TIDMKGP
RNS Number : 7628W
Kingspan Group PLC
21 August 2020
KINGSPAN GROUP PLC
HALF-YEARLY FINANCIAL REPORT
for the period ended 30 June 2020
KINGSPAN GROUP PLC
RESULTS FOR THE HALF YEAR 30 JUNE 2020
Kingspan, the global leader in high performance insulation and
building envelope solutions, issues its half-yearly financial
report for the six-month period ended 30 June 2020.
Financial Highlights:
-- Revenue down 8% to EUR2.1bn, (underlying, down 13%).
-- Trading profit down 13% to EUR200.1m, (underlying, down 16%).
-- Group trading margin of 9.7%, a decrease of 60bps versus the same period in 2019.
-- Acquisitions contributed 6% to sales growth and 4% to trading profit growth in the period.
-- Net debt of EUR437.9m (H1 2019: EUR734.3m). Net debt to EBITDA of 0.79x (H1 2019: 1.31x).
-- Basic EPS down 14.9 % to 79.8 cent (H1 2019: 93.8 cent).
-- A more than three-fold increase in free cashflow to EUR260.4m (H1 2019: EUR80.6m).
-- Interim dividend nil (H1 2019: 13.0 cent per share). Medium
term dividend and shareholder returns policy under review.
-- ROCE of 16.9 % (H1 2019: 17.1%).
Operational Highlights:
-- Resilient performance overall in times without parallel.
-- Insulated Panels sales decrease of 8%. Good recovery in key
markets particularly in Europe in more recent months. UK slower to
recover with Americas softer recently. Continued progress on
QuadCore (TM) adoption and Bacacier acquisition integrating
well.
-- Insulation Boards sales decrease of 18%. Positive Kooltherm
(R) performance. UK and Ireland experiencing more prolonged
disruption than Mainland European and North American markets.
Australasia relatively resilient.
-- Light & Air sales growth of 20%. Another milestone marked
in the period with the acquisition of Colt Group significantly
adding to the scale and breadth of the category and service
offering.
-- Water & Energy sales decrease of 10% with solid rainwater harvesting and wastewater activity.
-- Data & Flooring sales growth of 6% with strong data centre activity driving this trend.
Summary Financials:
H1 '20 H1 '19 Change
---------------------- -------- -------- --------
Revenue EURm 2,072.7 2,243.1 -8%
Trading Profit*
EURm 200.1 230.4 -13%
Trading Margin** 9.7% 10.3% -60bps
EPS (cent per share) 79.8 93.8 -15%
---------------------- -------- -------- --------
*Operating profit before amortisation of intangibles
** Operating profit before amortisation of intangibles divided
by total revenue
Gene Murtagh, Chief Executive of Kingspan commented:
"Kingspan has delivered a resilient first half result in a
period of unparalleled challenges. Performance has varied
substantially from region to region depending on the severity and
length of Government restrictions, and been helped by our rapid
introduction of cost containment measures.
With over EUR1bn in cash and undrawn facilities we are well
placed to come through the crisis in a strong position. In 2020 we
have completed or agreed terms on three major acquisitions of
businesses with revenue totalling over EUR400m, and we also
continue our organic expansion, with new facilities being developed
in locations including Brazil, Russia, and Sweden.
We have decided it is prudent not to pay an interim dividend and
our shareholder returns policy is under review. We expect that the
economic environment will remain weak, with confidence for
businesses to make investment decisions curtailed. On a more
positive note, policy makers are more focussed on ensuring
buildings are more energy efficient, which is a supportive
long-term trend."
For further information contact:
Murray Consultants Tel: +353 (0) 1 4980 300
Douglas Keatinge
Business Review
The first half of 2020 has been an experience different to any
that we have encountered in the past. Whilst sales activity was
relatively weak in the early months, order intake had improved
encouragingly, pointing towards a potentially strong second
quarter. From mid-March revenue suffered markedly, down over 30% at
the extreme in April. May trading was also challenging, however
order intake began to improve and June trading turned out
particularly strong helped by pent-up demand. The result for the
half overall was revenue down 8% to EUR2.07bn and trading profit
down 13% to EUR200m. Rapid and effective cost containment across
the Group, along with the resolve and commitment of our people were
fundamental in protecting the business during the critical months
and enabling the recovery that followed.
Globally the picture varied hugely as governments and societies
responded differently to the crisis. In Europe, France shut down
abruptly at the end of March but recovered well through late May
and June. Germany and much of Central Europe continued largely
uninterrupted. Spain, the UK and Ireland imposed the most severe
and long-lasting restrictions in relative terms with the resulting
curtailment in demand still prevailing. US activity performed well
throughout, although order intake has eased back notably in recent
weeks. Canada meanwhile experienced a brutal decrease in revenue
and Brazil performed relatively well.
In the Middle East, activity suffered significantly whilst in
India our business was effectively closed for a couple of months,
and current trading remains slow. Australasia has been generally
resilient throughout.
During April we completed the Light & Air acquisition of
Colt, a leading provider of daylighting and smoke management
systems with a significant presence in Germany, the Netherlands,
and the UK, with annual revenue of approximately EUR200m. Early in
the second half we have signed an agreement to acquire Terasteel, a
PIR Insulated Panel manufacturer based in Romania, with revenue in
the region of EUR120m. Since then, we have agreed to acquire Trimo,
a producer of mineral fibre Insulated Panels and Façades based in
Slovenia and with revenues of just over EUR100m. Both are subject
to regulatory approval processes that are currently underway.
Insulated Panels
H1 '20 H1 '19 Change
---------------- -------- -------- --------
Revenue EURm 1,332.0 1,444.8 -8% (1)
Trading Profit
EURm 123.3 146.5 -16%
Trading Margin 9.3% 10.1% -80bps
---------------- -------- -------- --------
(1) Comprising underlying -12%, currency impact -1% and acquisitions +5%
Order intake globally across our Insulated Panel product group
was down 7% by volume in the first six months, having started the
year ahead. The backlog by volume was ahead by 8% pointing towards
strong near-term deliveries, assuming markets are open and
receptive. The order intake picture varied by region, and although
still recently strong in Germany, France, the Benelux and Brazil,
other key markets such as the UK and North America have weakened.
This would indicate lower revenue in those regions towards the
latter end of 2020. Overall, Quadcore(TM) represented 12% of
insulated panels sales revenue in the period (H1 2019: 8%).
During the first half the US performed exceptionally well for
Kingspan as the business traded largely uninterrupted, as was also
the case in Brazil supported by our new facility close to Sao
Paulo. Canada on the other hand took more extreme lockdown measures
and as a result trading was significantly behind the same period in
2019, and sharply so in the second quarter.
In Europe the response also varied with Germany largely
unaffected, France recovered well after effective closure in April,
with the Benelux performing steadily. Central & Eastern Europe
was a little behind but very robust in Poland throughout the
period. The UK has been disappointing, and Ireland performed weaker
than any of our regions not just in Europe, but globally.
Australasia deliveries did ease back somewhat albeit performed
robustly all things considered and order intake in the region has
been strong.
Insulation Boards
H1 '20 H1 '19 Change
--------------------- ------- ------- ---------
Revenue EURm 367.9 450.5 -18% (1)
Trading Profit EURm 48.5 60.4 -20%
Trading Margin 13.2% 13.4% -20bps
--------------------- ------- ------- ---------
(1) Comprising underlying -18%
Unsurprisingly the pattern of sales at the Insulation Board
businesses mapped a similar path to that of Insulated Panels. Of
note was the strong performance in Western European markets, the
Nordics and Australasia all of which delivered revenue ahead of the
first half of 2019. Some of this reflected share gains from
synthetic mineral fibre, as well as the varying government
approaches to the crisis. The Netherlands, Germany and Denmark were
positive stand-outs during the period.
In the UK, where construction activity was severely impacted,
revenue was down significantly. This has improved in recent months
although is still trailing prior year. In Ireland, revenue
virtually halted for April and much of May and has since rebounded
strongly.
Our North American business delivered growth as all product
categories progressed, and growth has resumed in Australasia taking
share from traditional materials. In the Middle East activity was
heavily impacted by shutdowns but has since begun to recover.
Light & Air
H1 '20 H1 '19 Change
--------------------- ------- ------- ---------
Revenue EURm 171.9 142.9 +20% (1)
Trading Profit EURm 7.6 6.2 +23%
Trading Margin 4.4% 4.3% +10bps
--------------------- ------- ------- ---------
(1) Comprising underlying -9% and acquisitions +29%
The Light & Air business performed robustly through the
turbulence of the first half. Like for like revenue was negatively
impacted, particularly in the teeth of the crisis during April and
May. Before and since then the underlying operation grew
encouragingly in France and Germany although has been more
challenged in the US by strong prior year comparatives.
