Half-year Report

About this update from Melrose Industries Plc

[{"type":"text","content":"\n \n 1 August 2024 \n   \n MELROSE INDUSTRIES PLC \n   \n                                                          UNAUDITED RESULTS \n FOR THE SIX MONTHS ENDED 30 JUNE 2024 \n   \n Continued good progress, ahead of our expectations and positive full year outlook \n   \n Melrose Industries PLC (\"Melrose\", the \"Company\" or the \"Group\"), the aerospace focused Group, today announces its interim results for the six months ended 30 June 2024 (the \"Period\"). \n Key messages         \n ·     Results ahead of our expectations with adjusted 1 operating profit up 62% 2 versus prior year \n ·     Adjusted 1 operating margin at Aerospace level at 14.9%, up 420bps versus prior year with Engines outperformance at 29.4% and good Structures progress at 4.7% \n ·     On track for 2024 guidance and 2025 profit targets, despite ongoing industry-wide supply chain challenges \n ·     2025 revenue guidance adjusted to £3.8 billion to reflect supply chain challenges and disposals; operating margin guidance increased to >18% \n ·     Clear long-term growth strategy driving double-digit EPS growth over the long term with improving cash flows post major restructuring \n ·     Further £250 million 18 month share buyback announced today, while investing more in organic growth and keeping leverage between 1.5-2x \n   \n \n \n \n \n \n \n \n Adjusted 1 results \n \n \n Statutory results \n \n \n \n \n \n \n \n 2024 \n \n \n 2023 \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n Continuing operations \n \n \n £m \n \n \n £m \n \n \n £m \n \n \n £m \n \n \n \n \n Revenue \n \n \n 1,742 \n \n \n 1,633 \n \n \n 1,742 \n \n \n 1,633 \n \n \n \n \n Aerospace operating profit/(loss) \n \n \n 260 \n \n \n 175 \n \n \n 42 \n \n \n (4) \n \n \n \n \n Operating profit/(loss) (post-PLC costs 3 ) \n \n \n 247 \n \n \n 159 \n \n \n (62) \n \n \n (18) \n \n \n \n \n Profit/(loss) before tax \n \n \n 204 \n \n \n 134 \n \n \n (105) \n \n \n (62) \n \n \n \n \n Diluted earnings per share (p) \n \n \n 11.9p \n \n \n 7.5p \n \n \n (6.1)p \n \n \n (3.0)p \n \n \n \n \n Dividend per share (p) \n \n \n 2.0p \n \n \n 1.5p \n \n \n N/A \n \n \n N/A \n \n \n \n \n Net debt 1 \n \n \n 976 \n \n \n 572 \n \n \n N/A \n \n \n N/A \n \n \n \n \n Leverage 1 \n \n \n 1.7x \n \n \n 1.1x \n \n \n N/A \n \n \n N/A \n \n \n \n \n Net debt and leverage comparative information as at 31 December 2023 \n Financial highlights 2 \n ·     Revenue of £1,742 million, 12% growth on the prior year ( 9% in cluding businesses exited) \n ·     Statutory operating loss of £62 million (2023: £18 m illion) \n ·     Adjusted 1 diluted EPS of 11.9p compared to 7.5p in 2023. Statutory diluted EPS of (6.1)p (2023: (3.0)p ) \n ·     Net debt 1 of £976 million, representing leverage 1 of 1.7x, after £246 million of share buybacks in 2024 (£339 million in total since current £500 million buyback programme commenced) \n ·     Continuation of growing dividend, with an interim dividend of 2.0 pence per share declared, an increase of 33% on the prior year \n \n \n   \n Strategic highlights 2 \n ·     Engines adjusted 1 operating margin outperforming recent guidance for 2024, and target for 2025, due to aftermarket growth; on track to >30% margin post 2025 \n ·     Structures delivered 89% growth in adjusted 1 operating profit a s a result of business improvement actions and portfolio changes \n ·     Strong Group operational progress with further improvements in safety, customer quality, and productivity \n ·     Increasing interest in proprietary additive fabrication technology from all major engine customers, with ongoing investment in industrialisation and certification \n ·     New Engines repair centre in California and £50 million additive fabrication capacity in Sweden progressing to plan \n ·     Successful disposal of our non-core Structures businesses at St. Louis, Orangeburg and Fuel Systems; disposal plan substantially complete \n   \n Divisional highlights 2 \n Engines \n ·     Engines revenue growth of 21% to £720 million with adjusted 1 operating profit up 46% to £212 million and adjusted 1 operating margin up to 29.4% \n ·     Engines performance driven by the strength of growth initiatives and the lucrative aftermarket including repairs and defence \n ·     Good progress being made on Pratt & Whitney GTF fleet management programme with growing partner confidence on long-term position and performance of programme \n   \n Structures \n ·     As expected, Structures revenue growth of 6% to £1,022 million (1% including businesses exited) reflecting planned civil destocking offset by defence growth \n ·     Adjusted 1 operating profit of £48 million with margins increasing to 4.7% from 2.5% in 2023 \n ·     Defence improvements are on track with good progress in portfolio repricing and rationalisation \n ·     Good progress with ongoing restructuring programme; further work focused on the Netherlands integration and productivity enhancements \n   \n Guidance maintained for 2024 full year 4 \n ·     Revenue between £3.6 billion and £3.75 billion, growth tempered by ongoing sector-wide supply chain issues. Revenue guidance includes the effect of non-core disposals  \n ·     Adjusted 1 operating profit (pre-PLC costs 3 ) guidance maintained between £550 million and £570 million despite recent OE build rate changes and continued supply chain challenges \n ·     Adjusted 1 EBITDA of between £710 million and £730 million \n ·     Central costs at £30 million \n ·     As previously guided, cash generation limited by ongoing restructuring in 2024 and announced GTF issues; increasing free cash flow is expected in 2025 and beyond, driven by RRSPs and wider Group \n   \n Governance \n ·     New Chair designate, Chris Grigg, appointed to the Board, with effect from 1 October 2024 \n ·     Following a planned transition period, Justin Dowley will step down from the Melrose Board on 31 March 2025; Chris to succeed Justin as the Company's Non-Executive Chairman \n   \n Peter Dilnot, Chief Executive Officer of Melrose Industries PLC, today said: \n   \n \"We have made strong progress in the first half, driven by Engines aftermarket performance and business improvement actions, despite industry-wide supply chain challenges. We remain confident of delivering on our 2024 and 2025 guidance. Our positive outlook and disciplined capital allocation enables us to invest more in attractive organic growth opportunities, as well as continue shareholder returns through our growing dividend and the further share buyback programme announced today. We have positive momentum, a clear strategy and excellent growth opportunities ahead.\" \n   \n Enquiries: \n Investor Relations: \n Chris Dyett:                  +44 (0) 7974 974 690, [email protected] \n   \n Montfort Communications: +44 (0) 20 3514 0897 \n Nick Miles:                   +44 (0) 7739 701 634, [email protected] \n Charlotte McMullen:     +44 (0) 7921 881 800, [email protected] \n   \n Notes \n 1.     Described in the glossary to the Interim Announcement and considered by the Board to be a key measure of performance \n 2.     Like-for-like growth is calculated at constant currency against 2023 results and, for revenue, excludes exited businesses \n 3.     PLC costs are also referred to as corporate costs (see note 3 to the Condensed Consolidated Interim Financial Statements) \n 4.     Assuming US$ = 1.25 average exchange rate \n \n \n   \n CHIEF EXECUTIVE OFFICER'S REVIEW \n   \n TECHNOLOGY-FOCUSED AEROSPACE BUSINESS WITH LONG-TERM STRUCTURAL GROWTH POTENTIAL \n   \n Melrose delivered a strong performance in the first half of 2024. Results were ahead of our expectations, underpinned by continued outperformance from our industry-leading Engines business. Structures also made good progress, with operational and commercial gains recorded across the Group. Technology developments, most notably in Engines' additive fabrication, continued to differentiate the business, enhancing our design-led Tier 1 position with all major aircraft and engine OEMs. This progress has been made despite the headwinds from industry-wide supply chain issues which continue to pace growth and OEM production rates. \n   \n Looking ahead, we are well set to deliver further profitable growth. While supply constraints and sector production challenges may persist, underlying demand and market dynamics remain strong. Flight hours are rising, record customer order backlogs continue to grow, and the engines aftermarket will drive increasing Melrose cash flows for many years to come. We have positive momentum, a clear strategy and excellent growth opportunities ahead. \n   \n FIRST HALF 2024 RESULTS \n   \n Overall Group revenues rose 12% in the first half to £1,742 million. This comprised strong Engines growth of 21%, driven by parts repair, defence aftermarket and performance of our RRSP portfolio, and Structures growth of 6%, suppressed due to supply constraints and the previously announced customer destocking. There was a 52% increase in adjusted operating profit to £260 million, with margins up 420bps to 14.9% (pre-PLC costs) driven by sales growth, business improvements and aftermarket mix. Our net debt position was better than expected at £976 million representing a leverage ratio of 1.7x, after funding growth, ongoing restructuring and share buybacks. \n   \n Our Engines business had an excellent first half. This included signing a decade-long contract with Safran to supply LEAP-1A shafts from Norway, as well as an agreement with the Swedish Defence Materiel Administration (FMV) to explore future fighter propulsion systems in Sweden . I n the civil repair business, we expanded our Pratt & Whitney GTF capabilities in Malaysia, increasing throughput and capacity. This progress reinforces our confidence that our original 2025 Engines margin target (28%) will be achieved in 2024, one year ahead of the original plan. \n   \n In Structures, new commercial agreements were secured with Lockheed Martin to double our F-35 canopy production capacity in California, largely funded by the customer, as well as a multi-year contract renewal with Airbus to deliver the full A220 wiring package. Elsewhere, long-running commercial n egotiations with Boeing were successfully concluded with the sale of both our Orangeburg and St. Louis businesses. These divestments, combined with the sale of our non-core Fuel Systems business, have further focused our Structures business on differentiated proprietary technologies. We also saw progress in the repricing of defence contracts and our plans remain on track. \n   \n Across Melrose, we made significant operational gains, reinforcing safety and quality as top priorities. We are pleased to announce that in the Period we had zero lost time accidents for the first time over a six-month period. The number of quality issues reaching our customers was down by 33% versus H1 2023. Our performance on customer deliveries continued to improve, with a reduction in arrears of c.