REG - Kingspan Group PLC - Final Results <Origin Href="QuoteRef">KSP.I</Origin> - Part 2
17/02/2017 07:06
- Part 2: For the preceding part double click ID:nRSQ1329Xa
5 (99.4) (119.3)
Increase/(decrease) in lease finance 5 1.8 (0.5)
Proceeds from share issues 3.2 9.3
Repurchase of shares (1.3) -
Dividends paid to non-controlling interests (0.4) -
Dividends paid 7 (48.0) (31.8)
Net cash flow from financing activities 75.9 194.2
INCREASE IN CASH AND CASH EQUIVALENTS 5 28.1 22.5
Effect of movements in exchange rates on cash held (18.1) 3.8
Cash and cash equivalents at the beginning of the year 212.0 185.7
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 222.0 212.0
Notes to the Preliminary Results
for the year ended 31 December 2016
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
2015 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 2016
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 2015 represents an abbreviated version of the Group's
statutory financial statements on which an unqualified audit report was issued
and which have been filed with the Companies Registration Office.
Basis of preparation and accounting policies
The financial information contained in this Preliminary Statement has been
prepared in accordance with the accounting policies set out in the last annual
financial statements.
IFRS does not define certain Income Statement headings. For clarity, the
following are the definitions as applied by the Group:
- Trading profit refers to the operating profit generated by the businesses
before intangible asset amortisation.
- 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.
The Group adopted Annual Improvements to IFRSs 2012 to 2014 Cycle for the
first time in the current financial year with no significant impact on the
Group's result for the year or financial position.
There are a number of new standards, amendments to standards and
interpretations that are not yet effective and have not been applied in
preparing these consolidated financial statements. These new standards,
amendments to standards and interpretations are either not expected to have a
material impact on the Group's financial statements or are still under
assessment by the Group.
The new standards, amendments to standards and interpretations are as
follows:
Effective Date - periods beginning on or after
Amendments to IAS 7: Disclosure Initiative 1 January 2017
Amendments to IAS 12: Recognition of deferred tax assets for unrealised losses 1 January 2017
IFRS 15: Revenue from contracts with customers 1 January 2018
IFRS 9 Financial Instruments(2009 and subsequent amendments in 2010 and 2013) 1 January 2018
Clarification to IFRS 15: Revenue from contracts with customers 1 January 2018*
Amendments to IFRS 2: Classification and measurement of share based payment transactions 1 January 2018*
IFRS 16: Leases 1 January 2019*
* Not yet EU endorsed
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.
The Group is establishing a new division, Kingspan Light & Air, encompassing
the Group's daylighting and natural ventilation activities effective from
January 2017. The extent of these activities increased significantly in the
second half of the current year. This activity is reported within the
Insulated Panels division with a plan in place to facilitate full systematic
and operational separation effective from 1 January 2017 and therefore Light &
Air will be disclosed as a new operating segment from that point onwards.
Operating segments
The Group has the following four operating segments:
Insulated Panels Manufacture of insulated panels, structural framing and metal facades.
Insulation Boards Manufacture of rigid insulation boards, building services insulation and engineered timber systems.
Environmental Manufacture of energy storage solutions, water and microwind systems and all related service activities.
Access Floors Manufacture of raised access floors and datacentre storage solutions.
