Full Year Results 2024

Released: 11 March 2025

Full Year Results 2024

Strong execution and Adjusted EBIT margin expansion in a challenging market

TI Fluid Systems plc ("The Group"), a global industry leader in highly engineered automotive fluid storage, carrying and delivery systems and thermal management products and systems, announces its results for the year ended 31 December 2024.

*Adjusted measures are non - IFRS metrics and reconciled in Note 4 and defined in the glossary in Note 16

**2024 consists of a 2.40 € cents interim dividend paid in September; given the pending acquisition by ABC Technologies, the Board is not recommending a final dividend for 2024

Full year 2024 financial performance

Delivering on our strategy for sustainable and profitable growth:

Hans Dieltjens, Chief Executive Officer and President, commented:

"We have delivered a strong margin performance and strategic progress despite multiple external headwinds, demonstrating the strengths of our propulsion agnostic portfolio and our Taking-the-Turn strategy. Our financial performance was driven by relentless commercial execution and the benefits of our intensified productivity and efficiency measures. We also continued to successfully execute our strategic priorities by further investing in our EV growth opportunities and maximising our conventional portfolio. It has been a privilege to lead TI, and I would like to thank colleagues across the business for their continued hard work and contribution to our success over the last three years. Together we have accelerated our transition to electrification and ensured TI is well-positioned to continue to deliver on its vision and create value for all stakeholders as part of an enlarged group."

Notes

1  Adjusted EBITDA, net leverage and Adjusted ROCE defined in Note 16 in the glossary

Enquiries

Chief Executive Officer's statement

In 2024, we delivered strong Adjusted EBIT margin expansion and robust free cash flow thanks to the team's relentless focus on operational execution to overcome external headwinds. We also continued to invest in EV growth and deliver strong bookings whilst benefiting from our conventional portfolio. Our performance and progress in the year reflect the strengths of our propulsion agnostic portfolio and our Taking-the-Turn strategy for a successful transition to electrification. I am proud to say that we ended 2024 on track, delivering on our vision and creating value for all stakeholders.

2024: excellent operational execution driving strong progress in a challenging market

Our 2024 performance demonstrates TI's fundamental strengths and resilience, underpinned by a propulsion agnostic portfolio and diversified geographic and customer mix. Our success in delivering further margin expansion despite external headwinds from lower industry volumes, persistent labour inflation, customer-specific destocking, slower EV growth and the continued rise of the Chinese Local OEMs ("LOEMs") is testament to the entire team's commitment to driving productivity and efficiency. I would like to thank them all.

2024 financial performance: strong Adjusted EBIT margin expansion

Group revenue declined 4.4% year on year to €3,360.3 million (2023: €3,516.2 million). At constant currency, revenue declined 3.5%, or 3.0% excluding the Cascade acquisition and a planned product line exit in the Americas. This compares to a 2.2% TIFS' weighted market production decline, and a 1.1% reduction in global light vehicle production in the year.

· EMEA: revenue increased 3.1% at constant currency, including a circa 160 basis points contribution from the Cascade Engineering Europe acquisition. Growth was well ahead of light vehicle production volumes, which declined 4.5%. Fuel tanks and delivery systems delivered strong revenue growth. In the second half, demand for thermal products for EVs also increased as customers ramped up BEV production ahead of 2025 European CO2 emissions standards.

· Asia Pacific: revenue declined 7.7% at constant currency compared to a light vehicle production increase of 0.1%. Excluding China, revenue in the region was broadly flat at constant currency. As expected, revenue was lower in China, but slightly better than the reduction in Global OEM production, particularly in Q4, as revenues continued to ramp up on our 2023 and 2024 launches with LOEMs. We also launched circa 66 programmes during 2024, almost two thirds of which were with LOEMs.

· Americas: revenue was 8.1% lower at constant currency compared to a 0.9% reduction in light vehicle production. As expected, the exit of a less profitable product line reduced constant currency revenue by circa 350 basis points. Destocking by the region's largest OEM customer was also a significant headwind. Tanks and brake lines delivered good growth, whilst demand for thermal products was significantly weaker. 

One of the key financial highlights of the year was the continued expansion of the Group's Adjusted EBIT margin, with a 40 basis points year-on-year increase to 7.8% (2023: 7.4%) representing further progress towards our double-digit mid-term target. Through disciplined financial execution, we converted a 0.5% increase in Adjusted EBIT into 5.7% growth in Adjusted EPS.

Statutory Operating Profit was €132.4 million (2023: €195.8 million), down year on year primarily due to an exceptional charge related to the closure of the Group's manufacturing facility in Ligonier and the associated exit of the powertrain business at this location, as well as higher restructuring costs.