£20 million versus H1 2023, albeit ongoing industry supply chain issues hamper progress and are leading to productivity headwinds and some excess inventory. \n   \n Melrose is firmly on track to meet its full year commitments, with adjusted operating profit forecast to increase to £560 million (pre-PLC costs) in 2024, at the midpoint of the range. Beyond that, there is a clear trajectory to £700 million adjusted operating profit (pre-PLC costs) in 2025, with an operating margin now expected to be over 18% driven by positive aftermarket mix in Engines and recent low margin disposals in Structures. Melrose cash flows will also increase post restructuring. \n   \n MARKET UPDATE AND PORTFOLIO POSITION \n   \n We hold embedded positions on all leading commercial narrowbody and widebody aircraft, with a significantly stronger weighting towards Airbus than Boeing. In Engines, we lead the industry in the fabrication of advanced engine structures, cases and frames. We are also RRSP partners on 19 different engine families, including the CFM56 and V2500 which power all mature single-aisle aircraft. In all, our RRSPs cover more than 70% of major civil aircraft flight hours globally. In Structures, we have design-to-build expertise in metallic and composite components, as well as wiring, transparencies and anti-ice systems for both civil and defence platforms. \n   \n Underlying global market dynamics continued to improve in H1 2024. Air traffic, capacity and ticket sales all rose, while passenger load factors hovered near 80%, all indicating another strong year. Total flight hours were c.5% above 2019 levels and 9% above 2019 on a narrowbody basis. As a result, flight hours for our RRSP portfolio increased by 8% in the first half versus the same period last year. \n   \n Well-publicised industry-wide operational challenges persisted throughout the industry during the Period. Production capacity and raw material shortages continued to restrict new aircraft deliveries and limit production rate increases, as confirmed by Airbus in June. Quality issues at Boeing exacerbated this delivery bottleneck. The result is record order backlogs, now well into the 2030s in our key markets. This dynamic is fuelling aftermarket and driving our strong Engines performance, as existing aircraft fly for longer, and additional older engine shop visits are required. In the longer-term, the substantial backlogs will support our expected future business growth. \n   \n We have continued to work closely with Pratt & Whitney and other partners to manage the previously announced powder metal issues on some variants of the GTF with significant progress having been made in line with Pratt & Whitney's global fleet management plan. The GTF remains a fundamentally excellent engine. The ongoing block D upgrades together with the Advantage upgrade, planned in 2025, will further improve fuel consumption and durability. We see no change to our short-term guidance at this time and anticipate the GTF contributing to Melrose's profit and cash flow for many years to come. \n   \n For defence, global tensions and conflict have driven a significant increase in military spending. In the US, long-term government spending is supported by the recently released US National Defence Industry Strategy targeting 'generational' production-capacity expansion of the Defence Industrial Base. Further support is provided by the European Defence Industrial Strategy, which focuses on a stronger and more capable European Union. Across Europe, many countries have pledged to increase defence spending to 2.5% of GDP, underpinning future growth. We have a strong foundation to meet regional defence needs with our established footprint in the US, UK, Sweden and the Netherlands. \n   \n GROWTH STRATEGY \n   \n Melrose has an outstanding track record of delivering value for its stakeholders. As a pureplay, technology-focused aerospace business, partnering with all major aircraft and engine OEMs, value creation remains at the heart of our strategy. Today, our differentiated technologies position the Group as a 'Super-Tier 1' for our customers, as our design-led solutions are deeply embedded with OEMs - often for life of programme. We think like a peer, act as a partner and deliver as a trusted supplier. \n   \n In order to deliver future value, we are focused on three strategic priorities: to profitably capture OEM and aftermarket growth; to expand in new targeted opportunities; and to favourably position for next-generation aircraft . \n   \n Within the first priority, we are already seeing profitable growth driven by the strong engines aftermarket. We will continue to unlock returns from our unique portfolio of engine RRSPs, defence aftermarket and our rapidly expanding engine repair business as flight hours rise and current aircraft fly longer. On the Structures side, both the civil aircraft ramp-up and our defence portfolio shift will drive quality of earnings for the long-term. \n                                                                                               \n Our second priority, to expand in new targeted opportunities, focuses on both differentiated technology and growing markets. Here, our additive fabrication technology leadership in Engines, built over two decades, provides a key differentiator for Melrose. Long-term production contracts have already been secured with GE and Pratt & Whitney and industrialising this breakthrough technology is a core element of our capital allocation strategy where we will invest more in expanding capacity. In the Structures business, we are pursuing opportunities to grow in China, as well as selectively expand in the emerging urban air mobility and uncrewed defence air vehicle markets. \n   \n Our final priority will see us position the Group for next-generation aircraft. This includes partnering on the next-generation of commercial engines, where we are already embedded as the only Super-Tier 1 on both the CFMI RISE and the next-generation GTF development programmes. In the Structures business, we will also target positions on future single-aisle airframes and 6 th generation fighter aircraft, as well as continuing to develop the potential of hydrogen flight. \n   \n This strategy, underpinned by our proprietary technology and disciplined approach to capital allocation, will drive Melrose's sustainable growth and attractive shareholder returns for many years to come. We are confident that double-digit annual EPS growth can be delivered consistently over the long term. \n   \n SUSTAINABILITY \n   \n Melrose focuses its sustainability activities in two areas: developing the technology to enable more sustainable flight while minimising the environmental impact of our own operations. We have made good progress on both paths in 2024. \n   \n As a Super-Tier 1 partner, we recognise that the greatest impact we can make is by developing breakthrough technologies for more sustainable flight. We continue to make encouraging progress across both divisions in 2024. Our optimised engine intermediate compressor case (''ICC'') was successfully ground-tested as part of Rolls-Royce's full power UltraFan™ trial, which ran on 100% sustainable aviation fuel. This ICC featured additive fabrication technology, further demonstrating our unique capability. We also reached milestones in the advanced air mobility sector, delivering the first complete composite wings and booms for Supernal's SA-2 eVTOL, while strengthening our partnership with Joby on thermoplastic structures. Our ground-breaking work on hydrogen aircraft propulsion continued, with the world's first cryogenically cooled hydrogen electric motor demonstrator delivered for testing. \n   \n To help us reduce our environmental impact, in March we outlined a new set of 2025 sustainability targets. These include targeted reductions in energy, Scope 1 & 2 emissions intensity (as validated by the SBTi) and water withdrawal intensity. As at the end of H1 2024, we are well on track, with energy intensity usage reduced by 25% and water withdrawal intensity down 28% compared to the final period of 2023. We will provide a detailed update on our performance against these targets in our 2024 Sustainability Report. As part of our approach, we continue to develop more sustainable manufacturing methods in line with our commitment to contribute to decarbonisation of aerospace. These include additive technologies, out-of-autoclave manufacturing processes, such as resin-transfer moulding, and lightweight recyclable thermoplastic applications.  \n   \n Our Melrose updated Sustainability Report and Transition Plan was published in March 2024 and our ESG rating was upgraded from A to AA and recategorised from Industrial Conglomerate to Aerospace & Defence by MSCI. \n   \n DISCIPLINED CAPITAL ALLOCATION \n   \n At our full year results in March, we indicated that the Board would review its capital allocation approach to align with Melrose's long-term growth strategy. This work has been completed and we are outlining the resulting approach today. Future capital allocation will be focused on accelerating accretive organic business growth, while retaining Group financial resources and strength to reward shareholders through capital returns. With a strong organic growth investment case we do not see major acquisitions as part of our equity story in the short-term.   \n Investment will be targeted to increase operational capacity and automation, especially in our high-margin Engines business. This will enable us to deliver the ramp-up and capture the strong growth in our current markets. Our policy will also direct funding into new business opportunities where our proprietary technologies can deliver an IRR above 20%. We anticipate investing around £300 million incrementally over the next five years, with the majority in our industry-leading additive fabrication capabilities. \n Our capital allocation will be conducted with Melrose's usual financial discipline, and we will maintain a strong balance sheet throughout. A net debt/adjusted EBITDA ratio of between 1.5 to 2 times will provide flexibility for future opportunities, with investment grade metrics being targeted over time. \n   \n This approach to leverage, coupled with strong earnings and increasing cash generation, also allows for attractive shareholder returns through a growing annual dividend and ongoing share buybacks. \n   \n DIVIDEND AND BUYBACK \n   \n The Board has declared an interim dividend for 2024 of 2.0 pence per share, which will be paid on 16 September 2024 to shareholders on the register at the close of business on 9 August 2024. Our policy seeks to grow dividends over the longer term without being directly linked to earnings growth as we see organic growth as offering superior shareholder returns. \n   \n The Group commenced a £500 million share buyback programme in October 2023 with £339 million completed as at the half year. Further to this, there was a £157 million cash cancellation of shares to settle the tax element of the Melrose Employee Share Plan (''MESP''). The current buyback programme is anticipated to complete by the end of September 2024 and will be augmented by a new £250 million 18-month share buyback, as announced today. The ongoing buyback highlights the Board's confidence in the future growth prospects of the Group. The 18-month period aims to realign the period with our full year reporting cycle. \n   \n GOVERNANCE \n   \n With effect from 1 October 2024, Chris Grigg will join the Board as a Non-Executive Director and Chair Designate. Chris is currently Chair of the UK Infrastructure Bank, having served in this role since April 2021. He has also been Chair of Evelyn Partners since February 2022, before which he served as a Non-Executive Director. Chris was a Non-Executive Director of BAE Systems plc for more than 10 years, leaving the role in December 2023, latterly serving as its Senior Independent Director. During his executive career, Chris was Chief Executive of The British Land Company plc from January 2009 and left the Board in December 2020. Following a planned transition period, Justin Dowley will step down from the Board on 31 March 2025 and Chris will succeed him as the Company's Non-Executive Chairman. \n   \n GROUP OUTLOOK \n   \n The Group is well positioned to deliver further progress over the remainder of 2024 and beyond. Notwithstanding the headwinds from industry-wide supply chain issues and short-term destocking due to the phasing of commercial aircraft build rates, revenue and operating profit guidance is maintained. \n   \n The progress we expect to make over the remainder of 2024 will further narrow the gap to our 2025 targets, which represents a 67% increase in Aerospace adjusted operating profit versus 2023. We are confident of delivering this performance and positioning Melrose for ongoing growth in the years ahead. \n   \n GUIDANCE FOR 2024 AND 2025 \n \n \n \n \n Income Statement \n \n \n 2024 (Guidance) \n \n \n 2025 (Targets) \n \n \n \n \n Revenue: \n \n \n   \n \n \n   \n \n \n \n \n Engines \n \n \n £1.45bn - £1.50bn \n \n \n £1.7bn \n \n \n \n \n Structures \n \n \n £2.15bn - £2.25bn \n \n \n £2.1bn \n \n \n \n \n Aerospace \n \n \n £3.60bn - £3.75bn \n \n \n £3.8bn \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Adjusted operating profit (pre-PLC costs): \n \n \n   \n \n \n   \n \n \n \n \n Engines \n \n \n £410m - £420m \n \n \n £500m \n \n \n \n \n Structures \n \n \n £140m - £150m \n \n \n £200m \n \n \n \n \n Aerospace \n \n \n £550m - £570m \n \n \n £700m \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Adjusted operating profit margin (pre-PLC costs) \n \n \n >15% \n \n \n >18% \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n Adjusted EBITDA (pre-PLC costs): \n \n \n \n \n \n   \n \n \n \n \n Engines \n \n \n £480m - £490m \n \n \n £580m \n \n \n \n \n Structures \n \n \n £230m - £240m \n \n \n £290m \n \n \n \n \n Aerospace \n \n \n £710m - £730m \n \n \n £870m \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n PLC costs \n \n \n c.£30m \n \n \n c.£30m \n \n \n \n \n   \n The revised 2025 revenue targets reflect expected lower OE sales, due to ongoing industry-wide supply chain issues, as well as disposals of non-core businesses in Structures. This is compensated for by higher expected adjusted operating margins, above our previous range, driven by a stronger aftermarket mix in Engines and a reduction in low margin revenue in Structures, leaving our operating profit targets unchanged. \n   \n \n \n   \n DIVISIONAL REVIEW \n   \n ENGINES \n Industry-leading Engines division positioned for long-term structural growth \n \n \n \n \n   \n Engines adjusted results \n \n \n H1 2024 \n £m \n \n \n H1 2023 \n £m \n \n \n \n \n Revenue \n \n \n 720 \n \n \n 608 \n \n \n \n \n Operating profit \n \n \n 212 \n \n \n 149 \n \n \n \n \n Operating profit margin \n \n \n 29.4% \n \n \n 24.5% \n \n \n \n \n EBITDA \n \n \n 237 \n \n \n 173 \n \n \n \n \n EBITDA margin \n \n \n 32.9% \n \n \n 28.5% \n \n \n \n \n   \n The Engines division has maintained its strong performance, with excellent progress in the Period. Growth was powered by strong end market dynamics, with increasing engine shop visits and spare parts demand fuelling the aftermarket. In the Period, aftermarket growth was 31% versus the prior period, with our engines repair business and defence aftermarket demand contributing more strongly than civil OE and RRSPs. As flight hours grow and older aircraft continue to fly longer, this trend is set to remain, with wider shop visit scope and favourable pricing supporting future growth. Revenue in H1 2024 grew 21% to £720 million whilst adjusted operating profit increased 46% to £212 million . Adjusted operating profit margin in the Period was at 29.4%, up from 24.5% in the prior period. Our continued progress in business improvement across the division gives us further confidence in the positive long-term trajectory. \n   \n During the Period, commercial highlights include finalising a long-term contract with Safran to supply shafts for the industry-leading LEAP engine. This new product insertion is now underway in Norway, with full production for the LEAP-1A variant set to begin in Q4 2024. On the military side, we signed a multi-year contract with Sweden's FMV to explore the propulsion requirements for future fighter systems, while continuing to develop the product support capability for both Gripen C/D (RM12 engine) and Gripen E (RM16 engine). \n   \n Our high-quality repair solutions business delivered a particularly strong half. The business gained more than 30 new customers and secured further contracts from existing OEMs, such as GE Aerospace. We added LEAP-1A and LEAP-1B fan blade repairs to our portfolio and broadened our GTF capabilities with Pratt & Whitney in Malaysia, increasing throughput and capacity. Our parts repair turnaround time is now less than half the estimated market average, increasing customer demand and market share. Our new flagship engine component repair centre in California is set to open by the year end and will drive further growth. We will continue to allocate capital into this highly attractive business. \n   \n Melrose also bolstered its proprietary technology leadership positions in 2024. We are placing most focus and investment in additive fabrication, where we are a global leader in the manufacture of complex structures through additive manufacturing and sophisticated welding methods. In January, we announced a joint investment of £50 million, including £12 million of Swedish Energy Agency funding, to develop this capability in Trollhättan, Sweden. This will move additive fabrication into serial production and is a landmark for the business. Production of the ground-breaking fan case mount ring for Pratt & Whitney's GTF using additive fabrication is established and in the ramp-up phase. The installation of further additive cells is proceeding according to plan to increase capacity and accelerate full rate production. Our unique capabilities in additive fabrication are now widely recognised, with long-term contracts in place with both Pratt & Whitney and GE Aerospace to expand industrialisation and production capacity. Interest has widened significantly in 2024 as OEMs consider new solutions to overcome supply constraints and to drive more sustainable manufacturing processes. We see this as a significant area for future growth. \n   \n Engines continues to navigate a challenging operating environment. The business met its commitments and remained ahead of OEM production rates, though constraints on forging and casting supply will remain a key area of management focus in the second half. Internally, our Lean implementation continued to drive a strong quality, delivery and safety culture. The successful digitalisation of Engines sites through our CO-PILOT programme also continued, with substantial productivity gains already starting to read through in the half year. \n   \n Looking further ahead, Engines is the only strategic partner on both future engine development programmes: the CFMI RISE and Pratt & Whitney's next-generation GTF. Within RISE, our work is focused on additive fabrication capability, while our core input in the future GTF is around our leadership in complex load-bearing structures. Our unique position on both programmes has been earned over many years through our strong customer partnerships and deep technology expertise. This positions Melrose to secure a profitable and meaningful partnership on all of tomorrow's aircraft engines. \n   \n OUTLOOK \n   \n Engines is a high-performing business, with exceptional potential. Our proprietary technology, enviable customer partnerships, diverse RRSP portfolio, and unique position within future engine programmes provides the springboard for long-term structural growth. In the second half of 2024 we expect strong aftermarket-led revenue growth to continue, allowing us to deliver our 28% operating margin target. Beyond 2025, we remain confident that Engines will deliver operating margins in excess of 30%.   \n   \n STRUCTURES \n Strong customer positions and operational progress improving quality of earnings \n \n \n \n \n Structures adjusted results \n \n \n H1 2024 \n £m \n \n \n H1 2023 \n £m \n \n \n \n \n Revenue \n \n \n 1,022 \n \n \n 1,025 \n \n \n \n \n Operating profit \n \n \n 48 \n \n \n 26 \n \n \n \n \n Operating profit margin \n \n \n 4.7% \n \n \n 2.5% \n \n \n \n \n EBITDA \n \n \n 94 \n \n \n 72 \n \n \n \n \n EBITDA margin \n \n \n 9.2% \n \n \n 7.0% \n \n \n \n \n   \n Our Structures division is a design-to-build partner on the world's most successful and highest volume platforms. It is also well-positioned as partner of choice for next-generation and emerging aircraft. With strong underlying dynamics in both the civil and defence markets, management focus is on delivering ongoing production ramp-ups and driving actions to improve quality of earnings. \n Structures revenue performed in line with our expectations in the Period, with revenue up 6% to £1,022 million, despite customer destocking as previously outlined. The division continues to make encouraging progress underpinned by restructuring and portfolio transition, including completing the disposal of three non-core businesses during the Period. This helped to increase adjusted operating profit by 89% to £48 m illion and operating profit margin, up 220bps to 4.7%, ahead of our expectations. Further benefits are expected to read through from business improvement actions in the second half and into 2025 . T he division remains firmly on track to achieve its 9% adjusted operating margin target by 2025. \n Over the first half of 2024, Structures made good commercial progress with several new contract wins. In Civil, we signed a multi-year contract renewal for the full wiring package for the Airbus A220, reinforcing our electrical wiring interconnection system (''EWIS'') market leadership. We also expanded our technology partnership with electric aircraft manufacturer Joby, focused on lightweight thermoplastic structures. In Defence, we secured up to £120 million of customer investment to double our F-35 canopy production capacity in California, extending production into the late 2030s.  \n   \n Defence continued to sustainably reprice its portfolio of contracts, and the business is on track with its plans . We also successfully concluded n egotiations with Boeing over the sale of our Orangeburg and St. Louis businesses. Both sales have completed, with the resolution of all associated contractual matters. The additional divestment of our much-improved non-core Fuel Systems business further focuses Structures on differentiated proprietary technologies. \n   \n Operationally, steps were also taken to enhance Structures' manufacturing footprint. This included a series of internal work package movements to refocus our wiring business into cost-efficient, regional hubs. Work transfers were successfully completed from China to Pune, in India, and from the Netherlands to Izmir, Turkey. Our recently expanded Chihuahua facility in Mexico, is being established as our Americas wiring hub, with first article inspection for its inaugural customer on track to complete in the second half. These regional centres of excellence will underpin the future profitable growth of our industry-leading wiring business. \n   \n Our Lean deployment continued to drive operational improvements more broadly across the division. Quality escapes reaching customers reduced by 40% compared to the first half of 2023, with the cost of poor quality down by 14% (excluding exited sites). Most impressively, zero lost time accidents have now been recorded in the Structures business during the past 14 months. This reflects excellent progress in our top priority areas of safety and quality.    \n   \n Like our Engines business, Structures also made good progress enhancing proprietary technology during the first half. The US global technology centre secured several development contracts with defence primes to explore laser wire deposition additive manufacturing for large-scale titanium aerostructures. This is targeting load-bearing metallic aerostructures entering service in two to three years. In the advanced air mobility (''AAM'') sector, the Civil business delivered the first composite wings for Supernal's SA-2 electric demonstrator aircraft, while bolstering our EWIS partnerships with several other leading AAM players. The wiring business also delivered the first sets of harnesses to Pratt & Whitney Canada for use on their hybrid-electric flight demonstrator, which is targeting 30% improvement in fuel efficiency. Our work with Airbus on the next generation of wing technology was also extended under the SusWingS programme. The ground-breaking work on hydrogen aircraft propulsion continued, with the world's first cryogenically cooled hydrogen electric motor demonstrator delivered for testing. These developments across our proprietary technology portfolio are fully aligned with our strategy and will underpin our long-term growth. \n   \n OUTLOOK \n   \n Structures is a well-positioned business, with an embedded, design-led offering on all the world's leading aircraft. It has strong growth potential underpinned by record order backlogs and production ramp-ups, albeit currently constrained by supply chain issues and a challenging operating environment. We expect further progress in the second half as business improvement actions continue to read through especially from the Netherlands where integration work is ongoing. At the full year, reported revenue is expected to be largely flat as previously guided due to the planned exits of non-core work and site divestments highlighted earlier. Our 2024 full year profit expectation is unchanged, and we remain confident in meeting our 2025 adjusted operating margin target of 9%. \n \n   \n Peter Dilnot \n Chief Executive Officer \n 1 August 2024 \n \n \n   \n CHIEF FINANCIAL OFFICER'S REVIEW \n   \n   \n MELROSE GROUP RESULTS \n   \n Statutory results: \n   \n The statutory IFRS results are shown on the face of the Income Statement and show revenue of £1,742 million (2023: £1,633 million), an operating loss of £62 million (2023: £18 million) and a loss before tax of £105 million (2023: £62 million). The diluted earnings per share (\"EPS\"), calculated using the weighted average number of shares in issue during the Period, were a loss of 6.1 pence (2023: loss of 3.0 pence). \n   \n Adjusted results: \n   \n The adjusted results are also shown on the face of the Income Statement.  They are adjusted to exclude certain items which are significant in size or volatility or by nature are non-trading or non-recurring, or are the net changes in fair value items booked on an acquisition.  It is the Group's accounting policy to exclude these items from the adjusted results, which are used as an Alternative Performance Measure (\"APM\") as described by the European Securities and Markets Authority (\"ESMA\").  APMs used by the Group are defined in the glossary to the Condensed Consolidated Interim Financial Statements. \n   \n As part of the transition to a pureplay Aerospace business, the Group's policy on adjusting items has been reviewed and it has concluded that the cost of any new long-term incentive schemes will be included within adjusted results.  This contrasts with prior practice which treated the Melrose equity-settled compensation scheme as an adjusting item and brings our policy in line with market practice for typical FTSE listed entities. \n   \n The Melrose Board considers the adjusted results to be an important measure used to monitor how the businesses are performing as they achieve consistency and comparability between reporting periods when all businesses are held for the complete reporting period. \n   \n The adjusted results for the Period show revenue of £1,742 million (2023: £1,633 million), an operating profit of £247 million (2023: £159 million) and a profit before tax of £204 million (2023: £134 million).  Adjusted diluted EPS, calculated using the weighted average number of shares in issue in the Period of 1,346 million (2023: 1,404 million), were 11.9 pence (2023: 7.5 pence). \n   \n The following tables shows the adjusted results for the Period split by reporting segment: \n   \n \n \n \n \n   \n   \n \n \n Engines \n £m \n \n \n Structures \n £m \n \n \n Aerospace \n £m \n \n \n Corporate \n £m \n \n \n Total \n £m \n \n \n \n \n Revenue \n \n \n 720 \n \n \n 1,022 \n \n \n 1,742 \n \n \n - \n \n \n 1,742 \n \n \n \n \n Operating profit/(loss) \n \n \n 212 \n \n \n 48 \n \n \n 260 \n \n \n (13) \n \n \n 247 \n \n \n \n \n Operating margin \n \n \n 29.4% \n \n \n 4.7% \n \n \n 14.9% \n \n \n n/a \n \n \n 14.2% \n \n \n \n \n   \n Revenue for Engines of £720 million (2023: £608 million) shows constant currency growth of 21% over 2023, with operating profit of £212 million (2023: £149 million) giving an operating margin of 29.4% (2023: 24.5%), an increase of 4.9 percentage points. \n   \n Revenue for Structures of £1,022 million (2023: £1,025 million) shows like-for-like constant currency growth of 6% over 2023, (1% including exited businesses), with operating profit of £48 million (2023: £26 million) giving an operating margin of 4.7% (2023: 2.5%), an increase of 2.2 percentage points. \n   \n Corporate costs (also referred to as PLC costs) were £13 million (2023: £16 million). \n   \n Tables summarising the reconciliation of statutory results to adjusted results by reportable segment are shown in note 3 of the Condensed Consolidated Interim Financial Statements, with a Group table shown below. \n   \n   \n RECONCILIATION OF STATUTORY RESULTS TO ADJUSTED RESULTS \n   \n The following table reconciles the Group statutory operating loss to adjusted operating profit: \n   \n \n \n \n \n Continuing operations: \n \n \n 2024 \n £m \n \n \n       2023 \n £m \n \n \n \n \n Statutory operating loss \n \n \n (62) \n \n \n (18) \n \n \n \n \n Adjusting items: \n \n \n \n \n \n \n \n \n \n \n Amortisation of intangible assets acquired in business combinations \n \n \n            128 \n \n \n 131  \n \n \n \n \n Restructuring costs \n \n \n              70 \n \n \n 49  \n \n \n \n \n Currency movements in derivatives and movements in associated financial assets and liabilities \n \n \n              51 \n \n \n (28) \n \n \n \n \n Acquisition and disposal related gains and losses \n \n \n              38 \n \n \n            - \n \n \n \n \n Equity-settled compensation scheme charges \n \n \n              14 \n \n \n 26  \n \n \n \n \n Other \n \n \n                8 \n \n \n (1) \n \n \n \n \n Adjustments to statutory operating loss \n \n \n     309 \n \n \n 177  \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Adjusted operating profit \n \n \n 247 \n \n \n 159  \n \n \n \n \n   \n Adjusting items to the statutory operating loss are consistent with prior periods and include: \n   \n ·     The amortisation charge on intangible assets acquired in business combinations of £128 million (2023: £131 million), which is excluded from adjusted results due to its non-trading nature and to enable comparison with companies that grow organically.  