TIDMKGP
RNS Number : 3430O
Kingspan Group PLC
18 August 2017
KINGSPAN GROUP PLC
HALF-YEARLY FINANCIAL REPORT
for the period ended 30 June 2017
KINGSPAN GROUP PLC
RESULTS FOR THE HALF YEAR 30 JUNE 2017
Kingspan, the global leader in high performance insulation and
building envelope solutions, issues its half-yearly financial
report for the six month period ended 30 June 2017.
Financial Highlights:
-- Revenue up 19% to EUR1.75bn, (pre-currency, up 21%).
-- Trading profit* up 6% to EUR177.8m, (pre-currency up 10%).
-- Acquisitions contributed 10% to sales growth and 6% to trading profit growth in the period.
-- Group trading margin** of 10.2%, a decrease of 120bps versus the same period in 2016.
-- Net debt of EUR440.3m (H1 2016: EUR348.1m). Net debt to EBITDA of 1.06x (H1 2016: 0.9x).
-- Basic EPS up 5% to 74.4 cent (H1 2016: 70.6 cent).
-- Interim dividend per share up 10% to 11.0 cent (H1 2016: 10.0 cent).
-- 17.3% ROCE (H1 2016: 17.8%).
Operational Highlights:
-- Insulated Panel sales growth of 17% with a continuing
improvement in Western Europe, solid activity in the UK and
tougher, although resilient, performances in North America and
Eastern Europe.
-- Insulation Board sales growth of 8% with ongoing advancement
of Kooltherm(R) in all key markets.
-- Light & Air sales of EUR81.7m making a strong start in its maiden results period.
-- Environmental continues to progress positively overall.
Access Floors is ahead in the UK, albeit with a softer pipeline
towards year end, with subdued activity in North America.
-- The pass through of significant and ongoing raw material
increases was a key trading theme in the period.
Summary Financials:
H1 '17 H1 '16 % Change
EURm EURm
------------------ -------- -------- ----------
Revenue 1,749.3 1,468.1 +19%
EBITDA 209.2 196.8 +6%
Trading Profit* 177.8 167.3 +6%
Trading Margin** 10.2% 11.4% -120bps
EPS (cent per
share) 74.4 70.6 +5%
------------------ -------- -------- ----------
* Operating profit before non-trading items and amortisation of
intangibles
** Operating profit before non-trading items and amortisation of
intangibles divided by total revenue
Gene Murtagh, Chief Executive of Kingspan commented:
"The first six months of 2017 were strong for Kingspan. We
expect end market activity to be broadly positive for the remainder
of the year and at current exchange rates to deliver a full-year
result at least in line with consensus. Whilst margins contracted
somewhat, we anticipate further recovery of input increases in the
second half. Our balance sheet is strong and ready to support our
development agenda as the opportunities unfold."
For further information contact:
Murray Consultants Tel: +353 (0) 1 4980
Douglas Keatinge 300
Business Review
In the first six months of 2017, Kingspan delivered strong
revenue growth with sales up 19% over the prior year. The primary
drivers of this growth were the ever increasing demand for greater
energy efficiency, a robust recovery in much of Western Europe, and
a significant inflationary dimension in the second quarter. Trading
profit increased by 6%, which was somewhat constrained by a lag in
selling price increases. Whilst chemical raw material costs will
rise further in the second half, margins are expected to improve as
the sales price increases notified earlier in the year come into
effect.
Market activity in general has been positive, even in the UK
despite the underlying political uncertainty. The US and Germany
have also performed robustly, whilst the Netherlands and France in
particular have demonstrated a strong recovery from the lows of a
few years ago. The Nordics and Australia performed well for
Kingspan, however, less positive were pockets of Central Europe and
the Middle East, although penetration growth in the latter
continued to drive sales growth.
So far this year we have invested EUR64m, EUR50m of which was on
internal capital projects, and EUR14m on acquisitions, one of which
marked our entry into South America, and another providing an
enhanced presence in Australia. Since period end, we have acquired
CPI Daylighting in the US for consideration of EUR40m, further
bolstering our global Light & Air footprint. Our future
acquisition pipeline remains healthy.
On the technology front, QuadCore(R) and Kooltherm(R) continued
to increase penetration. QuadCore(R) represented 5% of Kingspan's
Insulated Panels sales, up from initially zero in 2016, with
Kooltherm accounting for 35% of Kingspan's rigid board sales, again
well ahead of the same period last year.
Innovation
For decades now, innovation has been a cornerstone of Kingspan's
strategy. The sole focus of this is to create consistent tangible
differentiation from competing technologies and systems by
providing superior performance at every step.
The vast portion of our new R&D initiatives fall into the
categories of Thermal, Fire, Aesthetics and Structural.
v Thermal - our most recent developments have been QuadCore(R)
Version 1, Kooltherm(R) Version 2, and Optim-R(R). The first two
outperform other rigid insulations by up to 20%, and materials like
mineral wool by almost 60% when measured on a performance/thickness
scale.
v Fire - over the last ten years, we have developed
ground-breaking fire performing rigid insulations that have
undergone more independent testing worldwide than any other
insulation material. In all, more than 1,700 tests have been
carried out on our products, and some are now achieving standards
that were previously reserved for fibre containing materials often
referred to as 'non-combustible'.
v Aesthetic - Kingspan's Insulated Panels and Façades now
feature offerings that include Benchmark(R), Matrix(R) and
Dri-Design(R). These form part of our ever-expanding array of
finishes that both inspire and enable the creative freedom that
today's designers require.
v Structural - the current focus of this aspect of our
innovation effort is to develop multiple span flat roofing
insulated panels that more fully address the conversion opportunity
on membraned roofs, and open up a relatively new and under
exploited market for Kingspan.
Insulated Panels
H1 '17 H1 '16 % Change
EURm EURm
---------------- -------- ------- ---------
Revenue 1,111.7 949.5 +17% (1)
Trading Profit 116.9 112.0 +4%
Trading Margin 10.5% 11.8% -130bps
---------------- -------- ------- ---------
(1) Comprising underlying +11%, currency impact -1% and acquisitions +7%
Mainland Europe & Middle East
Activity across much of Western Europe has been strong during
the first half of 2017, with the Benelux, France and Nordics being
particular standouts for Kingspan. Penetration rates of high
performance Insulated Panels remain relatively low in some of these
regions, which when combined with wider improvement in building
activity led to a strong performance in the period. Germany was
broadly flat at a revenue level, and order intake has also
presented somewhat of a challenge as we push to recover margin in
an increasingly competitive market. Central Europe was quite mixed
in the period, whilst non-residential activity in Turkey and the
Middle East remained understandably subdued.
UK
Having delivered an uncharacteristically strong first quarter,
revenue in the UK eased off as expected during the second quarter
in part owing to a relatively soft retail build programme by the
traditional incumbents. Quotation activity remains encouraging
however and intake in quarter three is expected to improve as
sectors such as data, online retail and continental retailers
continue to develop their physical infrastructure across the UK.
Kingspan's solutions are often a key component in these
developments, now further enhanced by our Quadcore(R) offering
which represented 5% of Panel sales in the first half, up from
virtually zero a year earlier.
Americas
Insulated Panel revenue and volume were both comfortably ahead
of the same period last year, owing to the strength of backlog at
the turn of the year. As with most of our markets worldwide, the
recovery of raw material inflation was central, particularly in the
second quarter. Our strategy has been to fully recover, even at the
expense of market share loss. This transpired in quarter two, and
was particularly pronounced in Canada, where much of the market has
not responded to the cost increases. Our near-term approach is to
hold our line as we anticipate further increases in the second
half. Encouragingly, market penetration in the US continues to
advance. We have recently begun manufacturing in Mexico, and also
acquired 51% of PanelMet in Colombia. We expect these investments
to be the beginning of our longer term Latin American strategy, as
we embark on an entirely new frontier for Kingspan.
