Professional Documents
Culture Documents
Locations
Kingscourt, Ireland
Africa
Kingspan Group plc — Egypt
IKON™ will be Kingspan’s global Morocco
innovation hub and is expected to
Asia
open its doors mid-2019. The hub
India
—
will be the centre of excellence Indonesia
for collaborative innovation in Pakistan
Kingspan, across divisions and Singapore
across geographic regions. Thailand
Vietnam
Annual Report
Our research and development will
concentrate on using advanced Australasia
materials to create solutions Australia
across the themes of ThermalSafe, New Zealand
& Financial
FireSafe, SmokeSafe, WeatherSafe
and FibreSafe; developing ways Europe
Austria
to increase recycled content and
Azerbaijan
create a more circular product set,
Statements
Belgium
for example our ambitious target Bosnia
to include more than 500 million Croatia
recycled PET bottles in our high- Czech Republic
performance insulation by 2023; Denmark
2018
and the ongoing digitalisation Estonia
of the construction industry Finland
using technologies such as data France
information, BIM, augmented reality Germany
Hungary
and virtual reality.
Ireland
Kazakhstan
Stakeholders will be invited to Latvia
come to IKON™ and feedback into Lithuania
the innovations which are most Netherlands
relevant to them, giving them the Northern Ireland
opportunity to shape their ongoing Norway
partnership with Kingspan. Poland
IKON
Romania
Russia
Serbia
Slovakia
Slovenia
Spain
Sweden
Switzerland
United Kingdom
Ukraine
Middle East
Iran
Qatar
Saudi Arabia
Turkey
UAE
Americas
Brazil
Canada
Chile
Colombia
Costa Rica
Mexico
Panama
USA
— Chairman's
— — Financial
75% Statement
Approaching 256 million Review
Chief
Executive’s Sustainability Financial
Review Report Statements
Page Page Page
16 36 88
— 4 — 47 88 — 139
4 2
2
2
3 2
3
129
6 15 6 35 2 5
10 3
8 4 3
11
8
2 2
Business & Strategic Report Financial Statements
2
Chairman’s Statement 6 Independent Auditor’s Report 92
Manufacturing
9
2 Business Model & Strategy 8 Financial Statements 95
Chief Executive’s Review 16 Notes to the Financial Statements 102
sites
Financial Review 26
Risk & Risk Management 32
—
2 Sustainability Report 36
—
2
14,000+ 2
€600 million
2
Report of the Remuneration Committee 70
2 Report of the Audit Committee 82
Sales Manufacturing
3
22 33
Summary Financials
—
2 2 2 ™ 2 2
Revenue EBITDA1 Trading Profit2 Trading Margin Profit After Tax EPS
Brian Glancy
— Insulated Panels:
QuadCore™ AWP;
KS1000 RW
2018 was a year of new milestones, new frontiers Fire Rating:
Euroclass B-s1, d0 to EN 13501-1
Our first full year in Brazil and research & development to bring projects such as architects, engineers, Dividend details of which are set out in the the audit committee, chair of the
Colombia, followed by further to the market new and proprietary contractors, and owners. The Board is recommending a final Directors’ Report of this Annual remuneration committee, and as
investment during the year in technologies to further differentiate dividend of 30.0 cent per share, Report. We also engage in open senior independent director, and
Panama, delivered a very encouraging from our competitors. In 2018, Notwithstanding the rapid expansion which if approved at the Annual dialogue with our major shareholders on behalf of the Board, I would like
performance for the LATAM region as Kingspan started development of of our business, both organically General Meeting, will give a total on the Company’s strategic and to thank Helen for the valuable
a whole. At the same time Kingspan our first fibre free 'A Core' insulation and through acquisition, Kingspan’s dividend for the year of 42.0 cent, financial performance, as detailed contribution she has made to the
advanced its position in southern which is planned for launch next year. commitment to reducing our carbon an increase of 13.5% on prior year. in the Financial Review in this Company during those years.
Europe, through our acquisition Additionally, during the year Kingspan emissions and attaining our goal of This continues the Board’s policy Annual Report.
of the Synthesia Group. We also QuadCore™ insulated panel systems becoming a Net Zero Energy business of growing the shareholder Looking ahead
extended the company’s footprint achieved major milestones in fire by 2020, remains as strong as ever. dividend in line with the Company’s During the year, we were delighted Whilst acknowledging the challenges
into India through an Insulated resistance performance, including In 2018 renewable energy accounted continued progression. to announce the appointment of and uncertainties that lie ahead in
Panel manufacturing partnership the achievement of up to 1 hour for 75% of our total energy usage. Jost Massenberg as a non-executive some of our more mature markets,
with Jindal Mectec. These are all fire insulation and up to 4 hours fire If approved, the final dividend will be director to the Board. Jost brings I am confident that Kingspan’s
exciting new markets for Kingspan, integrity in our architectural wall Management and employees paid (subject to Irish withholding tax more than 30 years’ experience in continued strategy of building on
with considerable long-term growth panel range. During the year the Board had the rules) on 10 May 2019 to shareholders European steel and manufacturing our existing leadership positions by
potential. Organic investment in opportunity to visit several of our on the register at close of business industries, and I welcome his investing in new geographies and
new frontiers also continued, with In 2018, Kingspan also launched its manufacturing facilities, and we on 29 March 2019. addition to the Board. new technologies, will continue to
Kingspan currently constructing its new digital strategy. This exciting were delighted to meet the local deliver improved shareholder returns
first Kooltherm® manufacturing plant plan is focused on the digitalisation staff and management teams, Board governance and Following the conclusion of this into the future.
in the Nordics, to be commissioned of our business and of the broader and really appreciated seeing their composition year’s Annual General Meeting
later this year. Each of these construction industry, using world commitment and enthusiasm for The Board carefully monitors and in May, Helen Kirkpatrick will be Eugene Murtagh
investments will create strong leading technologies to transform the the Kingspan vision. manages risk across the business, retiring as a non-executive director Chairman
platforms for growth in these design, construction and performance and espouses best practice on the expiration of her term of
new regions. of intelligent buildings. Through On behalf of the Board, I want to governance policies and procedures, office. Helen has served as chair of 22 February 2019
investment in technology we can thank all of Kingspan's management
At the same time Kingspan help drive cost-saving collaboration and employees for their contribution
has continued its investment in between partners on construction to our success in 2018.
8 9
customers to make a difference in employing more than 14,000 people. A global leader in the design, 4. Data & Flooring Technology
Ireland Rest of World Data & Flooring Technology Water & Energy
4% 7% 4% 5%
Light & Air
UK Mainland Europe
7%
21% Geography 48% Products
— —
Insulation Boards
Americas 64%
20%
10 11
Strategic Pillars — — —
To be the leader in high To achieve greater geographic To contribute to the effort in
— performance insulation
globally with proprietary and
balance, primarily focusing on the
Americas, Continental Europe and
tackling climate change by
continuously improving the
differentiating technologies. appropriate developing markets. attributes of our high performance
insulation, which address the
— — impact of building emissions.
To be the world’s leading To deliver 20% Return
provider of low energy on Investment. —
building envelopes –
To drive sustainable practices
Insulate and Generate.
through our organisations with
programmes such as Net Zero
Energy and PET recycling.
INNOVATION
PENETRATION
GLOBALISATION
PLANET PASSIONATE
Kingspan Group plc — Annual Report & Financial Statements 2018
Differentiation from Increased penetration of The continued evolution In 2018 we achieved 75%
& Strategy
competitors driven by Kingspan’s product suite of Kingspan’s geographic Net Zero Energy, a significant
Statement
superior innovation: underpinned by regulatory footprint as we build market increase on the 69% achieved
changes and environmental leading positions globally: last year and we remain on
→→ Construction on “IKON™” is awareness: target to achieve 100% by 2020.
Model
Chairman’s
well underway at Kingspan’s →→ In 2018 Kingspan closed a
Group headquarters in →→ Continued penetration number of acquisitions which →→ Kingspan is proud to
— Business
Kingscourt, Ireland. IKON™ growth and conversion from supplemented our geographic continue to support CDP.
will be Kingspan's global traditional insulation and spread. Synthesia Group In 2018 we achieved an
centre of excellence for building methods has been is our first manufacturing A- Climate Change rating
Report —
Research and Development and will continue to be a core presence in Southern Europe which puts us among the
and we look forward to driver of our success. and consists of Synthesia top 400 companies in the
StrategicReport
updating you on the future →→ Ongoing revisions to key International, Poliuretanos world in terms of leading on
innovations it delivers. EU legislation including and Huurre. In July we environmental practices.
Strategic
→→ The ongoing roll-out of the Energy Performance of finalised the acquisition of →→ A wide range of projects
QuadCore™ during the year, Buildings Directive (EPBD) Balex which supplemented designed to improve the
which is now available from continue to drive industry to our presence in Central and energy efficiency of our
&&
over half of our Insulated take action. Eastern Europe. operations were implemented
Business
Business
Panel facilities worldwide. →→ Through 2018 we continued →→ Following the investment in on many sites, including the
→→ The Kooltherm 100 Series
®
to drive the penetration Isoeste in 2017, we announced implementation of Energy
was launched towards the of Kingspan’s best in class plans in 2018 to invest in Management Standard
end of 2016, and work is proprietary products, further capacity for the ISO 50001.
ongoing on developing a QuadCore™ now represents Kingspan Isoeste business →→ 5.9% of our total energy
Kooltherm® 200 Series. 8% of Kingspan's Insulated in Brazil. use was generated from
→→ The digitalisation of Kingspan, Panel global sales. →→ In 2018 we announced renewable sources on our
designed to transform how a partnership with own manufacturing sites.
we do business and how our Jindal Mectec in India.
specifiers and customers This is Kingspan’s first
interact with us over the manufacturing footprint
next three to five years. in the Indian market, an
economy with over 1.3 billion
people and significant
development plans.
US
Entertainment and Sports Arena
2018 In a Nutshell
France, Sports Hall Plélo
Data & Flooring Technology Water & Energy Other Energy Efficiency & Conversion How we operate How we create value
4% 5% 15% 85%
129
> Product innovation
and differentiation
Light & Air
7%
Revenue > Excellent customer service
> Energy efficient sustainable
€4.4bn
Global manufacturing facilities building envelope solutions
Insulation Insulated
Boards Products Panels Drivers
> We operate our businesses to
14,000+
20% — 64% —
the highest standards
Kingspan Group plc — Annual Report & Financial Statements 2018
€521.2m €308.4m
> Infrastructure
184.0c 42.0c
et
14 15
Bianca Wong
Melbourne, Australia
—
Australia
16 17
— Amstel Tower
Insulation Boards:
and strengthens our emerging →→ In July we invested in the →→ We are Planet Passionate
Insulated Panels presence in Latin Kingspan Jindal business in India at Kingspan. We are committed
America. It also provides an
excellent technology platform for
opening the door to a longer
term conversion opportunity
to achieving 100% Net Zero
Energy by 2020, and stand alone
2 Insulated Panels
in the region. within our industry in having this
blended chemical systems similar
to those used throughout the goal. Our product technology
Turnover —
→→ Penetration growth and
€2,823.1m
wider Kingspan Group. conversion from traditional provides designers, developers
insulation and building and owners the means with Mainland Europe UK
We also advanced our position methods have been core drivers which to equally embrace a The Continental European region Sales volumes were strong towards
+21%(1)
in Central Europe with the of our success to date. As lower energy future. Circularity performed well overall for our the end of the year bringing the
acquisition in July 2018 of Balex energy consumption, energy is becoming crucial, and our Insulated Panels businesses. France in full year-on-year output broadly
Metal, a Polish manufacturer of conservation, and energy sources products are reusable, recyclable particular had an excellent year, as in line with 2017. This was achieved
Insulated Panels and Insulation become increasingly important and increasingly comprise 2017: €2,328.5m did the Netherlands. Germany and despite growing uncertainty and
Boards. Balex has a strong challenges for the world, recycled PET with a commitment Belgium delivered solid outcomes a construction market backdrop
market presence locally and in demand should rise for product to more than doubling this source and market penetration in the that weakened towards year-end.
surrounding export markets.
It complements our existing
technologies which address this
urgent agenda. Buildings consume
within the coming five years.
We are developing initiatives to
2 Nordics advanced further as the
region increasingly adopts advanced
Whilst the project pipeline is in
reasonable shape, the growing
presence in the region and approximately 40% of global harvest recycled raw materials
brings with it two well invested energy and Kingspan’s solutions from both land and ocean. Trading Profit methods. Activity in Central Europe deficit in confidence has resulted in
was mixed and the focus on reviving ongoing postponements. We expect
€281.8m
manufacturing facilities. are designed to dramatically margins in this market resulted in a this situation to prevail until the
Kingspan Group plc — Annual Report & Financial Statements 2018
curtail the environmental strong operating outcome, further political and economic landscape
damage from building emissions. bolstered by the addition of Balex is more certain, and will focus our
10.0%
America during 2018 as penetration with both the order bank and
for Insulated Panels continued specification pipeline well improved
to grow, and as the steep cost by year-end. This bodes positively
inflation experienced earlier in for the first half of 2019. Meanwhile
2017: 10.0%
the year was passed through to in Turkey and the Middle East,
market. The temperature controlled growth also resumed and a healthy
environments segment performed project pipeline should provide a
well and the adoption of our solid foundation from which to
insulated architectural facades range advance long-term in the region.
continued to outpace traditional During the year we also entered
construction methods across a wide India through the Kingspan Jindal
variety of building applications. partnership which provides us with
2018 was also our first full year of two manufacturing facilities in this
operation in Latin America through relatively embryonic and exciting
the Kingspan Isoeste partnership in new frontier.
Brazil and PanelMET in Colombia.
Both businesses made significant Ireland
progress over the prior year and have Not surprisingly, construction activity
begun to deliver broader technical in Ireland has expanded once again
and operational synergies. Across the and at a more digestible pace than
Americas in total, the business exited in the past. The non-residential
the year with an order bank well segment which this business unit
ahead of prior year. serves experienced a significant uplift
in 2018 and we would anticipate this
trend continuing into 2019.
Ireland
Pilz
Insulated Panels:
Evolution Axis
Evolution Recess (1) Comprising underlying +6%,
Fire Rating: currency -3% and acquisitions +18%
EN 13501-1 is B – s1, d0.
20 21
Insulation Boards 2
— Turnover
UK
The business had a strong start to
Americas
Again, following a slow start to
€864.1m
2018 which was largely fuelled by
continuing penetration growth of
Kooltherm® coupled with the selling
2018, our business in North America
improved as the year progressed. The
investment made in 2017 in a new
+12%(1)
price inflationary impact of rising XPS line in Winchester Virginia is now 2017: €769.4m
raw material costs. Since then, and fully operational and as its capacity
as indicated at half year, these prices becomes increasingly utilised our
have reversed somewhat, leading
to corresponding deflation in the
focus will shift to assessing further
locations to establish a future
2
price of our PIR based products. This manufacturing presence. The Trading Profit
general trend, also experienced in specification pipeline for Kooltherm®
€105.1m
other markets, has resulted in PIR has grown substantially, albeit from
Kingspan Group plc — Annual Report & Financial Statements 2018
12.2%
significantly in the second half of both the new PIR line installed earlier
the year. The scarcity of some raw in the year, and a new phenolic
materials had hampered growth board plant. The latter will be aimed
+30bps
earlier in the year. Activity in the at servicing the increasing demand
Netherlands was particularly strong for advanced insulation in HVAC
and our presence in the Nordics, applications in the UAE and beyond.
which is dominated by traditional 2017: 11.9%
fibrous materials, continued to Ireland
advance in anticipation of our The revenue growth experienced
upcoming Kooltherm® facility which during the first half continued
we expect to commission in the through the remainder of the year,
fourth quarter of this year. Our first largely driven by Kooltherm® and
year with the Synthesia Insulation strong PIR pricing, although the
business in Spain, has been very latter eased somewhat towards
satisfactory at a time of gradual year-end. Raw material deflation
recovery in the Iberian market. This has led to some price erosion of PIR
business has been further bolstered which we anticipate will stabilise in
by growth in exports as it delivers the near-term.
its technologies across a broad
international base of end markets.
UK
University of Nottingham
Insulation Boards:
Kooltherm Pipe Insulation,
ThermaDuct Insulation
Fire Rating:
Kooltherm: Euroclass BL,s1,d0, FM Approved Class 4924
ThermaDuct: Class 1, BS 476–7: 1997
(1) Comprising underlying +2%,
currency -2% and acquisitions +12%.
22 23
€14.2m
Mainland Europe. Integration of to compensate for this with a
the VPI acquisition in the Nordics wider product offering and growth
Kingspan Group plc — Annual Report & Financial Statements 2018
-12%
growth frontier in the waste water
-200bps
Below: UK
continued to do so into the early wall-lighting system has grown
Harry Potter Studios
part of 2019. The Benelux was a considerably during the year. Order
little more subdued as the project intake outpaced dispatches during 2017: €204.7m Water & Energy:
pipeline was lower than in recent the year and this augurs well for Klargester fuel and soil separator 2017:9.0%
years, although this picture has 2019. In contrast to this, more
improved into early 2019. Southern
Europe grew marginally and the
generic roof-lighting systems have
become increasingly competitive
2
relocation of this business into a resulting in an element of margin Trading Profit
state-of-the-art manufacturing pressure. This pattern is expected
facility in Lyon, France will provide
capacity for growth, and play a key
role in supporting the substantial
to improve during the current year
and overtime the integrated sales
effort with our insulated panels
€21.5m
daylighting requirement across the
Middle East.
business is expected to deliver
meaningful sales leverage. +45%
2017: €14.8m
€22.6m
wider offering on floor finishes.
+3%
performance of the business in the UK
was in contrast to the general trend in
11.9%
and Australia where we expect to deliver Insulation Boards:
tangible progress in the year ahead. In Kingspan Thermataper TT46;
approved to LPS 1181: Part 1
addition, during 2018 our presence grew in
+10bps
FM 4470 & 4450;
Continental Europe through the business Thermaroof: 4470 FM4470
acquired in Belgium in late 2017.
Data & Flooring Technology:
2017:11.8% RMG600 Attiro magnetic
engineered timber flooring finish
RMG600 - Fire rating: BS476-6 & BS476-7;
EN13501:1 Bfl-s1
(1) Comprising underlying +2%,
currency -3% and acquisitions +4%
Acquisitions Order intake and the order bank Whilst these indicators bode well
During the year we completed eight in many of our key markets are for our near-term future, we remain
acquisitions with a consideration of ahead of prior year, although some acutely mindful of the increasingly
almost €470m. These included the exceptions exist. As the competitive negative economic rhetoric, not
leading insulated panel and board dynamics of the various raw alone in the UK, that could well
businesses in Iberia, a strong player materials in insulation have changed impact the appetite for investment
in the insulated panel business in in recent months Kingspan's in construction later in the year.
Central and Eastern Europe and a proprietary non-fibrous cores Setting aside this macro concern,
partnership with the market leader in have grown share and, in general, and any unavoidable effect it may
the insulated panel market in India. penetration of advanced insulation have on Kingspan, we remain
has improved following the supply resolutely focused on the delivery
Looking Ahead turbulence earlier in 2018 which had of our long-term strategy.
2019 has started well for the Group temporarily upset this momentum.
with like-for-like sales revenue and Gene M Murtagh
volume ahead of the same period Chief Executive Officer
last year. 22 February 2019
26 27
—
by €2.2m to €18.1m (2017: €15.9m). are now named Water & Energy schemes was €13.1m (2017: €13.6m)
A net non-cash credit of €0.6m (formerly Environmental) and as at 31 December 2018.
(2017: credit of €0.6m) was recorded Data & Flooring Technology
The Financial Review provides an overview of in respect of swaps on the Group’s
USD private placement notes. The
(formerly Access Floors). Intangible assets and goodwill
Intangible assets and goodwill
the Group’s financial performance for the year Group’s net interest expense on
borrowings (bank and loan notes)
Dividends
The Board has proposed a final
increased during the year by
€316.1m to €1,502.1m (2017:
ended 31 December 2018 and of the Group’s was €18.0m (2017: €16.1m). This dividend of 30.0 cent per ordinary €1,186.0m). Intangible assets and
increase reflects higher average share payable on 10 May 2019 to goodwill of €340.1m were recorded in
financial position at that date. gross and net debt levels in 2018, due shareholders registered on the the year relating to acquisitions and
to acquisition spend. The interest record date of 29 March 2019. When additions completed by the Group,
expense is driven extensively by combined with the interim dividend offset by annual amortisation of
gross debt balances with cash yields, of 12.0 cent per share, the total €22.2m (2017: €15.7m) and a small
although improving, still low in the dividend for the year increased decrease due to year end exchange
current environment. to 42.0 cent (2017: 37.0 cent), rates used to translate intangible
an increase of 13.5%. assets and goodwill other than
Taxation those denominated in euro.
Overview of results Sales Underlying Currency Acquisition Total The tax charge for the year was Retirement benefits
Kingspan Group plc — Annual Report & Financial Statements 2018
€69.1m (2017: €60.6m) which The primary method of pension Key performance indicators -
Group revenue increased by 19% to Insulated Panels +6% -3% +18% +21% represents an effective tax rate of provision for current employees financial
€4.4bn (2017: €3.7bn) and trading Insulation Boards +2% -2% +12% +12% 17.1% (2017: 17.5%). The decrease in is by way of defined contribution The Group has a set of financial key
The key drivers of sales and trading profit performance in each division
are set out in the Business Review.
28 29
Key performance indicators 2018 2017 The Insulated Panels division (d) Free cashflow is an important (e) Return on capital employed, →→ On 9 July 2018, the purchase of
trading margin was stable indicator and it reflects the calculated as operating profit 51% of Jindal Mectec Private
Basic EPS growth 16% 11%
year-on-year reflecting ongoing amount of internally generated divided by total equity plus net Limited, an Indian manufacturer
Sales growth 19% 18% of insulated panels for a cash
progress in sales of QuadCore™ capital available for re-investment debt, was 16.8% in 2018 (2017:
Trading margin 10.2% 10.3% amount of €22.8m.
and the market mix of sales. The in the business or for distribution 17.8%), or 17.1% including the
Free cashflow (€m) 308.4 198.5 trading margin improvement to shareholders. annualised impact of acquisitions. →→ An investment of €8.2m in
Return on capital employed 16.8% 17.8% in the Insulation Boards division The creation of shareholder Invicara PTE Limited, a Building
Net debt/EBITDA 1.4x 1.05x reflects a positive Kooltherm® mix value through the delivery of Information Modelling solution
Free cashflow 2018 2017
and some relief on raw material long term returns well in excess provider with global reach.
€m €m
(a) Basic EPS growth. The growth in in underlying sales and a 3% prices towards the end of the of the Group’s cost of capital is →→ Further capital outlay of
EPS is accounted for primarily by decrease due to the effect year. The decrease in the Water EBITDA* 521.2 441.7 a core principle of Kingspan’s €14.9m was made with respect
an 18% increase in trading profit, of currency translation. A key & Energy trading margin reflects, Non-cash items 13.4 9.4 financial strategy. The increase to business within Light & Air
partially offset by an increase in contributor to underlying sales in the main, the impact of costs Movement in working in profitability together with the and Water & Energy together
intangible amortisation generating growth in the year was price associated with the exit from 2.3 (85.3) deployment of further capital has with some residual payments
capital
a 17% increase in profit after tax. growth necessitated by raw small scale wind and solar thermal Pension contributions (0.8) (0.9)
maintained returns on capital arising on the finalisation of
The minority interest amount material inflation recovery in the activity. The increased trading during the year. completion accounts for prior
increased year-on-year leading to first half of the year. Furthermore, margin in Light & Air reflects an Movement in provisions (5.8) (2.4)
year acquisitions.
a basic EPS increase of 16%. sales volumes were positive in improved margin performance Net capital expenditure (131.3) (85.6) (f) Net debt to EBITDA measures
most key end markets. overall in Europe which offset Net interest paid (15.6) (16.8) the ratio of net debt to earnings Capital structure and
(b) Sales growth of 19% (2017: 18%) more subdued margins in certain and at 1.4x (2017: 1.05x) is Group financing
Kingspan Group plc — Annual Report & Financial Statements 2018
France
Net debt Quatuor
Net debt increased by €264.4m during 2018 to €728.3m (2017: €463.9m). Insulated Panels:
This is analysed in the table below: JI Facade - Profil TYPHON
Perfo diam 11, Profil OURAGAN
Movement in net debt 2018 2017 Perfo diam 11
Fire Rating: Euroclass A1
€m €m
Free cashflow 308.4 198.5
Acquisitions (472.3) (168.2)
Share issues 0.1 0.2
Repurchase of shares - (1.5)
Dividends paid (68.3) (61.7)
Dividends paid to non-controlling interests (0.1) -
Cashflow movement (232.2) (32.7)
Exchange movements on translation (2.2) (3.3)
Deferred consideration (30.0) -
Increase in net debt (264.4) (36.0)
Kingspan Group plc — Annual Report & Financial Statements 2018
Geoff Doherty
Chief Financial Officer,
22 February 2019
32 33
monitored and controlled by the Group’s internal risk Kingspan brand and/or reputation could
be damaged and if so, this could lead to
› Documented and tested product recall procedures are embedded in all our businesses
and are regularly reviewed.
a loss of market share.
management framework. ›
›
Effective training is delivered to our staff.
We proactively monitor the regulatory and legislative environment.
Mark Harris
Holywell, UK
—
UK
QuadCore™, and to driving its
rollout globally.
36 37
is instilled at every level of the Board (SASB) and the Task Force on how we are making a difference. insulation, delivering unrivalled to manufacture our products using 40% of emissions attributable to
Group and at every step in the Climate-related Financial Disclosures thermal efficiency, superior fire (in aggregate) 100% of energy from buildings. Kingspan is proud to help
66
world becomes more urbanised.
will share best practice from our
›› Kingspan Light & Air manufactures more mature businesses: our The annual output of
products which allow natural light UK and Ireland panel facilities sixty-six power stations
and ventilation into a building, achieved zero waste to landfill in
thereby improving the ambient 2018 and the target is to achieve
4.7
conditions for its inhabitants. this across Panels Western Europe;
and our European Data & Flooring Up to 4.7 times the annual
›› Kingspan Water & Energy sells electricity consumption
Technology achieved 100% of
solutions for sourcing, storing
and protecting water.
waste to recycling in 2018. of Greater London
* These figures relate to sales of Insulated Panels and Insulation Boards between 1993 and 2018.
