In line with their progressive dividend policy, the Melrose Industries Board proposes to pay a final dividend of 3.4 pence per share (2018: 3.05 pence), making a total dividend for the year of 5.1 pence per share (2018: 4.6 pence), an increase of 11% from last year. The final dividend will be paid on 20 May 2020 to those shareholders on the register at 3 April 2020, subject to approval at the Annual General Meeting ("AGM") on 7 May 2020.
Other financial highlights include:
The results for 2019 were comfortably ahead of the Board's expectations for both profit and cash generation
Adjusted1 diluted earnings per share ("EPS") were 14.3 pence, up 13% on last year (statutory EPS: 0.9 pence) and adjusted free cash flow3 was £591 million, up 72%4 on an annualised like-for-like basis
Group net debt and leverage have both been improved and were reduced to £3.28 billion and 2.25x respectively
Net trade working capital in the Group was reduced by £95 million (5%) in the year, with adjusted profit conversion to cash of 104%. More progress in net trade working capital to come, in line with achieving the previously announced £400 million target within the Melrose ownership period
Loss-making contracts have been improved materially with the losses from 2018 reducing by 11% in 2019. In addition, c.25% of the remaining provision has been released (as previously stated this release is not included in adjusted operating profit) due to improvements implemented by management this year. These improvements impact future trading in GKN positively
The GKN UK defined benefit pension schemes are significantly better funded, aided by over £240 million5 of cash contributions from the Group so far during Melrose ownership, fully in line with the plan agreed with the Trustees. Along with better investment returns, the remaining contributions required to make these schemes well funded has reduced from up to £1 billion at acquisition to c.£500 million
During 2019, a record total level of investment has been made in new product development; technology; environmental, social & governance (ESG); and capital and restructuring projects - all designed to improve the quality of the businesses and their future performance
The effects of the COVID-19 outbreak are not fully known at present. However, whilst there will clearly be some impact, the opportunities to improve GKN in 2020 and beyond position Melrose well to deliver positive returns for shareholders in the future
