morgan advanced materials plc  annual report 201 3
morgan advanced materials plc
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morgan advanced materials plc
annual report 2013
innovation
ambition
collaboration
integrity
applications 
engineering
materials 
science
one  
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one  
morgan
morgan advanced materials  
is committed to building  
a sustainable competitive 
advantage in attractive  
markets with truly 
differentiated products  
and services underpinned by 
worldleading technology
the group produces a wide range of specialist  
highspecification materials that have extraordinary 
attributes and properties
engineered into products they deliver enhanced 
performance often under extreme conditions
the group’s dynamic highly skilled people are 
continuously engaged in finding solutions for 
complex and technologically demanding applications 
which are used all over the world
in short the group supplies innovative differentiated 
products made from highly technical advanced 
materials which enable its customers’ products and 
processes to perform more efficiently more reliably 
and for longer
  for more information about morgan advanced materials 
please visit our website
   wwwmorganadvancedmaterialscom
  find out more about morgan advanced materials 
graduate recruitment on facebook
   wwwfacebookcommorganceramics overview str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
 annu al report 2013  morgan advanced ma terials
1 ov er view
ov er view
02 at a glance
04 o perational and financial highlights
06 chairman’s statement
str ateg ic report 
08 chief executive o fficer’s review
12 w hat morgan does
16 g roup business model
17 g roup strategy
18 key performance indicators
19 r isk management
23 corporate responsibility
35 review of operations
41 financial review
dire ctor s’ report
46 board of directors
48 corporate governance report
54 r eport of the audit committee
57 r eport of the n omination committee
59 r emuneration report
81 o ther disclosures
85 independent auditor’s report to the members of morgan advanced materials plc
fin an cial s t ate ments
88 consolidated income statement
89 consolidated statement of comprehensive income
90 consolidated balance sheet
91 consolidated statement of changes in equity
92 consolidated statement of cash flows
93 n otes to the consolidated financial statements
 138 company balance sheet
 139 n otes to the company balance sheet
 148 g roup statistical information
 1 49 cautionary statement
 150 g lossary of terms
 1 51 shareholder information morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
2 ov er view
at a gl an ce
o ur mark et s
healt hcare
morgan advanced materials produces 
components used in medical monitoring  
and diagnostic instrumentation and tools for 
treatment and surgery
ele ctron ics
morgan advanced materials makes 
components that help the electronics 
industry in its drive towards higher 
performance and reliability in smaller  
lighter more robust products
petro chemical
morgan advanced materials makes critical
components for tough assignments in the
global petrochemical industry
energy
morgan advanced materials develops
products for power distribution and
generation from renewable and traditional
sources and insulation materials for heat 
management
t r an sportat ion
morgan advanced materials makes 
highperformance products to exacting 
standards for aerospace automotive  
marine and rail applications
secur ity a n d defen ce
morgan advanced materials supplies
precisionengineered materials components
and assemblies to meet the exacting 
standards of the international defence and 
security markets
in du str ial
morgan advanced materials designs  
and manufactures products for use in  
a broad range of challenging process  
and manufacturing environments
what diff erent iate s u s
  advanced material science and  
processing capabilities
  o ur applications engineering experience
  a strong history of innovation and reinvention
  consistent and reliable performance
  a truly global footprint
   w e find and invest in the best people morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
3 ov er view
overview str ategic 
rep ort
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rep ort
fin anc ial 
statemen ts
in sul at ing fib re  
br ick an d monol it hics
extensive range of hightemperature insulation 
products used to reduce energy consumption  
in industrial processes
ele ctr ical ca r bon  
l ine ar an d rot ary  
tr an sfer s yste ms
u sed to transfer current and data between 
stationary and rotating or linear moving parts  
in motor generator current collector and  
rotary signal applications within mining power 
transportation and industrial markets
seal s  bear ings
providing improved performance reliability  
and extended life to pumps and similar 
equipment used in petrochemical aerospace  
and water applications
cer amic cores for 
in vest ment cas t ing
consumable products used to create intricate 
internal cooling cavities in aero engine and 
industrial gas turbine blades
piezoelec tr ic sen sor s  
and tr ansd u cer s
products for measurement duties including  
level flow vibration and pressure in aerospace 
medical industrial and defence applications 
cru cibles for  
met al s pro cessing
comprehensive range for optimum  
performance in nonferrous metal and alloy 
melting in foundries diecasters and metal 
processing facilities
per sonnel ba llis t ic 
prote ct ion
l ightweight armour systems combining advanced 
ceramics with hightechnology composites to 
create highperformance products
our glo bal f ootpr int
sal es by reg ion  m
 n orth america £3599
 europe  £3573
 asiar est of w orld £2406
pr in cipal pro du ct s
1
2
3
4
5
6
7
9000
employee s
£9578m
t ot al glo bal sale s
manu factur ing in 
30
countr ies
selli ng into 
1 00
countr ies
2
1
3
4
5
6
7 morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
4 ov er view
oper at ion al an d 
fin an cial hig hl ig ht s
  as expected revenue at constant currency in the second half of 2013 
was similar to the first half o n a fullyear basis revenue was down 
49 on both a reported and constant currency basis compared 
with 2012
  g roup ebit a margin for the second half of 2013 increased to 129 
a 90 basis points improvement compared with the 120 achieved 
in the first half for the fullyear the margin was 124 2012 120
  across the regions n orth america europe and asiar est of w orld 
trading conditions in the second half of 2013 have remained similar  
to those experienced in the first half of the year with revenue stable 
at constant currency ebit a margins improved across all three 
regions during the second half of the year
  g ood progress on the portfolio reshaping announced in the 
n ovember 2013 interim management statement ims with  
circa £20 million of revenue being exited for which the g roup 
incurred £129 million of noncash writeoffs which are shown in the 
income statement as ‘specific adjusting items’ in a separate column
  o perating cash flow was good at £1270 million 2012 £1268 
million and net debt was reduced to £1865 million 2012 £1928 
million resulting in a year end net debt to ebit da ratio of 13 times 
2012 13 times
  proposed final dividend increased to 67 pence per share 2012  
final 64 pence per share giving a fullyear dividend of 105 pence 
2012 100 pence a 50 increase
  t rading results from overseas operations are converted at the 
average exchange rates for the year in the second half of 2013 
sterling strengthened against many of the g roup’s key currencies 
including the u s dollar euro and yuan if the year end closing 
exchange rates were applied to these reported results then the 
reported 2013 revenue and ebit a would have been £442 million 
and £68 million lower respectively
129
group e bit a marg in 
in h2 2013
£127m
o per at ing  
cash flow
5
full ye ar divid en d 
co mpare d to 2012
fin ancia l hi g hl ig ht s morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
  t he key driver of the o ne morgan organisational structure 
announced last year is to accelerate profitable growth by  
investing in core advanced materials technologies where the  
g roup has differentiation global market leadership positions and 
sustainable competitive advantage some key highlights of this in  
the past year include
 –  increasing the g roup’s research and development ‘r d’ spend 
both in absolute terms and as a percentage of revenue meaning 
the g roup’s r d spend is circa two and a half times greater than  
in 2006
 –  t he announcement of a new g lobal materials centre of excellence 
for structural ceramics in stourport u k t his will seek to emulate 
for the g roup’s technical ceramics applications the worldleading 
breakthroughs already made in its superwool
®
 fibre range  
from the now wellestablished g lobal centre of excellence  
in bromborough u k
 –  a 23 yearonyear increase in capital expenditure in 2013 to  
circa 125 times depreciation as the g roup invests for profitable 
growth in new greenfield facilities such as dalian china and  
in converting the g roup’s hightemperature fibre lines to be 
superwool
®
 enabled in 2014 the g roup will be making  
further investments in growth capex including a new greenfield 
superwool
®
 plant in the middle east t his will enable the g roup  
to leverage the strong local demand in petrochemical and 
aluminium markets and at the same time access lowcost energy  
which will make the facility one of the g roup’s lowest cost plants  
in the world t otal gross capital expenditure in 2014 is expected  
to be circa £40 million
 –  a significant increase in graduate recruitment to 26 providing  
a pipeline of engineers and commercial leaders of the future  
t he g roup’s target for 2014 is to increase its intake to over  
30 graduates
o per at ion al hi g hl ig ht s an d ot her d evelop ment s
  t he o ne morgan model has also delivered benefits to the cost base 
through its simpler leaner structure t his combined with other 
operational initiatives undertaken in the latter part of 2012 has 
delivered the stated cost base improvements of £10 million in 2013 
with a further £34 million to come through in 2014 as the fullyear 
benefits of actions taken during the course of 2013 are realised
  t he g roup has made significant progress reshaping its portfolio
 –  since the n ovember 2013 ims announcement the g roup  
has made good progress in exiting circa £20 million of revenue 
from businesses with lowbreakeven margins and limited 
differentiation o ther lowmargin businesses accounting for  
an additional £30 million of annual revenue being targeted  
for divestment in 2014
 –  t he g roup has also substantially enhanced the returns of 
businesses that are currently below the g roup’s target of midteen 
operating margins in particular the margin of the largest of these 
business areas electrical carbon has been improved significantly in 
2013 from midsingle digits into double digits with further progress 
expected in 2014
 –  t he g roup’s midteen margin businesses have also shown 
progress in 2013 o f particular note is the improvement in 
hightemperature insulating fibre margins which meant that in  
the second half of 2013 the t hermal ceramics business delivered 
for the first time margins in excess of 15
definitions of the financial measures used throughout this annual r eport 
and accounts can be found in the g lossary on page 150
23
ye aronye ar 
in cre ase in ca pit al 
expen diture  
in 2013
overview str ategic 
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5 ov er view morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
chair man ’s st ate ment
an drew shil ston 
chair man
6 ov er view
2013 w as a ye ar o f sign ificant 
change f or t he g roup as  
t he o ne morg an m o del w as 
implem ented  this pro vided 
t he pl at for m for f uture 
growt h in our cho sen 
mar kets  in vestm ent i n 
te chnology a n d better 
del ivery m echan isms to our 
cu sto mer s impro ving ma rg in 
per for man ce w as achieved  
in a cha lleng ing glo bal 
econo my a n d we look 
forw ar d to c onti nu ing  
t his progre ss in 2014 morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
morgan advanced materials is a business  
with diverse products selling into a wide  
range of global markets it is this diversity  
which contributes resilience by avoiding 
overexposure to endmarkets and over
reliance on individual products t his also 
creates challenges as to be successful we need 
to focus on key customers and technologies 
where we bring distinctive products and levels 
of service it is in response to these challenges 
that the o ne morgan model was implemented 
across the g roup enabling us to adapt our 
approach to respond to local needs as well  
as recognising that some businesses require 
addressing globally w e are also improving our 
recognition and capture of new technologies 
through g lobal materials centres of excellence 
and investment in r d
t he combination of the o ne morgan model 
and focus on our portfolio in ensuring that we 
only keep and invest in highmargin businesses 
will be the foundation for sustainable profitable 
growth and margin enhancement
t he changes being implemented are significant 
for our employees and it is gratifying to see that 
the response has been enthusiastic improving 
cooperation across the g roup sharing ideas 
and bringing all our expertise to our customers 
t he board is grateful to all of our staff for the 
hard work in driving through these changes
o ur endmarkets have been challenging in 
2013 but we have achieved an improving level 
of profits and margins as the year progressed 
with 129 ebit a margin in the second half  
of the year cash generation was good and  
net debt was reduced to £1865 million  
it is proposed that the final dividend for  
the year will be increased to 67 pence  
2012 64 pence making the fullyear dividend 
105 pence a 5 increase yearonyear
w e are delighted to welcome douglas caster 
and r ob r owley to the board douglas is  
a highly experienced engineer with a strong  
track record in managing and driving growth in 
electronics businesses rob has an impressive 
record of boardlevel experience and he will  
be bringing that to bear at morgan
t he board would like to thank martin flower 
and simon heale for their very considerable 
contributions to the g roup as they both retire 
from the board in the first half of 2014 in their 
nine years on the board they have provided 
invaluable counsel and guidance to the 
management team in reshaping morgan and 
leave the g roup well positioned to achieve 
enhanced profitable growth
andrew shilston 
chairman
succ essful 
imple mentat ion o f
one
morg an
7 ov er view
overview str ategic 
rep ort
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statemen ts 8 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
2013 has been a year of significant change  
for morgan implementing a new organisation 
structure striving for profit and margin 
improvements in markets that predominantly 
have afforded little or no growth and 
accelerating our portfolio transformation  
i am pleased to report that relative to our 
direct competitors we have demonstrated 
significantly greater resilience in the difficult 
market conditions n evertheless we are  
very clear that regardless of market conditions 
as an organisation our aspiration remains to 
drive absolute improvement in our results  
in 2013 against the backdrop of the difficult 
environment whilst we made yearonyear 
progress in our g roup ebit a margin 
increasing it to 124 2012 120 our 
revenue and ebit a in absolute terms were 
below 2012 levels however i believe that  
the structural and portfolio changes that we  
are well advanced in making leave us well 
positioned to take advantage of profitable 
growth opportunities in 2014 and to continue 
to improve further the quality and returns of 
the g roup both in relative and absolute terms 
one morgan
in february 2013 we announced and began the 
implementation of our o ne morgan model – 
streamlining the former divisional organisation 
and moving to a single management structure 
organised on a regional basis n orth america 
europe and asiar est of w orld in this new 
model each region is able to offer our 
customers the full range and depth of our 
products and technologies and i am delighted 
with how well this major organisational change 
has been implemented t he simplification of 
the management structure has improved our 
global communication and accelerated the  
pace of change leaving the group increasingly 
well positioned for future profitable growth  
and margin enhancement w e successfully 
implemented this new organisational model 
without losing focus on our daytoday 
operations and whilst continuing to provide 
excellent service to our customers
chief exe cut ive o fficer ’s re view
w e re main f o cu sed on b u il ding 
su st ainab le c o mpet it ive advant age 
in a ttr act ive mar ket s t hroug h  
a port fol io o f bu sine sses w it h  
truly diff erent iate d pro du cts  
and ser vices und erp inne d by 
world le ading te chnology
mark ro ber tsha w 
chief exe cut ive offic er 9 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
str ategic 
rep ort
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statemen ts
overview
t he focus of the move to the o ne morgan 
organisation remains on capturing greater 
profitable growth opportunities by fully 
leveraging the breadth of our geographic and 
market access w hilst it is still early days there 
have already been some initial successes in this 
area with additional sales opportunities being 
identified and pursued through our extensive 
range of customers and channels
w hilst i will comment on the g roup  
and regional results in more detail later on  
it is worth noting that the general industry 
background has been difficult through 2013  
and in most markets we have seen limited 
pickup in demand as many countries around 
the world continue to find achieving meaningful 
economic recovery to be a challenge however 
i am pleased to report that the operational and 
cost benefits targeted under o ne morgan have 
been realised enabling us to improve operating 
margins despite the difficult competitive 
environment whilst at the same time positioning 
us better for future profitable growth 
o ne of the key operational benefits of the new 
structure is that we have significantly shortened 
our reporting lines enabling closer contact  
with the operating units and an increased level 
of agility to respond even more effectively  
to any change in market conditions it has also 
given us the opportunity to reevaluate the 
businesses and technologies in our portfolio  
to heighten further our focus on building 
sustainable competitive advantage  
underpinned by worldleading technology 
r evenue in n orth america declined 56 
relative to 2012 at constant currency t he 
decline in large petrochemical project demand 
impacted our hightemperature insulating  
fibre and insulating firebrick sales with some 
degree of offset by increased sales of our fibre 
products to the automotive industry and to the 
general industrial market w e have increased 
our superwool
®
 low biopersistent fibre 
capacity and market penetration and this has 
provided benefits to both sales and margin 
n orth america was also adversely impacted by 
a decline in our sales to the electronics market 
w hilst the consumer electronics market as a 
whole weakened during 2013 we were 
specifically impacted by reduced hard disc drive 
sales as we chose not to engage in heavy price 
discounting and saw our market share of  
this business reduce as a consequence 
encouragingly our sales of electrical brush  
and related products did increase during 2013 
largely due to new business wins in the  
wind energy aftermarket where we  
have successfully developed differentiated 
highperforming products that are taking  
a growing share in those applications
 
r evenue for the european region was 37 
below 2012 at constant currency though  
as with g roup revenue this yearonyear 
decline was all relative to the first half of 2012 
o ne encouraging exception was an increase in 
our electrical brush and rotary business during  
the course of the year driven by successfully 
winning market share from our competitors 
despite the continued reduction in u k defence 
spending our u kbased composites and 
defence systems business delivered sales  
very similar to 2012 at improved margin  
levels w hilst as noted above we exited the 
lowmargin vehicles spares contract towards 
the end of 2013 we have been successful  
in some important new contract wins for  
2014 and beyond particularly in armoured 
vehicle programmes for the u k mod
o ur goal is for all our businesses and 
technologies to have the potential to deliver 
midteen operating profit margins and we  
have already exited in 2013 from certain 
businesses that fall short of our requirements  
of technologyrich midteen margins in 2013  
our composites and defence systems business 
formerly np aerospace exited a spares  
and logistics contract with the u k ministry  
of defence ‘mod’ whilst supporting the 
composites and defence systemsbuilt mastiff 
fleet in theatre was important and a source  
of revenue it was not an ‘advanced materials’ 
business and generated very low margins 
t owards the end of 2013 we also sold the 
majority of our shares in the lossmaking  
assam carbon products l imited india  
t his process of portfolio reshaping will 
continue through 2014 
group results
w ith challenging market conditions our 
revenue of £9578 million was 49 below 
2012 at both reported exchange rates and on  
a constant currency basis t his yearonyear 
reduction was a reflection of revenue being 
lower in the first half of 2013 compared to the 
first half of 2012 with revenue in the second 
half of 2013 increasing marginally compared  
to the equivalent period in the prior year on  
a constant currency basis
despite the lower revenue g roup underlying 
operating profit of £1085 million was 
marginally ahead of 2012 £1077 million
all three regions saw a large decline in major 
petrochemical projects into which we provide 
our hightemperature insulating fibre and 
insulating firebrick management solutions  
t he low level of global industrial demand  
and reduced credit availability to fund such large 
projects has led to delays in their commissioning 
encouragingly enquiry levels for these projects 
remained high in 2013 and in recent weeks  
we have seen some initial project orders being 
placed providing some grounds for optimism 
in this market for 2014 10 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
r evenue in asiar est of w orld was 57 
lower than 2012 at constant currency in 
addition to the weak petrochemical market  
the general industrial market was also subdued 
most notably in china and india in 2013 we 
celebrated 25 years of having an operational 
presence in china and whilst our sales in 
china and most of the rest of the region were 
lower yearonyear we remain confident in  
the longterm demand prospects of the region 
as a result we continue to invest significant 
amounts of resource both in terms of our 
people and also in new capital investment  
w e are close to completion of our greenfield 
site in dalian china for hightemperature 
castable products and expect to commission 
this new plant in the second quarter of 2014 
w e also expect to commence work in  
2014 on a new plant for superwool
®
  
hightemperature insulating fibre in khalifa 
industrial z one abu dhabi the u nited arab 
emirates which will give us close proximity to 
key customer opportunities in petrochemical 
markets in the region and access to lowcost 
energy which is a key element of the operating 
costs of this business w e also recognise the 
increasing demand in the former ‘emerging 
markets’ for technically differentiated products 
and processes in areas such as medical devices 
advanced electronics and aerospace w e have 
worldleading technology and products in all of 
these areas and already serve these applications 
in the w est u nder the o ne morgan structure 
we are leveraging this technological capability in 
these growing higher margin markets through 
our wellestablished local presence w e have 
enjoyed some early successes and see even 
greater opportunity for the future in these 
highertech areas 
during 2013 we have continued to focus hard 
on making improvements to our operating cost 
base w hilst not the primary reason for the 
o ne morgan initiative we have successfully 
realised significant cost benefits as a result of 
the organisational streamlining further cost 
benefits have come in 2013 from the fullyear 
impact of initiatives undertaken in the second 
half of 2012 w e continue to increase the use 
of our lowcost manufacturing footprint for 
example completing the relocation of electrical 
brush manufacturing from the n etherlands to 
hungary and the cessation of hightemperature 
ceramic fibre manufacturing in highcost 
australia japan and south africa supplying 
these markets instead from our lower cost 
facilities elsewhere in the world 
as a result of the cost actions taken combined 
with the positive changes we have made to our 
product mix we have progressively delivered 
increases in our g roup ebit a 1 10 in the 
second half of 2012 increasing to 120 in the 
first half of 2013 and 129 in the second half 
of 2013 t he 2013 fullyear ebit a margin of 
124 is an improvement against the 120  
in 2012 
t he g roup also continued to generate good 
levels of cash and to further reduce the net 
debt position to £1865 million 2012 £1928 
million leaving the g roup with the capability 
to easily finance any appropriate bolton 
acquisitions that satisfy our investment criteria 
t he financial performance and the progress 
made underpins our progressive dividend 
policy and the increase in the final dividend to 
67 pence 2012 64 pence giving a fullyear 
dividend of 105 pence 2012 100 pence 
technology and innovation
w e are an advanced materials g roup and 
worldleading technology and constant 
innovation is at the core of what we do  
w e have continued to increase our investment 
in r d in 2013 in both £ and  terms spend 
in 2013 was £202 million or 21 of sales 
compared with £196 million in 2012 19 of 
sales t he move to o ne morgan has provided 
additional impetus to our r d efforts w e 
appointed in 2013 a g roup chief t echnology 
o fficer whereas in the past this function was 
conducted at the divisional level his remit  
is to coordinate and deploy g roupwide  
r d resource on those initiatives that are 
considered to be the highest potential  
growth opportunities for morgan examples  
of this include the development of next
generation low biopersistent fibres extending 
the temperature coverage of our superwool
®
 
fibre products and the introduction of 
additional g lobal materials centres of 
excellence – these are single locations where 
we consolidate development resource and 
efforts for our major product lines providing 
critical mass that links effectively with our  
global manufacturing and sales network 
chief exe cut ive o fficer ’s re view
continued 11 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
overview str ategic 
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our people
i have been delighted with the way in which 
the g roup workforce has embraced the  
new organisational structure many have been 
affected by the change in the organisation 
assuming new responsibilities and working  
in new reporting structures such change 
brings with it the challenge of maintaining good 
business continuity and i am delighted with  
the way our employees have risen successfully 
to these challenges r egrettably this re
organisation along with a number of the  
cost reduction initiatives implemented across 
the g roup has led to some redundancies  
i see this as an unfortunate but necessary 
consequence of looking to do the best for  
the g roup as a whole in such redundancy 
situations we ensure that in addition to 
complying with local legislation we seek to 
treat our people with honesty and respect 
throughout the process as a g roup we 
recognise the importance of developing our 
people o ne morgan has further helped in  
this regard allowing us to take a single global 
view of the talent in our organisation and how 
we manage their careers across geographies 
and functions to ensure we are developing  
our future leaders t o support this we have 
increased the scale of our awardwinning 
graduate recruitment programme with  
26 new graduates hired in 2013 compared  
to 20 in 2012 and a target to bring in more 
than 30 in 2014 t hese graduates are sourced 
from top universities around the world and  
a significant proportion of them are women 
providing real diversity i am pleased to report 
that securing the brightest young minds from 
the best universities across the world is 
providing us with an exciting and growing 
pipeline of real talent for the future 
looking forward
o ur goal is to deliver sustained profitable 
growth effectively exploiting our worldleading 
technology and global reach not only to take 
advantage of endmarket recovery but most 
importantly to create our own opportunities 
w e have already actioned a number of our 
portfolio reshaping initiatives to increase  
further our focus on accelerated profitable 
growth underpinned by differentiation and 
technological leadership and we expect more 
of these portfolio reshaping initiatives to come 
through in 2014 
t he creation of o ne morgan our increased 
investment in innovation and technology and 
the quality of our people leave us increasingly 
well positioned to deliver such growth and 
margin enhancement
mark r obertshaw
chief executive o fficer 12 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
w hat morg an doe s
morgan advanced materials is a worldleader 
in advanced materials focused on specialist 
ceramics carbon and composites w orking at 
the forefront of materials science the g roup 
supplies differentiated products to a range of 
attractive growth markets satisfying technically 
demanding applications and enabling 
customers’ products to perform more 
efficiently reliably and for longer in a wide 
range of markets
bu sine ss stru cture
o perating from approximately 100 
manufacturing sites supported by a network  
of sales offices and employing approximately 
9100 people morgan advanced materials  
has a significant operational presence in all  
the world’s major regions serving customers  
in over 100 countries
following the implementation of o ne morgan 
in early 2013 the g roup now reports through 
three geographical regions n orth america 
europe and asiar est of w orld and each of 
those regions offers the full range of morgan’s 
product and services t he move away from  
the previous structure defined by product 
lines has enabled better collaboration and 
efficiency within the morgan g roup and has 
resulted in more crossr egional selling and 
improvements in how the g roup interacts  
with its key clients t he o ne morgan model 
integrates the g roup under a cohesive brand 
identity which better reflects the business as  
a whole 
morgan manufactures a large range of 
products satisfying a variety of applications  
and for a number of endmarkets
t he principal product ranges are
  insulating fibre brick and monolithics  
– 35 of g roup revenue in 2013 –  
an extensive range of hightemperature 
insulation products used to reduce  
energy consumption in industrial 
processes a morgan design team will  
often work with the customer to ensure  
an optimum solution
  electrical carbon linear and rotary transfer 
systems – 15 of g roup revenue in 2013 
– primarily used for transferring electrical 
energy in motor and generator applications 
within mining transportation and power 
generation markets
  seals and bearings – 7 of g roup revenue 
in 2013 – carbongraphite and silicon 
carbide components that provide 
improved performance reliability and 
extended life to pumps and similar 
equipment used in petrochemical 
aerospace and water applications
  ceramic cores for investment casting –  
5 of g roup revenue in 2013 – 
consumable products used to create 
intricate internal cooling cavities in aero 
engine and industrial gas turbine blades
  piezoelectric sensors and transducers – 
4 of g roup revenue in 2013 – products 
for measurement duties including level 
flow vibration and pressure in aerospace 
medical industrial and defence applications 
  crucibles for metals processing – 5 of 
g roup revenue in 2013 – comprehensive 
range for optimum performance in 
nonferrous metal and alloy melting  
in foundries diecasters and metal 
processing facilities
  hightechnology composites – 3 of 
g roup revenue in 2013 – which are 
combined with the g roup’s advanced 
ceramics for lightweight armour systems 
providing ballistic protection in the form of 
personnel body armour or vehicle armour 
in addition to these principal product ranges 
there are also a high number of application
specific products made to customer 
requirements using a wide range of structural 
ceramics electroceramics and precious metals 
that are sold into the seven markets 
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marke ts
th e g roup oper ate s in  
a nu mber o f sele cte d 
mar ket s ector s t he 
perc ent age o f group 
re venue f ro m each o f 
th ese togeth er w ith 
ex ample s o f t he pro du ct s 
morg an suppl ies  
is pro vided below 
morgan advanced materials designs and 
manufactures products for use in a broad  
range of challenging processes and 
manufacturing environments
t he g roup’s advanced materials offer a wide 
range of performance characteristics including 
superior insulating properties dimensional 
stability strength and stiffness
w ith these materials the g roup engineers 
components that are highly resistant to 
chemical and physical wear corrosion and 
extreme heat for use in industrial processing 
and demanding manufacturing environments
many of the industrial projects the g roup  
is involved in exploit the properties of its 
advanced materials to contribute to improved 
process efficiency productivity and reduced 
waste and environmental impact
for example in the mining industry the  
g roup’s electrical brush material technology 
has facilitated reliable equipment operation in 
harsh environments even in the very deepest 
mines in the world t he g roup’s crucible 
technology is helping to improve the efficiency 
of energyintensive melting processes used  
in metal casting through increased strength 
and longer life
syncarb z 2 crucibles for aluminium processing 
are made with isostatically pressed hybrid 
ceramic with a high silicon carbide and  
graphite content t his gives them a high 
breaking strength so they last longer in the 
harsh environments in which they operate 
lowering the costs of operation for the  
group’s customers
t he g roup’s insulating products allow 
manufacturers to control their thermal 
processing operations for optimum throughput 
for example the high fibre content of the 
g roup’s superwool plus
®
 low biopersistent 
insulating fibre used for hightemperature kiln 
linings means it is 17 more energyefficient 
than traditional refractory ceramic fibre
morgan advanced materials makes  
highperformance products to exacting 
standards for aerospace automotive marine 
and rail applications
t he g roup has longstanding experience  
in the transport sector making components  
and subassemblies for many and varied 
applications t he g roup combines its materials 
science and manufacturing capabilities to offer 
consistent and reliable products in flexible 
production quantities from small even  
oneoff runs to highvolume
o ver the years the g roup has applied its 
materials knowhow to solve engineering 
challenges and enhance performance for air 
sea and land transport systems for example 
the g roup has helped to improve reliability in 
highspeed rail and on longhaul freight trains 
that must operate consistently in widely varying 
climatic conditions t he g roup has developed 
precision parts used in the manufacture  
of aero engine turbine blades and critical 
components for inflight refuelling and  
satellite positioning systems
in the automotive sector the g roup supplies 
hightemperature fibre products used in 
catalytic converters and has developed  
new materials that improve performance  
and address regional regulatory issues in the 
vehicle emission controls market t he g roup 
has also contributed to the development of  
more fuelefficient vehicles with lightweight 
components and intelligent fuel sensors  
and is working on projects to help improve  
the efficiency of battery technology for  
electric cars
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morgan advanced materials supplies precision
engineered materials components and 
assemblies to meet the exacting standards of 
the international defence and security markets
materials technology and manufacturing 
capability is combined to produce solutions  
that deliver real performance benefits in 
security and defence applications from  
military hardware to surveillance equipment
t he g roup is a global leader in lightweight 
armour systems for the protection of people 
vehicles and equipment t he g roup’s vehicle 
armour combines advanced ceramics with 
hightechnology composites to create systems 
that are much lighter than the equivalent in 
armoured steel t hey are easier faster and 
more costeffective to deploy and they 
demonstrate higher ballistic performance
t he g roup’s ceramic components for naval 
sonar systems are made from hardwearing 
pzt 400 and pzt 800 series piezoelectric 
formulations to ensure low dielectric and 
mechanical losses in the transducer for 
optimum acoustic output and efficiency
r eliability of products materials and supply  
is a fundamental requirement in this market 
t he g roup is a critical resource supplier for  
the u k ministry of defence providing tactical 
wheeled vehicles equipment and armour  
and a t ier 2 supplier of ceramic body armour 
plates to the u s department of defense
morgan advanced materials makes 
components for use in semiconductor 
fabrication and electronic products
t he g roup exploits the unique properties  
of its advanced materials to help electronics 
manufacturers achieve competing demands  
on size functionality and cost
t he g roup works closely with its customers  
to design and manufacture small or intricate 
components achieving explicit electrical and 
thermal properties within restricted size and 
shape constraints t he g roup is able to  
offer durable piezoceramics highquality 
dielectric materials and specialised metallisation 
techniques t he g roup’s products are found  
in mobile phones laptops highdefinition 
televisions lighting controls laser instrumentation 
microwave and highvoltage systems  
for example the g roup’s single capacitor 
assemblies are constructed from ceramic 
dielectric materials that exhibit a high  
ac breakdown strength allowing them  
to operate continuously in the capacitor  
divider circuits for which they are designed 
saving significant space
in semiconductor and le d substrate 
fabrication the g roup’s highpurity materials 
and controlled microstructures have brought 
significant yield improvements in specialist 
processes for ion implantation epitaxy and 
compound crystal growth
examples include the use of very highpurity 
silicon carbide to coat graphite wafer carriers 
used in chemical vapour deposition tools  
t he material is resistant to the harsh high
temperature ammonia environment so the 
possibility of contamination is much reduced
morgan advanced materials makes critical 
components for demanding applications  
in the global petrochemical industry
t he oil and gas industry presents some of the 
world’s harshest operational environments  
for equipment and people t he g roup’s 
products and materials are routinely chosen  
to fulfil critical applications on and offshore in 
exploration drilling and downstream processing
it is the resistance of the g roup’s materials  
to chemical and physical wear corrosion and 
extreme heat that makes them ideally suited  
for use in these severe duty applications for 
example due to a unique microstructure the 
g roup’s zirconia materials exhibit a property 
known as ‘transformational toughening’ that 
makes them exceptionally strong and resistant 
to corrosion and abrasion t he g roup uses 
them to engineer hardwearing parts for pumps  
drilling machinery and specialist fluids  
handling equipment
t he integrity of the components the g roup 
manufactures are often fundamental to the 
safety and efficiency of highvalue hydrocarbon 
extraction and processing operations for 
example the g roup’s precision machining  
of silicon carbide composite mechanical  
seals dramatically reduces interface leakage  
in demanding conditions allowing operators  
to work at elevated contact pressures t he 
g roup’s tribology work on pumps and bearings 
is producing lowfriction composites for longer 
life and better energy efficiency
t he g roup’s highefficiency insulation materials 
are used to provide complete fire protection 
systems for low critical temperature operations 
on and offshore
w hat morg an doe s
continued
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morgan advanced materials develops products 
for power distribution and generation from 
renewable and traditional sources and 
insulation materials for heat management
t he g roup’s materials and products have  
a strong reputation for performance and 
reliability in the energy sector built on years  
of experience supplying products across the 
electricity supply chain 
t he g roup continues to work on diverse 
energyrelated projects from piezoceramics 
for energy harvesting technologies to 
highquality capacitance for highvoltage 
systems and specialist fire protection systems 
for offshore wind farms
increasingly the g roup’s materials technology 
is employed to allow more efficient use of 
energy by reducing friction providing better 
insulation and enabling new technologies for 
example the g roup makes metallised ceramic 
components for critical service uninterruptable 
power supplies using our sintox™ fa which is 
chemically resistant to the corrosive environment 
within the cell structure and provides high 
strength and joint integrity for the lifetime  
of the battery
morgan advanced materials makes 
components used in medical monitoring 
instrumentation and tools for treatment  
and surgery 
medical engineering demands the highest 
standards of precision accuracy reliability and 
performance equipment manufacturers and 
medical professionals choose the g roup’s 
materials for their exceptional physical 
characteristics
t he g roup’s teams collaborate with medical 
scientists and device manufacturers to source 
refine and engineer materials that facilitate 
specific advances in diagnostics surgery 
therapy and treatment for example the 
g roup’s piezoceramic air inline and occlusion 
sensors allow noninvasive air bubble detection 
and accurate measurement of pressure changes 
in tubes leading in to the body providing a 
highly precise means of monitoring safety
critical events in infusion pumps feeding 
pumps dialysis equipment and other medical 
fluidhandling equipment
t he g roup also makes highquality ceramic 
implants including ceramic replacement hip 
and knee joints favoured by surgeons because 
they have better resistance to wear than 
polyethylene and complex ceramictometal 
assemblies used in implantable pacemakers 
defibrillators neurostimulators and housings  
for cochlear implants
experience over many years has given the 
g roup a good understanding of the uniquely 
demanding environment in which equipment 
for the global medical market is developed 
t he g roup’s capability in materials innovation 
and quality manufacturing allows it to produce 
parts that are optimised to meet precise 
complex physical and chemical specifications
energy healt hcare
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morgan advanced materials’ business model  
is based on taking the full depth and breadth  
of its advanced materials capabilities to selected 
markets across the globe t he implementation 
of the o ne morgan structure in early 2013 
allows the g roup to fully leverage geographic 
infrastructure and endmarket positions to 
most effectively achieve this t he g roup 
reports as three geographical regions  
n orth america europe and asiar est of 
w orld each serves its local markets with  
the full range of morgan’s material capabilities 
w here appropriate crossregional collaboration 
takes place to support for example key global 
customer accounts operational benchmarking 
or new product development
t he g roup’s core values are based on a 
commitment to act with integrity when dealing 
with customers employees shareholders 
suppliers and the wider community so that it 
continues to maintain the trust and confidence 
of those with whom it deals with t he g roup 
aims to be vigilant and proactive in respect  
of environmental health and safety matters  
t his common culture is critical to the  
continued growth and development of  
morgan advanced materials 
t he g roup is organised and managed to 
ensure absolute clarity as to responsibility  
and accountability with a focus on pushing  
as much decisionmaking down to regions  
and local businesses as possible within a 
wellunderstood strategic framework and 
schedule of authorities 
customers and markets
at the core of what morgan does is the 
development of longterm relationships with 
customers working collaboratively with them 
over time and on multiple initiatives to develop 
materials components and subassemblies  
to address very specific customer needs t he 
parts that the g roup makes often play a critical 
role in its customers’ products helping them to 
perform more efficiently more reliably or for 
longer sometimes in the most demanding 
environments r elationships are built at 
multiple levels between morgan advanced 
materials and its customers to ensure its 
materials science and its manufacturing 
knowhow is utilised both at the start of its 
customers’ product lifecycle and through the 
ongoing refinement of products and solutions 
positioning morgan as the supplier of choice  
for current and nextgeneration products 
t he g roup focuses on higher growth higher 
margin noneconomically cyclical markets 
where customers demand product and service 
excellence t hese markets include energy 
generation aerospace and healthcare
t he g roup enjoys a good spread of customers 
in terms of markets and geographies and while 
the loss of certain of these could affect the 
operations of a particular local business  
none are considered financially essential to  
the g roup as a whole n otwithstanding this  
the g roup devotes significant resources to 
ensuring these relationships continue to 
operate satisfactorily
additional information on the markets served 
by the g roup and on its products are included 
in w hat morgan does on pages 12 to 15
operations
as noted above the g roup has a truly global 
footprint that allows it to effectively serve  
its customer base u tilising that footprint in 
terms of providing the highest level of service 
excellence to its customers and maximising 
operational excellence and costefficiency is  
a critical element of the business model
t he g roup continues to increase the effective 
use of its lowcost manufacturing footprint 
through sites in hungary mexico india and 
china t hese sites act as points of supply to 
their immediate geographic regions and also  
as global points of supply where appropriate 
o perational benchmarking across sites  
with similar productsprocesses is also  
utilised alongside a suite of operational 
efficiency initiatives
t he quality and reliability of certain raw 
material inputs is critical and just as the g roup 
has developed excellent relationships with 
customers it has also longterm and effective 
relationships with its critical raw material 
suppliers w herever possible raw materials are 
dualsourced or there are actionable plans in 
place for alternative sources should the supply 
chain be disrupted 
research and development
research and development is at the heart  
of what morgan does t he g roup’s research  
and development ‘r d’ capabilities are led  
by a chief t echnology o fficer supported by 
technical directors in each geography and in its 
principal product areas in turn these technical 
directors oversee a network of materials 
scientists and applications and process 
engineers across the g roup’s sites t he focus is 
on constantly refreshing the innovation pipeline 
and the effective commercialisation of these 
efforts t he g roup works closely with its 
customers to engineer solutions that address 
their needs and also undertakes research in 
collaboration with worldleading universities 
and other organisations w here appropriate 
the g roup’s intellectual property is protected 
with patents
o ne of the key elements to the g roup’s r d 
strategy is the establishment of g lobal materials 
centres of excellence t hese provide critical 
mass in terms of resource and capability  
and focused expertise in morgan’s core 
technologies t he hightemperature fibre 
centre of excellence in bromborough u k  
has been critical to the successful development 
and rollout of the marketleading superwool
®
 
range of low biopersistent fibres
r ole of centre
t he g roup’s head office is based in w indsor 
u k and is the location of the g roup’s central 
functions comprising approximately 35 people 
t he centre is responsible for external investor 
relations funding and treasury management 
and other areas where it is appropriate for 
specialist expertise to be brought together  
in one place for the benefit of the g roup  
such as pensions insurance tax legal and 
environmental health and safety t he centre 
also provides the strategic framework for the 
g roup clarity on core values and ‘responsible 
business’ and the processes for appropriate 
business monitoring through the business 
planning and budget cycles t he corporate 
centre is small and the lines of communication 
with the businesses are short and responsive
group bu siness m o del
morg an pro vides advan ced mater ial s olut ion s to  
a vari ety o f en dmark et s worki ng c oll abor at ively  
w it h cu sto mer s worl dw ide to pro vide eng ineere d  
pro du ct s t hat sa t isfy te chn ically cha lleng ing  
requ irem ent s in d eman ding en viron ment s 17 str ateg ic report
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group str ategy
th e g roup’ s str ategy is bas ed on b u il ding a s u st ain able 
bu sine ss for t he longter m by fo cu sing on i t s five  
str ateg ic pr ior it ies an d re main ing c o mmitte d to  
del iver ing s trong fi n an cial return s
str ateg ic pr ior it ies imple mentat ion
be innovative differentiated and high 
valueadded to our customers
t o focus on higher growth higher margin 
noneconomically cyclical markets
be number one of number two in  
our chosen market segments
have a culture of operational excellence 
and cost efficiency
find keep and develop the right people
by helping to solve technically demanding challenges for our discerning customers the  
g roup is able to secure the value that these skills and efforts justify allowing it to build 
longterm relationships with customers who regard morgan as a solutions provider rather  
than just another supplier
o ver time morgan actively manages its portfolio and makes capital and people investments  
to maximise exposure to its chosen geographies and markets
a significant majority of revenue comes from markets where the g roup has successfully 
established a leading position t hrough detailed ‘share of wallet’ assessments morgan 
understands its position and actively targets where this can be improved t he g roup  
nurtures and maintains relationships with key customers at multiple levels in the organisation
from these strong positions the g roup is able to invest in longterm relationships with 
customers providing technology leadership and delivering good sustainable returns
providing the g roup’s customers with product and service excellence secures morgan’s 
revenue stream and a focus on all elements of its cost base maximises the profits generated 
from that revenue t he g roup is focused on managing its operational footprint using its 
lowcost operations as much as possible sourcing decisions manufacturing and back office 
efficiency and on minimising scrap and any other inefficiencies throughout its processes
t he ‘people process’ begins with a robust recruitment process considering internal and 
external candidates utilising a suite of assessment tools and interviews t here is a growing 
graduate recruitment programme targeting the world’s best universities and providing a 
pipeline of talent t raining and development is targeted to develop jobspecific and wider 
management skills and a flexible remuneration package considers the external market and 
individual contribution site regional and global communication is regular and environmental 
health and safety is a key focus at all levels of the business
t he g roup uses its strategic priorities to test new investment opportunities to screen its businesses for fit with the existing g roup and to  
identify areas requiring strategic attention and action 18 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
key per for man ce in dicator s
t o support the g roup’s strategy and to 
monitor performance the board of directors 
and the executive committee use a number  
of financial and nonfinancial key performance 
indicators kpis t hese kpis are selected as 
being important to the success of the g roup  
in delivering its strategic objectives progress  
is assessed by comparison with the g roup’s 
strategy its budget for the year and against 
historic performance r egional and business 
management use a range of further 
benchmarks and other kpis as part of their 
planning and performance review processes  
in order to measure the underlying 
performance of the business management 
further analyse the headline kpis to exclude  
the impact of acquisitions and foreign exchange
t he list of kpis selected is reviewed and 
updated to ensure they remain important  
to the success of the g roup financial and 
nonfinancial performance is reviewed in  
more detail in the corporate r esponsibility 
review of o perations and financial review 
sections of this report
 kpi 2013 2012 w hy a k pi per for man ce co mment ary
financial kpi s
r evenue growth 49 85  creating consistent longterm  
value for shareholders
  focus on higher growth markets
  r evenue declined in the first half of 2012 and 
at constant currency there have since been 
three halfyears with no growth of note
g roup underlying operating  
profit margin
113 107  creating consistent longterm  
value for shareholders
  focus on higher growth markets
  t o have a culture of operational  
excellence and costefficiency
  improvements in sales mix operational 
improvements and overhead reductions from 
o ne morgan and other initiatives have more 
than offset the impact of reduced revenue
free cash flow before  
acquisitions  
and dividends
£374m £489m  creating consistent longterm  
value for shareholders
  a reduction on prior year due primarily to the 
increased capital expenditure investment and 
spend on the restructuring programmes in the 
year both of which are expected to improve 
the longterm position of the g roup
r eturn on o perating  
capital employed
275 263  creating consistent longterm  
value for shareholders
  l imited improvement made in ro ce in  
the year – small increase in profit and small 
decrease in capital employed a key area of 
focus for the future as reflected by the fact 
that this is a key element of lt ip plans
u nderlying earnings  
per share
215p 217p  creating consistent longterm  
value for shareholders
  t he underlying earnings have increased 
marginally but there has been a larger increase 
in the weighted average number of shares 
thereby reducing this ratio
dividend per share 105p 100p  creating consistent longterm  
value for shareholders
  a 5 increase in the dividend is driven by the 
improved results and reflects management’s 
confidence in the business
n onfinancial kpi s
u
yearonyear pricing change 14 20  t o be high valueadded to  
the group’s customers
  t he g roup has continued to secure price 
increases across most of its businesses though 
the challenging market dynamics particularly  
in asia means that this is lower than 2012 
critically the g roup continues to achieve 
positive price pass through – the sales price 
increase more than covers direct and indirect 
cost increases
employee turnover 138 134  t o find keep and develop  
the right people
  t his increase reflects the actions taken as part 
of o ne morgan as well as other costcutting
headcount reduction actions that the g roup 
has taken over the year
l ost time accident frequency  
per 100000 hours worked

044 052  t o have a culture of operational  
excellence and costefficiency
  t o find keep and develop  
the right people
  a good 15 reduction with significant 
progress in the asiar est of w orld region 
where there have been sustained efforts to 
increase safety awareness and good practice
tonnes c o
2
e per £m revenue

