5th Sep 2005 07:00
Kingspan Group PLC05 September 2005 Kingspan Group plc 2005 INTERIM RESULTSSix months ended 30th June 2005 ------------------------------------------------- H1-05 H1-04 % change •'mn •'mn -------------------------------------------------Sales 580.1 439.4 +32%Operating profit 67.0 43.6 +54%Operating margin % 11.5% 9.9% +160bpProfit before tax 62.4 40.4 +55% •'cent •'cent -------------------------------------------------Earnings per share 30.7 19.7 +56%Dividend per share 4.45 3.4 +31% ------------------------------------------------- • Strong underlying performance before acquisitions with Sales up 20% and Operating profit up 41%. • Insulated Panels in the UK continued to gain share from site assembled alternatives. • Significant increases in input costs successfully recovered. • Central and Eastern European volumes up marginally despite an estimated construction market decline of 5% to 7%. • Increased level of acquisition activity in line with strategy to enhance a primarily organic model with timely and appropriate bolt on and in-fill acquisitions. • €137 million spend in the period in three strategically important sectors: Off-site Residential, Foodstore/Coldstore Panels and Environmental Containers. • All performing on target. • Greenfield investment in Hungary commissioned and at approximately 30% capacity utilisation. • Continued move towards energy efficient products, Modern Methods of Construction (MMC) and environmental solutions remain the main contributory factors in Kingspan's growth. Gene Murtagh, Chief Executive Officer, commented: "We continued to deliver on our stated strategy of maintaining good organicgrowth enhanced with complementary acquisitions of a bolt on and in-fill nature. Against the background of a robust Irish market, an evolving UK constructionmarket and improving Central European and US markets, the Group anticipates asatisfactory outcome for the year as a whole". For further information contact: Donnchadh O'Neill: Murray Consultants Tel:+ (353) 1 4980 300Tim Thompson/Jeremy Garcia: Buchanan Communications Tel: +(44) 207 466 5000 INTERIM STATEMENTSix months ended 30th June 2005 Kingspan Group plc announces half year results to 30th June 2005. Summary • Turnover up 32% to €580.1 million (H1 2004 : €439.4 million). • Operating profit up 54% to €67.0 million (H1 2004 : €43.6 million). • Basic earnings per share up 56% to 30.7 cent (H1 2004 : 19.7 cent). • Interim dividend up 31% to 4.45 cent per share (H1 2004 : 3.4 cent). • Net debt as a percentage of shareholders' funds of 62% at 30th June 2005 (41% at 30th June 2004). • Interest cover (based on EBITDA) was 17.9 times (H1 2004 : 17.4 times). • Capital investment was €154.7 million in the period, of which €17.4 million was net capital expenditure and €137.3 million was acquisitions. Results The Directors of Kingspan Group plc are pleased to announce the results for theGroup for the six months ended 30th June 2005. Operating profit was €67 million,an increase of 54% on the corresponding period last year, on turnover of €580million, up 32%. Basic earnings per share of 30.7 cent were up 56% compared to the same periodlast year. It is proposed that an interim dividend of 4.45 cent per share willbe paid on 7th October 2005 to shareholders on the register at close of businesson 14th September 2005. This represents an increase of 31% on the 2004 interimdividend. The interim dividend is covered 6.9 times by earnings. Insulated Panels Sales of Insulated Panels represented 36% of Group turnover in the period, andrevenue at €212 million was up 29% compared to the corresponding period lastyear. In the UK, the overall market for low rise structural steel, and hencecladding in general, has performed a little under the level of last year.Despite this and the exceptionally high year-on-year cost increases, thisbusiness has performed well. Insulated Panels further strengthened theirposition relative to the technically challenged site assembled alternatives. Afeature of the period was a very significant increase in input costs which wererecovered in the marketplace. Despite these cost increases the rate ofconversion to Insulated Panels continues apace. The investment in the Holywell manufacturing facility in North Wales in 2004 hasdriven efficiencies and provides appropriate capacity to facilitate furtherprogress in our new product groups. Ireland has performed very robustly in the period, and an encouraging pipelineexists for the remainder of the year. The market in the Benelux remains weak andthe Group is focusing on new product opportunities in that region. Central and Eastern European markets got off to a generally sluggish start withKingspan volumes up marginally on 2004, but against an estimated constructionmarket decline