Final Results

RNS Number : 8060H

Kingspan Group PLC

01 March 2010

 



KINGSPAN GROUP PLC

RESULTS FOR THE YEAR ENDED 31^st DECEMBER 2009.

Kingspan Group Plc ("Kingspan"), the leading international manufacturer of an integrated range of energy conserving building solutions, today announces its preliminary results for the year ended 31 December 2009.

Financial Performance:

	2009	2008	% Change
Turnover	€1,125.5mn	€1,672.7mn	-33%
Operating profit	€62.7mn	€157.1mn*	-60%
Profit before tax	€56.7mn	€68.1mn	-17%
Basic earnings per share	28.7€cent	26.7€cent	+7%
Dividend per share for the year	nil	8.0€cent
Interest cover	9.4 times	14.6 times
(EBITDA/Net Interest)
Gearing ratio	28.1%	57.7%
(net debt as % shareholders funds)

* before non-trading items

Operational Performance:

-      Solid performance in 2009 from the overall Group, despite hostile economic conditions.

-      Insulation Boards total sales volumes were down 23%, although growing sales and penetration in Western Europe.

-      Insulated Panel sales volumes in the UK, Ireland and Western Europe were down 33%, with particular weakness in the speculative development segment.

-      Insulated Panel sales volumes in North America were down 23%.  Architectural façade products remained strong and the former Metecno business performed robustly in the circumstances.

-      Central & Eastern Europe panel volumes were also weaker, down 25%.  A substantial reorganisation of this unit was implemented, and will be completed in H1 2010.

-      Access Floors sales volumes were down 31% globally, however, margins improved from 14% to 17.5%.

-      Across the Group, fixed cost reductions in the year of €50mn brings the total since peak to €66mn.  This process is largely complete.

-      Total investment in the year was €48.1mn.  The main projects were the completion of a new Kooltherm® phenolic insulation facility in the Netherlands, and the completion of a new solar thermal collector plant in Northern Ireland.  The Group also entered the Australian thermal insulation market with the acquisition of AIR-CELL Innovations in December, complementing Kingspan's already growing Insulated Panel business in that region.

-      Excellent progress was made in debt reduction, with net debt at year-end of €164.3mn, down from €299.6mn.  Operating working capital was €99mn lower than a year earlier.

2009's performance by operating segment was as follows:

Segment Result (profit before finance costs)	Insulated Panels	Insulation Boards	Environmental & Renewables	Access Floors	Total
	€'mn	€'mn	€'mn	€'mn	€'mn
Trading Profit	26.3	13.5	1.8	25.5	67.1
Intangible Amortisation	(2.8)	(0.7)	(0.8)	(0.1)	(4.4)
Operating result 2009	23.5	12.8	1.0	25.4	62.7
Finance costs (net)					(6.0)
Results for the period before tax					56.7
Income Tax Expense					(8.7)
Net result for the year					48.0

Gene Murtagh, Chief Executive of Kingspan commented:

"In 2009 we experienced a set of global challenges never encountered before by the business.  In the circumstances, the Company delivered a robust and resilient performance having responded to the challenges by overhauling our cost structure and focusing on cash generation. Excellent progress has been made in debt reduction which positions the Company with one of the strongest balance sheets in the industry.

While the year ahead will present continued challenges, there is now tangible evidence of stability emerging with conditions becoming more predictable than in the recent past.  Globally, energy conservation initiatives continue to gather pace which will play to the Group's strengths. Coupled with the strong actions taken to date, it leaves Kingspan in good stead as markets regain stability."

For further information contact:

Murray Consultants Ed Micheau

Tel: [phone]

Chief Executive's Review

In the immediate aftermath of the international financial crisis, the global economy was exceptionally weak, particularly in early 2009.  These difficulties transpired to be a sign of things to come and as the year progressed, pressures in many sectors continued to mount, and were acutely evident in the construction environment.  However, the closing quarter gave some reprieve, and tangible evidence of stability began to emerge.

In all, the current environment has been the toughest experienced by Kingspan in modern times.  It has necessitated a shift in management priorities, which were effected without impacting the business' longer term positioning within the growing global theme of greater energy efficiency, lower emissions, and lower energy costs.

Widespread reorganisation and cost-out programmes led to an underlying reduction of €66mn in the Group's fixed cost base since peak. Over the past 18 months, more than ten plants were consolidated into larger more efficient operations, and the relentless focus on cash drove a reduction in net debt of over €135mn, leaving the balance sheet considerably stronger than a year earlier.  The profit performance of the business naturally suffered with revenue falling 33% to €1.1bn, but EBITDA and operating profits of €102.8mn and €62.7mn respectively, were solid given the times.

Insulated Panels

Sales	% of Group Turnover
2009                 2008                        % change	2009                    2008
€593.9mn          €862.1mn                       -31%	53%                      51%

Sales volumes in the UK suffered heavily in the early part of the year, but broadly flattened out for the latter six months.  In all, sales volumes were down 35%, and order intake was down 34% on prior year.  This downward spiral eased towards year end and was reflected in improved order intake.  A significant portion of the activity was both food and retail led, while speculative development, a key driver in the past, practically ceased.  The result was a smaller average order size, and a shifting mix which in future will see a growing portion of sales in the higher value "Benchmark" architectural façade systems.  This product suite, already marketed in North America, has now been tailored for the European markets.  This higher value-added range will be launched by mid 2010 and we anticipate that the medium to longer term penetration growth potential is significant.  Nearer term, the project pipeline has trended very marginally up in recent months, quotation levels are robust, and order intake in the first two months of 2010 is up 20% versus 2009.  Volumes in the Benelux were down 14%, reflecting the relatively stable environment in the region, which appears to be continuing into 2010.

Ireland volumes, now representing 5% of this category's revenue, continued to reach new lows as the year drew to a close.  Newbuild activity in this segment has fallen to levels not seen in Ireland for 30 years, as a direct result of the excess non-residential inventory resulting from the overbuild in 2007 and early 2008.  The stranglehold caused by lack of general business lending will compound this trend for some time, and is evidenced by declining architects' workloads.  Order intake levels in this sector were down 60% year on year, or down 73% since the peak of 2007.  The fundamental overhaul of this business' cost base and work practices will be essential in ensuring its longer term recovery.