404 392  t o have a culture of operational  
excellence and costefficiency
  w hilst absolute emissions reduced by 2  
this was on revenue that was nearly 5 lower  
as a number of our energyintensive processes 
cannot be fully flexed to sales volumes

 definitions of the measures can be found in the glossary
u
 
n onfinancial kpis are at constant currency and updated to reflect changes in reporting methodology
   2013 l ost t ime accident frequency and the 2013 and 2012 co
2
e information has been subject to assurance by pwc see page 31 for further details 19 str ateg ic report
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risk mana ge ment
t he g roup has an established risk management 
methodology in place which seeks to identify 
quantify manage and mitigate both existing and 
emerging risks together with a comprehensive 
internal control framework and appropriate 
assurance processes t he board considers that 
this is fundamental to achieving the g roup aim of 
creating longterm sustainable shareholder value
r isks are identified ‘top down’ by the board 
and ‘site up’ though the g roup’s businesses  
and are quantified by assessing their inherent 
impact and mitigated probability to ensure  
that the true potential impact of any risk and  
its likelihood of materialising is appreciated 
throughout the g roup t he daytoday 
management of risk sits within the g roup’s 
internal control framework at the level of the 
g roup where the impact would materialise 
with the effectiveness of the controls and 
mitigating actions being monitored and 
assessed through a g roupwide review 
process senior members of the management 
team are responsible for the strategic 
management of the respective key risks 
including related policy guidelines and process
during 2013 the boardaudit committee 
reviewed all risks with an inherent potential 
ebit a impact of above £5 million and the 
controls and assurance processes that are in 
place to mitigate those risks as a result of this 
review a number of actions were identified  
to improve controls and the mitigation of risk 
for example the review of both the ‘top 
down’ and ‘site up’ single point exposures 
identified the need to qualify alternate suppliers 
of key materials both internally and externally  
at certain of our businesses t he boardaudit 
committee annual review of key risks will 
continue into 2014 and beyond 
t he following risks feature in the g roup’s key 
risk register and are those that the board feels 
could have the most serious effect on achieving 
our strategy of building a sustainable business 
for the long term and delivering strong returns 
to our stakeholders
r isk miti g ati on
strategy and strategic planning risks
technology obsolescence
o ne of the g roup’s strategic priorities is that it aims to ‘be innovative 
differentiated and high valueadded’ t his is fundamental to 
achieving the goal of continuing to be one of the world’s very  
best advanced materials companies
unforeseenunmitigated technology obsolescence the loss  
of control of proprietary technology or the loss of intellectual 
propertyknowhow would impact the g roup’s business and  
its ability to deliver on its strategic goal
recruiting maintaining and motivating highquality staff
another of the g roup’s strategic priorities is to ‘find keep and 
develop the right people’
t he advanced technological nature of the g roup requires people 
with highly differentiated skillsets any inability to recruit retain  
and develop the right people would impact the g roup achieving  
its strategic priority
t he g roup has a chief t echnical o fficer and a dedicated 
technology team which monitors technology and business 
developments specifically the team has developed technology 
roadmaps for its major technology families to ensure it is at the 
leading edge of technology development but also to understand 
emerging and competing technologies 
t he technology team proactively manages the g roup’s technology 
pipeline and r d investment in newimproving technologies t his 
technology pipeline is regularly reviewed by the g roup executive 
and the board 
w here g roup products are designed for a specific customer  
they are developed in tandem with the customer to maintain 
leadingedge differentiated solutions of value 
t he g roup seeks to secure ip protection where appropriate  
for its existing and emerging portfolio of products external advisers 
manage this protection globally
making morgan a safe fulfilling and rewarding g roup to work for  
is the primary means of control and the g roup has an hr director 
and a network of hr professionals within the business along with 
policies and processes to manage the risks relating to its people 
t hese cover areas including reward and recognition health and 
safety talent management skills assessment and development 
performance management and employee consultation
a global employee survey was carried out in 2013 the results  
of which will inform further actions going forward
in 2012 the g roup launched a g raduate l eadership programme 
and this ran for a successive year in 2013 with enhanced numbers 
of graduates and with a greater global focus
further detail on people is available on pages 32 to 34 20 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
risk mana ge ment
continued
r isk miti g ati on
operational risks
treasury risks
t he g roup’s global nature means that it is exposed to uncertainties 
in the financial markets and the banking sector which heighten the 
g roup’s foreign exchange interest rate credit and liquidity risks as 
well as the risk of bank failure impacting the g roup’s cash
quality of contracts
as a global advanced materials business supplying into critical 
applications our quality of contracts must match our quality of 
products ineffective contract risk management could result in 
significant liabilities for the g roup and damage customer relationships
it risks and cyber risks
in order to meet the g roup’s strategic objectives the viability  
of its underlying it infrastructure is essential if a critical business 
system was to fail or the g roup lost critical data or information 
through inadequate data management or security of it systems  
the business would be impacted
product quality safety and liability
products used in applications for which they were not intended  
or inadequate quality control systemsovercommitting on 
specifications could result in products not meeting specifications 
which could lead to significant liabilities and reputational damage
t he g roup’s t reasury function t reasury policy and guidelines 
provide strict controls on the selection of banks and cash 
management t he t reasury team proactively manages and  
is ultimately responsible for all of the g roup’s funding liquidity  
cash management interest rate risk foreign exchange risk and 
other treasury business
t he g roup has an inhouse legal function supplemented by 
external lawyers
t he g roup legal policy requires inhouse legal review of highvalue 
or highrisk contracts to ensure that the contracts contain the 
appropriate protection for the g roup ceo approval is required 
before any part of the business can enter into an unlimited liability 
contract or one where the liabilities could exceed £5 million in 
2013 the ceo approved entry into only two contracts with this 
liability profile where the underlying risks were considered to be 
within the g roup’s risk appetite
t o the extent that risk has not been managed out of the contractual 
process the g roup has insurance cover approved by the board 
including product liability insurance
t he g roup has an it policy and guidelines in place as well as 
g roup and business it teams to manage the g roup’s infrastructure 
technology roadmap and it risks 
during the course of 2013 there has been focus on testing the 
global infrastructure including elements of it auditing into the 
internal audit process reviewing data management and reviewing
developing the g roup’s business continuity plans in relation to it risk 
in relation to cyber risk a number of steps have been taken in 2013 
security guidance documents have been introduced access 
privileges have been improved and network monitoring enhanced 
further improvements are planned in 2014
many of the g roup’s products are designed to customer 
specifications o ver 90 of the g roup’s manufacturing output  
is accredited to iso 9001 and the g roup’s quality management 
systems and training help ensure that morgan’s products meet or 
exceed customer requirements and nationalinternational standards
contracts relating to products used in potential highrisk 
applications are subject to mandatory legal review
t here were no material product quality issues in 2013
t he g roup insurance programme includes product liability insurance 
this g rouplevel insurance is reviewed annually by the board 21 str ateg ic report
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operational risks continued
single point exposures
t he g roup has a number of potential single point exposure risks  
these include
  single point supplier – a significant interruption of a key  
internal or external supply could impact business continuity
  single point customer – the unmitigated loss of a major 
customer could have an impact on g roup profit
  single point profit – a key site exposed to a strike a natural 
catastrophe or serious incident such as fire could impact 
business continuity
environment health and safety ehs risks
t he g roup operates a number of manufacturing facilities around 
the globe a failure in the g roup’s ehs procedures could lead to 
environmental damage or lead to injury or death of individuals  
with a consequential impact on operations and raising the risk  
of regulatory action being taken against the g roup any such action 
could result in litigation resultant damages and damage to reputation
compliance and ethics risks
changes to or noncompliance with laws and regulation
t he g roup’s global operations must comply with a range of 
national and international laws and regulations including those 
related to bribery and corruption human rights exports and 
competitionantitrust 
a failure to comply with any applicable lawsregulations could result 
in civil or criminal liabilities individual or corporate fines and could 
also result in debarment from government related contracts and 
reputational damage
t he g roup executive is responsible for monitoring and managing 
these single point exposures
l ocal and r egional management of these risks involves monitoring  
and reviewing supply chains internal and external dualmultiple 
sourcing of materials or strategic stock fire protection systems 
creating and testing disaster recovery plans and maintaining 
product quality and customer relationships
t he g roup insurance programme includes business interruption 
cover this g rouplevel insurance is reviewed annually by the board
t he g roup has a welldeveloped ehs programme managed by  
the ehs director with sitebased ehs officers to implement and 
monitor ehs adherence at site level
during 2013 the g roup has implemented a number of safety 
performance improvement programmes and launched a process  
to analyse and understand the root causes and consequences of all 
lost time accidents in 2014 a global behavioural safety programme 
will be introduced g roupwide
further detail of the ehs programme in place to manage these 
risks is available on pages 26 to 31
t he g roup is committed to the highest standards of corporate and 
individual behaviour and this commitment is set out in the g roup’s  
core values statement and ethics policy
due to the potential magnitude of corporate fines compliance risks 
are identified as some of the most significant risks for a number  
of reasons
  morgan’s historic breach of antitrust laws creates a greater 
sensitivity to antitrust risk and means that the g roup could  
be subject to the greater potential liabilities which attach to 
repeat offenders
  t he location of a number of morgan businesses and customers 
means they are exposed to greater bribery risk
  morgan exports from the u s and is therefore subject to the 
stringent u s export laws
t he g roup’s r esponsible business programme and the u s export 
director address these areas of risk through policies training
education and reportingassurance processes full information is 
available on pages 23 to 25 22 str ateg ic report
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risk mana ge ment
continued
r isk miti g ati on
external risks
changing political economic and social environment
t he g roup operates in a range of markets and geographies  
around the world and can be affected by political economic  
social or regulatory developments or instability such as the  
euro crisis and u s government debt‘fiscal cliff’ some of those  
risks related to morgan in 2013 include venezuelan regime change 
argentinian economic policies tensions between china t aiwan 
and japan and u s fiscal cliff
pension funding
t he g roup participates in defined pension arrangements which  
are exposed to fluctuating interest rates investment values and 
inflation t his coupled with the increased longevity of members 
could result in funding burdens on the g roup in the future
t he g roup’s broad marketgeographic spread helps to mitigate the 
effects of political and economic crises
key risks and events are regularly tracked at a business and  
g roup level with contingency plans in place to manage the 
changing situations
financial and treasury controls limit exposure to foreign currency 
interest rate credit and liquidity risk also the g roup maintains a 
carefully managed debt facility to ensure that its debt ratio is within 
acceptable market tolerances
active management of the pension scheme assets is the primary 
means of mitigation t his comprises management both internally 
within the g roup but also externally through corporate actuaries 
and professional advisers
t his is not an exhaustive list and there are many factors that could change for this reason the fundamental concept underpinning  
the g roup’s approach to risk is that beyond the regular review and assessment of controls and mitigation of risk each business is required 
to have an uptodate and tested business continuity plan and to foster a culture of ‘riskreadiness’ t he case study below demonstrates  
the effectiveness of instilling a culture of riskreadiness and was used as a practical way of demonstrating this in the 2013 training sessions 
on risk
in o ctober 2012 hurricane sandy hit the u s and affected a number of our u s businesses particularly certech inc in n ew jersey  
t he hurricane itself was of a greater magnitude and with a more severe effect than had been anticipated and the business found itself 
without power and with severely affected employees having an uptodate business continuity plan in place to follow and to use as 
guidance was important but what took the business ‘beyond’ this was the culture of ‘riskreadiness’
  as the hurricane was expected preparations had been made including the securing of accesses signage and anything that could  
cause damage externally t he evening shift was cancelled and employees told to stay at home this being communicated via an 
existing telephone ‘chain’ system t he g eneral manager and the maintenance engineer remained on site the engineer staying  
on site throughout the night 
  t he following day emails were sent to all employees advising that those who ‘could’ get to work would be welcome t here were 
variable attendance rates in the following days but management played their part in allowing for flexible working to fit around 
childcare logistical and safety issues t he employees also played their part many walkingcycling or finding a car share in order  
to get into work 
  hourly staff who were concerned about lost wages were offered additional overtime to the extent possible 
  w ith basic supplies becoming an issue for many employees other morgan plants shipped in dried goods soups toilet paper  
nappies and petrol 
  a w almart gift card of u s150 was issued by the n orth american management for everyone in the certech business
t he plan provided the structure for the immediate reaction but the riskreadiness culture of the management and local teams across  
the affected business resulted in limited ‘downtime’ in production no lost contractsdamage to customer relationships and a developed 
sense of ‘team’ 23 str ateg ic report
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corpor ate re spon sibil ity is i ntegr al to t he morg an g roup  
it m ean s a co mmit ment to b ehaving w it h integr ity a n d  
having a po sit ive impact on i t s employee s it s st akehol der s  
an d t he co mmun it ies in w hich t he group wor ks
corpor ate re spon sibil ity
morgan values
t he core values statement is the guiding 
principle for the g roup’s global approach to 
corporate responsibility t his underpins the 
g roup’s commitment to doing business the 
right way limiting the impact of its operations 
on the environment protecting and developing 
its people and supporting the communities  
in which the g roup works
morgan strategy
t his firm commitment to doing business the 
right way is integral to the g roup in continuing 
to be one of the world’s very best advanced 
materials companies where corporate 
responsibility is a differentiator t he g roup’s 
r esponsible business programme ‘r bp’ 
environment health and safety ‘ehs’ 
programme and the approach to morgan’s 
‘people’ support the aim of creating longterm 
sustainable shareholder value
tone from the top
t he board is ultimately accountable for 
corporate responsibility and receives regular 
reports on ehs the r bp and global talent 
management 
t he senior management team recognise the 
need to lead by example t he chief executive 
o fficer mark r obertshaw takes the lead on  
doing business the ‘right’ way whilst the  
chief financial o fficer kevin dangerfield is 
responsible for the g roup’s approach to ehs  
t hey are supported by the g roup executive 
team and functional heads with specific 
responsibility for environment health and 
safety legal compliance and human resources 
t he g roup and business executive teams ‘lead 
from the front’ and set the tone from the top 
2013 examples include
  each of the chief executive o fficer chief 
o perating o fficer and r egional presidents 
participating in 2013 facetoface training 
sessions on responsible business and risk 
and
  t he chief o perating o fficer participating 
in the asia r egion health and safety w eek
“ w e t ake pr ide in t he 
integr ity o f our 
behaviour as well as  
th e integr ity o f our 
pro du ct s an d ser vices 
an d bel ieve t hat worki ng 
in t his manner ac ro ss  
t he g roup  w it h each o f 
our c u sto mer s suppl ier s 
jo int v enture p artner s 
an d repre sentat ives  
is t he ‘r ig ht’ w ay to  
do busi ne ss”
mark r obertshaw
chief executive o fficer
value s str ategy a n d tone f ro m t he top 24 str ateg ic report
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doing business the right way
t he r bp is the g roupwide ethics and 
compliance programme launched in 2010 
providing a policycompliance framework 
underpinning the g roups commitment  
and ensuring a common approach to doing 
business the right way
the r esponsible business programme 
t he three core elements of the r bp are 
policiesguidance trainingeducation and 
compliance risk assessment
policies
t he r bp policies are the ethics competition
antit rust export and donations and 
sponsorships policies 
t hese and related manuals and guidelines  
are each available in 13 languages and oblige 
employees to operate in accordance with 
applicable laws and regulations to obtain  
ceo approval for trading in certain countries 
including iran syria and sudan and to comply 
with rules and internal reporting requirements 
around donations and sponsorship 
t hese policies also apply to the extent 
appropriate to morgan’s business partners 
including agents joint ventures and 
representatives in particular the responsible 
business g uide for representatives summarises 
the ethical principles the g roup requires its 
representatives to adhere to in order to act  
on behalf of the g roup
all policies manuals and guidelines are subject 
to annual review 
training
r aising awareness of and educating employees 
on the g roup policies and the applicable laws 
and regulations is a fundamental part of the 
r bp t here are a number of challenges in 
delivering a programme of this nature across 
more than 50 countries including language 
culture and logistics
feedback is sought from all attendees to ensure 
that the programme develops yearonyear  
and is built for the r egion and the employees 
rather than being a ‘one size fits all’ approach 
since 2010 annual training has included
  el earning modules for human rights 
antibribery and ethics antitrust and 
contract risk management each of which 
requires a 100 score in the test in order 
to pass
  facetoface ‘train the facilitator’ training of 
local managers and site based compliance 
officers and subsequent cascaded site level 
training and 
  site level training by the g roup r bp team 
eg u k france  r ussia
 
t his has been further supplemented by the 
provision of r bp training in g roup induction 
processes t his will be reinforced in 2014 to 
ensure that this is standard practice around  
the g roup 
r isk assessment
r egular compliance risk assessments across  
the g roup help to identify those businesses 
which have a higher risk of a compliance 
breach often associated with highrisk 
territories t hese highrisk businesses receive 
additional focus and support including further 
training guidance and site visits during 2013 
certain of the g roup’s businesses in china 
india and r ussia received such support 
implementation
how are the policies cascaded
policies and procedures are mandated across 
the g roup and apply to all employees 
t he g roup intranet morgan et is the primary 
means of making each of the policies manuals 
and guidelines available to employees it is 
acknowledged that not all employees can 
access morgan et so hard copies are also 
made available locally 
education on the r bp policies is also built  
into each of the r bp el earning modules and  
all facetoface materials
how is the training given 
in 2013 eight facetoface ‘train the facilitator’ 
sessions were held in a number of locations 
around the world t hese were attended by 
184 people including local r egional and g roup 
executives o ne of the g roup’s n onexecutive 
directors also attended a session in the u k
in 2013 the focus of the training was on 
refreshing the antibribery and competition 
training and introducing for the first time some 
facetoface contract risk management and 
export training all training materials were 
provided in 13 different languages to facilitate 
the annual training cascade u ltimately this 
2013 training was delivered to more than 
2000 employees 
what have the risk assessments shown
t he g roupwide bribery risk assessments run 
in 2013 took into account a number of factors 
including location of business location of 
customers the market sector and whether 
third party agents were used t he results of  
this assessment created an internal bribery  
risk ranking that was used to focus additional 
support monitoring and training to be 
delivered in 2014 to a number of the g roup’s 
businesses including those in r ussia and india
corpor ate re spon sibil ity
continued
corpor ate re spon sibil ity 25 str ateg ic report
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ethics hotline
t he ethics hotline operated by expolink  
was in place throughout the year it enables 
employees who are aware of or suspect 
misconduct illegal activities fraud abuse of 
g roup assets or violations of any g roup policy 
to report these confidentially without fear of 
retribution should they feel they cannot use  
a local channel t he hotline includes local 
freephone numbers in each of the countries  
in which the g roup operates with realtime 
translators available as necessary
issues raised through the ethics hotline or via 
other channels are followed up by the regional 
president or the company secretary as 
appropriate further investigation may be 
conducted through the audit committee  
as required w here appropriate disciplinary 
action up to and including dismissal is  
taken andor additional guidance and  
training provided
during 2013 seven reports were received via  
the hotline from australia mexico the u k  
and the u s each of the calls related to local 
human resource grievances including local 
management outsourcing practices overtime 
disputes and stylebehaviour of management 
t he reports were relayed to the relevant 
r egional president and were subject to 
investigation and further actions n o material 
issues were raised
effectiveness
annual certification
r egional presidents and all functional heads  
are required on an annual basis to certify that 
the businessesfunctions they are responsible 
for have implemented and complied in full  
with the policies or declared any exceptions 
t he ceo  cfo and c oo then certify to the 
board on a g roupwide basis 
t his certification forms an integral part  
of the g roup’s system of internal controls  
n o material exceptions were declared in 
respect of 2013 
t his is further supplemented by annual  
sitelevel certification where to the extent 
applicable employees certify that they 
understand and are compliant with the r bp 
and related policies and manuals
internal audit
internal audit has incorporated an  
r bp element into its process and monitors 
adherence to key r bp processes including 
completion of sitelevel training induction 
processes compliance with key elements  
of the r bp policies and the filing of reporting 
forms internal audit also ensures that the 
availability of the ethics hotline is adequately 
promoted at site level
during 2013 internal audit identified  
a number of immaterial breaches in gifts and 
entertainment approval processes particularly 
in asia further training on the importance  
of adhering to approval processes will be 
carried out in the asian businesses in 2014
t he audit committee annually monitors  
and reviews the effectiveness of the hotline 
and of the followup investigation processes  
by considering the number of calls which 
countries they came from and the results of  
the investigations for 2013 it was satisfied that 
the hotline and investigation processes were 
operating effectively
the programme going forward
during 2014 the g roup plans to further 
develop the programme in a number of ways 
including
  updating the existing el earning modules
  providing training for thirdparty agents
  refreshing the ethics antibribery and 
competition training through webinars and 
the provision of new facetoface materials 
for cascade 
  testing the embedding of the programme 
through focused business compliance visits 
and
  sitelevel adherence to the g roup’s 
antitrust compliance programme will also 
become part of the remit of internal audit 26 str ateg ic report
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morgan advanced materials is committed to 
conducting all its activities in a manner which 
achieves high standards of health and safety  
for employees and others affected by its 
operations t his commitment is continuous 
and ongoing
during 2013 the g roup evaluated a number of 
behavioural safety performance improvement 
programmes and work has commenced to 
implement the selected programme on a 
g roupwide basis t his will be a top down 
programme led by the chief executive o fficer 
and the executive team 
as part of the ongoing focus on health and 
safety during 2013 a process was put in place 
to enable the g roup to more fully analyse and 
understand the root causes and consequences 
in terms of lost time of all lost time accidents 
and workrelated illnesses t his increased 
understanding of accident causes helps the 
g roup to reduce the occurrence and effects  
of lost time accidents 
t he g roup is also committed to minimising the 
impact of its business on the environment and 
maximising the positive environmental benefits 
of its products examples of morgan’s products 
which help enhance the environmentrelated 
performance and efficiency of the products  
and operations of the g roup’s customers  
are included in pages 2 to 3 and 12 to 15  
of this r eport
t he regular collection reporting and evaluation 
of ehs key performance indicators kpis and 
the setting of ehsrelated targets assists in the 
development and monitoring of programmes 
to enhance operational and health and safety 
performance and to reduce the impact of the 
g roup’s operations on the environment
t his r eport includes a summary of the  
g roup’s ehs policy and its effectiveness as 
demonstrated through its ehs kpis and training 
and other programmes further detail will  
be included in the 2013 ehs r eport to be 
published on the g roup’s website in may 2014 
t he ehs r eport will also include case studies 
to help demonstrate the g roup’s approach to 
ehs performance improvement
u nder t he companies act 2006 strategic 
r eport and directors’ r eport r egulations 
2013 the g roup is required to report its annual 
greenhouse gas emissions for the year in its 
directors report t his information is shown  
on page 82 and includes the co
2
e

 due  
to energy use which is further analysed in  
this section as well as other sources of 
greenhouse gases
eh s policy
morgan’s ehs policy applies to all g roup 
businesses worldwide it forms the basis for 
executive and management oversight and 
implementation and has been communicated 
across all sites within the g roup t he policy  
is published on the g roup’s website and in  
the annual ehs r eport
eh s policy implementation
morgan’s ehs governance procedures are 
centred on its ehs policy which forms the  
basis of the g roup’s ehs management systems 
and processes t he policy requires high 
standards of ehs management at all sites  
t his is implemented through performance 
monitoring risk assessment and the 
management and mitigation of identified risks 
to help provide continuous improvement in 
ehs performance in support of the g roup’s 
strategic priorities
morg an advan ced 
mater ial s’ en viron ment 
healt h an d safety  ehs 
pol icy a n d imple ment at ion 
progr ammes support  
th e g roup’ s five str ateg ic 
pr ior it ies an d core  
value s state ment  
ehs per for man ce has  
a dire ct a n d sign ificant 
effect on oper at ing 
per for man ce an d is 
t here fore a k ey foc u s  
for r isk assessment a n d 
oper at ion al ma n agem ent 
acro ss t he g roup 
en vironment  healt h and saf ety
   
co
2
e carbon dioxide equivalent – the amount of 
carbon dioxide and the amount of nonco
2
 greenhouse 
gas with the equivalent global warming potential
corpor ate re spon sibil ity
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overview
t he governance structure for ehs places 
responsibility for ehs performance with the 
chief o perating o fficer and the operational 
management team with each site having a 
point of accountability ehs performance is 
reported regularly to the board by the chief 
financial o fficer who has specific responsibility 
for ehs policy strategic direction and 
performance monitoring he is supported  
by the g roup director environment health 
and safety who provides g roup direction and 
oversight with responsibility for implementation 
of g roup ehs programmes including 
standards and procedures the review of the 
adequacy of ehs resources and training across 
the g roup for performance reporting and all 
assurance processes
during 2013 the g roup completed the 
recruitment of ehs leaders in all the r egions 
that it operates t his global network of ehs 
specialists reports to the regional management 
teams and is responsible for improving  
the standards of ehs management and 
performance in the g roup’s businesses t his 
has already begun to show benefits in intra and 
interregional cooperation on ehs issues
as described below the g roup commissioned 
external assurance on selected ehs data from 
pricewaterhousecoopers llp pwc
morgan’s g rouplevel ehs management 
processes include
  t he ehs compliance audit programme 
which is carried out by external ehs 
consultants in europe and asia and 
inhouse resources in the americas t his 
programme reviews the ehs management 
at each site and helps ensure compliance 
with local regulations and good 
management practice t he ehs 
compliance audit programme also covers 
the ehs management systems and the 
ehs kpis reported by each site all of  
the g roup’s manufacturing facilities are 
reviewed on a threeyear rolling cycle 
environmental intensity kpis are reported  
at constant currency and where necessary 
historic ehs data is updated to reflect changes 
in reporting methodology and to ensure 
yearonyear consistency
in 2013 the g roup expanded the independent 
external assurance performed by pwc to 
cover the g roup’s lost time accident frequency 
rate in addition to the information on co
2
e 
intensity energy intensity waste intensity 
water intensity and the waste recycling rate  
that were also assured in 2012 t he assurance 
report from pwc is set out on page 31
t he g roup participates in a number of external 
initiatives which help to benchmark policy 
effectiveness and progress t hese include  
the cdp which is a notforprofit organisation 
that assesses and ranks companies in the major 
industrial countries according to their world
wide carbonrelated reporting strategies 
management and performance in the 2013 
cdp ft se 350 r eport the g roup was  
one of 1 1 companies featured in both the 
carbon disclosure l eadership index and the 
carbon performance l eadership index t his 
performance reflects the continuing progress 
being made throughout the g roup to reduce 
energy usage and resulting co
2
e emissions
morgan advanced materials has made filings  
in respect of the g roup’s u k facilities under  
the u k government’s carbon r eduction 
commitment energy efficiency scheme
accordingly 30 sites were audited during 
2013 and 31 sites are planned for audit in 
2014 t he audit reports are reviewed by 
the director environment health and 
safety and by the r egional presidents 
action items are tracked through a formal 
followup process
  formal training as an integral part of the 
implementation of the g roup’s ehs policy 
t his is undertaken at a regional level 
according to businessspecific risks and 
opportunities with g rouplevel support 
and oversight
  monthly performance reporting against  
the g roup kpis by all g roup sites t he 
data is subject to biannual review and 
challenge at g roup level with reporting  
of performance to the executive 
committee and the board by the  
chief financial o fficer
in 2013 environmental management systems 
were in place at 98 sites worldwide including 
41 sites certified to iso 14001 additional 
certifications were achieved at sites in 
argentina japan and china in 2013 t hese new 
certifications are in addition to the ongoing 
programme of recertifications w orldwide 
103 sites have health and safety management 
systems in place with 18 sites certified to or 
working towards o hsas 18001
eh s policy effectiveness
morgan advanced materials monitors the 
effectiveness of its ehs policy through the  
ehs compliance audit programme the review 
of performance against a series of g roupwide 
kpis its external assurance programme and by 
participating in a number of external initiatives 
as further described below 
t he summary charts on pages 28 29 and  
30 represent the g roup’s ehs performance 
covering all production sites during the year 28 str ateg ic report
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corpor ate re spon sibil ity
continued
environmental performance
w herever possible the g roup works to 
minimise the impact of its business on the 
environment and to maximise the positive 
environmental benefit of its products 
morgan advanced materials monitors the 
impact of its operations on the environment  
as measured by its scope 1 co
2
e and scope 2 
co
2
 emissions energy waste and water 
intensity per £million of revenue 
t he g roup sets twoyear targets for the 
improvement in these environmental metrics 
and the g roup’s 2013 performance is an 
interim report against the current targets for 
the twoyear period 201214 further details  
of the g roup’s ehs targets and objectives will 
be included in the g roup’s 2013 ehs r eport 
which will be published on the g roup’s website 
in may 2014
t he decline in revenue in 2013 and 
corresponding reduction in production 
volumes had an impact on the absolute co
2
e 
emissions energy use and water use with  
all these being lower than in 2012 however 
the g roup’s intensity targets and kpis relate 
environmental measures to revenue t he 
reduced revenue and corresponding reduction 
in production volumes led to lower efficiency 
in some of the g roup’s energyintensive 
operations resulting in a deterioration in the 
g roup’s energy and co
2
erelated metrics 
despite this the g roup was still able to improve 
the waste generation and water usage metrics 
– further details are provided below 
in absolute terms total co
2
e emissions due  
to energy use in 2013 were some 387100 
tonnes down by 2 from 395200 tonnes in 
2012 and 1 1 lower than the 433700 tonnes 
reported for 201 1 t otal energy use was some 
1287 gw h down by 2 from 1312 gw h  
in 2012 and 10 down against the 1430 gw h 
reported for 201 1
t aking into account the decline in the g roup’s 
sales co
2
e intensity

 increased by 3  
in 2013 t his was behind the running rate 
required to achieve the g roup’s target to 
reduce the co
2
e emissions intensity due to 
energy use by 5 over the twoyear period 
201214 2013 energy intensity

 was up by 3 
compared to 2012 t he g roup has a number 
of energy reduction programmes designed to 
reduce energy intensity in 2014 and beyond
404
392
401
430
419
2013
2012
2011
2010
2009
co
2
e
 
intensity due to energy use

tonnes co
2
e£m revenue

1343
1302
1323
1407
1389
2013
2012
2011
2010
2009
energy intensity


mwh£m revenue

387100
395200
433700
424200
387500
2013
2012
2011
2010
2009
co
2
e

 due to energy use

tonnes

1287
1312
1430
1388
1286
2013
2012
2011
2010
2009
energy use


gwh

   t he 2013 2012 and 201 1 co
2
e intensity energy intensity water intensity and the 2013 and 2012 waste intensity 
information has been subject to assurance by pwc for further details of the assurance provided see the independent 
assurance r eport on page 31 further details of the 2012 and 201 1 assurance provided are included in the independent 
assurance r eports on page 25 of the 2012 annual r eport and page 41 of the 201 1 annual r eport
  s c o p e 1 c o
2
e emissions from fossil fuel usage and scope 2 co
2
 using countryspecific electricity factors as co
2
e 
factors are not consistently available for electricity use in all countries
   constant currency basis and updated to reflect changes in reporting methodology
  energy from all sources
  c o
2
e carbon dioxide equivalent the amount of carbon dioxide and the amount of nonco
2
 greenhouse gas with 
the equivalent global warming potential 29 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
overview str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
46
48
45
47
58
2013
2012
2011
2010
2009
waste intensity


tonnes waste£m revenue

2356
2495
2567
2962
2664
2013
2012
2011
2010
2009
water intensity
 
m
3
£m revenue

44400
48500
48300
46000
53800
2013
2012
2011
2010
2009
waste


tonnes

226
251
277
292
247
2013
2012
2011
2010
2009
water use
 
million m
3 
t otal waste reported in 2013 was some 
44400 tonnes down by 8 from 48500 
tonnes in 2012 and 8 lower than the 48300 
tonnes reported for 201 1 w aste intensity

 
was reduced by 4 in 2013 t his was ahead  
of the rate required to achieve the target  
to reduce waste intensity by 5 over the 
twoyear period 201214 t he reduction in 
2013 waste intensity follows programmes to 
identify and dispose of accumulated waste and 
surplus materials and equipment across a 
number of sites worldwide in 2012 much of 
which was recycled however the proportion 
of total waste which was recycled

 was 25 
in 2013 down by three percentage points from 
28 in 2012 but up by one percentage point 
from the 24 reported for 201 1 t he recycling 
rate achieved in 2012 was enhanced by a 
number of oneoff disposals of recyclable 
material t he g roup’s target continues to  
be to increase the proportion of total waste 
which is recycled over the two years 201214
t otal water use in 2013 was 226 million m
3
 
down 10 from 251 million m
3
 in 2012 and 
down 19 from 277 million m
3
 in 201 1 w ater 
use intensity

 was reduced by 6 in 2013 
t his was ahead of the target to reduce water 
intensity by 5 over the two years 201214 
t his improvement was achieved through a 
widening focus on reducing water use at the 
g roup’s more waterintensive businesses 
combined with further reductions achieved 
through reuse and recycling of water at a 
number of sites t he g roup will seek to 
achieve further improvements in 2014
   t he 2013 2012 and 201 1 co
2
e intensity energy intensity water intensity and the 2013 and 2012 waste intensity 
information has been subject to assurance by pwc for further details of the assurance provided see the independent 
assurance r eport on page 31 further details of the 2012 and 201 1 assurance provided are included in the independent 
assurance r eports on page 25 of the 2012 annual r eport and page 41 of the 201 1 annual r eport
   constant currency basis and updated to reflect changes in reporting methodology
 hazardous and nonhazardous waste including recycled material
  w ater from all sources including process irrigation and sanitary usew 30 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
corpor ate re spon sibil ity
continued
044
052
058
058
053
2013
2012
2011
2010
2009
lost time accident frequency

ltas100k hours worked

94
114
132
124
104
2013
2012
2011
2010
2009
lost time accidents

number of ltas

009
012
010
011
014
2013
2012
2011
2010
2009
health and safetyrelated lost time
 of total working time
26
28
21
24
32
2013
2012
2011
2010
2009
lost time per lta
 
days per lta

  l ost t ime accident ‘lt a’ accident which results in  
one or more days’ lost time
   t he 2013 l ost t ime accident frequency information has 
been subject to assurance by pwc for further details of 
the assurance provided see the independent assurance 
r eport on page 31
  t otal time lost due to health and safety in the year 
divided by the number of lost time accidents reported  
in the year
h ealth and safety performance
as reported above morgan advanced 
materials is committed to conducting all  
its activities in a manner which achieves  
high standards of health and safety for all its 
employees in 2013 the independent external 
assurance performed by pwc was extended  
to cover the g roup’s l ost t ime accident 
‘lt a’ frequency rate 
t he g roup’s health and safety policy 
statements are clear and communicated 
throughout the g roup and health and safety 
metrics receive a high degree of focus at all 
levels of the business t he policy statements  
are supported by sitelevel assessment and 
monitoring of risks 
t he investigation by the u k health and safety 
executive following the employee fatality which 
occurred in december 2012 at the g roup’s  
site in r uabon u k is ongoing in addition  
in 2013 morganite electrical carbon l imited 
was prosecuted by the u k health and safety 
executive following a fatal accident involving  
a thirdparty delivery driver at the site in 
swansea u k a fine of £120000 plus costs 
was imposed in january 2014 
morgan’s health and safety aim is to have  
no accidents or injuries in 2013 the g roup 
continued to extend its accident prevention  
and training programmes with the objective  
of reducing accident numbers and the time  
lost per lost time accident particular focus  
is placed on those sites with belowaverage 
performance as measured by their  
ehs kpis and through the ehs compliance 
audit programme
t he g roup’s health and safety kpis include 
accident frequencies causes and related lost 
working time t hese are used to monitor the 
effectiveness of the g roup’s health and safety 
policies and related systems on a monthly basis
during 2013 the g roup introduced an 
enhanced process to track and manage  
lt as and the associated lost time 
in 2013 the g roup’s lt a frequency

 was 
down 15 at 044 per 100000 hours worked 
2012 052 t he number of lost time accidents 
reported was 94 2012 1 14
t he reduction in the number of lt as in 2013 
was concentrated in the asiar est of w orld 
region t his improved performance follows  
a sustained effort over the past few years to 
increase safety awareness during the year the 
r egion hosted a number of safety initiatives 
which included a ‘safety w eek’ carried out 
simultaneously at all facilities in the r egion
t he g roup has worked to identify and develop 
a behaviourbased safety programme to  
be applied on a g roupwide basis t he 
programme ‘morgan thinksafe’ is designed  
to promote safe behaviours and to establish  
a ‘total safety culture’ throughout the g roup  
it has an initial programme of intensive training 
at all levels of the g roup combined with the 
analysis of incidents and sharing of experience 
with regular reinforcement of the safety 
message using ‘safety corners’ in all facilities 
morgan thinksafe will be formally launched  
in the first half of 2014
r eported lost time due to accidents and 
workrelated illnesses as a percentage of 
working time decreased from 012 in 2012  
to 009 in 2013 t he number of days lost 
during 2013 was down by 23 and the 
number of hours worked was decreased by 
3 t he decrease in the number of days lost  
in 2013 was in part due to a reduction in the 
time lost in the year due to accidents which 
occurred in 2012 as well as a focus on 
returntowork programmes
t he reported average number of days lost per 
lt a reported in the year decreased to 26 from 
28 in 2012 t his reflected an increased focus 
on the management of lt as and lost time 31 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
in depen dent assur an ce report
independent l imited assurance r eport to the directors of morgan advanced materials plc
t he directors of morgan advanced materials plc ‘morgan’ engaged us to provide limited assurance on the information described below  
and set out in morgan’s annual r eport for the year ended 31 december 2013
w hat we are assuring ‘selected information’
t he selected environment health and safety ‘ehs’ 
data for the year ended 31 december 2013 
marked with the symbol 

 presented in the  
annual r eport 2013 consists of
  co
2
e and co
2
e intensity scope 1 and  
scope 2 emissions due to energy use
  energy use and energy intensity
  w ater use and water intensity
  w aste and waste intensity
  r ecycling rate and
  n umber of lost time accidents and lost time 
accident frequency rate
t he scope of our work was restricted to  
the selected information for the year ended  
31 december 2013 and does not extend to 
information in respect of earlier periods or to any 
other information in the annual r eport 2013
h ow the information is assessed  
‘r eporting criteria’
w e assessed the selected information using 
morgan’s r eporting criteria as set out at
httpwwwmorganadvancedmaterialscom
governanceresponsiblebusiness 
environmenthealthsafety
1

professional standards applied
2
 and level  
of assurance
3
 
w e have performed a limited assurance 
engagement in accordance with isae 3000 and 
in respect of greenhouse gas emissions information 
isae 3410 w e have complied with the icaew 
code of ethics as also stated in footnote 2
understanding reporting and measurement 
methodologies
t here is no single globally recognised and 
established method for evaluating and measuring 
the selected information t he range of different 
but acceptable techniques can result in materially 
different reporting outcomes that may affect 
comparability with other organisations t he 
r eporting criteria used as the basis of morgan’s 
reporting should therefore be read in conjunction 
with the selected information and associated 
statements reported on morgan’s website
w ork done
considering the risk of material misstatement  
of the selected information we
  made enquiries of morgan’s management 
including those with responsibility for ehs 
management and group e hs reporting
  evaluated the design of the key structures 
systems processes and controls for managing 
recording and reporting the selected 
information t his included visiting 6 sites and 
analysing a further 10 sites selected on the 
basis of their inherent risk and materiality to  
the g roup to understand the key processes 
and controls for reporting site performance 
data to the g roup ehs team
  performed limited substantive testing on a 
selective basis of the selected information at 
corporate head o ffice and in relation to the 
same 16 sites noted above to assure that data 
had been appropriately measured recorded 
collated and reported and
  assessed the disclosure and presentation  
of the selected information
morgan responsibilities 
t he directors of morgan are responsible for
  t he identification and reporting of morgan’s 
material environmental and health and  
safety impacts which are included in the 
selected information
  designing implementing and maintaining 
internal controls over information relevant to 
the preparation of the selected information 
that is free from material misstatement 
whether due to fraud or error 
  establishing objective r eporting criteria  
for preparing the selected information
  measuring morgan’s performance based  
on the r eporting criteria and
  t he content of the annual r eport 2013
our responsibilities
w e are responsible for
  planning and performing the engagement to 
obtain limited assurance about whether the 
selected information is free from material 
misstatement whether due to fraud or error
  forming an independent conclusion based  
on the procedures we have performed and 
the evidence we have obtained and
  r eporting our conclusion to the directors  
of morgan
our conclusions
as a result of our procedures nothing has come  
to our attention that indicates the selected 
information for the year ended 31 december 
2013 has not been prepared in all material 
respects with the r eporting criteria
this report including our conclusions has been 
prepared solely for the directors of morgan as a 
body in accordance with the agreement between us 
to assist the directors in reporting morgan’s ehs 
performance and activities we permit this report to 
be disclosed in the annual report for the year ended 
31 december 2013 to enable the directors to show 
they have addressed their governance responsibilities 
by obtaining an independent assurance report  
in connection with the selected information  
to the fullest extent permitted by law we do not 
accept or assume responsibility to anyone other than 
the directors as a body and morgan for our work or 
this report except where terms are expressly agreed 
between us in writing
1  t he maintenance and integrity of morgan’s website is the 
responsibility of the directors the work carried out by  
us does not involve consideration of these matters and 
accordingly we accept no responsibility for any changes 
that may have occurred to the reported selected 
information or r eporting criteria when presented on 
morgan’s website
2  w e have complied with international standard on assurance 
engagements 3000 – ‘assurance engagements other than 
audits and r eviews of historical financial information’  
and in respect of greenhouse gas emissions information  
the international standard on assurance engagements 3410 
‘assurance engagements on greenhouse gas statements’ 
both issued by the iaasb w e have complied with the 
applicable independence and competency requirements of 
the institute of chartered accountants in england and w ales 
icaew  code of ethics and the international standard on 
q uality control u ki t o comply with those standards 
our work was carried out by an independent and multi 
disciplinary team of sustainability and assurance specialists
3  assurance defined by the international auditing and 
assurance standards board iaasb gives the user 
confidence about the subject matter assessed against  
the reporting criteria r easonable assurance gives more 
confidence than limited assurance as a limited assurance 
engagement is substantially less in scope in relation to both 
the assessment of risks of material misstatement including 
an understanding of internal control and the procedures 
performed in response to the assessed risks
pricewaterhousecoopers llp 
chartered accountants
l ondon
13 february 2014
overview 32 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
at 31 december 2013 morgan advanced 
materials had circa 9100 employees working 
across the globe t he g roup recognises that  
its people are critical to its success employing  
a workforce with highly unique skills and 
abilities set out below are the g roup’s people 
policies and how they have been implemented 
together with a review of their effectiveness  
as a business morgan works hard to ensure  
it has the right people in the right jobs  
building capability to meet the needs of  
our stakeholders
people policies and their implementation
t he g roup supports the u niversal declaration 
of human r ights and the g roup’s human 
r ights policy commits the g roup to protect  
the rights of everyone who works for it and all 
those who have dealings with it t he principles 
of the policy cover child labour forced labour 
health and safety freedom of association 
discrimination discipline working hours and 
compensation and the policy is published on 
the g roup’s website morgan does not unfairly 
discriminate and respects human rights t he 
g roup’s employee policies are set locally to 
comply with local law within the overall g roup 
framework t he morgan advanced materials 
ethics hotline enables employees who  
are aware of or suspect issues under the 
g roup’s human r ights policy to report  
these confidentially
talent
t he g roup has reassessed its talent strategy 
against business strategy following the 
implementation of the o ne morgan structure 
and objectives n ew business leadership teams 
were quickly up and running following the 
restructure and management development 
priorities have now been refined as a 
consequence
t he new structure has enabled more  
efficient talent interventions through internal 
promotions development opportunities 
sometimes involving global redeployment  
and targeted recruitment t his includes the 
continued prioritisation of the g roup’s global 
graduate programme 
morgan has a biannual succession and  
talent review process designed to ensure  
that succession for key roles is planned  
and that future strategic and individual needs  
are assessed improvements are being made  
to the succession planning process whilst 
recognising that the right mix of internal 
promotion and external appointments is  
in the longterm interest of the g roup
t alent development and acquisition is 
positioned to emphasise capability in business 
development sales technology innovation and 
commercial leadership
a new internal development programme for 
midlevel managers – the step u p programme 
– is being developed for launch in 2014
recruitment
morgan recognises the benefits of external 
recruitment as well as building its own internal 
pipeline of talented people and of bringing in 
new people who have the potential and ability 
to drive the business forward t his year 
morgan has continued to use assessments  
and strengthen the quality of recruitment 
processes w hether recruiting internally or 
externally selection is based on many factors 
including relevant education work experience 
competencies potential and performance 
record t he g roup does not unfairly 
discriminate and it respects human rights 
should existing employees become disabled 
the g roup’s policy is to provide continuing 
employment and training wherever practicable 
t he g roup has operated its revised graduate 
programme for a second successive year with 
more graduates and an increased global focus 
g raduates initially join the businesses in asia 
europe and n orth america and take part in a 
common development programme g raduate 
recruits in all major markets have access to 
learning that has enabled previous graduates to 
move locations and take on more responsibility 
t he chief executive o fficer and other 
members of the g roup executive personally 
take part in the development programmes 
31
27
29
26
27
2013
2012
2011
2010
2009
total lost time
 of working time
138
134
137
137
167
2013
2012
2011
2010
2009
employee turnover
 per year
139
151
133
129
124
2013
2012
2011
2010
2009
training
hours per employee
people
corpor ate re spon sibil ity
continued 33 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
overview str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
morgan continues to sponsor the annual 
science engineering  t echnology student  
of the year awards in 2013 the winner of the 
morgan advanced materials best materials 
student award was t homas casselden  
from l oughborough u niversity additionally 
the g roup continues to strengthen existing 
relationships with leading universities working  
in materials science providing information 
materials and opportunities for undergraduate 
as well as postgraduate students
training and development
o verall training hours per employee have 
reduced from 151 hours to 139 hours t his  
is due to reasons including fewer new starters 
resulting in less time spent on induction training 
and initiatives such as iso accreditations taken 
in 2012 being complete t he g roup has 
maintained training in critical skills such as 
management commercial technical and 
health and safety training t he g roup will be 
continuing to develop this programme on a 
global basis focus on training and development 
in commercial skills will continue to be a  
priority in 2014
w ithin the local businesses momentum 
continues regarding the g roup’s r esponsible 
business programme details of which are 
provided in the corporate r esponsibility 
section on pages 23 to 25 
r eward recognition and awards
t he g roup recognises the accomplishments of 
its people individually and as teams and makes 
awards to acknowledge achievement loyalty 
and innovation in 2013 recognition awards 
continued to be made across local businesses 
t he principle of pay for performance is applied 
to the g roup’s compensation approach and the 
g roup sets compensation levels using external 
benchmarking and relevant commercial 
considerations that are both competitive in the 
countries in which it operates and affordable 
morgan offers shortterm performance 
incentives globally to managers technical  
and functional experts g roup executives  
and senior management also have longterm 
incentives tied to personal and commercial 
performance at plant level most sites offer 
incentives to their workforce that result in 
payments based on meeting locallyset 
performance targets
morgan regularly reviews bonus arrangements 
and benefits to ensure they encourage and 
reward commercial and personal performance
communication
t he o ne morgan restructure in february 2013 
has simplified how businesses can work 
together and has improved communication 
t his has been supported by workshops to 
explore greater collaboration and consequent 
business development opportunities  
in addition in the context of o ne morgan 
employee and customer events have been  
held globally to improve understanding of  
the g roup’s technologies and capabilities  
for example composites and defence 
systems held a ‘o ne morgan day’ for staff  
and customers and in n orth america a o ne 
morgan sales conference was hosted to enable 
sales opportunity awareness and encourage 
crossselling of the whole morgan advanced 
materials portfolio across the region 
morgan continues to have formal and  
informal consultative arrangements globally 
according to local requirements and regulations 
t he 17th annual european employee forum 
was held in may 2013 which was attended  
by site employee representatives from  
france g ermany hungary italy and the 
united kingdom 
in august 2013 the g roup implemented a 
global employee survey t he primary objective 
of the survey was to provide local and regional 
management with feedback from employees 
about their businesses o verall 83 of 
employees responded to the survey reviews 
of the results took place during o ctober 
followed by local actionplanning o verall 
employees agreed most strongly that they 
know what is expected of them at work  
t hey also strongly agree that they and their 
colleagues all take responsibility for safety  
t he survey has also highlighted the need to 
ensure supervisors more frequently recognise 
good work and ensure employees receive 
appropriate support to learn new skills  
t hese will be areas of focus in 2014 
people policy effectiveness
at the end of the year morgan employed circa 
9100 people a reduction of approximately 
700 from the circa 9800 at the end of 2012 
almost half of the change was due to the 
deconsolidation of the assam business in india 
following the sale of shares in the company 
t he g roup additionally contracts with circa 
1000 people on shortterm arrangements  
to provide the flexibility for the g roup’s 
businesses to react quickly to changes in market 
conditions t he g roup’s employee turnover 
was 138 in 2013 134 in 2012 21  
of the workforce was made redundant during 
the year 34 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
t he g roup’s geographic spread of people  
is as follows
2013 2012
usa 28 27
uk 16 15
china 16 16
o ther europe 17 17
o ther n orth america 7 6
south america 4 4
r est of w orld 12 15
breakdown of staff by gender
total workforce 9070
male 6605 73
female 2465 27
senior managers 22
male 21 95
female 1 5
directors 9
male 8 89
female 1 11
senior managers in morgan are defined as  
the g roup executive excluding directors  
the regional heads and their most senior 
management 
l ost time as a proportion of total working  
time increased to 31 27 in 2012  
with lost time due to workrelated accidents 
and illnesses of 01 of total working time
during the year 58 employees around the 
world celebrated 40 years of loyal service  
with morgan advanced materials with  
277 employees celebrating anniversaries  
of 20 25 or 30 years’ service t he g roup is 
pleased with the number of employees who 
remain with the g roup for significant periods  
of their careers and whose experience the 
g roup has retained
corpor ate re spon sibil ity
continued
people continued 35 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
overview
re view of oper at ion s
hig hl ig ht s
  fullyear margins increased to 154  
with margins in the second half of 160
  significant savings from the successful 
implementation of o ne morgan
performance
r evenue for the n orth america r egion for  
the year was £3599 million representing  
a decrease of 44 compared with £3763 
million in 2012 at constant currency the 
yearonyear decrease was 56 r evenue  
in the second half of 2013 was 15 lower  
than in the first half at constant currency 
ebit a for the region was £555 million  
2012 £557 million representing a margin  
of 154 2012 reported 148 t he ebit a 
margin in the second half of 2013 was 160 
compared with 148 in the first half t he 
continued margin improvement has been 
delivered despite the lower revenue and is due 
to positive mix shift operational improvements 
in a number of facilities and cost benefits 
primarily from the implementation of  
o ne morgan
business review
t rading conditions in the second half of 2013 
continued to be mixed as they were in the  
first half of the year
t he t hermal ceramics business continued  
to perform well in some niche automotive 
applications g ood progress was made in 
supplying hightemperature insulating fibre  
for catalytic converters to the growing vehicle 
emission controls market successfully 
introducing new materials that improve 
customers’ product performance and address 
regional regulatory legislation importantly  
morgan is partnered with global marketleaders 
and is providing them with nextgeneration 
fibre materials to support their growth 
t he r egion continued to increase the 
manufacturing capacity and market penetration 
of superwool
®
 low biopersistent fibre 
providing a major impetus to sales into the 
general industrial market
business description
for morgan the n orth america r egion 
comprises u nited states of america canada 
and mexico t he financials of the n orth 
american region comprise those of all the 
businesses that are located within those 
countries including the sales made directly  
to and profits from third party customers 
outside of the r egion sales made to morgan 
companies outside of the region are not 
included in n orth america’s reported revenue 
but the profit made on these interr egional 
sales are included in n orth america’s results 
t he n orth america r egion offers the full 
morgan product range and the vast majority  
of revenue is from products made within  
the r egion n orth america has a number of 
important primary processing sites that provide 
morgan businesses across the world with base 
materials semifinished and sometimes finished 
products particularly in the electrical brush and 
seals and bearings businesses 
as shown in the chart to the left n orth 
america serves all of the g roup’s chosen end 
markets o f the three r egions it currently has 
the greatest proportion of revenue from the  
higher margin endmarkets such as aerospace 
included in transportation and healthcare
footprint
as at 31 december 2013 the n orth america 
region comprises 25 operating sites employing 
3150 people t he principal manufacturing sites 
are in u sa canada and mexico t he mexican 
operations are used to satisfy both the local 
market but more importantly and increasingly 
as an effective lowcost point of supply  
to the u sa and to other morgan businesses  
across the world t he r egion also has a 
comprehensive network of sales offices 
allowing immediate access to and facilitating 
direct working with endusers some sales 
particularly for the insulating fibre and  
crucibles product ranges are made through  
a wellestablished distributor network
nort h amer ica
£3599m
£3763m
2013
2012
revenue
£m
  definitions of the measures can be found in the glossary
energy 5
transportation 28
security and defence 8
healthcare 7
electronics 14
petrochemical 8
industrial 30
north america 2013

£555m
£557m
2013
2012
regional ebita
£m
restated for impact of ias 19 revised 36 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
t he most notable drag on revenue in  
the t hermal ceramics business was the lack  
of large petrochemical projects that use the 
r egion’s fibre and insulating fire bricks t he 
general global slowdown and a tightening of 
credit markets has meant that very few large 
projects were actually commissioned in 2013 
enquiry and quoting levels are high and  
morgan is hopeful that these project orders  
do get placed in 2014
a focus on attractive niche markets the gross 
margin benefits of superwool
®
 compared  
to refractory ceramic fibre and operational 
benefits contributed to improved operating 
performance in the t hermal ceramics 
business
t he t echnical ceramics business in 2013  
was impacted by weaker hard disc drive and 
semiconductor business though there have 
been some signs of general market recovery  
in the fourth quarter of 2013 and there is a 
solid order book for the start of 2014 sales  
in the second half of the year to the aerospace 
market were impacted by inventory adjustments 
specifically cores used in the manufacture of 
turbine blades as well as reduced demand 
from the industrial gas turbine market t he 
business has started to benefit from the strong 
oil and gas market and particularly from the 
increase in fracking 
t he electrical brush business has delivered 
broadly flat revenue through 2013 relative  
to the second half of 2012 progress has  
been made in sales to the wind energy  
market where the r egion has won share in  
the aftermarket based on product offering  
and service levels t he major impact on the 
performance of the electrical business came 
from the restructuring actions taken as a result 
of o ne morgan demand for hightemperature 
insulation carbon graphite products in the 
renewables sector and for u s body armour 
remained at the low levels experienced in the 
first half of the year t here have been some 
successful synergy sales where customers  
who use ceramic fibre products have been 
introduced to higher temperature range carbon 
insulation products t his is one early example 
of the real benefits of being organised to offer 
the full morgan product and technology range 
to each and every customer and will be an area  
of continued focus in 2014 
t he region has progressively seen the benefits 
of the o ne morgan model and organisational 
change to one business unit in 2013 t he 
region is already a midteen margin business 
operating in mixed trading conditions during 
the year t he focus as one unified business  
is delivering performance improvement and 
creating new opportunities for growth in 2014
research and development
t he n orth american facilities have played an 
important role in superwool
®
 development 
working effectively with the bromborough u k 
technology facility to take products through  
to volume production
in addition to this in the fibre product range 
there has been significant development of 
product and process capability in respect of 
engineered fibre that is used in the vehicle 
emission control market
t he n orth american r egion has also invested 
significant resource and made good progress  
in the development of new lightweight ceramic 
plates for ballistic protection 
significant local investment has also been  
made to support initiatives in a number of key 
markets braze alloy development to produce 
cutters for deep hole drilling for oil and gas 
exploration material and process development 
to improve the performance and extend the 
range of ceramic cores for more demanding 
turbine blade applications for the aerospace 
market
priorities and outlook
t he priorities of the n orth american region 
are to continue to drive positive mix shift 
towards higher tech secular growth markets 
such as aerospace healthcare energy and 
emission control supported by the rollout  
of market leading differentiated technology  
for example the superwool
®
 range of 
hightemperature insulating fibre products 
alongside this there will be a continued focus 
on operational improvements including 
expanding the use of lowcost mexican 
operations
some early ‘synergy selling’ successes have  
been achieved but this is seen as an as yet 
unrealised opportunity from the o ne morgan 
reorganisation and one that will receive more 
focus in 2014 
t he market for the n orth american r egion 
was mixed during 2013 and the outlook for 
2014 suggests that this will continue o rder 
books going in to 2014 are stable but the 
investments made in 2013 and the product 
pipeline should position the region for further 
profitable growth as markets improve 
re view of oper at ion s
continued
nort h amer ica continued 37 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
overview str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
hig hl ig ht s
  ebit a margins increased by 140 basis 
points to 1 18
  portfolio reshaping commenced with  
the exit of the composites and defence 
systems spares and logistics business
performance
r evenue for the european r egion for the year 
was £3573 million representing a decrease  
of 12 compared with the £3617 million in 
2012 at constant currency the yearonyear 
decrease was 37 r evenue in the second 
half of 2013 was 15 lower than in the first 
half at constant currency
 
ebit a for the r egion continued to improve to 
£420 million 2012 £375 million a margin of 
1 18 2012 104 t he ebit a margin in the 
second half of 2013 was 123 compared with 
1 12 in the first half t he margin progress has 
been achieved on lower sales and is due to a 
combination of positive revenue mix shift and 
cost benefits from a range of operational 
initiatives including those from the 
implementation of o ne morgan
business review
t rading conditions in most of the markets 
served by the european r egion have remained 
relatively stable through 2013 
in the t hermal ceramics business comprising 
principally hightemperature insulating fibre  
and firebrick revenue from large projects 
particularly in the petrochemical industry 
continues to be weak as customers have 
delayed major investment decisions enquiry 
levels are good and the r egion remains hopeful 
of an improvement in this market in 2014  
t he r egion has increased its presence in  
the r ussianeastern european market and  
has secured some small but strategically 
important sales management are conscious  
of the reputation of trading practices in these 
markets and has been rigorous in terms  
of the training given to staff through the 
r esponsible business programme and 
subsequent monitoring
business description
for morgan the european r egion is defined  
as the u k continental europe and r ussia  
but excludes t urkey which is reported in  
asiar est of w orld t he financials of europe 
comprise all of the morgan advanced  
materials’ businesses that are located within  
the european region it includes the sales  
made directly to and profits from thirdparty 
customers outside of the region sales made  
to morgan companies outside of the region  
are not included in europe’s reported revenue 
but the profit made on these interregional 
sales are included in europe’s results 
t he european r egion offers the full morgan 
product range and the vast majority of revenue 
is from products made within the r egion 
certain specific grades of material and some 
finished products are sourced from the  
n orth america and asiar est of w orld r egions 
as shown in the chart to the left europe 
serves all of the g roup’s chosen endmarkets 
t he r egion has a broad spread of endmarket 
exposure t he security and defence revenue is 
primarily from the composites and defence 
systems ‘cds’ business 
 
footprint
as at 31 december 2013 the european r egion 
comprises 25 operating sites and employed  
a total of approximately 2950 people t he 
principal manufacturing sites are in the u k 
france g ermany l uxembourg italy hungary 
and russia
t he r egion also has a number of sales offices 
providing regional coverage and customer 
proximity allowing the r egion’s people to 
work directly with endusers some use is also 
made of wellestablished distribution networks
europe
  definitions of the measures can be found in the g lossary
energy 5
transportation 13
security and defence 18
healthcare 5
electronics 4
petrochemical 7
industrial 48
europe 2013

