Annual Financial Report

RNS Number : 0867J

Morgan Crucible Co PLC

24 March 2010

 



The Morgan Crucible Company plc Annual Report 2009

In compliance with Listing Rule 9.6.1, The Morgan Crucible Company plc has submitted two copies of each of the following documents to the UK Listing Authority:

a.   Annual Report and Financial Statements for the year ended 3^rd January 2010;

b.   Shareholder Circular incorporating the Notice of the Annual General Meeting to be held on 23^rd April 2010;

c.   Letter regarding the availability of the Annual Report on the Company's website;

d.   Form of proxy for the 2010 Annual General Meeting; and

e.   Amended Articles of Association of the Company showing the amendments proposed at the 2010 Annual General Meeting. 

Copies of the above documents will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility which is situated at:

Financial Services Authority

25 The North Colonnade

Canary Wharf

London

E14 5HS

The documents were despatched to shareholders on 22^nd March 2010.

In compliance with DTR 6.3.5, the Annual Report and Financial Statements and the Notice of Annual General Meeting are also available on the Company's website at www.morgancrucible.com in the 'Investors' section.

On 18^th February 2010, the Company issued its preliminary financial results for the year ended 3^rd January 2010.  The results included a management report which contained an indication of important events which had occurred during the year and their impact on the financial results.  Also in compliance with DTR 6.3.5, the responsibility statement contained in the Annual Report and Financial Statements signed by Paul Boulton, Company Secretary, for and on behalf of the Board on 18^th February 2010, is set out below in unedited full text, together with an extract from the Company's Business Review detailing principal risks and uncertainties, also in unedited full text.  Page references and references to notes below refer to page numbers and notes in the Annual Report and Financial Statements.

Directors' Responsibility Statement

'We confirm to the best of our knowledge:

·    The Group financial statements in this report, which have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ('adopted IFRSs'), including interpretations issued by the International Accounting Standards Board (IASB) and those sections of the Companies Act 2006 applicable to companies reporting under IFRSs as adopted in the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group taken as a whole.

·    The parent Company financial statements in this report, which have been prepared in accordance with UK Accounting Standards (UK Generally Accepted Accounting Practice) and applicable law, give a true and fair view of the assets, liabilities, financial position and loss of the Company.

·   The Business review contained in this report includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, together with a description of the principle risks and uncertainties they face.'

Principal Risks and Uncertainties

'Introduction

Our risk management processes are designed to be forward-looking in the identification, management and mitigation of business risks that could impact the Group's short- and long-term performance and value. The processes will not eliminate risks but rather mitigate them to an acceptable level within the context of the business environment in which we operate. The process covers both risks and opportunities.

Management of business risk is an integral part of delivering performance and is the responsibility of all managers. Our risk management decision-making and reporting procedures are integrated in our formal business reporting up to the Board.

The Group appointed a new Director of Risk Assurance at the end of 2008. During the year the Group reviewed and benchmarked its risk management methodologies and processes against external good practice. Following this review, the Board approved a plan to evolve the existing processes to a more coherent approach by using a formalised and standardised risk management methodology throughout the Group.

Implementation commenced in 2009 and will continue through 2010 with regular reports covering risk management processes and key risks to the Audit Committee and the Executive Committee through the Risk Management Committee. The Risk Management Committee is chaired by the Chief Financial Officer and includes representation from each Division. The effectiveness of risk management and internal control processes is monitored by the Audit Committee, which also ensures that the Board has sufficient information in this regard.

During the year the Group and its subsidiaries complied with its policies and procedures for managing material risks.

The risks described below include the main areas of risk that could impact Morgan Crucible. These cover most areas of known and emerging business risk. They include internal risks where we have a greater degree of control and influence as well as external risks where our ability to completely control them may be more limited. They are nevertheless assessed and managed down to an acceptable level. The relative importance of some of these risks has changed during 2008-09 as a result of the world recession. As a consequence the controls to manage risk have been adjusted to ensure that the risks continue to be managed within acceptable limits.

Strategic planning risks

These risks relate to the appropriateness of strategy, business model or product portfolio, acquisitions and disposals. The risks to planning and delivery of the strategy are also included.

External risks

Political, economical and social

We are exposed to these risks in a number of countries in which we operate as part of realising business opportunities. We operate within the local conditions while monitoring the political, economic and social changes in these countries and adjusting our business plan, operations and controls accordingly.

