Interim Results

Kingspan Group PLC 05 September 2005 Kingspan Group plc 2005 INTERIM RESULTS Six months ended 30th June 2005 ------------------------------------------------- H1-05 H1-04 % change €'mn €'mn ------------------------------------------------- Sales 580.1 439.4 +32% Operating profit 67.0 43.6 +54% Operating margin % 11.5% 9.9% +160bp Profit before tax 62.4 40.4 +55% €'cent €'cent ------------------------------------------------- Earnings per share 30.7 19.7 +56% Dividend per share 4.45 3.4 +31% ------------------------------------------------- • Strong underlying performance before acquisitions with Sales up 20% and Operating profit up 41%. • Insulated Panels in the UK continued to gain share from site assembled alternatives. • Significant increases in input costs successfully recovered. • Central and Eastern European volumes up marginally despite an estimated construction market decline of 5% to 7%. • Increased level of acquisition activity in line with strategy to enhance a primarily organic model with timely and appropriate bolt on and in-fill acquisitions. • €137 million spend in the period in three strategically important sectors: Off-site Residential, Foodstore/Coldstore Panels and Environmental Containers. • All performing on target. • Greenfield investment in Hungary commissioned and at approximately 30% capacity utilisation. • Continued move towards energy efficient products, Modern Methods of Construction (MMC) and environmental solutions remain the main contributory factors in Kingspan's growth. Gene Murtagh, Chief Executive Officer, commented: 'We continued to deliver on our stated strategy of maintaining good organic growth enhanced with complementary acquisitions of a bolt on and in-fill nature. Against the background of a robust Irish market, an evolving UK construction market and improving Central European and US markets, the Group anticipates a satisfactory outcome for the year as a whole'. For further information contact: Donnchadh O'Neill: Murray Consultants Tel:+ (353) 1 4980 300 Tim Thompson/Jeremy Garcia: Buchanan Communications Tel: +(44) 207 466 5000 INTERIM STATEMENT Six months ended 30th June 2005 Kingspan Group plc announces half year results to 30th June 2005. Summary • Turnover up 32% to €580.1 million (H1 2004 : €439.4 million). • Operating profit up 54% to €67.0 million (H1 2004 : €43.6 million). • Basic earnings per share up 56% to 30.7 cent (H1 2004 : 19.7 cent). • Interim dividend up 31% to 4.45 cent per share (H1 2004 : 3.4 cent). • Net debt as a percentage of shareholders' funds of 62% at 30th June 2005 (41% at 30th June 2004). • Interest cover (based on EBITDA) was 17.9 times (H1 2004 : 17.4 times). • Capital investment was €154.7 million in the period, of which €17.4 million was net capital expenditure and €137.3 million was acquisitions. Results The Directors of Kingspan Group plc are pleased to announce the results for the Group for the six months ended 30th June 2005. Operating profit was €67 million, an increase of 54% on the corresponding period last year, on turnover of €580 million, up 32%. Basic earnings per share of 30.7 cent were up 56% compared to the same period last year. It is proposed that an interim dividend of 4.45 cent per share will be paid on 7th October 2005 to shareholders on the register at close of business on 14th September 2005. This represents an increase of 31% on the 2004 interim dividend. The interim dividend is covered 6.9 times by earnings. Insulated Panels Sales of Insulated Panels represented 36% of Group turnover in the period, and revenue at €212 million was up 29% compared to the corresponding period last year. In the UK, the overall market for low rise structural steel, and hence cladding in general, has performed a little under the level of last year. Despite this and the exceptionally high year-on-year cost increases, this business has performed well. Insulated Panels further strengthened their position relative to the technically challenged site assembled alternatives. A feature of the period was a very significant increase in input costs which were recovered in the marketplace. Despite these cost increases the rate of conversion to Insulated Panels continues apace. The investment in the Holywell manufacturing facility in North Wales in 2004 has driven efficiencies and provides appropriate capacity to facilitate further progress in our new product groups. Ireland has performed very robustly in the period, and an encouraging pipeline exists for the remainder of the year. The market in the Benelux remains weak and the Group is focusing on new product opportunities in that region. Central and Eastern European markets got off to a generally sluggish start with Kingspan volumes up marginally on 2004, but against an estimated construction market decline of 5% to 7%. The recent greenfield investment in Hungary began producing on schedule, and is now at approximately 30% capacity utilisation. Organically, the Coldstore and Foodstore