the morgan crucible company plc 
annual report 2009
the 
adva nced 
materia ls 
grou p overview
financial statements
governance
business review
 the morgan crucible company plc  
 annual report 2009
morgan crucible is a world leader  
in advanced materials
our highly skilled dynamic people  
provide hightechnology solutions  
for specialised applications in selected  
global markets
a look at some of our markets
aerospace p06
power generation p12
defence and protection p10
medical p16
metals p24 petrochemical p20
overview
01 operational and financial highlights
02 morgan crucible at a glance
04 strategic overview 
30 chairman’s statement
business review
32 chief executive officer’s review
34 group business review
35 key performance indicators 
36 review of operations 
48 corporate responsibility
56 financial review
60 risk management 
62  key resources and contractual 
relationships
63 cautionary statement
governance
64  board of directors and  
executive committee
66  directors’ report
70  corporate governance
76 statement of directors’ responsibilities 
77 remuneration report
86 shareholder information 
87 independent auditors’ report
financial statements
88 consolidated income statement
89  consolidated statement of other 
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
139 company balance sheet
140 notes to the company balance sheet
148 group statistical information overview
financial statements
governance
business review
01 the morgan crucible company plc 
 annual report 2009
operational and  
financial highlights
revenue for the year grew   
to £9426 million up 129  
on the previous year
group ebita was £890 million  
delivering a margin of 94
net cash flow from operations  
increased substantially to  
£1345 million 21 up on  
the previous year
final dividend maintained at last  
year’s level of 45 pence giving  
a fullyear dividend of 7 0 pence
2009
revenue
continuing businesses £m
2008
2007
9426
8350
6932
2009
group ebita
continuing businesses £m
2008
2007
890
1088
881
2009
group ebita margin
continuing businesses 
2008
2007
94
130
127
2009
underlying earnings per share
pence
2008
2007
132
234
197
  defined as operating profit before restructuring costs  
other oneoff items and amortisation of intangible assets
  defined as basic earnings per share adjusted to exclude 
amortisation of intangible assets overview
financial statements
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02 the morgan crucible company plc 
 annual report 2009
morgan crucible 
at a glance
our divisions
carbon division
technical ceramics division
insulating ceramics division
the carbon division is a global provider of advanced materials technology with  
extensive expertise in the processing and application of carbon graphite silicon carbide 
oxide ceramics and related materials this includes advanced composite technology 
developed within the ballistic protection business working at the forefront of materials 
technology the division is a world leader in the development of valueadded customer 
solutions through engineering innovation and an understanding of industryspecific 
needs opportunities and challenges the division has sites in 25 countries and employs 
some 3400 people worldwide
the technical ceramics division utilises advanced ceramic glass precious metals 
piezoelectric and dielectric materials combined with innovative design and applications 
engineering to provide an extensive range of ceramic components assemblies and 
related products for niche technological applications in selected markets in many 
applications the technology provided by technical ceramics defines the performance  
of the customer’s end product the division is a world leader in its target markets with 
sites in 6 countries around the world employing some 2600 people
the insulating ceramics division designs manufactures and installs a wide variety  
of engineered solutions from its range of worldrenowned advanced insulation and 
thermal management products these solutions help customers to protect equipment 
and personnel and to reduce energy consumption in their processes and in many 
applications reduce emissions to the environment the division is a world leader in the 
production of insulating fibre insulating fire bricks monolithics and crucibles with sites 
in over 30 countries around the world and employing more than 3400 people
core productsapplications
electrical brushes  
seals and bearings  
protective ballistic armour  
ultra hightemperature insulation  
core productsapplications
ceramic cores for complex   
turbine blades
components for electron tubes  
feedthroughs for medical implants  
piezoelectric ceramic actuators  
core productsapplications
engineered thermal management  
solutions
hightemperature insulating fibres  
hightemperature insulating fire bricks  
monolithics  
crucibles and furnaces  
morgan crucible is a global advanced materials company listed  
on the london stock exchange the group’s products and  
services help make the world safer  healthier and more efficient  
morgan crucible employs some 9400 people around the world 
and has operating sites in 34 countries serving customers in over 
100 countries its three divisions have leading positions in their 
target niches in the aerospace defence and protection power 
generation medical petrochemical and iron and steel markets overview
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03 the morgan crucible company plc 
 annual report 2009
target markets 
defence and protection  
electrical current transfer systems  
fluid handling  
power generation  
semiconductor processing  
target markets 
aerospace  
medical  
industrial equipment  
power generation  
electronics  
target markets 
metalsiron and steel  
petrochemical  
fire protection  
ceramics  
power generation  
carbon revenue £
technical ceramics revenue £
insulating ceramics revenue £
3 9 14m
2060m
3452m
americas
group ebita

2009  
£356m
emea
group ebita

2009  
£324m
asia
group ebita

2009  
£21 0m
40
36
24
americas
group ebita

2009  
£356m
emea
group ebita

2009  
£324m
asia
group ebita

2009  
£21 0m
40
36
24
americas
group ebita

2009  
£356m
emea
group ebita

2009  
£324m
asia
group ebita

2009  
£21 0m
40
36
24
2009
divisional ebita 
continuing businesses £m
2008
2007
405
363
352
2009
2008
2007
251
316
200
divisional ebita 
continuing businesses £m
2009
2008
2007
276
456
375
divisional ebita 
continuing businesses £m
  operating profit before restructuring costs other 
oneoff items and amortisation of intangible assets
  defined as segment operating profit before 
restructuring costs other oneoff items and 
amortisation of intangible assets overview
financial statements
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04 the morgan crucible company plc 
 annual report 2009
chief executive officer’s  
strategic overview
our strategy of reducing our 
exposure to economically cyclical 
markets has delivered resilient 
results in 2009 against the 
challenging background of the 
major global downturn
mark robertshaw
chief executive officer
defence
endmarket mix change since 2003 
movement in  share of group revenue 
from 2003 to 2009 
aerospace
petrochemical
medical
construction
metalsiron and steel
rail transportation
industrial equipment
power generationenvironmental
telecomselectronics
consumer goods
automotive
other
221
38
24
07
03
03
04
06
25
52
58
71
81
strategic progress since 2003
t arget markets higher growth 
highmargin less economically cyclical
markets with some cyclicality but 
selected growth potential
deemphasised markets greater 
cyclicality and commoditisation
 
2006
businesses continue to 
refocus their organic 
growth plans towards 
higher margin less  
economically cyclical 
markets
2007 
morgan crucible acquires 
a 49 equity stake in np 
aerospace a composite 
technical moulding 
business in key higher 
margin noneconomically 
cyclical defence and 
medical markets
2003 
morgan crucible  
announces a threeyear 
profit improvement 
programme as a result of 
a strategic review which 
identifies substantial 
opportunities to transform 
the group and generate 
improved performance 
2004 
disposal of the auto  
and consumer business 
completed in june as part 
of the group’s strategy  
of disposing of noncore 
businesses and to simplify 
and focus the group’s 
structure
2005 
magnetics division 
disposal completed  
in september continuing 
the transformation of  
morgan crucible into  
a more simplified and  
focused group overview
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05 the morgan crucible company plc 
 annual report 2009
 have a culture of  
operational excellence  
and cost efficiency
 our aim is to create  
longterm sustainable 
shareholder value
 find keep and   
develop the right  
people
 be high valueadded to  
our customers
our vision is to be one  
of the world’s very best 
advanced materials 
companies
be number one   
or number two in  
our chosen market 
segments
 focus on higher  
growth higher margin 
noneconomically 
cyclical markets
strategic priorities
our vision
the next stage
our aim
2010 and beyond 
continued focus on providing 
differentiated advanced materials  
to highvalue noneconomically  
cyclical markets 
2008 
acquisition of the technical ceramics 
businesses of the carpenter technology 
corporation to increase the group’s 
presence in higher margin higher 
growth sectors of the aerospace and 
power generation markets
2009 
morgan crucible increases its  
equity stake in np aerospace to  
60 in january becoming a majority 
shareholder and allowing the results of 
np aerospace to be fully consolidated 
for the first time overview
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06 the morgan crucible company plc 
 annual report 2009
a t the 
leading edge 
of aerospace overview
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07 the morgan crucible company plc 
 annual report 2009
with the rapid development of 
increasingly complex aerospace 
technology our customers are 
demanding more from the materials 
they use in morgan crucible they 
have a partner who can help them 
respond to the pace of change
enhancing aerospace production processes
innovative materials for the  
aerospace industry
long life and highaltitude 
performance
morgan crucible is helping to make aerospace production 
processes more efficient and safer for example thermal ceramics  
is working with a leading uk investment casting company to 
develop single use biosoluble mould wrap insulation for casting  
the turbine blades for many civilian and military aircraft this is 
based on our superwool 607ht
tm
 and is critical to ensure that the 
nickelbased superalloy blades develop the right crystal structures 
as they are gradually cooled from 1600ºc to room temperature
advanced materials technology from morgan 
crucible is used throughout many modern 
aircraft including in guidance and satellite 
positioning systems ignition systems fire 
protection and suppression instrument 
displays and engine monitoring for example 
the technical ceramics division’s seals 
thermocouples and feedthroughs are ideal  
for aerospace applications due to their ability 
to withstand the high temperatures vibration 
and mechanical shock experienced in aircraft 
engines and other highstress locations
through the carbon division’s advanced 
engineering an innovative carbon material 
has been developed to transfer electrical 
current between stationary wires and 
moving parts in lowhumidity environments 
at high altitude and in space used to 
transfer the high current loads required by 
starter generators on fixed and rotary wing 
aircraft the material offers longer life with 
no compromise on performance thereby 
helping to reduce maintenance requirements 
and associated operating costs overview
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08 the morgan crucible company plc 
 annual report 2009
providing  
perf o rma n ceen ha nci ng
com ponents
aerospace morgan crucible’s advanced 
materials technology has provided precision
engineered materials components and 
assemblies to meet the exacting needs and 
demanding applications of the aerospace 
industry for more than 50 years
measuring aircraft fuel 
consumption
reverse thruster insulation
technical ceramics’ piezoceramic materials 
are used in ultrasonic fuel level sensors to 
provide highly accurate readings regardless 
of the orientation of the aircraft each 
boeing 777 has over 50 fuel level sensors
technical ceramics’ piezoelectric and 
dielectric ceramic materials are used in  
the accelerometers and gyroscopes which 
measure the acceleration vibration and 
pitch of the aircraft
thermal ceramics provides flexible mink
tm
 
insulation which protects the reverse 
thrusters from hot exhaust gases the 
thrusters help the aeroplane decelerate once 
it has touched down helping cut landing 
distances and reducing wear on the brakes 
and other components
aircraft instrumentation overview
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09 the morgan crucible company plc 
 annual report 2009
providing  
perf o rm a n ceen ha nci ng
com ponents
quieter and more efficient  
engines
hightemperature insulation 
for flight data recorders
 improving engine efficiency
technical ceramics uses its proprietary 
materials and injection moulding processes 
to make the ceramic cores which enable 
turbine blades to be cast with an intricate 
network of cooling channels these cooling 
channels allow aircraft engines to run at 
higher temperatures which makes them  
quieter and more efficient
thermal ceramics provides the moulded 
mink
tm 
hightemperature thermal 
protection which helps safeguard the  
data recorder’s memory boards in the  
event of a postaccident fire 
the carbon division’s materials are 
invaluable in the seals which protect the 
main shaft bearings and the lubrication 
system from the hot combustion gases  
in the highspeed hightemperature 
environment of modern aircraft engines overview
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10 the morgan crucible company plc 
 annual report 2009
h ig h tech nology
defence and 
protection sol utions overview
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11 the morgan crucible company plc 
 annual report 2009
our materials technology 
ballistic expertise and integration 
capabilities help protect customers 
in defence police and civilian 
applications from new and 
increasing threats with particular 
focus on personnel protection 
morgan crucible is a leader in  
the advanced materials used  
in body armour helmets and 
protective vehicles
np aerospaceforce protection joint venture
integrated survivability technologies is a joint venture formed to 
offer speed of response and flexibility in the increasingly important 
market for vehicle protection systems the wolfhound – a highly 
protected tactical support vehicle which will transport general 
stores food and water in highthreat areas – is the first vehicle  
to benefit from this approach providing the customer with a  
truly integrated product offering and the ability to tailor vehicle 
solutions to customer needs
marine fire protection
security scanners
fire safety and damage limitation are  
key considerations in the design of coastal 
protection and naval ships worldwide 
lightweight but heavyduty fire protection 
products are increasingly used sometimes 
with the need to withstand much higher  
fire temperatures than are specified for 
commercial vessels thermal ceramics’ 
firemaster
tm
 systems fulfil the requirement 
for efficient fire insulation solutions in  
this one of the most demanding marine 
operating sectors
the superior dielectric properties and high 
mechanical stability of technical ceramics’ 
metallised alumina ceramics enable security 
scanners to operate with higher accelerating 
voltages as a result our customers can 
build smaller xray tubes with a much 
better resolution for luggage cargo  
and parcel inspection around the globe overview
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12 the morgan crucible company plc 
 annual report 2009
performance in 
power generation and 
renewable energy
new and advancing technology  
is making electricity production  
and transmission more efficient 
and in the case of renewables 
increasingly cost efficient
thermal solutions in power generation
customised technology  
for wind power
enabling reliable power  
generation
rising fuel costs and the escalating demand for electricity is 
increasing the focus on technology to enhance efficiency thermal 
ceramics has developed advanced insulation solutions to help 
reduce heat losses in power generation using its superwool
tm
  
lowbiopersistence hightemperature insulating fibre and its 
insulating fire bricks and monolithics the division plays a key role  
in helping leading electricity generators around the world to reduce 
the amount of energy consumed per unit of electricity generated
wind turbines are often located in  
hostile environments around the world 
and in many cases this makes maintenance  
a difficult and costly task the carbon 
division is leveraging its advanced materials 
capabilities to tailor its portfolio of wind 
power technologies according to climate 
using customised materials helps to increase 
maintenance intervals making wind power  
an environmentally friendly more economic 
alternative to standard electricity generation 
processes
whether electricity is generated from gas 
coal oil wind water or nuclear energy 
carbon materials are used to transfer current 
between moving and stationary points  
the indispensable nature of our materials 
technology means that most power stations 
worldwide depend on products from the 
carbon division to transfer electrical current 
safely and effectively from their generators 
to the distribution grid overview
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13 the morgan crucible company plc 
 annual report 2009 overview
financial statements
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14 the morgan crucible company plc 
 annual report 2009
leading to more 
sustainable power 
generation
power generation morgan 
crucible’s advanced materials 
technologies are extensively  
used across the power generation 
sector our products are key  
to enhancing the sustainability  
of traditional generation and  
to enabling electricity to be 
produced from new and 
renewable sources 
thermal ceramics’ superwool
tm
 insulating 
fibre offers hightemperature resistance  
and low biopersistence it is seen as  
the preferred solution for duct and boiler 
insulation in heat recovery steam generator 
systems which can help boost power station 
efficiency by 35
the technical ceramics division is 
leveraging the outstanding mechanical 
properties and special surface quality of  
its fused silica roller technology to help 
manufacturers of thinfilm photovoltaic 
cells to enhance efficiency and cut costs 
bringing grid parity for renewable power 
ever closer
the carbon division is a world leader  
in advanced carbongraphitebased 
solutions for the solar industry these are 
highly engineered from hybrid materials  
to provide polysilicon and crystalline  
silicon manufacturers with the benefits  
of energy efficient production and 
enhanced photovoltaic cell performance
boosting efficiency in power 
generation
photovoltaic cells –  
towards grid parity
enhancing photovoltaic cell 
performance overview
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15 the morgan crucible company plc 
 annual report 2009
concentrated solar power focuses vast 
amounts of solar energy to harvest  
heat energy from the sun to generate 
electricity thermal ceramics supplies 
multiple highperformance insulation 
products to protect the tower and  
preserve the stored heat energy
power tower –  
solar thermal electricity
the carbon division supplies slip ring 
transmitters and rotating current transfer 
systems threephase generator slip rings 
and environmentspecific brushholders  
for high current transmission in the harsh 
environments experienced by wind farms 
around the world
harvesting the wind –
reliable wind power generation
the technical ceramics division’s ceramic 
capacitors are used in the systems which 
remotely indicate when an electrical 
transmission line fails these ‘liveline’ 
capacitors are used all over the world  
in onerous service conditions to ensure 
electrical integrity and long service life
reliability in power transmission overview
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16 the morgan crucible company plc 
 annual report 2009
t echnical expertise  
for medical 
appl ications overview
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17 the morgan crucible company plc 
 annual report 2009
with the growing pace of scientific 
discovery developments in health 
and wellbeing are increasingly 
technologyled morgan crucible  
is leveraging its advanced materials 
and manufacturing technologies  
to help deliver innovations  
in healthcare 
more precise and predictable 
ultrasound transducers
manufacturing and materials 
technology combined
medical fire protection
technical ceramics’ piezoelectric materials 
produce a voltage proportional to applied 
mechanical pressure and conversely if  
a voltage is applied they change shape  
technical ceramics uses these advanced 
materials to dramatically improve the 
performance of ultrasound transducers in  
medical applications including sensors for 
catheters blood pressure vascular flow 
and medical imaging 
the technical ceramics division  
combines worldleading ceramic injection 
moulding capabilities iso 13485certified 
manufacturing facilities and advanced 
materials technology to offer medical 
innovators and practitioners the 
biocompatibility repeatability and reliability 
required for human body implants and 
medical applications for example the 
division has achieved iso 133562008 
‘implants for surgery using nonmetallic 
materials’ compliance for its yztp zirconia 
material used in the manufacture of dental 
abutments and copings
the complexity of modern hospitals necessitates specialist  
fire protection solutions these help contain a fire to the room  
of origin and protect people equipment and the building  
thermal ceramics fire protection products were used in the 
construction of the new 835000ft
2
 columbia st mary’s hospital 
milwaukee wi usa  overview
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18 the morgan crucible company plc 
 annual report 2009
medical advanced materials and 
manufacturing techniques developed  
by morgan crucible serve critical  
functions in medical diagnosis and 
therapeutic processes
helping 
to improve  
qual ity of l ife
by replacing metal xray treatment couch 
components with advanced composites  
np aerospace helps ensure patients are 
positioned correctly for treatment whilst 
also facilitating higher image quality and 
lower xray doses
the technical ceramics division has 
developed vitox
tm
 amc an alumina matrix 
composite material for surgically implanted 
devices including hip joints it can be  
used to manufacture femoral heads with 
diameters close to that of a natural joint  
and for thinner wall section acetabular 
cups this offers recipients a wider range  
of motion and a reduced risk of dislocation
multiple products from the technical 
ceramics division are used in critical blood 
handling applications these include seals  
for automated blood collection devices 
diamonex
tm
 coated valves and bearing 
surfaces customdeveloped ultrasonic 
sensors to detect air bubbles in the  
blood flow and pressure sensors to  
detect occlusions 
precise imaging – replacing metals 
with advanced composites
hip joints – helping restore  
quality of life
blood handling overview
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19 the morgan crucible company plc 
 annual report 2009
the technical ceramics division is leveraging 
its experience in hip joints to offer other 
surgical implants using vitox
tm
 and zyranox
tm
 
zirconia bioceramic materials our spinal 
devices offer faster bone fusion no allograft 
or autologous bone graft anterior and 
posterior operative procedures and optimum 
biomechanical stability
ceramic assemblies and components  
from the technical ceramics division  
are critical in demanding diagnostic 
applications including computed 
tomography scanning equipment and 
xray machines for mammography it is  
the design material purity and quality  
of the ceramic components that defines  
the quality of the diagnostic images
ceramics at the heart of a scanner orthopaedic implants
advanced ceramics are making  
innovative treatment methods possible 
ceramictometal brazed feedthroughs from 
technical ceramics provide the electrical 
connection needed to communicate with 
neurostimulators that pulse various nerves 
for pain management and to treat epilepsy 
depression migraine and other conditions 
treatment through 
neurostimulation overview
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20 the morgan crucible company plc 
 annual report 2009
adv anced materials
for the petrochemica l
i nd ustry 
from cosmetics through fuels and 
fertilisers to detergents and plastics  
the petrochemical industry and its 
products play an enormous role in  
our daily lives advanced materials 
technology from morgan crucible 
helps the industry to ensure 
productivity is maximised and 
processes are efficient whilst  
also minimising emissions
superior downhole performance
heat management in the 
petrochemical sector
as exploration for oil gas and other fossil fuels increasingly involves 
on and offshore deep drilling drill bit reliability and tolerance  
become critical to exploration productivity the carbon division is a 
major supplier of the highly engineered graphite powder used in the 
manufacture of polycrystalline diamond cutters whilst the technical 
ceramics division provides the braze alloys which are critical to the 
manufacture of drill bits their performance is a critical factor for  
drill bit productivity and reliability 
thermal ceramics supplies optimised heat 
management and fire protection solutions 
for petrochemical plants around the world 
with a broad portfolio of hightemperature 
insulating fibres and insulating fire bricks  
and monolithics and backed by engineering 
experience and a global network of sales 
offices thermal ceramics is helping the 
petrochemical sector to reduce energy  
costs and extend service life 
helping to cut emissions
the reduction and where possible 
elimination of fugitive gas and product 
vapour emissions from valves pumps 
compressors and other pressurised equipment 
is an imperative across the petrochemical 
sector fugitive emissions represent a loss  
of product and frequently contribute to air 
pollution and climate change the carbon 
division works closely with its customers  
to develop its range of carbon and silicon 
carbide materials which are used for the  
seal faces in rotating process equipment  
the chemical resistance and selflubricating 
properties of the division’s materials make 
them ideal choices across the industry  overview
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21 the morgan crucible company plc 
 annual report 2009
adv anced materials
for the petrochemica l
i nd ustry  overview
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22 the morgan crucible company plc 
 annual report 2009
enabl ing g reater 
performance 
and efficiency 
petrochemicals morgan crucible’s global spread enables 
customers in the worldwide petrochemical industry to 
access our leading materials technology and solutions  
to help them reduce energy consumption in  
their processes and to make them more reliable 
and efficient
fire protection in the  
petrochemical sector
a fire in a refinery can quickly spiral out  
of control with disastrous consequences 
the destruction of instrumentation and 
control cabling can prevent the refinery 
from being shut down making the fire 
worse thermal ceramics’ firemaster
tm
 
system protects cables helping maintain 
control in an emergency situation
carbongraphites and silicon carbides  
are used extensively in pump sealing 
applications the sealing challenge 
increases as refiners process contaminated 
and abrasiveladen oil silicon carbide  
and other seal materials developed by the 
carbon division are at the heart of high
temperature highpressure sealing systems 
in refineries worldwide
rugged fluid handling
in partnership with its customers the 
technical ceramics division has developed  
a proprietary process for the production of 
the highstrength highpurity brazing alloys 
used in highly specialised drill bits offering 
superior downhole performance increased 
tool life and enhanced productivity
drill bit performance overview
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23 the morgan crucible company plc 
 annual report 2009
the steam cracking process is the most 
energyconsuming process in the chemical 
industry thermal ceramics is working with 
ethylene cracking technology providers  
to improve the energy efficiency of their 
designs offering solutions from our range 
of insulating fire bricks and high
temperature insulating fibre 
enhanced efficiency ethylene 
cracking
thermocouple tubes from the technical 
ceramics divison are made from specialist  
ceramics custom designed and up  
to 39 metres long they enable the 
accurate and fast measurement of 
temperatures of up to 2000ºc in  
the aggressive and rapidly changing 
environment of chemical processing 
temperature measurement
fluid handling pumps and compressors are 
key to the operation of a chemical plant 
leading pump and seal manufacturers 
around the world depend on the self
lubricating properties of the carbon 
division’s axial face seal materials to help 
increase maintenance intervals and to 
increase productivity
selflubricating sealing materials overview
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24 the morgan crucible company plc 
 annual report 2009
marketleading 
soluti ons for the g lobal
metals ind ustry   overview
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25 the morgan crucible company plc 
 annual report 2009
marketleading 
soluti ons for the g lobal
metals ind ustry  
around the world the metals 
industry is investing to reduce  
its environmental footprint 
particularly in relation to energy  
use and associated co
2
 emissions 
morgan crucible offers a 
comprehensive range of advanced 
engineered solutions to help
speciality carbon and graphite in the  
metallurgical industries
energyconserving refractory solutions
efficient furnaces for quality  
casting
the unique properties of carbon and graphite are fundamental to 
the efficiency and performance of the metals industry as well as 
comprehensive engineering support the carbon division provides  
a wide range of technically advanced products to aluminium 
processors including graphite flux tubes and degassing rotors  
for purification permacast
tm
 rings for semicontinuous casting  
and multiple components used in slab casting these are enhanced 
as required with the division’s proprietary impermeable coating 
systems or antioxidation treatments
thermal ceramics provides thermal management solutions to help 
the metals industry control product quality and conserve energy 
focused on hightemperature applications worldleading product 
performance is combined with engineered refractory solutions  
for the complete metalmaking process monolithic higun™ is  
used in blast furnaces pyrobloc™ in reheating and heat treatment 
furnaces trimor™ plascast for lining walls and arches and trimor 
hicast™ extra insulating fire bricks and morflo™ for hearth and 
reheating furnaces
ajax xray inc is a specialist nonferrous 
casting manufacturer with 40 years  
of experience keen to enhance 
competitiveness and to reduce emissions  
the company embarked on a programme to 
replace its existing metalmelting furnaces 
following a competitive evaluation ajax 
xray installed five morgan molten metals 
systems recuperative baleout furnaces  
at its foundry in sayre pa usa the 
recuperative furnaces recycle waste heat 
and use much less energy to deliver the 
same rate of metal melt nancy brittain 
ajax xray business manager commented 
“the new furnaces lose so little heat that 
we may have to start heating the foundry 
building in winter” overview
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26 the morgan crucible company plc 
 annual report 2009
 en hancing efficiency
and operational yields
in iron and steel
metals morgan crucible is uniquely positioned 
technically and geographically to offer a full  
range of advanced thermal management  
solutions to the world’s iron and steel industries
modern blast furnaces can produce up to 
80000 tonnes of iron per week requiring 
large quantities of energy and raw 
materials thermal ceramics supplies its 
monolithic higun
tm
 to help ensure blast 
furnace yields throughput and thermal 
efficiency are maximised
continuous casting eliminates multiple 
steps in the steelmaking process by casting 
the steel into semifinished shapes thermal 
management and control are key and 
thermal ceramics’ range of fibrebased 
hightemperature insulation boards 
vacuumformed shapes and paper  
provide solutions
cowper stoves are critical to blast furnace 
efficiency they preheat the blast air to 
9001300
o
c and recover heat from the hot 
gases from the furnace thermal ceramics 
provides the insulating fire bricks which are 
essential to the thermal management and 
reliability of this part of the process
blast furnace continuous casting hot blast stove cowpers overview
financial statements
governance
business review
27 the morgan crucible company plc 
 annual report 2009
heating steel sheets coil wire and other 
products to above their recrystallisation 
temperature in a controlled atmosphere 
the annealing furnace ensures the finished 
steel has a uniform crystal structure and 
good dynamic properties thermal ceramics’ 
insulating fire bricks and superwool
tm 
insulating fibre offer the heat management 
and durability required
coating steel by hotdipping it in a bath  
of molten zinc at 460ºc provides it with 
the corrosion protection needed in multiple 
consumer construction and automotive 
applications to help ensure the galvanising 
line is thermally efficient thermal ceramics 
provides multiple products including 
insulating fire bricks insulating fibre  
and vacuum formed shapes 
used for heating slabs of steel up to 
250mm thick the walking beam furnace  
is a heatintensive challenge leveraging 
its range of pyrobloc
tm
 modules hicast
tm
 
extra insulating fire bricks and morflo
tm
 
thermal ceramics is a leader in heat 
management for walking beam and  
other continuous reheating furnaces
annealing bell furnace galvanising line walking beam furnace overview
financial statements
governance
business review
28 the morgan crucible company plc 
 annual report 2009
t aking our 
responsibilities 
seriously  overview
financial statements
governance
business review
29 the morgan crucible company plc 
 annual report 2009
corporate responsibility is integral 
to morgan crucible’s business we 
take the needs and expectations of 
our key stakeholders into account 
as we work to implement our five 
strategic priorities our framework 
of policies procedures and 
reporting helps to ensure our 
approach is consistent worldwide 
focus on sustainability
new training centre
science engineering  technology  
student of the year
many of morgan crucible’s products and services help to improve 
the sustainability of our customers’ operations for example 
thermal ceramics’ advanced hightemperature insulation solutions 
dramatically reduce energy consumption and associated emissions  
in the metals petrochemical power generation and other sectors  
of the economy whilst the energy saved by the use of our products 
may exceed the amount consumed in their production by a wide 
margin we cannot be complacent internally we continue to work 
to conserve energy and reduce our carbon footprint in absolute  
and relative terms as a result our co
2
 emissions intensity was down 
by 18 over the past two years and we are targeting further 
reductions in the coming years
 
a new training centre has been opened  
at the carbon division’s site in south  
africa providing greater flexibility to 
support a range of training initiatives  
from adult basic education through to 
production technology qualifications
to help foster the best engineering talent morgan crucible 
sponsors the annual science engineering  technology student  
of the year awards morgan crucible is proud to sponsor this  
event as we believe it allows highcalibre students to showcase  
their remarkable research work and demonstrates the capability  
of graduates in the uk the 2009 winner of the best materials 
student award michael robinson from sheffield university 
received his award from mark robertshaw chief executive  
officer of morgan crucible overview
financial statements
governance
business review
30 the morgan crucible company plc 
 annual report 2009
chairman’s statement
overview
in my chairman’s statement last year 
i commented that i believed that the  
group’s strategy of reducing its exposure  
to economically cyclical more commoditised 
markets would stand us in good stead  
to weather the very difficult economic 
circumstances that we expected to lie ahead 
in 2009 the past year has confirmed this 
view and morgan crucible has shown real 
resilience in its performance during the  
most severe downturn in global industrial 
production that we have seen in most of  
our lifetimes 
the changes to the group’s portfolio  
in recent years with the disposal of 
underperforming and cyclical businesses 
combined with the acquisition of higher 
margin more differentiated businesses  
have delivered significant improvements  
in morgan crucible’s throughcycle margins 
specifically at the beginning of 2009  
we acquired a further 11 stake in np 
aerospace taking the group’s equity 
holding to 60 and enabling us to 
consolidate np aerospace in morgan 
crucible’s financial results the remaining 
40 stake will be acquired in annual 
tranches of 10 from 2010 to 2013  
np aerospace’s strong business in ballistic 
armour protection delivered an excellent 
performance at a time when general 
industrial markets were significantly 
depressed as we look to the future the 
goal for your board is to leverage morgan 
crucible’s extensive global footprint to 
develop opportunities for np aerospace 
beyond its traditional position as a 
predominantly ukfocused business
both np aerospace and the technical 
ceramics businesses acquired in 2008  
from the carpenter technology corporation 
have delivered operating profit margins well 
morgan crucible has  
shown real resilience in its 
performance during the 
most severe downturn in 
global industrial production 
that we have seen in most 
of our lifetimes
tim stevenson
chairman overview
financial statements
governance
business review
31 the morgan crucible company plc 
 annual report 2009
into double digits in a particularly  
difficult macroeconomic environment  
this combined with a robust performance 
from the existing businesses has helped  
the group deliver overall operating profit 
margins before restructuring and oneoff 
costs of 94
i am pleased with the results delivered  
by morgan crucible in such a challenging 
market environment group revenues  
for the year were £9426 million compared 
to £8350 million in 2008 operating profit 
before restructuring and oneoff items was 
£890 million compared to £1088 million in 
2008 and underlying diluted earnings per 
share was 126 pence 2008 228 pence 
from a balance sheet perspective a strong 
and consistent focus on cash generation 
during the year resulted in net debt being 
reduced from a £2904 million opening year 
position to £2527 million by the year end 
dividend
the group’s resilient profit performance  
and solid cash generation mean that  
the board is confident to recommend 
maintaining a final dividend of 45 pence 
per ordinary share this brings the total 
dividend for the year to 70 pence
board
given the extreme volatility of the market 
environment your board remained very 
close to the operational performance of the 
business during 2009 a significant amount 
of our time was focused on ensuring that 
the right mitigating actions were taken 
quickly and decisively in the face of the 
global industrial downturn to ensure that 
the cost base remained as closely aligned  
to revenue demand as possible this close 
operational cost base focus was a key factor 
in delivering the robust profits and margins 
that were achieved in 2009
outlook
as we look forward we remain cautious  
on the outlook for the world economy 
which we believe still faces a number of 
challenges and uncertainties as various 
national stimulus packages are withdrawn 
however encouragingly in the latter  
parts of 2009 we did begin to see  
signs of modest demand recovery in  
our business particularly in the chinese  
and indian markets 
regardless of whether the economic 
outlook remains depressed or does  
indeed begin to show recovery in 2010  
i am confident that morgan crucible is a 
more resilient higher quality business that  
is well equipped to thrive and prosper in  
the future
it has been undeniably a difficult market 
environment in 2009 that the group has 
prospered during this period and that it is 
so well positioned for the future is due of 
course to the hard work and commitment 
of all our employees around the world  
the board is grateful as always for all that 
they have achieved 
tim stevenson
chairman
2009
2008
2007
2006
2005
dividend per share
pence
70
70
675
45
25 overview
financial statements
governance
business review
32 the morgan crucible company plc  
 annual report 2009
chief executive officer’s review
group results
the group’s wellestablished strategy  
of reducing our exposure to economically 
cyclical more commoditised markets has 
served us well operating profit margin 
before restructuring and oneoff items  
in 2009 was a highly creditable 94  
the performance of the np aerospace 
business in particular merits highlighting 
having achieved stellar results in 2009  
with revenues of £1862 million compared 
to £720 million in 2008 and operating 
profit of £288 million compared to  
£107 million in 2008 this is primarily 
attributable to significant business with  
the uk ministry of defence in providing 
highspecification vehicle and personal 
ballistic protection solutions 
given the challenging market environment 
we have kept a tight and rigorous focus on 
cash generation and on the health of our 
balance sheet throughout the year our 
fiveyear banking facilities which were 
coming to the end of their term in 2009 
were successfully renewed in the first quarter 
during a period of significant uncertainty for 
the world’s banking system the fact that  
we were able to bring two new banks into 
our syndicate of lenders at a time of such 
turbulence in financial markets was a very 
pleasing endorsement of the strength and 
resilience of your group furthermore i am 
pleased to report that we ended 2009 having 
successfully maintained our position on the 
key net debt to ebitda financial covenant at 
21 times which is exactly where we were at 
the end of last year this is having purchased 
a further 11 stake in np aerospace to 
move us to a majority equity holding of 
60 we are also in a position of being able  
to recommend a fullyear dividend in line 
with the prior year
i am extremely proud of 
what morgan crucible has 
achieved in 2009 against  
a backdrop of the most 
difficult market environment 
for industrial companies  
for many decades
mark robertshaw
chief executive officer overview
financial statements
governance
business review
33 the morgan crucible company plc  
 annual report 2009
divisional highlights
all of the group’s divisions have shown 
pleasing resilience during this period of 
pronounced global recession with each 
delivering sound profit levels in 2009  
i have already commented on the excellent 
performance of np aerospace in its maiden 
set of figures as a majorityowned morgan 
crucible business 
the technical ceramics division also 
deserves special mention for delivering 
£251 million of divisional ebita before 
restructuring and oneoff costs 
representing an operating profit margin 
of 122 revenues were £2060 million 
compared to £2122 million in 2008 
driven by the division’s increasing exposure 
to more secular growth markets with our 
medical business performing especially  
well the integration of the businesses we 
acquired from the carpenter technology 
corporation in 2008 was delivered 
successfully to plan 
the insulating ceramics division has also 
demonstrated a much improved resilience  
of operating profit margins compared to 
previous downturns achieving 80 in 
2009 the division’s strong and increasing 
business presence in emergingmarket 
economies including china india and latin 
america helped offset the weakness of 
westernworld economies good progress 
was also made in the division’s operating 
efficiencies driven by the thermal ceramics 
‘world class manufacturing’ programme
the carbon division excluding np 
aerospace arguably had the most difficult 
environment of our divisions in 2009 with 
market downturns in core industrial markets 
combined with demand slowdowns in 
newer endmarkets such as solar and us 
body armour nevertheless the business 
made a respectable profit contribution in 
2009 with an encouraging pickup in orders 
seen in the latter part of the year
one area where all of our businesses did an 
excellent job during the course of the year 
was in aligning their cost bases with prevailing 
demand levels their decisive actions during  
a period of pronounced economic downturn 
were a key factor in your group weathering 
this difficult environment so robustly i would 
like to extend a personal thankyou to all  
our employees for their commitment and 
individual contributions towards making  
this happen
looking forward
even though we have seen some degree  
of recovery in many endmarkets in the 
latter part of 2009 our expectation is that 
the demand environment is likely to remain 
challenging and will certainly be unpredictable 
the deep global recession of 2009 was a 
thorough test of our strategy and business 
model which have stood up to this stern 
examination in a pleasing manner 
looking to the future i am therefore 
confident that morgan crucible is emerging 
from the downturn as a stronger more 
resilient business which is well placed to 
capitalise on opportunities as 2010 develops  overview
financial statements
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business review
34 the morgan crucible company plc  
 annual report 2009
group business review
group activities
morgan crucible is a world leader in 
advanced materials focused on specialist 
ceramics carbon and composites we 
employ around 9400 people in over  
34 countries and serve customers in over  
100 countries around the world working  
at the forefront of advanced materials 
technology we develop solutions that help 
to make the world more efficient better 
protected and healthier 
the group has three global divisions carbon 
technical ceramics and insulating ceramics 
carbon division is a global supplier  
of highly engineered solutions built on 
carbon silicon carbide oxidebased ceramics 
and advanced polymeric composite materials 
technology applications include current 
transfer systems for industrial and rail 
transportation seals and bearings for fluid 
handling hightemperature insulation for 
solar silicon wafer production and advanced 
lightweight ceramiccomposite armour 
systems for personal and vehicle protection
technical ceramics division is a leading 
supplier of bespoke applicationsengineered 
industrial products these are manufactured 
from advanced materials including ceramic 
glass precious metals and piezoelectric  
and dielectric materials key markets are 
electronics aerospace industrial equipment 
medical and power generation
insulating ceramics division is a global 
supplier of thermal management and metal 
melting solutions for hightemperature 
applications which benefit technically 
financially and environmentally from 
increased thermal and energy efficiency  
and management the division consists of 
two global reportable operating segments 
thermal ceramics with the core products 
of hightemperature insulating fibre bricks 
and monolithics and molten metal systems 
mms with the core products of crucibles 
foundry consumables and furnaces
group strategy
morgan crucible’s vision is to be one  
of the world’s very best advanced materials 
companies
our aim is to create longterm sustainable 
shareholder value
the group’s five strategic priorities are 
to focus on higher growth higher  
margin noneconomically cyclical 
markets
to be high valueadded to our  
customers
to be number one or number two   
in our chosen market segments 
to have a culture of operational  
excellence and cost efficiency 
to find keep and develop the   
right people
we use our strategic priorities to test new 
investment opportunities to screen our 
businesses for fit with the existing group and 
to identify areas requiring strategic attention 
and action
revenue and profits 
group revenues increased by 129 to 
£9426 million 2008 £8350 million 
group ebita before restructuring charges 
and oneoff items was £890 million 2008 
£1088 million representing a margin of 
94 2008 130 the main factors for 
these movements are as follows
carbon   revenues were up by 63 
compared to 2008 at £3914 million 
2008 £2399 million this increase 
reflects the inclusion of np aerospace  
in the division’s consolidated results for 
the first time following the increase in 
morgan crucible’s shareholding from 
49 to 60 in january 2009 revenues 
for the underlying carbon business 
excluding np aerospace were down 
approximately 25 on a likeforlike 
constant currency basis reflecting the 
impact the economic downturn had  
on almost all of the markets we serve 
combined with a significant reduction in 
north america body armour revenues 
divisional ebita including np aerospace 
was £405 million a margin of 103 
compared to £363 million and a 
margin of 151 for 2008 
technical ceramics   revenues for 2009 
were £2060 million 2008 £2122 
million a decrease of 3 this included 
£459 million 2008 £414 million for 
nine months of ownership of revenue 
contributed by the businesses acquired 
from the carpenter technology 
corporation at the end of march 2008 
revenues for the underlying technical 
ceramics business including the 
businesses acquired from the carpenter 
technology corporation as if they had 
been owned for 12 months in 2008 
were down by 194 on a likeforlike 
constant currency basis despite the 
unprecedented economic conditions 
technical ceramics was in the main 
able to protect divisional ebita profit 
margins which were 122 for the year 
2008 149
insulating ceramics   revenues for the 
insulating ceramics division decreased 
by 98 to £3452 million in 2009 
divisional ebita and margins dropped  
to £276 million and 8 from £456 
million and 119 in 2008 reflecting 
challenging endmarket demand 
particularly in the second half of  
the year
cash generation
the net cash inflow from operating activities 
was £1345 million 2008 £1112 million 
an increase of 21 over the previous year 
free cash flow before oneoff items and 
dividends was £859 million a substantial 
increase in cash generation on the previous 
year 2008 £347 million this was driven 
by strong working capital management 
which resulted in a net inflow of £258 
million compared to last year’s outflow  
of £218 million as a result our net debt  
at the year end was £2527 million an 
improvement of £377 million compared  
to the 2008 yearend position overview
financial statements
governance
business review
35 the morgan crucible company plc  
 annual report 2009
key performance 
indicators
to support the group’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 these 
kpis are selected as being important to  
the success of the group in delivering its 
strategic objectives progress is assessed 
by comparison with the group’s strategy 
its budget for the year and against historic 
performance at a business level a range  
of further benchmarks and other kpis are 
also used as part of the divisional 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  
as morgan crucible’s businesses grow  
and evolve we will review and update the 
list of kpis selected to ensure they remain 
important to the success of the group
financial and nonfinancial performance  
is reviewed in more detail in the divisional 
financial and corporate responsibility 
sections of this business review
  performance
kpi 2009 2008 relevant strategic objective
financial kpis
revenue growth 129 205 creating consistent longterm value for shareholders  
focus on higher growth markets  
underlying profit declinegrowth 216 245 creating consistent longterm value for shareholders  
focus on higher growth markets  
to be high valueadded to our customers  
to have a culture of operational excellence and   
cost efficiency
underlying profit margin 82 118 creating consistent longterm value for shareholders  
focus on higher growth markets  
to have a culture of operational excellence and  
cost efficiency
free cash flow before oneoff costs and dividends £859m £347m creating consistent longterm value for shareholders  
underlying earnings per share 132p 234p creating consistent longterm value for shareholders  
dividend per share 70p 70p creating consistent longterm value for shareholders  
nonfinancial kpis
♦
yearonyear pricing change 20 35 to be high valueadded to our customers  
total employment costs as  of sales 286 312 to have a culture of operational excellence and   
cost efficiency
employee turnover
†
167 142 to find keep and develop the right people  
training hours per employee
†
124 149 to find keep and develop the right people  
lost time accident frequency 
per 100000 hours worked
056 069 to have a culture of operational excellence and  
cost efficiency
to find keep and develop the right people  
tonnes co
2
 per £m revenue 400 464 to have a culture of operational excellence and   
cost efficiency
tonnes waste per £m revenue 65 73 to have a culture of operational excellence and   
cost efficiency
 
