Exhibit 99.3

Consolidated Financial Statements

Dowlais Group plc

For the years ended December 30, 2024 and 2023

 

Independent auditor’s report

To the Members of Dowlais Group Plc

Opinion

We have audited the consolidated financial statements of Dowlais Group plc and subsidiaries (the “Company”), which comprise the consolidated balance sheets as of December 31, 2024 and 2023, and the related consolidated income statements, statements of comprehensive income, statements of changes in equity, and statements of cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively referred to as the ‘financial statements’).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IASB”).

Basis for opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Restatement of the 2024 and 2023 financial statements

As discussed in Note 1 to the financial statements, the accompanying 2024 and 2023 financial statements have been restated to correct misstatements. Our opinion is not modified with respect to this matter.

Responsibilities of management for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards as issued by the IASB, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern at least, but not limited to, twelve months from the end of the reporting period, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

· Exercise professional judgment and maintain professional skepticism throughout the audit.

· Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

· Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

· Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

/s/ Deloitte LLP

London, United Kingdom

15 September 2025

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Consolidated income statement

	Notes		Year ended 31 December  2024(1)			Year ended 31 December  2023(1)
				£m			£m
Revenue		4,5		4,337			4,864
Cost of sales				(3,691	)		(4,107	)
Gross profit				646			757
Selling, general and administrative expenses				(813	)		(1,258	)
Operating loss				(167	)		(501	)
Share of results of equity accounted investments, net of tax		13		61			51
Finance costs		7		(131	)		(101	)
Finance income		7		22			29
Loss before tax				(215	)		(522	)
Tax		8		47			27
Loss after tax for the year				(168	)		(495	)
Attributable to:
Owners of the parent				(173	)		(501	)
Non-controlling interests				5			6
				(168	)		(495	)
Earnings per share
– Basic		10		(12.6	)p		(36.0	)p
– Diluted		10		(12.6	)p		(36.0	)p

(1) In consideration of SEC reporting requirements, the presentation of the Consolidated Income Statement has been restated from that included in the Company’s previously published UK Annual Reports. Further details are set out in Note 1.2.

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Consolidated statement of comprehensive income

	Notes		Year ended 31 December 2024			Year ended 31 December  2023
				£m			£m
Loss after tax for the year				(168	)		(495	)
Items that will not be reclassified subsequently to the Income Statement:
Net remeasurement gain/(loss) on retirement benefit obligations		23		37			(22	)
Income tax (charge)/credit relating to items that will not be reclassified		8		(9	)		4
				28			(18	)
Items that may be reclassified subsequently to the Income Statement:
Currency translation				(68	)		(152	)
Impact of hyperinflationary economies				9			8
Share of other comprehensive expense from equity accounted investments		13		(3	)		(32	)
Gain arising on hedging instruments designated as hedge of net investment		24		4			20
Fair value gain on hedging instruments designated as cash flow hedges		24		2			1
Cumulative gain on hedging instruments reclassified to the Income Statement		24		(3	)		—
Income tax credit relating to items that may be reclassified		8		6			4
				(53	)		(151	)
Other comprehensive expense for the year				(25	)		(169	)
Total comprehensive expense for the year				(193	)		(664	)
Attributable to:
Owners of the parent				(198	)		(668	)
Non-controlling interests				5			4
				(193	)		(664	)

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Consolidated statement of cash flows

	Notes		Year ended 31 December  2024			Year ended 31 December  2023
				£m			£m
Net cash from operating activities		26		120			239
Investing activities
Purchase of property, plant and equipment				(188	)		(279	)
Proceeds from disposal of property, plant and equipment				4			33
Purchase of computer software and capitalised development costs				(3	)		(16	)
Disposal of business, net of cash disposed				(10	)		—
Dividends received from equity accounted investments		13		70			63
Interest received				8			5
Net cash used in investing activities				(119	)		(194	)
Financing activities
Cash settlements with Related Parties(1)				—			(1,096	)
Drawings on borrowings facilities				921			1,313
Repayment of borrowing facilities				(792	)		(124	)
Costs of raising debt finance				(2	)		(12	)
Repayment of principal under lease obligations		27		(24	)		(25	)
Purchase of own shares under share buy-back		25		(26	)		—
Purchase of own shares by Employee Benefit Trust		25		—			(7	)
Dividends paid to non-controlling interests				(2	)		(7	)
Dividends paid to equity shareholders		9		(58	)		(19	)
Net cash from financing activities				17			23
Net increase in cash and cash equivalents, net of bank overdrafts				18			68
Cash and cash equivalents, net of bank overdrafts at the beginning of the year(2)		26		313			263
Effect of foreign exchange rate changes		26		(8	)		(18	)
Cash and cash equivalents, net of bank overdrafts at the end of the year		26		323			313

(1) Related Parties comprised Melrose Industries PLC, the ultimate parent company prior to demerger on the 20 April 2023 and other non-Group entities controlled by Melrose Industries PLC.

(2) Cash and cash equivalents, net of overdrafts at 1 January 2023 includes a £7 million bank overdraft presented in loans payable to Related Parties.

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Consolidated balance sheet

	Notes		31 December 2024			31 December 2023(1)
				£m			£m
Non-current assets
Goodwill and other intangible assets		11		2,129			2,365
Property, plant and equipment		12		1,676			1,751
Interests in equity accounted investments(1)		13		385			397
Deferred tax assets		21		157			146
Derivative financial assets		24		9			8
Other financial assets		24		—			28
Retirement benefit surplus		23		34			27
Other receivables		16		13			12
				4,403			4,734
Current assets
Inventories		15		431			510
Trade and other receivables		16		485			628
Derivative financial assets		24		9			45
Current tax assets				25			21
Other financial assets		24		18			—
Cash and cash equivalents		17		336			313
				1,304			1,517
Total assets		5		5,707			6,251
Current liabilities
Trade and other payables		18		961			1,179
Interest-bearing loans and borrowings		19		13			2
Lease obligations		27		29			25
Derivative financial liabilities		24		32			4
Current tax liabilities				65			100
Provisions		20		142			136
				1,242			1,446
Non-current liabilities
Other payables		18		18			18
Interest-bearing loans and borrowings		19		1,291			1,158
Lease obligations		27		103			126
Derivative financial liabilities		24		14			4
Deferred tax liabilities		21		199			248
Retirement benefit obligations		23		418			486
Provisions		20		117			182
				2,160			2,222
Total liabilities		5		3,402			3,668
Equity
Issued share capital		25		14			14
Own Shares		25		(7	)		(7	)
Translation reserve		25		(133	)		(81	)
Hedging reserve		25		—			1
Retained earnings(1)				2,392			2,620
Equity attributable to owners of the parent				2,266			2,547
Non-controlling interests				39			36
Total equity				2,305			2,583
Total liabilities and equity				5,707			6,251

(1) Interests in equity accounted investments and retained earnings at 31 December 2023 have been restated to reflect a previously unidentified omission in the acquisition accounting of an equity accounted investment. Further details are set out in Note 1.3.

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Consolidated statement of changes in equity

	Issued share capital		Share premium account			Own shares			Translation reserve			Hedging reserve			Retained earnings			Equity attributable to owners of the parent			Non- controlling interests			Total equity
	£m		£m			£m			£m			£m			£m			£m			£m			£m
At 31 December 2022 (as restated)(1)		—		—			—			69			—			4,902			4,971			39			5,010
Loss for the year		—		—			—			—			—			(501	)		(501	)		6			(495	)
Other comprehensive (expense)/income		—		—			—			(150	)		1			(18	)		(167	)		(2	)		(169	)
Total comprehensive (expense)/income		—		—			—			(150	)		1			(519	)		(668	)		4			(664	)
Dividends paid to Related Parties(2)		—		—			—			—			—			(1,675	)		(1,675	)		—			(1,675	)
Transactions with Related Parties(2)		—		—			—			—			—			(57	)		(57	)		—			(57	)
Effect of change of ultimate holding company(3)		14		1,070			—			—			—			(1,084	)		—			—			—
Purchase of own shares by Employee Benefit Trust(4)		—		—			(7	)		—			—			—			(7	)		—			(7	)
Capital reduction		—		(1,070	)		—			—			—			1,070			—						—
Dividends paid to equity shareholders		—		—			—			—			—			(19	)		(19	)		(7	)		(26	)
Equity-settled share-based payments		—		—			—			—			—			2			2			—			2
At 31 December 2023 (as restated)		14		—			(7	)		(81	)		1			2,620			2,547			36			2,583
Loss for the year		—		—			—			—			—			(173	)		(173	)		5			(168	)
Other comprehensive (expense)/income		—		—			—			(52	)		(1	)		28			(25	)		—			(25	)
Total comprehensive (expense)/income		—		—			—			(52	)		(1	)		(145	)		(198	)		5			(193	)
Dividends paid to equity shareholders		—		—			—			—			—			(58	)		(58	)		(2	)		(60	)
Purchase of own shares under share buy- back(5)		—		—			—			—			—			(26	)		(26	)		—			(26	)
Equity-settled share-based payments		—		—			—			—			—			1			1			—			1
At 31 December 2024		14		—			(7	)		(133	)		—			2,392			2,266			39			2,305

(1) Retained earnings at 1 January 2023 has been restated to reflect a previously unidentified omission in the acquisition accounting of an equity accounted investment. Further details are set out in Note 1.3.

(2) Related Parties comprised Melrose Industries PLC, the ultimate parent company prior to demerger on 20 April 2023 and other non-Group entities controlled by Melrose Industries PLC.

(3) Following the demerger, the issued share capital and share premium account of Dowlais Group plc were recognised in the Consolidated Financial Statements. Further details are set out in Note 2.

(4) On 31 May 2023 an Employee Benefit Trust (EBT) established for the benefit of certain employees of the Group purchased shares in the capital of the Company to be held for the purpose of settling awards vesting under the Group’s share incentive schemes.

(5) On 4 April 2024 the Group commenced a share buy-back programme under which shares in the capital of the Company totalling £26 million (2023: £nil) have been purchased. All shares purchased under this programme have been cancelled.

Further information on issued share capital and reserves is set out in Note 25.

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Notes to the consolidated financial statements

1. Corporate information

Dowlais Group plc (the “Company”) comprises the GKN Automotive and GKN Powder Metallurgy businesses along with certain Corporate functions, together referred to as the “Group”. GKN Automotive is a global technology and systems engineer which designs, develops, manufactures and integrates an extensive range of driveline technologies, including electric vehicle components. GKN Powder Metallurgy is a global leader in precision powder metal parts for the automotive and industrial sectors, as well as the production of powder metal. GKN Hydrogen formed part of the Group, offering reliable and secure hydrogen storage solutions, until its sale on 29 July 2024 to Langley Holdings plc.

These consolidated financial statements were approved by the Group’s Board of Directors and authorised for issue on 15 September 2025.

1.1 Corporate structure

Dowlais Group plc was incorporated as a public company limited by shares in the United Kingdom on 13 January 2023 and is registered in England & Wales. On 28 February 2023, Melrose Industries PLC (“Melrose”) transferred the entire shareholding of GKN Industries Limited and GKN Powder Metallurgy Holdings Limited to Dowlais Group plc such that all the entities within the Group became owned directly or indirectly by Dowlais Group plc.

On 20 April 2023, Melrose made a distribution to its shareholders of Dowlais Group plc shares with one Dowlais share issued for every Melrose share held. On the same day, Dowlais Group plc shares were admitted to the premium listing segment of the Official List of the Financial Conduct Authority (FCA) and to trading on the London Stock Exchange’s main market for listed securities.

Prior to 20 April 2023, the ultimate parent company and controlling party of the Group was Melrose Industries PLC, a public company limited by shares and incorporated in England & Wales.

Subsidiaries of Melrose Industries PLC prior to the date of the demerger which do not form part of the Dowlais Group are considered non-Group entities. Melrose Industries PLC and other non-Group entities controlled by Melrose Industries PLC are Related Parties of the Group up to the date of the demerger on 20 April 2023.

1.2 Basis of preparation

The Consolidated Financial Statements have been prepared in accordance with IFRS Accounting Standards® (IFRS) as issued by the International Accounting Standards Board (IASB). The Consolidated Financial Statements are presented in pounds Sterling and, unless stated otherwise, rounded to the nearest million. They have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and financial liabilities (including derivative instruments).

The comparative information presented for results up to 28 February 2023 in this set of accounts show an aggregation of the GKN Automotive, GKN Powder Metallurgy and GKN Hydrogen businesses along with certain Corporate functions, which formed the operating segments of the Group. The aggregation has been prepared as though the post-demerger legal structure of the Group was in place at the beginning of the comparative period as described in Note 2.

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As part of the preparation of these Consolidated Financial Statements, and in consideration of SEC reporting requirements, the presentation of the Consolidated Income Statement has been re-evaluated and amended from that included in the Company’s previously published UK Annual Reports. Operating expenses has been renamed to selling, general and administrative expenses. To more appropriately reflect the functional analysis of costs within our business, impairment of goodwill of £nil (2023: £449 million) has been presented within selling, general and administrative expenses. The share of results of equity accounted investments of £61 million (2023: £51 million) has been presented after operating (loss)/profit. These changes had no impact on revenue, loss before tax or loss after tax for the years ended 31 December 2023 and 2024.

1.3 Restatement of equity accounted investments

During the year, a previously unidentified omission was noted with respect to the acquisition accounting for the Group’s investment in Shanghai GKN HUAYU Driveline Systems (“SDS”). SDS was acquired in 2018 and is held as an equity accounted investment. At the time of acquisition, intangible assets relating to customer programmes were identified and recorded as part of the carrying value of the investment as required by IAS 28 Investments in Associates and Joint Ventures, however no corresponding deferred tax liability was recorded. Had the deferred tax liability been recorded at the time of acquisition, this would have had no effect on the fair value of the investment initially recorded on acquisition. Due to the unwind of the underlying deferred tax liability, reflecting the amortisation of the related intangible assets, this would have increased the share of profits of equity accounted investments by £3 million each year since then, with a corresponding increase to the investment in equity accounted investments. As the cumulative effect of this on the opening balance sheet in 2022 is considered material, it has been restated. As a result, interests in equity accounted investments have increased by £17 million being the net impact of the increase to goodwill of £36 million and the remaining deferred tax liability of £19 million, with a corresponding credit to retained earnings. The Income Statements for comparative periods have not been restated on the basis the impact is not considered to be material to the results reported for the comparative periods. The impact of the restatement on the Consolidated Financial Statements is set out in the table below.

	As reported			Adjustment			As restated
31 December 2023
Interests in equity accounted investments		380			17			397
Retained earnings		(2,603	)		(17	)		(2,620	)

1.4 New standards, amendments and Interpretations affecting amounts, presentation or disclosure reported in the current year

The following amendments to IFRS Accounting Standards have been applied for the first time by the Group. Their adoption has not had any material impact on the disclosures or on the required amounts reported in these Consolidated Financial Statements, except as noted below:

· Amendments to IAS 1 Classification of Liabilities as Current or Non-current

· Amendments to IAS 1 Non-current Liabilities with Covenants

· Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements- The Group has provided the required disclosures around the effects of supplier finance arrangements on the entity’s liabilities and cash flows and any exposure to the Group’s concentration of liquidity risk as a result of being party to such arrangements in Note 24.

· Amendments to IFRS 16 Lease Liability in a Sale and Leaseback

1.5 New and revised IFRS accounting standards in issue but not yet effective

At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS Accounting Standards that have been issued but are not yet effective:

· Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

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· Amendments to IAS 21 Lack of Exchangeability

· Amendments to IFRS 9 Amendments to the Classification and Measurement of Financial Instruments

· IFRS 18 Presentation and Disclosures in Financial Statements

The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods, except for presentation and disclosure changes that may arise on the adoption of IFRS 18.

2. Summary of material accounting policies

Comparative information

As set out in Note 1.1 above, the Group was separated from Melrose during the prior year. The demerger took place while the business was under Melrose ownership and therefore the Directors assessed that the transaction was under common control and outside of the scope of IFRS 3 Business Combinations.

IFRS is not prescriptive as to the accounting for such transactions, and under IAS 8 Accounting Polices, Changes in Accounting Estimates and Errors, the Directors accounted for the demerger in the Consolidated Financial Statements as follows:

· The value of the assets and liabilities of the business were transferred to the Group at book value on the date of the transaction with no adjustments required to estimate fair value.

