morgan crucible
annual report 2012
advanced materials
 resilient performance
the morgan crucible company plc  annual report 2012 
the morgan crucible company plc
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f ax 44 01753 850872
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overview
01 strategy
02 morgan crucible at a glance
04 chairman’s statement
business review
06  chief executive o fficer’s 
review
08 group business review
09 key performance indicators 
10 review of operations 
18 corporate responsibility
28 f inancial review
32 risk management 
34  key resources and  
contractual relationships
35 cautionary statement
governance
36  board of directors and
 executive committee
38  directors’ report
42  corporate governance
49  statement of directors’ 
responsibilities 
50 remuneration report
67 independent auditor’s report
financial statements
68  c o n s ol i d a t ed i n c o m e 
statement
69  c o n s ol i d a t ed s t a t e m en t  
of comprehensive income
70 consolidated balance sheet
71  c o n s ol i d a t ed s t a t em en t  
of changes in equity
72  c o n s ol i d a t ed s t a t em en t  
of cash flows
73 notes to the consolidated 
 financial statements
116 company balance sheet
117  notes to the company  
balance sheet
126 group statistical information
127 shareholder information
mor gan cru cible  
is a wo rldleader in 
advanced materials
we produce a wide range of specialist 
highspecification materials that have 
extraordinary attributes and properties
engineered into products they deliver 
enhanced performance often under 
extreme conditions
o ur dynamic highly skilled people are 
continuously engaged in finding solutions  
for complex and technologically demanding 
applications which are used all over  
the world
in short we supply innovative differentiated 
products made from highly technical advanced 
materials which enable our customers’ 
products and processes to perform more 
efficiently more reliably and for longer
  f or more information about morgan crucible 
please visit our website
   wwwmorgancruciblecom
  f ind out more about morgan crucible graduate 
recuitment on facebook
   wwwfacebookcommorganceramics annual report 2012  the morgan crucible company plc 01
overview business review governance financial statements
our strategy is based on building  
a sustainable business for the  
long term by continuing to focus  
on our five strategic priorities and 
remaining committed to delivering 
strong returns to our stakeholders
strate gy in acti on
morgan c rucible identifies customer opportunities in sectors 
driven by megatrends where its materials science and applications 
engineering skills can solve technically demanding challenges  
t he group chooses its markets carefully focusing on those  
in which it can achieve leadership positions underpinned by 
technical differentiation
   
our goal is to continue  
to be one of the world’s  
very best advanced  
materials companies
   
our aim is to create 
longterm sustainable 
shareholder value
   
be innovative differentiated 
and high valueadded  
to our customers
   
   have a culture of  
operational excellence  
and cost efficiency
   
   find keep and develop  
the right people
   
be number one or  
number two in our 
chosen market segments
   
focus on higher growth 
higher margin 
noneconomically  
cyclical markets
our goal
our aim
strate gic pri oritie s  02 the morgan crucible company plc  annual report 2012
a truly global operation with 
significant business in the 
dynamic growth economies  
of a sia and south a merica
morgan c rucible’s markets
 
mor gan cruci ble 
at a g lance
£3468m
£3463m
£3144m
asia and rest of world
europe
north america
our regions
 sales by destination
2012 total revenue
industrial 45
transportation 19
electronics 9
petrochemical 9
1
2
3
4
security  defence 8
energy 6
healthcare 4
5
6
7
1
2
3
4
5
6
7
£1 007 5m annual report 2012  the morgan crucible company plc 03
overview business review governance financial statements
our divisions
 

   divisional ebita is defined as segment operating profit before restructuring costs  
other oneoff items and amortisation of intangible assets
morgan ceramics uses its expertise in material science 
and applications engineering to manufacture custom 
products for demanding environments
t hrough its t echnical c eramics business it supplies customerspecific 
applicationsengineered industrial products manufactured from 
advanced materials including structural ceramic electroceramic and 
precious metals t he t hermal c eramics business provides thermal 
management solutions for hightemperature applications which 
benefit technically financially and environmentally from optimised 
energy and emissions control
core products
  insulating fibre insulating bricks and monolithics
  c eramic cores for complex turbine blades
  c omponents for electron tubes
  feedthroughs for medical implants
  piezoelectric ceramic actuators
morgan engineered materials delivers materials 
technology through its global businesses
morgan engineered materials delivers highly engineered solutions 
across the world from a portfolio of advanced material technologies 
that include carbon silicon carbide oxidebased ceramics and 
advanced polymeric composites t he division’s core applications  
are industrial and rail transportation fluid handling power generation 
gas turbine solar and wind molten metal handling and advanced 
lightweight ceramiccomposite armour systems for personnel and 
vehicle protection
core products
  electrical brushes
  seals and bearings
  protective ballistic armour
  u ltrahightemperature insulation
  crucibles
  l ithium ion battery anode materials
revenue £m
6605m
divisional ebita

 £m 
c ontinuing business
946m
revenue £m
3470m
divisional ebita

 £m 
c ontinuing business
325m
mor gan c era mics mor gan en gineered material s  04 the morgan crucible company plc  annual report 2012
i am delighted to join the board as chairman  
i am grateful to t im stevenson for helping  
this transition and also for his efforts since  
2006 including leading the group through  
the economic downturn and positioning  
the business for future growth i am excited  
by the opportunities that the group has to 
develop and i look forward to contributing  
to its future success
in recent years great strides have been made 
to simplify the business most recently in the 
consolidation of the two c eramic businesses  
in 2010 it is the case that we produce a variety 
of different products for different industrial and 
geographical markets but there are powerful 
underlying unifying themes we specialise in 
bringing science and application engineering 
expertise to meet demanding technical 
requirements involving advanced materials  
and we look to position ourselves in growth 
markets it has become apparent that we can 
further simplify the business to improve clarity 
at the customer interface gain benefits from 
innovation across the group and reduce costs 
we are therefore reorganising the business  
on a regional basis and sharpening the  
brand identity as is further explained in  
the chief e xecutive officer’s review
t rading conditions were difficult in 2012 
nevertheless operating profit before oneoff 
costs of £1220 million was the group’s second 
highest ever c ash generation was strong  
with a reduction in net debt of £226 million 
compared to £208 million in 201 1 t his 
reflects the strength of our capabilities and 
being present in growing markets which  
helped to offset disappointing performance  
in morgan engineered materials
c hair man ’s state ment
t rading conditions were difficult in 2012 
nevertheless operating profit before 
oneoff costs of £1220 million was  
the group’s second highest ever
andrew shilston 
chairman overview business review governance financial statements
annual report 2012  the morgan crucible company plc 05
dividend
t he board has decided to set the final dividend 
at 64 pence per share t his is an increase of 
67 compared to the final dividend declared 
in 201 1 t his means that the fullyear dividend  
is 100 pence
100
925
77
70
70
total dividend per share
pence
2012
2011
2010
2009
2008
outlook
t he macroeconomic outlook for 2013 is  
not significantly better than 2012 with global 
imbalances and indebtedness in developed 
countries still weighing on growth t he changes 
we are announcing to the organisation 
structure will maximise our chances of growing 
despite the challenging economic environment 
we continue to invest in new manufacturing 
facilities and research and development and to 
look for bolton acquisitions to add capability 
board and governance
i should like to welcome victoire de margerie 
to the board she has a wealth of operational 
experience across europe in related industries 
it has been a pleasure to work with board 
colleagues over the last nine months and  
we all remain committed to the development 
of the group
i have visited a number of the group’s sites 
since i joined the board and have been 
impressed by the enthusiasm and loyalty to  
the group of all those i have met t he board 
recognises that the quality and commitment  
of our employees is key to future success  
and continues to be grateful for their efforts
andrew shilston 
chairman  06 the morgan crucible company plc  annual report 2012
ch ief executiv e officer ’s re view
group results
following the group’s record results in 201 1 
our 2012 performance whilst still amongst  
one of the best in morgan c rucible’s 156year 
history was impacted by a much more difficult 
macroeconomic environment t he eurozone 
countries slipped back into recession growth  
in the u s economy was subdued and even  
the dynamic growth economies such as china 
india and brazil all struggled relative to their 
performance of recent years we at morgan 
c rucible were not immune from the global 
turbulence of 2012 with group revenue at 
£10075 million down 85 versus 201 1 
£11010 million and profit from operations 
before oneoff and restructuring costs at 
£1220 million 201 1 £1434 million down 
149 t his overall group performance was  
a reflection of a good year from the c eramics 
division offset by a disappointing one from  
the engineered materials division t he group’s 
operating cashflow was strong once again  
with c£50 million of free cash flow before 
acquisitions and dividends enabling the  
board to increase the final dividend by  
over 6 whilst delivering a reduction  
in 2012 year end net debt levels to  
£1928 million 201 1 £2154 million
divisional summary
t he c eramics division performed well in  
the more difficult economic environment with 
an increase in yearonyear divisional ebita  
of £19 million on revenue which was slightly 
down on 201 1’s record levels down 19 
yearonyear on a constant currency basis and 
36 at reported rates c eramics’ divisional 
ebita margin before any oneoff or 
restructuring costs improved from 135  
in 201 1 to 143 in 2012
t he key drivers of this encouraging 
improvement in divisional ebita margin  
were an increasing proportion of our business 
coming from higher margin product areas 
combined with ongoing improvements  
to our operating cost base
a s one of the world’s leading advanced 
materials groups we have a portfolio  
of exciting innovative differentiated  
new products and technologies
mark robertshaw 
c hief executive officer overview business review governance financial statements
annual report 2012  the morgan crucible company plc 07
we continued to make good progress in our 
hightemperature insulating fibre business and 
in particular the global rollout of our range of 
low biopersistent fibres superwool
®
 fibre 
products hightemperature insulating fibre  
is the group’s single biggest product category 
representing close to 25 of total group 
revenue our superwool
®
 range of  
hightemperature insulating fibres accounted 
for 37 of these fibre sales up from 34  
in 201 1 as we progressively convert over our 
fibre production capacity to be able to produce 
our differentiated and patentprotected 
superwool
®
 products a s i indicated in last 
year’s a nnual r eport we continue to believe 
that the environmentally friendly properties  
of the new superwool
®
 range combined  
with their technical performance leave us 
wellplaced to deliver profitable growth in this 
important business area over the coming years
from a geographic perspective the c eramics 
division delivered particularly strong 
performance in the n orth a merican region 
which achieved record levels of revenue and 
profit in 2012 in addition to the rollout of 
superwool
®
 fibre in this region we also saw 
good profit growth from our aerospace related 
applications such as the morgan c ertech 
businesses where we are the global number 
one provider of ceramic cores used in the 
manufacture of turbine blades
t he c eramics manufacturing footprint 
continued to be streamlined with the closure  
of one of our facilities in n ew jersey as 
production was relocated to other larger sites 
in the u s and lower cost operations in mexico 
and with the announced closure of a t hermal 
c eramics site in a ustralia with production 
being relocated to lower cost locations in a sia
t he performance of the engineered materials 
division was disappointing in 2012 with 
revenue of £3470 million down 152 at 
constant currency 165 at reported rates 
and divisional ebita down by more than 40 
compared to 201 1 as the softening of general 
industrial demand was exacerbated by the 
marked reduction in our business into 
highmargin renewable energy and defence 
applications t his impacted both the a dvanced 
materials  t echnology and np a erospace 
businesses and in both we made significant 
reductions in the cost and headcount base to 
reflect the lower levels of demand t his has 
included the announced closure or downsizing 
of a number of sites particularly in c ontinental 
europe our goal is to have an operating cost 
base in these businesses which can deliver at  
or close to midteen operating profit margins  
at current demand levels t he highlight of the 
engineered materials division in 2012 was the 
performance of the molten metal systems 
business which grew revenue by 48  
on a constant currency basis a reduction  
of 19 at reported rates with ebita 
increasing to £81 million £77 million in 201 1 
representing an ebita margin of 177  
2011 165 
changes to the group’s  
organisation structure
a t the same time as the release of 2012 
fullyear results we have also announced  
a new management structure which sees  
the group organised on a regional basis  
t his change is consistent with our direction  
of travel in the past several years to present  
our customers and markets with a single 
unified ‘one morgan’ set of products and 
technologies we believe that this leaves us 
better placed to exploit growth opportunities 
both geographically and by endmarket  
through more fully leveraging the breadth  
of our geographic and market access it will  
also improve our operational cost efficiency 
through opportunities to further streamline  
our overhead and fixed cost base t he three 
regions n orth a merica europe and a sia 
r est of world will report to a ndrew hosty 
who moves from being ce o of the c eramics 
division to become the chief operating 
officer of the group don klas ce o of the 
engineered materials division after helping 
work through the transition to the new model 
will leave the group after over 30 years with 
morgan c rucible and i would like to take this 
opportunity to thank him for his commitment 
and service and to wish him well for the future
in conjunction with the change to the 
organisational model i am also pleased to 
announce that the group will be renamed 
morgan a dvanced materials plc which we 
believe is a better and more appropriate 
descriptor of the breadth and depth of the 
technologies and capabilities which we bring  
to our customers
looking forward
t he macroeconomic environment was more 
difficult in 2012 and we do not expect this to 
improve materially in 2013 we anticipate that 
european markets will remain challenging as 
austerity driven policies continue to impact 
demand and business confidence levels  
t he interconnectedness of global markets 
means that we will likely also see some degree 
of impact on business levels in the a mericas 
and a sia in this environment our focus 
remains on selfhelp actions rather than relying 
on positive market conditions which may  
or may not transpire a s one of the world’s 
leading advanced materials groups we have a 
portfolio of exciting innovative differentiated 
new products and technologies we also have 
a truly global presence with marketleading 
positions a bove all we have a talented and 
committed workforce around the world  
who have shown themselves once again  
to be nimble imaginative and tenacious in the 
uncertain and fluid market conditions of 2012  
i would like to take this opportunity to thank 
them all for their efforts in 2012 and for their 
commitment to ongoing excellence in all that 
we do in 2013 and beyond
mark robertshaw
c hief executive officer  08 the morgan crucible company plc  annual report 2012
gr oup bu siness re view
group activities
morgan c rucible is a worldleader in advanced 
materials focused on specialist ceramics 
carbon and composites working at the 
forefront of advanced materials technology  
the group develops solutions that  
help to make the world more efficient  
better protected and healthier
in 2012 the group operated through  
two global divisions morgan c eramics  
and morgan engineered materials
morgan c eramics consists of two global 
reportable operating segments t echnical 
c eramics is a leading supplier of customer
specific applicationsengineered industrial 
products manufactured from advanced 
materials including structural ceramic 
electroceramic and precious metals t hermal 
c eramics provides thermal management 
solutions for hightemperature applications 
which benefit technically financially and 
environmentally from optimised thermal and 
energy efficiency management c ore products 
are hightemperature insulating fibre bricks  
and monolithics
morgan engineered materials delivers highly 
engineered solutions built from a portfolio of 
advanced material technologies that includes 
carbon silicon carbide oxidebased ceramics 
and advanced polymeric composite materials 
t he division consists of two global reportable 
operating segments morgan a mt  which 
includes np a erospace with core applications 
including 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 and molten 
metal systems with core products of crucibles 
and foundry consumables
group strategy
morgan c rucible’s goal is to continue to  
be one of the world’s very best advanced 
materials companies
t he group’s aim is to create longterm 
sustainable shareholder value
t he group’s five strategic priorities are
  t o focus on higher growth higher margin 
noneconomically cyclical markets 
  t o be innovative differentiated and  
high valueadded to its customers 
  t o be number one or number two  
in its chosen market segments
  t o have a culture of operational excellence 
and cost efficiency 
  t o find keep and develop the right people 
t he group uses its strategic priorities to test 
new investment opportunities to screen its 
businesses for fit with the existing group and to 
identify areas requiring strategic attention and 
action
business model
morgan c rucible’s business model is aligned 
with and driven by the group’s strategy  
as set out above in each division and across  
all businesses and sites morgan c rucible  
utilises advanced materials technology and 
manufacturing expertise to design develop 
manufacture and integrate technically 
differentiated solutions that help enhance the 
performance and efficiency of its customers’ 
products or operations t his is supported  
with a focus on service excellence and the 
development of genuine partnerships such that 
the group works alongside its customers and 
suppliers in the ongoing refinement of products 
and solutions further details of the group’s 
key resources and contractual relationships are 
set out on page 34 of this business review
t he announcement of the new organisation 
structure which reinforces a ‘one morgan’ 
approach underpins the group’s commitment 
to present its customers and markets with a 
single unified set of products and technologies 
and allows it to fully leverage its breadth of 
geographic and market access
t his outwardfacing part of morgan c rucible’s 
business model is combined with an internal 
focus on operational excellence and effective 
cost management and the continued work  
to take full advantage of the group’s lowcost 
manufacturing footprint is a tangible example  
of this t he new organisation structure will also 
contribute to this cost effectiveness improving 
operational efficiency through the streamlining 
of overheads
t he group’s focus on highquality customer 
solutions and efficient operations combine to 
satisfy morgan c rucible’s stated aim of creating 
longterm sustainable shareholder value
a dditional information on the markets served 
by the group and on its products are included 
in the r eview of operations on pages 10 to 17 
and in the overview section on pages 1 to 5
revenue and profits
group revenue decreased by 85 to  
£10075 million 201 1 £11010 million  
group ebita before restructuring charges  
and oneoff items was £1220 million 201 1 
£1434 million representing a margin of  
121 201 1 130 t he main factors  
for these movements are as follows
morgan c eramics 
  t echnical c eramics r evenue for 2012  
was £2733 million 201 1 £2851 million 
representing a decrease of 41 divisional 
ebita was £427 million 201 1 £431 
million a margin of 156 201 1 151
  t hermal c eramics r evenue for 2012  
was £3872 million 201 1 £4001 million 
representing a decrease of 32 divisional 
ebita was £519 million 201 1 £496 
million a margin of 134 201 1 124
morgan engineered materials
  morgan a mt  r evenue for 2012 was 
£3012 million 201 1 £3691 million 
representing a decrease of 184 
divisional ebita was £244 million  
201 1 £480 million a margin of  
81 201 1 130 
  molten metal systems r evenue for 2012 
was £458 million 201 1 £467 million 
representing a decrease of 19 divisional 
ebita was £81 million 201 1 £77 million 
a margin of 177 201 1 165
cash generation
t he net cash inflow from operating activities 
was £1268 million 201 1 £1374 million free 
cash flow before acquisitions and dividends was 
£489 million 201 1 £578 million annual report 2012  the morgan crucible company plc 09
key per for mance in dicat or s
t o support the group’s strategy and to 
monitor performance the board of directors 
and the executive c ommittee use a number  
of financial and nonfinancial key performance 
indicators kpis t hese 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 a t 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
a s morgan c rucible’s businesses grow and 
evolve the list of kpis selected will be reviewed 
and updated 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 2012 2011 r elevant strategic objective
financial kpis
r evenue declinegrowth 85 82  c reating consistent longterm value for shareholders
  focus on higher growth markets
u nderlying operating profit  declinegrowth 231 393  c reating consistent longterm value for shareholders
  focus on higher growth markets
  t o be high valueadded to the group’s customers
  t o have a culture of operational excellence and  
costefficiency
u nderlying operating profit  margin 108 129  c reating consistent longterm value for shareholders
  focus on higher growth markets
  t o have a culture of operational excellence and  
costefficiency
u nderlying profit before taxation  £897m £1197m  c reating consistent longterm value for shareholders
  focus on higher growth markets
  t o have a culture of operational excellence and  
costefficiency
free cash flow before acquisitions and dividends £489m £578m  c reating consistent longterm value for shareholders
r eturn on operating c apital employed  265 337  c reating consistent longterm value for shareholders
u nderlying earnings per share  232p 299p  c reating consistent longterm value for shareholders
dividend per share 100p 925p  c reating consistent longterm value for shareholders
nonfinancial kpis
u
yearonyear pricing change 20 23  t o be high valueadded to the group’s customers
t otal employment costs as  of sales 304 292  t o have a culture of operational excellence and  
costefficiency
employee turnover 134 137  t o find keep and develop the right people
t raining hours per employee 151 133  t o find keep and develop the right people
l ost time accident frequency per 100000 hours worked 052 058  t o have a culture of operational excellence and  
costefficiency
  t o find keep and develop the right people
t onnes c o
2
 per £m revenue 403 411  t o have a culture of operational excellence and  
costefficiency
t onnes waste per £m revenue 49 45  t o have a culture of operational excellence and  
costefficiency
  u nderlying operating profit is defined as operating profit before amortisation of intangible assets
 u nderlying profit before taxation is defined as operating profit before amortisation of intangible assets less net financing costs
  r eturn on operating c apital employed is defined as group underlying operating profit

 divided by the sum of working capital which excludes pension liability and provisions  
and the net book value of tangible assets goodwill and other intangible assets are excluded
  u nderlying earnings per share is defined as basic earnings per share adjusted to exclude amortisation of intangible assets see note 10 on page 82 for definition of basic earnings per share
u 
n onfinancial kpis are at constant currency and updated to reflect changes in reporting methodology
overview business review governance financial statements  10 the morgan crucible company plc  annual report 2012
re view of operati on s
6605
6852
6091
revenue
£m
2012
2011
2010
946
927
688
divisional ebita
£m
2012
2011
2010
business description
morgan c eramics comprises two operating 
businesses t echnical c eramics provides 
customerspecific components and assemblies 
manufactured from advanced materials while 
t hermal c eramics is a provider of thermal 
management solutions for hightemperature 
applications in industrial markets
a s at 31 december 2012 morgan c eramics 
employed approximately 5800 people 
worldwide t he division is a truly global 
business with 57 manufacturing sites across  
six continents it is structured with regional 
teams supported by global engineering 
marketing technology research and 
development strategy and finance functions 
t he division’s major sites are located in 
a rgentina a ustralia brazil china france 
germany india italy japan korea mexico 
r ussia the u k and the u sa  t he division has 
50 sales offices working directly with endusers 
and also sells some products through 
distribution networks
t he division’s engineering and design 
capabilities are the key to its success  
full technical support and advice is offered  
to customers throughout their product 
development cycle working closely with  
them to understand their needs and provide 
engineered solutions that add value and  
help differentiate their endproducts
t he morgan c eramics business strategy  
is aligned with that of the group with the 
objective of being a worldleader in engineered 
solutions based on advanced ceramic and 
related materials t he division’s strategy is
  t o focus on market niches where the 
division’s distinctive competences and 
innovation skills differentiate it
  t o structure the division’s businesses for 
simplicity and high levels of accountability 
  t o drive operational excellence in all of  
the division’s facilities
  t o actively manage the division’s portfolio 
to achieve optimum shareholder returns
  t o develop the division’s leaders teams 
and technical talent to deliver its strategy
t he t echnical c eramics business manufactures 
applicationspecific products to customer 
requirements using a wide range of structural 
ceramics electroceramics and precious 
metals key markets for these products include 
electronics aerospace industrial equipment 
healthcare and energy
t echnical c eramics’ components and 
assemblies are used in hundreds of high
technology application niches including
  c eramic cores used in the casting of 
turbine blades for aeroengine and 
industrial gas turbines
  braze alloys ceramics and subassemblies 
used in the manufacture monitoring and 
control of aeroengines
  c omponents and subassemblies for  
a broad range of medical applications 
including implantable devices prosthetics 
surgical and diagnostic equipment
  c eramics and assemblies for electron 
tubes used in a range of medical security 
industrial and research applications such  
as airport security scanners t v and radio 
broadcasting and xray equipment
  engineered ceramics for fluid handling 
equipment
  piezoelectric ceramic actuators for 
electronic data storage
  c omponents and assemblies for lasers 
used in product marking medical and 
industrial applications
t he t hermal c eramics business serves a 
broad spectrum of industrial and commercial 
markets with insulation requirements ranging 
from 500°c to 1600° c  its hightemperature 
insulating fibre insulating bricks and monolithics 
enable users to optimise thermal efficiency 
reduce energy costs and improve environmental 
performance through reduced c o
2
 emissions 
t he business also provides passive fire 
protection for the transportation industrial  
and construction sectors
products are manufactured from advanced 
insulating materials marketed under a number 
of leading brands including superwool
®
 jm™ 
pyrobloc™ firemaster
®
 and t rimor™ t hey 
are used worldwide in demanding applications 
which are increasingly influenced by legislative 
and environmental requirements major 
markets include petrochemical iron and  
steel and industrial equipment
mor gan cera mic s division annual report 2012  the morgan crucible company plc 11
market sectors
industrial
in the industrial sector morgan c eramics’ 
products contribute to improved process 
efficiency productivity and reduced waste  
and environmental impact
morgan c eramics advanced ceramic  
materials offer an exceptionally wide range  
of characteristics including superior insulating 
properties dimensional stability strength and 
stiffness t he resistance of these materials  
to chemical and physical wear corrosion  
and extreme heat makes them ideally suited  
for use in harsh industrial processing and 
demanding manufacturing environments 
for example n ilcra
®
 magnesia partially
stabilised zirconia mgo psz is the material  
of choice for a wide range of applications from 
severe service valves and pumps to tooling  
for battery and steel can production morgan 
c eramics’ hightemperature components  
are used in industrial annealing and in the 
manufacture of medical devices t he division 
supplies ceramic membranes for efficient 
industrial water filtration and purification 
helping businesses in that sector to reduce 
maintenance and save energy 
insulating products from morgan c eramics 
allow manufacturers to control a variety  
of thermal processing operations thereby 
optimising throughput and yields it supplies 
monolithic linings for blast furnaces and fibre 
modules and firebricks for heat treatment 
furnaces its fire protection products are used 
in a range of infrastructure projects including 
sea defences offshore oil and gas platforms  
and public buildings
transportation
morgan c eramics offers a wide range  
of products for many different transport 
applications t he division has been meeting 
the exacting needs and demanding application 
requirements of the aerospace and automotive 
industries for more than 50 years its ceramic 
and brazed assemblies improve the efficiency 
and reliability of its customers’ products  
it produces ceramic components sensors  
and brazed assemblies to tight specifications in 
quantities from oneoffs and small production 
runs to highvolume 
precision engineered materials components 
and assemblies from morgan c eramics are 
used in instrumentation and control systems 
engine monitoring guidance systems and 
satellite positioning equipment t he division’s 
ceramic cores are used to form the cooling 
paths in aerospace engine turbine blades and  
its specialist braze alloys are used extensively  
in aeroengine manufacture and repair 
piezoceramics are used in gyroscopes and fuel 
level sensors for example every boeing 777 
aircraft is fitted with more than 50 of its 
ultrasonic fuel level sensors
morgan c eramics ceramic materials offer  
a combination of physical properties which 
makes them an attractive and costeffective 
option for designers of transportation systems 
including road rail marine and aircraft and its 
thermal management products are used widely 
in fire protection and suppression applications 
security  defence
morgan c eramics has provided precision
engineered materials components and 
assemblies to meet the exacting standards of 
the international defence and security markets 
for several decades from military hardware  
to surveillance equipment and armour for 
personnel and vehicle protection its superior 
materials technology and impressive 
manufacturing capability deliver real 
performance benefits in the field
t he division’s piezoceramic components  
are highly versatile stable and durable even in 
challenging operating conditions making them 
ideal for use in custom sensor and transducer 
systems t he division is a major supplier to  
the manufacturers of power tubes used in 
image intensifiers electronic countermeasures 
and communications equipment 
morgan c eramics’ materials are used 
extensively for protection of personnel and 
vehicles in armour systems that are designed  
to meet the classified ballistic performance 
requirements of each individual customer  
t he division also makes lightweight heavy 
duty fire protection systems for commercial 
and naval vessels the firemaster
®
 system  
is certified to meet most national and 
international military standards 
morgan c eramics is at the forefront of 
improving security systems at border controls 
its custom ceramic and metal assemblies  
are used to improve the image resolution of 
luggage and cargo scanners and its diamonex™ 
diamondlikecarbon coatings are used in 
fingerprint swipe sensors
petrochemical
morgan c eramics provides precision
engineered materials components and 
assemblies for the global petrochemical  
market t he resistance of its materials to 
chemical and physical wear corrosion and 
extreme heat makes them ideally suited for  
use in challenging applications and harsh 
processing environments
t he division supplies heat management 
systems with insulation requirements ranging 
from 500°c to 1600° c  for fired heaters 
ethylene crackers reformers sulphur recovery 
units fluid catalytic cracking units and boilers 
morgan c eramics products enable users to 
optimise thermal efficiency reduce energy 
costs and improve environmental performance 
through reduced c o
2
 emissions its firemaster
®
 
fire protection systems offer proven fire 
protection performance certified to national 
and international standards 
t he division makes a range of parts and 
subassemblies for use in processing 
hydrocarbons including specialist valves  
pumps seals and bearings its highperformance 
ceramic materials provide a level of precision 
and reliability equally suited to the demanding 
requirements of drilling and refining for 
example n ilcra
®
 zirconia components extend 
the serviceability of valves and pumps and 
deranox
®
 975 alumina is used in the harsh 
environment of the hydrocyclone where  
sand and other solids are separated from  
the hydrocarbon stream helping to protect  
and increase the lifetime of sensitive  
processing instrumentation and heat 
exchangers downstream
overview business review governance financial statements  12 the morgan crucible company plc  annual report 2012
electronics
morgan c eramics’ capabilities in precision 
engineering are increasingly being specified  
to meet the needs of niche applications across 
the electronics sector t he division supports 
designers and manufacturers of electronic 
equipment in their drive towards higher 
performance and reliability in smaller lighter 
and more robust products 
morgan c eramics piezoceramic components 
are highly versatile durable and stable with 
excellent electrical and thermal properties  
it makes actuators for highcapacity hard disk 
drive hdd data storage which enable the 
head to be positioned with extraordinary 
accuracy and vibration control ceramic  
formers for wirewound radio frequency r f 
inductors for mobile phones laptops  
high definition televisions lighting controls 
sensors and wireless devices 
dielectric materials from morgan c eramics 
offer highquality capacitance solutions  
for applications from laser instrumentation  
to microwave and highvoltage systems  
its highpurity alumina ceramic is used 
extensively for waveguides in c o
2
 lasers  
and insulators in excimer lasers that function  
in harsh environments and it is a major  
supplier of components for electron tubes  
used in communications signalling and  
control equipment
morgan c eramics produces a wide range  
of standard and specialised components  
and assemblies including metallised parts  
and ceramictometal subassemblies t he 
division’s specialised manufacturing capabilities 
allow it to produce highquality electronic 
components costeffectively in highvolume
energy
energy generation management and 
distribution is arguably one of the fastest 
evolving industries of modern times morgan 
c eramics components and subassemblies  
are widely used in a variety of systems that 
generate and distribute power from both 
renewable and traditional sources 
t he division has a broad range of dielectric 
materials and high quality capacitance solutions 
for high voltage systems and its piezo materials 
are key components in a number of energy
harvesting applications
it makes products that are used in the 
manufacture of thinfilm photovoltaic cells for 
the solar industry and cores for industrial gas 
turbine blades its ceramic live line indicators 
are used in high voltage dc power distribution 
applications all over the world 
 
morgan c eramics highperformance insulating 
products enable users to reduce their energy 
costs and improve their environmental 
performance t he division’s hightemperature 
insulating fibre bricks and monolithics are  
used to optimise thermal efficiency in industrial 
applications with operating temperatures from 
500°c to 1600° c  l atestgeneration low 
biopersistent superwool
®
 plus fibre is used  
in duct and chimney insulation process heater 
linings pipe wrap and automotive exhaust  
heat shields where its exceptionally low 
thermal conductivity allows engineers to  
specify a significantly thinner blanket to achieve 
the same level of insulation 
healthcare
morgan c eramics is an innovative 
manufacturer of ceramic implants components 
and complex assemblies for a wide range  
of medical devices its highquality ceramics  
can be found in surgical tools medical 
instrumentation therapeutic and diagnostic 
equipment its materials are favoured by 
equipment manufacturers and medical 
professionals for their exceptional physical 
characteristics 
t he division’s broad medical engineering 
expertise encompasses ceramic orthopaedic 
joint replacements precision engineered 
ceramic parts for cancer treatment  
blood and cellular analysis systems along  
with specialised ceramictometal assemblies 
for implantable devices such as pacemakers 
speech valves cochlear implants defibrillators 
and neurostimulators morgan c eramics 
piezoelectric components are used extensively 
in medical ultrasound applications and in pumps 
for drug delivery 
t he division’s superior materials display 
industryleading electrical and mechanical 
properties enabling design of highefficiency 
medical tools such as ultrasonic dental 
descalers ultrasonic scalpels and tumour 
ablation tips 
morgan c eramics’ applications engineering 
expertise is second to none and its specialist 
manufacturing facilities aid the evolution of key 
components in instrumentation and diagnostic 
equipment such as ultrasonic imaging  
xr ay cat and m ri scanners i ts superior 
piezoelectric ceramic components are used 
extensively in medical ultrasound to enable 
increased image resolution while its non
magnetic temperature stable dielectric 
materials are being used more extensively  
in next generation mri systems 
research and development
research and development capabilities are  
led by a t echnical director for each business 
overseeing a network of materials scientists  
and applications and process engineers across 
the division’s global sites t hey work with 
customers to engineer solutions that address 
the customer’s needs t he division also 
undertakes research in collaboration  
with leading universities in europe and  
n orth a merica
r ecent developments have focused on 
products for the medical transportation  
and energy markets product innovation  
is driven by the customer’s endapplication
a n increased emphasis on the development  
of new fire protection systems shows excellent 
promise for future growth
re view of operati on s
continued
mor gan cera mic s division continued annual report 2012  the morgan crucible company plc 13
t he majority of the division’s research and 
development into thermal management 
solutions is carried out at the division’s 
bromborough u k site in a purposebuilt 
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 t he role of low biopersistent 
fibres is seen as being of increasing importance 
in the future of the hightemperature insulation 
market and so research and development 
activities have been directed towards extending 
the division’s product range in this area 
r esearch into manufacturing processes has 
produced new generation fibre products with 
superior insulation l ow biopersistent fibre 
technology for use in automotive catalytic 
converters has been developed and patented 
a major focus for the division is on  
recruitment of highcalibre material scientists 
and engineers to provide the talent and 
resources that the division requires to fuel the 
growth from these exciting expanding markets
business performance
t he c eramics division produced a good year 
in 2012 particularly when the more difficult 
macroeconomic environment is considered 
revenue in the morgan c eramics division  
was £6605 million 201 1 £6852 million 
representing a decrease at reported rates  
of 36 a t constant currency the decrease  
in revenue was 19
r evenue for the t echnical c eramics business 
in 2012 was £2733 million 201 1 £2851 
million a decrease of 41 at reported rates 
r evenue was down by 40 on a constant 
currency basis t hermal c eramics’ revenue 
decreased by 32 to £3872 million in 2012 
201 1 £4001 million on a constant currency 
basis the yearonyear decrease was 04
for t echnical c eramics divisional ebita  
was £427 million 201 1 £431 million 
t echnical c eramics raised its ebita margin  
by 50 basis points reaching 156 for the year 
201 1 151 t hermal c eramics’ divisional 
ebita increased in the year to £519 million 
201 1 £496 million t he ebita margin for 
t hermal c eramics increased by 100 basis 
points to 134 201 1 124 overall the 
c eramics divisional ebita margin showed 
good improvement to 143 201 1 135
business developments
in 2012 major investments were focused on 
the superwool
®
 fibre programme and the 
conversion of existing refractory ceramic fibre 
‘rc f’ capacity significant investment in both 
equipment and people continued to be made 
in the dynamic a sian and south a merican 
markets c apital was invested in kailong 
china and daegu korea to increase fibre 
capacity and the thermal insulation product 
range t he division received approval from the 
board for a new fibre plant in the middle east 
which is becoming an attractive and rapidly 
growing market smaller but important 
investments were made to extend existing 
brazing capability in the hayward c alifornia 
facility a ceramic grinding facility was 
established in y ixing china and in the  
u sa capacity was increased for making  
c vd diamond coatings for the growing  
a sian semiconductor equipment market
r esources and capabilities in a sia and south 
a merica were further developed and added  
to resulting in a number of positive enquiries 
being generated t hese are now making their 
way into commercial plans
t he t hermal c eramics business made good 
progress with continued rollout of high
temperature insulation products t hese include 
a range of differentiated and patentprotected 
products based on a range of superwool
®
 
chemistries good progress was made in the 
engineering business which takes morgan 
c eramics products and through applications 
engineering adds value to give customers  
a package design that will give them a more 
energy efficient and safer operating solution 
t ypical applications are found in the chemical 
processing aluminium iron and steel and 
passive fire protection industries n ew product 
development in the t hermal c eramics 
business remains concentrated in the field of 
low biopersistent fibre where the business 
continues to develop even higher temperature 
resistant materials
work in the t echnical c eramics business 
focused on moving towards newer more 
differentiated products that will continue to 
drive positive mix shift t his was achieved  
by increasing the number of new business 
projects in higher margin high valueadded 
endmarkets such as healthcare and aerospace 
whilst continuing to reduce exposure to more 
commoditised and economically cyclical 
product areas
t he ‘operational excellence’ programme has 
now been firmly embedded across the whole 
division it involves benchmarking projects  
that have accountability and responsibility  
at plant level and it delivered yearonyear 
improvements in operational efficiency  
t hese locally based and managed initiatives 
continue to be coordinated and supported  
by engineering and research and development 
personnel to optimise manufacturing 
processes 
t he continuous operational improvement 
programmes cost reduction initiatives and 
emphasis on positive price passthrough  
have all helped to deliver the margin growth 
achieved in 2012 and are expected to continue 
to contribute in 2013 and beyond
outlook
following the decline in market demand in  
the second half of 2012 entering 2013 the 
orderbooks for both t echnical and t hermal 
c eramics appear to have stabilised t here 
remain weaker areas such as the construction 
market in europe and whilst quotation levels 
for engineering projects in t hermal c eramics 
are strong the speed of conversion is slower 
than expected 
 
