Melrose Industries Share Discussion Threads

[yertiz] 31/5/2017 12:41

Next month is a big month for Melrose with their inclusion into the FTSE 250 (or 100??). Fund managers will take note of the good/great work done by the management and I expect the announcement of any further acquisition to accompany their premium listing. I think you are right, MEANWHILE, having been invested in Melrose for a good few years too, I am starting to see how they work as a unit for the shareholder. They have been as good as my own Royal Mint and easily are the largest holding I have - all wrapped up nicely in an ISA. 350p would be my cue to retire.
As for a rights issue, if there is one - guesses would have to be based on the last for Nortek against the share price at the time. I'm not getting involved with this, just happy in the knowledge Melrose was, is and remains to be a cash cow. Good luck.

[steeplejack] 16/5/2017 12:18

Interesting.You might be right.

[meanwhile] 15/5/2017 11:23

Brace yourselves & be prepared.

I've followed Melrose for around 12 years, making a fortune in the process. I've followed their business cycle of "buy & sell" through several full turns.
However, I have seen for the first time, in their recent statements, a particular, and rather singular, message.
This is, (in my words):- despite running their latest major acquisition for only 6 months, they are seeking a next acquisition -.
Now I've no doubt that they have an acquisition searching team who are always engaged in doing this, but why announce that they are searching after only 6 months. They've never stated this before and they have no need to state this. However they have now in the annual results statement in March and again in the recent trading update.

I think the reason is that they are close to making the next. If Nortek is going as well as it appears, they will have found that they have tapped into a new seam of opportunities, namely in the USA, in construction industries & in fitting & servicing. As would be expected in such finds, they can't wait to capitalise.
Shareholder rewards from a new rights issue won't be anything like the bonanza with Nortek but I expect will be well worth taking.

Of, course, you must appreciate that I could be completely wrong.

As usual, some will think I'm trying to talk up the share price in my own mind - False. I have made a great deal of money from Melrose over the years and, as an alternative to giving to you some of this money, I am giving good, soundly-based advice from my many years experience of this company. I'm keeping the money to myself because I've not yet reached the position of a gross excess, which I submit is quite enough for anyone.

Finally, Is anyone prepared to guess the offer price of the next Rights Issue. I am offering 3 prizes for the closest estimate.

Prize 1. An interview with the BBC's Nick Robinson.
Prize 2. An evening, dinner date with Angela Rippon.
Prize 3. Entry to a 3 hour lecture from Dan Snow on the Battle of Sebastopol.

Yours Faithfully,
Meanwhile

[meanwhile] 12/5/2017 13:17

This is often a dull time for the shares, with yesterday's update adding nothing.
The brokers, apart from Panmure, are a bit behind on valuing the company's prospects, as they always have been. It is good to see Panmure looking a good way ahead instead of just adding 5-10% to the current share price
The shares are worth 300p on current businesses and 400p based on prospects for the next acquisition.

[mattboxy] 11/5/2017 08:05

Announcement Current trading in Melrose is in line with expectations. Consistent with the commentary given at the year end results announcement in March, Nortek continues to improve its performance and the power generation market remains difficult for Brush. The Melrose Board is seeking another acquisition to create further value for shareholders and is confident of finding a suitable opportunity in due course.

[bigalan3] 26/4/2017 09:14

Regarding pay incentives. The institutions will decide whether they get their incentives which do seem a little excessive. However, it does not seem to have any adverse effect on the share price. I suppose it is only about 1% dilution per year.
I am sure the price will continue to rise up to the next acquisition.

[grevis] 25/4/2017 19:50

25 Apr Panmure Gordon 355.00 Buy
10 Apr JP Morgan... 250.00 Overweight
7 Apr JP Morgan... 230.00 Overweight
27 Mar Liberum Capital 260.00 Buy
24 Mar Liberum Capital 260.00 Buy
22 Mar Liberum Capital 260.00 Buy
21 Mar Barclays... N/A Overweight
17 Mar Liberum Capital 260.00 Buy
9 Mar Liberum Capital 260.00 Buy
6 Mar Deutsche Bank 220.00 Hold

[topvest] 12/4/2017 21:26

The 4 directors are about to take a cool £164m in total under the 2012 incentive plan and are proposing another feeding frenzy under a new "incentive" plan. I'm sorry, but this is excessive. They have done very well for shareholders, but excessive greed is not really on. I'm voting NO on the resolution. I wonder what the large holders think? Taking 7.5% of the increase in value for a company this size and diluting holders by 5% isn't really on. 1% would be more than adequate.

[grevis] 07/4/2017 19:18

Still climbing!