Across Central & Eastern Europe, sales volumes were down 25% in 2009, a pattern which also eased in the final quarter.  The business' performance in Poland and Germany was relatively strong, with volumes in these markets down only slightly.  Czech Republic, Hungary, the Baltics, and Romania were exceptionally weak as funds availability and confidence both took a knock. Coinciding with this weakness has been overinvestment in the industry's capacity levels, which is likely to continue exerting pressure on margins for the foreseeable future.  In light of this, more new product introductions and a longer term move into the higher end insulated architectural façades will be key.  In the meantime, the order book at year end stood 3% lower than a year earlier, although quarter one 2010 is expected to be somewhat down year on year due mainly to adverse weather conditions.

In Turkey and the Middle East, the operating performance of the business improved during the year, largely due to enhanced margins.  Volumes were similar to a year earlier, and the run rate is likely to remain at similar levels for at least the first half of 2010.

In North America, non-residential construction tapered off sharply during the year, and underlying sales were down 23% on 2009.  Volumes in Canada were more severely impacted, a situation that was exacerbated by the fall-off in developments in the oil producing regions.  In the US, architectural sales were strong and notwithstanding the pressures on volume, it was a year of solid progress in building the team and the model for the longer term.  In 2010, the focus will be on achieving higher levels of operational efficiency in the US facilities, fully commissioning the two new plants in Canada, and continuing to drive the brand through the distinctly different channels of Architectural, Commercial and Industrial, and Cold Storage segments.  2010 is also likely to see the ratification of what will essentially amount to the first ever US wide building energy code.  The Department of Energy's Net Zero Energy programme will effectively establish an allowable base building energy performance that will ultimately culminate in grid neutral buildings by 2025.  This legislative roadmap presents great opportunities for Kingspan's model.

Australia and New Zealand showed an improved performance in 2009 over prior year, and the current year should build upon that progress.

Insulation Boards

Sales	% of Group Turnover
2009                 2008                      % change	2009                    2008
€215.3mn         €345.2mn                  -38%	19%                      21%

In Britain, newbuild housing activity was lower than it has been for decades, and volumes were down 25%, a better outturn than for the general market activity.  Growing penetration of rigid high performance insulation was further complemented by Kingspan's Kooltherm® phenolic insulation which continued to grow its underlying share of the market.  From April 2010, building codes in the UK will be upgraded once again, and the targeted decreases in carbon emissions from new buildings will be in the order of 25%. The related increase in thermal insulation required will be a similar percentage, and will be implemented from mid 2011.  As the codes become more stringent, the attractiveness of thinner and more thermally efficient rigid insulation like Kooltherm® becomes greater.

In Ireland (including Northern Ireland), the Insulation Boards business is primarily exposed to the residential market in both newbuild and, increasingly, RMI.  Refurbishment activity provided a solid base for the business in 2009 given the collapse of the newbuild segment.  This pattern is likely to prevail over the medium term, and much of the product strategy will be focused on the growing refurbishment segment.

Mainland Europe was comparatively stable during 2009, and volumes were down 7%.  At present, the business' primary markets on the continent are the Netherlands, Belgium and Germany.  The products marketed are rigid foam, produced in the UK, and Kooltherm®, produced in the Netherlands.  This latter facility was commissioned in late 2009, and will predominately serve the German and Dutch markets.  The product is being focused most specifically on the external wall insulation refurbishment opportunity in Germany, and in the future, across Central & Eastern Europe.  The current incumbent in these markets is fibrous insulation, like stone and glasswool, which will be increasingly inefficient given its relative thickness and poor over-life performance.  The penetration in Continental Europe of high performance rigid insulation is currently less than 5%, offering clear opportunities for this business to develop and grow.

Towards the end of the year, AIR-CELL Innovations in Australia was acquired by Kingspan.  This business provides an excellent platform and network from which to build our presence across Australia and New Zealand, not only with its own range of insulations, but also with the broad range of products that Kingspan will bring to the venture.

Environmental & Renewables

Sales	% of Group Turnover
2009                 2008                      % change	2009                    2008
€168.7mn         €266.7mn                  -37%	15%                      16%

With approximately 75% of this division's sales coming from the UK and Ireland, this business bore the brunt of the recessionary slide in both markets.

This business' product range is extensive, and includes solar thermal hot water systems, heat pumps, rainwater harvesting, water storage, fuel storage and wastewater treatment systems.  Many are destined for the residential segment, hence the current pressures.  The pressures on the business will ease as the UK housing market, in particular, begins to recover, and evidence of this was already visible towards the end of 2009. 

During the first quarter of 2010, a new entirely automated manufacturing facility for the production of solar thermal collectors is being commissioned in Northern Ireland.  The plant will produce the highly effective solar thermal vacuum tubes more efficiently than any other comparable operation globally, and the current market focus is in Mainland Europe and North America, where our routes to market have developed rapidly in the past year.

On an underlying basis, this division returned a profit although as in other years, the figures are substantially impacted by the ongoing polyethylene raw material related warranty issues dating back to 2002/2003.  Proceedings have been issued against the supplier of the material, Borealis, based on specialist legal and technical advice, in which the full recovery of past and future losses is being sought.  A conclusion to the case is anticipated sometime in 2011.

Access Floors

Sales	% of Group Turnover
2009                 2008                     % change	2009                    2008
€147.6mn        €198.7mn                  -26%	13%                      12%

Given the late cycle nature of office construction, the weakness of the general economy wasn't particularly evident in this business during the first half of 2009.  Underlying conditions were deteriorating however, and in the second half, the year on year volume decline accelerated in both North America and Europe.  Overall, first half volumes were down 25% on prior year, and the second half down 36%.

We expect office construction starts will hit a low in 2010, driven largely by the excess capacity currently in the market.  Vacancy rates in major US and European cities are at a five-year high, and development activity will therefore remain weak before any resumption of growth, possibly in late 2011 or 2012.

Despite the weakening completions, Kingspan's businesses performed exceptionally well during 2009, and margins were strong at 17.5%.  Firm management of controllable costs was the largest contributor to this, a theme that will continue to run through the current year throughout the Group.

Capital Expenditure and Acquisitions

Total investment during the year was €48.1mn.  This figure is significantly lower than  that of recent years during which the Group substantially expanded its overall capacity, and it is above the run rate anticipated to maintain the business during the current year.

Investments of note in the year were the completion of the Kooltherm® insulation facility in the Netherlands, the completion of a new, relocated insulated panel plant in Toronto, Canada, and a new relocated solar thermal facility in Northern Ireland.

In December, the acquisition of AIR-CELL Innovations in Australia was also completed.

Looking Ahead

In the near term, it is likely that the overall building environment will be more predictable than in the recent past.  The virtual collapse in activity experienced in late 2008 and 2009 should be replaced with a more stable, albeit notably lower base from which to build businesses once again.

