1

LEI: 213800QNZ22GS95OSW84

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

14 February 2018

GKN plc ("GKN")

Moving GKN to world class financial performance

Introduction

As set out in its announcement of 12 January 2018, the board of directors of GKN (the “Board”)

commenced a wide-ranging strategic and operational review of the business of GKN in 2017. Today, GKN

announces further details of its new strategy and transformation plan along with its cash improvement

initiative (“Project Boost”) and outlines the financial performance targets for GKN and its subsidiaries

(the “Group”) to the end of the financial year ended 31 December 2020.

Key points

GKN already has world class businesses and technology and now intends to move towards world

class financial performance

GKN has a new strategy, new leadership team and new execution engine

There are three components in the new strategy:

o Deliver distinct strategies for different product segments with rigorous capital allocation

and focused performance targets

o Establish a delivery culture based on greater accountability, capability and pace, supported

by aligned incentives

o Separate operationally now and formally when it maximises shareholder value –

operational separation of the Aerospace and Driveline divisions has already begun

The Board expects Project Boost to deliver a recurring annual cash benefit of £340m from the

end of 20201

The Board is targeting up to £2.5bn cash return to shareholders over the next three years, with

a significant part expected to come from divestments executed within the first 12 – 18 months,

including the sale of Powder Metallurgy

1 This statement includes a quantified financial benefits statement which has been reported on for the purposes of the City

Code (see Appendix 2). This does not take account of one-off associated incentive payments, which are estimated to be in the region of £70m (to be satisfied in GKN ordinary shares) and which have not been reported on for the purposes of the City Code. Excludes impact of potential disposals.

2

GKN’s progressive dividend policy will be to target an average payout of 50% of free cash flow

over the period of 2018-2020

GKN expects to distribute surplus cash to shareholders, subject to maintaining an investment

grade credit rating

Anne Stevens, Chief Executive of GKN plc, said:

“The new strategy brings clarity, accountability and focus to GKN’s world class businesses and will allow

the Group to attain world class financial performance.

“GKN has great technologies and great people. We have strong market positions and have delivered

good growth, with management revenues last year of over £10bn. But too often we pursued growth at

the expense of returns, this will no longer be the case. The new strategy brings discipline, both financial

and operational.

“We are bringing clarity to our objectives through distinct strategies for different product segments, with

rigorous capital allocation and focused performance targets. We are establishing a delivery culture

based on greater accountability, with incentives aligned to specific team targets. And we are bringing

greater focus, with our divisions now being run as separate operations.

“This strategy is expected to generate significant cash for shareholders in the short term and meaningful

sustainable cash flows over the mid to long term. We expect to deliver £340 million of recurring annual

cash benefit from the end of 20202 and are targeting a return of up to £2.5 billion to our shareholders

over the next three years, with a significant part expected to come from divestments executed within the

first 12 –18 months. We have a plan and we are dedicated to delivering it.”

GKN has world class businesses with huge potential

GKN has leading technology and market positions in the aerospace and automotive sectors, with strong

and long standing customer relationships supported by its global manufacturing and engineering

footprint. Through GKN’s sustained focus on R&D and investment, GKN has not only a strong business

today, but a strong business for tomorrow, with leadership positions in a number of large, rapidly

growing markets such as Aero Engines, eDrive Systems and Aero Additive Manufacturing. GKN has made

significant long term investments which the Board expects will generate considerable growth, profits

and cash flow for decades to come. The Board believes GKN’s shareholders should receive 100% of the

benefit of these investments.

GKN’s new leadership team has a strategy to substantially improve cash flow and shareholder value

2 This statement includes a quantified financial benefits statement which has been reported on for the purposes of the City

Code (see Appendix 2). This does not take account of one-off associated incentive payments, which are estimated to be in the region of £70m (to be satisfied in GKN ordinary shares) and which have not been reported on for the purposes of the City Code. Excludes impact of potential disposals.

3

GKN has been successful in building global businesses and delivering above-market growth, creating a

company with annual sales of £10.4bn in the financial year ended 31 December 2017. However, this has

at times been at the expense of maximising margins and cash generation. The Board has recently

appointed two highly qualified new executive leaders who are addressing this, ensuring that GKN

focuses on margin and cash generation.

Anne Stevens, Chief Executive, has extensive experience in the businesses of GKN’s core divisions. She

also has a proven track record of performance improvement. Jos Sclater, Finance Director, combines 20

years of acquisition and divestment experience with an in-depth knowledge of GKN’s business and

strong working relationships with key stakeholders. Anne and Jos are backed by an experienced set of

operational leaders in the core business divisions.

GKN’s new strategy has three components. First, GKN will deliver distinct strategies for different product

segments with rigorous capital allocation and focused performance targets. Second, GKN will establish a

delivery culture based on greater accountability, capability and pace, supported by aligned incentives.

Third, GKN will separate operationally now and formally when it makes sense for GKN shareholders.

Distinct product segment strategies

As part of the overall strategy, Project Boost will consist of three different strategies for the different

product segments within the core business divisions, comprising improve, grow and develop. Each

strategy has different capital expenditure targets and different expectations for growth, margin

improvement, cash generation and return on investment. Portfolio rationalisation of GKN’s non-core

segments along with fixing US Standard Aerostructures will also be a priority.

Business division

Core product segments Non-core segments

Improve Grow Develop

Aerospace Speciality Aerostructures

Aero Aftermarket

Aero Specialist Positions

Aero Engines

Aero Additive Manufacturing

US Standard Aerostructures

Fuel and Flotation Tanks

Engine and Aircraft Servicing

Driveline

Driveshafts All-Wheel

Drive (AWD)

Driveline China

eDrive Systems Wheels3 Cylinder Liners3 Off-Highway

Powertrain

As part of the Group’s non-core divestment programme, the Board expects that shareholder value will

be further unlocked through the sale of Powder Metallurgy.

3 Segments have been shown as part of Driveline. However, Cylinder Liners is reported in GKN’s “Other” business segment and

Wheels is reported in GKN’s “Other” business segment post the 2016 disposal of Stromag and subsequent divisional reorganisation.