product has grown year-on-year, and has received a significant boost from the recent ATC acquisition. Kingspan is now the leader in this segment in the UK and Ireland. The Group continues to explore longer term opportunities for this product range beyond its current geographical presence. Insulation Sales of Insulation products represented 19% of Group turnover in the period and, at €109 million, revenue was up 16% compared to the corresponding period last year. As indicated over the past year, the rapid volume growth achieved by this division in recent years has tapered somewhat, as the market finally adjusts itself to the last UK regulations. However, Kingspan expects that this growth curve will rise again from late 2006 onwards, driven by the proposed amendments to the Building Regulations scheduled for next year. Investments to capitalise on this will be made during the course of 2006/2007. Competing capacity continues to enter the PIR rigid board segment of the market and margins in that product will remain under pressure. It is therefore important that Kingspan continues to differentiate itself in this segment. Towards this end, much of the emphasis in this business is being geared towards the generation of additional market opportunities and product innovation. In product and process development, the focus of investment is on products using Kingspan proprietary technology, which can deliver significant value for the customer beyond that offered by competitors. The first of these investments will be in Ireland, building upon the well established Kingspan processes in the UK and the Netherlands. This will be followed by significant upgrades to the Pembridge facility. These investments in rigid insulation will go a long way to achieving this differentiation. Given its relative importance, the Group continues to review investment opportunities for rigid insulation across Central Europe. Environmental Containers Sales of Environmental Containers represented 18% of Group turnover in the period and, at €103 million, revenue was up 47% compared to the corresponding period last year, of which 20% was organic and 27% related to acquisitions in the period. The Pollution Control range of effluent treatment products provided much of the organic growth. An increasing shift toward domestic treatment plants from traditional septic tanks, particularly in Ireland, was most evident. In the UK, that transition continues, but as yet, at a slower pace. The Group's presence in the hot water cylinder sector has been substantially enhanced with the acquisitions of RCM and Albion. The unvented cylinder product in particular continues to grow against traditional gravity fed systems in which Kingspan already had a strong presence. The unvented cylinder market is likely to provide one of the key growth platforms in the division, both in new build and refurbishment sectors. The Group, in anticipating these market changes and in reacting to them in a timely manner, is now well positioned to capitalise on these developments. Revenue in fuel storage products in the UK and Ireland continued to grow despite an underlying reduction in the total volume available in the market. This growth reflects the continuing conversion to higher value double skinned products with telemetry enhancements. The European mainland element of this business is now a significant contributor to the division's earnings. Based in Poland, this business markets a broadening range of innovative and proprietary storage solutions, primarily across Central Europe and Scandinavia. Capacity is currently being increased by 30%. Geographic development of this product stream is considered central to the strategy of this division. The Group continues to evaluate opportunities in this regard. Access Floors Sales of Access Floors represented 10% of Group turnover in the period and, at €58 million, revenue was down 4% compared to the corresponding period last year. This was against a backdrop of relatively weak commercial high rise construction in both the European and North American markets. In North America in particular, the effect of the Group's exhaustive promotion of the benefits associated with under-floor air movement is now becoming evident from the type and level of specifications being generated. Overall, while underlying sales volume in the first half was below that of the prior year, product mix, pricing improvements and operating efficiencies combined to give an increase in operating profits of €3.6 million to €4.4 million in the period. Visibility on Access Floors projects looks encouraging over the medium term and whilst high-rise construction activity in the period was relatively low, the level of quotations indicates potential for modest improvements in sales activity into 2006. Off-site and Structural Sales of Off-site and Structural represented 17% of Group turnover in the period and, at €98 million, revenue was up 95% on the same period last year. Excluding