Final Results
Kingspan Group PLC
05 March 2007
KINGSPAN GROUP PLC
RESULTS FOR THE YEAR ENDED 31st DECEMBER 2006
Results Highlights
2006 2005 % Change
Turnover €1,461.2mn €1,243.4mn +18%
Operating profit €194.0mn €145.1mn +34%
Operating margin 13.3% 11.7%
Net profit before tax €185.2mn €135.0mn +37%
Basic earnings per share 89.8 €cent 66.4 €cent +35%
Dividend per share for the year 19.0 €cent 13.4 €cent +42%
Dividend cover 4.7 times 5.0 times
Interest cover 26.7 times 17.6 times
(EBITDA/Net Interest)
• Strong momentum across all of the Group's businesses.
• Robust underlying construction markets.
• Continued advances in penetration levels of high performance
insulation products.
• Total investment in the period under review was €167 million.
• Acquisitions have extended the geographic reach of the Insulated Panel
division and given increased scale to the Group's UK timber-frame business.
Gene Murtagh, Chief Executive, commented:
'2006 was another strong year for the Group with earnings growth of 35%, and we
enter 2007 with confidence that it will be another year of progress at Kingspan.
This is underpinned by generally strong construction markets, ongoing product
development and growth from new and embryonic markets, which will help to offset
increasingly competitive markets and the expectation that raw material prices
will be more unpredictable'.
For further information contact:
James Dunny: Murray Consultants Tel: +353 (0) 1 4980 300
Tim Thompson/Jeremy Garcia: Buchanan Communications Tel: +(44) 207 466 5000
Chief Executive's Review
2006 was another year of great progress for Kingspan as momentum in our core
markets continued and the foundations of the Group in new geographical
territories were established. Globally, the focus on energy consumption
intensified during the year and there is an increasing awareness of the role
that construction techniques and building fabrics can play in alleviating future
environmental damage. Generally, activity across the construction sector in
Europe improved in the year and whilst preferences in material choices continued
to change the Group's focus on developing solutions to capitalise on this shift
drove further growth.
Some key highlights of 2006 were:
• Growth of 18% in sales revenue and growth of 35% earnings over 2005,
which in itself was a year of significant growth for Kingspan
• Continued advances in penetration levels of high performance insulation
materials in the UK and Irish markets
• Group activities in Central & Eastern European markets, strategically a
core market for Kingspan, saw sales growth of 60%
• Combined acquisition and capital investments of €167 million, €107 million
of which was in a range of small to medium sized acquisitions across the
Group
• The establishment of an extended geographical footprint for the Insulated
Panels business, with a presence now in North America, Australia and
Turkey
• Positive impact from raw material pricing movements.
Insulated Panels & Boards
Insulated Panels
Representing 39% of Group turnover in 2006, Insulated Panels continued to
deliver strong growth with revenues up by 21%. Growth in this business unit was
mainly organic, derived from further conversion away from traditional materials
and systems in Ireland and the UK, which was augmented by healthy rates of
activity in those markets. In particular, many large logistic projects were
built in the year, where construction timetables and the increasing appetite for
more sustainable buildings are most appropriately satisfied by the Insulated
Panel solution.
Insulated Panels in Central and Eastern Europe (CEE), a key area of focus for
the Group in recent years, grew by a very strong 50%. In the industrial and
commercial buildings markets in that region, Insulated Panels are becoming an
increasingly preferred building material, largely due to the compelling build
speed benefits of the system. This is also influenced by the continued trend of
inward investment in CEE. Reflecting the significant expansion of the Group in
the region, Kingspan now has a commercial presence in 13 CEE countries. Building
upon this in 2006, Kingspan entered into a new manufacturing joint venture in
Turkey which provides a platform to expand further east in the future. The
clear benefits of Insulated Panels with respect to environmental sustainability
have not yet been fully recognised in these markets but it is inevitable that
Kingspan can expect these issues to become a market driver for Insulated Panels
as these evolving economies develop further.
