Annual Report &
Financial Statements 2020
BETTER
BUILDINGS
FOR A BETTER
WORLD
Renovation
Key to unlocking
energy efficiency
Circularity
Kingspan’s
LIFECycle approach
Changing Lifestyle
Next generation solutions
for next generation industry
Carbon in Construction
It is vital to reduce carbon
at all stages of construction
Our
Impact
IN 2020
Our Front Cover features the Goede Doelen Loterijen
Building in Amsterdam. A defining element of the
design is a canopy of aluminium leaves resting
on tree shaped columns. Not visible behind the
leaves is the glass roof of Kingspan Light &
Air, designed to allow natural daylight into the
building and to cast shadows imitating the canopy
of the forest. The atrium incorporates Kingspan’s
Ventria ventlight to naturally ventilate the
building. A beautiful example of a building which
both emulates and harnesses the power of nature.
Photography: Janners Linders
164m tonnes
164 million tonnes of
CO2e will be saved over
the life of our insulation
systems sold in 2020
ULTRA
ENERGY-
EFFICIENT
CIRCULAR
MATERIALS
15 years
Enough to
power a
major airline
for 15 years 1
573m
In 2020 alone
we upcycled 573
million waste
plastic bottles
800
Enough recycled
bottles to fill over
800 football pitches
CONSERVED
WATER
NATURAL
DAYLIGHT &
VENTILATION
34bn litres
Over 34 billion litres
of rainwater will be
harvested by our tanks
produced in 20202
400m
Enough water
to fill over 400
million baths
9bn lumens
The capacity
to create 9
billion lumens
of natural light
annually through
our daylighting
systems
1m
Enough to light
up 1 million homes3
The Netherlands Goede
Loterijen Building /
Light & Air Ventria /
Photography Janners Linders
OUR PRODUCTS
DIRECTLY ENABLE LOW
CARBON AND HEALTHY
BUILDINGS NOW AND
INTO THE FUTURE
1 Assumes 60 year product
life; based on an EU airline
disclosure of 10.5m tonnes
of CO2e emissions in 2019
2 Assumes a 20 year product life
3 Assumes 10 x 60W bulbs
per home
1
WE ARE
PLANET
PASSIONATE
Through Planet Passionate we will
reduce carbon and energy in both
our manufacturing processes and
products, and continue our relentless
pursuit of low-carbon buildings that
deliver more performance and value,
with clear targets to strive for by 2030.
GENE M. MURTAGH
I
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T
N
E
M
T
M
M
O
C
R
U
O
ENERGY
CARBON
– Maintain our Net Zero Energy status
–
–
Increase our direct use of renewable energy to 60% by 2030
Increase our on-site generation of renewable energy to 20%
by 2030
Install solar PV systems on all wholly owned facilities by 2030
–
– Net zero carbon manufacturing by 2030
–
50% reduction in product CO2e intensity from our primary
supply partners by 2030
100% zero emission company funded cars by 2025
–
CIRCULARITY
– Zero company waste to landfill by 2030
–
1 billion PET bottles upcycled into our manufacturing processes
by 2025
– QuadCore™ products utilising upcycled PET
WATER
–
–
100 million litres of rainwater harvested by 2030
5 active ocean clean-up projects by 2025
2020
2025
2030
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READ MORE
ONLINE ABOUT
PLANET
PASSIONATE
6
RENOVATION
34
CIRCULARITY
Business & Strategic Report
Chairman’s Statement 10
Business Model & Strategy 12
Chief Executive’s Review 18
Financial Review 28
Risk & Risk Management 38
Sustainability Report 42
Directors' Report
The Board 60
Chairman’s Introduction 62
Report of the Nomination
& Governance Committee 64
Report of the Remuneration
Committee 72
Report of the Audit &
Compliance Committee 84
Report of the Directors 94
Financial Statements
Independent Auditor’s Report 104
Financial Statements 112
Notes to the Financial Statements 119
Other Information
Alternative Performance Measures 158
Shareholder Information 161
Principal Subsidiary Undertakings 163
Group 5 Year Summary 168
BETTER
BUILDINGS
FOR A BETTER
WORLD
Our mission is to accelerate
a net zero emissions future
built environment with
the wellbeing of people
and planet at its heart.
56
90
CHANGING
LIFESTYLES
CARBON IN
CONSTRUCTION
3
Summary
Financials
USA HALL Arts Hotel,
Dallas / Insulated
Panels Dri-Design
Painted Aluminum
1 Earnings before finance costs, income taxes, depreciation,
amortisation and the impact of IFRS 16
2 Operating profit before amortisation of intangibles
3 Trading profit divided by total revenue
™
2
REVENUE
EBITDA1
€4.6bn
-2%
€596.5m
+3%
2019: €4.7bn
2019: €579.8m
2
2
TRADING PROFIT2
TRADING MARGIN3
€508.2m
+2%
11.1%
+40bps
2019: €497.1m
2019: 10.7%
2
PROFIT AFTER TAX
€384.8m
+2%
2
EPS
206.2c
+1%
2019: €377.8m
2019: 204.6c
4
Kingspan Group plc Annual Report & Financial Statements 2020 Our Global
Reach
2
2
Sales
Manufacturing
2
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S
N
O
T
A
C
O
L
N
A
P
S
G
N
K
I
Our Global Reach
2
3
3
3
2
2
5
5
11
10
2
3
3
2
2
2
3
2
7
15
11
6
4
11
36
8
9
2
2
2
BETTER
BUILDINGS,
GLOBALLY
READ MORE ONLINE
ABOUT OUR GLOBAL
STRATEGIC PILLAR
2
2
4
Americas
Brazil
Canada
Chile
Colombia
Costa Rica
Mexico
Panama
Peru
Uruguay
USA
Europe
Austria
Azerbaijan
Belgium
Bosnia
Croatia
Czech Republic
Denmark
Estonia
Finland
France
Germany
Hungary
Ireland
Kazakhstan
Latvia
Lithuania
Netherlands
N. Ireland
Norway
Poland
Portugal
Romania
Russia
Serbia
Slovakia
Slovenia
Spain
Sweden
Switzerland
UK
2
2
2
Australasia
Australia
New Zealand
Asia
China
India
Indonesia
Singapore
Thailand
Vietnam
Africa
Egypt
Morocco
Middle East
Qatar
Saudi Arabia
Turkey
UAE
5
MEGATRENDS
RENOVATION
READ OUR
INTERACTIVE
STORY ONLINE
RENOVATION
IS KEY TO
UNLOCKING
EFFICIENCY
The energy consumption of
the building stock is a leading
contributor to carbon emissions and
therefore, global warming. Deep
energy renovation is a vital weapon
in the fight against climate change.
France Office
Refurbishment, Rennes
/ Insulated Panels JI
Ponant M & W
Kingspan Group plc Annual Report & Financial Statements 2020
6
THERE WILL BE NO ‘WELL BELOW 2°C’
LIMIT ON THE INCREASE IN THE AVERAGE
TEMPERATURE OF THE PLANET WITHOUT
MASSIVE RENOVATION OF EXISTING BUILDINGS
Green renovation measures are widely recognised
to be amongst the most cost-effective options
to achieve emission reductions.
However, the pace of renovation in all countries
concerned is insufficient, staying well behind
potential. Indeed, annual renovation rates globally
should reach 4% by 2050 and 3% by 2030.
Next to the pace, the depth of renovation needs to
pick up with deep energy renovations that reduce
energy consumption of existing buildings by 50% or
more in developed economies and 30% or more in
developing economies (GlobalABC/IEA/UNEP 2020
and UNEP/IEA 2019), and achieve the highest energy
efficiency potential to prevent lock-in. If a single
deep retrofit is not financially viable, a step-by-step
retrofitting should be mapped out.
LEARN MORE ONLINE FROM THE
GLOBAL ALLIANCE FOR BUILDINGS
AND CONSTRUCTION
TAKING THE
EU AS AN
EXAMPLE
85%
85-95% of today’s EU
buildings will still be in
use in 2050
34m
34 million Europeans
cannot afford to
keep their homes
adequately heated
7
75%
75% of buildings in
the EU are energy
inefficient
1%
Today’s building stock
is being renovated at a
rate of 1% per annum
65%
Almost 65% of EU
household energy
consumption is for
space heating
Megatrends Renovation KINGSPAN
BREAKING DOWN
BARRIERS TO
RENOVATION
Germany, Hameln /
Kingspan’s QuadCore™
KS 1000 RW
The narrow measurement of
the prefabricated QuadCore™
sandwich panels allow costs to
be saved in both transport and
installation. This is an important
part of the NetZero modernisation.
Ronald Meyer
Technical Consultant, Ecoworks
SAVING COST IN
TRANSPORT AND
INSTALLATION
Germany, Hameln
The German Energy Agency supervises the
‘Energiesprong’ initiative in Germany with
the objective of reaching climate targets.
Renovating the building stock is a key element
of this objective. However deep energy
renovations can be expensive and disruptive.
The Dutch initiative ‘Energiesprong’ developed
a new principle, to attach pre-cast facades and
roof elements to existing homes, this helps to
renovate homes quickly and cost-effectively
while allowing the occupants to remain in situ.
Kingspan’s QuadCore™ roof panel was
the ideal solution for an efficient and cost
effective renovation with long-term results.
Ireland, Irish Rail /
Kingspan’s insulated
roof panel and
daylighting system
ENABLING MINIMUM
DISRUPTION
Ireland, Irish Rail
The Running Shed at Irish Rails HQ in Dublin is a hive
of activity, located directly beside the main Dublin to
Cork rail line. Therefore, when it came to replacing its
10,000m2 twin skin asbestos roof and 2,000m2 of side
sheeting, it was vital that the project was completed as
quickly and safely as possible to minimise disruption to
Irish Rail’s operations.
Kingspan’s technical team worked closely with
Gravity Construction to specify an upgraded new
purlin system as well as a new insulated panel
roof system solution. The lightweight panels
achieved a faster on-site build time than would
have been possible with heavier built-up systems.
This facilitated the rapid weatherproofing of the
building and a swift project completion.
8
Kingspan Group plc Annual Report & Financial Statements 2020 As it was also the one that insulated best,
we chose to use Kingspan again when we
were going to start with Ryesgade 25, where
Kingspan is used both for internal insulation
in the existing homes and to minimise the
thickness of the construction around.
Leif Røndby
Röndby.dk
PRESERVING
SPACE AND DETAIL
Denmark, Ryesgade 25
Ryesgade 25 is a typical Copenhagen property
and an example of how a renovation, with great
respect for conservation, can be combined both
with the addition of new qualities and with energy
and indoor climate optimisation. The thickness of
the insulation played a role. By choosing Kingspan
insulation, you can build thinner wall and roof
constructions, which ultimately provide more
square meters.
Kingspan has provided complete insulation for
this project. The insulation on the new roof
(K12), post-insulation of the existing walls
(K17) and insulation for the newly created
roof terraces (Therma TR26 and TT46).
HIGH-
PERFORMANCE
SOLUTIONS
Denmark, Ryesgade 25 /
Kingspan’s Kooltherm® K17
and K12 and Therma TR26
and TT46
LEARN MORE ONLINE ABOUT
KINGSPAN’S IMPACT ON RENOVATION
9
Megatrends Renovation BUSINESS & STRATEGIC REPORT
Chairman’s
Statement
EUGENE MURTAGH
USA Aperture Cellars /
Insulated Panels OneDek RD1
Roof Deck and DM 40 Wall
Panels in Vintage and Rust
Few could have foreseen, when I wrote my
Chairman’s Statement last year, the global
pandemic that would take hold and define
the year that was 2020. And as events
unfolded in the first half of the year, few
might have envisaged the resilience that
the business would demonstrate.
Whilst revenue dropped slightly to €4.6bn, in the
face of rolling lockdowns causing business and
market disruption, trading profit increased to
€508.2m. This strong result is testament to the
quality of the management team and employees
throughout Kingspan, as well as to the firm
foundations we have built in our four strategic pillars:
Planet Passionate, Innovation, Globalisation, and
Completing the Envelope.
Kingspan’s ambitious Planet Passionate
programme aims to significantly reduce the Group’s
environmental impact as it continues to grow its
business, whilst also enhancing the sustainable
benefits of its products. 2020 was the first year of
the programme which is focused on 12 measurable
Planet Passionate targets, based on the key themes
of energy, carbon, water and circularity. We will be
reporting progress against these targets annually
in Kingspan’s Planet Passionate Report, the first of
which will be published in March 2021.
Continuous innovation is at the centre of everything
we do, and good progress has been made on new
product development at Kingspan’s new IKON
Global Innovation Centre. New products include
the QuadCore™ 2.0 insulated panel, Kingspan’s
fully integrated solar PV PowerPanel®, and by 2022
we aim to commence production on the AlphaCore
Class A insulation board.
In addition, Kingspan continues to lead the
digitalisation of the construction industry through
cutting edge digital project delivery platforms that
drive efficiency and performance.
During the year Kingspan increased product
penetration and continued the expansion of its global
footprint through a number of acquisitions. Early in
2020 we completed the acquisition of the Colt Group
to bolster our market leading position as a provider
of daylighting and smoke management systems in
Western Europe.
10
Kingspan Group plc Annual Report & Financial Statements 2020 At the same time, the seamless integration of Group
Bacacier, acquired at the end of the previous year,
adds strength and depth to our Insulated Panels
business in France.
We have also continued our investment in organic
expansion, particularly in new and developing
geographies. We will shortly be commissioning
new insulated panels lines in North America and
Brazil, and further Insulated Panels investments
have been approved in Russia and Vietnam. Our
new Kooltherm® line in Sweden is also scheduled
to commence production later this year, and in
Kingscourt our new Light & Air facility will soon be
manufacturing a range of daylighting products.
Management and employees
Although travel restrictions limited the opportunity to
meet face-to-face with local staff and management
at our global facilities, full credit has to be given to all
our employees who adjusted to new ways of working
remotely to protect themselves and the broader
community. The Board’s sincere thanks go out to all
Kingspan employees for rising to the challenge, and
our thoughts in particular are with those who were
affected either personally or through their wider
family by this terrible pandemic.
We look forward to meeting and thanking some of
those employees in person, hopefully in the not-too-
distant future.
Dividend
Last March, at the outset of the pandemic, the Board
moved decisively to cancel the proposed 2019 final
dividend in order to preserve the Company’s cash
position, in addition to which no interim dividend
was declared in 2020. The Board is now pleased to
recommend a final dividend for 2020 of 20.6 cent
per share, which if approved at the Annual General
Meeting will be paid (subject to Irish withholding tax
rules) on 7 May 2021 to shareholders on the register
at close of business on 26 March 2021.
Board governance and changes
The Board is committed to high standards of
corporate governance and aims to embed our
core values of honesty, integrity and compliance in
everything we do. Full details of how we have aligned
this approach with the principles of the new UK
Corporate Governance Code 2018 are set out in the
Directors’ Report of this Annual Report.
The Board, through the Audit & Compliance
Committee, carefully monitors and manages risk
across the business as explained in this committee’s
report. During the year the remit of the committee
was expanded to include product certification and
compliance, as part of the wide-ranging actions
that Kingspan has taken in response to some serious
and unacceptable practices identified as part of the
UK’s Grenfell Tower Inquiry process. The Report of the
Remuneration Committee details how the Company’s
remuneration policy balances pay for performance
with the wider stakeholder experience and how the
committee has continued to listen and take on board
shareholder feedback.
As part of the continuing process of refreshing the
Board, we are pleased to announce the appointments
of Éimear Moloney and Paul Murtagh as non-
executive directors with effect from 30 April 2021.
Éimear was previously a senior investment manager
in Zurich Life Assurance (Irl) plc managing asset
allocation and various geographic equity portfolios,
and has excellent knowledge and experience of
capital markets and asset management. Paul is the
Chairman and CEO of Tibidabo Scientific Industries
Ltd, and was formerly the Chairman and CEO of
Faxitron Bioptics LLC and Chairman of Deerland
Probiotics & Enzymes Inc. The Board looks forward
to the benefit of their experience and input in the
coming years.
Separately, Bruce McLennan has notified the
Board that he will not be seeking re-election as
a non-executive director at this year’s Annual General
Meeting for personal reasons. Bruce has served on
the Board for six years and the Board would like to
thank him for his contribution to Kingspan during
that period.
As indicated in last year’s Annual Report, I will be
stepping down as Chairman and non-executive
director of Kingspan with effect from the conclusion
of this year’s Annual General Meeting. I have greatly
enjoyed my 55-year journey with Kingspan, and it
has been a very interesting road with plenty of twists
and turns along the way. From a small business in
my parent’s yard Kingspan has grown to become a
global leader with a presence in over 70 countries and
a family of over 15,500 employees.
I am confident that its governance and continuing
success is in safe hands with Jost Massenberg, who
has made an important contribution to the Board
in his role as an independent non-executive director
since 2018, and I wish him well in his new role as
Non-Executive Chairman.
Today, the business is in a very strong position
to build upon its four strategic pillars, under the
guidance of its excellent management team, and
with the benefit of its strong balance sheet. I look
forward to watching Kingspan’s continuing success
in the years ahead.
Eugene Murtagh
Chairman
19 February 2021
11
Business & Strategic Report Chairman’s Statement BUSINESS & STRATEGIC REPORT
Business Model
& Strategy
OUR BUSINESS MODEL AND OUR
STRATEGIC PILLARS ENABLE THE
ONGOING CONVERSION TO ULTRA-
EFFICIENT BUILDING ENVELOPES,
FROM OUTDATED, INEFFICIENT
METHODS OF CONSTRUCTION
Through our relentless development of innovative
and proprietary technology we have created a
portfolio of products which create value across
a number of key metrics. Critically, through
the differentiated thermal performance of our
innovative solutions, we help design teams,
architects and ultimately our customers to play
their part in tackling climate change. Today, the
construction and operation of buildings together
account for 36% of global energy use and 39%
of energy-related CO₂ emissions when upstream
power generation is included.
Action, at scale, is urgently needed.
7
1
1 Insulated Panels
2 Insulation Boards
3 Light & Air
4 Data & Flooring
5 Water & Energy
6 Industrial Insulation
7 Flat Roof Membrane
2
4
5
6
1
3
12
Kingspan Group plc Annual Report & Financial Statements 2020 BUSINESS & STRATEGIC REPORT
Business Model
& Strategy
OUR BUSINESSES
1. Insulated Panels
Kingspan Insulated Panels is the world’s largest and leading
manufacturer of high-performance insulated panel building
envelopes. Powered by Kingspan’s proprietary and differentiated
insulation core technologies, a Kingspan panelised envelope
provides building owners with consistently superior build quality
and lifetime thermal performance compared with built-up
constructions using traditional insulation.
2. Insulation Boards
Kingspan is a world leader in rigid insulation board. Our advanced
insulation technologies deliver superior thermal performance and
air-tightness when compared with traditional insulation, resulting
in thinner solutions that offer multiple advantages including more
internal floorspace and daylight.
3. Light & Air
Kingspan Light & Air is established as a global leader providing a
full suite of daylighting solutions, as well as natural ventilation and
smoke management solutions, which complement our existing
building envelope technologies. Thermal comfort, indoor air
quality and natural daylighting are widely recognised as the most
important factors affecting occupant wellbeing in buildings.
4. Data & Flooring
Kingspan is the world's largest supplier of raised access flooring and data
centre airflow management systems. Raised access flooring is the most
cost effective way of creating a flexible working environment by utilising
the floor void to manage the distribution of M&E services and HVAC systems.
Our systems have many benefits including optimising overall building height,
achieving faster construction with greater design flexibility, enabling easier
reconfiguration of a workspace, and improving indoor air quality.
5. Water & Energy
Sustainable water management is rapidly becoming one of the greatest
challenges of our time. We manufacture and support pioneering new
technologies to preserve and protect water. Kingspan is also a market
leading manufacturer of innovative energy management solutions.
COMPLETING THE ENVELOPE
6. Industrial Insulation
The operation of buildings accounts for 28% of carbon emissions globally.
While space heating is the largest consumer of energy in buildings,
heating water and space cooling are also key energy consumers. Cooling
is the fastest growing use of energy in buildings. Kingspan has innovative,
ultra-performance products in both piping insulation and ducting
insulation and we aim to expand our presence in these markets.
From a modest footprint, Kingspan already generates over €100m
in revenue from industrial insulation. Focus areas for growth, organic
and inorganic, include air ducting insulation, piping insulation and
equipment insulation.
7. Flat Roof Membrane
Kingspan is a market leader in the manufacture of high-performance
insulation for flat roofs. Our Topdek, Onedek and X-dek ranges offer a
single-fix panel solution for flat roof applications. Building on the fast
growth in our flat roof panel offering, we aim to expand our offer in
built-up flat roof systems. Our range of insulation boards, including the
QuadCore™ Roofboard and the Optim-R roofing system offer significant
thermal advantages in a built-up system. Manufacturing flat roof
membrane would enable us to offer the main structural components
of a built-up roof system as a single, trusted, provider - from the steel
deck to the waterproof layer.
Business & Strategic Report Business Model & Strategy
13
BUSINESS & STRATEGIC REPORT
Strategic
Goals
OUR MISSION IS TO ACCELERATE
A ZERO EMISSIONS FUTURE BUILT
ENVIRONMENT WITH PEOPLE AND
PLANET AT ITS HEART
STRATEGIC PILLARS
Innovation
Planet
Passionate
Global
Completing
the Envelope
I
S
L
A
O
G
C
G
E
T
A
R
T
S
g
g To be the world’s leading provider of low energy building envelopes – Insulate
and Generate.
g To be the leader in high-performance insulation globally with proprietary and
differentiating technologies.
g To progress our Net Zero Energy goal by delivering on our ambitious 10-year
Planet Passionate commitments which aim to make significant advances
in the sustainability of both our business operations and our products.
g To expand globally, bringing high-performance building envelope solutions to
markets which are at an earlier stage in the evolution of sustainable and efficient
building methods.
g To advance materials, building systems and digital technologies to address issues
such as climate change, circularity and the protection of our natural world.
READ MORE
ABOUT OUR
STRATEGIC
PILLARS
on page 15
Our core values of honesty and
integrity, and compliance with the
law, are the foundation upon which
our strategic pillars sit.
Kingspan Group plc Annual Report & Financial Statements 2020
14
BUSINESS & STRATEGIC REPORT
Strategic
Pillars
2020 saw significant
advancements across
our strategic pillars
and a reinforcement
of our core values.
INNOVATION
Kingspan is committed to innovation so we
can make building better. It’s something we
demonstrate daily in the work we produce
across our business. We believe we have
to challenge building industry traditions
through innovating in advanced materials
and digital technologies to achieve a net
zero emissions future.
g The award winning Day-Lite Kapture was brought to the
market by Light & Air in 2020.
g Launching PowerPanel® 2.0 in 2021.
g Fibre-free A1 AlphaCore™ before the end of 2022.
g QuadCore™ 2.0 and the next generation of Kooltherm®
are also at the early stages of development as part of
our ongoing innovation agenda.
PLANET PASSIONATE
In 2019, Kingspan announced our 10 year
Planet Passionate programme, setting 12 hard
environmental targets which focus on the
most material impacts in our business. We
made significant progress in our first year and
have further developed our 2030 roadmap.
g We generated 32.6 GWh of renewable energy on-site.
g We commissioned 7 rooftop solar PV projects.
g We upcycled 573 million PET waste plastic bottles.
g The ongoing engagement with our supply chain on
multiple sustainability fronts has resulted in several
exciting research and development projects.
GLOBAL
Kingspan is a truly global business,
operating in over 70 countries with 166
manufacturing sites across the globe.
We will continue to expand globally to
bring ultra-performance building envelope
solutions to markets which are at an earlier
stage in their evolution to sustainable and
efficient methods of construction.
COMPLETING THE ENVELOPE
We announced our strategy to “Complete
the Envelope” in 2016, identifying Light & Air,
roofing membranes and industrial insulation
as key product categories which complement
our building envelope solutions. Today,
Kingspan Light & Air has a 12 month revenue
run rate in excess of €500m.
g Kingspan has a number of sites under construction
globally. We are advanced in developing a new site in
Pennsylvania USA and close to commissioning sites in
Brazil, Sweden and Russia.
g In January 2021, we acquired a leading insulated panel
manufacturer in Uruguay, Bromyros, further expanding
our presence in the Latin American region.
g In April 2020 Kingspan added Colt Group to its Light &
Air division. Colt is a market leader in providing
and servicing innovative products and solutions for
smoke control, natural ventilation, solar control and
climate control projects.
Business & Strategic Report Strategic Pillars
15
BUSINESS & STRATEGIC REPORT
Our Values
OUR VALUES HAVE
ALWAYS BEEN THE
FOUNDATION OF OUR
STRATEGY AND ARE
FUNDAMENTAL TO
HOW WE DO BUSINESS
AND INTERACT WITH
EACH OTHER.
Our Belief
Historically, construction has taken from
nature with little consideration given to
the finite resource available. Buildings were
constructed without contemplating how they
might impact future generations. We believe
the buildings of the future need to deliver more
than ever before. They must combat climate
change by maximising energy efficiency
through superior thermal performance while
incorporating products that are lower in
embodied carbon across their entire lifecycle.
Using less energy is not enough; buildings
should generate their own energy too. Buildings
should be healthy and inspirational, optimising
the benefits of daylight and fresh, clean air.
They should be designed, constructed and
operated to protect natural resources and
conserve water as much as possible. Above
all they must be safe, protecting people and
property from fire and other natural hazards.
Our Culture and Values
Kingspan has grown from a family business
and many of the values associated with family
businesses form the backbone of our culture
today. The business has been built on trust in
the integrity of our people and of our offering.
We value this trust and recognise it as being
fundamental to our ongoing success. We are
entrepreneurial, collaborative, honest, and
we stand behind a common cause – better
buildings for a better world.
We are innovative. We are the market leader
in the field of high-performance building
envelope solutions, which ensure lifetime
carbon and resource savings. We have gained
this position through a creative and solutions
driven mindset, which continues to inform our
innovation agenda today.
We think long-term. The strategy of the
business is driven by long-term ambitions
and not by quarterly performance. The
success of this strategy can be seen in our
long-term growth. This ethos is apparent
in our multi-year commitments such as
our 10-year Planet Passionate programme
which will drive real, positive, impact for
the environment and forms a common
goal across the business globally.
Code of Conduct
Kingspan expects the highest standards of
integrity, honesty and compliance with the
law from our employees, our directors and
our partners globally. We actively encourage
our employees to speak out if they experience
instances that are not in keeping with the
principles outlined in our Code of Conduct.
In 2020 we updated our Code of Conduct.
Our business success is inextricably linked
to our behaviours, and our aspiration is to
maintain a culture where our everyday
actions are built on five core principles:
g Clear, ethical and honest behaviours
and communications;
g Compliance with the law;
g Respect for the safety and wellbeing
of colleagues;
g Protection of our Group assets;
g Upholding our commitment to
a more sustainable future
Please see further detail at:
https://www.kingspan.com/group/
commitments/people-and-community/
our-code-of-conduct
16
Kingspan Group plc Annual Report & Financial Statements 2020 BUSINESS & STRATEGIC REPORT
Business Model
& Strategy
2020 IN A NUTSHELL
REVENUE
€4.6bn
TRADING PROFIT2
€508.2m
HOW WE CREATE VALUE
HOW WE OPERATE
> Product innovation and differentiation
> Excellent customer service
> Energy efficient sustainable building
envelope solutions
> We operate our businesses to the
highest standards
> We acquire excellent businesses
> We recycle capital to optimise returns
> We maintain financial discipline
> We balance our portfolio of businesses
across product and geography
> We drive sustainable practices in
our operations through our Planet
Passionate initiatives
166
Global manufacturing
facilities
15,500+
Employees
> Management controls
> Quality systems
> Responsible supply
chain partnerships
APPLICATIONS
> Retail
> Distribution
> Leisure
> Accommodation
> Food
> Manufacturing
> Data Management
> Infrastructure
VALUE CREATED
EBITDA1
EPS
€596.5m
206.2c
Total Shareholder Return
Free Cash Flow
5.4%
4%
Water
& Energy
10%
Light
& Air
17%
Insulation
Boards
€479.7m
5%
Data &
Flooring
64%
Insulated
Panels
6%
Rest of
World
16%
Britain
20%
Americas
PRODUCTS
15%
Other
85%
Energy Efficiency & Conversion
30%
Via Distribution
70%
Direct
24%
Refurbishment
76%
New Build
18%
Residential
14% Office
& Data
68%
Commercial & Industrial
ROCE
18.4%
Dividend
20.6c
36%
Western &
Southern
Europe
GEOGRAPHY
22%
Central &
Northern Europe
DRIVERS
CHANNEL
END-MARKET
SECTOR
1 Earnings before finance costs, income taxes, depreciation,
amortisation and the impact of IFRS 16
2 Operating profit before amortisation of intangibles
Business & Strategic Report 2020 in a Nutshell
17
Australia Belmont Hub,
Faulkner Park / Insulated
Panels KS1000 RW, Karrier
Panel, KingZip
IN 2020, WE
GENERATED
32.6 GWh OF
RENEWABLE
ENERGY ON-SITE
LEARN MORE ABOUT
OUR COMMITMENT TO
RENEWABLE ENERGY
BUSINESS & STRATEGIC REPORT
Chief
Executive’s
Review
GENE M. MURTAGH
Energy from buildings accounts
for roughly 40% of all emissions.
Envelope First and conservation
will be vital in curtailing global
temperature rises.
18
Kingspan Group plc Annual Report & Financial Statements 2020 Business Review
2020 was a tumultuous year for Kingspan, as it
was for many. After a relatively strong start, April
and May saw a deep reduction in activity in many
markets, followed by a rebound towards mid-year
and ultimately a strong finish in the fourth quarter.
Full year revenue was down 2% to €4,576m and
trading profit was ahead by 2% to €508.2m, after
accounting for repayment of all government COVID
supports worldwide. Net debt was €236.2m at year
end, the lowest level in a number of years and leaves
our balance sheet in an exceptionally strong position.
Globally, governments reacted in varying ways to
the crisis which resulted in an economic experience
which was equally variable. All markets suffered
interruption to some degree although in our case it
was particularly acute in the UK, Spain, Canada and
Ireland. Most other markets recovered to, and in some
cases exceeded, the performance of 2019.
Raw material prices moved broadly to our advantage
for much of the year but we experienced significant
inflation in the fourth quarter. We expect further
significant increases in our raw materials in early 2021
and the effort to recover these through price increases
is underway and will be a challenge.
The climate action agenda continues to gather pace
globally. With energy from buildings accounting
for roughly 40% of all emissions, a more thermally
efficient building envelope will be vital in curtailing
global temperature rises. Insulation will be central
to this effort. At Kingspan we aim to provide the
broadest possible spectrum of solutions to enable this
reduction in emissions. These solutions must be able
to stand the test of time, and Kingspan’s warrantied
performance should prove to be a compelling
advantage to building owners in their quest to achieve
emission reductions over the lifetime of the building.
FINANCIAL HIGHLIGHTS
-2% ™
Revenue
to €4.6bn
(pre-currency, flat)
2% 2
Trading profit4 up
2% to €508.2m
(pre-currency, +5%)
42% 2
Free cashflow
up 42% to €479.7m
40bps 2
Group trading
margin3 of 11.1%,
an increase of 40bps
1% 2
Basic EPS
up 1% to
206.2 cent
20.6c 2
Final dividend per share
of 20.6 cent
0.4x
Year-end net debt1
of €236.2m (2019:
€633.2m). Net debt
to EBITDA2 of 0.4x
(2019: 1.1x)
18.4%
ROCE of 18.4%
(2019: 17.3%)
OPERATIONAL SUMMARY
g Insulated Panels sales decrease of 4%
due mainly to second quarter lows. Solid
performance with most end-markets
experiencing recovery in the second half. Europe
positive overall, particularly in Germany and
France. Strong finish to the year in the UK.
Strong order intake in the Americas in the
fourth quarter. 33% growth in QuadCore™
sales globally in 2020.
g Insulation Boards sales decrease of 10% albeit
much improved in the second half which was
down 2%. Strong performance in Western
Europe and good second half recovery in
Ireland and the UK, Americas and Australia
ahead of prior year. Softer in the Middle East
and Southern Europe.
g Another year of progress in Light & Air with
sales up 36% in the year, acquisition of Colt
a key driver. Europe positive overall although
softer in North America. Further bolt on
acquisition in Europe, Skydome, agreed after
year-end.
g Water & Energy sales down 3% with a
resilient performance overall and year
on year margin improvement. Water
applications particularly positive.
g Data & Flooring sales increase of 4%. Strong
performance across data centre applications
offsetting softer office activity.
g Steep raw material inflation a key theme as
we enter 2021 with a challenging recovery
effort underway.
1 Net Debt and EBITDA both pre-IFRS 16
2 Earnings before finance costs, income taxes,
depreciation, amortisation and the impact of IFRS 16
3 Trading profit divided by total revenue
4 Operating profit before amortisation of intangibles
19
Business & Strategic Report Chief Executive’s Review Planet Passionate
2020 was the first full year of implementing the
initiatives of our Planet Passionate programme.
Building upon our previous ten year Net Zero Energy
drive this programme is now much broader and
deeper, and focuses on twelve distinct targets in the
categories of Energy, Carbon, Circularity and Water.
The programme is dealt with in detail in the Planet
Passionate annual report which will be published
in March and the table below demonstrates our
progress to date, along with our medium and long
term targets.
Organic Expansion
Insulated Panels in the Americas is progressing
the development of its new facility in Pennsylvania,
and in Brazil two new facilities will be
commissioned this year.
In Europe, the Joris Ide business is adding an
insulated wall panel production line to its German
facility in Ansbach. At Bacacier in France, plans are
afoot to develop a Group hub for the manufacture
of insulated panels, insulation and profiles which,
when complete in 2022, will be a showcase facility.
In Russia, we are investing in a second plant
south of Moscow to complement our existing
St. Petersburg presence.
In Asia, we have signed off on an investment
to develop a greenfield insulated panel plant
in Vietnam which will serve the wider south
east Asia market. This facility is planned for
completion by late 2022. It is also our intention
to develop a greenfield PIR board line in this
region during 2022/2023.
Planet Passionate Targets
Target Year
ENERGY
g Net Zero Energy (%)
g 60% direct renewable energy use (%)
g 20% on-site renewable energy generation (%)
g Solar PV systems on all wholly owned facilities (%)
g Net Zero Carbon Manufacturing (% change)
CARBON
g Zero Emission company funded cars (% annual conversion)
g 50% reduction in product CO2e intensity from primary supply chain partners (% reduction)
g Zero Company waste to landfill (tonnes)
CIRCULARITY
g Recycle 1 billion PET bottles into our manufacturing processes (bottles)
g QuadCore™ products utilising recycled PET (% sites)
WATER
g Harvest 100 million litres of rainwater (litres)
g 5 Active Ocean Clean-Up projects (no. of initiatives)
2020
2030
2030
2030
2030
2025
2030
2030
2025
2025
2030
2025
2020
100%
28%
5.3%
21%
0.1%*
11%
0%
18,167
573m
5%
21.1m
1
* Scope 1 & 2 GHG emissions estimate, external assurance ongoing. Final figures to be confirmed in Kingspan’s annual Planet Passionate report to be released March 2021
20
Kingspan Group plc Annual Report & Financial Statements 2020 In Sweden, the development of our greenfield
Kooltherm® facility is undergoing commissioning
presently and will be in production by the second
quarter of this year. Demand is growing quickly
in the Nordic region as advanced insulation
continues to displace traditional alternatives
and this new plant will play a key role in continuing
that momentum.
Inorganic Expansion
In April last year the Group’s Light & Air division
completed the acquisition of Colt Group, a leading
provider of daylighting and smoke management
systems with a significant presence in Germany,
the Netherlands and the UK, with annual revenue
of approximately €200m.
In the second half of the year we signed an
agreement to acquire Terasteel, an insulated panel
manufacturer based in Romania, with revenue in
the region of €120m. Also in the second half of the
year, we agreed to acquire Trimo, a producer of
mineral fibre insulated panels and facades based
in Slovenia and with global revenues of just over
€100m. Terasteel is expected to complete shortly
and Trimo is subject to a regulatory approval
process which is still underway.
In December 2020 we signed an agreement to
acquire Skydome, the daylighting activity of SMAC
in France with revenues of approximately €45m. In
January 2021 we acquired Bromyros, the market
leader for insulated panels in Uruguay and a further
extension to our Latin American presence. Earlier
this month we agreed to acquire Dyplast Products,
a technical insulation producer in Florida, USA
which is our first step into this segment in the North
American market.
Innovation
Innovation is a central pillar of Kingspan’s strategy
with a number of active initiatives underway.
Development of QuadCore™ 2.0 has continued
at pace with the aim of launching in the UK and
Ireland initially. Alongside this we are launching
our QuadCore™ Assured programme which will be
unique in providing a warrantied fire, thermal and
circularity solution. We anticipate commencing the
extensive certification process by the second half
of this year. Thereafter we plan to begin work on
a bio-based rigid insulation.
Both the PowerPanel® (an insulated panel
with fully integrated solar PV) and AlphaCore®
developments suffered some timetable disruption
for much of 2020 given travel and other
restrictions and the associated impact on practical
collaboration with our international partners. In
recent months significant development work has
been completed on PowerPanel® and we expect to
commence the certification process by mid-year.
We are currently designing the pilot manufacturing
plant for AlphaCore® which we expect to
be operational in 2022. The focus is on the
development of a medium thermal performance
option, and we are concurrently exploring potential
OEM partnerships for similar technologies.
A project has recently been launched with the
objective of achieving A-Class fire performance
for our Optim-R® product, the highest thermal
performance insulation in our offering. Our aim is
to have a product ready for market by late 2022.
Finally, over the next two years we aim to have
B-Class fire performance available as a standard
offering across much of the Kooltherm® range.
France, Modern Home,
Plerin / Insulated
Panels JI 33-20-1000
21
Business & Strategic Report Chief Executive’s Review S Global order intake recovered through the
second half and the backlog at year-end
L
was ahead by 19%. QuadCore™ sales
E
N
grew by 33% in 2020 and comprised 12%
of insulated panels product sales in 2020.
A
Most of our markets continued to recover
P
well in the aftermath of the first severe
D
lockdown early in the year. Germany,
Belgium and France were stand-outs
E
where positive market dynamics
T
A
combined with an element of share gain
to drive revenue growth through the
L
U
second half. Spain had a tough start to
the year which was difficult to recover
S
from although activity did improve
N
markedly through the second half. In the
Nordics, our insulated panel businesses
were slightly behind prior year as a whole,
as was much of Central Europe.
I
The UK delivered a strong fourth quarter
although still lagged behind 2019’s
overall revenue by year-end, and Ireland
performed similarly. Both markets entered
2021 with orderbooks comfortably ahead
of prior year.
In the Americas, the US market finished
the year with revenue slightly behind prior
year, albeit with an orderbook well ahead
owing to exceptionally strong order intake
in the fourth quarter. Canada delivered
a disappointing outcome following a
particularly weak first half, and Latin
America performed strongly with volumes
ahead by double digits, supported by
deliveries from the new facility near Sao
Paulo. A further facility in the south of the
country is nearing completion.
1 Comprising underlying -6%, currency -3%
and acquisitions +5%. Like for like volume -3%.
™
TURNOVER
€2,917.4m
-4%(1)
2019: €3,031.9m
2
TRADING PROFIT
€321.3m
+2%
2019: €316.1m
2
TRADING MARGIN
11.0%
+60bps
2019: 10.4%
France IdHEO, Nantes
/ Insulated Panels JI
Boreas XLS
22
Kingspan Group plc Annual Report & Financial Statements 2020
S
D
R
A
O
B
N
O
T
A
L
U
S
N
I
I
During the second half of the year the
division delivered a strong performance
across most of the markets in which it
operates. Volumes were in line with the
second half of 2019, a recovery from
the sharp decreases seen in the first
half. Western Europe posted a record
year with revenue well ahead in the
Benelux and Germany, whilst in Southern
Europe the outcome was still below prior
year despite a marked recovery in the
second half. Spain suffered a particularly
deep downturn during the earlier part of
the year.
North America and Australasia both
performed ahead of 2019 and in the Middle
East the business performed well in the
circumstances, albeit below prior year.
Ireland and the UK were both severely
impacted during the first half but delivered
strong recoveries through the second half.
The UK’s Grenfell Tower Inquiry (the
“Inquiry”) commenced in May 2018.
The report on Phase 1 of the Inquiry was
completed in October 2019, a central
conclusion of which was that the PE-
Cored ACM cladding was the principal
reason for the fire spread on the tower
itself. None of the ACM was Kingspan
product, and just 5% of the insulation
material on the building was Kingspan
product, supplied via a distributor,
without our knowledge or advice.
Module 2 of Phase 2 of the Inquiry
commenced in the second half of 2020,
this phase of the Inquiry attracted
considerable commentary in relation to
testimony of some former and current
Kingspan employees. A number of totally
unacceptable process shortcomings
in our UK Insulation Boards business
were highlighted by us and submitted
to the Inquiry. In addition, some former
employee communications displayed
a culture which is not reflective of the
greater ethos of the Group and which
are completely unacceptable.
We are resolute in our efforts to address
these issues and are actively engaged for
some time implementing concrete actions
throughout the Group that will ensure
that this cannot happen again. This is set
out in more detail in the Directors’ Report
section of this Annual Report, and in our
statement of 19 February 2021 which is
available on our microsite:
https://inquiry.kingspan.com.
Sweden Juvelen,
Uppsala / Insulation
Boards Kooltherm® K20
™
™
2
TURNOVER
TRADING PROFIT
TRADING MARGIN
€787.0m
-10%(1)
€110.1m
-6%
2019: €876.9m
2019: €117.1m
14.0%
+60bps
2019: 13.4%
1 Comprising underlying -9% and
currency -1%. Like for like volume -9%.
23
Business & Strategic Report Chief Executive’s Review
I
R The Light & Air division performed robustly
A
&
T
H
G
L
during the more challenging first half
of the year and activity improved in
a number of its key markets through
the latter half. The business performed
particularly well in the Benelux and
France, and somewhat weaker in
Germany toward year-end. 2019 was
a strong year for our North American
business unit and the performance in
2020 lagged that, mainly owing to a
weaker pipeline of large projects.
I
Germany Marienturm,
Frankfurt / Light & Air
Smoke Pressure System (SPS)
The acquisition of the Colt Group was
completed in April 2020, bringing with it a
significant boost in revenue and a highly
complementary product suite for the
division, particularly in Western Europe
and the UK. In December we also agreed
to acquire Skydome, the daylighting
activity of SMAC in France.
2
2
™
TURNOVER
TRADING PROFIT
TRADING MARGIN
€445.5m
+36%(1)
2019: €327.7m
1 Comprising underlying
-8%, currency -1% and
acquisitions +45%.
7.0%
-70bps
2019: 7.7%
€31.2m
+24%
2019: €25.2m
24
Kingspan Group plc Annual Report & Financial Statements 2020
operating performance in 2020 despite
the challenging revenue performance,
owing largely to tight margin
management across the units.
Y This business unit delivered a strong
G
R
E
N
E
&
R
E
T
A
W
The energy storage business had a
steady year and the water unit delivered
a result well ahead of prior year,
particularly in the UK. In Australia, where
rainwater harvesting still dominates the
offering, the business performed well
in both residential and the rural and
commercial end markets.
™
2
2
TURNOVER
TRADING PROFIT
TRADING MARGIN
€202.7m
-3%(1)
2019: €208.1m
€16.3m
+15%
2019: €14.2m
8.0%
+120bps
2019: 6.8%
1 Comprising
underlying -3%,
currency -2% and
acquisitions +2%.
France Eglise Notre
Dame de Beauregard
/ Water & Energy
Klargester BioDisc®
Treatment plant 25EH
25
Business & Strategic Report Chief Executive’s Review
I
G Last year proved to be a positive year
for this business, primarily driven by its
N
growing exposure to the data centre
R
market, predominantly in North America
O
and Europe.
O
L
F
&
A
T
A
D
Clients in this particular segment
demand flexibility in how their buildings
are configured and the combination of
our access floors, structural ceiling grids
and airflow management systems provide
an integrated solution to the world’s
largest data management companies.
In contrast, the office segment was
less buoyant and we would anticipate
this remaining the case for the
foreseeable future.
Britain 22
Bishopsgate /
Data & Flooring
RMG600 and Calcium
Sulphate
2
TURNOVER
€223.4m
+4%(1)
2019: €214.5m
2
TRADING PROFIT
€29.3m
+20%
2019: €24.5m
2
TRADING MARGIN
13.1%
+170bps
2019: 11.4%
1 Comprising underlying
-3%, currency -1% and
acquisitions +8%.
26
Kingspan Group plc Annual Report & Financial Statements 2020
Looking Ahead
2021 has started well, helped by strong backlogs
at the turn of the year. Raw material price
inflation is a very significant feature at present
and a challenging recovery effort is underway.
We can expect a degree of lag in the recovery of
these cost increases. Whilst there can be limited
certainty in the near-term, sentiment across
our end-markets remains positive overall.
The Group’s innovation agenda continues
to move ahead at pace and will support our
development in the years ahead. The need for
action on climate change is gaining increasing
traction with policymakers worldwide.
Kingspan’s proposition and our Planet
Passionate programme are aligned fully with
this urgent agenda.
The Group’s balance sheet is in a robust position
and this will support the continued organic
and inorganic development of the Group in the
years ahead.
There are of course many challenges, and
indeed more opportunities, which when
combined with the resolve of Kingspan people
and the sustainability of our proposition,
positions the business well for the future.
Gene M. Murtagh
Chief Executive Officer
19 February 2021
Poland Bomar Wholesale Building, Gdansk
/ Insulated Panels Cladding coffers and
insulated panel system
27
Business & Strategic Report Chief Executive’s Review IN 2020 ALONE WE
UPCYCLED 573
MILLION WASTE
PLASTIC BOTTLES
BUSINESS & STRATEGIC REPORT
Financial
Review
GEOFF DOHERTY
USA Donald Dungan
Library, California /
Data & Flooring ConCore
1250, 1500 & 2500
The Financial Review
provides an overview
of the Group’s financial
performance for the year
ended 31 December 2020
and of the Group’s financial
position at that date.
28
Kingspan Group plc Annual Report & Financial Statements 2020 USA Donald Dungan Library,
California / Data & Flooring
ConCore 1250, 1500 & 2500
Overview of results
Group revenue decreased by 2% to €4.6bn (2019:
€4.7bn) and trading profit increased by 2% to
€508.2m (2019: €497.1m) with an increase of 40
basis points in the Group’s trading profit margin
to 11.1% (2019: 10.7%). Basic EPS for the year was
206.2 cent (2019: 204.6 cent), representing an
increase of 1%.
The Group’s underlying sales and trading profit
growth by division are set out adjacent:
Sales
Underlying
Currency
Acquisition
Insulated Panels
Insulation Boards
Light & Air
Water & Energy
Data & Flooring
Group
-6%
-9%
-8%
-3%
-3%
-7%
-3%
-1%
-1%
-2%
-1%
-2%
+5%
-
+45%
+2%
+8%
+7%
Total
-4%
-10%
+36%
-3%
+4%
-2%
The Group’s trading profit measure is earnings before interest, tax and amortisation of intangibles:
Trading Profit
Underlying
Currency
Acquisition
Insulated Panels
Insulation Boards
Light & Air
Water & Energy
Data & Flooring
Group
+1%
-5%
-31%
+14%
+16%
-1%
-4%
-1%
-
-2%
-2%
-3%
+5%
-
+55%
+3%
+6%
+6%
Total
+2%
-6%
+24%
+15%
+20%
+2%
The key drivers of sales and trading profit performance in each division are set out in the Business Review.
29
Business & Strategic Report Financial Review Finance costs (net)
Finance costs for the year increased by €4.2m to
€25.0m (2019: €20.8m). A net non-cash charge
of €2.0m (2019: charge of €0.1m) was recorded
in respect of swaps on the Group’s USD private
placement notes. The Group’s net interest expense
on borrowings (bank and loan notes net of interest
receivable) was €19.3m (2019: €16.7m). This increase
reflects higher average gross debt levels in 2020 as
well as a negative return on Euro denominated cash
balances. Lease interest of €3.6m (2019: €3.8m)
was recorded for the year. €0.1m (2019: €0.1m) was
recorded in respect of a non-cash finance charge on
the Group’s defined benefit pension schemes.
Taxation
The tax charge for the year was €74.9m (2019:
€76.6m) which represents an effective tax rate
of 16.3% (2019: 16.9%). The decrease in the
effective rate reflects, primarily, the change in
the geographical mix of earnings year on year.
Dividends
The Board has proposed a final dividend of 20.6
cent per ordinary share payable on 7 May 2021 to
shareholders registered on the record date of 26
March 2021. No interim dividend (2019: 13.0 cent)
was declared during the year given the uncertain
backdrop for much of 2020. The final dividend
proposed for 2019 of 33.5 cent was subsequently
cancelled in order to preserve cash at the outset
of the pandemic. In summary, therefore, the total
dividend for 2020 is 20.6 cent compared to 13.0 cent
for 2019 (as adjusted for the cancellation).
The Board carried out a review of the Group’s
dividend policy during the year. The outgoing
policy guidance was to pay out approximately
25% of earnings. In assessing a revised policy a
key objective was to afford the Group appropriate
development capital to invest in the business over
time as well as to preserve the strength of the
balance sheet. On that basis the revised dividend
policy for 2021 and for the foreseeable future is to
pay out approximately 15% of earnings. The policy
will be reviewed periodically to ensure it remains
appropriate over time having regard to the capital
needs of the business.
