Interim Results
Kingspan Group PLC
10 September 2002
Embargo: Tuesday, 10th September 2002, 7:00am
10th September 2002
Kingspan Group plc
Kingspan Group plc announces half year results to 30th June 2002:
Summary
• Turnover down 17.8% to €360.5 million (H1 2001 : €438.3 million)
• Profit before tax down 24.5% to €28.7 million (H1 2001 : €37.9 million)
If the effects of Tate U.S. are excluded, the results of the remaining
operations were as follows:
Turnover down 3.8% to €335.6 million
Profit before tax up 5.5% to €36.6 million
Basic earnings per share up 12.4%
• Basic earnings per share before goodwill ('adjusted EPS') down 15.7% to
15.5 cent
• Interim dividend up 20.0% to 2.1 cent
• Net debt reduction of €30.0 million
• Net debt as a percentage of shareholders' equity of 57.8% at 30th June
2002 (73.5% at 31st December 2001)
• Interest cover was 7.2 times (6.4 times for the calendar year 2001)
Interim Statement
Results
The Directors of Kingspan Group are pleased to announce the results for the
Group for the six months ended 30th June 2002. Excluding the effects of Tate,
profits before tax were €36.6 million, an increase of 5.5% on the corresponding
period last year, on turnover of €335.6 million, down 3.8%. Group profit before
tax was €28.7 million, down 24.5% on the corresponding period of 2001, on
turnover of €360.5 million, down 17.8%. Tate made an operating loss of €2.8
million in the period before goodwill amortisation, compared to an operating
profit of €9.2 million in the corresponding period last year.
Basic earnings per share before goodwill amortisation of 15.5 cent were down
15.7% compared to the same period last year.
Goodwill of €4.4 million has been amortised against profits in the period
compared to €4.2 million in the corresponding period last year.
Through tight cash management, net debt has been reduced in the period by €30.0
million and amounted to €139.7 million at 30th June 2002, representing net
gearing of 57.8%. This compares to net debt of €169.7 million and net gearing of
73.5% at 31st December 2001. Working capital was reduced by a further €3.8
million in the period. Interest cover was 7.2 times in the period compared to
6.4 times for the calendar year 2001.
It is proposed that an interim dividend of 2.1 cent per share will be paid on
11th October 2002 to shareholders on the register at close of business on 13th
September 2002. This represents an increase of 20.0% on the 2001 interim
dividend. The interim dividend is covered 6.1 times by profits.
As mentioned earlier, Group turnover in the period without Tate was €335.6
million compared to €349.0 million in the corresponding period last year, a drop
of €13.4 million or 3.8%. This was accounted for by a drop in Ireland of €9.7
million (or 17.2% against the equivalent prior period), a drop in the UK of €5.6
million (2.3%) and an increase in other markets of €1.9 million. This small
reduction in turnover relative to a much larger decline in the related market
places reflects the successful launch of new products and the continuing
conversion of markets to Kingspan products.
Market conditions
Insulated Panels
Sales of insulated panels in all markets were down 3.2% on the corresponding
period last year. The overall cladding market in the UK, mainly in commercial
and industrial building, was down 7.2% compared to last year. Despite this,
Kingspan achieved sales growth of 6.9% in this market. This is the principal
application for insulated panels and building components. In Ireland the same
market was down in excess of 15%. In the UK, insulated panels continue to
increase penetration following the recent introduction of the new building
regulations governing the insulation of buildings. These regulations, which
govern thermal efficiency and air leakage in buildings, broadly require a
doubling of insulation in new buildings and favour the type of product solution
provided by Kingspan. While the benefit of these regulations cannot be expected
to affect Kingspan's sales until the back end of this year, an increase in the
specification of Kingspan products is already noticeable.
Kingspan has successfully launched six new products in its insulated panels
range. These products, which open up new market segments and have been well
received since launch, effectively double the available market in which Kingspan
competes. As far as the Group is aware, Kingspan, with its range of Firesafe(R)
insulated panels, is the only supplier of roof and wall insulated systems which
fully comply with both the Building Regulations (Parts L2 and J) and which are
also certified for fire purposes by the Loss Prevention Certification Board (LPS
1181 A and B) and Factory Mutual (FMRC 4880 Class1.)
Raised Access Flooring
The Kingspan raised access flooring products are aimed at the high rise office
market and as such are exposed to the cyclical macro economic influences in the
Group's primary market places of Ireland, UK and the US.
In Ireland and the UK, the new office construction sector, which has seen
significant growth over the past three years, is down 20% on last year. The
continuing slow down in UK office development will put sales and margins under
pressure there.
