Final Results
Kingspan Group PLC
03 March 2008
KINGSPAN GROUP PLC
RESULTS FOR THE YEAR ENDED 31st DECEMBER 2007.
Kingspan ('Kingspan'), the leading manufacturer of an integrated range of energy
conserving building solutions, announces preliminary results for the year ended
31 December 2007.
Financial highlights:
2007 2006 % Change
Turnover €1,863.2mn €1,461.2mn 27.5%
Operating profit €236.7mn €194.0mn 22.0%
Net profit before tax €224.2mn €185.2mn 21.0%
Basic earnings per share 110.5 €cent 89.8 €cent 23.0%
Dividend per share for the year 25.0 €cent 19.0 €cent 31.5%
Dividend cover 4.4 times 4.7 times
Interest cover 22.8 times 26.7 times
(EBITDA/Net Interest)
Gearing ratio 33.4% 34.3%
(net debt as % shareholders funds)
Operational highlights:
• Increased penetration of Insulated Panels and rigid Insulated Boards
in the UK
• Further significant progression in CEE with turnover up 33%.
• Total acquisition and capital expenditure of €194.6mn:
o Commissioned new phenolic insulation line in Ireland and new Insulated
Panel facility in Turkey;
o Commencement of building projects for additional lines/greenfield
plants in the UK, Czech Republic, Poland, the Netherlands and Canada.
• Solid, early stage progress in the newer markets of Australia, New
Zealand & Canada.
• Encouraging growth in Offsite residential in the UK with significant
like for like growth in order book.
• Outstanding performance of Access Floors, both UK and North America.
Gene Murtagh, Chief Executive of Kingspan commented:
'Kingspan delivered another record year of profitable growth in 2007. Our
strategy of focusing on higher growth, energy sensitive segments of the building
industry with a diverse product range will continue to be beneficial in dealing
with a backdrop of challenging market conditions and the ongoing battle against
climate change.
As a Group, we have little control over global market conditions, but are
clearly taking all reasonable measures to respond to the immediate challenges
facing the business. That aside, we believe our ability to penetrate further
into existing markets and our continually expanding geographic reach, coupled
with the growing global demand for energy conserving building systems, will
provide excellent growth opportunities for Kingspan in the longer term.'
For further information contact:
Murray Consultants Tel: +353 (0) 1 4980 300
James Dunny
Buchanan Communications Tel: +(44) 207 466 5000
Tim Thompson / Jeremy Garcia
Chief Executive's Review
2007 was another year of strong organic development throughout the Group,
resulting in a period of record earnings with operating profit growing 22% to
€236.7mn.
The Group's model of focusing on higher growth, energy sensitive segments of the
building industry proved resilient in a year of mixed overall performance. The
core energy conservation qualities of many of the Group's products again
demonstrated Kingspan's ability to relentlessly convert specifiers and end-users
from traditional and less effective materials towards more modern solutions.
The enormity of climate change, and its accelerating implications, continues to
gain much greater exposure than at any stage in the past. With that comes the
very evident shift in demand for all solutions that will contribute to an easing
of these pressures over the medium to long term. Buildings, be they
residential, commercial or manufacturing account for in excess of 40% of carbon
emissions globally. Recognising this, Kingspan has, and continues to innovate
and deliver solutions today that will dramatically reduce the need for energy
tomorrow, and provide compelling economic payback. Becoming the first in the
world to develop the Zero Carbon home, which in itself meets the 2016 standards
as outlined in the Code for Sustainable Homes, is the latest example of this
innovation. This code envisages much higher insulation standards, rainwater
recovery, use of renewables such as solar hot water and power generation, all
products currently in the Kingspan suite.
Insulated Panels & Boards
Insulated Panels
Representing 40% of Group sales, Insulated Panels continued its pattern of
strong organic sales growth, delivering revenue of €763.6mn in 2007, an increase
of 33% over prior year. Growth was achieved in all markets.
In Ireland, volumes grew in the year by 9% in a non-residential market that
continued to display strength despite weakness in other segments of
construction. In particular, retail and distribution drove much of the progress
in the year. However, the buoyancy of the first half was not evident in the
second half. Low rise non-residential activity in the UK continued to be as
robust as in recent years, and the market grew by an estimated 5% in 2007.
Penetration growth continued, which together with a strong market contributed to
a volume increase of 15%. The Group's R&D resources delivered a number of new
products to the market, particularly in the area of architectural facades. As
yet sales levels are low as the concepts move through the process of launch,
specification and receipt of order, but progress has been encouraging for
product specifications in these newer, future segments, including the Group's
EnergiPanel. It will be 2009 before these specifications materialise into
orders.
