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
  -17.00 -4.23% 385.00 386.00 387.50 400.00 386.00 400.00 424,761 16:35:10
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Electronic & Electrical Equipment 910.7 -13.1 -7.9 - 1,099

Morgan Advanced Materials PLC Annual Financial Report

31/03/2021 2:08pm

UK Regulatory (RNS & others)

Morgan Advanced Materials (LSE:MGAM)
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RNS Number : 1646U

Morgan Advanced Materials PLC

31 March 2021

Morgan Advanced Materials plc

(the Company)

31 March 2021

Publication of 2020 Annual Report and Notice of 2021 Annual General Meeting

The following documents have today been posted or otherwise made available to shareholders:

-- Annual Report and Financial Statements for the year ended 31 December 2020 (2020 Annual Report);

-- Notice of the 2021 Annual General Meeting (AGM) to be held at the Company's offices at York House, Sheet Street, Windsor SL4 1DD, on Thursday 6 May 2021 at 10.30am; and

   --    Form of Proxy for the 2021 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

The documents are also available in the 'Invest In Us' section of the Company's website at: .

AGM format in light of the coronavirus pandemic

Due to ongoing restrictions on gatherings across England (including those relating to travel and indoor mixing) which are intended to remain in place on the day of our AGM, the Board's current intention is to hold the AGM at the Company's offices with a limited number of Company representatives attending in person to ensure that a valid meeting is held. Unfortunately, other shareholders will not be permitted to attend the AGM while restrictions remain in place.

The Board will continue to monitor developments and the latest Government restrictions, and will assess whether any modifications to the AGM arrangements are necessary, including if it becomes possible to admit shareholders to the AGM in person. We therefore ask shareholders to monitor the Company's website at and regulatory news for any further updates.

Shareholders may submit any questions on the business of the meeting in advance by sending them by email to , by telephoning +44 (0) 1753 837000 or by post to our registered office address, addressed to the Company Secretary. The Company will respond to those questions and publish answers on the Company website. To ensure the answers are published before the proxy appointment deadline questions must be received by the close of business on Monday 26 April 2021.

Information required by Disclosure Guidance and Transparency Rule 6.3.5

The Company's preliminary results announcement of 4 March 2021 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 4 March 2021 does not constitute the Company's statutory accounts for the year ended 31 December 2020. Statutory accounts for 2020 are included in the 2020 Annual Report, which will be delivered to the registrar of companies following the Company's 2021 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 2020.

The information below, which is extracted from the 2020 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 4 March 2021 (available at ). This announcement is not a substitute for reading the full 2020 Annual Report. All page numbers and cross-references in the extracted information below refer to page numbers in the 2020 Annual Report.

Related party transactions

There are no related party transactions requiring disclosure.

Risk management

We have an established risk management methodology which seeks to identify, prioritise and mitigate risks, underpinned by a 'three lines of defence' model comprised of 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.

Principal and emerging 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. The severity of each risk is quantified by assessing its inherent impact and mitigated probability, to ensure that the residual risk exposure is 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 2020, 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 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, including:

   --      swift adoption of protocols to protect the workforce from COVID-19; 

-- increased focus on the environment with the appointment of a Group Environment & Sustainability Director in November 2020;

-- strengthening of information security and compliance function by operating an IT and cybersecurity programme called 'thinkSECURE', including comprehensive security awareness training;

   --      focused actions within each business unit to mitigate risks. 

The Board reviewed its appetite for the Group's principal risks and concluded its appetite for these risks was unchanged from the previous 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, as is 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 in which they operate. The Group also has a low appetite for financial risk. Certain risks, such as pension funding, are likely to take a longer period of time to mitigate. 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.

Emerging risks

As part of the ongoing risk management process, the Board and the GBUs identified and assessed emerging risks. The key emerging risk areas identified were:

-- Environmental risk: climate change - including the potential impact of rising sea levels on low-lying or coastal sites and our role in protecting and enhancing the environment. Energy intensity was also considered - including ways of adjusting our production processes to reduce usage of fossil fuels. Raw materials and potential issues with their continued availability was also judged an area to be monitored.

   --      Regulatory risk: pension regulations, due to the evolving regulatory environment. 

-- Social risk - parts of the business have an ageing direct workforce; this could lead to potential loss of skills and know-how (in the future) as it becomes more difficult and expensive to attract the next generation of workers.

