TIDMKGP

RNS Number : 2429J

Kingspan Group PLC

20 August 2021

KINGSPAN GROUP PLC

HALF-YEARLY FINANCIAL REPORT

for the period ended 30 June 2021

KINGSPAN GROUP PLC

RESULTS FOR THE HALF YEAR 30 JUNE 2021

Kingspan, the global leader in high performance insulation and building envelope solutions, issues its half-yearly financial report for the six-month period ended 30 June 2021.

Financial Highlights:

 
            --              Revenue up 41% to EUR2.9bn, (pre-currency and acquisitions, 
                             up 36%). 
            --              Trading profit up 64% to EUR329m, (pre-currency and acquisitions, 
                             up 60%). 
            --              Group trading margin of 11.3%, an increase of 160bps versus 
                             the same period in 2020. 
            --              Acquisitions contributed 8% to sales growth and 7% to trading 
                             profit growth in the period. 
            --              Net debt of EUR601.7m (H1 2020: EUR437.9m). Net debt to EBITDA 
                             of 0.83x (H1 2020: 0.79x). 
            --              Basic EPS up 65.9 % to 132.4 cent (H1 2020: 79.8 cent). 
            --              Interim dividend 19.9 cent (H1 2020: nil) in line with policy 
                             guidance. 
            --              Continued growth in ROCE at 18.9 % (H1 2020: 16.9%). 
 

Operational Highlights:

 
            --   Unprecedented and ongoing raw material inflation with the price 
                  recovery effort on track. 
            --   Strong underlying volume growth of 30% and 27% in Insulated 
                  Panels and Insulation Boards. 
            --   Insulated Panels sales increase of 44% driven by strong momentum 
                  generally in construction activity, raw material led price 
                  growth further enhanced by strong demand in high growth sectors. 
                  Order backlog strongly ahead of the same point in 2020. 
            --   Insulation Boards sales increase of 36% reflecting strong demand 
                  in key markets and inflation recovery on pricing. Acquisition 
                  of Logstor, a leading global supplier of technical insulation 
                  solutions, completed before the period end. 
            --   Light & Air sales growth of 39% reflecting the acquisition 
                  of Colt Group in Q2 2020 and the acquisition of Skydome in 
                  the period. 
            --   Water & Energy sales increase of 36% reflecting a strong performance 
                  across all key markets, with the exception of Australasia, 
                  and further acquisition activity. 
            --   Data & Flooring sales growth of 22% reflecting strong datacentre 
                  activity and ongoing development of the European operations. 
            --   Invested a total of EUR496m in acquisitions, capex and financial 
                  investments during the period. 
 

Summary Financials:

 
                         H1 '21    H1 '20     Change 
----------------------  --------  --------  -------- 
 Revenue EURm            2,920.1   2,072.7    +41% 
 Trading Profit* 
  EURm                    328.9     200.1     +64% 
 Trading Margin**         11.3%     9.7%     +160bps 
 EPS (cent per share)     132.4     79.8      +66% 
----------------------  --------  --------  -------- 
 

*Operating profit before amortisation of intangibles

** Operating profit before amortisation of intangibles divided by total revenue

Gene Murtagh, Chief Executive of Kingspan commented:

"Growth in the first half of the year has been remarkably strong with revenue and trading profit at record levels driven by high levels of demand and a global recovery in the construction sector. Despite inflation in our input costs, effective price management has helped increase trading margins, with a stand out performance in our largest division - insulated panels.

Our strategy of expanding through acquisition and diversifying geographically has continued, with ten acquisitions made during the period across four continents, and a robust balance sheet positioned to support future growth. We also continue to invest in organic expansion, product innovation, digitalisation, enhanced compliance and executing on our ambitious Planet Passionate sustainability targets.

A strong pipeline of future demand means we are positive about the outlook for the second half of the year. Longer term, the decarbonisation agenda and increasing awareness of the need to reduce the contribution of the built environment to climate change is supportive of our focus on delivering customers with high performance solutions that deliver best-in-class thermal performance."

For further information contact:

 
 Murray Consultants   Tel: +353 (0) 1 4980 300 
  Douglas Keatinge 
 

Business Review

The first half of 2021 has proven to be an extraordinary period for Kingspan during which we have experienced unprecedented demand, coupled with increasingly acute supply constraints and an inflationary curve never experienced before. The latter has meant that over the course of the year price management activity will have had to recover well in excess of EUR600m in cost increases. Whilst a lag has been and can be expected, the recovery effort has so far been a success. In all, and despite these pressures, the business delivered record revenue and trading profit up 41% to EUR2.92bn and up 64% to EUR329m respectively. Compared with 2019 those performance statistics were ahead by 30% and 43%. Given the particularly unique backdrop it is an immense credit to the team globally to have delivered this performance.

By market, and almost without exception, growth was achieved in both order intake and deliveries, and in our largest category, Insulated Panels, the backlog at half year grew further and was significantly ahead of the same point in 2020. This clearly bodes well for the remainder of the year, although we anticipate disruption to our supply capability due to some critical raw material constraints. Construction markets in general have been buoyant and the palpable shift toward more energy efficient building for both new builds and renovations has been, and will remain, a positive driver of growth at Kingspan. In addition, our increasing exposure to high growth end-markets including online retail, data warehousing and electric vehicle production, are likely to be key strands of the future development of the Group.

Planet Passionate

Building upon the 2020 achievement of Net Zero Energy across the Group, over a year ago we launched our Planet Passionate agenda, a mission critical and distinctively ambitious programme across the four pillars of Energy, Carbon, Circularity and Water. We have set targets across twelve sub-categories in all of our businesses with annual goals across the next ten years. Significant progress has already been made in the first year of the programme, as detailed in our inaugural Planet Passionate report published in April. Further advancement is underway in 2021, even in the face of very significant growth in manufacturing output.

Kingspan has recently announced ambitious new targets aligned with its Planet Passionate programme for reducing its Scope 1, 2 and 3 CHG emissions. The Group has now committed to reducing absolute Scope 1 and 2 CHG emissions by 90% by 2030 from a 2020 base year. It has also pledged to reduce absolute Scope 3 CHG emissions by 42% within the same timeframe.

The ambitious new targets are in line with the scale of reductions required to keep global warming below 1.5C from pre-industrial levels.

 
 Planet Passionate Targets                                 Target     2020     2021 
                                                             Year      (A) 
                                                                                (F) 
--------------------------------------------------------  --------  ------- 
 Energy         Net Zero Energy (%)                         2020      100%     100% 
------------- 
  60% direct renewable energy use 
   (%)                                               2030             28%      30% 
 
  20% on-site renewable energy generation 
   (%)                                               2030             4.7%      5% 
  Solar PV systems on all wholly owned 
   facilities (%)                                    2030             21%      29% 
 -----------------------------------------  ----------------------  ------- 
                Net Zero Carbon Manufacturing (% 
                 yoy reduction in scope 1 & 2 GHG 
 Carbon          emissions)                                 2030      5.2%      4% 
------------- 
  Zero Emission company funded cars 
   (% annual conversion)                             2025             11%      25% 
 
  50% reduction in product CO2e intensity 
   from our primary supply partners 
   (% reduction)                                     2030              0%       0% 
                                            ----------------------  ------- 
 Circularity    Zero Company waste to landfill (tonnes)     2030     18,450   17,000 
------------- 
  Recycle 1 billion PET bottles into 
   our manufacturing processes (bottles)             2025             573m     800m 
 
  QuadCore(TM) products utilising 
   recycled PET (% of sites)                         2025              5%       5% 
 -----------------------------------------  ----------------------  ------- 
                Harvest 100 million litres of rainwater 
 Water           (litres)                                   2030     21.1m     24m 
------------- 
  5 Active Ocean Clean-Up projects 
   (No. of initiatives)                              2025              1        2 
 -----------------------------------------  ----------------------  -------  ------- 
 

Expansion

During the period we invested a total of EUR496m in acquisitions, capex and financial investments. Of note, the EUR242m purchase of Denmark headquartered Logstor completed in June, and the Romanian based TeraSteel also completed in the period. We also entered the Uruguayan insulated panel market through Bromyros and bolstered our insulation channel in New Zealand and Australia with the onboarding of Thermakraft, since the period end. Additionally, we became a founding investor in H2 Green Steel, a start up in Sweden that aims to become the world's first zero carbon steel plant. Over a year ago we signed an agreement to acquire Trimo in Slovenia and we remain fully engaged in, and committed to, what has already been a lengthy regulatory process. These and other investments, including our broadening organic footprint, will all serve to increase our exposure to the growing global drive to dramatically decrease building related emissions in the future. Currently, the construction and operation of buildings accounts for approximately 40% of all greenhouse gases.

Innovation

Continuing the trajectory of QuadCore(TM) as an industry-leading solution particularly in the areas of thermal-efficiency and fire performance, development of QuadCore(TM) 2.0 has continued with the aim of launching in Britain and Ireland initially. We expect to commence the extensive certification process before year end.

The production process for PowerPanel(R) is now fully commissioned and the first trial project is underway with the replacement of the existing roof at our Kingscourt facility in Ireland. Comprehensive product testing and certification is in progress and we plan a formal market launch during quarter four of this year. Significant progress has been made in developing an A-Class fibre free AlphaCore(R) insulation solution from a materials perspective, and tests are currently underway to determine the optimal thermal performance and installation methods.

A separate development project is currently underway with the objective of achieving an A-Class fire performance for our Optim-R(R) product, the highest thermal performance insulation in our offering. Our aim is still to have a product ready for market by late 2022. Separately, over the next two years, we plan to have a B-Class fire performance available as a standard offering across much of the Kooltherm(R) range.

Kingspan Digital

The Kingspan Digitalisation Programme sets out to transform the business across its value chain. We are now developing an entire digitally integrated ecosystem that links products, services and operational capabilities. We aim, over time, to reach a new bar in seamless, flexible and accurate digital solutions for our customers.

Product Integrity

A number of enhancements were made early in the year to bolster the Group's product compliance processes. ISO37301 is the leading standard for establishing, developing and maintaining compliance management systems. In July, we achieved this standard for Kingspan Group's Compliance function and at one of our manufacturing sites, which is among the first production sites in the world of any type to achieve it. This system will be embedded throughout our organisation and in each of our current 182 manufacturing locations, with 20 sites expected to have received the accreditation by H1 2022.

During the period, in excess of 250 third party external product and system audits took place across the Group. In addition, 50 manufacturing sites have been internally audited under the process validated by the Audit and Compliance Committee.

Insulated Panels

 
                   H1 '21    H1 '20    Change 
----------------  --------  --------  -------- 
 Revenue EURm      1,922.8   1,332.0   +44%(1) 
 Trading Profit 
  EURm              223.6     123.3     +81% 
 Trading Margin     11.6%     9.3%     +230bps 
----------------  --------  --------  -------- 
 

(1) Comprising underlying +41% (volume +30% and price/mix +11%), currency -3% and acquisitions +6%.

Activity in our largest segment has continued the momentum demonstrated last year right through the first half of 2021 with deliveries reaching a record 40 million m(2) . Revenue and volume are both strongly ahead and order intake volume was ahead by 50%. As noted earlier, this leaves the backlog significantly ahead of the same point in 2020. Quadcore (TM) comprised 15% of insulated panels order intake value in the period.

Construction activity is clearly ahead in most markets and for Kingspan this is being further enhanced by the tangible increase in the penetration of insulated panels in a number of key markets. This dynamic has been particularly evident in the US, Brazil, France and the Benelux where the category is growing encouragingly in each case. Germany has also been strong, and significant growth in order intake has also been registered in Britain. Ireland has experienced a remarkably strong first half.

