Basis of presentation (Form 8-K)

Basis of presentation

AAM Holdings' historical financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). AAM Holdings publishes its financial statements in U.S. Dollars. Dowlais' historical financial statements included in this offering memorandum have been prepared in accordance with IFRS^® Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Dowlais publishes its financial statements in Pound Sterling. Certain financial information of Dowlais in this offering memorandum has been translated into U.S. Dollars for comparability and convenience purposes only. Unless otherwise indicated or the context otherwise requires, the rate used to translate Pound Sterling amounts to U.S. Dollars was 1.3574, which is the exchange rate reported by Bloomberg on September 11, 2025.

Prospective investors should consult their professional advisors for an understanding of: (i) any differences between GAAP, IFRS as issued by the IASB and other systems of generally accepted accounting principles and how these differences might affect the financial information included in this offering memorandum, and (ii) the impact that future additions to, or amendments of any such accounting principles may have on the results of operations and/or financial condition of AAM or Dowlais, as well as on the comparability of the prior periods.

This offering memorandum also includes certain financial and operating metrics for AAM Holdings and Dowlais combined as one company. These "combined" metrics are provided for illustrative purposes, are derived by combining the relevant historical financial or operating information of AAM Holdings and Dowlais and do not reflect pro forma adjustments and are not prepared in compliance with the requirements of Article 11 of Regulation S-X, as would be required if this offering of notes were registered with the SEC. These figures do not reflect what the Combined Group's financial condition or results of operations would have been had the Transactions (as defined herein) occurred on or prior to the dates indicated. The Combined Group's actual financial position and results of operations may differ significantly from the amounts reflected herein due to a variety of factors. See "Risk Factors-Risks Related to the Pending Combination with Dowlais."

The statements and information included or incorporated by reference in this offering memorandum regarding synergies, cost savings and similar information were prepared by AAM Holdings and relate to the synergies and cost savings being targeted by AAM Holdings following the consummation of the Combination only, and are conditional upon the consummation of the Combination. Such statements and information are forward-looking statements subject to risks, and actual results may vary materially from such statements and information.

Unless otherwise stated herein, pro forma financial information gives effect to the Combination, anticipated incurrence of new indebtedness pursuant to the Second Amendment (as defined herein) and the Bridge Credit Agreements (as defined herein) and the use of proceeds therefrom (collectively, the "Transactions"), as described under "Unaudited Pro Forma Condensed Combined Financial Information." References to financial or other data presented as "pro forma" or "on a pro forma basis" refer to a presentation that applies adjustments to give pro forma effect to the Transactions. The unaudited pro forma condensed combined financial information contained in this offering memorandum was calculated on the basis of assumptions made by the respective management of AAM Holdings and Dowlais at the time such information was prepared. For example, such unaudited pro forma condensed combined financial information reflects assumptions regarding the terms on which the Transactions will be completed and the terms of the indebtedness of the Combined Group that will be outstanding following completion of the Transactions. In particular, the unaudited pro forma condensed combined financial information contained in this offering memorandum does not give effect to any amendments to the Credit Agreement or the Co-operation Agreement or other modifications to the terms of the Transactions that may be agreed by the parties thereto and assumes the indebtedness incurred to fund the cash consideration payable in connection with the Combination and related fees and expenses and to repay certain existing indebtedness of Dowlais will be pursuant to the Second Amendment and the Bridge Credit Agreements rather than giving effect to this offering or to actual terms of the notes issued in this offering. See "Risk Factors-Risks Related to the Pending Combination with Dowlais-The unaudited pro forma financial information included in this offering memorandum may not be an indication of the Combined Group's financial condition or results of operations following the Combination."

The information included in this offering memorandum is not intended to, and does not, comply with all of the disclosure requirements of the SEC that would apply if this offering were being made pursuant to a registration statement filed with the SEC. Compliance with such requirements could require the modification or exclusion of certain financial measures and/or other information included in this offering memorandum and the inclusion of certain information not included in this offering memorandum. For example, the twelve months ended June 30, 2025 is not a fiscal period for us or Dowlais under GAAP or IFRS and, accordingly, the unaudited pro forma condensed combined financial information for the twelve months ended June 30, 2025 has not been prepared in compliance with the requirements of Article 11 of Regulation S-X, as would be required if this offering of notes were registered with the SEC. Similarly, certain "combined" metrics are derived by combining the relevant historical financial or operating information of AAM Holdings and Dowlais and do not reflect pro forma adjustments and are not prepared in compliance with the requirements of Article 11 of Regulation S-X, as would be required if this offering of notes were registered with the SEC.

Numerical figures included in this offering memorandum have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

In this offering memorandum, unless otherwise specified or the context otherwise requires:

·	"Pound Sterling," "Pounds," "£," "Pence" or "p" each refer to the lawful currency of the United Kingdom; and

·	"U.S. Dollars," "Dollars," "$" or "U.S.$" each refer to the lawful currency of the United States.

Non-GAAP and non-IFRS financial measures

In addition to results reported in accordance with GAAP and IFRS as issued by the IASB in this offering memorandum, we have provided certain non-GAAP and non-IFRS financial measures such as EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Revenue, Free Cash Flow, Adjusted Free Cash Flow and Adjusted Operating Profit. Such information is reconciled to its closest GAAP or IFRS measure, as applicable, in accordance with SEC rules under "Summary-AAM Holdings Summary Consolidated Financial Data" and "Summary-Dowlais Summary Consolidated Financial Data."

AAM Holdings defines EBITDA to be earnings before interest expense, income taxes, depreciation and amortization. AAM Holdings defines Adjusted EBITDA as EBITDA excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, gains or losses on the derivative associated with the Combination, gains or losses on equity securities, pension curtailment and settlement charges, impairment charges and non-recurring items. AAM Holdings defines Segment Adjusted EBITDA as EBITDA for its reportable segments excluding the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, gains or losses on the derivative associated with the Combination, gains or losses on equity securities, pension curtailment and settlement charges, impairment charges and non-recurring items. AAM Holdings defines Free Cash Flow to be net cash provided by operating activities less capital expenditures net of proceeds from the sale of property, plant and equipment and from government grants. AAM Holdings defines Adjusted Free Cash Flow as Free Cash Flow excluding the impact of cash payments for restructuring and acquisition-related costs and cash payments related to the Malvern fire, including payments for capital expenditures, net of recoveries.

Dowlais defines Adjusted Revenue as external revenue including Dowlais' share of revenue of equity accounted investments. Dowlais defines Adjusted Operating Profit as operating profit excluding items which are significant in size or volatility or by nature are non-trading or non-recurring and including the adjusted operating profit of equity accounted investments. Dowlais defines Adjusted EBITDA as Adjusted Operating Profit after adding back depreciation and impairment of property, plant and equipment and amortization of computer software and development costs, including that of equity accounted investments. Dowlais defines Free Cash Flow as cash generated after accounting for all trading costs, restructuring, pension contributions, and tax payments, but before any cash flows associated with financing activities (i.e. net cash from operating and investing activities). Dowlais defines Adjusted Free Cash Flow as Free Cash Flow adjusted for cash flows related to its demerger from Melrose Industries PLC, cash spend on AAM combination and net cash on business disposals.

