Track Record
History
Outputs
Shareholder investment and gain
Reinvestment
How has Melrose created value?
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McKechnie/Dynacast
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FKI
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Elster
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Nortek
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GKN
McKechnie/Dynacast
McKechnie/Dynacast
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Bought for£0.4bn
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Sold for£0.8bn
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Investment in business51%
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Equity rate of return30%
-
Shareholder return on original equity3.0x
- Sales growth
- Margin growth
- Cash generation
- Multiple expansion
FKI
FKI
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Bought for£1.0bn
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Sold for£1.4bn
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Investment in business78%
-
Equity rate of return29%
-
Shareholder return on original equity2.6x
- Margin growth
- Cash generation
- Multiple expansion
Elster
Elster
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Bought for£1.8bn
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Sold for£3.3bn
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Investment in business25%
-
Equity rate of return33%
-
Shareholder return on original equity2.3x
- Sales growth
- Margin growth
- Cash generation
- Multiple expansion
Nortek
Nortek
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Bought for£2.2bn
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Sold for£3.1bn
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Investment in business22%
-
Equity rate of return17%
-
Shareholder return on original equity2.1x
- Sales Growth
- Margin growth
- Cash generation
- Multiple expansion
GKN
GKN
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Bought for£8.3bn
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Equity raised on acquisition£6.8bn
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Follow-on investment(1)£2.6bn
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Investment(1) as % of initial equity38%
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Cash generated during ownership£0.8bn
(1) Up to 31 December 2022.
- N/A
Responsible approach to investing
Maintaining the substantial improvements made to all UK pension schemes under ownership
Responsible stewardship (figures up to 31 December 2022)
£366m
In aggregate, the GKN UK pension schemes are now in surplus helped by £366 million cash contributions made to GKN UK defined benefit pension schemes from the Group so far during Melrose ownership, reducing the funding deficit on acquisition of c.£1 billion, making them now fully funded.
Schemes for current businesses
The Melrose funding commitment made on the acquisition of GKN has been fulfilled ahead of time. Ongoing annual payments remain at £30 million and there is no funding requirement from future disposal proceeds or potential demerger activities.
| Acquisition commitment | Significantly increased contributions in Melrose ownership | Improved investment strategy and other |
Surplus as at 31 December 2022 | |||
| 'Up to £1 billion' | ⇢ | £0.4 billion | ⇢ | £0.7 billion | ⇢ | £0.1 billion |
For the GKN schemes, we were proactive, transparent and constructive in agreeing commitments with pension trustees during the acquisition of GKN. We committed to providing up to £1 billion of funding contributions; to doubling annual contributions to £60 million; to making £150 million upfront contributions; and to further contributions on sales of businesses.
So far we have:
- Eliminated the GKN UK defined benefit pension schemes’ net accounting deficit.
- Set secure funding targets of Gilts +25 basis points (GKN 2016) and Gilts +75 basis points (GKN 2012 schemes 1-4) to achieve more prudent funding targets.
- Achieved a successful buyout of the GKN 2016 pension plan in 2021.
- Rebalanced the GKN schemes across the GKN divisions, to avoid overburdening any one business and to provide stability and better security for members.
GKN 2012 schemes 1-4
Schemes for businesses sold
Whilst under Melrose ownership, we improve contributions and provide better security to our businesses’ pension schemes in every case improving their percentage funding in advance of departure from the Group.
Adjusted operating margin improvement
Total shareholder returns (TSR)(1)(2)
(1) Source: Datastream Total Shareholder Return Index.
(2) Since Melrose’s first acquisition (May 2005).
How Elster and Nortek operating margin improved(1)
- Returns on capex and restructuring and other commercial actions
- Central cost savings
- Exit of low margin sales channels
(1) Nortek adjusted operating margin up to 31 December 2021.
