TIDMKGP
RNS Number : 5397F
Kingspan Group PLC
23 February 2015
KINGSPAN GROUP PLC
PRELIMINARY RESULTS
Year Ended 31 December 2014
KINGSPAN GROUP PLC
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014
Kingspan, the global leader in high performance insulation and
building envelope solutions, reports its preliminary results for
the year ended 31 December 2014.
Financial Highlights:
-- Revenue up 6% to EUR1.89bn.
-- Trading profit up 21% to EUR148.5m.
-- Group trading margin of 7.9%, an increase of 100bps.
-- Basic EPS up 21% to 62.6 cent.
-- Final dividend per share of 10 cent. Total dividend for the year up 16% to 16.25 cent.
-- An increase in net debt to EUR125.5m (2013: EUR106.7m). Net
debt to EBITDA of 0.66x (2013: 0.66x).
-- Increase in ROCE by 110bps to 13.4% (2013:12.3%).
Operational Highlights:
-- Insulated Panels sales and trading profit up 7% and 18%
respectively, reflecting strong margin improvement, particularly in
the United Kingdom, North America, Australasia, and Kingspan
Energy, our integrated solar panel business.
-- Insulation Boards sales and trading profit up 8% and 35%
respectively, owing to robust performance in both the UK and
Benelux markets, and the continued growth of Kooltherm's(R) market
presence more widely.
-- A positive data centre activity backdrop was beneficial to
Access Floors in the Americas, and improving office volume in the
UK led to overall sales in line with the prior year (H2 +7%) and
trading profit up 12%.
-- Stability at the Environmental division remained the
priority, and the many new initiatives underway should lead to
profit growth in 2015.
-- Three acquisitions were completed during the year:
Dri-Design, a high end architectural façade business in the US,
Pactiv Insulation, a rigid foam board producer in the US, and PAL
Insulation, a Dubai based supplier of ducting insulation. The
combined consideration for these was EUR114.4m.
Summary Financials:
2014 2013 % change
---------------- -------- -------- ---------
Revenue EURm 1,891.2 1,776.8 +6%
EBITDA EURm 189.3 162.5 +16%
Trading Profit
EURm 148.5 122.8 +21%
Trading Margin 7.9% 6.9% +100bps
Profit after
tax EURm 106.5 89.1 +20%
EPS (cent) 62.6 51.7 +21%
---------------- -------- -------- ---------
Gene Murtagh, Chief Executive of Kingspan commented:
"We are very pleased to report another strong year of profit
growth at Kingspan, helped particularly by double-digit growth in
our UK and North American businesses. Conditions in our core
markets are improving, and our activity pipeline starting the new
year is encouraging. We are delivering on our strategic goal of
broadening our geographic base through acquisitions, and will focus
intensively this year on the integration of the companies acquired
in 2014 and the Joris Ide and Vicwest businesses when those deals
are completed."
For further information contact:
Murray Consultants Tel: +353 (0) 1 4980 300
Douglas Keatinge
Business Review
2014 proved to be another positive year for Kingspan, with
global sales and trading profit growing 6% and 21% respectively.
The resultant earnings improvement was 21% to 62.6 cent per share
(2013: 51.7 cent per share).
The trading pattern reflected an uncharacteristically strong
start to the year, leading to a more stable performance through
mid-year, culminating in a strong final quarter in most of our
markets. The macro-economic environment remained mixed, with clear
improvement evident in the key non-residential markets in both the
UK and US, contrasting with weaker activity levels in pockets of
Continental Europe. Germany, one of our larger end markets, was
relatively stable, levelling off from the growth levels experienced
there in recent years. Trading in the Netherlands improved
marginally and, more importantly, the future pipeline showed
encouraging signs that ought to bear fruit over the coming years.
Australasia continued its growth pattern for Kingspan, owing mainly
to penetration growth.
Exiting 2014, the general mood across our core markets, and our
activity pipeline, were encouraging.
Insulated Panels
FY '14 FY '13 Change
EURm EURm
---------------- -------- -------- -------
Turnover 1,111.4 1,036.0 +7%(1)
Trading Profit 89.2 75.6 +18%
Trading Margin 8.0% 7.3% +70bps
---------------- -------- -------- -------
(1) Comprising acquisition impact +1%, volume +3%, price/mix +3% and currency impact nil
UK
Growth resumed in Kingspan's Insulated Panel business in the UK
during 2014, after a number of relatively stable years. Some
large-scale conversion successes played a part in this improvement,
along with a more general lift in the sectors we are most exposed
to. These sectors include low-rise non-residential buildings in the
retail, distribution and manufacturing space among others.
Benchmark(R) Architectural continues to challenge traditional and
conventional high end facades, a journey that will likely last for
many years. Kingspan Energy, our Integrated Rooftop Solar PV and
Insulated Panel offering, posted a significant improvement over
prior year, and again exited the year with an encouraging pipeline.
Standards of building envelope continue to rise, evident from
continually increasing insulation thicknesses, and geared towards
advancing the lifetime energy performance of these buildings for
their owners/occupiers. The UK has been, and remains, a prominent
global voice on this front.
Mainland Europe & Middle East
Given the mixed backdrop across Mainland Europe, our performance
varied somewhat. Sales in Germany were broadly flat whilst a slight
improvement was experienced in the Netherlands. France showed
encouraging improvement in commercial and industrial applications
where penetration growth is capable of advancing significantly over
the medium to longer term. Central and Eastern Europe weakened
towards year-end, partly linked to the Russian crisis, and Turkey's
economic fragility continued to weigh on volumes there. Across the
wider Gulf region, both activity and pipeline have been strong and
should lead to a positive outcome in 2015.
Kingspan is also in the early stages of developing a presence in
key markets in Africa. Early indications and contracts won have
both been encouraging.
Americas
2014 was a year of significant advancement for our Insulated
Panels business in North America. By mid-year, a record order-book
and rising penetration pointed towards a strong second half, which
duly materialised. Further sizeable projects were converted from
traditional systems, boding well for the early part of 2015. The
energy agenda is firmly centre stage in the US at present, with
efficiency and conservation being key. Our role in this improving
dynamic will be to continue driving penetration growth through
specification.
In addition, we are in the early stages of exploring entry into
the neighbouring Mexican market.
Australasia
Similar to North America, the growth in low-energy buildings
continues to push ahead in Australia and New Zealand. Our volume
grew significantly in 2014 and we expect to build upon this in
2015.
Ireland
Volumes in this market are still relatively low by historic
comparison, albeit with a significant growth in activity in 2014.
This momentum is likely to continue as Ireland gradually rebuilds
itself, and the overhang from the 'boom' years gets absorbed,
giving way to further newbuild opportunity.
Insulation Boards
FY '14 FY '13(2) Change
EURm EURm
---------------- ------- ---------- --------
Turnover 477.1 441.9 +8%(1)
Trading Profit 39.9 29.5 +35%
Trading Margin 8.4% 6.7% +170bps
---------------- ------- ---------- --------
(1) Comprising growth from acquisition impact +3%, price/mix
+1%, volume +2% and currency impact +2%
(2) Restated to reflect adoption of IFRS 11 'Joint Arrangements'
UK
The strong revenue growth pattern reported in the first half of
the year continued through to year-end, driven by a combination of
positive residential and non-residential construction, and
continued penetration growth of Kooltherm(R) . Albeit still at
embryonic levels, specifications continue to grow for Optim-R(R) as
an 'ultra-thin' insulation solution. Housing activity growth eased
off somewhat in late 2014 after a relatively strong run for the
previous couple of years. Forecasts for this segment remain
positive, as they do for office construction, both of which present
scope for further insulation volume growth in the coming years.
