Melrose Industries Share Discussion Threads

[brexitplus] 11/3/2019 10:17

Getting, great minds ...

[brexitplus] 11/3/2019 10:16

Yertiz,

Porky was a holder then took up the rights issue (which was greatly undersubscribed). Recently he boasted about his great investment in Kier. Next we will hear that he sold at a huge profit, probably greater than Getting’s accumulated salary for the last 10 years😁ԅ13;😁

[gettingrichslow] 11/3/2019 10:14

Yertiz, Porky bought 'more than a multiple of my net worth' of Kier shares...but I've got a sneaky feeling he'll claim he sold out completely yesterday!

[brexitplus] 11/3/2019 10:07

Getting, yes Interserve on the brink for investors!!!

[gettingrichslow] 11/3/2019 10:04

B+, yes, Kier down almost 18% as I write.
Meanwhile - note Kier is the company that Minny often names as being the company we should have bought into instead of MRO...a company that had to launch an emergency rights issue which was then way under-subscribed, and now they've revealed an accounting error (when the BoD is filled with accountants!). All in a sector that is in big trouble...

[yertiz] 11/3/2019 09:52

Kier = Carillion in disguise. Didn't Porky buy a bunch some time back? ROFLMAO.

[brexitplus] 11/3/2019 09:43

Getting, I see Kier having a big drop (down 15%) today because of incorrect net debt calculation. As one poster said

“One would think that a Board comprising of accountants should be able to calculate average net debt.”

Apparently its Broadmoor hospital development is 2 years behind schedule.

[brexitplus] 11/3/2019 09:30

Useful summary of GKN Aerospace for those who don’t want to plough through the Melrose annual report from Flight Global


“GKN Aerospace shareholder Melrose Industries has generated an £847 million ($1.12 billion) adjusted operating profit for 2018, following its acquisition of the UK aerostructures specialist last April.

On a statuary basis, Melrose delivered an operating loss of £392 million, on revenue worth £8.61 billion for the year ended in December. But balanced against costs for amortisation, restructuring efforts, asset impairments, exchange rate and IFRS-related inventory accounting effects, the result led to an adjusted profit, Melrose documents show.

The turnaround specialist says the results are "ahead of the board's previous expectations".

GKN generated a £341 million adjusted operating profit on revenue worth £3.53 billion on an annualised basis – including the January-April period under the manufacturer's previous ownership.

The company's US aerostructures operations delivered a £6 million operating loss.

However, Melrose says these operating results are "approaching operational break-even, on a run rate basis, and relationships with key aerospace customers have been much improved".

In regard to GKN's entire business, Melrose foresees "significant potential" for performance improvement through "loss-making contraction resolution".

Meanwhile, efforts are also under way to improve supply chain and procurement processes.

"Many initiatives" have been started to drive operational excellence, while investments have been directed to "historically underinvested parts of the business", Melrose says.

An accounting deficit in GKN's UK pension scheme has also been reduced to £588 million, from £691 million at the end of 2017.”

[meanwhile] 11/3/2019 09:25

Is this a private club meeting, or can anyone join in?

[brexitplus] 11/3/2019 08:48

Hi Yertiz, I’ve always liked schoolboy humour. Not keen on modern humour with lots of swearing.

Glaws played against the wind first half and Cipriani was immaculate in penning back Quins. Forwards were excellent. I’m looking forward to seeing the highlights tonight.

So did Argyle outplay Luton?

And Exeter were well up at HT but I imagine that was playing with the wind. Strong comeback by Worcester.

Did you hear the one about the three surgeons ......

[brexitplus] 11/3/2019 07:59

Losos

Did you hear about the man who bought a dog from a blacksmith?

He only had him for 3 hours and he’d made a bolt for the door!!!

😊😊😊

[brexitplus] 10/3/2019 15:02

Yertiz

Impressive Glaws win. Hammered Quins at the Stoop. Cipriani had the ball on a string.