Work has begun on a new insulated panel facility in central France, due for completion in late 2022. Similarly, in North America work is progressing on a new greenfield facility in north east US and an additional greenfield plant will be added in the midwest region. This will bring our plant count to nine in the region. Brazil has commenced production at the new facility in Santa Catarina and plans are afoot to add further lines in the north of the country.

Our plan for plant construction in Vietnam has experienced understandable logistical challenges that we are confident will be resolved, but remains central to our strategy for the region.

Insulation Boards

 
                        H1 '21   H1 '20    Change 
---------------------  -------  -------  --------- 
 Revenue EURm           499.5    367.9    +36% (1) 
 Trading Profit EURm     69.9     48.5      +44% 
 Trading Margin         14.0%    13.2%     +80bps 
---------------------  -------  -------  --------- 
 

(1) Comprising underlying +36% (volume +27% and price/mix +9%), currency -2% and acquisitions +2%.

Sales value and volume were both well ahead of last year in all key markets and deliveries reached a record 38 million m (2) . Newbuild has recovered strongly in many regions and RMI activity is becoming a more meaningful portion of our insulation offering. Western Europe and North America in particular posted significant volume increases and momentum in Australasia has improved substantially. Volume growth in Britain was comfortably in excess of 20%.

Production commenced in our new Kooltherm(R) facility in Sweden. The new manufacturing plant is powered by 100% renewable electricity, of which 20% is produced on-site, and it will support the growing drive towards modern high performance insulation in that region.

During the period a number of attractive insulation acquisitions were either completed or signed. Key amongst these was Logstor, a global leader in medium and large core insulated pipes for multiple applications but predominately for the district heating sector. We anticipate this end market will grow as Europe focuses increasingly on deep improvements to achieve energy efficient infrastructure of cities in particular. Separately we signed an agreement to acquire Thermakraft, based in New Zealand, which will significantly enhance our insulation presence in Australasia. Finally, in the US, we acquired Dyplast based in Florida in the industrial insulation sphere.

Light & Air

 
                        H1 '21   H1 '20    Change 
---------------------  -------  -------  --------- 
 Revenue EURm           239.5    171.9    +39% (1) 
 Trading Profit EURm     6.5      7.6       -14% 
 Trading Margin          2.7%     4.4%    -170bps 
---------------------  -------  -------  --------- 
 
   (1)   Comprising underlying +2%, currency -1% and acquisitions +38%. 

The division took a significant step forward in 2020 with the acquisition of Colt Group which added material scale to the category with annual revenue in the order of EUR250m. Geographically it also resulted in Northern Europe taking a leap forward, in particular Germany and the Netherlands. More recently we completed the acquisition of Skydome which broadly doubles our presence in France and Major Industries in the US was acquired close to the period end. In all, the division is on track to deliver 2021 revenue of approximately EUR550m with a trading profit margin in the region of 8%. It is our medium term aim to drive revenue towards EUR1bn delivering a trading profit margin of 10%. To achieve this, organic development will continue to be supplemented with acquisitions across both the 'Light' and the 'Air' end markets. The first half demonstrated significant lag in raw material recovery, more so than across the rest of the Group, and we anticipate a more complete recovery during the second half. Additionally, the segment bore the first quarter seasonal weakness at Colt, which last year was pre-acquisition.

Water & Energy

 
                        H1 '21   H1 '20    Change 
---------------------  -------  -------  --------- 
 Revenue EURm           126.3     92.9    +36% (1) 
 Trading Profit EURm     11.9     6.9       +72% 
 Trading Margin          9.4%     7.4%    +200bps 
---------------------  -------  -------  --------- 
 
   (1)   Comprising underlying +24%, currency impact +3% and acquisitions +9%. 

This segment delivered a robust half year result with notable growth achieved in most regions, and across the product portfolio that ranges from rainwater harvesting to water treatment and hot water storage.

Of note, activity in Britain and Poland performed well across water treatment and fuel storage, and encouraging progress is being made in France in the waste water category. In the Nordics activity has recovered well and, in contrast to this, the rainwater harvesting business in Australia was more challenged as the pandemic restrictions have continued to hamper activity.

Product range expansion and innovation are key to this division's future growth and, as an example, work is well underway on the design of hydrogen tanks for the transportation sector.

Data & Flooring

 
                        H1 '21   H1 '20    Change 
---------------------  -------  -------  --------- 
 Revenue EURm           132.0    108.0    +22% (1) 
 Trading Profit EURm     17.0     13.8      +23% 
 Trading Margin         12.9%    12.8%     +10bps 
---------------------  -------  -------  --------- 
 
   (1)   Comprising underlying +25% and currency impact -3% 

Given the obvious pressure on the office construction market, the Data & Flooring segment delivered a relatively strong performance in the period with revenue and trading profit ahead by 22% and 23% respectively.

For some time now the predominant focus in this business has been the pursuit of unique solutions aimed at the efficient running of data warehouses.

The product suite includes airflow panels, aisle containment and structural ceilings which are designed to minimise the energy consumed in the cooling process of these facilities. As the wider technology evolves, so too will our solutions to keep apace.

Financial Review

Overview of results

Group revenue increased by 41% to EUR2,920.1m (H1 2020: EUR2,072.7m) and trading profit increased by 64% to EUR328.9m (H1 2020: EUR200.1m). This represents a 44% increase in sales and a 67% increase in trading profit on a constant currency basis. The Group's trading margin increased by 160bps to 11.3% (H1 2020: 9.7%) primarily reflecting the impact of the inflation recovery effort and the positive effect of year on year operating leverage, due to increased trading. The amortisation charge in respect of intangibles was EUR12.4m compared to EUR10.9m in the first half of 2020. Group operating profit after amortisation increased by 67% to EUR316.5m (H1 2020: EUR189.2m). Profit after tax was EUR246.7m compared to EUR147.5m in the first half of 2020, driven in the main by the increase in trading profit. Basic EPS for the period was 132.4 cent, representing an increase of 65.9% on the first half of 2020 (H1 2020: 79.8 cent).

The Group's underlying sales and trading profit performance by division are set out below:

 
 Sales                Underlying   Currency   Acquisition   Total 
-------------------  -----------  ---------  ------------  ------ 
 Insulated Panels        +41%        -3%          +6%       +44% 
 Insulation Boards       +36%        -2%          +2%       +36% 
 Light & Air             +2%         -1%         +38%       +39% 
 Water & Energy          +24%        +3%          +9%       +36% 
 Data & Flooring         +25%        -3%           -        +22% 
 Group                   +36%        -3%          +8%       +41% 
                     -----------  ---------  ------------  ------ 
 

The Group's trading profit measure is earnings before interest, tax and amortisation of intangibles:

 
 Trading Profit       Underlying   Currency   Acquisition   Total 
-------------------  -----------  ---------  ------------  ------ 
 Insulated Panels        +74%        -3%         +10%       +81% 
 Insulation Boards       +44%        -2%          +2%       +44% 
 Light & Air             -16%         -           +2%       -14% 
 Water & Energy          +50%        +2%         +20%       +72% 
 Data & Flooring         +28%        -5%           -        +23% 
 Group                   +60%        -3%          +7%       +64% 
                     -----------  ---------  ------------  ------ 
 

Finance costs (net)

Finance costs for the period were higher than the same period last year at EUR19.3m (H1 2020: EUR11.7m). Finance costs include a non-cash charge of EUR0.2m (H1 2020: EUR0.4m) relating to the Group's defined benefit pension schemes. Lease interest of EUR1.8m was recorded during the period (H1 2020: EUR2.0m). The Group's net interest expense on borrowings (bank and loan notes) in the first half of 2021 was EUR17.2m compared to EUR9.2m in the same period in 2020. Net interest increased during the period due to drawdown of the EUR750m Green Private Placement in December 2020 and reduced, (and in some cases negative) returns on cash balances. Interest charges will be lower in the second half of the year due to the repayment on maturity of a more expensive historical $200m private placement in August 2021.

Free cashflow

 
                                   H1 '21    H1 '20 
                                    EURm      EURm 
--------------------------------  --------  ------- 
 EBITDA*                            373.4    244.2 
 Movement in working capital **    (118.5)    95.6 
 Net capital expenditure           (60.3)    (58.7) 
 Pension contributions              (1.7)    (0.6) 
 Net finance costs paid            (18.5)    (10.4) 
 Income taxes paid                 (40.9)    (14.9) 
 Other including non-cash items      8.3      5.2 
                                  --------  ------- 
 Free cashflow                      141.8    260.4 
                                  --------  ------- 
 

*Earnings before finance costs, income taxes, depreciation, amortisation and the impact of IFRS 16. Calculation is set out in Alternative Performance Measures at the end of the statement

**Excludes working capital on acquisition but includes working capital movements since that point

Working capital on 30 June 2021 was EUR631.7m (31 December 2020: EUR450.8m), an increase of EUR180.9m (EUR118.5m excl. acquisitions) in the period. The increase is driven by the increased level of year on year trading, with the Group investing in working capital to support the significant increase in sales. The average working capital to sales percentage was 9.7% compared with 11.6% in H1 2020. Working capital management and cash generation continue to be important financial metrics for the business. The lower than normal working capital percentage is reflective of the very high levels of activity coupled with lower inventory days due to raw material supply constraints.

Net Debt

Net debt increased by EUR365.5m during the first half of the year to EUR601.7m (31 December 2020: EUR236.2m). The movement in debt is analysed in the table below:

 
 Movement in net debt                 H1 '21    H1 '20 
                                       EURm      EURm 
-----------------------------------  --------  -------- 
 Free cashflow                         141.8     260.4 
 Acquisitions and disposals           (430.9)   (42.0) 
 Purchase of financial asset           (5.0)       - 
 Repurchase of shares                 (46.9)       - 
 Dividends paid                       (37.4)       - 
 Dividends paid to non-controlling 
  interests                            (2.2)     (0.5) 
                                     --------  -------- 
 Cashflow movement                    (380.6)    217.9 
 Exchange movements on translation     15.1     (22.6) 
                                     --------  -------- 
 (Increase)/decrease in net debt      (365.5)    195.3 
 Net debt at start of period          (236.2)   (633.2) 
 Net debt at end of period            (601.7)   (437.9) 
                                     --------  -------- 
 

Retirement benefits

The primary method of pension provision for current employees is by way of defined contribution arrangements. The Group has three legacy defined benefit schemes in the UK which are closed to new members and to future accrual. In addition, the Group assumed a number of defined benefit pension liabilities in Mainland Europe through acquisitions completed in recent years. The net aggregate pension liability in respect of all schemes and obligations was EUR39.3m at 30 June 2021 (30 June 2020: EUR34.4m).

Taxation

The tax charge for the first half of the year was EUR50.5m (H1 2020: EUR30.0m) which represents an effective tax rate of 17.0% on profit before tax (H1 2020: 16.9%). The effective rate is broadly consistent year on year. Taxation payments of EUR40.9m (H1 2020: EUR14.9) were higher than in the first half of 2020 with the prior year benefitting from deferred payment programmes in place in a number of jurisdictions in response to the pandemic, which have since been paid in full.

Acquisitions

The Group incurred EUR435.9m on acquisitions and financial investments during the period. Of this, EUR242.4m was incurred on Logstor Group with an additional EUR193.5m incurred on 10 further acquisitions and financial investments in the first 6 months of 2021.

Dividend & repurchase of shares

The Board has declared an interim dividend of 19.9 cent (H1 2020: nil) payable on 8 October 2021 to shareholders on the register on the record date of 10 September 2021. This is in line with the previously announced revised shareholder returns policy.

During the period the Group bought back 600,000 shares at a weighted average price of EUR78.16. This is consistent with an objective of maintaining a broadly constant share count over time.