Mainland Europe
Insulation Boards sales volume showed a marked improvement in
the Benelux with mid-single digit growth in Germany. This, as in
recent years, is being predominately driven by the rising adoption
of Kooltherm(R) in Western Europe. Further growth through
specification will remain the medium to longer term focus in this
region. Central European markets also provided growth as high
performance rigid board begins to take a foothold from traditional
alternatives. These regions are already well disposed towards
Insulated Panel as a thermally efficient form of construction which
should bode well for Board as a thermal solution. Our recently
commissioned PIR Board facility in Eastern Germany is ideally
situated to service this and key surrounding target markets.
North America
Following our acquisition of Pactiv Insulation during the third
quarter, Kingspan's rigid board presence, and relevance, in North
America has increased substantially. This business currently
features XPS extruded polystyrene as a technology. Given the low
penetration of this form of insulation in North America, our
primary near-term focus will be on expanding our sales and capacity
of XPS. Medium and longer term this product set will be
complemented by the introduction of Kooltherm(R) and Optim-R(R) to
the North American market.
Australasia and Middle East
Building upon the progress of recent years, penetration of
Kooltherm(R) rigid board continued to forge ahead in Australia,
again displacing lower performing insulation alternatives that
still dominate the region. The process of establishing a new
manufacturing facility in Melbourne has commenced to bolster this
momentum and is scheduled for production in early 2017.
Our insulation presence in the Gulf and Middle East regions
received a significant boost following the acquisition of PAL in
late 2014. PAL's primary business is the delivery of ducting
insulation, and has now begun the process of incorporating
Kingspan's wider product set into the many markets it serves.
Ireland
Insulation revenue in Ireland grew by mid-single digit levels,
reflecting the growing presence of Kooltherm(R) in this market.
Volume slippage in other product sets was experienced as margin
took priority over volume. Construction forecasts suggest that
recent momentum is likely to continue into 2015 and beyond, a trend
that Kingspan is ideally positioned to capitalise on.
Access Floors
FY '14 FY '13 Change
EURm EURm
---------------- ------- ------- --------
Turnover 155.1 154.2 +1%(1)
Trading Profit 18.2 16.2 +12%
Trading Margin 11.7% 10.5% +120bps
---------------- ------- ------- --------
(1) Comprising volume +5%, price/mix -6% and currency impact +2%
2014 was a year characterised by solid data centre related
activity in North America compensating for stubbornly lethargic
office construction activity. This is in stark contrast to the UK
market that appears to be midway through an upward cycle in office
construction. The latter is likely to lead to notable growth in
Access Floor applications through 2015 and 2016 given the late
cycle nature of when flooring is installed.
In North America, whilst maintaining our market share in the
weaker office market, our focus has been primarily on advancing
energy efficient and more complete air distribution systems that
are incorporated as an integrated floor application. Our unique
range is used as the primary chassis for intelligently distributing
air to cool individual data servers. The full commercialisation of
this product set is our key near-term focus, in advance of more
general office construction activity which is forecast to improve
from late 2015 onward.
Environmental
FY '14 FY '13 Change
EURm EURm
---------------- ------- ------- -------
Turnover 147.6 144.7 +2%
Trading Profit 1.2 1.5 -
Trading Margin 0.8% 1.0% -
---------------- ------- ------- -------
Sales in this division were broadly stable in 2014.
In our water business, revenue was marginally ahead on prior
year, after a relatively sluggish start and picked up towards year
end. Water treatment products performed best, with rainwater
harvesting lagging despite the anticipated growth in this market.
That dynamic may change as regulated water charges and conservation
initiatives continue to increase in the future.
The micro-wind business saw the soft launch of the KW15 turbine
in the fourth quarter, and interest levels are encouraging for
2015. Conventional fuel storage products performed well, and an
expanding product set is designed to position the business for
future growth not only in the UK and Ireland, but also more
internationally.
Renewables remains competitive, both in solar thermal and hot
water storage. We plan to see this phase of market instability
through by maintaining our market share and investing further in
lower cost manufacturing techniques to ensure our sustained
presence in this sector longer term.
Innovation
The process of 'staying ahead' is a central theme throughout
Kingspan.
Much of the emphasis in recent years has focused on 'core'
performance, predominately from both a thermal and fire
perspective. Kooltherm(R) remains a key platform for growth, and
will in the coming 2-3 years see itself transition to the next
generation with notably improved thermal values, from an evolving
set of inputs. Optim-R(R) , our vacuum insulated offering, was
launched in 2013. Technically and commercially it is positioned at
the very upper end, and as a result, the process of building volume
scale in this product can be expected to be gradual.
IPN Quadcore(R) is being developed for a more mainstream
Insulated Panel offering. It is a unique Kingspan hybrid
formulation that moves rigid foam in Insulated Panels to a
completely new level, providing up to 25% in thermal advantage per
thickness over the industry average. It will be launched in limited
applications by mid-year 2015 and rolled out more globally in the
following two years or so.
Net Zero Energy
A number of years back we set ourselves the goal of achieving
Net Zero Energy status throughout Kingspan by 2020. This entails
everything ranging from the procurement of renewable energy to
local on-site generation of renewable power. While the rate of
expansion of Kingspan in recent years might have rendered the 2020
target difficult to achieve, we remain largely on plan and expect
to reach 50% by the end of 2017. The table below outlines that
progress.
Year Total Energy Use Total Renewable Energy NZE %
GWh GWh
------- ----------------- ----------------------- ------
2012A 317 27 9
------- ----------------- ----------------------- ------
2013A 327 60 18
------- ----------------- ----------------------- ------
2014A 312 88 28
------- ----------------- ----------------------- ------
2015P 335 125 37
------- ----------------- ----------------------- ------
2016P 342 155 45
------- ----------------- ----------------------- ------
2017P 346 173 50
------- ----------------- ----------------------- ------
A=Actual; P=Plan
Our Strategy
For some time now, we have been pursuing a three pillar
strategy:
- Conversion from traditional insulation and building techniques to high performance solutions.
- Innovating within our space to consistently maintain a competitive edge.
- Broadening our geographies, with primary focus on Mainland
Europe, the Americas, Gulf & Middle East and Australasia.
The delivery of these objectives, within the scope of a
conservatively managed balance sheet which has served the Group
well, will remain the focus of our execution for the foreseeable
future.
Financial Review
Overview of results
Group revenue increased by 6% to EUR1.89bn (2013: EUR1.78bn) and
trading profit increased by 21% to EUR148.5m (2013: EUR122.8m)
resulting in an improvement of 100 basis points in the Group's
trading profit margin to 7.9% (2013: 6.9%). Basic EPS for the year
was 62.6 cent (2013: 51.7 cent), representing an increase of
21%.
The Group's underlying sales and trading profit growth by
division are set out below:
Sales Underlying Currency Acquisition Total
------------------- ----------- --------- ------------ ------
Insulated Panels +6% - +1% +7%
Insulation Boards +3% +2% +3% +8%
Environmental -2% +4% - +2%
Access Floors -1% +2% - +1%
----------- --------- ------------ ------
Group +4% +1% +1% +6%
----------- --------- ------------ ------
The Group's trading profit measure is earnings before interest,
tax and amortisation of intangibles:
Trading Profit Underlying Currency Acquisition Total
------------------- ----------- --------- ------------ ------
Insulated Panels +14% - +4% +18%
Insulation Boards +29% +5% +1% +35%
Environmental -16% -1% - -17%
Access Floors +10% +2% - +12%
----------- --------- ------------ ------
Group +16% +2% +3% +21%
----------- --------- ------------ ------
Change in accounting policy and reclassification
IFRS 11 'Joint Arrangements' has been adopted as required by
IFRS for the year ended 31 December 2014. All comparatives have
been restated accordingly. Further details are set out in note
10.
