Final Results
Kingspan Group PLC
06 March 2006
KINGSPAN GROUP PLC
RESULTS FOR THE YEAR ENDED 31st DECEMBER 2005
Results Highlights
2005 2004 % Change
Turnover €1,243.4mn €958.1mn 30%
Operating profit €145.1mn €103.3mn 40%
Net profit before tax €135.0mn €96.4mn 40%
Basic earnings per share 66.4 €cent 47.1 €cent 41%
Dividend per share for the year 13.4 €cent 9.6 €cent 40%
Dividend cover 4.9 times 4.9 times
Interest cover 17.6 times 18.6 times
Gearing ratio 39.2% 35.4%
(net debt as % shareholders funds)
Chairman's Statement
Review of the Year
Results
I am pleased to report on another strong year's performance and growth in
Kingspan.
Group turnover increased 30% to €1,243.4 million, operating profit rose by 40%
to €145.1 million, and earnings per share rose to 66.4 cent. Just over half of
this represents organic growth, whilst acquisitions during the year contributed
€138.9 million to Group turnover, adding €16.1 million in operating profits.
For the second year running Kingspan has delivered growth in operating profits
in excess of 30%. Indeed, over the past 10 years Kingspan has delivered
compound annual growth in earnings per share of 30%. These results are built on
a platform of strong management, innovative building solutions, and a commitment
to driving Modern Methods of Construction in the building industry.
Milestones achieved during the year included the commissioning of the new
manufacturing plant in Hungary to meet demand for Insulated Panels in the
growing Central and Eastern European markets, the acquisition of Century Homes,
Ireland's largest timberframe manufacturer, and the acquisition of ASM in the US
which has consolidated Kingspan's position for Raised Access Floor solutions in
the US. Other acquisitions complementing the Group's organic growth were ATC,
the leading provider of panels to the UK food storage industry, and the addition
of the RCM and Albion water storage and heating businesses to the Environmental
Containers range of products. In fact, during the year Kingspan grew to employ
over 4,600 people, and now operates in 28 countries worldwide.
I wish to extend my thanks to all employees throughout the Group for their
contribution throughout the year, and also to our customers, trading partners,
shareholders, and other stakeholders in the business for their continued
support.
Dividends
The Board is recommending payment of a final dividend of 8.95 cent per share, an
increase of 44% on the 2004 final dividend. This will give a total dividend for
the year of 13.4 cent, up 40% on the previous year. The increased dividend is
in accordance with the Board's stated policy of progressively increasing the
dividend so as to bring dividend cover to a level closer to industry norms, in a
manner compatible with the Group's strategic growth plans.
If approved at the Annual General Meeting, the final dividend (which will be
subject to Irish withholding tax rules) will be paid on the 9th June 2006 to
shareholders on the register at close of business on the 24th March 2006.
Board Changes
As previously announced, David Byrne S.C. was co-opted on to the Board as a
non-executive director on the 1st January 2005, and was duly elected at the
Annual General Meeting on the 26th May 2005. Brian Hill was co-opted on to the
Board as a non-executive director on the 1st June 2005 and offers himself for
election at the forthcoming Annual General Meeting. Both appointments bring
valuable experience and independent view points to the Board.
Jim Paul retired from the Board on the 31st December 2005 after 16 years with
the Group. During his career with Kingspan, Jim was Managing Director of the
Insulation Board business and more recently the Off-Site & Structural division.
On behalf of the Board, I wish to thank Jim for his significant contribution to
the Group over the years.
Looking to the Future
The excellent results for the year under review have been achieved while at the
same time investing substantial resources in Research & Development to ensure
the future prospects of the Group.
There is now substantial emphasis on developing new building solutions that are
sustainable, renewable and affordable. In their various market segments, all of
Kingspan's products have major contributions to make in this regard.
Energy Performance of Buildings Directive
The European Union introduced a directive on the energy performance of
buildings, which passed into EU law in 2003. The legislation when fully
implemented in member states will impact on the energy efficiency of buildings
by reducing the CO2 emissions from these buildings by at least 20%. Member
states can stipulate minimum efficiency standards for new buildings of all types
and for the refurbishment of existing large buildings. In addition, and for the
first time, the precise measurement of a building's own energy consumption will
become a reality.
In the UK the directive will be implemented via revised Building Regulations and
a certification scheme agreed with building stakeholders, with the intention of
saving over one million tonnes of CO2 per annum by 2010. Kingspan's range of
products are well positioned to benefit from the general thrust of this
Directive.
Sustainable Buildings
From mid 2006 a more stringent regulatory environment will exist. This is
designed to improve the sustainable development profile of buildings in the UK.