[grevis] 24/3/2017 16:02

Seems to have done the trick!

[steeplejack] 24/3/2017 15:58

This news,as expected,confirms that tracker funds will be buying as Melrose (with a premium listing once again)will be eligible for inclusion in the FTSE indices ie the 100 or 250 as appropriate.24 March 2017Melrose Industries PLCNotification of transfer to a Premium ListingMelrose Industries PLC ("Melrose" or the "Company" and, together with its subsidiaries from time to time, the "Group") announces that it is proposing to transfer the listing category of its ordinary shares (the "Ordinary Shares") from a Standard Listing to a Premium Listing on the official list of the UK Listing Authority ("Official List") under Rule 5.4A of the Listing Rules issued by the Financial Conduct Authority (the "Transfer").No shareholder approval is required in connection with the Transfer. It is anticipated that the Transfer will take effect at 8.00 a.m. on 26 April 2017.

[steeplejack] 24/3/2017 15:11

The payouts might seem large but this company is the very creation of the management.It's not as if Miller or Roper etc joined a long established company,they built Melrose from scratch.

[bigalan3] 23/3/2017 08:28

I think the pay awards are excessive but I suppose other companies pay large awards for failure. Melrose are extremely successful at what they do. I await the big acquisition - better start saving up.

[grevis] 21/3/2017 13:15

Melrose Industries bosses to land £200m-plus share bonanza
The quartet of executives who run Melrose are likely to be handed shares worth more than £150m, Sky News learns.
15:17, UK,
Sunday 19 March 2017
LONDON STOCK EXCHANGE

Melrose management team to share windfall




By Mark Kleinman, City Editor

Top executives at one of Britain's best-performing industrial groups are close to landing a share bonanza worth more than £200m, placing it among the largest one-off payouts ever made by a FTSE-100 company.

Sky News has learnt that the management team of Melrose Industries, which specialises in turning around underperforming engineering businesses, could receive in the region of £206m from an incentive scheme due to pay out in the next few months.

The details, which will be disclosed in Melrose's annual report‎ next month, relate to a five-year bonus scheme approved by the company's shareholders in 2012.

Melrose, which owns manufacturing names such as Brush and Nortek, has generated billions of pounds of profit for its investors since it was set up more than a decade ago.

Sources said that an accounting note in Melrose's recent annual results, which disclosed a £22.8m charge for employers' National Insurance‎ contributions, hinted at the scale of the potential share scheme payout.

‎One insider said the current 40-day average share price of about 210p would equate to a total award to Melrose's top team of £206m, although the final figure had yet to be determined this weekend.

A number of top shareholders in Melrose contacted by Sky News said they were comfortable with the size of the payout.

"We signed up to this knowing the scale of the upside for management," said one.

"They only make money if we do."

Melrose's top team is led by chairman Christopher Miller, deputy chairman David Roper, Simon Peckham, the chief executive, and chief financial officer Geoff Martin.

Between them, the four men are expected to receive roughly 75% of the aggregate payout, which is calculated by handing participants in the bonus plan 7.5% of the total shareholder gain.

A further 20 senior managers would share the remainder of the multimillion pound rewards under the scheme.

Melrose has sold companies including metering business Elster and Bridon, an industrial cable-maker, during the last few years.

The share bonanza will come amid growing scrutiny of boardroom pay at the UK's top companies, with Theresa May vowing last year to crack down on corporate excess.

Ministers are starting to formulate responses to a green paper published in the autumn, while a report on corporate governance and executive pay is expected to be published by the Department for Business, Energy and Industrial Strategy shortly.

While some companies, such as Thomas Cook and Imperial Brands, have faced revolts over much smaller management incentives than those at Melrose, the industrial turnaround group has generally enjoyed strong support from its shareholders.

Since its inception, Melrose has returned roughly £3.2bn to investors by selling a string of companies for big profits.

A person close to Melrose pointed out that its executives' pay was strongly aligned to shareholder returns and that its chief executive's basic salary was £450,000 - well below the average for a company with a market value of more than £4bn.

This year's share scheme will be the second to crystallise at Melrose since the company was established.

In 2012, executives shared a £126m windfall under the previous incentive plan.

The company's management team have never sold shares other than to settle tax liabilities, and will be obliged to hold onto half of the latest‎ share awards for at least two years.

Melrose, which declined to comment, will seek shareholder approval for a further incentive scheme at its annual meeting later this year.

[sogoesit] 08/3/2017 10:37

I agree, Meanwhile. I dived in today after being absent since the rights issue.
They also appear to be ambitious to do another deal at the same time.

