TIDMMRO
RNS Number : 7392I
Melrose Industries PLC
03 April 2020
The 2019 Annual Report and Notice of Annual General Meeting
Melrose Industries PLC (the "Company") announces that its Annual
Report and financial statements for the year ended 31 December 2019
(the "Annual Report"), Notice of Annual General Meeting (the
"AGM"), and Form of Proxy for the AGM have each been sent to
shareholders, under the cover of a letter from our Chairman, Mr
Justin Dowley ("Chairman's Letter"), and subject to the trading
update released on 30 March 2020 ("Trading Update") which together
confirmed that the previously proposed resolutions in relation to
approval of the final dividend and the new long term incentive
scheme have been withdrawn due to the continuing impact of the
global outbreak of COVID-19. Please refer to those documents for
further information. The Annual Report, Notice of AGM, Chairman's
Letter and the Trading Update are available to view or download
from the Company's website at https://www.melroseplc.net/investors/
.
The Company's AGM will be held at 11.00 a.m. on 7 May 2020 at
Leconfield House, Curzon Street, London W1J 5JA.
PLEASE NOTE THAT IN LINE WITH UK GOVERNMENT GUIDANCE AT THE TIME
OF PUBLICATION OF THE NOTICE OF AGM, THE COMPANY URGES ALL
SHAREHOLDERS NOT TO ATT THE AGM IN PERSON, BUT TO MAKE USE OF
PROXIES TO EXERCISE THEIR VOTING RIGHTS AND TO SUBMIT ANY QUESTIONS
PRIOR TO THE MEETING USING THE SERVICE THAT THE COMPANY HAS SET UP
FOR THESE PURPOSES.
If, despite this request, any shareholder nonetheless seeks to
attend in person, the Chairman reserves the right to introduce
further appropriate safety measures such as temperature checks and
self-certifications, as well as to suspend the meeting immediately
and seek an alternative time when it can be held safely and in
accordance with UK Government guidance.
The Company's preliminary results announcement on 5 March 2020
included, in addition to the preliminary financial results, the
text of the Chairman's statement, Chief Executive's review
(including the Divisional review) and Finance Director's review, in
each case as contained in the Annual Report. In the few short weeks
since we announced our very successful set of 2019 financial
results, the global situation has completely changed and we all
face very difficult health and economic circumstances. As we
release our Annual Report, the impact of this outbreak is still
uncertain. However, it is clear that the language and tone of our
preliminary results announcement, as reflected in our Annual
Report, are no longer appropriate for 2020.
The appendix to this announcement sets out the required
disclosures with regard to the Directors' responsibility statement,
the principal risks and uncertainties and related party
transactions, in each case as contained in the Annual Report.
Together, this information is provided in accordance with
Disclosure & Transparency Rule 6.3.5(2). This information is
not a substitute for reading the full Annual Report for the year
ended 31 December 2019.
The Company confirms that, in compliance with Listing Rule
9.6.1, an electronic copy of each of the Company's Annual Report
for the year ended 31 December 2019, Notice of AGM and Form of
Proxy for the AGM have been submitted to the National Storage
Mechanism, appointed by the Financial Conduct Authority, and will
be available shortly for inspection at www.morningstar.co.uk/uk/NSM
.
Enquiries:
Montfort Communications:
Nick Miles, +44 (0) 20 3514 0897
Charlotte McMullen, +44 (0) 7973 130 669 / +44 (0) 7921 881
800
APPIX
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole;
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face; and
-- the Annual Report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's performance,
business model and strategy.
Principal Risks and Uncertainties
This section outlines the principal risks and uncertainties that
may affect the Group and highlights the mitigating actions that are
being taken. This section is not intended to be an exhaustive list
of all the risks and uncertainties that may arise, nor is the order
of the content intended to be any indication of priority.
A risk management and internal controls framework is in place
within the Group, which is continually reviewed and adapted where
necessary to reflect the risk profile of the Group and to continue
to ensure that such risks and uncertainties can be identified and,
where possible, managed suitably. Each Group business unit
maintains a risk register which is aggregated into an interactive
data-driven dashboard reporting tool, to facilitate review by the
Melrose senior management team, the Audit Committee and the
Board.
