5th Mar 2007 07:02
Kingspan Group PLC05 March 2007 KINGSPAN GROUP PLC RESULTS FOR THE YEAR ENDED 31st DECEMBER 2006 Results Highlights 2006 2005 % Change Turnover €1,461.2mn €1,243.4mn +18% Operating profit €194.0mn €145.1mn +34% Operating margin 13.3% 11.7% Net profit before tax €185.2mn €135.0mn +37% Basic earnings per share 89.8 •cent 66.4 •cent +35% Dividend per share for the year 19.0 •cent 13.4 •cent +42% Dividend cover 4.7 times 5.0 times Interest cover 26.7 times 17.6 times(EBITDA/Net Interest) • Strong momentum across all of the Group's businesses. • Robust underlying construction markets. • Continued advances in penetration levels of high performance insulation products. • Total investment in the period under review was €167 million. • Acquisitions have extended the geographic reach of the Insulated Panel division and given increased scale to the Group's UK timber-frame business. Gene Murtagh, Chief Executive, commented: "2006 was another strong year for the Group with earnings growth of 35%, and weenter 2007 with confidence that it will be another year of progress at Kingspan.This is underpinned by generally strong construction markets, ongoing productdevelopment and growth from new and embryonic markets, which will help to offsetincreasingly competitive markets and the expectation that raw material priceswill be more unpredictable". For further information contact: James Dunny: Murray Consultants Tel: +353 (0) 1 4980 300Tim Thompson/Jeremy Garcia: Buchanan Communications Tel: +(44) 207 466 5000 Chief Executive's Review 2006 was another year of great progress for Kingspan as momentum in our coremarkets continued and the foundations of the Group in new geographicalterritories were established. Globally, the focus on energy consumptionintensified during the year and there is an increasing awareness of the rolethat construction techniques and building fabrics can play in alleviating futureenvironmental damage. Generally, activity across the construction sector inEurope improved in the year and whilst preferences in material choices continuedto change the Group's focus on developing solutions to capitalise on this shiftdrove further growth. Some key highlights of 2006 were: • Growth of 18% in sales revenue and growth of 35% earnings over 2005, which in itself was a year of significant growth for Kingspan • Continued advances in penetration levels of high performance insulation materials in the UK and Irish markets • Group activities in Central & Eastern European markets, strategically a core market for Kingspan, saw sales growth of 60% • Combined acquisition and capital investments of €167 million, €107 million of which was in a range of small to medium sized acquisitions across the Group • The establishment of an extended geographical footprint for the Insulated Panels business, with a presence now in North America, Australia and Turkey • Positive impact from raw material pricing movements. Insulated Panels & Boards Insulated Panels Representing 39% of Group turnover in 2006, Insulated Panels continued todeliver strong growth with revenues up by 21%. Growth in this business unit wasmainly organic, derived from further conversion away from traditional materialsand systems in Ireland and the UK, which was augmented by healthy rates ofactivity in those markets. In particular, many large logistic projects werebuilt in the year, where construction timetables and the increasing appetite formore sustainable buildings are most appropriately satisfied by the InsulatedPanel solution. Insulated Panels in Central and Eastern Europe (CEE), a key area of focus forthe Group in recent years, grew by a very strong 50%. In the industrial andcommercial buildings markets in that region, Insulated Panels are becoming anincreasingly preferred building material, largely due to the compelling buildspeed benefits of the system. This is also influenced by the continued trend ofinward investment in CEE. Reflecting the significant expansion of the Group inthe region, Kingspan now has a commercial presence in 13 CEE countries. Buildingupon this in 2006, Kingspan entered into a new manufacturing joint venture inTurkey which provides a platform to expand further east in the future. Theclear benefits of Insulated Panels with respect to environmental sustainabilityhave not yet been fully recognised in these markets but it is inevitable thatKingspan can expect these issues to become a market driver for Insulated