Finance costs (net)
Finance costs for the year increased by EUR0.4m to EUR14.0m
(2013: EUR13.6m). Finance costs included a non-cash charge of
EUR0.1m (2013: EUR0.3m) in respect of the Group's legacy defined
benefit pension schemes. A net non-cash charge of EUR0.8m (2013:
credit of EUR0.7m) was recorded in respect of swaps on the Group's
USD private placement notes. The Group's net interest expense on
borrowings (bank and loan notes) was EUR13.1m compared to EUR14.0m
in 2013. This decrease reflects lower average net debt levels in
2014 compared to 2013 and favourable financing initiatives
undertaken in 2014. The interest expense is driven extensively by
gross debt balances with cash yields negligible in the current
environment. Average gross debt during the year was EUR304m (2013:
EUR298m) with average cash balances amounting to EUR186m (2013:
EUR158m). The average is calculated by reference to the month end
position.
Non trading items
The Group recorded a non trading charge of EUR2.1m (2013: charge
of EUR3.5m) in the year. The charge is a composite item comprising
an impairment of EUR2.1m in respect of certain goodwill within the
Environmental division, a loss of EUR2.7m on the disposal of a
property asset and a credit of EUR2.7m in respect of a surplus
deferred consideration accrual on an acquisition made in a prior
year. The charge in the prior year is a composite item which is set
out in further detail in the Group's 2013 annual report.
Taxation
The tax charge for the year was EUR21.0m (2013: EUR12.8m) which
represents an effective tax rate of 16.4% (2013: 13.8%) on earnings
before amortization and non trading items.
Dividends
The Board has proposed a final dividend of 10 cent per ordinary
share payable on 15 May 2015 to shareholders registered on the
record date of 24 April 2015. When combined with the interim
dividend of 6.25 cent per share, the total dividend for the year
increased to 16.25 cent (2013: 14.0 cent), an increase of 16%.
Retirement benefits
The Group has two legacy defined benefit schemes which are
closed to new members and to future accrual. In addition, the Group
assumed a defined benefit pension liability in respect of current
and former employees of ThyssenKrupp Construction acquired during
2012. The net pension liability in respect of these schemes and
obligations was EUR11.7m (2013: EUR7.7m) as at 31 December
2014.
Key performance indicators
The Group has a set of key performance indicators which are set
out in the table below:
Key performance indicators 2014 2013
---------------------------- ------ ------
Basic EPS growth 21% 18%
Sales growth 6% 10%
Trading margin 7.9% 6.9%
Free cashflow (EURm) 109.3 78.2
Return on capital employed 13.4% 12.3%
Net debt/EBITDA 0.66x 0.66x
---------------------------- ------ ------
(a) Basic EPS growth. The growth in EPS is accounted for by the
21% increase in trading profit, generating a 19% increase in profit
after tax.
(b) Sales growth of 6% (2013: 10%) was driven by a 1%
contribution from acquisitions, a 4% increase in underlying sales
and a 1% increase due to the effect of currency translation.
(c) Trading margin by division is set out below:
2014 2013
------------------- ------ ------
Insulated Panels 8.0% 7.3%
Insulation Boards 8.4% 6.7%
Environmental 0.8% 1.0%
Access Floors 11.7% 10.5%
------------------- ------ ------
The Insulated Panels division trading margin reflects an
increase in overall margin due to positive overall operating
leverage within the division, reflecting increased volume, and a
positive business mix oriented towards higher specification
industrial and architectural applications. The trading margin
improvement in the Insulation Boards division reflects some
recovery in overall margin, continuing progression in Kooltherm(R)
volumes and a positive business mix in Mainland Europe. The modest
decrease in the Environmental trading margin reflects the relative
product mix year on year, in particular a decline in renewables.
The increase in trading margin in Access Floors reflects the year
on year sales mix between domestic and international markets as
well as the office and data centre product mix.
(d) Free cashflow is an important indicator and it reflects the
amount of internally generated capital available for re-investment
in the business or for distribution to shareholders.
Free cashflow 2014 2013
EUR'm EUR'm
----------------------------- ------- -------
EBITDA* 189.3 162.5
Non-cash items 16.2 5.9
Movement in working capital (27.7) (16.1)
Movement in provisions (6.5) (5.1)
Net capital expenditure (40.6) (36.6)
Property disposal proceeds 9.7 -
Pension contributions (2.4) (3.6)
Finance costs (13.9) (13.4)
Income taxes paid (14.8) (15.4)
------- -------
Free cashflow 109.3 78.2
------- -------
*Earnings before finance costs, income taxes, depreciation and
amortisation
Working capital at year end was EUR263.3m (2013: EUR212.5m) and
represents 13.4% (2013: 12.0%) of annual turnover. This metric is
monitored throughout the year and is subject to a certain amount of
seasonal variability associated with trading patterns and the
timing of significant purchases of steel and chemicals.
(e) Return on capital employed, calculated as operating profit
divided by total equity plus net debt, was 13.4% in 2014 (2013:
12.3%). The creation of shareholder value through the delivery of
long term returns well in excess of the Group's cost of capital is
a core principle of Kingspan's financial strategy.
(f) Net debt to EBITDA measures the ratio of debt to earnings
and at 0.66x is comfortably less than the Group's banking covenant
of 3.5x in both 2014 and 2013.
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. The primary bank debt facility is
a EUR300m revolving credit facility, with a syndicate of
international banks, entered into in April 2012 and amended in
March 2014. The facility, which was undrawn at year end, was
favourably amended from a pricing perspective with the term
extended to March 2019. In December 2014 the Group agreed a
EUR127.5m private placement loan note with equal maturities of 6, 8
and 10 years. These notes will be drawn in March 2015 to fund the
repayment of pre-existing loan notes of $158m. In December 2014,
the Group agreed bi-lateral facilities of EUR190m with three banks
with a two year maturity which were undrawn at year-end. The Group
has two US Private Placement loan notes in issue and the total
Private Placement debt outstanding at year-end was $400m. $158m of
this matures in March 2015, $42m matures in March 2017 with the
balance of $200m maturing in August 2021.
The Group has significant available undrawn facilities which
provide appropriate headroom for ongoing operational requirements
and development funding.
Net debt
Net debt increased by EUR18.8m during 2014 to EUR125.5m (2013:
EUR106.7m). This is analysed in the table below:
Movement in net debt 2014 2013
EUR'm EUR'm
----------------------------------- -------- --------
Free cashflow 109.3 78.2
Acquisitions (net of disposal
proceeds) (105.0) (1.5)
Share issues 5.5 2.8
Dividends paid (25.3) (22.0)
-------- --------
Cashflow movement (15.5) 57.5
Exchange movements on translation (3.3) 1.0
-------- --------
Decrease/(increase) in net debt (18.8) 58.5
Net debt at start of year (106.7) (165.2)
-------- --------
Net debt at end of year (125.5) (106.7)
-------- --------
Key financial covenants
The majority of Group borrowings are subject to primary
financial covenants calculated in accordance with lenders' facility
agreements:
- A maximum net debt to EBITDA ratio of 3.5 times; and
- A minimum EBITDA to net interest coverage of 4 times
The performance against these covenants in the current and
comparative year is set out below:
2014 2013
Covenant Times Times
--------------------- ------------- ------ ------
Net debt/EBITDA Maximum 3.5 0.66 0.66
EBITDA/Net interest Minimum 4.0 13.5 12.0
--------------------- ------------- ------ ------
Investor relations
Kingspan is committed to interacting with the international
financial community to ensure a full understanding of the Group's
strategic plans and its performance against these plans. During the
year, the executive management presented at nine capital market
conferences and conducted 320 institutional one-on-one and group
meetings.
