Kendrion N.V. — Earnings Release 2006

Feb 27, 2007

KENDRION

PRESS RELEASE - KENDRION N.V.

RESULTS FOR 2006

27 FEBRUARY 2007

Net profit up 14% in 2006; strong development in Q4

• Net profit of EUR 14.3 million (+14%)
• Strong rise in profits in Q4 (+46%)
• Q4 organic growth in sales: 9%
• Kendrion Electromagnetic continues positive development
• Reorganisation of Kendrion Automotive Metals yields results
• Kendrion Distribution Services starts seeing benefits of commercial approach in Germany, while improvements in the French activities are expected during the course of 2007
• Positive outlook for 2007

Kendrion N.V. key figures for full year and fourth quarter of 2006

(x EUR millions)

| | Full year 2006 | Full year 2005^{1} | % | | --- | --- | --- | --- | | Revenue | 568.5 | 520.1 | +9% | | Operating profit | 25.1 | 22.4 | +12% | | Net profit | 14.3 | 12.5 | +14% | | | 4^{th} quarter 2006 | 4^{th} quarter 2005^{1} | % | | Revenue | 150.5 | 130.2 | +16% | | Operating profit | 6.2 | 4.2 | +48% | | Net profit | 3.8 | 2.6 | +46% |

See comments on page 5

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According to Piet Veenema, CEO of Kendrion: "2006 was a reasonably good year for Kendrion. The results in the first half of the year were squeezed by the high costs of raw materials and the reorganisation of Kendrion Automotive Metals. However, the benefits of measures taken started being seen in the second half of the year, while acquisitions made a good contribution to the result and we also further intensified our sales efforts in France and Germany, which are important countries for Kendrion Distribution Services. As the economies in Kendrion's most important domestic markets are continuing to strengthen, the outlook for 2007 is good. As we announced before, we are also seeking increasingly to focus on a more limited range of activities. And this is reflected in our new Mid-term Plan, which we have called "Focused acceleration".

Review of operations

The performance of Kendrion's activities in the fourth quarter of the year was largely in line with our expectations, despite the high costs of raw materials. Sales rose by 16% in the fourth quarter, of which 9% was organic growth.

The operating profit for the full year rose by 12%, with an increase of 48% in the fourth quarter.

The net profit for the year came out at EUR 14.3 million, which represented an increase of 14% on the normalised (like-for-like) result in 2005. Earnings per share amounted to EUR 0.14.

The balance sheet total was EUR 36 million higher than at the 2005 year-end at EUR 291.5 million. This increase was attributable to various factors, including the acquisitions made in 2006, the high level of activities in the fourth quarter and the longer payment terms granted to a number of larger customers. As a result, the free cash flow (before acquisitions) remained limited.

Investments in 2006 totalled EUR 12.3 million, against depreciation of EUR 13.5 million.

The solvency ratio at year-end was 29%.

In February 2007 agreement was reached with the bank consortium on adjusting the credit facilities arranged on 31 March 2006. These adjustments, which take effect as of 31 December 2006, include an extra standby facility for 2007 of EUR 10 million and a relaxation of the solvency and debt-cover covenants. It has also been agreed not to pay a dividend in 2007. Kendrion complied with all the covenants as at 31 December 2006.

Developments in individual business areas²

Kendrion Electromagnetic developed well in 2006. Major new contracts were won in both the industrial and automotive segments. Sales for the year rose by 13% to EUR 136 million, while the operating profit was also 13% higher at EUR 12.4 million. The sharp rise in copper prices took over EUR 1.0 million off Kendrion Electromagnetic's operating profit for the year. However, the effect of the improving German economy on these activities was evident in the second half of the year, and Kendrion Electromagnetic is well positioned for further growth.

Kendrion Automotive Metals had a challenging year. On the one hand, it reinforced its position in the market in the first half of the year by acquiring the remaining 50% of Kendrion SKA. On the other hand, however, the safety-related activities were reorganised during the year, and this resulted in non-recurring expenses of around EUR 1.0 million. The performance of these activities improved during the year, partly thanks to the various measures taken. Overall sales were 10% higher in 2006 at EUR 107 million, but the lower sales in the safety activities resulted in an organic decrease of 2%. The operating result rose in the second half of the year to a profit of EUR 1.1 million, compared with a loss of EUR 0.3 million in the same period last year. The acquisition of Kendrion SKA, together with the improvement in the results of our Slovak business that has been operating since 2005, played a part in this, while the result was

² See comments on page 5 Page 2 of 12

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squeezed by lower volumes for Volvo Car in particular. Efforts were also undertaken in the second half of the year to continue strengthening the international sales organisation. As a result, the outlook for Kendrion Automotive Metals has improved, and we expect to achieve further organic growth in 2007. The development of metal prices remains, however, an uncertain factor in these activities.