-- Longer-term changes to end-markets - redirecting effort to new end-markets when, for example, gas boilers are phased out and replaced by other forms of heating, or petroleum-fueled vehicles are phased out in favour of electric vehicles.

These emerging risks have been recorded and will be continually monitored so that their potential impact can be understood and mitigated. They will also be considered as an integral part of the strategic planning process.

The following are the Group's principal risks and uncertainties and represent the 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 could impact the delivery of strong returns to the Group's shareholders. An indication of the Board's assessment of the trend of each principal risk - whether the potential severity has increased, decreased or is broadly unchanged over the past year - is provided.

  OPERATIONAL RISKS          Risk description,                                                 Mitigation 
                              assessment and trend 
   Technical leadership       from 2019 
   Severity: Moderate                                                                          The Group has a dedicated 
   Trend: Unchanged           The Group's strategic                                            technology 
                              success depends on                                               team within each GBU 
                              maintaining and developing                                       which monitors 
                              its technical leadership                                         relevant technology and 
                              in materials science                                             business 
                              over its competitors.                                            developments, using 
                              Unforeseen/unmitigated                                           technology 
                              technology obsolescence,                                         roadmaps linked to 20 
                              the emergence of competing                                       major technology 
                              technologies, the                                                families, to ensure it 
                              loss of control of                                               remains 
                              proprietary technology                                           at the leading edge of 
                              or the loss of intellectual                                      development. 
                              property/know-how                                                The Group also has four 
                              would impact the Group's                                         Centres 
                              business and its ability                                         of Excellence. These 
                              to deliver on its                                                Centres 
                              strategic goals.                                                 focus Morgan's expertise 
                              The advanced technological                                       and 
                              nature of the Group                                              research resources on 
                              requires people with                                             further 
                              highly differentiated                                            developing core 
                              skillsets. Any inability                                         technologies 
                              to recruit, retain                                               and identifying new 
                              and develop the right                                            opportunities 
                              people would negatively                                          and applications. 
                              impact the Group's                                               The GBU leadership teams 
                              ability to achieve                                               proactively 
                              its strategic goals.                                             monitor their technology 
                                                                                               and R&D investments and 
                                                                                               implemented a stage-gate 
                                                                                               to manage this 
                                                                                               effectively. These 
                                                                                               projects are also 
                                                                                               regularly reviewed 
                                                                                               by the Executive 
                                                                                               Committee and 
                                                                                               the Board. 
                                                                                               Where Group products are 
                                                                                               for a specific customer, 
                                                                                               are developed in 
                                                                                               with the customer in 
                                                                                               order to 
                                                                                               maintain leading-edge 
                                                                                               The Group seeks to secure 
                                                                                               property protection, 
                                                                                               where appropriate, 
                                                                                               for its existing and 
                                                                                               portfolio of products and 
                                                                                               an in-house counsel 
                                                                                               to intellectual property 
                                                                                               with the support of 
                                                                                               The Group continued its 
                                                                                               leadership programme 
                                                                                               adding an 
                                                                                               advanced programme to 
                                                                                               more high-potential 
                                                                                               functional and technical 
                                                                                               Further detail on our 
                                                                                               can be found on pages 18 
                                                                                               to 21. 
                             ----------------------------------------------------------------  ------------------------- 
                             Risk description,                                                 Mitigation 
   OPERATIONAL RISKS          assessment and trend 
                              from 2019 
   Operational                                                                                 Changes to operational 
   execution/organisational   As part of the Group's                                           processes 
   change/sales               strategy to improve                                              are carefully considered 
   effectiveness              the efficiency of                                                by site, 
   Severity: Low              its operations and                                               GBU and divisional 
   Trend: Increased           organisation, various                                            management 
   within                     changes have been                                                before implementation. 
   severity band              made to operational                                              Operational 
                              processes at individual                                          improvements and savings 
                              sites, to the Group's                                            are 
                              structure, and to                                                monitored against budget 
                              the structure of and                                             by the 
                              incentives for our                                               GBUs and the Executive 
                              sales force. Further                                             Committee 
                              improvements and changes                                         to ensure that changes 
                              are planned for future                                           deliver 
                              years. Failure to                                                the savings promised 
                              manage these changes                                             without 
                              adequately could result                                          disruption to business 
                              in interruption to                                               operations. 
                              operations or customer                                           New capital investments 
                              service, or a failure                                            are approved 
                              to maximise the Group's                                          at appropriate levels of 
                              opportunities.                                                   the 
                                                                                               Group and delivery of 
                                                                                               these is 