· The results of the Group for the year ended 31 December 2023 have been presented for a continuous period to include both pre- and post-demerger activities.

· Pre demerger reserves are presented as a translation reserve and a single remaining balance of retained earnings.

· The comparative for Earnings Per Share has been calculated as if the current share structure has always existed in accordance with IAS 33.26.

· Costs relating to the demerger are charged to the Income Statement.

Going concern

The Consolidated Financial Statements have been prepared on a going concern basis as the Directors consider that adequate resources exist for the Company to continue in operational existence for a period of not less than 12 months from the date of this report.

In reaching this conclusion, the Directors have also considered the implications in a going concern context of the proposed acquisition of the Group by American Axle & Manufacturing Holdings, Inc (AAM) which was announced on 29 January 2025. The Directors believe that the proposed combination with AAM is an attractive opportunity to accelerate the realisation of shareholder value through the establishment of a global, automotive supplier with market-leading capabilities, better-positioned together to navigate both the short-term challenges and long-term market dynamics in the automotive sector. On that basis, the Directors believe this supports its going concern assessment, in the event the combination proceeds. The combination is expected to close during the fourth quarter of 2025, subject to the approval and availability of the Court, as well as customary closing conditions, including regulatory clearances.

At 31 December 2024, the Group had undrawn facilities of £0.5 billion and cash on the Balance Sheet of £0.3 billion.

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Testing

In concluding that the going concern basis is appropriate, the Directors have modelled the impact of a ‘worst case scenario’ to the ‘base case’ by including an aggregation of three plausible but severe downside risks. The scenarios modelled were based on the Group remaining an independent entity and, therefore, remain appropriate should the proposed combination not proceed.

The base case is prepared from the Group’s latest forecast and takes into account the estimated impact of end market and operational factors, including supply chain and inflationary challenges and the Group’s latest estimate of the impact of US tariffs throughout the going concern period. Climate related risks have also been considered, including estimating the expected transition from internal combustion engines to electric vehicles and considering potential risks to the Group’s infrastructure resulting from extreme weather or climate events.

The three downside scenarios modelled were (i) economic shock/downturn, (ii) losing a key market, product or customer and (iii) significant contract delivery issues, including a cyber attack scenario.

Throughout the period covered, after applying the ‘worst case scenario’, and after considering the repayment of the £100 million and €100 million tranches of the term loan due in April 2026, the Group would comfortably remain within covenant limits and retain sufficient headroom on available facilities. Finally, a reverse stress test was performed which demonstrated that a significant reduction in revenue and operating profit in the second half of 2025, and/or the first half of 2026, still assuming no mitigating actions, would be required before the Group breached its leverage and interest covenants.

Even after applying significant downside risk scenarios in aggregation under the ‘worst case scenario’, no covenant is forecast to be breached at the relevant testing dates being 31 December 2025 and 30 June 2026, and the Group would not expect to require any additional sources of finance.

Consideration of climate change

In preparing the financial statements, the Directors have considered the impact of climate change, particularly TCFD recommended risks. There has been no material impact identified on the financial reporting judgements and estimates. In particular, the Directors considered the impact of climate change in respect of the following areas:

· going concern and viability of the Group over the next three years;

· cash flow forecasts used in the impairment assessments of non-current assets including goodwill and other intangible assets; and

· the carrying value and useful economic lives of property, plant and equipment.

Whilst there is currently no medium-term impact expected from climate change, the Directors are aware of the ever-changing risks that may result from climate change and will regularly assess these risks against judgements and estimates made in preparation of the Group’s financial statements.

Business combinations and goodwill

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of acquisition is measured at the fair value of assets transferred, the liabilities incurred or assumed at the date of exchange of control and equity instruments issued by the Group in exchange for control of the acquiree. Control is achieved where the Group has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. Costs directly attributable to business combinations are recognised as an expense in the Income Statement as incurred.

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The acquired identifiable assets and liabilities are measured at their fair value at the date of acquisition except those where specific guidance is provided by IFRS.

Any excess of the cost of the acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts where appropriate. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised at that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum period of one year.

Goodwill on acquisition is initially measured at cost, being the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree, the excess is recognised immediately in profit or loss as a bargain purchase gain.

As at the acquisition date, any goodwill acquired is allocated to the cash-generating units acquired. Impairment is determined by assessing the recoverable amount of the cash-generating units, or group of cash-generating units, to which goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the Income Statement and is not subsequently reversed. When there is a disposal of a cash-generating unit, goodwill relating to the operation disposed of is taken into account in determining the gain or loss on disposal of that operation. The amount of goodwill allocated to a partial disposal is measured on the basis of the relative values of the operation disposed of and the operation retained.

Equity accounted investments

A joint venture is an entity which is not a subsidiary undertaking but where the interest of the Group is that of a partner in a business over which the Group exercises joint control with its partners over the financial and operating policies. In all cases voting rights are 50% or lower.

Associated undertakings are entities that are neither a subsidiary nor a joint venture, but where the Group has a significant influence.

The results, assets and liabilities of equity accounted investments are accounted for by applying the equity method of accounting. The Group’s share of equity includes goodwill arising on acquisition.

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When a Group entity transacts with an equity accounted investment of the Group, profits and losses resulting from the transactions with the equity accounted investments are recognised in the Income Statement only to the extent of interests in equity accounted investments that are not related to the Group.

Revenue

Revenues are recognised at the point of transfer of control of goods, as the Group does not currently generate any revenue that qualifies to be recognised over time.

The nature of contracts into which the Group enters means that certain of the Group’s arrangements with its customers have multiple elements that can include a combination of:

· Sale of products; and

· Design and build.

Contracts are reviewed to identify each performance obligation relating to distinct goods and the associated consideration. The Group allocates revenue to multiple element arrangements based on the identified performance obligations within the contracts in line with the policies below. A performance obligation, which generally relates to the manufacture and supply of products for use in our customers’ operations, is identified if the customer can benefit from the goods on their own or together with other readily available resources, and it can be separately identified within the contract. This review is performed by reference to the specific contract terms.

Sale of products

This revenue stream accounts for the majority of Group sales.

Invoices for goods are raised and revenue is recognised when control of the goods is transferred to the customer. Dependent upon contractual terms this may be at the point of despatch or acceptance by the customer. Revenue recognised is the transaction price as it is the observable selling price per product.

Cash discounts, volume rebates and other customer incentive programmes are based on certain percentages agreed with the Group’s customers, which are typically earned by the customer over an annual period. These are allocated to performance obligations and are recorded as a reduction in revenue at the point of sale based on the estimated future outcome. Due to the nature of these arrangements an estimate is made based on historical results to date, estimated future results across the contract period and the contractual provisions of the customer contract.

Certain of the Group’s Automotive and Powder Metallurgy businesses recognise an element of revenue via a surcharge or similar raw material cost recovery mechanism. The surcharge is generally based on prior period movement in raw material price indices applied to current period deliveries.

Participation fees are payments made to original equipment manufacturers relating to long-term contracts. They are recognised as contract assets to the extent that they can be recovered from future sales over the lives of the contracts, generally up to seven years.

Design and build

This revenue stream affects a discrete number of Automotive businesses. Generally, revenue is only recognised on the sale of product as detailed above, however, on occasions cash is received in advance of work performed to compensate the Group for costs incurred in design and development activities. The Group performs an assessment of its performance obligations to understand multiple elements. As there is generally only one performance obligation, any cash received in advance is deferred on the Balance Sheet and recognised at a point in time as deliveries are made under the contract.

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Finance costs

Issue costs of loans

The finance cost recognised in the Income Statement in respect of the issue costs of borrowings is allocated to periods over the terms of the instrument using the effective interest rate method.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the Income Statement in the period in which they are incurred and accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.

Finance income

Finance income is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Finance income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value.

The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bring the asset into operation, and any material borrowing costs on qualifying assets. Qualifying assets are defined as an asset or programme where the period of capitalisation is more than 12 months. Purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.

Where assets are in the course of construction at the balance sheet date, they are classified as capital work-in-progress and presented within Plant and equipment. Transfers are made to other asset categories when they are available for use, at which point depreciation commences.

Right-of-use assets arise under IFRS 16 Leases and are depreciated over the shorter of the estimated life or the lease term.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

Freehold buildings and long leasehold property	over expected economic life not exceeding 50 years
Short leasehold property and equipment	over the term of the lease
Plant and equipment	3 – 15 years

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The estimated useful lives of property, plant and equipment are reviewed on an annual basis and, if necessary, changes in useful lives are accounted for prospectively. No depreciation is charged on freehold land.

The carrying values of property, plant and equipment are reviewed annually for indicators of impairment, or if events or changes in circumstances indicate that the carrying value may not be recoverable. If such indication exists an impairment test is performed and, where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount. The recoverable amount of property, plant and equipment is the greater of net selling price and value in use. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds or costs and the carrying amount of the item) is included in the Income Statement in the period that the item is derecognised.

Intangible assets

Intangible assets, with a finite useful life, are stated at cost less accumulated amortisation and accumulated impairment losses.

On acquisition of businesses, separately identifiable intangible assets are initially recorded at their fair value at the acquisition date.

Access to the use of brands and intellectual property are valued using a “relief from royalty” method which determines the net present value of future additional cash flows arising from the use of the intangible asset.

Customer relationships and contracts are valued on the basis of the net present value of the future additional cash flows arising from customer relationships with appropriate allowance for attrition of customers.

Technology assets are valued using a replacement cost approach, or a “relief from royalty” method.

Amortisation of intangible assets is recorded in the Income Statement and is calculated on a straight-line basis over the estimated useful lives of the asset as follows:

Customer relationships and contracts	20 years or less
Brands and intellectual property	20 years or less
Technology	9 years or less
Computer software	5 years or less
Development costs	6 years or less

Where computer software is not integral to an item of property, plant or equipment, its costs are capitalised and categorised as intangible assets. Computer software is initially recorded at cost. Where these assets have been acquired through a business combination, this will be the fair value allocated in the acquisition accounting. Where these have been acquired other than through a business combination, the initial cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.

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Intangible assets (other than computer software and development costs) are tested for impairment annually or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment losses are measured on a similar basis to property, plant and equipment. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis.

Research and development costs

Research costs are expensed as incurred.

Costs relating to clearly defined and identifiable development projects are capitalised when there is a technical degree of exploitation, adequacy of resources and a potential market or development possibility in the undertaking that are recognisable; and where it is the intention to produce, market or execute the project. A correlation must also exist between the costs incurred and future benefits and those costs must be able to be measured reliably. Capitalised costs are expensed on a straight-line basis over their useful lives of 6 years or less. Costs not meeting such criteria are expensed as incurred.

Research and development activities generally relate to enhancing the engineering, design or manufacturing processes of our products, particularly in relation to electric vehicles and propulsion source agnostic components.

In 2024, research and development costs of £126 million (2023: £151 million) were recorded in selling, general and administrative expenses.

Inventories

Inventories are valued at the lower of cost and net realisable value and are measured using a first in, first out or weighted average cost basis. Cost includes all direct expenditure and appropriate production overhead expenditure incurred in bringing goods to their current state based on normal operating conditions. Net realisable value is based on estimated selling price less costs expected to be incurred to completion and disposal. Provisions are made for obsolescence or other expected losses where considered necessary.

Cash and cash equivalents

Cash and cash equivalents may comprise cash in hand, balances with banks and similar institutions, and short-term deposits which are readily convertible to cash and are subject to insignificant risks of changes in value.

For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

Leases

Where a lease arrangement is identified, a liability to the lessor is included in the Balance Sheet as a lease obligation calculated at the present value of minimum lease payments. A corresponding right-of-use asset is recorded in property, plant and equipment. The discount rate used to calculate the lease liability is the Group’s incremental borrowing rate, unless the rate implicit in the lease is reasonably determinable. The incremental borrowing rate is used for the majority of leases. Incremental borrowing rates are based on the term, currency, country and start date of the lease and reflect the rate the Group would pay for a loan with similar terms and security.

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Following initial recognition, the lease liability is measured at amortised cost using the effective interest rate method. Where there is a change in future lease payments due to a rent review, change in index or rate, or a change in the Group’s assessment of whether it is reasonably certain to exercise a purchase, extension or break option, the lease obligation is remeasured. A corresponding adjustment is made to the associated right-of-use asset. Right-of-use assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.

Lease payments are apportioned between finance costs and a reduction in the lease obligation so as to reflect the interest on the remaining balance of the obligation. Finance charges are recorded in the Income Statement within finance costs.

Leases with a term of 12 months or less and leases for low value are not recorded on the Balance Sheet. Lease payments for these leases are recognised as an expense in the Income Statement on a straight-line basis over the lease term. Expenses relating to variable lease payments which are not included in the lease liability, due to being based on a variable other than an index or rate, are recognised as an expense in the Income Statement when incurred.

Financial instruments—assets

Classification and measurement

All financial assets are classified as either those which are measured at fair value, through profit or loss or other comprehensive income, and those measured at amortised cost.

Financial assets are initially recognised at fair value. For those which are not subsequently measured at fair value through profit or loss, this includes directly attributable transaction costs. Trade and other receivables, contract assets and amounts due from equity accounted investments are subsequently measured at amortised cost.

Recognition and derecognition of financial assets

Financial assets are recognised in the Balance Sheet when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when, and only when, a) the contractual rights to the cash flows from the financial asset expire or are settled, b) the Group transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or c) the Group, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party.

Impairment of financial assets

For trade receivables and contract assets, the simplified approach permitted under IFRS 9 Financial Instruments is applied. The simplified approach requires that at the point of initial recognition the expected credit loss across the life of the receivable must be recognised. As these balances do not contain a significant financing element, the simplified approach relating to expected lifetime losses is applicable under IFRS 9.

Derivatives over own equity

The Group holds a derivative asset over its own equity as a result of a contract for its own shares to be returned to it at nil cost under certain circumstances dependent on the Company’s share price at a future date. As a transaction with a shareholder, the asset was initially recognised directly in equity at the fair value of the shares expected to be returned. Following initial recognition, the derivative asset is held on the Balance Sheet at fair value. Gains and losses arising on the remeasurement of the asset are recognised immediately in the Income Statement.

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Trade and other receivables

Trade and other receivables that are held within a business model whose objective is to hold the receivables in order to collect contractual cash flows, and where the contractual terms of the receivables give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured and carried at amortised cost using the effective interest method, less any impairment. For trade receivables, the carrying amount is reduced by a loss allowance for expected credit losses. Subsequent recoveries of amounts previously written off are credited against the allowance account and changes in the carrying amount of the allowance account are recognised in the Income Statement.

Trade receivables that are assessed not to be impaired individually are also assessed for impairment on a collective basis. In measuring the expected credit losses, the Group considers all reasonable and supportable information such as the Group’s past experience at collecting receipts, any increase in the number of delayed receipts in the portfolio past the average credit period, and forward looking information such as forecasts of future economic decisions.

Other receivables are also considered for impairment. The Group recognises the expected lifetime credit loss when there has been a significant increase in credit risk (such as changes to credit ratings or when the contractual payments are overdue by more than 30 days) since initial recognition. However, if the credit risk has not increased significantly since initial recognition, the Group measures the loss allowance at an amount equal to the 12-month expected credit loss. The carrying amount is reduced by any loss arising which is recorded in the Income Statement.

Financial instruments—liabilities

Recognition and derecognition of financial liabilities

Financial liabilities are recognised in the Balance Sheet when the Group becomes a party to the contractual provisions of the instruments and are initially measured at fair value, net of transaction costs. The Group derecognises financial liabilities when the Group’s obligations are discharged, significantly modified, cancelled or they expire.

Classification and measurement

Non-derivative financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest rate basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant periods. The effective interest rate is the rate that discounts estimated future cash payments throughout the expected life of the financial liability, or, where appropriate, a shorter period to the gross carrying amount of the financial liability.

Interest bearing loans and borrowings

All loans and borrowings are initially recognised at fair value of the consideration received net of associated issue costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method.

Derivative financial instruments

The Group uses derivative financial instruments to manage its exposure to interest rate, foreign exchange rate and commodity risks, arising from operating and financing activities. The Group does not hold or issue derivative financial instruments for speculative trading purposes. Derivative financial instruments are recognised and stated at fair value in the Balance Sheet. Their fair value is recalculated at each reporting date. The accounting treatment for the resulting gain or loss will depend on whether the derivative meets the criteria to qualify for hedge accounting and are designated as such.

