Half Year Results for the period ended 30 June 13

NEWS RELEASE 30 July 2013

GKN plc Results Announcement for the six months ended 30 June 2013

*2012 figures restated for the impact of IAS 19 revised. Within Management figures, this had the impact of increasing corporate costs by £2 million. Further details can be found in note 2.

Group Highlights(1)

·; Group results reflect GKN's continued outperformance of its end markets and the contribution from GKN Aerospace Engine Systems (formerly Volvo Aero)

·; Sales increased 12%, up 2% on an organic basis

·; Management trading (operating) profit up 10%

·; Trading margin of 8.3%, after incurring £25 million of previously announced restructuring charges

·; Profit before tax up 5%

·; Reported profit before tax of £134 million (2012: £279 million) lower, primarily due to foreign exchange rate changes impacting the mark to market value of foreign exchange contracts

·; Earnings per share 3% lower due to the higher tax rate of 20%, as previously guided, and the additional shares issued to finance the acquisition of GKN Aerospace Engine Systems

·; Return on average invested capital reduced to 16.6% (2012: 17.2%), excluding GKN Aerospace Engine Systems

·; Positive free cash flow of £77 million (2012: £28 million)

·; Net debt of £928 million (31 December 2012: £871 million)

"GKN has continued to make good progress against our strategy to grow a market-leading global engineering business. Although some of our end markets remained challenging, we continued to outperform and are reporting good underlying financial results with further benefit from last year's acquisition, GKN Aerospace Engine Systems (formerly Volvo Aero), which is performing well. The first half met our expectations and, with planned restructuring costs now behind us, we expect a stronger second half performance and to deliver good progress in 2013."

Nigel Stein

Chief Executive, GKN plc

Divisional Highlights

The table does not include Other Businesses.

GKN Aerospace

·; Integration of GKN Aerospace Engine Systems proceeding well

·; Continuing growth in commercial aerospace offsets military decline

GKN Driveline

·; Continued growth ahead of the market

·; Underlying trading margin improved

GKN Powder Metallurgy

·; Growth ahead of market

·; Trading margin of 10.0%, including restructuring charges

GKN Land Systems

·; Organic sales down 7% due to challenging end markets

·; Operational discipline maintained, trading margin of 9.2%, including restructuring charges

Outlook

In aerospace, commercial aircraft production is expected to continue to grow, as both Airbus and Boeing increase production, whereas military demand is expected to decline. Excluding Engine Systems, GKN Aerospace's 2013 sales are expected to be similar to the prior year, reflecting increased commercial aircraft sales, lower military sales and the impact of the previously announced transfer of the supply chain contract to Airbus. For the division as a whole, second half profit is expected to benefit from both the ramp up of new programmes and the synergy benefits from GKN Aerospace Engine Systems.

In automotive, external forecasts suggest that global light vehicle production in the second half will be lower than the first half, but ahead of the equivalent period last year, reaching approximately 83 million vehicles for the whole of 2013, an increase of 2%. Against this background, GKN Driveline and GKN Powder Metallurgy are expected to show good year-on-year sales improvement, although reflecting normal seasonality. Second half profit in both Divisions will also benefit from the absence of restructuring charges.

Due to weaker than anticipated industrial and construction markets and the planned cessation of certain chassis programmes, GKN Land Systems is now expecting slightly lower sales in 2013 compared with 2012. Sales in the second half are expected to show a reduction when compared with the first half, due to normal seasonal patterns.

Overall, with a stronger second half profit performance anticipated, GKN expects 2013 to be a year of good progress for the Group, helped by the contribution from GKN Aerospace Engine Systems.

Notes

(1) Financial information set out in this announcement, unless otherwise stated, is presented on a management basis as defined on page 13.

(2) 2012 figures restated for the impact of IAS 19 revised. This had the impact of increasing corporate costs by £2 million and thus reducing profit and earnings measures by the same amount. Further details can be found in note 2 of the financial statements on page 24.

Cautionary Statement

This announcement contains forward looking statements which are made in good faith based on the information available to the time of its approval. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number of risks and uncertainties that are inherent in any forward looking statement which could cause actual results to differ materially from those currently anticipated. Nothing in this document should be regarded as a profits forecast.