Australasia
This region has again demonstrated encouraging growth as
penetration rises in Australia and New Zealand, and the early
efforts of our market entry into South East Asia pay dividends. The
energy efficiency of buildings in general across this region lags
significantly behind the levels achieved across Europe. Our aim
therefore is to be instrumental in the drive towards a more
efficient build environment in this region, a goal that has
delivered well for Kingspan over the last decade.
Ireland
Given its relative size, the market in Ireland can be sensitive
to the presence of major projects. Over the last few years this
market has grown consistently, and although the medium term
pipeline is very positive, actual activity in the first half of
2017 is broadly flat with 2016. We expect the second half to
display a similar pattern.
Insulation Boards
H1'17 H1 '16 % Change
EURm EURm
---------------- ------ ------- ---------
Revenue 373.7 347.4 +8% (1)
Trading Profit 40.0 39.9 -
Trading Margin 10.7% 11.5% -80bps
---------------- ------ ------- ---------
(1) Comprising underlying +11% and currency impact -3%
UK
Insulation Board sales revenue in the UK grew significantly in
the first half of the year through a combination of modest overall
volume growth, a notable increase in conversion to Kooltherm(R),
and pronounced selling price increases resulting from the steep
chemical inflation we have been experiencing. The latter, when
combined with the associated supply constraints imposed upon the
market, has created an environment for Kingspan to accelerate
conversion to our proprietary Kooltherm(R) technology which now
represents 35% of our rigid board sales worldwide, and 34% in the
UK alone.
Mainland Europe
Sales volume in Continental Europe has been strong so far this
year, particularly in the Benelux, Germany and the Nordics. Whilst
cost inflation recovery was somewhat slower than in other markets
during the first half, quarter three will see notable traction on
this front. Kooltherm conversion has also been encouraging in these
markets, to the point that we intend developing a greenfield
manufacturing facility in the Nordics during 2018.
Americas
Revenue in North America for our XPS products has been broadly
flat with prior year as our facility in Winchester has been
operating at maximum capacity. We are currently in the process of
commissioning a new line there which, when fully operational, will
provide approximately $40m in additional revenue potential.
Concurrently, we are in the early stages of developing the
specification channel for Kooltherm(R) and Optim-R(R). Progress can
be expected to be gradual in this regard as both technologies are
new to the North American market.
Australasia & the Middle East
Activity in both of these markets has been tracking ahead of
prior year. This has been driven in the main by the growth in
conversion to Kooltherm(R) in Australia, now supported by our
recent plant opening in Melbourne, and by the continued rise in
high performance insulation across the Middle East, particularly in
residential applications in the Gulf States. A new rigid board line
was commissioned in the UAE earlier this year, where we would also
aim to develop a Kooltherm(R) facility over the coming two to three
years.
Ireland
The progress of our insulation business in Ireland has been very
encouraging in recent times. The raw material supply shortage has
resulted in us activating an accelerated conversion strategy
towards Kooltherm(R). This approach has been effective in both
meeting our customers' insulation needs during this time of
shortage, as well as simultaneously enhancing the margin profile of
our business in this market.
Light & Air
H1'17 H1 '16
EURm EURm
--------------- ------ -------
Revenue 81.7 n/a
Trading Profit 3.0 n/a
Trading Margin 3.7% n/a
--------------- ------ -------
This new division, formed in the second half of 2016, aims to
develop a global leadership position in the market for efficient
daylighting, smoke management and ventilation systems that not only
complements Kingspan's existing envelope activities, but also
serves the wider building envelope market worldwide. As set out in
the 2016 Annual Report, we have reported this business as a
separate segment from 1 January 2017 onwards.
Starting with our original product set, we commenced a programme
of expansion, through acquisition initially, to assemble a global
footprint. Presently, we are manufacturing in Ireland, the UK,
France, Germany and North America and expect to generate annual
revenue of close to EUR200m, and an operating margin of
approximately 7%, on plan, in what is typically a more second half
weighted business. Over a five year period from now, we plan to
develop the Light & Air division into a business with annual
turnover exceeding EUR500m.
Environmental
H1'17 H1 '16 % Change
EURm EURm
---------------- ------ ------- ---------
Revenue 88.9 79.5 +12% (1)
Trading Profit 6.7 4.2 +59%
Trading Margin 7.5% 5.3% +220bps
---------------- ------ ------- ---------
(1) Comprising underlying +3%, currency impact -6% and acquisitions +15%
This division experienced a solid performance in the first half
of the year with like-for-like revenues up 3%.
Rainwater harvesting in Australia has been a key driver of this
year's growth, which now with the addition of the Rhino(R) brand
acquired recently, moves further into larger scale non-residential
water management. Effluent treatment products have also performed
well, as did our Ecosafe(R) fuel storage range.
Hot water and solarthermal products have however continued to
experience tougher trading conditions in the UK, and continuous
cost improvement will remain our primary focus in this business
segment medium term.
Access Floors
H1'17 H1 '16 % Change
EURm EURm
---------------- ------ ------- ---------
Revenue 93.3 91.7 +2% (1)
Trading Profit 11.2 11.2 -
Trading Margin 12.0% 12.2% -20bps
---------------- ------ ------- ---------
(1) Comprising underlying +4% and currency impact -2%
The trading pattern in this segment broadly mirrored that of
recent years where the UK has continued to deliver a strong
year-on-year result, in contrast to the class A office sector in
the US which has remained relatively subdued. We can expect this
pattern to prevail for the remainder of 2017, after which it is
likely that office building activity in the UK will ease off.
The wider 'data' solutions dimension to this division has
however continued to deliver well for Kingspan as we increase our
exposure to many of the leading technology enterprises worldwide by
providing multiple solutions to datacentre type applications. Also
of note is the relatively embryonic but growing floor finishes
product group. Together these two platforms will drive longer term
evolution of this division worldwide.
Financial Review
Overview of results
Group revenue increased by 19% to EUR1,749.3m (H1 2016:
EUR1,468.1m) and trading profit increased by 6% to EUR177.8m (H1
2016: EUR167.3m). This represents a 21% increase in sales and a 10%
increase in trading profit on a constant currency basis. The
Group's trading margin decreased by 120bps to 10.2% (H1 2016:
11.4%) reflecting the impact of higher input prices and the
associated lag in recovery. The amortisation charge in respect of
intangibles was EUR7.5m compared to EUR5.3m in the first half of
2016 with the increase reflecting, primarily, the year on year
effect of intangible assets acquired as part of business
acquisition activity during 2016. Group operating profit after
amortisation and non-trading items grew 5% to EUR170.9m. Profit
after tax was EUR133.1m compared to EUR125.7m in the first half of
2016 driven, in the main, by the growth in trading profit. Basic
EPS for the period was 74.4 cent, representing an increase of 5% on
the first half of 2016 (H1 2016: 70.6 cent).
The Group's underlying sales and trading profit performance by
division is set out below:
Sales Underlying Currency Acquisition Total
------------------- ----------- --------- ------------ ------
Insulated Panels +11% -1% +7% +17%
Insulation Boards +11% -3% - +8%
Access Floors +4% -2% - +2%
Environmental +3% -6% +15% +12%
Group * +11% -2% +10% +19%
----------- --------- ------------ ------
* Includes Light & Air
The Group's trading profit measure is earnings before
non-trading items, interest, tax and amortisation of
intangibles:
Trading Profit Underlying Currency Acquisition Total
------------------- ----------- --------- ------------ ------
Insulated Panels +2% -4% +6% +4%
Insulation Boards +3% -3% - -
Access Floors +4% -4% - -
Environmental +40% -6% +25% +59%
Group * +4% -4% +6% +6%
----------- --------- ------------ ------
* Includes Light & Air
Finance costs (net)
Finance costs for the period were modestly higher than the same
period last year at EUR7.6m (H1 2016: EUR7.2m). Finance costs
include a non-cash charge of EUR0.1m (H1 2016: EUR0.1m) relating to
the Group's legacy defined benefit pension schemes. A net non-cash
credit of EUR0.5m was recorded in respect of swaps on the Group's
USD private placement notes (H1 2016: charge of EUR0.2m). The
Group's net interest expense on borrowings (bank and loan notes)
was EUR7.9m compared to EUR6.9m in the first half of 2016. The
increased interest charge reflects the interest on the new private
placement completed in November 2016.
