Financial Highlights - Full year 2016

Final dividend
Underlying1 operating profit £104.1m1Considered by the Board to be the best measure of performance

For the twelve months ended 31 December 2016


  • Melrose’s 2016 results have exceeded market expectations:
    • Brush, in its eighth year of Melrose ownership, is still experiencing adverse trading headwinds and management continues to take appropriate action
    • Nortek, acquired on 31 August 2016 for an enterprise value of £2.2 billion, is responding well to Melrose ownership and has materially outperformed, albeit in a short four month period
  • In comparison to the same four month period last year, Nortek has achieved:
    • An increase to underlying1 operating profit of 35%
    • Underlying1 operating margin of 13.4%, up 4.1 percentage points
    • Underlying1 profit conversion to cash of 134%
  • Since acquisition, Melrose has significantly reduced the debt levels in Nortek and also increased capital investment in the businesses to enhance long-term value
  • Future operating margin improvement possibilities for Nortek are better than originally thought
  • The Melrose Group achieved an underlying1 profit before tax of £96.4 million (2015: £2.4 million), despite declaring a statutory loss before tax of £69.3 million (2015: £30.7 million) after non-trading and acquisition costs
  • In spite of adverse foreign exchange translation effects on US$ debt, Melrose Group net debt has been reduced since acquisition to £541.5 million, reflecting very strong cash generation
  • A final dividend of 1.9 pence per share is proposed (2015: 0.5 pence2)
  • The Melrose Board has started the process of looking for the next acquisition



1 Considered by the Board to be the best measure of performance. A reconciliation of the statutory result
to underlying performance is set out in the Finance Director’s Review
2 Adjusted by a bonus factor of 18.8% related to the Rights Issue completed in August 2016