Slide 1: 2020 Year end results presentation
2020 Year end results presentation 4 March 2021 1
Slide 2: Agenda
Agenda • Introduction and summary – Pete Raby • 2020 Year end results – Peter Turner • Operational and strategic update – Pete Raby © Morgan Advanced Materials 2
Slide 3: Summary
Summary • Robust Covid-19 response with protection measures in place in all facilities to protect our employees • Trading has been resilient with revenue decline of 11.4% on an organic constant-currency basis demonstrating our strategic progress and the benefits of our diverse end-markets • Growth i
Slide 4: 2020 Year end results – Peter Turner
2020 Year end results Peter Turner © Morgan Advanced Materials 4
Slide 5: Group performance
Group performance % change from FY 2019 £m FY 2020 FY 2019 At organic constant- As reported currency Revenue 910.7 1,049.5 (13.2%) (11.4%) Group adjusted operating profit1 91.7 134.2 (31.7%) (28.1%) Group adjusted operating profit margin % 1 10.1% 12.8% ROIC % 13.0% 17.4% Cash generated from continu
Slide 6: Group adjusted operating profit bridge
Group adjusted operating profit bridge £m 140 • Volume decline significantly 120 impacted margin performance 100 • Continuous improvement 80 projects and rapid actions taken to significantly reduce 60 discretionary cost base partially offset lower volume 40 margin impact 20 • Restructuring programme
Slide 7: Emerging stronger: Group restructuring and efficiency programme
Emerging stronger: Group restructuring and efficiency programme The Group restructuring and efficiency programme is ahead of plan and we increase our cost savings target to £23m per annum by 2022 for a cash cost of £30m. This programme further simplifies our structure and drives efficiency in our op
Slide 8: Group performance: specific adjusting items
Group performance: specific adjusting items • Specific adjusting items were £87.4m (2019: £nil) • Impairment losses of £65.6m were £m FY 2020 recognised in relation to: Impairment of assets (65.6) • Ceramic cores in Technical Technical Ceramics (35.7) Ceramics Thermal Ceramics (29.9) Restructuring c
Slide 9: Cash flow summary
Cash flow summary £m FY 2020 FY 20191 EBITDA 133.6 176.6 • Improvement in working Change in working capital 34.8 (0.1) Change in provisions and other (22.1) (11.7) capital efficiency, Cash generated from continuing operations 146.3 164.8 especially debtors Net capital expenditure (28.6) (54.9) Net i
Slide 10: Strong balance sheet and available liquidity
Strong balance sheet and available liquidity Facilities maturity profile £m Headroom on banking covenants • Net debt to EBITDA excluding the impact of IFRS 16: 0.8x (FY2019: 1.0x) Significant liquidity • £200m undrawn RCF plus available net cash and cash equivalents of £75.8m Average cost of fixed r
Slide 11: Pensions update
Pensions update Deficit movement since 31 December 2019 (£m) Deficit at 31 December 2019 (157) Return on assets 60 Contributions (net of service/finance costs) 17 Actuarial loss on liabilities (94) Currency adjustment (2) Deficit at 31 December 2020 (176) £m 31 December 2020 31 December 2019 31 Dece
Slide 12: FY21 financial framework
FY21 financial framework Effective tax rate 27-28% Net finance charge: Interest charge (c. £7m) IAS 19 pensions net interest charge (c. £2m) c. £12m IFRS 16 lease interest (c. £3m) Defined benefit pension scheme contributions c. £21m Foreign currency impacts see slide 34 Portfolio impacts Capital ex
Slide 13: Operational and strategic update – Pete Raby
Operational and strategic update Pete Raby © Morgan Advanced Materials 13
Slide 14: Growth in healthcare and security and defence offset declines in industrial and transportation
Growth in healthcare and security and defence segments offset by declines in industrial and transportation markets Organic % change at constant-currency % of Group Segment FY20 vs FY19 revenue Industrial (15%) 43% • Broad based decline in industrial in Thermal Ceramics and Technical Ceramics Transpo
Slide 15: Thermal Ceramics performance summary
Thermal Ceramics performance summary % change from FY 2019 £m FY 2020 FY 2019 At organic constant- As reported currency Revenue 344.3 418.4 (17.7%) (15.5%) 1 Adjusted operating profit 26.7 52.2 (48.9%) (45.4%) Margin % 7.8% 12.5% Performance commentary • Decline in the industrial and metals segments
Slide 16: Molten Metal Systems performance summary
Molten Metal Systems performance summary % change from FY 2019 £m FY 2020 FY 2019 At organic constant- As reported currency Revenue 41.2 49.1 (16.1%) (13.8%) 1 Adjusted operating profit 3.2 5.9 (45.8%) (43.9%) Margin % 7.8% 12.0% Performance commentary • Revenue decline resulting from reduced global
Slide 17: Electrical Carbon performance summary
Electrical Carbon performance summary % change from FY 2019 £m FY 2020 FY 2019 At organic constant- As reported currency Revenue 151.4 164.2 (7.8%) (6.3%) 1 Adjusted operating profit 23.6 21.9 7.8% 11.3% Margin % 15.6% 13.3% Performance commentary • Volume decline in the core industrial and rail mar
Slide 18: Seals and Bearings performance summary
Seals and Bearings performance summary % change from FY 2019 £m FY 2020 FY 2019 At organic constant- As reported currency Revenue 146.4 144.3 1.5% 1.5% 1 Adjusted operating profit 27.5 26.4 4.2% 4.6% Margin % 18.8% 18.3% Performance commentary • Growth in ceramic armour (2020: £49m vs 2019: £35m) of
Slide 19: Technical Ceramics performance summary
