REG - Kingspan Group PLC - Final Results
17/02/2023 07:00
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RNS Number : 2172Q Kingspan Group PLC 17 February 2023
KINGSPAN GROUP PLC
PRELIMINARY RESULTS
Year Ended 31 December 2022
KINGSPAN GROUP PLC
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022
Kingspan, the global leader in high-performance insulation and building
envelope solutions, reports its preliminary results for the year ended 31
December 2022.
Financial Highlights:
• Revenue up 28% to €8.3bn, (pre-currency, up 25%).
• Trading profit up 10% to €833m, (pre-currency, up 7%).
• Acquisitions contributed 9% to sales growth and 8% to trading profit growth in
the year.
• Milestone EBITDA of c. €1bn (2021: €893.2m) in the financial year.
• Group trading margin of 10.0%, a decrease of 160bps.
• Basic EPS up 8% to 329.5 cent.
• Final dividend per share of 23.8 cent (2021: 26.0 cent) giving a total
dividend for the year of 49.4 cent (2021: 45.9 cent).
• Year end net debt(1) of €1,539.6m (2021: €756.1m). Net debt(4) to
EBITDA(4) of 1.62x (2021: 0.88x).
• ROCE of 15.9% (2021: 19.5%), or 16.5% after annualised impact of acquisitions.
Operational Summary:
• Record year overall in a testing environment and a tougher second half.
• Insulated Panels sales increase of 23% driven by raw material price growth and
a 46% increase in global sales volume of QuadCore(TM). Ground-breaking Lower
Embodied Carbon (LEC) insulated panel launched recently.
• Insulation sales strongly ahead by 40% driven by inflation and acquisitions.
District heating applications a standout performer. Significant progress on
entry into the bio-based insulation category. AlphaCore(®) launching shortly.
Technical insulation now comprising 35% of divisional revenue.
• Roofing + Waterproofing platform embedded. Annualised revenue run rate in
excess of €500m. Ondura Group acquisition completed in September 2022
following Derbigum acquisition and strategic minority investment of 24% in
Nordic Waterproofing.
• Technical insulation and roofing significantly increase the Group's exposure
to RMI.
• Significant progress at Light + Air, sales increase of 27% and margins
progressing year on year.
• Strong performance in Data + Flooring with sales up 33% and a strong data
centre solutions pipeline into 2023.
• Invested a total of €1.3bn in acquisitions, purchase of minority interest
and capex during the year.
Summary Financials:
FY'22 FY'21 change
Revenue €m 8,341 6,497 +28%
Trading Profit(2) €m 833 755 +10%
Trading Margin(3) 10.0% 11.6% -160bps
EBITDA(5) €m 998 893 +12%
Profit after tax €m 616 571 +8%
EPS (cent) 330 306 +8%
(1) Net Debt pre-IFRS 16
(2) Operating profit before amortisation of intangibles and non trading item
(3) Operating profit before amortisation of intangibles and non trading item
divided by total revenue
(4) Net debt to EBITDA ratio is pre-IFRS 16 per banking covenants
(5) Earnings before finance costs, income taxes, depreciation, amortisation
and non trading item
Gene M. Murtagh, Chief Executive Officer of Kingspan commented:
"The 2022 outturn was very satisfactory in the context of accumulating
uncertainty over the course of a bumpy year that saw a strong first half
performance giving way to a more subdued environment in the second half of the
year.
Kingspan recorded another meaningful year in its contribution to lowering the
CO2 emissions of buildings combined with record revenue and EBITDA touching
€1 billion for the first time. Notwithstanding ongoing challenges in the
global economy, we expect to see a continuation of the structural drive in
favour of more sustainable buildings over the longer term.
Given the powerful combination of our global scale, the diversity of our end
markets, our ability to grow organically and through acquisition, alongside
our strong innovation pipeline and an ongoing societal drive for energy
efficiency, we believe Kingspan is very well placed for continuing progress
for the benefit of all stakeholders."
For further information contact:
Murray Group Tel: +353 (0)1 4980300/+353 (0) 87 2269345
Pat Walsh
Business Review
The 2022 outcome for the Group as a whole was relatively pleasing given the
accumulating uncertainty as the year progressed. Over-life carbon saved in
buildings using insulation systems we manufactured in 2022 is an estimated 173
million tonnes of CO2e, driving record revenue of €8.3bn and record trading
profit of €833m. This was achieved at a time of exceptional inflation and
unprecedented disruption in supply chains globally, which was less a feature
in the latter part of the year.
The performance of individual markets and economies varied significantly with
the Americas, Germany and Australasia the most stable for Kingspan, with much
of Europe weaker. The pattern of trade was also at odds with prior periods
where many of our routes to market built inventory in the earlier part of the
year, largely out of caution, followed by industry-wide efforts to lower stock
levels in the second half.
Virtually all walks of life have been and will be further impacted by the
prevailing energy cost and availability dynamics. This has understandably led
to broader and growing concerns which may weigh on demand in the year or so
ahead. Conversely it has also generated an unprecedented impetus amongst
governments and society in general to ensure measures are taken to curtail
reliance on fossil fuel. Conservation in buildings is a key component of this
given almost 40% of all global energy related carbon emissions emanate from
buildings and construction. Our solutions can, and are, playing a meaningful
long-term role in this process.
Planet Passionate and our Impact
The vast majority of what we provide to the market enables others to
dramatically reduce energy consumption and its related GHG emissions. That
estimated impact during 2022 was 173 million tonnes of CO2e saved from
insulation systems we sold during the year, taking into account their
contributions over the life of the building infrastructure that they serve.
Internally, our Planet Passionate initiative once again made tremendous
progress, despite being hampered by supply issues, largely related to the
procurement of solar panels from Asia.
The table below provides further detail on the progress within Kingspan by
category:
Intensity Indicators Change from 2020 base year
Carbon Intensity (tCO(2)e/€m) 54% reduction
Energy Intensity (MWh/€m) 28% reduction
Landfill Waste Intensity (t/€m) 68% reduction
Water Intensity (million lt/€m) 16% reduction
In summary, 18 solar PV projects were completed across our facilities during
the year which will generate 6.4 GWh of renewable electricity annually. 803
million PET bottle equivalent of recycled material was processed across the
Group, and 14 rainwater harvesting systems were installed. In addition, 58% of
all new cars within the Group in the year were zero emission vehicles, and our
waste to landfill for the whole business reduced by 42% since 2020.
Underlying Business Whole
Business
Planet Passionate Targets Target Year 2020 2022 2020 2022
Carbon Net Zero Carbon Manufacturing - scope 1 & 2 GHG emissions(1) (t/CO2e) 2030 410,224(2) 242,734 517,972(2,3) 385,157(3)
50% reduction in product CO2e intensity from primary supply partners (%) 2030 - 0.04 - 0.04
Zero emission company funded cars (annual replacement %) 2025 11 60 11 58(4)
Energy 60% Direct renewable energy (%) 2030 19.5 34.3 19.5 33.4
20% On-site renewable energy generation (%) 2030 4.9 7.2 4.9 7.1
Solar PV systems on all wholly owned sites (%) 2030 21.7 41.5 21.7 35.2
Net Zero Energy (%) 2020 100 100 100 n/a(5)
Circularity Zero Company waste to landfill (tonnes) 2030 18,642 9,081 18,642 10,828
Recycle 1 billion PET bottles into our manufacturing processes annually 2025 573 803 573 803
(million bottles)
QuadCore™ products utilising recycled PET (no. of sites) 2025 1 3 1 3
Water Harvest 100 million litres of rainwater annually (million litres) 2030 20.1 26.3 20.1 26.4
Support 5 Ocean Clean-Up projects (no. of projects) 2025 1 3 1 3
Whole Business includes all manufacturing, assembly and R&D sites within
the Kingspan Group, including acquisitions since 2020.
(1) Excluding biogenic emissions. Scope 2 GHG emissions calculated using
market-based methodology.
(2) Restated figures due to improved data collection & change in
calculation methodologies.
