K E N D R I O N N . V .

I N T E R I M R E P O R T 2 0 1 9

1 3 Au g u s t 2 0 1 9

Difficult market conditions affect Kendrion. Investment in key growth

opportunities continues.
- Revenue decreases in Q2 2019 by 8% to EUR 109.0 million (Q2 2018: EUR 119.0 million)
- Normalised EBITDA in Q2 2019 decreases 27% to EUR 12.7 million (Q2 2018: EUR 17.4 million)
- HY1 2019 revenue decrease of 9% to EUR 217.3 million (HY1 2018: EUR 239.6 million)
- Normalised EBITDA in HY1 2019 of EUR 25.4 million from EUR 35.1 million in HY1 2018
- Normalised EBITDA margin in HY1 2019 of 11.7% from 14.6% in HY1 2018
- Normalised net profit of EUR 8.3 million in HY1 2019 (HY1 2018: EUR 15.8 million)
- New share buyback programme of max. EUR 10 million reflecting confidence in Kendrion's
strategy and future

Key figures

Reported (in EUR million) Q2 2019 Q2 2018 delta HY1 2019 HY1 2018 delta
Revenue 109.0 119.0 -8% 217.3 239.6 -9%
EBITDA 11.1 12.6 -12% 23.8 29.2 -18%
EBITA 5.1 6.8 -25% 11.8 17.6 -33%
Net profit 4.5 4.3 5% 8.8 11.6 -24%
EBITDA as a % of revenue 10.2% 10.6% 11.0% 12.2%
EBITA as a % of revenue 4.6% 5.7% 5.4% 7.3%
Return on invested capital (12 months rolling) 7.2% 11.1%

Normalised (in EUR million) Q2 2019 Q2 2018 delta HY1 2019 HY1 2018 delta
Revenue 109.0 119.0 -8% 217.3 239.6 -9%
EBITDA 12.7 17.4 -27% 25.4 35.1 -28%
EBITA 6.7 11.6 -42% 13.4 23.5 -43%
Net profit 4.0 7.7 -48% 8.3 15.8 -47%
EBITDA as a % of revenue 11.7% 14.6% 11.7% 14.6%
EBITA as a % of revenue 6.1% 9.7% 6.2% 9.8%
Return on invested capital (12 months rolling) 8.7% 14.4%
Normalised items (after tax) (0.5) 3.4 (0.5) 4.2

Normalised in Q2 2019: EUR 1.6m (EUR 1.2m after tax) claim settlement, EUR 2.0m positive release currency translation reserve and EUR 0.3m
income tax expense related to tax audit. Normalised in Q2 2018: EUR 4.8m (EUR 3.4m after tax) restructuring costs
Normalised in HY1 2019: EUR 1.6m (EUR 1.2m after tax) claim settlement, EUR 2.0m positive release currency translation reserve and EUR 0.3m
income tax expense related to tax audit. Normalised in HY1 2018: EUR 5.9m (after tax EUR 4.2 million) restructuring costs

- The quarterly and interim results are not audited -

Page 1 of 18
Joep van Beurden, Kendrion CEO:
"We have had a difficult first half of 2019, as the global automotive market continues to be challenging.
Global car production declined by 6.7% compared with the first half of 2018, with weakness in all major
markets, and especially China. Industrial markets weakened as well and purchasing managers' indexes
around Europe are now pointing towards a contraction in industrial activity. This has had a significant
impact on our revenue, which declined by 9% compared with HY1 2018. Automotive revenue decreased
by 12% and Industrial by 4%.

The difficult trading environment inevitably puts our short-term results under pressure. We have
simplified and streamlined the organisation, decreased our costs significantly and increased our focus.
This enables us to cope with the current headwinds that we expect to continue in the second half of
2019.

We firmly believe in our longer-term prospects and continue to invest in our three focus areas:
Automotive and specifically in products relevant to the development of Autonomous, Connected, Electric,
Shared vehicles, the so called "ACES", permanent magnet brakes for robotics and in China. We see
opportunities for healthy growth in all areas.

In Automotive, we are working on six "Lighthouse Projects", developing products such as a Sensor
Cleaning Valve and Control System, AVAS Sound Systems and a Battery Cooling Valve and Control
System. In robotics, the next phase of our China production line is on schedule, while in that same China
facility, revenue grew by more than 20% compared with the first half of 2018, despite slowing economic
growth.

We take a long-term view of the opportunities for both our Automotive and Industrial activities; these
opportunities remain intact and we reiterate our long-term financial targets of ROIC of at least 20% and
an EBITDA margin of more than 15% by 2023.

