5 November 2024
Morgan Advanced Materials PLC
("Morgan Advanced Materials" or the "Company")
Commencement of Share Buyback Programme
Morgan Advanced Materials is pleased to announce the commencement of a share buyback programme (the "Buyback Programme") with effect from 5 November 2024, to return up to a maximum of £40 million (excluding expenses) of capital to shareholders.
Rationale for Buyback Programme
The Buyback Programme reflects the Company's strong balance sheet as well as the Board's continued confidence in its future prospects. The Buyback Programme is consistent with the Company's capital allocation framework, which was set out at the April 2024 capital markets event and is as follows:
| · | Organic Investment. Investment to enhance growth and returns, including investment of £100m of capital in our Semiconductor manufacturing capacity which is well progressed. |
| · | Regular Returns via a Progressive Dividend Policy. Grow the regular dividend through the cycle targeting a dividend cover of c.2.5x over the medium term. |
| · | Inorganic Investment. Complementary, disciplined M&A focused on accelerating revenue growth opportunities in faster growing markets. |
| · | Additional Returns. Additional returns of surplus capital to shareholders as appropriate. |
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The Company continues to review and evaluate M&A opportunities but remains disciplined on finding the right targets that have a strong strategic fit and financial rationale.
In the context of the strong balance sheet position, the Board believes a share buyback to be an attractive use of capital to drive shareholder value alongside the significant ongoing organic investment. The Company continues to target through the cycle leverage range of 1.0x to 1.5x net debt to adjusted EBITDA excluding M&A and expects to remain within this range during 2025.
The purpose of the Buyback Programme is to reduce the Company's share capital and it is expected that implementation of the Buyback Programme will increase earnings per share. Any Shares purchased pursuant to the Buyback Programme will be cancelled.
The first tranche of the Buyback Programme will be for up to a maximum of £10 million (excluding expenses), as set out further below. The Company views share buybacks as an attractive element of shareholder returns and will consider options for further returns at the time of the announcement of the preliminary results for the year ending 31 December 2024, in line with our capital allocation policy.
Commenting on the Buyback Programme, Chief Executive Officer, Pete Raby said:
"Our strong prospects and balance sheet have enabled us to increase returns to shareholders by supplementing our regular dividend with the launch of this share buyback programme. Alongside our investments to enhance both organic growth and cost rationalisation, the share buyback is further evidence of the attractive capital allocation options at the group's disposal."
Details of Tranche 1 of the Buyback Programme
Morgan Advanced Materials announces that, pursuant to the first tranche of its Buyback Programme ("Tranche 1"), it has entered into an irrevocable, non-discretionary agreement with Investec Bank plc ("Investec"), acting as riskless principal, to enable the Company to purchase up to £10 million (excluding expenses) of the Company's ordinary shares of 25 pence each (the "Shares"). Under the terms of the agreement, Investec will make its trading decisions independently of and uninfluenced by the Company in accordance with certain pre-set parameters. Any repurchases of Shares by the Company pursuant to Tranche 1 will be carried out on the London Stock Exchange and/or other recognised investment exchange(s). Tranche 1 will commence today and end no later than 31 March 2025.
Any purchases of Shares effected pursuant to Tranche 1 will be subject to the terms of the agreement with Investec and in accordance with (and subject to the limits prescribed by) the Company's general authority to repurchase Shares granted by shareholders at the Company's 2024 Annual General Meeting on 9 May 2024. Tranche 1 will be conducted in accordance with the Market Abuse Regulation (EU) No 596/2014 (as it forms part of UK domestic law and as amended by the Market Abuse (Amendment) (EU Exit) Regulations 2019), the Commission Delegated Regulation (EU) 2016/1052 (as it forms part of UK domestic law and as amended by the FCA's Technical Standards (Market Abuse Regulation) (EU Exit) Instrument 2019) and Chapter 9 of the UK Listing Rules.
Any repurchase of Shares will be announced no later than 7:30 am on the business day following the calendar day on which the repurchase occurred. The maximum number of Shares that can be purchased under Tranche 1 is 28,536,998.
Any further tranches of the Buyback Programme, which may be conducted after completion of Tranche 1, will be announced in due course. There is no guarantee that the Buyback Programme will be implemented in full or that any Shares will be repurchased by the Company. The Buyback Programme will not impact the Company's existing Share dividend policy, which will continue unaffected through the regular awards of interim and final dividends.
At the time of this announcement, the Company's share capital comprises 285,369,988 Ordinary Shares with voting rights and 437,281 cumulative preference shares with no voting rights, save in specified limited circumstances. The total number of voting rights in the Company is therefore 285,369,988.
For further enquiries:
| Pete Raby, CEO Richard Armitage, CFO
| Morgan Advanced Materials plc | 01753 837000
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| Nina Coad | Brunswick | 0207 404 5959 |
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