38 39
Sustainable buildings The Hub will use roof-mounted, Sustainable buildings temperate, the building’s distinctive
solar photovoltaic panels to supply bronze blades can open and close,
The Hub: The UK’s First Electricity electricity straight to the building Bloomberg’s European allowing the building to operate
Cost Neutral Logistics Building for immediate use. Any extra power Headquarters – The World’s Most in a “breathable” state which is
produced is then used to charge a Sustainable Office Building complimented by smart CO2 control
The logistics sector is undoubtedly a battery which supplies the building air distribution according to the
very large energy user, but a sector with power whenever there is a dip One of London’s most iconic approximate number of people
which acknowledges its impact on in electricity production from the buildings, Bloomberg’s award- occupying the building.
the environment and is looking to building's own solar panels, ensuring winning London-based European
find its place in the greener future of that there is never any business headquarters occupies 3.2 acres, Bloomberg’s desire was to create a
sustainable building. IM Properties, a interruption. The battery can also providing approximately 1.1 million building which looks to the future,
UK based investor developer, looked be solar charged or charged from square feet of sustainable office reflects the company’s commitments
at how it could create a world-class the grid when electricity is cheaper, space to 4,000 of Bloomberg’s in practice to sustainability and
sustainable logistics facility and allowing the power to be used employees. The completion of the encourages active working for its
developed the UK's first electricity during more expensive periods in a high specification building marks the employees – the development’s
Kingspan Group plc — Annual Report & Financial Statements 2018
cost neutral logistics building – process known as peak shaving. Any culmination of years of planning and interiors do just that, with sit-to-
The Hub. extra electricity generated from the development for both Bloomberg, stand work stations for all employees
Insulated Panels: AWP, Curvewall, Trapezoidal Wall. 37,000m2 of Kingspan raised access flooring and 34,000m2 of Kingspan Attiro real wood
Roof: Trapezoidal Roof with Energy Rooftop Solar PV Fire Rating: (Panels) - LPCB 1181 engineered floor
Part 1 and achieve LPS Grade EXT-B and are FM approved to 4880 and 4471
40 41
(LPS) and FM Approvals (FM); → Increasing demand for % currently stands at 75%. 2018 saw treatment of sold products by 10%.
applications. boards and products can achieve high
→ up to 60 minutes fire insulation products leads to an increase in a large contribution from acquisition
levels of reaction to fire performance “ At Kingspan, we are dedicated to
and integrity (EI60) according manufacturing energy demand. activity which had a significant
Our Net Zero Energy Committee →→ Insulation to reduce heat loss; Generate More Our Data & Flooring Technology
is a global team consisting of 17 →→ Destratification fans to improve A key foundation of our “Generate manufacturing site in Red Lion US
dedicated and passionate people heat distribution; More” strategy has been investing in is one of the largest consumers of
representing all business units and all →→ Low energy process equipment on site generation. In 2018 5.9% of water in the Group and in 2018 the
geographies. This team collaborates installation; our total energy use was generated conservation of water amounted to
and shares best practice in order from renewable sources on our own 1.1 million gallons (which is 71% of
→→ Transitioned forklifts from LPG to
to deliver our ambitious 2020 goal manufacturing sites, and we have total usage) through water recycling.
renewable energy;
through our three-step strategy ambitious targets to grow this. The
– Save More – Generate More – Buy →→ Optimised the use of lower gauge technologies presently in use include: Accreditation
More. The Chair of the committee, steel in access floor panels, RE100 Kingspan is a gold member of
Mark Harris, reports Net Zero Energy saving wielding energy; →→ Solar PV; the RE100. RE100 is a collaborative,
developments directly to the CEO, →→ Power factor correction systems. →→ Solar thermal; global initiative of influential
David Palleja
Gene Murtagh. businesses committed to 100%
→→ Biomass heat;
A key part of the “Save More” strategy CEO Synthesia Technology renewable electricity, working to
Save More has been employee awareness and →→ Biomass CHP (electricity); increase demand for, and delivery
Kingspan Group plc — Annual Report & Financial Statements 2018
Improving the energy efficiency of training. Implementation of Energy →→ Wind; of renewable electricity. The private
our operations remains the highest Management Standard ISO 50001 in →→ Anaerobic digestion. Buy More Waste sector accounts for around half of
key positions hired throughout the innovation and sustainability employees who join the “Yours to including safety culture surveys and
year and to forecast future talent initiatives. Over 4 months in 2018 Shape” development programme, questionnaires, poster campaigns,
19% 47%
Water & Energy
46 47
Kingspan grew out of a family business and those family values Kingspan Water & Energy Our policies in our business or any of our supply
gives the gift of water - Australia Aims chains. We adopted and published
continue to shape how we engage with our communities today. Kingspan reached out to the Liverpool our policy statement at the end
Decades on, Kingspan remains deeply rooted in the community Plains Shire to donate a 104,000
litre tank filled with drinking water.
→→ Comply with all local laws in
the countries we operate in.
of 2016 and all our businesses are
responsible for ensuring supplier
of Kingscourt, Ireland, where the business was founded. Being The council chose to install the tank →→ Ensure supply chain compliance with the legislation.
at Currabubula, a town 18 km outside
engaged in our local communities is a core element of the culture of Tamworth with a community of
accountability.
Supply chain engagement
of Kingspan. It is important that our businesses have the flexibility about 330 people. This community
of people were mainly relying on bore
Modern slavery
Slavery and human trafficking are
Kingspan engages with its supply
chain to minimise the environmental
to support initiatives which are relevant to the local workforce and water for drinking due to the drought abhorrent crimes and we all have impact of its raw materials, using
conditions in the area. The bore a responsibility to ensure that they its purchasing power to bring
to the communities in which they operate. In 2018 we are proud to water was not ideal for drinking as it do not continue. At Kingspan we about lasting and positive change.
have supported a wide range of initiatives, including: runs against contained too much iron and calcium. pride ourselves on conducting our
business ethically and responsibly.
Kingspan has developed an ethical
and procurement strategy for
cancer, stimulating the local environment through beekeeping,
Kingspan Group plc — Annual Report & Financial Statements 2018
The tank was installed at The Modern Slavery Act 2015 became procuring materials and services in a
children’s craft competitions for local schools, festive family box Currabubula War Memorial Hall - UK legislation and required all large sustainable way, and we seek to build
Natalia Rizzatti
California, USA
—
Directors' Report
up the finance function for our
LATAM division. Natalia is also
the President of Kingspan’s
AWIP business.
Kingspan Group plc — Annual Report & Financial Statements 2018
— Insulation Boards:
Optim-R; Kingspan Greenguard XPS
Fire Rating: XPS Class A;
—
(Age 57) Key skills & experience: She is a registered stockbroker and the Head of Corporate Broking
Ireland at Goodbody Capital Markets, where she has worked since 2004. Previously she worked at
Independent
NCB Stockbrokers and Merrill Lynch. She brings to the Board her considerable knowledge and
The Board provides entrepreneurial leadership experience in capital markets and corporate governance.
and sets the governance framework for the Group. Committees: Audit (5½ years), Remuneration (3½ years).
External appointments: Chair of the board of the Irish Blood Transfusion Service.
Qualifications: B.B.S.
Chairman Michael Cawley Michael Cawley was appointed to the Board in May 2014.
Eugene Murtagh Eugene Murtagh is the non-executive Chairman of the Group. (Age 64) Key skills & experience: He is a chartered accountant, and was formerly Chief Operating Officer
(Age 76) Ireland & Deputy Chief Executive of Ryanair. Prior to joining Ryanair he had experience in a number of
Key skills & experience: He founded the Kingspan business in 1965 and, as CEO until 2005, he led its growth
Ireland Independent different distribution and manufacturing industries, including as Finance Director of the Gowan
and development to become an international market leader. He has an unrivalled understanding of the Group,
its business and ethos, and brings to the Board his leadership and governance skills. Group, one of Ireland’s largest private companies. He brings his extensive international financial
Committees: Nominations (21 years, chair). and business experience to the Board and to the Audit Committee.
Chief Executive Officer Committees: Audit (4½ years, chair), Remuneration (4½ years).
Gene M. Murtagh Gene Murtagh is the Group Chief Executive Officer. He was appointed to the Board in November 1999. External appointments: Chairman of Fáilte Ireland, Chairman of Hostelworld Group plc, and
(Age 47) Key skills & experience: He was previously the Chief Operating Officer from 2003 to 2005. Prior to that he was non-executive director of Paddy Power Betfair plc, Ryanair Holdings plc and Gowan Group Ltd.
Kingspan Group plc — Annual Report & Financial Statements 2018
Ireland managing director of the Group’s Insulated Panels business and of the Water & Energy business. He joined the Group Qualifications: B. Comm., F.C.A.
in 1993, and has a deep knowledge of all of the Group’s businesses and the wider construction materials industry.
John Cronin John Cronin was appointed to the Board in May 2014.
Committees: Nominations (11½ years). (Age 59)
Key skills & experience: He is a qualified solicitor, and partner and former chairman of McCann
Executives Ireland
Independent
FitzGerald. He has more than 30 years’ experience in corporate, banking, structured finance and
Geoff Doherty Geoff Doherty is the Group Chief Financial Officer. He joined the Group, and was appointed to the Board, in capital markets matters. He is a member of the International Bar Association, and is President
activities comprise the manufacture business divisions which are Insulated USA
and distribution of the following Panels, Insulation Boards, Light & Air, An interim dividend of 12.0 cent per Palo Alto
product suites as part of the Water & Energy and Data & Flooring share was paid to shareholders on 5
complete “Building Envelope”: Technology. These divisions offer a October 2018 (2017: 11.0 cent). The Data & Flooring Technology:
Principal risks and uncertainties Innovation Corporate governance ethical, renewable and affordable Shareholding analysis as at 31 December 2018:
The principal risks and uncertainties Kingspan places considerable The directors are committed to best practice solutions for the
facing the Group, and the actions emphasis on innovation and achieving the highest standards of construction sector. We know that Shareholding Number of % of total Number of % of total
taken by Kingspan to mitigate them development of existing and new corporate governance. A statement the built economy has an important range accounts shares held
are detailed on pages 32 to 33 of the products and on the improvement describing how Kingspan has applied part to play in combatting climate 1 - 1,000 2,874 57.5 1,232,792 0.7
Risk & Risk Management Report. of the production process, focused the principles of good governance change, and we have pledged to 1,001 - 10,000 1,472 29.4 4,733,536 2.6
The principal risks are: primarily on differentiation and set out in the UK Corporate lead by example. Our commitment
10,001 - 100,000 473 9.5 16,321,082 9.0
extending competitive advantage. Governance Code (April 2016) and to sustainability is instilled at every
→→ Volatility in the macro In the year ended 31 December the Irish Corporate Governance level of the Group and at every step 100,001 - 1,000,000 153 3.0 45,764,680 25.1
environment; 2018, the Group’s research and Annex is included in the Governance in the manufacturing process. Our Over 1,000,000 30 0.6 114,119,030 62.6
→→ Failure to innovate; development expenditure amounted section of this Annual Report on goal is that by 2020 all of Kingspan’s
5,002 100 182,171,120 100
to €30.5m (2017: €27.1m). Research pages 62 to 67. The Corporate energy needs will be met by
→→ Product failure;
and development expenditure is Governance Statement is treated renewable energy.
→→ Business interruption generally written off in the year in as forming part of this Report.
(including IT continuity); which it is incurred. During 2018 Kingspan recognises the importance Details of persons with a significant holding of securities in the company are
→→ Credit risk and credit control; Kingspan’s continuing investment in Code of conduct of conducting its business in a socially disclosed below:
→→ Employee development & research and development involved Kingspan is committed to acting responsible manner. At Kingspan
over 40 key projects. These key responsibly in its business and we are Product Passionate, Planet Notification Date Shareholder Shares held %
retention;
projects included: maintaining high standards of ethics Passionate and People Passionate. 07/02/2019 Eugene Murtagh 28,018,000 15.53%
→→ Fraud and cybercrime;
and integrity in all of its dealings The Sustainability Report on pages 15/02/2019 Blackrock, Inc. 15,233,848 8.44%
Kingspan Group plc — Annual Report & Financial Statements 2018
→→ Acquisition and integration →→ QuadCore™ insulation board; with its stakeholders, be they 36 to 47 of this Annual Report gives
of new businesses. investors, customers, suppliers, its details of some of the projects that 12/04/2018 Allianz Global Investors GmbH 10,349,716 5.74%
→→ Next generation Kooltherm®
200 range; people or the community it operates are on-going across the Group, with 16/11/2018 Bailie Gifford & Co. 9,010,740 5.00%
Key performance indicators in. Kingspan has a Code of Conduct further details available on the
Financial
(Takeover Bids (Directive 2004/
Trading margin 10.2% (down 10 bps) See page 28 25/Ec)) Regulations 2006 Russell Shiels 300,000 300,000
Free cash flow €308.4m (up €109.9m) See page 29 Structure of the Company’s Peter Wilson 389,376 389,376
share capital 247,637
Return on capital employed 16.8% (down 1%) See page 29 Gilbert McCarthy 247,637
Net debt/EBITDA 1.4x (2017: 1.05x) See page 29 At 31 December 2018, the Company Helen Kirkpatrick 26,000 26,000
had an authorised share capital Linda Hickey 5,000 5,000
comprised of 250,000,000 (2017: 30,600
KPIs
Michael Cawley 30,600
Net Zero Energy 75% See pages 41-42 250,000,000) ordinary shares of €0.13
each and the Company’s total issued John Cronin 8,000 8,000
Health & Safety 1.5 per 100k hours (down 6%) See page 45
Financial
Waste Recycling 68% (down 9%) See page 43 of which the Company held 1,969,143
Lorcan Dowd 2,603 4,961
(2017: 2,019,750) Ordinary
Shares in treasury. 30,404,749 31,408,923
58 59
Details of the directors’ and Going concern It is recognised that such future preparing the Annual Report and the prevention and detection of fraud In accordance with Section 225 (2)
secretary’s share options at the end The directors have reviewed budgets assessments are subject to a level consolidated and company financial and other irregularities. (b) of the Act, the directors confirm
of the financial year are set out in and projected cash flows for a of uncertainty that increases with statements in accordance with that they have:
the report of the Remuneration period of not less than 12 months time, and therefore future outcomes applicable Irish law and regulations. The directors are responsible for the
Committee. As at the 22 February from the date of this Annual Report, cannot be guaranteed or predicted maintenance and integrity of the 1. drawn up a Compliance Policy
2019, there have been no changes in and considered its net debt position with certainty. Company law in Ireland requires corporate and financial information Statement setting out the
the directors’ and secretary’s interests and capital commitments, available the directors to prepare financial on the Company’s website. Company’s policies (that are,
in shares since 31 December 2018. committed banking facilities and The Group Strategic Plan is approved statements for each financial year. in the opinion of the directors,
other relevant information including by the Board, building upon the Under that law the directors have to Legislation in the Republic of appropriate to the Company)
Conflicts of interest the economic conditions currently several divisional management plans prepare the consolidated financial Ireland governing the preparation in respect of the compliance by
None of the directors have any direct affecting the building environment as well as the Group’s strategic statements in accordance with and dissemination of financial the Company with its Relevant
or indirect interest in any contract or generally and the Group’s Strategic goals. It is based on a number of International Financial Reporting statements may differ from Obligations;
arrangement subsisting at the date Plan. On the basis of this review the cautious assumptions concerning Standards (IFRSs) as adopted by legislation in other jurisdictions.
hereof which is significant in relation directors have concluded that there macro growth and stability in our the European Union (EU). The 2. put in place appropriate
to the business of the Company are no material uncertainties that key markets, and continued access directors have elected to prepare In accordance with Transparency arrangements or structures that,
or any of its subsidiaries nor in the would cast significant doubt over the to capital to support the Group’s the company financial statements (Directive 2004/109/EC) Regulations in the opinion of the directors,
share capital of the Company or any Company’s and the Group’s ability ongoing investments. The strategic in accordance with IFRSs as adopted 2007 and the Transparency Rules of provide a reasonable assurance
of its subsidiaries. to continue as a going concern. For plan is subject to stress testing by the EU and as applied by the the Financial Regulator, the directors of compliance in all material
this reason, the directors consider which involves flexing a number of Companies Act 2014. The financial confirm that to the best of their respects with the Company’s
Financial instruments it appropriate to adopt the going the main assumptions underlying statements are required by law knowledge: Relevant Obligations; and
Kingspan Group plc — Annual Report & Financial Statements 2018
In the normal course of business, concern basis in preparing the the forecast in severe but reasonable to give a true and fair view of the
the Group has exposure to a variety financial statements. scenarios. Such assumptions are assets, liabilities and financial →→ the Group financial statements 3. during the financial year to
of financial risks, including foreign rigorously tested by management position of the Group and company and the Company financial which this report relates,
currency risk, interest rate risk, Viability statement and the directors. It is reviewed and of the profit or loss of the Group statements, prepared in conducted a review of the
Magnus Wallin
Jönköping, Sweden
—
Directors' Report
performance insulation is
growing rapidly. Our job is to
create trust in converting
a traditional insulation market
into advanced materials.
It is thrilling to be part of
a development where no one
knew what our advanced insulation
was back in 2009 and yet
10 years later it has become
well known to builders,
fire engineers and architects.
Sweden
Kingspan’s new Kooltherm® facility
in Sweden will support Magnus
in his growth ambitions.
62 63
Corporate Governance Statement Attendance at Board and Committee meetings during the year
ended 31 December 2018
Board balance and independence
The Board is comprised of twelve
—
directors and its current size and
Board Audit Nominations Remuneration structure is functioning efficiently.
The balance of executive and
Kingspan is committed to operating best practice standards A B A B A B A B non-executive directors facilitates
Eugene Murtagh 6 6 2 2 constructive and effective challenge
of good governance, accountability and transparency. and debate. Whilst it is intended
Gene M. Murtagh 6 6 2 2
This tone is set by the Group Board of Directors and Geoff Doherty 6 6
to progressively refresh the
independent non-executive directors
communicated throughout the Group regardless of division Russell Shiels 6 6 on the Board having regard to their
or geographical location. Peter Wilson 6 5
mix of skills, experience and diversity,
it is not at present intended to
Gilbert McCarthy 6 6 change the size of the Board. The
Helen Kirkpatrick 6 6 2 2 4 4 Nomination Committee has
reviewed the size and performance
→→ On recommendation of the Linda Hickey 6 6 4 4 4 4
This statement outlines how combination of general business skills of the Board during the year and this
Kingspan has applied the principles and experience in the construction Remuneration Committee Michael Cawley 6 5 4 4 4 4 process occurs once annually.
and complied with the provisions set materials market. The non-executive determining the remuneration for John Cronin 6 6 4 4 2 2
out in the UK Corporate Governance directors represent a diverse business executive directors, secretary and The Board continues to ensure
Kingspan Group plc — Annual Report & Financial Statements 2018
due regard to various matters which to her position as a senior executive The Board therefore concluded that Information and professional The Chairman reviews annually the best people in the right roles and a
might affect, or appear to affect, the at Goodbody stockbrokers, one of the neither Ms Kirkpatrick’s, Ms Hickey’s development performance of the Board of Directors, strong pipeline of executive talent
independence of some of the directors, Company’s corporate brokers. Having nor Mr Cronin’s independence was The Group Chairman is responsible the conduct of Board meetings and throughout the Group.
and the Board considers that Helen regard to the fact that the level of affected and considers that between for ensuring that all directors are committee meetings, and the general
Kirkpatrick, Linda Hickey, Michael fees and expenses paid to Goodbody them they bring valuable financial, supplied with appropriate and timely corporate governance of the Group. In Board committees
Cawley, John Cronin, Bruce McLennan stockbrokers in respect of their role as capital markets, governance and information for Board and committee addition the non-executive directors, The Board has established the
and Jost Massenberg are independent. the Company’s corporate brokers is less legal risk experience to the Board. meetings. Such information is always led by the senior independent director, following committees: Audit,
than €50,000 per annum, the Board provided to the Board in a timely meet annually without the Chairman Nominations and Remuneration
In determining the independence concluded that there was no material The Chairman and Chief Executive manner which gives the directors the present to conduct a review of the committees. All committees of
of Helen Kirkpatrick, the Board had relationship, financial or otherwise, There is a clear division of responsibility opportunity to probe and question Board and appraise the Chairman’s the Board have written terms
due regard to her length of service which might either directly or indirectly set out in writing between the non- the executives when deemed relevant. performance. of reference setting out their
as a non-executive director on the influence her judgement. executive Chairman and the Chief Kingspan ensures that the directors authorities and duties and these
Board, which was extended beyond Executive. Further information on obtain all professional advice required As part of the performance terms are available on the Group’s
nine years following consultation When considering John Cronin’s the officers of the Company on the in order to further their duties as a evaluation process the Chairman website www.kingspan.com.
with ISS and the IAIM at that time. independence, the Board had due division of responsibility set out below. director either through the directors meets at least once annually with
Having considered the circumstances, regard to his position as a partner seeking professional advice at the the non-executive directors without Attendance at meetings held is set
the Board formed the view that she at McCann FitzGerald, one of the Appointments to the Board expense of the Company or through the executive directors being out in the table on page 63.
has always expressed a strongly Company’s legal advisers. Mr Cronin is All appointments to the Board are independent professional advisors present to review the performance
independent voice at the Board and not engaged directly in the provision made on the recommendation of the being available for consultation with of the Board, the conduct of The Members of each committee,
its Committee meetings, including of legal advice to the Company and Nominations Committee. In addition, the Board and attending Board and Board meetings and committee the date of their first appointment
Kingspan Group plc — Annual Report & Financial Statements 2018
the Remuneration Committee of appropriate arrangements have the Nominations Committee reviews Committee meetings where required. meetings, and the general corporate to the committee and brief details of
which she is chairman, and that she been put in place within McCann the various committees and makes All directors have access to the governance of the Group. these committees are set out below:
de
the year, the Board visited three of All directors, in accordance with work, and in particular the Board
nt
Ch
there is appropriate and timely and also had the opportunity to Governance Code, are subject Audit Committee, Michael Cawley
tor
communication with shareholders. meet with key executives within the to annual re-election by the B.COMM., F.C.A., has appropriate
Group, which gave the Board valuable shareholders at the Company’s recent and relevant financial
insight into the manufacturing Annual General Meeting. Kingspan experience. The Board is satisfied
processes, the local markets and the is committed to refreshing and that the combined qualifications and
The Board has delegated executive All directors have access to management strategy. strengthening the independent experience of the members give the
responsibility for running the the advice and services of
ar y
the executive management team. is responsible for ensuring Performance evaluation an on-going basis. expertise necessary to discharge its
cr
Ex
cu
Se
The Chief Executive is responsible y that Board procedures are Kingspan has in place formal responsibilities. The report of the Audit
tiv an
e
for the strategic direction and the e mp followed. He is also responsible procedures for the evaluation of its Kingspan also has in place a People Committee is set out on pages 82 to
overall performance of the Group, Co for advising the Board, Board, Committees and individual and Leadership Development 87, which describes how the Company
and is accountable to the Board through the Chairman, on all directors. The purpose of this formal Programme. This allows the Group has applied the principles of Section
for all authority so delegated. governance matters. to ensure that the key senior talent
evaluation is to ensure that the C of the UK Corporate Governance
Board of Directors (on a collective throughout the Group are gaining Code (April 2016) and the Irish
and individual basis) is performing the appropriate experience, skillsets Corporate Governance Annex.
UK, Milton Keynes effectively and to ensure stakeholder and development opportunities in
confidence in the Board. order to ensure that we have the
Wall: AWP, Micro-Rib, Trapezoidal Wall Roof: Trapezoidal Roof
Panels: LPCB 1181 Part 1 and achieve LPS Grade EXT-B and are
FM approved to 4880 and 4471
66 67
Nominations Committee agreeing to recommend his In addition, Kingspan is committed Shareholders’ meetings and rights This process has been in place for →→ Sales are submitted and
appointment to the Board. to interacting with the international The Company operates under the the year under review and up to the reviewed on a weekly basis
Eugene Murtagh (Chair) financial community to ensure a Companies Act 2014 (the ‘Act’). date of approval of the financial whilst full reporting packs are
Appointed 1998 Following the retirement of Helen full understanding of the Group’s This Act provides for two types of statements and it is regularly submitted and reviewed on a
Gene Murtagh Kirkpatrick after last year's strategic plans and its performance shareholder meetings: the Annual reviewed by the Board in compliance monthly basis; and
Appointed 2007 Annual General Meeting, Jost against these plans. During the year, General Meeting (‘AGM’) with with ‘Guidance on Risk Management, →→ Internal audit function review
Massenberg will be appointed to the the executive management and all other meetings being called Internal Control and Related Financial financial controls and report
Helen Kirkpatrick
Nomination Committee. investor team presented at three Extraordinary General Meetings and Business Reporting’ issued by the results /findings on a quarterly
Appointed 2009, Independent
capital market conferences, hosted a (‘EGM’). Financial Reporting Council. basis to the Audit Committee.
John Cronin Remuneration Committee capital markets day at our Holywell
Appointed 2014, Independent facility in Wales and conducted 311 The Company must hold an AGM The Board has delegated
Helen Kirkpatrick (Chair) institutional one-on-one and group each year in addition to any other responsibility to the Audit In addition, the main features of
Bruce McLennan Appointed 2009, Independent meetings. Further information shareholder meeting in that year. The Committee to monitor and review the Group’s internal control and
Appointed 2017, Independent
Michael Cawley regarding the Company’s Annual ordinary business of an AGM is to the Group’s risk management risk management systems that
The Nominations Committee assists Appointed 2014, Independent General Meeting is set out in the receive and consider the Company’s and internal control processes, relate specifically to the Group’s
the Board in ensuring that the Shareholder Information Section in Annual Report and statutory including the financial, operational consolidation process are:
Linda Hickey
composition of the Board and its this Annual Report. financial statements, to review and compliance controls, through
Appointed 2015, Independent
committees is appropriate for the the affairs of the Group, to elect detailed discussions with →→ The review of reporting
needs of the Group. The committee Bruce McLennan All shareholders can sign up to directors, to declare dividends, to management and the executive packages for each entity as
considers the Board’s membership, Appointed 2017, Independent obtain all regulatory news and appoint or reappoint auditors and directors, the review and approval part of the year-end audit
Kingspan Group plc — Annual Report & Financial Statements 2018
identifies additional skills or alerts via the Kingspan website to fix the remuneration of auditors of the internal audit reports, which process;
experience which might benefit the The Remuneration Committee has www.kingspan.com, and depending and directors. focus on the areas of greatest risk
Sean McGuinness
Kingscourt, Ireland
—
Directors' Report
solutions to maximise the energy-
efficiency of buildings. Working as
part of R&D means that I get to
be part of a very diverse team that
enables me to be involved in each
stage of product and technology
development, from idea generation,
through to testing and certifications.
I get to work with teams across
the business to create proof of
concepts and test cases that can
ultimately deliver value for
our business and customers.
Kingspan’s ambition is to be
the leader in digital technologies for
the construction industry and Sean
dedicates a large portion of
his research time to digitalisation.
Along with investing in BIM
technology, we have sponsored a
number of internal and external
digital innovation challenges.