Central & Eastern Europe, together with Turkey, once again showed exceptional
growth in the Panel business. Strong markets, favourable mix, and expansions
into a small number of new markets all combined to deliver 48% growth both in
revenue and volume in the region. This business is currently in the process of
expanding its product offering of architectural, roofing and Firesafe(R)
solutions throughout the region which will form the foundation for longer term
sustainable growth. Significant additional capacity is being added to the Czech
facility in 2008, in addition to that in Turkey successfully commissioned during
2007. The Turkish and Middle Eastern markets remain very competitive however,
and it is a medium to longer term process to bring these business opportunities
into satisfactory levels of profitability.
Canada and Australia, both delivered solid progress in 2007. In Australia, the
focus remained largely on expanding our presence in the cold and food store
sectors, and towards the end of the period, production of roofing systems
commenced. This, together with an architectural wall offering which began
production in early 2008, significantly broadens the longer term opportunity for
Kingspan in that region. In Canada, the front end of the business has been
rebranded Kingspan, and the manufacturing side will become fully integrated as
we establish a new, multi-product panel facility south of Toronto during 2008.
To date, both the Canadian and Australian markets have been slow to embrace
policies to deal with the challenges of climate change. During 2007, there was
evidence that this is beginning to turn, as was also the case in the US where
the Group intends to become more established over the medium term.
Insulation Boards
Representing 15% of Group sales, Insulation sales at €284.2mn grew by 17% over
prior year, in all markets.
In Ireland, and against a challenging backdrop, sales in Insulation Boards grew
by 7.7%.
The drivers for this robust performance were strong commercial construction,
improving standards of insulation, steady one-off residential construction, and
an increasing need for high performance insulation in Northern Ireland. In
addition to this, Kingspan's phenolic insulation sales are outgrowing the
market, which are being further supported by a newly commissioned production
line in Ireland during the year.
In Britain sales increased by 20%, continuing the pattern of growth displayed in
recent years. The Group's high performance rigid insulation business is
optimally positioned to benefit from the rapid improvement in thermal building
standards. Accordingly, the market attainable by Kingspan's products continues
to expand, as does our product range, and our capacity. Early 2008 will see the
commissioning of a new Northern UK PIR insulation facility designed to support
the longer term growth and service demands of Kingspan's client network through
the UK, whilst significantly enhancing the Group's ability to retain its clear
number one market position in the face of growing demand and an increasingly
competitive environment.
On Mainland Europe, both Western and Central regions performed well in 2007.
Benelux sales grew significantly, particularly in phenolic, as did sales in our
insulation business' more recent markets in CEE. The Group places growing
emphasis on its ability to expand this product offering throughout Mainland
Europe, and has committed to substantial greenfield expansion in both the
Netherlands and Poland where production is expected in early 2009.
Offsite & Structural
Representing 18% of Group sales, this Division generated sales of €326.8mn for
2007, growth of 33% over prior year, driven entirely by strong progress in the
UK market.
Offsite construction has become much more prevalent in the UK in recent years,
which is clearly evidenced by year on year growth of 66% in that market during
2007. The Group's emphasis has been placed predominately on highly insulated
timberframe applications, which showed growth in penetration in the England/
Wales markets from 13% to 15% of residential construction. Also the Group's
secondary steel products performed satisfactorily in both the UK and Ireland.
More significant for the longer term is the adoption in the UK of the Code for
Sustainable Homes which has mapped out a mandatory roadmap to zero carbon for
all new dwelling construction by 2016. Whilst perceived by many as an ambitious
timeline, Kingspan made a practical contribution to this debate by developing
and building the world's first net zero carbon house, the Lighthouse, during
2007. The Lighthouse now represents the future standard, versions of which will
be increasingly reflected in the products offered by the Group. Similarly in
Ireland regulations are trending in this direction, the first step of which will
be a 40% energy efficiency improvement in late 2008, followed in 2010 by a 60%
improvement on today's levels, plus mandatory use of renewable energy. The
Group's products have been developed and tailored for these advancing standards.
In the shorter term however, Ireland's residential construction market is
experiencing a dramatic downturn, likely to last at least until late 2009.
To-date this has had a significant effect on this business' sales and profits,
to the extent that the unit traded at breakeven in 2007. Appropriate measures
have been taken, including satellite plant closures, to minimise the effect on
the business in the short term.