both businesses are continuing to pursue new 
business opportunities and increase their share 
of customer spend in 2013 which along with a 
number of the superwool
®
 capital investments 
coming fully on line during the year should 
leave them well placed to improve performance 
in 2013 and beyond
overview business review governance financial statements  14 the morgan crucible company plc  annual report 2012
3470
4158
4080
revenue
£m
2012
2011
2010
325
557
455
divisional ebita
£m
2012
2011
2010
business description
t he businesses within the morgan engineered 
materials division deliver highly engineered 
solutions across the world from a portfolio  
of advanced material technologies that include 
carbon silicon carbide oxidebased ceramics 
and advanced polymeric composites t he 
division’s footprint provides a global reach  
that enables the delivery of marketleading 
solutions to a variety of chosen endmarkets 
t hese chosen endmarkets are served  
through global businesses morgan a dvanced 
materials  t echnology morgan a mt   
np a erospace and molten metal systems 
mms for reporting purposes the division 
consists of two global reporting segments 
morgan a mt including np a erospace  
and molten metal systems mms
t he division’s capabilities are rooted in the 
understanding application and processing of  
its broad range of advanced materials t oday 
the engineered materials division has strong 
positions in carbon brushes for industrial and 
rail traction applications seals and bearings  
for fluid handling crucibles for the processing  
of nonferrous metals hightemperature 
insulation for silicon solar wafer production and 
sapphire crystal substrates for le ds advanced 
lightweight protective ceramiccomposite 
armour systems and graphite materials for 
lithium ion batteries
a s at 31 december 2012 the division 
employed approximately 4000 people serving 
customers in around 100 countries worldwide 
its global presence includes 40 operating 
facilities in 25 countries with major materials 
processing plants in the u sa  europe  
south a merica and a sia feeding an integrated 
network of finishing plants t he division 
benefits from a strategically located lowcost 
manufacturing base with sites in mexico 
china hungary and i ndia that allows the 
division to serve customers across the globe
t he division’s strategy aligns with the group’s 
strategic priorities and has fostered success in 
the ballistic protection market and entry into 
the silicon solar cell sapphire le d and lithium 
ion anode markets specifically the division’s 
strategy is to
  a dd 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 the division delivers  
to its customers 
  establish and fully embed a mindset  
for growth through focused business 
development specifically in highgrowth 
and highmargin markets 
  invest in its future through its technology 
centres of excellence and through 
acquisitions alliances and partnerships
  fully engage its entire workforce and  
instil a culture of continuous reinvention 
  c ontinuously recruit and develop the  
right people 
t he division’s global businesses go to  
market through channels that include  
both direct sales and distributor networks 
morgan a mt primarily uses direct sales 
channels complemented by strategic 
distribution partners who serve both the 
original equipment market and the aftermarket 
and are supported by a global network of 
applications engineers np a erospace uses 
direct channels to serve major militaries and 
vehicle original equipment manufacturers 
‘oems’ while mms leverages an effective 
global network of independent distributors to 
serve the global nonferrous metals industry 
t he division is strategically positioned to 
ensure that the best possible resource is 
deployed to provide advanced materials  
and technologies in the form of engineered 
solutions to its key global markets
re view of operati on s
continued
mor gan en gineered material s division annual report 2012  the morgan crucible company plc 15
market sectors
industrial
morgan engineered materials products are 
used in a wide range of industrial equipment 
t hey help manufacturers of nonferrous 
metallurgy steel paper cement chemicals 
pharmaceuticals and food to improve the 
efficiency of their processes
t he division’s highquality carbon brushes 
linear collectors and rotary current transfer 
products help to maximise equipment 
performance extend system life and  
optimise energy efficiency thereby reducing 
maintenance and operating costs 
its carbon and graphite insulation materials  
and machined graphite products are used  
to support specialist processes in demanding 
hightemperature environments where their 
purity and structural characteristics are critical 
to achieving the required process quality
in the mining industry severe and changeable 
operating loads and high levels of vibration 
make considerable demands on the electrical 
performance of heavy machinery morgan 
engineered materials’ superior advanced  
brush material technology has facilitated  
reliable equipment operation in the harshest 
and deepest mines in the world
morgan engineered materials’ advanced 
crucible technology is helping to improve the 
efficiency of energyintensive melting processes 
used in metal casting through increased 
strength and longer life
t he division’s crucibles are used all over the 
world in foundries diecasters and metal 
melting facilities working with zinc precious 
metals aluminium copper brass bronze  
and other nonferrous materials 
transportation
morgan engineered materials supplies key 
components for rail road and aerospace 
transport
its specialist materials technologies deliver 
longlife performance for rail networks all over 
the world even those operating in extreme 
environments such as very highspeed trains 
and long haul freight passing through widely 
varying conditions c arbon brushes 
commutation system components earthing 
brushes third rail and pantograph collectors 
are custom built and tested to meet individual 
rail network requirements
in light rail systems morgan engineered 
materials advanced composite technology is 
chosen for its combination of structural integrity 
and light weight which helps to save energy  
and provides better wear performance for 
longer life
t he division’s carbon and graphite 
components are used in commercial airlines 
military aircraft and helicopters and it makes  
jet engine main shaft bearing seals electrical 
brushes for alternators and generators 
bearings for fuel pumps and high temperature 
carbon fabrics for insulating systems its 
materials are used where reliability is critical 
and highperformance paramount such as 
inflight refuelling at high altitude
t he division supplies graphite anode materials 
for lithium ion batteries used in electric vehicles 
and is currently working with a number of 
worldleading partners to develop new 
materials for this sector 
security  defence
morgan engineered materials is a global leader 
in lightweight armour systems for the effective 
protection of people and property 
t he division has an unparalleled record in 
rapid fielding of new equipment in support  
of a range of defence programmes it is a  
critical resource supplier to the u k ministry  
of defence and has supplied tactical wheeled 
vehicles and equipment for use in iraq and 
a fghanistan it is designated a t ier 2 supplier  
of ceramic body armour plates to the  
u s department of defense
t he division’s ca mac ™ vehicle armour 
combines advanced ceramics with high
technology composites its systems are  
typically 40 of the weight of the equivalent  
in armoured steel making them easier faster 
and more costeffective to deploy t hey also 
demonstrate higher ballistic performance
morgan engineered materials provides 
comprehensive fleet management and support 
services for defence and security vehicles from 
design of the armour system to manufacture 
installation and spares provisioning it also 
repairs and refurbishes vehicles in theatre  
or upon return
t he division’s rotary transfer products are 
specified for their high reliability for use in 
military vehicles operating in the harshest 
conditions examples include tank turret 
systems specialist robotic mine detectors  
and radar systems
petrochemical
morgan engineered materials makes critical 
components for fluid flow handling applications 
in the petrochemical industry including  
seal faces bearings rotors and vanes  
its leadingedge materials offer excellent  
wear characteristics for the most extreme 
environments contributing to the safety  
and efficiency in oil and gas extraction  
and downstream processing operations
morgan engineered materials carbon  
and silicon carbide materials are used to 
manufacture the highperformance seals  
and bearings that play a vital role in minimising 
fugitive gas and product vapour emissions  
from valves pumps compressors and other 
pressurised equipment t he engineered 
topography in its seal components can reduce 
leakage rates in critical applications by as much 
as 50 
t he division’s capability for precision machining 
of silicon carbide composite mechanical seals 
produces products that allow operators to 
work at elevated contact pressures 
dramatically reducing interface leakage in 
demanding conditions
wear resistance is increasingly important  
in the design and operation of pumps and 
bearings for the petrochemical industry where 
advanced materials are used to help reduce 
failure rates warranty costs and downtime 
morgan engineered materials is working on 
nextgeneration materials with improved 
performance characteristics for example  
its patented silicon carbide and graphite 
composite reduces friction for longer life  
better reliability and energy efficiency
overview business review governance financial statements  16 the morgan crucible company plc  annual report 2012
electronics
morgan engineered materials is playing a key role 
in helping the electronics industry to achieve  
its own demanding performance targets
a s semiconductor manufacturers continue  
the drive for smaller faster integrated circuits 
that are less expensive to make so processing 
equipment is increasingly dependent on 
advanced materials to achieve the desired 
performance for example use of advanced 
carbon technology in the silicon wafer tool 
helps to achieve the required purity and 
process temperatures
morgan engineered materials manufactures the 
highest purity and controlled microstructure 
materials in the world and has enabled yield 
and process improvements in specialised 
semiconductor and le d substrate fabrication 
processes including ion implantation epitaxy 
and compound crystal growth t he division 
offers a stateoftheart purification capability 
and is working with leading equipment 
manufacturers to develop and incorporate  
new materials that will allow them to meet  
the needs of the semiconductor and  
le d industries
a dvanced materials that the division has 
engineered for applications in this sector allow 
manufacturers to work at higher temperatures 
with greater energy efficiency and reduced  
risk of contamination for a stepchange in 
process performance t his has enabled  
the manufacture of new products including 
integrated circuits le d devices and very  
fine optical fibres
energy
morgan engineered materials components  
play a critical role in traditional and renewable 
power generation and throughout the 
electricity supply chain its materials technology 
allows more efficient use of energy in a wide 
variety of industries by reducing friction 
providing better insulation and enabling  
new technologies
worldrenowned for performance and 
reliability the division’s brush technology  
is used in coal gas nuclear and wind power 
plants all over the world and is at the heart  
of electricity storage and distribution systems 
for applications from rail transport to electric 
vehicles its molten metal crucible technology  
is recognised as the most energyefficient  
way to melt nonferrous materials and  
is used extensively in the manufacture  
of copper components for electricity 
transmission systems
morgan engineered materials helps the world’s 
leading producers of polysilicon and silicon 
ingots to enhance solar cell performance its 
advanced insulation materials help to control 
the silicon melting process optimising energy 
efficiency and reducing contamination for 
more efficient photovoltaics
t he division’s graphite materials are used  
to make anodes for lithiumion batteries for 
portable electronic devices electric vehicles 
and grid energy storage and its carbon brushes 
and rotary transfer systems designed to 
perform in the harshest environments  
are used widely in wind power installations
healthcare
morgan engineered materials supplies specialist 
components for niche markets in healthcare 
diagnostic equipment
the division’s advanced carbon fibre 
composites are used as a strong lightweight 
structural frames for an advanced technology 
xray treatment couch used in oncology t he 
components help to ensure that patients are 
positioned correctly for optimum treatment 
higher image quality and lower xray doses 
t he material enhances resolution diagnostics 
thanks to its high xray transparency
its graphite material is used in the case and 
graphite layer of a sophisticated ultrasonic 
diagnostic probe it has developed a range  
of highly engineered ultrathin components  
to enable more accurate higher resolution  
and reliable ultrasound imagery
silicon carbide and carbon are used in 
advanced oxygen concentration units  
that provide relief to patients suffering from  
chronic obstructive pulmonary diseases such 
as emphysema and chronic bronchitis that 
cause airflow blockage and breathingrelated 
problems morgan engineered materials’ 
components are part of a rotary valve that 
extracts more than 95 pure oxygen from  
the environment
t he division’s electrical rotary transfer 
products are used widely in medical analysis 
equipment from endoscopes to cct and  
mrt scanners
research and development
t he businesses within the engineered materials 
division are leaders in carbonbased materials 
oxide and nonoxide ceramics lightweight 
composites and in ballistics and blast 
technology t he division’s research activities 
include material and process capabilities as  
well as product and systems development 
t hese activities are located within the major 
material processing facilities in the u sa  the u k 
and c hina t he division’s businesses deploy 
application engineers worldwide to work  
with customers in applying advanced materials 
and technologies to develop leadingedge 
engineered solutions according to customer 
need with a focus to position each business  
as leaders in dynamic growth markets
business performance
revenue in the e ngineered materials division 
was £3470 million 201 1 £4158 million 
representing a decrease at reported rates  
of 165 a t constant currency this decrease  
in revenue was 152 t he revenue of 
morgan a mt excluding np a erospace  
was £2434 million 201 1 £2761 million 
representing a decrease of 1 19 at reported 
rates and 106 on a constant currency basis 
np a erospace revenue was £578 million 
201 1 £930 million a decline of 378  
mms revenue was £458 million 201 1  
£467 million a decrease of 19 at reported 
rates but an increase of 48 on a constant 
currency basis
re view of operati on s
continued
mor gan en gineered material s division continued annual report 2012  the morgan crucible company plc 17
divisional ebita for the engineered materials 
division was £325 million 201 1 £557 
million a margin of 94 201 1 134 
morgan a mt e bita margin excluding  
np a erospace was 85 201 1 127  
np a erospace was 62 201 1 140  
and mms was 177 201 1 165
business developments
t he deterioration in the morgan a mt 
excluding np a erospace performance in  
2012 reflects the softening in a number of 
endmarkets globally but most acutely in china 
where the business had experienced significant 
growth in recent years t he slowing of this 
dynamic growth economy the sharp decline  
of highmargin renewable energy markets plus 
the fall in u s armour revenue were the main 
reasons for the weaker results in the year 
demand for electrical products across all 
regions began to soften in the second quarter 
and continued through the rest of the year  
seal and bearing demand driven by weakening 
economies in the u s and in europe began  
to soften in the third quarter and this continued 
through much of the second half demand  
for renewable and clean energy products fell 
off sharply at the end of the first quarter and 
remained depressed throughout the year with 
the largest impacts being a 50 yearonyear 
drop in demand for hightemperature 
insulation products and an abrupt decline  
of the wind energy market in china
r evenue from u s body armour declined  
from 201 1 however good progress was  
made during the year in positioning the 
business for success in 2013 and beyond
t he business reacted to the reduced volumes 
by making significant headcount and cost 
reductions across the globe including the 
closure or downsizing of a number of sites 
particularly in c ontinental europe
despite the challenges presented by slowing 
industrial markets and virtually stalled renewable 
energy markets the business continued to 
invest selectively in technology in expanding  
its lowcost manufacturing capability and in  
the business’s overall capability in c hina  
in order to continue to advance its ability  
to compete in its markets
r evenue in np a erospace was £578 million 
t he reduction in sales reflected the continued 
reduction in u rgent operational r equirements 
demand from the u k ministry of defence 
‘mod’ for tactical wheeled vehicles  
np a erospace margin was impacted in 2012 
particularly in the second half by vehicle 
contract closures resulting in both settlements 
with the mod and prudent assessments of 
inventory remaining from the long period of 
supporting u rgent operational r equirements 
for the mod in a fghanistan entering 2013 
revenue predictions are stable and the cost 
base has been rightsized for this level of 
revenue np a erospace continues to build  
a significant pipeline of opportunities both 
through the u sa  focused on key u sa military 
vehicle oems and through a growing series  
of export opportunities outside the u k  
and the u sa  investment in technology has 
continued to be a high priority and has yielded 
breakthrough developments in lighter weight 
personal protection and highly advanced 
vehicle armour systems that have the potential 
to generate significant growth in the future
t he mms business continued to perform well 
with revenue growth at constant currency rates 
and margin improvements as global demand 
for nonferrous castings continued to increase 
in part driven by increasing demand from the 
automotive sector good growth in china 
n orth a merica and the far east more than 
offset a decline in demand from europe t he 
business continues to benefit from its lowcost 
manufacturing footprint strong market presence 
in dynamic growth markets and continued 
progress in driving operational excellence
outlook
entering 2013 morgan a mt ’s order book 
continues to reflect softness in demand from 
most sectors and geographies although 
demand appears to have stabilised towards the 
end of 2012 demand from the solar sector is 
expected to remain depressed at least until the 
second half of the year while demand from 
china’s wind sector is expected to improve 
from a low base through the course of 2013 
t he business is also pursuing a number of u s 
body armour contracts that hold promise for 
improving revenue in 2013 and beyond
np a erospace revenue in 2013 is expected  
to be in line with 2012 with lower vehicle 
systems demand from the u k mod being 
offset by a growth in export sales
t he outlook for the mms business remains 
positive with continued sales growth expected 
in the dynamic growth markets particularly 
china t he commitment to operational 
excellence and marketleading positions  
in dynamic growth economies means  
mms is well placed to continue to deliver 
highmargin growth again in 2013
overview business review governance financial statements  18 the morgan crucible company plc  annual report 2012
c orp orate re spon sibility
c orporate responsibility  
is integral to morgan 
c rucible’s business 
morgan c rucible’s 
corporate responsibility 
policies and programmes 
in this area support each  
of the group’s five strategic 
priorities and address key 
risks and opportunities 
t his report summarises 
the group’s key corporate 
responsibility policies  
and procedures their 
implementation and their 
effectiveness which is 
where appropriate 
monitored using key 
performance indicators
t he following section reports on morgan 
c rucible’s r esponsible business programme 
including the group’s policies procedures  
and performance in respect of business  
ethics community relations and suppliers  
and customers subsequent pages cover 
environment health and safety ehs and 
people in addition morgan c rucible’s 2012 
ehs r eport planned for publication on the 
website in may 2013 will provide a more 
comprehensive review of the group’s  
ehs performance in 2012
morgan c rucible’s approach to corporate 
responsibility is encapsulated in the group’s 
c ore values statement a s the group works 
to implement its strategic priorities the c ore 
values statement provides the framework for 
the group’s corporate responsibility policies 
programmes and procedures t he statement  
is available on the website and applies  
to all morgan c rucible businesses and 
employees worldwide
t he governance structure for corporate 
responsibility is aligned with the management 
structure of the group t he board is 
accountable for corporate responsibility policies 
and procedures t he chief e xecutive officer 
mark r obertshaw is the executive in charge  
of all corporate responsibility matters  
he is supported by the executive team with 
functional heads having specific responsibility 
for environment health and safety legal 
compliance human resources and other areas 
operational implementation is delegated to the 
chief e xecutive of each of the group’s divisions
corporate responsibility policies 
and procedures
t he group continues to develop its 
r esponsible business programme as the core 
training and education platform for morgan 
c rucible’s corporate responsibility policies  
and procedures other than ehs which is  
a standalone programme t he responsible 
business programme covers human rights 
contract risk management ethics and 
antibribery and competition
t he policies and procedures are mandated 
across the group taking into account local 
legislation and regulation a ll policies are 
reviewed annually and where amendments  
are made these are communicated across the 
group group policies are often accompanied 
by detailed manuals or guidelines which 
provide additional support to the business
t he group provides employees with access  
to the group’s policies and related procedures 
and guidance notes through the group’s 
intranet key policies and other relevant 
materials are also required to be displayed  
on site noticeboards
each year the divisional chief e xecutives  
and finance directors are required to certify 
that their division has implemented and 
complied in full with the policies or to declare 
any exceptions t his certification forms an 
integral part of the group’s system of internal 
controls n o material exceptions were 
declared in respect of 2012 each business also 
completes an annual certification of compliance 
with the various elements of the responsible 
business programme including corporate 
responsibility policies
t he morgan c rucible ethics hotline operated 
by expolink was launched globally in 201 1  
and enables employees and other stakeholders 
who are aware of or suspect misconduct 
illegal activities fraud abuse of group assets or 
violations of any group policy to report these 
confidentially without fear of retribution should 
they feel they cannot use a local channel
business ethics and compliance
t he board is responsible for overseeing the 
group’s ethics policy
t he group’s c ore values statement ethics 
policy and c ompetition l awa ntit rust policy 
which are available in 13 languages oblige all 
employees to operate in accordance with 
applicable laws and regulations t he ethics 
policy specifically prohibits the giving or 
receiving of bribes and the c ompany is clear 
that no employee shall suffer discrimination  
as a result of refusing to pay or receive a bribe 
t he group policies apply so far as is 
appropriate to morgan c rucible’s business 
partners including agents joint ventures and 
representatives 
during 2012 an appropriately translated 
version of the responsible business guide  
for r epresentatives was issued to thirdparty 
agents and others acting ‘on behalf’ of the 
group t his guide summarises the ethical 
principles the group requires its representatives 
to adhere to in order to act on behalf of  
the group  annual report 2012  the morgan crucible company plc 19
customers and suppliers
morgan c rucible’s customer service policy is to 
respond quickly to changing customer demand 
to identify emerging needs and to ensure 
product availability quality and value t he 
group stays close to its current and potential 
customers building longterm relationships 
over 90 of the group’s manufacturing 
output is accredited to iso 9001 and the 
group’s quality management systems help 
ensure that morgan c rucible’s products  
meet or exceed customer requirements 
management of the supply chain is a key part  
of iso 9001 accreditation and includes supplier 
audits and screening as appropriate
t he group engages with its customers 
suppliers and other partners in mutually 
beneficial ways and works with business 
partners who the group believes will act in 
accordance with morgan c rucible’s policies  
and values morgan c rucible’s support for  
the u niversal declaration of human r ights 
referred to in the people section on page 26 
commits the group in respect of all those who 
work for it and those who have dealings with it 
including suppliers
community
t he group’s policy is to engage with local 
communities in relation to matters of mutual 
interest and concern a t a local level where 
morgan c rucible often has longestablished 
roots and is frequently a major employer  
this helps to foster mutual understanding  
and credibility in addition morgan c rucible 
engages with local and national governments 
and agencies both directly and through 
professional bodies t he group has a 
donations  sponsorship policy under  
which donations to political parties or  
causes are prohibited
corporate responsibility policy 
implementation
t he implementation of morgan c rucible’s 
corporate responsibility policies and 
procedures is aligned with the overall 
governance structure of the group  
t he implementation of the group’s ehs  
and peoplerelated policies is covered in  
more detail on pages 21 to 27
described below are some of the processes 
for implementing and monitoring the group’s 
corporate responsibility policies and procedures
business ethics and compliance
t he board of morgan c rucible is committed  
to ensuring that the group’s policies relating  
to business integrity are upheld policies and 
manuals are implemented in the business 
through the r esponsible business programme 
t he r esponsible business programme was 
introduced in 2010 with the first phase of the 
programme completed in 201 1 t his phase 
introduced human rights contract risk 
management ethics and antibribery training 
t he second phase of the programme from 
201 1 into 2012 covered the relaunch of  
the group’s global a ntit rust c ompliance 
programme which underpins the group’s 
policy to comply with all antitrust and 
competition laws around the world in addition 
to covering antitrust the second phase of  
the programme reinforced and refreshed  
the training provided in phase one with  
training delivered to over 2000 relevant 
employees worldwide
t he programme is implemented via  
‘trainthetrainer’ sessions for general managers 
and compliance officers who then deliver 
facetoface training to relevant local and site 
staff t he facetoface training is complemented 
by el earning modules which are available in  
13 different languages and require a 100 
score in each el earning test module in order  
to pass t he r esponsible business programme 
is also a mandated part of induction training for 
new employees 
l ocal sitebased c ompliance officers report to 
the c ompany secretary as global c ompliance 
director on the continuing effectiveness of the 
r esponsible business programme specifically 
incorporating annual business certification of 
compliance with the various elements of the 
programme
r egular compliance risk assessments across  
the group help to identify those businesses 
which have a higher risk of a compliance 
breach often where located in a high risk 
territory working through a third party agent 
or with government entities in order to assist 
with managing these compliance risks these 
highrisk businesses receive additional focus 
and support including further training guidance 
and site visits t hese risk assessments also 
inform internal audit practices
during 2013 the group plans to further 
develop the responsible business p rogramme 
with the incorporation of facetoface export 
control training updated contract risk training 
and updated facetoface training on each of 
the existing modules to reinforce the existing 
training materials
t he ethics hotline complements the training 
given in the r esponsible business programme 
providing an alternative means of reporting 
breaches of policy t his is promoted on the 
group’s intranet through site posters and 
other promotional materials in 17 languages 
t he ethics hotline includes local freephone 
numbers in each of the countries in which the 
group operates with realtime translators 
available as necessary t he remit of internal 
audit includes ensuring the availability of the 
ethics hotline is suitably promoted at site level
customers and suppliers
t he chief e xecutives of each of the group’s 
divisions have specific responsibility for 
customers and suppliers and related policies 
and procedures within their respective 
divisions each division and business 
implements appropriate sales and customer 
account management structures with customer 
contacts and monitoring at senior levels to help 
ensure that customer feedback concerns and 
opportunities are addressed
divisional supplier audits and screening also 
cover the un global c ompact health and 
safety labour standards including with regard 
to minimum age maximum hours minimum 
wages equal opportunities grievance 
procedures and human rights anticorruption 
procedures and environmental management
overview business review governance financial statements  20 the morgan crucible company plc  annual report 2012
community
t he implementation of morgan c rucible’s 
communityrelated policies and procedures is 
aligned with the management of the group’s 
overall business and is focused at site level on 
engagement and initiatives which are relevant 
to the local community and to the group’s 
business divisional and group support is 
made available where appropriate a ll 
charitable and other donations are accurately 
accounted for and reported centrally  
for monitoring
verification of esg disclosures
t he c ompany secretary and the director  
of ehs work with independent external 
consultants to review and where appropriate 
verify the group’s esg disclosures t his 
process covers the environmental and  
health and safetyrelated nonfinancial key 
performance indicators included in this r eport 
corporate responsibility policy 
effectiveness
business ethics and compliance
participation in the responsible business 
programme and implementation of the site 
training is monitored at a group level through 
internal reporting procedures the annual 
selfcertification process and the annual 
business certification of compliance with  
the various elements of the programme 
a dherence is also monitored by the collation 
and review of a number of reporting forms 
which include reporting any requests for  
a bribe and contact with competitors
in addition an assessment of the effectiveness 
of the programme has been incorporated  
into the internal audit process providing  
an additional ‘check and balance’ to the 
selfcertification of policy compliance t his 
along with independent audit of the antitrust 
element of the programme allows monitoring 
of the continued effectiveness of the 
programme which is monitored by the 
c ompany secretary as global c ompliance 
director who reports to the executive 
c ommittee and the board on the effectiveness 
of the programme and on any issues arising
issues raised through the ethics hotline or  
via other channels are followed up by the 
c ompany secretary further investigations may 
be conducted through the a udit c ommittee  
as required where appropriate disciplinary 
action up to and including dismissal is taken 
andor additional guidance and training 
provided during 2012 1 1 reports were 
received via the hotline from three different 
countries n o material issues were reported 
via the hotline in 2012 t he a udit c ommittee 
monitors and reviews the effectiveness of  
the ethics hotline and of the followup and 
investigation processes t he a udit c ommittee 
reviewed the operation and effectiveness of 
the hotline during the year and was satisfied 
that it is operating effectively 
customers and suppliers
morgan c rucible continues to benefit from 
longterm relationships with many customers 
and suppliers reflecting the effectiveness of the 
group’s customer service and supplierrelated 
strategies some examples of the products and 
markets served are included on pages 10 to 17 
of this a nnual r eport
management of the supply chain is a key part  
of iso 9001 accreditation and includes supplier 
audits and screening as appropriate
community
during the year the group’s charitable 
donations were £178060 201 1 £194744 
t his is in addition to the time given and 
donations made by morgan c rucible 
employees around the world
during 2012 morgan c rucible supported a 
number of initiatives at group divisional and 
site level t he 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
  t he group continues to support the joint 
barnardo’soutward bound initiative which 
provides opportunities for young people  
to develop life skills at a centre in u llswater 
u k t his year a team from barnado’s 
visited head office and presented on the 
value of their experience of the initiative
  np a erospace in c oventry u k is a major 
sponsor of the local godiva harriers 
a thletics c lub and other local community 
and charitable initiatives and also supports 
the a rmy winter sports a ssociation which 
creates the opportunity for many hundreds 
of soldiers to take part in winter challenges 
  t he group also supported the british 
heart foundation and a number of  
other sports and healthrelated charities 
and appeals
t he group’s 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
  morgan t echnical c eramics in the u sa 
instituted a companywide relief effort for 
those affected by hurricane sandy with 
extensive supplies including canned goods 
clothing and fuel being sent to the group’s 
wood r idge n j facility t raditional 
shipping methods could not guarantee 
delivery dates so mtc n ew bedford 
rented a truck which was then driven 
overnight to wood r idge by an mtc 
employee 
  employees from the morgan c eramics 
a sia team took part in the standard 
chartered marathon singapore 2012 
funds were raised for the a utism 
a ssociation
c orp orate re spon sibility
continued annual report 2012  the morgan crucible company plc 21
morgan c rucible’s environment health  
and safety ehs policy and implementation 
programmes support the group’s five strategic 
priorities and c ore values statement ehs 
performance has a direct and significant effect 
on operating performance and is therefore a 
key focus for risk assessment and operational 
management across the group 
morgan c rucible is committed to conducting  
all its activities in a manner which achieves high 
standards of health and safety for employees 
and others affected by its operations t his 
commitment is continuous and ongoing and  
it is with regret that the group reports that  
for the first time in many years two employees 
were involved in fatal accidents at the group’s 
manufacturing facilities t he accidents occurred 
in china in july and in the u k in december 
2012 t he u k accident is the subject of  
a detailed investigation that is still ongoing 
further details are included on page 24  
below and during 2013 morgan c rucible  
will be working to introduce an enhanced 
behavioural safety culture throughout  
the group 
t he group is also committed to minimising  
the impact of its business on the environment 
and to maximising the positive environmental 
benefits of its products examples of morgan 
c rucible’s products which help enhance  
the environmentrelated performance and 
efficiency of the products and operations  
of the group’s customers are included in  
pages 10 to 17 of this r eport
t he regular collection and reporting and 
evaluation of ehs key performance indicators 
kpis and the setting of ehsrelated targets 
assists in the development and monitoring 
of programmes to enhance operational and 
health and safety performance and to reduce 
the impact of the group’s operations on  
the environment
t his r eport includes a summary of the  
group’s ehs policy and its effectiveness as 
demonstrated through its ehs kpis and training 
and other programmes further detail will  
be included in the 2012 ehs r eport to be 
published on the group’s website in may 2013 
t he ehs r eport will also include case studies 
to help demonstrate the group’s approach  
to ehs performance improvement
ehs policy
morgan c rucible’s ehs policy applies 
groupwide it forms the basis for  
executive and management oversight and 
implementation and has been communicated 
across all sites within the group t he policy  
is published on the group’s website and in  
the annual ehs r eport
ehs policy implementation
morgan c rucible’s ehs governance procedures 
are centred on its ehs policy which forms  
the basis of the group’s ehs management 
systems and processes t he policy requires 
high standards of ehs management at all sites  
t his is implemented through performance 
monitoring risk assessment and the 
management and mitigation of identified risks 
to help provide continuous improvement in 
ehs performance in support of the group’s 
strategic priorities
ehs performance is reported halfyearly  
to the board by the chief financial officer  
t he governance structure for ehs places 
responsibility for ehs performance on the 
chief e xecutive of each of the group’s 
divisions with each site having a point of 
accountability t he chief financial officer is 
responsible for ehs policy and performance 
monitoring and the group’s director 
environment health and safety provides 
group direction and oversight and has 
responsibility for implementation of the  
group ehs programmes including standards 
and procedures review of the adequacy  
of ehs resources across the group as  
well as training performance reporting  
and assurance processes 
during 2012 the group continued the 
recruitment of divisional ehs leaders in  
all the regions that it operates t his global 
network of ehs specialists reports to  
the regional management teams and is 
responsible for improving the standards  
of ehs management and performance in  
the group’s businesses t his is in line with  
the proposals for the enhancement and 
formalisation of ehs governance arrangements 
that were adopted by the board at the end  
of 2011
in addition as described below the group 
commissioned external assurance on selected 
ehs data from pricewaterhousec oopers llp 
pwc 
 
morgan c rucible’s grouplevel ehs 
management processes include
  t he ehs c ompliance a udit programme 
which is carried out by external ehs 
consultants in europe and a sia and 
inhouse resources in the a mericas t his 
programme reviews the ehs management 
at each site and helps ensure compliance 
with local regulations and good 
management practice t he ehs 
c ompliance a udit programme also covers 
the ehs management systems and the 
ehs kpis reported by each site a ll of the 
group’s manufacturing facilities are 
reviewed on a threeyear rolling cycle 
a ccordingly 29 sites were audited during 
2012 and 36 sites are planned for audit  
in 2013 t he audit reports are reviewed  
by the director environment health  
and safety and by the divisional chief 
executives a ction items are tracked 
through a formal followup process
  formal training as an integral part of the 
implementation of the group’s ehs policy 
t his is undertaken at a regional level in 
each division according to businessspecific 
risks and opportunities with grouplevel 
support and oversight for example  
during 2012 training programmes in c hina 
focused on machine safety including the 
introduction of lockouttagout systems  
at each site
  monthly performance reporting against  
the group kpis by all group sites t he 
data is subject to biannual review and 
challenge at group level with reporting  
of performance to the executive 
c ommittee and the board by the  
chief financial officer
in 2012 environmental management  
systems were in place at 94 sites worldwide 
including 41 major sites certified to iso 14001 
201 1 39 sites t wo additional sites in the  
u sa and i ndia achieved certification in 2012 
t hese new certifications are in addition to  
the ongoing programme of recertifications  
a ll major production sites worldwide have 
health and safety management systems in 
place with 15 sites certified to or working 
towards ohsa s 18001 201 1 15
overview business review governance financial statements
en vir on ment  health an d sa fety  22 the morgan crucible company plc  annual report 2012
ehs policy effectiveness
morgan c rucible monitors the effectiveness  
of its ehs policy through the ehs c ompliance 
a udit programme the review of performance 
against a series of groupwide kpis its external 
assurance programme and by participating in  
a number of external initiatives as further 
described below 
t he summary charts on pages 23 and 24 
represent the group’s ehs performance 
covering all production sites during the year
environmental intensity kpis are reported  
at constant currency and where necessary 
historic ehs data is updated to reflect changes 
in reporting methodology and to ensure 
yearonyear consistency
in 2012 the group expanded the independent 
external assurance performed by pwc to 
cover the group’s waste and recycling kpis in 
addition to c o
2
 intensity energy intensity and 
water intensity that were also assured in 201 1 
t he assurance report from pwc is set out  
on page 25 in addition a workprogramme  
is underway with a view to gain assurance for 
the group’s lost time accident frequency data 
in 2013 
t he overall verification of morgan c rucible’s 
environmental social and governance 
disclosures is further discussed on page 20
t he group participates in a number of external 
initiatives which help to benchmark policy 
effectiveness and progress including
  during the year morgan c rucible’s wholly 
owned u k businesses were accredited to 
the c arbon t rust standard t his certified 
that they have measured managed and 
reduced their carbon footprint
  morgan c rucible has made filings in 
respect of the group’s u k facilities under 
the u k government’s c arbon r eduction 
c ommitment energy efficiency scheme
  t he group also participates in the c arbon 
disclosure project c dp t he c dp is a 
notforprofit organisation that assesses and 
ranks companies in the major industrial 
countries according to their worldwide 
carbonrelated reporting strategies 
management and performance in the 
2012 c dp ft se 350 r eport the group 
was featured in both the c arbon disclosure 
l eadership index one of 35 companies 
and the c arbon performance l eadership 
index one of seven companies t his 
performance reflects the progress being 
made throughout the group to reduce 
energy usage and resulting co
2
 emissions
environmental performance
wherever possible the group works to 
minimise the impact of its business on the 
environment and to maximise the positive 
environmental benefit of its products 
morgan c rucible monitors the impact of its 
operations on the environment as measured 
by its combined scope 1 and scope 2 c o
2
 
emissions energy waste and water intensity 
per £million of revenue t he group sets 
twoyear targets for the improvement in these 
environmental metrics and the group’s 2012 
performance is a report against the targets for 
the twoyear period 201012 
t he group’s intensity targets and kpis relate 
environmental measures to revenue t he 
decline in revenue in 2012 and corresponding 
reduction in production volumes inevitably  
had an impact on the absolute c o
2
 emissions 
energy use and water use whilst the lower 
volumes led to lower efficiency in some of  
the group’s energyintensive operations the 
group was still able to improve the c o
2
 and 
energy related metrics as a result of the actions 
taken – further details are provided below 
r ecycling rates improved although the quantity 
of waste reported increased due to the 
disposal of historic waste at a number of  
sites during 2012
further details of the group’s ehs targets and 
objectives including updated and new targets 
for 201214 will be included in the group’s 
2012 ehs r eport which is expected to be 
published on the group’s website in may 2013
t he group’s c o
2
 intensity  was reduced by 
2 in 2012 bringing the reduction over the 
two years 201012 to 7 t his was ahead  
of the target to reduce the c o
2
 emissions 
intensity due to energy use by 5 over the 
two year period 2012 energy intensity   
was down by 7 compared to 2010 with  
a marginal decrease in the year t he reduction 
over the two years was achieved through 
increased efficiency at many of the group’s 
energyintensive businesses driven by energy 
reduction programmes t his 7 reduction 
follows on from the 12 reduction achieved 
over the twoyear period 200810 in absolute 
terms total c o
2
 emissions due to energy use  
in 2012 were some 405600 tonnes against 
445000 tonnes in 201 1 and 428500 tonnes  
in 2010 t otal energy use was some 131 3 gwh 
in 2012 against 1430 gwh in 201 1 and  
1388 gwh in 2010 t he group will be 
seeking further reductions in energy intensity  
in 2013 and beyond
r eported waste intensity  increased by 4 
over the two years 201012 which is behind 
the target to reduce waste intensity by 5 over 
the period t he increase in reported waste 
intensity follows programmes to identify and 
dispose of accumulated waste and surplus 
materials and equipment across a number  
of sites worldwide a dditionally the group 
undertook a thorough review of waste 
generation and reporting in 2012 a s a result a 
small number of waste streams are included in 
the 2012 reports which were not fully covered 
by previous reports t he proportion of total 
waste which was recycled was 28  in 2012 
up from 22 in 2010 and meeting the target  
to increase recycling by 5 of total waste over 
the two years 201012 t otal waste reported  
in 2012 was some 48900 tonnes up from 
48600 tonnes in 201 1 and against 46400 
tonnes in 2010
water use intensity  was down by 3 in  
the year bringing the reduction the over the 
two years 201012 to 15 t his was ahead of 
the target to reduce water intensity by 5 over 
the two years 201012 t his improvement was 
achieved through a focus on reducing water 
use at the group’s more waterintensive 
businesses combined with further reductions 
achieved through reuse and recycling of water 
at a number of sites t otal water use in 2012 
was 253 million m
3
 down from 279 million m
3
 
in 201 1 and down from 292 million m
3
 in 2010
  t he 2012 c o
2
 intensity energy intensity water use 
intensity waste intensity and proportion of total waste 
recycled information has been subject to assurance by 
pwc  see independent a ssurance r eport on page 25  
for further details
c orp orate re spon sibility
continued
en vir on ment  health an d sa fety continued annual report 2012  the morgan crucible company plc 23
403
411
433
420
503
total co 2 intensity 
tonnes co
2
£m revenue 
2012
2011
2010
2009
2008
49
45
47
58
71
waste intensity

tonnes waste£m revenue 
2012
2011
2010
2009
2008
1303
1321
1402
1378
1589
energy intensity

mwh£m revenue 
2012
2011
2010
2009
2008
2516
2581
2946
2642
2864
water intensity

m
3
£m revenue 
2012
2011
2010
2009
2008
  t h e 2012 and 201 1 c o
2
 intensity energy intensity water intensity and 2012 waste intensity information has been subject  
to assurance by pwc  see the independent a ssurance r eport on page 25 for further details
  scope 1 emissions from fossil fuel usage and scope 2 c o
2
 using countryspecific electricity factors
  c o n s t a n t currency basis and updated to reflect changes in reporting methodology
  energy from all sources
 hazardous and nonhazardous waste including recycled material
   water from all sources including process irrigation and sanitary use
overview business review governance financial statements  24 the morgan crucible company plc  annual report 2012
health and safety performance
a s reported above morgan c rucible is 
committed to conducting all its activities in  
a manner which achieves high standards of 
health and safety for all its employees t he 
group’s policy statement on this is clear and 
communicated throughout the group and 
health and safety metrics receive a high degree 
of focus at all levels of the business t he policy 
statement is supported by site level assessment 
and monitoring of risks however there were 
two fatal accidents involving employees in 2012 
t he accidents had different causes with the first 
fatality occurring at the group’s y ixing t hermal 
c eramics facility in china when an employee 
became trapped in an automated unloading 
and stacking machine t he group has 
conducted a review of machine guarding 
operator training and related procedures  
at its manufacturing facilities worldwide  
and is committed to making any necessary 
improvements a second fatality occurred 
when an employee at the t echnical c eramics 
site in r uabon u k suffered crush injuries  
whilst moving a piece of heavy machinery  
t his incident is subject to an ongoing 
investigation by the u nited kingdom health 
and safety executive a lthough differing in 
nature these fatal accidents have demonstrated 
the importance of the behavioural safety 
culture throughout the group and  
morgan c rucible is committed to introduce 
programmes to further enhance this in 2013
morgan c rucible’s health and safety aim  
is to have no accidents or injuries in 2012  
the group continued to extend its accident 
prevention and training programmes with  
the objective of reducing accident numbers  
and the time lost per lost time accident 
particular focus is placed on those sites with 
belowaverage performance as measured  
by their ehs kpis and through the ehs 
c ompliance a udit programme
t he group’s health and safety kpis include 
accident frequencies and causes and related 
lost working time t hese are used to monitor 
the effectiveness of the group’s health  
and safety policies and related systems  
on a monthly basis
in 2012 the frequency of lost time accidents 
across the group was down 1 1 at 052  
per 100000 hours worked 201 1 058  
t he number of lost time accidents reported 
was 1 13 201 1 131 manual handling cuts and 
abrasions remain the most common causes of 
accidents and the group continues to address 
this specifically targeting businesses with 
belowaverage performance
a ll accidents are reported in the year in which 
the accident actually occurs whereas the lost 
time which impacts lost time as a  of total 
working time and the lost time per lta metrics 
is reported in the year in which the individual  
is away from work
r eported lost time due to accidents and 
workrelated illnesses as a percentage of 
working time increased from 010 in 201 1 to 
01 1 in 2012 t his was caused by an increase 
of 12 in the number of days lost during 2012 
and a 3 decrease in the number of hours 
worked t he increase in the number of days 
lost in 2012 largely related to time lost in the 
year due to accidents which occurred in 201 1
t he reported average number of days lost  
per lta in the year increased to 28 days from 
21 days in 201 1 t his calculation was impacted 
by accidents that occurred and were reported 
in 201 1 which resulted in lost time in 2012 
t hus the 201 1 figure includes the accident but 
not all of the lost time and the 2012 figure 
includes the balance of the lost time but not  
the accident whilst such items will always 
occur in this instance it does lead to a large 
increase in the reported figure and if the 
accidents and lost time were to be fully 
reported in the same period then the  
increase in the days lost per lta would be 
approximately 10 t here has been no 
change in the underlying nature or severity  
of the accidents reported
c orp orate re spon sibility
continued
000 069
052
058
058
056
069
lost time accident frequency 
ltas100k hours worked 
2012
2011
2010
2009
2008
011
010
01 1
01 4
01 5
health and safetyrelated lost time
 of total working time
2012
2011
2010
2009
2008
28
21
24
32
27
lost time per lta