The Group has and will continue to benefit from its overhauled cost structure, and its more streamlined operations which are the result of substantial internal consolidation over the past two years.  This has been achieved without damage to the core tenets of Kingspan's competitive advantage being undermined.  An increased focus on a number of new products which were brought to market during this period, in addition to the broader palette of Kingspan solutions, will continue to generate long term potential across a wider geography than at any time in the past.

Notwithstanding these opportunities, the current year will continue to pose challenges for Kingspan as some economies climb slowly out of recession, leaving behind a construction environment that has not yet fully caught up with the general contraction of last year.  In some markets building activity is therefore still likely to have further to fall.

Globally, the energy conservation agenda continues to gain impetus, which will become more evident when further tangible national and international energy saving commitments are firmed up.  Kingspan's strategy remains fully aligned with that global theme.

Gene Murtagh

1^st March 2010

Financial Review 2009

Overview

2009 saw a fall in Group turnover of 33% and a decrease in operating profits (before non-trading items) of 60%. At a constant currency, sales were down 28% and operating profits were down 57%.  The trend in sales has improved somewhat being down 35% in H1 2009 vs H1 2008 and 30% in H2.  Overall from peak (H1 2007) to trough (H2 2009), Group sales suffered a decline of 42%.  Given the Group's relatively high operational gearing in certain products, this fall-off in sales has had a disproportionate impact on operating profits, which was mitigated somewhat by a rapid response through fixed cost reductions and rationalisation of some manufacturing facilities.   

The gross margin (gross profit as % of turnover) was 27.4% for the year, compared to 27.9% in 2008. There was a slight improvement in H2 over H1 (H1 27.2%, H2 27.4%) as raw material prices stabilised. 

Fixed overheads were reduced by approximately €50mn in the year compared to 2008.   This is a like-for-like comparison at constant currency, excluding the acquisition of the Panels business in the United States, and is a reduction of €66mn from the peak. There were rationalisation costs in the year of €6.5mn which are included in operating costs.

The weakness of Sterling against the Euro (average rate 2008: 0.796 v average rate 2009: 0.8917) has had a negative impact on the translation of results when compared with last year.  The overall impact of all currency movements on Euro reported turnover was €71mn and operating profit was €4mn.

There was capital investment of €48.1mn in the year including the acquisition of AIR-CELL Innovations. Based in Perth in Australia, AIR-CELL is a market leading distributor of flexible reflective insulation foil products with inter-state presence across the Australian market. Other capital investment mainly related to the completion of projects from 2008 and maintenance capital.

Operating working capital at year end of €123.3mn was reduced by €99mn compared to 2008, due to increased focus and lower activity levels.

Dividend

The Board is recommending that no final dividend in respect of 2009 be paid.   Resumption of dividend payments will be considered by the Board in 2010 in light of debt reduction achieved in 2009, ongoing cash flow and operating performance reaching expectations.

Results

Income Statement

	2009 €'mn	2008 €'mn
Sales Revenue	1,125.5	1,672.7
Gross Profit	308.9	467.5
Gross Profit %	27.4%	27.9%
Operating Costs	(241.8)	(305.8)
Trading Profit	67.1	161.7
Amortisation	(4.4)	(4.6)
Non Trading items	0.0	(75.1)
Operating Result	62.7	82.0

Segment Reporting

Following on from the restructuring of the businesses and the requirements of IFRS 8, the segmental reporting of the results has been changed.  From 1 January 2009 the following four business segments are reported on:

Insulated Panels                                                   manufacture of insulated panels, structural framing and metal façades;

Insulation Boards                                                manufacture of rigid insulation boards, building services insulation and engineered timber systems;

Environmental & Renewables                            manufacture of environmental, pollution control and renewable energy solutions;

Access Floors                                                      manufacture of raised access floors.

Up to December 2008 Insulated Panels and Insulation Boards were reported on as one combined segment.  In addition, Offsite & Structural was reported as a segment in its own right.  Following the restructuring of this business unit, the part of Offsite & Structural that relates to timber framing and engineered timber systems has been transferred to Insulation Boards and the rest of the business (relating to metal framing, façades and structural products) has been transferred to Insulated Panels. 

Note 2 of the supplementary information in the attached accounts gives further analysis of the segments and the rest of this report deals with the results analysed under the new segments and corresponding comparisons.

Turnover

Turnover for the year ended 31 December 2009 was €1,125.5mn, a drop of 33% on 2008.  The acquisition of Metecno Inc. in August 2008 generated incremental turnover in 2009 of €41.3mn.  In 2009, the decline in the value of Sterling against the Euro continued and the average rate in 2009 was 0.8917 versus an average rate in 2008 of 0.796. Approximately 45% of Group turnover was in the Sterling area and this, combined with movements in average exchange rates for other operating currencies, resulted in an adverse translation impact on turnover of €71mn. Stripping out the impact of the adverse effect of movement in translation and the incremental impact of the acquisition of Metecno Inc., underlying turnover was down by 31%.    This reduction results from an overall volume decline of approximately 25% and price/product mix decline of 6%.

Analysis by Class of Activity
		Year ended 31.12.09  €'mn	Year ended 31.12.08 €'mn		% Change 2009-2008	% Change @ constant rates
Insulated Panels		593.9	862.1		-31%	-27%
Insulation Boards		215.3	345.2		-38%	-33%
Environmental & Renewables		168.7	266.7		-37%	-29%
Access Floors		147.6	198.7		-26%	-25%
		1,125.5	1,672.7		-33%	-28%
Analysis by Geographic Market
	Year ended 31.12.09 €'mn		Year ended 31.12.08 €'mn		% Change 2009-2008	% Change @ constant rates
Ireland	78.1		173.8		-55%	-55%
Britain & NI	503.3		826.6		-39%	-32%
Mainland Europe	310.9		453.1		-31%	-28%
Americas	192.7		177.1		+9%	+5%
Other	40.5		42.1		-4%	+2%
	1,125.5		1,672.7		-33%	-28%

Insulated Panels in the UK, Irish and Western European markets:

Currency	Volume	Price & Mix	Total
-4%	-33%	-3%	-40%

·      Sales were down 40% for the year.  Volume, down 33% overall, was 37% lower in the first half and 27% in the second half.

·      Order intake was down 40% in the first half, down 18% in the second half and down 32% for the full year.

Insulated Panels in Central & Eastern European markets:

Currency	Volume	Price & Mix	Total
-5%	-25%	-3%	-33%

·      Sales were down 33% for the year.  Volume was down 28% in the first half and down 21% in the second half, down 25% overall 

·      Order intake was down 28% year-on-year being down 40% in the first half but down 11% in the second half.    