However, where intangible assets are trading in nature, such as computer software and development costs, the amortisation is not excluded from adjusted results. \n   \n ·     Costs associated with significant restructuring projects in the Period totalling £70 million (2023: £49 million).  These are shown as adjusting items due to their size and non-trading nature. \n   \n There have been three significant ongoing multi-year restructuring programmes, impacting multiple sites across the Engines and Structures divisions, including European footprint consolidations which commenced in 2021, and a significant restructuring programme in North America which commenced in 2020.  These programmes incurred a combined charge of £48 million in the Period. Since commencement, the cumulative charge on these three restructuring programmes to 30 June 2024 has been £265 million (31 December 2023: £217 million). \n   \n The North American multi-site restructuring was accelerated by the disposal of two businesses during the first half of the year and is now substantially complete.  Costs are expected to continue at a much reduced level into 2025.  The European programmes have continued to progress with one of the two programmes now reaching completion.  The other European multi-site restructuring programme completed the closure of all intended sites by the end of 2023.   Integration will continue throughout 2024 and costs are expected to conclude in 2025.  \n   \n As at 30 June 2024, £17 million is included in restructuring provisions in relation to the multi-year programmes to be settled in cash over the next two years. \n   \n There has been a charge of £21 million within the Corporate cost centre in relation to actions taken to merge the Melrose corporate function with the previously separate Aerospace division head office team. These restructuring actions reshape the Corporate cost centre to serve as an ongoing pureplay aerospace business. \n   \n ·     Movements in the fair value of derivative financial instruments (primarily forward foreign currency exchange contracts), where hedge accounting is not applied, along with foreign exchange movements on the associated financial assets and liabilities, entered into within the businesses to mitigate the potential volatility of future cash flows on long-term foreign currency customer and supplier contracts.  This totalled a charge of £51 million (2023: credit of £28 million) in the Period and is shown as an adjusting item because of its volatility and size. \n   \n ·     Acquisition and disposal related net losses of £38 million (2023: £nil) are inclusive of a loss of £37 million on the sale of three non-core businesses in the Structures segment.   The loss of £37 million includes a net liability of £21 million that was crystallised relating to the withdrawal from a multi-employer post-retirement pension scheme. Consideration is £25 million which is net of a deferred payable of £39 million and £1 million of costs. The net loss is recorded as an adjusting item due to its non-trading nature. \n   \n One of the three businesses divested was loss-making and was purchased by a customer. The resulting amount payable for the sale reflects the fair value of assets and programmes transferred, including the resolution of all contractual matters. \n   \n ·     A charge for the recently matured equity-settled compensation schemes of £14 million (2023: £26 million), which includes a charge for employer's tax payable of £14 million (2023: £18 million).  This is excluded from adjusted results due to its size and volatility. \n   \n ·     Other net adjusting items, being a charge of £8 million (2023: credit of £1 million), relating to the net change of fair value items in the Period. \n   \n TAX \n   \n The statutory results for the Period show a tax credit of £25 million (2023: £22 million), arising on a statutory loss before tax of £105 million (2023: £62 million).  The Group Income Statement underlying adjusted tax rate is 21.6% (2023: 20.9%).  During the Period, the Group paid tax of £10 million (2023: £15 million). \n   \n LONG-TERM INCENTIVE SCHEME \n   \n The Melrose 2020 Employee Share Plan (the \"MESP\") crystallised on 31 May 2024, with awards being settled by 1) the transfer from treasury of ordinary shares to participants, 2) the grant of nil cost options and 3) the balance being settled by cash payments in an amount sufficient to meet participants' income and other tax liabilities in accordance with the plan rules (the \"Cash Settlement\").  \n   \n The Company transferred a total of 28,848,071 ordinary shares from treasury to satisfy its obligation to the majority of participants and issued nil cost options over 3,875,954 ordinary shares. \n   \n In relation to the Cash Settlement, awards which would otherwise have given rise to Melrose being obliged to transfer an additional 25,498,465 ordinary shares have instead been settled by cash payments totalling £157 million for the purposes of meeting participants' income and other tax liabilities (which, for UK tax resident participants, has been paid directly to HMRC since the period end to settle the outstanding tax liability in relation to their awards). This has resulted in a charge to retained earnings in accordance with IFRS 2: \"Share-Based Payment\". \n   \n The Company has issued a 2024 Melrose Performance Share Plan (the \"PSP\") which rewards the performance of certain senior management over a three year period. The charge for this scheme and future such incentive arrangements will be recorded in adjusted operating profit to reflect the change in Group strategy to that of a pureplay aerospace company.  \n   \n CASH GENERATION AND MANAGEMENT \n   \n Adjusted free cash flow for the Period was an outflow of £60 million (2023: £65 million), after net interest and tax spend of £46 million (2023: £49 million), but before restructuring spend of £85 million (2023: £53 million). \n   \n An analysis of free cash flow is shown in the table below: \n \n \n \n \n \n \n \n 2024 \n £m \n \n \n 2023 \n £m \n \n \n \n \n Continuing operations: \n \n \n \n \n \n \n \n \n \n \n Adjusted operating profit \n \n \n 247  \n \n \n 159  \n \n \n \n \n Depreciation and amortisation \n \n \n 72  \n \n \n 71  \n \n \n \n \n Lease obligation payments \n \n \n (19) \n \n \n (16) \n   \n \n \n \n \n Positive non-cash impact from loss-making contracts \n \n \n (16) \n \n \n (13) \n \n \n \n \n Working capital movements: \n \n \n \n \n \n \n \n \n \n \n Inventory \n \n \n (91) \n \n \n (53) \n \n \n \n \n Receivables and payables \n \n \n (139) \n \n \n (116) \n \n \n \n \n Adjusted operating cash flow (pre-capex) \n \n \n 54  \n \n \n             32 \n \n \n \n \n Net capital expenditure \n \n \n (57) \n \n \n (40) \n \n \n \n \n Defined benefit pension contributions - ongoing \n \n \n (2) \n \n \n (2) \n \n \n \n \n Restructuring \n \n \n (85) \n \n \n (53) \n \n \n \n \n Net other \n \n \n (9) \n \n \n             (6) \n \n \n \n \n Free cash flow pre-interest and tax \n \n \n (99) \n \n \n (69) \n \n \n \n \n Net interest and net tax paid \n \n \n (46) \n \n \n (49) \n \n \n \n \n Free cash flow \n \n \n (145) \n \n \n (118) \n \n \n \n \n Adjusted free cash flow \n \n \n (60) \n \n \n (65) \n \n \n \n \n   \n During the Period working capital increased due to sales growth, supply chain challenges impacting deliveries and the normal seasonal pattern. \n   \n Net capital expenditure in the Period was £57 million (2023: £40 million) and represented 1.0x (2023: 0.7x) depreciation of owned assets. \n   \n Restructuring spend in the Period was £85 million (2023: £53 million). \n   \n The net interest paid in the Period was £36 million (2023: £34 million), net tax payments were £10 million (2023: £15 million) and ongoing contributions to defined benefit pension schemes were £2 million (2023: £2 million). \n   \n The movement in net debt (as defined in the glossary to the Condensed Consolidated Interim Financial Statements) is summarised as follows: \n \n \n   \n \n \n \n \n \n \n \n £m \n \n \n \n \n Opening net debt \n \n \n (572) \n \n \n \n \n Free cash flow in the Period \n \n \n (145) \n \n \n \n \n Net cash flow from disposals \n \n \n 55  \n \n \n \n \n Amounts paid to shareholders \n \n \n (292) \n \n \n \n \n Melrose equity-settled compensation scheme related payments \n \n \n (18) \n \n \n \n \n FX and other non-cash movements \n \n \n                (4) \n \n \n \n \n Net debt at 30 June 2024 at closing exchange rates \n \n \n (976) \n \n \n \n \n   \n Group net debt at 30 June 2024, translated at closing exchange rates (being US $1.26 and €1.18), was £976 million (31 December 2023: £572 million), after a free cash outflow of £145 million, described above.  Movement in Group net debt also included the payment of the 2023 final dividend of £46 million, £246 million spent buying back shares in the market and a net £55 million received from disposals.  There were also net adverse foreign exchange movements of £2 million and other non-cash movements of £2 million.  \n   \n For bank covenant purposes the Group's net debt is calculated at average exchange rates for the previous twelve months, to better align the calculation with the currency rates used to calculate profits and was £980 million. \n   \n The Group net debt leverage on this basis at 30 June 2024 was 1.7x EBITDA (31 December 2023: 1.1x EBITDA). Interest cover at 30 June 2024 was 9.6x. \n   \n   \n PROVISIONS \n   \n Total provisions at 30 June 2024 were £201 million (31 December 2023: £286 million). \n   \n The following table details the movement in provisions in the Period: \n   \n \n \n \n \n   \n \n \n Total \n £m \n \n \n \n \n Provisions at 1 January 2024 \n \n \n 286  \n \n \n \n \n Net charge in the Period \n \n \n 84  \n \n \n \n \n Spend against provisions \n \n \n (101) \n \n \n \n \n Utilisation of loss-making contract provision \n \n \n (16) \n \n \n \n \n Foreign exchange \n \n \n (1)  \n \n \n \n \n Disposal of businesses \n \n \n (20) \n \n \n \n \n Transfers \n \n \n (31) \n \n \n \n \n Provisions at 30 June 2024 \n \n \n 201 \n \n \n \n \n   \n The net charge to the Income Statement in the Period was £84 million, including £55 million relating to restructuring activities.  