We believe that EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Revenue, Free Cash Flow, Adjusted Free Cash Flow and Adjusted Operating Profit are meaningful measures of performance as they are commonly utilized by management and investors to analyze operating performance and entity valuation. Our management, the investment community and the banking institutions routinely use EBITDA and Adjusted EBITDA, together with other measures, to measure our operating performance relative to other Tier 1 automotive suppliers. We also use Segment Adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. We also believe Free Cash Flow and Adjusted Free Cash Flow are meaningful measures as they are commonly utilized by management and investors to assess our ability to generate cash flow from business operations to repay debt and return capital to our stockholders. EBITDA, Adjusted EBITDA, Free Cash Flow and Adjusted Free Cash Flow are also key metrics used in our calculation of incentive compensation. These non- GAAP and non-IFRS financial measures are not and should not be considered a substitute for any GAAP or IFRS measure. Additionally, non-GAAP and non-IFRS financial measures as presented may not be comparable to similarly titled measures reported by other companies.

Capitalization

The following table sets forth our consolidated cash and cash equivalents and capitalization as of June 30, 2025 on (i) an actual basis and (ii) a pro forma as adjusted basis to give effect to the Transactions, including the borrowings under the Credit Agreement and the notes issued in this offering, on the assumptions described herein.

The historical balance sheet data in the "actual" column of the following table is derived from our unaudited consolidated financial statements incorporated by reference in this offering memorandum. The pro forma information presented in the "pro forma as adjusted" column below is derived from the "Unaudited Pro Forma Condensed Combined Financial Statements" that are included elsewhere in this offering memorandum, and has been adjusted to give effect to the Transactions on the assumptions described herein.

This table should be read in conjunction with the other information included or incorporated by reference herein, including under the headings "Presentation of Information," "Summary-The Transactions," "Use of Proceeds," "Unaudited Pro Forma Condensed Combined Financial Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations of Dowlais," Dowlais' historical financial statements included in this offering memorandum and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our historical financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2025 and June 30, 2025, which are incorporated by reference herein.

Actual amounts may vary from the amounts included in the table below due to various factors, including, without limitation, the amount of our borrowings under the Credit Agreement at the closing of the Combination, the amount of borrowings outstanding under the Dowlais Credit Facilities at the closing of the Combination, the cash of AAM and Dowlais at the closing of the Combination, the amount of Dowlais Notes tendered in the Dowlais Notes Change of Control Offer and the accuracy of our estimates of fees and expenses. See "Use of Proceeds."

		As of June 30, 2025
(Dollars in millions)		Actual				Pro forma as adjusted
Cash and cash equivalents(3)		$	586.5			$
Long-term debt(1):
Secured Revolving Credit Facility(2)			-				-
Secured Credit Agreement
Term Loan A Facility			484.3				484.3
Term Loan B Facility			648.0				648.0
Tranche C Term Facility			-				843.0
Secured notes offered hereby			-				843.0
Unsecured 6.50% Senior Notes due 2027			500.0				500.0
Unsecured 6.875% Senior Notes due 2028			400.0				400.0
Unsecured 5.00% Senior Notes due 2029			600.0				600.0
Dowlais Notes(3)			-				500.0
Unsecured notes offered hereby			-				600.0
Foreign and other debt agreements			23.8				23.8
Total long-term debt and capital lease obligations			2,656.1				5,442.1

		As of June 30, 2025
(Dollars in millions)		Actual				Pro forma as adjusted
Stockholders' equity:
Common Stock; par value $.01 per share (Actual: 150.0 million shares authorized; 129.9 million shares issued; Pro Forma As Adjusted: 375.0 million shares authorized; 246.9 million shares issued)			1.3				2.5
Paid-in capital			1,405.5				2,116.7
Accumulated deficit			(201.8	)			(246.8	)
Treasury stock at cost; (Actual: 11.3 million shares; Pro Forma As Adjusted: 11.3 million shares)			(238.4	)			(238.4	)
Accumulated other comprehensive loss, net of tax			(293.6	)			(293.6	)
Noncontrolling interest in subsidiaries			-				54.0
Total stockholders' equity			673.0				1,394.4
Total capitalization		$	3,329.1			$	6,836.5

(1) On January 29, 2025, in connection with the announcement of the Combination, AAM Holdings and AAM Inc. entered into the First Lien Bridge Facility and the Second Lien Bridge Facility. As of June 30, 2025, no amounts were outstanding under the Bridge Facilities. We currently expect that the net proceeds of this offering, along with borrowings under our Credit Agreement and cash on hand, will be sufficient to fund the cash consideration of the Combination. While not anticipated, if and to the extent we do not receive sufficient net proceeds in this offering, we may be required to borrow additional amounts under our Credit Agreement or under the Bridge Credit Agreements in order to finance the Combination.

(2) As of June 30, 2025, $897.1 million was available under the Revolving Credit Facility, which reflected a reduction of $27.9 million for standby letters of credit issued against the facility. As of June 30, 2025, after giving effect to the Transactions and the application of proceeds as described in "Use of Proceeds," we would have had $1.5 billion available under the Revolving Credit Facility, which would reflect a reduction of $27.9 million for standby letters of credit issued against the facility.

(3) Pursuant to the terms of the Note Purchase Agreement, the Dowlais Notes Change of Control Offer will be made within 15 business days after the closing of the Combination and the repurchase date will be not less than 30 days and not more than 60 days after the date on which we make the Dowlais Notes Change of Control Offer to the holders of the Dowlais Notes. Pursuant to the terms of the Notes Purchase Agreement, if the Disposal occurs, Dowlais will be required to make the Disposal Offer to the holders of the Dowlais Notes to repurchase the Dowlais Notes with the net proceeds from the Disposal. If the Disposal occurs, Dowlais intends to make the Disposal Offer concurrently with the Dowlais Notes Change of Control Offer and repurchase any Dowlais Notes tendered pursuant to the Disposal Offer concurrently with the Dowlais Notes tendered for repurchase in connection with the Dowlais Notes Change of Control Offer. As of June 30, 2025, Dowlais had $500 million of Dowlais Notes outstanding and the fair value of the Dowlais Notes was $585 million. The decision as to whether to tender the Dowlais Notes in the Dowlais Notes Change of Control Offer or the Disposal Offer will be made by each holder of Dowlais Notes at their discretion and for this reason, we cannot accurately predict the outcome of the Dowlais Notes Change of Control Offer or the Disposal Offer. Any remaining proceeds not used to fund the Dowlais Notes Change of Control Offer will be used for general corporate purposes, which may include, among other things, repayment of debt. For purposes of the table above, we have assumed that none of the Dowlais Notes will be tendered in the Dowlais Notes Change of Control Offer or the Disposal Offer, and that none of the sources of funds will be used to fund the Dowlais Notes Change of Control Offer (and, accordingly, all such funds that may be used to fund the Dowlais Notes Change of Control Offer have been added to Cash and cash equivalents in the Pro Forma As Adjusted column). See "Summary-Transactions Related to the Outstanding Debt of Dowlais."

Business of Dowlais

Dowlais is a specialist engineering group focused on the automotive sector. Dowlais develops and delivers precisely engineered solutions for the automotive industry through its two high- technology engineering businesses: GKN Automotive and GKN Powder Metallurgy. Dowlais is headquartered in the United Kingdom, and operates in 22 countries and in 100 locations across the Americas, Europe and Asia, with over 70 manufacturing facilities and seven global innovation centers. Dowlais employs over 29,000 employees globally, including as part of its joint ventures. Dowlais has relationships with over ninety percent of global original equipment manufacturers, which are typically light vehicle original equipment manufacturers, and its components are present in approximately 45% of light vehicles in use globally.