70 71
—
Governance Code relating to Code, the policy includes a providing this years’ Remuneration
pensions and will seek to address discretion for the committee to Report the committee has taken
these over time as part of its wider adjust incentive pay and vesting into account investor and published
On behalf of the Remuneration Committee, remit of considering wider group levels if the formulaic outcome of proxy agency guidance. It has also
I am pleased to present the Directors’ Remuneration policies and practices. Pension
arrangements for the current
incentive awards does not reflect
underlying corporate performance,
engaged with our largest investors
and proxy voting agencies regarding
Report for the year ended 31 December 2018. executive directors will continue the investor experience or the new directors’ remuneration
in their current form but the new employee reward outcome. policy and welcomes the feedback
policy will provide a cap for new received from both.
appointments of 25% of salary. →→ For “good leavers”, the deferral of
annual bonuses and performance Conclusion
→→ Shareholding guidelines have period for the PSP awards The committee believes that
increased so that executive (with the award being reduced the policy, with its evolutionary
directors have to hold at least by an amount to reflect the refinements rather than
This report sets out Kingspan’s Our remuneration strategy the Divisional MD’s have additional 200% of salary in Kingspan proportion of the vesting period revolutionary changes and its
updated remuneration policy, the The primary objective of the divisional profit targets. This excellent shares, to be achieved through not actually served), will continue application for 2019 strongly
operation of the policy in 2018 and Remuneration Committee is to performance resulted in varying the retention of at least 50% post cessation of employment. supports the Group’s business
its proposed operation in 2019. It create a remuneration structure levels of annual bonus payouts being of all vested deferred share and This provides post cessation of strategy. Further, the committee
Kingspan Group plc — Annual Report & Financial Statements 2018
provides details of the activities for executive directors which: earned by each of the executive PSP awards. These levels are employment, alignment to the believes that there has been and
Fixed Variable
Directors’ Remuneration Policy through a mix of short and long term 38% 62%
Executive Directors' Variable Remuneration
In setting the executive directors’ performance based incentives and by The Remuneration Committee seeks to ensure that overall remuneration reflects Group performance and individual contribution.
remuneration package the encouraging share ownership, whilst Accordingly, the committee seeks to align an appropriate portion of the executive directors’ remuneration with the achievement
Remuneration Committee seeks to taking into consideration the market of annual and longer term performance targets.
ensure that: norms and practices of other quoted
Performance related bonus - drives and rewards achievement of annual short-term performance targets, with deferred
Irish and international industry peer share awards aligning management interests with shareholders and the longer term performance of the Group.
→→ the Group will attract, motivate companies of similar size and scope in
and retain individuals of the setting the base and fixed elements of Fixed pay How it operates Maximum opportunity
v
highest calibre; the package. Executive directors receive annual performance related bonus based on the attainment The maximum annual performance
Variable pay of financial targets set prior to the start of each year by the committee. related bonus is up to 150% of base
→→ executives are rewarded in a salary.
The committee believes that — Bonuses are paid on a sliding scale if the targets are met. Maximum bonus is only
fair and balanced way for their
contribution to the Group’s this policy sets an appropriate achieved if ambitious incremental growth targets are achieved.
Bonus payment is 0% at threshold
performance; balance between fixed and variable No more than 100% of salary may be delivered in cash through the bonus plan. target.
remuneration, and that the split Any performance related bonus achieved in excess of the amount payable in cash
→→ executives receive a level of is satisfied by the grant of share awards, which are deferred for two years.
between short-term and long-term
remuneration that is appropriate
performance based remuneration Performance share plan - drives and rewards execution of the longer term business strategy, aligns the interests of executive directors
to their scale of responsibility and
(including the deferred share awards) and senior managers with those of the Group’s shareholders and recognises and rewards value creation over the longer term.
individual performance;
reflects the Group’s objective to drive
→→ the overall approach to How it operates Maximum opportunity
long-term shareholder value through
remuneration has regard to the its strategic pillars of innovation, Executive directors are entitled to participate in the Group’s Performance Share Plan (PSP). 200% of base salary.
Variable pay
Kingspan Group plc — Annual Report & Financial Statements 2018
sectors and geographies in which penetration, globalisation, and planet Short Term Under the terms of the PSP, performance shares are awarded to the executive directors
Each year, prior to the start of the relevant performance period, the committee assesses which performance measures
Executive Directors' Fixed Remuneration (including if applicable non-financial measures), are most appropriate for both the annual bonus and the PSP awards, to reflect
Provides a fair fixed element of pay commensurate for the role ensuring no over reliance on variable pay. the Company’s strategic initiatives. The Committee may change the performance measures, or the combination and weighting
of performance measures, for awards granted in future years based upon the strategic plans of the Company. The committee
Base salary - attracts and retains skilled and experienced individuals. sets what it considers are demanding targets for variable pay in the context of the Company’s trading environment and strategic
objectives and considering the Company’s internal financial planning and market forecasts.
How it operates Maximum opportunity
Policy on external appointments
Base salaries are reviewed annually by the Remuneration Committee in the last quarter of No prescribed maximum base salary
each year. or maximum annual increase. Subject to Board approval, executive directors may accept external non-executive positions and retain the fees payable for
Factors taken into account by the committee include the Group’s overall performance, the such appointments.
executive directors’ experience, role and personal performance, movements in pay generally
across the Group and competitive market practice taking into account companies of a
similar size and complexity to Kingspan. Where applicable, changes in salary are effective The non-executive directors’ remuneration policy is set out below.
from 1 January.
Non-Executive Directors
Increases will generally be in line with increases across the Group, but may be higher or lower
in certain circumstances to reflect performance, changes in remit, roles and responsibilities, Non-executive directors’ fees - to reflect time commitment, experience and responsibilities and to attract and retain high calibre
or to allow newly appointed executives to move progressively towards market norms. NEDs by offering a market competitive fee level
Pension scheme and other allowances - attracts and retains skilled and experienced individuals. How it operates Maximum opportunity
How it operates Maximum opportunity The Chairman of the Board receives a single fee for all his responsibilities. There is no prescribed maximum annual fee
or fee increase.
The Group operates a defined contribution pension scheme for executive directors. Pension No prescribed maximum for current The non-executive directors each receive a basic board membership fee.
contributions are calculated on base salary only. Contributions are determined on an incumbents. Account is taken of the general increase in fees
individual basis and take into account a number of factors including age, length of service, The Chairman of Board Committees and the Senior Independent Director receive
For new appointments a maximum of in the non-executive market, but a lower or
and number of years to retirement. an additional fee to reflect the additional role and responsibilities (only one
25% of salary unless exceptionally a higher fee increase may be made to recognise,
The committee may alternatively pay a cash amount subject to all applicable employee higher amount is appropriate to take additional fee is paid if a director has dual roles).
for example, an increase in the scale, scope or
and employer payroll taxes and social security. account of market practice in certain Supplemental fees may be paid for additional responsibilities and activities. responsibility of the role and/or take account
countries where executives may be of relevant market movements.
recruited from. Non-executive directors are entitled to the reimbursement of reasonable business
expenses including any tax (grossed up) that may be payable on those expenses.
Benefits - provides market competitive benefits for recruitment and retention purposes, as well as supporting the personal health
and well-being of the executive. Letters of appointment and policy on recruitment and termination
Each of the non-executive directors has a letter of appointment with the Company which recognises that their appointments can
How it operates Maximum opportunity
be terminated on one month’s notice and are subject to annual re-election by the shareholders at the Company’s Annual General
Executive directors’ benefits include but are not limited to life and health insurance, the use by No prescribed maximum level, Meeting. The non-executive directors do not have service contracts and do not participate in any bonus or long-term incentive
the executive directors of company cars (or a taxable car allowance), and relocation or similar as benefits depend on individual schemes. The non-executive directors do not receive any pension or other benefits, and there is no provision for compensation for
allowances on recruitment, each in line with typical market practice. director circumstances. loss of office other than payment of accrued fees and expenses.
74 75
The committee has adopted best practice governance policies in relation to the directors’ remuneration contracts, Implementation of Remuneration Salaries for the other executive Performance share awards:
as set out below. Policy For 2019 directors will be increased by 3% in For 2019, the following PSP Awards
line generally with increases in the will be granted:
Governance Base salary, benefits and pension: rest of the workforce.
The committee carried out a full →→ For the CEO: an award over shares
Share ownership guidelines - aligns the interests of management and shareholders to shareholder value and longer-term performance
review of base salaries, with the Benefits and pension will be in line with a market value of 175% of
Executive directors are required to build up and retain 200% of salary, to be achieved through the retention of at least 50% of all assistance of independent advice, with those received for 2018. base salary;
vested deferred share and PSP awards (subject to sales to meet taxes payable). Achievement of this guideline is measured through and determined the following
beneficially owned shares and deferred bonus share awards only. →→ For the other executive directors:
increases for 2019. Annual performance bonus: an award over shares with a
For good leavers annual bonus deferral will continue post cessation of employment and performance targets for annual bonus
The maximum bonus opportunity for market value of approx. 150%
and pro-rated PSP awards will be tested at the usual time providing longer term post cessation of employment alignment to the
longer-term performance and sustainability of the business. There are no additional post cessation of employment requirements for In 2016 the committee agreed to all the executive directors is 150% of of base salary (subject to
beneficially owned shares. progressively increase the Chief salary (unchanged from 2018) with adjustment to ensure internal
Executive Officer’s salary over a up to 100% of salary earned through parity and to manage exchange
Clawback & malus - including discretion to adjust formulaic calculation of incentive pay
number of years to what it considers the bonus plan delivered in cash and rate fluctuations between
The Remuneration Committee recognises that there could potentially be circumstances in which performance related pay (either is a market rate for the size, up to 50% of salary being deferred
annual performance related bonuses and/or PSP Awards) is paid out and where certain circumstances later arise which bring
the divisional directors). The
responsibilities and complexities of into shares in the Company for two committee will keep this
the committee to conclude that the payment should not have been made in full or in part. Whilst the Company has robust
management and financial controls in place to minimise any such risk, the committee has put in place formal clawback and malus his role. These factors have increased years. For 2019, the Remuneration approach under review and
arrangements for the protection of the company and its investors. The clawback of performance related pay, and malus provisions significantly over the years as the Committee has determined to use ensure that it does not breach
(where awards are reduced to nil before they have vested) would apply in certain circumstances including: business has expanded into new the same performance measures as the overall limits contained in
→→ a material misstatement of the Company’s financial results; markets, invested in organic growth in 2018: the PSP rules.
Kingspan Group plc — Annual Report & Financial Statements 2018
In anticipation of the Shareholders’ Rights Directive being implemented in Ireland, and in line with Kingspan’s 50% EPS 12.5% 6% 12%
commitment to best corporate governance practices and shareholder engagement, the Remuneration Committee 50% TSR 12.5% Median ranking Upper quartile (or higher)
has decided that shareholders should be given an advisory vote on Kingspan directors’ remuneration policy at the
2019 Annual General Meeting. *Straight line vesting between threshold and maximum vesting
76 77
Remuneration outcomes for 2018 Executive’s salary was increased by Overall, total salaries for the Performance related bonus: Again, the committee considers Vesting of the 2016 Performance
Base salary: The salaries for 2018 for 7.5% as detailed above. Increases for executive Directors increased by The targets for 2018 were set prior these to be appropriately stretching Share Plan awards: The
each of the executive directors were the other executive directors were 5% in 2018. Full details are set out to the start of the year, and targets, aligned with shareholder Remuneration Committee reviewed
set by the Remuneration Committee generally in line with increases in the in the table below. comprise a combination of interests. the extent to which the vesting
towards the end of 2017. The Chief business as a whole. stretching Group EPS targets and targets in respect of the PSP Awards
divisional profit growth targets. In The Remuneration Committee granted in 2016 had been met by
2018 all executive directors were reviewed the Group EPS growth and reference to EPS and TSR targets over
eligible for a maximum performance divisional performance following the three year performance period
DIRECTORS’ REMUNERATION FOR YEAR ENDED 31 DECEMBER 2018 related bonus opportunity of up to the year end, and considered the to 31 December 2018. For 2016 the
(Remuneration is reported in the currency received by the individual) 150% of base salary. extent to which the 2018 annual Committee granted PSP Awards
performance bonus targets had been that were 40% based on EPS growth
Executive Directors Gene Geoff Russell Peter Gilbert Total(1) The Chief Executive’s and the achieved by each of the executive targets, 40% based on relative TSR
Murtagh Doherty Shiels Wilson McCarthy Chief Financial Officer’s annual directors. Whilst the Group delivered and 20% based on Exceptional TSR
EUR000 EUR000 USD000 GBP000 EUR000 EUR000 performance related bonuses were excellent results for the year (trading targets as set out below.
based on Group EPS growth targets profit up 18% on prior year) and
2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 over prior year, with the maximum strong EPS growth (up 16% on prior The committee determined that
Fixed Pay annual performance related bonus year) the maximum Group EPS total EPS growth during the period
being payable on the achievement target was not achieved, and the was over 72%, which significantly
- Salary and Fees 828 770 546 530 568 541 376 358 505 480 2,785 2,667 of 25% Group EPS growth over prior varying divisional performances exceeded the target for maximum
- Pension Contributions (2)
150 140 133 128 193 189 154 150 101 96 721 703 year. The Remuneration Committee resulted in different levels of bonus vesting of CPI plus 10% p.a.
Kingspan Group plc — Annual Report & Financial Statements 2018
considers this to be a stretching payouts being earned by each of the The committee also noted that
- Benefits 34 31 33 32 65 64 17 13 33 34 174 167
The table below sets out the targets set at the time of the granting of the 2016 PSP Awards, PERFORMANCE SHARE PLAN
and the performance achieved in respect thereof. Director At Granted Vested Exercised At Option Earliest Latest
31 Dec during during or lapsed 31 Dec price exercise expiry
2016 - 2018 PSP AWARDS - PERFORMANCE 2017 year year during year 2018 € date date
Percentage Performance Threshold Maximum Performance % of PSP Gene M. Murtagh
of total measure target target achieved Awards Unvested 133,793 40,588 (44,883) (2,514)¹ 126,984 0.13 23/02/2019 26/02/2025
award vesting
Vested 141,480 - 44,883 (86,359)² 100,004 0.13 25/02/2017 24/02/2022
40% EPS CPI + 5% CPI + 10% CPI + 19.6% 40% 275,273 40,588 - (88,873) 226,988 0.13
40% TSR Median ranking 75th percentile 87th percentile 40% Geoff Doherty
20% Exceptional TSR 76th percentile 100th percentile 87th percentile 9% Unvested 80,129 22,941 (27,707) - 75,363 0.13 23/02/2019 26/02/2025
Vested - - 27,707 (27,707)³ - 0.13 - -
80,129 22,941 - (27,707) 75,363 0.13
The TSR peer group for the 2016 The TSR peer group was reviewed Russell Shiels
PSP awards comprised the following and amended for awards in 2017 and Unvested 74,268 19,242 (24,812) - 68,698 0.13 23/02/2019 26/02/2025
companies: thereafter and is set out below:
Vested - - 24,812 (24,812)⁴ - 0.13 - -
74,268 19,242 - (24,812) 68,698 0.13
Armstrong World Boral Ltd Armstrong World Owens
Peter Wilson
Industries Inc Industries Corning
Kingspan Group plc — Annual Report & Financial Statements 2018
Governance Chief Financial Officer and any other Shareholding requirements: Former directors: There were no Reporting requirements and Accordingly, the Board, on
Composition: The Remuneration members of the management team The Remuneration Committee pension payments, payments for loss engagement with shareholders: the recommendation of the
Committee comprises four may be asked to attend meetings recognises that share ownership is of office or other remuneration paid In anticipation of the Shareholders’ committee, will put this report of
independent non-executive directors, where their input is helpful to the important in aligning the interests to any former directors during the Rights Directive being implemented the Remuneration Committee to an
Helen Kirkpatrick (chairman), matter being discussed by the of management with those of relevant financial year. in Ireland, and in line with advisory vote at the forthcoming
Michael Cawley, Linda Hickey and committee. No individual is present shareholders. Executive directors Kingspan’s commitment to best Annual General Meeting of the
Bruce McLennan. The Company at a meeting when the terms of his are required to build up and retain, External advisors: corporate governance practices Company, and will put the directors’
Secretary acts as the secretary to own remuneration are discussed. The a minimum holding in Kingspan The Remuneration Committee and shareholder engagement, remuneration policy to a separate
the committee. committee’s independent advisers shares with equivalent market value obtained advice during the year the Remuneration Committee advisory vote.
may also be asked to attend. to 200% of base salary. The executive from independent remuneration has committed to providing an
Responsibilities: The responsibilities directors in practice hold significantly consultants Korn Ferry. increased level of transparency in The Committee received strong
of the Remuneration Committee Clawback & malus policy: The in excess of this requirement. The its remuneration reporting in recent support for the 2017 Remuneration
are summarised in the Corporate committee has put in place robust current shareholdings of the executive Korn Ferry is a member of the years, and has incorporated many Report. The table below shows
Governance Report, and its terms clawback and malus arrangements directors as a multiple of 2018 Remuneration Consultants Group of the proposed disclosure the voting outcome at Kingspan’s
of reference are available on for the protection of the Company salary (based on share price as at and a signatory to its Code of requirements into this report. 2018 Annual General Meeting
the Company’s website: and its investors, as outlined in the 31 December 2018) are shown in Conduct, and all advice is provided relating to the 2017 Directors’
www.kingspan.com Remuneration Policy above. the table below. in accordance with this code. The Committee also keeps up to date Remuneration Report.
During 2018 Korn Ferry carried with the specific voting guidelines
Meetings: The Remuneration out a leadership development of its shareholders and proxy voting
Committee met four times during assessment for senior members agencies as well as being advised
Kingspan Group plc — Annual Report & Financial Statements 2018
the year. Each meeting was Shareholding requirements 31/12/18 of the Kingspan Group, but did about developments in best practice
Performance pay
1200
Assess Group and individual performance against targets for 2017 •
Confirm percentage of performance bonus achieved for 2017 • 1000
Confirm vesting of 2016 Deferred Share Awards •
Agree Group and individual performance targets for 2019 • 800
PSP Awards
600
Assess performance of 2015/2017 PSP Awards against targets •
Determine percentage of 2015/2017 PSP Awards which vest • 400
—
Committee to monitor the integrity Audit Committee plays an active found on pages 52 to 53.
of the Group's financial statements role and has responsibility. These
and the effectiveness of the Group’s areas are as follows: The Board considers that the
As Chairman of the Audit Committee, internal financial controls. The
1. Financial reporting and related
committee as a whole has an
committee’s role and responsibilities appropriate and experienced blend
I am pleased to present the report of the committee are set out in the committee’s Terms primary areas of judgement; of commercial, financial and industry
for the year ended 31 December 2018. of Reference which are available from
the Company and are displayed on
2. The external audit process; expertise to enable it to fulfil its
duties, and that the committee
3. The Group’s internal audit
the Group’s website www.kingspan. function; chairman, Michael Cawley B.COMM.,
com. The terms of reference are F.C.A., has appropriate recent and
4. Risk management and internal
reviewed annually and amended relevant financial experience.
controls; and
This report details how the model and strategy. The significant During the year, the committee where appropriate. During the
Audit Committee has met its issues that the committee considered carried out a robust assessment of year the committee worked with 5. Whistleblowing procedures. Meetings
responsibilities under its Terms of in relation to the financial statements the principal risks facing the Group management, the external auditors, The committee met four times during
Reference, the Irish Companies and how these issues were addressed and monitored the risk management internal audit, and other members Committee membership the year ended 31 December 2018
Act 2014 and under the 2014 UK are set out in this report. and internal control system on an on- of the senior management team in As at 31 December 2018, the Audit and attendance at the meetings is
Corporate Governance Code in the going basis. Further details in regard fulfilling these responsibilities. Committee comprised of three noted below. Activities of the Audit
last twelve months. The Audit Committee note the to these matters are also set out in independent non-executive directors Committee in each meeting is
Kingspan Group plc — Annual Report & Financial Statements 2018
requirements under section 225 of this report on pages 32 to 33. who are Michael Cawley (Chairman), noted below.
US
Approve going concern and viability statements •
Spoke Building Consider accounting policies and the impact of new accounting standards • •
Fire Rating: Review any related party matters and intended disclosures •
CC1 per ASTM D 635
Review Annual Report and confirm if fair, balanced and understandable •
External auditors
Plan for year-end audit & half year review • •
Approve internal audit plan and resources, taking account of risk management • • • •
Governance
Accounting standards update •
Committee evaluation
As outlined on page 65 within the Adequacy The committee reviewed the judgements applied by management in assessing both specific and
Corporate Governance Statement, of warranty risk based warranty provisions at 31 December 2018. The committee reviewed and discussed with
Kingspan Group plc — Annual Report & Financial Statements 2018
the performance of the Board also provisions management the monthly reports presented to the Board which set out, for each of the Group’s
External auditor (“PIE”). Key developments falling The auditors also confirmed that they an annual risk assessment of the
The Audit Committee has from the implementation of this were not aware of any relationships business to formally identify the key
responsibility for overseeing the legislation are: between the Group and the firm or risks facing the Group. Full details
Group’s relationship with the external between the firm and any persons of this risk assessment and the key
auditor including reviewing the →→ a requirement that the PIE in financial reporting oversight roles risks identified are set out in the Risks
quality and effectiveness of their changes its statutory auditor in the Group that may affect its & Risk Management section of this
performance, their external audit every ten years (following independence. Annual Report on pages 32 to 33.
plan and process, their independence rotation, the statutory audit
from the Group, their appointment firm cannot be reappointed for Non-audit services These processes, which are used by
and their audit fee proposals. four years); In order to further ensure the Audit Committee to monitor the
→→ a requirement that certain independence, the committee has a effectiveness of the Group’s system
Performance and audit plan procedures are followed for the policy on the provision of non-audit of risk management and internal
Following the completion of selection of the new statutory services by the external auditors that control, are in place throughout the
the 2017 year-end audit, the auditor; and seeks to ensure that the services accounting period and remain in
committee carried out a review of provided by the external auditors are place up to the date of approval of
→→ restrictions on the entitlement
the effectiveness of the external not, or are not perceived to be, in this Annual Report.
of the statutory auditing firm
auditor and the audit process. This conflict with auditor independence.
to provide certain non-audit
review involved discussions with By obtaining an account of all The main features of the Group’s
services.
both group management and relationships between the external internal control and risk management
internal audit and feedback provided Kingspan Group plc has fully auditors and the Group, and by systems that specifically relate to
Kingspan Group plc — Annual Report & Financial Statements 2018
by divisional management. The complied with such EU Audit Reform reviewing the economic importance the Group’s financial reporting and
David Palleja
Barcelona, Spain
Financial Statements
—
Spain
500 million PET recycled bottles in
our products by 2023.
90 91
140 — 148
Other Information
Alternative Performance Measures (APMs) 140
Shareholder Information 142
Principal Subsidiary Undertakings 144
Group Five Year Summary 148
92 93
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KINGSPAN GROUP PLC How the matter was addressed in our audit The structure of the Group’s finance function Based on the above procedures, the Group audit
is such that certain transactions and balances team was satisfied with the coverage obtained
OPINION AND CONCLUSIONS ARISING FROM OUR AUDIT Our audit procedures in this area included, among
are accounted for by the central Group finance and the audit work performed in respect of each
others, assessing the Group’s impairment models
1 OPINION: OUR OPINION ON THE 2 KEY AUDIT MATTERS: OUR We considered whether the resulting goodwill for each CGU and evaluating the assumptions team, with the remainder accounted for in the component.
FINANCIAL STATEMENTS ASSESSMENT OF RISKS OF balances appeared reasonable. We also assessed used by the Group in the model, specifically Group’s reporting components. We performed
comprehensive audit procedures, including those 4 WE HAVE NOTHING TO REPORT ON
IS UNMODIFIED MATERIAL MISSTATEMENT whether the disclosures as set out in Note 10 were the cash flow projections, perpetuity rates
in relation to the significant risks set out above, on GOING CONCERN
We have audited the Group and Company Key audit matters are those matters that, in our in compliance with IFRS 3. and discount rates. We compared the Group’s
assumptions, where possible, to externally derived those transactions and balances accounted for We are required to report to you if:
financial statements of Kingspan Group plc professional judgment, were of most significance Based on evidence obtained, we found that at Group. The Group audit team carried out the
(“the Company”) for the year ended 31 December in the audit of the financial statements and data and performed our own assessment in >> we have anything material to add or draw
the key assumptions used when accounting for relation to key model inputs, such as projected audit of the Company financial statements.