The code for sustainable buildings will go beyond the current Building
Regulations in terms of energy consumption, and will cover not just fuel and
power, but also the efficient use of water and the effective management of
waste. The code will be mandatory for all new buildings. Kingspan's Off-Site &
Structural solutions will significantly reduce waste on site as well as
providing energy efficient buildings, and Kingspan's range of products in the
Environmental Containers division are specifically geared towards saving and
recycling water.
Renewable Resource of Building Materials
Increasingly, architects are considering not just the strength and durability of
building materials, but also their impact on the environment, the community, and
global resources. There is a realisation that building developments in future
must meet the needs of the present, without compromising the ability of future
generations to meet theirs. Various developments within the Group, coupled with
complementary acquisitions, will ensure that Kingspan's product range will have
a major role to play in sustainable developments of the future.
Outlook
The fact that the 'Energy Performance of Buildings Directive' was one of the
fastest pieces of legislation to be introduced in the EU, indicates the urgency
with which regulators are now treating the environmental impact of the built
environment, and the pressure to transform is set to increase in the coming
years. Kingspan intends to influence this transformation, and is well placed to
take advantage of all these developments as they come on stream. For some time
now Kingspan has directed its product focus, through continued research and
development and strategic acquisitions, to benefit from the move to sustainable,
renewable and affordable solutions for the construction sector.
Eugene Murtagh
Chairman
6th March 2006
Chief Executive's Review
2005 marked a year of exceptional performance across the Group, in which revenue
grew by 30% to almost €1.25 billion and operating profit grew by 40% to €145.1
million. Despite the absence of any real buoyancy in the Group's primary
markets, progress was achieved in all of the operating divisions, where the
relentless focus on internally generated growth continued to bear fruit.
Organic growth, which accounted for most of this year on year increase, added
€146.4 million to the Group's revenue. Contributing to this in particular were:
-
• Continued volume growth;
• Further new product penetration; and also
• The impact of passed-on input price rises in many product and geographic
areas.
This organic growth was complemented by acquisitions, which added almost €138.9
million to Group revenue in the year.
In summary, the main features of 2005 were:
• Record levels of sales and earnings, reaching almost €1.25 billion and
€111.4 million respectively.
• The addition of new businesses, at a cost of €141.7 million, which
themselves are focused on growing sectors.
• Continued penetration growth of Insulated Panels across a number of
markets.
• The successful commissioning of our Insulated Panel facility in Hungary,
reinforcing our position as the clear leader in the Central and Eastern
European markets.
• Robust performance of our UK and Ireland Rigid Insulation businesses.
• Satisfactory profits in Raised Access Floors, achieved in the face of weak
Class A office construction in both the UK and US.
Insulated Panels & Boards
Insulated Panels
Representing 38% of Group turnover in 2005, Insulated Panels continued to
deliver good growth in its main markets, and revenues were up by a very healthy
24%. In Ireland, where non-residential construction activity remained high,
Panel volumes grew reasonably, and in the UK where the metal cladding market was
essentially flat versus 2004, Panels continued to convert from the cumbersome
site assembled systems, albeit at a lesser pace than in some recent years.
Management succeeded in maximising returns by striking the right balance between
volumes and price when material inputs were unpredictable.
In the second six months, Central and Eastern European construction markets
recovered from a poor start to the year. The Panel business in this region
posted growth of 18% in the first half, which improved to 26% for the year as a
whole, reflecting a very robust run up to year end, and the further expansion
into the region from the newly established manufacturing facility in Hungary.
The integration of the Door Panel business in Belgium is complete and the newly
acquired ATC, which specialises in panels for the food storage sector, performed
well. Now operating as Kingspan Controlled Environments this business further
consolidated its position in the UK, as well as securing large scale projects in
Australia and New Zealand. These are growing markets for Firesafe(R) solutions
and the Group continues to review the possibility of investing more
substantially in Australasia.
Insulation Boards
Representing 17% of Group turnover in 2005, Insulation grew by 9% over the prior
year. As previously indicated, this business was expected to deliver somewhat
less growth in 2005 than in previous years, primarily due to the transitionary
phase between the insulation demand patterns established following the 2002 UK
Building Regulations, and those anticipated following the April 2006 regulations
review. Accordingly, although volume was broadly flat, revenue growth was
achieved as some of the substantial chemical cost increases were passed on to
the market. More importantly Kingspan grew sales of the higher value, higher
performing phenolic insulation products in which the Group has invested
significantly over recent years.
Coinciding with the pressure on the input side of this business, was an
intensified level of competition due to a number of recent entrants to the
market. In the short to medium term further new entrants are also anticipated.