4

Performance and accountability

To ensure that the strategy is delivered and that shareholder value is realised, a much stronger

performance and accountability culture will be instilled throughout the entire GKN business. This will be

supported by changes to incentives aligned to the new strategy.

As part of Project Boost, GKN is focused on delivering a step change in margins and free cash flow

generation for shareholders, underpinned by a drive to achieve a significant increase in cash returns on

invested capital appropriate to its product segment strategy.

Financial year ending 31 December 2020 Targets

Unaudited product segment results for the financial year ended 31 December 2017 are set out in

Appendix 1. In line with the strategy as outlined above, GKN is today announcing the following trading

margin targets for the financial year ending 31 December 20204:

Management trading profit margins 20175 20204

Aerospace (Core) 10.3% ≥ 14.0%

Driveline (Core): 7.0% ≥ 9.5%

Group (Core) 8.2% 11%

Powder Metallurgy 10.6% ≥ 11.5%

Off-Highway Powertrain 8.2%

Other non-core 0.9%

Group (Total) 7.4% ≥ 10.5% Note: GKN trading margins include proportionally consolidated results from various joint ventures, the most notable of which is the China SDS

joint venture (included in the Driveline division) and SABCA (minority shareholding included in the Aerospace division). Management trading

profit is trading profit of subsidiaries with the Group’s share of the trading profit of equity accounted investments. Management trading profit

included in this document exclude the impact of the 2017 approximate £112m charge arising from the Aerospace North America balance sheet

review (£108m of this charge is included in the Aerospace division and an additional £4m in central costs). Group includes unallocated central

costs of £27m to management trading profit and £35m to management operating cash flow.

The Board intends to deliver this fundamental improvement in the Group’s cash flow performance

through Project Boost. There are four key levers set to transform GKN’s operating model, namely:

(i) manufacturing excellence: enhanced processes and productivity improvements, including

the acceleration of Industry 4.0;

(ii) functional excellence: reduce layers of management whilst upgrading capabilities and skills

throughout the business;

(iii) direct procurement cost savings; and

(iv) indirect procurement cost savings.

4 The targets for 2020 should not be construed as a profit forecast or interpreted as such.

5 This statement includes a profit estimate which has been reported on for the purposes of the City Code (see Appendix 1).

5

Boost benefits by division†

† This table contains quantified financial benefits statements which have been reported on for the purposes of the City Code

(see Appendix 2). These do not take account of one-off associated incentive payments, which are estimated to be in the region of £70m (to be satisfied in GKN ordinary shares) and which have not been reported on for the purposes of the City Code. Excludes the impact of potential disposals.

While GKN believes the significant value benefits of Project Boost will positively impact management

operating cash performance across the Group, the core focus of these actions will be at the product

segment level. The benefits of Project Boost are expected to deliver a £340m annual cash benefit from

the end of 2020 for the Group.6

In addition to cash flow generated by these benefits, the Board anticipates generating an average cash

release through improvement in working capital management of £257m cumulatively in the period to

the end of 2020.7 It is expected that this will be delivered through both specific initiatives and as a result

of embedding world class processes and addressing the issues identified in the US Standard Aerospace

business. The benefits will come equally from payables and inventories, with the remainder coming

from receivables.

GKN believes that the Project Boost programme will require one-off costs to achieve of £450m with

around 32% incurred in 2018, around 44% in 2019 and the remainder in 2020. Of this, approximately

£134m will be investment in capital expenditure to facilitate the adoption of world class Industry 4.0

processes.8

6 This statement includes a quantified financial benefits statement which has been reported on for the purposes of the City

Code (see Appendix 2). This does not take account of one-off associated incentive payments, which are estimated to be in the region of £70m (to be satisfied in GKN ordinary shares) and which have not been reported on for the purposes of the City Code. Excludes impact of potential disposals. 7 This statement includes a quantified financial benefits statement which has been reported on for the purposes of the City

Code (see Appendix 2). This does not take account of any relevant proportion of one-off associated incentive payments, which are estimated to be, in aggregate, in the region of £70m (to be satisfied in GKN ordinary shares) and which have not been reported on for the purposes of the City Code. Excludes impact of potential disposals. 8 This statement includes a quantified financial benefits statement which has been reported on for the purposes of the City

Code (see Appendix 2). This does not take account of any relevant proportion of one-off associated incentive payments, which are estimated to be, in aggregate, in the region of £70m (to be satisfied in GKN ordinary shares) and which have not been reported on for the purposes of the City Code. Excludes impact of potential disposals.

Run-rate 2020

(£m) Aerospace Driveline Powder Metallurgy

Central Total

Manufacturing excellence 77 55 13 - 145

Functional excellence 27 30 1 5 63

Direct procurement 30 35 - - 65

Indirect procurement 26 33 8 - 67

Total 160 153 22 5 340

6

Project Boost will be fully resourced with capability drawn both internally and externally and is

underpinned by a management incentive plan which includes a stretch target over and above the

expected benefits of Project Boost, with alignment across the Group from CEO to the factory floor.

Phasing†

(£m) 2018 2019 2020 Run-rate 4 year total

Benefits (in-year) 50 150 274 340 8141

One-off exceptional cash costs to achieve

(110) (138) (68) - (450)

Capital investments (32) (61) (41) -

Average working capital (in-year)

105 82 70 -

Net cash impact 13 33 235 340 †

This table contains quantified financial benefits statements which have been reported on for the purposes of the City Code

(see Appendix 2). These do not take account of one-off associated incentive payments, which are estimated to be in the region of £70m (to be satisfied in GKN ordinary shares) and which have not been reported on for the purposes of the City Code. Excludes the impact of potential disposals.

1Before capital investment and one off exceptional cash costs to achieve of £450m,

as shown above

Taxation

Expected tax rate reductions in key territories should provide significant tax tailwinds to the Group. As a

consequence, the long-term Group booked tax rate is expected to reduce by 4% to around 20%.

Capital returns and dividends

The new strategy has a clear framework that is expected to result in significant cash returns to GKN

shareholders. The strategy includes a plan to sell Powder Metallurgy, as well as a number of other non-

core businesses. GKN’s progressive dividend policy will be to target an average payout of 50% of free

cash flow over the period of 2018 - 2020. In addition, GKN expects to distribute surplus cash to

shareholders, subject to maintaining an investment grade credit rating. In total, GKN is targeting returns

of up to £2.5bn to shareholders over the next three years, with a significant part expected to come from

divestments executed within the first 12 –18 months, including the sale of Powder Metallurgy.