the effect of acquisitions, revenue was up 41%. A feature of the period was the extraordinary steel price increases which were passed on to the sector. It is the Group's objective to establish a leading market presence in the residential and non-residential sector of the UK and Irish Off-site markets. The growing adoption of more modern building materials and methods provides Kingspan with significant future development potential in this sector. This strategy received a substantial boost with the acquisition earlier this year of Century Homes, Ireland's largest timber frame manufacturer and an emerging force in the UK. This business is performing as expected. Offering the Century House and the Tek House, combined with other Kingspan product solutions, greatly broadens the design appeal and overall opportunity for the Group. The investment in the plant in Sherburn, North Yorkshire, part of the Group's metal based Off-site initiative in the UK, is partly commissioned and operational. The accreditation process for the product range is in progress. This investment and the continuing development of the timber frame products and markets are geared towards positioning Kingspan at the forefront of the sector. Acquisitions The level of acquisition activity by the Group in the first six months has been higher than in recent years. Kingspan's strategy seeks to complement and enhance its primarily organic model with timely and appropriate bolt on and in-fill acquisitions. In total, five such acquisitions were completed in the first half across three strategically important sectors, (Off-site, Insulated Panels and Environmental Containers) for a total consideration of €137 million. The largest of these was Century Homes, which now places the Group in a market leadership position for Off-site residential solutions in the UK and Ireland. The acquisition of ATC, a UK based producer of Coldstore and Foodstore Insulated Panels, improves the Group's presence in that market segment, and, combined with Kingspan's already existing involvement in this segment, gives the Group another market leadership position. It also provides valuable additional dedicated capacity. Three other acquisitions, namely RCM, Albion and Clearwater, each contribute to broadening the range and strengthening the position of the Environmental Containers division. Financial Review Operating Margins The gross margin at 30.3% is 0.8% up on the full year 2004. This improvement reflects some changes in product mix, efficiencies across the operations and the recovery of distribution costs which in real terms increased by approximately 7%. Administration costs at €70 million in continuing operations were up 25% on the corresponding period last year and reflect the continuing investment in product and process development which is an important element of Group strategy. The operating margin at 11.5% compares with 9.9% in the same period last year and 10.8% for the full year 2004. Sales by geographical market (Half 1 2005 versus Half 1 2004): ------------------------------------------------------------------------- % change in 2005 excl. Acquisitions % change in 2005 in period ------------------------------------------------------------------------- Ireland 71% 34% ------------------------------------------------------------------------- Britain and Northern Ireland 32% 23% ------------------------------------------------------------------------- Europe mainland 20% 15% ------------------------------------------------------------------------- United States of America (5%) (5%) ------------------------------------------------------------------------- Sales by product group (Half 1 2005 versus Half 1 2004): ------------------------------------------------------------------------- % change in 2005 excl. Acquisitions % change in 2005 in period ------------------------------------------------------------------------- Insulated ------------------------------------------------------------------------- Panels and Boards 24% 23% ------------------------------------------------------------------------- Off-site and Structural Products 95% 41% ------------------------------------------------------------------------- Environmental Containers 47% 20% ------------------------------------------------------------------------- Access Floors (4%) (4%) ------------------------------------------------------------------------- Cash Flow The table below summarises the Group's funds flow for 2005 and 2004 --------------------------------------------------------------- H1-05 H1-04 FY04 €'mn €'mn €'mn --------------------------------------------------------------- Operating profit 67.0 43.6 103.3 Depreciation 14.1 11.7 24.4 Amortisation 0.7 0.2 0.7 Pension contributions (0.9) (0.1) (2.9) Working capital increase (23.6) (7.8) (24.9) Interest paid (2.3) (3.3) (6.6) Taxation paid (8.9) (4.7) (14.8) Others 1.9 1.0 4.1 --------------------------------------------------------------- Free cash flow 