 defined as operating profit before amortisation of intangible assets
 defined as basic earnings per share adjusted to exclude amortisation see note 9 on pages 109 and 110 for definition of basic earnings per share
♦
 nonfinancial kpis are at constant currency
† 2009 hr data covers 100 of employees 2008 96 overview
financial statements
governance
business review
36 the morgan crucible company plc  
 annual report 2009
review of operations
carbon
business description
the carbon division is a leading global 
supplier of highly engineered solutions  
built on advanced materials technology  
the division’s capabilities originated in the 
unique properties of carbon and graphite 
materials and have evolved to include silicon 
carbide which is used in fluid handling and 
multiple other critical applications including 
composite protective armour the acquisition 
of np aerospace in 2009 extended the 
division’s materials and ballistic technologies 
to include lightweight ceramicscomposites 
the division leverages its extensive array  
of advanced materials capabilities through 
its global infrastructure to serve a wide 
portfolio of endmarkets today the  
carbon division has strong positions  
in carbon brushes for industrial and rail 
traction applications seals and bearings  
for fluid handling hightemperature 
insulation for silicon wafer production and 
advanced lightweight protective ceramic
composite armour systems 
the carbon division employ some 3400 
people serving customers in around 100 
countries worldwide the division’s global 
presence includes 40 operating facilities in 
25 countries with major materials 
processing plants in the usa uk and china 
feeding an integrated network of finishing 
plants strategically located to serve 
customers across the globe and providing 
the division with a network of lowcost 
manufacturing sites in mexico china 
hungary and india 
the division’s strategy aligns with the 
group’s strategic priorities and has driven 
the division’s success in the ballistic 
protection market as well as the recent 
entry to the silicon solar cell market 
specifically the carbon division’s strategy  
is to
add value to advanced materials   
and technology to deliver engineered 
solutions to chosen markets
engender a culture of operational  
excellence with a focus on continually 
improving the value we deliver to our 
customers 
establish and fully embed a mindset   
for growth through focused business 
development specifically in 
highgrowth and highmargin markets 
invest in our future through our  
technology centres of excellence and 
through acquisitions alliances and 
partnerships
stellar performance  
from np
aerospace
key performance indicators 
    2009  2008 
divisional revenue growth  63 11
divisional ebita growth   12 3
divisional ebita margin  103 151 
 
2009
divisional revenue
£m
2008
2007
2006
2005
3914
2399
2166
2136
1999
2009
divisional ebita
£m
2008
2007
2006
2005
405
363
352
341
276
  defined as segment operating profit before 
restructuring costs other oneoff items and 
amortisation of intangible assets
 as at 3 january 2010 overview
financial statements
governance
business review
37 the morgan crucible company plc  
 annual report 2009
lower defence spend in 2010 going 
forward the market will offer solid 
opportunities due to the continued 
escalation of ballistic threats and increasing 
demand for lighter more mobile solutions 
for both vehicles and personnel 
electrical current transfer 
the carbon division has a strong position  
in the global market for electrical current 
transfer systems which are critical enablers 
for many industries the division utilises  
its core technology portfolio and global 
support network to supply carbon brushes 
collectors and rotary current transfer 
products to railways the mass transit 
industry open pit and deep shaft mining 
and a variety of other key industrial markets 
during the year demand in european 
markets and the americas was down 
significantly due to the global economic 
crisis however asian markets were more 
resilient particularly china the medium 
and longterm prospects are positive with 
demand in western markets expected to 
improve during 2010
fluid handling
seals and bearings are critical to the  
pumps and compressors used in many fluid 
handling applications in the petrochemical 
food processing residential and oil and  
gas industries the carbon division has a 
wide and expanding range of carbon and 
silicon carbide materials and is the globally 
recognised leading provider of seal faces 
bearings rotors vanes and other technical 
solutions required for a large variety of  
fluid handling applications market demand 
declined significantly in 2009 but is 
expected to recover slightly ahead of  
global gdp growth in the medium term
fully engage our entire workforce and  
instil a culture of continuous reinvention 
continuously seek and develop the   
right people
the carbon division’s channels to  
market are primarily direct with sales  
and applications engineers serving  
both the original equipment market and  
the aftermarket the division is structured 
regionally and is able to leverage its global 
footprint and infrastructure to ensure  
that the best possible resource is deployed 
to provide advanced materials and 
technologies in the form of engineered 
solutions to the following key global 
markets 
defence and protection
the carbon division is a major supplier  
of advanced ceramic technology to the  
us body armour market and is the major 
supplier of protective body armour systems 
to the uk’s defence forces the addition  
of np aerospace to the division at the 
beginning of the year broadened our 
materials portfolio and competency in 
ballistics positioning morgan crucible  
as a leader in lightweight armour systems 
morgan is now a critical resource to  
the uk’s ministry of defence for major 
integration contracts for the fielding of 
nextgeneration tactical wheeled vehicles 
and our highly advanced systems have  
seen service in both iraq and afghanistan 
the division continues to invest heavily  
in the development of ballistic solutions  
to counter everincreasing threats the 
protection market was robust during the 
year and although expectations are for 
power generation and renewables
over the past two years the global  
energy sector has become an increasingly 
important target market for the carbon 
division the division’s technology and 
product portfolio includes components 
which are critical to traditional power 
generation companies the nuclear industry 
and the renewables sector including solar 
and wind power in solar power the carbon 
division is a world leader in advanced 
hightemperature solutions providing major 
producers of polysilicon and silicon ingots 
with the means to enhance solar cell 
performance in wind power generation 
the division supplies carbon brushes and 
rotary transfer systems which perform in the 
harshest environments around the globe 
investment in wind power slowed during 
2009 but installed capacity represents a 
large and more stable aftermarket for 
carbon brushes looking forward demand 
for both solar and wind power capacity  
is expected to grow significantly and the 
division is well placed to capitalise on  
this growth
semiconductor processing
the carbon division’s products are at the 
heart of many electronic innovations and 
are used in semiconductor manufacturing 
processes such as ion implantation  
epitaxy and compound crystal growth  
with the drive to faster smaller and lower 
cost devices semiconductor processing 
equipment companies are dependent on 
advanced materials being able to work at 
higher temperatures and having higher 
purity levels to achieve the required 
performance the carbon division also  overview
financial statements
governance
business review
38 the morgan crucible company plc  
 annual report 2009
review of operations
continued
supplies products used in the manufacture 
of components such as optical fibres laser 
diodes and transistors for mobile and 
satellite communications the sector started 
to decline in mid 2008 and by early 2009 
demand was down very significantly the 
market began to improve in the summer  
of 2009 and is expected to grow in 2010 
although this sector is a relatively small 
portion of the division’s turnover our 
engineered solutions are highly valued  
and prospects for future growth through 
innovation are promising
research and development
the division is a leader in carbonbased 
materials oxide and nonoxide ceramics  
and lightweight composites having 
expanded its materials technology portfolio 
through inhouse research and development 
and through the strategic acquisitions of np 
aerospace in 2009 and aceram in 2006  
the division’s research activities cover both 
material and process capabilities and are 
located within our major material processing 
facilities in the usa the uk and china 
carbon’s application development engineers 
in 25 countries worldwide work with our 
customers to apply the division’s advanced 
materials and process technologies to 
develop leadingedge solutions according  
to customer need and to position the 
division as a leader in highgrowth and 
emerging markets
divisional performance
total revenues for the carbon division were 
up by 63 on a reported basis at £3914 
million 2008 £2399 million this increase 
reflects the inclusion of np aerospace in the 
division’s consolidated results for the first 
time following the increase in morgan 
crucible’s shareholding from 49 to 60 
in january 2009 the likeforlike revenue 
increase ie including np aerospace revenues 
for all of 2008 when they were accounted 
for as an associate on a constant currency 
basis was 13 this was driven by an 
exceptionally strong performance from the 
np aerospace business with revenues of 
£1862 million up 159 on the previous 
year 2008 £720 million
revenues for the underlying carbon division 
business excluding np aerospace were 
down approximately 25 on a likeforlike 
constant currency basis reflecting the 
impact of the economic downturn 
combined with a significant reduction  
in north america body armour revenues 
second half revenues were broadly flat  
on the first half reflecting a seasonally  
quiet third quarter especially in europe  
and some improvement in quarter four 
the traditional electrical brush and the  
seals and bearings businesses were affected 
by a significant contraction in mature 
western markets although growth was 
achieved in china with the introduction  
of new products 
the rotary business was impacted by a 
continued slowdown in the industrial and 
construction markets however significant 
progress was made in the global wind 
energy sector and in china
the hightemperature insulation  
business delivered some growth in  
2009 despite deeply contracted markets 
demand for these products is driven by 
the processing of advanced materials  
for markets such as solar energy and 
semiconductors the division continued  
to improve its operational capability and 
product offering and is well positioned  
to take advantage of the expected market 
improvements 
fullyear ebita on a reported basis was 
£405 million a margin of 103 
compared to £363 million and a margin  
of 151 for 2008 ebita margins were 
155 in np aerospace and 57 in the 
underlying carbon business and whilst the 
margin in the underlying carbon business 
was below that achieved in 2008 second 
half margins improved over the first half  
of 2009
the np aerospace business had a very 
strong year with revenues in each half in 
excess of £90 million demand for mastiffs 
ridgbacks and wolfhounds from the  
uk ministry of defence uk mod remained 
strong throughout 2009 and progress was  
carbon  
continued overview
financial statements
governance
business review
39 the morgan crucible company plc  
 annual report 2009
reductions in the working week were also 
implemented at a large number of sites and 
the relocation of manufacturing to lower 
cost regions such as mexico china and 
hungary was accelerated wherever possible 
as a result of these actions fullyear total 
employment costs were reduced by more 
than £12 million compared with 2008 
however the division maintained its 
commitment to devote resources to new 
growth opportunities advancing its position 
in the renewable energy sector in the global 
armour market and in china
looking forward the actions taken to  
meet the challenges of the global economic 
downturn provide a more efficient and 
flexible structure to respond effectively  
as market demand recovers and the 
increased focus on global growth markets 
has improved the prospects for growth 
entering 2010
outlook
endmarket demand in the carbon 
division’s underlying business stabilised 
during the third quarter of 2009 and has 
shown some signs of recovery entering 
2010 improvements to the cost base and  
to global operational capability along with 
the focus of effort and resource on higher 
growth markets means that the division  
is well positioned to take advantage of 
improvements in the global economy
made in the development of new product 
offerings np aerospace has successfully 
established itself as a critical supplier to the 
uk mod and is through the deployment of  
its technology into combat theatre gaining 
global recognition for its highly advanced 
lightweight armour systems
business developments
the key developments in 2009 were the 
excellent performance of the np aerospace 
business and the response to the global 
economic crisis 
at the beginning of 2009 the group 
increased its equity stake in np aerospace 
from 49 to 60 as part of the strategy  
to further develop the group’s presence  
in the market for personal and vehicle 
protection during the year np aerospace 
more than doubled its sales and profits  
and has strengthened its position as a 
critical supplier to the uk mod for the 
armouring and integration of tactical 
wheeled vehicles and for personal 
protection in terms of body armour and 
helmets good progress was also made in 
developing future strategies for accessing 
the division’s wider global footprint across  
a number of key geographic regions
in the underlying carbon business a series 
of significant cost reduction actions were 
initiated in the second half of 2008 in 
anticipation of weakening demand total 
headcount has been reduced by nearly 700 
18 since the summer of 2008 
np aerospace is expected to continue  
to perform well above preacquisition  
levels however revenues in 2010 are 
expected to be below the record levels  
of 2009 opportunities beyond the uk 
market are being pursued and could allow  
a further ’reinvention’ of the business
through the course of 2010 the division’s 
operational footprint will continue to  
be refined while appropriate resource 
is committed to markets that offer the 
greatest longterm profitable growth  
after a year of consolidation and 
considerable reinvention the division  
is much better positioned for future 
challenges and opportunities  overview
financial statements
governance
business review
40 the morgan crucible company plc  
 annual report 2009
review of operations
continued
technical ceramics
business description
the technical ceramics division is a leading 
supplier of bespoke applicationengineered 
industrial products these are manufactured 
from advanced materials including ceramic 
glass precious metals and piezoelectric and 
dielectric ceramics key markets include 
electronics aerospace industrial equipment 
medical and power generation applications 
include ceramic cores used in the manufacture 
of turbine blades components and 
subassemblies for electron tubes used  
in communications security and medical 
devices and medical implants 
the technical ceramics division operates 
worldwide with 23 manufacturing sites 
across the usa uk germany mexico 
australia and china the three largest sites 
are in california usa massachusetts usa 
and germany the division employs some 
2600 people and offers full technical 
support and advice to customers 
throughout their product development 
cycle working closely with them to provide 
engineered solutions that add value and 
help differentiate their end products 
the division is structured regionally with 
global support from marketing technology 
business development strategy and finance
the division’s strategy is aligned with that  
of the group with the objective of being a 
world leader in engineered solutions based 
on advanced ceramic materials  
the division’s strategy is to
focus on niche applications   
in growth markets
deliver innovation in materials  
technology 
use applications engineering and  
distinctive competencies to provide 
customers with differentiated solutions
be the supplier of choice in our chosen  
markets exhibiting excellent customer 
service
demonstrate dissatisfaction with the  
status quo and through continuous 
improvement and best practice 
initiatives achieve higher levels of 
business performance 
through recruitment development and  
training ensure we have the strongest 
teams in all areas of the business 
constantly review our manufacturing  
footprint and its ability to deliver our 
growth and profit objectives
resilient 
performance  
in challenging
conditions
key performance indicators 
    2009  2008 
divisional revenue declinegrowth 3 39
divisional ebita declinegrowth  21 58
divisional ebita margin  122 149 
 
2009
divisional revenue
£m
2008
2007
2006
2005
2060
2122
1526
1625
1448
2009
divisional ebita
£m
2008
2007
2006
2005
251
316
200
172
123
  defined as segment operating profit before 
restructuring costs other oneoff items and 
amortisation of intangible assets
 as at 3 january 2010 overview
financial statements
governance
business review
41 the morgan crucible company plc  
 annual report 2009
to customerspecific requirements our main 
channel to market is direct with sales and 
applications engineers working closely with 
our customers to establish their needs and 
support them through the design and 
production process the division has strong 
niche positions within its target markets 
the performance and prospects of the  
five main markets are described below
aerospace 
as engines run hotter in order to increase 
efficiency and reduce co
2
 emissions 
demands on the materials used in their 
construction become greater as does the 
need to monitor and control operating 
conditions technical ceramics produces 
braze alloys for engine build and repair and 
ceramic components and subassemblies for 
engine monitoring and control equipment 
our certech business manufactures cores 
used in the casting of turbine blades  
we also supply piezoelectric components 
and sensors including fuel level sensors  
and gyroscopes and our diamonex™ 
engineered coatings are used on critical 
components of aircraft fuel systems  
as passenger numbers fell during 2009  
our sales to the aerospace market declined 
significantly forecasts for 2010 are 
expected to show growth year on year 
but the market will remain difficult in the 
medium term 
medical
an ageing population and stepchange 
improvements in procedural practice 
maintain growth rates consistently above 
gdp in this market our medical engineering 
the technical ceramics division offers an 
extensive range of products for hundreds  
of hightechnology application niches 
including 
ceramic cores used in the casting of  
turbine blades for aero engine and 
industrial gas turbines
braze alloys for aero engine build and  
repair and ceramic components and 
subassemblies for aero engine 
monitoring and control equipment 
components and subassemblies for a  
broad range of medical applications 
primarily implantable devices 
prosthetics and surgical and diagnostic 
equipment 
ceramics and assemblies for electron  
tubes used in a range of medical 
security industrial and research 
applications such as airport security 
scanners tv and radio broadcasting 
and xray equipment 
engineered ceramics used in fluid  
handling equipment 
piezoelectric ceramic actuators used   
in electronic data storage
components and assemblies used in   
a variety of lasers for product marking  
and medical and industrial applications
technical ceramics leverages its advanced 
ceramic materials capabilities to serve its 
major markets – aerospace automotive 
electronics household goods industrial 
equipment medical power generation 
process control and monitoring and  
security and defence ninety percent of 
sales are designed and manufactured  
expertise includes ceramic orthopaedic  
joint replacements and highly specialised 
ceramictometal assemblies for implantable 
devices such as pacemakers cochlear 
implants and defibrillators in addition we 
supply key components for instrumentation 
and diagnostic equipment such as ultrasonic 
imaging cat and mri scanners our superior 
piezoelectric ceramic components are 
enabling increased resolution of ultrasonic 
imaging and are used extensively in medical 
ultrasound piezoelectric components are also 
the key technology in applications such as 
blood flow measurement and foetal heart 
monitors providing increased reliability and 
accurate detection additionally they can 
be found in ultrasonic airinline sensors  
in medical devices and infusion pumps  
the highperformance piezoelectric material 
is used in highpower transmission of 
highfrequency waves to assist with surgical 
cutting we supply efficient materials for 
small medical tools such as ultrasonic dental 
descalers and ultrasonic scalpels which are 
used in applications such as cataract removal 
multilayer chip capacitors are used extensively 
in mri systems to tune the magnetic field 
accurately and our ceramic capacitors can  
also be found in lasers for eye surgery 
the medical market again showed itself  
to be resilient in times of recession sales 
growth was strong during the year and  
the market is expected to continue to grow 
strongly in the medium term  overview
financial statements
governance
business review
42 the morgan crucible company plc  
 annual report 2009
review of operations
continued
industrial equipment
the mechanical electrical chemical and 
thermal characteristics of our materials 
make them ideally suited for use in harsh 
processing environments such as those  
found in valves pumps and a variety of 
manufacturing processes our ceramic 
rollers are used in kilns used for the 
manufacture of metals glass ceramicware 
and fuel cell production our kiln furniture 
and hightemperature components are  
used in a wide range of specialist thermal 
processing applications from industrial 
annealing to medical device manufacture 
and scientific equipment
our range of highefficiency piezoelectric 
materials are used in many highpower 
ultrasonic systems such as those for cleaning 
and welding we also design and manufacture 
complete sensors and transducers for these 
industrial applications the global downturn 
in manufacturing and equipment sales 
impacted our revenues in this market and 
we saw a decline compared to 2008 a 
steady recovery is expected in the coming 
year and mediumterm prospects are 
generally positive 
power generation and distribution
energy generation management and 
distribution is arguably one of the fastest 
evolving industries of modern times  
our precisionengineering capabilities  
are increasingly being called on to develop 
components and subassemblies for new 
products across the power sector increasing 
global demand for power and dramatic 
increases in energy costs have led to an 
increased emphasis on environmental issues 
and the need for renewable energy  
we supply a range of products that are used 
in the manufacture of thinfilm photovoltaic  
cells for the solar industry and our certech 
business manufactures cores used in the 
manufacture of turbine blades used for 
industrial gas turbines a slowdown in 
equipment sales and cutbacks in funding  
of new projects caused sales to the power 
sector to decline significantly during the 
year however the outlook for the coming 
year is more encouraging 
electronics
technical ceramics’ components and 
subassemblies are used extensively in the 
electron tubes used in communications 
healthcare security and research 
applications our components are used  
in handheld landbased and satellite 
communications equipment and networks 
for the telecommunications sector as well 
as pcs servers data storage and a range  
of peripheral equipment for it hardware 
producers demand for mobile devices  
that offer increasing functionality together 
with increased requirements for data 
storage drives the consumer products 
segment of this market to develop and 
introduce a constant flow of new products 
in addition the laser market continues  
to find new applications that drive growth 
in healthcare product marking and  
process control during 2009 demand for 
consumerrelated products weakened but 
this was offset by sales of electron tube 
products driven by security and related 
applications sales of products for data 
storage devices were also strong driven  
by new product launches overall the 
electronics market declined slightly but 
prospects for 2010 are more positive with 
growth expected in the medium term 
research and development
technical ceramics’ research and 
development capabilities are led by the 
divisional technical director with a network 
of materials scientists and process engineers 
across our operations they work with our 
customers to engineer solutions that address 
their needs the division also undertakes 
research in collaboration with leading 
universities in europe and north america 
our internal research and development 
focus has been on product development  
for the medical and solar markets in the 
medical sector we have developed and 
released a new implantable grade of 
ceramic vitox™ amc which will have 
applications for orthopaedic implants  
in solar energy we have developed products 
that are used in the growth and subsequent 
processing of silicon substrates for solar 
panels as well as a variety of uniquely stable 
ceramic products that are used by panel 
producers using thinfilm manufacturing 
techniques 
in 2009 technical ceramics registered  
a number of new patents these include  
a controlled textured ceramic surface called 
sharkskin™ which will have a variety of  
end application uses in the semiconductor 
medical and other markets another is  
for a new silicon carbide diamond pad 
conditioner named phoenix™ which is  
used for chemicalmechanical polishing  
in semiconductor manufacturing 
technical ceramics 
continued overview
financial statements
governance
business review
43 the morgan crucible company plc  
 annual report 2009
business developments
during the year technical ceramics 
maintained its focus on positive mix shift 
moving towards higher margin higher 
valueadded endmarkets such as medical 
and aerospace whilst concurrently reducing 
exposure to more commoditised and 
economically cyclical product areas our 
continuous operational improvement 
programme cost reduction initiatives and 
our emphasis on positive price passthrough 
are all contributing to supporting operating 
margins in very difficult market conditions 
in 2009 major investments were controlled 
due to the uncertain market outlook work 
on consolidating our footprint continued 
throughout the year in july we announced 
and initiated the move of business from  
our auburn site into the hayward location 
in california usa and expect to realise  
the benefits of this in 2010 in october  
we announced the sale of the small  
metal injection moulding mim business 
for £11 million the mim business was 
based at our new bedford ma usa site 
and the sale will make room to expand 
the medical business there the shanghai 
china site which produced mostly 
commodity products for domestic 
applications was successfully closed  
on time and to plan during the first half  
of the year 
divisional performance
revenues for 2009 were £2060 million 
2008 £2122 million a decrease of 30 
this included £459 million 2008 £414 
million for nine months of ownership  
of revenue contributed by the businesses 
acquired from the carpenter technology 
corporation in 2008 the proforma 
underlying revenue decrease at constant 
currency was 194 compared to the  
full year 2008 the proforma calculation 
assumes that carpenter was included for a 
whole year in 2008 to enable a likeforlike 
comparison
despite the unprecedented and difficult 
economic conditions the division was  
in the main able to protect margins which 
were 122 for the year 2008 149 
ebita for the year was £251 million  
2008 £316 million the division made 
progress during the year and finished 2009 
well with an ebita margin of 134 in  
the second half first half 2009 111
in response to the weaker global market 
conditions we took early and decisive 
action to protect our margins these cost 
control measures included headcount 
reductions of 670 employees compared  
to june 2008 with the majority taking  
place in the first half of 2009 these 
measures continued to deliver benefits  
in the second half of the year driving the 
improved margins seen over the first half
outlook
although overall market demand declined  
in 2009 there are some areas that showed 
positive signs of improvement as we  
enter 2010 
the us market appears to have stabilised 
although we continue to watch carefully  
for any signs of a further downturn some 
weakness in the aerospace and industrial 
gas turbine sector is being offset by 
improvements in demand from sectors 
within the electronics market an example 
of this is our initiation of a production 
rampup to meet demand for the next 
generation of hard disk drive products 
our european business had a difficult year 
being consistently challenged by weak 
market conditions in general industrial 
markets and construction this principally 
affects our business in germany which 
supplies products for manufacturing 
applications involving thermal processing 
since the half year we have seen a reduction 
in industrial gas turbine demand which is 
continuing into 2010 in both europe and 
north america a highlight of 2009 has been 
the continuing strength of our medical 
customers developing our presence in  
this sector remains an important focus  
for the division during 2010 we continue  
to look carefully at potential bolton 
acquisition opportunities that would 
enhance our offering in our core markets 
which together with our strong new 
business pipeline leaves the division  
well placed for the future overview
financial statements
governance
business review
44 the morgan crucible company plc  
 annual report 2009
review of operations
continued
insulating ceramics
business description
the insulating ceramics division is a global 
supplier of thermal management and metal 
melting solutions for hightemperature 
applications which benefit technically 
financially and environmentally from 
increased thermal and energy efficiency  
and management the division consists of 
two global reportable operating segments 
thermal ceramics and molten metal 
systems mms
thermal ceramics
thermal ceramics is a world leader in heat 
management solutions serving a broad 
spectrum of industrial and nonindustrial 
markets with insulation requirements 
ranging from 500°c to 1600°c as well  
as passive fire protection for the building 
and construction sectors thermal ceramics 
serves highly demanding markets worldwide 
which are increasingly influenced by 
legislative and environmental requirements 
customers increasingly demand advanced 
insulation solutions and superior quality  
to reduce energy costs and improve 
environmental performance through 
reduced co
2
 emissions
thermal ceramics’ core products are 
manufactured from advanced insulating 
materials and include hightemperature 
insulating fibres insulating fire bricks and 
monolithics these are marketed under  
a number of leading brands including 
superwool™ jm™ pyrobloc™ 
firemaster™ and trimor™ 
thermal ceramics employs over 2900 
people across a network of 34 
manufacturing facilities and 50 sales offices 
worldwide the business is structured 
geographically with regional teams 
supported by global engineering sales and 
marketing technology and research and 
development functions major sites are 
located in argentina brazil china france 
india italy japan korea mexico russia  
uk and the usa 
thermal ceramics’ vision is to be the world’s 
leading provider of advanced insulation 
solutions this is implemented through 
focusing on highgrowth highmargin  
and high valueadded products  
and markets
establishing and maintaining leading  
positions in target markets
changing the scale and location of  
manufacturing operations to deliver  
the best value
constantly improving operational  
performance towards a goal of  
world class manufacturing
satisfying customers  
ensuring that thermal ceramics   
is ’a great place to work’
strong contribution 
from our emerging 
mark ets business
key performance indicators 
    2009  2008 
divisional revenue declinegrowth 10 18
divisional ebita declinegrowth 39 22
divisional ebita margin  80 119 
 