Capital structure and Group financing

The Group funds itself through a combination of equity and debt. Debt is funded through a combination of syndicated bank facilities and private placement loan notes. The principal syndicated facility is a green revolving credit facility of EUR700m entered into in May 2021 with a committed term to May 2026. There were no drawings on this facility at period end. This new facility was used to substantially replace the outgoing revolving credit facility of EUR461m and acquisition facility of EUR300m.

In addition, as part of the Group's longer-term capital structure, the Group has total private placement loan notes of EUR1,538m (H1 2020: EUR842m) which have a weighted average maturity of 6.2 years (H1 2020: 4 years).

The weighted average maturity of all debt facilities is 5.8 years (H1 2020: 3.8 years).

As well as ongoing free cashflow generation, the Group has significant available undrawn facilities and cash which provide appropriate headroom for operational requirements and development funding. Total available headroom was EUR1,631m at 30 June 2021 (H1 2020: EUR1,182m).

Related party transactions

There were no changes in related party transactions from the 2020 Annual Report that could have a material effect on the financial position or performance of the Group in the first half of the year. Eugene Murtagh retired as Chairman and non-executive director on 30 April 2021 and is no longer considered a related party.

Principal risks & uncertainties

Details of the principal risks and uncertainties facing the Group can be found in the 2020 Annual Report. These risks, namely volatility in the macro environment, failure to innovate, product failure, business interruption (including IT continuity and climate change), credit risks and credit control, employee development and retention, fraud and cybercrime, acquisition and integration of new businesses, health & safety, and laws & regulations remain the most likely to affect the Group in the second half of the current year. The Group actively manages these and all other risks through its control and risk management processes. We will continue to actively assess changes in the external environment on events which could change our risk assessment and profile.

Looking Ahead

The Group has had a very positive first half with a strong order backlog on entering the second half of the year. A prevailing and ongoing theme in the year to date has been the extent of raw material inflation and constrained availability. This backdrop will persist through the remaining part of 2021, and likely into 2022. Construction industry activity has been lively in most key markets with outperformance by Kingspan given the robustness of our global supply chain. This dynamic may change in time when raw material availability issues subside.

2021 is an abnormally buoyant year in an unparalleled environment. Whatever way the market evolves, Kingspan is well placed for the years ahead given the combined strength of our high performance product suite, the global decarbonisation agenda, our diversified end markets and strong balance sheet.

2021 Statement of Directors Responsibilities

for the 6 month period ended 30 June 2021

The Directors are responsible for preparing the half-yearly financial report in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, as amended, (the "Transparency Regulations") and the Transparency Rules of the Central Bank of Ireland.

Each of the Directors confirm that to the best of their knowledge:

1) the condensed set of consolidated financial statements included within the half-yearly financial report of Kingspan Group Plc for the six months ended 30 June 2021 (the "interim financial information") which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Statement of Changes in Equity, the Condensed Consolidated Statement of Cash Flows and the related explanatory notes, have been presented and prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, the Transparency Directive and Transparency Rules of the Central Bank of Ireland;

2) the interim financial information presented, as required by the Transparency Regulations, includes:

 
            a.   a fair review of the important events that have occurred 
                  during the first 6 months of the financial year, and their 
                  impact on the condensed set of consolidated financial statements; 
            b.   a description of the principal risks and uncertainties 
                  for the remaining 6 months of the financial year; 
            c.   a fair review of related parties' transactions that have 
                  taken place in the first 6 months of the current financial 
                  year and that have materially affected the financial position 
                  or the performance of the enterprise during that period; 
                  and 
            d.   any changes in the related parties' transactions described 
                  in the last annual report that could have a material effect 
                  on the financial position or performance of the enterprise 
                  in the first 6 months of the current financial year. 
 

The directors of Kingspan Group plc, and their functions, are listed in the 2020 Annual Report, with the exception of the following changes during the period:

 
            --   Eugene Murtagh retired as Chairman and a non-executive director 
                  on 30 April 2021, and Jost Massenberg was appointed Non-Executive 
                  Chairman on that date; 
            --   √Čimear Moloney and Paul Murtagh were appointed as non-executive 
                  directors on 30 April 2021. 
 

On behalf of the Board

 
 Gene M Murtagh              Geoff Doherty 
 Chief Executive Officer     Chief Financial Officer 
 
            20 August 2021              20 August 2021 
 

Kingspan Group plc

Condensed consolidated income statement (unaudited)

for the 6 month period ended 30 June 2021

 
                                                    6 months    6 months 
                                                       ended       ended 
                                                30 June 2021     30 June 
                                                                    2020 
 
                                         Note           EURm        EURm 
 
 Revenue                                    4        2,920.1     2,072.7 
 Cost of Sales                                     (2,087.8)   (1,462.0) 
                                               -------------  ---------- 
 
   Gross Profit                                        832.3       610.7 
 Operating Costs                                     (503.4)     (410.6) 
                                               -------------  ---------- 
 
   Trading Profit                           4          328.9       200.1 
 Intangible amortisation                              (12.4)      (10.9) 
                                                              ---------- 
 
 Operating Profit                                      316.5       189.2 
 Finance expense                            6         (19.5)      (12.5) 
 Finance income                             6            0.2         0.8 
                                               -------------  ---------- 
 
 Profit for the period before income 
  tax                                                  297.2       177.5 
 Income tax expense                         7         (50.5)      (30.0) 
                                               -------------  ---------- 
 
 Profit for the period                                 246.7       147.5 
                                               -------------  ---------- 
 
 
   Attributable to owners of Kingspan 
   Group plc                                           240.3       144.5 
 Attributable to non-controlling 
  interests                                              6.4         3.0 
                                               -------------  ---------- 
 
                                                       246.7       147.5 
                                               -------------  ---------- 
 
   Earnings per share for the period 
 Basic                                     12         132.4c       79.8c 
 
   Diluted                                 12       131.3c         79.2c 
 

Kingspan Group plc

Condensed consolidated statement of comprehensive income (unaudited)

for the 6 month period ended 30 June 2021

 
                                                      6 months   6 months 
                                                         ended      ended 
                                                       30 June    30 June 
                                                          2021       2020 
 
                                                          EURm       EURm 
 
 Profit for financial period                             246.7      147.5 
 
   Other comprehensive income: 
 
   Items that may be reclassified subsequently 
   to profit or loss 
 Exchange differences on translating foreign 
  operations                                              69.5     (71.6) 
 Net changes in fair value of cash flow hedges           (0.4)        0.5 
 
 Items that will not be reclassified subsequently 
  to profit or loss 
 Actuarial gains/(losses) on defined benefit 
  pension schemes                                          8.3      (9.4) 
 Income taxes relating to actuarial gains/losses 
  on defined benefit pension schemes                     (2.1)        1.8 
 
 
   Total comprehensive income for the period             322.0       68.8 
                                                     ---------  --------- 
 
 Attributable to owners of Kingspan Group 
  plc                                                    312.6       73.5 
 Attributable to non-controlling interests                 9.4      (4.7) 
                                                     ---------  --------- 
                                                         322.0       68.8 
                                                     ---------  --------- 
 
 

Kingspan Group plc

Condensed consolidated statement of financial position

as at 30 June 2021

 
                                                     At 30 June                  At 30 June          At 31 December 
                                               2021 (unaudited)            2020 (unaudited)                    2020 
                                                                                                          (audited) 
                                      Note                 EURm                        EURm                    EURm 
 Assets 
 Non-current assets 
 Goodwill                               13              1,810.7                     1,498.5                 1,478.8 
 Other intangible assets                                   93.5                        87.5                    82.7 
 Financial asset                                           13.2                         8.2                     8.2 
 Property, plant and equipment          14              1,089.6                       968.3                   972.9 
 Right of use assets                    15                131.8                       143.4                   113.0 
 Derivative financial instruments        9                    -                        33.5                       - 
 Retirement benefit assets                                  8.9                         9.4                     8.0 
 Deferred tax assets                                       23.0                        15.9                    23.0 
                                            -------------------         -------------------         --------------- 
                                                        3,170.7                     2,764.7                 2,686.6 
 Current assets 
 Inventories                                              755.0                       542.6                   505.9 
 Trade and other receivables                            1,237.0                       869.2                   799.6 
 Derivative financial instruments        9                 18.3                         0.2                    19.8 
 Cash and cash equivalents               9                931.4                       431.0                 1,329.7 
                                            -------------------         -------------------         --------------- 
                                                        2,941.7                     1,843.0                 2,655.0 
                                            -------------------         -------------------         --------------- 
 Total assets                                           6,112.4                     4,607.7                 5,341.6 
                                            -------------------         -------------------         --------------- 
 
 Liabilities 
 Current liabilities 
 Trade and other payables                               1,360.1                       932.6                   854.5 
 Provisions for liabilities                                58.3                        59.8                    55.7 
 Lease liabilities                      15                 31.6                        30.3                    27.3 
 Derivative financial instruments                           0.2                           -                     0.2 
 Deferred contingent consideration      10                 38.4                           -                       - 
 Interest bearing loans and 
  borrowings                             8                172.3                        45.9                   209.6 
 Current income tax liabilities                            67.2                        87.0                    55.9 
                                            -------------------         -------------------         --------------- 
                                                        1,728.1                     1,155.6                 1,203.2 
 
 Non-current liabilities 
 Retirement benefit obligations                            48.2                        43.8                    53.9 
 Provisions for liabilities                                62.9                        52.5                    63.3 
 Interest bearing loans and 
  borrowings                             8              1,379.1                       856.7                 1,376.1 
 Lease liabilities                      15                101.1                       114.3                    87.5 
 Deferred tax liabilities                                  37.9                        32.4                    32.4 
 Deferred contingent consideration      10                122.2                       156.2                   127.6 
                                            -------------------         -------------------         --------------- 
                                                        1,751.4                     1,255.9                 1,740.8 
                                            -------------------         -------------------         --------------- 
 Total liabilities                                      3,479.5                     2,411.5                 2,944.0 
                                            -------------------         -------------------         --------------- 
 
   Net Assets                                           2,632.9                     2,196.2                 2,397.6 
                                            -------------------         -------------------         --------------- 
 
   Equity 
 Share capital                                             23.8                        23.8                    23.8 
 Share premium                                             95.6                        95.6                    95.6 
 Capital redemption reserve                                 0.7                         0.7                     0.7 
 Treasury shares                                         (58.5)                      (11.7)                  (11.6) 
 Other reserves                                         (301.7)                     (323.8)                 (356.8) 
 Retained earnings                                      2,812.5                     2,366.0                 2,597.2 
                                            -------------------         -------------------         --------------- 
 
 Equity attributable to owners 
  of Kingspan Group plc                                 2,572.4                     2,150.6                 2,348.9 
 Non-controlling interests                                 60.5                        45.6                    48.7 
                                            -------------------         -------------------         --------------- 
 Total Equity                                           2,632.9                     2,196.2                 2,397.6 
                                            -------------------         -------------------         --------------- 
 
 
 Kingspan Group plc 
 
  Condensed consolidated statement of changes in equity (unaudited) 
  for the 6 month period ended 30 June 2021 
                        Share     Share      Capital   Treasury   Translation      Cash     Share   Revaluation         Put    Retained          Total          Non-       Total 
                      capital   premium   redemption     shares       reserve      flow     based       reserve      option    earnings   attributable   controlling      equity 
                                             reserve                            hedging   payment                 liability                  to owners     interests 
                                                                                reserve   reserve                   reserve                     of the 
                                                                                                                                                parent 
                         EURm      EURm         EURm       EURm          EURm      EURm      EURm          EURm        EURm        EURm           EURm          EURm        EURm 
 
 Balance at 1 
  January 
  2021                   23.8      95.6          0.7     (11.6)       (229.9)       0.3      40.4           0.7     (168.3)     2,597.2        2,348.9          48.7     2,397.6 
                     --------  --------  -----------  ---------  ------------  --------  --------  ------------  ----------  ----------  -------------  ------------  ---------- 
 