Despite the difficult market conditions and short-term economic uncertainty, we face the future with
confidence. Today we announce our intention to buy back shares with an aggregate market value
equivalent of up to EUR 10 million in order to reduce our issued share capital."

Progress on strategy
Having successfully simplified its organisation over the past three years, Kendrion has significantly
improved its position in dealing with market cyclicality and volatility. The Company has built a robust
organisation and benefits from a continued strong financial position.
As we are experiencing continued market-related headwinds, Kendrion will maintain its focus on further
improving operational effectiveness and containing cost levels. At the same time, we will continue to invest
in our three focus areas: Automotive, Brakes for robotics and China.

In Automotive, we are preparing to make maximum use of the opportunities created by the significant
disruption that is upon us. As vehicles become ever more Autonomous, Connected, Electric, and Shared,
the so-called "ACES", we are working on six Lighthouse Projects relevant to the ACES. These are
currently focused on Autonomous, which includes developments in Sensor Cleaning Valve and Control
System, Active Damping Actuators and positioning sensors for truck automation, and Electric - where we
are working on a Battery Cooling Valve and Control System, AVAS Sound Systems, and a Clutch for a
Mild Hybrid Drivetrain.

The investments for additional capacity in China for permanent magnet brakes for robotics are on track.
In China, our pipeline shows significant growth for the coming years and we continue to invest in
production equipment, in additional staff, and in training to accelerate local engineering know-how and
capabilities.
- The quarterly and interim results are not audited -
Page 2 of 18
Financial review
Revenue
Q2 2019
Revenue in the second quarter of 2019 came in at EUR 109.0 million, a decrease of 8% (9% at constant
exchange rates) compared with the second quarter of 2018 (EUR 119.0 million). Revenue decreased by
3% (3% at constant exchange rates) in Industrial activities and by 11% (12% at constant exchange rates)
in Automotive.

HY1 2019
Overall revenue for the first half of 2019 decreased by 9% (10% at constant exchange rates) to EUR 217.3
million (HY1 2018: EUR 239.6 million). Revenue for our Industrial activities in the first half of 2019 came
in at EUR 82.1 million, a decrease of 4% (4% at constant exchange rates) compared with the same period
last year (HY1 2018: EUR 85.6 million). In Automotive, revenue for the first half of 2019 amounted to
EUR 135.2 million, a decrease of 12% (13% at constant exchange rates) compared with the same period
last year (HY1 2018: EUR 154.0 million).

Results
Q2 2019
The normalised operating result before depreciation and amortisation (EBITDA) decreased by 27% to
EUR 12.7 million (normalised Q2 2018: EUR 17.4 million). The lower profitability was the result of lower
sales volumes in both Industrial and Automotive. Lower cost levels in Automotive as a result of last year's
simplification measures only partly offset the lower volumes. In Industrial, the quarterly results were
negatively impacted by lower production activities aimed at reducing levels of finished inventory. The
EBITDA margin decreased from 14.6% in Q2 2018 to 11.7% in Q2 2019.

HY1 2019
Normalised EBITDA in HY1 2019 decreased by 28% to EUR 25.4 million (HY1 2018: EUR 35.1 million).
The normalised EBITDA margin was 11.7% (HY1 2018: 14.6%).

Normalised EBITDA for the Industrial activities decreased to EUR 10.8 million from EUR 14.3 million in
the same period last year.

The Automotive activities posted normalised EBITDA of EUR 14.6 million compared with EUR 20.8 million
in HY1 2018.

The added value margin remained stable at 47.2%. Despite wage inflation, total staff costs in HY1 2019
decreased by 4% to EUR 63.0 million (HY1 2018: EUR 65.6 million) due to cost saving measures initiated
in 2018 and adjustments of capacity to the lower volumes. Operating expenses were EUR 1.7 million
higher than last year at EUR 14.2 million and depreciation charges increased by EUR 0.4 million to
EUR 12.0 million following last year's investment programme.

Normalised net finance costs of EUR 1.2 million in the first six months of 2019 were lower than in the same
period last year (HY1 2018: EUR 1.5 million) due to more favourable conditions in the new credit facility.

Normalised income tax expenses for HY1 2019 was EUR 2.8 million (HY1 2018: EUR 5.0 million). The
normalised effective tax rate in the first six months of 2019 was 25.6% (HY1 2018: 23.9%).

Normalised net profit in HY1 2019 was EUR 8.3 million (HY1 2018: EUR 15.8 million). Normalised earnings
per share amounted to EUR 0.62 (HY1 2018: EUR 1.18). Basic reported earnings per share amounted to
EUR 0.66 (HY1 2018: EUR 0.87).