Technical Ceramics performance summary % change from FY 2019 £m FY 2020 FY 2019 At organic constant- As reported currency Revenue 227.4 273.5 (16.9%) (14.8%) 1 Adjusted operating profit 14.8 33.7 (56.1%) (52.7%) Margin % 6.5% 12.3% Performance commentary • 40% (£30m) decline in ceramic cores for the
Slide 20: Environment, Social and Governance (ESG)
Environment, Social and Governance (ESG) Our purpose is to use advanced materials to make the world more sustainable and to improve the quality of life. • Sustainability and environmental stewardship are integrated into our daily operations and across our corporate functions. • We invest in manufact
Slide 21: Our products make a positive contribution
Our products make a positive contribution Our products; • improve the quality of life through medical applications • enable greener electricity generation • enable the digital world, and all the benefits to the environment and health that it brings • help to keep people safe • enable electrification
Slide 22: Shaping our sustainability strategy
Shaping our sustainability strategy Our approach to integrating ESG and embedding sustainability in our long-term business strategy: • We appointed a Group Director of Environment and Sustainability. • We engaged our employees through a survey and materiality assessment that addressed over 100 ESG t
Slide 23: Sustainability focus areas and key ESG priorities
Sustainability focus areas and key ESG priorities Our aspiration Our 2030 goals2 Protect the • A CO2 net zero business by 20501 • 50% reduction in Scope 1 and environment • Use water sustainably across our Scope 23 CO2 emissions business • 30% reduction in water use in high and extremely high stress
Slide 24: Planned sources of CO2 Scope 1 and 2 reduction
Planned sources of CO2 Scope 1 and 2 reduction -50% -19% -10% -6% % -15% % Scope 1 and 2 relate to CO2 emissions from direct and indirect sources, respectively. © Morgan Advanced Materials 24
Slide 25: Improving our ESG performance
Improving our ESG performance Absolute CO2 (Scope 1 and 2)1 Absolute water use in stressed areas Lost time accident rate % Female leadership population2 1 Scope 1 and 2 relate to CO2 emissions from direct and indirect sources, respectively. 2 Leadership population consists of approximately 450 of th
Slide 26: Our strategy for growth
Our strategy for growth We have a strategy to ensure we are the leaders in our field, with the customer and materials insight to apply our capabilities quickly and effectively We apply these skills to a portfolio of businesses where: • Our technical expertise and differentiation is valued • We can o
Slide 27: Strategic progress
Strategic progress Continued to enhance our sales effectiveness, through further deployments of our CRM tool and Drive sales effectiveness and integration into our sales and pipeline management processes, completion of sales training and market focus further pricing work Extend our technology Contin
Slide 28: Outlook
Outlook • Outlook for 2021 remains uncertain given the ongoing Covid-19 pandemic • We have seen order momentum improving steadily over the last six months: Average daily order intake Year-on-year % change at constant-currency - (5.0%) (10.0%) (15.0%) (20.0%) (25.0%) (30.0%) (35.0%) • We expect conti
Slide 29: Summary
Summary • Robust Covid-19 response with protection measures in place in all facilities to protect our employees • Trading has been resilient with revenue decline of 11.4% on an organic constant-currency basis demonstrating our strategic progress and the benefits of our diverse end-markets • Growth i
Slide 30: Appendix
Appendix © Morgan Advanced Materials 30
Slide 31: End-market mix (as a % of revenue)
Chemical and Chemical and and petrochemical Chemical 6% petrochemical petrochemical 7% 6% 6% End-market mix (as a % of revenue) 6% 7% 7% 7% 6% Security and defence Security and Security and defence Transportation defence 6% 6% 6% Semiconductor and 16% Semiconductor and and 16% electronics Semiconduc
Slide 32: Divisional performance
Divisional performance Revenue Adjusted operating profit1 Margin £m £m % FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 Thermal Ceramics 344.3 418.4 26.7 52.2 7.8% 12.5% Molten Metal Systems 41.2 49.1 3.2 5.9 7.8% 12.0% Thermal Products division 385.5 467.5 29.9 58.1 7.8% 12.4% Electrical Carbon 15
Slide 33: Reported statutory figures
Reported statutory figures Year ended 31 December 2020 Year ended 31 December 2019 Results before Results before £m Specific adjusting Specific adjusting specific adjusting Total specific adjusting Total items items items items Revenue 910.7 - 910.7 1,049.5 - 1,049.5 Operating costs before amortisat
Slide 34: Foreign currency impacts
Foreign currency impacts The principal exchange rates used in the translation of the results of overseas subsidiaries were as follows: FY 2020 FY 2019 Closing Average Closing Average GBP to: rate rate rate rate USD 1.37 1.28 1.33 1.28 EUR 1.12 1.13 1.18 1.14 For illustrative purposes, the table belo
Slide 35: Adjusted earnings per share
Adjusted earnings per share £m FY 2020 FY 2019 Profit/(loss) for the period attributable to shareholders of the Company (22.5) 73.1 (Profit)/loss from discontinued operations (2.0) (1.5) Profit/(loss) from continuing operations (24.5) 71.6 Specific adjusting items 87.4 - Amortisation of intangible a
Slide 36: MMorgan
MMorgan Cc Advanced Materials te. A i