Kendrion Distribution Services achieved an organic increase of over 5% in its sales in 2006, while its total sales rose to EUR 325 million. The operating profit of Kendrion Distribution Services rose by 9% to EUR 13.9 million. The Vink group, which is the most important part of Kendrion Distribution Services, is again gradually reinforcing its position as a major European supplier of semi-finished plastics, assisted by the acquisition in mid-2006 of the Swedish Essåplast Group. The improving economies throughout most of Western Europe meant sales and results developed well. Sales offices were closed in both France and Germany, while the sales forces at the other offices were strengthened. Considerable attention was devoted to group activities such as centralised purchasing and marketing, and the improvements in logistics and more intensive focus on sales are expected to generate significant benefits over the coming years. We implemented the Axapta business system in various countries in 2006, and most of the IT project is expected to be completed in early 2008.

Thanks to the introduction of a new scheme in one of the Vink businesses, we were able to reduce the pension provision by EUR 1.1 million. This item is shown as income. Vink also achieved non-recurring cost of around the same amount by, for example, closing offices in France and Germany and merging its existing operations in Sweden with those of Essåplast.

Servico in Belgium recorded a further increase in sales and profits in 2006, while also improving its position in the market.

The holding company expenses in the second half of the year were considerably higher than in the same period in 2005, primarily because of the considerable cost of market research and the costs of further implementing risk management.

Tax

We previously reported the proposals to reform the tax system in the Netherlands that included a reduction in tax rates and a facility to reduce taxation on subsidiary financing. The corporation tax rate has now been reduced from 29.6% to 25.5% with effect from 1 January 2007. The European Commission is still considering the proposal to limit the taxability of income generated on the financing of subsidiaries. If the full proposal had been approved, Kendrion's deferred tax asset would have been reduced by around EUR 3 million. For the moment, the negative effect on the deferred tax asset in the Netherlands was only EUR 0.7 million.

Deferred tax assets increased by around EUR 3.6 million in 2006 as a result of a change in the estimation method. This was offset, however, by a reduction of EUR 3.4 million in deferred tax assets. This reduction was partly attributable to the Netherlands (the above reduction of EUR 0.7 million resulting from the lower corporation tax rate from 1 January 2007), France (a reduction of EUR 1.2 million, primarily as a result of the loss in 2006) and Germany (EUR 1.1 million as a result of a change in the forecast for taxable profits). The net tax charge for 2006 came out at 27%.

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Reverse split

During the General Meeting of Shareholders on 2 April 2007, Kendrion will propose that its shareholders approve a reverse share split. The purpose of this reverse split is to increase the price at which the company's shares are traded so as to make them more attractive for a wider range of investors, including institutional investors. It is also intended to bring the share price more into line with those of other companies listed on the Euronext Amsterdam stock exchange. The proposal is to combine ten old shares into one new share.

Strategic progress

As announced in the report for the first half of 2006, Kendrion is seeking to achieve a greater focus in its activities over the coming years and to achieve positions of market leadership. Acquisitions will focus primarily on achieving further growth for Kendrion Electromagnetic, while the Vink group will also strive to strengthen its activities, primarily in France and Germany. New arrangements were recently agreed with the banking consortium, and these have created greater scope for Kendrion to fund acquisitions. As a result, Kendrion had around EUR 30 million available for acquisitions at the 2006 year-end.

Proposed dividend

It will be announced at the General Meeting of Shareholders to be held on 2 April 2007 that, in order to strengthen the group's financial position and in accordance with the agreements reached with the banks, no dividend will be declared for 2006.

Outlook

In 2006 Kendrion further strengthened its base for developing its activities in the future. The economic outlook in the group's major domestic markets is generally positive. The focus in 2007 will be on targeted expansion of existing activities. Investments in 2007 will be considerably higher than the levels of depreciation, mainly because of various new Kendrion Electromagnetic projects. Market developments and the development of raw material prices are, however, too uncertain for us to give any specific forecasts at this stage of the results we expect for 2007.

Profile Kendrion N.V.