This is shown as an adjusting item and is included in the adjusting items section discussed earlier in this review. \n   \n During the Period, £16 million was utilised against loss-making contract provisions and £101 million of cash was spent against other provisions including £85 million relating to restructuring activities.  £31 million was transferred to accruals following certainty of the timing and value for payments on incentive schemes. \n   \n   \n   \n   \n PENSIONS AND POST-EMPLOYMENT OBLIGATIONS \n   \n Melrose operates a number of defined benefit pension schemes and retiree medical plans across the Group, accounted for using IAS 19 Revised: \"Employee Benefits\". \n   \n The values of the Group plans were updated at 30 June 2024 by independent actuaries to reflect the latest key assumptions and are summarised as follows: \n   \n \n \n \n \n   \n   \n   \n \n \n   \n Assets \n £m \n \n \n Liabilities \n £m \n \n \n Accounting deficit \n £m \n \n \n \n \n UK Plans \n \n \n 1,006 \n \n \n (1,063) \n \n \n  (57) \n \n \n \n \n US Plans \n \n \n 31 \n \n \n (56) \n \n \n   (25) \n \n \n \n \n Other Plans \n \n \n - \n \n \n   (8) \n \n \n (8) \n \n \n \n \n Total Group pension schemes \n \n \n 1,037 \n \n \n (1,127) \n \n \n (90) \n \n \n \n \n   \n At 30 June 2024, the total plan assets of Melrose Group's defined benefit pension plans have reduced to £1,037 million (31 December 2023: £1,118 million) and total plan liabilities to £1,127 million (31 December 2023: £1,217 million), a net deficit of £90 million (31 December 2023: £99 million). \n   \n The GKN UK Group Pension Schemes (Numbers 1 and 4), included above within UK plans, are the most significant pension plans remaining in the Group and are closed to new members and to the accrual of future benefits for current members. \n   \n During 2023, the Group commenced a process to buy-out the GKN UK Group Pension Scheme Number 4 and, as a first step, purchased a buy-in policy which fully secured all members' benefits.  Accordingly, assets and liabilities are recorded equally and are £410 million at 30 June 2024 (31 December 2023: £438 million). The buy-out process is expected to complete within the next 12 months. \n   \n At 30 June 2024, the GKN UK Group Pension Scheme Number 1 had gross assets of £596 million (31 December 2023: £632 million), gross liabilities of £647 million (31 December 2023: £692 million) and a net deficit of £51 million (31 December 2023: £60 million).  \n   \n Other pension schemes in the Group include US pension plans which are generally funded schemes and closed to new members.  At 30 June 2024, these US pension plans had a net deficit of £25 million (31 December 2023: £25 million). \n   \n A summary of the assumptions used are shown in note 11 to the Condensed Consolidated Interim Financial Statements. \n   \n   \n FINANCIAL RISKS AND UNCERTAINTIES \n   \n The principal financial risks and uncertainties faced by the Group include liquidity risk, finance cost risk, exchange rate risk, contract and warranty risk and commodity cost risk.  The nature of these risks in relation to the Group are explained in detail on pages 25 to 26 of the 2023 Annual Report, a copy of which is available on the Company's website, www.melroseplc.net . \n   \n Further explanations and details of the strategic risk profile of the Group, which include non-financial risks, are set out on pages 31 to 36 of the 2023 Annual Report. \n   \n   \n   \n   \n   \n   \n EXCHANGE RATES USED IN THE PERIOD \n   \n Exchange rates used for currencies most relevant to the Group in the Period were: \n \n \n \n \n US Dollar \n \n \n   \n Average rate \n \n \n Closing \n Rate \n \n \n \n \n Six months to 30 June 2024 \n \n \n 1.26 \n \n \n 1.26 \n \n \n \n \n Twelve months to 31 December 2023 \n \n \n 1.24 \n \n \n 1.28 \n \n \n \n \n Six months to 30 June 2023 \n \n \n 1.23 \n \n \n 1.27 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Euro \n \n \n \n \n \n \n \n \n \n \n Six months to 30 June 2024 \n \n \n 1.17 \n \n \n 1.18 \n \n \n \n \n Twelve months to 31 December 2023 \n \n \n 1.15 \n \n \n 1.15 \n \n \n \n \n Six months to 30 June 2023 \n \n \n 1.14 \n \n \n 1.16 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n The Group policy on foreign currency risk is explained on page 26 of the 2023 Annual Report. \n   \n The following table shows an indication of a full year impact of a 10 percent strengthening of the US Dollar and the Euro, if they were to strengthen in isolation against all other currencies, on the re-translation of adjusted operating profit into Sterling: \n   \n \n \n \n \n £m \n \n \n \n \n \n \n \n \n USD \n \n \n EUR \n \n \n \n \n Movement in adjusted operating profit \n \n \n \n \n \n \n \n \n 45 \n \n \n 4 \n \n \n \n \n % impact on adjusted operating profit \n \n \n \n \n \n \n \n \n 8% \n \n \n 1% \n \n \n \n \n   \n In the first half of the year, the Group incurred a 2% translational foreign exchange loss on adjusted operating profit compared to the same period last year. \n   \n The impact from transactional foreign exchange exposures is not material in the short-term due to hedge coverage being approximately 90%. \n   \n The Group utilises its multi-currency banking facility to maintain an appropriate mix of debt in US Dollars, Euros and Sterling.  The hedge of having debt drawn in US Dollars and Euros protects against some of the Balance Sheet and banking covenant foreign exchange translation risk.  A 10 percent strengthening in either the US Dollar or Euro would have had the following impact on debt as at 30 June 2024: \n   \n \n \n \n \n £m \n \n \n USD \n \n \n EUR \n \n \n \n \n Increase in debt \n \n \n 81 \n \n \n 19 \n \n \n \n \n   \n   \n LIQUIDITY RISK MANAGEMENT \n   \n The Group's net debt position at 30 June 2024 was £976 million (31 December 2023: £572 million). \n   \n In May 2024, the US$300 million term loan, €100 million term loan and US$250 million revolving credit facility that were due to mature in April 2026 were amended to include two one-year extension options, at the Company's option, thereby aligning the maturity dates with the remaining bank facilities to April 2028. Furthermore, the US$300 million term loan was increased to US$549 million and the US$250 million revolving credit facility was increased to US$400 million. A summary of the Group's committed bank facilities, drawings and headroom is shown in the table below. \n   \n \n \n \n \n \n \n \n Local currency \n \n \n £m \n \n \n \n \n \n \n \n Size \n \n \n Drawn \n \n \n Headroom \n \n \n Headroom \n \n \n \n \n Term loans: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n USD \n \n \n 549 \n \n \n 549 \n \n \n - \n \n \n - \n \n \n \n \n EUR \n \n \n 100 \n \n \n 100 \n \n \n - \n \n \n - \n \n \n \n \n Revolving credit facilities: \n \n \n \n \n \n \n \n \n \n \n USD \n \n \n 1,090 \n \n \n 542 \n \n \n 548 \n \n \n 433 \n \n \n \n \n GBP \n \n \n 300 \n \n \n 22 \n \n \n 278 \n \n \n 278 \n \n \n \n \n Euro \n \n \n 300 \n \n \n 131 \n \n \n 169 \n \n \n 143 \n \n \n \n \n Total (GBP) \n \n \n 1,934 \n \n \n 1,080 \n \n \n \n \n \n 854 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n As at 30 June 2024, the term loans were fully drawn and there was £562 million of drawings across the revolving credit facilities.  Applying the exchange rates at 30 June 2024, the headroom equated to approximately £854 million. \n   \n In addition to the headroom across the revolving credit facilities, at 30 June 2024 cash, deposits and marketable securities, net of overdrafts, in the Group amounted to £166 million (31 December 2023: £57 million), whilst drawings on uncommitted borrowing facilities amounted to £61 million (31 December 2023: £53 million). \n   \n At 30 June 2024, capital market borrowings held by the Group consisted of an outstanding value of £10 million of a bond due to mature in May 2032, with a current coupon rate of 4.625%. \n   \n The committed bank funding has two financial covenants, being a net debt to adjusted EBITDA covenant and an interest cover covenant, both of which are tested half-yearly in June and December. \n   \n The net debt to adjusted EBITDA covenant test level is set at 3.5x for the remaining term of the bank facilities. At 30 June 2024, the Group net debt leverage was 1.7x, affording comfortable headroom. \n   \n The interest cover test is set at 4.0x for the remaining term of the bank facilities. At 30 June 2024 the Group interest cover was 9.6x, again showing comfortable headroom compared to the covenant test. \n   \n FINANCE COST RISK MANAGEMENT \n   \n In addition to the fixed coupon payable under the £10 million bond discussed above, the Group uses financial derivatives to fix a portion of the cost of its floating rate borrowings. The combination of these items as well as borrowings on the Group's bank facilities is expected to result in the cost of drawn debt for the year to be approximately 5.7%. \n   \n GOING CONCERN \n   \n As part of their consideration of going concern, the Directors have reviewed the Group's future cash forecasts and profit projections, which are based on market and internal data and recent past experience. \n   \n The Group has modelled a severe but plausible downside scenario against future cash forecasts and for this severe but plausible downside scenario, the Group has sufficient headroom to avoid breaching any of its financial covenants and would not require any additional sources of financing throughout the forecast period. \n   \n The Directors recognise the challenges in the current economic environment, including challenges in supply chain and the Group is actively managing the associated impacts on trading through a sharp focus on pricing, productivity and cost.  \n   \n The macroeconomic environment remains uncertain and volatile and the impact of the economic factors discussed above could be more prolonged or severe than that which the Directors have considered in the Group's severe but plausible downside scenario. \n   \n However, the Group's current committed bank facility headroom, its access to liquidity, and the sensible levels of bank covenants in place with lending banks, allow the Directors to consider it appropriate that the Group can manage its business risks successfully and adopt a going concern basis in preparing these Condensed Consolidated Interim Financial Statements. \n   \n   \n \n   \n Matthew Gregory \n Chief Financial Officer \n 1 August 2024 \n \n \n CAUTIONARY STATEMENT \n   \n This announcement contains forward-looking statements.  