of 5% to 7%. The recent greenfield investment in Hungary beganproducing on schedule, and is now at approximately 30% capacity utilisation. Organically, the Coldstore and Foodstore product has grown year-on-year, and hasreceived a significant boost from the recent ATC acquisition. Kingspan is nowthe leader in this segment in the UK and Ireland. The Group continues to explorelonger term opportunities for this product range beyond its current geographicalpresence. Insulation Sales of Insulation products represented 19% of Group turnover in the periodand, at €109 million, revenue was up 16% compared to the corresponding periodlast year. As indicated over the past year, the rapid volume growth achieved by thisdivision in recent years has tapered somewhat, as the market finally adjustsitself to the last UK regulations. However, Kingspan expects that this growthcurve will rise again from late 2006 onwards, driven by the proposed amendmentsto the Building Regulations scheduled for next year. Investments to capitaliseon this will be made during the course of 2006/2007. Competing capacity continues to enter the PIR rigid board segment of the marketand margins in that product will remain under pressure. It is thereforeimportant that Kingspan continues to differentiate itself in this segment.Towards this end, much of the emphasis in this business is being geared towardsthe generation of additional market opportunities and product innovation. Inproduct and process development, the focus of investment is on products usingKingspan proprietary technology, which can deliver significant value for thecustomer beyond that offered by competitors. The first of these investments willbe in Ireland, building upon the well established Kingspan processes in the UKand the Netherlands. This will be followed by significant upgrades to thePembridge facility. These investments in rigid insulation will go a long way toachieving this differentiation. Given its relative importance, the Groupcontinues to review investment opportunities for rigid insulation across CentralEurope. Environmental Containers Sales of Environmental Containers represented 18% of Group turnover in theperiod and, at €103 million, revenue was up 47% compared to the correspondingperiod last year, of which 20% was organic and 27% related to acquisitions inthe period. The Pollution Control range of effluent treatment products provided much of theorganic growth. An increasing shift toward domestic treatment plants fromtraditional septic tanks, particularly in Ireland, was most evident. In the UK,that transition continues, but as yet, at a slower pace. The Group's presence inthe hot water cylinder sector has been substantially enhanced with theacquisitions of RCM and Albion. The unvented cylinder product in particularcontinues to grow against traditional gravity fed systems in which Kingspanalready had a strong presence. The unvented cylinder market is likely to provideone of the key growth platforms in the division, both in new build andrefurbishment sectors. The Group, in anticipating these market changes and inreacting to them in a timely manner, is now well positioned to capitalise onthese developments. Revenue in fuel storage products in the UK and Ireland continued to grow despitean underlying reduction in the total volume available in the market. This growthreflects the continuing conversion to higher value double skinned products withtelemetry enhancements. The European mainland element of this business is now asignificant contributor to the division's earnings. Based in Poland, thisbusiness markets a broadening range of innovative and proprietary storagesolutions, primarily across Central Europe and Scandinavia. Capacity iscurrently being increased by 30%. Geographic development of this product streamis considered central to the strategy of this division. The Group continues toevaluate opportunities in this regard. Access Floors Sales of Access Floors represented 10% of Group turnover in the period and, at€58 million, revenue was down 4% compared to the corresponding period last year. This was against a backdrop of relatively weak commercial high rise constructionin both the European and North American markets. In North America in particular,the effect of the Group's exhaustive promotion of the benefits associated withunder-floor air movement is now becoming evident from the type and level ofspecifications being generated. Overall, while underlying sales volume in thefirst half was below that of the prior year, product mix, pricing improvementsand operating efficiencies combined to give an increase in operating profits of€3.6 million to €4.4 million in the period. Visibility on Access Floors projects looks encouraging over the medium term andwhilst high-rise