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Where derivatives do not meet the criteria to qualify for hedge accounting, any gains or losses on the revaluation to fair value at the period end are recognised immediately in the Income Statement. Where derivatives do meet the criteria to qualify for hedge accounting, recognition of any resulting gain or loss on revaluation depends on the nature of the hedge relationship and the item being hedged.

Derivative financial instruments with maturity dates of less than one year from the period end date are classified as current in the Balance Sheet. Derivatives embedded in non-derivative host contracts are recognised at their fair value in the Balance Sheet when the nature, characteristics and risks of the derivative are not closely related to the host contract. Gains and losses arising on the remeasurement of these embedded derivatives at each balance sheet date are recognised in the Income Statement.

Hedge accounting

In order to qualify for hedge accounting, the Group is required to document from inception the relationship between the item being hedged and the hedging instrument, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents that the hedge will be highly effective, which is when the hedging relationships meet all of the following hedge effectiveness requirements:

· there is an economic relationship between the hedged item and the hedging instrument;

· the effect of credit risk does not dominate the value changes that result from that economic relationship; and

·  the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.

The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted for prospectively. The Group designates certain hedging instruments as either cash flow hedges or hedges of net investments in foreign operations. No hedge accounting was in place within the Group prior to the demerger from the Melrose Industries PLC group.

Cash flow hedges

Derivative financial instruments are classified as cash flow hedges when they hedge the Group’s exposure to the variability in cash flows that are either attributable to a particular risk associated with a recognised asset or liability, or a highly probable forecasted cash flow.

The Group designates the full change in the fair value of interest rate swap contracts as the hedging instrument for variable interest rate exposure on debt. The effective portion of any gain or loss from revaluing the derivative financial instrument is recognised in the Statement of Comprehensive Income and accumulated in equity. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement.

Amounts previously recognised in the Statement of Comprehensive Income and accumulated in equity are recycled to the Income Statement in the periods when the hedged item is recognised in the Income Statement or when the forecast transaction is no longer expected to occur.

Hedges of net investments in foreign operations

Debt financial instruments are classified as net investment hedges when they hedge the Group’s net investment in foreign operations. The effective element of any foreign exchange gain or loss from revaluing the debt at a reporting period end is recognised in the Statement of Comprehensive Income. Any ineffective element is recognised immediately in the Income Statement.

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Gains and losses accumulated in equity are recognised immediately in the Income Statement when the foreign operation is disposed.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a rate that reflects the current market assessment of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Pensions and other retirement benefits

The Group operates defined benefit pension plans and defined contribution plans, some of which require contributions to be made to administered funds separate from the Group.

For the defined benefit pension and retirement benefit plans, plan assets are measured at fair value and plan liabilities are measured on an actuarial basis and discounted at an interest rate equivalent to the current rate of return on a high-quality corporate bond of equivalent currency and term to the plan liabilities. Any assets resulting from this calculation are limited to past service cost plus the present value of available refunds and reductions in future contributions to the plan. The present value of the defined benefit obligation, and the related current service cost and past service cost, are measured using the projected unit credit method.

The service cost of providing pension and other retirement benefits to employees for the period is charged to the Income Statement.

Net interest expense on net defined benefit obligations is determined by applying discount rates used to measure defined benefit obligations at the beginning of the year to net defined benefit obligations at the beginning of the year. The net interest expense is recognised within finance costs.

Remeasurement gains and losses comprise actuarial gains and losses, the effect of the asset ceiling (if applicable) and the return on plan assets (excluding interest). Remeasurement gains and losses, and taxation thereon, are recognised in full in the Statement of Comprehensive Income in the period in which they occur and are not subsequently recycled.

Actuarial gains and losses may result from differences between the actuarial assumptions underlying the plan obligations and actual experience during the period or changes in the actuarial assumptions used in the valuation of the plan obligations.

For defined contribution plans, contributions payable are charged to the Income Statement as an operating expense when employees have rendered services entitling them to the contributions.

Foreign currencies

The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the Group’s Consolidated Financial Statements, the results and financial position of each Group company are expressed in pounds Sterling, which is also the presentation currency.

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In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the Income Statement for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the Income Statement for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

For the purpose of presenting the Group’s Consolidated Financial Statements, the assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in the Statement of Comprehensive Income and accumulated in equity (attributed to non-controlling interests as appropriate). Such translation differences are recognised as income or as expenses in the period in which the related operation is disposed of. Any exchange differences that have previously been attributed to non-controlling interests are derecognised but they are not reclassified to the Income Statement.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the rate prevailing at the balance sheet date.

Hyperinflation

During 2022, Turkey’s economy became hyperinflationary. IAS 29 Financial Reporting in Hyperinflationary Economies requires affected entities to present their financial statements reflecting the general purchasing power of the relevant functional currency in terms of the measuring unit current at the end of the reporting period. The Group applies the Turkey Domestic Producer Price Index (D-PPI), which was 3,747 (31 December 2023: 2,915) as at the end of the year, to the results of the Group’s operations in Turkey whose functional currency is the Turkish Lira.

Taxation

The tax expense is based on the taxable profits for the period and represents the sum of the tax paid or currently payable and deferred tax.

Taxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

A tax provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of tax professionals within the Group supported by previous experience in respect of such activities and in certain cases based on specialist independent advice.

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Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences except:

· where the deferred tax liability arises on the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

· where the timing of the reversal of the temporary differences associated with investments in subsidiaries and interests in equity accounted investments can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and carry-forward of unused tax assets and unused tax losses can be utilised except:

· where the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

· in respect of deductible temporary differences associated with investments in subsidiaries and interests in equity accounted investments, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the relevant balance sheet date.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Tax relating to items recognised directly in other comprehensive income is recognised in the Statement of Comprehensive Income and not in the Income Statement.

Revenues, expenses and assets are recognised net of the amount of sales tax except:

· where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

· where receivables and payables are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet.

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Share-based payments

The Group has applied the requirements of IFRS 2 Share-based payment. The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value of the equity instrument excluding the effect of non-market based vesting conditions at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions. Fair value is measured by use of a Monte Carlo pricing model.

Government grants

Government grants are not recognised in the Income Statement until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants will be received. Government grants are recognised in the Income Statement on a systematic basis over the periods in which the Group recognises the related costs for which the grants are intended to compensate.

Specifically, government grants where the primary condition is that the Group should purchase, construct or otherwise acquire non-current assets (including property, plant and equipment) are recognised as deferred government grants in the Balance Sheet and transferred to the Income Statement on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in the Income Statement in the period in which they become receivable.

3. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, which are described in Note 2, 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.

Critical accounting judgements

No critical accounting judgements have been identified.

Key sources of estimation uncertainty

Assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, 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.

Assumptions used to determine the recoverable amount of goodwill and other assets

Determining whether the goodwill of groups of cash-generating units (“CGUs”) is impaired requires an estimation of its recoverable amount which is compared against the carrying value.

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The recoverable amount is deemed to be the higher of the value in use and fair value less costs to sell. For the year ended 31 December 2024, impairment testing has been performed for each group of CGUs using the value in use method based on estimated discounted cash flows.

The impairment tests concluded that there was headroom of £363 million for the Automotive group of CGUs, and headroom of £41 million for the Powder Metallurgy group of CGUs.

The models used to calculate value in use for each group of CGUs are particularly sensitive to key assumptions around discount rates, long-term growth rates and underlying assumptions underpinning forecasts including the impact of macroeconomic conditions such as interest rates and inflation on future sales and input prices which drive forecast operating margins and ultimately cash flows.

Details of the key assumptions supporting the impairment tests, together with sensitivity analysis in respect of those key assumptions, are set out in Note 11. Whilst actual movements might be different to sensitivities shown, these are considered to reflect a reasonably possible change that could occur.

Assumptions used to determine the carrying amount of the group’s net retirement benefit obligations

The Group’s pension plans are significant in size. The defined benefit obligations in respect of the plans are discounted at rates set by reference to market yields on high quality corporate bonds. Estimation 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 to include are the issue size of the corporate bonds, quality of the bonds and the identification of outliers which are excluded. In addition, assumptions are made in determining mortality and inflation rates to be used when valuing the plan’s defined benefit obligations. At 31 December 2024, the retirement benefit obligation was a net deficit of £384 million (2023: £459 million).

Further details of the assumptions applied and a sensitivity analysis on the principal assumptions used to determine the defined benefit liabilities of the Group’s obligations are shown in Note 23. Whilst actual movements might be different to sensitivities shown, these are considered to reflect a reasonably possible change that could occur.

4. Revenue

An analysis of the Group’s revenue, presented by destination (i.e. by the location of the external customer), is as follows:

Year ended 31 December 2024	Automotive		Powder metallurgy		Hydrogen		Total
		£m		£m		£m		£m
UK		196		13		—		209
Rest of Europe		993		339		—		1,332
North America		1,495		406		—		1,901
South America		176		16		—		192
Asia		516		170		—		686
Africa		15		2		—		17
Revenue		3,391		946		—		4,337

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Year ended 31 December 2023	Automotive		Powder metallurgy		Hydrogen		Total
		£m		£m		£m		£m
UK		180		12		—		192
Rest of Europe		1,312		360		4		1,676
North America		1,606		446		1		2,053
South America		144		17		—		161
Asia		588		180		—		768
Africa		13		1		—		14
Revenue		3,843		1,016		5		4,864

Revenue can also be disaggregated by product line as follows:

	Year ended 31 December 2024		Year ended 31 December 2023
		£m		£m
Automotive
Driveline		2,268		2,436
ePowertrain		1,049		1,329
Other		74		78
		3,391		3,843

	Year ended 31 December 2024		Year ended 31 December 2023
		£m		£m
Powder Metallurgy
Sinter		744		800
Powder		172		190
Additive		30		26
		946		1,016
Hydrogen		—		5

The Group derives its revenue from the transfer of goods at a point in time.

For the year ended 31 December 2024, the Group has identified two major customers (defined as customers that individually contributed at least 10% of the Group’s revenue) primarily reported within the Automotive segment that accounted for approximately 11% and 10% of the Group’s total revenue recognised in the year (2023: two customers that accounted for approximately 12% and 14% of the Group’s total revenue for 2023).

5. 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 Chief Operating Decision Maker (“CODM”), which has been deemed to be the Group’s Board of Directors, in order to allocate resources to the segments and assess their performance.

The operating segments are as follows:

Automotive—a global technology and systems engineer which designs, develops, manufactures and integrates an extensive range of driveline technologies, including electric vehicle components.

26

Powder metallurgy—a global leader in precision powder metal parts for the automotive and industrial sectors, as well as the production of powder metal.

Hydrogen—offering reliable and secure hydrogen storage solutions, the business was sold on 29 July 2024.

In addition, central corporate cost centres are also reported to the Board. The central corporate cost centres contain the Group head office costs and charges related to the divisional management long-term incentive plans.

No operating segments have been aggregated to form the reportable segments.

Reportable segment results include items directly attributable to a segment as well as those which can be allocated on a reasonable basis. Inter-segment pricing is determined on an arm’s length basis, in a manner similar to transactions with third parties.

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.

The following tables present the segment revenues and operating profits as regularly reported to the CODM, as well as certain asset and liability information regarding the Group’s operating segments and central cost centres.

a) Segment revenues

The Group has assessed that the disaggregation of revenue recognised from contracts with customers by operating segment is appropriate as this is the information regularly reviewed by the CODM in evaluating financial performance.

Year ended 31 December 2024	Notes		Automotive		Powder metallurgy		Hydrogen		Total
				£m		£m		£m		£m
Adjusted revenue				3,954		983		—		4,937
Equity accounted investments		13								(600	)
Revenue		4								4,337

Year ended 31 December 2023	Notes		Automotive		Powder metallurgy		Hydrogen		Total
			£m		£m		£m		£m
Adjusted revenue				4,437		1,047		5		5,489
Equity accounted investments		13								(625	)
Revenue		4								4,864

27

b) Segment operating profit

	Year ended 31 December 2024			Year ended 31 December 2023
		£m			£m
Adjusted operating profit/(loss):
Automotive		268			306
Powder Metallurgy		89			96
Hydrogen		(9	)		(15	)
Total		348			387
Corporate costs(1)		(24	)		(32	)
Unallocated items:
Restructuring costs(2)		(145	)		(120	)
Impairment of goodwill		—			(449	)
Amortisation of intangible assets acquired in business combinations		(191	)		(197	)
Movement in derivatives and associated financial assets and liabilities		(71	)		16
Impairment of assets		(10	)		—
Business disposal related losses		(8	)		—
Litigation costs		(3	)		—
Demerger costs		(1	)		(42	)
Net release of certain fair value items		27			17
Adjusted operating profit of equity accounted investments(3)		(89	)		(81	)
Operating (loss)/profit		(167	)		(501	)
Share of results of equity accounted investments, net of tax		61			51
Finance costs		(131	)		(101	)
Finance income		22			29
Loss before tax		(215	)		(522	)

(1) Corporate adjusted operating loss includes a charge of £nil (2023: £8 million) in respect of divisional management long-term incentive plans.

(2) Costs associated with restructuring projects included:

(a) A charge of £125 million (2023: £109 million) within the Automotive segment, primarily relating to significant footprint consolidation actions as the business continues to address its cost base and deliver transformational programmes. Significant costs incurred include direct costs relating to the closure of an Automotive plant in Roxboro, North Carolina and direct costs of expansion in Mexico as new product lines are added to the facility, and continued transfer of manufacturing from Mosel, Germany to Miskolc, Hungary. Further costs have also been incurred in 2024 reflecting the Group’s strategic decision to right size its engineering investment in the ePowertrain product line, with a primary focus on eDrive systems, to optimise capital allocation.

(b) A charge of £17 million (2023: £10 million) within the Powder Metallurgy segment relating to the optimisation of headcount and reorganisation of activities under the new commercial strategy. In 2023, a charge of £1 million was recorded within the Hydrogen segment.

(3) Segmental adjusted operating profit includes the Group’s share of operating profit of equity accounted investments, excluding any amortisation of intangible assets acquired in business combinations, which is not included in the Group’s operating profit/(loss).

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c) Segment total assets and liabilities

	Total assets				Total liabilities
	31 December 2024		31 December 2023(1)		31 December 2024		31 December 2023
		£m		£m		£m		£m
Automotive		4,123		4,578		1,655		2,059
Powder Metallurgy		1,185		1,268		373		404
Hydrogen		—		14		—		6
Total segmental assets/liabilities		5,308		5,860		2,028		2,469
Corporate		399		391		1,374		1,199
Total Group assets/liabilities		5,707		6,251		3,402		3,668

(1) Interests in equity accounted investments at 31 December 2023 have been restated to reflect a previously unidentified omission in the acquisition accounting of an equity accounted investment. Further details are set out in Note 1.3.

d) Segment additions to non-current assets and depreciation

	Additions to non-current assets
	Year ended 31 December 2024		Year ended 31 December 2023
		£m		£m
Automotive		194		217
Powder Metallurgy		43		42
Hydrogen		—		3
Total		237		262

Additions to non-current assets excludes lease additions.

	Depreciation of owned assets				Depreciation of leased assets
	Year ended 31 December 2024		Year ended 31 December 2023		Year ended 31 December 2024		Year ended 31 December 2023
		£m		£m		£m		£m
Automotive		187		187		14		15
Powder Metallurgy		46		50		11		10
Hydrogen		—				—		—
Total		233		237		25		25

e) Geographical information

The Group operates in various geographical areas around the world. The parent company’s country of domicile is the UK and the Group’s revenues and non-current assets in the rest of Europe and North America are also considered to be material.

29

The Group’s revenue from external customers and information about specific segment assets (noncurrent assets excluding deferred tax assets, non-current derivative financial assets, other financial assets, retirement benefit surplus and non-current other receivables) by geographical location are detailed in the following tables:

	Segment assets
	31 December 2024		31 December 2023(1)
		£m		£m
UK		520		633
Rest of Europe		1,521		1,637
North America		1,285		1,298
Other		864		945
Total		4,190		4,513

(1) Interests in equity accounted investments at 31 December 2023 have been restated to reflect a previously unidentified omission in the acquisition accounting of an equity accounted investment. Further details are set out in Note 1.3.