Kendrion N.V. designs, manufactures and sells high-quality electromagnetic and metal components. It also processes and distributes semi-finished plastics. The company currently has approximately 2,800 employees in 16 countries in Europe, as well as in China and the United States.

Kendrion seeks to develop strong leading positions in selected niche markets in Europe. Its mission is to be a leading international company that uses its existing know-how, innovative skills and commercial strengths to provide effective solutions to its customers in industry. In doing so it seeks to be a transparent, flexible and reliable company that combines entrepreneurial zest with clear profit objectives.

Kendrion's shares are listed on the Euronext Amsterdam N.V. stock exchange.

Zeist, 27 February 2007

Executive Board of Kendrion N.V.

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For more information, please contact: Kendrion N.V. Mr P. Veenema Utrechtseweg 33 3704 HA ZEIST Netherlands Tel: +31 (0)30 - 699.72.50 Fax: +31 (0)30 - 695.11.65 www.kendrion.com

1 The results for 2005 were normalised. The following table provides a reconciliation of the consolidated income statement shown in Appendix 1 and the normalised consolidated income statement, as well as the information segmented by business area shown in Appendices 5 and 6.

Explanation of normalisation in 2005	Results from operating activities	Profit from continuing operations
Continued activities in financial statements	19.1	Continued activities in financial statements 8.8
plus:		plus:
Spring Systems loss, including impairment of value	0.2	Adjustments to operating profit (3.1 + 0.2) 3.3
plus:		Normalisation of interest and taxes 0.4
Non-recurring income and expense holding companies	*3.1	Normalised net profit 12.5
Tax
Normalised operating profit	22.4

• This includes the provision for the fine by the European Commission, including legal expenses and other expenses, less the proceeds of selling property not required in the business.

2 As a result of agreements reached with the Dutch tax authorities, the holding company expenses passed on to foreign subsidiaries in the form of a management fee have been higher since mid-2006 than in the past. In order to provide a clear insight into the figures, the operating result on activities shown will from now on be the operating result before deduction of the management fee, but including directly related holding company costs. The figures for 2006 and 2005 are shown in appendix 6 on this basis.

Appendices

1. Consolidated income statement **
2. Consolidated balance sheet **
3. Consolidated statement of cash flows **
4. Consolidated statement of recognised income and expense **
5. Normalised consolidated income statement
6. Information segmented by business area
7. Important dates in 2007

** These statements are derived from the audited financial statements for 2006, which will be published no later than 2 March 2006. The auditors' report on the financial statements for 2006 was unqualified.

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Appendix 1 – Consolidated income statement

EUR million	2006	2005
	Total	Continuing operations	Discontinued operations	Total
Revenue	568,5	531,0	21,1	552,1
Other operating income	3,2	6,5	0,3	6,8
	571,7	537,5	21,4	558,9
Changes in inventories of finished goods and work in progress	(1,6)	2,3	-	2,3
Raw material and subcontracted work	352,5	324,0	12,6	336,6
Staff costs	114,6	112,7	4,2	116,9
Depreciation and amortisation	13,5	13,7	0,6	14,3
Impairment of assets	-	0,3	-	0,3
Other operating expenses	67,6	65,4	2,4	67,8
Results from operating activities	25,1	19,1	1,6	20,7
Finance income	0,7	1,0	-	1,0
Finance expense	(6,8)	(7,3)	(0,1)	(7,4)
Net finance costs	(6,1)	(6,3)	(0,1)	(6,4)
Share of profit of equity accounted investees	0,4	0,6	-	0,6
Profit before income tax	19,4	13,4	1,5	14,9
Income tax expense	(5,1)	(4,6)	(0,4)	(5,0)
Profit from continuing operations	14,3	8,8	1,1	9,9
Gain on sale of discontinued operations (net of income tax)	-	-	7,6	7,6
Profit for the period	14,3	8,8	8,7	17,5
Attributable to:
Equity holders of the company	14,3	8,8	8,7	17,5
Minority interest	-	-	-	-
Profit for the period	14,3	8,8	8,7	17,5
Basic earnings per share (EUR)	0,14	0,09	0,08	0,17
Diluted earnings per share (EUR)	0,14	0,09	0,08	0,17

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Appendix 2 – Consolidated balance sheet

Consolidated balance sheet as at: (EUR million)