48.0 40.6 83.3 --------------------------------------------------------------- Acquisitions (137.3) (0.7) (26.6) Receipt of Tate settlement - - 24.7 Net capital expenditure (17.4) (25.3) (54.5) Dividends paid (10.3) (7.6) (13.2) --------------------------------------------------------------- Cash flow movement (117.0) 7.0 13.7 --------------------------------------------------------------- Debt translation 0.1 (2.5) (0.6) --------------------------------------------------------------- (Increase)/decrease in net debt (116.9) 4.5 13.1 --------------------------------------------------------------- Net debt at start of period (108.1) (121.2) (121.2) --------------------------------------------------------------- Net debt at end of period (225.0) (116.7) (108.1) --------------------------------------------------------------- Free cash flow at €48.0 million is up 18% on the corresponding period last year. Net debt at 30th June 2005 was €225.0 million compared to €108.1 million at 31st December 2004, an increase of €116.9 million. This is after capital investment, including acquisitions, of €154.7 million in the period. Working capital increased by €23.6 million in the period, mainly related to increased sales. Expressed in terms of days sales, working capital increased by two days compared to the corresponding level at 30th June 2004. On 29th March 2005 the Group had a successful private placing of $200 million (€151 million) loan notes with maturities of 10 and 12 years. These notes were then swapped into fixed interest Euros giving the Group an appropriate mix of debt at competitive interest rates. Accounting Policies These accounts are prepared under IFRS accounting convention while previous accounts were prepared using Irish GAAP. A detailed reconciliation of the original accounts for the period ended 30th June 2004 and commentary was issued by the Group on 12th July 2005. The table below sets out a summary of the effect on earnings of the change of accounting methods for the period ended 30th June 2004: ------------------------------------------------------------------------- €'mn ------------------------------------------------------------------------- Earnings after tax as reported under GAAP Half 1 2004 29.5 ------------------------------------------------------------------------- Defined benefit pension ( 0.2) ------------------------------------------------------------------------- Share based payment ( 0.9) ------------------------------------------------------------------------- Goodwill amortisation 3.9 ------------------------------------------------------------------------- Tax adjustment 0.2 ------------------------------------------------------------------------- Restated Earnings under IFRS Half 1 2004 32.5 ------------------------------------------------------------------------- Board Changes There were two appointments of non-executive directors during the period: David Byrne joined the Board on 1st January 2005. He served as the EU Commissioner for Health and Consumer Protection 1999/2004 and previous to that was Attorney General for Ireland. Brian Hill joined the Board on 1st June 2005. He retired at the end of 2004 from the board of CRH plc after a career of 33 years with that company, most recently as head of the European Products and Distribution division. Outlook The general environment in which Kingspan operates remains stable. The continued move towards energy efficient construction and environmental solutions remains the main contributory factor in Kingspan's growth. Against the background of a robust Irish market, an evolving UK construction market, and improving Central European and US markets, the Group anticipates a satisfactory outcome for the year as a whole. GROUP INCOME STATEMENT Notes Continuing Operations Acquisitions 6 months 6 months 6 months 6 months Year ended ended ended ended ended 30.6.05 30.6.05 30.6.05 30.6.04 31.12.04 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) € '000 € '000 € '000 € '000 € '000 Sales revenue 3 529,404 50,659 580,063 439,387 958,083 Costs of sales (366,208) (37,907) (404,115) (311,284) (675,729) ------------------------------------------------------------------------------------------------------------- Gross profit 163,196 12,752 175,948 128,103 282,354 Distribution costs (32,069) (1,531) (33,600) (28,034) (59,269) Administrative costs (69,547) (5,837) (75,384) (56,503) (119,786) ------------------------------------------------------------------------------------------------------------- Operating result 61,580 5,384 66,964 43,566 103,299 Finance costs (5,105) (3,631) (7,761) Finance income 543 438 873 ------------------------------------------------------------------------------------------------------------- Result for the period before tax 62,402 40,373 96,411 Tax expense, net (11,297) (7,815) (18,330) ------------------------------------------------------------------------------------------------------------- Net result for the period 