Further information

The statements above labelled by way of a footnote as including a profit estimate (the “PE Footnoted

Statements”) include “profit estimates” for the purposes of Rule 28 of the City Code on Takeovers and

Mergers (the “City Code”), which have been reported on in accordance with the requirements of the

City Code in the form set out in Part A to Appendix 1 (the “Profit Estimate”). Further information on the

Profit Estimate, including the basis of preparation and principal assumptions, are set out in Appendix 1

to this announcement. As required by Rule 28.1(a) of the City Code, the Profit Estimate has been

reported on by Deloitte LLP (“Deloitte”), as reporting accountants to GKN, and Gleacher Shacklock LLP

("Gleacher Shacklock"), J.P. Morgan Securities plc (which conducts its UK investment banking business

as J.P. Morgan Cazenove) (“J.P. Morgan Cazenove”) and UBS Limited (“UBS”), as financial advisers to

7

GKN, have provided the report required under that Rule. Copies of these reports are included in Parts B

and C of Appendix 1 to this announcement and references in this announcement to the PE Footnoted

Statements should be read in conjunction with those parts of Appendix 1. Each of Deloitte, Gleacher

Shacklock, J.P. Morgan Cazenove and UBS has given and has not withdrawn its consent to the

publication of its report in the form and context in which it is included.

The statements above labelled by way of a footnote as including a quantified financial benefits

statement (the “QFBS Footnoted Statements”) include “quantified financial benefits statements” for

the purposes of Rule 28 of the City Code, which have been reported on in accordance with the

requirements of the City Code in the form set out in Part A to Appendix 2 (the “Quantified Financial

Benefits Statement”). Further information on the Quantified Financial Benefits Statement, including the

basis of preparation and principal assumptions, are set out in Appendix 2 to this announcement. As

required by Rule 28.1(a) of the City Code, the Quantified Financial Benefits Statement has been reported

on by KPMG LLP (“KPMG”), as reporting accountants to GKN, and Gleacher Shacklock, J.P. Morgan

Cazenove and UBS, as financial advisers to GKN, have provided the reports required under that Rule.

Copies of these reports are included in Parts B and C of Appendix 2 to this announcement and

references in this announcement to the QFBS Footnoted Statements should be read in conjunction with

those parts of Appendix 2. Each of KPMG, Gleacher Shacklock, J.P. Morgan Cazenove and UBS has given

and has not withdrawn its consent to the publication of its report in the form and context in which it is

included.

Contacts:

GKN plc

Guy Stainer, Investor Relations Director

Tel: +44 (0)20 7463 2382

FTI Consulting Andrew Lorenz / Richard Mountain Tel: +44 (0)203 727 1340

Gleacher Shacklock (Financial Adviser to GKN plc)

Tim Shacklock, Dominic Lee, Tom Quinn

Tel: +44 (0)20 7484 1150

J.P. Morgan Securities plc (Financial Adviser and Corporate Broker to GKN plc)

Robert Constant, Dwayne Lysaght, Stephen Smith

Tel: +44 (0)20 7742 4000

UBS (Financial Adviser and Corporate Broker to GKN plc)

Hew Glyn Davies, James Robertson, Jonathan Retter

Tel: +44 (0)20 7567 8000

Publication on a website

8

In accordance with Rule 26.1 of the City Code, a copy of this announcement will be published on the GKN website (www.gkn.com) by no later than 12 noon on the business day following this announcement. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Person responsible

The person responsible for arranging the release of this announcement on behalf of the Company is

Kerry Watson, Company Secretary (+44 (0)1527 517715).

Analyst and investor meeting and conference call

There will be an analyst and investor meeting today at 09.00am at UBS, 5 Broadgate, London, EC2M 2QS

in their Auditorium located on the ground floor.

There will also be a live conference call available on the following numbers:

Standard International Access +44 (0) 20 3003 2666

UK Toll Free 0808 109 0700

USA Toll Free 1 866 966 5335

The presentation will also be available as a live webcast. To access this, please use the following link:

http://cache.merchantcantos.com/webcast/webcaster/4000/7464/16531/99724/Lobby/default.htm

The Q&A session will only be available to those at the event.

Following the event, a replay of the conference call will be available using the details below and the on-

demand archive webcast will be available via the link. A replay will be available for seven days on the

following numbers:

International +44 (0) 208 196 1998

UK Toll Free 0800 633 8453

US Toll Free 1 866 583 1039

Access Pin 3586300#

Further information

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

9

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Gleacher Shacklock, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively as financial adviser to GKN and no one else in connection with the matters set out in this announcement and will not be responsible to anyone other than GKN for providing the protections afforded to clients of Gleacher Shacklock or for providing advice in connection with the subject matter of this announcement or any other matter referred to herein.

J.P. Morgan Cazenove is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom. J.P. Morgan Cazenove is acting exclusively as financial adviser to GKN and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than GKN for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, nor for providing advice in relation to any matter referred to herein.

UBS is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom. UBS is acting exclusively as financial adviser to GKN and no one else for the purpose of the consideration of a proposed acquisition by Melrose and will not be responsible to anyone other than GKN for providing the protections offered to clients of UBS nor for providing advice in relation to the subject matter of this announcement or any transaction, arrangement or other matter referred to herein.

