6th Sep 2018 08:43
LONDON (Alliance News) - Melrose Industries PLC on Thursday swung to a pretax loss due to costs incurred in the hostile takeover of British aerospace and automotive engineering firm GKN PLC.
The business turnaround specialist , however, said that trading remained in line with board's expectations for the current calendar year and that GKN was meeting expectations and "no black holes" have been found in the business since its takeover.
"All GKN businesses are being managed successfully on a standalone basis, freed from head office bureaucracy and with medium and long-term improvement plans agreed," Melrose added.
For the six months to June-end, Melrose recorded a pretax loss of GBP303 million, compared with pretax profit of GBP48 million in the year ago period, on a revenue of GBP2.94 billion and GBP1.09 billion, respectively.
Acquisition and disposal costs totalled GBP71 million, up sharply from GBP2 million a year ago. Restructuring and other associated costs arising from changes in business strategy totalled GBP128 million versus GBP25 million.
Stripping out acquisition and other exceptional costs, pretax profit rose to GBP240 million from GBP131 million. On a pro-forma basis, including GKN for the entire six-month period, Melrose reported pretax profit of GBP401 million on revenue of GBP6.20 billion.
Melrose, which took control of GKN in April, said that it is exploring strategic options for GKN powder metallurgy business and have appointed advisers accordingly, in line with previously announced plans to focus on aerospace and automotive divisions of the business.
"Plans have been agreed and are now being implemented to realise the full potential of GKN's world leading, but currently underdeveloped, businesses," Chairman Christopher Miller said.
The company also said it will make the chairman role non-executive from January. Miller, who is an executive chairman, will move to the role of executive vice chairman alongside David Roper from January. Current Senior Independent Director Justin Dowley will become non-executive chairman of the company.
Melrose declared an interim dividend of 1.55 pence per share, up 11% from 1.4 pence paid a year ago.
Shares in the FTSE 100 company were trading 3.2% higher at 229.80 pence each, the top gainer in the blue-chip index on Thursday morning.
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