2024 cash generation reflected a strong second half despite continued volatility in customer production schedules. Adjusted Free Cash Flow conversion of 29% of Adjusted EBITDA was in-line with guidance. We maintained a strong balance sheet with year end net leverage of 1.6x Adjusted EBITDA (2023: 1.5x) whilst also returning a total of €69.2 million in cash to shareholders through dividends and our share buyback programme. This represents the Group's largest cash return to shareholders in a single year since its initial public offering in 2017.

Our industry

Global light vehicle production ("GLVP") in 2024 declined 1.1% year-on-year to 89.5 million units (2023: 90.5 million). Forecasts were steadily downgraded through the year, largely driven by a slowdown in BEV production and destocking in North America. Volumes were weaker in the second half in particular, down 2.0%. The changing composition of GLVP provided an additional headwind, with the largest volume reductions in Europe and North America, partially offset by higher volumes at LOEMs in China.

The industry transition to electrification continued, but at a slower pace than previously expected. BEV production increased 13% in 2024, well below earlier projections - as recently as January 2024, the industry expected just over 30% growth in BEV volumes.

Looking ahead, industry forecasts anticipate a broadly flat GLVP in 2025 before the industry returns to growth in 2026 and 2027. The transition to EV is set to continue, and by 2030, industry forecasts expect BEV penetration of 38% (2024: 15%); PHEV & HEV of 23% (2024: 14%) and ICE of 39% (2024: 71%). Hybrids are now expected to play a much larger role in the transition coupled with a slower pace of decline in ICE vehicle production. Since August 2023, industry forecasts for 2025-30 BEV production have reduced by 41 million units, PHEV and HEV unit forecasts have increased by 24 million units and ICE unit forecasts have also increased by 13 million. Industry forecasts also indicate increasing demand for range extender BEVs which utilise a small combustion engine for battery charging. Whilst some of these developments create short-term volatility and uncertainty, a number also play directly to TI's strengths. Our propulsion agnostic portfolio means we are well-positioned to capture the resulting opportunities. 

Taking-the-Turn: delivering on our strategy for long-term, profitable growth

I am delighted with our strategic progress in 2024 as we balanced investment in electrification opportunities whilst also maximising our conventional portfolio. This is particularly true of product development where we successfully finalised and launched new product lines that will underpin our EV strategy. A key highlight is our SPT 2.0 fuel tank, a new and highly successful range of fuel tanks for plug-in hybrids which was validated by awards received from some of the largest EV manufacturers in China. We also completed the development of our electric coolant pump ("eCP") and installed our first manufacturing line in China ahead of industrialisation and launch in 2025. These are just a few examples how we continue to progress our strategic vision.

As part of our Taking-the-Turn strategy, we set clear financial targets in 2023 based on delivering revenue growth and a return to double-digit Adjusted EBIT margins in the mid-term.

· Revenue growth: 2026 target of €3.8-4.2 billion; 2030 target of >€4.5 billion.

· Return to double-digit Adjusted EBIT margins in the mid-term.

· Attractive shareholder value creation: targeting Adjusted Free Cash Flow Conversion of 30% and leverage of 1.5x to underpin returns, including a progressive dividend.

We also aim to become a more sustainable business, with 2030 targets for a 50% reduction in Scope 1 & 2 carbon emissions, and a 30% reduction in Scope 3 as compared with a 2021 baseline.

Sustainable revenue growth: investing in our long-term EV future and capitalising on short-term opportunities

The changing shape and pace of the transition has increased the opportunities for conventional products for ICE vehicles. This was reflected in 2024 revenue and bookings. At the same time, we have continued to make progress against our key strategic pillars, including continued investment in the Group's future long-term EV growth.

Our product portfolio means that we are ideally placed to benefit from the slower than expected decline in ICE vehicle production and associated platform extensions. During 2024, we delivered good growth in revenue from fuel tanks and delivery systems in the Americas and Europe, including for ICE. The increasing role for PHEVs and range extender EVs in the transition is also creating new opportunities for our conventional products, including our market-leading tanks technology. Some of the strongest growth in PHEV production is expected to be in China. Through developing innovative, cost competitive tanks such as our SPT 2.0, we are very well positioned to capitalise on this trend to improve our position with Chinese LOEMs.

We maintained our focus on bookings, and total bookings for 2024 remained strong at €2.7 billion (2023: €3.0 billion) despite a reduction in bidding opportunities. Bookings demonstrated a clear shift to ICE, whilst BEV and PHEV platforms available to bid were materially smaller than expected due to delays to tenders as customers revised their plans in relation to electrification. We delivered strong growth in bookings for ICE vehicles in the Americas, whilst BEV awards and EMEA were weaker. ICE bookings represented over half of total awards in the period. BEV awards were €0.5 billion (2023: €1.3 billion), whilst HEV awards were €0.6 billion (2023: €0.8 billion).

We also continued to drive progress against our key pillars for growth in an EV world - expanding our fluid handling business for EVs, strengthening our position in Modules & Systems for EVs, and enhancing our position in China. Longer-term, the transition to BEVs represents a tremendous opportunity for our fluid handling products, particularly lines and connectors. We estimate that BEVs require 4-5x as many connectors and 2-4x as many coolant lines versus a comparable ICE vehicle.