Share price and market capitalisation
The Company's shares traded in the range of EUR11.23 to EUR14.67
during the year. The share price at 31 December 2014 was EUR14.35
(31 December 2013: EUR13.00) giving a market capitalisation of
EUR2.46 billion (2013: EUR2.21 billion). Total shareholder return
for 2014 was 11.64%.
Financial risk management
The Group operates a centralised treasury function governed by a
treasury policy approved by the Group Board. This policy primarily
covers foreign exchange risk, credit risk, liquidity risk and
interest rate risk. The principal objective of the policy is to
minimise financial risk at reasonable cost. Adherence to the policy
is monitored by the CFO and the Internal Audit function. The Group
does not engage in speculative trading of derivatives or related
financial instruments.
Acquisitions
During 2014 we completed three acquisitions for a combined
consideration of EUR114.4m, Dri-Design, a high end architectural
façade business in the US, Pactiv Insulation, a rigid foam board
producer in the US, and PAL Insulation, a Dubai based supplier of
ducting insulation. The recent performance and early integration of
those businesses has been most encouraging. Since then, we have
entered into agreements to acquire Vicwest Building Products in
Canada for C$155m, and Joris Ide Group in Belgium for EUR315m. Both
of these businesses offer Kingspan tremendous growth avenues, in
market niches largely untouched by our current brand presence.
These transactions are subject to regulatory approval in their
respective jurisdictions, and we hope to be in a position to
complete these processes during the first half of this year. More
recently, earlier this month we bought out the 50% share in
Kingspan Tarec Industrial Insulation held by our joint venture
partner, Recticel NV, and will now fully integrate this premium
performance pipe insulation business into our UK and Belgian
Insulation Boards businesses.
Following these transactions, we expect peak net debt/EBITDA to
be relatively conservative, at approximately two times.
Looking Ahead
The positive momentum experienced in late 2014 has carried
through into the early part of 2015, and should lead to a solid
first quarter notwithstanding a flat January. This is particularly
so in the UK, North America, and Germany. Central Europe and Turkey
remain somewhat fragile, owing in both cases to the neighbouring
political situation, the outcomes of which remain uncertain.
Amongst our 2015 priorities will be the execution of the
recently announced Joris Ide acquisition, and that of Vicwest
announced late 2014, as well as completing the integration of the
businesses successfully acquired during the year. This integration
phase is well underway in all three cases, and their outlook is
encouraging. Furthermore, maintaining a strong balance sheet will
remain the bedrock of our financial strategy.
Energy costs, catalysed by recent oil prices, have been the
subject of vast debate in recent months, with no clear consensus on
future trends emerging. Whatever that outcome, we live in a time
where concern over the future of fossil fuel is unquestionably at
an all-time high. From both geopolitical and environmental
perspectives, the focus on energy conservation and alternative
sources is almost certain to remain relentless. With our
unparalleled global solutions portfolio, this backdrop can only be
encouraging for Kingspan.
On behalf of the Board
Gene Murtagh Geoff Doherty
Chief Executive Officer Chief Financial Officer
23 February 2015 23 February 2015
Kingspan Group plc
Group Condensed Income Statement
for the year ended 31 December 2014
2014 2013
EURm EURm
Note
REVENUE 2 1,891.2 1,776.8
Cost of sales (1,375.1) (1,316.8)
---------- ----------
GROSS PROFIT 516.1 460.0
Operating costs, excluding intangible
amortisation (367.6) (337.2)
---------- ----------
TRADING PROFIT 2 148.5 122.8
Intangible amortisation (4.9) (3.8)
Non trading items 3 (2.1) (3.5)
---------- ----------
OPERATING PROFIT 141.5 115.5
Finance expense 4 (14.6) (14.1)
Finance income 4 0.6 0.5
---------- ----------
PROFIT FOR THE YEAR BEFORE INCOME
TAX 127.5 101.9
Income tax expense (21.0) (12.8)
---------- ----------
NET PROFIT FOR THE YEAR FROM CONTINUING
OPERATIONS 106.5 89.1
---------- ----------
Attributable to owners of Kingspan
Group plc 107.2 87.6
Attributable to non-controlling
interests (0.7) 1.5
---------- ----------
106.5 89.1
---------- ----------
EARNINGS PER SHARE FOR THE YEAR
Basic 9 62.6c 51.7c
Diluted 9 61.3c 50.7c
Gene M. Murtagh Geoff Doherty 23 February 2015
Chief Executive Officer Chief Financial Officer
Kingspan Group plc
Group Condensed Statement of Comprehensive Income
for the year ended 31 December 2014
2014 2013
EURm EURm
Profit for the year 106.5 89.1
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating
foreign operations 58.2 (31.4)
Net change in fair value of cash
flow hedges reclassified to income
statement - 0.1
Effective portion of changes in
fair value of cash flow hedges 0.6 (1.0)
Income taxes relating to changes
in fair value of cash flow hedges (0.1) 0.1
Items that will not be reclassified subsequently to profit or
loss
Actuarial (losses)/gains on defined
benefit pension schemes (6.7) 1.4
Income taxes relating to actuarial
(losses)/gains on defined benefit
pension schemes 0.8 (0.3)
---------- --------
Total comprehensive income for
the year 159.3 58.0
---------- --------
Attributable to owners of Kingspan
Group plc 159.2 56.8
Attributable to non-controlling
interests 0.1 1.2
---------- --------
159.3 58.0
---------- --------
Kingspan Group plc
Group Condensed Statement of Financial Position
As at 31 December 2014
Note 2014 2013
(Restated)*
EURm EURm
ASSETS
NON-CURRENT ASSETS
Goodwill 475.3 368.5
Other intangible assets 31.2 16.2
Property, plant and equipment 497.0 487.7
Investment in joint ventures 10 8.4 8.3
Derivative financial instruments 15.4 0.7
Retirement benefit assets 4.7 6.1
Deferred tax assets 7.0 6.6
---------- -------------
1,039.0 894.1
---------- -------------
CURRENT ASSETS
Inventories 236.5 190.4
Trade and other receivables 364.0 308.1
Derivative financial instruments 11.3 -
Cash and cash equivalents 185.7 196.6
---------- -------------
797.5 695.1
TOTAL ASSETS 1,836.5 1,589.2
---------- -------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 337.2 285.5
Provisions for liabilities 29.6 39.9
Derivative financial instruments 0.6 2.4
Deferred contingent consideration 0.6 7.5
Interest bearing loans and
borrowings 132.7 6.9
Current income tax liabilities 42.6 37.3
---------- -------------
543.3 379.5
---------- -------------
NON-CURRENT LIABILITIES
Retirement benefit obligations 16.4 13.8
Provisions for liabilities 26.2 17.3
Interest bearing loans and
borrowings 204.6 290.7
Derivative financial instruments - 4.5
Deferred tax liabilities 22.1 23.8
Deferred contingent consideration 14.8 -
---------- -------------
284.1 350.1
---------- -------------
TOTAL LIABILITIES 827.4 729.6
---------- -------------
NET ASSETS 1,009.1 859.6
---------- -------------
EQUITY
Share capital 23.0 22.7
Share premium 48.4 43.1
Capital redemption reserve 0.7 0.7
Treasury shares (30.7) (30.7)
Other reserves (63.2) (126.1)
Retained earnings 1,022.9 942.0
---------- -------------
EQUITY ATTRIBUTABLE TO OWNERS
OF KINGSPAN GROUP PLC 1,001.1 851.7
