conjunction with jurisdictions around the world external specialists as required, and could be affected by changes closely monitors fiscal developments in tax laws and regulations and changes such as BEPS, within the complex international to ensure that the Group's tax environment. tax arrangements and practices continue to comply with the The OECD's Base Erosion and requirements of all relevant Profit Shifting (BEPS) framework jurisdictions whilst also provides additional obligations enabling efficient management and filing requirements for of the tax liability. The the Group as countries implement Group's Head of Tax reports the actions in the framework. twice-yearly to the Audit These could have an impact Committee on key tax issues on the tax paid by the Group. and initiatives. Tax reform in the US could The Group has published its also impact the Group's tax tax strategy on its website rate. in line with UK corporate governance requirements. Trend Unchanged -------------------------------------------- 11. Pension funding Morgan's primary means of The Group sponsors several mitigating pensions funding defined benefit pension arrangements, risk is proactive management (the Schemes), whose liabilities of the pension scheme assets are subject to fluctuating and liabilities through an interest rates, investment integrated pension strategy values and inflation. This focusing on funding, investment coupled with the increased and benefit risk. This involves longevity of members will result both internal management within in increased funding burdens the Group and also externally on the Group in the future. through the Scheme Trustees, corporate actuaries and professional The deficit in Morgan's global advisers. defined benefit pension schemes calculated on the basis required In the UK, the Morgan Senior for IAS 19 accounting disclosures Executive Pension and Life decreased from GBP218 million Assurance Scheme closed to at 31 December 2017 to GBP190.4 future accrual in April 2016 million as at December 2018. and the Morgan Pension Scheme closed to future accrual in Trend April 2018. In consultation Unchanged with the Company, the Trustees have also adopted a pro-active approach to the management
of risk in the Schemes' investment portfolios, significantly reducing their unhedged interest and inflation rate exposure. In the US, in June 2016 one Defined Benefit Pension Plan completed a full legal termination, and for the other remaining Scheme, a formal offer of a present-value-equivalent, lump-sum cash payment was made to members. In December 2017, the Company made an additional contribution of $36 million to this Scheme. -------------------------------------------- 12. Contract management The Group has an in-house As a global advanced materials legal function supplemented business supplying components by specialist external lawyers. into critical applications, the Group may be exposed to The Group Legal Policy requires liabilities arising from the in-house legal review of high-value use of its products. Ineffective or high-risk contracts to contract risk management could ensure they contain appropriate result in significant liabilities protections for the Group. for the Group and could damage The Policy requires CEO approval customer relationships. before a business can enter into an unlimited liability Trend contract or one where the Unchanged liability cap exceeds GBP5 million. To the extent that risk cannot be mitigated through contractual arrangements, the Group has insurance cover in place, including product liability insurance. -------------------------------------------- 13. Compliance The Group is committed to The Group's global operations the highest standards of corporate must comply with a range of and individual behaviour. national and international To support this, in 2018 the laws and regulations including Group issued the Morgan Code. those related to bribery and The Morgan Code defines the corruption, human rights, trade/export Group's approach to doing compliance and competition/anti-trust business ethically and confirms activities. Morgan's commitments to high standards of ethical behaviour. A failure to comply with any The Morgan Code is supported applicable laws/regulations by a range of policies, standards could result in civil or criminal and guidance; training materials; liabilities and/or individual the provision of an ethics or corporate fines and could hotline for employees; and also result in debarment from systems to support effective government-related contracts screening of and due diligence or rejection by financial market on third parties. counterparties and reputational damage. Further improvements to the programme are planned in 2019, Trend including enhanced training, Unchanged a refresh of the ethics hotline and further reviews of businesses operating in higher risk locations. The Group also has an Export Compliance Director in the US whose role is dedicated to ensuring compliance with export controls. In addition to Group-level compliance specialists, our businesses are required to establish compliance officer roles, which are responsible for supporting local training and monitoring. Morgan also employs country-specific trade and export compliance specialists in higher risk businesses and jurisdictions. --------------------------------------------
Directors' Responsibility Statement
The 2018 Annual Report contains the following statements regarding responsibility for the financial statements in compliance with DTR 4.1.12. Responsibility is for the 2018 Annual Report and Financial Statements and not the condensed statements required to be set out in the Annual Financial Report announcement.
Each of the Directors in post as at 26 February 2019, the names and roles of whom are set out on pages 44 and 45 of the 2018 Annual Report, confirms to the best of their knowledge:
-- the Group's Financial statements, which have been prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
-- the management report (comprising the Directors' Report and the Strategic Report) includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
Enquiries: Stephanie Mackie, Company Secretary
Telephone: 01753 837000
Notes:
Legal Entity Identifier: I4K14LL95N2PHDL7EG85
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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