We therefore continued to invest in products and initiatives that will drive future EV growth. This includes opening our fifth and final e-Mobility Innovation Centre ('eMIC') in the US in the middle of the year. Our eMICs are a differentiator in winning new thermal management business for EVs by providing customers with one-stop shops to tackle their thermal management challenges and accelerate speed to market. We also continued to invest in product innovation, and our new electric valve and eCP will increase our BEV content and strengthen our position in Modules & Systems.

In China, we continued to enhance our position with the LOEMs, leveraging our long history in China and strong market positions with GOEMs. Around half of our bookings and close to two thirds of the 66 launches in the period were with LOEMs. We also made important progress with the largest LOEM, with eight awards in total for brake lines and tanks for BEV and PHEV platforms in the year. 

Strong margin expansion and further progress towards a double-digit Adjusted EBIT margin

2024 represented further progress towards achieving our double-digit Adjusted EBIT margin target. The Group's 40 basis points margin expansion was primarily driven by self-help initiatives, which more than compensated for lower volumes and labour inflation. Productivity contributed 130 basis points to the margin and commercial activities also played an important role.

Productivity and efficiency have always been part of the Group's DNA. Our programme for driving operational excellence and cost competitiveness is anchored in clear, simple metrics and dashboards with live data so we can actively manage performance. We entered 2024 fully focused on productivity and with many actions already underway. In response to weakening market conditions, we took additional actions in the second half, including short-term measures on headcount and fixed costs as well as accelerated restructuring. Purchasing has played an important role throughout 2024, driven by benchmarking, consolidating product lines, further localisation and leveraging our scale. Our operational efficiency programme consists of many small initiatives which are powerful when taken as a whole. 

Finally, we continued to optimise our footprint, closing three facilities and downsizing other locations. In response to lower short-term industry forecasts, we have temporarily increased our investment in restructuring to €37.4 million (2023: €13.4 million), largely related to headcount and footprint optimisation.

A more sustainable business

Safety remains our number one priority as we continue to focus on continuous improvement of health and safety. Having already rolled out our ISO 45001 Occupational Health & Safety Management System to manufacturing sites, we further progressed this process for our eMICs, test centres and selected warehouses. We are also rolling out Behaviour Based Safety programmes to drive a safety-first culture focused on prevention where all employees go home safe. Our LTI rate of 1.76 represented a significant year-on-year improvement (2023: 3.0), and we continue to increase our efforts to drive further progress.

Sustainability remains at the heart of our purpose, commercial strategy and how we run our business. Our products are at the heart of this, as we develop new, cleaner technologies to support customers in producing greener vehicles. Our revenue mix remains broadly in line with the industry and we continue to invest in product innovation and development. Our new electric coolant pump is on track to enter production in the first half of 2025. This will complete our product portfolio for Modules & Systems, which in turn offer BEV manufacturers weight and efficiency gains. Our new pressurised SPT 2.0 fuel tank for PHEVs caters directly to the increasing role hybrids are expected to play in the transition. By adapting an existing technology, we have developed a tank that can withstand higher pressures and at a lower cost whilst also minimising evaporative emissions.

We also continued to improve our own environmental footprint, increasing our use of renewable energy and energy efficiency. We achieved a significant step change in reducing Scope 1 & 2 emissions (tonnes of CO2 equivalent) which are now 28% lower than our 2021 baseline (2023: 15% lower), and 15% lower year-on-year. Development of our life cycle analysis and mapping of product carbon footprint in the period will also help us to define Scope 3 carbon emission reduction actions. We are on track to deliver our planned 50% reduction in Scope 1 & 2 emissions by 2030. 

People

During 2024, I was delighted to complete our Executive Committee with one external appointment and two internal promotions. Julien Plenchette joined TI in April as President for the Americas region whilst Renee McLeod and Samantha Bellis were promoted to the Executive Committee in their respective roles of Chief Human Resources Officer in June and Vice President, Operational Excellence in September. All three bring a wealth of experience and track record in the automotive industry, and I am proud to lead an Executive Committee with a wide range of skills and deep automotive experience gained both within TI and at other leading organisations in our sector.

Our regional structure has bedded down well and is delivering the expected financial and operational benefits, ensuring our leaders are better placed to adapt to the diverging dynamics across their individual markets. This structure has enabled us to remove a global layer, reducing cost and enhancing the regions' ability to respond to local dynamics quickly and decisively. I believe this has played an important role in 2024, and that it will continue to be a differentiator in a market undergoing rapid change and deglobalisation.