£3573m
£3617m
2013
2012
revenue
£m
£420m
£375m
2013
2012
regional ebita
£m
restated for impact of ias 19 revised 38 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
in the t echnical ceramics business sales of 
cores to both the aerospace and the industrial 
gas turbines market weakened in the second 
half of 2013 but there was further growth in 
sales to the medical market
t he electrical brush and rotary business has 
delivered good growth in the year despite  
the macroenvironment and the continued 
migration from dc to ac motors that do not 
require brushes t his growth has been secured 
through winning market share and the growth 
of integrated brush slip ring and rotary 
products to the wind industry as the installed 
wind turbine base comes to the end of its 
original warranty period the r egion has been 
successful in securing business from the original 
supplier with excellent service and product 
offering further progress has also been made 
in the rationalisation of the electrical brush 
manufacturing footprint and cost base in the 
period with the completion of the relocation 
of manufacturing from the n etherlands  
to hungary
t he seals and bearings business has also 
delivered further growth with revenue 
increasing from both the oil and gas and  
water markets
r evenue in the composites and defence 
systems cds business improved in  
the second half of the year with improving 
profitability based on a combination of product 
mix volume and operational cost reductions 
during the second half of 2013 cds ended 
its spares and logistics contract with the u k 
ministry of defence ‘mod’ in respect of the 
mastiff fleet of vehicles which in 2013 was circa 
£12 million of revenue despite the absence of 
new vehicle build contracts and the exit from 
the vehicle spares and sustainment business 
cds remain a key supplier to the u k mod  
in terms of upgrades to those vehicles and for 
personal protection specifically body armour 
and helmets major investment has been made 
in the development of nextgeneration armour 
and helmet solutions t he focus going forward  
will increasingly be on taking worldleading 
advanced composite technology into non
military commercial applications cds  
already have a strong presence in the medical 
market with oncology beds and there is good 
opportunity to expand on this both in the  
u k and in export markets 
research and development
as noted in the g roup business model on  
page 16 under o ne morgan the g roup’s 
research and development activities are now 
headed by the chief t echnology o fficer  
with r d resource deployed across the  
globe increasingly concentrated in ‘centres  
of excellence’ 
t he europe r egion is the location for the 
g roup’s global ceramic fibre research and 
development facility based in bromborough 
u k t his stateoftheart facility employs 25 
dedicated scientists focused on the continued 
development of morgan’s fibre product range 
morgan’s marketleading low biopersistent 
superwool
®
 fibre was developed here and  
the product range in this area continues to  
be expanded w ith superwool plus
®
 ht and 
xt range of products the g roup is extending 
the temperature range allowing it to provide 
customers with superior insulation performance 
improved fire protection and weight saving 
opportunities in more applications t here  
has been particular success in areas such as 
offshore platforms and liquid natural gas 
terminals t he scientists at the facility work 
closely with sales and operational staff across 
the globe to ensure that research effort 
remains focussed on developing products that 
customers need and that the g roup’s facilities 
are capable of manufacturing in sufficient scale 
priorities and outlook
g ood margin improvement has been delivered 
progressively through 2013 some of this has 
come from a positive mix shift in sales t he 
larger part of the margin improvement has 
come from cost reductions both operational 
improvements and efficiencies at most of the 
sites and a reduced headcount
w hilst there are further opportunities for  
cost improvement the focus of the r egion  
will be on driving further margin improvement 
from targeted revenue growth and portfolio 
reshaping
management are hopeful that macro conditions 
will be better in 2014 and there have been 
some signs of improvement in a number  
of markets however the focus will be on 
creating opportunities for growth based on  
the markets targeted and the pipeline of  
new business that have been developed in 
recent years
in line with stated morgan g roup strategy  
the r egion will be looking to expand in those 
attractive niche markets where the margins 
earned fully reflect the benefit brought to 
customers and for those businesses where  
the r egion does not see a way to deliver 
adequate returns then an appropriate exit  
will be sought as with the spares and logistics 
business of cds
re view of oper at ion s
continued
europe continued 39 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
overview
hig hl ig ht s
  endmarkets been difficult through  
the year especially in china and india
  cost reduction actions taken with closure 
of highcost manufacturing operations  
in japan australia and south africa
  portfolio reshaping started with the sale  
of majority stake in lossmaking indian 
carbon business
performance
r evenue for the asiar est of w orld r egion  
for the year was £2406 million representing a 
decline of 107 compared with 2012 revenue 
of £2695 million at constant currency the 
decrease was 57 r evenue in the second 
half of 2013 was 44 higher than that in the 
first half at constant currency 
ebit a for the r egion was £264 million  
2012 £328 million representing a margin  
of 1 10 2012 122 t he ebit a margin in  
the second half of 2013 was 1 12 compared 
with 108 in the first half t he margin in  
the r egion has been adversely impacted by  
the large drop in sales volume and the cost 
reduction actions taken have not been enough 
to offset this w ith some sales recovery in the 
second half and with the benefits of the cost 
reduction actions coming through there was 
an improvement in margins in the second half 
of the year management have taken the view 
that the industrial part of the economies such 
as china and india which represents the major 
part of morgan’s business in those countries  
will recover and that the g roup is wellplaced 
to take advantage of this recovery and that  
the resource base that has been installed  
over recent years and indeed added to  
where appropriate in 2013 needs to be largely 
retained to deliver this
business review
t rading across the r egion has remained 
subdued during the second half of 2012 
although there has been some improvement 
towards the end of 2013 in some markets
a slowing of global growth and domestic 
industrial output has meant deferral of a 
number of major projects q uote activity  
has remained strong but very few orders of  
any size have been placed in the asiar est  
of w orld r egion a much larger part of the 
business is currently in traditional industrial 
markets such as iron and steel and heavy 
construction and the general slowdown in 
these markets most notably in china and india 
has also had an adverse impact on revenue
business description
for morgan the asiar est of w orld r egion 
comprises asia australasia india africa 
middle east including t urkey and south 
america t he financials of the region comprise 
those of all the businesses that are located 
within those countries including the sales  
made directly to and profits from third party 
customers outside of the r egion sales made  
to morgan companies outside of the region  
are not included in asiar est of w orld’s 
reported revenue but the profit made on  
these interregional sales are included in  
asiar est of w orld’s results 
t he asiar est of w orld r egion offers the  
full morgan product range t he r egion has 
significant manufacturing capability and capacity 
for insulating fibre including superwool
®
 and 
firebrick and some capacity for electrical brush 
material however it does source a large 
amount of material semifinished and finished 
products from morgan businesses in n orth 
america and europe either finishing locally  
or selling finished products to end customers 
as shown in the chart to the left the  
asiar est of w orld r egion serves all of the 
g roup’s chosen endmarkets t he majority  
of revenue in the r egion is currently from 
industrial markets but there is a significant 
opportunity to drive a positive mix shift through 
increased sales to markets such as aerospace 
and healthcare
footprint
as at 31 december 2013 the asiar est of 
w orld r egion comprises 25 operating sites 
employing 3000 people t he principal 
manufacturing sites are located in china  
india south korea australia japan brazil  
and argentina t hese manufacturing sites are 
supported by a network of sales and application 
engineers to ensure that customers are  
well supported across this large region with  
the appropriate morgan resource w here 
appropriate use is also made of thirdparty 
distributors 
asiare st o f worl d
  definitions of the measures can be found in the glossary
energy 11
transportation 13
security and defence 1
healthcare 1
electronics 4
petrochemical 9
industrial 61
asiarest of world 2013

£2406m
£2695m
2013
2012
revenue
£m
£264m
£328m
2013
2012
regional ebita
£m
restated for impact of ias 19 revised 40 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
molten metals systems which focuses on  
the nonferrous industries such as aluminium 
generates circa 50 of its revenue in this 
r egion and has been impacted by a slowdown 
in the indian automotive industry 
it is clear that many of the countries in the 
r egion are starting to demand technically 
differentiated products for markets such as 
medical aerospace and electronics morgan  
is ideally placed to take advantage of this 
through an ability to take a large product range 
to market initially using w esternsourced 
technical support and products but rapidly 
moving to inr egion manufacturing t he 
r egion has already been successful in making 
sales to the medical and aerospace markets  
and are looking for the most effective way  
to develop full local capability through a 
combination of direct investment and 
partnerships with locally established players
o ne successful example of using w estern 
product and technology base and the asian 
network has been cds success in securing  
a major development programme for 
composite pods for military vehicles a first 
order has been won with a major asian vehicle 
manufacturer and cds are at various stages 
of discussion with major players in a number  
of other geographies
in response to the weak market conditions  
and accelerated in part by the o ne morgan 
structure a number of cost reduction initiatives 
were taken during the year including the 
cessation of fibre production in australia and 
japan with product now being imported from 
other lowercost morgan operations in the 
r egion and the consolidation of administrative 
functions in brazil t owards the end of 2013 
the g roup also sold the majority of its equity 
stake in the lossmaking assam carbon 
company in india a review of the lithium ion 
business in china was also performed resulting 
in a writeoff of its intangible assets and a 
review of the longterm future of its place in 
morgan t hese are part of the g roupwide 
portfolio reshaping that commenced in the 
latter part of the year 
business developments
despite the disappointing decline in revenue 
and profits in 2013 morgan has continued to 
invest significantly in the r egion
more than £15 million has been invested in 
china korea india and brazil with significant 
spend on adding new capacity and converting 
existing fibre equipment to support the 
continued roll out of the family of superwool
®
 
products t wo major greenfield projects have 
also been started a new ceramics plant in 
dalian china and a new superwool
®
 fibre 
plant in khalifa industrial z one abu dhabi  
the u nited arab emirates both these major 
investments are in locations where significant 
demand is expected in the coming years and 
where there is the advantage of low input 
costs labour in the case of china and energy 
and raw materials in the case of u ae
research and development
t he asiar est of w orld r egion takes full 
advantage of the development efforts that  
take place in the research and development 
facilities that are located in the n orth america 
and europe r egions importantly it provides  
a direct interface to local customers whose 
requirements are fed back in to the  
product and process development that  
takes place globally
for example the world’s leading special 
shipbuilders are located in korea and the local 
management team have successfully worked 
with the customer and morgan’s global  
fibre team to develop and have specified 
morgan’s firemaster
®
 marine plus™  
further work was then done to develop  
a waterrepellent grade
significant development has also taken place  
in the crucibles business t his is the g roup’s 
original and oldest product range but there  
has been a major focus on and successful 
introduction of new innovative coatings that 
give the crucibles much improved performance 
characteristics and expanding their applications 
to areas such as highpurity alumina processing 
for the electronics industry and for nuclear 
waste treatment 
outlook
w hilst the r egion has seen no growth since 
the start of the second half of 2012 there 
remains a strong belief in the growth prospects 
of the r egion w ith the current capabilities  
and capacity morgan is well placed to take 
advantage of any general industrial upturn in 
the r egion and there have been some signs  
of encouragement recently in terms of enquiry 
and more importantly order levels in certain 
markets
t he r egion is also extremely well placed to 
satisfy the expected growth in demand in more 
advanced markets such as medical aerospace 
and defence w estern capacity will initially  
be utilised but the r egion and the g roup are 
ready to make the necessary investments  
in resource to take full advantage of those 
opportunities as they arise
re view of oper at ion s
continued
asiare st o f worl d continued 41 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
overview str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
introduction
t hese results are produced under international 
financial r eporting standards as adopted by 
the eu adopted if r ss all the figures referred 
to below are extracted from the financial 
statements on pages 88 to 147 and comply  
with adopted ifr ss
t he results for 2012 as set out below have 
been restated to reflect the impact of ias 19 
revised employee benefits see note 1 of the 
consolidated financial statements for details of 
the restatement
r eference is made to ‘u nderlying operating 
profit’ and ‘u nderlying earnings per share 
eps’ eps is defined in note 10 on page 104 
t hese measures of earnings are shown 
because the directors consider that they give  
a better indication of underlying performance
in the consolidated income statement the 
g roup presents specific adjusting items totalling 
£129 million and the associated tax credit of 
£18 million separately in the section below 
results are shown before these specific 
adjusting items
group revenue and operating profit
g roup revenue was £9578 million  
2012 £10075 million a decrease of 49  
on both a reported and constant currency  
basis compared with 2012
t he results for 2012 as set out below have been restated to reflect the impact of ias 19 revised employee benefits
revenue ebita ebita margin
results before specific adjusting items
2013
£m
2012
£m
2013
£m
2012
£m 2013 2012
n orth america 3599 3763 555 557 154 148
europe 3573 3617 420 375 118 104
asiar est of w orld 2406 2695 264 328 110 122
regional ebita 9578 10075 1239 1260
unallocated central costs 49 51
group ebita 1190 1209 124 120
r estructuring costs 105 132
underlying operating profit 1085 1077 113 107
 definitions of the measures can be found in the g lossary
g roup oper a t ing ma rg in s have shown 
progre ss t hroug h t he ye ar a n d t here 
has been i n cre ased in vest ment i n our 
asset a n d te chnology base g oo d  
cash gener a t ion a n d a con fiden ce  
in t he po sit ion o f t he g roup s upport s 
progre ssive dividen d in cre ase
kevin dang er fiel d 
chief fin an cial o fficer
fin an cial re view 42 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
g roup ebit a was £1 190 million 2012  
£1209 million representing a margin of  
124 2012 120
g roup underlying operating profit was  
£1085 million 2012 £1077 million 
u nderlying operating profit margin was  
1 13 compared to 107 for 2012
g roup operating profit after specific adjusting 
items was £896 million 2012 £994 million 
o perating profit margin was 94 compared 
to 99 for 2012
r estructuring costs
t he restructuring costs of £105 million 2012 
£132 million relate mainly to the actions that 
the g roup has undertaken as a consequence  
of moving to the o ne morgan model and the 
reorganisation into geographical regions
specific adjusting items
in the consolidated income statement the 
g roup presents specific adjusting items totalling 
£129 million and the associated tax credit of 
£18 million separately in the judgment of the 
directors due to the nature and value of these 
items they should be disclosed separately from 
the underlying results of the g roup to allow  
the reader to obtain a proper understanding of 
the financial information and the best indication  
of underlying performance of the g roup  
n o specific adjusting items were incurred in 
2012 in the financial review below results are 
shown before these specific adjusting items
2013
£m
2012
£m
specific adjusting items
business exit costs 73 – 
impairment of intangible assets 33 –
l oss on disposal of business 23 –
129
income tax credit from specific 
adjusting items 18 –
111 –
business exit costs
t his relates to composites and defence 
systems and is a result of the exit of the  
u k mod vehicles logistics and spares contract 
and the completion of u k mod u rgent 
o perational r equirements uor  for new 
vehicle builds specifically the charge comprises 
a £57 million provision against inventory and  
a £16 million provision for building exit costs 
and impairment of other assets an income tax 
credit of £16 million has been recognised in 
respect of these items
impairment of intangible assets
t he impairment of intangible assets consists  
of a £33 million impairment of goodwill and 
intangible assets originally recognised on 
acquisition of morgan amt hairong l td 
formerly changsha hairong n ew materials 
co l td ‘hairong’ based on the current 
view of the future financial performance of 
hairong an income tax credit of £02 million 
has been recognised in respect of this  
oneoff item
loss on disposal of business
o n 28 december 2013 the g roup disposed  
of 2385 of the share capital of assam 
carbon products l td ‘assam’ for nil 
consideration t he g roup retains a 288 
shareholding as a result of the transaction  
the g roup no longer has control of assam  
and has therefore deconsolidated the assets 
and liabilities of assam in these consolidated 
financial statements t he loss recognised  
on the disposal of this shareholding was  
£23 million t he fair value of the g roup’s 
remaining investment has been measured at nil
foreign currency impact
t he principal exchange rates used in the 
translation of the results of overseas subsidiaries 
were as follows
average rate yearend rate
2013 2012 2013 2012
usd 15646 15852 16563 16255
¤ 11780 12336 12020 12330
t he potential impact of changes in foreign 
exchange rates is given in note 20 on page 1 19
amortisation of intangible assets
t he g roup amortisation charge was
£83 million 2012 £83 million
finance costs
t he net finance charge was £233 million 
2012 £227 million t his charge was primarily 
net bank interest and similar charges of  
£170 million 2012 £169 million which is  
flat yearonyear t he balance of the finance 
charge under ifr s is the net interest charge  
on pension scheme net liabilities which was  
£63 million 2012 £56 million t he impact  
of potential changes in interest rates on profit 
or loss is stated in note 20 on page 1 18
taxation
g roup taxation before specific adjusting  
items for the year was £211 million  
2012 £216 million t he effective tax rate  
excluding specific adjusting items was 274 
2012 282 
discontinued operations
t he £210 million credit shown in 2012 as 
‘discontinued operations’ related to a release  
of tax liabilities in the period that were set up  
in prior years relating to business disposals
fin an cial re view
continued 43 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
overview str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
earnings per share
u nderlying earnings per share was 215 pence 
2012 217 pence and basic earnings per 
share from continuing operations was  
148 pence 2012 187 pence details of  
these calculations can be found in note 10  
on page 104
dividend
t he directors recommend the payment of  
a final dividend at the rate of 67 pence per 
share on the o rdinary share capital of the 
g roup payable on 30 may 2014 to o rdinary 
shareholders on the register at the close of 
business on 16 may 2014 t ogether with the 
interim dividend of 38 pence per share paid  
on 29 n ovember 2013 this final dividend  
if approved by shareholders brings the total 
distribution for the year to 105 pence per 
share 2012 100 pence
a fiveyear summary of the g roup’s financial 
results is set out on page 148 of this r eport
cash flow
t he net cash inflow from operating activities 
was £1270 million 2012 £1268 million  
free cash flow before acquisitions and 
dividends was £374 million 2012 £489 
million dividend payments increased to  
£247 million 2012 £161 million as a 
consequence of the decision to bring forward 
the payment of dividends as a result in 2013 
three dividend payments were made the  
2012 interim the 2012 final and the 2013 
interim dividend
n et debt at the year end was £1865 million 
2012 £1928 million t he net debt to 
ebit da ratio at the year end was 13 times 
2012 13 times
2013
£m
2012
£m
net cash inflow from  
operating activities 1270 1268
n et capital expenditure 337 267
r estructuring costs and  
other oneoff items 140 59
n et interest paid 170 185
tax paid 249 268
free cash flow before  
acquisitions and dividends 374 489
cash flows in respect  
of disposalsacquisitions 17 66
purchase of own shares for 
share incentive schemes 66 94
dividends paid 247 161
exchange movement and  
other items 15 58
movement in net debt  
in period 63 226
o pening net debt 1928 2154
closing net debt 1865 1928
 definitions of the measures can be found in the glossary
commitments for property plant and 
equipment and computer software for which 
no provision has been made are set out in  
note 25 on page 136
capital structure
at the year end total equity was £2741 million 
2012 £2716 million with closing net debt of 
£1865 million 2012 £1928 million
n oncurrent assets were £5271 million  
2012 £5612 million and total assets were 
£91 19 million 2012 £9683 million
details of undiscounted contracted maturities 
of financial liabilities and capital management 
are set out in note 20 on page 1 17
o n 1 1 february 2014 morgan merged its 
u kbased thermal fired shapes business with 
magma ceramics  catalysts a u kbased fired 
shapes specialist in return for a 35 minority 
stake in the enlarged magma business t here 
have been no other significant postbalance 
sheet events
capital structure is further discussed in  
note 20 on page 120 under the heading  
capital management
pensions
t he g roup operates a number of pension 
schemes throughout the world the majority  
of which are of a funded defined benefit type 
t he largest of these are located in the u k  
and the u sa with the majority of others in 
continental europe 
for the period ended 31 december 2013 the 
g roup is required to adopt ias 19 revised 
employee benefits and the results for the year 
31 december 2012 have been restated to 
reflect this 
t he impact of the changes on the full year 
ended 31 december 2012 is a £42 million 
reduction in profit after taxation consisting of
  a £11 million reduction in g roup ebit a 
g roup underlying operating profit and 
operating profit as a result of the 
requirement to reclassify pension scheme 
administration costs from net finance 
charge to operating costs
  a £47 million reduction in u nderlying pbt 
and profit before tax due to the new 
requirement for the expected return  
on assets to be calculated by applying the 
corporate bond yield discount rate to  
the balance sheet pensionrelated assets
  a £05 million reduction in taxation charge  
as a result of the above changes 44 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
t he ias 19 revised charges are summarised  
in the table below
fy
2013
£m
fy
2012
r estated
£m
fy
2012
previously
reported
£m
o perating costs
– service cost 45 44 44
– curtailment charge – 02 02
– administration costs 14 11 –
total operating costs 59 57 46
n et finance charge
– n et interest charge 63 56 09
– administration costs – – 11
net finance charge 63 56 20
total ias 19 charge 122 113 66
t he g roup pension deficit has decreased  
by £222 million since last year end to £1446 
million on an ias 19 revised basis t he main 
movement was in the u s defined benefit 
pension schemes t he u s deficit decreased  
by £234 million to £393 million 2012 £627 
million t his decrease is mainly due to a higher 
discount rate – from 42 to 50 – and the 
impact of the weakening of the u s versus  
£ sterling t he u k deficit increased by £37 
million to £750 million 2012 £713 million
treasury policies
t he following policies were implemented and 
in place across the g roup throughout the year 
t he manager of each business unit is required 
to confirm compliance as part of the year end 
process
financial risk management and  
treasury policy
g roup t reasury works within a framework  
of policies and procedures approved by  
the audit committee it acts as a service  
to morgan advanced materials’ businesses  
not as a profit centre and manages and 
controls risk in the treasury environment 
through the establishment of such procedures 
g roup t reasury seeks to align treasury goals 
objectives and philosophy to those of the 
g roup it is responsible for all of the g roup’s 
funding liquidity cash management interest 
rate risk foreign exchange risk and other 
treasury business as part of the policies and 
procedures there is strict control over the  
use of financial instruments to hedge foreign 
currencies and interest rates speculative 
trading in derivatives and other financial 
instruments is not permitted
foreign exchange risks
due to the international reach of the g roup 
currency transaction exposures exist t he 
g roup has a policy in place to hedge all 
material firm commitments and highly probable 
forecast foreign currency exposures and 
achieves this through the use of the forward 
foreign exchange markets t he g roup 
continues its practice of not hedging income 
statement translation exposure
t here are exchange control restrictions  
which affect the ability of a small number of  
the g roup’s subsidiaries to transfer funds to  
the g roup t he g roup does not believe such 
restrictions have had or will have any material 
adverse impact on the g roup as a whole or 
the ability of the g roup to meet its cash flow 
requirements
currency translation risks are controlled 
centrally t o defend against the impact of  
a permanent reduction in the value of its 
overseas net assets through currency 
depreciation the g roup seeks to match the 
currency of financial liabilities with the currency 
in which the net assets are denominated  
t his is achieved by raising funds in different 
currencies and through the use of hedging 
instruments such as swaps and is implemented 
only to the extent that the g roup’s gearing 
covenant under the terms of its loan 
documents as well as its facility headroom  
are likely to remain comfortably within limits  
in this way the structure of the g roup’s 
borrowings becomes more aligned to the 
trading cash flows that service them
interest rate risk
t he g roup seeks to reduce the volatility in its 
interest charge caused by rate fluctuations t his 
is achieved through a combination of fixed rate 
debt and interest rate swaps t he proportions 
of fixed and floating rate debt are determined 
having regard to a number of factors including 
prevailing market conditions interest rate cycle 
the g roup’s interest cover and leverage 
position and any perceived correlation 
between business performance and rates
credit risk
credit risk arises when a counterparty fails to 
perform its obligations t he g roup is exposed 
to credit risk on financial instruments such  
as liquid assets derivative assets and trade 
receivables credit risk is managed by investing 
liquid assets and acquiring derivatives in a 
diversified way from highcreditquality financial 
institutions counterparties are reviewed 
through the use of rating agencies systemic  
risk considerations and through regular review 
of the financial press t he g roup has a credit 
policy in place in relation to trade receivables 
and exposure to credit risk is monitored  
on an ongoing basis credit evaluations are 
performed on all customers requiring credit 
over a certain amount t he nature of the 
g roup’s operations is such that the g roup  
has a significant number of lowvalue trade 
receivables t he risk is therefore considered 
minimal credit risk is further discussed in  
note 20 on pages 1 15 to 1 16
fin an cial re view
continued 45 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
overview str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
capital investment
t he g roup has wellestablished formal 
procedures for the approval of investment in 
new businesses and for capital expenditure to 
ensure appropriate senior management review 
and signoff
tax risks
t he g roup periodically assesses its liabilities 
and contingencies for all tax years open to audit 
based upon the latest information available 
t he g roup recorded its best estimate of these 
tax liabilities including related interest charges 
inherent uncertainties exist in estimates of tax 
contingencies due to changes in tax laws 
w hilst management believes they have 
adequately provided for the probable outcome 
of these matters future results may include 
favourable or unfavourable adjustments to 
these estimated tax liabilities in the period  
the assessments are made or resolved or 
when the statute of limitation lapses t he  
final outcome of tax examinations may result  
in a materially different outcome than assumed 
in the tax liabilities
borrowing facilities and liquidity
all of the g roup’s borrowing facilities are 
arranged by g roup t reasury and the funds 
raised are then lent to operating subsidiaries on 
an arm’slength basis in a few cases operating 
subsidiaries have external borrowings but these 
are supervised and controlled centrally g roup 
t reasury seeks to obtain certainty of access to 
funding in the amounts diversity of maturities 
and diversity of counterparties as required to 
support the g roup’s mediumterm financing 
requirements and to minimise the impact of 
poor credit market conditions
t he g roup’s debt and maturity profile is 
provided in notes 19 and 20 on pages 1 14  
to 122
going concern
t he g roup’s business activities together with 
the factors likely to affect its future development 
performance and position are set out in the 
strategic r eport on pages 8 to 45 t he financial 
position of the g roup its cash flows liquidity 
position and borrowing facilities are described 
earlier in this financial review in addition note 
20 includes the g roup’s policies and processes 
for managing financial risk details of its financial 
instruments and hedging activities and its 
exposures to credit risk and liquidity risk
t he g roup meets its daytoday working 
capital requirements through local banking 
arrangements that are supported by the 
flexibility provided by the g roup bank facility  
of £150 million unsecured fiveyear multi
currency revolving credit facility t he g roup’s 
forecasts and projections taking account  
of reasonably possible changes in trading 
performance and exchange rates show the 
g roup operating comfortably within its debt 
financial covenants for the next 12 months
t he current economic climate continues to 
have an impact on the g roup its customers 
and suppliers t he board fully recognises the 
challenges that lie ahead but after making 
enquiries the directors have a reasonable 
expectation that the company and the  
g roup have adequate resources to continue  
in operational existence for the foreseeable 
future accordingly they continue to adopt  
the going concern basis in preparing the  
annual r eport and accounts
kevin dangerfield
chief financial o fficer
t he strategic r eport as set out on pages 8  
to 45 has been approved by the board
o n behalf of the board
paul boulton
company secretary  g eneral counsel
13 february 2014 morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
1  andrew shil ston
n on ex ecu tive cha ir man ag ed 58
a ppointed may 2012 chairman designate  
a ugust 2012 chairman
career history from 2002 until his retirement  
in 201 1 a ndrew was chief financial o fficer of 
r ollsr oyce h oldings plc and prior to this he was  
the finance director at enterprise o il plc a ndrew  
was previously a nonexecutive director of cairn 
energy plc where he chaired the a udit committee 
a dditional appointments senior independent 
director of bp plc nonexecutive director of 
circle h oldings plc
committees n omination chair and 
remuneration
2 mark r obert sha w
ch ief ex ecu tive office r ag ed 45
a ppointed a ugust 2006
career history prior to a ugust 2006 mark was 
chief o perating o fficer from february 2006 and 
chief financial o fficer from o ctober 2004 before 
joining morgan a dvanced materials from 2000  
to 2004 mark was chief financial o fficer of 
g artmore investment management plc and prior  
to this he spent nine years with marakon a ssociates 
mark was a nonexecutive director of r athbone 
brothers plc from 2006 to 2010
a dditional appointments n onexecutive director  
of segro plc
committees n omination
3 andrew h o sty
ch ief o pera ting office r ag ed 49
a ppointed february 2013
career history prior to his appointment as chief 
o perating o fficer a ndrew was chief executive 
o fficer of morgan ceramics and joined the morgan 
a dvanced materials board in july 2010 before this 
appointment he held a number of senior positions 
within morgan a dvanced materials a ndrew was  
a nonexecutive director of fiberweb plc from  
2012 to 2013 and president of the british ceramics 
confederation from 2003 to 2005
a dditional appointments n onexecutive director  
of british ceramic r esearch limited
4 k evin da ngerfield
ch ief finan cia l office r ag ed 47
a ppointed a ugust 2006
career history kevin joined morgan a dvanced 
materials in july 2000 as deputy g roup financial 
controller before being promoted to g roup 
financial controller before joining morgan 
a dvanced materials kevin worked for london 
international g roup plc and virgin r etail europe 
limited h e qualified as a chartered accountant  
with pricewaterhousecoopers
a dditional appointments n onexecutive director  
of e2v technologies plc
boar d of dir ector s
46 dir ector s’ r epor t
andrew g iven
n onex ecu tive dir ector
andrew shil ston
cha ir man
k evin da ngerfield
ch ief finan cia l office r
mark r obert sha w 
ch ief ex ecu tive office r
martin f lower
sen ior in depen den t dir ector
andrew h o sty
ch ief o pera ting officer
5 martin f lower
sen ior in depen den t dir ector  ag ed 67
a ppointed december 2004 nonexecutive director 
a pril 2008 senior independent director
career history martin was previously chairman of 
a utogrill h oldings u k plc a nonexecutive director 
of a utogrill g roup inc and deputy chairman and 
senior independent director of severn trent plc 
martin held a variety of senior management positions 
with coats plc from 1968 to 2004 and was g roup 
chief executive of that g roup and chairman of the 
board from 2001 to 2004
a dditional appointments chairman of croda 
international plc chairman of low  bonar plc
committees a udit n omination and remuneration
6 andrew g iven
n on ex ecu tive dir ector ag ed 66
a ppointed december 2007
career history a ndrew was previously the senior 
nonexecutive director and chair of the a udit 
committee of vt g roup plc the senior 
independent director and chair of the a udit 
committee of spectris plc and a nonexecutive 
director and chair of the a udit committee of 
spirent communications plc a ndrew was  
formerly deputy chief executive of logica plc  
and held senior management positions in plessey  
and nortel n etworks
committees a udit chair n omination and 
remuneration morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
overview str ategi c 
report
dire ctor s’ 
report
f in anc ial 
state ment s
10 paul b oulton
co mpany s ecr etary  ge n era l coun sel 
ag ed 46 
a ppointed july 2004 g eneral counsel and deputy 
company secretary 2007 company secretary
career history before joining morgan a dvanced 
materials paul spent nine years with imi plc his  
last role being deputy company secretary and 
senior legal a dviser paul is a qualified solicitor
11 peter b l au sten
group h um an res our ces dir ector 
ag ed 54
a ppointed march 2011
career history prior to joining morgan a dvanced 
materials peter advised on private equity acquisitions 
and international leadership programmes as an 
independent consultant h e was formerly g roup hr 
director of baa plc and held senior roles with 
charles schwab  co british a irways and ford 
motor co h e served as a member of the cbi 
employment policy committee and was appointed  
a commissioner for the u k civil service in 2010
mark r obert sha w
ch ief ex ecu tive office r
k evin da ngerfield
ch ief finan cia l office r
andrew h o sty
ch ief o pera ting officer
7 simon h eale
n on ex ecu tive dir ector ag ed 60
a ppointed february 2005
career history simon was chief executive of china 
n ow from 2007 to 2008 and was chief executive  
of the london metal exchange from 2001 to 2006 
h e qualified as an accountant with price waterhouse 
and has had extensive experience in the far east 
having held senior positions with the swire g roup  
in japan and h ong kong and with jardine fleming  
in h ong kong
a dditional appointments chairman of kazakhmys 
plc senior independent director of coats plc 
nonexecutive director and chair of the a udit and 
compliance committee of marex spectron g roup 
limited trustee and treasurer of macmillan cancer 
support chairing their a udit committee
committees a udit n omination and  
remuneration chair
8 v ictoire de m argerie
n on ex ecu tive dir ector ag ed 50
a ppointed may 2012
career history victoire previously held non
executive positions at ciments français o utokumpu 
and ipsos and was a professor of strategic 
management at g renoble school of business 
during her executive career she held senior 
management positions in g ermany france and the 
u sa with a rkema carnaudmetalbox and péchiney 
victoire holds a phd in strategic management from 
u niversité paris 2 panthéon a ssas
a dditional appointments chairperson of r ondol 
industrie sa s chairperson of the materials 
committee french waste r ecycling scheme 
nonexecutive director of a rkema nonexecutive 
director of eurazéo nonexecutive director of 
n orsk h ydro nonexecutive director of italcementi
committees a udit n omination and remuneration
9 andrew r eynold s smith
n on ex ecu tive dir ector ag ed 47
a ppointed may 2013
career history a ndrew joined g kn in 2002  
and has held a number of senior positions across 
g kn ’s driveline powder metallurgy and 
o ffh ighway businesses prior to g kn  he held 
various general management and functional positions 
at ingersoll r and siebe plc now invensys plc  
and delphi a utomotive systems a ndrew is a former 
chairman of the cbi manufacturing council and  
a former member of the ministerial a dvisory g roup 
for manufacturing
a dditional appointments chief executive 
a utomotive and powder metallurgy and an executive 
director of g kn plc vice p resident of clepa  
the european a ssociation of a utomotive suppliers
committees a udit n omination and remuneration
ex ecu tive co mmittee
47 dir ector s’ r epor t
paul b oulton
co mpany s ecr etary  ge n era l coun sel
peter b l au sten
g roup h um an res our ces dir ector
simon h eale
n onex ecu tive dir ector
andrew r eynold s smith
n onex ecu tive dir ector
v ictoire de m argerie
n onex ecu tive dir ector 48 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
cha ir man ’s letter t o s har eholde r s 
d ear shareholder
it is my pleasure to address you following my first full year as chairman i comment on some of the 
significant governance issues that have arisen during the year below
  stewardship of the g roup during the transition to the new regional o ne morgan structure ensuring the 
benefits of the new organisational structure were secured has been one of the board’s key responsibilities 
during 2013 to this end the board has received reports at each meeting specifically on the progress  
of the restructuring as well as reports from a ndrew h osty in his new role as chief o perating o fficer
  the process to recruit new nonexecutive directors continued and i am pleased to recommend  
a ndrew r eynolds smith appointed at the conclusion of the 2013 a nnual g eneral meeting ‘ag m’  
as well as douglas caster and r ob r owley both appointed in february 2014 for election at the  
2014 ag m inducting the new nonexecutive directors and working on the board dynamic will be  
one of my priorities for 2014
  the board’s programme of work in 2013 was in part driven by the conclusions drawn from the  
2012 board evaluation process the performance evaluation process enables the board to adapt to 
changing circumstances and to move forward to ensure it is effective two areas where it was agreed  
that greater focus was needed were the g roup’s approach to risk management and getting to know key 
business leaders the way the board implemented these recommendations is explained further below 
the recommendations from the 2013 board performance review are set out later in this report
  o ne of the key areas of focus for the board during 2013 has been to ensure the new approach to  
risk has been embedded the board and the a udit committee have between them reviewed each 
individual g roup principal risk and have received reports at each meeting on the rollout of the new 
methodology for risk management 
  i would also like to mention the board’s visits to different parts of the business during the year  
in june 2013 the board visited the h aldenwanger technical ceramics site at waldkraiburg g ermany  
the meeting in july 2013 was held at the composites and defence systems site in coventry u k  
these visits were organised around scheduled board meetings and incorporated a meeting with the  
local management team as well as a tour of the operations which afforded the board a good insight  
into the business 
andrew shil ston 
cha ir man
corpora te go vernan ce 49 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
overview str ategi c 
report
dire ctor s’ 
report
f in anc ial 
state ment s
statement of compliance with the uk corporate  
g overnance code
throughout the year ended 31 december 2013 the company has been 
in full compliance with the relevant provisions of the september 2012 
version of the u k corporate g overnance code the ‘code’ which 
applies to the 2013 financial year the code is published by the financial 
r eporting council and is available on its website wwwfrcorguk
the main principles of the code focus on leadership effectiveness 
a ccountability remuneration and relations with shareholders this 
statement describes how the company has applied the main principles 
of the code it should be read in conjunction with the strategic report 
and the directors’ report on pages 8 to 45 and 46 to 84 respectively
l eadership
the role of the board
the board is collectively responsible to the company’s shareholders  
for the longterm success of the company the board is satisfied it has 
met the code’s requirements for its effective operation it has set the 
company’s strategic aims which were reviewed by the board at its 
dedicated strategy meeting during the year and has ensured that there  
is a framework of prudent and effective controls which enable risk to  
be assessed and managed the board sets the company’s values and 
standards which are contained in the core values statement and  
ethics policy both of which are referred to on pages 23 to 25 of the 
strategic report
matters reserved
there is a schedule of matters specifically reserved for the board 
including setting the g roup’s strategic aims and objectives approving 
significant contractual commitments including the acquisition or  
disposal of companiesbusinesses and treasury and intellectual property 
transactions the review of the effectiveness of risk management 
processes major capital expenditure and corporate responsibility  
o ne meeting each year is specifically focused on strategy and the longer 
term development of the g roup the board reviewed and updated the 
schedule of matters during the year to ensure that it accurately reflected 
the work of the board and the current version is available to view on the 
g roup’s website the board also reviewed the limitations of authority  
in the g roup following the transition to the o ne morgan structure
delegation of authority
the board has delegated responsibility for certain matters to three 
committees namely the a udit n omination and remuneration 
committees the memberships roles and activities of these committees 
are described in separate reports the a udit committee report is  
set out on pages 54 to 56 the n omination committee report is set out 
on pages 57 to 58 and the r emuneration committee report is set out 
on pages 59 to 80 the full terms of reference of the board committees 
are available upon request and are also available on the g roup’s website
the board delegates the daytoday management of the g roup and 
operational matters to the chief executive o fficer and the other 
executive directors the chief financial o fficer and the chief o perating 
o fficer who together with the g roup h uman r esources director and 
the company secretary form the executive committee the biographies 
of the members of the executive committee are set out on pages  
46 to 47
the board has delegated authority for certain other matters including 
routine approvals to a g eneral purposes committee which meets  
as required and at which a nonexecutive director must be present
board meetings
in 2013 the board met formally nine times of which eight meetings 
were scheduled and one meeting was held by telephone
the o ctober 2013 meeting included a dedicated session on g roup 
strategy 
attendance at meetings
the attendance of each director at board and a udit r emuneration  
and n omination committee meetings is set out in the table below
should a director have concerns about the running of the company  
or a proposed action which are not resolved their concerns would be 
recorded in the board minutes a n appropriate directors’ and o fficers’ 
liability insurance policy is in place
 board audit remuneration nomination
director
eligible
to attend a ttended
eligible
to attend a ttended
eligible
to attend a ttended
eligible 
to attend a ttended
a ndrew shilston 9 9 – – 5 5 3 3
mark robertshaw 9 9 – – – – 3 3
kevin dangerfield 9 9 – – – – – –
a ndrew h osty 9 9 – – – – – –
victoire de margerie 9 9 5 5 5 5 3 3
martin flower 9 9 5 5 5 5 3 3
a ndrew g iven 9 9 5 5 5 5 3 3
simon h eale 9 9 5 5 5 5 3 3
a ndrew r eynolds smith

 6 6 4 3 2 2 1 1

 indicates a director deemed by the board to be independent or in the case of the chairman independent on appointment

 a ppointed to the board on 10 may 2013
  in relation to the board and a udit committee meetings in o ctober 2013 a ndrew r eynolds smith attended the board session on strategy only due to a prior commitment with g kn plc 50 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
corpora te go vernan ce
continued
summary of the board’s work during the year
  r eview of performance against the g roup’s threeyear objectives
  r eview and approval of the design and implementation of the 
g roup’s new regional organisational model to create a unified  
and consistent o ne morgan business and monitoring of progress
  r eview of growth opportunities within the business against a 
backdrop of low or no growth in the macroeconomic environment
  r eview of strategic organic growth strategy and initiatives
  r eview of bolton merger and acquisition opportunities
  strategic review of the electrical carbon business 
  r eview of technology and innovation within the business and 
resulting business opportunities
  indepth briefing from the presidents of the r egions and their  
key management
  r eview and approval of the g roup’s halfyear report interim 
management statements and preliminary announcement of the  
final results
  a pproval of 2014 budget
  a pproval of capital expenditure and review of capital investment 
projects including investment in the g roup’s fibre business
  r eview of g roup and r egional business plans
  r eview of the g roup’s principal risks
  r eview of environmental and health and safety performance  
and plans including the behaviourbased safety programme to  
be implemented in 2014
  consideration of major shareholders’ views on the g roup’s 
performance and prospects
  consideration of detailed feedback on the responsible business 
programme training sessions held in the r egions
  review of senior management talent pipeline
  review of the results of the employee survey
  briefing on cyber security
chairman and chief executive o fficer
the roles of chairman and chief executive o fficer are separate  
clearly established set out in writing and agreed by the board
the chairman is responsible for the leadership and effectiveness  
of the board including setting the board’s agenda and ensuring sufficient 
time is available for all agenda items particularly regarding strategic 
issues for promoting a culture of open debate and constructive 
challenge facilitating effective contributions by the nonexecutive 
directors and ensuring constructive relationships between the executive 
and nonexecutive directors the chief executive o fficer is responsible 
for the management of the g roup including the delivery of the g roup’s 
business plan the formulation and implementation of strategy chairing 
the executive committee and for ensuring the implementation of the 
g roup’s policies
following the g roup’s transition to the new regional organisational 
structure the management of the g roup’s operations is now the 
responsibility of the g roup’s chief o perating o fficer supported  
by the heads of each r egion
the chairman
o n appointment as chairman on 1 a ugust 2012 a ndrew shilston  
met the independence criteria set out in the code
nonexecutive directors
n onexecutive directors are appointed for a term of three years 
subject to annual reelection the independence commitment and 
effectiveness of any nonexecutive director who has served for two 
threeyear terms is subject to rigorous review prior to reappointment 
for a further threeyear term 
by the time of the 2014 ag m a ndrew g iven will have served two 
threeyear terms as a nonexecutive director since first being elected to 
the board by shareholders the chairman conducted a rigorous review 
prior to authorising a ndrew g iven to seek reelection at the 2014 ag m 
this review took into account the need to retain experience on the board 
given the departure during 2014 of two longserving nonexecutive 
directors and the appointment of one new nonexecutive director  
in 2013 and two new nonexecutive directors in february 2014
martin flower is the senior independent director
a ndrew g iven will become senior independent director following 
martin flower’s departure at the conclusion of the 2014 ag m
the chairman and the nonexecutive directors met without the 
executive directors present on a number of occasions during the year 
in addition the senior independent director and the other nonexecutive 
directors met without the chairman present
effectiveness
board balance and independence
the size structure and composition of the board were reviewed  
during the year taking into account succession planning and the  
need to progressively refresh the membership of the board
a ndrew r eynolds smith was appointed to the board at the conclusion 
of the 2013 ag m on 10 may 2013 we recently announced the 
appointments of douglas caster and r ob r owley to the board as 
nonexecutive directors in february 2014 further information on  
the process used to appoint the new nonexecutive directors is 
included in the n omination committee report on pages 57 to 58
a s at 13 february 2014 the board comprises a ndrew shilston 
chairman mark r obertshaw chief executive o fficer kevin dangerfield 
chief financial o fficer a ndrew h osty chief o perating o fficer  
and five independent nonexecutive directors victoire de margerie  
martin flower a ndrew g iven simon h eale and a ndrew r eynolds 
smith biographies of the directors including details of their other  
main commitments are set out on pages 46 and 47
serving first threeyear term
serving second threeyear term
serving third threeyear term
nonexecutive director tenure
 51 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
overview str ategi c 
report
dire ctor s’ 
report
f in anc ial 
state ment s
throughout the year the company complied with the requirement  
of the code that at least half the board excluding the chairman  
should comprise nonexecutive directors determined by the board  
to be independent in addition to the factors set out in the code  
the board’s assessment of a nonexecutive director’s independence  
and effectiveness covers their total number of commitments and any 
relationships with major suppliers and with charities receiving material 
support from the company
commitment
prior to undertaking an additional external role or appointment the 
chairman and the nonexecutive directors are asked to confirm that 
they will continue to have sufficient time to fulfil their commitments to 
the company
information and support
the company secretary with the chairman is responsible for ensuring 
the board has full and timely access to all appropriate information  
to enable it to discharge its duties board papers are generally  
made available electronically five working days before each meeting 
n onexecutive directors also receive updates and information between 
formal board meetings 
the directors have access to the advice and services of the company 
secretary who with the chairman is responsible for ensuring that 
board procedures are followed and that applicable rules and regulations 
are observed a procedure is in place to enable the directors to  
seek independent professional advice at the company’s expense  
in connection with their duties as directors
induction and professional development
n ew directors receive a full formal and tailored induction on joining  
the board a new director’s experience and background is taken into 
account in developing a tailored programme following his appointment 
to the board on 10 may 2013 a ndrew r eynolds smith received 
comprehensive briefings to supplement the information on the g roup’s 
business provided during recruitment the briefing for a ndrew r eynolds 
smith included further information on the business and its products  
and markets brokers’ reports on the g roup the company’s corporate 
governance structure and processes and key g roup policies the 
induction programme for a ndrew r eynolds smith included meetings 
with executive management briefings from functional heads on 
governance responsible business key risks human resources and 
environment health and safety visits to a number of operational sites 
and meetings with r egional and operational management
the chairman considers the individual training and development  
needs of each director taking into account environmental social and 
governance matters the company secretary keeps the suitability of 
external courses under review and facilitates the ongoing training and 
development of all directors as necessary
n onexecutive directors have access to management and staff at all 
levels and are encouraged to visit operating sites in addition to visits  
by individual directors and the chairman each year at least one board 
meeting is held at an operating facility
performance evaluation
with the aim of improving effectiveness the board undertakes a formal 
annual evaluation of its own performance and that of its committees 
and individual directors
a n externally facilitated performance evaluation was conducted in 201 1 
and an internal evaluation was conducted in 2012 the 2013 process 
was also conducted internally the process was led by the chairman 
and carried out by the company secretary
the process for the evaluation of the board as a whole and its 
committees was as follows
  development of tailored questionnaires completed by all directors 
which took into account the output from the 2012 performance 
evaluation process the current dynamic of the board the work  
of the board during 2013 and its current areas of focus
  formulation of a report summarising the results of the 
questionnaires which was presented to the board for discussion
in consequence a number of recommendations were agreed by the 
board as follows 
  there should be increased focus on executive succession planning 
and improving the current bench strength in the businesses as  
well as developing future leaders 
  there should be continuing focus on board succession planning  
to ensure that in the medium term there is structured board 
refreshment
  the board should take account of diversity in planning board  
and senior management succession
  further consideration should be given to providing information  
to the board in the most suitable format
a longside the board and committee evaluation each director 
completed an individual questionnaire which invited them to reflect  
on their own performance and contribution to the board the 
questionnaires were reviewed by the chairman with any development 
needs being discussed with individual directors
the recommendations made following the 2012 board performance 
review were implemented during the year
executive directors
independent nonexecutive directors
chairman
board balance
 52 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
the nonexecutive directors led by the senior independent director 
met without the chairman present to evaluate the chairman’s 
performance during the year taking into account the views of the 
executive directors
conflicts of interest
the board has procedures in place to address the requirements of  
the companies a ct 2006 concerning the duty of the directors to  
avoid conflicts of interest a ccordingly the directors are required to 
1 disclose proposed outside interests before they are taken in order  
to enable a prior assessment of any actual or potential conflict and 
2 disclose without delay any situation which arises which gives rise  
to an actual or potential conflict
the board reviews the outside interests of the directors and any 
conflicts disclosed and authorisations given at least annually should an 
actual or potential conflict be identified the board considers whether  
to authorise the situation in accordance with the company’s a rticles of 
a ssociation and if so the terms of any authorisation in the event of an 
actual conflict arising the director concerned is to notify the chairman 
the chairman would notify the senior independent director and the 
director would be excluded from the relevant information debate  
and decision
accountability
financial reporting
in its reporting to shareholders the board is satisfied that the  
a nnual r eport and a ccounts taken as a whole is fair balanced and 
understandable and provides the information necessary for shareholders 
to assess the company’s performance business model and strategy as 
required by the code 
a summary of the statement of directors’ responsibilities in respect of the 
a nnual r eport and the financial statements is set out on pages 83 to 84 
and the ‘going concern’ statement is set out in the strategic report on  
page 45
business model and strategy
details of the g roup’s business model how it is working to generate 
and sustain longterm value and details of the board’s strategy for 
ensuring the g roup meets its objectives are set out in the strategic 
r eport on pages 8 to 45
corpora te go vernan ce
continued
r ecommendation from 2012
there should be continuing focus on both short and medium
term succession planning with particular emphasis on matching  
the skills and experience of the directors to the g roup’s strategy
the board should simplify how the g roup and its strategy are 
presented to external stakeholders
embedding the g roup’s updated approach to risk should be  
closely monitored
more opportunities should be found for nonexecutive directors 
to get to know key business leaders particularly where they are 
based outside the u k
action takenprogress made during 2013
there has been particular emphasis during the year on short and 
mediumterm succession planning and in light of this a ndrew 
r eynolds smith was appointed to the board as a nonexecutive 
director on 10 may 2013 and douglas caster and r ob r owley 
were appointed to the board as nonexecutive directors in 
february 2014
mediumterm succession planning will continue to be an area  
of focus for 2014
within the context of the transition to the o ne morgan structure 
the board has simplified how the g roup and its strategy are 
presented to external stakeholders
the board has closely monitored the g roup’s updated approach  
to risk as detailed on page 19
more opportunities have been found for nonexecutive directors 
to get to know key business leaders particularly where they are 
based outside the u k in addition to site tours and presentations 
from the managers of the h aldenwanger site in g ermany and the 
composites and defence systems site in coventry mentioned in 
the chairman’s introduction above the presidents of the n orth 
a merican and a sian r egions have given indepth presentations to 
the board
 