Notwithstanding this, Kingspan's core focus on absolute lowest unit cost,
superior efficiencies, and an unparalleled range of solutions for the design and
construction community, all contributed to defending the Group's leading
position during this transition period. The pattern for the early part of 2006
is expected to be quite similar. This will be followed, later in the year, by
the resumption of significant investment in projects to capitalise on the strong
volume growth potential to be derived from continued conversion, which will
arise from the increasing inter-changeability of insulants in the future.
The Group entered an industrial insulation joint venture with the Belgian group,
Recticel S.A. at the end of the year. Turnover of the venture is expected to be
in the region of €35.0 million for 2006.
Raised Access Floors
Representing 10% of Group turnover in 2005, Access Floors continued to build
upon the return to profitability achieved in 2004, exiting 2005 with sales
growth of 9% and operating profits of €9.8 million. This result was managed
against a backdrop of a flat market in Class A office development, the type of
construction most likely to opt for the cable management and underfloor air
attributes of the access floor itself. Cost base control, a favourable product
mix, and some upward price movement were all features of the 2005 performance.
In the UK, quotation levels for future projects grew by greater than 30% over
the prior year, coinciding with office vacancy rates in the City of London
dipping below 10% for the first time in a few years. Both are encouraging
indicators of this business's prospects over 2006 and 2007.
In the US, activity in this particular construction sector remains relatively
weak, compared with the peak of 2001. There are signs that activity in segments
of the market such as data centres may enter a new phase of good growth. This
time the growth would be demand led and not speculation led as in the previous
boom period. Strengthened by the recent acquisition in the US of the 'ASM'
access floor business and brand, the operation, which has returned to
profitability, is now well positioned for any market uplift.
Environmental Containers
Representing 18% of Group turnover in 2005, this division grew by a very
substantial 54% in the past year through a combination of robust organic growth
and a number of acquisitions.
The main products of this division fall into the broad categories of fuel
storage, effluent treatment, and water storage and distribution, all of which
have very important environmental attributes.
Sales of fuel storage containers in absolute numbers declined during the year,
however the growth in conversion to higher value double skinned tanks,
incorporating level sensing telemetry, contributed to increased revenues in this
category. The effluent treatment products grew both in volume and value once
again, largely driven by further conversion from septic tanks to the higher
value domestic treatment plant range. This dynamic continues to take place in
both the UK and Ireland.
The hot water storage and distribution systems business was considerably
strengthened in 2005 through the acquisition of RCM and Albion in the UK. The
acquisition of these businesses has moved Kingspan into a leading position in a
growing market for unvented hot water systems. This sub-sector is growing at
approximately 12% per annum, driven by a shift away from traditional gravity fed
systems, towards more modern pressurised solutions. The acquisitions have been
well integrated and are performing as expected.
From its manufacturing base in Poland, the mainland European business unit grew
once again by more than 50% and has just recently completed an expansion
programme there to support further growth during 2006.
In general, Environmental Containers is a product group ideal for further
geographic expansion, and accordingly the Group continues to review appropriate
opportunities.
Off-Site & Structural
Representing 17% of Group turnover in 2005, this division grew in revenue by a
significant 75%, the result of Century's timber frame business joining the
Group, as well as further inflationary growth driven by the high steel cost
experienced by our lightweight structural components during the year.
The Off-Site opportunity for Kingspan lies in bringing together the overwhelming
advantages of build speed and energy performance in both the residential and
non-residential markets, predominately in the UK and Ireland. Century has
almost single handedly grown timber frame penetration in Ireland to 25% by 2005.
Kingspan's share of that market provides a platform to drive similar
conversion to timber frame in the UK, and evolve this product group into a more
strategic part of the Group's Modern Methods of Construction Solutions.
Already, Kingspan's Off-Site & Structural division was part of a consortium that
was selected as a successful bidder in the UK government's £60k affordable
housing initiative. However, the business will require significant upfront
investment in product and process development in order to achieve its full
potential.
On the metal side of this business, the first phase of investment at our UK
metal offsite plant is fully commissioned and operational. This is already
generating encouraging levels of specifications. 2006 will represent the first
full year since the launch of this product and we have reason to anticipate a
satisfactory level of sales based on those specifications. This is an evolving
sector for us and the Group will be looking to make further investments in this
area.
Research & Development
At Kingspan, we are acutely mindful of the contribution Research & Development
has made, and will make, to the success of the Group. Firstly it is crucial to
maintaining our edge in current products and markets, which require continuous
process and product improvements throughout each business. Additionally it is
the source of new concepts, solutions and products that enable us to forge a
position in evolving areas relatively new to the market.
Approximately 1% of the Group turnover is invested in this process annually.
The current pipeline of initiatives numbers greater than sixty, and spans
projects ranging from formulation improvement, to fundamental chemistry
advancements, to developing new construction concepts. It is central to many of
Kingspan's strategic objectives.
