Interim Results

Kingspan Group PLC
5 September 2001

Embargo: Wednesday, 5th September 2001, 7:00am

5th September 2001

                              Kingspan Group plc

Kingspan Group plc announces half year results to 30th June 2001:

    Highlights


  * Turnover up 34.9% to Euro438.3 million


  * Profit before tax up 21.1% to Euro38.0 million


  * Profit after tax up 10.8% to Euro26.9 million


  * Basic earnings per share up 10.4% to 15.9 cents


  * Basic earnings per share before goodwill ('adjusted EPS') up 17.9% to
    18.4 cents


  * Interim dividend up 29.6% to 1.75 cents


  * Net debt as a percentage of shareholders' equity of 110.5% at 30th June
    2001


    (59.6% at 31st December 2000).




Interim Statement


Results


The Directors of Kingspan Group are pleased to announce that profit before tax
for the six months to 30th June 2001 amounted to Euro38.0 million compared to
Euro31.4 million for the corresponding period of 2000, representing an
increase of 21.1% (26.6% before goodwill amortisation). Basic earnings per
share of 15.9 cents is up 10.4% compared to the same period last year
(adjusted EPS up 17.9%).


In line with Financial Reporting Standard 10, goodwill arising on acquisitions
in the period of Euro92.2 million has been capitalised; total goodwill of Euro
4.2 million has been amortised against profits in the period.


Net debt amounted to Euro231.7 million at 30th June 2001, representing net
gearing of 110.5%. This compares to net debt of Euro109.9 million and net
gearing of 59.6% at 31st December 2000. Interest was covered 5.5 times in the
period compared 8.3 times for the calendar year 2000.


It is proposed that an interim dividend of 1.75 cents will be paid on 12th
October 2001 to shareholders on the register at close of business on 14th
September 2001. This represents an increase of 29.6% on the 2000 interim
dividend.


Turnover


Turnover in the period at Euro438.3 million is up 34.9% over the corresponding
period last year. This includes the effect of the acquisition of Tate, the
raised access flooring business in the USA, which was completed on the 12th
January this year. Turnover in Tate in the period was Euro89.4 million. The
downturn in the US market particularly in quarter 2, which can be expected to
continue to year end, resulted in excess stock being held by dealers due to
cancelled orders and this will adversely affect Tate performance in the second
half of the year. It is anticipated that this surplus stock will have been
substantially reduced by year-end. An enhanced sales and marketing plan is
being rolled out which focuses on the opportunity presented by the 90% of the
commercial office market which currently does not use raised floors.
Significant benefits can be attributed to the use of raised access floors that
include reduced first build cost, running costs and staffing costs. The
approach and techniques being used in the marketplace include those that
Kingspan has previously applied successfully in other markets.


Turnover for the Group, excluding the Tate acquisition was Euro349.0 million,
an increase of 7.4% on the corresponding period last year. Turnover of raised
access floors in Europe increased by 28% where the market, particularly in
Britain remains buoyant. The process of rolling out the market conversion
formula for Kingspan raised access floors to specific mainland European
markets is underway. Sales of composite panels increased by 2.6% over all
markets. This was achieved against a backdrop of the overall UK cladding
market which is estimated to have declined by 8% and by 15% in Germany and the
Benelux region. The conversion to composite panels from traditional 'built up'
systems continues and will receive a further boost when new building
regulations referred to below are introduced in the UK in Quarter 2 next year.


Doubling the Available Market through Product Development


A significant feature in the period has been expenditure of Euro2 million on
new product development across the existing portfolio. It is expected that the
full year new product development costs will be in excess of Euro5 million.


