REG - Kingspan Group PLC - Half-year Report
19/08/2022 07:00
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RNS Number : 5380W Kingspan Group PLC 19 August 2022
KINGSPAN GROUP PLC
HALF-YEARLY FINANCIAL REPORT
for the period ended 30 June 2022
KINGSPAN GROUP PLC
RESULTS FOR THE HALF YEAR 30 JUNE 2022
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 2022.
Financial Highlights:
• Revenue up 42% to €4.2bn, (underlying up 27%).
• Trading profit up 32% to €434.2m, (underlying up 15%).
• Group trading margin of 10.5%, a decrease of 80bps versus the same period in
2021.
• Acquisitions contributed 12% to sales growth and 13% to trading profit growth
in the period.
• Net debt1 of €1,206.6m (H1 2021: €601.7m). Net debt4 to EBITDA4 of 1.25x
(H1 2021: 0.83x).
• Basic EPS up 29% to 170.6 cent (H1 2021: 132.4 cent).
• Interim dividend up 29% to 25.6 cent (H1 2021: 19.9 cent) in line with policy
guidance.
• ROCE at 18.1 % (H1 2021: 18.9%) reflecting timing of acquisitions.
Operational Highlights:
• Record performance overall in a testing environment, lower order intake in
quarter two yet solid quotation pipelines in most key markets.
• Insulated Panels sales increase of 39% driven by raw material led price growth
and a 63% increase in global sales volume of QuadCore(TM).
• Insulation sales strongly ahead by 69%, driven by inflation and acquisitions.
District heating applications order intake up by 50% year on year with an
annualised run rate of c.€500m. Technical insulation now comprising c.35% of
divisional revenue.
• Roofing + Waterproofing global platform established. Annualised revenue run
rate will be in excess of €500m post acquisition of Derbigum in June and
acquisition of Ondura Group cleared in August. Strategic minority stake of 24%
acquired in Nordic Waterproofing in August.
• Technical insulation and Roofing significantly increase the Group's exposure
to RMI.
• Significant progress at Light + Air, margins progressing positively year on
year.
• Data + Flooring medium term pipeline stronger than at any time in the past.
• Water + Energy margin recovery underway following a lag experienced in the
first half of the year.
• Invested a total of €522m in acquisitions, purchase of a minority interest
and capex during the period.
Summary Financials:
H1 '22 H1 '21 Change
Revenue €m 4,153.4 2,920.1 +42%
Trading Profit €m(2) 434.2 328.9 +32%
Trading Margin(3) 10.5% 11.3% -80bps
EBITDA €m(5) 512.2 392.9 +30%
EPS (cent per share) 170.6 132.4 +29%
1 Net debt pre-IFRS16
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-IFRS16 per banking covenants
5 Earnings before finance costs, income taxes, depreciation, amortisation and
non trading item.
Gene Murtagh, Chief Executive of Kingspan commented:
"Despite a challenging trading environment Kingspan delivered record half year
results, with revenues over €4bn for the first time. We have been able to
navigate large input cost increases with only modest margin impact.
We invested €522m in new businesses and capex in the period, including
significant progress executing on our strategy of developing a new business
division focussed on roofing and waterproofing solutions. We also continue our
organic expansion plans, with the intention to build 25 new production lines
in the next 5 years, including our plans to invest €200m in a new Building
Technology Campus in Ukraine.
Looking forwards we retain the outlook flagged in our June trading update but
are confident in the long term demand for the energy efficient solutions we
deliver. Whilst inflationary pressures have eased in recent months, the
context of energy supply constraints over the winter months in Europe will be
something we will be closely monitoring."
For further information contact:
Murray Consultants Tel: +353 (0) 1 4980 300
Douglas Keatinge
Business Review
The first half of 2022 was a period of remarkable contrast. The Group
delivered a record trading performance with revenue and trading profit ahead
by 42% and 32%. The momentum in deliveries across most of the business was
solid although the opposite was the case on inbound orders particularly in the
second quarter. The last two years have been characterised by untypical ups
and downs in order placement with raw material pricing playing a part in these
gyrations. As a consequence it is difficult to draw conclusions from movements
month to month with the pattern over a longer period more reflective of trend.
In that context global insulated panels order intake volume for the 6 month
period to 30 June 2022 was precisely 50% of the total intake for the full year
2021.
Revenue for the six months exceeded €4bn for the first time, with EBITDA and
trading profit reaching €512.2m and €434.2m respectively. Kingspan's
exposure to high growth end markets and applications and a concerted worldwide
move towards a more energy conscious future built environment all played a
role in driving this outcome. Extraordinary levels of price inflation also had
a meaningful influence as we passed on an unprecedented level of raw material
increases received during 2021. Whilst the process has been broadly delivered,
certain pockets of activity across the Group experienced a lag in the recovery
effort. The raw material backdrop has become less hostile in recent months. It
remains to be seen how this plays out particularly in a context of likely
energy supply constraints in Europe in the months ahead.
Planet Passionate
Building upon the progress achieved during 2021, the first half of this year
has again seen further advances in our global programme.
In 2021, we announced revised 1.5⁰C aligned science-based targets bringing
them in line with our Planet Passionate programme goals to reduce Scope 1, 2
and 3 greenhouse gas (GHG) emissions. The Group is committed to reducing
absolute Scope 1 and 2 GHG emissions by 90% by 2030 from a 2020 base year. We
have also pledged to reduce absolute Scope 3 GHG emissions by 42% within the
same timeframe. We will also be implementing a €70 per tonne internal carbon
charge from 2023 which will galvanise full alignment across the organisation.
Planet Passionate Targets* Target Year 2020 (A) 2021 (A) 2022 Forecast
Carbon Net Zero Carbon Manufacturing (yoy % reduction scope 1 & 2(1)) 2030 5.2% 4.3% 5.0%
50% reduction in product CO2e intensity from primary supply chain partners (% 2030 - - -
reduction)
Zero emission company cars (annual replacement %) 2025 11% 29% 30%
Energy 60% direct renewable energy use (%) 2030 19.5% 26.1% 26.0%
20% on-site renewable energy generation (%) 2030 4.9% 4.8% 5.0%
Solar PV systems on all wholly owned facilities (%) 2030 21.7% 28.4% 36.0%
Net Zero Energy (%) 2020 100% 100% 100%
Circularity Zero Company waste to landfill (tonnes) 2030 18,642 16,294 14,500
Recycle 1 billion PET bottles into our manufacturing processes (million 2025 573 843 800
bottles)
QuadCore™ products utilising recycled PET (% sites) 2025 5% 5% 10%
Water Harvest 100 million litres of rainwater (million litres) 2030 20.1 20.6 25.0
Support 5 Ocean Clean-Up projects (No. of projects) 2025 1 2 3
1 excluding biogenic emissions
*Scope and boundaries: Planet Passionate targets include manufacturing &
assembly sites within the Kingspan Group in 2020 and organic growth.