Environmental & Renewables
Representing almost 16% of Group sales, this Division grew sales by 17% to
€291.5mn in the year, owing largely to a continued strong performance in Hot
Water Systems, and the addition of a number of bolt-ons, including Thermomax,
now Kingspan's own manufactured solar thermal solution.
The Group's Hot Water Systems business in the UK continued its growth trend,
through market share and penetration gains. Increasingly, pressurised systems
are replacing traditional gravity fed systems and Kingspan has positioned itself
ideally to benefit from this trend. In the short term, however, the slowdown in
residential construction in the UK and Ireland means we will not see the full
benefit of the transition in the coming year. It is further envisaged that
renewable sources of energy for hot water will become much more evident in the
medium term in the UK & Ireland, and indeed across Europe. The Thermomax
product range now puts the Group at the forefront of this emerging opportunity
and renewables will favour storage over direct heating, pointing towards
sustainable growth in hot water storage. Augmenting our position in this sector
will be central to this business' development. The Effluent Treatment products
again delivered a steady performance, but Fuel Storage suffered greater warranty
related costs than in previous years. Whilst Fuel Storage products remain a
robust contributor to the sales line, warranty issues alone hampered the
business' outcome and compressed the Division's margin by approximately 5% in
2007. During 2008, legal proceedings will commence against the raw material
manufacturer to recover past and future costs.
On Mainland Europe, profits grew once again as the small sales subsidiaries
around the continent delivered another year of local growth. The Group will
continue to focus on this region in 2008, through both organic and acquisition
led opportunities.
Access Floors
Representing almost 11% of Group sales, turnover in this Division grew by 32% to
€197.1mn in 2007.
In North America, the business delivered an excellent performance, with record
profits, despite sales trailing the sector's last peak. Good product mix, lean
cost and gradual growth in penetration all contributed to the strong
performance. This was further supported by the small but advantageous bolt-on
of Tate ASP in Canada, which is now fully integrated and partially supplied by
the Group's US operations. Order intake activity was well ahead of prior year.
In many ways, performance of the UK based business mirrored that of North
America. Strong topline growth, exceptionally low cost base and record
operating margins. Vacancy rates in London, in particular, remained extremely
low at year end. Notwithstanding a slight weakening in vacancy rates in the
early part of 2008, we expect the order bank to deliver a strong first half to
the current year.
Strategy
The Group's strategic focus is to pursue a broadening geographic footprint of
sustainable building solutions, with market leading positions in regions where
energy conservation and creative aesthetics are the priority. In support of
this goal, significant internal resources and emphasis has been placed on
nurturing a continuous flow of new and leading edge products and solutions to
our markets, produced in the most highly efficient manufacturing environment
possible.
Outlook
The backdrop of recent global economic and financial turmoil has made itself
increasingly evident in most construction markets in the developed world.
Limited access to debt markets for investors and developers along with dwindling
consumer confidence is resulting in contraction of building activity generally.
While it is still early in the year, if present market conditions persist it is
likely to result in the Group's earnings performance being appreciably behind
the 2007 outcome.
The Group is taking all reasonable measures to respond to the immediate
challenges it faces. Kingspan's strategy, however, leaves it well positioned to
capitalise on future improvements in global construction markets. The climate
change agenda is here to stay resulting in both voluntary and mandatory measures
to alleviate its impact on our surroundings. Longer term, the Group remains
absolutely confident and ambitious about its ability to grow, and is fully
committed to its strategy of increasing penetration in existing markets and
further geographic expansion in response to growing global demand for energy
conserving building systems.
Financial Review
Results
Turnover for the year ended 31st December 2007 was €1,863.2mn, an increase of
27.5% on 2006. Acquisitions completed during the course of the year generated
€43.6mn additional turnover.
Profit before tax was €224.2mn, 21% up on the €185.2mn achieved in 2006.
Earnings attributable to ordinary shareholders were €187.3mn (2006:€151mn).
Cash generation remained strong with earnings before interest, tax, depreciation
and amortisation (EBITDA) of €284.2mn, which represented a 20.4% increase on the
€236mn out-turn in 2006. The amortisation charge for the year amounted to
€4.6mn (2006:€2.7mn).
Turnover and Margins
Group turnover increased by 27.5% or €402mn compared to 2006. The tables below
summarise the Profit and Loss account and detail the Group's Turnover by Class
of Activity and Geographical Area and the year on year growth achieved.