construction activity in the period was relatively low, thelevel of quotations indicates potential for modest improvements in salesactivity into 2006. Off-site and Structural Sales of Off-site and Structural represented 17% of Group turnover in the periodand, at €98 million, revenue was up 95% on the same period last year. Excludingthe effect of acquisitions, revenue was up 41%. A feature of the period was theextraordinary steel price increases which were passed on to the sector. It is the Group's objective to establish a leading market presence in theresidential and non-residential sector of the UK and Irish Off-site markets. Thegrowing adoption of more modern building materials and methods provides Kingspanwith significant future development potential in this sector. This strategyreceived a substantial boost with the acquisition earlier this year of CenturyHomes, Ireland's largest timber frame manufacturer and an emerging force in theUK. This business is performing as expected. Offering the Century House and theTek House, combined with other Kingspan product solutions, greatly broadens thedesign appeal and overall opportunity for the Group. The investment in the plant in Sherburn, North Yorkshire, part of the Group'smetal based Off-site initiative in the UK, is partly commissioned andoperational. The accreditation process for the product range is in progress.This investment and the continuing development of the timber frame products andmarkets are geared towards positioning Kingspan at the forefront of the sector. Acquisitions The level of acquisition activity by the Group in the first six months has beenhigher than in recent years. Kingspan's strategy seeks to complement and enhanceits primarily organic model with timely and appropriate bolt on and in-fillacquisitions. In total, five such acquisitions were completed in the first halfacross three strategically important sectors, (Off-site, Insulated Panels andEnvironmental Containers) for a total consideration of €137 million. The largestof these was Century Homes, which now places the Group in a market leadershipposition for Off-site residential solutions in the UK and Ireland. Theacquisition of ATC, a UK based producer of Coldstore and Foodstore InsulatedPanels, improves the Group's presence in that market segment, and, combined withKingspan's already existing involvement in this segment, gives the Group anothermarket leadership position. It also provides valuable additional dedicatedcapacity. Three other acquisitions, namely RCM, Albion and Clearwater, eachcontribute to broadening the range and strengthening the position of theEnvironmental Containers division. Financial Review Operating Margins The gross margin at 30.3% is 0.8% up on the full year 2004. This improvementreflects some changes in product mix, efficiencies across the operations and therecovery of distribution costs which in real terms increased by approximately7%. Administration costs at €70 million in continuing operations were up 25% onthe corresponding period last year and reflect the continuing investment inproduct and process development which is an important element of Group strategy.The operating margin at 11.5% compares with 9.9% in the same period last yearand 10.8% for the full year 2004. Sales by geographical market (Half 1 2005 versus Half 1 2004): ------------------------------------------------------------------------- % change in 2005 excl. Acquisitions % change in 2005 in period-------------------------------------------------------------------------Ireland 71% 34%-------------------------------------------------------------------------Britain and Northern Ireland 32% 23%-------------------------------------------------------------------------Europe mainland 20% 15%-------------------------------------------------------------------------United States of America (5%) (5%)------------------------------------------------------------------------- Sales by product group (Half 1 2005 versus Half 1 2004): ------------------------------------------------------------------------- % change in 2005 excl. Acquisitions % change in 2005 in period-------------------------------------------------------------------------Insulated-------------------------------------------------------------------------Panels and Boards 24% 23%-------------------------------------------------------------------------Off-site and Structural Products 95% 41%-------------------------------------------------------------------------Environmental Containers 47% 20%-------------------------------------------------------------------------Access Floors (4%) (4%)------------------------------------------------------------------------- Cash Flow The table below summarises the Group's funds flow for 2005 and 2004 --------------------------------------------------------------- H1-05 H1-04 FY04 •'mn •'mn •'mn--------------------------------------------------------------- Operating profit 67.0 43.6 103.3Depreciation 14.1 11.7 24.4Amortisation 0.7 0.2 0.7Pension contributions (0.9) (0.1) (2.9)Working capital increase (23.6) (7.8) (24.9)Interest paid (2.3) (3.3) (6.6)Taxation paid (8.9) (4.7) (14.8)Others 1.9 1.0 4.1---------------------------------------------------------------Free cash flow 48.0 40.6 83.3--------------------------------------------------------------- Acquisitions (137.3) (0.7) (26.6)Receipt of Tate settlement - - 24.7Net capital expenditure (17.4) (25.3) (54.5)Dividends paid (10.3) (7.6) (13.2)---------------------------------------------------------------Cash flow movement (117.0) 7.0 13.7---------------------------------------------------------------Debt translation 0.1 (2.5) (0.6)---------------------------------------------------------------(Increase)/decrease in net debt (116.9) 4.5 13.1--------------------------------------------------------------- Net debt at start of period (108.1) (121.2) (121.2)---------------------------------------------------------------Net debt at end of period (225.0) (116.7) (108.1)--------------------------------------------------------------- Free cash flow at €48.0 million is up 18% on the corresponding period last year.Net debt at 30th June 2005 was €225.0 million compared to €108.1 million at 31stDecember 2004, an increase of €116.9 million. This is after capital investment,including acquisitions, of €154.7 million in the period. Working capitalincreased by €23.6 million in the period, mainly related to increased sales.Expressed in terms of days sales, working capital increased by two days comparedto the corresponding level at 30th June 2004. On 29th March 2005 the Group had a successful private placing of $200 million(€151 million) loan notes with maturities of 10 and 12 years. These notes werethen swapped into fixed interest Euros giving the Group an appropriate mix ofdebt at competitive interest rates. Accounting Policies These accounts are prepared under IFRS accounting convention while previousaccounts were prepared using Irish GAAP. A detailed reconciliation of theoriginal accounts for the period ended 30th June 2004 and commentary was issuedby the Group on 12th July 2005. The table below sets out a summary of the effecton earnings of the change of accounting methods for the period ended 30th June2004: ------------------------------------------------------------------------- •'mn-------------------------------------------------------------------------Earnings after tax as reported under GAAP Half 1 2004 29.5-------------------------------------------------------------------------Defined benefit pension ( 0.2)-------------------------------------------------------------------------Share based payment ( 0.9)-------------------------------------------------------------------------Goodwill amortisation 3.9-------------------------------------------------------------------------Tax adjustment 0.2-------------------------------------------------------------------------Restated Earnings under IFRS Half 1 2004 32.5------------------------------------------------------------------------- Board Changes There were two appointments of non-executive directors during the period: David Byrne joined the Board on 1st January 2005. He served as the EUCommissioner for Health and Consumer Protection 1999/2004 and previous to thatwas Attorney General for Ireland. Brian Hill joined the Board on 1st June 2005. He retired at the end of 2004 fromthe board of CRH plc after a career of 33 years with that company, most recentlyas head of the European Products and Distribution division. Outlook The general environment in which Kingspan operates remains stable. The continuedmove towards energy efficient construction and environmental solutions remainsthe main contributory factor in Kingspan's growth. Against the background of arobust Irish market, an evolving UK construction market, and improving CentralEuropean and US markets, the Group anticipates a satisfactory outcome for theyear as a whole. GROUP INCOMESTATEMENT Notes Continuing Operations Acquisitions 6 months 6 months 6 months 6 months Year ended ended ended ended ended 30.6.05 30.6.05 30.6.05 30.6.04 31.12.04 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) • '000 • '000 • '000 • '000 • '000 Sales revenue 3 529,404 50,659 580,063 439,387 958,083Costs of sales (366,208) (37,907) (404,115) (311,284) (675,729)-------------------------------------------------------------------------------------------------------------Gross profit 163,196 12,752 175,948 128,103 282,354 Distribution costs (32,069) (1,531) (33,600) (28,034) (59,269)Administrative