   Transactions with owners recognised directly in equity 
 
 Employee share 
  based 
  compensation              -         -            -          -             -         -       8.1             -           -           -            8.1             -         8.1 
 Exercise or 
  lapsing of 
  share options             -         -            -          -             -         -     (6.2)             -           -         6.2              -             -           - 
 Repurchase of 
  shares                    -         -            -     (46.9)             -         -         -             -           -           -         (46.9)             -      (46.9) 
 Dividends                  -         -            -          -             -         -         -             -           -      (37.4)         (37.4)             -      (37.4) 
 Transactions with 
 non-controlling 
 interests: 
 Dividends paid to 
  non-controlling 
  interests                 -         -            -          -             -         -         -             -           -           -              -         (2.2)       (2.2) 
 Arising on 
  acquisition               -         -            -          -             -         -         -             -           -           -              -           4.6         4.6 
 Fair value 
  movement                  -         -            -          -             -         -         -             -      (12.9)           -         (12.9)             -      (12.9) 
 Transactions with 
  owners                    -         -            -     (46.9)             -         -       1.9             -      (12.9)      (31.2)         (89.1)           2.4      (86.7) 
                     --------  --------  -----------  ---------  ------------  --------  --------  ------------  ----------  ----------  -------------  ------------  ---------- 
 
  Total 
  comprehensive 
  income 
  for the period 
 
 Profit for the 
  period                    -         -            -          -             -         -         -             -           -       240.3          240.3           6.4       246.7 
 
 Other 
 comprehensive 
 income 
 Items that may be reclassified subsequently to profit or loss 
 Cash flow hedging 
 in 
 equity 
 - current year             -         -            -          -             -     (0.4)         -             -           -           -          (0.4)             -       (0.4) 
 - tax impact               -         -            -          -             -         -         -             -           -           -              -             -           - 
 Exchange 
  differences 
  on translating 
  foreign 
  operations                -         -            -          -          66.5         -         -             -           -           -           66.5           3.0        69.5 
 
 Items that will not be reclassified subsequently to profit or loss 
 Actuarial gains on 
  defined 
  benefit pension 
  scheme                    -         -            -          -             -         -         -             -           -         8.3            8.3             -         8.3 
 Income taxes 
  relating 
  to actuarial 
  gains on 
  defined benefit 
  pension 
  scheme                    -         -            -          -             -         -         -             -           -       (2.1)          (2.1)             -       (2.1) 
 
 Total 
  comprehensive 
  income 
  for the period            -         -            -          -          66.5     (0.4)         -             -           -       246.5          312.6           9.4       322.0 
                     --------  --------  -----------  ---------  ------------  --------  --------  ------------  ----------  ----------  -------------  ------------  ---------- 
 
   Balance at 30 
   June 2021             23.8      95.6          0.7     (58.5)       (163.4)     (0.1)      42.3           0.7     (181.2)     2,812.5        2,572.4          60.5     2,632.9 
                     --------  --------  -----------  ---------  ------------  --------  --------  ------------  ----------  ----------  -------------  ------------  ---------- 
 
 
 Kingspan Group plc 
 
  Condensed consolidated statement of changes in equity (unaudited) 
  for the 6 month period ended 30 June 2020 
                        Share     Share      Capital   Treasury   Translation      Cash     Share   Revaluation         Put    Retained          Total          Non-       Total 
                      capital   premium   redemption     shares       reserve      flow     based       reserve      option    earnings   attributable   controlling      equity 
                                             reserve                            hedging   payment                 liability                  to owners     interests 
                                                                                reserve   reserve                   reserve                     of the 
                                                                                                                                                parent 
                         EURm      EURm         EURm       EURm          EURm      EURm      EURm          EURm        EURm        EURm           EURm          EURm        EURm 
 
 Balance at 1 
  January 2020           23.8      95.6          0.7     (11.8)       (110.8)       0.3      38.9           0.7     (188.7)     2,221.6        2,070.3          50.1     2,120.4 
                     --------  --------  -----------  ---------  ------------  --------  --------  ------------  ----------  ----------  -------------  ------------  ---------- 
 
  Transactions with owners 
  recognised 
  directly in equity 
 
 Employee share 
  based 
  compensation              -         -            -        0.1             -         -       7.7             -           -           -            7.8             -         7.8 
 Exercise or 
  lapsing of 
  share options             -         -            -          -             -         -     (7.6)             -           -         7.5          (0.1)             -       (0.1) 
 Dividends                  -         -            -          -             -         -         -             -           -           -              -             -           - 
 Transactions with 
 non-controlling 
 interests: 
 Dividends paid to 
  non-controlling 
  interests                 -         -            -          -             -         -         -             -           -           -              -         (0.5)       (0.5) 
 Arising on 
  acquisition               -         -            -          -             -         -         -             -           -           -              -           0.7         0.7 
 Fair value 
  movement                  -         -            -          -             -         -         -             -       (0.9)           -          (0.9)             -       (0.9) 
 Transactions with 
  owners                    -         -            -        0.1             -         -       0.1             -       (0.9)         7.5            6.8           0.2         7.0 
                     --------  --------  -----------  ---------  ------------  --------  --------  ------------  ----------  ----------  -------------  ------------  ---------- 
 
  Total 
  comprehensive 
  income 
  for the period 
 
 Profit for the 
  period                    -         -            -          -             -         -         -             -           -       144.5          144.5           3.0       147.5 
 
 Other 
 comprehensive 
 income 
 Items that may be reclassified subsequently to profit or loss 
 Cash flow hedging 
 in equity 
 - current year             -         -            -          -             -       0.5         -             -           -           -            0.5             -         0.5 
 - tax impact               -         -            -          -             -         -         -             -           -           -              -             -           - 
 Exchange 
  differences on 
  translating 
  foreign 
  operations                -         -            -          -        (63.9)         -         -             -           -           -         (63.9)         (7.7)      (71.6) 
 
 Items that will not be reclassified subsequently to profit or loss 
 Actuarial losses 
  on defined 
  benefit pension 
  scheme                    -         -            -          -             -         -         -             -           -       (9.4)          (9.4)             -       (9.4) 
 Income taxes 
  relating to 
  actuarial losses 
  on defined 
  benefit pension 
  scheme                    -         -            -          -             -         -         -             -           -         1.8            1.8             -         1.8 
 
 Total 
  comprehensive 
  income 
  for the period            -         -            -          -        (63.9)       0.5         -             -           -       136.9           73.5         (4.7)        68.8 
                     --------  --------  -----------  ---------  ------------  --------  --------  ------------  ----------  ----------  -------------  ------------  ---------- 
 
   Balance at 30 
   June 2020             23.8      95.6          0.7     (11.7)       (174.7)       0.8      39.0           0.7     (189.6)     2,366.0        2,150.6          45.6     2,196.2 
                     --------  --------  -----------  ---------  ------------  --------  --------  ------------  ----------  ----------  -------------  ------------  ---------- 
 
 
   Kingspan Group plc 
 
    Condensed consolidated statement of changes in equity (audited) 
    for the year ended 31 December 2020 
                          Share     Share      Capital   Treasury   Translation      Cash     Share   Revaluation         Put   Retained          Total          Non-      Total 
                        capital   premium   redemption     shares       reserve      flow     based       reserve      option   earnings   attributable   controlling     equity 
                                               reserve                            hedging   payment                 liability                 to owners     interests 
                                                                                  reserve   reserve                   reserve                    of the 
                                                                                                                                                 parent 
                           EURm      EURm         EURm       EURm          EURm      EURm      EURm          EURm        EURm       EURm           EURm          EURm       EURm 
 
     Balance at 1 
      January 
      2020                 23.8      95.6          0.7     (11.8)       (110.8)       0.3      38.9           0.7     (188.7)    2,221.6        2,070.3          50.1    2,120.4 
     Transactions with owners recognised directly in equity 
 
     Employee share 
      based 
      compensation            -         -            -          -             -         -      16.0             -           -          -           16.0             -       16.0 
     Tax on employee 
      share 
      based 
      compensation            -         -            -          -             -         -     (0.9)             -           -        4.4            3.5             -        3.5 
     Exercise or 
      lapsing of 
      share options           -         -            -        0.2             -         -    (13.6)             -           -       13.4              -             -          - 
     Repurchase of            -         -            -          -             -         -         -             -           -          -              -             -          - 
     shares 
     Transactions 
     with 
     non-controlling 
     interests: 
     Arising on 
      acquisition             -         -            -          -             -         -         -             -           -          -              -         (0.8)      (0.8) 
     Dividends paid 
      to 
      non-controlling 
      interests               -         -            -          -             -         -         -             -           -          -              -         (1.2)      (1.2) 
     Fair value 
      movement                -         -            -          -             -         -         -             -        20.4          -           20.4             -       20.4 
 
     Transactions 
      with owners             -         -            -        0.2             -         -       1.5             -        20.4       17.8           39.9         (2.0)       37.9 
                       --------  --------  -----------  ---------  ------------  --------  --------  ------------  ----------  ---------  -------------  ------------  --------- 
 
     Total 
     comprehensive 
     income 
     for the year 
     Profit for the 
      year                    -         -            -          -             -         -         -             -           -      373.6          373.6          11.2      384.8 
     Other 
     comprehensive 
     income: 
     Items that may be reclassified subsequently to profit or loss 
     Cash flow 
     hedging in 
     equity 
     - current year           -         -            -          -             -         -         -             -           -          -              -             -          - 
     - tax impact             -         -            -          -             -         -         -             -           -          -              -             -          - 
     Exchange 
      differences 
      on translating 
      foreign 
      operations              -         -            -          -       (119.1)         -         -             -           -          -        (119.1)        (10.6)    (129.7) 
 
     Items that will not be reclassified subsequently to profit or loss 
     Actuarial losses 
      on defined 
      benefit pension 
      scheme                  -         -            -          -             -         -         -             -           -     (19.9)         (19.9)             -     (19.9) 
     Income taxes 
      relating 
      to actuarial 
      losses on 
      defined benefit 
      pension 
      scheme                  -         -            -          -             -         -         -             -           -        4.1            4.1             -        4.1 
     Total 
      comprehensive 
      income 
      for the year            -         -            -          -       (119.1)         -         -             -           -      357.8          238.7           0.6      239.3 
                       --------  --------  -----------  ---------  ------------  --------  --------  ------------  ----------  ---------  -------------  ------------  --------- 
 
      Balance at 31 
      December 
      2020                 23.8      95.6          0.7     (11.6)       (229.9)       0.3      40.4           0.7     (168.3)    2,597.2        2,348.9          48.7    2,397.6 
                       --------  --------  -----------  ---------  ------------  --------  --------  ------------  ----------  ---------  -------------  ------------  --------- 
 
 
 
   Kingspan Group plc 
 
   Condensed consolidated statement of cash flows (unaudited) 
   for the 6 month period ended 30 June 2021 
                                  6 months                   6 months 
                                     ended                      ended 
                              30 June 2021                    30 June 
                                                                 2020 
                                      EURm 
                                                                 EURm 
 
 
 Operating activities 
 Profit for the period                     246.7   147.5 
 
 Add back non-operating expenses: 
 Income tax expense                         50.5    30.0 
 Depreciation of property, plant 
  and equipment                             64.0    60.4 
 Amortisation of intangible assets          12.4    10.9 
 Impairment of non-current assets            0.4       - 
 Employee equity-settled share options       8.1     7.7 
 Finance income                            (0.2)   (0.8) 
 Finance expense                            19.5    12.5 
 
 
 Profit on sale of property, plant 
  and equipment                                  (0.2)     (2.5) 
 