                                                                                               overseen by GBU and Group 
                                                                                               Organisational changes 
                                                                                               are assessed 
                                                                                               by the Chief Executive 
                                                                                               the Executive Committee 
                                                                                               and sometimes 
                                                                                               the Board before being 
                                                                                               in line with local 
                                                                                               A number of 
                                                                                               initiatives commenced 
                                                                                               the GBUs in 2020 to align 
                                                                                               standardise data and 
                                                                                               The rollout of these 
                                                                                               will continue in 2021. 
                                                                                               Changes to our sales 
                                                                                               and incentives are 
                                                                                               reviewed at 
                                                                                               various levels of the 
                                                                                               before being launched. 
                                                                                               Further detail on our 
                                                                                               can be found on page 7. 
                             ----------------------------------------------------------------  ------------------------- 
  OPERATIONAL RISKS          Risk description,                                                 Mitigation 
                              assessment and trend 
   Portfolio management       from 2019 
   Severity: Moderate                                                                          The Board performs 
   Trend: Unchanged           The Group operates                                               regular reviews 
                              across a range of                                                of the Group's portfolio. 
                              product and technology                                           During 2020, the Group 
                              families. These are                                              launched 
                              subject to long-term                                             a COVID-19-related 
                              market trends which                                              restructuring 
                              may lead to either                                               and efficiency programme. 
                              obsolescence or opportunities                                    This 
                              to further expand                                                accelerated existing 
                              the Group. Failure                                               plans to 
                              to manage the Group's                                            simplify the Group's 
                              portfolio of businesses                                          portfolio 
                              proactively and in                                               and align capacity with 
                              line with this technology                                        the anticipated 
                              profile could lead                                               demand across the 
                              to the value of the                                              business. The 
                              Group's businesses                                               Group has announced 
                              being eroded over                                                closure of 
                              time or to a failure                                             Technical Ceramics 
                              to exploit opportunities                                         ceramic cores 
                              to acquire businesses                                            manufacturing sites (in 
                              with the capability                                              response 
                              to add further value                                             to the downturn in 
                              to the Group.                                                    aerospace 
                                                                                               demand) and closure of 
                                                                                               production lines in 
                                                                                               Thermal Ceramics. 
                                                                                               Opportunities to acquire 
                                                                                               are reviewed on a 
                             ----------------------------------------------------------------  ------------------------- 
  OPERATIONAL RISKS          Risk description,                                                 Mitigation 
                              assessment and trend 
  Macro-economic              from 2019 
  and political environment                                                                    The Group's broad market 
  Severity: High              The Group operates                                               and 
  Trend: Increased            in a range of markets                                            geographic spread helps 
  within                      and geographies around                                           to mitigate 
  severity band               the world and could                                              the effects of political 
                              be affected by political,                                        and 
                              economic, social or                                              economic changes. 
                              regulatory developments                                          Budgets and forecasts for 
                              or instability, for                                              Morgan's 
                              example an economic                                              different businesses are 
                              slowdown or issues                                               used 
                              stemming from oil                                                to monitor delivery 
                              and natural resource                                             against expectations 
                              price shocks.                                                    and anticipate potential 
                              Whilst a 'no-deal'                                               external 
                              Brexit was avoided                                               risks to performance. 
                              and new tariffs have                                             These are 
                              not currently been                                               subject to regular review 
                              introduced, the UK's                                             by 
                              exit from the EU impacts                                         the Executive Committee 
                              border controls, product                                         and the 
                              standards, and controls                                          Board. 
                              around the flow of                                               The overall 
                              data. The current                                                macro-economic 
                              value of Group's UK                                              environment 
                              exports to the EU                                                has weakened compared 
                              is approximately GBP24                                           with the 
                              million and imports                                              previous year. However, 
                              into the UK from the                                             the Group's 
                              EU are approximately                                             daily order intake has 
                              GBP17 million.                                                   improved 
                                                                                               during the second half of 
                                                                                               Cost-control measures 
                                                                                               have been 
                                                                                               effective, and the Group 
                                                                                               sustained a strong 
                                                                                               balance sheet. 
                                                                                               Global issues considered 
                                                                                               by the 
                                                                                               Board this year included 
                                                                                               continuing impact and 
                                                                                               relating to the trade 
                                                                                               between the US and China, 
                                                                                               well as Russia/Iran and 