(3) GHG emissions were recalculated due to acquisitions that occurred in 2021
& 2022.
(4) Excluding recent acquisitions due to unavailability of data at this time.
(5) As we retire our Net Zero Energy target in favour of a carbon charge,
newly acquired businesses are not included for this target.
Investing in our Future
Between organic and inorganic initiatives, we invested a total of €1.3bn
during the year. Capital projects, mainly focused on capacity expansion,
amounted to €276m and included significant projects either completed or
commenced in the US, Brazil, France, Germany, Vietnam and Australia.
Preparatory work is also underway for the Ukraine Technology Campus that we
announced last year. Understandably, progress has been slow to date although
we anticipate investing over €200m in the project over the next four years.
Acquisitions have long been a prominent feature of our strategy and in 2022 we
invested a total of €1,054m, a record, in adding geographic footprint and
new business lines to our portfolio including deferred consideration and a
strategic minority investment. In total six transactions were completed, the
largest of which was Ondura, a French headquartered global provider of roofing
solutions. Together with Derbigum, this now forms the platform for expansion
deeper into the Roofing and Waterproofing arena with combined run-rate
revenues of approximately €500m entering the current year. In addition, we
also acquired a 24% strategic holding in Nordic Waterproofing.
Innovation at Work
The nucleus of our innovation agenda is focused on driving product improvement
across thermal, renewable content, embodied carbon and fire performance, while
also incorporating more bio-based solutions across our portfolio.
PowerPanel(TM) and Rooftricity(TM) made it to market during 2022 with very
encouraging early signs. We have limited the launch to Ireland and the UK for
the time being due to component supply constraints. Initial preparations are
now underway for PowerPanel(TM) production enablement in the US, France and
the Czech Republic, likely entering production sometime in 2024.
Our QuadCore™ LEC (Lower Embodied Carbon) insulated panel launched recently,
giving rise to an estimated 17% reduction in embodied carbon (in life cycle
modules A-C) relative to existing product. We aim to achieve further
reductions in embodied carbon as we progress towards our 2030 supply chain
targets. This is an exciting new departure which we are confident will
resonate strongly with our global blue chip client base and beyond.
QuadCore(TM) 2.0 development is significantly advanced and AlphaCore(®) is
launching imminently following the acquisition of Calostat(®) technology in
late 2022. Progress is also being made on the bio-based insulation front,
albeit at a somewhat slower pace than we would like.
Product and System Integrity
By the end of 2022, 26 of our sites were certified to ISO 37301, with a plan
to have 58 sites certified to the standard by the end of 2023. ISO 37301 is
the leading global standard for establishing, developing and monitoring
compliance systems. Our enhanced product integrity programme is now deeply
embedded across the Group. To date, 133 of our sites have been audited by the
Compliance Team. In addition, 651 third party external products and system
audits took place throughout 2022.
Insulated Panels
FY '22 FY '21 Change
Turnover €m 5,181.5 4,229.2 +23%((1))
Trading Profit €m 548.7 519.8 +6%
Trading Margin 10.6% 12.3% -170bps
(1) Comprising underlying +17%, currency +4% and acquisitions +2%.
Like-for-like volume -7%.
The global and diverse nature of this business was reflected in the broad and
varying performances of the different regional businesses and trends. Overall,
the trading result has demonstrated growth, albeit that volumes became more
challenged during the second half.
Advanced insulation cored products represented 85% of insulated panels sales
volumes, whilst mineral fibre cored was 11% with older generation materials
comprising the balance. QuadCore(TM), our highly differentiated and unique
core material, represented 17% of insulated panels volume, having grown by 46%
over prior year. Further progress is anticipated during 2023.
PowerPanel(TM) made its market entry, and we anticipate this family of
ground-breaking solutions to feature prominently over the longer term. Supply
chain consistency and reliability has been a challenge and we continue to
explore ways of ensuring this is addressed.
Insulation
FY '22 FY '21 Change
Turnover €m 1,658.3 1,182.9 +40%((1))
Trading Profit €m 165.2 146.7 +13%
Trading Margin 10.0% 12.4% -240bps
(1) Comprising underlying +12%, currency +2% and acquisitions +26%.
Worldwide sales grew encouragingly by 40% over prior year. Much of the growth
was delivered through pricing, and indeed the acquisitions added during 2022.
Sales volumes in Logstor(®), Kingspan's main technical insulation platform
and now 25% of the division, grew by 18% in the second half of the year which
was the first like-for-like period of ownership. Insulation board activity
represents approximately 60% of the division with like-for-like volume
decreasing by 10% in the year.
The two larger businesses acquired were Logstor (June 2021) and Troldtekt
(April 2022), both Danish headquartered, but in entirely different markets
with significant growth potential. Logstor, the larger of the two, focuses
primarily on pre-insulated pipes for district heating (and cooling)
infrastructure, an area of ever-growing opportunity as the world accelerates
towards clean power generation and distribution. Our capacity will be
increased by 30% during the current year, and by a further 50% over the
following three years. Troldtekt addresses both the acoustic and bio-based
insulation segments. Again, we expect to grow capacity by 60% over the next
two years or so reflecting the opportunity afforded by the extension of
applications and geography.
On the innovation and new product agenda, AlphaCore(®) launches imminently
following the acquisition of Calostat(®) technology. An A-Class Optim-R(®)
should reach market in early 2024. We are in the process of assembling the
leadership and skills required to enter the stone wool segment which is part
of our long-established ambition to be the sole global provider of the 'full
spectrum' of thermal solutions.
Light + Air
FY '22 FY '21 Change
Turnover €m 700.7 552.2 +27% ((1))
Trading Profit €m 52.3 36.0 +45%
Trading Margin 7.5% 6.5% +100bps
(1) Comprising underlying +15%, currency + 2% and acquisitions +10%
In 2022 this business delivered strong progress with revenue and trading
profit both ahead, by 27% and 45% respectively. Notable growth was achieved in
the Central European and Southern European businesses. North America also
improved its performance, enhanced by the addition of the Solatube(®) product
set and business model, which we anticipate rolling out more regionally across
the US over the coming years.
As the Group grows, so too will the divisional structure that supports it. To
that end, going forward the Light, Air and Water businesses will be reported
as one enlarged division. Combining the service businesses of both, leveraging
the online success at Water + Energy, and having a wider global route to
market and channel synergy will make this combination compelling over the
longer term. The enlarged division will have real global scale and scope, with
revenue run-rate expected to be approximately €1bn in 2023.
Roofing + Waterproofing
FY '22 FY '21 Change
Turnover €m 153.2 - n/a
Trading Profit €m 8.5 - n/a
Trading Margin 5.5% - n/a
The maiden year for this new business was marked by two meaningful
acquisitions, Ondura and Derbigum, acquired in September 2022 and June 2022
respectively. The annualised revenue run rate is approximately €500m. This
combination brings Kingspan into both flat and pitched roof membrane
solutions, from the primary outer layer of the roof to the secondary underlay.
In both applications, the core basis of our strategy is to create pull-through
for Insulation products through a warranted system-sell. Early progress has
been encouraging. From a roofing technology perspective, we intend to broaden
our portfolio of waterproofing, and our geographic presence, through both
organic and inorganic routes. The trading margin above reflects acquisition
and other related costs during 2022.
Data + Flooring
FY '22 FY '21 Change
Turnover €m 360.1 271.4 +33%((1))
Trading Profit €m 43.1 32.3 +33%
Trading Margin 12.0% 11.9% +10bps
(1) Comprising underlying +26% and currency +7%
Strong progress was again achieved in the data solutions activity in this
business as large scale cloud services infrastructure continued to expand
globally, and as our share of those internal solutions grew. This trajectory
and the active pipeline of live projects give us confidence that further
growth ought to be delivered during the current year.
