Rosebank Industries Plc · LSE:ROSE
Rosebank Industries — Investor Presentation (July 2024)
18 slides from Rosebank Industries's investor presentation, July 2024
Slide 1: Rosebank Industries: Recreating the 'Buy, Improve, Sell' model
Strictly Private & Confidential Rosebank Industries Recreating the ‘Buy, Improve, Sell’ model July 2024
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by or on behalf of Rosebank Industries plc (“Rosebank” or the “Company”). The information set out in this presentation is not intended to form the basis of any contract. By attending (whether in person, by telephone or webcast) this presentation or by r
Slide 3: Our plan
Our plan • 2 of the 3 original Melrose co-founders, and four other members of its senior management team, intend to recreate the same successful ‘Buy, Improve, Sell’ business model in a recently listed vehicle, called Rosebank Industries plc • This team made all Melrose’s acquisitions and led all it
Slide 4: Rosebank team and governance
Rosebank team and governance Rosebank team and governance The Rosebank team’s transactional differentiators • Rosebank is led by key members of the previous leadership team • Rosebank team has unique experience and an extensive deal from Melrose: sourcing network Simon Peckham Christopher Miller ‒ E
Slide 5: Acquisition criteria
Acquisition criteria Sector • Industrial / manufacturing companies Geography • Developed markets, headquartered in UK, Europe or North America Size • Indicative ideal Enterprise Value of up to c.$3bn • Strong underlying fundamentals • Robust competitive positioning Attributes • Scope for operational
Slide 6: Track record at Melrose
Track record at Melrose We bought high quality manufacturing 1 businesses with performance improvement potential Long-standing senior management team Simon Christopher Jim Matt Geoff Joff 2 with decades of investment and operating Peckham Miller Slattery Richards Morgan Crawford experience 2003 2003
Slide 7: Track record at Melrose - key figures
Track record at Melrose - key figures How value was created(2) Sales Growth 2.5x 1% Average return on equity across businesses Resultant sold to date Multiple Expansion 26% (1) £8.3bn Returned to shareholders (1) 3,396% Total shareholder return since Melrose’s first acquisition (May 2005) versus 209
Slide 8: How we create value
How we create value Sell Improve Buy Choose the right time to sell, often after 3-5 years Eliminate unnecessary but flexible corporate overhead Quality industrial or manufacturing businesses with improvement potential Find the right home for Change management the business as a whole Employ prudent l
Slide 9: How Melrose created value
How Melrose created value >30% uplift >70% uplift >40% uplift >50% uplift >70% uplift +6ppts +7ppts +9ppts +5ppts +5ppts 24% 22% 18% 16% 16% 15% 13% 11% 10% 9% 3.0x 2.3x 3.0x 2.6x 2.1x Return on equity Return on equity Return on equity Return on equity Return on equity Operating Margin at Entry Marg
Slide 10: Effect of the value creation
Effect of the value creation (GBP) (GBP) (GBP) (GBP) 3.4bn 1.3bn 2.7bn 0.1bn 0.8bn 0.7bn 1.0bn 0.4bn 0.1bn 2.2bn 1.8bn 0.5bn 0.4bn 2.6bn 1.6bn 1.2bn 2.6bn 0.2bn 0.6bn 0.9bn 0.5bn 0.2bn 0.6bn 0.6bn Entry EV Net Returns⁽¹⁾ Entry EV Net Returns⁽¹⁾ Entry EV Net Returns⁽¹⁾ Entry EV Net Returns⁽¹⁾ 30% 29%
Slide 11: Successfully acquired GKN and led its turnaround
Successfully acquired GKN and led its turnaround Key actions GKN Aerospace margin progression with COVID disruption ✓ Removed underperforming PLC management, empowered Melrose acquisition of GKN COVID 17% - 18% 17.5% and upgraded leadership of divisions >15% 15.0% 12.5% 9.9% 10.6% ✓ Fundamental comm
Slide 12: Remuneration structure
Remuneration structure • Reduced salaries until first acquisition completed • Thereafter a standard salary / annual bonus structure will be adopted – As at Melrose, these will be set at a level below the normal market practice, with the focus of reward package to be on a shareholder-aligned long-ter
Slide 13: Significant shareholders
Significant shareholders • The following investors have acquired interests of 3% or more of Rosebank’s ordinary shares ‒ BlackRock Inc 17.0% ‒ GIC Private Limited 17.0% ‒ Permian Investment Partners, LP 10.0% ‒ Artemis Investment Management LLP 8.4% ‒ Norges Bank 8.0% ‒ Aviva Investors 7.7% ‒ Select
Slide 14: Appendix 1: Case Studies
Appendix 1: Case Studies
Slide 15: Case Study: McKechnie & Dynacast
Case Study: McKechnie & Dynacast Value creation levers • McKechnie was a global supplier of Net returns(1): £0.7bn specialist engineered components, primarily to the global aerospace industry. During Return on equity: 3.0x Melrose’s ownership we improved operating margins from 18% to 24% by optimisi
Slide 16: Case Study: FKI
Case Study: FKI Net returns(1): £1.3bn Value creation levers • FKI comprised a number of diverse businesses, and our improvement initiatives were centred around refocusing the newly Return on equity: 2.6x Multiple decentralised FKI conglomerate to allow arbitrage 20% each of its businesses to stand
Slide 17: Case Study: Elster
Case Study: Elster Net returns(1): £2.7bn Value creation levers • Elster was a US publicly-listed German manufacturer of meters operating through Return on equity: 2.3x three separate divisions with different Multiple markets and drivers (Gas, Electricity, Water) Equity IRR: 33% arbitrage 33% • We o
Slide 18: Case Study: Nortek
Case Study: Nortek Net returns(1): £3.4bn Value creation levers • Upon Melrose’s acquisition, Nortek was a global diversified group, manufacturing innovative air management, security, home automation and Return on equity: 2.1x Multiple arbitrage ergonomic and productivity solutions 17% • Refocusing
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