the board also received presentations from the chief technical 
o fficer and from the head of the fibre business
rec o mmen dation s fro m th e 2012 boar d per for man ce review an d a ction s 
implemen ted dur ing 2013 53 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
overview str ategi c 
report
f in anc ial 
state ment s
dire ctor s’ 
report
internal control
the board has overall responsibility for establishing and maintaining a 
sound system of internal control to safeguard shareholders’ investment 
and the g roup’s assets and for reviewing the effectiveness of this system 
the g roup’s system of internal control has been in place for the year 
under review and up to the date of approval of the a nnual r eport
through the a udit committee the board reviews the effectiveness  
of the internal control system annually and did so during the year the 
system of internal control accords with the financial r eporting council’s 
guidance on the internal control requirements of the code turnbull 
this review covered all material controls including financial operational 
and compliance controls and risk management systems the a udit 
committee and board receive regular risk management reports covering 
the full range of risks faced by the g roup and together they ensure there 
are adequate systems in place and evaluate their effectiveness
the directors believe that the g roup’s system of internal financial 
controls provides reasonable but not absolute assurance that the 
assets of the g roup are safeguarded that transactions are authorised 
and recorded in a correct and timely manner and that such controls 
would prevent and detect within a timely period material errors or 
irregularities the system is designed to manage rather than eliminate 
risk and to address key business and financial risks including social 
environmental and ethical risks the internal control framework 
complements the g roup’s management structure the main features of 
the g roup’s systems for internal control and for assessing the potential 
risks to which the g roup is exposed are summarised as follows
  control environment the g roup’s management processes include 
delegated authorities and the segregation of duties with documented 
policies and manuals these cover financial procedures environmental 
health and safety practice and other areas in addition there is a 
schedule of matters reserved for the board the g roup’s core 
values statement ethics policy and other supporting policies and 
procedures set out the g roup’s commitment to the highest standards 
of corporate and individual behaviour and provide guidance for 
employees the g roup’s r esponsible business programme includes 
relevant training and reporting and is part of the control framework 
the ethics h otline is available to employees and others in this regard 
the presidents of each r egion and other senior operational and 
functional management make an annual statement of compliance  
to the board confirming that for each of the businesses for which  
they are responsible the financial statements are fairly presented in 
all material respects appropriate systems of internal controls have 
been developed and maintained and the businesses comply with 
g roup policies and procedures
  financial reporting r isk management systems and internal controls 
are in place in relation to the g roup’s financial reporting processes 
and the process for preparing consolidated accounts these include 
policies and procedures which require the maintenance of records 
which accurately and fairly reflect transactions and dispositions of 
assets provide reasonable assurance that transactions are recorded 
as necessary to allow the preparation of financial statements in 
accordance with international financial r eporting standards ifr s 
and the review and reconciliation of reported data a s noted above 
representatives of the business are required to certify that their 
reported information gives a true and fair view of the state of affairs 
of the business and its results for the period the a udit committee 
is responsible for monitoring these risk management systems and 
internal controls
  performance monitoring there are regular meetings of the board 
and of the executive committee a comparison of forecast and 
actual results is considered including cash flows and comparisons 
against budget and the prior year r egional management teams  
also meet regularly to review performance in addition regular  
site visits are made by members of the executive committee
  r isk management the identification of major business risks is  
an ongoing process carried out in conjunction with operating 
management steps are taken to mitigate or manage any material 
risks identified the board either directly or through the a udit 
committee receives reports on financial taxation insurance 
treasury pension legal social environmental and ethical risks from 
management the r egional presidents cover risk issues at their 
management meetings details of the g roup’s risk management 
system are set out in the r isk management section on pages 19 to 22
  r isk factors morgan’s businesses are affected by a number of factors 
many of which are influenced by macroeconomic trends and are 
therefore outside the company’s immediate control although  
as described above and in the strategic report the identification  
and management of such risks is carried out systematically  
these are further discussed in the r isk management section  
on pages 19 to 22
  internal audit the g roup’s internal audit function reviews internal 
control and risk management processes the a udit committee 
approves the plans for internal audit reviews and receives reports 
accordingly a ctions resulting from internal audit reviews are agreed 
with management the internal a uditor has direct access to the 
chairman of the a udit committee
r elations with shareholders
during 2013 the chairman and other nonexecutive directors attended 
the annual and halfyear results presentations and the g roup’s capital 
markets day this provided the opportunity to meet institutional 
shareholders and other attendees and to further develop an 
understanding of their views
following the announcement of the g roup’s results and after other 
significant statements and presentations investor opinion is canvassed 
and any feedback is made available to the board in addition the board 
is provided with brokers’ reports and feedback from shareholder 
meetings on a regular basis
to help facilitate dialogue with shareholders the investors section of  
the company’s website includes details of the london stock exchange 
announcements press releases presentations webcasts and other 
relevant information
constructive use of the agm
the ag m is normally attended by all members of the board and by a 
representative of the external auditor a t the ag m held in may 2013 the 
chief executive o fficer made a short business presentation shareholders 
are also invited to ask questions during the meeting and have the 
opportunity to meet the directors and other members of senior 
management before and after the formal meeting the results of the 
proxy voting on all resolutions are provided for all attendees and are 
released to the london stock exchange and published on the g roup’s 
website as soon as practicable after the meeting
information on share capital and other matters
the information about share capital required to be included in this 
statement can be found on pages 82 to 83 in the o ther disclosures 
section morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
54 dir ector s’ r epor t
co mmittee member s
andrew g iven chairman
martin f lower
simon h eale
v ictoire de margerie
andrew r eynolds smith 
 joined the committee on his appointment as a director on 10 may 2013
a ll members of the committee are independent nonexecutive directors 
and a ndrew g iven the chairman of the committee has the requisite  
financial experience
th is is th e fir st dedicated r epor t  
o f th e au dit co mmittee g iving an  
o ver view o f its r espon sibilities an d  
ho w it discharg ed th ese tog eth er  
with i n for mation on its membe r sh ip  
an d go vernan ce
re por t o f th e a udit co mmittee
andrew g iven 
co mmittee cha ir man
chairman’s introduction
the main purpose of the a udit committee is to assist the 
board in effectively discharging its responsibilities for financial 
reporting and corporate control i would like to highlight  
a number of key areas of focus for the committee in 2013 
as follows
  during 2013 we continued to monitor our internal 
controls closely and received a series of presentations 
from the r egions on their internal controls the 
presentations were delivered by the finance director 
of the business which gave the committee the 
opportunity to ask questions facetoface and gain  
a real insight into the internal control environment  
of each business
  following the outcome of the 2012 internal a udit 
effectiveness review in which resource was identified 
as an area for improvement the committee had 
oversight of the appointment of an additional internal 
a uditor during the year we also approved an extended 
remit for internal a udit to include review of certain 
aspects of the r esponsible business programme  
the risk management process and it especially major  
it projects
  throughout 2013 the committee monitored how  
the g roup’s new approach to risk management was 
working we received progress reports in person  
at each meeting from the r esponsible business 
programme  r isk manager in relation to the 
embedding of the new risk management processes 
between the a udit committee and the board during 
the course of the year we reviewed each individual  
key risk by receiving a report containing information on 
the risk controls and the effectiveness of those controls 
and any recommended actions
  following the transition to the o ne morgan structure 
the committee has reviewed the g roup’s reporting 
format we received advice from kpmg a udit plc  
on the application of current accounting standards  
as well as on the classification of restructuring costs and 
other accounting matters arising from the reorganisation
  the a udit committee has implemented the new 
provisions of the code which applied to the 2013 
financial year for the first time a n account of how we 
addressed our responsibility for advising the board  
on whether taken as a whole the 2013 a nnual r eport 
is fair balanced and understandable such that 
shareholders can assess the company’s performance 
business model and strategy is set out below
i am pleased to present the a udit committee report  
for 2013
andrew g iven
committee chairman morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
55 dir ector s’ r epor t
overview str ategi c 
report
dire ctor s’ 
report
f in anc ial 
state ment s
meetings
the a udit committee met five times during the year a t the end  
of each meeting the nonexecutive directors who are members of  
the committee also meet the external auditor the h ead of internal 
a udit and the r esponsible business programme  r isk manager without  
the executive directors or other members of management present 
between meetings the members of the a udit committee keep in 
contact with the chairman of the board the chief executive o fficer  
the chief financial o fficer the external auditor and h ead of internal 
a udit as necessary
information and support
the committee may request the attendance at meetings of any 
director auditor or member of management as may be considered 
appropriate by the committee
the committee identifies and confirms that it receives the information  
it needs to enable it to fulfil its responsibilities this is complemented  
by regular presentations made by the regional p residents and finance 
directors on the internal control environment within their respective 
regions training and development information is made available to  
the members of the a udit committee when appropriate
audit committee terms of reference
the a udit committee’s terms of reference were reviewed during  
the year and updated to reflect the changes to the u k corporate 
g overnance code introduced in september 2012 they are available  
on the g roup’s website and are summarised below
  monitoring and making appropriate recommendations to the board 
with regard to the financial reporting process the integrity of the 
financial statements of the g roup preliminary announcements 
halfyear reports and any formal announcements relating to the 
g roup’s financial performance and reviewing significant financial 
reporting judgments contained in them
  r eviewing accounting policies used by the g roup and their 
consistent application across the g roup
  r eviewing whether the g roup has followed appropriate accounting 
standards and made appropriate estimates and judgments taking 
into account the views of the external auditor
  r eviewing and monitoring the effectiveness of the g roup’s internal 
financial controls and internal control internal audit and risk 
management systems
  r eviewing and monitoring the g roup’s whistleblowing arrangements 
and systems and controls for the prevention of bribery
  making recommendations to the board for it to put to the 
shareholders for their approval at the ag m in relation to the 
appointment reappointment and removal of the external auditor 
and to approve the remuneration and terms of engagement of the 
external auditor
  r eviewing and monitoring the external auditor’s independence  
and objectivity
  r eviewing the effectiveness of the process for the statutory audit  
of the annual consolidated accounts taking into consideration 
relevant u k professional and regulatory requirements
  developing and implementing the policy on the engagement of the 
external auditor to supply nonaudit services taking into account 
relevant ethical guidance regarding the provision of nonaudit 
services by the external auditor
  r eporting to the board identifying any matters in respect of which  
it considers that action or improvement is needed and making 
recommendations as to the steps to be taken
the committee has the authority to investigate any matters according  
to its terms of reference and may obtain external advice at the cost of 
the company but did not do so during the year the h ead of internal 
a udit has access to the chairman of the committee and regularly meets 
with the committee without other executives present
main areas of work in 2013
during 2013 the committee
  r eviewed the g roup’s 2013 halfyear and fullyear statements  
prior to board approval
  r eviewed the scope of the external audit and confirmation of  
the external auditor’s terms of engagement and fee structures
  a ssessed the effectiveness of the external audit process and all 
aspects of the service provided by the external auditor
  completed the review of the g roup’s approach to risk management 
and an indepth review of certain material risks including 
antibriberyantitrust it security and financial misstatementfraud
  r eviewed the effectiveness of and received reports from 
management on the g roup’s internal audit and risk management 
systems and updates to the g roup’s governance risk and 
compliance plans
  r eviewed the remit of the internal a udit function and agreed to 
extend the scope beyond internal financial controls to other areas 
including it and areas of regulatory compliance
  a pproved the work and plans for the internal a udit function and  
the monitoring of progress against the plan
  r eviewed the systems of internal controls of the r egions
  a ppraised the g roup’s whistleblowing process and related 
procedures and policies
  r eviewed material litigation crisis management plans and controls  
in relation to joint ventures
  monitored the level of nonaudit work of the auditor which  
in 2013 included services amounting to £02 million mainly  
in connection with tax services
  r eviewed the impact of the o ne morgan structure on the  
reporting structure public reporting
a s mentioned the committee on behalf of the board considered the 
code requirement to make a statement on whether the a nnual r eport 
and a ccounts is fair balanced and understandable the committee 
approached this as follows
  considered the questions which need to be answered in order to 
evaluate whether the a nnual r eport and a ccounts meets the fair 
balanced and understandable test
  reviewed the methodology used to construct the narrative sections 
of the a nnual r eport
  reviewed the disclosure judgments made by the authors of each 
section and considered the balance of good and bad news in the 
a nnual r eport
  received confirmation from external advisers that all regulatory 
requirements are satisfied
  received confirmation of verification of content from the authors  
of each section
  asked the board to confirm that the business model and strategy 
narrative accord with the agreed strategy and business model
  received confirmation from the company secretary and chief 
financial o fficer that the narrative reports and financial statements 
are consistent
  reviewed an advance draft of the a nnual r eport and a ccounts prior 
to the financial year end
the significant areas of judgement considered by the committee  
in relation to the 2013 financial statements and how these were 
addressed were
  g oodwill impairment testing the judgments in relation to asset 
impairment largely relate to the determination of the cashgenerating 
unit cgu  particularly following the o ne morgan reorganisation  
in early 2013 and the assumptions underlying the calculation of  
the value in use of each cgu  primarily the basis of the financial 
projections used and the macroeconomic assumptions underlying 
the valuation process the committee has addressed this through 
receiving and analysing reports from the chief financial o fficer and 
the director of finance and kpmg a udit plc explaining the basis  
of the new cgu s and the basis of the financial assumptions used
  provisions and contingent liabilities the level of provisioning for 
known and contingent liabilities including those arising from trading 
environmental issues and litigation is an issue where management  
and thirdparty judgments are important these are addressed 
through the committee and the main board discussing with  
various members of senior management the key judgments made 
supported where appropriate with relevant external advice  
kpmg a udit plc also reports regularly on all material provisions and 
contingent liabilities
  tax provisions a ccounting for current and deferred tax involves a 
range of judgments the committee and the main board address 
these issues through reporting from the chief financial o fficer and 
the director of g roup tax supported as necessary with external 
professional advice including from kpmg a udit plc 
the committee reviewed the content of the a nnual r eport and 
a ccounts and advised the board on whether taken as a whole it is fair 
balanced and understandable and provides the information necessary  
for shareholders to assess the company’s performance business model 
and strategy
re por t o f th e a udit co mmittee
continued
56 dir ector s’ r epor t
audit committee and the external auditor
the a udit committee has received confirmation from kpmg a udit plc 
that its general procedures support the auditor’s independence and 
objectivity in relation to nonaudit services a fter considering such 
procedures the opinion of the a udit committee was that the auditor’s 
objectivity and independence were safeguarded despite the provision  
of nonaudit services by kpmg a udit plc
to help ensure the objectivity and independence of the external auditor 
the policy implemented by the committee for the provision of 
nonaudit services by the external auditor is in summary as follows
  certain nonaudit services may not be provided by the external 
auditor including the review of their own work they may not  
make management decisions their work must not create a mutuality 
of interest and they may not put themselves in the position  
of advocate
  a ny nonaudit work proposed to be placed with the external 
auditor with a fee between £50000 and £200000 must be 
approved in advance by the chairman of the a udit committee 
projects in excess of £200000 must be approved in advance by the 
a udit committee work which includes multiple phases is treated as 
a single project for approval purposes
  the prior approval of the a udit committee is required for any 
nonaudit work which when added to the fees paid for other 
nonaudit work would total more than 80 of the audit fee
during the year the proportion of the auditor’s fees for nonaudit  
work relative to the audit fee was 13 2012 14
the committee’s policy is to undertake an annual review of the 
effectiveness of the audit process and of all aspects of the external 
auditor’s performance and independence before determining whether 
to undertake a formal review of the auditor including a retender 
presentation or whether to put the g roup’s audit work out to full 
thirdparty tender 
the external auditor has processes in place to safeguard their 
independence and has written to the committee confirming that  
in their opinion they are independent the g roup last changed its 
auditor in late 2001 and undertook a formal review of the external 
auditor which included a retender presentation during 2007 the 
external auditor rotated the partner responsible for the g roup’s audit 
work in 2008 and 2013 h aving reviewed the effectiveness of the audit 
process and all aspects of the service provided by the auditor and taking 
account of the assurance given by the auditor as to their independence 
the committee recommended to the board that the g roup’s audit 
work should not be put out to thirdparty tender during 2013 and  
will further review the situation during 2014 overview str ategi c 
report
dire ctor s’ 
report
f in anc ial 
state ment s
57 dir ector s’ r epor t
co mmittee member s
andrew shilston chairman
martin f lower
andrew g iven
simon h eale
v ictoire de margerie
andrew r eynolds smith 
mark r obertshaw
 joined the committee on his appointment as a director on 10 may 2013
a majority of members of the committee are independent nonexecutive 
directors
th e ma in ro le o f th e n o mina tion  
co mmittee is to le a d th e process  
for boar d appo in tmen ts an d to m a ke 
r eco mmen dation s to t h e boar d on  
th e appo intme nt o f n ew dir ector s
re por t of th e nomi na tion committee
andrew shil ston 
co mmittee cha ir man
chairman’s introduction
h aving the right balance of skills and experience on the 
board is fundamental to the longterm success of the 
company r efreshing the board has been the committee’s 
key area of focus during the year leading to the recruitment 
of three nonexecutive directors a ppointments are made 
on merit and against objective criteria having due regard for 
diversity including gender
there is a formal rigorous and transparent procedure  
for appointments to the board which is described in more 
detail below
andrew shilston
committee chairman
meetings
the committee met three times during 2013
information and support
the committee has the power to request the attendance 
of any other director or member of management for all  
or part of any meeting as may be considered appropriate 
by the committee
n omination committee terms of reference
the committee’s terms of reference were reviewed during 
the year and updated to reflect the changes introduced by 
the september 2012 version of the code the terms of 
reference are available to view on the g roup’s website
main areas of work during 2013
the n omination committee reviews the balance of skills 
knowledge and experience on the board succession 
planning and the leadership needs of the g roup the work 
of the committee in discharging those responsibilities in 
respect of 2013 included
  led the search for new nonexecutive directors 
resulting in the selection and recommended 
appointment of a ndrew r eynolds smith in may 2013 
and r ob r owley and douglas caster in february 2014 
  reviewed the composition of the board and its 
committees and succession planning
  conducted a rigorous review of the continued 
appointment of a ndrew g iven nonexecutive director 
who by the time of the 2014 ag m will have served  
for six years since first election by shareholders
  considered the reappointment of the nonexecutive 
directors at the conclusion of their specified time in 
office and directors’ annual reelection at the 2014 ag m
  r eviewed for recommendation to the board a policy 
on diversity morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
re por t of th e nomi na tion committee
continued
appointments to the board
the board discussed the g roup’s approach to talent management and 
succession planning at senior levels within the business during december 
2013 succession planning for appointments to the board and for senior 
management will be an area of focus for the committee in 2014
the process for appointing a ndrew r eynolds smith douglas caster 
and r ob r owley is described below
  following consideration of a number of leading firms the 
committee appointed egon zehnder as external search agent  
in line with the code the committee established that  
egon zehnder has no other connection with the company
  in the light of its discussions on the balance of skills knowledge 
experience and diversity on the board the committee considered 
and formulated a candidate specification for the roles
  the external search agent produced ‘long lists’ of candidates  
for the roles
  interviews were held with the shortlisted candidates and  
all members of the n omination committee participated  
in interviews with the preferred candidates
  the committee selected its preferred candidates and 
recommended their appointment to the board
the terms and conditions of appointment of nonexecutive directors 
are available for inspection n onexecutive directors including the 
chairman are asked to undertake that they will have sufficient time  
to meet their commitments to the company and their other significant 
commitments are disclosed to the board before appointment with an 
indication of the time involved the board is informed of any subsequent 
changes with additional commitments disclosed before they are taken 
the terms of appointment for nonexecutive directors do not include  
a notice period
board d iversity policy
the board firmly believes in the value of diversity of perspective 
including background nationality experience and gender at all  
levels of the company as well as on the board a s is not unusual  
in engineering or manufacturing businesses diversity in gender  
is the hardest to achieve 
it is very gratifying however to see that at the graduate recruitment  
level the g roup is now having great success in attracting good 
candidates of both sexes and many nationalities 42 of the  
2013 graduate intake were female a t the senior level 5 of  
senior managers and one of the board directors are female
n ew appointments to the board are made on merit with a  
focus on international and industrial experience but diversity of 
perspective and the mix of skills around the board table are also 
taken into account when selecting potential candidates during the 
selection process for new nonexecutive directors the committee 
has and will continue to use a search agent who has signed up  
to the voluntary code of conduct which ensures that diversity is 
considered when developing a candidate pool the brief to the 
search agent is to put forward a ‘long list’ of candidates from a wide 
range of backgrounds to ensure that the best candidate is selected
when monitoring the development of leadership and considering 
the succession planning for executive management the board will 
take into account the need for talented leaders who will have the 
skills needed to lead a global company with a growing presence  
in the emerging economic giants of the future
the board will continue to monitor whether it is taking diversity  
into account when planning executive succession and appointing 
new board members and the board effectiveness evaluation 
process addresses diversity
the board has discussed whether a quota for female directors 
should be introduced by a certain date but feels this is unrealistic 
given the current gender composition of senior executives and  
the competition for female nonexecutive directors
58 dir ector s’ r epor t morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
re por t of th e nomi na tion committee
continued
r emun era tion r epor t
a statement to shareholders from the chairman of the r emuneration committee
i am pleased to present the directors’ report on remuneration for the year ended 31 december 2013
this is my last r eport to shareholders as i will be retiring from the board during 2014 i have very much enjoyed my involvement with the  
g roup and seeing significant improvements in performance over the years i have been keen to ensure that the remuneration strategy has been 
appropriate and relevant throughout the range of market conditions the g roup has faced shareholder interests have always been foremost in  
our thinking and they will certainly remain so for my successor
a s noted earlier in this r eport the g roup’s markets in 2013 remained challenging whilst percentage profit margins were increased there was 
insufficient improvement in the reported level of profits for any incentive awards to vest
n o bonus is payable for the ceo  cfo and c oo in respect of 2013 performance this also means they will not be able to participate in the  
2014 bonus deferral share matching plan bdsmp
for the 201 1 award of the bdsmp vesting was based on the compound annual growth rate cagr  in eps from the 2010 base year over  
the three years to the end of the 2013 financial year whilst profits and eps did increase over that time the cagr of just under 6 was below  
the 8 start point for any matching shares to vest in demanding trading conditions the significant stretch required for a threshold payout for  
the 201 1 bdsmp was not achieved
longterm incentive plan ltip awards granted in 201 1 were also partdependent on eps performance this element therefore also did not  
vest for the ltip and neither did the other two measures used for this award tsr and ro ce 
the committee is still of the view that incentive payments must reflect the achievement of stretching performance targets that are aligned with 
shareholder interests a t the same time the effective pursuit of strategic objectives must be continued in challenging less predictable market 
environments to emphasise this strategic personal objectives will be added to executive directors’ bonus plans for 2014 weighted 20  
the committee continues to take the approach that a significant part of the executive directors’ packages should be linked to the longterm  
success of the g roup
for the 2014 share incentive award targets we again reviewed eps targets against internal and external reference points and have once more  
set what we consider a challenging range – particularly against the uncertain market outlook o n this basis the existing 815 pa range  
for the ltip and the 820 pa range for the bdsmp represent demanding targets over the next three years and remain appropriate for  
the 2014 award cycle
ro ce targets for the 2014 ltip awards have again been reviewed so that they reflect the returns the board would expect to ensure that  
the g roup’s ro ce levels are maintained and enhanced a t the same time they put a strong emphasis on profit growth via the challenging  
eps metrics the target range for g roup ro ce has again been set at 33 to 37 which the committee still believes provides a significant  
degree of demanding performance
for the 2014 bonus year the committee’s view is that the likely macroeconomic environment will continue to make effective cash management 
more important the o perating working capitalsales  measure applied to the executive directors’ bonus targets in 2013 will remain for  
another year this will accompany the main element of the bonus target of operating profit before oneoff costs as well as the new strategic 
personal objectives described in the report
o ver the last 12 months we have engaged with our shareholders and we value the views and feedback we have received we have again  
written to those with the largest shareholdings about our annual incentive arrangements and proposals to renew the employee sharesave scheme  
we also consulted shareholders about the treatment of unvested incentive plans when the two former operating divisions were restructured  
as part of the ‘o ne morgan’ strategy 
we do discuss and consider feedback and reflect on how to ensure overall remuneration should both be in the longer term interests of shareholders 
and meaningful for management i hope you will again find this balance appropriately reflected in the report that follows
during the year the committee met five times and its activities included
  consideration of whether the g roup’s overall remuneration structure supports the g roup’s business strategy
  a review of external benchmarking of executive remuneration packages
  determination of the remuneration packages for the executive directors and other g roup executives
  a review of whether the measures for the bonus and share incentive schemes remain appropriate
  determination of appropriate performance targets for bonus and share incentive schemes
  determination of whether targets for the bonus and share incentive schemes were achieved
the presentation of this report is intended to be consistent with the new reporting regulations for executive remuneration and i therefore hope  
we have been successful in achieving even greater clarity and transparency for our shareholders 
simon h eale
chairman of the remuneration committee
overview str ategi c 
report
dire ctor s’ 
report
f in anc ial 
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59 dir ector s’ r epor t 60 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
r emun era tion r epor t
continued
compliance statement
this r eport covers the period 1 january 2013 to 31 december 2013 and provides details of the r emuneration committee and remuneration 
policy of morgan a dvanced materials 
the company has complied with the principles and provisions relating to directors’ remuneration in the u k corporate g overnance code and  
this r emuneration r eport has been prepared in accordance with schedule 8 of the large  mediumsized companies and g roups a ccounts and 
r eports a mendment r egulations 2013 in accordance with section 439a of the companies a ct a binding resolution to approve the ‘directors’ 
r emuneration policy’ will be proposed at the ag m on 9 may 2014 a second advisory resolution to approve the ‘a nnual r eport on r emuneration’ 
will also be proposed at the ag m
r emuneration committee
the r emuneration committee is responsible for developing g roup policy on executive remuneration and for determining on behalf of the  
board specific remuneration packages for the executive directors and the chairman the committee’s terms of reference are available on  
the g roup’s website
the r emuneration committee consults the chief executive o fficer and invites him to attend meetings when appropriate the director of  
h uman r esources attends meetings of the committee by invitation the committee also had access to advice from the chief financial o fficer  
the company secretary acts as secretary to the committee n o executive director or other attendee is present when his own remuneration  
is being discussed
membership of the committee is shown on page 67
1 poli cy report
key principles of the executive d irectors’ remuneration policy
the r emuneration committee aims to ensure that all the remuneration packages offered are competitive and designed to attract retain and 
motivate executive directors and senior executives of the right calibre in order to run the g roup successfully and to create value for shareholders 
the committee takes a longerterm perspective on retention and motivation and although the shortterm is important the committee’s view  
is that this has to be put in the context of the g roup’s longterm interests
the policy of the committee is to ensure that a significant proportion of the total remuneration opportunity is performancerelated with particular 
emphasis on longterm performance and based on the achievement of measurable targets that are relevant to and support the business strategy 
this is in order to create a strong link between performance and reward which should be beneficial to shareholders employees and the g roup
in assessing all aspects of pay and benefits the committee also takes into account the packages offered by similar companies to ensure the 
remuneration of executive directors is competitive against the market in which the g roup competes for talent for the purposes of such analysis 
comparator companies are chosen having regard to business sector the size of the company eg in terms of market capitalisation turnover and 
number of people employed the diversity and complexity of its businesses and the geographical spread of its businesses the committee also 
considers the level of pay and employment conditions throughout the g roup when determining executive directors’ remuneration
the committee believes that the current remuneration policy for executive directors which is set out over the following pages and is intended  
to apply for a period of three years subject to shareholder approval at the 2014 ag m is appropriate and supports the business strategy  
the r emuneration committee will keep remuneration policy under periodic review to ensure it remains aligned with the g roup’s strategy  
and in line with the principles set out in the u k corporate g overnance code in relation to directors’ remuneration as well as the guidance  
of institutional investors and their representative bodies 61 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
overview str ategi c 
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f in anc ial 
state ment s
purpo se an d  
lin k to st ra tegy op era tion oppor tun ity
perf orm an ce 
metr ics
f ixed pay
base salary
provides the fixed element of  
the remuneration package set at 
competitive levels against the market
base salaries are generally reviewed 
each january with reference to the 
salary levels at companies of similar 
sector size and complexity in the  
ftse 350 the committee also 
considers individual contribution  
and the range of salary increases 
applying across the g roup when 
determining increases
base salary increases are applied in  
line with the outcome of the annual 
review salaries in respect of the year 
under review and for the following 
year are disclosed in the a nnual 
report on remuneration
salary increases for executive directors 
will normally be within the range of 
increases for the general employee 
population over the period of this 
policy where increases are awarded 
in excess of those for the wider 
employee population for example in 
instances of sustained strong individual 
performance or if there is a material 
change in the responsibility size or 
complexity of the role the committee 
will provide the rationale in the 
relevant year’s a nnual r eport on 
remuneration
n ot applicable
pension
provides postretirement  
benefits for participants in  
a costefficient manner
defined benefit scheme subject  
to a notional earnings cap with  
an abovethecap allowance for 
current executive directors
defined contribution scheme  
andor a cash allowance in lieu 
thereof for future external hires
o pportunities vary depending on  
the scheme in which an executive 
participates details for the executive 
directors are set out in the a nnual 
r eport on r emuneration on pages 69 
and 70
a bovethecap pension allowances will 
be established in line with our principle 
to be broadly costneutral
for future hires defined contributions  
or cash in lieu thereof will be up to 
20 of salary
n ot applicable
benefits
designed to be competitive in  
the market in which the individual  
is employed
can include company car 
car allowance health insurance and 
where appropriate relocation 
allowances and other expenses
benefits values vary by role and are 
reviewed periodically relative to market
it is not anticipated that the cost of 
benefits provided will change materially 
yearonyear over the period for which 
this policy will apply
the committee retains the discretion 
to approve a higher cost in exceptional 
circumstances eg relocation expenses 
expatriation allowances etc or in 
circumstances where factors outside 
the g roup’s control have changed 
materially eg market increases in 
insurance costs
benefits in respect of the year under 
review are disclosed in the a nnual 
report on remuneration
n ot applicable
summary of morgan advanced materials’ remuneration policy for executive d irectors
this section of our report summarises the key components of remuneration for executive directors 62 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
r emun era tion r epor t
continued
purpo se an d  
lin k to st ra tegy op era tion oppor tun ity
perf orm an ce 
metr ics
variable pay
annual bonus 
incentivises the achievement of  
specific goals over the shortterm  
that are also aligned to the longterm 
business strategy
performance measures are set by the 
committee at the start of the year and 
are weighted to reflect a balance of 
financial and strategic objectives 
a t the end of the year the 
remuneration committee determines 
the extent to which these have been 
achieved
between 0 and 100 of salary 
depending on performance
the payout for threshold performance 
may vary yearonyear but will not 
exceed 25 of the maximum 
opportunity
bonuses for the ceo  cfo  
and coo may be based own a 
combination of financial and non 
financial measures the weighting 
of nonfinancial performance  
will be capped at 20 of the 
maximum opportunity
further details are set out in the 
a nnual report on remuneration  
on page 68
bonus d eferral share matching plan 
bd smp
designed to encourage longterm 
profitable growth and to retain key 
individuals over this time period 
provides an opportunity for individuals 
to invest in company shares and 
receive matching shares based on 
g roup performance
participants can elect to voluntarily 
defer a proportion of their annual 
bonus into shares for three years and 
receive a matching opportunity based 
on performance 
a ward levels and performance 
conditions on which vesting depends 
are reviewed prior to the start of each 
cycle to ensure they remain 
appropriate
dividend shares may accrue on the 
invested and matching shares during 
the performance period and are 
released to participants at the end of 
the vesting period depending on the 
level of performance
u p to 75 of the annual bonus may 
be voluntarily deferred into shares for 
three years
whilst the plan maximum is 75 the 
policy is to make awardsallow deferral 
of 50 unless exceptional 
circumstances apply
a matching award of up to three shares 
for each deferred share may be earned 
based on g roup performance a t 
threshold levels of performance no 
matching shares vest
the vesting of awards is usually 
subject to
  continued employment
  the g roup’s performance 
currently eps growth  
against stretching targets  
over a threeyear  
performance period
the committee has discretion 
to adjust the measures their 
weighting and performance 
targets prior to the start of each 
cycle to ensure they continue to 
align with the g roup’s strategy
further details of the measures 
attached to the bdsmp in the 
year under review and the 
coming year are set out in the 
a nnual report on remuneration 
on pages 71 and 72
l ong t erm incentive plan ltip 
a ligns the interests of executives  
and shareholders by delivering shares  
to executive directors and other senior 
executives as a reward for outstanding 
longterm performance
the remuneration committee has 
the ability each year to grant an award 
under the ltip
the award levels and performance 
conditions on which vesting depends 
are reviewed prior to the start of each 
award cycle to ensure they remain 
appropriate
the ltip provides for a conditional 
award of shares up to an annual limit  
of 200 of salary
30 of an award vests for 
achievement of the threshold level  
of performance
the vesting of awards is usually 
subject to
  continued employment
  the g roup’s performance  
over a threeyear 
performance period 
currently a combination of 
total shareholder return 
tsr  earnings per share 
eps and r eturn on 
capital employed ro ce
the committee has discretion  
to adjust the measures their 
weighting and performance 
targets prior to the start of each 
cycle to ensure they continue to 
align with the g roup’s strategy
further details of the measures 
attached to the ltip awarded in 
the year under review and the 
coming year are set out in the 
a nnual report on remuneration 
on pages 71 and 73
sharesave
a voluntary scheme open to  
all u k employees which aligns  
the interests of participants with 
shareholders through any growth  
in the value of shares
a n h mr c approved scheme where 
employees may save up to a monthly 
savings limit out of their own pay 
towards options granted at up to a 
20 discount o ptions may not be 
exercised for three years
u p to the savings limit as determined 
by h mr c from time to time across  
all sharesave schemes in which an 
individual has enrolled
n one 63 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
overview str ategi c 
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dire ctor s’ 
report
f in anc ial 
state ment s
payments under existing awards
the company will honour any commitment entered into and directors will be eligible to receive payment from any award granted prior to the 
approval and implementation of the remuneration policy detailed in this report ie before 9 may 2014 even if these commitments andor awards 
fall outside the above policy the company will also honour any commitment entered into at a time prior to an individual becoming a director if  
in the opinion of the committee the payment was not in consideration for the individual becoming a director of the company details of these 
awards are and will be disclosed in the a nnual r eport on r emuneration
d ifference in policy between executive d irectors and other employees
the remuneration policy for other employees is based on broadly consistent principles as those described in this r eport for the executive 
directors a nnual salary reviews across the g roup take into account business performance local pay and market conditions and salary levels  
for similar roles in comparable companies a ll executives are eligible to participate in an annual bonus scheme o pportunities and performance 
measures vary by organisational level geographical region and an individual’s role o ther members of the g roup executive committee participate 
in the bdsmp and ltip on similar terms to the executive directors although award sizes may vary according to each individual and by organisational 
level below this level executives are eligible to participate in the ltip and other sharebased incentives by annual invitation 
u se of discretion
to ensure fairness and align executive director remuneration with underlying individual and g roup performance the committee may exercise its 
discretion to adjust upwards or downwards the outcome of any short or longterm incentive plan payment within the limits of the relevant plan 
r ules for corporate or exceptional events including but not limited to corporate transactions changes in the g roup’s accounting policies minor  
or administrative matters internal promotions external recruitment terminations etc a ny adjustments in light of corporate events will be made  
on a neutral basis ie to not be to the benefit or detriment of participants
a ny use of discretion by the committee during the financial year will be detailed in the relevant a nnual r eport on r emuneration
performance measure selection
the committee considers carefully the selection of performance measures at the start of each performance cycle taking into consideration the 
macroeconomic environment as well as specific g roup strategic objectives 
for the 2014 annual bonus the committee has decided to introduce a strategic personal objectives element for executive directors and g roup 
executives this is to ensure the continued focus on strategic priorities during the bonus year that are crucial for the g roup’s overall strategy  
the 2014 objectives are described in the implementation section of this r eport on page 72 these will constitute a maximum of 20 of the  
total bonus target alongside 60 for the ebita target and 20 for the o perating working capitalsales  element
ebita is selected to achieve alignment with measures used throughout the g roup o perating working capitalsales  is selected as the most 
appropriate measure of effective cash management involving four quarterly calculations where working capital management in every month 
matters in the calculation incentivising yearround performance
ltip performance measures are reviewed periodically to ensure they continue to align with the company’s strategy as well as provide an 
appropriate balance between growth and returns internal and external performance and absolute and relative performance
the tsr comparator group comprises the circa 1 10 constituents of the ftse a llshare industrials index this benchmark is robust to ma activity 
and comprises companies that are subject to the same market influences as morgan a dvanced materials the vesting performance range is 
calibrated to be stretching and in line with common market practice for ftse tsr based longterm incentives
eps targets have been set taking account of multiple relevant reference points including internal forecasts external expectations for future eps 
performance at both morgan a dvanced materials and its closest sector peers and typical eps performance ranges at other ftse 350 companies 
ltip eps performance ranges are set to represent demanding and challenging performance targets over the threeyear performance period
ro ce targets have been set using a similar approach referring to external reference points and reflecting the returns required to meet and exceed 
the g roup’s internal strategic plan
for the bdsmp the eps performance range is set at very demanding levels of stretch for full vesting in recognition of the maximum matching 
opportunity awarded on an executive director’s own investment in the plan 64 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
r emun era tion r epor t
continued
share ownership guidelines
in order to encourage alignment with shareholders individual shareholding guidelines are operated for executive directors u nder such guidelines 
executive directors are encouraged to build and maintain over time a shareholding in the company equivalent to at least 100 of basic salary  
this policy is supported by the bdsmp under which participants are encouraged to invest their bonus in company shares
from 2013 the shareholding guideline for the chief executive o fficer was increased to at least 150 of basic salary as reported last year
current executive director shareholdings are set out in the a nnual r eport on r emuneration on page 75
external appointments
with the approval of the board in each case and subject to the overriding requirements of the g roup executive directors may accept external 
appointments as nonexecutive directors of other companies and retain any fees received details of external directorships held by executive 
directors along with fees retained are provided on page 72
payforperformance scenario analysis
the graphs below provide detailed illustrations of the potential future reward opportunity for executive directors and the potential mix between 
the different elements of remuneration under three different performance scenarios ‘below threshold’ ‘target’ and ‘stretch’
potential reward opportunities illustrated above are based on the policy which will apply in the forthcoming financial year applied to the base  
salary in force at 1 january 2014 for the annual bonus the amounts illustrated are those potentially receivable in respect of performance for 2014 
for the bdsmp the award opportunities assume full voluntary investment in morgan a dvanced materials shares it should be noted that any awards 
granted under the bdsmp and ltip in a year do not normally vest until the third anniversary of the date of grant this illustration is intended to 
provide further information to shareholders on the relationship between executive pay and performance the values of the bdsmp and ltip 
assume no increase in the underlying value of the shares and actual pay delivered will further be influenced by changes in factors such as the 
company’s share price and the value of dividends paid further the bdsmp requires an investment from an individual’s annual bonus payment  
in years where the bonus is zero no bdsmp opportunity will be available for the subsequent threeyear period the following assumptions have  
been made in compiling the above charts
scenario a nnual bonus bdsmp ltip fixed pay
stretch maximum annual bonus performance warrants  
full vesting 3x match
performance warrants full 
vesting 100 of the award
latest disclosed base salary 
pension and benefits
target o ntarget annual bonus performance warrants 
threshold vesting 0
performance warrants 
threshold vesting 30
below threshold n o annual bonus payable threshold not achieved 0 threshold not achieved 0
 n ormally up to 50 bonus deferral
0 500 1000 £’000 1500 2000
coo
stretch
target
below
threshold
£447k
£724k
£1660k
fixed pay base salary pension and benefits
annual bonus bdsmp ltip
0 500 1000 1500 2000 2500 3000
ceo
stretch
target
below
threshold
£664k
£1100k
£2542k
£’000 0 500 1000 £’000 1500 2000
cfo
stretch
target
below
threshold
£412k
£664k
£1514k 65 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
overview str ategi c 
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dire ctor s’ 
report
f in anc ial 
state ment s
d etails of executive d irectors’ service contracts
the executive directors are employed under contracts of employment with morgan a dvanced materials plc contracts may be terminated  
on 12 months’ notice given by the company or on six months’ notice given by the executive director concerned contracts end on each  
executive director’s anticipated normal retirement date the following table shows the date of the contract for each executive director who  
served during the year
executive director position date of appointment
date of
service agreement from employer from employee
mark robertshaw ceo 4 a ugust 2006 15 a ugust 2008 12 months 6 months
kevin dangerfield cfo 4 a ugust 2006 15 a ugust 2008 12 months 6 months
a ndrew h osty coo 28 july 2010 17 a ugust 2010 12 months 6 months
exit payments policy
the g roup’s policy is to limit severance payments on termination to preestablished contractual arrangements comprising base salary and benefits 
only in the event that the employment of an executive director is terminated any compensation payable will be determined in accordance with  
the terms of the service contract between the company and the employee as well as the rules of any incentive plans
the g roup may terminate the employment of executive directors by making a payment in lieu of notice equal to base salary together with the  
fair value of any other benefits to which the executive is contractually entitled under his service agreement for the duration of the notice period
the r emuneration committee will exercise discretion in making appropriate payments in the context of settling legal claims or potential legal claims 
by the departing executive director including any other amounts reasonably due to the executive director for example to meet the legal fees 
incurred by the executive director in connection with the termination of employment where the company wishes to enter into a settlement 
agreement and the individual must seek independent legal advice
o n termination of an executive director’s service contract the r emuneration committee will consider the departing director’s duty to mitigate  
his loss when determining the timing of when any payment in lieu of notice will be made there is no automatic entitlement to bonus or the vesting 
of longterm incentives on termination h owever the table below summarises the policy on how awards under the annual bonus and ltip will 
normally be treated in specific circumstances with the final treatment remaining subject to committee discretion
t reatment of awards on cessation of employment and a change of control
r eason for cessation calculation of vestingpayment time of vesting
a nnual bonus
a ll reasons the committee may determine that a bonus is payable on cessation of employment the amount of bonus 
payable will be determined in the context of the time served during the performance year the performance  
of the g roup and of the individual over the relevant period and the circumstances of the director’s loss of office 
if g roup or individual performance has been poor or if the individual’s employment has been terminated in 
circumstances amounting to misconduct no bonus will be payable
ltip awards  bdsmp matching awards
injury disability death 
redundancy retirement  
or other such event as the 
committee determines
a wards will normally be prorated for time and will vest based on  
performance over the original performance period unless the  
committee decides to measure performance to the date of cessation
a t the normal vesting date 
unless the committee decides 
that awards should vest earlier 
eg in the event of death
change of control ltip awards made after 10 may 2013 will be prorated for time and will vest 
subject to performance over the performance period to the change of control 
ltip awards made before 10 may 2013 the committee has discretion on the 
extent to which awards vest but will normally prorate awards for time and 
performance
ltip awards may alternatively be exchanged for equivalent replacement awards 
where appropriate
bdsmp matching awards will normally vest subject to performance over the 
performance period to the change of control and will be prorated for time
o n change of control
a ll other reasons awards normally lapse na
the r emuneration committee retains discretion where permitted by the scheme rules to alter these default provisions on a casebycase basis 
following a review of circumstances and to ensure fairness for both shareholders and participants
n otice period 66 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
r emun era tion r epor t
continued
approach to recruitment remuneration 
external appointment
in cases of hiring or appointing a new executive director from outside the g roup the committee may make use of all existing components  
of remuneration as follows
pay element policy on recruitment maximum
salary based on the size and nature of the responsibilities of the proposed role  
current market pay levels for comparable roles the candidate’s experience 
implications for total remuneration internal relativities and the candidate’s 
current salary
–
pension o ption to join the defined contribution scheme andor to receive  
a cash allowance
–
benefits a s described in the policy table and may include but not limited to  
car medical insurance and relocation expenses andor allowances
–
sharesave n ew appointees will be eligible to participate on identical terms to all other  
u k employees
in line with h mr c limits
a nnual bonus a s described in the policy table and typically prorated for proportion of  
year served performance measures may include strategic and operational 
objectives tailored to the individual in the financial year of joining
100 of salary
bdsmp a s described in the policy table 225 of salary
ltip n ew appointees may be granted awards under the ltip on similar terms to 
other executives
200 of salary
o ther the r emuneration committee may make an award under a different structure 
under the relevant listing r ule to replace incentive arrangements forfeited on 
leaving a previous employer a ny such award would have a fair value no higher 
than that of the awards forfeited taking into account relevant factors including 
performance conditions the likelihood of those conditions being met and the 
proportion of the vesting period remaining details of any such award will be 
disclosed in the first a nnual r eport on r emuneration following its grant
–
 a ssumes maximum bonus awarded and maximum deferral of 75 of bonus into shares with a maximum match of 3x deferred shares
internal promotion to the board
in cases of appointing a new executive director by way of internal promotion the policy will be consistent with that for external appointees detailed 
above where an individual has contractual commitments made prior to their promotion to executive director the company will continue to honour 
these arrangements even if there are instances where they would not otherwise be consistent with the prevailing executive director remuneration 
policy at the time of promotion
chairman and nonexecutive d irectors remuneration policy
purpose and link to strategy o peration o pportunity performance metrics
a nnual fee
to attract and retain highcalibre 
nonexecutive directors
a nnual fees paid to the chairman 
and nonexecutive directors  
are reviewed periodically a n 
additional fee is payable for the 
senior independent director  
and also in respect of committee 
chairmanship
currently paid 100 in cash
a nnual fees are applied in line with 
the outcome of the review
n one 67 dir ector s’ r epor t
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the chairman and nonexecutive directors are also entitled to reimbursement of expenses incurred in attending board strategy and other 
meetings details of chairman and nonexecutive director annual fees are provided on page 73
n one of the nonexecutive directors has a service contract with the company although they do have letters of appointment the nonexecutive 
directors do not participate in any of the incentive share or share option plans the dates of the chairman’s and nonexecutive directors’ 
appointments who served during the reporting period are as follows
n onexecutive director position date of appointment date of letter of appointment date of reelection
a ndrew shilston chairman 8 may 2012 30 march 2012 10 may 2013
martin flower n onexecutive director 10 december 2004 16 n ovember 2004 10 may 2013
a ndrew g iven n onexecutive director 7 december 2007 20 n ovember 2007 10 may 2013
simon h eale n onexecutive director 18 february 2005 1 february 2005 10 may 2013
victoire de margerie n onexecutive director 8 may 2012 1 march 2012 10 may 2013
a ndrew r eynolds smith n onexecutive director 10 may 2013 14 february 2013 –
 a ppointed as nonexecutive director on 10 may 2013
consideration of employment conditions
the g roup seeks to promote and maintain good relations with employee representative bodies – including trade unions and works councils –  
as part of its broader employee engagement strategy and consults on matters affecting employees and business performance as required in each 
case by law and regulation in the jurisdictions in which the g roup operates in making remuneration decisions the r emuneration committee also 
considers the pay and employment conditions elsewhere in the g roup but the committee does not currently consult with employees specifically 
on executive remuneration policy and framework prior to the annual salary review the r emuneration committee is briefed by the director of 
h uman r esources about pay increase data that individual business units will consider when deciding local pay awards for their specific businesses 
and countries this also forms part of the considerations for determining executive director remuneration 
consideration of shareholder views
the committee considers shareholder views received during the year and at the a nnual g eneral meeting each year as well as guidance from 
investor representative bodies more broadly in shaping remuneration policy the committee keeps the remuneration policy under regular  
review to ensure it continues to reinforce the g roup’s longterm strategy and aligns executive directors with shareholders’ interests it is the 
r emuneration committee’s policy to consult with major shareholders prior to any major changes to its executive remuneration policy
2 annu al report on re muner ation
the following section provides details of how the remuneration policy was implemented during the year
r emuneration committee membership in 2013
the r emuneration committee is composed of five nonexecutive directors each of the nonexecutive  
directors is regarded by the board as independent except the chairman of the company who was considered 
independent upon appointment a ndrew r eynolds smith joined the committee on his appointment to the  
board on 10 may 2013 the r emuneration committee met five times during the year a ttendance at meetings  
by individual members is detailed in the corporate g overnance r eport on page 49
summary of shareholder voting at the 2013 ag m
the following table shows the results of the advisory vote on the 2012 r emuneration r eport at the 2013 ag m
for a gainst withheld
9928 072 3563249
  votes ‘withheld’ are not votes in law and therefore have not been included in the calculation of the proportion of votes ‘for’ or ‘against’  
the resolution
committee members
simon h eale chairman
a ndrew shilston
martin flower
a ndrew g iven
victoire de margerie
a ndrew r eynolds smith
 from 10 may 2013 68 dir ector s’ r epor t
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r emun era tion r epor t
continued
single total figure of remuneration for executive d irectors
the auditors are required to report on the information in this table
the table below sets out a single figure for the total remuneration received by each executive director for the year ended 31 december 2013  
and the prior year
ceo cfo coo
2013 2012 2013 2012 2013 2012
1  salary £492500 £480000 £297500 £285000 £335567 £312500
2 benefits £14080 £14000 £13225 £14000 £12925 £12000
3 bonus – – – – – £42500
4 bdsmp – £346034 – – – –
5 ltip – £303021 – £175613 – £165282
6 pension £142352 £142501 £83703 £85106 £86896 £86943
7 other – – – – – £360
total £648932 £1285556 £394428 £559719 £435388 £619585
the figures have been calculated as follows
1  base salary amount earned for the year
2  benefits the taxable value of benefits received in the year includes private medical insurance and a company car or car allowance
3  a nnual bonus the total bonus earned on performance during the year includes the value of any bonus deferred into shares for three years  
under the bdsmp deferred bonus shares are not forfeitable and are not subject to any further performance measures
4   bdsmp the estimated value on 31 december 2013 of 201 1 bdsmp matching shares and dividend equivalents vesting in 2014 subject to 
performance over the threeyear period ended 31 december 2013 the 2012 value represents the actual value including dividend equivalents  
of 2010 bdsmp matching shares at vesting on 18 march 2013
5  ltip the estimated value on 31 december 2013 of 201 1 ltip shares vesting in 2014 subject to performance over the threeyear period ended  
31 december 2013 the 2012 value represents the actual value of 2010 ltip shares at vesting on 13 may 2013
6  pension 20x the increase in the value of their accrued benefit net of inflation over the year less directors’ contributions plus the value  
of any company contribution
7  o ther comprises the value of sharesave options granted in the year based on the embedded value at grant 20 discount to the grantdate 
share price multiplied by the number of options granted full details of executive director sharesave options are available on page 76 to 78  
of the a nnual report on remuneration
incentive outcomes for the year ended 31 d ecember 2013
annual bonus in respect of 2013 performance
targets for the annual bonus are set by the r emuneration committee taking into account the short and longterm requirements of the g roup 
challenging goals are set which must be met before any bonus is paid this approach is intended to align executive reward with shareholder return 
by rewarding the achievement of ‘stretch’ targets
for 2013 the bonus targets for the ceo  cfo and c oo were split between g roup ebita before restructuring weighted 80 and third party 
o perating working capital to sales  weighted 20 the targets were set to incentivise the executive directors to deliver stretching profit and 
cash performance for the g roup 
in addition to the achievement of the targets set in considering any awards to be made the committee also takes into account the quality of the 
overall performance of the g roup
the table below sets out the total bonus entitlement for each director for 2013 the specific bonus targets for 2013 are shown below the table
g roup ebita o perating working capitalsales  
director
max bonus
 salary
 max
bonus
ebita
targets met
 salary
earned
 max
bonus
quarterly target
thresholds
achieved
 salary
earned
total
payable
mark robertshaw 100 80 0 0 20 0 0 £0
kevin dangerfield 100 80 0 0 20 0 0 £0
a ndrew h osty 100 80 0 0 20 0 0 £0
the target for a maximum payout against the g roup profit ebita before restructuring element was £1261 million with the threshold for a payment 
of 25 of that profit element set at £1 191 million both calculated using 2013 budgeted exchange rates for the o perating working capitalsales  
element the four quarterly targets were 220 211 213 and 206 respectively with each quarter being measured independently 69 dir ector s’ r epor t
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201 1 bdsmp award vesting 
the performance period for the 201 1 bdsmp awards ended on 31 december 2013 o ver the period morgan a dvanced materials’ actual  
eps growth rate for bdsmp purposes was 6 pa this is below the threshold performance target and accordingly matching shares and matching 
dividend shares will lapse
director
investment
shares
maximum
 potential
matching
shares
matching
dividend
shares
match
earned
matching
shares
released
matching
dividend
shares
released
matching
shares
lapsed
matching
dividend
shares
lapsed date of vesting
mark robertshaw 74875 224625 22195 0x 0 0 224625 22195 23 march 2014
kevin dangerfield 22046 66138 6533 0x 0 0 66138 6533 23 march 2014
a ndrew h osty 39933 1 19799 11835 0x 0 0 1 19799 11835 23 march 2014
  calculated using the award price of £3005 the market value of one morgan a dvanced materials o rdinary share on 22 march 201 1 the dealing day immediately preceding the grant date 
shares in this table are stated on a pretax basis shares awarded on a pretax basis are subject to tax when sold
201 1 ltip award vesting 
a wards granted to the ceo and cf o in 201 1 were subject to relative ts r and e ps performance targets the eps target applying to 50 of each 
award required threeyear eps growth of 8 pa for 30 of that element to vest rising to full vesting for eps growth of 15 pa or higher the tsr 
target applying to the other 50 of each award required morgan a dvanced materials’ threeyear tsr performance to rank at median against 
constituents of the ftse a llshare industrials index for 30 of that element to vest rising to full vesting if morgan a dvanced materials’ tsr ranked 
at or above the upper quartile against this index the performance period for the 201 1 ltip awards ended on 31 december 2013 o ver the period
  morgan a dvanced material’s eps growth for ltip purposes was 6 pa which is below the threshold performance target and accordingly none 
of the award vested under this criterion
  morgan a dvanced material’s tsr was 39 which was below median versus the ftse a llshare industrials index a ccordingly none of the 
award vested under this criterion
this combined performance resulted in none of the 201 1 ltip awards vesting
for the award granted to a ndrew h osty in 201 1 as ceo of the former morgan ceramics division half of the incentive was linked to g roup tsr 
as for the ceo and cf o  and half was based on a ceramics division ebita ro ce matrix this divisional portion of the 201 1 ltip would only 
vest if stretching performance was achieved with no vesting occurring unless ebita growth in the former morgan ceramics division was at least 
12 pa and ro ce was 357 in 2013 full vesting would have occurred for ebita growth of 18 pa and ro ce of 407
the combined performance resulted in none of 201 1 ltip awards vesting
director
maximum
 potential ltip
 award
maximum
 potential
 ltipcsop
 award
ltip
award
vested
ltipcsop
award
vested
ltipcsop
 award
 exercised date of vesting
mark robertshaw 171068 – 0 – – 23 march 2014
kevin dangerfield 84185 6481 0 0 – 23 march 2014
a ndrew h osty 102641 – 0 – – 23 march 2014
  calculated using the award price of £29228 the average share price over the five dealing days from 16 march 201 1 to 22 march 201 1
 from the vesting date participants have seven years to exercise ltipcsop awards for cs op awards see the plan details on page 79
pensions
the three executive directors participate in the morgan g roup senior staff pension and life a ssurance scheme which is a contributory 
h mr cregistered defined benefit funded occupational pension scheme with effect from 6 a pril 2006 the basis of the scheme switched  
from final salary to career average and the normal pension age increased by five years its main features are now
  a normal pension age of 65
  pension at normal pension age based on twothirds career average pensionable salary for those with at least 20 years’ 26 years and  
eight months for joiners since 2006 potential service to age 65 on joining
  life assurance of four times basic salary
  dependants’ pension on death
pensionable salary is the member’s basic salary restricted to an earnings cap of £140400 for kevin dangerfield and a ndrew h osty and £1 10437  
for mark r obertshaw for the 201314 tax year it is proposed that these earnings caps will reduce to £1 17375 for kevin dangerfield £128200  
for a ndrew h osty and £88350 for mark r obertshaw for the 201415 tax year in response to the reduction in h mr c’s a nnual a llowance from 
£50000 to £40000 70 dir ector s’ r epor t
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r emun era tion r epor t
continued
the auditors are required to report on the information in this table
a dditional information
executive director
2013
value of increase
in scheme benefit
less directors’
 contributions
£000
2012
value of increase
in scheme benefit
less directors’
 contributions
£000
accrued pension
31 december
2013
£000 pa
a ccrued pension
31 december
2012
£000 pa
mark robertshaw 39 45 33 30
kevin dangerfield 41 44 42 38
a ndrew h osty 36 39 55 51
n ote the accrued benefit entitlement for mark r obertshaw kevin dangerfield and a ndrew h osty is the pension which would be paid annually on retirement based on service at the  
end of the year
the value of the increase in accrued pension in excess of inflation less each director’s own contributions is included in the directors’ single figure 
remuneration table on page 68 of this report
mark r obertshaw kevin dangerfield and a ndrew h osty also received a pension allowance derived from the employer contributions based 
notionally on the registered pension scheme pensionable salary in excess of the earnings cap for 2013 these pension allowances were calculated 
as a fixed percentage of basic salary the percentages were 209 for mark r obertshaw 145 for kevin dangerfield and 152 for a ndrew 
h osty these pension allowances will be reviewed again by the committee in response to the reduction in h mr c’s a nnual a llowance for the 
201415 tax year and will be detailed in the 2014 r eport
total pension allowances paid in the year are set out in the directors’ single figure remuneration table on page 68 of this report
single total figure of remuneration for nonexecutive d irectors
the auditors are required to report on the information in this table
the table below sets out a single figure for the total remuneration received by each nonexecutive director for the year ended 31 december 2013 
and the prior year 
a shilston m flower a g iven s h eale v de margerie a r eynolds smith
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
1 salary 175000 92000