These statements are made in good faith based on the information available up to the time of the approval of this announcement, and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.  Accordingly, readers are cautioned not to place undue reliance on any such forward-looking statements.  Subject to compliance with applicable laws and regulations, the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this announcement.  \n   \n This announcement has been prepared solely to provide information to shareholders to assess the Company's strategies and the potential for those strategies to succeed, and neither the Company nor its directors accept any liability to any other person save as would arise under English law. \n   \n NO OFFER OF SECURITIES \n   \n Nothing in this announcement constitutes an offer of securities for sale in the U.S.  Securities may not be sold in the U.S. absent registration or an exemption from registration. \n   \n   \n RESPONSIBILITY STATEMENT \n   \n We confirm to the best of our knowledge: \n   \n a)   the condensed financial statements have been prepared in accordance with IAS 34 \"Interim Financial Reporting\" as adopted by the UK; \n   \n b)   the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events and their impact, and description of principal risks and uncertainties for the remaining six months of the financial year); and \n   \n c)   the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein). \n   \n By order of the Board \n   \n   \n                                                   \n   \n Peter Dilnot                                                                 Matthew Gregory \n Chief Executive Officer                                                           Chief Financial Officer \n 1 August 2024                                                             1 August 2024 \n \n \n   \n INDEPENDENT REVIEW REPORT TO MELROSE INDUSTRIES PLC \n REPORT ON THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS \n   \n Our conclusion \n   \n We have reviewed Melrose Industries PLC's condensed consolidated interim financial statements (the \"interim financial statements\") in the Unaudited Results of Melrose Industries PLC for the 6 month period ended 30 June 2024 (the \"period\"). \n   \n Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. \n   \n The interim financial statements comprise: \n   \n ·   the condensed consolidated balance sheet as at 30 June 2024; \n ·   the condensed consolidated income statement and the condensed consolidated statement of comprehensive income for the period then ended; \n ·   the condensed consolidated statement of cash flows for the period then ended; \n ·   the condensed consolidated statement of changes in equity for the period then ended; and \n ·   the explanatory notes to the interim financial statements. \n   \n The interim financial statements included in the Unaudited Results of Melrose Industries PLC have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. \n Basis for conclusion \n   \n We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom (\"ISRE (UK) 2410\"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. \n   \n A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. \n   \n We have read the other information contained in the Unaudited Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements. \n   \n Conclusions relating to going concern \n   \n Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern. \n   \n \n \n   \n Responsibilities for the interim financial statements and the review \n   \n Our responsibilities and those of the directors \n   \n The Unaudited Results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Unaudited Results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the Unaudited Results, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so. \n   \n Our responsibility is to express a conclusion on the interim financial statements in the Unaudited Results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. \n   \n \n PricewaterhouseCoopers LLP \n Chartered Accountants \n London \n 1 August 2024 \n   \n \n \n   \n Melrose Industries PLC                                                                            \n Condensed Consolidated Income Statement \n   \n \n \n \n \n Continuing operations \n \n \n   \n   \n   \n   \n   \n   \n Notes \n \n \n                6 months \n ended \n 30 June \n 2024 \n Unaudited \n £m \n \n \n 6 months \n ended \n 30 June \n 2023 \n Unaudited \n £m \n \n \n Year ended \n 31 December \n 2023 \n Audited \n £m \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Revenue \n \n \n 3 \n \n \n 1,742  \n \n \n 1,633  \n \n \n 3,350  \n \n \n \n \n Cost of sales \n \n \n \n \n \n (1,338) \n \n \n (1,326) \n \n \n (2,696) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Gross profit \n \n \n \n \n \n 404  \n \n \n 307  \n \n \n 654  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Operating expenses \n \n \n \n \n \n (466) \n \n \n (325) \n \n \n (597) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Operating (loss)/profit \n \n \n 3,4 \n \n \n  (62) \n \n \n (18) \n \n \n 57  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Finance costs \n \n \n \n \n \n (45) \n \n \n (45) \n \n \n (79) \n \n \n \n \n Finance income \n \n \n \n \n \n 2  \n \n \n 1  \n \n \n 14  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Loss before tax \n \n \n \n \n \n (105) \n \n \n (62) \n \n \n (8) \n \n \n \n \n Tax \n \n \n 5 \n \n \n 25  \n \n \n 22  \n \n \n 9  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n (Loss)/profit after tax for the period from continuing operations \n \n \n  (80) \n \n \n (40) \n \n \n 1  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Discontinued operations \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Loss for the period from discontinued operations \n \n \n 8 \n \n \n -  \n \n \n (1,020) \n \n \n (1,020) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Loss after tax for the period attributable to owners of the parent \n \n \n \n \n \n   \n (80) \n \n \n   \n (1,060) \n \n \n   \n (1,019) \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Earnings per share \n Continuing operations \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n    - Basic \n \n \n 6 \n \n \n (6.1)p \n \n \n (3.0)p \n \n \n                    0.1p \n \n \n \n \n    - Diluted \n \n \n 6 \n \n \n (6.1)p \n \n \n (3.0)p \n \n \n                    0.1p \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Continuing and discontinued operations \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n    - Basic \n \n \n 6 \n \n \n (6.1)p \n \n \n (78.5)p \n \n \n (75.5)p \n \n \n \n \n    - Diluted \n \n \n 6 \n \n \n (6.1)p \n \n \n (78.5)p \n \n \n (75.5)p \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Adjusted (1) results from continuing operations \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Adjusted operating profit \n \n \n 3,4  \n \n \n     247  \n \n \n 159  \n \n \n                390   \n \n \n \n \n Adjusted profit before tax \n \n \n 4 \n \n \n               204  \n \n \n 134  \n \n \n                331  \n \n \n \n \n Adjusted profit after tax \n \n \n 4 \n \n \n               160  \n \n \n 106  \n \n \n                263   \n \n \n \n \n Adjusted basic earnings per share \n \n \n 6 \n \n \n   12.1p \n \n \n    7.8p \n \n \n 19.5p \n \n \n \n \n Adjusted diluted earnings per share \n \n \n 6 \n \n \n   11.9p \n \n \n 7.5p \n \n \n 18.7p \n \n \n \n \n   \n (1)    Defined in the summary of material accounting policies (see note 2). \n   \n \n \n   \n Melrose Industries PLC \n Condensed Consolidated Statement of Comprehensive Income \n                                     \n \n \n \n \n \n \n \n   \n   \n   \n   \n   \n   \n Notes \n \n \n 6 months \n ended \n30 June \n 2024 \n Unaudited \n £m \n \n \n 6 months \n ended \n30 June \n 2023 \n Unaudited \n £m \n \n \n Year ended \n 31 December \n 2023 \n Audited \n £m \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Loss after tax for the period \n \n \n   \n \n \n (80) \n \n \n (1,060) \n \n \n (1,019) \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Items that will not be reclassified subsequently to the \n Income Statement: \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net remeasurement gain/(loss) on retirement benefit obligations \n \n \n   \n \n \n 12  \n \n \n                 (91) \n \n \n (119) \n \n \n \n \n Fair value gain/(loss) on investments in equity instruments \n \n \n   \n \n \n 3  \n \n \n (2) \n \n \n 35  \n \n \n \n \n Income tax (charge)/credit relating to items that will not be reclassified \n \n \n 5 \n \n \n  (3) \n \n \n 22    \n \n \n 29  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 12   \n \n \n (71) \n \n \n (55) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Items that may be reclassified subsequently to the \n Income Statement: \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Currency translation on net investments \n \n \n \n \n \n 16   \n \n \n (190) \n \n \n (195) \n \n \n \n \n Share of other comprehensive expense from equity accounted investments \n \n \n \n \n \n   \n -   \n \n \n   \n (11) \n \n \n   \n (12) \n \n \n \n \n Transfer to Income Statement from equity of cumulative translation differences on disposal of foreign operations \n \n \n   \n 8 \n \n \n   \n (6) \n \n \n   \n (152) \n \n \n   \n (152) \n \n \n \n \n Derivative gains on hedge relationships \n \n \n \n \n \n 4   \n \n \n 8  \n \n \n 2  \n \n \n \n \n Income tax charge relating to items that may be reclassified \n \n \n 5 \n \n \n -           \n \n \n  (5) \n \n \n (8) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 14   \n \n \n (350) \n \n \n (365) \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Other comprehensive income/(expense) for the period \n \n \n   \n \n \n 26   \n \n \n (421) \n \n \n (420) \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Total comprehensive expense for the period attributable to owners of the parent \n \n \n   \n \n \n   \n (54) \n \n \n   \n (1,481) \n \n \n   \n (1,439) \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   \n   \n \n \n   \n Melrose Industries PLC \n Condensed Consolidated Statement of Cash Flows \n   \n \n \n \n \n   \n \n \n   \n   \n   \n   \n   \n   \n Notes \n \n \n             6 months \n ended \n 30 June \n 2024 \n Unaudited \n £m \n \n \n  