TIDMKGP
RNS Number : 6745D
Kingspan Group PLC
21 February 2020
KINGSPAN GROUP PLC
PRELIMINARY RESULTS
Year Ended 31 December 2019
KINGSPAN GROUP PLC
RESULTS FOR THE YEARED 31 DECEMBER 2019
Kingspan, the global leader in high-performance insulation and
building envelope solutions, reports its preliminary results for
the year ended 31 December 2019.
Financial Highlights:
-- Revenue up 7% to EUR4.7bn, (pre-currency, up 6%).
-- Trading profit up 12% to EUR497.1m, (pre-currency, up 10%).
-- Free cashflow up 9% to EUR337.1m.
-- Group trading margin of 10.7%, an increase of 50bps.
-- Basic EPS up 11% to 204.6 cent.
-- Final dividend per share of 33.5 cent. Total dividend for the year up 10.7% to 46.5 cent.
-- Year-end net debt(1) of EUR633.2m (2018: EUR728.3m). Net
debt(1) to EBITDA(1) of 1.1x (2018: 1.4x).
-- ROCE of 17.3% (2018: 16.8%).
Operational Highlights:
-- Insulated Panels sales growth of 7%. Strong performance in
the Americas. Mainland Europe performed well overall with the
notable exception of Germany. Difficult UK market particularly in
the second half. Further headway in key markets on QuadCore(TM),
now 9% of global sales.
-- Insulation Boards sales growth of 2%. Continuing progress on
Kooltherm (R) and share gain from traditional materials.
-- Strong underlying volume growth of 4% and 8% in Insulated
Panels and Insulation Boards partially offset by the pricing impact
of raw material deflation.
-- Light & Air sales growth of 12% buoyed by a strong
performance in the US. Solid activity in Mainland Europe.
Daylighting centre of excellence under construction in Ireland.
-- Water & Energy sales growth of 3% with progress in the
Nordics, a difficult UK environment and more subdued rainwater
harvesting activity in Australia.
-- Data & Flooring sales growth of 13% reflecting strong
datacentre activity and geographic expansion in Europe.
Summary Financials:
2019 2018 change
------------------- -------- -------- -------
Revenue EURm 4,659.1 4,372.5 +7%
Trading Profit(2)
EURm 497.1 445.2 +12%
Trading Margin(3) 10.7% 10.2% +50bps
Profit after tax
EURm 377.8 335.8 +13%
EPS (cent) 204.6 184.0 +11%
------------------- -------- -------- -------
(1) Net Debt and EBITDA both pre-IFRS 16
(2) Operating profit before amortisation of intangibles
(3) Trading profit divided by total revenue
Gene M. Murtagh, Chief Executive of Kingspan commented:
"2019 was another year of solid growth for the business, ending
a decade during which the company's revenue increased fourfold, and
trading profit increased sevenfold. Performance this year was
helped by increased penetration of our proprietary high-performance
insulation products QuadCore(TM) and Kooltherm (R) . This
structural shift in building techniques and materials used also
drove our increased profit margins.
Organic expansion is supported by new production facilities we
have commissioned during the year in the US, Brazil and Sweden, and
the level of demand building in Southeast Asia will soon justify
investment in local manufacturing capacity there. We also continue
to focus on acquisition opportunities, and have a healthy pipeline
of targets under consideration.
The uncertain economic outlook in our end markets has seen a
slow start to 2020, however, Kingspan's longer-term growth
potential is supported by investment in innovation to ensure we
have a product suite that continues to differentiate us from the
competition, operated through a sustainable business model that is
underpinned by the ambitious Planet Passionate targets we set in
2019."
For further information contact:
Murray Consultants Tel: +353 (0) 1 4980 300
Douglas Keatinge
Business Review
2019 capped off a decade of great progress for Kingspan with
revenue and trading profit ahead of prior year by 7% and 12%
respectively. Over the past decade, sales and trading profit grew
in excess of fourfold and sevenfold respectively. Group sales
reached almost EUR4.7bn, and trading profit EUR497m. Despite the
significant macro instability in a number of our key markets the
Group performed well in the first half, but was weaker towards year
end. Predictably, the UK was the most notable illustration of
this.
Underlying volume growth at the larger Insulated Panels and
Insulation Boards divisions was 4% and 8% respectively. Underlying
revenue was 1% ahead in Insulated Panels and 1% lower in Insulation
Boards reflecting the impact of lower pricing due to raw material
deflation over prior year.
During the year we invested a total of EUR305m continuing on our
path of both organic and new acquisition expansion worldwide. New
facilities were either completed or commenced in Sweden, UAE, USA,
the Netherlands and Brazil. Acquisition investment was EUR144m,
comprising most notably Bacacier in France for EUR122m.
2019 marked the launch of our global Planet Passionate
initiative, building upon the last decade of progress on our Net
Zero Energy agenda. We have now embarked on our next ambitious 10-
year journey to radically advance Kingspan across the four key
themes of Energy, Carbon, Circularity and Water. This agenda is
central to our purpose and entails the following targets and
timelines:
Energy Maintain our Net Zero Energy status
Increase our direct use of renewable energy to 60% by
2030
Increase our on-site generation of renewable energy to
20% by 2030
Install solar PV systems on all wholly owned facilities
by 2030
Net zero carbon manufacturing by 2030
Carbon 50% reduction in product CO(2) intensity from our primary
supply partners by 2030
100% zero emission company funded cars by 2025
-----------------------------------------------------------
1 billion PET bottles upcycled into our manufacturing
Circularity processes by 2025
All QuadCore(TM) insulation to utilise upcycled PET by
2025
Zero company waste to landfill by 2030
-----------------------------------------------------------
Water 5 active ocean clean-up projects by 2025
100 million litres of rainwater harvested by 2030
-----------------------------------------------------------
Insulated Panels
FY '19 FY '18 Change
---------------- -------- -------- --------
Turnover EURm 3,031.9 2,823.1 +7%(1)
Trading Profit
EURm 316.1 281.8 +12%
Trading Margin 10.4% 10.0% +40bps
---------------- -------- -------- --------
(1) Comprising underlying +1%, currency +1% and acquisitions +5%. Like-for-like volume +4%.
QuadCore(TM) penetration reached 9% globally, with sales up 36%
over prior year. In Mainland Europe, the trading picture was quite
mixed overall although most regions started the year ahead of 2018.
France and Spain performed particularly well throughout the year as
the Kingspan model has become more embedded in these markets in
recent years. In the Benelux, revenue was marginally ahead although
the Netherlands weakened in the last quarter owing to environmental
legislation that affected progress on many building sites. This
headwind is expected to ease somewhat in 2020. The German market
has been key for us in recent years although it stagnated during
2019. We have taken steps to ensure our competitiveness is
enhanced, including significant focus on QuadCore(TM). Poland and
the broader Central European markets were steady as was our
activity in the Nordics.
Significant progress was achieved across all markets in the
Americas over the year. Penetration in the USA and Canada has
continued to grow as modern and more efficient methods of
construction become increasingly adopted and Kingspan's solutions
become the basis of specification in many applications which
historically would have used more traditional materials. The
roll-out of QuadCore(TM) is also gaining momentum and this will be
further enabled with the new production line in Modesto,
California, that is nearing completion. In Latin America, progress
has also been encouraging with a gradual gain in position in Mexico
and continuing our momentum in Brazil where we opened a new
facility in Cambui late last year. We have also broken ground on a
fifth plant in the region which will be in southern Brazil. Other
regions in Latin America are now also under developmental
review.
At the outset of 2019 the UK backlog and general activity was
healthy, showing no signs of the weakness that ensued in the second
half of the year. As the political uncertainty grew through the
year more building projects were postponed which, when combined
with accelerating deflation in the latter part of the year,
resulted in a disappointing outturn overall. QuadCore(TM), however,
continued to grow in share. With the momentum in QuadCore(TM)
continuing through early 2020, together with a more stable
political backdrop, we should see activity improve from the evident
weakness of the first quarter.
