Interim Results

RNS Number : 0751C
Kingspan Group PLC
27 August 2008
 



KINGSPAN GROUP plc 


2008 INTERIM RESULTS 


Six months ended 30 June 2008


SUMMARY RESULTS 



H1 2008 €'mn

H1 2007 €'mn

% change at actual rates

% change at constant rates

Revenue

849.4

908.4

-6.5%

+1.5%

Operating Profit

90.1

114.2

-21.1%

-16%

Operating Margin

10.6%

12.5%

-190bps

-120bps






Earnings per Share

41.4 cent

52.7 cent

-21.4%

-16.7%

Dividend per Share

8.00 cent

8.00 cent

0%

0%






Net Debt

194.2

246.7

-21.3%


Interest Cover

18.0x

22.7x









Operational Highlights:


  • Strong growth of 27% in CEE revenue reflecting increased penetration, new product introductions, an expanded geographic presence, and rising prices

  • UK and Ireland Insulated Panels produced better than expected results given the trading environment. Sales were down just 8%

  • Insulation Boards declined slightly reflecting a robust Mainland European market but a weaker UK and Ireland residential environment

  • Excellent performance in Access Floors in both North America and Europe where office construction remained strong in the period 

  • Significant general and headcount cost reductions in the most affected elements of the Group to help mitigate the impact of lower sales revenue

  • Consolidation of operations in both the Environmental and Off-site divisions in response to poor residential completions

  • Strong progress in the Group's Renewables businesses as rising energy costs and the international push to lower emissions drive a shift towards non-fossil and sustainable energy sources.


Gene Murtagh, Chief Executive Officer, commented:


'The first half of 2008 has seen Kingspan deliver a comparatively robust operating performance against a difficult international backdrop where the headwinds of contracting markets, rising raw material costs, and unfavourable foreign exchange movements remain in place. 

The rationale for high performance building solutions that reduce energy consumption and carbon emissions is now widely accepted. As evidenced by the recent acquisition of Metecno Inc.  in the US, Kingspan continues to invest in the business, undertake cost initiatives and widen its geographical footprint to leave the group well-positioned for a rebound when the current cyclical weakness reverses.' 


For further information contact:


Ed Micheau: Murray Consultants Tel: +353 (0) 1 4980300

Tim Thompson/Jeremy Garcia: Buchanan Communications Tel: +44 207 466 5000


INTERIM RESULT STATEMENT 

Six months ended 30th June 2007 


  • Turnover -6.5% to €849.4mn 

  • +1.5% on a constant currency basis;

  • Operating Profit down -21% to €90.1mn

  • -16% on a constant currency basis; 

  • Basic Earnings 41.4c per share versus 52.7c in 2007;

  • Interim Dividend maintained at 8c per share;

  • Net Debt €194.2mn; 

  • Interest Cover 18.0; 

  • Total Investment of €61.4mn, including capex of €56.3mn.


The first half of 2008 has been a period of mixed fortunes for Kingspan, characterised by a strong Western and Central European performance, solid progress in North America, and a weakened UK and Ireland construction environment. Clearly, the Group's substantial presence in the latter markets has impacted on the results for the period, yet despite a particularly poor residential backdrop and unfavorable currency movements, the operating performance of Kingspan was comparatively robust, reinforced by deep cost reductions in a number of activities. The Group continued to invest throughout the period and remains fully committed to its current €250mn capital expenditure programme. This will not only fortify Kingspan's position in all of its markets, but when the present cyclical weakness reverses, the Group will be very well positioned for a medium-term rebound, with significantly broadened geographic exposure.  


INSULATED PANELS & BOARDS


In this segment, turnover was €474.1mn, down 6.2% on the same period in 2007


Insulated Panels 


Representing 40% of Group turnover in the period, sales were €337.6mn, a decline of 8% over prior year.


In the UK, volumes came under pressure, and were down circa 18% on prior year. This decline was particularly severe in the first quarter as it was for order intake, whereas quarter two's performance represented an improvement, although still trailing 2007, with the gap closing towards mid year. Rising material costs have been a major feature of the first half. Passing on these costs is an ongoing process. The lag effect in recovering cost has impacted on margins during the period. Increasing penetration and a positive mix compensated for some of the decline which contributed towards a robust outturn given the economic circumstances. Reflecting this shift, new dedicated Architectural Wall Panel capacity came on stream in quarter two.  


