5th Sep 2006 07:02
Kingspan Group PLC05 September 2006 Kingspan Group plc 2006 INTERIM RESULTSSix months ended 30th June 2006 H1-2006 H1-2005 % change •'mn •'mn Sales 675.9 580.1 +16.5%Operating profit 88.0 67.0 +31.4%Operating margin % 13.0% 11.5% +150bpProfit before tax 83.4 62.4 +33.7% •'cent •'cent Earnings per share 40.4 30.7 +31.6%Dividend per share 6.00 4.45 +35% • Strong momentum was maintained in the first six months with sales up 16.5% and operating profits up 31.4%. • The trend of Insulated Panels in the UK gaining market share over built-up systems was maintained in the first half and is underpinned going forward by ongoing product development and regulatory change. • From a regional perspective group sales were particularly strong in Western and Eastern Europe with growth of 26% and 50%, respectively. • Investment in future growth continued in the first half with net capital expenditure of €24.9m versus depreciation of €18.9m. • Reflecting an ongoing programme of geographic expansion, Kingspan acquired a 51% stake in Eurobond Pacific, an insulated panel manufacturer in Australia, a market which has significant growth potential. • The construction industry and property owners globally are becoming increasingly aware of both the costs and environmental implications of higher energy consumption. This in conjunction with increasing acceptance of Modern Methods of Construction (MMC) and ever more stringent building regulations are the key drivers behind Kingspan's growth. Gene Murtagh, Chief Executive Officer, commented: "Results for the first six months represent a tremendous outcome for the Group.Our products continue to gain share against traditional alternatives, bolsteredby the increasing awareness of the advantages of sustainable energyconstruction. This dynamic, coupled with ongoing regulation change underpinsdemand for our products and gives us confidence that substantial earnings growthwill be achieved for the year as a whole". For further information contact: James Dunny: Murray Consultants Tel: (353 1) 4980 300Tim Thompson/Jeremy Garcia: Buchanan Communications Tel: +(44) 207 466 5000 INTERIM STATEMENT Six Months Ended 30th June 2006 Kingspan Group plc announces half year results to 30th June 2006. Summary Results • Turnover up 16.5% to €675.9 million (H1 2005 : €580.1 million). • Operating profit up 31.4% to €88.0 million (H1 2005 : €67.0 million). • Basic earnings per share up 31.6% to 40.4 cent (H1 2005 : 30.7 cent). • Interim dividend up 35% to 6.0 cent per share (H1 2005 : 4.45 cent). • Net debt as a percentage of shareholders' funds of 33% at 30th June 2006 (62% at 30th June 2005). • Interest cover (based on EBITDA) was 23.5 times (H1 2005 : 17.9 times). • Capital investment was €36.1 million in the period, of which €24.9 million was net capital expenditure and €11.2 million was acquisitions. The Directors of Kingspan Group plc are pleased to announce the results for theGroup for the six months ended 30th June 2006. Operating profit was €88.0million, an increase of 31.4% on the corresponding period last year, on turnoverof €675.9 million, up 16.5%. Basic earnings per share of 40.4 cent were up 31.6% compared to the same periodlast year. It is proposed that an interim dividend of 6.00 cent per share willbe paid on 6th October 2006 to shareholders on the register at close of businesson 15th September 2006. This represents an increase of 35% on the 2005 interimdividend. The interim dividend is covered 6.7 times by earnings. INSULATED PANELS & BOARDS Insulated Panels Representing 37% of Group turnover, this product group delivered 17% growth overthe same period last year, and advanced in all its geographic markets. Against a stable backdrop in low-rise non-residential construction in the UK,insulated panels' sales grew by close to 11%, continuing the trend of activelyconverting from less efficient traditional built-up methods. This pattern isexpected to continue and will increasingly be bolstered by more recent productintroductions that will continue to expand the available market for thesematerials. Ireland has continued to perform well and in the Benelux sales growth was in theorder of 33%, in a strengthening market. Across Central & Eastern Europe, the Group's strategy of rolling out the modelthroughout