Final Results - Year Ended 31 December 1999

Kingspan Group PLC 23 March 2000 KINGSPAN GROUP PLC RESULTS FOR THE YEAR ENDED 31 DECEMBER 1999 FINANCIAL HIGHLIGHTS Euro % change Turnover 532.5m up 44% Operating profit 65.0m up 27% Operating profit before 67.5m up 31% goodwill amortisation Net profit before tax 58.7m up 22% Basic earnings per share 27.2c up 25% Final dividend per share 1.57c up 45% Dividend cover 10.9 times (1998: 12.7 times) Interest cover 10.3 times (1998: 15.6 times) Gearing ratio 72% (1998: 40%) (net debt as a % of shareholders' funds) CHAIRMAN'S STATEMENT Kingspan continues on its mission to be a high-performing, growth-oriented, world-class company, supplying a related mix of added-value brands to the construction sector and delivering superior long term returns to shareholders. The success of this strategy has been demonstrated in the financial results over the past number of years. 1999 has been another year of such performance. Financial performance Turnover, excluding discontinued activities, was Euro 508 million, an increase of 38% on the previous year. Operating profit at Euro 65 million was up 27% and earnings per share, before goodwill amortisation, was up 30% at 28.7 cents. Significant developments The most important events for the year were the entry into the raised access floor market through the acquisition of Hewetson plc in January 1999 and the acquisition of the business of its nearest competitor, Durabella Limited, in October 1999. The successful disposal of those parts of Hewetson which did not fit into the longer term Kingspan strategy reduced the total acquisition cost to the Group of these businesses to Euro 78.4 million. These acquisitions make the Group the largest supplier of raised access floors in the UK. Further capital investment is now underway to consolidate the production of the enlarged raised access floor business at the Hewetson site at Hull. During 1999 and early 2000 the Group acquired four businesses that add to the range and volume of products in the environmental containers business. These were Plastech, Ferham, Klargester and Entec. Plastech and Ferham increase the Group's capacity and market position in its existing range of products. Klargester and Entec are number one and two respectively in the mini waste treatment containers market in Britain and Ireland. This is a new market for Kingspan which complements the existing range of products for the domestic housing sector. The turnover for the environmental containers range of products has grown very significantly and now represents an important part of the Kingspan building product range for the future. Investment has continued in the composite panel business in all locations to ensure that capacity stays ahead of the demand which is expected to grow considerably over the next five years. Performance strategies Common strengths unify Kingspan's businesses in pursuit of its mission: strengths such as market leadership, efficient production and distribution, standard setting quality, product innovation and influencing market change. When combined effectively, these strengths have become performance strategies. It is this ability to convert integrated strengths into performance strategies and execute them successfully that can yield strong growth in the future and strong market positions. Kingspan's ability to copperfasten and even improve its market leadership positions and manage growth in a responsible way defines Kingspan now and will continue to do so in the years ahead. Market leadership in its selected markets has become a business strategy to which Kingspan is totally committed. In its achievement of responsible growth, Kingspan has demonstrated an ability to effectively manage the trade-off between growth on the one hand, and return on investment on the other. Kingspan continues to grow while at the same time protecting its record of achieving good returns on investments. This will be done by pressing ahead with further development of markets with proven products and by moving into related products. A disciplined acquisition strategy will play a significant part in this. Kingspan has been relentless in its pursuit of excellent performance as has been demonstrated over the past number of years. With products that have good growth potential and that can travel across country and continental boundaries, Kingspan is well positioned for strong long-term growth. Board, management and staff Kingspan is very soundly based operationally and financially and enjoys a strong reputation for prudent management capable of delivering responsible growth. This is due to the commitment of the Board and management as well as a proud and dedicated work force. This loyalty and commitment finds expression in a strong Kingspan culture and sense of identity across all its operations. We are very pleased to welcome to the Board, Robert Barr and Gene Murtagh, both