Activity for Insulated Panels in Australia was solid over the
year while in New Zealand the business advanced significantly over
2018. Although relatively embryonic in Southeast Asia, revenue has
grown year-on-year and we continue to build a base level of demand
in the region which should necessitate local manufacturing in the
not too distant future. Our Indian business delivered its plan for
the year while the Middle East remains a challenge for the Panels
business.
Volume growth in Ireland was healthy for most of the year but
weakened towards year-end, pointing towards a slow start to
2020.
Insulation Boards
FY '19 FY '18 Change
--------------------- ------- ------- ----------
Turnover EURm 876.9 864.1 +2%(1)
Trading Profit EURm 117.1 105.1 +11%
Trading Margin 13.4% 12.2% +120bps
--------------------- ------- ------- ----------
(1) Comprising underlying -1%, currency +1% and acquisitions
+2%. Like-for-like volume +8%.
On the whole, the Insulation Boards business performed well
across Continental Europe. 2018 was marred by heavy raw material
inflation followed by rapid deflation through 2019. This led to a
challenge in maintaining price, and of course margins. Despite
this, volumes grew substantially in the Benelux and Southern Europe
and improved in Germany and the Nordics. A new Kooltherm (R) plant
will come on stream later this year in Sweden to support continued
conversion from legacy mineral fibre insulation. Kooltherm (R)
volumes grew by 15% in the year.
In the UK, volumes were strong in the early part of the period
followed by weakness in the latter half of the year, largely owing
to the uncertain political backdrop which was very pronounced at
that point.
Progress continued in North America where our presence to date
has been limited to a single XPS facility in the North East. We
expect to build and commission a new PIR/QuadCore(TM) board
facility during 2021/2022 which will be the first plant of our
phased roll-out in the US, and will sit alongside a new Insulated
Panel facility currently under development in Pennsylvania.
Our business in the Middle East delivered another year of solid
growth largely in the Industrial Insulation sphere. Strong recovery
was evident in the Australasia market as Kooltherm (R) grew its
presence against local legacy mineral fibre and other insulation
materials. In Ireland, the business had a solid outcome for the
year across both the Insulation Board and structural residential
Timberframe business units.
Light & Air
FY '19 FY '18 Change
--------------------- ------- ------- ------------
Turnover EURm 327.7 291.8 +12% (1)
Trading Profit EURm 25.2 21.5 +17%
Trading Margin 7.7% 7.4% +30bps
--------------------- ------- ------- ------------
(1) Comprising underlying +9%, currency +1% and acquisitions
+2%.
Revenue grew by 12% in 2019 and trading profit by 17% aided by
improving synergies and efficiencies as this relatively embryonic
business segment evolves. The story was somewhat mixed however with
activity in Germany weakening notably through the second half and
the Benelux performed similarly. In contrast to this, France and
Southern Europe generally experienced attractive growth supported
by the recently commissioned new facility in Lyon from which we
anticipate continued momentum through the current year.
North America delivered a stand-out performance across both the
standard and architecturally bespoke offerings. The UniQuad (R)
wall-light, produced near Chicago, has also been launched across
Europe where we anticipate penetration growth in the coming
years.
Work has commenced on a significant plant expansion in Ireland
to extrude polycarbonate daylighting for both roof and wall
applications and we anticipate production to commence mid-2021.
Water & Energy
FY '19 FY '18 Change
---------------- ------- ------- --------
Turnover EURm 208.1 202.9 +3%(1)
Trading Profit
EURm 14.2 14.2 -
Trading Margin 6.8% 7.0% -20bps
---------------- ------- ------- --------
(1) Comprising underlying -3% and acquisitions +6%
2019 was a year of stability for the Water & Energy business
segment with profit in line with prior year. The UK and Ireland
were both broadly flat on prior year, Mainland Europe grew and in
Australia sales weakened as housing starts in New South Wales came
under pressure. This pattern can be expected to continue into the
current year and more longer term we would expect to grow large
scale water storage applications in more rural and afforested parts
of Australia. The focus of this wider unit will increasingly
revolve around water applications with a plan to establish a more
global footprint beyond the European and Australian presence we
currently have.
Data & Flooring
FY '19 FY '18 Change
---------------- ------- ------- ----------
Turnover EURm 214.5 190.6 +13%(1)
Trading Profit
EURm 24.5 22.6 +8%
Trading Margin 11.4% 11.9% -50bps
---------------- ------- ------- ----------
(1) Comprising underlying +4%, currency +3% and acquisitions +6%
2019 was a positive year for our global Data & Flooring
business segment largely driven by an increased product offering
into the data sector and our growing geographic presence in
Europe.
The UK was predictably weak however as office construction
faltered particularly in the greater London area. We anticipate
this trend to remain a drag through 2020 compensated somewhat by
growth in Germany and the Benelux. Whilst the data opportunity
remains front and central to the division's future, the projects
can be large and lumpy with respect to the timing, resulting in an
inconsistent pattern of revenue. 2020 is expected to be no
different in that regard.
Innovation
During the year we completed and opened our Global Innovation
Centre, IKON, which sits alongside our headquarters in Kingscourt,
Ireland.
The primary near-term focus is to soft launch PowerPanel (R)
2.0, and the fibre-free A1 AlphaCore (R) before the end of 2020.
Both will offer Kingspan a significantly broadened specification
opportunity and will no doubt be followed by more advanced
iterations over the coming years. QuadCore(TM) 2.0 and the next
generation of Kooltherm (R) are also at the early stages of
development as part of our ongoing innovation agenda.
Financial Review
The Financial Review provides an overview of the Group's
financial performance for the year ended 31 December 2019 and of
the Group's financial position at that date.
Overview of results
Group revenue increased by 7% to EUR4.7bn (2018: EUR4.4bn) and
trading profit increased by 12% to EUR497.1m (2018: EUR445.2m) with
an increase of 50 basis points in the Group's trading profit margin
to 10.7% (2018: 10.2%). Basic EPS for the year was 204.6 cent
(2018: 184.0 cent), representing an increase of 11%.
The Group's underlying sales and trading profit growth by
division are set out below:
Sales Underlying Currency Acquisition Total
------------------- ----------- --------- ------------ ------
Insulated Panels +1% +1% +5% +7%
Insulation Boards -1% +1% +2% +2%
Light & Air +9% +1% +2% +12%
Water & Energy -3% - +6% +3%
Data & Flooring +4% +3% +6% +13%
----------- --------- ------------ ------
Group +1% +1% +5% +7%
----------- --------- ------------ ------
The Group's trading profit measure is earnings before interest,
tax and amortisation of intangibles:
Trading Profit Underlying Currency Acquisition Total
------------------- ----------- --------- ------------ ------
Insulated Panels +7% +1% +4% +12%
Insulation Boards +6% +2% +3% +11%
Light & Air +11% +2% +4% +17%
Water & Energy -2% - +2% -
Data & Flooring - +3% +5% +8%
----------- --------- ------------ ------
Group +6% +2% +4% +12%
----------- --------- ------------ ------
The key drivers of sales and trading profit performance in each
division are set out in the Business Review.
IFRS 16 Leases
A new accounting standard, IFRS 16 Leases, was adopted with
effect from 1 January 2019. The standard requires leases which were
previously treated as operating leases to be recognised as a lease
liability with the associated asset capitalised and treated as a
right of use asset. On 1 January 2019, EUR127.9m of leases were
recognised as liabilities on adoption of the standard and EUR128.8m
capitalised as right of use assets. During 2019 depreciation on the
right of use assets was EUR30.0m and the associated lease rental
charge decreased by EUR31.8m leading to an increase in operating
profit of EUR1.8m. The interest charge on the associated leases was
EUR3.8m and the aggregate impact of IFRS 16 on profit before tax
was a decrease of EUR2.0m.