[meanwhile] 07/3/2017 12:15

I had intended to hold off my contributions until 12th May but have changed my mind after seeing forecasts from Deutsche Bank & Liberum Capital, 220p and 200p. These fellows are Clueless, they should join the BBC, the Guardian or possibly the 'movement to keep the UK in the EU'.

Based on underlying 4 months worth of profit at Nortek (and bear in mind that for this 4 month period, MRO had run Nortek for an average time of only 8 weeks), the shares are worth around 300p, for the business as it currently exists. Add some expected improvements in margin at Nortek, a bit more of sales and the prospect of a further acquisition and I think 400p is not a crazy target.

[hedger] 02/3/2017 14:53

Meanwhile, LOL.
Happy days
H

[meanwhile] 02/3/2017 12:45

Very promising. Around 10% up. My 27th Feb. prediction was just slightly off.

If this goes on much longer, I will need to resist the temptation fallen into by that great british institution the British Brainwashing Corporation, otherwise known as the BBC, to believe that I'm making the news rather than reporting it.

My next prediction is scheduled for 12th May 2017.

[grevis] 02/3/2017 09:53

2 March 2017
MELROSE INDUSTRIES PLC

AUDITED RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2016


Melrose Industries PLC today announces its audited results, which are reported under IFRS, for the year ended 31 December 2016.

Highlights

§ 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


Christopher Miller, Chairman of Melrose Industries PLC, today said:

"This has been a tremendous year for Melrose and we are delighted with the performance of Nortek which is exceeding expectations. All aspects of the business are being improved and its prospects are better than originally thought. As a result we have started looking for the next acquisition that will materially enhance shareholder value."

An analysts' meeting will be held today at 11.00 am at Investec, 2 Gresham Street, London EC2V 7QP.

Enquiries:

Montfort Communications:
Charlotte McMullen/Sophie Arnold [phone]



CHAIRMAN'S STATEMENT


I am pleased to report on our 14th set of annual results since flotation in 2003. Since the date of the first acquisition in 2005, Melrose has created net shareholder value of £4.8 billion and achieved an average annual return for a shareholder of 26% (as at 1 March 2017).

CALENDAR YEAR 2016

2016 has been another successful year. In February 2016, £2.4 billion was returned to shareholders following the sale of Elster in December 2015. In August, Nortek was acquired for £2.2 billion, financed from the net proceeds of a successful rights issue raising £1.6 billion, with the balance funded through debt of £0.6 billion.

The presentation of this year's results has been dominated by the Nortek acquisition, which, when combined with Brush, has more than tripled the revenue of the Melrose Group this year.

Melrose Group revenue for the year was £889.3 million (2015: £261.1 million) and, despite declaring a statutory loss before tax of £69.3 million (2015: £30.7 million), the underlying profit before tax was £96.4 million (2015: £2.4 million).

At Nortek, the Security & Smart Technology and Ergonomics divisions performed particularly well, driving outperformance, but all businesses are responding well to the improvement measures we have implemented to date. Brush continues to face challenging end-market conditions but we remain positive about its long-term prospects. Further details of these results are contained in the Chief Executive and Finance Director's reviews.

As ever, I would like to thank all our employees for their efforts in helping to produce this outstanding performance.

DIVIDEND

The Board proposes to pay a final dividend of 1.9 pence per share (2015: 0.5 pence2), making a total of 2.2 pence for the year (2015: 1.0 pence2), in line with its progressive annual dividend policy. This will be paid on 16 May 2017 to those shareholders on the register at 7 April 2017, subject to approval at the Annual General Meeting (AGM) on 11 May 2017.

[sogoesit] 02/3/2017 08:09

Way undervalued... 300p+ imv
Following but not in here.

[steeplejack] 02/3/2017 07:30

Excellent results.Nortek exceeding expectations.Brush must irritate a perfectionist management but that appears to be the only caveat.Note the company on the look out for next acquisition.Extraordinary energy.

[dafrog] 02/3/2017 07:05

Melrose's 2016 results have exceeded market expectations:

[steeplejack] 01/3/2017 20:03

Indeed,but have Melrose established a premium listing and thus established eligibility for the index or are they still in the standard category re RNS of 31 Aug last.

[hedger] 01/3/2017 16:40

Steeplejack. There are currently four companies in the FTSE with a smaller capitalisation than MRO. It doesn't necessarily mean that any of them will be replaced by MRO at the next shake up though. It would be nice if one was.
H.

[steeplejack] 01/3/2017 13:33

Melrose will be going back into the index in due course I understand ...possibly the FTSE 100.Trackers will be buying ahead of inclusion.Am I right ?I've got in a muddle about this in the past.