NON-CONTROLLING INTEREST 8.0 7.9
---------- -------------
TOTAL EQUITY 1,009.1 859.6
---------- -------------
* IFRS 11 has been adopted as required by IFRS for the year
ended 31 December 2014. The comparatives for the year ended 31
December 2013 have been restated (refer to Note 10)
Gene M. Murtagh Geoff Doherty 23 February 2015
Chief Executive Officer Chief Financial Officer
Kingspan Group plc
Group Condensed Statement of Changes in Equity
for the year ended 31 December 2014
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
2014 22.7 43.1 0.7 (30.7) (148.0) (0.7) 21.9 0.7 942.0 851.7 7.9 859.6
--------- --------- ------------ ---------- ------------- --------- -------- ------------- ---------- ------------- ------------- ----------
Transactions with owners recognised directly in equity
Shares issued 0.3 5.3 - - - - - - - 5.6 - 5.6
Employee share
based
compensation - - - - - - 7.7 - - 7.7 - 7.7
Tax on employee
share
based
compensation - - - - - - 1.1 - 1.1 2.2 - 2.2
Exercise or
lapsing
of share
options - - - - - - (3.8) - 3.8 - - -
Dividends - - - - - - - - (25.3) (25.3) - (25.3)
Transactions
with
owners 0.3 5.3 - - - - 5.0 - (20.4) (9.8) - (9.8)
--------- --------- ------------ ---------- ------------- --------- -------- ------------- ---------- ------------- ------------- ----------
Total
comprehensive
income for the
year
(Loss)/Profit
for
the year - - - - - - - - 107.2 107.2 (0.7) 106.5
Other
comprehensive
income:
Items that may be reclassified subsequently to profit or loss
Cash flow
hedging
in equity
- current year - - - - - 0.6 - - - 0.6 - 0.6
- tax impact - - - - - (0.1) - - - (0.1) - (0.1)
Exchange
differences
on translating
foreign
operations - - - - 57.4 - - - - 57.4 0.8 58.2
Items that will not be reclassified subsequently to profit or loss
Defined benefit
pension
scheme - - - - - - - - (6.7) (6.7) - (6.7)
Income taxes
relating
to actuarial
losses
on defined
benefit
pension scheme - - - - - - - - 0.8 0.8 - 0.8
Total
comprehensive
income for the
year - - - - 57.4 0.5 - - 101.3 159.2 0.1 159.3
--------- --------- ------------ ---------- ------------- --------- -------- ------------- ---------- ------------- ------------- ----------
Balance at 31
December
2014 23.0 48.4 0.7 (30.7) (90.6) (0.2) 26.9 0.7 1,022.9 1,001.1 8.0 1,009.1
--------- --------- ------------ ---------- ------------- --------- -------- ------------- ---------- ------------- ------------- ----------
Kingspan Group plc
Group Condensed Statement of Changes in Equity
for the year ended 31 December 2013
Share Total
Capital Cash Based Attributable Non-Controlling
Share Share Redemption Treasury Translation flow Payment Revaluation Retained to Owners Interest Total
Capital Premium Reserve Shares Reserve Hedging Reserve Reserve Earnings of the Equity
Reserve Parent
EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
Balance at 1
January 2013 22.5 40.6 0.7 (30.7) (116.9) 0.1 24.0 0.7 865.2 806.2 7.1 813.3
--------- --------- ------------ ---------- ------------- --------- -------- ------------- ---------- ------------- ----------------- ---------
Transactions with owners recognised directly in equity
Shares issued 0.2 2.5 - - - - - - - 2.7 - 2.7
Employee share
based
compensation - - - - - - 7.2 - - 7.2 - 7.2
Tax on employee
share
based
compensation - - - - - - (0.2) - 2.1 1.9 - 1.9
Exercise or
lapsing of
share options - - - - - - (9.1) - 9.1 - - -
Dividends - - - - - - - - (21.6) (21.6) - (21.6)
Transactions with
non-controlling
interests:
Buy out of
non-controlling
interest - - - - - - - - (1.5) (1.5) - (1.5)
Dividends paid to
non-controlling
interest - - - - - - - - - - (0.4) (0.4)
Transactions with
owners 0.2 2.5 - - - - (2.1) - (11.9) (11.3) (0.4) (11.7)
--------- --------- ------------ ---------- ------------- --------- -------- ------------- ---------- ------------- ----------------- ---------
Total
comprehensive
income
for the year
Profit for the
year - - - - - - - - 87.6 87.6 1.5 89.1
Other
comprehensive
income:
Items that may be reclassified subsequently to profit or loss
Cash flow hedging
in equity
- current year - - - - - (1.0) - - - (1.0) - (1.0)
-
reclassification
to
profit - - - - - 0.1 - - - 0.1 - 0.1
- tax impact 0.1 0.1 0.1
Exchange
differences on
translating
foreign
operations - - - - (31.1) - - - - (31.1) (0.3) (31.4)
Items that will not be reclassified subsequently to profit or loss
Defined benefit
pension
scheme - - - - - - - - 1.4 1.4 - 1.4
Income taxes
relating
to actuarial
gains/ (losses)
on defined
benefit pension
scheme - - - - - - - - (0.3) (0.3) - (0.3)
Total
comprehensive
income
for the year - - - - (31.1) (0.8) - - 88.7 56.8 1.2 58.0
--------- --------- ------------ ---------- ------------- --------- -------- ------------- ---------- ------------- ----------------- ---------
Balance at 31
December
2013 22.7 43.1 0.7 (30.7) (148.0) (0.7) 21.9 0.7 942.0 851.7 7.9 859.6
--------- --------- ------------ ---------- ------------- --------- -------- ------------- ---------- ------------- ----------------- ---------
Kingspan Group plc
Group Condensed Statement of Cash Flows
for the year ended 31 December 2014
2014 2013
Note (Restated)*
EURm EURm
OPERATING ACTIVITIES
Cash generated from operations 7 168.9 143.6
Income tax paid (14.8) (15.4)
Interest paid (14.5) (13.9)
--------- -------------
Net cash flow from operating activities 139.6 114.3
--------- -------------
INVESTING ACTIVITIES
Additions to property, plant and equipment (45.4) (41.8)
Proceeds from disposals of property,
plant and equipment 14.5 5.2
Purchase of subsidiary undertakings (100.5) (1.5)
Payment of deferred contingent consideration (4.5) -
in respect of acquisitions
Interest received 0.6 0.5
--------- -------------
Net cash flow from investing activities (135.3) (37.6)
--------- -------------
FINANCING ACTIVITIES
(Repayment)/drawdown of bank loans (4.3) 3.8
Change in finance lease liability (0.1) (0.4)
Proceeds from share issues 5.5 2.8
Dividends paid to non-controlling
interests - (0.4)
Dividends paid (25.3) (21.6)
--------- -------------
Net cash flow from financing activities (24.2) (15.8)
--------- -------------
(Decrease)/increase in cash and cash
equivalents (19.9) 60.9
Translation adjustment 9.0 (4.2)
Cash and cash equivalents at the beginning
of the year 196.6 139.9
--------- -------------
CASH AND CASH EQUIVALENTS AT THE END
OF THE YEAR 185.7 196.6
--------- -------------
Cash and cash equivalents as at 1
January were made up of:
- Cash and cash equivalents 196.6 140.3
- Overdrafts - (0.4)
--------- -------------
196.6 139.9
--------- -------------
Cash and cash equivalents as at 31
December were made up of:
- Cash and cash equivalents 185.7 196.6
- Overdrafts - -
--------- -------------
185.7 196.6
--------- -------------
`
* IFRS 11 has been adopted as required by IFRS for the year ended
31 December 2014. The comparatives for the year ended 31 December
2013 have been restated (refer to Note 10)
Notes to the Preliminary Statement
for the year ended 31 December 2014
1 GENERAL INFORMATION
The financial information presented in this report has been
prepared using accounting policies consistent with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union and as set out in the Group's annual financial statements in
respect of the year ended 31 December 2013 except as noted below.