of whom were appointed in November 1999. Robert Barr joined Kingspan as Chief Operating Officer. He joined us from Bespak plc, where he was Managing Director - Europe, having previously worked for the Guinness Group in a number of senior positions around the world. Gene Murtagh joined the Group in 1993 and spent the first two years in Kingspan's business interests in Europe. He was Managing Director in Ireland for the Insulation division for two years before taking on his present position as Managing Director for the Environmental Containers business which has grown 300% since he assumed that position in 1997. Dividend policy A final dividend of 1.57 cents is proposed, bringing the total dividend to 2.50 cents. This is an increase of 46% on the previous year and the dividend is covered 10.9 times. This is in line with the Group policy to bring dividend cover closer to the industry average and is consistent with the commitment to increasing shareholder value while conserving resources to fund the Group's expansion plans. Outlook 2000 will be a year of strategy positioning for the Group's products. Achievement of significant volume increases in all product groupings remains central to the Group's plans in the immediate future. We will be taking steps to increase capacities through increased capital expenditure and by suitable acquisitions. Going forward the Group will remain clearly focused on a range of building products that target the same market sectors in which it currently operates. The emphasis will be on performance and to that end we will expect to leverage competitive advantages that both unify and strengthen all our businesses. As previously stated we count among these strengths leading market share positions, efficient low cost production and marketing and distribution networks that enjoy economies of scale. The market for structural steel buildings has been operating on short order books. Kingspan therefore does not have the luxury of a market place that is bursting at the seams for industrial buildings but has the advantage of continued conversion to composite panels. We therefore need to be cautious about our market over the next twelve months pending the impact of the new building regulations in the UK which are expected to boost the market in 2002/3. Office developments in the UK, particularly in the London area are expected to be buoyant for the next couple of years. This will benefit Kingspan particularly in raised access floor business, which should enjoy good growth over that period. Because of an extensive product range and the acquisition of technology that satisfies environmental issues, we expect the environmental containers business to show satisfactory growth in these products which are geared more towards the domestic housing sector. A number of acquisitions were made towards the end of 1999 and we would not expect these to be contributing significantly until next year. We expect a good outcome for the year with profits growth weighted more towards the second half. In relation to the medium term outlook, we intend to continue the successful strategy followed by the Group in recent years and expect to achieve significant year on year growth. We would hope to double the size of the Group over the next three to four years and to this end we will continue to seek out strategically important acquisitions. Eugene Murtagh 23rd March 2000 OPERATIONS REVIEW The Group's product portfolio has been broadened and deepened during the year. These products which, in the main, are highly specified, are all aimed at the construction market. All the main product groupings enjoyed a year of strong demand in the markets in which we operate. Composite panels had another good year with market conversion continuing in the UK market at the rate forecast. This product also enjoyed increased sales in Ireland, Benelux and Central Europe. In anticipation of demand continuing to improve, a new composite panel plant is being installed at our Sherburn, Yorkshire facility and will be in production in the third quarter of 2000. Capacity is also being increased in the Czech facility. The raised access floor business performed well. Hewetson was acquired in January 1999 and Durabella in October 1999. Both of these acquisitions make Kingspan the market leader in the UK and Ireland for raised access floors. A sizeable capital expenditure programme is underway to rationalise production of both companies in one location. Sales, marketing and administrative functions will also be merged to give maximum synergies out of both acquisitions. The environmental containers business put in a very strong performance during the year. In order to provide additional capacity and market share, Ferham was acquired in the UK during the year and Plastech in January 2000. Mini waste treatment plants are becoming a much more significant part of this product range. To fulfil the