Traditionally, in the US market, access floors were targeted primarily at
computer rooms, financial services companies, data centres and telecoms
buildings. As has been well documented, these markets are down very
significantly since the first half of 2001. As a consequence sales for Kingspan
of access floors in the US were €22.8 million in the six months ended 30th June
2002 as compared to €83.3 million for the corresponding period in 2001. Kingspan
has developed and commenced significant marketing initiatives to increase
conversion of the commercial office market to raised access floors. Despite
expectations that the office construction market for 2003 will be down a further
30%, the initiatives undertaken point to a return to growth in that market for
Kingspan.
Kingspan has identified other sectors in its primary markets, to which access
floors have not traditionally been supplied and where significant development
and growth is taking place. The Group has developed a range of new products that
will facilitate its targeting of these sectors. In addition, a market presence
has been established in twelve other countries where sufficient progress has
been made to factor in reasonable growth.
Insulation Boards
Sales of insulation boards were up 17.2% in the period compared to the
corresponding period last year. A buoyant new house construction market has
driven this growth, coupled with the effect of the new building regulations on
house insulation. In June 2002, Marec, an insulation board manufacturing
business located in Holland, was acquired at a cost of €4.6 million. Sales in
this company last year were €10.1 million, mostly in mainland European markets.
Investment is underway at the Group's site in Pembridge which will facilitate
expansion and the transfer of manufacturing from a site in Barry in South Wales.
This rationalisation will be completed by year-end.
Environmental Containers
Sales of environmental containers were up slightly in the period, rising from
€56.0 million in the equivalent period last year to €56.8 million this year. The
Group has a comprehensive range of products in the marketplace which addresses
the more stringent environmental regulation and legislation introduced in
Britain. These relate to commercial buildings where all oil storage must be
converted to bunded tanks by 2005.
Operating Margins
The gross percentage margin in the period was 31.0%, an improvement of 2.1% from
the 28.9% for the full year 2001. The operating margin before goodwill
amortisation was 10.6% compared to 11.7% for the full year 2001. The operating
margin for the Group excluding Tate was 12.3% in the period, compared to 12.4%
for the full year 2001. When Tate in the US gets through its break-even , the
full Group operating margin should get back to that achieved in 2001.
Balance Sheet and Cash Flow Review
Cash flow was again very strong in the period with a reduction in net debt of
€30.0 million, which arose as follows
6 months 30th June 2002 Year 31st December 2001
€million €million
Inflows
Profit before taxation 28.7 73.4
Depreciation 10.3 22.2
Amortisation 4.6 9.0
Working capital 3.8 26.9
Share issues 1.1 0 .5
48.5 132.0
Outflows
Acquisitions 5.0 120.4
Capital expenditure 14.3 33.7
Dividends paid 5.0 6.8
Taxation paid 4.6 16.3
Acquisition minority - 1.6
Purchase own shares - 4.0
Translation effect on debt (10.4) 9.0
18.5 191.8
Decrease/(Increase) in net debt 30.0 (59.8)
Net debt at start of period (169.7) (109.9)
Net debt at end of period (139.7) (169.7)
Net debt, including deferred consideration, was €139.7 million at 30th June 2002
and represents 57.8% of shareholders funds. Interest cover was 7.2 times
compared to cover last year of 6.4 times. Working capital represents 14.1% of
sales compared to 12.6% at 31st December 2001.
Capital investment in the period amounted to €14.3 million and it is expected
that a further €25.7 million will be invested to year-end.
Outlook
The business environment in which the Group operates can be expected to remain
uncertain to year-end and into next year. Appropriate strategies have been
developed to manage this situation. The key strategies going forward involve a
deepening of the product, technology and sales pipelines, continuing investment
in reducing unit costs of production and tight management and control of fixed
costs. There remain significant market opportunities across the Group's range of
products. These opportunities are driven by building and environmental
regulations and by a growing awareness amongst property developers and building
occupiers of the initial build-costs and lifetime running costs of their
buildings. Kingspan products are attractive in this environment because they
reduce capital and running costs of buildings while meeting the functional
requirements of occupiers. Taking all the circumstances into account, Kingspan
looks forward to a satisfactory outcome for the year, and, provided that there
is no further deterioration in construction markets, remains confident that it
has the products and the strategy to deliver further growth.