Summary Profit and Loss Account:
2007 2006
€'mn €'mn
Sales Revenue 1,863.2 1,461.2
Gross Profit 562.8 456.6
Gross Profit % 30.2% 31.2%
Operating Costs 322.3 259.9
240.5 196.7
Add profit on sale of Land/ 3.9 -
Buildings
Less Goodwill Impairment (3.1) -
Less Amortisation of Intangibles (4.6) (2.7)
Operating Result 236.7 194.0
Analysis by Class of Activity
Year ended Year ended % Change €'mn increase
31.12.07 €'mn 31.12.06 2007-2006
€'mn
Insulated Panels 763.6 574.1 +33% +189.5
Insulation Boards 284.2 242.4 +17.2% +41.8
Insulated Panels & Boards 1,047.8 816.5 +28.3% +231.4
Raised Access Flooring 197.1 149.5 +31.8% +47.6
Environmental &.Renewables 291.5 249.0 +17.1% +42.5
Offsite & Structural 326.8 246.2 +32.7% +80.6
1,863.2 1,461.2 +27.5% +402
Year ended Year ended % Change €'mn increase
31.12.07 31.12.06 2007-2006
€'mn €'mn
Republic of Ireland 270.4 261.5 +3.4% +8.9
Britain and Northern Ireland 1,036.7 822.1 +26.1% +214.6
Mainland Europe 375.5 272.1 +38% +103.4
Americas 144.5 78.9 +83% +65.6
Other 36.1 26.6 +35.7% +9.5
1,863.2 1,461.2 +27.5% +402
The gross profit margin was 30.2%, down from 31.2% last year. The operating
costs at €322.3mn represent 17.3% of sales revenue, compared to 17.8% in the
previous year.
Within the product groups, the operating margin in insulated panels and
insulation boards, which together represent 56% of group sales revenue,
increased to 16.2% (2006:15.8%). The margin in off-site and structural products
fell to 7.0% (2006:11.7%), the result of the significant fall-off in sales in
Ireland in the second half of the year. This business has now been downsized
to the current market environment. The margin in environmental and renewable
products at 4.8% is down from 8.6% in 2006. This division is in the process of
rationalizing production sites, the benefit of which will only come through in
2008/9, and continues to be negatively affected by warranty costs. Access
floor products delivered an operating margin of 17.3% (2006:11.8%) and benefited
in the year from a good mix of products, a favourable procurement environment
and from the timing of the final completion of certain projects.
The ongoing amortisation of intangibles was €4.6mn in the year (2006:€2.7 mn).
There was a profit of €3.9mn on the disposal of a property, resulting from the
relocation of a business to a more modern and efficient building, and there was
an impairment of goodwill charge of €3.1mn relating to the discontinuance of a
particular product line.
The operating margin, being profits before interest and tax, as a percent of
turnover, and after accounting for the items above, was 12.7% (2006:13.3%)
Taxation
The effective tax rate in the year at 16.4% compares with 18.1% last year.
Earnings Per Share
Basic earnings per share at 110.5 cent shows an increase of 23% over the
previous year. This figure has grown at an annual compound rate of 20% over the
ten year period 1997 to 2007. The average number of shares in issue during 2007
was 169.6mn and the number of shares in issue at 31st December 2007 was 170.4mn.
Dividends
Subject to shareholder approval at the 2008 Annual General Meeting, it is
proposed that the dividend for 2007 will be 25 cent per share. This consists of
an interim dividend of 8.0 cent per share paid on 5th October 2007, and a final
dividend of 17 cent per share proposed to be paid on 30th May 2008 to
shareholders on the register on 14th March 2008. This represents a 31.5%
increase on the previous year. The dividend for the year is covered 4.4 times by
earnings which compares to 4.7 times in 2006, which is line with previously
given management guidance of a progressive dividend policy so as to bring
dividend cover to a level closer to industry norms.
Funds Flow
The table below summarises the Group's funds flow for 2007 and 2006:
2007 2006
€'mn €'mn
Operating profit 236.7 194.0
Depreciation 39.8 39.3
Amortisation 7.7 2.7
Working capital increase (66.8) (48.5)
Pension contributions (3.4) (4.6)
Interest (12.3) (8.4)
Taxation paid (27.0) (25.5)
Others 17.6 17.7
Free cash 192.3 166.7
Acquisitions (49.8) (107.3)
Net capital expenditure (140.3) (57.7)
Dividends paid (35.5) (25.1)
(225.6) (190.1)
Cash flow movement (33.3) (23.4)
Debt translation (4.1) (0.7)
(Increase) in net debt (37.4) (24.1)
Net debt at start of year (187.6) (163.5)
Net debt at end of year (225.0) (187.6)
The free cash flow for the year, representing operating cash flow less interest
and taxation paid, amounted to €192.3mn, which was up 15% on last year. This was
used to fund investment of €194.6mn in acquisitions and capital expenditure, and
dividends of €35.5mn to shareholders
Operational working capital at the year end was €285.4mn (2006:€229.7mn) and
represented 15.3% of turnover (2006:15.7%).