Taxation
The tax charge for the first half of the year was EUR30.2m (H1
2016: EUR29.1m) which represents an effective tax rate of 18.5% on
profit before tax (H1 2016: 18.8%). The decrease in the effective
rate reflects the global mix of earnings year on year.
Retirement benefits
The primary method of pension provision for current employees is
by way of defined contribution arrangements. The Group has two
legacy defined benefit schemes in the UK which are closed to new
members and to future accrual. In addition, the Group assumed a
number of smaller defined benefit pension liabilities in mainland
Europe through acquisitions completed in recent years. The net
pension liability in respect of these schemes and obligations was
EUR15.0m at 30 June 2017 (30 June 2016: EUR7.1m).
Free cashflow
Free cashflow H1 '17 H1 '16
EURm EURm
-------------------------------- ------- -------
EBITDA* 209.2 196.8
Movement in working capital
** (84.9) (26.0)
Net capital expenditure (46.0) (52.5)
Pension contributions (0.6) (1.1)
Net finance costs paid (9.8) (7.5)
Income taxes paid (32.0) (20.3)
Other including non-cash items 3.5 3.2
------- -------
Free cashflow 39.4 92.6
------- -------
*Earnings before finance costs, income taxes, depreciation,
amortisation and non-trading items
**Excludes working capital on acquisition but includes working
capital movements since that point
Working capital at 30 June 2017 was EUR445.4m (31 December 2016:
EUR382.7m), an increase of EUR62.7m in the period. This increase is
driven by the working capital on acquisitions in the period, a
seasonal build in the first half of the year and increased steel
and chemical prices.
The average working capital to sales % was 13.1% in H1 2017
compared to 10.5% in H1 2016.
Net Debt
Net debt increased by EUR12.4m during the first half of the year
to EUR440.3m (31 December 2016: EUR427.9m) and this is analysed in
the table below:
Movement in net debt H1 '17 H1 '16
EURm EURm
----------------------------- -------- --------
Free cashflow 39.4 92.6
Acquisitions and disposals (8.6) (80.6)
Share issues 0.1 1.0
Dividends paid (42.0) (30.2)
-------- --------
Cashflow movement (11.1) (17.2)
Exchange movements on
translation (1.3) (2.9)
-------- --------
Increase in net debt (12.4) (20.1)
Net debt at start of period (427.9) (328.0)
-------- --------
Net debt at end of period (440.3) (348.1)
-------- --------
Capital Structure and Group Financing
The Group funds itself through a combination of equity and debt.
Debt is funded through a combination of syndicated bank facilities
and private placement loan notes.
In June 2017, the Group refinanced its primary syndicated bank
debt facility. The new facility, negotiated on more favourable
terms than the previous facility, is a EUR500m revolving credit
facility, with a syndicate of ten international banks, with a
committed term to June 2022. This facility was undrawn at 30 June
2017. This facility replaced a previous EUR300m syndicated
facility, which was due to mature in March 2019, and bilateral
agreements totalling EUR160m which were due to mature in January
2018.
In addition, as part of the Group's longer term capital
structure, the Group has total private placement loan notes of
EUR666m which have a weighted average maturity of 6.5 years.
The weighted average maturity of all debt facilities is 5.9
years.
As well as ongoing free cashflow generation, the Group has
significant available undrawn facilities and cash which provide
appropriate headroom for operational requirements and development
funding. Total available headroom was approximately EUR706m at 30
June 2017.
Related Party Transactions
There were no changes in related party transactions from the
2016 Annual Report that could have a material impact on the
financial position or performance of the Group in the first half of
the year.
Principal Risks & Uncertainties
Details of the principal risks and uncertainties facing the
Group can be found in the 2016 Annual Report. These risks, namely
volatility in the macro environment, failure to innovate, product
failure, business interruption (including IT continuity), credit
risks & credit control, employee development & retention,
fraud & cybercrime and acquisition & integration of new
businesses, remain the most likely to affect the Group in the
second half of the current year. The Group actively manages these
and all other risks through its control and risk management
processes.
Dividend
The Board has proposed an interim dividend of 11.0 cent per
ordinary share, an increase of 10% on the 2016 interim dividend of
10.0 cent per share. The interim dividend will be paid on 6 October
2017 to shareholders on the register on the record date of 1
September 2017.
Looking Ahead
We expect end market activity to be broadly positive during the
remainder of 2017, with a solid performance anticipated in the UK
and Ireland, continued strength across much of Western Europe and
the Nordics, and a reasonably stable environment in North
America.
Conversion towards our high performance insulations and building
envelopes has been on an upward trajectory for some time now. The
recent pattern has been, and is expected to remain, consistent with
this as the thermal, aesthetic, and fire performance of our
solutions play a more significant role in specifications as we move
forward.
Nearer term we anticipate an unrelenting chemical supply
environment that will maintain high cost and pricing levels, which
may be accompanied by a constrained flow of material. In light of
these circumstances Kingspan will continue to successfully deploy
its wide-ranging product set to limit the impact of this issue, and
at current exchange rates we expect to at least meet the consensus
view of 2017 as a whole.
RESPONSIBILITY STATEMENT
Directors' Responsibility Statement in respect of the
half-yearly financial report for the six month period ended 30 June
2017
Each of the directors of Kingspan Group plc confirm our
responsibility for preparing the half year financial report in
accordance with the Transparency (Directive 2004/109/EC)
Regulations 2007, the Transparency Rules of the Central Bank of
Ireland and with IAS 34 Interim Financial Reporting, as adopted by
the EU, and to the best of our knowledge and belief:
a) the condensed interim financial statements comprising the
Condensed Consolidated Income Statement, the Condensed Consolidated
Statement of Comprehensive Income, the Condensed Consolidated
Statement of Financial Position, the Condensed Consolidated
Statement of Changes in Equity, the Condensed Consolidated
Statement of Cash Flows and related notes have been prepared in
accordance with the Transparency (Directive 2004/109/EC)
Regulations 2007, the Transparency Rules of the Central Bank of
Ireland and with IAS 34 Interim Financial Reporting as adopted by
the EU.
b) The interim management report includes a fair review of the
information required by:
i) Regulation 8(2) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
ii) Regulation 8(3) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being related party transactions that have taken
place in the first six months of the current financial year and
that have materially affected the financial position or performance
of the entity during that period; and any changes in the related
party transactions described in the last annual report that could
do so.
The directors of Kingspan Group plc, and their functions, are as
listed in the 2016 Annual Report.
On behalf of the Board
Gene Murtagh Geoff Doherty
---------------- ------------------------
Chief Executive Chief Financial Officer
Officer
---------------- ------------------------
18 August 2017 18 August 2017
---------------- ------------------------
Independent Review Report to Kingspan Group PLC
Introduction
We have been engaged by the company to review the condensed set
of consolidated financial statements in the half-yearly financial
report for the six months ended 30 June 2017 which comprises the
Condensed Consolidated Income Statement, the Condensed Consolidated
Statement of Comprehensive Income, the Condensed Consolidated
Statement of Financial Position, the Condensed Consolidated
Statement of Changes in Equity, the Condensed Consolidated
Statement of Cash Flows and the related explanatory notes. The
financial reporting framework that has been applied in their
preparation is International Financial Reporting Standards as
adopted by the EU ("IFRSs"). Our review was conducted having regard
to the Financial Reporting Council's ("FRC's") International
Standard on Review Engagements ("ISRE") (UK and Ireland) 2410,
'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity'.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of consolidated
financial statements in the half-yearly report for the six months
ended 30 June 2017 is not prepared, in all material respects, in
accordance with IAS 34 as adopted by the EU, the TD Regulations and
the Transparency Rules of the Central Bank of Ireland.