Talent remains a key priority, including developing, retaining and promoting talent from within. At the same time, we seek to bring valuable new skills into the Group through select external appointments. During 2024, we intensified our focus on career and skills development within TI, including a review of high potential talent at the executive level as well as investing in upskilling in engineering and continuous improvement. As a result, we have a well-balanced leadership team, with a mix of experienced TI leaders and external appointees with a broad range of skills and diversity of experience.

Returns to shareholders

During 2024, we returned a total of €69.2 million to shareholders (2023: €26.1 million). This consisted of €34.7 million in respect of the 2023 final dividend and 2024 interim dividend and €34.5 million on buying back shares. The €40 million share buyback programme announced in August 2023 was completed in October. Given the pending acquisition of TI by ABC Technologies, the Board is not recommending a final dividend for 2024.

Outlook

I am very proud of what we have achieved in 2024, and our continued progress in a challenging market is testament to the strength of our market-leading positions, resilience and ability to adapt to changing market conditions.

Looking ahead to 2025, subject to receiving the requisite regulatory approvals and court approval of the scheme of arrangement, TI will enter a new chapter in its history as part of a larger, combined group with ABC Technologies. Assuming completion as anticipated, this transaction will bring together two complementary businesses and create an opportunity to accelerate TI's strategic development. The transaction would also result in a larger, more diversified business with more opportunities for employees, a broader range of products and customers and better positioned to navigate industry challenges.

It has been a privilege to lead TI, and I would like to thank colleagues across the business for their hard work and contribution to our success over the last three years. Together we have accelerated our transition to electrification and ensured TI is well-positioned to continue to deliver on its vision and create value for all stakeholders. I am confident that the business has an exciting future ahead as part of a larger group. 

Hans Dieltjens

Chief Executive Officer and President

10 March 2025

Chief Financial Officer's report

Strong financial performance in a challenging market

We delivered a strong 2024 financial performance despite weakening industry volumes, particularly in the second half, and persistent labour inflation. By concentrating on self-help measures and factors within our control, we successfully expanded our Adjusted EBIT margin by 40 basis points to 7.8% (2023: 7.4%) despite a 3.5% decline in revenue at constant currency. Moreover, Adjusted EPS increased 5.7%, demonstrating our financial discipline as we reduced interest costs, maintained an Adjusted effective tax rate below 30% and completed our €40 million share buyback programme. Our capital allocation policy continued to deliver attractive shareholder returns, with a total cash return of €69.2 million representing the Group's largest in a single year since its initial public offering in 2017.

Adjusted cash conversion of 29% of Adjusted EBITDA was in line with guidance and reflects good progress with working capital management in the second half. We also maintained our strong balance sheet and returns profile, with year-end net debt / Adjusted EBITDA of 1.6x (2023: 1.5x) and Adjusted Return on Capital Employed of 26.8% (2023: 27.6%).

Key financial highlights

*Interim dividend of 2.40 Euro cents paid in-line with the Group's adoption of a progressive dividend policy in 2023; given the pending acquisition by ABC Technologies, the Board is not recommending a final dividend for 2024

Revenue performance

Group revenue for the year ended 31 December 2024 was €3,360.3 million (2023: €3,516.2 million), 4.4% lower year-on-year, partly due to a 90 basis points foreign exchange headwind from the Euro against most key currencies. At constant currency, revenue declined 3.5%, or 3.0% excluding the Cascade acquisition and the product line exit in the Americas. This was slightly lower than TIFS' weighted market production, which declined 2.2% as compared with a 1.1% decline in global light vehicle production.

Revenue by region €m

Adjusted EBIT margin

The Group uses several financial measures to manage the business, including Adjusted EBIT, which is a non-IFRS measure, but which has been consistently used by the Group to monitor and measure the underlying operating performance of the business. This ensures that decisions taken align with the Group's long-term interests. The metrics are also used in certain of our compensation plans and to communicate to our investors. A reconciliation between the reported and adjusted measures is shown in Note 4.

One of the key financial highlights of the year was the continued recovery of the Group's Adjusted EBIT margin, which increased 40 basis points to 7.8% (2023: 7.4%) despite lower revenue. This improvement was driven mainly by operational and productivity initiatives which intensified in the second half in response to weaker market volumes. Continuing commercial activities also contributed. EMEA delivered significant Adjusted EBIT margin expansion of 210 basis points reflecting good revenue growth and a strong productivity focus. In the Americas, we succeeded in offsetting the impact of lower revenue through productivity initiatives to maintain a broadly flat Adjusted EBIT margin. In Asia Pacific, the Adjusted EBIT margin declined 100 basis points due to lower volumes in China where Global OEM production declined by 16% and which was partially offset by productivity actions. Group Adjusted EBIT was slightly higher year-on-year, up 0.5% to €260.8 million (2023: €259.6 million). 

