REG - Melrose Industries - Final Results <Origin Href="QuoteRef">MRON.L</Origin> - Part 2
02/03/2017 07:06
- Part 2: For the preceding part double click ID:nRSB2916Ya
of net debt was acquired with Nortek.
Subsequent to the acquisition, Melrose refinanced all of Nortek's debt facilities which consisted of 8.5% Senior Notes with
a principal value of US $735.0 million which were due to mature in 2021, in addition to a US $605.4 million Senior Secured
Term Loan facility due to mature in 2020. Nortek also held a US $325.0 million ABL facility which was due to mature in
2021 but this was not drawn against at the date of acquisition. The ABL facility and the Senior Secured Term Loan facility
were cancelled immediately on the date of acquisition and on 30 September 2016 the Nortek 8.5% Senior Notes were repaid
together with the applicable redemption premium of US $31.2 million and accrued interest of US $28.7 million, resulting in
a repayment including principal of US $794.9 million.
A new Melrose five year multi-currency US $1.25 billion committed bank facility was entered into on 6 July 2016 to assist
with the acquisition of Nortek which consists of a US $350 million term loan facility and a US $900 million revolving
credit facility.
As with previous facilities the new facility has two financial covenants. There is a net debt to underlying EBITDA
(underlying operating profit before depreciation and amortisation) covenant and an interest cover covenant, both of which
are tested half yearly, each June and December.
The first of these covenants is set at a maximum 3.5x leverage for each of the half yearly measurement dates for the
remainder of the term. For the year ended 31 December 2016 it was approximately 1.9x, after including the first eight
months of Nortek EBITDA, showing significant headroom compared to the covenant test.
The interest cover covenant is set at 4.0x or higher throughout the life of the facility and was 20.7x at 31 December 2016,
also affording comfortable headroom compared to the covenant test.
The new facility, to the extent it has been utilised, has been drawn down in US $, the core currency of Nortek, to protect
the Melrose Group as efficiently as possible from currency fluctuations on net assets and profit.
In addition, there are a number of uncommitted overdraft, guarantee and borrowing facilities made available to the Melrose
Group. These uncommitted facilities have been lightly used.
Cash, deposits and marketable securities amounted to £42.1 million at 31 December 2016 and are offset against gross debt of
£583.6 million to arrive at the net debt position of £541.5 million. The combination of this cash and the size of the new
facility allows the Directors to consider that the Melrose Group has sufficient access to liquidity for its current needs.
The Board takes careful consideration of counterparty risk with banks when deciding where to place Melrose's cash on
deposit.
Finance cost risk management
The new Melrose bank facility carries a cost of LIBOR plus a margin.
In October 2016, the Melrose Group entered into new interest rate swap arrangements to fix the cost of LIBOR. The profile
of the interest rate swaps has been designed to hedge, on average, 70% of the interest exposure on the projected gross debt
as it reduces over the five year term. Under the terms of these swap arrangements, the Melrose Group will pay a cost of
1.0% up to 30 June 2018, 1.1% up to 30 June 2019, and 1.2% until the remaining swaps terminate on 6 July 2021.
The margin depends on the Melrose Group leverage, and ranges from 0.85% to 2.00%; as at 31 December 2016 the margin was
1.35%. The interest on the swaps is payable annually in arrears on 1 July. The bank margin is payable monthly.
Exchange rate risk management
The Melrose Group trades in various countries around the world and is exposed to many different foreign currencies. The
Melrose Group therefore carries an exchange rate risk that can be categorised into three types, transaction, translation
and disposal related risk as described below. The Board policy is designed to protect against the majority of the cash
risks but not the non-cash risks.
The most common exchange rate risk is the transaction risk the Group takes when it invoices a sale in a different currency
to the one in which its cost of sale is incurred. This is addressed by taking out forward cover against approximately 60%
to 80% of the anticipated cash flows over the following twelve months, placed on a rolling quarterly basis and for 100% of
each material contract. This does not eliminate the cash risk but does bring some certainty to it.