days per lta

2012
2011
2010
2009
2008
  l ost time accident lta accident which results in one  
or more days’ lost time
   t otal time lost due to health and safety in 2012 divided by 
the number of lost time accidents reported in the year annual report 2012  the morgan crucible company plc 25
in depen dent a ssurance rep ort
independent assurance report to the directors of the morgan crucible company plc
t he directors of t he morgan c rucible c ompany plc ‘morgan c rucible’ engaged us to provide limited assurance on the information described 
below and set out in morgan c rucible’s a nnual r eport for the year ended 31 december 2012
what we are assuring ‘selected information’
t he selected environment health and safety ‘ehs’ data for the year 
ended 31 december 2012 marked with the symbol  presented in  
the a nnual r eport 2012 t he scope of our work was restricted to the 
selected information for the year ended 31 december 2012 and does  
not extend to information in respect of earlier periods or to any other 
information in the a nnual r eport 2012
how the information is assessed ‘reporting criteria’
we assessed the selected information using morgan c rucible’s 
r eporting c riteria as set out at
httpwwwmorgancruciblecomgovernanceresponsiblebusiness
environmenthealthsafety
1

professional standards applied
2
 and level of assurance
3
 
we have used isae 3000 limited level of assurance and we have 
complied with the icae w c ode of ethics
understanding reporting and measurement methodologies
t here are no globally recognised and established practices for evaluating 
and measuring the selected information t he range of different  
but acceptable techniques can result in materially different reporting 
outcomes that may affect comparability with other organisations  
t he r eporting c riteria used as the basis of morgan c rucible’s reporting 
should therefore be read in conjunction with the selected information 
and associated statements reported on morgan c rucible’s website
work done
c onsidering the risk of material misstatement of the selected 
information we
  made enquiries of morgan c rucible’s management including those 
with responsibility for ehs management and group ehs reporting
  evaluated the design of the key structures systems processes  
and controls for managing recording and reporting the selected 
information t his included visiting eight sites and analysing a further 
31 sites selected on the basis of their inherent risk and materiality  
to the group to understand the key processes and controls  
for reporting site performance data to the group ehs team
  performed limited substantive testing on a selective basis of the 
selected information at corporate head office and in relation  
to the same 39 sites noted above to assure that data had been 
appropriately measured recorded collated and reported and
  a ssessed the disclosure and presentation of the selected information
morgan crucible’s responsibilities 
t he directors of morgan c rucible are responsible for
  designing implementing and maintaining internal controls over 
information relevant to the preparation of the selected information 
that is free from material misstatement whether due to fraud  
or error 
  establishing objective r eporting c riteria for preparing the  
selected information
  measuring morgan c rucible’s performance based on the  
r eporting c riteria and
  t he content of the a nnual r eport 2012
our responsibilities
we are responsible for
  planning and performing the engagement to obtain limited assurance 
about whether the selected information is free from material 
misstatement whether due to fraud or error
  forming an independent conclusion based on the procedures  
we have performed and the evidence we have obtained and
  r eporting our conclusion to the directors of morgan c rucible
our conclusions
as a result of our procedures nothing has come to our attention  
that indicates the selected information for the year ended  
31 december 2012 has not been prepared in all material  
respects with the reporting criteria
this report including our conclusions has been prepared solely for the 
directors of morgan crucible as a body in accordance with the agreement 
between us to assist the directors in reporting morgan crucible’s  
ehs performance and activities we permit this report to be disclosed in 
the annual report for the year ended 31 december 2012 to enable the 
directors to show they have addressed their governance responsibilities  
by obtaining an independent assurance report in connection with the 
selected information to the fullest extent permitted by law we do not 
accept or assume responsibility to anyone other than the directors as  
a body and morgan crucible for our work or this report except where  
terms are expressly agreed between us in writing
pricewaterhousecoopers llp 
c hartered a ccountants
l ondon
14 february 2013
1  t he maintenance and integrity of morgan c rucible’s website is the responsibility of  
the directors the work carried out by us does not involve consideration of these matters 
and accordingly we accept no responsibility for any changes that may have occurred  
to the reported selected information or r eporting c riteria when presented on  
morgan c rucible’s website
2  we have complied with international standard on a ssurance engagements 3000 – 
‘a ssurance engagements other than a udits and r eviews of historical financial 
information’ issued by the iaa sb and with the applicable independence and competency 
requirements of the institute of c hartered a ccountants in england and wales icae w 
c ode of ethics t o comply with those standards our work was carried out by an 
independent and multidisciplinary team of sustainability and assurance specialists
3  a ssurance defined by the international a uditing and a ssurance standards board iaa sb 
gives the user confidence about the subject matter assessed against the reporting criteria 
r easonable assurance gives more confidence than limited assurance as a limited 
assurance engagement is substantially less in scope in relation to both the assessment of risks 
of material misstatement and the procedures performed in response to the assessed risks
overview business review governance financial statements  26 the morgan crucible company plc  annual report 2012
morgan c rucible recognises that its people  
are critical to the group’s success with a 
workforce with highly unique skills set out 
below are the group’s people policies how 
they have been implemented together with  
a review of their effectiveness
people policies and their implementation
t he group supports the u niversal declaration 
of human r ights and the group’s human 
r ights policy commits the group to protect  
the rights of everyone who works for it and all 
those who have dealings with it t he principles 
of the policy cover child labour forced labour 
health and safety freedom of association 
discrimination discipline working hours and 
compensation and the policy is published on 
the group’s website t he director of human 
r esources reports to the chief e xecutive 
officer and is responsible for the development 
of the human r ights policy and related 
matters with the chief e xecutives of each 
division having responsibility for policy 
implementation within their respective 
divisions t he divisional c hief executives 
report annually on their implementation of the 
human r ights policy t he morgan c rucible 
ethics hotline enables employees who are 
aware of or suspect issues under the group’s 
human r ights policy to report these 
confidentially
t he group’s global human r esources 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 plan
talent and recruitment
demands on the business as a whole  
continue to change and the group’s businesses 
continuously explore different business 
development opportunities as they evolve  
into new markets and industries t he group’s 
approach is therefore to develop existing 
employee talent and recruit new people  
into jobs that fit those business requirements 
at the time they are needed t he group 
reviews short and longterm business needs 
on a regular basis and carries out succession 
planning and talent reviews to identify any skill 
gaps a gain this year this process has enabled 
several promotions around the group as well 
as some targeted external hiring 
whether recruiting internally or externally  
for a vacant position selection is based on 
many factors including a candidate’s relevant 
education work experience competencies  
and performance record t he group does  
not unfairly discriminate and it respects human 
rights should existing employees become 
disabled the group’s policy is to provide 
continuing employment and training  
wherever practicable
training and development
overall training hours per employee have 
increased see people policy effectiveness  
t his training encompasses management 
commercial technical and health  safety 
training for example last year the group 
further developed its existing approaches to  
the assessment of management capability and 
development t his was through investment  
in management training and leadership 
development in both divisions and across  
all regions
within the local businesses momentum 
continues regarding the group’s r esponsible 
business programme which was introduced  
in 2010 with training on human rights  
contract risk management ethics and 
antibribery training t he second phase of  
the programme from 201 1 into 2012 covered 
the relaunch of the group’s global a ntit rust 
c ompliance programme which underpins the 
group’s policy to comply with all antitrust and 
competition laws around the world in addition 
to covering antitrust the second phase of the 
programme reinforced and refreshed the training 
provided in phase one with training delivered 
to over 2000 relevant employees worldwide
t he programme is implemented via  
‘trainthetrainer’ sessions for general managers 
and compliance officers who then deliver 
facetoface training to relevant local and site 
staff t he facetoface training is complemented 
by el earning modules which are available  
in 13 different languages and require a 100 
score in each el earning test module in order  
to pass 
c orp orate re spon sibility
continued
27
29
26
27
total lost time
 of working time
2012
2011
2010
2009
134
137
137
167
employee turnover
 per year
2012
2011
2010
2009
151
133
129
124
training
hours per employee
2012
2011
2010
2009
people annual report 2012  the morgan crucible company plc 27
during 2013 the group plans to further 
develop the responsible business p rogramme 
with the incorporation of facetoface export 
control training updated contract risk training 
and will provide updated facetoface training 
on each of the existing modules to reinforce 
the existing training materials t his programme 
is covered in more detail on pages 18 and 19
in 2012 the group continued to make 
progress with its ‘developing for performance’ 
management approach with local businesses 
already beginning to see encouraging results 
t he system focuses on developing the skills of 
the group’s employees through performance 
management goalsetting competency 
assessment and development planning  
t he group sees continuous learning and 
professional development as a major 
investment in its future t he group’s 
businesses continue to deliver local learning 
initiatives to meet operational and local 
leadership needs
reward recognition and awards
t he group recognises and celebrates the 
accomplishments of its people individually  
or as teams and makes recognition awards  
to acknowledge achievement loyalty and 
innovation in 2012 recognition awards 
continued to be made across local businesses 
t he principle of pay for performance is applied 
to the group’s compensation approach t he 
group establishes compensation levels that are 
both competitive in the countries in which it 
operates and affordable to morgan c rucible
in pursuit of investing in future talent in the 
labour market morgan c rucible continues  
to sponsor annually the science engineering  
 t echnology student of the year awards  
in 2012 the winner of the morgan c rucible 
best materials student a ward was faith 
bateman from the u niversity of l eeds for  
her project entitled ‘t he binding mechanism  
of “r ecombinasea” based nucleoprotein 
filaments in molecular scaffolding’ t he group 
also achieved its plan to increase the number  
of graduate recruits in 2012 and established  
a global approach to graduate recruitment  
and development
communication
t he divisions communicate regularly through 
employee forums team briefs and divisional 
magazines employees give feedback on  
many different aspects of its business l ocal 
businesses also have employee suggestion 
programmes
t he group continues to use its intranet site 
providing access to information from diverse 
sources across the globe in addition the two 
divisions developed their own sites to facilitate 
more effective communication the divisions 
continue to issue regular divisional newsletters 
both electronically and in hardcopy formats 
employee feedback received regarding local 
communication mediums has been positive
in europe the group has an established 
consultative arrangement that provides  
an arena for the exchange of relevant and 
appropriate information across the european 
region t he group also held its 16th annual 
european employee forum in may 2012 
where site representatives attended from 
france germany hungary italy the 
n etherlands and the u nited kingdom
l ocal business units conduct employee surveys 
according to the needs of local employee 
relations and team agendas t hese measure  
a range of issues relevant to the business units 
including employee satisfaction and awareness 
of business objectives for example in c hina 
manufacturing plants saw an improvement in 
their employee satisfaction scores from 614 
to 762 in 2012 surveys of leadership style 
and culture are also conducted at regional and 
divisional levels
people policy effectiveness
a t the end of the year morgan c rucible 
employed circa 9800 people a dditionally  
the group employs circa 1000 people on 
shortterm contractual arrangements to 
provide the numerical flexibility for the  
group’s businesses to react quickly to changes 
in market conditions
t he group’s geographic spread of people  
is as follows 27 28 in 201 1 of employees  
in the u sa  15 16 in 201 1 in the u k  
16 16 in 201 1 in china 17 17 in 201 1 
in other europe 6 5 in 201 1 in  
other n orth a merica 4 4 in 201 1  
in south a merica and 15 14 201 1  
in the r est of the world of these employees 
74 75 in 201 1 are male 
l ost time as a proportion of total working time 
improved to 27 29 in 201 1 with lost 
time due to accidents in the workplace of  
01 of total working time t raining hours per 
employee increased to 151 hours 133 hours 
in 201 1 t he group’s employee turnover was 
134 in 2012 137 in 201 1 32 of the 
workforce was made redundant during the 
year with higher levels of natural turnover 
coming from china and mexico where  
labour markets are exceptionally fluid
during the year 19 employees around the 
world celebrated 40 years of loyal service  
with morgan c rucible with 130 employees 
celebrating anniversaries of 20 25 or 30 years’ 
service t he group is pleased by the number 
of employees who remain with the morgan 
c rucible for significant periods of their careers 
and whose experience the group has retained 
t he average length of service of the group’s 
employees is 1 15 years 137 years in 201 1
overview business review governance financial statements  28 the morgan crucible company plc  annual report 2012
financial re view
whilst the group has experienced 
tougher trading conditions in 2012 
particularly in the second half of the year 
it has achieved a 121 ebita margin and 
good free cashflow and has increased the 
fullyear dividend to 100 pence per share
kevin dangerfield 
chief financial officer
introduction
t hese results are produced under international 
financial r eporting standards as adopted by 
the eu adopted i fr ss a ll the figures referred 
to below are extracted from the financial 
statements on pages 68 to 125 and comply  
with adopted ifr ss
r eference is made to ‘u nderlying operating 
profit’
3
 and ‘u nderlying earnings per share 
eps’ eps is defined in note 10 on page 82 
t hese 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 £10075 million  
201 1 £11010 million a decrease of 85 
compared to 201 1 on a constant currency 
basis revenue decreased by 69
group ebita
2
 was £1220 million  
201 1 £1434 million representing  
a margin of 121 201 1 130
group underlying operating profit
3
  
was £1088 million 201 1 £1415 million 
u nderlying operating profit margin was  
108 compared to 129 for 201 1
group operating profit was £1005 million 
201 1 £1332 million operating profit margin 
was 100 compared to 121 for 201 1
morgan c eramics morgan engineered materials
t echnical 
ceramics
t hermal 
ceramics
morgan
a mt
molten metal
systems c onsolidated
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
revenue from external customers 2733 2851 3872 4001 3012 3691 458 467 10075 11010
divisional ebita
1
427 431 519 496 244 480 81 77 1271 1484
u nallocated costs 51 50
group ebita
2
1220 1434
r estructuring costs and other oneoff items 14 11 54 30 64 – – – 132 19
underlying operating profit
3
1088 1415
a mortisation of intangible assets 25 25 13 12 43 45 02 01 83 83
operating profit 1005 1332
finance income 263 277
finance expense 454 495
profit before taxation 814 1114
1 segment profit is defined as divisional e bita  which is 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 u nderlying operating profit is defined as operating profit before amortisation of intangible assets annual report 2012  the morgan crucible company plc 29
overview business review governance financial statements
t he restructuring costs and other oneoff  
items of £132 million 201 1 £19 million 
included restructuring costs of £133 million 
201 1 £56 million and a gain on sale of 
properties of £01 million 201 1 £24 million 
in 201 1 the charge also included a net pension 
credit of £13 million t he restructuring costs  
in 2012 relate to a range of actions across the 
group mainly in the second half of the year as 
the group took action to reduce the cost base 
particularly in the morgan a mt business
foreign currency impact
t he principal exchange rates used in the 
translation of the results of overseas subsidiaries 
were as follows
a verage rate yearend rate
2012 2011 2012 2011
usd 15852 16043 16255 15541
¤ 12336 11529 12330 11972
t he potential impact of changes in foreign 
exchange rates is given in note 20 on pages 93 
to 100
amortisation of intangible assets
t he group amortisation charge was  
£83 million 201 1 £83 million
finance costs
t he net finance charge was £191 million  
201 1 £218 million t his charge was primarily 
net bank interest and similar charges of  
£169 million 201 1 £204 million a decrease 
of £35 million t he decrease in the net interest 
charge is due to the continuing reduction in 
average debt levels and lower interest rates 
following the refinancing of the bank facilities  
in 201 1 t he balance of the finance charge 
under ifr s is the net interest charge on 
pension scheme net liabilities which was  
£20 million 201 1 £09 million and interest 
expense of £02 million 201 1 £05 million on 
the unwinding of the discount on the deferred 
consideration relating to the np a erospace 
acquisition t he impact of potential changes  
in interest rates on profit or loss is stated in 
note 20 on pages 93 to 100
taxation
group taxation for the year was £221 million 
201 1 £326 million t he effective tax rate was 
271 201 1 293 and the mediumterm 
view is that the effective tax rate will remain  
below 30
discontinued operations
t he £210 million credit shown as ‘discontinued 
operations’ relates to a release of tax liabilities 
in the period that were set up in prior years 
relating to business disposals
earnings per share
u nderlying earnings per share was 232 pence 
201 1 299 pence and basic earnings per share 
from continuing operations was 202 pence 
201 1 269 pence details of these calculations 
can be found in note 10 on pages 82 and 83
dividend
t he directors recommend the payment of a 
final dividend at the rate of 64 pence per share 
on the ordinary share capital of the c ompany 
payable on 31 may 2013 to ordinary 
shareholders on the register at the close  
of business on 19 a pril 2013 t ogether with  
the interim dividend of 36 pence per share 
paid on 10 january 2013 this final dividend  
if approved by shareholders brings the total 
distribution for the year to 100 pence per 
share 201 1 925 pence
a scrip alternative to the cash dividend will 
again be offered 
a fiveyear summary of the group’s financial 
results is set out on page 126 of this r eport
cash flow
t he net cash inflow from operating activities 
was £1268 million 201 1 £1374 million  
free cash flow before acquisitions and 
dividends was £489 million 201 1  
£578 million
n et debt  at the year end was £1928 million 
201 1 £2154 million t he net debt  to 
ebit da ratio at the year end was 13 times 
201 1 12 times
2012
£m
2011
£m
net cash inflow from  
operating activities 1268 1374 
n et capital expenditure 267 255 
r estructuring costs and  
other oneoff items 59 81 
n et interest paid 185 204 
tax paid 268 256 
free cash flow before  
acquisitions and dividends 489 578
c ash flows in respect  
of acquisitions 66 104
purchase of own shares for 
share incentive schemes 94 32
dividends paid 161 184
exchange movement and  
other items 58 50
movement in net debt  
in period 226 208
opening net debt 2154 2362
c losing net debt 1928 2154
 n et debt is defined as interestbearing loans and borrowings 
and bank overdrafts less cash and cash equivalents
c ommitments for property plant and 
equipment and computer software for which 
no provision has been made are set out in  
note 25 on page 1 14  30 the morgan crucible company plc  annual report 2012
financial re view
continued
capital structure
a t the year end total equity was £2718 million 
201 1 £2702 million with closing net debt  
of £1928 million 201 1 £2154 million
n oncurrent assets were £5612 million  
201 1 £5945 million and total assets were 
£9683 million 201 1 £10414 million
details of undiscounted contracted maturities 
of financial liabilities and capital management 
are set out in note 20 on page 95
t here have been no significant postbalance 
sheet events
c apital structure is further discussed in  
note 20 on page 98 under the heading  
c apital management
pensions
t he group operates a number of pension 
schemes throughout the world the majority  
of which are of a funded defined benefit type 
t he largest of these are located in the u k  
and the u sa with the majority of others in 
c ontinental europe t he group pension deficit 
increased by £315 million since last year end  
to £1666 million on an ia s 19 basis t he main 
movements were in the u sa and u k defined 
benefit pension schemes t he u k schemes’ 
deficit increased by £239 million to £713 
million 201 1 £474 million and the u sa 
schemes by £42 million to £627 million  
201 1 £585 million t his increase was mainly 
due to the impact of lower discount rates 
for the year ended 31 december 2013 the 
group is required to adopt ia s 19 revised 
employee benefits t he group’s expectation  
is that profit before taxation for 2013 will be 
approximately £6 million lower than if the 
current ia s 19 had been applied t he reasons 
for changes are
  a £12 million increase in operating costs  
as a result of the requirement to reclassify 
pension scheme administration costs from 
net finance charge to operating costs  
such costs include the ppf levy and 
actuary audit legal and trustee charges 
which under the current ia s 19 are 
allowed to be included within the net 
finance charge
  a £48 million increase in the net financing 
costs being the net of a £6 million 
additional charge due to the new 
requirement for the expected return  
on assets to be calculated by applying the 
corporate bond yield discount rate to the 
balance sheet pensionrelated assets offset 
by a £12 million decrease as a result of the 
reclassification of the administration costs 
to operating charges identified above
t he group does not expect there to be a 
material change in the group pension deficit as 
a result of the change in the accounting standard
treasury policies
t he following policies were implemented and 
in place across the group throughout the year 
t he manager of each business unit is required 
to confirm compliance as part of the year end 
process
financial risk management and  
treasury policy
group t reasury works within a framework  
of policies and procedures approved by  
the a udit c ommittee it acts as a service to 
morgan c rucible’s businesses not as a profit 
centre and manages and controls risk in  
the treasury environment through the 
establishment of such procedures group 
t reasury seeks to align treasury goals 
objectives 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 a s 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  
t he 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 t he group 
continues its practice of not hedging income 
statement translation exposure
t here are exchange control restrictions  
which affect the ability of a small number of  
the group’s subsidiaries to transfer funds to  
the group t he 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
currency translation risks are controlled 
centrally t o defend against the impact  
of a permanent reduction in the value of  
its overseas net assets through currency 
depreciation the group seeks to match the 
currency of financial liabilities with the currency 
in which the net assets are denominated  
t his is achieved by raising funds in different 
currencies and through the use of hedging 
instruments such as swaps and is implemented 
only to the extent that the 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 annual report 2012  the morgan crucible company plc 31
overview business review governance financial statements
interest rate risk
t he group seeks to reduce the volatility in  
its interest charge caused by rate fluctuations 
t he group seeks to ensure that between 30 
and 80 of its borrowings is on a fixed rate 
basis t his is achieved through a combination  
of fixed rate debt and interest rate swaps 
group t reasury may not actively seek to fix  
or cap more than 80 of the group’s current 
overall debt however the fixed or capped 
proportion is permitted to rise above that level 
with a udit c ommittee approval
credit risk
c redit risk arises when a counterparty fails to 
perform its obligations t he group is exposed 
to credit risk on financial instruments such  
as liquid assets derivative assets and trade 
receivables c redit risk is managed by investing 
liquid assets and acquiring derivatives in a 
diversified way from highcreditquality financial 
institutions c ounterparties are reviewed 
through the use of rating agencies systemic risk 
considerations and through regular review  
of the financial press t he group has a c redit 
policy in place in relation to trade receivables 
and exposure to credit risk is monitored  
on an ongoing basis c redit evaluations are 
performed on all customers requiring credit 
over a certain amount t he nature of the 
group’s operations is such that the group  
has a significant number of lowvalue trade 
receivables t he risk is therefore considered 
minimal c redit risk is further discussed in  
note 20 on pages 93 to 100
capital investment
t he 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 risks
t he group periodically assesses its liabilities 
and contingencies for all tax years open to audit 
based upon the latest information available 
t he group recorded its best estimate of these 
tax liabilities including related interest charges 
inherent uncertainties exist in estimates of  
tax contingencies due to changes in tax laws 
whilst management believes they have 
adequately provided for the probable outcome 
of these matters future results may include 
favourable or unfavourable adjustments to 
these estimated tax liabilities in the period the 
assessments are made or resolved or when 
the statute of limitation lapses t he final 
outcome of tax examinations may result in  
a materially different outcome than assumed  
in the tax liabilities
accounting policies
t he group adopted international financial 
r eporting standards as adopted by the eu 
adopted ifr ss in 2005 a ll a ccounting policies 
are compliant with adopted ifr ss
borrowing facilities and liquidity
a ll of the group’s borrowing facilities are 
arranged by group t reasury and the funds 
raised are then lent to operating subsidiaries on 
an arm’slength basis in a few cases operating 
subsidiaries have external borrowings but these 
are supervised and controlled centrally group 
t reasury seeks to obtain certainty of access to 
funding in the amounts diversity of maturities 
and diversity of counterparties as required to 
support the group’s mediumterm financing 
requirements and to minimise the impact of 
poor credit market conditions
t he group’s debt and maturity profile is 
provided in notes 19 and 20 on pages 92  
to 100
going concern
t he 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 6 to 35 
t he financial position of the group its cash 
flows liquidity position and borrowing facilities 
are described earlier in this financial review  
in addition note 20 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
t he group meets its daytoday working 
capital requirements through local banking 
arrangements that are supported by the 
flexibility provided by the facility t he group’s 
forecasts and projections taking account  
of reasonably possible changes in trading 
performance and exchange rates show the 
group operating comfortably within its debt 
financial covenants for the next 12 months
t he current economic climate continues to 
have an impact on the group its customers 
and suppliers t he board fully recognises  
the challenges that lie ahead but after making 
enquiries the directors have a reasonable 
expectation that the c ompany and the  
group have adequate resources to continue  
in operational existence for the foreseeable 
future a ccordingly they continue to adopt  
the going concern basis in preparing the  
a nnual r eport and a ccounts  32 the morgan crucible company plc  annual report 2012
ri sk mana gement
t he group has an established risk 
management methodology in place which 
identifies manages and mitigates risks  
together with a comprehensive internal  
control framework and appropriate assurance 
processes 
during 2012 this approach to risk management 
was reviewed and further developed to  
adopt a holistic ‘r isk dashboard’ approach  
to mapping identified risks in the context  
of the groups controls monitoring and 
assurance systems 
t he group’s r isk dashboard populated with 
material risks identified from operating site level 
upwards sets the agenda for a rolling review by 
the board and a udit c ommittee of the group’s 
material strategic operating financial and 
compliance risks and the associated controls 
monitoring and assurance processes 
t he risk management processes seek to 
capture manage and mitigate both existing and 
emerging risks that could impact the group’s 
immediate and longterm performance and 
value whilst they do not fully eliminate risks 
they facilitate mitigation to an acceptable level 
within the context of the business environment 
in which the group operates 
t he following key risk areas are those that  
the group feels could have the most serious 
adverse effect on achieving the group’s  
five strategic priorities its performance and 
reputation t he relative importance of some  
of these risks has changed during 2012 as 
business conditions change where necessary 
monitoring and controls to manage risk have 
been adjusted to ensure that the risks continue 
to be managed within acceptable limits
strategy and strategic planning risks
delivery of group strategy
in pursuit of its strategic goals and priorities the group continues to seek out growth 
opportunities both organically and through acquisition
c apital investments to drive organic growth carry inherent risks in execution and the 
delivery of anticipated benefits
a cquisitions can be complex and challenging and there is a risk that significant or costly 
issues arise which have not been identified in preacquisition due diligence nor identified 
in commercial business planning t he group could also be subject to ‘inherited’ 
liabilities as a result of an acquisition
technology obsolescence
one of the group’s strategic priorities is that it aims to ‘be innovative differentiated and 
high valueadded’ t he group is frequently in competition with existing technology 
producers or other innovators
u nforeseenunmitigated technology obsolescence would impact the group’s business
recruiting maintaining and motivating highquality staff
one of the group’s strategic priorities is to ‘find keep and develop the right people’ 
t he group relies on the quality and commitment of its people from those working  
at a site level through site management to the divisional and group executives  
many of the group’s processes require a high degree of skill and experience and  
loss of these employees to other markets or competitors would impact the business
t he board approves and monitors strategy consulting external advisers and experts 
when necessary within its delegated authority the executive c ommittee and 
divisional management implement strategic plans and regularly report performance 
processes are in place to ensure a structured approach to strategy threeyear plans 
budgets investment approval as well as monitoring and reporting performance 
a cquisitions and capital investment are managed through an established process with 
appropriate monitoring and reporting
t he group has a technology pipeline which is regularly reviewed by divisional 
executives the group executive and the board
each division has a c hief t echnical officer who monitors technology business 
developments and future regulations to ensure that the business is in a strong position 
to optimise future events
r d investment is maintained in newimproving technologies through the group’s 
research and development facilities 
where group products are designed for a specific customer they are developed  
in tandem with the customer to maintain leadingedge solutions 
t he group seeks to secure ip protection to the fullest extent possible for the existing 
portfolio of products and external advisers manage this protection globally
t he group has a hr director and a network of h r professionals within the business 
along with human resource policies and processes to manage the risks relating to its 
people t hese cover areas including reward and recognition health and safety talent 
management skills assessment and development performance management and 
employee consultation
t he board and executive hold annual talent management reviews 
in 2012 the group launched a graduate l eadership programme t his programme 
develops individuals and aims to create the business leaders of the future
risk mitigation annual report 2012  the morgan crucible company plc 33
overview business review governance financial statements
operational risks
treasury risks
t he group’s global nature means that it is exposed to uncertainties in the financial 
markets and the banking sector which heightens the group’s foreign exchange interest 
rate credit and liquidity risks as well as the risk of bank failure impacting the group’s cash 
quality of contracts
ineffective contract risk management could result in significant liabilities for the group 
and damage customer relationships and group reputation 
it risks
in order to meet the group’s strategic objectives the viability of its underlying  
it infrastructure is essential i f a critical business system was to fail or the group  
lost critical data and information the business would be impacted 
product quality safety and liability
products used in applications for which they were not intended or inadequate quality 
control systemsovercommitting on specifications could result in products not meeting 
specifications which could lead to significant liabilities
single point exposures
t he group has a number of potential single point exposure risks these include
  single point supplier – a significant interruption of a key internal or external supply 
could impact business continuity
  single point profit – a key site exposed to a strike a natural catastrophe or serious 
incident such as fire could impact business continuity
  single point customer – the unmitigated loss of a major customer could have an 
impact on group profit
environment health and safety ehs risks
t he group operates a number of manufacturing facilities around the globe a failure  
in the group’s ehs procedures could lead to environmental damage or lead to injury  
or death of individuals with a consequential impact on operations and raising the  
risk of regulatory action being taken against the group a ny such action could result  
in litigation resultant damages and damage to reputation
compliance and ethics risks
changes to or noncompliance with laws and regulation
t he group’s global operations must comply with a range of national and international 
laws and regulations including those related to bribery and corruption human rights 
exports and competitionantitrust 
a failure to comply with any applicable lawsregulations could result in civil or criminal 
liabilities individual or corporate fines and could also result in debarment from 
government related contracts 
external risks
changing political economic and social environment
t he group operates in a range of markets and geographies around the world  
and can be affected by political economic social or regulatory developments  
or instability such as the euro crisis a rab spring and c hina’s slowdown  
many of these events impact local markets and some have a worldwide impact
pension funding
t he group participates in defined pension arrangements which are exposed to 
fluctuating interest rates investment values and inflation t his coupled with the 
increased longevity of members could result in funding burdens on the group  
in the future
t he group’s t reasury function t reasury policy and guidelines provide strict controls  
on the selection of banks and cash management a dditional actions have been taken  
to respond to the euro crisis
t he group l egal policy requires review of high value or high risk contracts by  
group l egal t his policy is supported by additional guidance documents and checklists
where the contracts do not fall under the group l egal policy the divisions are 
responsible for managing their contractual risk and do so pulling from the knowledge 
they have obtained through the group’s contract risk management training under  
the r esponsible business programme further information available on page 18 
t he group has established it systems in place and group and divisional it teams  
to manage the it risks
many of the group products are designed to customer specifications 
over 90 of the group’s manufacturing output is accredited to iso 9001 and the 
group’s quality management systems and training help ensure that morgan c rucible’s 
products meet or exceed customer requirements and nationalinternational standards
c ontracts relating to products used in potential highrisk applications are subject  
to mandatory legal review
t he group monitors legislation and regulation to manage future risks
t he group insurance programme includes product liability insurance 
t he group executive and divisional executive teams are responsible for monitoring 
and managing these single point exposures t his involves monitoring and reviewing 
supply chains internal and external dualmultiple sourcing of materials or strategic 
stock fire protection systems creating and testing disaster recovery plans maintaining 
product quality and customer relationships 
t he group insurance programme includes business interruption cover
further detail of the ehs programme in place to manage these risks is available on 
pages 21 to 24
t he group monitors changes in legislation and regulation proactively modifying 
existing controls and compliance frameworks 
t he group is committed to the highest standards of corporate and individual behaviour 
and this commitment is set out in the group’s c ore values statement and ethics policy 
global compliance training on a number of compliance subjects is provided through the 
group’s r esponsible business programme full information is available on pages 18 to 20
t he group has an ethics hotline operated by expolink which enables employees and 
other stakeholders who are aware of or suspect misconduct illegal activities fraud 
abuse of group assets or violations of any group policy to report these confidentially
key risks and events are regularly tracked at a divisional and group level with 
contingency plans in place to manage the changing situations
financial and treasury controls limit exposure to foreign currency interest rate credit 
and liquidity risk
t he group’s broad marketgeographic spread helps to mitigate the effects of political 
and economic crises 
mitigation plans are in place to manage the financial and business impact of the 
eurozone crisis and any large currency swings t hese include not only cash and banking 
but also operational issues in the businesses 
t he group maintains a carefully managed debt facility to ensure that its debt ratio is 
within acceptable market tolerances
a ctive management of the pension scheme assets is the primary means of mitigation 
t his comprises management both internally within the group but also externally 
through corporate actuaries and professional advisers
t here is regular board review of the group’s pension position and strategy in the 
changing global environment
risk mitigation  34 the morgan crucible company plc  annual report 2012
key re source s an d  
c ontractual relati on ships
morgan c rucible has built up significant 
resources and benefits from contractual and 
other relationships with multiple stakeholders 
including customers and suppliers employees 
and joint venture partners t hese relationships 
have been built up over many years to support 
morgan c rucible’s competitive positioning in 
the key markets which the group serves
a s 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 c orporate 
responsibility section on pages 18 to 27  
a s referred to in the directors’ report  
on page 41 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 
c ompany following a takeover
in accordance with its goal aim and strategic 
priorities the group continues to invest in the 
areas detailed below to maintain its leading 
market positions
commercial relationships market 
position and reputation
morgan c rucible is generally ranked number 
one or two in its chosen market segments  
t he group is a worldleader in advanced 
ceramic and composite materials t he 
c ompany was founded in 1856 and has  
a worldwide reputation
morgan c rucible’s businesses provide  
products and services to other companies  
and the group has developed close working 
relationships with many of its customers  
and suppliers and collaborates with them  
to develop new products
t he group has a wide range of customers  
and suppliers and while the loss of or 
disruption to certain of these arrangements 
could temporarily affect the operations of a 
particular business none is considered essential 
to the group as a whole n otwithstanding  
this the group devotes significant resources  
to ensuring these relationships continue to 
operate satisfactorily
employees
morgan c rucible’s most important resource  
is its people and the group employs a highly 
skilled and qualified workforce one of the 
group’s strategic priorities is ‘finding keeping 
and developing the right people’ many 
employees stay with the group for their whole 
careers as is highlighted on page 27 morgan 
c rucible places great emphasis on recruitment 
and training and the group’s policies and 
performance in these areas are set out on 
pages 26 and 27
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
t he executive directors’ contracts and the 
terms and conditions of appointment of the 
nonexecutive directors are referred to  
on page 54 and are available for inspection  
prior to the 2013 a nnual general meeting  
and at the c ompany’s registered office
research and development 
patents and intellectual property
morgan c rucible’s goal is to continue to  
be one of the world’s very best advanced 
materials companies supported by the strategic 
priority of ‘offering high addedvalue to the 
group’s customers’ t he 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
morgan c rucible benefits from technological 
knowhow and other forms of intellectual 
property some of which are covered by 
patents c ollectively 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
both of morgan c rucible’s divisions have  
a t echnical director and have research and 
development capabilities variously located  
at divisional centres of excellence which is 
diffused through the business in the form of 
applications engineering further details are 
included in the r eview of operations for both 
divisions on pages 10 to 17
manufacturing capabilities
over many years morgan c rucible 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 i ndia and l atin a merica to meet 
customer needs in both local and global 
markets t his investment supports the  
group’s 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 
morgan c rucible as a whole
banking and other financial 
relationships
details of significant banking and other financial 
relationships are referred to on page 41 in the 
directors’ report however no one banking  
or financial relationship is considered to be 
essential to the performance and value  
of the c ompany annual report 2012  the morgan crucible company plc 35
t his document has been prepared for and 
only for the members of the c ompany as a 
body and no other persons its purpose is to 
assist members to assess how the directors 
have performed their duties the c ompany’s 
strategies and the potential for those strategies 
to succeed and for no other purpose save as 
would otherwise arise under english law  
the c ompany its directors employees 
agents or advisers do not accept or assume 
responsibility or liability to any third parties to 
whom this document is shown or into whose 
hands it may come and any such responsibility 
or liability is expressly disclaimed
t his document contains forwardlooking 
statements that are subject to risk factors 
associated with amongst other things  
the economic and business circumstances 
occurring from time to time in the countries 
sectors and markets in which the group 
operates t hese and other factors could 
adversely affect the outcome and financial 
effects of the plans and events described 
forwardlooking statements by their nature 
involve a number of risks uncertainties and 
assumptions because they relate to events 
andor depend on circumstances that may  
or may not occur in the future and could 
cause actual results and outcomes to differ 
materially from those expressed in or  
implied by the forwardlooking statements
it is believed that the expectations reflected  
in these statements are reasonable but they 
may be affected by a wide range of such 
variables n o assurances can be given  
that the forwardlooking statements in this 
document will be realised t he forward
looking statements reflect the knowledge  
and information available at the date this 
document was prepared and will not  
be updated during the year but will  
be considered in the a nnual r eport  
for next year n othing in this document  
should be construed as a profit forecast
cauti onary state ment
overview business review governance financial statements  36 the morgan crucible company plc  annual report 2012
board of directors
andrew shilston
†§
nonexecutive chairman aged 57
andrew was appointed as chairman designate in  
may 2012 and as chairman in august 2012 he is  
the senior independent director of bp plc and  
a nonexecutive director of circle holdings plc  
from 2002 until his retirement in 201 1 he was  
chief financial officer of rolls royce holdings plc and 
prior to this he was the finance director at enterprise 
oil plc andrew was previously a nonexecutive 
director of cairn energy plc where he chaired the 
audit committee
mark robertshaw
§
chief executive officer aged 44
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 prior to this  
he spent nine years with marakon associates mark is  
a nonexecutive director of segro plc and was a 
nonexecutive director of rathbones brothers plc  
from 2006 to 2010
andrew hosty
ceo morgan ceramics aged 48
andrew was appointed as chief executive officer  
of morgan ceramics and joined the morgan crucible 
board in july 2010 before this appointment he held a 
number of senior positions within the morgan crucible 
group andrew was chief executive officer of 
technical ceramics from 2004 to july 2010  
whereupon the technical ceramics and thermal 
ceramics businesses were brought together as the 
morgan ceramics division he is a nonexecutive 
director of fiberweb plc british ceramic research 
limited and was president of the british ceramics 
confederation from 2003 to 2005
kevin dangerfield
chief financial officer aged 46
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 
he is a nonexecutive director of e2v technologies plc 
before joining morgan crucible kevin worked for 
london international group plc and virgin retail  
europe limited he qualified as a chartered accountant 
with pricewaterhousecoopers
martin flower
†§
senior independent director aged 66
martin was appointed as a nonexecutive director in 
december 2004 and as senior independent director  
in april 2008 he is chairman of croda international plc 
and low  bonar plc he was previously chairman of 
autogrill holdings uk plc a nonexecutive director of 
autogrill group inc and deputy chairman and senior 
independent director of severn trent plc martin held  
a variety of senior management positions with coats plc 
from 1968 to 2004 and was group chief executive  
of that group and chairman of the board from 2001  
to 2004
andrew given
†§
nonexecutive director aged 65
andrew was appointed as a nonexecutive director  
in december 2007 and is the chairman of the  
audit committee he was previously the senior 
nonexecutive director and chair of the audit 
committee of vt group plc the senior independent 
director and chair of the audit committee  
of spectris plc and a nonexecutive director and chair 
of the audit committee of spirent communications plc 
andrew was formerly deputy chief executive of  
logica plc and held senior management positions  
in plessey and nortel networks
andrew shilston
†§
chairman
andrew given
†§
nonexecutive director
andrew hosty
ceo morgan ceramics
mark robertshaw
§
chief executive officer
martin flower
†§
senior independent director
kevin dangerfield
chief financial officer annual report 2012  the morgan crucible company plc 37
overview business review governance financial statements
executive committee
 member of the audit committee
† 
member of the remuneration committee
§ 
member of the nomination committee
simon heale
†§
nonexecutive director aged 59
simon was appointed as a nonexecutive director  
in february 2005 and is the chairman of the 
remuneration committee he is the senior 
independent director and chairman of the 
remuneration committee of coats plc a non
executive director and chair of the audit committee  
of kazakhmys plc a nonexecutive director and  
chair of the csr committee of pz cussons plc  
a nonexecutive director and chair of the audit and 
compliance committee of marex spectron group 
limited and trustee and treasurer of macmillan cancer 
support chairing their finance and legal committee 
and sitting on their audit committee 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
victoire de margerie
†§
nonexecutive director aged 49
victoire was appointed as a nonexecutive  
director in may 2012 she is the chairman and  
first shareholder of rondol technology limited  
she is also a nonexecutive director of the french 
quoted companies arkema and eurazéo and the 
norwegian quoted company norsk hydro victoire 
previously held nonexecutive positions at ciments 
français outokumpu and ipsos and was a professor  
in strategic management at grenoble school of 
business during her executive career she held senior 
management positions in germany france and the  
usa with arkema carnaudmetalbox and péchiney 
victoire holds a phd in strategic management from 
université paris 2 panthéon assas
paul boulton
company secretary  general counsel  
aged 45
paul was appointed company secretary in 2007  
having joined morgan crucible in july 2004 as general 
counsel and deputy company secretary before 
joining the company he spent nine years with imi plc 
his last role being deputy company secretary and 
senior legal adviser paul is a qualified solicitor
peter blausten
director of human resources aged 53
peter joined morgan crucible in march 201 1  
as director of human resources prior to joining 
morgan crucible peter advised on private equity 
acquisitions and international leadership programmes 
as an independent consultant he was formerly group  
hr director of baa plc and held senior roles with 
charles schwab  co british airways and ford motor 
co peter is a member of the council of the institute  
of employment studies and was appointed as a 
commissioner for the uk civil service in 2010
don klas
ceo morgan engineered materials  
aged 54
don joined morgan crucible in 1980 as a plant engineer 
and has over a quarter of a century of experience with 
the carbon business in his role as ceo of carbon 
americas don was responsible for 50 of the revenue 
of the carbon division don became ceo of the 
former carbon division in 2008 and became ceo of 
morgan engineered materials in july 2010 when the 
carbon np aerospace and molten metal systems 
businesses were integrated into one division
mark robertshaw
chief executive officer
kevin dangerfield
chief financial officer
andrew hosty
ceo morgan ceramics
don klas
ceo morgan engineered materials
paul boulton
company secretary  general counsel
peter blausten
director of human resources
victoire de margerie
†§
nonexecutive director
paul boulton
company secretary  general counsel
peter blausten
director of human resources
don klas
ceo morgan engineered materials
simon heale
†§
nonexecutive director  38 the morgan crucible company plc  annual report 2012
directors’ report
the directors present their report together with the financial 
statements and independent auditor’s report for the year ended  
31 december 2012 this directors’ report was approved by the  
board on 14 february 2013
principal activities
the morgan crucible company plc the company and its subsidiary 
undertakings comprise two divisions covering four operating segments 
as outlined on page 8 that design manufacture and market primarily 
carbon and ceramic components for applications in 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 10 to 17  
to be read in conjunction with the cautionary statement on page 35
business review
the business review sets out a comprehensive review of the 
development and performance of the business of the company for the 
year ended 31 december 2012 and future developments the business 
review is set out on pages 6 to 35 inclusive of this annual report  
all information detailed in those pages is incorporated by reference  
into this directors’ report and is deemed to form part of this  
directors’ report
corporate governance statement
the corporate governance statement as required by rule 721  
of the fsa’s disclosure and transparency rules is set out on pages 42  
to 48 of this annual report all information detailed in the corporate 
governance statement is incorporated by reference into this directors’ 
report and is deemed to form part of this directors’ report
financial results
the total profit for the year ended 31 december 2012 was £803 
million 201 1 £788 million profit before taxation for the same period 
was £814 million 201 1 £1 1 14 million revenue was £10075 million 
201 1 £11010 million and operating profit was £1005 million 201 1 
£1332 million basic earnings per share from continuing operations  
was 202 pence 201 1 269 pence capital and reserves at the end  
of the year were £2718 million 201 1 £2702 million the total profit  
of £803 million will be transferred to equity
dividends
the directors recommend the payment of a final dividend at the rate  
of 64 pence per share on the ordinary share capital of the company 
payable on 31 may 2013 to shareholders on the register at the close  
of business on 19 april 2013 together with the interim dividend  
of 36 pence per share paid on 10 january 2013 this final dividend  
if approved by shareholders brings the total distribution for the year  
to 100 pence per share 201 1 925 pence
acquisitions and disposals
on 28 march 2012 the company increased its equity stake in  
np aerospace from 80 to 90 by acquiring an additional  
10 of the equity for £61 million which represents full consideration  
for the 10 of share capital acquired
postbalance sheet events
there have been no material events since the year end
share capital
the company’s share capital is set out in note 18 on pages 90 to 92 
the company’s ordinary shares represent 9984 of the total issued 
share capital with the 55 cumulative first preference shares 
representing 005 and the 50 cumulative second preference 
shares representing 01 1 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 
articles copies of which can be obtained from companies house  
in the uk or from 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 92 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  annual report 2012  the morgan crucible company plc 39
overview business review governance financial statements
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 
to ensure suppliers are made aware of the terms of payment 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 36 days 201 1 45 days and  
for the group was 55 days 201 1 58 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 satisfy customer demands the company has research  
and development facilities at its key manufacturing sites the spend  
on research and development was £196 million during the year  
201 1 £143 million the group did not capitalise any development 
costs in 2012 201 1 £nil
financial instruments
details of the group’s use of financial instruments together with 
information on policies and exposure to price liquidity cash flow  
credit interest rate and currency risks can be found in note 20 on  
pages 93 to 100 all information detailed in this note is incorporated  
into this directors’ report by reference and is deemed to form part  
of this directors’ report
human resources
details of the group’s human resources policy and employee 
involvement are set out on pages 26 and 27
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 154 employees hold awards under the  
morgan crucible longterm incentive plan 31 employees hold awards 
under the morgan crucible bonus deferral share matching plan  
22 employees have options under the company’s executive share  
option schemes and 670 employees participate in the company’s  
uk sharesave plan there are currently no participants in the 
company’s german employee share purchase plan details of 
outstanding share awards and share options are given in note 21  
on page 106
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 132 employees hold 
awards under this scheme the np aerospace employee benefit trust 
holds 8330 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 201493 
shares on 31 december 2012 in connection with awards granted under 
the company’s employee share schemes the trustees of the trust 
trustees have agreed to waive their entitlement to the payment of 
dividends on the shares held by the trust the directors are not aware 
that any other shareholders waived or agreed to waive any dividends  
or future dividends during the period under review
the trustees have absolute and unfettered discretion in relation to 
voting any shares held in the trust at any general meeting their policy  
is not to vote the shares if any offer is made to shareholders to acquire 
their shares the trustees will have absolute and unfettered discretion  
on whether to accept or reject the offer in respect of any shares held  
by them  40 the morgan crucible company plc  annual report 2012
directors’ report
continued
directors
all those who served as directors at any time during the year  
under review are listed on pages 36 to 37 with the exception  
of tim stevenson who retired from the board on 31 july 2012
details of directors’ interests in the share capital of the company  
are listed on page 62 in the period from 31 december 2012  
to 14 february 2013 the executive directors acquired further  
ordinary shares in the company pursuant to the company’s  
scrip dividend scheme
all information detailed on page 62 in respect of directors’ interests  
is incorporated into this directors’ report by reference and is deemed  
to form part of this directors’ report
all of the directors will be offering themselves for election or reelection 
at the forthcoming annual general meeting agm on 10 may 2013 
details of their background and experience can be found on pages 36 
and 37 and details of the board committees on which they serve can  
be found on pages 46 to 48
appointment and replacement of directors and 
amendments to the articles
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  
agm following appointment and all directors are required to submit 
themselves for reelection at the third agm following their appointment 
or reelection notwithstanding the provisions of the articles the board 
has once again determined that the full board of directors will stand for 
election or reelection at the forthcoming agm in compliance with the 
provisions of the uk corporate governance code the articles may  
be amended by a special resolution of the company’s shareholders
subject to the articles 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
share allotment and repurchase authorities
the directors were granted authority at the 2012 agm to allot shares  
in the company and to grant rights to subscribe for or convert any 
securities into shares in the company up to a a nominal amount of 
£23150173 and b a nominal amount of £46300364 in connection 
with a rights issue such amount to be reduced by any shares allotted 
under a this authority is due to lapse at the 2013 agm at the 2013 
agm shareholders will be asked to grant a similar allotment authority
a special resolution will also be proposed to renew the directors’ 
powers to make non preemptive issues for cash up to an aggregate 
nominal amount representing approximately 5 of the issued share 
capital as at the last practicable date before the publication of the notice 
of agm 2013
the directors did not seek an authority at the 2012 agm to repurchase 
shares in the capital of the company as at 31 december 2012 there 
was no such authority in place the directors do not intend to seek an 
authority to repurchase shares at the 2013 agm
full details of the resolutions to be proposed at the 2013 agm are  
set out in the circular to shareholders which will be circulated in  
march 2013
directors’ indemnities
the company has entered into separate indemnity deeds with each 
director containing qualifying indemnity provisions as defined at section 
236 of the companies act 2006 under which the company has agreed 
to indemnify each director in respect of certain liabilities which may 
attach to each of them as a director or as a former director of the 
company or any of its subsidiaries the indemnity deeds were in force 
during the financial year to which this directors’ report relates and are  
in force as at the date of approval of the directors’ report
donations
during the year morgan crucible companies made charitable donations 
of £178060 201 1 £194744
further details of charitable donations and activities of the group are 
given on page 20 no political donations have been made annual report 2012  the morgan crucible company plc 41
overview business review governance financial statements
significant agreements
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 of such agreements are the uk £150 million 
multicurrency revolving facility agreement which was signed on  
5 april 201 1 and the privately placed note purchase and guarantee 
agreements signed on 6 march 2003 15 december 2007 and  
30 june 2010 for which the outstanding loan amounts are  
usd9 million usd350 million and €60 million respectively
there are a number of other agreements that take effect alter  
or terminate upon a change of control of the company following  
a takeover bid such as commercial contracts and joint venture 
agreements 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 31 december 2012 the company had been notified of the 
following interests representing 3 or more of the issued ordinary 
share capital of the company 
number of
ordinary
shares  
prudential plc group of companies mg 40330677 14417
ax a investment managers sa 23560970 8422
standard life investments ltd 13788184 4929
aviva plc and its subsidiaries 11197379 4003
  as at 28 february 2013 prudential plc group of companies mg held 39287142 
ordinary shares 13970 norge bank held 8473625 ordinary shares 3010  
hsbc held 15290009 ordinary shares 5438 there were no changes to the  
other substantial shareholdings shown in the above table
  percentages are shown as a percentage of the company’s issued share capital as at  
31 december 2012
disclosure of information to the auditor
each director holding office at the date of approval of this directors’ 
report confirms that so far as he is aware there is no relevant audit 
information of which the company’s auditor is unaware and that he  
has taken all steps that he ought to have taken as a director to make 
himself aware of any relevant audit information and to establish that  
the company’s auditor is aware of that information
auditor
kpmg audit plc has expressed its willingness to continue in office 
resolutions for its reappointment as auditor and authority for the 
directors to determine the auditor’s remuneration will be proposed  
at the forthcoming agm
annual general meeting
the agm of the company will be held on 10 may 2013 at the lincoln 
centre 18 lincoln’s inn fields london wc2a 3ed a circular will be 
sent with this report to shareholders in march 2013 incorporating the 
notice of agm
fsa’s disclosure and transparency rules
for the purposes of dtr 415r2 and dtr 418 this directors’ report 
is the management report
directors’ responsibility statement in respect  
of the disclosure and transparency rules
each of the directors the names and roles of whom are set out on 
pages 36 and 37 confirms to the best of their 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 profit 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 
that they face 
for and on behalf of the board
paul boulton
company secretary  general counsel
14 february 2013
the morgan crucible company plc
quadrant 5557 high street windsor berkshire sl4 1lp 
registered in england no 286773  42 the morgan crucible company plc  annual report 2012
corporate governance
statement of compliance with the uk corporate 
governance code
throughout the year ended 31 december 2012 the company has been 
in full compliance with the relevant provisions of the june 2010 version 
of the uk corporate governance code the ‘code’ published by the 
financial reporting council and available on its website wwwfrcorguk
the main principles of the code focus on leadership effectiveness 
accountability remuneration and relations with shareholders this 
statement describes how the company has applied the main principles 
of the code it should be read in conjunction with the business review 
and remuneration report on pages 6 to 35 and 50 to 66 respectively
leadership
the role of the board
the board is collectively responsible to the company’s shareholders  
for the longterm success of the company the board is satisfied it  
has met the code’s requirements for its effective operation it has set 
the company’s strategic aims which were reviewed by the board at  
its 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 page 18 in the business review
board meetings
in 2012 the board met formally nine times of which eight meetings 
were scheduled and one meeting was held by telephone at short notice
the meeting in march 2012 was scheduled to coincide with the group’s 
2012 leadership conference in san francisco and also allowed the 
board the opportunity to visit the company’s local operations and  
to meet local management the october 2012 meeting included  
a dedicated halfday session on group strategy 
matters reserved
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 group 
 board audit remuneration nomination
director
eligible
to attend attended
eligible
to attend attended
eligible
to attend attended
eligible 
to attend attended
andrew shilston  
6 6 – – 3 3 1 1
mark robertshaw 9 9 – – – – 5 5
kevin dangerfield 9 9 – – – – – –
andrew hosty 9 9 – – – – – –
victoire de margerie 