Expansion
In the first six months we invested a total of €522m across acquisitions,
the purchase of a minority interest and capex, the largest of which was
Troldtekt, a natural acoustic insulation producer based in Denmark. This marks
our first significant step into the 'natural insulation' category, an area in
which we expect to make further advances in the foreseeable future. In June
2022 we completed the acquisition of Derbigum in our new Roofing +
Waterproofing platform. The acquisition of Ondura Group is expected to
complete shortly and when combined with the Derbigum business will take the
annual run rate revenues of our wholly owned Roofing + Waterproofing
activities to approximately €500m. Since period end, we acquired a strategic
minority stake of 24% in Nordic Waterproofing.
Last year we entered the district heating market with the acquisition of
Logstor with operations in the Nordics and Poland. We have been very pleased
with progress to date and our excitement about its future prospects continues
to grow. Full year 2022 order intake is heading for approximately €500m,
ahead of prior year by over 50%.
Organically, within the next five years, we have internal requirements for
more than 25 new production lines worldwide. Included in this is our recently
announced intention to invest €200m on a Building Technology Campus in
Ukraine to meet demand in the wider Central and Eastern European region. The
site search is nearing completion and a full design of the complex is
currently in preparation.
Innovation
PowerPanel(™) has been launched in Britain and in Ireland where the initial
interest has been encouraging. The team has had active engagement on
projects that will generate over 75 MW of power (approximately €75m), with 5
MW already installed and operational. Rooftricity(TM), our funded solution,
has also been launched in the same markets and is expected to catalyse
increased momentum in the refurbishment category offering a complete
solar-embedded re-roof, with no capital outlay for the building owner.
QuadCore(TM) 2.0 is also progressing and in a coldstore application, the
product reached a 120 minute fire rating, a significant advancement which will
in many cases match if not exceed the performance of synthetic mineral fibre
cored products. QuadCore(TM) sales volume grew by 63% globally in the first
half.
We have also developed QuadCore(TM) LEC (lower embodied carbon) in
collaboration with our suppliers. This is a prime example of how our Planet
Passionate agenda is translating into market leading, sustainable products.
QuadCore(TM) LEC will have c.50% less embodied carbon, contain upwards of 45%
recycled content and will launch in Q4 this year. The lower embodied carbon
project ultimately envisages a 80% lower embodied carbon product within the
next five years.
Furthermore, projects are underway to achieve an 'A' classification for
Optim-R(®) and 'B' classification for key Kooltherm(®) applications.
AlphaCore® will launch, with UK initial scale production, in Q1 2023.
Significant progress is also being made on entering the 'natural' insulation
category.
Insulated Panels
H1 '22 H1 '21 Change
Revenue €m 2,665.2 1,922.8 +39%((1))
Trading Profit €m 299.4 223.6 +34%
Trading Margin 11.2% 11.6% -40bps
(1) Comprising underlying +32%, currency +4% and acquisitions +3%.
Like-for-like volume -3%.
Revenue generation was very buoyant in the period reflecting solid volume and
strong pricing. Margins were also strong reflecting effective cost recovery of
inflated raw materials and ongoing advancement of QuadCore(TM).
The Americas had a good performance overall with encouraging activity levels
as we look towards the second half of the year. Our new facility in
Pennsylvania opened in May with plans underway for an additional line in the
region. Europe overall has been mixed with intake levels in the second quarter
under some pressure although activity pipelines appear solid.
Insulation
H1 '22 H1 '21 Change
Revenue €m 842.0 499.5 +69%((1))
Trading Profit €m 88.2 69.9 +26%
Trading Margin 10.5% 14.0% -350bps
(1) Comprising underlying +16%, currency +3% and acquisitions +50%.
Like-for-like volume -6%.
Revenue was significantly ahead of the same period last year, up by 69%. A
significant transition and advancement is underway in the division with
technical insulation now representing approximately 35% of the portfolio. The
addressable market for technical insulation is vast and includes district
heating and applications in acoustic, ducting and piping. Since its
acquisition in June 2021, Logstor, focused on district heating, has made
significant progress and order intake for 2022 is anticipated to be
approximately €500m, over 50% ahead of prior year. Building insulation
margins particularly in Britain and France decreased in the period due to a
lag in recovery of raw material inflation, although reported margins in 2021
were abnormally strong. Margins have improved in more recent months. Volumes
overall were weaker in the period due to generally high inventories in the
distribution channel at the turn of the year. Pro-forma volumes, assuming
acquisitions were owned for the full period, were down 1% in the half year.
Business in North America and Australasia continues to trend positively.
Light + Air
H1 '22 H1 '21 Change
Revenue €m 327.8 239.5 +37%((1))
Trading Profit €m 16.3 6.5 +151%
Trading Margin 5.0% 2.7% +230bps
(1) Comprising underlying +17%, currency +2% and acquisitions +18%.
It's been another period of progress with solid volume and pricing reflecting
margins and intake improving over prior year. This will be further evident in
the second half which is typically the more significant trading period.
Water + Energy
H1 '22 H1 '21 Change
Revenue €m 146.4 126.3 +16%((1))
Trading Profit €m 8.5 11.9 -29%
Trading Margin 5.8% 9.4% -360bps
(1) Comprising underlying +8%, currency impact +2% and acquisitions +6%.
The division grew revenues principally on raw material led pricing although
there was a lag in recovery particularly in the first quarter. Water
applications continue to demonstrate structurally positive trends and is an
area of increasing opportunity.
Data + Flooring
H1 '22 H1 '21 Change
Revenue €m 172.0 132.0 +30%((1))
Trading Profit €m 21.8 17.0 +28%
Trading Margin 12.7% 12.9% -20bps
(1) Comprising underlying +23% and currency impact +7%.
The division had a strong first half due largely to buoyant datacentre
activity and this is expected to continue for the foreseeable future. Our
innovations in recent years in industry leading datacentre solutions has
positioned us well to capitalise on those opportunities.
Financial Review
Overview of results
Group revenue increased by 42% to €4,153.4m (H1 2021: €2,920.1m) and
trading profit increased by 32% to €434.2m (H1 2021: €328.9m). This
represents a 39% increase in sales and a 28% increase in trading profit on a
constant currency basis. The Group's trading margin decreased by 80bps to
10.5% (H1 2021: 11.3%) primarily reflecting a lag in the recovery of raw
material inflation and an abnormally high margin in Insulation in the prior
period. The amortisation charge in respect of intangibles was €12.9m
compared to €12.4m in the first half of 2021. Group operating profit after
amortisation increased by 28% to €405.2m (H1 2021: €316.5m). Profit after
tax was €319.9m compared to €246.7m in the first half of 2021, driven in
the main by the increase in trading profit. Basic EPS for the period was 170.6
cent, representing an increase of 29% on the first half of 2021 (H1 2021:
132.4 cent).
The Group's underlying sales and trading profit performance by division are
set out below:
Sales Underlying Currency Acquisition Total
Insulated Panels +32% +4% +3% +39%
Insulation +16% +3% +50% +69%
Light + Air +17% +2% +18% +37%
Water + Energy +8% +2% +6% +16%
Data + Flooring +23% +7% - +30%
Group +27% +3% +12% +42%
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 +28% +4% +2% +34%
Insulation -24% +3% +47% +26%
Light + Air +66% +3% +82% +151%
Water + Energy -35% +2% +4% -29%
Data + Flooring +20% +8% - +28%
Group +15% +4% +13% +32%
Finance costs (net)
Finance costs for the period were lower than the same period last year at
€17.6m (H1 2021: €19.3m). Finance costs include a non-cash charge of
€0.1m (H1 2021: €0.2m) relating to the Group's defined benefit pension
schemes. Lease interest of €2.3m was recorded during the period (H1 2021:
€1.8m). The Group's net interest expense on borrowings (bank and loan notes)
in the first half of 2022 was €15.2m compared to €17.2m in the same period
in 2021. This decrease was due mainly to the repayment in August 2021 of a
higher coupon 2011 private placement loan note.