GKN Automotive is a global leader in the development and production of sideshafts, propshafts, AWD systems and advanced differentials and a trusted partner to automotive OEMs globally. Its products drive the wheels of light vehicles around the world, and it has been a pioneer in the development of eDrive systems, remaining at the forefront of electric vehicle powertrain technology.

GKN Powder Metallurgy is a global leader in the production of sintered metal products for the automotive and industrial sectors and a leading manufacturer of atomized metal powders. Its world-class engineering expertise and sustainable technology enables the design and production of parts with complex geometries, higher densities and improved physical properties. GKN Powder Metallurgy serves over 2,000 customers globally and produces approximately 10 million components per day. GKN Powder Metallurgy serves over 2,000 customers globally and produces approximately 10 million components per day.

In the financial year 2024, the Dowlais Group achieved adjusted revenue of £4,937 million and adjusted operating profit of £324 million as compared to £5,489 million and £355 million in the financial year 2023, respectively.

In the financial year 2024, the Americas region accounted for 42% of Dowlais' adjusted revenue, the Asia Pacific region accounted for 26% and Europe, Middle East and Africa accounted for 32%. GKN Automotive accounted for 80.1% of Dowlais' adjusted revenue, whereas GKN Powder Metallurgy accounted for 19.9%.

In the financial year 2024, sideshafts accounted for 49% of GKN Automotive's adjusted revenue, and propshafts, AWD Systems, ePowertrain components and eDrive Systems accounted for 9%, 15%, 11% and 1% in the financial year 2024, respectively. Sintered metal components accounted for 76% of GKN Powder Metallurgy's adjusted revenue in the financial year 2024, with metal powders and additive manufactured components accounted for 21% and 3%, respectively.

Dowlais' sideshaft business benefits from global, vertically integrated scale. Dowlais is a pioneer of the Auto Constant Velocity joint and produces over 100 joint types and sizes. With respect to its sideshafts business, Dowlais holds approximately 400 active patents and employs approximately 500 engineers across 18 sites. Dowlais' market share in sideshafts is approximately twice that of its nearest competitor.

Sales to GM accounted for 10% of Dowlais' adjusted revenue for 2024, with sales to Stellantis, Ford, Volkswagen Group, Toyota and Renault-Nissan accounting for 9%, 6%, 8%, 9% and 6% of adjusted revenue respectively, and the remaining 52% of adjusted revenue was attributable to other customers.

Revenue from Dowlais' joint ventures amounted to £600 million in 2024, with adjusted operating profit of £89 million, adjusted operating profit margin of 15%, net income of £61 million and dividends to Dowlais of $70 million.

Dowlais is a public company incorporated and registered in England and Wales, whose shares are traded on the Main Market of the London Stock Exchange (the "LSE"). Dowlais is the ultimate parent company of the companies in the Dowlais Group. Dowlais' Legal Entity Identifier (LEI) is 213800XM8WOFLY6VPC92. Its registered address is 2nd Floor, Nova North, 11 Bressenden Place, London SW1E 5BY and its telephone number at that address is +44 (0)204 551 3383. Dowlais' website is accessible at www.dowlais.com. Neither the content of this website nor the content of any other website (including any other website accessible from hyperlinks on this website) is incorporated into, or forms part of, this offering memorandum.

History

Dowlais was incorporated on January 13, 2023 under the Companies Act 2006 as a public company limited by shares under the name Dowlais Group Headquarters PLC with registered number 14591224. On February 3, 2023, Dowlais changed its name to its current name, Dowlais Group plc. On April 20, 2023, Dowlais demerged from Melrose Industries PLC.

Business activities

Dowlais develops and delivers precisely engineered solutions for the automotive industry through its two high-technology engineering businesses: GKN Automotive and GKN Powder Metallurgy.

GKN automotive

GKN Automotive is a global leader in the development and production of sideshafts, proposhafts, AWD systems and advanced differentials and a trusted partner to automotive OEMs globally. Its products drive the wheels of light vehicles around the world and it has been a pioneer in the development of eDrive systems, remaining at the forefront of electric vehicle powertrain technology. While its core Driveline product group works with all types of powertrains, including electric, hybrid and traditional engines, its ePowertrain product group has potential for growth with new EV platforms. As more vehicles adopt electric powertrains, demand for larger joints and higher installation rates present a growth opportunity. Additionally, its strong market position in China, via joint venture SDS with local partner HUAYU Automotive Systems Co. Ltd ("HASCO"), gives GKN Automotive a unique advantage in expanding alongside the fast-growing Chinese OEM Market. SDS is the leading supplier of driveline products to the Chinese market, supplying 9 of the top 10 OEMs in China, with ten manufacturing facilities located in the country. SDS' share with local Chinese OEMs continues to grow. As of June 30, 2025, Dowlais' has received £178 million in cumulative dividends from JV operations since 2023. In 2024, 42% of SDS revenue came from Chinese OEMs.

GKN Automotive operates 48 manufacturing locations across Europe, the Americas, Asia Pacific and China, as well as five technology and innovation centers, with around 24,000 employees globally (including joint ventures).

GKN powder metallurgy

GKN Powder Metallurgy is a global leader in the production of sintered metal products for the automotive and industrial sectors and a world-class manufacturer of atomised metal powders. Its world-class engineering expertise and sustainable technology enables the design and production of parts with complex geometries, higher densities and improved physical properties.

Strategic goals

The Dowlais Group's purpose is engineering transformation for a sustainable world. This forms part of the Dowlais Group's wider strategic framework within which its purpose, its strategy and its values of agility, accountability and ambition are all aligned.

The Dowlais Group's overall strategy is focused on three pillars:

·

Lead: The Dowlais Group aims to lead in both market position and financial performance by consistently prioritising operational excellence. This is achieved through implementing best in class manufacturing, commercial and procurement processes, as well as maintaining strict discipline in managing working capital.

·

Transform: Continuous improvement and agility are central to the Dowlais Group's operations. It is digitising and optimising manufacturing processes, improving their production footprint to enhance competitiveness, and driving innovation in its product portfolio to support the transition to electrified mobility.

·

Accelerate: The Dowlais Group is positioned for organic growth while remaining open to value- accretive M&A opportunities at the appropriate time. Its approach is prudent and disciplined, targeting opportunities that align with its portfolio strategy and deliver shareholder value.

Lead

The Dowlais Group continues to build on its position as a portfolio of market-leading, high- technology engineering businesses, with a clear focus on delivering industry-leading financial performance and shareholder value. The Dowlais Group delivered a 0.1% adjusted operating margin expansion in 2024, despite a 6.4% year-on-year decline in adjusted revenue, demonstrating resilience and operational agility in a volatile market environment. In Powder Metallurgy, 56% of new business wins were attributed to EV or propulsion-agnostic products, demonstrating the business's alignment with evolving market demands and its strategic focus on supporting the electrification transition.