Kingspan entered the North America market for Insulated Panels late in 2006
through the acquisition of a business with a leading presence in Canada, which
has manufacturing facilities in Toronto and Vancouver. In January 2007 the
Group also acquired two continuous panel production lines in Toronto. Over the
coming year these businesses will be fully integrated in terms of systems and
processes, which have been refined over the years by Kingspan in all of its
existing markets. Combined, these businesses provide the Group with an excellent
product range with which to launch the Kingspan brand on a continent that is
only at the very early stages of embracing more energy efficient building
solutions. Whilst the ultimate opportunity here is very significant for
Kingspan, progress will be gradual.
Having entered the Australian and New Zealand markets in 2003 with a sales
presence, Kingspan commenced manufacturing early in 2006 and progress has been
very satisfactory in the first nine months of operation.
Insulation Boards
Representing 17% of Group turnover in 2006, sales of Insulation Boards grew by
12% over the prior year.
Ireland has been a solidly performing construction market for a number of years
now. Momentum once again was exceptionally strong in 2006, right across all
aspects of this sector, and Kingspan continued to take advantage of that
environment with strong double-digit volume growth. Insulation Boards is now
the clear material of choice in this market.
The UK also provided volume growth, however, it was more moderate at circa 7%,
with the market still in the transition phase between old and new regulations.
The Group's strategy has been to shift specification patterns towards the most
efficient rigid insulation material available, comprising Kingspan's proprietary
technology. This product, which is currently marketed across Western Europe and
gaining traction particularly in Ireland and the UK, will be the subject of
significant capital investment during 2007 aimed primarily at increasing
capacity for further penetration growth. The regulation review of 2006 is
expected to impact the Group from mid 2007. Although somewhat later than
initially anticipated, it will create the necessity for further expansion of the
Group's manufacturing capacity for its standard range of boards commencing in
2007. This investment will be significant and will be at a new location in the
UK, enhancing Kingspan's goal of providing our customers with unequalled
products and service performance.
In Western Europe, Kingspan continues to review opportunities to strengthen the
Group's market presence, and following the success of the Insulated Panel
business in CEE, plans are currently being drawn up for Insulation Board
production in that region.
Raised Access Floors
Representing 10% of Group turnover in 2006, Raised Access Floors revenue grew by
15% during the year, largely in response to the recent upturn on both sides of
the Atlantic in activity in the office construction market.
In the US, commercial office construction, which had lagged other sectors of the
industry, began to show signs of improvement in 2006. This momentum has
continued into the current year bolstered by Kingspan's consolidation of its
market leadership position in the US during the period. A more favourable
market backdrop coupled with an exceptionally lean manufacturing environment and
a positive mix in market applications has resulted in a successful outcome for
the year and a return to double-digit operating margins for the US.
In the UK and Ireland, commercial office construction was strong, which had a
positive impact on the performance of Kingspan's business in this highly
penetrated but cyclical sector.
Currently going through a clear upturn in the cycle, the medium-term outlook for
our North American and European Raised Access Floors businesses is encouraging.
Environmental
Representing 17% of Group turnover in 2006, this division grew turnover by 13%
in the past year. This was driven by both organic growth and contributions from
bolt-on deals completed over the last two years.
This division remains focused on converting leading market positions in
relatively low value products towards higher value added solutions. The three
key product areas are:
• Water Systems
• Fuel Storage and Containment
• Waste Water Treatment Solutions
All of these products have an ever increasing role to play in the area of
environmental and sustainable solutions.
The Group's traditional emphasis on gravity fed water systems has been
successfully superseded by the growth in recent years of the higher value
Unvented Cylinder market. As water pressures increase and changes in lifestyle
preferences demand greater comfort and convenience, our new enhanced product
range should continue to gain share against the traditional alternative. This
has been particularly evident in the UK.
At a time when environmental legislation is becoming more widely enforced, the
shift towards Wastewater Treatment solutions has continued to benefit the Group.
Similar influences will increasingly drive markets towards more planet
friendly fuel storage solutions. The risks associated with single skin fuel
storage tanks became more evident in recent years as there were widespread and
costly failures across the industry, linked to unsuitable raw material
specifications. This has served to strongly reinforce Kingspan's efforts to
encourage a regulatory move towards Bunded (secondary containment) tanks.
Kingspan's Ecosafe(TM) Bunded Fuel Tanks with telemetric leak detection, are the
most environmentally protective storage solution.
The range of products is evolving in this division continuously. Further
businesses and products will be added to reflect evolving opportunities and the
shift towards more environmentally sustainable solutions.