The Colt acquisition, which completed in April, is being
integrated on plan despite the obvious hurdles, and has performed
well since acquisition. The coming six months will focus on full
regional integration of this business as well as the ongoing
assessment of further inorganic opportunities in Europe and
beyond.
Water & Energy
H1 '20 H1 '19 Change
--------------------- ------- ------- ---------
Revenue EURm 92.9 103.1 -10% (1)
Trading Profit EURm 6.9 5.9 +17%
Trading Margin 7.4% 5.7% +170bps
--------------------- ------- ------- ---------
(1) Comprising underlying -10%, currency impact -2% and acquisitions +2%
This business also suffered at a revenue level in the UK and
Ireland due to lockdown measures. Cost containment in these regions
was particularly effective in delivering a strong trading profit,
which we expect to continue through the second half.
The hot water offering was particularly weak in the UK as both
newbuild and house renovations ground to a halt for a time. Water
treatment was steady most prominently in the Nordics and Western
Europe, and the rainwater harvesting business in Australia
delivered a strong outcome in the circumstances.
Data & Flooring
H1 '20 H1 '19 Change
--------------------- ------- ------- --------
Revenue EURm 108.0 101.8 +6% (1)
Trading Profit EURm 13.8 11.4 +21%
Trading Margin 12.8% 11.2% +160bps
--------------------- ------- ------- --------
(1) Comprising underlying -9%, currency impact +1% and acquisitions +14%
The performance of the Data & Flooring activities of the
Group was positive in the first half in the key regions of the US,
Western Europe and Australia although the UK was weaker.
The growing 'Data' dimension to this business has been the key
driver of its robust delivery in recent years, and again growth was
achieved by the expanding product set aimed at the data warehousing
opportunity. We expect that dynamic to continue for the foreseeable
future.
Meanwhile in Germany, the WeGo acquisition (now rebranded as
Kingspan Access Floors), has been seamlessly integrated and is
performing ahead of plan.
Organic Expansion
With the longer term in our sights, we continued to push ahead,
insofar as was practical with broadening our footprint globally.
Insulated Panels in the Americas is moving ahead with its facility
in Pennsylvania, and in Brazil we have broken ground on a fifth
facility, this time in the south of the country.
In Europe, the Joris Ide business is at the early stages of
adding a second production line to its German facility. At Bacacier
in France, plans are evolving to create a 'Group' hub with the
manufacture of Insulated Panels, Insulation and Profiles which,
when complete in early 2022, will be a showcase facility. In
Russia, we are investing in a second plant south of Moscow to
complement our existing St. Petersburg presence.
In Sweden, the development of our greenfield Kooltherm(R)
facility is well underway, albeit delayed due to recent
restrictions. Demand is growing fast in the Nordic regions as
advanced insulation continues to displace traditional synthetic
mineral fibre and this new plant will play a key role in continuing
that momentum.
Planet Passionate
This ground-breaking initiative launched last December and
covering the next decade of our commitments on Energy, Carbon,
Circularity and Water is already delivering notable results. Under
these four banners (see table below), goals have been set across
twelve sub-categories, linked into each business unit across the
world. At this stage there are many active projects either being
implemented or under consideration. At the full year results next
February we intend to demonstrate the progress achieved in year
one.
2020 2025 2030
------------ ---------------------------------------- ----- ----- -----
Energy Maintain our Net Zero Energy Status l l l
------------
60% direct renewable energy use l
------------
20% on-site renewable energy generation l
Solar PV systems on all wholly owned l
facilities
------------ ---------------------------------------- ----- ----- -----
Carbon Net Zero Carbon Manufacturing l
Zero Emission company cars l
50% reduction in product C02e intensity
from primary supply chain partners l
Circularity Zero Company waste to landfill l
Upcycle 1 billion PET bottles into our
manufacturing processes l
All QuadCore(TM) products to utilise l
upcycled PET
Water 5 Active Ocean Clean-Up projects l
------------
Harvest 100 million litres of rainwater l
annually
------------ ---------------------------------------- ----- ----- -----
Innovation
Development of QuadCore(TM) 2.0 has continued at pace with the
aim of launching in the UK and Ireland initially. We anticipate
having product ready to start the lengthy certification process by
quarter two next year. It is a performance focused evolution which
will deliver advancement across all four 'Quads'.
Both the PowerPanel(R) (fully integrated solar PV) and
AlphaCore(R) projects have suffered some timetable disruption due
to being heavily reliant on co-operation with our international
partners. Progress has now resumed and we plan to have a launchable
Insulated Solar PV Panel by quarter two next year.
Two versions of AlphaCore(R) are being developed presently, one
with high thermal performance as well as a medium performance
alternative. We expect to place orders for the manufacturing assets
required to produce the products at scale by early 2021.
Financial Review
Overview of results
Group revenue decreased by 8% to EUR2,072.7m (H1 2019:
EUR2,243.1m) and trading profit decreased by 13% to EUR200.1m (H1
2019: EUR230.4m). This represents a 7% decrease in sales and a 12%
decrease in trading profit on a constant currency basis. The
Group's trading margin decreased by 60bps to 9.7% (H1 2019: 10.3%)
primarily reflecting the divisional mix of earnings and the
negative operating leverage associated with enforced plant
shutdowns for a period. The amortisation charge in respect of
intangibles was EUR10.9m compared to EUR11.0m in the first half of
2019. Group operating profit after amortisation fell 14% to
EUR189.2m (H1 2019: EUR219.4m). Profit after tax was EUR147.5m
compared to EUR173.2m in the first half of 2019, driven in the main
by the decrease in trading profit. Basic EPS for the period was
79.8 cent, representing a decrease of 14.9% on the first half of
2019 (H1 2019: 93.8 cent).
The Group's underlying sales and trading profit performance by
division is set out below:
Sales Underlying Currency Acquisition Total
------------------- ----------- --------- ------------ ------
Insulated Panels -12% -1% +5% -8%
Insulation Boards -18% - - -18%
Light & Air -9% - +29% +20%
Water & Energy -10% -2% +2% -10%
Data & Flooring -9% +1% +14% +6%
Group -13% -1% +6% -8%
----------- --------- ------------ ------
The Group's trading profit measure is earnings before interest,
tax and amortisation of intangibles:
Trading Profit Underlying Currency Acquisition Total
------------------- ----------- --------- ------------ ------
Insulated Panels -19% -1% +4% -16%
Insulation Boards -20% - - -20%
Light & Air -5% +1% +27% +23%
Water & Energy +16% -2% +3% +17%
Data & Flooring +8% +2% +11% +21%
Group -16% -1% +4% -13%
----------- --------- ------------ ------
Finance costs (net)
Finance costs for the period were higher than the same period
last year at EUR11.7m (H1 2019: EUR10.5m). Finance costs include a
non-cash charge of EUR0.4m (H1 2019: EUR0.1m) relating to the
Group's defined benefit pension schemes. Of this EUR0.3m relates to
a scheme assumed on acquisition during the period. Lease interest
of EUR2.0m was recorded during the period (H1 2019: EUR1.8m). A net
non-cash credit of EUR0.1m was recorded in respect of swaps on the
Group's USD private placement notes (H1 2019: credit of EUR0.3m).
The Group's net interest expense on borrowings (bank and loan
notes) in the first half of 2020 was EUR9.2m compared to EUR8.2m in
the same period in 2019. The increased net interest charge reflects
interest paid on drawings on bank facilities, which were drawn as a
contingency measure in March, and lower interest income on cash
balances.
Free cashflow
H1 '20 H1 '19
EURm EURm
-------------------------------- ------- -------
EBITDA* 244.2 271.1
Movement in working capital ** 95.6 (72.2)
Net capital expenditure (58.7) (68.5)
Pension contributions (0.6) (0.2)
Net finance costs paid (10.4) (8.7)
Income taxes paid (14.9) (45.6)
Other including non-cash items 5.2 4.7
------- -------
Free cashflow 260.4 80.6
------- -------
*Earnings before finance costs, income taxes, depreciation,
amortisation and the impact of IFRS 16. Calculation is set out in
Alternative Performance Measures at the end of the statement
**Excludes working capital on acquisition but includes working
capital movements since that point
Working capital at 30 June 2020 was EUR479.2m (31 December 2019:
EUR582.8m), a decrease of EUR103.6m in the period. The typical
seasonal build in the first half of the year was not a feature of
H1 2020 given the extended shutdown in many of the Group's end
markets and an associated reduction in working capital. The average
working capital to sales percentage was 11.6% compared with 13.1%
in H1 2019. Working capital management and cash generation has been
a relentless area of focus over recent months, reflected in the
lower working capital percentage. We expect working capital levels
to normalise in the third quarter as activity levels pick up.