Much of the development process occurs internally, and beyond this we continue
to build complimentary working relationships with a number of external bodies,
including universities and technical colleges.
People
2005 was a tremendous year at Kingspan. This is largely due to the ideas,
commitment and determination of the many people throughout the business. I
would like to extend my gratitude to all for their contribution to date, and for
their collective ambitions for the continued development of the organisation.
Looking Ahead
The Group has got off to a good start in 2006. The economies in which Kingspan
operates are quite stable in general, with some improvement anticipated in
certain sectors later in the year. This backdrop, together with the robustness
of the business, and the imminent UK Building Regulations review, should enable
Kingspan to deliver further growth into the future.
Gene Murtagh
Chief Executive Officer
6th March 2006
Financial Review
Results
Turnover for the year ended 31st December 2005 was €1,243.4 million, an increase
of 30% compared to the previous year. Acquisitions in the year generated €138.9
million additional turnover.
Profit before tax was €135.0 million (2004: €96.4 million). Earnings
attributable to ordinary shareholders were €111.4 million (2004: €78.1 million).
Cash generation remained strong with earnings before interest, tax,
depreciation and amortisation (EBITDA) of €177.6 million (2004: €128.4 million).
Amortisation amounted to €1.9 million (2004: €0.7 million).
Turnover and Margins
Group turnover increased by 30% or €285.3 million compared to 2004.
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
31.12.05 31.12.04 2005-2004
€'million €'million
Insulated Panels 472.4 380.2 +24%
Insulation Boards 217.0 199.4 +9%
Insulated Panels & Boards 689.4 579.6 +19%
Raised Access Floors 130.0 119.2 +9%
Environmental Containers 220.1 142.5 +54%
Off-Site & Structural 203.9 116.8 +75%
1,243.4 958.1 +30%
Analysis by Geographical Area Year ended Year ended % Change
31.12.05 31.12.04 2005-2004
€'million €'million
Republic of Ireland 215.3 136.8 +57%
Britain and Northern Ireland 753.3 592.4 +27%
Mainland Europe 196.4 163.2 +20%
United States of America 63.7 53.6 +19%
Other 14.7 12.1 +21%
1,243.4 958.1 +30%
In continuing operations the gross profit margin was 30.8%, up from 29.5% last
year. Acquisitions, with an equivalent margin of 26.9%, had a small dilutative
effect giving an overall margin of 30.3%.
The operating margin, being earnings before interest and tax as a percent of
turnover, was 11.7% in the year, up from 10.8% last year. Acquisitions, which
have lower distribution costs than continuing operations delivered an operating
margin of 11.6%.
Taxation
The effective tax rate in the year at 17.5% compares with 19% last year.
Earnings Per Share
Basic earnings per share at 66.4 cent show an increase of 41% over the previous
year. This figure has grown at an annual compound rate of almost 30% over the
ten year period 1995 to 2005.
Dividends
Subject to shareholder approval at the 2006 Annual General Meeting, it is
proposed that the dividend for 2005 will be 13.4 cent per share. This consists
of an interim dividend of 4.45 cent per share paid on 7th October 2005, and a
final dividend of 8.95 cent per share proposed to be paid on 9th June 2006 to
shareholders on the register on 24th March 2006. This represents a 40% increase
on the previous year. The dividend for the year is covered 4.9 times by
earnings, and 7.9 times profits before interest, taxation, depreciation and
amortisation compared to 8.0 times in 2004. The dividend yield for the year was
1.4% compared to 1.9% for 2004, based on the average share price in the relevant
years.
The ordinary dividend has grown at an annual compound rate of 30% over the
period 2001 through to 2005 compared to earnings growth of 15%, as the Group
continues with a progressive dividend policy so as to bring dividend cover to a
level closer to industry norms.
Acquisitions in the year
The Group completed a number of strategically important acquisitions during the
year with a total spend, net of cash acquired and including debt acquired, of
€141.7 million. This investment falls into the following product categories:
Product group Net Investment Assets acquired Goodwill & Intangibles
€'million €'million €'million
Off-Site & Structural 69.1 13.8 55.3
Insulated Panels & Board 35.6 7.7 27.9
Environmental Containers 31.9 6.0 25.9
Raised Access Floors 5.1 0.8 4.3
141.7 28.3 113.4
The intangibles acquired, which amounted to €12.4 million, are being amortised
principally over 7 years and this amortisation of €1.5 million has been charged
against the profits from the acquisitions in the year. Under the IFRS
accounting rules the goodwill acquired of €101.0 million is not amortised but
will be subject to impairment reviews.