	Revenue(1) from external customers
	Year ended 31 December 2024		Year ended 31 December 2023
		£m		£m
UK		209		192
Rest of Europe		1,332		1,676
North America		1,901		2,053
Other		895		943
Total		4,337		4,864

(1) Revenue is presented by destination.

Total revenue includes revenue from customers located in the United States of £1,322 million (2023: 1,483 million), in Mexico of £514 million (2023: £484 million) and Germany of £474 million (2023: £551 million) which are considered individually material.

6. Staff costs

An analysis of staff costs is as follows:

	Year ended 31 December 2024		Year ended 31 December 2023
		£m		£m
Staff costs during the year (including Executive Directors)
Wages and salaries		878		985
Social security costs		190		202
Pension costs (Note 23)
– defined benefit plans		6		6
– defined contribution plans		14		12
Share-based compensation expense (Note 22)		1		1
Total staff costs		1,089		1,206

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7. Finance costs and finance income

An analysis of finance costs and income is as follows:

	Year ended 31 December 2024			Year ended 31 December 2023
		£m			£m
Finance costs and income
Interest on bank loans and overdrafts		(89	)		(63	)
Interest on loans due to Related Parties(1)		—			(8	)
Amortisation of costs of raising finance		(5	)		(3	)
Net interest cost on pensions		(15	)		(17	)
Lease interest		(6	)		(6	)
Unwind of discount on provisions		(1	)		—
Fair value changes on other financial assets		(10	)		(1	)
Other finance costs		(5	)		(3	)
Finance costs		(131	)		(101	)
Foreign exchange movements on loans with Related Parties(1)		—			22
Other finance income		22			7
Finance income		22			29

(1) Related Parties comprised Melrose Industries PLC, the ultimate parent company prior to demerger on 20 April 2023 and other non-Group entities controlled by Melrose Industries PLC.

8. Tax

	Year ended 31 December 2024			Year ended 31 December 2023
		£m			£m
Analysis of tax credit in the year:
Current tax
Current year tax charge		19			55
Adjustments in respect of prior years		—			(2	)
Total current tax charge		19			53
Deferred tax
Origination and reversal of temporary differences		(62	)		(111	)
Adjustments in respect of prior years		22			27
Tax on the change in value of derivative financial instruments		(14	)		—
Adjustments to deferred tax attributable to changes in tax rates		—			1
Recognition of previously unrecognised deferred tax assets		(6	)		—
Non-recognition of deferred tax		(6	)		3
Total deferred tax credit		(66	)		(80	)
Tax credit for the year		(47	)		(27	)

The United Kingdom’s Finance (No.2) Act 2023 (as amended by Schedule 12 Finance Act 2024) legislates for the UK’s application of the Organisation for Economic Co-operation and Development’s Global Anti-Base Erosion Model Rules (Pillar Two), in general to accounting periods beginning on or after 31 December 2023. However, specific provisions of the UK’s Pillar Two legislation interact with the date of the Group’s demerger from Melrose Industries PLC (20 April 2023), such that Pillar Two will not apply to the Group until the accounting period beginning 1 January 2025. The Group’s effective tax rate may be impacted, from 2025 onwards, by Pillar Two. Upon a review of the Group’s results for the year ended 31 December 2024 and their interaction with the Pillar Two rules (had they been in force in relation to the Group for that year), the Group currently considers that the impact of Pillar Two on its 2025 global tax position will not be material.

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The tax credit for the year can be reconciled to the loss before tax per the Income Statement as follows:

	Year ended 31 December 2024			Year ended 31 December 2023
		£m			£m
Loss before tax:		(215	)		(522	)
Tax credit on loss before tax at the weighted average rate of 19% (2023: 25%)		(41	)		(131	)
Tax effect of:
Disallowable expenses and other permanent differences(1)		(10	)		86
Temporary differences not recognised in deferred tax		(6	)		3
Recognition of previously unrecognised deferred tax assets		(6	)		—
Tax credits, withholding taxes and other rate differences		(6	)		(7	)
Adjustments in respect of prior years		22			25
Effect of changes in tax rates		—			(3	)
Total tax credit for the year		(47	)		(27	)

(1) Disallowable expenses and other permanent differences for the year ended 31 December 2024 include a £45 million provision release following the settlement of a German tax audit relating to the years 2010 to 2021.

The reconciliation has been performed at a blended Group tax rate of 19% (2023: 25%) which represents the weighted average of the tax rates applying to profits and losses in the jurisdictions in which those results arose in the year.

Tax charges/(credits) included in other comprehensive income are as follows:

	Year ended 31 December 2024			Year ended 31 December 2023
		£m			£m
Deferred tax on retirement benefit obligations		9			(4	)
Deferred tax on foreign exchange gains and losses		(6	)		(4	)
Total charge/(credit) for the year		3			(8	)

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9. Dividends

	Year ended 31 December 2024		Year ended 31 December 2023
		£m		£m
Interim dividend		19		19
Final dividend		39		—
Dividends paid to Related Parties		—		1,675
		58		1,694

An interim dividend of 1.4 pence per ordinary share (2023: 1.4 pence) was declared by the Board on 13 August 2024 and paid on 4 October 2024, totalling £19 million (2023: £19 million).

A final dividend of 2.8 pence per ordinary share (2023: 2.8 pence) is proposed by the Board, totalling £38 million (2023: £39 million).

On 23 February 2023, prior to the demerger, GKN Industries Limited declared a dividend of £1,675 million (72.83 pence per ordinary share) in favour of its immediate parent undertaking GKN Enterprise Limited, a member of the Melrose Industries PLC group. The dividend was credited to the loan balance with Related Parties which was subsequently cash settled at the date of demerger.

During the current year, the Group commenced a share buy-back programme under which £26 million of cash has been used to acquire shares in the Company. All shares acquired in this way have been cancelled.

10. Earnings per share

Earnings attributable to owners of the parent	Year ended 31 December 2024			Year ended 31 December 2023
		£m			£m
Net loss attributable to shareholders		(173	)		(501	)
Adjustments for earnings attributable to shares subject to recall		4			10
Earnings for basis of earnings per share		(169	)		(491	)

	Year ended 31 December 2024 number			Year ended 31 December 2023 number
Weighted average number of ordinary shares (million)		1,373			1,390
Adjustment for shares subject to recall (million)		(28	)		(28	)
Weighted average number of ordinary shares for the purposes of basic earnings per share (million)		1,345			1,362
Weighted average number of ordinary shares for the purposes of diluted earnings per share (million)		1,345			1,362

On 3 April 2024, the Group commenced a share buy-back programme, with 41 million shares purchased and cancelled by 31 December 2024 at a total cost of £26 million.

33

Earnings per share	Year ended 31 December 2024 pence			Year ended 31 December 2023 pence
Basic earnings per share		(12.6	)		(36.0	)
Diluted earnings per share		(12.6	)		(36.0	)

11. Goodwill and other intangible assets

	Goodwill			Customer relationships and contracts			Brands and intellectual property			Technology			Computer software			Development costs			Total
		£m			£m			£m			£m			£m			£m			£m
Cost
At 1 January 2023		1,605			1,789			183			404			98			112			4,191
Additions		—			—			—			—			12			4			16
Disposals		—			—			—			—			(5	)		—			(5	)
Impact of hyperinflationary economies		2			3			—			—			—			—			5
Reclassification		—			—			—			—			3			(3	)		—
Exchange adjustments		(51	)		(73	)		—			(2	)		(2	)		(4	)		(132	)
At 31 December 2023		1,556			1,719			183			402			106			109			4,075
Additions		—			—			—			—			—			3			3
Disposals		—			—			—			—			(19	)		(2	)		(21	)
Impact of hyperinflationary economies		1			3			—			—			—			—			4
Exchange adjustments		(27	)		(36	)		—			(1	)		(2	)		—			(66	)
At 31 December 2024		1,530			1,686			183			401			85			110			3,995
Amortisation and impairment
At 1 January 2023		—			(672	)		(44	)		(226	)		(84	)		(70	)		(1,096	)
Charge for the year		—			(140	)		(9	)		(48	)		(5	)		(5	)		(207	)
Impairments		(449	)		—			—			—			—			—			(449	)
Disposals		—			—			—			—			5			—			5
Reclassification		—			—			—			—			(1	)		1			—
Exchange adjustments		—			30			—			2			3			2			37
At 31 December 2023		(449	)		(782	)		(53	)		(272	)		(82	)		(72	)		(1,710	)
Charge for the year		—			(136	)		(8	)		(47	)		(6	)		(8	)		(205	)
Disposals		—			—			—			—			19			2			21
Exchange adjustments		12			14			—			1			1			—			28
At 31 December 2024		(437	)		(904	)		(61	)		(318	)		(68	)		(78	)		(1,866	)
Net book value
At 31 December 2024		1,093			782			122			83			17			32			2,129
At 31 December 2023		1,107			937			130			130			24			37			2,365
At 1 January 2023		1,605			1,117			139			178			14			42			3,095

Amortisation expense of £7 million (2023: £5 million) and £198 million (2023: £202 million) is included within costs of sales and selling, general and administrative expenses, respectively.

34

Impairments of £nil (2023: £449 million) are included in selling, general and administrative expenses. The goodwill generated as a result of acquisitions represents the premium paid in excess of the fair value of all net assets, including intangible assets identified at the point of acquisition. On demerger of the Group from Melrose, goodwill relating to historical acquisitions was transferred at book value based on the goodwill that arose on the original acquisition. No additional goodwill was created as a result of the demerger. Further details are set out in Note 2.

Goodwill acquired in business combinations, net of impairment, has been allocated to the businesses, each of which comprises several cash-generating units (“CGUs”). Goodwill is allocated to CGUs, or groups of CGUs, that are expected to benefit from the synergies of the acquisition. Goodwill is allocated to the Automotive and Powder Metallurgy groups of CGUs, which each represent reportable segments, as this is the lowest level within the Company at which the goodwill is monitored for internal management purposes.

Goodwill	31 December 2024		31 December 2023
		£m		£m
Automotive		1,014		1,028
Powder Metallurgy		79		79
Total		1,093		1,107

Impairment testing

The Group tests goodwill annually or more frequently if there are indications that goodwill might be impaired. The date of the annual impairment test is 31 October, aligned with internal forecasting and review processes. In accordance with IAS 36 Impairment of Assets, the Group values goodwill at the recoverable amount, being the higher of the value in use or fair value less costs to sell. For the current year, impairment tests for both groups of CGUs were performed by applying a value in use approach (2023: value in use).

Based on impairment testing completed for the year ended 31 December 2024 no impairment was identified in respect of either the Automotive or the Powder Metallurgy group of CGUs (2023: no impairment identified in respect of the Automotive group of CGUs, however an impairment of £449 million was identified with respect to the Powder Metallurgy group of CGUs).

Significant assumptions and estimates

The basis of the impairment tests and the key assumptions are set out in the tables below:

	2024								2023
Groups of CGUs	Pre-tax discount rates			Long-term growth rates			Years in forecast		Pre-tax discount rates			Long-term growth rates			Years in forecast
Automotive		12.5	%		3.5	%		5		13.3	%		3.3	%		5
Powder Metallurgy		12.6	%		3.5	%		5		13.4	%		3.3	%		5

Risk adjusted discount rates

Cash flows within the groups of CGUs are discounted using a post-tax discount rate specific to each group of CGUs. Discount rates reflect the current market assessments of the time value of money and the territories in which the group of CGUs operates. In determining the cost of equity, the Capital Asset Pricing Model (“CAPM”) has been used. Under CAPM, the cost of equity is determined by adding a risk premium, based on an industry adjustment (“Beta”), to the expected return of the equity market above the risk-free return. The relative risk adjustment reflects the risk inherent in each group of CGUs relative to all other sectors and geographies on average.

35

The cost of debt is determined using a risk-free rate based on the cost of government bonds and an interest rate premium equivalent to a corporate bond with a credit rating similar to the rating of the Group.

The pre-tax discount rate for each group of CGUs is derived such that when applied to pre-tax cash flows it gives the same result as when the observable post-tax weighted average cost of capital is applied to post-tax cash flows.

Assumptions applied in financial forecasts

The Group prepares five-year cash flow forecasts derived from financial budgets and medium-term forecasts. Each forecast has been prepared using a cash flow period deemed most appropriate by management, considering the nature of each group of CGUs. The key assumptions used in forecasting cash flows relate to future budgeted revenue and operating margins likely to be achieved and the expected rates of long-term growth by market sector. Underlying factors in determining the values assigned to each key assumption are shown below.

Revenue growth and operating margins

Revenue growth assumptions in the forecast period are based on financial budgets and medium-term forecasts by management, taking into account industry growth rates and management’s historical experience in the context of wider industry and economic conditions. Projected sales are built up with reference to markets and product categories. They incorporate past performance, historical growth rates, projections of developments in key markets, secured orders and orders forecast to be achieved in the short to medium-term given trends in the relevant market sector. Revenue assumptions take account of relevant external market data, where available, and also consider the potential continued impact of recent macroeconomic and political instability.

Operating margins have been forecast based on historical levels achieved considering the likely impact of changing economic environments and competitive landscapes on volumes and revenues and the impact of management actions on costs. Projected margins reflect the impact of all committed and initiated projects to improve operational efficiency and leverage scale.

Forecasts for other operating costs are based on inflation forecasts and supply and demand factors, which take account of climate change implications for affected markets. Overall, climate risk exposure is considered to be relatively low across the divisions in the short and medium-term but starts to increase in the longer-term, for example through increasing likelihood of flooding risk or increasing wildfire risk. Impairment testing includes short to medium-term planning (five years) for each of the groups of CGUs, which addresses known risks from climate change and other environmental factors impacting forecast costs as well as the opportunities in associated markets as they prepare for change, for example, transition to electrification in Automotive which is expected to impact revenues.

Across the Group, the key driver for growth in operating margin is the Group’s ability to optimise performance. This includes manufacturing optimisation and automation, making supply chain savings, commercial activities to align sales prices with inflationary pressures, and restructuring activities to ensure the Group is operating an efficient cost base.

For Automotive, sector growth is driven by global demand for a large range of cars, ranging from smaller low-cost cars to larger premium vehicles. Demand is influenced by technological advancements, particularly in electric and full hybrid vehicles, market expectations for global vehicle production requirements, fuel prices, raw material input costs and expectations of their recovery, consumer spending, credit availability, and other macroeconomic factors.

36

For Powder Metallurgy, growth is dependent on trends in the automotive and industrial markets. Market expectations for global light vehicle production requirements, raw material input costs and technological advancements, particularly in additive manufacturing, influence demand for these products along with other macroeconomic factors.

Long-term growth rates

Long-term growth rates are based on long-term forecasts for growth in the sectors and geographies in which the group of CGUs operates. These rates are determined using forecasts that reflect the international presence and the markets in which each business operates. The rates are applied to calculate a terminal value for cash flows after the five-year period covered by management forecasts.

Sensitivity analysis

The models used to calculate value in use for each group of CGUs are particularly sensitive to key assumptions around discount rates, long-term growth rates and underlying assumptions underpinning forecasts including the impact of macroeconomic conditions such as interest rates and inflation on future sales and input prices which drive forecast operating margins and ultimately cash flows.

Automotive group of CGUs—sensitivity analysis

At 31 December 2024, forecasts result in headroom of £363 million above the carrying amount for the Automotive group of CGUs. Sensitivity analysis has been carried out and a reasonably possible increase in the discount rate from 12.5% to 13.8%, would reduce headroom to £nil. Further increases in the discount rate to 14.2% would result in an impairment charge of c.£90 million.

Management does not believe reasonably possible changes in the long-term growth rate of 3.5% would result in headroom being eroded to £nil, however for indication purposes, a decrease in the long-term growth rate to 2.5% would result in a reduction of headroom by £200 million. Operating margin assumptions are a key driver of business value and a 17% reduction in the terminal operating profit would reduce operating profit margin by 1.4 percentage points, resulting in headroom of £nil. An additional reduction in the terminal operating profit, representing a total reduction of 20%, would reduce operating profit margin by 1.7 percentage points, resulting in an impairment charge of c.£80 million.