Financial

Operating in a number of countries, we are exposed to events in the financial environment including commodity and energy prices, currency exchange, the current credit crisis and other financial market incidents, market volatility, interest rates, liquidity, pension funding, tax planning etc. These risks are managed through proactive assessment, contingency planning and the use of appropriate mitigation.

Examples of mitigation include:

·   Optimising exchange rate exposure through the supply chain by raw material sourcing, manufacturing and selling locally to minimise exchange rate impact.

·    Minimising the impact on the Group of a major currency devaluation.

·    Fixing long-term pricing for the purchase of energy and other materials.

·    Entering into certain hedging arrangements to help manage the impact of currency fluctuations (the Group's relevant treasury policies are summarised in the Financial review on pages 58 and 59).

·    Managing pension funds using independent, competent Trustee Boards and external advisers.

Further details of the Group's pension plans and employee benefits are included in note 20 on pages 129 to 136.

Market dynamics and competition

Our products tend to be technologically advanced and use complex and high-added-value manufacturing techniques. We operate in a business environment where we need to be proactive with respect to market dynamics including customer preference, new technology and new competition.

We monitor our current areas of business, working with our customers to ensure that we continue to satisfy their evolving needs. We adjust our strategies and business plans to reflect changing conditions, thereby helping to ensure that risks are managed within acceptable limits.

Compliance and ethics risks

Legal, regulatory and litigation

We are subject to varying laws and regulations around the world. Changes in these could affect the long- and short-term value of the Group. As a listed company we are also exposed to the risks of ensuring compliance with listing requirements. We cannot always predict whether future developments in laws and regulations concerning our businesses will have an adverse or a positive effect.

For example, a failure to comply with export control regulations could have a negative impact, whilst new environmental performance legislation which affects our customers could increase the demand for our energy-conserving products and services which can help our customers to address the requirements of such legislation.

To manage these risks, we monitor potential changes in regulation as well as having appropriate training and compliance processes in place.

From time to time, and in the normal course of business, we are subject to certain litigation, in particular in the USA. Provisions for the expected costs and liabilities are set out in note 21 to the accounts. If the liabilities arising were significantly to exceed the amounts provided for, there could be a material financial effect on the value of the Group.

Health, safety and environmental

Our operations involve the normal environmental, health and safety risks associated with manufacturing operations in the countries in which we operate. Although we believe that our operations are in compliance with current regulations, we cannot eliminate the risk of all accidents or non-compliance.

Further details of the programmes in place to manage these risks are included on pages 51 to 53.

Business conduct risks

Risks such as a potential breach in the area of ethical behaviour could impact the Group's reputation or image.

Our reputation with our stakeholders is fundamental to the continued success of the Group and we mitigate reputational risks through various means, including:

·    Our corporate responsibility programme, and our Core Values Statement.

·    Our Ethics Policy, Whistleblowing line and related procedures.

·    Our systems of internal control and risk management.

The Group's Ethics Policy and Anti-Trust Compliance Programme are further described in the Corporate responsibility section. These programmes address the risk of unethical business behaviour and are supported by mandatory training and the Group's Whistleblowing line and related procedures.

Operational risks

Financial, physical property, intellectual property and information

The Group's financial, physical and intellectual property assets are exposed to risks such as theft, loss, natural catastrophe, accidental disclosure etc. Such incidents can also impact the continuity of the business.

These risks are managed through internal controls, proactive design and protection of facilities and business continuity measures to minimise the impact of an incident. Audits by experts in their fields (including financial auditors) review and assess the effectiveness of such measures.

In some cases, risks are partially transferred through insurance programmes.

Human resources risks

The Group maintains human resource policies and processes to manage the risks relating to our people, eg reward and recognition, health and safety, talent management including succession planning, skills assessment and development, performance management and employee consultation.

Product development, performance and safety risks

Our products are used in many industrial sectors including medical, aerospace and defence. These sectors require high quality and conformance to specification as well as consideration of the health and safety of the end users.

Robust research and development processes, both in-house and where undertaken in co-operation with our customers, minimise product development risks. Our design, testing and quality assurance processes, including ISO 9001 accreditations, help to control manufacturing risks.'

Enquiries:  Tracey Bigmore

Telephone:  [phone]

24^th March 2010

 

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