Further Enquiries

Analysts/Investors:

Guy Stainer

Investor Relations Director

GKN plc

T: +44 (0)207 463 2382

M: +44 (0)7739 778187

E: [email protected]

Media:

Chris Fox

Group Communications Director

GKN plc

T: +44 (0)1527 533238

M: +44 (0)7920 540051

E: [email protected]

Andrew Lorenz

FTI Consulting

T: +44 (0)207 269 7113

M: +44 (0)7775 641807

There will be an analyst and investor meeting today at 10:00am at UBS, Ground Floor Presentation Suite, 1 Finsbury Avenue, London EC2M 2PP.

A live audiocast of the presentation will be available at http://www.gkn.com/investorrelations/Pages/Webcasts.aspx.

Slides will be put onto the GKN website approximately 45 minutes before the presentation is due to begin, and will be available to download from the GKN website at: http://www.gkn.com/investorrelations/Pages/results-and-presentations.aspx?year=2013.

Questions will only be taken at the event.

A live dial in facility will be available by telephoning: +44 (0) 1452 555 566, Conf ID: 14589606#

A replay of the conference call will be available until 30 August 2013 on:

Standard International Number: +44 (0) 1452 550 000

Replay Access Number: 14589606#

This announcement together with the attached financial information thereto may be downloaded from: www.gkn.com/media/Pages/default.aspx.

NEWS RELEASE

GKN plc Results Announcement for the six months ended 30 June 2013

Group Overview

Markets

The Group operates in the global aerospace, automotive and land systems markets. GKN Aerospace sells to manufacturers of commercial and military aircraft, aircraft engines and equipment. In the automotive market, GKN Driveline sells to manufacturers of passenger cars and light vehicles. Around 80% of GKN Powder Metallurgy sales are also to the automotive market, with the balance to other industrial customers. GKN Land Systems sells to producers of agricultural, construction, mining and industrial equipment and to the automotive and commercial vehicle sectors.

These results reflect a good performance in each division relative to their respective markets and the benefit of the successful integration of GKN Aerospace Engine Systems.

Management sales increased 12% in the six months ended 30 June 2013 to £3,869 million (2012: £3,459 million). The effect of currency translation was £20 million positive and there was a £328 million benefit from acquisitions which was partly offset by a £3 million reduction due to disposals. Excluding these items, the organic increase was £65 million, or 2%. Within this organic figure, Aerospace was up £20 million, Driveline increased by £68 million, Powder Metallurgy was £9 million higher, Land Systems was £34 million lower and Other Businesses was £2 million higher.

Management trading profit increased £29 million to £320 million (2012: £291 million, restated from £293 million due to IAS19 revised). After adjusting for the positive currency translational impact of £4 million and the initial profit contribution from GKN Aerospace Engine Systems of £37 million, the organic decrease was £12 million, after including £25 million of restructuring charges (2012: £nil). Within the total, Aerospace organic trading profit was down £6 million, Driveline was £5 million lower, Powder Metallurgy was unchanged, Land Systems reduced £8 million, Other Businesses was £1 million higher and Corporate Costs were £6 million lower.

Group trading margin in the first half was 8.3% (2012: 8.4%). Return on average invested capital (ROIC) was 16.6% (2012: 17.2%), excluding GKN Aerospace Engine Systems.

*2012 management figures restated for the impact of IAS 19 revised which increased corporate costs by £2 million

Divisional Performance

GKN Aerospace

GKN Aerospace is a global first tier supplier of airframe and engine structures, components, assemblies, transparencies, ice protection systems and fuel and flotation systems for a wide range of aircraft and engine prime contractors and other first tier suppliers. It operates in three main product areas: aerostructures, engine systems and specialist products.

The overall aerospace market remains positive in 2013 driven by a growing commercial aircraft market partly offset by a more subdued military market. The division has increased its share of sales to commercial aerospace to 71%, with military representing 29%.

Commercial aircraft production is expected to grow strongly with Airbus and Boeing continuing to project the procurement of new single aisle and wide-bodied aircraft at between 28,000 and 34,000 by 2030. Both companies continue to benefit from increasing deliveries and record order backlog. This sustained order growth has led both Airbus and Boeing to increase production levels for single aisle and wide-bodied aircraft. The business jet market is also showing some signs of recovery.

Military spending remains under pressure, largely driven by cutbacks throughout Europe and likely reductions in the U.S. Defense Budget. GKN's position on key multi-year programmes such as the UH-60 Blackhawk helicopter, F/A-18 Super Hornet, F-15 Eagle and C-130J Super Hercules is providing support despite potential budget pressure and delay in the F-35 programme ramp-up.