Off-Site & Structural
Representing 17% of Group turnover in 2006, this division grew revenue by 21%.
The operating result benefited from efficiency gains and once-off procurement
gains.
Performance of structural metal components in the UK and Ireland reflected the
state of low rise non-residential construction, and was therefore quite flat.
This division is also focused on delivering a range of factory manufactured
construction solutions. By incorporating many on-site processes in a modern
production environment, such solutions vastly reduce time on-site and provide
certainty of performance over the buildings' life-cycle. Regulation has also
contributed to the attractiveness of these systems, but so too has the
heightened awareness of the extent to which modern building solutions can reduce
energy consumption and greenhouse gas emissions.
On the back of a number of strategic investments, Kingspan has been actively
positioning itself for this dynamic of tougher regulations and increasing
environmental awareness, and now through its timber and steel framing
capabilities has a leading presence in both the UK and Ireland markets. While
the Group's UK business is much less established than in Ireland and is
effectively in the developing stages, its market position has been greatly
enhanced by the acquisition of two timber-frame businesses in 2006, with a view
to providing the Group with greater market penetration. These developments in
the UK are unlikely to contribute significantly in the short term, pending major
redesign of products to meet future requirements.
To this end, much of the Group's Research and Development has been centred on
advancing the off-site product, and to date, progress is evident from successes
such as the 'House of Tomorrow' projects in Ireland and the winning of the
'SixtyK' Modern Methods Competition sponsored by the UK Government. Home
designs that achieve zero carbon emissions are already being finalised by the
Group, and are due for launch in 2007. This is in keeping with the UK's
confirmation of its intention to have all new build reach zero carbon by 2016,
an innovative policy measure which Ireland may find difficult not to follow.
The Group plans to invest significantly in both metal and timber framing
processes to ensure that the business is well positioned to take advantage of
these developments. These projects are expected to be completed over the coming
two years to ensure that Kingspan has sufficient manufacturing scale to give
house builders and developers the confidence to move their developments towards
the Group's modern methods solutions.
Capital Expenditure and Acquisitions
Combined investment by the Group in 2006 came to €167 million. Throughout the
Group, Kingspan continues to invest in superior manufacturing assets that ensure
maximum efficiency, while providing the Group with appropriate levels of
capacity to support further growth and expansion. As part of the Group's
strategy, acquisitions often substitute directly for capital expenditure, as
well as providing Kingspan with a more immediate presence in the Group's
targeted sectors and geographic markets. In the year gone by, Kingspan
completed ten deals amounting to €107 million. The average size of these
acquisitions clearly reflects the bolt-on nature of the deals.
Outlook
In general, construction markets in 2007 are expected to show continued growth,
particularly in the UK and CEE markets. However the rate of growth in the Irish
construction market should inevitably slow down. Raw material prices are also
expected to be less predictable during the current year. The Group is conscious
that competition is likely to increase in its main markets as more companies are
alerted to the environmental and sustainable drivers in the construction
industry. These developments make it more imperative that the Group continues
to differentiate itself from competitors through an enhanced product development
programme. Whilst we are not anticipating growth rates throughout the Group in
line with the last few years, good momentum has nevertheless continued into the
current year. This momentum together with the Group's presence in new and
embryonic markets gives us confidence that 2007 will be another year of progress
at Kingspan.
Gene Murtagh
Chief Executive
5th March 2007
Financial Review
Results
Turnover for the year ended 31st December 2006 was €1,461.2 million, an increase
of 18% on 2005. Acquisitions completed during the course of the year generated
€35.0 million in additional turnover.
Profit before tax was €185.2 million, 37% up on the €135.0 million achieved in
2005. Earnings attributable to ordinary shareholders were €151.0 million (2005:
€111.4 million). Cash generation remained strong with earnings before interest,
tax, depreciation and amortisation (EBITDA) of €236.0 million, which represented
a 33% increase on the €177.6 million out-turn in 2005. The amortisation charge
for the year amounted to €2.7 million (2005: €1.9 million).
Turnover and Margins
Group turnover increased by 18% or €217.8 million compared to 2005. The tables
below detail the Group's Turnover by Class of Activity and Geographical Area and
the year on year growth achieved.