Overall net debt, including amounts outstanding in respect of acquisitions, at
the end of year was up slightly on the previous year at €225mn (2006:€187.6mn),
which represents gearing of 33.4%.
Return on Capital Employed
The return on capital employed, being profit before interest and taxation as a
percentage of shareholders' funds plus net debt at the year end, was maintained
at 26.4%.
Treasury
At 31st December 2007 the Group had total facilities of €533mn comprising of
syndicated bank facilities of €275mn, €151.5mn loan notes and €106.5mn of
overdraft and other facilities. The syndicated facilities include a €50mn term
loan with repayments of €25mn per annum to 16th December 2009, and a €225mn
revolving credit facility which will also mature at that date. The Group's
private placement of $200mn (€151.5mn) loan note matures in March 2015 ($158mn)
and March 2017 ($42mn).
The drawn down bank facilities and loan notes at 31st December 2007 were
€248.4mn, comprising €171.3mn EUR debt, €77.1mn of STG debt.
The loan notes, which represent 60% of the drawn down facilities, are fixed out
to maturity in Euro at 4.15%. The remainder of the drawn down facilities are
subject to floating rates.
Currently the Group does not enter into any external hedges to limit the
exposure on translating non-Euro earnings.
Foreign exchange transaction exposures are internally hedged as far as possible
and to the extent that they are not, such material residual exposures are hedged
on a rolling 12 month basis. Based on current cashflow projections for the
existing businesses to 31st December 2008, it is estimated that the Group has
the need to sell the equivalent of €55mn in Sterling for Euro and sell the
equivalent of US$24m in Sterling for US Dollar. As at 31st December 2007,
hedges were in place covering over 50% of the Sterling to Euro exposure at a
weighted average rate of 0.6990, and covering over 60% of the Sterling to US$
exposure at a weighted average rate of 2.01.
Pension Deficit
The Group has three legacy defined benefit pension schemes in the U.K. These
schemes have been closed and the liability relates only to past service. As at
31st December 2007 there were assets in the schemes of €61.4mn and actuarial
assessed pension liabilities of €67.9mn, giving a net deficit of €6.5mn. The
corresponding liability at 31st December 2006 was €20.9mn.
The main drivers in this movement were:
Assets €'mn Liabilities €'mn Net €'mn
Opening deficit 61.3 (82.2) (20.9)
Translation (5.6) 7.5 1.9
Contributions paid 3.4 - 3.4
Benefits paid (1.7) 1.7 0
Actuarial gains/(losses) 0.3 8.9 9.2
Net return on asset 3.7 - 3.7
Interest cost - (3.8) (3.8)
Closing deficit 61.4 (67.9) (6.5)
Summary
Overall the Group is in a strong financial position going into 2008. The
balance sheet is conservatively geared with interest cover significantly above
both banking covenants and company targets. This will enable the Group to
comfortably fund its anticipated growth, through both organic means and bolt on
acquisitions.