2009
divisional revenue
£m
2008
2007
2006
2005
3452
3829
3240
3017
2651
2009
divisional ebita
£m
2008
2007
2006
2005
276
456
375
286
219
  defined as segment operating profit before 
restructuring costs other oneoff items and 
amortisation of intangible assets
 as at 3 january 2010 overview
financial statements
governance
business review
45 the morgan crucible company plc  
 annual report 2009
projects lasting many years in planning  
and implementation thermal ceramics is 
well positioned in the market and with its 
leading capability offers bespoke packaged 
solutions of insulation bricks fibre and fibre 
products during the year the sector was 
relatively strong and is seen as likely to 
remain so in the short and medium term 
fire protection 
thermal ceramics’ firemaster™ fire 
protection systems are comprehensively 
certified and extensively tested to meet 
national and international standards 
offering customers proven fire protection 
performance in various sectors including 
commercial buildings hotels airports 
industrial plants offshore platforms  
cruise ships military vessels and tunnels  
and other underground construction 
thermal ceramics works with fire protection 
specialists in the sector and channels to 
market include direct sales and distribution 
fire protectionrelated legislation is a key 
factor in driving demand in the sector 
which is also linked to construction output 
during the year demand was down but 
increased penetration enabled thermal 
ceramics to outperform the underlying 
market it is expected that the new lighter 
weight solutions of the firemaster™ 
product range combined with the 
increasing regulatory requirements for  
fire protection will create opportunities  
for growth in 2010 
ceramics 
thermal ceramics’ fibre products offer 
multiple benefits to the ceramics industry 
including saving energy by reducing kiln  
car mass each year over one million square 
metres of thermal ceramics insulating 
products is installed in kilns firing ceramic 
products from tiles to tableware and from 
sanitaryware to fine bone chinaware 
thermal ceramics’ routes to market include 
both direct sales and distribution the 
division’s application engineering and 
design capabilities are a key competitive 
advantage and its customer base is  
broadly diversified
the business targets growth opportunities 
in the following key markets
metalsiron and steel
thermal ceramics has a strong position in 
the supply of monolithic linings for blast 
furnaces fibre modules in reheating and 
heat treatment furnaces and insulating fire 
bricks for hearth and reheating furnaces 
where product quality is a key differentiator 
channels to market include distribution with 
direct sales to major accounts and where 
engineering input is required demand from 
the iron and steel sector declined in the year 
although demand for higher technology 
heat management solutions from asia  
was strong in the medium term as the 
global economy recovers the demand  
for steel will begin to rise again fuelled  
by industrialisation population growth and 
construction in addition steel producers 
are seeking new heat management 
solutions to tackle environmental concerns 
and rising energy costs and to increase 
operational efficiency 
petrochemical processing 
thermal ceramics targets both new  
and retrofit projects in the global 
petrochemical sector supplying heat 
management solutions for fired heaters 
sulphur recovery units fluid catalytic 
cracking units and boilers as petrochemical 
and refining process technology develops 
hightemperature heat management and 
energy efficiency become increasingly 
critical longterm growth in the sector  
is geared to population expansion with 
insulating fire bricks are sold under the 
jm™ k™ and tjm™ brands for use in 
roller kilns shuttle kilns tunnel kilns and 
hobby kilns thermal ceramics is well 
positioned in the market based on its 
highquality products and engineering 
support demand in the ceramics industry is 
broadly linked to building and construction 
and has suffered from a severely reduced 
market in the last year the outlook remains 
good longer term but with the market 
moving faster from europe to asia following 
the downturn 
power generation 
increasing demand for electricity across 
the world and particularly in the emerging 
economies is driving expansion in the 
power generation sector environmental 
and energycost efficiency issues make heat 
and thermal management a key issue for all 
operators for example thermal ceramics’ 
low biopersistent fibre superwool™ is used 
for duct insulation in heat recovery steam 
generators hrsgs offering high
temperature resistance with the important 
reassurance that the materials utilised are  
an environmentally friendly solution the 
newgeneration fibre superwool plus™ 
improves hrsg design further by reducing 
heat losses or reducing panel thickness 
power generation is a global industry with 
the specification fabrication financing and 
installation of projects potentially taking 
place on different continents such 
longterm projects are proving resilient to 
market downturns thermal ceramics has  
a strong position in higher end applications 
in the power generation and renewables 
sector serving the market through both 
direct sales with engineering support and 
via distributors  overview
financial statements
governance
business review
46 the morgan crucible company plc  
 annual report 2009
review of operations
continued
research and development
the thermal ceramics business carries out 
the majority of its research and development 
at its bromborough uk site in a purpose 
built worldclass facility with 25 dedicated 
scientists the team has led the market  
in the development of low biopersistent 
fibres lowenergy furnace operation  
and product development the work of  
this team has been at the heart of all of 
thermal ceramics’ major product launches 
of the last five years and in the past year 
investment has been increased as the 
business positions itself for future growth 
molten metal systems mms 
mms has a leading position in the supply of 
crucibles to the nonferrous metals industry 
and manufactures equipment and foundry 
products used in the melting holding and 
processing of metals and alloys
mms employs some 500 people at  
its 10 locations worldwide including five 
manufacturing facilities with localised 
technical support and five distribution 
centres mms is managed as an integrated 
global business with three product lines 
crucibles foundry consumables and 
furnaces in 2009 germany and india 
accounted for 90 of production output 
mms’s strategy is to deliver targeted 
solutions for metal casters focused on 
improving their metal quality increasing 
efficiency and reducing energy consumption 
and related co
2
 emissions
this strategy is implemented by
focusing on highvaluehighchallenge  
opportunities 
striving for operational excellence  
worldwide 
developing a growth culture throughout  
the business
mms serves its customers through a 
combination of direct sales and distribution 
with targeted technical support mms’s key 
growth opportunities are driven by multiple 
enduse markets these include 
nonferrous castings for the automotive  
marine and rail markets 
the recycling and refining of precious  
metals from mining projects 
the production of metal powder for   
the cosmetics aerospace and defence 
markets 
copper and brass castings for the  
construction chemical processing  
and oil and gas sectors 
the production of pure aluminium   
for electronics applications 
mms has a leading market position in 
crucibles which make up 80 of its 
revenue key markets are north america 
india brazil and germany sales to the 
indian market were up by over 15 in  
the year future growth will continue  
to come from the ‘bric’ countries and 
smaller developing markets 
mms’s technology capability is focused  
in its global research and product 
development facilities which form  
part of the indian operations
divisional performance
the insulating ceramics division comprises 
two reportable operating segments 
thermal ceramics and molten metal 
systems mms
in 2009 the insulating ceramics  
division’s revenue decreased by 98 to 
£3452 million 2008 £3829 million on  
a constant currency basis the yearonyear 
decline was 197 divisional ebita and 
margins dropped to £276 million and 80 
respectively from £456 million and 119 
in 2008
thermal ceramics
thermal ceramics’ revenues decreased  
by 93 to £3151 million in 2009  
2008 £3474 million on a constant 
currency basis the yearonyear decline  
was 194 endmarket demand was more 
challenging in the second half of the year 
with a revenue decline of 66 at constant 
currency compared to the first half of 2009
due to early management action thermal 
ceramics’ profitability showed encouraging 
resilience to this sales decline compared with 
the performance in previous downturns  
with ebita margins holding up well at 85 
2008 119 and with ebita for the year  
of £267 million 2008 £414 million 
our businesses in the developed economies 
of europe and north america were most 
affected by the global downturn in contrast 
markets in asia and latin america held  
up somewhat better and in the latter part  
of the year started to show some order  
book recovery
insulating ceramics 
continued
 as at 3 january 2010 overview
financial statements
governance
business review
47 the morgan crucible company plc  
 annual report 2009
thermal ceramics’ new product 
development remains concentrated in  
the field of low biopersistent fibre with  
the continued rollout of superwool 607
tm
  
the improved insulation performance 
product of superwool plus
tm
 as well as  
the higher temperature superwool ht
tm
 
the division is positioned as the global 
technology leader in the production of 
its biosoluble product range
the objective of thermal ceramics  
‘world class manufacturing’ programme  
is to increase productivity overall by 
improving health safety and environmental 
performance quality cost logistics and 
customer satisfaction the rollout of the 
programme covered three plants in 2009 
with a further three plants planned for 
2010 at the same time engineering and 
research time is being utilised to optimise 
manufacturing processes to improve gross 
margins through improved raw material  
and energy yield enhancements 
the relocation of mms’s manufacturing 
footprint to india and china was completed 
in 2009 both facilities are fully functional 
the focus in 2010 is to leverage our 
lowcost advantage and move the business 
into a period of profitable growth
outlook
towards the end of 2009 thermal ceramics’ 
order intake rate started to improve in all 
regions except europe this has continued 
into the early part of 2010 with the 
expectation that the year will show a  
trend of continued improvement although 
europe is likely to remain slow until 2011 
margin improvements were made with a 
number of operational excellence initiatives 
underway including our ‘world class 
manufacturing’ programme 
molten metal systems
mms revenues decreased by 225 in  
2009 on a constant currency basis the  
decline in customer demand was most 
severe in europe and north america the 
foundry products and crucibles product 
lines fared significantly better than the 
furnace equipment product line
while the business traded at just above 
breakeven in the first half of 2009  
it improved in the second half of 2009  
as benefits of the cost reduction and 
manufacturing footprint moves began  
to take effect 
business developments
whereas 2008 represented a growth  
period for thermal ceramics 2009 has 
been one of cost control and consolidation 
in the face of the challenging global 
economic conditions commencing in late 
2008 the business implemented a cost 
reduction programme that led to a 12 
headcount reduction at the end of 2009 
the cost reduction programme included  
the closure of two fibre plants erwin usa 
and skawina poland
the longterm outlook for thermal 
ceramics remains encouraging driven by 
the growth in global population and the 
continuing industrialisation of emerging 
economies in 2009 some 39 of revenues 
were generated in the asian and latin 
american regions and this percentage is  
set to increase these factors combined 
with the need to reduce energy expenditure 
and the increasingly stringent environmental 
legislation that favours low biopersistent 
fibres such as superwool
tm
 will continue  
to drive demand for thermal ceramics’ heat 
management solutions
the outlook for mms is positive with  
the order book having improved markedly 
due to modest recovery in europe and 
strong growth in india and china having 
successfully completed the relocation of its 
manufacturing facilities approximately 70 
of mms’s 2010 output will come from india 
brazil and china mms is well placed to take 
advantage of the continuing industrialisation 
of emerging economies and to retain its 
marketleading position overview
financial statements
governance
business review
48 the morgan crucible company plc  
 annual report 2009
corporate responsibility
introduction
at morgan crucible corporate responsibility 
is integral to our business supporting each  
of our five strategic priorities in this section 
we report on our policies procedures and 
performance in respect of business ethics 
community relations and suppliers and 
customers subsequent pages cover 
environment health and safety ehs 
and our people in addition our 2009  
ehs report planned for publication on  
our website in april 2010 will provide  
a more comprehensive review of our  
2009 environmental and health and  
safety performance
the board is accountable for corporate 
responsibility policies and procedures the 
chief executive officer mark robertshaw  
is the executive in charge of all corporate 
responsibility matters including internal  
and external stakeholders
during the year all of morgan crucible’s 
corporate responsibilityrelated and other 
policies went through a review and updating 
process with external benchmarking where 
appropriate the revised policies were 
agreed by the executive committee and 
approved by the board 
the company relaunched its groupwide 
intranet in january 2010 this provides 
employees with online access to the  
group’s policies and related procedures  
and guidance notes
our antitrust compliance programme 
helps ensure that we comply with antitrust 
and competition laws around the world 
the programme has been in place since 
2002 and was updated in 2008 to include 
new training materials and an updated 
programme structure
community
our practice is to engage with local 
communities in relation to matters of mutual 
interest and concern at a local level where 
morgan crucible often has longestablished 
roots and is frequently a major employer 
this helps to foster mutual understanding 
and credibility in addition morgan crucible 
engages with local and national 
governments and agencies both directly 
and through professional bodies donations 
to political parties or causes are prohibited
customers and suppliers
morgan crucible’s customer service strategy 
is to respond quickly to changing customer 
demand to identify emerging needs  
and to improve product availability quality  
and value we stay close to our current  
and potential customers building long 
term relationships
corporate responsibility policies 
and procedures
core values
morgan crucible’s approach to corporate 
responsibility is encapsulated in our core 
values statement which was first published 
in 2004 and is regularly reviewed as we 
work to implement our strategic priorities 
our core values statement provides the 
framework for our policies programmes 
and relevant procedures the statement  
is available on our website and applies  
to all morgan crucible businesses and 
employees worldwide
business ethics
the audit committee is responsible for 
overseeing the group’s ethics policy and 
reports to the board on its effectiveness
our core values statement and ethics  
policy oblige all employees to operate  
in accordance with applicable laws and 
regulations and specifically prohibit the 
giving or receiving of bribes these policies 
apply so far as is appropriate to our 
business partners including contractors 
agents joint ventures and suppliers the 
company also requires that no employee 
shall suffer discrimination as a result of 
refusing to pay or receive a bribe
during the year the morgan crucible ethics 
policy was reviewed and updated senior 
management training has been taking 
place the groupwide launch of the policy 
and related training programme took place 
with the launch of the intranet as referred 
to above  overview
financial statements
governance
business review
49 the morgan crucible company plc  
 annual report 2009
over 90 of the group’s manufacturing 
capacity is accredited to iso 9001 and our 
quality management systems help ensure 
that our products meet or exceed customer 
requirements management of the supply 
chain is a key part of iso 9001 and iso 
14001 accreditation and includes supplier 
questionnaires as appropriate
we aim to work with our customers 
suppliers and other partners in mutually 
beneficial ways and so far as is practicable 
require that our customers and suppliers 
joint venture partners and contractors 
throughout the supply chain act in 
accordance with our policies and values 
our support for the universal declaration 
of human rights referred to in the our 
people section on page 54 commits us  
in respect of all those who work for the 
company and those who have dealings  
with it including suppliers
corporate responsibility policy 
implementation
the implementation of our corporate 
responsibilityrelated policies and 
procedures is aligned with the overall 
governance structure of the group  
the implementation of our environmental 
health and safety and peoplerelated 
policies is covered in more detail on  
pages 51 to 55
we describe below some of the processes 
for implementing and monitoring our  
key corporate responsibility policies  
and procedures and those in respect of 
verification of our environmental social  
and governance esg disclosures
business ethics
the board of morgan crucible is committed 
to ensuring that the company’s policies 
relating to business integrity are upheld  
our core values statement and ethics policy 
are translated into appropriate languages 
for our sites worldwide the statement and 
policy are promoted to employees globally 
in particular through coverage in the global 
employee magazine which is available in 
eight languages appropriate training is 
provided including induction training for 
new employees and via elearning 
the morgan crucible whistleblowing line 
enables employees and other stakeholders 
who are aware of or suspect misconduct 
illegal activities fraud abuse of company 
assets or violations of morgan crucible’s 
ethics policy to report these confidentially 
without fear of retribution should they  
feel they cannot use a local channel
morgan crucible’s global antitrust 
compliance programme is ongoing with 
regular training for appropriate employees 
across the group antitrust compliance 
officers within each business report to the 
company secretary as global compliance 
director on the continuing effectiveness of 
the programme the antitrust compliance 
programme includes independent audits 
the results of which are considered by the 
company secretary who reports to the 
executive committee and the board on  
the effectiveness of the programme and  
on any issues arising
community
the implementation of our community
related policies and procedures is aligned 
with the management of our overall 
business and is focused at site level on 
engagement and initiatives which are 
relevant to the local community and to  
our business divisional and group support 
is made available where appropriate  
all charitable and other donations are  
fully accounted for
customers and suppliers
the chief executives of each of our divisions 
have specific responsibility for customers  
and suppliers and the related policies and 
procedures within their respective divisions
verification of esg disclosures
our company secretary the director of  
risk assurance and the director of ehs  
work with independent external consultants 
to review and where appropriate verify  
our environmental social and governance 
disclosures this process covers the 
environmental and health and safetyrelated 
nonfinancial key performance indicators 
included in this report
all morgan crucible businesses are regularly 
reviewed under the group’s compliance 
audit programme and those sites and 
businesses certified to iso 9001 iso 14001 
ohsas 18001 and other standards have 
regular external audits the group also uses 
external professional advisers in relation to 
specific health and safety and environmental 
matters as required
the board considers that these procedures 
provide a reasonable level of assurance that 
the group’s esg disclosures are free from 
material misstatement whether caused by 
fraud or other irregularity or error overview
financial statements
governance
business review
50 the morgan crucible company plc  
 annual report 2009
corporate responsibility
continued
corporate responsibility policy 
effectiveness
business ethics
during the year ethicsrelated issues  
raised through the whistleblowing line the 
dedicated ethics email facility or via other 
channels were followed up by the director 
of risk assurance in consultation with the 
company secretary further investigations 
may be conducted through the audit 
committee as required where appropriate 
disciplinary action is taken andor additional 
guidance and training provided in respect 
of the antitrust compliance programme 
the independent audits referred to above 
confirm the continued effectiveness of  
the programme 
customers and suppliers
morgan crucible continues to benefit  
from longterm relationships with many 
customers and suppliers reflecting the 
effectiveness of our customer service and 
supplierrelated strategies some examples 
of our customer relationships are included  
on pages 6 to 27 of this annual report
community 
during the year and including donations  
of £235592 made by np aerospace the 
group’s charitable donations increased  
to £302232 2008 £114736 this is in 
addition to the time given and donations 
made by morgan crucible employees 
around the world
during 2009 morgan crucible supported  
a number of initiatives at group divisional 
and site level the main emphasis of this 
support is to help disadvantaged young 
people and sponsor local community 
projects which can also engage and involve 
employees example initiatives include
the group continued its threeyear  
£60000 programme to support the 
army cadet force association acfa 
outreach project
morgan crucible continues to support  
the joint barnardo’soutward bound 
initiative which provides opportunities 
for young people to develop life skills  
at a centre in ullswater uk 
our divisions sponsor a number of local  
sports facilities and the teams that use 
them for instance np aerospace is a 
major sponsor of the godiva harriers 
the oldest athletics club in coventry uk 
formed in 1879 the godiva harriers 
cater for all types of athletic events  
and age groups in addition technical 
ceramics stourport uk provides 
support to the local football team  
and in the usa the carbon division 
supports a number of athletic teams  
in st mary’s pa usa
np aerospace also supports help for  
heroes the uk based charity which 
helps wounded servicemen and 
women as well as a number of  
related charitable causes 
the company also supports the british  
transplant games an annual fourday 
event which encourages transplant 
patients to regain fitness whilst also 
increasing public awareness of the  
value of organ donation
the carbon division’s site near  
johannesburg south africa organised  
a ‘wellness day’ some 100 employees 
participated increasing their awareness 
of the importance of a healthy lifestyle 
preventative screening and staying hiv 
negative the wellness day is planned  
to be an annual event in future
our staff also support a variety of local and 
national initiatives and projects helping to 
raise funds and giving their time examples 
of employee activities include 
employees at the carbon site in  
greenville sc usa and at the technical 
ceramics site in new bedford ma  
usa continue to be strong community 
supporters working closely with  
united way employees pledge payroll 
deductions to local charities make 
donations to local united way 
programmes and participate in the 
united way day of caring when  
they help with landscaping painting  
and other community tasks
the technical ceramics site in  
waldkraiburg germany held an onsite 
auction which raised £1500 for a local 
children’s daycare centre
the morgan crucible headoffice   
team participated in the 262 mile 
maidenhead relay marathon to raise 
money for the link foundation a 
charity which helps care for children  
in difficult circumstances overview
financial statements
governance
business review
51 the morgan crucible company plc  
 annual report 2009
environment health and safety
our environment health and safety ehs 
policy and implementation programmes 
support our five strategic priorities and  
our core values statement the regular 
collection and reporting of ehs key 
performance indicators kpis and the 
setting of ehsrelated targets assist us  
in the development and monitoring of 
programmes to reduce the impact of  
our operations on the environment 
the company is committed to conducting 
all its activities in a manner which achieves 
the highest practicable standards of health 
and safety for our employees and others 
affected by our operations 
this report includes a summary of our ehs 
policy and its effectiveness as demonstrated 
through our ehs kpis and programmes 
further detail will be included in our 2009 
ehs report to be published on our website 
in april 2010 the ehs report will also 
include case studies to help demonstrate 
our approach to enhancing the sustainability 
of our business
ehs policy
the group’s ehs policy applies groupwide 
it is made available to all employees and is 
published on our website and in our annual 
ehs report
during 2009 we reviewed and externally 
benchmarked our group ehs policy the 
revised policy has been agreed by the 
executive committee and approved by  
the board in addition to statements of  
ehs policy the new ehs policy clearly sets 
out the responsibilities for ehs matters 
throughout the group
our ehs policy requires high standards  
of ehs management at all sites this is 
achieved through risk assessment and  
the management and mitigation of 
identified risks to help provide continuous 
improvement in environmental health  
and safety performance in support of  
our strategic priorities
ehs policy implementation
our ehs policy forms the basis of our 
environment health and safety management 
systems and processes the management of 
our environmental and health and safety 
performance is aligned with the operation of 
our daytoday business the chief financial 
officer has specific responsibility for ehs 
policy and performance supported by the 
director of environment health and safety 
operational responsibility is delegated to  
the chief executive of each division and  
the manager of each operation in practice  
all employees are responsible for ensuring 
that our ehs policy is implemented and  
for identifying additional areas and 
opportunities for further development
morgan crucible’s environmental and  
health and safety management processes 
include the ehs compliance audit 
programme carried out by external auditors 
in europe and asia and inhouse resources 
in the americas this programme provides 
assurance of the ehs management at each 
site and helps ensure compliance with local 
regulations and good management practice 
all of the group’s manufacturing facilities 
are audited on a threeyear rolling cycle  
thirtythree sites were audited during 2009 
including all seven of the group’s chinese 
facilities this enabled the effectiveness of 
the first stage of the group’s chinese ehs 
training and improvement programme to  
be independently assessed our target  
for 2010 is to audit a further 26 sites 
training is an integral part of our ehs  
policy implementation during 2008 we 
implemented an indepth ehs training 
programme at all of the group’s facilities  
in china the programme was carried out 
with the assistance of external consultants 
and included comprehensive training of 
senior management and the development 
and implementation of ehs management 
systems at all sites the ehs compliance 
audits carried out at all of these facilities  
in 2009 showed a substantial improvement 
in ehs performance a small number of 
areas requiring further improvement were 
identified and these are being addressed  
in the next stage of the programme which 
is currently underway 
the success of the chinese programme 
demonstrated the benefits of focused  
ehs training and a similar programme  
is being developed for the group’s six 
manufacturing facilities in india this 
programme will be implemented in 2010 
environmental management systems are  
in place at 89 sites worldwide representing 
over 90 of output including 34 major 
sites or 38 of output certified to iso 
14001 2008 27 sites and 43 of output 
seven sites achieved certification in 2009 
however the proportion of our output 
covered by iso 14001 certification declined 
due to the consolidation of np aerospace 
we plan for the main np aerospace sites  
to be certified over the period of 201011
these new certifications are in addition to 
the ongoing programme of recertifications 
all of our major sites worldwide have health 
and safety management systems in place 
with nine sites certified to or working 
towards ohsas 18001 overview
financial statements
governance
business review
52 the morgan crucible company plc  
 annual report 2009
corporate responsibility
continued
environmental performance
wherever possible we work to minimise the 
impact of our business on the environment 
and to maximise the positive environmental 
benefit of our products 
our environmental target for the two years 
200910 is to reduce the intensity of our 
co 2 emissions due to all sources of energy 
use by 5 in real terms co 2 intensity was 
down by 14 in 2009 in absolute terms 
total co 2 emissions due to energy use were 
some 393000 tonnes against 464000 
tonnes in 2008 444000 tonnes in 2007 
and 419000 tonnes in 2006 our waste 
intensity was down by 11 in the year 
ahead of our 5 reduction target for the 
two years 200910 the proportion of total 
waste which was recycled was 28 in 
2009 down one percentage point on  
the prior year and thus we are not on track 
to achieve our target to increase the level  
of recycling to 35 of total waste over  
the period 200910 water intensity was  
down 9 in 2009 and we are ahead of  
the targeted 5 reduction over the two 
years 200910
we will again be targeting reductions in our 
energy emissions waste and water intensity 
in 2010 to ensure we achieve our targets  
for the twoyear period 200910 further 
details will be included in our ehs report to 
be published on our website in april 2010
ehs policy effectiveness
in addition to the ehs compliance  
audit programme the group monitors  
the effectiveness of its ehs policy through  
a series of ehs kpis these are reported 
groupwide on a monthly basis and  
the executive committee and the board 
receive reports every six months
during 2009 we extended our ehs 
reporting to cover np aerospace the data 
in this report includes the environmental 
and health and safety impacts of this 
business following the group’s acquisition 
of a majority stake in january 2009 
where necessary historic data has been 
restated to reflect changes to the business 
with environmental intensity kpis reported 
at constant currency the summary charts 
on pages 52 and 53 represent the group’s 
ehs performance in real terms covering 
100 of production sites during the year
the verification of our environmental social 
and governance disclosures is discussed on 
page 49
environment health and safety
continued
2009
co
2 
intensity
tonnes£m revenue
2008
2007
2006
400
464
487
516
2009
waste intensity
♦
tonnes£m revenue
2008
2007
2006
65
73
85
94
2009
energy intensity
†
mwh£m revenue
2008
2007
2006
1283
1471
1541
1692
2009
water intensity

m
3
£m revenue
2008
2007
2006
2563
2816
3321
4450
  c o
2 
equivalent from all energy sources 
including countryspecific electricity
  constant currency basis includes intercompany 
sales
† energy from all sources
♦	 	
hazardous and nonhazardous waste includes 
recycled material
  water from all sources includes process and 
irrigation use overview
financial statements
governance
business review
53 the morgan crucible company plc  
 annual report 2009
the number of days lost due to accidents was 
down 13 in the year but as a result of the 
reductions in working time at many facilities 
worldwide relative lost time performance 
was flat at 014 of working time although 
many businesses improved performance in 
this area however with the reduced number 
of lost time accidents the average time lost 
per lost time accident increased to 32 days 
although this figure includes a small number 
of more longterm cases
health and safety performance
our longterm health and safety objective  
is to have no accidents in 2010 we will 
continue to extend our accident prevention 
and training programmes throughout the 
group with the objective of reducing the 
time lost per lost time accident and placing 
particular focus on those sites with below 
average performance 
our health and safety kpis include accident 
frequencies and causes and related lost 
working time these are used to monitor the 
effectiveness of our health and safety policies 
and related systems on a monthly basis 
the group’s accident reporting and analysis 
systems continue to be refined to enable us 
to produce kpis that more accurately reflect 
the health and safety situation throughout 
the group
our ehs policy implementation 
programmes including the training 
programme mentioned on page 51 helped  
to drive down the frequency of lost time 
accidents across the group to 056 per 
100000 hours worked the number of  
lost time accidents was down by over 25 
manual handling cuts and abrasions are  
the most common cause of accidents  
and we will be working to address this 
specifically targeting businesses with 
belowaverage performance
2009
lost time accident frequency
ltas100000 hours
2008
2007
2006
056
069
055
070
2009
lost time per lta
days per lta
2008
2007
2006
32
26
19
13
cuts  abrasions 46
manual handling 12
slips trips falls 8
struck by object 8
strike stationary object 8
moving machinery 5
other 13
accident causes

2009
health and safetyrelated lost time
 of total working time
2008
2007
2006
014
014
008
007
  lost time accident lta accident which results  
in one or more days’ lost time overview
financial statements
governance
business review
54 the morgan crucible company plc  
 annual report 2009
corporate responsibility
continued
our people
during a period of global economic 
recession the capabilities flexibility  
and tenacity of our people have enabled 
morgan crucible to achieve a resilient 
performance in 2009 in almost every  
area of the business our people have  
been affected in some way and while the 
business has been constrained to directly 
reward them their commitment and effort 
have not waned we will continue to leverage 
that commitment and the significant talents 
of our people around the world to create a 
network that reaches our customers and 
supports their individual needs globally 
people policies
we support the universal declaration of 
human rights and our human rights policy 
commits us to protect the rights of everyone 
who works for the company and all those 
who have dealings with it the 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 our website the director of human 
resources reports to the chief executive 
officer and is responsible for the 
development of human rights policy and 
related matters with the chief executive  
of each division having responsibility  
for policy implementation within their 
respective divisions the morgan crucible 
whistleblowing line enables employees  
who are aware of or suspect issues under 
our human rights policy to report these 
confidentially
our global human resources policy provides 
an infrastructure of human resource 
activities that enables the business to 
attract retain and engage people with the 
skills and capabilities to deliver its business 
plans and outperform the competition 
key to building and maintaining the trust 
and respect of our people is open timely 
and factual communication our systems 
provide twoway communication forums 
through online working areas encouraging 
greater collaboration the divisions 
we recognise and celebrate the 
accomplishments achieved by our people 
individually or as teams in acknowledging 
and celebrating achievement loyalty 
innovation and creativity we strive to 
motivate and inspire employees towards the 
pursuit of performance excellence creating  
a sense of pride in their work and in morgan 
crucible our compensation systems reward 
people who apply their knowledge skills  
and talents to support the achievement  
of business goals we pay for performance  
in all our compensation practices the total 
reward package includes a mix of base pay 
variable pay and benefits we establish 
compensation levels that are both competitive 
and affordable to morgan crucible we have 
the flexibility to respond to changing market 
conditions and competition for highdemand 
skills while maintaining equity in salary 
ranges and pay levels 
implementation of our peoplerelated 
policies
the implementation of our human rights 
policy is supported by an online learning 
programme that is translated into brazilian 
portuguese latin american spanish and 
mandarin chinese the assessment of 
compliance with this policy is part of  
our annual certification process
during the year we launched the morgan 
crucible intranet renamed by our people  
as ‘morganet’ morganet provides fast  
and efficient access to information from 
diverse sources across the globe we also 
introduced our global ‘360’ emagazine  
in an online version in addition to having 
hard copies available in 13 languages  
the divisions continue to issue regular 
divisional newsletters in both soft and hard 
formats in europe we have an established 
consultative arrangement that provides  
an arena for the exchange of relevant  
and appropriate information across the 
european region we also held our 13th 
annual european employee forum in april 
2009 where site representatives attended 
from france germany hungary italy the 
netherlands and the uk
communicate regularly through  
employee forums team briefs and  
divisional magazines we are committed to 
providing our people with the opportunity  
to give feedback through regular global 
employee surveys listening to our people 
and harnessing their knowledge and 
experience of morgan crucible is essential 
to continuously improve and grow the  
business over the long term
demands on the business are constantly 
growing and changing requiring the 
placement of current and new talent into 
jobs that fit those business requirements  
at the time they are needed we review 
short and longterm business needs on  
a regular basis and carry out succession 
planning and talent reviews to identify  
any skill gaps when recruiting for a  
vacant position we will draw from internal 
talent and where necessary seek external 
candidates selection is based on many 
factors including a candidate’s relevant 
education work experience competencies 
and performance record we provide  
equal opportunities in recruitment  
and employment ensuring we do not 
discriminate against any person based on 
sex race caste origin religion disability 
gender sexual orientation age or any  
other status protected by law should 
existing employees become disabled our 
policy is to provide continuing employment 
and training wherever practicable
for the business to achieve superior 
performance there is an expectation that 
our people need to operate at superior 
levels we aim to support them through  
a formalised performance management 
system cascaded through the businesses 
that focuses on setting clear resultsbased 
objectives directly linked to the strategic 
goals and annual objectives of the business 
providing people with the skills to perform  
at a superior level is also critical and we see 
continuous learning and their professional 
development as a major investment in  
our future  overview
financial statements
governance
business review
55 the morgan crucible company plc  
 annual report 2009
we have introduced a learning management 
system that enables managers and employees 
to track and record their learning and 
development and link specific development  
to the achievement of business goals and 
objectives in our online development centre 
we added a number of new elearning 
programmes throughout the year microsoft 
it eappraisal and compliance training while 
continuing with a business english language 
module a number of new employee 
development initiatives have been introduced 
in our businesses insulating ceramics  
has developed and introduced elearning 
programmes to support the implementation 
of its ‘world class manufacturing’ 
programme while carbon china has set  
up a virtual learning resource centre with 
time guanghua school to support a breadth 
of technical and business management 
training a new training centre has been 
opened at morgan carbon south africa 
providing greater flexibility to support a  
range of training initiatives from adult basic 
education through to production technology 
qualifications 
in pursuit of growing capability in the  
labour market morgan crucible continues 
to sponsor annually the science engineering  
 technology student of the year awards 
we are proud to sponsor this event as we 
believe it allows highcalibre students to 
showcase their remarkable research work 
and demonstrate the depth of ability of 
graduates in the uk in 2009 the winner  
of the best materials student award was 
michael robinson from sheffield university 
people policy effectiveness
at the end of the year morgan crucible 
employed some 9400 people a reduction 
of 119 on the previous year our 
geographic coverage has 35 of employees 
in europe middle east and africa 37 in 
the americas and 28 in asia pacific of 
these employees 97 are ‘permanent’ and 
73 are male lost time as a proportion of 
total working time was 27 with lost time 
due to accidents in the workplace of 014 
the training hours per employee were 124
this reflects a reduction in expenditure on 
direct training during this period however 
we are looking forward to this increasing  
in 2010 with the ability to collate data from  
our new learning management system  
our employee turnover increased to 167  
in 2009 this regrettably reflects an increase 
in the number of people made redundant 
during the year and the challenges of 
retaining talent in china where the labour 
market is exceptionally fluid 
during this period 19 employees around the 
world celebrated 40 years of loyal service 
with morgan crucible with 117 employees 
celebrating anniversaries of 20 25 and 30 
years service this year we regretfully said 
goodbye to bill byrd who retired at the age 
of 83 the transportation specialist based  
in our insulating ceramics plant in augusta 
ga usa decided to retire after 62 years’  
of loyal service with morgan crucible to 
reflect our longserving employee base we 
have improved our method of calculating 
employee tenure for 2009 and our average 
length of service is 113 years
morgan crucible carried out an employee 
survey in october 2008 and an overview of 
the results was reported in the 2008 annual 
report throughout 2009 we have focused 
on completing actions related to improving 
communications and growing the skills  
of our employees through effective 
performance management and focused 
development programmes
2009
total lost time
 of working time
2008
2007
27
24
25
2009
employee turnover
 per year
2008
2007
167
142
140
2009
training
hours per employee
2008
2007
124
149
135
  2009 data covers 100 of employees 2008 
96 2007 66 for comparison purposes these 
kpis exclude the indian facility which was subject 
to a ‘lockout’ during part of 2008 and 2007 overview
financial statements
governance
business review
56 the morgan crucible company plc  
 annual report 2009
financial review
introduction
these results are produced under 
international financial reporting standards 
as adopted by the eu adopted ifrss all 
the figures referred to below are extracted 
from the financial statements on pages 88 
to 148 and comply with adopted ifrss 
reference is made to ’underlying operating 
profit’ and ’underlying earnings per share 
eps’ eps is defined in note 9 on pages 109 
and 110 these measures of earnings are 
shown because the directors consider that 
they give a better indication of underlying 
performance
group revenue and operating profit
group revenue was £9426 million 2008 
£8350 million an increase of 129 
compared to 2008 on a proforma constant 
currency basis group revenue declined by 
87 from the previous year the proforma 
calculation assumes that np aerospace had 
been consolidated in 2008 to enable a 
likeforlike comparison
group ebita before restructuring costs  
and oneoff items was £890 million  
2008 £1088 million representing  
a margin of 94 2008 130
group underlying operating profit  
was £770 million 2008 £982 million 
underlying operating profit margins were 
82 compared to 118 for 2008
group operating profit was £607 million 
2008 £950 million operating profit 
margins were 64 compared to 114 
for 2008
our strategy of focusing  
on higher growth higher 
margin less economically 
cyclical markets has 
generated a good 
performance with greatly 
improved resilience of 
earnings
kevin dangerfield
chief financial officer
  underlying operating profit is defined as 
operating profit before amortisation overview
financial statements
governance
business review
57 the morgan crucible company plc  
 annual report 2009
the group has undertaken extensive cost 
reduction programmes across its business  
in 2009 the majority of which were 
completed in the first half of the year  
our focus particularly in the first half of  
the year was to rapidly resize and adjust  
our cost base to reflect weakening market 
demand net restructuring costs and gain 
on disposal of property were £129 million 
in 2009 2008 £97 million and costs 
recovered associated with the settlement  
of prior period antitrust litigation were  
£09 million 2008 cost incurred  
£09 million
foreign currency impact
the principal exchange rates used in the 
translation of the results of overseas 
subsidiaries were as follows
  average rate yearend rate
  2009 2008 2009 2008
us  15687 18552 16149 14450
euro  11249 12582 11255 10408
 
the potential impact of changes in foreign 
exchange rates is given in note 19 on  
pages 125 and 126 
amortisation of intangible assets
the group amortisation charge was  
£163 million 2008 £32 million  
the increase in amortisation is mainly 
attributable to a fair value assessment  
of the assets of np aerospace at the date  
of the 11 acquisition the amortisation 
 carbon technical ceramics insulating ceramics consolidated
  2009 2008 2009 2008 2009 2008 2009 2008
  £m £m £m £m £m £m £m £m
revenue  3914 2399 2060 2122 3452 3829 9426 8350
divisional ebita 405 363 251 316 276 456 932 1135
unallocated central costs       42 47
group ebita       890 1088
restructuring costs and other oneoff items       120 106
underlying operating profit       770 982
amortisation of intangible assets       163 32
operating profit       607 950
 divisional ebita is defined as segment operating profit before oneoff items and amortisation of intangible assets 
calculation is driven by the np aerospace 
order book which has been ‘fair valued’ as 
part of the intangible assets and amortised 
over the 12month period over which the 
orders were delivered hence in 2009 the 
group had a oneoff increase in its 
amortisation charge for the year in 2010 
the group amortisation charge will be 
reduced to circa £75 million per annum 
which includes the amortisation on the 
other ongoing intangible assets the group 
has booked on the acquisition of np 
aerospace the carpenter businesses and 
other historical acquisitions
finance costs
the net finance charge was £293 million 
2008 £127 million net bank interest  
and similar charges were £228 million 
2008 £143 million an increase of  
£85 million due mainly to the increase 
in average net debt in 2009 following  
the np aerospace and carpenter business 
acquisitions a significant part of the  
finance charge under ifrss is the net  
interest charge on pension scheme liabilities 
which was £43 million 2008 £01 million 
gain also included in the finance charge 
is an interest expense on unwinding of 
discount on deferred consideration of  
£22 million 2008 £nil which relates  
to the np aerospace acquisition
the impact of potential changes in interest 
rates on profit or loss is stated in note 19  
on pages 124 and 125
taxation
group taxation for the year was £87 million 
2008 £201 million the effective tax rate 
was 277 2008 24
earnings per share
underlying earnings per share was 132 
pence 2008 234 pence basic earnings 
per share was 71 pence 2008 222 
pence details of these calculations can  
be found in note 9 on pages 109 and 110
dividend
the board is recommending a final  
dividend of 45 pence per share bringing  
the total dividend for the year to 70 pence 
per share in line with the previous year’s 
dividend the dividend will be paid on  
9 july 2010 to ordinary shareholders on the 
register of members at the close of business 
on 21 may 2010 subject to shareholder 
approval at this year’s annual general 
meeting a scrip alternative to the cash 
dividend will be offered and will replace  
the existing drip scheme
a fiveyear summary of the group’s financial 
results is set out on page 148 of this report overview
financial statements
governance
business review
58 the morgan crucible company plc  
 annual report 2009
financial review
continued
cash flow
the net cash inflow from operating activities 
was £1345 million 2008 £1112 million  
an increase of 21 over the previous year 
free cash flow before oneoff costs and 
dividends was £859 million a substantial 
increase in cash generation on the previous 
year 2008 £347 million driven by strong 
working capital management working 
capital generation was a net inflow of  
£258 million compared to last year’s outflow 
of £218 million at the year end the group 
had net borrowings of £2527 million an 
improvement of £377 million compared to 
the 2008 yearend position of £2904 million 
    2009 2008
    £m £m
net cash inflow from  
operating activities  1345 1112
net capital expenditure  137 315
net interest paid   232 169
tax paid on ordinary activities  117 281
free cash flow before oneoff  
costs and dividends  859 347
oneoff costs  
–  restructuring costs and 
other oneoff items  121 115
– tax settlement   203 –
dividends paid   121 188
cash flows from other investing  
and financing activities  320 983
exchange rate movement  283 768
opening net debt   2904 1197
closing net debt   2527 2904
 
