Annual Report CEO's Review

We are continuing to invest in capacity to support our growth in key market segments and we are well placed to grow quickly and expand margins as markets recover. I am pleased with the progress we made on safety with our LTA rate 32% better than the prior year at 0.13. Our CO₂ emissions declined further during the year and our scope 1 and 2 emissions are now 55% lower than our baseline. With our strong balance sheet, and reflecting the Board’s confidence in the prospects of the Group we launched a share buyback in November 2024.

Group results

During the year we saw declining and low order levels in European and Chinese industrial and metals markets, and slowing in those same markets in the USA. We have also seen lower demand for our products used in SiC power semiconductor production in the second half of the year driven by the lower growth rate in global electric vehicle sales.

We have grown 3.7% organically on a constant currency basis during the year, and delivered an adjusted operating profit margin of 11.7%. This margin level is below the bottom of our 12.5% to 15% range and reflects the very weak market conditions in the second half of the year. We expect margins to be back in the range during 2025 as the restructuring and efficiency actions we are taking come through. ROIC was in our target range at 18.5%, a good performance given the weaker demand, and leverage at 1 .4x remains within our 1-1.5x organic range. Read more about our Group financial performance on pages 50 to 54 on the Annual Report.

Restructuring

We have responded to the lower demand environment by expanding our restructuring programme. The total benefit from the restructuring programme is expected to be £27 million per year from 2026, for a total cost of £45 million. This continues our track record of self-help and will support rapid margin expansion as demand recovers and further optimise thefootprint, simplifying our Group.

While markets have been extremely challenging this year, we have continued to invest in our growth opportunities in faster growing market segments and we remain confident in our medium-term prospects. Our people have shown tremendous commitment to our business, to each other and to our customers and I would like to thank them for their hard work and support.

Sustainability

In 2021, we set out five long-term goals for our business together with the following intermediate goals for 2030:

1. A 50% reduction in scope 1 and 2 CO₂ emissions. We reduced scope 1 and 2 emissions by 3% during the year and are now 55% below our 2015 baseline. As our business grows, continued focus is needed on process efficiencies and technological advancements to maintain this.
2. Reducing water use and water use in high-stress areas by 30%. Our overall water usage reduced by 6% and water in high-stress areas increased by 2%. We are 31% and 21% below our 2015 baseline for water and water in high-stress areas.
3. A 0.10 LTA rate. Our LTA rate was 0.13 (2023: 0.19), a further improvement over the prior year reflecting the significant focus on behavioural safety.
4. A goal of 40% of our leadership population being female. Our gender diversity position was improved over the year with 34% females in our leadership population. This reflects the considerable work done in the prior years and in 2024 to improve policies, procedures and recruiting approaches and to deliver a more supportive environment for our female leaders.
5. A top-quartile engagement score. Our engagement score was 52%, a 2% decline compared to the prior year. We have not made progress on this metric over the last five years despite a lot of effort across our business to improve the employee experience. In 2025, we will be working more closely with a small number of sites where engagement levels are below average, looking to understand the root causes more deeply and work with our people to address those.