Free cashflow
H1 '22 H1 '21
€m €m
EBITDA* 512.2 392.9
Lease payments (27.1) (19.5)
Movement in working capital ** (261.8) (118.5)
Net capital expenditure (117.5) (60.3)
Pension contributions (2.7) (1.7)
Net finance costs paid (16.2) (18.5)
Income taxes paid (82.4) (40.9)
Other including non-cash items 8.4 8.3
Free cashflow 12.9 141.8
*Earnings before finance costs, income taxes, depreciation, amortisation and
non trading item. 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 on 30 June 2022 was €1,307.2m (31 December 2021: €977.8m),
an increase of €329.4m (€261.8m excl. acquisitions) in the period. The
increase was driven by the increased level of year on year trading, with the
Group investing in working capital to support the significant increase in
sales as well as higher levels of inventory year on year. The average
working capital to sales percentage was 14.5% compared with 9.7% in H1 2021.
The working capital percentage in H1 2021 was unusually low reflecting very
high levels of activity coupled with lower inventory days due to a lack of
availability of certain raw materials. Since quarter four 2021 we have carried
higher levels of inventory than is typical reflecting longer delivery lead
times and supply chain constraints. We expect the working capital to sales
ratio to reduce during the second half of 2022.
Net Debt
Net debt increased by €450.5m during the first half of the year to
€1,206.6m (31 December 2021: €756.1m). The movement in debt is analysed in
the table below:
Movement in net debt H1 '22 H1 '21
€m €m
Free cashflow 12.9 141.8
Acquisitions and divestments (357.2) (430.9)
Deferred consideration paid (46.9) -
Purchase of financial asset - (5.0)
Repurchase of shares - (46.9)
Dividends paid (47.2) (37.4)
Dividends paid to non-controlling interests (2.1) (2.2)
Cashflow movement (440.5) (380.6)
Exchange movements on translation (10.0) 15.1
Increase in net debt (450.5) (365.5)
Net debt at start of period (756.1) (236.2)
Net debt at end of period (1,206.6) (601.7)
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. In
addition, the Group has a number of smaller defined benefit pension
liabilities in Mainland Europe. The net aggregate pension liability in respect
of all schemes and obligations was €15.8m at 30 June 2022 (31 December 2021:
€28.0m).
Non trading item
The Group recorded a non trading charge of €16.1m (H1 2021: €nil) in the
period in respect of the Group's net loss on the complete divestment of its
Russian operations.
Taxation
The tax charge for the first half of the year was €67.7m (H1 2021: €50.5m)
which represents an effective tax rate of 17.5% on profit before tax (H1 2021:
17.0%). The effective tax rate reflects the geographic mix of earnings year on
year.
Acquisitions
The Group incurred €350.8m on acquisitions during the period. Of this,
€220.5m was incurred on Troldtekt, €96.7m was incurred on Derbigum and an
aggregate amount of €33.6m invested in other acquisitions.
The Group also made a payment of €36.6m to acquire the remaining 15% of
shares in Bacacier which were held by a non-controlling interest.
Dividend
The Board has declared an interim dividend of 25.6 cent (H1 2021: 19.9 cent)
payable on 7 October 2022 to shareholders on the register on the record date
of 9 September 2022. This is in line with the previously announced revised
shareholder returns policy.
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 green revolving
credit facility of €700m entered into in May 2021 with a committed term to
May 2026. There were no drawings on this facility at period end.
In addition, as part of the Group's longer-term capital structure, the Group
has total private placement loan notes of €1,392m (H1 2021: €1,538m) which
have a weighted average maturity of 5.8 years (H1 2021: 6.2 years).
During the period, the Group arranged two new acquisition related financing
facilities with an aggregate value of €800m. At period end, there was
€150m drawn on one of these facilities and the other facility remained
undrawn.
The weighted average maturity of all debt facilities is 4.3 years (H1 2021:
5.8 years).
As well as ongoing free cashflow generation, the Group has significant
available undrawn committed facilities and cash which provide appropriate
headroom for operational requirements and development funding. Total available
headroom was €1,743m at 30 June 2022 (H1 2021: €1,631m).
Related party transactions
There were no changes in related party transactions from the 2021 Annual
Report that could have a material effect 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 2021 Annual Report. These risks, namely volatility in the macro
environment, failure to innovate, product failure, business interruption
(including IT continuity), climate change, credit risks and credit control,
employee development and retention, fraud and cybercrime, acquisition and
integration of new businesses, health & safety, and laws and 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. We will continue to actively assess changes in
the external environment on events which could change our risk assessment and
profile.
Board Changes
The Board of Kingspan is pleased to announce the appointment of Senan Murphy
as a Non-Executive Director with effect from 1 October 2022. Senan was
formerly the Group Finance Director and an executive director of CRH plc., and
was previously Chief Operating Officer at Bank of Ireland Group, and Chief
Financial Officer at Airtricity. He has over 30 years' experience in
international business across multiple industries including building
materials, renewable energy, financial services and banking.
Looking Ahead
We live at a time when climate, energy, social and economic challenges are
escalating almost everywhere. Clearly, the answers are not straightforward
although they do exist. The homes we live in, the buildings we work in and how
we move around all hold the key. Radically more efficient solutions to each of
these challenges exist and are gaining momentum, although to date progress has
been too slow. The impending pinch points on a number of fronts should harden
the global resolve to accelerate this transition.
In the more immediate term, the building economy is likely to contract in many
parts of the world which leaves our sentiment similar to that expressed in our
last trading update. Whilst we have seen softer order intake patterns in
recent months, quotation activity generally remains solid. Our portfolio is
growing and evolving with new business streams added, and we remain
unrelenting in our longer term purpose to deliver an effective transition to a
materially less consumptive, and lower emissions built environment.