[meanwhile] 10/3/2019 14:42

Perhaps it's too early in Melrose's ownership of GKN to begin judgement on the 'Asset Stripping' question, although the first bits of evidence (yet to be evaluated) were announced last week with the 2 small disposals. Others will follow and the evidence, on both sides, will build up.
It might be a good time to refresh the memory of Will Hutton's comments in the Guardian at the time of the GKN takeover almost a year ago.

Will Hutton, The Guardian, Sun 1 Apr 2018

"The past is never dead. When the wheeling, dealing, asset-stripping Hanson Trust finally collapsed in 2007, having played a major part in the deindustrialisation of Britain – but having greatly enriched its Thatcherite founder Lord Hanson – I thought a stake had finally being driven through the heart of a particular ghoul.
Never again would our Westminster, Whitehall and City establishments indulge a glorified super-accountant who knew the price of everything but the value of nothing. And, in the name of “culture change” and rigorous “management221;, had laid waste to industrial Britain. I was wrong.

The ghoul lives on, reincarnated as Chris Miller, the executive chair of Melrose, a company self-consciously cast in Hanson Trust’s image, and now the victor in the £8bn battle for control of Britain’s third largest engineering group, GKN. Miller is in fact a Hanson protege and, like his former boss James Hanson, he trained as an accountant – the perfect professional background for asset stripping.

For what glory days were those! The young Miller will have been part of the finance team working to Hanson and his chief accomplice, Gordon White, at their headquarters overlooking Buckingham Palace. It was a company wholly controlled by the two men, insisting on approving every expenditure above £500 by the companies they acquired – even while they pioneered stowing profits in tax havens and raiding pension funds of the companies they took over.

Crucially, Miller will have seen firsthand how Hanson and White stalked their takeover targets, set about winning the battles and then made a fortune from breaking up the victim company while running its core businesses to incredibly stringent financial targets. I have no doubt that, like Hanson and White, both ennobled by Margaret Thatcher who admired them uncritically, he believes in the virtue of what he does. Since founding Melrose, the financial returns have been stratospheric. Miller has yet to be named capitalist of the year by the Times as Hanson was in 1986 – but he is on his way.

But, like Hanson’s, Miller’s is a capitalism organised entirely around extracting rather than creating value. Hanson’s model was brutally simple, exemplified by the 1982 takeover of Berec, the manufacturer of Eveready batteries, and its subsequent breakup – Miller will have had a ringside seat.

Like GKN, it was a proud Midlands-based British engineering company setting about the hazardous business of becoming the international brand leader in batteries, based on high investment in research and development. Who knows? In a different business culture, Berec might now be the world’s leading battery manufacturer, set to exploit the electrification of cars. Instead, it does not exist.

For, like GKN, it made a mis-step – the share price dipped and Hanson launched his bid. The European division was sold off to its chief competitor, Duracell, thus recouping most of the cost of the takeover. Battery prices were increased across the board, so that Eveready quickly lost market share. All new investment could only be justified if the cash was returned in four years while making a 20% return. Ten years later, Eveready had been milked dry, and Hanson sold out to Ralston Purina. Its verdict on Eveready as it assessed its purchase: a company “a number of years behind the times… a business in decline… the whole infrastructure was pretty thin”.

Hanson had made a fortune – but Britain had lost another pivotal company. So it continued. Two years before he left Hanson to found his own Hanson-like shell company, Miller would have been in the thick of the 1986 bid for Imperial Tobacco – then dismembered like Eveready. But the Hanson business model was inherently unstable. To grow and maintain his own share price, he had to go for ever bigger targets to feed the beast. Hanson had an unsuccessful shot at ICI, which saw him off – but only at the price of ICI changing its declared business purpose from bettering society through science to maximising the share price. ICI then broke itself up – but so did Hanson, with the company ignominiously being sold to a German cement company.