The key financial results for the period are as follows:

*Excluding GKN Aerospace Engine systems

GKN Aerospace sales of £1,123 million were £353 million higher than the prior period (2012: £770 million). The impact from currency on translation of sales was £6 million positive. The contribution of GKN Aerospace Engine Systems, acquired on 1 October 2012, was £327 million, which was slightly lower than expected due to softer spares demand. The organic increase in sales of £20 million represented a 3% increase. This level of increase reflects 6% lower production rates on military programmes, such as the C-130J and C-17, being more than offset by 8% higher commercial sales, particularly for the Boeing 787, Airbus A320, A330 and A380. Furthermore, the previously announced £100 million per annum supply chain contract that was being managed for Airbus at Filton, which was expected to cease at the end of 2012, was not taken back in-house as quickly as expected and therefore the reduction in sales was around £20 million in the first half.

Trading profit in the period increased by £32 million to £118 million (2012: £86 million). The impact from currency on translation of results was £1 million positive. Organic decline in trading profit of £6 million was due to lower military spares sales on mature programmes, lower volumes on certain new programmes and the absence of one-off positive pricing adjustments in the prior year. GKN Aerospace Engine Systems generated a trading profit of £37 million and trading margin of 11.3%. The trading margin of GKN Aerospace overall was 10.5% (2012: 11.2%), or 10.2% (2012: 11.2%) excluding GKN Aerospace Engine Systems.

Return on average invested capital was 20.1% (2012: 22.4%) reflecting increased investment in new programmes and lower profitability in the period. This excludes GKN Aerospace Engine Systems which has not been owned for a full 12 months.

During the period a number of important new contracts worth around $480 million were won and other milestones were achieved, including, opening a new facility in Phoenix, USA to carry out engine podding work for Honeywell, and inaugurating a new engineering facility in Bangalore.

Automotive market

As shown in the table below, strong growth in car and light vehicle production in China in the first half of 2013, provided the majority of the overall market growth. Demand in Japan fell in comparison to a strong first half in 2012 and Europe and India continued to be affected by economic issues.

Source: IHS Automotive; (#) Growth is derived from unrounded production figures

Overall, global production volumes increased 1.4% in the first half of 2013 to 42.3 million vehicles (2012: 41.7 million).

Production in Europe fell due to weak economies, particularly in Southern Europe, and slowing demand in Russia. Production of smaller vehicles remained low while premium vehicles remained robust due to export demand in North America and China helping to offset weaker demand in Europe.

Production in North America continued its gradual recovery, benefiting from improved consumer confidence and the release of pent-up demand.

Japanese production fell relative to the high production levels experienced in 2012, which benefitted from a strong recovery in production following the earthquake and tsunami in 2011 and government incentives to boost domestic demand.

China recovered from a slight reduction in the fourth quarter of 2012 with a 12.6% increase, but the economic slowdown in India resulted in a production decline of 6.2%.

External forecasters expect global production in the second half of 2013 to grow more than in the first half to give full year production of 83.1 million vehicles, an increase of 2.0% on 2012. The major markets where production for the year is expected to grow fastest include China (10%), Brazil (6%) and North America (5%). Production in Europe is expected to contract by 3% and in Japan to decline by 7%.

GKN Driveline

GKN Driveline is the world's leading supplier of automotive driveline systems and solutions. As a global business serving the leading vehicle manufacturers, it develops, builds and supplies an extensive range of automotive driveline products and systems - for use in the smallest ultra low-cost car to the most sophisticated premium vehicle demanding the most complex driving dynamics.

The key financial results for the period are as follows:

Driveline's sales increased 4% to £1,728 million (2012: £1,664 million). The adverse impact of currency translation was £4 million. Organic sales increased by £68 million, or 4%, compared with an increase in global vehicle production of 1%.

Strong growth was achieved in North America, China and Brazil while sales in Europe, Japan and India were lower, broadly in-line with their respective markets.

Trading profit was £117 million (2012: £121 million). The positive impact of currency translation was £1 million. The organic decline in trading profit was £5 million, which included £16 million of restructuring charges in Europe and Japan. Driveline's trading margin was 6.8% (2012: 7.3%), or 7.7% excluding restructuring. Return on average invested capital was 15.0% (2012: 15.2%).