Water + Energy
FY '22 FY '21 Change
Turnover €m 287.1 261.3 +10%((1))
Trading Profit €m 15.4 20.0 -23%
Trading Margin 5.4% 7.6% -220bps
(1) Comprising underlying +6%, currency +1% and acquisitions +3%
This business delivered a reasonably solid outcome for the year owing to some
recovery of position in the Australian market, albeit with margin pressures
elsewhere reflecting a lag in the recovery of raw material inflation.
Financial Review
The Financial Review provides an overview of the Group's financial performance
for the year ended 31 December 2022 and of the Group's financial position at
that date.
Overview of results
Group revenue increased by 28% to €8.3bn (2021: €6.5bn) and trading profit
increased by 10% to €833.2m (2021: €754.8m) with a decrease of 160 basis
points in the Group's trading profit margin to 10.0% (2021: 11.6%). Basic EPS
for the year was 329.5 cent (2021: 305.6 cent), representing an increase of
8%.
The Group's underlying sales and trading profit growth by division are set out
below:
Sales Underlying Currency Acquisition Total
Insulated Panels +17% +4% +2% +23%
Insulation +12% +2% +26% +40%
Light + Air +15% +2% +10% +27%
Roofing + Waterproofing - - +100% +100%
Water + Energy +6% +1% +3% +10%
Data + Flooring +26% +7% - +33%
Group +16% +3% +9% +28%
The Group's trading profit measure is earnings before interest, tax,
amortisation of intangibles and non trading item:
Trading Profit Underlying Currency Acquisition Total
Insulated Panels +1% +4% +1% +6%
Insulation -16% +2% +27% +13%
Light + Air +29% +2% +14% +45%
Roofing + Waterproofing - - +100% +100%
Water + Energy -26% - +3% -23%
Data + Flooring +24% +9% - +33%
Group -1% +3% +8% +10%
The key drivers of sales and trading profit performance in each division are
set out in the Business Review.
Finance costs (net)
Finance costs for the year increased by €1.4m to €37.7m (2021: €36.3m).
The Group's net interest expense on borrowings (bank and loan notes net of
interest receivable) was €34.6m (2021: €32.2m). This increase reflects
higher average gross debt levels in 2022. In particular, this includes the
interest expense relating to the two new acquisition related financing
facilities with an aggregated value of €800m which were arranged and fully
drawn in 2022. Lease interest of €4.7m (2021: €3.7m) was recorded for the
year. €0.1m (2021: €0.2m) was recorded in respect of a non-cash finance
charge on the Group's defined benefit pension schemes.
Taxation
The tax charge for the year was €130.6m (2021: €118.4m) which represents
an effective tax rate of 17.5% (2021: 17.2%). The increase in the effective
rate reflects, primarily, the change in the geographical mix of earnings year
on year.
Dividends
The Board has proposed a final dividend of 23.8 cent (2021: 26.0 cent) per
ordinary share payable on 9 May 2023 to shareholders registered on the record
date of 14 April 2023. An interim dividend of 25.6 cent per ordinary share was
declared during the year (2021: 19.9 cent). In summary, therefore, the total
dividend for 2022 is 49.4 cent compared to 45.9 cent for 2021. This payout is
in line with our shareholder returns policy.
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
total pension contributions to these schemes for the year amounted to €1.8m
(2021: €nil) and the expected contributions for 2023 are €nil (2021:
€nil). On 6 December 2022, the Group completed a bulk insurance annuity
insurance policy 'buy in' for the Colt Life Assurance and Retirement Scheme
('CLARS'). This buy-in ensures an insurance asset that fully matches the
remaining pension liability and was net settled in cash for an amount of
€15.9m in January 2023. There was no impact on profit before tax from this
transaction. In addition, the Group has a number of smaller defined benefit
pension liabilities in Mainland Europe. The net pension liability in respect
of all defined benefit schemes was €49.5m as at 31 December 2022 (2021:
€28.0m) with the increase reflecting, primarily, a decrease in the value of
scheme assets during the year partially offset by actuarial gains on scheme
liabilities.
Intangible assets and goodwill
Intangible assets and goodwill increased during the year by €685.5m to
€2,687.3m (2021: €2,001.8m). Intangible assets and goodwill of €708.9m
(2021: €418.9m) were recorded in the year relating to acquisitions completed
by the Group. An increase of €9.0m (2021: increase of €50.9m) arose due to
year end exchange rates used to translate intangible assets and goodwill other
than those denominated in euro. There was an annual amortisation charge of
€32.4m (2021: €29.5m).
Financial key performance indicators
The Group has a set of financial key performance indicators (KPIs) which are
presented in the table below. These KPIs are used to measure the financial and
operational performance of the Group and to track ongoing progress in
achieving medium and long term targets to maximise shareholder return.
Key performance indicators 2022 2021
Basic EPS growth +8% +48%
Sales performance +28% +42%
Trading margin 10.0% 11.6%
Free cashflow (€m) 392.5 127.1
Return on capital employed 15.9% 19.5%
Net debt/EBITDA 1.62x 0.88x
(a) Basic EPS growth. The growth in EPS is accounted for primarily by a 10%
increase in trading profit partially offset by an increase in the Group's
effective tax rate by 30 basis points to 17.5% and an increase in minority
interest. The effective tax rate increased due to the geographical mix of
earnings year on year. The minority interest amount increased reflecting the
performance at the Group's operations which have minority stakeholders.
(b) Sales performance of +28% (2021: +42%) was driven by a 16% increase in
underlying sales, a 9% contribution from acquisitions and positive currency
translation of 3%. The increase in underlying sales reflected a combination of
strong year on year price growth due to raw material inflation offset by an
overall reduction in volume particularly in the second half of the year as
global construction markets eased.
(c) Trading margin by division is set out below:
2022 2021
Insulated Panels 10.6% 12.3%
Insulation 10.0% 12.4%
Roofing + Waterproofing 5.5% -
Light + Air 7.5% 6.5%
Water + Energy 5.4% 7.6%
Data + Flooring 12.0% 11.9%
The Insulated Panels division trading margin decreased year on year reflecting
the market mix of sales, inventory cost dynamics as well as negative operating
leverage driven by year on year volume declines. The trading margin decrease
in the Insulation division reflects, in the main, negative operating leverage
associated with year on year volume declines and the category mix of sales.
The increased trading margin in Light + Air reflects activity growth,
investment in specification and other processes as the division continues to
scale up. The Water + Energy trading margin decrease reflects lag in the
recovery of inflation in the first half of the year. The trading margin in
Data + Flooring is consistent year on year.
(d) Free cashflow is an important indicator and reflects the amount of
internally generated capital available for re-investment in the business or
for distribution to shareholders.
Free cashflow 2022 2021
€m €m
EBITDA* 998.3 893.2
Lease payments (50.6) (38.6)
Movement in working capital** (136.2) (429.3)
Movement in provisions 7.7 6.9
Net capital expenditure (250.6) (163.6)
Net interest paid (31.9) (34.5)
Income taxes paid (158.4) (126.8)
Other including non-cash items 14.2 19.8
Free cashflow 392.5 127.1
*Earnings before finance costs, income taxes, depreciation, amortisation and
non trading item
**Excludes working capital on acquisition but includes working capital
movements since that point
Working capital at year end was €1,195.9m (2021: €977.8m) and represents
14.5% (2021: 13.8%) of annualised sales based on fourth quarter sales. This
metric is closely managed and monitored throughout the year and is subject to
a certain amount of seasonal variability associated with trading patterns and
the timing of significant purchases of steel and chemicals. The 16% growth in
underlying sales in 2022 required a consequential investment in working
capital to support the sales growth. The December 2022 working capital
position is untypically high reflecting higher than normal inventory levels
although these have been reducing through the second half. The business took
the opportunity to build an element of buffer stocks earlier in the year due
to availability constraints and has been steadily working through this in the
second half as supply chain bottlenecks and pricing eased. We expect working
capital levels to normalise further during 2023.