Net Debt
Net debt decreased by EUR195.3m during the first half of the
year to EUR437.9m (31 December 2019: EUR633.2m) bolstered by strong
free cashflow. The movement in debt is analysed in the table
below:
Movement in net debt H1 '20 H1 '19
EURm EURm
----------------------------------- -------- --------
Free cashflow 260.4 80.6
Acquisitions and disposals (42.0) (3.0)
Deferred consideration paid - (59.7)
Share issues - 0.1
Repurchase of shares - (0.6)
Dividends paid - (54.2)
Dividends paid to non controlling
interests (0.5) (0.3)
-------- --------
Cashflow movement 217.9 (37.1)
Deferred consideration* - 30.0
Exchange movements on translation (22.6) 1.1
-------- --------
Decrease/(increase) in net debt 195.3 (6.0)
Net debt at start of period (633.2) (728.3)
Net debt at end of period (437.9) (734.3)
-------- --------
* Adjustment reflects the inclusion of deferred consideration in
2018 net debt, which was settled in cash in April 2019
Retirement benefits
The primary method of pension provision for current employees is
by way of defined contribution arrangements. The Group has three
legacy defined benefit schemes in the UK which are closed to new
members and to future accrual. The most significant of these, a net
liability of EUR19.7m (EUR9.8m at point of acquisition) was assumed
on the acquisition of Colt Group during the period. This scheme is
also closed to future accrual. In addition, the Group assumed a
number of defined benefit pension liabilities in Mainland Europe
through acquisitions completed in recent years. The net aggregate
pension liability in respect of all schemes and obligations was
EUR34.4m at 30 June 2020 (30 June 2019: EUR12.8m).
Taxation
The tax charge for the first half of the year was EUR30.0m (H1
2019: EUR35.7m) which represents an effective tax rate of 16.9% on
profit before tax (H1 2019: 17.1%). The decrease in the effective
rate reflects the global mix of earnings year on year. Taxation
payments of EUR14.9m were lower than in the first half of 2019
(EUR45.6m) due to deferred payment programs in place in a number of
jurisdictions in response to the crisis. These will normalise in
the second half.
Acquisitions
The Group incurred EUR42.0m on acquisitions during the period.
Of this, EUR36.9m was incurred on Colt Group with a further EUR5.1m
on other acquisitions. In addition to the cash consideration for
Colt the Group assumed a net pension liability of EUR9.8m.
Dividend
The Board took the decision to cancel the proposed final 2019
dividend due for payment in May 2020 in light of the uncertain
backdrop. This preserved EUR60.6m of cash in the business in the
first half. In light of the ongoing, delicate nature of end markets
an interim dividend has not been declared implying there will be no
cash outflow for dividends during 2020. Furthermore, the dividend
and shareholder returns policy is under review, and the outcome
will be announced with our 2020 full year results.
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 principal syndicated facility
is a revolving credit facility of EUR451m with a committed term to
June 2022. This is supplemented by an additional revolving credit
facility of EUR300m with a committed term to June 2022. There were
no drawings on either facility at period end. In February 2020 the
Group arranged an additional bi-lateral term 'Green Loan' for
EUR50m which matures in 2025. Green finance is expected to become a
more prominent part of the Group's debt structure in future
years.
In addition, as part of the Group's longer-term capital
structure, the Group has total private placement loan notes of
EUR842m (H1 2019: EUR839m) which have a weighted average maturity
of 4 years (H1 2019: 5 years).
The weighted average maturity of all debt facilities is 3.8
years (H1 2019: 4.8 years).
As well as ongoing free cashflow generation, the Group has
significant available undrawn facilities and cash which provide
appropriate headroom for operational requirements and development
funding. Total available headroom was EUR1,182m at 30 June 2020 (H1
2019: EUR888.6m).
Related party transactions
Apart from the dividend cancellation, there were no changes in
related party transactions from the 2019 Annual Report that could
have a material impact on the financial position or performance of
the Group in the first half of the year.
Principal risks & uncertainties
Details of the principal risks and uncertainties facing the
Group can be found in the 2019 Annual Report. These risks, namely
volatility in the macro environment, failure to innovate, product
failure, business interruption (including IT continuity and climate
change), credit risks and credit control, employee development and
retention, fraud and cybercrime, acquisition and integration of new
businesses, health & safety, and laws & regulations remain
the most likely to affect the Group in the second half of the
current year. The Group actively manages these and all other risks
through its control and risk management processes. The risk agenda
and outlook has been significantly tested in recent months and the
Group's processes and business model has withstood these
uncertainties well. We will continue to actively assess changes in
the external environment on events which could change our risk
assessment and profile.
Looking Ahead
Accurate predictions are impossible at present. What appears
certain is that general confidence will have suffered and
investment decisions across many sectors will be curtailed through
2021. Conversely, sectors such as data, technology, next generation
automotive and online logistics could be buoyed up as consumer
behaviour evolves. More broadly, governments and policy makers
worldwide are becoming more purposeful about a move towards lower
emissions and ensuring buildings of all types become dramatically
more efficient. Kingspan's exposure to these end markets has grown
markedly in recent years.
All things considered, and despite the much anticipated
near-term stimulus initiatives across the globe, we expect the
general economic environment to be tougher than it was pre-crisis.
Whatever situation unfolds Kingspan remains well poised, agile and
funded to play our part.
2020 Statement of Directors Responsibilities
for the 6 month period ended 30 June 2020
The Directors are responsible for preparing the half-yearly
financial report in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007, as amended, (the "Transparency
Regulations") and the Transparency Rules of the Central Bank of
Ireland.
Each of the Directors confirm that to the best of their
knowledge:
1) the condensed set of consolidated financial statements
included within the half-yearly financial report of Kingspan Group
Plc for the six months ended 30 June 2020 (the "interim financial
information") which comprises the Condensed Consolidated Income
Statement, the Condensed Consolidated Statement of Comprehensive
Income, the Condensed Consolidated Statement of Financial Position,
the Condensed Consolidated Statement of Changes in Equity, the
Condensed Consolidated Statement of Cash Flows and the related
explanatory notes, have been presented and prepared in accordance
with IAS 34, Interim Financial Reporting, as adopted by the EU, the
Transparency Directive and Transparency Rules of the Central Bank
of Ireland;
2) the interim financial information presented, as required by
the Transparency Regulations, includes:
a. a fair review of the important events that have occurred
during the first 6 months of the financial year, and their impact
on the condensed set of consolidated financial statements;
b. a description of the principal risks and uncertainties for
the remaining 6 months of the financial year;
c. a fair review of related parties' transactions that have
taken place in the first 6 months of the current financial year and
that have materially affected the financial position or the
performance of the enterprise during that period; and
d. any changes in the related parties' transactions described in
the last annual report that could have a material effect on the
financial position or performance of the enterprise in the first 6
months of the current financial year.
The directors of Kingspan Group plc, and their functions, are
listed in the 2019 Annual Report.