Exchange rates used in the period
Following the acquisition of Nortek, 81% of the Melrose Group's annual revenue is denominated in US Dollars and therefore
the largest foreign exchange rate exposure is the translation risk from changes in the US Dollar exchange rate relative to
Sterling. In addition, the Melrose Group has foreign currency exposure, the largest being a transactional exchange rate
exposure due to the Nortek US businesses transacting in the Chinese Renminbi. The following exchange rates were used in
respect of these two currencies during the year:
US Dollar Twelve month average rate Four month average (Nortek businesses) Closing rate
2016 1.36 1.26 1.23
2015 1.53 N/A 1.47
CNY
2016 8.99 8.56 8.57
2015 9.60 N/A 9.56
The translation rate risk, being the effect on the results in the year due to the translation movement of exchange rates
from one year to the next is shown below. The table below illustrates what the translation movement in revenue and
underlying operating profit would have been if the 2015 average exchange rates had been used to calculate the 2016 results
rather than the 2016 average exchange rates.
The translation difference in 2016 £m
Revenue decrease 121.3
Underlying operating profit decrease 15.8
For reference, in respect of the continuing Melrose Group, an indication of the short-term exchange rate risk, which shows
both translation exchange risk and unhedged transaction exchange rate risk, is as follows:
Sensitivity of profit to translation and unhedged transaction exchange risk Increase/(decrease) in underlying operating profit £m
For every 10 per cent strengthening of the US Dollar against Sterling 29.4
For every 10 per cent strengthening of the CNY against Sterling (3.1)
The long-term exchange rate risk, which ignores any hedging instruments, is as follows:
Sensitivity of profit to translation and full transaction exchange rate risk Increase/(decrease) in underlying operating profit £m
For every 10 per cent strengthening of the US Dollar against Sterling 35.5
For every 10 per cent strengthening of the CNY against Sterling (15.7)
No specific exchange instruments are used to protect against the translation risk because it is a non-cash risk to the
Melrose Group. However, when the Melrose Group has net debt, the hedge of having a matching debt facility funding these
foreign currency trading units protects against some of the balance sheet and banking covenant translation risk.
Lastly, and potentially most significantly for Melrose, exchange risk arises when a business that is predominantly based in
a foreign currency is sold. The proceeds for those businesses may be received in a foreign currency and therefore an
exchange risk might arise if foreign currency proceeds are converted back to Sterling, for instance to pay a dividend to
shareholders. Protection against this risk is considered on a case-by-case basis.
Contract and warranty risk
The financial risks connected with contracts and warranties, which include the consideration of warranty terms, duration
and any other commercial or legal terms are considered carefully by Melrose before being entered into.
Commodity cost risk management
As Melrose can own engineering businesses across various sectors the cumulative expenditure on commodities is important.
The Melrose Group addresses the risk of base commodity costs increasing by, wherever possible, passing on the cost
increases to customers or by having suitable purchase agreements with its suppliers which sometimes fixes the price over
some months into the future. These risks are minimised through sourcing policies (including the use of multiple sources,
where possible) and procurement contracts where prices are agreed for up to one year to limit exposure to price volatility.
On occasions, Melrose does enter into financial instruments on commodities when this is considered to be the most
efficient way of protecting against movements.
GOING CONCERN
The Melrose Group's business activities, together with the factors likely to affect its future development, performance and
position are set out in the Chief Executive's Review. In addition, the consolidated financial statements include details
of the Melrose Group's borrowing facilities and hedging activities along with the processes for managing its exposures to
credit risk, capital risk, liquidity risk, interest risk, foreign currency risk and commodity cost risk.
The Melrose Group has adequate financial resources and has a consistent cash generation record, and, as a consequence, the
Directors believe that the Melrose Group is well placed to manage its business risks successfully despite the current
uncertain economic outlook.
After making enquiries, the Directors have a reasonable expectation that the Melrose Group has adequate resources to
continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern
basis in preparing the financial statements.