Adjusted EBIT and Adjusted EBIT margin by region €m

Reconciliation of Adjusted EBIT to Statutory Operating Profit

Statutory Operating Profit was €132.4 million (2023: €195.8 million), down year on year primarily due to an exceptional charge related to the closure of the Group's manufacturing facility in Ligonier and the associated exit of the powertrain business at this location, as well as higher restructuring costs as described further below. Key adjusting items excluded from Adjusted EBIT but included in Statutory Operating Profit are below.

Adjusting items include a €37.4 million restructuring cost (2023: €13.4 million) related to activity to drive efficiency, optimise our footprint and adjust our workforce as we adapt to the constantly evolving needs of our customers. The increase in restructuring costs compared to 2023 relates to elevated activity in response to the softening of industry volumes. The majority of these costs were cash related. We also incurred an exceptional item before tax of €40.6 million (2023: €nil) related to the planned exit of an unprofitable product line, the majority of which relates to the non-cash write-down of intangible assets related to the Millenium acquisition. The largest adjusting item relates to non-cash depreciation and amortisation on purchase accounting, mainly relating to Bain's acquisition of the Group in 2015. Costs of €5.5 million were incurred in respect of the pending acquisition by ABC Technologies. Other items of €3.0 million (2023: €4.9 million) consist primarily of net foreign exchange losses. 

Net finance expense

Net finance expense reduced year on year to €68.5 million (2023: €74.7 million). This reflects the full year impact of the August 2023 term loan repayment and the benefit of lower interest rates on interest costs, partially offset by higher costs related to lease interest. 

Effective tax rate

The Group's adjusted income tax expense was €55.4 million (2023: €52.0 million), with the Adjusted Effective Tax Rate slightly higher year on year at 28.8% (2023: 28.1%) on Adjusted profit before tax of €192.3 million (2023: €184.9 million). This reflects the significant improvement in the Group's profitability in the last two years together with the work undertaken in 2023 to address historical one-off factors driving a higher effective tax rate. Including the effect of adjusting items, the Group's statutory income tax expense was €31.4 million (2023: €37.5 million).

Earnings per share

Consistent with the definition of Adjusted EBIT, Adjusted Net Income and Adjusted EPS are non-IFRS measures which are used by the Group to monitor and measure the underlying operating performance of the business, and ensuring that decisions taken align with the Group's long-term interests. The metrics are also used in certain of our compensation plans and to communicate to our investors. A reconciliation between the reported and adjusted measures is shown in Note 4.

In 2024, Adjusted Net Income increased 2.9% to €136.7 million (2023: €132.8 million). Growth in Adjusted EPS also reflects a lower number of shares as a result of the share buyback, up 5.7% to 27.2 Euro cents (2023: 25.8 Euro cents). The weighted average number of shares for 2024 was 502.0 million (2023: 515.6 million).

On a statutory basis, the Group's Profit for the Year was €32.5 million (2023: €83.6 million), resulting in Basic Earnings per Share (EPS) of 6.4 Euro cents for the year (2023: 16.2 Euro cents).

Adjusted Free Cash Flow conversion

Adjusted Free Cash Flow, the Group's primary operating measure of cash flow performance, was €113.0 million (2023: €140.7 million). This represents Adjusted Free Cash Flow conversion of 29% of Adjusted EBITDA (2023: 36%), in line with guidance and the Group's circa 30% target. This reflects a strong second half performance on working capital management. For the full year, our working capital ratio was 10.4% (2023: 8.7%), with a working capital outflow of €14.3 million (2023: €11.1 million outflow) due to higher inventory. Group tax payments decreased to €58.8 million (2023: €66.5 million).

Our capex needs remain modest, at 4.3% of revenue in 2024 (2023: 3.5%). Total capex invested, including capitalised R&D, was €145.7 million (2023: €124.4 million), largely consisting of maintenance capex and investment to support the launch of a significant number of new customer programmes. The net cash outflow on restructuring was €25.8 million (2023: €14.3 million), higher year on year as discussed above, and largely related to severance payments.

Free cash flows of €82.7 million (2023: €104.2 million) were offset by financing cash outflows of €104.3 million (2023: €162.5 million). Financing cash outflows include a total dividend cash outflow of €34.7 million (2023: €19.8 million), a further €34.5 million outflow to complete the share buyback programme announced in August 2023 (2023: €6.3 million), and lease principal repayments of €29.0 million (2023: €30.0 million).

Adjusted return on capital employed (ROCE)

The Group's Adjusted ROCE remains at a very strong level of 26.8% (2023: 27.6%), slightly lower as compared to 2023 due to a number of factors, including higher net debt as described below. This demonstrates the Group's discipline in deploying capital effectively to maximise value creation.

Returns for shareholders

Following the Group's revised capital allocation policy and adoption of a progressive dividend policy, on 13 September 2024, a 2024 interim dividend of €11.9 million (2023: €11.8 million) or 2.40 Euro cents (2.04 pence) per ordinary share (2023: 2.30 Euro cents or 1.96 pence) was paid. Given the pending acquisition by ABC Technologies, the Board is not recommending a final dividend for 2024.