Key risk Description and impact Mitigation Responsibility Risk Trend commentary Strategic
trend priorities
Strategic risks
Acquisition The success of the Structured and Executive Following the Buy
of new Group's acquisition appropriate management acquisition Improve
businesses strategy depends on due diligence of GKN in 2018,
and identifying available undertaken the Group
improvement and suitable targets, on potential remains
strategies obtaining any consents new targets focused
or authorisations where permitted principally
required and on improvement.
to carry out an practicable. Whilst no large
acquisition, Focus on acquisitions
and procuring the acquisition were made in
necessary targets 2019
financing, be this that have relative to the
from equity, debt or strong headline 2018 GKN
a combination of the fundamentals, acquisition,
two. In making high-quality some
acquisitions, products, small bolt-on
there is a risk of leading market acquisitions
unforeseen liabilities share but which were made by
being later discovered are certain
which were not underperforming businesses and
uncovered their potential are expected to
or known at the time and ability improve those
of the due diligence to generate businesses.
process, particularly sustainable
in the context of cash flows and
limited profit growth.
access in public bids. Hands-on role
Further, as per the taken by
Group's strategy to executive
buy and improve good Directors and
but underperforming other senior
manufacturing employees
businesses, of the Group.
once an acquisition Development of
is completed, there strategic
are risks that the plans,
Group will not succeed restructuring
in driving strategic opportunities,
operational capital
improvements expenditure,
to achieve the expected procurement
post-acquisition and working
trading capital
results or value which management.
were originally Proper
anticipated, incentivisation
that the acquired of operational
products management
and technologies may teams to align
not be successful, with Melrose
or that the business strategy.
may require
significantly
greater resources and
investment than
anticipated.
If anticipated benefits
are not realised or
trading by acquired
businesses falls below
expectations, it may
be necessary to impair
the carrying value
of these assets. The
Group's return on
shareholder
investment may fall
if acquisition hurdle
rates are not met.
The Group's financial
performance may suffer
from goodwill or other
acquisition-related
impairment charges,
or from the
identification
of additional
liabilities
not known at the time
of the acquisition.
------------------------ ---------------- --------------- --------- ----------------- -----------
Timing of In line with our Directors are Executive Although global Sell
disposals strategy experienced management M&A markets
and depending where in judging and continue
the Group is within regularly to experience
the "Buy, Improve, reviewing the some
Sell" cycle, the appropriate uncertainty
expected time in a there
timing of any disposal business cycle remain
of businesses is for a disposal opportunities
considered to realise for value
as a principal risk maximum value realisation.
which could have a for Some non-core
material impact on shareholders. businesses
the Group strategy. Each disposal were placed
Further, due to the is assessed under
Group's global on its merits, strategic review
operations, with a key during 2019.
there may be a focus on a However,
significant clean disposal. management
impact on the timings continue
of disposals due to to remain
political and disciplined
macro-economic and there is no
factors. Depending obligation to
on the timings of sell
disposals before it is
and nature of the appropriate
businesses' to do so.
operations there may
be long-term
liabilities
which could be retained
by the Group following
a disposal.
Insufficient
allowance for such
retained liabilities
may affect the Group's
financial position.
------------------------ ---------------- --------------- --------- ----------------- -----------
Operational risks
Economic and The Group operates, Regular Executive Geopolitical Buy
political through manufacturing monitoring of management uncertainty Improve
and/or sales order continued during Sell
facilities, books, cash 2019. However,
in numerous countries generation the Board notes
and is affected by and other that economic
global economic leading uncertainty
conditions. indicators, can depress
Businesses are also to ensure the business
affected by government Group and valuations and
spending priorities each of its this may
and the willingness businesses increase
of governments to can respond the number of
commit quickly to potential
substantial resources. any adverse acquisition
Current global economic trading opportunities
and financial market conditions. for Melrose.