Panelsas these evolving economies develop further. Kingspan entered the North America market for Insulated Panels late in 2006through the acquisition of a business with a leading presence in Canada, whichhas manufacturing facilities in Toronto and Vancouver. In January 2007 theGroup also acquired two continuous panel production lines in Toronto. Over thecoming year these businesses will be fully integrated in terms of systems andprocesses, which have been refined over the years by Kingspan in all of itsexisting markets. Combined, these businesses provide the Group with an excellentproduct range with which to launch the Kingspan brand on a continent that isonly at the very early stages of embracing more energy efficient buildingsolutions. Whilst the ultimate opportunity here is very significant forKingspan, progress will be gradual. Having entered the Australian and New Zealand markets in 2003 with a salespresence, Kingspan commenced manufacturing early in 2006 and progress has beenvery satisfactory in the first nine months of operation. Insulation Boards Representing 17% of Group turnover in 2006, sales of Insulation Boards grew by12% over the prior year. Ireland has been a solidly performing construction market for a number of yearsnow. Momentum once again was exceptionally strong in 2006, right across allaspects of this sector, and Kingspan continued to take advantage of thatenvironment with strong double-digit volume growth. Insulation Boards is nowthe clear material of choice in this market. The UK also provided volume growth, however, it was more moderate at circa 7%,with the market still in the transition phase between old and new regulations.The Group's strategy has been to shift specification patterns towards the mostefficient rigid insulation material available, comprising Kingspan's proprietarytechnology. This product, which is currently marketed across Western Europe andgaining traction particularly in Ireland and the UK, will be the subject ofsignificant capital investment during 2007 aimed primarily at increasingcapacity for further penetration growth. The regulation review of 2006 isexpected to impact the Group from mid 2007. Although somewhat later thaninitially anticipated, it will create the necessity for further expansion of theGroup's manufacturing capacity for its standard range of boards commencing in2007. This investment will be significant and will be at a new location in theUK, enhancing Kingspan's goal of providing our customers with unequalledproducts and service performance. In Western Europe, Kingspan continues to review opportunities to strengthen theGroup's market presence, and following the success of the Insulated Panelbusiness in CEE, plans are currently being drawn up for Insulation Boardproduction in that region. Raised Access Floors Representing 10% of Group turnover in 2006, Raised Access Floors revenue grew by15% during the year, largely in response to the recent upturn on both sides ofthe Atlantic in activity in the office construction market. In the US, commercial office construction, which had lagged other sectors of theindustry, began to show signs of improvement in 2006. This momentum hascontinued into the current year bolstered by Kingspan's consolidation of itsmarket leadership position in the US during the period. A more favourablemarket backdrop coupled with an exceptionally lean manufacturing environment anda positive mix in market applications has resulted in a successful outcome forthe year and a return to double-digit operating margins for the US. In the UK and Ireland, commercial office construction was strong, which had apositive impact on the performance of Kingspan's business in this highlypenetrated but cyclical sector. Currently going through a clear upturn in the cycle, the medium-term outlook forour North American and European Raised Access Floors businesses is encouraging. Environmental Representing 17% of Group turnover in 2006, this division grew turnover by 13%in the past year. This was driven by both organic growth and contributions frombolt-on deals completed over the last two years. This division remains focused on converting leading market positions inrelatively low value products towards higher value added solutions. The threekey product areas are: • Water Systems• Fuel Storage and Containment• Waste Water Treatment Solutions All of these products have an ever increasing role to play in the area ofenvironmental and