Powder Metallurgy group of CGUs—sensitivity analysis

At 31 December 2024, forecasts result in headroom of £41 million above the carrying amount for the Powder Metallurgy group of CGUs. Sensitivity analysis has been carried out and a reasonably possible increase in the discount rate from 12.6% to 13.1%, would reduce headroom to £nil. Further increases in the discount rate to 13.6% would result in an impairment charge of c.£39 million.

The value of the Powder Metallurgy group of CGUs remains sensitive to and dependent upon the underlying forecast and financial assumptions in the future. Operating margin assumptions are a key driver of business value and a reduction in the terminal operating profit by 6% would reduce the operating margin by 0.5 percentage points, resulting in headroom of £nil. An additional reduction in the terminal operating profit, representing a total reduction of 12%, would reduce operating profit margin by 1.0 percentage points, resulting in an impairment charge of c.£38 million in 2025. A reasonably possible decrease in long-term growth rates from 3.5% to 2.8% would result in headroom of £nil. A further decrease in the long-term growth rate to 2.0% would result in an impairment charge of c.£37 million being incurred.

37

For all sensitivities, it is assumed that all other variables remain unchanged.

Allocation of significant intangible assets

The allocation of significant customer relationships and contracts, brands, intellectual property and technology is as follows:

	Customer relationships and contracts
	Remaining amortisation period				Net book value
	31 December 2024 Years		31 December 2023 Years		31 December 2024		31 December 2023
					£m		£m
Automotive		6		7		396		501
Powder Metallurgy		11		12		386		436
Total						782		937

	Brands, intellectual property and technology
	Remaining amortisation period				Net book value
	31 December 2024 Years		31 December 2023 Years		31 December 2024		31 December 2023
					£m		£m
Automotive		14		15		166		214
Powder Metallurgy		14		15		39		46
Total						205		260

12. Property, plant and equipment

	Land and buildings			Plant and equipment			Total
		£m			£m			£m
Cost
At 1 January 2023		659			2,005			2,664
Additions		10			263			273
Disposals		(24	)		(40	)		(64	)
Transfer		71			(71	)		—
Impact of hyperinflationary economies		1			2			3
Exchange adjustments		(30	)		(88	)		(118	)
At 31 December 2023		687			2,071			2,758
Additions		15			242			257
Disposals		(13	)		(33	)		(46	)
Disposal of business		(2	)		(5	)		(7	)
Transfer		50			(50	)		—
Lease reassessments		(11	)		1			(10	)
Impact of hyperinflationary economies		4			8			12

38

	Land and buildings			Plant and equipment			Total
		£m			£m			£m
Exchange adjustments		(26	)		(55	)		(81	)
At 31 December 2024		704			2,179			2,883
Accumulated depreciation and impairment
At 1 January 2023		(121	)		(722	)		(843	)
Charge for the year		(30	)		(222	)		(252	)
Disposals		10			38			48
Impairments		(1	)		—			(1	)
Exchange adjustments		6			35			41
At 31 December 2023		(136	)		(871	)		(1,007	)
Charge for the year		(30	)		(214	)		(244	)
Disposals		10			32			42
Disposal of business		2			5			7
Impairments		(9	)		(22	)		(31	)
Impact of hyperinflationary economies		(3	)		(4	)		(7	)
Exchange adjustments		5			28			33
At 31 December 2024		(161	)		(1,046	)		(1,207	)
Net book value
At 31 December 2024		543			1,133			1,676
At 31 December 2023		551			1,200			1,751
At 1 January 2023		538			1,283			1,821

Depreciation expense of £227 million (2023: £233 million) and £17 million (2023: £19 million) of depreciation expense is included within costs of sales and selling, general and administrative expenses, respectively. Impairments of £31 million (2023: £1 million) are included in selling, general and administrative expenses. Assets under the course of construction at 31 December 2024 totalled £176 million (31 December 2023: £158 million). Assets under the course of construction are presented as plant and equipment until the point at which the asset is ready for use. Transfers of £50 million (2023: £71 million) between asset classes were recorded on completion of construction projects.

The basis of testing for impaired assets, which resulted in a charge totalling £31 million (2023: £1 million), primarily used fair value less costs to sell methodology which was classified as a level 3 fair value under the IFRS 13 fair value hierarchy.

Property, plant and equipment includes the net book value of right-of-use assets as follows:

Right-of-use asset	Land and buildings			Plant and equipment			Total
		£m			£m			£m
At 1 January 2023		114			30			144
Additions		9			18			27
Depreciation		(14	)		(11	)		(25	)
Disposals		(1	)		—			(1	)
Exchange adjustments		(6	)		(2	)		(8	)
At 31 December 2023		102			35			137

39

Right-of-use asset	Land and buildings			Plant and equipment			Total
		£m			£m			£m
Additions		10			13			23
Depreciation		(13	)		(12	)		(25	)
Reassessments		(11	)		1			(10	)
Impairments		(5	)		—			(5	)
Impact of hyperinflationary economies		2			—			2
Exchange adjustments		(7	)		(1	)		(8	)
At 31 December 2024		78			36			114

13. Equity accounted investments

	31 December 2024			31 December 2023(1)
		£m			£m
Aggregated amounts relating to equity accounted investments:
Share of non-current assets		256			291
Share of current assets		445			453
Share of current liabilities		(288	)		(298	)
Share of non-current liabilities		(28	)		(49	)
Interests in equity accounted investments		385			397

(1) Interests in equity accounted investments at 31 December 2023 have been restated to reflect a previously unidentified omission in the acquisition accounting of an equity accounted investment. Further details are set out in Note 1.3.

Group share of results	Year ended 31 December 2024			Year ended 31 December 2023
		£m			£m
Revenue		600			625
Selling, general and administrative expenses		(531	)		(565	)
Operating profit		69			60
Net finance income		1			2
Profit before tax		70			62
Tax		(9	)		(11	)
Share of results of equity accounted investments		61			51

Group share of equity accounted investments	Year ended 31 December 2024			Year ended 31 December 2023
		£m			£m
At 1 January		397			441
Share of results of equity accounted investments		61			51
Dividends paid to the Group		(70	)		(63	)
Exchange adjustments		(3	)		(32	)
At 31 December		385			397

(1) Interests in equity accounted investments at 31 December 2023 have been restated to reflect a previously unidentified omission in the acquisition accounting of an equity accounted investment. Further details are set out in Note 1.3.

Within the Group’s share of equity accounted investments there is one significant joint venture, held within the Automotive segment, Shanghai GKN HUAYU Driveline Systems Co Limited (“SDS”).

40

	Shanghai GKN HUAYU Driveline Systems Co Limited			Group 50% share of SDS			Amortisation of acquisition intangibles			Intra-Group sales elimination			Total Group share of SDS
		£m			£m			£m			£m			£m
Year ended 31 December 2024
Revenue		1,102			551			—			(37	)		514
Operating profit		138			69			(20	)		—			49
Interest income		4			2			—			—			2
Tax		(18	)		(9	)		3			—			(6	)
Profit after tax		124			62			(17	)		—			45
Year ended 31 December 2023
Revenue		1,188			594			—			(38	)		556
Operating profit		142			71			(21	)		—			50
Interest income		6			3			—			—			3
Tax		(20	)		(10	)		—			—			(10	)
Profit after tax		128			64			(21	)		—			43

	Shanghai GKN HUAYU Driveline Systems Co Limited			Group 50% share of SDS			Fair value adjustments			Total Group share of SDS
		£m			£m			£m			£m
31 December 2024
Non-current assets		138			69			163			232
Current assets		734			367			—			367
Current liabilities		(472	)		(236	)		—			(236	)
Non-current liabilities		(8	)		(4	)		(16	)		(20	)
Net assets		392			196			147			343
31 December 2023
Non-current assets		152			76			184			260
Current assets		796			398			—			398
Current liabilities		(506	)		(253	)		—			(253	)
Non-current liabilities		(44	)		(22	)		(19	)		(41	)
Net assets		398			199			165			364

41

14. Disposals

On 29 July 2024, the Group completed the disposal of the GKN Hydrogen business to Langley Holdings plc, for nominal consideration.

Classes of assets and liabilities disposed of as a result of the Hydrogen disposal were as follows:

	Hydrogen disposal
		£m
Trade and other receivables		3
Cash and cash equivalents		9
Total assets		12
Trade and other payables		4
Lease obligations		1
Total liabilities		5
Net assets		7

An impairment charge totalling £10 million (2023: £nil) was recorded against the value of inventory and property, plant and equipment held by the Hydrogen division to write down the assets to £nil reflecting their anticipated recoverable value, following the decision made in June 2024 to close or dispose of the business.

	Year ended 31 December 2024
		£m
Proceeds received on disposal		—
Net assets disposed of		7
Disposal transaction costs		1
Loss on disposal of business		8

15. Inventories

	31 December 2024		31 December 2023
		£m		£m
Raw materials		240		288
Work in progress		105		123
Finished goods		86		99
		431		510

In 2024 the write down of inventories to net realisable value amounted to £19 million (2023: £15 million). The reversal of write downs amounted to £9 million (2023: £8 million). Write downs and reversals in both years relate to ongoing assessments of inventory obsolescence, excess inventory holding and inventory resale values across all of the Group’s businesses.

The cost of inventory recognised as an expense during the year ended 31 December 2024 totalled £3,691 million (2023: £4,107 million).

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16. Trade and other receivables

Current	31 December 2024			31 December 2023
		£m			£m
Trade receivables, gross		384			476
Allowance for expected credit loss		(15	)		(16	)
Trade receivables		369			460
Other receivables		82			151
Prepayments		25			10
Contract assets		9			7
		485			628

Trade receivables are non interest-bearing. Credit terms offered to customers vary upon the country of operation but are generally between 30 and 90 days.

Non-current	31 December 2024		31 December 2023
		£m		£m
Other receivables		8		6
Contract assets		5		6
		13		12

As described in Note 24, certain businesses participate in receivables working capital programmes and have the ability to choose whether to receive payment earlier than the normal due date, for specific customers on a non-recourse basis. As at 31 December 2024, eligible receivables under these programmes have been factored and derecognised in line with the derecognition criteria of IFRS 9 Financial Instruments.

An allowance has been made for expected lifetime credit losses with reference to past default experience and management’s assessment of credit worthiness over trade receivables, an analysis of which is as follows:

	Total
		£m
At 31 December 2023		16
Impairment recognised on trade receivables
Impairment reversed on trade receivables		(4	)
Exchange adjustments
At 31 December 2024		15

The concentration of credit risk is limited due to the large number of unrelated customers. Credit control procedures are implemented to ensure that sales are only made to organisations that are willing and able to pay for them. Such procedures include the establishment and review of customer credit limits and terms. The Group does not hold any collateral or any other credit enhancements over any of its trade receivables nor does it have a legal right of offset against any amounts owed by the Group to the counterparty.

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The ageing of impaired trade receivables past due, allowance for expected credit losses and recoverable amounts are as follows:

31 December 2024	Gross		Loss allowance			Recoverable
		£m		£m			£m
Current		348		—			348
0 – 30 days		19		(8	)		11
31 – 60 days		4		—			4
60+ days		13		(7	)		6
		384		(15	)		369

31 December 2023	Gross		Loss allowance			Recoverable
		£m		£m			£m
Current		444		—			444
0 – 30 days		21		(9	)		12
31 – 60 days		4		—			4
60+ days		7		(7	)		—
		476		(16	)		460

The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

The Group’s contract assets comprise the following:

	Participation fees			Other			Total
		£m			£m			£m
At 1 January 2023		10			10			20
Additions		—			1			1
Reclassification		—			(3	)		(3	)
Utilised		(1	)		(3	)		(4	)
Exchange adjustments		(1	)		—			(1	)
At 31 December 2023		8			5			13
Additions		5			—			5
Utilised		(1	)		(2	)		(3	)
Exchange adjustments		—			(1	)		(1	)
At 31 December 2024		12			2			14

An assessment for impairment of contract assets has been performed in accordance with policies described in Note 2. No such impairment has been recorded.

Participation fees

Participation fees are described in the accounting policies in Note 2 and are considered to be a reduction in revenue for the related customer contract. Amounts are capitalised and ‘amortised’ to match to the related performance obligation.

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17. Cash and cash equivalents

	31 December 2024		31 December 2023
		£m		£m
Cash and cash equivalents		336		313

Cash and cash equivalents comprises cash at bank and in hand which earns interest at floating rates based on daily bank deposit rates. The carrying amount of these assets is considered to be equal to their fair value.

18. Trade and other payables

Current	31 December 2024		31 December 2023
		£m		£m
Trade payables		577		698
Accruals and other payables		325		440
Customer advances and contract liabilities		11		4
Other taxes and social security		47		33
Deferred government grants		1		4
		961		1,179

As at 31 December 2024, and as described in Note 24, included within trade payables were invoices on supplier finance facilities of £148 million (2023: £106 million).

Trade payables are non-interest-bearing. Normal settlement terms vary by country and the average credit period taken for trade payables is 85 days (2023: 89 days).

Non-current	31 December 2024		31 December 2023
		£m		£m
Other payables		9		13
Customer advances and contract liabilities		9		5
		18		18

The Directors consider that the carrying amount of trade and other payables approximates to their fair value. Non-current other payables fall due for payment within one to two years.

45

19. Interest-bearing loans and borrowings

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. Details of the Group’s exposure to credit, liquidity, interest rate and foreign currency risk are included in Note 24.

	Current				Non-current						Total
	31 December 2024		31 December 2023		31 December 2024			31 December 2023			31 December 2024			31 December 2023
	£m		£m		£m			£m			£m			£m
Floating rate obligations
Bank borrowings – US Dollar loan		—		—		319			584			319			584
Bank borrowings – Sterling loan		—		—		240			285			240			285
Bank borrowings – Euro loan		—		—		339			298			339			298
Unamortised finance costs		—		—		(4	)		(9	)		(4	)		(9	)
Other loans and bank overdrafts		13		2		—			—			13			2
Fixed rate obligations
US Private Placement		—		—		399			—			399			—
Unamortised finance costs		—		—		(2	)		—			(2	)		—
Total interest- bearing loans and borrowings		13		2		1,291			1,158			1,304			1,160

At 31 December 2024, the Group’s committed bank facility includes a multi-currency denominated term loan comprised of a tranche of £100 million and a tranche of €100 million as well as a multi-currency denominated revolving credit facility comprised of a tranche of £350 million, a tranche of US$660 million and a tranche of €450 million.

During the year, the third tranche of the original bank facility’s term loan of US$400 million was repaid.

In addition, the Group issued US$500 million through US Private Placement (USPP) of fixed interest rate notes with tranches maturing between 5 and 12 years.

The current bank facilities and USPP have two financial covenants being a net debt to adjusted EBITDA covenant and an interest cover covenant, both of which are tested half yearly, in June and December. Further details on the covenants and covenant compliance for the year ended 31 December 2024 are contained in Note 24. The bank facilities and USPP are guaranteed by Dowlais Group plc and certain of its subsidiaries. There is no security over any of the Group’s assets in respect of these facilities.

At 31 December 2024, the term loans were fully drawn at £100 million and €100 million (2023: fully drawn at £100 million and €100 million and US$400 million). A further £140 million (2023: £185 million), US$400 million (2023: US$345 million) and €310 million (2023: €244 million) were drawn on the multi-currency revolving credit facility. There are also a number of uncommitted overdraft, guarantee and borrowing facilities made available to the Group.

The bank margin on the bank facility depends on the Group’s leverage. The average interest rate payable on the debt facilities, net of the impact of interest rate hedging, was 6.32% for the year (2023: 6.38% for the period from the initial drawdown of the debt facilities to 31 December 2023).

46

20. Provisions

	Loss-making contracts			Property related costs			Environmental and litigation			Warranty related costs			Restructuring			Other			Total
		£m			£m			£m			£m			£m			£m			£m
At 1 January 2024		17			5			46			141			78			31			318
Utilised		(6	)		—			(5	)		(19	)		(105	)		(7	)		(142	)
Charge to operating profit		—			—			5			19			122			2			148
Release to operating profit		—			—			(6	)		(52	)		(7	)		(3	)		(68	)
Unwind of discount		—			—			—			—			1			—			1
Transfers		—			—			1			5			5			1			12
Exchange adjustments		(1	)		(1	)		(1	)		(3	)		(4	)		—			(10	)
31 December 2024		10			4			40			91			90			24			259
Current		3			1			18			41			66			13			142
Non-current		7			3			22			50			24			11			117

Loss-making contracts

Provisions for loss-making contracts are considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received under it. This obligation has been discounted and will be utilised over the period of the respective contracts, which is up to five years.