54000 50000 54000 50000 54000 50000 46000 28000

27000

–
2 benefits – – – – – – – – – – – –
3 pension – – – – – – – – – – – –
4 bonus – – – – – – – – – – – –
5 bdsmp – – – – – – – – – – – –
6 ltip – – – – – – – – – – – –
7 other – – – – – – – – – – – –
to ta l 175000 92000

54000 50000 54000 50000 54000 54000 46000 28000

27000

–
  a ppointed 8 may 2012
 a ppointed 10 may 2013 71 dir ector s’ r epor t
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30x
20x
10x
00x
8 12 16 20
bdsmp matching shares
matching shares
threeyear eps growth pa
scheme interests awarded in 2013
2013 bdsmp awards granted
in march 2013 the coo deferred 50 of his bonus into shares under the bdsm p which was equivalent to 685 of 2012 salary and was  
granted a maximum matching award of shares under the bdsmp equivalent to 3x his investment the threeyear performance period over which 
eps performance will be measured began on 1 january 2013 and will end on 31 december 2015 this award will normally be eligible to vest on  
25 march 2016 the performance conditions attached to awards are set out below
investment shares matching shares
number
as  of
2012 salary
as  of
2012 bonus
£
face value
earliest date
of vesting
a ndrew h osty 7474 685 50 22422 £64217 25 march 2016
  calculated using the award price of £2864 the market value of one morgan a dvanced materials o rdinary share on 22 march 2013 the dealing day immediately preceding the grant date
the performance criteria for the bdsmp are set annually in 2013 they were based on eps growth targets against the 2012 base year as follows
eps performance matching shares
20 pa 3x match
16 pa 2x match
12 pa 1x match
≤ 8 pa 0x match
n o bdsmp award was granted to the ceo or cf o in 2013 as their bonuses based on g roup performance only were nil
2013 ltip awards granted
in may 2013 mark r obertshaw kevin dangerfield and a ndrew h osty were granted awards of shares under the ltip equivalent to 100 of  
2012 salary respectively the threeyear performance period over which performance will be measured began on 1 january 2013 and will end  
on 31 december 2015 n o award will normally be eligible to vest until 20 may 2016
executive director
number of
 ltip
shares
 granted
number of
 ltipcsop
 shares
granted £
as  2012
 salary
earliest date
of vesting
mark robertshaw 172006 – 480000 100 20 may 2016
kevin dangerfield 100147 1981 285000 100 20 may 2016
a ndrew h osty 101233 10750 312500 100 20 may 2016
  calculated using the award price of £27906 the average share price over the five dealing days from 13 may to 17 may 2013
the committee discusses and reviews the performance criteria for new threeyear ltip awards before they are granted for the awards granted  
in 2013 the committee considered its desire to have the most relevant balance of measures that reflected feedback from shareholders and directly 
related to the stretching objectives in the g roup’s business plan the committee decided to maintain the equal onethird basis of the three 
performance criteria introduced in 2012 as follows
tsr against ftse a llshare industrials index
 of award
that vests eps growth
 of award
that vests
g roup
average
ro ce
 of award
that vests
upper quartile 33 15 pa 33 37 33
median 10 8 pa 10 33 10
below median n il  8 pa n il  33 n il
value of awards at grant 72 dir ector s’ r epor t
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continued
exit payments made in year
the auditors are required to report on this information
n o executive director left the company during the year
payments to past d irectors
the auditors are required to report on this information
n o payments were made to past directors in the year
external appointments
details of external appointments held by executive directors and the fees retained in 2013 are provided in the table below
executive director company role fees retained
mark robertshaw segro plc n onexecutive director £53000
kevin dangerfield e2v technologies plc n onexecutive director £39000
a ndrew h osty fiberweb plc n onexecutive director £42000
british ceramic research limited n onexecutive director £8000
 r esigned as a director on 15 n ovember 2013 following the acquisition of fiberweb plc by polymer g roup inc
  fees retained are for the period from 1 january 2013 to 28 february 2014 and include a payment in lieu of notice following the acquisition of fiberweb plc by polymer g roup inc
implementation of remuneration policy for 2014
base salary
in line with remuneration policy and the approach being taken across the organisation executive directors’ salaries will be increased in 2014  
for 2014 executive directors’ increases will be implemented with effect from 1 january in considering the level of increase the committee has 
been mindful of the range of increases to be awarded across the g roup of 3 on average as well as the positioning of roles against the market 
increases for all employees take into account local business unit commercial and market considerations the table below shows the salaries in 2013 
and those which took effect from 1 january 2014
base salary at
increase
executive director position 1 january 2014 1 march 2013
mark robertshaw ceo £507500 £495000 25
kevin dangerfield cfo £315000 £300000 50
a ndrew h osty coo £346800 £340000 20
in agreeing the increase for kevin dangerfield the committee took into consideration his sustained strong performance relevant market data  
and the range of salary increases awarded to other strong performers in the g roup
annual bonus
n o changes will be made to the total annual bonus opportunity in 2014 for 2014 the financial performance measures for executive directors’ 
bonuses will be based 60 on ebita before other oneoffs and 20 on thirdparty working capital to sales in addition and new for 2014  
the committee has decided to emphasise the need for continuing focus on strategic objectives during challenging less predictable market 
environments to reflect this strategic personal objectives will be added to executive directors’ bonus plans for 2014 and will constitute up  
to 20 of the overall bonus the three strategic personal objective target areas for the executive directors will be scored individually and relate  
to technology talent and portfolio reshaping
the actual performance targets set at the beginning of the performance period are not disclosed as they are considered commercially sensitive  
at this time given the close link between performance measures and the g roup’s longerterm strategy we will disclose these targets at such point 
that the committee considers they are no longer commercially sensitive
bdsmp award 
executive directors are unable to participate in the bdsmp for 2014 as no bonus was earned during 2013 and therefore there is no bonus to defer 73 dir ector s’ r epor t
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ltip awards for 2014
in february 2014 mark r obertshaw kevin dangerfield and a ndrew h osty were granted awards of shares under the 2014 ltip as set out below 
the threeyear performance period over which performance will be measured began on 1 january 2014 and will end on 31 december 2016  
the measures their weightings and performance targets will remain unchanged from those attached to the 2013 ltip awards see table on page 71 
except for the ro ce element which will be calculated using the 2016 results alone as opposed to an average of the three years in the performance 
period a wards will normally be eligible to vest on 28 february 2017
value of awards at grant
£ as  2013 salary earliest date of vesting
mark robertshaw 594000 120 28 february 2017
kevin dangerfield 300000 100 28 february 2017
a ndrew h osty 315000 93 28 february 2017
pension
the only changes to pension for 2014 are in response to the reduction in h mr c’s a nnual a llowance from £50000 to £40000 the earnings  
caps that apply to executive director pensions will reduce to £1 17375 for kevin dangerfield £128200 for a ndrew h osty and £88350 for  
mark r obertshaw for the 201415 tax year pension allowances will also be reviewed by the committee in light of this change to the a nnual 
a llowance consistent with the principle that the impact of any changes should be broadly costneutral
chairman and nonexecutive director fees
n onexecutive directors’ fees were last reviewed in december 2012 a t this time to the base fee was increased to £46000 pa with effect  
from 1 january 2013 the following fees which remain unchanged from 2013 will apply in 2014
role fee pa
chairman fee £175000
n onexecutive director base fee £46000
committee chairman additional fee £8000
senior independent director additional fee £8000
percentage change in ceo remuneration
the table below shows the percentage change in ceo remuneration 2013 on 2012 compared to the average percentage change in remuneration 
for other u kbased g roup employees the u k employee workforce was chosen as a suitable comparator group as the ceo is based in the u k 
albeit with a global role and responsibilities and pay changes across the g roup vary widely depending on local market conditions a lthough  
similar remuneration principles apply across the wider g roup pay decisions for this subset are impacted by similar external market forces  
eg wage inflation local practice with respect to the provision of benefits etc
element of remuneration 2013
ceo
2012  change
 change in 2013
vs 2012 for
other employees
base salary received during the year £492500 £480000 26 23
taxable benefits excluding pension £14080 £14000 06 59
a nnual bonus £nil £nil na 743
r elative importance of spend on pay
the graphs below show shareholder distributions ie dividends and share buybacks and total employee pay expenditure for the financial years 
ended 31 december 2012 and 31 december 2013 and the percentage change
£35m
£30m
£25m
£20m
£15m
£10m
£5m
£0m
£280m
68
£299m
2012 2013
shareholder distributions
£350m
£300m
£250m
£200m
£150m
£100m
£50m
£0m
£3041m
–32
£2943m
2012 2013
total employee pay expenditure 74 dir ector s’ r epor t
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r emun era tion r epor t
continued
advisers
kepler a ssociates was appointed by the committee in 2010 as its executive remuneration adviser and was retained during the most recent  
financial year in 2013 kepler a ssociates provided independent advice on performance measurement the setting of incentive targets tsr analysis 
the structure of longterm incentives and provided market data in respect of senior executive remuneration and nonexecutive director fees 
kepler a ssociates reports directly to the chairman of the r emuneration committee and does not provide any other material services to the 
g roup and is considered to be independent
kepler a ssociates is a signatory of the code of conduct for r emuneration consultants
fees paid during the year to our adviser for advice to the r emuneration committee charged on a time and materials basis were as follows
a dviser n ature of advice fees incl expenses excl vat
kepler a ssociates a ppointed committee adviser £40000
comparison of company performance
the graph below shows the value at 31 december 2013 of £100 invested in morgan a dvanced materials’ shares on 31 december 2008 compared 
with the current value of the same amount invested in the ftse a ll share industrials index the ftse a ll share industrials index is chosen because 
this is the current comparator group for tsr based longterm incentives
the table below details the ceo’s ‘single figure’ of remuneration over the same fiveyear period
2009 2010 2011 2012 2013
ceo single figure £ £676512 £1045984 £3371302 £1285556 £648932
a nnual bonus  max 20 100 100 0 0
bdsmp vesting  max na 0 60 100 0
ltip vesting  max na 0 100 50 0
2008 data source bloomberg
ftse allshare industrials index
morgan advanced materials plc
2009 2010 2011 2012 2013
400
350
300
250
200
150
100
50
0
£347
£197 75 dir ector s’ r epor t
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d irectors’ interests in shares
the auditors are required to report on the information in this table
directors’ interests directors’ and their connected persons’ beneficial interests in the o rdinary share capital of the company are as follows
£ a s at 1 january 2013 a s at 31 december 2013 a s at 13 february 2014
executive directors
mark robertshaw 623447 770037 770037
kevin dangerfield 221169 254366 254366
a ndrew h osty 122644 154488 154488
nonexecutive directors   
a ndrew shilston 30000 30000 30000
martin flower 25000 25000 25000
a ndrew g iven 10000 10000 10000
simon h eale 18000 18000 18000
victoire de margerie 2000 2000 2000
a ndrew r eynolds smith”
– – –
 the date of this report 
 including shares held as a posttax deferred award under the bdsmp
” a ppointed to the board on 10 may 2013
  directors’ qualifying shareholding requirement removed when the company’s current a rticles of a ssociation were approved by shareholders at the 2013 ag m
a s at 3 march 2014 mark r obertshaw held 835707 o rdinary shares and kevin dangerfield held 256286 o rdinary shares
executive d irectors’ shareholding requirements
the table below shows the shareholding of each executive director against their respective shareholding requirement as at 31 december 2013
shareholding
 requirement
 2013
 salary
shares
owned
outright
shares
subject to 
performance
1
performance
 tested but
 unvested
 shares
2
shares
subject to
 bdsmp
 deferral
3
o ptions
 vested but
 unexercised
4
current
 shareholding
 2013
 salary
5
g uideline
 met
mark robertshaw 150 770037 517954 395693 145222 200000 544 yes
kevin dangerfield 100 254366 216267 156804 33392 6920 288 yes
a ndrew h osty 100 154488 357199 222440 92395 4221 190 yes
1  2012 and 2013 ltip and ltipcsop awards and 2012 and 2013 bdsm p matching awards
2  201 1 ltip and ltipcsop shares and 201 1 bdsm p matching shares for the threeyear performance period that ended on 31 december 2013 the 201 1 ltip vests on 23 march 2014 
and the 201 1 bdsmp vests on 23 march 2014
3  estimated net number of shares voluntarily deferred under the bdsmp
4  o ptions granted under the executive share o ption scheme 2010 ltipcsop and sharesave scheme
5  based on an executive director’s 2013 salary and the share price at 31 december 2013 comprising shares owned outright and shares subject to deferral estimated net number  
of shares voluntarily deferred under the bdsmp 76 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013
r emun era tion r epor t
continued
mark r obertshaw
the auditors are required to report on the information in this table
ltip
status plan
a s at
1 january
2013
a llocations
during
the year
released
during
the year
lapsed
during
the year
a s at
31 december
2013
market
price at
date of
allocation
market
price on
date of
release performance period
n o further performance 
conditions released
2010 214529 – 107264 107265 – 20510p 28110p 040110  311212
n o further performance 
conditions not yet 
released
2011 171068 – –  – 171068 29228p – 03011 1  311213
subject to  
performance conditions
2012 134907 – – – 134907 35580p – 020112  311214
2013 – 172006 –  – 172006 27906p – 010113  311215
bonus d eferral share matching plan
status plan
a s at
1 january
2013
a llocations
during
the year
released
during
the year
lapsed
during
the year
a s at
31 december
2013
market
price at
date of
allocation
market
price on
date of
release performance period
n o further performance 
conditions released
2010
investment
20635 – 20635 – –
18870p
25122p 040110  311212
2010
matching
104928 – 104928 – –
2010
dividend
– 10148 10148 – – various
n o further performance 
conditions not yet 
released
2011
 investment
74875 – – – 74875
30050p – 03011 1  311213
2011
matching
224625 – – – 224625
subject to performance 
conditions
2012
investment
70347 – – – 70347
33050p – 020112  311214
2012
 matching
211041 – – – 211041
share options
status plan
a s at
1 january
2013
a llocations
during
the year
released
during
the year
lapsed
during
the year
a s at
31 december
2013
market
price at
date of
allocation
market
price on
date of
release performance period
exercisable eso s 200000 –  –  – 200000 14527p – 011 107  011 114
subject to continued  
service only
2010
sharesave 5454 – 5454  – – 16500p 29300p 011213  310514
t otal interests in share plans
a s at
1 january
2013
a s at
31 december
2013
1432409 1258869
  the price used for bdsmp dividend shares is the closing share price of one morgan a dvanced materials o rdinary share trading on the london stock exchange on the dividend payment date 77 dir ector s’ r epor t
overview str ategi c 
report
dire ctor s’ 
report
f in anc ial 
state ment s
annual repor t 2013  morgan adv anced ma terials
kevin dangerfield
the auditors are required to report on the information in this table
ltip
status plan
a s at
1 january
2013
a llocations
during
the year
released
during
the year
lapsed
during
the year
a s at
31 december
2013
market
price at
date of
allocation
market
price on
date of
release performance period
n o further performance 
conditions released
2010 118939 – 59469 59470 – 20510p 28110p 040110  311212
2010
 funding
5390 – – – 5390 20510p – 040110  311212
n o further performance 
conditions not yet 
released
2011 84185 – – – 84185 29228p – 03011 1  311213
2011
 funding
6481 – – – 6481 29228p – 03011 1  311213
subject to  
performance conditions
2012 80101 – – – 80101 35580p – 020112  311214
2013 – 100147 – – 100147 27906p – 010113  311215
2013
 funding
– 1981 – – 1981 27906p – 010113  311215
bonus d eferral share matching plan
status plan
a s at
1 january
2013
a llocations
during
the year
released
during
the year
lapsed
during
the year
a s at
31 december
2013
market
price at
date of
allocation
market
price on
date of
release performance period
n o further performance 
conditions not yet 
released
2011
 investment
22046 – – – 22046
30050p – 03011 1  311213
2011
matching
66138 – – – 66138
subject to performance 
conditions
2012
investment
1 1346 – – – 1 1346
33050p – 020112  311214
2012
 matching
34038 – – – 34038
share options
status plan
a s at
1 january
2013
a llocations
during
the year
released
during
the year
lapsed
during
the year
a s at
31 december
2013
market
price at
date of
allocation
market
price on
date of
release performance period
exercisable
2010 ltip
 csop 5390 – – 2695 2695 20510p – 130513  060520
n o further performance 
conditions not yet 
released
2011 ltip
 csop 6481 – – – 6481 29228p – 230314  230321
subject to performance 
conditions
2013 ltip
csop – 1981 – – 1981 27906p – 200516  200523
subject to continued 
service only
2011 
sharesave 4225 –  –  – 4225 21300p – 011214  310515
t otal interests in share plans
a s at
1 january
2013
a s at
31 december
2013
447760 427235 
   includes funding awards that are not transferable to kevin dangerfield 78 dir ector s’ r epor t
r emun era tion r epor t
continued
andrew h osty
the auditors are required to report on the information in this table
ltip
status plan
a s at
1 january
2013
a llocations
during
the year
released
during
the year
lapsed
during
the year
a s at
31 december
2013
market
price at
date of
allocation
market
price on
date of
release performance period
n o further performance 
conditions released
2010 102389 – 51194 51195 – 20510p 28110p 040110  311212
2010
 funding
14627 – 5336 9291 – 20510p 28110p 040110  311212
n o further performance 
conditions released
2011 102641 – – – 102641 29228p – 03011 1  311213
subject to performance 
conditions
2012 87830 – – – 87830 35580p – 020112  311214
2013 – 101233 – – 101233 27906p – 010113  311215
2013
 funding
– 10750 – – 10750 27906p – 010113  311215
bonus d eferral share matching plan
status plan
a s at
1 january
2013
a llocations
during
the year
released
during
the year
lapsed
during
the year
a s at
31 december
2013
market
price at
date of
allocation
market
price on
date of
release performance period
n o further performance 
conditions not yet 
released
2011
 investment
39933 – – – 39933
30050p – 03011 1  311213
2011
 matching
1 19799 – – – 1 19799
subject to performance 
conditions
2012
investment
44988 – – – 44988
33050p – 020112  311214
2012
 matching
134964 – – – 134964
2013
investment
– 7474 – – 7474
28640p – 010113  311215
2013
 matching
– 22422 – – 22422
share options
status plan
a s at
1 january
2013
a llocations
during
the year
released
during
the year
lapsed
during
the year
a s at
31 december
2013
market
price at
date of
allocation
market
price on
date of
release performance period
exercisable
2010 ltip
csop
14627 – 7313 7314 – 20510p 28110p 130513  060520
subject to performance 
conditions
2013 ltip
csop
– 10750 – – 10750 27906p – 200516  200523
subject to continued 
service only
2011 
sharesave
3380 – – – 3380 21300p – 011214  310515
2012 
sharesave
841 – – – 841 21400p – 011215  310516
t otal interests in share plans
a s at
1 january
2013
a s at
31 december
2013
666019 687005 
   includes funding awards that are not transferable to a ndrew h osty
 
morgan adv anced ma terials  annual repor t 2013 79 dir ector s’ r epor t
overview str ategi c 
report
dire ctor s’ 
report
f in anc ial 
state ment s
details of plans
ltip
plan details
2010
for the cfo and c oo who at the time of the award was ce o morgan ceramics awards were structured as an a pproved 
performance share plan ap sp and comprise three elements i h m r evenue  customs h mr c approved options csop  
over shares to the value of up to £30000 with an exercise price of 2051 pence per share ii an ltip award in the form of a 
conditional award of free shares to the value of the remainder of the award above this limit and iii a funding award also in the 
form of a conditional award of free shares over such numbers of shares whose value at exercise at the approved option equals  
up to £30000 for the ceo  the 2010 award was structured as an ltip award in the form of a conditional award of free shares
the provisions of these csop options funding awards and lti p awards was linked so that the maximum aggregate number  
of shares that could be acquired on exercise of ltip and csop awards the funding award being used to pay the exercise price  
arising on exercise of the csop  was limited to that number of shares that had a market value on the date of the awards equal  
to 100 of kevin dangerfield’s 2009 base salary and £240000 for a ndrew h osty vested funding awards were not transferable  
to the participant
measures and targets are provided in the notes to the single figure table
2011
a wards granted to the ceo and cf o in 201 1 are subject to relative ts r and e ps the eps target applying to 50 of each award 
requires threeyear eps growth above a threshold of 8 pa of that element to vest commencing at 30 vesting for that element 
rising to full vesting for eps growth of 15 pa or higher the tsr target applying to the other 50 of each award requires 
morgan a dvanced materials’ threeyear tsr performance to rank at median against the ftse a llshare industrials index for  
30 of that element to vest rising to full vesting if morgan a dvanced materials’ tsr ranks at or above the upper quartile against 
the companies in this index 
for the coo who at the time of the award was ce o morgan ceramics half of the 201 1 incentive is linked to g roup tsr  
as for the ceo and cf o  and half is based on a ceramics division ebita ro ce matrix this divisional portion of the 201 1 ltip 
will only vest if stretching performance is achieved with no vesting occurring unless ebita growth in morgan ceramics is at least 
12 pa and ro ce is 357 in 2013 full vesting will occur for ebita growth of 18 pa and ro ce of 407
the award for the cfo was structured on the same basis as the 2010 award the awards for the ce o and c oo were structured 
as an ltip in the form of a conditional award of free shares
2012
a wards granted to the ceo and cf o in 2012 are subject to relative ts r  eps and ro ce the eps target applying to a third of 
each award requires threeyear eps growth above a threshold of 8 pa of that element to vest commencing at 30 vesting  
for that element rising to full vesting for eps growth of 15 pa or higher the tsr target applying to another third of each award 
requires morgan a dvanced materials’ threeyear tsr performance to rank at median against the ftse a llshare industrials index 
for 30 of that element to vest rising to full vesting if morgan a dvanced materials’ tsr ranks at or above the upper quartile against 
the companies in this index for the ceo and cf o  the ro ce element has been set for a 3337 pa range vesting on a straight 
line basis with 30 of the measure vesting at the 33 threshold ro ce is measured as the average annual ro ce over the 
threeyear performance period
for the coo who at the time of the award was ce o morgan ceramics 13 of the award was to vest on relative ts r   
with the remaining 23 to vest on a divisional ebita ro ce matrix for the ebita ro ce element there would have been  
no vesting unless ebita growth in morgan ceramics was at least 6 pa and ro ce is 410 in 2014 full vesting would have 
occurred for ebita growth of 15 pa and ro ce of 435
in may 2013 following the announced change in divisional structure and following consultation with shareholders it was decided 
to change these targets for a ndrew h osty to make them relevant to his new role as coo  prior to the announcement of the 
reorganisation just over one year of the threeyear 2012 ltip performance period had elapsed to reflect the g roupwide remit  
of his new role as coo  and to help ensure his interests are aligned with those of the ceo  cfo and shareholders it was agreed 
that the ceramics divisional targets attached to his 2012 ltip be replaced by g roup targets aligned with those attached to the  
2012 ltip awards awarded to the ceo and cf o  as detailed above it was also agreed that for the purpose of alignment across 
the executive directors performance against these revised targets will be assessed over the full original three year performance 
period ie 1 january 2012 to 31 december 2014
2013
a wards granted to executive directors in 2013 are subject to relative tsr  eps and ro ce the eps target applying to a third of 
each award requires threeyear eps growth above a threshold of 8 pa of that element to vest commencing at 30 vesting for 
that element rising to full vesting for eps growth of 15 pa or higher the tsr target applying to another third of each award 
requires morgan a dvanced materials’ threeyear tsr performance to rank at median against the ftse a llshare industrials index 
for 30 of that element to vest rising to full vesting if morgan a dvanced materials’ tsr ranks at or above the upper quartile  
against the companies in this index the ro ce element has been set for a 3337 pa range vesting on a straightline basis  
with 30 of the measure vesting at the 33 threshold ro ce is measured as the average annual ro ce over the threeyear 
performance period
annual repor t 2013  morgan adv anced ma terials 80 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
r emun era tion r epor t
continued
d etails of plans continued
bonus d eferral matching plan
plan details
2011 deferral of bonus on a gross basis matching awards granted to executive directors in 201 1 2012 and 2013 are subject to 
threeyear eps growth the eps target requires threeyear eps growth above a threshold of 8 pa before any matching  
12 pa for a 1x match 16 pa for a 2x match and 20 pa or higher for a 3x match there is straightline vesting between  
these points
2012
2013
share options
plan details
eso s
the performance measure for the executive share o ption scheme awards was based on the company’s tsr performance 
against the ftse 350 30 of the awards vested for medianranked performance with full vesting for upperquartileranked 
performance for performance between median and upper quartile awards vested on a straightline prorata basis
201 1 ltip –
csop
see 201 1 ltip above
2010 sharesave
  h mr c approved allemployee sharesave scheme exercise price set at 20 discount to share price on date of grant o ptions  
vest after three years of continuous service and must be exercised within 6 months’ of vesting details of options held by directors 
under sharesave are outlined in the individual director shareholding tables above
201 1 sharesave
2012 sharesave
201 3 sharesave
o ther transactions involving directors are set out in note 27 r elated parties to the financial statements 
this r eport was approved by the board on 13 february 2014
signed on behalf of the board
simon h eale
chairman of the remuneration committee 81 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
overview str ategi c 
report
dire ctor s’ 
report
f in anc ial 
state ment s
o th er discl o sur es
the directors’ report is required to be produced by law the u kla’s 
disclosure and transparency r ules dtr s and listing r ules lr s also 
require us to make certain disclosures
pages 46 to 84 inclusive together with the sections of the a nnual 
r eport incorporated by reference constitute a directors’ report that 
has been drawn up and presented in accordance with applicable law  
and the liabilities of the directors in connection with that report are 
subject to the limitations and restrictions provided by that law
the company
legal form of the company
morgan a dvanced materials plc is a company incorporated in england 
and wales with company number 286773
name change
the company changed its name to morgan a dvanced materials plc 
from the morgan crucible company plc on 27 march 2013
annual general meeting
the company’s 2014 ag m will be held on friday 9 may 2014 at  
the lincoln centre 18 lincoln’s inn fields london wc2a 3ed  
a circular incorporating the n otice of ag m accompanies this  
a nnual r eport
amendment of the articles of association
the company’s constitution known as the a rticles of a ssociation 
a rticles is essentially a contract between the company and its 
shareholders governing many aspects of the management of the 
company the a rticles may be amended by special resolution of the 
company’s shareholders and are available on the company’s website  
at wwwmorganadvancedmaterialscom
appointment and replacement of directors
the a rticles give the directors power to appoint and replace directors 
u nder the terms of reference of the n omination committee any 
appointment must be recommended by the n omination committee 
for approval by the board of directors the a rticles also require 
directors to submit themselves for election at the first ag m following 
appointment and all directors are required to submit themselves for 
reelection if they have remained a director without being appointed  
or elected or reelected as such at one of the two previous ag ms 
n otwithstanding the provisions of the a rticles all of the directors will 
stand for election or reelection on an annual basis in compliance with 
the provisions of the u k corporate g overnance code details of their 
career history and the board committees on which they serve can be 
found on pages 46 and 47
statutory disclosures
results and dividends
the total profit for the year ended 31 december 2013 was £447 million 
2012 £761 million profit before taxation for the same period was 
£640 million 2012 £767 million r evenue was £9578 million  
2012 £10075 million and operating profit was £896 million 2012 
£994 million basic earnings per share from continuing operations  
was 148 pence 2012 187 pence capital and reserves at the end  
of the year were £2741 million 2012 £2716 million the total profit  
of £447 million will be transferred to equity
the directors recommend the payment of a final dividend at the rate  
of 67 pence per share on the o rdinary share capital of the company 
payable on 30 may 2014 to shareholders on the register at the close  
of business on 16 may 2014 together with the interim dividend of  
38 pence per share paid on 29 n ovember 2013 this final dividend  
if approved by shareholders brings the total distribution for the year  
to 105 pence per share 2012 100 pence
directors
a ll those who served as directors at any time during the year under 
review are listed on pages 46 to 47
powers of the directors
subject to the company’s a rticles u k legislation and any directions 
given by special resolution the business of the company is managed  
by the board which may exercise all the powers of the company
directors’ interests
details of directors’ interests and their connected persons’ beneficial 
interests in the share capital of the company are listed on page 75 
directors’ indemnities
the company has entered into separate indemnity deeds with each 
director containing qualifying indemnity provisions as defined at section 
236 of the companies a ct 2006 under which the company has agreed 
to indemnify each director in respect of certain liabilities which may 
attach to each of them as a director or as a former director of the 
company or any of its subsidiaries the indemnity deeds were in force 
during the financial year to which this directors’ report relates and are  
in force as at the date of approval of the directors’ report
human resources 
details of the g roup’s h uman r esources policies and employee 
involvement are set out on pages 32 and 33
there are no agreements between the company and its directors or 
employees providing for compensation for loss of office or employment 
whether through resignation purported redundancy or otherwise that 
occurs because of a takeover bid
research and development
during the year the g roup invested £202 million 2012 £196 million  
in research and development the g roup did not capitalise any 
development costs in 2013 2012 £nil
details of the g roup’s research and development during the year  
are set out on page 16 and in the r eview of operations for each  
r egion on page 36 n orth a merica page 38 europe and page 40 
a siar est of world 82 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
greenhouse gas emissions
u nder the companies a ct 2006 strategic r eport and directors’ 
r eport r egulations 2013 the ‘r egulations’ the g roup is required to 
report its annual greenhouse gas emissions in tonnes of carbon dioxide 
equivalent co
2
e in its directors’ report
morgan has published information on its emissions due to the 
combustion of fossil fuels and the electricity purchased by the company 
for its own use in its annual eh s report since 2004 and in its a nnual 
r eport since 2005 since 201 1 the g roup’s co
2
e emissions due to 
energy consumption have been externally assured by pwc see pwc’s 
2013 a ssurance report on page 31 the g roup has also participated  
in the carbon disclosure project since 2006 and in 2013 was one of  
1 1 ftse 350 companies to feature in both the carbon performance 
leadership index and the carbon disclosure leadership index
the r egulations require the g roup to disclose its emissions due to  
the combustion of biomass and due to process and fugitive emissions 
which are not included in the emissions reported on page 28 in the 
corporate r esponsibility section of this a nnual r eport
2013
tonnes co
2
e
2012
tonnes co
2
e
emissions from combustion of fuels and 
operation of facilities

combustion of fossil fuels 148300 152200
o peration of facilities including process 
emissions 31600 36300
electricity heat steam and cooling 
purchased for own consumption
purchased electricity

238800 243000
intensity measurement
tonnes co
2
e due to fossil fuels and purchased 
electricity per £m revenue 404 392
tonnes ghg s per £m revenue 437 428
data is rounded to the nearest 100 tonnes of co
2
e
  excludes emissions from companyowned and leased vehicles estimated at approx 
2000 tonnes co
2
e in 2013
   the 2013 and 2012 information regarding co
2
e due to energy use has been subject  
to assurance by pwc see the independent a ssurance r eport on page 31 of this a nnual 
r eport and on page 25 of the 2012 a nnual r eport for further details

  electricity from renewable sources at zero tonnes co
2
 per kwh emissions increase  
by 2800 tonnes at gridaverage rates 2012 2900 tonnes
 constant currency basis and updated to reflect changes in reporting methodology
a s required under the r egulations the above report includes the 
material emission sources from the operations and activities covered  
by the g roup’s financial statements a s noted the reports exclude 
emissions from companyowned and leased vehicles and emissions 
relating to steam supplied by third parties to two sites in china which  
are in total estimated to account for less than 1 of total emissions  
the directors consider that these sources of emissions are not material 
to the total of the emissions
the g roup uses the g reenhouse g as protocol with emission factors  
for standard grid electricity by country and year from the international 
energy a gency together with other factors as published by the  
u k department of environment food and r ural a ffairs in order  
to calculate the co
2
e emissions included in this r eport
donations
during the year morgan a dvanced materials companies made charitable 
donations of £125370 2012 £178060
n o political donations have been made morgan a dvanced materials has 
a policy of not making donations to any political party representative or 
candidate in any part of the world
financial instruments 
details of the g roup’s use of financial instruments together with 
information on policies and exposure to price liquidity cash flow credit 
interest rate and currency risks can be found in note 20 on pages 1 15  
to 122 a ll information detailed in this note is incorporated into the 
directors’ report by reference and is deemed to form part of the 
directors’ report
share capital and related matters
share capital
the company’s share capital as at 31 december 2013 is set out in  
note 18 on pages 1 1 1 to 1 13 the company’s o rdinary shares represent 
9985 of the total issued share capital with the 55 cumulative  
first preference shares representing 004 and the 50 cumulative 
second preference shares representing 01 1 the rights and 
obligations attaching to the company’s o rdinary shares and restrictions 
on the transfer of shares in the company are set out in the a rticles 
shareholders’ rights
the holders of o rdinary shares are entitled to receive dividends when 
declared to receive the company’s reports and accounts to attend and 
speak at general meetings of the company to appoint proxies and to 
exercise voting rights 
details of the structure of the company’s preference share capital and 
the rights attached to the company’s preference shares are set out in 
note 18 on page 1 13 
n o person holds securities in the company carrying special rights with 
regard to control of the company the company is not aware of any 
agreements between holders of securities that may result in restrictions 
on the transfer of securities or on voting rights
share allotment and repurchase authorities
the directors were granted authority at the 2013 ag m to allot shares  
in the company and to grant rights to subscribe for or convert any 
securities into shares in the company up to a a nominal amount of 
£23430575 and b a nominal amount of £46861150 in connection 
with a rights issue such amount to be reduced by any shares allotted 
under a this authority is due to lapse at the 2014 ag m a t the 2014 
ag m shareholders will be asked to grant a similar allotment authority
a special resolution will also be proposed to renew the directors’ 
powers to make non preemptive issues for cash up to an aggregate 
nominal amount representing approximately 5 of the issued share 
capital as at the last practicable date before the publication of the n otice 
of ag m 2014
o th er discl o sur es
continued 83 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
overview str ategi c 
report
dire ctor s’ 
report
f in anc ial 
state ment s
the directors did not seek an authority at the 2013 ag m to repurchase 
shares in the capital of the company a s at 31 december 2013 there 
was no such authority in place the directors do not intend to seek an 
authority to repurchase shares at the 2014 ag m
employee share and share option schemes 
the company operates a number of employee share and share  
option schemes o ne hundred and thirty employees hold awards  
under the morgan a dvanced materials plc longterm incentive plan  
26 employees hold awards under the morgan a dvanced materials 
bonus deferral share matching plan 13 employees have options  
under the company’s executive share o ption schemes and  
677 employees participate in the company’s u k sharesave scheme 
details of outstanding share awards and share options are given in  
note 21 on page 129
a ll of the company’s share schemes contain provisions relating to a 
change of control o utstanding options and awards would normally  
vest and become exercisable on a change of control subject to being 
prorated for time and to the satisfaction of any performance conditions 
at that time
the morgan g eneral employee benefit trust the trust held 305041 
shares on 31 december 2013 in connection with awards granted under 
the company’s employee share schemes the trustees of the trust 
trustees have agreed to waive their entitlement to the payment of 
dividends on the shares held by the trust the directors are not aware 
that any other shareholders waived or agreed to waive any dividends or 
future dividends during the period under review
the trustees have absolute and unfettered discretion in relation to 
voting any shares held in the trust at any general meeting their policy  
is not to vote the shares if any offer is made to shareholders to acquire 
their shares the trustees will have absolute and unfettered discretion  
on whether to accept or reject the offer in respect of any shares held  
by them
major shareholdings
a s at 31 december 2013 the company had been notified of the 
following in accordance with disclosure and transparency r ule dtr  5 
from holders of notifiable interests representing 3 or more of the 
issued o rdinary share capital of the company
n umber of
o rdinary shares 
prudential plc group of companies mg  39287142 13970
axa investment managers s a 23560970 8630
schroders plc 15119209 5307
  percentages are shown as a percentage of the company’s issued share capital as at  
28 n ovember 2013
    a s at 3 march 2014 schroders plc held 12304156 o rdinary shares 4312 there 
were no changes to the other substantial shareholdings shown in the above table
t ransactions contractual arrangements and postbalance 
sheet events
significant agreements – change of control
the g roup has a number of borrowing facilities provided by various 
financial institutions these facility agreements generally include change 
of control provisions which in the event of a change in ownership of the 
company could result in renegotiation or withdrawal of these facilities
the most significant of such agreements are the u k £150 million 
multicurrency r evolving facility a greement which was signed on  
5 a pril 201 1 and the privately placed n ote purchase and g uarantee 
a greements signed on 15 december 2007 and 30 june 2010  
for which the outstanding loan amounts are u sd 350 million and  
€60 million respectively
there are a number of other agreements that take effect alter or 
terminate upon a change of control of the company following  
a takeover bid such as commercial contracts and joint venture 
agreements n o such individual contract is considered to be significant  
in terms of its potential impact on the business of the g roup as a whole
postbalance sheet events
o n 1 1 february 2014 morgan a dvanced materials merged its u kbased 
thermal fired shapes business with magma ceramics  catalysts a 
u kbased fired shapes specialist in return for a 35 minority stake in 
the enlarged magma business there have been no other significant 
postbalance sheet events
r eporting accountability and audit
statement of directors’ responsibilities
the directors are responsible for preparing the a nnual r eport and the 
g roup and parent company financial statements in accordance with 
applicable law and regulations
company law requires the directors to prepare g roup and parent 
company financial statements for each financial year u nder that  
law they are required to prepare the g roup financial statements in 
accordance with ifr ss as adopted by the eu and applicable law and 
have elected to prepare the parent company financial statements  
in accordance with u k a ccounting standards and applicable law  
u k g enerally a ccepted a ccounting practice
u nder company law the directors must not approve the financial 
statements unless they are satisfied that they give a true and fair view of 
the state of affairs of the g roup and parent company and of their profit 
or loss for that period 84 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
in preparing each of the g roup and parent company financial 
statements the directors are required to
  select suitable accounting policies and then apply them consistently
  make judgments and estimates that are reasonable and prudent
  for the g roup financial statements state whether they have been 
prepared in accordance with ifr ss as adopted by the eu 
  for the parent company financial statements state whether 
applicable u k a ccounting standards have been followed subject  
to any material departures disclosed and explained in the parent 
company financial statements
  prepare the financial statements on the going concern basis unless  
it is inappropriate to presume that the g roup and the parent 
company will continue in business
the directors are responsible for keeping adequate accounting  
records that are sufficient to show and explain the parent company’s 
transactions and disclose with reasonable accuracy at any time the 
financial position of the parent company and enable them to ensure  
that its financial statements comply with the companies a ct 2006  
they have general responsibility for taking such steps as are reasonably 
open to them to safeguard the assets of the g roup and to prevent and 
detect fraud and other irregularities
u nder applicable law and regulations the directors are also responsible 
for preparing a strategic report directors’ report r emuneration report 
and corporate governance statement that comply with that law and 
those regulations
the directors are responsible for the maintenance and integrity of the 
corporate and financial information included on the company’s website 
legislation in the u k governing the preparation and dissemination of 
financial statements may differ from legislation in other jurisdictions
the directors as at the date of this report whose names and functions 
are set out on pages 46 and 47 confirm that to the best of their 
knowledge
  the g roup’s financial statements which have been prepared in 
accordance with ifr s as adopted by the eu  give a true and fair  
view of the assets liabilities financial position and profit of the 
g roup 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 g roup 
together with a description of the principal risks and uncertainties 
that it faces
scope of the reporting in this annual report
the board has prepared a strategic report which provides an overview 
of the development and performance of the g roup’s business in the 
year ended 31 december 2013
for the purposes of dtr 415 r 2 and dtr 418 this directors’ report 
and the strategic report on pages 8 to 45 comprise the management 
report including the sections of the a nnual r eport and financial 
statements incorporated by reference
external auditor
each director holding office at the date of approval of this directors’ 
report confirms that so far as he is aware there is no relevant audit 
information of which the company’s auditor is unaware and that he has 
taken all steps that he ought to have taken as a director to make himself 
aware of any relevant audit information and to establish that the 
company’s auditor is aware of that information
following their intention to gradually wind down the activity in the 
registered firm kpmg a udit plc have notified the company that they  
are not seeking reappointment as auditor a resolution to appoint  
kpmg ll p an intermediate parent of kpmg a udit plc will be proposed 
at the 2014 ag m
the strategic report the directors’ report and the directors’ remuneration 
report were approved by the board on 13 february 2014
for and on behalf of the board
paul boulton
company secretary  g eneral counsel
13 february 2014
morgan a dvanced materials plc
quadrant 5557 h igh street windsor berkshire sl4 1lp 
r egistered in england n o 286773
o th er discl o sur es
continued 85 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials
overview str ategi c 
report
dire ctor s’ 
report
f in anc ial 
state ment s
in depen den t au ditor ’s r epor t  
to t h e member s o f morgan 
a dvan ced mater ia ls plc on ly
opinion s and c onc lu sion s ari sing  
fro m our a udit
1 o ur opinion on the financial statements is unmodified
we have audited the financial statements of morgan a dvanced  
materials plc for the year ended 31 december 2013 which comprise  
the consolidated income statement the consolidated statement  
of comprehensive income the consolidated statement of changes  
in equity the consolidated balance sheet the consolidated statement 
of cash flows the parent company balance sheet and the related notes 
in our opinion
  the financial statements give a true and fair view of the state of the 
group’s and of the parent company’s affairs as at 31 december 2013 
and of the group’s profit for the year then ended 
  the group financial statements have been properly prepared in 
accordance with international financial r eporting standards as 
adopted by the european u nion ifr s’s as adopted by the eu  
  the parent company financial statements have been properly 
prepared in accordance with u k a ccounting standards and 
  the financial statements have been prepared in accordance with  
the requirements of the companies a ct 2006 and as regards  
the group financial statements a rticle 4 of the ia s r egulation
2 o ur assessment of risks of material misstatement
in arriving at our audit opinion above on the group financial statements 
the risks of material misstatement that had the greatest effect on our 
group audit were as follows
  carrying value of goodwill and other intangible assets
refer to page 56 audit committee report page 106 accounting policy 
note and pages 106 to 108 financial disclosures
the risk the carrying value of goodwill is assessed for impairment at 
least annually and together with other intangible assets whenever  
there is an indication that the asset may be impaired the impairment 
calculations are based on the discounted projected cash flows of the 
relevant cashgenerating units there is inherent uncertainty involved  
in forecasting and discounting future cash flows and judgement involved 
in determining how goodwill should be split between the parts of  
the business expected to generate those cash flows following the 
reorganisation of the group the key assumptions estimates and 
judgements on which the impairment calculations are based which  
are inherently uncertain could be inappropriate and the carrying values 
goodwill and other intangible assets could be overstated as a result
our response o ur audit procedures included among others testing the 
principles and mathematical integrity of the group’s discounted cash flow 
model and comparing the group’s assumptions to externally derived data 
as well as our own assessments in relation to the allocation of goodwill 
to cashgenerating units and key inputs such as projected economic 
growth competition cost inflation and discount rates we tested the 
sensitivity of the impairment calculation to changes in the judgements 
and assumptions used by the directors we also assessed whether the 
group’s disclosures see note 12 about the sensitivity of the outcome  
of the impairment assessment to changes in key assumptions properly 
reflected the risks inherent in the valuation of goodwill
  provisions and contingent liabilities 
refer to page 56 audit committee report page 135 accounting policy 
note and pages 135 and 137 financial disclosures
the risk provisions are held in respect of closure and restructuring costs 
environmental issues and other matters including the settlement of 
european class actions and amounted to £177 million at 31 december 
2013 the financial statements also disclose contingent liabilities in 
respect of legal claims in the u sa  canada and europe which have not 
been provided for on the basis that they are not considered to qualify  
for recognition as provisions the application of accounting standards  
to determine whether a provision should be recorded and if so  
the amount is inherently subjective
our response o ur audit procedures included among others a critical 
assessment of the extent to which the directors’ estimates take into 
account a balanced assessment of the latest available information  
and the accuracy and reliability of the sources of that information  
we corroborated the appropriateness of the assumptions by reference 
to third party confirmations and legal advice where available and 
considered whether our understanding of the business gained 
throughout the audit process corroborated the provisions recorded  
or indicated that further challenge was warranted we considered  
the adequacy of the g roup’s disclosures in respect of provisions and 
contingent liabilities we also assessed whether the group’s disclosures 
about provisions and the treatment of movements on provisions in the 
income statement for the year were appropriate
  tax liabilities
refer to page 56 audit committee report page 103 accounting policy 
note and pages 103 109 and 136 financial disclosures
the risk the g roup is subject to income taxes in a large number  
of jurisdictions the level of current tax and deferred tax recognised 
requires judgments as to the likely outcome of decisions to be made  
by the tax authorities in the various tax jurisdictions around the world in 
which the g roup operates there is a risk that the judgements on which 
the provisions are based do not take into account or do not properly 
reflect the latest available reliable information or an appropriate 
application of relevant tax legislation and are either under or overstated 
as a result
our response o ur audit procedures included among others challenging 
the appropriateness of the directors’ assumptions and estimates in 
relation to tax assets and liabilities by critically assessing the range of 
possible amounts that may be assessed under tax laws likely settlements 
based on the latest correspondence with the relevant tax authorities and 
the complexity of the relevant tax legislation we involved our tax 
specialist in analysing and challenging the assumptions used to determine 
tax provisions because they have relevant experience of the application 
of the international and local legislation by the relevant authorities  
and courts we also assessed whether the g roup’s tax disclosures  
see notes 8 and 14 are appropriate and in accordance with relevant 
accounting standards 86 dir ector s’ r epor t
morgan adv anced ma terials  annual repor t 2013  annual repor t 2013  morgan adv anced ma terials morgan adv anced ma terials  annual repor t 2013
3 o ur application of materiality and an overview of the  
scope of our audit
the materiality for the g roup financial statements as a whole was set at 
£32 million this has been determined with reference to a benchmark 
of g roup profit before taxation of which it represents 5 which we 
consider to be one of the principal considerations for members of  
the company in assessing the financial performance of the group
we agreed with the audit committee to report to it all corrected and 
uncorrected misstatements we identified through our audit with a value 
in excess of £021 million in addition to other audit misstatements below 
that threshold that we believe warranted reporting on qualitative grounds
a udits for group reporting purposes were performed by component 
auditors at the key reporting components in the following countries  
u k u sa  china g ermany france and a ustralia and by the group audit 
team in the u k in addition specified audit procedures were performed 
by component auditors in u sa and brazil these group procedures 
covered 90 of total group revenue 76 of group profit before 
taxation and 75 of total group assets the segment disclosures  
in note 3 set out the individual significance of a specific country
the audits undertaken for group reporting purposes at the key reporting 
components of the group were all performed to materiality levels set by 
or agreed with the group audit team these materiality levels were  
set individually for each component and ranged from £01 million to 
£32 million
detailed audit instructions were sent to all the auditors in these 
locations these instructions covered the significant audit areas that 
should be covered by these audits which included the relevant risks  
of material misstatement detailed above and set out the information 
required to be reported back to the group audit team the group audit 
team visited the following locations u k u sa and china telephone 
meetings were also held with the auditors at these locations and the 
majority of the other locations that were not physically visited
4 o ur opinion on other matters prescribed by the  
companies act 2006 
in our opinion 
  the part of the directors’ r emuneration r eport to be audited has 
been properly prepared in accordance with the companies a ct 
2006 and 
  the information given in the strategic r eport and directors’ r eport 
for the financial year for which the financial statements are prepared 
is consistent with the financial statements
5 w e have nothing to report in respect of the matters  
on which we are required to report by exception 
u nder isa s u k and ireland we are required to report to you if based 
on the knowledge we acquired during our audit we have identified 
other information in the annual report that contains a material 
inconsistency with either that knowledge or the financial statements  
a material misstatement of fact or that is otherwise misleading
in particular we are required to report to you if 
  we have identified material inconsistencies between the knowledge 
we acquired during our audit and the directors’ statement that  
they consider that the annual report and financial statements taken 
as a whole is fair balanced and understandable and provides the 
information necessary for shareholders to assess the group’s 
performance business model and strategy or
  the a udit committee r eport does not appropriately address 
matters communicated by us to the audit committee
u nder the companies a ct 2006 we are required to report to you if  
in our opinion 
  adequate accounting records have not been kept by the parent 
company or returns adequate for our audit have not been received 
from branches not visited by us or 
  the parent company financial statements and the part of the 
directors’ r emuneration r eport to be audited are not in agreement 
with the accounting records and returns or 
  certain disclosures of directors’ remuneration specified by law are 
not made or 
  we have not received all the information and explanations we 
require for our audit
u nder the listing r ules we are required to review 
  the directors’ statement set out on page 45 in relation to going 
concern
  the part of the corporate g overnance statement on pages 49 
relating to the company’s compliance with the nine provisions of  
the u k corporate g overnance code specified for our review and 
  certain elements of the report to shareholders by the board on 
directors’ remuneration 
we have nothing to report in respect of the above responsibilities
scope and responsibilities
a s explained more fully in the directors’ r esponsibilities statement  
set out on pages 83 and 84 the directors are responsible for the 
preparation of the financial statements and for being satisfied that  
they give a true and fair view a description of the scope of an audit  
of accounts is provided on the financial r eporting council’s website at 
wwwfrcorgukauditscopeukprivate this report is made solely to the 
company’s members as a body and subject to important explanations 
and disclaimers regarding our responsibilities published on our website  
at wwwkpmgcomukauditscopeukco2013a which are incorporated 
into this report as if set out in full and should be read to provide an 
understanding of the purpose of this report the work we have 
undertaken and the basis of our opinions
 