sustainable solutions. The Group's traditional emphasis on gravity fed water systems has beensuccessfully superseded by the growth in recent years of the higher valueUnvented Cylinder market. As water pressures increase and changes in lifestylepreferences demand greater comfort and convenience, our new enhanced productrange should continue to gain share against the traditional alternative. Thishas been particularly evident in the UK. At a time when environmental legislation is becoming more widely enforced, theshift towards Wastewater Treatment solutions has continued to benefit the Group. Similar influences will increasingly drive markets towards more planetfriendly fuel storage solutions. The risks associated with single skin fuelstorage tanks became more evident in recent years as there were widespread andcostly failures across the industry, linked to unsuitable raw materialspecifications. This has served to strongly reinforce Kingspan's efforts toencourage a regulatory move towards Bunded (secondary containment) tanks.Kingspan's Ecosafe(TM) Bunded Fuel Tanks with telemetric leak detection, are themost environmentally protective storage solution. The range of products is evolving in this division continuously. Furtherbusinesses and products will be added to reflect evolving opportunities and theshift towards more environmentally sustainable solutions. Off-Site & Structural Representing 17% of Group turnover in 2006, this division grew revenue by 21%.The operating result benefited from efficiency gains and once-off procurementgains. Performance of structural metal components in the UK and Ireland reflected thestate of low rise non-residential construction, and was therefore quite flat. This division is also focused on delivering a range of factory manufacturedconstruction solutions. By incorporating many on-site processes in a modernproduction environment, such solutions vastly reduce time on-site and providecertainty of performance over the buildings' life-cycle. Regulation has alsocontributed to the attractiveness of these systems, but so too has theheightened awareness of the extent to which modern building solutions can reduceenergy consumption and greenhouse gas emissions. On the back of a number of strategic investments, Kingspan has been activelypositioning itself for this dynamic of tougher regulations and increasingenvironmental awareness, and now through its timber and steel framingcapabilities has a leading presence in both the UK and Ireland markets. Whilethe Group's UK business is much less established than in Ireland and iseffectively in the developing stages, its market position has been greatlyenhanced by the acquisition of two timber-frame businesses in 2006, with a viewto providing the Group with greater market penetration. These developments inthe UK are unlikely to contribute significantly in the short term, pending majorredesign of products to meet future requirements. To this end, much of the Group's Research and Development has been centred onadvancing the off-site product, and to date, progress is evident from successessuch as the "House of Tomorrow" projects in Ireland and the winning of the "SixtyK" Modern Methods Competition sponsored by the UK Government. Homedesigns that achieve zero carbon emissions are already being finalised by theGroup, and are due for launch in 2007. This is in keeping with the UK'sconfirmation of its intention to have all new build reach zero carbon by 2016,an innovative policy measure which Ireland may find difficult not to follow. The Group plans to invest significantly in both metal and timber framingprocesses to ensure that the business is well positioned to take advantage ofthese developments. These projects are expected to be completed over the comingtwo years to ensure that Kingspan has sufficient manufacturing scale to givehouse builders and developers the confidence to move their developments towardsthe Group's modern methods solutions. Capital Expenditure and Acquisitions Combined investment by the Group in 2006 came to €167 million. Throughout theGroup, Kingspan continues to invest in superior manufacturing assets that ensuremaximum efficiency, while providing the Group with appropriate levels ofcapacity to support further growth and expansion. As part of the Group'sstrategy, acquisitions often substitute directly for capital expenditure, aswell as providing Kingspan with a more immediate presence in the Group'stargeted sectors