conditions, including This includes The Melrose
continued headwinds the senior
in the automotive identification management team
sector of cost continues to
and a continued reduction and actively
slowdown efficiency engage with the
in US new-build measures. executive teams
residential Finance for of each division
housing markets, any acquisitions to track the
fluctuation in is readily potential
commodity available to impacts of
prices, the potential the Group from Brexit
for a significant and banking and imposition
prolonged global syndicates. of future
recession This has proven expected
and any uncertainty to be available tariffs, engage
in the political to the actively with
environment, Group even those
may materially and during periods who are working
adversely affect the of economic on the impact
Group's operational downturn, for assessments and
performance and example during mitigation
financial condition, the global actions,
and could have financial and report the
significant crisis in 2008. material
impact on the timing Short-term findings to the
of acquisitions and inventory Board. Melrose
disposals. buffers senior
A recession may also are being management
materially affect planned to team monitors
customers, minimise key
suppliers and other the initial issues with the
parties with which impact of divisional
the Group does Brexit management
business. on import costs teams including
Adverse economic and and tariffs the impact of
financial market and border geopolitical
conditions disruption. uncertainty on
may cause customers Sales from the order books,
to terminate existing EU to the cash
orders, to reduce their UK within the generation,
purchases from the GKN Automotive legal
Group, or to be unable and GKN and regulatory
to meet their Aerospace threats and
obligations divisions other
to pay outstanding are frequently key operational
debts to the Group. on ex-works and commercial
These market conditions terms and indicators, to
may also cause our therefore a ensure the Group
suppliers to be unable cost and each of its
to meet their to customers. businesses can
commitments This continues respond
to the Group or to to be reviewed appropriately
change the credit terms in light to adverse
they of the possible trading
extend to the Group's terms on conditions.
businesses. which the UK Tactics
Since the period under fully departs for mitigating
review, the UK left from the EU. the potential
the EU on 31 January Strong customer impact
2020. There continues relationships of geopolitical
to be uncertainty in built on uncertainty
the UK regarding the long-term include
nature of the UK's partnerships identifying cost
future trading often with reduction and
relationship plants in close operational
with the EU and other proximity, efficiency
international trading technical measures.
partners with which excellence
the UK intends to and quality.
establish Planning for
new terms on which potential
to trade, and what discussions in
this will mean for respect of
business and the UK increased
economy following tariff costs
expiry that
of the initial Brexit materialise if
transition period on a 'No
31 December 2020. Deal' Brexit
Whilst emerges when
the long-term impact the initial
of Brexit is not transition
isolated period expires.
as a principal risk The Group
to the Group as a remains agile,
whole, diversified and
it does present well positioned
potential to deal with
risks that the business any short-term
units continue to uncertainty in
monitor the UK.
and assess closely
relating to potential
changes to the
cross-border
trade and regulatory
environment. The Board
continues to assess
and review mitigation
plans.
A significant amount
of the Group's revenue
is generated from
operations
located in North
America,
which this year has
continued to (i)
experience
challenging tariffs
relating to the
US/China
trade war; and (ii)
require close
monitoring
of the expected short
to medium- term impact
of potential changes
to international
trading
relationships following
Brexit. The Group's
exposure to these
factors
as a whole has been
inherently mitigated
since acquiring GKN,
which created a more
geographically balanced
manufacturing
footprint,
and resulted in a
larger
proportion of the
Group's
revenue being generated
from the UK and
European-based
GKN Aerospace and GKN
Automotive divisions.
Further, the Group's
businesses operating
in North America
continue
to take regular
specific
actions to mitigate
the impact of new
relevant
North American tariffs
and changes to
international
trading regulations
by engaging with the
relevant authorities
prior to and after
any such changes are
implemented.
Since the period under
review, the potential
rapid spreading of
COVID-19 has become
a significant emerging
risk to the global
economy. The Board
continues to monitor
the impact of the virus
on the Group as more
information about the
epidemic emerges, with
particular focus on
the potential for staff
shortages and
production
delays that could arise
and potentially affect
Group businesses'
China-based
operations and their
supply chains, as well
as monitoring how other
operations around the
world could become
affected depending
on the extent to which
the virus spreads
outside
of China.