anthony sykes senior statutory auditor 
for and on behalf of kpmg a udit plc statutory a uditor 
chartered a ccountants 
15 canada square
london e14 5g l
13 february 2014
in depen den t au ditor ’s r epor t  
to t h e member s o f morgan 
a dvan ced mater ia ls plc on ly 87 financial statements
annu al repor t 2013  morgan advanced materials
financial statements
overview str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
co ntents
88 consolidated income statement
89  consolidated statement of comprehensive income
90 consolidated balance sheet
91  consolidated statement of changes in equity
92 consolidated statement of cash flows
93  notes to the consolidated financial statements
 138 company balance sheet
 139 notes to the company balance sheet
 148 g roup statistical information
 1 49 cautionary statement
 150 g lossary of terms
 1 5 1 shareholder information 88 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
co nso lidated inco me statement
for t h e y ear ended 31 d ecember 2013
note
results
before specific
adjusting
items
2013
£m
specific
adjusting
items
2013
£m
total
2013
£m
2012
r estated
£m
revenue 3 9578 – 9578 10075 
o perating costs before restructuring costs and amortisation of  
intangible assets 4 8388 – 8388 8866
profit from operations before restructuring costs and 
amortisation of intangible assets 1190 – 1190 1209 
r estructuring costs
r estructuring costs 4 113 – 113 133
g ain on disposal of properties 08 – 08 01 
business exit costs 6 – 73 73 – 
profit from operations before amortisation of intangible assets 3 1085 73 1012 1077 
amortisation and impairment of intangible assets 83 33 116 83
operating profit 3 1002 106 896 994
finance income 13 – 13 16 
finance expense 246 – 246 243
net financing costs 7 233 – 233 227
loss on disposal of business 6 – 23 23 – 
profit before taxation 769 129 640 767 
income tax expense 8 211 18 193 216
profit after taxation before discontinued operations 558 111 447 551 
discontinued operations 9 – – – 210 
profit for the period 558 111 447 761 
profit for period attributable to
 o wners of the parent 524 106 418 728 
 noncontrolling interests 34 05 29 33 
558 111 447 761 
basic earnings per share 10
continuing operations 148p 187p
discontinued operations  00p 76p 
148p 263p
diluted earnings per share
continuing operations 147p 184p
discontinued operations 00p 74p
147p 258p
dividends
interim dividend  – pence 380p 360p
 – £m 108 101 
proposed final dividend  – pence 670p 640p
 – £m 191 179 
the proposed final dividend is based upon the number of shares outstanding at the balance sheet date
 details of specific adjusting items are given in note 6 to the financial statements 
  details of the restatement are given in note 1 to the financial statements morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
89 financial statements
co nsolidated statement o f co mpr eh ensive inco me
for t h e y ear ended 31 d ecember 2013
translation
reserve
£m
h edging
reserve
£m
fair value
reserve
£m
retained
earnings
r estated
£m
total parent
comprehensive
income
r estated
£m
noncontrolling
interests
£m
total
comprehensive
income
r estated
£m
2012
profit for the period – – – 728 728 33 761 
items that will not be reclassified  
subsequently to profit or loss
r emeasurement loss on defined  
benefit plans – – – 432 432 – 432
tax effect of components of other 
comprehensive income not reclassified – – – 62 62 – 62 
– – – 370 370 – 370
items that may be reclassified 
subsequently to profit or loss
foreign exchange translation differences 118 – – – 118 35 153
net gain on hedge of net investment in 
foreign subsidiaries 26 – – – 26 – 26 
cash flow hedges
effective portion of changes in fair value – 09 – – 09 – 09 
transferred to profit or loss – 06 – – 06 – 06
change in fair value of equity securities 
availableforsale – – 01 – 01 – 01 
92 03 01 – 88 35 123
total comprehensive income  
net of tax 92 03 01 358 270 02 268 
2013
profit for the period – – – 418 418 29 447 
items that will not be reclassified 
subsequently to profit or loss
r emeasurement gain on defined  
benefit plans – – – 122 122 – 122 
tax effect of components of other 
comprehensive income not reclassified – – – 55 55 – 55
– – – 67 67 – 67 
items that may be reclassified 
subsequently to profit or loss
foreign exchange translation differences 146 – – – 146 28 174
net gain on hedge of net investment  
in foreign subsidiaries 04 – – – 04 – 04 
cash flow hedges
effective portion of changes  
in fair value – 05 – – 05 – 05
transferred to profit or loss – 04 – – 04 – 04 
change in fair value of equity securities 
availableforsale – – 03 – 03 – 03 
142 01 03 – 140 28 168
total comprehensive income  
net of tax 142 01 03 485 345 01 346 
  details of the restatement are given in note 1 to the financial statements
overview str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts 90 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
co nsolidated balance sh eet
as at 31 december 2013
note
2013
£m
2012
r estated
£m
assets
property plant and equipment 11 2414 2455 
intangible assets 12 2495 2651 
investments 13 37 54 
o ther receivables 43 46 
deferred tax assets 14 282 406 
total noncurrent assets 5271 5612 
inventories 15 1189 1399 
derivative financial assets 17 18 
trade and other receivables 16 1882 1854 
cash and cash equivalents 17 760 800 
total current assets 3848 4071 
total assets 9119 9683 
liabilities
interestbearing loans and borrowings 19 2015 2650 
employee benefits 21 1446 1668 
provisions 22 48 69 
nontrade payables 23 14 48 
deferred tax liabilities 14 335 405 
total noncurrent liabilities 3858 4840 
interestbearing loans and borrowings and bank overdrafts 19 610 78 
trade and other payables 23 1759 1840 
current tax payable 13 61 
provisions 22 129 141 
derivative financial liabilities 09 07 
total current liabilities 2520 2127 
total liabilities 6378 6967 
total net assets 2741 2716 
equity
share capital 18 718 704 
share premium 1117 990 
r eserves 379 516 
retained earnings 167 128 
total equity attributable to equity owners of parent company 2381 2338 
noncontrolling interests 360 378 
total equity 2741 2716 
  details of the restatement are given in note 1 to the financial statements
the financial statements were approved by the board of directors on 13 february 2014 and were signed on its behalf by
mark robertshaw
chief executive o fficer
 
kevin dangerfield
chief financial o fficer 91 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
overview str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
co nsolidated statement o f ch ang es in equ ity
for t h e y ear ended 31 d ecember 2013
share
capital
£m
share
premium
£m
translation
reserve
£m
h edging
reserve
£m
fair
value
reserve
£m
special
reserve
£m
capital
redemption
reserve
£m
o ther
reserves
£m
retained
earnings
r estated
£m
total
parent
equity
r estated
£m
non
controlling
interests
£m
total
equity
r estated
£m
balance at 2 january 2012  
as previously reported 687 906 86 04 14 60 357 1 11 97 2294 408 2702 
effect of restatement – – – – – – – – 02 02 – 02
balance at 2 january 2012  
as restated 687 906 86 04 14 60 357 1 11 95 2292 408 2700 
profit for the year – – – – – – – – 728 728 33 761 
o ther comprehensive income – – 92 03 01 – – – 370 458 35 493
transactions with owners
 dividends 09 84 – – – – – – 254 161 28 189
 equitysettled sharebased  
 payment transactions – – – – – – – – 31 31 – 31 
 o wn shares issuedacquired  
 for share incentive schemes 08 – – – – – – – 102 94 – 94
balance at 31 december 2012 704 990 06 07 13 60 357 1 11 128 2338 378 2716 
balance at 1 january 2013 704 990 06 07 13 60 357 111 128 2338 378 2716 
profit for the year – – – – – – – – 418 418 29 447 
o ther comprehensive income – – 142 01 03 – – – 67 73 28 101
transactions with owners
dividends 14 127 – – – – – – 388 247 16 263
equitysettled sharebased  
payment transactions – – – – – – – – 08 08 – 08 
o wn shares acquired for share 
incentive schemes – – – – – – – – 66 66 – 66
adjustment arising from change  
in noncontrolling interest – – – – – – – 03 – 03 03 – 
balance at 31 december 2013 718 1117 148 06 10 60 357 114 167 2381 360 2741 
details of the reserves are provided in note 18
  details of the restatement are given in note 1 to the financial statements 92 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
co nsolidated statement o f cash fl o ws
for t h e y ear ended 31 d ecember 2013
note
2013
£m
2012
r estated
£m
operating activities
profit for the period before discontinued operations 447 551 
adjustments for
depreciation 4 293 300 
amortisation 4 83 83 
net financing costs 7 233 227 
profit on sale of property plant and equipment 08 02
income tax expense 8 193 216 
noncash operating costs relating to restructuring 4 05 50 
specific adjusting items 6 106 – 
loss on disposal of business 6 23 – 
equitysettled sharebased payment expenses 07 19 
cash generated from operations before changes in working capital and provisions 1382 1444 
increasedecrease in trade and other receivables 108 08 
decrease in inventories 95 185 
decrease in trade and other payables 31 319
decrease in provisions and employee benefits 208 108
cash generated from operations 1130 1210 
interest paid 183 201
income tax paid 249 268
net cash from operating activities 698 741 
investing activities
purchase of property plant and equipment 363 294
proceeds from sale of property plant and equipment 26 27 
sale of investments 01 01 
interest received 13 16 
disposalacquisition of subsidiaries net of cash acquired 07 66
forward contracts used in net investment hedging 21 07 
deferred consideration received on disposal of subsidiary 10 – 
net cash from investing activities 285 309
financing activities
purchase of own shares for share incentive schemes 66 94
r epayment of borrowings 17 89 162
payment of finance lease liabilities 17 01 02
dividends paid 247 161
net cash from financing activities 403 419
net increase in cash and cash equivalents 10 13 
cash and cash equivalents at start of period 800 834 
effect of exchange rate fluctuations on cash held 50 47
cash and cash equivalents at period end 17 760 800 
a reconciliation of cash and cash equivalents to net borrowings is shown in note 17
  details of the restatement are given in note 1 to the financial statements 93 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
overview
no tes to th e co nso lidated financial statements
1 accoun tin g poli cies estimates an d judgmen ts
accounting policies
morgan advanced materials plc the ‘company’ formerly the morgan crucible company plc is a company incorporated in the u k
the g roup financial statements consolidate those of the company and its subsidiaries together referred to as the ‘g roup’ and include the  
g roup’s interest in associates the parent company financial statements present information about the company as a separate entity and not  
about its g roup these consolidated financial statements have been drawn up to 31 december 2013 the g roup maintains a 12month calendar 
fiscal year ending on 31 december 
the g roup financial statements have been prepared and approved by the directors in accordance with international financial r eporting standards 
as adopted by the eu adopted if r ss the company has elected to prepare its parent company financial statements in accordance with  
u k g enerally accepted accounting practice these are presented on pages 138 to 147
where possible the g roup has set out individual accounting policies in the note to the consolidated financial statements most relevant to that 
accounting policy
except for the changes set out in the ‘adoption of new and revised standards’ section the accounting policies set out below have been applied 
consistently to all periods presented in these g roup financial statements
a measurement convention
the financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value derivative 
financial instruments and financial instruments availableforsale 
b functional and presentation currency
the g roup financial statements are presented in pounds sterling which is the company’s functional currency
c basis of consolidation
i subsidiaries
subsidiaries are entities controlled by the company control exists when the company has the power directly or indirectly to govern the financial 
and operating policies of an entity so as to obtain benefits from its activities the financial statements of subsidiaries are included in the consolidated 
financial statements from the date that control commences until the date that control ceases
ii associates
associates are those entities in which the company has significant influence but not control over the financial and operating policies significant 
influence is presumed to exist when the g roup holds between 20 and 50 of the voting power of another entity associates are accounted for 
using the equity method and are initially recognised at cost
iii transactions eliminated on consolidation
intrag roup balances and any unrealised gains and losses or income and expenses arising from intrag roup transactions are eliminated in preparing 
the consolidated financial statements u nrealised gains arising from transactions with associates are eliminated against the investment to the extent  
of the g roup’s interest in the associate u nrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no 
evidence of impairment 
d foreign currency
i foreign currency transactions
transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction monetary assets and liabilities 
denominated in foreign currencies at the balance sheet date are translated to pounds sterling at the foreign exchange rate ruling at that date foreign 
exchange differences arising on translation are recognised in the income statement nonmonetary assets and liabilities that are measured in terms 
of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction nonmonetary assets and liabilities 
denominated in foreign currencies that are stated at fair value are translated to pounds sterling at foreign exchange rates ruling at the dates the  
fair value was determined
ii financial statements of foreign operations
the assets and liabilities of foreign operations including goodwill and fair value adjustments arising on consolidation are translated to pounds  
sterling at foreign exchange rates ruling at the balance sheet date the revenues and expenses of foreign operations are translated to pounds sterling 
at an average rate for the period where this approximates to the foreign exchange rates ruling at the dates of the transactions foreign exchange 
differences arising on retranslation since the adoption of ifr s are recognised directly in o ther comprehensive income ‘o ci’  94 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
1 accoun tin g poli cies estimates an d judgmen ts continued
accounting policies continued
e impairment
the carrying amounts of the g roup’s assets other than deferred tax assets are reviewed at each balance sheet date to determine whether there  
is any indication of impairment if any such indication exists the asset’s recoverable amount is estimated see i below
an impairment loss is recognised whenever the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount impairment 
losses are recognised in the income statement 
impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to 
cashgenerating units group of units and then to reduce the carrying amount of the other assets in the unit group of units on a prorata basis 
when a decline in the fair value of an availableforsale financial asset has been recognised directly in o ci and there is objective evidence that the 
asset is permanently impaired the cumulative loss that had been recognised directly in o ci is recognised in profit or loss a significant or prolonged 
decline in an availableforsale financial asset’s fair value below its cost is objective evidence of impairment the amount of the cumulative loss that  
is recognised in profit or loss is the difference between the acquisition cost and current fair value less any impairment loss on that financial asset 
previously recognised in profit or loss
i calculation of recoverable amount
the recoverable amount of the g roup’s investments in receivables carried at amortised cost is calculated as the present value of estimated future 
cash flows discounted at the original effective interest rate ie the effective interest rate computed at initial recognition of these financial assets 
r eceivables with a short duration are not discounted the recoverable amount of other assets is the greater of their fair value less costs to sell and 
value in use in assessing value in use the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects 
current market assessments of the time value of money and the risks specific to the asset for an asset that does not generate largely independent 
cash inflows the recoverable amount is determined for the cashgenerating unit to which the asset belongs
ii reversals of impairment
an impairment loss in respect of a receivable carried at amortised cost and other assets not listed below is reversed if the subsequent increase in 
recoverable amount can be related objectively to an event occurring after the impairment loss was recognised 
an impairment loss in respect of an investment in an equity instrument classified as availableforsale is not reversed through profit or loss if the  
fair value of a debt instrument classified as availableforsale increases and the increase can be objectively related to an event occurring after the 
impairment loss was recognised in profit or loss the impairment loss shall be reversed with the amount of the reversal recognised in profit or loss
an impairment loss in respect of goodwill is not reversed 
an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been 
determined net of depreciation or amortisation if no impairment loss had been recognised
f revenue
r evenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable net of 
returns trade discounts and volume rebates r evenue is recognised when the significant risks and rewards of ownership have been transferred  
to the customer recovery of the consideration is probable the associated costs and possible return of goods can be estimated reliably there is  
no continuing management involvement with the goods and the amount of revenue can be measured reliably if it is probable that discounts  
will be granted and the amount can be measured reliably then the discount is recognised as a reduction of revenue as the sales are recognised
g dividends
dividends payable are recognised as a liability in the period in which they are declared and approved
accounting estimates and judgments
judgments made by the directors in the application of these accounting policies that have a significant effect on the financial statements and 
estimates with a significant risk of material adjustment in the next year are discussed below
management discussed with the audit committee the development selection and disclosure of the g roup’s critical accounting policies and 
estimates and the application of these policies and estimates the following accounting estimates are subject to significant uncertainty
provisions
note 22 contains information about provisions provisions for closure and restructuring costs environmental issues and settlement of litigation  
are judgmental by their nature amounts provided are the g roup’s best estimate of exposure based on currently available information 95 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
overview
1 accoun tin g poli cies estimates an d judgmen ts continued
recognition of identifiable intangible assets and goodwill
note 12 contains information about intangible assets recognised on acquisition these primarily relate to technology and trademarks and customer 
relationships which are supported by longterm relationships with key customers the g roup has estimated that the customer relationships have 
an economic life of 1520 years
impairment of intangible assets and goodwill
note 12 contains information about the assumptions relating to goodwill impairment tests including a sensitivity analysis
credit risk
note 20 contains information about the g roup’s exposure to credit risk including a sensitivity analysis the g roup establishes both specific and 
general allowances for impairment losses against receivables the general loss allowance is estimated based on historical data of payment statistics 
for similar financial assets
foreign currency exposure
note 20 contains information about the foreign currency exposure of the g roup and risks in relation to foreign exchange movements including  
a sensitivity analysis
pension assumptions
the principal actuarial assumptions applied to pensions are shown in note 21 including a sensitivity analysis the actuarial evaluation of pension 
assets and liabilities is based on assumptions in respect of inflation future salary increases discount rates returns on investments and mortality rates 
r elatively small changes in the assumptions underlying the actuarial valuations of pension schemes can have a significant impact on the net pension 
liability included in the balance sheet
taxation
the level of current tax and deferred tax recognised is dependent on the tax rates in effect at the balance sheet date and on subjective judgments 
as to the outcome of decisions to be made by the tax authorities in the various tax jurisdictions around the world in which the g roup operates 
deferred tax assets are recognised based on management’s assessment of the extent to which they are recoverable
going concern
the g roup’s business activities together with the factors likely to affect its future development performance and position are set out in the  
strategic r eport on pages 4 to 45 the financial position of the g roup its cash flows liquidity position and borrowing facilities are described in  
the strategic r eport in addition note 20 includes the g roup’s policies and processes for managing financial risk details of its financial instruments 
and hedging activities and its exposures to credit risk and liquidity risk
the g roup meets its daytoday working capital requirements through local banking arrangements that are supported by the flexibility provided by 
the g roup bank facility of £150 million unsecured fiveyear multicurrency revolving credit facility the bank facility headroom at 31 december 2013 
was £150 million 
the g roup’s forecasts and projections taking account of reasonably possible changes in trading performance show that the g roup is able to operate 
within the level of its committed facilities the directors have a reasonable expectation that the g roup has adequate resources to continue in 
operational existence for the foreseeable future accordingly they continue to adopt the going concern basis in preparing the annual r eport  
and accounts
adoption of new and revised standards
ias 19 revised employee benefits
during the period the g roup has applied ias 19 revised employee benefits this has led to a restatement of the comparatives for 2012  
the impact on the g roup of the revised standard is as follows 
  interest cost and expected return on assets were replaced by a net interest cost which is calculated by applying the discount rate to the net 
defined benefit obligation
  pension scheme administration costs have been reclassified from net finance charge to operating costs such costs include the ppf levy  
and actuary audit legal and trustee charges which under the previous ias 19 were allowed to be included within the net finance charge
  past service costs are recognised immediately instead of being accrued over the vesting period
the impact of the changes was a £51 million reduction in profit for the period 2012 £42 million as follows
i a £14 million increase in operating costs before restructuring costs and amortisation of intangible assets 2012 £11 million
ii a £43 million increase in net financing costs 2012 £36 million
iii a £06 million reduction in income tax expense 2012 £05 million
the changes resulted in a £51 million increase in other comprehensive income excluding profit for the period 2012 £42 million 96 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
1 accoun tin g poli cies estimates an d judgmen ts continued
adoption of new and revised standards continued
the above changes reduced basicdiluted earnings per share for 2012 by 15 pence with basic earnings per share reducing from 202 pence to 
187 pence and diluted basic earnings per share reducing from 199 pence to 184 pence
the impact of the changes on the balance sheet was a £02 million increase in the net employee benefits obligation
the increase in operating costs resulted in a decrease in r egional ebita for the g roup’s new reportable operating segments see note 3 as follows 
north america £06 million 2012 £05 million and europe £08 million 2012 £06 million
other accounting standards
o n 1 january 2013 the g roup applied the following accounting standards and amendments issued by the iasb
  amendments to ifr s 7 financial instruments disclosures
  ifr s 13 fair value measurement
the application of these accounting standards has not had any significant impact on the reported results or financial position of the g roup
new standards and interpretations 
a number of new standards amendments to standards and interpretations are effective for annual periods beginning on or after 1 january 2014 
and have not been applied in preparing the g roup financial statements those which may be relevant to the g roup are set out below the g roup 
has not applied these standards early and does not expect the application of these standards to have a material impact on the g roup’s financial 
statements
ifr s 10 consolidated financial statements introduces a single control model to determine whether an investee should be consolidated the 
objective of ifr s 10 is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls  
one or more other entities 
u nder ifr s 1 1 joint arrangements the structure of the joint arrangement although still an important consideration is no longer the main factor  
in determining the type of joint arrangement and therefore the subsequent accounting
ifr s 12 disclosure of interests in other entities 201 1 brings together into a single standard all the disclosure requirements about an entity’s interests 
in subsidiaries joint arrangements associates and unconsolidated structured entities ifr s 12 disclosure of interests in other entities 201 1 requires 
the disclosure of information about the nature risks and financial effects of these interests
these standards are effective for annual periods beginning on or after 1 january 2014
2 acq uisition s an d disposal s
accounting policies
step acquisitions
step acquisitions arise when the g roup acquires control of an entity through successive share purchases the identifiable assets liabilities and 
contingent liabilities acquired are recorded at fair value on the date that control is acquired for step acquisitions occurring before 3 january 2010  
the amount recognised as goodwill or negative goodwill is determined separately for each tranche acquired calculated as the difference between 
the fair value of the consideration paid and the fair value of the identifiable assets liabilities and contingent liabilities acquired in accordance with 
ifr s 3 business combinations 2004 any changes in the fair value of the identifiable assets and liabilities acquired between the acquisition date and 
the date that control is obtained are recorded in other reserves in equity to the extent that they have not previously been recognised in the income 
statement any future step acquisitions would be accounted for in accordance with ifr s 3 business combinations 2008 97 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
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statemen ts
overview
2 acq uisition s an d disposal s continued
acquisitions
in 2007 the g roup acquired 49 of the o rdinary share capital of clearpower limited a company that via two intermediary holding companies 
owns 100 of np aerospace limited o n 5 january 2009 the g roup acquired the remaining 51 of the o rdinary share capital of clearpower 
limited for a total of £568 million an amount contingent on the future performance of clearpower limited this comprised £122 million in cash 
for 1 1 of the o rdinary share capital and £446 million in discounted deferred contingent consideration for 40 of the o rdinary share capital  
the discounted deferred contingent consideration took the form of four synthetic forwards each to acquire 10 of the o rdinary share capital  
of clearpower limited at future dates from 2010 onwards the amount of which are based on a fixed ebitda multiple of clearpower limited
o n 1 april 2010 the g roup agreed to pay £249 million o f this amount £172 million related to the first of the four synthetic forwards noted above 
the remaining payment of £77 million related to deferred contingent consideration on the acquisition of 1 1 of clearpower limited in 2009 
£124 million of the total was deferred for payment until 6 july 2010 in addition to these payments the g roup paid £23 million to the employee 
benefit trust in accordance with the terms of the original acquisition agreement
o n 31 march 201 1 and 28 march 2012 the g roup paid £91 million and £61 million respectively for the second and third synthetic forwards  
in addition to these payments on 31 march 201 1 and 28 march 2012 the g roup paid £08 million and £06 million respectively to the employee 
benefit trust in accordance with the terms of the original acquisition agreement
at 31 december 2013 the g roup anticipates acquiring the remaining 10 of clearpower limited for nil consideration and therefore has not 
recognised a liability for this the adjustment through goodwill since the date of acquisition as a result of the remeasurement is £96 million
o n 1 february 2013 the g roup purchased the remaining 25 of the share capital of beijing morgan ceramics co ltd ‘bmc’ not already held  
by the g roup for £03 million as a result the g roup now owns 100 of the share capital of bmc the adjustment to the noncontrolling interest 
component of equity due to this transaction was £06 million
during 2013 the g roup also made adjustments to goodwillpurchase consideration totalling £37 million relating to historic acquisitions for which 
ifr s 3 business combinations 2004 applied
disposals
o n 28 december 2013 the g roup disposed of 2385 of the share capital of assam carbon products ltd for nil consideration details of this 
disposal are given in note 6 to the financial statements
other acquisitions in 2013 and 2012
there were no other business combinations in 2013 and 2012
3 segmen t repo r tin g
accounting policies
the g roup has identified three reportable operating segments these have been identified on the basis of internal management reporting 
information that is regularly reviewed by the g roup’s board of directors the chief o perating decision maker in order to allocate resources and 
assess performance
segment results assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis 
u nallocated items comprise mainly investments and related income loans and borrowings and related expenses corporate assets and head office 
expenses and income tax assets and liabilities
the g roup comprises the following three reportable operating segments north america europe and asiar est of world
segment reporting
the tables below show restated comparative figures for the operating segments and for the g roup for the year ended 31 december 2012 the 
restatements reflect the impact of changes the g roup made to its internal organisation changes during the year ended 31 december 2013 which 
caused the composition of its reportable segments to change in addition the restatements reflect the impact from the adoption of the change in 
ias 19 revised employee benefits that was adopted for the year ended 31 december 2013 details of the impact of the adoption of ias 19 revised 
employee benefits are given in note 1
following the internal organisation changes made the g roup is now organised on a geographical basis and comprises the following three reportable 
operating segments north america europe and asiar est of world 98 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
3 segmen t repo r tin g continued
segment reporting continued
the information presented below represents the operating segments of the g roup
north america europe asiar est of world consolidated
2013
£m
2012
r estated
£m
2013
£m
2012
r estated
£m
2013
£m
2012
r estated
£m
2013
£m
2012
r estated
£m
revenue from external customers 3599 3763 3573 3617 2406 2695 9578 10075 
r egional ebita before impact of ias 19 restatement 2012 562 381 328 1271 
impact of ias 19 restatement 2012 05 06 – 11
regional ebita
1
555 557 420 375 264 328 1239 1260 
u nallocated costs 49 51
group ebita
2
1190 1209 
r estructuring costs 25 15 26 62 33 55 84 132
u nallocated restructuring costs 21 – 
underlying operating profit
3
1085 1077 
amortisation of intangible assets 32 28 36 43 15 12 83 83
operating profit before specific adjusting items 1002 994 
specific adjusting items included in operating profit
4
106 – 
operating profit
896 994 
finance income before impact of ias 19 restatement 2012
263 
impact of ias 19 restatement 2012
247
finance income
13 16 
finance expense before impact of ias 19 restatement 2012
454
impact of ias 19 restatement 2012
 211 
finance expense 246 243
loss on disposal of business 23 – 
profit before taxation 640 767 
segment assets 2833 2890 3031 3203 2186 2310 8050 8403 
u nallocated assets 1069 1280 
total assets 9119 9683 
segment liabilities 891 1176 1666 1675 464 516 3021 3367 
u nallocated liabilities 3357 3600 
total liabilities 6378 6967 
segment capital expenditure 135 110 71 77 157 106 363 293 
unallocated capital expenditure – 01 
total capital expenditure 363 294 
segment depreciation 120 123 98 97 74 79 292 299 
u nallocated depreciation 01 01 
total depreciation 293 300 
1 segment profit is defined as r egional ebita which is segment operating profit before restructuring costs and amortisation of intangible assets
2 g roup ebita is defined as operating profit before restructuring costs and amortisation of intangible assets
3 u nderlying operating profit is defined as operating profit before amortisation of intangible assets
4 details of specific adjusting items are given in note 6 to the financial statements
the above measures of profit are shown because the directors use them to measure the underlying performance of the business as referred to in the strategic r eport section of the 
annual r eport  99 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
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statemen ts
overview
3 segmen t repo r tin g continued
r evenue from  
external customers
noncurrent assets
excluding tax and
financial instruments
2013
£m
2012
£m
2013
£m
2012
£m
usa 3014 3155 1658 1710 
u k the g roup’s country of domicile 1086 1079 1594 1656 
china 826 836 551 519 
g ermany 635 703 316 311 
france 396 411 198 209 
o ther asia middle east and africa 1561 1873 308 362 
o ther europe 1310 1275 215 225 
o ther north america 413 308 70 116 
south america 337 435 79 98 
9578 10075 4989 5206
r evenue from external customers is based on geographic location of the endcustomer segment assets are based on geographical location of  
the assets
segment revenue by product
2013
£m
2012
£m
industrial 4254 4535 
transportation 1804 1876 
electronics 719 873 
petrochemical 761 931 
security and defence 944 814 
energy 617 620 
h ealthcare 479 426 
9578 10075
intercompany sales to other segments
north america europe asiar est of world
2013
£m
2012
£m
2013
£m
2012
£m
2013
£m
2012
£m
intercompany sales to other segments 234 222 180 196 80 91  100 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
4 oper atin g costs before s pecific adjustin g items
2013
£m
2012
r estated
£m
change in stocks of finished goods and work in progress 49 01
r aw materials and consumables 2497 2789 
o ther external charges 1563 1636 
total 4109 4424 
employee costs
– wages and salaries 2356 2392 
– equitysettled sharebased payments 06 19 
– social security costs 454 510 
– other pension costs 127 120 
total 2943 3041 
depreciation 293 300 
rentals under operating leases
– hire of plant and machinery 32 30 
– other operating leases 56 53 
total 88 83 
o ther operating charges and income
– net foreign exchange gainslosses 13 04 
– other operating income and charges 968 1014 
total 955 1018 
total operating costs before restructuring costs and amortisation of intangible assets 8388 8866 
r estructuring costs
– employment termination costs 72 61 
– writeoff of assets 05 50 
– other reorganisation rationalisation and closure costs 36 22 
– profit on disposal of properties 08 01
total 105 132 
amortisation of intangible assets 83 83 
total operating costs before specific adjusting items 8576 9081
the g roup recognised £202 million in expense in respect of research and development 2012 £196 million 101 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
rep ort
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fin anc ial 
statemen ts
overview
4 oper atin g costs before s pecific adjustin g items continued
a summary of the audit and nonaudit fees in respect of services provided by kpmg audit plc charged to operating profit in the year ended 
31 december 2013 is set out below
2013
£m
2012
£m
fees payable to the company’s auditor for the audit of the company’s annual accounts 04 04 
fees payable to the company’s auditor and its associates for other services
– the auditing of accounts of any subsidiaries of the company 17 17 
– audit related services 01 01 
– taxation compliance services 01 01 
– other nonaudit services 01 01 
24 24 
5 staff n umber s 
the average number of persons employed by the g roup including directors during the year analysed by geographical area and reporting segment 
was as follows
number of employees
2013
2012
r estated
reportable operating segments
north america 3167 3315
europe 3024 3196
asiar est of world 3370 3512
corporate 11 10
9572 10033
   the table above shows restated comparative figures for the operating segments for the year ended 31 december 2012 the restatements reflect the impact of changes the g roup 
made to its internal organisation changes during the year ended 31 december 2013 which caused the composition of its reportable segments to change see note 3 for further details
6 specific adjusting items
in the consolidated income statement the g roup presents specific adjusting items separately in the judgment of the directors due to the nature 
and value of these items they should be disclosed separately from the underlying results of the g roup to allow the reader to obtain a proper 
understanding of the financial information and the best indication of underlying performance of the g roup no specific adjusting items were 
incurred in 2012
2013
£m
2012 
£m
specific adjusting items
– business exit costs 73 – 
– impairment of intangible assets 33 – 
– loss on disposal of business 23 – 
total specific adjusting items before income tax credit 129 – 
– income tax credit from specific adjusting items 18 – 
111 –  102 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
6 specific adjustin g items continued
business exit costs
business exit costs relates to composites and defence systems and is a result of the exit of the u k ministry of defence ‘mod’ vehicles logistics 
and spares contract and the completion of u k mod u rgent o perational r equirements uor  for new vehicle builds specifically the charge 
comprises a £57 million provision against inventory and a £16 million provision for building exit costs and impairment of other assets an income 
tax credit of £16 million has been recognised in respect of these items
impairment of intangible assets
the impairment of intangible assets consists of a £33 million impairment of goodwill and intangible assets originally recognised on acquisition of 
morgan amt h airong ltd formerly changsha h airong new materials co ltd ‘h airong’ based on the current view of the future financial 
performance of h airong an income tax credit of £02 million has been recognised in respect of this item
l oss on disposal of business
o n 28 december 2013 the g roup disposed of 2385 of the share capital of assam carbon products ltd ‘assam’ for nil consideration the 
g roup retains a 288 shareholding as a result of the transaction the g roup no longer has control of assam and has therefore deconsolidated  
the assets and liabilities of assam in these consolidated financial statements the loss recognised on the disposal of this shareholding was 
£23 million based on the g roup’s remaining 288 shareholding the g roup accounts for the shareholding as an associate the fair value of  
the g roup’s remaining investment has been measured at nil the adjustment to the noncontrolling interest component of equity due to this 
transaction was £06 million
7 n et fin anc e income a n d expen se
accounting policies
net financing costs comprise interest payable on borrowings calculated using the effective interest rate method interest receivable on funds 
invested gains and losses on hedging instruments that are recognised in the income statement net interest on ias 19 pension assets and interest  
on ias 19 obligations interest income is recognised in the income statement as it accrues using the effective interest method 
borrowing costs interest and other costs are capitalised when they are incurred on raising specific funds to finance a major capital project which 
will be a significant productive asset or to the extent that funds borrowed generally are used for the purposes of obtaining a qualifying asset
2013
£m
2012
r estated
£m
recognised in profit or loss
interest income on bank deposits measured at amortised cost 13 16 
finance income 13 16 
interest expense on financial liabilities measured at amortised cost 183 185
net interest on ias 19 obligations 63 56
interest expense on unwinding of discount on deferred consideration – 02
finance expense 246 243
net financing costs recognised in profit or loss 233 227
recognised directly in equity
net change in fair value of availableforsale financial assets 03 01 
cash flow hedges
– effective portion of changes in fair value of cash flow hedges 05 09 
– transferred to profit or loss 04 06
effective portion of change in fair value of net investment hedge 04 26 
foreign currency translation differences for foreign operations 146 118
140 88 103 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
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fin anc ial 
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overview
8 tax ation – in come tax expen se
accounting policies
income tax on the profit or loss for the year comprises current and deferred tax income tax is recognised in the income statement except to the 
extent that it relates to items recognised directly in o ci in which case it is recognised in o ci
current tax is the expected tax payable on the taxable income for the year using tax rates enacted or substantively enacted at the balance sheet 
date and any adjustment to tax payable in respect of previous years 
deferred tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and 
liabilities for financial reporting purposes and the amounts used for taxation purposes the following temporary differences are not provided for  
the initial recognition of goodwill the initial recognition of assets or liabilities that affect neither accounting nor taxable profit and differences relating 
to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future the amount of deferred tax provided is 
based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively 
enacted at the balance sheet date 
a deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be 
utilised deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised
taxation – income tax expense
r ecognised in the income statement
2013
£m
2012
r estated
£m
current tax expense
current year 235 249 
adjustments for prior years 36 50
199 199 
deferred tax expense
o rigination and reversal of temporary differences 06 17 
total income tax expense in income statement 193 216 
r econciliation of effective tax rate
2013
£m
2013

