Consolidated responses to queries submitted by shareholders for the 2020 AGM

Trading, Finance and Operations

We have released a full trading update for the four months from 1 January 2020 to 30 April 2020.  The Group, and each of our businesses, is focused on maintaining its financial position through strong cash management given the significant level of trading uncertainty.  In these circumstances, the Board decided that it must act prudently and conservatively in respect of payments to shareholders. Accordingly, as first announced on 30 March 2020 the Board decided not to pay the 2019 final dividend due to be paid in May 2020, and the final dividend resolution was duly withdrawn at AGM. The Board will keep under review any decision in respect of further dividends.



In the current unprecedented circumstances surrounding the impact of COVID-19, the Board has asked David Roper to temporarily delay his retirement as Executive Vice Chairman and we are pleased to inform shareholders that he has agreed to do so.

Melrose remains committed to actively supporting diversity, which we and our businesses continue to champion in its broadest sense, be that along geographical, cultural, personal or market lines. Since 2018 all Board appointments have been female and two of the most important roles on the Board, being the Senior Independent Director and the Chairman of the Audit Committee, are held by a woman. Our Board has implemented the same high standards and values among Melrose senior management, where 33% of the Executive Committee are female and 31% of the Executive Committee and their direct reports are female. Those standards and values are also driven through our businesses, for example GKN Aerospace has launched the inaugural ‘Inspired Women’s Leadership Development Programme’ with the professional training and coaching company Forward Ladies, designed to help women in the organisation succeed and to encourage women to mentor other female colleagues in the business. The programme saw 35 female leaders globally from across the division come together to hear industry-leading speakers and to share their own learning, resources and insights relevant to their roles and careers. GKN Aerospace was also pleased to strengthen its executive committee with two new female appointments in 2019.

We recognise the importance of supporting the representation of females in senior roles as an industry-wide aim. We and our businesses actively support initiatives that seek to address this, for example through the ‘Melrose Skills Fund’ we are working on a strategic diversity project to help improve diversity within the engineering sector as a whole. This project is being by Enginuity (formerly known as Semta), a not-for-profit organisation that leads on several initiatives to support the engineering and manufacturing sectors, and also involves Unite. The aim of this project is to conduct research into identifying barriers that are hindering socio-economic and ethnic diversity within the engineering sector, with a view to provide bursaries to help increase diversity based on these findings. A meeting of the project steering committee, which consists of Melrose, Enginuity and Unite, was held in January 2020 to discuss the findings of the initial report, which will inform the development of short, medium and long-term actions that can be undertaken to increase diversity in the sector.

The Government has suspended gender pay gap reporting for the 2019/2020 reporting year given the pressures of the COVID-19 pandemic. As with many businesses across the UK, some of our divisions have similarly not published reports for the latest reporting round in line with the national suspension. However, GKN Aerospace (one of our largest divisions) did publish its report for the current round, which showed that its median gender pay gap fell by almost 2% during 2019.

Melrose’s core purpose is to acquire good engineering businesses that are underperforming their potential, to invest in them heavily, and to empower their management teams to achieve improved performance. This necessarily means that we inherit businesses which may be underperforming in areas such as gender diversity. To enable our businesses to achieve sustained improvement during our ownership period and over the longer term after they inevitably leave our Group, we operate a decentralised model that equips our management teams with the resources that they require to strengthen their respective businesses, including with respect to gender diversity. Consistent with this, we ensure compliance with the national standards of reporting on an entity-by-entity basis, which is consistent with our decentralised model and avoids distortion of reporting as businesses join and leave the Group.  Our businesses duly disclose their gender pay gap data in line with the regulations where they fulfil the reporting criteria, and to date they have traditionally outperformed the average national median gender pay gap figures for manufacturing companies (as reported by ONS).

For further details about the specific diversity objectives and initiatives that Melrose is pursuing, please refer to our 2019 Annual Report.



Mirroring sacrifices being made by businesses in the Group, the Board and central Melrose staff have committed to a temporary 20% reduction in salary. Given the present uncertainty and lack of clarity, the Board also chose not to propose a resolution in relation to a new long term incentive plan to follow the current plan expiring at the end of May 2020 (which will not result in any award for participants). We are nonetheless very grateful for the constructive engagement and widespread support for the new long-term incentive proposal that we received from investors and other stakeholders during the extensive consultation exercise we recently completed, and we thank them for their time. Once the COVID-19 crisis has passed, the Board will propose an appropriate incentive plan continuing from the previous one for approval by shareholders.