The financial information does not include all the information and
disclosures required in the annual financial statements. The Annual
Report will be distributed to shareholders and made available on
the Company's website www.kingspan.com in due course. It will also
be filed with the Company's annual return in the Companies
Registration Office. The auditors have reported on the financial
statements for the year ended 31 December 2014 and their report was
unqualified and did not contain any matters to which attention was
drawn by way of emphasis. The financial information for the year
ended 31 December 2013 represents an abbreviated version of the
Group's statutory financial statements on which an unqualified
audit report was issued and which have been filed with the
Companies Registration Office.
Basis of Preparation and Accounting Policies
The financial information contained in this Preliminary
Statement has been prepared in accordance with the accounting
policies set out in the last annual financial statements.
IFRS does not define certain Income Statement headings. For
clarity, the following are the definitions as applied by the
Group:
- 'Trading profit' refers to the operating profit generated by
the businesses before intangible asset amortisation and gains or
losses from non trading items.
- 'Non trading items' refers to material gains or losses on the
disposal or acquisition of businesses and material related
acquisition and integration costs, and material impairments to the
carrying value of intangible assets or property, plant and
equipment. It is determined by management that each of these items
relate to events or circumstances that are unusual due to their
size or incidence.
- 'Operating profit' is profit before income taxes and net finance costs.
The Group makes this distinction to give a better understanding
of the financial performance of the business.
The Income Statement has been expanded to include cost of sales,
gross profit and operating costs in order
to assist the reader to better understand the components of
profit.
The following are the new standards that were effective for the
Group's financial year ending 31 December 2014. They had no
significant impact on the results or financial position as set out
in this Preliminary Statement.
-- IFRS 10 Consolidated Financial Statements
-- IFRS 11 Joint Arrangements
-- IFRS 12 Disclosure of Interests in Other Entities
-- IAS 27 Separate Financial Statements (2011)
-- IAS 28 Investments in Associates and Joint Ventures (2011)
-- Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)
-- Investment Entities (Amendments to IFRS 10, 12 and IAS 27)
-- Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39)
-- IFRIC 21 Levies
There are a number of forthcoming requirements of IFRSs as
adopted by the EU which are not yet effective and have therefore
not been adopted in these financial statements.
-- IAS 19 Amendment: Defined Benefit Plans; Employee Contributions
-- Annual Improvements to IFRSs 2010-2012 Cycle and 2011-2013 Cycle
-- Amendments to IFRS 11: Accounting for acquisitions of interests in Joint Operations
-- IFRS 14 Regulatory Deferral Accounts
-- Amendments to IAS 16 and IAS 38: Clarification of acceptable
methods of depreciation and amortisation
-- Amendments to IAS 16 and IAS 41: Bearer plants
-- IAS 27: (Amendments) Equity Method in Separate Financial Statements
-- Amendments to IFRS 10 and IAS 28: Sale or contribution of
assets between an investor and its associate or joint venture
-- Amendments to IFRS 10, IFRS 12 and IAS 28: Investment entities: exception to consolidation
-- Amendments to IAS 1: Disclosure Initiative
-- Annual Improvements to IFRSs 2012-2014 Cycle
-- IFRS 15: Revenue from contracts with customer
-- IFRS 9 Financial Instruments (2014)
The Group does not plan to adopt these standards early and the
extent of their impact has not yet been determined.
2 SEGMENT REPORTING
In identifying the Group's operating segments, management based
its decision on the product supplied by each segment and the fact
that each segment is managed and reported separately to the Chief
Operating Decision Maker, which the Group has defined as the Board
of Directors. These operating segments are monitored and strategic
decisions are made on the basis of segment operating results.
Operating segments
The Group has the following four operating segments:
Insulated Panels Manufacture of insulated panels, structural framing
and metal facades.
Insulation Boards Manufacture of rigid insulation boards, building
services insulation and engineered timber systems.
Environmental Manufacture of environmental, pollution control and
renewable energy solutions.
Access Floors Manufacture of raised access floors.
Analysis by class of business
Segment revenue
Insulated Insulation Access
Panels Boards Environmental Floors Total
EURm EURm EURm EURm EURm
Total revenue - 2014 1,111.4 477.1 147.6 155.1 1,891.2
Total revenue - 2013
(restated) 1,036.0 441.9 144.7 154.2 1,776.8
Inter-segment transfers are carried out at arm's length prices
and using an appropriate transfer pricing methodology. As
inter-segment revenue is not material, it is not subject to
separate disclosure in the above analysis.
Segment result (profit before finance expense)
Insulated Insulation Access Total Total
Panels Boards Environmental Floors 2014 2013
EURm EURm EURm EURm EURm EURm
Trading profit 89.2 39.9 1.2 18.2 148.5
Intangible amortisation (2.7) (2.0) (0.2) - (4.9)
Non trading items 2.7 (2.7) (2.1) - (2.1)
---------- ----------- ---------------- -------- --------
Operating profit
- 2014 89.2 35.2 (1.1) 18.2 141.5
---------- ----------- ---------------- --------
Trading profit 75.6 29.5 1.5 16.2 122.8
Intangible amortisation (2.0) (1.6) (0.2) - (3.8)
Non trading items 2.5 - (6.0) - (3.5)
---------- ----------- ---------------- -------- --------
Operating profit
- 2013 76.1 27.9 (4.7) 16.2 115.5
---------- ----------- ---------------- --------
Net finance expense (14.0) (13.6)
-------- --------
Profit for the
year before tax 127.5 101.9
Income tax expense (21.0) (12.8)
Net profit for
the year 106.5 89.1
-------- --------
Segment assets
Insulated Insulation Access Total Total
Panels Boards Environmental Floors 2014 2013
EURm EURm EURm EURm EURm EURm
Assets - 2014 801.2 523.3 145.9 146.7 1,617.1
Assets - 2013 (restated) 691.0 412.6 150.6 131.1 1,385.3
Derivative financial instruments 26.7 0.7
Cash and cash equivalents 185.7 196.6
Deferred tax asset 7.0 6.6
---------- ----------
Total assets as reported in the Consolidated Statement
of Financial Position 1,836.5 1,589.2
---------- ----------
Segment liabilities
Insulated Insulation Access Total Total
Panels Boards Environmental Floors 2014 2013
EURm EURm EURm EURm EURm EURm
Liabilities - 2014 (244.4) (116.4) (36.8) (27.2) (424.8)
Liabilities - 2013
(restated) (212.5) (87.7) (38.1) (25.7) (364.0)
Interest bearing loans and borrowings (current
and non-current) (337.3) (297.7)
Derivative financial instruments (current and
non-current) (0.6) (6.8)
Income tax liabilities (current and deferred) (64.7) (61.1)
-------- --------
Total liabilities as reported in the Consolidated
Statement of Financial Position (827.4) (729.6)
-------- --------
Other segment information
Insulated Insulation Access
Panels Boards Environmental Floors Total
EURm EURm EURm EURm EURm
Capital investment - 2014
* 23.6 28.4 2.2 2.0 56.2
Capital investment - 2013
* 20.5 17.8 2.4 2.1 42.8
(restated)
Depreciation included in
segment result - 2014 (23.5) (12.4) (3.2) (1.7) (40.8)
Depreciation included in
segment result - 2013 (restated) (22.5) (11.3) (3.9) (2.0) (39.7)
Non-cash items included
in segment result - 2014 (1.4) (2.0) (2.9) (0.9) (7.2)
Non-cash items included
in segment result - 2013 (3.6) (1.9) (7.0) (0.7) (13.2)
* Capital investment includes fair value of property, plant and
equipment acquired in business combinations
Analysis of segmental data by geography
Republic United Rest of
of Ireland Kingdom Europe Americas Others Total
EURm EURm EURm EURm EURm EURm
Income Statement Items
Revenue - 2014 81.1 687.4 668.0 274.1 180.6 1,891.2
Revenue - 2013 (restated) 72.1 595.2 693.2 231.9 184.4 1,776.8
Statement of Financial Position Items
Non-current assets
- 2014 50.5 334.2 284.4 253.5 94.0 1,016.6
Non-current assets
- 2013 (restated) 53.5 324.5 296.2 149.4 63.2 886.8
Other segmental information
Capital investment
- 2014 2.5 12.6 19.7 11.6 9.8 56.2
Capital investment
- 2013 (restated) 2.5 15.6 18.5 4.8 1.4 42.8
The Group has a presence in over 70 countries worldwide. The
revenues from external customers and non-current assets (as defined
in IFRS 8) attributable to the country of domicile and all foreign
countries or regions of operation are as set out above and specific
regions are highlighted separately on the basis of materiality.