 Changes in working capital: 
 Inventories                                   (159.6)      15.8 
 Trade and other receivables                   (334.6)    (53.8) 
 Trade, other payables and provisions            375.7     133.6 
 
 
   Other: 
 Pension contributions                           (1.7)     (0.6) 
                                            ----------  -------- 
 
 Cash generated from operations                  281.0     360.7 
 Income tax paid                                (40.9)    (14.9) 
 Interest paid                                  (18.8)    (11.1) 
                                            ----------  -------- 
 Net cash flow from operating activities         221.3     334.7 
                                            ----------  -------- 
 
   Investing activities 
 Additions to property, plant and 
  equipment                                     (62.9)    (63.8) 
 Proceeds from disposals of property, 
  plant and equipment                              2.6       5.1 
 Purchase of subsidiary undertakings 
  (including net debt/cash acquired)           (430.9)    (42.0) 
 Purchase of financial assets                    (5.0)         - 
 Interest received                                 0.3       0.7 
                                            ----------  -------- 
 Net cash flow from investing activities       (495.9)   (100.0) 
                                            ----------  -------- 
 
   Financing activities 
 Drawdown of interest bearing loans 
  and borrowings                                  47.0      51.5 
 Repayment of interest bearing loans 
  and borrowings                                (92.5)     (1.1) 
 Payment of lease liabilities                   (19.5)    (16.3) 
 Repurchase of treasury shares                  (46.9)         - 
 Dividends paid to non-controlling 
  interests                                      (2.2)     (0.5) 
 Dividends paid                                 (37.4)         - 
                                            ----------  -------- 
 Net cash flow from financing activities       (151.5)      33.6 
                                            ----------  -------- 
 
   (Decrease)/increase in cash and 
   cash equivalents                            (426.1)     268.3 
 Translation adjustment                           27.8    (28.2) 
 Cash and cash equivalents at the 
  beginning of the period                      1,329.7     190.9 
                                            ----------  -------- 
 Cash and cash equivalents at the 
  end of the period                              931.4     431.0 
                                            ----------  -------- 
 
 

Kingspan Group plc

Notes

forming part of the financial statements

   1    Reporting entity 

Kingspan Group plc ("the Company") is a public limited company registered and domiciled in Ireland.

The Company and its subsidiaries (together referred to as "the Group") are primarily involved in the manufacture of high performance insulation and building envelope solutions.

The financial information presented in the half-yearly report does not represent full statutory accounts. Full statutory accounts for the year ended 31 December 2020 prepared in accordance with IFRS, as adopted by the EU, upon which the auditors have given an unqualified audit report, are available on the Group's website ( www.kingspan.com ).

   2    Basis of preparation 

This half-yearly financial report is unaudited and has not been reviewed by the Company's auditor with regard to the Financial Reporting Council's International Standard on Review Engagements (UK and Ireland) 2410.

(a) Statement of compliance

These condensed consolidated interim financial statements ("the Interim Financial Statements") have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements.

The Interim Financial Statements were approved by the Board of Directors on 20 August 2021.

(b) Significant accounting policies

The significant accounting policies applied by the Group in the Interim Financial Statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2020.

The following amendments to standards and interpretations are effective for the Group from 1 January 2021 and do not have a material effect on the results or financial position of the Group:

 
                                                                           Effective Date 
                                                                      - periods beginning 
                                                                              on or after 
 
       Amendments to IFRS 9 Financial Instruments, 
        IAS 39 Financial Instruments: Recognition 
        and measurement, IFRS 7 Financial Instruments: 
        Disclosures, IFRS 4 Insurance Contracts and                        1 January 2021 
        IFRS 16 Leases - Interest Rate Benchmark Reform 
        - Phase 2 
 

There are a number of new standards, amendments to standards and interpretations that are not yet effective and have not been applied in preparing these Interim Financial Statements. These new standards, amendments to standards and interpretations are either not expected to have a material impact on the Group's financial statements or are still under assessment by the Group. The principal new standards, amendments to standards and interpretations are as follows:

 
                                                                         Effective Date 
                                                                    - periods beginning 
                                                                            on or after 
 
 IFRS 17 Insurance Contracts                                            1 January 2023* 
 Amendments to IAS 1 Presentation of Financial 
  Statements - Classification of Liabilities as                         1 January 2023* 
  Current or Non-current 
 Amendments to IAS 12 Income Taxes - Deferred Tax 
  related to Assets and Liabilities arising from                        1 January 2023* 
  a Single Transaction 
 Amendments to IAS 1 Presentation of Financial 
  Statements and IFRS Practice Statement 2 - Disclosure                 1 January 2023* 
  of Accounting policies 
 Amendments to IAS 8 Accounting policies, Changes 
  in Accounting Estimates and Errors - Definition                       1 January 2023* 
  of Accounting Estimates 
 Amendments to IFRS 3 Business Combinations -- 
  Reference to the Conceptual Framework                                 1 January 2022* 
 Amendments to IAS 16 Property, Plant and Equipment 
  - Proceeds before Intended Use                                         1 January 2022 
 Amendments to IAS 37 Provisions, Contingent Liabilities 
  and Contingent Assets - Onerous Contracts - Costs                     1 January 2022* 
  of Fulfilling a Contract 
 Amendments to IFRS 1 First-time Adoption of International 
  Financial Reporting Standards - Subsidiary as                         1 January 2022* 
  a first-time adopter 
 Amendments to IFRS 9 Financial Instruments - Fees 
  in the "10 per cent" test for derecognition of                        1 January 2022* 
  financial liabilities 
 Amendments to IAS 41 Agriculture - Taxation in                         1 January 2022* 
  fair value measurements 
 Amendments to IFRS 16 Leases - COVID-19 related 
  rent concessions beyond 30 June 2021                                    1 April 2021* 
 

* Not EU endorsed

(c) Estimates and judgements

The preparation of Interim Financial Statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.

In preparing the Interim Financial Statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2020.

The Interim Financial Statements are available on the Group's website ( www.kingspan.com ).

(d) Going concern

The directors have reviewed forecasts and projected cash flows for a period of not less than 12 months from the date of these Interim Financial Statements, and considered its net debt position, available committed banking facilities and other relevant information including the economic conditions currently affecting the building environment generally. On the basis of this review, the directors have concluded that there are no material uncertainties that would cast significant doubt over the Group's ability to continue as a going concern. For this reason, the directors consider it appropriate to adopt the going concern basis in preparing the financial statements.

   3    Reporting currency 

The Interim Financial Statements are presented in Euro which is the functional currency of the Company and presentation currency of the Group.

Results and cash flows of foreign subsidiary undertakings have been translated into Euro at the average exchange rates for the period, as these approximate the exchange rates at the dates of the transactions. The related assets and liabilities have been translated at the closing rates of exchange applicable at the end of the reporting period.

The following significant exchange rates were applied during the period:

 
                                 Average rate                  Closing rate 
                         H1 2021   H1 2020    FY 2020   H1 2021   H1 2020   FY 2020 
    Euro = 
    Pound Sterling         0.868     0.874      0.889     0.860     0.904     0.900 
    US Dollar              1.205     1.103      1.142     1.185     1.124     1.229 
    Canadian Dollar        1.502     1.503      1.530     1.470     1.534     1.567 
    Australian Dollar      1.563     1.679      1.655     1.583     1.637     1.596 
    Czech Koruna          25.850    26.351     26.463    25.467    26.738    26.264 
    Polish Zloty           4.537     4.413      4.444     4.516     4.457     4.589 
    Hungarian Forint     357.800   345.220     351.21   351.690   353.830    364.92 
    Brazilian Real         6.482     5.409      5.898     5.891     6.008     6.384 
 
   4    Operating segments 

The Group has the following five reportable segments:

 
       Insulated Panels          Manufacture of insulated panels, structural framing 
                                  and metal facades. 
       Insulation Boards         Manufacture of rigid insulation boards, building 
                                  services insulation and engineered timber systems. 
       Light & Air               Manufacture of daylighting, smoke management and 
                                  ventilation systems. 
       Water & Energy            Manufacture of energy and water solutions and 
                                  all related service activity. 
       Data & Flooring           Manufacture of data centre storage solutions and 
                                  raised access floors. 
 
 
 Analysis by class of business 
 Segment revenue and disaggregation of revenue 
                                                                            Data 
                        Insulated   Insulation     Light       Water           & 
                           Panels       Boards     & Air    & Energy    Flooring       Total 
                             EURm         EURm      EURm        EURm        EURm        EURm 
 
   Total revenue - 
   H1 2021                1,922.8        499.5     239.5       126.3       132.0     2,920.1 
 Total revenue - 
  H1 2020                 1,332.0        367.9     171.9        92.9       108.0     2,072.7 
 
 Disaggregation of revenue H1 2021 
 Point in Time            1,915.7        487.6     122.1       124.8       118.0     2,768.2 
 Over Time                    7.1         11.9     117.4         1.5        14.0       151.9 
                       ----------  -----------  --------  ----------  ----------  ---------- 
                          1,922.8        499.5     239.5       126.3       132.0     2,920.1 
 
 Disaggregation of revenue H1 2020 
 Point in Time            1,330.4        356.4      96.3        92.4        96.0     1,971.5 
 Over Time                    1.6         11.5      75.6         0.5        12.0       101.2 
                       ----------  -----------  --------  ----------  ----------  ---------- 
                          1,332.0        367.9     171.9        92.9       108.0     2,072.7 
 
 
 
                                                                               Data 
                            Insulated   Insulation    Light       Water           & 
                               Panels       Boards    & Air    & Energy    Flooring      Total 
                                 EURm         EURm     EURm        EURm        EURm       EURm 
 
   Trading profit - 
   H1 2021                      223.6         69.9      6.5        11.9        17.0      328.9 
 Intangible amortisation        (7.1)        (1.8)    (2.8)       (0.6)       (0.1)     (12.4) 
 
   Operating result 
   - H1 2021                    216.5         68.1      3.7        11.3        16.9      316.5 
                           ----------  -----------  -------  ----------  ---------- 
 
   Net finance expense                                                                  (19.3) 
                                                                                     --------- 
 Profit for the period before income tax                                                 297.2 
 Income tax expense                                                                     (50.5) 
                                                                                     --------- 
 
   Profit for the period - H1 2021                                                       246.7 
                                                                                     --------- 
 
 
                                                                      Data 
                  Insulated   Insulation     Light       Water           & 
                     Panels       Boards     & Air    & Energy    Flooring       Total 
                       EURm         EURm      EURm        EURm        EURm        EURm 
 
   Trading 
   profit - 
   H1 2020            123.3         48.5       7.6         6.9        13.8       200.1 
 Intangible 
  amortisation        (7.2)        (2.5)     (0.7)       (0.4)       (0.1)      (10.9) 
 
   Operating 
   result 
   - H1 2020          116.1         46.0       6.9         6.5        13.7       189.2 
                -----------  -----------  --------  ----------  ---------- 
 
   Net finance 
   expense                                                                      (11.7) 
                                                                            ---------- 
 Profit for the period before income tax                                         177.5 
 Income tax 
  expense                                                                       (30.0) 
                                                                            ---------- 
 
   Profit for the period - H1 2020                                               147.5 
                                                                            ---------- 
 
   Segment assets and liabilities 
                                                                      Data       Total       Total 
                  Insulated   Insulation     Light       Water           &     30 June     30 June 
                     Panels       Boards     & Air    & Energy    Flooring        2021        2020 
                       EURm         EURm      EURm        EURm        EURm        EURm        EURm 
 Assets - H1 
  2021              2,914.1      1,206.5     587.9       230.4       200.8     5,139.7 
 Assets - H1 
  2020              2,459.7        801.2     498.9       182.5       184.8                 4,127.1 
 Derivative 
  financial 
  instruments                                                                     18.3        33.7 
 Cash and cash 
  equivalents                                                                    931.4       431.0 
 Deferred tax 
  asset                                                                           23.0        15.9 
                                                                            ----------  ---------- 
 Total assets                                                                  6,112.4     4,607.7 
                                                                            ----------  ---------- 
 