51,105 32,558 78,081 ------------------------------------------------------------------------------------------------------------- Attributable to minority interest 23 2 4 ---------------------------------- Attributable to shareholders of Kingspan Group plc 51,082 32,556 78,077 ---------------------------------- Earnings per share for the period 5 Basic 30.7 19.7 47.1 Diluted 29.8 19.3 46.3 GROUP BALANCE SHEET Notes 30.6.05 30.6.04 31.12.04 (Unaudited) (Unaudited) (Audited) € '000 € '000 € '000 Assets Non-current assets Goodwill 6 210,323 125,892 110,039 Other intangible assets 7 13,382 2,212 2,180 Property, plant and equipment 243,976 197,708 210,898 Long term financial assets 26 38 38 Deferred tax assets 1,641 684 1,639 ------------------------------------------------------------------------------------------------------------- 469,348 326,534 324,794 Current assets Inventories 107,046 72,030 89,225 Trade and other receivables 305,408 230,061 220,787 Cash and cash equivalents 82,755 56,365 87,791 ------------------------------------------------------------------------------------------------------------- 495,209 358,456 397,803 ------------------------------------------------------------------------------------------------------------- Total assets 964,557 684,990 722,597 ------------------------------------------------------------------------------------------------------------- Liabilities Current liabilities Trade and other liabilities 220,802 170,920 157,164 Provisions 21,244 13,758 18,483 Deferred consideration 14,104 85 597 Short term financial liabilities 44,010 23,328 108,725 Current tax liabilities 23,390 19,347 19,355 ------------------------------------------------------------------------------------------------------------- 323,550 227,438 304,324 Non-current liabilities Pension and other employee obligations 27,104 21,254 22,664 Long term financial liabilities 241,855 145,805 76,136 Deferred tax liabilities 3,146 3,484 3,947 Deferred consideration 7,787 3,825 10,463 ------------------------------------------------------------------------------------------------------------- 279,892 174,368 113,210 ------------------------------------------------------------------------------------------------------------- Total liabilities 603,442 401,806 417,534 ------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------- NET ASSETS 361,115 283,184 305,063 ------------------------------------------------------------------------------------------------------------- Equity Equity attributable to shareholders of Kingspan Group plc Share capital 21,865 21,734 21,797 Additional paid-in share capital 21,358 19,179 20,260 Other reserves (24,786) (19,796) (38,868) Revaluation reserve 713 713 713 Capital redemption reserve 513 513 513 Retained earnings 341,015 260,362 300,233 ------------------------------------------------------------------------------------------------------------- 360,678 282,705 304,648 Minority interest 437 479 415 ------------------------------------------------------------------------------------------------------------- TOTAL EQUITY 361,115 283,184 305,063 ------------------------------------------------------------------------------------------------------------- GROUP STATEMENT OF CHANGES IN EQUITY 30.06.05 30.06.04 31.12.04 € '000 € '000 € '000 Balance at beginning of period 305,063 244,171 244,171 Cash flow hedging - in equity (103) (640) 102 Defined benefit pension scheme (3,995) (3,854) (7,708) Currency translation 16,093 16,072 (1,921) Income taxes relating to items charged or credited to equity 1,211 1,179 2,314 ------------------------------------------------------------------------------------------------------------- Net income recognised directly in equity 13,206 12,757 (7,213) Profit for the period 51,082 32,556 78,077 ------------------------------------------------------------------------------------------------------------- Total recognised income and expense for the period 64,288 45,313 70,864 Shares issued 1,166 441 1,585 Employee share based compensation 876 886 1,764 Dividends (10,300) (7,608) (13,238) Movement in minority interest 22 (19) (83) ------------------------------------------------------------------------------------------------------------- Balance at end of period 361,115 283,184 305,063 ------------------------------------------------------------------------------------------------------------- STATEMENT OF RECOGNISED INCOME AND EXPENSE 6 months 6 months Year ended ended ended 30.6.05 30.6.04 31.12.04 (Unaudited) (Unaudited) (Audited) € '000 € '000 € '000 Profit for financial period attributable to Group shareholders 51,082 32,556 78,077 Currency translation 16,093 16,072 (1,921) Cash flow hedging (103) (640) 102 Defined benefit pension scheme (2,797) (2,698) (5,396) ------------------------------------------------------------------------------------------------------------- Total income and expense recognised since last annual report 64,275 45,290 70,862 ------------------------------------------------------------------------------------------------------------- GROUP CASH FLOW STATEMENT Notes 6 months 6 months Year ended ended ended 30.6.05 30.6.04 31.12.04 (Unaudited) (Unaudited) (Audited) € '000 € '000 € '000 Operating activities Result for the period before tax 62,402 40,373 96,411 Adjustments 8 20,289 15,921 34,852 Change in inventories (3,473) (6,877) (21,838) Change in trade and other receivables (42,952) (45,363) (39,779) Change in trade and other payables 22,780 44,469 35,754 Pension contributions (924) (133) (2,885) Taxes paid (8,908) (4,663) (14,826) ------------------------------------------------------------------------------------------------------------- Net cash flow from operating activities 49,214 43,727 87,689 Investing activities Additions to property, plant and equipment (18,282) (26,659) (55,679) Proceeds from disposals of property, plant and equipment 853 1,316 2,124 Proceeds from financial assets 13 15 11 Purchase of subsidiary undertakings (139,028) (748) (18,051) Net cash acquired with acquisitions 18,250 - 954 Receipt of Tate Global Corporation settlement - - 24,680 Payment of deferred consideration in respect of acquisitions (1,419) (497) (629) Dividends paid to minorities - - (91) Interest received 521 434 875 ------------------------------------------------------------------------------------------------------------- Net cash flow from investing ctivities (139,092) (26,139) (45,806) Financing activities Proceeds from bank loans 159,350 173,272 187,338 Repayment of bank loans (65,363) (181,394) (178,342) Discharge of finance lease liability (212) (5) (5) Proceeds from share issues 1,166 441 1,585 Interest paid (2,796) (3,722) (7,472) Dividends paid (10,300) (7,608) (13,238) ------------------------------------------------------------------------------------------------------------- Net cash flow from activities 81,845 (19,016) (10,134) Cash and cash equivalents at the beginning of the period 85,201 52,917 52,917 Net increase in cash and cash equivalents (8,033) (1,428) 31,749 Translation adjustment 5,046 2,107 535 ------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at the end of the period 82,214 53,596 85,201 ------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at the beginning of the period Cash and cash equivalents, beginning of period 87,791 55,746 55,746 Overdrafts (2,590) (2,829) (2,829) ------------------------------------------------------------------------------------------------------------- 85,201 52,917 52,917 ------------------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of the period Cash and equivalents, end of the period 82,755 56,365 87,791 Overdrafts (541) (2,769) (2,590) ------------------------------------------------------------------------------------------------------------- 82,214 53,596 85,201 ------------------------------------------------------------------------------------------------------------- Kingspan Group plc Financial statements Notes 1 Basis of preparation All publicly quoted European companies in the EU are required to prepare consolidated financial statements in accordance with International Reporting Standards (IFRS) as adopted by the European Commission in respect of accounting periods commencing on or after 1st January 2005. The financial information presented in this announcement has been prepared in accordance with the International Financial Reporting Standards and Interpretations issued by the International Accounting Standards Board and in accordance with the accounting policies as set out in Appendix 6 of the IFRS Update in Appendix 6 of the IFRS issued by the Group on 12th July 2005. The 2005 interim results and 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 results for the half year to 30th June 2005 and 30th June 2004 are unaudited. The comparative figures for the year ended 31st December 2004 represent the Group's full accounts for that year which were restated under IFRS and presented by the Group in an IFRS Update on 12th July 2005. 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 Reporting currency The currency used in this preliminary announcement is Euro. Results and cash flows of foreign subsidiary undertakings have been translated into Euro at the average exchange rates, and the related balance sheets have been translated at the rates of exchange ruling at the balance sheet date. Exchange rates used were as follows: Average Closing rate rate Euro = 30.6.05 30.6.04 31.12.04 30.6.05 30.6.04 31.12.04 Pound Sterling 0.686 0.674 0.679 0.665 0.659 0.693 US Dollar 1.286 1.228 1.244 1.217 1.210 1.335 Czech Koruna 30.123 32.496 31.953 30.000 31.900 30.600 Polish Zloty 4.083 4.736 4.534 4.100 4.580 4.100 3 Segment reporting Analysis by class of business -------------------------------------------------- Insulated Segment Revenue Panels Offsite & Access & Boards Structural EC Floors TOTAL €m €m €m €m €m -------------------------------------------------- Total