Finance costs (net)
Finance costs for the year increased by EUR2.7m to EUR20.8m
(2018: EUR18.1m). A net non-cash charge of EUR0.1m (2018: credit of
EUR0.6m) 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 EUR16.7m (2018: EUR18.0m).
This decrease reflects lower average gross and net debt levels in
2019. The interest expense is driven extensively by gross debt
balances with low cash yields in the current environment. An amount
of EUR3.8m (2018: EURnil) was recorded as interest on leases
capitalised in accordance with IFRS 16 which was adopted with
effect from 1 January 2019.
Taxation
The tax charge for the year was EUR76.6m (2018: EUR69.1m) which
represents an effective tax rate of 16.9% (2018: 17.1%). The
decrease in the effective rate reflects, primarily, the change in
the geographical mix of earnings year on year and reductions in
certain territorial tax rates.
Dividends
The Board has proposed a final dividend of 33.5 cent per
ordinary share payable on 7 May 2020 to shareholders registered on
the record date of 27 March 2020. When combined with the interim
dividend of 13.0 cent per share, the total dividend for the year
increased to 46.5 cent (2018: 42.0 cent), an increase of 10.7%.
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 has a number
of smaller defined benefit pension liabilities in Mainland Europe.
The net pension liability in respect of all defined benefit schemes
was EUR15.1m (2018: EUR13.1m) as at 31 December 2019.
Intangible assets and goodwill
Intangible assets and goodwill increased during the year by
EUR98.0m to EUR1,600.1m (2018: EUR1,502.1m). Intangible assets and
goodwill of EUR95.2m were recorded in the year relating to
acquisitions completed by the Group. An increase of EUR24.7m arose
due to year end exchange rates used to translate intangible assets
and goodwill other than those denominated in euro, offset by annual
amortisation of EUR21.9m (2018: EUR22.2m).
Financial key performance indicators
The Group has a set of financial key performance indicators
(KPIs) which are presented in the table below. These KPIs are used
to measure the financial and operational performance of the Group
and are used to track ongoing progress and also in achieving medium
and long term targets to maximise shareholder return.
Key performance indicators 2019 2018
---------------------------- ------ ------
Basic EPS growth 11% 16%
Sales growth 7% 19%
Trading margin 10.7% 10.2%
Free cashflow (EURm) 337.1 308.4
Return on capital employed 17.3% 16.8%
Net debt/EBITDA 1.1x 1.4x
---------------------------- ------ ------
(a) Basic EPS growth . The growth in EPS is accounted for
primarily by a 12% increase in trading profit. The minority
interest amount increased year on year due to a strong performance
at the Group's operations which have minority stakeholders, leading
to a basic EPS increase of 11%.
(b) Sales growth of 7% (2018: 19%) was driven by a 5%
contribution from acquisitions, a 1% increase in underlying sales
and a 1% increase due to the effect of currency translation. Whilst
underlying sales growth overall was a modest 1%, volume growth
exceeded this in many markets although it was partially offset by
price deflation due to raw material price reductions.
(c) Trading margin by division is set out below:
2019 2018
------------------- ------ ------
Insulated Panels 10.4% 10.0%
Insulation Boards 13.4% 12.2%
Light & Air 7.7% 7.4%
Water & Energy 6.8% 7.0%
Data & Flooring 11.4% 11.9%
------------------- ------ ------
The Insulated Panels division trading margin advanced year on
year reflecting ongoing progress in sales of QuadCore(TM) and the
market mix of sales. The trading margin improvement in the
Insulation Boards division reflects a positive Kooltherm (R) mix,
operating leverage as a consequence of volume growth and a positive
lag effect on raw material price reductions. The increased trading
margin in Light & Air reflects improved efficiencies overall
and the market mix of sales. The Water & Energy trading margin
was broadly stable year on year. The decrease in trading margin in
Data & Flooring reflects the geographic market and product mix
of sales year on year.
(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 2019 2018
EURm EURm
-------------------------------- -------- --------
EBITDA* 579.8 521.2
Movement in working capital** 5.6 2.3
Movement in provisions 1.7 (5.8)
Net capital expenditure (154.3) (131.3)
Net interest paid (16.7) (15.6)
Income taxes paid (87.2) (75.0)
Other including non-cash items 8.2 12.6
Free cashflow 337.1 308.4
-------- --------
*Earnings before finance costs, income taxes, depreciation,
amortisation and the impact of IFRS 16
**Excludes working capital on acquisition but includes working
capital movements since that point
Working capital at year end was EUR582.8m (2018: EUR543.9m) and
represents 11.9% (2018: 11.5%) of annualised turnover based on
fourth quarter sales. This metric is closely managed and 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. The movement year on
year reflects a 40 basis points increase in underlying working
capital levels primarily due to higher inventory levels in recently
acquired businesses.
(e) Return on capital employed , calculated as operating profit
divided by total equity plus net debt, was 17.3% in 2019 (2018:
16.8%) or 17.7% including the annualised impact of acquisitions.
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. The increase in
profitability together with the deployment of further capital has
enhanced returns on capital during the year.
(f) Net debt to EBITDA measures the ratio of net debt to
earnings and at 1.1x (2018: 1.4x) is comfortably less than the
Group's banking covenant of 3.5x in both 2019 and 2018. The
calculation is pre-IFRS 16 which is consistent with the Group's
banking covenant.
Acquisitions and capital expenditure
During the period the Group made the following acquisitions for
a total upfront cash consideration of EUR142.2m.
On 6 November 2019, the purchase of 85% of Group Bacacier SAS
for an initial cash amount of EUR122.0m. The Group also made a
number of smaller acquisitions during the year for a combined cash
consideration of EUR22.2m:
-- the purchase of 100% of the share capital of WeGo Floortec
GmbH, a German manufacturer of access floors ;
-- the purchase of 100% of the share capital of Epur SA, a French water treatment business; and
-- the purchase of the assets of SkyCo a US Light & Air business.
The deferred consideration paid during the period of EUR59.7m
(2018: EUR3.1m) represents EUR30m relating to the Synthesia
business which was acquired in 2018 and EUR29.7m relating to the
Isoeste business which was acquired in 2017.
Capital structure and Group financing
The Group funds itself through a combination of equity and debt.
Debt is funded through syndicated and bilateral bank facilities and
private placement loan notes. The primary bank debt facility is a
EUR451m revolving credit facility, which was undrawn at year end
and which matures in June 2022. In June 2019 an additional 3 year
bank facility of EUR300m was arranged, which was undrawn at year
end. As at 31 December 2019, the Group also had private placement
loan note funding net of related derivatives totalling EUR814m. The
weighted average maturity of the notes is 4.5 years. Subsequent to
the year end the Group arranged a bilateral 'Green Loan' of EUR50m
to fund the Group's Planet Passionate initiatives.
The Group had significant available undrawn facilities and cash
balances which, in aggregate, were EUR942m at 31 December 2019.
This, together with the Green Loan of EUR50m provides appropriate
headroom for ongoing operational requirements and development
funding.