Geoffrey Martin
Group Finance Director
2 March 2017
Consolidated Income Statement
Notes Year ended Year ended31 December 2015£m
31 December
2016£m
Continuing operations
Revenue 3 889.3 261.1
Cost of sales (626.0) (179.0)
Gross profit 263.3 82.1
Net operating expenses (324.9) (77.3)
Operating (loss)/profit (61.6) 4.8
Finance costs (9.5) (45.6)
Finance income 1.8 10.1
Loss before tax (69.3) (30.7)
Tax 5 30.3 14.4
Loss for the year from continuing operations (39.0) (16.3)
Discontinued operations
Profit for the year from discontinued operations - 1,424.3
(Loss)/profit for the year (39.0) 1,408.0
Attributable to:
Owners of the parent (39.0) 1,407.1
Non-controlling interests - 0.9
(39.0) 1,408.0
Earnings per share
Continuing operations:
- Basic 7 (2.6)p (0.3)p
- Diluted 7 (2.6)p (0.3)p
Continuing and discontinued operations:
- Basic 7 (2.6)p 26.4p
- Diluted 7 (2.6)p 25.8p
Underlying Results
Underlying operating profit 3,4 104.1 24.8
Underlying profit before tax 4 96.4 2.4
Underlying profit/(loss) after tax 4 70.4 (1.4)
Underlying diluted earnings per share - continuing 7 4.4p Nil p
Consolidated Statement of Comprehensive Income
Notes Year ended Year ended31 December 2015£m
31 December
2016£m
(Loss)/profit for the year (39.0) 1,408.0
Items that will not be reclassified subsequently to the Income Statement:
Net remeasurement gain on retirement benefit obligations 22.7 57.5
Income tax charge relating to items that will not be reclassified 5 (3.3) (6.0)
19.4 51.5
Items that may be reclassified subsequently to the Income Statement:
Currency translation on net investments 104.3 (30.8)
Currency translation on non-controlling interests - 0.2
Transfer to Income Statement from equity of cumulative translation differences on disposal of foreign operations - 123.7
Gains/(losses) on cash flow hedges 5.3 (2.8)
Transfer to Income Statement on cash flow hedges 0.3 3.7
Income tax credit/(charge) relating to items that may be reclassified 5 5.4 (1.0)
115.3 93.0
Other comprehensive income after tax 134.7 144.5
Total comprehensive income for the year 95.7 1,552.5
Attributable to:
Owners of the parent 95.7 1,551.4
Non-controlling interests - 1.1
95.7 1,552.5
Consolidated Statement of Cash Flows
Notes Year ended31 December Year ended31 December 2015£m
2016£m
Net cash from/(used in) operating activities from continuing operations 11 50.6 (57.8)
Net cash from operating activities from discontinued operations 11 - 89.2
Net cash from operating activities 50.6 31.4
Investing activities
Disposal of businesses - 3,381.0
Disposal costs (0.1) (25.6)
Net cash disposed - (93.5)
Purchase of property, plant and equipment (16.8) (17.4)
Proceeds from disposal of property, plant and equipment 0.3 -
Purchase of computer software and development costs (0.6) (0.3)
Dividends received from joint ventures 0.9 0.3
Acquisition of subsidiaries (1,130.0) -
Cash acquired on acquisition of subsidiaries 8 9.4 -
Interest received 1.8 10.1
Net cash (used in)/from investing activities from continuing operations (1,135.1) 3,254.6
Net cash used in investing activities from discontinued operations 11 - (38.7)
Net cash (used in)/from investing activities (1,135.1) 3,215.9
Financing activities
Return of Capital (2,388.5) (200.4)
Net proceeds from Rights Issue 10 1,612.0 -
Repayment of borrowings (1,092.4) (595.1)
New bank loans raised 557.4 -
Costs of raising debt finance (10.9) -
Dividends paid 6 (5.8) (80.6)
Net cash used in financing activities from continuing operations (1,328.2) (876.1)
Net cash used in financing activities from discontinued operations 11 - -
Net cash used in financing activities (1,328.2) (876.1)
Net (decrease)/increase in cash and cash equivalents (2,412.7) 2,371.2
Cash and cash equivalents at the beginning of the year 11 2,451.4 70.5
Effect of foreign exchange rate changes 11 3.4 9.7
Cash and cash equivalents at the end of the year 11 42.1 2,451.4
As at 31 December 2016, the Group had net debt of £541.5 million (31 December 2015: net cash of £2,451.4 million). A
reconciliation of the movement in net debt is shown in note 11.