Basis of our report, responsibilities and restriction on use
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the TD Regulations and the Transparency Rules of the Central Bank
of Ireland. As disclosed in note 1, the annual financial statements
of the Group are prepared in accordance with IFRSs as adopted by
the EU. The directors are responsible for ensuring that the
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with IAS 34
Interim Financial Reporting as adopted by the EU. Our
responsibility is to express to the company a conclusion on the
condensed set of consolidated financial statements in the
half-yearly financial report based on our review.
We conducted our review having regard to the Financial Reporting
Council's International Standard on Review Engagements (UK and
Ireland) 2410 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity'. A review of interim
financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We read the other information contained in the half-yearly
financial report to identify material inconsistencies with the
information in the condensed set of consolidated financial
statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the review. If
we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the Transparency (Directive 2004/109/EC)
Regulations 2007 as amended ("the TD Regulations") and the
Transparency Rules of the Central Bank of Ireland. Our review has
been undertaken so that we might state to the company those matters
we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
KPMG 18 August 2017
Chartered Accountants
1 Stokes Place
St. Stephen's Green
Dublin 2
Ireland
Kingspan Group plc
Condensed consolidated income statement (unaudited)
for the 6 month period ended 30 June 2017
6 months 6 months
ended ended
30 June 30 June
2017 2016
Note EURm EURm
Revenue 4 1,749.3 1,468.1
Cost of Sales (1,243.5) (1,010.7)
---------- ----------
Gross Profit 505.8 457.4
Operating Costs * (328.0) (290.1)
---------- ----------
Trading Profit 4 177.8 167.3
Intangible amortisation (7.5) (5.3)
Non-trading items 6 0.6 -
---------- ----------
Operating Profit 170.9 162.0
Finance expense 7 (7.8) (7.4)
Finance income 7 0.2 0.2
---------- ----------
Profit for the period before
income tax 163.3 154.8
Income tax expense 8 (30.2) (29.1)
---------- ----------
Net Profit for the period 133.1 125.7
---------- ----------
Attributable to owners
of Kingspan Group plc 132.8 125.4
Attributable to non-controlling
interests 0.3 0.3
---------- ----------
133.1 125.7
---------- ----------
Earnings per share for
the period
Basic 12 74.4c 70.6c
Diluted 12 73.6c 69.7c
* Operating costs exclude intangible amortisation and
non-trading items
Kingspan Group plc
Condensed consolidated statement of comprehensive income
(unaudited)
for the 6 month period ended 30 June 2017
6 months 6 months
ended ended
30 June 30 June
2017 2016
EURm EURm
Net profit for financial period 133.1 125.7
Other comprehensive income:
Items that may be reclassified
subsequently to profit or loss
Exchange differences on translating
foreign operations (54.5) (57.6)
Net changes in fair value of
cash flow hedges (0.4) 1.1
Income taxes relating to changes
in fair value of cash flow hedges - (0.1)
Total comprehensive income for
the period 78.2 69.1
--------- ---------
Attributable to owners of Kingspan
Group plc 78.8 69.1
Attributable to non-controlling (0.6) -
interests
--------- ---------
78.2 69.1
--------- ---------
Kingspan Group plc
Condensed consolidated statement of financial position
as at 30 June 2017
At 30 At 30 At 31
June June December
2017 2016 2016
(unaudited)
(unaudited) (audited)
Note EURm EURm EURm
Assets
Non-current assets
Goodwill 13 971.1 859.7 990.1
Other intangible assets 91.5 85.7 91.9
Property, plant and
equipment 14 674.0 625.0 665.5
Derivative financial
instruments 10 31.2 43.2 40.6
Retirement benefit assets 6.4 7.8 6.7
Deferred tax assets 12.0 10.9 12.0
------------- ------------- -----------
1,786.2 1,632.3 1,806.8
Current assets
Inventories 444.1 322.6 365.5
Trade and other receivables 687.4 592.3 601.9
Derivative financial
instruments 10 0.7 2.7 8.4
Cash and cash equivalents 10 205.6 166.5 222.0
------------- ------------- -----------
1,337.8 1,084.1 1,197.8
------------- ------------- -----------
Total assets 3,124.0 2,716.4 3,004.6
------------- ------------- -----------
Liabilities
Current liabilities
Trade and other payables 686.7 593.5 585.2
Provisions for liabilities 40.7 40.3 55.5
Derivative financial
instruments 10 0.1 0.4 -
Deferred contingent
consideration 6.2 6.6 6.8
Interest bearing loans
and borrowings 10 1.7 123.5 41.1
Current income tax liabilities 79.0 73.8 77.1
------------- ------------- -----------
814.4 838.1 765.7
Non-current liabilities
Retirement benefit obligations 21.4 14.9 20.8
Provisions for liabilities 54.4 42.9 45.4
Interest bearing loans
and borrowings 10 675.4 434.3 657.3
Deferred tax liabilities 37.5 45.7 37.8
Deferred contingent
consideration 13.3 2.4 6.1
------------- ------------- -----------
802.0 540.2 767.4
------------- ------------- -----------
Total liabilities 1,616.4 1,378.3 1,533.1
------------- ------------- -----------
Net Assets 1,507.6 1,338.1 1,471.5
------------- ------------- -----------
Equity
Share capital 23.5 23.4 23.4
Share premium 95.6 93.4 95.6
Capital redemption reserve 0.7 0.7 0.7
Treasury shares (13.9) (12.5) (12.5)
Other reserves (121.9) (73.6) (58.9)
Retained earnings 1,505.9 1,294.2 1,406.6
------------- ------------- -----------
Equity attributable
to owners of Kingspan
Group plc 1,489.9 1,325.6 1,454.9
Non-controlling interests 17.7 12.5 16.6
------------- ------------- -----------
Total Equity 1,507.6 1,338.1 1,471.5
------------- ------------- -----------
Kingspan Group plc
Condensed consolidated statement of changes in equity (unaudited)
for the 6 month period ended 30 June 2017
Cash Share Total
Capital flow based Put attributable Non-
Share Share redemption Treasury Translation hedging payment Revaluation option Retained to owners controlling Total
capital premium reserve shares reserve reserve reserve reserve liability Earnings of the interests equity
reserve parent
EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
Balance at 1
January
2017 23.4 95.6 0.7 (12.5) (95.2) 2.3 33.3 0.7 - 1,406.6 1,454.9 16.6 1,471.5
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Transactions with owners
recognised directly in
equity
Employee share
based
compensation 0.1 - - - - - 6.9 - - - 7.0 - 7.0
Exercise or
lapsing
of share options - - - - - - (8.5) - - 8.5 - - -
Repurchase of
shares - - - (1.4) - - - - - - (1.4) - (1.4)
Dividends - - - - - - - - - (42.0) (42.0) - (42.0)
Transactions with
non-controlling
interests:
Non-controlling
interest
arising on
acquisition - - - - - - - - - - - 1.7 1.7
Put option
liability
arising on
acquisition - - - - - - - - (7.4) - (7.4) - (7.4)
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Transactions with
owners 0.1 - - (1.4) - - (1.6) - (7.4) (33.5) (43.8) 1.7 (42.1)
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Total
comprehensive
income for the
period
Profit for the
period - - - - - - - - - 132.8 132.8 0.3 133.1
Other
comprehensive
income
Items that may be reclassified
subsequently to profit or
loss
Cash flow hedging
in equity
- current year - - - - - (0.4) - - - - (0.4) - (0.4)
Exchange
differences
on translating
foreign
operations - - - - (53.6) - - - - - (53.6) (0.9) (54.5)
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Total
comprehensive
income for the
period - - - - (53.6) (0.4) - - - 132.8 78.8 (0.6) 78.2
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Balance at 30
June
2017 23.5 95.6 0.7 (13.9) (148.8) 1.9 31.7 0.7 (7.4) 1,505.9 1,489.9 17.7 1,507.6