Revenue - H1 2005 321.4 97.9 102.8 58.0 580.1 Total Revenue - H1 2004 258.6 50.2 69.9 60.7 439.4 Total Revenue - 2004 579.6 116.8 142.5 119.2 958.1 Intersegment revenue is not material and is thus not subject to separate disclosure in the above analysis Segment Result (profit before finance costs) ------------------------------------------------------------------------- Insulated Panels Offsite & Access TOTAL TOTAL TOTAL & Boards Structural EC Floors H1 2005 H1 2004 2004 €m €m €m €m €m €m €m ------------------------------------------------------------------------- Operating result - H1 2005 43.7 10.1 8.8 4.4 67.0 Operating result - H1 2004 30.8 4.4 7.6 0.8 43.6 Operating result - 2004 72.2 13.9 14.2 3.0 103.3 Finance costs (net) (4.6) (3.2) (6.9) -------------------------- Result for the period before tax 62.4 40.4 96.4 Tax expense, net (11.3) (7.8) (18.3) -------------------------- Net result for the period 51.1 32.6 78.1 -------------------------- Segment Assets and Liabilities ------------------------------------------------------------------------- Insulated Panels Offsite & Access TOTAL TOTAL TOTAL & Boards Structural EC Floors H1 2005 H1 2004 2004 €m €m €m €m €m €m €m ------------------------------------------------------------------------- Assets - H1 2005 381.6 204.8 164.1 129.7 880.2 Assets - H1 2004 298.1 65.4 92.1 172.3 627.9 Assets - 2004 323.9 93.2 96.2 119.8 633.1 Liabilities - H1 2005 (139.6) (63.3) (44.4) (21.9) (269.2) Liabilities - H1 2004 (122.2) (34.5) (24.5) (24.8) (206.0) Liabilities - 2004 (119.2) (34.8) (24.4) (19.9) (198.3) --------------------------- Total assets less total liabilities 611.0 421.9 434.8 Cash and cash equivalents 82.8 56.4 87.8 Deferred tax asset 1.6 0.7 1.6 Financial liabilities (current and non-current) (285.9) (169.1) (184.9) Deferred consideration (current and non-current) (21.9) (3.8) (11.0) Income tax liabilities (current and deferred) (26.5) (22.9) (23.3) --------------------------- Total Equity as reported in Group Balance Sheet 361.1 283.2 305.0 =========================== Other Segment Information -------------------------------------------------- Insulated Panels Offsite & Access & Boards Structural EC Floors TOTAL €m €m €m €m €m -------------------------------------------------- Capital Investment - H1 2005 32.5 74.3 40.9 0.4 148.1 Capital Investment - H1 2004 18.4 3.6 4.7 1.8 28.5 Capital Investment - 2004 50.0 8.2 12.8 (21.1) 49.9 Depreciation included in segment result - H1 2005 (7.1) (2.1) (3.0) (1.9) (14.1) Depreciation included in segment result - H1 2004 (6.1) (1.4) (2.1) (2.0) (11.6) Depreciation included in segment result - 2004 (13.2) (3.1) (4.2) (3.9) (24.4) Amortisation included in segment result - H1 2005 (0.2) (0.3) (0.2) - (0.7) Amortisation included in segment result - H1 2004 (0.2) - - - (0.2) Amortisation included in segment result - 2004 (0.7) - - - (0.7) Non-Cash Items included in segment result - H1 2005 0.1 (0.1) - - - Non-Cash Items included in segment result - H1 2004 - - - - - Non-Cash Items included in segment result - 2004 (1.2) - - - (1.2) Analysis of Segmental Data by Geography -------------------------------------------------------------- Republic of United Rest of Ireland Kingdom Europe Americas Others TOTAL €m €m €m €m €m €m -------------------------------------------------------------- Income Statement Items Segment Revenue - H1 2005 104.0 362.0 82.4 27.0 4.7 580.1 Segment Revenue - H1 2004 60.8 274.7 68.4 28.3 7.2 439.4 Segment Revenue - 2004 136.8 592.4 163.2 53.6 12.1 958.1 Balance Sheet Items Assets - H1 2005 147.7 555.0 116.8 60.0 0.7 880.2 Assets - H1 2004 79.5 390.6 67.8 88.7 1.3 627.9 Assets - 2004 105.4 367.2 106.6 53.3 0.6 633.1 Other segmental information Capital Investment - H1 2005 14.1 28.6 104.7 - 0.7 148.1 Capital Investment - H1 2004 3.5 20.9 3.6 0.5 - 28.5 Capital Investment - 2004 5.9 10.5 17.0 - 16.5 49.9 4 Dividends An interim dividend at the rate of 4.45c per share (2004 : 3.4c) is payable on 7th October 2005 to shareholders on the register at close of business on 14th September 2005. An interim dividend on Ordinary Shares is recognised as a liability 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 six month period ended 30th June 2005. 5 Earnings per share 6 months 6 months Year ended ended ended 30.6.05 30.6.04 31.12.04 €'000 €'000 €'000 The calculations of earnings per share are based on the following: Profit attributable to ordinary shareholders 51,082 32,556 78,077 --------------------------------------------------------------------------------------------------------- Number of Number of Number of shares Shares shares ('000) ('000) ('000) 30.6.05 30.6.04 31.12.04 Weighted average number of ordinary shares for the calculation of basic earnings per share 166,306 165,444 165,621 Dilutive effect of share options 5,010 3,318 3,025 --------------------------------------------------------------------------------------------------------- Weighted average number of ordinary shares for the calculation