Consolidated Balance Sheet
Notes 31 December 31 December
2016£m 2015£m
Non-current assets
Goodwill and other intangible assets 2,667.0 273.0
Property, plant and equipment 271.9 112.9
Interests in joint ventures - -
Deferred tax assets 49.3 25.7
Derivative financial assets 5.2 -
Trade and other receivables 5.2 1.1
2,998.6 412.7
Current assets
Inventories 297.3 55.6
Trade and other receivables 365.8 67.9
Derivative financial assets 3.8 1.2
Cash and cash equivalents 42.1 2,451.4
709.0 2,576.1
Total assets 3 3,707.6 2,988.8
Current liabilities
Trade and other payables 426.4 71.2
Interest-bearing loans and borrowings 0.5 -
Derivative financial liabilities 4.2 1.5
Current tax liabilities 10.2 3.3
Provisions 9 138.1 12.0
579.4 88.0
Net current assets 129.6 2,488.1
Non-current liabilities
Trade and other payables 13.7 -
Interest-bearing loans and borrowings 583.1 -
Deferred tax liabilities 193.7 20.2
Retirement benefit obligations 33.4 17.2
Provisions 9 141.5 18.0
965.4 55.4
Total liabilities 3 1,544.8 143.4
Net assets 2,162.8 2,845.4
Equity
Issued share capital 10 129.4 10.0
Share premium account 1,492.6 -
Merger reserve 112.4 2,500.9
Other reserves (2,329.9) (2,329.9)
Hedging reserve 4.5 -
Translation reserve 67.8 (37.8)
Retained earnings 2,686.0 2,702.2
Equity attributable to owners of the parent 2,162.8 2,845.4
Non-controlling interests - -
Total equity 2,162.8 2,845.4
The financial statements were approved and authorised for issue by the Board of Directors on 2 March 2017 and were signed
on its behalf by:
……………………………………………… ……………………………………………
Geoffrey Martin Simon
Peckham
Group Finance Director Chief
Executive
Consolidated Statement of Changes in Equity
Issued share capital£m Share premium account£m Merger reserve£m Other reserves£m Hedging reserve£m Translation reserve£m Retained earnings£m Equity attributable to owners of the parent£m Non-controlling interests£m Total equity£m
At 1 January 2015 263.8 - 2,500.9 (2,329.9) (0.5) (130.7) 1,267.5 1,571.1 2.6 1,573.7
Profit for the year - - - - - - 1,407.1 1,407.1 0.9 1,408.0
Other comprehensive income - - - - 0.5 92.9 50.9 144.3 0.2 0.2 144.5
Total comprehensive income - - - - 0.5 92.9 1,458.0 1,551.4 1.1 1,552.5
Return of Capital - - - - - - (200.4) (200.4) - (200.4)
Dividends paid - - - - - - (80.6) (80.6) (0.4) (81.0)
Capital reduction (253.8) - - - - - 253.8 - - -
Credit to equity for equity- settled share-based payments - - - - - - 4.0 4.0 - 4.0
Purchase of non-controlling interests - - - - - - (0.1) (0.1) (1.4) (1.5)
Disposal of non-controlling interests - - - - - - - - (1.9) (1.9)
At 31 December 2015 10.0 - 2,500.9 (2,329.9) - (37.8) 2,702.2 2,845.4 - 2,845.4
Loss for the year - - - - - - (39.0) (39.0) - (39.0)
Other comprehensive income - - - - 4.5 105.6 24.6 134.7 - - 134.7
Total comprehensive income/(expense) - - - - 4.5 105.6 (14.4) 95.7 - 95.7
Return of Capital - - (2,388.5) - - - - (2,388.5) - (2,388.5)
Issue of new shares 119.4 1,492.6 - - - - - 1,612.0 - 1,612.0
Dividends paid - - - - - - (5.8) (5.8) - (5.8)
Credit to equity for equity- settled share-based payments - - - - - - 4.0 4.0 - 4.0
At 31 December 2016 129.4 1,492.6 112.4 (2,329.9) 4.5 67.8 2,686.0 2,162.8 - 2,162.8
Notes to the financial statements
1. Corporate information
The financial information included within this preliminary announcement does not constitute the Company's statutory
financial statements for the years ended 31 December 2016 or 31 December 2015 within the meaning of s435 of the Companies
Act 2006, but is derived from those financial statements. Statutory financial statements for the year ended 31 December
2015 have been delivered to the Registrar of Companies and those for the year ended 31 December 2016 will be delivered to
the Registrar of Companies during April 2017. The auditor has reported on those financial statements; their reports were
unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498(2) or (3)
of the Companies Act 2006.