During the period, GKN Driveline extended its footprint in China by extending (subject to regulatory approval) its joint venture agreement to include the full driveline product range and opened an extension to the Wuhan forge. New business wins also continued across GKN Driveline's product groups, including significant customer wins in AWD systems, notably the final drive unit (FDU) for the BMW X series which will start to be produced from August, in the US.

GKN Powder Metallurgy

GKN Powder Metallurgy is the world's largest manufacturer of sintered components. GKN Powder Metallurgy comprises GKN Sinter Metals and Hoeganaes. Hoeganaes produces the metal powder that GKN Sinter Metals and other customers use to manufacture precision automotive components for engines, transmissions and body and chassis applications. GKN Sinter Metals also produces a range of components for industrial and consumer applications.

The key financial results for the period are as follows:

GKN Powder Metallurgy sales were £480 million (2012: £465 million), an increase of 3%. The positive impact of currency translation was £6 million. Organic sales increased by £9 million, or 2%. Sales in Hoeganaes were lower than the prior year due to fewer tons of powder shipped and the pass through of lower raw material costs. GKN Sinter Metals increased sales in China, North America and Europe while India was broadly flat.

Overall, GKN Powder Metallurgy reported a trading profit of £48 million (2012: £47 million). The positive impact of currency translation was £1 million and there was a £5 million restructuring charge. The divisional trading margin was 10.0% (2012: 10.1%), or 11.0% excluding restructuring. Return on average invested capital was 19.2% (2012: 18.2%).

During the period, GKN Powder Metallurgy continued its strong product and operational development, being awarded £65 million of annualised sales in new business and announcing an extension to its Ohio plant to support the launch of production of differential gear components using a unique process (Forged Powdered Metal) that increases strength and geometry.

GKN Land Systems

GKN Land Systems is a global leading supplier of technology differentiated power management components and services. It designs, manufactures and supplies products and services for the agricultural, construction, mining, and industrial machinery markets. In addition, it provides global aftermarket distribution and through-life support.

Sales in GKN Land Systems were lower than the prior year due to weaker construction, mining, European aftermarket and industrial markets while the agricultural equipment market remained stable. Automotive structures activity declined slightly due to a planned programme cessation that took effect in May 2013 and required some restructuring activity. Over the next 15 months, some £45 million of annualised sales will be phased out of this business.

The key financial results for the period are as follows:

GKN Land Systems sales in the first half reduced 5% to £487 million (2012: £512 million). The positive impact of currency translation was £11 million, the establishment of the new wheels joint venture in China had sales of £1 million and the disposal of an aftermarket branch in the fourth quarter of 2012 reduced sales by £3 million. The organic decrease in sales was £34 million, a fall of 7%.

The division reported a trading profit of £45 million (2011: £52 million), which included £3 million of restructuring charges. The positive impact of currency translation was £1 million, resulting in an overall organic decrease in trading profit of £8 million. Trading margin was 9.2% (2012: 10.2%), or 9.9% excluding restructuring. Return on average invested capital was stable at 18.7% (2012: 18.7%).

Good progress was made towards winning new business and implementing the GKN Land Systems strategy through broadening its product offering and geographic footprint. Building on the benefits that Stromag brought, marketing and customer account management have been reorganised to enable cross-selling of the full Land Systems power management product range and the first integrated customer technology days have been held. A new joint venture was also established in Donghai, China to manufacture agricultural wheels.

Other Businesses

GKN's Other Businesses comprise Cylinder Liners, which is mainly a 59% owned venture in China, manufacturing engine liners for the truck market in the US, Europe and China and a 50% share in Emitec, which manufactures metallic substrates for catalytic converters in Germany, the US, China and India.

Sales in the period were £51 million (2012: £48 million), reflecting a slight improvement in the commercial vehicle market. Trading profit was £2 million (2012: £1 million), after £1 million of restructuring charges.

Other Financial Information

All comparative information provided below relates to the first half of 2012, unless otherwise stated.

Corporate costs

Corporate costs, which comprise the costs of stewardship of the Group and operating charges and credits associated with the Group's legacy businesses, were £10 million (2012: £16 million). The 2012 comparative included £4 million of transaction costs related to the acquisition of GKN Aerospace Engine Systems.