                                                                                               trade relations. The 
                                                                                               impact of 
                                                                                               the UK's exit from the EU 
                                                                                               been reduced by the 
                                                                                               of a 'no-deal' Brexit; 
                                                                                               tariffs could be 
                                                                                               introduced in 
                                                                                               the future. 
                             ----------------------------------------------------------------  ------------------------- 
  OPERATIONAL RISKS          Risk description,                                                 Mitigation 
                              assessment and trend 
   Environment, health        from 2019 
   and safety (EHS)                                                                            Managing its operations 
   Severity: High             The Group operates                                               safely 
   Trend: Unchanged           a number of manufacturing                                        is the Group's number one 
                              facilities around                                                priority. 
                              the world. A failure                                             The Group has a 
                              in the Group's EHS                                               comprehensive 
                              procedures could lead                                            EHS programme managed by 
                              to environmental damage                                          the 
                              or to injury or death                                            Group H&S Director and 
                              of employees or third                                            the Group 
                              parties, with a consequential                                    Environment & 
                              impact on operations                                             Sustainability 
                              and increased risk                                               Director, with clear EHS 
                              of regulatory or legal                                           standards 
                              action being taken                                               and a refreshed programme 
                              against the Group.                                               of 
                              Any such action could                                            audits to assess 
                              result in both financial                                         compliance. 
                              damages and damage                                               The Group H&S Director 
                              to reputation. Given                                             and the 
                              the long history of                                              Group Environment & 
                              many of the operations                                           Sustainability 
                              of the Group, there                                              Director, working with 
                              is also a risk that                                              the Global 
                              historical operating                                             EHS Leads, set annual 
                              and environmental                                                priorities 
                              standards may not                                                for EHS which are 
                              have met today's environmental                                   approved by 
                              regulations. In addition,                                        the Executive Committee. 
                              the Group may have                                               These 
                              obligations relating                                             form the basis for 
                              to prior asset sales                                             individual 
                              or closed facilities.                                            sites' own EHS priorities 
                                                                                               plans and complement the 
                                                                                               'thinkSAFE' behavioural 
                                                                                               EHS performance is 
                                                                                               by the Group Executive 
                                                                                               and the Board. EHS 
                                                                                               metrics are 
                                                                                               regularly assessed. 
                                                                                               Overall EHS 
                                                                                               performance deteriorated 
                                                                                               during 2020. 
                                                                                               As at 31 December 2020, 
                                                                                               the Group 
                                                                                               was managing projects to 
                                                                                               legacy contamination at a 
                                                                                               of former operational 
                                                                                               sites in 
                                                                                               conjunction with external 
                                                                                               and relevant authorities. 
                                                                                               The Group's commitment to 
                                                                                               and enhancing the 
                                                                                               is set out on pages 12 to 
                                                                                               Details of the Group's 
                                                                                               and contingent 
                                                                                               liabilities can 
                                                                                               be found in note 25 to 
                                                                                               the consolidated 
                                                                                               financial statements. 
                             ----------------------------------------------------------------  ------------------------- 
  OPERATIONAL RISKS          Risk description,                                                 Mitigation 
                              assessment and trend 
   Coronavirus (COVID-19)     from 2019 
   pandemic                                                                                    In all our manufacturing 
   Severity: Moderate         Communicable disease                                             sites, 
   Trend: Not applicable.     impacts ways of working,                                         we have successfully 
   New risk in 2020.          the supply chain and                                             adapted 
                              the ability of employees                                         our ways of working to 
                              to travel to work                                                respond 
                              in affected areas.                                               to the pandemic - 
                              Our priority is to                                               introducing 
                              take all actions and                                             social distancing, 
                              precautions necessary                                            hygiene measures 
                              to ensure the safety                                             and additional PPE - to 
                              and wellbeing of our                                             keep 
                              employees. The pandemic                                          our people safe. Flexible 
                              led to the shutdown                                              working 
                              of a number of our                                               from home was also 
                              manufacturing facilities                                         introduced 
                              during the year.                                                 for all roles that could 
                                                                                               do so. 
                                                                                               We have continued to 
                                                                                               supply our 
                                                                                               key customers operating 
                                                                                               in essential 
                                                                                               sectors, including 
                                                                                               and power generation. 
                                                                                               The Group has provided 
                                                                                               and timely communication 