Insulated Panels in the North American markets:

Currency	Volume	Acquisitions	Total
+5%	-23%	+62%	+44%

·      Metecno Inc. was acquired by the Group in August 2008. Turnover for the year 2009 was $111.2mn (€79.7mn), down 25% on the same period in 2008.

·      In Canada sales were down approximately 23% year on year.   

Insulation Boards:

Currency	Volume	Price & Mix	Total
-6%	-23%	+4%	-25%

Engineered Timber Systems:

Currency	Price/Mix/Volume	Total
-3%	-69%	-72%

·      Insulation sales volumes were down 23% for the year, down 32% in the first half, and down 13% in the second half. This decline in volumes was offset by increased value of sales of 4%.

·      Sales of Off-site/Engineered Timber Systems were down 72% versus 2008 (down 69% on constant currency).

Environmental & Renewables:

Currency	Price & Volume	Disposals	Total
-8%	-21%	-8%	-37%

·      Sales were down 37% of which price/volume was down 21% year on year, being down 23% in the first half and 18% in the second half.

Access Floors:

Currency	Volume	Price & Mix	Total
-1%	-31%	+6%	-26%

·      Sales were down 26% in the year.  31% of this reduction was represented by volume, being down 25% in the first half and down 36% in the second half.

·      Order intake, declined by 25% in the North American market and by 44% in the European markets compared to 2008.  

With the exception of Access Floors, which is mainly into a late cycle market, the downward trend in order intake and sales showed a significant abatement in the second half of the year, continuing into 2010.

Trading Profit

Trading profit, before amortisation and non-trading items, was €67.1mn compared to €161.7mn in 2008, a decline of 59%.  There was a negative impact of the translation of trading profits from non-Euro currencies at the average exchange rates of €4mn.  Stripping out the translation impact the decline in operating profit was 57%.  

The return on sales in 2009 was 5.6% compared to 9.4% in 2008.

Cost of sales comprises variable costs i.e. raw material and direct labour plus other production overheads which are fixed or semi-fixed.  Variable costs as a percentage of sales reduced by approximately 1% compared to last year. While production overheads were reduced by €28mn, as a percentage of sales they increased by approximately 1.5%.  As a result the gross profit at €308.9mn representing a return of 27.4% on sales, compares to 27.9% last year. 

Operating costs (including amortisation) at €246.2mn are down by €64.2mn compared to 2008.  Excluding the effect of the acquisition of Metecno on 2009 overheads and the effect of exchange rate movements between the two periods, the net overhead reduction in the year was €50mn.  

	Actual Overheads €'mn		Overhead Reduction €'mn
	Half  1	Half  2
2007	145	149
2008	149	133
2009	118	114
Reduction H1 09 vs H1 08			31
Reduction H2 09 vs H2 08			19
H2 08 vs H2 07			16
			66

Trading margin by product group 

(excluding  amortisation/rationalisation costs*/non-trading items)

	2008	2009
Insulated Panels	12.9%	5.3%
Insulation Boards	5.9%	6.4%
Environmental & Renewables	1.0%	1.7%
Access Floors	14.0%	17.5%
Group	9.7%	6.5%*

* Rationalisation costs of €6.5mn in 2009 have been added back to the profits in the  relevant division.

The table above shows the trading margin for the product groups. 

Insulated Panels margin decreased to 5.3% (2008: 12.9%). Raw materials purchased in quarter four 2008, acquired at higher prices and carried through in inventory into 2009, had a negative impact on margins, particularly in the first half of the year.  There were also specific issues in Canada where the Group is still manufacturing on an inefficient line pending the move to an upgraded manufacturing process.   This new plant will be fully commissioned in Quarter 1 2010.  In the United States incremental costs were incurred as the process of product, market and management development got underway. In Central Europe overcapacity in the industry resulted in pressure on margins. In addition, all business units suffered from the loss of leverage on fixed costs resulting from the decline in volumes.   

Insulation Boards margin increased to 6.4% (2008: 5.9%).  The incorporation of Engineered Timber Systems into this business from Off-Site & Structural depressed the margin, particularly in 2008.  The underlying profitability of the Division continues to remain robust and should not be materially affected by Engineered Timber Systems in the future.

The margin in Environmental & Renewables at 1.7% is up from 1.0% last year.  Efficiencies have been coming through in the Environmental part of this Division since the consolidation of sites in Ireland was completed last year and further consolidation was completed in Britain in 2009.  Costs continue to be incurred in relation to the warranty issues arising from faulty raw material supplied to the division in the past, which at €6mn is a somewhat higher charge than last year.  In the Renewables business, sales have been disappointing in the year, particularly in mainland Europe, which had accounted for approximately 75% of this units' turnover.  At the same time the Group has significantly increased resources in respect of new geographical market development and product development.  The investment in a new manufacturing facility, which will be fully commissioned in Quarter 1 2010 will result in significant unit cost savings.

Access Floors delivered an operating margin of 17.5% (2008: 14%).  The gross margin has held up strongly, despite steel price volatility in the first half of 2009.  The mix of product also had a positive impact on sales pricing and related margins.  There are challenges to come, given the position of these products in the construction cycle and indicated by the negative trends in sales volumes, quotations and order book, that will put pressure on the margins here in the medium term.

Non-Trading Items (including goodwill impairment)

Included in non-trading items in 2008 was goodwill impairment of €43.6mn.  Further analysis of the carrying cost of goodwill on the balance sheet was carried out in 2009 and this review resulted in no further impairment charges. There were rationalization costs incurred in 2009 of €6.5mn included in operating overheads.        

As a result of site rationalisation, production properties surplus to requirements with a book value of €19.0mn have been transferred in the Balance Sheet from "Property" to "Assets held for resale". None of these properties, which are still believed to have a disposal value in excess of book value, were disposed of during the year.  Since year end the sale of one of these properties has been agreed, at a price slightly in excess of its book value.

Net Finance Costs

The net finance costs in the year were €5.9mn.  This comprises interest paid or payable of €12.7mn and interest received of €1.8mn giving a net interest charge of €10.9mn.   

In addition there was a translation gain on the private placement debt of €11.8mn and the    fair value movement on the related cross currency interest rate swaps resulted in a loss of €6.9m. These two non-cash adjustments, a net credit of €4.9mn, have been credited off the net interest charge of €10.9mn.