Further information, contact:
Eugene Murtagh
Chairman & Chief Executive
Dermot Mulvihill
Group Finance Director
Tel.: +353 42 9698000
GROUP PROFIT AND LOSS ACCOUNT
Continuing operations
Acquisitions
6 months 6 months 6 months 6 months Year
ended ended ended ended ended
30.6.02 30.6.02 30.6.02 30.6.01 31.12.01
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000 €'000 €'000
Turnover 358,862 1,661 360,523 438,342 828,947
Cost of sales (247,537) (1,068) (248,605) (314,468) (589,424)
Gross profit 111,325 593 111,918 123,874 239,523
Distribution costs (19,147) (36) (19,183) (19,589) (39,560)
Administrative expenses (53,823) (535) (54,358) (53,737) (102,766)
Goodwill amortisation (4,362) (18) (4,380) (4,196) (8,563)
Group operating profit 33,993 4 33,997 46,352 88,634
Interest payable and similar charges (6,047) (8,845) (16,746)
Interest receivable and other income 723 476 1,474
Profit on ordinary activities before taxation 28,673 37,983 73,362
Tax on profit on ordinary activities (7,072) (11,102) (17,947)
Profit on ordinary activities after taxation 21,601 26,881 55,415
Minority interest 52 5 (20)
Profit attributable to ordinary shareholders 21,653 26,886 55,395
Ordinary Dividends (3,543) (2,964) (7,960)
Profit retained for the period 18,110 23,922 47,435
€ cent € cent € cent
Basic earnings per share 12.9 15.9 32.9
Diluted earnings per share 12.8 15.7 32.3
Basic earnings per share (before goodwill) 15.5 18.4 37.9
Dividend per share 2.10 1.75 4.70
GROUP BALANCE SHEET 30.6.02 30.6.01 31.12.01
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
FIXED ASSETS
Tangible assets 164,111 164,220 167,427
Intangible assets 148,536 171,442 161,953
Financial assets 36 299 38
312,683 335,961 329,418
CURRENT ASSETS
Stocks 61,642 76,532 61,503
Trade and other debtors 173,175 210,406 170,133
Cash and term deposits 78,670 58,481 91,466
313,487 345,419 323,102
CREDITORS
Amounts falling due within one year
Trade and other creditors 148,291 156,357 139,537
Bank and other borrowings 17,325 37,444 35,234
Deferred consideration 375 1,933 -
Dividends 3,543 3,054 4,996
169,534 198,788 179,767
NET CURRENT ASSETS 143,953 146,631 143,335
TOTAL ASSETS LESS CURRENT LIABILITIES 456,636 482,592 472,753
CREDITORS
Amounts falling due after more than one year
Bank and other borrowings 195,675 244,452 220,256
Deferred consideration 4,939 6,323 5,663
200,614 250,775 225,919
PROVISIONS FOR LIABILITIES AND CHARGES 11,534 19,002 12,757
CAPITAL GRANTS 1,236 1,461 1,343
243,252 211,354 232,734
CAPITAL AND RESERVES
Called-up share capital 22,144 22,015 22,019
Share premium account 18,212 17,248 17,248
Revaluation reserve 891 891 891
Profit and loss account 205,581 163,958 187,471
Other reserves (5,216) 5,515 3,355
Shareholders' funds 241,612 209,627 230,984
MINORITY INTERESTS 1,640 1,727 1,750
243,252 211,354 232,734
GROUP CASH FLOW STATEMENT 6 months 6 months Year
ended ended ended
30.6.02 30.6.01 31.12.01
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
Net cash inflow from operating activities 52,630 51,648 146,658
Returns on investments and servicing of finance (5,506) (8,752) (14,105)
Taxation (4,561) (8,498) (16,308)
Capital expenditure and financial investment (14,319) (17,186) (33,697)
Acquisitions and disposals (4,991) (120,482) (101,855)
Equity dividends paid (4,997) (3,745) (6,799)
Cash inflow/(outflow) before use of liquid resources and financing 18,256 (107,015) (26,106)
Management of liquid resources (1,884) 4,173 (23,401)
Financing (16,371) 111,191 63,614
Increase in cash in the period 1 8,349 14,107
RECONCILIATION OF NET CASH FLOW TO 6 months 6 months Year
MOVEMENT IN NET DEBT ended ended Ended
30.6.02 30.6.01 31.12.01
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
Increase in cash in the period 1 8,349 14,107
Increase/(decrease) in liquid resources 1,884 (4,173) 23,401
Cash flow from movement in debt, lease finance and deferred 17,453 (90,420) (66,436)
consideration
Change in net debt resulting from cash flows 19,338 (86,244) (28,928)
Change in net debt resulting from acquisitions 177 (21,586) (20,805)
19,515 (107,830) (49,733)
Translation adjustment 10,528 (13,913) (10,028)
Movement in net debt in the period 30,043 (121,743) (59,761)
Net debt at start of period (169,687) (109,926) (109,926)
Net debt at end of period (139,644) (231,669) (169,687)
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 6 months 6 months Year
ended ended Ended
30.6.02 30.6.01 31.12.01
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
Profit for financial period attributable to Group shareholders 21,653 26,886 55,395
Exchange adjustments (8,571) 820 3,159
Total gains and losses recognised since last annual report 13,082 27,706 58,554
SUPPLEMENTARY INFORMATION
1 BASIS OF PREPARATION
The 2002 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 2001.