In Ireland comparisons against last year are more disappointing, with volumes down over 20% as the retail and logistics construction segments in particular slowed significantly. An overhang in the building market and a severe lack of funding for speculative developments resulted in activity being dampened. It is a trend that is likely to remain for the foreseeable future, and costs in the business are being adjusted to reflect this.


In Mainland Europe, the performance of the businesses were excellent, with volumes in the Benelux up over 10% and in CEE up 16%. Order intake for the period was also strong, which provide some comfort for activity levels in the second half. With the exception of the Czech Republic and Slovakia, where sales were similar to 2007, significant growth was achieved in all other markets and the business has now extended into Russia, Serbia, Croatia, Denmark, France and Finland where the early signs have been encouraging. The Roof Panel capital project for the Czech Republic is now commencing production, and will be key in supporting further organic growth in the region.


Further afield, Australia and New Zealand have both felt the impact of a tightening economic environment.  Turkey has been making some progress, and the Group has begun marketing into India, establishing a sales organisation there during quarter two.  Canada continued to perform well against prior year, but due to site disruption beyond the Group's control, the relocation project for the Ontario facility has been delayed by approximately nine months and is now anticipated to commence production in late 2009.  


Insulation Boards 


Representing 16% of Group sales in the period, turnover was €136.5mn, a decline of 2.5% over prior year.


Despite the clear deterioration in the new housing environment in Ireland, this business unit managed to hold a volume decline, including Northern Ireland, to around 5%. Improving standards, an increase in RMI, a reasonable performance in the non-residential sector and a strong Northern Ireland insulation market all contributed to this outcome. We expect a tightening in the business during the second half, in line with a continuing weak new residential backdrop. Medium term however, insulation standards are on the rise in Ireland, and the high performance niche Phenolic offering from Kingspan continues to gain traction and provides growing differentiation in the Irish market.


In Britain, volumes were down approximately 2% in the period, reflecting a reasonable first quarter, but a weaker quarter two as housing activity dropped off significantly in most regions. Again, however, penetration growth has shown no sign of abating, and Kingspan's Phenolic insulation now has established a firm and growing position in the higher end of the insulation market. Residential activity accounts for 40% of this business unit, and the housing slowdown will certainly maintain pressure on volumes and margins during the second half, yet despite this, other sectors and the growing attractiveness of high performance insulation should deliver reasonably solid sales in the second half of the year.


Insulation Boards continued to show good progress in the continental markets, particularly in Germany and Central Europe, where volumes rose by 20%. In support of the Group's longer term goals in the region, work is continuing on the establishment of new world class facilities in both the Netherlands and Poland. This forms part of the Division's broadening geographic balance, but more importantly, places capacity firmly in the under-penetrated markets of the continent. This market remains dominated by traditional, low performance insulants, and has a rigid board penetration level still only in single digit percentages.


ENVIRONMENTAL & RENEWABLES 


Representing 17% of Group sales in the period, turnover was €140.0mn, broadly flat over prior year.


Relative to 2007, fuel storage and effluent treatment products have performed well, and although the UK and Irish markets have been tougher, excellent cost control led to a solid outcome. The ongoing product warranty issue continued to lean on margins however, and formal legal action to recover past and future losses commenced during the second quarter. If they run their full course, proceedings may last into 2010.


The Group's Unvented Hot Water Cylinder business has been focused on the new build housing market of the UK, a strategy that contributed strongly to its growth in recent years. This pattern has clearly been interrupted in the last few months as homebuilders have significantly reduced their output. Tight cost control, and expansion of the business into RMI segments will help sustain it through this period, but margins will suffer due to topline pressure. Although it's some time away yet, this business is well positioned for what we expect will be a strong sectoral rebound given the longterm need for new housing in the UK.


The Group's Solar Hot Water activity has delivered a strong first half, and in doing so, has turned what was an underlying loss in 2007 into to a positive return sofar in 2008. This business is the Group's first step into building integrated renewables, a segment that will be focused on more intensely in the future. Kingspan views the combination of highly insulated building fabric and renewable energy sources as the most viable and marketable answer in the drive towards genuinely low carbon buildings. In recognition of this aspect, the Group has committed to growing its solar evacuated tubes capacity, the most efficient method of solar hot water generation, by 300% in 2009, rising to 500% by 2013. This investment is in addition to a site consolidation drive that will see six of the current Environmental & Renewables sites become one new facility, which began in phases from the second quarter this year. This move will yield greater process and operational efficiencies from early 2009.