While the financial information included in this preliminary announcement has been prepared in accordance with the
recognition and measurement criteria of International Financial Reporting Standards ("IFRSs"), this announcement does not
itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that
comply with IFRSs during April 2017.
The Group has adopted a number of standards and amendments which became mandatory during the current financial year. These
changes have had no significant impact on the Group's financial statements. The accounting policies followed are the same
as those detailed within the 2015 Annual Report which are available on the Group's website www.melroseplc.net.
On 31 August 2016 the Group acquired 100 per cent of the issued share capital and obtained control of Nortek Inc.
("Nortek") for cash consideration of £1,093.1 million. Nortek is a leading diversified global manufacturer of innovative
air management, security, home automation and ergonomic and productivity solutions. The results of Nortek are included in
the consolidated financial statements of the Group for the four month period from the date of acquisition.
The Board of Directors approved the preliminary announcement on 2 March 2017.
Alternative performance measures
In response to the Guidelines on Alternative Performance Measures ("APMs") issued by the European Securities and Markets
Authority ("ESMA"), additional information on the APMs used by the Group is provided below. The APMs used by the Group
are:
- Underlying operating profit/(loss)
- Underlying profit/(loss) before tax
- Underlying profit/(loss) after tax
- Underlying diluted earnings per share
- Underlying profit/(loss) conversion to cash
A reconciliation between statutory reported measures and the underlying measures listed above is shown in notes 4 and 7 of
this preliminary announcement.
Underlying profit/(loss) excludes items which are significant in size or volatility or by nature are non-trading or
non-recurring, or any item released to the Income Statement that was previously a fair value item booked on acquisition.
These items are not included in the performance measures the Board uses to monitor the performance of the Group.
The underlying measures are used to partly determine the variable element of remuneration of senior Management throughout
the Group and are also in alignment with performance measures used by certain external stakeholders. The underlying
measures are also used to value individual businesses as part of the "Buy, Improve and Sell" Melrose strategy model.
Underlying profit is not a defined term under IFRS and may not be comparable with similarly titled profit measures reported
by other companies. It is not intended to be a substitute for, or superior to, GAAP measures. All APMs relate to the
current year results and comparative periods where provided.
2. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experiences and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and
future periods if the revision affects both current and future periods.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year, are discussed below.
Impairment of non-current assets
Goodwill and intangible assets are tested for impairment whenever events or circumstances indicate that their carrying
amounts might be impaired and at least annually. Such events and circumstances include the effects of restructuring
initiated by management.
Determining whether goodwill and intangible assets are impaired requires an estimation of the value in use of the
cash-generating units to which goodwill and intangible assets have been allocated. The value in use calculation requires
the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate
in order to calculate present value. Management draw upon experience as well as external resources in making these
estimates.
The carrying amount of goodwill and other intangible assets (not including computer software and development costs) at the
Balance Sheet date was £2,656.1 million (31 December 2015: £271.8 million). At 31 December 2016 and 2015, the Group
recognised no impairment loss in respect of these assets. Further detail, which includes sensitivity analysis, is shown in
note 8.
Brush China
The Group's assets in Brush China remained mothballed at the year end as production was reduced during 2016. The value in
use calculation prepared by management to estimate the recoverable amount of the Brush China business supported the
carrying amount of the Brush China assets which were £37.0 million as at 31 December 2016. However, significant uncertainty
remains and the determination as to whether these assets were impaired at 31 December 2016 involved management judgement on
highly uncertain matters, particularly with respect to the level of demand for generators in the Chinese market, the
successful resolution of current customer discussions, and therefore the timing and quantity of forecast unit sales, as
well as long-term growth rates and discount factors.
Should the resolution of customer discussions or the level of demand for generators not be realised in line with current
expectations and should the China plant continue to remain mothballed there is a worst case risk that a full impairment
could potentially be required which would reduce the value of the Brush China assets to a net realisable value of
approximately £9 million.
Assumptions used to determine the carrying amount of the Group's defined benefit obligation
The Group's defined benefit obligation is discounted at a rate set by reference to market yields at the end of the
reporting period on high quality corporate bonds. Significant judgement is required when setting the criteria for bonds to
be included in the population from which the yield curve is derived. The most significant criteria considered for the
selection of bonds include the issue size of the corporate bonds, quality of the bonds and the identification of outliers
which are excluded. In addition judgement is made in determining mortality rate assumptions to be used when valuing the
Group's defined benefit obligations. At 31 December 2016, the Group's retirement benefit obligation deficit was £33.4
million (31 December 2015: £17.2 million).