- The quarterly and interim results are not audited -

Page 3 of 18
Financial position
The net debt position was EUR 96.2 million at the end of the second quarter, which is a EUR 8.6 million
increase compared with the end of Q1. The net debt increase was partly due to the cash dividend payment
of EUR 8.1 million and the share buyback programme that resulted in a cash outflow of EUR 2.0 million in
Q2. The net debt position at the end of the second quarter included IFRS 16 liabilities in an amount of
EUR 14.8 million.

Normalised free cash flow came in at EUR 2.7 million negative in the first half year (HY1 2018: EUR 4.3
million). Free cash flow in Q2 was positive at EUR 3.3 million. Kendrion's efforts to reduce inventory levels,
which had increased since the second half of 2018, started to bear fruit with a EUR 3.5 million reduction
in the second quarter. Cash flow and reducing working capital will remain a focus point for the remainder
of the year.

Capital expenditure totalled EUR 10.2 million in the first half of 2019, below the depreciation level of
EUR 12.0 million. Investments for the full year 2019 are anticipated to be in line with the depreciation level
as a result of strict capex control with respect to non-project related investments.

Kendrion's financial position is strong; the solvency ratio stood at 46.9% at the end of June 2019.

Number of employees
The number of employees (FTEs) at the end of the second quarter was 2,473, including 121 temporary
employees (Q1 2019: 2,450 employees, including 94 temporary employees).

Operational performance
Industrial activities
The Industrial activities consist of Industrial Magnetic Systems, Industrial Control Systems and Industrial
Drive Systems.
Industrial activities, which accounted for 38% of Kendrion's revenue, experienced a decrease in revenue
in the second quarter. The sector came seemed to be under increased pressure as the German machine
building market weakened. Revenue for the first half of 2019 came in at EUR 82.1 million, a decrease of
4% compared with the same period last year (HY1 2018: EUR 85.6 million).

ICS experienced a setback in the second quarter, which was largely caused by a postponed start of two
new projects in their flow control activities. ICS saw its profitability decline due to the lower revenue, while
its profitability remained at a good level in absolute terms. Although revenue decreases in IMS and IDS
were more modest, both these business units also experienced a decrease in profitability. IDS profitability
was affected by significant growth investments both in Germany and China. Both IMS and IDS substantially
reduced production to decrease inventory levels.

Industrial's normalised EBITDA margin for HY1 2019 was 13.1%, compared with 16.7% in HY1 2018.

ICS has almost finalised the insourcing of valves for a whole range of fluid control products from a third-
party vendor in Italy, which will reduce third-party dependency and is anticipated to generate significant
annual savings starting in 2020.

Automotive activities
Up to and including 2018, the Automotive activities consisted of two business units: Passenger Cars and
Commercial Vehicles. As of 1 January 2019, both business units and the central corporate function have
been combined into a centralised functional Automotive organisation.

- The quarterly and interim results are not audited -

Page 4 of 18
Automotive activities, which accounted for 62% of Kendrion's revenue, were significantly impacted by the
continued weak trading environment because of declining car sales around the world. This affected almost
all players in the global automotive supply chain, including our leading major automotive customers.
Revenue for the first half of 2019 came in at EUR 135.2 million, a decrease of 12% compared with the
same period last year (HY1 2018: 154.0 million).

The normalised EBITDA margin was 10.8%, down from 13.5% in HY1 2018.

Automotive staff costs decreased by 8% due to restructuring measures initiated last year and adjustments
of capacity to the lower volumes. Total costs including other operating expenses and depreciation charges
decreased by 4% compared with last year.

The transition to the new Automotive organisation is well on track. The manufacturing plants managed by
the COO have initiated various efficiency improvement programmes. The Automotive commercial
organisation is generating traction as we received an increasing number of RFQs in our strategic focus
areas. New project wins include a park lock application in China, a new active damping project in Europe
and hydraulic solenoids for agricultural machines in the U.S.

Alternative Performance Measures (APM) adjustments to EBIT(D)A and net profit

In Automotive, an amount of EUR 1.6 million (EUR 1.2 million after tax) related to an out-of-court settlement
of an alleged breach of contract claim from a supplier has been normalised in the results and is adjusted
in EBITDA. The tax provision related to the German tax audits was increased by EUR 0.3 million following
the closing meeting with the tax authorities in Northern Germany, which is adjusted in net profit. A positive
currency result of EUR 2.0 million related to the release of the cumulative currency translation reserve,
following the liquidation of legal entities in China and Switzerland, was normalised in the result and
adjusted in net profit. For a full reconciliation see page 12.

Outlook
The outlook for the automotive industry continues to be weak. The industrial markets showed modest
softening in the first few months of the year and came under more pressure as the year advanced. Leading
manufacturing indicators now indicate a contraction in activity.