The Group completed its €40 million share buyback programme which commenced in October 2023, with €34.5 million used to acquire shares in the year. Over the course of the buy-back programme, 24.1 million shares were purchased at an average price of 141.79 pence share and cancelled.

Balance sheet and liquidity

Net debt at 31 December 2024 was €619.2 million (2023: €595.0 million). At year end, the Group's net leverage ratio remained in line with our circa 1.5x target at 1.6x Adjusted EBITDA (2023: 1.5x), slightly above 2023 due to higher net debt.

Total available liquidity (cash plus available facilities) on 31 December 2024 was €686.8 million (2023: €616.2 million).

The Group excludes IFRS 16 lease liabilities from its net debt and leverage ratio. If these were included, net debt would be €783.3 million (2023: €727.5 million) and net leverage would be 2.0x Adjusted EBITDA (2023: 1.9x).

The Group operates funded and unfunded defined benefit schemes across multiple territories. All major plans are closed to new entrants, but a few allow for future accrual. Schemes are subject to periodic actuarial valuations. As at 31 December 2024, the Group's net liability position was €90.2 million (2023: €103.9 million) with the reduction in liability largely driven by the US funded pension plan which benefited from higher discount rates and employer contributions.

Alexander De Bock

Chief Financial Officer

10 March 2025

TABLE OF CONTENTS

Group Financial Statements

Consolidated Income Statement

For the year ended 31 December 2024

Refer to Note 4 for reconciliation to alternative performance measures (APMs).

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2024

Consolidated Balance Sheet

As at 31 December 2024

Consolidated Statement of Changes in Equity

For the year ended 31 December 2024

Consolidated Statement of Cash Flows

For the year ended 31 December 2024

1. General Information

The Group's full financial statements have been approved by the Board of Directors and reported on by the auditors on 10 March 2025. These consolidated financial statements for the current and prior years do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the year ended 31 December 2023 has been delivered to the Registrar of Companies, and those for the year ended 31 December 2024 will be delivered in due course. The independent auditors' report on the full financial statements for the year ended 31 December 2024, whilst unmodified, contains reference to the material uncertainty disclosed in note 2 below. The auditors' report does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

2. Basis of Preparation

The consolidated financial statements included within this announcement have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006. The consolidated financial statements have been prepared under the historical cost convention, except for the fair valuation of assets and liabilities of subsidiary companies acquired, retirement benefit obligations, and financial assets and liabilities at fair value through profit or loss (FVTPL) (including derivative instruments not in hedged relationships).

The preparation of financial statements in conformity with UK-adopted International Accounting Standards requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting year. Although these estimates are based on management's reasonable knowledge, actual results may differ from those estimates.

The consolidated Financial Statements have been prepared on a going concern basis. The financial performance and position of the Company and Group, its cash flows and its approach to capital management are set out in the Chief Financial Officer's report.

The Board reviewed the Company and Group's projections for the period to June 2026 in conjunction with the severe but plausible downside scenario used to stress test the going concern assessment. The Directors have assessed the potential impact of a change in control as a result of the proposed acquisition by ABC Technologies, which was approved by the shareholders by a special resolution on 5 February 2025 and which the directors have assessed is likely to conclude in the going concern period. This assessment includes the uncertainty related to refinancing of the existing borrowing facilities as a result of a change in control, the lack of visibility or control over the availability of funding following a change in control, and the uncertainty relating to the future intentions and plans for the business by the potential new owners. The Directors concluded that these conditions indicate the existence of a material uncertainty related to events or conditions that may cast significant doubt on the Company's and the Group's ability to continue as a going concern and that it may therefore be unable to realise its assets and discharge its liabilities in the normal course of business.

Notwithstanding this uncertainty, having assessed the Company's and the Group's risks, existing facilities and performance, the Directors have concluded that the Company and the Group have adequate resources to continue in operational existence for at least 12 months from the date of approval of these consolidated financial statements and therefore have determined that the going concern basis remains appropriate for preparation of the Company's and Group's financial statements. These consolidated financial statements do not include the adjustments that would result if the Company and the Group were unable to continue as a going concern.

3. Segment Reporting

In accordance with the provisions of IFRS 8 'Operating Segments', the Group's segment reporting is based on the management approach with regard to segment identification, under which information regularly provided to the chief operating decision makers (CODM) for decision-making purposes forms the basis of the disclosure. The Company's CODM is the Chief Executive Officer (CEO), and the Chief Financial Officer. The CODM evaluates the performance of the Company's segments primarily on the basis of revenue, Adjusted EBITDA, and Adjusted EBIT (see note 4).

Effective from 1 January 2024, the Group is operating a new regional reporting structure, ensuring better alignment with customers and enhancing regional leaders' agility to respond to changes in their markets, particularly the transition to electrification. The three regional segments that the CODM now manage the business by are: Americas ("AMER"), Europe, the Middle East and Africa ("EMEA") and Asia Pacific ("APAC"). The comparative information for the following segmental disclosures has been restated accordingly, to reflect the change from a two division structure to the three regions.