(e) Return on capital employed, calculated as operating profit divided by
total equity plus net debt, was 15.9% in 2022 (2021: 19.5%) and was 16.5% with
annualised impact of acquisitions. The decrease year on year reflects the
160bps reduction in trading margin and elevated levels of working capital. The
creation of shareholder value through the delivery of long term returns well
in excess of the Group's cost of capital is a core principle of Kingspan's
financial strategy.
(f) Net debt to EBITDA measures the ratio of net debt to earnings and at 1.62x
(2021: 0.88x) is comfortably less than the Group's banking covenant of 3.5x in
both 2022 and 2021. The calculation is pre-IFRS 16 in accordance with the
Group's banking covenants.
Acquisitions and capital expenditure
During the year the Group made a number of acquisitions for a total upfront
consideration of €887.0m.
In April 2022, the Group acquired 100% of the share capital of Troldtekt, a
Danish natural acoustic insulation producer. The total consideration,
including net debt acquired amounted to €220.4m.
In September 2022, the Group acquired 100% of the share capital of Ondura
Group, a French headquartered global provider of roofing membranes and
associated roofing solutions, for a total consideration, including net debt
acquired of €515.6m.
The Group also made a number of smaller acquisitions during the year for a
combined cash consideration of €151.0m:
· The Roofing + Waterproofing division acquired 100% of the share capital of
Derbigum, a Belgian producer of waterproofing membranes for a total
consideration, including net debt acquired of €95.0m in June 2022;
· The Insulated Panels division acquired 100% of the share capital of THU Perfil
in February 2022 and 100% of the share capital of Invespanel in Spain in
September 2022;
· The Insulation division acquired the assets of Calostat in the UK in September
2022.
The Group's organic net capital expenditure during the year was €250.6m
encompassing a number of strategic capacity enhancements and ongoing
maintenance.
EU Taxonomy and TCFD
Climate related disclosures are required under the EU Taxonomy Regulation
(Sustainable finance taxonomy - Regulation (EU) 2020/852) and by the Task
Force on Climate-related Financial Disclosures (TCFD). The disclosures will be
included in our 2022 Planet Passionate Sustainability Report that will be
published at a later date within the required timeframe.
Non trading item
The Group recorded a non trading charge of €16.5m (2021: €nil) in the year
in respect of the Group's net loss on the complete divestment of its Russian
operations.
Capital structure and Group financing
The Group funds itself through a combination of equity and debt. Debt is
funded through syndicated bank facilities and private placement loan notes.
The primary bank debt facility is a €800m sustainability linked Revolving
Credit Facility arranged in May 2021, maturing in May 2026, and which was
undrawn at year end. The Revolving Credit Facility was increased by €100m in
December 2022 under the facility's accordion clause.
In April 2022, the Group arranged two additional banking finance facilities
with an aggregate value of €800m (€500m maturing in April 2024, €300m in
April 2025). The facilities were fully drawn at year end.
In addition, as part of the Group's debt funding structure, the Group has
total private placement loan notes of €1,322.0m (2021: €1,377.1m) which
have a weighted average maturity of 5.7 years (31 December 2021: 6.4 years).
The weighted average term, as at 31 December 2022, of all drawn debt was 4.1
years (31 December 2021: 6.3 years).
The Group has significant available committed undrawn facilities and cash
balances which, in aggregate, were €1.45bn at 31 December 2022 (31 December
2021: €1.3bn).
Net debt
Net debt increased by €783.5m during 2021 to €1,539.6m (2021: €756.1m).
This is analysed in the table below:
Movement in net debt 2022 2021
€m €m
Free cashflow 392.5 127.1
Acquisitions and divestments (893.4) (540.2)
Purchase of financial asset (113.3) (5.0)
Deferred consideration paid (45.4) -
Purchase of non-controlling interests (2.0) -
Share issues - 0.1
Repurchase of treasury shares (1.4) (46.9)
Dividends paid (93.7) (73.5)
Dividends paid to non-controlling interests (3.5) (3.2)
Cashflow movement (760.2) (541.6)
Exchange movements on translation (23.3) 21.7
Movement in net debt (783.5) (519.9)
Net debt at start of year (756.1) (236.2)
Net debt at end of year (1,539.6) (756.1)
Key financial covenants
The majority of Group borrowings are subject to primary financial covenants
calculated in accordance with lenders' facility agreements which exclude the
impact of IFRS 16:
- A maximum net debt to EBITDA ratio of 3.5 times; and
- A minimum EBITDA to net interest coverage of 4 times.
The performance against these covenants in the current and comparative year is
set out below:
2022 2021
Covenant Times Times
Net debt/EBITDA Maximum 3.5 1.62 0.88
EBITDA/Net interest Minimum 4.0 28.7 26.2
Investor relations
Kingspan is committed to interacting with the international financial
community to ensure a full understanding of the Group's strategic plans and
its performance against these plans. During the year, the executive management
and investor team presented at 11 capital market conferences and conducted 624
institutional one-on-one and group meetings.
Share price and market capitalisation
The Company's shares traded in the range of €43.60 to €106.65 during the
year. The share price at 30 December 2022 was €50.58 (31 December 2021:
€105.00) giving a market capitalisation at that date of €9.2bn (2021:
€19.0bn). Total shareholder return for 2022 was -51.5% (2021: +84%).
Financial risk management
The Group operates a centralised treasury function governed by a treasury
policy approved by the Group Board. This policy primarily covers foreign
exchange risk, credit risk, liquidity risk and interest rate risk. The
principal objective of the policy is to minimise financial risk at reasonable
cost. Adherence to the policy is monitored by the CFO and the Internal Audit
function. The Group does not engage in speculative trading of derivatives or
related financial instruments.
Board Changes
The Board of Kingspan is pleased to announce the appointment of Louise Phelan,
who will join the Board as an independent Non-Executive Director with effect
from 28 April 2023. Louise was formerly Vice President Global Operations EMEA
of PayPal, and is a highly respected business leader and adviser with
experience leading global organisations in both the renewable energy and
finance sectors. The Board looks forward to benefitting from her experience in
the years ahead.
Following the conclusion of this year's Annual General Meeting, both Michael
Cawley and John Cronin will be retiring from the Board on the expiration of
their terms of office. Both Michael and John have been valued Board and
committee members over the past nine years. The Board would like to thank
them both for their significant contributions to Kingspan during those years.
Looking Ahead
2022 was a bumpy year with the strong performance in the first half giving way
to a more subdued environment in the second half of the year. The combination
of war in Ukraine, the consequential steep energy and consumer inflation, and
an industry overstocked due to supply chain concerns were all factors that
weighed on second half demand and performance.
The more recent performance of our business has differed significantly by
sector, end market and geography. Within the mix of business there are strong
sectors of out-performance led by a need for ultra-energy efficiency and lower
carbon. This is a theme which is likely to play out more fully in the medium
term as society grapples with the need for a step change in energy efficiency
and de-carbonisation.
It is difficult to look too far ahead in this environment. We anticipate
delivering a broadly similar trading profit in the first quarter of 2023 to
that of 2022, aided in part by the contribution from acquisitions. We are
mindful of a more demanding comparative to come in the second quarter. Longer
term, Kingspan is very well placed given the powerful combination of our
global scale, diversity of our end markets, strong innovation agenda and an
ongoing societal drive for energy efficiency.