Analysis by class of business
Segment revenue
InsulatedPanelsEm InsulationBoardsEm EnvironmentalEm Access Floors Em Total Em
Total revenue - 2016 2,074.1 688.1 162.0 184.3 3,108.5
Total revenue - 2015 1,776.6 662.8 159.0 175.9 2,774.3
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)
InsulatedPanelsEm InsulationBoardsEm EnvironmentalEm Access Floors Em Total2016 Em Total2015 Em
Trading profit - 2016 228.0 78.5 11.3 23.1 340.9
Intangible amortisation (8.3) (3.1) (1.2) - (12.6)
Operating profit - 2016 219.7 75.4 10.1 23.1 328.3
Trading profit - 2015 165.2 61.3 8.1 21.3 255.9
Intangible amortisation (5.9) (3.1) (0.1) - (9.1)
Operating profit - 2015 159.3 58.2 8.0 21.3 246.8
Net finance expense (14.3) (14.8)
Profit for the year before tax 314.0 232.0
Income tax expense (58.5) (41.4)
Net profit for the year 255.5 190.6
Segment assets
InsulatedPanelsEm InsulationBoardsEm EnvironmentalEm Access Floors Em Total2016 Em Total2015 Em
Assets - 2016 1,806.7 595.9 159.0 160.0 2,721.6
Assets - 2015 1,401.3 586.2 149.9 157.1 2,294.5
Derivative financial instruments 49.0 31.7
Cash and cash equivalents 222.0 212.0
Deferred tax assets 12.0 10.9
Total assets as reported in the Consolidated Statement of Financial Position 3,004.6 2,549.1
Segment liabilities
InsulatedPanelsEm InsulationBoardsEm EnvironmentalEm Access Floors Em Total2016 Em Total2015 Em
Liabilities - 2016 (508.6) (136.2) (45.7) (29.3) (719.8)
Liabilities - 2015 (377.0) (133.9) (39.9) (26.2) (577.0)
Interest bearing loans and borrowings (current and non-current) (698.4) (569.6)
Derivative financial instruments (current and non-current) - (0.1)
Income tax liabilities (current and deferred) (114.9) (108.6)
Total liabilities as reported in the Consolidated Statement of Financial Position (1,533.1) (1,255.3)
Other segment information
InsulatedPanelsEm InsulationBoardsEm Environmental Em Access Floors Em Total Em
Capital investment - 2016 * 112.2 38.5 11.0 8.1 169.8
Capital investment - 2015 * 209.4 26.4 3.5 5.3 244.6
Depreciation included in segment result - 2016 (43.0) (14.5) (3.3) (2.4) (63.2)
Depreciation included in segment result - 2015 (38.7) (15.7) (3.7) (2.4) (60.5)
Non-cash items included in segment result - 2016 (6.6) (2.0) (0.9) (0.9) (10.4)
Non-cash items included in segment result - 2015 (4.7) (2.0) (0.6) (0.8) (8.1)
* Capital investment includes fair value of property, plant and equipment and
intangible assets acquired in business combinations.
Analysis of segmental data by geography
Republic of Ireland Em United Kingdom Em Rest of Europe Em Americas Em Others Em TotalEm
Income Statement Items
Revenue - 2016 118.0 834.4 1,287.5 630.4 238.2 3,108.5
Revenue - 2015 92.4 816.9 1,079.3 566.7 219.0 2,774.3
Statement of Financial Position Items
Non-current assets - 2016* 47.9 381.3 716.9 441.2 166.9 1,754.2
Non-current assets - 2015* 49.3 351.2 628.2 382.8 115.0 1,526.5
Other segmental information
Capital investment - 2016 3.5 32.7 72.2 29.4 32.0 169.8
Capital investment - 2015 5.3 21.7 141.1 55.8 20.7 244.6
* Total non-current assets excluding derivative financial instruments and
deferred tax assets.
The Group has a presence in over 70 countries worldwide. The revenues from
external customers and non-current assets (as defined in IFRS 8) attributable
to the country of domicile and all foreign countries or regions of operation
are as set out above and specific regions are highlighted separately on the
basis of materiality.
There are no material dependencies or concentrations on individual customers
which would warrant disclosure under IFRS 8. The individual entities within
the Group each have a large number of customers spread across various
activities, end-users and geographies.
3 FINANCE EXPENSE AND FINANCE INCOME
2016Em 2015Em
Finance expense
Bank loans 2.1 3.9
Private placement loan notes 12.1 10.6
Fair value movement on derivative financial instrument (20.4) (14.8)
Fair value movement on private placement debt 20.5 15.3
Net defined benefit pension scheme 0.1 0.1
14.4 15.1
Finance income
Interest earned (0.1) (0.3)
Net finance cost 14.3 14.8
No borrowing costs were capitalised during the year (2015: Enil).