and geographic markets. In the year gone by, Kingspancompleted ten deals amounting to €107 million. The average size of theseacquisitions clearly reflects the bolt-on nature of the deals. Outlook In general, construction markets in 2007 are expected to show continued growth,particularly in the UK and CEE markets. However the rate of growth in the Irishconstruction market should inevitably slow down. Raw material prices are alsoexpected to be less predictable during the current year. The Group is consciousthat competition is likely to increase in its main markets as more companies arealerted to the environmental and sustainable drivers in the constructionindustry. These developments make it more imperative that the Group continuesto differentiate itself from competitors through an enhanced product developmentprogramme. Whilst we are not anticipating growth rates throughout the Group inline with the last few years, good momentum has nevertheless continued into thecurrent year. This momentum together with the Group's presence in new andembryonic markets gives us confidence that 2007 will be another year of progressat Kingspan. Gene MurtaghChief Executive5th March 2007 Financial Review Results Turnover for the year ended 31st December 2006 was €1,461.2 million, an increaseof 18% on 2005. Acquisitions completed during the course of the year generated€35.0 million in additional turnover. Profit before tax was €185.2 million, 37% up on the €135.0 million achieved in2005. Earnings attributable to ordinary shareholders were €151.0 million (2005:€111.4 million). Cash generation remained strong with earnings before interest,tax, depreciation and amortisation (EBITDA) of €236.0 million, which representeda 33% increase on the €177.6 million out-turn in 2005. The amortisation chargefor the year amounted to €2.7 million (2005: €1.9 million). Turnover and Margins Group turnover increased by 18% or €217.8 million compared to 2005. The tablesbelow detail the Group's Turnover by Class of Activity and Geographical Area andthe year on year growth achieved. Analysis by Class of Activity Year ended Year ended % Change 2006-2005 •'mn increase 31.12.06 31.12.05 •'mn •'mn Insulated Panels 574.1 472.4 +21% +101.7 Insulation Boards 242.4 217.0 +25.4 +12%Insulated Panels & Boards 816.5 689.4 +18% +127.1Raised Access Floors 149.5 130.0 +15% +19.5Environmental 249.0 220.1 +13% +28.9Off-Site & Structural 246.2 203.9 +21% +42.3 1461.2 1243.4 +18% +217.8 Year ended Year ended % Change 2006-2005 •'mn increase 31.12.06 31.12.05 •'mn •'mnRepublic of Ireland 261.5 215.3 +21% +46.2Britain and Northern Ireland 822.1 753.3 +9% +68.8Mainland Europe 272.1 196.4 +39% +75.7Americas 78.9 63.7 +24% +15.2Other 26.6 14.7 +81% +11.9 1461.2 1243.4 +18% +217.8 In continuing operations the gross profit margin was 31.5%, up from 30.3% lastyear. Acquisitions completed in 2006 had an equivalent margin of 21.6%, whichhad the effect of diluting the overall gross profit margin to 31.2%. The operating margin, being earnings before interest and tax as a percentage ofturnover, was 13.3% in the year, up from 11.7% last year. This improvementreflected the increase in gross margin and favourable leverage on the operatingcost base which represented 18.0% of turnover compared with 18.7% in 2005. Taxation The effective tax rate in the year at 18.1% compares with 17.5% last year, areflection of the growing overseas business. Earnings Per Share Basic Earnings per share at 89.8 cent shows an increase of 35% over the previousyear. This figure has grown at an annual compound rate of just over 25% overthe ten year period 1996 to 2006. Dividends Subject to shareholder approval at the 2007 Annual General Meeting, it isproposed that the dividend for 2006 will be 19.0 cent per share. This consistsof an interim dividend of 6.0 cent per share paid on 6th October 2006, and afinal dividend of 13.0 cent per share proposed to be paid on 8th June 2007 toshareholders on the register on 23rd March 2007. This represents a 42% increaseon the previous year. The dividend for the year is covered 4.7 times byearnings which compares to 5.0 times in 2005, which is in line with previouslygiven management guidance of a progressive dividend policy so as to bringdividend cover to a level closer to industry norms. Funds Flow The table below summarises the Group's funds flow for 2006 and 2005: 2006 2005 •'mn •'mn Operating profit 194.0 145.1Depreciation 39.3 30.6Amortisation 2.7 