GROUP INCOME STATEMENT
for the year ended 31 December 2007
Continuing
Operations Acquisitions Total Total
2007 2007 2007 2006
€ '000 € '000 € '000 € '000
Revenue 1,819,654 43,585 1,863,239 1,461,170
Costs of sales (1,266,178) (34,282) (1,300,460) (1,004,613)
Gross profit 553,476 9,303 562,779 456,557
Operating costs (317,105) (9,010) (326,115) (262,512)
Operating result 236,371 293 236,664 194,045
Finance costs (14,297) (11,620)
Finance income 1,837 2,775
Result for the year before 224,204 185,200
tax
Income tax expense (36,877) (33,520)
Net result for the year 187,327 151,680
Profit attributable to:
Shareholders of Kingspan 187,295 151,032
Group plc
Minority Interest 32 648
Net Result for the year 187,327 151,680
Earnings per share for the
year
Basic 110.5 89.8
Diluted 108.5 87.8
GROUP BALANCE SHEET
as at 31 December 2007
2007 2006
€ '000 € '000
Assets
Non-current assets
Goodwill 303,966 287,580
Other intangible assets 14,164 17,117
Property, plant and 398,688 294,875
equipment
Financial assets 209 227
Deferred tax assets 2,401 2,694
719,428 602,493
Current assets
Inventories 152,140 130,868
Trade and other receivables 386,744 357,966
Cash and cash equivalents 66,626 69,060
605,510 557,894
Total assets 1,324,938 1,160,387
Liabilities
Current liabilities
Trade and other liabilities 253,454 259,112
Provisions for liabilities 54,670 42,554
and charges
Deferred consideration 3,351 5,659
Interest bearing loans and 46,102 34,631
borrowings
Current tax liabilities 32,861 26,130
390,438 368,086
Non-current liabilities
Pension and other employee 6,509 20,958
obligations
Interest bearing loans and 234,392 205,979
borrowings
Deferred tax liabilities 12,933 8,212
Deferred consideration 7,750 10,355
261,584 245,504
Total liabilities 652,022 613,590
NET ASSETS 672,916 546,797
Equity
Equity attributable to shareholders of Kingspan Group
plc
Called-up share capital 22,146 22,161
Additional paid-in share 31,917 26,341
capital
Other reserves (67,568) (25,601)
Revaluation reserve 713 713
Capital redemption reserve 723 513
Retained earnings 681,755 519,390
669,686 543,517
Minority interest 3,230 3,280
TOTAL EQUITY 672,916 546,797
STATEMENT OF RECOGNISED INCOME AND EXPENSE
as at 31 December 2007
2007 2006
€ '000 € '000
Profit for financial year attributable to Group 187,295 151,032
shareholders
Currency translation (43,670) (4,657)
Cash flow hedging in equity 1,702 (337)
Actuarial losses in defined benefit 9,203 (685)
pension scheme
Income taxes relating to items charged or credited to (3,110) 206
equity
Total recognised income and expense for 151,420 145,559
the year
GROUP CASH FLOW STATEMENT
for the year ended 31 December 2007
2007 2006
€ '000 € '000
Operating activities
Result for the year before 224,204 185,200
tax
Adjustments 62,350 54,393
Change in inventories (21,759) (18,446)
Change in trade and other (37,829) (68,313)
receivables
Change in trade and other 3,519 48,669
payables
Pension contributions (3,447) (4,561)
Cash generated from 227,038 196,942
operations
Taxes paid (26,985) (25,498)
Net cash flow from operating 200,053 171,444
activities
Investing activities
Additions to property, plant and (144,880) (59,420)
equipment
Proceeds from disposals of property, plant and 7,310 1,747
equipment
Proceeds from financial - 528
assets
Purchase of subsidiary (48,647) (70,815)
undertakings
Net cash acquired with 2,284 (7,073)
acquisitions
Payment of deferred consideration in respect of (2,163) (16,102)
acquisitions
Dividends paid to minorities (24) (14)
Interest received 1,846 2,654
Net cash flow from investing activities (184,274) (148,495)
Financing activities
Proceeds from bank loans and loan notes - -
Repayment of bank loans 35,487 (35,998)
Discharge of finance lease (246) (2,406)
liability
Proceeds from share issues 4,644 3,288
Interest paid (14,188) (11,087)
Dividends paid (35,546) (25,103)
Net cash flow from financing (9,849) (71,306)
activities
Cash and cash equivalents at the beginning of the 61,864 110,231
year
Net increase in cash and cash equivalents 5,930 (48,357)
Translation adjustment (4,856) (10)
Cash and cash equivalents at end of the 62,938 61,864
year
Cash and cash equivalents as at 1st January 2007 were
made up of:
Cash and cash equivalents 69,060 120,165
Overdrafts (7,196) (9,934)
61,864 110,231
Cash and cash equivalents as at 31st December 2007 were made up of:
Cash and cash equivalents 66,626 69,060
Overdrafts (3,688) (7,196)
62,938 61,864
The following non-cash adjustments have been made to the pre-tax result for the year to arrive
at operating cash flow:
2007 2006
€'000 €'000
Depreciation, amortisation and impairment charges of fixed and 47,572 41,957
intangible assets
Employee equity-settled 5,650 3,492
share options
Finance income (1,837) (2,775)
Finance cost 14,297 11,620
Loss on sale of tangible (3,332) 99
assets
Total 62,350 54,393
Reconciliation of net cash flow to movement in net debt
2007 2006
€'000 €'000
(Decrease)/increase in cash and bank 5,930 (48,357)
overdrafts
Decrease/(increase) in debt, lease finance and (33,078) 54,506
deferred consideration
Change in net debt resulting from cash (27,148) 6,149
flows
Loans and lease finance acquired with (5,469) (15,365)
subsidiaries
Deferred consideration arising on acquisitions in the 2,035 (14,086)
period
New finance leases (2,704) (67)
Translation movement (4,119) (679)
Net movement (37,405) (24,048)
Net debt at start of the (187,564) (163,516)
year
Net debt at end of the year (224,969) (187,564)
SUPPLEMENTARY INFORMATION
1 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 of material entites used
were as follows:
Average rate Closing Rate
Euro = 2007 2006 2007 2006
Pound Sterling 0.685 0.682 0.738 0.670
US Dollar 1.371 1.256 1.471 1.313
Canadian Dollar 1.469 1.425 1.438 1.525
Australian Dollar 1.636 1.668 1.669 1.670
Czech Koruna 27.782 28.367 26.335 27.590
Polish Zloty 3.792 3.906 3.625 3.840
2 Segment reporting
Segment information is presented in respect of the Group's business and
geographical segments. The primary format, business segments, is based on the
Group's management and internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly income-earning assets and revenue, interest-
bearing loans, borrowings and expenses, and corporate assets and liabilities.