No costs were reclassified from Other Comprehensive Income to profit during
the year (2015: Enil).
4 ANALYSIS OF NET DEBT
2016Em 2015Em
Cash and cash equivalents 222.0 212.0
Derivative financial instruments - net 48.5 29.6
Current borrowings (41.1) (98.7)
Non-current borrowings (657.3) (470.9)
Total Net Debt (427.9) (328.0)
The Group's core funding is provided by five private placements: two USD
private placements totalling $242m, $42m of which will expire in March 2017
with the remaining $200m maturing in August 2021, and three EUR private
placements totalling E457.5m which will mature in tranches between March 2021
and November 2026. The notes have a weighted average maturity of 6.5 years.
In addition, the Group has a E300m revolving credit facility, which was
undrawn at year end and which matures in March 2019. As at 31 December 2016,
the Group's committed bilateral bank facilities were E160m, none of which was
drawn.
Net debt is stated net of interest rate and currency hedges which relate to
hedges of debt. Foreign currency derivatives assets of E0.5m (2015: E2m) which
are used for transactional hedging are not included in the definition of net
debt.
5 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2016Em 2015Em
Increase in cash 28.1 22.5
Drawdown of bank loans (220.0) (336.5)
Repayment of bank loans 99.4 119.3
(Increase)/decrease in lease finance (1.8) 0.5
Change in net debt resulting from cash flows (94.3) (194.2)
Translation movement - relating to US dollar loan (5.6) (24.0)
Translation movement - other (19.0) 1.5
Derivative financial instruments movement 19.0 14.2
Net movement (99.9) (202.5)
Net debt at start of the year (328.0) (125.5)
Net debt at end of the year (427.9) (328.0)
Further analysis on net debt at the start and end of the year is provided in
note 4.
6 CASH GENERATED FROM OPERATIONS
2016Em 2015Em
Profit for the year 255.5 190.6
Add back non-operating expenses:
- Income tax expense 58.5 41.4
- Depreciation of property, plant and equipment 63.2 60.5
- Amortisation of intangible assets 12.6 9.1
- Impairment of non-current assets 3.4 13.4
- Employee equity-settled share options 10.4 8.1
- Finance income (0.1) (0.3)
- Finance expense 14.4 15.1
- Non-cash items - 1.7
- Profit on sale of property, plant and equipment (1.4) (2.1)
Changes in working capital:
- Inventories (39.9) 57.5
- Trade and other receivables (75.7) (21.2)
- Trade and other payables 62.5 1.6
Other
- Change in provisions 13.7 7.1
- Pension contributions (2.9) (2.8)
Cash generated from operations 374.2 379.7
7 DIVIDENDS
Equity dividends on ordinary shares: 2016Em 2015Em
2016 Interim dividend 10.0 cent (2015: 8.0 cent) per share 17.8 14.2
2015 Final dividend 17.0 cent (2014: 10.0 cent) per share 30.2 17.6
48.0 31.8
Proposed for approval at AGM
Final dividend of 23.5 cent (2015: 17.0 cent) per share 42.3 30.4
This proposed dividend for 2016 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
2016 in accordance with IAS 10 Events after the Reporting Period. The proposed
final dividend for the year ended 31 December 2016 will be payable on 5 May
2017 to shareholders on the Register of Members at close of business on 31
March 2017.
8 EARNINGS PER SHARE
2016Em 2015Em
The calculations of earnings per share are based on the following:
Profit attributable to ordinary shareholders 255.4 188.1
Number ofshares ('000)2016 Number ofshares ('000)2015
Weighted average number of ordinary shares for the calculation of basic earnings per share 177,637 176,221
Dilutive effect of share options 2,677 2,977
Weighted average number of ordinary shares for the calculation of diluted earnings per share 180,314 179,198
2016E cent 2015E cent
Basic earnings per share 143.8 106.7
Diluted earnings per share 141.6 105.0
Adjusted basic earnings per share 150.2 111.0
Adjusted basic earnings reflects the profit attributable to ordinary
shareholders after eliminating the impact, net of tax, of the Group's
intangible amortisation.
