Track Record
History
Outputs
Shareholder investment and gain
Reinvestment
How has Melrose created value?
-
McKechnie/Dynacast
-
FKI
-
Elster
-
Nortek
McKechnie/Dynacast
McKechnie/Dynacast
-
Bought for£0.4bn
-
Sold for£0.8bn
-
Investment in business51%
-
Equity rate of return30%
-
Shareholder return on original equity3.0x
- Sales growth
- Margin growth
- Cash generation
- Multiple expansion
FKI
FKI
-
Bought for£1.0bn
-
Sold for£1.4bn
-
Investment in business78%
-
Equity rate of return29%
-
Shareholder return on original equity2.6x
- Margin growth
- Cash generation
- Multiple expansion
Elster
Elster
-
Bought for£1.8bn
-
Sold for£3.3bn
-
Investment in business25%
-
Equity rate of return33%
-
Shareholder return on original equity2.3x
- Sales growth
- Margin growth
- Cash generation
- Multiple expansion
Nortek
Nortek
-
Bought for£2.2bn
-
Sold for(1)£3.1bn
-
Investment in business22%
-
Equity rate of return19%
-
Shareholder return on original equity2.1x
(1) Includes estimated value of business not yet sold.
- N/A
Responsible approach to investing
Substantial improvements for all UK pension schemes under ownership
Responsible stewardship (figures up to 31 December 2021)
£1 in every £3
The GKN UK pension schemes are now in surplus helped by £1 in every £3 of free cash flow since acquisition being paid into the Group’s pensions schemes, thereby freeing up more free cash flow in the future.
- GKN UK schemes now in accounting surplus of £172 million(1), equivalent funding surplus of c.£100 million.
- The Group’s gross pension plan liabilities have reduced by 25% during the year, including £379 million of gross liabilities transferred with businesses disposed and £366 million following a successful buyout of the pensioners of the GKN UK 2016 scheme.
(1) Includes a surplus of £179 million relating to the GKN UK Group Pension Schemes (numbers 1-4) and a deficit of £7 million relating to the GKN UK Post Employment Medical Scheme.
Schemes for current businesses
The Melrose funding commitment made on acquisition of GKN has been fulfilled ahead of time. Ongoing annual payments are halved to £30 million and no funding requirement from future disposal proceeds.
Acquisition commitment | Significantly increased contributions in Melrose ownership | Improved investment strategy and other |
At 31 December 2021 |
|||
'Up to £1 billion' | ⇢ | £0.35 billion | ⇢ | £0.75 billion | ⇢ | £0.1 billion surplus |
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 scheme accounting deficit.
- Applied more 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.
- Rebalanced the GKN schemes across the GKN divisions, to avoid overburdening any one business and to provide stability and better security for members.
- Having funded the GKN 2016 scheme to 115%, we arranged a buyout with an appropriate insurer that secures the futures of over 8,000 pensioners’ member benefits.
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.