  net debt is defined as interestbearing loans and 
borrowings and bank overdrafts less cash and 
cash equivalents
commitments for property plant and 
equipment and computer software for 
which no provision has been made are  
set out in note 24 on page 137
capital structure
at the year end total equity was £2146 
million 2008 £2080 million with closing 
net debt of £2527 million 2008 £2904 
million
noncurrent assets were £6196 million 
2008 £5838 million and total assets were 
£10412 million 2008 £10787 million 
the most significant elements of these 
movements were the translation effect  
of the us dollar and the purchase of a 
further 11 stake in np aerospace in 
january 2009 taking morgan crucible’s 
stake to a controlling 60 holding as a 
result this business has been consolidated 
into the group results for the first time in 
2009 please refer to note 3 on pages 104 
to 106 for further details of the accounting 
in respect of this transaction
details of undiscounted contracted 
maturities of financial liabilities and capital 
management are set out in note 19 on  
page 123
there have been no significant postbalance 
sheet events
capital structure is further discussed in note 
19 on page 126 under the heading capital 
management 
pensions
the group operates a number of pension 
schemes throughout the world the majority 
of which are of a funded defined benefit 
type the largest of these are located in the 
uk and the us with others in continental 
europe net employee benefit liabilities 
totalling £1059 million are included in the 
financial statements at the end of the year 
an increase of £41 million compared with 
the previous year the main movements have 
been in the us and uk pension schemes the 
us scheme deficit improved by £152 million 
to £462 million 2008 £614 million while 
the uk scheme deficit deteriorated to  
£345 million 2008 £131 million mainly 
due to an increase in the inflation rate and  
a lower discount rate refer to note 20 on 
pages 129 to 132 for further details
treasury policies
the following policies were implemented 
and in place across the group throughout 
the year the manager of each business  
unit is required to confirm this as part of  
the yearend process
financial risk management  
and treasury policy
group treasury works within a framework 
of policies and procedures approved by  
the audit committee it acts as a service  
to morgan crucible’s business not as a 
profit centre and manages and controls  
risk in the treasury environment through  
the establishment of such procedures 
group treasury seeks to align treasury  
goals objective and philosophy to those  
of the group it is responsible for all of  
the group’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  
group currency transaction exposures  
exist the group 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 the group continues its practice  
of not hedging income statement 
translation exposure
there are exchange control restrictions 
which affect the ability of a small number  
of the group’s subsidiaries to transfer funds 
to the group the group does not believe 
such restrictions have had or will have any 
material adverse impact on the group as  
a whole or the ability of the group to meet  
its cash flow requirements overview
financial statements
governance
business review
59 the morgan crucible company plc  
 annual report 2009
credit risk
credit risk arises when a counterparty  
fails to perform its obligations the group  
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 the group 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  
the nature of the group’s operations  
are such that the group has a significant 
number of lowvalue trade receivables  
the risk is therefore considered minimal 
credit risk is further discussed in note 19  
on pages 121 and 122
capital investment
the group has wellestablished formal 
procedures for the approval of investment in 
new businesses and of capital expenditure 
to ensure appropriate senior management 
review and signoff
tax planning risk
the group’s reported aftertax income  
is calculated based on the relevant tax 
legislation in each of the jurisdictions that  
it operates in changes in tax legislation 
including tax rates could materially affect 
the group’s aftertax income the group 
undertakes tax planning initiatives where 
appropriate the outcome of such planning 
cannot be assured and could materially 
influence the effective tax rate
accounting policies
we adopted international financial 
reporting standards as adopted by the eu 
‘adopted ifrss’ in 2005 all accounting 
policies shown on pages 93 to 101 are 
compliant with adopted ifrss
going concern 
the group’s business activities together 
with the factors likely to affect its future 
development performance and position 
are set out in the business review on pages 
32 to 63 the financial position of the 
group its cash flows liquidity position and 
borrowing facilities are described earlier in 
this financial review in addition note 19 
includes the group’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 group announced in may 2009 the 
signing of a new £280 million threeyear 
multicurrency revolving facility agreement 
with a syndicate of eight banks this 
replaced a us420 million facility with the 
same financial covenants which was due  
to mature in march 2010 the group meets 
its daytoday working capital requirements 
through local banking arrangements that 
are supported through the flexibility 
provided by the new facility the group’s 
forecasts and projections taking account  
of reasonably possible changes in trading 
performance and exchange rates show the 
group operating comfortably within the 
group’s debt financial covenants for the 
next 12 months
the current economic climate continues to 
have an impact on the group its customers 
and suppliers the board fully recognises the 
challenges that lie ahead but after making 
enquiries the directors have a reasonable 
expectation that the company and the 
group 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 report and accounts
currency translation risks are controlled 
centrally to defend against the impact  
of a permanent reduction in the value  
of its overseas net assets through currency 
depreciation the group seeks to match  
the currency of financial liabilities with  
the currency in which the net assets are 
denominated this 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 group’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 group’s 
borrowings becomes more aligned to  
the trading cash flows that service them
interest rate risk
the group seeks to reduce the volatility  
in its interest charge caused by rate 
fluctuations the group adopts a policy of 
ensuring that between 30 and 80 of  
its exposure to changes in interest rates on 
borrowings is on a fixed rate basis this is 
achieved through a combination of fixed 
rate debt and interest rate swaps
borrowing facilities and liquidity
all of the group’s borrowing facilities are 
arranged by group treasury 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 group treasury seeks  
to obtain certainty of access to funding in 
the amounts diversity of maturities and 
diversity of counterparty as required to 
support the group’s mediumterm financing 
requirements and to minimise the impact of 
poor credit market conditions
in may 2009 the group announced the 
signing of a new threeyear multicurrency 
facility for £280 million from a syndicate of 
eight banks this has replaced the us420 
million facility which was due to mature  
in march 2010 further information on the 
group’s debt and maturity profile is provided 
in note 18 on page 119 overview
financial statements
governance
business review
60 the morgan crucible company plc  
 annual report 2009
risk management
introduction
our risk management processes are 
designed to be forwardlooking in the 
identification management and mitigation 
of business risks that could impact the 
group’s short and longterm performance 
and value the processes will not eliminate 
risks but rather mitigate them to an 
acceptable level within the context of  
the business environment in which we 
operate the process covers both risks  
and opportunities
management of business risk is an integral 
part of delivering performance and is  
the responsibility of all managers our  
risk management decisionmaking and 
reporting procedures are integrated in our 
formal business reporting up to the board 
the group appointed a new director of risk 
assurance at the end of 2008 during the 
year the group reviewed and benchmarked 
its risk management methodologies and 
processes against external good practice 
following this review the board approved  
a plan to evolve the existing processes to  
a more coherent approach by using a 
formalised and standardised risk management 
methodology throughout the group 
implementation commenced in 2009 and  
will continue through 2010 with regular 
reports covering risk management processes 
and key risks to the audit committee  
and the executive committee through the 
risk management committee the risk 
management committee is chaired by  
the chief financial officer and includes 
representation from each division the 
effectiveness of risk management and 
internal control processes is monitored by  
the audit committee which also ensures 
that the board has sufficient information  
in this regard
during the year the group and its 
subsidiaries complied with its policies and 
procedures for managing material risks
the risks described below include the main 
areas of risk that could impact morgan 
crucible these cover most areas of known 
and emerging business risk they include 
internal risks where we have a greater 
degree of control and influence as well  
as external risks where our ability to 
completely control them may be more 
limited they are nevertheless assessed and 
managed down to an acceptable level the 
relative importance of some of these risks 
has changed during 200809 as a result  
of the world recession as a consequence 
the controls to manage risk have been 
adjusted to ensure that the risks continue  
to be managed within acceptable limits
strategic planning risks
these risks relate to the appropriateness  
of strategy business model or product 
portfolio acquisitions and disposals  
the risks to planning and delivery of  
the strategy are also included
external risks
political economical and social
we are exposed to these risks in a number 
of countries in which we operate as part of 
realising business opportunities we operate 
within the local conditions while monitoring 
the political economic and social changes in 
these countries and adjusting our business 
plan operations and controls accordingly
financial
operating in a number of countries we  
are exposed to events in the financial 
environment including commodity and 
energy prices currency exchange the  
current credit crisis and other financial market 
incidents market volatility interest rates 
liquidity pension funding tax planning etc 
these risks are managed through proactive 
assessment contingency planning and the 
use of appropriate mitigation
examples of mitigation include
optimising exchange rate exposure  
through the supply chain by raw 
material sourcing manufacturing  
and selling locally to minimise exchange  
rate impact 
minimising the impact on the group   
of a major currency devaluation
fixing longterm pricing for the   
purchase of energy and other materials
entering into certain hedging  
arrangements to help manage the 
impact of currency fluctuations the 
group’s relevant treasury policies are 
summarised in the financial review on 
pages 58 and 59
managing pension funds using  
independent competent trustee boards 
and external advisers
further details of the group’s pension plans 
and employee benefits are included in note 
20 on pages 129 to 136
market dynamics and competition
our products tend to be technologically 
advanced and use complex and 
highaddedvalue manufacturing 
techniques we operate in a business 
environment where we need to be proactive 
with respect to market dynamics including 
customer preference new technology and 
new competition
we monitor our current areas of business 
working with our customers to ensure that 
we continue to satisfy their evolving needs 
we adjust our strategies and business plans 
to reflect changing conditions thereby 
helping to ensure that risks are managed 
within acceptable limits overview
financial statements
governance
business review
61 the morgan crucible company plc  
 annual report 2009
business conduct risks
risks such as a potential breach in the area 
of ethical behaviour could impact the 
group’s reputation or image
our reputation with our stakeholders is 
fundamental to the continued success of  
the group and we mitigate reputational 
risks through various means including
our corporate responsibility programme  
and our core values statement 
our ethics policy whistleblowing line  
and related procedures 
our systems of internal control and   
risk management
the group’s ethics policy and antitrust 
compliance programme are further 
described in the corporate responsibility 
section these programmes address the risk  
of unethical business behaviour and are 
supported by mandatory training and the 
group’s whistleblowing line and related 
procedures
operational risks
financial physical property intellectual 
property and information
the group’s financial physical and 
intellectual property assets are exposed to 
risks such as theft loss natural catastrophe 
accidental disclosure etc such incidents can 
also impact the continuity of the business
these risks are managed through internal 
controls proactive design and protection of 
facilities and business continuity measures  
to minimise the impact of an incident 
audits by experts in their fields including 
financial auditors review and assess the 
effectiveness of such measures
in some cases risks are partially transferred 
through insurance programmes
human resources risks
the group maintains human resource 
policies and processes to manage the  
risks relating to our people eg reward  
and recognition health and safety talent 
management including succession planning 
skills assessment and development 
performance management and employee 
consultation
product development performance  
and safety risks
our products are used in many industrial 
sectors including medical aerospace and 
defence these sectors require high quality 
and conformance to specification as well  
as consideration of the health and safety  
of the end users
robust research and development 
processes both inhouse and where 
undertaken in cooperation with our 
customers minimise product development 
risks our design testing and quality 
assurance processes including iso 9001 
accreditations help to control 
manufacturing risks
compliance and ethics risks
legal regulatory and litigation
we are subject to varying laws and 
regulations around the world changes  
in these could affect the long and 
shortterm value of the group as a listed 
company we are also exposed to the  
risks of ensuring compliance with listing 
requirements we cannot always predict 
whether future developments in laws and 
regulations concerning our businesses will 
have an adverse or a positive effect
for example a failure to comply with  
export control regulations could have a 
negative impact whilst new environmental 
performance legislation which affects  
our customers could increase the demand 
for our energyconserving products and 
services which can help our customers to 
address the requirements of such legislation
to manage these risks we monitor potential 
changes in regulation as well as having 
appropriate training and compliance 
processes in place
from time to time and in the normal  
course of business we are subject to certain 
litigation in particular in the usa provisions 
for the expected costs and liabilities are  
set out in note 21 to the accounts if the 
liabilities arising were significantly to exceed 
the amounts provided for there could be 
a material financial effect on the value of 
the group
health safety and environmental
our operations involve the normal 
environmental health and safety risks 
associated with manufacturing operations  
in the countries in which we operate 
although we believe that our operations  
are in compliance with current regulations 
we cannot eliminate the risk of all accidents 
or noncompliance 
further detail of the programmes in place  
to manage these risks are included on  
pages 51 to 53 overview
financial statements
governance
business review
62 the morgan crucible company plc  
 annual report 2009
key resources and  
contractual relationships
morgan crucible has built up significant 
resources and benefits from contractual  
and other relationships with multiple 
stakeholders including customers and 
suppliers employees and joint venture 
partners these have been built up  
over many years to support the group’s 
competitive positioning in the key markets 
which the group serves 
as is described below no one contractual  
or other relationship is considered essential 
to the business of the group as a whole
further information on the group’s 
stakeholder relationships is included 
elsewhere in this business review including 
in the corporate responsibility section on 
pages 48 to 55 as referred to in the 
directors’ report on page 68 a number  
of commercial and contractual agreements 
include change of control provisions which 
come into effect in the event of a change  
in ownership of the company following a 
takeover
in accordance with its vision aim and 
strategic priorities the group continues  
to invest in the areas discussed below to 
maintain its leading market positions
commercial relationships market 
position and reputation
morgan crucible is generally ranked number 
one or two in its chosen market segments 
the group is a world leader in advanced 
ceramic and composite materials the 
company was founded in 1856 and has  
a worldwide reputation
the group’s businesses provide products 
and services to other companies and we 
have developed close working relationships 
with many of our customers and suppliers 
and work in collaboration with them to 
develop new products 
none of the group’s customers or suppliers 
are individually essential to the business of 
the group as a whole notwithstanding  
this the group devotes significant resources 
to ensure these relationships continue to 
operate satisfactorily
employees
morgan crucible’s most important  
resource is its people and we employ a 
highly skilled and qualified workforce one 
of our strategic priorities is ‘finding keeping 
and developing the right people’ many 
employees stay with the company for their 
whole careers as is highlighted on page 55 
we place great emphasis on recruitment 
and training and our policies and 
performance in these areas are set out  
on pages 54 and 55
succession plans are in place covering key 
management and technical roles and as 
such no individual employee is considered 
essential to the business of the group as  
a whole
the directors’ contracts are referred to on 
page 82 and are available for inspection 
prior to the annual general meeting and  
at the company’s registered office
research and development patents 
and intellectual property
the group’s vision is to be one of the 
world’s very best advanced materials 
companies supported by the strategic 
priority of ‘offering high added value to 
our customers’ the group’s divisions use 
their extensive knowledge base particularly 
in the areas of advanced ceramic and 
composite materials to develop new 
products and services to meet customer 
needs and to differentiate themselves in  
the markets they serve
the group benefits from technological 
knowhow and other forms of intellectual 
property some of which is covered by 
patents collectively this intellectual 
property supports the development and 
manufacture of new products and services 
to meet customer needs but no one single 
patent is considered essential to the  
business of the group as a whole
each of the group’s divisions has a 
technical director with research and 
development capabilities variously located  
at divisional centres of excellence and 
diffused through the business in the form  
of applications engineering further details 
are included in the review of operations for 
each division on pages 36 to 47
manufacturing capabilities
over many years morgan crucible has 
invested heavily in manufacturing capacity 
and technology to develop its capability  
to serve its chosen markets worldwide in 
recent years the group has developed and 
extended its manufacturing presence and 
capabilities in china india and latin america 
to meet customer needs in both local and 
global markets this investment supports  
our strategic priority of ‘having a culture of 
operational excellence and cost efficiency’ 
joint venture partners
in a number of territories around the world 
the group has established joint ventures with 
local partners many of these joint ventures 
have been in operation for many years 
however no individual joint venture 
agreement is considered to be essential  
to the business of the group as a whole
banking and other financial 
relationships
details of significant banking and other 
relationships are referred to on page 68  
in the directors’ report however no one 
banking relationship is considered to be 
essential to the performance and value  
of the company overview
financial statements
governance
business review
63 the morgan crucible company plc  
 annual report 2009
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 
report will be realised the forwardlooking 
statements reflect the knowledge and 
information available at the date of 
preparation and will not be updated during 
the year but will be considered in the 
annual report for next year nothing in this 
document should be construed as a profit 
forecast this business review has not been 
audited or otherwise independently verified 
this business review has been prepared for 
and only for the members of the company 
as a body and no other persons its purpose 
is to assist shareholders 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 the company its 
directors employees agents or advisers  
do not accept or assume responsibility for 
any other purpose or to any other person  
to whom this document is shown or into 
whose hands it may come and any such 
responsibility or liability is expressly 
disclaimed this business review and certain 
other sections of the annual report contain 
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 group 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
cautionary statement overview
financial statements
governance
business review
64 the morgan crucible company plc  
 annual report 2009
board of directors
executive committee
mark robertshaw
§
chief executive officer
tim stevenson obe
†§
chairman
don klas 
ceo carbon 
martin flower
†§
senior independent director
kevin dangerfield
chief financial officer
andrew hosty 
ceo technical ceramics
simon heale
†§
nonexecutive director
paul boulton 
company secretary
tim hayter 
ceo thermal ceramics
andrew given
†§
nonexecutive director
amanda wooding 
director of human resources
 member of the audit committee
† member of the remuneration committee
§ member of the nomination committee overview
financial statements
governance
business review
65 the morgan crucible company plc  
 annual report 2009
tim stevenson obe
†§
nonexecutive chairman
tim was appointed as chairman of morgan 
crucible in december 2006 he is also 
chairman of travis perkins plc a position 
that he has held since november 2001  
he was a nonexecutive director of tribal 
group plc from 2004 to 2008 and was 
latterly the senior independent director 
from 1975 to 2000 tim held a variety of 
senior management positions at burmah 
castrol plc including chief executive from 
1998 to 2000 he is a qualified barrister  
and is lord lieutenant of oxfordshire 
martin flower
†§
senior independent director
martin was appointed as a nonexecutive 
director in december 2004 and senior 
independent director in april 2008 he is 
also chairman of croda international plc 
and is a nonexecutive director of low  
bonar plc he was previously chairman  
of autogrill holdings uk plc and a 
nonexecutive director of autogrill  
group inc martin held a variety of senior 
management positions with coats plc  
from 1968 to 2004 and was group chief 
executive of that group and chairman  
of the board from 2001 to 2004
mark robertshaw
§
chief executive officer
mark was appointed as chief executive 
officer in august 2006 prior to this  
he was chief operating officer from 
february 2006 and chief financial officer 
from october 2004 before joining morgan 
crucible he was chief financial officer of 
gartmore investment management plc  
from 2000 to 2004 mark is a nonexecutive 
director of rathbones brothers plc he 
previously worked for the natwest group 
and also spent nine years as a management 
consultant with marakon associates
andrew given
†§
nonexecutive director
andrew was appointed as a nonexecutive 
director in december 2007 and is the 
chairman of the audit committee  
he is the senior nonexecutive director  
and chair of the audit committee at  
vt group plc and was previously the senior 
independent director and chair of the 
audit committee of spectris plc he was 
also formerly a nonexecutive director and  
chair of the audit committee of spirent 
communications plc he was previously 
deputy chief executive of logica cmg plc 
and held senior management positions in 
plessey and nortel networks
 
kevin dangerfield
chief financial officer
kevin was appointed as chief financial 
officer in august 2006 having joined 
morgan crucible in july 2000 as deputy 
group financial controller before being 
promoted to group financial controller 
before joining morgan crucible kevin 
worked for london international group plc 
and virgin retail europe limited he 
qualified as a chartered accountant  
with pricewaterhousecoopers 
 
simon heale
†§
nonexecutive director
simon was appointed as a nonexecutive 
director in february 2005 and is the chairman 
of the remuneration committee he is also 
chairman of panmure gordon and co plc and 
is a nonexecutive director of kazakhmys plc 
pz cussons plc and marex group limited he 
was chief executive of china now from 2007 
to 2008 and was chief executive of the 
london metal exchange from 2001 to 2006 
simon qualified as an accountant with price 
waterhouse and has had extensive experience 
in the far east having held senior positions 
with the swire group in japan and hong 
kong and with jardine fleming in hong kong
board of directors
executive committee
 member of the audit committee
† member of the remuneration committee
§ member of the nomination committee
mark robertshaw 
chief executive officer
kevin dangerfield
chief financial officer
don klas
ceo carbon
andrew hosty
ceo technical ceramics
tim hayter
ceo thermal ceramics
paul boulton
company secretary
amanda wooding
director of human resources overview
financial statements
governance
business review
66 the morgan crucible company plc  
 annual report 2009
the directors present their report together with the financial statements and independent auditors’ report for the year ended 3 january 
2010 this directors’ report was approved by the board on 18 february 2010
principal activities and business review
the morgan crucible company plc ‘the company’ and its subsidiary undertakings comprise three reporting divisions as outlined on 
page 34 that design manufacture and market primarily carbon and ceramic components for applications for a wide range of markets  
a review of developments affecting the group during the year and of its prospects for the future appears on pages 32 to 62 to be read in 
conjunction with the cautionary statement on page 63
the companies act 2006 requires the directors’ report to include a business review certain information that fulfils the requirements of 
the business review can be found in this directors’ report and on page 34 group business review pages 36 to 47 review of operations 
56 to 59 financial review 60 and 61 risk management and 48 to 55 corporate responsibility to be read in conjunction with the 
cautionary statement on page 63
financial results
the total profit for the year ended 3 january 2010 was £227 million 2008 £627 million profit before taxation for the same period  
was £314 million 2008 £828 million revenue was £9426 million 2008 £8350 million and operating profit was £607 million 2008 
£950 million basic earnings per share was 71 pence 2008 222 pence capital and reserves at the end of the year were £2146 million 
2008 £2080 million the total profit of £227 million will be transferred to equity the group’s accounting policies can be found on 
pages 93 to 101
dividends
the directors recommend the payment of a final dividend at the rate of 45 pence per share on the ordinary share capital of the company 
payable on 9 july 2010 to shareholders on the register at the close of business on 21 may 2010 together with the interim dividend of  
25 pence per share paid on 12 january 2010 this final dividend if approved by shareholders brings the total distribution for the year to 
70 pence per share 2008 70 pence
acquisitions and disposals
on 5 january 2009 the company increased its equity stake in np aerospace from 49 to 60 by acquiring an additional 11 of the 
equity for £122 million with a deferred consideration based on 2009 performance payable in 2010
on 6 april 2009 the company acquired via its subsidiary np aerospace limited a 50 stake in integrated survivability technologies 
limited for £15 million
on 25 september 2010 morgan advanced ceramics inc disposed of its metal injection moulding business for £11 million cash
on 9 october 2009 the company acquired a further 90 of the issued share capital of carbo san luis sa for £11 million bringing  
its interest in carbo san luis to 846
postbalance sheet events
there have been no material events since the year end the company proposes to pay a final ordinary dividend of 45 pence per share  
in respect of the 2009 financial year
share capital
as at 3 january 2010 pursuant to an authority granted at the company’s annual general meeting on 17 april 2009 the company was 
authorised pursuant to the companies act 1985 to purchase up to 999 of its issued share capital this authority expires on the date  
of the annual general meeting to be held on 23 april 2010
this authority was not used by the company during the year under review
the company’s share capital is set out in note 17 on pages 117 to 119 the company’s ordinary shares represent 9936 of the total 
issued share capital with the 55 cumulative first preference shares representing 018 and the 50 cumulative second preference 
shares representing 046 the rights and obligations attaching to the company’s ordinary shares and restrictions on the transfer of 
shares in the company are set out in the company’s articles of association copies of which can be obtained from companies house  
in the uk or the company secretary the holders of ordinary 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 on page 119 no 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 unless expressly specified to the contrary in the articles of association of the company the company’s articles of 
association may be amended by a special resolution of the company’s shareholders
directors’ report overview
financial statements
governance
business review
67 the morgan crucible company plc  
 annual report 2009
policy on the payment of creditors
the company’s policy in relation to its suppliers is where possible to settle terms of payment when agreeing the terms of the transaction 
and to abide by those terms provided that it is satisfied that the supplier provided the goods and services in accordance with the agreed 
terms and conditions the company and its subsidiaries do not follow any one code or standard on payment practice due to the diverse 
nature of the global markets in which the group operates
the number of days’ purchases outstanding for payment by the company at the end of the year was 18 days 2008 33 days and for  
the group was 54 days 2008 68 days
research and development
innovative use of existing and emerging technologies will continue to be crucial to the successful development of new products and 
solutions to customer demands the company has research and development facilities at its key manufacturing sites the spend on 
research and development which excludes the amounts spent working with customers and others by way of product enhancement and 
application engineering was £146 million during the year 2008 £114 million including £07 million of capitalised development costs 
2008 £16 million
financial instruments
details of the group’s use of financial instruments together with information on policies and exposure to credit interest rate and currency 
risks can be found in note 19 on pages 120 to 128
human resources
details of the company’s and the group’s personnel policies including its policy on equal opportunities for disabled employees and 
employee involvement are set out on pages 54 and 55
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
employee share and share option schemes
the company continues to encourage employee ownership of its shares through the provision of a number of employee share and share 
option schemes 147 employees hold awards under the morgan crucible long term incentive plan 36 employees hold awards under the 
morgan crucible bonus deferral share matching plan 58 employees have options under the company’s executive share option schemes 
and 621 employees participate in the company’s uk sharesave plan there are 84 participants in the company’s german employee share 
purchase plan there are currently no participants in the company’s us employee share purchase plan details of outstanding options are 
given in note 20 on pages 132 to 136
np aerospace operates an employee share option scheme pursuant to which np aerospace employees who were in employment as at  
31 july 2007 have been granted options over shares in clearpower limited the np aerospace holding company 146 employees hold 
awards under the np aerospace share option scheme the np aerospace employee benefit trust holds 33335 shares in clearpower limited 
in respect of the scheme
all of the company’s share schemes contain provisions relating to a change of control outstanding options and awards would normally 
vest and become exercisable on a change of control subject to the satisfaction of any performance conditions at that time
the morgan general employee benefit trust ‘the trust’ held 1984022 shares on 3 january 2010 in connection with awards granted 
under the company’s employee share schemes in the period 3 january 2010 to 18 february 2010 no shares were transferred out of the 
trust 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
directors
all those who served as directors throughout the year under review are listed on page 64
details of directors’ interests in the share capital of the company are listed on page 83 in the period from 3 january 2010 to 18 february 
2010 the executive directors acquired further ordinary shares in the company pursuant to the company’s dividend reinvestment plan 
the directors’ shareholdings are shown on page 83
the details of those directors who will be offering themselves for reelection at the forthcoming annual general meeting on 23 april 2010 
are set out in the circular to shareholders which will be posted in march 2010 overview
financial statements
governance
business review
68 the morgan crucible company plc  
 annual report 2009
directors’ report
continued
details of the background and experience of all the directors can be found on page 64 and details of the board committees on which  
they serve can be found on pages 74 and 75
the company’s articles of association ‘the articles’ give the directors power to appoint and replace directors under the terms of 
reference of the nomination committee any appointment must be recommended by the nomination committee for approval by the 
board of directors the articles also require directors to retire and submit themselves for election at the first annual general meeting 
following appointment and all directors are required to submit themselves for reelection at the third annual general meeting following 
their appointment or reelection
subject to the company’s memorandum and articles of association uk 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
the directors may also seek authority from shareholders at each annual general meeting to allot shares to disapply preemption rights 
and to make market purchases of the company’s ordinary shares these powers may be exercised under authority of resolutions of the 
company passed at its annual general meeting
as at the date of this report indemnities are in force under which the company has agreed to indemnify all of the directors to the extent 
permitted by law and the company’s articles of association in respect of all losses arising out of or in connection with the execution of 
their powers duties and responsibilities as directors of the company or any of its subsidiaries
donations
during the year morgan crucible companies made charitable donations of £302232 2008 £114736
further details of charitable donations and activities of the group are given on page 50 no political donations have been made
significant agreements
as referred to in the key resources and contractual relationships section on page 62 the group 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 such agreements are the uk £280 million multicurrency revolving facility agreement which was signed on  
1 may 2009 and the privately placed note purchase and guarantee agreements signed on 6 march 2003 and 15 december 2007  
for which the outstanding loan amounts are us45 million and us350 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 jointventure agreements no such individual contract is considered to be significant  
in terms of its potential impact on the business of the group as a whole
substantial shareholdings
as at 18 february 2010 the directors have been advised of the following holdings representing 3 or more of the issued ordinary share 
capital of the company
        number of
company      ordinary shares  
standard life investments ltd       40506809 14991
jpmorgan chase  co       13591569 5030
schroders plc       12494272 4623
lloyds tsb group plc       10907770 4037
bt pension scheme trustees limited       10780464 3990
aegon uk       10751020 3979
legal  general group plc       10738156 3974
bae systems pension funds management ltd       10142618 3754
aviva plc       9039613 3345
  
  as at 23 february 2010 there was no change in the details shown in the above table with the exception of a notification received by the company from jpmorgan 
chase  co that its disclosable holding had decreased to 11935619 ordinary shares representing 442 of the company’s issued ordinary issued share capital  
at that date
 percentages are shown as a percentage of the company’s issued share capital as at 18 february 2010 overview
financial statements
governance
business review
69 the morgan crucible company plc  
 annual report 2009
disclosures of information to auditors
the directors who held office at the date of approval of this directors’ report confirm that so far as they are each aware there is no 
relevant audit information of which the company’s auditors are unaware and that each director 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 auditors are aware 
of that information
auditors
kpmg audit plc has expressed its willingness to continue in office resolutions for its reappointment as auditors and authority for  
the directors to determine the auditors’ remuneration will be proposed at the forthcoming annual general meeting
annual general meeting
the annual general meeting of the company will be held on 23 april 2010 at st anne’s manor london road wokingham rg40 1st  
a circular will be sent with this report to shareholders in march 2010 incorporating the notice of annual general meeting and detailing 
any special business to be transacted at that time
directors’ responsibility statement in respect of the disclosure and transparency rules
we confirm to the best of our knowledge
the group financial statements in this report which have been prepared in accordance with international financial reporting  
standards as adopted by the eu ‘adopted ifrss’ including interpretations issued by the international accounting standards  
board iasb and those sections of the companies act 2006 applicable to companies reporting under ifrss as adopted in the  
eu give a true and fair view of the assets liabilities financial position and profit of the group taken as a whole
the parent company financial statements in this report which have been prepared in accordance with uk accounting standards   
uk generally accepted accounting practice and applicable law give a true and fair view of the assets liabilities financial position  
and loss of the company
the business review contained in this report includes a fair review of the development and performance of the business and the  
position of the company and the group taken as a whole together with a description of the principal risks and uncertainties they face
for and on behalf of the board
paul boulton
secretary 
18 february 2010
the morgan crucible company plc 
quadrant 5557 high street windsor berkshire sl4 1lp 
registered in england no 286773 overview
financial statements
governance
business review
70 the morgan crucible company plc  
 annual report 2009
statement of compliance with the combined code
throughout the year ended 3 january 2010 the company has been in compliance with section 1 of the june 2008 edition of the 
combined code on corporate governance ‘the code’
this statement describes how the company has applied the main and supporting principles of the code it should be read in conjunction 
with the business review and remuneration report on pages 32 to 63 and pages 77 to 85 respectively
directors
the board
the board is collectively responsible to the company’s shareholders for the 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 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 48 and 49 in the business review
the board met formally 11 times during the year to review current performance against agreed objectives and to make and review  
major business decisions there is a schedule of matters specifically reserved for the board including significant contractual commitments 
including the acquisition or disposal of companiesbusinesses treasury and intellectual property transactions the review of the 
effectiveness of risk management processes major capital expenditure and corporate responsibility one meeting each year is specifically 
focused on strategy and the longer term development of the company various matters are delegated to duly authorised subcommittees 
of the board as is further described below
there were no changes to the membership of the board during the year and there were no changes of role
as at 3 january 2010 the board comprises tim stevenson chairman mark robertshaw chief executive officer kevin dangerfield  
chief financial officer and three independent nonexecutive directors martin flower is the senior independent director biographies  
of the directors including details of their other main commitments are set out on page 64
all directors submit themselves for election by the shareholders at the first annual general meeting following their appointment and for 
reelection at least once every three years should a nonexecutive director serve for more than six years his reelection would be subject 
to particularly rigorous review should any director serve for longer than nine years he would then be subject to annual reelection
the attendance of each director at board and audit remuneration and nomination committee meetings is set out in the table below
 board audit remuneration nomination
  eligible  eligible  eligible  eligible 
director to attend attended to attend attended to attend attended to attend attended
tim stevenson 11 11 – – 7 7 1 1
mark robertshaw 11 11 – – – – 1 1
kevin dangerfield 11 11 – – – – – –
martin flower 11 11 5 5 7 7 1 1
andrew given 11 11 5 5 7 6 1 1
simon heale 11 11 5 4 7 7 1 1
 