2012
r estated
£m
2012
r estated

profit before tax 640 767 
income tax using the domestic corporation tax rate 149 232 188 245 
nondeductible expenses 36 56 24 31 
temporary differences not equalised in deferred tax 10 16 14 18
adjustments in respect of prior years 22 34 36 47
r ecognition of previously unrecognised temporary differences 50 78 – – 
o ther including the impact of overseas tax rates
70 109 54 70 
193 301 216 282 
income tax recognised directly in equity
tax effect on components of other comprehensive income
– current tax associated with share schemes 05 13 
– deferred tax associated with defined benefit schemes and share schemes 60 49 
– o ther – – 
total income tax recognised directly in equity 55 62 
the effective rate of tax before specific adjusting items is 274 104 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
9 discon tin ued oper ation s
discontinued operations in the year ended 31 december 2012 is a tax credit arising from the review and release of tax liabilities set up in prior years 
relating to business disposals
10 earnin gs per s h are
earnings per share from continuing operations
the calculation of basicdiluted earnings per share from continuing operations at 31 december 2013 was based on the following
2013 2012
basic
£m
diluted
£m
basic
r estated
£m
diluted
r estated
£m
profit attributable to equity holders of the company from  
continuing operations 418 418 518 518 
weighted average number of ordinary shares
issued o rdinary shares at the beginning of the period millions 2797 2797 2731 2731 
effect of shares issued in period and shares held by the morgan g eneral employee 
benefit trust millions 32 32 39 39 
dilutive effect of share optionsincentive schemes millions na 13 na 50 
basicdiluted weighted average number of o rdinary shares during the period millions 2829 2842 2770 2820 
earnings per share from continuing operations pence 148p 147p 187p 184p
earnings per share from discontinued operations
the calculation of basicdiluted earnings per share from discontinued operations at 31 december 2013 was based on the following
2013 2012
basic
£m
diluted
£m
basic
£m
diluted
£m
profit attributable to equity holders of the company from discontinued 
operations – – 210 210 
basicdiluted weighted average number of o rdinary shares during the period – 
calculated as above millions 2829 2842 2770 2820 
earnings per share from discontinued operations pence 00p 00p 76p 74p
underlying earnings per share
the calculation of basicdiluted underlying earnings per share at 31 december 2013 was based on the following
2013 2012
basic
£m
diluted
£m
basic
r estated
£m
diluted
r estated
£m
underlying operating profit before specific adjusting items and 
amortisation less net financing costs income tax expense and 
noncontrolling interests 607 607 601 601 
basicdiluted weighted average number of o rdinary shares during the period – 
calculated as above millions 2829 2842 2770 2820 
earnings per share before specific adjusting items and amortisation  
of intangible assets pence 215p 214p 217p 213p 105 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
rep ort
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rep ort
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statemen ts
overview
1 1 pr oper ty pl an t an d eq uipmen t 
accounting policies
i owned assets
items of property plant and equipment are stated at cost or at deemed cost less accumulated depreciation see below and impairment losses 
the cost of selfconstructed assets includes the cost of materials direct labour and an appropriate proportion of production overheads 
where parts of an item of property plant and equipment have different useful lives they are accounted for as separate items of property plant  
and equipment
g ains and losses on the disposal of property plant and equipment are determined by comparing the proceeds from disposal with the carrying 
amount of the asset g ains and losses on the disposal of property are recognised in ‘r estructuring costs’ in the income statement g ains and losses 
on the disposal of plant and equipment are recognised in ‘o perating costs before restructuring costs and amortisation of intangible assets’ in the 
income statement
ii leased assets
leases under the terms of which the g roup assumes substantially all the risks and rewards of ownership are classified as finance leases leased 
assets acquired by way of a finance lease are stated at an amount equal to the lower of their fair value and the present value of the minimum lease 
payments at inception of the lease less accumulated depreciation and impairment losses 
iii depreciation
depreciation is charged to the income statement on a straightline basis over the estimated useful lives of each part of an item of property plant and 
equipment land is not depreciated depreciation methods useful lives and residual values are reviewed at each balance sheet date the estimated 
useful lives are as follows
  buildings 50 years
  plant and equipment and fixtures 320 years
property plant and equipment
land and
buildings
£m
plant and
equipment
and fixtures
£m
total
£m
cost
balance at 2 january 2012 1546 5342 6888 
additions 45 245 290 
disposals 03 95 98
effect of movement in foreign exchange 57 191 248
balance at 31 december 2012 1531 5301 6832 
balance at 1 january 2013 1531 5301 6832 
additions 74 257 331 
disposals 24 184 208
effect of movement in foreign exchange 26 98 124
balance at 31 december 2013 1555 5276 6831  106 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
1 1 pr oper ty pl an t an d eq uipmen t continued
land and
buildings
£m
plant and
equipment
and fixtures
£m
total
£m
depreciation and impairment losses
balance at 2 january 2012 522 3768 4290 
depreciation charge for the year 45 255 300 
disposals 01 53 54
effect of movement in foreign exchange 24 135 159
balance at 31 december 2012 542 3835 4377 
balance at 1 january 2013 542 3835 4377 
depreciation charge for the year 49 244 293 
disposals 05 172 177
effect of movement in foreign exchange 10 66 76
balance at 31 december 2013 576 3841 4417 
carrying amounts
at 2 january 2012 1024 1574 2598 
at 31 december 2012 989 1466 2455 
at 31 december 2013 979 1435 2414 
assets pledged as security for liabilities
at 31 december 2013 assets with a carrying amount of £38 million 31 december 2012 £33 million are subject to registered debentures  
to secure bank loans and other liabilities see note 19 there were no borrowings drawn on these debentures 2012 £09 million
12 in tang ible ass ets
accounting policies
i goodwill
all business combinations are accounted for by applying the purchase method g oodwill represents the difference between the cost of the 
acquisition and the fair value of assets liabilities and contingent liabilities acquired  
g oodwill is allocated to cashgenerating units and is tested annually for impairment
ii research and development
expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding is recognised 
in the income statement as an expense as incurred
expenditure on development activities whereby research findings are applied to a plan or design for the production of new or substantially 
improved products and processes is capitalised if the product or process is technically and commercially feasible and the g roup has sufficient 
resources to complete development use and sale of products or processes the expenditure capitalised includes the cost of materials direct labour 
and an appropriate proportion of overheads capitalised development expenditure is stated at cost less accumulated amortisation see below and 
impairment losses o ther development expenditure is recognised in the income statement as an expense as incurred
iii other intangible assets
o ther intangible assets that are acquired by the g roup are stated at cost less accumulated amortisation see below and impairment losses
iv amortisation
amortisation is charged to the income statement on a straightline basis over the estimated useful lives of intangible assets unless such lives are 
indefinite g oodwill and intangible assets with an indefinite useful life are systematically tested for impairment at each balance sheet date o ther 
intangible assets are amortised from the date they are available for use the estimated useful lives are as follows
  capitalised development costs 3 years
  computer software 36 years
  customer relationships 1520 years
  technology and trademarks 1520 years
  o rder book amortised over the period in which the associated orders are fulfilled 107 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
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dire ctor s’ 
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12 in tan gible ass ets continued
g oodwill
£m
o rder
book
£m
customer
relationships
£m
technology
and
trademarks
£m
capitalised
development
costs
£m
computer
software
£m
total
£m
cost
balance at 2 january 2012 1998 93 774 227 22 138 3252 
additions externally purchased – – – – – 06 06 
disposals 01 93 – – 16 – 110
r emeasurement of goodwill 51 – – – – – 51
effect of movement in foreign exchange 35 – 22 01 – 04 62
balance at 31 december 2012 1911 – 752 226 06 140 3035 
balance at 1 january 2013 1911 – 752 226 06 140 3035 
additions externally purchased – – – – – 24 24 
disposals – – – – – 02 02
impairment – – – – – – – 
r emeasurement of goodwill 37 – – – – – 37
effect of movement in foreign exchange 22 – 13 – – 02 37
balance at 31 december 2013 1852 – 739 226 06 160 2983 
amortisation and impairment losses
balance at 2 january 2012 – 93 168 53 18 87 419 
amortisation charge for the year – – 45 18 04 16 83 
disposals – 93 – – 16 – 109
effect of movement in foreign exchange – – 03 03 – 03 09
balance at 31 december 2012 – – 210 68 06 100 384 
balance at 1 january 2013 – – 210 68 06 100 384 
amortisation charge for the year – – 44 18 – 21 83 
impairment losses for the year 16 – 03 14 – – 33 
disposals – – – – – 02 02
effect of movement in foreign exchange – – 07 02 – 01 10
balance at 31 december 2013 16 – 250 98 06 118 488 
carrying amounts
at 2 january 2012 1998 – 606 174 04 51 2833 
at 31 december 2012 1911 – 542 158 – 40 2651 
at 31 december 2013 1836 – 489 128 – 42 2495  108 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
12 in tan gible ass ets continued
impairment test for cashgenerating units containing goodwill
in accordance with the requirements of ias 36 impairment of assets goodwill is allocated to the g roup’s cashgenerating units that are expected  
to benefit from the synergies of the business combination that gave rise to the goodwill 
the table below shows restated comparative figures for the cashgenerating units for the year ended 31 december 2012 the restatements  
reflect the impact of changes the g roup made to its internal organisation changes during the year ended 31 december 2013 which caused the 
composition of its cashgenerating units to change assets are grouped together into the smallest group of assets that generates cash inflows from 
continuing use that are largely independent of the cash inflows of other assets or cashgenerating units primarily based on geographical basis to 
reflect this new structure
g oodwill is attributed to each cashgenerating unit as follows 
2013
£m
2012
r estated
£m
north america 775 808 
europe 458 475 
asiar est of world 439 464 
composites and defence systems 164 164 
1836 1911 
each cashgenerating unit is assessed for impairment annually and whenever there is an indication of impairment 
as part of the annual impairment test review the carrying value of goodwill has been assessed with reference to its value in use reflecting the 
projected discounted cash flows of each cashgenerating unit to which goodwill has been allocated
the key assumptions used in determining value in use relate to growth rates and discount rates
the cash flow projections in year one are based on budgeted operating results for the forthcoming year
g rowth rates for the period not covered by budgets are specific to each cashgenerating unit ranging from 10 to 50 2012 20 to 50 
the growth rates are also used to calculate a terminal value these growth rates reflect the products industries and countries in which the 
operating segments operate these medium to longterm growth rates have been reviewed by management during 2013 and are considered  
to be appropriate
in 2013 the g roup has used the following pretax discount rates for calculating the terminal value of each of the new cashgenerating units  
north america 122 europe 129 asiar est of world 151 composites and defence systems 124 these discount rates have been  
used as the g roup believes it suitably approximates the rates used by endmarket participants in 2012 the g roup used a standard pretax discount 
rate of 133 for all of the g roup’s former cashgenerating units
the directors have considered the following individual sensitivities and are confident that no impairment would arise in any of the following three 
circumstances
  if the pretax discount rate was increased by 1100bps for each of the north america europe and asiar est of world cashgenerating units 
for composites and defence systems no impairment would arise if the pretax discount rate was increased by 340bps
  if no growth was assumed for years two to five and in the calculation of terminal value and
  if the cash flow projections of all businesses were reduced by 25 2012 15
during the year ended 31 december 2013 the g roup recognised an impairment loss of £16 million on goodwill in relation to morgan amt 
h airong ltd which was identified when undertaking the exercise to review the composition of the cashgenerating units following the internal 
organisation changes it also recognised an impairment loss of £03 million on customer relationships and £14 million of technology and trademarks 
in relation to morgan amt h airong ltd further details are given in note 6 109 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
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13 inve stmen ts
accounting policies
investments in debt and equity securities
investments in debt and equity securities held by the g roup are classified as being availableforsale and are stated at fair value with any resultant 
gain or loss being recognised directly in o ci in the fair value reserve except for impairment losses and in the case of monetary items such as debt 
securities foreign exchange gains and losses when these investments are derecognised the cumulative gain or loss previously recognised directly  
in equity is recognised in profit or loss where these investments are interestbearing interest calculated using the effective interest method is 
recognised in profit or loss
2013
£m
2012
£m
noncurrent investments
investment in associate 10 15 
equity securities availableforsale 27 39 
37 54 
equity securities availableforsale
the equity securities availableforsale represent an investment in a mutual fund a 10 increase in the unit price would increase the fair value of 
the investments by £02 million
14 r ecogni sed deferre d tax ass ets an d li abilit ies
deferred tax assets and liabilities are attributable to the following
assets
2013
£m
assets
2012
£m
liabilities
2013
£m
liabilities
2012
£m
net
2013
£m
net
2012
£m
property plant and equipment – – 163 212 163 212
intangible assets – – 163 183 163 183
employee benefits 225 334 – – 225 334 
provisions 51 57 – – 51 57 
tax value of loss carried forward recognised 06 15 – – 06 15 
o ther items – – 09 10 09 10
282 406 335 405 53 01 
unrecognised deferred tax assets
deferred tax assets have not been recognised in respect of the following items
2013
£m
2012
£m
deductible temporary differences 884 904 
tax losses 731 703 
1615 1607 
movements in temporary differences during the year
balance
1 january
2012
£m
r ecognised
in income
r estated
£m
r ecognised
directly
in equity
r estated
£m
balance
31 december
2012
£m
recognised
in income
£m
recognised
directly
in equity
£m
balance
31 december
2013
£m
property plant and equipment 231 19 – 212 49 – 163
intangible assets 214 31 – 183 20 – 163
employee benefits 284 01 49 334 49 60 225 
provisions 70 13 – 57 06 – 51 
tax value of loss carried forward recognised 55 40 – 15 09 – 06 
o thers 02 10 02 10 01 – 09
34 12 47 01 06 60 53
deferred income tax of £25 million is provided on the potential unremitted earnings of overseas subsidiary undertakings 110 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
15 inven torie s
accounting policies
inventories are stated at the lower of cost and net realisable value net realisable value is the estimated selling price in the ordinary course of business 
less the estimated costs of completion and selling expenses 
the cost of inventories is based on the firstinfirstout principle and includes expenditure incurred in acquiring the inventories and bringing them to 
their existing location and condition in the case of manufactured inventories and work in progress cost includes an appropriate share of overheads 
based on normal operating capacity
inventories
2013
£m
2012
£m
r aw materials and consumables 341 458 
work in progress 357 397 
finished goods 491 544 
1189 1399 
the g roup holds consignment inventory amounting to £145 million 2012 £177 million which is not reflected in the balance sheet the majority 
of this balance is for precious metals which are held on consignment by a subsidiary and for which it is invoiced only when the material is required
during the year provisions of £53 million were made against inventories and recognised in operating costs 2012 £56 million and £57 million 
2012 £nil million has been recognised in business exit costs within specific adjusting items see note 6
16 tr ade an d other re ceiv able s
accounting policies
trade and other receivables are initially stated at their fair value and subsequently measured at amortised cost less impairment losses
trade and other receivables
2013
£m
2012
£m
current
trade receivables due from associate 130 125 
o ther trade receivables 1545 1530 
trade receivables 1675 1655 
o ther nontrade receivables and prepayments 207 199 
1882 1854 
the g roup’s exposure to credit and currency risks related to trade and other receivables is disclosed in note 20 111 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
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overview
17 cash a n d cash eq uiv alen ts
accounting policies
cash and cash equivalents comprises cash balances and call deposits shortterm deposits include demand deposits and shortterm highly liquid 
investments with maturities of three months or less that are readily convertible to known amounts of cash and are subject to an insignificant risk of 
changes in value bank overdrafts that are repayable on demand and form an integral part of the g roup’s cash management are included as a 
component of cash and cash equivalents for the purpose of the g roup statement of cash flows
cash and cash equivalents
2013
£m
2012
£m
bank balances 603 642 
cash deposits 157 158 
cash and cash equivalents 760 800 
r econciliation of cash and cash equivalents to net debt
2013
£m
2012
£m
o pening borrowings 2728 2988
net decrease in borrowings 89 162 
payment of finance lease liabilities 01 02 
effect of movements in foreign exchange on borrowings 13 96 
closing borrowings 2625 2728
cash and cash equivalents 760 800 
closing net debt 1865 1928
 net debt is defined as interestbearing loans and borrowings bank overdrafts less cash and cash equivalents
18 capital a n d re serve s
accounting policies
i ordinary share capital
o rdinary shares are classified as equity
ii preference share capital
preference share capital is classified as equity if it is nonredeemable and any dividends are discretionary or is redeemable but only at the 
company’s option dividends on preference share capital classified as equity are recognised as distributions within equity
iii repurchase of share capital and own shares held by the morgan general employee benefit trust ‘the trust’
when share capital recognised as equity is repurchased the amount of the consideration paid which includes directly attributable costs is net of 
any tax effects and is recognised as a deduction from equity r epurchased shares and the purchase of own shares by the trust are presented as  
a deduction from total equity
translation reserve
the translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations  
as well as from the translation of liabilities that hedge the company’s net investment in a foreign subsidiary and forward contracts used for net 
investment hedging
hedging reserve
the hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to 
hedged transactions that have not yet occurred 
fair value reserve
the fair value reserve includes the cumulative net change in the fair value of availableforsale investments until the investment is derecognised 112 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
18 capital a n d re serve s continued
special reserve
a special r esolution to cancel the share premium account was passed at the ag m of the company held on 1 1 june 1993 this cancellation was 
confirmed by an o rder of the h igh court of justice chancery division on 14 july 1993 the amount of £889 million standing to the credit of the 
share premium account on 14 july 1993 was transferred to the special reserve against which goodwill on consolidation could be written off this 
reserve together with the amounts standing to the credit of the share premium account on 12 o ctober 1990 of £715 million on 19 june 1987  
of £389 million and on 27 july 1989 of £123 million which were transferred following previous o rders of the h igh court becomes distributable  
to the extent of subsequent increases in issued share capital and share premium account
capital redemption reserve
the capital redemption reserve arose when the company redeemed preference shares wholly out of distributable profits
other reserves
the other reserves includes the £108 million increase in the year ended 3 january 2010 in the fair value of the g roup’s original 49 interest in 
clearpower limited from the date of its original acquisition to 5 january 2009 excluding goodwill and to the extent not previously recognised as  
the g roup’s share of the results of clearpower limited 
retained earnings
the company has acquired own shares to satisfy the requirements of the various share option incentive schemes at 31 december 2013 305041 
shares were held by the morgan g eneral employee benefit trust and are treated as a deduction from equity 2012 201493 nil treasury shares 
were held by the company 2012 nil all rights conferred by those shares are suspended until they are reissued
dividends
the following o rdinary dividends were declared and paid by the company
per share total
2013
pence
2012
pence
2013
£m
2012
£m
201 1 interim – 325 – 88 
2011 final – 600 – 166 
2012 interim 360 – 101 –
2012 final 640 – 179 –
2013 interim 380 – 108 –
total 1380 925 388 254
in addition to the above the company also declared and paid dividends on the 55 cumulative first preference shares and 50 cumulative 
second preference shares
after 31 december 2013 the following dividends were proposed by the directors for 2013 these dividends have not been provided for and there 
are no income tax consequences
£m
67 pence per qualifying o rdinary share 191 
55 cumulative first preference shares see note 31 –
50 cumulative second preference shares see note 31 –
191 
the proposed 2013 final dividend is based upon the number of shares outstanding at the balance sheet date 113 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
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statemen ts
overview
18 capital a n d re serve s continued
calledup share capital
2013
£m
2012
£m
equity share capital
285369988 2012 279741415 issued o rdinary shares of 25 pence each fully paid
714 700 
714 700 
preference share capital
125327 issued 55 cumulative first preference shares of £1 each fully paid
01 01 
31 1954 issued 50 cumulative second preference shares of £1 each fully paid 03 03 
total preference share capital 04 04 
total share capital 718 704 
n umber of shares in issue
o rdinary shares preference shares
2013 2012 2013 2012
in issue at beginning of period 279741415 273139791 437281 437281
scrip dividend 5628573 3601624 – – 
allotment – 3000000 – – 
in issue at end of period 285369988 279741415 437281 437281
as at the date of this report 285369988 o rdinary shares have been issued 2012 281166903
the holders of o rdinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings  
of the company
details of options outstanding in respect of o rdinary shares are given in note 21
the 55 cumulative first preference shares of £1 each and the 50 cumulative second preference shares of £1 each confer on the holders 
thereof the right to receive a cumulative preferential dividend at the rate of 55 and 50 respectively calculated up to 30 june and 31 december 
respectively in every year the first and second cumulative preference shares shall not entitle the holders thereof to attend or vote at any general 
meeting unless either
  the meeting is convened to consider any resolutions for reducing the capital or authorising any issue of debentures or debenture stock or 
increasing the borrowing powers of the board under the articles of association of the company or winding up or sanctioning a sale of the 
undertaking or altering the articles in any manner affecting their respective interests or any other resolutions directly altering their respective 
rights and privileges or
  at the date of the notice convening the general meeting the preference dividend is upwards of one month in arrears from the payment date  
of any halfyearly instalment
o n a return of capital on a windingup the assets of the company available for distribution shall be applied
  first in payment to the holders of the first preference shares of the amounts paid up on such shares together with interest at the rate of 55 pa
  second in payment to the holders of the second preference shares of the amounts paid up on such shares together with interest at the rate  
of 50 pa
  third in repaying the capital paid up or credited as paid up on the o rdinary shares
  fourth any surplus shall be distributed rateably amongst the holders of the o rdinary shares in proportion to the nominal amount paid up on 
their respective holdings of shares in the company 114 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
19 in tere stbe arin g l oan s an d borr owin gs
this note provides information about the contractual terms of the g roup’s interestbearing loans and borrowings which are measured at amortised 
cost for more information about the g roup’s exposure to interest rate and foreign currency risk see note 20
accounting policies
interestbearing loans and borrowings
interestbearing loans and borrowings are recognised initially at fair value less attributable transaction costs subsequent to initial recognition 
interestbearing loans and borrowings are stated at amortised cost with any difference between cost and redemption value being recognised  
in the income statement over the period of the borrowings on an effective interest basis
finance lease payments
leases where the g roup assumes substantially all of the risks and rewards of ownership are classified as finance leases as if the asset had been 
purchased outright assets acquired under finance leases are recognised as assets of the g roup and the capital elements of the leasing commitments 
are shown as obligations in creditors depreciation is charged on a basis consistent with similar owned assets or over the lease term if shorter 
minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability the finance charge is allocated 
to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability
interestbearing loans borrowings and overdrafts
2013
£m
2012
£m
noncurrent liabilities
senior notes 2012 2643 
bank and other loans 03 05 
o bligations under finance leases – 02 
2015 2650 
current liabilities
senior notes 604 58 
bank and other loans 04 18 
o bligations under finance leases 02 02 
610 78 
terms and debt repayment schedule
the terms and conditions of outstanding loans are given in note 20 in the liquidity risk section
finance lease liabilities
finance lease liabilities are payable as follows
minimum
lease
payments
2013
£m
interest
2013
£m
principal
2013
£m
minimum
lease
payments
2012
£m
interest
2012
£m
principal
2012
£m
less than one year 02 – 02 02 – 02 
between one and five years – – – 02 – 02 
more than five years – – – – – – 
02 – 02 04 – 04 
bank and other loans did not include any loans secured on the assets of the g roup 2012 £09 million
as at 31 december 2013 the g roup had available headroom under the bank syndication of £1500 million 2012 £1500 million 115 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
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fin anc ial 
statemen ts
overview
20 fin an cial ri sk m an agemen t
this note presents information about the g roup’s exposure to a variety of financial risks credit risk liquidity risk and market risk and the g roup’s 
management of capital further quantitative disclosures are included throughout these consolidated financial statements
accounting policies
classification of financial instruments issued by the group
financial instruments issued by the g roup are treated as equity ie forming part of shareholders’ funds only to the extent that they meet the 
following two conditions
  they include no contractual obligations upon the g roup to deliver cash or other financial assets or to exchange financial assets or financial 
liabilities with another party under conditions that are potentially unfavourable to the g roup and
  where the instrument will or may be settled in the company’s own equity instruments it is either a nonderivative that includes no obligation 
to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company exchanging  
a fixed amount of cash or other financial assets for a fixed number of its own equity instruments
to the extent that this definition is not met the proceeds of issue are classified as a financial liability where the instrument so classified takes the  
legal form of the company’s own shares the amounts presented in these financial statements for calledup share capital and share premium 
account exclude amounts in relation to those shares
finance payments associated with financial liabilities are dealt with as part of finance expenses finance payments associated with financial 
instruments that are classified in equity are dividends and are recorded directly in equity
credit risk
credit risk is the risk of financial loss to the g roup if a customer or counterparty to a financial instrument fails to meet its contractual obligations  
and arises principally from the g roup’s receivables from customers and investment securities 
the carrying amount of financial assets represents the maximum credit exposure the maximum exposure to credit risk at the reporting date was
carrying amount
2013
£m
2012
£m
availableforsale financial assets 27 39 
trade and other receivables 1675 1655 
cash and cash equivalents 760 800 
2462 2494 
availableforsale financial assets
the g roup limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have a sound credit rating  
g iven these high credit ratings management does not expect any counterparty to fail to meet its obligations 116 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
20 fin an cial ri sk m an agemen t continued
trade and other receivables
the g roup’s exposure to credit risk is influenced mainly by the individual characteristics of each customer the demographics of the g roup’s 
customer base including the default risk of the industries and countries in which customers operate has less influence on credit risk
management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis credit evaluations are performed  
on all customers requiring credit over a certain amount the g roup does not require collateral in respect of financial assets
the g roup serves thousands of customers many of these have purchased the same product for several years and in some cases decades  
o thers have modified and enhanced designs or adopted the same components into new products extending the lifecycle of the components  
that the g roup supplies the g roup’s level of customer retention is very high particularly with its major accounts and although the top 20 ranking 
will alter from yeartoyear many of the names remain consistent over time
the g roup establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and 
investments
the ageing of trade receivables at the reporting date was
gross
2013
£m
impairment
2013
£m
g ross
2012
£m
impairment
2012
£m
not past due 1217 04 1255 05
past due 030 days 270 03 216 04
past due 3160 days 92 04 89 05
past due 6190 days 115 39 136 39
past due more than 90 days 112 81 85 73
1806 131 1781 126
the only movement in the allowance for impairment in respect of trade receivables was an increase of £05 million 2012 £33 million
a specific impairment allowance may be created in respect of an individual trade receivable for which full recovery is doubtful as at 31 december 2013 
and 31 december 2012 there were no specific impairment allowances that were significant to the g roup
the allowances in the accounts in respect of trade receivables are used to record impairment losses unless the g roup is satisfied that no recovery  
of the amount owing is possible at the point the amount is considered irrecoverable it is written off against the financial asset directly
cash and cash equivalents
cash balances held by companies representing over 75 of the g roup’s revenue are managed centrally through a number of pooling 
arrangements cash balances throughout the g roup are held with highcreditquality financial institutions 
l iquidity risk
liquidity risk is the risk that the g roup will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by cash 
the g roup’s approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due 
under both normal and stressed conditions
the g roup seeks a balance between certainty of funding and a flexible costeffective borrowing structure the policy is to ensure that the g roup 
has sufficient liquidity available to meet all foreseeable needs 117 financial statements
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20 fin an cial ri sk m an agemen t continued
the following are the undiscounted contracted maturities of financial liabilities including interest payments
2013
effective
interest rate
year of
maturity
carrying
amount
£m
contractual
cash flows
£m
less than
1 year
£m
12
years
£m
25
years
£m
more than
5 years
£m
nonderivative financial liabilities
570 u s dollar senior notes 2014 570 2014 604 638 638 – – – 
365 euro senior notes 2015 365 2015 336 354 12 342 – – 
432 euro senior notes 2017 432 2017 168 193 07 07 179 – 
612 u s dollar senior notes 2017 612 2017 1056 1316 65 65 1186 – 
626 u s dollar senior notes 2019 626 2019 452 622 28 28 85 481 
bank and other loans 1551501 up to 2017 07 15 09 02 04 –
o bligations under finance leases 600 up to 2014 02 02 02 – – – 
trade and other payables 903 903 903 – – – 
derivative financial liabilities
forward exchange contracts as  
cash flow hedges 01 01 01 – – – 
forward exchange contracts as  
fair value hedges 06 06 06 – – – 
forward exchange contracts as  
net investment hedges 02 02 02 – – – 
3537 4052 1673 444 1454 481 
2012
effective
interest rate
year of
maturity
carrying
amount
£m
contractual
cash flows
£m
less than
1 year
£m
12
years
£m
25
years
£m
more than
5 years
£m
nonderivative financial liabilities
684 u s dollar senior notes 2013 684 2013 58 58 58 – – – 
570 u s dollar senior notes 2014 570 2014 616 685 35 650 – – 
365 euro senior notes 2015 365 2015 327 357 12 12 333 – 
432 euro senior notes 2017 432 2017 164 195 07 07 181 – 
612 u s dollar senior notes 2017 612 2017 1075 1406 66 66 1274 – 
626 u s dollar senior notes 2019 626 2019 461 664 29 29 87 519 
bank and other loans 1701501 up to 2017 23 33 18 02 13 – 
o bligations under finance leases 600 up to 2014 04 04 02 02 – – 
trade and other payables 950 950 946 04 – – 
derivative financial liabilities
forward exchange contracts as  
cash flow hedges 01 01 01 – – – 
forward exchange contracts as  
fair value hedges 05 05 05 – – – 
forward exchange contracts as  
net investment hedges 01 01 01 – – – 
3685 4359 1180 772 1888 519 
 the 684 u s dollar senior notes 2013 were repaid as scheduled on 6 march 2013 118 financial statements
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20 fin an cial ri sk m an agemen t continued
cash flows associated with derivatives that are cash flow hedges
the following table indicates the periods in which cash flows associated with cash flow hedges are expected to occur this is matched with the 
periods in which cash flows associated with cash flow hedges are expected to impact profit or loss
carrying
amount
£m
contractual
cash flows
£m
more than
1 year
£m
12
years
£m
25
years
£m
more than
5 years
£m
forward exchange contracts – assets 09 552 549 03 – – 
forward exchange contracts – liabilities 01 543 540 03 – – 
total 2013 08 09 09 – – – 
forward exchange contracts – assets 11 454 450 04 – – 
forward exchange contracts – liabilities 01 440 436 04 – – 
total 2012 10 14 14 – – – 
market risk
market risk is the risk that changes in market prices such as interest rates foreign exchange rates and equity prices will affect the g roup’s income  
or the value of its holdings of financial instruments the objective of market risk management is to manage and control market risk exposures within 
acceptable parameters while optimising the return on risk
the g roup buys and sells derivatives in the ordinary course of business for hedging purposes and also incurs financial liabilities in order to manage 
market risks all such transactions are carried out in accordance with the treasury policy which has been approved by the audit committee 
g enerally the g roup seeks to apply hedge accounting in order to manage volatility in profit or loss
interest rate risk
at the reporting date the interest rate profile of the g roup’s interestbearing financial instruments was
fixed rate instruments
carrying amount
2013
£m
2012
£m
fixed rate instruments
financial assets – – 
financial liabilities 2623 2711
2623 2711
variable rate instruments
carrying amount
2013
£m
2012
£m
variable rate instruments
financial assets 760 800 
financial liabilities 09 27
751 773 
interest rate risk is regularly monitored and reviewed taking into account the g roup’s overall borrowing costs interest cover ratio and the relevant 
interest rate markets the fixed rate financial liabilities comprise the currency equivalent of £2616 million 2012 £2701 million of u s private 
placement debt the average cost of the g roup’s fixed rate debt is 56 2012 57
an increase of 100 basis points in interest rates on the variable element of the g roup’s net debt at the reporting date would have increased profit  
by £07 million 2012 £08 million a decrease of 100 basis points would have decreased profit by £05 million 2012 £04 million this analysis 
assumes that all other variables in particular foreign currency rates remain constant  119 financial statements
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foreign currency risk
the table below shows the g roup’s currency exposures being exposures on currency transactions that give rise to net currency gains and losses 
recognised in the income statement such exposures comprise the monetary assets and liabilities of the g roup that are not denominated in  
the functional currency of the operating company involved other than certain nongbp borrowings treated as hedges of net investments in 
overseas entities
functional currency of group operations
2013 2012
gbp
£m
usd
£m
€
£m
gbp
£m
usd
£m
€
£m
trade receivables 10 114 47 25 99 134 
cash and cash equivalents 03 43 80 06 96 34 
trade payables 11 96 43 46 65 41
net balance sheet exposure 02 61 84 15 130 127 
the amounts shown in the table take into account the effect of the forward contracts entered into to manage these currency exposures
the g roup aims to hedge all material trade receivables and trade payables denominated in a foreign currency at any point in time the g roup also 
hedges up to 75 of its estimated foreign currency exposure in respect of forecasted sales and purchases over the following 12 months the g roup 
uses forward exchange contracts to hedge its foreign currency risk almost all of the forward exchange contracts have maturities of less than one 
year after the balance sheet date
in respect of other monetary assets and liabilities held in currencies other than the currency of the reporting unit the g roup ensures that the net 
exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates where necessary to address shortterm imbalances
the g roup classifies its forward exchange contracts hedging forecasted transactions as cash flow hedges and states them at fair value the fair value 
of forward exchange contracts used as hedges of forecasted transactions at 31 december 2013 was an asset of £08 million 2012 asset of 
£10 million
the contractual cash flows associated with the forward exchange contracts that are designated as cash flow hedges are shown in the section on 
liquidity risk the impact on profit or loss is expected to occur at the same time as the associated cash flows
the g roup maintains incountry local currency borrowings and has designated certain forward foreign exchange contracts and other borrowings 
as hedges of the foreign exchange risk associated with investments in foreign operations in this way the g roup seeks to manage the translation 
exposure of overseas net assets but only to the extent that its gearing covenant under the terms of its loan documents as well as its facility 
headroom are likely to remain comfortably within limits and provided the associated costs are not prohibitive
the g roup’s currency split of total borrowings after the impact of net investment hedges was as follows
2013
£m
2012
£m
gbp 66 46 
usd 1962 2056 
€ 514 498 
japanese yen 80 100 
o ther 03 28 
2625 2728 
the g roup’s sensitivity to changes in foreign exchange rates on financial assets and liabilities as at 31 december 2013 is as follows
based upon the currency profile of the g roup’s net financial assets and liabilities if gbp had strengthened by 10 reported equity would have 
increased by £181 million 2012 £189 million conversely if gbp had weakened by 10 reported equity would have reduced by £221 million 
2012 £227 million assuming the change occurred on the balance sheet date there would be no impact on reported profit 
the impact of a weakening in gbp on the g roup’s financial assets and liabilities would be more than offset in equity and income by its impact on the 
g roup’s overseas net assets and earnings respectively
based on the 2013 results if in isolation the u sd average exchange rate for 2013 were 10 weaker reported revenue and profit before tax would 
be £334 million 2012 £340 million and £38 million 2012 £35 million lower
based on the 2013 results if in isolation the eur average exchange rate for 2013 were 10 weaker reported revenue and profit before tax would 
be £212 million 2012 £214 million and £27 million 2012 £28 million lower 120 financial statements
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20 fin an cial ri sk m an agemen t continued
other market price risk
equity price risk arises from availableforsale equity securities held for meeting partially the unfunded portion of the g roup’s defined benefit 
pension obligations the primary goal of the g roup’s investment strategy is to maximise returns in order to meet partially the g roup’s unfunded 
defined benefit obligations
capital management
the board’s policy is to maintain a strong capital base total equity so as to maintain investor creditor and market confidence and to sustain future 
development of the business the board uses a number of measures identified as key performance indicators kpi to ensure the continued 
success of the g roup the main kpi for the g roup is the underlying operating profit margin the aim is to achieve midteen margins in good times 
and doubledigit margins when the environment is more challenging
the board encourages employees of the g roup to hold the company’s o rdinary shares the g roup operates a number of employee share and 
share option schemes from time to time the company purchases its own shares on the market the timing of these purchases depends on market 
prices primarily the shares are intended to be used for issuing shares under the g roup’s various share option incentive schemes
the board seeks to maintain a balance between the advantages and security afforded by a sound capital position and the higher returns that might 
be possible with higher levels of borrowings
the g roup monitors capital using the following indicators
debt to adjusted capital
2013
£m
2012
£m
total interestbearing loans and borrowings 2625 2728 
less cash and cash equivalents and overdrafts 760 800
net debt 1865 1928 
total equity 2741 2718 
less amounts accumulated in equity relating to cash flow hedges 06 07
adjusted capital 2735 2711 
debt to adjusted capital ratio 07 07
n et debt  to ebi tda
2013
£m
2012
r estated
£m
net debt to ebitda 1865 1928
o perating profit before specific adjusting items and restructuring costs 1107 1137 
depreciation and amortisation 376 383 
ebitda 1483 1520 
net debt to ebitda ratio 13x 13x
interest cover
2013
£m
2012
r estated
£m
ebitda 1483 1520 
net finance costs excluding ias 19 pension and discount on deferred consideration 170 169 
interest cover 87x 90x
 net debt is defined as interestbearing loans and borrowings bank overdrafts less cash and cash equivalents
there were no changes in the g roup’s approach to capital management during the year
neither the company nor any of its subsidiaries are subject to externally imposed capital requirements 121 financial statements
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20 fin an cial ri sk m an agemen t continued
fair values
the fair values of financial assets and liabilities together with the carrying amounts shown in the balance sheet are as follows
carrying
 amount
2013
£m
fair value
2013
£m
carrying
amount
2012
£m
fair value
2012
£m
financial assets and liabilities at amortised cost
684 u s dollar senior notes 2013 – – 58 58
570 u s dollar senior notes 2014 604 624 616 655
365 euro senior notes 2015 336 343 327 341
432 euro senior notes 2017 168 179 164 178
612 u s dollar senior notes 2017 1056 1169 1075 1241
626 u s dollar senior notes 2019 452 504 461 547
bank and other loans 07 07 23 23
o bligations under finance leases 02 02 04 04
trade and other payables 881 881 950 950
loans and receivables 1675 1675 1655 1655 
cash and cash equivalents 760 760 800 800 
1071 1274 1223 1542
availableforsale financial instruments
availableforsale financial assets 27 27 39 39 
derivatives and other items at fair value
forward exchange contracts used for hedging 08 08 11 11 
1036 1239 1173 1492
the following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the preceding table
equity securities
fair value is based on quoted market prices at the balance sheet date
derivatives
forward exchange contracts are marked to market either using listed market prices or by discounting the contractual forward price and deducting 
the current spot rate
interestbearing loans and borrowings
fair value is calculated based on discounted expected future principal and interest cash flows the interest rates used to determine the fair value  
of loans and borrowings are 2141 2012 2052 and finance leases 60 2012 60
finance lease liabilities
the fair value is estimated as the present value of future cash flows discounted at market interest rates for homogeneous lease agreements  
the estimated fair values reflect changes in interest rates
trade and other receivablespayables
for receivablespayables with a remaining life of less than one year the notional amount is deemed to reflect the fair value all other receivables
payables are discounted to determine the fair value
cash and cash equivalents trade and other payables and loans and receivables
the g roup has disclosed the fair value of cash and cash equivalents current loans and receivables and current payables at their carrying amount 
given their notional amount is deemed to be their fair value 122 financial statements
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20 fin an cial ri sk m an agemen t continued
fair value hierarchy
the table below analyses financial instruments carried at fair value by valuation method the different levels have been defined as follows 
level 1  quoted prices unadjusted in active markets for identical assets or liabilities
level 2  inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly ie as prices or 
indirectly ie derived from prices
level 3  inputs for the asset or liability that are not based on observable market data unobservable inputs
31 december 2013
  
level 1
£m
level 2
£m
total
£m
availableforsale financial assets 27 – 27
derivative financial assets – 17 17
27 17 44 
derivative financial liabilities – 09 09
31 december 2012
level 1
£m
level 2
£m
total
£m
availableforsale financial assets 39 – 39
derivative financial assets – 18 18
39 18 57 
derivative financial liabilities – 07 07
the table below analyses financial instruments disclosed at fair value by valuation method
31 december 2013
  
level 1
£m
level 2
£m
total
£m
570 u s dollar senior notes 2014 – 624 624
365 euro senior notes 2015 – 343 343
432 euro senior notes 2017 – 179 179
612 u s dollar senior notes 2017 – 1169 1169
626 u s dollar senior notes 2019 – 504 504
o bligations under finance leases – 02 02
– 2821 2821
31 december 2012
 
level 1
£m
level 2
£m
total
£m
684 u s dollar senior notes 2013 – 58 58
570 u s dollar senior notes 2014 – 655 655
365 euro senior notes 2015 – 341 341
432 euro senior notes 2017 – 178 178
612 u s dollar senior notes 2017 – 1241 1241
626 u s dollar senior notes 2019 – 547 547
o bligations under finance leases – 04 04
– 3024 3024
there have been no transfers between level 1 and level 2 during 2013 and 2012 and there were no level 3 financial instruments in either 2013  
and 2012 123 financial statements
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21 empl oyee benef its
accounting policies
i defined contribution plans
for defined contribution plans the g roup pays contributions to either public or privately administered pension insurance plans and the g roup  
has no further payment obligations once the contributions have been paid o bligations for contributions to defined contribution pension plans are 
recognised as an expense in the income statement as incurred 
ii defined benefit plans
a defined benefit plan is any retirement plan which is not a defined contribution plan typically defined benefit plans define an amount of 
retirement benefit that an employee will receive usually depending on one or more factors such as age years of service and earnings 
the g roup’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future 
benefit that employees have earned in return for their service in the current and prior periods that benefit is discounted to determine its present 
value and the fair value of any plan assets is deducted the discount rate is the yield at the balance sheet date on aacreditrated bonds that have 
maturity dates approximating the terms of the g roup’s obligations the calculation is performed by a qualified actuary using the projected unit  
credit method 
when the calculation results in a benefit to the g roup the recognised asset is limited to the total of any unrecognised past service costs and  
the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan  
an economic benefit is available to the g roup if it is realisable during the life of the plan or on settlement of the plan liabilities r emeasurement 
gains and losses differences between the expected and actual returns and the effect of changes in actuarial assumptions are recognised in full  
in o ci in the year in which they arise
iii longterm service benefits
the g roup’s net obligation in respect of longterm service benefits other than pension plans is the amount of future benefit that employees have 
earned in return for their service in the current and prior periods the obligation is calculated using the projected unit credit method or similar 
approximation and is discounted to its present value and the fair value of any related assets is deducted the discount rate is the yield at the balance 
sheet date on aacreditrated bonds that have maturity dates approximating the terms of the g roup’s obligations
iv sharebased payment transactions
the grant date fair value of sharebased payment awards granted to employees is recognised as an expense with a corresponding increase in 
equity over the period that the employees become unconditionally entitled to the awards the amount recognised as an expense is adjusted  
to reflect the actual number of awards for which the related service and nonmarket performance conditions are met such that the amount 
ultimately recognised as an expense is based on the number of awards that meet the related service and nonmarket performance conditions  
at the vesting date
employee benefits
the g roup operates a number of defined benefit arrangements as well as defined contribution plans the defined benefit plans are primarily in the 
u k u sa and europe and predominantly provide pensions based on service and careeraverage pay in addition postretirement medical plans are 
operated in the u sa 124 financial statements
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21 empl oyee benef its continued
uk schemes
in the u k the g roup operates two defined benefit pension schemes the morgan pension scheme and the morgan g roup senior staff pension 
and life assurance scheme ‘the u k schemes’ the two u k schemes provide a benefit based upon an employee’s total service and their career 
average earnings including allowance for consumer price inflation although historically benefits were based upon an employee’s final salary  
o nce in payment pensions receive increases as set out in the rules at either a fixed level or in line with the r etail price index the overall duration 
of the u k schemes is around 16 years
the u k schemes’ assets are held in trusteeadministered funds which are governed by u k regulations as is the nature of the relationship between 
the g roup and the trustees r esponsibility for the governance of the u k schemes – including investment decisions and contribution schedules –  
lies with the board of trustees which must consult with the company on such matters the board of trustees must be composed of 
representatives of the company plan participants and an independent trustee in accordance with the u k schemes’ governing documents 
funding legislation in the u k requires that schemes are fully funded on a schemespecific basis as measured and this must be assessed at least every 
three years to the extent that there is a deficit against this measure a payment schedule must be agreed such that the deficit is removed over  
a period of time typically around 10 years
the most recent full actuarial valuation of the u k schemes were undertaken as at april 201 1 and resulted in combined assessed deficits of 
£23 million o n the basis of these full valuations the trustees of the u k schemes having consulted with the g roup agreed past service deficit 
recovery payments totalling £55 million a year in 2013 increasing by 275 pa until 2021 and contributions in respect of future service  
as accrued
new full valuations are currently in progress with effective dates of april 2013 and the trustees are currently consulting with the g roup regarding 
the outcome of these valuations the outcome of those consultations will determine the g roup’s future contribution requirements with any new 
deficit arising needing to be met through the payment of additional contributions
the u k schemes were closed to new entrants on 1 august 201 1 with any new employees receiving benefits through the morgan g roup personal 
pension plan a defined contribution arrangement
us schemes
in the u s the g roup operates a number of defined benefit pension schemes ‘the u s schemes’ the majority of these are qualified arrangements 
for tax purposes although the g roup also operates a supplemental executive r etirement plan ‘serp ’ which is not tax approved with the 
exception of the serp the u s schemes are all frozen with employees accruing benefits within a 401k arrangement
the u s schemes provide a benefit based upon an employee’s service and earnings the benefits are level both prior to and whilst in payment 
o verall the u s schemes’ duration is around 12 years
the qualified u s schemes’ assets are held in a trust separately from the g roup’s assets for the serp the g roup holds an asset to meet the 
obligations however due to its nature this is accounted for as a g roup asset rather than an asset of the serp r esponsibility for the governance  
of the u s schemes including investment decisions and contribution schedules lies with a management committee all of whose members are 
appointed by the g roup
the funding requirements in the u s er isa require schemes to be fully funded at all times and if not to target full funding within a period of 
seven years
the most recent full actuarial valuation of the u s schemes were undertaken as at 1 january 2013 and resulted in combined assessed deficits of 
£261 million o n the basis of these valuations the g roup made a £92 million payment in 2013 and will make payments of £64 million in 2014 
£32 million in 2015 and a total of £86 million over the following five years
european schemes
in europe the g roup operates a number of retirement schemes with the bulk of the obligations relating to arrangements for employees  
in g ermany in line with local practice these arrangements are not funded for in advance with benefits met by the g roup as they fall due 125 financial statements
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21 empl oyee benef its continued
employee benefits
2013
uk
£m
2013
usa
£m
2013
europe
£m
2013
rest of
world
£m
2013
total
£m
pension plans and employee benefits
present value of unfunded defined benefit obligations – 77 268 15 360
present value of funded defined benefit obligations 4415 1342 17 116 5890
fair value of plan assets 3665 1026 05 108 4804 
net obligations 750 393 280 23 1446
movements in present value of defined benefit obligation
at 1 january 2013 4270 1586 296 155 6307
current service cost 25 01 07 12 45
interest cost 184 67 09 03 263
r emeasurement losses
changes in financial assumptions 06 138 23 – 155 
changes in demographic assumptions 27 04 – – 31
experience adjustments on benefit obligations 62 01 03 12 52
benefits paid 172 78 14 17 281 
contributions by members 13 – – – 13
disposals – – – 07 07 
exchange adjustments – 22 07 03 18 
at 31 december 2013 4415 1419 285 131 6250
movements in fair value of plan assets
at 1 january 2013 3557 959 05 118 4639 
interest on plan assets 155 42 – 03 200 
r emeasurement gains 41 22 – 13 50 
contributions by employer 79 105 14 21 219 
contributions by members 13 – – – 13 
benefits paid 172 78 14 17 281
administrative expenses 08 – – – 08
disposals – – – 04 04
exchange adjustments – 24 – – 24
at 31 december 2013 3665 1026 05 108 4804 
actual return on assets 196 64 – 10 250 
2013
uk
£m
2013
usa
£m
2013
europe
£m
2013
rest of
world
£m
2013
total
£m
pension plans and employee benefits
expense recognised in the consolidated income statement
current service cost and past service cost 25 01 07 12 45
administrative expenses 08 – – – 08
net interest on net defined benefit liability 29 25 09 – 63
total expense 62 26 16 12 116
in addition to the above the g roup directly incurred £06 million of administrative expenses in relation to the u s schemes which have been 
recognised in overheads outside of the pension liability 126 financial statements
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the ias 19 expense in relation to the g roup’s defined benefit arrangements is recognised in the following line items in the consolidated income 
statement
2013
£m
2012
r estated
£m
o perating costs 53 57
net finance expense 63 56
total expense 116 113
in canada the g roup is winding up three of the pension plans for its employees this resulted overall in a curtailment loss of £02 million in 2012 
o ne of these plans has settled its benefits in full in 2013
statement of financial position reconciliation
2013
£m
2012
r estated
£m
at 1 january 2013 1668 1353
pension expense 116 113
contributions 219 192 
o ther comprehensive income 122 432
disposals 03 – 
currency adjustments 06 38 
at 31 december 2013 1446 1668
the g roup expects to contribute £199 million to these arrangements in 2014
uk
£m
usa
£m
europe
£m
rest of
world
£m
total
£m
estimate of employer contributions to be paid into the plans during the 
12month period beginning 1 january 2014 80 83 15 21 199 
the fair values of the plan assets were as follows
2013
uk
£m
2013
usa
£m
2013
europe
£m
2013
rest of
world
£m
2013
total
£m
equities and growth assets 1462 444 – – 1906 
bonds 397 529 – – 926 
matching insurance policies 1792 – 04 33 1829 
o ther 14 53 01 75 143 
total 3665 1026 05 108 4804 
the assumptions used are best estimate assumptions chosen from a range of possible actuarial assumptions which may not be borne out in 
practice the principal assumptions are the discount rate and inflation assumptions which are longterm and are measured on external factors 
based upon each plan’s duration in addition to these the mortality assumption in the u k and u s is material to the cost of the promised benefits  
in both the u k and europe the assumed increases in salaries and pensions in payment are derived from assumed future inflation 127 financial statements
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21 empl oyee benef its continued
actuarial assumptions were
2013
uk

2013
usa

2013
europe

2013 
rest of
 world

discount rate 450 500 350 460
inflation u k rpic pi 330210 na 200 na
salary increase na na 250 500
pensions increase 320310380 na 200 na
mortality – postretirement
life expectancy of a male retiring at age 60 in 2013 265 235 233 na
life expectancy of a male retiring at age 60 in 2033 280 243 261 na
the actual liability in respect of global employee benefits will not be known until the last payments have been made in placing a current estimate  
on the g roup’s past service benefit obligations a number of assumptions about the future are required for defined benefit schemes the directors 
make annual estimates and assumptions in respect of discount rates future changes in salaries employee turnover inflation rates and life 
expectancy in making these estimates and assumptions the directors consider advice provided by external advisers such as actuaries
the accounting assumptions noted above are used to calculate the yearend net pension liability in accordance with the relevant accounting 
standard ias 19 revised employee benefits changes in these assumptions have no impact on the g roup’s cash payments to their arrangements 
the payments due are calculated based on local funding requirements or in the case of the g roup’s unfunded arrangements on the incidence of 
benefit payments falling due
the sensitivities of the g roup’s net balance sheet to the principal assumptions are
change in assumption
2013
increase
effect
£m
2012
increase
effect
£m
discount rate decrease by 01 78 77 
inflation increase by 01 38 34 
mortality – postretirement pensioners live 1 year longer 151 125 
exchange rates gbp weakens against u sd by 10 44 70 
gbp weakens against e ur by 10 31 32 
these sensitivities have been calculated to show the movement in the net balance sheet in isolation and assuming no other changes in market 
conditions at the accounting date this is unlikely in practice – for example a change in discount rate is unlikely to occur without any movement  
in the value of the assets held by the g roup’s schemes
2012
r estated
uk
£m
2012
r estated
usa
£m
2012
r estated
europe
£m
2012
r estated 
r est of
world
£m
2012
r estated 
total
£m
present value of unfunded defined benefit obligations – 88 280 22 390
present value of funded defined benefit obligations 4270 1498 16 133 5917
fair value of plan assets 3557 959 05 118 4639 
net obligations 713 627 291 37 1668
movements in present value of defined benefit obligation
at 2 january 2012 3781 1478 252 163 5674
current service cost 22 04 03 15 44
interest cost 216 87 09 02 314
r emeasurement losses 398 160 51 15 624
benefits paid 161 74 12 25 272 
contributions by members 14 – – – 14
curtailments and settlements – – – 14 14 
exchange adjustments – 69 07 01 77 
at 31 december 2012 4270 1586 296 155 6307 128 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
21 empl oyee benef its continued
2012
r estated
uk
£m
2012
r estated
usa
£m
2012
r estated
europe
£m
2012
r estated 
r est of
world
£m
2012
r estated 
total
£m
movements in fair value of plan assets
at 2 january 2012 3307 893 06 115 4321 
interest on plan assets 195 58 – 05 258 
r emeasurement gains 130 52 – 10 192 
contributions by employer 78 75 11 28 192 
contributions by members 14 – – – 14 
benefits paid 161 74 12 25 272
administrative expenses 06 05 – – 11
curtailments and settlements – – – 16 16
exchange adjustments – 40 – 01 39
at 31 december 2012 3557 959 05 118 4639 
actual return on assets 325 110 – 15 450 
2012
r estated
uk
£m
2012
r estated
usa
£m
2012
r estated
europe
£m
2012
r estated
r est of
world
£m
2012
r estated
total
£m
pension plans and employee benefits
expense recognised in the consolidated income statement
current service cost and past service cost 22 04 03 15 44
administrative expenses 06 05 – – 11
net interest on net defined benefit assetliability 21 29 09 03 56
g ain on curtailment and settlements – – – 02 02
total expense 49 38 12 14 113
r isks
through its defined benefit pension plans the g roup is exposed to a number of risks the most significant of which are detailed below
the balance sheet net pension liability is a snapshot view which can be significantly influenced by shortterm market factors
the calculation of the surplus or deficit depends therefore on factors which are beyond the control of the g roup – principally the value at the 
balance sheet date of equity shares in which the scheme has invested and longterm interest rates which are used to discount future liabilities  
the funding of the scheme is based on longterm trends and assumptions relating to market growth as advised by qualified actuaries and 
investment advisers
investment returns  the g roup’s net balance sheet and contribution requirements are heavily dependent upon the return on the assets 
invested in by the schemes
longevity  the cost to the g roup of the pensions promised to members is dependent upon the expected term of these payments 
to the extent that members live longer than expected this will increase the cost of these arrangements
inflation rate risk  in the u k the pension promises are in the main linked to inflation and higher inflation will lead to higher liabilities
the above risks have been mitigated for a large proportion of the u k schemes’ population through the purchase of an insurance policy the 
payments from which exactly match the promises made to employees r emaining investment risks have also been mitigated to some extent by 
diversification of the return seeking assets and backing uninsured pensioner liabilities by bonds
in addition the ias 19 defined benefit obligation is linked to yields on aarated corporate bonds however the majority of the g roup’s arrangements 
invest in a number of other assets which will move in a different manner from these bonds therefore changes in market conditions may lead to 
volatility in the net pension liability on the g roup’s balance sheet and in other comprehensive income and to a lesser extent in the ias 19 pension 
expense in the g roup’s income statement  129 financial statements
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str ategic 
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statemen ts
overview
21 empl oyee benef its continued
defined contribution plans
the g roup operates a number of defined contribution pension plans the total expense relating to these plans in the current year was £68 million 
2012 £70 million the g roup expects to contribute £67 million to these arrangements in 2014
sharebased payments
the g roup operates various share plans that allow g roup employees to acquire shares in the company u nder the morgan advanced materials plc 
longterm incentive plan ‘ltip’ and the morgan advanced materials bonus deferral share matching plan ‘bdsmp’ awards of shares are made 
to various key executives u nder the executive share o ption scheme 2004 ‘eso s 2004’ share options were granted by the company the 
company also maintains a u k allemployee sharesave scheme ‘employee sharesave scheme 2004’ the grant date fair value of options granted 
to employees is recognised as an employee expense with a corresponding increase in equity over the period that the employees become 
unconditionally entitled to the options the amount recognised as an expense is adjusted to reflect the actual number of share options for which  
the related service and nonmarket vesting conditions are met
the fair value of the options and awards under each scheme have been measured using the following models
ltip bdsmp eso s 2004 monte carlo model
employee sharesave scheme 2004 blackscholes merton model
the following options and awards were outstanding at 31 december 2013 in respect of o rdinary shares
exercise prices
number of shares
 outstanding
normal exercise dates ranging
 from to
employee sharesave scheme 2004 16500p24500p 1886640 1 december 2013 31 may 2017
eso s 2004 12905p17190p 457354 22 june 2007 23 may 2015
bdsmp 000p33050p 3586214 23 march 2014 25 september 2016
ltip 000p 3170686 6 may 2013 20 may 2023
performance metrics for l tip bdsmp and esos 2004
the key performance metrics used in the plans are
  total shareholder r eturn ‘tsr ’ – the return expressed as a percentage on a notional investment in one share in the company expressed  
as follows
 a the average share price over the last three months of the performance period plus  
b the net dividends per share paid during the performance period reinvested in company shares at the exdividend date divided by  
c the average share price over the three months preceding the performance period
  earnings per share ‘eps’ – for the ltip and bdsmp profit before taxation less the charge for noncontrolling interests in any financial year  
of the company adjusted by the r emuneration committee to exclude the effect of amortisation of intangible assets charges related to  
ias 39 financial instruments recognition and measurement and the effect of any other special items which the r emuneration committee  
does not in its discretion consider to reflect underlying operating performance divided by the weighted average number of shares in issue 
during the relevant financial years defined on a pretaxation basis
  g roup earnings before interest tax and amortisation ‘ebita’ – the g roup’s revenue for any financial year less operating expenses but 
measured before the impact of taxation net financing costs and the effect of amortisation of intangible assets the r emuneration committee 
may also make further adjustments to exclude items which it does not in its discretion consider to reflect the underlying operating performance  
of the g roup during the relevant financial years
  g roup average r eturn on capital employed ‘ro ce’ – ebita divided by the average of the capital employed at the end of the relevant 
financial years
  divisional ebita for the ltip  bdsmp calculations – divisional revenue for the relevant financial years less operating costs including 
restructuring costs but measured before the impact of taxation net financing costs and the effect of amortisation of intangible assets  
at reported exchange rates the r emuneration committee may also make further adjustments to exclude items which it does not  
in its discretion consider to reflect the underlying operating performance of the division during the relevant financial years
  divisional average ro ce – divisional earnings before net financing costs taxation and amortisation of intangible assets ebita divided by the 
average of the capital employed by the division at the end of the relevant financial years
for the tsr elements of the plans for performance between median and upper quartile awards are made on a straightline prorata basis 
similarly for eps g roup ebita g roup average ro ce divisional ebita and divisional average ro ce metrics for performance between the 
identified trigger points awards are made on a straightline prorata basis 130 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
21 empl oyee benef its continued
share plans terms and conditions
the terms and conditions of all awards and grants made that were outstanding on or after 2 january 2012
g rant dateemployees entitled
number of
instruments granted vesting conditions
contractual
life of option
awards granted to senior employees in 2013 under the bdsmp 194944 
three years of service plus 
satisfaction of performance metrics 3 years
awards granted to senior employees in 2013 under the ltip 1332099 
three years of service plus 
satisfaction of performance metrics 3 years
awards granted to senior employees in 2012 under the bdsmp 1740554 
three years of service plus 
satisfaction of performance metrics 3 years
awards granted to senior employees in 2012 under the ltip 1251358 
three years of service plus 
satisfaction of performance metrics 3 years
awards granted to senior employees in 201 1 under the bdsmp 1484633 
three years of service plus 
satisfaction of performance metrics 3 years
awards granted to senior employees in 201 1 under the ltip 1500775 
three years of service plus 
satisfaction of performance metrics 3 years
awards granted to senior employees in 2010 under the bdsmp 82731 1 
three years of service plus 
satisfaction of performance metrics 3 years
awards granted to senior employees in 2010 under the ltip 2331758 
three years of service plus 
satisfaction of performance metrics 3 years
o ptions granted to senior employees in 2005 under the eso s 2004 2097000
three years of service plus 
satisfaction of performance metrics 10 years
o ptions granted to senior employees in 2004 under the eso s 2004 3157500
three years of service plus 
satisfaction of performance metrics 10 years
performance metrics for l tip 
the performance metrics for ltip awards are set annually the company has given an undertaking to shareholders that awards will only vest if 
there is also an improvement in underlying financial performance awards will only vest therefore if the r emuneration committee is satisfied that 
the company’s andor division’s pre2012 ltip awards only underlying financial performance over the performance period justifies vesting
2009 l tip awards 
for ltip awards granted to all participants in 2009 the extent to which 100 of the awards vested depended on the company’s tsr ranking 
against an appropriate comparator group from 5 january 2009 to 1 january 2012
tsr performance against the 
comparator group companies  of award that vests
upper quartile 100
median 30
below median nil
2010 l tip awards 
for ltip awards granted to all participants in 2010 the extent to which 50 of the awards vested depended on the company’s tsr ranking against 
an appropriate comparator group over the period from 4 january 2010 to 31 december 2012 the extent to which the other 50 of these awards 
vested depended on the growth in the company’s eps compared with rp i between the 2009 base financial year and the 2012 financial year
tsr element eps element
tsr performance against the 
comparator group companies  of award that vests eps growth  of award that vests
upper quartile 50 rp i10 pa 50
median 15 rp i4 pa 15
below median nil rp i 4 pa nil
in addition the ltip awards granted in 2010 were restructured to include an h mr c approved element as part of the overall ltip awards 131 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
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statemen ts
overview
21 empl oyee benef its continued
201 1 l tip awards
for ltip awards granted to the ceo  cfo and nondivisional employees in 201 1 the extent to which 50 of the awards vest depends on the 
company’s tsr ranking against an appropriate comparator group over the period from 3 january 201 1 to 31 december 2013 the extent to which 
the other 50 of these awards vest depends on the growth in the company’s eps compared with rp i between the 2010 base financial year and 
the 2013 financial year
tsr element eps element
tsr against ftse allshare 
industrials index  of award that vests eps growth  of award that vests
upper quartile 50 15 pa 50
median 15 8 pa 15
below median nil  8 pa nil
to support the twodivisional structure introduced in july 2010 the 201 1 ltip awards for senior divisional executives were tailored to the value 
creation of each division u nder these awards the divisional element is split into divisional ebita growth and divisional average ro ce vesting 
under the divisional element only occurs when divisional performance exceeds the threshold performance metrics under both measures o nce 
the divisional performance metrics exceed the threshold the two elements are then measured independently
for the ltip award granted to the coo who at the time of the award was ce o morgan ceramics in 201 1 ts r ranking as for ce o  cfo  
and nondivisional employees and divisional performance between the 2010 base financial year and the 2013 financial year were awarded on  
an equal basis
tsr element divisional element
tsr against ftse 
allshare industrials 
index  of award that vests
divisional ebita 
growth  of award that vests
divisional average 
roce  of award that vests
upper quartile 50 18 pa 25 407 25
median 15 12 pa 75 357 75
below median nil  12 pa nil  357 nil
for ltip awards granted to other executives in the former morgan ceramics division in 201 1 100 of awards are based on morgan ceramics 
divisional performance between the 2010 base financial year and the 2013 financial year
divisional ebita growth  of award that vests divisional average roce  of award that vests
18 pa 50 407 50
12 pa 15 357 15
 12 pa nil  357 nil
for the ltip award granted to the former ceo morgan engineered materials in 201 1 ts r ranking as for ce o  cfo and nondivisional 
employees and divisional performance between the 2010 base financial year and the 2013 financial year were awarded on an equal basis
tsr element divisional element
tsr against ftse 
allshare industrials 
index  of award that vests
divisional ebita 
growth  of award that vests
divisional average 
roce  of award that vests
upper quartile 50 15 pa 25 361 25
median 15 10 pa 75 337 75
below median nil  10 pa nil  337 nil
for ltip awards granted to other executives in the former morgan engineered materials division in 201 1 100 of awards are based on morgan 
engineered materials divisional performance between the 2010 base financial year and the 2013 financial year
divisional ebita growth  of award that vests divisional average roce  of award that vests
15 pa 50 361 50
10 pa 15 337 15
 10 pa nil  337 nil 132 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
21 empl oyee benef its continued
2012 l tip awards 
to support the o ne morgan organisation structure the performance metrics for the 2012 ltip awards were reviewed during 2013
there were no changes to the performance conditions of the ltip awards granted to the ceo  cfo and nondivisional employees in 2012 the 
extent to which 33 of the awards vest depends on the company’s tsr ranking against an appropriate comparator group over the period from 
2 january 2012 to 31 december 2014 the extent to which 33 of these awards vest depends on the compound annual growth in the company’s 
eps between the 201 1 base financial year and the 2014 financial year the extent to which 33 vest depends on the g roup’s average ro ce for 
the financial years ending 31 december 2012 2013 and 2014
tsr element group element
tsr against ftse 
allshare industrials 
index  of award that vests eps growth  of award that vests group average roce  of award that vests
upper quartile 3333 15 pa 3333 37 3333
median 10 8 pa 10 33 10
below median nil  8 pa nil  33 nil
for the 2012 ltip award made to the coo who at the time of the award was ce o morgan ceramics it was decided that the morgan ceramics 
divisional performance metrics attached to his 2012 ltip award would be replaced by g roup performance metrics aligned with those attached  
to the 2012 ltip awards awarded to the other executive directors as set out above
for the 2012 ltip awards granted to other executives in the former morgan ceramics and morgan engineered materials divisions in 2012 it was 
decided that a single set of g roup performance metrics should apply to these participants the single set of g roup performance metrics blends  
the performance metrics originally set for the two divisions over the performance period as set out below the g roup performance metrics  
are split into compound annual growth ebita and g roup average ro ce vesting only occurs when g roup performance exceeds the threshold 
performance metrics under both measures o nce the g roup performance metrics exceed the threshold the two elements are then measured 
independently
compound annual growth ebita  of award that vests group average roce  of award that vests
15 pa 50 409 50
56 pa 15 385 15
 56 pa nil  385 nil
the changes to the performance conditions attaching to the 2012 ltip awards did not result in a change in the fair value at the measurement date 
details of the original 2012 ltip performance metrics for other executives in the former morgan ceramics and morgan 
engineered materials divisions are set out below
for the coo who at the time of the award was ce o morgan ceramics 13 of the award was to vest on relative ts r  with the remaining  
23 to vest on a divisional ebitaro ce matrix for the ebitaro ce element there would have been no vesting unless ebita growth in  
morgan ceramics was at least 6 pa and ro ce is 41 in 2014 full vesting would have occurred for ebita growth of 15 pa and ro ce of 435
for ltip awards granted to executives in the former morgan ceramics division in 2012 100 of awards were based on morgan ceramics 
divisional performance between the 201 1 base financial year and the 2014 financial year
divisional ebita  of award that vests divisional average roce  of award that vests
15 pa 50 435 50
6 pa 15 41 15
 6 pa nil  41 nil
for ltip awards granted to executives in the former morgan engineered materials division in 2012 100 of awards were based on morgan 
engineered materials divisional performance between the 201 1 base financial year and the 2014 financial year
divisional ebita  of award that vests divisional average roce  of award that vests
15 pa 50 3710 50
5 pa 15 3470 15
 5 pa nil  347 nil 133 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
rep ort
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fin anc ial 
statemen ts
overview
21 empl oyee benef its continued
2013 l tip awards
for ltip awards granted to all participants in 2013 the extent to which 33 of the awards vest depends on the company’s tsr ranking against  
an appropriate comparator group over the period from 1 january 2013 to 31 december 2015 the extent to which 33 of these awards vest 
depends on the growth in the company’s eps between the 2012 base financial year and the 2015 financial year the extent to which 33 vest 
depends on the g roup’s average ro ce for the financial years ending 31 december 2013 2014 and 2015 
tsr element eps element roce element
tsr against ftse 
allshare industrials 
index  of award that vests eps growth  of award that vests average roce  of award that vests
upper quartile 3333 15 pa 3333 37 3333
median 10 8 pa 10 33 10
below median nil  8 pa nil  33 nil
performance metrics for the bdsmp
the bdsmp was introduced following shareholder approval in 2008
u nder the plan rules participants may be offered the opportunity to defer up to 75 of their annual bonus on a pre or posttax basis into 
company shares participants must hold the deferred shares for three years to be eligible for a matching award based on the pretax value of  
their deferred shares matching shares may be earned at the end of three years in the event that stretching performance metrics have been met 
the performance metrics for the bdsmp are set annually
u nder the 2009 grant participants were given the opportunity to defer up to 50 of their bonus under the bdsmp and the performance metrics 
were based on eps growth targets relative to the 2008 base year
eps performance
vesting of matching shares as 
multiple of the shares under the 
deferred award
15 pa 3x match
10 pa 175x match
75 pa 1x match
5 pa 05x match
4 pa 025x match
 4 pa nil
u nder the 2010 grant participants were given the opportunity to defer up to 75 of their bonus under the bdsmp and the performance metrics 
were based on eps growth targets relative to the 2009 base year 
eps performance
vesting of matching shares as 
multiple of the shares under the 
deferred award
rp i15 pa 3x match
rp i10 pa 175x match
rp i75 pa 1x match
rp i5 pa 05x match
rp i4 pa 025x match
 rp i4 pa nil
u nder the 201 1 2012 and 2013 grants participants were given the opportunity to defer up to 50 of their bonus under the bdsmp and the 
performance metrics are based on eps growth targets relative to the 2010 201 1 and 2012 base years respectively
eps performance
vesting of matching shares as 
multiple of the shares under the 
deferred award
20 pa 3x match
16 pa 2x match
12 pa 1x match
8 pa nil
 8 pa nil 134 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
21 empl oyee benef its continued
esos 2004
there were no awards during 2013 2012 nil
employee sharesave scheme 2004 terms and conditions
the terms and conditions of options that were outstanding on or after 2 january 2012 that are not covered in the information above are as follows
g rant dateemployees entitled
number of 
instruments 
granted vesting conditions
contractual life  
of option
o ptions granted to u k employees in 2013 under the employee sharesave scheme 2004 463394 three years of service 3 years
o ptions granted to u k employees in 2012 under the employee sharesave scheme 2004 1071868 three years of service 3 years
o ptions granted to u k employees in 201 1 under the employee sharesave scheme 2004 471732 three years of service 3 years
o ptions granted to u k employees in 2010 under the employee sharesave scheme 2004 484069 three years of service 3 years
share plans – further details
awards made in 2013
ltip 2004 bdsmp
employee sharesave 
schemes 2004
fair value at measurement date 1584824800p 28640p 10718p
share price 27670p 28640p 31100p
exercise price na na 24500p
expected volatility expressed as weighted average volatility used in the model 50 na 45
o ption life expressed as weighted average life used in the model 3 years 3 years 3 years
expected dividends 36
na 25
r iskfree interest rate 05 na 10
the expected volatility is based on the historic volatility calculated based on the weighted average remaining life of the share options adjusted for 
any expected changes to future volatility due to publicly available information
the number and weighted average exercise prices of share options are as follows
weighted average
exercise price
31 december 2013
number of options
31 december 2013
weighted average
exercise price
31 december 2012
number of options
31 december 2012
o utstanding at the beginning of the period 6620p 11387046 4061p 17999603 
g ranted during the period 8581p 1973749 8990p 4045797 
forfeited during the period 6078p 676768 5130p 519561
exercised during the period 4945p 2520584 3459p 9009111
lapsed during the period 099p 1062549 230p 1129682
o utstanding at the end of the period 8311p 9100894 6620p 1 1387046 
exercisable at the end of the period 12638p 611204 13640p 889085 
the weighted average share price at the date of share options exercised during the period was 28481 pence 2012 31985 pence
the options outstanding at the year end have an exercise price in the range nil to 33050 pence and a weighted average contractual life of 05 years
the fair value of services received in return for share options granted are measured by reference to the fair value of share options granted
the weighted average fair value of options issued in the period was 19877 pence 2012 26628 pence
the ifr s 2 fair value charge expensed to the income statement was £07 million 2012 £19 million 135 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
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overview
22 pr ovi sions
accounting policies
a provision is recognised in the balance sheet when the g roup has a present obligation legal or constructive as a result of a past event it is 
probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the obligation  
the best estimate of the expenditure required to settle the present obligation is the amount that an entity would rationally pay to settle the 
obligation at the end of the reporting period or to transfer it to a third party at that time if the effect is material provisions are determined by 
discounting the expected future cash flows at a pretax rate that reflects current market assessments of the time value of money and where 
appropriate the risks specific to the liability
i restructuring
a provision for restructuring is recognised when the g roup has approved a detailed and formal restructuring plan and the restructuring has  
either commenced or has been announced publicly future operating costs are not provided for
ii onerous contracts
a provision for onerous contracts is recognised when the expected benefits to be derived by the g roup from a contract are lower than the 
unavoidable cost of meeting its obligations under the contract
iii environmental
in accordance with the g roup’s environmental policy a provision is recognised for known environmental issues which the g roup will rectify  
over the next few years in a number of jurisdictions companies have a constructive obligation to remedy any known environmental problems
provisions
closure and
 restructuring
provisions
£m
other
provisions
£m
environmental
provisions
£m
total
£m
balance at 31 december 2012 84 76 50 210 
provisions made during the year 93 19 – 112 
provisions used during the year 106 16 18 140
provisions reversed during the year 01 02 – 03
effect of movements in foreign exchange – 02 – 02
balance at 31 december 2013 70 75 32 177 
current 57 52 20 129 
noncurrent 13 23 12 48 
70 75 32 177 
closure and restructuring provisions are based on the g roup’s restructuring programmes and represent committed expenditure at the balance 
sheet date the amounts provided are based on the costs of terminating relevant contracts under the contract terms and management’s  
best estimate of other associated restructuring costs including professional fees most of which are expected to be incurred over the next year  
the amounts provided also include the obligation for discounted future payments under a noncancellable lease for the company’s former 
headquarters net of expected rental income under subleases the lease expires in 2016
o ther provisions include the settlement of european class actions together with the associated legal costs the estimated costs are based on  
the g roup’s assessment of the probable future costs of these activities the g roup expects to incur most of the liability in more than one year
environmental provisions are for known environmental issues which the g roup will rectify over the next few years in a number of jurisdictions 
companies have a constructive obligation to remedy any known environmental problems the estimated costs are based on management’s  
best estimate of the costs required to remedy these problems the g roup expects to incur most of the liability over the next five years 136 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to th e co nso lidated financial statements
co ntinued
23 tr ade an d other p ayable s
accounting policies
trade and other payables are initially stated at their fair value and subsequently measured at amortised cost
trade and other payables
2013
£m
2012
£m
noncurrent
trade and nontrade payables 14 48 
current
trade payables due to associate 03 10 
o ther trade payables 900 937 
nontrade payables and accrued expenses 856 893 
1759 1840 
included in current nontrade payables and accrued expenses is £229 million 2012 £232 million of tax accruals included in current nontrade 
payables and accrued expenses is £nil million 2012 £03 million of deferred contingent consideration following the purchase of 51 of the 
o rdinary share capital of clearpower limited for further details see note 2
24 oper ating le ases
accounting policies
operating lease payments
payments made under operating leases are recognised in the income statement on a straightline basis over the term of the lease lease incentives 
received are recognised in the income statement as an integral part of the total lease expense
leases as lessee
noncancellable operating lease rentals are payable as follows
2013
£m
2012
£m
less than one year 89 85 
between one and five years 181 173 
more than five years 186 262 
456 520 
the g roup leases a number of properties under operating leases of varying duration in some cases during the life of the lease the rental payable  
is reviewed after a fixed period to reflect market rentals
l eases as lessor
the total of future minimum sublease income under noncancellable subleases is £18 million 2012 £25 million
25 capital co mmitmen ts
commitments for property plant and equipment and computer software expenditure for which no provision has been made in these accounts 
amount to £18 million 2012 £24 million for the g roup 137 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
str ategic 
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dire ctor s’ 
rep ort
fin anc ial 
statemen ts
overview
26 con ting enc ies
subsidiary undertakings within the g roup have given unsecured guarantees of £102 million 2012 £89 million in the ordinary course of business
in an international group of companies a variety of claims arise from time to time provision has been made in these accounts against those claims 
which the directors consider meet the requirements of ias 37 provisions contingent liabilities and contingent assets and are likely to result in 
significant liabilities
the g roup has been subject to legal claims in the u sa canada and europe settlements for the majority of these have been agreed there remain 
provisions in respect of these claims of £11 million 2012 £12 million in some cases it will not be possible to form a view either because the facts 
are unclear or because further time is needed to properly assess the merits of the case and no provisions are held against such cases the board 
having taken legal advice is of the opinion that the remainder of these actions will not have a material impact on the g roup’s financial position
27 r el ated par ties
identification of related parties
the g roup has related party relationships with its subsidiaries a list of principal subsidiary undertakings is shown in note 43 with its associates  
see note 13 and with its directors and executive officers
transactions with key management personnel
the company has written service contracts or letters of appointment with each of its directors under which the directors receive a salary or  
a fee and other emoluments 
the key management of the g roup and parent company consists of the board of directors including nonexecutive directors and members  
of the executive committee
their compensation charged in the year was
2013
£m
2012
£m
shortterm employee benefits 15 17 
employer national insurance contributions 04 03 
pension and other postemployment costs 04 04 
sharebased payments 02 04 
nonexecutive directors’ fees and benefits 04 04 
total compensation of key management personnel 29 32 
information on executive directors’ remuneration is given in the r emuneration r eport on pages 59 to 80
other related party transactions
2013
£m
2012
£m
sales to associate 103 198 
the balances with the g roup’s associate are shown in note 16 and note 23 in addition the g roup has trade receivables owed by associates of 
£16 million which have been fully provided for
28 subseq uen t even ts
o n 1 1 february 2014 the g roup merged its u kbased thermal fired shapes business with magma ceramics  catalysts a u kbased fired shapes 
specialist in return for a 35 minority stake in the enlarged magma business there have been no other material events since the year end 138 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
note
2013
£m
2012
£m
fixed assets
tangible fixed assets 32 20 21 
investment in subsidiary undertakings 33 8464 8339 
8484 8360 
current assets
debtors – due within one year 34 377 473 
cash at bank and in hand 254 165 
631 638 
creditors – amounts falling due within one year 35 592 909 
net current assetsliabilities 39 271
total assets less current liabilities 8523 8089 
creditors – amounts falling due after more than one year
amounts payable to subsidiary undertakings 1802 1721 
borrowings 36 497 481 
2299 2202 
provisions for liabilities and charges 37 29 38 
2328 2240 
net assets 6195 5849 
capital and reserves
equity shareholders’ funds
calledup share capital 18 714 700 
share premium account 38 1117 990 
merger reserve 38 170 170 
capital redemption reserve 38 357 357 
profit and loss account 38 3833 3628 
6191 5845 
nonequity shareholders’ funds
calledup share capital 18 04 04 
shareholders’ funds 6195 5849 
the financial statements were approved by the board of directors on 13 february 2014 and were signed on its behalf by
mark robertshaw
chief executive o fficer
 