These acquisitions delivered turnover, from date of acquisition to year end, of
€138.9 million and operating profits, after intangible amortisation, of €16.1
million.
Funds Flow
The table below summarises the Group's funds flow for 2005 and 2004:
2005 2004
€'million €'million
Operating profit 145.1 103.3
Depreciation 30.6 24.4
Amortisation 1.9 0.7
Working capital increase (9.4) (36.0)
Pension Contributions (2.9) (2.9)
Interest (7.5) (6.6)
Taxation paid (28.2) (14.8)
Others 13.8 14.2
Free cash 143.4 82.3
Acquisitions (141.7) (26.6)
Receipt of Tate settlement - 24.7
Net capital expenditure (42.2) (53.5)
Dividends paid (17.8) (13.2)
(201.7) (68.6)
Cash flow movement (58.3) 13.7
Debt translation 2.9 (0.6)
(Increase)/Decrease in net debt (55.4) 13.1
Net debt at start of year (108.1) (121.2)
Net debt at end of year (163.5) (108.1)
The acquisitions during the year were financed out of Group resources. Debt
reduction before acquisitions, dividend payments and non-cash translation effect
was €101.1 million (2004: €53.5 million).
The free cash flow for the year, representing operating cash flow less interest
and taxation paid, amounted to €143.4 million, an increase of €61.1 million on
last year or 74%. This performance represents 85.5 cent per share (2004: 49.7
cent). Over the two years 2004 and 2005, a total of €225.7 million in free cash
was generated and €264.0 million was invested in acquisitions and capital
expenditure.
Operational working capital at the year end was €175.1 million (2004: €154.2
million) and represented 14.1% of turnover (2004: 16.1%), against a company
target of 15%. Working capital expressed as days sales, which takes into
account the phasing of sales, has remained constant at 33 days compared with
prior year end.
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 constant at
25% compared to 2004. If goodwill previously written off of €80.7 million was
still on the balance sheet, the corresponding figures would be 22% in 2005 and
21% in 2004.
Treasury
At 31st December 2005, the Group had total facilities of €541.5 million
comprising of syndicated bank facilities of €325.0 million, €151.5 million loan
notes and €65.0 million of overdraft and other facilities. The syndicated
facilities are comprised of a €100.0 million term loan with repayments of €25.0
million per annum to 16th December 2009 and €225.0 million revolving credit
which will also mature at that date.
On 29th March 2005, the Group had a successful private placement of $200.0
million (€151.5 million) loan notes with maturities of 10 and 12 years. These
notes were then swapped into fixed interest EUR giving the Group a broad range
of debt providers with an appropriate mix of debt maturity at competitive
interest rates.
The drawn down bank facilities and loan notes at 31st December 2005 were €252.3
million, comprising €197.3 million EUR debt and €55.0 million of STG debt.
It is Group policy to enter into interest rate hedging to limit interest rate
exposure on a proportion of the Group's medium to long term debt. Approximately
67% of drawn down bank facilities were subject to interest rate swaps, at 3.89%
on the EUR debt and at 4.97 % on the STG debt. €151.5 million of EUR swaps
expire on the maturity of the loan notes, a further €10.0 million of EUR swaps
and €7.0 million of STG swaps expire on 31st December 2006.
Currently the Group does not enter into any external hedges to limit the
exposure on translating non-Euro earnings.
Foreign exchange transaction exposure is internally hedged as far as possible
and to the extent that they are not, such residual exposures are hedged on a
rolling 12 month basis.
Pension Deficit
The Group has two legacy defined benefit pension schemes in the U.K. These
schemes have been closed and the liability relates only to past service. As at
31st December 2005 there were assets in the schemes of €52.5 million and
actuarial assessed pension liabilities of €76.5 million, giving a net deficit of
€24.0 million. The corresponding liability at 31st December 2004 was €22.7
million.
International Financial Reporting Standards (IFRS)
The financial statements for 2005 and the comparatives for 2004 have been
prepared and are presented using IFRS while the annual financial statements for
2004 and prior years were prepared in accordance with accounting practice
generally accepted in Ireland (GAAP). The effect of this change on the 2004
profits as previously reported was an increase in the net profit before tax of
€8.4 million and an increase in the tax charge of €0.3 million. The effect on
shareholders funds was an increase of €2.4 million. These changes are
summarised below:
NET PROFIT BEFORE TAX RECONCILIATION 2004 2004
€'million €'million
Irish GAAP 88.0
Defined benefit pension credit 2.3
Share based Payment (1.8)
Goodwill amortisation 7.9
8.4
IFRS 96.4
SHAREHOLDERS' FUND RECONCILIATION 2004 2004
€'million €'million
Irish GAAP 302.2
Defined benefit pension deficit (22.7)
Deferred Tax on pension 6.8
Share based Payment 0.4
Goodwill amortisation 7.9
Final dividend accrual 10.3
Others (taxation) (0.3)
2.4
IFRS 304.6
Summary
Overall the Group is in a strong financial position going into 2006 and is well
positioned for continued growth. The balance sheet is conservatively geared and
this will enable the Group to comfortably fund its anticipated growth, through
both organic means and bolt on acquisitions.