Calculation of loss-making contract provisions is based on contract documentation and delivery expectations, along with an estimate of directly attributable costs and represents management’s best estimate of the unavoidable costs of fulfilling the contract.

Property related costs

The provision for property related costs represents dilapidation costs for ongoing leases and is expected to result in cash expenditure over the next six years. Calculation of dilapidation obligations are based on lease agreements with landlords and external quotes or, in the absence of specific documentation, management’s best estimate of the costs required to fulfil obligations.

Environmental and litigation

Environmental provisions relate to the estimated remediation costs of pollution, soil and groundwater contamination at certain sites and amounted to £15 million (2023: £16 million). Liabilities for environmental costs are recognised when environmental remediation works are probable and the associated costs can be reasonably estimated. The majority of the provision is anticipated to be utilised over the next 13 years.

Litigation provisions amounting to £25 million (2023: £30 million) relate to estimated future costs and settlements in relation to legal claims and associated insurance obligations. The Group has on occasion been required to take legal or other actions to defend itself against proceedings brought by other parties. Provisions are made for the expected costs associated with such matters, based on past experience of similar items and other known factors, considering professional advice received. This represents management’s best estimate of the likely outcome. The timing of utilisation of these provisions is frequently uncertain, reflecting the complexity of issues and the outcome of various court proceedings and negotiations. Contractual and other provisions represent management’s best estimate of the cost of settling future obligations and reflect management’s assessment of the likely settlement method, which may change over time. However, no provision is made for proceedings which have been, or might be, brought by other parties against Group companies unless management, considering professional advice received, assess that it is more likely than not that such proceedings may be successful.

47

Warranty related costs

Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products and subsequently updated for changes in estimates as necessary. The provision for warranty related costs represents the best estimate of the expenditure required to settle the Group’s obligations, based on past experience, recent claims and current estimates of costs relating to specific claims. Warranty terms are, on average, between one and five years.

During the year, a warranty provision recorded as a fair value item on historical acquisitions, was resolved for a more favourable amount than first anticipated. The related release of £27 million was recognised in operating loss.

Restructuring

Restructuring provisions relate to committed costs in respect of restructuring programmes, usually resulting in cash spend within three years. A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by either starting to implement the plan or by announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are necessarily entailed by the restructuring programmes.

Other

Other provisions include long-term incentive plans for senior management and the employer tax on equity-settled incentive schemes which are expected to result in cash expenditure over the next one to five years.

Where appropriate, provisions have been discounted using discount rates depending on the territory in which the provision resides and the length of its expected utilisation.

48

21. Deferred tax

The following are the major deferred tax assets and liabilities recognised by the Group and movements thereon during the current and prior year.

	Deferred tax assets		Deferred tax liabilities
	Tax losses and other assets		Accelerated capital allowances and other liabilities		Deferred tax on intangible assets		Total deferred tax liabilities		Total net deferred tax
	£m		£m		£m		£m		£m
At 1 January 2023	300		(131	)	(363	)	(494	)	(194	)
Credit to Income Statement	15		16		49		65		80
Credit to equity	—		8		—		8		8
Exchange adjustments	(12	)	5		11		16		4
At 31 December 2023	303		(102	)	(303	)	(405	)	(102	)
(Charge)/credit to Income Statement	(13	)	30		49		79		66
Charge to equity	—		(3	)	—		(3	)	(3	)
Exchange adjustments	(9	)	2		4		6		(3	)
At 31 December 2024	281		(73	)	(250	)	(323	)	(42	)

Deferred tax assets and liabilities are recognised on the Balance Sheet, after offset of balances within territories in accordance with IAS 12, as follows:

	31 December 2024			31 December 2023
		£m			£m
Deferred tax asset		157			146
Deferred tax liability		(199	)		(248	)
		(42	)		(102	)

A deferred tax asset of £63 million (2023: £72 million) has been recognised in respect of £209 million (2023: £234 million) of tax losses. No asset has been recognised in respect of the remaining losses of £424 million (2023: £382 million) due to the divisional and geographic split of anticipated future profit streams. Most of these losses may be carried forward indefinitely subject to certain continuity of business requirements. Where losses are subject to time expiry, a deferred tax asset is recognised to the extent that sufficient future profits are anticipated to utilise these losses. In addition to the corporate income tax losses included above, a deferred tax asset of £27 million (2023: £24 million) has been recognised on tax credits (primarily US) and US state tax losses.

Deferred tax assets have also been recognised on Group retirement benefit obligations at £54 million (2023: £53 million).

There are no material unrecognised deferred tax assets at 31 December 2024 (2023: £nil), other than the losses referred to above. No deferred tax is recognised on the unremitted earnings of overseas subsidiaries except where the distribution of such profits is planned. If these earnings were remitted in full, tax of £56 million (2023: £59 million) would be payable.

49

22. Share-based payments

During the year, the Company recognised a charge of £1 million (2023: £1 million) in respect of the Group’s share incentive schemes.

The share-based payment arrangements are as follows:

2023 Performance Share Plan (PSP)

Date of grants	2 May 2023, 10 October 2023, 15 November 2023
Number of share awards granted	6,223,292
Contractual life	3 years
Vesting condition	Three years’ service, achievement of target growth in earnings per share and achievement of a total shareholder return ranking against comparator group.

Each employee share award converts into one ordinary share of the Company on vesting. No amounts are paid or payable by recipient on receipt of the award. The awards carry neither rights to dividends nor voting rights. Awards are forfeited if the employee leaves the Company before the share awards vest.

Details of the share options outstanding during the year are as follows:

Number of share awards	31 December 2024			31 December 2023
Outstanding at the beginning of the year		6,149,660			—
Granted during the year		—			6,223,292
Forfeited during the year		(377,297	)		(73,632	)
Outstanding at the end of the year		5,772,363			6,149,660

Fair value of share awards and assumptions

The inputs into the Monte Carlo pricing model that were used to fair value the share awards s at the grant dates were as follows:

	Valuation assumptions
Weighted average share price		£1.31
Weighted average exercise price		nil
Expected volatility		38.65	%
Expected life at inception		3 years
Risk free interest rate		3.78	%
Expected dividend yield		3.2	%

2024 Omnibus Share Plan (OSP)

Date of grants	24 May 2024
Number of share awards granted	9,921,488
Contractual life	3 years
Vesting condition	Three years’ service, achievement of target growth in earnings per share and achievement of a total shareholder return ranking against comparator group.

50

Each employee share award converts into one ordinary share of the Company on vesting. No amounts are paid or payable by recipient on receipt of the award. The awards accrue dividend equivalents but do not carry voting rights. Awards are forfeited if the employee leaves the Company before the share awards vest.

Details of the share awards outstanding during the year are as follows:

Number of share awards	31 December 2024		31 December 2023
Outstanding at the beginning of the year		—		—
Granted during the year		9,921,488		—
Forfeited during the year		—		—
Outstanding at the end of the year		9,921,488		—

Fair value of share awards and assumptions

The inputs into the Monte Carlo pricing model that were used to fair value the share awards at the grant dates were as follows:

	Valuation assumptions
Weighted average share price		£0.72
Weighted average exercise price		nil
Expected volatility		33.67	%
Expected life at inception		3 years
Risk free interest rate		4.37	%
Expected dividend yield		n/a

Due to the short listing period of the Company’s shares, expected volatility was determined using an average of the historic volatility of the Company’s peer group share prices.

Other share-based payment arrangements

Since April 2023, the Company has received services from Melrose Industries PLC under a Transitional Service Agreement (TSA) as part of the demerger process for which consideration was settled in shares of the Company. A charge of £1 million in respect of these services was recognised in the prior year, equivalent to the value of services rendered. Certain services under the TSA have ceased during the current year resulting in a current year charge of £nil.

23. Retirement benefit obligations

Defined contribution plans

The Group operates defined contribution plans for qualifying employees across several jurisdictions. The assets of the plans are held separately from those of the Group in funds under the control of Trustees.

The total costs charged during the year of £14 million (2023: £12 million) represent contributions payable to these plans by the Group at rates specified in the rules of the plans.

51

Defined benefit plans

The Group sponsors defined benefit plans for qualifying employees of certain subsidiaries. The funded defined benefit plans are administered by separate funds that are legally separated from the Group. The Trustees of the funds are required by law to act in the interest of the fund and of all relevant stakeholders in the plans. The Trustees of the pension funds are responsible for the investment policy with regard to the assets of the fund.

The most significant defined benefit pension plans in the Group at 31 December 2024 were:

UK: GKN Group Pension Schemes (No.2 and No.3)

The GKN Group Pension Schemes (Numbers 2 and 3) are disclosed within the Automotive segment. These schemes are funded, closed to new members and were closed to future accrual in 2017. The valuation of the schemes was based on the latest triennial statutory actuarial valuation as of 5 April 2022, updated to 31 December 2024 by independent actuaries. The next triennial valuation of the schemes will take place during 2025.

US: GKN Automotive and GKN Powder Coatings Pension Plans

The GKN Automotive and GKN Powder Coatings Pension Plans are funded plans, closed to new members and closed to future accrual. The valuation of these plans was based on a full actuarial valuation as of 1 January 2024, updated to 31 December 2024 by independent actuaries.

Germany: GKN Germany Pension Plans

The GKN Germany Pension Plans provide benefits dependent on final salary and service with the Company. The plans are generally unfunded and closed to new members.

Other plans include a number of funded and unfunded defined benefit arrangements and retiree medical insurance plans, predominantly in the US and Europe.

The cost of the Group’s defined benefit plans is determined in accordance with IAS 19 (revised 2011) Employee Benefits, using the advice of independent professionally qualified actuaries on the basis of formal actuarial valuations and using the projected unit credit method. In line with normal practice, statutory scheme valuations are undertaken triennially in the UK and annually in the US and Germany.

Contributions

The Group contributed £44 million (2023: £39 million, £40 million) to defined benefit pension plans and post-employment plans in the year ended 31 December 2024. In 2025, the Group expects to contribute c.£36 million to the plans including a deficit reduction payment of c.£7 million related to the GKN Group Pension Scheme No. 3. The annual deficit reduction payment is of a variable amount contingent on the funding valuation of the scheme at 31 December and is capped at the lower of £15 million or the deficit on the scheme.

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Actuarial assumptions

The major assumptions used by the actuaries in calculating the Group’s pension liabilities are as set out below:

	Rate of increase of pensions in payment % per annum		Discount rate %		Price inflation (RPI/CPI) %
31 December 2024
GKN Group Pension Schemes (No.2 – No.3)		2.5		5.5		3.0 /2.7
GKN US plans		n/a		5.5		n/a
GKN Europe plans		2.0		3.4		2.0 /2.0
31 December 2023
GKN Group Pension Schemes (No.2 – No.3)		2.5		4.5		3.0 /2.6
GKN US plans		n/a		4.8		n/a
GKN Europe plans		2.1		3.3		2.1 /2.1

Mortality

GKN Group Pension Schemes (No.2 – No.3)

The GKN Group Pension Schemes (No.2 – No.3) use the SAPS “S3PA” base tables with scheme-specific adjustments. The base table mortality assumption for each of the UK schemes reflects best estimate results from the most recent mortality experience analyses for each scheme. Weighting factors vary by scheme.

Future improvements for all UK plans are in line with the 2023 Continuous Mortality Investigation (“CMI”) core projection model (SK = 7.0, A = 0%, w2022 =w2023= 15%) with a long-term rate of improvement of 1.25% p.a. for both males and females.

GKN US Consolidated Pension Plan

GKN US Pension and Medical Plans use base mortality tables (PRI 2012) as used in the 2024 funding valuation. Future improvements for all US plans are in line with MP2021.

GKN Germany Pension Plans

All German plans use the Richttafeln 2018 G tables, with no adjustment.

The following table shows the future life expectancy of individuals aged 65 at the year end and the future life expectancy of individuals aged 65 in 20 years’ time.

	GKN Group Pension Schemes (No. 2 – No. 3) years		GKN US Consolidated Pension Plan years		GKN Germany Pension Plans years
Male today		20.9		19.7		20.9
Female today		23.2		21.7		24.3
Male in 20 years’ time		21.9		21.2		23.6
Female in 20 years’ time		24.5		23.1		26.5

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Balance Sheet disclosures

The amounts recognised in the Consolidated Balance Sheet in respect of defined benefit plans were as follows:

	31 December 2024			31 December 2023
		£m			£m
Present value of funded defined benefit obligations		(686	)		(786	)
Fair value of plan assets		717			775
Funded status		31			(11	)
Present value of unfunded defined benefit obligations		(415	)		(446	)
Asset ceiling		—			(2	)
Net liabilities		(384	)		(459	)
Analysed as:
Retirement benefit surplus (non-current assets)(1)		34			27
Retirement benefit obligations (non-current liabilities)		(418	)		(486	)
Net liabilities		(384	)		(459	)

(1) Includes a surplus relating to the GKN Group Pension Scheme (No.2) of £33 million (2023: £25 million) and the Japan Employee plan of £1 million (2023: £2 million).

A retirement benefit surplus is recognised in relation to the GKN Group Pension Scheme (No.2) as the Group has an unconditional right to a refund of surplus assets when there are no remaining members of the scheme.

The net retirement benefit obligation is attributable to Automotive: liability of £360 million (2023: £430 million) and Powder Metallurgy: liability of £24 million (2023: £29 million).

The plan assets and liabilities at the year end were as follows:

31 December 2024	UK Plans			US Plans			European Plans			Other Plans			Total
		£m			£m			£m			£m			£m
Plan assets		613			76			16			12			717
Plan liabilities		(584	)		(111	)		(385	)		(21	)		(1,101	)
Net assets/(liabilities)		29			(35	)		(369	)		(9	)		(384	)

The plan assets and liabilities at the previous year end were as follows:

31 December 2023	UK Plans			US Plans			European Plans			Other Plans			Total
		£m			£m			£m			£m			£m
Plan assets		665			73			16			21			775
Plan liabilities		(672	)		(118	)		(416	)		(26	)		(1,232	)
Asset ceiling		—			—			—			(2	)		(2	)
Net liabilities		(7	)		(45	)		(400	)		(7	)		(459	)

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The major categories and fair values of plan assets at the end of the year for each category were as follows:

	31 December 2024		31 December 2023
		£m		£m
Equities		28		56
Government bonds		339		404
Corporate bonds		112		85
Property		5		7
Insurance contracts		11		13
Multi-strategy/Diversified growth funds		182		116
Private equity		9		15
Other(1)		31		79
Total		717		775

(1) Primarily consists of cash collateral and other assets associated with liability driven investments in the UK schemes.

The assets were well diversified and the majority of plan assets had quoted prices in active markets. All government bonds were issued by reputable governments and were generally AA rated or higher. Interest rate and inflation rate swaps were also employed to complement the role of fixed and index-linked bond holdings for liability risk management.

The Trustees continually review whether the chosen investment strategy is appropriate with a view to providing the pension benefits and to ensure appropriate matching of risk and return profiles. The main strategic policies included maintaining an appropriate asset mix, managing interest rate sensitivity and maintaining an appropriate equity buffer. Investment results are regularly reviewed.

Movements in the present value of defined benefit obligations during the year:

	Year ended 31 December 2024			Year ended 31 December 2023
	£m			£m
At 1 January		1,232			1,240
Current service cost		6			6
Interest cost on obligations		49			53
Remeasurement gains-demographic		(6	)		—
Remeasurement (gains)/losses-financial		(89	)		18
Remeasurement losses-experience		—			1
Benefits paid out of plan assets		(68	)		(67	)
Curtailments		1			—
Settlements		(5	)		—
Past service cost		1			—
Exchange adjustments		(20	)		(19	)
At 31 December		1,101			1,232

The defined benefit plan liabilities were 17% (2023: 17%) in respect of active plan participants, 22% (2023: 23%) in respect of deferred plan participants and 61% (2023: 60%) in respect of pensioners.

The weighted average duration of the defined benefit plan liabilities at 31 December 2024 was 12 years (31 December 2023: 13 years).