Transform

The Dowlais Group continues to take a disciplined approach to investing in its portfolio, with a focus on transitioning to a powertrain-agnostic business model that is resilient to global market fluctuations and well-positioned to deliver sustainable, profitable growth and cash generation. In 2024, the Dowlais Group made the decision to right size engineering investment in the business' eDrive systems product line to optimize capital allocation, with gross engineering spend on the ePowertrain product line totaling £95.8 million, expected to reduce to approximately £60 million by the end of 2025. This proactive step reflects its strategy of balancing disciplined investment with long-term profitability, ensuring that it is better positions to navigate the increasing volatility in the battery electric vehicle market.

In Powder Metallurgy, the order book grew by 2% in 2024, with 56% of new business wins attributed to EV or propulsion-agnostic products, reinforcing its strategic focus on supporting the electrification transition. The Dowlais Group has continued to expand production capacity in Mexico and relocating production from its Mosel plant in Germany to its newly opened facility in Hungary, enhancing regional competitiveness and operational efficiency.

Accelerate

At the start of 2024, GKN Powder Metallurgy established a new leadership team and developed a clear strategic and commercial plan to accelerate a range of options including a potential sale. The Dowlais Group also disposed of its entire interest in its GKN Hydrogen business to Langley Holdings plc, eliminating future cash losses associated with the funding of the Hydrogen operations. The Combination with AAM is expected to accelerate the realization 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.

Regulatory environment

The Dowlais Group is subject to regulation from national and international regulatory authorities concerning, among other things: (i) working conditions of employees, in particular in connection with environmental hazards in the workplace; (ii) restrictions arising from economic sanctions, export controls and customs; (iii) product liability claims, in particular in connection with products supplied to global production programs or to consumer end-markets; and (iv) compliance with anti- bribery, anti-corruption and anti-money laundering legislation.

In order to ensure compliance with these regulations, the Dowlais Group regularly monitors existing legal and regulatory matters, both at the group-wide and operating segment levels. The Dowlais Group has a robust control framework in place in order to identify and assess principal risks, underpinned by comprehensive corporate governance and compliance procedures which are periodically reviewed and updated as needed, in line with best practice. Furthermore, the Dowlais Group also maintains insurance coverage for the risks associated with the operations of its businesses, and conducts diligence before purchasing strategic and value enhancing targets to ensure compliance with applicable regulations. The Dowlais Group's businesses have received certification in respect of quality management, environmental management and health and safety procedures from the International Organisation for Standardisation.

Environmental, tax and health and safety regulations

The Dowlais Group operates global facilities that are subject to a broad array of environmental laws and regulations relating to pollution, the health and safety of employees, protection of the public, protection of the environment, the storage and handling of hazardous substances and waste materials and the clean-up of contaminated properties. It is the policy of the Dowlais Group to comply with all relevant laws and regulations. The Dowlais Group actively manages these risks through regular compliance and performance improvement assessments and key performance indicators and the engagement of competent health, safety and environmental coordinators at each of its sites. However, violations of applicable laws and regulations, in particular provisions of environmental and health and safety laws, or changes in such laws and regulations (such as the imposition of more stringent standards for discharges into the environment), could result in litigation and damage to the reputation of the Dowlais Group as above, temporary or permanent restrictions on the operations of the facilities of the Dowlais Group, damages, fines, clean-up costs or other civil or criminal sanctions and/or increased costs of compliance (including capital expenditures).

As an organization with global operations, the Dowlais Group will conduct business in countries subject to complex tax rules, which may be interpreted in different ways. Changes in tax law could result in higher tax expense and payments.

The nature of the Dowlais Group's operating activities exposes the Dowlais Group to a range of health and safety risks if such operations are not properly managed and conducted. Dowlais' employees work in environments where maintaining the highest standards of operational health and safety is critical.

Product liability

As a supplier to major vehicle manufacturers and other customers, it is imperative that Dowlais' products are safe to use and meet quality requirements. A defect in the design or manufacturing process, a failure of controls, or the inadequate performance of Dowlais' suppliers could result in Dowlais supplying products that are unsafe or of inadequate quality. Many of Dowlais' automotive products are considered safety critical and are the subject of vehicle safety and industry regulations.

Anti-corruption and sanction regulation

Conducting business on a worldwide basis requires the Dowlais Group to comply with anti- corruption laws and regulations such as the US Foreign Corrupt Practices Act of 1977 and the UK Bribery Act 2010. Additionally, as a result of conducting business in foreign countries, the Dowlais Group will be exposed to a risk of violating anti-corruption laws and sanctions regulations applicable in those countries where it, its partners or agents operate.

While the Dowlais Group has policies and procedures designed to assist its compliance with applicable anti-corruption laws and sanctions regulations, it seeks to continuously improve its systems of internal controls, to remedy any weaknesses that are identified through appropriate corrective action depending on the circumstances, including additional training, improvement of internal controls and oversight and deployment of additional resources. The Dowlais Group also takes appropriate action in case of any breach of the Dowlais Group's rules and procedures which might include disciplinary measures, suspensions of employees and ultimately termination of such employees.

Governmental, legal or arbitration proceedings

In the ordinary course of its business, Dowlais may, at any given time, be involved in various inquiries, administrative proceedings and litigation relation to environmental and safety matters, personal injury, product liability, labor and employment, contracts, sale of property, intellectual property, tax, and other matters, some of which may allege substantial monetary damages. These matters are managed internally by the Dowlais Group and, where appropriate, may involve the assistance of external advisers. Assessments of lawsuits and claims can involve a series of complex judgments about future events, can rely heavily on estimates and assumptions, and are otherwise subject to significant uncertainties. As a result, there can be no certainty that the Dowlais Group will not ultimately incur charges in excess of presently recorded liabilities. The inherent uncertainties involved in pending or threatened legal matters, some of which are beyond the Dowlais Group's control, and the large or indeterminate damages sought in some of these matters are such that an adverse ruling, settlement, unfavorable development or increase in accruals with respect to these matters could result in future charges that could be material to the Dowlais Group's result of operations or cash flows in any particular reporting period.

Management's discussion and analysis of financial condition and results of operations of Dowlais

Introduction

The following discussion and analysis should be read in conjunction with the financial information of Dowlais Group plc set out in the section of this offering memorandum entitled "Index to Dowlais Consolidated Financial Statements". The financial information included in this section has been extracted without material adjustment from the financial information in the section of this offering memorandum entitled "Index to Dowlais Consolidated Financial Statements" or has been extracted without material adjustment from the Dowlais Group's accounting records, which formed the underlying basis of the financial information referred to in the financial information of the Dowlais Group set out in the section of this offering memorandum entitled "Index to Dowlais Consolidated Financial Statements."

The Dowlais Group's consolidated financial statements were historically prepared in accordance with IFRS whereas AAM's consolidated financial statements were historically and are expected to continue to be prepared in accordance with U.S. GAAP. U.S. GAAP differs from IFRS in a number of significant respects. AAM has not prepared, and does not currently intend to prepare, its financial statements or the financial statements of the Combined Group in, or reconcile them to, IFRS and hence has not quantified these differences for prospective investors. In making an investment decision, prospective investors must rely on their own examination of the AAM group, the terms of the Combination and the financial information contained in this offering memorandum. Prospective investors should consult their own professional advisors for an understanding of the differences between IFRS and U.S. GAAP.