ambitions for this category of product, two additional acquisitions were made in 1999, namely: Entec in January 1999 and Klargester in December 1999. These companies are number two and number one respectively in Britain and Ireland in the mini waste treatment containers market and when put together with Kingspan's range it makes the Group the market leader in this area. There are market opportunities throughout Europe for this range of products. A new production line is being installed in Pembridge, Herefordshire to increase the capacity for rigid insulation boards. This capital expenditure will also improve efficiencies substantially and will make the product more competitive in the domestic housing market where cheaper products tend to dominate. We consider that Kingspan insulation boards provide a better solution in most applications. When the product is more competitive and when the new building regulations come into force, demand for these products should also improve. The remaining building components supplied by Kingspan (purlins, sections and ancillaries) continue to make steady progress. Demand for these products are influenced by the macro economy and unlike most other products within Kingspan's range they do not have substitution potential. FINANCIAL REVIEW Operating results Sales for 1999 at Euro 532.5 million were up Euro 163.7 million or 44% compared with 1998. Organic growth and translation effects accounted for Euro 46.7 million of the increase while the balance of Euro 117.1 million related to acquisitions in 1998 and 1999. The main acquisitions were raised access flooring companies Hewetson plc and the business of Durabella Limited, and environmental container companies Entec (Pollution Control) Limited and the businesses of Klargester and Ferham. Parts of the business of Hewetson, not related to raised access flooring, were disposed of during the year. These businesses added Euro 24.8 million to the year's sales. Set out below is a table of the effects of acquisitions and translation on sales and operating profits: Incremental effect of acquisitions completed Translation during: Ongoing Euro million 1998 effects 1998 1999 activities 1999 Sales 368.7 7.2 6.0 111.1 39.5 532.5 Operating profit 51.2 0.2 0.7 10.0 2.9 65.0 % change in operating profit 0.4% 1.4% 19.5% 5.7% 27.0% Net of proceeds on disposals, there was Euro 78.5 million invested in acquisitions in the year, of which Euro 56.5 million was in respect of goodwill capitalised. These acquisitions generated operating profits of Euro 8.4 million in the year, net of goodwill amortisation of Euro 2.0 million. On a regional basis, sales in the Republic of Ireland continued at a high level and increased by 23% over 1998 to Euro 80.2 million. This increase reflects the continued buoyancy in the Irish construction market and turnover of the acquired businesses in the region. Sales in Britain and Northern Ireland increased by 54% in value terms in total. The increase before acquisitions in the year was 12% in value terms. Continuing price deflation, reflected in both reduced selling prices and reduced input costs, hides a volume increase in some products (before acquisitions) in this market place of about 17%. Sales in Mainland Europe (including Central and Eastern Europe) increased by 34% to Euro 79.7 million. The geographic analysis of sales is as follows: 1999 1998 Region Euro million Euro million Republic of Ireland 80.2 65.1 Britain and Northern Ireland 357.7 231.2 Mainland Europe 79.7 59.4 Other 14.9 13.1 ----- ----- 532.5 368.8 ===== ===== The analysis of sales by product group is as follows: 1999 1998 Euro million Euro million Building components 304.6 255.1 Insulation products 72.6 68.7 Environmental containers 60.8 44.9 Raised access floors 69.7 0.0 Discontinued activities 24.8 0.0 ----- ----- 532.5 368.8 ===== ===== At the gross profit level, before taking account of disposals, average margins remained mostly unchanged at 31.0% with continuing operations producing 31.5% and acquisitions 28.2%. With some economies of scale to come in respect of acquisitions this can improve somewhat in 2000. On the other hand, the strength of Sterling is giving rise to higher input costs in respect of raw material in the Irish manufacturing plants and lower sales value in respect exports to the Euro zone from British manufacturing plants. This combination is off-set by the translation of sterling generated operating profits and together with hedging of the exposure the overall effect of the strength of sterling is broadly neutral at the earnings level. The operating margin, calculated before taking account of discontinued activities and goodwill amortisation, fell from 13.9% to 12.9% from a combination of increased transport and distribution costs, particularly in Britain, and increased administration expenses. Taxation The Group's effective tax rate, calculated before goodwill amortisation, fell