We have streamlined the organisation, brought cost levels down and have a strong financial position. This
enables us to cope with the current headwinds that we expect to continue in the second half of 2019.

For the medium and long term, we remain positive about our business fundamentals, with our main
objective being to deliver sustainable profitable growth. We reiterate our medium-term targets of ROIC of
at least 20% and an EBITDA margin of more than 15% by 2023.

Post-balance sheet events

Kendrion has decided to launch a new share buyback programme, repurchasing up to an amount of
EUR 10 million or 625,000 ordinary shares reflecting confidence in its strategy and future. The
programme will start on 13 August 2019 and end on 31 December 2019 at the latest. The shares will be
cancelled upon purchase.

The share buyback programme initiated on 13 May 2019 to neutralise the effect of the stock dividend was
completed on 17 July 2019. The new buyback programme is in addition to the Company's stated policy to
pay an annual dividend to shareholders in the range of 35% to 50% of the annual profit.

- The quarterly and interim results are not audited -

Page 5 of 18
Audio webcast interim results 2019
Kendrion CEO Joep van Beurden and CFO Jeroen Hemmen will present the interim results on Tuesday,
13 August 2019 at 1:00 p.m. A live audio webcast will be available on www.kendrion.com with playback
functionalities.

Profile of Kendrion N.V.

Kendrion develops, manufactures and markets high-quality electromagnetic systems and components for
industrial and automotive applications. For over a century, we have been engineering precision parts for
the world's leading innovators in passenger cars, commercial vehicles and industrial applications. As a
leading technology pioneer, Kendrion invents, designs and manufactures complex components and
customised systems as well as local solutions on demand.

We are committed to the engineering challenges of tomorrow, and taking responsibility for how we source,
manufacture and conduct business is embedded into our culture of innovation. Rooted in Germany,
headquartered in the Netherlands and listed on the Amsterdam stock exchange, Kendrion's expertise
extends across Europe to the Americas and Asia. Created with passion and engineered with precision.
Kendrion – we magnetise the world.

Declaration of the Board

The Executive Board declares that, with due regard for what has been described in this report, to its
knowledge, (i) the semi-annual financial statements give a true and fair view of the assets, liabilities,
financial position and profits of Kendrion N.V. and the companies jointly included in the consolidation, and
(ii) the semi-annual report gives a true and fair overview of the information required pursuant to Article 5
25d sub 8 and 9 of the Netherlands Financial Supervision Act.

Amsterdam, 13 August 2019

The Executive Board

For more information, please contact:

Kendrion N.V.
Mr Joep van Beurden
Chief Executive Officer
Tel: +31 85 073 1504
Email: IR@kendrion.com
Website: www.kendrion.com

Annexes

1. Financial calendar 2019 – 2020

2. Semi-annual financial statements 2019
1. Consolidated statement of comprehensive income
2. Consolidated statement of financial position
3. Consolidated statement of cash flows
4. Consolidated statement of changes in equity
5. Reconciliation of normalised to reported 2019 figures
6. Risks and risk management
7. Notes to the interim financial statements
- The quarterly and interim results are not audited -
Page 6 of 18
Annex 1 – Financial calendar 2019 - 2020

2019

Publication of Q3 2019 results Tuesday, 5 November 2019 07.30 a.m.

Analysts' call Tuesday, 5 November 2019 11.00 a.m.

2020

Publication of FY 2019 results Tuesday, 18 February 2020 07.30 a.m.

Analysts' meeting Tuesday, 18 February 2020 11.00 a.m.
General Meeting of Shareholders Monday, 6 April 2020 02.30 p.m.
Publication of Q1 2020 results Tuesday, 5 May 2020 07.30 a.m.
Analysts' call Tuesday, 5 May 2020 11.00 a.m.
Publication of HY1 2020 results Tuesday, 18 August 2020 07.30 a.m.
Analysts' meeting Tuesday, 18 August 2020 11.00 a.m.
Publication of Q3 2020 results Tuesday, 3 November 2020 07.30 a.m.
Analysts' call Tuesday, 3 November 2020 11.00 a.m.

- The quarterly and interim results are not audited -

Page 7 of 18
 AN N E X 2

K E N D R I O N N . V .