the region delivered exceptionally strong organic growth of over 30%. Capacity utilisation and efficiency levels continue to rise in this relativelyyoung part of the Group's base. We are in the early stages of examining furtherlocations from which to expand in this developing region. Having had a commercial presence in Australasia for a number of years, the firsthalf of 2006 marked the beginning of the next phase of Kingspan's development inthat region. Kingspan has entered into both manufacturing and sales jointventures in Australia & New Zealand respectively. This will provide us with anearly mover advantage in markets that offer long-term conversion potential forKingspan Firesafe(R) solutions, an approach that may be replicated to takeadvantage of similar opportunities in other geographic markets currently underconsideration. INSULATION BOARDS Representing 17% of Group turnover in the period, this product group deliveredgrowth of 10% compared to the same period last year. In the UK, this business's largest market, general levels of relevantconstruction have been stable. Growth has been achieved through a slightimprovement in the penetration levels of Rigid Firesafe Insulation, reflectingthe full impact of the 2002 building regulations, and the subsequentstabilisation of the purchasing patterns. In the period, the 2006 amendments tothe UK building codes became law, and are anticipated to yield significantbenefit to our Insulation business over the coming years. As previouslyindicated, competition in the UK continues to intensify, particularly given themedium term growth prospects for high performance insulation. Kingspan's focusremains on being the lowest cost provider to this sector, with our clear productdifferentiation and market driven philosophy. Substantial capital investment isboth underway and planned in this business, not only to meet the expected growthin demand, but to ensure that our evolving technology continues to deliversuperior returns in a changing insulation environment. These projects will takeplace not only in the UK, but also in Ireland, which once again during theperiod, posted significant growth. Kingspan entered into a Joint Venture with Recticel for the production ofindustrial insulation late last year and this business is performing as planned. ENVIRONMENTAL CONTAINERS Representing 18% of Group turnover in the period, this division has grown by17%, including acquisitions, compared to the same period last year. In this division, the emphasis has been on achieving strong market positions, incomplimentary niche product areas. Its primary products are effluent treatmentsolutions, fuel storage products and a number of water related systems. Theyinclude pressurised and un-pressurised hot and cold water storage anddistribution, as well as rainwater harvesting systems which could prove anattractive growth area in the future. The operating performance in the first half was particularly strong in the hotwater and effluent treatment business units. Growth in the unvented cylindermarket was a key driver as these systems continued to gain share over the moretraditional gravity fed alternative. In mainland Europe, last year's capacity expansion at our Polish facility hassupported structured growth of this business in the region. This was mainly intoScandinavia, where we are assessing further potential avenues to expand ouractivity. OFFSITE & STRUCTURAL Representing 17% of Group turnover in the period, this division grew by 17% overthe same period in 2005. Much of this growth is attributable to the acquisitiontiming of Kingspan Century which was acquired in April last year. In Ireland, the combination of a strong housing market and an evident increasein people's awareness of lower energy building methods continues to drive growthin the penetration of timber frame homes, now estimated at circa 27% of allhouses built. Both the investor's and the public's knowledge of the long-termcost benefits of timber frame, the compelling build speed advantages of MMC, andthe looming regulation changes in 2008 all provide us with confidence in themedium term prospects for this business in Ireland. In England, progress to date has been slower. However, clear signs are emergingthat momentum in MMC penetration, not only for