costs (69,547) (5,837) (75,384) (56,503) (119,786)-------------------------------------------------------------------------------------------------------------Operating result 61,580 5,384 66,964 43,566 103,299 Finance costs (5,105) (3,631) (7,761)Finance income 543 438 873-------------------------------------------------------------------------------------------------------------Result for the period before tax 62,402 40,373 96,411Tax expense, net (11,297) (7,815) (18,330)-------------------------------------------------------------------------------------------------------------Net result for the period 51,105 32,558 78,081------------------------------------------------------------------------------------------------------------- Attributable to minority interest 23 2 4 ----------------------------------Attributable to shareholders of Kingspan Group plc 51,082 32,556 78,077 ---------------------------------- Earnings per share for the period 5Basic 30.7 19.7 47.1Diluted 29.8 19.3 46.3 GROUP BALANCE SHEET Notes 30.6.05 30.6.04 31.12.04 (Unaudited) (Unaudited) (Audited) • '000 • '000 • '000AssetsNon-current assetsGoodwill 6 210,323 125,892 110,039Other intangible assets 7 13,382 2,212 2,180Property, plant and equipment 243,976 197,708 210,898Long term financial assets 26 38 38Deferred tax assets 1,641 684 1,639------------------------------------------------------------------------------------------------------------- 469,348 326,534 324,794Current assetsInventories 107,046 72,030 89,225Trade and other receivables 305,408 230,061 220,787Cash and cash equivalents 82,755 56,365 87,791------------------------------------------------------------------------------------------------------------- 495,209 358,456 397,803-------------------------------------------------------------------------------------------------------------Total assets 964,557 684,990 722,597------------------------------------------------------------------------------------------------------------- LiabilitiesCurrent liabilitiesTrade and other liabilities 220,802 170,920 157,164Provisions 21,244 13,758 18,483Deferred consideration 14,104 85 597Short term financial liabilities 44,010 23,328 108,725Current tax liabilities 23,390 19,347 19,355------------------------------------------------------------------------------------------------------------- 323,550 227,438 304,324Non-current liabilitiesPension and other employee obligations 27,104 21,254 22,664Long term financial liabilities 241,855 145,805 76,136Deferred tax liabilities 3,146 3,484 3,947Deferred consideration 7,787 3,825 10,463------------------------------------------------------------------------------------------------------------- 279,892 174,368 113,210-------------------------------------------------------------------------------------------------------------Total liabilities 603,442 401,806 417,534------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------NET ASSETS 361,115 283,184 305,063------------------------------------------------------------------------------------------------------------- Equity Equity attributable to shareholders of Kingspan Group plcShare capital 21,865 21,734 21,797Additional paid-in share capital 21,358 19,179 20,260Other reserves (24,786) (19,796) (38,868)Revaluation reserve 713 713 713Capital redemption reserve 513 513 513Retained earnings 341,015 260,362 300,233------------------------------------------------------------------------------------------------------------- 360,678 282,705 304,648 Minority interest 437 479 415-------------------------------------------------------------------------------------------------------------TOTAL EQUITY 361,115 283,184 305,063------------------------------------------------------------------------------------------------------------- GROUP STATEMENT OF CHANGES IN EQUITY 30.06.05 30.06.04 31.12.04 • '000 • '000 • '000 Balance at beginning of period 305,063 244,171 244,171 Cash flow hedging - in equity (103) (640) 102Defined benefit pension scheme (3,995) (3,854) (7,708)Currency translation 16,093 16,072 (1,921)Income taxes relating to items charged or credited to equity 1,211 1,179 2,314------------------------------------------------------------------------------------------------------------- Net income recognised directly in equity 13,206 12,757 (7,213)Profit for the period 51,082 32,556 78,077-------------------------------------------------------------------------------------------------------------Total recognised income and expense for the period 64,288 45,313 70,864 Shares issued 1,166 441 1,585Employee share based compensation 876 886 1,764Dividends (10,300) (7,608) (13,238)Movement in minority interest 22 (19) (83)-------------------------------------------------------------------------------------------------------------Balance