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%
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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
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.