The Group is in the process of bringing ten new products to market which will
have the effect of doubling the size of the available market in which Kingspan
operates without going outside its current geographical regions. This will
have the effect of increasing sales opportunities. Kingspan has very strong
market shares in the markets in which it operates and its products are the
leading brands in their sectors. The Kingspan brand stands for quality,
reliability, functional and financial benefits for customers that have not
been compromised. It is anticipated that the new products will be viewed in
exactly the same light. We have always worked on the principal that brands
that are successful are those that deliver strong benefits and are synonymous
with original thinking. In the UK for example, we are witnessing the first
stage in a wider 'Egan' inspired drive to reform house building. In
anticipation of an increase in demand for factory assembled systems for
domestic houses, Kingspan has developed a product using existing technology
that is already showing signs of strong market approval. There are also two
new innovative systems to tackle the very substantial non-domestic roof tile
and slate market. The Group will also have, for the first time, two new
insulated panels for flat roof solutions where only site assembled systems
could be used until now. Again, this will substantially increase the available
market.


New UK Building Regulations to Favour Kingspan


The new UK Building Regulations, which will be introduced in Quarter 2 of
2002, require that all new buildings will have a significantly higher degree
of thermal efficiency. In addition, for the first time, buildings will have to
meet demanding new requirements relating to both air and heat leakage. It is
expected that the regulations will become even more stringent over the next
five years. These regulations favour Kingspan type composite panel solutions
over the traditional and complex 'built-up' methods.


Operating Margins


Before taking account of acquisitions in the period, gross margin at 30.3% is
down marginally on 30.5% in the corresponding period last year. The gross
margin in acquisitions is 20.2%. Due to the fact that there are little or no
distribution costs in the Tate operations in the US, gross margins can be
expected to be at least 5% lower than equivalent Group businesses in the UK
against which it is benchmarked. Actions are underway which will improve this
margin over time bringing it closer to the UK benchmark. The operating margin
excluding acquisitions, before the effects of goodwill amortisation, was 11.8%
in the current period, compared to 12.2% in 2000. This reflects expenditure in
the period on product development, increased transport costs, partly offset by
manufacturing efficiencies.


Balance Sheet Review

Net debt at Euro231.7 million is 110.5% of shareholders funds and interest is
covered 5.5 times. Working capital at 15% of sales remains constant. Capital
investment in the period amounted to Euro17.2 million and a further Euro20
million will be invested to year-end. This investment increases capacity,
improves efficiency of manufacture and includes Euro4 million on I.T.
Acquisitions in the period amounted to Euro120.5 million, funded from the
Group's resources. Banking facilities of Euro375 million are in place, which
together with strong cash generation will fund the growth strategies of the
Group.


Outlook

The business environment in which the Group operates has changed in recent
months. However, appropriate strategies have been developed to manage this
situation, and Kingspan still looks forward to a satisfactory outcome for the
year. The key strategy going forward is innovation in product and market
development in each area in which Kingspan operates in conjunction with
continuing groupwide initiatives to reduce unit costs and increase efficiency.
In tight property market conditions, building owners are more conscious than
ever of value for money and return on investment. Kingspan products meet these
criteria by reducing capital and running costs of buildings and meeting the
functional requirements of occupiers. Kingspan has significantly increased the
size of the marketplace in which it operates and the platform for continuing
growth is in place. This coupled with investment in production efficiency
augurs well for future growth.


Further information, contact:


Eugene Murtagh

Chairman & Chief Executive


Dermot Mulvihill

Group Finance Director


Tel.: [phone]