Retirement benefits
The primary method of pension provision for
current employees is by way of defined contribution
arrangements. The Group has three legacy defined
benefit schemes in the UK which are closed to new
members and to future accrual. In addition, the
Group has a number of smaller defined benefit
pension liabilities in Mainland Europe. The Group
assumed €10.5m of net pension obligations in April
2020 on the acquisition of Colt Group. The net
pension liability in respect of all defined benefit
schemes was €45.9m (2019: €15.1m) as at 31
December 2020 with the increase reflecting both
the new acquisition during the year and the impact
of reduced interest rates on liabilities.
Intangible assets and goodwill
Intangible assets and goodwill decreased during the
year by €38.6m to €1,561.5m (2019: €1,600.1m).
Intangible assets and goodwill of €57.3m were
recorded in the year relating to acquisitions
completed by the Group. A decrease of €72.4m
arose due to year-end exchange rates used to
translate intangible assets and goodwill other than
those denominated in euro. There was an annual
amortisation charge of €23.5m (2019: €21.9m).
Financial key performance indicators
The Group has a set of financial key performance
indicators (KPIs) which are presented in the table
adjacent. These KPIs are used to measure the
financial and operational performance of the Group
and to track ongoing progress and also in achieving
medium and long term targets to maximise
shareholder return.
Key performance
indicators
Basic EPS growth
Sales performance
Trading margin
Free cashflow (€m)
Return on capital
employed
Net debt/EBITDA
2020
1%
-2%
11.1%
479.7
18.4%
2019
11%
7%
10.7%
337.1
17.3%
0.4x
1.1x
(a) Basic EPS growth. The growth in EPS is
accounted for primarily by a 2% increase in
trading profit partially offset by an increase
in minority interest. The minority interest
amount increased year on year due to a strong
performance at the Group’s operations which
have minority stakeholders, leading to a basic
EPS increase of 1%.
(b) Sales performance of -2% (2019: 7%) was
driven by a 7% decrease in underlying sales,
a 2% decrease due to the effect of currency
translation and a 7% contribution from
acquisitions. The decrease in underlying sales
reflected in particular a difficult period in the
first wave of restrictions from the end of March
through to mid summer 2020.
(c) Trading margin by division is set out below:
2020
2019
11.0%
14.0%
7.0%
8.0%
13.1%
10.4%
13.4%
7.7%
6.8%
11.4%
Insulated Panels
Insulation Boards
Light & Air
Water & Energy
Data & Flooring
30
Kingspan Group plc Annual Report & Financial Statements 2020 The Insulated Panels division trading margin
advanced year on year reflecting ongoing progress
in sales of QuadCore™, the market mix of sales as
well as some short term curtailment of overhead
due to the pandemic. The trading margin
improvement in the Insulation Boards division
reflects, in the main, a positive lag effect on raw
material price reductions in the first half of the
year and short term overhead curtailment. The
reduced trading margin in Light & Air reflects the
market mix of sales. The Water & Energy trading
margin improvement reflects the category mix
and overhead curtailment. The increase in trading
margin in Data & Flooring reflects the geographic
market and product mix of sales year on year.
(d) Free cashflow is an important indicator and
it reflects the amount of internally generated
capital available for re-investment in the business
or for distribution to shareholders.
Free cashflow
EBITDA1
Movement in
working capital2
Movement in provisions
Net capital expenditure
Net interest paid
Income taxes paid
Other including
non-cash items
Free cashflow
2020
€m
596.5
107.7
(2.1)
(126.1)
(21.6)
(89.7)
15.0
2019
€m
579.8
5.6
1.7
(154.3)
(16.7)
(87.2)
8.2
479.7
337.1
1 Earnings before finance costs, income taxes, depreciation,
amortisation and the impact of IFRS 16
2 Excludes working capital on acquisition but includes
working capital movements since that point
Working capital at year-end was €450.8m (2019:
€582.8m) and represents 8.8% (2019: 11.9%) of
annualised sales based on fourth quarter sales.
This metric is closely managed and monitored
throughout the year and is subject to a certain
amount of seasonal variability associated with
trading patterns and the timing of significant
purchases of steel and chemicals. Working capital
levels in the business were unusually low for
much of the second half of the year with reduced
inventory levels in particular as our inbound
supply chain continued to ramp up from subdued
production earlier in the year. The working capital
% is expected to increase in the first half of 2021
reflecting more normal inventory levels as well as
inflation of some key inputs.
(e) Return on capital employed, calculated as
operating profit divided by total equity plus net
debt, was 18.4% in 2020 (2019: 17.3%).
The creation of shareholder value through the
delivery of long term returns well in excess of
the Group’s cost of capital is a core principle of
Kingspan’s financial strategy. The increase in
profitability together with the deployment of
further capital has enhanced returns on capital
during the year.
(f) Net debt to EBITDA measures the ratio of
net debt to earnings and at 0.4x (2019: 1.1x)
is comfortably less than the Group’s banking
covenant of 3.5x in both 2020 and 2019. The
calculation is pre-IFRS 16 which is consistent with
the Group’s banking covenant.
Acquisitions and capital expenditure
During the period the Group made a number of
acquisitions for a total upfront cash consideration
of €46.1m.
On 17 April 2020, the Group completed the purchase
of 100% of the Colt Group for an initial cash amount
of €41m. In addition to the cash consideration for
the Colt Group, the Group assumed a net pension
liability of €10.5m.
The Group also made a number of smaller
acquisitions during the year for a combined
cash consideration of €5.1m.
COVID-19 Pandemic
The Group took a number of steps to protect
its financial position at the outset of the global
pandemic in the first quarter of the year. Many
construction markets were severely impacted at
the early stage of the virus albeit most experienced
some element of recovery through the year. The
Group received €17m in COVID-19 related furlough
benefits although full repayment was accounted for
in December 2020 given the better than expected
trading performance than was initially anticipated.
Working capital management has been an ongoing
area of focus over time and this was emphasised
further still during the year. Working capital levels
in the business were 8.8% at 31 December 2020
reflecting in particular a lower than normal level of
inventories. We expect working capital to increase
to more normal levels over the course of the first
half of 2021. A further area of focus was on the more
discretionary overhead items, particularly in the early
stage of the pandemic, where more variable cost
headings were curtailed. Many of these costs had
returned to more normal levels by the end of the third
quarter. The Group’s finance systems and processes
seamlessly accommodated greater levels of remote
working during 2020 without a reduction in service
levels or information flow within the business.
Capital structure and Group financing
The Group funds itself through a combination of
equity and debt. Debt is funded through syndicated
and bilateral bank facilities and private placement
loan notes.
31
Business & Strategic Report Financial Review The primary bank debt facility is a €451m revolving
credit facility, which was undrawn at year-end
and which matures in June 2022. In June 2019
an additional 3 year bank facility of €300m was
arranged, which was undrawn at year-end. As at
31 December 2020, the Group also had private
placement loan note funding net of related
derivatives totalling €1,508.3m including a €750m
Green Private Placement arranged in September
2020. These new notes had a weighted average
coupon of 1.78% and a weighted average term of
9.75 years. On 20 February 2020 the Group arranged
a bilateral Green Loan of €50m to fund the Group’s
Planet Passionate initiatives. The weighted average
term, as at 31 December 2020, of all drawn debt was
6.3 years (31 December 2019: 4.5 years).
The Group had significant committed available
undrawn facilities and cash balances which, in
aggregate, were €2.1bn at 31 December 2020.
Net debt
Net debt decreased by €397m during 2020 to
€236.2m (2019: €633.2m). This is analysed in
the table adjacent:
Movement in net debt
Free cashflow
Acquisitions
Deferred consideration paid
Share issues
Repurchase of treasury shares
Dividends paid
Dividends paid to non-
controlling interests
2020
€m
479.7
2019
€m
337.1
(46.1)
(142.2)
-
-
-
-
(59.7)
0.1
(0.6)
(77.6)
Key financial covenants
The majority of Group borrowings are subject to
primary financial covenants calculated in accordance
with lenders’ facility agreements which exclude the
impact of IFRS 16:
– A maximum net debt to EBITDA ratio of
3.5 times; and
– A minimum EBITDA to net interest coverage
of 4 times.
(1.2)
(0.4)
The performance against these covenants in the
current and comparative year is set out below:
Cashflow movement
432.4
56.7
Exchange movements on
translation
Deferred consideration
Movement in net debt
(35.4)
-
397.0
8.4
30.0
95.1
Net debt at start of year
(633.2)
(728.3)
Net debt at end of year
(236.2)
(633.2)
2020
2019
Covenant
Times
Times
Maximum 3.5
0.4
1.1
Minimum 4.0
27.9
34.1
Net debt/
EBITDA
EBITDA/
Net interest
Belgium Attent Gifts /
Insulated Panels
JI Wall 1000SF PIR &
JI 106-250-750
32
Kingspan Group plc Annual Report & Financial Statements 2020 Germany WINX Tower, Frankfurt
/ Light & Air Smoke Pressure
System (SPS)
Investor relations
Kingspan is committed to interacting with the
international financial community to ensure a full
understanding of the Group’s strategic plans and
its performance against these plans. During the
year, the executive management and investor
team presented at four capital market conferences
and conducted 439 institutional one-on-one and
group meetings.
Share price and market capitalisation
The Company’s shares traded in the range of
€37.44 to €84.55 during the year. The share price
at 31 December 2020 was €57.40 (31 December
2019: €54.45) giving a market capitalisation at
that date of €10.4bn (2019: €9.9bn). Total
shareholder return for 2020 was 5.4%.
Financial risk management
The Group operates a centralised treasury function
governed by a treasury policy approved by the
Group Board. This policy primarily covers foreign
exchange risk, credit risk, liquidity risk and interest
rate risk. The principal objective of the policy is
to minimise financial risk at reasonable cost.
Adherence to the policy is monitored by the CFO
and the Internal Audit function. The Group does
not engage in speculative trading of derivatives
or related financial instruments.
Geoff Doherty
Chief Financial Officer
19 February 2021
33
Business & Strategic Report Financial Review MEGATRENDS
CIRCULARITY
CONSTRUCTING
A CIRCULAR
FUTURE
Addressing the vast
consumption of resources used
in construction could have
an enormous impact on the
planet. Using its new LIFECycle
framework, Kingspan is
making innovative strides in
product circularity.
Kingspan Group plc Annual Report & Financial Statements 2020
USA UpCycle Office,
Texas / Insulated Panels
KarrierPanel
34
READ OUR
INTERACTIVE
STORY ONLINE
TODAY WE LIVE IN A WORLD
WHERE WE TAKE RESOURCES,
MAKE PRODUCTS AND CAST
THEM ASIDE AS WASTE.
42.4bn
Take: The construction industry consumes
42.4bn tonnes of materials each year1
11%
Make: 11% of all energy-related carbon
emissions arise from the energy used to
produce building and construction materials2
25-30%
Waste: Construction and demolition waste
currently accounts for approximately 25% -
30% of all waste generated in the EU3
1 World Green Building Council, Sustainable building for everyone,
everywhere report
2 Global Alliance for Buildings and Constuction, 2019 Global status
report for buildings and construction
3 European Commission, Construction and demolition waste report
THE CIRCULAR ECONOMY IS AN
EMERGING AND COMPLEX CONCEPT.
Recycling at end-of-life is
only one aspect of a product’s
lifecycle, true circularity is
embedded throughout the
entire lifecycle of the product.
At Kingspan we have been
working on a new framework
to drive product circularity,
that takes learnings from
the Ellen McArthur circular
economy principles.
We’re asking ourselves questions all the way
through the lifecycle of each product:
g Could less materials be used to make it?
g Can more recycled or renewable materials
be used to make it?
g Is it designed from the outset to
last longer?
g Is it manufactured in a low-carbon,
resource-efficient way?
g Can it be re-used after its first service life?
g And as a last resort, can it be recycled
using minimal natural resources such as
energy or water?
CONVERTING THE CONSTRUCTION
INDUSTRY TO A MORE CIRCULAR
MODEL WILL LEAD TO
CONSIDERABLE ENVIRONMENTAL
BENEFITS FOR THE FUTURE.
35
Megatrends Circularity OUR LIFECYCLE
PRODUCT
CIRCULARITY
FRAMEWORK
WE ARE USING
‘LIFECYCLE’ TO DRIVE
OUR CIRCULARITY
INNOVATION ROADMAP
FOR ALL OUR MAJOR
PRODUCTS.
WATCH ONLINE TO SEE HOW QUADCORE™
INSULATED PANELS CAN BE RE-USED AND
RECYCLED AT END OF LIFE.
Our core philosophy is to achieve product
design that is inherently lean and circular.
Today, our advanced insulation products are
up to 50% more thermally-efficient than
synthetic mineral fibre insulation, which
can lead to leaner building structures and
potential savings in transport.
36
Kingspan Group plc Annual Report & Financial Statements 2020 Input Materials
1bn PET bottles will be recycled into raw
materials for our products per annum by
2025. We’re partnering with our suppliers
to source more recycled and renewable
raw materials.
Factory Processes
100% of our factories across the entire
Group will be zero waste to landfill by 2030.
Extended Life
Re-use case studies are emerging for our
insulated panels products after their first
service life.
Cycling (End Of Life)
2 recycling plants in the UK will be up and
running in 2021 to recycle production waste,
take back site waste and demolition waste.
CIRCULARITY
IN ACTION
Bianca Wong Global Head of
Sustainability, Kingspan
As a manufacturer, we can’t do this alone.
We are committed to supporting the re-use
and recyclability of our products, but this is
not enough to create change at scale.
The entire industry will need to transform, from
material innovation all the way through to new
legal frameworks to support re-use of products
and waste legislation to drive segregation and
recycling instead of landfill.
We’re determined to play our part, with
innovation programmes at IKON and through
collaborative industry initiatives such as the
Ellen MacArthur Foundation.
Bianca Wong,
Global Head of Sustainability, Kingspan
37
Megatrends Circularity BUSINESS & STRATEGIC REPORT
Risk & Risk
Management
As a leading building supplies
manufacturer in a highly competitive
international environment, Kingspan
is exposed to a variety of risks and
uncertainties which are monitored
and controlled by the Group’s internal
risk management framework.
READ MORE
ABOUT OUR
STRATEGIC PILLARS
on page 15
Kingspan's strategic pillars that contribute to the risk
management of these risks and uncertainties are:
INNOVATION
GLOBAL
PLANET PASSIONATE
COMPLETING THE ENVELOPE
Overall responsibility for risk management lies
with the Board who ensure that risk awareness
is set at an appropriate level. To ensure that risk
awareness is set at an appropriate level, the Audit &
Compliance Committee assists the Board by taking
delegated responsibility for the risk identification and
assessment, in addition to reviewing the Group’s risk
management and internal control systems and making
recommendations to the Board thereon.
The chairman of the Audit & Compliance Committee
reports to the Board on its activities, both in regard
to audit matters and risk management. The activities
of the Audit & Compliance Committee are set out
in detail in the Report of the Audit & Compliance
Committee on page 84.
The Board monitors the Group’s risk management
systems through this consultation with the Audit &
Compliance Committee but also through the Group’s
divisional monthly management meetings, where at
least two executive directors are present. The risks
and trends are the focus of each division’s monthly
management meeting, where their performance
is also assessed against budget, forecast and prior
year. In addition, key performance indicators are
used to benchmark operational performance for all
manufacturing sites.
In addition to this ongoing assessment of risk within
the divisions, the Audit & Compliance Committee
oversees an annual risk assessment for the Group
whereby each divisional management team is formally
asked to prepare a risk assessment for their business.
This assessment involves evaluating group-wide risks,
as put forward by the Board, and also presenting
additional risks that are specific to their business.
While it is acknowledged that the Group faces a
variety of risks, the Board, through the processes
set out above, has identified the principal risks and
uncertainties that could potentially impact upon the
Group’s short to medium term strategic goals and
these are set out overleaf.
38
Kingspan Group plc Annual Report & Financial Statements 2020
Risk and impact
Actions to mitigate
Risk and impact
Actions to mitigate
Volatility in the macro environment
The exposure to the cyclicality or down turn due to the
impact of a pandemic, or other significant economic event,
on any one construction market is partially mitigated by
the Group’s diversification geographically, by end application
and by product.
As set out in the Business Model & Strategy, the Group has
mitigated this risk through diversification as follows:
–
–
–
–
Significant globalisation strategy with a presence in
over 70 markets;
Launch of new innovative products and an approach
of continual improvements to existing product lines;
Exposure to a significant range of end use applications
in residential and non-residential markets; and
Acquisitions made during the year extend the geographic
reach of the Group.
The full details of these diversifications are set out in
the Business Model & Strategy report contained in this
Annual Report.
Kingspan products are
targeted at both the
residential and non-
residential (including
retail, commercial, public
sector and industrial)
construction sectors.
As a result, demand is
dependent on activity
levels which may vary by
geographic market and
is subject to the usual
drivers of construction
activity (i.e. general
economic conditions
and volatility, Brexit,
pandemics, political
uncertainty in some
regions, interest rates,
business / consumer
confidence levels,
unemployment,
population growth).
While construction
markets are inherently
cyclical, changing
building and
environmental regulations
continue to act as an
underlying positive
structural trend for
demand for many of
the Group’s products.
Product failure
A key risk to Kingspan’s
business is the potential
for functional failure of
our product which could
lead to health, safety and
security issues for both our
people and our customers.
The Kingspan brand is well
established and is a key
element of the Group’s
overall marketing and
positioning strategy. In the
event of a product failure,
the Kingspan brand and/
or reputation could be
damaged and if so, this
could lead to a loss of
market share.
Dedicated structures and processes are in place to
manage and monitor product quality controls throughout
the business:
– New products go through a certification process which
is undertaken by a recognised and reputable authority
before it is brought to market.
–
–
The Group appointed a Head of Compliance &
Certification reporting to the Group CEO to ensure a
rigorous approach to certification, testing and product
compliance across the Group and to ensure consistent
and robust application of processes centred around our
core value of product safety.
The terms of reference for the Audit & Compliance
Committee were amended in December 2020 to include
oversight of the product compliance agenda.
– Our businesses employ quality control specialists and
operate strict policies to ensure consistently high
standards are maintained in addition to the sourcing and
handling of raw materials.
–
The construction of a dedicated Kingspan Fire Test centre
using Kingspan products allows for more expedient and
significant testing to take place.
– Quality audits are undertaken at our manufacturing sites.
Over 70 of our facilities are ISO 9001 certified.
–
Effective training is delivered to our staff.
– We proactively monitor the regulatory and legislative
environment.
Innovation
Global
Planet Passionate
Completing the Envelope
39
Business & Strategic Report Risk & Risk Management
Risk and impact
Actions to mitigate
Risk and impact
Actions to mitigate
Failure to innovate
Business interruption (including IT continuity and climate change)
Failing to successfully
manage and compete
with new product
innovations, changing
market trends and
consumer tastes could
have an adverse effect on
Kingspan’s market share,
the future growth of the
business and the margins
achieved on the existing
product line.
–
–
–
Innovation is one of Kingspan’s four pillars to increasing
shareholder value and therefore plays a key role within
the Group.
There is a continual review of each division’s product
portfolios at both the executive and local management
level to ensure that they target current and future
opportunities for profitable growth.
This risk is further mitigated by continuing innovation and
compelling marketing programmes. The launch of IKON in
2019 has served to enhance the capabilities of the Group
to innovate. Kingspan also has a deep understanding
of changing consumer and industry dynamics in its key
markets and continues to refine its omnichannel customer
centric approach, enabling management to respond
appropriately to issues which may impact business
performance.
Each business unit has rigorous established procedures and
credit control functions around managing its receivables
and takes action when necessary.
Trade receivables are primarily managed through strong
credit control functions supplemented by credit insurance
to the extent that it is available. All major outstanding
and overdue balances together with significant potential
exposures are reviewed regularly and concerns are discussed
at monthly meetings at which the Group’s executive
directors are present.
– Control systems are in place to ensure that credit
authorisation requests are supported with appropriate and
sufficient documentation and are approved at appropriate
levels in the organisation.
Credit risks and credit control
As part of the overall
service package, Kingspan
provides credit to
customers and as a result
there is an associated
risk that the customer
may not be able to pay
outstanding balances.
–
–
At the year-end, the
Group was carrying
a receivables book of
€702.2m expressed net
of provision for default in
payment. This represents
a net risk of 15% of sales.
Of these net receivables,
approximately 60%
were covered by credit
insurance or other forms
of collateral such as
letters of credit and bank
guarantees.
Kingspan’s performance
is dependent on
the availability and
quality of its physical
infrastructure, its
proprietary technology,
its raw material supply
chain and its information
technology. The safe and
continued operation of
such systems and assets
is threatened by natural
and man-made perils and
is affected by the level of
investment available to
improve them.
The building industry as
a whole is going through
some significant change
with respect to building
regulations and codes.
The risks associated with
misunderstanding some
of the potential changes
and the nature of our
product set are more
prevalent today.
Embedded within climate
change risks are energy
regulations, change in
customer preferences and
global supply.
Any significant or
prolonged restriction to
its physical infrastructure,
the necessary raw
materials or its IT systems
and infrastructure could
have an adverse effect
on Kingspan’s business
performance.
–
–
–
Kingspan insists on industry leading operational processes
and procedures to ensure effective management of
each facility. The Group invests significantly in a rigorous
programme of preventative maintenance on all key
manufacturing lines to mitigate the risk of production
line stoppages.
The impact of production line stoppages is also mitigated
by having business continuity plans in place to allow for the
transfer of significant volume from any one of our 96 plants
in the Insulated Panels division or 28 plants in the Insulation
Boards division to another in the event of a shutdown.
In addition, and as part of our consequential loss insurance,
Kingspan is subject to regular reviews of all manufacturing
sites by external risk management experts, with these
reviews being aimed at enhancing Kingspan’s risk profile.
– Climate related risks are managed through significant
investment in product development which helps mitigate
climate change along with our ambitious commitments to
reduce our own environmental footprint.
–
–
–
–
Kingspan continues to focus on developing, enhancing
and protecting its IP portfolio. As a global leader in building
envelope solutions, Kingspan considers its IP security
to be paramount. In addition to trade secret policies
and procedures, Kingspan has developed appropriate IP
strategies to protect and defend against infringements.
In an effort to reduce Kingspan’s exposure to raw
material supply chain issues, Kingspan retains strong
relationships with a wide range of raw material suppliers
to limit the reliance on any one supplier or even a small
number of suppliers.
Kingspan continues to inform all stakeholders of
the characteristics of our product offerings, their
appropriate application and benefits to limit the risk
of misunderstanding within the building industry.
Kingspan’s IT infrastructure is constantly reviewed and
updated to meet the needs of the Group. Procedures have
been established for the protection of this infrastructure and
all other IT related assets. These include the development
of IT specific business continuity plans, IT disaster recovery
plans and back-up delivery systems, to reduce business
disruption in the event of a major technology failure.
Innovation
Global
40
Planet Passionate
Completing the Envelope
Kingspan Group plc Annual Report & Financial Statements 2020
Risk and impact
Actions to mitigate
Risk and impact
Actions to mitigate
Employee development and retention
Health and safety
The success of Kingspan
is built upon effective
management teams
committed to achieving a
superior performance in
each division. Failure to
attract, retain or develop
these teams could have
an impact on business
performance.
Fraud and cybercrime
Kingspan is potentially
exposed to fraudulent
activity, with particular
focus on the Group’s
online banking systems,
online payment
procedures and
unauthorised access
to internal systems.
Kingspan is committed to ensuring that the necessary
procedures are in place to attract, develop and retain the skill
levels needed to achieve the Group’s strategic goals. These
procedures include strong recruitment processes, succession
planning, remuneration reviews, including both long and
short term incentive plans, and targeted career development
programmes.
The security and processes around the Group’s IT and banking
systems are subject to review by divisional management and
internal audit. These systems are continually reviewed with
updates and improvements implemented as required. Robust IT
and security policy documents and related alerts are circulated
by Group management to all divisions to ensure a consistent
and effective approach is taken across the Group.
Acquisition and integration of new businesses
Acquisitive growth
is an important
element of Kingspan’s
development strategy.
A failure to execute
and properly integrate
significant acquisitions
and capitalise on the
potential synergies they
bring may adversely
affect the Group.
–
–
–
All potential acquisitions are rigorously assessed and
evaluated, both internally and by external advisors, to
ensure any potential acquisition meets Kingspan’s strategic
and financial criteria.
This process is underpinned by extensive integration
procedures and the close monitoring of performance post
acquisition by both divisional and Group management.
Kingspan also has a strong track record of successfully
integrating acquisitions and therefore management have
extensive knowledge in this area which it utilises for each
acquisition.
The nature of Kingspan’s
operations can expose its
contractors, customers,
suppliers and other
individuals to potential
health and safety risks.
Health and safety
incidents can lead to loss
of life or severe injuries.
Laws and regulations
Kingspan is subject to a
broad range of existing
and evolving governance
requirements,
environmental, health
and safety and other
laws, regulations
and standards which
affect the way the
Group operates. Non-
compliance can lead
to potential legal
liabilities and curtail
the development of
the Group.
A robust health and safety framework is in place throughout
the Group’s operations requiring all employees to complete
formal health and safety training on a regular basis.
–
–
–
–
–
–
–
The Group monitors the performance of its health and
safety framework, and takes immediate and decisive action
where non-adherence is identified.
The development of a strong safety culture is driven by
management and employees at every level and is a core
part of doing business with integrity.
Kingspan’s in-house legal team is responsible for monitoring
changes to laws and regulations that affect the business
and is supported by external advisors.
A comprehensive framework of policies are in place that
set out the ways employees and suppliers are expected to
conduct themselves.
The Group’s Code of Conduct sets out the fundamental
principles which it requires all its directors, officers and
employees to adhere to in order to meet those standards.
Training is provided through a variety of mediums in key
areas of legal and regulatory compliance, including a suite
of mandatory training for those that join Kingspan.
A robust whistleblowing process is in place that allows for
the anonymous reporting through an independent hotline,
of any suspected wrongdoing or unethical behaviour,
including reporting instances of non-compliance with laws
and regulations. All reported cases are investigated.
Innovation
Global
Planet Passionate
Completing the Envelope
41
Business & Strategic Report Risk & Risk Management
Sustainability
Report
KINGSPAN’S MISSION
To accelerate a net zero emissions
future built environment with the
wellbeing of people and planet at its
heart. We do this through enabling
high-performance buildings that can
save more energy, carbon and water.
We recognise the vital importance of achieving this
while: enhancing the safety and wellbeing of people
in buildings; enabling the circular economy; and
always delivering more performance and value. We
believe the answers lie in challenging building industry
traditions with innovation in advanced materials and
digital technologies. What defines us is our relentless
pursuit for better building performance whilst being
Planet Passionate in everything we do.
Our commitment to sustainability is instilled at
every level of Kingspan and at every step in the
manufacturing process. In developing our approach
to sustainability we have built on materiality
assessments conducted at a divisional level as
well as incorporating guidelines from recognised
associations such as the Sustainable Accounting
Standards Board (SASB) and the Task Force on
Climate-related Financial Disclosures (TCFD), of
which Kingspan is a signatory. Kingspan recognises
that it has a responsibility as a business leader to
contribute towards the achievement of the United
Nation's Sustainable Development Goals (SDGs).
We will be publishing a Kingspan Planet Passionate
report in March 2021 with more detail on how we
contribute to the SDGs.
42
Kingspan Group plc Annual Report & Financial Statements 2020 PRODUCT
PASSIONATE
Today, the construction and operation
of buildings together account for 39%
of energy related CO2e emissions.
The energy efficiency of buildings is
therefore fundamental to combating
climate change.
g The largest influence Kingspan has on
the SDGs is through our solutions in
use. As demonstrated throughout this
report our advanced building envelope
solutions help building owners to
reduce energy emissions. The total
energy saved over the lifetime of the
Kingspan insulation systems, sold
worldwide in 2020, is an estimated 716
million MWh of energy or 164 million
tonnes of CO2e.
g Our solutions also help to enhance
occupant health and wellbeing
through improved thermal comfort,
natural daylighting, natural
ventilation, and increased space.
Our advanced insulation is free from
health concerns associated with
airborne fibres.
g Our Water & Energy business helps
building owners to sustainably
manage water as a resource and can
help to protect local communities
through reducing flood risk and the
risk of polluted run-off to waterways.
We estimate our rainwater harvesting
systems, produced in Australia in
2020, will save over 34 gigalitres of
water in their lifetime.
PLANET
PASSIONATE
Through Planet Passionate we are
playing our part in tackling climate
change by increasing our use of
renewable energy, reducing carbon
in our business operations and value
chain, increasing our recycling
of rainwater and waste and by
accelerating our participation in
the circular economy.
g Energy: In 2020 we achieved
g Carbon: We had significant
100% of our Net Zero Energy goal
throughout our operations. We
generated 5.3% of our energy on
Kingspan sites and 21% of wholly
owned sites have deployed rooftop
Solar PV systems.
g Carbon: We converted 11% of our
annual replacement cars and 2.4%
of our total car fleet to zero-
emissions cars. In addition, we
installed 9 EV charging points
with a further 8 charging points
commissioned for 2021.
engagement with our key suppliers
including cross functional team
meetings, strategy reviews and site
visits. These ongoing collaborations
have resulted in several exciting R&D
projects. We don’t expect linear
progress in our supply chain target,
but we look forward to announcing
step-changes driven by innovation
and technological advances.
PEOPLE
PASSIONATE
Despite our size, we retain
our heritage and culture as a
family business, with very high
value placed on people, trust,
relationships and communities
which are at the very heart of
how we do business.
g Kingspan takes the welfare of our
employees very seriously. We are deeply
saddened to report that there was a
workplace fatality in the business in
2020. We will do our utmost to learn
from this tragedy and to continually
improve processes and training to
achieve our target of zero fatalities
across our business in the future.
g Our Lost Time Incident rate fell by over
14% in 2020, or by 25% since 2017.
g We continue to champion diversity
across the business. The percentage
of females in Kingspan remained
at 19% in 2020. The percentage of
females on the executive management
team, reporting to the CEO, was 27%.
g Circularity: In 2020 we upcycled 573
million waste PET bottles into our
manufacturing processes. Through
our Planet Passionate programme
we aim to achieve zero waste to
landfill in our business by 2030.
g Water: In 2020 we harvested 21.1
million litres of rainwater across our
manufacturing sites. The EcoAlf
Foundation collected 180 million
tonnes of marine debris through its
Upcycling the Ocean project. Almost
10 million tonnes of which were
utilised by Kingspan’s Synthesia.
g Over 96 additional candidates had the
opportunity to broaden their business
and leadership skills on development
programmes in 2020, including 27 on
our PEAK Leadership programme.
g Kingspan supports local community
projects at a global level. For 2020,
we highlight a number of projects
where we used our skills to support
local communities through the
COVID-19 pandemic, see page 54.
43
43
Business & Strategic Report Sustainability Report I
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T
A
N
O
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S
A
P
T
C
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KINGSPAN IS DRIVEN BY A
BELIEF THAT ADVANCED
MATERIALS AND METHODS
OF CONSTRUCTION HOLD
THE ANSWER TO SOME OF
THE GREAT CHALLENGES
THAT OUR PLANET AND
SOCIETY FACE.
From products that insulate better while creating
more internal space, to those that harness more
natural daylight, we are dedicated to extending
the limits of ultra-performance envelope design
with a core focus on energy efficiency.
We have innovated a portfolio of advanced
products and solutions for architects and
building owners which enable them to construct
buildings that consume less resources. Future
proofing their investment, generating returns
through enhanced internal space and operational
performance, and facilitating efficient
construction through thinner, lighter and safer to
handle materials. Increasingly we are enhancing
our service and solutions through digitalising our
offer. By surfacing all of our products digitally,
we’re making it easier to find them, specify them,
buy them, build with them and track them.
READ MORE ABOUT
KINGSPAN’S INNOVATION
PRODUCT
SUSTAINABILITY
Increasingly our customers want
solutions which not only enable
them to preserve resources, but
solutions which are also sourced and
manufactured in a sustainable way.
To this end, Kingspan is working with our suppliers and
throughout our own organisation to meet our ambitious
Planet Passionate goals in the areas of carbon, energy,
circularity and water. In an effort to reduce a key source
of carbon in construction, embodied carbon, we are
targeting Net Zero Carbon Manufacturing by 2030 and
a reduction in carbon from our primary suppliers by
50% by 2030. Our Head of Innovation works together
with our Head of Sustainability, and our CEO, to ensure
that product development is closely aligned with our
environmental objectives.
44
Kingspan Group plc Annual Report & Financial Statements 2020
PRODUCT
INTEGRITY
Product Safety and Integrity
Ensuring the safe use of our products in buildings is
central to our approach to product development,
testing and support. This encompasses both the
safety of those who are installing our products and
crucially, those who live and use the buildings that
contain our products.
With respect to fire performance, our approach to
the safe use of our insulation products in buildings
is founded on the principle that system testing is
the best way to assess fire performance of any roof
or cladding system, regardless of the insulation
materials used.
Today, fire safety is often reduced to a simplistic
“combustible” versus “non-combustible” definition.
It is our view that large-scale system testing is the
best way to assess the fire performance of any
system, regardless of the classification of constituent
materials used. Important factors such as building
design, installation methodology and the interaction
of the different materials in the actual system are not
tested in small-scale materials classification testing.
As a manufacturer of products incorporating a very
wide spectrum of insulation solutions, including both
combustible and non-combustible insulation, we
have extensive experience with system testing for fire
performance across a range of insulation types and
system build-ups. It is this knowledge that informs
our belief that fire safety should be predicated on
tested performance of the actual system, rather than
a presumption that certain materials will be safe in
any build-up.
It is also very important to understand that there
is a wide spectrum of performance in combustible
materials. Thermoset combustible materials (such
as QuadCore™ and Kooltherm®) are designed to
char when subjected to fire, this is an important
characteristic underpinning their ability to pass the
most rigorous large-scale system tests.
For example, a wide range of Kingspan insulated
panels carry an FM (FM Global) or LPCB (Loss
Prevention Certification Board) Approval, both
of which are large-scale system testing regimes
developed by the insurance industry. These approvals
provide objective third-party testing, which is
underpinned by quarterly, bi-annual and annual
factory surveillance audits (depending on the region)
to verify compliance. Independent certification
bodies take samples of insulated panels from our
factories and send them to their own laboratories
for fire testing to verify ongoing compliance. These
independent audits also include assessments of
change control, formulations, processing parameters,
labelling and internal testing.
The behaviour of these insulated panels in these
tests has been consistent with a significant number
of independently investigated real fire case studies,
where Kingspan LPCB and FM approved panel
systems have been exposed to real fires in a range
of building types including school, hospital, retail,
distribution, storage, food manufacture/ processing,
industrial and a car showroom. Whilst all these case
studies relate to insulated panels with a PIR core,
large scale system tests embedded within LPCB and
FM approvals indicate that QuadCore™ insulated
panels will perform in a similar or better manner. Key
findings from these real fire investigations include:
g No evidence to indicate that the PIR insulated
panels increased the risk of fire spread;
g PIR cores within the insulated panels charred
in the immediate vicinity of the fire;
g Fires were not propagated within the PIR core
of the insulated panel;
g PIR insulated panels did not char significantly
outside of the area of the main fire;
g Building contents were the dominant
influence on fire severity, and the fire severity
was not significantly influenced by the PIR
insulated panel.
The Kooltherm® range of Insulation Boards
and KoolDuct® pre-insulated ductwork are
manufactured with a phenolic insulation core,
which has been proven to offer superior fire and
smoke performance to other commonly used rigid
thermoset insulants.
45
Business & Strategic Report Sustainability Report A comprehensive range of building facade systems
incorporating our insulation board and insulated
panels products have successfully passed Kingspan
large-scale facade tests around the globe
including, but not limited to, NFPA 285 (North
America), LEPIR II (France), SP 105 (Nordics), AS
5113 (Australia), ISO 13785-2 (Czech Republic),
MSZ 14800-6 (Hungary). In addition, there are
a total of 15 systems incorporating Kooltherm®
which have met the requirements of BR135
when tested to BS 8414 (UK). There are also 6
insulated panel based systems that have met the
requirements of BR 135 when tested to BS 8414.
We recognise that all testing, for fire and other
aspects of performance, must be supported by a
robust approach to ensuring that the integrity of
this information can be assured and disseminated
to enable a golden thread from testing through
to the service life of our products on buildings
and beyond. Furthermore, safe use of our
products on buildings must be supported by
accurate and truthful marketing together with
competent technical and installation advice. This
approach underpins a programme of work that
is underway across Kingspan, which is built upon
four pillars:
1.
2.
3.
4.
CULTURE OF HONESTY,
INTEGRITY AND COMPLIANCE
INTEGRITY OF PRODUCT
COMPLIANCE
DIGITAL TRACEABILITY OF
PRODUCT INFORMATION
COMPETENCY IN TECHNICAL
SUPPORT AND INSTALLATION
Our updated groupwide Code of
Conduct is being rolled out across all
businesses in Kingspan based on the
three principles of honesty, integrity
and compliance. This updated Code of
Conduct sets out clear expectations
for all employees with respect to
clear, ethical and honest business
communications, together with in
compliance with the law.
Led by our Group Head of Compliance
& Certification (appointed in
December 2020), a new product
compliance programme is being
rolled out across the Group to the
incoming ISO 37301 Compliance
Management standard, which will
be audited by our Group Internal
Auditing function with reporting
to the Board’s Audit & Compliance
Committee.
This programme of work will be rolled out
to all businesses, with the aim of assuring
the highest standards of product safety
and compliance.
An extensive Marketing Integrity
programme is being launched in 2021,
aligned with the incoming UK Code
for Construction Product Information,
which is expected to launch in
the second half of 2021, to ensure
accurate and truthful representation
of product information in marketing
materials. This will be supported by a
training programme with a key focus
on representation of testing and
accreditations.
Our groupwide Digital Transformation
programme has a core focus on
the implementation of a groupwide
Product Information Management
(PIM) system to ensure accuracy of all
product information, including that
which is related to compliance. The
PIM will provide accurate and up-to-
date product information to a suite of
customer tools, including Kingspan’s
proprietary BIMDesigner platform
which will support the golden thread of
Kingspan product information through
building models and into building
passports. The PIM project has been
underway since 2019 and we launched
our prototype BIMDesigner platform in
the UK in 2020.
46
Kingspan Group plc Annual Report & Financial Statements 2020 INNOVATION
POWERPANEL®
g Launching 2021
g Insulate – featuring QuadCore™
insulated roof panel solutions
providing operational energy
savings of up to 30%
g Generate – high-performance
monocrystalline PV cells for
maximum output efficiency
g A single fix solution saving time on
installation and earlier operation
and income
g Up to 74% lighter – suitable for
many existing roof structures,
saving the need for additional
structural works
DAY-LITE KAPTURE
g Save on energy bills by maximising
natural light indoors
g Offers exceptional levels of light
transmission with 100% diffusion
g 100% UV Resistant
g Pre-glazed, ready for installation
OVER 65% OF OUR
PRODUCTS CONTRIBUTE
TOWARDS DELIVERING THE
UN SDGS.
KINGSPAN’S INSULATION
SYSTEMS, SOLD IN 2020,
WILL SAVE AN ESTIMATED
716 MILLION MWh OF ENERGY
OR 164 MILLION TONNES OF
CO2e OVER THEIR LIFETIME.
The total projected energy savings* over the lifetime
of the Kingspan insulation systems, sold worldwide in
2020, is equivalent to:
421m
Over four hundred
and twenty one
million barrels of oil
247
The annual output
of 247 gas-fired
power stations
17.3
Up to 17.3 times the
annual electricity
consumption of
Greater London
75m
Taking over 75
million cars off
the road annually
*figures are based on savings of insulation systems in use for 60 years.
47
Business & Strategic Report Sustainability Report I
I
0
2
0
2
-
1
1
0
2
S
T
H
G
L
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Y
G
R
E
N
E
O
R
E
Z
T
E
N
R
U
O
OUR NET ZERO
ENERGY JOURNEY
2011- 2020
In 2011, we set ourselves an ambitious target
to achieve Net Zero Energy* across our business
by 2020. We are proud to announce that we have
achieved that goal thanks to targeted investment
and the dedication and hard work of our global
Net Zero Energy Team.
2
5x
™
35%
™
36%
A more than 5 fold
increase in on-site
renewable energy
generation
A 35% reduction in
absolute Scope 1 &
2 greenhouse gas
emissions since 2013
A 36% reduction
in heating and
lighting costs per
unit of revenue
*Kingspan’s Net Zero Energy definition is to match 100% of
our operational energy use through the use of renewable energy and
the purchase of renewable energy certificates to offset any remaining
non-renewable energy use.
5%
2011
2012
2014
2016
2018
4 GWh/yr
estimated energy
savings from over 14
efficiency projects
1 GWh/yr estimated
renewable energy
capacity from two
new rooftop solar
PV installations
3.1 GWh/yr estimated
renewable energy
capacity from new
rooftop solar PV in
Sherburn, UK
0.3 GWh/yr
estimated renewable
energy capacity
from new rooftop
solar PV in Tiel
100%
2020
2011
2013
2015
2017
2019
2020
g Programme
launched
g NZE Team
assembled
3 GWh/yr estimated
energy savings from
a new heat recovery
system in Pembridge
15.2 GWh/yr
estimated energy
savings from four
new heat recovery
systems
1 GWh/yr estimated
renewable energy
capacity from new
rooftop solar PV in
Somerton, Australia
1.6 GWh/yr
estimated renewable
energy from new
wind turbine in
Holywell
1.9 GWh/yr estimated
renewable energy
capacity from
three rooftop solar
PV installations
48
Kingspan Group plc Annual Report & Financial Statements 2020
I
PP Image to go here
E In 2020, we embarked on the next leg of
T
our sustainability journey, one that aligns
A
N
us with the essential goal of keeping the
O
global temperature increase, by the end
of this century, at less than 1.5oC above
S
S
the pre-industrial era.
A
P
T
E
N
A
L
P
PP Image to go here
THE INNOVATION AND PARTNER
DRIVEN APPROACH TO ACHIEVING
THESE GOALS WILL PUT US AT THE
VANGUARD OF HIGH-PERFORMANCE
AND SUSTAINABLE BUILDING
ENVELOPE SOLUTIONS.
49
Business & Strategic Report Sustainability Report
Launched in December 2019, Planet Passionate
is our ambitious 10-year global sustainability
programme where we have set ourselves hard
targets to progress our positive impact on three
global issues: climate change, circularity and
the protection of our natural world.
The programme consists of 12 targets across
4 key areas:
ENERGY
– Net Zero Energy (%)
–
–
–
60% direct renewable energy use (%)
20% on-site renewable energy generation (%)
Solar PV systems on all owned facilities (%)
CARBON
– Net Zero Carbon Manufacturing (% change)
CIRCULARITY
–
–
–
–
Zero emissions company funded cars (% annual conversion)
50% reduction in product CO2e intensity from primary supply partners (% reduction)
Zero Company waste to landfill (tonnes)
Recycle 1 billion PET bottles into our manufacturing processes (bottles)
– QuadCore™ products utilising recycled PET (% sites)
WATER
– Harvest 100 million litres of rainwater (litres)
–
5 active ocean clean-up projects (No. of initiatives)
Target Year
2020 (base year)
2020
2030
2030
2030
2030
2025
2030
2030
2025
2025
2030
2025
100%
28%
5.3%
21%
0.1%*
11%
0%
18,167
573m
5%
21.1m
1
* Scope 1 & 2 GHG emissions estimate, external assurance ongoing. Final figures to be confirmed in Kingspan’s Planet Passionate report, due March 2021
50
Kingspan Group plc Annual Report & Financial Statements 2020 ENERGY
CIRCULARITY
Following on from our Net Zero Energy programme,
a key focus of our Planet Passionate programme is
to increase our direct use of renewable energy.
The circular economy is moving from the traditional
linear system of take, make and waste. Learn more
about our circularity strategy on pages 34 to 37.
g We generated 32.6 GWh of renewable energy
on-site. This represents 5.3% of our total
energy needs.
g We upcycled 573 million PET waste plastic
bottles into our manufacturing process, an
increase of almost 50% versus 2019.
g We commissioned seven solar PV projects. These
solar PV projects have the capacity to generate
4.76 GWh of renewable energy annually.
g Our Modesto plant in California implemented
the use of our recycled PET polyol in its
QuadCore™ insulated panel production.
2020 was a foundational
year for our Planet
Passionate programme.
We set the baseline
for each target and
developed detailed
strategies and timelines
to achieve our goals.
CARBON
We have made great strides in reducing our carbon
emissions to date. To meet the goal of limiting
global warming to 1.5oC by the end of the century,
compared to the pre-industrial era, we are targeting
Net Zero manufacturing by 2030.
g We had significant engagement with our key
suppliers including cross functional meetings,
strategy reviews and site visits. These ongoing
collaborations have resulted in several exciting
R&D projects. We don’t expect linear progress
in our supply chain target, but we look forward
to announcing step-changes on the back of
innovation and technological advances.
g We converted 11% of our annual replacement
cars and 2.4% of our total car fleet to zero-
emission cars. In addition, we installed 9 EV
charging points with a further 8 charging point
projects commissioned for 2021.
Planet Passionate Partner / Born Free Foundation
To help halt the dramatic decline in Kenya’s
lion population and safeguard the future of an
animal close to our hearts and at the centre
of our logo. Kingspan entered a three-year
partnership with the Born Free Foundation.
Planet Passionate Partner / EcoAlf Foundation
Under a 3-year partnership, we are supporting
EcoAlf Foundation’s removal of waste from
the Mediterranean, aiming to reuse as much
of the ocean plastic recovered as possible
in our production.
g We recycled 67.8% of our waste, up from 65%
in 2019. Our Insulated Panel facility in Holywell,
UK and our Global Tate Data & Flooring business
achieved zero-waste to landfill.
g The ongoing engagement with our supply
chain on multiple sustainability fronts has
led to exciting research and development
projects which are exploring the potential
to include further post-consumer waste as
materials in our high-performance solutions.
WATER
As a manufacturer of solutions to harvest and
recycle water, we recognise the need for future
water security and the protection of our natural
water systems.
g We harvested 21.1 million litres of rainwater
across our business.
g Kingspan Water & Energy installed 8 rainwater
harvesting systems in 4 countries with a total
expected annual yield of 2.18 million litres.
g 180 tonnes of marine debris was collected
by EcoAlf’s Upcycling the Ocean project
in Spain. Over the course of 2020, Synthesia
utilised 9.67 tonnes of PET sourced from the
EcoAlf Upcycling the Ocean’s project in
their production.
51
Business & Strategic Report Sustainability Report I
E
T
A
N
O
S
S
A
P
E
L
P
O
E
P
What has been achieved at
Kingspan would not be possible
without the people that work
hard every day to drive the
Group forward. A dynamic
and motivated workforce is
key to delivering against the
future growth strategy of
the business. For this reason,
talent is at the heart of future
planning at Kingspan.
Kingspan’s leadership team holds an annual
Talent Forum in September to review
succession plans, metrics on key positions
hired throughout the year and to forecast
future talent gaps as part of our human
capital risk assessment.
ATTRACT, RETAIN
AND DEVELOP
Graduates and Early Career Talent
Graduates and early career talent participated
for the fourth consecutive year in our Yours to
Shape Programme which has now provided a
12-month programme for 155 graduates across
Kingspan to-date. Following residential sessions
in Barcelona and the IKON Global Innovation
Centre in Ireland, this year’s 36 international
participants were asked to present their final
projects virtually due to travel restrictions
and broadcast live to the biggest audience
ever for the annual Graduate Showcase.
The next cohort, launched in October 2020,
has 40% female participation in line with
our ongoing ambition to be a diverse and
inclusive organisation.
Kingspan continues to be an attractive
employer of choice for young, talented
graduates with a 60% increase in applications
to our global website in 2020. While we have
recruited traditionally from engineering
disciplines, our product impact and our
Planet Passionate programme has appealed
increasingly to those with backgrounds in
material science, digital skills and sustainability
to drive our Innovation, Digitalisation and
Planet Passionate agenda.
Next Generation of Leaders
PEAK (Programme for Executive Acceleration in
Kingspan) was launched in 2018 and is targeted
at developing ‘hi-potentials’ middle managers
GENDER BALANCE
INJURY FREQUENCY RATE
FATALITIES
2020
19%
2019
19%
2018
18%
2017
17%
81%
81%
82%
83%
2020
1.2
2019
1.4
2018
1.5
2017
1.6
Female
Male
p/100k hours
2020
2019
2018
2017
52
1
1
0
0
Kingspan Group plc Annual Report & Financial Statements 2020
for future senior leadership roles. Seventy-five
percent of those who attended the first programme
have been promoted to the next level in the last
18 months. The core objective of the programme
is to deepen Kingspan’s leadership bench-strength
to match the increasing scale and global nature of
the business. Since its launch in April 2018, eighty-
four executives have participated in PEAK which has
strengthened cross divisional relationships as well as
led to further integration of executive talent from
recent acquisitions. PEAK 2020 was a truly global
event with greater participation than ever before
from our emerging businesses in Asia Pacific.
Advanced Management Programmes
Due to the global pandemic, two new leadership
programmes were postponed to 2021. An Advanced
Management Programme will be launched in
June 2021 in partnership with INSEAD’s executive
business school in France. This new programme will
support Kingspan’s senior leaders to engage with the
enterprise-level goals in a more collaborative way
while transforming their leadership capabilities to
drive significant long-term growth.