Analysis by Class of Activity
Year ended Year ended % Change 2006-2005 €'mn increase
31.12.06 31.12.05
€'mn €'mn
Insulated Panels 574.1 472.4 +21% +101.7
Insulation Boards 242.4 217.0 +25.4
+12%
Insulated Panels & Boards 816.5 689.4 +18% +127.1
Raised Access Floors 149.5 130.0 +15% +19.5
Environmental 249.0 220.1 +13% +28.9
Off-Site & Structural 246.2 203.9 +21% +42.3
1461.2 1243.4 +18% +217.8
Year ended Year ended % Change 2006-2005 €'mn increase
31.12.06 31.12.05
€'mn €'mn
Republic of Ireland 261.5 215.3 +21% +46.2
Britain and Northern Ireland 822.1 753.3 +9% +68.8
Mainland Europe 272.1 196.4 +39% +75.7
Americas 78.9 63.7 +24% +15.2
Other 26.6 14.7 +81% +11.9
1461.2 1243.4 +18% +217.8
In continuing operations the gross profit margin was 31.5%, up from 30.3% last
year. Acquisitions completed in 2006 had an equivalent margin of 21.6%, which
had the effect of diluting the overall gross profit margin to 31.2%.
The operating margin, being earnings before interest and tax as a percentage of
turnover, was 13.3% in the year, up from 11.7% last year. This improvement
reflected the increase in gross margin and favourable leverage on the operating
cost base which represented 18.0% of turnover compared with 18.7% in 2005.
Taxation
The effective tax rate in the year at 18.1% compares with 17.5% last year, a
reflection of the growing overseas business.
Earnings Per Share
Basic Earnings per share at 89.8 cent shows an increase of 35% over the previous
year. This figure has grown at an annual compound rate of just over 25% over
the ten year period 1996 to 2006.
Dividends
Subject to shareholder approval at the 2007 Annual General Meeting, it is
proposed that the dividend for 2006 will be 19.0 cent per share. This consists
of an interim dividend of 6.0 cent per share paid on 6th October 2006, and a
final dividend of 13.0 cent per share proposed to be paid on 8th June 2007 to
shareholders on the register on 23rd March 2007. This represents a 42% increase
on the previous year. The dividend for the year is covered 4.7 times by
earnings which compares to 5.0 times in 2005, which is in 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 2006 and 2005:
2006 2005
€'mn €'mn
Operating profit 194.0 145.1
Depreciation 39.3 30.6
Amortisation 2.7 1.9
Working capital increase (48.5) (9.4)
Pension contributions (4.6) (2.9)
Interest (8.4) (7.5)
Taxation paid (25.5) (28.2)
Others 17.7 13.8
Free cash 166.7 143.4
Acquisitions (107.3) (141.7)
Net capital expenditure (57.7) (42.2)
Dividends paid (25.1) (17.8)
(190.1) (201.7)
Cash flow movement (23.4) (58.3)
Debt translation (0.7) 2.9
(Increase) in net debt (24.1) (55.4)
Net debt at start of year (163.5) (108.1)
Net debt at end of year (187.6) (163.5)
The free cash flow for the year, representing operating cash flow less interest
and taxation paid, amounted to €166.7 million, which was up 16.3% on last year.
This was used to fund spending of €107.3 million on ten bolt-on deals, net
capital expenditure of €57.7 million and dividends of €25.1 million.
Operational working capital at the year end was €229.7 million (2005: €172.1
million) and represented 15.7% of turnover (2005: 13.8%). This is higher than
the company target of 15.0% reflecting the second half bias to acquisition spend
and a busy end to the year. Working capital expressed as days sales (which
takes into account the phasing of sales) was up slightly at 35 days compared to
33 days for the prior year end.
Overall, net debt at the end of the year was up slightly on the previous year at
€187.6 million (2005: €163.5 million), which represents gearing of 34.3%.
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 26.4%
compared to 25.0% in 2005.
Treasury
At 31st December 2006 the Group had total facilities of €537 million, comprising
of syndicated bank facilities of €300 million, €151.5 million loan notes and
€85.5 million of overdraft and other facilities. The syndicated facilities
include a €75 million term loan with repayments of €25 million per annum to 16th
December 2009 and a €225 million revolving credit which will also mature at that
date. The Group's private placement of US$200.0 million (€151.5 million) loan
notes matures in March 2015 (US$158.0 million) and March 2017 (US$42.0 million).