On behalf of the Board
Gene M. Murtagh Geoff Doherty
Chief Executive Officer Chief Financial Officer
17(th) February 2023 17(th) February 2023
Kingspan Group plc
Consolidated Income Statement
for the year ended 31 December 2022
2022 2021
€m €m
Note
REVENUE 2 8,340.9 6,497.0
Cost of sales (6,124.6) (4,640.9)
GROSS PROFIT 2,216.3 1,856.1
Operating costs, excluding intangible amortisation (1,383.1) (1,101.3)
TRADING PROFIT 2 833.2 754.8
Intangible amortisation (32.4) (29.5)
Non trading item 3 (16.5) -
784.3 725.3
OPERATING PROFIT
Finance expense 4 (39.4) (36.3)
Finance income 4 1.7 -
746.6 689.0
PROFIT FOR THE YEAR BEFORE INCOME TAX
Income tax expense (130.6) (118.4)
616.0 570.6
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS
598.0 554.1
Attributable to owners of Kingspan Group plc
Attributable to non-controlling interests 18.0 16.5
616.0 570.6
EARNINGS PER SHARE FOR THE YEAR
Basic 9 329.5c 305.6c
Diluted 9 326.9c 303.0c
Kingspan Group plc
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
2022 2021
€m €m
Profit for the year 616.0 570.6
Other comprehensive (loss)/income:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations (24.7) 123.1
Effective portion of changes in fair value of cash flow hedges - 0.3
Items that will not be reclassified subsequently to profit or loss
Actuarial (losses)/gains on defined benefit pension schemes (20.3) 21.5
Income taxes relating to actuarial losses/gains on defined benefit pension
schemes
4.9 (5.5)
Equity investments at FVOCI - net change in fair value (32.6) -
Total other comprehensive (loss)/income (72.7) 139.4
Total comprehensive income for the year 543.3 710.0
Attributable to owners of Kingspan Group plc 521.3 691.8
Attributable to non-controlling interests 22.0 18.2
543.3 710.0
Kingspan Group plc
Consolidated Statement of Financial Position
as at 31 December 2022
2022 2021
€m €m
ASSETS
NON-CURRENT ASSETS
Goodwill 2,495.5 1,908.6
Other intangible assets 191.8 93.2
Financial assets 93.6 13.2
Property, plant and equipment 1,437.9 1,155.8
Right of use assets 205.3 155.5
Retirement benefit assets 3.3 17.9
Deferred tax assets 40.1 34.7
4,467.5 3,378.9
CURRENT ASSETS
Inventories 1,235.8 1,138.9
Trade and other receivables 1,328.4 1,228.4
Derivative financial instruments 0.4 0.3
Cash and cash equivalents 649.3 641.4
3,213.9 3,009.0
TOTAL ASSETS 7,681.4 6,387.9
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 1,368.7 1,389.8
Provisions for liabilities 74.0 67.8
Lease liabilities 43.2 35.0
Deferred contingent consideration 174.9 41.7
Interest bearing loans and borrowings 85.0 77.4
Current income tax liabilities 54.9 57.7
1,800.7 1,669.4
NON-CURRENT LIABILITIES
Retirement benefit obligations 52.8 45.9
Provisions for liabilities 107.5 74.9
Interest bearing loans and borrowings 2,103.9 1,320.1
Lease liabilities 153.6 123.0
Deferred tax liabilities 55.2 34.7
Deferred contingent consideration 12.2 160.6
2,485.2 1,759.2
TOTAL LIABILITIES 4,285.9 3,428.6
NET ASSETS 3,395.5 2,959.3
EQUITY
Share capital 23.9 23.9
Share premium 112.4 94.4
Capital redemption reserve 0.7 0.7
Treasury shares (56.9) (57.3)
Other reserves (288.0) (277.7)
Retained earnings 3,527.6 3,108.1
EQUITY ATTRIBUTABLE TO OWNERS OF KINGSPAN GROUP PLC 3,319.7 2,892.1
NON-CONTROLLING INTERESTS 75.8 67.2
TOTAL EQUITY 3,395.5 2,959.3
Kingspan Group plc
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
Capital Cash Flow Share Total
Share Share Redemption Treasury Translation Hedging Based Put Option Liability Reserve Attributable Non- Controlling Interests Total
Capital Premium Reserve Shares Reserve Reserve Payment Revaluation Retained to Owners Equity
Reserve Reserve Earnings of the Parent
€m €m €m €m €m €m €m €m €m €m €m €m €m
Balance at 1 January 2022 23.9 94.4 0.7 (57.3) (108.5) 0.6 57.3 0.7 (227.8) 3,108.1 2,892.1 67.2 2,959.3
Transactions with owners recognised directly in equity
Employee share based compensation - - - - - - 18.4 - - - 18.4 - 18.4
Tax on employee share based compensation - - - - - - (11.4) - - 2.5 (8.9) - (8.9)
Exercise or lapsing of share options - 18.0 - 1.8 - - (9.2) - - (10.6) - - -
Repurchase of shares - - - (1.4) - - - - - - (1.4) - (1.4)
Dividends - - - - - - - - - (93.7) (93.7) - (93.7)
Transactions with non-controlling interests:
Settlement of put option - - - - - - - - 36.6 (28.3) 8.3 (8.3) -
Purchase of NCI - - - - - - - - - (0.4) (0.4) (1.6) (2.0)
Dividends to NCI - - - - - - - - - - - (3.5) (3.5)
Fair value movement - - - - - - - - (16.0) - (16.0) - (16.0)
Transactions with owners - 18.0 - 0.4 - - (2.2) - 20.6 (130.5) (93.7) (13.4) (107.1)
Total comprehensive income for the year
Profit for the year - - - - - - - - - 598.0 598.0 18.0 616.0
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations - - - - (28.7) - - - - - (28.7) 4.0 (24.7)
Items that will not be reclassified subsequently to profit or loss
Actuarial losses on defined benefit pension scheme - - - - - - - - - (20.3) (20.3) - (20.3)
Income taxes relating to actuarial losses on defined benefit pension scheme - - - - - - - - - 4.9 4.9 - 4.9
Equity investments at FVOCI - net change in fair value - - - - - - - - - (32.6) (32.6) - (32.6)
Total comprehensive income for the year - - - - (28.7) - - - - 550.0 521.3 22.0 543.3
23.9 112.4 0.7 (56.9) (137.2) 0.6 55.1 0.7 (207.2) 3,527.6 3,319.7 75.8 3,395.5
Balance at 31 December 2022
Kingspan Group plc
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
Capital Cash Flow Share Total
Share Share Redemption Treasury Translation Hedging Based Put Option Liability Reserve Attributable Non- Controlling Interests Total
Capital Premium Reserve Shares Reserve Reserve Payment Revaluation Retained to Owners Equity
Reserve Reserve Earnings of the Parent
€m €m €m €m €m €m €m €m €m €m €m €m €m
Balance at 1 January 2021
23.8 95.6 0.7 (11.6) (229.9) 0.3 40.4 0.7 (168.3) 2,597.2 2,348.9 48.7 2,397.6
Transactions with owners recognised directly in equity
Employee share based compensation 0.1 - - - - - 17.7 - - - 17.8 - 17.8
Tax on employee share based compensation - - - - - - 9.7 - - 3.8 13.5 - 13.5
Exercise or lapsing of share options - (1.2) - 1.2 - - (10.5) - - 10.5 - - -
Repurchase of shares - - - (46.9) - - - - - - (46.9) - (46.9)
Dividends - - - - - - - - - (73.5) (73.5) - (73.5)
Transactions with non-controlling interests:
Arising on acquisition - - - - - - - - - - - 3.5 3.5
Dividends to NCI - - - - - - - - - - - (3.2) (3.2)
Fair value movement - - - - - - - - (59.5) - (59.5) - (59.5)
Transactions with owners 0.1 (1.2) - (45.7) - - 16.9 - (59.5) (59.2) (148.6) 0.3 (148.3)
Total comprehensive income for the year
Profit for the year - - - - - - - - - 554.1 554.1 16.5 570.6
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Cash flow hedging in equity
- current year - - - - - 0.3 - - - - 0.3 - 0.3
- tax impact - - - - - - - - - - - - -
Exchange differences on translating foreign operations - - - - 121.4 - - - - - 121.4 1.7 123.1
Items that will not be reclassified subsequently to profit or loss
Actuarial gains on defined benefit pension scheme - - - - - - - - - 21.5 21.5 - 21.5
Income taxes relating to actuarial gains on defined benefit pension scheme - - - - - - - - - (5.5) (5.5) - (5.5)
Total comprehensive income for the year - - - - 121.4 0.3 - - - 570.1 691.8 18.2 710.0
23.9 94.4 0.7 (57.3) (108.5) 0.6 57.3 0.7 (227.8) 3,108.1 2,892.1 67.2 2,959.3
Balance at 31 December 2021
Kingspan Group plc
Consolidated Statement of Cash Flows
for the year ended 31 December 2022
2022 2021
Note €m €m
OPERATING ACTIVITIES
Profit for the year 616.0 570.6
Add back non-operating expenses:
Income tax expense 130.6 118.4
Depreciation 165.1 138.4
Amortisation of intangible assets 32.4 29.5
Impairment of non-current assets - 3.1
Loss on divestment of subsidiary 3 16.5 -
Employee equity-settled share options 18.4 17.7
Finance income 4 (1.7) -
Finance expense 4 39.4 36.3
(Profit)/loss on sale of property, plant and equipment (0.4) 0.4
Movement of deferred consideration - 0.4
Changes in working capital:
Inventories 14.6 (525.7)
Trade and other receivables 25.7 (298.8)
Trade and other payables (176.5) 395.2
Other:
Change in provisions 7.7 6.9
Pension contributions (3.8) (1.8)