Profit forecast of 13 October 2017 In the announcement entitled “Trading update – brought forward by two probable significant external claims” dated 13 October 2017, GKN announced that “the Group now expects management profit before tax for 2017 to be slightly above 2016” (the “October 2017 Profit Forecast”). The October 2017 Profit Forecast was reconfirmed in the announcement entitled “Board Change and Guidance Update” dated 16 November 2017, before the additional working capital write-off in Aerospace North America and as further described in that announcement (the “Working Capital Write-Off”). The October 2017 Profit Forecast relates to a financial measurement, management profit before tax, that does not form part of the Profit Estimate. The October 2017 Profit Forecast was published before Melrose made an approach with regard to a possible offer for GKN and therefore the requirements of Rule 28.1(c) of the City Code apply to the October 2017 Profit Forecast. In accordance with Rule 28.1(c) of the City Code, the Board confirms that the October 2017 Profit Forecast, before the Working Capital Write-Off, remains valid and confirms that the October 2017 Profit Forecast has been properly compiled and that the basis of accounting used is consistent with GKN’s accounting policies. For the avoidance of doubt, the October 2017 Profit Forecast does not form part of the Profit Estimate and, accordingly, has not been reported on by Deloitte, Gleacher Shacklock, J.P. Morgan Cazenove or UBS for the purposes of Rule 28 of the City Code. No profit forecasts or estimates

10

Other than the Profit Estimate and the October 2017 Profit Forecast, no statement in this announcement is intended as a profit forecast or estimate for any period. For the purposes of Rule 28 of the City Code, the Profit Estimate is the responsibility of GKN and the directors of GKN. Quantified Financial Benefits Statement The Quantified Financial Benefits Statement relates to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies and which may in some cases be subject to consultation with employees or their representatives. The targets, cost savings and efficiency gains referred to may not be achieved, or may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. For the purposes of Rule 28 of the City Code, the Quantified Financial Benefits Statement is the responsibility of GKN and the directors of GKN. Disclosure requirements of the City Code

Under Rule 8.3(a) of the City Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

11

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

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Appendix 1

PART A

PROFIT ESTIMATE

The statements labelled by way of a footnote as including a profit estimate in this announcement

include “profit estimates” for the purposes of Rule 28 of the City Code on Takeovers and Mergers (the

“City Code”), which have been reported on in accordance with the requirements of the City Code in the

following form. These comprise management trading profit, management EBITDA and management

operating cash flow (the “Profit Estimate”).

Management trading profit margins1 2017

Aerospace (Core) 10.3%

Driveline1 (Core): 7.0%

Group (Core) 8.2%

Powder Metallurgy 10.6%

Off-Highway Powertrain 8.2%

Other non-core 0.9%

Group2 (Total) 7.4%

Management trading profit margins1 2017

Aerospace (Total) 7.8%

Driveline (Total) 7.0%

Group2 7.4%

Powder Metallurgy (Total) 10.6%

1 GKN trading margins include proportionally consolidated results from various joint ventures, the most notable of which is the

China SDS joint venture (included in the Driveline division) and SABCA (minority shareholding included in the Aerospace division). Management trading profit is trading profit of subsidiaries with the Group’s share of the trading profit of equity accounted investments. Management trading profit included in this document exclude the impact of the 2017 approximate £112m charge arising from the Aerospace North America balance sheet review (£108m of this charge is included in the Aerospace division and an additional £4m in central costs). 2 Includes unallocated central costs of £27m to management trading profit and £35m to management operating cash flow.

Group

£m Core product segments Non-core segments2 Total5

Group Improve Grow1 Develop Total

Management Revenue3 5,990 1,709 35 7,734 2,675 10,409

Management EBITDA4 1,183

Management trading profit4

422 235 (22) 635 166 774

Trading margin1 (%) 7.0% 13.8% N/M 8.2% 6.2% 7.4%

Capex 315 79 7 401 117 518

Management operating 298 68 (29) 337 95 397

13

cash flow4

Cash conversion6 (%) 71% 48% N/M 59% 56% 58%

Core product segments

£m Core product segments Non-core

segments2 Total5

Improve Grow1 Develop Total

Aerospace

Management Revenue3 1,728 1,074 - 2,802 836 3,638

Management EBITDA4 439

Management trading profit4

148 141 - 289 (6) 283

Trading margin1 (%) 8.6% 13.1% N/A 10.3% (0.7%) 7.8%

Capex 67 80 - 147 23 170

Management operating cash flow4

141 68 - 209 (31) 178

Cash conversion6 (%) 96% 48% N/A 72% N/M 63%

Driveline

Management Revenue3 4,262 635 35 4,932 665 5,597

Management EBITDA4 594

Management trading profit4

274 94 (22) 346 47 393

Trading margin1 (%) 6.4% 14.8% N/M 7.0% 7.1% 7.0%

Capex 247 - 7 254 25 279

Management operating cash flow4

157 - (29) 128 18 146

Cash conversion6 (%) 57% N/A N/M 51% 39% 49%

Non-core segments

Non-core segments (£m)

Management Revenue3

Management EBITDA4

Management trading profit4

Management trading margin

(%)1

Powder Metallurgy 1,174 177 125 10.6%

Off-Highway Powertrain

376 38 31 8.2%

Other non-core segments (£m)

Management Revenue3

Management EBITDA4

Fuel and Flotation tanks

26

Engine and Aircraft Servicing

105

Cylinder Liners 62

SABCA 78

14

Wheels 227

Total other non-core (excl. US Standard Aerostructures)

498 27

US Standard Aerostructures

627 11

1 GKN trading margins include proportionally consolidated results from various joint ventures, the most notable of which are

the China SDS joint venture (included in the Driveline division) and SABCA (minority shareholding included in the Aerospace

division). Consistent with historical treatment, Group and Driveline Management operating cash flow does not include 2017

dividends of £59m from the China SDS joint venture and £1m from Taiway. 2 Includes Powder Metallurgy.

3 Management Revenue defined as management sales which aggregate the sales of subsidiaries with the Group’s share of the

sales of equity accounted investments. 4

Management trading profit is trading profit of subsidiaries with the Group’s share of the trading profit of equity accounted

investments. Management EBITDA is management trading profit adding back depreciation and amortisation of operating

intangible assets. Management trading profit and Management EBITDA numbers included in this document exclude the impact

of the 2017 approximate £112m charge arising from the Aerospace North America balance sheet review (£108m of this charge

is included in the Aerospace division and an additional £4m in central costs). Management operating cash flow measures in this

document are defined as management operating cash flow (as defined on page 39 of the 2016 Annual Report) excluding UK

pension deficit funding payments and restructuring cash flows arising from charges reported outside of management trading

profit. This is consistent with the 2016 annual report. 5 Includes unallocated central costs of £27m to management trading profit and £35m to management operating cash flow.

6 Cash conversion calculations exclude the management trading profit from joint ventures of £96m for the Driveline grow

segment and £(2)m for the Aerospace non-core segment.