Net debt
Net debt decreased by EUR95.1m during 2019 to EUR633.2m (2018:
EUR728.3m). This is analysed in the table below:
Movement in net debt 2019 2018
EURm EURm
----------------------------------- -------- --------
Free cashflow 337.1 308.4
Acquisitions (142.2) (469.2)
Deferred consideration paid (59.7) (3.1)
Share issues 0.1 0.1
Repurchase of treasury shares (0.6) -
Dividends paid (77.6) (68.3)
Dividends paid to non-controlling
interests (0.4) (0.1)
-------- --------
Cashflow movement 56.7 (232.2)
Exchange movements on translation 8.4 (2.2)
Deferred consideration 30.0 (30.0)
-------- --------
Movement in net debt 95.1 (264.4)
Net debt at start of year (728.3) (463.9)
-------- --------
Net debt at end of year (633.2) (728.3)
-------- --------
Key financial covenants
The majority of Group borrowings are subject to primary
financial covenants calculated in accordance with lenders' facility
agreements which exclude the impact of IFRS 16:
- 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:
2019 2018
Covenant Times Times
--------------------- ------------- ------ ------
Net debt/EBITDA Maximum 3.5 1.1 1.4
EBITDA/Net interest Minimum 4.0 34.1 28.8
--------------------- ------------- ------ ------
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 and investor team presented at nine
capital market conferences and conducted 351 institutional
one-on-one and group meetings.
Share price and market capitalisation
The Company's shares traded in the range of EUR35.70 to EUR55.25
during the year. The share price at 31 December 2019 was EUR54.45
(31 December 2018: EUR37.38) giving a market capitalisation at that
date of EUR9.9bn (2018: EUR6.7bn). Total shareholder return for
2019 was 47.2%.
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.
Looking Ahead
As flagged in our most recent trading update underlying sales in
the early part of 2020 are behind prior year. Despite the poor
start we have experienced some element of recovery in order
placement in recent weeks and our backlog globally is in reasonable
shape. This could point towards an improved second quarter.
Our acquisitions pipeline is healthy with a number of projects
currently under consideration. Furthermore, the understandable
ratcheting in recent months of the climate debate chimes fully with
the advanced energy efficiency solutions provided by Kingspan and
our Planet Passionate agenda. This, combined with the global
footprint of our business and the strength of the Group's balance
sheet, positions Kingspan well for the years ahead.
On behalf of the Board
Gene M. Murtagh Geoff Doherty
Chief Executive Officer Chief Financial Officer
21 February 2020 21 February 2020
Kingspan Group plc
Consolidated Income Statement
for the year ended 31 December 2019
2019 2018
EURm EURm
Note
REVENUE 2 4,659.1 4,372.5
Cost of sales (3,304.3) (3,158.0)
---------- ----------
GROSS PROFIT 1,354.8 1,214.5
Operating costs, excluding intangible
amortisation (857.7) (769.3)
---------- ----------
TRADING PROFIT 2 497.1 445.2
Intangible amortisation (21.9) (22.2)
OPERATING PROFIT 475.2 423.0
Finance expense 3 (23.7) (19.5)
Finance income 3 2.9 1.4
---------- ----------
PROFIT FOR THE YEAR BEFORE INCOME
TAX 454.4 404.9
Income tax expense (76.6) (69.1)
---------- ----------
PROFIT FOR THE YEAR FROM CONTINUING
OPERATIONS 377.8 335.8
---------- ----------
Attributable to owners of Kingspan
Group plc 369.4 330.9
Attributable to non-controlling
interests 8.4 4.9
---------- ----------
377.8 335.8
---------- ----------
EARNINGS PER SHARE FOR THE YEAR
Basic 8 204.6c 184.0c
Diluted 8 202.9c 182.3c
Gene M. Murtagh Geoff Doherty 21 February 2020
Chief Executive Officer Chief Financial
Officer
Kingspan Group plc
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2019
2019 2018
EURm EURm
Profit for the year 377.8 335.8
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating
foreign operations 61.0 4.0
Effective portion of changes in
fair value of cash flow hedges (0.2) 0.3
Items that will not be reclassified subsequently to profit or
loss
Actuarial (losses)/gains on defined
benefit pension schemes (0.2) 0.9
Income taxes relating to actuarial
losses/gains on defined benefit
pension schemes - (0.2)
---------- ---------
Total other comprehensive income 60.6 5.0
---------- ---------
Total comprehensive income for
the year 438.4 340.8
---------- ---------
Attributable to owners of Kingspan
Group plc 430.2 337.1
Attributable to non-controlling
interests 8.2 3.7
---------- ---------
438.4 340.8
---------- ---------
Kingspan Group plc
Consolidated Statement of Financial Position
as at 31 December 2019
2019 2018
EURm EURm
ASSETS
NON-CURRENT ASSETS
Goodwill 1,506.9 1,391.0
Other intangible assets 93.2 111.1
Financial asset 8.2 8.2
Property, plant and equipment 965.2 850.5
Right of use assets 121.6 -
Derivative financial instruments 27.3 27.4
Retirement benefit assets 9.2 7.4
Deferred tax assets 14.1 15.6
---------- ----------
2,745.7 2,411.2
---------- ----------
CURRENT ASSETS
Inventories 557.6 524.9
Trade and other receivables 794.2 798.6
Derivative financial instruments - 0.2
Cash and cash equivalents 190.9 294.5
---------- ----------
1,542.7 1,618.2
TOTAL ASSETS 4,288.4 4,029.4
---------- ----------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 768.9 779.8
Provisions for liabilities 58.0 47.5
Lease liabilities 25.6 -
Derivative financial instruments 0.1 -
Deferred consideration (including
contingent consideration) - 59.5
Interest bearing loans and
borrowings 3.1 53.2
Current income tax liabilities 72.9 78.8
---------- ----------
928.6 1,018.8
---------- ----------
NON-CURRENT LIABILITIES
Retirement benefit obligations 24.3 20.5
Provisions for liabilities 51.7 56.8
Interest bearing loans and
borrowings 848.3 967.0
Lease liabilities 96.7 -
Deferred tax liabilities 31.9 40.8
Deferred contingent consideration 186.5 136.6
1,239.4 1,221.7
---------- ----------
TOTAL LIABILITIES 2,168.0 2,240.5
---------- ----------
NET ASSETS 2,120.4 1,788.9
---------- ----------
EQUITY
Share capital 23.8 23.7
Share premium 95.6 95.6
Capital redemption reserve 0.7 0.7
Treasury shares (11.8) (12.7)
Other reserves (259.6) (273.2)
Retained earnings 2,221.6 1,916.2
---------- ----------
EQUITY ATTRIBUTABLE TO OWNERS
OF KINGSPAN GROUP PLC 2,070.3 1,750.3
NON-CONTROLLING INTEREST 50.1 38.6
---------- ----------
TOTAL EQUITY 2,120.4 1,788.9
---------- ----------
Gene M. Murtagh Geoff Doherty 21 February 2020
Chief Executive Officer Chief Financial
Officer
Kingspan Group plc
Consolidated Statement of Changes in Equity
for the year ended 31 December 2019
Capital Cash Share Total
Share Share Redemption Treasury Translation Flow Based Put Attributable Non- Total
Capital Premium Reserve Shares Reserve Hedging Payment Revaluation Option Retained to Owners Controlling Equity
Reserve Reserve Reserve Liability Earnings of the Interest
Reserve Parent
EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
Balance at 1
January 2019 23.7 95.6 0.7 (12.7) (172.0) 0.5 36.9 0.7 (139.3) 1,916.2 1,750.3 38.6 1,788.9
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Transactions with owners recognised directly in equity
Employee share
based
compensation 0.1 - - - - - 13.1 - - - 13.2 - 13.2
Tax on employee
share
based
compensation - - - - - - 1.7 - - 2.5 4.2 - 4.2
Exercise or
lapsing of
share options - - - 1.5 - - (12.8) - - 11.3 - - -
Repurchase of
shares - - - (0.6) - - - - - - (0.6) - (0.6)
Dividends - - - - - - - - (77.6) (77.6) (0.4) (78.0)
Transactions
with
non-controlling
interests:
Arising on
acquisition - - - - - - - - (26.7) - (26.7) 3.7 (23.0)
Fair value