As part of our plans to develop a more coaching
style of leadership, we are in the process of
transitioning to an on-line format for our Developing
Leaders as Coaches programme which will be rolled
out in 2021. In parallel, we continue to assign internal
coaches and mentors to sponsor “Hi-Potentials”
with particular emphasis on accelerating emerging
female leaders across Kingspan.
the local authorities and independent specialists
retained by the Company, we are fully examining
the circumstances of this incident. We will use the
learnings from this tragedy to continually improve
processes and training to achieve our target of zero
fatalities across all of our businesses in the future.
Protect
Kingspan takes the safety of our employees incredibly
seriously. All accidents, as well as near misses, are
recorded and reviewed. Health and Safety (H&S)
is under on-going review at a facility and divisional
level and a Group H&S Committee sits at least
twice a year. It is an opportunity for all divisions
and geographies to share best practice and discuss
operational experiences that will improve the welfare
of all our employees.
We are deeply saddened to report that during the
year, a fatal accident occurred during the installation
of Light & Air products in Germany. Together with
Equal opportunities, employee rights
and diversity
Kingspan is committed to providing equal
opportunities from recruitment and appointment,
training and development to appraisal and
promotion opportunities for a wide range of people,
free from discrimination or harassment and in which
all decisions are based on work criteria and individual
performance. We see diversity and inclusiveness
as an essential part of our productivity, creativity
and innovation. Diversity is widely promoted
within Kingspan, 40% of our most recent graduate
programme are female and over 27% of our senior
executive team, reporting to the CEO, are female.
Employees at our Balex
manufacturing facility
in Bolszewo, Poland
Hazard Identification Processes include (but are not limited to):
g All near misses are assessed and processes are updated.
g Employees are encouraged to make suggestions for process improvements.
g Safety walks by responsible persons.
g Periodic workplace inspections.
g Risk assessment on new machines at installation.
53
Business & Strategic Report Sustainability Report OUR
COMMUNITIES
Kingspan grew out of a family business and
those family values continue to shape how we
engage with our communities today. Decades
on, Kingspan remains deeply rooted in the
community of Kingscourt, Ireland, where the
business was founded. Being engaged in our
local communities is a core element of the
culture of Kingspan.
2020 was an extraordinary year, one which will never
be erased from our memories. Despite the challenges
it presented, Kingspan is proud to recognise the
great achievements of our people in turning our skills,
facilities and equipment to help with the fight against
COVID-19. Our lab at IKON made hand sanitiser
which has been used to keep our own people safe,
as well as donating to the wider community. We also
manufactured over 500 3D prints of PPE frames in
IKON to support local schools. Furthermore, during a
time of great crisis in terms of shortages of PPE in our
nursing homes, a team of people between Holywell
and Kingscourt worked at speed to ship 30,000
face masks to Ireland, where they were donated to
Nursing Homes Ireland and distributed to 400 nursing
homes over a short number of days.
It is important that our businesses have the flexibility
to support initiatives which are relevant to the local
workforce and to the communities in which they
operate. We continued to support a number of great
causes across the Group from The Irish Hospice
Foundation, to charity runs and to supporting a local
rugby team in the UK who responded by participating
in a beach clean-up with our Synthesia team in
Barcelona and our Light & Air team in France while
on tour.
54
Kingspan receiving €1m of Personal
Protective Equipment in Dublin
for the Health Service Executive
of Ireland.
Kingspan Group plc Annual Report & Financial Statements 2020 Our policies
Aims
g Comply with all local laws in the countries
we operate in.
g Ensure supply chain accountability.
Modern slavery
Slavery and human trafficking are abhorrent crimes
and we all have a responsibility to ensure that they
do not continue. At Kingspan we pride ourselves on
conducting our business ethically and responsibly. The
Modern Slavery Act 2015 became UK legislation and
required all large UK companies and businesses who
supply goods or services in the UK to publish a slavery
and human trafficking statement each financial
year on their website. Kingspan is fully committed to
ensuring that modern slavery is not taking place in our
business or any of our supply chains. We adopted and
published our policy statement at the end of 2016 and
all our businesses are responsible for ensuring supplier
compliance with the legislation.
Supply chain engagement
Kingspan has developed an ethical and environmental
strategy for procuring materials and services. We seek
to build and maintain long term relationships with
key suppliers and contractors to ensure that they are
aligned to the same goals and standards as Kingspan,
to address strategic global issues, emerging trends
and ultimately our customer needs.
This approach has divisional and regional
variances based on the local requirements and
materials, but is built on core social, ethical and
environmental standards. In all cases we aim to foster
an environment of collaboration.
Customer experience programme
Our Customer Experience programme is all about
capturing what, how and why our customers
experience the things they do. With the insight
from our customers we can take action and make
meaningful change happen. Our 2020 Global
Customer Experience survey spans 113 businesses
within the Group receiving feedback from their
customers. Over 10,000 customers from 92 countries
took the time to share their experiences with us.
Top: Team Kingspan presenting a cheque to the Irish
Hospice Foundation / Bottom: Mold U16 Rugby Team
participating in a beach clean up with our Synthesia
team in Barcelona.
55
Business & Strategic Report Sustainability Report MEGATRENDS
CHANGING
LIFESTYLES
READ OUR
INTERACTIVE
STORY ONLINE
NEXT GENERATION
SOLUTIONS FOR
NEXT GENERATION
INDUSTRY
Kingspan’s innovation driven portfolio
of ultra-performance building
envelope solutions has put us at the
forefront of delivering carbon and
energy efficient, healthy buildings
for future generations of industry.
Kingspan Group plc Annual Report & Financial Statements 2020
Canada Simons Distribution Centre /
Insulated Panels KS Shadowline; KS
Micro-Rib; KarrierPanel
56
AN EVOLVING WORLD
2020 saw a global step-
change in how we live, work
and consume. This has led
to an acceleration of some
of the industry evolution
seen over recent years, such
as e-commerce migration,
data consumption growth,
EV adoption and increasing
healthcare demands.
SIGNIFICANT AND RAPID
INFRASTRUCTURE MUST
BE DEVELOPED IN ORDER
TO SUPPORT THE GROWTH
IN THESE EVOLVING
BUSINESS CATEGORIES.
1 Euromonitor, Prologis Research
2 McKinsey, Electric Vehicle Index
3 Host in Ireland
Canada, Simons Distribution
Centre, Quebec City /
Insulation Boards
KS Shadowline; KS Micro
Rib and Karrierpanel
e-Commerce
COVID-19 has pulled forward five years of
expected online sales growth into just five
months. Already a fast-growth category,
online sales have accelerated dramatically and
are on pace to reach $340bn globally in 2020.1
Data Centres
Globally, there is considerable planned investment
in data centre infrastructure to support the
forecast growth in data consumption and cloud
computing. For example, Ireland is a key data
centre market in Europe. At the end of 2019 it had
53 operational data centres, eight more under
construction and 26 with planning approval 3.
Healthcare
The IMF estimates that the global cost of
COVID-19 in lost output will be $28tn. The
pandemic exposed a lack of resilience and
preparedness in global healthcare systems,
particularly in relation to Intensive Care Unit
(ICU) capacity, which became a key factor in
the length and severity of national lockdowns.
Electric Vehicles
Global Electric Vehicle (EV) penetration stood
at just 2.5 percent in 2019 2. The widespread
adoption of EVs is a necessary step toward
achieving climate-change goals. This requires
significant investment in EV manufacturing
infrastructure and its supporting supply chain,
including battery manufacturing.
57
Megatrends Changing Lifestyles DISTRIBUTION
& LOGISTICS
One of the many advantages of Kingspan insulated panels
is the length of panel availability, we have less structure,
less support and the sky’s the limit with optimizing the
building envelope. Additionally, the Kingspan products
exhibit both form and function and in many climate
conditions, such as northern temperatures here in
Canada, we can add value by enclosing the envelope
quickly, easily and efficiently with weathertightness.
Canada Simons Distribution Centre /
Insulated Panels KS Shadowline; KS
Micro-Rib; KarrierPanel
Fernando Lozano,
Partner, GKC Architects
Awarded “Best in Industrial and
Logistics Development” MIPIM 2020
Simons is one of the largest fashion
retailers in Canada, it was only fitting
that their main distribution centre and
office campus reflect the aesthetic values
of the company. GKC chose external
facades with patterns inspired by woven
fabric thread, which gave the building a
cutting-edge yet fashionable appearance.
GKC Architects was recognized as the
2020 winner in the “Best in Industrial and
Logistics Development” at the annual
MIPIM Awards Ceremony.
The search for thermal performance,
installation efficiency, and flexible
design options lead GKC Architects to
choose Kingspan insulated panels for
the building envelope and exterior of
the building.
ELECTRIC
VEHICLES
Kingspan has worked with many EV manufacturers
including Tesla, Volkswagen, General Motors and
Lucid Motors. In the United States alone, we have
supplied over 650,000 square metres of insulated
panels to EV related projects.
LEARN MORE ABOUT WHY
Watch the online interview with
Brent Trenga, Director of Sustainability,
Kingspan Insulated Panels North America.
58
Kingspan Group plc Annual Report & Financial Statements 2020 HEALTHCARE
National health systems must be supported in the rollout
of vaccinations and strengthened for future pandemic
preparedness and response.
Kingspan has solutions and is presently working on projects
across the spectrum of healthcare, including hospital
construction, manufacturing for medical equipment and
cold storage for medicine and vaccinations.
DATA CENTRE
SOLUTIONS
Kingspan has extensive data centre solutions including ultra-efficient
building envelopes, HVAC insulation and airflow management systems.
Access Floors & Airflow Management
Russia BIOCAD Moscow /
Insulated Panels KS1200 FR
Shell & Core Solutions
Lighting
HVAC Insulation
59
Megatrends Changing Lifestyles DIRECTORS’ REPORT
The Board
Non-Executive Chairman
Executive directors
Eugene
Murtagh
(Age 78)
Ireland
Eugene Murtagh is the Non-Executive Chairman of the Group.
Geoff Doherty
Relevant skills & experience: Eugene founded the Kingspan business
in 1965 and, as CEO until 2005, he led its growth and development
to become an international market leader. As Chairman, he sets
the tone at the top, developing and embedding values. He has an
unrivalled understanding of the Group, its business and its ethos, and
demonstrates outstanding leadership and governance skills.
(Age 49)
Ireland
Chief Executive Officer
Gene M.
Murtagh
(Age 49)
Ireland
Gene Murtagh is the Group Chief Executive Officer.
He was appointed to the Board in November 1999.
Relevant skills & experience: Gene joined the Group in 1993 and was
appointed CEO in 2005. He was previously the Chief Operating Officer
from 2003 to 2005, and prior to that he was managing director of the
Group’s Insulated Panel business and of the Water & Energy business.
He leads the development of the Group’s strategy and has a deep
knowledge of all of the Group’s businesses and the wider construction
materials industry.
Russell Shiels
(Age 59)
United States
of America
Gilbert
McCarthy
(Age 49)
Ireland
The Board provides
entrepreneurial leadership
and sets the governance
framework for the Group.
Geoff Doherty is the Group Chief Financial Officer. He joined the
Group, and was appointed to the Board, in January 2011.
Relevant skills & experience: Prior to joining Kingspan Geoff
was the Chief Financial Officer of Greencore Group plc and Chief
Executive of its property and agribusiness activities. He is a qualified
chartered accountant, with extensive experience of capital markets
and financial management in an international manufacturing
environment.
Russell Shiels is President of Kingspan’s Insulated Panels business in
the Americas as well as Kingspan’s global Data & Flooring business.
He joined the Board in December 1996.
Relevant skills & experience: Russell has experience in many of
the Group’s key businesses, and was previously Managing Director
of the Group’s Building Components and Raised Access Floors
businesses in Europe. He brings to the Board his particular knowledge
of the building envelope market in the Americas, as well as his
understanding of the office and data centre market globally.
Gilbert McCarthy is Managing Director of the Group’s Insulated
Panels businesses in the UK, Ireland, Western Europe, Middle East
and Australasia. He was appointed to the Board in September 2011.
Relevant skills & experience: Gilbert joined the Group in 1998,
and has held a number of senior management positions including
managing director of the former Off-site division and general
manager of the Insulation Boards business. He brings to the Board
his extensive knowledge of the building envelope industry, in
particular in Western Europe and Australasia.
Board Committees:
Audit & Compliance
Nomination & Governance
Remuneration
60
Kingspan Group plc Annual Report & Financial Statements 2020 Non-executive directors
Non-executive directors
Linda Hickey
(Age 59)
Ireland
Independent
Linda Hickey was appointed to the Board in June 2013, and is
appointed as the Senior Independent Director.
Relevant skills & experience: Linda was previously the Head of
Corporate Broking at Goodbody Capital Markets where she worked
closely with multi-national corporates and the investor community.
Prior to that Linda worked at NCB Stockbrokers in Dublin and Merrill
Lynch in New York. Her considerable knowledge and experience of
capital markets and corporate governance provide important insights
to the Board.
Qualifications: B.B.S.
External appointments: Chair of the board of the Irish Blood
Transfusion Service, and non-executive director of Cairn Homes plc
and Greencore Group Plc.
Michael
Cawley
(Age 66)
Ireland
Independent
Michael Cawley was appointed to the Board in May 2014.
Relevant skills & experience: Michael is a chartered accountant,
and was formerly Chief Operating Officer & Deputy Chief Executive of
Ryanair. His extensive international financial and business experience
as well as his role on other audit committees are an asset to the Board
and to the Audit & Compliance Committee.
Bruce
McLennan
(Age 56)
Australia
Independent
Jost
Massenberg
(Age 64)
Germany
Independent
Bruce McLennan was appointed to the Board in June 2015.
Relevant skills & experience: Bruce is Managing Director and Co-
Head of Advisory at Gresham Advisory Partners Limited. He is also a
Member of the Australian Institute of Company Directors, Australian
Society of Certified Practising Accountants, and a Fellow of the
Financial Services Institute of Australia. He brings to the Board over
30 years’ experience in investment banking, and a broad knowledge
of international capital markets and strategic and corporate planning.
Qualifications: B. Bus, M. Comm.
External appointments: Member of the Australian Government
Takeovers Panel.
Jost Massenberg was appointed to the Board in February 2018.
Relevant skills & experience: Jost is the former Chief Executive Officer
of Benteler Distribution International GmbH, and prior to that he
was the Chief Sales Officer and a member of the executive board
of ThyssenKrupp Steel Europe AG. His more than 30 years’ industry
experience in European steel and major manufacturing businesses, as
well as his broad experience as a chairman and non-executive director
of large private companies, are of enormous benefit to the Board.
Qualifications: B. Comm., F.C.A.
Qualifications: PhD Business Admin.
External appointments: Chairman of Hostelworld Group plc, and
non-executive director of Flutter Entertainment plc and Ryanair
Holdings plc.
External appointments: Chairman of VTG Aktiengesellschaft, and a
non-executive director in a number of large private companies.
Anne Heraty
Anne Heraty was appointed to the Board in August 2019.
John Cronin
John Cronin was appointed to the Board in May 2014.
(Age 61)
Ireland
Independent
Relevant skills & experience: John is a qualified solicitor, and partner
and former chairman of McCann FitzGerald. He has more than 30
years’ experience in corporate, banking, structured finance and
capital markets matters. He is a member of the International Bar
Association, and is a past President of the British Irish Chamber of
Commerce. His valuable legal, corporate governance and capital
markets experience brings a unique perspective to the Board.
Qualifications: B.A. (Mod) Legal Science, Solicitor in Ireland and
England & Wales.
External appointments: Non-executive director of the Dublin Theatre
Festival Limited.
Board Committees:
Audit & Compliance
Nomination & Governance
Remuneration
(Age 60)
Ireland
Independent
Relevant skills & experience: Anne is the founder and Chief Executive
Officer of Cpl Resources plc. She has over 20 years’ experience running
an international recruitment and outsourcing business and is currently
on the Board of IBEC, having previously held a number of other
public and private non-executive directorships, and brings this broad
business and entrepreneurial experience to the Board.
Qualifications: B.A. in Mathematics & Economics.
External appointments: Chief Executive Officer of Cpl Resources plc.
Company Secretary
Lorcan Dowd
(Age 52)
Ireland
Lorcan Dowd was appointed Head of Legal and Group Company
Secretary in July 2005.
Relevant skills & experience: Lorcan qualified as a solicitor in
1992. Before joining Kingspan he was Director of Corporate Legal
Services in PwC in Belfast, having previously worked as a solicitor
in private practice.
61
Directors’ Report The Board
DIRECTORS’ REPORT
Chairman’s
Introduction
EUGENE MURTAGH
The Kingspan Board recognises
that the values, integrity and
behaviours that shape our culture
and corporate governance are
the foundation of long-term
success. As a Board, we strive to
continue to enhance our corporate
governance practice and disclosure
to ensure we not only meet the
standards expected of us but,
more importantly, we promote the
success of the business for all of
our stakeholders. At the heart of
those efforts is an entrepreneurial
Board that adheres to high
standards of governance.
Australia North Queensland
Stadium / Insulated Panels
KingZip Structural Liner
62
Kingspan Group plc Annual Report & Financial Statements 2020 Throughout 2020, the Board continued to refine and
improve our corporate governance practice in line with
the principles of the 2018 UK Corporate Governance
Code (the ‘Code’). We have embraced the Code’s
aims of returning to a principled-based approach
to governance. We consistently strive to ensure that
our reporting continues to be meaningful in detailing
how we integrate the Code’s principles within our
decision making. We continue to make enhancements
to our governance processes and this translates to
less governance risk, based on our purpose, values,
strategy, business and outlook. We are committed
to ensuring that our long-term ambitions go hand in
hand with high standards of corporate governance,
as well as a Board equipped with an abundance of
diversity, experience and expertise.
As part of our response to the UK’s Grenfell Tower
Inquiry (the “Inquiry”), the Board has implemented
a suite of measures that underpin Kingspan’s clear
commitment to enhanced compliance, governance
and transparency. Details of these measures are set
out in the Report of the Nomination & Governance
Committee. Included in these measures is the
expansion of the role of the Board’s Audit Committee
into an Audit & Compliance Committee to monitor
and ensure a culture of product compliance across
the Group, as explained in the Report of the
Audit & Compliance Committee. Additionally, the
Remuneration Committee considered the impact of
the issues arising from the Inquiry on the Executive
Directors’ remuneration outcomes for 2020. These
considerations and outcomes are fully detailed in the
Report of the Remuneration Committee and include
a decision to reduce executive bonuses to zero for
2020. I am confident that, in the years ahead, the
business will benefit from these learnings and that the
changes made will contribute to the longer term and
sustainable success of the Company.
One of the key changes under the new Code was
the introduction of a tenure consideration in respect
of the Chair of the Board. As indicated in last
year’s Annual Report, I have notified the Board of
my intention to step down as Chairman and non-
executive director of Kingspan with effect from the
conclusion of this year’s Annual General Meeting.
Following a detailed succession process, as set out
in the Report of the Nomination & Governance
Committee, we are pleased to have an experienced
non-executive in Jost Massenberg to take on the
role of non-executive Chairman of the Kingspan
Board. In the three years since his appointment to
the Board, Jost has developed a deep understanding
of our business while providing valuable insight.
There has also been additional refreshment and
renewal at Board level, as detailed in the Report
of the Nomination & Governance Committee,
which ensures the Board invites fresh thinking and
challenge to its decision making and has the optimal
blend of skills and expertise to ensure effective
oversight of the business and implementation of
Kingspan’s strategy.
We had the pleasure of engaging with major
shareholders and stakeholders on a number of
occasions during the year in what proved to be a
difficult year in attaining face to face meetings.
On behalf of the Board, I would like to thank those
shareholders who provided their views on governance
and strategy during the past year. We were also
delighted to welcome overseas shareholders who
were able to attend the 2020 Annual General
Meeting on-line for the first time in the Company’s
history, and we look forward to facilitating a wider
global participation by our shareholders on-line at
this year’s and future AGMs, in line with developing
trends elsewhere.
Eugene Murtagh
Chairman
Australia North Queensland
Stadium / Insulated Panels
KingZip Structural Liner
63
Directors’ Report Chairman’s Introduction DIRECTORS’ REPORT
Report of the
Nomination
& Governance
Committee
This statement outlines how
Kingspan has applied the
principles and complied with
the provisions set out in the UK
Corporate Governance Code
(July 2018) (the ‘Code’).
The full text of the Code and of
the Irish Corporate Governance
Annex can be obtained from the
following websites respectively:
www.frc.org.uk
www.euronext.com
Statement of compliance
The directors confirm that the Company has
throughout the accounting period ended 31
December 2020 complied with the provisions of
the UK Corporate Governance Code (July 2018)
as set out below.
Stakeholder views
The Board notes the importance of the principle
underpinning Provision 5 of the Code, which asks
Boards to have regard for engagement mechanisms
with stakeholders. The Board recognises its
responsibilities in this regard and other sections
in this Annual Report set out clearly the long-
lasting partnerships we have developed with
customers, suppliers and communities. We are
also aware of the importance of engagement
with the workforce to the development of strategy
as well as uncovering of risk and promoting new
opportunities. In last year’s Annual Report, we
confirmed that Linda Hickey had been appointed as
the director responsible for workforce engagement
to facilitate the channelling of employee views
to Board discussions. Although opportunities for
face-to-face meetings were restricted in 2020, as
normality returns to our businesses it is expected
that Ms Hickey will have the opportunity to meet
and hear views from a wide range of employees
across all divisions both through site visits to our
various facilities during the year, and through
engagement with participants on our employee
development programmes. In addition, in 2021
we will be launching a groupwide employee
engagement survey to foster a deeper dialogue on
a broad range of issues including culture, vision,
health & well-being, and training & development.
This process of engagement will allow the Board to
consistently assess and monitor the evolution of the
Company’s corporate culture, while promoting the
ability of the workforce to raise concerns. Details of,
and feedback from, this employee engagement will
be set out in the 2021 Annual Report.
64
Kingspan Group plc Annual Report & Financial Statements 2020 The Netherlands
Hartman, URK /
Insulated Panels
Dri-Design
Tapered & X-dek
Audit & Compliance Committee
Michael Cawley (Chair)
Anne Heraty
Bruce McLennan
Appointed 2014
Appointed 2019
Appointed 2020
Nomination & Governance Committee
Eugene Murtagh (Chair)
Gene M. Murtagh
John Cronin
Bruce McLennan
Jost Massenberg
Remuneration Committee
Linda Hickey (Chair)
Michael Cawley
Bruce McLennan
Appointed 1998
Appointed 2007
Appointed 2014
Appointed 2017
Appointed 2019
Appointed 2015
Appointed 2014
Appointed 2017
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Board committees
The Board has established three standing committees:
Audit & Compliance; Nomination & Governance; and
Remuneration. All committees of the Board have
written terms of reference setting out their authorities
and duties and these terms are available on the Group’s
website www.kingspan.com. The members of each
committee as at the date of this report, and the date
of their first appointment to the committee, are set
out adjacent. The details of each committee’s activities
during the year are detailed in their respective reports
as set out in this Annual Report.
Column A - indicates the number of meetings
held during the period the director was a
member of the Board and/or Committee.
Column B - indicates the number of meetings
attended during the period the director was a
member of the Board and/or Committee.
Attendance at Board and Committee meetings are set out in the table below.
Attendance at Board and Committee meetings
during the year ended 31 December 2020
Eugene Murtagh
Gene M. Murtagh
Geoff Doherty
Russell Shiels
Peter Wilson*
Gilbert McCarthy
Linda Hickey
Michael Cawley
John Cronin
Bruce McLennan
Jost Massenberg
Anne Heraty
Board
Audit &
Compliance
Nomination &
Governance
A
8
8
8
8
8
8
8
8
8
8
8
8
B
8
8
8
8
7
8
8
8
8
8
8
8
A
B
4
1
3
4
4
1
3
4
A
2
2
2
2
2
B
2
2
2
2
2
Remuneration
A
B
3
3
3
3
3
3
* Retired as a director 31 December 2020.
65
Directors’ Report Report of the Nomination & Governance Committee Board composition and responsibilities
There is a clear division of responsibilities within
the Group between the Board and executive
management, with the Board retaining control of
strategic and other major decisions. The Chairman
leads the Board and is responsible for its overall
effectiveness in directing the Company. One of the
key roles for the Chairman in doing so is promoting
a culture of objectivity, openness and debate. In
addition, the Chairman facilitates constructive
board relations and the effective contribution of all
non-executive directors, and ensures that directors
receive accurate, timely and clear information.
The balance of skills, background and diversity of
the Board contributes to the effective leadership
of the business and the development of strategy.
The Board’s composition is central to ensuring all
directors contribute to discussions. As outlined
below, the Board continues to review its composition
to ensure appropriate refreshment and renewal
which is essential to bring fresh thinking to Board
discussions and constructive challenge to the Board’s
decision making. Following a number of changes
in 2019, there has been further refreshment during
2020 and 2021 to the Board and Committees, details
of which are outlined below.
As a means of fostering challenge and director
engagement, the non-executive directors, led by
the senior independent director, meet without the
Chairman present at least annually. Likewise, the
Chairman holds meetings with the non-executive
directors without the executives present. In each
of these settings, there is a collegiate atmosphere
that also lends itself to a level of scrutiny, discussion
and challenge.
such as remuneration, succession etc. The Company
has procedures whereby directors (including non-
executive directors) receive formal induction and
familiarisation with Kingspan’s business operations
and systems on appointment, including trips to
manufacturing sites with in-depth explanations of
the processes involved at the site.
Board changes
During the past year, we continued to deliver on the
objective of appropriate refreshment and renewal
at Board level. As a Board, we are fully aware
of the benefits of balancing longer serving and
newly appointed directors, which is central to the
generation of new business strategies. In addition,
new directors bring fresh thinking and constructive
challenge to the Board.
In December 2020, Peter Wilson retired as an
executive director and as Divisional Managing
Director of the Group’s Insulation Boards business.
Mr Wilson made a significant contribution to the
Group and the Board over his forty year career
with Kingspan.
Post the year-end, Bruce McLennan notified the
Board that he would not be seeking re-election to
the Board at the 2021 Annual General Meeting. Mr
McLennan has served on the Board for six years and
we thank him for his contribution to Kingspan during
that period.
In line with guidance set out in last year’s Annual
Report, the Group’s Chairman will also step-down
from the Board at the conclusion of the 2021 AGM.
Details on his retirement and Chair succession are
outlined on page 70.
All directors have access to the advice and services
of the Company Secretary. Where necessary or
requested, directors can also avail of independent
third-party advice on Company issues or relevant
Board matters – including, but not limited to matters
In addition, the Company was pleased to announce
the two new appointments to the Board, Éimear
Moloney who joins as an independent non-executive
director and Paul Murtagh as a non-executive
director, with effect from 30 April 2021.
These appointments broaden the diversity of the Board
while reflecting our increasingly global footprint as a
business. A breakdown of the background and skillset
of the non-executive directors, a central tenet of
promoting Board effectiveness, is provided on page 61.
Following Eugene Murtagh’s and Bruce McLennan’s
retirement from the Board, Jost Massenberg will
become Chair of the Nomination & Governance
Committee and Linda Hickey will be appointed to
that committee. Éimear Moloney will join the Audit
& Compliance Committee and Anne Heraty will be
appointed to the Remuneration Committee.
Shareholders’ meetings and rights
The Company operates under the Irish Companies
Act 2014 (the ‘Act’). This Act provides for two
types of shareholder meetings: the Annual General
Meeting (‘AGM’) with all other meetings being called
Extraordinary General Meetings (‘EGM’).
The Company must hold an AGM each year in addition
to any other shareholder meeting in that year. The
AGM is an important forum for shareholders to meet
with and hear from Company directors. Given Irish
government and public health guidelines at the time
of the 2020 AGM, the Company was unable to host
a public meeting at which shareholders could attend
in person. However, shareholders were provided with
the facility to join the 2020 AGM on-line and submit
questions in advance, and the Company was delighted
to welcome shareholders participating from overseas
for the first time. The Board is committed to reviewing
technology solutions which would offer shareholders
the opportunity to attend and vote on-line, as well
as in person, which in line with developing trends
elsewhere would facilitate a wider global participation
by our shareholders, whilst still providing them with
equivalent rights to vote and ask questions.
The ordinary business of an AGM is to receive and
consider the Company’s Annual Report and statutory
financial statements, to review the affairs of the
66
Kingspan Group plc Annual Report & Financial Statements 2020 Group, to elect directors, to declare dividends,
to appoint or reappoint auditors and to fix the
remuneration of auditors and directors.
The Chairman of the Board of Directors shall preside
as chairman of every general meeting and in his
absence, one of the directors present will act in the
capacity of chairman. The quorum for a general
meeting shall be not less than three members
present in person or by proxy and entitled to vote.
All ordinary shares rank pari passu and carry equal
voting rights. Every member present in person or by
proxy shall upon a show of hands have one vote, and
every member present in person or by proxy shall
upon a poll have one vote for each share of which
they are the holder. In the case of an equality of
votes the Chairman shall, both on a show of hands
and at a poll, have a casting vote.
Further details of shareholders rights with regards
the General Meetings are set out in the Shareholder
Information section of this Annual Report.
Internal control and risk management systems
The Board confirms that there is an ongoing
process for identifying, evaluating and managing
any significant risks faced by the Group. This
process has been in place for the year under
review and up to the date of approval of the
financial statements and it is regularly reviewed
by the Board in compliance with ‘Guidance on
Risk Management, Internal Control and Related
Financial and Business Reporting’ issued by the
Financial Reporting Council.
The Board has delegated responsibility to the Audit
& Compliance Committee to monitor and review
the Group’s risk management and internal control
processes, including the financial, operational and
compliance controls, through detailed discussions
with management and the executive directors, the
review and approval of the internal audit reports,
which focus on the areas of greatest risk to the
Group, and the external audit reports, as part of
both the year-end audit and the half-year process,
all of which are designed to highlight the key areas
of control weakness in the Group. Further details
of the work conducted by the Audit & Compliance
Committee in this regard is detailed in the Report
of the Audit & Compliance Committee contained
in this Annual Report.
The main features of the Group’s internal control
and risk management systems that relate specifically
to the Group’s financial reporting processes are:
g Budgets and Strategic Plans are approved
annually by the Board and compared to actual
performance and forecasts on a monthly basis;
g Sufficiently sized finance teams with appropriate
level of experience and qualifications throughout
the Group;
g Formal Group Accounting Manual in place which
clearly sets out the Group financial policies in
addition to the formal controls;
g Formal IT and Treasury policies and controls in place;
g Centralised Tax and Treasury functions;
g Sales are submitted and reviewed on a weekly
basis whilst full reporting packs are submitted and
reviewed on a monthly basis; and
g Internal audit function review financial controls
and report results/findings on a quarterly basis to
the Audit & Compliance Committee.
In addition, the main features of the Group’s internal
control and risk management systems that relate
specifically to the Group’s consolidation process are:
g The review of reporting packages for each entity as
part of the year-end audit process;
g The reconciliation of reporting packages to
monthly management packs as part of the audit
process and as part of management review;
g The validation of consolidation journals as
part of the management review process and
as an integral component of the year-end
audit process;
g The review and analysis of results by the Chief
Financial Officer and the auditors with the
management of each division;
g Consideration by the Audit & Compliance
Committee of the outcomes from the annual
risk assessment of the business;
g The review of internal and external audit
management letters by the Chief Financial
Officer, Head of Internal Audit & Compliance
and the Audit & Compliance Committee; and
the follow up of any critical management
letter points to ensure issues highlighted are
addressed.
Further information on the risks faced by the Group
and how they are managed are set out in the Risk
& Risk Management section of this Annual Report.
Response to issues arising from the UK’s Grenfell
Tower Inquiry
Kingspan is a core participant in the UK’s Grenfell
Tower Inquiry (“the Inquiry”), and as part of the
review and disclosure process undertaken to support
the Inquiry process, a number of serious issues
were identified in part of our UK Insulation Boards
business. Earlier this year Kingspan announced a
comprehensive suite of measures that underpin
Kingspan’s clear commitment to proper professional
conduct and safety, and to ensuring that all legacy
issues are dealt with comprehensively, as well as
implementing an enhanced suite of compliance,
governance and reporting measures. These include:
g Eversheds Sutherland conducted a review of
compliance and governance in the UK Insulation
Boards business. Kingspan is committed to
implementing in full the recommendations
made, and this work is already underway;
67
Directors’ Report Report of the Nomination & Governance Committee g Extending the role of the Audit Committee
into an Audit & Compliance Committee to
monitor and ensure a culture of compliance
cross the Group;
g Expansion of the Internal Audit role to include
audit of compliance, testing, certification and
marketing of products, reporting to the Audit
& Compliance Committee;
g The introduction of a new code of conduct
and the roll out of a training programme on its
core principles to all employees worldwide;
g The appointment of a Group Head of
Compliance & Certification, reporting directly
to the Group CEO;
g The appointment of Product Compliance
Officers in each business division; and
g A comprehensive testing programme to
provide reassurance on the safety of K15’s use
in historical facade systems where compliant
and correctly installed.
Leadership
The Nomination & Governance Committee
(the ‘Committee’), leads the process for
appointments while ensuring plans are in place for
orderly succession to both the Board and senior
management positions. A fundamental aspect of
overseeing appointments to senior management
remains the development of a diverse pipeline. In
terms of non-executive directors, the Committee
remains guided by the principle that all
appointments will be made on merit, but having
regard, where possible to diversity of gender, age,
nationality and educational background.
The non-executive directors on the Board
currently have the following mix of skills and
experience as set out in the table above:
Name
Nationality International
Financial Governance Leadership Industry
Legal
Eugene Murtagh
Linda Hickey
Michael Cawley
John Cronin
IrishIrish
IrishIrish
IrishIrish
IrishIrish
Bruce McLennan
Australian
Australian
Jost Massenberg
German
German
Anne Heraty
IrishIrish
••
••
••
••
••
••
••
Effectiveness and independence
The Committee has reviewed the size and
performance of the Board during the year and this
process occurs annually. The Board continues to
ensure that each of the non-executive directors,
excluding the Chairman, remain impartial and
independent in order to meet the challenges of
the role. Throughout the year, more than half of
the Board, excluding the Chairman, comprised
independent non-executive directors. Linda Hickey
is the senior independent director on the Board. The
senior independent director provides a sounding
board for the Chairman and serves as an intermediary
for the other directors and shareholders when
necessary. The directors consider that there is strong
independent representation on the Board.
The Board has had due regard to various matters
which might affect, or appear to affect, the
independence of certain of the directors. The Board
considers that each of the non-executive directors
on the Board, (excluding the Chairman Eugene
Murtagh), are independent. In addition, following the
conclusion of the 2021 AGM, Jost Massenberg will be
appointed non-executive Chairman of the Board and
will be independent upon appointment.
In determining the independence of John Cronin, both
at the time of his appointment and subsequently as
••
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part of annual reviews of the Board’s composition,
the Committee had particular regard for his position
as a partner of McCann FitzGerald, one of the
Company’s legal advisors. Mr. Cronin will retire from
McCann FitzGerald in March 2021, and the Board
concluded that he remains fully independent, taking
into account the following material factors:
g He had no role in the selection or retention
of legal advisors to the Company;
g All work undertaken by McCann FitzGerald
for the Company was managed by other
employees within the firm, and there were
formal arrangements in place, both at McCann
FitzGerald and Kingspan, to ensure there were
no conflicts of interests;
g Mr Cronin is an experienced and accomplished
corporate lawyer who adds important legal
and regulatory experience to the Board;
g Since his appointment to the Board, Mr. Cronin
has not had any involvement in advising the
Company on any legal matters; and
g The total fees paid for legal services to
McCann FitzGerald during the year were
€145,541 (2019: €125,947) and account
for substantially less than 1% of McCann
FitzGerald’s annual revenues.
68
Kingspan Group plc Annual Report & Financial Statements 2020 Name
Nationality International
Financial Governance Leadership Industry
Legal
Eugene Murtagh
Linda Hickey
Michael Cawley
John Cronin
IrishIrish
IrishIrish
IrishIrish
IrishIrish
Bruce McLennan
Australian
Australian
Jost Massenberg
German
German
Anne Heraty
IrishIrish
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In these circumstances the Board continues to be
satisfied that there was no material relationship,
financial or otherwise, which might either directly
or indirectly influence his judgement.
In addition to these considerations, given the
potential for a perceived conflict of interest, at
the time of Mr Cronin’s appointment, we engaged
with ISS to discuss the steps we had taken to avoid
any conflicts developing during his tenure in order
to alleviate any potential shareholder concerns.
Both parties were satisfied at the time that the
relationship was not likely to impact Mr Cronin’s
independence as a director, and the Company
agreed to disclose annually the fees paid to McCann
FitzGerald as a related party transaction.
In assessing the independence of Linda Hickey, the
Board had due regard to her previous position as a
senior executive at Goodbody Stockbrokers, (one of
the Company’s corporate brokers), from which she
retired in 2019. The Board noted that annual fees
and expenses paid to Goodbody Stockbrokers were
normally in the region of €60,000 for corporate
broking services during her tenure there. In assessing
Ms Hickey’s independence annually, the Committee
also took into account her invaluable experience
in working for two of the largest Irish stockbroking
firms. In Ireland, she has unrivalled experience
in capital markets and particularly Irish public
companies, which is hugely valuable to the Company
and our shareholders.
The Board concluded that neither Ms Hickey’s nor
Mr Cronin’s independence was affected and considers
that between them they bring valuable financial,
capital markets, governance and legal risk experience
to the Board.
Conflict of Interests
Acknowledging the importance of independent
representation to the effective functioning of the
Board, as well as the scrutiny and, when necessary,
the challenging of management, as part of the
evolution of our governance framework, the
Committee has previously adopted a conflicts
of interest policy which guides all decisions of
the Board when actual or potential conflicts of
interest arise.
The policy stipulates that directors are required to
avoid situations where they have, or could have,
a direct or indirect interest that conflicts, or may
conflict, with the Company’s interests. Directors are
required to give notice of any potential situational
and/ or transactional conflicts, which are considered
at the following Board meeting and, if appropriate,
situational conflicts are authorised. Directors are not
allowed to participate in such considerations or to
vote regarding their own conflicts.
External commitments
Non-executive directors, including the Chairman,
may serve on other boards provided they continue
to demonstrate the requisite commitment to
discharge their duties effectively. The Committee
reviews the extent of the directors’ other interests
on an ongoing basis throughout the year. The
Committee is satisfied that each of the directors
commits sufficient time to their duties in relation
to the Company. The Chairman and each of the
directors have also confirmed they have sufficient
time to fulfil their obligations to the Company.
In assessing the time commitments of Board
members, the Committee had particular regard
for the external commitments of Michael Cawley,
who is also a non-executive director of Ryanair
Holdings plc, and Flutter Entertainment plc, as
well as Chairman of Hostelworld Group plc. The
Committee recognises the views expressed by some
shareholders in this area and reviewed Mr Cawley’s
attendance and contribution as a non-executive
director, as well as his other mandates.
9%
Australia
9%
USA
45%
Non-
Independent
RESIDENCY
INDEPENDENCE
9%
Germany
73%
Ireland
55%
Independent
82%
Male
18%
Female
GENDER
TENURE
46%
More
than 9
years
27%
More than
6 and less
than 9 years
69
18%
Less than
3 years
9%
More than
3 and less
than 6 years
Directors’ Report Report of the Nomination & Governance Committee It was noted that Mr Cawley has only missed one
meeting since his appointment as a non-executive
director in 2014. In particular, notwithstanding the
wider market issues caused by the global pandemic
and the related increase in demands on boards
of directors in every business during 2020, the
Committee notes that Mr Cawley attended all
Board and committee meetings during the year.
The committee has engaged with Mr Cawley and
is satisfied that he will continue to devote sufficient
time to the Board. The Committee will continue
to keep under review the external commitments
of all directors.
Performance evaluation
Kingspan has in place formal procedures for the
evaluation of its Board, committees and individual
directors. The purpose of this formal evaluation is to
ensure that the Board of Directors (on a collective
and individual basis) is performing effectively and
to ensure stakeholder confidence in the Board. The
Chairman reviews annually the performance of the
Board of Directors, the conduct of Board meetings
and committee meetings, and the general corporate
governance of the Group.
An externally facilitated review of the Board’s
performance was carried out during 2018 by
Better Boards. It is intended that another external
evaluation will be undertaken in 2021, consistent
with best practice. Details of the outcome of the
evaluation will be provided in the 2021 Annual Report.
Succession Planning
One of the primary remits of the Committee is to
ensure that robust succession plans are in place for
the directors and senior management, taking into
consideration planned and unplanned departures,
as well as the strategic evolution of the business.
Aligning succession planning to our strategy is
a cornerstone of strong Committee and Board
governance, and has been, and will continue to
be, a focus of the Committee.
The 2018 UK Code was updated to include a new
provision which outlined that, generally, Board
Chairs should not remain in place for over nine
years, although there is an exception to this rule
to facilitate succession planning. In last year’s
Annual Report, the Committee outlined that the
Company’s founder Eugene Murtagh, who has
served as Chairman since he started the business
55 years ago, had announced his intention to
retire within an 18 month period. This provided
an appropriate timeline to balance the need for
stability and continuity while ensuring an orderly
transition in what would be a significant change in
the leadership of the Board. Mr Murtagh has now
confirmed his intention to retire with effect from the
conclusion of this year’s Annual General Meeting.
Mr Murtagh founded the Kingspan business in
1965 and as CEO until 2005 he led its growth and
development to become an international market
leader. As Chairman he has been instrumental
in setting the tone at the top, developing and
embedding values as well as encouraging
performance and ensuring that management
has the necessary support and controls in place
to deliver on its strategy. Affording an 18 month
time horizon provided the Committee with the
time and scope to effect an appropriate and
rigorous succession plan and ensure an appropriate
transition to a new Non-Executive Chairman.
During the course of 2020, the Committee
conducted a rigorous process to consider and
identify an appropriate successor to the Chairman.
Mr Murtagh did not Chair the Committee meetings
relating to his successor.
Following this process, the Committee identified
Jost Massenberg, who joined the Board as an
independent non-executive director in 2018, as
the best candidate to succeed Mr Murtagh. Mr
Massenberg will assume the role of non-executive
Chairman of the Board following the 2021 AGM.
The Committee noted Mr Massenberg’s more than
30 years’ industry experience in European steel and
international manufacturing businesses in making
their recommendation to the Board to appoint him
as successor to Mr Murtagh. The Committee also
considered that since Mr Massenberg’s appointment
to the Board in 2018 he had gained a valuable
understanding of the Board and the Kingspan
Group, and that he would still have a significant
tenure on the Board for him to serve as Chairman
within the revised nine year guidance of the 2018
Code, providing continuity and stability of Board
leadership for the period ahead. The Committee
recommended Mr Massenberg to the Board as the
successor to Mr Murtagh. His nomination as the
new Non-Executive Chairman was unanimously
supported by the Board.
70
Kingspan Group plc Annual Report & Financial Statements 2020 Britain Graven Hill / Insulation Boards TEK Building System
with Thermawall TW55 and Thermapitch TP10
71
Directors’ Report Report of the Nomination & Governance Committee DIRECTORS’ REPORT
Report of the
Remuneration
Committee
LINDA HICKEY
The Netherlands PB Tec
Maassluis / Insulated
Panels Kingspan
Evolution and AWP Facade
On behalf of the
Remuneration
Committee (the
‘committee’), I
am pleased to
present the 2020
Report on Directors’
Remuneration.
Our remuneration philosophy
As detailed previously, we have developed a clear
philosophy around remunerating and incentivising
employees, management and executive directors.
Central to our approach to remuneration are the
principles of simplicity, pay for performance and
transparency. Variable remuneration is only paid for
strong performance and maximum payouts will only be
realised for truly exceptional performance under simple
measures that are key to the delivery of strategy. A
significant portion of remuneration is delivered through
equity, ensuring strong levels of alignment between
the interests of management and shareholders. This
approach cascades through the organisation and
promotes transparency and simplicity for participants
and our shareholders. Our relentless focus on simplicity
and a high performance culture has been instrumental
in driving the growth of the business and significant
value creation for stakeholders over the years.
Business performance and pay outcomes
Overall, the past year was one of robust
performance for Kingspan across a number
of measures in the face of remarkable market
turbulence and unprecedented challenges. The
performance of the Group in that environment, the
wider backdrop of the global COVID-19 pandemic
and the learnings from the UK’s Grenfell Tower
Inquiry (the “Inquiry”), have each been central to
the discussion and decisions at committee level
during the course of the year.
Group revenue was down somewhat on prior year at
€4.6bn, whilst trading profit was up 2% to €508.2m.
Earnings Per Share (‘EPS’) rose 1% to 206.2 cent and
Total Shareholder Return (‘TSR’) for the year was
5.4%. EPS and TSR are two of the key performance
measures used to determine the executives’
performance-related pay.
72
Kingspan Group plc Annual Report & Financial Statements 2020 In the first half of the year, amidst the initial outbreak
of the COVID-19 pandemic and the imposition of
government restrictions, there was considerable
disruption to our business and end-markets. As
a result of the unpredictability of the situation, a
number of early decisions were taken to protect and
safeguard the long-term interests of the business.
These included a 50% cut in the executive directors’
pay and non-executive directors’ fees for two months
(in April and May), as well as similar salary cuts of
40% for all employees across the Group. In some
jurisdictions we were able to avail of furlough and
wider governmental support schemes to protect as
many jobs as possible. As the year progressed, we
developed a clearer picture of the likely impact of the
pandemic on our business, and we were in a position
to fully reinstate all staff pay deductions and cease
the receipt of and repay any government support.
We also recognised the importance of balancing
stakeholder interests in our decision-making, and the
Company has either already repaid or committed
to repay all COVID-19-related government support
received over the past year.
The committee carefully assessed the performance
of the executive directors against their individual
performance measures in line with normal practice.
Despite strong performance against both the Group
and divisional profit measures underpinning the
annual bonus plan, the committee conducted a
holistic review of our stakeholder experience during
the past fiscal year, including the matters arising from
the Inquiry. Against this backdrop, and consistent
with our commitment to consistently evaluate
the appropriateness of pay-outs, the committee
exercised its discretion to reduce compensation
entitlements under the annual bonus plan to zero. As
a consequence, there are no pay-outs to executive
directors under the annual bonus plan for 2020.
In terms of long-term incentives, the underlying
health of the Group has been reflected in the
achievement of top quartile TSR performance among
the peer group for the tenth cycle in a row which,
together with robust EPS growth over the three year
vesting period, resulted in the 2018 Performance
Share Plan ('PSP') Awards vesting at 90% of
maximum.
The committee remains dedicated to overseeing
the implementation of our Remuneration Policy
in a manner which works for our business and
delivers results for our stakeholders. During
the course of 2020, recognising the growing
importance of integrating non-financial measures
into remuneration frameworks and strategic KPIs,
we considered the introduction of non-financial
measures within short and long-term incentive
arrangements for executive Directors. As set out
in further detail within the following report, Net
Promoter Score (“NPS”), a measure of customer
satisfaction, will be included within the Annual
Bonus plan, accounting for 10% of measures. This
will constitute a second metric for those with Group
focused measures, and a third for those with Group
and divisional focused measures. The addition
extends the focus to non-financial performance
which is central to delivering on the Group’s strategy.
In addition, the committee determined it would
introduce an additional ESG measure into our long-
term Performance Share Plan (PSP). The PSP metric
is based on Kingspan’s ambitious Planet Passionate
programme that aims to significantly reduce the
Group’s environmental impact as it continues to
grow. Ten of our Planet Passionate targets, based
around saving energy, carbon, water and circularity,
have been selected for inclusion against 10% of
the annual PSP bonus award. The inclusion of
non-financial measures in both short and long-
term variable incentives reflects the Group’s wider
commitment to Enviromental Social Governance
(ESG) considerations and to ensuring Kingspan
delivers against key non-financial as well as financial
FIXED PAY V VARIABLE PAY
VARIABLE PAY
Short Tem v Long Term
37%
Fixed
37%
Short
Term
63%
Variable
63%
Long
Term
measures. Both measures also align with our philosophy
of simplicity and pay for performance, with the NPS
being an externally recognised measure, and the Planet
Passionate targets being quantifiable and transparent.
Whilst undoubtedly there remain challenges ahead, we
continue to work together with all of our stakeholders,
and the resilience of the Group’s performance is
testament to the management and employees’
efforts. I would like to thank my fellow members on the
committee for their contribution to the remuneration
agenda during 2020.
Linda Hickey
Chair of the Remuneration Committee
73
Directors’ Report Report of the Remuneration Committee Corporate governance developments
As an Irish listed company, Kingspan reports against
the provisions of the UK Corporate Governance
Code (July 2018). This latest iteration of the Code
has broadened the role of the committee, as well as
introducing additional practices concerning director
pay, all of which have been carefully considered
by the committee during the year and extensively
discussed with shareholders. During the past fiscal
year, steps were taken to broaden our oversight of
remuneration practices throughout the organisation,
which are guided by the same principles as those at
senior management. As a committee, we will continue
to be apprised of any overarching themes from
remuneration with the wider workforce.
In addition, the Shareholder Rights Directive II (“SRD
II) was transposed into Irish Law during the past fiscal
year. The primary change in terms of remuneration
related to the requirement to propose a remuneration
policy at least every four years, something which the
Company previously did on a voluntary basis in 2019.
Shareholder consultation
As set out in last year’s Annual Report, following
consultation with shareholders post the 2019 AGM, we
implemented a number of changes to the Kingspan
remuneration policy, including:
g The adoption of a two-year post-vesting holding
period under the PSP;
g The introduction of a post-cessation shareholding
guideline for all new executive directors, with the
current shareholding guidelines applying for two
years after an executive’s departure; and
g Reduction in pension contributions for all future
executive directors, which will be aligned with the
rate applicable to the workforce in the relevant
local market.