Cash generated from operations 884.0 490.6
Income tax paid (158.4) (126.8)
Interest paid (33.6) (34.6)
Net cash flow from operating activities 692.0 329.2
INVESTING ACTIVITIES
Additions to property, plant and equipment (269.2) (168.8)
Proceeds from disposals of property, plant and equipment 18.6 5.2
Purchase of subsidiary undertakings (including net debt/cash acquired) 10 (887.0) (540.2)
Purchase of non-controlling interest (2.0) -
Purchase of financial asset (113.3) (5.0)
Divestment of subsidiary (6.4) -
Payment of deferred contingent consideration (45.4) -
Interest received 1.7 0.1
Net cash flow from investing activities (1,303.0) (708.7)
FINANCING ACTIVITIES
Drawdown of loans 6 846.0 55.1
Repayment of loans and borrowings 6 (66.0) (263.2)
Settlement of derivative financial instrument - 18.5
Payment of lease liability 7 (50.6) (38.6)
Proceeds from share issues - 0.1
Repurchase of shares (1.4) (46.9)
Dividends paid to non-controlling interests (3.5) (3.2)
Dividends paid 8 (93.7) (73.5)
Net cash flow from financing activities 630.8 (351.7)
19.8 (731.2)
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 6
Effect of movement in exchange rates on cash held (11.9) 42.9
Cash and cash equivalents at the beginning of the year 641.4 1,329.7
649.3 641.4
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
Notes to the Preliminary Results
for the year ended 31 December 2022
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
2021 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 (http://www.kingspan.com) in due course. It
will also be filed with the Company's annual return in the Companies
Registration Office. The auditor has consented to the publication of this
preliminary announcement. The audit of the Group's statutory consolidated
financial statements for the year ended 31 December 2022 is substantially
complete and the report of the auditor is expected to be unqualified and not
contain any matters to which attention will be drawn by way of emphasis. The
principle outstanding procedures as identified by our auditors include the
receipt of final ESEF financial statements incorporating their observations in
respect of the tagging alone, consequent completion of subsequent event
procedures and the receipt of final audit representations from management. The
financial information for the year ended 31 December 2021 represents an
abbreviated version of the Group's statutory financial statements on which an
unqualified audit report was issued and which have been filed with the
Companies Registration Office.
Basis of preparation and accounting policies
The financial information contained in this Preliminary Statement has been
prepared in accordance with the accounting policies set out in the last annual
financial statements.
IFRS does not define certain Income Statement headings. For clarity, the
following are the definitions as applied by the Group:
- Trading profit refers to the operating profit generated by the businesses
before intangible asset
amortisation and gains or losses from non trading items.
- Non trading items refer to certain items, which by virtue of their nature and
amount, are disclosed separately in order for the user to obtain a proper
understanding of the financial information. Non-trading items include gains
or losses on the disposal or acquisition of businesses and material related
acquisition and integration costs, and material impairments to the carrying
value of intangible assets or property, plant and equipment. It is determined
by management that each of these items relate to events or circumstances that
are non-recurring in nature.
- Trading margin refers to the trading profit, as calculated above, as a
percentage of revenue.
- Operating profit is profit before income taxes and net finance costs.
- EBITDA is earnings before finance costs, income taxes, depreciation,
amortisation and non
trading items.
The following amendments to standards and interpretations are effective for
the Group from 1 January 2022 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 -- Reference to the Conceptual 1 January 2022
Framework
Amendments to IAS 16 Property, Plant and Equipment - Proceeds before Intended 1 January 2022
Use
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets 1 January 2022
- Onerous Contracts - Costs of Fulfilling a Contract
Annual improvements to IFRS Standards 2018-2020 1 January 2022
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 principal new standards, amendments to standards
and interpretations are as follows:
Effective Date - periods beginning on or after
IFRS 17 Insurance Contracts 1 January 2023
Amendments to IAS 12 Income Taxes - Deferred Tax Related to Assets and 1 January 2023
Liabilities Arising from a Single Transaction
Amendment to IAS 1 Presentation of Financial Statements and IFRS Practice 1 January 2023
Statement 2 - Disclosure of Accounting Policies
Amendments to IAS 8 Accounting Policies, Changes in Accounting Policies and 1 January 2023
Errors - Definition of Accounting Estimates
Amendments to IFRS 17 Insurance Contracts: Initial Application of IFRS 17 and 1 January 2023
IFRS 9 - Comparative information
Amendments to IAS 1 Presentation of Financial Statements - Classification of 1 January 2024*
Liabilities as Current or Non-current Date, Classification of Liabilities as
Current or Non-current - Deferral of Effective Date and Non-current
Liabilities with Covenants
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback 1 January 2024*
* Not 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 established a new division, Roofing + Waterproofing, during the
financial year. This encompasses the Group's waterproof membrane roofing
solutions activities which has resulted from the acquisition of Ondura Group
and Derbigum during the financial year. There were no operations or activities
in 2021 that are related to the new segment and therefore no changes have been
made to the comparatives in relation to the new division.
Operating segments
The Group has the following six operating
segments:
Insulated Panels Manufacture of insulated panels, structural framing and metal facades.
Insulation Manufacture of rigid insulation boards, technical insulation and engineered
timber systems.
Light + Air Manufacture of daylighting, smoke management, ventilation systems and service
activities.
Water + Energy Manufacture of energy and water solutions and all related service activities.
Data + Flooring Manufacture of data centre storage solutions and raised access floors.
Roofing + Waterproofing Manufacture of roofing and waterproofing solutions for renovation and new
construction of buildings.
Analysis by class of business
Segment revenue and disaggregation of revenue
Insulated Insulation Light + Water + Data + Roofing + Waterproofing Total
Panels Air Energy Flooring €m €m
€m €m €m €m €m
Total revenue - 2022 5,181.5 1,658.3 700.7 287.1 360.1 153.2 8,340.9
Total revenue - 2021 4,229.2 1,182.9 552.2 261.3 271.4 - 6,497.0
Disaggregation of revenue 2022
Point of Time 5,147.7 1,633.1 409.5 286.6 325.4 153.2 7,955.5
Over Time & Contract 33.8 25.2 291.2 0.5 34.7 - 385.4
5,181.5 1,658.3 700.7 287.1 360.1 153.2 8,340.9
Disaggregation of revenue 2021
Point of Time 4,210.9 1,152.0 296.3 258.8 240.1 - 6,158.1
Over Time & Contract 18.3 30.9 255.9 2.5 31.3 - 338.9
4,229.2 1,182.9 552.2 261.3 271.4 - 6,497.0
The disaggregation of revenue by geography is set out in more detail below.
The segments specified above capture the major product lines relevant to the
Group.
The combination of the disaggregation of revenue by product group, geography
and the timing of revenue recognition capture the key categories of disclosure
with respect to revenue. Typically, individual performance obligations are
specifically called out in the contract which allow for accurate recognition
of revenue as and when performances are fulfilled. Given the nature of the
Group's product set, customer returns are not a significant feature of our
business model. No further disclosures are required with respect to
disaggregation of revenue other than what has been presented in this note.