1.9Working capital increase (48.5) (9.4)Pension contributions (4.6) (2.9)Interest (8.4) (7.5)Taxation paid (25.5) (28.2)Others 17.7 13.8Free cash 166.7 143.4 Acquisitions (107.3) (141.7)Net capital expenditure (57.7) (42.2)Dividends paid (25.1) (17.8) (190.1) (201.7) Cash flow movement (23.4) (58.3)Debt translation (0.7) 2.9 (Increase) in net debt (24.1) (55.4) Net debt at start of year (163.5) (108.1)Net debt at end of year (187.6) (163.5) The free cash flow for the year, representing operating cash flow less interestand taxation paid, amounted to €166.7 million, which was up 16.3% on last year. This was used to fund spending of €107.3 million on ten bolt-on deals, netcapital expenditure of €57.7 million and dividends of €25.1 million. Operational working capital at the year end was €229.7 million (2005: €172.1million) and represented 15.7% of turnover (2005: 13.8%). This is higher thanthe company target of 15.0% reflecting the second half bias to acquisition spendand a busy end to the year. Working capital expressed as days sales (whichtakes into account the phasing of sales) was up slightly at 35 days compared to33 days for the prior year end. Overall, net debt at the end of the year was up slightly on the previous year at€187.6 million (2005: €163.5 million), which represents gearing of 34.3%. Return on Capital Employed The return on capital employed, being profit before interest and taxation as apercentage of shareholders' funds plus net debt at the year end, was 26.4%compared to 25.0% in 2005. Treasury At 31st December 2006 the Group had total facilities of €537 million, comprisingof syndicated bank facilities of €300 million, €151.5 million loan notes and€85.5 million of overdraft and other facilities. The syndicated facilitiesinclude a €75 million term loan with repayments of €25 million per annum to 16thDecember 2009 and a €225 million revolving credit which will also mature at thatdate. The Group's private placement of US$200.0 million (€151.5 million) loannotes matures in March 2015 (US$158.0 million) and March 2017 (US$42.0 million). The drawn down bank facilities and loan notes at 31st December 2006 were €232.5million, comprising €186.6 million EUR debt, €44.6 million of STG debt and €1.3million of other debt. The loan notes which represent 65% of the drawn down facilities are fixed out tomaturity in Euro terms at 4.15%. The remainder of the drawn down facilities aresubject to floating rates. Currently the Group does not enter into any external hedges to limit theexposure on translating non-Euro earnings. Foreign exchange transaction exposures are internally hedged as far as possibleand to the extent that they are not, such material residual exposures are hedgedon a rolling 12 month basis. Based on current cash flow projections for theexisting businesses to 31st December 2007, it is estimated that the Group hasthe need to sell the equivalent of €120 million in Sterling for Euro and sellthe equivalent of US$13 million in Sterling for US Dollar. As at 31st December2006, given hedges in place, these currency exposures have been reduced to €60million at a weighted average rate of £0.677, and reduced to US$3 million at aweighted average rate of £0.522. Pension Deficit The Group has two legacy defined benefit pension schemes in the UK. Theseschemes have been closed and the liability relates only to past service. As at31st December 2006 there were assets in the schemes of €61.3 million andactuarial assessed pension liabilities of €82.2 million, giving a net deficit of€20.9 million. The corresponding deficit at 31st December 2005 was €24.0million. The main drivers in this deficit movement were: Assets •'mn Liabilities •'mn Net •'mnOpening balance 52.4 (76.4) (24.0)Translation 0.6 (1.0) (0.4)Contribution paid 4.6 4.6Benefits paid (1.6) 1.6 0.0Actuarial gain/(losses) 2.1 (2.8) (0.7)Net return on asset 3.2 3.2Interest cost (3.6) (3.6)Closing balance 61.3 (82.2) (20.9) Summary Overall the Group is in a strong financial position going into 2007 and is wellpositioned for continued growth. The balance sheet is conservatively gearedwith interest cover significantly above both banking covenants and companytargets. This will enable the Group to comfortably fund its anticipated growth,through both organic means and bolt-on acquisitions. Dermot MulvihillFinance Director5th March 2007 GROUP INCOME STATEMENTfor the year ended 31 December 2006 Continuing Operations Acquisitions Total Total 2006 2006 