2018 which comprise the Consolidated Income include the most significant assessed risks of acquisitions were appropriate. attention to in relation to the directors’
Statement, the Consolidated Statement of material misstatement (whether or not due to economic growth, competition, cost inflation and In respect of components, based on our statement in note 1 to the financial
Comprehensive Income, the Consolidated fraud) identified by us, including those which had Warranty provisions €104.3 million (2017: discount rates. assessment of the financial significance of each of statements on the use of the going concern
Statement of Financial Position, the Consolidated the greatest effect on: the overall audit strategy; €101.0 million) We examined the sensitivity analysis performed the Group’s 299 components, we determined that basis of accounting with no material
Statement of Changes in Equity, the Consolidated the allocation of resources in the audit; and by Group management and performed our there were: uncertainties that may cast significant
Refer to page 85 (Report of the Audit
Statement of Cash Flows, the Company directing the efforts of the engagement team. own sensitivity analysis in relation to the key doubt over the Group and Company’s use
Committee), page 106 (accounting policy) and >> 57 components ‘full scope components’
Statement of Financial Position, the Company These matters were addressed in the context of assumptions. We compared the sum of the of that basis for a period of at least twelve
Note 20 to the financial statements. where audits of the financial information of
Statement of Changes in Equity, the Company our audit of the financial statements as a whole, discounted cash flows to the Group’s market months from the date of approval of the
those components were performed;
Statement of Cash Flows and the related notes, and in forming our opinion thereon, and we do The key audit matter capitalisation. We also assessed whether the financial statements; or
>> 16 components ‘specific scope components’
including the accounting policies in note 1. The not provide a separate opinion on these matters. disclosures in relation to the key assumptions and >> the related statement under the Listing
The Group’s business involves the sale of where audit procedures over specified
financial reporting framework that has been in respect of the sensitivity of the outcome of the Rules set out on page 58 is materially
In arriving at our audit opinion above, the key products under warranty, some of which use financial statement captions were
applied in their preparation is Irish Law and impairment assessment to changes in those key inconsistent with our audit knowledge.
audit matters, in decreasing order of audit new technology and applications. Accordingly, performed, due to the risk of potential
International Financial Reporting Standards assumptions were appropriate.
significance, and which were unchanged from the Group has recorded significant warranty misstatement of the Group financial
(IFRS) as adopted by the European Union and, We have nothing to report in these respects.
our report on the 31 December 2017 financial provisions which are inherently judgemental in Based on evidence obtained, we found that the statements caused by errors in those
as regards the Company financial statements, as
statements, were as set out below: nature. These provisions are required in order for captions; and
Kingspan Group plc — Annual Report & Financial Statements 2018
applied in accordance with the provisions of the key assumptions used by management were 5 WE HAVE NOTHING TO REPORT ON
the Group to record an appropriate estimate appropriate, and supported management’s >> 226 components where the audit procedures
Companies Act 2014. Group audit matters
THE OTHER INFORMATION IN THE
of the ultimate costs of repairing and replacing conclusion that no impairment of goodwill was comprised analytical review procedures to
ANNUAL REPORT
In our opinion: Acquisition accounting (total consideration of product that is ascertained to be faulty. required. ensure that our initial assessment that there
were no significant risks of misstatement The directors are responsible for the other
€492.4 million (2017: €207.1 million))
>> the financial statements give a true and fair How the matter was addressed in our audit of the Group financial statements in those information presented in the annual report
Company audit matter
view of the assets, liabilities and financial Refer to page 85 (Report of the Audit components was appropriate. together with the financial statements. The other
Our audit procedures included, among others, Investment in subsidiaries €1,191.0 million
position of the Group and Company as at 31 Committee), page 104 (accounting policy) and information comprises the information included
assessing management’s approach to identifying, (2017: €1,180.7 million)
December 2018 and of the Group’s profit for Note 22 to the financial statements. in the directors’ report and Business and Strategic
recording and monitoring potential claims; The coverage we obtained was as follows:
the year then ended; Refer to page 108 (accounting policy) and Note 13 Report. The financial statements and our
consideration of the nature and basis of the
>> the Group financial statements have been The key audit matter
Financial Statements
provision and the range of potential outcomes; to the financial statements. Full Specific auditor’s report thereon do not form part of the
properly prepared in accordance with IFRS as The Group completed a number of acquisitions scope scope Other other information. Our opinion on the financial
correspondence in relation to specific claims;
adopted by the European Union; during the year, as set out in Note 22. The The key audit matter components components components statements does not cover the other information
progress on individual significant claims; and
>> the Company financial statements have acquired businesses comprise a number of % % % and, accordingly, we do not express an audit
relevant settlement history of claims and The investments in subsidiary undertakings are
been properly prepared in accordance with components in multiple jurisdictions and Profit 86 9 5 opinion or, except as explicitly stated below, any
utilisation of related provisions. We considered carried in the Company’s financial statements
IFRS as adopted by the European Union, as accounting for the completed transactions before form of assurance conclusion thereon.
the rollout of new technology and products and at cost less impairment. Impairments are
applied in accordance with the provisions of involves estimating the fair value at acquisition tax
challenged the Group’s assumptions in relation determined by reference to the subsidiary Our responsibility is to read the other information
the Companies Act 2014; and date of the assets and liabilities of each Revenue 73 16 11
to potential failure rates, considering past failure undertakings’ fair value. and, in doing so, consider whether, based on our
>> the Group and Company financial component, including the identification and rates and related settlements where necessary. Total 80 11 9 financial statements audit work, the information
statements have been properly prepared in valuation, where appropriate, of intangible assets. How the matter was addressed in our audit assets
We substantively tested material movements in therein is materially misstated or inconsistent with
accordance with the requirements of the Significant judgement is involved in relation to the the provision and considered the accounting for In this area our audit procedures included, among The audits undertaken for Group reporting the financial statements or our audit knowledge.
Companies Act 2014 and, as regards the assumptions used in this valuation process. There movements in the provision balances and the others, assessing the carrying value of subsidiaries purposes at the key reporting components were Based solely on that work we have not identified
Group financial statements, Article 4 of the is a risk that these assumptions are inappropriate. related disclosures for compliance with IAS 37. for any objective indicators of impairment. all performed to component materiality levels. material misstatements in the other information.
IAS Regulation.
How the matter was addressed in our audit Based on evidence obtained, we found that Based on the results of our testing, we found These component materiality levels were set
Based solely on our work on the other information
management’s process for identifying and management’s assessment that no impairment is individually for each component and ranged from
Basis for opinion Our audit procedures in this area included, we report that, in those parts of the director’s
quantifying warranty provisions was appropriate required to be reasonable. €10,000 to €7,600,000. Detailed audit instructions
among others, an inspection of the legal report specified for our review:
We conducted our audit in accordance with were sent to the component auditors in all of
agreements underpinning each transaction. and that the resulting provision was reasonable.
International Standards on Auditing (Ireland) 3 OUR APPLICATION OF MATERIALITY these identified locations. These instructions >> we have not identified material
(“ISAs (Ireland)”) and applicable law. Our We examined the information contained in due Goodwill €1,391.0 million AND AN OVERVIEW OF THE SCOPE covered the significant audit areas to be covered misstatements in the directors’ report or
responsibilities under those standards are further diligence reports and business case submissions (2017: €1,095.7 million) OF OUR AUDIT by these audits (which included the relevant key other accompanying information;
described in the Auditor’s Responsibilities section proposing the acquisitions to the board and,
audit matters detailed above) and set out the >> in our opinion, the information given in
where commissioned by the Group, third party Refer to page 85 (Report of the Audit Materiality for the Group financial statements
of our report. We believe that the audit evidence information required to be reported to the Group the directors’ report is consistent with the
valuations of intangible assets. Committee), page 104 (accounting policy) and as a whole was set at €19.5 million (2017: €17.5
we have obtained is a sufficient and appropriate audit team. financial statements;
Note 10 to the financial statements. million).
basis for our opinion. Our audit opinion is We considered the assumptions used in >> in our opinion, the directors’ report has been
consistent with our report to the audit committee. Senior members of the Group audit team were
determining contingent consideration and The key audit matter This has been calculated using a benchmark prepared in accordance with the Companies
directly responsible for the audit of 25 full scope
the fair value of the Group’s option to acquire of Group profit before taxation (of which it Act 2014.
We were appointed as auditor by the directors There is a risk in respect of the recoverability of the components and 7 specific scope components. In
minority shares in the acquired entities. We represents 5% (2017: 5%)), which we have
on 17 June 2011. The period of total uninterrupted Group’s significant goodwill balance if future cash respect of the other 32 full scope components and
assessed the accounting entries used to record determined, in our professional judgement, to
engagement is the 8 financial years ended 31 flows are not sufficient to recover the carrying 9 specific scope components carried out by other Disclosures of principal risks and longer-term
each acquisition, the acquisition date assets and be one of the principal benchmarks within the
December 2018. value of the Group’s goodwill; this could occur if component auditors (all KPMG member firms), viability
liabilities of each of the acquired entities, and, financial statements relevant to members of the
demand is weak or due to the nature of the cost senior members of the Group audit team: Based on the knowledge we acquired during our
We have fulfilled our ethical responsibilities under, where the fair value assessment exercise had Company in assessing financial performance.
base in certain markets. We focus on this area due financial statements audit, we have nothing
and we remained independent of the Group in been completed by management, the fair value >> participated in planning calls to ensure that
to the inherent uncertainty involved in forecasting Materiality for the Company financial statements material to add or draw attention to in relation to:
accordance with, ethical requirements applicable adjustments made thereto. the audit instructions were understood;
and discounting future cash flows, which rely on as a whole was set at €13.0m (2017: €13.4m),
in Ireland, including the Ethical Standard issued >> for certain locations, including some of the >> the directors’ statement of risk and
We also challenged the Group’s critical the management’s assumptions and estimates of determined with reference to a benchmark of
by the Irish Auditing and Accounting Supervisory acquired entities, visited the component; risk management on pages 32 and 33,
assumptions in relation to the identification future trading performance, which are the basis of Company’s total assets of which it represents 1%
Authority (“IAASA”) as applied to listed public >> inspected the audit workpapers in respect of concerning the disclosures of principal risks,
and valuation of intangible assets by assessing the assessment of recoverability. (2017: 1%).
interest entities. No non-audit services prohibited significant audit risk areas; and describing these risks and explaining how
by that standard were provided. whether all intangible assets had been
We report to the Audit Committee all corrected >> participated in closing conference calls, they are being managed and mitigated;
appropriately identified; by considering the
and uncorrected misstatements we identified during which the results of the audit were
appropriateness of the methodology used to
through our audit in excess of €500,000 discussed by local management, the local
value the intangible assets; by comparing the
(2017: €350,000), in addition to other audit audit team, Group management and the
key assumptions used to external data, where
misstatements below that threshold that we Group audit team.
available; and by assessing the arithmetic
believe warranted reporting on qualitative
accuracy of calculations underpinning the values.
grounds.
94 95
>> the directors’ confirmation within the report >> the Corporate Governance statement Auditor’s responsibilities Consolidated Income Statement for the year ended 31 December 2018
of the Audit Committee on page 87 that contains the information required by the Our objectives are to obtain reasonable assurance
they have carried out a robust assessment of European Union (Disclosure of Non-Financial about whether the financial statements as a Note 2018 2017
the principal risks facing the Group, including and Diversity Information by certain large whole are free from material misstatement, €m €m
those that would threaten its business undertakings and groups) Regulations 2017. whether due to fraud or error, and to issue
model, future performance, solvency and our opinion in an auditor’s report. Reasonable
liquidity; and We also report that, based on work undertaken assurance is a high level of assurance, but
REVENUE 2 4,372.5 3,668.1
>> the directors’ explanation in the directors’ for our audit, all of the other information does not guarantee that an audit conducted Cost of sales (3,158.0) (2,615.4)
report of how they have assessed the required by the Act is contained in the Corporate in accordance with ISAs (Ireland) will always
prospects of the Group, over what period Governance Statement. detect a material misstatement when it GROSS PROFIT 1,214.5 1,052.7
they have done so and why they considered exists. Misstatements can arise from fraud, Operating costs, excluding intangible amortisation (769.3) (675.2)
that period to be appropriate, and their 6 OUR OPINIONS ON OTHER MATTERS other irregularities or error and are considered
statement as to whether they have a PRESCRIBED THE COMPANIES ACT material if, individually or in aggregate, they
reasonable expectation that the Group 2014 ARE UNMODIFIED could reasonably be expected to influence the
will be able to continue in operation and TRADING PROFIT 2 445.2 377.5
We have obtained all the information and economic decisions of users taken on the basis of
meet its liabilities as they fall due over the Intangible amortisation (22.2) (15.7)
explanations which we consider necessary for the the financial statements. The risk of not detecting
period of their assessment, including any purpose of our audit. a material misstatement resulting from fraud or
Non trading items 4 - 0.6
related disclosures drawing attention to any other irregularities is higher than for one resulting
necessary qualifications or assumptions. In our opinion, the accounting records of the OPERATING PROFIT 423.0 362.4
from error, as they may involve collusion, forgery,
Company were sufficient to permit the financial
intentional omissions, misrepresentations, or the Finance expense 5 (19.5) (16.4)
statements to be readily and properly audited and
Other corporate governance disclosures override of internal control and may involve any Finance income 5 1.4 0.5
the Company’s statement of financial position is
area of law and regulation not just those directly
We are required to address the following items in agreement with the accounting records.
affecting the financial statements. PROFIT FOR THE YEAR BEFORE INCOME TAX 6 404.9 346.5
and report to you in the following circumstances:
7 WE HAVE NOTHING TO REPORT ON A fuller description of our responsibilities is Income tax expense 8 (69.1) (60.6)
>> Fair, balanced and understandable (set out
Kingspan Group plc — Annual Report & Financial Statements 2018
Financial Statements
to assess the Group’s position and members, as a body, in accordance with section
to (7) of the European Union (Disclosure of Non-
performance, business model and strategy; 391 of the Companies Act 2014. Our audit work
Financial and Diversity Information by certain
>> Report of the Audit Committee (set out on has been undertaken so that we might state to Diluted 9 182.3c 157.3c
large undertakings and groups) Regulations 2017
pages 82 to 87): if the section of the annual the Company’s members those matters we are
for the year ended 31 December 2018 as required
report describing the work of the Audit required to state to them in an auditor’s report
by the European Union (Disclosure of Non-
Committee does not appropriately address and for no other purpose. To the fullest extent
Financial and Diversity Information by certain
matters communicated by us to the Audit permitted by law, we do not accept or assume Gene M. Murtagh Geoff Doherty 22 February 2019
large undertakings and groups) (amendment)
Committee; responsibility to anyone other than the Company Chief Executive Officer Chief Financial Officer
Regulations 2018.
>> Statement of compliance with UK Corporate and the Company’s members, as a body, for our
Governance Code (set out on page 56): if The Listing Rules of the Irish Stock Exchange audit work, for our report, or for the opinions we
the directors’ statement does not properly require us to review: have formed.
disclose a departure from provisions of the >> the directors’ statement, set out on page 58, Consolidated Statement of Comprehensive Income for the year ended 31 December 2018
UK Corporate Governance Code specified by in relation to going concern and longer-term
the Listing Rules for our review. Conall O’Halloran Note 2018 2017
viability;
for and on behalf of
>> the part of the Corporate Governance €m €m
We have nothing to report in these respects. Statement on page 56 relating to the KPMG
In addition, as required by the Companies Act Company’s compliance with the provisions Chartered Accountants, Profit for the year 335.8 285.9
2014, we report, in relation to information given of the UK Corporate Governance Code Statutory Audit Firm
in the Corporate Governance Statement on page and the Irish Corporate Governance Annex
1 Stokes Place Other comprehensive income:
67, that: specified for our review; and
St. Stephen’s Green
>> certain elements of disclosures in the report
>> based on the work undertaken for our to shareholders by the Board of Directors’
Dublin 2 Items that may be reclassified subsequently to profit or loss
audit, in our opinion, the description of the Ireland Exchange differences on translating foreign operations 4.0 (85.2)
remuneration committee.
main features of internal control and risk 22 February 2019 Effective portion of changes in fair value of cash flow hedges 0.3 (2.1)
management systems in relation to the
8 RESPECTIVE RESPONSIBILITIES
financial reporting process for preparing
Items that will not be reclassified subsequently to profit or loss
the Group financial statements, and Directors’ responsibilities
Actuarial gains on defined benefit pension schemes 32 0.9 1.0
information relating to voting rights and As explained more fully in their statement set out
other matters required by the European
Income taxes relating to actuarial gains on defined benefit pension schemes 21 (0.2) (0.2)
on pages 58 and 59, the directors are responsible
Communities (Takeover Bids (Directive for: the preparation of the financial statements
2004/EC) Regulations 2006 and specified Total other comprehensive income 5.0 (86.5)
including being satisfied that they give a true
for our consideration, are consistent with and fair view; such internal control as they
the financial statements and have been determine is necessary to enable the preparation Total comprehensive income for the year 340.8 199.4
prepared in accordance with the Act; and of financial statements that are free from
>> based on our knowledge and understanding material misstatement, whether due to fraud or Attributable to owners of Kingspan Group plc 337.1 201.0
of the Company and its environment error; assessing the Group and Company’s ability Attributable to non-controlling interests 28 3.7 (1.6)
obtained in the course of our audit, we have to continue as a going concern, disclosing, as 340.8 199.4
not identified any material misstatements in applicable, matters related to going concern;
that information. and using the going concern basis of accounting
unless they either intend to liquidate the Group or
the Company or to cease operations, or have no
realistic alternative but to do so.
Kingspan Group plc — Annual Report & Financial Statements 2018 96
ASSETS
EQUITY
Goodwill
Inventories
LIABILITIES
NET ASSETS
Share capital
Other reserves
Financial asset
TOTAL ASSETS
Treasury shares
Share premium
TOTAL EQUITY
Gene M. Murtagh
Retained earnings
CURRENT ASSETS
TOTAL LIABILITIES
Deferred tax assets
NON-CURRENT LIABILITIES
Retirement benefit obligations
Property, plant and equipment
Derivative financial instruments
NON-CONTROLLING INTEREST
Deferred contingent consideration
Interest bearing loans and borrowings
Geoff Doherty
Chief Financial Officer
EQUITY ATTRIBUTABLE TO OWNERS OF KINGSPAN GROUP PLC
Consolidated Statement of Financial Position as at 31 December 2018
Note
11
10
19
12
21
32
19
15
14
20
16
17
18
19
20
32
23
18
21
17
28
25
24
22 February 2019
€m
2018
1,391.0
27.4
850.5
8.2
111.1
2,411.2
15.6
7.4
779.8
4,029.4
1,618.2
294.5
0.2
798.6
524.9
-
47.5
1,018.8
78.8
53.2
59.5
56.8
20.5
1,788.9
2,240.5
1,221.7
136.6
40.8
967.0
1,788.9
38.6
1,750.3
1,916.2
0.7
95.6
23.7
(273.2)
(12.7)
€m
2017
1,095.7
703.3
-
90.3
447.1
1,935.9
16.5
7.9
22.2
645.2
3,235.6
1,299.7
176.6
0.1
675.9
0.1
52.3
786.1
80.9
1.2
6.4
661.5
48.7
21.5
1,568.0
1,667.6
881.5
111.1
38.7
1,568.0
39.9
1,528.1
1,642.7
0.7
95.6
23.6
(220.5)
(14.0)
Consolidated Statement of Changes In Equity for the year ended 31 December 2018
Share Share Capital Treasury Translation Cash Flow Share Revaluation Put Retained Total Non- Total
Capital Premium Redemption Shares Reserve Hedging Based Reserve Option Earnings Attributable Controlling Equity
Reserve Reserve Payment Liability to Owners Interest
Reserve Reserve of the Parent
€m €m €m €m €m €m €m €m €m €m €m €m €m
Balance at 1 January 2018 23.6 95.6 0.7 (14.0) (177.2) 0.2 35.2 0.7 (79.4) 1,642.7 1,528.1 39.9 1,568.0
Transactions with owners recognised
directly in equity
Transactions with owners 0.1 - - 1.3 - - 1.7 - (59.9) (58.1) (114.9) (5.0) (119.9)
Financial Statements
97
Kingspan Group plc — Annual Report & Financial Statements 2018 98
Consolidated Statement of Changes In Equity for the year ended 31 December 2017
Share Share Capital Treasury Translation Cash Flow Share Revaluation Put Retained Total Non- Total
Capital Premium Redemption Shares Reserve Hedging Based Reserve Option Earnings Attributable Controlling Equity
Reserve Reserve Payment Liability to Owners Interest
Reserve Reserve of the Parent
€m €m €m €m €m €m €m €m €m €m €m €m €m
Balance at 1 January 2017 23.4 95.6 0.7 (12.5) (95.2) 2.3 33.3 0.7 - 1,406.6 1,454.9 16.6 1,471.5
Transactions with owners 0.2 - - (1.5) - - 1.9 - (79.4) (49.0) (127.8) 24.9 (102.9)
Dividends paid
Income tax paid
Interest received
Drawdown of loans
Repayment of loans
Repurchase of shares
INVESTING ACTIVITIES
Note
29
18
22
30
29
29
29
29
27
28
25
23
€m
2018
445.0
1.4
-
12.9
-
438.3
530.3
294.5
176.6
120.1
284.0
0.1
-
-
0.1
(92.8)
(602.2)
(3.1)
(8.2)
(461.0)
(144.2)
(17.0)
(75.0)
(2.2)
(68.3)
(0.1)
€m
2017
0.5
-
-
5.7
4.2
283.6
362.5
176.6
222.0
8.0
30.4
-
0.2
0.8
(41.8)
(253.3)
(173.9)
(4.8)
(85.0)
(17.3)
(61.6)
(10.1)
(35.3)
(65.6)
(61.7)
(1.5)
Financial Statements
99
100 101
Company Statement of Financial Position as at 31 December 2018 Company Statement of Changes In Equity for the year ended 31 December 2018
NON-CURRENT ASSETS Balance at 1 January 2018 23.6 95.6 0.7 (14.0) 1,242.6 1,348.5
Investments in subsidiaries 13 1,191.0 1,180.7
Shares issued 0.1 - - - - 0.1
CURRENT ASSETS Employee share based compensation - - - 1.3 12.3 13.6
Intercompany receivables 112.7 167.9
Cash and cash equivalents 0.1 0.1 Dividends paid - - - - (68.3) (68.3)
TOTAL ASSETS 1,303.8 1,348.7 Transactions with owners 0.1 - - 1.3 (56.0) (54.6)
CURRENT LIABILITIES Balance at 31 December 2018 23.7 95.6 0.7 (12.7) 1,196.3 1,303.6
Payables (0.2) (0.2)
TOTAL LIABILITIES (0.2) (0.2) Share Share Capital Treasury Retained Shareholders’
Kingspan Group plc — Annual Report & Financial Statements 2018
Financial Statements
Treasury shares 25 (12.7) (14.0)
Retained earnings 26 1,196.3 1,242.6 Dividends paid - - - - (61.7) (61.7)
TOTAL EQUITY 1,303.6 1,348.5 Transactions with owners 0.2 - - (1.5) (51.0) (52.3)
Gene M. Murtagh Geoff Doherty 22 February 2019 Balance at 31 December 2017 23.6 95.6 0.7 (14.0) 1,242.6 1,348.5
Chief Executive Officer Chief Financial Officer
Company Statement of Cash Flows for the year ended 31 December 2018
2018 2017
€m €m
OPERATING ACTIVITIES
Profit for the year before tax 9.7 83.0
Net cash flow from operating activities 9.7 83.0
FINANCING ACTIVITIES
Change in receivables 57.2 (19.9)
Repurchase of shares - (1.5)
Exercise or lapsing of share options 1.3 -
Proceeds from share issues 0.1 0.2
Dividends paid (68.3) (61.7)
Net cash flow from financing activities (9.7) (82.9)
Notes to the Financial Statements for the year ended 31 December 2018 Notes to the Financial Statements for the year ended 31 December 2018 (continued)
1 STATEMENT OF ACCOUNTING POLICIES 1 STATEMENT OF ACCOUNTING POLICIES (continued)
General information Comparative information has been IFRS 15 establishes a five-step model for The Group has completed an initial exemption for short-term and low-value annual report and provides an indication of
represented where necessary, to present the reporting the nature, amount, timing and assessment of the potential impact of IFRS leases. The Group’s non-cancellable the scale of leases held by the Group.
Kingspan Group plc is a public limited
financial statements on a consistent basis. uncertainty of revenue and cash flows 16 on its consolidated financial statements. operating lease commitments on an
company registered and domiciled in Ireland, Based on this initial impact assessment,
arising from contracts with customers. IFRS The Group will adopt the new standard undiscounted basis at 31 December 2018
with its registered office at Dublin Road, and the current group profile, the standard
Changes in Accounting Policies 15 specifies how and when revenue should by applying the modified retrospective are detailed in Note 31 to the consolidated
Kingscourt, Co Cavan. is expected to increase debt by €140m and
and Disclosures be recognised as well as requiring enhanced approach and will avail of the recognition financial statements of the Group’s 2018
reduce profit before tax by €1.4m.
The Group’s principal activities comprise disclosures. The Group has adopted IFRS
New and amended standards and
the manufacture of insulated panels, rigid 15 from 1 January 2018, using the modified The new standards, amendments to standards and interpretations are as follows:
interpretations effective during 2018
insulation boards, architectural facades, retrospective approach and has not restated Effective Date – periods
data and flooring technology, daylighting Financial instruments comparatives for 2017. beginning on or after
and ventilation systems and water and IFRS 9, Financial Instruments, replaces IAS
energy solutions. The Group’s Principal The Group used the five-step model to IFRS 15: Revenue from contracts with customers (Note – including amendments to IFRS 15:
39, Financial Instruments: Recognition 1 January 2018
Subsidiary Undertakings are set out on develop an impact assessment framework Effective date of IFRS 15 (11 September 2015) and clarifications to IFRS 15 (12 April 2016))
and Measurement. IFRS 9 addresses
page 144. to assess the impact of IFRS 15 on the IFRS 9 Financial Instruments (24 July 2014) 1 January 2018
the classification, measurement and
Group’s revenue transactions. The results Amendments to IFRS 2: Classification and measurement of share based payment transactions (20 June 2016) 1 January 2018
derecognition of financial assets and
Statement of compliance of our IFRS 15 assessment framework and Annual Improvements to IFRS 2014 -2016 Cycle: (Amendments to IFRS 1 First-time Adoption of IFRSs and IAS
liabilities, introduces new rules for hedge
The consolidated and Company financial contract reviews indicated that the impact 28 Investments in Associates and Joint Ventures) (issued on 8 December 2016) 1 January 2018
accounting and a new impairment model
statements have been prepared in of applying IFRS 15 on our consolidated IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration 1 January 2018
for financial assets. The Group has adopted
accordance with International Financial financial statements was not material for 1 January 2018
IFRS 9 from 1 January 2018. Amendments to IAS 40: Transfers of Investment Property (December 2016)
Kingspan Group plc — Annual Report & Financial Statements 2018
Reporting Standards (IFRSs) and their the Group and there was no adjustment to
IFRS 16: Leases (13 January 2016) 1 January 2019
interpretations issued by the International IFRS 9 largely retains the requirements of IAS retained earnings or material impact on the
IFRIC 23: Uncertainty over income tax treatment (7 June 2017) 1 January 2019
Accounting Standards Board (IASB) as 39 for the classification and measurement timing of revenue recognition on application
of financial liabilities but eliminates the of the new rules at 1 January 2018. Annual Improvements to IFRS 2015 -2017 Cycle (12 December 2017) 1 January 2019*
adopted by the EU and those parts of
previous IAS 39 categories for financial Amendments to IAS 19: Plan amendment, Curtailment or Settlement (8 February 2018) 1 January 2019*
the Companies Acts 2014, applicable to Revenue is recognised when control of goods
companies reporting under IFRS and Article assets. The vast majority of the Group’s Amendments to references to the Conceptual Framework in IFRS Standards (29 March 2018) 1 January 2020*
is transferred to the customer, which for
4 of the IAS Regulation. financial assets are trade receivables and
the vast majority of the Group is at a point
cash and as a result the classification and *not EU endorsed
The Company has availed of the exemption in time when delivery has taken place in
measurement changes do not have a
Revenue recognition
Financial Statements
in Section 304 of the Companies Act 2014 accordance with the terms of sale. The following amended standards and Subsidiaries are included in the Group
material impact on the Group’s consolidated
and has not presented the Company interpretations are not expected to have financial statements from the date on which For the year ended 31 December 2018
financial statements. New and amended standards and
Income Statement, which forms part of a significant impact on the Group’s control over the entity is obtained and cease the Group used the five-step model as
For trade receivables, the Group applies interpretations issued but not yet consolidated financial statements: to be consolidated from the date on which
the Company's financial statements, to its prescribed under IFRS 15 on the Group’s
the IFRS 9 simplified approach to measure effective or early adopted control is transferred out of the Group.
members and the Registrar of Companies. revenue transactions. This included the
expected credit losses which uses a IFRS 16 sets out the principles for the IFRS 9 Financial Instruments identification of the contract, identification
Basis of preparation lifetime expected loss allowance. Given recognition, measurement, presentation and Transactions eliminated on consolidation
Amendments to IFRS 2: Classification and of the performance obligations under
The financial statements have been historic loss rates, normal receivable disclosure of leases for both the lessee and measurement of share based payment Intragroup transactions and balances, same, determination of the transaction
prepared on a going concern basis, ageing and the significant portion of trade the lessor. For lessees, IFRS 16 eliminates the transactions and any unrealised gains arising from such price, allocation of the transaction price to
under the historical cost convention, as receivables that are within agreed terms, classification of leases as either operating transactions, are eliminated in preparing performance obligations and recognition
Annual Improvements to IFRS 2014 -2016
modified by: the change in impairment methodology leases or finance leases and introduces a the consolidated financial statements. of revenue.