------------------------ ---------------- --------------- --------- ----------------- -----------
Commercial The Group operates The Group Executive The Melrose Improve
in competitive markets continued to management senior
throughout the world actively invest management team
and is diversified in research actively engages
across a variety of and development with the
industries and activities divisional
production in 2019 to executive
and sales geographies. augment its teams to track,
This provides a degree platforms for monitor and
of Group-level impact future product support
mitigation from the expansion, strategic
potential commercial quality planning
challenges and market improvements, activities and
disruptions that face customer impact
each of the divisions. alignment and mitigation
Each division is achieving assessments in
exposed further respect of
to particular production ongoing
commercial efficiencies. commercial
and market risks, which Details about risks.
are primarily some of the Particular focus
accentuated Group's is placed on
where research and certain
customer/competitor development GKN Aerospace
concentration is high activities are and
within their respective provided GKN Automotive
market segments. in the ESG end-markets
Melrose operates a report on pages where
decentralised control 58 to 69 of the customer and/or
and management 2019 Annual competitor
structure Report. concentration
which empowers Health and is high and
divisional safety heavier
management teams to awareness reliance is
take full initiatives and placed
responsibility performance on supply chain
for planning, enhancements efficiency and
mitigating, continued programme
navigating and to be partner
responding implemented in management. The
to the specific alignment divisional CEOs
commercial with report material
risks and challenges regulation, updates directly
facing their respective market to members of
businesses. The Melrose practice and the
senior management team site-based Melrose senior
monitors the aggregated risk management team
impact of such risks assessments and which maintains
and provide active requirements. a number of
support and challenge Further details contact
to the divisional are provided points
management in the throughout
teams in fulfilling nonfinancial the Group to
their responsibilities. KPIs increase
Common commercial risk on pages 36, awareness. The
areas that potentially 37, 65 of Group continued
affect a large the 2019 Annual to actively
proportion Report. invest
of the Group's Since acquiring in research and
businesses GKN, the development
include those related Melrose senior initiatives
to production quality management during 2019 to
assurance, health and team has augment its
safety performance, actively platforms
customer concentration engaged for future
and uncertainties with and expansion,
related supported the to benefit
to future customer GKN businesses' product
demand, onerous divisional quality
customer management improvements
and supplier contracts, teams in and increased
the impact of increased identifying customer
competitive pressures embedded alignment, and
on the maintenance/ contractual and to achieve
improvement of market business further
share, potential conduct risks production
disruptions relating to key efficiencies.
to supply chains and supply
increases to the price chain and
of raw materials, production
technological programme
innovation and market partners. Those
disruption, and the management
performance and teams have
management continued to
of programme partners implement and
(the "Common Commercial direct a
Risks"). series of
operational
change
management
programmes to
mitigate the
risks they
have
identified.
The Melrose
senior
management
team, in
collaboration
with Ernst &
Young, enhanced
the Board and
Audit
Committee's
visibility of
the Group's
Common
Commercial
Risks
during
2019 by
building and
implementing
an intelligent,
data-driven
Group reporting
dashboard
to automate the
aggregation
and reporting
of numerous
Common
Commercial
Risks
across each of
the Group's
divisions,
including those
identified from
the diligence
efforts and
site visits
undertaken to
prepare the
GKN opening
Balance Sheet
during 2018,
and ongoing
divisional risk
reporting.
------------------------ ---------------- --------------- --------- ----------------- -----------
Loss of key The success of the Succession Executive Succession Buy
management Group is built upon planning within management planning Improve
and strong management the Group is remains a core Sell
capabilities teams. coordinated focus for the
As a result, the loss via the Nomination
of key personnel could Nomination Committee and
have a significant Committee the
impact on performance, in conjunction Board.
at least for a time. with the Succession
The loss of key Board and planning of
personnel includes all executive
or the failure to plan Directors and Directors and
adequately for senior Group senior
succession employees. In management,
or develop new talent line with together
may impact the the Group's with visibility
reputation decentralised of potential
of the Group or lead structure, each successors
to a disruption in divisional within the
the leadership of the CEO, in Group,
business. Competition consultation will remain an
for personnel is with area of
intense the Chief particular
and the Group may not Executive, is management focus
be successful in responsible for in 2020.
attracting the appointment
or retaining qualified of their
personnel, particularly respective
engineering executive
professionals. team members,
with disclosure
to the
Nomination
Committee
via the Melrose
senior
management
team.