2022 Statement of Directors Responsibilities
for the 6 month period ended 30 June 2022
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 2022 (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
2021 Annual Report.
On behalf of the Board
Gene M Murtagh Geoff Doherty
Chief Executive Officer Chief Financial Officer
19 August 2022 19 August 2022
Kingspan Group plc
Condensed consolidated income statement (unaudited)
for the 6 month period ended 30 June 2022
6 months 6 months
ended ended
30 June 2022 30 June 2021
Note €m €m
Revenue 4 4,153.4 2,920.1
Cost of Sales (3,044.3) (2,087.8)
Gross Profit 1,109.1 832.3
Operating Costs (674.9) (503.4)
Trading Profit 4 434.2 328.9
Intangible amortisation (12.9) (12.4)
Non trading item 6 (16.1) -
Operating Profit 405.2 316.5
Finance expense 7 (18.0) (19.5)
Finance income 7 0.4 0.2
Profit for the period before income tax 387.6 297.2
Income tax expense 8 (67.7) (50.5)
Profit for the period 319.9 246.7
Attributable to owners of Kingspan Group plc 309.5 240.3
Attributable to non-controlling interests 10.4 6.4
319.9 246.7
Earnings per share for the period
Basic 13 170.6c 132.4c
Diluted 131.3c
13 169.3c
Kingspan Group plc
Condensed consolidated statement of comprehensive income (unaudited)
for the 6 month period ended 30 June 2022
6 months 6 months
ended ended
30 June 2022 30 June 2021
€m €m
Profit for financial period 319.9 246.7
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 49.0 69.5
Net changes in fair value of cash flow hedges - (0.4)
Items that will not be reclassified subsequently to profit or loss
Actuarial gains on defined benefit pension schemes 10.0 8.3
Income taxes relating to actuarial gains on defined benefit pension schemes (2.5) (2.1)
Total comprehensive income for the period 376.4 322.0
Attributable to owners of Kingspan Group plc 358.6 312.6
Attributable to non-controlling interests 17.8 9.4
376.4 322.0
Kingspan Group plc
Condensed consolidated statement of financial position
as at 30 June 2022
At 30 June At 30 June At 31 December
2022 (unaudited) 2021 (unaudited) 2021
(audited)
Note €m €m €m
Assets
Non-current assets
Goodwill 14 2,208.4 1,810.7 1,908.6
Other intangible assets 82.6 93.5 93.2
Financial assets 13.0 13.2 13.2
Property, plant and equipment 15 1,285.3 1,089.6 1,155.8
Right of use assets 16 173.9 131.8 155.5
Retirement benefit assets 29.7 8.9 17.9
Deferred tax assets 35.4 23.0 34.7
3,828.3 3,170.7 3,378.9
Current assets
Inventories 1,364.1 755.0 1,138.9
Trade and other receivables 1,675.2 1,237.0 1,228.4
Derivative financial instruments 10 0.5 18.3 0.3
Cash and cash equivalents 10 392.7 931.4 641.4
3,432.5 2,941.7 3,009.0
Total assets 7,260.8 6,112.4 6,387.9
Liabilities
Current liabilities
Trade and other payables 1,732.6 1,360.1 1,389.8
Provisions for liabilities 68.3 58.3 67.8
Lease liabilities 16 38.1 31.6 35.0
Derivative financial instruments - 0.2 -
Deferred contingent consideration 11 173.4 38.4 41.7
Interest bearing loans and borrowings 9 133.3 172.3 77.4
Current income tax liabilities 50.1 67.2 57.7
2,195.8 1,728.1 1,669.4
Non-current liabilities
Retirement benefit obligations 45.5 48.2 45.9
Provisions for liabilities 78.5 62.9 74.9
Interest bearing loans and borrowings 9 1,466.0 1,379.1 1,320.1
Lease liabilities 16 134.6 101.1 123.0
Deferred tax liabilities 39.1 37.9 34.7
Deferred contingent consideration 11 13.8 122.2 160.6
1,777.5 1,751.4 1,759.2
Total liabilities 3,973.3 3,479.5 3,428.6
2,959.3
Net Assets 3,287.5 2,632.9
Equity
Share capital 23.9 23.8 23.9
Share premium 93.2 95.6 94.4
Capital redemption reserve 0.7 0.7 0.7
Treasury shares (56.1) (58.5) (57.3)
Other reserves (204.4) (301.7) (277.7)
Retained earnings 3,356.0 2,812.5 3,108.1
Equity attributable to owners of Kingspan Group plc 3,213.3 2,572.4 2,892.1
Non-controlling interests 74.2 60.5 67.2
Total Equity 3,287.5 2,632.9 2,959.3
Kingspan Group plc
Condensed consolidated statement of changes in equity (unaudited)
for the 6 month period ended 30 June 2022
Share Share Capital Treasury Translation Cash flow Share Revaluation Put option liability reserve Retained Total Non- controlling interests Total
capital premium redemption shares reserve hedging based reserve earnings attributable equity
reserve reserve payment to owners
reserve 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 - - - - - - 9.1 - - - 9.1 - 9.1
Exercise or lapsing of share options - (1.2) - 1.2 - - (6.0) - - 6.0 - - -
Dividends - - - - - - - - - (47.2) (47.2) - (47.2)
Transactions with non-controlling interests:
Dividends paid to non-controlling interests - - - - - - - - - - - (2.1) (2.1)
Fair value movement - - - - - - - - (8.0) - (8.0) - (8.0)
Settlement of put option - - - - - - - - 36.6 (27.9) 8.7 (8.7) -
Transactions with owners - (1.2) - 1.2 - - 3.1 - 28.6 (69.1) (37.4) (10.8) (48.2)
Total comprehensive income for the period
Profit for the period - - - - - - - - - 309.5 309.5 10.4 319.9
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Cash flow hedging in equity
- current year - - - - - - - - - - - - -
- tax impact - - - - - - - - - - - - -
Exchange differences on translating foreign operations - - - - 41.6 - - - - - 41.6 7.4 49.0
Items that will not be reclassified subsequently to profit or loss
Actuarial gains on defined benefit pension scheme - - - - - - - - - 10.0 10.0 - 10.0
Income taxes relating to actuarial gains on defined benefit pension scheme - - - - - - - - - (2.5) (2.5) - (2.5)
Total comprehensive income for the period - - - - 41.6 - - - - 317.0 358.6 17.8 376.4
Balance at 30 June 2022 23.9 93.2 0.7 (56.1) (66.9) 0.6 60.4 0.7 (199.2) 3,356.0 3,213.3 74.2 3,287.5
Kingspan Group plc
Condensed consolidated statement of changes in equity (unaudited)
for the 6 month period ended 30 June 2021
Share Share Capital Treasury Translation Cash flow Share Revaluation Put option liability reserve Retained Total Non- controlling interests Total
capital premium redemption shares reserve hedging based reserve earnings attributable equity
reserve reserve payment to owners
reserve 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 - - - - - - 8.1 - - - 8.1 - 8.1
Exercise or lapsing of share options - - - - - - (6.2) - - 6.2 - - -
Repurchase of shares - - - (46.9) - - - - - - (46.9) - (46.9)
Dividends - - - - - - - - - (37.4) (37.4) - (37.4)
Transactions with non-controlling interests:
Dividends paid to non-controlling interests - - - - - - - - - - - (2.2) (2.2)
Arising on acquisition - - - - - - - - - - - 4.6 4.6
Fair value movement - - - - - - - - (12.9) - (12.9) - (12.9)
Transactions with owners - - - (46.9) - - 1.9 - (12.9) (31.2) (89.1) 2.4 (86.7)
Total comprehensive income for the period
Profit for the period - - - - - - - - - 240.3 240.3 6.4 246.7
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Cash flow hedging in equity
- current year - - - - - (0.4) - - - - (0.4) - (0.4)
- tax impact - - - - - - - - - - - - -
Exchange differences on translating foreign operations 66.5 - - - - - 66.5 3.0 69.5
- - - -
Items that will not be reclassified subsequently to profit or loss
Actuarial gains on defined benefit pension scheme - - - - - - - - - 8.3 8.3 - 8.3
Income taxes relating to actuarial gains on defined benefit pension scheme - - - - - - - - - (2.1) (2.1) - (2.1)
Total comprehensive income for the period - - - - 66.5 (0.4) - - - 246.5 312.6 9.4 322.0
Balance at 30 June 2021 23.8 95.6 0.7 (58.5) (163.4) (0.1) 42.3 0.7 (181.2) 2,812.5 2,572.4 60.5 2,632.9
Kingspan Group plc
Condensed consolidated statement of changes in equity (audited)
for the year ended 31 December 2021
Share Share Capital Treasury Translation Cash flow Share Revaluation Put option liability reserve Retained Total Non- controlling interests Total
capital premium redemption shares reserve hedging based reserve earnings attributable equity
reserve reserve payment to owners
reserve 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 paid to non-controlling interests - - - - - - - - - - - (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
Balance at 31 December 2021 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
Kingspan Group plc
Condensed consolidated statement of cash flows (unaudited)
for the 6 month period ended 30 June 2022
6 months 6 months
ended ended
30 June 2022 30 June 2021
€m €m
Operating activities
Profit for the period 319.9 246.7
Add back non-operating expenses:
Income tax expense 67.7 50.5
Depreciation of property, plant and equipment 78.0 64.0
Amortisation of intangible assets 12.9 12.4
Impairment of non-current assets - 0.4
Loss on divestment of subsidiary 16.1 -
Employee equity-settled share options 9.1 8.1
Finance income (0.4) (0.2)
Finance expense 18.0 19.5
Profit on sale of property, plant and equipment (0.7) (0.2)
Changes in working capital:
Inventories (181.2) (159.6)
Trade and other receivables (367.9) (334.6)
Trade, other payables and provisions 287.3 375.7
Other:
Pension contributions (2.7) (1.7)
Cash generated from operations 256.1 281.0
Income tax paid (82.4) (40.9)
Interest paid (16.5) (18.8)
Net cash flow from operating activities 157.2 221.3
Investing activities
Additions to property, plant and equipment (131.5) (62.9)
Proceeds from disposals of property, plant and equipment 14.0 2.6
Purchase of subsidiary undertakings (including net debt/cash acquired) (350.8) (430.9)
Payment of deferred consideration in respect of acquisitions (46.9) -
Divestment of subsidiary (6.4) -
Purchase of financial assets - (5.0)
Interest received 0.3 0.3
Net cash flow from investing activities (521.3) (495.9)
Financing activities
Drawdown of interest bearing loans and borrowings 185.6 47.0
Repayment of interest bearing loans and borrowings - (92.5)
Payment of lease liabilities (27.1) (19.5)
Repurchase of treasury shares - (46.9)
Dividends paid to non-controlling interests (2.1) (2.2)
Dividends paid (47.2) (37.4)
Net cash flow from financing activities 109.2 (151.5)
Decrease in cash and cash equivalents (254.9) (426.1)
Effect of movement in exchange rates on cash held 6.2 27.8
Cash and cash equivalents at the beginning of the period 641.4 1,329.7
Cash and cash equivalents at the end of the period 392.7 931.4
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 2021 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 (http://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.
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.
- 'Operating profit' is profit before income taxes and net finance costs.
(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 19
August 2022.
(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
2021.
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
Framework
1 January 2022
Amendments to IAS 16 Property, Plant and Equipment - Proceeds before Intended
Use
1 January 2022
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
- Onerous Contracts - Costs of Fulfilling a Contract
1 January 2022
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 Interim 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
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice
Statement 2: Disclosure of Accounting policies
1 January 2023
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and 1 January 2023
Errors - Definition of Accounting Estimates
IFRS 17 Insurance Contracts 1 January 2023
Amendments to IAS 12 Income Taxes - Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
1 January 2023
Amendments to IAS 1 Presentation of Financial Statements - Classification of
Liabilities as Current or Non-current
1 January 2023*
Amendments to IFRS 17 Insurance Contracts: Initial Application of IFRS 17 and
IFRS 9 - Comparative information
1 January 2023*
* Not EU endorsed
(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
2021.
The Interim Financial Statements are available on the Group's website
(www.kingspan.com (http://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 2022 H1 2021 FY 2021 H1 2022 H1 2021 FY 2021
Euro =
Pound Sterling 0.842 0.868 0.860 0.861 0.860 0.838
US Dollar 1.093 1.205 1.183 1.045 1.185 1.133
Canadian Dollar 1.389 1.502 1.483 1.348 1.470 1.442
Australian Dollar 1.520 1.563 1.575 1.518 1.583 1.558
Czech Koruna 24.647 25.850 25.642 24.738 25.467 24.851
Polish Zloty 4.636 4.537 4.565 4.663 4.516 4.588
Hungarian Forint 375.38 357.800 358.52 394.50 351.690 368.89
Brazilian Real 5.553 6.482 6.381 5.412 5.891 6.309
4 Operating segments
The Group has the following five reportable
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 and ventilation systems.
Water + Energy Manufacture of energy and water solutions and all related service activities.
Data + Flooring Manufacture of data centre storage solutions and raised access floors.