Cycle: (Amendments to IFRS 1 First-time
as a result of implementing IFRS 9 did not single lessee accounting model whereby all Unrealised losses are eliminated in the
>> measurement at fair value of share Adoption of IFRSs and IAS 28 Investments in The point of recognition arises when the
have a material impact on the Group’s leases are accounted for as finance leases, same manner as unrealised gains, but only
based payments at initial date Associates and Joint Ventures) Group satisfies a performance obligation
financial results. with some exemptions for short-term and to the extent that there is no evidence
of award; low-value leases. It also includes an election IFRIC Interpretation 22: Foreign Currency of impairment. by transferring control of a promised good
>> certain derivative financial instruments The hedge accounting requirements in Transactions and Advance Consideration or service to the customer, which could
which permits a lessee not to separate
and deferred contingent consideration IFRS 9 are optional. Under the transition Segment reporting occur over time or at a point in time.
non-lease components (e.g. maintenance) Amendments to IAS 40: Transfers of
recognised and measured at fair value; requirements of the new standard,
from lease components and instead Investment Property The Group’s accounting policy for Prior to 1 January 2018 the policy was as
and the Group may choose to apply, as its
capitalise both the lease cost and associated identifying segments is based on internal follows:
>> recognition of the defined benefit accounting policy, IAS 39. The Group IFRIC 23: Uncertainty over income tax
non-lease cost. The lessee will recognise a management reporting information that
liability as plan assets less the present have decided not to adopt the hedge treatment Revenue represents the fair value of goods
right-of-use asset representing its right to is routinely reviewed by the Board of
value of the defined benefit obligation. accounting requirements under IFRS 9 and Annual Improvements to IFRS 2015 -2017 supplied to external customers net of trade
use the underlying asset and a lease liability Directors, which is the Chief Operating
will continue to apply IAS 39. This decision Cycle discounts, rebates and value added tax/
representing its obligation to make lease Decision Maker (CODM) for the Group.
The accounting policies set out below has no impact on the current effective sales tax.
payments. All rights of use assets will be Amendments to IAS 19: Plan amendment,
have been applied consistently to all years hedging relationships. The measurement policies used for the
measured at the amount of the lease liability Curtailment or Settlement Revenue is recognised when the significant
presented in these financial statements, segment reporting under IFRS 8 are the
The cumulative effect method has been on adoption. IFRS 16 is effective for annual Amendments to references to the risks and rewards of ownership have
unless otherwise stated. same as those used in the consolidated
adopted upon transitioning to IFRS 9. periods beginning on or after 1 January 2019, Conceptual Framework in IFRS Standards passed to the customer, it is probable
financial statements. Segment results
These consolidated financial statements The impact of adopting IFRS 9 on our and the Group will apply IFRS 16 from its that economic benefits will flow to the
that are reported to the CODM include
have been prepared in Euro. The Euro is the consolidated financial statements was effective date. Group and the amount of revenue can be
Basis of consolidation items directly attributable to a segment
presentation currency of the Group and the not material for the Group and there was measured reliably, which usually arises on
The standard will primarily affect the The Group consolidated financial statements as well as those that can be allocated on
functional currency of the Company. no adjustment to retained earnings on delivery of the goods.
accounting for the Group’s operating incorporate the financial statements of the a reasonable basis. Unallocated items
application at 1 January 2018.
The Group uses a number of Alternative leases. The application of IFRS 16 will result Company and its subsidiary undertakings. comprise mainly of corporate assets,
Research and development
Performance Measures (APMs) throughout Revenue recognition in the recognition of additional assets and finance income and expenses and tax
liabilities in the consolidated statement of Subsidiaries assets and liabilities. Expenditure on research and development
these financial statements to give assistance IFRS 15, Revenue from Contracts with
financial position and in the consolidated is recognised as an expense in the period in
to investors in evaluating the performance of Customers, replaces IAS 18, Revenue and Subsidiaries are entities controlled by the The Group has determined that it has five
income statement it will replace the which it is incurred. An asset is recognised
the underlying business and to give a better IAS 11, Construction Contracts and related Group. The Group controls an entity when it operating segments: Insulated Panels,
straight-line operating lease expense with only when all the conditions set out in IAS
understanding of how management review interpretations. is exposed to, or has the rights to, variable Insulation Boards, Water & Energy, Data &
a depreciation charge for the right-of- 38 Intangible Assets are met.
and monitor the business on an ongoing returns from its involvement with the entity Flooring Technology and Light & Air.
basis. These APMs have been defined and use asset and an interest expense on the and has the ability to affect those returns
explained in more detail on page 140. lease liabilities. through its power over the entity.
104 105
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
1 STATEMENT OF ACCOUNTING POLICIES (continued) 1 STATEMENT OF ACCOUNTING POLICIES (continued)
Business combinations Any subsequent remeasurements required Intangible assets Exchange rates of material currencies used were as follows:
Business combinations are accounted for due to changes in fair value of the put (other than goodwill)
liability estimation are recognised in the Put Average rate Closing rate
using the acquisition method as at the Intangible assets separately acquired
date of acquisition. Option Reserve in equity. are capitalised at cost. Intangible assets
acquired as part of a business combination Euro = 2018 2017 2018 2017
In accordance with IFRS 3 Business Goodwill
are capitalised at fair value as at the date
Combinations, the fair value of consideration Goodwill arises on business combinations Pound Sterling 0.885 0.876 0.898 0.887
of acquisition.
paid for a business combination is measured and represents the difference between the US Dollar 1.181 1.129 1.144 1.197
as the aggregate of the fair values at the fair value of the consideration and the fair Following initial recognition, intangible Canadian Dollar 1.530 1.465 1.557 1.501
date of exchange of assets given and value of the Group’s share of the identifiable assets, which have finite useful lives, are Australian Dollar 1.580 1.473 1.620 1.533
liabilities incurred or assumed in exchange for net assets of a subsidiary at the date carried at cost or initial fair value less Czech Koruna 25.648 26.329 25.711 25.574
control. The assets, liabilities and contingent of acquisition. accumulated amortisation and accumulated Polish Zloty 4.260 4.256 4.299 4.171
liabilities of the acquired entity are measured impairment losses. Hungarian Forint 318.78 309.26 321.02 310.20
at fair value as at the acquisition date. The Group measures goodwill at the Brazilian Real 4.307 3.609 4.435 3.967
acquisition date as: The amortisation of intangible assets is
When the initial accounting for a business calculated to write off the book value of
combination is determined, it is done so on >> the fair value of the consideration intangible assets over their useful lives on Foreign operations A provision is made, where necessary, in Deferred tax assets are recognised in
a provisional basis with any adjustments transferred; plus a straight-line basis on the assumption of all inventory categories for obsolete, slow- respect of all deductible temporary
>> the recognised amount of any non- The Income Statement, Statement
to these provisional values made within zero residual value. Amortisation charged of Financial Position and Cash Flow moving and defective items. differences (i.e. differences that give
12 months of the acquisition date and are controlling interests in the acquiree; plus on these assets is recognised in the
Kingspan Group plc — Annual Report & Financial Statements 2018
Statement of Group companies that have rise to amounts which are deductible
effective as at the acquisition date. >> if the business combination is achieved Income Statement. Income tax in determining taxable profits in future
in stages, the fair value of the pre- a functional currency different from that
To the extent that deferred consideration The carrying amount of intangible assets of the Company are translated as follows: Income tax in the Income Statement periods when the carrying amount of the
existing equity interest in the acquiree; represents the sum of current income asset or liability is recovered or settled),
is payable as part of the acquisition cost less is reviewed for indicators of impairment >> Assets and liabilities at each reporting
and is payable after one year from the at each reporting date and is subject to tax and deferred tax not recognised in carry-forward of unused tax credits
>> the net recognised amount (generally date are translated at the closing rate other comprehensive income or directly and unused tax losses to the extent
acquisition date, the deferred consideration fair value) of the identifiable assets impairment testing when events or changes at that reporting date.
is discounted at an appropriate interest rate of circumstances indicate that the carrying in equity. that it is probable that taxable profits
acquired and liabilities assumed. >> Results and cash flows are translated will be available against which to offset
and, accordingly, carried at net present value values may not be recoverable. at actual exchange rates for the year, Current tax
(amortised cost) in the Group Statement of these items.
Financial Statements
Following initial recognition, goodwill is The estimated useful lives are as follows: or an average rate where this is a Current tax represents the expected tax
Financial Position. The discount component measured at cost less any accumulated reasonable approximation. The carrying amounts of deferred tax
is then unwound as an interest charge in the Customer relationships 2 - 6 years payable or recoverable on the taxable
impairment losses. assets are subject to review at each
Consolidated Income Statement over the life Trademarks & Brands 2 - 12 years profit for the year using tax rates and laws
All resulting exchange differences are reporting date and reduced to the extent
of the obligation. As at the acquisition date, any goodwill Patents 8 years that have been enacted, or substantively
recognised as a separate component of that future taxable profits are considered
acquired is allocated to each of the cash- Technological know how 5 - 10 years enacted, at the reporting date and taking
Where a business combination agreement equity, the Translation Reserve. to be inadequate to allow all or part of
generating units expected to benefit from into account any adjustments arising
provides for an adjustment to the cost of Amortisation methods, useful lives and any deferred tax asset to be utilised.
the combination’s synergies. The cash- On disposal of a foreign operation, any from prior years. Liabilities for uncertain
a business acquired contingent on future generating units represent the lowest level residual values are reviewed at each such cumulative retranslation differences, tax positions are recognised based on Changes in deferred tax assets or liabilities
events, other than put options held by non- within the Group which generate largely reporting date and adjusted as necessary. previously recognised in equity, are the directors’ best probability weighted are recognised as a component of tax
controlling interests, the Group accrues the independent cash inflows and these units reclassified to the Income Statement as estimate of the probable outflow of income or expense in profit or loss,
fair value of the additional consideration Foreign currency economic resources that will be required except where they relate to items that
are not larger than the operating segments part of gain or loss on disposal.
payable as a liability at acquisition date. This (before aggregation) determined in Functional and presentation currency to settle the liability. are recognised in other comprehensive
amount is reassessed at each subsequent accordance with IFRS 8 Operating Segments. The individual financial statements of Inventories income or directly in equity, in which case
reporting date with any adjustments Deferred tax the related deferred tax is also recognised
Goodwill is tested for impairment at the each Group company are measured and Inventories are stated at the lower of cost
recognised in the Income Statement. and net realisable value. Deferred tax is recognised on all in other comprehensive income or equity,
same level as the goodwill is monitored presented in the currency of the primary
If the business combination is achieved economic environment in which the temporary differences at the reporting respectively.
by management for internal reporting Cost is based on the first-in, first-out date. Temporary differences are defined
in stages, the fair value of the acquirer’s purposes, which is at the individual cash- company operates, the functional currency. principle and includes all expenditure Grants
previously held equity interest in the acquiree The Group financial statements are as the difference between the tax bases
generating unit level. incurred in acquiring the inventories and of assets and liabilities and their carrying Grants are recognised at their fair value
is re-measured at the acquisition date presented in Euro, which is the Company’s bringing them to their present location
through the Income Statement. Goodwill is subject to impairment testing functional currency. amounts in the consolidated financial when there is a reasonable assurance that
on an annual basis and at any time during and condition. statements. Deferred tax assets and the grant will be received and all relevant
Transaction costs are expensed to the the year if an indicator of impairment is Transactions and balances >> Raw materials are valued at liabilities are not subject to discounting conditions have been complied with.
Income Statement as incurred. considered to exist. The goodwill impairment the purchase price including and are measured at the tax rates that
Transactions in foreign currencies are Capital grants received and receivable in
tests are undertaken at a consistent time translated into the functional currency transport, handling costs and net of are expected to apply in the period in
Put options held by non-controlling respect of property, plant and equipment
each year. Impairment is determined by at the exchange rates at the date of the trade discounts. which the asset is realised or the liability
interest shares are treated as a reduction in the cost
assessing the recoverable amount of the transaction. Monetary assets and liabilities >> Work in progress and finished goods is settled based on tax rates and tax laws
Any contingent consideration is measured of that asset and thereby amortised to
cash-generating unit to which the goodwill denominated in foreign currencies are are carried at cost consisting direct that have been enacted or substantively
at fair value at the date of acquisition. the Income Statement in line with the
relates. Where the recoverable amount of the translated to the functional currency at the materials, direct labour and directly enacted at the reporting date.
Where a put option is held by a non- underlying asset.
cash-generating unit is less than the carrying exchange rates at the reporting date. All attributable production overheads Deferred tax liabilities are recognised for
controlling interest (“NCI”) in a subsidiary amount, an impairment loss is recognised in and other costs incurred in bringing Revenue grants are recognised in
currency translation differences on monetary all taxable temporary differences (i.e.
undertaking whereby that party can require the Income Statement. Impairment losses them to their existing location the Income Statement to offset the
assets and liabilities are taken to the Income differences that will result in taxable
the Group to acquire the NCI’s shareholding arising in respect of goodwill are not reversed and condition. related expenditure.
Statement, except when deferred in equity as amounts in future periods when the
in the subsidiary at a future date but the following recognition. qualifying net investment hedges. carrying amount of the asset or liability is
NCI retain present access to the results Net realisable value represents the
of the subsidiary, the Group applies the On disposal of a subsidiary, the attributable Goodwill and fair value adjustments arising recovered or settled).
amount of goodwill, not previously written estimated selling price less costs to
present access method of accounting to on the acquisition of a foreign entity completion and appropriate marketing,
this arrangement. The Group recognises off, is included in the calculation of the profit are initially translated at the exchange
or loss on disposal. selling and distribution costs.
a contingent consideration liability at fair rate at the date of acquisition and then
value, being the Group’s estimate of the subsequently these assets and liabilities are
amount required to settle that liability and a treated as part of a foreign entity and are
corresponding reserve in equity. translated at the closing rate.
106 107
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
1 STATEMENT OF ACCOUNTING POLICIES (continued) 1 STATEMENT OF ACCOUNTING POLICIES (continued)
Property, Plant and Equipment Specific provisions will generally be The Group designates all of its derivatives Cash flow hedge
aged as a current liability, reflecting the in one or more of the following types The effective part of any gain or loss on
Property, plant and equipment is measured at cost less accumulated depreciation and accumulated impairment losses.
assessment that a current liability exists of relationships: the derivative financial instrument is
to replace or repair product sold on foot recognised in other comprehensive income
Depreciation is provided on a straight line basis at the rates stated below, which are estimated to reduce each item of property, plant >> F air value hedge: Hedges the
of an accepted valid warranty issue. Only and presented in the Cash Flow Hedge
and equipment to its residual value by the end of its useful life: exposure to movements in fair value
where the liability is reasonably certain not Reserve in equity with the ineffective
of recognised assets or liabilities that
to be settled within the next 12 months, portion being recognised within finance
Freehold buildings 2% on cost are attributable to hedged risks.
will a specific provision be categorised income or finance expense in the Income
Plant and machinery 5% to 20% on cost >> Cash flow hedge: Hedges the Group’s
as a long-term obligation. Risk-based Statement. If a hedge of a forecasted
exposures to fluctuations in future
Fixtures and fittings 10% to 20% on cost provisions will generally be aged as a non- transaction subsequently results in the
cash flow derived from a particular
Computer equipment 12.5% to 33% on cost current liability, reflecting the fact that recognition of a financial asset or a
risk associated with recognised assets
Motor vehicles 10% to 25% on cost no warranty claim has yet been made by financial liability, the associated gains
or liabilities or forecast transactions.
Leased assets Over the period of the lease, or useful life if shorter the customer. and losses that were recognised directly
>> Net investment hedge: Hedges the
Leasehold property improvements Over the period of the lease, or useful life if shorter Provisions which are not expected to give exchange rate fluctuations of a net in other comprehensive income are
Freehold land Stated at cost and is not depreciated. rise to a cash outflow within 12 months of investment in a foreign operation. reclassified into profit or loss in the same
the reporting date are, where material, period or periods during which the asset
The estimated useful lives and residual The corresponding lease obligation, Remeasurements of the net defined determined by discounting the expected At inception of the transaction, the Group acquired or liability assumed affects
values of property, plant and equipment net of finance charges, is included in benefit liability or asset, which comprise future cash flows. The unwinding of the documents the relationship between profit or loss. For cash flow hedges, other
are determined by management at interest bearing loans and borrowings actuarial gains and losses, the return discount is recognised as a finance cost. the hedging instruments and hedged than those covered by the preceding
Kingspan Group plc — Annual Report & Financial Statements 2018
the time the assets are acquired and in the Statement of Financial Position on plan assets (excluding interest) items, including the risk management statements, the associated cumulative
subsequently, re-assessed at each and analysed as appropriate between and the effect of the asset ceiling, Dividends objectives and strategy in undertaking gain or loss is removed from other
reporting date. These lives are based on current and non-current amounts. The are recognised immediately in other Final dividends on ordinary shares are the hedge transactions. The Group also comprehensive income and recognised
historical experience with similar assets interest element of the lease payments is comprehensive income. recognised as a liability in the financial documents its assessment, both at in the Income Statement in the same
across the Group. charged to the Income Statement over the statements only after they have been inception and on an ongoing basis, as to period or periods during which the hedged
The Group determines the net interest
lease period so as to produce a constant approved at the Annual General Meeting whether the derivatives that are used in forecast transaction affects profit or
In accordance with IAS 36 Impairment of expense on the net defined benefit liability
periodic rate of interest, on the remaining of the Company. Interim dividends on hedging transactions are highly effective loss. The ineffective part of any gain or
Assets, the carrying values of property, or asset by applying the discount rate
balance of the liability, for each period. ordinary shares are recognised when they in offsetting changes in fair values or cash loss is recognised immediately in the
plant and equipment are reviewed at used to measure the defined benefit
Financial Statements
are paid. flows of hedged items. Income Statement.
each reporting date to determine whether Leases where the lessor retains obligation at the beginning of the annual
there is any indication of impairment. substantially all the risks and rewards period to the then net defined benefit Hedge accounting is discontinued when
Cash and cash equivalents Fair value hedge
An impairment loss is recognised of ownership are classified as operating liability or asset, taking into account any a hedging instrument expires or is sold,
whenever the carrying value of an asset leases. Operating lease rentals are changes in the net defined benefit liability Cash and cash equivalents principally Any gain or loss resulting from the re- terminated or exercised, or no longer
or its cash generating unit exceeds its charged to the Income Statement on a or asset during the period as a result of comprise of cash at bank and in hand measurement of the hedging instrument qualifies for hedge accounting. The
recoverable amount. straight-line basis over the lease term. contributions and benefit payments. and short term deposits with an original to fair value is reported in the Income cumulative gain or loss at that point
Net interest expense and other expenses maturity of three months or less. Statement, together with any changes remains in other comprehensive income
Impairment losses are recognised in Retirement benefit obligations in the fair value of the hedged asset
related to defined benefit plans are and is recognised when the transaction
the Income Statement. Following the Derivative financial instruments or liability that are attributable to the
The Group operates defined contribution recognised in profit or loss. occurs. If a hedged transaction is no
recognition of an impairment loss, the Derivative financial instruments, hedged risk. The gains or losses of a
and defined benefit pensions schemes. longer expected to occur, the net
depreciation charge applicable to the When the benefits of a plan are changed principally interest rate and currency hedging instrument that are in hedge cumulative gain or loss recognised in other
asset or cash-generating unit is adjusted Defined contribution pension schemes or when a plan is curtailed, the resulting swaps, are used to hedge the Group’s relationships with borrowings are included comprehensive income is transferred to
to allocate the revised carrying amount, change in benefit that relates to past foreign exchange and interest rate within finance income or finance expense
The costs arising on the Group’s defined the Income Statement in the period.
net of any residual value, over the service or the gain or loss on curtailment risk exposures. in the Income Statement. In the case
contribution schemes are recognised in the
remaining useful life. is recognised immediately in profit or loss. of the related hedged borrowings, any Net investment hedge
Income Statement in the period in which Derivative financial instruments are
The Group recognises gains and losses on gain or loss on the hedged item which is
Assets under construction are carried at the related service is provided. The Group recognised initially at fair value and Any gain or loss on the hedging
the settlement of a defined benefit plan attributable to the hedged risk is adjusted
cost less any recognised impairment loss. has no legal or constructive obligation to thereafter are subsequently remeasured instrument relating to the effective
when the settlement occurs. against the carrying amount of the
Depreciation of these assets commences pay further contributions in the event that at their fair value. Fair value is the portion of the hedge is recognised in other
when the assets are ready for their these plans do not hold sufficient assets to hedged item and is also included within comprehensive income and presented in
Provisions amount for which an asset could be
intended use. provide retirement benefits. finance income or finance expense in the the Translation Reserve in equity. The gain
A provision is recognised in the Statement exchanged, or a liability settled, between
Income Statement. or loss relating to the ineffective portion is
of Financial Position when the Group has a knowledgeable willing parties in an arm’s
Leases Defined benefit pension schemes recognised immediately in either finance
present constructive or legal obligation as length transaction. The fair value of these If the hedge no longer meets the criteria
Leases are classified as finance leases The Group’s net obligation in respect instruments is the estimated amount for hedge accounting, the adjustment to income or finance expense in the Income
a result of a past event and it is probable
whenever substantially all the risks and of defined benefit plans is calculated that the Group would receive or pay to the carrying amount of the hedged item is Statement. Cumulative gains or losses
that an outflow of economic benefit will
rewards of ownership of the asset have separately for each plan by estimating the terminate the swap at the reporting amortised on an effective interest basis to remain in equity until disposal of the net
be required to settle the obligation and
transferred to the lessee. All other leases amount of future benefit that employees date, taking into account current the Income Statement with the objective investment in the foreign operation at
the amount of the obligation can be
are classified as operating leases. have earned in return for their service in interest and currency exchange rates of achieving full amortisation by maturity which point the related differences are
estimated reliably.
the current and prior periods, discounting and the current creditworthiness of the of the hedged item. reclassified to the Income Statement as
Assets held under finance leases are
that amount and deducting the fair value A specific provision is created when a swap counterparties. part of the overall gain or loss on sale.
capitalised at the inception of the lease
of any plan assets. claim has actually been made against
in the Statement of Financial Position at
the Group or where there is a known
the lower of its fair value and the present The calculation is performed annually by
issue at a known customer’s site, both
value of the minimum lease payments, a qualified actuary using the projected
relating to a product or service supplied
and are depreciated over their useful lives unit credit method. When the calculation
in the past. In addition, a risk-based
with any impairment being recognised in results in a benefit to the Group, the
provision is created where future claims
the Income Statement. recognised asset is limited to the total of
are considered incurred but not reported.
any unrecognised past service costs and
The warranty provision is based on
the present value of economic benefits
historical warranty data and a weighting
available in the form of any future refunds
of all possible outcomes against their
from the plan or reductions in future
associated probabilities.
contributions to the plan.
108 109
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
1 STATEMENT OF ACCOUNTING POLICIES (continued) 1 STATEMENT OF ACCOUNTING POLICIES (continued)
Financial assets through the income statement, and all Borrowing costs Non-controlling interest Recoverability of trade receivables Measurement of deferred contingent
other financial liabilities are measured at Borrowing costs directly attributable to (Note 15) consideration and put option liabilities
Upon adoption of IFRS 9 on 1 January 2018 Non-controlling interests represent the
amortised cost unless the fair value option qualifying assets, as defined in IAS 23 related to business combinations require
the accounting policy for financial assets portion of the equity of a subsidiary not The Group provides credit to customers
is applied. Borrowing costs, are capitalised during assumptions to be made regarding
is as follows: attributable either directly or indirectly to and as a result there is an associated risk
The accounting policy in force for the year the period of time that is necessary to the parent company and are presented that the customer may not be able to pay profit forecasts and discount rates used
On initial recognition, a financial asset is complete and prepare the asset for its to arrive at the net present value of the
ended 31 December 2017 was as follows: separately in the Income Statement and outstanding balances. Trade receivables
classified as measured at amortised cost intended use. Other borrowing costs are potential obligations. The Group has
within equity in the Statement of Financial are considered for impairment on a case
or fair value with any movement being Financial liabilities are classified as either expensed to the Income Statement in the considered all available information
Position, distinguished from shareholders’ by case basis, when they are past due
reflected through other comprehensive financial liabilities at fair value through period in which they are incurred. in arriving at the estimate of liabilities
equity attributable to owners of the at the reporting date or when objective
income or the income statement. profit or loss or other financial liabilities. associated with deferred contingent
parent company. evidence is received that a specific
Financial liabilities at fair value through Share Based Payment Transactions consideration obligations.
On initial recognition of an equity counterparty may default.
profit or loss are initially measured at The Group grants equity settled share Accounting estimates
investment that is not held for trading,
fair value and subsequently stated at based payments to employees through and judgements Under IFRS 9 the Group uses an allowance Income taxes (Note 8)
the Group may irrevocably elect to present
fair value, with any resultant gain or the Performance Share Plan and the matrix to measure Expected Credit Loss The Group is subject to income tax
subsequent changes in the investment’s In the process of applying the Group’s
loss recognised in profit or loss. The net Deferred Bonus Plan. (ECL) of trade receivables from customers. in numerous jurisdictions. Significant
fair value in other comprehensive income. accounting policies, as set out on pages
gain or loss recognised in profit or loss Loss rates are calculated using a roll rate judgement is required in determining the
This election is made on an investment- The fair value of these equity settled 102 to 109, management are required
incorporates any interest paid on the method based on the probability of a worldwide provision for income taxes.
by-investment basis. transactions is determined at grant to make estimates and judgements
financial liability. receivable progressing through successive There are many transactions for which the
date and is recognised as an employee that could materially affect the Group’s
The accounting policy in force for the year chains of non-payment to write-off. The ultimate tax determination is uncertain.
Other financial liabilities (including trade reported results or net asset position.