Inter-segment transfers are carried out at arm's length prices and using an
appropriate transfer pricing methodology. As inter-segment revenue is not
material, it is not subject to separate disclosure in the above analysis. For
the purposes of the segmental analysis, corporate overheads have been
allocated to each division based on their respective revenue for the year.
Segment result (profit before net finance expense)
Insulated Insulation Light + Water + Data + Roofing + Waterproofing Total Total
Panels Air Energy Flooring €m 2022 2021
€m €m €m €m €m €m €m
Trading profit - 2022 548.7 165.2 52.3 15.4 43.1 8.5 833.2
Intangible amortisation (13.0) (9.4) (4.6) (0.5) (0.1) (4.8) (32.4)
Non trading item (16.5) - - - - - (16.5)
519.2 155.8 47.7 14.9
Operating profit - 2022 43.0 3.7 784.3
Trading profit - 2021 519.8 146.7 36.0 20.0 32.3 - 754.8
Intangible amortisation (13.7) (8.6) (5.8) (1.2) (0.2) - (29.5)
506.1 138.1 30.2 18.8
Operating profit - 2021 32.1 - 725.3
Net finance expense (37.7) (36.3)
Profit for the year before tax 746.6 689.0
Income tax expense (130.6) (118.4)
Net profit for the year 616.0 570.6
Segment assets
Insulated Insulation Light + Water + Data + Roofing + Waterproofing Total Total
Panels Air Energy Flooring €m 2022 2021
€m €m €m €m €m €m €m
3,350.6 1,683.4 686.5 247.6
Assets - 2022 240.4 783.1 6,991.6
Assets - 2021 3,266.4 1,309.4 665.0 243.5 227.2 - 5,711.5
Derivative financial instruments 0.4 0.3
Cash and cash equivalents 649.3 641.4
Deferred tax assets 40.1 34.7
Total assets as reported in the Consolidated Statement of Financial Position 7,681.4 6,387.9
Segment liabilities
Insulated Insulation Light + Water + Data + Roofing + Waterproofing Total Total
Panels Air Energy Flooring €m 2022 2021
€m €m €m €m €m €m €m
(1,080.7) (320.8) (248.1) (95.7) (1,986.9)
Liabilities - 2022
(77.9) (163.7)
Liabilities - 2021 (1,240.7) (307.1) (218.1) (98.4) (74.4) - (1,938.7)
Interest bearing loans and borrowings (current and non-current) (2,188.9) (1,397.5)
Derivative financial instruments (current and non-current) - -
Income tax liabilities (current and deferred) (110.1) (92.4)
(4,285.9) (3,428.6)
Total liabilities as reported in the Consolidated Statement of Financial
Position
Other segment information
Insulated Insulation Light + Water + Data + Roofing + Waterproofing
Panels Air Energy Flooring €m Total
€m €m €m €m €m €m
178.8 136.8 12.1 8.8 551.4
Capital investment - 2022 * 6.2 208.7
164.3 94.2 32.3 8.4 5.5 304.7
Capital investment - 2021 * -
Depreciation included in segment result - 2022 (85.1) (41.7) (18.9) (8.1) (165.1)
(6.6) (4.7)
Depreciation included in segment result - 2021 (77.7) (32.2) (15.8) (7.0) (138.4)
(5.7) -
Non-cash items included in segment result - 2022 (10.0) (4.1) (1.4) (1.3) (18.4)
(1.5) (0.1)
Non-cash items included in segment result - 2021 (10.2) (3.4) (1.4) (1.1) (17.7)
(1.6) -
* Capital investment also includes fair value of property, plant and equipment
and intangible assets acquired in business combinations.
Analysis of segmental data by geography
Western + Southern Central +
Europe Northern Rest of
€m Europe Americas World Total
€m €m €m €m
Income Statement Items
Revenue - 2022 3,850.2 2,133.3 1,823.7 533.7 8,340.9
Revenue - 2021 3,239.8 1,629.8 1,269.8 357.6 6,497.0
Statement of Financial Position Items
Non-current assets - 2022 * 2,248.0 1,121.9 784.4 273.1 4,427.4
Non-current assets - 2021 * 1,535.8 842.2 720.8 245.4 3,344.2
Other segmental information
Capital investment - 2022 318.3 167.9 45.2 20.0 551.4
Capital investment - 2021 97.3 130.6 66.3 10.5 304.7
* Total non-current assets excluding deferred tax assets.
The Group is trading in over 80 countries worldwide. Foreign regions of
operation are as set out above and specific countries of operation are
highlighted separately below on the basis of materiality where revenue exceeds
15% of total Group revenues.
Revenues, non-current assets and capital investment (as defined in IFRS 8)
attributable to France were €1,238.1m (2021: €988.3m), €734.1m (2021:
€251.2m) and €161.1m (2021: €29.3m) respectively.
Revenues, non-current assets and capital investment (as defined in IFRS 8)
attributable to the country of domicile (Ireland) were €256.5m (2021:
€206.0m), €168.0m (2021: €89.0m) and €15.5m (2021: €19.3m)
respectively.
The country of domicile is included in Western & Southern Europe. Western
& Southern Europe also includes France, Benelux, Spain and Britain while
Central & Northern Europe includes Germany, the Nordics, Poland, Hungary,
Romania, Czech Republic, the Baltics and other South Central European
countries. Americas comprises the US, Canada, Central Americas and South
America. Rest of World is predominantly Australasia and the Middle East.
There are no material dependencies or concentrations on individual customers
which would warrant disclosure under IFRS 8. The individual entities within
the Group each have a large number of customers spread across various
activities, end-uses and
geographies.
3 NON-TRADING
ITEM
2022 2021
€m €m
Loss on disposal of subsidiary 16.5 -
During the year the Group's Russian operations were divested in full which
resulted in a loss on disposal of €16.5m (2021: €nil).
4 FINANCE EXPENSE AND FINANCE INCOME
2022 2021
€m €m
Finance expense
Lease interest 4.7 3.7
Deferred contingent consideration fair value movement - 0.1
Bank loan interest 10.1 5.4
Private placement loan note interest 24.5 26.8
Other interest 0.1 0.3
39.4 36.3
Finance income
Interest earned (1.7) -
Net finance expense 37.7 36.3
€0.7m of borrowing costs were capitalised during the year (2021: €3.9m).
No costs were reclassified from other comprehensive income to profit during
the year (2021: €nil).
5 ANALYSIS OF NET
DEBT
2022 2021
€m €m
Cash and cash equivalents 649.3 641.4
Current borrowings (85.0) (77.4)
Non-current borrowings (2,103.9) (1,320.1)
Total Net Debt (1,539.6) (756.1)
The Group's core funding is provided by six private placement loan notes; one
USD private placement totalling $200m (2021: $200m) maturing in December 2028
and five EUR private placements totalling €1.1bn (2021: €1.2bn) which will
mature in tranches between March 2023 and December 2032. The notes have a
weighted average maturity of 5.7 years (31 December 2021: 6.4 years).
The primary bank debt facility is a €800m revolving credit facility, which
was undrawn at year end, and which matures in May 2026. The Revolving Credit
Facility was increased by €100m in December 2022 under the facility's
accordion clause. In April 2022, the Group arranged two additional banking
finance facilities with an aggregate value of €800m (€500m maturing April
2024, €300m maturing April 2025). The facilities were fully drawn at year
end.
Included in cash at bank and in hand are overdrawn positions of €1,456.8m
(31 December 2021: €1,439.8m). These balances form part of a notional cash
pool arrangement and are netted against cash balances of €1,480.2m (31
December 2021: €1,463.6m). The net cash pool balance of €23.4m (31
December 2021: €23.8m) is included in the cash and cash equivalents balance
above. There is a legal right of offset between these balances and the
balances are physically settled on a regular basis.