On behalf of the Board
Gene M Murtagh Geoff Doherty
Chief Executive Officer Chief Financial Officer
21 August 2020 21 August 2020
Kingspan Group plc
Condensed consolidated income statement (unaudited)
for the 6 month period ended 30 June 2020
6 months 6 months
ended ended
30 June 2020 30 June
2019
Note EURm EURm
Revenue 4 2,072.7 2,243.1
Cost of Sales (1,462.0) (1,598.8)
------------- ----------
Gross Profit 610.7 644.3
Operating Costs (410.6) (413.9)
------------- ----------
Trading Profit 4 200.1 230.4
Intangible amortisation (10.9) (11.0)
----------
Operating Profit 189.2 219.4
Finance expense 6 (12.5) (12.1)
Finance income 6 0.8 1.6
------------- ----------
Profit for the period before income
tax 177.5 208.9
Income tax expense 7 (30.0) (35.7)
------------- ----------
Profit for the period 147.5 173.2
------------- ----------
Attributable to owners of Kingspan
Group plc 144.5 169.3
Attributable to non-controlling
interests 3.0 3.9
------------- ----------
147.5 173.2
------------- ----------
Earnings per share for the period
Basic 12 79.8c 93.8c
Diluted 12 79.2c 93.3c
Kingspan Group plc
Condensed consolidated statement of comprehensive income
(unaudited)
for the 6 month period ended 30 June 2020
6 months 6 months
ended ended
30 June 30 June
2020 2019
EURm EURm
Profit for financial period 147.5 173.2
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translating foreign
operations (71.6) 12.3
Net changes in fair value of cash flow hedges 0.5 0.2
Items that will not be reclassified subsequently
to profit or loss
Actuarial losses on defined benefit pension (9.4) -
schemes
Income taxes relating to actuarial losses 1.8 -
on defined benefit pension schemes
Total comprehensive income for the period 68.8 185.7
--------- ---------
Attributable to owners of Kingspan Group
plc 73.5 181.3
Attributable to non-controlling interests (4.7) 4.4
--------- ---------
68.8 185.7
--------- ---------
Kingspan Group plc
Condensed consolidated statement of financial position
as at 30 June 2020
At 30 June At 30 June At 31 December
2020 (unaudited) 2019 (unaudited) 2019
(audited)
Note EURm EURm EURm
Assets
Non-current assets
Goodwill 13 1,498.5 1,402.9 1,506.9
Other intangible assets 87.5 100.7 93.2
Financial asset 8.2 8.2 8.2
Property, plant and equipment 14 968.3 888.3 965.2
Right of use assets 15 143.4 126.3 121.6
Derivative financial instruments 9 33.5 30.3 27.3
Retirement benefit assets 188.1 7.5 9.2
Deferred tax assets 15.9 15.6 14.1
------------------- ------------------- ---------------
2,943.4 2,579.8 2,745.7
Current assets
Inventories 542.6 578.2 557.6
Trade and other receivables 869.2 928.8 794.2
Derivative financial instruments 9 0.2 - -
Cash and cash equivalents 9 431.0 157.6 190.9
------------------- ------------------- ---------------
1,843.0 1,664.6 1,542.7
------------------- ------------------- ---------------
Total assets 4,786.4 4,244.4 4,288.4
------------------- ------------------- ---------------
Liabilities
Current liabilities
Trade and other payables 932.6 889.6 768.9
Provisions for liabilities 59.8 50.0 58.0
Lease liabilities 15 30.3 25.5 25.6
Derivative financial instruments - - 0.1
Interest bearing loans and
borrowings 8 45.9 52.7 3.1
Current income tax liabilities 87.0 67.1 72.9
------------------- ------------------- ---------------
1,155.6 1,084.9 928.6
Non-current liabilities
Retirement benefit obligations 222.5 20.3 24.3
Provisions for liabilities 52.5 61.4 51.7
Interest bearing loans and
borrowings 8 856.7 869.5 848.3
Lease liabilities 15 114.3 100.4 96.7
Deferred tax liabilities 32.4 42.8 31.9
Deferred contingent consideration 10 156.2 139.6 186.5
------------------- ------------------- ---------------
1,434.6 1,234.0 1,239.4
------------------- ------------------- ---------------
Total liabilities 2,590.2 2,318.9 2,168.0
------------------- ------------------- ---------------
Net Assets 2,196.2 1,925.5 2,120.4
------------------- ------------------- ---------------
Equity
Share capital 23.8 23.8 23.8
Share premium 95.6 95.6 95.6
Capital redemption reserve 0.7 0.7 0.7
Treasury shares (11.7) (12.4) (11.8)
Other reserves (323.8) (264.6) (259.6)
Retained earnings 2,366.0 2,039.7 2,221.6
------------------- ------------------- ---------------
Equity attributable to owners
of Kingspan Group plc 2,150.6 1,882.8 2,070.3
Non-controlling interests 45.6 42.7 50.1
------------------- ------------------- ---------------
Total Equity 2,196.2 1,925.5 2,120.4
------------------- ------------------- ---------------
Kingspan Group plc
Condensed consolidated statement of changes in equity (unaudited)
for the 6 month period ended 30 June 2020
Share Share Capital Treasury Translation Cash Share Revaluation Put Retained Total Non- Total
capital premium redemption shares reserve flow based reserve option earnings attributable controlling equity
reserve hedging payment liability to owners interests
reserve reserve reserve of the
parent
EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
Balance at 1
January
2020 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
-------- -------- ----------- --------- ------------ -------- -------- ------------ ---------- ---------- ------------- ------------ ----------
Transactions with owners
recognised
directly in equity
Employee share
based
compensation - - - 0.1 - - 7.7 - - - 7.8 - 7.8
Exercise or
lapsing of
share options - - - - - - (7.6) - - 7.5 (0.1) - (0.1)
Dividends - - - - - - - - - - - - -
Transactions with
non-controlling
interests:
Dividends paid to
non-controlling
interests - - - - - - - - - - - (0.5) (0.5)
Arising on
acquisition - - - - - - - - - - - 0.7 0.7
Fair value
movement - - - - - - - - (0.9) - (0.9) - (0.9)
Transactions with
owners - - - 0.1 - - 0.1 - (0.9) 7.5 6.8 0.2 7.0
-------- -------- ----------- --------- ------------ -------- -------- ------------ ---------- ---------- ------------- ------------ ----------
Total
comprehensive
income
for the period
Profit for the
period - - - - - - - - - 144.5 144.5 3.0 147.5
Other
comprehensive
income
Items that may be reclassified subsequently to profit or loss
Cash flow
hedging
in equity
- current year - - - - - 0.5 - - - - 0.5 - 0.5
- tax impact - - - - - - - - - - - - -
Exchange
differences
on translating
foreign
operations - - - - (63.9) - - - - - (63.9) (7.7) (71.6)
Items that will not be reclassified subsequently to profit or loss
Actuarial losses
on defined
benefit pension
scheme - - - - - - - - - (9.4) (9.4) - (9.4)
Income taxes
relating
to actuarial
losses on
defined benefit
pension
scheme - - - - - - - - - 1.8 1.8 - 1.8
Total
comprehensive
income
for the period - - - - (63.9) 0.5 - - - 136.9 73.5 (4.7) 68.8
-------- -------- ----------- --------- ------------ -------- -------- ------------ ---------- ---------- ------------- ------------ ----------
Balance at 30
June 2020 23.8 95.6 0.7 (11.7) (174.7) 0.8 39.0 0.7 (189.6) 2,366.0 2,150.6 45.6 2,196.2
-------- -------- ----------- --------- ------------ -------- -------- ------------ ---------- ---------- ------------- ------------ ----------
Kingspan Group plc
Condensed consolidated statement of changes in equity (unaudited)
for the 6 month period ended 30 June 2019
Share Share Capital Treasury Translation Cash Share Revaluation Put Retained Total Non- Total
capital premium redemption shares reserve flow based reserve option earnings attributable controlling equity
reserve hedging payment liability to owners interests
reserve reserve reserve of the
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 - - - - - - 6.7 - - - 6.7 - 6.7
Exercise or lapsing
of
share options 0.1 - - 0.9 - - (9.3) - - 8.4 0.1 - 0.1
Repurchase of
shares - - - (0.6) - - - - - - (0.6) - (0.6)
Dividends - - - - - - - - - (54.2) (54.2) - (54.2)
Transactions with
non-controlling
interests:
Dividends paid to
non-controlling
interests - - - - - - - - - - - (0.3) (0.3)
Fair value movement - - - - - - - - (0.8) - (0.8) - (0.8)
Transactions with
owners 0.1 - - 0.3 - - (2.6) - (0.8) (45.8) (48.8) (0.3) (49.1)
-------- -------- ----------- --------- ------------ -------- -------- ------------ ---------- ---------- ------------- ------------ ----------
Total
comprehensive
income
for the period
Profit for the
period - - - - - - - - - 169.3 169.3 3.9 173.2
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 - - - - 11.8 - - - - - 11.8 0.5 12.3
Total comprehensive
income
for the period - - - - 11.8 0.2 - - - 169.3 181.3 4.4 185.7
-------- -------- ----------- --------- ------------ -------- -------- ------------ ---------- ---------- ------------- ------------ ----------
Balance at 30
June
2019 23.8 95.6 0.7 (12.4) (160.2) 0.7 34.3 0.7 (140.1) 2,039.7 1,882.8 42.7 1,925.5
-------- -------- ----------- --------- ------------ -------- -------- ------------ ---------- ---------- ------------- ------------ ----------
Kingspan Group plc
Condensed consolidated statement of changes in equity (audited)
for the year ended 31 December 2019
Share Share Capital Treasury Translation Cash Share Revaluation Put Retained Total Non- Total
Capital Premium Redemption Shares Reserve Flow Based Reserve Option Earnings Attributable Controlling Equity
Reserve Hedging Payment Liability to Owners Interest
Reserve Reserve Reserve of the
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
Condensed consolidated statement of cash flows (unaudited)
for the 6 month period ended 30 June 2020
6 months 6 months
ended ended
30 June 2020 30 June
2019
EURm
EURm
Operating activities
Profit for the period 147.5 173.2
Add back non-operating expenses:
Income tax expense 30.0 35.7
Depreciation of property, plant
and equipment 60.4 56.9
Amortisation of intangible assets 10.9 11.0
Employee equity-settled share options 7.7 6.7
Finance income (0.8) (1.6)
Finance expense 12.5 12.1
Profit on sale of property, plant
and equipment (2.5) (1.7)
Release of deferred consideration - (0.3)
Changes in working capital:
Decrease/(increase) in inventories 15.8 (52.4)
Increase in trade and other receivables (53.8) (128.5)
Increase in trade, other payables
and provisions 133.6 108.7
Other:
Pension contributions (0.6) (0.2)
-------- ----------
Cash generated from operations 360.7 219.6
Taxes paid (14.9) (45.6)
Interest paid (11.1) (10.3)
-------- ----------
Net cash flow from operating activities 334.7 163.7
-------- ----------
Investing activities
Additions to property, plant and
equipment (63.8) (71.5)
Proceeds from disposals of property,
plant and equipment 5.1 3.0
Purchase of subsidiary undertakings
(including net debt/cash acquired) (42.0) (3.0)
Payment of deferred consideration
in respect of acquisitions - (59.7)
Interest received 0.7 1.6
-------- ----------
Net cash flow from investing activities (100.0) (129.6)
-------- ----------
Financing activities
Drawdown of interest bearing loans
and borrowings 51.5 0.5
Repayment of interest bearing loans
and borrowings (1.1) (102.2)
Payment of lease liabilities (16.3) (16.2)
Proceeds from share issues - 0.1
Repurchase of treasury shares - (0.6)
Dividends paid to non-controlling
interests (0.5) (0.3)
Dividends paid - (54.2)
-------- ----------
Net cash flow from financing activities 33.6 (172.9)
-------- ----------
Increase/(decrease) in cash and
cash equivalents 268.3 (138.8)
Translation adjustment (28.2) 1.9
Cash and cash equivalents at the
beginning of the period 190.9 294.5
-------- ----------
Cash and cash equivalents at the
end of the period 431.0 157.6
-------- ----------
Kingspan Group plc
Notes
forming part of the financial statements
1 Reporting entity
Kingspan Group plc ("the Company") is a public limited company
registered and domiciled in Ireland.