The circumstances of this credit to the profit and loss account are set out below;

The Group had a private placement of US$158mn fixed interest 10-year bullet repayment loan notes maturing on 29 March 2015 and US$42mn fixed interest 12-year bullet repayment loan notes maturing on 29 March 2017.  The Group, being Euro denominated and with mostly Euro cash flows wished to economically hedge the risk and therefore entered into US dollar fixed/Euro fixed cross currency interest rate swaps for the full amount of the private placement with semi-annual interest payments with a weighted average interest rate of 4.15%.  The maturity date of these cross currency interest rate swaps is identical to the maturity date of the private placement debt.

These cross currency interest rate swaps had not been designated under the IAS39 hedge accounting rules.  Consequently the change in fair value of the cross currency interest rate swaps is recognised in the Income Statement (€6.9mn above)  and the translation gain on the private placement debt is also recognised in the Income Statement in accordance with IAS21 (€11.8mn above).

On 26 February 2010, these cross currency interest rate swaps were designated under IAS 39 hedge accounting rules and as such any further changes in the fair value of the swaps or in the translation of the debt itself will be adjusted directly through reserves, thus removing any of the volatility from reported earnings.

Taxation

Taxation provided for on profits is €8.7mn or a composite rate of 15.4% of profit before taxation.  This compares with an equivalent rate of 14.6% in 2008.  This increase is the result of a different spread of profits across jurisdictions with relatively higher tax rates.

Earnings Per Share

Basic earnings per share at 28.7 €cent compares with 26.7 €cent last year, an increase of 7%. This includes the net credit of €4.9mn in relation to the cross currency swaps and revaluation of the US$ loan described above.  In the absence of this credit the underlying earnings per share in the year was 25.7 €cent, a fall of 4% on 2008.

The Group's shares traded in a range of €2.02 to €7.00 during 2009 and at year end the share price was €6.00.

Funds Flow

The table below summarises the Group's funds flow for 2009 and 2008:

	2009	2008
	€'mn	€'mn
Operating profit	62.7	82.0
Depreciation	35.8	40.6
Amortisation	4.3	4.6
Working capital decrease/(increase)	105.4	43.6
Pension contributions	(2.9)	(2.6)
Interest	(12.9)	(12.7)
Taxation paid	(10.1)	(18.1)
Others	5.4	60.3
Free cash	187.7	197.7
Acquisitions	(8.0)	(92.6)
Net capital expenditure	(45.9)	(97.5)
Dividends paid	(0.3)	(42.3)
Share buy-back	0.0	(32.6)
	(54.2)	(265.0)
Cash flow movement	133.5	(67.3)
Debt translation	1.8	(7.3)
Decrease/(Increase) in net debt	135.3	(74.6)
Net debt at start of year	(299.6)	(225.0)
Net debt at end of year	(164.3)	(299.6)

Earnings before finance costs, tax, deprecation, amortisation (EBITDA) and before Non- Trading Items was €102.8mn (2008: €202.3mn).  In 2009, the Group delivered free cash flow of €187.7mn. This included a positive contribution of €105.4mn from a working capital reduction. This was used to fund investment of €8.0mn in acquisitions and net capital expenditure of €45.9mn.

Net debt, including amounts outstanding in respect of acquisitions, at the end of year was €164.3mn, a decrease of €135.3mn on 2008.

	31 Dec  2009 €mn	31 Dec  2008 €mn
Cash and cash equivalents	83.9	75.3
Bank debt < 1 year	(31.9)	(16.8)
Private placement debt > 5 years	(151.4)	(151.4)
Bank Debt 2-5 years	(61.6)	(194.0)
Contingent deferred consideration	(3.3)	(12.7)
Total Net debt	(164.3)	(299.6)

Operational working capital at the year end was €123.3mn (2008: €222.3mn), a reduction of €99mn and represented 11.0% of turnover (2008:13.3%). Approximately €58mn of this reduction was due to the fall off in the level of activity and the balance resulted from improved management of the components of working capital. There can be expected to be some increase in the general level of working capital requirements during 2010 but the target remains to manage this on average at about 15% of sales.

Financial Performance Indicators

Some key financial performance indicators which measure performance and the financial position of the Group are set out in the table below:

	2009	2008	2007
EBITDA interest cover	9.4x	14.6x	22.8x
Net debt:EBITDA	1.6x	1.48x	0.79x
Effective tax rate	15.4%	14.6%*	16.4%
Net debt as % of total equity	28.1%	57.7%	33.4%
Return on capital employed	8.4%	19.2%	26.4%
Return on Equity	8.6%	7.6%	30.7%
Gross margin	27.4%	27.9%	30.2%
Trading margin	6.5%	9.7%	12.9%

*yoy rate is 14.6%, including non-trading costs the rate in 2008 was 35.4%

There are three principle financial covenants relating to the funding facilities:  EBITDA/net interest cover of not lower than 4 times; Net Debt/EBITDA no higher than 3.5 times; Net Assets greater than €400mn.  These covenants are tested at June and December each year.  At 31 December 2009 the Group was comfortably within these covenants with interest cover of 9.4, Net Debt/EBITDA of 1.6 and Net Assets of €585.5mn

Financial Risk Management

Funding and Liquidity

The Group's core funding is provided by a private placing of $200mn converted into €151mn at the time of the placing.   Of this debt, €119mn (79%) matures in March 2015 and the balance in March 2017.  The Group also has a five year committed banking facility of €330mn which was put in place in September 2008.  At year end the Private Placement debt was drawn down in full and €56.8mn of the banking facility was drawn.   The Group also has in place a number of uncommitted bilateral working capital/overdraft facilities amounting to circa €65mn at year end.   

Foreign Exchange Risk

There are three types of foreign exchange risks to which the Group is exposed: 

1. Transactional - where a business unit has input costs or sales in currency other than its local currency; 2. Translational - where profits are earned in a currency other than Euro, which is the reporting currency for the Group, and 3. Balance Sheet - where the Group has investments in non-Euro currency, not offset by borrowings in the same currency.   The first two affect the earnings of the Group and the latter goes directly to reserves and affects the net assets position.

Transactional - transaction exposures are internally hedged as far as possible, and to the extent that they are not material residual exposures are hedged on a rolling 12 month basis.  Based on current cash flow projections for the existing businesses to 31 December 2010, it is estimated that the Group will have surplus sterling of approximately £44mn which will be required to be converted to Euro during the year.  At the current date £26mn, or 60% of the surplus, has been sold forward at an average rate of 0.8840 compared to the average rate in 2009 of 0.7950. The Group will also need to sell the equivalent of US$12mn in Sterling for US Dollar and at the current date this amount was substantially hedged at an average rate of 1.58 compared to the average rate in 2009 of 1.66.