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Kingspan Group plc
Condensed consolidated statement of changes in equity (unaudited)
for the 6 month period ended 30 June 2016
Cash Share Total
Capital flow based attributable Non-
Share Share redemption Treasury Translation hedging payment Revaluation Retained to owners controlling Total
capital premium reserve shares reserve reserve reserve reserve Earnings of the interests equity
parent
EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
Balance at 1
January
2016 23.3 92.5 0.7 (11.3) (50.9) 2.9 29.6 0.7 1,194.9 1,282.4 11.4 1,293.8
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ---------- -------------- ------------- ----------
Transactions with owners
recognised directly in
equity
Employee share
based
compensation 0.1 0.9 - - - - 6.0 - - 7.0 - 7.0
Exercise or
lapsing
of share
options - - - - - - (5.6) - 5.6 - - -
Repurchase of
shares - - - (1.2) - - - - - (1.2) - (1.2)
Dividends - - - - - - - - (30.2) (30.2) - (30.2)
Transactions
with
non-controlling
interests:
Change of
ownership
interest - - - - - - - - (1.5) (1.5) 1.5 -
Dividends paid
to
non-controlling
interests - - - - - - - - - - (0.4) (0.4)
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ---------- -------------- ------------- ----------
Transactions
with
owners 0.1 0.9 - (1.2) - - 0.4 - (26.1) (25.9) 1.1 (24.8)
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ---------- -------------- ------------- ----------
Total
comprehensive
income for the
period
Profit for the
period - - - - - - - - 125.4 125.4 0.3 125.7
Other
comprehensive
income
Items that may be reclassified
subsequently to profit or
loss
Cash flow
hedging
in equity
- current year - - - - - 1.1 - - - 1.1 - 1.1
- tax impact - - - - - (0.1) - - - (0.1) - (0.1)
Exchange
differences
on translating
foreign
operations - - - - (57.3) - - - - (57.3) (0.3) (57.6)
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ---------- -------------- ------------- ----------
Total
comprehensive
income for the
period - - - - (57.3) 1.0 - - 125.4 69.1 - 69.1
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ---------- -------------- ------------- ----------
Balance at 30
June
2016 23.4 93.4 0.7 (12.5) (108.2) 3.9 30.0 0.7 1,294.2 1,325.6 12.5 1,338.1
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ---------- -------------- ------------- ----------
Kingspan Group plc
Condensed consolidated statement of changes in equity (audited)
for the financial year ended 31 December 2016
Share Total
Capital Cash Based Attributable Non-
Share Share Redemption Treasury Translation Flow Payment Revaluation Retained to Owners Controlling Total
Capital Premium Reserve Shares Reserve Hedging Reserve Reserve Earnings of the Interest Equity
Reserve Parent
EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
Balance at 1
January
2016 23.3 92.5 0.7 (11.3) (50.9) 2.9 29.6 0.7 1,194.9 1,282.4 11.4 1,293.8
-------- -------- ----------- --------- ------------ -------- -------- ------------ --------- ------------- ------------ ---------
Transactions with owners recognised directly in equity
Employee share
based
compensation 0.1 3.1 - - - - 10.4 - - 13.6 - 13.6
Tax on employee
share
based
compensation - - - - - - (0.3) - 1.7 1.4 - 1.4
Exercise or
lapsing
of share
options - - - - - - (6.4) - 6.4 - - -
Repurchase of
shares - - - (1.3) - - - - - (1.3) - (1.3)
Transfer of
shares - - - 0.1 - - - - - 0.1 - 0.1
Dividends - - - - - - - - (48.0) (48.0) - (48.0)
Transactions
with
non-controlling
interests:
Arising on
acquisition - - - - - - - - - - 3.5 3.5
Change of
ownership
interest - - - - - - - - (1.5) (1.5) 1.5 -
Dividends paid
to
non-controlling
interest - - - - - - - - - - (0.4) (0.4)
Transactions
with
owners 0.1 3.1 - (1.2) - - 3.7 - (41.4) (35.7) 4.6 (31.1)
-------- -------- ----------- --------- ------------ -------- -------- ------------ --------- ------------- ------------ ---------
Total
comprehensive
income for the
year
Profit for the
year - - - - - - - - 255.4 255.4 0.1 255.5
Other
comprehensive
income:
Items that may be reclassified subsequently to profit or loss
Cash flow
hedging
in equity
- current year - - - - - (0.7) - - - (0.7) - (0.7)
- tax impact - - - - - 0.1 - - - 0.1 - 0.1
Exchange
differences
on translating
foreign
operations - - - - (44.3) - - - - (44.3) 0.5 (43.8)
Items that will not be reclassified subsequently to profit or loss
Actuarial losses
of defined
benefit
pension scheme - - - - - - - - (2.9) (2.9) - (2.9)
Income taxes
relating
to actuarial
losses
on defined
benefit
pension scheme - - - - - - - - 0.6 0.6 - 0.6
Total
comprehensive
income for the
year - - - - (44.3) (0.6) - - 253.1 208.2 0.6 208.8
-------- -------- ----------- --------- ------------ -------- -------- ------------ --------- ------------- ------------ ---------
Balance at 31
December
2016 23.4 95.6 0.7 (12.5) (95.2) 2.3 33.3 0.7 1,406.6 1,454.9 16.6 1,471.5
-------- -------- ----------- --------- ------------ -------- -------- ------------ --------- ------------- ------------ ---------
Kingspan Group plc
Condensed consolidated statement of cash flows
(unaudited)
for the 6 month period ended 30 June 2017
6 months 6 months
ended ended
30 June 30 June
2017 2016
EURm EURm
Operating activities
Net profit for the period 133.1 125.7
Add back non-operating expenses:
Income tax 30.2 29.1
Depreciation of property,
plant and equipment 31.4 29.5
Amortisation of intangible
assets 7.5 5.3
Impairment of non-current
assets - 1.6
Non-trading items (0.6) -
Employee equity-settled
share options 6.9 6.0
Finance income (0.2) (0.2)
Finance expense 7.8 7.4
Profit on sale of property, (2.0) -
plant and equipment
Changes in working capital:
Increase in inventories (87.0) (28.3)
Increase in trade and other
receivables (95.1) (116.1)
Increase in trade, other
payables & provisions 97.2 118.4
Other:
Pension contributions (0.6) (1.1)
--------- ---------
Cash generated from operations 128.6 177.3
Taxes paid (32.0) (20.3)
Financing fees paid (1.8) -
Interest paid (8.2) (7.7)
--------- ---------
Net cash flow from operating
activities 86.6 149.3
--------- ---------
Investing activities
Additions to property, plant
and equipment (44.6) (54.8)
Additions to intangible (4.8) -
assets
Proceeds from disposals
of property, plant and equipment 3.4 2.3
Proceeds from disposal of 5.7 -
trade and assets
Purchase of subsidiary undertakings
(including net debt/cash
acquired) (14.3) (80.6)
Payment of deferred consideration
in respect of acquisitions - (2.8)
Interest received 0.2 0.2
--------- ---------
Net cash flow from investing
activities (54.4) (135.7)
--------- ---------
Financing activities
Repayment of interest bearing
loans & borrowings (8.8) (12.2)
Settlement of derivative 8.0 -
financial instrument
Increase in finance lease
liability 1.5 0.1
Proceeds from share issues 0.1 1.0
Repurchase of treasury shares (1.4) (1.2)
Dividends to non-controlling
interests - (0.4)
Dividends paid (42.0) (30.2)
--------- ---------
Net cash flow from financing
activities (42.6) (42.9)
--------- ---------
Decrease in cash and cash
equivalents (10.4) (29.3)
Translation adjustment (6.0) (16.2)
Cash and cash equivalents
at the beginning of the
period 222.0 212.0
--------- ---------
Cash and cash equivalents
at the end of the period 205.6 166.5
--------- ---------
Kingspan Group plc
Notes
forming part of the financial statements
1 Reporting entity
Kingspan Group plc ("the Company" or "the Group") is a public
limited company registered and domiciled in Ireland. The condensed
consolidated interim financial statements of the Company as at and
for the six month period ended 30 June 2017 comprise the Company
and its subsidiaries (together referred to as the "Group").