Change in value of derivative and other financial instruments

The Group enters into foreign exchange contracts to hedge much of its transactional exposure. Where hedge accounting has not been applied, the change in fair value between 1 January 2013 and 30 June 2013, or the date of maturity if earlier, is reflected in the income statement as a component of operating profit and has resulted in a charge of £98 million (2012: £18 million credit), primarily due to the strength of the US dollar and Euro relative to sterling. There was a £3 million credit arising from a change in the value of embedded derivatives in the period (2012: £1 million charge) and a credit of £4 million attributable to the translational currency impact on intra-group funding balances (2012: £1 million credit).

Amortisation of non-operating intangibles arising on business combinations

The charge for amortisation of non-operating intangible assets (for example, customer contracts, technology assets and intellectual property rights) arising on business combinations was £28 million (2012: £16 million). The increase reflects the Group's acquisition in 2012 of GKN Aerospace Engine Systems.

Gains and losses on changes in Group structure

There have been no changes in the Group structure during the period (2012: the Group sold its 49% share in a joint venture company, GKN JTEKT (Thailand) Limited for cash consideration of £1 million, realising neither a profit nor loss).

Post-tax earnings of joint ventures

On a management basis, the sales and trading profits of joint ventures are included pro-rata in the individual divisions to which they relate, although shown separately post-tax in the statutory income statement.

The Group's share of post-tax earnings of joint ventures in the period was £24 million (2012: £23 million) with trading profit of £31 million (2012: £29 million). The Group's share of post-tax earnings on a management basis was £25 million (2012: £24 million). The Group's share of the tax charge amounted to £6 million (2012: £5 million) with no net financing costs in either period. The organic increase in trading profit was £1 million.

Net financing costs

Net financing costs totalled £60 million (2012: £43 million, restated for the impact of IAS 19 revised), the increase due primarily to the additional borrowings following the acquisition of GKN Aerospace Engine Systems in the second half of 2012.

Details of the assumptions used in calculating post-employment obligations are provided in note 10 to the financial statements.

Profit before tax

Management profit before tax was £278 million (2012: £264 million, restated for the impact of IAS 19 revised). Profit before tax on a statutory basis was £134 million (2012: £279 million, restated for the impact of IAS 19 revised). The main differences in the first half of 2013 between management and statutory figures are the change in value of derivative and other financial instruments, amortisation of non-operating intangible assets and the pension financing charge. Further details are provided in note 3 to the financial statements.

Taxation

The book tax rate on management profits of subsidiaries was 20% (2012: 17%), arising as a £51 million tax charge (2012: £40 million charge) on management profits of subsidiaries of £253 million (2012: £240 million).

The Group's theoretical weighted average tax rate, which assumes that book profits/losses are tax affected at the statutory tax rates in the countries in which they arise, is 31% (2012: 34%). The book tax rate is significantly lower, largely because of the recognition of substantial deferred tax assets (mainly in Canada, Spain and the US) due to increased confidence in the Group's ability to offset brought forward tax deductions against future taxable profits in various countries and a reduction in tax risk provisions.

'Cash tax' provides a proxy for the cash cost of taxation of management profits, plus the cash effect of prior year items, and so excludes elements of the book tax charge which do not have a cash effect. The cash tax rate was 12% (2012: 14%). In the near term, the cash tax rate is expected to continue below 15% as brought forward tax deductions are utilised.

The tax rate on statutory profits of subsidiaries was 27% (2012: 20%) arising as a £30 million tax charge (2012: £52 million charge) on a statutory profit of £110 million (2012: £256 million, restated for the impact of IAS 19 revised).

Non-controlling interests

The profit attributable to non-controlling interests was £10 million (2012: £12 million) including an £8 million (2012: £10 million) impact from the pension partnership arrangement. See post-employment obligations section below.

Earnings per share

Management earnings per share was 13.8 pence (2012: 14.3 pence). On a statutory basis earnings per share was 5.8 pence (2012: 13.9 pence).

Dividend

In view of the improving trading performance, the Board has decided to pay an interim dividend of 2.6 pence per share (2012: 2.4 pence), an increase of 8%. The interim dividend will be paid on 23 September 2013 to shareholders on the register at 16 August 2013. Shareholders may choose to use the Dividend Reinvestment Plan (DRIP) to reinvest the interim dividend. The closing date for receipt of new DRIP mandates is 2 September 2013.

Cash flow

Operating cash flow, which is defined as cash generated from operations of £267 million (2012: £215 million) adjusted for capital expenditure (net of proceeds from capital grants) of £158 million (2012: £149 million) was an inflow of £109 million (2012: £66 million).