Translational - it is Group policy not to hedge translational exposure, which is effectively a non-cash transaction in the accounts.  There was a negative impact on non-Euro profits of circa €4mn due to adverse movements in average rates used for translation in 2009 versus 2008.

Balance Sheet - as the bulk of the Group's non-Euro investments are Sterling denominated, the translation of these investments into Euro has given rise to an exchange gain of €22mn which has been taken directly to reserves, thereby increasing the Group net assets. This annual translation adjustment can be positive or negative depending on the movement between the opening and closing currency exchange rates. 

Interest Rates

The Private Placement loan notes, which represent 73% of the drawn down facilities, are fixed out to maturity in Euro at a weighted average interest rate of 4.15%.  €14mn of further USD borrowings have been fixed at 1.675% bringing the total fixed debt to 79%.  The remainder of the drawn down facilities are subject to floating rates.

Customer Credit risk

At the year end, the Group was carrying a receivables book of €181mn expressed net of provisions for default in payment. Of these receivables approximately 55% were covered by credit insurance or other forms of collateral such as letters of credit and bank guarantees.

Pension Deficit

The Group has three legacy defined benefit pension schemes in the UK, two of which were merged during the year. These schemes have been closed and the liability relates only to past service.  Details on the movement during 2009 on the scheme deficit is set out below:

	€'mn
Opening net deficit	(3.7)
Translation	(0.32)
Contributions paid	2.9
Actuarial gains/(losses)	(3.9)
Net finance (charge)/credit	(0.08)
Closing deficit	5.1

Summary

The Group goes into 2010 with a strong balance sheet, with a streamlined business and a business model very much intact.  There is capacity in the Group to service turnover of a figure in the order of €2bn without any significant capital investment.  Given the operational leverage in the business, in the short term any incremental increase in sales should be relatively profitable. The Group continues to invest selectively in product, process and market development and will be ready to capitalise on any up-tick in markets and any opportunities that arise.     

CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2009
						Total	Total
						2009	2008
						€ '000	€ '000
Revenue						1,125,523	1,672,714
Costs of sales						(816,610)	(1,205,239)
Gross Profit						308,913	467,475
Operating costs						(241,858)	(305,739)
Trading Profit						67,055	161,736
Intangible amortisation						(4,396)	(4,615)
Non trading items						-	(75,077)
Operating Result						62,659	82,044
Net finance cost						(5,980)	(13,910)
Result for the year before tax						56,679	68,134
Income tax expense						(8,712)	(24,151)
Net result for the year						47,967	43,983
Attributable to shareholders of Kingspan Group plc						47,658	44,990
Attributable to minority interest						309	(1,007)
						47,967	43,983
Earnings per share for the year
Basic						28.7	26.7
Diluted						28.3	26.5

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
as at 31 December 2009
						2009	2008
						€ '000	€ '000
Net result for financial period						47,967	43,983
Other comprehensive income:
Cash flow hedging - current year						(389)	6,658
Cash flow hedging - reclassification to profit and loss						(6,658)	(1,702)
Actuarial losses in defined benefit pension scheme						(3,951)	(1,640)
Currency translation						22,681	(131,712)
Income taxes relating to items charged or credited to equity						1,106	452
Minority interest movement						2,212	(110)
Total comprehensive income for the year						62,968	(84,071)
Attributable to shareholders of Kingspan Group plc						60,107	(82,666)
Attributable to minority interest						2,861	(1,405)
						62,968	(84,071)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2009
						2009	2008
						€ '000	€ '000
Assets
Non-current assets
Goodwill						300,021	279,777
Other intangible assets						10,305	13,168
Property, plant and equipment						399,989	411,068
Long term financial assets						10	210
Deferred tax assets						2,950	1,228
						713,275	705,451
Current assets
Inventories						110,821	159,116
Trade and other receivables						203,505	299,189
Cash and cash equivalents						83,886	75,254
Assets held for sale						19,010	-
						417,222	533,559
Total assets						1,130,497	1,239,010
Liabilities
Current liabilities
Trade and other liabilities						191,071	236,029
Provisions for liabilities and charges						59,059	56,467
Derivative financial instrument						917	-
Contingent deferred consideration						698	4,980
Interest bearing loans and borrowings						31,863	16,857
Current income tax liabilities						32,914	34,314
						316,522	348,647
Non-current liabilities
Retirement benefit obligations						3,666	3,738
Interest bearing loans and borrowings						201,141	345,249
Derivative financial instrument						6,042	-
Deferred tax liabilities						14,982	14,504
Contingent deferred consideration						2,609	7,790
						228,440	371,281
Total liabilities						544,962	719,928
NET ASSETS						585,535	519,082
Equity
Equity attributable to shareholders of Kingspan Group plc
Share capital						22,296	22,265
Share premium account						36,486	35,751
Other reserves						(178,742)	(194,036)
Revaluation reserve						713	713
Capital redemption reserve						723	723
Retained earnings						699,373	651,841
						580,849	517,257
Minority interest						4,686	1,825
TOTAL EQUITY						585,535	519,082