2006 2005 • '000 • '000 • '000 • '000 Revenue 1,426,134 35,036 1,461,170 1,243,410Costs of sales (977,151) (27,462) (1,004,613) (866,348) Gross profit 448,983 7,574 456,557 377,062 Operating costs (256,499) (6,013) (262,512) (231,993) Operating result 192,484 1,561 194,045 145,069 Finance costs (11,620) (11,607)Finance income 2,775 1,535 Result for the year before tax 185,200 134,997Income tax expense (33,520) (23,628) Net result for the year 151,680 111,369 Profit attributable to:Shareholders of Kingspan Group plc 151,032 111,378Minority Interest 648 (9)Net Result for the year 151,680 111,369 Earnings per share for the yearBasic 89.8 66.4Diluted 87.8 64.8 GROUP BALANCE SHEETas at 31 December 2006 2006 2005 • '000 • '000AssetsNon-current assetsGoodwill 287,580 217,736Other intangible assets 17,117 12,265Property, plant and equipment 294,875 250,757Financial assets 227 755Deferred tax assets 2,694 2,366 602,493 483,879Current assetsInventories 130,868 97,323Trade and other receivables 357,966 268,124Cash and cash equivalents 69,060 120,165 557,894 485,612 Total assets 1,160,387 969,491 LiabilitiesCurrent liabilitiesTrade and other liabilities 259,112 193,368Provisions for liabilities and 42,554 30,252chargesDeferred consideration 5,659 16,777Interest bearing loans and 34,631 38,864borrowingsCurrent tax liabilities 26,130 16,366 368,086 295,627 Non-current liabilitiesPension and other employee obligations 20,958 24,009Interest bearing loans and 205,979 226,799borrowingsDeferred tax liabilities 8,212 5,173Deferred consideration 10,355 1,241 245,504 257,222 Total liabilities 613,590 552,849 NET ASSETS 546,797 416,642 EquityEquity attributable to shareholders of Kingspan Group plcCalled-up share capital 22,161 22,003Additional paid-in share capital 26,341 22,803Other reserves (25,601) (23,650)Revaluation reserve 713 713Capital redemption reserve 513 513Retained earnings 519,390 393,898 543,517 416,280 Minority interest 3,280 362 TOTAL EQUITY 546,797 416,642 STATEMENT OF RECOGNISED INCOME AND EXPENSEas at 31 December 2006 2006 2005 • '000 • '000 Profit for financial year attributable to Group 151,032 111,378shareholders Currency translation (4,657) 15,032Cash flow hedging in equity (337) 18Actuarial losses in defined benefit pension (685) (2,979)schemeIncome taxes relating to items charged or credited to 206 891equity Total recognised income and expense for the 145,559 124,340year GROUP CASH FLOW STATEMENTfor the year ended 31 December 2006 2006 2005 • '000 • '000Operating activitiesResult for the year before tax 185,200 134,997Adjustments 54,393 46,625Change in inventories (18,446) 8,032Change in trade and other (68,313) (5,627)receivablesChange in trade and other 48,669 (4,392)payablesPension contributions (4,561) (2,873) Cash generated from operations 196,942 176,762Taxes paid (25,498) (28,159) Net cash flow from operating 171,444 148,603activities Investing activitiesAdditions to property, plant and equipment (59,420) (46,802)Proceeds from disposals of property, plant and equipment 1,747 4,654Proceeds from financial assets 528 29Purchase of subsidiary (70,815) (142,970)undertakingsNet cash acquired with (7,073) 18,910acquisitionsPayment of deferred consideration in respect of (16,102) (1,441)acquisitionsDividends paid to minorities (14) (44)Interest received 2,654 1,606 Net cash flow from investing (148,495) (166,058)activities Financing activitiesProceeds from bank loans and loan notes - 151,458Repayment of bank loans (35,998) (89,862)Discharge of finance lease (2,406) (413)liabilityProceeds from share issues 3,288 2,749Interest paid (11,087) (9,138)Dividends paid (25,103) (17,713) Net cash flow from financing (71,306) 37,081activities Cash and cash equivalents at the beginning of the year 110,231 85,201 Net increase in cash and cash equivalents (48,357) 19,626Translation adjustment (10) 5,404 Cash and cash equivalents at end of the 61,864 110,231year Cash and cash equivalents as at 1st January 2006 were made up of: Cash and cash equivalents 120,165 87,791 Overdrafts (9,934) (2,590) 110,231 85,201 Cash and cash equivalents as at 31st December 2006 were made up of: Cash and cash equivalents 69,060 120,165 Overdrafts (7,196) (9,934) 61,864 110,231 The following non-cash adjustments have been made to the pre-tax result for the year to arrive at operating cash flow: 2006 2005 •'000 •'000 Depreciation, amortisation and impairment charges of fixed and intangible assets 41,957 32,515Employee