Basis of preparation and principal assumptions

The Profit Estimate is based on the unaudited management accounts of GKN for the 12 months ended

31 December 2017.

The Profit Estimate has been prepared on a basis consistent with the current accounting policies of GKN

and its subsidiaries, which are in accordance with IFRS and are those that GKN will apply in preparing its

financial statements for the financial year ended 31 December 2017.

The Directors of GKN have prepared the Profit Estimate on the basis of the following assumption which

is outside of the influence or control of the GKN Board and could turn out to be incorrect and therefore

affect whether the profit estimate can be achieved: there will be no material adjusting post balance

sheet events arising in relation to the Group’s contracts.

Reports

As required by Rule 28.1(a) of the City Code, Deloitte LLP, as reporting accountant to GKN, and Gleacher

Shacklock LLP, J.P. Morgan Securities plc and UBS Limited, as financial advisers to GKN, have provided

the reports required under that Rule.

15

Copies of these reports are included in Parts B and C of this Appendix 1. Each of Deloitte LLP, Gleacher

Shacklock LLP, J.P. Morgan Securities plc and UBS Limited has given and has not withdrawn its consent

to the publication of its report in the form and context in which it is included.

16

PART B

ACCOUNTANT’S REPORT ON PROFIT ESTIMATE

The Board of Directors (the “Directors”)

GKN plc

PO Box 55

Ipsley House

Ipsley Church Lane

Redditch

Worcestershire

B98 0TL

Gleacher Shacklock LLP

Cleveland House

33 King Street

London SW1Y 6RJ

J.P Morgan Securities plc

25 Bank Street

Canary Wharf

London E14 5JP

UBS Limited

5 Broadgate

London EC2M 2QS

14 February 2018

Dear Ladies and Gentlemen

Profit Estimate by GKN plc (“GKN”)

We report on the profit estimate comprising the estimates of management trading profit, EBITDA and

management operating cash flow for GKN and its subsidiaries (together, the “Group”) and their business

segments for the year ended 31 December 2017 (the “Profit Estimate”), which constitutes a “profit

estimate” for the purposes of the City Code on Takeovers and Mergers (the “City Code”). The Profit

Estimate, and the basis on which it is prepared, are set out in Part A of Appendix 1 to the announcement

entitled “Moving GKN to world class financial performance” dated 14 February 2018 in relation to the

Project Boost transformation programme (the “Announcement”).

Responsibilities

It is the responsibility of the Directors to prepare the Profit Estimate in accordance with the

requirements of Rule 28 of the City Code. In preparing the Profit Estimate, the Directors are responsible

17

for correcting errors that they have identified which may have arisen in unaudited financial results and

unaudited management accounts used as the basis of preparation for the Profit Estimate.

It is our responsibility to form an opinion as required by Rule 28.1(a)(i) of the City Code as to the proper

compilation of the Profit Estimate and as to whether the basis of accounting used is consistent with the

accounting policies of the Group, and to report that opinion to you.

This report is given solely for the purposes of complying with Rule 28.1(a)(i) of the City Code and for no

other purpose. To the fullest extent permitted by law we do not assume any responsibility and will not

accept any liability to any other person for any loss suffered by any such other person as a result of,

arising out of, or in connection with this report or our statement, required by and given solely for the

purposes of complying with Rule 23.2(b) of the City Code, consenting to its inclusion in the

Announcement.

We assume no responsibility in respect of this report to the offeror or any person connected to, or

acting in concert with, the offeror or to any other person who is seeking or may in future seek to acquire

control of GKN (an “Alternative Offeror”) or to any other person connected to, or acting in concert with,

an Alternative Offeror.

Basis of preparation of the Profit Estimate

The Profit Estimate has been prepared on the basis stated in Part A of Appendix 1 to the Announcement

and is based on the unaudited management accounts for the 12 months ended 31 December 2017. The

Profit Estimate is required to be presented on a basis consistent with the accounting policies of the

Group.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the

Auditing Practices Board in the United Kingdom. Our work included evaluating the basis on which the

historical financial information for the 12 months to 31 December 2017 has been prepared and

considering whether the Profit Estimate has been accurately computed using that information and

consistent with the accounting policies of the Group.

We planned and performed our work so as to obtain the information and explanations we considered

necessary in order to provide us with reasonable assurance that the Profit Estimate has been properly

compiled on the basis stated. However, the Profit Estimate has not been audited. The actual results

reported may be affected by required revisions to accounting estimates due to changes in circumstances

or the impact of unforeseen events and we can express no opinion as to whether the actual results

achieved will correspond to those shown in the Profit Estimate and differences may be material.

Our work has not been carried out in accordance with auditing or other standards and practices

generally accepted in jurisdictions outside the United Kingdom, including the United States of America,

and accordingly should not be relied upon as if it had been carried out in accordance with those

standards and practices. We have not consented to the inclusion of this report and our opinion in any

18

registration statement filed with the SEC under the US Securities Act of 1933 (either directly or by

incorporation by reference) or in any offering document enabling an offering of securities in the United

States (whether under Rule 144A or otherwise). We therefore accept no responsibility to, and deny any

liability to, any person using this report and opinion in connection with any offering of securities inside

the United States of America or who makes a claim on the basis they had acted in reliance on the

protections afforded by United States of America law and regulation.

Opinion

In our opinion, the Profit Estimate has been properly compiled on the basis stated and the basis of

accounting used is consistent with the accounting policies of the Group.

Yours faithfully,

Deloitte LLP

Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its

registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Deloitte LLP is the United Kingdom affiliate of

Deloitte NWE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”).

DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NWE LLP do not provide

services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.

19

PART C

REPORT FROM GLEACHER SHACKLOCK LLP, J.P. MORGAN SECURITIES PLC AND UBS LIMITED

The Board of Directors (the “Directors”)

GKN plc

PO Box 55

Ipsley House

Ipsley Church Lane

Redditch

Worcestershire

B98 0TL

14 February 2018

Dear Ladies and Gentlemen,

We refer to the profit estimate comprising an estimate of management trading profit, EBITDA and

management operating cash flow of GKN plc (“GKN”) and its subsidiaries (together the “Group”) for the

year ended 31 December 2017 (the “Profit Estimate”). The Profit Estimate, and the basis on which it is

prepared, are set out in Part A of Appendix 1 to the announcement entitled “Moving GKN to world class

financial performance” dated 14 February 2018 in relation to the Project Boost transformation

programme (the “Announcement”), for which the Directors are solely responsible under Rule 28.3 of

the City Code on Takeovers and Mergers (the "City Code").