Analysis by class of business
Segment revenue and disaggregation of revenue
Insulated Insulation Light + Air Water + Energy Data + Total
Panels €m €m Flooring €m
€m €m €m
Total revenue - H1 2022 2,665.2 842.0 327.8 146.4 172.0 4,153.4
Total revenue - H1 2021 1,922.8 499.5 239.5 126.3 132.0 2,920.1
Disaggregation of revenue H1 2022
Point in Time 2,638.1 828.9 195.1 146.1 152.7 3,960.9
Over Time 27.1 13.1 132.7 0.3 19.3 192.5
2,665.2 842.0 327.8 146.4 172.0 4,153.4
Disaggregation of revenue H1 2021
Point in Time 1,915.7 487.6 122.1 124.8 118.0 2,768.2
Over Time 7.1 11.9 117.4 1.5 14.0 151.9
1,922.8 499.5 239.5 126.3 132.0 2,920.1
Insulated Insulation Light + Air Water + Energy Data + Total
Panels €m €m Flooring €m
€m €m €m
Trading profit - H1 2022 299.4 88.2 16.3 8.5 21.8 434.2
Intangible amortisation (7.0) (2.4) (3.0) (0.4) (0.1) (12.9)
Non trading item (16.1) - - - - (16.1)
Operating result - H1 2022 276.3 85.8 13.3 8.1 21.7 405.2
Net finance expense (17.6)
Profit for the period before income tax 387.6
Income tax expense (67.7)
Profit for the period - H1 2022 319.9
Insulated Insulation Light + Air Water + Energy Data + Total
Panels €m €m Flooring €m
€m €m €m
Trading profit - H1 2021 223.6 69.9 6.5 11.9 17.0 328.9
Intangible amortisation (7.1) (1.8) (2.8) (0.6) (0.1) (12.4)
Operating result - H1 2021 216.5 68.1 3.7 11.3 16.9 316.5
Net finance expense (19.3)
Profit for the period before income tax 297.2
Income tax expense (50.5)
Profit for the period - H1 2021 246.7
Segment assets and liabilities
Insulated Insulation Light + Air Water + Energy Data + Total Total
Panels €m €m Flooring 30 June 30 June
€m €m €m 2022 2021
€m €m
Assets - H1 2022 3,763.2 1,823.1 727.5 258.7 259.7 6,832.2
Assets - H1 2021 2,914.1 1,206.5 587.9 230.4 200.8 5,139.7
Derivative financial instruments 0.5 18.3
Cash and cash equivalents 392.7 931.4
Deferred tax asset 35.4 23.0
Total assets 7,260.8 6,112.4
Liabilities - H1 2022 (1,427.4) (442.7) (237.0) (109.1) (68.6) (2,284.8)
Liabilities - H1 2021 (1,129.9) (327.9) (217.4) (91.6) (56.0) (1,822.8)
Derivative financial instruments - (0.2)
Interest bearing loans and borrowings (current and non-current) (1,599.3) (1,551.4)
Income tax liabilities (current and deferred) (89.2) (105.1)
Total liabilities (3,973.3) (3,479.5)
Other segment information
Insulated Insulation Light + Air Water + Energy Data + Total
Panels €m €m Flooring €m
€m €m €m
92.5 85.8 5.9 3.2 2.5 189.9
Capital Investment - H1 2022 *
Capital Investment - H1 2021 * 93.3 53.0 16.8 4.8 2.8 170.7
Depreciation included in segment (41.1) (20.7) (9.4) (3.9) (2.9) (78.0)
result - H1 2022
Depreciation included in segment (38.3) (12.0) (7.6) (3.2) (2.9) (64.0)
result - H1 2021
Non cash items included in segment result - H1 2022 (5.3) (1.8) (0.6) (0.5) (0.9) (9.1)
Non cash items included in segment result - H1 2021 (4.7) (1.5) (0.6) (0.5) (0.8) (8.1)
* 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 Europe** Central & Northern Europe
€m €m Rest of World
Americas €m Total
€m €m
Income Statement Items
Revenue - H1 2022 2,019.2 1,022.1 846.6 265.5 4,153.4
Revenue - H1 2021 1,558.7 657.8 539.4 164.2 2,920.1
Non-current assets - H1 2022 * 1,678.6 1,056.4 787.2 270.7 3,792.9
Non-current assets - H1 2021 * 1,482.7 834.8 622.1 208.1 3,147.7
Capital Investment - H1 2022 89.6 75.2 13.3 11.8 189.9
Capital Investment - H1 2021 43.4 93.5 31.2 2.6 170.7
* Total non-current assets excluding deferred tax assets.
** Prior period figures have been re-presented to include Britain in Western
& Southern Europe.
The Group has a presence in over 70 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
Operating Segments) attributable to France were €677.3m (H1 2021:
€484.4m), €263.8m (H1 2021: €212.0m) and €15.4m (H1 2021: €5.9m)
respectively.
Revenues, non-current assets and capital investment (as defined in IFRS 8)
attributable to the country of domicile (Ireland) were €131.0m (H1 2021:
€94.1m), €91.0m (H1 2021: €79.6m) and €9.1m (H1 2021: €7.8m)
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.
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 Non trading item
6 months 6 months
ended ended
30 June 2022 30 June 2021
€m €m
Loss on disposal of subsidiary 16.1 -
During the period the Group's Russian operations were divested in full which
resulted in a loss on disposal of €16.1m (H1 2021: €nil).
7 Finance expense and finance income
6 months 6 months
ended ended
30 June 2022 30 June 2021
€m €m
Finance expense
Bank loans 3.1 3.0
Private placement loan notes 12.5 14.4
Lease interest 2.3 1.8
Defined benefit pension scheme, net 0.1 0.2
Fair value movement on derivative financial instruments - 3.5
Fair value movement on private placement debt - (3.6)
Other interest - 0.2
18.0 19.5
Finance income
Interest earned (0.4) (0.2)
Net finance cost 17.6 19.3
€0.9m of borrowing costs were capitalised during the period (H1 2021:
€2.5m).
8 Taxation
Taxation provided for on profits is €67.7m (H1 2021: €50.5m) which
represents 17.5% (H1 2021: 17.0%) of the profit before tax for the period.
The full year effective tax rate in 2021 was 17.2%. The taxation charge for
the six month period is accrued using the estimated applicable rate for the
year as a whole.
9 Analysis of net debt
At At At
30 June 2022 30 June 2021 31 December 2021
€m €m €m
Cash and cash equivalents 392.7 931.4 641.4
Derivative financial instruments - 18.3 -
Current borrowings (133.3) (172.3) (77.4)
Non-current borrowings (1,466.0) (1,379.1) (1,320.1)
Total net debt (1,206.6) (601.7) (756.1)
Net debt, which is an Alternative Performance Measure, is stated net of
interest rate and currency hedge asset of €nil (at 31 December 2021: asset
of €nil) which relate to hedges of debt. Foreign currency derivative assets
of €0.5m (at 31 December 2021: €0.3m), 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.
10 Financial instruments
The following table outlines the components of net debt by category:
Derivatives designated as hedging instruments
Financial assets/ (liabilities) at amortised cost Liabilities in a fair value hedge relationship €m
€m €m Total net debt by category
€m
Assets:
Foreign exchange and interest rate swaps - - - -
Cash at bank and in hand 392.7 - - 392.7
Total assets 392.7 - - 392.7
Liabilities:
Private placement notes (1,392.0) - - (1,392.0)
Other loans (207.3) - - (207.3)
Total liabilities (1,599.3) - - (1,599.3)
At 30 June 2022 (1,206.6) - - (1,206.6)
Derivatives designated as hedging instruments
Financial assets/ (liabilities) at amortised cost Liabilities in a fair value hedge relationship €m
€m €m Total net debt by category
€m
Assets:
Foreign exchange and interest rate swaps - - - -
Cash at bank and in hand 641.4 - - 641.4
Total assets 641.4 - - 641.4
Liabilities:
Private placement notes (1,377.1) - - (1,377.1)
Other loans (20.4) - - (20.4)
Total liabilities (1,397.5) - - (1,397.5)
(756.1) - - (756.1)
At 31 December 2021
Financial assets/ (liabilities) at amortised cost Liabilities in a fair value hedge relationship Derivatives designated as hedging instruments
€m €m €m Total net debt by category
€m
Assets:
Foreign exchange and interest rate swaps - - 18.3 18.3
Cash at bank and in hand 931.4 - - 931.4
Total assets 931.4 - 18.3 949.7
Liabilities:
Private placement notes (1,404.1) (134.2) - (1,538.3)
Other loans (13.1) - - (13.1)
Total liabilities (1,417.2) (134.2) - (1,551.4)
At 30 June 2021 (485.8) (134.2) 18.3 (601.7)
The Group's private placement loan notes of €1,392.0m (at 31 December 2021:
€1,377.1m) have a weighted average maturity of 5.8 years (at 31 December
2021: 6.4 years).
Included in cash at bank and in hand are overdrawn positions of €1,323.9m
(30 June 2021: €1,433.6m). These balances form part of a notional cash pool
arrangement and are netted against cash balances of €1,375.9m (30 June 2021:
€1,518.4m). There is legal right of offset between these balances and the
balances are physically settled on a regular basis.