6 6 4 4 3 3 1 1
martin flower  9 9 5 5 5 5 5 5
andrew given  9 9 5 5 5 5 5 5
simon heale  9 9 5 5 5 5 5 5
tim stevenson 
 5 5 – – 2 2 2 2
 indicates a director deemed by the board to be independent or in the case of the chairman independent on appointment
 appointed to the board on 8 may 2012
 retired from the board on 31 july 2012
summary of the board’s work during the year
during 2012 the board carried out all its core duties as set out in the 
schedule of matters reserved for the board including the following
  review of performance against the group’s threeyear objectives
  growth opportunities within the business against a backdrop of  
low or no growth in the macroeconomic environment
  review of bolton merger and acquisition opportunities
  strategic review of the soldier survivability business
  technology and innovation within the business and resulting 
business opportunities
  approval of capital expenditure including investment in the group’s 
fibre business
  review of the group’s approach to risk management
  environmental and health and safety issues
  review and appointment of new corporate advisors
  consideration of major shareholders’ views on the group’s 
performance and prospects
delegation of authority
the board has delegated responsibility for certain matters to three 
committees namely the audit nomination and remuneration 
committees the memberships roles and activities of these committees 
are described in separate reports the audit committee report is set out 
on pages 46 to 47 the nomination committee report is set out on 
page 48 and the remuneration committee report is set out on pages 
47 to 48 the full terms of reference of the board committees are 
available upon request and are also available on the group’s website
the board delegates the daytoday management of the group  
and operational matters to the chief executive officer and the  
other executive directors the chief financial officer and the ceo 
morgan ceramics who together with the ceo morgan engineered 
materials the director of human resources and the company 
secretary form the executive committee the biographies of the 
members of the executive committee are set out on pages 36 to 37
the board has delegated authority for certain other matters including 
routine approvals to a general purposes committee which meets  
as required and at which a nonexecutive director must be present
attendance at meetings
the attendance of each director at board and audit remuneration  
and nomination committee meetings is set out in the table below
should a director have concerns about the running of the company  
or a proposed action which are not resolved their concerns would be 
recorded in the board minutes an appropriate directors’ and officers’ 
liability insurance policy is in place annual report 2012  the morgan crucible company plc 43
overview business review governance financial statements
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 the leadership and effectiveness of the 
board including setting the board’s agenda and ensuring sufficient time  
is available for all agenda items particularly regarding strategic issues  
for promoting a culture of open debate and constructive challenge 
facilitating effective contributions by the nonexecutive directors  
and ensuring constructive relationships between the executive and 
nonexecutive directors the chief executive officer is responsible  
for the management of the group including the delivery of the group’s 
business plan the formulation and implementation of strategy chairing 
the executive committee and for ensuring the implementation of the 
group’s policies the management of the group’s operating divisions 
reports to the chief executive officer
the chairman
tim stevenson resigned as chairman on 31 july 2012 on appointment 
as chairman on 1 august 2012 andrew shilston met the independence 
criteria set out in the code
nonexecutive directors
nonexecutive directors are appointed for a term of three years 
subject to annual reelection the independence commitment and 
effectiveness of any nonexecutive director who has served for two 
terms is subject to rigorous review prior to reappointment for a further 
threeyear term
martin flower is the senior independent director
the chairman and the nonexecutive directors met without the 
executive directors present on a number of occasions during the  
year in addition the senior independent director and the other 
nonexecutive directors met without the chairman present
effectiveness
board balance and independence
the size structure and composition of the board was reviewed  
during the year taking into account succession planning and the need  
to progressively refresh the membership of the board as well as  
the impending departure of tim stevenson who stepped down  
as chairman and resigned from the board on 31 july 2012
andrew shilston was appointed to the board as chairman designate  
on 8 may 2012 and was appointed as chairman on 1 august 2012 
victoire de margerie was appointed to the board on 8 may 2012
as at 14 february 2013 the board comprises andrew shilston 
chairman mark robertshaw chief executive officer kevin 
dangerfield chief financial officer andrew hosty chief executive 
officer morgan ceramics and four independent nonexecutive 
directors victoire de margerie martin flower andrew given  
and simon heale biographies of the directors including details  
of their other main commitments are set out on pages 36 and 37
at the year end in addition to the chairman whom the company 
deemed to be independent on appointment the board comprised 
three executive directors and four nonexecutive directors deemed by 
the board to be independent thus there is a balance of executive and 
nonexecutive directors which helps ensure that no individual or small 
group can dominate the board’s decisionmaking throughout the year 
the company complied with the requirement of the code that at least 
half the board excluding the chairman should comprise nonexecutive 
directors determined by the board to be independent in addition  
to the factors set out in the code the board’s assessment of a 
nonexecutive director’s independence and effectiveness covers their 
total number of commitments and any relationships with major suppliers 
and with charities receiving material support from the company
appointments to the board
as is further detailed in the report of the nomination committee  
set out on page 48 there is a formal rigorous and transparent 
procedure for appointments to the board appointments are  
made on merit and against objective criteria having due regard for 
diversity including gender the process used for the appointments of 
andrew shilston and victoire de margerie to the board during 2012  
are described in the report of the nomination committee on page 48
the board has also considered the recommendations made by the 
davies report on women on boards the board does not think quotas 
are a good option as the board believes all appointments should be 
based on merit rather than through positive discrimination policies  
the board is however clear that obtaining the right balance and an 
appropriately diverse mix of skills and experience round the boardtable 
is of paramount importance if the board is to continue to deliver true 
entrepreneurial leadership of the business
the board is satisfied that there are succession plans in place for 
appointments to the board and for senior management the board 
discussed the group’s approach to talent management and succession 
planning at senior levels within the divisions at its strategy meeting in 
october 2012 a description of the work done on planning for board 
succession and refreshing the board is included in the report of the 
nomination committee on page 48
commitment
prior to undertaking an additional external role or appointment the 
chairman and the nonexecutive directors are asked to confirm that 
they will continue to have sufficient time to fulfil their commitments  
to the company
information and support
the company secretary with the chairman is responsible for ensuring 
the board has full and timely access to all appropriate information  
to enable it to discharge its duties board papers are generally made 
available electronically five working days before each meeting  
nonexecutive directors also receive updates and information  
between formal board meetings 
the directors have access to the advice and services of the company 
secretary who with the chairman is responsible for ensuring that 
board procedures are followed and that applicable rules and regulations 
are observed a procedure is in place to enable the directors to  
seek independent professional advice at the company’s expense  
in connection with their duties as directors  44 the morgan crucible company plc  annual report 2012
corporate governance
continued
induction and professional development
new directors receive a full formal and tailored induction on joining  
the board a new director’s experience and background is taken  
into account in developing a tailored programme following their 
appointments to the board on 8 may 2012 andrew shilston and 
victoire de margerie received comprehensive briefings to supplement 
the information on the company’s business provided during 
recruitment the briefing for both directors included further 
information on the business and its products and markets brokers’ 
reports on the group the company’s corporate governance structure 
and processes and key group policies the induction programme for 
both directors included meetings with executive management briefings 
from functional heads on governance responsible business and key risks 
visits to operational sites around the world and meetings with divisional 
and operational management in addition andrew shilston the 
incoming chairman met the company’s main institutional shareholders 
the chairman considers the individual training and development  
needs of each director taking into account environmental social and 
governance matters the company secretary keeps the suitability of 
external courses under review and facilitates the ongoing training and 
development of all directors as necessary
during 2012 the directors received a briefing on the uk government’s 
updated guidance on facilitation payments a presentation on the  
group’s technology and its potential commercial applications a briefing 
on group’s treasury arrangements and a briefing on changes to the  
uk corporate governance code and stewardship code
nonexecutive directors have access to management and staff at all 
levels and are encouraged to visit operating sites in addition to visits  
by individual directors and the chairman each year at least one  
board meeting is held at an operating facility during 2012 formal  
board meetings were held at the morgan technical ceramics site  
in southampton uk and at the morgan thermal ceramics site in 
bromborough uk in addition the nonexecutive directors attended 
the group’s leadership conference held in san francisco and visited the 
ceramics facility in hayward california
performance evaluation
with the aim of improving effectiveness the board undertakes a formal 
annual evaluation of its own performance and that of its committees 
and individual directors
as an externally facilitated performance evaluation had been conducted 
in 201 1 the board decided that the 2012 process should be conducted 
internally the process was led by the chairman and carried out by the 
company secretary
the process for the evaluation of the board as a whole and its 
committees was as follows
  development of tailored questionnaires completed by all directors 
which took into account the output from the 201 1 performance 
evaluation process the current dynamic of the board as well as  
the work of the board during 2012 and its current areas of focus
  formulation of a report summarising the results of the 
questionnaires which was presented to the board for discussion
 in consequence a number of recommendations were agreed by the 
board as follows
  there should be a continuing focus on both short and  
mediumterm board succession planning with particular  
emphasis on matching the skills and experience of the directors  
to the group’s strategy
  the board should simplify how the group and its strategy are 
presented to external stakeholders
  embedding of the group’s updated approach to risk as detailed  
on page 32 should be closely monitored
  more opportunities should be found for nonexecutive directors  
to get to know key business leaders particularly where they are 
based overseas 
alongside the board and committee evaluation each nonexecutive 
director completed an individual questionnaire which invited them  
to reflect on their own performance and contribution to the board  
the questionnaires were reviewed by the chairman with any 
development needs being discussed with individual directors
the recommendations made following the 201 1 board performance 
review were implemented during the year further emphasis was placed 
on succession planning and the composition of the board especially 
within the context of the processes used to appoint andrew shilston 
the chairman and victoire de margerie a nonexecutive director  
as reported in the report of the nomination committee on page 48 
below a review of the style presentation and length of board papers 
was conducted in the context of the transition from paperbased to 
electronic board papers 
the nonexecutive directors led by the senior independent director 
met without the chairman present to evaluate the chairman’s 
performance during the year taking into account the views of the 
executive directors
conflicts of interest
the board has procedures in place to address the requirements  
of the companies act 2006 concerning the duty of the directors to  
avoid conflicts of interest accordingly the directors are required to 
1 disclose proposed outside interests before they are taken in order  
to enable a prior assessment of any actual or potential conflict and 
2 disclose without delay any situation which arises which gives rise  
to an actual or potential conflict
the board reviews the outside interests of the directors and any 
conflicts disclosed and authorisations given at least annually should an 
actual or potential conflict be identified the board considers whether  
to authorise the situation in accordance with the company’s articles of 
association 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 annual report 2012  the morgan crucible company plc 45
overview business review governance financial statements
accountability
financial reporting
in its reporting to shareholders the board is satisfied that it has met its 
obligations to present a balanced and understandable assessment of  
the company’s position and prospects as required by the code and in 
accordance with the accounting standards board’s reporting statement 1 
the operating and financial review rs1 this is included in the business 
review on pages 6 to 35 the board also presents updated information 
in its halfyear 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 49 and the ‘going concern’ statement is set out in the business 
review on page 31
business model and strategy
details of the company’s business model how it is working to generate 
and sustain longterm value and details of the board’s strategy for 
ensuring the company meets its objectives are set out in the business 
review on pages 6 to 35
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 and for reviewing the effectiveness of such 
system the company’s system of internal control has been in place  
for the year under review and up to the date of approval of the  
annual report through the audit committee the board reviews  
the effectiveness of the internal control system annually and did so 
during the year the system of internal control accords with the financial 
reporting council’s guidance on the internal control requirements of  
the code turnbull this review covered all material controls including 
financial operational and compliance controls and risk management 
systems the 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 that transactions are authorised 
and recorded in a correct and timely manner and that such controls 
would prevent and detect within a timely period material errors or 
irregularities the system is designed to manage rather than eliminate 
risk and to address key business and financial risks including social 
environmental and ethical risks the internal control framework 
complements the 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 
responsible business programme includes relevant training and 
reporting and is part of the control framework the ethics hotline  
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 risk management systems and internal controls 
are in place in relation to the group’s financial reporting processes 
and the process for preparing consolidated accounts these include 
policies and procedures which require the maintenance of records 
which accurately and fairly reflect transactions and dispositions of 
assets provide reasonable assurance that transactions are recorded 
as necessary to allow the preparation of financial statements in 
accordance with international financial reporting standards ifrs 
and the review and reconciliation of reported data as noted above 
representatives of the business are required to certify that their 
reported information gives a true and fair view of the state of affairs 
of the business and its results for the period the audit committee 
is responsible for monitoring these risk management systems and 
internal controls
  performance monitoring there are regular meetings of the board 
and of the executive committee a comparison of forecast and 
actual results is considered including cash flows and comparisons 
against budget and the prior year divisional management teams  
also meet regularly to review performance 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 
treasury pension legal and social environmental and ethical risks 
from management the divisional chief executives cover risk issues 
at their management meetings during the year the group’s risk 
management system was reviewed and revised with details set out 
in the risk management section on page 32
  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 pages 32 and 33
  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 the internal auditor has direct access to the 
chairman of the audit committee   46 the morgan crucible company plc  annual report 2012
corporate governance
continued
audit committee and the external auditor
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 auditor 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 auditor kpmg audit plc
the audit committee has received confirmation from kpmg audit plc 
that its general procedures support the auditor’s independence and 
objectivity in relation to nonaudit services after considering such 
procedures the opinion of the audit committee was that the auditor’s 
objectivity and independence was safeguarded despite the provision  
of nonaudit services by kpmg audit plc
remuneration
remuneration policy and practice is discussed in the remuneration 
report on pages 50 to 66
relations with shareholders
during 2012 the chairman and other nonexecutive directors  
attended the annual and halfyear results presentations the group’s 
capital markets day and other investor events this provided the 
opportunity to meet institutional shareholders and other attendees  
and to further develop an understanding of their views
following the announcement of the group’s results and after other 
significant statements and presentations investor opinion is canvassed 
and any feedback is made available to the board in addition  
the board is provided with brokers’ reports and feedback from 
shareholder meetings on a regular basis
to help facilitate dialogue with shareholders the investors section of the 
company’s website includes details of stock exchange announcements 
press releases presentations webcasts and other relevant information
constructive use of the annual general meeting
the annual general meeting is normally attended by all members of  
the board and by a representative of the external auditor at the agm 
held in may 2012 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 group’s website as soon as practicable after the meeting
report of the audit committee
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 victoire de margerie became a 
member of the audit committee on her appointment as a director  
on 8 may 2012 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 committee at the end of each meeting the nonexecutive 
directors who are members of the committee also meet the auditor 
without the executive directors or other members of management 
present between meetings the members of the audit committee keep 
in contact with the chairman of the board the chief executive officer 
the chief financial officer the external auditor and the internal auditor 
as necessary
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 training and development information is made 
available to the members of the audit committee when appropriate
the audit committee’s terms of reference were reviewed during the 
year but were left unchanged they are available on the group’s website 
and include
  monitoring and making appropriate recommendations to the board 
with regard to the financial reporting process the integrity of the 
financial statements of the group preliminary announcements 
halfyear reports and any formal announcements relating to the 
group’s financial performance and reviewing significant financial 
reporting judgments contained in them
  reviewing accounting policies used by the group and their 
consistent application across the group
  reviewing whether the group has followed appropriate accounting 
standards and made appropriate estimates and judgments taking 
into account the views of the external auditor
  reviewing and monitoring the effectiveness of the group’s internal 
financial controls and internal control internal audit and risk 
management systems 
  reviewing and monitoring the group’s whistleblowing arrangements 
and systems and controls for the prevention of bribery
  making recommendations to the board for it to put to the 
shareholders for their approval at the agm in relation to the 
appointment reappointment and removal of the external auditor 
and to approve the remuneration and terms of engagement of the 
external auditor 
  reviewing and monitoring the external auditor’s independence and 
objectivity
  reviewing the effectiveness of the process for the statutory audit of 
the annual consolidated accounts taking into consideration relevant 
uk professional and regulatory requirements 
  developing and implementing policy on the engagement of the 
external auditor to supply nonaudit services taking into account 
relevant ethical guidance regarding the provision of nonaudit 
services by the external auditor 
  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 annual report 2012  the morgan crucible company plc 47
overview business review governance financial statements
the committee has the authority to investigate any matters according  
to its terms of reference and may obtain external advice at the cost of 
the company but did not do so during the year the internal auditor 
has access to the chairman of the committee and regularly meets  
with the committee without other executives present
the work of the committee in discharging those responsibilities in 
respect of 2012 included
  reviewing the group’s 201 1 financial statements and 2012 halfyear 
statements prior to board approval 
  reviewing the scope of the external audit and confirmation of  
the external auditor’s terms of engagement and fee structures
  assessing the effectiveness of the external audit process and  
all aspects of the service provided by the external auditor
  the review of the group’s approach to risk management and the 
approval of a new methodology and process by which the group’s 
main business risks are assessed and managed with the principal 
strategic and operational risks being considered by the board as  
a whole
  reviewing the effectiveness of and receiving reports from 
management on the group’s internal audit and risk management 
systems and updates to the group’s governance risk and 
compliance plans 
  approval of the work and plans for the internal audit function  
and the monitoring of progress against the plan 
  review of the systems of internal controls within the ceramics  
and morgan engineered materials divisions
  appraisal of the group’s whistleblowing process and related 
procedures and policies 
  reviews of material litigation crisis management plans and  
controls in relation to joint ventures
  monitoring the level of nonaudit work of the auditor which  
in 2012 included services amounting to £02 million mainly in 
connection with tax services
  a review of the group’s pension scheme arrangements
  assessing the impact of a potential breakdown of the eurozone
to help ensure the objectivity and independence of the external  
auditor the policy implemented by the committee for the provision  
of nonaudit services by the external auditor is in summary as follows
  certain nonaudit services may not be provided by the external  
auditor including the review of their own work they may not make 
management decisions their work must not create a mutuality of 
interest and they may not put themselves in the position of advocate
  any nonaudit work proposed to be placed with the external 
auditor with a fee between £50000 and £200000 must be 
approved in advance by the chairman of the audit committee 
projects in excess of £200000 must be approved in advance  
by the audit committee work which includes multiple phases  
is treated as a single project for approval purposes
  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
during the year the proportion of the auditor’s fees for nonaudit  
work relative to the audit fee was 14 201 1 14
the committee’s policy is to undertake an annual review of the 
effectiveness of the audit process and of all aspects of the external 
auditor’s performance and independence before determining whether 
to undertake a formal review of the auditor including a retender 
presentation or whether to put the group’s audit work out to full 
thirdparty tender
the external auditor has processes in place to safeguard their 
independence and has written to the committee confirming that in 
their opinion they are independent the group last changed its auditor 
in late 2001 and undertook a formal review of the external auditor 
which included a retender presentation during 2007 the external 
auditor rotated the partner responsible for the group’s audit work  
in 2008 and the next rotation of audit partner will take place in 2013 
having reviewed the effectiveness of the audit process all aspects of  
the service provided by the auditor and taking account of the assurance 
given by the auditor as to their independence the committee 
recommended to the board that the group’s audit work should not  
be put out to thirdparty tender during 2012 and will further review  
the situation during 2013
remuneration committee
as is further described in the remuneration report on pages 50  
to 66 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 the committee’s terms of reference were 
reviewed and updated during the year to correct minor inconsistencies 
and are available on the group’s website
martin flower andrew given and simon heale who is the committee 
chairman were members of the committee throughout the year 
andrew shilston and victoire de margerie became members of the 
committee on their appointment to the board on 8 may 2012 tim 
stevenson was a member of the committee until he stepped down 
from the board on 31 july 2012 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 committee the committee met five times during the year  48 the morgan crucible company plc  annual report 2012
corporate governance
continued
remuneration committee continued
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 
segro plc kevin dangerfield served as a nonexecutive director  
of e2v technologies plc and andrew hosty served as a nonexecutive 
director of british ceramic research limited and with effect from  
10 september 2012 as a nonexecutive director of fiberweb plc  
the fees received by mark robertshaw kevin dangerfield and  
andrew hosty in this regard are shown on page 54 the remuneration 
report 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 50 to 66
report of the nomination committee
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 martin flower andrew given 
simon heale and mark robertshaw were members of the committee 
throughout the year andrew shilston and victoire de margerie became 
members of the committee on their appointment to the board on  
8 may 2012 tim stevenson who acted as chairman of the committee 
ceased to be a member on stepping down from the board on 31 july 2012 
when andrew shilston became chairman of the committee 
the committee’s terms of reference were reviewed but left unchanged 
during the year and are available on the group’s website
the committee has the power to request the attendance of any other 
director or member of management for all or part of any meeting  
as may be considered appropriate by the committee the committee 
met five times during 2012
the nomination committee reviews the balance of skills knowledge 
and experience on the board succession planning and the leadership 
needs of the group the work of the committee in discharging those 
responsibilities in respect of 2012 included
  leading the search for a successor to the outgoing chairman  
tim stevenson resulting in the selection and recommended 
appointment of andrew shilston to the role of chairman
  leading the search for a new nonexecutive director resulting in the 
selection and recommended appointment of victoire de margerie
  reviewing the composition of the board and its committees and 
succession planning for the directors who will retire at or before  
the 2014 agm 
the process for appointing the new chairman and nonexecutive 
director is described below
  following consideration of a number of leading firms the 
committee appointed egon zehnder as external search agent
  in the light of its discussions on the balance of skills and experience 
on the board the committee considered and formulated a 
candidate specification for each role
  the external search agent produced ‘long lists’ of candidates for the roles 
  interviews were held with the shortlisted candidates and all 
members of the nomination committee met the preferred 
candidates for both roles and the former chairman met the 
preferred candidate for the nonexecutive director role
  the committee selected its preferred candidates and 
recommended their appointment to the board
the terms and conditions of appointment of nonexecutive directors 
are available for inspection nonexecutive directors including the 
chairman are asked to undertake that they will have sufficient time to 
meet their commitments to the company and their other significant 
commitments are disclosed to the board before appointment with an 
indication of the time involved the board is informed of any subsequent 
changes with additional commitments disclosed before they are taken 
the terms of appointment for nonexecutive directors do not include  
a notice period
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 38 to 41 and is incorporated in this statement by reference
information on share capital and other matters
the information about share capital required to be included in this 
statement can be found on pages 38 to 41 of the directors’ report annual report 2012  the morgan crucible company plc 49
overview business review governance financial statements
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 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 
company secretary  general counsel
14 february 2013  50 the morgan crucible company plc  annual report 2012
remuneration report
a statement to shareholders from the chairman of the remuneration committee
on behalf of the remuneration committee i am pleased to present the directors’ report on remuneration for the year ended 31 december 2012
the committee has continued to ensure that the targets we set are both challenging and incentivise management appropriately the committee 
also sees the importance of ensuring that a significant part of the executive directors’ packages should be linked to the longterm success of the group
as you will have read earlier in this annual report following the group’s record results in 201 1 2012 group revenue was down versus 201 1  
yet it was still the second best operating profit before oneoff costs in the group’s history 
nevertheless no bonus is payable for the ceo and cfo in respect of 2012 performance and a significantly reduced bonus versus last year  
is payable to the ceo morgan ceramics whose bonus was based on both group targets and specific targets for his division
eps performance over the three years from 2010 has remained strong and therefore will be reflected in the maximum payouts of the  
2010 bonus deferral share matching plan bdsmp longterm incentive plan ltip awards granted in 2010 were also partdependent on  
eps performance and this element also vested in full however 2012 performance has affected total shareholder return tsr and so this has 
significantly reduced the potential payout for the 2010 ltip overall this is consistent with our approach to ensuring incentive payments do reflect 
stretching performance targets and also reflect shareholder interests against relevant measures those shares will be released in 2013 at the end 
of their threeyear vesting period and details are shown in this report
last year i noted the considerable achievement by management of key performance measures over the previous three years not least the  
upper quartile growth in shareholder return that performance resulted in a maximum vesting of the 2009 ltip  and a 18 times match vesting  
of the 2009 bdsmp  which was also subject to very demanding eps growth targets those shares were released during 2012 at the end of their  
threeyear vesting period and are now detailed in this report
we again reviewed eps targets against internal and external reference points and have once more set what we consider a challenging range – 
particularly against the uncertain market outlook on this basis the existing 815 pa range for the ltip and the 820 pa range for  
the bonus deferral plan represent demanding targets over the next three years and remain appropriate for the 2013 award cycle
because no bonus was payable to the ceo and cfo in respect of 2012 performance they will not be able to participate in the 2013 bdsmp 
roce targets which were introduced last year have been reviewed so that they reflect the returns the board would expect to ensure that the 
group’s roce levels are maintained and enhanced at the same time they put a strong emphasis on profit growth via the challenging eps metrics 
the target range for group roce has again been set at 33 to 37 which the committee still believes provides a significant degree of 
demanding performance when compared to the group’s 2012 roce of 265
for the bonus the committee’s view is that the likely macroeconomic environment in 2013 makes effective cash management even more 
important accordingly an operating working capitalsales  element has been applied to the executive directors’ bonus targets consistent 
with that used in divisional targets this will accompany the main element of the bonus target which will be operating profit before oneoff costs
my fellow committee members and i have had contact with shareholders over the last 12 months and value the views and feedback we have 
received we have also specifically consulted those with the largest shareholdings on the proposals for the renewal of the ltip  which will be 
submitted for approval at the 2013 agm 
we do discuss and consider feedback and reflect on how to ensure overall remuneration should both be in the longer term interests of 
shareholders and meaningful for management i hope you will again find this balance appropriately reflected in the report that follows
consistent with the new regulations governing the reporting of executive remuneration due to come into force in october 2013 we have  
opted to incorporate a number of the proposed changes in this year’s report to enhance transparency 
simon heale
chairman of the remuneration committee annual report 2012  the morgan crucible company plc 51
overview business review governance financial statements
compliance statement
this report covers the period 2 january 2012 to 31 december 2012 and provides details of the remuneration committee and remuneration 
policy of morgan crucible
the company has complied with the principles and provisions relating to directors’ remuneration in the uk corporate governance code  
and this remuneration report has been prepared in accordance with schedule 8 of the large  mediumsized companies and groups  
accounts and reports regulations 2008 in accordance with section 439 of the companies act 2006 an advisory resolution to approve this 
report will be proposed at the agm on 10 may 2013
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
the remuneration committee consults the chief executive officer and invites him to attend meetings when appropriate the director of  
human resources attends meetings of the committee by invitation the committee also had access to advice from the chief financial officer  
the company secretary acts as secretary to the committee no executive director or other attendee is present when his own remuneration  
is being discussed
membership of the committee is shown on page 55
i policy report
key principles of the remuneration policy
the remuneration committee aims to ensure that all the remuneration packages offered are competitive and designed to attract retain and 