We have discussed the Profit Estimate (including the bases and assumptions on which it is made), with

the Directors and those officers and employees of GKN who prepared the unaudited management

accounts for the 12 months ended 31 December 2017. The Profit Estimate is subject to uncertainty as

described in the Announcement and our work did not involve an independent examination, or

verification, of any of the financial or other information underlying the Profit Estimate.

We have relied upon the accuracy and completeness of all the financial and other information provided

to us by or on behalf of GKN, or otherwise discussed with or reviewed by us, in connection with the

Profit Estimate, and we have assumed such accuracy and completeness for the purposes of providing

this letter.

We do not express any view as to the achievability of the Profit Estimate, whether on the basis identified

by the Directors in the Announcement, or otherwise.

We have also reviewed the work carried out by Deloitte LLP (“Deloitte”) on the Profit Estimate and have

discussed with Deloitte its opinion addressed to you and us on this matter and which is set out in Part B

of Appendix 1 to the Announcement.

On the basis of the foregoing, we consider that the Profit Estimate, for which the Directors are solely

responsible, has been prepared with due care and consideration.

20

This letter is provided to you solely having regard to the requirements of, and in connection with, Rule

28.1(a)(ii) of the City Code and for no other purpose. We accept no responsibility to GKN, its

shareholders or to any person other than the Directors in respect of the contents of this letter. We are

acting exclusively as financial advisers to GKN and no one else and it was for the purpose of complying

with Rule 28.1(a)(ii) of the City Code that GKN requested us to prepare this letter relating to the Profit

Estimate. No person other than the Directors can rely on the contents of, or the work undertaken in

connection with, this letter, and to the fullest extent permitted by law, we exclude and disclaim all

liability (whether in contract, tort or otherwise) to any other person, in respect of this letter, its contents

or the work undertaken in connection with this letter or any of the results or conclusions that may be

derived from this letter or any written or oral information provided in connection with this letter, and

any such liability is expressly disclaimed except to the extent that such liability cannot be excluded by

law.

Yours faithfully,

For and on behalf of For and on behalf of For and on behalf of

Gleacher Shacklock LLP J.P. Morgan Securities plc UBS Limited

21

Appendix 2

PART A

QUANTIFIED FINANCIAL BENEFITS STATEMENT

The statements labelled by way of a footnote as including a quantified financial benefits statement in

this announcement include “quantified financial benefits statements” for the purposes of Rule 28 of the

City Code on Takeovers and Mergers (the “City Code”), which have been reported on in accordance with

the requirements of the City Code in the following form (the “Quantified Financial Benefits

Statement”):

“The benefits of the Project Boost transformation plan are expected to deliver a recurring annual cash

cost benefit of at least £340m from the end of 2020, with approximately 15% of this achieved in-year in

2018, increasing to 44% in 2019 and 81% in 2020.

Over 40% of the benefits are driven by world-class process improvement, implementing Industry 4.0

across the divisions and addressing underperformance in the US aerospace business. The remaining

benefits are derived from improved procurement processes in both direct and indirect procurement, and

other functional savings.

The nature of the programmes mean that there will be minimal jobs losses to achieve these benefits, but

there will be an adjustment in working practices required to adopt the leading edge technologies.

Phasing

In-Year

Run-rate (2020) 4 year total

(£m) 2018 2019 2020

Benefits (in-year) 50 150 274 340 814

One-off exceptional cash costs to achieve (110) (138) (68) - (450) Capital investments (32) (61) (41) -

Average working capital (in year) 105 82 70 -

Net cash impact 13 33 235 340

Boost benefits by division

Run-rate 2020 (£m) Aerospace Driveline Powder Met Central Total

Manufacturing excellence 77 55 13 - 145 Functional excellence 27 30 1 5 63 Direct procurement 30 35 - - 65 Indirect procurement 26 33 8 - 67

Total 160 153 22 5 340 Note: The figures included in the above tables exclude any impact of potential disposals.

22

In addition to cash flow generated by these benefits, we anticipate generating an average cash release

through improvement in working capital management of £257million cumulatively in the period to the

end of 2020, with an average working capital release of approximately £105m in 2018, £82m in 2019

and £70m in 2020. The benefits will come equally from payables (43%) and inventories (43%) with

remainder coming from receivables (14%).

This will be delivered through both specific initiatives and as a result of embedding world class processes

throughout the group.

The majority of the benefits are split broadly evenly between the two major divisions, Driveline and

Aerospace. The Aerospace benefits are primarily focused on addressing existing operations in the US and

embedding best practice processes across the division, whereas the Driveline benefits are primarily based

on investment in technology.

We estimate that the Project Boost programme will require one-off costs to achieve of £450m with

approximately 32% incurred in 2018, approximately 44% in 2019 and the remainder in 2020. Of this,

approximately £134m will be investment in capital expenditure to facilitate the adoption of world class

Industry 4.0 processes.”

Bases of belief, assumptions and sources

The following approach and sources have been utilised in developing the Project Boost benefits case:

• Work streams led by GKN’s Divisional CEOs have developed the Project Boost benefits case,

including identification and quantification of estimates of potential benefits and associated one-

off costs relating to the programme.

• In preparing the Quantified Financial Benefits Statement, the Divisional CEOs have been

supported by functional management (and in several cases external advisors) to facilitate

analysis and evaluation of the potential benefits available as a result of Project Boost.

• Where possible, estimated benefits and costs have been calculated on a bottom-up basis,

however in circumstances where data has been limited, estimates and assumptions have been

made by Management, with input from external advisors, to aid the development of individual

benefits and one off costs.

• Cost bases used as the basis for the quantification exercise are a profit estimate for the financial

year ended 31 December 2017 (see Appendix 1) and audited financial results for the year ended

31 December 2016. Key sources of information used to develop Project Boost include financial

results for the year ended 31 December 2017, audited financial results for the year ended 31

December 2016 and information from Management’s Oracle Hyperion system.