The Company and its subsidiaries (together referred to as "the
Group") are primarily involved in the manufacture of high
performance insulation and building envelope solutions.
The financial information presented in the half-yearly report
does not represent full statutory accounts. Full statutory accounts
for the year ended 31 December 2019 prepared in accordance with
IFRS, as adopted by the EU, upon which the auditors have given an
unqualified audit report, are available on the Group's website (
www.kingspan.com ).
2 Basis of preparation
This half-yearly financial report is unaudited and has not been
reviewed by the Company's auditor with regard to the Financial
Reporting Council's International Standard on Review Engagements
(UK and Ireland) 2410.
(a) Statement of compliance
These condensed consolidated interim financial statements ("the
Interim Financial Statements") have been prepared in accordance
with IAS 34 Interim Financial Reporting and do not include all of
the information required for full annual financial statements.
The Interim Financial Statements were approved by the Board of
Directors on 21 August 2020.
(b) Significant accounting policies
The significant accounting policies applied by the Group in the
Interim Financial Statements are the same as those applied by the
Group in its consolidated financial statements as at and for the
year ended 31 December 2019.
The following amendments to standards and interpretations are
effective for the Group from 1 January 2020 and do not have a
material effect on the results or financial position of the
Group:
Effective Date
- periods beginning
on or after
Amendments to IFRS 3 Business Combinations - 1 January 2020
Definition of a business
Amendments to IFRS 9 Financial Instruments, 1 January 2020
IAS 39 Financial Instruments: Recognition and
measurement and IFRS 7 Financial Instruments:
Disclosures - Interest Rate Benchmark Reform
Amendments to IAS 1 Presentation of Financial 1 January 2020
Statements -- Definition of material
Amendments to IAS 8 Accounting Policies, Changes 1 January 2020
in Accounting Estimates and Errors -- Definition
of material
Amendments to References to the Conceptual Framework
in IFRS Standards
The following standard amendment was issued in May 2020
effective for annual reporting periods beginning on or after 1 June
2020 with earlier application permitted and is not expected to have
a material effect on the results or financial position of the Group
:
Effective Date
periods beginning
on or after
Amendments to IFRS 16 Leases - COVID-19 related 1 June 2020
rent concessions.
The following standard is not yet effective and is not expected
to have a material effect on the results or financial position of
the Group:
Effective Date
- periods beginning
on or after
IFRS 17 Insurance Contracts 1 January 2021
(c) Estimates and judgements
The preparation of Interim Financial Statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expense. Actual results
may differ from these estimates.
In preparing the Interim Financial Statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements
as at and for the year ended 31 December 2019.
The Interim Financial Statements are available on the Group's
website ( www.kingspan.com ).
(d) Going concern
The directors have reviewed forecasts and projected cash flows
for a period of not less than 12 months from the date of these
Interim Financial Statements, and considered its net debt position,
available committed banking facilities and other relevant
information including the economic conditions currently affecting
the building environment generally. On the basis of this review,
the directors have concluded that there are no material
uncertainties that would cast significant doubt over the Group's
ability to continue as a going concern. For this reason, the
directors consider it appropriate to adopt the going concern basis
in preparing the financial statements.
3 Reporting currency
The Interim Financial Statements are presented in Euro which is
the functional currency of the Company and presentation currency of
the Group.
Results and cash flows of foreign subsidiary undertakings have
been translated into Euro at the average exchange rates for the
period, as these approximate the exchange rates at the dates of the
transactions. The related assets and liabilities have been
translated at the closing rates of exchange applicable at the end
of the reporting period.
The following significant exchange rates were applied during the
period:
Average rate Closing rate
H1 2020 H1 2019 FY 2019 H1 2020 H1 2019 FY 2019
Euro =
Pound Sterling 0.874 0.873 0.877 0.904 0.896 0.852
US Dollar 1.103 1.130 1.120 1.124 1.137 1.121
Canadian Dollar 1.503 1.506 1.485 1.534 1.492 1.461
Australian Dollar 1.679 1.599 1.610 1.637 1.625 1.600
Czech Koruna 26.351 25.682 25.669 26.738 25.433 25.414
Polish Zloty 4.413 4.291 4.297 4.457 4.256 4.260
Hungarian Forint 345.220 320.45 325.31 353.830 323.420 330.52
Brazilian Real 5.409 4.342 4.415 6.008 4.372 4.512
4 Operating segments
The Group has the following five reportable 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 activity.
Data & Flooring Manufacture of data centre storage solutions and
raised access floors.