 Liabilities - 
  H1 2021         (1,129.9)      (327.9)   (217.4)      (91.6)      (56.0)   (1,822.8) 
 Liabilities - 
  H1 2020           (877.7)      (205.1)   (200.5)      (66.0)      (40.2)               (1,389.5) 
 Derivative                                                                      (0.2)           - 
 financial 
 instruments 
 Interest bearing loans and borrowings (current and non-current)             (1,551.4)       (902.6) 
 Income tax liabilities (current and deferred)                                 (105.1)       (119.4) 
                                                                            ----------  ------------ 
 Total liabilities                                                           (3,479.5)     (2,411.5) 
                                                                            ----------  ------------ 
 
 
 
 Other segment information 
                              Insulated   Insulation    Light                    Data 
                                 Panels       Boards    & Air       Water           & 
                                   EURm         EURm     EURm    & Energy    Flooring    Total 
                                                                     EURm        EURm     EURm 
 
   Capital Investment 
   - H1 2021 *                     93.3         53.0     16.8         4.8         2.8    170.7 
 Capital Investment 
  - H1 2020 *                      54.7          9.4     16.7         0.7         1.1     82.6 
 
 Depreciation included 
  in segment 
  result - H1 2021               (38.3)       (12.0)    (7.6)       (3.2)       (2.9)   (64.0) 
 Depreciation included 
  in segment 
  result - H1 2020               (36.7)       (12.1)    (5.6)       (3.3)       (2.7)   (60.4) 
 
 Non cash items included 
  in segment result 
  - H1 2021                       (4.7)        (1.5)    (0.6)       (0.5)       (0.8)    (8.1) 
 Non cash items included 
  in segment result 
  - H1 2020                       (4.5)        (1.5)    (0.4)       (0.5)       (0.8)    (7.7) 
 
 
 Analysis of segmental data by geography 
                                Western       Central 
                             & Southern    & Northern                                  Rest 
                                 Europe        Europe     Americas     Britain     of World     Total 
                                   EURm          EURm         EURm        EURm         EURm      EURm 
 Income Statement Items 
 Revenue - H1 2021              1,086.2         657.8        539.4       472.5        164.2   2,920.1 
 Revenue - H1 2020                734.2         438.2        426.6       335.0        138.7   2,072.7 
 
 Statement of Financial Position Items 
 Non-current assets - 
  H1 2021 **                    1,074.8         834.8        622.1       407.9        208.1   3,147.7 
 Non-current assets - 
  H1 2020 ** (***)              1,039.2         503.3        577.8       392.9        202.1   2,715.3 
 
 Capital Investment - 
  H1 2021 *                        34.5          93.5         31.2         8.9          2.6     170.7 
 Capital Investment - 
  H1 2020 *                        43.8          13.5         14.4         9.8          1.1      82.6 
 
 *                         Capital investment includes the fair value of property, plant, 
                            equipment and intangible assets acquired through additions 
                            in the period and also as part of business combinations. 
                            Additions to right of use assets are excluded. 
 
 ** Total non-current assets excluding derivative financial instruments 
  and deferred tax assets. 
  *** Non-current assets in H1 2020 have been restated to reflect 
  a change in the classification of the Colt retirement benefit 
  assets and liabilities which were shown gross instead of net 
  in the prior year. 
 
 

Revenues, non-current assets and capital investment (as defined in IFRS 8) attributable to the country of domicile were EUR94.1m (June 2020: EUR60.6m), EUR79.6m (June 2020: EUR65.4m) and EUR7.8m (June 2020: EUR4.1m) respectively. In presenting information on the basis of geographic segments, segment revenue is based on the geographic location of customers. Segment assets are based on the geographic location of the assets.

The geographic regions have been revised to provide a more detailed breakdown of the previously reported Mainland Europe region which has seen significant growth in recent years. All prior year comparatives have been restated on the same basis. The country of domicile is included in Western & Southern Europe. Western & Southern Europe includes France, Benelux, Spain and Ireland while Central & Northern Europe includes Germany, the Nordics, Poland, Hungary, Romania, Czech Republic, the Baltics and other South Central European countries. Americas comprises the US, Canada, Central Americas and South America. Rest of World is predominantly Australasia and the Middle East.

   5    Seasonality of operations 

Activity in the global construction industry is characterised by cyclicality and is dependent, to a significant extent, on the seasonal impact of weather in some of the Group's operating locations. Activity is second half weighted.

   6    Finance expense and finance income 
 
                                                   6 months        6 months 
                                                      ended           ended 
                                                    30 June         30 June 
                                                       2021            2020 
                                                       EURm            EURm 
 Finance expense 
 Bank loans                                             3.0             1.6 
 Private placement loan notes                          14.4             8.4 
 Lease interest                                         1.8             2.0 
 Defined benefit pension scheme, 
  net                                                   0.2             0.4 
 Fair value movement on derivative 
  financial instruments                                 3.5           (7.3) 
 Fair value movement on private placement 
  debt                                                (3.6)             7.4 
  Other interest                                        0.2               - 
                                                  ---------       --------- 
                                                       19.5            12.5 
 Finance income 
 Interest earned                                      (0.2)           (0.8) 
                                                                  --------- 
 Net finance cost                                      19.3            11.7 
                                                  ---------       --------- 
 

EUR2.5m of borrowing costs were capitalised during the period (H1 2020: EUR0.2m).

   7    Taxation 

Taxation provided for on profits is EUR50.5m (H1 2020: EUR30.0m) which represents 17.0% (H1 2020: 16.9%) of the profit before tax for the period. The full year effective tax rate in 2020 was 16.3%. The taxation charge for the six month period is accrued using the estimated applicable rate for the year as a whole.

   8    Analysis of net debt 
 
                                             At          At             At 
                                        30 June     30 June    31 December 
                                           2021        2020           2020 
                                           EURm        EURm           EURm 
 
 Cash and cash equivalents                931.4       431.0        1,329.7 
 Derivative financial instruments          18.3        33.7           19.8 
 Current borrowings                     (172.3)      (45.9)        (209.6) 
 Non-current borrowings               (1,379.1)     (856.7)      (1,376.1) 
 
   Total net debt                       (601.7)     (437.9)        (236.2) 
                                     ----------  ----------  ------------- 
 

Net debt, which is an Alternative Performance Measure, is stated net of interest rate and currency hedge asset of EUR18.3m (at 31 December 2020: asset of EUR19.8m) which relate to hedges of debt. Foreign currency derivatives of EUR0.2m (at 31 December 2020: EUR0.2m), which are used for transactional hedging, are not included in the definition of net debt. Lease liabilities recognised due to the implementation of IFRS 16 and deferred contingent consideration have also been excluded from the calculation of net debt.

   9     Financial instruments 

The following table outlines the components of net debt by category:

 
                                                                Derivatives 
                                  Financial      Liabilities     designated 
                                    assets/        in a fair     as hedging     Total net 
                              (liabilities)      value hedge    instruments       debt by 
                               at amortised     relationship           EURm      category 
                                       cost             EURm                         EURm 
                                       EURm 
 Assets: 
 Foreign exchange and 
  interest rate swaps                     -                -           18.3          18.3 
 Cash at bank and in 
  hand                                931.4                -              -         931.4 
                           ----------------  ---------------  -------------  ------------ 
 Total assets                         931.4                -           18.3         949.7 
                           ----------------  ---------------  -------------  ------------ 
 
   Liabilities: 
 Private placement notes          (1,404.1)          (134.2)              -     (1,538.3) 
 Other loans                         (13.1)                -              -        (13.1) 
 Total liabilities                (1,417.2)          (134.2)              -     (1,551.4) 
                           ----------------  ---------------  -------------  ------------ 
 
   At 30 June 2021                  (485.8)          (134.2)           18.3       (601.7) 
                           ----------------  ---------------  -------------  ------------ 
 
 
                                                                Derivatives 
                                  Financial      Liabilities     designated 
                                    assets/        in a fair     as hedging     Total net 
                              (liabilities)      value hedge    instruments       debt by 
                               at amortised     relationship           EURm      category 
                                       cost             EURm                         EURm 
                                       EURm 
 Assets: 
 Foreign exchange and 
  interest rate swaps                   0.6                -           19.2          19.8 
 Cash at bank and in 
  hand                              1,329.7                -              -       1,329.7 
                           ----------------  ---------------  -------------  ------------ 
 Total assets                       1,330.3                -           19.2       1,349.5 
                           ----------------  ---------------  -------------  ------------ 
 
   Liabilities: 
 Private placement notes          (1,396.8)          (131.3)              -     (1,528.1) 
 Other loans                         (57.6)                -              -        (57.6) 
 Total liabilities                (1,454.4)          (131.3)              -     (1,585.7) 
                           ----------------  ---------------  -------------  ------------ 
 
   At 31 December 2020              (124.1)          (131.3)           19.2       (236.2) 
                           ----------------  ---------------  -------------  ------------ 
 
 
 
 
                                  Financial 
                                    assets/      Liabilities     Derivatives 
                              (liabilities)        in a fair      designated     Total net 
                               at amortised      value hedge      as hedging       debt by 
                                       cost     relationship     instruments      category 
                                       EURm             EURm            EURm          EURm 
 Assets: 
 Foreign exchange and 
  interest rate swaps                     -                -            33.7          33.7 
 Cash at bank and in 
  hand                                431.0                -               -         431.0 
                           ----------------  ---------------  --------------  ------------ 
 Total assets                         431.0                -            33.7         464.7 
                           ----------------  ---------------  --------------  ------------ 
 
   Liabilities: 
 Private placement notes            (699.3)          (142.8)               -       (842.1) 
 Other loans                         (60.5)                -               -        (60.5) 
 Total liabilities                  (759.8)          (142.8)               -       (902.6) 
                           ----------------  ---------------  --------------  ------------ 
 
   At 30 June 2020                  (328.8)          (142.8)            33.7       (437.9) 
                           ----------------  ---------------  --------------  ------------ 
 

The Group's private placement loan notes of EUR1,538.3m (at 31 December 2020: EUR1,528.1m) have a weighted average maturity of 6.2 years (at 31 December 2020: 6.1 years).

Included in cash at bank and in hand are overdrawn positions of EUR1,433.6m ( June 2020: EUR1,141.7m) . These balances form part of a notional cash pool arrangement and are netted against cash balances of EUR1,518.4m ( June 2020: EUR1,257.8m) . There is legal right of offset between these balances and the balances are physically settled on a regular basis.

Fair value of financial instruments carried at fair value

Financial instruments recognised at fair value are analysed between those based on quoted prices in active markets for identical assets or liabilities (Level 1), those involving inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly (Level 2), and those involving inputs for the assets or liabilities that are not based on observable market data (Level 3).