OFF-SITE & STRUCTURAL 


Representing 16% of Group turnover in this period, sales were €138.0mn, a decline of 18.5% over prior year.


In the first half of 2008, the Irish residential market has suffered a very considerable and widely reported slowdown. Volume estimates indicate that the level of housing starts has reduced by approximately 70% over the same period in 2007. Output from the Group's manufacturing locations has also experienced a commensurate decline, which has heavily impacted the operating return in the period. Despite such a steep decline, the business has operated at only a slight loss, owing largely to the timely and deep reduction in its operating and overhead costs over the preceding year. The business now operates from one site, having ceased production at the other two. Over the coming twelve months, the Group anticipates residential activity to decline slightly from current levels, and remain at those levels for a further year or so.


Structural Products in Ireland are down over 25%, but as the product range expands, a number of the new façade offerings have had positive market introductions, and an encouraging specification bank is being built.


In the UK, the Off-site business produced a solid performance in the first six months, up 15% on 2007. Much of this was delivered in the early part of the year, with a noticeable drop-off towards the end of the half, which is anticipated to be the case for the remainder of the year also. As part of the ongoing consolidation process, one manufacturing location and sales offices have been closed, and activity is being concentrated at an existing site north of London. This is the geographic area in which the Group expects to invest in a centralised UK facility around 2010. Growing penetration, bolstered by a supportive legislative framework and an evolving product range leaves the Group satisfied that the medium to long term potential for this business is solid in the UK.  


Structural products sales in the UK were also robust, up approximately 10% on prior year, and largely due to reasonable low rise construction, and a strong high rise market into which the Group's floordeck product is supplied.


ACCESS FLOORS


Representing 11% of Group turnover in the period, sales were €97.3mn, growth of 5.5% over prior year.


In the US, sales grew substantially as the office construction market remained strong, and conversion to modern flooring solutions continued. Coupled with this has been a strong data construction environment in the US, led by the leading internet organisations, which resulted in the positive trend in laminated flooring product sales for the period. Order intake was up in excess of 30% in the six months, which reflected an element of pre price increase commitments made in June. This trend has reversed considerably in the third quarter.


The pattern of trade in the UK has been very similar to that of North America, where office construction, particularly in London has been resilient, despite other aspects of the construction environment weakening. This trend in office activity is likely to continue at least through the rest of 2008.


Both businesses produced strong margins again, which at a combined 16%, is well up on prior year. In the second half, however, rising steel costs, and a degree of fixed contract pricing will erode margins, most noticeably in North America.


ACQUISITIONS


On 22 August 2008, the Group acquired Metecno Inc., the second largest Insulated Panel and profile producer in the US, for a total consideration of $111mn. Metecno operates out of 5 facilities across the US, and together with the Group's existing Canadian presence, gives Kingspan unrivalled geographic reach and a market leading position in the North American Insulated Panel market. This is a key strategic move for the Group and provides exposure to a market that longer term will trend towards more efficient methods of construction. While composite panels have traditionally occupied only a very small position in that market, the combination of environmental and energy cost pressures, together with a market leading position, provide Kingspan with an excellent opportunity to grow penetration of its product range in the medium term.



OUTLOOK 


Near term, a contracting market, rising raw material costs, and a foreign exchange headwind all present challenges to the Group. As previously indicated to the market, this will result in lower earnings in the current year. The tightening cost control measures, continued investment in growth markets, and a broadening geographic base, together with the opportunity created by high energy prices, should provide Kingspan with a stronger, more balanced position from which to build the business in the future.


Whilst the global economic environment is changing, the challenges of dealing with our ecological environment are not. There now exist clear international targets for longer term carbon emission reductions, which are increasingly reflected in national building codes and a rising pattern of low energy construction. Compounding this is the exceptionally high, and upward trending cost of energy, which in itself drives the choice towards high performance insulation and micro renewable energy. The economic and ecological case has never been more compelling for low energy building solutions and Kingspan will continue to pursue a strategy of broadening its geographic exposure to this changing environment.



FINANCIAL REVIEW

Turnover and Operating Margins

On a constant currency basis Group turnover grew by 1.5%, however after currency impact is taken into account turnover decreased by 6.5% compared with the corresponding period last year.