Dermot Mulvihill
Finance Director
6th March 2006
For further information contact:
James Dunny
Murray Consultants
Tel: +(353 1) 4980 300
Tim Thompson/Jeremy Garcia/Tom Carroll
Buchanan Communications
Tel: +(44) 207 466 5000
GROUP INCOME STATEMENT
for the year ended 31 December 2005
Continuing
Operations Acquisitions Total Total
2005 2005 2005 2004
€'000 €'000 €'000 €'000
Revenue 1,104,555 138,855 1,243,410 958,083
Cost of sales (764,848) (101,500) (866,348) (675,729)
Gross profit 339,707 37,355 377,062 282,354
Distribution costs (67,162) (4,420) (71,582) (59,269)
Administrative costs (143,619) (16,792) (160,411) (119,786)
Operating result 128,926 16,143 145,069 103,299
Finance costs (11,607) (7,761)
Finance income 1,535 873
Result for the year before tax 134,997 96,411
Income taxes (23,628) (18,330)
Net result for the year 111,369 78,081
Attributable to minority interest 9 (4)
Attributable to shareholders of Kingspan Group plc 111,378 78,077
Earnings per share for the year
Basic (€'cent) 66.4 47.1
Diluted (€'cent) 64.8 46.3
GROUP BALANCE SHEET
as at 31 December 2005
2005 2004
€'000 €'000
Assets
Non-current assets
Goodwill 217,736 110,039
Other intangible assets 12,265 2,180
Property, plant and equipment 250,757 210,898
Long term financial assets 755 38
Deferred tax assets 2,366 1,639
483,879 324,794
Current assets
Inventories 97,323 89,225
Trade and other receivables 268,124 220,787
Cash and cash equivalents 120,165 87,791
485,612 397,803
Total assets 969,491 722,597
Liabilities
Current liabilities
Trade and other liabilities 193,368 157,164
Provisions 30,252 18,483
Deferred consideration 16,777 597
Short term financial liabilities 38,864 108,725
Current tax liabilities 16,366 19,355
295,627 304,324
Non-current liabilities
Pension and other employee obligations 24,009 22,664
Long term financial liabilities 226,799 79,435
Deferred tax liabilities 5,173 3,947
Deferred consideration 1,241 7,164
257,222 113,210
Total liabilities 552,849 417,534
NET ASSETS 416,642 305,063
Equity
Equity attributable to shareholders of Kingspan Group plc
Share capital 22,003 21,797
Additional paid-in share capital 22,803 20,260
Other reserves (23,650) (38,868)
Revaluation reserve 713 713
Capital redemption reserve 513 513
Retained earnings 393,898 300,233
416,280 304,648
Minority interest 362 415
TOTAL EQUITY 416,642 305,063
GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2005
2005 2004
€'000 €'000
Balance at beginning of year 305,063 244,171
Cash flow hedging - in equity 18 102
Actuarial losses on defined benefit pension scheme (2,959) (7,708)
Currency translation 15,013 (1,921)
Income taxes relating to items charged or credited to equity 891 2,314
Net income recognised directly in equity 12,963 (7,213)
Net result for the year 111,378 78,077
Total recognised income and expense for the year 124,341 70,864
Shares issued during the year 2,749 1,585
Employee share based compensation 2,256 1,764
Dividends paid during the year (17,713) (13,238)
Movement in Minority Interest (54) (83)
Balance at end of year 416,642 305,063
STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the year ended 31 December 2005
2005 2004
€'000 €'000
Profit for financial year attributable to Group shareholders 111,378 78,077
Cash flow hedging 18 102
Actuarial losses on defined benefit pension scheme (2,959) (7,708)
Currency translation 15,013 (1,921)
Income taxes relating to items charged or credited to equity 891 2,314
Total income and expense recognised since last annual report 124,341 70,864
GROUP CASH FLOW STATEMENT
for the year ended 31 December 2005
2005 2004
€'000 €'000
Operating activities
Result for the year before tax 134,997 96,411
Adjustments 46,625 34,852
Change in inventories 8,032 (21,838)
Change in trade and other receivables (5,627) (39,779)
Change in trade and other payables (4,392) 35,754
Pension contributions (2,873) (2,885)
Cash generated from operations 176,762 102,515
Taxes paid (28,159) (14,826)