timber-based systems, but alsometal and indeed hybrid solutions, is rising. From its current low base ofapproximately 11% penetration, it would not be unreasonable to expect thatfigure to reach 20% by 2010. Although no significant progress has been madeto-date, the Group is committed to investing both in acquisition and capex, toensure Kingspan plays a leading role in this relatively small but growth niche. Structural products performed soundly in the period, and in particular,composite floor decking, used in commercial construction, is expected to bestrong during 2006. ACCESS FLOORS Representing 11% of Group turnover in the period, Access Floors growth was 27%compared to the same period last year. In the US, office construction has remained at significantly lower levels thanat its peak in 2001. Whilst this pattern clearly limits the available marketfor our products, Kingspan's relentless focus has been on driving thespecification bank for under-floor air systems, that essentially incorporate ourfloor panels. Although slowly, and in a weak market, penetration has beenimproving. This, coupled with an advantageous sales mix, particularly aroundData Warehousing, and a lower cost base have underpinned a very satisfactoryresult for the period. In the UK, where penetration rates are much higher, the performance of thebusiness is improving with the early stage cyclical upturn in commercial officeconstruction in London, where vacancy rates are now estimated at less than 9%.The project pipeline is healthy, and consistent with independent views on theanticipated rate of office development over the coming 3 years or so. ACQUISITIONS During the period, Kingspan completed the acquisition of a 51% stake in anAustralian start-up company, Eurobond Pacific, since rebranded Kingspan, for€11mn. The remaining 49% will be acquired at end 2007. Based in Sydney, thisfacility will now supply the growing Australian and New Zealand markets with ourFiresafe(R) products for the food, industrial and retail sectors. Kingspan also entered into an agreement to acquire Leanort Ltd, a holdingcompany for the Xtratherm & Hytherm insulation brands in the UK and Ireland forup to €87 million. This is currently awaiting approval from the CompetitionAuthority. FINANCIAL REVIEW Operating Margins The gross margin at 32.2% compares with 30.3% in the first half in 2005. Thisimprovement reflects some changes in product mix, efficiencies across theoperations and the recovery of raw material price increases. Administrationcosts at €93 million were up 23% on the corresponding period last year, and 10%on the second half of last year, reflecting the ongoing investment in productand process development, which are important elements of the Group's strategy. The operating margin at 13.0% compares with 11.5% in the same period last yearand 11.7% for the full year 2005. Sales by geographical market (H1-2006 versus H1-2005): % change in 2006 Ireland 21%Britain and Northern Ireland 9%Europe mainland 35%United States of America 35% Sales by product group (H1-2006 versus H1-2005): % change in 2006Insulated panels and boards 14%Off-site and structural products 17%Environmental Containers 17%Access Floors 27% Cash Flow The table below summarises the Group's funds flow for H1-2006, H1-2005 and FY05 H1-2006 H1-2005 FY05 •'mn •'mn •'mnInflowsOperating profit 88.0 67.0 145.1Depreciation 18.9 14.1 30.6Amortisation 1.3 0.7 1.9Pension contributions (1.8) (0.9) (2.9)Working capital increase (32.4) (23.6) (9.4)Interest paid (4.3) (2.3) (7.5)Taxation paid (7.7) (8.9) (28.2)Others 3.1 1.9 13.7 Free cash flow 65.1 48.0 143.3 Acquisitions (11.2) (137.3) (141.6)Net capital expenditure (24.9) (17.4) (42.2)Dividends paid (15.0) (10.3) (17.8) Cash flow movement 14.0 (117.0) (58.3) Debt translation (0.8) 0.1 2.9 Decrease / (Increase) in net debt 13.2 (116.9) (55.4) Net debt at start of period (163.5) (108.1) (108.1) Net debt at end of period (150.3) (225.0) (163.5) Free cash flow at €65.1 million is up 36% on the corresponding period last year.This reflects the strong underlying growth in profits. Working capital,expressed in terms of days sales, remaining broadly unchanged at 36 days, ascompared to 37 at 30th June 2005. These cashflows were used to fund net capital expenditure of €24.9m andacquisition spend