We can foretell what will happen to GKN. Businesses will be sold to repay the £8bn. Prices will increase, and market share will be foregone: there is no other option given the millstone of debt around Melrose’s neck. R&D will be frozen at the current levels, already running at half to two thirds the rate of its chief competitors, rendering virtually valueless the promise to the business secretary, Greg Clark, to maintain it. Investment will only be allowed on Hanson-type terms – four-year paybacks and 20% returns. Yes, the company headquarters will remain in Britain – but in Mayfair, not in Redditch. In 10 years’ time, some company will buy the rump of GKN, only to find it in the same condition as Ralston Purina found Eveready.

Melrose’s future is also foretold. For all the hundreds of millions it is making, it will wind up like Hanson. Britain, which already has no major indigenous company in an array of sectors, will have them in even fewer – with all the implications for work, wages, careers and skills. For most of the young analysts at the asset management groups who took the decision to accept Melrose’s offer for GKN, the events I describe will seem like ancient history.

But the same mistakes keep being repeated. To prevent them, the government simply has to rule that only shareholders who own shares at the time of the bid can vote, so disenfranchising the arbitrageurs and hedge funds who swung the decision. But the City establishment lobbies ferociously against this move. For the City is wedded to the value extraction on which its fees depend."

[gettingrichslow] 10/3/2019 13:48

Yawn. Double yawn.

[meanwhile] 10/3/2019 13:14

Well pointed out, ryelodge, with the very appropriate correction.

Some will think you are me, and I am you, but these un-named persons suffer at least 2 types of mental affliction, too complex to detail here.
Your use of the word "cognoscenti" distinguishes you from me; I have never used it here in rural Wales. I might now though.

What I think is most disturbing about such bonus payments is that the remuneration committee thought these amounts were OK to award, the recipients thought they were OK to accept, and that all these people are still there making decisions in other areas of the company's business.

[gettingrichslow] 10/3/2019 12:18

It's another really good point that you haven't already made numerous times. Meanwhile hasn't made the same point numerous times either. Maybe next time you post you could make a point about how excessive the Directors' bonuses are, or something like that? Or alternatively, something about Directors' bonuses?

[gettingrichslow] 10/3/2019 12:18

It's another really good point that you haven't already made numerous times. Meanwhile hasn't made the same point numerous times either. Maybe next time you post you could make a point about how excessive the Directors' bonuses are, or something like that? Or alternatively, something about Directors' bonuses?

[gettingrichslow] 10/3/2019 12:18

It's another really good point that you haven't already made numerous times. Meanwhile hasn't made the same point numerous times either. Maybe next time you post you could make a point about how excessive the Directors' bonuses are, or something like that? Or alternatively, something about Directors' bonuses?

[ryelodge] 10/3/2019 11:51

CORRECTION: My previous comment on returns to MRO shareholders versus UK Index Trackers over the last two years obviously does not apply to to the Directors who each received £50 million bonuses last year or their 20 senior managers who shared £80 million.

[gettingrichslow] 10/3/2019 10:52

Ryelodge, yes that is a really 'interesting' point, I doubt anyone on here would have ever realised if you hadn't pointed it out. Even more interesting is that if holders of MRO had sold up a year ago and stashed the money under their beds, they would now be better off than investing in the Tracker Fund! Incredible.

[ryelodge] 10/3/2019 10:18

Interesting that holders of MRO for the past year or two would have been better off in a UK Index Tracker Fund.

Of course the cognoscenti will have traded in and out at propitious moments over the last five years and had the best of all worlds.

[brexitplus] 10/3/2019 09:53

No sorry you two. You’re not members of the club and never will be.

Porky yet again said he had filtered me yet is back responding to my post, as I predicted.

[meanwhile] 10/3/2019 09:42

The countryside white this morning, due to snow I think. Bit of sledging maybe later. Roast beef for lunch. Brexit on the rocks. Millions starving in Yemen.
All's right in the Cotswolds.

[minerve 2] 10/3/2019 09:29

Watching the LFC match today. The log fire is glowing, the Cheshire countryside and wood look wonderful this morning. Big gulps of fresh air, maybe take a dump before lunch.