from 23% in 1998 to 21% in 1999. This arose mainly from a reduced rate of corporation tax in the UK. Earnings per share Earnings per share at 27.2 cents (28.7 cents before goodwill) shows an increase of 24% over the previous year or 30% before goodwill amortisation. Earnings per share has grown at an annual compound rate of 26% over the three years 1997 through 1999. Dividends The total net dividend per share for 1999 is proposed at 2.50 cents. This comprises an interim dividend of 0.93 cents paid in November 1999, and a final dividend of 1.57 cents which it is proposed will be paid on 26th June 2000 to shareholders on the register on 26th May 2000. This represents an increase of 46% on the previous year. Dividend per share has grown at an annual compound rate of 33% over the three years 1997 through 1999. The dividend for the year is covered 10.9 times compared to 12.7 times in 1998. Cash flow The table below summarises the Group's funds flow for 1998 and 1999: 1999 1998 Euro million Euro million Inflows Profit before tax 58.7 48.0 Depreciation 13.5 10.1 Amortisation 3.0 0.9 Disposals 9.7 1.6 Share issues in Company 0.2 0.1 ----- ----- 85.1 60.7 ----- ----- Outflows Acquisitions 76.5 17.0 Capital expenditure 17.8 20.3 Dividends paid 3.4 2.5 Taxation paid 18.2 8.0 Dividends to minorities 1.6 1.7 Working capital increase 23.8 18.4 Purchase of shares in Hewetson 0.0 9.1 Other 8.9 (3.0) ----- ----- 150.2 74.0 ----- ----- Increase in net debt (65.1) (13.3) Net debt at start of year (35.4) (22.1) ----- ----- Net debt at end of year (100.5) (35.4) ===== ===== The free cash flow for the year, comprising operating cash flow less taxation paid, amounted to Euro 32.7 million compared to Euro 33.1 million last year. This represents 19.5 cents per share (1998: 19.8 cents). This was negatively affected by changes to the timing of payment of corporation tax in the UK to the extent of approximately Euro 5 million. There was an increase in working capital (stocks, debtors and creditors) at year end compared to 31st December 1998 of Euro 23.8 million excluding working capital included in acquisitions of Euro 14.7 million. Year end working capital expressed as days sales in 1999 was 62 days compared to 61 days the previous year. There was investment in fixed assets of Euro 17.8 million as the Group continues to expand production capacity and efficiency. Return on Capital Employed The return on average capital employed, including goodwill capitalised in 1998 and 1999, was 34.5% compared to 42.2% in 1998. While all Group acquisitions when fully integrated are giving return on investment in excess of 20%, the effect is to dilute the overall return on capital. If goodwill previously written off of Euro 37 million was still carried on the balance sheet, the return on average capital employed would have been 28.8% in 1999 compared to 31.4% in 1998. Acquisitions since the year end With effect from 21st January 2000, the Group acquired Plastech, a business based in Rotherham, UK which manufactures and distributes environmental containers. This acquisition adds to the Group's rotational moulding capacity and provides the Group with large scale injection moulding capabilities. Treasury and borrowing Net interest payable amounted to Euro 6.3 million and this was covered 10.3 times (1998: 15.6 times). Net year end borrowings amounted to Euro 100.5 million representing gearing of 72%. Given the present interest rate environment, approximately 50% of the Group's borrowings are the subject of interest rate hedges which limits the Sterling interest rate exposure to between 6.2% and 8.0% for a three year period to 2002. Balance sheet exposure in relation to foreign currency is hedged as far as possible by borrowings in the same currency. Foreign exchange transaction and translation exposures are hedged internally as far as possible and to the extent that they are not, such exposures are hedged up to one year forward. Summary The Group's balance sheet is in a healthy financial position and strong cash generation continues to enable the Group to expand safely. There is considerable scope to fund the continuation of our growth strategy without recourse to shareholders. ***************************************************************************** GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST DECEMBER 1999 Continuing operations Discontinued Acquisitions activities Total Total 1999 1999 1999 1999 1998 EURO'000 EURO'000 EURO'000 EURO'000 EURO'000 Turnover 421,433 86,329 24,779 532,541 368,794 Cost of sales (288,872) (61,989) (18,327) (369,188) (254,292) ------- ------ ------ ------- ------- Gross profit 132,561 24,340 6,452 163,353 114,502 Distribution costs (25,490) (2,246) (1,460) (29,196) (19,601) Administrative (51,638) (11,729) (3,292) (66,659) (43,174) expenses Goodwill amortisation (480) (2,014) 0 (2,494) (490) ------- ------ ------- ------- ------- Operating profit 