Business segments
The Group comprises operates in the following four business segments:
Insulated Panels & Boards Manufacture of insulated panels and rigid insulation
products.
Offsite & Structural Manufacture of offsite solutions, timber frame buildings and
structural products.
Environmental & Renewables Manufacture of environmental and pollution control
products.
Access Floors Manufacture of raised access floors.
Geographical segments
In presenting information on the basis of geographical segments, segment revenue
is based on the geographical location of customer.
Segment assets are based on the geographical location of the assets.
Analysis by class of business
Insulated Offsite & Environmental Access TOTAL
Panels
Segment Revenue & Boards Structural & Renewables Floors
€m €m €m €m €m
Total Revenue - 2007 1,047.8 326.8 291.5 197.1 1,863.2
Total Revenue - 2006 816.5 246.2 249.0 149.5 1,461.2
Intersegment revenue is not material and is thus not subject to separate
disclosure in the above analysis.
Intersegment transfers are priced using an appropriate transfer pricing
methodology.
Segment Result (profit before finance costs)
Insulated Offsite & Environmental Access TOTAL TOTAL
Panels
& Boards Structural & Renewables Floors 2007 2006
€m €m €m €m €m €m
Operating result pre 169.6 23.0 13.9 34.0 240.5
goodwill/impairment
Sale of property 3.9 3.9
Intangible Amortisation (1.2) (2.4) (0.9) (0.1) (4.6)
Goodwill Impairment (3.1) (3.1)
Operating result - 2007 172.3 20.6 9.9 33.9 236.7
Operating result - 2006 128.0 27.5 20.9 17.6 194.0
Finance costs (net) (12.5) (8.8)
Result for the year before 224.2 185.2
tax
Income tax expense (36.9) (33.5)
Net result for the year 187.3 151.7
Segment Assets and Liabilities
Insulated Offsite & Environmental Access TOTAL TOTAL
Panels
& Boards Structural & Renewables Floors 2007 2006
€m €m €m €m €m €m
Assets - 2007 659.9 204.3 249.4 142.3 1,255.9
Assets - 2006 534.8 216.0 201.2 136.6 1,088.6
Liabilities - 2007 (171.4) (52.2) (57.4) (33.6) (314.6)
Liabilities - 2006 (163.8) (77.5) (50.5) (30.9) (322.7)
Total assets less total 941.3 765.9
liabilities
Cash and cash equivalents 66.6 69.1
Deferred tax asset 2.4 2.7
Interest bearing loans and borrowings (current and (280.5) (240.6)
non-current)
Deferred consideration (current and (11.1) (16.0)
non-current)
Income tax liabilities (current and (45.8) (34.3)
deferred)
Total Equity as reported in Group Balance 672.9 546.8
Sheet
Other Segment Information
Insulated Offsite & Environmental Access TOTAL
Panels
& Boards Structural & Renewables Floors
€m €m €m €m €m
Capital investment pre goodwill 126.6 16.7 52.3 4.5 200.1
impairment
Goodwill impairment 0.0 0.0 (3.1) 0.0 (3.1)
Capital Investment - 2007 126.6 16.7 49.2 4.5 197.0
Capital Investment - 2006 77.8 56.4 21.8 8.8 164.8
Depreciation included in segment result - (21.6) (7.8) (6.8) (3.7) (39.9)
2007
Depreciation included in segment result - (19.7) (6.8) (6.5) (6.3) (39.3)
2006
Amortisation & impairment included in (1.2) (2.4) (4.0) (0.1) (7.7)
segment result - 2007
Amortisation included in segment result - (0.9) (1.3) (0.4) (0.1) (2.7)
2006
Non cash Items included in segment result 3.8 (0.1) (0.4) 0.0 3.3
- 2007
Non cash Items included in segment result (0.1) 0.0 0.0 0.0 (0.1)
- 2006
Analysis of Segmental Data by Geography
Republic of United Rest of Americas Others TOTAL
Ireland Kingdom Europe
€m €m €m €m €m €m
Income Statement Items
Revenue - 2007 270.4 1,036.7 375.5 144.5 36.1 1,863.2
Revenue - 2006 261.5 822.1 272.1 78.9 26.6 1,461.2
Balance Sheet Items
Assets - 2007 189.1 730.6 208.3 111.8 16.1 1,255.9
Assets - 2006 162.6 653.2 171.1 87.2 14.5 1,088.6
Other segmental information
Capital investment pre 27.9 117.9 32.6 20.3 1.4 200.1