The Company
recognises
that, as with
most
businesses,
particularly
those operating
within a
technical
field,
it is dependent
on Directors
and employees
with particular
managerial,
engineering
or technical
skills.
Appropriate
remuneration
packages and
long-term
incentive
arrangements
are offered in
an effort
to attract and
retain such
individuals.
------------------------ ---------------- --------------- --------- ----------------- -----------
Compliance and ethical risks
Legal, Considering the Regular Executive Each business Improve
regulatory breadth, monitoring of management has
and scale and complexity legal a fully
environmental of the Group, there and regulatory developed
is a risk that the matters legal function,
Group may not always at both a Group headed by their
be in complete and business respective
compliance unit level. General
with laws, regulations Consultation Counsel
or permits. The Group with external reporting
could be held advisors to their
responsible where executive
for liabilities and necessary. management team,
consequences arising Group-wide and are properly
from (i) past or future standard and staffed and
environmental damage, enhanced supported
including potentially application to by
significant trade external
remedial costs; (ii) authorisation advisors
employee matters procedures where necessary
including are in place or helpful to
liability for employee and regularly ensure
accidents in the reviewed ongoing
workplace against the compliance
or consequences of ever-changing in the
environmental global trade jurisdictions
liabilities, compliance in which they
which may be landscape, operate
susceptible supported by across the
to class action law access to globe.
suits, particularly external trade This is
but not exclusively compliance augmented
with respect to Group legal and by central
businesses operating regulatory oversight
in North America; (iii) specialists and from the Melrose
restrictions arising electronic legal team and
from economic counterparty robust annual
sanctions, screening reviews
export controls and systems. to ensure it has
customs, which can Our businesses a strong legal
result in fines, are validated and compliance
criminal and certified framework and
penalties, adverse in respect considers
publicity, payment of quality the risk to be
of back duties and management, consistent with
suspension or environmental prior years.
revocation management
of the Melrose Group's and health and
import or export safety with
privileges; the appropriate
and (iv) product bodies
liability including ISO
claims, which can and BS OHSAS,
result where relevant
in significant total to their
liability or remedial operations. The
costs, particularly Group's
for products supplied businesses are
to large volume global either already
production programmes compliant with
spanning multiple or working
years, towards timely
for example in the compliance
aerospace and with new and
automotive upcoming
industries, or to standards.
consumer This includes
end-markets for example Group
in the air management businesses
industry. There can that are
also be no assurance currently
that any provisions certified to
for expected BS OHSAS 18001
environmental and are
liabilities and actively
remediation driving towards
costs will adequately full transition
cover these liabilities to ISO
or costs. 45001:2018.
The Group operates A robust
in highly regulated control
sectors, which has framework
been accentuated by is in place,
the GKN acquisition. underpinned
In addition, new by
legislation, comprehensive
regulations or corporate
certification governance and
requirements may compliance
require procedures at
additional expense, both a Group
restrict commercial and business
flexibility and unit level.
business Where possible
strategies or introduce and
additional liabilities practicable,
for the Group or due diligence
Directors. processes
For example, the during the
Group's acquisition
operations are subject stage seek to
to anti-bribery and identify
anti-corruption, legal,
anti-money regulatory
laundering, and
competition, environmental
anti-trust and trade risks.
compliance laws and At the business
regulations. Failure unit level,
to comply with certain controls are in
regulations may result place to
in significant prevent such
financial risks from
penalties, debarment crystallising.
from government Any
contracts environmental
and/or reputational risks
damage, and may impact that
our business strategy. crystallise are
subject
to mitigation
by specialist
consultants
engaged for
this purpose.
External
consultants
assist
the Group in
complying
with new and
emerging
environmental
regulations.