excludes meetings attended by invitation for all or part of a meeting
 indicates a director deemed by the board to be independent or in the case of the chairman independent on appointment
the chairman and the nonexecutive directors met without the executive directors present on multiple occasions during the year  
in addition the senior independent director and the other nonexecutive directors met without the chairman present
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 
an appropriate directors’ and officers’ liability insurance policy is in place
chairman and chief executive officer
the roles of chairman and chief executive officer are separate clearly established set out in writing and agreed by the board  
the chairman is responsible for running the board and the chief executive officer is responsible for running the company’s business  
the management of the group’s operating divisions report to the chief executive officer
corporate governance overview
financial statements
governance
business review
71 the morgan crucible company plc  
 annual report 2009
board balance and independence
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 at the year end in addition to the chairman  
whom the company deemed to be independent on appointment the board comprised two executive directors and three further 
nonexecutive directors deemed 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 or with charities receiving material support from the company
the structure and shape of the board were reviewed during the year the board has frequent interaction with senior management and  
the divisional chief executives normally attend board meetings thus it was considered that the current level of executive representation 
on the board remains appropriate
appointments to the board
as is further detailed in the report of the nomination committee set out on page 75 there is a formal rigorous and transparent 
procedure for appointments to the board
the board is satisfied that there are succession plans in place for appointments to the board and for senior management
there were no new appointments to the board during the year and none of the directors changed role
information and professional development
the board receives in a timely manner information in a form and of a quality appropriate to enable it to discharge its duties with  
board papers generally sent out five working days before each meeting
all directors received a full formal and tailored induction on joining the board each director’s experience and background is taken into 
account in developing a tailored programme
nonexecutive directors are encouraged to visit operating sites and to meet with management in addition to visits by individual directors 
and the chairman each year at least one board meeting is held at an operating facility during 2009 formal board meetings took place at 
the technical ceramics site in rugby uk and at the carbon division’s site at swansea uk in addition the board visited the np aerospace 
site in coventry uk
training and development needs are assessed as part of the board performance review process and the directors regularly update and 
refresh their skills and knowledge taking into account environmental social and governance matters the company secretary keeps the 
suitability of external courses under review
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
performance evaluation
the board undertook a formal evaluation of its performance its committees and of the individual directors during the year the review 
consisted of a structured interview between the chairman and each director the divisional chief executives and the company secretary 
these onetoone discussions were complemented by a questionnaire and each director had the opportunity to raise broader issues 
relating to the company’s strategy and governance the results of the review were communicated to the board with onetoone feedback 
where appropriate
the evaluation concluded that the board performs effectively that the board calendar and agendas are appropriate with open discussions 
and effective followthrough by the executive team the chairman and the nonexecutive directors also confirmed that they have 
sufficient time to fulfil their commitments to the company as noted above training needs are assessed
the recommendations to be implemented following the 2009 board performance evaluation include increasing the amount of  
interaction outside the formal board environment reviews of the board procedures in relation to capital expenditure proposals and the 
board evaluation process for 2010 increasing the focus on succession planning throughout the business and further presentations of  
the group’s technology to the board
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
the recommendations made following the 2008 board performance review were implemented during the year including with regard to 
increased reporting between meetings enhancing the exposure of the board to senior management with the divisional chief executives 
normally attending board meetings and with board meetings held at two manufacturing locations and a board visit to a third 
manufacturing site during 2009 overview
financial statements
governance
business review
72 the morgan crucible company plc  
 annual report 2009
corporate governance
continued
remuneration
remuneration policy and practice is discussed in the remuneration report on pages 77 to 85
accountability and audit
financial reporting
in its reporting to shareholders the board aims to present the balanced and understandable assessment of the company’s position  
and prospects required by the code and in accordance with the accounting standards board’s reporting standard 1 the operating  
and financial review this is included in the business review on pages 32 to 63 the board also presents updated information in its  
interim and other public reports
a summary of the statement of directors’ responsibilities in respect of the annual report and the financial statements is set out on  
page 76 and the ‘going concern’ statement is set out in the business review on page 59
internal control
the board has overall responsibility for establishing and maintaining a sound system of internal control to safeguard shareholders’ 
investment and the company’s assets through the audit committee the board reviews the effectiveness of the internal control system 
annually and did so during the year this review covered all material controls including financial operational and compliance controls  
and risk management systems the audit committee receives regular risk management reports covering the full range of risks faced by 
morgan crucible as a group and ensures there are adequate systems in place and evaluates their effectiveness 
the directors believe that the group’s system of internal financial controls provides reasonable but not absolute assurance that the  
assets of the group are safeguarded 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 group’s management structure the main features of the group’s systems for internal control and for assessing the 
potential risks to which the group is exposed are summarised as follows
control environment   the group’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 group’s core values statement ethics policy and other supporting 
policies and procedures set out the group’s commitment to the highest standards of corporate and individual behaviour and provide 
guidance for employees the group’s whistleblowing line is available to employees and others in this regard the chief executive of 
each division makes an annual statement of compliance to the board confirming that for each of the businesses for which he is 
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 group policies and procedures
financial reporting   a detailed budgeting system for each division exists with an annual consolidated budget reviewed and approved 
by the board businesses present their revenue and capital expenditure budgets for approval monthly results for the group are 
presented to the executive committee and the board including comparisons against budget and the prior year the group’s annual 
and halfyearly results are reported externally in addition to interim management statements the annual results are audited
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 divisional management 
teams also meet regularly to review performance presentations of actual and forecast performance are made to the executive 
committee and the board by the group’s divisional chief executives in addition regular site visits are made by members of the 
executive committee
risk 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  
audit committee receives reports on financial taxation insurance pension legal and social environmental and ethical risks from 
management the divisional chief executives cover risk issues at their management meetings and the director of risk assurance  
helps to ensure that internal control and risk management is embedded into the group’s operations through the risk management 
committee which is chaired by the chief financial officer and is attended by the chief financial officer of each division
risk factors   morgan crucible’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 business review the 
identification and management of such risks is carried out systematically these are further discussed in the risk management section 
on page 60
internal audit   the group’s internal audit function reviews internal control and risk management processes the audit committee 
approves the plans for internal audit reviews and receives reports accordingly actions resulting from internal audit reviews are  
agreed with management a new internal auditor was appointed during the year and has direct access to the chairman of the  
audit committee overview
financial statements
governance
business review
73 the morgan crucible company plc  
 annual report 2009
audit committee and auditors
the board has formal and transparent arrangements for considering how the directors apply the company’s financial reporting and 
internal control principles and for maintaining an appropriate relationship with the company’s auditors this requirement is met by the 
work of the audit committee as described below and by the audit work carried out by the company’s external auditors kpmg audit plc 
the audit committee has received confirmation from kpmg audit plc that its general procedures support the auditors’ independence and 
objectivity in relation to nonaudit services after considering such procedures the opinion of the audit committee was that the auditors’ 
objectivity and independence was safeguarded despite the provision of nonaudit services by kpmg audit plc
conflicts of interest
the board has procedures in place to address the requirements of section 175 of the companies act 2006 concerning the duty of the 
directors to avoid conflicts of interest these procedures are in accordance with the gc100 guidance 
accordingly the directors are required to continue 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 
during the year the board undertook a review of directors’ outside interests to identify actual or potential conflicts of interest including 
the interests of connected persons where such interests could give rise to an indirect conflict this confirmed that there were no actual 
conflicts of interest and the only potential conflicts of interest identified were outside directorships the board considered each director’s 
situation and authorised any potential conflicts for a period of 15 months from december 2009 such authorisation is revocable at any 
time at the board’s discretion 
should an actual or potential conflict be identified the board shall consider whether to authorise the situation 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
the board is responsible for undertaking a regular review of any authorisations given and will itself or through one of its committees 
ensure that the procedures for reporting and if appropriate authorising conflicts and potential conflicts of interest are operated correctly 
in addition the nomination committee will review the outside interests of a proposed director to identify actual or potential conflicts of 
interest and will make recommendations to the board as to whether the situation should be authorised
relations with shareholders
dialogue with shareholders
the importance of dialogue with major shareholders is recognised and meetings are held in order to help achieve a mutual understanding 
of objectives in this respect the chief executive officer and chief financial officer make themselves available to major shareholders as 
appropriate throughout the year in particular at the time of the preliminary and interim announcements the chairman also discusses 
governance and other matters directly with shareholders the chairman and the nonexecutive directors are invited to investor briefings 
and attend meetings with major shareholders when requested the senior independent director is available to attend separate meetings 
with major shareholders on request
following the announcement of the group’s preliminary and interim 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 stock exchange 
announcements press releases presentations webcasts and other relevant information
constructive use of the agm
the annual general meeting is normally attended by all members of the board and by a representative of the auditors at the agm held 
in april 2009 the chief executive officer 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 company’s website as soon as practicable after the meeting overview
financial statements
governance
business review
74 the morgan crucible company plc  
 annual report 2009
corporate governance
continued
board committees 
the full terms of reference of the following board committees are available upon request and are also available on the company’s website
audit
the audit committee assists the board in effectively discharging its responsibilities for financial reporting and corporate control martin 
flower andrew given and simon heale were members of the committee throughout the year all members of the committee are 
independent directors and andrew given the chairman of the committee has the requisite financial experience
the audit committee met five times during the year and has the power to and does request the attendance at meetings of any director 
auditor or member of management as may be considered appropriate by the chairman of the committee at the end of each meeting the 
nonexecutive directors who are members of the committee also meet the auditors without the executive directors or other members of 
management present
the committee identifies and confirms that it receives the information it needs to enable it to fulfil its responsibilities this is complemented 
by an annual presentation made by the divisional chief executives and chief financial officers on the internal control environment within 
their respective divisions
the audit committee’s terms of reference include
monitoring and making appropriate recommendations to the board with regard to the financial reporting process the integrity of   
the financial statements of the company any formal announcements relating to the company’s financial performance and reviewing 
significant financial reporting judgments contained in them
reviewing and monitoring the effectiveness of the company’s internal control internal audit and risk management systems  
making recommendations to the board for it to put to the shareholders for their approval in general meeting in relation to the  
appointment reappointment and removal of the external auditors and to approve the remuneration and terms of engagement of  
the external auditors
reviewing and monitoring the external auditors’ independence and objectivity and the effectiveness of the audit process taking into  
consideration relevant uk professional and regulatory requirements
developing and implementing policy on the engagement of the external auditors to supply nonaudit services taking into account  
relevant ethical guidance regarding the provision of nonaudit services by the external auditors
reporting 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 the director of risk assurance and the internal auditor both have access to the chairman of the committee and meet 
when appropriate with the committee without other executives present
the work of the committee in discharging those responsibilities in respect of 2009 included
reviewing the group’s 2008 financial statements and 2009 interim statements prior to board approval  
the review of the process by which the group’s main business risks are assessed and managed with the principal risks being  
considered by the board as a whole
reviewing the effectiveness of the group’s internal audit and risk management systems  
consideration of the work and plans for the internal audit function  
appraisal of the company’s whistleblowing line and related procedures and policies  
confirmation of the external auditors’ terms of engagement and fee structures  
monitoring the level of nonaudit work of the auditors which in 2009 included services amounting to £01 million mainly in  
connection with tax advice
to ensure the objectivity and independence of the external auditors the policy implemented by the committee for the provision of 
nonaudit services by the external auditors is in summary as follows
certain nonaudit services may not be provided by the external auditors 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
any nonaudit work proposed to be placed with the external auditors with a fee in excess of £200000 should be referred to the   
audit committee
the prior approval of the audit 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 overview
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75 the morgan crucible company plc  
 annual report 2009
during the year the proportion of the auditors’ fees for nonaudit work relative to the audit fee was 5 2008 11
the external auditors have processes in place to safeguard their independence and have written to the committee confirming that in their 
opinion they are independent the company last changed its auditors in late 2001 and undertook a formal review of the external auditors 
which included a retender presentation during 2007 during 2008 the external auditors rotated the partner responsible for the group’s 
audit work as a result the committee recommended to the board that the group’s audit work should not be put out to thirdparty tender 
during 2009
remuneration
as is further described in the remuneration report on pages 77 to 85 the remuneration committee has responsibility for setting 
remuneration for all executive directors and the chairman including benefits such as share options and awards under the company’s 
incentive plans pension rights and any compensation payments the committee also monitors the level and structure of remuneration  
for senior management
tim stevenson martin flower andrew given and simon heale who is the committee chairman were members of the committee 
throughout the year the committee is assisted in its duties by the chief executive officer the company secretary and the director of 
human resources no member of the committee or attendee is present when their own remuneration is under consideration nor do  
they participate in any relevant voting the committee also has the power to request for all or part of any meeting the attendance of  
any director or member of management as may be considered appropriate by the chairman of the committee the committee met  
seven times during the year
it is the company’s policy to disclose the fees of any executive director who serves as a nonexecutive director of another company  
during the year mark robertshaw served as a nonexecutive director of rathbone brothers plc the fees received by mark robertshaw  
in this regard are shown on page 82
the report of the remuneration committee which includes details of the committee’s responsibilities and terms of reference and of  
the directors’ remuneration and directors’ interests in options and shares is set out on pages 77 to 85
nomination
the nomination committee leads the process for board appointments and makes recommendations to the board on the appointment  
of new directors a majority of members of the nomination committee are independent nonexecutive directors tim stevenson as 
chairman of the committee martin flower andrew given simon heale and mark robertshaw were members of the committee 
throughout the year 
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 chairman of the committee the committee formally met once during 2009 and  
also held further informal discussions regarding the shape and size of the board no nominations to the board or changes in role were 
made during the year
the nomination committee reviews the balance of skills knowledge and experience on the board succession planning and the leadership 
needs of the group in the light of this review the committee prepares a description of the role and capabilities required for a particular 
appointment
candidates for appointment as director are considered by the committee taking advice from external consultants where appropriate
the terms and conditions of appointment of nonexecutive directors are available for inspection nonexecutive directors including the 
chairman are asked to undertake that they will have sufficient time to meet their commitments to the company their other significant 
commitments are disclosed to the board before appointment with an indication of the time involved and the board is informed of any 
subsequent changes the terms of appointment for nonexecutive directors do not include a notice period
disclosure and transparency rules
this statement complies with subsections 21 221 231 25 27 and 210 of rule 7 of the uk listing authority disclosure and 
transparency rules the information required to be disclosed by subsection 26 of rule 7 is shown in the directors’ report on pages 66  
to 69 and is incorporated in this statement by reference overview
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76 the morgan crucible company plc  
 annual report 2009
statement of directors’ responsibilities in respect of the 
annual report and the financial statements
the directors are responsible for preparing the annual report and the group and parent company financial statements in accordance with 
applicable law and regulations
company law requires the directors to prepare group and parent company financial statements for each financial year under that law 
they are required to prepare the group financial statements in accordance with ifrss as adopted by the eu and applicable law and have 
elected to prepare the parent company financial statements in accordance with uk accounting standards and applicable law uk 
generally accepted accounting practice
under 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 group and parent company and of their profit or loss for that period 
in preparing each of the group 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 group financial statements state whether they have been prepared in accordance with ifrss as adopted by the eu  
for the parent company financial statements state whether applicable uk accounting 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 group 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 act 2006 they have general responsibility for taking such steps as are reasonably 
open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities
under applicable law and regulations the directors are also responsible for preparing a directors’ report directors’ remuneration 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 uk governing the preparation and dissemination of financial statements may differ from legislation in other 
jurisdictions
by order of the board
paul boulton
secretary 
18 february 2010 overview
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77 the morgan crucible company plc  
 annual report 2009
the directors’ remuneration report has been prepared by the remuneration committee ‘the committee’ and has been approved by  
the board shareholders will be given the opportunity to approve the report at the annual general meeting on 23 april 2010
the report has been drawn up in accordance with the combined code on corporate governance schedule 8 of the large and 
mediumsized companies and groups accounts and reports regulations 2008 and the uk listing authority listing rules
the remuneration report is divided into two parts the first part contains commentary on remuneration policy which is not required to be 
audited the second part contains the remuneration tables that have been audited in accordance with the relevant statutory requirements
the remuneration committee
the remuneration committee is responsible for developing group 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 our website
during the year the members of the committee were simon heale who is the chairman of the committee martin flower tim stevenson 
and andrew given each of the nonexecutive directors is regarded by the board as independent tim stevenson was independent at the 
time of his appointment as chairman of the board
the committee met on seven occasions during the year
the company secretary acts as secretary to the committee the chief executive officer and the director of human resources attend 
meetings of the committee by invitation the committee also had access to advice from the chief financial officer no executive director 
or other attendee is present when his or her own remuneration is under consideration
deloitte llp was appointed by the committee as its retained advisers in february 2007 and has provided advice on market practice and 
remuneration policy as well as total shareholder return tsr analysis
during the financial year deloitte llp has also provided unrelated tax advice to the company
during the year imbucon provided tsr analysis relating to the company’s share plans imbucon did not provide any other services  
to the company
remuneration policy
the remuneration committee aims to ensure that 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 company successfully and to create  
value for shareholders
the policy of the committee is to ensure that a significant proportion of the total remuneration opportunity is performancerelated  
and based on the achievement of measurable targets which 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 company
in assessing all aspects of pay and benefits the committee takes into account the packages offered by similar companies to ensure  
the remuneration packages for executive directors are competitive against the market in which the company competes for talent  
for the purposes of such analysis comparator companies are chosen having regard to the size of the company eg 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 throughout the company when determining executive directors’ remuneration
the committee believes that the current remuneration structures are appropriate and support the business strategy 
remuneration report overview
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78 the morgan crucible company plc  
 annual report 2009
remuneration report
continued
main components of remuneration
the table below summarises the company’s policies in respect of each of the key elements of executive directors’ remuneration as they 
applied during the year
element policy details
base salary provides the fixed element of the remuneration  
package
set at competitive levels against the market  
 benchmarked against companies of a similar  
size and complexity in the ftse 350
annual review date of 1 january  
annual bonus incentivises the achievement of specific goals  
over the short term that are also aligned to  
the longterm business strategy
maximum bonus award of 100 of salary  
targets based on underlying operating profit  
performance 60 of salary and cash 
conversion 40 of salary
deferred bonus share 
matching plan
designed to encourage longterm company  
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 group performance 
designed to work alongside the long term  
incentive plan
up to 50 of the annual bonus may be  
voluntarily deferred into shares for three  
years up to 75 in 2010 
a matching award of up to three shares for  
each deferred share may be earned based on 
the company’s performance against stretching 
earnings per share eps targets
long term incentive plan aligns the interests of executives and  
shareholders by delivering executive directors 
and other senior executives shares as a reward 
for outstanding performance
award of shares based on performance over   
a threeyear period
awards to be made in 2010 will be based on  
tsr and eps performance
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
shareholding guidelines encourages executives to build an interest in   
the company’s shares and supports alignment 
with shareholder interests 
policy of 100 of basic salary for executive  
directors
supported by the deferred bonus share  
matching plan which encourages investment  
in company shares 
the relative proportion of fixed and variable remuneration for the executive directors at ‘target’ and ‘stretch’ performance is illustrated 
below this is based on our ongoing remuneration policy
 
calculated on a projected value basis assuming 10 pa share price growth at ‘target’ performance and 15 pa share price growth at ‘stretch’
0 10 20 30 40 50 60 70 80 90 100
20
50
20
25
60
25
stretch
target
salary bonus longterm incentives overview
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79 the morgan crucible company plc  
 annual report 2009
base salary
the base salary for each executive director is determined by the remuneration committee taking into account the performance of the 
individual and having regard to practice in companies of comparable size and complexity in the ftse 350 salaries are normally reviewed 
on an annual basis
no increase to base salaries was made in 2009 in line with the approach being taken across the organisation executive directors’  
salaries will be increased in 2010 in considering the level of increase the committee has been mindful of the general level of increase 
across the company as well as the positioning of roles against the market the table below shows the salaries in 2009 and with effect 
from 1 january 2010
         salary
        2009 2010
mark robertshaw       £440000 £450000
kevin dangerfield       £255000 £265000
 
base salary is the only element of the remuneration package that is pensionable
annual bonus
the targets for the annual bonus are set by the remuneration committee taking into account the short and longterm requirements  
of the company 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
the bonus scheme provides the opportunity for executive directors to earn a bonus of up to 100 of basic salary if stretching 
performance targets are achieved
for 2009 the bonus was based wholly on financial performance the targets for the awards were set to address the new demands  
placed on the business in the current economic climate and were based on underlying operating profit performance up to 60 of salary 
and cash conversion up to 40 of salary 
for 2010 the bonus will be based on profit before tax this incentivises the executive directors to manage much more of the ‘income 
statement’ to improve the earnings per share of the group
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 company 
the bonuses awarded to executive directors in respect of 2009 were as follows
mark robertshaw – 20 of salary 2008 60  
kevin dangerfield – 20 of salary 2008 30  
this award was made on the basis that in 2009 the underlying operating profit target was not achieved but the cash conversion measure 
was partially satisfied resulting in a bonus payment of 20 of salary
longterm incentive arrangements
the committee believes that share ownership by the executive directors and senior executives helps align their interests with those of  
the shareholders accordingly the company operates a number of share schemes for the executive directors and other senior employees 
details of which are set out below
deferred bonus share matching plan
in 2008 shareholder approval was gained for the introduction of a new longterm incentive plan the deferred bonus share matching plan 
this plan now operates alongside the other longterm incentive arrangements to date participants have been offered the opportunity  
to defer up to 50 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 eps targets have been met
for the 2009 performance year participants will be given the opportunity to defer up to 75 of their bonus under the plan this is in 
order to provide participants with a meaningful opportunity to invest in morgan crucible shares this change is within the limits in the  
plan rules approved by shareholders in 2008 this approach will be reviewed for future award cycles overview
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80 the morgan crucible company plc  
 annual report 2009
remuneration report
continued
as is set out in the table below the targets for the 2010 matching awards will revert to referencing a growth above rpi as used in 2008 
eps performance       matching shares
rpi 15 pa        3x match
rpi 10 pa        175x match
rpi 75 pa        1x match
rpi 5 pa        05x match
rpi 4 pa        025x match
 rpi 4 pa        0x match
there is straightline vesting in between each point above
the performance targets for awards made in 2009 did not reference growth above rpi given the difficult economic climate at that time 
the committee considered the targets to be stretching
long term incentive plan ltip
the ltip was approved at the 2004 annual general meeting and offers executive directors and other senior executives the opportunity  
to receive shares as a reward for outstanding performance the scheme allows awards of up to 150 of basic salary although in 
exceptional circumstances the committee is able to make awards of up to 200 of basic salary the vesting of the awards is subject  
to the achievement of performance targets measured over the threeyear period from the start of the year in which the award is made
during the year an award over 489705 shares was made to mark robertshaw and an award over 283806 shares was made to  
kevin dangerfield
due to the real economic uncertainty at the time the 2009 awards were made the remuneration committee decided to recalibrate the 
focus of awards between internal financial targets and relative share price targets consequently awards made under the ltip in 2009 
were based wholly on the company’s tsr performance against the comparator group below if the company’s tsr places it at the median 
of the comparator group 30 of the award will vest with 100 of the awards vesting for performance at the upper quartile or above 
for performance between median and upper quartile awards vest on a straightline basis the committee must also be satisfied that the 
company’s underlying financial performance justifies the level of vesting 
for 2010 awards the remuneration committee believes it is appropriate to return to the previous split between tsr and eps targets on 
the basis that the company is now able to set robust threeyear eps targets which have a meaningful line of sight for participants the  
split between tsr and eps targets provides the right balance between incentivising strong financial growth while taking into account the 
share price performance relative to peers therefore for awards to be made under the ltip in 2010 50 will be based on tsr against the 
comparator group ones leaf and 50 will be based on eps growth above rpi following a review during the year the comparator group 
for the 2010 awards has been extended to include six new comparator companies this is to ensure that the comparator group is of a 
robust size and reflects the different markets in which morgan crucible operates the committee must be satisfied that the company’s 
underlying financial performance justifies the level of vesting the awards made under the ltip in 2007 and 2008 were based on the  
same measures and targets as will apply for the 2010 awards
the vesting schedule for the 2010 awards is as follows
       of the award which vests  of the award  
      tsr performance against which vests 
      the sector comparator group eps growth
upperquartileranked performance     50 rpi 10 pa 50
medianranked performance     15 rpi 4 pa 15
belowmedianranked performance     0  rpi 4 pa 0
straightline vesting applies between each point for both vesting schedules overview
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81 the morgan crucible company plc  
 annual report 2009
the tsr comparator group for the 2007–2010 awards is set out below
bodycote  meggit spectris
charter international porvair spiraxsarco
chemring group qinetiq tomkins
cobham renishaw tt electronics
cookson group ricardo ultra electronics holdings
halma rotork umeco
imi  senior weir group
laird group smiths group 
 
 the original comparator group also included fki and foseco which have subsequently delisted
 additional comparator companies for 2010 awards
the details of awards held by all directors are shown on page 84
executive share option scheme esos
the esos was approved at the 2004 annual general meeting and offers executive directors and other senior executives the opportunity 
to receive options granted at the market price of the company’s shares at the time of the grant the scheme allows awards of up to  
150 of basic salary although in exceptional circumstances the committee is able to make awards of up to 200 of basic salary
there are two remaining awards to the executive directors mark robertshaw has a vested option grant from 2004 that he has not 
exercised kevin dangerfield has an unvested option from 2001 that is subject to annual retest for up to 10 years from the date of  
the grant see directors’ share options table on page 83 there is currently no intention to make awards under the esos in 2010
savingsrelated share option scheme saye
as uk employees the executive directors may also participate in the savingsrelated share option scheme on the same basis as other 
eligible employees and subject to uk legislation scheme members save a fixed amount per month over three years and options have  
been granted with an exercise price at 80 of the market price at the date of grant those directors who received options under this 
scheme are shown in the table on page 85 no performance conditions apply to these options as they are a taxefficient mechanism for 
all employees to acquire shares in the company at their own cost
other benefits
executive directors are eligible to receive certain benefits including a car allowance health insurance and where appropriate relocation 
and other expenses
shareholding guidelines
in order to encourage alignment with shareholders individual shareholding guidelines are operated for executive directors and senior 
executives under 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 deferred bonus share matching plan under which participants 
are encouraged to invest their bonus in company shares
chairman and nonexecutive directors
tim stevenson was appointed as chairman on 1 december 2006 since the date of his appointment his annual fee has been set at £125000
nonexecutive directors receive a basic annual fee of £40000 additional payments of £4500 per annum are made to the senior independent 
director £7500 to the chairman of the audit committee and £5000 to the chairman of the remuneration committee the chairman and 
nonexecutive directors are also entitled to reimbursement of expenses incurred in attending board strategy and other meetings no changes 
were made to nonexecutive fees during the year
annual fees paid to the chairman and nonexecutive directors are reviewed on a biennial basis a review was held in 2008 and while  
no increases were recommended for the nonexecutive directors an increase for the chairman was recommended at the request of  
the chairman the 2009 increase was deferred for 12 months therefore with effect from 1 january 2010 his annual fee will be increased  
to £140000
none of the nonexecutive directors has a service contract with the company although they do have letters of appointment which  
contain no obligations relating to any notice period there are no obligations on the company to make any payments in lieu of notice  
to any nonexecutive director the nonexecutive directors do not participate in any of the incentive share or share option plans each  
of the nonexecutive directors is subject to reelection by shareholders every third year after their initial confirmation by shareholders  
as a director
should any nonexecutive director serve for nine or more years they would be subject to annual reelection overview
financial statements
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82 the morgan crucible company plc  
 annual report 2009
remuneration report
continued
service contracts
executive directors are employed on contracts subject to 12 months’ notice at any time contracts may be terminated on 12 months’ 
notice given by the company or on six months’ notice given by the director concerned contracts end on each director’s anticipated 
normal retirement date the following table shows the date of the contract for each executive director who served during the year
       date of date of
executive director      appointment service agreement
kevin dangerfield     3 august 2006 15 august 2008
mark robertshaw     4 august 2006 15 august 2008
 
the service agreements for mark robertshaw and kevin dangerfield do not contain specific termination provisions in the event of  
early termination the company may be liable to pay an amount in damages having regard to salary bonus and other benefits that would 
have been received had they served out their notice period the value of any termination payment made will be at the judgment of the 
committee having regard to all relevant factors including ensuring that the full benefit of mitigation is obtained there is no automatic 
entitlement to bonus as part of the termination arrangements 
company pensions policy
the executive directors participate in the morgan group senior staff pension and life assurance scheme which is a contributory 
hmrcregistered defined benefit funded occupational pension scheme with effect from 6 april 2006 the basis of the scheme  
changed from final salary to career average and the normal pension age increased by five years the main features of the plan are
a normal pension age of 65  
pension at normal pension age of twothirds career average pensionable salary subject to completion of 20 years’ employment  
26 years and eight months for new members
life assurance of four times basic salary  
dependants’ pension on death  
pensionable salary is the member’s basic salary restricted to a scheme earnings cap of £123600 for the 200910 tax year
in addition executive directors received a pension allowance derived from employer contributions based notionally on the registered 
scheme pensionable salary in excess of the earnings cap the value of the pension allowance for each executive director is set out in  
the directors’ emoluments table on page 83
external directorships
with the approval of the board in each case and subject to the overriding requirements of the company executive directors may accept 
external appointments as nonexecutive directors of other companies and retain any fees received
the total amount of fees received by mark robertshaw in respect of a nonexecutive directorship was £35000
performance graph
the following graph shows the cumulative total shareholder return tsr for the company for the fiveyear period to 4 january 2010 
against the ftse 350 both are rebased to 100 as at 5 january 2005 the ftse 350 is considered to be appropriate for comparison as  
it is a broad market index and the company forms part of that index 
 
 
t otal shareholder return for the fiveyear period 
january 2005 to january 2010
0
50
100
150
200
january 05 january 06 january 07 january 08 january 09 january 10
morgan crucible
ftse 350 overview
financial statements
governance
business review
83 the morgan crucible company plc  
 annual report 2009
the auditors are required to report on the following information
directors’ interests in shares
directors’ interests in the ordinary share capital of the company are as follows
       as at as at as at
       5 january 3 january 18 february
       2009 2010 2010
executive directors
mark robertshaw      331595 338595 339277
kevin dangerfield      138717 138717 138914
nonexecutive directors
tim stevenson      29000 29000 29000
martin flower      15000 15000 15000
simon heale      18000 18000 18000
andrew given      10000 10000 10000
 
 the date of report as at 23 february 2010 there was no change to the details listed in the above table
at the market price on 18 february 2010 mark robertshaw and kevin dangerfield respectively held shares worth 131 and 92 of their 
basic salaries
directors’ emoluments
  annual other total pension other total
 feessalary bonus benefits emoluments allowance payments
2
 remuneration
 £000 £000
1
 £000
2
 £000 £000 £000 £000 
 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
executive directors
mark robertshaw 440 440 88 264 13 13 541 717 114 108 – – 655 825
kevin dangerfield 255 255 51 77 12 12 318 344 66 60 – – 384 404
nonexecutive directors
tim stevenson chairman 125 125 – – – – 125 125 – – – – 125 125
martin flower 45 43 – – – – 45 43 – – – – 45 43
andrew given
3
 53 45 – – – – 53 45 – – – – 53 45
simon heale 45 45 – – – – 45 45 – – – – 45 45
 
1  annual bonus shows the total bonus payable in respect of the relevant year mark robertshaw and kevin dangerfield voluntarily deferred 25 of their 2008 
bonus awards into the bonus deferral share matching plan as set out in the table on page 84
2 other benefits include private medical insurance and a car allowance
3  andrew given received a backpayment in 2009 for nonpayment in 2008 of the additional fees due to him following his appointment as chairman of the  
audit committee on 18 april 2008
directors’ share options
  at granted exercised lapsed at  earliest 
  5 january during during during 3 january exercise date of 
  2009 the year the year the year 2010 price exercise expiry date
mark robertshaw 200000 – – – 200000 145275p 011107 011114
  1000000 – – 1000000 0 256p 201209 201216
kevin dangerfield 10520 – – – 10520 18008p 231104 231111
  150000   150000 0 256p 201209 201216
 
  this relates to an award made to mark robertshaw on his appointment as chief executive officer in february 2006 the award is structured as a market value 
option over 1000000 shares subject to the performance conditions that apply to awards under the executive share option scheme
the performance measure for the executive share option scheme awards above was based on the company’s total shareholder return 
performance against the ftse 350 thirty per cent of the awards vest for achieved medianranked performance with full vesting for 
upperquartileranked performance for performance between median and upper quartile awards vest on a straightline prorata basis 
the performance condition for the awards granted in 2006 was not met and these awards have therefore lapsed in full
the share price at the year end was 1577 pence and the high and low during the year were 1923 pence and 703 pence respectively overview
financial statements
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84 the morgan crucible company plc  
 annual report 2009
remuneration report
continued
awards to directors under the long term incentive plan
   shares shares  market market 
 as at allocations released lapsed as at price at price at 
 5 january during during during 3 january date of date of 
 2009 the year the year the year 2010 allocation release performance periods
mark robertshaw 
2006 ltip may 250000 – – 250000 – 24295p – 050106 – 040109
2006 ltip december 50000 – – 50000 – 256p – 050106 – 040109
2008 ltip 220000 – – – 220000 203p – 050108 – 040111
2009 ltip – 489705 – – 489705 8985p – 050109 – 040112
kevin dangerfield
2006 ltip december 107500 – – 107500 – 256p – 050106 – 040109
2007 ltip 80000 – – – 80000 282p – 050107 – 040110
2008 ltip 120000 – – – 120000 203p – 050108 – 040111
2009 ltip – 283806 – – 283806 8985p – 050109 – 040112
 
the performance measure for the 2006 ltip awards is based on the company’s total shareholder return tsr against the ftse 350 
thirty per cent of the awards vest for achieving medianranked performance with full vesting for upperquartileranked performance  
for performance between median and upper quartile awards vest on a straightline prorata basis the performance condition for  
these awards was not met and therefore the awards lapsed in full
awards to directors under the bonus deferral share matching plan 
   shares shares  market market 
 as at allocations released lapsed as at price at price at 
 5 january during during during 3 january date of date of 
 2009 the year the year the year 2010 allocation release performance periods
mark robertshaw 
2008 award         
investment shares
1
 104743 – – – 104743 197625p – –
matching shares
2
 314229 – – – 314229 197625p – 050108 – 040111
2009 award
investment shares
1
 – 48222 – – 48222 8075p – –
matching shares
2
 – 245201 – – 245201 8075p – 050109 – 040112
kevin dangerfield         
2008 award         
investment shares
1
 58266 – – – 58266 197625p – –
matching shares
2
 174798 – – – 174798 197625p – 050108 – 040111
2009 award        
investment shares
1
 – 13973 – – 13973 8075p – –
matching shares
2
 – 71052 – – 71052 8075p – 050109 – 040112
 
1  investment shares represent those shares acquired with a portion of the bonus set out in the emoluments table on page 83 voluntarily deferred into the  
bonus deferral share matching plan 
2  this is the maximum number of shares based on the pretax value of the deferred shares that could be earned at the end of the performance period if the 
performance condition set out on page 79 is met in full
3  in 2008 the executive directors deferred their bonus payment on a gross basis and in 2009 deferral was on a net basis the flexibility to defer on either basis  
is within the plan rules
note  prior to 6 april 2010 the committee is intending to amend the terms of the investment shares in order to allow individuals to crystallise the tax due on 
their earned deferred bonus awards the net value of these awards will continue to be held until the normal vesting date no amendment will be made  
to the terms of the matching shares overview
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85 the morgan crucible company plc  
 annual report 2009
options under the sharesave scheme 
  as at granted exercised lapsed as at  
  5 january during during during 3 january  exercise 
  2009 the year the year the year 2010 price exercise periods
mark robertshaw 
2006 scheme 4725 – – – 4725 200p 010310 – 310810
kevin dangerfield 
2008 scheme 5680 – – – 5680 169p 011211 – 310512
pension benefits earned by the directors
executive directors participate in the morgan group senior staff pension and life assurance scheme this is a contributory hmrc
registered defined benefit uk occupational pension scheme as noted above the scheme was amended on 6 april 2006
        transfer increase
    increase increase in transfer transfer value value of decrease
   accrued in accrued accrued value of of accrued accrued in transfer
   benefits at benefits benefits  a less benefits at benefits at value less
   3 january excluding including director’s 4 january 3 january director’s
   2010 inflation a inflation contributions 2009 2010 contributions
executive directors  £000 £000 £000 £000 £000 £000 £000
mark robertshaw  17 4 4 20 64 176 94
kevin dangerfield  27 4 4 28 140 336 185
 
notes re pension benefits
1  the accrued benefit entitlement for mark robertshaw and kevin dangerfield is the pension which would be paid annually on retirement based on service at 
the end of the year
2  the transfer values for the pension benefits have been calculated on the basis set by the trustee of the pension scheme the trustee of the pension scheme  
is an independent body that is separate from the company and they must calculate transfer values in accordance with legislation having taken actuarial advice 
from an independent adviser the assumptions used in the calculation of the transfer values depend on market conditions over the year corporate bond yields 
fell and inflation expectations as implied by government bond yields rose both movements increase the assessed transfer values the method for setting the 
assumptions used was also updated by the trustee during the year on the advice of the actuary following the introduction of new legislation this too increased 
transfer values these two factors were much more significant than the increase in accrued benefits over the year 
3  members of the pension scheme had the option to pay additional voluntary contributions neither the contributions nor the resulting benefits are included  
in the above table
mark robertshaw and kevin dangerfield also received a pension allowance details of which are set out in the directors’ emoluments table 
on page 83
the directors’ remuneration report has been approved by the board and is signed on its behalf by
simon heale
chairman 
remuneration committee 
18 february 2010 overview
financial statements
governance
business review
86 the morgan crucible company plc  
 annual report 2009
shareholder information
analysis of shareholdings as at 3 january 2010
    number of  of  number  of
    holdings total holdings of shares share capital
size of holding
  1 – 2000  6514 7500 3618987 134
  2001 – 5000  1191 1371 3810921 141
  5001 – 10000  394 454 2822911 104
  10001 – 50000  295 340 6158791 228
  50001 – 100000  81 093 5892143 218
  100001 and above  210 242 247902503 9175
      8685 10000 270206256 10000
holding classification
  individuals  7561 8706 17599117 651
  nominee companies  1012 1165 248777277 9207
  trusts pension funds etc  11 013 336322 012
  others  101 116 3493540 129
      8685 10000 270206256 10000
key dates 
dividends subject to the relevant detailed terms and approvals of the board of directors where applicable
  55 cumulative first preference shares of £1 each and 1 april 2010 and
  50 cumulative second preference shares of £1 each 1 october 2010
annual general meeting  23 april 2010
financial results  the interim results are announced in july with the report and accounts for the year 
normally posted in march 
other information
capital gains tax the market values of quoted shares and stocks at 31 march 1982 were 
  
  ordinary 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 ordinary 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 wwwmorgancruciblecom
company details 
registered office quadrant 5557 high street windsor berkshire sl4 1lp  registered in england no 286773
  telephone 01753 837000
  fax 01753 850872
  website wwwmorgancruciblecom 
company registrars 
  capita registrars the registry 34 beckenham road beckenham kent br3 4tu
   telephone in uk 0871 664 0300 calls cost 10p per minute plus network extras  
lines are open 830am530pm mondayfriday
  telephone from overseas 44 20 8639 3399
  email ssdcapitaregistrarscom
  website wwwcapitaregistrarscom overview
financial statements
governance
business review
87 the morgan crucible company plc  
 annual report 2009
independent auditors’ report to the members  
of the morgan crucible company plc
we have audited the financial statements of the morgan crucible company plc for the year ended 3 january 2010 set out on pages 88  
to 148 the financial reporting framework that has been applied in the preparation of the group financial statements is applicable law  
and international financial reporting standards ifrss as adopted by the eu the financial reporting framework that has been applied 
in the preparation of the parent company financial statements is applicable law and uk accounting standards uk generally accepted 
accounting practice
this report is made solely to the company’s members as a body in accordance with chapter 3 of part 16 of the companies act 2006  
our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them  
in an auditors’ report and for no other purpose to the fullest extent permitted by law we do not accept or assume responsibility to anyone 
other than the company and the company’s members as a body for our audit work for this report or for the opinions we have formed
respective responsibilities of directors and auditors
as explained more fully in the directors’ responsibilities statement set out on page 76 the directors are responsible for the preparation  
of the financial statements and for being satisfied that they give a true and fair view our responsibility is to audit the financial statements 
in accordance with applicable law and international standards on auditing uk and ireland those standards require us to comply with  
the auditing practices board’s apb’s ethical standards for auditors
scope of the audit of the financial statements
a description of the scope of an audit of financial statements is provided on the apb’s website at wwwfrcorgukapbscopeukp 
opinion on financial statements
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 3 january and  
of the group’s profit for the year then ended
the group financial statements have been properly prepared in accordance with ifrss as adopted by the eu  
the parent company financial statements have been properly prepared in accordance with uk generally accepted accounting practice  
the financial statements have been prepared in accordance with the requirements of the companies act 2006 and as regards the  
group financial statements article 4 of the ias regulation
opinion on other matters prescribed by the companies act 2006
in our opinion
the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the companies act 2006  
the information given in the directors’ report for the financial year for which the financial statements are prepared is consistent with  
the financial statements
information given in the corporate governance statement set out on pages 70 to 75 with respect to internal control and risk management  
systems in relation to financial reporting processes and about share capital structures is consistent with the financial statements
matters on which we are required to report by exception
we have nothing to report in respect of the following
under the companies act 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’ remuneration report 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  
under the listing rules we are required to review
the directors’ statement set out on page 101 in relation to going concern and  
the part of the corporate governance statement relating to the company’s compliance with the nine provisions of the june 2008  
combined code specified for our review
stephen cooper senior statutory auditor 
for and on behalf of kpmg audit plc statutory auditor
chartered accountants
8 salisbury square london ec4y 8bb 
18 february 2010 overview
financial statements
governance
business review
88 the morgan crucible company plc  
 annual report 2009
        2009 2008
       note £m £m
revenue      2 9426  8350 
    
operating costs before restructuring costs other oneoff items and amortisation of intangible assets  4 8536 7262
profit from operations before restructuring costs  
other oneoff items and amortisation of intangible assets      890  1088 
restructuring costs and other oneoff items    
 restructuring costs and costs associated with settlement of prior period antitrust litigation  8 140 114
 gain on disposal of property       20  08 
profit from operations before amortisation of intangible assets    2 770  982 
amortisation of intangible assets      4 163 32
operating profit      2 607  950 
finance income       244  343 
finance expense       537 470
net financing costs      6 293 127
loss on disposal of business       – 07
share of profit of associate net of income tax      12 – 12 
profit before taxation       314  828 
income tax expense      7 87 201
profit after taxation and for the period       227  627 
profit for period attributable to    
 equity holders of the parent       190  592 
 noncontrolling interests       37  35 
        227  627 
earnings per share      9  
basic       71p 222p
diluted       68p 216p
    