The drawn down bank facilities and loan notes at 31st December 2006 were €232.5
million, comprising €186.6 million EUR debt, €44.6 million of STG debt and €1.3
million of other debt.
The loan notes which represent 65% of the drawn down facilities are fixed out to
maturity in Euro terms 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 cash flow projections for the
existing businesses to 31st December 2007, it is estimated that the Group has
the need to sell the equivalent of €120 million in Sterling for Euro and sell
the equivalent of US$13 million in Sterling for US Dollar. As at 31st December
2006, given hedges in place, these currency exposures have been reduced to €60
million at a weighted average rate of £0.677, and reduced to US$3 million at a
weighted average rate of £0.522.
Pension Deficit
The Group has two legacy defined benefit pension schemes in the UK. These
schemes have been closed and the liability relates only to past service. As at
31st December 2006 there were assets in the schemes of €61.3 million and
actuarial assessed pension liabilities of €82.2 million, giving a net deficit of
€20.9 million. The corresponding deficit at 31st December 2005 was €24.0
million. The main drivers in this deficit movement were:
Assets €'mn Liabilities €'mn Net €'mn
Opening balance 52.4 (76.4) (24.0)
Translation 0.6 (1.0) (0.4)
Contribution paid 4.6 4.6
Benefits paid (1.6) 1.6 0.0
Actuarial gain/(losses) 2.1 (2.8) (0.7)
Net return on asset 3.2 3.2
Interest cost (3.6) (3.6)
Closing balance 61.3 (82.2) (20.9)
Summary
Overall the Group is in a strong financial position going into 2007 and is well
positioned for continued growth. 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.
Dermot Mulvihill
Finance Director
5th March 2007
GROUP INCOME STATEMENT
for the year ended 31 December 2006
Continuing
Operations Acquisitions Total Total
2006 2006 2006 2005
€ '000 € '000 € '000 € '000
Revenue 1,426,134 35,036 1,461,170 1,243,410
Costs of sales (977,151) (27,462) (1,004,613) (866,348)
Gross profit 448,983 7,574 456,557 377,062
Operating costs (256,499) (6,013) (262,512) (231,993)
Operating result 192,484 1,561 194,045 145,069
Finance costs (11,620) (11,607)
Finance income 2,775 1,535
Result for the year before tax 185,200 134,997
Income tax expense (33,520) (23,628)
Net result for the year 151,680 111,369
Profit attributable to:
Shareholders of Kingspan Group plc 151,032 111,378
Minority Interest 648 (9)
Net Result for the year 151,680 111,369
Earnings per share for the year
Basic 89.8 66.4
Diluted 87.8 64.8
GROUP BALANCE SHEET
as at 31 December 2006
2006 2005
€ '000 € '000
Assets
Non-current assets
Goodwill 287,580 217,736
Other intangible assets 17,117 12,265
Property, plant and equipment 294,875 250,757
Financial assets 227 755
Deferred tax assets 2,694 2,366
602,493 483,879
Current assets
Inventories 130,868 97,323
Trade and other receivables 357,966 268,124
Cash and cash equivalents 69,060 120,165
557,894 485,612
Total assets 1,160,387 969,491
Liabilities
Current liabilities
Trade and other liabilities 259,112 193,368
Provisions for liabilities and 42,554 30,252
charges
Deferred consideration 5,659 16,777
Interest bearing loans and 34,631 38,864
borrowings
Current tax liabilities 26,130 16,366
368,086 295,627
Non-current liabilities
Pension and other employee obligations 20,958 24,009
Interest bearing loans and 205,979 226,799
borrowings
Deferred tax liabilities 8,212 5,173
Deferred consideration 10,355 1,241
245,504 257,222
Total liabilities 613,590 552,849
NET ASSETS 546,797 416,642
Equity
Equity attributable to shareholders of Kingspan Group plc
Called-up share capital 22,161 22,003
Additional paid-in share capital 26,341 22,803
Other reserves (25,601) (23,650)
Revaluation reserve 713 713
Capital redemption reserve 513 513
Retained earnings 519,390 393,898
543,517 416,280
Minority interest 3,280 362