The Group is primarily involved in the manufacture of high
performance insulation and building envelope solutions.
The financial information presented in the half-yearly report
does not represent full statutory accounts. Full statutory accounts
for the year ended 31 December 2016 prepared in accordance with
IFRS, as adopted by the EU, upon which the auditors have given an
unqualified audit report, are available on the Group's website
(www.kingspan.com).
2 Basis of preparation
This Half-Yearly Financial Report is unaudited but has been
reviewed by the Company's auditor.
(a) Statement of compliance
These condensed consolidated interim financial statements ("the
Interim Financial Statements") have been prepared in accordance
with IAS 34 Interim Financial Reporting and do not include all of
the information required for full annual financial statements.
The Interim Financial Statements were approved by the Board of
Directors on 18 August 2017.
(b) Significant accounting policies
The accounting policies applied by the Group in the Interim
Financial Statements are the same as those applied by the Group in
its consolidated financial statements as at and for the year ended
31 December 2016, with the exception of non-trading items. The
Group's accounting policy for non-trading items is as follows:
Non-trading items
Certain items and transactions, by virtue of their nature and
significance, are disclosed separately from the main trading
activities of the Group to provide the user with a greater
understanding of the financial information. These items relate to
events or circumstances that are not core to the Group's activities
and are therefore presented as "non-trading items".
Non-trading items refers to gains or losses on the disposal of
businesses, impairment of goodwill, material gains or losses on the
disposal of assets and material acquisition or restructuring
costs.
Non-trading items have been disclosed in Note 6 of the Interim
Financial Statements.
There are a number of new standards, amendments to standards and
interpretations that are not yet effective and have not been
applied in preparing these Interim Financial Statements. The
principal new standards, amendments to standards and
interpretations, none of which have been EU endorsed, are as
follows:
Effective
Date - periods
beginning
on or after
IFRS 15: Revenue from contracts with 1 January
customers 2018
IFRS 9 Financial Instruments (2009 1 January
and subsequent amendments in 2010 2018
and 2013)
IFRS 16: Leases 1 January
2019
IFRS 15: Revenue from contracts with customers and IFRS 9
Financial Instruments (2009 and subsequent amendments in 2010 and
2013) are not expected to have a material impact on the Group's
financial statements.
Management are currently assessing the potential impact of the
implementation of IFRS 16: Leases, which may be material to the
Group's financial statements, but is currently not quantified.
(c) Estimates
The preparation of Interim Financial Statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expense. Actual results
may differ from these estimates.
In preparing the Interim Financial Statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements
as at and for the year ended 31 December 2016.
The Interim Financial Statements are available on the Group's
website (www.kingspan.com).
(d) Going concern
The directors have reviewed forecasts and projected cash flows
for a period of not less than 12 months from the date of these
Interim Financial Statements, and considered its net debt position,
available committed banking facilities and other relevant
information including the economic conditions currently affecting
the building environment generally. On the basis of this review,
the directors have concluded that there are no material
uncertainties that would cast significant doubt over the Group's
ability to continue as a going concern. For this reason, the
directors consider it appropriate to adopt the going concern basis
in preparing the financial statements.
3 Reporting currency
The Interim Financial Statements are presented in euro which is
the functional currency of the Company and presentation currency of
the Group.
Results and cash flows of foreign subsidiary undertakings have
been translated into euro at the average exchange rates for the
period, as these approximate the exchange rates at the dates of the
transactions. The related assets and liabilities have been
translated at the closing rates of exchange ruling at the end of
the reporting period.
The following significant exchange rates were applied during the
period:
Average rate Closing rate
H1 2016 FY H1 2016
H1 2017 2016 H1 2017 FY 2016
Euro =
Pound Sterling 0.860 0.780 0.819 0.879 0.827 0.858
US Dollar 1.083 1.117 1.110 1.140 1.113 1.056
Canadian
Dollar 1.446 1.484 1.466 1.484 1.440 1.425
Australian
Dollar 1.436 1.521 1.489 1.487 1.495 1.462
Czech Koruna 26.783 27.038 27.033 26.294 27.105 27.020
Polish Zloty 4.268 4.367 4.362 4.245 4.434 4.422
Hungarian
Forint 309.50 312.74 311.43 309.95 316.58 311.53
4 Operating segments
The Group has the following five reportable segments:
Insulated Manufacture of insulated panels, structural
Panels framing and metal facades.
Insulation Manufacture of rigid insulation boards,
Boards building services insulation and engineered
timber systems.
Light & Air Manufacture of daylighting, smoke
management and ventilation systems.
Environmental Manufacture of energy storage solutions,
water and microwind systems and all
related service activity.
Access Floors Manufacture of raised access floors
and data centre storage solutions.
The Group has established a new division, Kingspan Light &
Air, encompassing the Group's daylighting and ventilation
activities effective from 1 January 2017. This activity increased
significantly in the second half of 2016 due to a number of
acquisitions. In the prior period and as disclosed in the 2016
Annual Report, the Group's limited activity in this sector was
disclosed within the Insulated Panels segment and therefore no
comparative information is disclosed in the below tables.
Analysis by class
of business
Segment revenue
Insulated Insulation Access
Panels Boards Light Environmental Floors Total
EURm EURm & Air EURm EURm EURm
EURm
Total revenue
- H1 2017 1,111.7 373.7 81.7 88.9 93.3 1,749.3
Total revenue
- H1 2016 949.5 347.4 - 79.5 91.7 1,468.1
Segment result (profit before finance expense)
Insulated Insulation Light Access
Panels Boards & Air Environmental Floors Total
EURm EURm EURm EURm EURm EURm
Trading profit
- H1 2017 116.9 40.0 3.0 6.7 11.2 177.8
Intangible
amortisation (4.6) (1.1) (1.1) (0.7) - (7.5)
Non-trading
items (2.3) 2.9 - - - 0.6
---------- ----------- -------- ---------------- -------- --------
Operating result
- H1 2017 110.0 41.8 1.9 6.0 11.2 170.9
---------- ----------- -------- ---------------- --------
Net finance
expense (7.6)
--------
Profit for the period before income
tax 163.3
Income tax
expense (30.2)
--------
Profit for
the period
- H1 2017 133.1
--------
Segment result (profit before finance expense)
Insulated Insulation Light Access
Panels Boards & Air Environmental Floors Total
EURm EURm EURm EURm EURm EURm
Trading profit
- H1 2016 112.0 39.9 - 4.2 11.2 167.3
Intangible
amortisation (3.5) (1.6) - (0.2) - (5.3)
---------- ----------- -------- ---------------- -------- --------
Operating result
- H1 2016 108.5 38.3 - 4.0 11.2 162.0
---------- ----------- -------- ---------------- --------
Net finance
expense (7.2)
--------
Profit for the period before income
tax 154.8
Income tax
expense (29.1)
--------
Profit for
the period
- H1 2016 125.7
--------
Segment assets and liabilities
Total Total
30 30
Insulated Insulation Light Access June June
Panels Boards & Air Environmental Floors 2017 2016
EURm EURm EURm EURm EURm EURm EURm
Assets - H1 2017 1,765.4 629.8 153.6 168.7 157.0 2,874.5
Assets - H1 2016 1,580.7 592.8 - 165.7 153.9 2,493.1
Derivative financial
instruments 31.9 45.9
Cash and cash
equivalents 205.6 166.5
Deferred tax
asset 12.0 10.9
---------- ----------
Total assets 3,124.0 2,716.4
---------- ----------
Liabilities -
H1 2017 (529.9) (160.8) (46.5) (51.9) (33.6) (822.7)
Liabilities -
H1 2016 (471.0) (156.2) - (46.6) (26.8) (700.6)
Interest bearing loans and
borrowings (current and non-current) (677.1) (557.8)
Derivative financial instruments
(current and non-current) (0.1) (0.4)
Income tax liabilities (current
and deferred) (116.5) (119.5)
---------- ----------
Total liabilities (1,616.4) (1,378.3)
---------- ----------
Other segment information
Insulated Insulation Light Access
Panels Boards & Air Environmental Floors Total
EURm EURm EURm EURm EURm EURm
Capital
Investment
- H1 2017 * 40.8 16.0 1.8 1.7 2.2 62.5
Capital Investment
- H1 2016 * 42.3 18.7 - 9.0 2.5 72.5
Depreciation
included
in segment result
- H1 2017 (20.2) (7.1) (1.4) (1.5) (1.2) (31.4)
Depreciation
included
in segment result
- H1 2016 (19.2) (7.4) - (1.7) (1.2) (29.5)
Non cash items
included in
segment
result - H1 2017 (4.2) (1.5) (0.1) (0.5) (0.6) (6.9)
Non cash items
included in
segment
result -H1 2016 (3.6) (1.4) - (0.4) (0.6) (6.0)
* Capital investment includes the fair value of property,
plant, equipment and intangible assets acquired through
additions in the period and also as part of business
comibinations.
