Interim Results - Replacement

Kingspan Group PLC 10 September 2002 The following replaces the Interim announcement released on 10th September 2002 at 07:00 hrs under RNS:9549A: The dividend is payable on 11th October 2002 to shareholders on the Register as at the close of business on 20th September 2002 and not 13th September 2002 as previously reported. All other details remain unchanged. The full amended text appears below. 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 3.7% to €335.6 million Profit before tax up 5.5% to €36.6 million Basic earnings per share up 11.4% • 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 20th 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 3.7%. 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 20th 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 The company news service from the London Stock Exchange
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