The interim results for the half year to 30th June 2002 and 30th June 2001 are
unaudited. The comparative figures for the year ended 31st December 2001
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
30.6.02 30.6.01 31.12.01
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
Profit attributable to ordinary shareholders 21,653 26,886 55,395
Number of Number of Number of
shares ('000) shares ('000) shares ('000)
Weighted average number of ordinary shares for the
calculation of basic earnings per share 167,839 168,966 168,543
Dilutive effect of share options 1,673 1,806 3,055
Weighted average number of ordinary shares for the
calculation of diluted earnings per share 169,512 170,772 171,598
€ cent € cent € cent
Basic earnings per share 12.9 15.9 32.9
Diluted earnings per share 12.8 15.7 32.3
3 DIVIDEND
An interim dividend at the rate of 2.10c per ordinary share (2001: 1.75c) is
payable on 11th October 2002 to shareholders on the register at the close of
business on 13th September 2002.
4 TURNOVER 6 months 6 months Year
ended ended ended
30.6.02 30.6.01 31.12.01
(Unaudited) (Unaudited) (Audited)
The analysis by class of activity is as follows: €'000 €'000 €'000
Insulated panels 116,123 120,018 248,011
Raised access flooring 84,309 160,165 252,455
Insulation boards 54,663 46,644 98,306
Environmental containers 56,792 55,991 116,147
Building components 48,636 55,524 114,028
360,523 438,342 828,947
The analysis by geographical area is as follows:
Republic of Ireland 46,493 56,157 108,919
Britain and Northern Ireland 236,580 242,152 493,764
Mainland Europe 43,693 45,378 94,126
United States of America 22,781 83,288 109,221
Other 10,976 11,367 22,917
360,523 438,342 828,947
5 RECONCILIATION OF MOVEMENTS IN 6 months 6 months Year
SHAREHOLDERS' FUNDS ended ended ended
30.6.02 30.6.01 31.12.01
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
Profit for the financial period attributable to Group 21,653 26,886 55,395
shareholders
Dividends (3,543) (2,964) (7,960)
18,110 23,922 47,435
Exchange adjustment (8,571) 820 3,159
Purchase of treasury shares - - (4,499)
New share capital subscribed 1,089 458 462
Net addition to shareholders' funds 10,628 25,200 46,557
Opening shareholders' funds 230,984 184,427 184,427
Closing shareholders' funds 241,612 209,627 230,984
6 RECONCILIATION OF OPERATING PROFIT 6 months 6 months Year
TO NET CASH FLOW FROM OPERATING ACTIVITIES ended ended ended
30.6.02 30.6.01 31.12.01
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
Operating profit 33,997 46,352 88,634
Depreciation charge 10,265 10,268 22,236
Amortisation of intangible assets 4,621 4,438 9,046
Amortisation of other assets - 259 -
Loss / (profit) on sale of tangible assets - 44 38
Government grants amortised (59) (67) (174)
Decrease / (Increase) in stocks (1,254) 3,657 19,125
Decrease / (Increase) in debtors (4,074) (14,635) 26,512
(Decrease) / Increase in creditors 9,134 1,332 (18,759)
Net cash flow from operating activities 52,630 51,648 146,658
7 INTANGIBLE ASSETS 30.6.02 30.6.01 31.12.01
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
Goodwill
At start of period 158,513 69,197 69,197
On acquisitions 3,140 92,238 91,297
Translation adjustment (11,911) 10,518 6,582
Amortised in period (4,380) (4,197) (8,563)
At end of period 145,362 167,756 158,513
Patents
At start of period 3,440 3,913 3,913
On acquisitions - - -
Translation adjustment (24) 14 10
Amortised in period (242) (241) (483)
At end of period 3,174 3,686 3,440
Total intangible assets
At start of period 161,953 73,110 73,110
On acquisitions 3,140 92,238 91,297
Translation adjustment (11,935) 10,532 6,592
Amortised in period (4,622) (4,438) (9,046)
At end of period 148,536 171,442 161,953
This information is provided by RNS
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