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
	Share capital		Share Premium account	Other reserves	Capital Redemption & Revaluation reserves **		Retained earnings		Total Attributable to shareholders		Minority Interest	Total equity 31.12.09
	€'000		€'000	€'000	€'000		€'000		€'000		€'000	€'000
Balance at 1 January 2009	22,265		35,751	(194,036)	1,436		651,841		517,257		1,825	519,082
Shares issued	31		654	-	-		-		685		-	685
Employee share based compensation	-		-	-	-		2,800		2,800		-	2,800
Exercise of employee share based compensation	-		81	-	-		(81)		-		-	-
Transactions with shareholders	31		735	-	-		2,719		3,485		-	3,485
Profit for the year	-		-	-	-		47,658		47,658		309	47,967
Other comprehensive income:
Cash flow hedging - in equity
- current year	-		-	(389)	-		-		(389)		-	(389)
-reclassification to profit and loss	-		-	(6,658)	-		-		(6,658)		-	(6,658)
Defined benefit pension scheme	-		-	-	-		(3,951)		(3,951)		-	(3,951)
Tax on defined benefit pension scheme	-		-	-	-		1,106		1,106		-	1,106
Currency translation	-		-	22,341	-		-		22,341		340	22,681
Movement in Minority Interest	-		-	-	-		-		-		2,212	2,212
Total comprehensive income for the year	-		-	15,294	-		44,813		60,107		2,861	62,968
Balance at 31 December 2009	22,296		36,486	(178,742)	1,436		699,373		580,849		4,686	585,535
	Share capital		Share Premium account	Other reserves	Capital Redemption & Revaluation reserves **		Retained earnings		Total Attributable to shareholders		Minority Interest	Total equity 31.12.08
	€'000		€'000	€'000	€'000		€'000		€'000		€'000	€'000
Balance at 1 January 2008	22,146		31,917	(67,568)	1,436		681,755		669,686		3,230	672,916
Shares issued	119		2,574	-	-		-		2,693		-	2,693
Employee share based compensation	-		-	-	-		2,372		2,372		-	2,372
Exercise of employee share based compensation	-		1,260	-	-		(1,260)		-		-	-
Share buyback	-		-	-	-		(32,565)		(32,565)		-	(32,565)
Dividends	-		-	-	-		(42,262)		(42,262)		-	(42,262)
Transactions with shareholders	119		3,834	-	-		(73,716)		(69,763)		-	(69,763)
Profit for the year	-		-	-	-		44,990		44,990		(1,007)	43,983
Other comprehensive income:
Cash flow hedging - in equity
- current year	-		-	6,658	-		-		6,658		-	6,658
-reclassification to profit and loss	-		-	(1,702)	-		-		(1,702)		-	(1,702)
Defined benefit pension scheme	-		-	-	-		(1,640)		(1,640)		-	(1,640)
Tax on defined benefit pension scheme	-		-	-	-		452		452		-	452
Currency translation	-		-	(131,424)	-		-		(131,424)		(288)	(131,712)
Movement in Minority Interest	-		-	-	-		-		-		(110)	(110)
Total comprehensive income for the year	-		-	(126,468)	-		43,802		(82,666)		(1,405)	(84,071)
Balance at 31 December 2008	22,265		35,751	(194,036)	1,436		651,841		517,257		1,825	519,082
**Capital Redemption and Revaluation reserves are €723,000 and €713,000 respectively. There were no movements on these balances since 31 December 2008.

CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2009
						2009	2008
						€ '000	€ '000
Operating activities
Result for the year before tax						56,679	68,134
Adjustments						50,967	107,692
Change in inventories						50,723	(4,218)
Change in trade and other receivables						108,398	52,018
Change in trade and other payables						(53,958)	4,715
Pension contributions						(2,927)	(2,611)
Cash generated from operations						209,882	225,730
Taxes paid						(10,119)	(18,121)
Net cash flow from operating activities						199,763	207,609
Investing activities
Additions to property, plant and equipment						(48,592)	(100,044)
Proceeds from disposals of property, plant and equipment						2,715	2,470
Proceeds from financial assets						200	-
Purchase of subsidiary undertakings						(6,566)	(87,700)
Net cash acquired with acquisitions						(183)	3,184
Payment of deferred consideration in respect of acquisitions						(11,196)	(2,521)
Interest received						1,840	1,587
Net cash flow from investing activities						(61,782)	(183,024)
Financing activities
Repayment of bank loans						(139,093)	84,577
Discharge of finance lease liability						(574)	(1,350)
Proceeds from share issues						685	2,693
Buyback of own shares						-	(32,565)
Interest paid						(14,752)	(14,255)
Dividends paid to minorities						(340)	(71)
Dividends paid						-	(42,262)
Net cash flow from financing activities						(154,074)	(3,233)
Cash and cash equivalents at the  beginning of the year						74,272	62,938
Net increase in cash and cash equivalents						(16,093)	21,352
Translation adjustment						1,738	(10,018)
Cash and cash equivalents at the end of the year						59,917	74,272
Cash and cash equivalents at the beginning of the year
	Cash and cash equivalents, beginning of year					75,254	66,626
	Overdrafts					(982)	(3,688)
						74,272	62,938
Cash and cash equivalents at the end of the year
	Cash and cash equivalents, end of the year					83,886	75,254
	Overdrafts					(23,969)	(982)
						59,917	74,272

The following non-cash adjustments have been made to the pre-tax result for the year to arrive at operating cash flow:
						2009	2008
						€ '000	€ '000
Depreciation, amortisation and impairment charges of fixed and intangible assets						40,178	88,876
Employee equity-settled share options						2,800	2,372
Net finance costs						5,980	13,910
Non cash items						2,711	2,705
(Profit)/loss on sale of tangible assets						(702)	(171)
Total						50,967	107,692
Reconciliation of net cash flow to movement in net debt
						2009	2008
						€ '000	€ '000
(Decrease)/increase in cash and bank overdrafts						(16,093)	21,352
Decrease/ (increase) in debt, lease finance and contingent deferred consideration						151,252	(80,706)
Change in net debt resulting from cash flows						135,159	(59,354)
Loans and lease finance acquired with subsidiaries						(388)	(2,684)
Contingent deferred consideration arising on acquisitions in the period						(1,235)	(5,356)
New finance leases						-	-
Translation movement - relating to private placement						11,881	-
Translation movement - other						1,780	(7,259)
Derivative financial instrument						(6,959)	-
Net movement						140,238	(74,653)
Net debt at start of the year						(299,622)	(224,969)
Net debt at end of the year						(159,384)	(299,622)

SUPPLEMENTARY INFORMATION
1       Reporting currency
The Consolidated Financial Statements are expressed in Euro which is the presentation currency of the Group and the functional currency of the Company. Results and cash flows of foreign subsidiary undertakings have been translated into Euro at the actual 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 entities used were as follows:
			Actual Rate			Closing Rate
Euro =			2009	2008		2009	2008
Pound Sterling			0.892	0.796		0.890	0.951
US Dollar			1.395	1.471		1.433	1.381
Canadian Dollar			1.587	1.560		1.510	1.750
Australian Dollar			1.776	1.743		1.600	2.050
Czech Koruna			26.478	24.990		26.000	26.550
Polish Zloty			4.337	3.523		4.100	4.120
Hungarian Forint			281.151	252.430		270.00	265.00
2    Segment reporting
In identifying the operating segments, management generally follows the Groups product lines, which represent the main products provided by the Group. Each of these operating segments is managed separately as each requires different technologies and other resources as well as marketing approaches.
Reported segments and their results are now based on internal management reporting information that is regularly reviewed by the chief operating decision maker.
The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial statements.
The requirements of IFRS 8 are applied retrospectively and comparative figures restated.
Business segments
The Group operates in the following four business segments:
Insulated Panels	Manufacture of insulated panels, structural framing and metal facades.
Insulation Boards	Manufacture of rigid insulation boards, building services insulation and engineered timber systems.
Environmental & Renewables	Manufacture of environmental, pollution control and renewable energy solutions.
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 customers.
Segment assets are based on the geographical location of the assets.
Below is an extract from the note that will be included in the annual report.
Analysis by class of business
			Insulated	Insulation	Environmental	Access	TOTAL
Segment Revenue			Panels	Boards	& Renewables	Floors
			€mn	€mn	€mn	€mn	€mn
Total Revenue - 2009			593.9	215.3	168.7	147.6	1,125.5
Total Revenue - 2008			862.1	345.2	266.7	198.7	1,672.7
Inter-segment revenue is not material and is thus not subject to separate disclosure in the above analysis.
Inter-segment transfers are priced using an appropriate transfer pricing methodology.