Following on from these changes and ongoing
consultation with shareholders, almost 94% of
shareholders supported the resolution to approve the
Report of the Remuneration Committee at the 2020
AGM, which the committee believes is a reflection of
its responsiveness to shareholders and a commitment
to maintaining high levels of engagement with our
shareholder base.
In advance of the 2020 AGM, the committee set
out the background and context to each of the
contractual pension entitlements of the executive
directors. The committee undertook to keep pension
contributions under review in line with evolving
best-practice while noting legacy contractual
arrangements for incumbent executives.
Executive
Director
2020 Contractual
Pension Entitlement
2024 Pension
Contribution Target
Annual Percentage Point
Reduction Over 4 Years
Gene Murtagh
Geoff Doherty
18%18%
24%24%
Gilbert McCarthy
20%20%
Russell Shiels*
33%33%
10%10%
10%10%
10%10%
10%10%
2% annually
2% annually
4% in year 1 and 2
4% in year 1 and 2
3% in year 3 and 4
3% in year 3 and 4
3% in year 1 and 2
3% in year 1 and 2
2% in year 3 and 4
2% in year 3 and 4
10% in year 1
10% in year 1
5% in year 2
5% in year 2
4% in year 3 and 4
4% in year 3 and 4
*Russell Shiels joined Kingspan in 1996. His contract was renegotiated in 2013 and, in that renegotiation, his pension contribution
was increased by $100,000 per annum for the period until his retirement.
Following a thorough review of remuneration
during the course of 2020, and incorporating both
evolving best-practice and the perspectives of
shareholders, with the agreement of each of the
executive directors, all contractual pension contributions
will be reduced to 10% of base salary by the end of 2024.
Current and future pension contributions are detailed
in the table below including the annual increments
of reduction for each executive director which will be
applied. The committee believes this approach fairly
and appropriately balances the legacy contractual
entitlement of each of the executive directors with the
expectations of shareholders and wider stakeholders.
2020 Remuneration at a Glance
This section provides a snapshot of remuneration
received by executive directors during 2020.
Salary
As flagged in our 2019 Annual Report, apart from Peter
Wilson, each of the executive directors received a base
salary increase of 2% in 2020 which was in line with
that awarded to the general workforce. By reason of
his increased responsibilities as outlined in last year’s
Annual Report, Mr Wilson received a salary increase of
7.5%. Each of the salaries were effective from 1 January
2020, well in advance of the committee’s awareness of
COVID-19 and the potential impact on business.
Temporary salary reductions of 50% were applied to
executive directors for two months during the year which
was later repaid along with all employee reductions. Full
details of the directors’ salaries and total remuneration
are set out in the Remuneration Table on page 78.
Annual Bonus
As provided by the approved remuneration policy, the
maximum annual bonus potential for the executive
directors is 150% of basic salary. The CEO and CFO’s
annual bonus is based on the achievement of Group
EPS performance targets. For Divisional MDs, bonuses
are based on a combination of stretching profit targets
for their respective divisions, plus an element of Group
EPS targets.
74
Kingspan Group plc Annual Report & Financial Statements 2020 The 2020 targets and final outturns of the annual performance bonuses are detailed in full below:
CEO & CFO
Divisional MDs
Measure
Targets
Performance
% Max payout
EPSEPS
Divisional profit targets
Divisional profit targets
95% -115% of prior year
95% -115% of prior year
95% -110% of prior year
95% -110% of prior year
100.8%
100.8%
38.55%*
38.55%*
(13.2%) to 111.6%
(13.2%) to 111.6%
15.42% to 75.42%
15.42% to 75.42%
EPSEPS
95% -115%
95% -115%
100.8%
100.8%
*Notional pay-out as committee discretion resulted in zero annual bonus.
Based on the targets above, the CEO and CFO
achieved 29% of maximum target, which would
have equated to 38.55% of salary for each executive.
Divisional profit performances varied, with the
outturn for the bonus targets for the divisional MDs
ranging from 15.42% to 75.42% of salary. Russell
Shiels exceeded 110% of his divisional profit target,
whilst Peter Wilson and Gilbert McCarthy’s divisional
performance failed to meet their threshold targets
given the global macro backdrop.
Despite financial performance that would have
resulted in payouts to each of the Executive Directors
during 2020, all payouts were subject to a final
evaluation by the committee as set out in the
statement of the Committee Chair. In light of wider
stakeholder experience and the matters arising from
the Inquiry, the committee determined that no
annual bonus payouts would be made for 2020.
Performance Share Plan
The Performance Share Plan (‘PSP’) awards vesting
in February 2021, relate to awards granted in 2018.
These awards were subject to EPS growth and
relative TSR performance targets measured over
the period from the start of 2018 to the end of
2020. Target and actual outturns are set out in
the table below. 90% of awards granted will vest
in February 2021. Prior to confirming the payouts,
the committee undertook an evaluation of
whether vesting levels reflected both individual
and company performance over the three-year
period to December 2020.
Summary of Remuneration Policy
Set out on the next page is a summary of the
remuneration policy approved by shareholders at
the 2020 AGM (as updated following shareholder
consultation). The policy is guided by the following
overarching principles:
g Simplicity
g Transparency
g High performance
Weighting
Targets
Performance
EPS
TSR
50%50%
50%50%
CPI +5% to 10%
CPI +5% to 10%
compounded p.a.
compounded p.a.
CPI+8.7%
CPI+8.7%
Upper Quartile
Upper Quartile
93rd percentile
93rd percentile
Payout
(% of max.)
80%80%
100%100%
France L'Arbre Blanc /
Insulated Panels JI
Vulcasteel
75
Directors’ Report Report of the Remuneration Committee Base Salary
Pensions
How it Operates
Base salaries are reviewed annually by the Remuneration Committee
in the last quarter of each year. Increases will generally be in line
with increases across the Group, but may be higher or lower in
certain circumstances to reflect performance, changes in remit,
roles and responsibilities, or to allow newly appointed executives to
move progressively towards market norms.
The Group operates a defined contribution pension scheme for
executive directors. Pension contributions are calculated on base
salary only. Contributions are determined on an individual basis
and take into account a number of factors including age, length
of service, and number of years to retirement. The committee may
alternatively pay a cash amount subject to all applicable employee
and employer payroll taxes and social security.
Benefits
Annual
Bonus
PSP
Executive directors’ benefits include but are not limited to life and
health insurance, the use by the executive directors of company cars
(or a taxable car allowance), and relocation or similar allowances on
recruitment, each in line with typical market practice.
Executive directors receive annual performance related bonus
based on the attainment of financial targets set prior to the start
of each year by the committee. Bonuses are paid on a sliding
scale if the targets are met. Maximum bonus is only achieved if
ambitious incremental growth targets are achieved. No more than
100% of salary may be delivered in cash through the bonus plan.
Any performance related bonus achieved in excess of the amount
payable in cash is satisfied by the grant of share awards, which are
deferred for two years.
Executive directors are entitled to participate in the Group’s
Performance Share Plan (PSP). Under the terms of the PSP,
performance shares are awarded to the executive directors and
the senior management team. The performance shares will vest
after three years only if the Company’s underlying performance has
improved during the three-year performance period, and if certain
performance criteria are achieved over the performance period. The
awards are subject to a two-year post-vesting holding period.
Maximum Opportunity
No prescribed maximum
In addition to the framework outlined, the
following are key structural aspects of the
remuneration policy.
Executive director shareholding guidelines
The committee recognises that share ownership is
important in aligning the interests of management
with those of shareholders. Shareholding guidelines
are in place whereby all executive directors are
required to acquire a holding of shares in the
Company equal to 200% of salary. The executive
directors in practice hold significantly in excess
of this requirement, and details of these
shareholdings are provided in the Report of the
Directors contained in this Annual Report. Newly
appointed executive directors are also subject
to a post-employment shareholding policy equal
to 200% of salary. The committee did not
implement post employment guidelines for
the current executive directors, having regard
to their long-standing high levels of shareholdings
and their existing contractual arrangements.
Clawback
The committee recognises that there could
potentially be circumstances in which performance
related pay (either annual performance related
bonuses and/or PSP Awards) is paid out and where
certain circumstances later arise which bring the
committee to conclude that the payment should
not have been made in full or in part. The clawback
of performance related pay, and malus provisions
(where awards are reduced to nil before they have
vested) would apply in certain circumstances
including:
For all future
appointments, pensions
will be capped at the
rate applicable to the
workforce in the relevant
local market. Incumbent
executive directors’
pensions will be reduced
to 10% by the end of
2024.
No prescribed maximum
150% of base salary
Part deferred
200% of salary
25% threshold vesting
g a material misstatement of the Company’s
financial results;
g a material breach of an executive’s contract
of employment;
g error in calculation;
76
Kingspan Group plc Annual Report & Financial Statements 2020 Max. opportunity
as % salary
Performance
measures and %
weighting
Threshold
target
Target for
maximum
Performance
achieved
Bonus outcome
as % salary*
Chief Executive
Chief Financial Officer
Russell Shiels
Peter Wilson
Gilbert McCarthy
150%
150%
60%
90%
60%
90%
60%
90%
EPS
EPS
Divisional profit
EPS
Divisional profit
EPS
Divisional profit
EPS
194.4c
194.4c
N/D
194.4c
N/D
194.4c
N/D
194.4c
*Notional payout as committee discretion resulted in zero annual bonus.
235.3c
235.3c
N/D
235.3c
N/D
235.3c
N/D
235.3c
206.2c
206.2c
N/D
206.2c
N/D
206.2c
N/D
206.2c
38.55%
38.55%
75.42%
15.42%
15.42%
g failure of risk management;
g corporate failure;
g any wilful misconduct, recklessness, and/or
fraud resulting in serious damage to the financial
condition or business reputation of the Company.
The committee may adjust the bonus and PSP that
is payable if it considers the formulaic outcome is
not representative of the underlying performance
of the Company, investor experience or employee
reward outcome.
The remuneration policy approved at the 2020 AGM is
set out in full in the 2019 Annual Report and on our
website at: www.kingspan.com.
2020 performance related bonus
In 2020 all executive directors were eligible for a
maximum performance related bonus opportunity
of up to 150% of base salary. The CEO and CFO’s
annual performance related bonuses were based on
Group EPS growth targets over prior year, with the
maximum annual performance related bonus being
payable on the achievement of 15% Group EPS
growth over prior year. The committee considers
this to be a truly stretching target.
For each of the Divisional MDs, up to 40% of their
total bonus opportunity was based on achieving
stretching divisional profit targets, with maximum
bonus being payable on the achievement of 10%
divisional profit growth. A further 60% of the
Divisional MDs’ total bonus opportunity is payable
on the achievement of the same Group EPS targets
as for the CEO and CFO, ensuring a healthy balance
between incentivising divisional and Group growth.
While the Group delivered another year of robust
financial performance, as set out by the Chair of
the Remuneration Committee, following an
evaluation of overall company performance,
stakeholder experience and the matters arising from
the Inquiry, the committee exercised its discretion
to reduce compensation entitlements under the
annual bonus plan to zero. As a consequence, it
was determined that no pay-outs would be made
in respect of the 2020 annual performance bonus
to any of the directors.
The table above sets out the performance against
targets for each of the executive directors in
respect of the year ended 31 December 2020.
We do not disclose the specific targets for the
Divisional MDs, or performance against them,
as these are commercially sensitive figures. While
the committee is fully aware of the expectation
that all bonus targets are disclosed in the year of
payment, the specific targets for the Divisional
MDs would provide information that would not
otherwise be available to competitors, where
such MDs are unlikely to be subject to comparable
disclosure requirements.
77
Directors’ Report Report of the Remuneration Committee 2020 Remuneration Outturn
Directors’ Remuneration for year ended 31 December 2020
Executive Directors
Gene Murtagh Geoff Doherty Russell Shiels(1)
Peter Wilson Gilbert McCarthy
Total
EUR'000
EUR'000
EUR'000
EUR'000
EUR'000
EUR'000
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Fixed Remuneration
Salary and Fees
Pension Contributions(2)
Benefits(3)
888
161
33
870
158
36
Total Fixed Remuneration
1,082
1,064
Performance Pay
Annual Incentives (4)
Cash Element
Deferred Share Awards
Long Term Incentives (5)
-
-
870
52
LTI - Grant Value (6) (7)
1,308
1,348
LTI - Share Price Growth(6)(7)
800
640
573
140
31
744
-
-
740
452
562
137
34
733
562
34
795
378
Total Performance Pay
2,108
2,910
1,192
1,769
523
173
48
744
-
-
620
379
999
522
174
55
751
522
31
757
360
1,670
512
198
20
730
-
-
586
358
944
477
186
20
683
477
29
720
342
530
106
43
679
-
-
684
418
520
104
37
661
495
-
720
342
3,026
2,951
778
175
759
182
3,979 3,892
-
-
2,926
146
3,938 4,340
2,407
2,062
1,568
1,102
1,557
6,345 9,474
Total Remuneration
3,190
3,974
1,936
2,502
1,743
2,421
1,674
2,251
1,781
2,218
10,324 13,366
Non Executive Directors(8)
Eugene Murtagh
Linda Hickey
Michael Cawley
John Cronin
Bruce McLennan
Jost Massenberg
Anne Heraty (9)
Helen Kirkpatrick (10)
Total non-executive pay
Total Directors' remuneration
191
191
85
85
75
75
75
75
-
82
85
75
75
75
31
35
661
649
10,985 14,015
78
(1) Russell Shiels’ remuneration is denominated
in USD, and has been converted to Euro
at the following average rates USD: 1.142
(2019: 1.120).
(2) The Group operates a defined contribution
pension scheme for executive directors.
Certain executives have elected to receive
part of their prospective pension entitlement
in cash.
(3) Benefits principally relate to health insurance
premiums and company cars/car allowances.
In the case of Russell Shiels the cost of life
insurance and permanent health benefit is
also included.
(4) The annual incentive amount is earned for
meeting clearly defined EPS growth and
divisional profit targets. Details of the
bonus plan and targets are set out on
page 75 of the Report of the Remuneration
Committee.
(5) Long Term Incentives are granted annually
pursuant to the Kingspan Group Performance
Share Plan (PSP). Details of the PSP scheme
and targets are set out on page 79 of the
Report of the Remuneration Committee.
(6) The vesting value of the 2018 LTIP award
(vesting in 2021) has been calculated using
the average share price for the 30 day period
ending 18 February 2021 being €57.52. The
calculation for this award will be adjusted in
next years’ Annual Report to reflect the share
price on the date of vesting (26 February
2021). The share price increased from the date
of grant (share price: €35.70) to the share
price used to determine the vesting value
(share price: €57.52).
(7) The vesting value of the 2017 LTIP award (that
vested in 2020) has been calculated using
the share price at the date of vesting (5 May
2020) of €46.10. The share price increased
from the date of grant (share price: €33.00)
to the date of vesting (share price: €46.10).
(8) Non-executive directors receive a base fee
of €75,000 per annum, plus an additional
fee of between €7,500 and €10,000 for
chairmanship of Board committees. They
do not receive any pension benefit, or any
performance or share based remuneration.
(9) Anne Heraty was appointed as a non-
executive director on 1 August 2019.
(10) Helen Kirkpatrick retired as a non-executive
director on 3 May 2019.
Kingspan Group plc Annual Report & Financial Statements 2020 Performance Share Plan
The committee reviewed the extent to which the
vesting targets in respect of the PSP Awards granted
in 2018 had been met by reference to EPS and TSR
targets over the three-year performance period to 31
December 2020. In addition, the committee reviewed
overall performance and stakeholder experience
during the three-year period up to December 2020.
In 2018, the committee granted PSP Awards that
were 50% based on EPS growth targets and 50%
based on TSR targets:
Weighting
Measure
50%
EPS
50%
TSR
Threshold
CPI + 5%
Median
Gene M. Murtagh
Geoff Doherty
Maximum
CPI + 10%
Upper quartile
Russell Shiels
Performance
CPI +8.7%
93rd percentile
% Vesting
40%
50%
The peer group against which TSR performance was
measured was as follows:
Peter Wilson
Armstrong World
Industries Inc.
Owens Corning
Boral Ltd.
CRH plc
Geberit AG
Rockwool Intl. A/S
Gilbert McCarthy
SIG plc
Sika
Grafton Group plc
Travis Perkins plc
Lafarge Holcim
USG Corporation
NCI Building Systems Inc. Wienerberger AG
Company Secretary
Lorcan Dowd
Following a review of the vesting levels, the
committee was satisfied that they reflected
company and induvial performance over the
three-year period.
Performance Share Plan
Director
At
31 Dec
2019
Granted
during
year
Vested
during
year
Exercised
or lapsed
during
year
At
31 Dec
2020
Option
price
€
Earliest
exercise
date
Latest
expiry
date
Unvested
122,350
24,268
(43,120)
103,498
Vested
83,251
43,120
(126,371) ¹
-
205,601
24,268
-
(126,371)
103,498
Unvested
69,777
13,430
(25,440)
57,767
Vested
1
25,440
(25,441)²
-
69,778
13,430
-
(25,441)
57,767
Unvested
63,266
12,422
(24,227)
51,461
Vested
-
24,227
(24,227)³
-
63,266
12,422
-
(24,227)
51,461
Unvested
61,000
12,422
(23,040)
50,382
Vested
-
23,040
(23,040)⁴
-
61,000
12,422
-
(23,040)
50,382
Unvested
64,055
12,422
(23,040)
53,437
Vested
72,673
23,040
(26,042)⁵
69,671
136,728
12,422
-
(26,042)
123,108
Unvested
13,752
4,160
(4,752)
13,160
Vested
15,438
4,752
(6,250)⁶
13,940
29,190
4,160
-
(6,250)
27,100
26/02/21
24/02/27
-
-
26/02/21
24/02/27
-
-
26/02/21
24/02/27
-
-
26/02/21
24/02/27
-
-
26/02/21
24/02/27
24/02/18
05/05/24
26/02/21
24/03/27
24/02/18
05/05/24
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
1 Exercised (83,251) on 21/02/20. Market value on day of exercise €64.55.
Exercised (43,120) on 13/10/20. Market value on day of exercise €79.89.
2 Exercised on 21/08/20. Market value on day of exercise €64.75.
3 Exercised on 24/08/20. Market value on day of exercise €72.01.
4 Exercised on 28/09/20. Market value on day of exercise €76.55.
5 Exercised on 14/10/20. Market value on day of exercise €77.90.
6 Exercised on 20/11/20. Market value on day of exercise €74.44.
79
Directors’ Report Report of the Remuneration Committee Deferred Share Awards
Director
Gene M. Murtagh Unvested
At
31 Dec
2019
4,009
Granted
during
year
813
Geoff Doherty
Unvested
2,644
525
Russell Shiels
Unvested
2,424
488
Peter Wilson
Unvested
2,090
446
Gilbert McCarthy
Unvested
2,445
-
Vested &
transferred
during year
-
-
-
-
-
At
31 Dec
2020
4,822
Earliest
vesting/
transfer date
31/03/21
3,169
31/03/21
2,912
31/03/21
2,536
31/03/21
2,445
31/03/21
Executive retirement
Following his retirement at year end, Peter Wilson’s
unvested PSP awards will be reduced pro rata by an
amount to reflect the proportion of the vesting period
not actually served, in line with the scheme rules and
remuneration policy as approved by shareholders
in 2019. Mr Wilson did not receive any other
compensation or payment on his retirement.
Non-executive directors
The non-executive directors each received fees which
are approved by the Board as a whole. The Chairman’s
fee is €191,000. The basic non-executive director fee
is €75,000. An additional fee of €7,500 is paid for
chairing the Remuneration Committee, and a fee of
€10,000 for chairmanship of the Audit & Compliance
Committee and for the Senior Independent Director,
to reflect the additional role and responsibilities (only
one additional fee is paid if a director has dual roles).
A 50% cut in non-executive directors’ fees was
introduced for two months during 2020 reflecting
the uncertainty relating to the COVID-19 pandemic
which was reinstated later in the year, in line with
payments to all employees.
Implementation of Remuneration Policy for 2021
The core principles of our remuneration philosophy
as outlined earlier, frame our approach to 2021,
namely simplicity, reward for high performance, and
transparency.
Base salary and pension
The committee carried out a review of each of the
divisional director’s roles and salary levels during
2020. The committee noted that Russell Shiels’ role
and responsibilities had increased in recent years as
President of Kingspan's Insulated Panels business in the
Americas, as a result of recent organic and inorganic
expansion in LATAM. The committee agreed to
give Mr Shiels a 3% salary increase in 2021, and
proposed a broadly similar adjustment in 2022 to
reflect his increased responsibilities. With regard to
each of the other executive directors, their salaries
for 2021 remain at the same level as those set at
the beginning of 2020.
As outlined previously, the committee has made
a significant change to the Company’s policy on
pensions, with the pension contributions of new
executive directors limited to the levels applicable
to the wider workforce in the market in which they
work. In addition, commencing in 2021, the pension
contributions of all incumbent executives are being
reduced in instalments to 10% over the four-year
period to the end of 2024.
Annual bonus
The maximum bonus opportunity for all the
executive directors is 150% of salary (unchanged
from 2020) with up to 100% of salary earned
through the bonus plan delivered in cash and up
to 50% of salary being deferred into shares in the
Company for two years. For 2021, the committee
has determined that the financial performance
measures will remain unchanged from 2020.
As detailed in the 2019 Annual Report, the
committee has considered the merits of including
an additional non-financial measure that draws
focus on certain strategic imperatives while
remaining aligned with our philosophy of simplicity
and pay for performance. During 2019, the Net
Promoter Score (NPS) programme was launched
by Kingspan across the Group. NPS is a rigorous
measure of customer experience across a range of
touch points in the business, and as such it closely
aligns our strategy with the experience of one of
our most important stakeholders, our customers.
80
Kingspan Group plc Annual Report & Financial Statements 2020 From 2021, the committee has determined that
an NPS measure of our customer satisfaction
performance will be included in the bonus plan,
accounting for 10% of pay-outs. This will constitute
a third metric alongside the existing Group and
divisional financial performance measures. The
Group targets, and performance against them,
will be disclosed in the 2021 Report of the
Remuneration Committee.
Performance share awards
For 2021, the CEO will receive an award over shares
with a market value of 175% of base salary. The other
executive directors will receive awards over shares with
a market value of approximately 150% of base salary
(subject to adjustment to ensure internal parity and
to manage exchange rate fluctuations between the
divisional directors). These grant levels are unchanged
from prior year, although the committee will keep this
approach under review whilst ensuring that it does not
breach the overall limits contained in the PSP rules.
During the year, the committee carried out a
review of the constituent members of its TSR peer
group. Two of the group, NCI Building Systems and
USG Corporation had delisted in the previous 12 month
period, and a third company, SIG plc, was no longer
considered to be a suitable peer given its relative size
to the other members of the group. The committee
identified a number of potential companies to take
their place in the TSR peer group, having regard
to sector, market cap, revenue and geography,
and having taken advice from its independent
remuneration consultants, the committee selected
Cornerstone Building Brands Inc, Compagnie de Saint
Gobain SA and Mohawk Industries as suitable peers.
Accordingly, the peer group against which TSR
performance will be measured for PSP grants made
in 2020 and thereafter will be as set out adjacent.
Performance
Measures
Weighting
Percentage vesting
at threshold
Threshold vesting
target
Maximum vesting
target*
EPS
TSR
Planet Passionate
45%45%
45%45%
10%10%
25%25%
25%25%
0%0%
*Straight line vesting between threshold and maximum vesting
6% p.a
6% p.a
Median
Median
Various
Various
12% p.a
12% p.a
Upper quartile
Upper quartile
Various
Various
There is no change in peer group for in-flight awards.
Armstrong World
Industries Inc.
Boral Ltd
Compagnie de Saint
Gobain SA
Cornerstone Building
Brands Inc
CRH plc
Geberit AG
Lafarge Holcim
Mohawk Industries
Owens Corning
Rockwool Intl. A/S
Sika
Travis Perkins plc
Grafton Group plc
Wienerberger AG
The committee also reviewed the performance
framework of the PSP scheme. For the 2021 PSP
Awards, the committee has selected the same
financial performance measures based on EPS
growth targets and relative TSR against the above
peer group. The financial targets are set out in the
table above. The committee considers that given
the market and business outlook these targets
are stretching yet realistic and are appropriately
aligned with our risk appetite as well as internal
and external forecasts.
The Committee also determined that the
introduction of an additional ESG measure into the
PSP framework would be appropriate, recognising
the importance of non-financial measures to both
short-and-long-term performance. The measure is
based on Kingspan’s ambitious Planet Passionate
programme that aims to significantly reduce the
Group’s environmental impact as it continues
to grow its business whilst also enhancing the
environmental benefits of its products. Ten of our
Planet Passionate targets, based around saving
energy, carbon, water and circularity, have been
selected for inclusion against 10% of the annual PSP
award. Kingspan has set internal annual targets
at Group level to help keep the business on track
to achieve our ambitious Planet Passionate 2025 &
2030 targets. The Group’s progress against these
targets will be reviewed and disclosed in Kingspan’s
annual Planet Passionate report.
Non-executive director fees
Following the retirement of Kingspan’s founder
Chairman, Eugene Murtagh, at this year’s AGM,
the Remuneration Committee will take advice and
consider the appropriate level of fees for the new
Non-Executive Chairman upon appointment.
There will be no change to the other non-executive
director fees for 2021.
81
Directors’ Report Report of the Remuneration Committee Committee Governance
The Remuneration Committee comprises three
independent non-executive directors, Linda Hickey
(Chair), Michael Cawley and Bruce McLennan.
The Company Secretary acts as the secretary to the
committee. The Chief Executive does not normally
attend meetings but provides input where relevant,
to the committee chair prior to the meeting. No
individual is present at a meeting when the terms
of his own remuneration are discussed. The terms of
reference are available on the Company’s website:
www.kingspan.com
The Remuneration Committee met three times
during the year. Each meeting was attended by
all the members of the committee, and an overview
of the workings of the committee is set out adjacent.
External advisors
The Remuneration Committee obtained advice
during the year from independent remuneration
consultants Korn Ferry. Korn Ferry is a member of the
Remuneration Consultants Group and a signatory
to its Code of Conduct, and all advice is provided in
accordance with this code. Korn Ferry did not provide
any other services to Kingspan Group during the
year. Accordingly, the committee is satisfied that the
advice obtained was objective and independent.
Performance graph
The first graph overleaf shows the Company’s TSR
performance against the performance of the
ISEQ and FTSE 250 indices over the 10-year period
to 31 December 2020. The second graph shows the
CEO's total remuneration (fixed and variable) over
the 5-year period, compared to the Company's EPS
and TSR performance over the same period.
Remuneration Committee activities
FEB
JUN
NOV
Salary and fees
Engage independent consultants for executive directors pensions review
Review of overall remuneration policy
Review executives' salary, role and responsibilities for 2021
Review non-executives' fees for 2021
Approve Executive's pension alignment
Review Remuneration benchmark
Review Non-financial performance measures
Performance pay
Review executive bonus targets
Assess Group and individual performance against targets for 2019
Confirm percentage of performance bonus achieved for 2019
Confirm vesting of 2019 Deferred Share Awards
Agree Group and individual performance targets for 2021
PSP Awards
Assess performance of 2017/2019 PSP Awards against targets
Determine percentage of 2017/2019 PSP Awards which vest
Review performance measures for PSP Awards for 2020
Agree targets and level for grants of PSPs Awards for 2020
Review TSR peer group
Governance
Review and approve Remuneration Report for Annual Report 2019
Update on governance and remuneration trends generally
Consider shareholder votes and feedback from AGM 2020
Review of Shareholder Rights Directive
••
••
••
••
••
••
••
••
••
••
••
••
••
••
••
••
••
••
••
••
••
••
••
82
Kingspan Group plc Annual Report & Financial Statements 2020 Total Shareholder Returns
CEO Remuneration vs Kingspan Performance
1,200
1,000
800
600
400
200
'
)
0
0
0
€
(
n
o
i
t
a
r
e
n
u
m
e
R
O
E
C
10,000
8,000
6,000
240
230%
210
206c
217%
205c
184c
)
%
(
n
r
u
t
e
R
r
e
d
o
h
e
r
a
h
S
l
l
a
t
o
T
)
s
t
n
e
c
(
e
r
a
h
S
r
e
P
g
n
n
r
a
E
i
180
150
120
159c
4,000
148%
144c
143%
2,000
100%
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Kingspan
ISEQ
FTSE 250
Fixed Remuneration
Total Performance Pay (exc. share price growth)
LTI Share Price Growth
TSR
EPS
83
Directors’ Report Report of the Remuneration Committee
DIRECTORS’ REPORT
Report of the
Audit & Compliance
Committee
MICHAEL CAWLEY
As Chairman of the Audit & Compliance
Committee (the ‘committee’) I am pleased to
present the report of the committee for the
year ended 31 December 2020 to stakeholders
and wider society.
Australia Melbourne
Jet Base / Insulated
Panels KingZip Linea
and RD 200/750
This report details how the Audit & Compliance
Committee has met its responsibilities under its
Terms of Reference, the Irish Companies Act 2014
and under the UK Corporate Governance Code
(July 2018) over the last twelve months.
The Audit & Compliance Committee focused
particularly on the appropriateness of the Group’s
financial statements. The committee has satisfied
itself, and has advised the Board accordingly, that
the 2020 Annual Report and financial statements
are fair, balanced and understandable, and provide
the information necessary for shareholders to
assess the Company’s performance, business
model and strategy. The significant issues that
the committee considered in relation to the
financial statements and how these issues were
addressed are set out in this report.
The Audit & Compliance Committee notes the
requirements under section 225 of the Companies
Act 2014 and has ensured that the directors are
aware of their responsibilities and comply fully
with this provision.
One of the Audit & Compliance Committee’s
key responsibilities is to review the Group’s risk
management and internal controls systems,
including in particular internal financial controls.
During the year, the committee carried out a
robust assessment of the principal risks facing the
company and monitored the risk management
and internal control system on an on-going basis.
Further details in regard to these matters are also
set out in this Annual Report on page 38.
The committee also reviewed the effectiveness
of both the external audit process and the
internal audit function as part of the continuous
improvement of financial reporting and risk
management across the Group.
Michael Cawley
Chairman, Audit & Compliance Committee
84
Kingspan Group plc Annual Report & Financial Statements 2020 Role and Responsibilities
The Board has established an Audit & Compliance Committee
to monitor the integrity of the Company’s financial
statements and the effectiveness of the Group’s internal
financial controls. The committee’s role and responsibilities
are set out in the committee’s Terms of Reference which are
available from the Company and are displayed on the Group’s
website (www.kingspan.com). The Terms of Reference are
reviewed annually and amended where appropriate. During
the year the committee worked with management, the
external auditors, internal audit, and other members of the
senior management team in fulfilling these responsibilities.
In December 2020 the Terms of Reference of the committee
were updated to include oversight of product compliance.
The Audit & Compliance Committee report deals with the key
areas in which the Audit & Compliance Committee plays an
active role and has responsibility. These areas are as follows:
1. Financial reporting and related primary areas
of judgement;
2. The external audit process;
3. The Group’s internal audit function;
4. Risk management and internal controls; and
5. Whistleblowing procedures.
Committee membership
As at 31 December 2020, the Audit & Compliance Committee
comprised of three independent non-executive directors who
are Michael Cawley (Chairman), Anne Heraty and Bruce
McLennan. Bruce McLennan joined the committee in February
2020. The biographies of each can be found on page 61.
The Board considers that the committee as a whole has an
appropriate and experienced blend of commercial, financial
and industry expertise to enable it to fulfil its duties, and that
the committee chairman, Michael Cawley B.COMM., F.C.A.,
has appropriate recent and relevant financial experience.
Committee Member
Michel Cawley (chairman)
Anne Heraty
John Cronin
Bruce McLennan
Attended
Eligible
Appointment Date
4
4
1
3
4
4
1
3
2014
2019
2015
2020
Audit & Compliance Committee activities
FEB JUN AUG NOV
Financial reporting
Review and approve preliminary & half-year results
Consider key audit and accounting issues and judgements
Approve going concern and viability statements
Consider accounting policies and the impact of new accounting standards
Review management letter from auditors
Review of any related party matters and intended disclosures
Review Annual Report, and confirm if fair, balanced and understandable
External auditors
Review of proposed auditor transition plan and timetable
Approval of external audit plan
Governance update
Confirm audit independence, materiality of fees and non-audit services (KPMG)
Confirmation of auditor independence (EY)
Approval of audit engagement letter and audit fees
Internal audit and risk management controls
Review of internal audit reports and monitor progress on open actions
Approval of internal audit charter
Approve internal audit plan and resources, taking account of risk management
Review of financial, IT and general controls
Monitor Group whistleblowing procedures
Review of finance team business continuity plan
Review of impact of pandemic on financial control environment
Review of Group liquidity position
Assessment of the principal risks and effectiveness of internal control systems
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Meetings
The committee met four times during the year ended 31
December 2020 and attendance at the meetings is noted
in the table adjacent. Activities of the Audit & Compliance
Committee in each meeting is noted in the table adjacent.
Governance
Review accounting regulator correspondence
Group Code of Conduct
Directors’ Compliance Statement policy and procedures
85
Directors’ Report Report of the Audit & Compliance Committee Each committee meeting was attended by the Group
Chief Financial Officer and the Head of Internal Audit
& Compliance. The external auditors also attended
these meetings as required. The Company Secretary
is the secretary of the Audit & Compliance
Committee. Other directors can attend the meetings
as required.
Financial Reporting
The committee is responsible for monitoring the
integrity of the Group’s financial statements and
reviewing the financial reporting judgements
contained therein. The financial statements are
prepared by a finance team with the appropriate
qualifications and expertise.
The chairman of the Audit & Compliance Committee
also met with both the Head of Internal Audit &
Compliance and the external audit lead partner
outside of committee meetings as required
throughout the year.
Committee Evaluation
As outlined on page 70 within the Corporate
Governance Statement, the performance of the
Board also includes a review of the committees. Any
recommendations raised in relation to the Audit &
Compliance Committee are acted upon in a formal
and structured manner. No issues were identified for
the year ending 31 December 2020.
The committee confirmed to the Board that
the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the
information necessary for shareholders to assess
the Group’s position and performance, business
model and strategy.
In respect of the year to 31 December 2020, the
committee reviewed:
g the Group’s Trading Updates issued in May
and November 2020;
g the Group’s Interim Report for the six months
to 30 June 2020; and
g the Preliminary Announcement and Annual
Report to 31 December 2020.
In carrying out these reviews, the committee:
g reviewed the appropriateness of Group accounting
policies and monitored changes to and compliance
with accounting standards on an on-going basis;
g discussed with management and the external
auditors the critical accounting policies and
judgements that had been applied;
g compared the results with management accounts
and budgets, and reviewed reconciliations
between these and the final results;
USA Hilton Canopy
Hotel, Arizona /
Insulated Panels
Dri-Design Painted
Aluminum
g discussed a report from the external auditors
identifying the significant accounting and
judgemental issues that arose in the course
of the audit;
g considered the management representation
letter requested by the auditors for any
non-standard issues and monitored action
taken by management as a result of any
recommendations;
g discussed with management future accounting
developments which are likely to affect the
financial statements;
g reviewed the budgets and strategic plans of the
Group in order to ensure that all forward looking
statements made within the Annual Report reflect
the actual position of the Group; and considered
key areas in which estimates and judgement
had been applied in preparation of the financial
statements including, but not limited to, a review
of fair values on acquisition, the carrying amount
of goodwill, intangible assets and property,
plant and equipment, litigation and warranty
provisions, recoverability of trade receivables,
valuation of inventory, hedge accounting
treatments, and treasury and tax matters.
The primary areas of judgement considered by the
committee in relation to the Group’s 2020 financial
statements, and how they were addressed by the
committee are set out overleaf.
Each of these areas received particular focus from
the external auditor, who provided detailed analysis
and assessment of the matter in their report to
the committee.
In addition, the Internal Audit team review the
businesses covered in their annual Internal Audit
Plan, as agreed by the committee, and report their
findings to the Audit & Compliance Committee
throughout the year. These internal audit reviews
are focused on areas of judgement such as warranty
provisions, trade receivables and inventory and
provide the committee information on the adequacy
and appropriateness of provisions in these areas.
86
Kingspan Group plc Annual Report & Financial Statements 2020 Primary areas
of judgement
Consideration
of impairment
of goodwill
Committee activity
The committee considered the annual impairment assessment
of goodwill prepared by management for each Cash Generating
Unit (“CGU”) using a discounted cash flow analysis based on
the strategic plans approved by the Board, including a sensitivity
analysis on key assumptions. The primary judgement areas were
the achievability of the long term business plans and the key
macroeconomic and business specific assumptions. In considering
the matter, the committee discussed with management the
judgements made and the sensitivities performed. Further
detail of the methodology is set out in Note 9 to the financial
statements.
Primary areas
of judgement
Valuation of
inventory and
adequacy of
inventory
provision
EY also provided the committee with their evaluation of the
impairment review process.
Taxation
Adequacy
of warranty
provisions
Recoverability
of trade
receivables
and adequacy
of receivables
provision
Kingspan completed one material acquisition during the financial
year. The allocation of goodwill to CGUs is not yet complete for
the acquisition.
The committee reviewed the judgements applied by management
in assessing both specific and risk based warranty provisions at
31 December 2020. The committee reviewed and discussed with
management the monthly reports presented to the Board which
set out, for each of the Group’s divisions, warranty provisions
and warranty costs and analyse these costs as a percentage of
divisional sales. Warranty provisions are reviewed on an ongoing
basis throughout the year in conjunction with the internal audit
process. The committee was satisfied that such judgements were
appropriate and the risk had been adequately addressed.
The committee reviewed the judgements applied by management
in determining the bad debts provision at 31 December 2020.
The committee reviewed and discussed with management the
monthly board report which sets out aged analysis of gross
debtor balances and associated bad debt provisions and reviewed
security (including credit insurance) that is in place. Bad debt
provisions are reviewed on an ongoing basis throughout the year
in conjunction with the internal audit process. The committee was
satisfied that such judgements were appropriate and the risk had
been adequately addressed.
Accounting
for acquisitions
Committee activity
The committee reviewed the valuation and provisioning for
inventory at 31 December 2020. The main area of judgement
was the level of provisioning required for slow moving and
obsolete inventory. The committee reviewed and discussed with
management the monthly board report which sets out, for each
of the Group’s divisions, gross inventory balances and associated
obsolescence provision including an analysis by inventory,
category and ageing. Inventory provisions are reviewed on an
ongoing basis throughout the year in conjunction with the internal
audit process. The committee was satisfied that such judgements
were appropriate and the risk had been adequately addressed.
Provisioning for potential current tax liabilities and the level of
deferred tax asset recognition in relation to accumulated tax
losses are underpinned by a range of judgements. The committee
addresses these issues through a range of reporting from senior
management and a process of challenging the appropriateness
of management’s views including the degree to which these are
supported by professional advice from external legal and other
advisory firms. This assessment was conducted in line with the
provisions of IFRIC 23.
The Group’s accounting manual sets out detailed policies that
prescribe the methodology to be used by management in
calculating the above provisions. Each division formally confirms
compliance with these policies on an annual basis.
The committee was satisfied that such judgements were
appropriate and the risk had been adequately addressed.
Total acquisition consideration in 2020 amounted to €46.1m.
The committee discussed with management and the external
auditors the accounting treatment for newly acquired businesses,
and the related judgements made by management, and were
satisfied that the treatment in the Group’s financial statements
was appropriate.
87
Directors’ Report Report of the Audit & Compliance Committee External auditor
The Audit & Compliance Committee has responsibility
for overseeing the Group’s relationship with the
external auditor including reviewing the quality and
effectiveness of their performance, their external audit
plan and process, their independence from the Group,
their appointment and their audit fee proposals.
Performance and audit plan
Following the completion of the 2019 year-end
audit, the committee carried out a review of the
effectiveness of the external auditor and the audit
process. This review involved discussions with
both group management and internal audit and
feedback provided by divisional management. The
committee continues to monitor the performance
and objectivity of the external auditors and takes this
into consideration when making its recommendations
to the Board on the remuneration, the terms of
engagement and the re-appointment, or otherwise,
of the external auditors.
Prior to commencement of the 2020 year-end
audit, the committee approved the external
auditors’ work plan and resources and agreed with
the auditor’s various key areas of focus, including
accounting for acquisitions, impairments and
warranty provisions.
During the year the committee met with the external
auditors without management being present. This
meeting provided the opportunity for direct dialogue
and feedback between the committee and the
auditor, where they discussed inter alia some of the
key audit management letter points.
EU Audit Reform
The regulatory framework for the Group’s statutory
audit is governed by EU legislation under Directive
2014/56/EU and Regulation EU No. 537/2014. EU Audit
reform legislation is applicable in the Member States
of the European Union, including Ireland. Under this
legislation, Kingspan Group plc is considered a Public
Interest Entity (“PIE”). Key developments falling from
the implementation of this legislation are:
g a requirement that the PIE changes its statutory
auditor every ten years (following rotation, the
statutory audit firm cannot be reappointed for
four years);
g a requirement that certain procedures are followed
for the selection of the new statutory auditor; and
g restrictions on the entitlement of the statutory
auditing firm to provide certain non-audit services.
Kingspan Group plc has fully complied with such EU
Audit Reform from the period commencing 1 January
2017. With regards audit firm rotation, EY, was
selected as the external auditor for the financial year
commencing 1 January 2020. The selection process is
outlined in more detail below.
Independence and objectivity
The committee is responsible for ensuring that the
external auditor is objective and independent. EY was
appointed as the Group’s auditor on 11 June 2020,
following a formal tender process in which a number
of leading global firms submitted written tenders and
presentations. The lead audit partner is Pat O’Neill and
is rotated every five years.
The committee received confirmation from the
auditors that they are independent of the Group under
the requirements of the Ethical Standard issued by the
Irish Auditing and Accounting Supervisory Authority
(“IAASA”). The auditors also confirmed that they were
not aware of any relationships between the Group
and the firm or between the firm and any persons in
financial reporting oversight roles in the Group that
may affect its independence.
Non-audit services
In order to further ensure independence, the
committee has a policy on the provision of non-audit
services by the external auditors that seeks to ensure
that the services provided by the external auditors
are not, or are not perceived to be, in conflict with
auditor independence. By obtaining an account of all
relationships between the external auditors and the
Group, and by reviewing the economic importance of
the Group to the external auditors by monitoring the
audit fees as a percentage of total income generated
from the relationship with the Group, the committee
ensured that the independence of the external audit
was not compromised. Last year the committee
reviewed and updated its policy on the engagement
of external auditors and the provision of non-audit
services in order to bring it into full compliance with
the EU audit reform legislation. An analysis of fees
paid to the external auditor, including the non-audit
fees, is set out in Note 5 and below.
Audit tender & rotation of auditors
A competitive audit tender process was launched
in 2019. The committee was responsible for the
design and operation of the tender process. The
objectives were for the process to be efficient, fair
and transparent and to submit two firms to the
Board for appointment, with a reasoned preference
for a single firm.
AUDIT V NON AUDIT SERVICES REMUNERATION (€m)
€2.7
€2.6
€2.0
€2.0
Audit Services
€0.1 2020
€0.9 2019
€0.7 2018
€0.5 2017
Non-Audit Services
88
Kingspan Group plc Annual Report & Financial Statements 2020 Following the issuance of a Request for Proposal, a
number of measures took place including visits to
key manufacturing sites, numerous meetings with
senior management and assurance that each of the
firms would be suitably independent should they be
appointed. The principal assessment criteria included:
g Audit quality;
g Experience; and
g Cultural fit
Subsequent to an evaluation of proposals and
interactions, it was decided to take two firms to make
final presentations to the committee and Group Chief
Financial Officer. Following these final presentations,
the committee recommended to the Board that EY be
appointed to succeed KPMG as the Group’s external
auditor. The committee believes that the strength and
experience of the EY team best met the predefined
criteria set as part of the selection process.
As a result of this process, the Company’s previous
auditors, KPMG Chartered Accountants, retired
following the conclusion of the audit for the 2019
financial year, with the Board then appointing EY as
Group external auditor with effect for the financial
year ending 31 December 2020.
Internal audit & compliance
The committee reviewed and agreed the annual
internal audit plan, which the committee believes is
appropriate to the scope and nature of the Group.
The internal audit plan is risk based, with all divisions
audited every year, and all new businesses audited
within 12 months of acquisition.
The committee reviewed reports from the Head of
Internal Audit & Compliance at its quarterly meetings.
These reports enable the committee to monitor the
progress of the internal audit plan, to discuss key
findings and the plan to address them in addition to
status updates of previous key findings.
The committee is responsible for reviewing the
effectiveness of the internal audit function and does
so based upon discussion with Group management,
the Group’s external auditors and feedback provided
by divisional management. The committee was
satisfied that the internal audit function is working
effectively, improves risk management throughout the
Group and that the internal audit team is sufficiently
resourced in addition to having the adequate level of
experience and expertise.
The terms of reference of the Audit & Compliance
Committee were extended in December 2020 to
include oversight of the processes around product
certification. The Head of Internal Audit & Compliance
will report to the committee in this regard.
Risk Management and Internal controls
The Audit & Compliance Committee has been
delegated, from the Board, the responsibility for
monitoring the effectiveness of the Group’s system
of risk management and internal control.
The Audit & Compliance Committee monitors the
Group’s risk management and internal control
processes through detailed discussions with
management and executive directors, the review and
approval of the internal audit reports, which focus
on the areas of greatest risk to the Group, and the
external audit reports, as part of both the year-end
audit and the half-year review process, all of which
highlight the key areas of control weakness in the
Group. All weaknesses identified by either internal or
external audit are discussed by the committee with
Group management and an implementation plan for
the targeted improvements to these systems is put in
place. The implementation plan is being overseen by
the Group Chief Financial Officer and the committee
is satisfied that this plan is being properly executed.
the Group. Full details of this risk assessment and the
key risks identified are set out in the Risks and Risk
Management section of this Annual Report on pages
38 to 41.
These processes, which are used by the Audit &
Compliance Committee to monitor the effectiveness
of the Group’s system of risk management and internal
control, are in place throughout the accounting period
and remain in place up to the date of approval of this
Annual Report.
The main features of the Group’s internal control and
risk management systems that specifically relate to the
Group’s financial reporting and accounts consolidation
process are set out in the Corporate Governance Report
on page 67.
Whistleblowing procedures
The Group has a Code of Conduct, full details of which are
available on the Group’s website (www.kingspan.com).
Based on the standards set out in this Code of Conduct,
the Group employs a comprehensive, confidential and
independent whistleblowing phone service to allow all
employees to raise their concerns about their working
environment and business practices. This service then
allows management and employees to work together
to address any instances of fraud, abuse or other
misconduct in the workplace.
Any instances of fraud, abuse or misconduct reported
on the whistleblowing phone service are reported to
the Head of Internal Audit & Compliance and the
Company Secretary, who then evaluate each incident
for onward communication to the committee. This
onwards communication consists of the full details of
the incident, key control failures, any financial loss and
actions for improvement.
As part of its standing schedule of business, the
committee carried out an annual risk assessment of
the business to formally identify the key risks facing
During the year, the committee reviewed the Group’s
whistleblowing process and were satisfied with the
design and operating effectiveness of the process.
89
Directors’ Report Report of the Audit & Compliance Committee MEGATRENDS
CARBON IN
CONSTRUCTION
READ OUR
INTERACTIVE
STORY ONLINE
CURBING
CARBON IN
CONSTRUCTION
Kingspan’s innovative building
envelope solutions aim to
help building designers reduce
carbon emissions at the upfront,
operational and end-of-life stages.
Australia ECU Science
Building / Insulated Panels
KS 1000 RW; Dri-Design
Rainscreen Facade
Kingspan Group plc Annual Report & Financial Statements 2020
90
Australia ECU Science
Building / Insulated Panels
KS 1000 RW; Dri-Design
Rainscreen Facade
CARBON IN
CONSTRUCTION
2020
Together, buildings and construction
are responsible for 39% of
all carbon emissions in the world,
with operational emissions (from
energy used to heat, cool, light and
power appliances) accounting for 28%.
The remaining 11% comes from embodied
carbon emissions, or ‘upfront’ carbon
that is associated with materials and
construction processes throughout the
whole building lifecycle.
28%
Operational
Emissions
11%
Embodied
Emissions
“
THE BUILT ENVIRONMENT SECTOR HAS
A VITAL ROLE TO PLAY IN RESPONDING
TO THE CLIMATE EMERGENCY, AND
ADDRESSING UPFRONT CARBON IS A
CRITICAL AND URGENT FOCUS.
World Green Building Council
Bringing Embodied Carbon Upfront Report
91
Megatrends Carbon in Construction KINGSPAN’S
IMPACT ON
EMBODIED
CARBON
THROUGH OUR
PLANET PASSIONATE
PROGRAMME, WE ARE
TARGETING A 50%
REDUCTION IN CARBON
EMISSIONS FROM OUR
PRIMARY SUPPLIERS
BY 2030.
Kingspan’s thinner, lighter insulation
materials can reduce embodied carbon
at the upfront stage, by reducing
the structural members, associated
foundations and ancillary products
in construction.
SEE HOW KINGSPAN’S QUADCORE™ CAN
REDUCE UPFRONT OR EMBODIED CARBON BY
UP TO 28% VERSUS ALTERNATIVE SYSTEMS
KINGSPAN’S
IMPACT ON
OPERATIONAL
CARBON
USA Colby
College’s
Athletics
Centre /
Insulated
Panels
Kingspan
QuadCore™ /
Photography
Colby College
We invest to continuously improve
the thermal performance of
our insulation systems, with
innovations such as QuadCore™
insulated panels and Kooltherm®
insulation boards.