Analysis by class of business
Segment revenue and disaggregation of revenue
Data
Insulated Insulation Light Water &
Panels Boards & Air & Energy Flooring Total
EURm EURm EURm EURm EURm EURm
Total revenue -
H1 2020 1,332.0 367.9 171.9 92.9 108.0 2,072.7
Total revenue -
H1 2019 1,444.8 450.5 142.9 103.1 101.8 2,243.1
Disaggregation of revenue H1 2020
Point in Time 1,330.4 356.4 96.3 92.4 96.0 1,971.5
Over Time 1.6 11.5 75.6 0.5 12.0 101.2
---------- ----------- ------- ---------- ---------- ---------
1,332.0 367.9 171.9 92.9 108.0 2,072.7
Disaggregation of revenue H1 2019
Point in Time 1,441.6 427.9 87.4 102.3 78.0 2,137.2
Over Time 3.2 22.6 55.5 0.8 23.8 105.9
---------- ----------- ------- ---------- ---------- ---------
1,444.8 450.5 142.9 103.1 101.8 2,243.1
Data
Insulated Insulation Light Water &
Panels Boards & Air & Energy Flooring Total
EURm EURm EURm EURm EURm EURm
Trading profit -
H1 2020 123.3 48.5 7.6 6.9 13.8 200.1
Intangible amortisation (7.2) (2.5) (0.7) (0.4) (0.1) (10.9)
Operating result
- H1 2020 116.1 46.0 6.9 6.5 13.7 189.2
---------- ----------- ------- ---------- ----------
Net finance expense (11.7)
---------
Profit for the period before income tax 177.5
Income tax expense (30.0)
---------
Profit for the period - H1 2020 147.5
---------
Data
Insulated Insulation Light Water &
Panels Boards & Air & Energy Flooring Total
EURm EURm EURm EURm EURm EURm
Trading profit -
H1 2019 146.5 60.4 6.2 5.9 11.4 230.4
Intangible amortisation (6.4) (2.4) (1.7) (0.5) - (11.0)
Operating result
- H1 2019 140.1 58.0 4.5 5.4 11.4 219.4
---------- ----------- ------- ---------- ----------
Net finance expense (10.5)
---------
Profit for the period before income tax 208.9
Income tax expense (35.7)
---------
Profit for the period - H1 2019 173.2
---------
Segment assets and liabilities
Total Total
Insulated Insulation Light Water & Data & 30 June 30 June
Panels Boards & Air Energy Flooring 2020 2019
EURm EURm EURm EURm EURm EURm EURm
Assets - H1 2020 2,459.7 801.2 677.6 182.5 184.8 4,305.8
Assets - H1 2019 2,443.2 856.1 376.1 192.4 173.1 4,040.9
Derivative
financial
instruments 33.7 30.3
Cash and cash
equivalents 431.0 157.6
Deferred tax asset 15.9 15.6
---------- ----------
Total assets 4,786.4 4,244.4
---------- ----------
Liabilities - H1
2020 (877.7) (205.1) (379.2) (66.0) (40.2) (1,568.2)
Liabilities - H1
2019 (855.2) (215.1) (104.7) (70.0) (41.8) (1,286.8)
Interest bearing loans and borrowings (current and non-current) (902.6) (922.2)
Income tax liabilities (current and deferred) (119.4) (109.9)
---------- ------------
Total liabilities (2,590.2) (2,318.9)
---------- ------------
Other segment information
Insulated Insulation Light Data
Panels Boards & Air Water &
EURm EURm EURm & Energy Flooring Total
EURm EURm EURm
Capital Investment
- H1 2020 * 54.7 9.4 16.7 0.7 1.1 82.6
Capital Investment
- H1 2019 * 48.5 20.1 6.2 2.0 0.7 77.5
Depreciation included
in segment
result - H1 2020 (36.7) (12.1) (5.6) (3.3) (2.7) (60.4)
Depreciation included
in segment
result - H1 2019 (35.3) (11.8) (4.2) (3.2) (2.4) (56.9)
Non cash items included
in segment result
- H1 2020 (4.5) (1.5) (0.4) (0.5) (0.8) (7.7)
Non cash items included
in segment result
- H1 2019 (4.0) (1.3) (0.3) (0.5) (0.6) (6.7)
Analysis of segmental data by geography
Republic United Rest
of Ireland Kingdom of Americas Others Total
EURm EURm Europe EURm EURm EURm
EURm
Income Statement Items
Revenue - H1 2020 60.6 350.9 1,095.9 426.6 138.7 2,072.7
Revenue - H1 2019 93.8 450.6 1,099.5 451.5 147.7 2,243.1
Statement of Financial Position Items
Non-current assets -
H1 2020 ** 65.4 810.1 1,238.6 577.8 202.1 2,894.0
Non-current assets -
H1 2019 ** 56.4 392.1 1,292.0 585.7 207.7 2,533.9
Capital Investment -
H1 2020 * 4.1 9.8 53.2 14.4 1.1 82.6
Capital Investment -
H1 2019 * 5.1 9.4 41.7 20.9 0.4 77.5
* Capital investment includes the fair value of property, plant,
equipment and intangible assets acquired through additions
in the period and also as part of business combinations. Additions
to right of use assets are excluded.
** Total non-current assets excluding derivative financial instruments
and deferred tax assets.
In presenting information on the basis of geographic segments,
segment revenue is based on the geographic location of customers.
Segment assets are based on the geographic location of the
assets.
5 Seasonality of operations
Activity in the global construction industry is characterised by
cyclicality and is dependent to a significant extent on the
seasonal impact of weather in some of the Group's operating
locations. Activity is second half weighted.
6 Finance expense and finance income
6 months 6 months
ended ended
30 June 30 June
2020 2019
EURm EURm
Finance expense
Bank loans 1.6 1.1
Private placement loan notes 8.4 8.7
Lease interest 2.0 1.8
Deferred contingent consideration
fair value movement - 0.1
Defined benefit pension scheme,
net 0.4 0.1
Fair value movement on derivative
financial instruments (7.3) (2.2)
Fair value movement on private placement
debt 7.4 2.5
--------- ---------
12.5 12.1
Finance income
Interest earned (0.8) (1.6)
---------
Net finance cost 11.7 10.5
--------- ---------
EUR0.2m of borrowing costs were capitalised during the period
(H1 2019: EUR0.5m).
7 Taxation
Taxation provided for on profits is EUR30.0m which represents
16.9 % of the profit before tax for the period (H1 2019: 17.1%).
The full year effective tax rate in 2019 was 16.9%. The taxation
charge for the six month period is accrued using the estimated
applicable rate for the year as a whole.
8 Analysis of net debt
At At At
30 June 30 June 31 December
2020 2019 2019
EURm EURm EURm
Cash and cash equivalents 431.0 157.6 190.9
Derivative financial instruments 33.7 30.3 27.3
Current borrowings (45.9) (52.7) (3.1)
Non-current borrowings (856.7) (869.5) (848.3)
Total net debt (437.9) (734.3) (633.2)
---------- ---------- -------------
Net debt, which is an Alternative Performance Measure, is stated
net of interest rate and currency hedge asset of EUR33.7m (at 31
December 2019: asset of EUR27.3m) which relate to hedges of debt.
Foreign currency derivatives of EURnil (at 31 December 2019:
liability of EUR0.1m), 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.
9 Financial instruments
The following table outlines the components of net debt by
category:
Derivatives
Financial Liabilities designated
assets/ in a fair as hedging Total net
(liabilities) value hedge instruments debt by
at amortised relationship EURm category
cost EURm EURm
EURm
Assets:
Interest rate swaps - - 33.7 33.7
Cash at bank and in
hand 431.0 - - 431.0
---------------- --------------- -------------- ------------
Total assets 431.0 - 33.7 464.7
---------------- --------------- -------------- ------------
Liabilities:
Private placement notes (699.3) (142.8) - (842.1)
Other loans (60.5) - - (60.5)
Total liabilities (759.8) (142.8) - (902.6)
---------------- --------------- -------------- ------------
At 30 June 2020 (328.8) (142.8) 33.7 (437.9)
---------------- --------------- -------------- ------------
Derivatives
Financial Liabilities designated
assets/ in a fair as hedging Total net
(liabilities) value hedge instruments debt by
at amortised relationship EURm category
cost EURm EURm
EURm
Assets:
Interest rate swaps - - 27.3 27.3
Cash at bank and in
hand 190.9 - - 190.9
---------------- --------------- -------------- ------------
Total assets 190.9 - 27.3 218.2
---------------- --------------- -------------- ------------
Liabilities:
Private placement notes (699.4) (141.5) - (840.9)
Other loans (10.5) - - (10.5)
Total liabilities (709.9) (141.5) - (851.4)
---------------- --------------- -------------- ------------
At 31 December 2019 (519.0) (141.5) 27.3 (633.2)
---------------- --------------- -------------- ------------
Derivatives
Financial Liabilities designated
assets/ in a fair as hedging Total net
(liabilities) value hedge instruments debt by
at amortised relationship EURm category
cost EURm EURm
EURm
Assets:
Interest rate swaps - - 30.3 30.3
Cash at bank and in
hand 157.6 - - 157.6
---------------- --------------- -------------- ------------
Total assets 157.6 - 30.3 187.9
---------------- --------------- -------------- ------------
Liabilities:
Private placement notes (698.9) (140.3) - (839.2)
Other loans (83.0) - - (83.0)
Total liabilities (781.9) (140.3) - (922.2)
---------------- --------------- -------------- ------------
At 30 June 2019 (624.3) (140.3) 30.3 (734.3)
---------------- --------------- -------------- ------------
The Group's private placement loan notes of EUR842.1m have a
weighted average maturity of 4 years.
Fair value of financial instruments carried at fair value
Financial instruments recognised at fair value are analysed
between those based on quoted prices in active markets for
identical assets or liabilities (Level 1), those involving inputs
other than quoted prices that are observable for the assets or
liabilities, either directly or indirectly (Level 2), and those
involving inputs for the assets or liabilities that are not based
on observable market data (Level 3).