Segment Result (profit before finance costs)
		Insulated	Insulation	Environmental	Access	TOTAL	TOTAL
		Panels	Boards	& Renewables	Floors	2009	2008
		€mn	€mn	€mn	€mn	€mn	€mn
Trading Profit		26.3	13.5	1.8	25.5	67.1	161.7
Intangible Amortisation		(2.8)	(0.7)	(0.8)	(0.1)	(4.4)	(4.6)
Non Trading Items		-	-	-	-	-	(31.5)
Goodwill & Intangibles Impairment		-	-	-	-	-	(43.6)
Operating result - 2009		23.5	12.8	1.0	25.4	62.7
Operating result - 2008		88.8	(31.0)	(3.6)	27.8		82.0
Net finance cost						(6.0)	(13.9)
Result for the year before tax						56.7	68.1
Tax expense, net						(8.7)	(24.2)
Minority interest						(0.3)	1.0
Net result for the year						47.7	45.0
Segment Assets and Liabilities
		Insulated	Insulation	Environmental	Access	TOTAL	TOTAL
		Panels	Boards	& Renewables	Floors	2009	2008
		€mn	€mn	€mn	€mn	€mn	€mn
Assets - 2009		494.9	247.7	182.7	118.2	1,043.5
Assets - 2008		591.4	251.4	183.1	136.4		1,162.3
Liabilities - 2009		(123.0)	(48.8)	(65.4)	(24.8)	(262.0)
Liabilities - 2008		(156.8)	(73.3)	(40.0)	(26.0)		(296.1)
Total assets less total liabilities						781.5	866.2
Cash and cash equivalents						83.8	75.3
Deferred tax asset						3.0	1.2
Interest bearing loans and borrowings (current and non-current)						(233.0)	(362.1)
Deferred consideration (current and non-current)						(3.3)	(12.8)
Income tax liabilities (current and deferred)						(46.5)	(48.8)
Total Equity as reported in Group Balance Sheet						585.5	519.0
Other Segment Information
			Insulated	Insulation	Environmental	Access	TOTAL
			Panels	Boards	& Renewables	Floors
			€mn	€mn	€mn	€mn	€mn
Capital Investment - 2009			12.0	24.5	9.4	0.9	46.8
Capital Investment - 2008			162.6	(38.0)	9.4	3.6	137.6
Depreciation included in segment result - 2009			(19.3)	(8.4)	(5.2)	(2.9)	(35.8)
Depreciation included in segment result - 2008			(20.2)	(11.2)	(6.2)	(3.0)	(40.6)
Amortisation & impairment included in segment result - 2009			(2.8)	(0.7)	(0.8)	(0.1)	(4.4)
Amortisation & impairment included in segment result - 2008			(6.7)	(40.8)	(0.6)	(0.1)	(48.2)
Non cash items included in segment result - 2009			(2.8)	2.9	0.6	0.0	0.7
Non cash items included in segment result - 2008			(0.4)	-	0.6	-	0.2

Analysis of Segmental Data by Geography
		Republic of Ireland	United Kingdom	Rest of Europe	Americas	Others	TOTAL
		€mn	€mn	€mn	€mn	€mn	€mn
Income Statement Items
Revenue - 2009		78.1	503.3	310.9	192.7	40.5	1,125.5
Revenue - 2008		173.8	826.6	453.1	177.1	42.1	1,672.7
Balance Sheet Items
Assets - 2009		117.9	468.0	223.2	197.4	37.0	1,043.5
Assets - 2008		128.1	549.8	246.6	218.4	19.5	1,162.3
Other segmental information
Capital Investment - 2009		3.6	12.9	16.5	5.0	8.8	46.8
Capital Investment - 2008		(22.2)	30.3	46.0	76.9	6.6	137.6
2008 Capital investment figures include goodwill impairment.
3    Net finance cost
						2009	2008
						€'000	€'000
Bank loans						12,641	15,796
Hire purchase and finance leases						6	37
Net defined benefit pension scheme						103	(367)
Interest income						(1,848)	(1,556)
						10,902	13,910
Fair value movement on derivative financial instrument						6,959	-
Translation gain on private placement debt						(11,881)	-
Net finance cost						5,980	13,910
4    Analysis of net debt
						2009	2008
						€'000	€'000
Cash and cash equivalents						83,886	75,254
Bank debt < 1 year						(31,863)	(16,857)
Private placement debt > 5 years						(151,458)	(151,458)
Bank debt 2 - 5 years						(61,564)	(193,791)
Contingent deferred consideration						(3,307)	(12,770)
						(164,306)	(299,622)
Net gains on hedged dollar funding						4,922	-
Total net debt						(159,384)	(299,622)

5    Dividends
Dividends on Ordinary Shares are recognised in the Group's financial statements on a cash paid basis under IFRS.
There was no Final Dividend on Ordinary Shares for the year ended 31 December 2008
There was no Interim Dividend on Ordinary Shares for the year ended 31 December 2009
There is no Final Dividend on Ordinary Shares being proposed for the year ended 31 December 2009.
DIVIDENDS						2009	2008
						€'000	€'000
Ordinary dividends
Paid:	2008 Final dividend nil (2007: 17.0c per share)					-	28,984
	2009 Interim dividend nil (2008: 8.00c per share)					-	13,278
						-	42,262
6    Earnings per share
						2009	2008
						€'000	€'000
The calculations of earnings per share are based on the following:
Profit attributable to ordinary shareholders						47,658	44,990
						Number of	Number of
						shares ('000)	shares ('000)
						2009	2008
Weighted average number of ordinary shares for the calculation of basic earnings per share						166,116	168,318
Dilutive effect of share options						2,326	1,238
Weighted average number of ordinary shares for the calculation of diluted earnings per share						168,442	169,556
						2009	2008
						€ cent	€ cent
Basic earnings per share						28.7	26.7
Diluted earnings per share						28.3	26.5

7             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 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.
8             Distribution of Preliminary Statement of Annual Results
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.

 

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