Within operating cash there was an outflow in working capital and provisions of £131 million (2012: £141 million). Average working capital as a per cent of sales was 8.7% (2012: 7.9%).

Capital expenditure (net of proceeds from capital grants) on both tangible and intangible assets totalled £158 million (2012: £149 million), including £11 million (2012: £13 million) on the A350 programme. Of this, £133 million (2012: £127 million) was on tangible fixed assets and was 1.2 times (2012: 1.2 times) the depreciation charge. Expenditure on intangible assets, mainly non-recurring costs on Aerospace programmes, totalled £25 million (2012: £22 million).

Net interest paid totalled £21 million (2012: £25 million) as a result of the phasing of bond coupon payments and tax paid in the period was £24 million (2012: £24 million).

Free cash flow

Free cash flow, which is operating cash flow including joint venture dividends and after interest, tax, amounts paid to non-controlling interests and shares purchased but before dividends paid to GKN shareholders, was an inflow of £77 million (2012: £28 million). The year on year change reflects increased profitability.

Net borrowings

After making a £43 million initial deferred consideration payment for GKN Aerospace Engine Systems and the 2012 final dividend, at the end of the period, the Group had net debt of £928 million compared with £871 million at 31 December 2012.

Post-employment obligations

GKN operates a number of defined benefit and defined contribution pension schemes together with retiree medical arrangements across the Group. In 2013, the new requirements of IAS 19 have been introduced, requiring also a restatement of prior period comparative amounts. The restatement principally affects the other net financing charge and the presentation of administrative expenses.

The amount included within trading profit for the period comprises current service costs of £26 million (2012: £20 million) and administrative costs of £2 million (2012: £2 million). Interest on net defined benefit plans was £19 million (2012: £19 million).

The deficit of all schemes at 30 June 2013 was £1,240 million, a £262 million increase over 31 December 2012 (£978 million deficit). This increase results from the previously announced amendment to the UK pension partnership arrangement (detailed further below and in note 10 to the financial statements). Excluding this change, the reported deficit would have fallen to £917 million, primarily due to positive asset performance and the benefit of higher discount rates.

During the period the Group entered into discussions with the Trustees of the two UK pension schemes which resulted in changes to the pension partnership agreement, specifically with regard to placing restrictions on the ability of each UK pension scheme to sell or otherwise transfer its respective income interest. The result of this amendment is that the respective income interests no longer meet the criteria for recognition as an IAS 19 plan asset and, consequently, have been removed from the Group balance sheet with an effective date of 31 May 2013.

The UK deficit of £621 million, which includes the effect of the amendment to the UK pension partnership, was £280 million higher than 31 December 2012 (£341 million). Excluding the effect of the pension partnership amendment, the UK deficit would have fallen, as increases in inflation expectations were more than offset by an increase in the discount rate and asset outperformance. The UK defined benefit scheme was closed to new entrants during the period.

The post-employment obligations of overseas businesses, which relate principally to unfunded schemes in Germany and a mix of funded and unfunded US schemes, were slightly reduced at £619 million (31 December 2012: £637 million). This reflected the positive impact of higher discount rates and US asset performance, partially offset by adverse exchange rate movements of £33 million.

Group-wide contributions totalled £54 million (2012: £42 million), including a £20 million payment from the pension partnership to the UK pension schemes made after the effective date of the pension partnership amendment. In addition, the Group paid £10 million from the pension partnership, prior to the amendment.

Defined contribution pension schemes

In addition to the defined benefit pension schemes, the Group also operates a number of defined contribution pension schemes for which the income statement charge was £17 million (2012: £8 million).

Net assets

Net assets of £1,835 million were £92 million lower than 31 December 2012 (£1,927 million). The movement includes profit attributable to equity shareholders of £94 million, a favourable currency movement from the translation of subsidiaries assets of £119 million and a gain on re-measurement of defined benefit pension plans of £106 million, offset by distributions to both equity shareholders and non-controlling interests of £88 million and the £342 million impact of a change to the pension partnership arrangement.

Exchange rates

Exchange rates used for currencies most relevant to the Group's operations are:

The approximate impact on first half 2013 trading profit of subsidiaries and joint ventures of a 1% movement in the average rate would be euro - £1 million, US dollar - £2 million.