1 Assumes a 60 year product life
2 Estimate based off an EU airline
disclosure of 10.5m tonnes of CO2e
emissions in 2019
92
164m tonnes
164 million tonnes of CO2e will
be saved over the life of our
insulation systems sold in 20201
15 years
Enough to power
a major airline for
15 years 2
Kingspan Group plc Annual Report & Financial Statements 2020 KINGSPAN’S
IMPACT ON
END OF LIFE
CARBON
There are many reasons why a building
constructed today might be repurposed
or demolished at a future date.
Consideration must also be given to
the carbon impacts a building, and
the products with which it has been
constructed, will have at the end of
their life.
Recycling can be a very carbon
intensive process. Building materials
must be transported to recycling
depots, separated and, where possible,
reprocessed into reusable materials with
the remainder going to waste.
This is why designing for reuse,
repair and remanufacturing is a
key principle in carbon efficient
and circular thinking.
8000m2 Kingspan UltraTemp
panels are ready for
reuse after a successful
coldstore warehouse
demolition
KINGSPAN’S MODULAR
CONSTRUCTION COMPONENTS,
INCLUDING INSULATED PANELS
AND ACCESS FLOORING, CAN BE
EASILY DISASSEMBLED FOR REUSE.
93
Megatrends Carbon in Construction DIRECTORS’ REPORT
Report
of the
Directors
GENE M. MURTAGH
GEOFF DOHERTY
The directors of Kingspan
Group plc (“Kingspan”)
have pleasure in
presenting their report
with the audited
financial statements
for the year ended
31 December 2020.
™
REVENUE
(€bn)
2%
2
TRADING PROFIT
(€m)
2%
2
EPS
(cent)
1%
2020
€4.6
2019
€4.7
2020
2019
€508.2
€497.1
2020
206.2
2019
204.6
Principal Activities
Kingspan is the global leader in high-performance
insulation and building envelope solutions. Kingspan
Group plc is a holding company for the Group’s
subsidiaries and other entities. The Group’s principal
activities comprise the manufacture and distribution
of the following product suites as part of the complete
“Building Envelope”:
Insulated panels
Structural framing
Architectural facades
Rigid insulation boards
Building services insulation
Engineered timber systems
Natural daylighting
Ventilation and smoke management solutions
Raised access floors
Data centre storage solutions
Energy storage solutions
Rainwater and wastewater solutions
Renewable energy systems
Kingspan comprises five key business divisions
which are Insulated Panels, Insulation Boards,
Light & Air, Water & Energy and Data & Flooring.
These divisions offer a suite of complementary
building envelope solutions for both the new build
and refurbishment markets.
Results and Dividends
Group turnover for the year ended 31 December
2020 was €4.6bn (2019: €4.7bn), trading profit was
€508.2m (2019: €497.1m), and earnings per share
were 206.2 cent (2019: 204.6 cent). The Consolidated
Income Statement is set out later in this Annual Report
and a detailed review of the Group’s performance from
a financial and operational perspective is contained
within the Business & Strategic Report.
94
Kingspan Group plc Annual Report & Financial Statements 2020 The Board has proposed a final dividend if approved
at the Annual General Meeting of 20.6 cent per
ordinary share payable on 7 May 2021 to shareholders
registered on the record date of 26 March 2021. No
interim dividend (2019: 13.0 cent) was declared
during the year given the uncertain backdrop for
much of 2020. The final dividend proposed for 2019
of 33.5 cent was subsequently cancelled in order
to preserve cash at the outset of the pandemic. In
summary, therefore, the total dividend for 2020
is 20.6 cent compared to 13.0 cent for 2019 (as
adjusted for the cancellation).
The Board carried out a review of the Group’s
dividend policy during the year. The outgoing policy
guidance was to pay out approximately 25% of
earnings. In assessing a revised policy a key objective
was to afford the Group appropriate development
capital to invest in the business over time as well as
to preserve the strength of the balance sheet. On
that basis the revised dividend policy for 2021 and for
the foreseeable future is to payout approximately 15%
of earnings. The policy will be reviewed periodically
to ensure it remains appropriate over time having
regard to the capital needs for the business.
France STGI Services,
Thiers / Insulated
Panels Destral 9005
& Spectrum 9005
Business Review
The Business & Strategic Report contained in this
Annual Report, including the Chief Executive’s Review
and the Financial Review, sets out management’s
review of the Group’s business during 2020. The key
points include:
g Revenue down 2% to €4.6bn, (pre-currency,
in line with prior year).
g Trading profit up 2% to €508.2m, (pre-currency,
up 5%).
g Acquisitions contributed 7% to sales growth
and 6% to trading profit growth in the year.
g Free cashflow up 42% to €479.7m.
g Group trading margin1 of 11.1%, an increase
of 40bps.
g Basic EPS up 1% to 206.2 cent.
g Final dividend per share of 20.6 cent.
g Insulated Panels sales decrease of 4% due mainly
to second quarter lows. Solid performance with
most end-markets experiencing recovery in the
second half. Europe positive overall, particularly
in Germany and France. Strong finish to the year
in the UK. Strong order intake in the Americas in
the fourth quarter. 33% growth in QuadCore™
sales globally in 2020.
g Insulation Boards sales decrease of 10% albeit
much improved in the second half which was
down 2%. Strong performance in Western
Europe and good second half recovery in Ireland
and the UK. Americas and Australia ahead
of prior year. Softer in the Middle East and
Southern Europe.
g Another year of progress in Light & Air with
sales up 36% in the year, acquisition of Colt
a key driver. Europe positive overall although
softer in North America. Further bolt on
acquisition in Europe, Skydome, after year-end.
g Year-end net debt of €236.2m (2019: €633.2m).
g Water & Energy sales down 3% with a
Net debt2 to EBITDA2 of 0.4x (2019: 1.1x).
g ROCE of 18.4% (2019: 17.3%).
resilient performance overall and year on
year margin improvement. Water applications
particularly positive.
g Data & Flooring sales increase of 4%. Strong
performance across data centre applications
offsetting softer office activity.
g Steep raw material inflation a key theme as we
enter 2021 with recovery effort underway.
Directors’ Report Report of the Directors
95
1 Trading profit divided by total revenue.
2 Net Debt and EBITDA both pre-IFRS 16.
The Business & Strategic Report
contained in this Annual Report
sets out the “four pillars” of
Kingspan’s strategy which drive
conversion from traditional
methods of construction to
ultra-performance building
envelopes, these are:
INNOVATION
Differentiation from competitors driven
by superior innovation.
GLOBAL
The continued evolution of Kingspan’s
geographic footprint as we build market
leading positions globally.
PLANET PASSIONATE
Through our Net Zero Energy programme, we
have made great strides in powering our business
on renewable energy. With Planet Passionate we
are setting ourselves even more challenging goals
for the next 10 years. We are committing to hard
targets in the areas of energy, carbon, circularity
and water. 2020 was a foundational year for
our Planet Passionate programme. We set the
baseline for each target and developed detailed
strategies and timelines to achieve our goals, which
aim to proactively address the key sustainability
challenges that face our planet.
COMPLETING THE ENVELOPE
Expanding our business to include product
categories which complement our product portfolio
in offering complete, ultra-performance, building
envelope solutions.
Throughout 2020, Kingspan made significant
progress in pursuit of this strategy with the result
that Kingspan has continued to deliver a robust
performance. This strategy will remain the focus
of the execution of Kingspan’s strategic plan for
the foreseeable future.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the
Group, and the actions taken by Kingspan to
mitigate them are detailed in the Risk & Risk
Management Report contained in this Annual
Report. The principal risks are:
g Volatility in the macro environment;
g Product failure;
g Failure to innovate;
g Business interruption (including IT
continuity and climate change);
g Credit risk and credit control;
g Employee development & retention;
g Fraud & cybercrime;
g Acquisition and integration of new businesses;
g Health & Safety; and
g Laws and regulations.
Key Performance Indicators
The directors are pleased to report on the very
positive performance during 2020 against all of its
key performance indicators. A detailed commentary
incorporating key performance indicators is contained
within the Financial Review and in the Sustainability
Report contained in this Annual Report. A number of
the key performance indicators have been included
in more detail on page 158 ‘Alternative Performance
Measures’. The key performance indicators for
Kingspan upon which particular emphasis is placed
are listed below.
Innovation
At Kingspan innovation is a core pillar of our
strategy and we view it as a key strategic advantage.
We believe building industry traditions must be
challenged through innovation in advanced materials
and digital technologies in order to achieve a net zero
emissions future.
KPIS
FINANCIAL
Basic EPS growth
206.2 cent (up 1%)
Sales performance
€4.6bn (down 2%)
Trading margin
Free cash flow
11.1% bps (up 40 bps)
€479.7m (up €142.6m)
Return on capital employed
18.4% (up 110 bps)
Net debt/EBITDA
0.4x (2019: 1.1x)
See page 30
See page 30
See page 30
See page 30
See page 30
See page 30
KPIS
NON-FINANCIAL
Net Zero Energy
Health & Safety
Gender balance
Waste recycling
100% (up 10 percentage points)
See page 50
1.2x per 100k hours (-14%)
19% female (unchanged)
67.8% (up 278 bps)
See page 52
See page 52
See page 51
96
Kingspan Group plc Annual Report & Financial Statements 2020 We have innovated a portfolio of advanced
products and solutions for architects and building
owners which enable them to construct buildings
that consume less resources. Future proofing their
investment, generating returns through enhanced
internal space and operational performance, and
facilitating efficient construction through thinner,
lighter and safer to handle materials. Increasingly
we are enhancing our service and solutions through
digitisation. By surfacing our products digitally,
we’re making it easier to find them, specify them,
buy them, build with them and track them.
In the year ended 31 December 2020, the
Group’s research and development expenditure
amounted to €33.1m (2019: €31.9m). Research
and development expenditure is generally written
off in the year in which it is incurred. In 2020 we
launched the award winning nano-prismatic Day-
Lite Kapture Skylight and we continued to progress
development on the following key projects:
g PV solar-integrated PowerPanel® 2.0;
g Fibre-free A1 classified AlphaCore® insulation;
g QuadCore™ 2.0;
g Kooltherm® 200 series;
g Unitised facade solutions;
g Digitalisation of the construction industry; and
g Translucent insulated solutions.
Corporate Governance
The directors are committed to achieving the
highest standards of corporate governance. A
statement describing how Kingspan has applied
the principles of good governance set out in
the UK Corporate Governance Code (July 2018)
is included in the Report of the Nomination &
Governance Committee contained in this Annual
Report. The Corporate Governance Statement is
treated as forming part of this Annual Report.
Code Of Conduct
Kingspan knows that our business success is
inextricably linked to our behaviours, and high
standards of integrity, honesty and compliance.
Kingspan recently implemented a new Code of
Conduct setting out our aspiration to maintain
a culture where our everyday actions are built on
five core principles:
g Clear, ethical and honest behavious and
communications;
g Compliance with the law;
g Respect for the safety and wellbeing
of colleagues;
g Protection of our Group assets; and
g Upholding our commitment to a more
sustainable future.
The Code sets out these fundamental principles
which all directors, officers and employees of
Kingspan are required to adhere to in meeting
those standards. https://www.kingspan.com/
group/commitments/people-and-community/
our-code-of-conduct.
Sustainability
Our mission is to accelerate a net zero emissions
future built environment with the wellbeing of
people and planet at its heart. We do this through
enabling high-performance buildings that can
save more energy, carbon and water. Aligned
with our mission, we aim to make significant
advances in the sustainability of both our business
operations and our products. In 2011 we set
ourselves an almost impossible challenge: by
2020, on an aggregated basis, we committed
to matching 100% of our operational energy
with renewable energy. We are proud to report
that we achieved this goal in 2020. Highlights
of the programme include: a 5 fold increase in
our on-site renewable energy generation; a 35%
reduction in absolute Scope 1 & 2 greenhouse
gas emissions since 2013; and a 36% decrease
in heating and lighting costs per unit of revenue.
In December 2019 we launched the next phase
of our sustainable development, our new 10 year
Planet Passionate programme, setting ourselves
challenging targets in the areas of energy,
carbon, circularity and water. Learn more at
www.kingspan.com under ‘Our Commitments’
and in our Planet Passionate report due to be
published in March 2021.
Accounting Records
The directors are responsible for ensuring that
accounting records, as outlined in Sections 281
to 285 of the Companies Act 2014, are kept by
the Group. The directors have provided
appropriate systems and resources, including
the appointment of suitably qualified accounting
personnel, to maintain adequate accounting
records throughout the Group, in order to ensure
that the requirements of Sections 281 to 285
are complied with. The accounting records of
the Company are maintained at the principal
executive offices located at Dublin Road,
Kingscourt, Co. Cavan, A82 XY31, Ireland.
The European Communities (Takeover Bids
(Directive 2004/25/EC)) Regulations 2006
Structure of the Company’s share capital
At 31 December 2020, the Company had
an authorised share capital comprised of
250,000,000 (2019: 250,000,000) ordinary
shares of €0.13 each and the Company’s total
issued share capital comprised 183,402,238
(2019: 182,785,222) Ordinary Shares, of which
the Company held 1,870,284 (2019: 1,907,826)
Ordinary Shares in treasury. All of these shares
are of the same class. With the exception of
treasury shares which have no voting rights and
no entitlement to dividends, they all carry equal
voting rights and rank for dividends.
97
Directors’ Report Report of the Directors
Shareholding analysis as at 31 December 2020:
Shareholding
range
1 - 1,000
1,001 - 10,000
10,001 - 100,000
100,001 - 1,000,000
Over 1,000,000
Number of
accounts
% of
total
Number of
shares held
2,822
1,414
548
160
36
4,980
56.7
28.4
11.0
3.2
0.7
1,124,850
4,636,904
18,551,192
46,957,446
112,131,846
% of
total
0.6
2.5
10.1
25.6
61.2
100.00
183,402,238
100.00
Details of persons with a significant holding of securities in the Company are disclosed below:
Notification Date
Shareholder
Shares held
%
27/01/2021
14/01/2021
11/07/2019
17/02/2021
07/08/2019
11/02/2021
Eugene Murtagh
Blackrock, Inc.
Allianz Global Investors GmbH
Bailie Gifford & Co.
Ameriprise Financial Inc
FMR LLC
27,018,000
14.88%
12,894,941
8,966,284
8,972,855
7,228,355
5,797,663
7.10%
4.96%
4.94%
4.00%
3.19%
The number of shares held as treasury shares at
the beginning of the year was 1,907,826 (1.04% of
the then issued share capital (excluding treasury
shares)) with a nominal value of €248,017.38. A
total of 37,542 shares (0.02% of the issued share
capital (excluding treasury shares)) with a nominal
value of €4,880.46 were re-issued during the
year consequent to the exercise of share options
under the Kingspan Group Employee Benefit Trust,
leaving a balance held as treasury shares as at 31
December 2020 of 1,870,284 (1.03% of the issued
share capital (excluding treasury shares)) with a
nominal value of €243,136.92.
Further information required by Regulation 21 of the
above Regulations as at 31 December 2020 is set
out in the Shareholder Information section of this
Annual Report.
Directors and Secretary
The directors and secretary of the Company at
the date of this report are as shown in this Annual
Report on pages 60 and 61. Mr Eugene Murtagh will
be retiring as Chairman and non-executive director
following the conclusion of the AGM on 30 April
2021 and will be succeeded by Mr Jost Massenberg.
Mr Peter Wilson retired as an executive director
on 31 December 2020, and Éimear Moloney and
Paul Murtagh will be appointed as a non-executive
directors with effect from 30 April 2021.
Further details of the Board changes are set out
in the Report of the Nomination & Governance
Committee in this Annual Report.
Directors’ & Secretary’s Interests In Shares
The beneficial interests of the directors and
secretary and their spouses and minor children
in the shares of the Company at the end of the
financial year are as follows:
31-Dec-20
31-Dec-19
Eugene Murtagh
27,018,000
27,018,000
Gene Murtagh
1,079,207
1,079,207
Geoff Doherty
Russell Shiels
Peter Wilson*
Gilbert McCarthy
Linda Hickey
Michael Cawley
John Cronin
Bruce McLennan
Jost Massenberg
Anne Heraty
Lorcan Dowd
221,721
200,000
389,376
255,576
5,000
30,600
8,000
10,000
0
2,250
3,188
251,495
200,000
389,376
255,576
5,000
30,600
8,000
10,000
0
2,250
2,919
29,222,918
29,252,423
* Retired as a director on 31 December 2020.
Details of the directors’ and secretary’s share
options at the end of the financial year are set
out in the report of the Remuneration Committee
contained in this Annual Report.
98
Kingspan Group plc Annual Report & Financial Statements 2020
As at 19 February 2021, there have been no changes
in the directors’ and secretary’s interests in shares
since 31 December 2020.
Significant Events Since Year-end
There have been no significant events since the
year-end.
Conflicts Of Interest
None of the directors have any direct or indirect
interest in any contract or arrangement subsisting
at the date hereof which is significant in relation to
the business of the Company or any of its subsidiaries
nor in the share capital of the Company or any of
its subsidiaries.
Financial Instruments
In the normal course of business, the Group has
exposure to a variety of financial risks, including
foreign currency risk, interest rate risk, liquidity
risk, and credit risk. The Company’s financial risk
objectives and policies are set out in Note 19 of
the financial statements.
Political Donations
Neither the Company nor any of its subsidiaries
have made any political donations in the year
which would be required to be disclosed under the
Electoral Act 1997.
Subsidiary Companies
The Group operates from 166 manufacturing sites,
and has operations in over 70 countries worldwide.
The Company’s principal subsidiary undertakings
at 31 December 2020, country of incorporation and
nature of business are listed on pages 163 to 165 of
this Annual Report.
The Company does not have any branches outside
of Ireland.
Outlook
The Board fully endorses the outlook (“Looking
Ahead”) expressed in the Chief Executive’s Review
on pages 18 to 27 of this Annual Report.
Going Concern
The Board has assessed the principal risks and
uncertainties facing the Group, including the ongoing
pandemic and the impact it is having on the global
economy. Kingspan delivers highly efficient, low
carbon building product solutions across a broad
range of building applications and geographies.
The potential exposure to a downturn due to the
pandemic or other significant economic event in any
one construction market is partially mitigated by
the Group’s exposure to a wide set of geographies,
market sectors and building types. Globally there is an
increasing focus on climate change. Kingspan is well
placed to benefit from this trend, that is prompting
an increase in demand for insulation and other energy
efficient products that support energy conservation.
2021 has started strongly with orderbooks ahead of
where they were at the beginning of 2020.
The Group has significant liquidity with cash and
available facilities of €2.1bn. Debt facilities maturing
in 2021 will be repaid from cash. The weighted average
maturity of debt is 6.3 years. Net Debt to EBITDA is
0.4x which is significantly below the covenant ceiling
of 3.5x.
The directors have reviewed budgets and projected
cash flows for a period of not less than 12 months
from the date of this Annual Report, and considered
its net debt position and capital commitments,
available committed banking facilities and other
relevant information including the economic
conditions currently affecting the building
environment generally and the Group’s Strategic
Plan. The budget for the 12 months has been
subject to stress testing which involves flexing a
number of the main assumptions underlying the
forecast in severe but reasonable scenarios.
On the basis of this review the directors have
concluded that there are no material uncertainties
that would cast significant doubt over the
Company’s and the Group’s ability to continue
as a going concern. For this reason, the directors
consider it appropriate to continue to adopt the
going concern basis in preparing the Group and
Company financial statements.
Viability Statement
In accordance with Provision 31 of the 2018 UK
Corporate Governance Code, the directors are
required to assess the prospects of the Company,
explain the period over which we have done so and
state whether we have a reasonable expectation
that the Company will be able to continue in
operation and meet liabilities as they fall due
over this period of assessment. The directors have
assessed the prospects of the Group over the three-
year period to February 2024.
The directors concluded that three years was an
appropriate period for the assessment, having
had regard to:
g the Group’s rolling Strategic Plan which
extends to 2024;
g the Group’s long-term funding commitments
some of which fall to be repaid during the
period;
g the inherent short-cycle nature of the
construction market including the Group’s
order bank and project pipeline; and
g the potential impact of macro-economic
events and political uncertainty in some
regions such as the UK and Middle East.
It is recognised that such future assessments are
subject to a level of uncertainty that increases with
time, and therefore future outcomes cannot be
guaranteed or predicted with certainty.
99
Directors’ Report Report of the Directors The Group Strategic Plan is approved by the Board,
building upon the several divisional management
plans as well as the Group’s strategic goals.
It is based on a number of cautious assumptions
concerning macro growth and stability in our key
markets, and continued access to capital to support
the Group’s ongoing investments. The strategic plan
is subject to stress testing which involves flexing a
number of the main assumptions underlying the
forecast in severe but reasonable scenarios. Such
assumptions are rigorously tested by management
and the directors. It is reviewed and updated
annually and was considered and approved by the
Board at its meeting in October 2020.
In making this assessment, the directors have
also considered the resilience of the Group and its
end-markets during the pandemic. The directors
also note the current cash reserves of the Group,
the weighted average maturity of debt of 6.3
years and the significant headroom on funding
covenants. The directors also considered the other
principal risks facing the business as outlined in the
Risk & Risk Management Report contained in this
Annual Report, and the Group’s ability to manage
those risks. The risks have been identified using
a top-down and bottom-up approach, and their
potential impact was assessed having regard to the
effectiveness of controls in place to manage each
risk. In assessing the prospects of the Group many
potential impacts have been considered as have
the mitigating factors in place.
Based on this assessment the directors have a
reasonable expectation that the Group will be
able to continue in operation and meet its
liabilities as they fall due over the three-year
period of their assessment.
Directors’ Responsibility Statement
Each of the directors whose names and functions
are set out in the Board section of this Annual
Report confirm their responsibility for preparing the
Annual Report and the consolidated and company
financial statements in accordance with applicable
Irish law and regulations.
Company law in Ireland requires the directors to
prepare financial statements for each financial year.
Under that law the directors have to prepare the
consolidated financial statements in accordance
with International Financial Reporting Standards
(IFRSs) as adopted by the European Union (EU).
The directors have elected to prepare the Company
financial statements in accordance with IFRSs as
adopted by the EU and as applied by the Companies
Act 2014. The financial statements are required
by law to give a true and fair view of the assets,
liabilities and financial position of the Group and
Company and of the profit or loss of the Group for
that period. In preparing those financial statements,
the directors are required to:
g select suitable accounting policies and then
apply them consistently;
g make judgements and estimates that are
reasonable and prudent;
g state whether applicable IFRSs have been
followed, subject to any material departures
disclosed and explained in the financial
statements; and
g prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the Company, and the Group as
a whole, will continue in business.
The directors are responsible for keeping accounting
records which disclose with reasonable accuracy at
any time the financial position of the Group and the
Company and which enable them to ensure that the
financial statements comply with the Companies Act
2014 and Article 4 of the IAS Regulation.
They are responsible for safeguarding the assets
of the Group and hence for taking reasonable
steps for the prevention and detection of fraud
and other irregularities.
The directors are responsible for the maintenance
and integrity of the corporate and financial
information on the Company’s website. Legislation
in the Republic of Ireland governing the preparation
and dissemination of financial statements may differ
from legislation in other jurisdictions.
In accordance with Transparency (Directive
2004/109/EC) Regulations 2007 and the
Transparency Rules of the Financial Regulator, the
directors confirm that to the best of their knowledge:
g the Group financial statements and the
Company financial statements, prepared in
accordance with the applicable set of accounting
standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of
the Group and Company; and
g the Report of the Directors includes a fair review
of the development and performance of the
business and the position of the Group and
Company, together with a description of the
principal risks and uncertainties that they face.
They are also satisfied in compliance with Provision
27 of the 2018 UK Corporate Governance Code:
g that the Annual Report and financial statements,
taken as a whole, is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the Group’s
position, business model and strategy.
Directors’ Compliance Statement
The directors acknowledge that they are responsible
for securing the Company’s compliance with its
relevant obligations in accordance with Section
225(2)(a) of the Companies Act 2014 (the “Act”)
(described below as the “Relevant Obligations”).
100
Kingspan Group plc Annual Report & Financial Statements 2020 In accordance with Section 225 (2)(b) of the Act,
the directors confirm that they have:
1. drawn up a Compliance Policy Statement
setting out the Company’s policies (that are, in
the opinion of the directors, appropriate to the
Company) in respect of the compliance by the
Company with its Relevant Obligations;
2. put in place appropriate arrangements or
structures that, in the opinion of the directors,
provide a reasonable assurance of compliance
in all material respects with the Company’s
Relevant Obligations; and
3. during the financial year to which this report
relates, conducted a review of the arrangements
or structures that the directors have put in
place to ensure material compliance with the
Company’s Relevant Obligations.
Audit Information
Each of the directors have taken all the steps
that they should or ought to have taken as
a director in order to make himself or herself
aware of any relevant audit information and to
establish that the Group’s statutory auditors
are aware of that information. So far as
the directors are aware, there is no relevant
information of which the Group’s statutory
auditors are unaware.
Auditor
In accordance with Section 383(2) of the
Companies Act 2014 and following a rigorous
tender process, as detailed in thel Report of
the Audit & Compliance Committee, the
committee recommended EY and the Board
appointed EY on 11 June 2020 as Group external
auditor with effect for the financial year ending
31 December 2020 and EY will continue in office.
On Behalf Of The Board
Gene M. Murtagh,
Chief Executive Officer
Geoff Doherty,
Chief Financial Officer
19 February 2021
USA DYNA Energetics, Texas /
Insulated Panels Designwall
1000 & Designwall 2000
101
Directors’ Report Report of the Directors Financial
Statements
The Netherlands Koninklijke
De Vries Shipyard /
Insulated Panels KS1000 AWP
& Polycarbonate Daylights
102
Kingspan Group plc Annual Report & Financial Statements 2020 Independent Auditor’s Report 104
Consolidated Income Statement 112
Consolidated Statement of Comprehensive Income 112
Consolidated Statement of Financial Position 113
Consolidated Statement of Changes in Equity 114
Consolidated Statement of Cash Flows 116
Company Statement of Financial Position 117
Company Statement of Changes in Equity 118
Company Statement of Cash Flows 118
Notes to the Financial Statements
Statement of Accounting Policies 119
1
Segment Reporting 127
2
Employees 129
3
4
Finance Expense And Finance Income 130
5 Profit For The Year Before Income Tax 131
6 Directors’ Remuneration 131
Income Tax Expense 131
7
Earnings Per Share 132
8
9 Goodwill 133
10 Other Intangible Assets 134
11 Property, Plant and Equipment 135
Investments in Subsidiaries 135
12
Inventories 136
13
14 Trade and Other Receivables 136
15 Trade and Other Payables 137
16 Leases 137
17
18 Deferred Consideration 139
19 Financial Risk Management and Financial Instruments 140
20 Provisions for Liabilities 148
21 Deferred Tax Assets and Liabilities 148
22 Business Combinations 149
23 Share Capital 151
24 Share Premium 151
25 Treasury Shares 151
26 Retained Earnings 151
27 Dividends 152
28 Non-Controlling Interests 152
29 Reconciliation of Net Cash Flow to Movement in Net Debt 152
30 Guarantees and Other Financial Commitments 153
31 Pension Obligations 154
32 Related Party Transactions 157
33 Post Balance Sheet Events 157
34 Approval of Financial Statements 157
Interest Bearing Loans and Borrowings 138
Other Information
Alternative Performance Measures 158
Shareholder Information 161
Principal Subsidiary Undertakings 163
5 Year Summary 168
103
Financial Statements INDEPENDENT AUDITOR’S REPORT
to the Members of Kingspan Group plc
Opinion
Basis for opinion
We have audited the financial
statements of Kingspan Group plc
(‘the Company’) and its subsidiaries
(together ‘the Group’) for the year ended
31 December 2020, which comprise
the Consolidated Income Statement,
the Consolidated Statement of
Comprehensive Income, the Consolidated
Statement of Financial Position, the
Consolidated Statement of Changes in
Equity, the Consolidated Statement of
Cash Flows, the Company Statement
of Financial Position, the Company
Statement of Changes in Equity, the
Company Statement of Cash Flows
and notes to the financial statements,
including the summary of significant
accounting policies set out in Note 1.
The financial reporting framework that
has been applied in their preparation
is Irish law and International Financial
Reporting Standards (IFRS) as adopted
by the European Union and, as regards
the Company financial statements, as
applied in accordance with the provisions
of the Companies Act 2014.
In our opinion:
g the Group financial statements give
a true and fair view of the assets,
liabilities and financial position of the
Group as at 31 December 2020 and
of its profit for the year then ended;
g the Company Statement of Financial
Position gives a true and fair view of
the assets, liabilities and financial
position of the Company as at 31
December 2020;
g the Group financial statements
have been properly prepared in
accordance with IFRS as adopted by
the European Union;
g the Company financial statements
have been properly prepared in
accordance with IFRS as adopted
by the European Union as applied in
accordance with the provisions of the
Companies Act 2014; and
g the Group financial statements and
the Company financial statements
have been properly prepared in
accordance with the requirements
of the Companies Act 2014 and,
as regards the Group financial
statements, Article 4 of the
IAS Regulation.
We conducted our audit in accordance
with International Standards on Auditing
(Ireland) (ISAs (Ireland)) and applicable
law. Our responsibilities under those
standards are further described in the
Auditor’s Responsibilities for the Audit of
the Financial Statements section of our
report. We are independent of the Group
and Company in accordance with ethical
requirements that are relevant to our
audit of financial statements in Ireland,
including the Ethical Standard as applied
to public interest entities issued by the
Irish Auditing and Accounting Supervisory
Authority (IAASA), and we have fulfilled
our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence
we have obtained is sufficient and
appropriate to provide a basis for
our opinion.
Conclusions relating
to going concern
In auditing the financial statements,
we have concluded that the directors’
use of the going concern basis of
accounting in the preparation of the
financial statements is appropriate. Our
evaluation of the directors’ assessment
of the Group and Company’s ability to
continue to adopt the going concern
basis of accounting included:
g We confirmed our understanding
of management’s Going Concern
assessment process and also
engaged with management early to
ensure all key factors were considered
in their assessment;
g We obtained management’s going
concern assessment, including
the cash forecasts and covenant
calculations for the going concern
period which covers a year from the
date of signing this audit opinion;
g We considered the appropriateness
of the methods used to calculate
the cash forecasts and covenant
calculations and determined
through inspection and testing of
the methodology and calculations
that the methods utilised were
appropriately sophisticated to be able
to make an assessment for the entity;
g We considered the mitigating factors
included in the cash forecasts and
covenant calculations that are
within the control of the Group. This
included our review of the Group’s
non-operating cash outflows and
evaluating the Group’s ability to
control these outflows as mitigating
actions if required. We also
verified credit facilities available to
the Group;
g We have performed reverse stress
testing in order to identify what
factors would lead to the Group
utilising all liquidity or breaching the
financial covenant during the going
concern period;
g We reviewed the Group’s going
concern disclosures included in the
annual report in order to assess that
the disclosures were appropriate
and in conformity with the
reporting standards.
We have observed that the impact of the
pandemic has not significantly impacted
the Group which has seen an increase in
trading profit in four of its five divisions
during 2020 while the fifth division’s
trading profit was only marginally behind
the prior year. The Group continued to
generate significant strong operating
cash flows of €639m in 2020. The Group
is not expected to be significantly
impacted by Covid-19 in the going
concern assessment period. Further, the
Group has access to significant liquidity.
The majority of the Group’s long-term
funding commitments (76% or €1.19
billion) matures after February 2024.
At 31 December 2020, the Group has
unrestricted cash and cash equivalents
of €1.3 billion and unused committed
debt facilities of up to €0.75 billion from
a revolving bank credit facility expiring
in June 2022.
Conclusion
Based on the work we have performed,
we have not identified any material
uncertainties relating to events
or conditions that, individually or
collectively, may cast significant doubt
on the Group and Company’s ability to
continue as a going concern for a period
of at least twelve months from when
the financial statements are authorised
for issue.
In relation to the Group and Company’s
reporting on how they have applied the
UK Corporate Governance Code, we
have nothing material to add or draw
attention to in relation to the directors’
statement in the financial statements
about whether the directors considered it
appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the
responsibilities of the directors with
respect to going concern are described
in the relevant sections of this report.
However, because not all future events
or conditions can be predicted, this
statement is not a guarantee as to
the Group’s and Company’s ability to
continue as a going concern.
104
Kingspan Group plc Annual Report & Financial Statements 2020 INDEPENDENT AUDITOR’S REPORT
to the Members of Kingspan Group plc
Overview of our audit approach
First year audit
and transition
g This is the first year we have been appointed as auditor to the Group. We undertook a number
of transitional procedures to prepare for the audit. Before we commenced our audit, we
established our independence of the Group. We used the time prior to commencing our audit
to meet with key members of management to gain an understanding of the business, its
challenges and the environment in which it operates
Key audit matters
g The key audit matters that we identified in the current year were:
Assessment of the carrying value of goodwill
»
» Warranty provisions
Revenue recognition
»
g Key audit matters considered by the Group’s auditor in the prior year were broadly aligned with
the matters identified above, but also included consideration of the Company’s investment
in subsidiaries which we do not consider a key audit matter based on the significant excess of
the Company’s market capitalisation over the carrying value of its subsidiaries in the Company
Statement of Financial Position. Conversely, we identified revenue recognition as a separate key
audit matter where the predecessor did not separately identify this area
Audit scope
g We performed an audit of the complete financial information of 34 components and performed
audit procedures on specific balances for a further 15 components
g We performed procedures at a further 21 components that were specified by the Group audit
team in response to specific risk factors
g The components where we performed full or specific audit procedures accounted for 88% of
Profit before tax from continuing operations, 73% of Revenue and 75% of Total Assets
g ‘Components’ represent business units across the Group considered for audit scoping purposes
Materiality
g Overall Group materiality was assessed to be €23.0m which represents approximately 5% of
Profit before tax from continuing operations. In 2019, the predecessor auditor determined
materiality at €22.3m on the same basis
105
Financial Statements INDEPENDENT AUDITOR’S REPORT
to the Members of Kingspan Group plc
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key observations
communicated to the Audit
& Compliance Committee
Our observations included our
assessment of management’s
impairment model
methodology and for each
CGU model:
g where the discount
rates lay within an
acceptable range
g the headroom level
g analysis of the 5-year
forecast EBIT growth rate
when viewed against
historical and current
year actual growth rates
the results of our
sensitivity analysis
g all disclosures materially
comply with the applicable
requirements of IAS 36
Risk
Our response to the risk
Assessment of the carrying value
of goodwill (2020: €1,478.8m,
2019: €1,506.9m)
Goodwill is subject to impairment testing
on an annual basis and at any time during
the year if an indicator of impairment
exists. Goodwill acquired through business
combination activity has been allocated to
cash-generating units (CGUs). The recoverable
amount of the CGUs is determined based on a
value-in-use computation.
Auditing management’s annual goodwill
impairment test is considered a significant
risk area as it involves key judgements by
management due to the significant estimation
required in determining the fair value of
each CGU especially where an indicator of
impairment exists.
In particular, judgemental aspects include key
assumptions of future profitability, revenue
growth, margins and forecast cash flows, and
the selection of appropriate discount rates, all of
which may be subject to management override.
Refer to The Report of the Audit & Compliance
Committee (page 84); the Statement of
Accounting Policies (page 119); and note 9 of the
Group Financial Statements (page 133).
We evaluated the determination of the
Group’s eleven cash-generating units
(CGUs), and flexed our audit approach
relative to our risk assessment and the
level of excess of value-in-use over the
carrying amount in each CGU. For all
CGUs selected for detailed testing, in
order to exhibit professional scepticism,
we assessed key assumptions in the
models, in particular growth rates, and
forecast future profitability, margins and
cash flows, which we compared against
historic rates achieved and external
analyst forecasts.
Our Group audit team included
valuations specialists who performed an
independent assessment against external
market data of key inputs used by
management in calculating appropriate
discount rates.
We performed a sensitivity analysis on the
discount rate and the long-term growth
rate, to assess the level of excess of value-
in-use over the carrying value in place for
each CGU based on reasonably possible
movements in such assumptions.
We considered the adequacy of
management’s disclosures in respect
of impairment testing and whether the
disclosures appropriately communicate
the underlying sensitivities.
The above procedures were performed by
the Group audit team.
106
Kingspan Group plc Annual Report & Financial Statements 2020 INDEPENDENT AUDITOR’S REPORT
to the Members of Kingspan Group plc
Risk
Our response to the risk
Warranty provisions (2020: €119.0m,
2019: €109.7m)
The Group’s business involves the sale of
products under warranty, some of which use
new technology and applications. Due to the
nature of its product offering, the Group has
significant exposure to warranty claims which
are inherently uncertain in nature. Management
are required to exercise significant judgement
with regard to warranty provision assumptions.
Given the level of judgement required, there is a
significant risk that warranty provisions may be
over or understated.
Changes in these assumptions, which may
be subject to management override, can
materially affect the levels of provisions recorded
in the financial statements due to the higher
estimation uncertainty on the Group’s costs of
repairing and replacing, or otherwise making
reparations for the consequences of, product
that is ascertained to be faulty.
Refer to The Report of the Audit & Compliance
Committee (page 84); the Statement of
Accounting Policies (page 119); and note 20 of
the Group Financial Statements (page 148).
Revenue recognition (2020: €4,576.0m,
2019: €4,659.1m)
The Group has a number of revenue streams
with different revenue recognition policies across
its divisions.
There is a significant risk that revenue may be
recognised in an incorrect period as a result of
management accelerating revenue recognition
to achieve revenue targets or forecasts.
Refer to The Report of the Audit & Compliance
Committee (page 84); the Statement of
Accounting Policies (page 119); and note 2 of the
Group Financial Statements (page 127).
We performed audit procedures that
included, assessing management’s
approach to identifying, recording and
monitoring potential claims; consideration
of the nature and basis of the provision
and the range of potential outcomes;
review and assessment of correspondence
in relation to specific claims; progress
on individual significant claims; and
relevant settlement history of claims and
utilisation of related provisions.
We considered the rollout of new
technology and products and challenged
the Group’s assumptions in relation to
potential failure rates, considering past
failure rates and related settlements
where necessary.
We substantively tested material
movements in the provisions,
including warranty provisions arising
on acquisitions, and considered the
accounting for movements in the
provision balances and the related
disclosures for compliance with IAS 37.
The above procedures are performed both
locally and by the Group audit team.
We performed procedures on revenue at
all relevant in-scope locations, as outlined
in further detail in the ‘Tailoring the
scope’ section below.
Detailed transactional testing of revenue
recognised throughout the year was
performed, commensurate with the
higher audit risk assigned to revenue.
Dependent on the nature of the revenue
recognised at each location, we examined
supporting documentation including
customer contracts, statements of
works or purchase orders, sales invoices,
and cash receipts. In addition, we
performed cut- off procedures, revenue
journal testing and customer balance
confirmations. In some locations data
analytics procedures were also performed.
Key observations
communicated to the
Audit & Compliance
Committee
Our observations
included an outline
of the range of audit
procedures performed,
the key judgements
involved and the results of
our testing.
We also provided our
assessment of the
level of subjectivity
involved in warranty
provision estimates.
Our observations included
an overview of the risk,
outline of the audit
procedures performed, the
judgements we focused
on and the results of
our testing.
107
Financial Statements INDEPENDENT AUDITOR’S REPORT
to the Members of Kingspan Group plc
Our application of materiality
We apply the concept of materiality
in planning and performing the audit,
in evaluating the effect of identified
misstatements on the audit and in
forming our audit opinion.
Materiality
Materiality is the magnitude of an
omission or misstatement that,
individually or in the aggregate, could
reasonably be expected to influence the
economic decisions of the users of the
financial statements. Materiality provides
a basis for determining the nature and
extent of our audit procedures.
We determined materiality for the Group
to be €23.0m (2019: €22.3m), which is
approximately 5% of Group Profit before
tax from continuing operations. Profit
before tax is a key performance indicator
for the Group and is also a key metric
used by the Group in the assessment of
the performance of management. We
therefore considered Profit before tax to
be the most appropriate performance
metric on which to base our materiality
calculation as we consider it to be the
most relevant performance measure to
the stakeholders of the Group.
We determined materiality for the
Company to be €13.7m (2019: €13.2m),
which is approximately 1% of total equity.
During the course of our audit, we
reassessed initial materiality and
considered that no further changes to
materiality were necessary.
Performance materiality
Performance materiality is the
application of materiality at the
individual account or balance level. It
is set at an amount to reduce to an
appropriately low level the probability
that the aggregate of uncorrected
and undetected misstatements
exceeds materiality.
On the basis of our risk assessments,
together with our assessment of the
Group’s overall control environment,
our judgement was that performance
materiality should be set at 50% (2019:
75%) of our planning materiality, namely
€11.5m (2019: €16.7m). We have
set performance materiality at this
percentage based on our assessment of
the risk of misstatements, both corrected
and uncorrected.
Audit work at component locations for
the purpose of obtaining audit coverage
over significant financial statement
accounts is undertaken based on
a percentage of total performance
materiality. The performance materiality
set for each component is based on the
relative scale and risk of the component
to the Group as a whole and our
assessment of the risk of misstatement
at that component. In the current year,
the range of performance materiality
allocated to components was €2.1m
to €3.675m.
Reporting threshold
Reporting threshold is an amount below
which identified misstatements are
considered as being clearly trivial.
We agreed with the Audit & Compliance
Committee that we would report to them
all uncorrected audit differences in excess
of €1.15m, which is set at approximately
5% of planning materiality, as well as
differences below that threshold that,
in our view, warranted reporting on
qualitative grounds.
We evaluate any uncorrected
misstatements against both the
quantitative measures of materiality
discussed above and in light of other
relevant qualitative considerations in
forming our opinion.
An overview of the scope
of our audit report
Tailoring the scope
Our assessment of audit risk, our
evaluation of materiality and our
allocation of performance materiality
determine our audit scope for each entity
within the Group. Taken together, this
enables us to form an opinion on the
Group financial statements.
In determining those components in
the Group at which we perform audit
procedures, we utilised size and risk
criteria in accordance with ISAs (Ireland).
In assessing the risk of material
misstatement to the Group financial
statements, and to ensure we had
adequate quantitative coverage of
significant accounts in the financial
statements, we selected 49 components
covering entities across Europe, the
Americas, the Middle East and Australia,
which represent the principal business
units within the Group.
Of the 49 components selected, we
performed an audit of the complete
financial information of 34 components
(‘full scope components’) which were
selected based on their size or risk
characteristics. For the remaining
15 components (‘specific scope
components’), we performed audit
procedures on specific accounts within
that component that we considered had
the potential for the greatest impact on
the significant accounts in the financial
statements either because of the size of
these accounts or their risk profile.
In addition to the 49 components
discussed above, we selected a further
21 components where we performed
procedures at the component level that
were specified by the Group audit team
in response to specific risk factors. Also,
we performed review procedures at an
additional 16 components.
The reporting components where we
performed either full or specific scope
audit procedures accounted for 88%
of the Group’s Profit before tax from
continuing operations, 73% of the
Group’s Revenue and 75% of the Group’s
Total Assets.
The full scope components contributed
74% of the Group’s Profit before tax
from continuing operations, 62% of
the Group’s Revenue and 64% of the
Group’s Total Assets. The specific scope
components contributed 14% of the
Group’s Profit before tax from continuing
operations, 11% of the Group’s Revenue
and 11% of the Group’s Total Assets. The
components where we either performed
procedures that were specified by the
Group audit team in response to specific
risk factors or review scope procedures
contributed 6% and 4% respectively
of the Group’s Profit before tax from
continuing operations, 1% and 9%
respectively of the Group’s Revenue and
14% and 3% respectively of the Group’s
Total Assets. The audit scope of these
components may not have included
testing of all significant accounts of the
component but will have contributed
to the coverage of significant accounts
tested for the Group.
Of the remaining components, which
together represent 2% of the Group’s
Profit before tax from continuing
operations, none is individually greater
than 2% of the Group’s Profit before
tax from continuing operations. For
these components, we performed
other procedures, including analytical
review, confirmation of cash balances,
testing of consolidation journals and
intercompany eliminations and foreign
currency translation recalculations
to respond to any potential risks of
material misstatement to the Group
financial statements.
108
Kingspan Group plc Annual Report & Financial Statements 2020 INDEPENDENT AUDITOR’S REPORT
to the Members of Kingspan Group plc
The charts below illustrate the coverage obtained from the work performed by our audit teams based on continuing operations.
Profit before tax from
continuing operations
Revenue
Total Assets
74%
14%
6%
4%
2%
Full scope
Specific scope
Specified procedures
Review scope
Other procedures
62%
11%
1%
9%
17%
Full scope
Specific scope
Specified procedures
Review scope
Other procedures
64%
11%
14%
3%
8%
Full scope
Specific scope
Specified procedures
Review scope
Other procedures
Involvement with component teams
In establishing our overall approach to
the Group audit, we determined the type
of work that needed to be undertaken
at each of the components by us, as
the Group audit engagement team, or
by component auditors from other EY
global network firms operating under
our instruction. Of the 34 full scope
components, audit procedures were
performed on four of these directly by
senior members of the Group audit team
and on 30 by component audit teams.
For the specific scope components,
where the work was performed by
component auditors, we determined
the appropriate level of involvement to
enable us to determine that sufficient
audit evidence had been obtained as
a basis for our opinion on the Group as
a whole.
We issued detailed instructions to each
component auditor in scope for the Group
audit, with specific audit requirements
and requests across key areas. The
Group audit team would normally have
completed a programme of planned visits
designed to ensure that senior members of
the Group audit team, including the Audit
Engagement Partner, visit a number of
overseas locations each year. During the
current year’s audit cycle, due to travel
restrictions as a result of the Covid-19
pandemic, no physical visits were possible
by the Group audit team. Instead, the
Group audit team performed virtual
visits in respect of our key component
teams in the U.K., Belgium, the Czech
Republic, Poland and the United States.
These visits involved discussing the audit
approach and any issues arising with the
component team and holding discussions
with local management and attending
closing meetings.
The Group audit team interacted
regularly with the component teams
where appropriate during various stages
of the audit, reviewed and evaluated
the work performed by these teams,
including review of key reporting
documents, in accordance with the
ISAs (Ireland) and were responsible
for the overall planning, scoping and
direction of the Group audit process.
Senior members of the Group audit
team also participated in component
and divisional planning, interim and
closing meeting calls during which
the planning and results of the audits
were discussed with the component
auditors, local management and Group
management. This, together with
the additional procedures performed
at Group level, gave us appropriate
evidence for our opinion on the Group
financial statements.
Conclusions relating to
principal risks, going concern
and viability statement
We have nothing to report in respect of
the following information in the annual
report, in relation to which the ISAs
(Ireland) require us to report to you
whether we have anything material to
add or draw attention to:
g the disclosures in the Annual Report
set out on pages 38 to 41 that
describe the principal risks and
explain how they are being managed
or mitigated;
g the Directors’ confirmation set out
on pages 99 and 100 in the Annual
Report that they have carried out a
robust assessment of the principal
risks facing the Group and the
Company, including those that would
threaten its business model, future
performance, solvency or liquidity;
g the Directors’ statement set out on
page 99 in the Annual Report about
whether the Directors considered
it appropriate to adopt the going
concern basis of accounting in
preparing the financial statements
and the Directors’ identification of
any material uncertainties to the
Group’s and the Company’s ability
to continue to do so over a period of
at least 12 months from the date of
approval of the financial statements;
g whether the Directors’ statement
relating to going concern required
under the Listing Rules of Euronext
Dublin and the UK Listing Authority
is materially inconsistent with our
knowledge obtained in the audit; or
g the Directors’ explanation set out
on pages 99 and 100 in the Annual
Report as to how they have assessed
the prospects of the Group and the
Company, over what period they
have done so and why they consider
that period to be appropriate, and
their statement as to whether they
have a reasonable expectation that
the Group and the Company will be
able to continue in operation and
meet their liabilities as they fall due
over the period of their assessment,
including any related disclosures
drawing attention to any necessary
qualifications or assumptions.
109
Financial Statements
INDEPENDENT AUDITOR’S REPORT
to the Members of Kingspan Group plc
Corporate Governance Statement
We report, in relation to information
given in the Corporate Governance
Statement included in the Director’s
Report and elsewhere in the Annual
Report that:
g In our opinion, based on the work
undertaken during the course of the
audit, the information given in the
Corporate Governance Statement
pursuant to subsections 2(c) and
(d) of section 1373 of the Companies
Act 2014 is consistent with the
Company’s statutory financial
statements in respect of the financial
year concerned and such information
has been prepared in accordance
with the Companies Act 2014. Based
on our knowledge and understanding
of the Company and its environment
obtained in the course of the audit,
we have not identified any material
misstatements in this information;
g In our opinion, based on the work
undertaken during the course of the
audit, the Corporate Governance
Statement contains the information
required by Regulation 6(2) of the
European Union (Disclosure of Non-
Financial and Diversity Information
by certain large undertakings and
groups) Regulations 2017; and
g In our opinion, based on the work
undertaken during the course of
the audit, the information required
pursuant to section 1373(2)
(a),(b),(e) and (f) of the Companies
Act 2014 is contained in the
Corporate Governance Statement.
Other information
The Directors are responsible for the
other information. The other information
comprises the information included in the
Annual Report other than the financial
statements and our auditor’s report
thereon. Our opinion on the financial
statements does not cover the other
information and, except to the extent
otherwise explicitly stated in our report,
we do not express any form of assurance
conclusion thereon.