Kingspan Group plc — Annual Report & Financial Statements 2018
ended 31 December 2017 was as follows: expense in the Income Statement, with rates are calculated at a business unit
payables) are initially measured at fair The Group recognises liabilities based on
the corresponding increase in equity, Notwithstanding that the areas below level which reflects the risks associated
Financial assets other than derivatives are value, net of transaction costs, and are estimates of whether additional taxes
on a straight line basis over the vesting represent estimation and judgement with geographic region, age mix of
divided into the following categories: subsequently measured at amortised cost will be due. Once it has been concluded
period. The fair value at the grant date at the end of the reporting period, the customer relationship and type of product
using the effective interest method. When that a liability needs to be recognised,
>> loans and receivables is determined using a combination of directors are satisfied that none of these purchased.
determining the fair value of financial the liability is measured based on the
>> investments held at fair value through the Monte Carlo simulation technique areas have a significant risk of resulting
liabilities, the expected future cash flows tax laws that have been enacted or
profit and loss and a Black Scholes model, excluding the in a material adjustment to the carrying This is an area of estimation.
are discounted using an appropriate substantially enacted at the end of the
impact of any non-market conditions. amounts of assets and liabilities within the
interest rate. Valuation of inventory (Note 14) reporting period. The amount shown for
Trade and other receivables are initially Non-market vesting conditions are next financial year.
Financial Statements
Inventories are measured at the lower of current taxation includes an estimate
recorded at fair value and, at subsequent A financial liability is derecognised only included in the assumptions about the
The areas where key estimates and cost and net realisable value. The Group’s for tax uncertainties and is based on
reporting dates, at amortised cost. when the obligation is extinguished, that number of options that are expected to
judgements were made by management policy is to hold inventories at original the Directors’ best probability weighted
Generally, the Group recognises all is, when the obligation is discharged, vest. At each reporting date, the Group
and are material to the Group’s reported cost and create an inventory provision estimate of the probable outflow of
financial assets using settlement day cancelled or expired. revises its estimates of the number of
results or net asset position, are as follows: where evidence exists that indicates economic resources that will be required
accounting. An assessment of whether a options that are likely to vest as a result of
A reference table is included in note net realisable value is below cost for a to settle the liability. Where the final tax
financial asset is impaired is made at least non-market conditions. Any adjustment
19 which outlines the treatment of Impairment (Note 10) particular item of inventory. Damaged, outcome of these matters is different
at each reporting date. from this revision is recognised in the
the relevant instruments under both The Group is required to review assets for slow-moving or obsolete inventory are from the amounts that were initially
Income Statement with a corresponding
A provision for impairment of trade standards. objective evidence of impairment. typical examples of such evidence. This is estimated, such differences will impact
adjustment to equity.
receivables is recognised when there is an area of estimation. the income tax and deferred tax provisions
Finance income Where the share based payments give It does this on the basis of a review of the in the period in which such determination
objective evidence that the Group will
rise to the issue of new share capital, the budget and rolling 5 year forecasts (4 year Business combinations (Note 22) is made.
not be able to collect all amounts due Finance income comprises interest income
proceeds received by the Company are strategic plan, as approved by the Board,
according to the original terms of the on funds invested and any gains on Business combinations are accounted Deferred tax assets are recognised to
credited to share capital (nominal value) plus year 5 forecasted by management),
receivable. The amount of the provision hedging instruments that are recognised for using the acquisition method which the extent that it is probable that future
and share premium (where applicable) which by their nature are based on a series
is the difference between the asset’s in the Income Statement. Interest income requires that the assets and liabilities taxable profit will be available against
when the share entitlements are exercised. of assumptions and estimates.
carrying amount and the present value of is recognised as it accrues using the assumed are recorded at their respective which the unused tax losses and unused
estimated future cash flows. Movements effective interest rate method. Where the share based payments give The Group has performed impairment fair values at the date of acquisition. The tax credits can be utilised. The Group
in provisions are recognised in the Income rise to the re-issue of shares from treasury tests on those cash generating units which application of this method requires certain estimates the most probable amount of
Statement. Bad debts are written off Finance expense shares, the proceeds of issue are credited contain goodwill, and on any assets where estimates and assumptions relating, in future taxable profits, using assumptions
against the provision when no further Finance expense comprises interest to share premium. there are indicators of impairment. The particular, to the determination of the fair consistent with those employed in
prospect of collection exists. payable on borrowings calculated using The Group does not operate any cash- key assumptions associated with these values of the acquired assets and liabilities impairment calculations, and taking into
the effective interest rate method, gains settled share based payment schemes or reviews are detailed in Note 10. assumed at the date of acquisition. consideration applicable tax legislation in
A reference table is included in note
and losses on hedging instruments that share based payment transactions with the relevant jurisdiction. These calculations
19 which outlines the treatment of Guarantees & warranties (Note 20) For intangible assets acquired, the Group
are recognised in the Income Statement, cash alternatives as defined in IFRS 2. also require the use of estimates.
the relevant instruments under both bases valuations on expected future cash
the net finance cost of the Group’s defined Certain products carry formal guarantees
standards. flows. This method employs a discounted
benefit pension scheme, finance lease Treasury shares of satisfactory functional and aesthetic Deferred contingent consideration
cash flow analysis using the present value
Financial labilities interest and the discount component Where the Company purchases its own performance of varying periods following (Note 18)
of the estimated cash flows expected to
of the deferred consideration which is equity share capital, the consideration their purchase. Local management Measurement of put option liabilities
Upon adoption of IFRS 9 the accounting be generated from these intangible assets
unwound as an interest charge in the paid is deducted from total shareholders’ evaluate the constructive or legal require assumptions to be made regarding
policy for the year ended 31 December using appropriate discount rates and
Income Statement over the life of the equity and classified as treasury shares obligation arising from customer feedback profit forecasts and discount rates used
2018 is as follows: revenue forecasts. The period of expected
obligation. until such shares are cancelled or reissued. and assess the requirement to provide for to arrive at the net present value of the
cash flows is based on the expected useful
IFRS 9 doesn't change the main Where such shares are subsequently sold any probable outflow of economic benefit potential obligations. The Group has
life of the intangible asset acquired.
accounting principles for financial or reissued, any consideration received is arising from a settlement. This is an area considered all available information
liabilities set out under IAS 39. Two included in the share premium account. of estimation and judgement. in arriving at the estimate of liabilities
measurement categories continue to exist, No gains or losses are recognised on the associated with put option obligations.
fair value through the income statement purchase, sale, cancellation or issue of
and amortised cost. Financial liabilities treasury shares.
held for trading are measured at fair value
110 111
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
2 SEGMENT REPORTING 2 SEGMENT REPORTING (continued)
In identifying the Group’s operating segments, management based its decision on the product supplied by each segment and the Segment assets
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. Insulated Insulation Light Water & Data & Total Total
Panels Boards & Air Energy Flooring 2018 2017
Operating segments €m €m €m €m €m €m €m
The Group has the following five operating segments:
Assets – 2018 2,231.7 782.2 331.2 180.3 166.3 3,691.7
Insulated Panels Manufacture of insulated panels, structural framing and metal facades. Assets – 2017 1,792.1 620.4 287.6 164.1 156.0 3,020.2
Insulation Boards Manufacture of rigid insulation boards, building services insulation and engineered timber systems.
Light & Air Manufacture of daylighting, smoke management and ventilation systems. Derivative financial instruments 27.6 22.3
Water & Energy Cash and cash equivalents 294.5 176.6
(formerly Environmental) Manufacture of energy and water solutions and all related service activities. Deferred tax asset 15.6 16.5
Data & Flooring Technology Total assets as reported in the Consolidated Statement of Financial Position 4,029.4 3,235.6
(formerly Access Floors) Manufacture of data centre storage solutions and raised access floors.
Segment liabilities
Analysis by class of business
Insulated Insulation Light Water & Data & Total Total
Segment revenue and disaggregation of revenue Panels Boards & Air Energy Flooring 2018 2017
€m €m €m €m €m €m €m
Insulated Insulation Light Water & Data & Total
Kingspan Group plc — Annual Report & Financial Statements 2018
Financial Statements
2,823.1 864.1 291.8 202.9 190.6 4,372.5 Other segment information
The combination of the disaggregation of revenue by product group, geography and the timing of revenue recognition capture the Capital investment – 2018 * 160.8 87.9 22.7 7.1 2.8 281.3
key categories of disclosure with respect to revenue. No further disclosures are required with respect to disaggregation of revenue Capital investment – 2017 * 82.5 25.1 22.9 5.4 6.1 142.0
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- Depreciation included in segment result – 2018 (49.8) (15.9) (4.8) (2.4) (3.1) (76.0)
segment revenue is not material, it is not subject to separate disclosure in the above analysis. For the purposes of the segmental Depreciation included in segment result – 2017 (40.7) (14.6) (3.7) (2.8) (2.4) (64.2)
analysis, corporate overheads have been allocated to each division based on their respective revenue for the year.
Non-cash items included in segment result – 2018 (7.4) (2.5) (0.5) (0.8) (1.1) (12.3)
The Group has initially applied IFRS 15 at 1 January 2018. Under the transition methods chosen, comparative information is not Non-cash items included in segment result – 2017 (6.4) (2.3) (0.2) (0.8) (1.0) (10.7)
restated.
* Capital investment includes fair value of property, plant and equipment and intangible assets acquired in business combinations.
Segment result (profit before net finance expense)
Analysis of segmental data by geography
Insulated Insulation Light Water & Data & Total Total
Panels Boards & Air Energy Flooring 2018 2017 Republic of United Rest of Americas Others Total
€m €m €m €m €m €m €m Ireland Kingdom Europe
€m €m €m €m €m €m
Trading profit – 2018 281.8 105.1 21.5 14.2 22.6 445.2
Intangible amortisation (12.2) (4.4) (4.4) (1.2) - (22.2) Income Statement Items
Revenue – 2018 156.0 938.2 2,092.3 887.6 298.4 4,372.5
Operating profit – 2018 269.6 100.7 17.1 13.0 22.6 423.0 Revenue – 2017 138.1 909.2 1,628.5 738.1 254.2 3,668.1
Trading profit – 2017 233.3 91.2 14.8 16.2 22.0 377.5 Statement of Financial Position Items
Intangible amortisation (9.4) (2.1) (2.6) (1.6) - (15.7) Non-current assets – 2018 * 52.7 375.2 1,227.0 524.5 188.8 2,368.2
Non trading items (2.3) 2.9 - - - 0.6 Non-current assets – 2017 * 51.8 369.9 809.8 507.7 158.0 1,897.2
Operating profit - 2017 221.6 92.0 12.2 14.6 22.0 362.4 Other segmental information
Net finance expense (18.1) (15.9) Capital investment – 2018 6.0 23.9 204.8 27.8 18.8 281.3
Profit for the year before tax 404.9 346.5 Capital investment – 2017 8.0 16.9 57.9 49.7 9.5 142.0
Income tax expense (69.1) (60.6)
Net profit for the year 335.8 285.9 * Total non-current assets excluding derivative financial instruments and deferred tax assets.
The Group has activities in over 90 countries worldwide. The revenues from external customers and non-current assets (as defined
in IFRS 8) attributable to the country of domicile and all foreign countries or regions of operation are as set out above and specific
regions are highlighted separately on the basis of materiality.
There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8. The
individual entities within the Group each have a large number of customers spread across various activities, end-uses and geographies.
112 113
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
3 EMPLOYEES 3 EMPLOYEES (continued)
a) Employee numbers As set out in the Report of the Remuneration Committee, the number of options that will ultimately vest is contingent on market
conditions such as Total Shareholder Return and non market conditions such as the Earnings Per Share of the Group. Market
The average number of persons employed by the Group in the financial year was:
conditions were taken into account in determining the above fair value, and non market conditions are considered when estimating
the number of shares that will eventually vest. Expected volatility was determined by calculating the historical volatility of the Group
2018 2017
and peer company share prices over the previous 3 years. The Report of the Remuneration Committee sets out the current companies
Number Number
within the peer group.
Production 8,235 6,871 As set out in the Report of the Remuneration Committee on page 73, a portion of the annual performance bonus may be satisfied
Sales and distribution 2,623 2,542 by the payment of deferred share awards. These shares are held for the benefit of the individual participants for two years without
Management and administration 2,611 1,720 any additional performance conditions. These shares vest after two years but are forfeited if the participant leaves the Group within
13,469 11,133 that period.
During the year, no deferred awards (2017: 49,924) were granted and 50,607 (2017: Nil) awards vested. 49,924 awards remain
b) Employee costs, including executive directors outstanding at 31 December 2018. A charge of €0.6m was recognised in the Income Statement for 2018 (2017: €1.4m).
Pension costs - defined contribution (Note 32) 15.5 11.8 Profit on disposal of trade and assets - 2.9
Share based payments and awards 12.3 10.7 Impairment of goodwill - (2.3)
- 0.6
676.2 570.2
Actuarial (gains)/losses recognised in other comprehensive income (0.9) (1.0) During the period, no items of a non-trading nature arose.
675.3 569.2
In the prior period the Group disposed of the trade and assets of Kingspan Gefinex GmbH, which was part of the Insulation Boards
division, for €5.7m and realised a non-trading profit of €2.9m, and impaired goodwill relating to a US energy business, which was part
c) Employee share based compensation of the Insulation Panels division.
Financial Statements
The Group currently operates a number of equity settled share based payment schemes; two Performance Share Plans (PSP)
and a Deferred Bonus Plan, which was introduced in 2015. The details of these schemes are provided in the Report of the 5 FINANCE EXPENSE AND FINANCE INCOME
Remuneration Committee.
2018 2017
Performance Share Plan (PSP) €m €m
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
6 PROFIT FOR THE YEAR BEFORE INCOME TAX (continued) 8 INCOME TAX EXPENSE (continued)
Analysis of total auditor’s remuneration for audit services The total tax charge in future periods will be affected by any changes to the corporation tax rates in force in the countries in which
the Group operates. No significant change is expected to the standard rate of corporation tax in the Republic of Ireland which is
2018 2017 currently 12.5%.
€m €m
The methodology used to determine the recognition and measurement of uncertain tax positions is set out in Note 1 ‘Statement of
Audit of Group (KPMG Ireland) 0.8 0.8 Accounting Policies’.
Audit of other subsidiaries (other KPMG offices) 1.8 1.2 The total value of deductible temporary differences which have not been recognised is €31.4m (2017: €12.7m) consisting mainly of tax
2.6 2.0 losses forward. €1.2m (2017: €1.1m) of the losses expire within 10 years while all other losses may be carried forward indefinitely.
No provision has been made for tax in respect of temporary differences arising from unremitted earnings of foreign operations as
Analysis of amounts paid to the auditor in respect of non-audit services there is no commitment to remit such earnings and no current plans to do so. Deferred tax liabilities of €8.9m (2017: €7.9m) have not
been recognised for withholding tax that would be payable on unremitted earnings of €177.2m (2017: €158.2m) in certain subsidiaries.
2018 2017
€m €m An initial assessment of IFRIC 23 has been undertaken and it is not expected to have a material impact.
7 DIRECTORS’ REMUNERATION The calculations of earnings per share are based on the following:
Profit attributable to ordinary shareholders 330.9 284.3
2018 2017
€m €m Number of Number of
shares (‘000) shares (‘000)
Fees 0.7 0.6 2018 2017
Other emoluments 6.0 4.5
Pension costs 0.7 0.7 Weighted average number of ordinary shares for the calculation of basic earnings per share 179,840 178,854
7.4 5.8
Financial Statements
Performance Share Plan expense 2.8 2.2 Dilutive effect of share options 1,696 1,856
10.2 8.0 Weighted average number of ordinary shares for the calculation of diluted earnings per share 181,536 180,710
A detailed analysis of directors’ remuneration is contained in the Report of the Remuneration Committee. Aggregate gains of €8.3m 2018 2017
(2017: €17.7m) were realised with respect to share options exercised by directors during the financial year. € cent € cent
Profit for the year 404.9 346.5 Carrying amount 31 December 1,391.0 1,095.7
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
10 GOODWILL (continued) 10 GOODWILL (continued)
Cash generating units Sensitivity analysis
Goodwill acquired through business combinations is allocated, at acquisition, to CGUs that are expected to benefit from Sensitivity analysis was performed by adjusting cash flows, the discount rate and the average operating margin of each division by
synergies in that combination. The CGUs are the lowest level within the Group at which the associated goodwill is monitored for over 24% and by reducing the long-term growth rate to zero. Each test resulted in a positive recoverable amount for each CGU under
internal management reporting purposes and are not larger than the operating segments determined in accordance with IFRS 8 each approach. Management believes, therefore, that any reasonable change in any of the key assumptions would not cause the
Operating Segments. carrying value of goodwill to exceed the recoverable amount, thereby giving rise to an impairment.
An assessment was conducted during the year and two new CGUs were identified; namely Panels LATAM and Synthesia Technology. 11 OTHER INTANGIBLE ASSETS
Both of these CGUs arose on the back of recent acquisitions completed by the Group.
A total of 11 (2017: 9) CGUs have been identified and these are analysed between the five business segments in the Group as set out Customer Patents & Other Total
below. Assets and liabilities have been assigned to the CGUs on a reasonable and consistent basis. Relationships Brands Intangibles
€m €m €m €m
Cash-generating units Goodwill (€m)
Cost
2018 2017 2018 2017
At 1 January 2018 27.7 109.2 30.0 166.9
Acquisitions (Note 22) 21.2 18.8 3.3 43.3
Insulated Panels 6 4 827.2 614.7 Net exchange difference (0.2) (0.2) 0.6 0.2
Insulation Boards 1 1 232.5 175.6 At 31 December 2018 48.7 127.8 33.9 210.4
Light & Air 1 1 174.2 159.7
Water & Energy 1 1 78.7 68.7 Accumulated amortisation
Kingspan Group plc — Annual Report & Financial Statements 2018
Data & Flooring Technology 2 2 78.4 77.0 At 1 January 2018 17.9 43.4 15.3 76.6
Total 11 9 1,391.0 1,095.7 Charge for the year 5.4 10.5 6.3 22.2
Net exchange difference 0.1 0.1 0.3 0.5
Significant goodwill amounts At 31 December 2018 23.4 54.0 21.9 99.3
Management has assessed that, in line with IAS 36 Impairment of Assets, there are 4 CGUs that are individually significant (greater
Net Book Value as at 31 December 2018 25.3 73.8 12.0 111.1
than 10% of total goodwill) that require additional disclosure and are as follows:
Financial Statements
North America Joris Ide Boards & Air Relationships Brands Intangibles
€m €m €m €m
2018 2017 2018 2017 2018 2017 2018 2017
Cost
Goodwill (€m) 173.4 226.9 410.8 284.5 232.5 175.6 174.2 159.7
At 1 January 2017 25.4 107.1 23.6 156.1
Discount rate (%) 10.0 9.4 8.1 7.8 8.1 7.8 8.0 7.8
Acquisitions (Note 22) 3.4 6.3 3.2 12.9
Additions - - 4.8 4.8
Excess of value-in-use over carrying amount (€m) 335.7 380.6 489.5 502.2 854.0 1,468.0 132.8 138.6
Net exchange difference (1.1) (4.2) (1.6) (6.9)
At 31 December 2017 27.7 109.2 30.0 166.9
The goodwill allocated to these 4 CGUs accounts for 71% of the total carrying amount of €1,391.0m. The remaining goodwill balance
of €400.1m (2017: €249.0m) is allocated across the other 7 CGUs (2017: 5 CGUs), none of which are individually significant. Accumulated amortisation
None of the individually significant CGUs are included in the “Sensitivity analysis” section as it is not considered reasonably possible At 1 January 2017 13.9 36.5 13.8 64.2
that there would be a change in the key assumptions such that the carrying amount would exceed value-in-use. Consequently, no Charge for the year 4.5 8.3 2.9 15.7
further disclosures have been provided for these CGUs. Net exchange difference (0.5) (1.4) (1.4) (3.3)
At 31 December 2017 17.9 43.4 15.3 76.6
Impairment testing
Goodwill acquired through business combinations has been allocated to the above CGUs for the purpose of impairment testing. Net Book Value as at 31 December 2017 9.8 65.8 14.7 90.3
Impairment of goodwill occurs when the carrying value of the CGU is greater than the present value of the cash that it is expected
to generate (i.e. the recoverable amount). The Group reviews the carrying value of each CGU at least annually or more frequently if Other intangibles relate primarily to technological know how and order backlogs.
there is an indication that a CGU may be impaired.
The recoverable amount of each CGU is determined from value-in-use calculations. The forecasts used in these calculations are based
on a 4 year financial plan approved by the Board of Directors, plus year 5 as forecasted by management, and specifically excludes
any future acquisition activity. They include assumptions regarding future organic growth with cash flows after year 5 assuming to
continue in perpetuity at a general growth rate of 2% (Panels LATAM 4%), reflecting the relevant CGU inflation, but no other growth.
The use of cash flows in perpetuity is considered appropriate in light of the Group’s established history of earnings growth and cash
flow generation, its strong financial position and the nature of the industry in which the Group operates.
The value in use calculation represents the present value of the future cash flows, including the terminal value, discounted at a rate
appropriate to each CGU. The real pre-tax discount rates used range from 8.0% to 12.5% (2017: 7.8% to 9.4%). These rates are based
on the Group’s estimated weighted average cost of capital, adjusted for risk, and are consistent with external sources of information.
The cash flows and the key assumptions used in the value in use calculations are determined based on the historical performance
of the Group, its strong current financial position as well as management’s knowledge and expectation of future trends in the
industry. Expected future cash flows are, however, inherently uncertain and are therefore liable to material change over time. The key
assumptions used in the value in use calculations are subjective and include projected EBITDA margins, net cash flows, discount rates
used and the duration of the discounted cash flow model.
118 119
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
12 PROPERTY, PLANT AND EQUIPMENT 14 INVENTORIES
Net carrying amount 401.0 436.2 13.3 850.5 At 31 December 524.9 447.1
At 1 January 2018, net carrying amount 337.5 355.3 10.5 703.3 A total of €2.6bn (2017: €2.3bn) of inventories was included in the Income Statement as an expense. This includes a net income
Acquisitions through business combinations (Note 22) 47.8 44.9 1.0 93.7 statement charge of €2.6m (2017: €7.1m) arising on the inventory impairment allowance. Inventory impairment allowance levels
Additions 34.9 102.8 6.6 144.3 are continuously reviewed by management and revised where appropriate, taking account of the latest available information on the
Disposals (4.6) (2.8) (0.6) (8.0) recoverability of carrying amounts.
Reclassification (0.7) - 0.7 -
Depreciation charge for year (12.7) (58.5) (4.8) (76.0) No inventories have been pledged as security for liabilities entered into by the Group.
Impairment charge for year (0.1) (5.1) - (5.2)
15 TRADE AND OTHER RECEIVABLES
Effect of movement in exchange rates (1.1) (0.4) (0.1) (1.6)
Kingspan Group plc — Annual Report & Financial Statements 2018
2018 2017
At 31 December 2018, net carrying amount 401.0 436.2 13.3 850.5
€m €m
Land and Plant and Motor Total Amounts falling due within one year:
buildings machinery vehicles Trade receivables, gross 791.5 676.9
€m €m €m €m Impairment allowance (56.4) (51.1)
Financial Statements
Other receivables 32.1 25.1
Accumulated depreciation and impairment charges (175.5) (695.5) (18.0) (889.0) Prepayments 31.4 25.0
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
17 INTEREST BEARING LOANS AND BORROWINGS (continued) 18 DEFERRED CONTINGENT CONSIDERATION (continued)
During the year the Group paid €3.1m of deferred contingent consideration relating to the PAL business which was acquired in 2014
2018 2017
(2017: €nil).
€m €m
The deferred consideration arising on current year acquisitions relates to Synthesia.
Non-current financial liabilities The put liability arising on current year acquisitions is recognised with respect to the potential amounts payable to 49% shareholders
Private placements 835.9 655.4
of Kingspan Jindal.
Bank loans (unsecured) 127.3 2.4
Finance lease obligations (Note 31) 3.8 3.7 The amount of the deferred contingent consideration and put liability that have been recognised are arrived at by the application of
a range of outcomes and associated probabilities in order to determine the carrying amounts.
967.0 661.5
Liabilities in the range of €30m to €69.1m could arise with respect to potential deferred contingent consideration obligations and €nil
to €134.0m with respect to potential put option obligations.
Analysis of Net Debt
The put option in the shareholders’ agreement with non-controlling shareholders of Kingspan Isoeste is exercisable from 2023. The
2018 2017 undiscounted expected cash outflow is estimated to be €96m (2017: €77.1m). For the purposes of the fair value assessment this put
€m €m option liability is valued using the option price formula in the shareholder’s agreement and the most recent financial projections.
These are classified as unobservable inputs.
Cash and cash equivalents 294.5 176.6
The put option in the shareholders’ agreement with non-controlling shareholders of PanelMET is exercisable from 2022. The
Derivative financial instruments 27.4 22.2
undiscounted expected cash outflow is estimated to be €12.2m (2017: €7.1m). For the purposes of the fair value assessment this put
Current borrowings (53.2) (1.2)
option liability is valued using the option price formula in the shareholder’s agreement and the most recent financial projections.
Non-current borrowings (967.0) (661.5)
Kingspan Group plc — Annual Report & Financial Statements 2018
Financial Statements
In addition, the Group has a €500m revolving credit facility, €120m of which was drawn at year end and which matures in June 2022.
As at 31 December 2018, the Group’s committed bilateral bank facilities were €50m, all of which was drawn. 19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
More details of the Group’s loans and borrowings are set out in Note 19. Financial Risk Management
Net debt, which is an Alternative Performance Measure, is stated net of interest rate and currency hedges which relate to hedges of In the normal course of business, the Group has exposure to a variety of financial risks, including foreign currency risk, interest
debt. Foreign currency derivative assets of €0.2m (2017: €0.1m) and €nil foreign currency derivative liabilities (2017: €0.1m) which are rate risk, liquidity risk and credit risk. The Group’s focus is to understand these risks and to put in place policies that minimise the
used for transactional hedging are not included in the definition of net debt. economic impact of an adverse event on the Group’s performance. Meetings are held on a regular basis to review the result of the risk
assessment, approve recommended risk management strategies and monitor the effectiveness of such policies.
18 DEFERRED CONSIDERATION
The Group’s risk management strategies include the use of derivatives (other than for speculative transactions), principally forward
For each acquisition for which deferred contingent consideration has been provided, an annual review takes place to evaluate if the exchange contracts, interest rate swaps, and cross currency interest rate swaps.
payment conditions are likely to be met.
Liquidity risk
2018 2017 In addition to the high level of free cash flow, the Group operates a prudent approach to liquidity management using a mixture of
€m €m long-term debt together with short-term debt, cash and cash equivalents, to enable it to meet its liabilities when due.
Opening balance 117.5 12.9 The Group’s core funding is provided by a number of private placement loan notes totalling €835.9m. The notes have a weighted
Effect of movement in exchange rates (10.7) (8.1) average maturity of 5.6 years.
Deferred consideration arising on acquisitions (Note 22) 30.0 - In addition, the Group has a €500m revolving credit facility, €120m of which was drawn at year end and which expires in June 2022. As
Deferred contingent consideration arising on acquisitions (Note 22) 1.4 33.2 at 31 December 2018, the Group’s committed bilateral bank facilities were €50m, all of which was drawn.