Dowlais's business

Dowlais is a specialist engineering group focused on the automotive sector, generating growth through a portfolio of transformative and innovative businesses that advance the world's transition to sustainable vehicles. The Dowlais Group comprises of the GKN Automotive and GKN Powder Metallurgy businesses.

GKN Automotive is a global technology and systems engineer which designs, develops, manufactures and integrates an extensive range of driveline technologies, including electric vehicle ("EV") components with 48 manufacturing facilities in 18 countries. While its core Driveline product group works with all types of powertrains, including electric, hybrid, and traditional engines, its ePowertrain product group has potential for growth with new EV platforms. As more vehicles adopt electric powertrains, demand for larger joints and higher installation rates presents a growth opportunity. Additionally, its strong market position in China, via the joint venture SDS with HASCO, gives GKN Automotive a unique advantage in expanding alongside the fast- growing Chinese OEM market.

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. The business has a strong and diversified core portfolio, serving both industrial and automotive markets. It has also developed significant opportunities to generate incremental growth, including expanding into high-potential EV-ready product categories, such as iron powder for LFP batteries and sintered magnets for electric motors. GKN Powder Metallurgy operates globally with 31 manufacturing plants and two technology centers across 11 countries.

GKN Hydrogen formed part of the Dowlais Group, offering reliable and secure hydrogen storage solutions, until its sale on 29 July 2024.

Industry trends

The vast majority of components supplied by GKN Automotive and GKN Powder Metallurgy are for light vehicles, which comprise passenger cars and light trucks weighing up to 6 tons.

Global light vehicle production ("GLVP") in H1 2025 was estimated at 44.9 million units, representing a year-on-year increase of approximately 3.1%. However, excluding China, GLVP declined by 0.7% over the same period. Market conditions remained volatile, particularly due to trade tensions and the imposition of import tariffs by the United States. Tariffs announced by the US administration in April 2025, along with additional measures on imports from Mexico and Canada, disrupted production flows and weighed on the near to medium term outlook for GLVP. In July 2025, the US administration announced a further wave of tariffs targeting imports from the European Union, Canada, Japan and Korea, amongst others, adding to the macroeconomic uncertainty for the remainder of the year.

In H1 2025, regionally, Asia continued to lead global production, with China producing 14.8 million vehicles and the rest of Asia contributing 11.0 million vehicles. EMEA accounted for 9.9 million vehicles, followed by the Americas at 9.2 million vehicles. China had strong momentum in the first half of the year as production grew by 11.7% year-on-year, followed by the rest of Asia where production grew by 3.1%. In contrast, production declined by 3.1% and 2.4% in EMEA and the Americas respectively.

In 2024, GLVP was estimated at 89.5 million units, reflecting a 1.1% decline year-on-year, per S&P Global Mobility. GLVP has faced significant headwinds in recent years. From 2022 to 2023, GLVP grew by approximately 10%, this momentum reversed in 2024 as inventory replenishment neared completion, consumer demand softened due to high interest rates and inflation, and battery electric vehicle ("BEV") penetration slowed amid the withdrawal of government subsidies.

In 2024, Asia remained the largest producer of light vehicles regionally, with China producing 30.1 million vehicles and the rest of Asia 21.6 million vehicles. EMEA produced 19.4 million vehicles, followed by the Americas at 18.4 million vehicles. While China's production grew 3.6% year-on- year, production declined by 4.1%, 4.5% and 1.0% in EMEA, the rest of Asia and the Americas, respectively.

GLVP forecasts have remained volatile throughout the first half of the year. In 2024, volatilities in the global transition to EVs saw significant drops in production volumes across a number of the Dowlais Group's customers' vehicle platforms. This volatility significantly impacted the ePowertrain product group, where high-value content on a small number of vehicle platforms created a significant revenue headwind. While the Dowlais Group remains committed to the transition to BEV, the pace of change is expected to be slower than initially anticipated. As BEV adoption slows, hybrids-both Hybrid Electric Vehicles and Plug-in Hybrid Electric Vehicles-are increasingly being used as transitional technologies. Governments and consumers view hybrids as a compromise that reduce emissions without the charging infrastructure challenges associated with BEVs. The Dowlais Group's powertrain-agnostic products, such as sideshafts and ePowertrain components, are compatible with hybrids, allowing Dowlais to benefit from this transitional phase.

Since March 2025, the U.S. administration has announced several new tariffs, including a 10% universal base tariff, sector-specific tariffs on automotive imports, and additional reciprocal tariffs targeting individual countries. While the reciprocal tariffs have been temporarily paused until July 26, concerns about their potential impact on consumer demand have already led to downward revisions in industry forecasts. However, a subsequent pause in implementation and exemption for USMCA compliant goods helped improve market sentiment.

In April, S&P revised its 2025 industry outlook. In March, it had projected GLVP at 89.5 million units, but this was revised down to 87.9 million units in April-a year-over- year decline of 1.7%, or 3.3% when excluding China. The revisions reflect more cautious expectations for North America, where production is forecast to fall by 9.3%, and for Europe, which is expected to decline by 3.1%. Given the ongoing uncertainty around tariffs, forecasts remain volatile, and further revisions appear likely.

As of its latest forecast, S&P now projects 2025 GLVP at 89.9 million units, implying modest year- on-year growth of 0.4%. Excluding China, a decline of 1.3% is anticipated. For H2 2025, S&P forecasts a 2.2% decline in production compared to the same period in 2024, with China expected to contract by 2.4%, a reversal from the strong growth seen in the first half.

Looking further ahead, 2026 forecasts have also been revised downward, with GLVP growth now expected at 1.1%, down from the previously projected 2.0%.

In the medium term, S&P expects GLVP to grow at a CAGR of approximately 1% and reach around 95 million units by 2030.

Recent transactions and events

On February 28, 2023, Melrose Industries PLC ("Melrose") transferred the entire shareholding of GKN Industries Limited and GKN Powder Metallurgy Holdings Limited to Dowlais such that all the related entities became owned directly or indirectly by Dowlais.

On April 20, 2023, Melrose made a distribution to its shareholders of Dowlais shares with one Dowlais share issued for every Melrose share held. Prior to April 20, 2023, the ultimate parent company and controlling party of the Dowlais Group was Melrose Industries PLC, a public company limited by shares and incorporated in England & Wales.

In early 2024 the Dowlais Group started a process to identify suitable investment partners for the Hydrogen business. On July 29, 2024, the Dowlais Group disposed of its entire interest in its GKN Hydrogen business to Langley Holdings plc, for nominal consideration. This disposal aligns with the Dowlais Group's strategy to focus on businesses where it can add most value through operational improvement initiatives while ensuring fair treatment for all stakeholders involved throughout this process.

Further to the announcement on March 21, 2024, the Dowlais Group commenced a share buyback program on April 4, 2024 of its ordinary shares for up to a maximum aggregate consideration of £50 million, of which £32 million was completed as of June 30, 2025 (as noted below, the share buyback program was discontinued). The purpose of the share buyback program was to reduce the Dowlais Group's share capital and therefore the shares purchased under the program have been cancelled. Following the announcement regarding the recommended combination with AAM on January 29, 2025, the Dowlais Group cancelled the share buyback program with immediate effect.