54,953 8,351 1,700 65,004 51,237 ======= ====== ======= Interest payable and similar charges (7,498) (3,991) Interest receivable and other income 1,176 710 ------- ------- Profit on ordinary activities before taxation 58,682 47,956 Tax on profit on ordinary activities (12,875) (11,167) ------- ------- Profit on ordinary activities after taxation 45,807 36,789 Minority interest (152) (305) ------- ------- Profit attributable to ordinary shareholders 45,655 36,484 Ordinary dividends (4,198) (2,873) ------- ------- Profit retained for the year 41,457 33,611 ======= ======= Basic earnings per share 27.2c 21.9c Diluted earnings per share 26.8c 21.4c Basic earnings per share (before goodwill amortisation) 28.7c 22.1c Dividend per share 2.50c 1.71c GROUP BALANCE SHEET 31.12.99 31.12.98 AS AT 31ST DECEMBER 1999 EURO'000 EURO'000 FIXED ASSETS Tangible assets 107,387 77,199 Intangible assets 73,197 13,267 Financial assets 556 9,174 ------- ------- 181,140 99,640 ------- ------- CURRENT ASSETS Stocks 49,807 33,219 Trade and other debtors 136,386 87,895 Cash and term deposits 28,515 71,854 ------- ------- 214,708 192,968 ------- ------- CREDITORS Amounts falling due within one year Trade and other creditors 104,983 71,044 Bank and other borrowings 54,856 35,718 Deferred consideration 2,520 980 Dividends 2,636 1,808 ------- ------- 164,995 109,550 ------- ------- NET CURRENT ASSETS 49,713 83,418 ------- ------- TOTAL ASSETS LESS CURRENT LIABILITIES 230,853 183,058 ------- ------- CREDITORS Amounts falling due after more than one year Bank and other borrowings 61,909 69,171 Deferred consideration 9,860 1,417 ------- ------- 71,769 70,588 ------- ------- PROVISIONS FOR LIABILITIES AND CHARGES 12,730 13,510 ------- ------- CAPITAL GRANTS 1,740 1,807 ------- ------- 144,614 97,153 ======= ======= CAPITAL AND RESERVES Called-up share capital 21,827 21,271 Share premium account 15,884 15,747 Revaluation reserve 891 891 Profit and loss account 94,908 53,958 Other reserves 5,991 (2,579) ------- ------- Shareholders' funds 139,501 89,288 ------- ------- MINORITY INTERESTS Including non-equity interests 5,113 7,865 ------- ------- 144,614 97,153 ======= ======= GROUP CASH FLOW STATEMENT 1999 1998 FOR THE YEAR ENDED 31ST DECEMBER 1999 EURO'000 EURO'000 Net cash inflow from operating activities 57,426 43,597 ------- ------- Returns on investments and servicing of finance Interest received 1,178 721 Interest paid (7,655) (3,129) Interest element of finance lease rental payments (32) (10) ------- ------- Net cash outflow from returns on investments and servicing of finance (6,509) (2,418) ------- ------- Taxation Corporation tax paid (18,170) (8,091) ------- ------- Capital expenditure and financial investment Purchase of tangible fixed assets (18,073) (20,322) Less new finance leases 319 0 Purchase of financial fixed assets 0 (9,122) Proceeds on sale of tangible fixed assets 255 1,561 ------- ------- Net cash outflow for capital expenditure and financial investment (17,499) (27,883) ------- ------- Acquisitions and disposals Purchase of subsidiary undertakings (72,461) (9,664) Net cash acquired with acquisitions 8,978 3,125 Payment of deferred consideration in respect of acquisitions (1,372) (1,434) Acquisition of patent rights (551) 0 Disposal of subsidiary undertakings 10,315 0 Net cash disposed with disposals (625) 0 ------- ------- Net cash outflow for acquisitions and disposals (55,716) (7,973) ------- ------- Equity dividends paid (3,370) (2,545) ------- ------- Cash outflow before use of liquid resources and financing (43,838) (5,313) ------- ------- Management of liquid resources Decrease/(increase)in bank deposits 3,390 (7,573) ------- ------- Financing Issue of shares 185 199 Loans drawn down 7,253 66,810 Repayment of loans (16,211) (11,840) Capital element of finance lease repayments (298) (222) Acquisition of own shares (519) 0 Capital grants received 15 246 Acquisition of shares held by minorities (1,554) 0 Dividends paid to minorities (1,574) (1,588) ------- ------- Net cash flow from financing (12,703) 53,605 ------- ------- (Decrease)/increase in cash for the year (53,151) 40,719 ======= ======= GROUP CASH FLOW STATEMENT 1999 1998 FOR THE YEAR ENDED 31ST DECEMBER 1999 EURO'000 EURO'000 Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash for the year (53,151) 40,719 (Decrease)/increase in liquid resources (3,390) 7,573 Cash flow from movement in debt, lease finance & deferred consideration 10,628 (53,314) ------- ------- Change in net debt resulting from cash flows (45,913) (5,022) Loans and finance leases acquired with subsidiaries (2,815) (6,761) Deferred consideration acquired with subsidiaries (2,895) 0 Deferred consideration arising on acquisitions during the year (7,125) (2,286) New finance leases (318) 0 Translation adjustment (6,132) 770 ------- ------- Movement in net debt in the year (65,198) (13,299) Net debt at start of year (35,432) (22,133) ------- ------- Net