of €11.2m. These movements resulted in net debt at the end of June 2006 of €150.3m, whichrepresents a reduction of €13.2 million from the €163.5 million reported for theend of December 2005. This represents gearing of 33% and compares to currentbanking facilities in place of over €450m. OUTLOOK Globally the construction industry and property owners are becoming increasinglyaware of both the costs and environmental implications of higher energyconsumption. It is evident that a growing number of investors are takingvoluntary steps to build as sustainably and efficiently as is practical. Incombination with this pattern, the UK Building Regulations became law during theearly part of this year. They will demand further improvements in buildingmaterials and methodology. Kingspan is not only well positioned for this marketdynamic, but is committed to the R&D investment necessary to remain at theleading edge of this evolving industry. This backdrop, together with the solid performance of the Group in the firsthalf, give the Board confidence that substantial earnings growth will beachieved for the year as a whole. GROUP INCOME STATEMENT Notes Continuing Operations Acquisitions 6 months 6 months 6 months 6 months Year ended ended ended ended ended 30.6.06 30.6.06 30.6.06 30.6.05 31.12.05 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) • '000 • '000 • '000 • '000 • '000 Sales revenue 3 674,834 1,040 675,874 580,063 1,243,410Costs of sales (457,749) (685) (458,434) (404,115) (866,348)Gross profit 217,085 355 217,440 175,948 377,062 Distribution costs (36,274) (56) (36,330) (33,600) (71,582)Administrative costs (92,822) (274) (93,096) (75,384) (160,411)Operating result 87,989 25 88,014 66,964 145,069 Finance costs (6,048) (5,105) (11,607)Finance income 1,447 543 1,535Result for the period before tax 83,413 62,402 134,997Tax expense, net (15,424) (11,297) (23,628)Net result for the period 67,989 51,105 111,369 Attributable to minority interest 10 23 (9)Attributable to shareholders of Kingspan Group plc 67,979 51,082 111,378 Earnings per share for the period 5Basic 40.4 30.7 66.4Diluted 39.4 29.8 64.8 GROUP BALANCE SHEET Notes 30.6.06 30.6.05 31.12.05 (Unaudited) (Unaudited) (Audited) • '000 • '000 • '000AssetsNon-current assetsGoodwill 6 220,800 210,323 217,736Other intangible assets 7 10,949 13,382 12,265Property, plant and equipment 258,589 243,976 250,757Long term financial assets 774 26 755Deferred tax assets 2,263 1,641 2,366 493,375 469,348 483,879Current assetsInventories 106,403 107,046 97,323Trade and other receivables 319,807 305,408 268,124Cash and cash equivalents 105,819 82,755 120,165 532,029 495,209 485,612 Total assets 1,025,404 964,557 969,491 LiabilitiesCurrent liabilitiesTrade and other liabilities 223,809 220,802 193,368Provisions 30,699 21,244 30,252Deferred consideration 6,633 14,104 16,777Short term financial liabilities 31,975 44,010 38,864Current tax liabilities 23,902 23,390 16,366 317,018 323,550 295,627Non-current liabilitiesPension and other employee obligations 26,656 27,104 24,009Long term financial liabilities 216,758 241,855 226,799Deferred tax liabilities 3,951 3,146 5,173Deferred consideration 731 7,787 1,241 248,096 279,892 257,222 Total liabilities 565,114 603,442 552,849 NET ASSETS 460,290 361,115 416,642 EquityEquity attributable to shareholders of Kingspan Group plcShare capital 22,073 21,865 22,003Additional paid-in share capital 23,882 21,358 22,803Other reserves (34,690) (24,786) (23,650)Revaluation reserve 713 713 713Capital redemption reserve 513 513 513Retained earnings 446,862 341,015 393,898 459,353 360,678 416,280 Minority interest 937 437 362 TOTAL EQUITY 460,290 361,115 416,642 GROUP STATEMENT OF CHANGES IN EQUITY 30.06.06 30.06.05 31.12.05 (Unaudited) (Unaudited) (Audited) • '000 • '000 • '000 Balance at beginning of period 416,642 305,063 305,063Cash flow hedging - in equity (157) (103) 18Defined benefit pension scheme (4,265) (3,995) (2,979)Currency translation (9,430) 16,093 15,032Income taxes relating to items charged or credited to equity 1,279 1,211 891 Net income recognised directly in (12,573) 13,206 12,962equityProfit for the period 67,979 51,082 111,378 Total recognised income and expense for 55,406 64,288 124,340the period Shares issued 1,149 1,166 2,749Employee share