In the last quarter of 2024, the Dowlais Group successfully refinanced part of its term loan debt through the issuance of US$500 million of notes in the US private placement market. The notes have maturities in the range of 5 - 12 years. Following the note issuance, the notes were repaid in full, with the full $400 million of the term loan debt having been repaid as of June 30, 2025. Post refinancing, the Dowlais Group continues to be funded through two core banking facilities comprised of a multi-currency revolving credit facility and term loan facility, and the US private placement notes resulting in combined debt facilities of £1,831 million. The revolving credit and term loan facilities have an initial maturity date of April 20, 2026, and the Dowlais Group has the option to extend the maturity of the revolving credit facility by up to two years, at its sole discretion.

Overview of segments

As described above, the Dowlais Group's business is organized into Automotive and Powder Metallurgy (and previously Hydrogen until its disposal in July 2024) segments. These comprise the Dowlais Group's reportable segments and their results are regularly reviewed by the Dowlais Board of Directors.

Results of operations

Six months ended June 30, 2025 versus the six months ended June 30, 2024

The table below sets out the results of operations of the Dowlais Group for the six months ended June 30, 2025 and June 30, 2024:

		For the six months ended June 30,								Change %
		2025				2024				2025 vs 2024
		£ million
Revenue			2,181				2,289				-4.7
Cost of sales			(1,866	)			(1,943	)			4.0
Gross profit			315				346				-9.0
Selling, general and administrative expenses			(300	)			(432	)			30.6
Operating profit/(loss)			15				(86	)			117.4
Share of results of equity accounted investments, net of tax			31				29				6.9
Finance costs			(58	)			(68	)			14.7
Finance income			6				2				200.0
Loss before tax			(6	)			(123	)			-95.1
Tax			(5	)			25				-120.0
Loss after tax for the period			(11	)			(98	)			88.80
Loss for the period attributable to:
Owners of the parent			(14	)			(101	)			98.0
Non-controlling interests			3				3				0.0

Revenue

The following table sets out the revenue by segment for the periods indicated:

		For the six months ended June 30,								Change %
		2025				2024				2025 vs 2024
		£ million
Revenue			2,181				2,289				-4.7
GKN Automotive			1,710				1,780				-3.9
Driveline			1,112				1,204				-7.6
ePowertrain			560				538				4.1
Other			38				38				-
GKN Powder Metallurgy			471				509				-7.5
Sinter			355				379				-6.3
Powder			80				95				-15.8
Acceleration Platforms			36				35				2.9

Revenue was £2,181 million for the six months ended June 30, 2025, a decrease of £108 million, or 4.7%, from £2,289 million in the six months ended June 30, 2024. Of this decrease, 2.5% was due to the impact of changes in translational foreign exchange rates compared to the prior year. In addition, the following impacted each of the segments:

·

GKN Automotive: Revenue declined 3.9% year-on-year to £1,710 million, primarily driven by a 7.6% decrease in Driveline revenue. Driveline revenues declined 7.6%, of which 2.9% related to the impact of foreign exchange movements, compared to a 0.7% decline in light vehicle production volumes outside China, largely due to adverse customer mix and timing, as the phasing out of older programs was not fully compensated by new platform ramp-ups, which are expected to be more second-half weighted. Revenue from the ePowertrain product line grew 4.1% year-on-year, net of a 0.9% decline due to the impact of foreign exchange movements. This was largely due to a lower comparison base in H1 2024 and a recovery in volume on an AWD platform previously impacted by production delays.

·

GKN Powder Metallurgy: Revenue declined 7.5% year-on-year to £471 million. The impact of changes in foreign exchange rates made up 3.0% of this decrease, with the remaining 4.4% decline largely driven by lower volumes in in Europe and North America, partially offset by volume growth in China. Revenue in the Sinter product line declined by 6.3%, of which foreign exchange rates accounted for a decrease of 3.3%, and the Powder product line was 15.8% lower compared to prior year mainly as result of customer/platform mix and a 2.3% reduction due to foreign exchange movements. The Acceleration Platforms product line performed strongly during the period with significant growth in metallic products resulting in growth of 2.9%, in particular due to revenue growth in thermal management products for AI infrastructure customers, which was offset by negative changes of 1.8% in foreign exchange rates.

Cost of sales

Cost of sales was £1,866 million for the six months ended June 30, 2025, a decrease of £77 million, or 4.0%, from £1,943 million in the six months ended June 30, 2024. Changes in foreign exchange rates made up 2.5% of the 4.0% decrease, with the remaining 1.5% reflecting the decline in sales volumes during the first six months of 2025.

Selling, general and administrative expenses (SG&A expenses)

SG&A expenses were £300 million for the six months ended June 30, 2025, a decrease of £132 million, or 30.6%, from £432 million in the six months ended June 30, 2024. The decrease in SG&A includes a £22 million decrease in R&D overhead costs following the Group's strategic decision to right size its engineering investment in the ePowertrain product line, and a decrease of £85 million in relation to the following items:

·

Restructuring costs of £36 million were included in SG&A expenses for the six months ended June 30, 2025, a decrease of £13 million from £49 million in the six months ended June 30, 2024. This included £27 million of restructuring costs recorded in the GKN Automotive segment, compared with a charge of £43 million in the six months ended June 30, 2024, primarily relating to footprint consolidation actions as the business continues to address its cost base and deliver transformational programs. Costs incurred in the six months ended June 30, 2025 include direct costs relating to the closure of GKN Automotive plants in Köping, Sweden and Roxboro, North Carolina together with direct costs of expansion of the Group's production capacity in Mexico, and continued transfer of manufacturing from Mosel, Germany to Miskolc, Hungary. Restructuring costs also included a charge of £7 million recorded in the Powder Metallurgy segment relating to the optimization of headcount and reorganization of activities under the new commercial strategy, compared with a charge of £4 million in the six months ended June 30, 2024.

·

Credits related to unrealized gains on derivatives and associated financial assets and liabilities of £49 million were recorded in SG&A expenses in the six months ended June 30, 2025, compared with charges related to losses of £35 million in the six months ended June 30, 2024. These are primarily forward foreign currency exchange contracts where hedge accounting is not applied and are entered into to mitigate the potential volatility of future cash flows, on long-term foreign currency customer and supplier contracts, including foreign exchange movements on the associated financial liabilities.

·

SG&A expenses in the six months ended June 30, 2025 also included (i) a charge of £92 million related to amortization of intangible assets acquired in business combinations, compared to a charge of £96 million in the six months ended June 30, 2024; and (ii) costs of £16 million incurred in relation to the proposed combination with AAM.

Share of result of equity accounted investments, net of tax

The share of results of equity accounted investments, net of tax was £31 million for the six months ended June 30, 2025, an increase of £2 million, or 6.9%, from £29 million in the six months ended June 30, 2024. This increase was primarily due to stronger performance in the largest of the Dowlais Group's equity accounted investments, based in China.

Finance costs

Finance costs were £58 million for the six months ended June 30, 2025, a decrease of £11 million, or 14.7%, from £68 million in the six months ended June 30, 2024. The decrease primarily relates to fair value changes on other financial assets, which decreased from a charge of £9 million in the six months ended June 30, 2024 to a charge of £nil in 2025.

Finance income

Finance income was £6 million for the six months ended June 30, 2025, an increase of £4 million, or 200.0%, from £2 million in the six months ended June 30, 2024, reflecting increased bank interest receivable.