                                                                                               to reinforce 
                                                                                               the importance of 
                                                                                               following safety 
                                                                                               measures in every part of 
                             ----------------------------------------------------------------  ------------------------- 
  OPERATIONAL RISKS          Risk description,                                                 Mitigation 
                              assessment and trend 
   Product quality,           from 2019 
   safety and liability                                                                        Many of the Group's 
   Severity: High             Products used in applications                                    products 
   Trend: Unchanged           for which they were                                              are designed to customer 
                              not intended or inadequate                                       specifications. 
                              quality control/over-commitment                                  Our businesses' quality 
                              on customer specifications                                       management 
                              could result in products                                         systems and training help 
                              not meeting customer                                             ensure 
                              requirements, which                                              that all our products 
                              could in turn lead                                               meet or 
                              to significant liabilities                                       exceed customer 
                              and reputational damage.                                         requirements 
                              Some of our products                                             and 
                              are used in potentially                                          national/international 
                              high-risk applications,                                          standards. 
                              for example in the                                               The Group Legal Policy 
                              aerospace, automotive,                                           requires 
                              medical and power                                                that contracts relating 
                              industries.                                                      to products 
                                                                                               used in potential 
                                                                                               high-risk applications 
                                                                                               are subject to legal 
                                                                                               review to 
                                                                                               ensure that appropriate 
                                                                                               are in place for product 
                                                                                               The Group insurance 
                                                                                               includes product 
                                                                                               liability insurance; 
                                                                                               this Group-level 
                                                                                               insurance is 
                                                                                               reviewed annually by the 
                             ----------------------------------------------------------------  ------------------------- 
  OPERATIONAL RISKS          Risk description,                                                 Mitigation 
                              assessment and trend 
   IT and cybersecurity       from 2019 
   Severity: High                                                                              During 2020 we 
   Trend: Increased           The COVID-19 pandemic                                            strengthened our 
                              resulted in a rise                                               information security and 
                              in remote working                                                compliance 
                              and an accelerated                                               function. We are 
                              shift to cloud platforms,                                        currently operating 
                              thereby increasing                                               to a three-year approved 
                              the cyber risk severity                                          security 
                              due to threats such                                              programme and introduced 
                              as email-propagated                                              the 
                              attacks (phishing,                                               'thinkSECURE' internal 
                              cyber-fraud, impersonation,                                      brand 
                              malware, ransomware).                                            as an awareness 
                              If the Group were                                                programme. 
                              to lose critical information                                     The Group has continued 
                              (such as IP or regulatory                                        to monitor 
                              data) or if critical                                             the regulatory and 
                              systems availability                                             compliance 
                              were affected through                                            landscape and is working 
                              cyber-attacks, the                                               towards 
                              business would be                                                certification against 
                              impacted or could                                                emerging 
                              suffer reputational                                              regulations, such as the 
                              damage.                                                          US Department 
                              The effective management                                         of Defense's 
                              of the Group's IT                                                Cybersecurity Maturity 
                              infrastructure is                                                Model Certificate (CMMC), 
                              important in enabling                                            and 
                              our businesses to                                                the EU-GDPR and UK Data 
                              deliver customer requirements                                    Protection 
                              reliably. If a key                                               Act (DPA) 2018. 
                              business system were                                             We will mitigate residual 
                              to fail or core systems                                          and 
                              implementation were                                              emerging risks through 
                              to be ineffective,                                               continuation 
                              the ability of the                                               of our IT strategy and 
                              business to deliver                                              information 
                              on its strategic goals                                           security programme, 
                              might be impacted.                                               including 
                                                                                               'thinkSECURE' and 
                                                                                               of the related 
                             ----------------------------------------------------------------  ------------------------- 
  OPERATIONAL RISKS               Risk description,                                            Mitigation 
                                  assessment and trend 
   Supply chain/business          from 2019 
   continuity                                                                                  The Group has a 
   Severity: Moderate             The Group has a number                                       diversified 
   Trend: Unchanged               of potential single-point                                    manufacturing, 
                                  exposure risks, which                                        customer and geographic 
                                  include:                                                     base 
                                   *    Single-point supplier - a significant interruption of  which provides a level of 
                                        a key internal or external supply could impact         resilience 
                                        business continuity.                                   against single-point 
                                                                                               Were any site to be 
                                   *    Single-point customer - the unmitigated loss of a      unavailable, 
                                        major customer could have an impact on Group profit.   production in many cases 
                                        The Group's largest customer represents circa 3% of    could 
                                        Group revenue.                                         be switched to other 
                                                                                               sites. A 
                                                                                               new Business Continuity 
                                   *    Single-point site - a key site exposed to a strike, a  Policy 
                                        natural catastrophe or serious incident, such as fire  has been rolled out to 