kevin dangerfield
chief financial o fficer
co mpany balance sh eet
as at 31 december 2013 139 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
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no tes to t h e co mpany balance sh eet
29 accoun ting poli cies
the following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial 
statements
basis of preparation 
the company has elected to prepare its financial statements in accordance with u k g enerally accepted accounting practice
the financial statements have been prepared in accordance with applicable accounting standards and under the historical cost accounting rules
u nder section 4084 of the companies act 2006 the company is exempt from the requirement to present its own profit and loss account
u nder fr s 1 cash flow statements the company is exempt from the requirement to prepare a cash flow statement on the grounds that the cash 
flows of the company are included within the published consolidated financial statement
the company has taken advantage of the exemption contained in fr s 8 related parties and has therefore not disclosed transactions or balances 
with wholly owned subsidiaries
tangible assets and depreciation
depreciation is provided to write off the cost less the estimated residual value of tangible fixed assets by equal instalments over their estimated 
useful economic lives as follows
plant equipment and fixtures – 320 years
investments
investments in subsidiary undertakings associates and joint ventures are stated at cost less amounts written off unless they are designated as a 
hedged item in a fair value hedge of foreign currency risk under fr s 26 financial instruments recognition and measurement in this case they are 
accounted for at historical cost plus a hedging adjustment recognised in profit or loss for the changes in their fair value attributable to the foreign 
currency exposure from the date the hedge is designated
interestbearing loans and borrowings
immediately after issue debt is stated at the fair value of the consideration received immediately after issue capital instruments are stated after 
deduction of issue costs the finance cost of the debt is allocated to periods over the term of the debt at a constant rate on the carrying amount
foreign currency
transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction or if hedged forward at the rate of 
exchange under the related forward contract monetary assets and liabilities denominated in foreign currencies are translated using the contracted 
rate or the rate of exchange ruling at the balance sheet date and the gains or losses on translation are included in the profit and loss account
leases
r entals payable under operating leases are charged in the profit and loss account on a straightline basis over the lease term
postretirement benefits
the company participates in a g roupwide pension scheme providing benefits based on careeraverage pensionable pay the assets of the scheme 
are held separately from those of the company the company is unable to identify its share of the underlying assets and liabilities of the scheme  
on a consistent and reasonable basis and therefore as required by fr s 17 retirement benefits accounts for the scheme as if it were a defined 
contribution scheme as a result the amount charged to the profit and loss account represents the contributions payable to the scheme in respect 
of the accounting period r efer to note 40 for the additional disclosures required by fr s 17
taxation
the charge for taxation is based on the result for the year and takes into account taxation deferred because of timing differences between the 
treatment of certain items for taxation and accounting purposes
deferred tax is recognised without discounting in respect of all timing differences between the treatment of certain items for taxation and 
accounting purposes which have arisen but not reversed by the balance sheet date except as otherwise required by fr s 19 deferred tax 140 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to t h e co mpany balance sh eet
co ntinued
29 accoun tin g poli cies continued
classification of financial instruments issued by the company
following the adoption of fr s 25 financial instruments disclosure and presentation financial instruments issued by the company are treated  
as equity ie forming part of shareholders’ funds only to the extent that they meet the following two conditions
  they include no contractual obligations upon the company to deliver cash or other financial assets or to exchange financial assets or financial 
liabilities with another party under conditions that are potentially unfavourable to the company and
  where the instrument will or may be settled in the company’s own equity instruments it is either a nonderivative that includes no obligation 
to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company exchanging a  
fixed amount of cash or other financial assets for a fixed number of its own equity instruments
to the extent that this definition is not met the proceeds of issue are classified as a financial liability where the instrument so classified takes the 
legal form of the company’s own shares the amounts presented in these financial statements for calledup share capital and share premium 
account exclude amounts in relation to those shares
finance payments associated with financial liabilities are dealt with as part of interest payable and similar charges finance payments associated with 
financial instruments that are classified as part of shareholders’ funds see dividend policy are dealt with as appropriations in the reconciliation of 
movements in shareholders’ funds
h edging instruments and hedged items are accounted for separately in the balance sheet in fair value hedges gains and losses from remeasuring 
the hedging instrument at fair value for a derivative instrument or the foreign currency component for a nonderivative financial liability in a foreign 
currency hedge are included in profit for the year when they arise in cash flow hedges gains and losses from remeasuring the hedging derivative 
instrument at fair value are initially recognised in other comprehensive income to the extent effective and are later reclassified to profit or loss when 
the hedged transaction occurs or is no longer expected to occur
certain financial assets and liabilities have been designated as fair value through profit or loss and are recognised in the balance sheet at fair value 
own shares held by the morgan general employee benefit trust
transactions of the g roupsponsored morgan g eneral employee benefit trust are treated as being those of the company and are therefore 
reflected in the company’s financial statements in particular the trust’s purchases and sales of shares in the company are debited and credited  
to equity
sharebased payments
the share option programme allows employees to acquire shares of the company the fair value of options granted after 7 november 2002  
and those not yet vested as at 4 january 2005 is recognised as an employee expense with a corresponding increase in equity the fair value is 
measured at grant date and spread over the period during which the employee becomes entitled to the options the fair value of the options 
granted is measured using an option pricing model taking into account the terms and conditions upon which the options were granted the 
amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to share 
prices not achieving the threshold for vesting for details of sharebased payments made and the assumptions used in measuring the fair value  
see note 21
sharebased payments recharged to subsidiary undertakings are recorded via the intercompany loan account
dividends on shares presented within shareholders’ funds
dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately approved and are 
no longer at the discretion of the company u npaid dividends that do not meet these criteria are disclosed in the notes to the financial statements
financial guarantee contracts
where the company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its g roup the company 
considers these to be insurance arrangements and accounts for them as such in this respect the company treats the guarantee contract as a 
contingent liability until such time as it becomes probable that the company will be required to make a payment under the guarantee at which 
point a liability would be recognised 141 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
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30 staff n umber s an d costs
the average number of persons employed by the company including directors during the year analysed by category was as follows
number of employees
2013 2012
directors and head office staff 33 28
r egional staff 10 18
43 46
the majority of the directors and head office staff devote a proportion of their time to r egional duties o f the 33 directors and head office staff 
the average number who spent all or a proportion of their time on corporate duties was 1 1 2012 10 as shown in note 5
full details of the directors’ remuneration for the period can be found in the remuneration report on pages 59 to 80
aggregate employeerelated costs were as follows
2013
£m
2012
£m
wages and salaries 53 55 
equitysettled sharebased payments see note 21 07 19 
social security costs 02 28 
o ther pension costs 08 03 
70 105 
£06 million 2012 £11 million of the equitysettled sharebased payments amount were recharged to other morgan g roup companies
31 divi dends
dividends payable for the first and second preference shares were £22491 2012 £22491 of which £1 1245 2012 £1 1245 was outstanding  
at the balance sheet date
the 55 cumulative first preference shares of £1 each and the 50 cumulative second preference shares of £1 each confer on the holders 
thereof the right to receive a cumulative preferential dividend at the rate of 55 and 50 respectively calculated up to 30 june and 31 december 
respectively in every year 
for proposed o rdinary dividends see the consolidated income statement on page 88
32 tan gible fixe d assets
plant equipment
and fixtures
£m
cost
at 1 january 2013 50
additions 16
disposals 01
at 31 december 2013 65
accumulated depreciation
at 1 january 2013 29
amount provided for in the year 17
disposals 01
at 31 december 2013 45
net book amounts at 31 december 2012 21
net book amounts at 31 december 2013 20 142 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to t h e co mpany balance sh eet
co ntinued
33 inve stmen t in su bsidiary u n der takings
shares
£m
loans
£m
total
£m
cost
at 1 january 2013 5976 2918 8894 
additions 2192 1236 3428 
fair value hedge of investments exposure to foreign currency risk 39 – 39
less disposalsloan repaymentsliquidations 2355 387 2742
at 31 december 2013 5774 3767 9541 
amounts provided
at 1 january 2013 518 37 555 
provided in the year 729 96 825 
less disposalsloan repaymentsliquidations 303 – 303
at 31 december 2013 944 133 1077 
net book amounts at 31 december 2012 5458 2881 8339 
net book amounts at 31 december 2013 4830 3634 8464 
a list of principal subsidiary undertakings is shown in note 43
most of the movement in shares in 2013 relates to a reorganisation of the morgan g roup’s entity holding structure share additions consist  
of investments in morgan north america h olding limited morgan europe h olding limited and mna finance sar l these companies are 
intermediate holdingfinance companies within the morgan advanced materials g roup share disposals consist of the intrag roup sale of morganite 
electrical carbon limited morgan technical ceramics limited thermal ceramics u k limited and morganite industries inc these companies 
were purchased by the above mentioned and other g roup intermediate holdingfinance companies
34 debtor s
2013
£m
2012
£m
due within one year
o ther debtors 83 89 
derivative financial assets 04 06 
prepayments and accrued income 03 02 
amounts receivable from subsidiary undertakings 287 376 
377 473 
35 cre ditor s
2013
£m
2012
£m
due within one year
bank overdrafts 444 588 
trade creditors 11 22 
amounts payable to subsidiary undertakings 50 210 
o ther creditors including deferred consideration 39 28 
accruals and deferred income 48 57 
derivative financial liabilities – 04 
592 909  143 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
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36 borr owin gs
2013
£m
2012
£m
bank and other loans 497 481 
bank overdrafts 444 588 
941 1069 
less amount repayable within one year included within current liabilities 444 588
total repayable after more than one year 497 481 
37 pr ovi sion s for li abilit ies an d ch ar ges
closure and
restructuring
 provisions
£m
other
provisions
£m
total
£m
at 1 january 2013 24 14 38 
provided in the year – 01 01 
u tilised in the year 09 01 10
at 31 december 2013 15 14 29 
closure and restructuring provisions relate mainly to an onerous lease provision for morgan h ouse the company’s previous registered address
o ther provisions include the settlement of european class actions together with the associated legal costs
38 sh are premi um an d re serve s
share
premium
£m
merger
reserve
£m
capital
 redemption
reserve
£m
profit and loss
account
£m
at 1 january 2013 990 170 357 3628 
charges and transfers in relation to sharebased payments for the year – – – 08 
dividends 127 – – 388
o wn shares acquired for share incentive schemes – – – 66
r etained profit for the year – – – 651 
at 31 december 2013 1117 170 357 3833 
capita trustees limited administer a trust in which shares are held to satisfy awards granted under the company’s share plans the shares are 
distributed via discretionary settlement governed by the rules of the trust deed dated 1 march 1996 as amended
the total number of own shares held by the trust at 31 december 2013 is 305041 2012 201493 and at that date had a market value of 
£10 million 2012 £05 million 
the amount of reserves of morgan advanced materials plc that may not be distributed under section 8314 of the companies act 2006  
is £3002 million 2012 £1517 million
further details on share premium and reserves are given in note 18
39 l easin g commitmen ts
lease payments for which no provision has been made in these accounts that the company is committed to pay within 12 months of the balance 
sheet date analysed by lease term expiry date are as follows
land and buildings
2013
£m
2012
£m
lease term expires within two to five years 02 02 
02 02  144 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to t h e co mpany balance sh eet
co ntinued
40 pen sion costs
the morgan pension scheme and the morgan senior staff pension and l ife assurance scheme
the company participates in two defined benefit schemes in the u k the assets of these schemes are held in separate trusteeadministered  
funds the morgan pension scheme mps and the morgan g roup senior staff pension and life assurance scheme sss due to the historical 
complexity of the schemes the company is unable to identify its share of the scheme assets and liabilities on a consistent and reasonable basis as 
permitted by fr s 17 retirement benefits the schemes have been accounted for in these financial statements as if they were defined contribution 
schemes these schemes were closed to new members on 1 august 201 1 from which time membership of a defined contribution plan is available
the latest actuarial valuations of the mps and the sss were carried out as at 6 april 201 1 and 1 april 201 1 respectively and updated for fr s 17 
purposes to 31 december 2013 by a qualified independent actuary the results for these schemes in respect of the g roup are shown below
2013

2012

assumptions
inflation rp i  cpi 330210 290190
discount rate 450 440
pension increases in payment 320310380 290310360
g eneral salary increases na na
mortality – postretirement
life expectancy of a male retiring at age 60 in 20132012 265 years 263 years
life expectancy of a male retiring at age 60 in 20332032 280 years 274 years
the assets in the scheme and the expected rates of return were
2013
£m
2012
£m
asset distribution and balance sheet reconciliation
equities 1462 1339 
bonds 397 357 
matching insurance policies 1792 1846 
o ther 14 15 
total market value of assets 3665 3557 
present value of liability 4415 4270
deficit in the scheme 750 713
employer contributions due within one year 02 02
o ther assets include an insurance policy as described in note 21
the employer’s contribution for the year was £79 million 2012 £78 million
the company is expecting to pay £80 million of contributions into the u k defined benefit plans in 2014
41 con tin gen t li abili ties
where the company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its g roup the company 
considers these to be insurance arrangements and accounts for them as such in this respect the company treats the guarantee contract as a 
contingent liability until such time as it becomes probable that the company will be required to make a payment under the guarantee at which 
point a liability would be recognised
there are no other contingent liabilities in the company as at 31 december 2013
the company has been subject to legal claims in the u sa canada and europe settlements for the majority of these have been agreed  
there remain provisions in respect of these claims of £11 million 2012 £12 million in some cases it will not be possible to form a view either 
because the facts are unclear or because further time is needed to properly assess the merits of the case and no provisions are held against such 
cases the board having taken legal advice is of the opinion that the remainder of these actions will not have a material impact on the company’s 
financial position 145 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
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42 r el ated par ties
the company’s transactions with nonwholly owned subsidiaries are as follows
2013
£m
2012
£m
amounts invoiced to nonwholly owned subsidiaries 44 19
amounts receivable from nonwholly owned subsidiaries 07 09
amounts invoiced from nonwholly owned subsidiaries 02 03
amounts payable to nonwholly owned subsidiaries 60 74
the directors have reviewed transactions with related parties as defined in fr s 8 related party disclosures and have concluded that there are  
no other material transactions which require disclosure which have not been acknowledged elsewhere in the annual r eport and accounts
43 princ ipal su bsidiary u n der takings
north america principal products
country of incorporation
and operation
 morgan advanced materials canada inc electrical carbon canada
g rupo industrial morgan sa de cv insulating fibre bricks and monolithics and  
electrical carbon and seals and bearings
mexico
 morgan technical ceramics sa de cv ceramic cores mexico
 certech inc ceramic cores usa
 g raphite die mold inc machined graphite usa
 morganite industries inc h olding company usa
 morgan advanced ceramics inc engineered structural and piezoceramics usa
 morgan advanced materials and technology inc seals and bearings usa
 morganite crucible inc crucibles usa
 national electrical carbon products inc electrical carbon usa
 thermal ceramics inc insulating fibre bricks and monolithics usa
europe  principal products
country of incorporation  
and operation
 morgan technical ceramics limited engineered and piezoceramics and ceramic cores england
 morganite electrical carbon limited electrical carbon england
 np aerospace limited personnel and vehicle ballistic protection england
 thermal ceramics u k limited insulating fibre bricks and monolithics england
 thermal ceramics de france sas insulating fibre bricks and monolithics france
 morgan molten metal systems g mbh crucibles g ermany
 morgan r ekofa g mbh electrical carbon linear and rotary transfer systems g ermany
 morgan thermal ceramics deutschland g mbh insulating fibre bricks and monolithics g ermany
 w h aldenwanger technische keramik g mbh  co k g  engineered ceramics g ermany
 wesgo ceramics g mbh engineered ceramics g ermany
 morgan materials h ungary kft electrical carbon h ungary
 morgan carbon italia srl seals and bearings italy
 thermal ceramics italiana srl insulating fibre bricks and monolithics italy
 morganite luxembourg sa seals and bearings luxembourg
 morgan amt bv electrical carbon netherlands
 thermal ceramics benelux bv insulating fibre bricks and monolithics netherlands
 thermal ceramics polska sp zoo insulating fibre bricks and monolithics poland
 limited liability company morgan thermal ceramics sukhoy log insulating fibre bricks and monolithics russia
 thermal ceramics espana sl insulating fibre bricks and monolithics spain 146 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
no tes to t h e co mpany balance sh eet
co ntinued
43 princ ipal su bsidiary u n der takings continued
asiarest of world   principal products
country of incorporation  
and operation
 carbo san luis sa insulating fibre bricks and monolithics argentina
 morgan technical ceramics australia pty ltd engineered ceramics australia
 morganite australia pty limited insulating fibre bricks and monolithics and australia
electrical carbon and seals and bearings
 morganite brasil limitada insulating fibre bricks and monolithics brazil
dalian morgan r efractories limited insulating fibre bricks and monolithics china
morgan amt shanghai co ltd electrical carbon linear and rotary transfer systems china
 morgan amt h airong co limited lithium ion china
morgan kailong jingmen thermal ceramics co ltd insulating fibre bricks and monolithics china
morgan molten metal systems suzhou co ltd crucibles china
morgan thermal ceramics international trading shanghai co ltd insulating fibre bricks and monolithics china
morgan thermal ceramics shanghai ltd insulating fibre bricks and monolithics china
 y ixing h aldenwanger fine ceramic co ltd engineered ceramics china
y ixing morgan thermal ceramics co ltd insulating fibre bricks and monolithics china
refractorios nacionales sa insulating fibre bricks and monolithics g uatemala
 morganite crucible india limited crucibles india
murugappa morgan thermal ceramics limited insulating fibre bricks and monolithics india
 morganite carbon kabushiki kaisha electrical carbon and seals and bearings japan
shinnippon thermal ceramics corporation insulating fibre bricks and monolithics japan
morgan ceramics asia pte ltd insulating fibre bricks and monolithics singapore
 morganite south africa pty limited electrical carbon south africa
 thermal ceramics south africa pty limited insulating fibre bricks and monolithics south africa
morgan korea company limited insulating fibre bricks and monolithics and south korea
electrical carbon and seals and bearings
 morgan karbon g rafit sanayi as electrical carbon turkey
morgan ceramics middle east fze insulating fibre bricks and monolithics u ae
morgan advanced materials plc’s principal subsidiary undertakings unless otherwise stated are directly held by the company 
 denotes companies some or all of whose shares are owned by a subsidiary
the company has taken advantage of the exemption under section 410 of the companies act 2006 by providing information only in relation  
to subsidiary undertakings whose results or financial position in the opinion of the directors principally affected the financial statements a full list  
of subsidiaries will be sent to companies h ouse with the next annual return
in 2013 and 2012 the following g erman subsidiaries which are included in the g roup consolidated accounts utilised article 264b of the g erman 
commercial code to be liberated from preparing and disclosing audited statutory accounts
  w h aldenwanger technische keramik g mbh  co k g 
  technische keramik  co kg  147 financial statements
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44 company re conc ili ation of movemen ts in s h areho l der s’ fun ds
for the year ended 31 december 2013
2013
£m
2012
£m
retained profit for the financial year 651 1026 
dividends 247 161
issue of shares – 08 
o wn shares acquired for share incentive schemes 66 102
charges and transfers in relation to sharebased payments for the year 08 27 
net increase in shareholders’ funds 346 798 
o pening shareholders’ funds 5849 5051 
closing shareholders’ funds 6195 5849  148 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
2009
£m
2010
£m
2011
£m
2012
r estated
£m
2013
results before
specific
adjusting
items
£m
revenue 9426 10171 11010 10075 9578 
profit from operations before restructuring costs  
other oneoff items and amortisation of intangible assets 890 1095 1434 1209 1190 
restructuring costs and other oneoff items
r estructuring costs and costs associated with settlement of prior period 
antitrust litigation 140 85 56 133 113
g ain on disposal of properties 20 06 24 01 08 
net pension credit – – 13 – – 
profit from operations before amortisation of intangible assets 770 1016 1415 1077 1085 
amortisation of intangible assets 163 80 83 83 83
operating profit 607 936 1332 994 1002 
net financing costs 293 259 218 227 233
profit before taxation 314 677 1114 767 769 
income tax expense 87 197 326 216 211
profit after taxation before discontinued operations 227 480 788 551 558 
discontinued operations – – – 210 – 
profit for the period 227 480 788 761 558 
assets employed
property plant and equipment 2762 2692 2598 2455 2414 
intangible assets 2969 2850 2833 2651 2495 
investments and other receivables 93 91 103 100 80 
deferred tax assets 372 385 411 406 282 
net current assets 1365 1310 1601 1944 1328 
total assets less current liabilities 7561 7328 7546 7556 6599 
employee benefits 1059 1039 1351 1668 1446 
provisions and other items 3881 3316 3048 2767 2077 
deferred tax liabilities 475 452 445 405 335 
2146 2521 2702 2716 2741
equity
total equity attributable to equity holders of the parent company 1846 2150 2294 2338 2381 
noncontrolling interests 300 371 408 378 360 
total equity 2146 2521 2702 2716 2741 
ordinary dividends per share 70p 770p 925p 100p 105p 
earnings per share
basic 71p 158p 269p 187p 148p
diluted 68p 150p 257p 184p 147p
basic before amortisation of intangible assets 132p 187p 299p 217p 215p
diluted before amortisation of intangible assets 126p 178p 286p 213p 214p
   ias 19 revised employee benefits has been adopted for 2013 and the 2012 comparatives have been restated accordingly further details are given in note 1 to the financial statements 
figures for 2009201 1 have been prepared following the requirements of the previous ias 19 employee benefits and have not been restated for the impact of the new ias 19 revised 
employee benefits
group statistical infor matio n
u nder adop ted ifr ss 149 financial statements
morgan advanced materials  annu al repor t 2013  annu al repor t 2013  morgan advanced materials
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cau tio nary statement
this document has been prepared for and 
only for the members of the company as  
a body and no other persons its purpose  
is to assist members to assess how the 
directors have performed their duties  
the company’s strategies and the potential 
for those strategies to succeed and for no 
other purpose save as would otherwise 
arise under english law the company its 
directors employees agents or advisers  
do not accept or assume responsibility or 
liability to any third parties to whom this 
document is shown or into whose hands  
it may come and any such responsibility  
or liability is expressly disclaimed
this document contains forwardlooking 
statements that are subject to risk factors 
associated with amongst other things  
the economic and business circumstances 
occurring from time to time in the 
countries sectors and markets in which  
the g roup operates these and other 
factors could adversely affect the outcome 
and financial effects of the plans and events 
described forwardlooking statements  
by their nature involve a number of risks 
uncertainties and assumptions because  
they relate to events andor depend on 
circumstances that may or may not occur  
in the future and could cause actual results 
and outcomes to differ materially from 
those expressed in or implied by the 
forwardlooking statements
it is believed that the expectations reflected 
in these statements are reasonable but  
they may be affected by a wide range of 
such variables no assurances can be given 
that the forwardlooking statements in this 
document will be realised the forward
looking statements reflect the knowledge 
and information available at the date this 
document was prepared and will not  
be updated during the year but will be 
considered in the annual r eport for next 
year nothing in this document should be 
construed as a profit forecast 150 financial statements
morgan advanced materials  annu al repor t 2013
energy use energy from all sources
g roup earnings before interest tax  
depreciation and amortisation ‘ebitda’
o perating profit before specific adjusting items restructuring costs depreciation 
and amortisation of intangible assets
g roup ebita o perating profit before specific adjusting items restructuring costs and 
amortisation of intangible assets
g roup underlying operating profit o perating profit before specific adjusting items and amortisation of  
intangible assets
lost time accident ‘lta’ accident which results in one or more days’ lost time
lost time per lta total time lost due to health and safety in the year divided by the number  
of lost time accidents reported in the year
net debt interestbearing loans and borrowings bank overdrafts less cash and  
cash equivalents
r estructuring costs include the costs of restructuring activity and gain on disposal of property
nonfinancial kpis these are at constant currency and updated to reflect changes in reporting 
methodology
r egional ebita segment operating profit before restructuring costs and amortisation of  
intangible assets
r estated the results for the year ended 31 december 2012 have been restated to  
reflect the required adoption of ias 19 revised employee benefits see note 1  
for further details
r eturn on operating capital employed ‘ro ce’ g roup underlying operating profit divided by the sum of working capital  
which excludes pension liability and provisions and the net book value  
of tangible assets g oodwill and other intangible assets are excluded
segment profit segment profit is defined as r egional ebita which is segment operating profit 
before restructuring costs and amortisation of intangible assets
specific adjusting items see note 6 for further details
unallocated central costs includes plc costs eg r eport  accounts ag m nonexecutive and  
g roup management costs eg corporate head office rent utilities staff etc
u nderlying earnings per share ‘eps’ basic earnings per share adjusted to exclude specific adjusting items and 
amortisation of intangible assets
u nderlying profit before tax ‘pbt’ o perating profit before specific adjusting items and amortisation of intangible 
assets less net financing costs
waste h azardous and nonhazardous waste including recycled material
water useintensity water from all sources including process irrigation and sanitary use
working capital as used in the ro ce calculation working capital as used in the calculation of ro ce is the sum of inventories  
£1 189 million 2012 £1399 million trade and other receivables £1882 million 
2012 £1854 million net derivative financial assetsliabilities £08 million  
2012 £11 million trade and other payables £1759 million 2012 £1840 
million less tax accruals £229 million 2012 £232 million plus the net of 
deferred consideration third party dividends payable and other sundry items 
£19 million 2012 £12 million
g lo ssary o f ter ms 151 financial statements
str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
overview
annu al repor t 2013  morgan advanced materials
sh ar eholde r inf or matio n
analysis of shareholdings as at 31 december 2013
 number of holdings  of total holdings number of shares  of share capital 
size of holding 1 – 2000 5937 7332 3245101 114
2001 – 5000 1197 1478 3835537 134
5001 – 10000 446 551 3138484 110
10001 – 50000 296 366 6298004 221
50001 – 100000 62 077 4473288 157
100001 and above 159 196 264379574 9264
8097 10000 285369988 10000
h olding classification individuals 6769 8360 12672031 444
nominee companies 1208 1492 268325656 9403
trusts pension funds etc 9 011 101734 003
o thers 111 137 4270567 150
8097 10000 285369988 10000
key dates
dividend payment dates
30 may 2014 o rdinary shares of 25 pence each
1 april 2014 55 cumulative first preference shares of £1 each and 50 cumulative second preference 
shares of £1 each
1 o ctober 2014 55 cumulative first preference shares of £1 each and 50 cumulative second preference 
shares of £1 each
9 may 2014 2014 annual g eneral meeting
23 july 2014 h alfyear results
other information 
capital gains tax the market values of quoted shares and stocks at 31 march 1982 were 
o rdinary shares of 25 pence each 1225 pence 
55 cumulative first preference shares of £1 each  305 pence 
50 cumulative second preference shares of £1 each  285 pence
for capital gains tax purposes the cost of o rdinary shares is adjusted to take account of  
rights issues any capital gains arising on disposal will also be adjusted to take account of  
indexation allowances since the adjustments will depend on individual circumstances  
shareholders are recommended to consult their professional advisers
share price the price can be obtained on the company’s website wwwmorganadvancedmaterialscom
isin code gb 0006027295
ticker symbol mg am
 subject to shareholders’ approval at the 2014 ag m morgan advanced materials  annu al repor t 2013
152 financial statements
company details
company name change the company changed its name to morgan advanced materials plc from the morgan crucible company plc  
on 27 march 2013
following this change share certificates issued in the name ‘the morgan crucible company plc’ remain valid 
replacement share certificates in the name ‘morgan advanced materials plc’ will not be issued to existing shareholders
r egistered office quadrant 5557 h igh street windsor berkshire sl4 1lp r egistered in england no 286773
telephone 44 0 1753 837000  fax 44 0 1753 850872
website wwwmorganadvancedmaterialscom
the company’s website provides information about the g roup including the markets in which we operate our strategy 
and recent news from the g roup the investors section is a key source of information for shareholders containing 
details of our financial results shareholder meetings and dividend with a frequently asked questions section  
current and past annual h alfyear and eh s reports are also available to view and download
company registrars capita asset services the r egistry 34 beckenham r oad beckenham kent br 3 4tu
telephone in u k 0871 664 0300 calls cost 10p per minute plus network extras lines are open mondayfriday 
900am530pm excluding public holidays
telephone from outside the u k 44 0 20 8639 3399
email shareholderenquiriescapitacouk
website wwwcapitaassetservicescom
shareholders with queries relating to their shareholding should contact capita directly alternatively shareholders may 
find the investors section of our website useful for general enquiries
share portal the share portal is a secure online site where you can manage your shareholding quickly and easily reducing the 
need for paperwork and providing 24hour access for your convenience through the share portal you can view 
your holding and get an indicative valuation change your address arrange to have dividends paid into your bank 
account and view your dividend payment history to register for the share portal visit wwwcapitashareportalcom 
all you need is your investor code which can be found on your share certificate or your dividend tax voucher
dividend payments you can choose to receive your dividend in a number of ways dividends will automatically be paid to you by cheque 
and sent to your registered address unless you have chosen one of the options below
direct payment  
to your bank
cash dividends can be paid directly to a u k bank or building society account this means that your dividend reaches 
your bank account on the payment date it is more secure cheques can sometimes get lost in the post you don’t 
have the inconvenience of depositing a cheque and it helps reduce cheque fraud if you have a u k bank account  
you can sign up for this service on the share portal by clicking on ‘your dividend options’ and following the onscreen 
instructions or by contacting capita
international payments 
service
if you live outside the u k capita has partnered with deutsche bank to provide you with a service that will  
convert your sterling dividends into your local currency at a competitive rate you can choose to receive payment 
directly into your local bank account or alternatively you can be sent a currency draft you can sign up for this  
service on the share portal by clicking on ‘your dividend options’ and following the onscreen instructions or by 
contacting capita
for further information contact capita by telephone in the u k on 0871 664 0385 calls cost 10p per minute plus 
network extras lines are open mondayfriday 900am530pm excluding public holidays or from outside the u k  
on 44 0 20 8639 3405 or by email ipscapitacouk
multiple accounts on  
the shareholder register
if a shareholder receives two or more sets of ag m documents this means that there is more than one account in 
their name on the shareholder register perhaps because either the name or the address appears on each account  
in a slightly different way if you have multiple accounts and would like them to be combined please write to capita  
at the address above detailing your different investor codes and requesting that they be combined into one account
donate your shares  
to charity
if you have only a small number of shares which are uneconomical to sell you may wish to consider donating them to 
charity free of charge through shareg ift registered charity 10528686 a charity that specialises in the donation of small 
unwanted shareholdings to good causes you can find out more by visiting wwwsharegiftorguk or by telephoning  
44 0 20 7930 3737 
unsolicited telephone  
calls and mail
many companies have become aware that their shareholders have received unsolicited phone calls or correspondence 
concerning investment matters if you are offered unsolicited investment advice discounted shares a premium  
price for shares you own or free company or research reports further information about what you should do  
before handing over any money is available on our website httpwwwmorganadvancedmaterialscominvestors
shareholdercentreunsolicitedtelephonecallsandmail
morgan advanced materials  annu al repor t 2013
sh ar eholde r inf or matio n
co ntinued this report has been printed in the uk our printers are environmental management 
system iso 14001accredited and forest stewardship council fsc chain of 
custodycertified all inks used are vegetablebased this paper is environmentally  
friendly ecf elemental chlorinefree and woodfree with a high content of selected 
preconsumer recycled material the mill is fully fsccertified the paper is also 
completely biodegradable and recyclable
if you have finished reading this report and no longer wish to retain it please pass it on to 
other interested readers return it to morgan advanced materials or dispose of it in your 
recycled paper waste thank you
this annual report is available at wwwmorganadvancedmaterialscom
designed and produced by instinctif partners  wwwinstinctifcom
one  
morgan
morgan advanced materials  
is committed to building  
a sustainable competitive 
advantage in attractive  
markets with truly 
differentiated products  
and services underpinned by 
worldleading technology
the group produces a wide range of specialist  
highspecification materials that have extraordinary 
attributes and properties
engineered into products they deliver enhanced 
performance often under extreme conditions
the group’s dynamic highly skilled people are 
continuously engaged in finding solutions for 
complex and technologically demanding applications 
which are used all over the world
in short the group supplies innovative differentiated 
products made from highly technical advanced 
materials which enable its customers’ products and 
processes to perform more efficiently more reliably 
and for longer
  for more information about morgan advanced materials 
please visit our website
   wwwmorganadvancedmaterialscom
  find out more about morgan advanced materials 
graduate recruitment on facebook
   wwwfacebookcommorganceramics morgan advanced materials plc  annual report 201 3
morgan advanced materials plc
quadrant 5557 high street 
windsor berkshire sl4 1lp
tel 44 01753 837000 
fax 44 01753 850872
wwwmorganadvancedmaterialscom
morgan advanced materials plc
annual report 2013
innovation
ambition
collaboration
integrity
applications 
engineering
materials 
science
one  
morgan


Summary:
 8 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
2013 has been a year of significant change  
for morgan implementing a new organisation 
structure striving for profit and margin 
improvements in markets that predominantly 
have afforded little or no growth and 
accelerating our portfolio transformation  
i am pleased to report that relative to our 
direct competitors we have demonstrated 
significantly greater resilience in the difficult 
market conditions n evertheless we are  
very clear that regardless of market conditions 
as an organisation our aspiration remains to 
drive absolute improvement in our results  
in 2013 against the backdrop of the difficult 
environment whilst we made yearonyear 
progress in our g roup ebit a margin 
increasing it to 124 2012 120 our 
revenue and ebit a in absolute terms were 
below 2012 levels however i believe that  
the structural and portfolio changes that we  
are well advanced in making leave us well 
positioned to take advantage of profitable 
growth opportunities in 2014 and to continue 
to improve further the quality and returns of 
the g roup both in relative and absolute terms 
one morgan
in february 2013 we announced and began the 
implementation of our o ne morgan model – 
streamlining the former divisional organisation 
and moving to a single management structure 
organised on a regional basis n orth america 
europe and asiar est of w orld in this new 
model each region is able to offer our 
customers the full range and depth of our 
products and technologies and i am delighted 
with how well this major organisational change 
has been implemented t he simplification of 
the management structure has improved our 
global communication and accelerated the  
pace of change leaving the group increasingly 
well positioned for future profitable growth  
and margin enhancement w e successfully 
implemented this new organisational model 
without losing focus on our daytoday 
operations and whilst continuing to provide 
excellent service to our customers
chief exe cut ive o fficer ’s re view
w e re main f o cu sed on b u il ding 
su st ainab le c o mpet it ive advant age 
in a ttr act ive mar ket s t hroug h  
a port fol io o f bu sine sses w it h  
truly diff erent iate d pro du cts  
and ser vices und erp inne d by 
world le ading te chnology
mark ro ber tsha w 
chief exe cut ive offic er 9 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
overview
t he focus of the move to the o ne morgan 
organisation remains on capturing greater 
profitable growth opportunities by fully 
leveraging the breadth of our geographic and 
market access w hilst it is still early days there 
have already been some initial successes in this 
area with additional sales opportunities being 
identified and pursued through our extensive 
range of customers and channels
w hilst i will comment on the g roup  
and regional results in more detail later on  
it is worth noting that the general industry 
background has been difficult through 2013  
and in most markets we have seen limited 
pickup in demand as many countries around 
the world continue to find achieving meaningful 
economic recovery to be a challenge however 
i am pleased to report that the operational and 
cost benefits targeted under o ne morgan have 
been realised enabling us to improve operating 
margins despite the difficult competitive 
environment whilst at the same time positioning 
us better for future profitable growth 
o ne of the key operational benefits of the new 
structure is that we have significantly shortened 
our reporting lines enabling closer contact  
with the operating units and an increased level 
of agility to respond even more effectively  
to any change in market conditions it has also 
given us the opportunity to reevaluate the 
businesses and technologies in our portfolio  
to heighten further our focus on building 
sustainable competitive advantage  
underpinned by worldleading technology 
r evenue in n orth america declined 56 
relative to 2012 at constant currency t he 
decline in large petrochemical project demand 
impacted our hightemperature insulating  
fibre and insulating firebrick sales with some 
degree of offset by increased sales of our fibre 
products to the automotive industry and to the 
general industrial market w e have increased 
our superwool
®
 low biopersistent fibre 
capacity and market penetration and this has 
provided benefits to both sales and margin 
n orth america was also adversely impacted by 
a decline in our sales to the electronics market 
w hilst the consumer electronics market as a 
whole weakened during 2013 we were 
specifically impacted by reduced hard disc drive 
sales as we chose not to engage in heavy price 
discounting and saw our market share of  
this business reduce as a consequence 
encouragingly our sales of electrical brush  
and related products did increase during 2013 
largely due to new business wins in the  
wind energy aftermarket where we  
have successfully developed differentiated 
highperforming products that are taking  
a growing share in those applications
 
r evenue for the european region was 37 
below 2012 at constant currency though  
as with g roup revenue this yearonyear 
decline was all relative to the first half of 2012 
o ne encouraging exception was an increase in 
our electrical brush and rotary business during  
the course of the year driven by successfully 
winning market share from our competitors 
despite the continued reduction in u k defence 
spending our u kbased composites and 
defence systems business delivered sales  
very similar to 2012 at improved margin  
levels w hilst as noted above we exited the 
lowmargin vehicles spares contract towards 
the end of 2013 we have been successful  
in some important new contract wins for  
2014 and beyond particularly in armoured 
vehicle programmes for the u k mod
o ur goal is for all our businesses and 
technologies to have the potential to deliver 
midteen operating profit margins and we  
have already exited in 2013 from certain 
businesses that fall short of our requirements  
of technologyrich midteen margins in 2013  
our composites and defence systems business 
formerly np aerospace exited a spares  
and logistics contract with the u k ministry  
of defence ‘mod’ whilst supporting the 
composites and defence systemsbuilt mastiff 
fleet in theatre was important and a source  
of revenue it was not an ‘advanced materials’ 
business and generated very low margins 
t owards the end of 2013 we also sold the 
majority of our shares in the lossmaking  
assam carbon products l imited india  
t his process of portfolio reshaping will 
continue through 2014 
group results
w ith challenging market conditions our 
revenue of £9578 million was 49 below 
2012 at both reported exchange rates and on  
a constant currency basis t his yearonyear 
reduction was a reflection of revenue being 
lower in the first half of 2013 compared to the 
first half of 2012 with revenue in the second 
half of 2013 increasing marginally compared  
to the equivalent period in the prior year on  
a constant currency basis
despite the lower revenue g roup underlying 
operating profit of £1085 million was 
marginally ahead of 2012 £1077 million
all three regions saw a large decline in major 
petrochemical projects into which we provide 
our hightemperature insulating fibre and 
insulating firebrick management solutions  
t he low level of global industrial demand  
and reduced credit availability to fund such large 
projects has led to delays in their commissioning 
encouragingly enquiry levels for these projects 
remained high in 2013 and in recent weeks  
we have seen some initial project orders being 
placed providing some grounds for optimism 
in this market for 2014 10 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
r evenue in asiar est of w orld was 57 
lower than 2012 at constant currency in 
addition to the weak petrochemical market  
the general industrial market was also subdued 
most notably in china and india in 2013 we 
celebrated 25 years of having an operational 
presence in china and whilst our sales in 
china and most of the rest of the region were 
lower yearonyear we remain confident in  
the longterm demand prospects of the region 
as a result we continue to invest significant 
amounts of resource both in terms of our 
people and also in new capital investment  
w e are close to completion of our greenfield 
site in dalian china for hightemperature 
castable products and expect to commission 
this new plant in the second quarter of 2014 
w e also expect to commence work in  
2014 on a new plant for superwool
®
  
hightemperature insulating fibre in khalifa 
industrial z one abu dhabi the u nited arab 
emirates which will give us close proximity to 
key customer opportunities in petrochemical 
markets in the region and access to lowcost 
energy which is a key element of the operating 
costs of this business w e also recognise the 
increasing demand in the former ‘emerging 
markets’ for technically differentiated products 
and processes in areas such as medical devices 
advanced electronics and aerospace w e have 
worldleading technology and products in all of 
these areas and already serve these applications 
in the w est u nder the o ne morgan structure 
we are leveraging this technological capability in 
these growing higher margin markets through 
our wellestablished local presence w e have 
enjoyed some early successes and see even 
greater opportunity for the future in these 
highertech areas 
during 2013 we have continued to focus hard 
on making improvements to our operating cost 
base w hilst not the primary reason for the 
o ne morgan initiative we have successfully 
realised significant cost benefits as a result of 
the organisational streamlining further cost 
benefits have come in 2013 from the fullyear 
impact of initiatives undertaken in the second 
half of 2012 w e continue to increase the use 
of our lowcost manufacturing footprint for 
example completing the relocation of electrical 
brush manufacturing from the n etherlands to 
hungary and the cessation of hightemperature 
ceramic fibre manufacturing in highcost 
australia japan and south africa supplying 
these markets instead from our lower cost 
facilities elsewhere in the world 
as a result of the cost actions taken combined 
with the positive changes we have made to our 
product mix we have progressively delivered 
increases in our g roup ebit a 1 10 in the 
second half of 2012 increasing to 120 in the 
first half of 2013 and 129 in the second half 
of 2013 t he 2013 fullyear ebit a margin of 
124 is an improvement against the 120  
in 2012 
t he g roup also continued to generate good 
levels of cash and to further reduce the net 
debt position to £1865 million 2012 £1928 
million leaving the g roup with the capability 
to easily finance any appropriate bolton 
acquisitions that satisfy our investment criteria 
t he financial performance and the progress 
made underpins our progressive dividend 
policy and the increase in the final dividend to 
67 pence 2012 64 pence giving a fullyear 
dividend of 105 pence 2012 100 pence 
technology and innovation
w e are an advanced materials g roup and 
worldleading technology and constant 
innovation is at the core of what we do  
w e have continued to increase our investment 
in r d in 2013 in both £ and  terms spend 
in 2013 was £202 million or 21 of sales 
compared with £196 million in 2012 19 of 
sales t he move to o ne morgan has provided 
additional impetus to our r d efforts w e 
appointed in 2013 a g roup chief t echnology 
o fficer whereas in the past this function was 
conducted at the divisional level his remit  
is to coordinate and deploy g roupwide  
r d resource on those initiatives that are 
considered to be the highest potential  
growth opportunities for morgan examples  
of this include the development of next
generation low biopersistent fibres extending 
the temperature coverage of our superwool
®
 
fibre products and the introduction of 
additional g lobal materials centres of 
excellence – these are single locations where 
we consolidate development resource and 
efforts for our major product lines providing 
critical mass that links effectively with our  
global manufacturing and sales network 
chief exe cut ive o fficer ’s re view
continued 11 str ateg ic report
morgan advanced ma terials  annu al report 2013  annu al report 2013  morgan advanced ma terials
overview str ategic 
rep ort
dire ctor s’ 
rep ort
fin anc ial 
statemen ts
our people
i have been delighted with the way in which 
the g roup workforce has embraced the  
new organisational structure many have been 
affected by the change in the organisation 
assuming new responsibilities and working  
in new reporting structures such change 
brings with it the challenge of maintaining good 
business continuity and i am delighted with  
the way our employees have risen successfully 
to these challenges r egrettably this re
organisation along with a number of the  
cost reduction initiatives implemented across 
the g roup has led to some redundancies  
i see this as an unfortunate but necessary 
consequence of looking to do the best for  
the g roup as a whole in such redundancy 
situations we ensure that in addition to 
complying with local legislation we seek to 
treat our people with honesty and respect 
throughout the process as a g roup we 
recognise the importance of developing our 
people o ne morgan has further helped in  
this regard allowing us to take a single global 
view of the talent in our organisation and how 
we manage their careers across geographies 
and functions to ensure we are developing  
our future leaders t o support this we have 
increased the scale of our awardwinning 
graduate recruitment programme with  
26 new graduates hired in 2013 compared  
to 20 in 2012 and a target to bring in more 
than 30 in 2014 t hese graduates are sourced 
from top universities around the world and  
a significant proportion of them are women 
providing real diversity i am pleased to report 
that securing the brightest young minds from 
the best universities across the world is 
providing us with an exciting and growing 
pipeline of real talent for the future 
looking forward
o ur goal is to deliver sustained profitable 
growth effectively exploiting our worldleading 
technology and global reach not only to take 
advantage of endmarket recovery but most 
importantly to create our own opportunities 
w e have already actioned a number of our 
portfolio reshaping initiatives to increase  
further our focus on accelerated profitable 
growth underpinned by differentiation and 
technological leadership and we expect more 
of these portfolio reshaping initiatives to come 
through in 2014 
t he creation of o ne morgan our increased 
investment in innovation and technology and 
the quality of our people leave us increasingly 
well positioned to deliver such growth and 
margin enhancement
mark r obertshaw
chief executive o fficer