Tax

The Group's tax charge was £5 million for the six months ended June 30, 2025, compared with a tax credit of £25 million in the six months ended June 30, 2024, reflecting a £24 million reduction in deferred tax credit.

Year ended December 31, 2024 versus year ended December 31, 2023

The table below sets out the results of operations of the Dowlais Group for the financial years 2024 and 2023:

		For the year ended December 31,								Change %
		2024				2023				2024 vs 2023
		£ million
Revenue			4,337				4,864				-10.8
Cost of sales			(3,691	)			(4,107	)			10.1
Gross profit			646				757				-14.7
Selling, general and administrative expenses			(813	)			(1,258	)			35.4
Operating loss			(167	)			(501	)			-66.7
Share of results of equity accounted investments, net of tax			61				51				19.6

		For the year ended December 31,								Change %
		2024				2023				2024 vs 2023
		£ million
Finance costs			(131	)			(101	)			-29.7
Finance income			22				29				-24.1
Loss before tax			(215	)			(522	)			58.8
Tax			47				27				74.1
Loss after tax for the year			(168	)			(495	)			66.1
Loss for the year attributable to:
Owners of the parent			(173	)			(501	)			65.5
Non-controlling interests			5				6				-16.7

Revenue

The following table sets out the revenue by segment for the periods indicated:

		For the year ended December 31,								Change %
		2024				2023				2024 vs 2023
		£ million
Revenue			4,337				4,864				-10.8
GKN Automotive			3,391				3,843				-11.8
Driveline			2,268				2,436				-6.9
ePowertrain			1,049				1,329				-21.1
Other			74				78				-5.1
GKN Powder Metallurgy			946				1,016				-6.9
Sinter			744				800				-7.0
Additive			30				26				15.4
Powder			172				190				-9.5
GKN Hydrogen			-				5				n.a

Revenue was £4,337 million in the financial year 2024, a decrease of £527 million, or 10.8%, from £4,864 million in the financial year 2023. Of this decrease, 3.4% was due to the impact of changes in translational foreign exchange rates compared to the prior year, with the British pound sterling strengthening against several currencies (at average exchange rates), particularly the US Dollar and the Euro. In addition, the following impacted each of the segments:

·

GKN Automotive: Revenue declined 11.8% year-on-year to £3,391 million largely due to the impact of lower volumes and product mix in the ePowertrain product line, which continued to be impacted by volatility in BEV production volumes, driven by low double-digit decline in AWD systems, high single-digit decline in ePowertrain components and significant decline in eDrive systems. Driveline revenues declined 3.2% before considering the foreign exchange impact mentioned above, slightly outperforming a declining GLVP outside China of 3.3%, as it continued to demonstrate the resilience of its broad portfolio and scale across customers, platforms and geographies.

·	GKN Powder Metallurgy: Revenue declined 6.9% year-on-year to £946 million. Of this decrease, 3.1% was due to customer/platform mix in the North American Sinter business, and 3.3% was due to the impact of changes in foreign exchange rates.

Cost of sales

Cost of sales was £3,691 million in the financial year 2024, a decrease of £416 million, or 10.1%, from £4,107 million in the financial year 2023. This decrease mostly reflected the decline in sales volumes during the financial year 2024.

Selling, general and administrative expenses (SG&A expenses)

SG&A expenses were £813 million in the financial year 2024, a decrease of £445 million, or 35.4%, from £1,258 million in the financial year 2023. This decrease was primarily due to the £449 million goodwill impairment charge recorded in the financial year 2023 relating to the Powder Metallurgy segment. The remaining £4 million increase in SG&A included a decrease of £69 million reflecting the impact of changes in foreign exchange rates and a reduction in spend in administrative expenses, offset by an increase of £73 million in relation to the following items:

·

Restructuring costs of £145 million were included in SG&A expenses in the financial year 2024, an increase of £25 million from £120 million in the financial year 2023. This included £125 million of restructuring costs recorded in the GKN Automotive segment, compared with a charge of £109 million in the financial year 2023, primarily relating to significant footprint consolidation actions as the business continues to address its cost base and deliver transformational programs. Significant costs incurred in the year ended December 31, 2024 include direct costs relating to the closure of a GKN 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 reflecting the Dowlais Group's strategic decision to right size its engineering investment in the ePowertrain product line, with a primary focus on eDrive systems, to optimize capital allocation. Restructuring costs also included a charge of £17 million recorded in the Powder Metallurgy segment relating to the optimization of headcount and reorganization of activities under the new commercial strategy, compared with a charge of £10 million in the financial year 2023.

·

Charges related to unrealized losses on derivatives and associated financial assets and liabilities of £71 million were recorded in SG&A expenses in the financial year 2024, compared with a credit related to gains of £16 million in the financial year 2023. These are primarily forward foreign currency exchange contracts where hedge accounting is not applied and are entered into to mitigate the potential volatility of future cash flows, on long-term foreign currency customer and supplier contracts, including foreign exchange movements on the associated financial liabilities.

·

SG&A expenses in the financial year 2024 also included (i) a charge of £191 million related to amortization of intangible assets acquired in business combinations, compared to a charge of £197 million in the financial year 2023; (ii) a loss of £8 million relating to the disposal of the Hydrogen business on 29 July 2024 for nominal consideration (2023: £nil); (iii) a credit of £27 million recorded on the release of a warranty provision originally recognized as a fair value item on historical acquisitions. In the financial year 2023, a credit of £17 million was recognized relating to loss making contracts (previously recognized as a fair value item on historical acquisitions); and (iv) a charge of £1 million related to demerger costs (2023: £42 million).

Share of result of equity accounted investments, net of tax

The share of results of equity accounted investments, net of tax was £61 million in the financial year 2024, an increase of £10 million, or 19.6%, from £51 million in the financial year 2023. This increase was primarily due to consistent stronger performance in the largest of the Dowlais Group's equity accounted investments, based in China.

Finance costs

Finance costs were £131 million in the financial year 2024, an increase of £30 million, or 29.7%, from £101 million in the financial year 2023. The main driver of the increase was interest charges on bank loans and overdrafts, which were £26 million higher compared to the preceding year due to a full-year impact of the post demerger capital structure and draw-down on the revolving credit facility in the year.

Finance income

Finance income was £22 million in the financial year 2024, a decrease of £7 million, or 24.1%, from £29 million in the financial year 2023. In the prior year, finance income included the benefit of one-off foreign exchange gains of £22 million on loans with the Melrose Group up to the date of demerger. Offsetting this reduction was an £11 million release of accrued interest relating to a settlement agreement reached with German tax authorities in respect of prior years.

Tax

The tax credit was £47 million in the financial year 2024 compared to a tax credit of £27 million in the financial year 2023. The increased credit reflects the increase in loss before tax after adjusting for disallowable expenses, which included a £45 million credit related to a settlement agreement reached with German tax authorities in respect of the years 2010 to 2021.