Insurance cover
mitigates
certain levels
of risk
and the Group's
insurers
are instructed
to carry
out external
audits of
specified areas
of legal
and compliance
risk including
health and
safety.
------------------------ ---------------- --------------- --------- ----------------- -----------
Information Information security Management Executive Information Improve
security and and cyber threats are continues to management security
cyber threats an increasing work with its and cyber
priority across all business threats
industries and remain leaders and are an
a key UK Government external increasing
agenda item. security priority across
Like many businesses, consultants to all industries.
Melrose recognises better Cyber security
that the Group may understand breaches of the
have a potential the Group's Group's IT
exposure increased systems
in this area. Potential exposure could result in
exposure to such risks to cyber the
remains high due to security risk misappropriation
the scale, complexity and to ensure of confidential
and public-facing appropriate information
nature mitigation belonging
of the Melrose Group. measures are to it or its
In addition, Melrose in place for customers,
recognises that the the Group. suppliers or
inherent security In 2019, employees.
threat Melrose In response to
is considered highest completed the increased
in GKN Aerospace where the deployment sophistication
data is held in of its of information
relation information security and
to civil aerospace security cyber
technology and strategy and threats, the
controlled risk-based Group
defense contracts. governance has worked, and
framework to continues to
all businesses work,
within the with external
Group. The security
framework companies to
follows monitor,
the UK improve and
Government's refine
recommended its Group-wide
steps on cyber strategy to aid
security. the prevention,
This strategy identification
has enabled and mitigation
risk profiling of any threats.
and mitigation
plans to be
developed for
each business
to mitigate
and reduce
their exposure
to cyber risk.
As part of
Melrose's
overall
information
security
strategy,
IT Security
awareness
training
was deployed to
all Melrose
businesses.
The progress of
each business
is measured
against the
information
security
strategy
and is
monitored on a
quarterly
basis.
------------------------ ---------------- --------------- --------- ----------------- -----------
Financial risks
Foreign Due to the global The Group Executive Group results Buy
exchange nature policy is to management are Improve
of operations and protect against reported in Sell
volatility the majority Sterling
in the foreign exchange of foreign but a large
market, exchange rate exchange risk proportion
fluctuations have, which affects of the revenues
and could continue cash, by are denominated
to have, a material hedging such in currencies
impact on the reported risks with other
results of the Group. financial than Sterling,
The Group is exposed instruments. primarily US
to three types of Protection Dollar
currency against and Euro.
risk: transaction risk, specific Following
translation risk, and transaction the GKN
the risk that when risks is taken acquisition,
a business that is by the Board on the Group has
predominantly based a case-by-case exposure
in a foreign currency basis. on both a
is sold, it is sold transactional
in that foreign and
currency. translational
The Group's reported basis to more
results will fluctuate currencies.
as average exchange Sensitivity to
rates change. The the key currency
Group's pairs is shown
reported net assets in the Finance
will fluctuate as the Director's
year-end exchange rate review
changes. on pages 38 to
44 of the 2019
Annual Report.
------------------------ ---------------- --------------- --------- ----------------- -----------
Pensions Any shortfall in the The Group's key Executive Although the Buy
Group's defined benefit funded management risks Improve
pension schemes may UK defined are well Sell
require additional benefit pension understood
funding. As at 31 plans are and funding
December closed to new plans
2019, the Group's entrants and for the GKN
pension future service Schemes
schemes had an accrual. have already
aggregate Long-term been
deficit, on an funding agreed with
accounting arrangements Scheme
basis, of GBP1,121 are agreed trustees, the
million (2018: GBP1,413 with the size
million). Changes in trustees and of the gross
discount rates, reviewed liabilities
inflation, following as a proportion
asset values or completion of of the Group's
mortality actuarial net assets
assumptions could lead valuations. remains
to a materially higher Active significant.