TOTAL EQUITY 546,797 416,642
STATEMENT OF RECOGNISED INCOME AND EXPENSE
as at 31 December 2006
2006 2005
€ '000 € '000
Profit for financial year attributable to Group 151,032 111,378
shareholders
Currency translation (4,657) 15,032
Cash flow hedging in equity (337) 18
Actuarial losses in defined benefit pension (685) (2,979)
scheme
Income taxes relating to items charged or credited to 206 891
equity
Total recognised income and expense for the 145,559 124,340
year
GROUP CASH FLOW STATEMENT
for the year ended 31 December 2006
2006 2005
€ '000 € '000
Operating activities
Result for the year before tax 185,200 134,997
Adjustments 54,393 46,625
Change in inventories (18,446) 8,032
Change in trade and other (68,313) (5,627)
receivables
Change in trade and other 48,669 (4,392)
payables
Pension contributions (4,561) (2,873)
Cash generated from operations 196,942 176,762
Taxes paid (25,498) (28,159)
Net cash flow from operating 171,444 148,603
activities
Investing activities
Additions to property, plant and equipment (59,420) (46,802)
Proceeds from disposals of property, plant and equipment 1,747 4,654
Proceeds from financial assets 528 29
Purchase of subsidiary (70,815) (142,970)
undertakings
Net cash acquired with (7,073) 18,910
acquisitions
Payment of deferred consideration in respect of (16,102) (1,441)
acquisitions
Dividends paid to minorities (14) (44)
Interest received 2,654 1,606
Net cash flow from investing (148,495) (166,058)
activities
Financing activities
Proceeds from bank loans and loan notes - 151,458
Repayment of bank loans (35,998) (89,862)
Discharge of finance lease (2,406) (413)
liability
Proceeds from share issues 3,288 2,749
Interest paid (11,087) (9,138)
Dividends paid (25,103) (17,713)
Net cash flow from financing (71,306) 37,081
activities
Cash and cash equivalents at the beginning of the year 110,231 85,201
Net increase in cash and cash equivalents (48,357) 19,626
Translation adjustment (10) 5,404
Cash and cash equivalents at end of the 61,864 110,231
year
Cash and cash equivalents as at 1st January 2006 were made up of:
Cash and cash equivalents 120,165 87,791
Overdrafts (9,934) (2,590)
110,231 85,201
Cash and cash equivalents as at 31st December 2006 were made up of:
Cash and cash equivalents 69,060 120,165
Overdrafts (7,196) (9,934)
61,864 110,231
The following non-cash adjustments have been made to the pre-tax result for the
year to arrive at operating cash flow:
2006 2005
€'000 €'000
Depreciation, amortisation and impairment charges of fixed and intangible assets 41,957 32,515
Employee equity-settled share 3,492 2,256
options
Finance income (2,775) (1,535)
Finance cost 11,620 11,607
Loss on sale of tangible assets 99 1,782
Total 54,393 46,625
Reconciliation of net cash flow to movement in net debt
2006 2005
€'000 €'000
(Decrease)/increase in cash and bank (48,357) 19,626
overdrafts
Decrease/(increase) in debt, lease finance and deferred consideration 54,506 (59,742)
Change in net debt resulting from cash 6,149 (40,116)
flows
Loans and lease finance acquired with (15,365) (6,314)
subsidiaries
Deferred consideration arising on acquisitions in the (14,086) (11,383)
period
New finance leases (67) (45)
Translation movement (679) 2,472
Net movement (24,048) (55,386)
Net debt at start of the year (163,516) (108,130)
Net debt at end of the year (187,564) (163,516)
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 entities used were as follows:
Average rate Closing Rate
Euro = 2006 2005 2006 2005
Pound Sterling 0.682 0.684 0.670 0.678
US Dollar 1.256 1.245 1.313 1.185
Canadian Dollar 1.425 1.510 1.525 1.390
Australian Dollar 1.668 1.633 1.670 1.620
Czech Koruna 28.367 29.836 27.590 28.920
Polish Zloty 3.906 4.029 3.840 3.830
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 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 Floors
€m €m €m €m €m
Total Revenue - 2006 816.5 246.2 249.0 149.5 1,461.2