The number of options which are anti-dilutive and have therefore not been
included in the above calculation is Nil (2015: Nil).
9 BUSINESS COMBINATIONS
In August 2016, the Group acquired 100% of the share capital of Essmann
Gebaudetechnik GmbH, the holding company of the Essmann Group ("Essmann").
Essmann is a European provider of light, air and safety solutions for flat
roofs and façades on non-residential buildings. The total consideration
including debt and related costs amounts to E79.6m.
In April 2016 and August 2016, the Group acquired 100% of the share capital of
Euro Clad (Holdings) Limited ("Euro Clad") and of Eurobond Laminates Limited
("Eurobond") respectively. The two companies are referred to as the 'Euro
Group' as they previously had common ownership and were acquired together,
with the Eurobond acquisition delayed due to UK competition clearance. Euro
Clad is a British manufacturer of built up metal roof and wall systems and
products whilst Eurobond is a British manufacturer of stone wool fibre panels.
The total consideration including debt and related costs amounted to E94.2m.
The Group made four additional acquisitions during the year for a combined
total consideration of E88.6m:
· the purchase of 100% of the share capital of Tankworks Australia Pty
Limited in April 2016, a manufacturer and supplier of steel based rainwater
harvesting systems in Australia;
· the purchase of the business and assets of Bristol Fiberlite Industries
Inc. ('Bristolite') in November 2016, a US manufacturer of energy efficient
commercial unit skylights, smoke vents and accessories;
· the purchase of 100% of the share capital of the Paroc Panel Systems
group in December 2016, a Finnish insulated panels business; and
· the purchase of 62.5% of the share capital of Isocab Isobar NV in
October 2016, a Belgian insulated panels business.
The provisional fair values of the acquired assets and liabilities at
acquisition are set out below:
EssmannEm Euro GroupEm OtherEm TotalEm
Non-current assets
Intangible assets 8.7 10.3 6.2 25.2
Property, plant and equipment 13.5 5.5 11.9 30.9
Deferred tax asset 5.9 0.7 1.1 7.7
Current assets
Inventories 15.3 7.7 15.4 38.4
Trade and other receivables 29.4 22.1 22.3 73.8
Current liabilities
Trade and other payables (23.5) (22.7) (23.3) (69.5)
Provisions for liabilities (3.7) (2.1) (1.7) (7.5)
Non-current liabilities
Retirement benefit obligation (4.6) - - (4.6)
Deferred tax liabilities (2.8) (2.4) (2.0) (7.2)
Total identifiable assets 38.2 19.1 29.9 87.2
Non-controlling interest arising on acquisition - - (3.5) (3.5)
Goodwill 41.4 75.1 62.2 178.7
Total consideration 79.6 94.2 88.6 262.4
Satisfied by:
Cash (net of cash acquired) 79.6 94.2 77.6 251.4
Deferred contingent consideration - - 5.4 5.4
Transfer of assets - - 5.6 5.6
79.6 94.2 88.6 262.4
The acquired goodwill is attributable principally to the profit generating
potential of the businesses, together with cross-selling opportunities and
other synergies expected to be achieved from integrating the acquired
businesses into the Group's existing business.
In the post-acquisition period to 31 December 2016, the businesses acquired
during the current year contributed revenue of E144.5m and a trading profit of
E10.9m to the Group's results.
10 POST BALANCE SHEET EVENTS
There have been no material events subsequent to 31 December 2016 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 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 = 2016 2015 2016 2015
Pound Sterling 0.819 0.726 0.858 0.735
US Dollar 1.110 1.110 1.056 1.090
Canadian Dollar 1.466 1.419 1.425 1.515
Australian Dollar 1.489 1.478 1.462 1.491
Czech Koruna 27.033 27.282 27.020 27.022
Polish Zloty 4.362 4.184 4.422 4.266
Hungarian Forint 311.43 309.93 311.53 314.90
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 17 February 2017.
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