S E M I - AN N U AL
F I N AN C I AL S T AT E M E N T S 2 0 1 9
( U N AU D I T E D )

Annex 2.1 – Consolidated statement of comprehensive income *

(EUR million) Q2 Q2 half year half year full year

2019 2018 2019 2018 2018

Revenue 109.0 119.0 217.3 239.6 448.6

Other income - 0.0 - 0.0 0.1
Total revenue and other income 109.0 119.0 217.3 239.6 448.7

Changes in inventories of finished goods and work in progress 1.7 (0.8) 0.1 (0.2) (0.2)
Raw materials and subcontracted work 56.4 63.6 114.6 126.6 237.0
Staff costs 31.1 37.4 63.0 71.5 134.3
Depreciation and amortisation 6.6 6.4 13.1 12.8 25.4
Other operating expenses 8.7 6.2 15.8 12.5 27.9
Result before net finance costs 4.5 6.2 10.7 16.4 24.3

Finance income 2.1 0.0 2.1 0.0 0.2

Finance expense (0.9) (0.8) (1.3) (1.5) (3.3)
Share profit or loss of an associate - - - - (0.1)
Profit before income tax 5.7 5.4 11.5 14.9 21.1

Income tax expense (1.2) (1.1) (2.7) (3.3) (7.3)

Profit for the period 4.5 4.3 8.8 11.6 13.8

Other comprehensive income

Remeasurements of defined benefit plans 1 - - (0.4)
Foreign currency translation differences for foreign operations 2 (1.6) 1.3 2.1
Net change in fair value of cash flow hedges, net of income tax 2 0.1 (0.7) (0.7)
Other comprehensive income for the period, net of income tax (1.5) 0.6 1.0

Total comprehensive income for the period 7.3 12.2 14.8

Basic earnings per share (EUR), based on weighted average 0.33 0.32 0.66 0.87 1.03
Basic earnings per share (EUR), based on weighted average (diluted) 0.33 0.32 0.66 0.87 1.03

1
This item will never be reclassified to profit or loss.
2
These items may be reclassified to profit or loss.

*
Not adjusted for non-recurring items

- The quarterly and interim results are not audited -

Page 8 of 18
Annex 2.2 – Consolidated statement of financial position

(EUR million) 30 June 30 June 31 Dec.

2019 2018 2018
Assets

Non-current assets
Property, plant and equipment 113.1 107.8 113.6
Intangible assets 116.0 117.2 116.1
Other investments 3.0 0.1 3.1
Deferred tax assets 13.3 11.9 13.2
Contract costs 0.3 0.4 0.4
Total non-current assets 245.7 237.4 246.4

Current assets
Inventories 63.9 60.5 63.5
Current tax assets 1.3 1.1 1.0
Trade and other receivables 63.0 68.5 54.2
Cash and cash equivalents 8.6 13.9 10.2
Total current assets 136.8 144.0 128.9

Total assets 382.5 381.4 375.3

Equity and liabilities

Equity
Share capital 27.2 27.1 27.1
Share premium 28.1 39.8 39.8
Reserves 115.3 101.2 101.4
Retained earnings 8.8 11.6 13.8
Total equity 179.4 179.7 182.1

Liabilities
Loans and borrowings 88.6 77.3 78.5
Employee benefits 18.5 18.9 19.2
Deferred tax liabilities 10.1 8.6 10.2
Total non-current liabilities 117.2 104.8 107.9

Bank overdraft 10.6 12.7 9.3

Loans and borrowings 5.6 2.6 2.9
Provisions 5.2 4.9 4.1
Current tax liabilities 1.1 2.5 1.6
Contract costs 6.1 8.2 8.2
Trade and other payables 57.3 66.0 59.2
Total current liabilities 85.9 96.9 85.3

Total liabilities 203.1 201.7 193.2

Total equity and liabilities 382.5 381.4 375.3

- The quarterly and interim results are not audited -

Page 9 of 18
Annex 2.3 – Consolidated statement of cash flows

- The quarterly and interim results are not audited -

Page 10 of 18
(EUR million) half year half year full year
2019 2018 2018

Cash flows from operating activities

Profit for the period 8.8 11.6 13.8
Adjustments for:
Net finance costs (0.8) 1.5 3.1
Share profit or loss of an associate - - 0.1
Income tax expense 2.7 3.3 7.3
Depreciation of property, plant and equipment and software 12.0 11.6 23.1
Amortisation of other intangible assets 1.1 1.2 2.3
Impairment of fixed assets - 0.0 0.7
Share-based payments (0.0) 0.2 0.2
23.8 29.4 50.6

Change in trade and other receivables (8.5) (10.6) 3.6

Change in inventories (0.4) (3.0) (6.0)
Change in trade and other payables (2.0) 1.0 (5.6)
Change in provisions 0.2 4.0 0.8
Change in contract liabilities (2.1) (0.3) (0.3)
11.0 20.5 43.1

Interest paid (1.0) (1.2) (2.4)

Interest received 0.0 0.0 0.2
Tax paid (3.5) (1.7) (4.2)
Net cash flows from operating activities 6.5 17.6 36.7