dividends    
interim dividend – pence       250p 250p
  – £m       68  68 
proposed final dividend – pence       450p 450p
  – £m       122  122 
the proposed final dividend is based upon the number of shares outstanding at the balance sheet date
consolidated income statement
for the year ended 3 january 2010 overview
financial statements
governance
business review
89 the morgan crucible company plc  
 annual report 2009
consolidated statement of other comprehensive income
for the year ended 3 january 2010
        2009 2008
        £m £m
profit for the period       227 627
foreign exchange translation differences       175 691 
actuarial loss on defined benefit plans       187 470
deferred tax associated with defined benefit schemes       – 54 
revaluation on step acquisition see note 3       108  – 
net gainloss on hedge of net investment in foreign subsidiary      91  428
cash flow hedges  
 effective portion of changes in fair value       02  46
 transferred to profit or loss       46  12 
change in fair value of equity securities availableforsale      10  38
tax effect on components of other comprehensive income      55  – 
total comprehensive income for the period       177  402 
total comprehensive income attributable to
 equity holders of the parent       171  292 
 noncontrolling interests       06  110 
total comprehensive income for the period       177  402 overview
financial statements
governance
business review
90 the morgan crucible company plc  
 annual report 2009
consolidated balance sheet
as at 3 january 2010
        2009 2008
       note £m £m
assets
property plant and equipment      10 2762  3196 
intangible assets      11 2969  1770 
investment in associates      12 15  64 
other investments      12 57  52 
other receivables      15 21  390 
deferred tax assets      13 372  366 
total noncurrent assets       6196  5838 
inventories      14 1463  1439 
derivative financial assets      19 05  02 
trade and other receivables      15 1658  1963 
cash and cash equivalents      16 1076  1545 
assets classified as held for sale      10 14  – 
total current assets       4216  4949 
total assets       10412  10787 
   
liabilities   
interestbearing loans and borrowings      18 3466  4109 
employee benefits      20 1059  1018 
grants for capital expenditure       02  02 
provisions      21 55  72 
nontrade payables      22 317  40 
derivative financial liabilities      19 41  08 
deferred tax liabilities      13 475  408 
total noncurrent liabilities       5415  5657 
   
bank overdraft      16 12  173 
interestbearing loans and borrowings      18 125  167 
trade and other payables      22 2503  2209 
current tax payable       45  224 
provisions      21 109  125 
derivative financial liabilities      19 57  152 
total current liabilities       2851  3050 
total liabilities       8266  8707 
total net assets       2146  2080 
   
equity   
share capital      17 679  679 
share premium       853  853 
reserves       614  453 
retained earnings       300 207
total equity attributable to equity holders of parent company     1846  1778 
noncontrolling interests       300  302 
total equity       2146  2080 
the financial statements were approved by the board of directors on 18 february 2010 and were signed on its behalf by
mark robertshaw chief executive officer 
kevin dangerfield chief financial officer overview
financial statements
governance
business review
91 the morgan crucible company plc  
 annual report 2009
consolidated statement of changes in equity
for the year ended 3 january 2010
      fair  capital   total non 
  share share translation hedging value special redemption other retained parent controlling total
  capital premium reserve reserve reserve reserve reserve reserves earnings equity interests equity
  £m £m £m £m £m £m £m £m £m £m £m £m
balance at 5 january 2008 695  853  89 12 11  60  341  14  111 1762  201  1963 
profit for the period – – – – – – – – 592  592  35  627 
other comprehensive income – – 188  34 38 – – – 416 300 75  225
other movements – – – – – – – 04 – 04 06  02 
transactions with owners            
dividends – – – – – – – – 187 187 15 202
own shares acquired for  
share buyback programme 16 – – –  – – 16  – 121 121 – 121
own shares acquired for  
share incentive schemes – – – – – – – – 04  04  – 04 
equitysettled sharebased  
payment transactions – – –  – – – – – 32  32  – 32 
balance at 4 january 2009 679  853  99  46 27 60  357  10  207 1778  302  2080 
            
balance at 5 january 2009 679  853  99  46 27 60  357  10  207 1778  302  2080 
profit for the year – – – – –  – – – 190  190  37  227 
other comprehensive income – – 02  48  10  – – 108  187 19 31 50
other movements – – – – – – – 07 02  05 05  –
transactions with owners
dividends – – – – – – – – 121 121 13 134
equitysettled sharebased  
payment transactions – – – – – – – – 23  23  – 23 
balance at 3 january 2010 679  853  101  02  17 60  357  111  300 1846  300  2146 
 
the movement in other reserves in 2009 through other comprehensive income reflects the increase in the fair value of the group’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 group’s share of the results of clearpower limited see note 3 for further details
details of the reserves are provided in note 17 overview
financial statements
governance
business review
92 the morgan crucible company plc  
 annual report 2009
consolidated statement of cash flows
for the year ended 3 january 2010
        2009 2008
       note £m £m
operating activities
profit for the period       227  627 
adjustments for   
 depreciation      4 317  276 
 amortisation      4 163  32 
 net financing costs       293  127 
 loss on disposal of business       – 07 
 share of profit of associate      12 –  12
 profit on sale of property plant and equipment       21 07
 income tax expense      7 87  201 
 equitysettled sharebased payment expenses       20  22 
cash generated from operations before changes in working capital and provisions   1086  1273 
decreaseincrease in trade and other receivables       265  87
decreaseincrease in inventories       81  119
decrease in trade and other payables       88 12
noncash operating costs relating to restructuring      4 15  42 
decrease in provisions and employee benefits       135 100
cash generated from operations       1224  997 
interest paid       255 211
income tax paid       320 281
net cash from operating activities       649  505 
   
investing activities
purchase of property plant and equipment       181 334
proceeds from sale of property plant and equipment       44  19 
sale of investments       02  19 
interest received       23  42 
acquisition of subsidiaries and associate net of cash acquired      319 792
forward contracts used in net investment hedging       03 89
net cash from investing activities       434 1135
financing activities
purchase of own shares       – 121
increase in borrowings      16 1692  1272 
repayment of borrowings      16 2047 – 
payment of finance lease liabilities      16 06 03
dividends paid       121 188
net cash from financing activities       482 960 
net decreaseincrease in cash and cash equivalents       267 330 
cash and cash equivalents at start of period       1394  901 
effect of exchange rate fluctuations on cash held       51 163 
cash and cash equivalents at period end      16 1076  1394 
 
a reconciliation of cash and cash equivalents to net borrowings is shown in note 16 overview
financial statements
governance
business review
93 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements 
1 accounting policies estimates and judgments
accounting policies
the morgan crucible company plc the ‘company’ is a company incorporated in the uk
the group financial statements consolidate those of the company and its subsidiaries together referred to as the ‘group’ and include 
the group’s interest in associates the parent company financial statements present information about the company as a separate entity 
and not about its group historically the group has drawn up its consolidated financial statements to 4 january these consolidated 
financial statements have been drawn up to sunday 3 january 2010 as from this year the group will maintain a 52 or 53 week fiscal  
year ending on the sunday nearest to the accounting reference date of the company 1 january
the group financial statements have been prepared and approved by the directors in accordance with international financial reporting 
standards as adopted by the eu adopted ifrss the company has elected to prepare its parent company financial statements in 
accordance with uk generally accepted accounting practice these are presented on pages 139 to 147
the accounting policies set out below have unless otherwise stated been applied consistently to all periods presented in these group 
financial statements
during the period the group has applied ias 1 presentation of financial statements revised 2007 which has introduced a number of 
terminology changes and has resulted in a number of changes in presentation and disclosure the revised standard has had no impact  
on the reported results or financial position of the group in addition the group has adopted ifrs 2 amendment regarding vesting 
conditions and cancellations ifrs 8 operating segments ias 23 borrowing costs revised 2007 ifric 14 ias 19 the limit on a  
defined benefit asset minimum funding requirements and their interaction ifric 13 customer loyalty programmes and amendments 
to ias 32 financial instruments presentation and ias 1 presentation of financial statements none of which have had a significant effect 
on the reported results or financial position of the group
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 group 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 in assessing control potential voting rights that 
presently are exercisable or convertible are taken into account 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 group has significant influence but not control over the financial and operating policies 
significant influence is presumed to exist when the group 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 the group’s investment includes goodwill identified on 
acquisition net of any accumulated impairment losses the consolidated financial statements include the group’s share of the income and 
expenses and equity movements of associates after adjustments to align the accounting policies with those of the group from the date 
that significant influence commences until the date that significant influence ceases when the group’s share of losses exceeds its interest 
in an associate the carrying amount of that interest is reduced to nil and the recognition of further losses is discontinued except to the 
extent that the group has an obligation or has made payments on behalf of the associate 
iii transactions eliminated on consolidation 
intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions are eliminated 
in preparing the consolidated financial statements unrealised gains arising from transactions with associates are eliminated against the 
investment to the extent of the group’s interest in the associate unrealised 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  overview
financial statements
governance
business review
94 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
1 accounting policies estimates and judgments continued
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 ifrs are recognised directly in a separate 
component of equity  
iii net investment in foreign operations
exchange differences arising from the translation of the net investment in foreign operations and of related hedges are taken to the 
translation reserve they are released into the income statement upon disposal
e derivative financial instruments
the group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational 
financing and investment activities in accordance with its treasury policy the group does not hold or issue derivative financial instruments 
for trading purposes however derivatives that do not qualify for hedge accounting are accounted for at fair value through profit or loss
derivative financial instruments are recognised initially at fair value the gain or loss on remeasurement to fair value is recognised 
immediately in profit or loss however where derivatives qualify for hedge accounting recognition of any resultant gain or loss depends  
on the nature of the item being hedged see accounting policy ‘f’ 
the fair value of forward exchange contracts is their quoted market price at the balance sheet date being the present value of the quoted 
forward price
f hedging
i cash flow hedges
where a derivative financial instrument is designated as a hedge of the variability in cash flows of a highly probable forecasted transaction 
the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity the associated gain or loss is 
removed from equity and recognised in the income statement in the period in which the transaction to which it relates occurs 
when a hedging instrument expires or is sold terminated or exercised or the entity revokes designation of the hedge relationship but  
the hedged forecast transaction is still expected to occur the cumulative gain or loss at that point remains in the hedging reserve and  
is recognised in accordance with the above policy when the transaction occurs if the hedged transaction is no longer expected to take 
place the cumulative unrealised gain or loss recognised in the hedging reserve is recognised immediately in the income statement 
ii hedge of monetary assets and liabilities
where a derivative financial instrument is used to hedge economically the foreign exchange exposure of a recognised monetary asset  
or liability no hedge accounting is applied and any gain or loss on the hedging instrument is recognised in the income statement 
iii hedge of net investment in foreign operations
the portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is determined to be an 
effective hedge is recognised directly in the translation reserve the ineffective portion is recognised immediately in profit or loss 
g property plant and equipment 
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 see accounting policy ‘l’ the cost of selfconstructed assets includes the cost of materials direct labour and an appropriate 
proportion of production overheads  
certain items of property plant and equipment that had been revalued to fair value on or prior to 5 january 2004 the date of transition  
to adopted ifrss are measured on the basis of deemed cost being the revalued amount at the date of that revaluation 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
gains 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 gains and losses on the disposal of property are recognised in ‘other oneoff items’ in the income 
statement gains and losses on the disposal of plant and equipment are recognised in ‘operating costs’ in the income statement 
ii leased assets 
leases under the terms of which the group 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   overview
financial statements
governance
business review
95 the morgan crucible company plc  
 annual report 2009
1 accounting policies estimates and judgments continued
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 the estimated useful lives are as follows 
buildings 50 years
plant and equipment  presses kilns and furnaces 1020 years
other plant and equipment 10 years
fixtures and fittings 10 years
motor vehicles and it equipment 3 years
h intangible assets
i goodwill
all business combinations are accounted for by applying the purchase method in respect of business acquisitions that have occurred  
since 5 january 2004 goodwill represents the difference between the cost of the acquisition and the fair value of assets liabilities and 
contingent liabilities acquired 
in respect of acquisitions prior to this date goodwill is included on the basis of its deemed cost which represents the amount recorded 
under uk gaap the classification and accounting treatment of business combinations that occurred prior to 5 january 2004 has not  
been reconsidered goodwill is stated at cost less any accumulated impairment losses  
goodwill is allocated to cashgenerating units and is tested annually for impairment see accounting policy ‘l’ 
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 group 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 see accounting policy ‘l’ other development expenditure is recognised  
in the income statement as an expense as incurred 
iii other intangible assets
other intangible assets that are acquired by the group are stated at cost less accumulated amortisation see below and impairment losses 
see accounting policy ‘l’
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 goodwill and intangible assets with an indefinite useful life are systematically tested for impairment at each balance 
sheet date other 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 1520 years
order book amortised over the period in which the associated orders are fulfilled
i trade and other receivables 
trade and other receivables are stated at their fair value less impairment losses see accounting policy ‘l’
j inventories
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 firstin firstout 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 overview
financial statements
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business review
96 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
1 accounting policies estimates and judgments continued
k cash and cash equivalents
cash and cash equivalents comprises cash balances and call deposits 
l impairment
the carrying amounts of the group’s assets other than inventories see accounting policy ‘j’ and deferred tax assets see accounting  
policy ‘s’ 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 equity and there is objective evidence 
that the asset is impaired the cumulative loss that had been recognised directly in equity is recognised in profit or loss even though the 
financial asset has not been derecognised 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 group’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 receivables 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 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 in respect of other assets an impairment loss is reversed if there has been  
a change in the estimates used to determine the recoverable amount and when there is an indication that the impairment loss may  
no longer exist
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
m share capital
i ordinary share capital
ordinary 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 esop trust treasury shares
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 repurchased shares and the purchase of own shares by the 
groupsponsored esop trust are presented as a deduction from total equity repurchased shares are classified as treasury shares until  
their subsequent cancellation overview
financial statements
governance
business review
97 the morgan crucible company plc  
 annual report 2009
1 accounting policies estimates and judgments continued
n employee benefits
i defined contribution plans 
obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred
ii defined benefit plans
the group’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  
aa creditrated bonds that have maturity dates approximating the terms of the group’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 group 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 group if it is realisable 
during the life of the plan or on settlement of the plan liabilities actuarial gains and losses differences between the expected and actual 
returns and the effect of changes in actuarial assumptions are recognised in full in equity in the year in which they arise
iii longterm service benefits
the group’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 aa creditrated bonds that have maturity dates approximating the terms of  
the group’s obligations 
iv sharebased payment transactions
the group operates various share option programmes that allow group employees to acquire shares in the company under the  
long term incentive plan ltip and the morgan crucible bonus deferral share matching plan awards of shares are made to various  
key executives and under the directors’ share option plan 2006 2006 esop the executive share option scheme 2004 2004 esos  
and the executive share option scheme 1995 1995 esos share options are granted by the company the company also maintains  
an allemployee sharesave scheme available to employees in the uk and germany 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
directors’ share option plan 2006 monte carlo model
long term incentive plan 2004 monte carlo model
the morgan crucible bonus deferral share matching plan monte carlo model
executive share option scheme 2004 monte carlo model
executive share option scheme 1995 grants made since 2004 binominal lattice option pricing model
employee sharesave scheme 1995 grants made since 2004 blackscholes merton model
employee sharesave scheme 2004 blackscholes merton model
employee sharesave scheme 2004 germany blackscholes merton model
the choice of model takes into account the terms and conditions upon which the awards were made and 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 overview
financial statements
governance
business review
98 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
1 accounting policies estimates and judgments continued
o provisions
a provision is recognised in the balance sheet when the group has a present legal or constructive obligation as a result of a past event  
and it is probable that an outflow of economic benefits will be required to settle the obligation 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 group 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 group from a contract are lower than the 
unavoidable cost of meeting its obligations under the contract
iii environmental
in accordance with the group’s environmental policy a provision is recognised for known environmental issues which the group will rectify 
over the next few years in a number of jurisdictions companies have a constructive obligation to remedy any known environmental 
problems
p trade and other payables
trade and other payables are stated at their fair value
q revenue
i goods sold
revenue from the sale of products is measured at the fair value of the consideration received or receivable net of returns trade discounts 
and volume rebates revenue is recognised in the income statement when the significant risks and rewards of ownership have been 
transferred to the buyer
ii government grants
government grants are recognised in the balance sheet initially as deferred income as grants for capital expenditure when there is 
reasonable assurance that they will be received and that the group will comply with the conditions attaching to them grants that 
compensate the group for expenses incurred are recognised as revenue in the income statement on a systematic basis in the same periods 
in which the expenses are incurred grants that compensate the group for the cost of an asset are recognised in the income statement as 
other operating income on a systematic basis over the useful life of the asset
r expenses
i 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 
ii finance lease payments
leases where the group 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 group 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
iii net financing costs
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 see accounting policy ‘f’ expected 
return 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  overview
financial statements
governance
business review
99 the morgan crucible company plc  
 annual report 2009
1 accounting policies estimates and judgments continued
s income tax
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 equity in which case it is recognised in equity
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 
t segment reporting
the group has adopted ifrs 8 operating segments with effect from 4 january 2009 the group has identified four reportable operating 
segments these have been identified on the basis of internal management reporting information that is regularly reviewed by the group’s 
chief operating 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 unallocated items comprise mainly investments and related income loans and borrowings and related expenses corporate assets 
primarily the company’s headquarters and head office expenses and income tax assets and liabilities 
u classification of financial instruments issued by the group 
financial instruments issued by the group are treated as equity ie forming part of shareholders’ funds only to the extent that they meet 
the following two conditions 
i  they include no contractual obligations upon the group 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 group and 
ii  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 called up 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
v investments in debt and equity securities 
investments in debt and equity securities held by the group are classified as being availableforsale and are stated at fair value with  
any resultant gain or loss being recognised directly in equity 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 
w interestbearing borrowings
interestbearing borrowings are recognised initially at fair value less attributable transaction costs subsequent to initial recognition 
interestbearing 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
x capitalisation of borrowing costs
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  overview
financial statements
governance
business review
100 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
1 accounting policies estimates and judgments continued
y dividends
dividends payable are recognised as a liability in the period in which they are declared and approved 
z step acquisitions
step acquisitions arise when the group 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 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 ifrs 3 
business combinations 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 
aa new standards and interpretations not yet adopted
a number of new standards and amendments to standards and interpretations are not yet effective for the year ended 3 january 2010 
and have not been applied in preparing these consolidated financial statements 
the following adopted ifrss were available for early application but have not been applied
i ifrs 3 revised 2008 business combinations
ii ias 27 revised 2008 consolidated and separate financial statements
  the revised standards introduce changes to acquisition accounting notably in respect of treatment of acquisition costs step and 
partial acquisitions minority interests and contingent consideration 
  the group does not expect the above standards to have any significant impact on the financial statements for the period commencing 
4 january 2010 
amendments to the following adopted ifrss were available for early application but have not been applied
i ias 17 leases 
ii  ias 18 revenue 
iii ias 27 amended 2008 consolidated and separate financial statements 
iv  ias 36 impairment of assets 
v  ias 38 intangible assets 
vi  ifrs 5 noncurrent assets held for sale and discontinued operations 
vii  ifrs 8 operating segments 
viii  ias 39 financial instruments 
ix  ifric 16 hedges of a net investment in a foreign operation
  the group does not expect the above amendments to have any significant impact on the financial statements for the period 
commencing 4 january 2010
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 group’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 21 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 group’s best estimate of exposure based on currently  
available information overview
financial statements
governance
business review
101 the morgan crucible company plc  
 annual report 2009
1 accounting policies estimates and judgments continued
recognition of identifiable intangible assets and goodwill
note 3 contains information about intangible assets recognised on acquisition these primarily relate to existing contracts order books 
and customer relationships which are supported by longterm relationships with key customers the group has estimated that the 
customer relationships have an economic life of 1520 years
impairment of goodwill
note 11 contains information about the assumptions relating to goodwill impairment tests
credit risk
note 19 contains information about the group’s exposure to credit risk the group 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 19 contains information about the foreign currency exposure of the group and risks in relation to foreign exchange movements
pension assumptions 
the principal actuarial assumptions applied to pensions are shown in note 20 the actuarial evaluation of pension assets and liabilities  
is based on assumptions in respect of inflation future salary increases discount rates returns on investments and mortality rates  
relatively small changes in the assumptions underlying the actuarial valuations of pension schemes can have a significant impact  
on the net pension liability included in the balance sheet
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 group operates deferred tax assets are recognised based on management’s assessment of the extent to which they are recoverable
going concern
the group’s business activities together with the factors likely to affect its future development performance and position are set out in 
the business review on pages 32 to 63 the financial position of the group its cash flows liquidity position and borrowing facilities are 
described in the business review in addition note 19 includes the group’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 group announced in may 2009 the signing of a new £280 million threeyear multicurrency revolving facility agreement with a 
syndicate of eight banks this replaced a 420 million facility with the same financial covenants which was due to mature in march 2010 
the group meets its daytoday working capital requirements through local banking arrangements that are supported through the flexibility 
provided by the new facility the group’s forecasts and projections taking account of reasonably possible changes in trading performance 
and exchange rates show the group operating comfortably within the group’s debt financial covenants for the next 12 months
the current economic climate continues to have an impact on the group its customers and suppliers the board fully recognises the 
challenges that lie ahead but after making enquiries the directors have a reasonable expectation that the company and the group 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 report and accounts overview
financial statements
governance
business review
102 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
2 segment reporting
this year the group adopted ifrs 8 operating segments which replaces ias 14 segment reporting the accounting policy for identifying 
segments is now based on internal management reporting information that is regularly reviewed by the group’s chief operating decision 
maker in contrast ias 14 segment reporting required the group to identify two sets of segments business and geographical based on 
the risks and rewards of the operating segments 
as a result of the adoption of ifrs 8 operating segments the directors are of the opinion that the primary business segments as 
previously reported under ias 14 segment reporting should remain unchanged 
hence the group continues to comprise the following four reportable segments
carbon – the carbon division produces a wide variety of technological solutions from carbon graphite and silicon carbide  
technical ceramics – the technical ceramics division makes an extensive range of industrial ceramics products for a wide variety   
of applications
thermal ceramics – the thermal ceramics division designs and manufactures a wide variety of heat insulation products  
molten metal systems – the molten metal systems division occupies a leading position in the supply of crucibles and manufactures  
equipment used in the melting holding and processing of metals and alloys
 insulating ceramics
   carbon technical ceramics thermal ceramics molten metal systems  consolidated
  2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
  £m £m £m £m £m £m £m £m £m £m
revenue from  
external customers 3914  2399  2060  2122  3151  3474  301  355  9426 8350 
divisional ebita
1
 405 363 251 316 267 414 09 42 932  1135  
unallocated costs         42 47
group ebita
2
         890  1088 
restructuring costs  
and other oneoff items         120 106
underlying operating profit
3
        770  982 
amortisation of intangible assets        163 32
operating profit         607  950 
finance income         244  343 
finance expense         537 470
loss on disposal of business         – 07
share of profit of associate net of income tax         – 12 
profit before taxation         314  828 
1 divisional ebita is defined as segment operating profit before restructuring costs other oneoff items and amortisation of intangible assets
2 group ebita is defined as operating profit before restructuring costs other oneoff items and amortisation of intangible assets
3 underlying operating profit is defined as operating profit before amortisation of intangible assets
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 business review section of the annual report
the group did not have any significant intersegment revenue between reportable operating segments in 2009 and 2008 overview
financial statements
governance
business review
103 the morgan crucible company plc  
 annual report 2009
2 segment reporting continued
 insulating ceramics
   carbon technical ceramics thermal ceramics molten metal systems  consolidated
  2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
  £m £m £m £m £m £m £m £m £m £m
segment assets 3844  2546  2209  2746  2582  3592  316  441  8951 9325 
unallocated assets         1461  1462 
total assets         10412  10787 
           
segment liabilities 785  601  329  592  649  1314  74  164  1837  267 1 
unallocated liabilities         6429  6036 
total liabilities         8266  8707 
investment in associates 15  64  – – – – – – 15  64 
segment capital  
expenditure 50  130  61  68  59  91  09  40  179 329 
unallocated capital  
expenditure         02  05 
total capital expenditure         181  334 
 insulating ceramics
   carbon technical ceramics thermal ceramics molten metal systems  consolidated
  2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
  £m £m £m £m £m £m £m £m £m £m
segment depreciation 99  80  91  82  115  105  12  09  317 276 
   europe  americas far east  australia middle east  africa  consolidated
  2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
  £m £m £m £m £m £m £m £m £m £m
revenue from  
external customers 4533  3280  3251  3596  1401  1351  241  123  9426 8350 
noncurrent assets 
excluding deferred  
tax and financial 
instruments 2850  2043  2169  2536  788  866  17  27  5824 5472 
revenue from external customers attributed to the uk the group’s country of domicile was £2527 million 2008 £836 million
major customer
revenues from one customer of the group’s carbon division represent £1611 million of the group’s total revenues overview
financial statements
governance
business review
104 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
3 acquisitions
acquisitions in 2009
clearpower
in 2007 the group acquired 49 of the ordinary share capital of clearpower limited a company that via two intermediary holding 
companies owns 100 of np aerospace limited on 5 january 2009 the group acquired the remaining 51 of the ordinary 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 11 of the ordinary share capital and £446 million in discounted deferred contingent consideration for 40 of the 
ordinary share capital
the discounted deferred contingent consideration takes the form of four synthetic forwards each to acquire 10 of the ordinary 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 in accordance with ias 32 financial instruments presentation the group has recognised a liability representing the 
estimated present value of the redemption amount in respect of its obligation to acquire these shares and has treated them as if they were 
acquired by the group on 5 january 2009 since this consideration is contingent on the future performance of clearpower the liability is 
remeasured at each reporting date with any adjustments recorded through goodwill in accordance with ifrs 3 business combinations  
it is possible that the carrying amount of this liability will increase or decrease if the future performance of clearpower varies from current 
expectations at 3 january 2010 this liability to purchase the remaining 40 of the ordinary share capital of clearpower limited was 
remeasured and increased to £460 million in addition amounts payable in respect of the acquisition of 11 of the ordinary share capital 
were increased by £81 million based on the actual performance of clearpower limited in 2009 the £81 million deferred contingent 
consideration in respect of the acquisition of 11 of the ordinary share capital will be paid after the balance sheet date
at 3 january 2010 the group carries a total liability of £541 million in respect of deferred consideration this is included within current 
and noncurrent nontrade payables see note 22 the unwinding of the discount on this liability of £22 million is recorded as a finance 
expense see note 6 the adjustment through goodwill since the date of acquisition as a result of the remeasurement is £73 million 
the principal activity of np aerospace limited is the development manufacture and marketing of ballistic and nonballistic products in  
the defence and civil sectors in the 12 months to 3 january 2010 clearpower limited and its subsidiaries contributed an operating profit 
before amortisation of intangible assets of £288 million to the consolidated net profit 
the details of the transaction result and fair value adjustments arising from the change in ownership are shown below
        acquiree’s fair value
        carrying to the
        amount group
        2009 2009
        £m £m
clearpower
the figures in the table below represent a 100 interest in clearpower limited
intangible assets       –  515 
property plant and equipment       29  29 
other working capital       01  01 
derivative financial liabilities       08 08
interestbearing loans and other borrowings       583 583
noncontrolling interest       12 12
deferred taxation       03  141
net liabilities acquired       570 199
goodwill        967 
fair value of net liabilities acquired and goodwill arising       768 
components of cost of acquisition
fair value of consideration for initial 49 shareholding in 2007       05 
fair value of consideration for remaining 51 shareholding in 2009      641 
total cost of acquisition        646 
earnings under equity method of initial 49 shareholding while clearpower limited was an associate   14 
revaluation surplus arising on step acquisition        108 
fair value of net liabilities acquired and goodwill arising       768 
cash paid on acquisition of 11 of the ordinary share capital       122 
acquisition costs        01 
net cash outflow to the group in 2009        123  overview
financial statements
governance
business review
105 the morgan crucible company plc  
 annual report 2009
3 acquisitions continued
provisional fair value adjustments were made to reflect the fair value of the assetsliabilities acquired and principally represent the 
recognition of the fair value of noncontractual customer relationships order book and technology and the associated deferred tax  
on the temporary timing difference created by the fair value adjustments no adjustments to fair value were made
recognised goodwill comprises £225 million arising on the initial purchase of the 49 interest in 2007 and £742 million arising on the 
effective acquisition of the remaining 51 interest on 5 january 2009
excluding goodwill a total of £515 million of intangible assets has been recognised comprising £239 million of customer relationships 
£183 million of technology and an order book of £93 million these have been recognised within operating intangibles arising on 
acquisition see note 11
goodwill represents future economic benefits arising from assets that are not capable of being identified individually or recognised as 
separate assets this includes acquirerspecific synergies such as crossselling opportunities and the enhancement of technologies and 
processes between existing and acquired sites
the fair value of the purchase consideration which is dependent on future results represents management’s best estimate of the likely 
final purchase consideration
the revaluation surplus recorded in the statement of other comprehensive income reflects the increase in the fair value of the group’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 group’s share of the results of clearpower limited
other acquisitions
on 6 april 2009 the group acquired a 50 stake in integrated survivability technologies limited the principal activity of integrated 
survivability technologies limited is acting as prime contractor for delivery of military vehicles and provision of related support services 
this company did not trade prior to the date of acquisition 
during the year the company acquired a further 9 of the ordinary share capital and voting rights of carbo san luis sa for £11 million 
resulting in a total shareholding of 846 at 3 january 2010
acquisitions in 2008
on 31 march 2008 the group acquired 100 of the shares in the technical ceramics business of carpenter technology corporation 
known as certech and carpenter advanced ceramics for £746 million the principal activity of certech is the manufacture of complex 
injectionmoulded ceramic components the principal activity of carpenter advanced ceramics is the manufacture of engineered ceramic 
products in the nine months to 4 january 2009 these subsidiaries contributed an operating profit before amortisation of intangible assets 
of £66 million to the consolidated net profit for the period the group revenue and profit from operations before amortisation of intangible 
assets for 2008 had the acquisition taken place at the beginning of the period are £8492 million and £1004 million respectively
effect of acquisitions
the acquisitions had the following effect on the assets and liabilities of the group
        carrying fair value
        values before to the
        acquisition group
        2008 2008
        £m £m
certech and carpenter advanced ceramics  
intangible assets       32  322 
property plant and equipment       83  90 
other working capital       119  113 
provisions       – 17
deferred taxation       – 113
net identifiable assets and liabilities       234  395 
goodwill on acquisition        386 
consideration payable excluding acquisition costs satisfied in cash      746 
acquisition costs        35 
net cash outflow        781 
 
goodwill represents future economic benefits arising from assets that are not capable of being identified individually or recognised as 
separate assets this will include acquirerspecific synergies such as crossselling opportunities and the enhancement of technologies and 
processes between existing and acquired sites overview
financial statements
governance
business review
106 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
3 acquisitions continued
excluding goodwill a total of £322 million of intangible assets have been recognised which comprise customer relationships these have 
been recognised within operating intangibles arising on acquisition see note 11
during the year the company acquired a further 6 of the ordinary share capital and voting rights of carbo san luis sa for £07 million 
resulting in a shareholding of 756
4 operating costs 
        2009 2008
        £m £m
change in stocks of finished goods and work in progress      07 48 
raw materials and consumables       3023  2046 
other external charges       1483  1432 
total       4499  3526 
employee costs
 wages and salaries       2143  2097 
 sharebased payments       20  25 
 social security costs       451  411 
 other pension costs       71  89 
total       2685  2622 
depreciation
 owned assets       305  273 
 assets held under finance leases       12  03 
total       317  276 
rentals under operating leases
 hire of plant and machinery       30  19 
 other operating leases       87  50 
total       117  69 
other operating charges and income
 foreign exchange losses       39  22 
 other operating charges       973  870 
 foreign exchange gains       61 87
 other operating income       33 36
total       918  769 
total operating costs before restructuring costs other oneoff items and amortisation of intangible assets  8536  7262 
restructuring costs and other oneoff items
 employment termination costs       113  10 
 noncash writeoff of assets       15  42 
 other site rationalisation and closure costs       21  53 
 costs recoveredincurred associated with settlement of prior period antitrust litigation   09 09 
 profit on disposal of property       20 08
total       120  106 
amortisation of intangible assets       163  32 
total operating costs       8819  7400 
the group recognised £139 million in expense in respect of research and development 2008 £98 million   overview
financial statements
governance
business review
107 the morgan crucible company plc  
 annual report 2009
4 operating costs 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 3 january 2010 is set out below
        2009 2008
        £m £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 audit of the company’s subsidiaries pursuant to legislation and other services    16  14 
 tax services       01  01 
        21  19 
 
in addition in 2008 kpmg audit plc was paid £01 million in respect of the acquisition of certech and carpenter advanced ceramics
5 staff numbers 
the average number of persons employed by the group including directors during the year analysed by category was as follows
        number of employees
        2009 2008
united kingdom       1484 1394
rest of europe       1738 1868
the americas       3632 4051
far east and australia       2692 3064
middle east and africa       242 244
        9788 10621
carbon       3548 3868
technical ceramics       2698 2843
thermal ceramics       3032 3354
molten metal systems       502 548
corporate       8 8
        9788 10621 overview
financial statements
governance
business review
108 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
6 net finance income and expense
        2009 2008
        £m £m
recognised in profit or loss  
interest income on bank deposits       23  30 
interest income from associate       – 41 
expected return on ias 19 scheme assets       221  257 
foreign exchange gains recognised on net investment hedge      – 15 
finance income       244  343 
interest expense on financial liabilities measured at amortised cost      251 214
interest on ias 19 obligations       264 256
interest expense on unwinding of discount on deferred consideration     22 – 
finance expense       537 470
net financing costs recognised in profit or loss       293 127
the above finance income and expense include the following in respect of assetsliabilities not at fair value through profit or loss
total interest income on financial assets       23  7 1 
total interest expense on financial liabilities       251 214
recognised directly in equity
net change in fair value of availableforsale financial assets      10  38
cash flow hedges
 effective portion of changes in fair value of cash flow hedges      02  46
 transferred to profit or loss       46  12 
effective portion of change in fair value of net investment hedge      91  428
foreign currency translation differences for foreign operations      89 616 
        60  116 
recognised in
fair value reserve       10  38
translation reserve       02  188 
hedging reserve       48  34
        60  116  overview
financial statements
governance
business review
109 the morgan crucible company plc  
 annual report 2009
7 taxation  income tax expense
recognised in the income statement
        2009 2008
        £m £m
current tax expense
current year       173  157 
adjustments for prior years       08 17
        165  140 
deferred tax expense
origination and reversal of temporary differences       78 48 
benefit of losses recognised       – 13 
        78 61 
total income tax expense in income statement       87  201 
reconciliation of effective tax rate
      2009 2009 2008 2008
      £m  £m 
profit before tax     314   828  
income tax using the domestic corporation tax rate     88  280  232  280 
nondeductible expenses     64  204  08  10 
temporary differences not equalised in deferred tax     43 137 106 128
overunderprovided in prior years     02 06 23  28 
other including the impact of overseas tax rates     20 64 44  53 
      87  277  201  243 
income tax recognised directly in equity
actuarial gains and losses     –  54  
tax effect on components of other comprehensive income    55   – 
other     02  – 
total income tax recognised directly in equity     53   54  
8 restructuring costs and costs associated with settlement of prior period antitrust litigation
costs of restructuring were £149 million 2008 £105 million during the period net legal costs of £09 million were recovered relating  
to the settlement of antitrust litigation 2008 £09 million net legal costs charge
9 earnings per share
basic earnings per share
the calculation of basic earnings per share at 3 january 2010 was based on the profit attributable to equity holders of the morgan 
crucible company plc of £190 million 4 january 2009 £592 million and a weighted average number of ordinary shares outstanding 
during the period ended 3 january 2010 of 268070252 4 january 2009 266882370 calculated as follows
       2009 2008
       £m £m
profit attributable to equity holders of the morgan crucible company plc   190  592 
weighted average number of ordinary shares
issued ordinary shares at the beginning of the period      270206256  276414074 
effect of shares issued in period and treasury shares held by the company    2136004 9531704
weighted average number of ordinary shares during the period     268070252  266882370 
basic earnings per share pence      71p 222p overview
financial statements
governance
business review
110 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
9 earnings per share continued
diluted earnings per share  
the calculation of diluted earnings per share at 3 january 2010 was based on the profit attributable to equity holders of the morgan 
crucible company plc of £190 million 4 january 2009 £592 million and a weighted average number of ordinary shares outstanding 
during the period ended 3 january 2010 of 279724482 4 january 2009 274229467 calculated as follows  
       2009 2008
       £m £m
profit attributable to equity holders of the morgan crucible company plc   190  592 
weighted average number of ordinary shares
weighted average number of ordinary shares during the period     268070252  266882370 
effect of share optionsincentive schemes      11654230  7347097 
diluted weighted average number of ordinary shares      279724482  274229467 
diluted earnings per share pence      68p 216p
  
underlying earnings per share
the calculation of underlying earnings per share at 3 january 2010 was based on operating profit and share of profit of associate before 
amortisation less net financing costs loss on disposal of business income tax expense and noncontrolling interests of £353 million  
4 january 2009 £624 million and a weighted average number of ordinary shares outstanding during the period ended 3 january 2010 
of 268070252 4 january 2009 266882370 calculated as follows
       2009 2008
       £m £m
operating profit and share of profit of associate before amortisation less net financing  
costs loss on disposal of business income tax expense and noncontrolling interests  353  624 
issued ordinary shares at the beginning of the period      270206256  276414074 
effect of shares issued in period and treasury shares held by the company    2136004 9531704
weighted average number of ordinary shares during the period     268070252  266882370 
earnings per share before amortisation of intangible assets pence    132p 234p
diluted underlying earnings per share
the calculation of diluted underlying earnings per share at 3 january 2010 was based on operating profit and share of profit of  
associate before amortisation less net financing costs loss on disposal of business income tax expense and noncontrolling interests of 
£353 million 4 january 2009 £624 million and a weighted average number of ordinary shares outstanding during the period ended  
3 january 2010 of 279724482 4 january 2009 274229467 calculated as follows
       2009 2008
       £m £m
operating profit and share of profit of associate before amortisation less net financing costs  
loss on disposal of business income tax expense and noncontrolling interests   353  624 
weighted average number of ordinary shares during the period     268070252  266882370 
effect of share optionsincentive schemes      11654230  7347097 
diluted weighted average number of ordinary shares during the period    279724482  274229467 
diluted earnings per share before amortisation of intangible assets pence    126p 228p overview
financial statements
governance
business review
111 the morgan crucible company plc  
 annual report 2009
10 property plant and equipment
        plant and 
       land and equipment 
       buildings and fixtures total
       £m £m £m
cost    
balance at 5 january 2008      1359  4075  5434 
acquisitions through business combinations      20  90  110 
additions      65  309  374 
disposals      15 182 197
effect of movement in foreign exchange      385  1001  1386 
balance at 4 january 2009      1814  5293  7107 
balance at 5 january 2009      1814  5293  7107 
acquisitions through business combinations      15  14  29 
additions      14  126  140 
disposals      43 110 153
transfer to assets classified as held for sale      41 06 47
effect of movement in foreign exchange      132 361 493
balance at 3 january 2010      1627  4956  6583 
depreciation and impairment losses
balance at 5 january 2008      384  2584  2968 
depreciation charge for the year      39  237  276 
impairment loss      16  22  38 
disposals      07 150 157
effect of movement in foreign exchange      132  654  786 
balance at 4 january 2009      564  3347  3911 
balance at 5 january 2009      564  3347  3911 
depreciation charge for the year      45  272  317 
impairment loss      03  – 03 
disposals      10 90 100
transfer to assets classified as held for sale      28 05 33
effect of movement in foreign exchange      44 233 277
balance at 3 january 2010      530  3291  3821 
carrying amounts
at 5 january 2008      975  1491  2466 
at 4 january 2009      1250  1946  3196 
at 3 january 2010      1097  1665  2762 
assets pledged as security for liabilities
at 3 january 2010 assets with a carrying amount of £43 million 2008 £42 million are subject to registered debentures to secure bank 
loans and other liabilities see note 18
assets classified as held for sale
        2009 2008
        £m £m
land and buildings       13  –
plant and equipment       01  –
        14  – overview
financial statements
governance
business review
112 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
11 intangible assets
       operating   
      intangibles capitalised  
      arising on development computer 
     goodwill acquisition costs software total
     £m £m £m £m £m
cost     
balance at 5 january 2008    571  108  – 95  774 
acquisitions through business combinations    386  322  – – 708 
additions  externally purchased    – – 16  09  25 
disposals    12 – – 01 13
effect of movement in foreign exchange    239  149  – 21  409 
balance at 4 january 2009    1184  579  16  124  1903 
      
balance at 5 january 2009    1184  579  16  124  1903 
acquisitions through business combinations    968  515  – – 1483 
additions  externally purchased    – – 07  09  16 
disposals    02 – – 07 09
effect of movement in foreign exchange    82 56 01 09 148
balance at 3 january 2010    2068  1038  22  117  3245 
amortisation and impairment losses
balance at 5 january 2008    – 13  – 63  76 
amortisation charge for the year    – 22  01  09  32 
disposals    – – – 01 01
effect of movement in foreign exchange    – 10  – 16  26 
balance at 4 january 2009    – 45  01  87  133 
balance at 5 january 2009    – 45  01  87  133 
amortisation charge for the year    – 148  03  12  163 
disposals    – – – 07 07
effects of movement in foreign exchange    – 04 – 09 13
balance at 3 january 2010    – 189  04  83  276 
carrying amounts
at 5 january 2008    571  95  – 32  698 
at 4 january 2009    1184  534  15  37  1770 
at 3 january 2010    2068  849  18  34  2969 
 
operating intangibles arising on acquisition include an order book customer relationships and technology on 5 january 2009 the group 
recognised a £93 million order book on acquisition of clearpower limited this has been amortised over a period of 12 months being the 
period over which the associated orders are fulfilled for further details of acquired operating intangible assets see note 3 no order book 
was recognised in 2008 overview
financial statements
governance
business review
113 the morgan crucible company plc  
 annual report 2009
11 intangible assets continued
impairment test for cashgenerating units containing goodwill
in accordance with the requirements of ias 36 impairment of assets goodwill is allocated to the group’s cashgenerating units that  
are expected to benefit from the synergies of the business combination that gave rise to the goodwill the most significant elements  
of the group’s total consolidated goodwill of £2068 million at 3 january 2010 are allocated to the carbon cashgenerating unit
goodwill is attributed to each cashgenerating unit as follows
        2009 2008
        £m £m
carbon       1170  215 
technical ceramics       672  721 
thermal ceramics       205  225 
molten metal systems       21  23 
        2068  1184 
 