The gross margin at 30.1% compares with 31.0% in the first half of 2007 and 29.5% in the second half. The slight weakening compared to the first half of 2007 is primarily attributable to the time lag in passing on steel price increases, the benefit of which will emerge in the second half of the year. Distribution costs as a percentage of sales increased from 4.9% to 5.4% year on year, with increasing transport costs a significant factor. There was a marginal increase in administration costs from 13.5% to 13.7%.

The operating margin at 10.6% compares with 12.5% in the same period last year and 12.7% for the full year 2007.

Free cash flow increased over 100% compared with the same period last year.

Sales by geographical market (H1-2008 versus H1-2007)



HI 2007 €'mn

HI 2008 €'mn

% change in 2008

% change constant currency basis

Ireland

145.0

101.8

-30%

-28%

Britain and Northern Ireland

517.0

450.5

-13%

-1%

Mainland Europe 

163.0

203.6

+25%

+25%

North America

66.0

69.3

+ 5%

+16%

Other

17.0

24.2

+41%

+41%

Sales by product group (H1-2008 versus H1-2007)


H1 2007 €'mn

H1 2008 €'mn

% change in 2008

% change constant currency basis

Insulated Panel

365.2

337.6

-8%

-3%

Insulation Board

140.0

136.5

-3%

+7%

Offsite & Structural 

169.3

138.0

-18%

-9%

Environmental & Renewables

141.6

140.0

-1%

+9%

Access Floors

92.3

97.3

+5%

+18%

  

Cash Flow

The table below summarises the Group's funds flow for H1-2008, H1-2007 and FY07



H1-2008

H1-2007

FY07


€'mn

€'mn

€'mn

Inflows




Operating Profit

90.1

114.2

236.7

Depreciation

19.9

19.5

39.8

Amortisation

2.1

2.5

7.7

Pension contributions

(0.5)

(1.5)

(3.4)

Working capital increase/(decrease)

32.6

(63.5)

(66.8)

Interest paid

(6.4)

(5.5)

(12.3)

Taxation paid

(0.7)

(9.8)

(27.0)

Others

3.6

9.4

17.6





Free cash flow

140.7

65.3

192.3





Acquisitions

(5.3)

(29.5)

(49.8)

Net Capital Expenditure

(53.9)

(73.4)

(140.3)

Dividends paid

(29.0)

(20.8)

(35.5)

Share Buyback

(20.0)

-

-





Cash Flow movement

32.5

(58.4)

(33.3)

Debt translation

(1.8)

(0.7)

(4.1)

Decrease / (Increase) in net debt

30.7

(59.1)

(37.4)





Net debt at start of period

(224.9)

(187.6)

(187.6)

Net debt at end of period

(194.2)

(246.7)

(224.9)

Operational working capital at 30 June 2008 was €241.8mn (30 June 2007: €297.6mn) and represented 14.3% of turnover (30 June 2007:14.8%). Operational working capital has reduced by €43.5mn from December 2007.

These cashflows were used to fund net capital expenditure of €56.3mn, acquisition investment in two businesses of €5.1mn and share buyback of €20.0mn.

These movements resulted in net debt at the end of June 2008 of €194.2mn, which represents a decrease of €30.7mn from the €224.9mn reported for the end of December 2007. This represents gearing of 29.4% (30 June 2007: 39.7%) and compares to current banking facilities of over ca. €500mn. Interest cover was 18.0 times (2007: 22.7 times) and the net debt: EBITDA ratio was 0.75 (2007: 0.93).

The core banking facility, which runs until December 2009, is in the process of being refinanced and this is expected to be finalised by the end of September.

Acquisition

On 22 August the Group announced the acquisition of Metecno Inc., a leading US based Insulated Panel and profile producer, for a gross consideration of $111mn. This acquisition was funded out of the Group's existing financing facilities, and will be earnings positive for the full year. The acquisition will generate goodwill of ca. $62mn.

Share Buyback Update 

Under the share buyback programme, 3,123,750 shares were purchased in H1 '08 and since that date an additional 2,113,267 shares have been purchased.

Tax 

The effective tax rate for the period was 16.5%. However the full-year charge will be adversely affected by recently enacted changes to the UK's tax regime for capital allowances on industrial buildings, whereby previously available tax allowances have been abolished. As a result, the Group is forecasting a one-off deferred tax charge in 2008 in the region of €10mn. While the effective tax rate will be immediately impacted, the cash impact will be spread over a period in excess of 20 years.