Analysis of segmental data
by geography
Republic Rest
of United of
Ireland Kingdom Europe Americas Others Total
EURm EURm EURm EURm EURm EURm
Income Statement
Items
Revenue - H1 2017 66.2 455.4 759.1 336.4 132.2 1,749.3
Revenue - H1 2016 59.5 410.1 592.3 291.4 114.8 1,468.1
Statement of Financial Position Items
Non-current assets
- H1 2017 * 52.2 371.1 731.5 423.0 165.2 1,743.0
Non-current assets
- H1 2016 * 49.0 363.0 627.3 389.0 149.9 1,578.2
Capital Investment
- H1 2017 ** 6.1 8.3 25.8 15.9 6.4 62.5
Capital Investment
- H1 2016 ** 2.1 20.1 16.5 11.5 22.3 72.5
* Total non-current assets excluding derivative
financial instruments and deferred tax assets.
** Capital investment includes the fair value of
property, plant, equipment and intangible assets
acquired through additions in the period and
also as part of business comibinations.
In presenting information on the basis of geographic segments,
segment revenue is based on the geographic location of customers.
Segment assets are based on the geographic location of the
assets.
5 Seasonality of operations
Activity in the global construction industry is characterised by
cyclicality and is dependent to a significant extent on the
seasonal impact of weather in some of the Group's operating
locations. Activity is second half weighted and is likely to be
more pronounced in the future due to the activity profile of recent
acquisitions.
6 Non-trading items
6 months 6 months
ended ended
30 June 30 June
2017 2016
EURm EURm
Profit on disposal of trade 2.9 -
and assets
Impairment of goodwill (2.3) -
0.6 -
--------- ---------
During the period, the Group disposed of the trade and assets of
Kingspan Gefinex GmbH, which is part of the Insulation Boards
division, for EUR5.7m and realised a non-trading profit of
EUR2.9m.
The goodwill impairment relates to a US energy business, which
is part of the Panels division.
There is no tax impact for the above items in the Condensed
Consolidated Income Statement.
7 Finance expense and finance income
6 months 6 months
ended ended
30 June 30 June
2017 2016
EURm EURm
Finance expense
Bank loans 0.9 1.1
Private placement 7.2 6.0
Finance leases 0.1 -
Defined benefit pension
scheme, net 0.1 0.1
Fair value movement on derivative
financial instruments 8.0 (20.5)
Fair value movement on private
placement debt (8.5) 20.7
--------- ---------
7.8 7.4
Finance income
Interest earned (0.2) (0.2)
Net finance cost 7.6 7.2
--------- ---------
No borrowing costs were capitalised during the period (H1 2016:
Nil).
8 Taxation
Taxation provided for on profits is EUR30.2m which represents
18.5% of the profit before tax for the period (H1 2016: 18.8%). The
full year effective tax rate in 2016 was 18.6%. The taxation charge
for the six month period is accrued using the estimated applicable
rate for the year as a whole.
9 Analysis of net debt
At At
30 June 30 June
2017 2016
EURm EURm
Cash and cash equivalents 205.6 166.5
Derivative financial instruments 31.2 43.2
Current borrowings (1.7) (123.5)
Non-current borrowings (675.4) (434.3)
Total net debt (440.3) (348.1)
---------- ----------
Net debt, which is a non GAAP measure, is stated net of interest
rate and currency hedges (asset of EUR31.2m) which relate to hedges
of debt. Foreign currency derivatives (liability of EUR0.6m), which
are used for transactional hedging, are not included in the
definition of net debt.
10 Financial instruments
The following table outlines the components of net debt by
category:
Loans & Liabilities
Receivables in a Derivatives
& Other fair Designated Total
Financial value as Hedging Net
Assets/(Liabilities) hedge Instruments Debt
at Amortised relationship EURm by Category
Cost EURm EURm
EURm
Assets:
Interest rate swaps - - 31.2 31.2
Cash at bank and
in hand 205.6 - - 205.6
---------------------- -------------- -------------- --------------
Total assets 205.6 - 31.2 236.8
---------------------- -------------- -------------- --------------
Liabilities:
Private placement
notes (523.8) (142.6) - (666.4)
Other loans (10.7) - - (10.7)
---------------------- -------------- -------------- --------------
Total liabilities (534.5) (142.6) - (677.1)
---------------------- -------------- -------------- --------------
At 30 June 2017 (328.9) (142.6) 31.2 (440.3)
---------------------- -------------- -------------- --------------
Loans & Liabilities
Receivables in a Derivatives
& Other fair Designated Total
Financial value as Hedging Net
Assets/(Liabilities) hedge Instruments Debt
at Amortised relationship EURm by Category
Cost EURm EURm
EURm
Assets:
Interest rate swaps - - 43.2 43.2
Cash at bank and
in hand 166.5 - - 166.5
---------------------- -------------- -------------- --------------
Total assets 166.5 - 43.2 209.7
---------------------- -------------- -------------- --------------
Liabilities:
Private placement
notes (312.5) (153.7) - (466.2)
Other loans (91.6) - - (91.6)
---------------------- -------------- -------------- --------------
Total liabilities (404.1) (153.7) - (557.8)
---------------------- -------------- -------------- --------------
At 30 June 2016 (237.6) (153.7) 43.2 (348.1)
---------------------- -------------- -------------- --------------
The Group's private placement loan notes of EUR666m have a
weighted average maturity of 6.5 years.
Fair value of financial instruments carried at fair value
Financial instruments recognised at fair value are analysed
between those based on quoted prices in active markets for
identical assets or liabilities (Level 1), those involving inputs
other than quoted prices that are observable for the assets or
liabilities, either directly or indirectly (Level 2); and those
involving inputs for the assets or liabilities that are not based
on observable market data (Level 3).
The following table sets out the fair value of all financial
instruments whose carrying value is at fair value:
Level Level Level
1 2 3
30 June 30 June 30 June
2017 2017 2017
EURm EURm EURm
Financial assets
Interest rate swaps - 31.2 -
Foreign exchange contracts
for hedging - 0.7 -
Financial liabilities
Deferred contingent consideration - - (19.5)
Foreign exchange contracts
for hedging - (0.1) -
---------- --------- ---------
At 30 June 2017 - 31.8 (19.5)
---------- --------- ---------
Level Level Level
1 2 3
30 June 30 June 30 June
2016 2016 2016
EURm EURm EURm
Financial assets
Interest rate swaps - 43.2 -
Foreign exchange contracts
for hedging - 2.7 -
Financial liabilities
Deferred contingent consideration - - (9.0)
Interest rate swaps - (0.4) -
Foreign exchange contracts
for hedging - - -
---------- --------- ---------
At 30 June 2016 - 45.5 (9.0)
---------- --------- ---------
All derivatives entered into by the Group are included in Level
2 and consist of foreign currency forward contracts, interest rate
swaps and cross currency interest rate swaps.
Where derivatives are traded either on exchanges or liquid
over-the-counter markets, the Group uses the closing price at the
reporting date. Normally, the derivatives entered into by the Group
are not traded in active markets. The fair values of these
contracts are estimated using a valuation technique that maximises
the use of observable market inputs, e.g. market exchange and
interest rates.