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Movements in the fair value of plan assets during the year:

	Year ended 31 December 2024			Year ended 31 December 2023
	£m			£m
At 1 January		775			779
Interest income on plan assets		34			36
Loss on plan assets, excluding interest income		(60	)		(3	)
Contributions		44			39
Benefits paid out of plan assets		(68	)		(67	)
Plan administrative costs		(2	)		(3	)
Settlements		(5	)		—
Exchange adjustments		(1	)		(6	)
At 31 December		717			775

The actual return on plan assets was a loss of £26 million (2023: gain of £33 million).

Income statement disclosures

Amounts recognised in the Income Statement in respect of these defined benefit plans were as follows:

	Year ended 31 December 2024			Year ended 31 December 2023
	£m			£m
Included within operating loss:
– current service cost		6			6
– plan administrative costs		2			3
– curtailments and past service cost(1)		2			—
Included net within finance costs:
– interest cost on defined benefit obligations		49			53
– interest income on plan assets		(34	)		(36	)

(1) Curtailments and past service costs relate to benefits provided as a result of redundancies and a pension scheme wind up following site closures.

Statement of comprehensive income disclosures

Amounts recognised in the Consolidated Statement of Comprehensive Income in respect of these defined benefit plans were as follows:

	Year ended 31 December 2024			Year ended 31 December 2023
	£m			£m
Loss on plan assets, excluding interest income		(60	)		(3	)
Remeasurement gains/(losses) arising from changes in demographic assumptions		6			—
Remeasurement gains/(losses) arising from changes in financial assumptions		89			(18	)

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	Year ended 31 December 2024		Year ended 31 December 2023
	£m		£m
Change in unrecognised asset due to asset ceiling		2		—
Remeasurement losses arising from experience adjustments		—		(1	)
Net remeasurement gain/(loss) on retirement benefit obligations		37		(22	)

Risks and sensitivities

The defined benefit plans expose the Group to actuarial risks, such as longevity risk, inflation risk, interest rate risk and market (investment) risk. The Group is not exposed to any unusual, entity specific or plan specific risks.

A sensitivity analysis on the principal assumptions used to measure the plan liabilities at the year end was as follows:

	Change in assumption	Decrease/(increase) to plan liabilities			Increase/(decrease) to profit before tax
		£m			£m
Discount rate	Increase by 0.5 ppts		61			2
	Decrease by 0.5 ppts		(67	)		(1	)
Inflation assumption(1)	Increase by 0.5 ppts		(43	)		n/a
	Decrease by 0.5 ppts		40			n/a
Assumed life expectancy at age 65 (rate of mortality)	Increase by 1 year		(39	)		n/a
	Decrease by 1 year		38			n/a

(1) The inflation sensitivity encompasses the impact on pension increases and salary increases, where applicable.

The sensitivity analysis above was determined based on reasonably possible changes to the respective assumptions, while holding all other assumptions constant. There has been no change in the methods or assumptions used in preparing the sensitivity analysis from prior years. Sensitivities are based on the relevant assumptions and membership profile as at 31 December 2024 and are applied to obligations at the end of the reporting period. Whilst the analysis does not take account of the full distribution of cash flows expected, it does provide an approximation to the sensitivity of assumptions shown. Extrapolation of these results beyond the sensitivity figures shown may not be appropriate and the sensitivity analysis presented may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The Group is aware of the 2023 ruling in the Virgin Media vs NTL Pension Trustee case, including the 2024 court of appeal ruling published on 25 July 2024, which ruled that certain amendments made to the NTL Pension Plan were invalid because they were not accompanied by the correct actuarial confirmation. The trustees, having reviewed the relevant amendments, do not consider it necessary to make any adjustments as a result of the Virgin Media case.

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24. Financial instruments and risk management

The table below sets out the Group’s accounting classification of each category of financial assets and liabilities and their carrying values at 31 December 2024 and 31 December 2023:

	Current			Non-current			Total
	£m			£m			£m
31 December 2024
Financial assets
Classified as amortised cost:
Cash and cash equivalents		336			—			336
Net trade receivables		369			—			369
Classified as fair value:
Derivative over own equity(1)		18			—			18
Derivative financial assets
Foreign currency forward contracts		9			6			15
Interest rate swaps		—			3			3
Financial liabilities
Classified as amortised cost:
Interest-bearing loans and borrowings		(13	)		(1,291	)		(1,304	)
Lease obligations		(29	)		(103	)		(132	)
Other financial liabilities		(778	)		(8	)		(786	)
Classified as fair value:
Derivative financial liabilities
Foreign currency forward contracts		(32	)		(14	)		(46	)

(1) Included within other financial assets.

	Current			Non-current			Total
	£m			£m			£m
31 December 2023
Financial assets
Classified as amortised cost:
Cash and cash equivalents		313			—			313
Net trade receivables		460			—			460
Classified as fair value:
Derivative over own equity(1)		—			28			28
Derivative financial assets
Foreign currency forward contracts		43			4			47
Interest rate swaps		2			4			6
Financial liabilities
Classified as amortised cost:
Interest-bearing loans and borrowings		(2	)		(1,158	)		(1,160	)
Lease obligations		(25	)		(126	)		(151	)
Other financial liabilities		(1,063	)		(11	)		(1,074	)
Classified as fair value:
Derivative financial liabilities
Foreign currency forward contracts		(4	)		(1	)		(5	)
Interest rate swaps		—			(3	)		(3	)

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The fair value of the derivative financial instruments is derived from inputs other than quoted prices that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) and they are therefore categorised within level 2 of the fair value hierarchy set out in IFRS 13 Fair Value Measurement. The Group’s policy is to recognise transfers into and out of the different fair value hierarchy levels at the date of the event or change in circumstances that caused the transfer to occur. There have been no transfers between levels during the current year.

The fair value of the derivative over own equity is derived from unobservable inputs and as such is classified as level 3 of the fair value hierarchy set out in IFRS 13. Inputs to the valuation include the terms of the contract under which the asset arises, the Company’s current share price and expected volatility in the share price. The asset value is most sensitive to movements in the Company’s share price. A 10% reduction in the Company’s share price would result in a £2 million reduction in the fair value of the asset.

As detailed in the accounting policies (Note 2) the asset was initially recorded directly in equity in the prior year with subsequent revaluations recognised in the Income Statement. In the current year a loss of £10 million (2023: £1 million) was presented within interest expense in relation to fair value changes on the derivative. The asset is expected to be settled by receipt of the Company’s shares during 2025.

Fair values

Set out below is a comparison of the carrying amounts and fair values of the Group’s non-current interest-bearing loans and borrowings.

	Carrying amount		Fair value
	£m		£m
Floating rate obligations		894		901
Fixed rate obligations		397		455

Management consider all other financial assets and liabilities to have carrying values that are reasonable approximations of their fair values. In the prior year, management considered all financial assets and liabilities to have a carrying value which approximated fair value.

Credit risk

The Group’s principal financial assets are cash and cash equivalents, trade receivables and derivative financial assets which represent the Group’s maximum exposure to credit risk in relation to financial assets.

The Group’s credit risk on cash and cash equivalents and derivative financial assets is limited because the ultimate counterparties are banks with investment grade credit ratings assigned by international credit rating agencies. Exposure is managed on the basis of risk rating and counterparty limits. The value of credit risk in derivative assets is modelled using publicly available inputs as part of their fair value.

The Group’s credit risk is therefore primarily attributable to its trade receivables. The amounts presented in the Consolidated Balance Sheet are net of an allowance for expected credit losses, estimated by the Group’s management based on prior experience and their assessment of the current economic environment. Note 16 provides further details regarding the recovery of trade receivables.

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Capital risk

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern. The capital structure of the Group consists of interest-bearing loans and borrowings less cash and cash equivalents as disclosed in the Consolidated Balance Sheet, and equity attributable to the owners of the parent, comprising issued share capital, reserves and retained earnings as disclosed in the Consolidated Statement of Changes in Equity.

Liquidity risk management

Overview of banking facilities

As at 31 December 2024, the Group’s committed bank facilities include a multi-currency denominated term loan comprised of a £100 million tranche and a €100 million tranche as well as a multi-currency denominated revolving credit facility comprised of a £350 million tranche, a US$660 million tranche and a €450 million tranche. Details of amounts drawn under these facilities at year end are included in Note 19.

The revolving credit and term loan facilities have an initial maturity date of 20 April 2026, the Group has the option to extend the maturity of the revolving credit facility by up to two years, at its sole discretion.

During the year, the third tranche of the original bank facility’s term loan of US$400 million was repaid. In addition, the Group issued US$500 million through a US Private Placement (USPP) of fixed interest rate notes with tranches maturing between 5 and 12 years.

Loans drawn under the bank facilities and USPP are guaranteed by Dowlais Group plc and certain of its subsidiaries. There is no security over any of the Group’s assets in respect of these.

Cash amounted to £336 million at year end (2023: £313 million) and is offset against interest-bearing loans and borrowings of £1,304 million (2023: £1,160 million). The combination of this cash and the headroom on the revolving credit facility allows the Directors to consider that the 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 cash on deposit.

The committed bank funding and USPP have two financial covenants, both of which are tested half-yearly in June and December.

Interest rates on the USPP are fixed subject to the Group maintaining an investment grade credit rating. Should the credit rating of the Group fall below investment grade, an additional 1% is added to the interest rate until the Group’s credit rating returns to investment grade.

Maturity of financial liabilities (excluding currency contracts)

The table below shows the maturity profile of anticipated future cash flows, including interest, on an undiscounted basis in relation to the Group’s financial liabilities. The amounts shown therefore differ from the carrying value and fair value of the Group’s financial liabilities.

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	Interest- bearing loans and borrowings			Interest rate derivative financial liabilities		Finance lease obligations			Other financial liabilities		Total financial liabilities
	£m			£m		£m			£m		£m
Within one year		90			—		35			778		903
In one to two years		944			—		27			8		979
In two to five years		189			—		47			—		236
After five years		365			—		54			—		419
Total anticipated cash flows		1,588			—		163			786		2,537
Effect of financing		(284	)		—		(31	)		—		(315	)
31 December 2024		1,304			—		132			786		2,222
Within one year		78			—		31			1,063		1,172
In one to two years		76			2		26			11		115
In two to five years		1,279			1		47			—		1,327
After five years		—			—		92			—		92
Total anticipated cash flows		1,433			3		196			1,074		2,706
Effect of financing		(273	)		—		(45	)		—		(318	)
31 December 2023		1,160			3		151			1,074		2,388

Working capital

The Group has a small number of uncommitted working capital programmes, which provide favourable financing terms on eligible customer receipts and competitive financing terms to suppliers on eligible supplier payments.

Businesses that participate in these customer related finance programmes have the ability to choose whether to receive payment earlier than the normal due date, for specific customers on a non-recourse basis. As at 31 December 2024, the drawings on these facilities were £168 million (2023: £178 million).

Some suppliers may utilise the Group’s supplier finance programmes, which are provided by a limited number of the Group’s relationship banks. There is no cost to the Group for providing these programmes to its suppliers. These arrangements do not change the date suppliers are due to be paid by the Group, and therefore there is no additional impact on the Group’s liquidity. These programmes allow suppliers to choose, at their sole discretion, whether they want to accelerate the payment of their invoices, by the financing banks, for an interest cost which is competitive and based on the credit rating of the Group as determined by the financing banks funding each programme. The amounts owed by the Group to the banks in relation to amounts suppliers have drawn under these programmes are included in trade payables on the Balance Sheet and the cash flows are presented in cash flows from operating activities. The arrangements do not change the timing of the Group’s cash outflows.

Payment dates for trade payables under supplier finance arrangements, and comparable trade payables which are not financed, are generally between 60 and 120 days. Payment terms vary across the Group depending on individual supplier agreements and the jurisdictions under which the purchases are made. The total of supplier invoices under these facilities as at 31 December 2024 was £148 million (2023: £106 million). Movement on this balance in the year includes a £7 million non-cash increase due to exchange rate movements. Of the balance at 31 December 2024, £79 million had been paid by the facilitating banks to suppliers.

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Finance cost risk management

The bank margin on the bank facility depends on the Group’s leverage. Management performs periodic reviews of the Group’s interest rate exposure and fix a proportion of the exposure as deemed necessary at that time. As at 31 December 2024, 46% of the Group’s interest exposure was fixed (2023: 55%).

Interest rate risk

Cash flow hedges

Interest rate swaps are designated as cash flow hedges and are used to hedge against the risk of interest rate fluctuation on the floating rate debt. The fair value of the interest rate swaps as at 31 December 2024, was an asset of £3 million (31 December 2023: net asset of £3 million). During the year movements on the interest rate swaps comprised a credit of £2 million (2023: £1 million) booked to derivatives gains on hedge relationships within other comprehensive income, £8 million credit (2023: £6 million) booked to interest in the Income Statement, and a cash inflow of £10 million (2023: £4 million).

There is an economic relationship between the hedged item and the hedging instrument in relation to SOFR and EURIBOR interest cash flows. The Group has established a hedge ratio of 1:1 for the hedging relationships based on the notional of the hedging instrument and the hedged item. Group management performs periodic prospective effectiveness assessments to determine hedge effectiveness.

Hedge ineffectiveness may occur due to:

●  Differences in the timing of the cash flows of the hedged items and the hedging instruments;

●  The counterparties’ credit risk differently impacting the fair value movements of the hedging instruments and hedged items;

●  Changes to the forecasted amount of cash flows of hedged items and hedging instruments; or

●  Mismatches in payment frequency and/or reset dates.

During the year ended 31 December 2024, some of the critical terms of the interest rate swaps and the hedged items were not perfectly matched; however, this did not give rise to any ineffectiveness through the Income Statement in the year (2023: £nil).

Interest rate sensitivity analysis

Assuming the net debt, inclusive of interest rate swaps, held as at the balance sheet date was outstanding for the whole year, a one percentage point rise in market interest rates for all currencies would decrease profit before tax by the following amounts:

	Year ended 31 December 2024		Year ended 31 December 2023
	£m		£m
Sterling		3		3
US Dollar		1		1
Euro		3		1

On the basis of the floating-to-fixed interest rate swaps in place at the balance sheet date, a one percentage point fall in market interest rates for all currencies would have a pre-tax impact of decreasing Group equity by £4 million (2023: £18 million).

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Exchange rate risk management

The Group trades in various countries around the world and is exposed to movements in a number of foreign currencies. The Group therefore carries exchange rate risk that can be categorised into three types: transaction, translation and disposal related risk as described in the paragraphs below. The Group’s 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 customer or purchases from suppliers in a different currency to the underlying functional currency of the relevant business. The Group’s policy is to review transactional foreign exchange exposures, and place appropriate hedging contracts, quarterly on a rolling basis. To the extent the cash flows associated with a transactional foreign exchange risk are committed, the Group will hedge up to 100% at the time that the cash flow becomes committed. For forecast and variable material cash flows, the Group hedges a proportion of the expected cash flows on a phased basis over a time horizon of up to two years in accordance with the Group’s treasury policy.

The average time horizons for GKN Automotive and GKN Powder Metallurgy reflect the long-term nature of the contracts within these divisions. Typically, in total the Group hedges a minimum of 70% of foreign exchange exposures expected over the following year, and 40% to 60% of exposures between one and two years. This policy reduces, but does not eliminate, the cash risk.

The translation rate risk is the effect on the Group’s results in the year due to the movement in exchange rates used to translate results in foreign currencies into Sterling from one period to the next. No specific exchange instruments are used to protect against the translation risk because until foreign currency is converted to Sterling, this is a non-cash risk to the Group.

Finally, exchange rate risk arises when a business that reports in a currency, other than Sterling, is sold. The proceeds for those businesses may be received in a foreign currency and therefore an exchange rate risk may arise on conversion of the foreign currency proceeds into Sterling. Protection against this risk is considered on a case-by-case basis and, if appropriate, hedged at that time.

As at 31 December 2024, the Group held foreign exchange forward and swap contracts to mitigate expected exchange rate fluctuations on future cash flows from sales to customers and purchases from suppliers. The fair value of all foreign exchange forward and swap contracts across the Group was a net liability at 31 December 2024 of £31 million (2023: net asset of £42 million).