Cash flows

Six months ended June 30, 2025 versus the six months ended June 30, 2024

The following table sets out financial information extracted from the cash flow statement for the six months ended June 30, 2025 and June 30, 2024:

		For the six months ended June 30,
		2025				2024
		£ million
Net cash generated from operating activities			11				35
Net cash used in investing activities			(51	)			(29	)
Net cash generated from/(used in) financing activities			5				(16	)
Net decrease in cash and cash equivalents, net of bank overdrafts			(35	)			(10	)

Net cash from operating activities

Net cash from operating activities was £11 million for the six months ended June 30, 2025, compared to £35 million in the six months ended June 30, 2024. The reduction of £24 million primarily reflects adverse working capital movement of £3 million compared with the six months ended June 30, 2024, restructuring cash payments of £63 million being £12 million higher than the six months ended June 30, 2024, in support of ongoing performance improvement and footprint rationalization efforts, cash paid in 2025 relating to the AAM combination of £7 million, and an increase in tax paid of £5 million.

Net cash used in investing activities

Net cash used in investing activities was £51 million for the six months ended June 30, 2025, compared to £29 million in the six months ended June 30, 2024. The increase of £22 million primarily reflects lower dividends received from equity accounted investments of £45 million in 2025 compared with £70 million received in the six months ended June 30, 2024.

Net cash from/(used in) financing activities

Net cash from financing activities was £5 million for the six months ended June 30, 2025, compared to cash used in financing activities of £16 million in the six months ended June 30, 2024, with the difference reflecting increased net drawings on borrowing facilities of £62 million in 2025 compared with £44 million in the six months ended June 30, 2024.

Year ended December 31, 2024 versus year ended December 31, 2023

The following table sets out financial information extracted from the cash flow statements for the financial years 2024 and 2023.

		For the year ended December 31,
		2024				2023
		£ million
Net cash generated from operating activities			120				239
Net cash used in investing activities			(119	)			(194	)
Net cash generated from/(used in) financing activities			17				23
Net increase/(decrease) in cash and cash equivalents, net of bank overdrafts			18				68

Net cash from operating activities

Net cash from operating activities was £120 million in the financial year 2024, compared to £239 million in the financial year 2023. The reduction of £119 million includes adverse working capital movement of £53 million, an increase in restructuring costs of £35 million and increased interest paid of £28 million. This was partially offset by demerger cash costs of £4 million, being £44 million lower than the preceding year (£48 million).

Net cash used in investing activities

Net cash used in investing activities was £119 million in the financial year 2024, compared to cash used in investing activities of £194 million in the financial year 2023. This was mainly due to lower capital expenditure of £191 million in the financial year 2024, a decrease of £104 million compared to £295 million in the financial year 2023, as it was adjusted to align with lower volumes and no material expenditure was incurred on new production facilities, primarily associated with footprint restructuring initiatives. This was partially offset by lower proceeds received from disposal of property, plant and equipment of £4 million, compared with £33 million in the financial year 2023.

Net cash from/(used in) financing activities

Net cash from financing activities was £17 million in the financial year 2024, compared to cash from financing activities of £23 million in the financial year 2023. The Dowlais Group implemented a share buy-back scheme in the financial year 2024, acquiring shares worth £26 million during the year. The Dowlais Group paid an interim and final dividend to equity shareholders in 2024, totaling £58 million. In the financial year 2023 the Dowlais Group paid an interim dividend of £19 million, but no final dividend as Dowlais Group plc did not exist at December 31, 2022. These reductions were offset by net drawings and repayments on borrowing facilities and cash settlements with related parties increasing to £129 million in the financial year 2024, compared with £93 million in the financial year 2023.

Liquidity and capital resources

Available cash and cash equivalents and debt facilities are reviewed regularly to ensure sufficient funds are available to support the Dowlais Group's activities.

The Dowlais Group's primary sources of liquidity are cash generated from operating activities and funds available under its multi-currency term loan, revolving credit facility and US private placement notes. At June 30, 2025, the Dowlais Group's cash and cash equivalents balance, net of overdrafts was £267 million (December 31, 2024: £323 million and December 31, 2023: £313 million), and a further £462 million (December 31, 2024: £534 million and December 31, 2023: £590 million) was available under the revolving credit facility, translating to a total liquidity position of £729 million (December 31, 2024: £857 million and December 31, 2023: £903 million).

As of June 30, 2025, the Dowlais Group's net indebtedness was £1,034 million, comprising:

(i)	cash and cash equivalents of £325 million;

(ii)	net of bank overdrafts of £58 million, current interest-bearing loans and borrowings of £185 million and non-current interest-bearing loans and borrowings of £1,116 million.

As of December 31, 2024, the Dowlais Group's net indebtedness was £968 million, comprising:

(i)	cash and cash equivalents of £336 million;

(ii)	net of bank overdrafts of £13 million and non-current interest-bearing loans and borrowings of £1,291 million.

In addition to the above, the Dowlais Group continues to be funded by its committed bank facility that includes a multi-currency denominated term loan of £100 million and €100 million as well as a multi-currency denominated revolving credit facility of £350 million, US$660 million and €450 million. The revolving credit and term loan facilities have an initial maturity date of April 20, 2026, however the Dowlais Group has the option to extend the maturity of the revolving credit facility by up to two years, at its sole discretion.

As of June 30, 2025, the Dowlais Group had 35% of its drawn debt at fixed interest rate. This is made up of the US private placement notes and interest rate swaps. The maturity dates of the interest rate swaps are aligned with those of the underlying debt facilities. The Dowlais Group's effective interest rate was 6.3%, in line with prior years.

As of December 31, 2024, the Dowlais Group had 46% of its drawn debt at fixed interest rates. The average interest rate payable on the Dowlais Credit Facilities and Dowlais Notes, net of the impact of interest rate hedging, was 6.3% for the year ended December 31, 2024.

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

Working capital

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

Businesses that participate in these customer-related finance programs have the ability to choose whether to receive payment earlier than the normal due date, for specific customers on a non- recourse basis.

Some suppliers may utilize the Dowlais Group's supplier finance programs, which are provided by a limited number of the Dowlais Group's relationship banks. There is no cost to the Dowlais Group for providing these programs to its suppliers. These arrangements do not change the date suppliers are due to be paid by Dowlais, and therefore there is no additional impact on the Dowlais Group's liquidity.

Capital commitments

At June 30, 2025, the Dowlais Group had committed expenditure of £23 million relating to the acquisition of new plant and machinery.

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

Off-balance sheet arrangements

As of June 30, 2025 and December 31, 2024, the Dowlais Group had no off-balance sheet arrangements other than its working capital facilities and capital commitments discussed above.

Critical accounting policies

The preparation of financial statements requires management to exercise judgment in applying the Dowlais Group's accounting policies. It also requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any affected future periods. There were no critical judgments made by management, however key sources of estimation uncertainty were identified in respect of key assumptions underpinning value in use calculations in goodwill impairment tests and assumptions applied in calculating the accounting values for retirement benefit obligations.

Further discussion of the critical accounting policies that are relevant to included in Note 2 to the financial information of the Dowlais Group in the section of this offering memorandum entitled "Index to Dowlais Consolidated Financial Statements."

Quantitative and qualitative disclosure about market risk

The Dowlais Group is exposed to market risks in the ordinary course of business. These risks primarily include interest rate risk, liquidity, credit risk, market risk and foreign currency risk. See Note 24 to the financial information of the Dowlais Group in the section of this offering memorandum entitled "Index to Dowlais Consolidated Financial Statements."

Recent accounting pronouncements

A list of recently issued accounting pronouncements that are relevant to the Dowlais Group is included in Note 1 to the consolidated financial statements.