at end of period 361,115 283,184 305,063------------------------------------------------------------------------------------------------------------- STATEMENT OF RECOGNISED INCOME AND EXPENSE 6 months 6 months Year ended ended ended 30.6.05 30.6.04 31.12.04 (Unaudited) (Unaudited) (Audited) • '000 • '000 • '000 Profit for financial period attributable to Group shareholders 51,082 32,556 78,077 Currency translation 16,093 16,072 (1,921)Cash flow hedging (103) (640) 102Defined benefit pension scheme (2,797) (2,698) (5,396)-------------------------------------------------------------------------------------------------------------Total income and expense recognised since last annual report 64,275 45,290 70,862------------------------------------------------------------------------------------------------------------- GROUP CASH FLOW STATEMENT Notes 6 months 6 months Year ended ended ended 30.6.05 30.6.04 31.12.04 (Unaudited) (Unaudited) (Audited) • '000 • '000 • '000Operating activitiesResult for the period before tax 62,402 40,373 96,411Adjustments 8 20,289 15,921 34,852Change in inventories (3,473) (6,877) (21,838)Change in trade and other receivables (42,952) (45,363) (39,779)Change in trade and other payables 22,780 44,469 35,754Pension contributions (924) (133) (2,885)Taxes paid (8,908) (4,663) (14,826)-------------------------------------------------------------------------------------------------------------Net cash flow from operating activities 49,214 43,727 87,689 Investing activitiesAdditions to property, plant and equipment (18,282) (26,659) (55,679)Proceeds from disposals of property, plant and equipment 853 1,316 2,124Proceeds from financial assets 13 15 11Purchase of subsidiary undertakings (139,028) (748) (18,051)Net cash acquired with acquisitions 18,250 - 954Receipt of Tate Global Corporation settlement - - 24,680Payment of deferred consideration in respect of acquisitions (1,419) (497) (629)Dividends paid to minorities - - (91)Interest received 521 434 875-------------------------------------------------------------------------------------------------------------Net cash flow from investing ctivities (139,092) (26,139) (45,806) Financing activitiesProceeds from bank loans 159,350 173,272 187,338 Repayment of bank loans (65,363) (181,394) (178,342)Discharge of finance lease liability (212) (5) (5)Proceeds from share issues 1,166 441 1,585Interest paid (2,796) (3,722) (7,472)Dividends paid (10,300) (7,608) (13,238)-------------------------------------------------------------------------------------------------------------Net cash flow from activities 81,845 (19,016) (10,134) Cash and cash equivalents at the beginning of the period 85,201 52,917 52,917 Net increase in cash and cash equivalents (8,033) (1,428) 31,749Translation adjustment 5,046 2,107 535-------------------------------------------------------------------------------------------------------------Cash and cash equivalents at the end of the period 82,214 53,596 85,201------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at the beginning of the period Cash and cash equivalents, beginning of period 87,791 55,746 55,746Overdrafts (2,590) (2,829) (2,829)------------------------------------------------------------------------------------------------------------- 85,201 52,917 52,917-------------------------------------------------------------------------------------------------------------Cash and cash equivalents, end of the period Cash and equivalents, end of the period 82,755 56,365 87,791Overdrafts (541) (2,769) (2,590)------------------------------------------------------------------------------------------------------------- 82,214 53,596 85,201------------------------------------------------------------------------------------------------------------- Kingspan Group plcFinancial statements Notes 1 Basis of preparation All publicly quoted European companies in the EU are required to prepare consolidated financial statements in accordance with International Reporting Standards (IFRS) as adopted by the European Commission in respect of accounting periods commencing on or after 1st January 2005. The financial information presented in this announcement has been prepared in accordance with the International Financial Reporting Standards and Interpretations issued by the International Accounting Standards Board and in accordance with the accounting policies as set out in Appendix 6 of the IFRS Update in Appendix 6 of the IFRS issued by the Group on 12th July 2005. The 2005 interim results and balance sheet are presented in Euro. Results and cash flows of foreign subsidiary undertakings have been translated into Euro at the average exchange rates for the period, and the related balance sheets have been translated at the rates of exchange ruling at the balance sheet date. The interim results for the half year to 30th June 2005 and 30th June 2004 are unaudited. The comparative figures for the year ended 31st December 2004 represent the Group's full accounts for that year which were restated under IFRS and presented by the Group in an IFRS Update on 12th July 2005. 