Movement in deferred contingent consideration arising from fair value movement 1.1 -
Put liability arising on current year acquisitions 24.5 79.1 Both the private placements and the revolving credit facility have an interest cover test (Net Interest: EBITDA must exceed 4 times)
Movement in put liability arising from fair value movement 35.4 0.4 and a net debt test (Net Debt: EBITDA must be less than 3.5 times). These covenant tests have been met for the covenant test period
Amounts paid (3.1) - to 31 December 2018.
Closing balance 196.1 117.5 The Group also has in place a number of uncommitted bilateral working capital facilities to serve its working capital requirements.
These facilities total €44m (2017: €44m) and are supported by a Group guarantee. Core funding arrangements arise from a wide and
Split as follows: varied number of institutions and, as such, there is no significant concentration of liquidity risk.
Current liabilities 59.5 6.4
Non-current liabilities 136.6 111.1
196.1 117.5
Analysed as follows:
Deferred consideration 30.0 -
Deferred contingent consideration 38.9 43.0
Put liability 127.2 74.5
196.1 117.5
122 123
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
The following are the carrying amounts and contractual maturities of financial liabilities (including estimated interest payments): Market Risks
2018 Carrying Contractual Within 1 Between Between Greater Foreign exchange risk
amount cash flow year 1 and 2 2 and 5 than 5
There are two types of foreign currency risk to which the Group is exposed, namely transaction risk and translation risk. The objective
years years years
of the Group’s foreign currency risk management strategy is to manage and control market risk exposures within acceptable
€m €m €m €m €m €m
parameters. As set out below the Group uses derivatives to manage foreign exchange risk. Transactions involving derivatives are
carried out in accordance with the Treasury policy. The Group seeks to apply hedge accounting, where practicable, to manage
Non derivative financial instruments
volatility in profit or loss.
Bank loans 180.1 180.1 52.8 3.3 123.4 0.6
Private placement loan notes 835.9 930.5 20.0 20.0 357.1 533.4 Transaction risk
Finance lease liabilities 4.2 4.2 0.4 1.7 - 2.1
Apart from transaction risk on debt, this arises where operating units have input costs or sales in currencies other than their
Trade and other payables 772.8 772.8 772.8 - - -
functional currencies. These exposures are internally hedged as far as possible. Group policy is to hedge up to a maximum of 75% of a
Deferred consideration 30.0 30.0 30.0 - - -
forecast exposure. Material exposures are hedged on a rolling 12 months basis. The Group’s principal exposure relates to GBP and US$,
Deferred contingent consideration 166.1 173.1 29.6 - 131.3 12.2
with less significant exposures to certain central European currencies.
Derivative financial liabilities / (assets) In addition, where operating entities carry monetary assets and liabilities at year end denominated other than in their functional
Interest rate swaps used for hedging: currency, their translation at the year-end rates of exchange into their functional currency will give rise to foreign currency gains and
Carrying values (0.3) - - - - - losses. The Group seeks to manage these gains and losses to net to nil.
Net inflows - 0.4 0.1 0.1 0.2 -
Based on current cash flow projections for the businesses to 31 December 2019, it is estimated that the Group is long GBP110m and
Kingspan Group plc — Annual Report & Financial Statements 2018
Financial Statements
- outflow - 4.7 4.7 - - - Sensitivity analysis for primary currency risk
- inflow - 4.8 4.8 - - -
A 10% volatility of the EUR against GBP and US$ in respect of transaction risk in the reporting entities functional currency would
impact reported after tax profit by €14.5m (2017: €14.3m) and equity by €14.3m (2017: €14.0m).
2017 Carrying Contractual Within 1 Between Between Greater
amount cash flow year 1 and 2 2 and 5 than 5 US Dollar Loan Notes
2017 years years years
2011 Private Placement
€m €m €m €m €m €m
In 2011, the Group issued a private placement of US$200m fixed interest 10 year bullet repayment loan notes maturing in August 2021.
Non derivative financial instruments In order to align the Group’s debt profile with its risk management strategy, the Group entered into a number of hedging transactions
Bank loans 3.0 3.0 0.6 0.9 1.5 - in order to mitigate the associated foreign exchange and interest rate exposures. The Group entered into US dollar fixed / GBP floating
Private placement loan notes 655.4 748.5 17.2 17.2 360.3 353.8 cross currency interest rate swaps for US$118.6m of the private placement. The benchmark interest rate and credit spread have been
Finance lease liabilities 4.3 4.3 0.6 1.8 0.4 1.5 separately identified and designated for hedge accounting purposes. The Group also entered into US dollar interest rate swaps for
Trade and other payables 632.9 632.9 632.9 - - - US$40m of the private placement. The fixed rate and maturity date on the swaps match the fixed rate on the private placement for
Deferred contingent consideration 117.5 124.3 6.4 - 5.3 112.6 all instruments. The instruments were designated as hedging instruments at inception and continued to qualify as effective hedges
under IAS 39 at 31 December 2018.
Derivative financial liabilities / (assets)
Interest rate risk
Interest rate swaps used for hedging:
Carrying values (0.9) - - - - - The Group has an exposure to movements in interest rates on its debt portfolio, and on its cash and cash equivalent balances and
Net inflows - 0.3 0.1 0.1 0.1 - derivatives. The Group policy is to ensure that at least 40% of its debt is fixed rate.
In respect of interest bearing loans and borrowings, the following table indicates the effective average interest rates at the year-end
Cross currency interest rate swaps used for hedging: and the periods over which they mature. Interest on interest bearing loans and borrowings classified as floating rate is repriced at
Carrying value (21.3) - - - - - intervals of less than one year. The table further analyses interest bearing loans and borrowings by currency and fixed/floating mix
- outflow - 106.7 2.8 3.1 100.8 - and has been prepared both before and after the impact of derivatives.
- inflow - 134.5 5.9 5.8 122.8 -
For provisions, the carrying amount represents the Group’s best estimate of the expected future outflows. As it does not represent a
contractual liability at the year end, no amount has been included as a contractual cash flow.
Deferred contingent consideration, which includes any put option liabilities, is valued using the relevant agreed multiple of the
expected future EBITDA in each acquired business which is appropriately discounted using a risk-adjusted discount rate. The estimated
fair value of contingent consideration would decrease if EBITDA was lower or if the risk adjusted discount rate was higher. The range of
outcomes are set out in Note 18.
The actual future cash flows could be different from the amounts included in the tables above, if the associated obligations were to become
repayable on demand as a result of non-compliance with covenants or other contractual terms. No such non-compliance is envisaged.
124 125
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
Before the impact of hedging transactions After the impact of hedging transactions
Weighted average Total At fixed At floating Under Over Weighted average Total At fixed At floating Under Over
effective interest interest rate interest rate 5 years 5 years effective interest interest rate interest rate 5 years 5 years
As at 31 December 2018 rate €m €m €m €m €m As at 31 December 2017 rate €m €m €m €m €m
Bank loans 0.9% 180.1 180.1 - 179.5 0.6 Bank loans 2.91% 3.0 3.0 - 3.0 -
Loan notes 2.4% 837.3 837.3 - 325.8 511.5 Loan notes 2.13% 655.4 522.1 133.3 210.4 445.0
1,017.4 1,017.4 - 505.3 512.1 658.4 525.1 133.3 213.4 445.0
After the impact of hedging transactions An increase or decrease of 100 basis points in each of the applicable rates and interest rate curves would impact reported after-tax
Total At fixed At floating Under Over profit by €1.4m (2017: €1.3m) and equity by €1.4m (2017: €1.3m).
Weighted average
effective interest interest rate interest rate 5 years 5 years
Credit risk
As at 31 December 2018 rate €m €m €m €m €m
Credit risk encompasses the risk of financial loss to the Group of counterparty default in relation to any of its financial assets. The
Group’s maximum exposure to credit risk is represented by the carrying value of each financial asset:
Bank loans 0.9% 180.1 180.1 - 179.5 0.6
Loan notes 2.1% 835.9 698.7 137.2 324.4 511.5
2018 2017
Financial Statements
1,016.0 878.8 137.2 503.9 512.1
€m €m
The weighted average maturity of debt is 5.0 years as at 31 December 2018 (2017: 6.0 years). At 31 December, the exposure to credit risk for trade receivables by geographic region was as follows:
The Group uses an allowance matrix to measure Expected Credit Loss (ECL) of trade receivables from customers. The ECL simplified
approach has been adopted.
Loss rates are calculated using a roll rate method based on the probability of a receivable progressing through successive chains of
non-payment to write-off. The rates are calculated at a business unit level which reflects the risks associated with geographic region,
age, mix of customer relationship and type of product purchased. The identifiable loss pertaining to cash positions is immaterial.
126 127
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
The following table provides the information about the exposure to credit risk and ECL’s for trade receivables as at 31 December 2018. Movements in the allowance for impairment in respect of trade receivables
The movement in the allowance for impairment in respect of trade receivables during the year was as follows. Comparative amounts
Weighted Gross Loss
for 2017 represent the allowance account for impairment losses under IAS 39.
average loss carrying allowance
rate amount
2018 2017
% €m €m
€m €m
Current (not past due) 1% 538.7 6.1
Balance at 1 January under IAS 39 51.1 46.1
1-30 days past due 2% 148.2 3.3
Adjustment on initial application of IFRS 9 -
31-60 days past due 7% 39.0 2.8
Balance at 1 January 2018 under IFRS 9 51.1
61-90 days past due 15% 13.0 2.0
Arising on acquisition 10.8 3.9
More than 90 days past due 80% 52.6 42.2
Written off during the year (9.5) (4.8)
791.5 56.4
Net remeasurement of loss allowance 4.3 7.6
Effect of movement in exchange rates (0.3) (1.7)
Loss rates are based on actual credit loss experience over an appropriate diverse sample of trading periods.
The table below sets out the measurement category of the various classes of financial instruments and their carrying value under At 31 December 56.4 51.1
both standards.
There are no material trade receivables written off during 2018 which are still subject to enforcement activity.
Kingspan Group plc — Annual Report & Financial Statements 2018
Financial Statements
Current Financial Assets Financial instruments by category
Trade and other receivables Amortised cost Amortised cost 675.9 675.9
The carrying amount of financial assets presented in the Statement of Financial Position relate to the following measurement
Cash and cash equivalents Amortised cost Amortised cost 176.6 176.6
categories as defined in IAS 39:
Derivatives Fair Value through Fair Value through 0.1 0.1
Income Statement Income Statement
2018 Financial Loans and Derivatives Total
asset receivables designated
Non-Current Liabilities as hedging
Borrowings Financial liabilities Financial liabilities 661.5 661.5 instruments
€m €m €m €m
Current Financial Liabilities
Borrowings Financial liabilities Financial liabilities 1.2 1.2 Current:
Trade and other payables Financial liabilities Financial liabilities 645.2 645.2 Trade receivables - 735.1 - 735.1
Other receivables - 32.1 - 32.1
Derivatives Fair Value through Fair Value through 0.1 0.1 Cash and cash equivalents - 294.5 - 294.5
Income Statement Income Statement Derivative financial instruments - - 0.2 0.2
*no item of this nature in the 2017 accounts - 1,061.7 0.2 1,061.9
Non Current:
The carrying amount of receivables at 31 December 2017 whose terms were being renegotiated, that would otherwise be past due or
Derivative financial instruments - 22.2 22.2
impaired, is €nil.
- 22.2 22.2
It is considered that the carrying amounts of the above financial assets approximate their fair values.
128 129
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
The carrying amounts of financial liabilities presented in the Statement of Financial Position relate to the following measurement Except as detailed below, it is considered that the carrying amounts of financial assets and financial liabilities recognised at
categories as defined in IAS 39: amortised cost approximate their fair values.
Financial Statements
Accruals - - 271.1 - 271.1
Deferred contingent consideration - 6.4 - - 6.4 The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and
Derivative financial instruments - - - 0.1 0.1 the advantages and security afforded by a sound capital position. The Group actively manages foreign currency and interest rate
- 6.4 598.8 0.1 605.3
exposure, as well as actively managing the net asset position, in order to create bottom line value. This necessitates the development
of a methodology to optimise the allocation of financial resources on the one hand and the return on capital on the other.
Non current:
Borrowings 34.2 - 627.3 - 661.5 The Board closely monitors externally imposed capital restrictions which are present due to covenants within the Group’s core
Deferred consideration - 111.1 - - 111.1 banking facilities.
34.2 111.1 627.3 - 772.6
There were no changes to the Group’s approach to capital management during the year.
The unobservable input relevant to matters categorised as Level 3 is the underlying profitability of each business unit. A 5% movement in
cashflows and a 1% adjustment in the discount rate would each have an immaterial impact on the carrying value of Level 3 items.
130 131
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
21 DEFERRED TAX ASSETS AND LIABILITIES 22 BUSINESS COMBINATIONS (continued)
Deferred tax assets and liabilities arising from temporary differences and unused tax losses after offset are as follows: 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,
2018 2017 Business Combinations.
€m €m
Synthesia Balex Other* Total
Deferred tax assets 15.6 16.5 €m €m €m €m
Deferred tax liabilities (40.8) (38.7)
Net Position (25.2) (22.2) Non-current assets
Intangible assets 31.5 7.9 3.9 43.3
Deferred tax arises from differences in the carrying value of items such as property, plant and equipment, intangibles, pension Property, plant and equipment 42.8 42.3 8.6 93.7
obligations, and other temporary differences in the financial statements and the tax base established by the tax authorities. Deferred tax asset 3.3 0.7 2.8 6.8
The movement in the net deferred tax position for 2018 is as follows: Current assets
Inventories 49.1 30.0 4.8 83.9
Balance Recognised in Recognised in Recognised Translation Arising on Balance Trade and other receivables 70.4 18.1 4.2 92.7
1 Jan profit equity in other adjustment acquisitions 31 Dec
2018 or loss comprehensive 2018 Current liabilities
income Trade and other payables (59.6) (23.4) (28.5) (111.5)
€m €m €m €m €m €m €m Provisions for liabilities (5.6) (0.9) (2.9) (9.4)
Kingspan Group plc — Annual Report & Financial Statements 2018
Financial Statements
(22.2) (2.2) 0.9 (0.2) 0.5 (2.0) (25.2)
Goodwill 119.4 124.7 52.7 296.8
Total consideration 243.4 197.6 51.4 492.4
The movement in the net deferred tax position for 2017 is as follows:
Satisfied by:
Balance Recognised in Recognised in Recognised Translation Arising on Balance
Cash (net of cash acquired) 213.4 197.6 50.0 461.0
1 Jan profit equity in other adjustment acquisitions 31 Dec
Deferred contingent consideration 30.0 - 1.4 31.4
2017 or loss comprehensive 2017
243.4 197.6 51.4 492.4
income
€m €m €m €m €m €m €m *Included in Other are certain immaterial remeasurements of prior year accounting estimates.
The acquired goodwill is attributable principally to the profit generating potential of the businesses, together with cross-selling
Property, plant and opportunities and other synergies expected to be achieved from integrating the acquired businesses into the Group’s existing
equipment (46.3) 5.3 - - 1.2 (0.8) (40.6) business.
Intangibles (26.8) 3.1 - - 1.6 (2.8) (24.9)
Other temporary In the post-acquisition period to 31 December 2018, the businesses acquired during the current year contributed revenue of €416.3m
differences 39.2 (3.9) 3.9 - (2.1) (1.3) 35.8 and trading profit of €35.0m to the Group’s results.
Pension obligations (0.1) 1.0 - (0.2) 0.2 - 0.9 The full year revenue and trading profit had the acquisitions taken place at the start of the year, would have been €4,522.7m and
Unused tax losses 8.2 (1.1) - - (0.5) - 6.6 €449.5m respectively.
(25.8) 4.4 3.9 (0.2) 0.4 (4.9) (22.2)
The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to €103.0m. The fair
value of these receivables is €92.7m, all of which is recoverable, and is inclusive of an aggregate impairment provision of €10.8m.
22 BUSINESS COMBINATIONS
There is no goodwill (2017: €25.5m) which is expected to be deductible for tax purposes.
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 The Group incurred acquisition related costs of €3.3m (2017: €3.6m) relating to external legal fees, due diligence costs and stamp
completed during the year were as follows: duty. These costs have been included in operating costs in the Consolidated Income Statement.
In March 2018, the Group acquired 100% of the share capital of the Synthesia Group comprising of Synthesia Espanola S.A., The deferred consideration reflects the remaining obligation associated with the Group’s 100% interest in Synthesia. A put option is
Poliuretanos S.A, Huurre Iberica S.A. and their respective subsidiaries (“Synthesia”). The total consideration, including debt acquired also in place over the remaining 49% of Jindal Mectec Private Limited, the details of which are set out in Note 18.
and related costs amounted to €243.4m, representing the maximum amount of identifiable consideration, comprising of €213.4m The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in respect of
paid in cash on completion and €30.0m in deferred consideration. Synthesia Technology, being the chemical element of Synthesia, and Balex due to the relative size of the acquisitions and the number
In July 2018, the Group acquired 100% of the share capital of Balex Metal sp. z.o.o. (“Balex”), a Polish based manufacturer of insulated of markets they operate in. Any amendments to these fair values within the twelve-month timeframe from the date of acquisition will
panels and insulation boards. The total consideration, including debt acquired and related costs amounted to €197.6m which was be disclosable in the 2019 Annual Report, as stipulated by IFRS 3.
discharged in full at acquisition.
The Group also made a number of smaller acquisitions during the year for a combined cash consideration of €50.0m:
>> the purchase of 51% of the share capital of Jindal Mectec Private Limited, an Indian manufacturer of insulated panels;
>> the purchase of the assets of H2Enviro, an Australian water tanks business;
>> the purchase of 100% of Vestfold Plastindustri AS and Vestfold Plastindustri Eiendom AS, a Norwegian water treatment business;
>> the purchase of STF Holding GmbH & Co KG, a German based daylighting and smoke extraction business; and
>> the purchase of Tanks Direct Limited, a UK based Water & Energy business.
132 133
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
22 BUSINESS COMBINATIONS (continued) 24 SHARE PREMIUM
Prior year acquisitions 2018 2017
In the prior year, the Group acquired 51% of the share capital of Isoeste Construtivos Isotermicos S.A. (“Isoeste”), 100% of the share €m €m
capital of Brakel Investments BV, 100% of the share capital of CPI Daylighting Inc., 100% of the share capital of Rhino Water Tanks &
Liners Pty., 51% of the share capital of PanelMET S.A.S, the assets of the Jansen Building Products Access Floors business in Belgium At 1 January 95.6 95.6
and two smaller bolt-on European businesses. Premium on share options exercised under employee share based compensation schemes - -
The fair values as recognised at 31 December 2017 of the acquired assets and liabilities at acquisition are set out below:
At 31 December 95.6 95.6
Isoeste Brakel Other Total
€m €m €m €m 25 TREASURY SHARES
Consideration paid
Non-current assets
Intangible assets 5.3 - 7.6 12.9 2018 2017
Property, plant and equipment 12.9 10.5 16.4 39.8 No. of shares Consideration Total No. of shares Consideration Total
Deferred tax asset - - 3.9 3.9 paid paid
Current assets € €m € €m
Inventories 23.4 3.9 5.1 32.4
Trade and other receivables 29.0 14.2 8.2 51.4 At 1 January 2,019,750 6.89 14.0 1,969,826 6.32 12.5
Kingspan Group plc — Annual Report & Financial Statements 2018
Financial Statements
€ € € €
Total identifiable assets 46.4 10.4 19.1 75.9
At 1 January 2,019,750 0.13 262,567 1,969,826 0.13 256,077
Non-controlling interest arising on acquisition (Note 28) (24.6) - (0.3) (24.9) Repurchase of shares - - 49,924 0.13 6,490
Goodwill 53.2 62.9 40.0 156.1 Shares issued (50,607) 0.13 (6,579) - - -
Total consideration 75.0 73.3 58.8 207.1 At 31 December 1,969,143 0.13 255,988 2,019,750 0.13 262,567
Satisfied by: During the year, the Company issued 50,607 treasury shares in satisfaction of obligations falling under the Deferred Bonus Plan.
Cash (net of cash acquired) 41.8 73.3 58.8 173.9
Deferred contingent consideration 33.2 - - 33.2 The Company holds 1.1% (2017: 1.1%) of the issued ordinary share capital as treasury shares.
75.0 73.3 58.8 207.1
26 RETAINED EARNINGS
In the post-acquisition period to 31 December 2017, the acquired businesses contributed revenue of €80.9m and a trading profit of In accordance with Section 304 of the Companies Act 2014, the Company is availing of the exemption from presenting its individual
€9.5m to the Group’s results. Income Statement at the Annual General Meeting and from filing it with the Registrar of Companies. The Company’s profit for the
financial year was €9.7m (2017: €83.0m).
The full year revenue and trading profit had the acquisitions taken place at the start of the year, would have been €3,853.8m and
€397.3m. 27 DIVIDENDS
The Group incurred acquisition related costs of €3.6m (2016: €3.1m) relating to external legal fees and due diligence costs. These costs
2018 2017
have been included in operating costs in the Income Statement.
€m €m
23 SHARE CAPITAL
Equity dividends on ordinary shares:
2018 2017 2018 Interim dividend 12.0 cent (2017: 11.0 cent) per share 21.7 19.7
€m €m 2017 Final dividend 26.0 cent (2016: 23.5 cent) per share 46.6 42.0
Issued and fully paid This proposed dividend for 2018 is subject to approval by the shareholders at the Annual General Meeting and has not been included
Ordinary shares of €0.13 each as a liability in the Statement of Financial Position of the Group as at 31 December 2018 in accordance with IAS 10 Events after the
Opening balance – 181,342,315 (2017: 180,051,534) shares 23.6 23.4 Reporting Period. The proposed final dividend for the year ended 31 December 2018 will be payable on 10 May 2019 to shareholders on
Share options exercised – 828,805 (2017: 1,290,781) shares 0.1 0.2 the Register of Members at close of business on 29 March 2019.
There were no adjustments to the authorised share capital during the year (2017: 30,000,000 shares).
Details of share options exercised are set out in Note 3 to the financial statements.
134 135
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
28 NON-CONTROLLING INTEREST 30 CASH GENERATED FROM OPERATIONS
Financial Statements
Change in net debt resulting from cash flows (262.2) (32.7)
Translation movement - relating to US dollar loan (5.5) 25.9
Translation movement – other (1.9) (10.9) 31 GUARANTEES AND OTHER FINANCIAL COMMITMENTS
Derivative financial instruments movement 5.2 (18.3)
(i) Guarantees and contingencies
Net movement (264.4) (36.0)
The Group’s principal debt facilities are secured by means of cross guarantees provided by Kingspan Group plc. These include drawn
Net debt at start of the year (463.9) (427.9) private placement notes of US$200m and €662.5m, drawn banking facilities of €170m and undrawn banking facilities of €380m.
(ii) Leases
Net debt at end of the year (728.3) (463.9)
Finance lease liabilities are payable as follows:
A reconciliation of liabilities arising from financing activities is set out below:
Future minimum Present value of minimum
Balance Repayments Deferred Drawdowns / Non cash Balance lease payment Interest lease payments
1 Jan 2018 Consideration Receipts movements 31 Dec 2018 2018 2017 2018 2017 2018 2017
€m €m €m €m €m €m €m €m €m €m €m €m
Bank loans 3.0 (92.8) - 270.0 (0.1) 180.1 Less than one year 0.4 0.6 - - 0.4 0.6
Loan notes 655.4 - - 175.0 5.5 835.9 Between 1 - 5 years 4.3 4.4 0.5 0.7 3.8 3.7
Finance leases 4.3 - - 0.1 (0.2) 4.2 4.7 5.0 0.5 0.7 4.2 4.3
Derivatives (22.2) - - - (5.2) (27.4)
Deferred Consideration - - 30.0 - - 30.0 Total obligations under non-cancellable operating leases are due as follows:
640.5 (92.8) 30.0 445.1 - 1,022.8
Minimum Minimum
payments payments
A reconciliation of liabilities arising from financing activities in 2017 is set out below:
2018 2017
€m €m
Balance Repayments Drawdowns / Non cash Balance
1 Jan 2017 Receipts movements 31 Dec 2017
Less than one year 28.4 19.2
€m €m €m €m €m
Between 1 - 5 years 67.8 48.3
More than 5 years 55.3 39.8
Bank loans 3.8 (2.0) 0.4 0.8 3.0
151.5 107.3
Loan notes 691.1 (39.8) 30.0 (25.9) 655.4
Finance leases 3.5 - 0.8 - 4.3
Derivatives (48.5) - 8.0 18.3 (22.2)
649.9 (41.8) 39.2 (6.8) 640.5
136 137
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
31 GUARANTEES AND OTHER FINANCIAL COMMITMENTS (continued) 32 PENSION OBLIGATIONS (continued)
(iii) Future capital expenditure Movements in net liability recognised in the Statement of Financial Position
Capital expenditure in subsidiary entities, approved by the directors but not provided in the financial statements, is as follows: 2018 2017
€m €m
2018 2017
€m €m Net liability in schemes at 1 January (13.6) (14.1)
Acquired (Note 22) - (0.6)
Contracted for 49.7 45.2 Employer contributions 0.8 0.9
Not contracted for 20.9 20.4 Recognised in income statement (1.1) (0.6)
Recognised in statement of comprehensive income 0.9 1.0
70.6 65.6 Foreign exchange movement (0.1) (0.2)
Net liability in schemes at 31 December (13.1) (13.6)
32 PENSION OBLIGATIONS
The Group operates defined contribution schemes in each of its main operating locations. The Group also has a number of defined Defined benefit pension income/expense recognised in the Income Statement
benefit schemes in the UK and mainland Europe.
2018 2017
Defined contribution schemes €m €m
The total cost charged to profit or loss of €15.5m (2017: €11.8m) represents employer contributions payable to these schemes in
Current service cost (1.3) (0.4)
Kingspan Group plc — Annual Report & Financial Statements 2018
accordance with the rules of each plan. An amount of €4.3m (2017: €5.0m) was included at year end in accruals in respect of defined
contribution pension accruals.
Settlements of scheme obligations (0.1) (0.1)
Transfer 0.3 -
Contributions for key management personnel to defined contribution schemes are set out in Note 7. Total, included in operating costs (1.1) (0.5)
Financial Statements
The Group also has pension obligations in mainland Europe which are accounted for as defined benefit obligations. These
obligations have been accounted for in line with the Group’s existing pension obligations whereby companies are not required to Analysis of amount included in other comprehensive income
fund independent schemes for post employment benefit obligations. Instead, commencing from the date the employee becomes
eligible to receive the income stream, this obligation is satisfied from available cash resources of the relevant employing company. 2018 2017
A provision has been made for the unfunded liability. Pension entitlements of €0.8m have been paid to retired former employees €m €m
during the year (2017: €0.7m).