based compensation 1,532 876 2,256Dividends (15,014) (10,300) (17,713)Movement in Minority Interest 575 22 (53) Balance at end of period 460,290 361,115 416,642 STATEMENT OF RECOGNISED INCOME AND EXPENSE 6 months 6 months Year ended ended ended 30.6.06 30.6.05 31.12.05 (Unaudited) (Unaudited) (Audited) • '000 • '000 • '000 Profit for financial period attributable to Group shareholders 67,979 51,082 111,378 Cash flow hedging (157) (103) 18Defined benefit pension scheme (4,265) (3,995) (2,979)Currency translation (9,430) 16,093 15,032Income taxes relating to items charged or credited to equity 1,279 1,211 891Total income and expense recognised since last annual report 55,406 64,288 124,340 GROUP CASH FLOW STATEMENT Notes 6 months 6 months Year ended ended ended 30.6.06 30.6.05 31.12.05 (Unaudited) (Unaudited) (Audited) • '000 • '000 • '000 Operating activitiesResult for the period before tax 83,413 62,402 134,997Adjustments 8 25,768 20,289 46,625Change in inventories (9,910) (3,473) 8,032Change in trade and other receivables (51,601) (42,952) (5,627)Change in trade and other payables 30,104 22,780 (4,392)Pension contributions (1,817) (924) (2,873)Cash generated from operations 75,957 58,122 176,762Taxes paid (7,725) (8,908) (28,159)Net cash flow from operating activities 68,232 49,214 148,603 Investing activitiesAdditions to property, plant and equipment (26,510) (18,282) (46,802)Proceeds from disposals of property, plant and equipment 1,636 853 4,654Proceeds from financial assets - 13 29Purchase of subsidiary undertakings (6,487) (139,028) (142,970)Net cash acquired with acquisitions (768) 18,250 18,910Payment of deferred consideration in respect of acquisitions (10,450) (1,419) (1,441)Dividends paid to minorities - - (44)Interest received 1,340 521 1,606Net cash flow from investing activities (41,239) (139,092) (166,058) Financing activitiesProceeds from bank loans 1,636 159,350 151,458Repayment of bank loans (13,313) (65,363) (89,862)Discharge of finance lease liability (150) (212) (413)Proceeds from share issues 1,149 1,166 2,749Interest paid (5,603) (2,796) (9,138)Dividends paid (15,014) (10,300) (17,713)Net cash flow from financing activities (31,295) 81,845 37,081 Cash and cash equivalents at the beginning of the period 110,231 85,201 85,201 Net increase in cash and cash equivalents (4,302) (8,033) 19,626Translation adjustment (1,456) 5,046 5,404 Cash and cash equivalents at the end of the period 104,473 82,214 110,231 Cash and cash equivalents at the beginning of the period Cash and cash equivalents, beginning of period 120,165 87,791 87,791 Overdrafts (9,934) (2,590) (2,590) 110,231 85,201 85,201 Cash and cash equivalents at the end of the period Cash and cash equivalents, end of the period 105,819 82,755 120,165 Overdrafts (1,346) (541) (9,934) 104,473 82,214 110,231 Kingspan Group plcFinancial statements30 June 2006 Notes 1 Basis of preparation The financial information presented in this announcement has been prepared inaccordance with the International Financial Reporting Standards andInterpretations issued by the International Accounting Standards Board and inaccordance with the accounting policies as set out on pages 53 to 57 of theAnnual Report for the year ended 31st December 2005. The 2006 interim results and balance sheet are presented in Euro. Results andcash flows of foreign subsidiary undertakings have been translated into Euro atthe average exchange rates for the period, and the related balance sheets havebeen translated at the rates of exchange ruling at the balance sheet date. The interim results for the half year to 30th June 2006 and 30th June 2005 areunaudited. The comparative figures for the year ended 31st December 2005represent an abbreviated version of the Group's full accounts for that yearwhich have been filed with the Registrar of Companies and on which the auditors,Grant Thornton, have issued an unqualified audit report. These interim results are available on the Group's website (www.kingspan.com). A printed copy will be sent by post to all registered shareholders. Copies mayalso be obtained from the Company's Registrars: Computershare Services (Ireland)Limited, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18. 