Related Party Transactions

There were no material related party transactions during the period under review.





CONSOLIDATED INCOME STATEMENT

for the period ended 30 June 2008























Notes

















6 months

6 months

Year






ended

ended

ended






30.6.08

30.6.07

31.12.07






(Unaudited)

(Unaudited)

(Audited)






€ '000

€ '000

€ '000









Revenue




849,362 

908,377 

1,863,239 

Costs of sales





(594,115)

(626,846)

(1,300,460)

Gross profit

 

 

 

 

255,247 

281,531 

562,779 









Operating costs





(165,099)

(167,335)

(326,115)

Operating result

 

 

 

 

90,148 

114,196 

236,664 









Finance costs





(7,002)

(6,781)

(14,297)

Finance income





772 

769 

1,837 

Result for the period before tax

 

 

 

 

83,918

 

108,184

 

224,204

 

Income tax expense





(13,846)

(18,505)

(36,877)

Net result for the period

 

 

 

 

70,072

 

89,679

 

187,327

 









Profit attributable to:






Shareholders of Kingspan Group plc



70,672 

89,171 

187,295 

Minority Interest





(600)

508 

32 

Attributable to shareholders of Kingspan Group plc



70,072 

89,679 

187,327 









Earnings per share for the period from continuing operations




Basic





41.4 

52.7 

110.5 

Diluted





41.0 

51.4 

108.5 









CONSOLIDATED BALANCE SHEET

as at 30 June 2008
























6 months

6 months

Year






ended

ended

ended






30.6.08

30.6.07

31.12.07






(Unaudited)

(Unaudited)

(Audited)






€ '000

€ '000

€ '000

Assets








Non-current assets








Goodwill





290,621 

302,017 

303,966 

Other intangible assets




14,553 

16,116 

14,164 

Property, plant and equipment




423,105 

359,165 

398,688 

Financial assets





209 

208 

209 

Deferred tax assets

 

 

 

 

2,401 

2,694 

2,401 






730,889 

680,200 

719,428 

Current assets








Inventories





164,603 

161,416 

152,140 

Trade and other receivables




404,160 

431,820 

386,744 

Cash and cash equivalents

 

 

 

 

80,866

 

40,934

 

66,626

 






649,629 

634,170 

605,510 

 

 

 

 

 

 

 

 

Total assets

 

 

 

 

1,380,518 

1,314,370 

1,324,938 

















Liabilities








Current liabilities








Trade and other liabilities




326,901 

295,248 

253,454 

Provisions for liabilities and charges




51,789 

47,222 

54,670 

Deferred consideration




330 

7,266 

3,351 

Financial liabilities





105,847 

73,622 

46,102 

Current tax liabilities





46,547 

35,080 

32,861 

 

 

 

 

 

531,414 

458,438 

390,438 

Non-current liabilities







Pension and other employee obligations



7,759 

19,784 

6,509 

Financial liabilities





160,797 

196,567 

234,392 

Deferred tax liabilities




11,477 

8,372 

12,933 

Deferred consideration

 

 

 

 

8,114

 

10,161

 

7,750

 

 





188,147 

234,884 

261,584 









Total liabilities

 

 

 

 

719,561 

693,322 

652,022 









NET ASSETS

 

 

 

 

660,957 

621,048 

672,916 









Equity








Equity attributable to shareholders of Kingspan Group plc





Called-up share capital



22,250 

22,285 

22,146 

Additional paid-in share capital



35,283 

29,144 

31,917 

Other reserves





(104,880)

(23,715)

(67,568)

Revaluation reserve





713 

713 

713 

Capital redemption reserve



723 

513 

723 

Retained earnings





704,333 

588,253 

681,755 

 

 

 

 

 

658,422 

617,193 

669,686 









Minority interest





2,535 

3,855 

3,230 









TOTAL EQUITY

 

 

 

 

660,957 

621,048 

672,916 

















STATEMENT OF RECOGNISED INCOME AND EXPENSE





as at 30 June 2008













6 months

6 months

Year






ended

ended

ended






30.6.08

30.6.07

31.12.07






(Unaudited)

(Unaudited)

(Audited)






€ '000

€ '000

€ '000









Net result for financial period attributable to Group shareholders


70,672 

89,171 

187,295 









Currency translation



(37,062)

2,044 

(43,670)

Cash flow hedging in equity



(248)

(91)

1,702 

Acturarial losses on defined benefit pension scheme



(2,212)