                                  ,                                                            support 
                                        could impact business continuity. One Group site,      minimum standards at the 
                                        Hayward, is situated in the California earthquake      Group's 
                                        zone (US). Certain of the Group's businesses are       most important sites for 
                                        important for intercompany supply purposes.            intercompany 
                                                                                               Management of these risks 
                                                                                               involves monitoring and 
                                                                                               supply chains (internal 
                                                                                               and external), 
                                                                                               dual/multiple sourcing of 
                                                                                               or strategic stock, site 
                                                                                               and safety mechanisms, 
                                                                                               continuity plans, and 
                                                                                               of product quality and 
                                                                                               customer relationships. 
                                                                                               The Group insurance 
                                                                                               includes business 
                                                                                               cover and specific cover 
                                                                                               in relation 
                                                                                               to the impact of an 
                                                                                               in California, US; this 
                                                                                               insurance is reviewed 
                                                                                               by the Board. 
                             ----------------------------------------------------------------  ------------------------- 
  financial RISKS            Risk description,                                                 Mitigation 
                              assessment and trend 
   Treasury                   from 2019 
   Severity: Moderate                                                                          The Group's treasury 
   Trend: Increased           The Group's global                                               function 
   within severity            reach means that it                                              operates on a risk-averse 
   band                       is exposed to uncertainties                                      basis. 
                              in the financial markets,                                        Required controls over 
                              the fiscal jurisdictions                                         selection 
                              where it operates,                                               of banks, cash management 
                              and the banking sector.                                          and 
                              These heighten the                                               other treasury practices 
                              Group's funding, foreign                                         and 
                              exchange, tax, interest                                          payments globally are 
                              rate, credit and liquidity                                       documented 
                              risks as well as the                                             in Morgan's Treasury 
                              risk that a bank failure                                         Policy and 
                              could impact the Group's                                         related procedures. The 
                              cash.                                                            Group 
                                                                                               treasury team manages the 
                                                                                               funding, liquidity, cash 
                                                                                               interest rate, foreign 
                                                                                               counterparty credit and 
                                                                                               treasury-related risks. 
                                                                                               matters are regularly 
                                                                                               by the Board and Audit 
                                                                                               In 2020, the Group was 
                                                                                               as an eligible issuer 
                                                                                               under the 
                                                                                               UK Government's 'COVID-19 
                                                                                               Financing Facility' 
                                                                                               (CCFF) with 
                                                                                               an issuer limit of GBP300 
                                                                                               providing additional 
                                                                                               headroom. The facility 
                                                                                               was undrawn 
                                                                                               and expired in March 
                                                                                               As at 31 December 2020, 
                                                                                               the Group 
                                                                                               had an undrawn Revolving 
                                                                                               Facility of GBP200 
                                                                                               million, which 
                                                                                               matures in September 
                                                                                               Further detail on our 
                                                                                               Policy is set out in the 
                                                                                               Financial Review, which 
                                                                                               can be 
                                                                                               found on pages 38 to 40. 
                             ----------------------------------------------------------------  ------------------------- 
  financial RISKS            Risk description,                                                 Mitigation 
                              assessment and trend 
   Pension funding            from 2019 
   Severity: High                                                                              Morgan's primary means of 
   Trend: Unchanged           The Group sponsors                                               mitigating 
                              several defined benefit                                          pensions funding risk is 
                              pension arrangements                                             proactive 
                              (the Schemes), whose                                             management of the pension 
                              liabilities are subject                                          scheme 
                              to fluctuating interest                                          assets and liabilities 
                              rates, investment                                                through 
                              values and inflation.                                            an integrated pension 
                              This coupled with                                                strategy 
                              the increased longevity                                          focusing on funding, 
                              of members and a tougher                                         investment 
                              regulatory funding                                               and benefit risk. This 
                              regime will result                                               involves 
                              in increased funding                                             both internal management 
                              burdens on the Group                                             within 
                              in the future.                                                   the Group and also 
                              The deficit in Morgan's                                          external management 
                              global defined benefit                                           through the Schemes' 
                              pension schemes calculated                                       trustees, 
                              on the basis required                                            corporate actuaries and 
                              for IAS 19 accounting                                            professional 
                              disclosures increased                                            advisers. 
                              from GBP156.8 million                                            In the UK, both Schemes 
                              as at 31 December                                                are closed 
                              2019 to GBP176.3 million                                         to the future accrual of 