Actual return less interest on scheme assets (4.2) 2.2
The pension costs relating to all of the above defined benefit obligations are assessed in accordance with the advice of qualified
Experience gain arising on scheme liabilities - 0.3
actuaries. In the case of the two UK legacy schemes, the most recent actuarial valuations were performed as of 31 December 2018. In
Actuarial gain arising from changes in demographic assumptions 0.4 1.0
general, actuarial valuations are not available for public inspection; however, the results of valuations are advised to members of the
Actuarial gain /(loss) arising from changes in financial assumptions 4.7 (2.5)
various schemes.
Gain/(loss)recognised in other comprehensive income 0.9 1.0
The extent of the Group’s obligation under these schemes is sensitive to judgemental actuarial assumptions, of which the principal
ones are set out below. It is not considered that any reasonable sensitivity analysis on these assumptions would materially alter the The cumulative actuarial loss recognised in other comprehensive income to date is €18.3m (2017: €19.2m).
scheme obligations.
In 2018, the actual return on plan assets was a loss of €2.4m (2017: €4.1m).
2018 2017
Asset Classes and Expected Rate of Return
Life expectancies The assets in the scheme at each year end were as follows:
Life expectancy for someone aged 65 - Males 21.9 22.1
2018 2017
Life expectancy for someone aged 65 - Females 23.8 23.9
Life expectancy at age 65 for someone aged 45 - Males 23.3 23.5
Life expectancy at age 65 for someone aged 45 - Females 25.4 25.4 Asset Classes as % of Total Scheme Assets
Equities 53.0% 46.0%
Rate of increase in salaries 0% - 2.75% 0% - 2.75% Bonds (Corporates) 0.3% 0.3%
Rate of increase of pensions in payment 0% - 2.1% 0% - 2.1% Cash 0.2% 0.2%
Rate of increase for deferred pensioners 2% - 2.2% 2% - 2.2% Liability Driven Investment (LDI) 46.5% 53.5%
Discount rate 1.2% - 2.8% 1.3% - 2.6% 100% 100%
Inflation rate 1.5% - 3.2% 1% - 3.2%
138 139
Notes to the Financial Statements for the year ended 31 December 2018 (continued) Notes to the Financial Statements for the year ended 31 December 2018 (continued)
32 PENSION OBLIGATIONS (continued) 33 RELATED PARTY TRANSACTIONS
The net pension liability is analysed as follows: The principal related party relationships requiring disclosure under IAS 24 Related Party Disclosures relate to (i) transactions between
group companies, (ii) compensation of key management personnel and (iii) goods and services purchased from directors.
2018 2017
(i) Transactions between subsidiaries and associates are carried out on an arm’s length basis.
€m €m
The Company received no dividends from subsidiaries (2017: €67.0m), and there was a net decrease in the intercompany
balance of €55.2m (2017: €23.2m increase).
Equities 37.5 34.9
Bonds (Corporates) 0.2 0.2 Transactions with the Group’s non-wholly owned subsidiaries primarily comprise trading sales and capital funding, carried out on
Cash 0.2 0.2 an arm’s length basis. These transactions are not considered to be material.
Liability Driven Investment (LDI) 33.2 41.6
(ii) For the purposes of the disclosure requirements of IAS 24 Related Party Disclosures, the term “key management personnel” (i.e.
Fair market value of plan assets 71.1 76.9
those persons having the authority and responsibility for planning, directing and controlling the activities of the Company),
Present value of obligation (84.2) (90.5)
comprise the board of directors who manage the business and affairs of the Company. As identified in the Report of the
Deficit (13.1) (13.6)
Remuneration Committee, the directors, other than the non-executive directors, serve as executive officers of the Group.
Analysed between: Key management personnel compensation is set out in Note 7.
Funded schemes’ surplus 7.4 7.9
Mr Eugene Murtagh received dividends of €10.9m during the year from the Group (2017: €10.0m). Dividends of €0.92m were
Unfunded obligations (20.5) (21.5)
paid to other key management personnel (2017: €0.82m).
(13.1) (13.6)
(iii) The Group purchased legal services in the sum of €114,533 (2017: €135,916) from McCann FitzGerald Solicitors, a firm in which
Related deferred tax (asset)/liability (0.8) (0.9) Mr John Cronin is a partner.
Kingspan Group plc — Annual Report & Financial Statements 2018
Financial Statements
Interest cost 1.8 2.0
Benefits paid (2.4) (2.9)
Settlement (0.1) (0.2)
Actuarial (gains)/losses (5.1) 1.2
Effect of movement in exchange rates (0.7) (2.4)
Transfer (1.1) -
At 31 December 84.2 90.5
2018 2017
€m €m
— the amount of internally generated capital available for re-investment in the business or for distribution to shareholders. Free cash
flow is seen as an important indicator of the strength and quality of the business and the availability of funds for deployment of a
return to shareholders.
Alternative Performance Measures (APMs)
2018 2017
The Group uses a number of metrics, which are non-IFRS measures, to monitor the performance of its operations. Financial Statements Reference €m €m
The Group believes that these metrics assist investors in evaluating the performance of the underlying business. Given that these Net cash flow from operating activities Consolidated Statement of Cash Flows 438.3 283.6
metrics are regularly used by management, they also give the investor an insight into how Group management review and monitor
Additions to property, plant,
the business on an ongoing basis.
equipment and intangibles Consolidated Statement of Cash Flows (144.2) (89.8)
The principal APMs used by the Group are defined as follows:
Proceeds from disposals of property,
TRADING PROFIT plant and equipment Consolidated Statement of Cash Flows 12.9 4.2
Interest received Consolidated Statement of Cash Flows 1.4 0.5
This comprises the operating profit as reported in the Income Statement before intangible asset amortisation and non trading items.
This equates to the Earnings Before Interest, Tax and Amortisation (“EBITA”) of the Group. Trading profit is used by management as it Free cash flow 308.4 198.5
excludes items which may hinder year on year comparisons.
RETURN ON CAPITAL EMPLOYED (ROCE)
2018 2017
Financial Statements Reference €m €m ROCE is the adjusted operating profit before interest and tax expressed as a percentage of the net assets employed. The net assets
Kingspan Group plc — Annual Report & Financial Statements 2018
employed reflect the net assets, excluding net debt, at the end of each reporting period.
Trading profit Note 2 445.2 337.5
2018 2017
TRADING MARGIN Financial Statements Reference €m €m
Measures the trading profit as a percentage of revenue Net Assets Consolidated Statement of Financial Position 1,788.9 1,568.0
Net Debt Note 17 728.3 463.9
2018 2017 2,517.2 2,031.9
Financial Statements Reference €m €m
Operating profit before interest and tax Consolidated Income Statement 423.0 362.4
Other Information
Trading Profit Note 2 445.2 377.5
Return on capital employed 16.8% 17.8%
Total Group Revenue Note 2 4,372.5 3,668.1
Trading margin 10.2% 10.3%
NET DEBT
NET INTEREST 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
The Group defines net interest as the net total of finance expense and finance income as presented in the Income Statement
Statement of Financial Position.
2018 2017
2018 2017
Financial Statements Reference €m €m
Financial Statements Reference €m €m
Finance Expense Note 5 19.5 16.4
Net Debt Note 17 728.3 463.9
Finance Income Note 5 (1.4) (0.5)
Net Interest 18.1 15.9
WORKING CAPITAL
NON TRADING ITEMS Working capital represents the net total of inventories, trade and other receivables and trade and other payables, net of transactional
foreign currency derivation excluded from net debt.
The Group defines non trading items as significant one off items which are not part of the regular trading performance of the
Group. These may include significant restructuring costs, profit or loss on disposal of investments, significant impairment of assets.
2018 2017
Judgement is used by the Group in assessing the particular items, by their scale and nature, should be classified as non trading items.
Financial Statements Reference €m €m
ADJUSTED EARNINGS PER SHARE Trade and other receivables Note 15 798.6 675.9
The Group defines adjusted earnings per share as basic earnings per share adjusted for the impact, net of tax, of intangible amortisation. Inventories Note 14 524.9 447.1
Trade and other payables Note 16 (779.8) (645.2)
2018 2017 Foreign currency derivatives excluded from net debt Note 19 0.2 -
Financial Statements Reference €m €m
Working capital 543.9 477.8
Profit attributable to ordinary shareholders Note 9 330.9 284.3
Intangible amortisation Note 2 22.2 15.7
WORKING CAPITAL RATIO
Intangible amortisation tax impact (5.1) (3.1)
Non-trading items Note 4 - (0.4) Measures working capital as a percentage of October to December turnover annualised. The annualisation of October to December
348.0 296.5 turnover reflects the current profile of the Group rather than a partial reflection of any acquisitions completed during the financial year.
Weighted average number of shares ('000) Note 9 179,840 178,854
2018 2017
Financial Statements Reference €m €m
Adjusted earnings per share 193.5 cent 165.8 cent
Working capital 543.9 477.8
Weighted average number of shares for
October – December turnover annualised 4,711.6 3,840.7
dilutive calculation ('000) Note 9 181,536 180,710
Adjusted diluted earnings per share 191.7 cent 164.1 cent Working Capital ratio 11.5% 12.4%
142 143
Shareholder Information
Information Required by the European Communities additional persons as directors, but any director so co-opted is
(Takeover Bids (Directive 2004/25/Ec)) under the Articles required to be submitted to shareholders for
Regulations 2006 re-election at the first annual general meeting following his or her
— The information required by Regulation 21 of the above Regulations
co-option.
as at 31 December 2018 is set out below. The Articles require that at each annual general meeting of the
Company one-third of the directors retire by rotation. However,
Rights and obligations attaching to the Ordinary Shares
in accordance with the recommendations of the UK Corporate
The Company has no securities in issue conferring special rights
Governance Code, the directors have resolved they will all retire
with regards control of the Company.
The Annual General Meeting Share Registrar and submit themselves for re-election by the shareholders at the
The Annual General Meeting of the Company will be held at Administrative enquiries about the holding of Kingspan All Ordinary Shares rank pari passu, and the rights attaching to the Annual General Meeting to be held on 3 May 2019.
The Herbert Park Hotel, Ballsbridge, Dublin 4 on Friday 3 May Group plc shares should be directed to: Ordinary Shares (including as to voting and transfer) are as set out
The Company’s Articles may be amended by special resolution
2019 at 10.00 a.m. in the Company’s Articles of Association (“Articles”). The Articles
(75% majority of votes cast) passed at general meeting.
The Company Registrar: of Association also contain the rules relating to the appointment
Notice of the 2019 AGM will be made available to view online Computershare Investor Services (Ireland) Limited, and removal of directors, rules relating to amending the Articles of Powers of directors including powers in relation to issuing or buying
at www.kingspan.com/agm2019 Heron House, Association, the powers of the Company’s directors and in relation back by the Company of its shares
Corrig Road, to issuing or buying back by the Company of its shares. A copy Under its Articles, the business of the Company shall be managed
You may submit your votes electronically by accessing Sandyford Industrial Estate, of the Articles may be found on www.kingspan.com or may be by the directors, who exercise all powers of the Company as are
Computershare’s website: Dublin 18. obtained on request to the Company Secretary. not, by the Companies Acts or the Articles, required to be exercised
by the Company in general meeting.
Holders of Ordinary Shares are entitled to receive duly declared
www.eproxyappointment.com
Financial Calendar dividends in cash or, when offered, additional Ordinary Shares. In The directors are currently authorised to issue a number of shares
the event of any surplus arising on the occasion of the liquidation equal to the authorised but as yet unissued share capital of the
You will be asked for your Shareholder Reference Number Preliminary results announced: 22 February 2019 of the Company, shareholders would be entitled to a share in that Company on such terms as they may consider to be in the best
Kingspan Group plc — Annual Report & Financial Statements 2018
(SRN), Control Number, and PIN, all of which will have been
Annual General Meeting: 3 May 2019 surplus pro rata to their holdings of Ordinary Shares. interests of the Company, under an authority that was conferred
sent to shareholders in advance of the meeting. To be valid,
on them at the Annual General Meeting held on 20 April 2018. The
your proxy vote must be received by Computershare no later Payment date for 2018 final dividend: 10 May 2019 Holders of Ordinary Shares are entitled to receive notice of and to
directors are also currently authorised on the issue of new equity
than 10.00 am on Wednesday 1 May 2019 (48 hours before attend, speak and vote in person or by proxy, at general meetings
Ex dividend date: 28 March 2019 for cash to disapply the strict statutory pre-emption provisions
the meeting). having, on a show of hands, one vote, and, on a poll, one vote
Record date: that would otherwise apply, provided that the disapplication
29 March 2019 for each Ordinary Share held. Procedures and deadlines for
is limited to the allotment of equity securities in connection
Half-yearly financial report: entitlement to exercise, and exercise of, voting rights are specified
Amalgamation of shareholding accounts 23 August 2019 with (i) any rights issue or any open offer to shareholders, or (ii)
in the notice convening the general meeting in question. There
Shareholders who receive duplicate sets of Company mailings Trading update: 18 November 2019 the allotment of shares not exceeding in aggregate 5% of the
are no restrictions on voting rights except in the circumstances
due to multiple accounts in their name should write to the nominal value of the Company’s issued share capital, or (iii) for
Other Information
where a “Specified Event” (as defined in the Articles) shall have
Company’s Registrar to have their accounts amalgamated. the purpose of financing (or refinancing) an acquisition or other
occurred and the Directors have served a Restriction Notice on the
capital investment of a kind contemplated by the UK Pre-emption
Bankers shareholder. Upon the service of such Restriction Notice, no holder
Group not exceeding in aggregate 5% of the nominal value of the
Warning to shareholders of the shares specified in the notice shall, for so long as such notice
Bank of America Merrill Lynch HSBC Bank plc Company’s issued share capital. Both these authorities expire on 3
Many companies have become aware that their shareholders shall remain in force, be entitled to attend or vote at any general
May 2019 unless renewed and resolutions to that effect are being
have received unsolicited phone calls or correspondence ING Bank NV BNP Paribas meeting, either personally or by proxy.
proposed at the Annual General Meeting to be held on 3 May 2019.
concerning investment matters. These are typically from
Commerzbank Danske Bank AS
overseas based “brokers” who target shareholders offering Holding and transfer of ordinary shares The Company may, subject to the Companies Acts and the
to sell them what often turn out to be worthless or high-risk JP Morgan Chase Bank KBC Bank NV The Ordinary Shares may be held in either certificated or Articles, purchase any of its shares and may either cancel or
shares in US or UK investments. They can be very persistent Ulster Bank Ireland Limited Bank of Ireland uncertificated form (through CREST). hold in treasury any shares so purchased, and may re-issue any
and extremely persuasive. Shareholders are therefore advised such treasury shares on such terms and conditions as may be
Save as set out below, there is no requirement to obtain the
to be very wary of any unsolicited advice, offers to buy shares determined by the directors. The Company shall not make market
approval of the Company, or of other shareholders, for a transfer
at a discount or offers of free company reports. purchases of its own shares unless such purchases have been
Solicitors of Ordinary Shares. The Directors may decline to register (a)
authorised by a special resolution passed by the members of the
any transfer of a partly-paid share to a person of whom they
Please note that it is very unlikely that either the Company Company at a general meeting. At the Annual General Meeting
McCann FitzGerald, Allen & Overy LLP, do not approve, (b) any transfer of a share to more than four
or the Company’s Registrar, Computershare, would make held on 20 April 2018, shareholders passed a resolution giving the
Riverside One, One Bishops Square, joint holders, (c) any transfer of a share on which the Company
unsolicited telephone calls to shareholders and that any such Company, or any of its subsidiaries, the authority to purchase up
Sir John Rogerson’s Quay, London, has a lien, and (d) any transfer of a certificated share unless
calls would relate only to official documentation already to 10% of the Company’s issued Ordinary Shares. At the Annual
Dublin 2, E1 6AD, accompanied by the share certificate and such other evidence of
circulated to shareholders and never in respect of investment General Meeting to be held on 3 May 2019, shareholders are being
Ireland. England. title as may reasonably be required. The registration of transfers of
“advice”. asked to renew this authority.
shares may be suspended at such times and for such periods (not
Stockbrokers
exceeding 30 days in each year) as the Directors may determine. Miscellaneous
If you are in any doubt about the veracity of an unsolicited
There are no agreements between shareholders that are known
phone call, please call either the Company Secretary or the Goodbody, JP Morgan Cazenove, Transfer instruments for certificated shares are executed by or on
to the Company which may result in restrictions on the transfer of
Registrar. Ballsbridge Park, 25 Bank Street, behalf of the transferor and, in cases where the share is not fully
securities or voting rights.
Ballsbridge, Canary Wharf, paid, by or on behalf of the transferee. Transfers of uncertificated
Dublin 4, London, shares may be effected by means of a relevant system in the Certain of the Group’s banking facilities include provisions that,
Company information
Ireland. E14 5JP, manner provided for in the Companies Act, 1990 (Uncertificated in the event of a change of control of the Company, could oblige
Kingspan Group plc was incorporated on 14 August 1979. It
England. Securities) Regulations, 1996 (the “CREST Regulations”) and the early prepayment of the facilities. Certain of the Company’s joint
is an Irish domiciled company and the registered office is
rules of the relevant system. The Directors may refuse to register a venture arrangements also contain provisions that would allow the
Kingspan Group plc, Dublin Road, Kingscourt, Co. Cavan, A82 Auditor
transfer of uncertificated shares only in such circumstances as may counterparty to terminate the agreement in the event of a change
XY31, Ireland. The registered company number of Kingspan
be permitted or required by the CREST Regulations. of control of the Company.
Group plc is 70576. KPMG,
Chartered Accountants & Statutory Auditor, Rules concerning the appointment and replacement of the The Company’s Performance Share Plan contains change of
1 Stokes Place, directors and amendment of the Company’s Articles control provisions which allow for the acceleration of the exercise
St Stephen’s Green, Unless otherwise determined by ordinary resolution of the of share options/awards in the event of a change of control of the
Dublin 2, Company, the number of Directors shall not be less than two or Company.
Ireland. more than 15.
There are no agreements between the Company and its Directors
Subject to that limit, the shareholders in general meeting may or employees providing for compensation for loss of office or
appoint any person to be a director either to fill a vacancy or as employment (whether through resignation, purported redundancy
an additional director. The directors also have the power to co-opt or otherwise) that occurs because of a takeover bid.
144 145
% Shareholding Nature of Business % Shareholding Nature of Business % Shareholding Nature of Business % Shareholding Nature of Business
Other Information
Finance Unlimited Profilage SAS
Tanks Direct Limited 100 Sales & Marketing
Company Colombia Teczone France SAS 100 Sales & Marketing
Kingspan Light & 100 Sales & Marketing Australia Kingspan Comercial SAS 51 Sales & Marketing
Air Limited PanelMET SAS 51 Manufacturing Germany
Kingspan Insulation Pty 100 Manufacturing
Kingspan Limited 100 Manufacturing Limited Synthesia Colombia S.A. 100 Sales & Marketing E.M.B. Roda Montage u. 100 Sales & Marketing
Kingspan RE Limited 100 Property Company Kingspan Water & 85 Manufacturing Service GmbH
Costa Rica
Kingspan Research & 100 Product Energy Pty Limited Essmann Gebäudetechnik 100 Manufacturing
Developments Limited Development Acusterm Costa Rica 100 Sales & Marketing GmbH
Tate Asic-Pacific Pty 100 Sales & Marketing S.R.L.
Kingspan Securities 2016 100 Finance Company Limited Hoesch Bausysteme GmbH 100 Manufacturing
Designated Activity Joris Ide Deutschland 100 Manufacturing
Company Croatia
Austria GmbH
Kingspan Securities 2017 100 Finance Company Hoesch Gradjevinski 100 Sales & Marketing
Hoesch Bausysteme GmbH 100 Sales & Marketing Elementi D.O.O. Kingspan Environmental 100 Sales & Marketing
Designated Activity GmbH
Company Kingspan GmbH 100 Sales & Marketing Kingspan D.O.O. 100 Sales & Marketing
Kingspan Investments 100 Property
Kingspan Securities Limited 100 Finance Company GmbH
Azerbaijan Czech Republic
Kingspan Securities No. 2 100 Finance Company Kingspan GmbH 100 Property Company
Limited Izopoli Mahdut Mesuliyeti 85 Sales & Marketing Balex Metal S.R.O. 100 Sales & Marketing
Cemiyeti Kingspan Insulation Gmbh 100 Manufacturing
Kingspan Tate Limited 100 Sales & Marketing Hoesch Stavebni Systemy 100 Sales & Marketing & Co. KG
Kingspan Water & Energy 100 Manufacturing S.R.O
Belgium Schütze GmbH 100 Manufacturing
Limited Kingspan A.S. 100 Manufacturing
Argina Technics NV 100 Manufacturing STF Sicheheitstechnik 100 Manufacturing
KSP Property Limited 100 Property Company SEP Essmann S.R.O. 100 Sales & Marketing GmbH
Brakel Aero NV 100 Manufacturing
Isomasters NV 63 Manufacturing Denmark
United Kingdom Hong Kong
Joris Ide NV 100 Manufacturing Kingspan A/S 100 Sales & Marketing
Building Innovation Limited 100 Sales & Marketing Chemprogress HK Limited 100 Sales & Marketing
Kingspan Access Floors 100 Manufacturing Kingspan Insulation ApS 100 Sales & Marketing
Ecotherm Insulation (UK) 100 Sales & Marketing Europe NV Tate Access Floors (Hong 100 Sales & Marketing
Limited Kong) Limited
Kingspan Door 100 Manufacturing Egypt
Euroclad Group Limited 100 Manufacturing Components SA
Izopoli Egypt LLC 85 Sales & Marketing Hungary
Fuel Tank Shop Limited 100 Sales & Marketing Kingspan Insulation NV 100 Manufacturing
Essmann Hungaria Kft. 100 Sales & Marketing
Joris Ide Limited 100 Manufacturing Kingspan NV 100 Sales & Marketing Estonia Kingspan Kereskedelmi Kft. 100 Manufacturing
Kingspan Access Floors Limited 100 Manufacturing Kingspan Unidek NV 100 Sales & Marketing Kingspan Insulation OÜ 100 Sales & Marketing
Kingspan Energy Limited 100 Sales & Marketing
Kingspan OÜ 100 Sales & Marketing
Kingspan Group Limited 100 Holding Company Bosnia and Herzegovina
Kingspan D.O.O. 100 Sales & Marketing
146 147
Kingspan SIA 100 Sales & Marketing Essmann Polska Sp. z o.o. 100 Sales & Marketing
Balex Metal SIA 100 Manufacturing Sweden
Kingspan Environmental Sp. z o.o. 100 Manufacturing
Kingspan AB 100 Sales & Marketing
Kingspan Insulation Sp. z o.o. 100 Sales & Marketing
Lithuania Kingspan Insulation AB 100 Sales & Marketing
Kingspan Sp. z o.o. 100 Manufacturing
Balex Metal UAB 100 Sales & Marketing
Kingspan UAB 100 Sales & Marketing Qatar Switzerland
Kingspan Insulation WLL 100 Sales & Marketing Kingspan GmbH 100 Sales & Marketing
Luxembourg
Naps Holdings 100 Finance Company Turkey
Other Information
(Luxembourg) S.á.r.l. Izopoli Impeks Prefabrik Panel 85 Sales & Marketing
Romania
Mexico Sanayi ve Ticaret Ltd. Sti.
Kingspan S.R.L. 100 Sales & Marketing
Innovación en Aislamiento 100 Management & Kingspan Yapi Elemanlari A.S. 85 Manufacturing
Joris Ide S.R.L. 100 Manufacturing
Especializado S.A. DE C.V. Procurement
Kingspan Insulated Panels 100 Manufacturing Russia Ukraine
S.A. DE C.V. Joris Ide LLC 100 Manufacturing Balex Metal LLC 100 Sales & Marketing
Synthequimica Mexicana 100 Sales & Marketing Kingspan Lviv LLC 100 Sales & Marketing
S.R.L. DE C.V. Serbia
Kingspan D.O.O. 100 Sales & Marketing United Arab Emirates
Morocco
Kingspan Insulated Panels 85 Manufacturing
SM Polyurethanes S.á.r.l. 100 Sales & Marketing Manufacturing LLC
Singapore
Hoesch Bausysteme Pte 100 Sales & Marketing Kingspan Insulation LLC 95 Sales & Marketing
Netherlands Limited Kingspan International FZE 100 Sales & Marketing
Hoesch Bouwsystemen 100 Sales & Marketing Kingspan Pte Limited 100 Sales & Marketing
B.V.
United States
Kingspan B.V. 100 Sales & Marketing Slovakia American Solar Alternative 100 Sales & Marketing
Kingspan Holding 100 Holding Company Balex Metal A.S. 70 Manufacturing Power LLC
Netherlands B.V.
Kingspan S.R.O. 100 Sales & Marketing ASM Modular Systems Inc. 100 Manufacturing
Kingspan Insulation B.V. 100 Manufacturing
BPS & D&V S.R.O. 100 Manufacturing CPI Daylighting Inc. 100 Manufacturing
Kingspan (MEATI) B.V. 85 Holding Company
Daylighting Contracts Inc. 100 Sales & Marketing
Kingspan Unidek B.V. 100 Manufacturing Slovenia Dri-Design Inc. 95 Sales & Marketing
Brakel Aluminium B.V. 100 Manufacturing Kingspan D.O.O. 100 Sales & Marketing Kingspan Energy Inc. 100 Sales & Marketing
Brakel Atmos B.V. 100 Manufacturing
Kingspan Insulated Panels Inc. 100 Manufacturing
South Africa
New Zealand Kingspan Insulation LLC 100 Manufacturing
Kingspan Insulated Panels 85 Sales & Marketing
Kingspan Insulation NZ 100 Sales & Marketing (Pty) Ltd Kingspan Light & Air LLC 100 Manufacturing
Limited Morin Corporation 100 Manufacturing
Kingspan Limited 100 Manufacturing Pre-insulated Metal 100 Manufacturing
Technologies Inc.
Tate Access Floors Inc. 100 Manufacturing
445.2
377.5
340.9
255.9
148.5
1,891.2
4,372.5
3,668.1
3,108.5
2,774.3
2018 2017 2016 2015 2014
Ratios
2018
2018
2016
2016
2014
2014
2015
2015
2017
2017
Net debt as % of total shareholders’ equity 40.7% 29.6% 29.1% 25.4% 12.4%
Current assets / current liabilities 1.59 1.65 1.56 1.43 1.47
Net debt / EBITDA 1.40 1.05 1.06 1.04 0.66
184.0
159.0
143.8
106.7
62.6
42.00
37.00
33.50
25.00
16.25
Average number of employees 13,469 11,133 10,396 8,595 6,627
2018
2018
2016
2016
2014
2014
2015
2015
2017
2017
EPS DPS
(cent) (cent)
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Ireland
A82 XY31
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