deficit. For example, engagement with During
the cost of a buyout trustees on the period,
on a discontinued basis pension plan gross
uses more conservative asset liabilities were
assumptions and is allocations and reduced as a
likely to be strategies. result
significantly On 1 July 2019 of people
higher than the the large leaving
accounting UK GKN defined group schemes on
deficit. benefit the sale of
Alternatively, if the pension scheme their
plans are managed on was split employer
an ongoing basis, there into four new company,
is a risk that the schemes, voluntarily or
plans' assets, such two of which through an
as investments in have been insurance
equity allocated to buy-out, which
and debt securities, GKN Aerospace together with
will not be sufficient and two to GKN contributions
to cover the value Automotive, of GBP185
of the retirement in order to million
benefits more (including the
to be provided under appropriately balance of the
the plans. The balance initial GBP150
implications liabilities million funding
of a higher pension across commitment to
deficit include a supporting the
direct businesses. GKN schemes) and
impact on valuation, the better
implied credit rating hedging
and potential of interest and
additional inflation risks
funding requirements decreased both
at subsequent triennial the overall
reviews. In the event liability
of a major disposal and volatility
that generates risk to the
significant Group.
cash proceeds which
are returned to the
shareholders, the Group
may be required to
make additional cash
payments to the plans
or provide additional
security.
------------------------ ---------------- --------------- --------- ----------------- -----------
Liquidity The ability to raise To ensure it Executive The Group is Buy
debt or to refinance has management satisfied Improve
existing borrowings comprehensive that it has
in the bank or capital and timely adequate
markets is dependent visibility of resources
on market conditions the liquidity available
and the proper position, to meet its
functioning the Group liabilities.
of financial markets. conducts
As set out in more monthly
detail in the Finance reviews of its
Director's review on cash forecast,
pages 38 to 44 of the which are in
2019 Annual Report, turn revised
the Group has term quarterly.
loans of US$960 million The Group
and GBP100 million operates cash
and revolving credit management
facilities comprising mechanisms,
US$2.0 billion, EUR0.5 including cash
billion and GBP1.1 pooling
billion. across the
In addition, the GKN Group and
net debt at acquisition maintenance
included capital market of revolving
borrowings across three credit
unsecured bonds that facilities
totalled GBP1.1 to mitigate the
billion. risk of
Two of these bonds any liquidity
- totalling GBP750 issues.
million - remain The Group
outstanding gained
as at 31 December 2019 agreement
and further detail from its
is provided in the lenders to a
Finance Director's three-year
review on pages 38 extension, at
to 44 of the 2019 the Group's
Annual option to be
Report. built into
Furthermore, in line its
with the Group's multi-currency
strategy, term
investment is made loan
in the businesses denominated
(capital GBP100
expenditure in excess million and
of depreciation) and US$960 million,
there is a requirement exercisable at
to assess liquidity any time
and headroom when new prior to 1
businesses are April 2021
acquired. that would
In addition, the Group extend the
may be unable to maturity
refinance date of the
its debt when it falls loan to April
due. 2024.
The Group
operates a
conservative
level of
headroom across
its financing
covenants
which is
designed to
avoid
the need for
any unplanned
refinancing.
------------------------ ---------------- --------------- --------- ----------------- -----------
Related Party Transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
In the ordinary course of business sales and purchases of goods
take place between subsidiaries and equity accounted investment
companies priced on an arm's length basis. Sales by subsidiaries to
equity accounted investments in the year ended 31 December 2018
totalled GBP28 million (2017: GBPnil). Purchases by subsidiaries
from equity accounted investments in the year ended 31 December
2018 totalled GBP14 million (2017: GBPnil). At 31 December 2018,
amounts receivable from equity accounted investments totalled GBP6
million (31 December 2017: GBPnil) and amounts payable to equity
accounted investments totalled GBP2 million (31 December 2017:
GBPnil).
Sales to and purchases from Group companies are priced on an
arm's length basis and generally are settled on 30-day terms.
Year ended Year ended
31 December 31 December
2019 2018
GBPm GBPm
Short-term employee
benefits 4 3
------------- -------------
Share-based payments 9 9
------------- -------------
13 12
------------- -------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACSEAPLDESSEEEA
(END) Dow Jones Newswires
April 03, 2020 06:04 ET (10:04 GMT)
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