                              as at 31 December                                                benefits. 
                              2020.                                                            In consultation with the 
                              The Group also participates                                      Company, 
                              in two multi-employer                                            the trustees have adopted 
                              defined benefit schemes                                          a proactive 
                              in the US, both of                                               approach to the 
                              which have significant                                           management of 
                              funding deficits.                                                risk in the Schemes' 
                                                                                               portfolios, significantly 
                                                                                               their unhedged interest 
                                                                                               and inflation 
                                                                                               rate exposure. Following 
                                                                                               most recent Scheme 
                                                                                               in March 2019, Company 
                                                                                               increased to GBP16.5 
                                                                                               pa from 2020 (further 
                                                                                               by 2.75% pa) for the 
                                                                                               length of 
                                                                                               the current recovery 
                                                                                               plans (2025 
                                                                                               and 2027). 
                                                                                               The impact of the 
                                                                                               evolving regulatory 
                                                                                               environment for UK 
                                                                                               pensions, and in 
                                                                                               particular the 
                                                                                               likely passing of the 
                                                                                               Bill in Parliament, will 
                                                                                               to be monitored closely 
                                                                                               in 2021. 
                                                                                               Risk for both of the 
                                                                                               benefit Pension Plans in 
                                                                                               US has been reduced. One 
                                                                                               a full legal termination 
                                                                                               June 2016). For the other 
                                                                                               a formal offer of a 
                                                                                               lump-sum cash payment was 
                                                                                               to members. Following a 
                                                                                               $36 million 
                                                                                               additional contribution 
                                                                                               (in December 
                                                                                               2017) and a move to a 
                                                                                               de-risked investment 
                                                                                               this Scheme is now almost 
                                                                                               funded on an accounting 
                                                                                               A liability management 
                                                                                               for one the US 
                                                                                               plans has been agreed and 
                                                                                               a proposal 
                                                                                               for withdrawal made to 
                                                                                               the Trustees 
                                                                                               of the more severely 
                                                                                               No significant funding 
                                                                                               exist in any other 
                                                                                               country although German 
                                                                                               defined benefit schemes 
                                                                                               are unfunded, 
                                                                                               in accordance with local 
                                                                                               with benefits being met 
                                                                                               by the 
                                                                                               Group as they are due. 
                             ----------------------------------------------------------------  ------------------------- 
  financial RISKS            Risk description,                                                 Mitigation 
                              assessment and trend 
   Tax                        from 2019 
   Severity: Moderate                                                                          The Group's tax function, 
   Trend: Unchanged           The Group operates                                               working 
                              in many jurisdictions                                            in conjunction with 
                              around the world and                                             external 
                              could be affected                                                specialists as required, 
                              by changes in tax                                                closely 
                              laws and regulations                                             monitors fiscal 
                              within the complex                                               developments 
                              international tax                                                and changes such as BEPS 
                              environment.                                                     to ensure 
                              The OECD's Base Erosion                                          that the Group's tax 
                              and Profit Shifting                                              arrangements 
                              (BEPS) framework is                                              and practices continue to 
                              generating additional                                            comply 
                              obligations and filing                                           with the requirements of 
                              requirements for the                                             all 
                              Group as countries                                               relevant jurisdictions, 
                              continue to implement                                            whilst 
                              the actions in the                                               also enabling efficient 
                              framework. These could                                           management 
                              have an impact on                                                of the tax liability. The 
                              the tax paid by the                                              Group's 
                              Group.                                                           Head of Tax reports to 
                                                                                               the Audit 
                                                                                               Committee on key tax 
                                                                                               issues and 
                                                                                               The Group has published 
                                                                                               its tax 
                                                                                               strategy on its website 
                                                                                               in line 
                                                                                               with UK corporate 
                             ----------------------------------------------------------------  ------------------------- 
  LEGAL AND COMPLIANCE       Risk description,                                                 Mitigation 
   RISKS                      assessment and trend 
                              from 2019 
   Contract management                                                                         The Group has an in-house 
   Severity: Significant      As a global advanced                                             legal 