motivate executive directors and senior executives of the right calibre in order to run the group successfully and to create value for shareholders 
the committee takes a longerterm perspective on retention and motivation and although the shortterm is important the committee’s view is 
that this has to be put in the context of the group’s longterm interests
the policy of the committee is to ensure that a significant proportion of the total remuneration opportunity is performancerelated with particular 
emphasis on longterm performance and based on the achievement of measurable targets that are relevant to and support the business strategy 
this is in order to create a strong link between performance and reward which should be beneficial to shareholders employees and the group
in assessing all aspects of pay and benefits the committee also takes into account the packages offered by similar companies to ensure the 
remuneration of executive directors is competitive against the market in which the group competes for talent for the purposes of such analysis 
comparator companies are chosen having regard to business sector the size of the company eg in terms of market capitalisation turnover and 
number of people employed the diversity and complexity of its businesses and the geographical spread of its businesses the committee also 
considers the level of pay and employment conditions throughout the group when determining executive directors’ remuneration
the committee believes that the current remuneration structure is appropriate and supports the business strategy the remuneration committee 
will keep remuneration policy under review during the forthcoming year and in doing so will continue to give full consideration to the principles  
set out in the uk corporate governance code in relation to directors’ remuneration and to the guidance of investor representative bodies  52 the morgan crucible company plc  annual report 2012
remuneration report
continued
summary of morgan crucible’s remuneration policy for executive directors
this section of our report summarises the key components of remuneration for executive directors
purpose and  
link to strategy operation opportunity performance metrics changes for 2013
fixed pay
base salary
provides the fixed element  
of the remuneration package  
set at competitive levels  
against the market
base salaries are generally 
reviewed each january with 
reference to the salary levels  
at companies of similar sector 
size and complexity in the 
ftse350 the committee 
also considers individual 
contribution and the range  
of salary increases applying 
across the group when 
determining increases
base salary increases are 
applied in line with the 
outcome of the annual review
none no changes to the policy  
for 2013
for this year salary increases 
are effective from 1 march 2013 
and are set out in the 
implementation section  
on page 56
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
opportunities vary depending 
on the scheme in which an 
executive participates details 
for the executive directors are 
set out in the implementation 
report on page 56
none none
benefits
designed to be competitive  
in the market in which the 
individual is employed
can include company car 
car allowance health insurance 
and where appropriate 
relocation and other expenses
benefits values vary by role 
and are reviewed periodically 
relative to market
none none
variable pay
annual bonus 
incentivises the achievement 
of specific goals over the 
shortterm that are also 
aligned to the longterm
business strategy
performance measures are  
set at the start of the year  
and are weighted to reflect  
the balance of group and 
divisional responsibilities  
for each executive
at the end of the year the 
remuneration committee 
determines the extent  
to which these have  
been achieved 
maximum annual bonus 
opportunities of 100  
of salary
2012 bonuses for the ceo 
and cfo were based 100 
on group pbta and for the 
ceo morgan ceramics were 
based 30 on group pbta 
50 on morgan ceramics 
ebita and 20 on morgan 
ceramics thirdparty working 
capital to sales  targets 
further details are set out in 
the implementation section 
on page 57
no change to the annual 
bonus opportunity
for 2013 executive director 
annual bonuses will be based 
80 on ebita and 20 on 
thirdparty working capital  
to sales  targets
bonus deferral
share matching plan 
designed to encourage 
longterm profitable growth 
and to retain key individuals 
over this time period 
provides an opportunity  
for individuals to invest in 
company shares and receive 
matching shares based on 
group performance
participants can elect to 
voluntarily defer a proportion 
of their annual bonus into 
shares for three years and 
receive a match based on 
performance
award levels and performance 
conditions on which vesting 
depends are reviewed from 
time to time to ensure they 
remain appropriate
up to 75 of the annual 
bonus may be voluntarily 
deferred into shares for  
three years
a matching award of up to 
three shares for each deferred 
share may be earned based on
the company’s performance
the vesting of awards is usually 
subject to
 continued employment
  the company’s performance 
over a threeyear 
performance period
measures used for the 2012 
bdsmp award are set out in 
the implementation section 
on page 57
no change
ltip
aligns the interests of 
executives and shareholders 
by delivering shares to 
executive directors and  
other senior executives  
as a reward for outstanding 
longterm performance
the remuneration 
committee has the ability  
each year to grant an award 
under the ltip
the award levels and 
performance conditions  
on which vesting depends  
are reviewed from time  
to time to ensure they  
remain appropriate
the ltip provides for a 
conditional award of shares  
up to an annual limit of 150 
of salary 200 of salary in 
exceptional circumstances
the vesting of awards is usually 
subject to
 continued employment
  the group’s performance 
over a threeyear 
performance period 
measures used for the 2012 
ltip award are set out in  
the implementation section 
on page 59
no change overview business review governance financial statements
annual report 2012  the morgan crucible company plc 53
share ownership 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 bdsmp under which participants are encouraged to invest their bonus in company shares
from 2013 onwards the committee decided to increase the shareholding guideline for the chief executive officer to at least 150 of basic salary
current executive director shareholdings are set out in the implementation section on page 62
payforperformance scenario analysis
the graphs below provide estimates of the potential future reward opportunity for executive directors and the potential mix between the different 
elements of remuneration under three different performance scenarios ‘below threshold’ ‘target’ and ‘stretch’
potential reward opportunities illustrated above are based on the policy which will apply in the forthcoming financial year applied to the base  
salary in force at 1 january 2013 for the annual bonus the amounts illustrated are those potentially receivable in respect of performance for 2013 
for the bdsmp  the award opportunities assume full voluntary investment in morgan crucible shares it should be noted that any awards granted 
under the bdsmp and ltip in a year do not normally vest until the third anniversary of the date of grant this illustration is intended to provide 
further information to shareholders on the relationship between executive pay and performance please note however that actual pay delivered 
will further be influenced by changes in factors such as the company’s share price and the value of dividends paid the following assumptions have  
been made in compiling the above charts
annual bonus bdsmp ltip fixed pay
stretch maximum annual bonus performance warrants  
full vesting 3x match
performance warrants  
full vesting 100 of salary
latest disclosed base salary 
pension and benefits
target ontarget annual bonus vesting threshold met and 
vesting starts above target
performance warrants 
threshold vesting 30
below threshold no annual bonus payable threshold not achieved 0 threshold not achieved 0
 normally up to 50 bonus deferral
£000s 0 500 1000 1500 2000
ceo morgan ceramics
stretch
target
below
threshold
21 6
14
23
14 24
21 31 21
48
77
salary
annual bonus
pension and benefits
bdsmp ltip
£000s 0 500 1000 1500 2000 2500 3000
ceo
stretch
target
below
threshold
21 6
15
24
14 24
21 31 21
47
76
£000s 0 500 1000 1500 2000
cfo
stretch
target
below
threshold
21 6
15
24
14 24
21 31 21
47
76  54 the morgan crucible company plc  annual report 2012
remuneration report
continued
employee context
the policy and practice with regard to the remuneration of senior executives below the board is that these arrangements are typically reviewed 
annually and principally with regard to performance against objectives market information relevant to appropriate sectors and regions
in making remuneration decisions the remuneration committee also considers the pay and employment conditions elsewhere in the group  
prior to the annual salary review the remuneration committee is briefed by the director of human resources about pay increase data that 
individual business units will consider when deciding local pay awards for their specific businesses and countries this also forms part of the 
considerations for determining executive director remuneration for uk businesses salary increases in 2013 will be on average 3
details of executive directors’ service contracts
the executive directors are employed under contracts of employment with the morgan crucible company plc 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
notice period
executive position
date of
appointment
date of
service agreement from employer from employee
mark robertshaw ceo 4 august 2006 15 august 2008 12 months 6 months
kevin dangerfield cfo 3 august 2006 15 august 2008 12 months 6 months
andrew hosty ceo morgan ceramics 28 july 2010 17 august 2010 12 months 6 months
exit payments policy
the company’s policy is to limit severance payments on termination to preestablished contractual arrangements in the event that the 
employment of an executive director is terminated any compensation payable will be determined in accordance with the terms of the service 
contract between the company and the employee as well as the rules of any incentive plans
under normal circumstances all leavers are entitled to receive termination payments in lieu of notice equal to base salary and benefits there is  
no automatic entitlement to bonus as part of the termination arrangements and the value of any termination payment will be at the judgment of  
the remuneration committee having regard to all relevant factors including any available mitigation
in the event an executive leaves for reasons of injury disability death redundancy retirement or other such event as the remuneration 
committee determines then outstanding ltip awards and bdsmp matching awards will be prorated for time served and will vest based on 
performance over the full performance period in the event of death the date to which performance is tested may be brought forwards to the  
date of cessation of employment
upon a change of control of the company ltip awards will be prorated for time and will vest early subject to performance todate unless the 
committee determines otherwise or that a replacement award should be made bdsmp matching awards will vest early subject to performance 
and time elapsed to the change of control unless a replacement award is made
for all other leavers outstanding ltip awards and bdsmp matching awards will normally lapse the remuneration committee retains discretion  
to alter these provisions on a casebycase basis following a review of circumstances and to ensure fairness for both shareholders and participants
external appointments
with the approval of the board in each case and subject to the overriding requirements of the group executive directors may accept external 
appointments as nonexecutive directors of other companies and retain any fees received details of external directorships held by executive 
directors along with fees retained during 2012 are as follows
executive director company role fees retained
mark robertshaw segro plc nonexecutive director £53000
kevin dangerfield e2v technologies plc nonexecutive director £38000
andrew hosty fiberweb plc nonexecutive director £9846
british ceramic research limited nonexecutive director £6750 annual report 2012  the morgan crucible company plc 55
overview business review governance financial statements
relative importance of spend on pay
the graph below shows morgan crucible’s profit after tax dividend and total employee pay expenditure for the financial years ended 1 january 2012 
and 31 december 2012 and the percentage change
profit after taxation
before discontinued operations dividend total employee pay expenditure
considerations of shareholder views
the following table shows the results of the advisory vote on the 201 1 remuneration report at the 2012 agm it is the remuneration 
committee’s policy to consult with major shareholders prior to any major changes to its executive remuneration structure
for against withheld
9677 055 268
ii implementation report
the following section provides details of how the remuneration policy was implemented during the year
remuneration committee membership in 2012
the remuneration committee is composed of five nonexecutive directors each of the nonexecutive 
directors is regarded by the board as independent except the chairman of the company who was 
considered independent upon appointment tim stevenson retired from the board on 31 july 2012  
and also as a member of the committee andrew shilston and victoire de margerie joined the committee 
on their appointments to the board on 8 may 2012 the remuneration committee met five times during 
the year attendance at meetings by individual members is detailed in the corporate governance report 
on page 42
advisers
kepler associates was appointed by the committee in 2010 as its executive remuneration adviser and was retained during the most recent  
financial year in 2012 kepler associates provided independent advice on performance measurement the setting of incentive targets total 
shareholder return tsr analysis the structure of longterm incentives and provided market data in respect of senior executive remuneration  
and nonexecutive director fees kepler reports directly to the chairman of the remuneration committee
kepler associates is independent and does not provide any other services to the group the committee received a specific report on international 
equity participation from aon hewitt new bridge street it also received advice from both kepler associates and slaughter  may on the proposed 
longterm incentive plan renewal for 2013
both kepler and aon hewitt new bridge street are signatories of the code of conduct for remuneration consultants
£150m
£100m
£50m
£0m
£788m
–247
£593m
2011 2012
£150m
£100m
£50m
£0m
£254m
102
£280m
2011 2012
£400m
£300m
£200m
£100m
£0m
£3183m
–48
£3030m
2011 2012
committee members
simon heale chairman
martin flower
tim stevenson 
andrew given
andrew shilston 
victoire de margerie 
 until 31 july 2012
 from 8 may 2012  56 the morgan crucible company plc  annual report 2012
remuneration report
continued
single total figure of remuneration
the table below sets out a single figure for the total remuneration received by each executive director for the year ended 31 december 2012  
and the prior year
mark robertshaw kevin dangerfield andrew hosty
all figures shown in £’000 2012 201 1 2012 2011 2012 2011
1 salary 480 465 285 275 313 305
2 benefits 14 14 14 14 12 12
3 pension 160 129 109 68 115 75
4 annual bonus – 465 – 275 43 297
5 bdsmp 291 549 – 159 – 809
6 ltip 272 1733 157 1005 148 946
total 1217 3355 565 1796 631 2444
the figures have been calculated as follows
1  base salary amount earned for the year
2  benefits the taxable value of benefits received in the year
3  pension 20x the increase in the value of their accrued benefit over the year less directors’ contributions plus the value of any  
company contribution
4  annual bonus the total bonus earned on performance during the year
5  bdsmp the estimated value on 31 december 2012 of 2010 bdsmp matching shares and dividend equivalents vesting in 2013 subject to 
performance over the threeyear period ending 31 december 2012 the 201 1 value represents the actual vestdate value including dividend 
equivalents of 2009 bdsmp matching shares
6  ltip the estimated value on 31 december 2012 of 2010 ltip shares vesting in 2013 subject to performance over the threeyear period ended  
31 december 2012 the 201 1 value represents the actual vestdate value of 2009 ltip shares
base salary
annual salaries for executive directors are generally reviewed each year by the remuneration committee taking into account the performance  
of the individual and having regard to practice in ftse 350 companies of comparable sector size and complexity 
in line with the approach being taken across the organisation executive directors’ salaries will be increased in 2013 for 2013 executive directors’ 
increases will be implemented with effect from 1 march in considering the level of increase the committee has been mindful of the general level  
of increase across the group of on average 3 as well as the positioning of roles against the market in the case of andrew hosty the committee 
has also taken into account the additional global responsibilities of his new role of chief operating officer which was announced in february 2013  
the table below shows the salaries in 2012 and those which will take effect from 1 march 2013
base salary at
executive director position 1 march 2013 1 january 2012 increase
mark robertshaw ceo £495000 £480000 31
kevin dangerfield cfo £300000 £285000 53
andrew hosty coo £340000 £312500 88
pensions
the three 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 switched  
from final salary to career average and the normal pension age increased by five years its main features are now
  a normal pension age of 65
  pension at normal pension age based on twothirds career average pensionable salary subject to completion of at least 20 years’ employment 
26 years and eight months for joiners since 2006
  life assurance of four times basic salary
  dependants’ pension on death
pensionable salary is the member’s basic salary restricted to an earnings cap of £136800 for kevin dangerfield and andrew hosty and £1 10437  
for mark robertshaw for the 201213 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 in the last report the company advised that the committee had reviewed the impact of the 
government’s then new annual allowance limits on pension contributions the committee decided it wished to provide allowances for those affected 
which overall were appropriate costneutral and consistent with market practice of those affected mark robertshaw was the only executive 
director the value of the total company pension contributions for each executive director is shown in the emoluments table on page 63
the disclosure of executive directors’ scheme benefits is shown in the table on page 66 at the end of this report annual report 2012  the morgan crucible company plc 57
overview business review governance financial statements
benefits
executive directors are eligible to receive certain benefits including either a company car or a car allowance health insurance and where appropriate 
relocation and other expenses
annual bonus
the purpose of the annual bonus is to incentivise the achievement of specific goals over the shortterm that are also aligned to the longterm 
business strategy in 2012 the target and maximum bonus earnings for the executive directors were
 of annual salary
executive director target maximum
mark robertshaw 50 100
kevin dangerfield 50 100
andrew hosty 50 100
the targets for the annual bonus are set by the remuneration committee taking into account the short and longterm requirements of the group 
challenging goals are set which must be met before any bonus is paid this approach is intended to align executive reward with shareholder return 
by rewarding the achievement of ‘stretch’ targets
for 2012 the bonus for the ceo and cfo was based on group profit before taxation and amortisation the targets were set to incentivise the 
executive directors to deliver stretching earnings per share targets for the group senior executives with divisional responsibilities have part of  
their annual bonus linked to the performance of their division and part linked to group performance
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
group pbta divisional ebita
divisional thirdparty  
working capital to sales
director
max bonus
 salary
 max
bonus
pbta
targets
met
 salary
earned
 max
bonus
ebita
targets
met
 salary
earned
 max
bonus
quarterly
target
thresholds
achieved
 salary
earned
total
payable
mark robertshaw 100 100 0 0 £0
kevin dangerfield 100 100 0 0 £0
andrew hosty 100 30 0 0 50 partially 137 20 0 0 £42800
no award was payable for the ceo and cfo because the minimum group profit before tax and amortisation target upon which 100 of their 
bonus is based was not achieved the ceo morgan ceramics also did not receive any bonus in respect of the group pbta 30 of his bonus 
potential nor the morgan ceramics division thirdparty working capital to sales percentage targets 20 of his bonus potential however  
the morgan ceramics ebita target 50 of his bonus potential for bonus purposes before allocation of central costs and at 2012 budgeted 
exchange rates was partially achieved at £1032 million in a range from £995 million to £1 13 million resulting in a total bonus payment of  
137 of salary for andrew hosty
no changes will be made to the total annual bonus opportunity in 2013 for 2013 the performance measures for executive directors’ bonuses will 
be based 80 on ebita and 20 on thirdparty working capital to sales the committee has taken into account the group’s restructuring plans 
that were announced in february 2013 and considered that ebita prerestructuring and other oneoff charges would be an appropriate measure 
given the untypical circumstances of the restructuring performance targets have been set on this basis
bonus deferral share matching plan bdsmp
the bdsmp was introduced following shareholder approval in 2008 
this plan operates alongside the other longterm incentive arrangements under the plan rules participants may be offered the opportunity  
to defer up to 75 of their annual bonus on a pre or posttax basis into company shares typically the committee has approved a deferral 
opportunity of 50 the only exception being the 2010 award where the opportunity was 75 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 after  
three years in the event that stretching performance targets have been met
for the bonus earned for the 201 1 performance year ie payable in early 2012 participants were given the opportunity to defer up to 50  
of their bonus under the bdsmp  for any bonus earned in respect of the 2012 performance year payable in early 2013 participants will  
again be given the opportunity to defer up to 50 of their bonus under the bdsmp  as a result of the nil bonuses awarded in respect of 2012 
there will be no opportunity for the group ceo and cfo under the 2013 bdsmp   58 the morgan crucible company plc  annual report 2012
remuneration report
continued
the performance criteria for the bdsmp are set annually in 2012 they were based on eps growth targets against the 201 1 base year as follows
eps performance matching shares
20 pa 3x match
16 pa 2x match
12 pa 1x match
≤ 8 pa 0x match
the details of outstanding awards held by all directors including details of the performance criteria attached are shown on page 65
2009 bdsmp award vesting
the threeyear performance period for the 2009 bdsmp awards ended on 1 january 2012 over the period morgan crucible’s actual eps growth 
rate was 102 and accordingly a 18x match vested on 6 march 2012
director
investment
shares
maximum
 potential
matching
shares
matching
dividend
shares
match
earned
matching
shares
released
matching
dividend
shares
released
matching
shares
lapsed
matching
dividend
shares
lapsed date of vesting
mark robertshaw 48222 245201 32009 18x 147120 19205 98081 12804 6 march 2012
kevin dangerfield 13973 71052 9272 18x 42631 5562 28421 3710 6 march 2012
andrew hosty 71042 361233 47158 18x 216739 28293 144494 18865 6 march 2012
the investment shares in this table are stated on a posttax basis all other shares are stated on a pretax basis shares awarded on a pretax basis are subject to tax when released to participants
2010 bdsmp award vesting
the performance period for the 2010 bdsmp awards ended on 31 december 2012 over the period morgan crucible’s actual eps growth  
rate was rpi205 this exceeded the upper limit of the performance range and accordingly a 3x match will vest on 18 march 2013 and  
no shares will lapse
director
investment
shares
maximum
 potential
matching
shares
matching
dividend
shares
match
earned
matching
shares
released
matching
dividend
shares
released
matching
shares
lapsed
matching
dividend
shares
lapsed date of vesting
mark robertshaw 20635 104928 10148 3x 104928 10148 0 0 18 march 2013
 the investment shares in this table are stated on a posttax basis all other shares are stated on a pretax basis shares awarded on a pretax basis are subject to tax when released to participants
201 1 bdsmp awards outstanding
for the bonus earned for the 2010 performance year ie payable in 201 1 participants were given the opportunity to defer up to 50 of their bonus 
in march 201 1 mark robertshaw kevin dangerfield and andrew hosty pledged shares equivalent to 50 25 and 4444 of 2010 salary 
respectively and were granted matching awards of shares under the bdsmp equivalent to 3x their investments the threeyear performance 
period over which eps performance will be measured began on 3 january 201 1 and will end on 31 december 2013 matching awards granted to 
executive directors in 201 1 are subject to threeyear eps growth the eps target requires threeyear eps growth above a threshold of 8 pa 
before any matching 12 pa for a 1x match 16 pa for a 2x match and 20 pa or higher for a 3x match there is straightline vesting between 
these points no award is eligible to vest until 23 march 2014
investment shares
number as  2010 salary as  of 2010 bonus matching shares earliest date of vesting
mark robertshaw 74875 50 50 224625 23 march 2014
kevin dangerfield 22046 25 25 66138 23 march 2014
andrew hosty
 39933 4444 40 1 19799 23 march 2014
  andrew hosty’s annual salary was increased to £300000 on his appointment to the board on 28 july 2010 his total 2010 salary was £270000 and his 2010 bonus was £300000
30x
20x
10x
00x
8 12 16 20
bdsmp matching shares
matching shares
threeyear eps growth pa annual report 2012  the morgan crucible company plc 59
overview business review governance financial statements
2012 bdsmp awards granted
in march 2012 mark robertshaw kevin dangerfield and andrew hosty pledged shares equivalent to 50 1364 and 4875 of 201 1 salary 
respectively and were granted matching awards of shares under the bdsmp equivalent to 3x their investments the threeyear performance  
period over which eps performance will be measured began on 2 january 2012 and will end on 31 december 2014 no award is eligible to  
vest until 21 march 2015 the performance conditions attached to awards are discussed above
investment shares
number as  201 1 salary as  of 201 1 bonus matching shares earliest date of vesting
mark robertshaw 70347 50 50 211041 21 march 2015
kevin dangerfield 1 1346 1364 1364 34038 21 march 2015
andrew hosty 44988 4875 50 134964 21 march 2015
longterm incentive plan
the ltip was introduced following shareholder approval in 2004 it 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
the committee discusses and reviews the performance criteria for new threeyear ltip awards before they are granted for the awards granted  
in 2012 the committee considered its desire to have the most relevant balance of measures that reflected feedback from shareholders and directly 
related to the stretching objectives in the group’s business plan the committee therefore decided on the introduction of a roce measure for  
the 201214 performance period for the ceo and cfo tsr eps and roce performance are rewarded on an equal onethird basis as follows
tsr against ftse allshare
industrials index
 of award
that vests eps growth  of award that vests group average roce  of award that vests
upper quartile 33 15 pa 33 37 33
median 10 8 pa 10 33 10
below median nil  8 pa nil  33 nil
for the ceo morgan ceramics a third of the 201214 ltip is linked to group tsr and two thirds is based on the ceramics division’s ebita and 
roce performance as follows
tsr against ftse allshare
industrials index
 of award
that vests divisional ebitda  of award that vests divisional average roce  of award that vests
upper quartile 33 15 pa 33 435 33
median 10 6 pa 10 41 10
below median nil  6 pa nil  41 nil
the details of outstanding ltip awards held by the executive directors are shown on page 64
2009 ltip award vesting
awards granted to executive directors in 2009 were subject to relative tsr the tsr target required morgan crucible’s threeyear tsr 
performance to rank at median against 17 industrial and engineering companies comparators for 30 to vest rising to full vesting if morgan 
crucible’s tsr ranked at or above the upper quartile against these peers the performance period for the 2009 ltip awards ended on 1 january 2012 
over the period morgan crucible’s tsr was 183 which was at the 76th percentile versus the industrial and engineering comparator group 
the performance resulted in 100 of 2009 ltip awards vesting  60 the morgan crucible company plc  annual report 2012
remuneration report
continued
2010 ltip award vesting
awards granted to executive directors in 2010 were subject to relative tsr and eps the eps target applying to 50 of each award required 
threeyear eps growth of rpi4 pa for 30 of that element to vest rising to full vesting for eps growth of rpi 10 pa or higher  
the tsr target applying to the other 50 of each award required morgan crucible’s threeyear tsr performance to rank at median against  
23 industrial and engineering comparators for 30 of that element to vest rising to full vesting if morgan crucible’s tsr ranked at or above  
the upper quartile against these peers the performance period for the 2010 ltip awards ended on 31 december 2012 over the period
  morgan crucible’s eps growth was equivalent to rpi205 which exceeded the upper limit of the performance range and accordingly  
50 of the award vested under this criterion
  morgan crucible’s tsr was 69 which was 41st percentile versus the industrial and engineering comparator group accordingly  
none of the award vested under this criterion
this combined performance resulted in 50 of 2010 ltip awards vesting
201 1 ltip awards outstanding
in march 201 1 mark robertshaw kevin dangerfield and andrew hosty were granted awards of shares under the ltip equivalent to 1 1 1  
100 and 100 of salary respectively the threeyear performance period over which performance will be measured began on 3 january 201 1 
and will end on 31 december 2013 awards granted to the ceo and cfo in 201 1 are subject to relative tsr and eps the eps target applying  
to 50 of each award requires threeyear eps growth above a threshold of 8 pa for 30 of that element to vest rising to full vesting for eps 
growth of 15 pa or higher the tsr target applying to the other 50 of each award requires morgan crucible’s threeyear tsr performance  
to rank at median against the ftse allshare industrials index for 30 of that element to vest rising to full vesting if morgan crucible’s tsr ranks  
at or above the upper quartile against the companies in this index for the ceo morgan ceramics half of the 201 1 incentive is linked to group  
tsr as for the ceo and cfo and half is based on a ceramics division ebitaroce matrix this divisional portion of the 201 1 ltip will only  
vest if stretching performance is achieved with no vesting occurring unless ebita growth in morgan ceramics is at least 12 pa and roce is 
357 in 2013 in which case 30 of that element will vest full vesting will occur for ebita growth of 18 pa and roce of 407
value of awards at grant
number of ltip
shares granted £ as  2010 salary earliest date of vesting
mark robertshaw 171068 500000 111 23 march 2014
kevin dangerfield 90666 265000 100 23 march 2014
andrew hosty 102641 300000 100 23 march 2014
2012 ltip awards outstanding
in february 2012 mark robertshaw kevin dangerfield and andrew hosty were granted awards of shares under the ltip equivalent to 100  
of 2012 salary respectively the threeyear performance period over which performance will be measured began on 2 january 2012 and will end 
on 31 december 2014 no award is eligible to vest until 27 february 2015 the performance conditions attached to awards are discussed above
value of awards at grant
number of ltip
shares granted £ as  2012 salary earliest date of vesting
mark robertshaw 134907 480000 100 27 february 2015
kevin dangerfield 80101 285000 100 27 february 2015
andrew hosty 87830 312500 100 27 february 2015 annual report 2012  the morgan crucible company plc 61
overview business review governance financial statements
executive share option scheme esos
the esos was approved by shareholders in 2004 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
no awards were made under the esos in 201 1 or in 2012 there is one outstanding award to mark robertshaw who has a vested option  
from 2004 that he has not exercised see directors’ executive share options table on page 63 there is currently no intention to make awards 
under the esos in 2013
savingsrelated share option scheme saye
as uk employees the executive directors may also participate in the saye on the same basis as other eligible employees and subject to  
uk legislation saye participants save a fixed amount per month over three years and during 2012 options were granted with an exercise price at 
80 of the fiveday average market price calculated on 7 september 2012 those directors who have received options under the saye are shown 
in the table on page 66 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
exit payments made in year
no executive director left the company during the year
chairman and nonexecutive directors
annual fees paid to the chairman and nonexecutive directors are reviewed on a biennial basis 
tim stevenson retired as chairman on 31 july 2012 prior to which his fee had been £150000 pa from 1 january 2012 the committee  
reviewed market information before setting the fee for a new chairman and set the fee at £175000 pa andrew shilston was appointed  
chairman designate on 8 may 2012 on that fee basis  
  from andrew shilston’s appointment as chairman designate on 8 may 2012 until 26 july 2012 his fee was £75000 pa
the annual fee for nonexecutive directors was set at £42000 pa following the biennial review in 2010 additional payments of £8000 pa  
are made to the senior independent director the chairman of the audit committee and to the chairman of the remuneration committee  
the biennial review of nonexecutive directors’ fees was conducted in december 2012 during which market information was also considered  
it was decided to increase base fees only to £46000 pa with effect from 1 january 2013
the chairman and nonexecutive directors are also entitled to reimbursement of expenses incurred in attending board strategy and  
other meetings
role fee pa
chairman fee £175000
nonexecutive director base fee £46000
committee chairman additional fee £8000
senior independent director additional fee £8000
none of the nonexecutive directors has a service contract with the company although they do have letters of appointment the nonexecutive 
directors do not participate in any of the incentive share or share option plans the dates of the chairman’s and nonexecutive directors’ 
appointments who served during the reporting period are as follows
nonexecutive director position date of appointment date of letter of appointment date of reelection
tim stevenson chairman  1 december 2006 5 july 2006 8 may 2012
martin flower nonexecutive director 10 december 2004 16 november 2004 8 may 2012
simon heale nonexecutive director 18 february 2005 1 february 2005 8 may 2012
andrew given nonexecutive director 7 december 2007 20 november 2007 8 may 2012
andrew shilston chairman
 8 may 2012 30 march 2012 –
victoire de margerie nonexecutive director 8 may 2012 1 march 2012 –
 retired from the board 31 july 2012
 appointed chairman designate on 8 may 2012 and chairman on 1 august 2012  62 the morgan crucible company plc  annual report 2012
remuneration report
continued
total shareholdings of directors
directors’ interests in shares
the auditors are required to report on the information in this table
directors’ interests in the ordinary share capital of the company are as follows
as at
1 january
2012
as at
31 december
2012
as at 
14 february
2013 
executive directors
mark robertshaw 502057
 623447  629477 
kevin dangerfield 197589  221169 221397
andrew hosty 144778
 122644 122644
nonexecutive directors   
andrew shilston
 – 30000 30000
martin flower 15000 25000 25000
andrew given 10000 10000 10000
simon heale 18000 18000 18000
victoire de margerie
 – 2000 2000
tim stevenson 29000 29000 29000
 the date of this report
 appointed to the board on 8 may 2012
 retired from the board on 31 july 2012
 including shares held as a posttax deferred award under the bdsmp
as at 28 february 2013 there was no change to the details listed in the above table
executive directors’ shareholding requirements
the table below shows the shareholding of each executive director against their respective shareholding requirement as at 31 december 2012
director
shareholding
 requirement
 2012 salary
shares
owned
outright
1
shares
subject to
 performance
2
 