Total Revenue - 2005 689.4 203.9 220.1 130.0 1,243.4
Intersegment revenue is not material and is thus not subject to separate
disclosure in the above analysis. 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 Floors 2006 2005
€m €m €m €m €m €m
Operating result - 2006 128.0 27.5 20.9 17.6 194.0
Operating result - 2005 94.2 22.7 18.4 9.8 145.1
Finance costs (net) (8.8) (10.1)
Result for the year before tax 185.2 135.0
Income tax expense (33.5) (23.6)
Net result for the year 151.7 111.4
Segment Assets and Liabilities
Insulated Offsite & Environmental Access TOTAL TOTAL
Panels
& Boards Structural Floors 2006 2005
€m €m €m €m €m €m
Assets - 2006 534.8 216.0 201.2 136.6 1,088.6
Assets - 2005 413.3 134.6 161.2 137.9 847.0
Liabilities - 2006 (163.8) (77.5) (50.5) (30.9) (322.7)
Liabilities - 2005 (131.2) (50.2) (40.2) (26.1) (247.7)
Total assets less total 765.9 599.3
liabilities
Cash and cash equivalents 69.1 120.2
Deferred tax asset 2.7 2.3
Interest bearing loans and borrowings
(current and non-current) (240.6) (265.7)
Deferred consideration (current and (16.0) (18.0)
non-current)
Income tax liabilities (current and (34.3) (21.5)
deferred)
Total Equity as reported in Group Balance 546.8 416.6
Sheet
Other Segment Information
Insulated Offsite & Environmental Access TOTAL
Panels
& Boards Structural Floors
€m €m €m €m €m
Capital Investment - 2006 77.8 56.4 21.8 8.8 164.8
Capital Investment - 2005 61.3 73.6 45.9 5.8 186.6
Depreciation included in segment result - (19.7) (6.8) (6.5) (6.3) (39.3)
2006
Depreciation included in segment result - (14.8) (5.0) (6.3) (4.5) (30.6)
2005
Amortisation included in segment result - (0.9) (1.3) (0.4) (0.1) (2.7)
2006
Amortisation included in segment result - (0.8) (0.8) (0.3) 0.0 (1.9)
2005
Non cash Items included in segment result - (0.1) 0.0 0.0 0.0 (0.1)
2006
Non cash Items included in segment result - (1.9) (0.1) 0.2 0.0 (1.8)
2005
Analysis of Segmental Data by Geography
Republic of United Kingdom Rest of Europe Americas Others TOTAL
Ireland
€m €m €m €m €m €m
Income Statement Items
Revenue - 2006 261.5 822.1 272.1 78.9 26.6 1,461.2
Revenue - 2005 215.3 753.3 196.4 63.7 14.7 1,243.4
Balance Sheet Items
Assets - 2006 162.6 653.2 171.1 87.2 14.5 1,088.6
Assets - 2005 119.2 532.8 127.6 66.1 1.3 847.0
Other segmental information
Capital Investment - 2006 21.6 87.5 21.1 21.5 13.1 164.8
Capital Investment - 2005 76.7 65.0 37.7 4.5 2.7 186.6
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 2005 (€15.0 million) was approved by
shareholders in May 2006 and, in accordance with IFRS, was recognised as a
charge to Reserves in the year ended 31 December 2006. The Interim Dividend on
Ordinary Shares for 2006 (€10.1 million) was recognised as a charge to Reserves
in the year ended 31 December 2006.
The Final Dividend on Ordinary Shares for 2006 (€22.0 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 2007.
DIVIDENDS 2006 2005
€'000 €'000
Ordinary dividends
Paid: 2005 Final dividend 8.95c per share (2004: 6.20c per
share) on 167,760,629 shares 15,007 10,300
2006 Interim dividend 6.00c per share (2005: 4.45c per
share) on 168,244,464 shares 10,096 7,413
25,103 17,713
4 Earnings per share
2006 2005
€'000 €'000
The calculations of earnings per share are based on the following:
Profit attributable to ordinary 151,032 111,378
shareholders
Number of Number of
shares shares
('000) ('000)
2006 2005
Weighted average number of ordinary shares for the calculation of basic earnings per share 168,149 167,625
Dilutive effect of share options 3,936 4,269
Weighted average number of ordinary shares for the calculation of diluted earnings per share 172,085 171,894
2006 2005
€ cent € cent
Basic earnings per share 89.8 66.4
Diluted earnings per share 87.8 64.8
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
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