In connection with our audit of the
financial statements, our responsibility
is to read the other information and, in
doing so, consider whether the other
information is materially inconsistent with
the financial statements or our knowledge
obtained in the audit or otherwise
appears to be materially misstated. If we
identify such material inconsistencies or
apparent material misstatements, we are
required to determine whether there is a
material misstatement in the financial
statements or a material misstatement
of the other information. If, based on the
work we have performed, we conclude
that there is a material misstatement of
this other information, we are required to
report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to
report in regard to our responsibility to
specifically address the following items
in the other information and to report
as uncorrected material misstatements
of the other information where we
conclude that those items meet the
following conditions:
g Fair, balanced and understandable
(set out on page 100) – the
statement given by the directors
that they consider the Annual
Report and financial statements
taken as a whole is fair, balanced
and understandable and provides
the information necessary for
shareholders to assess the Group’s
and the Company’s performance,
business model and strategy, is
materially inconsistent with our
knowledge obtained in the audit; or
g Audit & Compliance Committee
reporting (set out on pages 84 to 89)
– the section describing the work of
the Audit & Compliance Committee
does not appropriately address
matters communicated by us to the
Audit & Compliance Committee or
is materially inconsistent with our
knowledge obtained in the audit; or
g Directors’ statement of compliance
with the UK Corporate Governance
Code (set out on page 97) – the
parts of the Directors’ statement
required under the Listing Rules
relating to the Company’s
compliance with the UK Corporate
Governance Code containing
provisions specified for review by
the auditor in accordance with the
Listing Rules of Euronext Dublin
and the UK Listing Authority do
not properly disclose a departure
from a relevant provision of the UK
Corporate Governance Code.
Opinions on other matters
prescribed by the Companies
Act 2014
Based solely on the work undertaken in
the course of the audit, we report that:
g in our opinion, the information given
in the Directors’ Report, other than
those parts dealing with the non-
financial statement pursuant to the
requirements of S.I. No. 360/2017 on
which we are not required to report
in the current year, is consistent with
the financial statements; and
g in our opinion, the Directors’ Report,
other than those parts dealing
with the non-financial statement
pursuant to the requirements of S.I.
No. 360/2017 on which we are not
required to report in the current year,
has been prepared in accordance
with the Companies Act 2014.
We have obtained all the information
and explanations which we consider
necessary for the purposes of our audit.
In our opinion the accounting records of
the Company were sufficient to permit
the financial statements to be readily
and properly audited and the Company
Statement of Financial Position is in
agreement with the accounting records.
Matters on which we are required
to report by exception
Based on the knowledge and understanding
of the Group and the Company and its
environment obtained in the course of
the audit, we have not identified material
misstatements in the Directors’ Report.
The Companies Act 2014 requires us
to report to you if, in our opinion, the
disclosures of directors’ remuneration
and transactions required by sections 305
to 312 of the Act are not made. We have
nothing to report in this regard.
We have nothing to report in respect of
section 13 of the European Union (Disclosure
of Non-Financial and Diversity Information
by certain large undertakings and groups)
Regulations 2017, which require us to report
to you if, in our opinion, the Company has
not provided in the non-financial statement
the information required by Section 5(2) to
(7) of those Regulations, in respect of year
ended 31 December 2019.
Respective responsibilities
Responsibilities of directors for
the financial statements
As explained more fully in the Directors’
Responsibility Statement set out on page
100, the directors are responsible for the
preparation of the financial statements
and for being satisfied that they give a true
and fair view, and for such internal control
as they determine is necessary to enable
the preparation of financial statements
that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements,
the directors are responsible for assessing
the Group and the Company’s ability to
continue as a going concern, disclosing,
as applicable, matters related to going
concern and using the going concern
basis of accounting unless management
either intends to liquidate the Group or
the Company or to cease operations, or
has no realistic alternative but to do so.
110
Kingspan Group plc Annual Report & Financial Statements 2020 The purpose of our audit work
and to whom we owe our
responsibilities
Our report is made solely to the
Company’s members, as a body, in
accordance with section 391 of the
Companies Act 2014. Our audit work
has been undertaken so that we might
state to the Company’s members
those matters we are required to state
to them in an auditor’s report and for
no other purpose. To the fullest extent
permitted by law, we do not accept or
assume responsibility to anyone other
than the Company and the Company’s
members, as a body, for our audit work,
for this report, or for the opinions we
have formed.
Pat O’Neill
for and on behalf of
Ernst & Young Chartered Accountants
and Statutory Audit Firm
Dublin
19 February 2021
INDEPENDENT AUDITOR’S REPORT
to the Members of Kingspan Group plc
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditor’s
report that includes our opinion.
Reasonable assurance is a high level
of assurance, but is not a guarantee
that an audit conducted in accordance
with ISAs (Ireland) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud
or error and are considered material
if, individually or in the aggregate,
they could reasonably be expected
to influence the economic decisions
of users taken on the basis of these
financial statements.
The objectives of our audit, in respect to
fraud, are; to identify and assess the risks
of material misstatement of the financial
statements due to fraud; to obtain
sufficient appropriate audit evidence
regarding the assessed risks of material
misstatement due to fraud, through
designing and implementing appropriate
responses; and to respond appropriately
to fraud or suspected fraud identified
during the audit. However, the primary
responsibility for the prevention and
detection of fraud rests with both those
charged with governance of the entity
and management.
Our approach was as follows:
g We obtained an understanding of
the legal and regulatory frameworks
that are applicable to the Group
across the various jurisdictions
globally in which the Group operates.
We determined that the most
significant are those that relate to
the form and content of external
financial and corporate governance
reporting including company law,
tax legislation, employment law and
regulatory compliance
g We understood how Kingspan
Group plc is complying with those
frameworks by making enquiries of
management, internal audit, those
responsible for legal and compliance
procedures and the Company
Secretary. We corroborated our
enquiries through our review of the
Group’s Compliance Policies, board
minutes, papers provided to the
Audit & Compliance Committee
and correspondence received from
regulatory bodies
g We assessed the susceptibility of
the Group’s financial statements to
material misstatement, including
how fraud might occur, by meeting
with management, including within
various parts of the business, to
understand where they considered
there was susceptibility to fraud.
We also considered performance
targets and the potential for
management to influence earnings
or the perceptions of analysts. Where
this risk was considered to be higher,
we performed audit procedures to
address each identified fraud risk.
These procedures included testing
manual journals and were designed
to provide reasonable assurance that
the financial statements were free
from fraud or error
g Based on this understanding we
designed our audit procedures to
identify non-compliance with such
laws and regulations. Our procedures
included a review of board minutes
to identify any non-compliance with
laws and regulations, a review of the
reporting to the Audit & Compliance
Committee on compliance with
regulations, enquiries of internal
and external legal counsel
and management
A further description of our
responsibilities for the audit of the
financial statements is located on the
IAASA’s website at: http://www.iaasa.
ie/getmedia/b2389013-1cf6-458b-
9b8f- a98202dc9c3a/Description_of_
auditors_responsibilities_for_audit.
pdf This description forms part of our
auditor’s report.
Other matters which we are
required to address
We were appointed by the Board of
Directors following the AGM held on
1 May 2020 to audit the financial
statements for the year ended 31
December 2020 and subsequent
financial periods. This is our first year
of engagement.
The non-audit services prohibited by
IAASA’s Ethical Standard were not
provided to the Group or Company and
we remain independent of the Group and
Company in conducting our audit.
Our audit opinion is consistent with
the additional report to the Audit &
Compliance Committee.
111
Financial Statements
CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2020
REVENUE
Cost of sales
GROSS PROFIT
Operating costs, excluding intangible amortisation
TRADING PROFIT
Intangible amortisation
OPERATING PROFIT
Finance expense
Finance income
PROFIT FOR THE YEAR BEFORE INCOME TAX
Income tax expense
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS
Attributable to owners of Kingspan Group plc
Attributable to non-controlling interests
EARNINGS PER SHARE FOR THE YEAR
Basic
Diluted
Note
2020
€m
2019
€m
2
2
4
4
5
7
28
8
8
4,576.0
(3,190.5)
4,659.1
(3,304.3)
1,385.5
(877.3)
1,354.8
(857.7)
508.2
(23.5)
484.7
(26.1)
1.1
459.7
(74.9)
384.8
373.6
11.2
384.8
497.1
(21.9)
475.2
(23.7)
2.9
454.4
(76.6)
377.8
369.4
8.4
377.8
206.2c
204.6c
204.4c
202.9c
Gene M. Murtagh
Chief Executive Officer
Geoff Doherty
Chief Financial Officer
19 February 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2020
Profit for the year
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
Effective portion of changes in fair value of cash flow hedges
Items that will not be reclassified subsequently to profit or loss
Actuarial (losses)/gains on defined benefit pension schemes
Income taxes relating to actuarial losses/gains on defined benefit pension schemes
Total other comprehensive income
Total comprehensive income for the year
Attributable to owners of Kingspan Group plc
Attributable to non-controlling interests
Note
2020
€m
2019
€m
384.8
377.8
(129.7)
-
(19.9)
4.1
(145.5)
239.3
238.7
0.6
239.3
31
21
28
61.0
(0.2)
(0.2)
-
60.6
438.4
430.2
8.2
438.4
112
Kingspan Group plc Annual Report & Financial Statements 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2020
ASSETS
NON-CURRENT ASSETS
Goodwill
Other intangible assets
Financial asset
Property, plant and equipment
Right of use assets
Derivative financial instruments
Retirement benefit assets
Deferred tax assets
CURRENT ASSETS
Inventories
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions for liabilities
Lease liabilities
Derivative financial instruments
Interest bearing loans and borrowings
Current income tax liabilities
NON-CURRENT LIABILITIES
Retirement benefit obligations
Provisions for liabilities
Interest bearing loans and borrowings
Lease liabilities
Deferred tax liabilities
Deferred contingent consideration
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Share premium
Capital redemption reserve
Treasury shares
Other reserves
Retained earnings
EQUITY ATTRIBUTABLE TO OWNERS OF KINGSPAN GROUP PLC
NON-CONTROLLING INTERESTS
Note
2020
€m
2019
€m
9
10
11
16
19
31
21
13
14
19
15
20
16
19
17
31
20
17
16
21
18
23
24
25
28
1,478.8
82.7
8.2
972.9
113.0
-
8.0
23.0
2,686.6
505.9
799.6
19.8
1,329.7
2,655.0
5,341.6
854.5
55.7
27.3
0.2
209.6
55.9
1,203.2
53.9
63.3
1,376.1
87.5
32.4
127.6
1,740.8
2,944.0
2,397.6
23.8
95.6
0.7
(11.6)
(356.8)
2,597.2
2,348.9
48.7
1,506.9
93.2
8.2
965.2
121.6
27.3
9.2
14.1
2,745.7
557.6
794.2
-
190.9
1,542.7
4,288.4
768.9
58.0
25.6
0.1
3.1
72.9
928.6
24.3
51.7
848.3
96.7
31.9
186.5
1,239.4
2,168.0
2,120.4
23.8
95.6
0.7
(11.8)
(259.6)
2,221.6
2,070.3
50.1
TOTAL EQUITY
2,397.6
2,120.4
Gene M. Murtagh
Chief Executive Officer
Geoff Doherty
Chief Financial Officer
19 February 2021
113
Financial Statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2020
4
1
1
Share
Capital
Share
Premium
Capital
Redemption
Reserve
Treasury
Shares
Translation
Reserve
€m
€m
€m
€m
€m
Cash
Flow
Hedging
Reserve
€m
Share
Based
Payment
Reserve
€m
Revaluation
Reserve
€m
Put
Option
Liability
Reserve
€m
Retained
Earnings
€m
Total
Attributable
to Owners of
the Parent
€m
Non-
Controlling
Interests
Total
Equity
€m
€m
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
Tax on employee share based compensation
Exercise or lapsing of share options
Repurchase of shares
Dividends
Transactions with non-controlling interests:
Arising on acquisition
Dividends to NCI
Fair value movement
Transactions with owners
Total comprehensive income for the year
Profit for the year
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
Items that will not be reclassified subsequently
to profit or loss
Actuarial losses on defined benefit pension scheme
Income taxes relating to actuarial losses on defined
benefit pension scheme
Total comprehensive income for the year
Balance at 31 December 2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.2
-
-
-
-
-
0.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(119.1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16.0
(0.9)
(13.6)
-
-
-
-
-
1.5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20.4
-
4.4
13.4
-
-
-
-
-
20.4
17.8
16.0
3.5
-
-
-
-
-
20.4
39.9
-
-
-
-
-
16.0
3.5
-
-
-
(0.8)
(1.2)
-
(0.8)
(1.2)
20.4
(2.0)
37.9
-
373.6
373.6
11.2
384.8
-
-
-
-
-
-
-
-
-
(119.1)
-
-
-
-
(10.6) (129.7)
(19.9)
(19.9)
-
(19.9)
-
-
23.8
-
-
95.6
-
-
0.7
-
-
(11.6)
-
(119.1)
(229.9)
-
-
0.3
-
-
40.4
-
-
4.1
-
-
357.8
0.7 (168.3) 2,597.2
4.1
238.7
2,348.9
-
0.6
4.1
239.3
48.7 2,397.6
Kingspan Group plc Annual Report & Financial Statements 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2019
5
1
1
Share
Capital
Share
Premium
Capital
Redemption
Reserve
Treasury
Shares
Translation
Reserve
€m
€m
€m
€m
€m
Cash
Flow
Hedging
Reserve
€m
Share
Based
Payment
Reserve
€m
Revaluation
Reserve
€m
Put
Option
Liability
Reserve
€m
Retained
Earnings
€m
Total
Attributable
to Owners of
the Parent
€m
Non-
Controlling
Interests
Total
Equity
€m
€m
Balance at 1 January 2019
23.7
95.6
0.7
(12.7)
(172.0)
0.5
36.9
0.7 (139.3) 1,916.2
1,750.3
38.6 1,788.9
Transactions with owners recognised directly in equity
Employee share based compensation
Tax on employee share based compensation
Exercise or lapsing of share options
Repurchase of shares
Dividends
Transactions with non-controlling interests:
Arising on acquisition
Fair value movement
Transactions with owners
Total comprehensive income for the year
Profit for the year
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
Items that will not be reclassified subsequently to
profit or loss
Actuarial losses on defined benefit pension scheme
Income taxes relating to actuarial losses on defined benefit
pension scheme
Total comprehensive income for the year
Balance at 31 December 2019
0.1
-
-
-
-
-
-
0.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.5
(0.6)
-
-
-
0.9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
61.2
(0.2)
-
-
-
-
13.1
1.7
(12.8)
-
-
-
2.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2.5
11.3
-
(77.6)
(26.7)
(22.7)
-
-
13.2
4.2
-
(0.6)
(77.6)
(26.7)
(22.7)
-
-
-
-
(0.4)
13.2
4.2
-
(0.6)
(78.0)
3.7
-
(23.0)
(22.7)
(49.4)
(63.8)
(110.2)
3.3
(106.9)
-
369.4
369.4
8.4
377.8
-
-
-
-
-
-
-
(0.2)
-
61.2
-
-
(0.2)
(0.2)
-
61.0
(0.2)
(0.2)
-
(0.2)
-
-
23.8
-
-
95.6
-
-
0.7
-
-
(11.8)
-
61.2
(110.8)
-
(0.2)
0.3
-
-
38.9
-
-
-
-
-
369.2
0.7 (188.7) 2,221.6
-
430.2
2,070.3
-
8.2
-
438.4
50.1 2,120.4
Financial Statements CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2020
OPERATING ACTIVITIES
Profit for the year
Add back non-operating expenses:
Income tax expense
Depreciation of property, plant and equipment
Amortisation of intangible assets
Impairment of non-current assets
Employee equity-settled share options
Finance income
Finance expense
Profit on sale of property, plant and equipment
Movement of deferred consideration
Changes in working capital:
Inventories
Trade and other receivables
Trade and other payables
Other:
Change in provisions
Pension contributions
Cash generated from operations
Income tax paid
Interest paid
Net cash flow from operating activities
INVESTING ACTIVITIES
Additions to property, plant and equipment
Proceeds from disposals of property, plant and equipment
Purchase of subsidiary undertakings (including net debt/cash acquired)
Payment of deferred contingent consideration in respect of acquisitions
Interest received
Net cash flow from investing activities
FINANCING ACTIVITIES
Drawdown of loans
Repayment of loans and borrowings
Payment of lease liability
Proceeds from share issues
Repurchase of shares
Dividends paid to non-controlling interests
Dividends paid
Net cash flow from financing activities
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
Effect of movement in exchange rates on cash held
Cash and cash equivalents at the beginning of the year
Note
2020
€m
2019
€m
384.8
377.8
7
5
10
11
4
4
5
31
22
18
29
29
16
25
28
27
29
74.9
122.0
23.5
2.4
16.0
(1.1)
26.1
(1.1)
(0.7)
38.2
(1.8)
71.3
(2.1)
(1.6)
750.8
(89.7)
(22.6)
638.5
(131.8)
5.7
(46.1)
-
1.0
(171.2)
751.2
(3.4)
(33.7)
-
-
(1.2)
-
712.9
1,180.2
(41.4)
190.9
76.6
114.5
21.9
0.2
13.1
(2.9)
23.7
(3.3)
(0.6)
5.8
57.3
(57.5)
1.7
(1.2)
627.1
(87.2)
(19.5)
520.4
(161.0)
6.7
(142.2)
(59.7)
2.8
(353.4)
7.8
(181.6)
(31.8)
0.1
(0.6)
(0.4)
(77.6)
(284.1)
(117.1)
13.5
294.5
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
1,329.7
190.9
116
Kingspan Group plc Annual Report & Financial Statements 2020 COMPANY STATEMENT OF FINANCIAL POSITION as at 31 December 2020
ASSETS
NON-CURRENT ASSETS
Investments in subsidiaries
CURRENT ASSETS
Amounts owed by group undertakings
Cash and cash equivalents
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Amounts owed to group undertakings
Payables
TOTAL LIABILITIES
NET ASSETS
EQUITY
Equity attributable to owners of Kingspan Group plc
Share capital
Share premium
Capital redemption reserve
Treasury shares
Retained earnings
TOTAL EQUITY
Note
2020
€m
2019
€m
12
14
15
15
23
24
25
26
1,212.8
1,201.4
232.3
0.1
128.7
0.1
1,445.2
1,330.2
71.1
0.2
71.3
61.3
0.2
61.5
1,373.9
1,268.7
23.8
95.6
0.7
(11.6)
1,265.4
23.8
95.6
0.7
(11.8)
1,160.4
1,373.9
1,268.7
In accordance with section 304 of the Companies Act 2014, the Company’s profit for the financial year was €89.2m (2019: €28.6m).
Gene M. Murtagh
Chief Executive Officer
Geoff Doherty
Chief Financial Officer
19 February 2021
117
Financial Statements
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2020
Share
Capital
Share
Premium
€m
€m
Capital
Redemption
Reserves
€m
Treasury
Shares
Retained
Earnings
Shareholders’
Equity
€m
€m
€m
Balance at 1 January 2020
23.8
95.6
0.7
(11.8)
1,160.4
1,268.7
Shares issued
Repurchase of shares
Employee share based compensation
Dividends paid
Transactions with owners
Profit for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.2
-
-
-
0.2
-
(0.2)
-
16.0
-
15.8
89.2
-
-
16.0
-
16.0
89.2
Balance at 31 December 2020
23.8
95.6
0.7
(11.6)
1,265.4
1,373.9
Share
Capital
Share
Premium
€m
€m
Capital
Redemption
Reserves
€m
Treasury
Shares
Retained
Earnings
Shareholders’
Equity
€m
€m
€m
Balance at 1 January 2019
23.7
95.6
0.7
(12.7)
1,196.3
1,303.6
Shares issued
Repurchase of shares
Employee share based compensation
Dividends paid
Transactions with owners
Profit for the year
0.1
-
-
-
0.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(0.6)
1.5
-
0.9
-
-
-
13.1
(77.6)
(64.5)
28.6
0.1
(0.6)
14.6
(77.6)
(63.5)
28.6
Balance at 31 December 2019
23.8
95.6
0.7
(11.8)
1,160.4
1,268.7
COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 December 2020
OPERATING ACTIVITIES
Profit for the year after tax
Net cash flow from operating activities
FINANCING ACTIVITIES
Change in receivables
Change in payables
Repurchase of shares
Exercise or lapsing of share options
Proceeds from share issues
Dividends paid
Net cash flow from financing activities
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
Net increase in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT END OF YEAR
2020
€m
89.2
89.2
(99.0)
9.8
-
-
-
-
(89.2)
0.1
-
0.1
2019
€m
28.6
28.6
(13.3)
61.3
(0.6)
1.5
0.1
(77.6)
(28.6)
0.1
-
0.1
118
Kingspan Group plc Annual Report & Financial Statements 2020 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2020
1 Statement of Accounting Policies
General information
Kingspan Group plc is a public limited
company registered and domiciled in
Ireland. Its registered number is 70576
and the address of its registered office is
Dublin Road, Kingscourt, Co Cavan.
The Group’s principal activities comprise
the manufacture of insulated panels,
rigid insulation boards, architectural
facades, data and flooring technology,
daylighting and ventilation systems and
water and energy solutions. The Group’s
Principal Subsidiary Undertakings are set
out on page 163 to 165.
Statement of compliance
The consolidated and Company financial
statements have been prepared in
accordance with International Financial
Reporting Standards (IFRSs) and
their interpretations issued by the
International Accounting Standards
Board (IASB) as adopted by the EU and
those parts of the Companies Acts 2014,
applicable to companies reporting under
IFRS and Article 4 of the IAS Regulation.
The Company has availed of the
exemption in Section 304 of the
Companies Act 2014 and has not
presented the Company Income
Statement, which forms part of the
Company’s financial statements,
to its members and the Registrar
of Companies.
Basis of preparation
The financial statements have been
prepared on a going concern basis,
under the historical cost convention,
as modified by:
g measurement at fair value of
share based payments at initial
date of award;
g certain derivative financial
instruments and deferred
contingent consideration recognised
and measured at fair value; and
g recognition of the defined benefit
liability as plan assets less the
present value of the defined
benefit obligation.
The accounting policies set out below
have been applied consistently to all
years presented in these financial
statements, unless otherwise stated.
These consolidated financial statements
have been prepared in Euro. The Euro is
the presentation currency of the Group
and the functional and presentation
currency of the Company.
The Group uses a number of Alternative
Performance Measures (APMs)
throughout these financial statements
to give assistance to investors in
evaluating the performance of the
underlying business and to give a better
understanding of how management
review and monitor the business on an
ongoing basis. These APMs have been
defined and explained in more detail on
page 158 to 160.
Changes in Accounting Policies and Disclosures
New and amended standards and interpretations effective during 2020
The following amendments to standards and interpretations are effective for the Group from 1 January 2020 and do not have a
material effect on the results or financial position of the Group:
Effective Date – periods
beginning on or after
Amendments to IFRS 3 Business Combinations – Definition of a business
1 January 2020
Amendments to IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and
measurement and IFRS 7 Financial Instruments: Disclosures – Interest Rate Benchmark Reform
Amendments to IAS 1 Presentation of Financial Statements – Definition of material
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors –
Definition of material
Amendments to References to the Conceptual Framework in IFRS Standards
1 January 2020
1 January 2020
1 January 2020
1 January 2020
The following standard amendment was issued in May 2020 effective for annual reporting periods beginning on or after 1 June 2020
with earlier application permitted and does not have a material effect on the results or financial position of the Group:
Effective Date - periods
beginning on or after
Amendments to IFRS 16 Leases – COVID-19 related rent concessions.
1 June 2020
119
Financial Statements 1 Statement of Accounting Policies (continued)
There are a number of new standards, amendments to standards and interpretations that are not yet effective and have not been
applied in preparing these consolidated financial statements. These new standards, amendments to standards and interpretations
are either not expected to have a material impact on the Group’s financial statements or are still under assessment by the Group.
The principal new standards, amendments to standards and interpretations are as follows:
Effective Date – periods
beginning on or after
IFRS 17 Insurance Contracts
Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or
Non-current
Amendments to IFRS 3 Business Combinations - Reference to the Conceptual Framework
Amendments to IAS 16 Property, Plant and Equipment - Proceeds before Intended Use
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets - Onerous Contracts –
Costs of Fulfilling a Contract
Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a
first-time adopter
Amendments to IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of
financial liabilities
Amendments to IAS 41 Agriculture – Taxation in fair value measurements
Amendments to IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and
measurement, IFRS 7 Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and IFRS 16 Leases
- Interest Rate Benchmark Reform - Phase 2
1 January 2023*
1 January 2023*
1 January 2022*
1 January 2022*
1 January 2022*
1 January 2022*
1 January 2022*
1 January 2022*
1 January 2021
* Not EU endorsed
Basis of consolidation
The Group consolidated financial
statements incorporate the financial
statements of the Company and its
subsidiary undertakings.
Subsidiaries
Subsidiaries are entities controlled by
the Group. The Group controls an entity
when it is exposed to, or has the rights
to, variable returns from its involvement
with the entity and has the ability to
affect those returns through its power
over the entity.
Subsidiaries are included in the Group
financial statements from the date on
which control over the entity is obtained
and cease to be consolidated from the
date on which control is transferred out
of the Group.
Transactions eliminated
on consolidation
Intragroup transactions and balances,
and any unrealised gains arising from
such transactions, are eliminated in
preparing the consolidated financial
statements. Unrealised losses are
eliminated in the same manner as
unrealised gains, but only to the extent
that there is no evidence of impairment.
Segment reporting
The Group’s accounting policy for
identifying segments is based on internal
management reporting information that
is routinely reviewed by the Board of
Directors, which is the Chief Operating
Decision Maker (CODM) for the Group.
The measurement policies used for
the segment reporting under IFRS 8
Operating Segments are the same as
those used in the consolidated financial
statements. Segment results that are
reported to the CODM include items
directly attributable to a segment as
well as those that can be allocated on
a reasonable basis. Unallocated items
comprise mainly corporate assets, finance
income and expenses and tax assets
and liabilities.
The Group has determined that it has five
operating segments: Insulated Panels,
Insulation Boards, Water & Energy, Data
& Flooring and Light & Air.
Revenue recognition
The Group recognises revenue exclusive
of sales tax and trade discounts which
would occur over time or at a point in
time. The Group uses the five-step model
as prescribed under IFRS 15 Revenue from
Contracts with Customers on the Group’s
revenue transactions. This includes
the identification of the contract,
identification of the performance
obligations under same, determination
of the transaction price, allocation of
the transaction price to performance
obligations and recognition of revenue.
Typically, individual performance
obligations are specifically called out in
the contract which allows for accurate
recognition of revenue as and when
performances are fulfilled.
The Group has generally concluded
that it is the principal in its revenue
arrangements, because it typically
controls the goods or services before
transferring them to the customers.
The Group has identified a number
of revenue streams where revenue is
recognised at a point in time and/or over
time. These are detailed below:
Supply only contracts
The point of recognition arises when the
Group satisfies a performance obligation
by transferring control of a promised
good or service to the customer, which
could occur over time or at a point in
time. Revenue is recognised at the time
of delivery at the delivery address (where
Kingspan is to deliver the goods to the
delivery address) or at Kingspan’s works
(where the customer is to collect the
goods) or, if the customer wrongfully fails
to take delivery of the goods, the time
when Kingspan has tendered delivery
of the goods. Invoicing occurs at the
point of final delivery of the product or
performance obligation, at which point
a right is established for unconditional
consideration as control passes to the
customer. Typically, payment terms are
30 days from the end of the month in
which the invoice is raised.
Supply and install projects
If a contract requires the Group to install
or commission a product and the product
can be separated or sold separately from
the installation service and the contract
specifically separates the performance
obligations then the product only supply
element is recognised in line with the
criteria set out in the supply only policy.
The installation element is recognised
over time in line with the milestones set
out in the contract. If there is significant
integration provided for the contract
then a single purchase order is identified
and the revenue is recognised over time.
120
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 1 Statement of Accounting Policies (continued)
Service and maintenance
Where the Group provides a post-sale
Service and Maintenance offering the
revenue associated with this separately
identifiable performance obligation is
initially recognised in deferred income.
The revenue is recognised in the P&L as
each site visit occurs.
Research and Development
Expenditure on research and
development is recognised as an expense
in the period in which it is incurred. An
asset is recognised only when all the
conditions set out in IAS 38 Intangible
Assets are met.
Business Combinations
Business combinations are accounted for
using the acquisition method as at the
date of acquisition.
In accordance with IFRS 3 Business
Combinations, the fair value of
consideration paid for a business
combination is measured as the
aggregate of the fair values at the date
of exchange of assets given and liabilities
incurred or assumed in exchange for
control. The assets, liabilities and
contingent liabilities of the acquired
entity are measured at fair value as at
the acquisition date. When the initial
accounting for a business combination is
determined, it is done so on a provisional
basis with any adjustments to these
provisional values made within 12 months
of the acquisition date and are effective
as at the acquisition date.
To the extent that deferred consideration
is payable as part of the acquisition
cost and is payable after one year
from the acquisition date, the
deferred consideration is discounted
at an appropriate interest rate and,
accordingly, carried at net present value
(amortised cost) in the Consolidated
Statement of Financial Position. The
discount component is then unwound as
an interest charge in the Consolidated
Income Statement over the life of
the obligation.
Where a business combination
agreement provides for an adjustment
to the cost of a business acquired
contingent on future events, other than
put options held by non-controlling
interests, the Group accrues the fair
value of the additional consideration
payable as a liability at acquisition
date. This amount is reassessed at
each subsequent reporting date with
any adjustments recognised in the
Income Statement.
If the business combination is
achieved in stages, the fair value of
the acquirer’s previously held equity
interest in the acquiree is re-measured
at the acquisition date through the
Income Statement.
For each business combination, the
Group elects whether to measure
the non-controlling interests in
the acquiree at fair value or at the
proportionate share of the acquiree’s
identifiable net assets.
Transaction costs are expensed to the
Income Statement as incurred.
Put options held by
non controlling interest shares
Any contingent consideration is
measured at fair value at the date of
acquisition. Where a put option is held
by a non-controlling interest (“NCI”)
in a subsidiary undertaking, whereby
that party can require the Group to
acquire the NCI’s shareholding in the
subsidiary at a future date, but the NCI
retains present access to the results of
the subsidiary, the Group applies the
present access method of accounting to
this arrangement. The Group recognises
a contingent consideration liability at
fair value, being the Group’s estimate
of the amount required to settle that
liability and a corresponding reserve in
equity. Any subsequent remeasurements
required due to changes in fair value of
the put liability estimation are recognised
in the Put Option Liability Reserve
in equity.
Goodwill
Goodwill arises on business combinations
and represents the difference between
the fair value of the consideration and
the fair value of the Group’s share of the
identifiable net assets of a subsidiary at
the date of acquisition.
The Group measures goodwill at the
acquisition date as:
g the fair value of the consideration
transferred; plus
g the recognised amount of any non-
controlling interests in the acquiree;
plus
g if the business combination is
achieved in stages, the fair value of
the pre-existing equity interest in the
acquiree; less
g the net recognised amount
(generally fair value) of the
identifiable assets acquired and
liabilities assumed.
Following initial recognition, goodwill is
measured at cost less any accumulated
impairment losses.
As at the acquisition date, any goodwill
acquired is allocated to each of the cash
generating units expected to benefit
from the combination’s synergies. The
cash generating units represent the
lowest level within the Group which
generate largely independent cash
inflows and these units are not larger
than the operating segments (before
aggregation) determined in accordance
with IFRS 8 Operating Segments.
Goodwill is tested for impairment at the
same level as the goodwill is monitored
by management for internal reporting
purposes, which is at the individual cash
generating unit level.
Goodwill is subject to impairment
testing on an annual basis and at any
time during the year if an indicator
of impairment is considered to exist.
The goodwill impairment tests are
undertaken at a consistent time each
year. Impairment is determined by
assessing the recoverable amount of
the cash generating unit to which the
goodwill relates. Where the recoverable
amount of the cash generating unit
is less than the carrying amount, an
impairment loss is recognised in the
Income Statement. Impairment losses
arising in respect of goodwill are not
reversed following recognition.
On disposal of a subsidiary, the
attributable amount of goodwill, not
previously written off, is included in
the calculation of the profit or loss
on disposal.
Intangible Assets
(other than goodwill)
Intangible assets separately acquired
are capitalised at cost. Intangible
assets acquired as part of a business
combination are capitalised at fair value
as at the date of acquisition.
Following initial recognition, intangible
assets, which have finite useful lives,
are carried at cost or initial fair value
less accumulated amortisation and
accumulated impairment losses.
The amortisation of intangible assets is
calculated to write off the book value of
intangible assets over their useful lives on
a straight-line basis on the assumption of
zero residual value. Amortisation charged
on these assets is recognised in the
Income Statement.
The carrying amount of intangible assets
is reviewed for indicators of impairment
at each reporting date and is subject
to impairment testing when events
or changes of circumstances indicate
that the carrying values may not be
recoverable.
121
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 1 Statement of Accounting Policies (continued)
The estimated useful lives are as follows:
Foreign currency
Customer relationships
Trademarks & Brands
Patents
Technological know-
how and order backlogs
2 - 6 years
2 - 12 years
8 years
1 - 10 years
Amortisation methods, useful lives
and residual values are reviewed at
each reporting date and adjusted
as necessary.
Functional and presentation currency
The individual financial statements of
each Group company are measured
and presented in the currency of the
primary economic environment in which
the Company operates, the functional
currency. The Group financial statements
are presented in Euro, which is the
Company’s functional currency.
Transactions and balances
Transactions in foreign currencies are
translated into the functional currency
at the exchange rates at the date of the
transaction. Monetary assets and liabilities
Exchange rates of material currencies used were as follows:
denominated in foreign currencies are
translated to the functional currency
at the exchange rates at the reporting
date. All currency translation differences
on monetary assets and liabilities are
taken to the Income Statement, except
when deferred in equity as qualifying net
investment hedges, which is recognised in
the Statement of Comprehensive Income.
Goodwill and fair value adjustments
arising on the acquisition of a foreign
entity are initially translated at the
exchange rate at the date of acquisition
and then subsequently these assets
and liabilities are treated as part of a
foreign entity and are translated at
the closing rate.
Euro =
Pound Sterling
US Dollar
Canadian Dollar
Australian Dollar
Czech Koruna
Polish Zloty
Hungarian Forint
Brazilian Real
Average rate
Closing rate
2020
2019
2020
2019
0.889
1.142
1.530
1.655
26.463
4.444
351.21
5.898
0.877
1.120
1.485
1.610
25.669
4.297
325.31
4.415
0.900
1.229
1.567
1.596
26.264
4.589
364.92
6.384
0.852
1.121
1.461
1.600
25.414
4.260
330.52
4.512
Foreign operations
The Income Statement, Statement
of Financial Position and Cash Flow
Statement of Group companies that
have a functional currency different
from that of the Company are translated
as follows:
g Assets and liabilities at each
reporting date are translated at the
closing rate at that reporting date.
g Results and cash flows are translated
at actual exchange rates for the
year, or an average rate where this is
a reasonable approximation.
All resulting exchange differences
are recognised in the Statement of
Comprehensive Income and accumulated
as a separate component of equity, the
Translation Reserve.
On disposal of a foreign operation,
any such cumulative retranslation
differences, previously recognised in
equity, are reclassified to the Income
Statement as part of gain or loss
on disposal.
Inventories
Inventories are stated at the lower of cost
and net realisable value.
Cost is based on the first-in, first-out
principle and includes all expenditure
incurred in acquiring the inventories and
bringing them to their present location
and condition.
g Raw materials are valued at
the purchase price including
transport, handling costs and net
of trade discounts.
g Work in progress and finished goods
are carried at cost consisting of
direct materials, direct labour and
directly attributable production
overheads and other costs incurred
in bringing them to their existing
location and condition.
Net realisable value represents the
estimated selling price less costs to
completion and appropriate marketing,
selling and distribution costs.
A provision is made, where necessary,
in all inventory categories for obsolete,
slow-moving and defective items.
Income tax
Income tax in the Income Statement
represents the sum of current income
tax and deferred tax not recognised in
other comprehensive income or directly
in equity.
Current tax
Current tax represents the expected tax
payable or recoverable on the taxable
profit for the year using tax rates
and laws that have been enacted, or
substantively enacted, at the reporting
date and taking into account any
adjustments from prior years. Liabilities
for uncertain tax treatments are
recognised in accordance with IFRIC 23
Uncertainty Over Income Tax Treatments
and are measured using either the most
likely amount method or the expected
value method – whichever better predicts
the resolution of the uncertainty.
Deferred Tax
Deferred tax is recognised on all
temporary differences at the reporting
date. Temporary differences are defined
as the difference between the tax bases
of assets and liabilities and their carrying
amounts in the consolidated financial
statements. Deferred tax assets and
liabilities are not subject to discounting
and are measured at the tax rates that
are expected to apply in the period in
which the asset is realised or the liability
is settled based on tax rates and tax laws
that have been enacted, or substantively
enacted, at the reporting date.
122
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020
1 Statement of Accounting Policies (continued)
The Group offsets deferred tax assets
and deferred tax liabilities only if it has a
legally enforceable right to setoff current
tax assets and current tax liabilities and
the deferred tax assets and deferred tax
liabilities relate to income taxes levied
by the same taxation authority on either
the same taxable entity or different
taxable entities which intend either to
settle current tax liabilities and assets
on a net basis, or to realise the assets
and settle the liabilities simultaneously,
in each future period in which significant
amounts of deferred tax liabilities
or assets are expected to be settled
or recovered.
Deferred tax liabilities are recognised for
all taxable temporary differences (i.e.
differences that will result in taxable
amounts in future periods when the
carrying amount of the asset or liability is
recovered or settled.
Deferred tax assets are recognised in
respect of all deductible temporary
differences (i.e. differences that give
rise to amounts which are deductible in
determining taxable profits in future periods
when the carrying amount of the asset
or liability is recovered or settled), carry-
forward of unused tax credits and unused
tax losses to the extent that it is probable
that taxable profits will be available against
which to offset these items.
The carrying amounts of deferred tax
assets are subject to review at each
reporting date and reduced to the extent
that future taxable profits are considered
to be inadequate to allow all or part of
any deferred tax asset to be utilised.
Changes in deferred tax assets or
liabilities are recognised as a component
of tax income or expense in profit or loss,
except where they relate to items that
are recognised in other comprehensive
income or directly in equity, in which case
the related deferred tax is also recognised
in other comprehensive income or
equity, respectively.
Grants
Grants are initially recognised as deferred
income at their fair value when there is a
reasonable assurance that the grant will
be received, and all relevant conditions
have been complied with.
Capital grants received and receivable in
respect of property, plant and equipment
are treated as a reduction in the cost
of that asset and thereby amortised to
the Income Statement in line with the
underlying asset.
Revenue grants are recognised in
the Income Statement to offset the
related expenditure.
Investments in subsidiaries
Investments in subsidiaries held by the
Parent Company are carried at cost less
accumulated impairment losses.
Property, Plant and Equipment
Property, plant and equipment is
measured at cost less accumulated
depreciation and accumulated
impairment losses.
Depreciation is provided on a straight
line basis at the rates stated below,
which are estimated to reduce each
item of property, plant and equipment
to its residual value by the end of its
useful life:
Freehold buildings
Plant and machinery
Fixtures and fittings
Computer equipment
Motor vehicles
2% to 2.5%
on cost
5% to 20%
on cost
10% to 20%
on cost
12.5% to 33%
on cost
10% to 25%
on cost
Freehold land is stated at cost and is
not depreciated.
The estimated useful lives and residual
values of property, plant and equipment
are determined by management at
the time the assets are acquired and
subsequently, re-assessed at each
reporting date. These lives are based on
historical experience with similar assets
across the Group.
In accordance with IAS 36 Impairment
of Assets, the carrying values of
property, plant and equipment
are reviewed at each reporting
date to determine whether there is
any indication of impairment. An
impairment loss is recognised whenever
the carrying value of an asset or
its cash generating unit exceeds its
recoverable amount.
Impairment losses are recognised in
the Income Statement. Following the
recognition of an impairment loss,
the depreciation charge applicable to
the asset or cash-generating unit is
adjusted to allocate the revised carrying
amount, net of any residual value, over
the remaining useful life.
Assets under construction are carried
at cost less any recognised impairment
loss. Depreciation of these assets
commences when the assets are ready
for their intended use.
Leases
The Group recognises right of use
assets representing its right to use the
underlying assets and lease liabilities
representing its obligation to make lease
payments at the lease commencement
date. The right of use assets are initially
measured at cost, and subsequently
measured at cost less accumulated
depreciation and impairment losses.
Depreciation is provided on a straight
line basis over the period of the lease, or
useful life if shorter.
Lease liabilities are measured at the
present value of the future lease
payments, discounted at the Group’s
incremental borrowing rate. Subsequent
to the initial measurement, the
lease liabilities are increased by the
interest cost and reduced by lease
payments made.
The right of use assets and lease
liabilities are remeasured when there are
changes in the assessment of whether
an extension option is reasonably
certain to be exercised or a termination
option is reasonably certain not to be
exercised or where there is a change in
future lease payments as a result of a
change in an index or rate. The Group
applies judgement when determining
the lease term where renewal and
termination options are contained in
the lease contract.
The Group applies the short-term lease
recognition exemption to leases that
have a lease term of 12 months or less
from the commencement date. The
Group also applies the lease of low-value
assets recognition exemption to leases
of equipment that are considered to be
low value. Lease payments on short-term
leases and leases of low-value assets are
recognised as an expense on a straight-
line basis over the term of the lease.
Retirement benefit obligations
The Group operates defined contribution
and defined benefit pensions schemes.
Defined contribution pension schemes
The costs arising on the Group’s defined
contribution schemes are recognised in
the Income Statement in the period in
which the related service is provided.
The Group has no legal or constructive
obligation to pay further contributions
in the event that these plans do
not hold sufficient assets to provide
retirement benefits.
123
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 1 Statement of Accounting Policies (continued)
Defined benefit pension schemes
The Group’s net obligation in respect
of defined benefit plans is calculated
separately for each plan by estimating
the amount of future benefit that
employees have earned in return for their
service in the current and prior periods,
discounting that amount and deducting
the fair value of any plan assets.
The calculation is performed annually by
a qualified actuary using the projected
unit credit method. When the calculation
results in a benefit to the Group, the
recognised asset is limited to the total of
any unrecognised past service costs and
the present value of economic benefits
available in the form of any future
refunds from the plan or reductions in
future contributions to the plan.
Remeasurements of the net defined
benefit liability or asset, which comprise
actuarial gains and losses, the return
on plan assets (excluding interest)
and the effect of the asset ceiling,
are recognised immediately in other
comprehensive income.
The Group determines the net interest
expense on the net defined benefit
liability or asset by applying the discount
rate used to measure the defined benefit
obligation at the beginning of the annual
period to the then net defined benefit
liability or asset, taking into account
any changes in the net defined benefit
liability or asset during the period as
a result of contributions and benefit
payments. Net interest expense and
other expenses related to defined benefit
plans are recognised in profit or loss.
When the benefits of a plan are changed
or when a plan is curtailed, the resulting
change in benefit that relates to past
service or the gain or loss on curtailment
is recognised immediately in profit or
loss. The Group recognises gains and
losses on the settlement of a defined
benefit plan when the settlement occurs.
Provisions
A provision is recognised in the
Statement of Financial Position when
the Group has a present constructive
or legal obligation as a result of a past
event and it is probable that an outflow
of economic benefit will be required to
settle the obligation and the amount of
the obligation can be estimated reliably.
A specific provision is created when a claim
has actually been made against the Group
or where there is a known issue at a known
customer’s site, both relating to a product
or service supplied in the past. In addition,
a risk-based provision is created where
future claims are considered incurred but
not reported. The warranty provision is
based on historical warranty data and a
weighting of all possible outcomes against
their associated probabilities.
Specific provisions will generally be
aged as a current liability, reflecting the
assessment that a current liability exists
to replace or repair product sold on foot
of an accepted valid warranty issue.
Only where the liability is reasonably
certain not to be settled within the next
12 months, will a specific provision be
categorised as a long-term obligation.
Risk-based provisions will generally be
aged as a non-current liability, reflecting
the fact that no warranty claim has yet
been made by the customer.
Provisions which are not expected to
give rise to a cash outflow within 12
months of the reporting date are, where
material, determined by discounting
the expected future cash flows. The
unwinding of the discount is recognised
as a finance cost.
Dividends
Final dividends on ordinary shares are
recognised as a liability in the financial
statements only after they have been
approved at the Annual General Meeting
of the Company. Interim dividends on
ordinary shares are recognised when
they are paid.
Cash and cash equivalents
Cash and cash equivalents principally
comprise cash at bank and in hand and
short term deposits with an original
maturity of three months or less.
Derivative financial instruments
Derivative financial instruments, principally
interest rate and currency swaps, are used
to hedge the Group’s foreign exchange and
interest rate risk exposures.
Derivative financial instruments are
recognised initially at fair value and
thereafter are subsequently remeasured
at their fair value. Fair value is the
amount for which an asset could be
exchanged, or a liability settled, between
knowledgeable willing parties in an
arm’s length transaction. The fair value
of these instruments is the estimated
amount that the Group would receive
or pay to terminate the swap at the
reporting date, taking into account
current interest and currency exchange
rates and the current creditworthiness of
the swap counterparties.
The Group designates all of its derivatives
in one or more of the following types
of relationships:
i.
Fair value hedge: Hedges the
exposure to movements in fair value
of recognised assets or liabilities that
are attributable to hedged risks.
ii. Cash flow hedge: Hedges the
Group’s exposures to fluctuations
in future cash flow derived from
a particular risk associated with
recognised assets or liabilities or
forecast transactions.
iii. Net investment hedge: Hedges the
exchange rate fluctuations of a net
investment in a foreign operation.
At inception of the transaction, the
Group documents the relationship
between the hedging instruments
and hedged items, including the risk
management objectives and strategy in
undertaking the hedge transactions. The
Group also documents its assessment,
both at inception and on an ongoing
basis, as to whether the derivatives that
are used in hedging transactions are
highly effective in offsetting changes in
fair values or cash flows of hedged items.
Fair value hedge
Any gain or loss resulting from the re-
measurement of the hedging instrument
to fair value is reported in the Income
Statement, together with any changes in
the fair value of the hedged asset or liability
that are attributable to the hedged risk.
The gains or losses of a hedging instrument
that are in hedge relationships with
borrowings are included within Finance
Income or Finance Expense in the Income
Statement. In the case of the related
hedged borrowings, any gain or loss on
the hedged item which is attributable to
the hedged risk is adjusted against the
carrying amount of the hedged item and
is also included within Finance Income or
Finance Expense in the Income Statement.
If the hedge no longer meets the criteria
for hedge accounting, the adjustment
to the carrying amount of the hedged
item is amortised on an effective interest
basis to the Income Statement with the
objective of achieving full amortisation
by maturity of the hedged item.
124
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 1 Statement of Accounting Policies (continued)
Cash flow hedge
The effective part of any gain or loss on
the derivative financial instrument is
recognised in other comprehensive income
and presented in the Cash Flow Hedge
Reserve in equity with the ineffective
portion being recognised within Finance
Income or Finance Expense in the Income
Statement. If a hedge of a forecasted
transaction subsequently results in the
recognition of a financial asset or a
financial liability, the associated gains and
losses that were recognised directly in other
comprehensive income are reclassified into
profit or loss in the same period or periods
during which the asset acquired or liability
assumed affects profit or loss. For cash
flow hedges, other than those covered by
the preceding statements, the associated
cumulative gain or loss is removed
from other comprehensive income and
recognised in the Income Statement in the
same period or periods during which the
hedged forecast transaction affects profit
or loss. The ineffective part of any gain
or loss is recognised immediately in the
Income Statement.
Hedge accounting is discontinued when
a hedging instrument expires or is sold,
terminated or exercised, or no longer
qualifies for hedge accounting. The
cumulative gain or loss at that point
remains in other comprehensive income
and is recognised when the transaction
occurs. If a hedged transaction is no
longer expected to occur, the net
cumulative gain or loss recognised in other
comprehensive income is transferred to
the Income Statement in the period.
Net investment hedge
Any gain or loss on the hedging
instrument relating to the effective
portion of the hedge is recognised
in other comprehensive income and
presented in the Translation Reserve
in equity. The gain or loss relating to
the ineffective portion is recognised
immediately in either Finance Income
or Finance Expense in the Income
Statement. Cumulative gains or losses
remain in equity until disposal of the net
investment in the foreign operation at
which point the related differences are
reclassified to the Income Statement as
part of the overall gain or loss on sale.
Financial Assets
On initial recognition, a financial asset is
classified as measured at amortised cost
and subsequently measured using the
effective interest rate (EIR) method and
subject to impairment. Financial assets
may also be initially measured at fair
value with any movement being reflected
through other comprehensive income or
the income statement.
On initial recognition of an equity
investment that is not held for
trading, the Group may irrevocably
elect to present subsequent
changes in the investment’s fair
value in other comprehensive
income. This election is made on an
investment-by-investment basis.
The Group applies the simplified
approach for expected credit losses
(ECL) under IFRS 9 Financial Instruments,
which requires expected lifetime
losses to be recognised from initial
recognition of receivables. Under IFRS
9 Financial Instruments, the Group
uses an allowance matrix to measure
Expected Credit Loss (ECL) of trade
receivables from customers. Loss rates
are calculated using a “roll rate” method
based on the probability of a receivable
progressing through successive chains
of non-payment to write-off. The rates
are calculated at a business unit level
which reflects the risks associated
with geographic region, age, mix of
customer relationship and type of
product purchased.