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 may also 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 cash flows of foreign subsidiary undertakings have been translated into Euro at the average exchange rates, and the related balance sheets have been translated at the rates of exchange ruling at the balance sheet date. Exchange rates used were as follows: Average Closing rate rate Euro = 30.6.05 30.6.04 31.12.04 30.6.05 30.6.04 31.12.04 Pound Sterling 0.686 0.674 0.679 0.665 0.659 0.693 US Dollar 1.286 1.228 1.244 1.217 1.210 1.335 Czech Koruna 30.123 32.496 31.953 30.000 31.900 30.600 Polish Zloty 4.083 4.736 4.534 4.100 4.580 4.100 3 Segment reporting Analysis by class of business -------------------------------------------------- Insulated Segment Revenue Panels Offsite & Access & Boards Structural EC Floors TOTAL •m •m •m •m •m -------------------------------------------------- Total Revenue - H1 2005 321.4 97.9 102.8 58.0 580.1 Total Revenue - H1 2004 258.6 50.2 69.9 60.7 439.4 Total Revenue - 2004 579.6 116.8 142.5 119.2 958.1 Intersegment revenue is not material and is thus not subject to separate disclosure in the above analysis Segment Result (profit before finance costs) ------------------------------------------------------------------------- Insulated Panels Offsite & Access TOTAL TOTAL TOTAL & Boards Structural EC Floors H1 2005 H1 2004 2004 •m •m •m •m •m •m •m ------------------------------------------------------------------------- Operating result - H1 2005 43.7 10.1 8.8 4.4 67.0 Operating result - H1 2004 30.8 4.4 7.6 0.8 43.6 Operating result - 2004 72.2 13.9 14.2 3.0 103.3 Finance costs (net) (4.6) (3.2) (6.9) -------------------------- Result for the period before tax 62.4 40.4 96.4 Tax expense, net (11.3) (7.8) (18.3) -------------------------- Net result for the period 51.1 32.6 78.1 -------------------------- Segment Assets and Liabilities ------------------------------------------------------------------------- Insulated Panels Offsite & Access TOTAL TOTAL TOTAL & Boards Structural EC Floors H1 2005 H1 2004 2004 •m •m •m •m •m •m •m ------------------------------------------------------------------------- Assets - H1 2005 381.6 204.8 164.1 129.7 880.2 Assets - H1 2004 298.1 65.4 92.1 172.3 627.9 Assets - 2004 323.9 93.2 96.2 119.8 633.1 Liabilities - H1 2005 (139.6) (63.3) (44.4) (21.9) (269.2) Liabilities - H1 2004 (122.2) (34.5) (24.5) (24.8) (206.0) Liabilities - 2004 (119.2) (34.8) (24.4) (19.9) (198.3) --------------------------- Total assets less total liabilities 611.0 421.9 434.8 Cash and cash equivalents 82.8 56.4 87.8 Deferred tax asset 1.6 0.7 1.6 Financial liabilities (current and non-current) (285.9) (169.1) (184.9) Deferred consideration (current and non-current) (21.9) (3.8) (11.0) Income tax liabilities (current and deferred) (26.5) (22.9) (23.3) --------------------------- Total Equity as reported in Group Balance Sheet 361.1 283.2 305.0 =========================== Other Segment Information -------------------------------------------------- Insulated Panels Offsite & Access & Boards Structural EC Floors TOTAL •m •m •m •m •m -------------------------------------------------- Capital Investment - H1 2005 32.5 74.3 40.9 0.4 148.1 Capital Investment - H1 2004 18.4 3.6 4.7 1.8 28.5 Capital Investment - 2004 50.0 8.2 12.8 (21.1) 49.9 Depreciation included in segment result - H1 2005 (7.1) (2.1) (3.0) (1.9) (14.1) Depreciation included in segment result - H1 2004 (6.1) (1.4) (2.1) (2.0) (11.6) Depreciation included in segment result - 2004 (13.2) (3.1) (4.2) (3.9) (24.4) Amortisation included in segment result - H1 2005 (0.2) (0.3) (0.2) - (0.7) Amortisation included in segment result - H1 2004 (0.2) - - - (0.2) Amortisation included in segment result - 2004 (0.7) - - - (0.7) Non-Cash Items included in segment result - H1 2005 0.1 (0.1) - - - Non-Cash Items included in segment result - H1 2004 - - - - - Non-Cash Items included in segment result - 2004 (1.2) - - - (1.2) Analysis of Segmental Data by Geography -------------------------------------------------------------- Republic of United Rest of Ireland Kingdom Europe Americas Others TOTAL •m •m •m •m •m •m -------------------------------------------------------------- Income Statement Items Segment Revenue - H1 2005 104.0 362.0 82.4 27.0 4.7 580.1 Segment Revenue - H1 2004 60.8 274.7 68.4 28.3 7.2 439.4 Segment Revenue - 2004 