movement - - - - - - - - (22.7) - (22.7) - (22.7)
Transactions
with owners 0.1 - - 0.9 - - 2.0 - (49.4) (63.8) (110.2) 3.3 (106.9)
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Total
comprehensive
income
for the year
Profit for the
year - - - - - - - - - 369.4 369.4 8.4 377.8
Other
comprehensive
income:
Items that may be reclassified subsequently to profit or loss
Cash flow
hedging in
equity
- current year - - - - - (0.2) - - - - (0.2) - (0.2)
- tax impact - - - - - - - - - - - - -
Exchange
differences on
translating
foreign
operations - - - - 61.2 - - - - - 61.2 (0.2) 61.0
Items that will not be reclassified subsequently to profit or loss
Actuarial losses
on defined
benefit pension
scheme - - - - - - - - - (0.2) (0.2) - (0.2)
Income taxes - - - - - - - - - - - - -
relating
to actuarial
losses on
defined benefit
pension
scheme
Total
comprehensive
income
for the year - - - - 61.2 (0.2) - - - 369.2 430.2 8.2 438.4
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Balance at 31
December
2019 23.8 95.6 0.7 (11.8) (110.8) 0.3 38.9 0.7 (188.7) 2,221.6 2,070.3 50.1 2,120.4
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Kingspan Group plc
Consolidated Statement of Changes in Equity
for the year ended 31 December 2018
Capital Cash Share Total
Share Share Redemption Treasury Translation Flow Based Put Attributable Non- Total
Capital Premium Reserve Shares Reserve Hedging Payment Revaluation Option Retained to Owners Controlling Equity
Reserve Reserve Reserve Liability Earnings of the Interest
Reserve Parent
EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
Balance at 1
January 2018 23.6 95.6 0.7 (14.0) (177.2) 0.2 35.2 0.7 (79.4) 1,642.7 1,528.1 39.9 1,568.0
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Transactions with owners recognised directly in equity
Employee share
based
compensation 0.1 - - - - - 12.3 - - - 12.4 - 12.4
Tax on employee
share
based
compensation - - - - - - (2.0) - - 2.9 0.9 - 0.9
Exercise or
lapsing of
share options - - - 1.3 - - (8.6) - - 7.3 - - -
Dividends - - - - - - - - - (68.3) (68.3) (0.1) (68.4)
Transactions
with
non-controlling
interests:
Arising on
acquisition - - - - - - - - (24.5) - (24.5) (4.9) (29.4)
Fair value
movement - - - - - - - - (35.4) - (35.4) - (35.4)
Transactions
with owners 0.1 - - 1.3 - - 1.7 - (59.9) (58.1) (114.9) (5.0) (119.9)
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Total
comprehensive
income
for the year
Profit for the
year - - - - - - - - - 330.9 330.9 4.9 335.8
Other
comprehensive
income:
Items that may be reclassified subsequently to profit or loss
Cash flow
hedging in
equity
- current year - - - - - 0.3 - - - - 0.3 - 0.3
- tax impact - - - - - - - - - - - - -
Exchange
differences on
translating
foreign
operations - - - - 5.2 - - - - - 5.2 (1.2) 4.0
Items that will not be reclassified subsequently to profit or loss
Actuarial gains
on defined
benefit pension
scheme - - - - - - - - - 0.9 0.9 - 0.9
Income taxes
relating
to actuarial
gains on
defined benefit
pension
scheme - - - - - - - - - (0.2) (0.2) - (0.2)
Total
comprehensive
income
for the year - - - - 5.2 0.3 - - - 331.6 337.1 3.7 340.8
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Balance at 31
December
2018 23.7 95.6 0.7 (12.7) (172.0) 0.5 36.9 0.7 (139.3) 1,916.2 1,750.3 38.6 1,788.9
--------- --------- ------------ ---------- ------------- --------- --------- ------------- ----------- ---------- -------------- ------------- ----------
Kingspan Group plc
Consolidated Statement of Cash Flows
for the year ended 31 December 2019
2019 2018
Note EURm EURm
OPERATING ACTIVITIES
Profit for the year 377.8 335.8
Add back non-operating expenses :
Income tax expense 76.6 69.1
Depreciation of property, plant and equipment 114.5 76.0
Amortisation of intangible assets 21.9 22.2
Impairment of non-current assets 0.2 5.2
Employee equity-settled share options 13.1 12.3
Finance income 3 (2.9) (1.4)
Finance expense 3 23.7 19.5
Profit on sale of property, plant and
equipment (3.3) (4.9)
Movement of deferred consideration (0.6) 0.8
Changes in working capital:
Inventories 5.8 4.7
Trade and other receivables 57.3 (33.0)
Trade and other payables (57.5) 30.6
Other:
Change in provisions 1.7 (5.8)
Pension contributions (1.2) (0.8)
-------- --------
Cash generated from operations 627.1 530.3
Income tax paid (87.2) (75.0)
Interest paid (19.5) (17.0)
-------- --------
Net cash flow from operating activities 520.4 438.3
-------- --------
INVESTING ACTIVITIES
Additions to property, plant and equipment (161.0) (144.2)
Proceeds from disposals of property,
plant and equipment 6.7 12.9
Purchase of subsidiary undertakings (142.2) (461.0)
Purchase of financial asset - (8.2)
Payment of deferred contingent consideration
in respect of acquisitions (59.7) (3.1)
Interest received 2.8 1.4
-------- --------
Net cash flow from investing activities (353.4) (602.2)
-------- --------
FINANCING ACTIVITIES
Drawdown of loans 5 7.8 445.0
Repayment of loans and borrowings 5 (181.6) (92.7)
Payment of lease liability 6 (31.8) -
Proceeds from share issues 0.1 0.1
Repurchase of shares (0.6) -
Dividends paid to non-controlling interests (0.4) (0.1)
Dividends paid 7 (77.6) (68.3)
-------- --------
Net cash flow from financing activities (284.1) 284.0
-------- --------
(DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS 5 (117.1) 120.1
Effect of movements in exchange rates
on cash held 13.5 (2.2)
Cash and cash equivalents at the beginning
of the year 294.5 176.6
-------- --------
CASH AND CASH EQUIVALENTS AT THE
OF THE YEAR 190.9 294.5
-------- --------
Notes to the Preliminary Results
for the year ended 31 December 2019
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 2018 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 2019 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 2018 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 with the
exception of changes in accounting policy in respect of IFRS 16
Leases and IFRIC 23 Uncertainty over income tax treatment.
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.
- Trading margin refers to the trading profit, as calculated above, as a percentage of revenue.
- Operating profit is profit before income taxes and net finance costs.
- EBITDA is earnings before finance costs, income taxes,
depreciation, amortisation and the impact of IFRS 16.
New and amended standards and interpretations effective during
2019
IFRS 16 Leases
IFRS 16 is effective for accounting periods beginning on or
after 1 January 2019, and the Group adopted IFRS 16 with effect
from 1 January 2019. IFRS 16 sets out the principles for the
recognition, measurement, presentation and disclosure of leases for
both the lessee and the lessor. For lessees, IFRS 16 eliminates the
classification of leases as either operating leases or finance
leases and introduces a single lessee accounting model whereby all
leases are accounted for as finance leases, with some exemptions
for short-term and low-value leases. It also includes an election
which permits a lessee not to separate non-lease components (e.g.
maintenance) from lease components and instead capitalise both the
lease cost and associated non-lease cost.
The standard primarily affects the accounting for the Group's
operating leases. The application of IFRS 16 results in the
recognition of additional assets and liabilities in the
consolidated statement of financial position and in the
consolidated income statement it replaces the straight-line
operating lease expense with a depreciation charge for the right of
use asset and an interest expense on the lease liabilities.