GROUP PROFIT AND LOSS
ACCOUNT
                          Continuing operations
                                    Acquisitions
                          6 months    6 months    6 months   6 months    Year
                           ended       ended       ended      ended     ended
                          30.6.01     30.6.01     30.6.01    30.6.00   31.12.00
                       (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
                          Euro'000    Euro'000    Euro'000   Euro'000  Euro'000
Turnover                   348,963       89,379    438,342    324,907  662,553
Cost of sales             (243,172)     (71,296)  (314,468)  (225,766) (455,916)
Gross profit               105,791       18,083    123,874     99,141  206,637
Distribution costs         (19,578)         (11)   (19,589)   (17,935) (37,736)
Administrative expenses    (44,961)      (8,776)   (53,737)   (43,371) (88,280)
Goodwill amortisation       (2,030)      (2,166)    (4,196)    (1,948)  (3,827)
Group operating profit      39,222        7,130     46,352     35,887   76,794
Interest payable and                                (8,845)    (5,084) (10,398)
similar charges
Interest receivable and                                476        555    1,111
other income
Profit on ordinary                                  37,983     31,358   67,507
activities before
taxation
Tax on profit on                                   (11,102)    (7,095) (16,098)
ordinary activities
Profit on ordinary                                  26,881     24,263   51,409
activities after
taxation
Minority interest                                        5        (64)    (176)
Profit attributable to                              26,886     24,199   51,233
ordinary shareholders
Ordinary dividends                                  (2,964)    (2,270)  (6,105)
Profit retained for the                             23,922     21,929   45,128
period
                                                 Euro cents Euro cents   Euro
                                                                        cents
Basic earnings per share                              15.9       14.4     30.4
Diluted earnings per                                  15.7       14.2     30.0
share
Basic earnings per share                              18.4       15.6     32.7
(before goodwill)
Dividend per share                                    1.75       1.35     3.62


GROUP BALANCE SHEET                             30.6.01     30.6.00   31.12.00
                                              (Unaudited) (Unaudited) (Audited)
                                               Euro'000    Euro'000   Euro'000
FIXED ASSETS
Tangible assets                                   164,220     119,197   130,588
Intangible assets                                 171,442      74,063    73,110
Financial assets                                      299         557    12,714
                                                  335,961     193,817   216,412
CURRENT ASSETS
Stocks                                             76,532      56,622    66,777
Trade and other debtors                           210,406     174,690   157,622
Cash and term deposits                             58,481      41,667    44,817
                                                  345,419     272,979   269,216
CREDITORS
(Amounts falling due within one year)
Trade and other creditors                         156,357     132,195   125,678
Bank and other borrowings                          37,444      72,616    82,799
Deferred consideration                              1,933           0     1,797
Dividends                                           3,054       2,270     3,835
                                                  198,788     207,081   214,109
NET CURRENT ASSETS                                146,631      65,898    55,107
TOTAL ASSETS LESS CURRENT LIABILITIES             482,592     259,715   271,519
CREDITORS
(Amounts falling due after more than one
year)
Bank and other borrowings                         244,452      70,480    63,435
Deferred consideration                              6,323       8,945     6,713
                                                  250,775      79,425    70,148
PROVISIONS FOR LIABILITIES AND CHARGES             19,002      15,333    12,168
GOVERNMENT GRANTS                                   1,461       1,860     1,496
                                                  211,354     163,097   187,707
CAPITAL AND RESERVES
Called-up share capital                            22,015      21,865    21,939
Share premium account                              17,248      16,200    16,866
Revaluation reserve                                   891         891       891
Profit and loss account                           163,958     116,837   140,036
Other reserves                                      5,515       3,957     4,695
Shareholders' funds                               209,627     159,750   184,427
MINORITY INTERESTS
Including non-equity interests                      1,727       3,347     3,280
                                                  211,354     163,097   187,707

GROUP CASH FLOW STATEMENT                         6 months   6 months    Year
                                                   ended      ended     ended
                                                  30.6.01    30.6.00   31.12.00
                                               (Unaudited) (Unaudited) (Audited)
                                                  Euro'000   Euro'000  Euro'000
Net cash inflow from operating activities           51,648     28,074   77,511
Returns on investments and servicing of finance     (8,752)    (4,083)  (8,644)
Taxation                                            (8,498)    (4,956) (12,986)
Capital expenditure and financial investment       (17,186)   (13,557) (43,221)
Acquisitions and disposals                        (120,482)   (16,406) (18,270)
Equity dividends paid                               (3,745)    (2,636)  (4,906)
Cash outflow before use of liquid resources and   (107,015)   (13,564) (10,516)
financing
Management of liquid resources                       4,173    (10,991)   2,526
Financing                                          111,191     25,782   34,498
Increase in cash in the period                       8,349      1,227   26,508