The following table sets out the fair value of all financial instruments whose carrying value is measured at fair value:

 
                                         Level 1    Level 2     Level 3 
                                         30 June    30 June     30 June 
                                            2021       2021        2021 
                                            EURm       EURm        EURm 
 Financial assets 
  Interest rate swaps                          -        0.1           - 
  Foreign exchange swaps                       -       18.2           - 
 
  Financial liabilities 
  Deferred contingent consideration            -          -      (23.7) 
  Put option liabilities                       -          -     (136.9) 
  Foreign exchange contracts for               -      (0.2)           - 
   hedging 
                                      ----------  ---------  ---------- 
 
   At 30 June 2021                             -       18.1     (160.6) 
                                      ----------  ---------  ---------- 
 
 
                                             Level 1        Level 2        Level 3 
                                         31 December    31 December    31 December 
                                                2020           2020           2020 
                                                EURm           EURm           EURm 
 Financial assets 
  Interest rate swaps                              -            0.6              - 
  Foreign exchange swaps                           -           19.2              - 
 
  Financial liabilities 
  Deferred contingent consideration                -              -         (10.3) 
  Put option liabilities                           -              -        (117.3) 
  Foreign exchange contracts for                   -          (0.2)              - 
   hedging 
 
   At 31 December 2020                             -           19.6        (127.6) 
                                      --------------  -------------  ------------- 
 
 
                                         Level 1    Level 2     Level 3 
                                         30 June    30 June     30 June 
                                            2020       2020        2020 
                                            EURm       EURm        EURm 
 Financial assets 
  Interest rate swaps                          -        1.0           - 
  Foreign exchange swaps                       -       32.7           - 
 
  Financial liabilities 
  Deferred contingent consideration            -          -      (11.2) 
  Put option liabilities                       -          -     (145.0) 
                                      ----------  ---------  ---------- 
 
   At 30 June 2020                             -       33.7     (156.2) 
                                      ----------  ---------  ---------- 
 

All derivatives entered into by the Group are included in Level 2 and consist of foreign currency forward contracts, interest rate swaps and cross currency interest rate swaps.

Where derivatives are traded either on exchanges or liquid over-the-counter markets, the Group uses the closing price at the reporting date. Normally, the derivatives entered into by the Group are not traded in active markets. The fair values of these contracts are estimated using a valuation technique that maximises the use of observable market inputs, e.g. foreign exchange and interest rates.

Deferred contingent consideration is included in Level 3. The fair value estimate of deferred contingent consideration is consistent with 31 December 2020 and is set out in notes 18 and 19 of the 2020 Annual Report. The contingent element is measured on a series of trading performance targets and is adjusted by the application of a range of outcomes and associated probabilities.

During the period ended 30 June 2021, there were no significant changes in the business or economic circumstances that affect the fair value of financial assets and liabilities, no reclassifications and no transfers between levels of the fair value hierarchy used in measuring the fair value of the financial instruments.

Fair value of financial instruments at amortised cost

Except as detailed below, it is considered that the carrying amounts of financial assets and financial liabilities recognised at amortised cost in the Interim Financial Statements approximate their fair values.

 
 Private placement notes    Carrying amount   Fair value 
                                       EURm         EURm 
 At 30 June 2021                    1,538.3      1,726.1 
 At 31 December 2020                1,528.1      1,726.4 
 At 30 June 2020                      842.1        915.2 
 

The fair value of the private placement notes, which are Level 2 financial instruments, is derived by using observable market data, principally the relevant interest rates.

   10    Deferred contingent consideration 
 
                                            At         At             At 
                                       30 June    30 June    31 December 
                                          2021       2020           2020 
                                          EURm       EURm           EURm 
 
   At the beginning of the period        127.6      186.5          186.5 
 Deferred contingent consideration        12.4          -              - 
  arising on acquisitions 
 Movement in deferred contingent 
  consideration arising from fair 
  value movement                             -          -          (0.7) 
 Movement in put liability arising 
  from fair value movement                12.9        0.9         (20.4) 
 Effect of movement in exchange 
  rates                                    7.7     (31.2)         (37.8) 
                                     ---------  ---------  ------------- 
 
   Closing balance                       160.6      156.2          127.6 
                                     ---------  ---------  ------------- 
 
 Split as follows: 
 Current liabilities                      38.4          -              - 
 Non-current liabilities                 122.2      156.2          127.6 
                                     ---------  ---------  ------------- 
 
                                         160.6      156.2          127.6 
                                     ---------  ---------  ------------- 
 

For the purposes of the fair value assessments all of the put option liabilities are valued using the option price formula in the shareholder's agreement and the most recent financial projections. These are classified as unobservable inputs. The significant unobservable inputs used in the fair value measurements and the quantitative sensitivity analysis are shown in the table below:

 
 Type            Valuation       Significant                                              Sensitivity of the 
                 technique        unobservable                                             input to the fair 
                                  inputs                                                   value 
 Deferred        Discounted 
 contingent      cashflow         *    Risk adjusted discount rates of between 0.0% and    *    A 10% decrease in the risk adjusted discount rate 
 consideration   method                1.5%.                                                    would result in an increase in the fair value of the 
                 The net                                                                        deferred contingent consideration of EUR0.1m. 
                 present value 
                 of the           *    EBITDA multiples of between 2.8 and 8.1. 
                 expected                                                                  *    A 5% increase in the assumed profitability of the 
                 payment                                                                        acquired entities would result in an increase in the 
                 is calculated                                                                  fair value of the deferred contingent consideration 
                 by using                                                                       of EUR0.4m. 
                 a risk 
                 adjusted 
                 discount 
                 rate. The 
                 expected 
                 payments are 
                 valued 
                 using the 
                 earn out 
                 formula in 
                 the 
                 shareholder's 
                 agreement and 
                 the 
                 most recent 
                 financial 
                 projections. 
                --------------  -------------------------------------------------------  ----------------------------------------------------------- 
 Put option      Discounted 
  liabilities    cashflow         *    Risk adjusted discount rates of between 0.6% and    *    A 10% decrease in the risk adjusted discount rate 
                 method                6.1%.                                                    would result in an increase in the fair value of the 
                 The net                                                                        put option liabilities of EUR0.7m. 
                 present value 
                 of the           *    EBITDA multiples of between 6.5 and 8.57. 
                 expected                                                                  *    A 5% increase in the assumed profitability of the 
                 payment                                                                        acquirees would result in an increase in the fair 
                 is calculated                                                                  value of the put option liabilities of EUR6.7m. 
                 by using 
                 a risk 
                 adjusted 
                 discount 
                 rate. The 
                 expected 
                 payments are 
                 valued 
                 using the 
                 option price 
                 formula in 
                 the 
                 shareholder's 
                 agreement and 
                 the 
                 most recent 
                 financial 
                 projections. 
                --------------  -------------------------------------------------------  ----------------------------------------------------------- 
 
   11   Dividends 

A final dividend on ordinary shares of 20.6 cent per share in respect of the year ended 31 December 2020 (2019: nil cent) was paid on 07 May 2021.

The directors have declared an interim dividend in respect of 2021 of 19.9 cent (2020: nil cent) which will be paid on 8 October 2021 to shareholders on the register on the record date of 10 September 2021.

   12   Earnings per share 
 
                                               6 months     6 months 
                                                  ended        ended 
                                                30 June      30 June 
                                                   2021         2020 
                                                   EURm         EURm 
 The calculations of earnings per 
  share are based on the following: 
 Profit attributable to owners 
  of the Company                                  240.3        144.5 
                                        ---------------  ----------- 
 
                                              Number of       Number 
                                          shares ('000)           of 
                                               6 months       shares 
                                                  ended       ('000) 
                                                30 June     6 months 
                                                   2021        ended 
                                                             30 June 
                                                                2020 
 Weighted average number of ordinary 
  shares for 
  the calculation of basic earnings 
  per share                                     181,536      181,013 
 Dilutive effect of share options                 1,445        1,485 
                                        ---------------  ----------- 
 Weighted average number of ordinary 
  shares 
  for the calculation of diluted 
  earnings per share                            182,981      182,498 
                                        ---------------  ----------- 
 
 
                                               EUR cent     EUR cent 
 
   Basic earnings per share                       132.4         79.8 
 
   Diluted earnings per share                     131.3         79.2 
 

At 30 June 2021, there were no anti-dilutive options (30 June 2020: Nil).

13 Goodwill

 
 
                                          At          At              At 
                                     30 June     30 June     31 December 
                                        2021        2020            2020 
                                                                    EURm 
                                        EURm        EURm 
 
 At beginning of period              1,478.8     1,506.9         1,506.9 
 Acquired through business 
  combinations                         301.4        31.5            41.7 
 Effect of movement in exchange 
  rates                                 30.5      (39.9)          (69.8) 
                                  ----------  ----------  -------------- 
 At end of period                    1,810.7     1,498.5         1,478.8 
                                  ----------  ----------  -------------- 
 
 At end of period 
 Cost                                1,878.4     1,566.2         1,546.5 
 Accumulated impairment losses        (67.7)      (67.7)          (67.7) 
                                              ---------- 
 Net carrying amount                 1,810.7     1,498.5         1,478.8 
                                  ----------  ----------  -------------- 
 

14 Property, plant and equipment

 
 
                                          At          At              At 
                                     30 June     30 June     31 December 
                                        2021        2020            2020 
                                                                    EURm 
                                        EURm        EURm 
 
   Cost or valuation                 2,364.3     2,088.8         2,099.8 
 Accumulated depreciation 
  and impairment charges           (1,274.7)   (1,120.5)       (1,126.9) 
                                  ----------  ----------  -------------- 
 Net carrying amount                 1,089.6       968.3           972.9 
                                  ----------  ----------  -------------- 
 
 Opening net carrying amount           972.9       965.2           965.2 
 Acquired through business 
  combinations                          83.1        13.1            11.5 
 Additions                              65.2        62.8           129.9 
 Disposals                             (2.4)       (2.6)           (4.6) 
 Depreciation charge                  (47.1)      (44.8)          (89.7) 
 Impairment charge                     (0.4)           -           (2.4) 
 Effect of movement in exchange 
  rates                                 18.3      (25.4)          (37.0) 
 Closing net carrying amount         1,089.6       968.3           972.9 
                                  ----------  ----------  -------------- 
 

The disposals generated a profit in the period of EUR0.2m (H1 2020: EUR2.5m).

15 Leases

Right of use asset

 
                                         At         At             At 
                                    30 June    30 June    31 December 
                                       2021       2020           2020 
                                                                 EURm 
                                       EURm       EURm 
 
 At beginning of period               113.0      121.6          121.6 
 Additions                             12.6        8.3           17.3 
 Arising on acquisitions               12.3       33.6           12.8 
 Remeasurement                          9.3        1.1            2.2 
 Terminations                         (1.4)      (1.0)          (2.6) 
 Depreciation charge for the 
  year                               (16.9)     (15.6)         (32.3) 
 Effect of movement in exchange 
  rates                                 2.9      (4.6)          (6.0) 
 Closing net carrying amount          131.8      143.4          113.0 
                                  ---------  ---------  ------------- 
 

Lease liability

 
                                         At         At             At 
                                    30 June    30 June    31 December 
                                       2021       2020           2020 
                                                                 EURm 
                                       EURm       EURm 
 
 At beginning of period               114.8      122.3          122.3 
 Additions                             12.0        8.0           17.1 
 Arising on acquisitions               12.8       33.1           12.6 
 Remeasurement                          9.3        1.1            1.7 
 Terminations                         (1.4)      (1.0)          (2.7) 
 Payments                            (19.5)     (16.3)         (33.7) 
 Interest                               1.8        2.0            3.6 
 Effect of movement in exchange 
  rates                                 2.9      (4.6)          (6.1) 
 Closing net carrying amount          132.7      144.6          114.8 
                                  ---------  ---------  ------------- 
 

Split as follows:

 
 Current liability               31.6    30.3    27.3 
 Non-current liability          101.1   114.3    87.5 
 Closing net carrying amount    132.7   144.6   114.8 
                               ------  ------  ------ 
 

16 Business combinations

During the period, the Group made ten acquisitions for a combined total cash consideration of EUR430.9m.

In June 2021, the Group acquired 100% of the share capital of Logstor a leading global supplier of technical insulation solutions. The total consideration, including net debt acquired amounted to EUR242.4m.

The Group also made a number of smaller acquisitions during the year for a combined cash consideration of EUR188.5m.