Cash flows from investing activities

Acquisition of equity-accounted investee - - (2.6)
Investments in property, plant and equipment (7.8) (11.9) (28.1)
Disinvestments of property, plant and equipment 0.1 0.2 0.7
Investments in intangible fixed assets (2.5) (1.6) (3.3)
Disinvestments of intangible fixed assets 0.0 0.0 0.0
(Dis)investments of other investments 0.0 0.0 (0.7)
Net cash from investing activities (10.2) (13.3) (34.0)

Free cash flow (3.7) 4.3 2.7

Cash flows from financing activities

Payment of lease liabilities (1.2) (1.1) (2.1)
Proceeds from borrowings (non current) 9.3 14.5 17.0
Proceeds from borrowings (current) 2.7 0.0 0.0
Proceeds from the issue of share capital 0.0 0.0 0.0
Own shares bought (2.0) (6.6) (6.6)
Dividends paid (8.1) (5.8) (5.8)
Net cash from financing activities 0.7 1.0 2.5

Change in cash and cash equivalents (3.0) 5.3 5.2

Cash and cash equivalents at 1 January 0.9 (4.1) (4.1)

Effect of exchange rate fluctuations on cash held 0.1 0.0 (0.2)
Cash and cash equivalents at end of period (2.0) 1.2 0.9

- The quarterly and interim results are not audited -

Page 11 of 18
Annex 2.4 – Consolidated statement of changes in equity

Share Share Translation Hedge Reserve for Other Retained Total

(EUR million) capital premium reserve reserve ow n shares reserves earnings equity
Balance at 1 January 2018 27.0 49.6 4.0 0.3 (4.5) 83.7 19.5 179.6

Total comprehensive income for the period

Profit or loss - - - - - - 13.8 13.8

Other comprehensive income

Remeasurements of defined benefit plans - - - - - (0.4) - (0.4)
Foreign currency translation differences for foreign operations - - 2.1 - - - - 2.1
Net change in fair value of cash flow hedges, net of income tax - - - (0.7) - - - (0.7)
Other comprehensive income for the period, net of income tax - - 2.1 (0.7) - (0.4) - 1.0

Total comprehensive income for the period - - 2.1 (0.7) - (0.4) 13.8 14.8

Transactions with owners, recorded directly in equity

Contributions by and distributions to owners
Issue of ordinary shares 0.1 1.6 - - - - - 1.7
Own shares sold - - - - 4.5 (0.5) - 4.0
Own shares repurchased - - - - (6.6) - - (6.6)
Share-based payment transactions 0.0 0.2 - - - 0.0 - 0.2
Dividends to equity holders - (11.6) - - - - - (11.6)
Appropriation of retained earnings - - - - - 19.5 (19.5) -

Balance at 31 December 2018 27.1 39.8 6.1 (0.4) (6.6) 102.3 13.8 182.1

Share Share Translation Hedge Reserve for Other Retained Total

(EUR million) capital premium reserve reserve ow n shares reserves earnings equity
Balance at 1 January 2019 27.1 39.8 6.1 (0.4) (6.6) 102.3 13.8 182.1

Total comprehensive income for the period

Profit or loss - - - - - - 8.8 8.8

Other comprehensive income

Foreign currency translation differences for foreign operations - - (1.6) - - - - (1.6)
Net change in fair value of cash flow hedges, net of income tax - - - 0.1 - - - 0.1
Other comprehensive income for the period, net of income tax - - (1.6) 0.1 - - - (1.5)

Total comprehensive income for the period - - (1.6) 0.1 - - 8.8 7.3

Transactions with owners, recorded directly in equity

Contributions by and distributions to owners
Own shares sold - - - - 5.9 (2.3) - 3.6
Own shares repurchased - - - - (2.0) - - (2.0)
Share-based payment transactions 0.1 0.0 - - - (0.0) - 0.1
Dividends to equity holders - (11.7) - - - - - (11.7)
Appropriation of retained earnings - - - - - 13.8 (13.8) -

Balance at 30 June 2019 27.2 28.1 4.5 (0.3) (2.7) 113.8 8.8 179.4

- The quarterly and interim results are not audited -

Page 12 of 18
Annex 2.5 – Reconciliation of normalised to reported 2019 figures

(x EUR 1 million) HY1 2019 HY1 2018

Reported result before net finance costs 10.7 16.4

Reported amortisation 1.1 1.2
Reported operating result before amortisation (EBITA) 11.8 17.6

One-off costs related to simplifying measures in staff costs - 5.9

One-off costs related to simplifying measures in other operating expenses - 0.0
One-off costs related to claim settlement in other operating expenses 1.6 -
Normalised EBITA 13.4 23.5

Reported amortisation (1.1) (1.2)

Reported net finance costs 0.8 (1.5)
One-off gains related to release of currency translation reserve (2.0) -
Normalised profit before income tax 11.1 20.8

Reported income tax expense (2.7) (3.3)

One-off costs related to tax audits in income tax expense 0.3 -
Impact one-off costs on income tax expense (0.4) (1.7)
Normalised profit for the period 8.3 15.8

- The quarterly and interim results are not audited -

Page 13 of 18
Annex 2.6 – Risks and risk management

Pages 51 to 59 of Kendrion N.V.'s 2018 Annual Report include a review of the risks faced by the company
in conducting its business operations.