• Benefits of growth in the businesses have been excluded.

• Assumed to be no significant changes in macro-economic conditions.

• Estimates of ongoing cost benefits and one-off costs have been phased over a three year period.

• The exchange rate used to convert between USD and GBP is 1.35 (GKN’s 2018 Budget rate).

• A stretch case of benefits has been also been prepared.

23

Reports

As required by Rule 28.1(a) of the City Code, KPMG LLP, as reporting accountant’s to GKN, and Gleacher

Shacklock LLP, J.P. Morgan Securities plc and UBS Limited, as financial advisers to GKN, have provided

the reports required under that Rule.

Copies of these reports are included in Parts B and C of this Appendix 2. Each of KPMG LLP, Gleacher

Shacklock LLP, J.P. Morgan Securities plc and UBS Limited has given and has not withdrawn its consent

to the publication of its report in the form and context in which it is included.

Notes

The assessment and quantification of the potential cost savings and efficiency gains of Project Boost

relate to future actions and circumstances which, by their nature, involve risks, uncertainties and

contingencies. As a result, the potential cost savings, efficiency gains and/or other expected benefits

may not be achieved, or may be achieved later or sooner than estimated, or those achieved could be

materially different from those estimated.

Due to the scale of GKN, there may be additional changes to its operations as a result of Project Boost.

As a result, and given the fact that the changes relate to the future, the resulting cost savings may be

materially greater or less than those estimated.

No statement in the Quantified Financial Benefits Statement or in this announcement generally should

be construed as a profit forecast or interpreted to mean that GKN’s earnings in the first full year

following implementation of the Project Boost, or in any subsequent period, would necessarily match or

be greater than or be less than those of GKN for the relevant preceding financial period or any other

period.

24

PART B

ACCOUNTANT’S REPORT ON QUANTIFIED FINANCIAL BENEFITS STATEMENT

The Board of Directors (the “Directors”)

GKN plc

PO Box 55

Ipsley House

Ipsley Church Lane

Redditch

Worcestershire

B98 0TL

Gleacher Shacklock LLP

Cleveland House

33 King Street

London SW1Y 6RJ

J.P Morgan Securities plc

25 Bank Street

Canary Wharf

London E14 5JP

UBS Limited

5 Broadgate

London EC2M 2QS

14 February 2018

Dear Ladies and Gentlemen,

Published Report on Quantified Financial Benefits Statement by GKN plc (“GKN”)

We refer to the statement (the “Statement”) made by the Directors set out in Part A of Appendix 2 to

the announcement entitled “Moving GKN to world class financial performance” dated 14 February 2018

in relation to the Project Boost transformation programme (the “Announcement”) to the effect that:

“The benefits of the Project Boost transformation plan are expected to deliver a recurring annual cash

cost benefit of at least £340m from the end of 2020, with approximately 15% of this achieved in-year in

2018, increasing to 44% in 2019 and 81% in 2020.

Over 40% of the benefits are driven by world-class process improvement, implementing Industry 4.0

across the divisions and addressing underperformance in the US aerospace business. The remaining

benefits are derived from improved procurement processes in both direct and indirect procurement, and

other functional savings.

25

The nature of the programmes mean that there will be minimal jobs losses to achieve these benefits, but

there will be an adjustment in working practices required to adopt the leading edge technologies.

Phasing

In-Year

Run-rate (2020) 4 year total

(£m) 2018 2019 2020

Benefits (in-year) 50 150 274 340 814

One-off exceptional cash costs to achieve (110) (138) (68) - (450) Capital investments (32) (61) (41) -

Average working capital (in year) 105 82 70 -

Net cash impact 13 33 235 340

Boost benefits by division

Run-rate 2020

(£m) † Aerospace Driveline Powder Met Central Total

Manufacturing excellence 77 55 13 - 145 Functional excellence 27 30 1 5 63 Direct procurement 30 35 - - 65 Indirect procurement 26 33 8 - 67

Total 160 153 22 5 340 Note: The figures included in the above tables exclude any impact of potential disposals.

In addition to cash flow generated by these benefits, we anticipate generating an average cash release

through improvement in working capital management of £257million cumulatively in the period to the

end of 2020, with an average working capital release of approximately £105m in 2018, £82m in 2019

and £70m in 2020. The benefits will come equally from payables (43%) and inventories (43%) with

remainder coming from receivables (14%).

This will be delivered through both specific initiatives and as a result of embedding world class processes

throughout the group.

The majority of the benefits are split broadly evenly between the two major divisions, Driveline and

Aerospace. The Aerospace benefits are primarily focused on addressing existing operations in the US and

embedding best practice processes across the division, whereas the Driveline benefits are primarily based

on investment in technology.

We estimate that the Project Boost programme will require one-off costs to achieve of £450m with

approximately 32% incurred in 2018, approximately 44% in 2019 and the remainder in 2020. Of this,

approximately £134m will be investment in capital expenditure to facilitate the adoption of world class

Industry 4.0 processes.”

The Statement has been made in the context of the disclosures in Part A of Appendix 2 of the

Announcement setting out, inter alia, the basis of the Directors’ belief (including the principal

26

assumptions and sources of information) supporting theStatement and their analysis and explanation of

the underlying constituent elements.

This report is required by Rule 28.1(a) of the City Code on Takeovers and Mergers (the “City Code”) and

is given for the purpose of complying with that requirement and for no other purpose. Accordingly, we

assume no responsibility in respect of this report to the offeror or to any person connected to, or acting

in concert with, the offeror, or to any other person who is seeking or may in future seek to acquire

control of the Company (an “Alternative Offeror”) or to any person connected to, or acting in concert

with, an Alternative Offeror.

Responsibilities

It is the responsibility of the Directors to prepare the Statement in accordance with the requirements of

Rule 28 of the City Code.

It is our responsibility to form an opinion, as required by Rule 28.1(a)(i) of the City Code, as to the proper

compilation of the Statement and to report that opinion to you.