	31 Dec. 2006	31 Dec. 2005
Assets
Property, plant and equipment	69,2	65,5
Intangible assets	16,1	7,0
Investments in equity accounted investees	0,0	1,9
Other investments, including derivatives	3,3	3,7
Deferred tax assets	20,9	20,7
Total non-current assets	109,5	98,8
Inventories	74,7	67,0
Current tax assets	0,9	0,6
Trade and other receivables	100,3	80,8
Cash and cash equivalents	5,5	8,5
Assets classified as held for sale	0,6	-
Total current assets	182,0	156,9
Total assets	291,5	255,7
Liabilities
Equity
Share capital	20,6	20,6
Share premium	75,2	75,2
Reserves	(26,5)	(44,4)
Retained earnings	14,3	17,5
Total equity attributable to equity holders of the company	83,6	68,9
Minority interest	0,2	0,2
Total equity	83,8	69,1
Liabilities
Loans and borrowings	76,7	13,9
Employee benefits	7,2	8,5
Deferred government grants	0,1	0,2
Provisions	3,5	7,4
Deferred tax liabilities	3,8	3,3
Total non-current liabilities	91,3	33,3
Bank overdraft	9,2	65,3
Loans and borrowings	7,1	4,8
Current tax liabilities	2,1	1,6
Trade and other payables	98,0	81,6
Total current liabilities	116,4	153,3
Total liabilities	207,7	186,6
Total equity and liabilities	291,5	255,7

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Appendix 3 – Consolidated statement of cash flows

(EUR million)	31 Dec. 2006	31 Dec. 2005
Cash flows from operating activities
Profit for the period	14,3	16,4
Adjustments for:
Net finance costs	6,1	6,3
Income tax expense	5,1	4,6
Share of profit of equity accounted investees	-	(0,6)
Gain on sale of discontinued operations	-	(7,0)
Depreciation on fixed assets	12,3	12,5
Amortisation of intangible assets	1,2	1,2
Operating profit before changes in working capital and provisions	39,0	33,4
Increase in trade and other receivables	(13,2)	(0,2)
Change in stocks	(3,6)	7,1
Change in trade and other payables	8,4	(8,9)
Change in provisions	(6,0)	2,7
Cash flow from operating activities	24,6	34,1
Interest paid	(5,5)	(5,7)
Income tax paid	(6,0)	(2,6)
Net cash from operating activities	13,1	25,8
Cash flows from investing activities
Disposal of associate, net of cash disposed of	-	21,4
Acquisitions of associate, net of cash acquired	(9,5)	-
Net investments in property, plant and equipment and intangible assets	(12,3)	(12,9)
Proceeds of sale of assets not employed in operations	-	1,6
Sale of other investments	0,8	6,2
Net cash from investing activities	(21,0)	16,3
Free cash flow	(7,9)	42,1
Cash flows from financing activities
Long-term debt borrowings	73,8	5,3
Repayment of long-term borrowings	(14,3)	(2,5)
Short-term borrowings	2,3	0,2
Dividend paid to minority interests	(0,1)	-
Dividend (including cumulative preferent dividend)	-	0,3
Net cash from financing activities	61,7	3,3
Net cash from operating activities of discontinued operations	-	1,6
Net cash from investing activities of discontinued operations	-	(0,3)
Net cash from financing activities of discontinued operations	-	-
Total cash flow discontinued operations	-	1,3
Net increase in cash and cash equivalents	53,8	46,7
Effect of exchange rate fluctuations on cash held	(0,7)	(0,3)
	53,1	46,4
Cash and cash equivalents as at 1 January	(56,8)	(103,2)
Cash and cash equivalents as at 31 December	(3,7)	(56,8)
	53,1	46,4

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Appendix 4 – Consolidated statement of recognised income and expense

EUR million	2006	2005
Currency translation differences for non-euro zone operations	0,2	(1,0)
Currency translation differences on sale of Fastening / Spring Systems	-	0,2
Effective part of changes in fair value of cash flow hedges	0,2	-
Income and expense recognised directly in equity	0,4	(0,8)
Profit for the period	14,3	17,5
Total recognised income and expense for the period	14,7	16,7
Attributable to:
Equity holders of the parent	14,7	16,7
Minority interest	-	-
Total recognised income and expense for the period	14,7	16,7

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Appendix 5 - Normalised consolidated income statement

(EUR million)

Revenue Other operating income Changes in inventories of finished goods and work in progress

Raw material and subcontracted work Staff costs Depreciation and amortisation Impairment of assets Other operating expenses Results from operating activities