Financial Liabilities
Financial liabilities held for trading are
measured at fair value through the profit
and loss, and all other financial liabilities
are measured at amortised cost unless
the fair value option is applied.
Finance Income
Finance income comprises interest
income on funds invested and any
gains on hedging instruments that are
recognised in the Income Statement.
Interest income is recognised as it
accrues using the effective interest
rate method.
Finance Expense
Finance expense comprises interest
payable on borrowings calculated using
the effective interest rate method,
fair value gains and losses on hedging
instruments that are recognised in the
Income Statement, the net finance cost
of the Group’s defined benefit pension
scheme, lease interest and the discount
component of the deferred consideration
which is unwound as an interest charge
in the Income Statement over the life of
the obligation.
Borrowing costs
Borrowing costs directly attributable to
qualifying assets, as defined in IAS 23
Borrowing costs, are capitalised during
the period of time that is necessary to
complete and prepare the asset for its
intended use. Other borrowing costs are
expensed to the Income Statement in the
period in which they are incurred.
Share-Based Payment Transactions
The Group grants equity settled share
based payments to employees through
the Performance Share Plan and the
Deferred Bonus Plan.
The fair value of these equity settled
transactions is determined at grant
date and is recognised as an employee
expense in the Income Statement, with
the corresponding increase in equity,
on a straight line basis over the vesting
period. The fair value at the grant date
is determined using a combination of
the Monte Carlo simulation technique
and a Black Scholes model, excluding the
impact of any non-market conditions.
Non-market vesting conditions are
included in the assumptions about the
number of options that are expected to
vest. At each reporting date, the Group
revises its estimates of the number
of options that are likely to vest as
a result of non-market conditions.
Any adjustment from this revision is
recognised in the Income Statement with
a corresponding adjustment to equity.
Where the share based payments give
rise to the issue of new share capital,
the proceeds received by the Company
are credited to share capital (nominal
value) and share premium (where
applicable) when the share entitlements
are exercised. Where the share-based
payments give rise to the re-issue of
shares from treasury shares, the proceeds
of issue are credited to share premium.
The Group does not operate any cash-
settled share-based payment schemes or
share-based payment transactions with
cash alternatives as defined in IFRS 2.
Treasury Shares
Where the Company purchases its own
equity share capital, the consideration
paid is deducted from total shareholders’
equity and classified as treasury shares
until such shares are cancelled or reissued.
Where such shares are subsequently sold
or reissued, any consideration received
is included in share premium account.
No gains or losses are recognised on the
purchase, sale, cancellation or issue of
treasury shares.
Non-controlling interests
Non-controlling interests represent the
portion of the equity of a subsidiary not
attributable either directly or indirectly to
the parent company and are presented
separately in the Income Statement
and within equity in the Statement of
Financial Position, distinguished from
shareholders’ equity attributable to
owners of the parent company.
125
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 1 Statement of Accounting Policies (continued)
Accounting Estimates
and Judgements
In the process of applying the Group’s
accounting policies, as set out on pages
119 to 126, management are required to
make estimates and judgements that
could materially affect the Group’s reported
results or net asset position.
The preparation of the Group’s consolidated
financial statements requires management
to make judgements, estimates and
assumptions that effect the reported
amounts of revenues, expenses, assets
and liabilities, and the accompanying
disclosures, and the disclosure of
contingent liabilities. Uncertainty about
these assumptions and estimates could
result in outcomes that require a material
adjustment to the carrying amount of
assets or liabilities in future periods.
The areas where key estimates and
judgements were made by management
and are material to the Group’s reported
results or net asset position, are
as following:
Impairment (Note 9)
The Group is required to review assets for
objective evidence of impairment.
It does this on the basis of a review of the
budget and rolling 5 year forecasts (4 year
strategic plan, as approved by the Board,
plus year 5 forecasted by management),
which by their nature are based on a series
of assumptions and estimates.
The Group has performed impairment
tests on those cash generating units which
contain goodwill, and on any assets where
there are indicators of impairment. The key
assumptions associated with these reviews
are detailed in Note 9. This is an area of
estimation and judgement.
Guarantees & warranties (Note 20)
Certain products carry formal guarantees
of satisfactory functional and aesthetic
performance of varying periods following
their purchase. Local management
evaluate the constructive or legal
obligation arising from customer feedback
and assess the requirement to provide for
any probable outflow of economic benefit
arising from a settlement. This is an area of
estimation and judgement.
Recoverability of trade receivables
(Note 14)
The Group provides credit to customers
and as a result there is an associated risk
that the customer may not be able to pay
outstanding balances. Trade receivables
are considered for impairment on a case by
case basis, when they are past due at the
reporting date or when objective evidence
is received that a specific counterparty
may default.
Under IFRS 9 the Group uses an allowance
matrix to measure Expected Credit Loss
(ECL) of trade receivables from customers.
Loss rates are calculated using a “roll rate”
method based on the probability of a
receivable progressing through successive
chains of non-payment to write-off. The
rates are calculated at a business unit level
which reflects the risks associated with
geographic region, age, mix of customer
relationship and type of product purchased.
This is an area of estimation.
Measurement of deferred contingent
consideration and put option liabilities
related to business combinations require
assumptions to be made regarding profit
forecasts and discount rates used to arrive
at the net present value of the potential
obligations. The Group has considered
all available information in arriving at
the estimate of liabilities associated
with deferred contingent consideration
obligations. This is an area of estimation
and judgement.
Valuation of inventory (Note 13)
Income taxes (Note 7)
Inventories are measured at the lower of
cost and net realisable value. The Group’s
policy is to hold inventories at original cost
and create an inventory provision where
evidence exists that indicates net realisable
value is below cost for a particular item
of inventory. Damaged, slow-moving or
obsolete inventory are typical examples of
such evidence. This is an area of estimation.
Leases (Note 16)
The Group has applied judgement to
determine the lease term of contracts that
include termination and extension options.
If the Group is reasonably certain to
exercise such options, the relevant amount
of right of use assets and lease liabilities
are recognised.
The Group has also applied judgement in
determining the incremental borrowing
rates. The incremental borrowing rate is
the rate of interest that a lessee would
expect to incur on funds borrowed over
a similar term and security to obtain a
comparable value to the right of use asset
in the relevant economic environment. The
Group estimates the IBR using observable
inputs (such as market interest rates) when
available and makes certain entity-specific
estimates (such as country risk and entity
specific credit rating) as required.
Business Combinations (Note 22)
Business combinations are accounted
for using the acquisition method which
requires that the assets and liabilities
assumed are recorded at their respective
fair values at the date of acquisition. The
application of this method requires certain
estimates and assumptions relating, in
particular, to the determination of the fair
values of the acquired assets and liabilities
assumed at the date of acquisition.
For intangible assets acquired, the Group
bases valuations on expected future cash
flows. This method employs a discounted
cash flow analysis using the present value
of the estimated cash flows expected to
be generated from these intangible assets
using appropriate discount rates and
revenue forecasts. The period of expected
cash flows is based on the expected useful
life of the intangible asset acquired.
The Group is subject to income tax in
numerous jurisdictions. Significant
judgement is required in determining the
worldwide provision for income taxes.
There are many transactions for which the
ultimate tax determination is uncertain.
The Group recognises liabilities based on
estimates of whether additional taxes
will be due. Once it has been concluded
that a liability needs to be recognised, the
liability is measured based on the tax laws
that have been enacted or substantially
enacted at the end of the reporting period.
The amount shown for current taxation
includes an estimate for uncertain tax
treatments where the Group considers it
probable that uncertain tax treatments will
not be accepted by tax authorities and the
estimate is measured using either the most
likely amount method or the expected value
method, as appropriate, prescribed by IFRIC
23. Where the final tax outcome of these
matters is different from the amounts that
were initially estimated, such differences
will impact the income tax and deferred
tax provisions in the period in which such
determination is made.
Deferred tax assets are recognised to
the extent that it is probable that future
taxable profit will be available against
which the unused tax losses and unused
tax credits can be utilised. The Group
estimates the most probable amount of
future taxable profits, using assumptions
consistent with those employed in
impairment calculations, and taking into
consideration applicable tax legislation in
the relevant jurisdiction. These calculations
also require the use of estimates.
Deferred Contingent Consideration
(Note 18)
Measurement of put option liabilities
require assumptions to be made regarding
profit forecasts and discount rates used
to arrive at the net present value of the
potential obligations. The Group has
considered all available information
in arriving at the estimate of liabilities
associated with put option obligations.
This is an area of estimation.
126
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 2 Segment Reporting
In identifying the Group’s operating segments, management based its decision on the product supplied by each segment and the
fact that each segment is managed and reported separately to the Chief Operating Decision Maker. These operating segments are
monitored and strategic decisions are made on the basis of segment operating results.
Operating segments
The Group has the following five operating segments:
Insulated Panels
Insulation Boards
Light & Air
Water & Energy
Data & Flooring
Manufacture of insulated panels, structural framing and metal facades.
Manufacture of rigid insulation boards, building services insulation and engineered timber systems.
Manufacture of daylighting, smoke management and ventilation systems.
Manufacture of energy and water solutions and all related service activities.
Manufacture of data centre storage solutions and raised access floors.
Analysis by class of business
Segment revenue and disaggregation of revenue
Insulated
Panels
€m
Insulation
Boards
€m
Light
& Air
€m
Water &
Energy
€m
Data &
Flooring
€m
Total
€m
Total revenue – 2020
Total revenue – 2019
Disaggregation of revenue 2020
Point of Time
Over Time & Contract
Disaggregation of revenue 2019
Point of Time
Over Time & Contract
2,917.4
3,031.9
2,908.4
9.0
2,917.4
3,025.2
6.7
3,031.9
787.0
876.9
759.8
27.2
787.0
834.4
42.5
876.9
445.5
327.7
227.3
218.2
445.5
202.3
125.4
327.7
202.7
208.1
200.9
1.8
202.7
207.4
0.7
208.1
223.4
214.5
4,576.0
4,659.1
199.8
23.6
223.4
186.1
28.4
214.5
4,296.2
279.8
4,576.0
4,455.4
203.7
4,659.1
The disaggregation of revenue by geography is set out in more detail on page 129.
The segments specified above capture the major product lines relevant to the Group.
The combination of the disaggregation of revenue by product group, geography and the timing of revenue recognition capture the
key categories of disclosure with respect to revenue. Typically, individual performance obligations are specifically called out in the
contract which allow for accurate recognition of revenue as and when performances are fulfilled. Given the nature of the Group’s
product set, customer returns are not a significant feature of our business model. No further disclosures are required with respect to
disaggregation of revenue other than what has been presented in this note.
Inter-segment transfers are carried out at arm’s length prices and using an appropriate transfer pricing methodology. As inter-
segment revenue is not material, it is not subject to separate disclosure in the above analysis. For the purposes of the segmental
analysis, corporate overheads have been allocated to each division based on their respective revenue for the year.
Segment result (profit before net finance expense)
Insulated
Panels
€m
Insulation
Boards
€m
Light
& Air
€m
Water &
Energy
€m
Data &
Flooring
€m
Trading profit – 2020
Intangible amortisation
321.3
(13.7)
110.1
(4.6)
Operating profit – 2020
307.6
105.5
Trading profit – 2019
Intangible amortisation
Operating profit - 2019
Net finance expense
Profit for the year before tax
Income tax expense
Net profit for the year
316.1
(13.1)
117.1
(4.9)
303.0
112.2
31.2
(4.1)
27.1
25.2
(2.9)
22.3
16.3
(0.9)
15.4
14.2
(0.9)
13.3
Total
2020
€m
508.2
(23.5)
29.3
(0.2)
29.1
484.7
24.5
(0.1)
24.4
(25.0)
459.7
(74.9)
384.8
Total
2019
€m
497.1
(21.9)
475.2
(20.8)
454.4
(76.6)
377.8
127
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 2 Segment Reporting (continued)
Segment assets
Insulated
Panels
€m
Insulation
Boards
€m
Light
& Air
€m
Water &
Energy
€m
Data &
Flooring
€m
Total
2020
€m
Total
2019
€m
Assets – 2020
Assets – 2019
2,350.4
2,495.9
787.1
832.2
474.0
348.0
183.5
191.8
174.1
188.2
Derivative financial instruments
Cash and cash equivalents
Deferred tax asset
3,969.1
19.8
1,329.7
23.0
4,056.1
27.3
190.9
14.1
Total assets as reported in the Consolidated Statement of Financial Position
5,341.6
4,288.4
Segment liabilities
Insulated
Panels
Insulation
Boards
€m
Light
& Air
€m
Water &
Energy
Data &
Flooring
€m
€m
€m
Total
2020
€m
Total
2019
€m
Liabilities – 2020
Liabilities – 2019
(778.8)
(831.4)
(192.9)
(194.4)
(184.1)
(80.2)
(72.8)
(64.2)
(41.2)
(41.5)
(1,269.8)
Interest bearing loans and borrowings (current and non-current)
Derivative financial instruments (current and non-current)
Income tax liabilities (current and deferred)
(1,585.7)
(0.2)
(88.3)
(1,211.7)
(851.4)
(0.1)
(104.8)
Total liabilities as reported in the Consolidated Statement of Financial Position
(2,944.0)
(2,168.0)
Other segment information
Insulated
Panels
€m
Insulation
Boards
€m
Light
& Air
€m
Water &
Energy
€m
Data &
Flooring
€m
Capital investment – 2020 *
Capital investment – 2019 *
Depreciation included in segment result – 2020
Depreciation included in segment result – 2019
Non-cash items included in segment result – 2020
Non-cash items included in segment result – 2019
92.5
135.7
(73.4)
(70.9)
(9.0)
(7.6)
17.4
36.8
(23.9)
(24.2)
(3.2)
(2.7)
40.6
11.8
(12.9)
(8.3)
(1.1)
(0.7)
2.8
4.5
(6.5)
(6.1)
(1.0)
(0.8)
3.7
4.0
(5.3)
(5.0)
(1.7)
(1.3)
Total
€m
157.0
192.8
(122.0)
(114.5)
(16.0)
(13.1)
* Capital investment also includes fair value of property, plant and equipment and intangible assets acquired in business combinations.
128
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020
2 Segment Reporting (continued)
Analysis of segmental data by geography
Income Statement Items
Revenue – 2020
Revenue – 2019
Statement of Financial Position Items
Non-current assets – 2020 *
Non-current assets – 2019 *
Other segmental information
Capital investment – 2020
Capital investment – 2019
Western &
Southern
Europe
€m
Central &
Northern
Europe
€m
Americas
Britain
Rest of
World
Total
€m
€m
€m
€m
1,633.6
1,546.1
1,018.9
993.9
70.2
77.2
997.8
960.0
520.1
486.7
42.2
44.4
916.0
990.9
546.4
605.4
32.1
49.1
743.6
848.4
388.8
410.6
10.8
18.1
285.0
313.7
4,576.0
4,659.1
189.4
207.7
2,663.6
2,704.3
1.7
4.0
157.0
192.8
* Total non-current assets excluding derivative financial instruments and deferred tax assets.
The Group has a presence in over 70 countries worldwide. Revenues, non-current assets and capital investment (as defined in IFRS
8) attributable to the country of domicile were €150.7m (2019: €176.0m), €72.6m (2019: €64.0m) and €16.4m (2019: €15.2m)
respectively. All foreign countries or regions of operation are as set out above and specific regions are highlighted separately on
the basis of materiality. The geographic regions have been revised this year 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.
There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8. The
individual entities within the Group each have a large number of customers spread across various activities, end-uses and geographies.
3 Employees
a) Employee numbers
The average number of persons employed by the Group in the financial year was:
Production
Sales and distribution
Management and administration
b) Employee costs, including executive directors
Wages and salaries
Social welfare costs
Pension costs - defined contribution (note 31)
Share based payments and awards
Actuarial losses/(gains) recognised in other comprehensive income
c) Employee share based compensation
The Group currently operates a number of equity settled share based payment schemes; two Performance Share Plans (PSP)
and a Deferred Bonus Plan, which was introduced in 2015. The details of these schemes are provided in the Report of the
Remuneration Committee.
2020
Number
2019
Number
9,430
3,120
2,874
9,046
2,895
2,588
15,424
14,529
2020
€m
676.4
86.7
22.0
16.0
801.1
19.9
821.0
2019
€m
651.2
78.0
20.1
13.1
762.4
0.2
762.6
129
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 3 Employees (continued)
Performance Share Plan (PSP)
Outstanding at 1 January
Granted
Forfeited
Lapsed
Exercised
Outstanding at 31 December
Of which, exercisable
Number of PSP Options
2020
2019
1,953,111
507,441
(33,550)
(6)
(654,558)
1,772,438
2,149,827
539,988
(76,361)
(10,781)
(649,562)
1,953,111
263,324
399,257
The Group recognised a PSP expense of €16.0m (2019: €12.9m) in the Income Statement during the year. All PSP options are
exercisable at €0.13 per share. For PSP options that were exercised during the year the average share price at the date of exercise was
€62.99 (2019: €44.99). The weighted average contractual life of share options outstanding at 31 December 2020 is 4.8 years (2019:
2.6 years). The weighted average exercise price during the period was €0.13 (2019: €0.13).
The fair values of options granted under the PSP scheme during the current and prior year were determined using the Black Scholes
Model or the Monte Carlo Pricing Model as appropriate. The key assumptions used in the model were as follows:
Share price at grant date
Exercise price per share
Expected volatility
Expected dividend yield
Risk-free rate
Expected life
2020 Awards
2020 Awards
2019 Awards
20 February 2020
24 March 2020
25 February 2019
€61.80
€0.13
26.4%
1.3%
(0.7%)
3 years
€47.10
€0.13
29.3%
1.3%
(0.6%)
3 years
€38.80
€0.13
30.0%
1.3%
(0.07%)
3 years
The resulting weighted average fair value of options granted in the year was €42.83 (2019: €29.67).
As set out in the Report of the Remuneration Committee, the number of options that will ultimately vest is contingent on market
conditions such as Total Shareholder Return and non-market conditions such as the Earnings Per Share of the Group. Market conditions
were taken into account in determining the above fair value, and non market conditions were considered when estimating the number of
shares that will eventually vest. Expected volatility was determined by calculating the historical volatility of the Group and peer company
share prices over the previous 3 years. The Report of the Remuneration Committee sets out the current companies within the peer group.
Deferred Bonus Plan
As set out in the Report of the Remuneration Committee, the Deferred Bonus Plan (DBP) is intended to reward incremental performance
over and above the growth targeted by the annual performance related bonus. Any DBP bonus earned for such incremental performance is
satisfied by the payment of deferred share awards. These shares are held for the benefit of the individual participants for two years without any
additional performance conditions. These shares vest after two years but are forfeited if the participant leaves the Group within that period.
During the year, 2,272 (2019: 15,718) awards were granted under the DBP and nil (2019: 49,924) awards were exercised. 17,990 awards
remain outstanding at 31 December 2020. No charge was recognised in the Income Statement for 2020 (2019: €0.2m).
4 Finance Expense and Finance Income
Finance expense
Lease interest
Deferred contingent consideration fair value movement
Bank loans
Private placement loan notes
Fair value movement on derivative financial instrument
Fair value movement on private placement debt
Other interest
Finance income
Interest earned
Net finance cost
2020
€m
3.6
-
3.1
17.3
6.4
(4.4)
0.1
26.1
(1.1)
25.0
2019
€m
3.8
0.1
2.4
17.2
2.6
(2.5)
0.1
23.7
(2.9)
20.8
€0.2m of borrowing costs were capitalised during the period (2019: €0.1m). No costs were reclassified from other comprehensive
income to profit during the year (2019: €nil).
130
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 5 Profit for the year before Income Tax
The profit before tax for the year is stated after charging / (crediting):
Distribution expenses
Product development costs (total, including payroll)
Depreciation
Amortisation of intangible assets
Impairment of property, plant and equipment
Foreign exchange net gains
Profit on sale of property, plant and equipment
Analysis of total auditor’s remuneration
2020
€m
207.2
33.1
122.0
23.5
2.4
3.7
(1.1)
2019
€m
224.6
31.9
114.5
21.9
0.2
0.7
(3.3)
Audit of Group
Audit of other subsidiaries
Tax compliance and advisory services
EY Ireland
2020
€m
0.6
-
0.1
0.7
Other EY
Offices
2020
€m
-
2.1
-
2.1
Total
2020
€m
0.6
2.1
0.1
2.8
KPMG
Ireland
2019
€m
Other KPMG
Offices
2019
€m
0.8
-
0.1
0.9
-
1.8
0.8
2.6
Total 2019
€m
0.8
1.8
0.9
3.5
Included in Audit of Group are total fees of €0.2m which are due to EY in respect of the audit of the Parent Company (2019: €0.4m KPMG).
6 Directors’ Remuneration
Fees
Other emoluments
Pension costs
Performance Share Plan expense (calculated in accordance with principals disclosed in note 3)
2020
€m
0.6
3.2
0.8
4.6
3.7
8.3
2019
€m
0.6
6.3
0.8
7.7
3.2
10.9
A detailed analysis of directors’ remuneration is contained in the Report of the Remuneration Committee. Aggregate gains of €16.2m
(2019: €8.0m) were realised with respect to share options exercised by directors during the financial year.
7
Income Tax Expense
Tax recognised in the Consolidated Income Statement
Current taxation:
Current tax expense
Adjustment in respect of prior years
Deferred taxation:
Origination and reversal of temporary differences
Effect of rate change
Income tax expense
2020
€m
2019
€m
85.0
(5.4)
79.6
(6.8)
2.1
(4.7)
74.9
83.2
(0.2)
83.0
(6.6)
0.2
(6.4)
76.6
131
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 7
Income Tax Expense (continued)
The following table reconciles the applicable Republic of Ireland statutory tax rate to the effective tax rate (current and deferred) of
the Group:
Profit for the year
Applicable notional tax charge (12.5%)
Expenses not deductible for tax purposes
Net effect of differing tax rates
Utilisation of unprovided deferred tax assets
Other items
Total income tax expense
2020
€m
2019
€m
459.7
454.4
57.5
10.8
16.3
(1.1)
(8.6)
74.9
56.8
9.0
15.3
(1.5)
(3.0)
76.6
The total tax charge in future periods will be affected by any changes to the corporation tax rates in force in the countries in which the Group
operates. No significant change is expected to the standard rate of corporation tax in the Republic of Ireland which is currently 12.5%.
The methodology used to determine the recognition and measurement of uncertain tax positions is set out in Note 1 ‘Statement
of Accounting Policies’.
The total value of deductible temporary differences which have not been recognised is €31.6m (2019: €29.7m) consisting mainly of
tax losses forward. €0.5m of the losses expire within 5 years while all other losses may be carried forward indefinitely.
No provision has been made for tax in respect of temporary differences arising from unremitted earnings of foreign operations as there
is no commitment to remit such earnings and no current plans to do so. Deferred tax liabilities of €12.1m (2019: €10.9m) have not been
recognised for withholding tax that would be payable on unremitted earnings of €242.9m (2019: €219.6m) in certain subsidiaries.
8 Earnings Per Share
The calculations of earnings per share are based on the following:
Profit attributable to ordinary shareholders
2020
€m
2019
€m
373.6
369.4
Number of
shares (‘000)
2020
Number of
shares (‘000)
2019
Weighted average number of ordinary shares for the calculation of basic earnings per share
Dilutive effect of share options
Weighted average number of ordinary shares for the calculation of diluted earnings per share
181,212
1,598
182,810
180,586
1,489
182,075
Basic earnings per share
Diluted earnings per share
Adjusted basic earnings per share
Adjusted diluted earnings per share
2020
€ cent
206.2
204.4
216.9
215.0
2019
€ cent
204.6
202.9
215.0
213.2
Adjusted basic earnings reflects the profit attributable to ordinary shareholders after eliminating the impact of the Group’s
intangible amortisation charge, net of tax.
Adjusted diluted earnings reflects the profit attributable to ordinary shareholders after eliminating the impact of the Group’s
intangible amortisation charge, net of tax and the dilutive effect of share options. Dilution is attributable to the weighted average
number of share options outstanding at the end of the reporting period.
The number of options which are anti-dilutive and have therefore not been included in the above calculations is nil (2019: nil).
132
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 9 Goodwill
At 1 January
Additions relating to acquisitions (Note 22)
Net exchange movement
Carrying amount 31 December
At 31 December
Cost
Accumulated impairment losses
Carrying amount
2020
€m
1,506.9
41.7
(69.8)
2019
€m
1,391.0
92.5
23.4
1,478.8
1,506.9
1,546.5
(67.7)
1,574.6
(67.7)
1,478.8
1,506.9
Cash generating units
Goodwill acquired through business combinations is allocated, at acquisition, to CGUs that are expected to benefit from synergies in that
combination. The CGUs are the lowest level within the Group at which the associated goodwill is monitored for internal management
reporting purposes and are not larger than the operating segments determined in accordance with IFRS 8 Operating Segments.
A total of 11 (2019: 11) CGUs have been identified and these are analysed between the five business segments in the Group as set out
below. Assets and liabilities have been assigned to the CGUs on a reasonable and consistent basis.
Insulated Panels
Insulation Boards
Light & Air
Water & Energy
Data & Flooring
Total
Cash-generating units
2020
2019
Goodwill (€m)
2019
2020
6
1
1
1
2
11
6
1
1
1
2
873.9
232.9
205.7
81.0
85.3
918.3
235.7
178.0
83.8
91.1
11
1,478.8
1,506.9
Significant goodwill amounts
Management has assessed that, in line with IAS 36 Impairment of Assets, there are 5 CGUs that are individually significant (greater
than 10% of total goodwill) that require additional disclosure and are as follows:
Panels
North America
Panels
Western Europe
Panels
Joris Ide
Insulation
Boards
Light
& Air
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Goodwill (€m)
Discount rate (%)
Excess of value-in-use over
carrying amount (€m)
167.2
10.1
181.1
9.6
291.6
8.6
225.5
7.8
334.6
8.3
415.6
8.0
232.9
8.7
235.7
7.7
205.7
8.6
178.0
7.8
840.9
722.0 1,971.1 1,976.4
781.2
576.2 1,578.3 1,812.1
508.2
279.1
The goodwill allocated to these 5 CGUs accounts for 83% of the total carrying amount of €1,478.8m. The remaining goodwill balance
of €246.8m (2019: €271.0m) is allocated across the other 6 CGUs (2019: 6 CGUs), none of which are individually significant. Similar
assumptions and techniques are applied on the impairment testing of these CGUs.
None of the individually significant CGUs are included in the “Sensitivity analysis” section as it is not considered reasonably possible
that there would be a change in the key assumptions such that the carrying amount would exceed value-in-use. Consequently, no
further disclosures have been provided for these CGUs.
Impairment testing
Goodwill acquired through business combinations has been allocated to the above CGUs for the purpose of impairment testing.
Impairment of goodwill occurs when the carrying value of the CGU is greater than the present value of the cash that it is expected
to generate (i.e. the recoverable amount). The Group reviews the carrying value of each CGU at least annually or more frequently if
there is an indication that a CGU may be impaired.
133
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 9 Goodwill (continued)
The recoverable amount of each CGU is determined from value-in-use calculations. The forecasts used in these calculations are
based on a 4 year financial plan approved by the Board of Directors, plus year 5 as forecasted by management, and specifically
excludes any future acquisition activity. They include assumptions regarding future organic growth with cash flows after year 5
assuming to continue in perpetuity at a general growth rate of 2% to 5% (Panels LATAM 5%), reflecting the relevant CGU market
growth. The use of cash flows in perpetuity is considered appropriate in light of the Group’s established history of earnings growth
and cash flow generation, its strong financial position and the nature of the industry in which the Group operates.
The value in use calculation represents the present value of the future cash flows, including the terminal value, discounted at a rate
appropriate to each CGU. The real pre-tax discount rates used range from 8.3% to 14.7% (2019: 7.5% to 10.6%). These rates are based
on the Group’s estimated weighted average cost of capital, adjusted for risk, and are consistent with external sources of information.
The cash flows and the key assumptions used in the value in use calculations are determined based on the historical performance
of the Group, its strong current financial position as well as management’s knowledge and expectation of future trends in the
industry. Expected future cash flows are, however, inherently uncertain and are therefore liable to material change over time. The key
assumptions used in the value in use calculations are subjective and include projected EBITDA margins, net cash flows, discount rates
used and the duration of the discounted cash flow model.
Sensitivity analysis
Sensitivity analysis was performed by adjusting cash flows, the discount rate and the average operating margin of each division by
over 42% and by reducing the long-term growth rate to zero. Each test resulted in a positive recoverable amount for each CGU under
each approach. Management believes, therefore, that any reasonable change in any of the key assumptions would not cause the
carrying value of goodwill to exceed the recoverable amount, thereby giving rise to an impairment.
10 Other Intangible Assets
2020
Cost
At 1 January
Acquisitions (Note 22)
Net exchange difference
At 31 December
Accumulated amortisation
At 1 January
Charge for the year
Net exchange difference
At 31 December
Net Book Value as at 31 December 2020
2019
Cost
At 1 January
Acquisitions (Note 22)
Net exchange difference
At 31 December
Accumulated amortisation
At 1 January
Charge for the year
Net exchange difference
At 31 December
Net Book Value as at 31 December 2019
Customer
Relationships
€m
Patents &
Brands
€m
Other
Intangibles
€m
50.3
(0.7)
(0.7)
48.9
29.6
5.9
(0.5)
35.0
13.9
130.0
10.0
(5.5)
134.5
66.8
12.6
(3.2)
76.2
58.3
35.6
6.3
(1.6)
40.3
26.3
5.0
(1.5)
29.8
10.5
Customer
Relationships
€m
Patents &
Brands
€m
Other
Intangibles
€m
48.7
1.4
0.2
50.3
23.4
6.1
0.1
29.6
20.7
127.8
0.1
2.1
130.0
54.0
11.7
1.1
66.8
63.2
33.9
1.2
0.5
35.6
21.9
4.1
0.3
26.3
9.3
Other intangibles relate primarily to technological know how and order backlogs.
Total
€m
215.9
15.6
(7.8)
223.7
122.7
23.5
(5.2)
141.0
82.7
Total
€m
210.4
2.7
2.8
215.9
99.3
21.9
1.5
122.7
93.2
134
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 11 Property, Plant And Equipment
Land and
buildings
€m
Plant,
machinery
and other
equipment
€m
Motor
vehicles
Total
€m
€m
As at 31 December 2020
Cost
Accumulated depreciation and impairment charges
686.5
(218.4)
1,368.3
(880.1)
45.0
(28.4)
2,099.8
(1,126.9)
Net carrying amount
468.1
488.2
16.6
972.9
At 1 January 2020, net carrying amount
Acquisitions through business combinations (Note 22)
Additions
Disposals
Reclassification
Depreciation charge for year
Impairment charge for year
Effect of movement in exchange rates
433.2
11.3
40.3
(2.1)
21.9
(20.3)
(2.2)
(14.0)
514.5
(1.1)
84.6
(2.0)
(20.4)
(64.6)
(0.2)
(22.6)
17.5
1.3
5.0
(0.5)
(1.5)
(4.8)
-
(0.4)
965.2
11.5
129.9
(4.6)
-
(89.7)
(2.4)
(37.0)
At 31 December 2020, net carrying amount
468.1
488.2
16.6
972.9
Land and
buildings
€m
Plant,
machinery
and other
equipment
€m
Motor vehicles
Total
€m
€m
As at 31 December 2019
Cost
Accumulated depreciation and impairment charges
634.1
(200.9)
1,386.2
(871.7)
42.8
(25.3)
2,063.1
(1,097.9)
Net carrying amount
433.2
514.5
17.5
965.2
At 1 January 2019, net carrying amount
Acquisitions through business combinations (Note 22)
Additions
Disposals
Reclassification
Depreciation charge for year
Impairment charge for year
Effect of movement in exchange rates
401.0
12.4
29.9
(1.1)
(0.1)
(14.4)
(0.1)
5.6
436.2
13.1
125.2
(1.9)
(0.1)
(64.8)
(0.1)
6.9
13.3
-
9.5
(0.4)
0.2
(5.3)
-
0.2
850.5
25.5
164.6
(3.4)
-
(84.5)
(0.2)
12.7
At 31 December 2019, net carrying amount
433.2
514.5
17.5
965.2
Included within the cost of land and buildings and plant, machinery and other equipment are assets in the course of construction to
the value of €10.7m and €63.1m respectively (2019: of €2.3m and €66.2m). These assets have not yet been depreciated.
The Group has no material investment properties and hence no property assets are held at fair value.
12 Investments in Subsidiaries
Company
At 1 January
Share options and awards
At 31 December
2020
€m
1,201.4
11.4
2019
€m
1,191.0
10.4
1,212.8
1,201.4
The share options and awards addition reflects the cost of share based payments attributable to employees of subsidiary
undertakings, which are treated as capital contributions by the Company. The carrying value of investments is reviewed at each
reporting date and there were no indicators of impairment.
135
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 13 Inventories
Raw materials and consumables
Work in progress
Finished goods
Inventory impairment allowance
At 31 December
2020
€m
396.7
19.7
161.2
(71.7)
2019
€m
433.2
20.3
169.6
(65.5)
505.9
557.6
A total of €2.5bn (2019: €2.7bn) of inventories was included in the Income Statement as an expense. This includes a net income
statement charge of €1.7m (2019: €4.4m) arising on the inventory impairment allowance. Inventory impairment allowance levels
are continuously reviewed by management and revised where appropriate, taking account of the latest available information on the
recoverability of carrying amounts.
No inventories have been pledged as security for liabilities entered into by the Group.
14 Trade and Other Receivables
Amounts falling due within one year:
Trade receivables, gross
Expected credit loss allowance
Trade receivables, net
Other receivables
Prepayments
2020
€m
767.3
(65.1)
702.2
65.2
32.2
799.6
2019
€m
770.3
(54.0)
716.3
45.1
32.8
794.2
The maximum exposure to credit risk for trade and other receivables at the reporting date is their carrying amount.
The Group uses an allowance matrix to measure Expected Credit Loss (ECL) of trade receivables from customers. The simplified
approach has been adopted and this gives rise to an ECL of €65.1m in 2020 (2019: €54.0m). This is presented in more detail in Note 19.
Company
Amounts falling due within one year:
Amounts owed by group undertakings
The amounts due from group undertakings are unsecured, interest free and are repayable on demand.
2020
€m
2019
€m
232.3
232.3
128.7
128.7
136
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 15 Trade and Other Payables
Current
Trade payables
Accruals
Deferred income and customer prepayments
Income tax & social welfare
Value added tax
2020
€m
419.9
349.8
33.7
30.8
20.3
854.5
2019
€m
404.9
307.9
14.8
29.6
11.7
768.9
Deferred income primarily relates to service and maintenance and projected related revenue and is primarily short term.
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
Company
Current
Amounts owed to group undertakings
Payables
The amounts due to group undertakings are unsecured, interest free and are repayable on demand.
2020
€m
2019
€m
71.1
0.2
71.3
61.3
0.2
61.5
16 Leases
Right of use asset
At 1 January 2020
Additions
Arising on acquisitions
Remeasurement
Terminations
Depreciation charge for the year
Reclassification
Effect of movement in exchange rates
At 31 December 2020
At 1 January 2019
Additions
Arising on acquisitions
Remeasurement
Terminations
Depreciation charge for the year
Effect of movement in exchange rates
At 31 December 2019
Land and
buildings
€m
98.5
7.7
8.0
1.2
(2.0)
(19.1)
0.6
(5.3)
89.6
Land and
buildings
€m
102.1
4.8
6.0
2.6
(1.6)
(17.4)
2.0
98.5
Plant,
machinery
and other
equipment
€m
9.2
2.3
-
0.4
(0.4)
(3.9)
(0.6)
(0.2)
6.8
Plant,
machinery
and other
equipment
€m
12.7
1.1
0.2
-
(0.1)
(4.8)
0.1
9.2
Motor
vehicles
€m
13.9
7.3
4.8
0.6
(0.2)
(9.3)
-
(0.5)
16.6
Motor
vehicles
€m
14.0
8.2
0.1
-
(0.8)
(7.8)
0.2
13.9
Total
2020
€m
121.6
17.3
12.8
2.2
(2.6)
(32.3)
-
(6.0)
113.0
Total
2019
€m
128.8
14.1
6.3
2.6
(2.5)
(30.0)
2.3
121.6
137
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 16 Leases (continued)
Lease liability
At 1 January
Additions
Arising on acquisitions
Remeasurement
Terminations
Payments
Interest
Effect of movement in exchange rates
At 31 December
Split as follows:
Current liability
Non-current liability
At 31 December
2020
€m
122.3
17.1
12.6
1.7
(2.7)
(33.7)
3.6
(6.1)
2019
€m
127.9
14.0
6.2
2.5
(2.5)
(31.8)
3.8
2.2
114.8
122.3
27.3
87.5
25.6
96.7
114.8
122.3
Expenses of €6.1m (2019: €5.6m) relating to short term leases, leases of low-value assets and variable lease payments were
recognised in the profit and loss.
17 Interest Bearing Loans and Borrowings
Current financial liabilities
Private placements
Bank loans
Lease obligations per banking covenants
Non-current financial liabilities
Private placements
Bank loans (unsecured)
Lease obligations per banking covenants
Analysis of Net Debt
Cash and cash equivalents
Derivative financial instruments
Current borrowings
Non-current borrowings
Total Net Debt
2020
€m
207.4
2.1
0.1
209.6
2020
€m
1,320.7
53.1
2.3
1,376.1
2019
€m
-
2.8
0.3
3.1
2019
€m
840.9
5.1
2.3
848.3
2020
€m
1,329.7
19.8
(209.6)
(1,376.1)
2019
€m
190.9
27.3
(3.1)
(848.3)
(236.2)
(633.2)
The Group’s core funding is provided by seven private placement loan notes; two USD private placement totalling US$400m maturing
in tranches between August 2021 and December 2028, and five EUR private placements totalling €1.2bn which will mature in
tranches between March 2021 and December 2032. The notes have a weighted average maturity of 6.1 years.
The Group also has two revolving credit facilities. The €300m facility matures in June 2022 and the €451m facility also matures in
June 2022. No amount was drawn on either of the facilities as at 31 December 2020. The Group also has a bilateral ‘Green Loan’ of
€50m to fund the Group’s Planet Passionate initiatives. The loan is fully drawn and matures in February 2025.
138
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 17 Interest Bearing Loans and Borrowings (continued)
More details of the Group’s loans and borrowings are set out in Note 19.
Net debt, which is an Alternative Performance Measure, is stated net of interest rate and currency hedges which relate to hedges of
debt. Foreign currency derivative assets of €nil (2019: €nil) and foreign currency derivative liabilities of €0.2m (2019: €0.1m) 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.
18 Deferred Consideration
At 1 January
Deferred contingent consideration arising on acquisitions (note 22)
Movement in deferred contingent consideration arising from fair value adjustment
Put liability arising on current year acquisitions (note 22)
Movement in put liability arising from fair value adjustment
Amounts paid
Effect of movement in exchange rates
At 31 December
Split as follows:
Current liabilities
Non-current liabilities
Analysed as follows:
Deferred contingent consideration
Put liability
2020
€m
186.5
-
(0.7)
-
(20.4)
-
(37.8)
2019
€m
196.1
2.0
(0.5)
26.7
22.7
(59.7)
(0.8)
127.6
186.5
-
127.6
127.6
10.3
117.3
127.6
-
186.5
186.5
11.3
175.2
186.5
For each acquisition for which deferred contingent consideration has been provided, an annual review takes place to evaluate if the
payment conditions are likely to be met.
During the prior year the Group paid €30m of deferred consideration relating to the Synthesia business which was acquired in 2018. In
addition, the Group paid €29.7m of deferred contingent consideration relating to the Isoeste business which was acquired in 2017.
The deferred contingent consideration arising on prior year acquisitions relates to Group Bacacier SAS.
The put liability arising on prior year acquisitions is recognised with respect to the potential amounts payable to the 15% shareholders
of Group Bacacier SAS.
The amount of the deferred contingent consideration and put liability that have been recognised are arrived at by the application of
a range of outcomes and associated probabilities in order to determine the carrying amounts.
Liabilities in the range of €nil to €10.3m could arise with respect to potential deferred contingent consideration obligations and €nil
to €117.3m with respect to potential put option obligations.
The put option in the shareholders’ agreement with non-controlling shareholders of Isoeste is exercisable from 2023. The
undiscounted expected cash outflow is estimated to be €88.7m (2019: €118.6m).
The put option in the shareholders’ agreement with non-controlling shareholders of PanelMET is exercisable from 2022. The
undiscounted expected cash outflow is estimated to be €3.5m (2019: €9.1m).
The put option in the shareholders’ agreement with non-controlling shareholders of Kingspan Jindal is exercisable from 2022. The
undiscounted expected cash outflow is estimated to be €9.8m (2019: €26.8m).
There are two put options in the shareholders’ agreement with non-controlling shareholders of Group Bacacier SAS. The first option
relating to 10% of shares is exercisable from 2021 and the related undiscounted expected cash outflow is estimated to be €15.7m
(2019: €7.1m). The second option for the remaining 5% of shares is exercisable from 2022 and the related undiscounted expected
cash outflow is estimated to be €9.6m (2019: €10.5m).
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.
In the case of Isoeste, PanelMET, Kingspan Jindal and Group Bacacier SAS call options rest over the remaining shareholding held by
non-controlling interests, which are exercisable by the Group in a very limited range of circumstances. No value has been attributed
to these call options.
139
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 19 Financial Risk Management and Financial Instruments
Financial Risk Management
In the normal course of business, the Group has exposure to a variety of financial risks, including foreign currency risk, interest
rate risk, liquidity risk and credit risk. The Group’s focus is to understand these risks and to put in place policies that minimise the
economic impact of an adverse event on the Group’s performance. Meetings are held on a regular basis to review the result of the
risk assessment, approve recommended risk management strategies and monitor the effectiveness of such policies.
The Group’s risk management strategies include the usage of derivatives (other than for speculative transactions), principally
forward exchange contracts, interest rate swaps, and cross currency interest rate swaps.
Liquidity risk
In addition to the high level of free cash flow, the Group operates a prudent approach to liquidity management using a mixture of
long-term debt together with short-term debt, cash and cash equivalents, to enable it to meet its liabilities when due.
The Group’s core funding is provided by a number of private placement loan notes totalling €1,528m. The notes have a weighted
average maturity of 6.1 years.
The primary bank debt facility is a €451m revolving credit facility, which was undrawn at year-end and which matures in June 2022. In
June 2019 an additional 3 year bank facility of €300m was arranged, which was undrawn at year end. The Group also has a bilateral
‘Green Loan’ of €50m to fund the Group’s Planet Passionate initiatives. This matures in February 2025.
Both the private placements and the revolving credit facility have an interest cover test (Net Interest: EBITDA must exceed 4 times)
and a net debt test (Net Debt: EBITDA must be less than 3.5 times). These covenant tests have been met for the covenant test
period to 31 December 2020.
The Group also has in place a number of uncommitted bilateral working capital facilities to serve its working capital requirements.
These facilities total €43m (2019: €43m) and are supported by a Group guarantee. Core funding arrangements arise from a wide and
varied number of institutions and, as such, there is no significant concentration of liquidity risk.
The following are the carrying amounts and contractual maturities of financial liabilities (including estimated interest payments):
Carrying
amount
2020
€m
55.2
1,528.1
2.4
114.8
820.8
127.6
Contractual
cash flow
Within
1 year
€m
€m
Between
1 and 2
years
€m
Between
2 and 5
years
€m
Greater
than 5
years
€m
56.7
1,721.5
2.4
134.5
820.8
137.6
2.4
253.6
0.1
30.4
820.8
-
1.3
88.9
0.3
23.6
-
26.0
52.8
338.0
-
43.7
-
108.1
0.2
1,041.0
2.0
36.8
-
3.5
Non derivative financial instruments
Bank loans
Private placement loan notes
Lease obligations per banking covenants
Lease liabilities
Trade and other payables
Deferred contingent consideration
Derivative financial liabilities / (assets)
Interest rate swaps used for hedging:
Carrying values
Net inflows
(0.6)
-
-
(0.9)
-
(0.9)
Cross currency interest rate swaps used for hedging:
Carrying value
- outflow
- inflow
(19.2)
-
-
-
103.6
(128.5)
-
103.6
(128.5)
Foreign exchange forwards used for hedging:
Carrying value assets
Carrying value liabilities
- outflow
- inflow
-
0.2
-
-
-
-
6.5
(6.3)
-
-
6.5
(6.3)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
140
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 19 Financial Risk Management and Financial Instruments (continued)
Carrying
amount
2019
€m
Contractual
cash flow
Within
1 year
€m
€m
Between
1 and 2
years
€m
Between
2 and 5
years
€m
Greater
than 5
years
€m
Non derivative financial instruments
Bank loans
Private placement loan notes
Lease obligations per banking covenants
Lease liabilities
Trade and other payables
Deferred contingent consideration
Derivative financial liabilities / (assets)
Interest rate swaps used for hedging:
Carrying values
Net inflows
7.9
840.9
2.6
122.3
754.1
186.5
(0.7)
-
Cross currency interest rate swaps used for hedging:
Carrying value
- outflow
- inflow
(26.6)
-
-
Foreign exchange forwards used for hedging:
Carrying value assets
Carrying value liabilities
- outflow
- inflow
-
0.1
-
-
7.9
919.0
2.6
148.0
754.1
193.4
-
0.8
-
93.4
127.1
-
-
7.2
7.0
2.8
20.4
0.3
30.2
754.1
-
-
0.4
-
(0.2)
6.0
-
-
7.2
7.0
2.5
237.3
0.1
24.6
-
28.4
-
0.4
-
93.6
121.1
-
-
-
-
2.5
329.7
-
43.3
-
155.9
0.1
331.6
2.2
49.9
-
9.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
For provisions, the carrying amount represents the Group’s best estimate of the expected future outflows. As it does not represent a
contractual liability at the year end, no amount has been included as a contractual cash flow.
Deferred contingent consideration, which includes any put option liabilities, is valued using the relevant agreed multiple of the
expected future EBITDA in each acquired business which is appropriately discounted using a risk-adjusted discount rate. The
estimated fair value of contingent consideration would decrease if EBITDA was lower or if the risk adjusted discount rate was higher.
The range of outcomes are set out in Note 18.
The actual future cash flows could be different from the amounts included in the tables above, if the associated obligations were to become
repayable on demand as a result of non-compliance with covenants or other contractual terms. No such non-compliance is envisaged.
Market Risks
Foreign exchange risk
There are two types of foreign currency risk to which the Group is exposed, namely transaction risk and translation risk. The objective of
the Group’s foreign currency risk management strategy is to manage and control market risk exposures within acceptable parameters.
As set out below the Group uses derivatives to manage foreign exchange risk. Transactions involving derivatives are carried out in
accordance with the Treasury policy. The Group seeks to apply hedge accounting, where practicable, to manage volatility in profit or loss.
Transaction risk
Apart from transaction risk on debt, this arises where operating units have input costs or sales in currencies other than their
functional currencies. These exposures are internally hedged as far as possible. Group policy is to hedge up to a maximum of 75% of
a forecast exposure. Material exposures are hedged on a rolling 12 months basis. The Group’s principal exposure relates to GBP and
USD, with less significant exposures to certain central European currencies.
In addition, where operating entities carry monetary assets and liabilities at year-end denominated other than in their functional
currency, their translation at the year-end rates of exchange into their functional currency will give rise to foreign currency gains and
losses. The Group seeks to manage these gains and losses to net to nil.
Based on current cash flow projections for the businesses to 31 December 2021, it is estimated that the Group is long GBP32m (2019:
long GBP61m) and short US$25m (2019: short US$25m). At 31 December 2020 these amounts were unhedged.
Translation risk
This exists due to the fact that the Group has operations whose functional currency is not the Euro, the Group’s presentational
currency. Changes in the exchange rate between the reporting currencies of these operations and the Euro, have an impact on the
Group’s consolidated reported result. For 2020, the impact of changing currency rates versus Euro compared to the average 2019
rates was negative €129.7m (2019: positive €61.0m). The key drivers of the change year on year are the movements in GBP and USD.
In common with many other international groups, the Group does not currently seek to externally hedge its translation exposure.
Sensitivity analysis for primary currency risk
A 10% volatility of the EUR against GBP and USD in respect of transaction risk in the reporting entities functional currency would
impact reported after tax profit by €1.5m (2019: €4.9m) and equity by €1.5m (2019: €4.9m).
141
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 19 Financial Risk Management and Financial Instruments (continued)
US Dollar Loan Notes
2011 Private Placement
In 2011, the Group issued a private placement of US$200m fixed interest 10 year bullet repayment loan notes maturing in August
2021. In order to align the Group’s debt profile with its risk management strategy, the Group entered into a number of hedging
transactions in order to mitigate the associated foreign exchange and interest rate exposures. The Group entered into US dollar fixed
/ GBP floating cross currency interest rate swaps for US$118.6m of the private placement. The benchmark interest rate and credit
spread have been separately identified and designated for hedge accounting purposes. The Group also entered into US dollar interest
rate swaps for US$40m of the private placement. The fixed rate and maturity date on the swaps match the fixed rate on the private
placement for all instruments. The instruments were designated as hedging instruments at inception and continued to qualify as
effective hedges under IFRS 9 at 31 December 2020.
Interest rate risk
The Group has an exposure to movements in interest rates on its debt portfolio, and on its cash and cash equivalent balances and
derivatives. The Group policy is to ensure that at least 40% of its debt is fixed rate.