The following table sets out the fair value of all financial
instruments whose carrying value is measured at fair value:
Level 1 Level 2 Level 3
30 June 30 June 30 June
2020 2020 2020
EURm EURm EURm
Financial assets
Interest rate swaps - 33.7 -
Financial liabilities
Deferred contingent consideration - - (156.2)
---------- --------- ----------
At 30 June 2020 - 33.7 (156.2)
---------- --------- ----------
Level 1 Level 2 Level 3
31 December 31 December 31 December
2019 2019 2019
EURm EURm EURm
Financial assets
Interest rate swaps
- 27.3 -
Financial liabilities
Deferred contingent consideration
Foreign exchange contracts for - - (186.5)
hedging - (0.1) -
At 31 December 2019 - 27.2 (186.5)
-------------- ------------- -------------
Level 1 Level 2 Level 3
30 June 30 June 30 June
2019 2019 2019
EURm EURm EURm
Financial assets
Interest rate swaps - 30.3 -
Financial liabilities
Deferred contingent consideration - - (139.6)
---------- --------- ----------
At 30 June 2019 - 30.3 (139.6)
---------- --------- ----------
All derivatives entered into by the Group are included in Level
2 and consist of foreign currency forward contracts, interest rate
swaps and cross currency interest rate swaps.
Where derivatives are traded either on exchanges or liquid
over-the-counter markets, the Group uses the closing price at the
reporting date. Normally, the derivatives entered into by the Group
are not traded in active markets. The fair values of these
contracts are estimated using a valuation technique that maximises
the use of observable market inputs, e.g. foreign exchange and
interest rates.
Deferred contingent consideration is included in Level 3. The
fair value estimate of deferred contingent consideration is
consistent with 31 December 2019 and is set out in notes 18 and 19
of the 2019 Annual Report. The contingent element is measured on a
series of trading performance targets and is adjusted by the
application of a range of outcomes and associated
probabilities.
During the period ended 30 June 2020, there were no significant
changes in the business or economic circumstances that affect the
fair value of financial assets and liabilities, no
reclassifications and no transfers between levels of the fair value
hierarchy used in measuring the fair value of the financial
instruments.
Fair value of financial instruments at amortised cost
Except as detailed below, it is considered that the carrying
amounts of financial assets and financial liabilities recognised at
amortised cost in the Interim Financial Statements approximate
their fair values.
Private placement notes Carrying amount Fair value
EURm EURm
At 30 June 2020 842.1 915.2
At 31 December 2019 840.9 902.3
At 30 June 2019 839.2 909.2
The fair value of the private placement notes, which are Level 2
financial instruments, is derived by using observable market data,
principally the relevant interest rates.
10 Deferred Consideration
At At At
30 June 30 June 31 December
2020 2019 2019
EURm EURm EURm
At the beginning of the period 186.5 196.1 196.1
Deferred contingent consideration
arising on acquisitions - - 2.0
Movement in deferred contingent
consideration arising from fair
value movement - 0.1 (0.5)
Put liability arising on current
year acquisitions - - 26.7
Movement in put liability arising
from fair value movement 0.9 0.8 22.7
Amounts released - (0.3) -
Amounts paid - (59.7) (59.7)
Effect of movement in exchange
rates (31.2) 2.6 (0.8)
--------- --------- -------------
Closing balance 156.2 139.6 186.5
--------- --------- -------------
Split as follows:
Current liabilities - - -
Non-current liabilities 156.2 139.6 186.5
--------- --------- -------------
156.2 139.6 186.5
--------- --------- -------------
There were no adjustments to the range of outcomes as there were
no material changes in the relevant expected future profitability
of the relevant business units. Profitability is the sole variable
associated with calculating the ultimate obligation for the Group
with respect to all deferred contingent consideration positions as
at the reporting date.
The overall impact on the income statement and statement of
financial position is immaterial when factors such as a 5% movement
in cashflows and a 1% adjustment in the discount rate were layered
on the most recent projections for the relevant businesses.
11 Dividends
There was no final dividend on ordinary shares paid in respect
of the year ended 31 December 2019 (2018: 30.0 cent per share).
The directors are not proposing an interim dividend in respect
of 2020 (2019: 13.0 cent per share).
12 Earnings per share
6 months 6 months
ended ended
30 June 30 June
2020 2019
EURm EURm
The calculations of earnings per
share are based on the following:
Profit attributable to owners
of the Company 144.5 169.3
--------------- -----------
Number of Number
shares ('000) of
6 months shares
ended ('000)
30 June 6 months
2020 ended
30 June
2019
Weighted average number of ordinary
shares for
the calculation of basic earnings
per share 181,013 180,408
Dilutive effect of share options 1,485 1,071
--------------- -----------
Weighted average number of ordinary
shares
for the calculation of diluted
earnings per share 182,498 181,479
--------------- -----------
EUR cent EUR cent
Basic earnings per share 79.8 93.8
Diluted earnings per share 79.2 93.3
At 30 June 2020, there were no anti-dilutive options (30 June
2019: Nil).
13 Goodwill
At At At
30 June 30 June 31 December
2020 2019 2019
EURm
EURm EURm
At beginning of period 1,506.9 1,391.0 1,391.0
Acquired through business
combinations 31.5 3.1 92.5
Effect of movement in exchange
rates (39.9) 8.8 23.4
---------- ---------- --------------
At end of period 1,498.5 1,402.9 1,506.9
---------- ---------- --------------
At end of period
Cost 1,566.2 1,470.6 1,574.6
Accumulated impairment losses (67.7) (67.7) (67.7)
----------
Net carrying amount 1,498.5 1,402.9 1,506.9
---------- ---------- --------------
14 Property, plant and equipment
At At At
30 June 30 June 31 December
2020 2019 2019
EURm
EURm EURm
Cost or valuation 2,088.8 1,942.0 2,063.1
Accumulated depreciation
and impairment charges (1,120.5) (1,053.7) (1,097.9)
---------- ---------- --------------
Net carrying amount 968.3 888.3 965.2
---------- ---------- --------------
Opening net carrying amount 965.2 850.5 850.5
Acquired through business
combinations 13.1 3.8 25.5
Additions 62.8 73.7 164.6
Disposals (2.6) (1.3) (3.4)
Depreciation charge (44.8) (41.9) (84.5)
Impairment charge - - (0.2)
Effect of movement in exchange
rates (25.4) 3.5 12.7
Closing net carrying amount 968.3 888.3 965.2
---------- ---------- --------------
The disposals generated a profit in the period of EUR2.5m (H1
2019: EUR1.7m).
15 Leases
Right of use asset
At At At
30 June 30 June 31 December
2020 2019 2019
EURm
EURm EURm
At beginning of period 121.6 128.8 128.8
Additions 8.3 7.4 14.1
Arising on acquisitions 33.6 - 6.3
Remeasurement 1.1 4.4 2.6
Terminations (1.0) (0.3) (2.5)
Depreciation charge for the
year (15.6) (15.0) (30.0)
Effect of movement in exchange
rates (4.6) 1.0 2.3
Closing net carrying amount 143.4 126.3 121.6
--------- --------- -------------
Lease liability
At At At
30 June 30 June 31 December
2020 2019 2019
EURm
EURm EURm
At beginning of period 122.3 127.9 127.9
Additions 8.0 7.3 14.0
Arising on acquisitions 33.1 - 6.2
Remeasurement 1.1 4.4 2.5
Terminations (1.0) (0.3) (2.5)
Payments (16.3) (16.2) (31.8)
Interest 2.0 1.8 3.8
Effect of movement in exchange
rates (4.6) 1.0 2.2
Closing net carrying amount 144.6 125.9 122.3
--------- --------- -------------
Split as follows:
Current liability 30.3 25.5 25.6
Non-current liability 114.3 100.4 96.7
Closing net carrying amount 144.6 125.9 122.3
------ ------ ------
16 Business combinations
During the period, the Group made three acquisitions for a
combined total cash consideration of EUR42.0m coupled with an
assumed net defined benefit pension liability of EUR9.8m. Of this,
EUR36.9m in cash was incurred on Colt Group as well as the pension
liability with a further EUR5.1m on other acquisitions.