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 cash flows of each cashgenerating unit 
the key assumptions on which the cash flow projections are based relate to growth rates and discount rates
the cash flow projections in year one are based on budgeted operating results for the forthcoming year the budget for 2010 was 
approved in december 2009
growth rates for the period not covered by budgets are specific to each operating division ranging from 44 to 69 2008 44  
to 69 these growth rates reflect the products industries and countries in which the divisions operate these medium to longterm 
growth rates have been reviewed by management during 2009 and are considered to remain appropriate
given the similar risk profiles of each of the operating divisions together with common funding from the central group treasury function 
a standard pretax discount rate of 129 2008 13 based on the group’s weighted average cost of capital has been used in 
discounting the projected cash flows and calculating the terminal value at the end of year five this discount rate has been used as  
the group believes it suitably approximates the rate used by endmarket participants
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 300bps to 159  
if no growth was assumed for years two to five and  
if the cash flow projections of all businesses were reduced by 25   overview
financial statements
governance
business review
114 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
12 other investments
        2009 2008
        £m £m
noncurrent investments
investment in associate       15  64 
equity securities availableforsale       57  52 
        72  116 
 
investment in associates
integrated survivability technologies limited
during the year the group acquired a 50 stake in integrated survivability technologies limited the principal activity of integrated 
survivability technologies limited is acting as prime contractor for delivery of military vehicles and provision of related support services 
total consideration paid including fees was £15 million 
the group’s share of profit after tax in integrated survivability technologies limited was £nil
summary 2009 financial information for the group’s investment in integrated survivability technologies limited not adjusted for the 50 
ownership held by the group
         2009
         £m
current assets        153 
noncurrent assets        01 
total assets        154 
current liabilities        124 
noncurrent liabilities        – 
total liabilities        124 
revenues        440 
profit        –
 
clearpower limited
as described in note 3 during 2009 the group acquired the remaining 51 of the ordinary share capital of clearpower limited as a 
result its results are fully consolidated in the results for the year ended 3 january 2010 in 2008 the group had accounted for its investment 
in clearpower limited as an associate in 2008 the group’s share of profit after tax in its associate for the year was £12 million 
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 £04 million
13 recognised deferred tax assets and liabilities
deferred tax assets and liabilities are attributable to the following
    assets assets liabilities liabilities net net
    2009 2008 2009 2008 2009 2008
    £m £m £m £m £m £m
property plant and equipment   – – 233  235  233  235 
intangible assets   – 07 242  168  242  161 
employee benefits   198 241 – – 198 241
provisions   54 66 – – 54 66
tax value of loss carried forward recognised   75 32 – – 75 32
other items   45 20 – 05  45 15
    372 366 475  408  103  42 
  overview
financial statements
governance
business review
115 the morgan crucible company plc  
 annual report 2009
13 recognised deferred tax assets and liabilities continued
unrecognised deferred tax assets
deferred tax assets have not been recognised in respect of the following items
        2009 2008
        £m £m
deductible temporary differences       389 400
tax losses       439 336
        828 736
movements in temporary differences during the year
  balance  acquired recognised balance  acquired recognised balance
  4 january recognised in business directly 4 january recognised in business directly 3 january
  2008 in income combinations in equity 2009 in income combinations in equity 2010
  £m £m £m £m £m £m £m £m £m
property plant and equipment 184  51  – – 235  02 – –  233 
intangible assets 05  59  97  – 161  60 141  – 242 
employee benefits 126 61 – 54 241 43  – – 198
provisions 60 06 – – 66 12  – – 54
tax value of loss carried 
forward recognised 63 31  – – 32 43 – – 75
others 06 09 – – 15 28 –  02 45
  66 65  97  54 42  78 141  02 103 
 
no deferred income tax is provided on the unremitted earnings of overseas subsidiary undertakings as the group is able to control the 
remittance of such earnings and currently has no intention of making any such remittance where such remittance would incur additional 
tax liabilities
14 inventories
        2009 2008
        £m £m
raw materials and consumables       569  439 
work in progress       324  360 
finished goods       570  640 
        1463  1439 
inventories stated at fair value less costs to sell       25  19 
carrying amount of inventories subject to retention of title clauses      20  23 
 
the group holds consignment inventory amounting to £245 million 2008 £130 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 £44 million were made against inventories and recognised in operating expenses 2008 £46 million  
the group did not reverse any provisions against inventory during 2009 and 2008 overview
financial statements
governance
business review
116 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
15 trade and other receivables
        2009 2008
        £m £m
noncurrent
loan to associate       – 360 
nontrade receivables and prepayments       21  30 
        21  390 
current
trade receivables due from associate       73  03 
other trade receivables       1372  1642 
loans and receivables       1445  1645 
nontrade receivables due from associate       – 57 
other nontrade receivables and prepayments       213  261 
        1658  1963 
 
the group’s exposure to credit and currency risks related to trade and other receivables is disclosed in note 19
16 cash and cash equivalentsbank overdrafts
        2009 2008
        £m £m
bank balances       929  1004 
cash deposits       147  541 
cash and cash equivalents per consolidated balance sheet      1076  1545 
bank balances subject to cash pooling arrangements       – 151
cash and cash equivalents per consolidated statement of cash flows     1076  1394 
bank overdrafts subject to cash pooling arrangements       –  151
other bank overdrafts       12 22
total bank overdrafts       12 173
 
for 2008 in accordance with ias 32 financial instruments presentation bank overdrafts subject to cash pooling arrangements were not 
offset against cash and cash equivalents as the group did not intend to settle on a net basis during 2009 this position was reviewed and 
the group would now intend to settle the pooled balances on a net basis 
reconciliation of cash and cash equivalents to net debt
        2009 2008
        £m £m
opening net borrowings       4298 2098
net new borrowings       355  1272
payment of finance lease liabilities       06  03 
effect of movements in foreign exchange on borrowings      334  931
closing borrowings       3603 4298
cash and cash equivalents per consolidated statement of cash flows     1076  1394 
closing net debt       2527 2904
 
 net debt is defined as interestbearing loans and borrowings bank overdrafts less cash and cash equivalents overview
financial statements
governance
business review
117 the morgan crucible company plc  
 annual report 2009
17 capital and reserves
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
special reserve
a special resolution to cancel the share premium account was passed at the annual general meeting of the company held on 11 june 
1993 this cancellation was confirmed by an order of the high 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 can be written off this reserve together with the amounts standing to the credit of the share premium account 
on 12 october 1990 of £715 million on 19 june 1987 of £389 million and on 27 july 1989 of £123 million which were transferred  
following previous orders of the high 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 the movement  
in 2008 relates to the cancellation of ordinary shares as a result of the share buyback programme
other reserves
the other reserves includes the £108 million increase in the fair value of the group’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 group’s share 
of the results of clearpower limited see note 3 for further details
retained earnings
the company has acquired own shares under a share buyback programme the company has also acquired own shares to satisfy the 
requirements of the various share option incentive schemes the number of treasury shares held by the company at the year end was 
1984022 2008 2593799 1984022 shares were held by the morgan general employee benefit trust 2008 2593799 and nil 
shares were held by the company 2008 nil all rights conferred by those shares are suspended until they are reissued
dividends
the following ordinary dividends were declared and paid by the company 
       per share  total
      2009 2008 2009 2008
      pence pence £m £m
2007 final     – 450 – 121
2008 interim     – 250 – 67
2008 final     450 –  121 –
total     450 700 121 188
 
the company also declared the following ordinary dividend
        per share total
        2009 2009
        pence £m
2009 interim       250 68
        250 68
  overview
financial statements
governance
business review
118 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
17 capital and reserves continued
this ordinary dividend had not been paid by the company as at 3 january 2010 and has not been provided for at the year end
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 3 january 2010 the following dividends were proposed by the directors for 2009 these dividends have not been provided for  
and there are no income tax consequences
         £m
45 pence per qualifying ordinary share        122 
55 cumulative first preference shares see note 30        –
50 cumulative second preference shares see note 30       –
         122 
       authorised  issued
      2009 2008 2009 2008
called up share capital     £m £m £m £m
equity share capital
434650876 2008 434650876 ordinary shares of 25 pence each   1087  1087   
fully paid 270206256 2008 270206256 ordinary shares of 25 pence each    675  675 
      1087  1087  675  675 
preference share capital
125327 authorised and issued 55 cumulative first preference shares of £1 each fully paid 01  01  01  01 
311954 authorised and issued 50 cumulative second preference shares of £1 each fully paid 03  03  03  03 
total preference share capital     04  04  04  04 
total share capital     1091  1091  679  679 
      ordinary shares preference shares
number of shares in issue    2009 2008 2009 2008
in issue at beginning of period    270206256 276414074 437281 437281
exercise of options under the various morgan crucible share option schemes  – 42182 – –
cancelled as a result of share buyback programme    – 6250000 – –
in issue at end of period    270206256 270206256 437281 437281
 
as at the date of this report 270206256 ordinary shares have been issued 2008 270206256
the holders of ordinary 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 overview
financial statements
governance
business review
119 the morgan crucible company plc  
 annual report 2009
17 capital and reserves continued
the following options were outstanding in respect of ordinary shares
   normal exercise dates ranging
number of shares  exercise prices from to
340734 the morgan executive share option scheme 1995 18008p20812p 19 june 2003 22 november 2011
2664743 the morgan crucible sharesave scheme 2004 12800p24900p 1 march 2010 31 may 2013
248274 the morgan crucible savings related share  €164 1 december 2011 31 may 2012 
 options scheme for employees in germany 
1625391 the morgan crucible executive share option  12905p25600p 22 june 2007 20 december 2016 
 scheme 2004 
6148623 the morgan crucible bonus deferral share matching plan 000p19762p 10 march 2011 6 march 2012
9091427 the morgan crucible long term incentive plan 2004 000p 13 june 2010 2 july 2012
 
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
i  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
ii  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
on 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 55pa
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 50pa
third in repaying the capital paid up or credited as paid up on the ordinary shares
fourth any surplus shall be distributed rateably amongst the holders of the ordinary shares in proportion to the nominal amount paid  
up on their respective holdings of shares in the company
18 interestbearing loans and borrowings
this note provides information about the contractual terms of the group’s interestbearing loans and borrowings which are measured  
at amortised cost for more information about the group’s exposure to interest rate and foreign currency risk see note 19
        2009 2008
        £m £m
noncurrent liabilities
us dollar senior notes       2337  2732 
multicurrency revolving facility       1054  1361 
bank and other loans       66  01 
obligations under finance leases       09  15 
        3466  4109 
current liabilities
us dollar senior notes       109  120 
bank and other loans       09  39 
obligations under finance leases       07  08 
        125  167 
  overview
financial statements
governance
business review
120 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
18 interestbearing loans and borrowings continued
terms and debt repayment schedule
the terms and conditions of outstanding loans were as follows
       carrying amount
     nominal year of 2009 2008
    currency interest rate maturity £m £m
684 us dollar senior notes 2013   us 684 2013 231  316 
623 us dollar senior notes 2010   us 623 2010 51  114 
570 us dollar senior notes 2014   us 570 2014 618  692 
612 us dollar senior notes 2017   us 612 2017 1082  1211 
626 us dollar senior notes 2019   us 626 2019 464  519 
multicurrency revolving facility   eur 346 2012 386  961 
multicurrency revolving facility   gbp 381 2012 668  400 
bank and other loans   various 400800 up to 2013 75  40 
obligations under finance leases   various 600 up to 2014 16  23 
total interestbearing loans and borrowings      3591  4276 
 
finance lease liabilities
finance lease liabilities are payable as follows
    minimum   minimum  
    lease   lease  
    payments interest principal payments interest principal
    2009 2009 2009 2008 2008 2008
    £m £m £m £m £m £m
less than one year   08  01  07  09  01  08 
between one and five years   09  – 09  14  01  13 
more than five years   – – – 02  – 02 
    17  01  16  25  02  23 
 
bank and other loans include £02 million 2008 £09 million of loans secured on the assets of the group
as at 3 january 2010 the group had available headroom under the bank syndication of £1714 million 2008 £1545 million
19 financial risk management
overview
the group has exposure to the following risks from its use of financial instruments
credit risk  
liquidity risk  
market risk  
this note presents information about the group’s exposure to each of the above risks and the group’s management of capital further 
quantitative disclosures are included throughout these consolidated financial statements
the board delegates the establishment and implementation of the systems for internal control and risk management to the operating 
divisions which are responsible for the identification and evaluation of significant risks applicable to their area of business together with  
the design and operation of suitable internal controls the board delegates the monitoring and review of the internal control and risk 
management systems to the audit committee assisted by the risk management committee the risk management committee which  
is chaired by the chief financial officer reviews the full range of risks faced by morgan crucible as a group ensures there are adequate 
systems in place and evaluates their effectiveness where necessary the risk management committee will initiate action to improve  
the systems and ensure compliance overview
financial statements
governance
business review
121 the morgan crucible company plc  
 annual report 2009
19 financial risk management continued
credit risk
credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual 
obligations and arises principally from the group’s receivables from customers and investment securities 
the group has set up notional cash pooling agreements with a number of banks under the notional cash pooling agreement the group 
has the legal right to offset liabilities on undrawn bank accounts against surplus balances 
trade and other receivables
the group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer the demographics of the group’s 
customer base including the default risk of the industry and country in which customers operate has less of an 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 group does not require collateral in respect of financial assets
the group serves thousands of customers many of these have purchased the same product for several years and in some cases decades 
others have modified and enhanced designs or adopted the same components into new products extending the lifecycle of the 
components that the group supplies the group’s level of customer retention is very high particularly with its major accounts and 
although the top 20 ranking will alter from year to year many of the names remain consistent over time
the group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables 
and investments the main components of this allowance are a specific loss component that relates to individually significant exposures 
and a general loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified 
the general loss allowance is determined based on historical data of payment statistics for similar financial assets
investments
the group limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have a sound credit rating 
given these high credit ratings management does not expect any counterparty to fail to meet its obligations
exposure to credit risk
the carrying amount of financial assets represents the maximum credit exposure the maximum exposure to credit risk at the reporting 
date was
        carrying amount
        2009 2008
        £m £m
availableforsale financial assets       57  52 
loan to associate       – 360 
loans and receivables       1445  1645
cash and cash equivalents       1076  1545 
        2578  3602
 
the maximum exposure to credit risk for trade receivables at the reporting date by division was
        carrying amount
        2009 2008
        £m £m
carbon       531  440 
technical ceramics       259  335
thermal ceramics       605  813 
molten metal systems       50  57 
        1445  1645 
  overview
financial statements
governance
business review
122 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
19 financial risk management continued
the maximum exposure to credit risk for trade receivables at the reporting date by geographic region was 
        carrying amount
        2009 2008
        £m £m
europe       675  683
americas       443  605 
far east and australasia       287  343
middle east and africa       40  14 
        1445  1645
 
impairment losses
the ageing of trade receivables at the reporting date was
        2009 2008
        £m £m
not past due       1116  1272 
past due 030 days       214  287 
past due 3160 days       56  70 
past due 6190 days       83  30 
past due more than 90 days       78  91 
        1547  1750
impairment allowance       102 105
        1445  1645 
 
the movement in the allowance for impairment in respect of trade receivables during the year was as follows
        2009 2008
        £m £m
balance at beginning of period       105  44 
decreaseincrease in allowance for impairment       03 61 
balance at end of period       102  105 
 
based on past experience the group believes that no impairment allowance is necessary in respect of trade receivables not past due  
a specific impairment allowance may be created in respect of an individual trade receivable for which full recovery is doubtful as at  
3 january 2010 and 4 january 2009 there were no specific impairment allowances that were significant to the group in addition local 
management may create a general impairment allowance to reflect their experience of the historical recoverability of trade receivables  
past due in the respective markets in which their businesses operate       
the allowances in the accounts in respect of trade receivables are used to record impairment losses unless the group 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 overview
financial statements
governance
business review
123 the morgan crucible company plc  
 annual report 2009
19 financial risk management continued
liquidity risk
liquidity risk is the risk that the group will encounter difficulty in meeting the obligations associated with its financial liabilities that are 
settled by cash the group’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 group seeks a balance between certainty of funding and a flexible costeffective borrowing structure the policy is to ensure that  
the group has sufficient liquidity available to meet all foreseeable needs
the following are the undiscounted contracted maturities of financial liabilities including interest payments
      less   2009
   effective carrying contractual than 1 12 25 more than
   interest amount cash flows year years years 5 years
   rate £m £m £m £m £m £m
nonderivative financial liabilities
684 us dollar senior notes 2013  684 231  257  70  66  121  –
623 us dollar senior notes 2010  623 51  51  51  – – –
570 us dollar senior notes 2014  570 618  795  35  35  725  –
612 us dollar senior notes 2017  612 1082  1614  66  66  199  1283 
626 us dollar senior notes 2019  626 464  755  29  29  87  610 
multicurrency revolving facility  369 1054  1107  21  – 1086  –
bank and other loans  400800 75  75  30  – 45  –
bank overdrafts  350 12  12  12  – – –
obligations under finance leases  600 16  17  09  03  05  –
derivative financial liabilities
forward exchange contracts as cash flow hedges   01  01  01  – – –
forward exchange contracts as fair value hedges   04  04  04  – – –
forward exchange contracts as net investment hedges  88  88  47  41  – –
interest rate swaps not designated   05  05  05  – – –
    3701  4781  380  240  2268  1893 
      less   2008
   effective carrying contractual than 1 12 25 more than
   interest amount cash flows year years years 5 years
   rate £m £m £m £m £m £m
nonderivative financial liabilities       
684 us dollar senior notes 2013  684 316  370  83  78  209  –
623 us dollar senior notes 2010  623 114  121  62  59  – –
570 us dollar senior notes 2014  570 692  927  39  39  118  731 
612 us dollar senior notes 2017  612 1211  1877  74  74  222  1507 
626 us dollar senior notes 2019  626 519  875  32  32  97  714 
multicurrency revolving facility  494 1361  1362  01  1361  – –
bank and other loans  400800 40  43  43  – – –
bank overdrafts  675 173  184  184  – – –
obligations under finance leases  60 23  25  09  07  07  02 
derivative financial liabilities       
forward exchange contracts as cash flow hedges   49  49  41  08  – –
forward exchange contracts as net investment hedges  111  111  111  – – –
    4609  5944  679  1658  653  2954  overview
financial statements
governance
business review
124 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
19 financial risk management continued
loans drawn under the £280 million multicurrency revolving facility are repayable within 12 months but have been classified as 
noncurrent as the relevant committed facilities are available until 1 may 2012
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
         2009
      less   more
    carrying contractual than 1 12 25 than 5
    amount cash flows year years years years
    £m £m £m £m £m £m
cash flows associated with derivatives that  
are cash flow hedges 
forward exchange contracts – assets   02  28  28  – – –
forward exchange contracts – liabilities   01 25 25 – – –
    01  03  03  – – –
         2008
      less   more
    carrying contractual than 1 12 25 than 5
    amount cash flows year years years years
    £m £m £m £m £m £m
cash flows associated with derivatives that  
are cash flow hedges
forward exchange contracts – assets   02  257  217  40  – – 
forward exchange contracts – liabilities   49 302 254 48 – –
    47 45 37 08 – –
 
market risk
market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the group’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 group buys and sells derivatives in the ordinary course of business and also incurs financial liabilities in order to manage market risks 
all such transactions are carried out within the guidelines set by the risk management committee generally the group seeks to apply 
hedge accounting in order to manage volatility in profit or loss
interest rate risk
profile
at the reporting date the interest rate profile of the group’s interestbearing financial instruments was
        carrying amount
        2009 2008
        £m £m
fixed rate instruments
financial liabilities       2508 2875
variable rate instruments
financial assets       1076  1544 
financial liabilities       1095 1573
        19 29
 
the group adopts a policy of ensuring that between 30 and 70 of its exposure to changes in interest rates on borrowings is on a fixed 
rate basis overview
financial statements
governance
business review
125 the morgan crucible company plc  
 annual report 2009
19 financial risk management continued
fair value sensitivity analysis for fixed rate instruments
the group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss
cash flow sensitivity analysis for variable rate instruments
a change of 100 basis points in interest rates on the outstanding bank syndication debt at the reporting date would have increased
decreased profit or loss by the amounts shown below this analysis assumes that all other variables in particular foreign currency rates 
remain constant the analysis is performed on the same basis for 2008
         profi t or loss
        100 bps 100 bps
        increase decrease
        £m £m
3 january 2010
variable rate instruments       11  05
cash flow sensitivity net       11  05
4 january 2009
variable rate instruments       14  14
cash flow sensitivity net       14  14
 
foreign currency risk
the table below shows the group’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 group that are not 
denominated in the functional currency of the operating company involved other than certain nonsterling borrowings treated as hedges 
of net investments in overseas entities
      2009   2008
    gbp us euro gbp us euro
functional currency of group operations   £m £m £m £m £m £m
trade receivables   41  02  32  09  119  73 
cash and cash equivalents   89  02  19  06  214  120 
trade payables   19 10 17 53 75 33
net balance sheet exposure   111  06 34  38 258  160 
the amounts shown in the table take into account the effect of the forward contracts entered into to manage these currency exposures
       average rate  yearend rate
      2009 2008 2009 2008
us     15687 18552  16149  14450 
euro     11249 12582  11255  10408 
the group aims to hedge all material trade receivables and trade payables denominated in a foreign currency at any point in time the 
group also hedges up to 75 of its estimated foreign currency exposure in respect of forecasted sales and purchases over the following 
12 months the group uses forward exchange contracts to hedge its foreign currency risk most 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 group 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
forecasted transactions
the group classifies its forward exchange contracts hedging forecasted transactions as cash flow hedges and states them at fair value  
the net fair value of forward exchange contracts used as hedges of forecasted transactions at 3 january 2010 was a loss of £04 million 
2008 loss £46 million comprising assets of £01 million 2008 £02 million and liabilities of £05 million 2008 £48 million that were 
recognised in fair value derivatives
cash flow hedges
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 overview
financial statements
governance
business review
126 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
19 financial risk management continued
hedge of net investment in foreign subsidiaries       
the group manages the translation exposure of overseas net assets by seeking to match the currency of borrowings with the currency in 
which the net assets are denominated the objectives are to maintain a low cost of borrowing whilst maintaining a balanced portfolio of 
net assets by currency
the group enters into forward contracts to hedge net investments in overseas subsidiaries the group also designates the euro 
drawdowns under the us280 million multicurrency revolving credit facility as a hedge of the group’s investment in subsidiaries  
in europe euro drawdowns during the year amounted to w435 million 2008 €1000 million
sensitivity analysis
the group’s sensitivity to changes in foreign exchange rates on financial assets and liabilities as at 3 january 2010 is set out in the table 
below the impact of a weakening in sterling on the group’s financial assets and liabilities would be more than offset in equity and income 
by its impact on the group’s overseas net assets and earnings respectively sensitivity on group assets other than financial assets and 
liabilities is not included in this analysis
the amounts generated from the sensitivity analysis are forwardlooking estimates of market risk assuming certain adverse market 
conditions occur actual results in the future may differ materially from those projected results due to developments in the global financial 
markets which may cause fluctuations in interest and exchange rates to vary from the hypothetical amounts disclosed in the table below 
which therefore should not be considered a projection of likely future events and losses
the estimated changes for foreign exchange rates are based on an instantaneous 10 weakening or strengthening in sterling against all 
other currencies from the levels applicable at 3 january 2010 with all other variables remaining constant such analysis is for illustrative 
purposes only  in practice market rates rarely change in isolation
       10 weakening in sterling
         profi t 
        equity before tax
3 january 2010       £m £m
us       205 16
euro       55 02
other       12  –
       10 weakening in sterling
         profi t 
        equity before tax
4 january 2009       £m £m
us       264 18
euro       80 13
other       69  –
 
the impact of a one cent movement in the us exchange rate on results that are reported in us including those currencies that track  
the us would be circa £19 million of revenue and £02 million of underlying operating profit
other market price risk
equity price risk arises from availableforsale equity securities held for meeting partially the unfunded portion of the group’s defined 
benefit pension obligations the primary goal of the group’s investment strategy is to maximise returns in order to meet partially the 
group’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 group the main kpi for the group is the underlying profit margin the aim is to achieve midteen margins in  
good times and doubledigit margins when the environment is more challenging another measure the economic valueadded ratio eva 
compares the returns made by our divisions with the notional cost of investing in them the group uses this ratio to ascertain where to 
make capital investments within the group the basic calculation deducts the cost of capital from the net operating profit after allowing  
for a notional mediumterm tax charge
the board encourages employees of the group to hold the company’s ordinary shares the group 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 group’s various share option incentive 
schemes the company may also acquire its own shares under a share buyback programme overview
financial statements
governance
business review
127 the morgan crucible company plc  
 annual report 2009
19 financial risk management continued
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 group’s debt to adjusted capital ratio at the end of the reporting period was as follows
        2009 2008
        £m £m
total interestbearing loans and borrowings       3591  4276 
less cash and cash equivalents and overdrafts       1064 1372
net debt       2527  2904 
total equity       2146  2080 
less amounts accumulated in equity relating to cash flow hedges      02 46 
adjusted capital       2144  2126 
debt to adjusted capital ratio       12 14
 
there were no changes in the group’s approach to capital management during the year
neither the company nor any of its subsidiaries are subject to externally imposed capital requirements
fair values
the fair values of financial assets and liabilities together with the carrying amounts shown in the balance sheet are as follows
      carrying  carrying 
      amount fair value amount fair value
      2009 2009 2008 2008
      £m £m £m £m
financial assets and liabilities at amortised cost
684 us dollar senior notes 2013     231 238 316 343
623 us dollar senior notes 2010     51 51 114 117
570 us dollar senior notes 2014     618 633 692 795
612 us dollar senior notes 2017     1082 1100 1211 1476
626 us dollar senior notes 2019     464 462 519 650
bank syndication     1054 1054 1361 1361
bank and other loans     75 75 40 40
bank overdrafts     12 12 173 173
obligations under finance leases     16 16 23 23
trade and other payables     1512 1512 943 943
loan to associate     –  – 360  360 
loans and receivables     1445  1445  1645  1645 
cash and cash equivalents     1076  1077  1545  1545 
      2594 2631 1842 2371
availableforsale financial instruments
availableforsale financial assets     57  57  52  52 
derivatives and other items at fair value
forward exchange contracts used for hedging
 assets     05  05  02  02 
 liabilities     98 98 160 160
      93 93 158 158
      2630 2667 1948 2477
unrecognised profitloss      37  529 overview
financial statements
governance
business review
128 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
19 financial risk management continued
estimation of fair values
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
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 
receivablespayables are discounted to determine the fair value
interest rates used for determining fair value
the interest rates used to determine the fair value of loans and borrowings and finance leases are as follows
        2009 2008
         
loans and borrowings       2763 2040
finance leases       60 60
 
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
      level 1 level 2 level 3 total
3 january 2010     £m £m £m £m
availableforsale financial assets     57  – – 57 
derivative financial assets     – 05  – 05 
      57  05  – 62 
     
derivative financial liabilities     – 98 – 98
      57  93 – 36
      level 1 level 2 level 3 total
4 january 2009     £m £m £m £m
availableforsale financial assets     52  –  – 52 
derivative financial assets     – 02  – 02 
      52  02  – 54 
derivative financial liabilities     – 160 – 160
      52  158 – 106
there have been no transfers between level 1 and level 2 during 2009 and 2008 overview
financial statements
governance
business review
129 the morgan crucible company plc  
 annual report 2009
20 employee benefits
morgan crucible operates a number of defined benefit arrangements as well as defined contribution plans the defined benefit plans are 
primarily in the uk usa and europe and predominately provide pensions based on service and career average pay in addition 
postretirement medical plans are operated in the usa
        2009 
     2009 2009 2009 rest of 2009 
     uk usa europe world total
     £m £m £m £m £m
pension plans and employee benefits 
present value of unfunded defined benefit obligations    – 87 225 21 333
present value of funded defined benefit obligations    3334 1114 10 100 4558
fair value of plan assets    2989  739  05  97  3830 
deficit    345 462 230 24 1061
unrecognised past service costs    – – 02  – 02 
net obligations    345 462 228 24 1059
      
movements in present value of defined benefit obligation     
at 5 january 2009    2785 1316 250 112 4463
current service cost    14 20 04 14 52
interest cost    177 73 11 03 264
actuarial losses    501 15 07 07 530
benefits paid    158  72  13  16  259 
contributions by members    15 – – – 15
past service costs    – – 02 – 02
curtailments and settlements    – 13  07  – 20 
exchange adjustments    – 138  19  01 156 
at 3 january 2010    3334 1201 235 121 4891
      
movements in fair value of plan assets     
at 5 january 2009    2654  702  06  83  3445 
expected return on plan assets    177  41  – 03  221 
actuarial gains    254  76  – 13  343 
contributions by employer    47  67  12  14  140 
contributions by members    15  – – – 15 
benefits paid    158 72 13 16 259
exchange adjustments    – 75 – – 75
at 3 january 2010    2989  739  05  97  3830 
actual return on assets    431  117  – 16  564 
        2009  
     2009 2009 2009 rest of 2009
     uk usa europe world total
     £m £m £m £m £m
pension plans and employee benefits
expense recognised in the consolidated income statement
current service cost and past service cost    14 20 04 14 52
interest on defined benefit pension plan obligation    177 73 11 03 264
expected return on defined benefit pension plan assets   177  41  – 03  221 
gain on curtailment of us and french employee benefit schemes   – 13  07  – 20 
total expense    14 39 08 14 75
  overview
financial statements
governance
business review
130 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
20 employee benefits continued
the expense is recognised in the following line items in the consolidated income statement
        2009 2008
        £m £m
operating costs       32 67
finance income       221  257 
finance expense       264 256
        75 66
the group has adopted the policy of recognising actuarial gains and losses immediately in the balance sheet through other comprehensive 
income cumulative actuarial losses recorded in other comprehensive income since 5 january 2004 the date of transition to adopted 
ifrss are £957 million
the fair value of the plan assets were as follows
        2009 
     2009 2009 2009 rest of 2009
     uk usa europe world total
     £m £m £m £m £m
equities    1250  397  – – 1647 
bonds    64  338  – – 402 
matching insurance policies    1675  – 05  17  1697 
other    – 04  – 80  84 
total    2989  739  05  97  3830 
 
principal actuarial assumptions were
     uk usa europe
       
discount rate    580 610 520
expected rate of return on plan assets – equities   840 900 na
  – bonds   530 570 na
  – matching insurance   580 na 520
salary increase    na 270 250
inflation    350 220 200
pensions increase    340340 na 200
mortality – postretirement
life expectancy of a male retiring at age 60 in 2009    258 years 212 years 225 years
life expectancy of a male retiring at age 60 in 2029    271 years 210 years 250 years
 
expected rates of return on plan assets are determined by reference to relevant indices the overall expected rate of return is calculated by 
weighting the individual rates in accordance with the anticipated balance in the plan’s investment portfolio
     2009 2008 2007 2006 2005
     £m £m £m £m £m
balance sheet
present value of defined benefit obligation    4891 4463 4507 4461 4663
fair value of plan assets    3830  3445  4030  4034  3421 
deficit    1061 1018 477 427 1242
unrecognised past service costs    02  – – – –
net obligations    1059 1018 477 427 1242 overview
financial statements
governance
business review
131 the morgan crucible company plc  
 annual report 2009
20 employee benefits continued
     2009 2008 2007 2006 2005
     £m £m £m £m £m
experience lossesgains
experience lossesgains on defined benefit obligation   22 17  02 20 86
experience gainslosses on plan assets    343  1047 175 72  260 
 
the sensitivities regarding the principal assumptions used to measure the scheme liabilities are
        2009 2008
        increase increase
        effect effect
  change in assumption      £m £m
discount rate decrease by 01      58  49 
rate of increase in salaries increase by 01      01  01 
inflation increase by 01      36  28 
mortality – postretirement pensioners live 1 year longer     88  82 
 
the 2009 expense recognised in the consolidated income statement includes a £13 million gain on curtailment of us employee benefit 
schemes the curtailment gain of £07 million in europe arose as a result of two european employee benefit schemes being withdrawn 
the unrecognised past service cost in france was as a result of a change in future benefit accrual this will be amortised over 13 years 
        2008 
     2008 2008 2008 rest of 2008
     uk usa europe world total
     £m £m £m £m £m
pension plans and employee benefits
present value of unfunded defined benefit obligations    – 101 239 21 361
present value of funded defined benefit obligations    2785 1215 11 91 4102
fair value of plan assets    2654  702  06  83  3445 
net obligations    131 614 244 29 1018
      
movements in present value of defined benefit obligation     
at 5 january 2008    3251 950 201 105 4507
current service cost    26 19 05 15 65
interest cost    184 59 10 03 256
actuarial gains    552  11  12  02  577 
benefits paid    143  56  13  12  224 
contributions by members    17 – – – 17
curtailments and settlements    02 – – – 02
exchange adjustments    – 355 59 03 417
at 4 january 2009    2785 1316 250 112 4463
      
movements in fair value of plan assets     
at 5 january 2008    3226  712  05  87  4030 
expected return on plan assets    201  53  – 03  257 
actuarial losses    711 331 – 05 1047
contributions by employer    64  50  13  10  137 
contributions by members    17  – – – 17 
benefits paid    143 56 13 12 224
exchange adjustments    – 274  01  – 275 
at 4 january 2009    2654  702  06  83  3445 
actual return on assets    510 278 – 02 790
  overview
financial statements
governance
business review
132 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
20 employee benefits continued
        2008 
     2008 2008 2008 rest of 2008
     uk usa europe world total
     £m £m £m £m £m
expense recognised in the consolidated income statement
current service costs    28 19 05 15 67
interest on defined benefit pension plan obligation    184 59 10 03 256
expected return on defined benefit pension plan assets   201  53  – 03  257 
total expense    11 25 15 15 66
the fair values of the plan assets were as follows
        2008 
     2008 2008 2008 rest of 2008
     uk usa europe world total
     £m £m £m £m £m
equities    978  353  – – 1331 
bonds    71  345  – – 416 
matching insurance policies    1533  – 06  16  1555 
other    72  04  – 67  143 
total    2654  702  06  83  3445 
 
principal actuarial assumptions were
     uk usa europe
       
discount rate    650 610 560
expected rate of return on plan assets – equities   800 800 na
  – bonds   500 470 na
  – matching insurance   650 na 560
salary increase    na 250 250
inflation    280 200 200
pensions increase    260315 na 200
mortality  postretirement
life expectancy of a male retiring at age 60 in 2008    257 years 212 years 225 years
life expectancy of a male retiring at age 60 in 2028    271 years 212 years 254 years
 