Deferred contingent consideration is included in Level 3. The
deferred contingent consideration has increased in the period due
to the PanelMet acquisition, which is outlined in more detail in
Note 16. The remaining deferred contingent consideration is
consistent with 31 December 2016 and is set out in notes 18 and 22
of the 2016 Annual Report. The contingent element is measured on a
series of trading performance targets, and is adjusted by the
application of a range of outcomes and associated
probabilities.
During the period ended 30 June 2017, there were no significant
changes in the business or economic circumstances that affect the
fair value of financial assets and liabilities, no
reclassifications and no transfers between levels of the fair value
hierarchy used in measuring the fair value of the financial
instruments.
Fair value of financial instruments at amortised cost
Except as detailed below, it is considered that the carrying
amounts of financial assets and financial liabilities recognised at
amortised cost in the Interim Financial Statements approximate
their fair values.
Private placement notes Carrying amount Fair value
EURm EURm
At 30 June 2017 666.4 705.6
At 30 June 2016 466.2 507.1
The fair value of the private placement notes, which are Level 2
financial instruments, is derived by using observable market data,
principally the relevant interest rates.
11 Dividends
A final dividend on ordinary shares of 23.5 cent per share in
respect of the year ended 31 December 2016 (2015: 17.0 cent) was
paid on 5 May 2017.
The directors are proposing an interim dividend of 11.0 cent
(2016: 10.0 cent) per share in respect of 2017, which will be paid
on 6 October 2017 to shareholders on the register on the record
date of 1 September 2017.
12 Earnings per share
6 months 6 months
ended ended
30 June 30 June
2017 2016
EURm EURm
The calculations of earnings
per share are based on
the following:
Profit attributable to
owners of the Company 132.8 125.4
----------- -----------
Number Number
of of
shares shares
('000) ('000)
6 months 6 months
ended ended
30 June 30 June
2017 2016
Weighted average number
of ordinary shares for
the calculation of basic
earnings per share 178,570 177,523
Dilutive effect of share
options 1,754 2,226
----------- -----------
Weighted average number
of ordinary shares
for the calculation of
diluted earnings per share 180,324 179,749
----------- -----------
EUR cent EUR cent
Basic earnings per share 74.4 70.6
Diluted earnings per share 73.6 69.7
Adjusted basic (pre amortisation
and non-trading items)
earnings per share 77.5 73.1
At 30 June 2017, there were no anti-dilutive options (30 June
2016: Nil).
13 Goodwill
At At At
30 June 30 June 31 Dec
2017 2016 2016
EURm EURm EURm
At beginning of period 990.1 821.2 821.2
Acquired through business
combinations 11.7 55.3 178.7
Impairment charge (2.3) - -
Effect of movement
in exchange rates (28.4) (16.8) (9.8)
--------- --------- -----------
At end of period 971.1 859.7 990.1
--------- --------- -----------
At end of period
Cost 1,039.0 925.3 1,055.7
Accumulated impairment
losses (67.9) (65.6) (65.6)
Net carrying amount 971.1 859.7 990.1
--------- --------- -----------
14 Property, plant & equipment
At At At
30 June 30 June 31 Dec
2017 2016 2016
EURm EURm EURm
Cost or valuation 1,523.5 1,441.9 1,505.2
Accumulated depreciation
and impairment charges (849.5) (816.9) (839.7)
---------- ---------- -------------
Net carrying amount 674.0 625.0 665.5
---------- ---------- -------------
Opening net carrying
amount 665.5 619.1 619.1
Acquired through business
combinations 7.9 5.0 30.9
Additions 45.3 54.8 113.7
Disposals (1.9) (2.3) (8.8)
Depreciation charge (31.4) (29.5) (63.2)
Impairment charge - (1.6) (3.4)
Effect of movement
in exchange rates (11.4) (20.5) (22.8)
Closing net carrying
amount 674.0 625.0 665.5
---------- ---------- -------------
The disposals, excluding the Gefinex element, generated a profit
in the period of EUR2.0m (H1 2016: EUR nil).
15 Reconciliation of net cash flow to movement in net debt
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
EURm EURm EURm
(Decrease)/increase in
cash and bank overdrafts (10.4) (29.3) 28.1
Decrease/(increase) in
interest bearing loans
& borrowings 8.8 12.2 (120.6)
Settlement of derivative (8.0) - -
financial instrument
Increase in lease finance (1.5) (0.1) (1.8)
---------- ---------- -------------
Change in net debt resulting
from cash flows (11.1) (17.2) (94.3)
Translation movement -
relating to US dollar
loans 14.9 (0.6) (5.6)
Translation movement -
other (6.8) (15.9) (19.0)
Derivative financial instruments
movement (9.4) 13.6 19.0
---------- ---------- -------------
Net movement (12.4) (20.1) (99.9)
Net debt at start of the
period (427.9) (328.0) (328.0)
---------- ---------- -------------
Net debt at end of the
period (440.3) (348.1) (427.9)
---------- ---------- -------------
16 Business combinations
During the period, the Group made three acquisitions for a
combined total consideration of EUR14.3m:
-- In March 2017, the purchase of 100% of the share capital of
Rhino Water Tanks and Liners Pty, an Australian water tanks
business;
-- In April 2017, the purchase of 51% of the share capital of
PanelMet S.A.S., a Colombian panels manufacturer and supplier;
and
-- In June 2017, the purchase of 100% of the share capital of
Schütze GmbH, a German Light & Air business.
The provisional fair values of the acquired assets and
liabilities in respect of these acquisitions at their respective
acquisition dates, along with fair value adjustments to a number of
2016 acquisitions, are set out below:
EUR'm
Non-current assets
Intangible assets 4.5
Property, plant and equipment 7.9
Deferred tax assets 1.1
Current assets
Inventories 1.4
Trade and other receivables 3.7
Current liabilities
Trade and other payables (12.4)
Provisions for liabilities (0.7)
Non-current liabilities
Retirement benefit obligations (0.3)
Deferred tax liabilities (0.9)
-------
Total identifiable assets 4.3
Non-controlling interest (1.7)
Goodwill 11.7
-------
Total consideration 14.3
-------
Satisfied by:
Cash (net of cash/debt acquired) 14.3
Total consideration 14.3
-------
The goodwill is attributable principally to the profit
generating potential of the business, together with a strong
workforce, new geographies and synergies expected to be achieved
from integrating the business into Kingspan's existing
structure.
In addition to the above consideration, there is a put option to
acquire the non-controlling interest of PanelMet S.A.S. This option
has been valued at EUR7.4m, which is based on a multiple of EBITDA,
and reflects its present value.
In the post-acquisition period to 30 June 2017, the businesses
acquired in the current period contributed total revenue of EUR5.0m
and trading profit of EUR0.4m to the Group's results.
17 Capital and reserves
Issues of ordinary shares
949,558 ordinary shares (H1 2016: 767,589) were issued as a
result of the exercise of vested options arising from the Group's
share option schemes (see the 2016 Annual Report for full details
of the Group's share option schemes). Options were exercised at an
average price of EUR0.13 per option.
18 Significant events and transactions
There were no individually significant events or transactions in
the period which contributed to the material changes in the
Statement of Financial Position; the more significant movements are
described below:
-- the changes in Inventories, Trade & other receivables and
Trade & other payables reflect the normal business cycle;
-- the fair value of derivatives moved primarily as a result of
the settlement of a derivative financial instrument and the
movements in the US dollar exchange rate against both sterling and
the euro; and
-- the negative currency translation movement of EUR54.5m
reflected in the Condensed Consolidated Statement of Comprehensive
Income reflects primarily the relative weakening of sterling year
on year.
19 Related party transactions
There were no changes in related party transactions from the
2016 Annual Report that could have a material effect on the
financial position or performance of the Group in the first half of
the year.
20 Subsequent events
There have been no material events subsequent to 30 June 2017
which would require disclosure in this report.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFFRTDIDLID
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