The incremental borrowing rate is the rate of interest that the
lessee would expect to incur on funds borrowed over a similar term
and security to obtain a comparable value to the right of use asset
in the relevant economic environment. The Group's weighted average
incremental borrowing rate pertaining to these leases is 3%.
Definition of a lease
Previously, the Group determined at contract inception whether
an arrangement was or contained a lease under IFRIC 4 Determining
Whether an Arrangement contains a Lease. The Group now assesses
whether a contract is or contains a lease based on the new
definition of a lease. Under IFRS 16, a contract is, or contains a
lease if the contract conveys a right to control the use of an
identified asset for a period of time in exchange for
consideration.
On transition to IFRS 16, the Group elected to apply the
practical expedient to grandfather the assessment of which
transactions are leases. It applied IFRS 16 only to contracts that
were previously identified as leases. Contracts that were not
identified as leases under IAS 17 and IFRIC 4 were not reassessed.
Therefore, the definition of a lease under IFRS 16 has been applied
only to contracts entered into or changed on or after 1 January
2019.
Transition
The Group adopted the new standard by applying the modified
retrospective approach.
At transition, for leases classified as operating leases under
IAS 17, lease liabilities were measured at the present value of the
remaining lease payments, discounted at the Group's incremental
borrowing rate as at 1 January 2019. All right of use assets were
measured at the amount of the lease liability on adoption, adjusted
by the amount of any prepaid or accrued interest payments.
Previously under IAS 17 operating lease rentals were charged to
the Income Statement on a straight-line basis over the term of the
lease.
The Group availed of the recognition exemption for short-term
and low-value leases and used hindsight when determining the lease
term if the contract contains options to extend or terminate the
lease. The Group also elected not to separate non-lease components
from lease components and instead capitalise both the lease cost
and associated non-lease cost.
The Group has also availed of the practical expedient which
allows for a single discount rate to be applied to a portfolio of
leases with reasonably similar characteristics.
The Group had a small number of finance leases under IAS 17. For
these leases, the carrying amount of the asset and liability at 1
January 2019 were recognised at the equivalent carrying amount
under IAS 17 immediately before that date.
On 1 January 2019, EUR127.9m of leases were recognised as
liabilities on adoption of the standard and EUR128.8m capitalised
as right of use assets. During 2019, depreciation on the right of
use assets was EUR30.0m and the associated lease rental charge
decreased by EUR31.8m leading to an increase in operating profit of
EUR1.8m. The interest charge on the associated leases was EUR3.8m
and the aggregate impact of IFRS 16 on profit before tax was a
decrease of EUR2.0m. The adoption of IFRS 16 reduced the 2019 EPS
by 1 cent. While IFRS 16 had no net impact on cash and cash
equivalents at the end of 2019, it had an impact on the cashflow
statement in respect of profit, depreciation and finance expense by
amounts outlined above, offset by the payment of lease liabilities
of EUR31.8m.
Measurement
The Group recognises right of use assets representing its right
to use the underlying assets and lease liabilities representing its
obligation to make lease payments at the lease commencement date.
The right of use assets are initially measured at cost, and
subsequently measured at cost less accumulated depreciation and
impairment losses.
Lease liabilities are measured at the present value of the
future lease payments, discounted at the Group's incremental
borrowing rate. Subsequent to the initial measurement, the lease
liabilities are increased by the interest cost and reduced by lease
payments made.
The right of use assets and lease liabilities are remeasured
when there are changes in the assessment of whether an extension
option is reasonably certain to be exercised or a termination
option is reasonably certain not to be exercised or where there is
a change in future lease payments as a result of a change in an
index or rate.
The Group has applied judgement to determine the lease term of
contracts that include termination and extension options. If the
Group is reasonably certain to exercise such options the relevant
amount of right of use assets and lease liabilities are recognised.
The Group has also applied judgement in determining the incremental
borrowing rate, the basis of which is set out above.
IFRIC 23 Uncertainty over income tax treatment
IFRIC 23 is effective for accounting periods beginning on or
after 1 January 2019, and the Group adopted IFRIC 23 with effect
from 1 January 2019. IFRIC 23 sets out how to determine taxable
profits and losses, tax bases, unused tax losses, unused tax
credits and tax rates when there is uncertainty over income tax
treatments under IAS 12 Income Taxes. Where the Group considers it
is probable that an uncertain tax treatment will not be accepted by
a tax authority it is measured using either the most likely amount
method or the expected value method, as appropriate. The adoption
and application of IFRIC 23 did not have a material impact on the
Group.
The new standards, amendments to standards and interpretations
are as follows:
Effective Date
- periods beginning
on or after
IFRS 16: Leases (13 January 2016) 1 January 2019
IFRIC 23: Uncertainty over income tax treatment 1 January 2019
(7 June 2017)
The following amended standards and interpretations do not have
a significant impact on the Group's consolidated financial
statements:
Effective Date
- periods beginning
on or after
Annual Improvements to IFRS Standards 2015-2017 1 January 2019
Cycle - various standards
1 January 2019
Amendments to IAS 19: Plan amendment, curtailment
or settlement 1 January 2019
Amendments to IAS 28: Long-term Interests in Associates 1 January 2019
and Joint Ventures
1 January 2020
Amendments to IFRS 9: Prepayment Features with
Negative Compensation 1 January 2020
Amendments to References to Conceptual Framework 1 January 2020
in IFRS Standards
Definition of Material (Amendments to IAS 1 and
IAS 8)
Interest Rate Benchmark Reform (Amendments to
IFRS 9, IAS 39 and IFRS 7)
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. These operating segments are monitored
and strategic decisions are made on the basis of segment operating
results.
Operating segments
The Group has the following five 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.
Light & Air Manufacture of daylighting, smoke management
and ventilation systems.
Water & Energy Manufacture of energy and water solutions
and all related service activities.
Data & Flooring Manufacture of data centre storage solutions
and raised access floors.
Analysis by class of business
Segment revenue and disaggregation of revenue
Insulated Insulation Light & Water & Data
Panels Boards Air Energy & Flooring Total
EURm EURm EURm EURm EURm EURm
Total revenue
- 2019 3,031.9 876.9 327.7 208.1 214.5 4,659.1
Total revenue
- 2018 2,823.1 864.1 291.8 202.9 190.6 4,372.5
Disaggregation of revenue 2019
Point of Time 3,025.2 834.4 202.3 207.4 186.1 4,455.4
Over Time & Contract 6.7 42.5 125.4 0.7 28.4 203.7
---------- ----------- -------- -------- ------------ --------
3,031.9 876.9 327.7 208.1 214.5 4,659.1
---------- ----------- -------- -------- ------------ --------
Disaggregation of revenue 2018
Point of Time 2,816.8 831.8 190.4 201.6 166.2 4,206.8
Over Time & Contract 6.3 32.3 101.4 1.3 24.4 165.7
---------- ----------- -------- -------- ------------ --------
2,823.1 864.1 291.8 202.9 190.6 4,372.5
---------- ----------- -------- -------- ------------ --------
The disaggregation of revenue by geography is set out in more
detail below.
The segments specified above capture the major product lines
relevant to the Group.
The combination of the disaggregation of revenue by product
group, geography and the timing of revenue recognition capture the
key categories of disclosure with respect to revenue. Typically,
individual performance obligations are specifically called out in
the contract which allow for accurate recognition of revenue as and
when performances are fulfilled. Given the nature of the Group's
product set customer returns are not a significant feature of our
business model. No further disclosures are required with respect to
disaggregation of revenue other than what has been presented in
this note.
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. For the purposes of the
segmental analysis, corporate overheads have been allocated to each
division based on their respective revenue for the year.