 
            --              The Insulated Panels division acquired TeraSteel in Romania, 
                             Bromyros in Uruguay, the remaining 50% of Dome Solar in France, 
                             and the assets of Krohn in Russia; 
            --              The Insulation Boards division acquired the assets of Dyplast 
                             in North America; 
            --              The Light & Air division acquired Skydome in Western Europe 
                             and Major Industries in North America; 
            --              The Water & Energy division acquired BAGA in Sweden and Heritage 
                             Tanks in Australia. 
 

The provisional fair values of the acquired assets and liabilities in respect of these acquisitions at their respective acquisition dates, along with fair value adjustments to certain 2020 acquisitions, are set out below:

 
                                Logstor   TeraSteel   Other*     Total 
                                   EURm        EURm     EURm      EURm 
 Non-current assets 
 Intangible assets                  4.2        13.9      4.3      22.4 
 Property, plant and 
  equipment                        37.1        22.0     24.0      83.1 
 Right of use assets                8.9         0.3      3.1      12.3 
 Deferred tax assets                  -           -      0.3       0.3 
 
   Current assets 
 Inventories                       41.0        24.8     13.9      79.7 
 Trade and other receivables       55.7         9.3     21.1      86.1 
 
   Current liabilities 
 Trade and other payables        (66.7)      (19.2)   (26.9)   (112.8) 
 Provisions for liabilities       (2.9)       (0.5)    (1.0)     (4.4) 
 Lease liabilities                (2.8)       (0.1)    (0.8)     (3.7) 
 
 Non-current liabilities 
 Retirement benefit 
  obligations                     (1.1)           -    (1.1)     (2.2) 
 Lease liabilities                (6.5)       (0.2)    (2.4)     (9.1) 
 Deferred tax liabilities         (0.6)       (2.2)    (0.7)     (3.5) 
                               --------  ----------  -------  -------- 
 
 Total identifiable 
  assets                           66.3        48.1     33.8     148.2 
 
 Non-controlling interests 
  arising in acquisition              -           -    (4.6)     (4.6) 
 Goodwill                         176.1        33.5     91.8     301.4 
 Joint venture becoming 
  subsidiary                          -           -    (1.7)     (1.7) 
                               --------  ----------  -------  -------- 
 
   Total consideration            242.4        81.6    119.3     443.3 
                               --------  ----------  -------  -------- 
 
   Satisfied by: 
 Cash (net of cash/debt 
  acquired)                       242.4        81.6    106.9     430.9 
 Deferred consideration               -           -     12.4      12.4 
 Total consideration              242.4        81.6    119.3     443.3 
                               --------  ----------  -------  -------- 
 

*Other includes the remaining acquisitions completed during the period together with certain immaterial remeasurements of prior year accounting estimates.

The goodwill is attributable principally to the profit generating potential of the businesses, together with a strong workforce, new geographies and synergies expected to be achieved from integrating the businesses into Kingspan's existing structure.

In the post-acquisition period to 30 June 2021, the businesses acquired in the current period contributed total revenue of EUR113.3m and trading profit of EUR15.6m to the Group's results.

The valuation of the fair value of the assets and liabilities recently acquired is still in progress due to the relative size of the acquisitions and the timing of the transactions. The initial assignment of fair values to identifiable net assets acquired has therefore been performed on a provisional basis.

17 Capital and reserves

189,444 ordinary shares (H1 2020: 368,873) were issued as a result of the exercise of vested options arising from the Group's share option schemes (see the 2020 Annual Report for full details of the Group's share option schemes). Options were exercised at an average price of EUR0.13 per option.

During the period the Group bought back 600,000 shares at a weighted average price of EUR78.16 on dates between 19 May 2021 and 10 June 2021.

18 Significant events and transactions

Other than the acquisitions referenced in note 16, there were no individually significant events or transactions in the period which contributed to material changes in the Statement of Financial Position.

19 Related party transactions

There were no changes in related party transactions from the 2020 Annual Report that could have a material effect on the financial position or performance of the Group in the first half of the year. Eugene Murtagh retired as Chairman and non-executive director on 30 April 2021 and is no longer considered a related party.

20 Subsequent events

There have been no further material events subsequent to 30 June 2021 which would require disclosure in this report.

Alternative Performance Measures (APMs)

The Group uses a number of metrics, which are non-IFRS measures, to monitor the performance of its operations.

The Group believes that these metrics assist investors in evaluating the performance of the underlying business. Given that these metrics are regularly used by management, they also give the investor an insight into how Group management review and monitor the business on an ongoing basis.

The principal APMs used by the Group are defined as follows:

Trading profit

This comprises the operating profit as reported in the Income Statement before intangible asset amortisation and non trading items. This equates to the Earnings Before Interest, Tax and Amortisation ("EBITA") of the Group. Trading profit is used by management as it excludes items which may hinder year on year comparisons.

 
                                                     30 June   30 June 
                                                        2021      2020 
                   Financial Statements Reference       EURm      EURm 
----------------  --------------------------------  --------  -------- 
 Trading profit                Note 4                  328.9     200.1 
----------------  --------------------------------  --------  -------- 
 

Trading margin

Measures the trading profit as a percentage of revenue.

 
                                                          30 June   30 June 
                                                             2021      2020 
                        Financial Statements Reference       EURm      EURm 
---------------------  --------------------------------  --------  -------- 
 Trading Profit                     Note 4                  328.9     200.1 
 Total Group Revenue                Note 4                2,920.1   2,072.7 
                                                         --------  -------- 
 Trading margin                                             11.3%      9.7% 
-------------------------------------------------------  --------  -------- 
 

Net interest

The Group defines net interest as the net total of finance expense and finance income as presented in the Income Statement. The impact of IFRS 16 is excluded from the calculation which is consistent with the terms and conditions of the covenants as set out in the Group's external borrowing arrangements.

 
                                                                30 June   30 June 
                                                                   2021      2020 
                              Financial Statements Reference       EURm      EURm 
---------------------------  --------------------------------  --------  -------- 
 Finance Expense                          Note 6                   19.5      12.5 
 Finance Income                           Note 6                  (0.2)     (0.8) 
 Less lease interest (IFRS 
  16)                                     Note 6                  (1.8)     (2.0) 
                                                               --------  -------- 
 Net Interest                                                      17.5       9.7 
-------------------------------------------------------------  --------  -------- 
 

Free cash flow

Free cash flow is the cash generated from operations after net capital expenditure, interest paid, income taxes paid and lease payments and reflects the amount of internally generated capital available for re-investment in the business or for distribution to shareholders.

 
                                                                     30 June   30 June 
                                                                        2021      2020 
                                   Financial Statements Reference       EURm      EURm 
--------------------------------  --------------------------------  --------  -------- 
 
 Net cash flow from operating      Consolidated Statement 
  activities                        of Cash Flows                      221.3     334.7 
 Additions to property, plant,     Consolidated Statement 
  equipment and intangibles         of Cash Flows                     (62.9)    (63.8) 
 Proceeds from disposals of        Consolidated Statement 
  property, plant and equipment     of Cash Flows                        2.6       5.1 
                                   Consolidated Statement 
 Lease payments                     of Cash Flows                     (19.5)    (16.3) 
                                   Consolidated Statement 
 Interest received                  of Cash Flows                        0.3       0.7 
 
 
 Free cash flow                                                        141.8     260.4 
                                                                    -------- 
 
 

Return on capital employed (ROCE)

ROCE is the operating profit before interest and tax for the previous 12 months expressed as a percentage of the net assets employed. The net assets employed reflect the net assets, excluding net debt, at the end of each reporting period.

 
                                                  30 June   30 June   31 December 
                                                     2021      2020          2020 
                      Financial Statements 
                       Reference                     EURm      EURm          EURm 
-------------------  ------------------------  ----------  --------  ------------ 
 
                      Consolidated Statement 
 Net Assets            of Financial Position      2,632.9   2,196.2       2,397.6 
 Net Debt             Note 8                        601.7     437.9         236.2 
 
                                                  3,234.6   2,634.1       2,633.8 
                                               ----------  -------- 
 
 Operating profit 
  before interest 
  and tax                                           612.0     445.0         484.7 
 
 Return on capital 
  employed                                          18.9%    16.9 %         18.4% 
                                               ----------  -------- 
 
 

Net debt

Net debt represents the net total of current and non-current borrowings, current and non-current derivative financial instruments, (excluding foreign currency derivatives which are used for transactional hedging), and cash and cash equivalents as presented in the Statement of Financial Position. Lease liabilities recognised due to the implementation of IFRS 16 and deferred contingent consideration have also been excluded from the calculation of net debt. This definition is in accordance with the terms and conditions of the covenants as set out in the Group's external borrowing arrangements.

 
                                     30 June   30 June   31 December 
                                        2021      2020          2020 
             Financial Statements 
              Reference                 EURm      EURm          EURm 
----------  ----------------------  --------  --------  ------------ 
 
 Net Debt           Note 8             601.7     437.9         236.2 
 
 

EBITDA

The Group defines EBITDA as earnings before finance costs, income taxes, depreciation, amortisation and the impact of IFRS 16.

 
                                                      30 June   30 June 
                                                         2021      2020 
                    Financial Statements Reference       EURm      EURm 
-----------------  --------------------------------  --------  -------- 
                    Condensed Consolidated Income 
 Trading profit      Statement                          328.9     200.1 
                    Consolidated Statement of Cash 
 Depreciation        Flows                               64.0      60.4 
 Lease liability    Consolidated Statement of Cash 
  payments           Flows                             (19.5)    (16.3) 
                                                     --------  -------- 
 EBITDA                                                 373.4     244.2 
---------------------------------------------------  --------  -------- 
 

Net debt : EBITDA

Net debt as a ratio to 12 month EBITDA. EBITDA is solely adjusted for the impact of IFRS 16 Leases which is in accordance with the terms and conditions of the covenants as set out in the Group's external borrowing arrangements.

 
                                              30 June   30 June   31 December 
                                                 2021      2020          2020 
                      Financial Statements 
                       Reference                 EURm      EURm          EURm 
-------------------  ----------------------  --------  --------  ------------ 
 
 Net Debt                    Note 8             601.7     437.9         236.2 
 EBITDA                                         725.7     552.9         596.5 
 
 Net Debt : EBITDA 
  times                                          0.83      0.79          0.40 
 
 

Working capital

Working capital represents the net total of inventories, trade and other receivables and trade and other payables, net of transactional foreign currency derivatives excluded from net debt.

 
                                                            30 June   30 June   31 December 
                                                               2021      2020          2020 
                                Financial Statements 
                                 Reference                     EURm      EURm          EURm 
-----------------------------  ------------------------  ----------  --------  ------------ 
 
                                Consolidated Statement 
 Trade and other receivables     of Financial Position      1,237.0     869.2         799.6 
                                Consolidated Statement 
 Inventories                     of Financial Position        755.0     542.6         505.9 
                                Consolidated Statement 
 Trade and other payables        of Financial Position    (1,360.1)   (932.6)       (854.5) 
 Foreign currency 
  derivatives excluded          Consolidated Statement 
  from net debt                  of Financial Position        (0.2)         -         (0.2) 
 
 Working capital                                              631.7     479.2         450.8 
-------------------------------------------------------  ----------  -------- 
 

Working capital ratio

Measures working capital as a percentage of the previous three months turnover annualised. The annualisation of turnover reflects the current profile of the Group rather than a partial reflection of any acquisitions completed during the period.

 
                                                  30 June   30 June   31 December 
                                                     2021      2020          2020 
                          Financial Statements 
                           Reference                 EURm      EURm          EURm 
-----------------------  ----------------------  --------  --------  ------------ 
 
 Working capital                                    631.7     479.2         450.8 
 Annualised turnover                              6,529.0   4,134.0       5,151.2 
 Working Capital ratio                               9.7%     11.6%          8.8% 
-----------------------------------------------  --------  --------  ------------ 
 

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