Morgan Advanced Materials Regulatory News (MGAM)

Press Release

Morgan Advanced Materials plc

23 April 2018

Q1 trading update

Sales for the first three months to March 2018 were 6.5% higher for the Group, on an organic constant currency basis, compared to the first quarter of last year.

By business, the organic constant currency trends for the first quarter compared to prior year are as follows. Sales for the Thermal Products division were 6.2% higher than the prior year, with growth in Asia and Europe. Within the Carbon and Technical Ceramics division, sales were 9.0% higher than last year, with above trend growth in Seals & Bearings driven by ceramic armour sales, good growth in Electrical Carbon, and modest growth in Technical Ceramics. The Composites and Defence Systems business has continued its recent declining trend.

Morgan Advanced Materials plc also announces that the Board has decided to exit the Composite and Defence Systems business. This exit will take the form of the potential divestment of certain product lines, should a suitable acquirer be found, together with the closure of the remainder of the business lines. Discussions with potential acquirers of certain product lines are at a very early stage, and there can be no certainty that any divestments will be made.

The provisional cash exit costs from closing the Composites and Defence Systems business are anticipated to be around £6 million, which may be partially offset by any proceeds from the divestment of certain product lines and the sale of certain fixed assets of the business.

Looking forward to the balance of the year for the Group as a whole, the growth rate achieved in the first quarter is higher than we anticipate for the full year, reflecting a relatively weaker comparator period in the first quarter of the prior year. We currently anticipate that full year headline operating profit margins will be slightly ahead of the prior year, with the benefits of pricing, efficiency savings and volume leverage being partially offset by the planned reinvestment in research and development and sales resources, as well as the dilutive impact of the divestments completed in 2017.

This announcement contains inside information, the person responsible for releasing this announcement on behalf of the company is Peter Turner.

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Notes:

The next scheduled update is the Group's half-year results presentation on 26 July 2018.

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