136.8 592.4 163.2 53.6 12.1 958.1 Balance Sheet Items Assets - H1 2005 147.7 555.0 116.8 60.0 0.7 880.2 Assets - H1 2004 79.5 390.6 67.8 88.7 1.3 627.9 Assets - 2004 105.4 367.2 106.6 53.3 0.6 633.1 Other segmental information Capital Investment - H1 2005 14.1 28.6 104.7 - 0.7 148.1 Capital Investment - H1 2004 3.5 20.9 3.6 0.5 - 28.5 Capital Investment - 2004 5.9 10.5 17.0 - 16.5 49.9 4 Dividends An interim dividend at the rate of 4.45c per share (2004 : 3.4c) is payable on 7th October 2005 to shareholders on the register at close of business on 14th September 2005. An interim dividend on Ordinary Shares is recognised as a liability in the Group's financial statements on a cash paid basis under IFRS rather than on an accruals basis which was the accounting treatment previously adopted under Irish GAAP. The Final Dividend on Ordinary Shares for 2004 (€10.3 million) was approved by shareholders in May 2005 and, in accordance with IFRS, was recognised as a charge to Reserves in the six month period ended 30th June 2005. 5 Earnings per share 6 months 6 months Year ended ended ended 30.6.05 30.6.04 31.12.04 •'000 •'000 •'000 The calculations of earnings per share are based on the following: Profit attributable to ordinary shareholders 51,082 32,556 78,077 --------------------------------------------------------------------------------------------------------- Number of Number of Number of shares Shares shares ('000) ('000) ('000) 30.6.05 30.6.04 31.12.04 Weighted average number of ordinary shares for the calculation of basic earnings per share 166,306 165,444 165,621 Dilutive effect of share options 5,010 3,318 3,025 --------------------------------------------------------------------------------------------------------- Weighted average number of ordinary shares for the calculation of diluted earnings per share 171,316 168,762 168,646 --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- • cent • cent • cent Basic earnings per share 30.7 19.7 47.1 Diluted earnings per share 29.8 19.3 46.3 6 Goodwill Goodwill • '000 Carrying amount 1st January 2005 110,039 Additions 94,762 Net exchange difference 5,522 --------------------------------------------------------------------------------------------------------- Carrying amount 30th June 2005 210,323 --------------------------------------------------------------------------------------------------------- 7 Other intangible assets Technical Patents Brands Know-how Other Total • '000 • '000 • '000 • '000 • '000 Carrying amount 1st January 2005 2,180 - - - 2,180 Additions 89 10,099 1,188 541 11,917 Amortisation (291) (365) (30) (45) (731) Net exchange difference 20 (4) - - 16 --------------------------------------------------------------------------------------------------------- Carrying amount 30th June 2005 1,998 9,730 1,158 496 13,382 --------------------------------------------------------------------------------------------------------- 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: 30.6.05 30.6.04 31.12.04 •'000 •'000 •'000 Depreciation, amortisation and impairment charges of fixed and intangible assets 14,862 11,892 25,039 Employee equity-settled share options 876 886 1,764 Finance income (543) (438) (873) Finance cost 5,105 3,631 7,761 (Profit)/loss on sale of tangible assets (11) (49) 1,161 (Profit) on sale of investment - (1) - --------------------------------------------------------------------------------------------------------- Total adjustments 20,289 15,921 34,852 --------------------------------------------------------------------------------------------------------- 9 Reconciliation of net cash flow to movement in net debt 30.6.05 30.6.04 31.12.04 •'000 •'000 •'000 (Decrease)/increase in cash and bank overdrafts (8,033) (1,428) 31,749 (Increase)/decrease in debt, lease finance and deferred consideration (92,356) 8,583 (8,362) ------------------------------- Change in net debt resulting from cash flows (100,389) 7,155 23,387 Loans and lease finance acquired with subsidiaries (5,103) - (2,054) Deferred consideration arising on acquisitions in the period (11,452) - (7,456) New finance leases (31) - (82) Translation movement 104 (2,506) (598) ------------------------------- Net movement (116,871) 4,649 13,197 Net debt at start of period (108,130) (121,327) (121,327) ------------------------------- Net debt at end of period (225,001) (116,678) (108,130) ------------------------------- 10 Board Approval This Interim Report was approved by the Board of Directors of Kingspan Group plc on 2nd September 2005. 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 2005 which comprises the consolidated incomestatement, statement of recognised income and expense, consolidated balanceRelated Shares:
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