Net cash flow from operating activities 148,603 87,689
Investing activities
Additions to property, plant and equipment (46,802) (55,679)
Proceeds from disposals of property, plant and equipment 4,654 2,124
Proceeds from financial assets 29 11
Purchase of subsidiary and joint venture undertakings (142,970) (18,051)
Net cash acquired with acquisitions 18,910 954
Receipt of Tate Global Corporation settlement - 24,680
Payment of deferred consideration in respect of acquisitions (1,441) (629)
Dividends paid to minorities (44) (91)
Interest received 1,606 875
Net cash flow from investing activities (166,058) (45,806)
Financing activities
Proceeds from bank loans and loan notes 151,458 187,338
Repayment of bank loans (89,862) (178,342)
Discharge of finance lease liability (413) (5)
Proceeds from share issues 2,749 1,585
Interest paid (9,138) (7,472)
Dividends paid (17,713) (13,238)
Net cash flow from financing activities 37,081 (10,134)
Cash and cash equivalents at the beginning of the year 85,201 52,917
Net increase in cash and cash equivalents 19,626 31,749
Translation adjustment 5,404 535
Cash and cash equivalents at the end of the year 110,231 85,201
Cash and cash equivalents at the beginning of the year
Cash 87,791 55,746
Overdrafts (2,590) (2,829)
85,201 52,917
Cash and cash equivalents at the end of the year
Cash 120,165 87,791
Overdrafts (9,934) (2,590)
110,231 85,201
The following non-cash adjustments have been made to the pre-tax result for the
year to arrive at operating cash flow:
Adjustments: 2005 2004
€'000 €'000
Depreciation, amortisation and impairment charges of fixed and intangible assets 32,515 25,039
Employee equity-settled share options 2,256 1,764
Finance income (1,535) (873)
Finance cost 11,607 7,761
Loss on sale of tangible assets 1,782 1,161
Total 46,625 34,852
Reconciliation of net cash flow to movement in net debt 2005 2004
€'000 €'000
Increase in cash and bank overdrafts 19,626 31,749
Increase in debt, lease finance and deferred consideration (59,742) (8,362)
Change in net debt resulting from cash flows (40,116) 23,387
Loans and lease finance acquired with subsidiaries (6,314) (2,054)
Deferred consideration arising on acquisitions in the period (11,383) (7,456)
New finance leases (45) (82)
Translation movement 2,472 (598)
Net movement (55,386) 13,197
Net debt, beginning of the year (108,130) (121,327)
Net debt, end of the year (163,516) (108,130)
SUPPLEMENTARY INFORMATION
1 REPORTING CURRENCY
The currency used in this Annual Report is Euro. Results and cash flows of
foreign subsidiary undertakings have been translated into Euro at the average
exchange rates, and the related balance sheets have been translated at the rates
of exchange ruling at the balance sheet date.
Exchange rates used were as follows:
Average Closing
rate Rate
Euro = 2005 2004 2005 2004
Pound Sterling 0.684 0.679 0.678 0.693
US Dollar 1.245 1.244 1.185 1.335
Czech Koruna 29.836 31.953 28.920 30.600
Polish Zloty 4.029 4.534 3.830 4.100
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 interest-bearing loans, borrowings and expenses, cash
and cash equivalents, income tax assets, liabilities and expenses and deferred
consideration.
Business segments
The Group operates in the following four business segments:
Insulated Panels & Boards Manufacture of insulated panels and
rigid insulation products.
Off-site & Structural Manufacture of offsite solutions,
timber frame buildings and structural
products.
Environmental Containers (EC) 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 customers.
Segment assets are based on the geographical location of the assets.
Analysis by class of business
Segment Revenue Insulated Off-site & EC Access TOTAL
Panels & Structural Floors
Boards
€'mn €'mn €'mn €'mn €'mn
Total Revenue - 2005 689.4 203.9 220.1 130.0 1,243.4
Total Revenue - 2004 579.6 116.8 142.5 119.2 958.1
Inter-segment revenue is not material and is thus not subject to separate
disclosure in the above analysis.