Finance income Finance expense Net finance costs

Share of profit of equity accounted investees Profit before income tax

Income tax expense Profit for the period

Attributable to: Equity holders of the parent Minority interest Profit for the period

Basic earnings per share (EUR) Diluted earnings per share (EUR)

Fourth quarter		Year
2006	2005*	2006	2005*
150,5	130,2	568,5	520,1
0,4	2,2	3,2	5,4
0,8	(0,3)	1,6	(2,2)
151,8	132,1	573,3	523,3
92,3	80,5	352,5	317,8
29,0	28,0	114,6	110,1
3,4	3,4	13,5	13,5
			0,3
20,8	15,6	67,6	59,2
6,2	4,2	25,1	22,4
0,3	0,9	0,7	1,3
(1,7)	(1,7)	(6,8)	(6,9)
(1,4)	(0,8)	(6,0)	(5,6)
(0,0)	0,2	0,4	0,6
4,8	3,6	19,4	17,4
(1,1)	(1,0)	(5,1)	(4,9)
3,8	2,6	14,3	12,5

• Normalised income statement

3,8	2,6	14,3	12,5
3,8	2,6	14,3	12,5
0,04	0,03	0,14	0,12
---	---	---	---
0,04	0,03	0,14	0,12

Unaudited

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Appendix 6 – Information segmented by business area

(EUR million)

Revenue Added value / net margin Added value % Operating result

Revenue Added value / net margin Added value % Operating result

ROI (rolling 12 months) ROS (rolling 12 months)

Unaudited

Kendron Electromagnetic		Kendron Automotive Metals		Kendron Distribution Services		Holding companies / Eliminations		Consolidated
HY1 2006	HY1 2005	HY1 2006	HY1 2005	HY1 2006	HY1 2005	HY1 2006	HY1 2005	HY1 2006	HY1 2005
67,0	60,4	54,3	55,6	159,5	152,7	-	(0,8)	280,8	267,9
36,9	32,9	22,0	24,0	50,1	48,0	0,2	2,2	109,2	107,1
55,1%	54,4%	40,5%	43,2%	31,4%	31,4%			38,9%	40,0%
6,0	5,9	1,6	2,2	7,1	7,2	(1,2)	(2,0)	13,5	13,3
Kendron Electromagnetic		Kendron Automotive Metals		Kendron Distribution Services		Holding companies / Eliminations		Consolidated
HY2 2006	HY2 2005	HY2 2006	HY2 2005	HY2 2006	HY2 2005	HY2 2006	HY2 2005	HY2 2006	HY2 2005
69,4	60,8	52,8	41,7	165,5	148,4	-	1,3	287,7	252,2
37,5	33,5	22,3	17,3	51,6	46,7	0,2	0,8	111,6	98,3
54,0%	55,1%	42,2%	41,5%	31,2%	31,5%			38,8%	39,0%
6,4	5,0	1,1	(0,3)	6,8	5,5	(2,7)	(1,1)	11,6	9,1
Kendron Electromagnetic		Kendron Automotive Metals		Kendron Distribution Services		Holding companies / Eliminations		Consolidated
2006	2005	2006	2005	2006	2005	2006	2005	2006	2005
136,4	121,2	107,1	97,3	325,0	301,1	-	0,5	568,5	520,1
74,4	66,4	44,3	41,3	101,7	94,7	0,4	3,0	220,8	205,4
54,5%	54,8%	41,4%	42,4%	31,3%	31,5%			38,8%	39,5%
12,4	10,9	2,7	1,9	13,9	12,7	(3,9)	(3,1)	25,1	22,4
24,3%	22,4%	6,2%	5,1%	23,4%	22,3%			15,4%	13,6%
9,0%	9,0%	2,5%	2,0%	4,2%	4,2%			4,4%	4,2%

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Appendix 7 – Important dates in 2007

Publication of results for 2006	Tuesday, 27 February 2007	Before stock exchange opens
Press and analysts' meeting	Tuesday, 27 February 2007	10.00 / 11.30
General Meeting of Shareholders	Monday, 2 April 2007	14.30
Publication of results for Q1 2007	Tuesday, 8 May 2007	Before stock exchange opens
Publication of H1 2007 results	Tuesday, 28 August 2007	Before stock exchange opens
Press and analysts' meeting	Tuesday, 28 August 2007	10.00 / 11.30
Publication of results for Q3 2007	Tuesday, 6 November 2007	Before stock exchange opens