2 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 used were as follows: Average rate Closing rateEuro = 30.6.06 30.6.05 31.12.05 30.6.06 30.6.05 31.12.05 Pound Sterling 0.687 0.686 0.684 0.684 0.665 0.678US Dollar 1.230 1.286 1.245 1.262 1.217 1.185Czech Koruna 28.522 30.123 29.836 28.480 30.000 28.920Polish Zloty 3.899 4.083 4.029 4.070 4.100 3.830 3 Segment reporting Analysis by class of business Insulated Offsite & EC Access TOTAL PanelsSegment Revenue & Boards Structural Floors •m •m •m •m •m Total Revenue - H1 2006 367.7 114.6 119.9 73.7 675.9Total Revenue - H1 2005 321.4 97.9 102.8 58.0 580.1Total Revenue - 2005 689.4 203.9 220.1 130.0 1,243.4 Intersegment revenue is not material and is thus not subject to separate disclosure in the above analysis Segment Result (profit before finance costs) Insulated Offsite & EC Access TOTAL TOTAL TOTAL Panels & Boards Structural Floors H1 2006 H1 2005 2005 •m •m •m •m •m •m •m Operating result - H1 2006 58.3 12.6 10.0 7.1 88.0Operating result - H1 2005 43.7 10.1 8.8 4.4 67.0Operating result - 2005 94.2 22.7 18.4 9.8 145.1 Finance costs (net) (4.6) (4.6) (10.1)Result for the period before tax 83.4 62.4 135.0Tax expense, net (15.4) (11.3) (23.6) Net result for the period 68.0 51.1 111.4 Segment Assets and Liabilities Insulated Offsite & EC Access TOTAL TOTAL TOTAL Panels & Boards Structural Floors H1 2006 H1 2005 2005 •m •m •m •m •m •m •m Assets - H1 2006 457.3 149.4 172.7 137.9 917.3Assets - H1 2005 381.6 204.8 164.1 129.7 880.2Assets - 2005 413.3 134.6 161.2 137.9 847.0 Liabilities- H1 2006 (143.4) (60.1) (46.8) (30.9) (281.2)Liabilities - H1 2005 (139.6) (63.3) (44.4) (21.9) (269.2)Liabilities - 2005 (131.2) (50.2) (40.2) (26.1) (247.7) Total assets less total liabilities 636.1 611.0 599.3 Cash and cash equivalents 105.8 82.8 120.2Deferred tax asset 2.3 1.6 2.3Financial liabilities (current and non-current) (248.7) (285.9) (265.7)Deferred consideration (current and non-current) (7.4) (21.9) (18.0)Income tax liabilities (current and deferred) (27.9) (26.5) (21.5) Total Equity as reported in Group Balance Sheet 460.2 361.1 416.6 Other Segment Information Insulated Offsite & EC Access TOTAL Panels & Boards Structural Floors •m •m •m •m •m Capital Investment - H1 2006 29.3 2.2 2.7 4.3 38.5Capital Investment -H1 2005 32.5 74.3 40.9 0.4 148.1Capital Investment -2005 67.3 66.7 45.4 7.2 186.6 Depreciation included in segment result - H1 2006 (8.6) (2.9) (3.4) (3.9) (18.8)Depreciation included in segment result - H1 2005 (7.1) (2.1) (3.0) (1.9) (14.1)Depreciation included in segment result - 2005 (14.8) (5.0) (6.3) (4.5) (30.6) Amortisation included in segment result - H1 2006 (0.5) (0.6) (0.2) 0.0 (1.3)Amortisation included in segment result - H1 2005 (0.2) (0.3) (0.2) 0.0 (0.7)Amortisation included in segment result - 2005 (0.8) (0.8) (0.3) 0.0 (1.9) Non- Cash Items included in segment result - H1 2006 0.5 0.0 0.0 0.0 0.5Non- Cash Items included in segment result - H1 2005 0.1 (0.1) 0.0Non- Cash Items included in segment result - 2005 (1.9) (0.1) 0.2 0.0 (1.8) Analysis of Segmental Data by Geography Republic United Rest of Americas Others TOTAL of Ireland Kingdom Europe •m •m •m •m •m •m Income Statement ItemsSegment Revenue - H1 2006 125.7 394.3 111.2 36.3 8.4 675.9Segment Revenue - H1 2005 104.0 362.0 82.4 27.0 4.7 580.1Segment Revenue - 2005 215.3 753.3 196.4 63.7 14.7 1,243.4 Balance Sheet ItemsAssets - H1 2006 203.8 498.2 136.5 64.5 14.3 917.3Assets - H1 2005 147.7 555.0 116.8 60.0 0.7 880.2Assets - 2005 119.2 532.8 127.6 66.1 1.3 847.0 Other segmental informationCapital Investment - H1 2006 2.6 16.1 3.8 3.9 12.1 38.5Capital Investment - H1 2005 14.1 28.6 104.7 - 0.7 148.1Capital Investment - 2005 22.8 36.1 124.2 0.8 2.7 186.6 4 Dividends An interim dividend at the rate of 6.00c per share (2005 : 4.45c) is payable on6th October 2006 to shareholders on the register at close of business on 15thSeptember 2006. An interim dividend on Ordinary Shares is recognised as a liability in theGroup's financial statements on a cash paid basis under IFRS rather than on anaccruals basis which was the accounting treatment previously adopted under IrishGAAP. 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 six month period ended 30th June 2006. 