equity-settled share 3,492 2,256optionsFinance income (2,775) (1,535)Finance cost 11,620 11,607Loss on sale of tangible assets 99 1,782 Total 54,393 46,625 Reconciliation of net cash flow to movement in net debt 2006 2005 •'000 •'000 (Decrease)/increase in cash and bank (48,357) 19,626overdraftsDecrease/(increase) in debt, lease finance and deferred consideration 54,506 (59,742) Change in net debt resulting from cash 6,149 (40,116)flows Loans and lease finance acquired with (15,365) (6,314)subsidiariesDeferred consideration arising on acquisitions in the (14,086) (11,383)periodNew finance leases (67) (45)Translation movement (679) 2,472 Net movement (24,048) (55,386) Net debt at start of the year (163,516) (108,130)Net debt at end of the year (187,564) (163,516) SUPPLEMENTARY INFORMATION 1 Reporting currency The currency used in this Preliminary Announcement is Euro. Results and cashflows of foreign subsidiary undertakings have been translated into Euro at theaverage exchange rates, and the related balance sheets have been translated atthe rates of exchange ruling at the balance sheet date. Exchange rates of material entities used were as follows: Average rate Closing RateEuro = 2006 2005 2006 2005 Pound Sterling 0.682 0.684 0.670 0.678US Dollar 1.256 1.245 1.313 1.185Canadian Dollar 1.425 1.510 1.525 1.390Australian Dollar 1.668 1.633 1.670 1.620Czech Koruna 28.367 29.836 27.590 28.920Polish Zloty 3.906 4.029 3.840 3.830 2 Segment reporting Segment information is presented in respect of the Group's business andgeographical segments. The primary format, business segments, is based on theGroup's management and internal reporting structure. Segment results, assets and liabilities include items directly attributable to asegment as well as those that can be allocated on a reasonable basis.Unallocated items comprise mainly income-earning assets and revenue, interest-bearing loans, borrowings and expenses, and corporate assets and liabilities. Business segmentsThe Group comprises operates in the following four business segments: Insulated Panels & Boards Manufacture of insulated panels and rigid insulation products.Offsite & Structural Manufacture of offsite solutions, timber frame buildings and structural products.Environmental Manufacture of environmental and pollution control products.Access Floors Manufacture of raised access floors. Geographical segments In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customer. Segment assets are based on the geographical location of the assets. Analysis by class of business Insulated Offsite & Environmental Access TOTAL PanelsSegment Revenue & Boards Structural Floors •m •m •m •m •m Total Revenue - 2006 816.5 246.2 249.0 149.5 1,461.2Total Revenue - 2005 689.4 203.9 220.1 130.0 1,243.4 Intersegment revenue is not material and is thus not subject to separatedisclosure in the above analysis. Intersegment transfers are priced using anappropriate transfer pricing methodology. Segment Result (profit before financecosts) Insulated Offsite & Environmental Access TOTAL TOTAL Panels & Boards Structural Floors 2006 2005 •m •m •m •m •m •m Operating result - 2006 128.0 27.5 20.9 17.6 194.0Operating result - 2005 94.2 22.7 18.4 9.8 145.1 Finance costs (net) (8.8) (10.1)Result for the year before tax 185.2 135.0Income tax expense (33.5) (23.6) Net result for the year 151.7 111.4 Segment Assets and Liabilities Insulated Offsite & Environmental Access TOTAL TOTAL Panels & Boards Structural Floors 2006 2005 •m •m •m •m •m •m Assets - 2006 534.8 216.0 201.2 136.6 1,088.6Assets - 2005 413.3 134.6 161.2 137.9 847.0 Liabilities - 2006 (163.8) (77.5) (50.5) (30.9) (322.7)Liabilities - 2005 (131.2) (50.2) (40.2) (26.1) (247.7) Total assets less total 765.9 599.3liabilities Cash and cash equivalents 69.1 120.2Deferred tax asset 2.7 2.3Interest bearing loans and borrowings (current and non-current) (240.6) (265.7)Deferred consideration (current and (16.0) (18.0)non-current)Income tax liabilities (current and (34.3) (21.5)deferred) Total Equity as reported in Group Balance 546.8 416.6Sheet Other Segment Information Insulated Offsite & Environmental Access TOTAL Panels & Boards Structural Floors •m •m •m •m •m Capital Investment - 2006 77.8 56.4 21.8 8.8 164.8Capital Investment - 2005 61.3 73.6 45.9 5.8 186.6 Depreciation included in segment result - (19.7) (6.8) (6.5) (6.3) (39.3)2006Depreciation included in segment result - (14.8) (5.0) (6.3) (4.5) (30.6)2005 Amortisation