Segment result (profit before net finance expense)
Insulated Insulation Light Water Data Total Total
Panels Boards & Air & Energy & Flooring 2019 2018
EURm EURm EURm EURm EURm EURm EURm
Trading profit
- 2019 316.1 117.1 25.2 14.2 24.5 497.1
Intangible amortisation (13.1) (4.9) (2.9) (0.9) (0.1) (21.9)
Operating profit
- 2019 303.0 112.2 22.3 13.3 24.4 475.2
---------- ----------- ------- ---------- ------------
Trading profit
- 2018 281.8 105.1 21.5 14.2 22.6 445.2
Intangible amortisation (12.2) (4.4) (4.4) (1.2) - (22.2)
Operating profit
- 2018 269.6 100.7 17.1 13.0 22.6 423.0
---------- ----------- ------- ---------- ------------
Net finance expense (20.8) (18.1)
-------- --------
Profit for the
year before tax 454.4 404.9
Income tax expense (76.6) (69.1)
Net profit for
the year 377.8 335.8
-------- --------
Segment assets
Insulated Insulation Light Water Data Total Total
Panels Boards & Air & Energy & Flooring 2019 2018
EURm EURm EURm EURm EURm EURm EURm
Assets - 2019 2,495.9 832.2 348.0 191.8 188.2 4,056.1
Assets - 2018 2,231.7 782.2 331.2 180.3 166.3 3,691.7
Derivative financial instruments 27.3 27.6
Cash and cash equivalents 190.9 294.5
Deferred tax assets 14.1 15.6
---------- ----------
Total assets as reported in the Consolidated Statement
of Financial Position 4,288.4 4,029.4
---------- ----------
Segment liabilities
Insulated Insulation Light Water Data Total Total
Panels Boards & Air & Energy & Flooring 2019 2018
EURm EURm EURm EURm EURm EURm EURm
Liabilities -
2019 (831.4) (194.4) (80.2) (64.2) (41.5) (1,211.7)
Liabilities -
2018 (755.0) (179.2) (73.2) (58.2) (35.1) (1,100.7)
Interest bearing loans and borrowings (current and
non-current) (851.4) (1,020.2)
Derivative financial instruments (current and non-current) (0.1) -
Income tax liabilities (current and deferred) (104.8) (119.6)
---------- ----------
Total liabilities as reported in the Consolidated
Statement of Financial Position (2,168.0) (2,240.5)
---------- ----------
Other segment information
Insulated Insulation Light Water Data
Panels Boards & Air & Energy & Flooring Total
EURm EURm EURm EURm EURm EURm
Capital investment -
2019 * 135.7 36.8 11.8 4.5 4.0 192.8
Capital investment -
2018 * 160.8 87.9 22.7 7.1 2.8 281.3
Depreciation included
in segment result - 2019 (70.9) (24.2) (8.3) (6.1) (5.0) (114.5)
Depreciation included
in segment result - 2018 (49.8) (15.9) (4.8) (2.4) (3.1) (76.0)
Non-cash items included
in segment result - 2019 (7.6) (2.7) (0.7) (0.8) (1.3) (13.1)
Non-cash items included
in segment result - 2018 (7.4) (2.5) (0.5) (0.8) (1.1) (12.3)
* Capital investment also includes fair value of property, plant
and equipment and intangible assets 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 - 2019 176.0 891.8 2,286.7 990.9 313.7 4,659.1
Revenue - 2018 156.0 938.2 2,092.3 887.6 298.4 4,372.5
Statement of Financial Position Items
Non-current assets
- 2019 * 64.0 411.4 1,415.8 605.4 207.7 2,704.3
Non-current assets
- 2018 * 52.7 375.2 1,227.0 524.5 188.8 2,368.2
Other segmental
information
Capital investment
- 2019 15.2 18.2 106.3 49.1 4.0 192.8
Capital investment
- 2018 6.0 23.9 204.8 27.8 18.8 281.3
* Total non-current assets excluding derivative financial
instruments and deferred tax assets.
The Group has activities in over 90 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-users and
geographies.
3 FINANCE EXPENSE AND FINANCE INCOME
2019 2018
EURm EURm
Finance expense
Lease interest 3.8 -
Deferred contingent consideration
fair value movement 0.1 0.3
Bank loans 2.4 2.7
Private placement loan notes 17.2 16.7
Fair value movement on derivative
financial instrument 2.6 (3.1)
Fair value movement on private placement
debt (2.5) 2.5
Other interest 0.1 0.4
23.7 19.5
Finance income
Interest earned (2.9) (1.4)
Net finance cost 20.8 18.1
------ ------
No costs were reclassified from other comprehensive income to
profit during the year (2018: EURnil).
4 ANALYSIS OF NET DEBT
2019 2018
EURm EURm
Cash and cash equivalents 190.9 294.5
Derivative financial instruments
- net 27.3 27.4
Current borrowings (3.1) (53.2)
Non-current borrowings (848.3) (967.0)
Deferred consideration - (30.0)
Total Net Debt (633.2) (728.3)
---------- ----------
The Group's core funding is provided by five private placement
loan notes; one USD private placement totalling US$200m which
matures in August 2021, and four EUR private placements totalling
EUR662.5m which will mature in tranches between March 2021 and
January 2028. The notes have a weighted average maturity of 4.5
years.
The Group also has two revolving credit facilities. The EUR300m
facility matures in June 2022 and the EUR451m facility also matures
in June 2022. No amount was drawn on either of the facilities as at
31 December 2019. The Group had no committed bilateral bank
facilities at year end, however, a Green Loan of EUR50m had been
agreed but was undrawn.
Net debt, which is an Alternative Performance Measure, is stated
net of interest rate and currency hedges which relate to hedges of
debt. Foreign currency derivative assets of EURnil (2018: EUR0.2m)
and foreign currency derivative liabilities of EUR0.1m (2018:
EURnil) which are used for transactional hedging are not included
in the definition of net debt. Lease liabilities recognised due to
the implementation of IFRS 16 and deferred contingent consideration
have also been excluded from the calculation of net debt.
5 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2019 2018
EURm EURm
Movement in cash and bank overdrafts (117.1) 120.1
Drawdown of loans (7.8) (445.0)
Repayment of loans and borrowings 181.6 92.7
Decrease/(increase) in deferred
consideration 30.0 (30.0)
Change in net debt resulting from
cash flows 86.7 (262.2)
Translation movement - relating
to US dollar loan (5.0) (5.5)
Translation movement - other 13.5 (1.9)
Derivative financial instruments
movement (0.1) 5.2
---------- ----------
Net movement 95.1 (264.4)
Net debt at start of the year (728.3) (463.9)
Net debt at end of the year (633.2) (728.3)
---------- ----------
Further analysis on net debt at the start and end of the year is
provided in note 4.
6 LEASES
A new accounting standard, IFRS 16 Leases, was adopted with
effect from 1 January 2019. The standard requires leases which were
previously treated as operating leases to be recognised as a lease
liability with the associated asset capitalised and treated as a
right of use asset. On 1 January 2019, EUR127.9m of leases were
recognised as liabilities on adoption of the standard and EUR128.8m
capitalised as right of use assets. During 2019, depreciation on
the right of use assets was EUR30.0m and the associated operating
lease rental charge decreased by EUR31.8m leading to an increase in
operating profit of EUR1.8m. The interest charge on the associated
leases was EUR3.8m and the aggregate impact of IFRS 16 on profit
before tax was a decrease of EUR2.0m.