9,203 

Income taxes relating to items charged or credited to equity



619 

(3,110)

Total recognised income and expense for the period

 

 

31,769 

91,124 

151,420 

 

 

 

 

 

 

 

 









CONSOLIDATED CASH FLOW STATEMENT 






for the period ended 30 June 2008



















Notes

6 months

6 months

Year






ended

ended

ended






30.6.08

30.6.07

31.12.07






(Unaudited)

(Unaudited)

(Audited)






€ '000

€ '000

€ '000









Operating activities







Result for the year before tax




83,918 

108,184 

224,204 

Adjustments




30,174 

30,341 

62,350 

Change in inventories




(15,750)

(28,535)

(21,759)

Change in trade and other receivables




(33,141)

(67,997)

(37,829)

Change in trade and other liabilities




80,848 

37,855 

3,519 

Pension contributions

 

 

 

 

(526)


(1,499)


(3,447)


Cash generated from operations




145,523 

78,349 

227,038 

Taxes paid

 

 

 

 

(716)


(9,827)


(26,985)


Net cash flow from operating activities



144,807 

68,522 

200,053 

















Investing activities








Additions to property, plant and equipment



(56,404)

(75,514)

(144,880)

Increase in finance leases




(18)

2,807 

Proceeds from disposals of property, plant and equipment


2,552 

2,110 

7,310 

Proceeds from financial assets


19 

Purchase of subsidiary undertakings / Net cash acquired with acquisitions

(4,099)

(25,845)

(46,363)

Payment of deferred consideration in respect of acquisitions


(3,088)

(2,241)

(2,163)

Interest received


786 

784 

1,846 

Net cash flow from investing activities

 

 

 

(60,271)


(97,880)


(184,250)


















Financing activities







Proceeds from bank loans and loan notes



46,924 

Repayment of bank loans



(13,633)

(12,915)

35,487 

Discharge of finance lease liability



(433)

(124)

(246)

Proceeds from share issues



2,409 

2,188 

4,644 

Buyback of own shares



(20,018)

Interest paid





(7,214)

(6,313)

(14,188)

Dividends paid to shareholders



(28,982)

(20,767)

(35,546)

Dividends paid to minorities

 

 

 

 

(74)



-


 

(24)



Net cash flow from financing activities



(67,945)

8,993 

(9,873)









Cash and cash equivalents at the beginning of the period

62,938 

61,864 

61,864 









Net increase in cash and cash equivalents



16,591 

(20,365)

5,930 

Effects of exchange rate changes in the balance of cash held in foreign currencies

(2,886)

(568)

(4,856)

 








Cash and cash equivalents at the end of the period

 

 

 

76,643 



40,931


 

62,938


 









Cash and cash equivalents as at 1 January 2008 were made up of:






Cash and cash equivalents



66,626 

69,060 

69,060 


Overdrafts




(3,688)

(7,196)

(7,196)






62,938 

61,864 

61,864 









Cash and cash equivalents as at 30 June 2008 were made up of:






Cash and cash equivalents



80,866 

40,934 

66,626 


Overdrafts




(4,223)

(3)

(3,688)






76,643 

40,931 

62,938 









































Kingspan Group plc

Notes to the Financial Statements

as at 30 June 2008
































Accounting policies (Notes 1 & 2)














1 Basis of preparation














The information presented in these condensed interim financial statements has been prepared in accordance with the IAS 34 issued by the International Accounting Standards Board and in accordance with the accounting policies as set out on pages 68 to 74 of the Annual Report for the year ended 31 December 2007.









The 2008 interim results and balance sheet are presented in Euro. Results and cash flows of foreign subsidiary undertakings have been translated into Euro at the actual 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 30 June 2008 and 30 June 2007 are unaudited. The comparative figures for the year ended 31 December 2007 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.









Kingspan Group plc is a public limited company domiciled in Ireland with its registered office being held at Dublin Road, Kingscourt, Co. Cavan. Kingspan Group plc is a building product business focused on establishing leading market positions by providing innovative construction systems and solutions with a global reach.

