included in segment result - (0.9) (1.3) (0.4) (0.1) (2.7)2006Amortisation included in segment result - (0.8) (0.8) (0.3) 0.0 (1.9)2005 Non cash Items included in segment result - (0.1) 0.0 0.0 0.0 (0.1)2006Non cash Items included in segment result - (1.9) (0.1) 0.2 0.0 (1.8)2005 Analysis of Segmental Data by Geography Republic of United Kingdom Rest of Europe Americas Others TOTAL Ireland •m •m •m •m •m •m Income Statement ItemsRevenue - 2006 261.5 822.1 272.1 78.9 26.6 1,461.2Revenue - 2005 215.3 753.3 196.4 63.7 14.7 1,243.4 Balance Sheet ItemsAssets - 2006 162.6 653.2 171.1 87.2 14.5 1,088.6Assets - 2005 119.2 532.8 127.6 66.1 1.3 847.0 Other segmental informationCapital Investment - 2006 21.6 87.5 21.1 21.5 13.1 164.8Capital Investment - 2005 76.7 65.0 37.7 4.5 2.7 186.6 3 Dividends Dividends on Ordinary Shares are recognised in the Group's financial statementson a cash paid basis under IFRS rather than on an accruals basis which was theaccounting treatment previously adopted under Irish GAAP. The Final Dividend on Ordinary Shares for 2005 (€15.0 million) was approved byshareholders in May 2006 and, in accordance with IFRS, was recognised as acharge to Reserves in the year ended 31 December 2006. The Interim Dividend onOrdinary Shares for 2006 (€10.1 million) was recognised as a charge to Reservesin the year ended 31 December 2006. The Final Dividend on Ordinary Shares for 2006 (€22.0 million) is being proposedat the Group's AGM and, in accordance with IFRS, will be recognised as a chargeto Reserves in the year ended 31 December 2007. DIVIDENDS 2006 2005 •'000 •'000Ordinary dividends Paid: 2005 Final dividend 8.95c per share (2004: 6.20c per share) on 167,760,629 shares 15,007 10,300 2006 Interim dividend 6.00c per share (2005: 4.45c per share) on 168,244,464 shares 10,096 7,413 25,103 17,713 4 Earnings per share 2006 2005 •'000 •'000The calculations of earnings per share are based on the following: Profit attributable to ordinary 151,032 111,378shareholders Number of Number of shares shares ('000) ('000) 2006 2005 Weighted average number of ordinary shares for the calculation of basic earnings per share 168,149 167,625 Dilutive effect of share options 3,936 4,269 Weighted average number of ordinary shares for the calculation of diluted earnings per share 172,085 171,894 2006 2005 • cent • cent Basic earnings per share 89.8 66.4 Diluted earnings per share 87.8 64.8 5 Basis of preparation These financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as adopted by the European Commission,which comprise standards and interpretations approved by InternationalAccounting Standards Board (IASB) and International Accounting Standards andStanding Interpretations Committee interpretations approved by the predecessorInternational Accounting Standards Committee that have been subsequentlyauthorised by IASB and remain in effect. These financial statements, which are presented in Euro, have been preparedunder the historical cost convention, as modified by the revaluation of land andbuildings and the measurement of fair value share options and derivativeinstruments. The carrying value of recognised assets and liabilities that arehedged are adjusted to record changes in the fair values attributable to therisks that are being hedged. The accounting policies set out below have been applied consistently by all theGroups' subsidiaries. The financial period-ends of the Group's subsidiaries arecoterminous. The preparation of financial statements in conformity with IFRS requires the useof certain critical accounting estimates. In addition it requires management toexercise judgement in the process of applying the Company's accounting policies.The areas involving a high degree of judgement or complexity, or areas whereassumptions and estimates are significant to the consolidated financialstatements, relate primarily to the accounting for defined benefit pensionschemes, share-based payments, receivable provisions, guarantees & warranties,tangible assets, intangible assets, goodwill impairment, and acquisitiondeferred consideration. 6 Distribution of Preliminary Announcement These results are available on the Group's website at www.kingspan.com. Aprinted copy is available to view at the Company's registered office or from theCompany's Registrars: Computershare Services (Ireland) Limited, Heron House,Corrig Road, Sandyford Industrial Estate, Dublin 18. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
KGP.L