Right of use asset
Land and Plant, Motor Total
buildings machinery vehicles 2019
and other
equipment
EURm EURm EURm EURm
At 1 January 2019 102.1 12.7 14.0 128.8
Additions 4.8 1.1 8.2 14.1
Arising on acquisitions 6.0 0.2 0.1 6.3
Remeasurement 2.6 - - 2.6
Terminations (1.6) (0.1) (0.8) (2.5)
Depreciation charge for the
year (17.4) (4.8) (7.8) (30.0)
Effect of movement in exchange
rates 2.0 0.1 0.2 2.3
At 31 December 2019 98.5 9.2 13.9 121.6
----------- ----------- ---------- -------
Lease liability
2019
EURm
At 1 January 2019 127.9
Additions 14.0
Arising on acquisitions 6.2
Remeasurement 2.5
Terminations (2.5)
Payments (31.8)
Interest 3.8
Effect of movement in exchange rates 2.2
At 31 December 2019 122.3
-------
Split as follows:
Current liability 25.6
Non-current liability 96.7
At 31 December 2019 122.3
------
Reconciliation of IAS 17 operating lease commitments and IFRS 16
lease liability
2019
EURm
Operating lease commitment at 31 December 2018 as
disclosed in the Group's Annual Report 151.5
Impact of discounting (19.9)
Recognition exemption for short term and low value
assets (1.0)
Adjustments as a result of alignment of extension
and termination options with accounting policies (2.7)
Lease liabilities recognised at 1 January 2019 127.9
-------
The EUR0.9m difference between the opening right of use asset
and lease liability relates to lease prepayments.
7 DIVIDS
Equity dividends on ordinary shares: 2019 2018
EURm EURm
2019 Interim dividend 13.0 cent (2018:
12.0 cent) per share 23.6 21.7
2018 Final dividend 30.0 cent (2017:
26.0 cent) per share 54.0 46.6
77.6 68.3
------- -------
Proposed for approval at AGM
Final dividend of 33.5 cent (2018:
30.0 cent) per share 60.6 54.1
------- -------
This proposed dividend for 2019 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 2019 in accordance with IAS
10 Events after the Reporting Period. The proposed final dividend
for the year ended 31 December 2019 will be payable on 7 May 2020
to shareholders on the Register of Members at close of business on
27 March 2020.
8 EARNINGS PER SHARE
2019 2018
EURm EURm
The calculations of earnings per
share are based on the following:
Profit attributable to ordinary
shareholders 369.4 330.9
--------------- ---------------
Number of Number of
shares ('000) shares ('000)
2019 2018
Weighted average number of ordinary
shares for
the calculation of basic earnings
per share 180,586 179,840
Dilutive effect of share options 1,489 1,696
--------------- ---------------
Weighted average number of ordinary
shares
for the calculation of diluted earnings
per share 182,075 181,536
--------------- ---------------
2019 2018
EUR cent EUR cent
Basic earnings per share 204.6 184.0
Diluted earnings per share 202.9 182.3
Adjusted basic earnings per share 215.0 193.5
Adjusted diluted earnings per share 213.2 191.7
Adjusted basic earnings reflects the profit attributable to
ordinary shareholders after eliminating the impact of the Group's
intangible amortisation charge, net of tax .
Adjusted diluted earnings reflects the profit attributable to
ordinary shareholders after eliminating the impact of the Group's
intangible amortisation charge, net of tax and the dilutive effect
of share options.
Dilution is attributable to the weighted average number of share
options outstanding at the end of the reporting period.
The number of options which are anti-dilutive and have therefore
not been included in the above calculations is nil (2018: nil).
9 BUSINESS COMBINATIONS
A key strategy of the Group is to create and sustain market
leading positions through acquisitions in markets it currently
operates in, together with extending the Group's footprint in new
geographic markets. In line with this strategy, the principal
acquisitions completed during the year were as follows:
In November 2019, the Group acquired 85% of the share capital of
Group Bacacier SAS, a French integrated profiling and insulated
panel distributor . The total consideration, including debt
acquired amounted to EUR122.0m, representing the maximum amount of
identifiable consideration, comprising of EUR120.0m paid in cash on
completion and EUR2.0m in deferred contingent consideration.
The Group also made a number of smaller acquisitions during the
year for a combined cash consideration of EUR22.2m:
-- the purchase of 100% of the share capital of WeGo Floortec
GmbH, a German manufacturer of access floors;
-- the purchase of 100% of the share capital of Epur SA, a French water treatment business; and
-- the purchase of the assets of SkyCo, a US Light & Air business.
The table below reflects the fair value of the identifiable net
assets acquired in respect of the acquisitions completed during the
year. Any amendments to fair values will be made within the twelve
month period from the date of acquisition, as permitted by IFRS 3,
Business Combinations.
Bacacier Other* Total
EURm EURm EURm
Non-current assets
Intangible assets 1.9 0.8 2.7
Property, plant and equipment
(including right of use assets) 25.2 6.6 31.8
Deferred tax asset - - -
Current assets
Inventories 29.2 2.1 31.3
Trade and other receivables 33.7 5.8 39.5
Current liabilities
Trade and other payables (36.6) (6.3) (42.9)
Provisions for liabilities (0.3) (1.5) (1.8)
Non-current liabilities
Trade and other payables (3.6) (1.4) (5.0)
Deferred tax liabilities - (0.2) (0.2)
----------- --------- --------------
49.5 5.9 55.4
Total identifiable assets
Non-controlling interest arising
on acquisition (3.7) - (3.7)
Goodwill 76.2 16.3 92.5
----------- --------- --------------
Total consideration 122.0 22.2 144.2
----------- --------- --------------
Satisfied by:
Cash (net of cash acquired) 120.0 22.2 142.2
Deferred contingent consideration 2.0 - 2.0
----------- --------- --------------
122.0 22.2 144.2
----------- --------- --------------
*Included in Other are certain immaterial remeasurements of
prior year accounting estimates.
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.
The initial assignment of fair values to identifiable net assets
acquired has been performed on a provisional basis in respect of
Group Bacacier SAS due to the relative size of the acquisition and
the timing of the transaction. Any amendments to these fair values
within the twelve month timeframe from the date of acquisition will
be disclosable in the 2020 Annual Report, as stipulated by IFRS
3.
In the post-acquisition period to 31 December 2019, the
businesses acquired during the current year contributed revenue of
EUR38.7m and trading profit of EUR2.0m to the Group's results.
10 POST BALANCE SHEET EVENTS
There have been no material events subsequent to 31 December
2019 which would require disclosure in this report.
11 EXCHANGE RATES
The financial information included in this report is expressed
in Euro which is the presentation currency of the Group and the
functional and presentation currency of the Company. Results and
cash flows of foreign subsidiary undertakings have been translated
into Euro at actual exchange rates or average, 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 = 2019 2018 2019 2018
Pound Sterling 0.877 0.885 0.852 0.898
US Dollar 1.120 1.181 1.121 1.144
Canadian Dollar 1.485 1.530 1.461 1.557
Australian Dollar 1.610 1.580 1.600 1.620
Czech Koruna 25.669 25.648 25.414 25.711
Polish Zloty 4.297 4.260 4.260 4.299
Hungarian Forint 325.31 318.78 330.52 321.02
Brazilian Real 4.415 4.307 4.512 4.435
12 CAUTIONARY STATEMENT
This report contains certain forward-looking statements
including, without limitation, the Group's financial position,
business strategy, plans and objectives of management for future
operations. Such forward-looking information involves risks and
uncertainties, assumptions and other factors that could cause the
actual results, performance or achievements of the Group to differ
materially from those in the forward-looking statements. The
forward-looking statements in this report reflect views held only
as of the date hereof. Neither Kingspan nor any other person gives
any representation, assurance or guarantee that the occurrence of
the events expressed or implied in any forward-looking statement in
this report will actually occur. Kingspan undertakes no duty to and
will not necessarily update any such statements in light of new
information or future events, except to the extent required by any
applicable law or regulation.
13 BOARD APPROVAL
This announcement was approved by the Board on 21 February
2020.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UROWRRAUUUAR
(END) Dow Jones Newswires
February 21, 2020 02:00 ET (07:00 GMT)
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