Kendrion's approach to the company's risk management is categorised into the following groups:
- Strategic & Business Risk Management;
- Operational Risk Management;
- Financial Reporting Risk Management;
- Compliance & Fraud Risk Management;
- IT & Systems Risk Management

In the 2018 Annual Report, the following risks were identified as the most important risks:
- Pressure from large customers and customer dependency;
- Increased competition;
- Future product portfolio, including impact of megatrends;
- Technological substitution;
- Attraction and retention of qualified staff;
- Non-performing Information Systems and cyber security.

In the course of HY2 2019 Kendrion will update its strategic and business risk assessment.

- The quarterly and interim results are not audited -

Page 14 of 18
Annex 2.7 – Notes to the interim financial statements

1. Reporting entity
Kendrion N.V. (the "Company") has its registered office in Zeist, the Netherlands. The Company's interim
financial statements for the first six months of 2019 covers the Company and its subsidiaries (collectively
referred to as the "Group") and the Group's interests in associates.

The Group's 2018 Annual Report is available on request from the Company's registered office or on
www.kendrion.com.

2. Declaration of Conformity
These interim financial statements are prepared in accordance with International Financial Reporting
Standards (IFRS) IAS 34, Interim Financial Reporting. The interim report does not contain all the
information required for annual financial statements and should be read in conjunction with the Group's
2018 consolidated financial statements.

These interim financial statements are authorised for issue by the Executive Board and the Supervisory
Board on 12 August 2019.

3. Accounting policies
The accounting policies applied in these interim financial statements are the same as those applied in the
Group's consolidated financial statements as at and for the year ended 31 December 2018.

4. Estimates
The preparation of the interim reports requires the Executive Board to make judgements, estimates and
assumptions that affect the application of accounting principles, the reported value of assets and liabilities,
and the size of the Group's income and expenditure. Note that the actual results may differ from these
estimates.

Unless otherwise specified below, in the preparation of these interim financial statements, important
opinions formed by management in applying the Group's accounting principles, and the main sources of
estimation used are equal to the opinions and sources used in preparing the consolidated financial
statements for the financial year 2018.

5. Financial risk management

The Group's objectives and policy relating to financial risk management are identical to the objectives and
policy disclosed in the 2018 consolidated financial statements of the Group.

6. Segment reporting
Based on the structure of the Group and the criteria of IFRS 8-Operating segments Kendrion has
concluded that the business units are the operating segments within the Group. Based on the aggregation
criteria of IFRS 8, these operating segments have been aggregated into two reportable segments: the
Industrial activities and the Automotive activities.

- The quarterly and interim results are not audited -

Page 15 of 18
 Industrial Automotive Consolidated
(x EUR 1 million unless otherw ise stated) HY1 2019 HY1 2018 HY1 2019 HY1 2018 HY1 2019 HY1 2018

Revenue from transactions with third parties 82,1 85,6 135,2 154,0 217,3 239,6
Inter-segment revenue 0,0 0,0 0,1 0,2 0,1 0,2
EBITDA 10,8 14,1 13,1 15,1 23,9 29,2
EBITDA as a % of revenue 13,1% 16,5% 9,7% 9,8% 11,0% 12,2%
EBITA 7,5 11,2 4,3 6,4 11,8 17,6
EBITA as a % of revenue 9,1% 13,1% 3,2% 4,2% 5,4% 7,3%

EBITDA1 10,8 14,3 14,6 20,8 25,4 35,1

EBITDA as a % of revenue1 13,1% 16,7% 10,8% 13,5% 11,7% 14,6%
EBITA1 7,5 11,4 5,9 12,1 13,4 23,5
EBITA as a % of revenue1 9,1% 13,3% 4,4% 7,9% 6,2% 9,8%

Reportable segment assets 140,1 134,7 242,4 246,7 382,5 381,4

Reportable segment employees (FTE) 945 931 1.528 1.665 2.473 2.596
1
Normalised for non-recurring costs of EUR 1.6 million for HY1 2019 and of EUR 5.9 million for HY1 2018.