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 actual 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:










Actual rate




Closing rate


Euro =

30.6.08

30.6.07

31.12.07


30.6.08

30.6.07

31.12.07









Pound Sterling

0.775 

0.675 

0.685 


0.791 

0.673 

0.738 

US Dollar

1.530 

1.330 

1.371 


1.558 

1.346 

1.471 

Czech Koruna

25.240 

28.172 

27.782 


24.070 

28.700 

26.335 

Polish Zloty

3.503 

3.852 

3.792 


3.358 

3.789 

3.625 

Canadian Dollar

1.542 

1.509 

1.469 


1.577 

1.440 

1.438 

Australian Dollar

1.657 

1.645 

1.636 


1.629 

1.585 

1.669 

















3 Segment reporting














Analysis by class of business 









Insulated Panels

Offsite &

Environmental

Access

TOTAL

Segment Revenue



 & Boards

Structural

& Renewables

Floors

 




€mn

€mn

€mn

€mn

€mn









Total Revenue - H1 2008


474.1

138.0

140.0

97.3

849.4

Total Revenue - H1 2007


505.2

169.3

141.6

92.3

908.4

Total Revenue - 2007


1,047.8

326.8

291.5

197.1

1,863.2









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 &

Environmental

Access

TOTAL

TOTAL

TOTAL


 & Boards

Structural

& Renewables

Floors

H1 2008

H1 2007

2007


€mn

€mn

€mn

€mn

€mn

€mn

€mn









Operating result - H1 2008

59.1

9.2

7.7

14.1

90.1



Operating result - H1 2007

78.1

14.2

9.9

12.0


114.2


Operating result - 2007

172.3

20.6

9.9

33.9



236.7









Finance costs (net)





(6.2)

(6.0)

(12.5)

Result for the period before tax




83.9

108.2

224.2

Income tax expense





(13.8)

(18.5)

(36.9)









Net result for the period




70.1

89.7

187.3









Segment Assets and Liabilities








Insulated Panels

Offsite &

Environmental

Access

TOTAL

TOTAL

TOTAL


 & Boards

Structural

& Renewables

Floors

H1 2008

H1 2007

2007


€mn

€mn

€mn

€mn

€mn

€mn

€mn









Assets - H1 2008

737.3

171.3

255.1

133.5

1,297.2



Assets - H1 2007

670.2

235.8

225.1

139.6


1,270.7


Assets - 2007

659.9

204.3

249.4

142.3



1,255.9









Liabilities- H1 2008

(227.8)

(54.7)

(70.3)

(33.7)

(386.5)



Liabilities - H1 2007

(193.4)

(77.4)

(52.1)

(39.3)


(362.2)


Liabilities - 2007

(171.4)

(52.2)

(57.4)

(33.6)



(314.6)






 

 

 

Total assets less total liabilities




910.7

908.5

941.3









Cash and cash equivalents




80.9

40.9

66.6

Deferred tax asset





2.4

2.7

2.4

Interest bearing loans and borrowings (current and non-current)


(266.6)

(270.2)

(280.5)

Deferred consideration (current and non-current)


(8.4)

(17.4)

(11.1)

Income tax liabilities (current and deferred)


(58.0)

(43.5)

(45.8)









Total Equity as reported in Group Balance Sheet


661.0

621.0

672.9









Other Segment Information










Insulated Panels

Offsite &

Environmental

Access

TOTAL




 & Boards

Structural

& Renewables

Floors

 




€mn

€mn

€mn

€mn

€mn









Capital Investment - H1 2008


53.2

1.8

4.1

2.3

61.4

Capital Investment -H1 2007


77.3

9.6

13.5

2.7

103.1

Capital Investment -2007


126.6

16.7

49.2

4.5

197.0









Depreciation included in segment result - H1 2008

(11.4)

(3.7)

(3.3)

(1.5)

(19.9)

Depreciation included in segment result - H1 2007

(10.7)

(3.6)

(3.3)

(1.9)

(19.5)

Depreciation included in segment result - 2007

(21.6)

(7.8)

(6.8)

(3.7)

(39.9)









Amortisation included in segment result - H1 2008

(0.5)

(0.9)

(0.7)

0.0

(2.1)

Amortisation included in segment result - H1 2007

(0.6)

(1.4)

(0.5)

0.0

(2.5)

Amortisation included in segment result - 2007

(1.2)

(2.4)

(4.0)

(0.1)

(7.7)









Non- Cash Items included in segment result - H1 2008

0.0

0.0

1.6

0.0

1.6

Non- Cash Items included in segment result - H1 2007

0.1

0.0

0.0

0.0

0.1

Non- Cash Items included in segment result - 2007

3.8

(0.1)

(0.4)