of diluted earnings per share 171,316 168,762 168,646 --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- € cent € cent € cent Basic earnings per share 30.7 19.7 47.1 Diluted earnings per share 29.8 19.3 46.3 6 Goodwill Goodwill € '000 Carrying amount 1st January 2005 110,039 Additions 94,762 Net exchange difference 5,522 --------------------------------------------------------------------------------------------------------- Carrying amount 30th June 2005 210,323 --------------------------------------------------------------------------------------------------------- 7 Other intangible assets Technical Patents Brands Know-how Other Total € '000 € '000 € '000 € '000 € '000 Carrying amount 1st January 2005 2,180 - - - 2,180 Additions 89 10,099 1,188 541 11,917 Amortisation (291) (365) (30) (45) (731) Net exchange difference 20 (4) - - 16 --------------------------------------------------------------------------------------------------------- Carrying amount 30th June 2005 1,998 9,730 1,158 496 13,382 --------------------------------------------------------------------------------------------------------- 8 Cash flow statement The following non-cash adjustments have been made to the pre-tax result for the period to arrive at operating cash flow: 30.6.05 30.6.04 31.12.04 €'000 €'000 €'000 Depreciation, amortisation and impairment charges of fixed and intangible assets 14,862 11,892 25,039 Employee equity-settled share options 876 886 1,764 Finance income (543) (438) (873) Finance cost 5,105 3,631 7,761 (Profit)/loss on sale of tangible assets (11) (49) 1,161 (Profit) on sale of investment - (1) - --------------------------------------------------------------------------------------------------------- Total adjustments 20,289 15,921 34,852 --------------------------------------------------------------------------------------------------------- 9 Reconciliation of net cash flow to movement in net debt 30.6.05 30.6.04 31.12.04 €'000 €'000 €'000 (Decrease)/increase in cash and bank overdrafts (8,033) (1,428) 31,749 (Increase)/decrease in debt, lease finance and deferred consideration (92,356) 8,583 (8,362) ------------------------------- Change in net debt resulting from cash flows (100,389) 7,155 23,387 Loans and lease finance acquired with subsidiaries (5,103) - (2,054) Deferred consideration arising on acquisitions in the period (11,452) - (7,456) New finance leases (31) - (82) Translation movement 104 (2,506) (598) ------------------------------- Net movement (116,871) 4,649 13,197 Net debt at start of period (108,130) (121,327) (121,327) ------------------------------- Net debt at end of period (225,001) (116,678) (108,130) ------------------------------- 10 Board Approval This Interim Report was approved by the Board of Directors of Kingspan Group plc on 2nd September 2005. Independent review report to Kingspan Group plc Introduction We have been instructed by the Company to review the financial information for the six months ended 30 June 2005 which comprises the consolidated income statement, statement of recognised income and expense, consolidated balance sheet information as at 30 June 2005, consolidated cash flow statement and associated notes and basis of preparation. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the Directors. The Directors are responsible for preparing the interim report in accordance with the Listing Rules of the Irish Stock Exchange. The next annual financial statements of the Group will be prepared in accordance with accounting standards adopted for use in the European Union. This interim report has been prepared in accordance with the basis set out in Appendix 6 of the IFRS update issued by Kingspan Group plc on 12th July 2005. The accounting policies are consistent with those that the Directors intend to use in the next annual financial statements. There is, however, a possibility that the Directors may determine that some changes are necessary when preparing the full annual financial statements for the first time in accordance with accounting standards adopted for use in the European Union. The IFRS standards and IFRIC interpretations that will be applicable and adopted for use in the European Union at 31 December 2005 are not known with certainty at the time of preparing this interim financial information. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in Ireland and the United Kingdom. A review consists principally of making enquiries of group and local management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards issued by the Auditing Practices Board and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Listing Rules of the Irish Stock Exchange and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2005 Grant Thornton 24 - 26 City Quay Chartered Accountants & Dublin 2 Registered Auditors 2 September 2005 This information is provided by RNS The company news service from the London Stock Exchange LU

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