Funding, liquidity and going concern

At 30 June 2013, UK committed bank facilities were £941 million. Within this amount there are committed revolving credit facilities of £861 million, £20 million of which expired in July 2013, and an £80 million eight-year amortising facility from the European Investment Bank (EIB). The next major maturities of the revolving credit facilities are £598 million in 2016. At 30 June 2013, drawings against the UK committed bank facilities were £289 million, including the £80 million fully drawn EIB facility. Additionally there were drawings of £20 million on uncommitted facilities.

Capital market borrowings at 30 June 2013 comprised a £350 million 6.75% unsecured bond maturing in October 2019 and a £450 million 5.375% unsecured bond maturing in September 2022. As at 30 June 2013, the Group had net borrowings of £928 million (31 December 2012: £871 million).

The Directors have taken into account both divisional and Group forecasts for the 18 months from the balance sheet date to assess the future funding requirements of the Group and compared them to the level of committed available borrowing facilities, described above. The Directors have concluded that the Group will have a sufficient level of headroom in the foreseeable future and that the likelihood of breaching covenants in this period is remote, such that it is appropriate for the financial statements to be prepared on a going concern basis.

Principal risks and uncertainties

The principal risks and uncertainties faced by the Group in the remaining six months of the year remain largely unchanged from those reported in the 2012 annual report. Overall macro-economic and political uncertainty, Eurozone instability, US budget priorities, and inflation in Asian and other economies continue to influence the macro environment, and to varying degrees are manifested in uneven growth geographically which could adversely impact Group results. Additional risks noted in the annual report include changes in customer demand; customer concentration; highly competitive markets; technology advancements; supply chain disruption; volatile input costs; new product introductions; product quality issues; inadequate health, safety and environmental processes; lack of people capability in specific geographic regions and disciplines; effectiveness of acquisition integration; compliance with complex laws and regulations across global jurisdictions; information systems resilience; pension deficit volatility; foreign exchange risk; and operating internationally in environments subject to complex tax laws. A more detailed explanation of the principal risks and uncertainties, together with the mitigating actions in place, can be found in pages 36 and 37 of the 2012 annual report.

Basis of Reporting

The financial statements for the period are shown on pages 16 to 34 and have been prepared using accounting policies which were used in the preparation of audited accounts for the year ended 31 December 2012 and which will form the basis of the 2013 Annual Report, with the exception of the adoption of IAS 19 revised which has impacted the comparative numbers above as detailed in note 2 to the financial statements.

Definitions

Financial information set out in this announcement, unless otherwise stated, is presented on a management basis which aggregates the sales and trading profit of subsidiaries (excluding certain subsidiary businesses sold and closed) with the Group's share of the sales and trading profit of joint ventures. References to trading margins are to trading profit expressed as a percentage of sales. Management profit or loss before tax is management trading profit less net subsidiary interest payable and receivable and the Group's share of net interest payable and receivable and taxation of joint ventures. These figures better reflect performance of continuing businesses. Where appropriate, reference is made to organic results which exclude the impact of acquisitions/divestments as well as currency translation on the results of overseas operations. Operating cash flow is cash generated from operations adjusted for capital expenditure, government capital grants, proceeds from disposal of fixed assets and government refundable advances. Free cash flow is operating cash flow including interest, tax, joint venture dividends, own shares purchased and amounts paid to non-controlling interests, but excluding dividends paid to GKN shareholders. Return on average invested capital (ROIC) is management trading profit as a percentage of average total net assets of continuing subsidiaries and joint ventures excluding current and deferred tax, net debt, post-employment obligations and derivative financial instruments.

Directors' Responsibility Statement

The half yearly financial report is the responsibility of the Directors who confirm that to the best of their knowledge:

Ÿ the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as endorsed and adopted by the EU;

Ÿ the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the 2012 Annual Report that could do so.

The Directors of GKN plc are listed in the GKN annual report for 2012; however since the publication of the annual report Mr. J. N. Sheldrick has retired from the Board.

Approved by the Board of GKN plc and signed on its behalf by:

Mike Turner

Chairman

29 July 2013

APPENDICES

* restated for the impact of IAS 19 (revised), see note 2.

* restated for the impact of IAS 19 (revised), see note 2.

* restated for the impact of IAS 19 (revised), see note 2.

1 restated for the impact of changes to the acquisition balance sheet related to the purchase of Volvo Aerospace on 1 October 2012, see note 2.