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 2022 30 June 2022 30 June 2022
€m €m €m
Financial assets
Interest rate swaps - - -
Foreign exchange swaps - - -
Foreign exchange contracts for hedging - 0.5 -
Financial liabilities
Deferred contingent consideration - - (16.1)
Put option liabilities - - (171.1)
Foreign exchange contracts for hedging - - -
At 30 June 2022 - 0.5 (187.2)
Level 1 Level 2 Level 3
31 December 2021 31 December 2021 31 December 2021
€m €m €m
Financial assets
Interest rate swaps - - -
Foreign exchange swaps - 0.3 -
Financial liabilities
Deferred contingent consideration - - (24.1)
Put option liabilities - - (178.2)
Foreign exchange contracts for hedging - - -
At 31 December 2021 - 0.3 (202.3)
Level 1 Level 2 Level 3
30 June 2021 30 June 2021 30 June 2021
€m €m €m
Financial assets
Interest rate swaps - 0.1 -
Foreign exchange swaps - 18.2 -
Financial liabilities
Deferred contingent consideration - - (23.7)
Put option liabilities - - (136.9)
Foreign exchange contracts for hedging - (0.2) -
At 30 June 2021 - 18.1 (160.6)
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
2021 and is set out in notes 18 and 19 of the 2021 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 2022, 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
€m €m
At 30 June 2022 1,392.0 1,383.6
At 31 December 2021 1,377.1 1,533.2
At 30 June 2021 1,538.3 1,726.1
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.
11 Deferred contingent consideration
At At At
30 June 30 June 31 December 2021
2022 2021 €m
€m €m
At the beginning of the period 202.3 127.6 127.6
Deferred contingent consideration arising on acquisitions - 12.4 12.1
Movement in deferred contingent consideration arising from fair value movement
- - 0.5
Movement in put liability arising from fair value movement 8.0 12.9 59.5
Amounts paid (46.9) - -
Effect of movement in exchange rates 23.8 7.7 2.6
Closing balance 187.2 160.6 202.3
Split as follows:
Current liabilities 173.4 38.4 41.7
Non-current liabilities 13.8 122.2 160.6
187.2 160.6 202.3
Included in the amounts paid during the period was a payment of €36.6m to
acquire the remaining 15% of shares in Bacacier which were held by a
non-controlling interest.
For each acquisition for which deferred contingent consideration has been
provided, an annual review takes place to evaluate if the payment conditions
are likely to be met. For the purposes of the fair value assessments all of
the put option liabilities are valued using the option price formula in the
shareholder's agreement and the most recent financial projections. These are
classified as unobservable inputs. The significant unobservable inputs used in
the fair value measurements and the quantitative sensitivity analysis are
shown in the table below:
Type Valuation technique Significant unobservable inputs Sensitivity of the input to the fair value
Deferred contingent consideration Discounted cashflow method · Risk adjusted discount rates of between 0.0% and 1.5%. · A 10% decrease in the risk adjusted discount rate would result in an
increase in the fair value of the deferred contingent consideration of
The net present value of the expected payment is calculated by using a risk · EBITDA multiples of between 2.8 and 8.1. €0.1m.
adjusted discount rate. The expected payments are valued using the earn out
formula in the shareholder's agreement and the most recent financial · A 5% increase in the assumed profitability of the acquired entities
projections. would result in an increase in the fair value of the deferred contingent
consideration of €0.5m.
Put option liabilities Discounted cashflow method · Risk adjusted discount rates of between 4.4% and 6.1%. · A 10% decrease in the risk adjusted discount rate would result in an
increase in the fair value of the put option liabilities of €0.7m.
The net present value of the expected payment is calculated by using a risk · EBITDA multiples of between 6.5 and 8.57.
adjusted discount rate. The expected payments are valued using the option · A 5% increase in the assumed profitability of the acquirees would
price formula in the shareholder's agreement and the most recent financial result in an increase in the fair value of the put option liabilities of
projections. €8.2m.
12 Dividends
A final dividend on ordinary shares of 26.0 cent per share in respect of the
year ended 31 December 2021 (2020: 20.6 cent) was paid on 6 May 2022.
The directors have declared an interim dividend in respect of 2022 of 25.6
cent (2021: 19.9 cent) which will be paid on 7 October 2022 to shareholders on
the register on the record date of 9 September 2022.
13 Earnings per share
6 months 6 months
ended ended
30 June 2022 30 June 2021
€m €m
The calculations of earnings per share are based on the following:
Profit attributable to owners of the Company 309.5 240.3
Number of Number of
shares ('000) shares ('000)
6 months 6 months
ended ended
30 June 2022 30 June 2021
Weighted average number of ordinary shares for
the calculation of basic earnings per share 181,437 181,536
Dilutive effect of share options 1,412 1,445
Weighted average number of ordinary shares
for the calculation of diluted earnings per share 182,849 182,981
€ cent € cent
Basic earnings per share 170.6 132.4
Diluted earnings per share 169.3 131.3
At 30 June 2022, there were no anti-dilutive options (30 June 2021: Nil).
14 Goodwill
At At At
30 June 2022 30 June 2021 31 December 2021
€m
€m €m
At beginning of period 1,908.6 1,478.8 1,478.8
Acquired through business combinations 262.8 301.4 380.4
Effect of movement in exchange rates 37.0 30.5 49.4
At end of period 2,208.4 1,810.7 1,908.6
At end of period
Cost 2,276.1 1,878.4 1,976.3
Accumulated impairment losses (67.7) (67.7) (67.7)
Net carrying amount 2,208.4 1,810.7 1,908.6
15 Property, plant and equipment
At At At
30 June 2022 30 June 2021 31 December 2021
€m
€m €m
2,723.4 2,364.3
Cost or valuation 2,488.3
Accumulated depreciation and impairment charges (1,438.1) (1,274.7) (1,332.5)
Net carrying amount 1,285.3 1,089.6 1,155.8
Opening net carrying amount 1,155.8 972.9 972.9
Acquired through business combinations 55.9 83.1 94.0
Divested (5.3) - -
Additions 133.1 65.2 172.2
Disposals (13.3) (2.4) (5.6)
Depreciation charge (56.4) (47.1) (101.4)
Impairment charge - (0.4) (3.1)
Effect of movement in exchange rates 15.5 18.3 26.8
Closing net carrying amount 1,285.3 1,089.6 1,155.8
The disposals generated a profit in the period of €0.7m (H1 2021: €0.2m).
16 Leases
Right of use asset
At At At
30 June 2022 30 June 2021 31 December 2021
€m
€m €m
At beginning of period 155.5 113.0 113.0
Additions 21.1 12.6 28.4
Arising on acquisitions 7.0 12.3 32.2
Remeasurement 8.5 9.3 17.3
Terminations (0.8) (1.4) (2.9)
Depreciation charge for the year (21.6) (16.9) (37.0)
Effect of movement in exchange rates 4.2 2.9 4.5
Closing net carrying amount 173.9 131.8 155.5
Lease liability
At At At
30 June 2022 30 June 2021 31 December 2021
€m
€m €m
At beginning of period 158.0 114.8 114.8
Additions 20.5 12.0 27.0
Arising on acquisitions 6.9 12.8 32.1
Remeasurement 8.4 9.3 17.3
Terminations (0.8) (1.4) (3.0)
Payments (27.1) (19.5) (38.6)
Interest 2.3 1.8 3.7
Effect of movement in exchange rates 4.5 2.9 4.7
Closing net carrying amount 172.7 132.7 158.0
Split as follows:
Current liability 38.1 31.6 35.0
Non-current liability 134.6 101.1 123.0
Closing net carrying amount 172.7 132.7 158.0
17 Business combinations
During the period, the Group made three acquisitions for a combined total cash
consideration of €350.8m.