performance
tested but
unvested
shares
3
 
shares
subject to
 bdsmp
 deferral
4
options
vested but
 unexercised
5
current
 shareholding
 2012
salary
6
guideline
met
mark robertshaw
7
100 623447 741641 319457 76968 200000 400 yes
kevin dangerfield 100 221169 270943 124329 17698 – 228 yes
andrew hosty 100 122644 445234 117016 45008 – 151 yes
1  including shares held as a posttax deferred award under the bdsmp
2  201 1 and 2012 ltip awards and 201 1 and 2012 bdsmp matching awards
3  2010 ltip and 2010 bdsmp matching shares for the threeyear performance period that ended on 31 december 2012 the 2010 ltip vests on 13 may 2013 and the 2010 bdsmp 
vests on 18 march 2013 
4  estimated net value of shares voluntarily deferred under the bdsmp
5  options granted under the executive share option scheme
6  based on an executive director’s 2012 salary and the share price at 31 december 2012 comprising shares owned outright and shares subject to deferral
7  from 2013 onwards the minimum shareholding guideline for the chief executive officer is to be at least 150 of basic salary annual report 2012  the morgan crucible company plc 63
overview business review governance financial statements
emoluments table
the auditors are required to report on the information in this table
directors’ emoluments
feessalary
£000
annual bonus
£000
1
other benefits
£000
2
total emoluments
£000
pension allowance
£000
total remuneration
£000
2012 201 1 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
executive directors
mark robertshaw 480 465 – 465 14 14 494 944 123 114 617 1058
kevin dangerfield 285 275 – 275 14 14 299 564 72 66 371 630
andrew hosty 3125 305 425 297 12 12 367 614 78 72 445 686
nonexecutive directors
andrew shilston chairman
 92 –  – – – – 92 – – – 92 –
martin flower 50 50 – – – – 50 50 – – 50 50
andrew given 50 50 – – – – 50 50 – – 50 50
simon heale 50 50 – – – – 50 50 – – 50 50
victoire de margerie
 27 –  –  – – – 27 – –  – 27 –
tim stevenson  88 140 – – – – 88 140 – – 88 140
1  annual bonus shows the total bonus payable in respect of the relevant year mark robertshaw voluntarily deferred 50 of his 201 1 bonus award into the bdsmp as set out in the table 
on page 65 kevin dangerfield deferred 1364 and andrew hosty deferred 50 of their 201 1 bonuses also shown in the same table
2  other benefits include private medical insurance and a company carcar allowance
 appointed to the board on 8 may 2012
 retired from the board on 31 july 2012
comparison of company performance
the graph below shows the value of £100 invested in morgan crucible’s shares on 31 december 2007 compared with the current value of the 
same amount invested in the ftse allshare industrials index the ftse allshare industrials index is chosen because this is the current comparator 
group for tsrbased longterm incentives
summary of outstanding share awards
the auditors are required to report on the information in this table
directors’ executive share options
at
1 january
2012
granted
during
the year
exercised
during
the year
lapsed
during
the year
as at
31 december
2012
exercise
price
earliest
date of
exercise
expiry
date
mark robertshaw 200000 – – – 200000 145275p 011 107 011 114
the performance measure for the executive share option scheme award above was based on the company’s tsr performance against  
the ftse 350 30 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 share price at the year end was 2687 pence and the high and low during the year were 3600 pence and 2203 pence respectively
total shareholder return for the fiveyear period 
december 2007 to december 2012
0
50
100
150
200
311 22007 data source bloomberg
ftse allshare industrials index
morgan crucible
311 22008 311 22009 311 22010 311 2201 1 311 22012
value of £100 since december 2007  64 the morgan crucible company plc  annual report 2012
remuneration report
continued
awards to directors under the longterm incentive plan
the auditors are required to report on the information in this table
as at
1 january
2012
allocations
during
the year
shares
released
during
the year
shares
lapsed
during
the year
as at
31 december
2012
market
price at
date of
allocation
market
price at
date of
release performance periods
mark robertshaw
2009 ltip 489705 –  489705  – – 8985p 35336p  050109 – 010112
2010 ltip 214529 –  –  – 214529 20510p –  040110 – 311212
2011 ltip 171068 –
 –  – 171068 29228p –  030111 – 311213
2012 ltip – 134907 –  – 134907 35580p –  020112 – 311214
kevin dangerfield
2009 ltip 283806 –  283806  – – 8985p 35336p  050109 – 010112
2010 ltip 118939 –  –  – 118939 20510p –  040110 – 311212
2010 ltip – csop 5390 –  –  – 5390 20510p –  040110 – 311212
2010 ltip – funding 5390 –  –  – 5390 20510p –  040110 – 311212
2011 ltip 84185 – –  – 84185 29228p –  030111 – 311213
201 1 ltip – csop 6481 – –  – 6481 29228p –  030111 – 311213
201 1 ltip – funding 6481
– –  – 6481 29228p –  030111 – 311213
2012 ltip – 80101 –  – 80101 35580p –  020112 – 311214
andrew hosty
2009 ltip 267111 – 267111 – – 8985p 35336p  050109 – 010112
2010 ltip 102389 – – – 102389 20510p – 040110 – 311212
2010 ltip – csop 14627 – – – 14627 20510p –  040110 – 311212
2010 ltip – funding 14627 –  – – 14627 20510p –  040110 – 311212
2011 ltip
102641 – – – 102641 29228p –  030111 – 311213
2012 ltip – 87830 –  – 87830 35580p –  020112 – 311214
notes
1   awards granted to executive directors in 2009 were subject to relative tsr the tsr target required morgan crucible’s threeyear tsr performance to rank at median against  
17 industrial and engineering comparators for 30 to vest rising to full vesting if morgan crucible’s tsr ranks at or above the upper quartile against these peers at the end of  
the performance period morgan crucible’s tsr performance resulted in 100 vesting vested awards were released on the third anniversary of grant 27 february 2012
2  awards granted to executive directors in 2010 are subject to relative tsr and eps the eps target applying to 50 of each award requires threeyear eps growth of rpi4 pa  
for 30 of that element to vest rising to full vesting for eps growth of rpi10 pa or higher the tsr target applying to the other 50 of each award requires morgan crucible’s 
threeyear tsr performance to rank at median against 23 industrial and engineering comparators for 30 of that element to vest rising to full vesting if morgan crucible’s tsr ranks  
at or above the upper quartile against these peers
3  ltip awards made in 2010 to andrew hosty and in 2010 and 201 1 to kevin dangerfield are structured as an approved performance share plan apsp and comprise three elements  
i hm revenue  customs hmrc approved options csop over shares to the value of up to £30000 with an exercise price of 205 1 pence per share in respect of 2010 awards  
and of 29228p pence per share in respect of the 201 1 award ii an ltip award in the form of a conditional award of free shares to the value of the remainder of the award above this 
limit and iii a funding award also in the form of a conditional award of free shares over such numbers of shares whose value at exercise of the approved option equals up to £30000 
the provisions of these csop options funding awards and ltip awards are linked so that the maximum aggregate number of shares that can be acquired on exercise of ltip and  
csop awards the funding award being used to pay the exercise price arising on exercise of the csop is limited to that number of shares that had a market value on the date of the 
awards equal to 100 of kevin dangerfield’s 2009 base salary and £240000 for andrew hosty ‘the limit’
4   awards granted to the ceo and cfo in 201 1 are subject to relative tsr and eps the eps target applying to 50 of each award requires threeyear eps growth above a threshold  
of 8 pa for 30 of that element to vest rising to full vesting for eps growth of 15 pa or higher the tsr target applying to the other 50 of each award requires morgan crucible’s 
threeyear tsr performance to rank at median against the ftse allshare industrials index for 30 of that element to vest rising to full vesting if morgan crucible’s tsr ranks at or 
above the upper quartile against the companies in this index for the ceo morgan ceramics half of the 201 1 incentive is linked to group tsr as for the ceo and cfo and half is 
based on a ceramics division ebitaroce matrix this divisional portion of the 201 1 ltip will only vest if stretching performance is achieved with no vesting occurring unless ebita 
growth in morgan ceramics is at least 12 pa and roce is 357 in 2013 in which case 30 of that element will vest full vesting of this element will occur for ebita growth of 18 pa  
and roce of 407
5  awards granted to executive directors in 2012 are subject to relative tsr eps and average roce the eps target applying to a third of each award requires threeyear eps growth 
above a threshold of 8 pa for 30 of that element to vest rising to full vesting for eps growth of 15 pa or higher the tsr target applying to another third of each award requires  
morgan crucible’s threeyear tsr performance to rank at median against the ftse allshare industrials index for 30 of that element to vest rising to full vesting if morgan crucible’s 
tsr ranks at or above the upper quartile against the companies in this index for the ceo and cfo the group average roce element has been set for a 3337 pa range vesting on 
a straight line basis with 30 of the measure vesting at the 33 threshold rising to full vesting at 37 or higher for the ceo morgan ceramics onethird of this award vests on relative 
tsr with the remaining twothirds vesting on a divisional ebitaroce matrix for the ebitaroce element there will be no vesting unless ebita growth in morgan ceramics is at 
least 6 pa and divisional average roce is 410 in 2014 full vesting will occur for ebita growth of 15 pa and roce of 435 annual report 2012  the morgan crucible company plc 65
overview business review governance financial statements
awards to directors under the bonus deferral share matching plan
the auditors are required to report on the information in this table
as at
1 january
2012
allocations
during
the year
shares
released
during
the year
shares
lapsed
during
the year
as at
31 december
2012
market
price at
date of
allocation
market
price at
date of
release performance periods
mark robertshaw
2009 award
investment shares
1
48222 –  48222  – – 8075p 25241p –
matching shares
2
245201 –  147120  98081 – 8075p 25241p 050109 – 010112
dividend shares
3
 – 32009 19205 12804 – various
4
25241p 050109 – 010112
2010 award
investment shares
1
20635 – –  – 20635 18870p – –
matching shares
2
104928 – –  – 104928 18870p – 040110 – 311212
2011 award
investment shares
1
 74875 – –  – 74875 30050p –  – 
matching shares
2
 224625 – – – 224625 30050p – 03011 1 – 311213
2012 award
investment shares
1
– 70347 –  – 70347 33050p – – 
matching shares
2
– 211041 – – 211041 33050p – 020112 – 311214
kevin dangerfield
2009 award 
investment shares
1
13973 –  13973  – – 8075p 34354p –
matching shares
2
71052 – 42631 28421 – 8075p 34354p 050109 – 010112
dividend shares
3
 – 9272 5562 3710 – various
4
34354p 050109 – 010112
2011 award
investment shares
1
22046 – –  – 22046 30050p –  – 
matching shares
2
66138 – – – 66138 30050p – 03011 1 – 311213
2012 award 
investment shares
1
– 1 1346 –  – 1 1346 33050p – – 
matching shares
2
– 34038 – – 34038 33050p – 020112 – 311214
andrew hosty   
2009 award 
investment shares
1
71042 – 71042 – – 8075p 32671p –
matching shares
2
361233 –  216739  144494 – 8075p 32671p 050109 – 010112
dividend shares
3
 – 47158 28293 18865 – various
4
32671p 050109 – 010112
2011 award
investment shares
1
 39933 – –  – 39933 30050p – – 
matching shares
2
 1 19799 – – – 1 19799 30050p – 03011 1 – 311213
2012 award
investment shares
1
– 44988 – – 44988 33050p – – 
matching shares
2
– 134964 – – 134964 33050p – 020112 – 311214
1  investment shares represent those shares acquired with a portion of the bonus set out in the emoluments table on page 63 voluntarily deferred into the bdsmp  
2  this is the maximum number of shares based on the pretax value of the investment shares that could be earned at the end of the performance period if the performance condition set out below  
is met in full
3 the number of shares representing the value of reinvested dividends that would have accrued during the retention period on the executive director’s matching award 
4 dividends were paid throughout the retention period meaning there are various market prices applicable to these shares
5  in 2009 and 2010 the executive directors deferred their bonus payment on a net basis in 201 1 and 2012 deferral was on a gross basis as it will be for 2013 the flexibility to defer on either  
basis is within the bdsmp rules
6  matching awards granted to executive directors in 2009 were subject to threeyear eps growth the eps target required threeyear eps growth of 4 pa for a 025x match 5 pa for a  
05x match 7 5 pa for a 1x match 10 pa for a 175x match and 15 pa or higher for a 3x match there is straightline vesting between these points 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 the threeyear performance period  
for the 2009 bdsmp awards ended on 1 january 2012 over the period morgan crucible’s actual eps growth rate was 102 and accordingly a 18x match vested on 6 march 2012
7   matching awards granted to executive directors in 2008 and 2010 are subject to threeyear eps growth the eps target required threeyear eps growth of rpi4 pa for a 025x match 
rpi5 pa for a 05x match rpi 7 5 pa for a 1x match rpi 10 pa for a 175x match and rpi 15 pa or higher for a 3x match there is straightline vesting between these points  
the performance conditions attached to the 2008 bdsmp awards were not met and therefore matching awards lapsed in full
8  matching awards granted to executive directors in 201 1 and 2012 are subject to threeyear eps growth the eps target requires threeyear eps growth above a threshold of 8 pa before  
any matching 12 pa for a 1x match 16 pa for a 2x match and 20 pa or higher for a 3x match there is straightline vesting between these points  66 the morgan crucible company plc  annual report 2012
options under the sharesave scheme
the auditor is required to report on the information in this table 
as at
1 january
2012
granted
during
the year
exercised
during
the year
lapsed
during
the year
as at
31 december
2012
exercise
price exercise periods
mark robertshaw 
2010 scheme 5454 –  –  – 5454 165p 011213 – 310514
kevin dangerfield        
201 1 scheme 4225 – –  – 4225 213p 011214 – 310515
andrew hosty       
2009 scheme 1417 –  1417  – – 128p 011212 – 310513
201 1 scheme 3380 – –  – 3380
213p 011214 – 310515
2012 scheme – 841 –  – 841 214p 011215 – 310516
pension benefits earned by the directors
the auditor is required to report on the information in this table
the three executive directors participate in the morgan group senior staff pension and life assurance scheme this is a contributory  
hmrcregistered defined benefit uk occupational pension scheme as noted above the scheme was amended on 6 april 2006
executive directors
accrued
benefits at
31 december
2012
£000
pa
increase
in accrued
benefits
excluding
inflation a
£000
increase
in accrued
benefits
including
inflation
£000
transfer 
value of a
less director’s
contributions
£000
transfer value
of accrued
benefits at
1 january
2012
£000
transfer value
of accrued
benefits at
31 december
2012
£000
increase
in transfer
value less
director’s
contributions
£000
mark robertshaw 30 4 4 39 340 452 95
kevin dangerfield 38 4 5 46 532 667 123
andrew hosty 51 4 5 51 803 973 158
notes re pension benefits
1  the accrued benefit entitlement for mark robertshaw kevin dangerfield and andrew hosty is the pension that 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 transfer values depend on market conditions over the year government bond yields fell this movement increases the assessed transfer values and was much 
more significant than the increase in accrued benefits over the year
3  members of the pension scheme historically had the option to pay additional voluntary contributions neither the contributions nor the resulting benefits are included in the above table
mark robertshaw kevin dangerfield and andrew hosty also received a pension allowance details of which are set out in the directors’ 
emoluments table on page 63
other transactions involving directors are set out in note 27 related parties to the financial statements
this report was approved by the board on 14 february 2013
signed on behalf of the board
simon heale
chairman of the remuneration committee
remuneration report
continued annual report 2012  the morgan crucible company plc 67
overview business review governance financial statements
independent auditor’s 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 31 december 2012 set out on pages 68  
to 125 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 auditor’s 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 auditor
as explained more fully in the directors’ responsibilities statement set out on page 49 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 and express an opinion on 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 wwwfrcorgukauditscopeukprivate
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 31 december 2012  
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 and 
  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 42 to 48 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 
  we have not received all the information and explanations we require for our audit or
  certain disclosures of the directors’ remuneration specified by law are not made or
  a corporate governance statement has not been prepared by the company
under the listing rules we are required to review
  the directors’ statement set out on page 31 in relation to going concern 
  the part of the corporate governance statement on pages 42 to 48 relating to the company’s compliance with the nine provisions  
of the uk corporate governance code specified for our review and
  certain elements of the report to shareholders by the board on directors’ remuneration
stephen cooper senior statutory auditor for and on behalf of kpmg audit plc statutory auditor
chartered accountants
15 canada square london e14 5gl
14 february 2013  68 the morgan crucible company plc  annual report 2012
consolidated in come statement
for the year ended 31 december 2012
n ote
2012
£m
2011
£m
revenue 3 10075 11010 
o perating costs before restructuring costs other oneoff items and amortisation of intangible assets 4 8855 9576
profit from operations before restructuring costs other oneoff items and amortisation  
of intangible assets 1220 1434
restructuring costs and other oneoff items 6
 restructuring costs 133 56
 gain on disposal of properties 01 24 
 n et pension credit – 13 
profit from operations before amortisation of intangible assets 3 1088 1415 
a mortisation of intangible assets 4 83 83
operating profit 3 1005 1332 
finance income 263 277 
finance expense 454 495
net financing costs 7 191 218
profit before taxation 814 1114
income tax expense 8 221 326
profit after taxation before discontinued operations 593 788
d iscontinued operations 9 210 –
profit for the period 803 788 
profit for period attributable to
 o wners of the parent 770 730 
 n oncontrolling interests 33 58 
803 788 
basic earnings per share 10
continuing operations 202p 269p
d iscontinued operations 76p –
278p 269p
diluted earnings per share
continuing operations 199p 257p
d iscontinued operations 74p –
273p 257p
dividends
proposed interim dividend – pence 360p 325p
  – £m 101 88 
proposed final dividend – pence 640p 600p
  – £m 179 166 
t he proposed interim and final dividends 201 1 actual are based upon the number of shares outstanding at the balance sheet date annual report 2012  the morgan crucible company plc 69
o verview business review governance financial statements
consolidated statement o f com prehensi ve in come
for the year ended 31 december 2012
t ranslation
reserve
£m
hedging
reserve
£m
fair value
reserve
£m
retained
earnings
£m
t otal parent
comprehensive
income
£m
n oncontrolling
interests
£m
total
comprehensive
income
£m
2011
profit for the year – – – 730 730 58 788 
foreign exchange translation differences 54 – – – 54 02 52
a ctuarial loss on defined benefit plans – – – 455 455 – 455
n et gain on hedge of net investment  
in foreign subsidiary 10 – – – 10 – 10 
cash flow hedges
 effective portion of changes in  
 fair value – 03 – – 03 – 03 
 t ransferred to profit or loss – 02 – – 02 – 02
change in fair value of equity securities 
availableforsale – – 01 – 01 – 01 
t ax effect on components of other  
comprehensive income – – – 59 59 – 59 
total comprehensive income 
net of tax 44 01 01 334 292 60 352 
2012
profit for the year – – – 770 770 33 803 
foreign exchange translation differences 118 – – – 118 35 153
a ctuarial loss on defined benefit plans – – – 479 479 – 479
n et gain on hedge of net investment  
in foreign subsidiary 26 – – – 26 – 26 
cash flow hedges
 effective portion of changes  
 in fair value – 09 – – 09 – 09 
 t ransferred to profit or loss – 06 – – 06 – 06
change in fair value of equity securities 
availableforsale – – 01 – 01 – 01 
t ax effect on components of other  
comprehensive income – – – 67 67 – 67 
total comprehensive income 
net of tax 92 03 01 358 270 02 268  annual report 2012  the morgan crucible company plc 71 70 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
consolidated b alan ce sheet
as at 31 december 2012
n ote
2012
£m
2011
£m
assets
property plant and equipment 11 2455 2598 
intangible assets 12 2651 2833 
investments 13 54 61 
o ther receivables 46 42 
d eferred tax assets 14 406 411 
total noncurrent assets 5612 5945 
inventories 15 1399 1666 
d erivative financial assets 18 16 
t rade and other receivables 16 1854 1953 
cash and cash equivalents 17 800 834 
total current assets 4071 4469 
total assets 9683 10414 
liabilities
interestbearing loans and borrowings 19 2650 2873 
employee benefits 21 1666 1351 
provisions 22 69 70 
n ontrade payables 23 48 105 
d eferred tax liabilities 14 405 445 
total noncurrent liabilities 4838 4844 
interestbearing loans and borrowings and bank overdrafts 19 78 115 
t rade and other payables 23 1840 2513 
current tax payable 61 108 
provisions 22 141 120 
d erivative financial liabilities 07 12 
total current liabilities 2127 2868 
total liabilities 6965 7712 
total net assets 2718 2702 
equity
share capital 18 704 687 
share premium 990 906 
reserves 516 604 
retained earnings 130 97 
total equity attributable to equity owners of parent company 2340 2294 
noncontrolling interests 378 408 
total equity 2718 2702 
t he financial statements were approved by the board of d irectors on 14 february 2013 and were signed on its behalf by
mark robertshaw chief executive o fficer
kevin dangerfield chief financial o fficer annual report 2012  the morgan crucible company plc 71 70 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
consolidated statement o f chan ges in e quit y
for the year ended 31 december 2012
share
capital
£m
share
premium
£m
t ranslation
reserve
£m
hedging
reserve
£m
fair
value
reserve
£m
special
reserve
£m
capital
redemption
reserve
£m
o ther
reserves
£m
retained
earnings
£m
total
parent
equity
£m
n on
controlling
interests
£m
total
equity
£m
balance at 3 january 2011 685 883 130 03 15 60 357 1 11 64 2150 371 2521 
profit for the year – – – – – – – – 730 730 58 788 
o ther comprehensive income – – 44 01 01 – – – 396 438 02 436
transactions with owners
d ividends 02 23 – – – – – – 209 184 23 207
equitysettled sharebased  
payment transactions – – – – – – – – 68 68 – 68 
o wn shares acquired for share 
incentive schemes – – – – – – – – 32 32 – 32
balance at 1 january 2012 687 906 86 04 14 60 357 1 11 97 2294 408 2702 
balance at 2 january 2012 687 906 86 04 14 60 357 111 97 2294 408 2702 
profit for the year – – – – – – – – 770 770 33 803 
o ther comprehensive income – – 92 03 01 – – – 412 500 35 535
transactions with owners
d ividends 09 84 – – – – – – 254 161 28 189
equitysettled sharebased  
payment transactions – – – – – – – – 31 31 – 31 
o wn shares issuedacquired for  
share incentive schemes 08 – – – – – – – 102 94 – 94
balance at 31 december 2012 704 990 06 07 13 60 357 111 130 2340 378 2718 
d etails of the reserves are provided in note 18 annual report 2012  the morgan crucible company plc 73 72 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
consolidated statement o f cas h flo ws
for the year ended 31 december 2012
n ote
2012
£m
2011
£m
operating activities
profit for the period before discontinued operations 593 788 
a djustments for
 depreciation 4 300 311 
 amortisation 4 83 83 
 n et financing costs 7 191 218 
 profit on sale of property plant and equipment 02 26
 income tax expense 8 221 326 
 n oncash operating costs relating to restructuring 4 50 – 
 equitysettled sharebased payment expenses 19 59 
cash generated from operations before changes in working capital and provisions 1455 1759 
d ecreaseincrease in trade and other receivables 08 129
d ecreaseincrease in inventories 185 77
d ecrease in trade and other payables 319 85
d ecrease in provisions and employee benefits 119 175
cash generated from operations 1210 1293 
interest paid 201 220
income tax paid 268 256
net cash from operating activities 741 817 
investing activities
purchase of property plant and equipment 294 287
proceeds from sale of property plant and equipment 27 32 
sale of investments 01 07 
interest received 16 16 
a cquisition of subsidiaries net of cash acquired 66 104
forward contracts used in net investment hedging 07 48
net cash from investing activities 309 384
financing activities
purchase of own shares for share incentive schemes 94 32
repayment of borrowings 17 162 244
payment of finance lease liabilities 17 02 04
d ividends paid 161 184
net cash from financing activities 419 464
n et increasedecrease in cash and cash equivalents 13 31
cash and cash equivalents at start of period 834 850 
effect of exchange rate fluctuations on cash held 47 15 
cash and cash equivalents at period end 17 800 834
a reconciliation of cash and cash equivalents to net borrowings is shown in note 17 annual report 2012  the morgan crucible company plc 73 72 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
notes to th e consolidated finan cial statements
1 accounting policies estimates and judgments
accounting policies
t he morgan crucible company plc the ‘company’ is a company incorporated in the uk
t he 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 t he parent company financial statements present information about the company as a separate entity and not about its 
group t hese consolidated financial statements have been drawn up to 31 d ecember 2012 t he group changed its fiscal year during the current 
period t he group now maintains a 12month calendar fiscal year ending on 31 d ecember previously the group maintained a 52 or 53week 
fiscal year ending on the s unday nearest to the a ccounting reference d ate of the company 1 january
t he group financial statements have been prepared and approved by the d irectors in accordance with international financial reporting standards 
as adopted by the eu adopted ifrss t he company has elected to prepare its parent company financial statements in accordance with uk 
generally a ccepted a ccounting practice these are presented on pages 1 16 to 125
where possible the group has set out individual accounting policies in the note to the consolidated financial statements most relevant to that 
accounting policy
t he accounting policies set out below have unless otherwise stated been applied consistently to all periods presented in these group financial 
statements
a measurement convention
t he 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
t he 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 t he 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
a ssociates are those entities in which the group has significant influence but not control over the financial and operating policies s ignificant 
influence is presumed to exist when the group holds between 20 and 50 of the voting power of another entity a ssociates are accounted  
for using the equity method and are initially recognised at cost
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
t ransactions 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 n onmonetary 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 n onmonetary assets and 
liabilities denominated in foreign currencies that are stated at fair value are translated to pounds sterling at foreign exchange rates ruling at the dates 
the fair value was determined
ii financial statements of foreign operations
t he 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 t he 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 o ther comprehensive income ‘o ci’ annual report 2012  the morgan crucible company plc 75 74 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
notes to th e consolidated finan cial statements
continued
1 accounting policies estimates and judgments continued
e impairment
t he carrying amounts of the group’s assets other than deferred tax assets are reviewed at each balance sheet date to determine whether there is 
any indication of impairment if any such indication exists the asset’s recoverable amount is estimated see i below
a n impairment loss is recognised whenever the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount impairment 
losses are recognised in the income statement
impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to 
cashgenerating units group of units and then to reduce the carrying amount of the other assets in the unit group of units on a prorata basis 
when a decline in the fair value of an availableforsale financial asset has been recognised directly in o ci and there is objective evidence that the 
asset is permanently impaired the cumulative loss that had been recognised directly in o ci is recognised in profit or loss a significant or prolonged 
decline in an availableforsale financial asset’s fair value below its cost is objective evidence of impairment t he 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
t he 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 t he 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
a n impairment loss in respect of a receivable carried at amortised cost and other assets not listed below is reversed if the subsequent increase in 
recoverable amount can be related objectively to an event occurring after the impairment loss was recognised
a n impairment loss in respect of an investment in an equity instrument classified as availableforsale is not reversed through profit or loss i f 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 
a n impairment loss in respect of goodwill is not reversed
a n impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been 
determined net of depreciation or amortisation if no impairment loss had been recognised
f revenue
revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable  
net of returns trade discounts and volume rebates revenue is recognised when the significant risks and rewards of ownership have been 
transferred to the customer recovery of the consideration is probable the associated costs and possible return of goods can be estimated  
reliably there is no continuing management involvement with the goods and the amount of revenue can be measured reliably if it is probable  
that discounts will be granted and the amount can be measured reliably then the discount is recognised as a reduction of revenue as the sales  
are recognised
g dividends
d ividends payable are recognised as a liability in the period in which they are declared and approved
accounting estimates and judgments
judgments made by the d irectors 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 a udit committee the development selection and disclosure of the group’s critical accounting policies and 
estimates and the application of these policies and estimates t he following accounting estimates are subject to significant uncertainty annual report 2012  the morgan crucible company plc 75 74 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
1 accounting policies estimates and judgments continued
provisions
n ote 22 contains information about provisions provisions for closure and restructuring costs environmental issues and settlement of litigation  
are judgmental by their nature a mounts provided are the group’s best estimate of exposure based on currently available information
recognition of identifiable intangible assets and goodwill 
n otes 2 and 12 contains information about intangible assets recognised on acquisition t hese primarily relate to existing contracts order books  
and customer relationships which are supported by longterm relationships with key customers t he group has estimated that the customer 
relationships have an economic life of 1520 years
remeasurement of deferred contingent consideration
n ote 2 contains information on deferred contingent consideration arising as an element of the fair value of consideration on acquisition d eferred 
contingent consideration is remeasured based upon the group’s best estimate of its future liability calculated in accordance with the acquisition 
agreement
impairment of goodwill
n ote 12 contains information about the assumptions relating to goodwill impairment tests including a sensitivity analysis
credit risk
n ote 20 contains information about the group’s exposure to credit risk including a sensitivity analysis t he group establishes both specific and 
general allowances for impairment losses against receivables t he general loss allowance is estimated based on historical data of payment statistics 
for similar financial assets
foreign currency exposure
n ote 20 contains information about the foreign currency exposure of the group and risks in relation to foreign exchange movements including  
a sensitivity analysis
pension assumptions
t he principal actuarial assumptions applied to pensions are shown in note 21 including a sensitivity analysis t he 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
t he 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 
d eferred tax assets are recognised based on management’s assessment of the extent to which they are recoverable
going concern
t he 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 6 to 35 t he financial position of the group its cash flows liquidity position and borrowing facilities are described in the business 
review in addition note 20 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
t he group meets its daytoday working capital requirements through local banking arrangements that are supported by the flexibility provided by 
the group bank facility of £150 million unsecured fiveyear multicurrency revolving credit facility t he bank facility headroom at 31 d ecember 2012 
was £150 million
t he group’s forecasts and projections taking account of reasonably possible changes in trading performance show that the group is able to 
operate within the level of its committed facilities t he d irectors have a reasonable expectation that the group has adequate resources to continue 
in operational existence for the foreseeable future a ccordingly they continue to adopt the going concern basis in preparing the a nnual report  
and a ccounts annual report 2012  the morgan crucible company plc 77 76 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
1 accounting policies estimates and judgments continued
adoption of new and revised standards
d uring the period the group has applied amendments to ifrs 7 disclosures – transfers of business assets t he above amendment has not had  
any significant impact on the reported results or financial position of the group
for the year ended 31 d ecember 2013 the group is required to adopt ias 19 revised employee benefits  t he group’s expectation is that profit 
before taxation for 2013 will be approximately £6 million lower than if the current ias 19 had been applied t he reasons for this are
i  a £12 million increase in operating costs as a result of the requirement to reclassify pension scheme administration costs from net finance 
charge to operating costs such costs include the ppf levy and actuary audit legal and trustee charges which under the current ias 19  
are allowed to be included within the net finance charge
ii  a £48 million increase in the net financing costs being the net of a £6 million additional charge due to the new requirement for the expected 
return on assets to be calculated by applying the corporate bond yield discount rate to the balance sheet pensionrelated assets offset by a  
£12 million decrease as a result of the reclassification of the administration costs to operating charges identified above
t he group does not expect there to be a material change in the group pension deficit as a result of the change in the accounting standard
t he group does not expect that the adoption of any other standards and interpretations that are in issue but not yet effective to have a material 
impact on the group’s financial statements
2 acquisitions
accounting policies
step acquisitions
step acquisitions arise when the group acquires control of an entity through successive share purchases t he identifiable assets liabilities and 
contingent liabilities acquired are recorded at fair value on the date that control is acquired for step acquisitions occurring before 3 january 2010  
the amount recognised as goodwill or negative goodwill is determined separately for each tranche acquired calculated as the difference between 
the fair value of the consideration paid and the fair value of the identifiable assets liabilities and contingent liabilities acquired in accordance with  
ifrs 3 business combinations 2004 a ny 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 a ny future step acquisitions would be accounted for in accordance with ifrs 3 business combinations 2008
acquisitions
clearpower limited
in 2007 the group acquired 49 of the o rdinary share capital of clearpower l imited a company that via two intermediary holding companies 
owns 100 of n p a erospace l imited o n 5 january 2009 the group acquired the remaining 51 of the o rdinary share capital of clearpower 
l imited for a total of £568 million an amount contingent on the future performance of clearpower l imited t his comprised £122 million in cash 
for 1 1 of the o rdinary share capital and £446 million in discounted deferred contingent consideration for 40 of the o rdinary share capital  
t he discounted deferred contingent consideration took the form of four synthetic forwards each to acquire 10 of the o rdinary share capital  
of clearpower l imited at future dates from 2010 onwards the amount of which are based on a fixed ebitda multiple of clearpower l imited
o n 1 a pril 2010 the group agreed to pay £249 million o f this amount £172 million related to the first of the four synthetic forwards  
t he remaining payment of £77 million related to deferred contingent consideration on the acquisition of 1 1 of clearpower l imited in 2009  
£124 million of the total was deferred for payment until 6 july 2010 in addition to these payments the group paid £23 million to the employee 
benefit t rust in accordance with the terms of the original acquisition agreement
o n 31 march 201 1 and 28 march 2012 the group paid £91 million and £61 million respectively for the second and third synthetic forwards  
in addition to these payments on 31 march 201 1 and 28 march 2012 the group paid £08 million and £06 million respectively to the employee 
benefit t rust in accordance with the terms of the original acquisition agreement
t he group carries a liability of £03 million representing the best estimate of the amount it will pay to acquire the remaining 10 of the o rdinary 
share capital of clearpower l imited t his is included within current nontrade payables t he unwinding of the discount on this liability of £02 million 
is recorded as a finance expense see note 7 t he adjustment through goodwill since the date of acquisition as a result of the remeasurement is 
£93 million
other acquisitions in 2012 and 201 1
t here were no other business combinations in 2012 and 201 1
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 77 76 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
3 segment reporting
accounting policies
t he group has identified four reportable operating segments t hese have been identified on the basis of internal management reporting 
information that is regularly reviewed by the group’s board of d irectors the chief o perating d ecision 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 and head office 
expenses and income tax assets and liabilities
t he group comprises the following four reportable operating segments
  t echnical ceramics – the t echnical ceramics business is a leading supplier of customerspecific applicationsengineered industrial products 
manufactured from advanced materials including structural ceramic electroceramic and precious metals
  t hermal ceramics – the t hermal ceramics business provides thermal management solutions for hightemperature applications which benefit 
technically financially and environmentally from optimised thermal energy and emissions control
  morgan am t – the m organ am t business delivers highly engineered solutions built from a portfolio of advanced material technologies  
that includes carbon silicon carbide oxidebased ceramics and advanced polymeric composite materials
  molten metal systems – the molten metal systems business produces crucibles and foundry consumables
segment reporting
t he information presented below represents the operating segments of the group
morgan ceramics morgan engineered materials
t echnical ceramics t hermal ceramics morgan am t molten metal systems consolidated
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
revenue from external customers 2733 2851 3872 4001 3012 3691 458 467  10075 11010 
divisional ebita
1
 427 431 519 496 244 480 81 77 1271 1484 
unallocated costs 51 50
group ebita
2
1220 1434 
restructuring costs and other oneoff items 14 11 54 30 64 – – –
132 19
underlying operating profit
3
1088 1415
a mortisation of intangible assets 25 25 13 12 43 45 02 01 83 83
operating profit 1005 1332 
finance income 263 277 
finance expense
454 495
profit before taxation 814 1114 
1 s egment profit is defined as d ivisional ebita  which is 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
t he above measures of profit are shown because the d irectors use them to measure the underlying performance of the business as referred to in 
the business review section of the a nnual report annual report 2012  the morgan crucible company plc 79 78 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
3 segment reporting continued
t he group did not have any significant intersegment revenue between reportable operating segments in 2012 and 201 1
morgan ceramics morgan engineered materials
t echnical ceramics t hermal ceramics morgan am t molten metal systems consolidated
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
segment assets 2101 2257 2573 2777 3422 3720 309 314 8405 9068 
unallocated assets 1278 1346 
t otal assets 9683 10414 
segment liabilities 443 508 732 816 495 774 70 85 1740 2183 
unallocated liabilities 5225 5529 
t otal liabilities 6965 7712 
segment capital expenditure 57 62 108 82 108 115 20 18 293 277 
unallocated capital expenditure 01 10 
t otal capital expenditure 294 287 
morgan ceramics morgan engineered materials
t echnical ceramics t hermal ceramics morgan am t molten metal systems consolidated
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
segment depreciation 87 86 99 1 11 99 101 14 13 299 311 
unallocated depreciation 01 – 
300 311 
revenue from  
external customers
n oncurrent assets
excluding tax and
financial instruments
2012
£m
2011
£m
2012
£m
2011
£m
usa 3155 3261 1710 1826 
uk the group’s country of domicile 1079 1419 1656 1764 
china 836 877 519 516 
germany 703 757 311 301 
france 411 432 209 238 
o ther a sia middle east and a frica 1873 2032 362 408 
o ther europe 1275 1429 225 241 
o ther n orth a merica 308 298 116 134 
south a merica 435 505 98 106 
10075 11010 5206 5534
revenue from external customers is based on geographic location of the endcustomer segment assets are based on geographical location of the assets
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 79 78 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
4 operating costs
2012
£m
2011
£m
change in stocks of finished goods and work in progress 01 23
raw materials and consumables 2789 3202 
o ther external charges 1636 1761 
t otal 4424 4940 
employee costs
– wages and salaries 2392 2541 
– equitysettled sharebased payments 19 56 
– social security costs 510 485 
– other pension costs 109 101 
t otal 3030 3183 
d epreciation 300 311 
rentals under operating leases
– hire of plant and machinery 30 31 
– other operating leases 53 53 
t otal 83 84 
o ther operating charges and income
– net foreign exchange lossesgains 04 13
– other operating income and charges 1014 1071 
t otal 1018 1058 
t otal operating costs before restructuring costs other oneoff items and amortisation of intangible assets 8855 9576 
restructuring costs and other oneoff items
– employment termination costs 61 51 
– writeoff of assets 50 – 
– other site rationalisation and closure costs 22 05 
– profit on disposal of properties 01 24
– net pension credit – 13
t otal 132 19
a mortisation of intangible assets 83 83 
t otal operating costs 9070 9678 
t he group recognised £196 million in expense in respect of research and development 201 1 £143 million annual report 2012  the morgan crucible company plc 81 80 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
4 operating costs continued
a summary of the audit and nonaudit fees in respect of services provided by kp mg a udit plc charged to operating profit in the year ended  
31 d ecember 2012 is set out below
2012
£m
2011
£m
fees payable to the company’s auditor for the audit of the company’s annual accounts 04 04 
fees payable to the company’s auditor and its associates for other services
– the auditing of accounts of any subsidiaries of the company 17 17 
– audit related services 01 – 
– other nonaudit services 02 03 
24 24 
5 staff numbers 
t he average number of persons employed by the group including d irectors during the year analysed by geographical area and reporting segment 
was as follows
n umber of employees
2012 2011
usa 2758 2822
uk 1594 1552
china 1570 1547
germany 644 616
france 483 489
o ther a sia middle east and a frica 1473 1488
o ther europe 542 563
o ther n orth a merica 545 534
south a merica 424 417
10033 10028
t echnical ceramics 2724 2724
t hermal ceramics 3172 3189
morgan am t 3616 3625
molten metal systems 511 480
corporate 10 10
10033 10028
6 restructuring costs and other oneoff items
included within restructuring costs and other oneoff items in the year ended 1 january 2012 is a net pension credit of £13 million arising from  
the following
  for the united kingdom defined benefit pension schemes future indexation of current employees’ accrued benefits will be set by reference to  
the consumer prices index ‘cpi’ rather than the retail prices index ‘rpi’ t his change has resulted in a oneoff pension credit negative past 
service cost of £31 million 
  in n orth a merica a total charge of £18 million arose as a result of a charge of £16 million in respect of a provision relating to a usa pension  
plan and a charge of £02 million in respect of the curtailment and settlement loss as a result of closure of three canadian defined benefit schemes
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 81 80 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
7 net finance income and expense
accounting policies
n et 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 expected return on ias 19 pension assets and interest on  
ias 19 obligations i nterest income is recognised in the income statement as it accrues using the effective interest method
borrowing costs interest and other costs are capitalised when they are incurred on raising specific funds to finance a major capital project which  
will be a significant productive asset or to the extent that funds borrowed generally are used for the purposes of obtaining a qualifying asset
net finance income and expense
2012
£m
2011
£m
recognised in profit or loss
interest income on bank deposits measured at amortised cost 16 13 
expected return on ias 19 scheme assets 247 264 
finance income 263 277 
interest expense on financial liabilities measured at amortised cost 185 217
interest on ias 19 obligations 267 273
interest expense on unwinding of discount on deferred consideration 02 05
finance expense 454 495
n et financing costs recognised in profit or loss 191 218
recognised directly in equity
n et change in fair value of availableforsale financial assets 01 01 
cash flow hedges
– effective portion of changes in fair value of cash flow hedges 09 03 
– transferred to profit or loss 06 02
effective portion of change in fair value of net investment hedge 26 10 
foreign currency translation differences for foreign operations 118 54
88 42
8 taxation – income tax expense
accounting policies
income tax on the profit or loss for the year comprises current and deferred tax income tax is recognised in the income statement except to the 
extent that it relates to items recognised directly in o ci in which case it is recognised in o ci
current tax is the expected tax payable on the taxable income for the year using tax rates enacted or substantively enacted at the balance sheet 
date and any adjustment to tax payable in respect of previous years
d eferred 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 t he 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 t he 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 d eferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised annual report 2012  the morgan crucible company plc 83 82 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
8 taxation – income tax expense continued
taxation – income tax expense
recognised in the income statement
2012
£m
2011
£m
current tax expense
current year 254 304 
a djustments for prior years 50 05
204 299 
deferred tax expense
o rigination and reversal of temporary differences 17 27 
t otal income tax expense in income statement 221 326 
reconciliation of effective tax rate
2012
£m
2012