RECONCILIATION OF NET CASH FLOW TO                6 months   6 months    Year
MOVEMENT IN NET DEBT                               ended      ended     ended
                                                  30.6.01    30.6.00   31.12.00
                                               (Unaudited) (Unaudited) (Audited)
                                                  Euro'000   Euro'000  Euro'000
Increase in cash in the period                       8,349      1,227   26,508
(Decrease) / increase in liquid resources           (4,173)    10,991   (2,526)
Cash flow from movement in debt, lease finance     (90,420)   (23,673) (31,739)
and deferred consideration
Change in net debt resulting from cash flows       (86,244)   (11,455)  (7,757)
Change in net debt resulting from acquisitions     (21,586)         0      (45)
                                                  (107,830)   (11,455)  (7,802)
Translation adjustment                             (13,913)     1,711   (1,494)
Movement in net debt in the period                (121,743)    (9,744)  (9,296)
Net debt at start of period                       (109,926)  (100,630) (100,630)
Net debt at end of period                         (231,669)  (110,374) (109,926)

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES    6 months   6 months    Year
                                                   ended      ended     ended
                                                  30.6.01    30.6.00   31.12.00
                                               (Unaudited) (Unaudited) (Audited)
                                                  Euro'000   Euro'000  Euro'000
Profit for financial period attributable to          26,886    24,199   51,233
Group shareholders
Exchange adjustments                                    820    (2,034)  (1,296)
Total gains and losses recognised since last         27,706    22,165   49,937
annual report

    SUPPLEMENTARY INFORMATION

  1 BASIS OF PREPARATION
    The 2001 interim results and summarised balance sheet are presented in
    Euro. Results and cash flows of foreign subsidiary undertakings have been
    translated into Euro at the average exchange rates for the period,
    and the related balance sheets have been translated at the rates of
    exchange ruling at the balance sheet date.
    The interim financial information has been prepared in accordance with
    applicable accounting and financial reporting standards and the accounting
    policies used are consistent with those set out on pages 46 to 48
    of the Annual Report for the year ended 31st December 2000.
    The interim results for the half year to 30th June 2001 and 30th June 2000
    are unaudited. The comparative figures for the year ended 31st December
    2000 represent an abbreviated version of the Group's full accounts
    for that year which have been filed with the Registrar of Companies and on
    which the auditors, Grant
    Thornton, have issued an unqualified audit report.
    These interim results are available on the Group's website
    (www.kingspan.com). A printed copy will be sent by post to all registered
    shareholders. Copies may also be obtained from the Company's Registrars:
    Computershare Services (Ireland) Limited, Heron House, Corrig Road,
    Sandyford Industrial Estate, Dublin 18.


2 EARNINGS PER SHARE                         6 months    6 months      Year
                                               ended       ended       ended
                                              30.6.01     30.6.00    31.12.00
                                            (Unaudited) (Unaudited)  (Audited)
                                             Euro'000    Euro'000    Euro'000
  Profit attributable to ordinary               26,886      24,199      51,233
  shareholders
                                             Number of   Number of   Number of
                                              shares      shares      shares
                                              ('000)      ('000)      ('000)
  Weighted average number of ordinary
  shares for the
  calculation of basic earnings per share      168,966     168,022     168,286
  Dilutive effect of share options               1,806       2,758       2,264
  Weighted average number of ordinary
  shares for the
  calculation of diluted earnings per          170,772     170,780     170,550
  share
                                            Euro cents  Euro cents  Euro cents
  Basic earnings per share                        15.9        14.4        30.4
  Diluted earnings per share                      15.7        14.2        30.0

3 DIVIDEND
  An interim dividend at the rate of 1.75c per ordinary share (2000: 1.35c) is
  payable on 12 October 2001 to shareholders on the register at the close of
  business on 14 September 2001.