0.0

3.3









Analysis of Segmental Data by Geography








Republic of Ireland

United Kingdom

Rest of Europe

Americas

Others

TOTAL



€mn

€mn

€mn

€mn

€mn

€mn









Income Statement Items







Segment Revenue - H1 2008

101.8

450.5

203.6

69.3

24.2

849.4

Segment Revenue - H1 2007

144.5

517.5

163.3

66.1

17.0

908.4

Segment Revenue - 2007

270.4

1,036.7

375.5

144.5

36.1

1,863.2









Balance Sheet Items







Assets - H1 2008


197.2

727.4

243.1

112.3

17.2

1,297.2

Assets - H1 2007


188.2

750.4

195.3

118.5

18.3

1,270.7

Assets - 2007


189.1

730.6

208.3

111.8

16.1

1,255.9









Other segmental information







Capital Investment - H1 2008

4.2

32.2

19.3

5.2

0.5

61.4

Capital Investment - H1 2007

15.1 

57.2 

12.4 

17.5 

0.9 

103.1

Capital Investment - 2007

27.9 

114.8 

32.6 

20.3 

1.4 

197.0









4 Dividends
















An interim dividend at the rate of 8.00c per share (2007 : 8.00c) is payable on 10 October 2008 to shareholders on the register at close of business on 12 September 2008.









The Final Dividend on Ordinary Shares for 2007 (€29.0 mn) was approved by shareholders in May 2008 and, in accordance with IFRS, was recognised as a charge to reserves in the six month period ended 30 June 2008.









5 Earnings per share












6 months

6 months

Year






ended

ended

ended






30.6.08

30.6.07

31.12.07






€'000

€'000

€'000

The calculations of earnings per share are based on the following:













Profit attributable to ordinary shareholders

 

 

 

70,672

 

89,171

 

187,295

 






















Number of

Number of

Number of






shares ('000)

shares ('000)

shares ('000)






30.6.08

30.6.07

31.12.07









Weighted average number of ordinary shares for the calculation of basic earnings per share

170,780 

169,150 

169,567 









Dilutive effect of share options




1,625 

4,418 

3,118 









Weighted average number of ordinary shares for the calculation of diluted earnings per share

172,405 

173,568 

172,685 

 

 

 

 

 

 

 

 






 


 














€ cent

€ cent

€ cent

Basic earnings per share




41.4 

52.7 

110.5 









Diluted earnings per share




41.0 

51.4 

108.5 









6 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:







6 months

6 months

Year






ended

ended

ended






30.6.08

30.6.07

31.12.07

Adjustments:





€'000

€'000

€'000









Depreciation, amortisation and impairment charges of property,plant and equipment and intangible assets

21,979 

21,989 

47,572 

Employee equity-settled share options



3,559 

2,392 

5,650 

Finance income





(772)

(769)

(1,837)

Finance cost





7,002 

6,781 

14,297 

(Profit)/loss on sale of property, plant and equipment



(1,594)

(52)

(3,332)

Total

 

 

 

 

30,174 

30,341 

62,350 

















7 Reconciliation of net cash flow to movement in net debt


















6 months

6 months

Year






ended

ended

ended






30.6.08

30.6.07

31.12.07






€'000

€'000

€'000









Decrease in cash and bank overdrafts




16,591 

(20,365)

5,930 

Decrease/(Increase) in debt, lease finance and deferred consideration


17,154 

(31,644)

(33,078)






 

 

 

Change in net debt resulting from cash flows



33,745 

(52,009)

(27,148)









Loans and lease finance acquired with subsidiaries



(38)

(23)

(5,469)

Deferred consideration arising on acquisitions in the period


(1,138)

(3,590)

2,035 

New finance leases





18 

(2,807)

(2,704)

Translation movement





(1,840)

(689)

(4,119)






 

 

 

Net movement





30,747 

(59,118)

(37,405)









NET DEBT AT START OF THE PERIOD



(224,969)

(187,564)

(187,564)

NET DEBT AT END OF THE PERIOD



(194,222)

(246,682)

(224,969)

























8 Statutory Accounts















The financial information presented in the interim report does not represent full statutory accounts. Full statutory accounts for the year ended 31 December 2007 prepared in accordance with IFRS, upon which the Auditors have given an unqualified audit report, have been filed with the Registrar of Companies. 

















9 Board approval
















The Interim Report was approved by the Board of Directors of Kingspan Group plc on 26 August 2008.






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