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 company’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
defined contribution plans
the group operates a number of defined contribution pension plans the total expense relating to these plans in the current year was  
£39 million 2008 £26 million
sharebased payments
during 2004 the group established a new long term incentive plan and a new executive share option scheme during 2004 the 
company also renewed its allemployee sharesave scheme and took the opportunity to extend a similar scheme to employees in germany
during 2005 2006 2007 2008 and 2009 the group made awards under the 2004 long term incentive plan during 2005 and 2006 the 
group made awards under the 2004 executive share option scheme also in 2005 2007 2008 and 2009 the company granted options 
under the uk allemployee sharesave scheme and in 2008 the company granted options under the german allemployee sharesave scheme
during 2008 the group established the morgan crucible bonus deferral share matching plan and awards were made under this plan  
in 2008 and 2009
additionally equitysettled share option grants and awards made under the executive share option scheme 1995 are outstanding in accordance 
with the transitional provisions under ifrs 1 the recognition and measurement principles in ifrs 2 have not been applied to these grants overview
financial statements
governance
business review
133 the morgan crucible company plc  
 annual report 2009
20 employee benefits continued
the terms and conditions of all awards and grants made since 7 november 2002 are as follows
 number  contractual
grant dateemployees entitled of instruments vesting conditions life of option
awards granted to senior employees in 2009 under   three years of service plus  
the morgan crucible bonus deferral share matching plan 3426473 satisfaction of performance criteria 3 years
options granted to uk employees in 2009     
under the employee sharesave scheme 2004 1937568 three years of service 3 years
awards granted to senior employees in 2009   three years of service plus 
under the long term incentive plan 2004 5085721 satisfaction of performance criteria 3 years
awards granted to senior employees in 2008 under   three years of service plus  
the morgan crucible bonus deferral share matching plan 2888005 satisfaction of performance criteria 3 years
options granted to uk employees in 2008  
under the employee sharesave scheme 2004 1089783 three years of service 3 years
options granted to german employees in 2008 under 
the morgan crucible savings related share option  
scheme for employees in germany 278451 three years of service 3 years
awards granted to senior employees in 2008   three years of service plus satisfaction 
under the long term incentive plan 2004 2691123 of performance criteria 3 years
options granted to uk employees in 2007 under  
the employee sharesave scheme 2004 856885 three years of service 3 years
awards granted to senior employees in 2007   three years of service plus 
under the long term incentive plan 2004 1540000 satisfaction of performance criteria 3 years
options granted to senior employees in 2006   three years of service plus 
under the directors’ share option plan 2006 1000000 satisfaction of performance criteria 10 years
options granted to senior employees in 2006  three years of service plus 
under the executive share option scheme 2004 398500 satisfaction of performance criteria 10 years
awards granted to senior employees in 2006  three years of service plus 
under the long term incentive plan 2004 477500 satisfaction of performance criteria 3 years
options granted to uk employees in 2005  
under the employee sharesave scheme 2004 976614 three years of service 3 years
awards granted to senior employees in 2005   three years of service plus  
under the long term incentive plan 2004 3804820 satisfaction of performance criteria 3 years
awards granted to senior employees in 2004   three years of service plus 
under the long term incentive plan 2004 5084031 satisfaction of performance criteria 3 years
options granted to senior employees in 2005 under   three years of service plus  
the executive share option scheme 2004 2097000 satisfaction of performance criteria 10 years
options granted to senior employees in 2004   three years of service plus 
under the executive share option scheme 2004 3157500 satisfaction of performance criteria 10 years
options granted to uk employees in 2004  
under the employee sharesave scheme 2004 521884 three years of service 3 years
options granted to german employees in 2004 under 
the morgan crucible savings related share option  
scheme for employees in germany 516844 three years of service 3 years
options granted to uk employees in 2003 under  
the employee sharesave scheme 1995 779421 three years of service 3 years
options granted to senior employees in 2004 under   three years of service plus 
the executive share option scheme 1995 263000 satisfaction of performance criteria 10 years
options granted to senior employees in 2002 under   three years of service plus satisfaction 
the executive share option scheme 1995 1780000 of performance criteria 10 years overview
financial statements
governance
business review
134 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
20 employee benefits continued
performance criteria for long term incentive plan 2004 directors’ share option plan 2006 and  
executive share option scheme 2004
for awards granted from 2004 to 2006 inclusive the extent to which awards vested depended on the company’s total shareholder  
return ‘tsr’ ranking against the tsr of the other companies in the ftse 350 measured over the performance period
if the company’s tsr placed it at the median then 30 of the awards would vest on the third anniversary of the date of the grant
if the company’s tsr placed it at the upper quartile then 100 of the option would vest on the third anniversary of the date of grant 
between the median and upper quartile the option would vest on a straightline basis below the median none of the shares would vest
in 2007 additional performance criteria were attached to the long term incentive plan 2004 the tsr performance criteria referred to 
above now only relate to 50 of awards made the extent to which the other 50 of these awards vest will depend on the company’s 
earnings per share ‘eps’ compared with the retail price index ‘rpi’ the full 50 will vest if over the threeyear performance period the 
company’s eps increases by more than the sum of the annual rpi increase and 10 per annum if the company’s eps increases by more 
than the sum of the annual rpi increase and between 4 and 10 per annum then the proportion of awards vesting will be interpolated 
between 15 and 50 if the company’s eps increases by more than the sum of the annual rpi increase and 4 per annum then 15 
of the awards will vest if the company’s eps increases by less than the sum of the rpi increase and 4 per annum then 0 of the awards 
will vest
in 2008 further changes were made to the performance criteria attached to the long term incentive plan 2004 for awards made in 2008 
and onwards for all participants excluding executive directors the tsr performance criteria referred to above now only relate to 333  
of awards made the extent to which the other 667 of these awards vest will depend on the company’s eps compared with the rpi 
the full 667 will vest if over the threeyear performance period the company’s eps increases by more than the sum of the annual rpi 
increase and 10 per annum if the company’s eps increases by more than the sum of the annual rpi increase and between 4 and 10 
per annum then the proportion of awards vesting will be interpolated between 15 and 50 if the company’s eps increases by more 
than the sum of the annual rpi increase and 4 per annum then 15 of the awards will vest if the company’s eps increases by less than 
the sum of the rpi increase and 4 per annum then 0 of the awards will vest for executive director participants the conditions remain 
unchanged from 2007
in 2009 further changes were made to the performance criteria attached to the long term incentive plan 2004 for all participants the  
tsr performance criteria referred to above now relate to 1000 of awards made 
in addition an improvement must be shown in the company’s underlying financial performance
performance criteria for the morgan crucible bonus deferral share matching plan
the extent to which awards will vest will depend on the company’s eps compared with the rpi participants are able to defer up to 75 
of their annual bonus into company shares subject to approval by the remuneration committee under the 2008 grant the remuneration 
committee allowed participants to defer up to 50 of their annual bonus into company shares participants must hold the deferred 
shares for three years to be eligible for a matching award matching shares may be earned at the end of three years in the event that a 
stretching eps target has been met if the company’s eps increases by more than the sum of the annual rpi increase and 15 per annum 
then matching shares equal to three times the deferred shares will be earned if the company’s eps increases by more than the sum of  
the annual rpi increase and between 4 and 10 per annum then the proportion of awards will be interpolated between 025x deferred 
shares and 175x deferred shares if the company’s eps increases by more than the sum of the annual rpi increase and 4 per annum 
then matching shares equal to 025x deferred shares will be earned if the company’s eps increases by less than the sum of the rpi 
increase and 4 per annum then 0 of the awards will vest
in 2009 additional criteria were attached to the bonus deferral share matching plan under the 2009 grant the remuneration committee 
allowed participants to defer up to 50 of their annual bonus into company shares participants must hold the deferred shares for  
three years to be eligible for a matching award matching shares may be earned at the end of three years in the event that a stretching  
eps target has been met if the company’s eps increases by more than 15 per annum then matching shares equal to three times the 
deferred shares will be earned if the company’s eps increases by between 4 and 10 per annum then the proportion of awards will  
be interpolated between 025x deferred shares and 175x deferred shares if the company’s eps increases by more than 4 per annum 
then matching shares equal to 025x deferred shares will be earned if the company’s eps increases by less than 4 per annum then 0 
of the awards will vest overview
financial statements
governance
business review
135 the morgan crucible company plc  
 annual report 2009
20 employee benefits continued
performance criteria for the executive share option scheme 1995
the diluted earnings per share for the company must grow by at least 2 per annum in excess of rpi over the period of date of grant  
to date of vesting
the fair values of services received are in return for awards made and share options granted the estimate of the fair value of the services 
received is measured based on an appropriate model as shown in accounting policy note ‘n’ in the case of the binomial lattice model and 
monte carlo model the contractual life of the options and awards are used as an input expectations of early exercise are incorporated into 
both of these models
long term incentive plan 2004       
         2009 awards
fair value at measurement date        4537p
share price        8985p
exercise price        na
expected volatility expressed as weighted average volatility used in the model     40
option life expressed as weighted average life used in the model       3 years
expected dividends        700
riskfree interest rate        43
 
the morgan crucible bonus deferral share matching plan
         2009 awards
fair value at measurement date        8075p
share price        8075p
exercise price        na
expected volatility expressed as weighted average volatility used in the model     40
option life expressed as weighted average life used in the model       3 years
expected dividends        na
riskfree interest rate        na
 
executive share option scheme 2004
there were no awards during 2009
employee sharesave schemes uk
         2009 awards
fair value at measurement date        5603p
share price        16000p
exercise price        12800p
expected volatility expressed as weighted average volatility used in the model     40
option life expressed as weighted average life used in the model       3 years
expected dividends        25
riskfree interest rate        21
 
the morgan crucible savings related share options scheme for employees in germany
there were no awards during 2009
employee share option scheme 1995
there were no awards during 2009
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 overview
financial statements
governance
business review
136 the morgan crucible company plc  
 annual report 2009
notes to the consolidated financial statements
continued
20 employee benefits continued
the number and weighted average exercise prices of share options are as follows
     weighted  weighted
     average number average number
     exercise price of options exercise price of options
     3 january 3 january 4 january 4 january
     2010 2010 2009 2009
outstanding at the beginning of the period    9408p 13455505  9986p 11803800 
granted during the period    2833p 10449762  5124p 6947362 
forfeited during the period    14995p 1283019 15389p 895840
exercised during the period    000p – 2709p 4160580
lapsed during the period    18121p 2503056 7634p 239237
outstanding at the end of the period    4553p 20119192  9408p 13455505 
exercisable at the end of the period    15371p 1625391  15739p 2449879 
 
the weighted average share price at the date of share options exercised during the period was nil pence 2008 21652 pence
the options outstanding at the year end have an exercise price in the range nil to 25600 pence and a weighted average contractual life  
of 07 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 estimates of the fair value of the services received is measured based on either a monte carlo model a binomial lattice option  
pricing model or a blackscholes merton model the choice of model takes into account the terms and conditions upon which the options 
were granted 
the ifrs 2 fair value charge expensed to the income statement was £20 million 2008 £22 million
21 provisions
      closure and   
      restructuring other environmental 
      provisions provisions provisions total
      £m £m £m £m
balance at 4 january 2009     51  103  43  197 
provisions made during the year     87  40  13  140 
provisions used during the year     62 53 13 128
provisions reversed during the year     02 28 05 35
effect of movements in foreign exchange     01 04 05 10
balance at 3 january 2010     73  58  33  164 
current     42  38  29  109 
noncurrent     31 20 04 55 
      73  58  33  164 
 
closure and restructuring provisions are based on the group’s restructuring programmes and represent committed expenditure at  
the balance sheet date the amounts provided are based on the costs of terminating relevant contracts under the contract terms and 
management’s best estimate of other associated restructuring costs including professional fees 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 offices of the company’s former headquarters net of expected rental income under subleases the lease expires in 2016
other provisions include the settlement of european class actions together with the associated legal costs the estimated costs are based on 
the group’s assessment of the probable future costs of these activities the group expects to incur most of the liability in more than one year
environmental provisions are for known environmental issues which the group 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 group expects to incur most of the liability over the next five years overview
financial statements
governance
business review
137 the morgan crucible company plc  
 annual report 2009
22 trade and other payables
        2009 2008
        £m £m
noncurrent
other trade payables       05 04 
nontrade payables        312  36 
        317  40 
current
other trade payables       966  939 
nontrade payables and accrued expenses       1537  1270 
        2503  2209 
 
included in current nontrade payables and accrued expenses and noncurrent nontrade payables is £266 million and £275 million 
respectively of deferred contingent consideration on purchase of 51 of the ordinary share capital of clearpower limited for further 
details see note 3
23 operating leases
leases as lessee
noncancellable operating lease rentals are payable as follows
        2009 2008
        £m £m
less than one year       79  61 
between one and five years       196  182 
more than five years       320  346 
        595  589 
 
the group 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
leases as lessor
the total of future minimum sublease income under noncancellable subleases is £28 million 2008 £53 million
24 capital commitments
commitments for property plant and equipment and computer software expenditure for which no provision has been made in these 
accounts amount to £27 million 2008 £38 million for the group
25 contingencies
there are contingent liabilities on bills discounted by the group amounting to £08 million 2008 £08 million
the group has been subject to legal claims in the usa canada and europe settlements for the majority of these have been agreed  
there remain provisions in respect of these claims of £07 million 2008 £23 million the board having taken legal advice is of the opinion 
that the remainder of these actions will not have a material impact on the group’s financial position
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 overview
financial statements
governance
business review
138 the morgan crucible company plc  
 annual report 2009
26 related parties
identification of related parties
the group has related party relationships with its subsidiaries a list of principal subsidiary undertakings is shown in note 43 with its 
associates see note 12 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 group and parent company consists of the board of directors and members of the executive committee
their compensation charged in the year was
        2009 2008
        £m £m
shortterm employee benefits       24  31 
pension and other postemployment costs       03  03 
sharebased payments       07  08 
termination payments       – 04 
nonexecutive directors’ fees and benefits       03  03 
total compensation of key management personnel       37  49 
 
information on executive directors’ remuneration is given in the remuneration report on pages 77 to 85
transactions in connection with former directors
during the year the group made payments on behalf of former chief executive ian norris of £15 million 2008 £10 million to cover the 
costs of his legal defence against extradition to stand trial in the usa in addition the group recovered fees of £16 million 2008 £nil million 
in respect of court cost awards relating to legal costs expended on behalf of ian norris in prior periods the group also made payments  
to former chief executive warren knowlton to reimburse him for us employer social costs in respect of his time with the group
other related party transactions
        2009 2008
        £m £m
sales to associates       124  36 
interest income from associate       – 41 
 
the balances with our associates are shown in note 15
during the year the group acquired a controlling interest in clearpower limited as a result clearpower limited ceased to be an associate 
and is accounted for as a subsidiary from the date control was attained the group had related party relationships with clearpower 
limited as an associate in the comparative year
in 2009 the group acquired a significant interest in integrated survivability technologies limited and started to account for it as an 
associate the transactions with associates reported in 2009 refer to integrated survivability technologies limited
27 subsequent events
there have been no material events since the year end
notes to the consolidated financial statements
continued overview
financial statements
governance
business review
139 the morgan crucible company plc  
 annual report 2009
company balance sheet
as at 3 january 2010
        2009 2008
       note £m £m
fixed assets   
tangible assets      31 18  22 
investment in subsidiary undertakings      32 7907  6938 
other investments      33 – 51 
        7925  7011 
current assets
debtors – due within one year      34 369  632 
 – due after one year      34 – 373 
total debtors       369  1005 
cash at bank and in hand       85  276 
        454  1281 
creditors – amounts falling due within one year      35 635  425 
net current assets       181 856 
total assets less current liabilities       7744  7867 
creditors – amounts falling due after more than one year
amounts payable to subsidiary undertakings       1787  1960 
other creditors including deferred consideration      35 276  –
derivative financial liabilities      35 41  08 
borrowings      36 1054  1361 
        3158  3329 
provisions for liabilities and charges      37 28  47 
        3186  3376 
net assets       4558  4491 
capital and reserves
equity shareholders’ funds
 called up share capital      17 675  675 
 share premium account      38 853  853 
 merger reserve      38 170  170 
 capital redemption reserve      38 357  357 
 profit and loss account      38 2499  2432 
        4554  4487 
nonequity shareholders’ funds
 called up share capital       04  04 
shareholders’ funds       4558  4491 
   
the financial statements were approved by the board of directors on 18 february 2010 and were signed on its behalf by
mark robertshaw chief executive officer
kevin dangerfield chief financial officer overview
financial statements
governance
business review
140 the morgan crucible company plc  
 annual report 2009
notes to the company balance sheet
 
28 accounting policies
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 financial statements have been prepared in accordance with applicable accounting standards and under the historical cost  
accounting rules
under section 4084 of the companies act 2006 the company is exempt from the requirement to present its own profit and  
loss account
under frs 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
fixed 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
buildings – 50 years 
motor vehicles – 3 years 
fixtures – 1020 years 
computer software – 36 years
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 currency 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
rentals 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 groupwide pension scheme providing benefits based on career average 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 frs 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 refer to note 40 for the additional disclosures required by frs 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 frs 19 deferred tax
classification of financial instruments issued by the company
following the adoption of frs 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
a  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
b  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 called up 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 overview
financial statements
governance
business review
141 the morgan crucible company plc  
 annual report 2009
28 accounting policies continued
hedging instruments and hedged items are accounted for separately in the balance sheet gains and losses on both are included in profit 
for the year when they arise fair value hedges or when the hedged transaction occurs having first recorded those on the hedging 
instrument in equity cash flow hedges to the extent effective
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 changes in the fair value of such instruments during the year were recognised immediately in the profit and loss account
own shares held by esop trust
transactions of the groupsponsored esop 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 unconditionally 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 20
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 
authorised and are no longer at the discretion of the company unpaid 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 group 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
29 staff numbers and costs
the average number of persons employed by the company including directors during the year analysed by category was as follows 
        number of employees
        2009 2008
directors and head office staff       23 21
global business units’ staff       13 14
        36 35
 
the majority of the directors and head office staff devote a proportion of their time to global business duties of the 23 directors and  
head office staff the average number who spent all or a proportion of their time on corporate duties was eight 2008 eight as shown  
in note 5
the aggregate payroll costs of these persons were as follows
        2009 2008
        £m £m
wages and salaries       49  60 
sharebased payments see note 20       20  22 
social security costs       11  14 
other pension costs       06  08 
total overhead employee cost       86  104 
  overview
financial statements
governance
business review
142 the morgan crucible company plc  
 annual report 2009
notes to the company balance sheet
continued 
30 dividends
dividends payable for the first and second preference shares were £22491 2008 £22491 of which £11245 2008 £11244 was 
outstanding at the balance sheet date
for proposed ordinary dividends see the consolidated income statement on page 88
31 tangible assets
         plant equipment
         and fixtures
         £m
cost  
at 5 january 2009        40
additions        01
at 3 january 2010        41
accumulated depreciation
at 5 january 2009        18
amount provided for in the year        05
at 3 january 2010        23
net book amounts at 3 january 2010        18
net book amounts at 4 january 2009        22
32 investment in subsidiary undertakings
       shares loans total
       £m £m £m
cost
at 5 january 2009      5878  1554  7432 
additions      666  819  1485 
less disposalsloan repaymentsliquidations      108 392 500
at 3 january 2010      6436  1981  8417 
amounts provided
at 5 january 2009      457  37  494 
provided in the year      16  – 16 
at 3 january 2010      473  37  510 
net book amounts at 3 january 2010      5963  1944  7907 
net book amounts at 4 january 2009      5421  1517  6938 
 
a list of principal subsidiary undertakings is shown in note 43 overview
financial statements
governance
business review
143 the morgan crucible company plc  
 annual report 2009
33 other investments
         £m
at 5 january 2009        51 
amounts received from subsidiary undertakings        51
at 3 january 2010        – 
34 debtors
        2009 2008
        £m £m
due within one year   
other debtors       19  06 
interest receivable from associate       – 56 
derivative financial assets       10  42 
prepayments and accrued income       07  07
amounts receivable from subsidiary undertakings       333  521 
        369  632 
due after one year
loan to associate       – 360
prepayments and accrued income       – 05 
derivative financial assets       – 08
        – 373
35 creditors
        2009 2008
        £m £m
due within one year
bank overdrafts       85  86 
trade creditors       10  19 
amounts payable to subsidiary undertakings       147  81 
other creditors including deferred consideration       290  06 
accruals and deferred income       48  79 
derivative financial liabilities       55  154 
        635  425 
due after one year
other creditors including deferred consideration       276  – 
derivative financial liabilities       41  08
        317 08
36 borrowings
        2009 2008
        £m £m
bank and other loans       1054  1361 
bank overdrafts       85  86 
        1139  1447 
less amount repayable within one year included within current liabilities     85 86
total repayable after more than one year       1054  1361  overview
financial statements
governance
business review
144 the morgan crucible company plc  
 annual report 2009
notes to the company balance sheet
continued 
37 provisions for liabilities and charges
     closure and   
     restructuring other environmental 
     provisions provisions provisions total
     £m £m £m £m
at 5 january 2009    24  09  14  47 
provided in the year    – 07  – 07 
utilised in the year    03 09 – 12
released in the year    – – 14 14
at 3 january 2010    21  07  – 28 
closure and restructuring provisions relate mainly to an onerous lease provision for morgan house the company’s previous  
registered address
other provisions include the settlement of european class actions together with the associated legal costs 
38 share premium and reserves
        capital profit
      share merger redemption and loss
      premium reserve reserve account
      £m £m £m £m
at 5 january 2009    853  170  357  2432 
charges and transfers in relation to sharebased payments for the year  – – – 23 
dividends    – – – 121
retained profit for the year    – – – 165 
      853  170  357  2499 
hsbc trustee ci limited administer a trust in which shares are held to satisfy awards granted under the company’s share plans  
the shares are distributed in a 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 3 january 2010 is 1984022 2008 2593799 and at that date had a market value  
of £3194275 2008 £3157950
the amount of reserves of the morgan crucible company plc that may not be distributed under section 8314 of the companies act 
2006 is £1397 million 2008 £1397 million
39 leasing commitments
operating lease commitments falling due during the next year for which no provision has been made in these accounts are
         land and buildings
        2009 2008
        £m £m
less than one year       – 01 
between one and five years       02  02 
more than five years       05  05 
        07  08 
 
40 pension costs
the morgan pension scheme and the morgan senior staff pension and life assurance scheme
the company participates in two defined benefit schemes in the uk the assets of these schemes are held in separate trusteeadministered 
funds the morgan pension scheme ‘mps’ and the morgan group senior staff pension and life assurance scheme ‘sss’ given that 
the company is unable to identify its share of the scheme assets and liabilities on a consistent and reasonable basis as permitted by frs 17 
retirement benefits the schemes have been accounted for in these financial statements as if they were defined contribution schemes overview
financial statements
governance
business review
145 the morgan crucible company plc  
 annual report 2009
40 pension costs continued
the latest actuarial valuations of the mps and the sss were carried out as at 6 april 2006 and 1 april 2006 respectively and updated  
for frs 17 purposes to 31 december 2009 by a qualified independent actuary the results for these schemes in respect of the group  
are shown below
        2009 2008
         
assumptions
 rpi inflation       350 280
 discount rate       580 650
 pension increases in payment       340340 260315
 general salary increases       na na
 
the assets in the scheme and the expected rates of return were
      2009  2008 
      expected  expected 
      return 2009 return 2008
       £m  £m
asset distribution and balance sheet reconciliation
 equities     84 1250  80 978 
 bonds     53 64  50 71 
 property     64 – 58 49 
 other     58 1675  38 1556 
total market value of assets      2989   2654 
present value of liability      3334  2785
deficit in the scheme      345  131
employer contributions due within one year      01  01
 
other assets include an insurance policy as described in note 20
the contribution for the year was £47 million 2008 £64 million
41 contingent liabilities
where the company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its group  
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
there are no other contingent liabilities in the company as at 3 january 2010
the group has been subject to legal claims in the usa canada and europe settlements for the majority of these have been agreed  
there remain provisions in respect of these claims of £07 million 2008 £23 million the board having taken legal advice is of the opinion 
that the remainder of these actions will not have a material impact on the group’s financial position
42 related parties
the company’s transactions with nonwholly owned subsidiaries are as follows
        2009 2008
        £m £m
amounts invoiced to nonwholly owned subsidiaries       07 07
amounts receivable from nonwholly owned subsidiaries      41 08
 
the directors have reviewed transactions with related parties as defined in frs 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 report and accounts overview
financial statements
governance
business review
146 the morgan crucible company plc  
 annual report 2009
notes to the company balance sheet
continued 
43 principal subsidiary undertakings
      country of incorporation and
  principal place of business
carbon companies
 shanghai morgan carbon co ltd  china
 shanghai morganite electrical carbon co ltd china
 morganite electrical carbon limited england
 np aerospace limited england
 morgan rekofa gmbh germany
 morgan materials hungary kft hungary
 assam carbon products ltd india
 morgan carbon italia srl italy
 morganite carbon kabushiki kaisha japan
 morganite luxembourg sa luxembourg
 national electrical carbon bv netherlands
 morganite south africa pty limited south africa
 morgan advanced materials and technology inc usa
 national electrical carbon products inc usa
 graphite die mold inc usa
insulating ceramics companies 
 carbo san luis sa  argentina
 dalian morgan refractories limited china
 morgan thermal ceramics international trading shanghai co ltd china
 morgan thermal ceramics shanghai ltd  china
 yixing morgan thermal ceramics co ltd  china
 morganite crucible limited england
 thermal ceramics uk limited england
 thermal ceramics de france sas france
 carl nolte söhne gmbh germany
 thermal ceramics deutschland gmbh  co kg  germany
 ciria india ltd  india
 morganite crucible india limited  india
 murugappa morgan thermal ceramics limited  india
 thermal ceramics italiana srl italy
 shinnippon thermal ceramics corporation  japan
 limited liability company morgan thermal ceramics sukhoy log  russia
 thermal ceramics asia pte ltd singapore
 thermal ceramics south africa pty limited south africa
 thermal ceramics espana sl spain
 morganite crucible inc usa
 thermal ceramics inc usa
technical ceramics companies  
 morgan technical ceramics australia pty ltd australia
 yixing haldenwanger fine ceramic co ltd  china
 certech international limited england
 morgan advanced ceramics limited england
 morgan electro ceramics limited england
 w haldenwanger technische keramik gmbh  co kg germany
 wesgo ceramics gmbh germany
 morgan technical ceramics sa de cv mexico
 certech inc usa
 morgan advanced ceramics inc usa
 morgan technical ceramics auburn inc usa
 
 denotes companies some or all of whose shares are owned by a subsidiary   overview
financial statements
governance
business review
147 the morgan crucible company plc  
 annual report 2009
43 principal subsidiary undertakings continued
      country of incorporation and
  principal place of business
other subsidiary undertakings  
 morganite australia pty limited australia
 morganite brasil limitada brazil
 morganite canada corporation canada
 grupo industrial morgan sa de cv mexico
 morgan korea company limited south korea
 morganite industries inc usa
 
 denotes companies some or all of whose shares are owned by a subsidiary  
in 2009 and 2008 the following german subsidiaries which are included in the group consolidated accounts utilised article 264b  
of the german commercial code to be liberated from preparing and disclosing audited statutory accounts
w haldenwanger technische keramik gmbh  co kg  
technische keramik  co kg  
thermal ceramics deutschland gmbh  co kg  
44 company reconciliation of movements in shareholders’ funds
for the year ended 3 january 2010
        2009 2008
        £m £m
retained profitloss for the financial year       165  235
dividends       121 187
purchase of shares for share incentive schemes       – 04 
charge in relation to sharebased payments       23  32 
share buyback       – 121
net increasedecrease in shareholders’ funds       67  507
opening shareholders’ funds       4491  4998 
closing shareholders’ funds       4558  4491 overview
financial statements
governance
business review
148 the morgan crucible company plc  
 annual report 2009
group statistical information
under adopted ifrss
     2005 2006 2007 2008 2009
     £m £m £m £m £m
revenue    7457  6778  6932  8350  9426 
profit from operations before restructuring costs other oneoff 
items and amortisation of intangible assets    673  749  881  1088  890 
restructuring costs and other oneoff items
restructuring costs and costs associated with settlement  
of prior period antitrust litigation    320 277 90 114 140
gain on curtailment of uk employee benefit schemes    – 110  – – –
terminated bid approach costs    –  21 – – –
profitloss on disposal of property    04 03  02 08  20 
profit from operations before amortisation of intangible assets  349  564  789  982  770 
amortisation of intangible assets    13 12 16 32 163
operating profit    336  552  773  950  607 
net financing costs    131 34 55 127 293
loss on disposal of businesses    01 15 03 07 –
share of profit of associate net of income tax    – – 02  12  –
profit before taxation    204  503  717  828  314 
income tax expense    88 106 152 201 87
profit after taxation but before gain on sale of discontinued operations 116  397  565  627  227 
gain on sale of discontinued operations net of tax    426  – – – – 
profit for the period    542  397  565  627  227 
assets employed
property plant and equipment    2353  2302  2466  3196  2762 
intangible assets    466  664  698  1770  2969 
investments and other receivables    64  84  495  506  93 
deferred tax assets    274  288  258  366  372 
net current assets    942  440  744  1899  1365 
total assets less current liabilities    4099  3778  4661  7737  7561 
employee benefits    1242  427  477  1018  1059 
provisions and other items    619  1036  2029  4231  3881 
deferred tax liabilities    281  284  192  408  475 
     1957  2031  1963  2080  2146
equity     
total equity attributable to equity holders of the parent company   1823  1867  1762  1778  1846 
minority interest    134  164  201  302  300 
total equity    1957  2031  1963  2080  2146 
ordinary dividends per share paid    25p  45p  675p 70p 45p 
earnings per share     
basic    181p  129p  191p 222p 71p
diluted    172p  123p  185p 216p 68p
basic before amortisation of intangible assets    186p  133p  197p 234p 132p
diluted before amortisation of intangible assets    177p  127p  191p 228p 126p 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 crucible or dispose  
of it in your recycled paper waste thank you
this annual report is available at wwwmorgancruciblecom
acknowledgements 
page 06 airbus 380 copyright © baa limited see wwwbaacomphotolibrary  
page 07 boeing 737 copyright © boeing see wwwboeingimagescom  
page 07 s76 helicopter copyright © rickard gillberg 
page 08 reverse thruster insulation image copyright © lachlan burnet 
page 11 image courtesy of kockums abbild  foto see wwwkockumse  
pages 08 09 14 15 18 19 22 23 26 and 27 illustrations by john see
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Summary:
 overview
financial statements
governance
business review
32 the morgan crucible company plc  
 annual report 2009
chief executive officer’s review
group results
the group’s wellestablished strategy  
of reducing our exposure to economically 
cyclical more commoditised markets has 
served us well operating profit margin 
before restructuring and oneoff items  
in 2009 was a highly creditable 94  
the performance of the np aerospace 
business in particular merits highlighting 
having achieved stellar results in 2009  
with revenues of £1862 million compared 
to £720 million in 2008 and operating 
profit of £288 million compared to  
£107 million in 2008 this is primarily 
attributable to significant business with  
the uk ministry of defence in providing 
highspecification vehicle and personal 
ballistic protection solutions 
given the challenging market environment 
we have kept a tight and rigorous focus on 
cash generation and on the health of our 
balance sheet throughout the year our 
fiveyear banking facilities which were 
coming to the end of their term in 2009 
were successfully renewed in the first quarter 
during a period of significant uncertainty for 
the world’s banking system the fact that  
we were able to bring two new banks into 
our syndicate of lenders at a time of such 
turbulence in financial markets was a very 
pleasing endorsement of the strength and 
resilience of your group furthermore i am 
pleased to report that we ended 2009 having 
successfully maintained our position on the 
key net debt to ebitda financial covenant at 
21 times which is exactly where we were at 
the end of last year this is having purchased 
a further 11 stake in np aerospace to 
move us to a majority equity holding of 
60 we are also in a position of being able  
to recommend a fullyear dividend in line 
with the prior year
i am extremely proud of 
what morgan crucible has 
achieved in 2009 against  
a backdrop of the most 
difficult market environment 
for industrial companies  
for many decades
mark robertshaw
chief executive officer overview
financial statements
governance
business review
33 the morgan crucible company plc  
 annual report 2009
divisional highlights
all of the group’s divisions have shown 
pleasing resilience during this period of 
pronounced global recession with each 
delivering sound profit levels in 2009  
i have already commented on the excellent 
performance of np aerospace in its maiden 
set of figures as a majorityowned morgan 
crucible business 
the technical ceramics division also 
deserves special mention for delivering 
£251 million of divisional ebita before 
restructuring and oneoff costs 
representing an operating profit margin 
of 122 revenues were £2060 million 
compared to £2122 million in 2008 
driven by the division’s increasing exposure 
to more secular growth markets with our 
medical business performing especially  
well the integration of the businesses we 
acquired from the carpenter technology 
corporation in 2008 was delivered 
successfully to plan 
the insulating ceramics division has also 
demonstrated a much improved resilience  
of operating profit margins compared to 
previous downturns achieving 80 in 
2009 the division’s strong and increasing 
business presence in emergingmarket 
economies including china india and latin 
america helped offset the weakness of 
westernworld economies good progress 
was also made in the division’s operating 
efficiencies driven by the thermal ceramics 
‘world class manufacturing’ programme
the carbon division excluding np 
aerospace arguably had the most difficult 
environment of our divisions in 2009 with 
market downturns in core industrial markets 
combined with demand slowdowns in 
newer endmarkets such as solar and us 
body armour nevertheless the business 
made a respectable profit contribution in 
2009 with an encouraging pickup in orders 
seen in the latter part of the year
one area where all of our businesses did an 
excellent job during the course of the year 
was in aligning their cost bases with prevailing 
demand levels their decisive actions during  
a period of pronounced economic downturn 
were a key factor in your group weathering 
this difficult environment so robustly i would 
like to extend a personal thankyou to all  
our employees for their commitment and 
individual contributions towards making  
this happen
looking forward
even though we have seen some degree  
of recovery in many endmarkets in the 
latter part of 2009 our expectation is that 
the demand environment is likely to remain 
challenging and will certainly be unpredictable 
the deep global recession of 2009 was a 
thorough test of our strategy and business 
model which have stood up to this stern 
examination in a pleasing manner 
looking to the future i am therefore 
confident that morgan crucible is emerging 
from the downturn as a stronger more 
resilient business which is well placed to 
capitalise on opportunities as 2010 develops