Net debt, which is an Alternative Performance Measure, is stated net of
interest rate and currency hedges which relate to hedges of debt. Foreign
currency derivative assets of €0.4m (2021: €0.3m) and foreign currency
derivative liabilities of €nil (2021: €nil) 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 which is consistent with the terms and conditions of the covenants as set
out in the Group's external borrowing arrangements.
6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2022 2021
€m €m
Movement in cash and bank overdrafts 19.8 (731.2)
Drawdown of loans (846.0) (55.1)
Repayment of loans and borrowings 66.0 263.2
Settlement of derivative financial instrument - (18.5)
Change in net debt resulting from cash flows (760.2) (541.6)
Translation movement - relating to US dollar loan (10.9) (19.7)
Translation movement - other (12.4) 42.7
Derivative financial instruments movement - (1.3)
Net movement (783.5) (519.9)
Net debt at start of the year (756.1) (236.2)
Net debt at end of the year (1,539.6) (756.1)
Further analysis of net debt at the start and end of the year is provided in
note 5.
7 LEASES
Right of use asset
2022 2021
€m €m
At 1 January 155.5 113.0
Additions 41.3 28.4
Arising on acquisitions 36.2 32.2
Remeasurement 19.6 17.3
Terminations (1.7) (2.9)
Depreciation charge for the year (47.2) (37.0)
Effect of movement in exchange rates 1.6 4.5
At 31 December 205.3 155.5
Lease liability
2022 2021
€m €m
At 1 January 158.0 114.8
Additions 39.7 27.0
Arising on acquisitions 25.3 32.1
Remeasurement 19.6 17.3
Terminations (1.7) (3.0)
Payments (50.6) (38.6)
Interest 4.7 3.7
Effect of movement in exchange rates 1.8 4.7
At 31 December 196.8 158.0
Split as follows:
Current liability 43.2 35.0
Non-current liability 153.6 123.0
At 31 December 196.8 158.0
8 DIVIDENDS
Equity dividends on ordinary shares: 2022 2021
€m €m
2022 Interim dividend 25.6 cent (2021: 19.9 cent) per share 46.5 36.1
2021 Final dividend 26.0 cent (2020: 20.6 cent) per share 47.2 37.4
93.7 73.5
Proposed for approval at AGM
Final dividend of 23.8 cent (2021: 26.0 cent) per share 43.3 47.2
This proposed dividend for 2022 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
2022 in accordance with IAS 10 Events after the Reporting Period. The proposed
final dividend for the year ended 31 December 2022 will be payable on 9 May
2023 to shareholders on the Register of Members at close of business on 14
April 2023.
9 EARNINGS PER
SHARE
2022 2021
€m €m
The calculations of earnings per share are based on the following:
Profit attributable to ordinary shareholders 598.0 554.1
Number of Number of
shares ('000) shares ('000)
2022 2021
Weighted average number of ordinary shares for
the calculation of basic earnings per share 181,487 181,348
Dilutive effect of share options 1,451 1,565
Weighted average number of ordinary shares
for the calculation of diluted earnings per share 182,938 182,913
2022 2021
€ cent € cent
Basic earnings per share 329.5 305.6
Diluted earnings per share 326.9 303.0
Dilution is attributable to the weighted average number of share options
outstanding at the end of the reporting period.
The number of options which are anti-dilutive and have therefore not been
included in the above calculations is nil (2021: nil).
10 BUSINESS COMBINATIONS
A key strategy of the Group is to create and sustain market leading positions
through acquisitions in markets it currently operates in, together with
extending the Group's footprint in new geographic markets. In line with this
strategy, the principal acquisitions completed during the year were as
follows:
In April 2022, the Group acquired 100% of the share capital of Troldtekt, a
Danish natural acoustic insulation producer. The total consideration,
including net debt acquired amounted to €220.4m.
In September 2022, the Group acquired 100% of the share capital of Ondura
Group, a French headquartered global provider of roofing membranes and
associated roofing solutions, for a total consideration, including net debt
acquired of €515.6m.
The Group also made a number of smaller acquisitions during the year for a
combined cash consideration of €151.0m:
· The Roofing + Waterproofing division acquired 100% of the share capital of
Derbigum, a Belgian producer of waterproofing membranes for a total
consideration, including net debt acquired of €95.0m in June 2022;
· The Insulated Panels division acquired 100% of the share capital of THU Perfil
in February 2022 and 100% of the share capital of Invespanel in Spain in
September 2022;
· The Insulation division acquired the assets of Calostat in the UK in September
2022.
The table below reflects the fair value of the identifiable net assets
acquired in respect of the acquisitions completed during the year. Any
amendments to fair values will be made within the twelve-month period from the
date of acquisition, as permitted by IFRS 3, Business Combinations.
Ondura Troldtekt Other* Total
€m €m €m €m
Non-current assets
Intangible assets 77.9 30.1 22.2 130.2
Property, plant and equipment 86.3 31.6 27.0 144.9
Right of use assets 27.0 1.8 7.4 36.2
Deferred tax asset 0.5 - 1.2 1.7
Current assets
Inventories 86.0 13.2 21.5 120.7
Trade and other receivables 75.1 16.6 35.6 127.3
Current liabilities
Trade and other payables (96.2) (14.7) (52.9) (163.8)
Provisions for liabilities (21.9) (0.3) (9.5) (31.7)
Lease liabilities (4.2) (0.8) (1.5) (6.5)
Non-current liabilities
Retirement benefit obligations (2.8) - (0.1) (2.9)
Lease liabilities (12.1) (1.0) (5.7) (18.8)
Deferred tax liabilities (21.7) (5.2) (2.1) (29.0)
Total identifiable assets 193.9 71.3 43.1 308.3
Goodwill 321.7 149.1 107.9 578.7
Total consideration 515.6 220.4 151.0 887.0
Satisfied by:
Cash (net of cash acquired) 515.6 220.4 151.0 887.0
Deferred consideration - - - -
Total consideration 515.6 220.4 151.0 887.0
*Included in Other are certain immaterial remeasurements of prior year
accounting estimates as a result of the finalisation of the assignment of fair
values to identifiable net assets.
The acquired goodwill is attributable principally to the profit generating
potential of the businesses, together with cross-selling opportunities and
other synergies expected to be achieved from integrating the acquired
businesses into the Group's existing business.
The initial assignment of fair values to identifiable net assets acquired has
been performed on a provisional basis due to the relative size of the
acquisitions and the timing of the transactions. Any amendments to these fair
values within the twelve-month timeframe from the date of acquisition will be
disclosable in the 2023 Annual Report, as stipulated by IFRS 3.
In the post-acquisition period to 31 December 2022, the businesses acquired
during the current year contributed revenue of €252.0m and trading profit of
€21.6m to the Group's results.
11 POST BALANCE SHEET
EVENTS
There have been no material events subsequent to 31 December 2022 which would
require adjustment to, or disclosure in this report.
12 EXCHANGE RATES
The financial information included in this report is expressed in Euro which
is the presentation currency of the Group and the functional and presentation
currency of the Company. Results and cash flows of foreign subsidiary
undertakings have been translated into Euro at actual exchange rates or
average, where this is a reasonable approximation, and the related Statements
of Financial Position have been translated at the rates of exchange ruling at
the balance sheet date.
Exchange rates of material currencies used were as
follows:
Average rate Closing rate
Euro = 2022 2021 2022 2021
Pound Sterling 0.853 0.860 0.886 0.838
US Dollar 1.054 1.183 1.067 1.133
Canadian Dollar 1.370 1.483 1.444 1.442
Australian Dollar 1.517 1.575 1.569 1.558
Czech Koruna 24.562 25.642 24.143 24.851
Polish Zloty 4.685 4.565 4.680 4.588
Hungarian Forint 391.09 358.52 400.190 368.89
Brazilian Real 5.442 6.381 5.632 6.309
13 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.
14 BOARD APPROVAL
This announcement was approved by the Board on 17 February 2023.
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