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The following table shows the maturity profile of undiscounted contracted gross cash flows of derivative financial liabilities used to manage currency risk:

	Cash inflows		Cash outflows			Total
	£m		£m			£m
Year ended 31 December 2024
Within 1 year
Foreign exchange forward contracts		319		(347	)		(28	)
Foreign exchange swap contracts		1		(1	)		—
In one to two years
Foreign exchange forward contracts		189		(195	)		(6	)
Year ended 31 December 2023
Within 1 year
Foreign exchange forward contracts		72		(74	)		(2	)
Foreign exchange swap contracts		9		(9	)		—
In one to two years
Foreign exchange forward contracts		54		(54	)		—

Hedge of net investment in foreign operations

The interest-bearing loans as at 31 December 2024 (Note 19) include US Dollar borrowings of US$900 million (2023: US$745 million) and Euro borrowings of €410 million (2023: €344 million), which have been designated as hedges of the Group’s net investments in US Dollar and Euro denominated subsidiaries respectively. These borrowings are used to hedge the Group’s exposure to the foreign exchange risk on these investments. Gains or losses on the retranslation of these borrowing are recorded in other comprehensive income to offset any gains or losses on translation of the net investments in the subsidiaries.

There is an economic relationship between the hedged item and the hedging instrument as the net investment creates a translation risk that matches the risks of foreign exchange fluctuation on the borrowings. The Group has established a hedge ratio of 1:1 as the underlying risk of the hedging instrument is identical to the hedged risk component. The Group performs periodic prospective effectiveness assessments to determine hedge effectiveness.

Foreign currency sensitivity analysis

Currency risks are defined by IFRS 7 Financial instruments: Disclosures as the risk that the fair value or future cash flows of a financial asset or liability will fluctuate because of changes in foreign exchange rates.

The following table details the transactional impact of hypothetical changes in foreign exchange rates on financial assets and liabilities at the balance sheet date, illustrating the increase in Group operating profit caused by a 10% strengthening of the US Dollar, Euro and Mexican Peso against Sterling compared to the year-end spot rate. The analysis assumes that all other variables, in particular other foreign currency exchange rates, remain constant. The Group operates in a range of different currencies, and those with a notable impact are shown below:

	Year ended 31 December 2024			Year ended 31 December 2023
	£m			£m
US Dollar		1			3
Euro		(2	)		1
Mexican Peso		4			4

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The following table details the impact of hypothetical changes in foreign exchange rates on financial assets and liabilities at the balance sheet date, illustrating the decrease in the Group’s equity caused by a 10% strengthening of the US Dollar and Euro against Sterling. The analysis assumes that all other variables, in particular other foreign currency exchange rates, remain constant.

	31 December 2024			31 December 2023
		£m			£m
US Dollar		(12	)		(12	)
Euro		(7	)		(11	)

In addition, the change in equity due to a 10% strengthening of the US Dollar against Sterling for the translation of net investment hedging instruments would be a decrease of £71 million (2023: decrease of £58 million) and for the Euro, a decrease of £34 million (2023: decrease of £30 million). However, there would be no overall effect on equity because there would be an offset in the currency translation of the foreign operations.

Fair value measurements recognised in the balance sheet

Foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching the maturities of the contracts.

Interest rate swap contracts are measured using yield curves derived from quoted interest and foreign exchange rates.

Derivative financial assets and liabilities are presented within the Balance Sheet as:

	31 December 2024			31 December 2023
	£m			£m
Non-current assets		9			8
Current assets		9			45
Current liabilities		(32	)		(4	)
Non-current liabilities		(14	)		(4	)

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Hedge accounted derivatives

The following table sets out details of the Group’s material cash flow hedging instruments where hedge accounting is applied at the balance sheet date:

	Average fixed rate						Notional principal				Fair value of assets/(liabilities)
Cash flow hedging Instruments	31 December 2024			31 December 2023			31 December 2024		31 December 2023		31 December 2024		31 December 2023
	%			%			£m		£m		£m		£m
Cash flow hedge – Interest rate risk
Pay fixed, receive floating interest rate swaps
USD Interest rate swaps
Within one year		—			—			—		—		—		2
In two to five years		3.48	%		3.43	%		200		470		3		3
EUR interest rate swaps
In two to five years		—			3.48	%		—		174		—		(2	)
Total								200		644		3		3

All cash flow hedging instruments are booked in the Balance Sheet as derivative financial assets or derivative financial liabilities.

The fair value of derivative financial instruments is derived from inputs other than quoted prices that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) and they are therefore categorised within Level 2 of the fair value hierarchy set out in IFRS 13. The Group’s policy is to recognise transfers into and out of the different fair value hierarchy levels at the date the event or change in circumstances that caused the transfer to occur. There have been no transfers between levels in the year.

The following table sets out details of the Group’s material hedging relationships at the balance sheet date where hedge accounting is applied:

	Change in fair value for calculating ineffectiveness				Balance in hedging and translation reserves for continuing hedges				Balance in hedging and translation reserves for discontinued hedges
	31 December 2024		31 December 2023		31 December 2024		31 December 2023		31 December 2024		31 December 2023
	£m		£m		£m		£m		£m		£m
Cash flow hedge – interest rate risk
Hedged items
Floating rate borrowings	(2	)	(1	)	n/a		n/a		n/a		n/a
Hedging instruments
US Dollar Interest rate swaps	1		4		2		4		—		—
Euro Interest rate swaps	1		(3	)	—		(3	)	(2	)	—
Net investment hedge
Hedged items
Net assets of designated investments	(4	)	(20	)	(24	)	(20	)	—		—
Hedging instruments
US Dollar debt	(13	)	15		2		15		—		—
Euro debt	17		5		22		5		—		—

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A debit balance of £2 million (2023: £nil) is held in the cash flow hedge reserve relating to the discontinued hedges of Euro interest rate swaps which were closed out during the year. This amount will be charged to the income statement over the remainder of the cash flows of the hedged item until 2026.

Impact of hedging on equity

The following table sets out the reconciliation for each component of the hedging reserve and the analysis of associated other comprehensive income.

	Cash flow hedge reserve			Net investment hedge reserve			Total hedging recognised in equity
		£m			£m			£m
At 1 January 2024		1			15			16
Effective portion of changes in fair value arising from:
Fair value gain on interest rate swaps		2			—			2
Foreign currency revaluation of the US Dollar debt		—			(13	)		(13	)
Foreign currency revaluation of the Euro debt		—			17			17
Cumulative gain on interest rate swaps reclassified to the Income Statement		(3	)		—			(3	)
Tax impact		—			(1	)		(1	)
At 31 December 2024		—			18			18

Amounts reclassified to other finance income in the Income Statement of £3 million (2023: £nil) relate to the settlement of US Dollar interest rate swaps where the hedged item was no longer expected to occur as a result of replacing floating rate US Dollar debt with fixed rate USPP.

25. Issued share capital and reserves

Share capital

Share Capital	31 December 2024		31 December 2023
	£m		£m
Allotted, called-up and fully paid 1,352,695,566 (2023: 1,393,273,527) ordinary shares of 1p each		14		14
		14		14

On 3 April 2024, the Group commenced a share buy-back programme, under which 40,577,961 of the Company’s shares have been purchased and cancelled as at 31 December 2024 at a total cost of £26 million.

On 13 January 2023, the Company was incorporated with an initial share capital of one ordinary £1 share issued at par. A further 49,999 ordinary £1 shares were issued at par on 19 January 2023 for cash consideration.

On 28 February 2023, the Company subdivided the 50,000 issued £1 ordinary shares into 5,000,000 ordinary shares of £0.01 (one pence) each.

On 28 February 2023, the Company issued 1,388,273,527 ordinary shares of £0.01 each to Melrose Industries PLC (“Melrose”) in consideration for the entire shareholding of GKN Industries Limited and GKN Powder Metallurgy Holdings Limited. This resulted in a total issued share capital of 1,393,273,527 ordinary shares of £0.01 each.

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As permitted under sections 611(4) and 615 of the Companies Act 2006, the issue of ordinary shares and the cost of investments in GKN Industries Limited and GKN Powder Metallurgy Holdings Limited was measured at the cost of those investments in the transferor company (Melrose). The value of the consideration for the shares allotted was the amount by which the value of the assets transferred exceeds the value of any liabilities assumed by the Company as part of the consideration for the assets transferred. The value of the GKN Industries Limited and GKN Powder Metallurgy Holdings Limited was £1,084 million and this was initially recognised as share capital of £14 million and share premium of £1,070 million.

On 20 April 2023, Melrose made a distribution to its shareholders of the Company’s shares with one Dowlais share issued for every Melrose share held. On the same day, the Company’s shares were admitted to the premium listing segment of the Official List of the Financial Conduct Authority (FCA) and to trading on the London Stock Exchange’s main market for listed securities.

Share premium

On 1 August 2023, the Company undertook a court-approved capital reduction in accordance with section 645 of the Companies Act 2006, through which the Company’s share premium of £1,070 million was cancelled in full. The Order of the High Court of Justice, Chancery Division, was registered at Companies House and became effective from 3 August 2023. In accordance with IS 2008 No 1915 The Companies (Reduction of Share Capital) Order 2008 this resulted in a credit to the distributable reserves of the Company of £1,070 million.

Own shares

On 31 May 2023, an Employee Benefit Trust (EBT) established for the benefit of certain employees of the Group purchased 5,575,630 shares in the capital of the Company at a cost of £7 million to be held for the purpose of settling awards vesting under the Group’s share incentive schemes.

In the current year, 52,559 shares were issued by the EBT to employees under the Restricted Share Award section of the Performance Share Plan (PSP). No shares were purchased by the EBT in the current year. At the year-end, 5,523,071 (2023: 5,575,630) shares were held by the EBT.

Translation reserve

The translation reserve contains exchange differences on the translation of subsidiaries with a functional currency other than pound Sterling together with exchange differences arising on debt financial instruments which have been designated as hedges of net investment.

Hedging reserve

The hedging reserve contains the effective portion of any gains or losses from revaluation of interest rate swap contracts which have been designated as cash flow hedging instruments.

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26. Cash flow statement

Reconciliation of loss after tax to net cash from operating activities:

	Notes	Year ended 31 December 2024			Year ended 31 December 2023
		£m			£m
Loss after tax			(168	)		(495	)
Finance costs			131			101
Finance income			(22	)		(29	)
Tax			(47	)		(27	)
Adjustments for:
Depreciation & impairment of property, plant and equipment			275			253
Amortisation of computer software and development costs			14			10
Amortisation & impairment of intangible assets acquired in business combinations			191			646
Profit after tax of equity accounted investments			(61	)		(51	)
Gain on disposal of non-current assets			—			(18	)
Loss on disposal of business			8			—
Share-based payment expense			1			2
Unrealised loss/(gain) on derivatives			73			(21	)
Other non-cash add back			(2	)		—
Movements in provisions			(62	)		1
Defined benefit pension costs charged			10			9
Defined benefit pension contributions paid			(44	)		(39	)
Change in inventories			66			(36	)
Change in receivables			85			6
Change in payables			(178	)		56
Tax paid			(56	)		(61	)
Interest paid on loans and borrowings			(88	)		(62	)
Interest paid on lease liabilities			(6	)		(6	)
Net cash from operating activities			120			239

Reconciliation of cash and cash equivalents, net of bank overdrafts

	31 December 2024			31 December 2023
		£m			£m
Cash and cash equivalents per Balance Sheet		336			313
Bank overdrafts		(13	)		—
Cash and cash equivalents, net of bank overdrafts per Statement of Cash Flows		323			313

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Reconciliation of liabilities arising from financing activities

As at 31 December 2023, liabilities arising from financing activities, as defined by IAS 7 Statement of Cash Flows, totalled £1,311 million comprising; interest-bearing loans and borrowings of £1,160 million and lease obligations of £151 million.

During the year, cash transactions on financing balances totalled a net cash inflow £103 million. This comprised net drawdowns on external debt facilities of £129 million, a cash outflow of £2 million relating to the costs of raising debt finance and the repayment of finance lease principal of £24 million.

Non-cash transactions included a £6 million reduction in liabilities due to foreign exchange movements, £5 million increase in liabilities due to the amortisation of debt issue costs, £11 million increase in lease liabilities due to new leases and the reassessment of existing lease liabilities, and a £1m reduction in lease liabilities due to the disposal of the Hydrogen business.

As at 31 December 2024, liabilities arising from financing activities, as defined by IAS 7, totalled £1,423 million comprising interest-bearing loans and borrowings of £1,291 million and lease obligations of £132 million.

27. Commitments

Amounts payable under lease obligations:

Minimum lease payments	31 December 2024			31 December 2023
		£m			£m
Amounts payable:
Within one year		35			31
After one year but within five years		74			73
Over five years		54			92
Less: future finance charges		(31	)		(45	)
Present value of lease obligations		132			151
Analysed as:
Amounts due for settlement within one year		29			25
Amount due for settlement after one year		103			126
Present value of lease obligations		132			151

It is the Group’s policy to lease certain of its property, plant and equipment. The average lease term is ten years. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The Group’s obligations under lease arrangements are secured by the lessors’ rights over the leased assets.

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The table below shows the key components in the movement in lease obligations.

	Year ended 31 December 2024			Year ended 31 December 2023
		£m			£m
At 1 January		151			159
Additions		23			27
Interest charge		6			6
Reassessment of lease obligation		(12	)		(1	)
Payment of principal		(24	)		(25	)
Payment of interest		(6	)		(6	)
Disposal of business		(1	)		—
Exchange adjustments		(5	)		(9	)
At 31 December		132			151

The expense related to short-term leases in the year was £1 million (2023: £1 million).

Capital commitments

At 31 December 2024, the Group had committed expenditure of £26 million (2023: £42 million) relating to the acquisition of new plant and machinery.

28. Related Parties

Remuneration of key management personnel

The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures:

	Year ended 31 December 2024		Year ended 31 December 2023
		£m		£m
Short-term employee benefits		3		19
Share-based payments		—		1
		3		20

Transactions between companies within the Group, which are Related Parties, have been eliminated on consolidation and are not disclosed in this note.

In the ordinary course of business, sales and purchases of goods take place between subsidiaries and equity accounted investment companies priced on an arm’s length basis. Sales by subsidiaries to equity accounted investments in the year totalled £7 million (2023: £9 million). Purchases by subsidiaries from equity accounted investments totalled £12 million (2023: £10 million). At 31 December 2024, there were no amounts receivable from equity accounted investments (2023: £nil) and amounts payable to equity accounted investments totalled £3 million (2023: £2 million).

Transactions and balances between the Group and Melrose Industries PLC, the ultimate parent company prior to demerger on 20 April 2023, and other non-Group entities controlled by Melrose Industries PLC, were classified as Related Party transactions up until the date of demerger. In the prior year Income Statement, an interest expense of £8 million, and other charges of £nil, was recorded in respect of these Related Party transactions. A further charge of £57 million was recognised in the Statement of Changes in Equity relating to reorganisation in respect of Related Parties. This charge included the initial recognition of a derivative over own equity of £29 million, reorganisational steps taken as part of the demerger, as well as other income and charges with entities in the Melrose Industries PLC group prior to the demerger on 20 April 2023.

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Dividends of £1,675 million were paid to GKN Enterprise Limited, a member of the Melrose Industries PLC Group on 23 February 2023 (Note 9).

29. Contingent liabilities

As a result of historical acquisitions, certain contingent legal and warranty liabilities were identified as part of the fair value review of these acquisition balance sheets. Whilst it is difficult to reasonably estimate the timing and ultimate outcome of these claims, the Directors’ best estimate has been included in the Consolidated Balance Sheet where they existed at the time of acquisition and hence were recognised in accordance with IFRS 3 Business combinations. Where a provision has been recognised, information regarding the different categories of such liabilities and the amount and timing of outflows is included within Note 20.

Given the nature of the Group’s business many of the Group’s products have a large installed base, and any recalls or reworks related to such products could be particularly costly. The costs of product recalls or reworks are not always covered by insurance. Recalls or reworks may have a material adverse effect on the Group’s financial condition, results of operations and cash flows.

The Group has contingent liabilities representing guarantees and contract bonds given in the ordinary course of business on behalf of trading subsidiaries. No losses are anticipated to arise on these contingent liabilities. The Group does not have any other significant contingent liabilities.

30. Post balance sheet events

On 29 January 2025, the Boards of Dowlais and American Axle & Manufacturing Holdings, Inc. (AAM) reached an agreement and recommended the share and cash combination of the Company with AAM. The transaction is expected to close during the fourth quarter of 2025, subject to customary closing conditions, including regulatory clearances. As a result of the recommended combination, the Group’s share buy-back programme has been terminated.

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