Taxation
The Group is subject to income tax in most of the jurisdictions in which it operates. Management is required to exercise
judgement in determining the Group's provision for income taxes. Management's judgement is required in estimating tax
provisions where management believe it is probable that additional current tax will become payable in the future following
the audit by the tax authorities of previously filed tax returns. Such provisions are measured based on management's best
estimates of the amounts payable. Management's judgement is also required as to whether a deferred tax asset should be
recognised based on the availability of future taxable profits and the expected timing of future disposals. While the Group
aims to ensure that the estimates recorded are accurate, the actual amounts could be different from those expected.
Provisions
The quantification of certain liabilities within provisions (environmental remediation obligations and future costs and
settlements in relation to certain legal claims) have been estimated using the best information available. However, such
liabilities depend on the actions of third parties and on the specific circumstances pertaining to each obligation, neither
of which is controlled by the Group. Although provisions are reviewed on a regular basis and adjusted for management's
best current estimates, the judgemental nature of these items means that future amounts settled may be different from those
provided. Further details are set out in note 9.
3. Segment information
Segment information is presented in accordance with IFRS 8: "Operating segments" which requires operating segments to be
identified on the basis of internal reports about components of the Group that are regularly reported to the Group's Board
in order to allocate resources to the segments and assess their performance. The Group's reportable operating segments
under IFRS 8 are as follows:
Energy - includes the Brush business, a specialist supplier of energy industrial products to the global market.
Air Management - includes the Air Quality & Home Solutions business ("AQH"), a leading manufacturer of ventilation products
for the professional remodelling and replacement markets, residential new construction market, and do-it-yourself market.
This division also includes the Heating, Ventilation & Air Conditioning business ("HVAC") which manufactures and sells
split-system and packaged air conditioners, heat pumps, furnaces, air handlers and parts for the residential replacement
and new construction markets, along with custom-designed and engineered HVAC products and systems for non-residential
applications.
Security & Smart Technology - includes the Security & Control business ("SCS") along with the Core Brands and GTO Access
Systems businesses. These businesses are manufacturers and distributors of products designed to provide convenience and
security primarily for residential applications and audio visual equipment for the residential audio video and professional
video market.
Ergonomics - includes the Ergotron business, a manufacturer and distributor of innovative products designed with ergonomic
features including wall mounts, carts, arms, desk mounts, workstations and stands that attach to or support a variety of
display devices such as notebook computers, computer monitors and flat panel displays.
In addition, there are central cost centres which are also separately reported to the Board. The central corporate cost
centre which contains the Melrose Group head office costs along with charges related to the divisional management long-term
incentive plans and the remaining Nortek central cost centre.
The discontinued segment in 2015 comprises the Elster disposal group and the Prelok business. The Elster disposal group
included the Gas, Electricity and Water segments and their related central costs. The Elster group also contained the
Elster divisional long-term incentive plans, the FKI UK defined benefit pension plan and the McKechnie UK defined benefit
pension plan.
Transfer prices between business units are set on an arm's length basis in a manner similar to transactions with third
parties.
No single customer contributed 10% or more to the Group's revenue in 2016. In 2015, revenues of approximately £67.0
million arose from the Group's largest customer in that year.
The Group's geographical segments are determined by the location of the Group's non-current assets and, for revenue, the
location of external customers. Inter-segment sales are not material and have not been disclosed.
Segment revenues and results
The following tables present the revenue, results and certain asset and liability information regarding the Group's
operating segments and central cost centres for the year ended 31 December 2016 and the comparative year.
Segment revenue from external customers
Year ended 31 December 2016£m Year ended 31 December 2015£m
Continuing operations
Energy 246.4 261.1
Air Management 416.5 -
Security & Smart Technology 130.4 -
Ergonomics 96.0 -
Nortek total 642.9 -
Total continuing operations 889.3 261.1
Discontinued operations - 1,109.8
Total revenue 889.3 1,370.9
Segment results
Notes Year ended 31 December 2016£m Year ended 31 December 2015£m
Continuing operations
Energy 32.0 38.5
Air Management 46.8 -
Security & Smart Technology 17.1
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