2011
£m
2011

profit before tax 814 1114 
income tax using the domestic corporation tax rate 199 245 295 265 
n ondeductible expenses 24 28 33 30 
t emporary differences not equalised in deferred tax 14 17 28 25
o verprovided in prior years 36 44 04 04
o ther including the impact of overseas tax rates 48 59 30 27 
221 271 326 293 
income tax recognised directly in equity
t ax effect on components of other comprehensive income
– current tax associated with share schemes 13 – 
– d eferred tax associated with defined benefit schemes 54 59 
– o ther – 01 
t otal income tax recognised directly in equity 67 60 
9 discontinued operations
d iscontinued operations is a tax credit arising from the review and release of tax liabilities set up in prior years relating to business disposals
10 earnings per share
earnings per share from continuing operations
t he calculation of basicdiluted earnings per share from continuing operations at 31 d ecember 2012 was based on the following
2012 2011
basic
£m
diluted
£m
basic
£m
d iluted
£m
profit attributable to equity holders of the company  
from continuing operations 560 560 730 730 
weighted average number of ordinary shares
issued o rdinary shares at the beginning of the period millions 2731 2731 2722 2722 
effect of shares issued in period and shares held by t he morgan general employee 
benefit t rust millions 39 39 05 05
d ilutive effect of share optionsincentive schemes millions 50 127 
basicdiluted weighted average number of o rdinary shares during the period millions 2770 2820 2717 2844 
earnings per share from continuing operations pence 202p 199p 269p 257p
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 83 82 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
10 earnings per share continued
earnings per share from discontinued operations
t he calculation of basicdiluted earnings per share from discontinued operations at 31 d ecember 2012 was based on the following
2012 2011
basic
£m
diluted
£m
basic
£m
d iluted
£m
profit attributable to equity holders of the company from  
discontinued operations 210 210 – –
basicdiluted weighted average number of o rdinary shares during the period – 
calculated as above millions 2770 2820 2717 2844 
earnings per share from discontinued operations pence 76p 74p 00p 00p
underlying earnings per share
t he calculation of basicdiluted underlying earnings per share at 31 d ecember 2012 was based on the following
2012 2011
basic
£m
diluted
£m
basic
£m
d iluted
£m
operating profit before amortisation less net financing costs  
income tax expense and noncontrolling interests 643 643 813 813
basicdiluted weighted average number of o rdinary shares during the period – 
calculated as above millions 2770 2820 2717 2844
earnings per share before amortisation of intangible assets pence 232p 228p 299p 286p
11 property plant and equipment
accounting policies
i owned assets
items of property plant and equipment are stated at cost or at deemed cost less accumulated depreciation see below and impairment losses 
t he cost of selfconstructed assets includes the cost of materials direct labour and an appropriate proportion of production overheads
where parts of an item of property plant and equipment have different useful lives they are accounted for as separate items of property  
plant and equipment
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 ‘o ther oneoff items’ in the income statement gains and losses 
on the disposal of plant and equipment are recognised in ‘o perating costs’ in the income statement
ii leased assets
l eases under the terms of which the group assumes substantially all the risks and rewards of ownership are classified as finance leases l eased 
assets acquired by way of a finance lease are stated at an amount equal to the lower of their fair value and the present value of the minimum lease 
payments at inception of the lease less accumulated depreciation and impairment losses
iii depreciation
d epreciation 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 l and is not depreciated d epreciation methods useful lives and residual values are reviewed at each balance sheet date  
t he estimated useful lives are as follows
  buildings 50 years
  plant and equipment and fixtures 320 years annual report 2012  the morgan crucible company plc 85 84 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
11 property plant and equipment continued
property plant and equipment
l and and
buildings
£m
plant and
equipment
and fixtures
£m
total
£m
cost
balance at 3 january 201 1 1672 5216 6888 
a dditions 13 255 268 
d isposals 125 81 206
effect of movement in foreign exchange 14 48 62
balance at 1 january 2012 1546 5342 6888 
balance at 2 january 2012 1546 5342 6888 
a dditions 45 245 290 
d isposals 03 95 98
effect of movement in foreign exchange 57 191 248
balance at 31 december 2012 1531 5301 6832 
depreciation and impairment losses
balance at 3 january 201 1 584 3612 4196 
d epreciation charge for the year 48 263 311 
impairment loss – 03 03 
d isposals 110 77 187
effect of movement in foreign exchange – 33 33
balance at 1 january 2012 522 3768 4290 
balance at 2 january 2012 522 3768 4290 
d epreciation charge for the year 45 255 300 
d isposals 01 53 54
effect of movement in foreign exchange 24 135 159
balance at 31 december 2012 542 3835 4377 
carrying amounts
a t 2 january 201 1 1088 1604 2692 
a t 1 january 2012 1024 1574 2598 
at 31 december 2012 989 1466 2455 
assets pledged as security for liabilities
a t 31 d ecember 2012 assets with a carrying amount of £33 million 1 january 2012 £33 million are subject to registered debentures to secure 
bank loans and other liabilities see note 19
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 85 84 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
12 intangible assets
accounting policies
i goodwill
a ll business combinations are accounted for by applying the purchase method goodwill represents the difference between the cost of the 
acquisition and the fair value of assets liabilities and contingent liabilities acquired
goodwill is allocated to cashgenerating units and is tested annually for impairment
ii research and development
expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding is recognised 
in the income statement as an expense as incurred
expenditure on development activities whereby research findings are applied to a plan or design for the production of new or substantially 
improved products and processes is capitalised if the product or process is technically and commercially feasible and the group has sufficient 
resources to complete development use and sale of products or processes t he expenditure capitalised includes the cost of materials  
direct labour and an appropriate proportion of overheads capitalised development expenditure is stated at cost less accumulated amortisation  
see below and impairment losses o ther development expenditure is recognised in the income statement as an expense as incurred
iii other intangible assets
o ther intangible assets that are acquired by the group are stated at cost less accumulated amortisation see below and impairment losses
iv amortisation
a mortisation 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  
o ther intangible assets are amortised from the date they are available for use t he estimated useful lives are as follows
  capitalised development costs 3 years
  computer software 36 years
  customer relationships 1520 years
  t echnology and trademarks 1520 years
  o rder book a mortised over the period in which the associated orders are fulfilled annual report 2012  the morgan crucible company plc 87 86 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
12 intangible assets continued
goodwill
£m
o rder
book
£m
customer
relationships
£m
t echnology
and
trademarks
£m
capitalised
development
£m
computer
software
£m
total
£m
cost
balance at 3 january 201 1 1973 93 773 225 22 123 3209 
a dditions externally purchased 03 – – – – 35 38 
d isposals – – – – – 27 27
remeasurement of goodwill 27 – – – – – 27 
effect of movement in foreign exchange 05 – 01 02 – 07 05 
balance at 1 january 2012 1998 93 774 227 22 138 3252 
balance at 2 january 2012 1998 93 774 227 22 138 3252 
a dditions externally purchased – – – – – 06 06 
d isposals 01 93 – – 16 – 110
remeasurement of goodwill 51 – – – – – 51
effects of movement in foreign exchange 35 – 22 01 – 04 62
balance at 31 december 2012 1911 – 752 226 06 140 3035 
amortisation and impairment losses
balance as at 3 january 201 1 – 93 124 34 11 97 359 
a mortisation charge for the year – – 44 18 07 14 83 
d isposals – – – – – 27 27
effects of movement in foreign exchange – – – 01 – 03 04 
balance at 1 january 2012 – 93 168 53 18 87 419 
balance at 2 january 2012 – 93 168 53 18 87 419 
a mortisation charge for the year – – 45 18 04 16 83 
d isposals – 93 – – 16 – 109
effects of movement in foreign exchange – – 03 03 – 03 09
balance at 31 december 2012 – – 210 68 06 100 384 
carrying amounts
a t 2 january 201 1 1973 – 649 191 11 26 2850 
a t 1 january 2012 1998 – 606 174 04 51 2833 
at 31 december 2012 1911 – 542 158 – 40 2651 
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 goodwill is attributed to each cashgenerating unit as follows
2012
£m
2011
£m
t echnical ceramics 672 694 
t hermal ceramics 204 210 
morgan am t 1017 1075 
molten metal systems 18 19 
1911 1998
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 87 86 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
12 intangible assets continued
each cashgenerating unit is assessed for impairment annually and whenever there is an indication of impairment
a s part of the annual impairment test review the carrying value of goodwill has been assessed with reference to its value in use reflecting the 
projected discounted cash flows of each cashgenerating unit to which goodwill has been allocated
t he key assumptions used in determining value in use relate to growth rates and discount rates
t he cash flow projections in year one are based on budgeted operating results for the forthcoming year
growth rates for the period not covered by budgets are specific to each operating segment ranging from 20 to 50 201 1 20 to 50 
t hese growth rates reflect the products industries and countries in which the operating segments operate t hese medium to longterm growth 
rates have been reviewed by management during 2012 and are considered to be appropriate
given the similar risk profiles of each of the operating segments together with common funding from the central group t reasury function  
a standard pretax discount rate of 133 201 1 139 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 t his discount rate has been used as the group believes it  
suitably approximates the rate used by endmarket participants
t he d irectors 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 210bps to 154 201 1 550bps to 194
  if no growth was assumed for years two to five and in the calculation of terminal value and
  if the cash flow projections of all businesses were reduced by 15 201 1 35
13 investments
accounting policies
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 o ci in the fair value reserve except for impairment losses and in the case of monetary items such as  
debt securities foreign exchange gains and losses when these investments are derecognised the cumulative gain or loss previously recognised 
directly in equity is recognised in profit or loss where these investments are interestbearing interest calculated using the effective interest method 
is recognised in profit or loss
2012
£m
2011
£m
noncurrent investments
investment in associate 15 15 
equity securities availableforsale 39 46 
54 61
equity securities availableforsale
t he equity securities availableforsale represent an investment in a mutual fund a 10 increase in the unit price would increase the fair value of 
the investments by £02 million annual report 2012  the morgan crucible company plc 89 88 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
14 recognised deferred tax assets and liabilities
d eferred tax assets and liabilities are attributable to the following
assets
2012
£m
a ssets
2011
£m
liabilities
2012
£m
l iabilities
2011
£m
net
2012
£m
n et
2011
£m
property plant and equipment – – 212 231 212 231 
intangible assets – – 183 214 183 214 
employee benefits 334 284 – – 334 284
provisions 57 70 – – 57 70
t ax value of loss carried forward recognised 15 55 – – 15 55
o ther items – 02 10 – 10 02
406 411 405 445 01 34 
unrecognised deferred tax assets
d eferred tax assets have not been recognised in respect of the following items
2012
£m
2011
£m
d eductible temporary differences 904 612
t ax losses 703 710
1607 1322
movements in temporary differences during the year
balance
2 january
201 1
£m
recognised
in income
£m
recognised
directly
in equity
£m
balance
1 january
2012
£m
recognised
in income
£m
recognised
directly
in equity
£m
balance
31 december
2012
£m
property plant and equipment 223 08 – 231 19 – 212 
intangible assets 229 15 – 214 31 – 183 
employee benefits 228 03 59 284 04 54 334
provisions 71 01 – 70 13 – 57
t ax value of loss carried forward recognised 64 09 – 55 40 – 15
o thers 22 21 01 02 10 02 10 
67 27 60 34 17 52 01
d eferred income tax of £20 million is provided on the potential unremitted earnings of overseas subsidiary undertakings
15 inventories
accounting policies
inventories are stated at the lower of cost and net realisable value n et realisable value is the estimated selling price in the ordinary course  
of business less the estimated costs of completion and selling expenses
t he cost of inventories is based on the firstinfirstout principle and includes expenditure incurred in acquiring the inventories and bringing them to 
their existing location and condition in the case of manufactured inventories and work in progress cost includes an appropriate share of overheads 
based on normal operating capacity
inventories
2012
£m
2011
£m
raw materials and consumables 458 611 
work in progress 397 415 
finished goods 544 640 
1399 1666 
t he group holds consignment inventory amounting to £177 million 201 1 £206 million which is not reflected in the balance sheet t he 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
d uring the year provisions of £56 million were made against inventories and recognised in operating expenses 201 1 £18 million
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 89 88 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
16 trade and other receivables
accounting policies
t rade and other receivables are initially stated at their fair value and subsequently measured at amortised cost less impairment losses
trade and other receivables
2012
£m
2011
£m
current
t rade receivables due from associate 125 104 
o ther trade receivables 1530 1594 
l oans and receivables 1655 1698 
o ther nontrade receivables and prepayments 199 255 
1854 1953 
t he group’s exposure to credit and currency risks related to trade and other receivables is disclosed in note 20
17 cash and cash equivalents
accounting policies
cash and cash equivalents comprises cash balances and call deposits shortterm deposits include demand deposits and shortterm highly liquid 
investments with maturities of three months or less that are readily convertible to known amounts of cash and are subject to an insignificant risk  
of changes in value bank overdrafts that are repayable on demand and form an integral part of the group’s cash management are included as a 
component of cash and cash equivalents for the purpose of the group statement of cash flows
cash and cash equivalents
2012
£m
2011
£m
bank balances 642 717 
cash deposits 158 117 
cash and cash equivalents 800 834 
reconciliation of cash and cash equivalents to net debt 
2012
£m
2011
£m
o pening borrowings 2988 3212
n et decrease in borrowings 162 244 
payment of finance lease liabilities 02 04 
effect of movements in foreign exchange on borrowings 96 24
closing borrowings 2728 2988
cash and cash equivalents 800 834 
closing net debt 1928 2154
  n et debt is defined as interestbearing loans and borrowings bank overdrafts less cash and cash equivalents annual report 2012  the morgan crucible company plc 91 90 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
18 capital and reserves
accounting policies
share capital
ordinary share capital
o rdinary shares are classified as equity
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 d ividends on preference share capital classified as equity are recognised as distributions within equity
repurchase of share capital and own shares held by the morgan general employee benefit trust ‘the trust’
when share capital recognised as equity is repurchased the amount of the consideration paid which includes directly attributable costs is net  
of any tax effects and is recognised as a deduction from equity repurchased shares and the purchase of own shares by the t rust are presented  
as a deduction from total equity
reserves
translation reserve
t he 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
t he 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
t he fair value reserve includes the cumulative net change in the fair value of availableforsale investments until the investment is derecognised
special reserve
a s pecial resolution to cancel the share premium a ccount was passed at the a nnual general meeting of the company held on 1 1 june 1993  
t his cancellation was confirmed by an o rder of the high court of justice chancery d ivision on 14 july 1993 t he amount of £889 million 
standing to the credit of the share premium a ccount on 14 july 1993 was transferred to the special reserve against which goodwill on consolidation 
could be written off t his reserve together with the amounts standing to the credit of the share premium a ccount on 12 o ctober 1990 of  
£715 million on 19 june 1987 of £389 million and on 27 july 1989 of £123 million which were transferred following previous o rders of the  
high court becomes distributable to the extent of subsequent increases in issued share capital and share premium account
capital redemption reserve
t he capital redemption reserve arose when the company redeemed preference shares wholly out of distributable profits
other reserves
t he other reserves includes the £108 million increase in the year ended 3 january 2010 in the fair value of the group’s original 49 interest in 
clearpower l imited 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 l imited
retained earnings
t he company has acquired own shares to satisfy the requirements of the various share option incentive schemes 201493 shares were held by 
t he morgan general employee benefit t rust and are treated as a deduction from equity 201 1 2044458 n il treasury shares were held by the 
company 201 1 nil a ll rights conferred by those shares are suspended until they are reissued
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 91 90 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
18 capital and reserves continued
dividends
t he following o rdinary dividends were declared and paid by the company
per share total
2012
pence
2011
pence
2012
£m
2011
£m
2010 interim – 270 – 73 
2010 final – 500 – 136 
201 1 interim 325 – 88 –
2011 final 600 – 166 –
t otal 925 770 254 209
t he company also declared the following o rdinary dividend
per share
2012
pence
total
2012
£m
2012 interim 360 101
360 101
t his o rdinary dividend had not been paid by the company as at 31 d ecember 2012 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
a fter 31 d ecember 2012 the following dividends were proposed by the d irectors for 2012 t hese dividends have not been provided for and  
there are no income tax consequences
£m
64 pence per qualifying o rdinary share 179 
55 cumulative first preference shares see note 31 –
50 cumulative second preference shares see note 31 –
179 
t he proposed 2012 interim and final dividends are based upon the number of shares outstanding at the balance sheet date
calledup share capital
2012
£m
2011
£m
equity share capital
fully paid 279741415 201 1 273139791 issued o rdinary shares of 25 pence each
700 683 
700 683 
preference share capital  
125327 issued 55 cumulative first preference shares of £1 each fully paid
01 01 
31 1954 issued 50 cumulative second preference shares of £1 each fully paid 03 03 
t otal preference share capital 04 04 
total share capital 704 687  annual report 2012  the morgan crucible company plc 93 92 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
18 capital and reserves continued
number of shares in issue
o rdinary shares preference shares
2012 2011 2012 2011
in issue at beginning of period 273139791 272166025 437281 437281
scrip dividend 3601624 973766 – – 
a llotment 3000000 – – – 
in issue at end of period 279741415 273139791 437281 437281
a s at the date of this report 281166903 o rdinary shares have been issued 201 1 274802078
t he holders of o rdinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings  
of the company
d etails of options outstanding in respect of o rdinary shares are given in note 21      
t he 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 d ecember 
respectively in every year t he 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 a rticles of a ssociation of the company or winding up or sanctioning a sale of the 
undertaking or altering the a rticles 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
o n a return of capital on a windingup the assets of the company available for distribution shall be applied
first in payment to the holders of the first preference shares of the amounts paid up on such shares together with interest at the rate of 55 pa
second in payment to the holders of the second preference shares of the amounts paid up on such shares together with interest at the rate of 
50 pa
t hird in repaying the capital paid up or credited as paid up on the o rdinary shares
fourth any surplus shall be distributed rateably amongst the holders of the o rdinary shares in proportion to the nominal amount paid up on their 
respective holdings of shares in the company
19 interestbearing loans and borrowings
t his 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 20
accounting policies
interestbearing borrowings
interestbearing borrowings are recognised initially at fair value less attributable transaction costs s ubsequent 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
finance lease payments
l eases 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 a ssets 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 d epreciation 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 t he 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
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 93 92 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
19 interestbearing loans and borrowings continued
interestbearing loans borrowings and overdrafts
2012
£m
2011
£m
noncurrent liabilities
senior n otes 2643 2817 
bank and other loans 05 53 
o bligations under finance leases 02 03 
2650 2873
current liabilities
senior n otes 58 59 
bank and other loans 18 53 
o bligations under finance leases 02 03 
78 115 
terms and debt repayment schedule
t he terms and conditions of outstanding loans are given in note 20 in the liquidity risk section
finance lease liabilities
finance lease liabilities are payable as follows
minimum
lease
payments
2012
£m
interest
2012
£m
principal
2012
£m
minimum
lease
payments
2011
£m
interest
2011
£m
principal
2011
£m
l ess than one year 02 – 02 03 – 03 
between one and five years 02 – 02 03 – 03 
more than five years – – – – – – 
04 – 04 06 – 06 
bank and other loans include £09 million 201 1 £07 million of loans secured on the assets of the group
a s at 31 d ecember 2012 the group had available headroom under the bank syndication of £1500 million 201 1 £1500 million
20 financial risk management
t his note presents information about the group’s exposure to a variety of financial risks credit risk liquidity risk and market risk and the group’s 
management of capital further quantitative disclosures are included throughout these consolidated financial statements
accounting policies
classification of financial instruments issued by the group
financial instruments issued by the 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
t o the extent that this definition is not met the proceeds of issue are classified as a financial liability where the instrument so classified takes the  
legal form of the company’s own shares the amounts presented in these financial statements for calledup share capital and share premium 
account exclude amounts in relation to those shares
finance payments associated with financial liabilities are dealt with as part of finance expenses finance payments associated with financial 
instruments that are classified in equity are dividends and are recorded directly in equity annual report 2012  the morgan crucible company plc 95 94 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
20 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
t he carrying amount of financial assets represents the maximum credit exposure t he maximum exposure to credit risk at the reporting date was
carrying amount
2012
£m
2011
£m
a vailableforsale financial assets 39 46 
t rade and other receivables 1655 1698 
cash and cash equivalents 800 834 
2494 2578 
availableforsale financial assets
t he 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
trade and other receivables
t he group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer t he demographics of the group’s 
customer base including the default risk of the industry and country in which customers operate has less influence on credit risk
management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis credit evaluations are performed  
on all customers requiring credit over a certain amount t he group does not require collateral in respect of financial assets
t he group serves thousands of customers many of these have purchased the same product for several years and in some cases decades o thers 
have modified and enhanced designs or adopted the same components into new products extending the lifecycle of the components that the 
group supplies t he 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
t he group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and 
investments t he 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 t he general loss allowance 
is determined based on historical data of payment statistics for similar financial assets
t he ageing of trade receivables at the reporting date was
gross
2012
£m
impairment
2012
£m
gross
2011
£m
impairment
2011
£m
n ot past due 1255 05 1363 16
past due 030 days 216 04 219 05
past due 3160 days 89 05 54 02
past due 6190 days 136 39 63 04
past due more than 90 days 85 73 93 67
1781 126 1792 94
t he only movement in the allowance for impairment in respect of trade receivables was an increase of £33 million 201 1 £02 million
a specific impairment allowance may be created in respect of an individual trade receivable for which full recovery is doubtful a s at 31 d ecember 2012 
and 1 january 2012 there were no specific impairment allowances that were significant to the group
t he 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
cash and cash equivalents
cash balances held by companies representing 80 of the group’s revenue are managed centrally through a number of pooling arrangements 
cash balances throughout the group are held with highcreditquality financial institutions
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 95 94 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
20 financial risk management continued
liquidity risk
l iquidity risk is the risk that the group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by cash 
t he 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
t he group seeks a balance between certainty of funding and a flexible costeffective borrowing structure t he policy is to ensure that the group 
has sufficient liquidity available to meet all foreseeable needs
t he following are the undiscounted contracted maturities of financial liabilities including interest payments 
2012
effective
interest rate
year of
maturity
carrying
amount
£m
contractual
cash flows
£m
less than
1 year
£m
12
years
£m
25
years
£m
more than
5 years
£m
nonderivative financial liabilities
684 us d ollar senior n otes 2013 684 2013 58 58 58 – – –
570 us d ollar senior n otes 2014 570 2014 616 685 35 650 – – 
365 euro senior n otes 2015 365 2015 327 357 12 12 333 – 
432 euro senior n otes 2017 432 2017 164 195 07 07 181 – 
612 us d ollar senior n otes 2017 612 2017 1075 1406 66 66 1274 – 
626 us d ollar senior n otes 2019 626 2019 461 664 29 29 87 519 
bank and other loans 1701501 up to 201 7 23 33 18 02 13 – 
o bligations under finance leases 600 up to 2014 04 04 02 02 – –
t rade and other payables 950 950 946 04 – – 
derivative financial liabilities
forward exchange contracts as  
cash flow hedges 01 01 01 – – – 
forward exchange contracts as  
fair value hedges 05 05 05 – – – 
forward exchange contracts as  
net investment hedges 01 01 01 – – – 
3685 4359 1180 772 1888 519 
2011
effective
interest rate
year of
maturity
carrying
amount
£m
contractual
cash flows
£m
l ess than
1 year
£m
12
years
£m
25
years
£m
more than
5 years
£m
nonderivative financial liabilities
684 us d ollar senior n otes 2013 684 2013 120 126 65 61 – – 
570 us d ollar senior n otes 2014 570 2014 643 754 37 37 680 – 
365 euro senior n otes 2015 365 2015 337 379 12 12 355 – 
432 euro senior n otes 2017 432 2017 169 208 07 07 22 172 
612 us d ollar senior n otes 2017 612 2017 1125 1540 69 69 207 1195 
626 us d ollar senior n otes 2019 626 2019 482 724 30 30 91 573 
bank and other loans 170800 up to 2012 106 106 53 53 – – 
o bligations under finance leases 600 up to 2014 06 06 03 01 02 – 
t rade and other payables 1213 1213 1160 53 – – 
derivative financial liabilities
forward exchange contracts as  
cash flow hedges 08 08 08 – – – 
forward exchange contracts as  
fair value hedges 04 04 04 – – – 
4213 5068 1448 323 1357 1940  annual report 2012  the morgan crucible company plc 97 96 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
20 financial risk management continued
cash flows associated with derivatives that are cash flow hedges
t he following table indicates the periods in which cash flows associated with cash flow hedges are expected to occur t his is matched with the periods 
in which cash flows associated with cash flow hedges are expected to impact profit or loss
carrying
amount
£m
contractual
cash flows
£m
more than
1 year
£m
12
years
£m
25
years
£m
more than
5 years
£m
forward exchange contracts – a ssets 11 454 450 04 – –
forward exchange contracts – l iabilities 01 440 436 04 – –
total 2012 10 14 14 – – –
forward exchange contracts – a ssets 11 549 447 102 – –
forward exchange contracts – l iabilities 08 542 443 99 – –
t otal 2011 03 07 04 03 – –
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 t he objective of market risk management is to manage and control market risk exposures within 
acceptable parameters while optimising the return on risk
t he group buys and sells derivatives in the ordinary course of business for hedging purposes and also incurs financial liabilities in order to manage 
market risks a ll such transactions are carried out in accordance with the t reasury policy which has been approved by the a udit committee 
generally the group seeks to apply hedge accounting in order to manage volatility in profit or loss
interest rate risk
a t the reporting date the interest rate profile of the group’s interestbearing financial instruments was
fixed rate instruments
carrying amounts
2012
£m
2011
£m
fixed rate instruments
financial assets – 116 
financial liabilities 2711 2927
2711 2811
variable rate instruments
carrying amounts
2012
£m
2011
£m
variable rate instruments
financial assets 800 834 
financial liabilities 27 191
773 643 
interest rate risk is regularly monitored and reviewed taking into account the group’s overall borrowing costs interest cover ratio and the relevant 
interest rate markets t he fixed rate financial liabilities comprise the currency equivalent of £2701 million 201 1 £2876 million of us private 
placement d ebt t he average cost of the group’s fixed rate debt is 57 201 1 57
a n increase of 100 basis points in interest rates on the variable element of the group’s net debt at the reporting date would have increased profit  
by £08 million 201 1 £07 million a decrease of 100 basis points would have decreased profit by £04 million 201 1 £05 million t his analysis 
assumes that all other variables in particular foreign currency rates remain constant
foreign currency risk
t he 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 nongbp borrowings treated as hedges of net investments in 
overseas entities
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 97 96 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
20 financial risk management continued
functional currency of group operations
2012 2011
gbp
£m
usd
£m
€
£m
gbp
£m
usd
£m
€
£m
t rade receivables 25 99 134 64 01 19 
cash and cash equivalents 06 96 34 53 02 16 
t rade payables 46 65 41 156 02 11
n et balance sheet exposure 15 130 127 39 01 24 
t he amounts shown in the table take into account the effect of the forward contracts entered into to manage these currency exposures
t he group aims to hedge all material trade receivables and trade payables denominated in a foreign currency a t 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  
t he 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
t he group classifies its forward exchange contracts hedging forecasted transactions as cash flow hedges and states them at fair value t he fair  
value of forward exchange contracts used as hedges of forecasted transactions at 31 d ecember 2012 was an asset of £10 million 201 1 asset  
of £03 million
t he contractual cash flows associated with the forward exchange contracts that are designated as cash flow hedges are shown in the section  
on liquidity risk t he impact on profit or loss is expected to occur at the same time as the associated cash flows
t he group maintains incountry local currency borrowings and has designated certain forward foreign exchange contracts and other borrowings 
as hedges of the foreign exchange risk associated with investments in foreign operations in this way the group seeks to manage the translation 
exposure of overseas net assets but only to the extent that its gearing covenant under the terms of its loan documents as well as its facility 
headroom are likely to remain comfortably within limits and provided the associated costs are not prohibitive
t he group’s currency split of total borrowings after the impact of net investment hedges was as follows
2012
£m
2011
£m
gbp 46 89
usd 2056 2210 
€ 498 706 
japanese yen 100 118 
o ther 28 06 
2728 2951 
t he group’s sensitivity to changes in foreign exchange rates on financial assets and liabilities as at 31 d ecember 2012 is as follows
a t 31 d ecember 2012 if gbp had weakenedstrengthened by 10 against usd with all other variables held constant posttax profit for the year 
would have been £13 million 201 1 £13 million higherlower equity would have been £188 million 201 1 £251 million higherlower
a t 31 d ecember 2012 if gbp had weakenedstrengthened by 10 against € with all other variables held constant posttax profit for the year 
would have been £02 million 201 1 £03 million higherlower equity would have been £85 million 201 1 £47 million higherlower
t he amounts generated from the sensitivity analysis are forwardlooking estimates of market risk assuming certain adverse market conditions occur 
a ctual results in the future may differ materially from those projected results due to developments t he impact of a weakening in gbp 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
t he impact of a onecent movement in the usd exchange rate on results that are reported in u sd would be a movement of circa £21 million  
in revenue and £02 million in profit annual report 2012  the morgan crucible company plc 99 98 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
20 financial risk management continued
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 t he 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
t he 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 t he board uses a number of measures identified as key performance indicators kpi to ensure the continued 
success of the group t he main kpi for the group is the underlying operating profit margin t he aim is to achieve midteen margins in good times 
and doubledigit margins when the environment is more challenging
t he board encourages employees of the group to hold the company’s o rdinary shares t he 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 t he company 
may also acquire its own shares under a share buyback programme
t he 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
t he group monitors capital using the following indicators
debt to adjusted capital
2012
£m
2011
£m
t otal interestbearing loans and borrowings 2728 2951 
l ess cash and cash equivalents and overdrafts 800 797
n et debt
 1928 2154 
t otal equity 2718 2702 
l ess amounts accumulated in equity relating to cash flow hedges 07 04
a djusted capital 2711 2698 
d ebt to adjusted capital ratio 07 08
net debt  to ebitda
2012
£m
2011
£m
n et debt  to ebitda 1928 2154
o perating profit before restructuring and other oneoff items 1137 1351 
d epreciation and amortisation 383 394 
ebitda 1520 1745 
n et debt
 to ebitda ratio 13x 12x
interest cover
2012
£m
2011
£m
ebitda 1520 1745 
n et finance costs excluding ias 19 pension and discount on deferred consideration 169 204 
interest cover 90x 86x
  n et debt is defined as interestbearing loans and borrowings bank overdrafts less cash and cash equivalents
t here were no changes in the group’s approach to capital management during the year
n either the company nor any of its subsidiaries are subject to externally imposed capital requirements
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 99 98 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
20 financial risk management continued
fair values
t he fair values of financial assets and liabilities together with the carrying amounts shown in the balance sheet are as follows
carrying
 amount
2012
£m
fair value
2012
£m
carrying
amount
2011
£m
fair value
2011
£m
financial assets and liabilities at amortised cost
684 us d ollar senior n otes 2013 58 58 120 121
570 us d ollar senior n otes 2014 616 655 643 703
365 euro senior n otes 2015 327 341 337 351
432 euro senior n otes 2017 164 178 169 180
612 us d ollar senior n otes 2017 1075 1241 1125 1305
626 us d ollar senior n otes 2019 461 547 482 557
bank and other loans 23 23 106 106
o bligations under finance leases 04 04 06 06
t rade and other payables 950 950 1213 1213
l oans and receivables 1655 1655 1698 1698 
cash and cash equivalents 800 800 834 834 
1223 1542 1669 2010
availableforsale financial instruments
a vailableforsale financial assets 39 39 46 46 
derivatives and other items at fair value
forward exchange contracts used for hedging 11 11 04 04 
1173 1492 1619 1960
t he 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 t he interest rates used to determine the fair value  
of loans and borrowings are 2052 201 1 2452 and finance leases 60 201 1 60
finance lease liabilities
t he fair value is estimated as the present value of future cash flows discounted at market interest rates for homogeneous lease agreements  
t he 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 a ll other receivables
payables are discounted to determine the fair value annual report 2012  the morgan crucible company plc 101 100 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
20 financial risk management continued
fair value hierarchy
t he table below analyses financial instruments carried at fair value by valuation method t he different levels have been defined as follows 
l evel 1  quoted prices unadjusted in active markets for identical assets or liabilities
l evel 2  inputs other than quoted prices included within l evel 1 that are observable for the asset or liability either directly ie as prices or indirectly 
ie derived from prices
l evel 3  inputs for the asset or liability that are not based on observable market data unobservable inputs
31 december 2012
  
level 1
£m
level 2
£m
total
£m
a vailableforsale financial assets 39 – 39 
d erivative financial assets – 18 18 
39 18 57 
d erivative financial liabilities – 07 07
39 11 50 
1 january 2012
l evel 1
£m
l evel 2
£m
total
£m
a vailableforsale financial assets 46 – 46 
d erivative financial assets – 16 16 
46 16 62 
d erivative financial liabilities – 12 12
46 04 50 
t here have been no transfers between level 1 and level 2 during 2012 and 201 1 and there were no level 3 financial instruments in either 2012  
and 2011
21 employee benefits 
accounting policies
i defined contribution plans
o bligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred
ii defined benefit plans
t he 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 t he 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 t he 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 a n economic 
benefit is available to the group if it is realisable during the life of the plan or on settlement of the plan liabilities a ctuarial gains and losses differences 
between the expected and actual returns and the effect of changes in actuarial assumptions are recognised in full in o ci in the year in which they arise
iii longterm service benefits
t he 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 t he 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 t he 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
t he grant date fair value of sharebased payment awards granted to employees is recognised as an expense with a corresponding increase in equity 
over the period that the employees become unconditionally entitled to the awards t he amount recognised as an expense is adjusted to reflect the 
actual number of awards for which the related service and nonmarket performance conditions are met such that the amount ultimately recognised  
as an expense is based on the number of awards that meet the related service and nonmarket performance conditions at the vesting date
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 101 100 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
21 employee benefits continued
employee benefits
morgan crucible operates a number of defined benefit arrangements as well as defined contribution plans t he defined benefit plans are primarily in 
the uk usa and e urope and predominantly provide pensions based on service and careeraverage pay in addition postretirement medical plans are 
operated in the usa  
2012
uk
£m
2012
usa
£m
2012
europe
£m
2012
rest of the
world
£m
2012
total
£m
pension plans and employee benefits
present value of unfunded defined benefit obligations – 88 280 22 390
present value of funded defined benefit obligations 4270 1498 16 133 5917
fair value of plan assets 3557 959 05 118 4639 
deficit 713 627 291 37 1668
unrecognised past service costs – – 02 – 02 
net obligations 713 627 289 37 1666
movements in present value of defined benefit obligation
a t 2 january 2012 3781 1478 252 163 5674
current service cost 22 04 03 15 44
interest cost 182 72 10 03 267
a ctuarial losses 432 175 50 14 671
benefits paid 161 74 12 25 272 
contributions by members 14 – – – 14
curtailments and settlements – – – 14 14 
exchange adjustments – 69 07 01 77 
at 31 december 2012 4270 1586 296 155 6307
movements in fair value of plan assets
a t 2 january 2012 3307 893 06 115 4321 
expected return on plan assets 189 53 – 05 247 
a ctuarial gains 130 52 – 10 192 
contributions by employer 78 75 11 28 192 
contributions by members 14 – – – 14 
benefits paid 161 74 12 25 272
curtailments and settlements – – – 16 16
exchange adjustments – 40 – 01 39
at 31 december 2012 3557 959 05 118 4639 
a ctual return on assets 319 105 – 15 439 
2012
uk
£m
2012
usa
£m
2012
europe
£m
2012
rest of the
world
£m
2012
total
£m
pension plans and employee benefits
expense recognised in the consolidated income statement
current service cost and past service cost 22 04 03 15 44
interest on defined benefit pension plan obligation 182 72 10 03 267
expected return on defined benefit pension plan assets 189 53 – 05 247 
curtailments and settlements – – – 02 02
total expense 15 23 13 15 66 annual report 2012  the morgan crucible company plc 103 102 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
21 employee benefits continued
t he ias 19 expense in relation to the group’s defined benefit arrangements is recognised in the following line items in the consolidated  
income statement
2012
£m
2011
£m
o perating costs 46 48
finance income 247 264 
finance expense 267 273
restructuring and other oneoff items – 30 
66 27
in the uk during 201 1 there was a change in the future increases to be provided to active members of the two schemes before retirement  
from being linked to the retail prices index rpi to the consumer prices index cpi t his resulted in a past service credit of £32 million in 201 1  
in the usa benefit accrual continues to be frozen in the m organ us employees pension plan
t he group has adopted the policy of recognising actuarial gains and losses immediately in the balance sheet through o ci cumulative actuarial  
gainslosses reported in o ci since 5 january 2004 the date of transition to a dopted ifrss are £1952 million
statement of financial position reconciliation
2012
£m
2011
£m
a t 2 january 2012 1351 1039
pension expense 66 27
contributions 192 170 
o ther comprehensive income 479 455
currency adjustments 38 – 
at 31 december 2012 1666 1351
t he group expects to contribute £180 million to these arrangements in 2012
t he fair values of the plan assets were as follows
2012
uk
£m
2012
usa
£m
2012
europe
£m
2012
rest of the
world
£m
2012
total
£m
equities 1339 467 – – 1806 
bonds 357 492 – – 849 
matching insurance policies 1846 – 04 28 1878 
o ther 15 – 01 90 106 
total 3557 959 05 118 4639 
uk
£m
usa
£m
europe
£m
rest of the
world
£m
total
£m
estimate of employer contributions to be paid into the plans  
during the 12month period beginning 1 january 2013 81 60 11 28 180 
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 103 102 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
21 employee benefits continued
principal actuarial assumptions were
2012
uk

2012
usa

2012
europe

d iscount rate 440 420 300
salary increase na 270 250
inflation uk rpi  cpi 290190 220 200
pensions increase 290310360 na 200
mortality – postretirement
l ife expectancy of a male retiring at age 60 in 2012 263 years 234 years 232 years
l ife expectancy of a male retiring at age 60 in 2032 274 years 242 years 26 years
expected rates of return on plan assets are determined by reference to relevant indices t he overall expected rate of return is calculated by weighting 
the individual rates in accordance with the anticipated balance in the plan’s investment portfolio
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
balance sheet
present value of defined benefit obligation 6307 5674 5218 4891 4463
fair value of plan assets 4639 4321 4177 3830 3445 
d eficit 1668 1353 1041 1061 1018
unrecognised past service costs 02 02 02 02 – 
n et obligations 1666 1351 1039 1059 1018
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
experience lossesgains
experience lossesgains on defined benefit obligation 95 142 08 22 17 
experience gainslosses on plan assets 192 55 150 343 1047
t he sensitivities regarding the principal assumptions used to measure the scheme liabilities are
change in assumption
2012
increase
effect
£m
2011
increase
effect
£m
d iscount rate d ecrease by 01 77 61 
rate of increase in salaries increase by 01 – –
inflation increase by 01 34 37 
mortality – postretirement pensioners live 1 year longer 125 112 
t he 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 group’s past service benefit obligations a number of assumptions about the future are required for defined benefit schemes  
the d irectors 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 d irectors consider advice provided by external advisers such as actuaries annual report 2012  the morgan crucible company plc 105 104 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
21 employee benefits continued
2011
uk
£m
2011
usa
£m
2011
europe
£m
2011
rest of the
world
£m
2011
total
£m
present value of unfunded defined benefit obligations – 89 237 27 353
present value of funded defined benefit obligations 3781 1389 15 136 5321
fair value of plan assets 3307 893 06 115 4321 
deficit 474 585 246 48 1353
unrecognised past service costs – – 02 – 02 
net obligations 474 585 244 48 1351
movements in present value of defined benefit obligation
a t 2 january 201 1 3472 1357 234 155 5218
current service cost 25 01 05 17 48
interest cost 187 70 11 05 273
a ctuarial losses 262 108 25 05 400
benefits paid 147 72 15 20 254 
contributions by members 14 – – – 14
past service credits 32 – – – 32 
curtailments and settlements – – – 02 02
exchange adjustments – 14 08 01 05
at 1 january 2012 3781 1478 252 163 5674
movements in fair value of plan assets
a t 2 january 201 1 3206 854 05 112 4177 
expected return on plan assets 200 58 – 06 264 
a ctuarial gains 35 18 01 03 55
contributions by employer 69 64 15 22 170 
contributions by members 14 – – – 14 
benefits paid 147 72 15 20 254
exchange adjustments – 07 – 02 05 
at 1 january 2012 3307 893 06 115 4321 
a ctual return on assets 165 40 01 03 209 
2011
uk
£m
2011
usa
£m
2011
europe
£m
2011
rest of the
world
£m
2011
total
£m
expense recognised in the consolidated income statement
current service cost and past service cost 07 01 05 17 16
interest on defined benefit pension plan obligation 187 70 11 05 273
expected return on defined benefit pension plan assets 200 58 – 06 264 
curtailments and settlements – – – 02 02
total expense 20 13 16 18 27
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 105 104 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
21 employee benefits continued
t he fair values of the plan assets were as follows
2011
uk
£m
2011
usa
£m
2011
europe
£m
2011
rest of the
world
£m
2011
total
£m
equities 1259 449 – – 1708 
bonds 270 444 – – 714 
matching insurance policies
1764 – 05 22 1791 
o ther 14 – 01 93 108 
total 3307 893 06 115 4321 
principal actuarial assumptions were
2011
uk