5 Earnings per share 6 months 6 months Year ended ended ended 30.6.06 30.6.05 31.12.05 •'000 •'000 •'000The calculations of earnings per share are based on the following: Profit attributable to ordinary shareholders 67,979 51,082 111,378 Number of Number of Number of shares shares shares ('000) ('000) ('000) 30.6.06 30.6.05 31.12.05 Weighted average number of ordinary shares for the calculation of basic earnings per share 168,169 166,306 167,625 Dilutive effect of share options 4,525 5,010 4,269 Weighted average number of ordinary shares for the calculation of diluted earnings per share 172,694 171,316 171,894 • cent • cent • centBasic earnings per share 40.4 30.7 66.4 Diluted earnings per share 39.4 29.8 64.8 6 Goodwill Goodwill • '000 Carrying amount 31 December 2005 217,736Additions 7,034 Net exchange difference (3,970)Carrying amount 30 June 2006 220,800 7 Other intangible assets Patents Brands Technical Other Total Know-how • '000 • '000 • '000 • '000 • '000 Carrying amount 31 December 2005 1,347 9,599 1,099 220 12,265 AdditionsAmortisation (212) (762) (59) (218) (1,251)Net exchange difference - (63) - (2) (65)Carrying amount 30 June 2006 1,135 8,774 1,040 - 10,949 8 Cash flow statement The following non-cash adjustments have been made to the pre-tax result for the period to arrive at operating cash flow: 6 months 6 months Year ended ended ended 30.6.06 30.6.05 31.12.05Adjustments: •'000 •'000 •'000 Depreciation, amortisation and impairment charges of fixed and intangible assets 20,116 14,862 32,515Employee equity-settled share options 1,532 876 2,256Finance income (1,447) (543) (1,535)Finance cost 6,048 5,105 11,607(Profit)/loss on sale of tangible assets (481) (11) 1,782Total 25,768 20,289 46,625 9 Reconciliation of net cash flow to movement in net debt 6 months 6 months Year ended ended ended 30.6.06 30.6.05 31.12.05 •'000 •'000 •'000 (Decrease)/increase in cash and bank overdrafts (4,302) (8,033) 19,626Decrease/(Incease) in debt, lease finance and deferred consideration 22,277 (92,356) (59,742) Change in net debt resulting from cash flows 17,975 (100,389) (40,116) Loans and lease finance acquired with subsidiaries (3,969) (5,103) (6,314)Deferred consideration arising on acquisitions in the period - (11,452) (11,383)New finance leases - (31) (45)Translation movement (768) 104 2,472 Net movement 13,238 (116,871) (55,386) NET DEBT AT START OF THE PERIOD (163,516) (108,130) (108,130)NET DEBT AT END OF THE PERIOD (150,278) (225,001) (163,516) 10 Board approval The Interim Report was approved by the Board of Directors of Kingspan Group plc on 4th. September 2006. Independent review report to Kingspan Group plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2006 which comprises the consolidated incomestatement, statement of recognised income and expense, consolidated balancesheet information as at 30 June 2006, consolidated cash flow statement andassociated notes and basis of preparation. We have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the ListingRules of the Irish Stock Exchange. Our review has been undertaken so that wemight state to the Company those matters we are required to state to it in thisreport and for no other purpose. To the fullest extent permitted by law, we donot accept or assume responsibility to anyone other than the Company for ourreview work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the Directors. The Directorsare responsible for preparing the interim report in accordance with the ListingRules of the Irish Stock Exchange which require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in Ireland and the UnitedKingdom. A review consists principally of making enquiries of group and localmanagement and applying analytical procedures to the financial information andunderlying financial data and, based thereon, assessing whether the accountingpolicies and presentation have been consistently applied unless otherwisedisclosed. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit performed in accordance with International Statements onAuditing (Ireland and the United Kingdom) and therefore provides a lower levelof assurance than an audit. Accordingly, we do not express an audit opinion onthe financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. Grant Thornton 24 - 26 City QuayChartered Accountants & Dublin 2Registered Auditors4 September 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
KGP.L