Inter-segment revenue is attributable solely to the ordinary business activities of the respective region, and is conducted on an arm`s length basis.

Restructuring costs of €37.4 million (€20.5 million in EMEA, €8.5 million in AMER and €8.4 million in APAC) (2023: €13.4 million, of which €9.8 million in EMEA, €1.8 million in AMER and €1.8 million in APAC) comprise announced headcount reductions and related costs of balancing production capacity with market requirements. A reconciliation of alternative performance measures to the income statement can be found in Note 4.

4. Adjusting items and alternative performance measures

In addition to the results reported under IFRS, Management use certain non-IFRS financial measures to monitor and measure the performance and profitability of the business and operations. Such measures are also utilised by the Board as targets in determining compensation of certain executives and key members of Management, as well as in communications with investors. In particular, Management use Adjusted EBIT, Adjusted EBITDA, Adjusted Net Income, Adjusted Free Cash Flow, Adjusted Basic EPS and Adjusted Return on Capital Employed (Adjusted ROCE). These non-IFRS measures are not recognised measurements of financial performance or liquidity under IFRS, and should be viewed as supplemental and not replacements or substitutes for any IFRS measures. Management acknowledge the limitations of non-IFRS measures as they do not include certain profit or loss and cash flow items, and these adjusting items could have a significant impact on net performance and cash flows of the Group.

Definitions for alternative performance measures are included in the Note 16 glossary.

4.1 Adjusting items

Management exclude certain items in the derivation of alternative performance measures, as shown below:

Adjusting items represent transactions that in Management's view do not form part of the substance of the trading activities of the Group, such as large-scale reorganisations, system implementations, acquisition costs and certain non-cash accounting measures.

Restructuring costs comprise announced headcount reductions and associated costs of balancing production capacity with market requirements. Restructuring programmes are discrete in nature, managed separately by country and production facility, with each programme not expected to span more than one financial year. Geopolitical tensions, supply chain disruptions and changes in technology and consumer trends are significantly impacting the automotive industry and therefore new restructuring activities are likely to occur in future years, as the Group continually adjusts its global footprint to align with customer demand.

Exceptional items before tax relate to asset impairment charges and restructuring costs arising from the closure of operations in Ligonier and exit of the Powertrain business. As a significant, non-recurring item, these charges have been separately identified within adjusting items. Refer to Note 10 for further details.

Depreciation and amortisation arising on purchase accounting relates to identifiable intangible assets and PP&E fair value adjustments arising on business combinations, which are then depreciated and amortised over the applicable useful lives of these assets.

Net foreign exchange gains and losses on the revaluation of intercompany loan, cash, deferred tax and forward foreign exchange contract balances are included in adjusting items to remove the impact of foreign exchange volatility arising on these non-operating monetary items. Foreign exchange gains and losses on the revaluation of operating monetary items, such as accounts receivable and accounts payable are recognised in the Income Statement line items to which they relate and accordingly are not adjusted from the alternative performance measures.

Costs associated with the proposed takeover of the Group relate to legal and other third party consulting and advisory costs incurred in relation to the proposed takeover of the Group by ABC Technologies Acquisitions Limited. These costs have been excluded from the alternative performance measures as they represent significant non-recurring items.

Costs associated with business acquisitions or disposals and customisation and configuration costs of significant SaaS arrangements in relation to initial costs of multi-year system upgrades or implementations have been excluded from the alternative performance measures due to their ad-hoc nature.

4.2 Adjusted Performance Measures

Reconciliations of adjusted performance measures to their statutory GAAP equivalent measures are provided below.

The Purchase of Cascade Engineering Europe of €18.6 million in the prior year includes €1.7 million relating to the effective settlement of pre-existing relationships, which are included in net cash generated from operating activities.

5. Exceptional items

Exceptional items in the year relate to the announced closure of the Group's manufacturing facility in Ligonier, Indiana and associated exit of the Powertrain business at this location. Restructuring charges principally relate to employee redundancies. Further details can be found in Note 10 - Impairments.

6. Finance Income and Expense

7. Income Tax

7.1 Income tax expense

In 2024, the Group is reporting an exceptional charge of €40.6 million with a deferred tax benefit of €4.5 million which results in an exceptional effective tax rate of 11.1%. The low exceptional effective tax rate is due to the fact that a significant portion of the impairment is related to goodwill that does not carry a deferred tax balance and therefore this portion of the impairment is not tax effected.