goodwill impairment
Goodwill impairment (3.1) (3.1)
Capital Investment - 2007 27.9 114.8 32.6 20.3 1.4 197.0
Capital Investment - 2006 21.6 87.5 21.1 21.5 13.1 164.8
3 Dividends
Dividends on Ordinary Shares are recognised 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 2006 (€22.0 million) was approved by
shareholders in May 2007 and, in accordance with IFRS, was recognised as a
charge to Reserves in the year ended 31 December 2007. The Interim Dividend on
Ordinary Shares for 2007 (€13.5 million) was recognised as a charge to Reserves
in the year ended 31 December 2007.
The Final Dividend on Ordinary Shares for 2007 (€29 million) is being proposed
at the Group's AGM and, in accordance with IFRS, will be recognised as a charge
to Reserves in the year ended 31 December 2008.
DIVIDENDS 2007 2006
€'000 €'000
Ordinary dividends
Paid: 2006 Final dividend 13.00c per share (2005: 8.95c per
share) on 169,827,909 22,000 15,007
shares
2007 Interim dividend 8.00c per share (2006: 6.00c
per share) on 168,893,070 13,546 10,096
shares
35,546 25,103
4 Earnings per share
2007 2006
€'000 €'000
The calculations of earnings per share are based on
the following:
Profit attributable to ordinary 187,295 151,032
shareholders
Number of Number of
shares shares
('000) ('000)
2007 2006
Weighted average number of ordinary shares for the calculation of 169,567 168,149
basic earnings per share
Dilutive effect of share 3,118 3,936
options
Weighted average number of ordinary shares for the calculation of 172,685 172,085
diluted earnings per share
2007 2006
€ cent € cent
Basic earnings per share 110.5 89.8
Diluted earnings per share 108.5 87.8
5 Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Commission,
which comprise standards and interpretations approved by International
Accounting Standards Board (IASB) and International Accounting Standards and
Standing Interpretations Committee interpretations approved by the predecessor
International Accounting Standards Committee that have been subsequently
authorised by IASB and remain in effect.
These financial statements, which are presented in euro, have been prepared
under the historical cost convention, as modified by the revaluation of land and
buildings and the measurement of fair value share options and derivative
instruments. The carrying value of recognised assets and liabilities that are
hedged are adjusted to record changes in the fair values attributable to the
risks that are being hedged.
The accounting policies set out below have been applied consistently by all the
Groups' subsidiaries. The financial period-ends of the Group's subsidiaries are
coterminous.
The preparation of financial statements in conformity with IFRS requires the use
of certain critical accounting estimates. In addition it requires management to
exercise judgement in the process of applying the Company's accounting policies.
The areas involving a high degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated financial
statements, relate primarily to the accounting for defined benefit pension
schemes, share-based payments, receivable provisions, guarantees & warranties,
tangible assets, intangible assets, goodwill impairment, and acquisition
deferred consideration.
6 Distribution of Preliminary Announcement
These results are available on the group's website at www.kingspan.com. A
printed copy is available to view at the Company's registered office or from the
Company's Registrars: Computershare Services (Ireland) Limited, Heron House,
Corrig Road, Sandyford Industrial Estate, Dublin 18.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 22nd November 2024
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