2011
usa

2011
europe

d iscount rate 490 500 430
expected rate of return on plan assets – equities 750 740 na
  – bonds 460 460 na
  – matching insurance 490 na 430
salary increase na 270 250
inflation rpi  cpi 300180 220 200
pensions increase 290320 na 200
mortality – postretirement
l ife expectancy of a male retiring at age 60 in 201 1 259 years 233 years 23 years
l ife expectancy of a male retiring at age 60 in 2031 272 years 241 years 259 years
defined contribution plans
t he group operates a number of defined contribution pension plans t he total expense relating to these plans in the current year was £70 million 
201 1 £70 million t he group expects to contribute £79 million to these arrangements in 2013
sharebased payments
t he group operates various share option programmes that allow group employees to acquire shares in the company under t he morgan 
crucible company plc l ongterm incentive plan ‘lti p’ and t he morgan crucible bonus d eferral share matching plan ‘bdsm p’ awards of shares 
are made to various key executives under the executive share o ption scheme 2004 ‘esos 2004’ share options were granted by the company 
t he company also maintains an allemployee sharesave scheme available to employees in the uk ‘employee sharesave scheme 2004’ t he 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 t he 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
t he fair value of services received are in return for awards made and share options granted t he estimate of the fair value of the services received is 
measured based on an appropriate model in the case of the monte carlo model the contractual life of the options and awards are used as an input 
expectations of an early exercise is built into the model
t he fair value of the options and awards under each scheme have been measured using the following models
lti p  bdsm p  esos 2004 monte carlo model
employee sharesave scheme 2004 blackscholes merton model annual report 2012  the morgan crucible company plc 107 106 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
21 employee benefits continued
t he terms and conditions of all awards and grants made that were outstanding on or after 3 january 201 1
grant dateemployees entitled
number of
instruments
 granted vesting conditions
contractual
life of option
a wards granted to senior employees in 2012 under the bdsm p 1740554 
t hree years of service plus
satisfaction of performance criteria 3 years
o ptions granted to uk employees in 2012 under the  
employee sharesave scheme 2004 1071868 t hree years of service 3 years
a wards granted to senior employees in 2012 under the lti p 1251358 
t hree years of service plus
satisfaction of performance criteria 3 years
a wards granted to senior employees in 201 1 under the bdsm p 1484633 
t hree years of service plus
satisfaction of performance criteria 3 years
o ptions granted to uk employees in 201 1 under the  
employee sharesave scheme 2004 471732 t hree years of service 3 years
a wards granted to senior employees in 201 1 under the lti p 1500775 
t hree years of service plus
satisfaction of performance criteria 3 years
a wards granted to senior employees in 2010 under the bdsm p 82731 1 
t hree years of service plus
satisfaction of performance criteria 3 years
o ptions granted to uk employees in 2010 under the  
employee sharesave scheme 2004 484069 t hree years of service 3 years
a wards granted to senior employees in 2010 under the lti p 2331758 
t hree years of service plus
satisfaction of performance criteria 3 years
a wards granted to senior employees in 2009 under the bdsm p 3426473
t hree years of service plus
satisfaction of performance criteria 3 years
o ptions granted to uk employees in 2009 under the employee 
sharesave scheme 2004 1937568 t hree years of service 3 years
a wards granted to senior employees in 2009 under the lti p 5085721
t hree years of service plus
satisfaction of performance criteria 3 years
o ptions granted to senior employees in 2005 under the esos 2004 2097000
t hree years of service plus
satisfaction of performance criteria 10 years
o ptions granted to senior employees in 2004 under the esos 2004 3157500
t hree years of service plus
satisfaction of performance criteria 10 years
t he following options were outstanding at 31 d ecember 2012 in respect of o rdinary shares
exercise prices
n umber of shares
 outstanding
n ormal exercise dates ranging
 from         to
employee sharesave scheme 2004 12800p21300p 2031606 1 d ecember 2012 31 may 2016
esos 2004 12905p17190p 683299 22 june 2007 23 may 2015
bdsmp 000p33050p 3978379 18 march 2013 21 september 2015
lti p 000p 4693762 6 may 2013 24 september 2015
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 107 106 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
21 employee benefits continued
performance criteria for ltip bdsmp and esos 2004
t he key metrics used in the plans are
t otal shareholder return ‘ts r’ – the return expressed as a percentage on a notional investment in one share in the company expressed as follows
a the average share price over the last 12 months of the performance period plus b the net dividends per share paid during the performance 
period reinvested in company shares at the exdividend date divided by c the average share price over the three months preceding the 
performance period
earnings per share ‘eps’ – for the lti p and bdsm p profit before taxation less the charge for noncontrolling interests in any financial year  
of the company adjusted by the remuneration committee to exclude the effect of amortisation of intangible assets charges related to  
ias39 financial instruments recognition and measurement and the effect of any other special items which the remuneration committee  
does not in its discretion consider to reflect underlying operating performance divided by the weighted average number of shares in issue during 
the relevant financial years
earnings before interest t ax and a mortisation ‘ebita ’ – the group’s revenue for any financial year less operating expenses but measured before 
the impact of taxation net financing costs and the effect of amortisation of intangible assets t he remuneration committee may also make further 
adjustments to exclude items which it does not in its discretion consider to reflect the underlying operating performance of the group during the 
relevant financial years
group return on capital employed ‘group ro ce’ – group underlying operating profit divided by the sum of group working capital and the  
net book value of tangible assets
d ivisional return on capital employed ‘d ivisional ro ce’ – d ivisional ebita divided by the sum of d ivisional working capital and the net book 
value of tangible assets
group average ro ce – the average of the group ro ce at the end of each of the three financial years in the lti p period
d ivisional ebita for the lti p  bdsm p calculations – d ivisional revenue for the relevant financial years less operating costs including restructuring 
costs and other oneoff items but measured before the impact of taxation net financing costs and the effect of amortisation of intangible assets at 
reported exchange rates t he remuneration committee may also make further adjustments to exclude items which it does not in its discretion 
consider to reflect the underlying operating performance of the d ivision during the relevant financial years
d ivisional average ro ce – the average of the d ivisional ro ce at the end of each of the three financial years in the lti p period
for the ts r elements of the plans for performance between median and upper quartile awards are made on a straightline prorate basis 
similarly for eps group average ebita  group average ro ce d ivisional average ebita and d ivisional average ro ce metrics for performance 
between the identified trigger points awards are made on a straightline prorata basis
performance criteria for ltip
t he performance criteria for lti p awards are set annually t he company has given an undertaking to shareholders that awards will only vest  
if there is also an improvement in the company’s andor d ivision’s underlying financial performance a wards will only vest therefore if the 
remuneration committee is satisfied that the company’s andor d ivision’s underlying financial performance over the performance period  
justifies vesting  108 the morgan crucible company plc  annual report 2012
21 employee benefits continued
2008 ltip awards
for lti p awards granted to the executive d irectors in 2008 the extent to which 50 of the awards vested depended on the company’s ts r 
ranking against an appropriate comparator group over the period from 5 january 2008 to 2 january 201 1 t he extent to which the other 50 of 
these awards vested depended on the growth in the company’s eps over and above the retail price i ndex ‘rpi’ between the 2007 base financial 
year and the 2010 financial year
tsr element eps element
tsr performance against the 
comparator group companies
 of award
that vests eps growth
 of award
that vests
upper quartile 50 rpi10 pa 50
median 15 rpi4 pa 15
below median n il rpi 4 pa n il
for lti p awards granted to all other participants in 2008 the extent to which 3333 of the awards vested depended on the company’s  
ts r ranking against an appropriate comparator group over the period from 5 january 2008 to 2 january 201 1 t he extent to which the other 
6667 of these awards vested depended on the growth in the company’s eps compared with rpi between the 2007 base financial year and  
the 2010 financial year
tsr element eps element
tsr performance against the 
comparator group companies
 of award
that vests eps growth
 of award
that vests
upper quartile 3333 rpi10 pa 6667
median 15 rpi4 pa 15
below median n il rpi 4 pa n il
2009 ltip awards
for lti p awards granted to all participants in 2009 the extent to which 100 of the awards vested depended on the company’s ts r ranking 
against an appropriate comparator group from 5 january 2009 to 1 january 2012
tsr performance against the 
comparator group companies
 of award
that vests
upper quartile 100
median 30
below median n il
2010 ltip awards
for lti p awards granted to all participants in 2010 the extent to which 50 of the awards vest depends on the company’s ts r ranking against  
an appropriate comparator group over the period from 4 january 2010 to 31 d ecember 2012 t he extent to which the other 50 of these awards 
vest depends on the growth in the company’s eps compared with rpi between the 2009 base financial year and the 2012 financial year
tsr element eps element
tsr performance against the 
comparator group companies
 of award
that vests eps growth
 of award
that vests
upper quartile 50 rpi10 pa 50
median 15 rpi4 pa 15
below median n il rpi 4 pa n il
in addition the lti p awards grated in 2010 were restructured to include an hmrc approved element as part of the overall lti p awards
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 109
o verview business review governance financial statements
21 employee benefits continued
201 1 ltip awards
for lti p awards granted to the ceo  cfo and group employees in 201 1 the extent to which 50 of the awards vest depends on the company’s 
ts r ranking against an appropriate comparator group over the period from 3 january 201 1 to 31 d ecember 2013 t he extent to which the other 
50 of these awards vest depends on the growth in the company’s eps between the 2010 base financial year and the 2013 financial year
tsr element eps element
tsr against ftse allshare 
industrials index
 of award
that vests eps growth
 of award
that vests
upper quartile 50 15 pa 50
median 15 8 pa 15
below median n il  8 pa n il
t o support the twod ivisional structure introduced in july 2010 the 201 1 lti p awards for senior d ivisional executives were tailored to the  
value creation of each d ivision under these awards the d ivisional element is split into d ivisional ebita growth and d ivisional average ro ce 
vesting under the d ivisional element only occurs when d ivisional performance exceeds the threshold performance target under both measures 
o nce the d ivisional performance targets exceed the threshold the two elements are then measured independently
for the lti p award granted to the ceo m organ ceramics in 201 1 ts r ranking as for ceo  cfo and group employees and d ivisional 
performance between the 2010 base financial year and the 2013 financial year were awarded on an equal basis
tsr element divisional element
tsr against 
ftse allshare  
industrials index
 of award
that vests
divisional
ebita
growth
 of award
that vests
divisional
average
roce
 of award
that vests
upper quartile 50 18 pa 25 407 25
median 15 12 pa 75 357 75
below median n il  12 pa n il  357 n il
for lti p awards granted to morgan ceramics executives in 201 1 100 of awards are based on morgan ceramics d ivisional performance 
between the 2010 base financial year and the 2013 financial year 
divisional
ebita
growth
 of award
that vests
divisional
average
roce
 of award
that vests
18 pa 50 407 50
12 pa 15 357 15
 12 pa n il  357 n il
for the lti p award granted to the ceo m organ engineered materials in 201 1 ts r ranking as for ceo  gfo and group employees and 
d ivisional performance between the 2010 base financial year and the 2013 financial year were awarded on an equal basis
tsr element divisional element
tsr against 
ftse allshare  
industrials index
 of award
that vests
divisional
ebita
growth
 of award
that vests
divisional
average
roce
 of award
that vests
upper quartile 50 15 pa 25 361 25
median 15 10 pa 75 337 75
below median n il  10 pa n il  337 n il
for lti p awards granted to morgan engineered materials executives in 201 1 100 of awards are based on morgan engineered materials d ivisional 
performance between the 2010 base financial year and the 2013 financial year 
divisional
ebita
growth
 of award
that vests
divisional
average
roce
 of award
that vests
15 pa 50 361 50
10 pa 15 337 15
 10 pa n il  337 n il  110 the morgan crucible company plc  annual report 2012
21 employee benefits continued
2012 ltip awards
for lti p awards granted to the ceo  cfo and group employees in 2012 the extent to which 33 of the awards vested depended on the 
company’s ts r ranking against an appropriate comparator group over the period from 2 january 2012 to 31 d ecember 2014 t he extent to  
which 33 of these awards vest depends on the growth in the company’s eps between the 201 1 base financial year and the 2014 financial year 
t he extent to which 33 vest depends on the group’s average ro ce for the financial years ending 31 d ecember 2012 2013 and 2014
tsr element group element
tsr against 
ftse allshare  
industrials index
 of award
that vests
eps
growth
 of award
that vests
group
average
roce
 of award
that vests
upper quartile 3333 15 pa 3333 37 3333
median 10 10 pa 10 33 10
below median n il  10 pa n il  33 n il
a s in 201 1 to support the twod ivisional structure the 2012 lti p awards for senior d ivisional executives were tailored to the value creation of 
each d ivision under these awards the d ivisional element is split into d ivisional ebita growth and d ivisional average ro ce vesting under the 
d ivisional element only occurs when d ivisional performance exceeds the threshold performance target under both measures o nce the d ivisional 
performance targets exceed the threshold the two elements are then measured independently
for lti p awards granted to the d ivisional ceo s in 2012 a third of the award is linked to the company’s ts r ranking and two thirds is based on the 
relevant d ivisional performance between the 201 1 base financial year and the 2014 financial year
ceo morgan ceramics
tsr element divisional element
tsr against 
ftse allshare  
industrials index
 of award
that vests
divisional
ebita
 of award
that vests
divisional
average
roce
 of award
that vests
upper quartile 3333 15 pa 3333 435 3333
median 10 6 pa 10 41 10
below median n il  6 pa n il  41 n il
ceo morgan engineered materials
tsr element divisional element
tsr against 
ftse allshare  
industrials index
 of award
that vests
divisonal
ebita
 of award
that vests
divisional
average
roce
 of award
that vests
upper quartile 3333 15 pa 3333 371 3333
median 10 5 pa 10 347 10
below median n il  5 pa n il  347 n il
for lti p awards granted to morgan ceramics executives in 2012 100 of awards are based on morgan ceramics d ivisional performance 
between the 201 1 base financial year and the 2014 financial year
divisional
ebita
growth
 of award
that vests
divisional
average
roce
 of award
that vests
15 pa 50 435 50
6 pa 15 41 15
 6 pa n il  41 n il
for lti p awards granted to morgan engineered materials executives in 2012 100 of awards are based on morgan engineered materials d ivisional 
performance between the 201 1 base financial year and the 2014 financial year
divisional
ebita
growth
 of award
that vests
divisional
average
roce
 of award
that vests
15 pa 50 371 50
5 pa 15 347 15
 5 pa n il  347 n il
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 111
o verview business review governance financial statements
21 employee benefits continued
performance criteria for the bdsmp
t he bdsm p was introduced following shareholder approval in 2008
under the plan rules participants may be offered the opportunity to defer up to 75 of their annual bonus on a pre or posttax basis into 
company shares participants must hold the deferred shares for three years to be eligible for a matching award based on the pretax value  
of their deferred shares matching shares may be earned at the end of three years in the event that stretching performance targets have been met 
t he performance criteria for the bdsm p are set annually
under the 2008 grant participants were given the opportunity to defer up to 50 of their bonus under the bdsm p  under the 2010 grant 
participants were given the opportunity to defer up to 75 of their bonus under the bdsm p  under the 2008 and 2010 grants the performance 
conditions were based on eps growth targets relative to the 2007 and 2009 base year e ps respectively
eps performance
vesting of matching shares  
as multiple of shares under  
the deferred award
rpi15 pa 3x match
rpi10 pa 175x match
rpi75 pa 1x match
rpi5 pa 05x match
rpi4 pa 025x match
 rpi4 pa n il
under the 2009 grant participants were given the opportunity to defer up to 50 of their bonus under the bdsm p and the performance conditions 
were based on eps growth targets relative to the 2008 base year
eps performance
vesting of matching shares
as multiple of shares under
the deferred award
15 pa 3x match
10 pa 175x match
75 pa 1x match
5 pa 05x match
4 pa 025x match
 4 pa n il
under the 201 1 grant participants were given the opportunity to defer up to 50 of their bonus under the bdsm p and the performance conditions 
were based on eps growth targets relative to the 2010 base year
eps performance
vesting of matching shares
as multiple of shares under
the deferred award
20 pa 3x match
16 pa 2x match
12 pa 1x match
8 pa n il
 8 pa n il
under the 2012 and 2013 grants participants were given the opportunity to defer up to 50 of their bonus under the bdsm p  in 2012 and 2013  
the performance conditions were based on eps growth targets relative to the 201 1 and 2012 base years respectively
eps performance
vesting of matching shares
as multiple of shares under
the deferred award
20 pa 3x match
16 pa 2x match
12 pa 1x match
8 pa n il
 8 pa n il  112 the morgan crucible company plc  annual report 2012
21 employee benefits continued
awards made in 2012
ltip 2004 bdsmp
employee sharesave
scheme 2004
fair value at measurement date 26049p3331 1p 33050p 9817p
share price 36000p 33050p 28100p
exercise price na na 21400p
expected volatility expressed as weighted average volatility used in the model 45 na 45
o ption life expressed as weighted average life used in the model 3 years 3 years 3 years
expected dividends 26 na 25
riskfree interest rate 05 na 04
esos 2004
t here were no awards during 2012 201 1 nil
t he 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
t he number and weighted average exercise prices of share options are as follows
weighted average
exercise price
31 december 2012
number of options
31 december 2012
weighted average
exercise price
1 january 2012
number of options
1 january 2012
o utstanding at the beginning of the period 4061p 17999603 3786p 20795850 
granted during the period 8990p 4045797 5988p 3457140 
forfeited during the period 5130p 519561 11449p 364934
exercised during the period 3459p 9009111 17206p 1265605
l apsed during the period 230p 1129682 082p 4622848
o utstanding at the end of the period 6620p 1 1387046 4061p 17999603 
exercisable at the end of the period 13640p 889085 15442p 1123641 
t he weighted average share price at the date of share options exercised during the period was 31985 pence 201 1 28342 pence
t he options outstanding at the year end have an exercise price in the range nil to 33050 pence and a weighted average contractual life of 05 years
t he fair value of services received in return for share options granted are measured by reference to the fair value of share options granted
t he weighted average fair value of options issued in the period was 26628 pence 201 1 12455 pence
t he ifrs 2 fair value charge expensed to the income statement was £19 million 201 1 £59 million
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 113
o verview business review governance financial statements
22 provisions
accounting policies
a provision is recognised in the balance sheet when the group has a present obligation legal or constructive as a result of a past event it is 
probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the obligation  
t he best estimate of the expenditure required to settled the present obligation is the amount that an entity would rationally pay to settle the 
obligation at the end of the reporting period or to transfer it to a third party at that time if the effect is material provisions are determined by 
discounting the expected future cash flows at a pretax rate that reflects current market assessments of the time value of money and where 
appropriate the risks specific to the liability
i restructuring
a provision for restructuring is recognised when the 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
provisions
closure and
 restructuring
provisions
£m
other
provisions
£m
environmental
provisions
£m
total
£m
balance at 1 january 2012 58 71 61 190 
provisions made during the year 61 16 01 78 
provisions used during the year 35 05 09 49
provisions reversed during the year – 04 02 06
effect of movements in foreign exchange – 02 01 03
balance at 31 december 2012 84 76 50 210 
current 57 51 33 141 
n oncurrent 27 25 17 69 
84 76 50 210 
closure and restructuring provisions are based on the group’s restructuring programmes and represent committed expenditure at the balance 
sheet date t he 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  
t he amounts provided also include the obligation for discounted future payments under a noncancellable lease for the company’s former 
headquarters net of expected rental income under subleases t he lease expires in 2016
o ther provisions include the settlement of european class actions together with the associated legal costs t he estimated costs are based on  
the group’s assessment of the probable future costs of these activities t he 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 t he estimated costs are based on management’s  
best estimate of the costs required to remedy these problems t he group expects to incur most of the liability over the next five years annual report 2012  the morgan crucible company plc 115 114 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
23 trade and other payables
accounting policies
t rade and other payables are initially stated at their fair value and subsequently measured at amortised cost
trade and other payables
2012
£m
2011
£m
noncurrent
t rade and nontrade payables 48 105
current
t rade payables due to associate 10 –
o ther trade payables 937 1098 
n ontrade payables and accrued expenses 893 1415 
1840 2513 
included in current nontrade payables and accrued expenses is £03 million 201 1 £62 million of deferred contingent consideration following the 
purchase of 51 of the o rdinary share capital of clearpower l imited in the year ended 1 january 2012 £51 million was included in noncurrent 
nontrade payables in respective of deferred contingent consideration on purchase of 51 of the o rdinary share capital of clearpower l imited  
for further details see note 2
24 operating leases
accounting policies 
operating lease payments
payments made under operating leases are recognised in the income statement on a straightline basis over the term of the lease l ease incentives 
received are recognised in the income statement as an integral part of the total lease expense
leases as lessee
n oncancellable operating lease rentals are payable as follows
2012
£m
2011
£m
l ess than one year 85 66 
between one and five years 173 204 
more than five years 262 349 
520 619 
t he 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
t he total of future minimum sublease income under noncancellable subleases is £25 million 201 1 £28 million
25 capital commitments
commitments for property plant and equipment and computer software expenditure for which no provision has been made in these accounts 
amount to £24 million 201 1 £24 million for the group
notes to th e consolidated finan cial statements
continued annual report 2012  the morgan crucible company plc 115 114 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
26 contingencies
subsidiary undertakings within the group have given unsecured guarantees of £89 million 201 1 £95 million in the ordinary course of business
in an international group of companies a variety of claims arise from time to time provision has been made in these accounts against those claims 
which the d irectors consider meet the requirements of ias 37 provisions contingent liabilities and contingent assets and are likely to result in 
significant liabilities
t he group has been subject to legal claims in the usa  canada and europe settlements for the majority of these have been agreed t here remain 
provisions in respect of these claims of £12 million 201 1 £14 million in some cases it will not be possible to form a view either because the facts 
are unclear or because further time is needed to properly assess the merits of the case and no provisions are held against such cases t he 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
27 related parties
identification of related parties
t he group has related party relationships with its subsidiaries a list of principal subsidiary undertakings is shown in note 43 with its associates  
see note 13 and with its d irectors and executive officers
transactions with key management personnel
t he company has written service contracts or letters of appointment with each of its d irectors under which the d irectors receive a salary or  
a fee and other emoluments
t he key management of the group and parent company consists of the board of d irectors including nonexecutive d irectors and members  
of the executive committee
t heir compensation charged in the year was
2012
£m
2011
£m
shortterm employee benefits 17 32 
employer n ational insurance contributions 03 05 
pension and other postemployment costs 04 03 
sharebased payments 04 10 
t ermination payments – 02 
n onexecutive d irectors’ fees and benefits 04 03 
t otal compensation of key management personnel 32 55 
information on executive d irectors’ remuneration is given in the remuneration report on pages 50 to 66
other related party transactions
2012
£m
2011
£m
sales to associate 198 283 
t he balances with the group’s associate are shown in note 16 and note 23
28 subsequent events
t here have been no material events since the year end annual report 2012  the morgan crucible company plc 117 116 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
com pan y balan ce sheet
as at 31 december 2012
n ote
2012
£m
2011
£m
fixed assets
t angible fixed assets 32 21 31 
investment in subsidiary undertakings 33 8339 6925 
8360 6956 
current assets
d ebtors – due within one year 34 473 367 
cash at bank and in hand 165 246 
638 613 
creditors – amounts falling due within one year 35 909 821 
net current liabilities 271 208
total assets less current liabilities 8089 6748 
creditors – amounts falling due after more than one year
a mounts payable to subsidiary undertakings 1721 1115 
o ther creditors including deferred consideration 35 – 51 
borrowings 36 481 493 
2202 1659 
provisions for liabilities and charges 37 38 38 
2240 1697 
net assets 5849 5051 
capital and reserves
equity shareholders’ funds
 calledup share capital 18 700 683 
 share premium account 38 990 906 
 merger reserve 38 170 170 
 capital redemption reserve 38 357 357 
 profit and loss account 38 3628 2931 
5845 5047 
n onequity shareholders’ funds
 calledup share capital 18 04 04 
shareholders’ funds 5849 5051 
t he financial statements were approved by the board of d irectors on 14 february 2013 and were signed on its behalf by
mark robertshaw chief executive o fficer
kevin dangerfield chief financial o fficer annual report 2012  the morgan crucible company plc 117 116 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
notes to t he com pan y balan ce sheet
29 accounting policies
t he following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial 
statements
basis of preparation
t he company has elected to prepare its financial statements in accordance with uk generally a ccepted a ccounting practice
t he financial statements have been prepared in accordance with applicable accounting standards and under the historical cost accounting rules
under section 4084 of the companies a ct 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
t he company has taken advantage of the exemption contained in frs 8 related parties and has therefore not disclosed transactions or balances 
with wholly owned subsidiaries
tangible fixed assets and depreciation
d epreciation is provided to write off the cost less the estimated residual value of tangible fixed assets by equal instalments over their estimated 
useful economic lives as follows
plant equipment and fixtures – 320 years 
investments
investments in subsidiary undertakings associates and joint ventures are stated at cost less amounts written off unless they are designated as  
a hedged item in a fair value hedge of foreign currency risk under frs 26 financial instruments recognition and measurement in this case they  
are accounted for at historical cost plus a hedging adjustment recognised in profit or loss for the changes in their fair value attributable to the  
foreign currency exposure from the date the hedge is designated
interestbearing borrowings
immediately after issue debt is stated at the fair value of the consideration received on the issue of the capital instrument after deduction of issue 
costs t he finance cost of the debt is allocated to periods over the term of the debt at a constant rate on the carrying amount
foreign currency
t ransactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction or if hedged forward at the rate of 
exchange under the related forward contract monetary assets and liabilities denominated in foreign currencies are translated using the contracted 
rate or the rate of exchange ruling at the balance sheet date and the gains or losses on translation are included in the profit and loss account
leases
rentals payable under operating leases are charged in the profit and loss account on a straightline basis over the lease term   
postretirement benefits
t he company participates in a groupwide pension scheme providing benefits based on careeraverage pensionable pay t he assets of the  
scheme are held separately from those of the company t he 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 a s 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
t he 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
d eferred 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 annual report 2012  the morgan crucible company plc 119 118 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
29 accounting policies continued
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
t o the extent that this definition is not met the proceeds of issue are classified as a financial liability where the instrument so classified takes  
the legal form of the company’s own shares the amounts presented in these financial statements for calledup share capital and share premium 
account exclude amounts in relation to those shares
finance payments associated with financial liabilities are dealt with as part of interest payable and similar charges finance payments associated  
with financial instruments that are classified as part of shareholders’ funds see dividend policy are dealt with as appropriations in the reconciliation 
of movements in shareholders’ funds
hedging instruments and hedged items are accounted for separately in the balance sheet in fair value hedges gains and losses from remeasuring 
the hedging instrument at fair value for a derivative instrument or the foreign currency component for a nonderivative financial liability in a foreign 
currency hedge are included in profit for the year when they arise in cash flow hedges gains and losses from remeasuring the hedging derivative 
instrument at fair value are initially recognised in other comprehensive income to the extent effective and are later reclassified to profit or loss when 
the hedged transaction occurs or is no longer expected to occur
certain financial assets and liabilities have been designated as fair value through profit or loss and are recognised in the balance sheet at fair value
own shares held by the morgan general employee benefit trust
t ransactions of the groupsponsored morgan general employee benefit t rust are treated as being those of the company and are therefore 
reflected in the company’s financial statements i n particular the t rust’s purchases and sales of shares in the company are debited and credited  
to equity
sharebased payments
t he share option programme allows employees to acquire shares of the company t he fair value of options granted after 7 n ovember 2002 and 
those not yet vested as at 4 january 2005 is recognised as an employee expense with a corresponding increase in equity t he fair value is measured 
at grant date and spread over the period during which the employee becomes entitled to the options t he 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 t he amount 
recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to share prices not 
achieving the threshold for vesting for details of sharebased payments made and the assumptions used in measuring the fair value see note 21
sharebased payments recharged to subsidiary undertakings are recorded via the intercompany loan account
dividends on shares presented within shareholders’ funds
d ividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately approved and are 
no longer at the discretion of the company unpaid dividends that do not meet these criteria are disclosed in the n otes 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 at which 
point a liability would be recognised
notes to t he com pan y balan ce sheet
continued annual report 2012  the morgan crucible company plc 119 118 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
30 staff numbers and costs
t he average number of persons employed by the company including d irectors during the year analysed by category was as follows  
n umber of employees
2012 2011
d irectors and head office staff 28 28
d ivisional staff 18 15
46 43
t he majority of the d irectors and head office staff devote a proportion of their time to d ivisional duties o f the 28 d irectors and head office staff 
the average number who spent all or a proportion of their time on corporate duties was 10 201 1 10 as shown in note 5
t he aggregate payroll costs of these persons were as follows
2012
£m
2011
£m
wages and salaries 55 83 
equitysettled sharebased payments see note 21 19 56 
social security costs 28 09 
o ther pension costs 03 07 
105 155 
31 dividends
d ividends payable for the first and second preference shares were £22491 201 1 £22491 of which £1 1245 201 1 £1 1245 was outstanding  
at the balance sheet date
t he 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 d ecember respectively in every year 
for proposed o rdinary dividends see the consolidated income statement on page 68
32 tangible fixed assets
plant equipment
and fixtures
£m
cost
a t 2 january 2012 47
a dditions 03
d isposals – 
at 31 december 2012 50
accumulated depreciation
a t 2 january 2012 16
a mount provided for in the year 13
d isposals – 
at 31 december 2012 29
net book amounts at 31 december 2012 21
n et book amounts at 1 january 2012 31 annual report 2012  the morgan crucible company plc 121 120 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
notes to t he com pan y balan ce sheet
continued
33 investment in subsidiary undertakings
shares
£m
loans
£m
total
£m
cost
a t 2 january 2012 6174 1292 7466 
a dditions – 1702 1702 
fair value hedge of investments’ exposure to foreign currency risk 15 – 15
l ess disposalsloan repaymentsliquidations 183 76 259
at 31 december 2012 5976 2918 8894 
amounts provided
a t 2 january 2012 504 37 541 
provided in the year 14 – 14 
at 31 december 2012 518 37 555 
net book amounts at 31 december 2012 5458 2881 8339 
n et book amounts at 1 january 2012 5670 1255 6925 
a list of principal subsidiary undertakings is shown in note 43
34 debtors
2012
£m
2011
£m
due within one year
o ther debtors 89 31 
d erivative financial assets 06 23 
prepayments and accrued income 02 03 
a mounts receivable from subsidiary undertakings 376 310 
473 367 
35 creditors
2012
£m
2011
£m
due within one year
bank overdrafts 588 519 
t rade creditors 22 19 
a mounts payable to subsidiary undertakings 210 80 
o ther creditors including deferred consideration 28 99 
a ccruals and deferred income 57 81 
d erivative financial liabilities 04 23 
909 821 
due after one year
o ther creditors including deferred consideration – 51 
– 51 annual report 2012  the morgan crucible company plc 121 120 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
36 borrowings
2012
£m
2011
£m
bank and other loans 481 493 
bank overdrafts 588 519 
1069 1012 
l ess amount repayable within one year included within current liabilities 588 519
t otal repayable after more than one year 481 493 
37 provisions for liabilities and charges
closure and
restructuring
 provisions
£m
other
provisions
£m
total
£m
a t 2 january 2012 24 14 38 
provided in the year 08 02 10 
utilised in the year 08 02 10
at 31 december 2012 24 14 38 
closure and restructuring provisions relate mainly to an onerous lease provision for morgan house the company’s previous registered address 
o ther provisions include the settlement of european class actions together with the associated legal costs
38 share premium and reserves
share
premium
£m
merger
reserve
£m
capital
 redemption
reserve
£m
profit and loss
account
£m
a t 2 january 2012 906 170 357 2931 
charges and transfers in relation to sharebased payments for the year – – – 27 
d ividends 84 – – 254
o wn shares acquired for share incentive schemes – – – 102
retained profit for the year – – – 1026 
at 31 december 2012 990 170 357 3628 
capita t rustees l imited administer a t rust in which shares are held to satisfy awards granted under the company’s share plans t he shares are 
distributed via discretionary settlement governed by the rules of the t rust deed dated 1 march 1996 as amended
t he total number of own shares held by the t rust at 31 d ecember 2012 is 201493 201 1 2044458 and at that date had a market value of  
£05 million 201 1 £54 million
t he amount of reserves of t he morgan crucible company plc that may not be distributed under section 8314 of the companies a ct 2006  
is £1517 million 201 1 £1451 million
further details on share premium and reserves are given in note 18
39 leasing commitments
o perating lease commitments falling due during the next year for which no provision has been made in these accounts are
l and and buildings
2012
£m
2011
£m
l ess than one year – – 
between one and five years 02 02 
more than five years – – 
02 02  annual report 2012  the morgan crucible company plc 123 122 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
notes to t he com pan y balan ce sheet
continued
40 pension costs
the morgan pension scheme and the morgan senior staff pension and life assurance scheme
t he company participates in two defined benefit schemes in the uk t he assets of these schemes are held in separate trusteeadministered funds 
t he morgan pension scheme mps and t he morgan group senior staff pension and l ife a ssurance 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 t hese schemes were closed to 
new members on 31 july 201 1 from which time membership of a defined contribution plan is available
t he latest actuarial valuations of the mps and the sss were carried out as at 6 a pril 201 1 and 1 a pril 201 1 respectively and updated for frs 17 
purposes to 31 d ecember 2012 by a qualified independent actuary t he results for these schemes in respect of the group are shown below
2012

2011

assumptions 290190 300180
 inflation rpi  cpi 440 490
 d iscount rate 290310360 290320
 pension increases in payment na na
 general salary increases
 mortality – postretirement
 l ife expectancy of a male retiring at age 60 in 2012201 1 263 years 259 years
 l ife expectancy of a male retiring at age 60 in 20322031 274 years 272 years
t he assets in the scheme and the expected rates of return were
2012
£m
2011
expected
return

2011
£m
asset distribution and balance sheet reconciliation
 equities 1339 75 1259 
 bonds 357 46 270 
 matching insurance policies 1846 49 1764 
 other 15 49 14 
t otal market value of assets 3557 3307 
present value of liability 4270 3781
d eficit in the scheme 713 474
employer contributions due within one year 02 02
t he employer’s contribution for the year was £78 million 201 1 £69 million
t he company is expecting to pay £81 million of contributions into the uk defined benefit plans during the 12month period beginning after  
31 d ecember 2012
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 at which 
point a liability would be recognised
t here are no other contingent liabilities in the company as at 31 d ecember 2012
t he company has been subject to legal claims in the usa  canada and europe settlements for the majority of these have been agreed t here 
remain provisions in respect of these claims of £12 million 201 1 £14 million in some cases it will not be possible to form a view either because 
the facts are unclear or because further time is needed to properly assess the merits of the case and no provisions are held against such cases  
t he board having taken legal advice is of the opinion that the remainder of these actions will not have a material impact on the company’s  
financial position annual report 2012  the morgan crucible company plc 123 122 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
42 related parties
t he company’s transactions with nonwholly owned subsidiaries are as follows  
2012
£m
2011
£m
a mounts invoiced to nonwholly owned subsidiaries 19 14
a mounts receivable from nonwholly owned subsidiaries 09 08
a mounts invoiced from nonwholly owned subsidiaries 03 01
a mounts payable to nonwholly owned subsidiaries 74 66
t he d irectors 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 a nnual report and a ccounts
43 principal subsidiary undertakings
business
country of incorporation and 
principal place of business
morgan ceramics companies
 carbo san l uis sa  t hermal ceramics a rgentina
 morgan t echnical ceramics a ustralia pty l td t echnical ceramics a ustralia
 beijing yingtelai morgan t hermal ceramics t extiles co l td t hermal ceramics china
d alian morgan refractories l imited t hermal ceramics china
morgan kailong jingmen t hermal ceramics co l td t hermal ceramics china
morgan t hermal ceramics international t rading shanghai co l td t hermal ceramics china
morgan t hermal ceramics shanghai l td t hermal ceramics china
yixing haldenwanger fine ceramic co l td t echnical ceramics china
yixing morgan t hermal ceramics co l td t hermal ceramics china
morgan t echnical ceramics l imited t echnical ceramics england
t hermal ceramics uk l imited t hermal ceramics england
 t hermal ceramics de france sa s t hermal ceramics france
 t hermal ceramics d eutschland gmbh  co kg t hermal ceramics germany
 w haldenwanger t echnische keramik gmbh  co kg t echnical ceramics germany
 wesgo ceramics gmbh t echnical ceramics germany
 ciria india l td t hermal ceramics india
murugappa morgan t hermal ceramics l imited t hermal ceramics india
 t hermal ceramics italiana srl t hermal ceramics italy
shinn ippon t hermal ceramics corporation t hermal ceramics japan
 morgan t echnical ceramics sa  de cv t echnical ceramics mexico
 t hermal ceramics benelux bv t hermal ceramics n etherlands
 l imited l iability company morgan t hermal ceramics sukhoy l og t hermal ceramics russia
morgan ceramics a sia pte l td t hermal ceramics singapore
 t hermal ceramics south a frica pty l imited t hermal ceramics south a frica
 t hermal ceramics espana sl  t hermal ceramics spain
 certech inc t echnical ceramics usa
 morgan a dvanced ceramics inc t echnical ceramics usa
 morgan t echnical ceramics a uburn inc t echnical ceramics usa
 t hermal ceramics inc t hermal ceramics usa annual report 2012  the morgan crucible company plc 125 124 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
43 principal subsidiary undertakings continued
business
country of incorporation and 
principal place of business
morgan engineered materials companies 
morgan molten metal systems suzhou co l td molten metal systems china
morgan am t  shanghai co l td a dvanced materials  t echnology china
morganite electrical carbon l imited a dvanced materials  t echnology england
 n p a erospace l imited a dvanced materials  t echnology england
 morgan molten metal systems gmbh molten metal systems germany
 morgan rekofa gmbh a dvanced materials  t echnology germany
 morgan materials hungary kft a dvanced materials  t echnology hungary
 a ssam carbon products l td a dvanced materials  t echnology india
 morganite crucible india l imited molten metal systems india
 morgan carbon italia srl a dvanced materials  t echnology italy
 morganite carbon kabushiki kaisha a dvanced materials  t echnology japan
 morganite l uxembourg sa  a dvanced materials  t echnology l uxembourg
 morgan am t bv a dvanced materials  t echnology n etherlands
 morganite south a frica pty l imited a dvanced materials  t echnology south a frica
 morgan am t t aiwan l imited a dvanced materials  t echnology t aiwan
 morgan karbon grafit s anayi a s a dvanced materials  t echnology t urkey
 morgan a dvanced materials and t echnology inc a dvanced materials  t echnology usa
 n ational electrical carbon products inc a dvanced materials  t echnology usa
 graphite d ie mold inc a dvanced materials  t echnology usa
 morganite crucible inc molten metal systems usa
other subsidiary undertakings trading companies covering both divisions or intermediate holding companies
 morganite a ustralia pty l imited a ustralia
 morganite brasil l imitada brazil
 morganite canada corporation canada
grupo industrial morgan sa  de cv mexico
morgan korea company l imited south korea
morganite industries inc usa
   d enotes companies some or all of whose shares are owned by a subsidiary
in 2012 and 201 1 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 t echnische keramik gmbh  co kg
  t echnische keramik  co kg
  t hermal ceramics d eutschland gmbh  co kg
notes to t he com pan y balan ce sheet
continued annual report 2012  the morgan crucible company plc 125 124 the morgan crucible company plc  annual report 2012
o verview business review governance financial statements
44 company reconciliation of movements in shareholders’ funds
for the year ended 31 d ecember 2012
2012
£m
2011
£m
retained profit for the financial year 1026 384
d ividends 161 184
issue of shares 08 –
o wn shares acquired for share incentive schemes 102 32
charges and transfers in relation to sharebased payments for the year 27 66
net increase in shareholders funds 798 234
o pening shareholders funds 5051 4817 
closing shareholders funds 5849 5051   126 the morgan crucible company plc  annual report 2012
2008
£m
2009
£m
2010
£m
2011
£m
2012
£m
revenue 8350 9426 10171 11010 10075 
profit from operations before restructuring costs  
other oneoff items and amortisation of intangible assets 1088 890 1095 1434 1220 
restructuring costs and other oneoff items
restructuring costs and costs associated with settlement of prior period 
antitrust litigation 114 140 85 56 133
gain on disposal of properties 08 20 06 24 01 
n et pension credit – – – 13 – 
profit from operations before amortisation of intangible assets 982 770 1016 1415 1088 
a mortisation of intangible assets 32 163 80 83 83
operating profit 950 607 936 1332 1005 
n et financing costs 127 293 259 218 191
l oss on disposal of businesses 07 – – – – 
share of profit of associate net of income tax 12 – – – – 
profit before taxation 828 314 677 1114 814 
income tax expense 201 87 197 326 221
profit after taxation before discontinued operations 627 227 480 788 593 
d iscontinued operations – – – – 210 
profit for the period 627 227 480 788 803 
assets employed
property plant and equipment 3196 2762 2692 2598 2455 
intangible assets 1770 2969 2850 2833 2651 
investments and other receivables 506 93 91 103 100 
d eferred tax assets 366 372 385 411 406 
n et current assets 1899 1365 1310 1601 1944 
total assets less current liabilities 7737 7561 7328 7546 7556 
employee benefits 1018 1059 1039 1351 1666 
provisions and other items 4231 3881 3316 3048 2767 
d eferred tax liabilities 408 475 452 445 405 
2080 2146 2521 2702 2718
equity
t otal equity attributable to equity holders of the parent company 1778 1846 2150 2294 2340 
n oncontrolling interests 302 300 371 408 378 
t otal equity 2080 2146 2521 2702 2718 
ordinary dividends per share paid 70p 45p 70p 77p 925p 
earnings per share
basic 222p 71p 158p 269p 202p
d iluted 216p 68p 150p 257p 199p
basic before amortisation of intangible assets 234p 132p 187p 299p 232p
d iluted before amortisation of intangible assets 228p 126p 178p 286p 228p
gro up statisti cal in fo rmation
under adopted ifrss annual report 2012  the morgan crucible company plc 127
o verview business review governance financial statements
sha reholde r in fo rmation
analysis of shareholdings as at 31 december 2012
 n umber of holdings  of total holdings n umber of shares  of share capital 
size of holding 1 – 2000 6072 7264 3303042 118
2001 – 5000 1218 1457 3912488 140
5001 – 10000 524 627 3705374 132
10001 – 50000 311 372 6621728 237
50001 – 100000 52 062 3728317 133
100001 and above 182 218 258470466 9240
8359 10000 279741415 10000
holding classification individuals 7130 8530 14996936 536
n ominee companies 1124 1345 258546337 9242
t rusts pension funds etc 9 010 104734 004
o thers 96 115 6093408 218
8359 10000 279741415 10000
key dates
d ividends subject to members’ approval at the 2013 a gm and to any s crip alternative a final cash  
dividend of 64 pence per o rdinary share of 25 pence shall be paid in respect of the  
financial year ended 31 d ecember 2012
31 may 2013
t he dividend shall be paid on 31 may 2013 to holders of o rdinary shares on the register  
of members at the close of business on 19 a pril 2013
preference dividends subject to the relevant detailed terms and approvals of the board of d irectors where 
55 cumulative first preference shares of £1 each and 28 march 2013 and
50 cumulative second preference shares of £1 each 1 o ctober 2013
a nnual general meeting t he 2013 a nnual general meeting will take place on 10 may 2013
financial results t he halfyear results are announced in july with the report and a ccounts for the year  
normally posted in march
other information 
capital gains tax t he market values of quoted shares and stocks at 31 march 1982 were 
o rdinary shares of 25 pence each 1225 pence 
55 cumulative first preference shares of £1 each 305 pence 
50 cumulative second preference shares of £1 each 285 pence 
for capital gains tax purposes the cost of o rdinary shares is adjusted to take account of  
rights issues a ny 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 t he price can be obtained on the company’s website wwwmorgancruciblecom
isin code gb0006027295
ticker symbol mgcr  128 the morgan crucible company plc  annual report 2012 128 the morgan crucible company plc  annual report 2012
sha reholde r in fo rmation
continued
company details 
registered office quadrant 5557 high street windsor berkshire sl 4 1l p registered in england n o 286773
t elephone 01753 837000   fax 01753 850872
website wwwmorgancruciblecom 
company registrars capita registrars t he registry 34 beckenham road beckenham kent br3 4t u
t elephone in uk 0871 664 0300 calls cost 10p per minute plus network extras lines are  
open mondayfriday 900am530pm
t elephone from overseas 44 0 20 8639 3399
email ssdcapitaregistrarscom
website wwwcapitaregistrarscom
share portal t he capita share portal wwwcapitashareportalcom is an online service enabling you to quickly 
and easily access and maintain your shareholding online reducing the need for paperwork and 
providing 24hour access for your convenience t hrough the share portal you may for example 
view your holding balance view the dividend payments you have received and register and  
change bank mandate instructions so that dividends can be paid directly to your bank account
scrip dividend scheme t he company’s scrip d ividend scheme enables shareholders to receive new fully paid  
o rdinary shares in the company instead of cash dividends whenever a scrip alternative is  
offered s crip elections can be made or revoked either online at wwwcapitashareportalcom  
or by contacting the company’s registrars to request a paper copy of the mandate form and  
the scrip d ividend scheme terms and conditions
unsolicited telephone  
calls and mail
if you are offered unsolicited investment advice discounted shares a premium price for shares  
you own or free company or research reports further information about what you should do 
before handing over any money is available on our website wwwmorgancruciblecominvestors
shareholdercentreunsolicitedtelephonecallsandmail this report has been printed in the uk our printers are environmental management 
system iso 14001accredited and f orest 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
designed and produced by the college  wwwthecollegecom
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overview
01 strategy
02 morgan crucible at a glance
04 chairman’s statement
business review
06  chief executive o fficer’s 
review
08 group business review
09 key performance indicators 
10 review of operations 
18 corporate responsibility
28 f inancial review
32 risk management 
34  key resources and  
contractual relationships
35 cautionary statement
governance
36  board of directors and
 executive committee
38  directors’ report
42  corporate governance
49  statement of directors’ 
responsibilities 
50 remuneration report
67 independent auditor’s report
financial statements
68  c o n s ol i d a t ed i n c o m e 
statement
69  c o n s ol i d a t ed s t a t e m en t  
of comprehensive income
70 consolidated balance sheet
71  c o n s ol i d a t ed s t a t em en t  
of changes in equity
72  c o n s ol i d a t ed s t a t em en t  
of cash flows
73 notes to the consolidated 
 financial statements
116 company balance sheet
117  notes to the company  
balance sheet
126 group statistical information
127 shareholder information
mor gan cru cible  
is a wo rldleader in 
advanced materials
we produce a wide range of specialist 
highspecification materials that have 
extraordinary attributes and properties
engineered into products they deliver 
enhanced performance often under 
extreme conditions
o ur dynamic highly skilled people are 
continuously engaged in finding solutions  
for complex and technologically demanding 
applications which are used all over  
the world
in short we supply innovative differentiated 
products made from highly technical advanced 
materials which enable our customers’ 
products and processes to perform more 
efficiently more reliably and for longer
  f or more information about morgan crucible 
please visit our website
   wwwmorgancruciblecom
  f ind out more about morgan crucible graduate 
recuitment on facebook
   wwwfacebookcommorganceramics morgan crucible
annual report 2012
advanced materials
 resilient performance
the morgan crucible company plc  annual report 2012 
the morgan crucible company plc
quadrant 5557 high street 
windsor berkshire sl4 1lp
tel 44 01753 837000 
f ax 44 01753 850872
wwwmorgancruciblecom


Summary:
  04 the morgan crucible company plc  annual report 2012
i am delighted to join the board as chairman  
i am grateful to t im stevenson for helping  
this transition and also for his efforts since  
2006 including leading the group through  
the economic downturn and positioning  
the business for future growth i am excited  
by the opportunities that the group has to 
develop and i look forward to contributing  
to its future success
in recent years great strides have been made 
to simplify the business most recently in the 
consolidation of the two c eramic businesses  
in 2010 it is the case that we produce a variety 
of different products for different industrial and 
geographical markets but there are powerful 
underlying unifying themes we specialise in 
bringing science and application engineering 
expertise to meet demanding technical 
requirements involving advanced materials  
and we look to position ourselves in growth 
markets it has become apparent that we can 
further simplify the business to improve clarity 
at the customer interface gain benefits from 
innovation across the group and reduce costs 
we are therefore reorganising the business  
on a regional basis and sharpening the  
brand identity as is further explained in  
the chief e xecutive officer’s review
t rading conditions were difficult in 2012 
nevertheless operating profit before oneoff 
costs of £1220 million was the group’s second 
highest ever c ash generation was strong  
with a reduction in net debt of £226 million 
compared to £208 million in 201 1 t his 
reflects the strength of our capabilities and 
being present in growing markets which  
helped to offset disappointing performance  
in morgan engineered materials
c hair man ’s state ment
t rading conditions were difficult in 2012 
nevertheless operating profit before 
oneoff costs of £1220 million was  
the group’s second highest ever
andrew shilston 
chairman overview business review governance financial statements
annual report 2012  the morgan crucible company plc 05
dividend
t he board has decided to set the final dividend 
at 64 pence per share t his is an increase of 
67 compared to the final dividend declared 
in 201 1 t his means that the fullyear dividend  
is 100 pence
100
925
77
70
70
total dividend per share
pence
2012
2011
2010
2009
2008
outlook
t he macroeconomic outlook for 2013 is  
not significantly better than 2012 with global 
imbalances and indebtedness in developed 
countries still weighing on growth t he changes 
we are announcing to the organisation 
structure will maximise our chances of growing 
despite the challenging economic environment 
we continue to invest in new manufacturing 
facilities and research and development and to 
look for bolton acquisitions to add capability 
board and governance
i should like to welcome victoire de margerie 
to the board she has a wealth of operational 
experience across europe in related industries 
it has been a pleasure to work with board 
colleagues over the last nine months and  
we all remain committed to the development 
of the group
i have visited a number of the group’s sites 
since i joined the board and have been 
impressed by the enthusiasm and loyalty to  
the group of all those i have met t he board 
recognises that the quality and commitment  
of our employees is key to future success  
and continues to be grateful for their efforts
andrew shilston 
chairman