There are no material dependencies or concentrations on
individual customers which would warrant disclosure under IFRS 8.
The individual entities within the Group each have a large number
of customers spread across various activities, end-uses and
geographies.
3 NON TRADING ITEMS
2014 2013
EURm EURm
Deferred consideration no longer 2.7 -
payable
Impairment of goodwill (2.1) -
Impairment of property, plant and
equipment (2.7) (6.0)
Reversal of previous impairment - 2.5
(2.1) (3.5)
-------- --------
During the year $5.0m deferred consideration was paid relating
to the Rigidal business which was acquired in 2012. The remaining
provision for deferred consideration has been released as the
associated EBITDA targets were not achieved.
The goodwill impairment relates to a business within the
Environmental segment.
The impairment of property, plant and equipment in 2014 relates
to a loss made on the disposal of an industrial building in Poland
for EUR9.75m.
The non trading items in respect of prior year are disclosed in
note 4 to the Group's 2013 annual report.
The tax effect of the above items was EUR0.4m (2013: EUR1.4m).
The income tax expense for the year in the Consolidated Income
Statement includes the impact of this effect.
4 FINANCE EXPENSE AND FINANCE INCOME
2014 2013
EURm EURm
Finance expense
Bank loans 2.1 2.8
Private Placement 11.6 11.7
Fair value movement on derivative
financial instrument (31.4) 17.9
Fair value movement on private placement
debt 32.2 (18.6)
Net defined benefit pension scheme 0.1 0.3
14.6 14.1
Finance income
Interest earned (0.6) (0.5)
Net finance cost 14.0 13.6
------- -------
No borrowing costs were capitalised during the year (2013:
EURnil).
No costs were reclassified from Other Comprehensive Income to
profit during the year (2013: EUR0.2m).
5 ANALYSIS OF NET DEBT
2014 2013
EURm (Restated)*
EURm
Cash and cash equivalents 185.7 196.6
Derivative financial instruments
- net 26.1 (5.7)
Current borrowings (132.7) (6.9)
Non current borrowings (204.6) (290.7)
Total Net Debt (125.5) (106.7)
---------- -------------
The Group's core funding is provided by two private placements
totalling US $400m, of which US $158m matures in March 2015, US
$42m matures in March 2017 and a further US $200m matures in 2021.
In December 2014 the Group arranged new notes totalling EUR127.5m.
These notes have a deferred draw down date of March 2015 and have a
weighted average maturity of 8 years.
In addition the Group has a committed revolving credit facility
with a syndicate of banks of EUR300m maturing in March 2019 and
committed bilateral facilities of EUR190m which mature in December
2016. The facilities are fully undrawn at year end.
Net debt, which is a non GAAP measure, is stated net of interest
rate and currency hedges which relate to hedges of debt. Foreign
currency derivatives of EUR0.01m (2013: EUR0.5m) which are used for
transactional hedging are not included in the definition of net
debt.
6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2014 2013
(Restated)*
EURm EURm
(Decrease)/Increase in cash and
bank overdrafts (19.9) 60.9
Decrease/(increase) in debt 4.3 (3.8)
Decrease in lease finance 0.1 0.4
---------- -------------
Change in net debt resulting from
cash flows (15.5) 57.5
Translation movement - relating
to US dollar loan (43.6) 23.5
Translation movement - other 8.5 (4.0)
Derivative financial instruments
movement 31.8 (18.5)
---------- -------------
Net movement (18.8) 58.5
Net debt at start of the year (106.7) (165.2)
Net debt at end of the year (125.5) (106.7)
---------- -------------
7 CASH GENERATED FROM OPERATIONS
2014 2013
(Restated)*
EURm EURm
Profit for the year 106.5 89.1
Add back non-operating expenses:
Income tax expense 21.0 12.8
Depreciation of property, plant
and equipment 40.8 39.7
Amortisation of intangible assets 4.9 3.8
Impairment of non-current assets 5.6 5.7
Employee equity-settled share options 7.7 7.2
Finance income (0.6) (0.5)
Finance expense 14.6 14.1
Non cash items 2.1 (0.9)
Loss/(profit) on sale of property,
plant and equipment 2.9 (2.6)
Change in inventories (23.5) (6.7)
Change in trade and other receivables (26.9) (7.2)
Change in trade and other payables 22.7 (2.2)
Change in provisions (6.5) (5.1)
Pension contributions (2.4) (3.6)
-------- -------------
Cash generated from operations 168.9 143.6
-------- -------------
8 DIVIDENDS
Equity dividends on ordinary shares: 2014 2013
EURm EURm
2014 Interim dividend 6.25 cent (2013:
5.5 cent) per share 10.7 9.3
2013 Final dividend 8.5 cent (2012:
7.25 cent) per share 14.6 12.3
25.3 21.6
------- -------
Proposed for approval at AGM
Final dividend of 10 cent (2013: 8.5
cent) per share 17.2 14.4
------- -------
This proposed dividend for 2014 is subject to approval by the
shareholders at the Annual General Meeting and has not been
included as a liability in the Consolidated Statement of Financial
Position of the Group as at 31 December 2014 in accordance with IAS
10 Events After the Reporting Date. The proposed final dividend for
the year ended 31 December 2014 will be payable on 15 May 2015 to
shareholders on the Register of Members at close of business on 24
April 2015.
9 EARNINGS PER SHARE
2014 2013
EURm EURm
The calculations of earnings per
share are based on the following:
Profit attributable to ordinary
shareholders 107.2 87.6
--------------- ---------------
Number of Number of
shares ('000) shares ('000)
2014 2013
Weighted average number of ordinary
shares for
the calculation of basic earnings
per share 171,128 169,468
Dilutive effect of share options 3,621 3,559
--------------- ---------------
Weighted average number of ordinary
shares
for the calculation of diluted earnings
per share 174,749 173,027
--------------- ---------------
2014 2013
EUR cent EUR cent
Basic earnings per share 62.6 51.7
Diluted earnings per share 61.3 50.7
Adjusted basic (pre amortisation
and non trading items) earnings
per share 66.6 54.7
The number of options which are anti-dilutive and have therefore
not been included in the above calculations is 589,484 (2013:
1,139,686).
10 JOINT VENTURES
The Group adopted IFRS 11 'Joint Arrangements' from 1 January
2014 with retrospective application to 2013, as required by the
standard. Previously the Group reported its share of the results
from jointly controlled entities separately on each line of the
Income Statement and its share of the assets and liabilities
separately on each line of the Statement of Financial Position.