On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK, introducing a global minimum effective tax rate of 15%. This UK legislation implements a domestic top-up tax and a multinational top-up tax (UK Pillar Two taxes), effective for accounting periods starting on or after 31 December 2023. The Group is in scope of the legislation and has performed an assessment of its potential exposure based on the most recent tax filings, country-by-country reporting for 2023 and tax charges included in these 2024 financial statements for the constituent entities in the Group. Based on the assessment, the UK Pillar Two effective tax rates in most of the jurisdictions in which the Group operates are above 15%, there are only a limited number of jurisdictions where the transitional safe harbour relief should not apply and the Group does not expect a material exposure to UK Pillar Two taxes in those jurisdictions. The Group has applied the exception under the IAS 12 Paragraph 4A amendment to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes.

The tax on the Group's profit before tax differs from the theoretical amount that would arise using the UK statutory tax rate applicable to profits of the consolidated entities as follows:

*Favourable adjustments for tax purposes comprised various local tax deductions related to foreign exchange movements, inflation adjustments, local taxes and non-taxable interest.

Other taxes comprised various local and national minimum taxes of €4.0 million (2023: €5.2 million) together with taxes withheld on dividend, interest and royalty remittances totalling €13.6 million (2023: €16.2 million).

Factors that may affect future tax charges include the continued non-recognition of deferred tax assets in certain territories as well as the existence of tax losses in certain territories which could be available to offset future taxable income in certain territories and for which no deferred tax asset is currently recognised.

7.2 Deferred Tax Assets and Liabilities

7.2.1 Movement on net deferred tax assets

8. Earnings Per Share

8.1 Basic and Diluted Earnings Per Share

In 2023, the potential shares related to the €19.0 million liability included within accrued expenses regarding amounts committed for future own share purchases for subsequent cancellation, were not included in the calculation of diluted earnings per share in the year because they would have been antidilutive.

8.2 Adjusted Earnings Per Share

Adjusted Net Income is based on the profit for the year attributable to the Parent Company of €32.3 million (2023: €83.5 million profit), after adding back exceptional items net of tax, and eliminating the impact of net restructuring charges, foreign exchange gains or losses, depreciation and amortisation arising on purchase accounting, customisation and configuration costs of significant SaaS arrangements, the costs associated with any business acquisitions or disposals, and the tax impact on adjusting items, totalling €104.4 million (2023: €49.3 million). Reconciliations of adjusted profit measures to statutory measures are included in Note 4.

9. Intangible Assets

9.1 Goodwill

Goodwill is deemed to have an indefinite useful life. It is carried at cost and reviewed annually for impairment.

9.2 Capitalised Development Expenses, Computer Software and Licences, Technology and Customer Platforms

Intangible assets are amortised over their useful economic life, which range from three to 25 years.

*Customer platforms includes intangible assets relating to: customer platforms, aftermarket customer relationships, trade names and trademarks.

The above amortisation charges for 'technology' and 'customer platforms' amounting to €40.9 million (2023: €42.0 million) arise from intangible assets recognised through purchase price accounting. Amortisation charges are included within cost of sales. During the prior year, part of the technology intangible became fully amortised and was disposed, with costs of €121.2 million and accumulated amortisation of €121.2 million, giving net nil impact on net book value.

As at 31 December 2024, goodwill of €325.5 million (2023: €346.2 million), technology of €nil (2023: €2.2 million) and customer platforms of €55.5 million (2023: €103.5 million) relate to assets that arose from purchase price allocations following historic acquisitions.

10. Impairments

10.1 Impairment Tests for Goodwill and Intangibles

As part of the Bain Capital acquisition, the purchase of TIFS Holdings Ltd (TIFSHL) on 30 June 2015, being the previous parent company of the Group, and the consequent fair valuation of assets and liabilities, resulted in recognition of goodwill of €711.1 million and other intangible assets of €663.2 million. The purchase of Millennium Industries Corporation on 16 February 2016 resulted in recognition of goodwill of €57.1 million and other intangible assets of €72.6 million, included in the Americas region. The acquisition of Cascade Engineering Europe on 2 November 2023 resulted in the recognition of goodwill with an initial value of €11.6 million, which was subsequently revised down to €6.0 million on finalisation of the acquisition accounting for the purchase during 2024 (see note 11).

The non-goodwill intangible assets recognised from the acquisitions outlined above included €369.7 million and €57.1 million in relation to customer platforms arising on the Bain and Millennium acquisitions respectively. These assets reflect the future revenue expected to arise from customer platforms existing at the date of acquisition, based on platform lives and probabilities of renewals.

The impairment test for goodwill and intangible assets is conducted at the level at which Management monitor goodwill. With the Group now operating on a regional structure effective from 1 January 2024, the cash generating unit (CGU) groups for goodwill impairment assessment purposes now identified for the Group are Americas (AMER), Europe and Africa (EMEA), and Asia-pacific (APAC). The CGUs prior to the organisational change were the intersection between the two operating segments, FCS and FTDS, and the geographic sub-divisions, North America (NA), Europe & Africa (EU), Asia Pacific (AP) and Latin America (LA).