Segment Result (profit before finance costs)
Insulated Off-site & EC Access TOTAL TOTAL 2004
Panels & Structural Floors 2005
Boards
€'mn €'mn €'mn €'mn €'mn €'mn
Operating result - 2005 94.2 22.7 18.4 9.8 145.1
Operating result - 2004 72.2 13.9 14.2 3.0 103.3
Finance costs (net) (10.1) (6.9)
Result for the year before tax 135.0 96.4
Income taxes (23.6) (18.3)
Net result for the year 111.4 78.1
Segment Assets and Liabilities
Insulated Off-site & EC Access TOTAL TOTAL 2004
Panels & Structural Floors 2005
Boards
€'mn €'mn €'mn €'mn €'mn €'mn
Assets - 2005 413.3 134.6 161.2 137.9 847.0
Assets - 2004 323.9 93.2 96.2 119.8 633.1
Liabilities - 2005 (131.2) (50.2) (40.2) (26.1) (247.7)
Liabilities - 2004 (119.2) (34.8) (24.4) (19.9) (198.3)
Total assets less total liabilities 599.3 434.8
Cash and cash equivalents 120.2 87.8
Deferred tax asset 2.3 1.6
Financial liabilities (current and non-current) (265.7) (188.2)
Deferred consideration (current and non-current) (18.0) (7.7)
Income tax liabilities (current and deferred) (21.5) (23.3)
Total Equity as reported in Group Balance Sheet 416.6 305.0
Other Segment Information
Insulated Off-site & EC Access TOTAL
Panels & Structural Floors
Boards
€'mn €'mn €'mn €'mn €'mn
Capital Investment - 2005 67.3 66.7 45.4 7.2 186.6
Capital Investment - 2004 50.0 8.2 12.8 (21.1) 49.9
Depreciation included in segment result - 2005 (14.8) (5.0) (6.3) (4.5) (30.6)
Depreciation included in segment result - 2004 (13.2) (3.1) (4.2) (3.9) (24.4)
Amortisation included in segment result - 2005 (0.8) (0.8) (0.3) (0.0) (1.9)
Amortisation included in segment result - 2004 (0.7) 0.0 0.0 0.0 (0.7)
Non- Cash Items included in segment result - 2005 (1.9) (0.1) 0.2 (0.0) (1.8)
Non- Cash Items included in segment result - 2004 (1.2) 0.0 0.0 0.0 (1.2)
Analysis of Segmental Data by Geography
Republic of United Mainland Americas Others TOTAL
Ireland Kingdom Europe
€'mn €'mn €'mn €'mn €'mn €'mn
Income Statement Items
Segment Revenue - 2005 215.3 753.3 196.4 63.7 14.7 1,243.4
Segment Revenue - 2004 136.8 592.4 163.2 53.6 12.1 958.1
Balance Sheet Items
Assets - 2005 119.2 532.8 127.6 66.1 1.3 847.0
Assets - 2004 105.4 367.2 106.6 53.3 0.6 633.1
Other segmental information
Capital Investment - 2005 22.8 36.1 124.2 0.8 2.7 186.6
Capital Investment - 2004 5.9 10.5 17.0 0.0 16.5 49.9
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 2004 (€10.3 million) was approved by
shareholders in May 2005 and, in accordance with IFRS, was recognised as a
charge to Reserves in the year ended 31 December 2005. The Interim Dividend on
Ordinary Shares For 2005 (€7.4 million) was recognised as a charge to Reserves
in the year ended 31 December 2005.
The Final Dividend on Ordinary Shares for 2005 (€15.0 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 2006.
DIVIDENDS 2005 2004
€'000 €'000
Ordinary dividends
Paid:
2004 Final dividend 6.20c per share (2003: 4.60c per share) on 166,121,748 10,300 7,608
shares
2005 Interim dividend 4.45c per share (2004: 3.40c per share) on 166,607,628 7,413 5,630
shares
17,713 13,238
4 EARNINGS PER SHARE
2005 2004
€'000 €'000
The calculations of earnings per share are based on the following:
Profit attributable to ordinary shareholders 111,378 78,077
No. of No. of
shares shares
('000) ('000)
2005 2004
Weighted average number of ordinary shares for the calculation of basic earnings
per share 167,625 165,621
Dilutive effect of share options 4,269 3,025
Weighted average number of ordinary shares for the calculation of diluted earnings
per share 171,894 168,646
2005 2004
€ cent € cent
Basic earnings per share 66.4 47.1
Diluted earnings per share 64.8 46.3
5 BASIS OF PREPARATION
The financial information set out in this document is an abridged version of the
Group's financial statements which have not yet been filed with the Registrar of
Companies but upon which the auditors have given an unqualified audit report.
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted for use in the European
Union and their interpretations as issued by the International Accounting
Standards Board (IASB) and the International Financial Reporting Interpretations
Committee.
The financial statements 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 Group's accounting policies will be included in the Annual Report to be
published in April 2006.
6 DISTRIBUTION OF PRELIMINARY ANNOUNCEMENT
These results are available on the Group's website at www.kingspan.com. A
printed copy is available to view at the Company's registered office or from the
Company's Registrars: Computershare Services (Ireland) Limited, Heron House,
Corrig Road, Sandyford Industrial Estate, Dublin 18.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 22nd November 2024
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