 4 TURNOVER                                       6 months   6 months    Year
                                                   ended      ended     ended
                                                  30.6.01    30.6.00   31.12.00
                                               (Unaudited) (Unaudited) (Audited)
   The analysis by class of activity is as        Euro'000   Euro'000  Euro'000
   follows:
   Composite panels                                120,018    116,974  244,745
   Raised access floors                            160,165     55,000  104,098
   Insulation products                              46,644     43,901   87,989
   Environmental containers                         55,991     52,596  111,037
   Building components                              55,524     56,436  114,684
                                                   438,342    324,907  662,553
   The analysis by geographical area is as
   follows:
   Republic of Ireland                              56,157     45,902   97,694
   Britain and Northern Ireland                    242,152    231,429  455,809
   Mainland Europe                                  45,378     37,549   89,471
   United States of America                         83,288        948    2,564
   Other                                            11,367      9,079   17,015
                                                   438,342    324,907  662,553

5 RECONCILIATION OF MOVEMENTS IN                  6 months   6 months    Year
  SHAREHOLDERS' FUNDS                              ended      ended     ended
                                                  30.6.01    30.6.00   31.12.00
                                               (Unaudited) (Unaudited) (Audited)
                                                  Euro'000   Euro'000  Euro'000
  Profit for the financial period attributable      26,886     24,199   51,233
  to Group shareholders
  Dividends                                         (2,964)    (2,270)  (6,105)
                                                    23,922     21,929   45,128
  Other recognised gains and losses for the            820     (2,034)  (1,296)
  period
  New share capital subscribed                         458        354    1,094
  Net addition to shareholders' funds               25,200     20,249   44,926
  Opening shareholders' funds                      184,427    139,501  139,501
  Closing shareholders' funds                      209,627    159,750  184,427

 6 RECONCILIATION OF OPERATING PROFIT TO       6 months    6 months     Year
   NET CASH FLOW FROM OPERATING ACTIVITIES       ended       ended      ended
                                                30.6.01     30.6.00   31.12.00
                                              (Unaudited) (Unaudited) (Audited)
                                               Euro'000    Euro'000   Euro'000
   Operating profit                               46,352      35,887    76,794
   Depreciation charges                           10,268       6,830    15,713
   Amortisation of intangible assets               4,438       2,205     4,311
   Amortisation of other assets                      259           0         0
   Loss / (profit) on sale of tangible                44         (14)      (79)
   assets
   Government grants amortised                       (67)        (89)     (242)
   Decrease / (increase) in stocks                 3,657      (5,555)  (15,110)
   (Increase) in debtors                         (14,635)    (38,527)  (19,200)
   Increase in creditors                           1,332      27,337    15,324
   Net cash flow from operating activities        51,648      28,074    77,511

 7 INTANGIBLE ASSETS          30.6.01          30.6.00            31.12.00
                            (Unaudited)      (Unaudited)          (Audited)
                              Euro'000         Euro'000           Euro'000
   Goodwill
   At start of period            69,197               68,798            68,799
   On acquisitions               92,238                4,276             4,457
   On disposals                       0                    0                 0
   Translation adjustment        10,518               (1,195)             (232)
   Amortised in period           (4,197)              (1,948)           (3,827)
   At end of period             167,756               69,931            69,197
   Patents
   At start of period             3,913                4,398             4,398
   On acquisitions                    0                    0                 0
   On disposals                       0                    0                 0
   Translation adjustment            14                   (9)               (1)
   Amortised in period             (241)                (257)             (484)
   At end of period               3,686                4,132             3,913
   Total intangible assets
   At start of period            73,110               73,196            73,197
   On acquisitions               92,238                4,276             4,457
   On disposals                       0                    0                 0
   Translation adjustment        10,532               (1,204)             (233)
   Amortised in period           (4,438)              (2,205)           (4,311)
   At end of period             171,442               74,063            73,110