Save for any responsibility which we may have to those persons to whom this report is expressly

addressed, to the fullest extent permitted by law we do not assume any responsibility and will not

accept any liability to any other person for any loss suffered by any such other person as a result of,

arising out of, or in connection with this report or our statement, required by and given solely for the

purposes of complying with Rule 23.2(b) of the City Code, consenting to its inclusion in the

Announcement.

Basis of preparation of the Statement

The Statement has been prepared on the basis stated in Part A of Appendix 2 to the Announcement.

Basis of opinion

We have discussed the Statement, together with the underlying plans, with the Directors and Gleacher

Shacklock LLP, J.P. Morgan Securities plc and UBS Limited. Our work did not involve any independent

examination of any of the financial or other information underlying the Statement. We conducted our

work in accordance with Standards for Investment Reporting issued by the Auditing Practices Board of

the United Kingdom.

We planned and performed our work so as to obtain the information and explanations we considered

necessary in order to provide us with reasonable assurance that the Statement has been properly

compiled on the basis stated.

Our work has not been carried out in accordance with auditing or other standards and practices

generally accepted in the United States of America or other jurisdictions and accordingly should not be

relied upon as if it had been carried out in accordance with those standards and practices. We have not

consented to the inclusion of this report and our opinion in any registration statement filed with the SEC

27

under the US Securities Act of 1933 (either directly or by incorporation by reference) or in any offering

document enabling an offering of securities in the United States (whether under Rule 144A or

otherwise). We therefore accept no responsibility to, and deny any liability to, any person using this

report and opinion in connection with any offering of securities inside the United States of America or

who makes a claim on the basis they had acted in reliance on the protections afforded by United States

of America law and regulation.

We do not express any opinion as to the achievability of the benefits identified by the Directors in the

Statement. The Statement is subject to uncertainty as described in Appendix 2 to the Announcement.

Because of the significant changes in the enlarged group’s operations expected to flow from the

transformation programme and because the Statement relates to the future, the actual benefits

achieved are likely to be different from those anticipated in the Statement and the differences may be

material.

Opinion

On the basis of the foregoing, we report that, in our opinion, the Statement has been properly compiled

on the basis stated.

Yours faithfully,

KPMG LLP

28

PART C

REPORT FROM GLEACHER SHACKLOCK LLP, J.P. MORGAN SECURITIES PLC AND UBS LIMITED

The Board of Directors (the “Directors”)

GKN plc

PO Box 55

Ipsley House

Ipsley Church Lane

Redditch

Worcestershire

B98 0TL

14 February 2018

Dear Ladies and Gentlemen,

We refer to the quantified financial benefits statement, the bases of belief thereof and the notes

thereto (together, the “Statement”) made by GKN plc (“GKN”) and set out in Part A of Appendix 2 to the

announcement entitled “Moving GKN to world class financial performance” dated 14 February 2018 in

relation to the Project Boost transformation programme (the “Announcement”), for which the Directors

are solely responsible under Rule 28.3 of the City Code on Takeovers and Mergers (the “City Code”).

We have discussed the Statement (including the assumptions, bases of calculation and sources of

information referred to therein), with the Directors and those officers and employees of GKN who have

developed the financial forecasts underlying the Project Boost transformation programme as well as

with KPMG LLP (“KPMG”). The Statement is subject to uncertainty as described in the Announcement

and our work did not involve an independent examination, or verification, of any of the financial or

other information underlying the Statement.

We have relied upon the accuracy and completeness of all the financial and other information provided

to us by or on behalf of GKN, or otherwise discussed with or reviewed by us, in connection with the

Statement, and we have assumed such accuracy and completeness for the purposes of providing this

letter.

We do not express any view as to the achievability of the quantified financial benefits, whether on the

basis identified by the Directors in the Statement, or otherwise.

We have also reviewed the work carried out by KPMG and have discussed with KPMG its opinion

addressed to you and us on this matter and which is set out in Part B of Appendix 2 to the

Announcement, and the accounting policies and bases of calculation for the Statement.

On the basis of the foregoing, we consider that the Statement, for which the Directors are solely

responsible, has been prepared with due care and consideration.

29

This letter is provided to you solely having regard to the requirements of, and in connection with, Rule

28.1(a)(ii) of the City Code and for no other purpose. We accept no responsibility to GKN, its

shareholders or to any person other than the Directors in respect of the contents of this letter. We are

acting exclusively as financial advisers to GKN and no one else and it was for the purpose of complying

with Rule 28.1(a)(ii) of the City Code that GKN requested us to prepare this letter relating to the

Statement. No person other than the Directors can rely on the contents of, or the work undertaken in

connection with, this letter, and to the fullest extent permitted by law, we expressly exclude and

disclaim all liability (whether in contract, tort or otherwise) to any other person, in respect of this letter,

its contents or the work undertaken in connection with this letter or any of the results or conclusions

that may be derived from this letter or any written or oral information provided in connection with this

letter, and any such liability is expressly disclaimed except to the extent that such liability cannot be

excluded by law.

Yours faithfully,

For and on behalf of For and on behalf of For and on behalf of

Gleacher Shacklock LLP J.P. Morgan Securities plc UBS Limited

30

Appendix 3

RECONCILIATION OF MANAGEMENT TARGETS

Reconciliation of Core targets to overall financial profile including non-core.

Management trading profit margins1 2017† 20203

Aerospace (Total) 7.8% ≥12%

Driveline (Total) 7.0% ≥9.5%

Group2 7.4% ≥10.5%

Powder Metallurgy (Total) 10.6% ≥11.5% †This statement includes a profit estimate which has been reported on for the purposes of the City Code (see Appendix 1).

1 GKN trading margins include proportionally consolidated results from various joint ventures, the most notable of which is the

China SDS joint venture (included in the Driveline division) and SABCA (minority shareholding included in the Aerospace division). Management trading profit is trading profit of subsidiaries with the Group’s share of the trading profit of equity accounted investments. Management trading profit included in this document exclude the impact of the 2017 approximate £112m charge arising from the Aerospace North America balance sheet review (£108m of this charge is included in the Aerospace division and an additional £4m in central costs). 2 Includes unallocated central costs of £27m to management trading profit and £35m to management operating cash flow.

3 The targets for 2020 should not be construed as a profit forecast or interpreted as such.