The provisional fair values of the acquired assets and
liabilities in respect of these acquisitions at their respective
acquisition dates, along with fair value adjustments to certain
2019 acquisitions, are set out below:
Colt Other* Total
EURm EURm EURm
Non-current assets
Intangible assets 0.1 6.6 6.7
Property, plant and equipment 13.1 - 13.1
Right of use assets 33.6 - 33.6
Retirement benefit assets 182.1 - 182.1
Deferred tax assets 0.2 - 0.2
Current assets
Inventories 16.6 0.5 17.1
Trade and other receivables 47.6 1.1 48.7
Current liabilities
Trade and other payables (51.9) (0.9) (52.8)
Provisions for liabilities (10.7) - (10.7)
Lease liabilities (5.4) - (5.4)
Non-current liabilities
Retirement benefit obligations (191.9) - (191.9)
Lease liabilities (27.7) - (27.7)
Deferred tax liabilities - (1.8) (1.8)
-------- ------- --------
Total identifiable assets 5.7 5.5 11.2
Non-controlling interest arising in
acquisition - (0.7) (0.7)
Goodwill 31.2 0.3 31.5
-------- ------- --------
Total consideration 36.9 5.1 42.0
-------- ------- --------
Satisfied by:
Cash (net of cash/debt acquired) 36.9 5.1 42.0
Deferred consideration - - -
Total consideration 36.9 5.1 42.0
-------- ------- --------
*Other includes the remaining acquisitions completed during the
period together with certain immaterial remeasurements of prior
year accounting estimates.
The goodwill is attributable principally to the profit
generating potential of the businesses, together with a strong
workforce, new geographies and synergies expected to be achieved
from integrating the businesses into Kingspan's existing
structure.
In the post-acquisition period to 30 June 2020, the businesses
acquired in the current period contributed total revenue of
EUR42.3m and trading profit of EUR1.8m to the Group's results.
The initial assignment of fair values to identifiable net assets
acquired has been performed on a provisional basis due to the
relative size of the acquisitions and the timing of the
transactions.
17 Capital and reserves
368,873 ordinary shares (H1 2019: 471,204) were issued as a
result of the exercise of vested options arising from the Group's
share option schemes (see the 2019 Annual Report for full details
of the Group's share option schemes). Options were exercised at an
average price of EUR0.13 per option.
18 Significant events and transactions
There were no individually significant events or transactions in
the period which contributed to material changes in the Statement
of Financial Position.
19 Related party transactions
Apart from the dividend cancellation there were no changes in
related party transactions from the 2019 Annual Report that could
have a material effect on the financial position or performance of
the Group in the first half of the year.
20 Subsequent events
There have been no further material events subsequent to 30 June
2020 which would require disclosure in this report.
Alternative Performance Measures (APMs)
The Group uses a number of metrics, which are non-IFRS measures,
to monitor the performance of its operations.
The Group believes that these metrics assist investors in
evaluating the performance of the underlying business. Given that
these metrics are regularly used by management, they also give the
investor an insight into how Group management review and monitor
the business on an ongoing basis.
The principal APMs used by the Group are defined as follows:
Trading profit
This comprises the operating profit as reported in the Income
Statement before intangible asset amortisation and non trading
items. This equates to the Earnings Before Interest, Tax and
Amortisation ("EBITA") of the Group. Trading profit is used by
management as it excludes items which may hinder year on year
comparisons.
30 June 30 June
2020 2019
Financial Statements Reference EURm EURm
---------------- -------------------------------- -------- --------
Trading profit Note 4 200.1 230.4
---------------- -------------------------------- -------- --------
Trading margin
Measures the trading profit as a percentage of revenue.
30 June 30 June
2020 2019
Financial Statements Reference EURm EURm
--------------------- -------------------------------- -------- --------
Trading Profit Note 4 200.1 230.4
Total Group Revenue Note 4 2,072.7 2,243.1
-------- --------
Trading margin 9.7 % 10.3%
------------------------------------------------------- -------- --------
Net interest
The Group defines net interest as the net total of finance
expense and finance income as presented in the Income Statement.
The impact of IFRS 16 is excluded from the calculation which is
consistent with the terms and conditions of the covenants as set
out in the Group's external borrowing arrangements.
30 June 30 June
2020 2019
Financial Statements Reference EURm EURm
--------------------------- -------------------------------- -------- --------
Finance Expense Note 6 12.5 12.1
Finance Income Note 6 (0.8) (1.6)
Less lease interest (IFRS
16) Note 6 (2.0) (1.8)
-------- --------
Net Interest 9.7 8.7
------------------------------------------------------------- -------- --------
Free cash flow
Free cash flow is the cash generated from operations after net
capital expenditure, interest paid, income taxes paid and lease
payments and reflects the amount of internally generated capital
available for re-investment in the business or for distribution to
shareholders.
30 June 30 June
2020 2019
Financial Statements Reference EURm EURm
-------------------------------- -------------------------------- -------- --------
Net cash flow from operating Consolidated Statement
activities of Cash Flows 334.7 163.7
Additions to property, plant, Consolidated Statement
equipment and intangibles of Cash Flows (63.8) (71.5)
Proceeds from disposals of Consolidated Statement
property, plant and equipment of Cash Flows 5.1 3.0
Consolidated Statement
Lease payments of Cash Flows (16.3) (16.2)
Consolidated Statement
Interest received of Cash Flows 0.7 1.6
Free cash flow 260.4 80.6
--------
Return on capital employed (ROCE)
ROCE is the operating profit before interest and tax for the
previous 12 months expressed as a percentage of the net assets
employed. The net assets employed reflect the net assets, excluding
net debt, at the end of each reporting period.
30 June 30 June 31 December
2020 2019 2019
Financial Statements
Reference EURm EURm EURm
------------------- ------------------------ -------- -------- ------------
Consolidated Statement
Net Assets of Financial Position 2,196.2 1,925.5 2,120.4
Net Debt Note 8 437.9 734.3 633.2
2,634.1 2,659.8 2,753.6
-------- --------
Operating profit
before interest
and tax 445.0 456.0 475.2
Return on capital
employed 16.9 % 17.1% 17.3%
-------- --------
Net debt
Net debt represents the net total of current and non-current
borrowings, current and non-current derivative financial
instruments, (excluding foreign currency derivatives which are used
for transactional hedging), and cash and cash equivalents as
presented in the Statement of Financial Position. Lease liabilities
recognised due to the implementation of IFRS 16 and deferred
contingent consideration have also been excluded from the
calculation of net debt. This definition is in accordance with the
terms and conditions of the covenants as set out in the Group's
external borrowing arrangements.
30 June 30 June 31 December
2020 2019 2019
Financial Statements
Reference EURm EURm EURm
---------- ---------------------- -------- -------- ------------
Net Debt Note 8 437.9 734.3 633.2
EBITDA
The Group defines EBITDA as earnings before finance costs,
income taxes, depreciation, amortisation and the impact of IFRS
16.
30 June 30 June
2020 2019
Financial Statements Reference EURm EURm
----------------- -------------------------------- -------- --------
Condensed Consolidated Income
Trading profit Statement 200.1 230.4
Consolidated Statement of Cash
Depreciation Flows 60.4 56.9
Lease liability Consolidated Statement of Cash
payments Flows (16.3) (16.2)
-------- --------
EBITDA 244.2 271.1
--------------------------------------------------- -------- --------
Net debt : EBITDA
Net debt as a ratio to 12 month EBITDA. EBITDA is solely
adjusted for the impact of IFRS 16 Leases which is in accordance
with the terms and conditions of the covenants as set out in the
Group's external borrowing arrangements.
30 June 30 June 31 December
2020 2019 2019
Financial Statements
Reference EURm EURm EURm
------------------- ---------------------- -------- -------- ------------
Net Debt Note 8 437.9 734.3 633.2
EBITDA 552.9 560.8 579.8
Net Debt : EBITDA
times 0.79 1.31 1.09
Working capital
Working capital represents the net total of inventories, trade
and other receivables and trade and other payables, net of
transactional foreign currency derivatives excluded from net
debt.
30 June 30 June 31 December
2020 2019 2019
Financial Statements
Reference EURm EURm EURm
----------------------------- ------------------------ -------- -------- ------------
Consolidated Statement
Trade and other receivables of Financial Position 869.2 928.8 794.2
Consolidated Statement
Inventories of Financial Position 542.6 578.2 557.6
Consolidated Statement
Trade and other payables of Financial Position (932.6) (889.6) (768.9)
Foreign currency
derivatives excluded
from net debt - - (0.1)
Working capital 479.2 617.4 582.8
------------------------------------------------------- -------- --------
Working capital ratio
Measures working capital as a percentage of the previous three
months turnover annualised. The annualisation of turnover reflects
the current profile of the Group rather than a partial reflection
of any acquisitions completed during the period.
30 June 30 June 31 December
2020 2019 2019
Financial Statements
Reference EURm EURm EURm
----------------------- ---------------------- -------- -------- ------------
Working capital 479.2 617.4 582.8
Annualised turnover 4,134.0 4,719.0 4,877.0
Working Capital ratio 11.6% 13.1% 11.9%
----------------------------------------------- -------- -------- ------------
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
IR FLFVATSIIFII
(END) Dow Jones Newswires
August 21, 2020 02:00 ET (06:00 GMT)
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