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 €220.5m. In June 2022, the Group
acquired 100% of the share capital of Derbigum, a Belgian producer of
waterproofing membranes for a total consideration, including net debt acquired
of €96.7m.
Other acquisitions had a combined consideration of €33.6m. The Group
acquired 100% of the share capital of THU Perfil in February 2022, a Spanish
firm specialising in metal ceiling profiles. Also included within other are
certain immaterial remeasurements of prior year estimates.
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 2021 acquisitions, are set out below:
Troldtekt Derbigum Other* Total
€m €m €m €m
Non-current assets
Intangible assets 0.3 0.7 (0.1) 0.9
Property, plant and equipment 40.4 16.5 (1.0) 55.9
Right of use assets 1.7 - 5.3 7.0
Deferred tax assets - - 2.7 2.7
Current assets
Inventories 13.9 13.7 5.5 33.1
Trade and other receivables 18.1 23.2 11.6 52.9
Current liabilities
Trade and other payables (12.6) (21.7) (17.5) (51.8)
Provisions for liabilities (0.2) - (2.5) (2.7)
Lease liabilities (0.7) - (0.7) (1.4)
Non-current liabilities
Retirement benefit obligations - - (0.1) (0.1)
Lease liabilities (0.9) - (4.6) (5.5)
Deferred tax liabilities (1.1) - (1.9) (3.0)
Total identifiable assets 58.9 32.4 (3.3) 88.0
Non-controlling interests arising in acquisition - - -
-
Goodwill 161.6 64.3 36.9 262.8
220.5 33.6 350.8
Total consideration 96.7
Satisfied by:
Cash (net of cash/debt acquired) 220.5 96.7 33.6 350.8
Deferred consideration - - - -
Total consideration 220.5 96.7 33.6 350.8
*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 2022, the businesses acquired in the
current period contributed total revenue of €37.5m and trading profit of
€4.5m to the Group's results.
The valuation of the fair value of the assets and liabilities recently
acquired is still in progress due to the relative size of the acquisitions and
the timing of the transactions. The initial assignment of fair values to
identifiable net assets acquired has therefore been performed on a provisional
basis.
18 Capital and reserves
No new ordinary shares (H1 2021: 189,444) were issued as a result of the
exercise of vested options arising from the Group's share option schemes.
During the period, 201,980 (H1 2021: nil) treasury shares were re-issued as a
result of vested options arising from the Group's share options schemes (see
the 2021 Annual Report for full details of the Group's share option schemes).
Options were exercised at an average price of €0.13 per option.
19 Significant events and transactions
Other than the acquisitions referenced in note 17, there were no individually
significant events or transactions in the period which contributed to material
changes in the Statement of Financial Position.
20 Related party transactions
There were no changes in related party transactions from the 2021 Annual
Report that could have a material effect on the financial position or
performance of the Group in the first half of the year.
21 Subsequent events
In August 2022, the Group acquired a strategic minority interest of 24% in
Nordic Waterproofing Holding AB. Nordic Waterproofing Holding AB is a
publicly listed company on the Nasdaq Stockholm and is a market leader in
waterproofing products and services for the protection of buildings and
infrastructure.
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 item. 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 2022 30 June 2021
Financial Statements Reference €m €m
Trading profit Note 4 434.2 328.9
Trading margin
Measures the trading profit as a percentage of revenue.
30 June 2022 30 June 2021
Financial Statements Reference €m €m
Trading Profit Note 4 434.2 328.9
Total Group Revenue Note 4 4,153.4 2,920.1
Trading margin 10.5% 11.3%
EBITDA
The Group has updated its definition of EBITDA as earnings before finance
expenses, income taxes, depreciation, amortisation and non trading item. In
prior statements the definition of EBITDA excluded the impact of IFRS 16
Leases, however as IFRS 16 Leases has been firmly embedded as an accounting
standard for the last number of years, the Group determined that the
associated definition of EBITDA was more appropriate going forward. This
treatment is consistent with the 2021 Annual Report.
30 June 2022 30 June 2021
Financial Statements Reference €m €m
Trading profit Condensed Consolidated Income Statement 434.2 328.9
Depreciation Consolidated Statement of Cash Flows 78.0 64.0
EBITDA* 512.2 392.9
* Prior period comparative has been re-presented to reflect this revised
definition.
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 2022 30 June 2021
Financial Statements Reference €m €m
Net cash flow from operating activities Consolidated Statement of Cash Flows 157.2 221.3
Additions to property, plant, equipment and intangibles Consolidated Statement of Cash Flows (131.5) (62.9)
Proceeds from disposals of property, plant and equipment Consolidated Statement of Cash Flows 14.0 2.6
Lease payments Consolidated Statement of Cash Flows (27.1) (19.5)
Interest received Consolidated Statement of Cash Flows 0.3 0.3
Free cash flow
12.9 141.8
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 2022 30 June 2021 31 December 2021
Financial Statements Reference €m €m €m
Net Assets Consolidated Statement of Financial Position 3,287.5 2,632.9 2,959.3
Net Debt Note 9 1,206.6 601.7 756.1
3,715.4
4,494.1 3,234.6
Operating profit before interest and tax 814.0 612.0 725.3
Return on capital employed 18.1% 18.9% 19.5%
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 2022 30 June 2021 31 December 2021
Financial Statements Reference €m €m €m
Net Debt Note 9 1,206.6 601.7 756.1
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 2022 30 June 2021
Financial Statements Reference
€m €m
H1 EBITDA EBITDA calculation 512.2 392.9
Lease liability payments Note 16 (27.1) (19.5)
H1 EBITDA (adjusted for the impact of IFRS 16) 485.1 373.4
30 June 2022 30 June 2021 31 December 2021
Financial Statements Reference
€m €m €m
Net Debt Note 9 1,206.6 601.7 756.1
12 month EBITDA (adjusted for the impact of IFRS 16) 966.3 725.7 854.6
Net Debt : EBITDA times 1.25 0.83 0.88
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 2022 30 June 2021 31 December 2021
Financial Statements Reference €m €m
€m
Trade and other receivables Consolidated Statement of Financial Position 1,675.2 1,237.0 1,228.4
Inventories Consolidated Statement of Financial Position 1,364.1 755.0 1,138.9
Trade and other payables Consolidated Statement of Financial Position (1,732.6) (1,360.1) (1,389.8)
Foreign currency derivatives excluded from net debt Consolidated Statement of Financial Position 0.5 (0.2) 0.3
Working capital 1,307.2 631.7 977.8
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 2022 30 June 31 December 2021
2021
€m €m
€m
Working capital 1,307.2 631.7 977.8
Annualised turnover 9,033.8 6,529.0 7,070.0
Working Capital ratio 14.5% 9.7% 13.8%
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