7. Seasonality of business operations

Kendrion is not significantly affected by seasonal trends. In general, however, there are fewer working
days in the second half of the year due to the summer holiday periods in the third quarter and the bank
holidays in December.

8. Main currencies
The table below shows the main exchange rates during the first half of 2019:

At 30 June At 31 December Average over

Value of EUR 2019 2018 HY1 2019
Pound sterling 0,8966 0,8945 0,8759
Czech koruna 25,4472 25,7241 25,6865
Chinese yuan 7,8185 7,8751 7,6873
US dollar 1,1380 1,1450 1,1333
Romanian lei 4,7343 4,6635 4,7329
Swedish krona 10,5633 10,2548 10,4765

9. Property, plant and equipment

Capital commitments
As at 30 June 2019, the Group had agreements outstanding for the acquisition of property, plant and
equipment in the amount of EUR 3.4 million (versus EUR 8.8 million as at 30 June 2018).

10. Impairment
During the first half of 2019, as well as in previous periods, Kendrion assessed whether there were
indications during this period for impairments adjusting goodwill or other key assets, and the conclusion
was that there was no need for impairment.

11. Deferred tax assets

As at 30 June 2019, deferred tax assets amounted to EUR 13.3 million, of which a total of EUR 4.7 million
relates to the valuation of tax losses carried forward and can be specified as follows:
Germany EUR 3.0 million
United States of America EUR 1.2 million
The Netherlands EUR 0.5 million

- The quarterly and interim results are not audited -

Page 16 of 18
12. Equity
In May 2019, the optional dividend of EUR 0.87 per share was paid to shareholders. A total cash dividend
was paid of EUR 8.1 million, and a total of 159,923 shares were issued. Because of the share buyback
programme that was announced on 7 May 2019 111,033 ordinary shares were repurchased.

The table below shows the number of outstanding shares as at 30 June 2019.

Shares entitled Shares owned Total number of

to dividend by Kendrion issued shares
At 1 January 2019 13.396.013 178.852 13.574.865
Issued shares (share dividend) 159.923 (159.923) -
Issued registered shares (share plan) 1.599 - 1.599
Delivered shares 162 (162) -
Repurchased shares (111.033) 111.033 -
At 30 June 2019 13.446.664 129.800 13.576.464

13. Loans and borrowings

As at 30 June 2019, the Group had the following credit lines available:
- EUR 150.0 million revolving Credit Facility with a syndicate of three banks consisting of HSBC,
Deutsche Bank and ING Bank. The Credit Facility is committed until 27 July 2023 and includes an
option (accordion option) to increase the facility with a maximum of EUR 75.0 million and the possibility
to attract additional alternative sources of debt funding;
- EUR 14.8 million in leases for various buildings, equipment and vehicles;
- EUR 2.7 million mortgage loan for the premises of the Kuhnke facilities in Malente, Germany. The loan
ultimately matures in 2022;
- EUR 0.1 million in subsidised term loans with final maturity in 2019;
- EUR 3.6 million in other overdraft facilities.

As at 30 June 2018, the total unutilised amount of the credit facilities was approximately EUR 67 million.

Pursuant to the terms of the credit facility with the banking syndicate, the Group has agreed to a financial
covenant relating to the leverage ratio (interest-bearing debt / EBITDA). In accordance with this covenant,
the leverage ratio should remain below 3.0, which can under certain circumstances be temporarily
increased to a maximum of 3.5. This covenant is tested quarterly on a 12-month rolling basis. The covenant
ratio was satisfied at 30 June 2018.

Security provided
The Group has provided a mortgage on its premises in Malente, Germany for a EUR 2.7 million loan. No
security is provided in relation to the EUR 150 million revolving Credit facility.

14. Taxes
The tax expense for the first six months was EUR 2.7 million, equivalent to a 24% effective tax rate.

15. Financial instruments

As at 30 June 2018 the value of the derivative instruments in the balance sheet is a EUR 0.2 million liability
(31 December 2018: EUR 0.5 million liability).

There have been no material changes since the end of 2018 in terms of sensitivity to market risks
(i.e. currency, interest and price).

16. Commitments, contingent assets and contingent liabilities

- The quarterly and interim results are not audited -

Page 17 of 18
Other than the payment of a settlement amount to a component supplier that initiated legal proceedings
against Kendrion, there have been no material changes since the end of 2018 regarding the contingent
liabilities as per note 19 of the Group’s Annual Report for the financial year 2018.

17. Related parties

For the definition of "related parties", please refer to note 28 of the Group's Annual Report for the financial
year 2018.

- The quarterly and interim results are not audited -

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