6 months \n ended \n 30 June \n 2023 \n Unaudited \n £m \n \n \n Year ended \n 31 December 2023 \n Audited \n £m \n \n \n \n \n Operating activities \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net cash used in operating activities from continuing operations    \n \n \n 12 \n \n \n (90) \n \n \n (172) \n \n \n (7) \n \n \n \n \n Net cash from operating activities from discontinued operations \n \n \n 12 \n \n \n -   \n \n \n 36  \n \n \n 36  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net cash (used in)/from operating activities \n \n \n \n \n \n (90) \n \n \n (136) \n \n \n 29  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Investing activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Disposal of businesses, net of cash disposed \n \n \n 8 \n \n \n 56   \n \n \n (320) \n \n \n (320) \n \n \n \n \n Settlement receipt from loans held with demerged entities \n \n \n \n \n \n -   \n \n \n 1,205  \n \n \n 1,205  \n \n \n \n \n Purchase of property, plant and equipment \n \n \n \n \n \n (50) \n \n \n (36) \n \n \n (95) \n \n \n \n \n Proceeds from disposal of property, plant and equipment \n \n \n \n \n \n -   \n \n \n -  \n \n \n 4  \n \n \n \n \n Purchase of computer software and capitalised development costs \n \n \n \n \n \n (7) \n \n \n (4) \n \n \n (11)              \n \n \n \n \n Disposal of equity accounted investments \n \n \n \n \n \n -   \n \n \n -  \n \n \n 3  \n \n \n \n \n Interest received \n \n \n \n \n \n 2   \n \n \n 2  \n \n \n 2  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net cash from investing activities from continuing operations \n \n \n \n \n \n                      1   \n \n \n 847  \n \n \n 788  \n \n \n \n \n Net cash used in investing activities from discontinued operations                                                                                             \n \n \n 12 \n \n \n -   \n \n \n (67) \n \n \n (67) \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net cash from investing activities \n \n \n 1   \n \n \n 780  \n \n \n 721  \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Financing activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Repayment of borrowings \n \n \n \n \n \n -   \n \n \n (1,262) \n \n \n (1,371) \n \n \n \n \n Drawings on borrowing facilities \n \n \n \n \n \n 512   \n \n \n 450  \n \n \n 628  \n \n \n \n \n Costs of raising debt finance \n \n \n \n \n \n (3) \n \n \n    (11) \n \n \n (11) \n \n \n \n \n Repayment of principal under lease obligations \n \n \n \n \n \n (19) \n \n \n (16) \n \n \n (32) \n \n \n \n \n Purchase of own shares, including associated costs \n \n \n 7 \n \n \n  (246) \n \n \n -  \n \n \n (93) \n \n \n \n \n Dividends paid to owners of the parent \n \n \n 7 \n \n \n  (46) \n \n \n (61) \n \n \n (81) \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net cash from/(used in) financing activities from continuing operations \n \n \n \n \n \n 198   \n \n \n (900) \n \n \n (960) \n \n \n \n \n Net cash used in financing activities from discontinued operations \n \n \n 12 \n \n \n -   \n \n \n (6) \n \n \n (6) \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net cash from/(used in) financing activities \n \n \n 198   \n \n \n (906) \n \n \n (966) \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net increase/(decrease) in cash and cash equivalents, net of bank overdrafts \n \n \n \n \n \n 109   \n \n \n (262) \n \n \n (216) \n \n \n \n \n Cash and cash equivalents, net of bank overdrafts at the beginning of the period \n \n \n \n \n \n   \n 57   \n \n \n   \n 292  \n \n \n   \n 292  \n \n \n \n \n Effect of foreign exchange rate changes \n \n \n \n \n \n -   \n \n \n (10) \n \n \n (19) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Cash and cash equivalents, net of bank overdrafts at the end of the period                                                                                           \n \n \n   \n 12 \n \n \n        \n 166   \n \n \n        \n 20  \n \n \n   \n 57  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n   \n   \n As at 30 June 2024, the Group had net debt of £976 million (31 December 2023: £572 million). A definition and reconciliation of the movement in net debt is shown in note 12. \n   \n \n \n   \n Melrose Industries PLC \n Condensed Consolidated Balance Sheet \n             \n \n \n \n \n   \n \n \n   \n   \n   \n   \n Notes \n \n \n 30 June \n 2024 \n Unaudited \n £m \n \n \n  30 June \n 2023 \n Unaudited \n £m \n \n \n 31 December \n    2023 \n Audited \n £m \n \n \n \n \n   \n Non-current assets \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Goodwill and other intangible assets \n \n \n \n \n \n 3,225  \n \n \n                 3,496  \n \n \n 3,351  \n \n \n \n \n Property, plant and equipment \n \n \n \n \n \n 749  \n \n \n 748  \n \n \n 777  \n \n \n \n \n Investments \n \n \n \n \n \n 118  \n \n \n 78  \n \n \n 114  \n \n \n \n \n Interests in equity accounted investments \n \n \n \n \n \n 6   \n \n \n 11  \n \n \n 7  \n \n \n \n \n Deferred tax assets \n \n \n \n \n \n 569   \n \n \n 508  \n \n \n 527  \n \n \n \n \n Derivative financial assets \n \n \n \n \n \n 23  \n \n \n 27  \n \n \n 46  \n \n \n \n \n Other receivables \n \n \n \n \n \n 970  \n \n \n 735  \n \n \n 789  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 5,660  \n \n \n 5,603  \n \n \n 5,611   \n \n \n \n \n Current assets \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Inventories \n \n \n \n \n \n 544  \n \n \n 557  \n \n \n 510  \n \n \n \n \n Trade and other receivables \n \n \n \n \n \n 719  \n \n \n 797  \n \n \n 713  \n \n \n \n \n Derivative financial assets \n \n \n \n \n \n 10  \n \n \n 10  \n \n \n 13  \n \n \n \n \n Current tax assets \n \n \n \n \n \n 2  \n \n \n -  \n \n \n 6  \n \n \n \n \n Cash and cash equivalents \n \n \n \n \n \n 189   \n \n \n 110  \n \n \n 58  \n \n \n \n \n Assets classified as held for sale \n \n \n \n \n \n -  \n \n \n -  \n \n \n 18  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1,464  \n \n \n 1,474  \n \n \n 1,318   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Total assets \n \n \n 3 \n \n \n 7,124  \n \n \n 7,077  \n \n \n 6,929   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Current liabilities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Trade and other payables \n \n \n \n \n \n 1,400  \n \n \n 1,220  \n \n \n 1,179  \n \n \n \n \n Interest-bearing loans and borrowings \n \n \n \n \n \n 84   \n \n \n 148  \n \n \n 54  \n \n \n \n \n Lease obligations \n \n \n 13 \n \n \n 31  \n \n \n 38  \n \n \n 40  \n \n \n \n \n Derivative financial liabilities \n \n \n \n \n \n 54  \n \n \n 57  \n \n \n 42  \n \n \n \n \n Current tax liabilities \n \n \n \n \n \n 11   \n \n \n 19  \n \n \n 20  \n \n \n \n \n Provisions \n \n \n 9 \n \n \n 123   \n \n \n 176  \n \n \n 188  \n \n \n \n \n Liabilities associated with assets held for sale \n \n \n \n \n \n -   \n \n \n -  \n \n \n 10  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1,703   \n \n \n 1,658   \n \n \n 1,533   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net current liabilities \n \n \n \n \n \n (239) \n \n \n (184) \n \n \n (215) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Non-current liabilities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Other payables \n \n \n \n \n \n 410   \n \n \n 343  \n \n \n 358  \n \n \n \n \n Interest-bearing loans and borrowings \n \n \n \n \n \n 1,081   \n \n \n 517  \n \n \n 576  \n \n \n \n \n Lease obligations \n \n \n 13 \n \n \n 151   \n \n \n 151  \n \n \n 152  \n \n \n \n \n Derivative financial liabilities \n \n \n \n \n \n 77   \n \n \n 115  \n \n \n 64  \n \n \n \n \n Deferred tax liabilities \n \n \n \n \n \n 475   \n \n \n 448  \n \n \n 482  \n \n \n \n \n Retirement benefit obligations \n \n \n 11 \n \n \n 90   \n \n \n 89  \n \n \n 99  \n \n \n \n \n Provisions \n \n \n 9 \n \n \n 78   \n \n \n 99  \n \n \n 98  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2,362  \n \n \n 1,762  \n \n \n 1,829   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Total liabilities \n \n \n 3 \n \n \n 4,065  \n \n \n 3,420   \n \n \n 3,362   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net assets \n \n \n \n \n \n 3,059  \n \n \n 3,657   \n \n \n 3,567   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Equity \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Issued share capital \n \n \n \n \n \n 309   \n \n \n 309  \n \n \n 309  \n \n \n \n \n Share premium account \n \n \n \n \n \n 3,271  \n \n \n 3,271  \n \n \n 3,271  \n \n \n \n \n Merger reserve \n \n \n \n \n \n 109  \n \n \n 109  \n \n \n 109  \n \n \n \n \n Capital redemption reserve \n \n \n \n \n \n 753  \n \n \n 753  \n \n \n 753  \n \n \n \n \n Other reserves \n \n \n \n \n \n (2,330)                \n \n \n  (2,330) \n \n \n (2,330) \n \n \n \n \n Translation and hedging reserve \n \n \n \n \n \n 287   \n \n \n   288  \n \n \n 273  \n \n \n \n \n Retained earnings \n \n \n \n \n \n 660   \n \n \n 1,257  \n \n \n 1,182  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Equity attributable to owners of the parent \n \n \n 3,059   \n \n \n 3,657   \n \n \n 3,567   \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Non-controlling interests \n \n \n \n \n \n -   \n \n \n -  \n \n \n -  \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Total equity \n \n \n \n \n \n 3,059   \n \n \n 3,657  \n \n \n 3,567   \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Melrose Industries PLC \n Condensed Consolidated Statement of Changes in Equity \n   \n \n \n \n \n   \n \n \n Issued share capital \n £m \n \n \n Share premium account \n £m \n \n \n   \n   \n   \n Merger reserve \n £m \n \n \n   \n   \n Capital \n redemption \n reserve \n £m \n \n \n Other reserves \n £m \n \n \n Translation \n and hedging reserve \n £m \n \n \n Retained earnings \n £m \n \n \n Equity \n attributable \n to owners \n of the parent \n £m \n \n \n Non-controlling \n interests \n £m \n \n \n Total equity \n             £m \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n At 1 January 2023 \n \n \n 309  \n \n \n 3,271  \n \n \n 109  \n \n \n 753  \n \n \n (2,330) \n \n \n 638  \n \n \n 4,379  \n \n \n 7,129   \n \n \n 39   \n \n \n 7,168   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Loss for the period \n \n \n -  \n \n \n -  \n \n \n -  \n \n \n -  \n \n \n -  \n \n \n -  \n \n \n (1,060) \n \n \n (1,060) \n \n \n -  \n \n \n (1,060) \n \n \n \n \n Other comprehensi...

View stock analysis, news, and events for Melrose Industries Plc