The standard now requires that the Group report only its share
of the profit after tax and the net investment in the Joint
Ventures. The share of the profit after tax from Joint Ventures for
the year ending 31 December 2014 was EUR0.6m (2013: EUR0.01m).
Due to the relative size of these amounts, the share of results
from Joint Ventures has been included within the Operating Costs
line of the Income Statement.
The effect of adoption of IFRS 11 on the individual line items
in the Statement of Financial Position and the Statement of Cash
Flows is not material.
11 BUSINESS COMBINATIONS
On 28 February 2014 the Group acquired 95% of the share capital
in Dri-Design Inc., a high-end architectural facades business in
the US. This acquisition will allow the Group to expand its product
offering to customers in its Panels division.
On 1 November 2014 the Group's Insulation Boards division
acquired the trade of the Building Insulation division of Pactiv
LLC. Pactiv building insulation produces a comprehensive range of
XPS insulation products under the GreenGuard brand which it
supplies throughout the USA from its manufacturing base in
Virginia.
On 3 November 2014 the Group acquired 90% of the share capital
in Pal International, a rigid insulation boards business with a
manufacturing presence in Dubai and India and sales throughout the
Middle East and North Africa. This acquisition will allow the
Group's Insulation Boards division to expand its geographical
footprint into these new markets.
The provisional fair values of the acquired assets and
liabilities at acquisition are set out below:
Pactiv Pal Dri-Design Total
EURm EURm EURm EURm
Non-current assets
Intangible assets 13.1 - 5.1 18.2
Property, plant
and equipment 4.3 5.7 0.2 10.2
Deferred tax asset - - 0.5 0.5
Current assets
Inventories 9.8 3.3 1.0 14.1
Trade and other
receivables 0.6 9.4 2.9 12.9
Current liabilities
Trade and other
payables (7.5) (8.0) (2.2) (17.7)
Provisions for
liabilities (1.4) (0.6) (0.7) (2.7)
Total identifiable
assets 18.9 9.8 6.8 35.5
Goodwill 37.3 19.8 21.8 78.9
Total consideration 56.2 29.6 28.6 114.4
------- ------- ----------- --------
Satisfied by:
Cash (net of cash
acquired) 56.2 20.9 23.4 100.5
Deferred contingent
consideration - 8.7 5.2 13.9
------- ------- ----------- --------
56.2 29.6 28.6 114.4
------- ------- ----------- --------
Since the valuation of the fair value of assets and liabilities
recently acquired is still in progress, the above values have been
determined provisionally.
The acquired goodwill is attributable principally to the profit
generating potential of the businesses, together with cross-selling
opportunities and other synergies expected to be achieved from
integrating the acquired businesses into the Group's existing
business.
In the case of Pal and Dri Design, the deferred contingent
consideration includes a potential amount payable to the former
owners if certain trading targets are achieved and an estimate of
the cost of the buy-out of the non-controlling interest. There are
put and call option arrangements in place that are exercisable
between years 3 and 5 and are based on a multiple of EBITDA. As
these options are expected to be exercised, the Group has
consolidated the acquired entities as 100% subsidiaries.
In the post-acquisition period to 31 December 2014, the acquired
businesses contributed revenue of EUR28.3m and a trading profit of
EUR3.3m to the Group's results.
12 POST BALANCE SHEET EVENTS
The Group has announced two acquisitions which are in the
process of obtaining regulatory approval at the date of approval of
these financial statements. Further details of these possible
acquisitions are set out below.
Vicwest
On 11 November 2014 Kingspan announced that it had entered into
an agreement to acquire the Building Products ("BP") division of
Vicwest Inc ("Vicwest").
Vicwest is a Canadian listed company. Its BP division comprises
three Insulated Panel manufacturing plants in addition to a number
of profiling facilities across Canada and the US.
The consideration is expected to be circa C$154.5m inclusive of
debt and reorganisation costs, payable in cash on completion. The
BP revenues for the 12 months to 31 December 2013 were C$253.7m,
and pro forma EBITDA for the same period was C$13.2m. Forecast pro
forma EBITDA for 2014 is C$15.0m. BP had gross assets of C$127.1m
as at 30 June 2014. Post acquisition, Kingspan plans to implement
further changes in the BP business and the impact of these changes
is expected to increase the annual pro forma EBITDA to circa
C$18.0m. The current management team of the BP business will be
transferring to Kingspan following completion.
The acquisition of the BP business will be funded from
Kingspan's existing credit facilities.
Completion of the Arrangement is subject to a number of
conditions including, but not limited to, anti trust approvals.
Subject to receipt of all required approvals, closing is expected
to occur in the first half of 2015.
Joris Ide
On 27 January 2015 Kingspan announced that it had entered into
an agreement with Ergon Capital Partners II NV and Bremhove NV to
acquire 100% of the shares of Steel Partners NV, the holding
company of the Joris Ide Group ("Joris Ide").
Joris Ide is a pan European manufacturer and supplier of
insulated panels, profiles and related accessories, with leading
market positions in France and the Benelux. It has 5 insulated
panel manufacturing facilities in Belgium, Germany, Romania and
Russia, and 11 regional manufacturing sites across Europe, which
provide a uniquely complementary geographic footprint to Kingspan's
existing European insulated panel business.
The consideration for the business will be circa EUR315m
inclusive of debt, which will vary depending on the specific amount
of working capital and debt on completion. The consideration will
be satisfied on completion partly in cash and by the assumption of
debt, with the balance of the consideration satisfied by the issue
of three million shares in Kingspan Group plc to Bremhove NV, which
is the holding company of the founder and major shareholder, Mr
Joris Ide.
In the 12 months to 31 December 2014, Joris Ide had unaudited
revenues of EUR465m and EBITDA of EUR36m. Revenues and adjusted
EBITDA to 31 December 2013 were EUR435m and EUR28m respectively. As
at 31 December 2013, Joris Ide had gross assets of EUR316m, and on
completion net assets excluding goodwill are expected to be
EUR135m.
The existing management team of Joris Ide will be retained in
the business, and will continue to manage and develop the business
distinct from the Kingspan brand. The acquisition is conditional on
regulatory clearance, and is expected to complete towards the end
of the first quarter of 2015.
As the initial accounting for the above business combinations is
incomplete further details on these two prospective acquisitions
has not been provided.
There have been no other material events subsequent to 31
December 2014 which would require disclosure in this report.
13 EXCHANGE RATES
The financial information included in this report is expressed
in Euro which is the presentation currency of the Group and the
functional currency of the Company. Results and cash flows of
foreign subsidiary undertakings have been translated into Euro at
actual exchange rates or average rates, where this is a reasonable
approximation, and the related Statements of Financial Position
have been translated at the rates of exchange ruling at the balance
sheet date.
Exchange rates of material currencies used were as follows:
Average rate Closing rate
Euro = 2014 2013 2014 2013
Pound Sterling 0.806 0.849 0.780 0.833
US Dollar 1.328 1.329 1.215 1.377
Canadian Dollar 1.467 1.369 1.409 1.464
Australian Dollar 1.473 1.378 1.483 1.540
Czech Koruna 27.534 25.976 27.744 27.401
Polish Zloty 4.185 4.195 4.259 4.151
Hungarian Forint 308.69 296.870 314.85 297.080
14 CAUTIONARY STATEMENT
This report contains forward-looking statements. These
statements have been made by the directors in good faith based on
the information available to them up to the time of their approval
of this report. Due to the inherent uncertainties, including both
economic and business risk factors underlying such forward looking
information, actual results may differ materially from those
expressed or implied by these forward-looking statements. The
directors undertake no obligation to update any forward-looking
statements contained in this report, whether as a result of new
information, future events, or otherwise.
15 BOARD APPROVAL
This announcement was approved by the Board on 23 February
2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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