   Trend: Unchanged           materials business,                                              function supplemented by 
                              supplying components                                             specialist 
                              into critical applications,                                      external lawyers. 
                              the Group may be exposed                                         The Group Legal Policy 
                              to liabilities arising                                           requires 
                              from the use of its                                              in-house legal review of 
                              products. Ineffective                                            high-value 
                              contract risk management                                         or high-risk contracts to 
                              could result in significant                                      ensure 
                              liabilities for the                                              they contain appropriate 
                              Group and could damage                                           protections 
                              customer relationships.                                          for the Group. The Policy 
                                                                                               Chief Executive Officer 
                                                                                               before a business can 
                                                                                               enter into 
                                                                                               an unlimited liability 
                                                                                               or one where the 
                                                                                               liability cap 
                                                                                               exceeds GBP5 million. 
                                                                                               To the extent that risk 
                                                                                               be mitigated through 
                                                                                               arrangements, the Group 
                                                                                               has insurance 
                                                                                               cover in place, including 
                                                                                               liability insurance. 
                             ----------------------------------------------------------------  ------------------------- 
  LEGAL AND COMPLIANCE       Risk description,                                                 Mitigation 
   RISKS                      assessment and trend 
                              from 2019 
   Compliance                                                                                  The Group is committed to 
   Severity: High             The Group's global                                               the 
   Trend: Increased           operations must comply                                           highest standards of 
                              with a range of national                                         corporate 
                              and international                                                and individual behaviour. 
                              laws and regulations                                             To 
                              including those related                                          support this, in 2018 the 
                              to bribery and corruption,                                       Group 
                              human rights, trade/export                                       issued the Morgan Code, 
                              compliance and competition/anti-trust                            which 
                              activities.                                                      has been continuously in 
                              A failure to comply                                              force 
                              with any applicable                                              since then. The Code 
                              laws/regulations could                                           defines 
                              result in civil or                                               the Group's approach to 
                              criminal liabilities                                             doing 
                              and/or individual                                                business ethically and 
                              or corporate fines                                               confirms 
                              and could also result                                            Morgan's commitments to 
                              in debarment from                                                high 
                              government-related                                               standards of ethical 
                              contracts or rejection                                           behaviour. 
                              by financial market                                              The Code is supported by 
                              counterparties and                                               a range 
                              reputational damage.                                             of documents and 
                                                                                               policies, standards and 
                                                                                               training materials; the 
                                                                                               of a 'Speak Up' hotline 
                                                                                               for employees; 
                                                                                               and systems to support 
                                                                                               screening of and due 
                                                                                               on third parties. 
                                                                                               Mandatory ethics training 
                                                                                               staff covers topics 
                                                                                               anti-bribery and 
                                                                                               competition law, 
                                                                                               harassment and 
                                                                                               bullying, and trade 
                                                                                               In-depth face-to-face 
                                                                                               has also been held in 
                                                                                               some of 
                                                                                               the Group's higher risk 
                                                                                               The Group's 'Speak Up' 
                                                                                               enable staff to report 
                                                                                               The Group also has an 
                                                                                               Compliance Director in 
                                                                                               the US 
                                                                                               whose role is dedicated 
                                                                                               to ensuring 
                                                                                               compliance with export 
                                                                                               In addition to 
                                                                                               Group-level compliance 
                                                                                               specialists, our 
                                                                                               businesses are 
                                                                                               required to establish 
                                                                                               officer roles, which are 
                                                                                               for supporting local 
                                                                                               and monitoring. Morgan 
                                                                                               also employs 
                                                                                               country-specific trade 
                                                                                               and export 
                                                                                               compliance specialists in 
                                                                                               businesses and 
                                                                                               Further details on ethics 
                                                                                               compliance can be found 
                                                                                               on page 
                             ----------------------------------------------------------------  ------------------------- 

Directors' Responsibility Statement

The 2020 Annual Report contains the following statements regarding responsibility for the financial statements in compliance with DTR 4.1.12. Responsibility is for the 2020 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 3 March 2021, the names and roles of whom are set out on pages 48 and 49 of the 2020 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

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March 31, 2021 09:08 ET (13:08 GMT)

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