debt at end of year (100,630) (35,432) ======= ======= STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 1999 1998 FOR THE YEAR ENDED 31ST DECEMBER 1999 EURO'000 EURO'000 Profit for financial period attributable to Group shareholders 45,655 36,484 Exchange adjustments 8,570 (4,134) ------- ------- Total gains and losses recognised since last annual report 54,225 32,350 ======= ======= SUPPLEMENTARY INFORMATION 1. REPORTING CURRENCY The financial statements are presented in 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 rate Year end rate Euro = 1999 1998 1999 1998 Irish Pound 0.7876 0.7876 0.7876 0.7876 Pound Sterling 0.6592 0.6775 0.6217 0.7054 Dutch Guilder 2.2037 2.2239 2.2037 2.2037 Belgian Franc 40.3399 40.6954 40.3399 40.3399 Deutschemark 1.9558 1.9728 1.9558 1.9558 Hong Kong Dollar 8.2775 8.7095 7.8090 9.0925 Czech Koruna 36.8823 35.6762 36.1030 35.1671 2. TURNOVER 1999 1998 The analysis by class of activity is as follows: EURO'000 EURO'000 Building components 304,555 255,111 Raised access flooring 69,692 0 Insulation boards 72,662 68,744 Environmental containers 60,853 44,939 Discontinued activities 24,779 0 ------- ------- 532,541 368,794 ======= ======= 1999 1998 The analysis by geographical area is as follows: EURO'000 EURO'000 Republic of Ireland 80,174 65,056 Britain and Northern Ireland 357,689 231,253 Mainland Europe 79,726 59,372 Other 14,952 13,113 ------- ------- 532,541 368,794 ======= ======= 3. DIVIDENDS 1999 1998 EURO'000 EURO'000 Ordinary dividends Paid: Final dividend - 1998 1 3 Interim dividend 0.93c per share (1998: 0.63c per share) on 167,871,445 shares 1,561 1,062 Payable: Final dividend 1.57c per share (1998: 1.08c per share) on 167,895,445 shares 2,636 1,808 ------- ------- 4,198 2,873 ======= ======= The Board is recommending the payment of a final dividend of 1.57 cents per share to be paid, subject to shareholder approval, on 26th June 2000 to shareholders registered at close of business on 26th May 2000. 4. RECONCILIATION OF MOVEMENTS IN 1999 1998 SHAREHOLDERS' FUNDS EURO'000 EURO'000 Profit for the financial year attributable to Group shareholders 45,655 36,484 Dividends (4,198) (2,873) ------- ------- 41,457 33,611 Other recognised gains and losses for the year 8,571 (4,134) New share capital subscribed 185 199 ------- ------- Net addition to shareholders' funds 50,213 29,676 Opening shareholders' funds 89,288 59,612 ------- ------- Closing shareholders' funds 139,501 89,288 ======= ======= 5. RECONCILIATION OF OPERATING PROFIT TO 1999 1998 NET CASH FLOW FROM OPERATING ACTIVITIES EURO'000 EURO'000 Operating profit 65,004 51,237 Depreciation charges 13,477 10,105 Amortisation of intangible assets 2,989 965 Loss/(profit)on sale of tangible assets 56 (170) Capital grants amortised (235) (232) (Increase)/decrease in stocks (3,932) (7,406) (Increase)/decrease in debtors (31,427) (19,758) Increase in creditors 11,494 8,856 ------- ------- 57,426 43,597 ======= ======= 6. EARNINGS PER SHARE 1999 1998 EURO'000 EURO'000 The calculations of earnings per share are based on the following: Profit attributable to ordinary shareholders 45,655 36,484 ======= ======= Number of Number of shares ('000) shares ('000) 1999 1998 Weighted average number of ordinary shares for the calculation of basic earnings per share 167,706 166,968 Dilutive effect of share options 2,630 3,330 ------- ------- Weighted average number of ordinary shares for the calculation of diluted earnings per share 170,336 170,298 ======= ======= 1999 1998 Cents Cents Basic earnings per share 27.2 21.9 ===== ===== Diluted earnings per share 26.8 21.4 ===== ===== Basic earnings per share before goodwill amortisation 28.7 22.1 ===== ===== 7. RESTATEMENT OF PRIOR YEAR BALANCE SHEET Following implementation of Financial Reporting Standard 12 - Provisions, contingent liabilities and contingent assets (FRS 12), provisions amounting to Euro 11,721,000 at 31st December 1998 which were previously included in trade and other creditors in the balance sheet, are now analysed separately as part of Provisions for liabilities and charges. 8. ABBREVIATED ACCOUNTS The 1999 financial information is an abridged version of the Group's financial statements which have not yet been filed with the Registrar of Companies but upon which the auditors have given an unqualified audit report. The 1998 figures are an extract from the Group's statutory accounts for the year ended 31 December 1998 which have been filed with the Registrar of Companies and audited and reported upon without qualification. 9. DISTRIBUTION OF THIS PRELIMINARY ANNOUNCEMENT These results are available on the Group's website at www.kingspan.com. A printed copy is available to the public from Friday 24th March 2000 at the Company's Registrars: Computershare Services (Ireland) Limited, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18.

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