In respect of interest bearing loans and borrowings, the following table indicates the effective average interest rates at the year-end
and the periods over which they mature. Interest on interest bearing loans and borrowings classified as floating rate is repriced at
intervals of less than one year. The table further analyses interest bearing loans and borrowings by currency and fixed/floating mix
and has been prepared both before and after the impact of derivatives.
Before the impact of hedging transactions
As at 31 December 2020
Weighted average
effective interest rate
Bank loans
Loan notes
0.78%
2.11%
Total
€m
55.2
1,528.1
At fixed
interest rate
€m
At floating
interest rate
€m
Under 5
years
€m
Over
5 years
€m
2.6
1,528.1
52.6
-
55.0
551.4
0.2
976.7
1,583.3
1,530.7
52.6
606.4
976.9
Total
€m
At fixed
interest rate
€m
At floating
interest rate
€m
Euro
USD
Other
After the impact of hedging transactions
As at 31 December 2020
Weighted average
effective interest rate
Bank loans
Loan notes
0.78%
1.95%
1,253.2
328.1
2.0
1.583.3
Total
€m
55.2
1,528.1
1,203.0
327.7
-
1,530.7
50.2
0.4
2.0
52.6
At fixed
interest rate
€m
At floating
interest rate
€m
Under 5
years
€m
Over
5 years
€m
2.6
1,396.9
52.6
131.2
55.0
551.4
0.2
976.7
1,583.3
1,399.5
183.8
606.4
976.9
Euro
GBP
USD
Other
Total
€m
At fixed
interest rate
€m
At floating
interest rate
€m
1,276.0
98.1
207.2
2.0
1,583.3
1,225.8
-
173.7
-
1,399.5
50.2
98.1
33.5
2.0
183.8
The weighted average maturity of debt is 6.3 years as at 31 December 2020 (2019: 4.5 years).
142
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 19 Financial Risk Management and Financial Instruments (continued)
Before the impact of hedging transactions
As at 31 December 2019
Weighted average
effective interest rate
Bank loans
Loan notes
2.0%
2.4%
Euro
USD
Other
After the impact of hedging transactions
As at 31 December 2019
Weighted average
effective interest rate
Bank loans
Loan notes
2.0%
2.1%
Euro
GBP
USD
Other
Total
€m
7.9
840.9
848.8
Total
€m
666.3
178.3
4.2
848.8
Total
€m
7.9
840.9
848.8
Total
€m
691.3
105.1
48.2
4.2
848.8
At fixed
interest rate
€m
At floating
interest rate
€m
Under 5
years
€m
Over
5 years
€m
7.9
840.9
848.8
-
-
-
7.8
522.4
0.1
318.5
530.2
318.6
At fixed
interest rate
€m
At floating
interest rate
€m
666.3
178.3
4.2
848.8
-
-
-
-
At fixed
interest rate
€m
At floating
interest rate
€m
Under 5
years
€m
Over
5 years
€m
7.9
699.4
707.3
-
141.5
7.8
522.4
0.1
318.5
141.5
530.2
318.6
At fixed
interest rate
€m
At floating
interest rate
€m
691.3
-
11.8
4.2
707.3
-
105.1
36.4
-
141.5
An increase or decrease of 100 basis points in each of the applicable rates and interest rate curves would impact reported after tax
profit by €1.8m (2019: €1.4m) and equity by €1.8m (2019: €1.4m).
Credit risk
Credit risk encompasses the risk of financial loss to the Group of counterparty default in relation to any of its financial assets. The
Group’s maximum exposure to credit risk is represented by the carrying value of each financial asset:
Cash & cash equivalents
Trade receivables
Derivative financial assets
Financial asset
2020
€m
1,329.7
767.3
19.8
8.2
2019
€m
190.9
770.3
27.3
8.2
Trade receivables arise from a wide and varied customer base spread across various activities, end users and geographies, and as
such there is no significant concentration of credit risk. The Group’s credit risk management policy in relation to trade receivables
involves periodically assessing the financial reliability of customers, taking into account their financial position, past experience
and other factors. The utilisation of credit limits is regularly monitored and a significant element of credit risk is covered by credit
insurance or other forms of collateral such as letters of credit or bank guarantees.
143
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 19 Financial Risk Management and Financial Instruments (continued)
At 31 December, the exposure to credit risk for trade receivables by geographic region was as follows:
Western & Southern Europe
Central & Northern Europe
Americas
Britain
Rest of World
At 31 December, the exposure to credit risk for trade receivables by customer type was as follows:
Insulated Panels customers
Insulation Boards customers
Other customers
2020
€m
300.9
92.8
127.9
188.0
57.7
767.3
2020
€m
478.5
136.5
152.3
767.3
2019
€m
266.2
91.4
149.8
202.2
60.7
770.3
2019
€m
493.6
151.8
124.9
770.3
The Group uses an allowance matrix to measure Expected Credit Loss (ECL) of trade receivables from customers. The ECL simplified
approach has been adopted.
Loss rates are calculated using a roll rate method based on the probability of a receivable progressing through successive chains of
non-payment to write-off. The rates are calculated at a business unit level which reflects the risks associated with geographic region,
age, mix of customer relationship and type of product purchased. The identifiable loss pertaining to cash positions is immaterial.
The following table provides the information about the exposure to credit risk and ECL’s for trade receivables as at 31 December 2020.
Current (not past due)
1-30 days past due
31-60 days past due
61-90 days past due
More than 90 days past due
Weighted
average loss
rate
%
Gross
carrying
amount
€m
1%
4%
9%
26%
84%
549.2
123.2
30.0
8.9
56.0
767.3
Loss
allowance
€m
8.2
4.5
2.8
2.3
47.3
65.1
The following table provides the information about the exposure to credit risk and ECL’s for trade receivables as at 31 December 2019.
Current (not past due)
1-30 days past due
31-60 days past due
61-90 days past due
More than 90 days past due
Weighted
average loss
rate
%
Gross carrying
amount
€m
1%
2%
6%
16%
69%
512.4
146.4
41.0
12.2
58.3
770.3
Loss allowance
€m
5.7
3.4
2.6
1.9
40.4
54.0
Loss rates are based in actual credit loss experience over an appropriate diverse sample of trading periods. Trade receivables are
written off when there is no reasonable expectation of recovery.
144
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020
19 Financial Risk Management and Financial Instruments (continued)
Movements in the allowance for impairment in respect of trade receivables
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at 1 January
Arising on acquisition
Written off during the year
Net remeasurement of loss allowance
Effect of movement in exchange rates
At 31 December
2020
€m
54.0
7.0
(3.7)
10.6
(2.8)
65.1
2019
€m
56.4
1.1
(7.3)
2.9
0.9
54.0
There are no material trade receivables written off during 2020 (2019: €nil) which are still subject to enforcement activity.
The increase in the expected credit loss allowance during 2020 reflects the reduction in the gross carrying amount of trade
receivables.
Cash & cash equivalents
On the Group’s cash and cash equivalents and derivatives, counterparty risk is managed by dealing with banks that have a minimum
credit rating and by spreading business across a portfolio of 9 relationship banks.
Financial instruments by category
The carrying amount of financial assets presented in the Statement of Financial Position relate to the following measurement
categories as defined in IFRS 9:
2020
Current:
Trade receivables, net
Other receivables
Cash and cash equivalents
Derivative financial instruments
Non current:
Derivative financial instruments
Financial asset
2019
Current:
Trade receivables, net
Other receivables
Cash and cash equivalents
Derivative financial instruments
Non current:
Derivative financial instruments
Financial asset
Financial asset
at fair value
through P&L
Assets at
amortised
cost
€m
€m
Derivatives
designated
as hedging
instrument
€m
-
-
-
0.6
0.6
-
8.2
8.2
-
-
-
-
-
0.7
8.2
8.9
702.2
65.2
1,329.7
-
2,097.1
-
-
-
716.3
45.1
190.9
-
952.3
-
-
-
-
-
-
19.2
19.2
-
-
-
-
-
-
-
-
26.6
-
26.6
It is considered that the carrying amounts of the above financial assets approximate their fair values.
Total
€m
702.2
65.2
1,329.7
19.8
2,116.9
-
8.2
8.2
716.3
45.1
190.9
-
952.3
27.3
8.2
35.5
145
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 19 Financial Risk Management and Financial Instruments (continued)
The carrying amounts of financial liabilities presented in the Statement of Financial Position relate to the following measurement
categories as defined in IFRS 9:
Financial
liabilities at
fair value
through P&L
€m
Financial
liabilities
measured at
amortised cost
€m
Financial
liabilities at
fair value
through OCI
€m
Derivatives
designated
as hedging
instrument
€m
Total
€m
2020
Current:
Borrowings
Lease liabilities
Trade payables
Accruals
Derivative financial instruments
Non current:
Borrowings
Lease liabilities
Deferred contingent consideration
2019
Current:
Borrowings
Lease liabilities
Trade payables
Accruals
Derivative financial instruments
Non current:
Borrowings
Lease liabilities
Deferred contingent consideration
33.1
-
-
-
-
33.1
-
-
10.3
10.3
-
-
-
-
-
-
36.3
-
11.3
47.6
55.6
27.3
419.9
349.8
-
852.6
1,376.1
87.5
-
1,463.6
3.1
25.6
404.9
307.9
-
741.5
681.9
96.7
-
778.6
120.9
-
-
-
-
120.9
-
-
-
-
-
-
-
-
-
-
130.1
-
175.2
305.3
-
-
-
-
0.2
0.2
-
-
117.3
117.3
-
-
-
-
0.1
0.1
-
-
-
-
209.6
27.3
419.9
349.8
0.2
1,006.8
1,376.1
87.5
127.6
1,591.2
3.1
25.6
404.9
307.9
0.1
741.6
848.3
96.7
186.5
1,131.5
Fair value hierarchy
Financial assets and liabilities 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) as set out in note 18.
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. market exchange and interest rates (Level 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.
Financial Assets
Interest rate swaps
Foreign exchange contracts for hedging
Financial Liabilities
Deferred contingent consideration
Put option liabilities
Foreign exchange contracts for hedging
As at 31 December 2020
Level 1
€m
Level 2
€m
Level 3
€m
As at 31 December 2019
Level 1
€m
Level 2
€m
Level 3
€m
-
-
-
-
-
0.6
19.2
-
-
0.2
-
-
10.3
117.3
-
-
-
-
-
-
27.3
-
-
-
0.1
-
-
11.3
175.2
-
146
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 19 Financial Risk Management and Financial Instruments (continued)
The principal movements in Level 3 liabilities in 2020 are set out in the table below:
Deferred contingent consideration
Put option liabilities
1 Jan
2020
€m
11.3
175.2
186.5
Balance
Settlement
Fair value
movement
Arising on
acquisition
Translation
adjustment
€m
€m
€m
€m
-
-
-
(0.7)
(20.4)
(21.1)
-
-
-
(0.3)
(37.5)
(37.8)
10.3
117.3
127.6
The principal movements in Level 3 liabilities in 2019 are set out in the table below:
Balance
Settlement
Fair value
movement
Arising on
acquisition
Translation
adjustment
Deferred contingent consideration
Put option liabilities
1 Jan
2019
€m
38.9
127.2
166.1
€m
€m
(29.7)
-
(29.7)
(0.5)
22.7
22.2
€m
2.0
26.7
28.7
€m
0.6
(1.4)
(0.8)
Balance
31 Dec
2020
€m
Balance
31 Dec
2019
€m
11.3
175.2
186.5
During the year ended 31 December 2020, the put liabilities were reassessed based on the most recent available financial
information. There were no other significant changes in the business or economic circumstances that affect the fair value of the
remaining 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.
Except as detailed below, it is considered that the carrying amounts of financial assets and financial liabilities recognised at
amortised cost approximate their fair values.
As at 31 December 2020
As at 31 December 2019
Carrying
amount
€m
Fair
Value
€m
Carrying
amount
€m
Fair
Value
€m
Level
Level
Private placement loan notes
1,528.1
1,726.4
2
840.9
902.3
2
Capital Management Policies and Procedures
The Group employs a combination of debt and equity to fund its operations. As at 31 December the total capital employed in the
Group was as follows:
Net Debt
Equity
Total Capital Employed
2020
€m
236.2
2,397.6
2019
€m
633.2
2,120.4
2,633.8
2,753.6
The Board’s objective when managing capital is to maintain a strong capital base so as to maintain the confidence of investors,
creditors and the market. The Board monitors the return on capital (defined as total shareholders’ equity plus net debt), and
targets a return in excess of 20% together with a dividend level that is compatible with industry norms, but which also reflects any
exceptional market conditions.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and
the advantages and security afforded by a sound capital position. The Group actively manages foreign currency and interest rate
exposure, as well as actively managing the net asset position, in order to create bottom line value. This necessitates the development
of a methodology to optimise the allocation of financial resources on the one hand and the return on capital on the other.
The Board closely monitors externally imposed capital restrictions which are present due to covenants within the Group’s core
banking facilities.
There were no changes to the Group’s approach to capital management during the year.
147
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 20 Provisions For Liabilities
Guarantees and warranties
At 1 January
Arising on acquisitions (Note 22)
Provided during year
Claims paid
Provisions released
Effect of movement in exchange rates
At 31 December
Current liability
Non-current liability
2020
€m
109.7
16.1
50.8
(31.4)
(21.5)
(4.7)
119.0
55.7
63.3
119.0
2019
€m
104.3
1.8
54.4
(29.5)
(23.3)
2.0
109.7
58.0
51.7
109.7
The Group manufactures a wide range of insulation and related products for use primarily in the construction sector. Some products
carry formal guarantees of satisfactory performance of varying periods following their purchase by customers and a provision
is carried in respect of the expected costs of settling warranty and guarantee claims which arise. The Group in the course of its
operations can be party to claims or litigation. Both the number of claims and the cost of settling the claim are sensitive to change.
In most cases, a reasonably reliable estimate can be made based on a range of possible outcomes. If the extent and cost of settling
a claim or potential claim is not yet reasonably determinable, no provision is made until such a reliable estimate can be made.
Provisions are reviewed by management on a regular basis, and adjusted to reflect the current best estimate of the economic
outflow. If it is no longer probable that an outflow of economic benefits will be required, the related provision is reversed.
For the non-current element of the provision, the Group anticipates that these will be utilised within three years of the reporting
date. Discounting of the non-current element has not been applied because the discount would be immaterial.
21 Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities arising from temporary differences and unused tax losses after offset are as follows:
Deferred tax assets
Deferred tax liabilities
Net Position
2020
€m
23.0
(32.4)
2019
€m
14.1
(31.9)
(9.4)
(17.8)
Deferred tax arises from differences in the carrying value of items such as property, plant and equipment, intangibles, pension
obligations, and other temporary differences in the financial statements and the tax base established by the tax authorities.
The movement in the net deferred tax position for 2020 is as follows:
Balance
1 Jan
2020
Recognised
in profit or
loss
Recognised
in equity
€m
€m
€m
Recognised
in other
comprehensive
income
€m
Translation
adjustment
Arising on
acquisitions
Balance
31 Dec
2020
€m
€m
€m
Property, plant and
equipment
Intangibles
Other temporary differences
Pension obligations
Unused tax losses
(41.4)
(26.8)
42.5
0.9
7.0
(17.8)
(7.4)
4.1
10.6
(0.4)
(2.2)
4.7
-
-
(0.9)
-
-
(0.9)
-
-
-
4.1
-
4.1
1.2
1.2
(0.5)
0.1
(0.6)
1.4
(1.4)
(4.3)
3.4
1.4
-
(0.9)
(49.0)
(25.8)
55.1
6.1
4.2
(9.4)
148
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 21 Deferred Tax Assets and Liabilities (continued)
The movement in the net deferred tax position for 2019 is as follows:
Balance
1 Jan
2019
Recognised
in profit or
loss
Recognised
in equity
€m
€m
(45.8)
(29.4)
40.8
0.8
8.4
(25.2)
5.0
3.0
(0.2)
0.3
(1.7)
6.4
€m
-
-
1.7
-
-
1.7
Recognised
in other
comprehensive
income
€m
Translation
adjustment
Arising on
acquisitions
Balance
31 Dec
2019
€m
€m
€m
-
-
-
-
-
-
(0.6)
(0.2)
0.1
(0.1)
0.3
(0.5)
-
(0.2)
0.1
(0.1)
-
(0.2)
(41.4)
(26.8)
42.5
0.9
7.0
(17.8)
Property, plant and
equipment
Intangibles
Other temporary differences
Pension obligations
Unused tax losses
22 Business Combinations
A key strategy of the Group is to create and sustain market leading positions through acquisitions in markets it currently operates
in, together with extending the Group’s footprint in new geographic markets. In line with this strategy, the principal acquisitions
completed during the year was as follows:
In April 2020, the Group acquired 100% of the share capital of the Colt Group, a leading provider of daylighting and smoke
management systems with a significant presence in Germany, the Netherlands, and the UK. The total consideration, including debt
acquired amounted to €41.0m. This was coupled with an assumed net defined benefit pension liability of €10.5m.
The Group also made a number of smaller acquisitions during the year for a combined cash consideration of €5.1m:
g the purchase of 100% of the share capital of Fire-US, a UK specialist passive fire product manufacturer and distributor; and
g the purchase of 100% of the share capital of Tanks.ie, a Water & Energy business.
The table below reflects the fair value of the identifiable net assets acquired in respect of the acquisitions completed during the year.
Any amendments to fair values will be made within the twelve month period from the date of acquisition, as permitted by IFRS 3,
Business Combinations.
Non-current assets
Intangible assets
Property, plant and equipment
Right of use assets
Retirement benefit assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Current liabilities
Trade and other payables
Provisions for liabilities
Lease liabilities
Non-current liabilities
Retirement benefit obligations
Lease liabilities
Deferred tax liabilities
Total identifiable assets
Non-controlling interests arising on acquisition** (Note 28)
Goodwill
Total consideration
Satisfied by:
Cash (net of cash acquired)
Deferred contingent consideration
Colt
€m
10.4
12.6
12.8
182.8
-
15.9
44.5
(50.3)
(14.0)
(4.0)
(193.3)
(8.6)
(0.5)
8.3
-
32.7
41.0
41.0
-
41.0
Other*
€m
5.2
(1.1)
-
-
-
(4.1)
(0.7)
(1.5)
(2.1)
-
-
-
(0.4)
(4.7)
0.8
9.0
5.1
5.1
-
5.1
Total
€m
15.6
11.5
12.8
182.8
-
11.8
43.8
(51.8)
(16.1)
(4.0)
(193.3)
(8.6)
(0.9)
3.6
0.8
41.7
46.1
46.1
-
46.1
*Included in Other are certain immaterial remeasurements of prior year accounting estimates as a result of the finalisation of the
assignment of fair values to identifiable net assets.
** Non-controlling interests arising are measured at the proportionate share of net assets.
149
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 22 Business Combinations (continued)
The acquired goodwill is attributable principally to the profit generating potential of the businesses, together with cross-selling
opportunities and other synergies expected to be achieved from integrating the acquired businesses into the Group’s existing business.
In the post-acquisition period to 31 December 2020, the businesses acquired during the year contributed revenue of €151.9m and
trading profit of €15.9m to the Group’s results.
The full year revenue and trading profit had the acquisitions taken place at the start of the year, would have been €4,620.0m and
€501.6m respectively.
The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to €50.8m. The fair
value of these receivables is €43.8m, all of which is recoverable, and is inclusive of an aggregate impairment provision of €7.0m.
There is €nil of goodwill (2019: €2.7m) which is expected to be deductible for tax purposes.
The Group incurred acquisition related costs of €5.4m (2019: €2.4m) relating to external legal fees and due diligence costs. These
costs have been included in operating costs in the Consolidated Income Statement.
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in respect of Colt
Group due to the relative size of the acquisition and the timing of the transaction. Any amendments to these fair values within the
twelve-month timeframe from the date of acquisition will be disclosable in the 2021 Annual Report, as stipulated by IFRS 3.
Prior year acquisitions
In the prior year, the Group acquired 85% of the share capital of Group Bacacier SAS, 100% of the share capital of WeGo Floortec
GmbH, 100% of the share capital of Epur SA, a French water treatment business; and also purchased of the assets of SkyCo a US
Light & Air business.
The fair values as recognised at 31 December 2019 of the acquired assets and liabilities at acquisition are set out below:
Non-current assets
Intangible assets
Property, plant and equipment (including ROU assets)
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Current liabilities
Trade and other payables
Provisions for liabilities
Non-current liabilities
Trade and other payables
Deferred tax liabilities
Total identifiable assets
Non-controlling interests arising on acquisition
(Note 28)
Goodwill
Total consideration
Satisfied by:
Cash (net of cash acquired)
Deferred contingent consideration
Bacacier
€m
Other*
€m
1.9
25.2
-
29.2
33.7
(36.6)
(0.3)
(3.6)
-
49.5
(3.7)
76.2
122.0
120.0
2.0
122.0
0.8
6.6
-
2.1
5.8
(6.3)
(1.5)
(1.4)
(0.2)
5.9
-
16.3
22.2
22.2
-
22.2
Total
€m
2.7
31.8
-
31.3
39.5
(42.9)
(1.8)
(5.0)
(0.2)
55.4
(3.7)
92.5
144.2
142.2
2.0
144.2
In the post-acquisition period to 31 December 2019, the businesses acquired during the current year contributed revenue of €38.7m
and trading profit of €2.0m to the Group’s results.
The full year revenue and trading profit had the acquisitions taken place at the start of the year, would have been €4,834.9m and
€509.5m respectively.
In the prior year, the Group incurred acquisition related costs of €2.4m relating to external legal fees and due diligence costs. These
costs have been included in operating costs in the Consolidated Income Statement.
150
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 2020
€m
2019
€m
32.5
32.5
23.8
-
23.8
2020
€m
95.6
95.6
23.7
0.1
23.8
2019
€m
95.6
95.6
23 Share Capital
Authorised
250,000,000 Ordinary shares of €0.13 each
(2019: 250,000,000 Ordinary shares of €0.13 each)
Issued and fully paid
Ordinary shares of €0.13 each
Opening balance – 182,785,222 (2019: 182,171,120) shares
Shares allotted– 617,016 (2019: 614,102) shares
Closing balance – 183,402,238 (2019: 182,785,222) shares
There were no adjustments to the authorised share capital during the year (2019: nil).
Details of share options exercised are set out in Note 3 to the financial statements.
24 Share Premium
At 1 January
At 31 December
25 Treasury Shares
Consideration paid
At 1 January
Repurchase of shares
Shares issued
2020
No. of
shares
Consideration
paid
€
1,907,826
-
(37,542)
6.21
-
6.18
Total
€m
11.8
-
(0.2)
2019
No. of
shares
Consideration
paid
€
1,969,143
15,718
(77,035)
6.40
40.50
(18.63)
Total
€m
12.7
0.6
(1.5)
At 31 December
1,870,284
6.21
11.6
1,907,826
6.21
11.8
Nominal value
No. of
shares
2020
Nominal
value
€
Total
€
No. of
shares
2019
Nominal
value
€
Total
€
At 1 January
Repurchase of shares
Shares issued
1,907,826
-
(37,542)
0.13 248,016
-
(4,880)
-
0.13
1,969,143
15,718
(77,035)
0.13
0.13
0.13
255,988
2,043
(10,015)
At 31 December
1,870,284
0.13 243,136
1,907,826
0.13
248,016
During the year, the Company issued 37,542 in satisfaction of obligations falling under share schemes.
The Company holds 1.0% (2019: 1.0%) of the issued ordinary share capital as treasury shares.
26 Retained Earnings
In accordance with Section 304 of the Companies Act 2014, the Company is availing of the exemption from presenting its individual
Income Statement to the Annual General Meeting and from filing it with the Registrar of Companies. The Company’s profit for the
financial year was €89.2m (2019: €28.6m).
151
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 27 Dividends
Equity dividends on ordinary shares:
2020 Interim dividend Nil cent (2019: 13.0 cent) per share
2019 Final dividend Nil cent (2018: 30.0 cent) per share
Proposed for approval at AGM
Final dividend of 20.6 cent (2019: Nil cent) per share
2020
€m
-
-
-
37.4
2019
€m
23.6
54.0
77.6
-
The 2020 Interim and 2019 Final dividends were cancelled during 2020 due to the initial uncertainty created by the pandemic.
This proposed dividend for 2020 is subject to approval by the shareholders at the Annual General Meeting and has not been included
as a liability in the Statement of Financial Position of the Group as at 31 December 2020 in accordance with IAS 10 Events after the
Reporting Period. The proposed final dividend for the year ended 31 December 2020 will be payable on 7 May 2021 to shareholders on
the Register of Members at close of business on 26 March 2021.
28 Non-Controlling Interests
At 1 January
Profit for the year attributable to non-controlling interests
Arising on acquisition (Note 22)
Dividends paid to minorities
Share of foreign operations’ translation movement
At 31 December
2020
€m
50.1
11.2
(0.8)
(1.2)
(10.6)
48.7
2019
€m
38.6
8.4
3.7
(0.4)
(0.2)
50.1
During the prior year, the Group acquired 85% of the ordinary share capital of Group Bacacier SAS, a French Insulated Panels
business. As part of the acquisition, the Group recognised the 15% non-controlling interests of €3.7m in 2019 and a movement of
€0.8m in the current year.
Further details are provided in Note 22.
29 Reconciliation of Net Cash Flow to Movement in Net Debt
Movement in cash and bank overdrafts
Drawdown of loans
Repayment of loans and borrowings
Decrease/(increase) in deferred consideration
Change in net debt resulting from cash flows
Translation movement - relating to US dollar loan
Translation movement – other
Derivative financial instruments movement
Net movement
Net debt at start of the year
Net debt at end of the year
Lease liabilities of €114.8m (2019: €122.3m) are excluded from net debt.
2020
€m
1,180.2
(751.2)
3.4
-
432.4
13.5
(41.4)
(7.5)
397.0
2019
€m
(117.1)
(7.8)
181.6
30.0
86.7
(5.0)
13.5
(0.1)
95.1
(633.2)
(728.3)
(236.2)
(633.2)
152
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 29 Reconciliation of Net Cash Flow to Movement in Net Debt (continued)
A reconciliation of liabilities arising from financing activities is set out below:
Bank loans and borrowings
Loan notes
Derivatives
Balance
1 Jan 2020
€m
10.5
840.9
(27.3)
824.1
Repayments
€m
(3.4)
-
-
(3.4)
Drawdowns /
Receipts
€m
Non cash
movements
€m
Balance
31 Dec 2020
€m
50.5
700.7
-
751.2
-
(13.5)
7.5
57.6
1,528.1
(19.8)
(6.0)
1,565.9
A reconciliation of liabilities arising from financing activities in 2019 is set out below.
Bank loans and borrowings
Loan notes
Derivatives
Balance
1 Jan 2019
€m
184.3
835.9
(27.4)
Repayments
€m
(181.6)
-
-
992.8
(181.6)
Drawdowns /
Receipts
€m
Non cash
movements
€m
Balance
31 Dec 2019
€m
7.8
-
-
7.8
-
5.0
0.1
5.1
10.5
840.9
(27.3)
824.1
30 Guarantees and Other Financial Commitments
(i) Guarantees and contingencies
The Group’s principal debt facilities are secured by means of cross guarantees provided by Kingspan Group plc. These include drawn
private placement notes of US$400m and €1,200.5m, undrawn banking facilities of €751m and a bilateral Green Loan of €50m.
(ii) Future capital expenditure
Capital expenditure in subsidiary entities, approved by the directors but not provided in the financial statements, is as follows:
Contracted for
Not contracted for
2020
€m
52.0
44.6
96.6
2019
€m
24.7
48.2
72.9
153
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 31 Pension Obligations
The Group operates defined contribution schemes in each of its main operating locations. The Group also has a number of defined
benefit schemes in the UK and mainland Europe.
Defined contribution schemes
The total cost charged to profit or loss of €22.0m (2019: €20.1m) represents employer contributions payable to these schemes
in accordance with the rules of each plan. An amount of €2.5m (2019: €3.1m) was included at year-end in accruals in respect of
defined contribution pension accruals.
Defined benefit schemes / obligations
The Group has three defined benefit schemes in the UK, all of which are closed to new members and to future accrual. The total
pension contributions to these schemes for the year amounted to €nil (2019: €nil) and the expected contributions for 2021 are €nil.
The Group also has pension obligations in mainland Europe which are accounted for as defined benefit obligations. These
obligations have been accounted for in line with the Group’s existing pension obligations whereby companies are not required to
fund independent schemes for post employment benefit obligations. Instead, commencing from the date the employee becomes
eligible to receive the income stream, this obligation is satisfied from available cash resources of the relevant employing company. A
provision has been made for the unfunded liability. €1.1m of pension entitlements have been paid to retired former employees during
the year (2019: €0.9m).
The pension costs relating to all of the above defined benefit obligations are assessed in accordance with the advice of qualified
actuaries. In the case of the three UK legacy schemes, the most recent actuarial valuations were performed as of 31 December 2020.
In general, actuarial valuations are not available for public inspection; however, the results of valuations are advised to members of
the various schemes.
The extent of the Group’s obligation under these schemes is sensitive to judgemental actuarial assumptions, of which the principal
ones are set out below. It is not considered that any reasonable sensitivity analysis on these assumptions would materially alter the
scheme obligations.
Life expectancies
Life expectancy for someone aged 65 - Males
Life expectancy for someone aged 65 - Females
Life expectancy at age 65 for someone aged 45 - Males
Life expectancy at age 65 for someone aged 45 - Females
Rate of increase in salaries
Rate of increase of pensions in payment
Rate of increase for deferred pensioners
Discount rate
Inflation rate
Movements in net liability recognised in the Statement of Financial Position
Net liability in schemes at 1 January
Acquired
Employer contributions
Recognised in income statement
Recognised in statement of comprehensive income
Foreign exchange movement
Net liability in schemes at 31 December
2020
2019
21.8
23.6
23.1
25.0
21.6
23.3
22.9
24.8
0% - 2.75%
0% - 2.05%
2.05%
0.3% - 1.5%
1.5% - 2.85%
0% - 2.75%
0% -1.9%
1.9%
0.7% - 2.0%
1.5% - 2.65%
2020
€m
(15.1)
(10.5)
1.6
(1.1)
(19.9)
(0.9)
(45.9)
2019
€m
(13.1)
(2.7)
1.2
(0.7)
(0.2)
0.4
(15.1)
154
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 31 Pension Obligations (continued)
Defined benefit pension income/expense recognised in the Income Statement
Current service cost
Other expenses
Settlements of scheme obligations
Total, included in operating costs
Movement on scheme obligations
Interest on scheme assets
Net interest expense, included in finance expense (Note 4)
Analysis of amount included in other comprehensive income
Actual return less interest on scheme assets
Experience gain arising on scheme liabilities
Actuarial gain arising from changes in demographic assumptions
Actuarial (loss)/gain arising from changes in financial assumptions
(Loss)/gain recognised in other comprehensive income
The cumulative actuarial loss recognised in other comprehensive income to date is €38.4m (2019: €18.5m).
In 2020, the actual return on plan assets was a gain of €11.8m (2019: loss of €8.1m).
Asset Classes and Expected Rate of Return
The assets in the scheme at each year-end were as follows:
Asset Classes as % of Total Scheme Assets
Equities
Bonds (Corporates)
Cash
Property
Liability Driven Investment (LDI)
2020
€m
(1.1)
(0.6)
0.6
(1.1)
(3.5)
3.4
(0.1)
2020
€m
17.5
0.2
(0.6)
(37.0)
(19.9)
2019
€m
(0.4)
(0.2)
(0.1)
(0.7)
(2.0)
2.0
-
2019
€m
6.1
0.1
1.6
(8.0)
(0.2)
2020
2019
50.5%
7.2%
3.4%
4.3%
34.6%
100%
41.2%
0.4%
0.4%
8.8%
49.2%
100%
155
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements 31 Pension Obligations (continued)
The net pension liability is analysed as follows:
Equities
Bonds (Corporates)
Cash
Property
Liability Driven Investment (LDI)
Fair market value of plan assets
Present value of obligation
Deficit
Analysed between:
Funded schemes’ surplus
Unfunded obligations
Related deferred tax (asset)
Changes in present value of defined benefit obligations
At 1 January
Acquired through business combination
Current service cost
Other expenses
Interest cost
Benefits paid
Settlement
Actuarial losses/(gains)
Effect of movement in exchange rates
At 31 December
Changes in present value of scheme assets during year
At 1 January
Acquired through business combination
Interest on scheme assets
Employer contributions
Benefits paid
Other expenses
Actual return less interest
Effect of movement in exchange rates
At 31 December
2020
€m
134.0
19.2
9.0
11.4
91.7
265.3
(311.2)
(45.9)
8.0
(53.9)
(45.9)
(6.1)
2020
€m
96.1
193.3
1.1
0.2
3.5
(10.3)
(0.6)
37.4
(9.5)
311.2
2020
€m
81.0
182.8
3.4
0.4
(9.1)
(0.4)
17.5
(10.3)
265.3
2019
€m
33.4
0.3
0.4
7.1
39.8
81.0
(96.1)
(15.1)
9.2
(24.3)
(15.1)
(0.9)
2019
€m
84.2
2.7
0.4
-
2.0
(3.2)
0.1
6.3
3.6
96.1
2019
€m
71.1
-
2.0
0.1
(2.1)
(0.2)
6.1
4.0
81.0
156
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Kingspan Group plc Annual Report & Financial Statements 2020 32 Related Party Transactions
The principal related party relationships requiring disclosure under IAS 24 Related Party Disclosures relate to (i) transactions between
group companies, (ii) compensation of key management personnel and (iii) goods and services purchased from Directors.
(i) Transactions between subsidiaries are carried out on an arm’s length basis.
The Company received €75.0m dividends from subsidiaries (2019: €20.0m), and there was a net increase in the intercompany
balance of €93.8m (2019: 45.3m decrease).
Transactions with the Group’s non-wholly owned subsidiaries primarily comprise trading sales and capital funding, carried out on
an arm’s length basis. These transactions are not considered to be material.
(ii) For the purposes of the disclosure requirements of IAS 24 Related Party Disclosures, the term “key management personnel” (i.e.
those persons having the authority and responsibility for planning, directing and controlling the activities of the Company),
comprise the Board of Directors who manage the business and affairs of the Company. As identified in the Report of the
Remuneration Committee, the directors, other than the non-executive directors, serve as executive officers of the Group.
Key management personnel compensation is set out in Note 6.
Mr Eugene Murtagh received dividends of €nil during the year from the Group (2019: €11.9m). Dividends of €nil were paid to
other key management personnel (2019: €0.98m). €nil (2019: €nil) was outstanding at year end.
(iii) The Group purchased legal services in the sum of €145,541 (2019: €125,947) from McCann FitzGerald Solicitors, a firm in which
Mr John Cronin is a partner. €74,076 (2019: €nil) was outstanding at year end.
33 Post Balance Sheet Events
There have been no material events subsequent to 31 December 2020 which would require adjustment to, or disclosure in this report.
34 Approval Of Financial Statements
The financial statements were approved by the directors on 19 February 2021.
157
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2020 (continued)Financial Statements
Other
Information
ALTERNATIVE PERFORMANCE MEASURES
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 of 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.
Financial Statements Reference
Trading profit
Note 2
Trading margin
Measures the trading profit as a percentage of revenue.
Financial Statements Reference
Trading Profit
Total Group Revenue
Trading margin
Note 2
Note 2
2020
€m
2019
€m
508.2
497.1
2020
€m
508.2
4,576.0
11.1%
2019
€m
497.1
4,659.1
10.7%
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.
Financial Statements Reference
Finance expense
Finance income
Less lease interest (IFRS 16)
Net Interest
Note 4
Note 4
Note 4
2020
€m
26.1
(1.1)
(3.6)
21.4
2019
€m
23.7
(2.9)
(3.8)
17.0
Adjusted earnings per share
The Group defines adjusted earnings per share as basic earnings per share adjusted for the impact, net of tax, of intangible
amortisation.
The Group defines adjusted diluted earnings per share as basic earnings per share adjusted for the impact, net of tax, of intangible
amortisation and the dilutive effect of share options.
Dilution is attributable to the weighted average number of share options outstanding at the end of the reporting period.
158
Kingspan Group plc Annual Report & Financial Statements 2020 Financial Statements Reference
Profit attributable to ordinary shareholders
Intangible amortisation
Intangible amortisation tax impact
Note 8
Note 10
Note 21
Weighted average
number of shares (‘000)
Adjusted earnings per share
Note 8
Weighted average number of shares for dilutive
calculation (‘000)
Note 8
Adjusted dilutive earnings per share
2020
€m
373.6
23.5
(4.1)
393.0
2019
€m
369.4
21.9
(3.0)
388.3
181,212
180,586
216.9 cent
215.0 cent
182,810
182,075
215.0 cent
213.2 cent
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.
Financial Statements Reference
2020
€m
2019
€m
Net cash flow from operating activities
Consolidated Statement of Cash Flows
638.5
520.4
Additions to property, plant and equipment
Consolidated Statement of Cash Flows
(131.8)
(161.0)
Proceeds from disposals of property, plant and
equipment
Interest received
Lease payments
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
Free cash flow
5.7
1.0
(33.7)
6.7
2.8
(31.8)
479.7
337.1
Return on capital employed (ROCE)
ROCE is the operating profit before interest and tax 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.
Net Assets
Net Debt
Financial Statements Reference
Consolidated Statement of Financial Position
Note 17
2020
€m
2,397.6
236.2
2019
€m
2,120.4
633.2
2,633.8
2,753.6
Operating profit before interest and tax
Consolidated Income Statement
484.7
475.2
Return on capital employed
18.4%
17.3%
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. Consistent with the 2019 APMs, this definition is in
accordance with the terms and conditions of the covenants as set out in the Group’s external borrowing arrangements.
Net Debt
Note 17
Financial Statements Reference
2020
€m
2019
€m
236.2
633.2
159
Financial Statements EBITDA
The Group defines EBITDA as earnings before finance costs, income taxes, depreciation, amortisation and the impact of IFRS 16.
Trading profit
Depreciation
Lease liability payments
EBITDA
Financial Statements Reference
Consolidated Income Statement
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
2020
€m
508.2
122.0
(33.7)
2019
€m
497.1
114.5
(31.8)
596.5
579.8
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.
Net Debt
EBITDA
Net Debt : EBITDA times
Financial Statements Reference
Note 17
2020
€m
236.2
596.5
0.40
2019
€m
633.2
579.8
1.09
Working capital
Working capital represents the net total of inventories, trade and other receivables and trade and other payables, net of
transactional foreign currency derivation excluded from net debt.
Financial Statements Reference
Trade and other receivables
Inventories
Trade and other payables
Foreign currency derivatives excluded from
net debt
Note 14
Note 13
Note 15
Note 19
Working capital
2020
€m
799.6
505.9
(854.5)
2019
€m
794.2
557.6
(768.9)
(0.2)
(0.1)
450.8
582.8
Working capital ratio
Measures working capital as a percentage of October to December turnover annualised. The annulations on turnover reflects the
current profile of the Group rather than a partial reflection of any acquisitions completed during the period.
Financial Statements Reference
Working capital
October - December turnover annualised
Working capital ratio
2020
€m
450.8
5,151.2
2019
€m
582.8
4,877.0
8.8%
11.9%
Total Shareholder Return (TSR)
Total Shareholder Return (TSR) is a is a key performance metric for the performance share plan (PSP).
The methodology for calculating the Total Shareholder Return assumes the following: the open price is set as the closing price of the
final trading day prior to the beginning of the performance period; the close price is set as the closing price on the final trading day of
the performance period; the calculation assumes all dividends are reinvested on the ex-dividend date, at the closing price on that day.
Annual Report Reference
2020
%
2019
%
Total Shareholder Return
Page 72
5.4
47.2
160
Kingspan Group plc Annual Report & Financial Statements 2020 SHAREHOLDER INFORMATION
The Annual General Meeting
Company Information
The Annual General Meeting of the
Company will be held on 30 April 2021
at 10.00 a.m.
Kingspan Group plc was incorporated on 14 August 1979. It is an Irish domiciled company
and the registered office is Kingspan Group plc, Dublin Road, Kingscourt, Co. Cavan, A82
XY31, Ireland. The registered company number of Kingspan Group plc is 70576.
Notice of the 2021 AGM will be
made available to view online at
http://www.kingspan.com/agm2021
The 2021 AGM is scheduled to be held after
the proposed migration (“Migration”) of
electronic settlement of the Company’s
shares from CREST to the settlement
system operated by Euroclear Bank,
currently scheduled for 15 March 2021, is
anticipated to have occurred. Details will
be provided in the Notice of the 2021 AGM
as to how shareholders of the Company
may attend and vote at the 2021 AGM
or appoint a proxy to attend and vote on
their behalf. Following Migration, holders
of CREST Depositary Instruments and
participants in the Euroclear Bank system
(not being shareholders in the Company)
may, in accordance with the rules and
procedures of Euroclear Bank and/or of
their relevant participant in Euroclear
Bank (such as their bank, broker or
nominee) submit their voting instructions
or proxy voting instructions requesting
that a proxy be appointed to attend and
vote at the 2021 AGM.
Amalgamation of
Shareholding Accounts
Shareholders who receive duplicate sets
of Company mailings due to multiple
accounts in their name should write to
the Company’s Registrar to have their
accounts amalgamated.
Warning to Shareholders
Many companies have become aware
that their shareholders have received
unsolicited phone calls or correspondence
concerning investment matters. These are
typically from overseas based “brokers”
who target shareholders offering to sell
them what often turn out to be worthless
or high-risk shares in US or UK investments.
They can be very persistent and extremely
persuasive. Shareholders are therefore
advised to be very wary of any unsolicited
advice, offers to buy shares at a discount
or offers of free company reports.
Please note that it is very unlikely
that either the Company or the
Company’s Registrar, Computershare,
would make unsolicited telephone
calls to shareholders and that any
such calls would relate only to official
documentation already circulated to
shareholders and never in respect of
investment “advice”.
If you are in any doubt about the veracity
of an unsolicited phone call, please
call either the Company Secretary or
the Registrar.
Share Registrar
Administrative enquiries about the holding of Kingspan Group plc shares should be
directed to:
The Company Registrar:
Computershare Investor Services (Ireland) Limited,
3100 Lake Drive,
Citywest Business Campus,
Dublin 24,
D24 AK82.
Financial Calendar
Preliminary Results
Trading Update
AGM
Half-Yearly Update
Trading Update
Bankers
Bank of America Merrill
Lynch
ING Bank NV
Commerzbank
KBC Bank NV
Bank of Ireland
Solicitors
19 February 2021
30 April 2021
30 April 2021
20 August 2021
15 November 2021
HSBC Bank plc
BNP Paribas
Danske Bank AS
Ulster Bank Ireland Limited
McCann FitzGerald,
Riverside One,
Sir John Rogerson’s Quay,
Dublin 2,
Ireland.
Allen & Overy LLP,
One Bishops Square,
London,
E1 6AD,
England.
Bank of America Merrill Lynch,
2 King Edward St,
Farringdon,
London,
EC1A 1HQ,
England.
Stockbrokers
Goodbody,
Ballsbridge Park,
Ballsbridge,
Dublin 4,
Ireland.
Auditor
EY
EY Building,
Harcourt Centre,
2 Harcourt St,
Saint Kevin’s,
Dublin
Ireland.
161
Financial Statements Information required by
the European Communities
(Takeover Bids (Directive 2004/25/
Ec)) Regulations 2006
The information required by Regulation
21 of the above Regulations as at 31
December 2020 is set out below.
Rights and obligations attaching to
the Ordinary Shares
The Company has no securities in issue
conferring special rights with regards control
of the Company.
All Ordinary Shares rank pari passu, and
the rights attaching to the Ordinary Shares
(including as to voting and transfer) are
as set out in the Company’s Articles of
Association (“Articles”). The Articles of
Association also contain the rules relating to
the appointment and removal of directors,
rules relating to the amending the Articles of
Association, the powers of the Company’s
directors and in relation to issuing or buying
back by the Company of its shares. A copy of
the Articles may be found on www.kingspan.
com or may be obtained on request to the
Company Secretary.
Holders of Ordinary Shares are entitled to
receive duly declared dividends in cash or,
when offered, additional Ordinary Shares.
In the event of any surplus arising on the
occasion of the liquidation of the Company,
shareholders would be entitled to a share
in that surplus pro rata to their holdings
of Ordinary Shares.
Holders of Ordinary Shares are entitled
to receive notice of and to attend, speak
and vote in person or by proxy, at general
meetings having, on a show of hands,
one vote, and, on a poll, one vote for each
Ordinary Share held. Procedures and
deadlines for entitlement to exercise, and
exercise of, voting rights are specified in
the notice convening the general meeting
in question. There are no restrictions on
voting rights except in the circumstances
where a “Specified Event” (as defined in
the Articles) shall have occurred and the
Directors have served a Restriction Notice
on the shareholder. Upon the service of such
Restriction Notice, no holder of the shares
specified in the notice shall, for so long as
such notice shall remain in force, be entitled
to attend or vote at any general meeting,
either personally or by proxy.
Holding and transfer of ordinary shares
The Ordinary Shares may be held in
either certificated or, until Migration,
uncertificated form (through CREST).
Save as set out below, there is no
requirement to obtain the approval of the
Company, or of other shareholders, for a
transfer of Ordinary Shares. The Directors
may decline to register (a) any transfer of a
partly-paid share to a person of whom they
do not approve, (b) any transfer of a share to
more than four joint holders, (c) any transfer
of a share on which the Company has a lien,
and (d) any transfer of a certificated share
unless accompanied by the share certificate
and such other evidence of title as may
reasonably be required. The registration
of transfers of shares may be suspended
at such times and for such periods (not
exceeding 30 days in each year) as the
Directors may determine.
Transfer instruments for certificated shares
are executed by or on behalf of the transferor
and, in cases where the share is not fully
paid, by or on behalf of the transferee.
Transfers of uncertificated shares may,
until Migration, be effected by means of a
relevant system in the manner provided for
in the Companies Act, 1990 (Uncertificated
Securities) Regulations, 1996 (the “CREST
Regulations”) and the rules of the relevant
system. The Directors may refuse to register
a transfer of uncertificated shares only in
such circumstances as may be permitted
or required by the CREST Regulations. The
Articles contain provisions designed to
facilitate the Company’s participation in the
Euroclear Bank settlement system following
Migration and to facilitate the exercise of
rights in the Company by holders of interests
in Ordinary Shares that are held through the
Euroclear Bank system.
Rules concerning the appointment
and replacement of the directors and
amendment of the Company’s Articles
Unless otherwise determined by ordinary
resolution of the Company, the number
of Directors shall not be less than two or
more than 15.
Subject to that limit, the shareholders in
general meeting may appoint any person to
be a director either to fill a vacancy or as an
additional director. The directors also have
the power to co-opt additional persons as
directors, but any director so co-opted is
under the Articles required to be submitted
to shareholders for re-election at the first
Annual General Meeting following his or
her co-option.
The Articles require that at each Annual
General Meeting of the Company one-third
of the directors retire by rotation. However,
in accordance with the recommendations
of the UK Corporate Governance Code, the
directors have resolved they will all retire and
submit themselves for re-election by the
shareholders at the Annual General Meeting
to be held on 1 May 2020.
The Company’s Articles may be amended
by special resolution (75% majority of votes
cast) passed at general meeting.
Powers of directors including powers in
relation to issuing or buying back by the
Company of its shares
Under its Articles, the business of the
Company shall be managed by the directors,
who exercise all powers of the Company
as are not, by the Companies Acts or the
Articles, required to be exercised by the
Company in general meeting.
The directors are currently authorised
to issue a number of shares equal to the
authorised but as yet unissued share capital
of the Company on such terms as they
may consider to be in the best interests
of the Company, under an authority that
was conferred on them at the Annual
General Meeting held on 1 August 2021. The
directors are also currently authorised on
the issue of new equity for cash to disapply
the strict statutory pre-emption provisions
that would otherwise apply, provided
that the disapplication is limited to the
allotment of equity securities in connection
with (i) any rights issue or any open offer
to shareholders, or (ii) the allotment of
shares not exceeding in aggregate 5% of
the nominal value of the Company’s issued
share capital, or (iii) for the purpose of
financing (or refinancing) an acquisition
or other capital investment of a kind
contemplated by the UK Pre-emption
Group not exceeding in aggregate 5%
of the nominal value of the Company’s
issued share capital. Both these authorities
expire at the conclusion of the next
Annual General Meeting unless renewed
and resolutions to that effect are being
proposed at the Annual General Meeting to
be held on 30 April 2021.
The Company may, subject to the
Companies Acts and the Articles, purchase
any of its shares and may either cancel or
hold in treasury any shares so purchased,
and may re-issue any such treasury shares
on such terms and conditions as may be
determined by the directors. The Company
shall not make market purchases of its own
shares unless such purchases have been
authorised by a special resolution passed by
the members of the Company at a general
meeting. At the Annual General Meeting
held on 1 May 2020, shareholders passed a
resolution giving the Company, or any of its
subsidiaries, the authority to purchase up
to 10% of the Company’s issued Ordinary
Shares. At the Annual General Meeting to be
held on 30 April 2021, shareholders are being
asked to renew this authority.
Miscellaneous
There are no agreements between
shareholders that are known to the
Company which may result in restrictions on
the transfer of securities or voting rights.
Certain of the Group’s banking facilities
include provisions that, in the event of a
change of control of the Company, could
oblige early prepayment of the facilities.
Certain of the Company’s joint venture
arrangements also contain provisions that
would allow the counterparty to terminate
the agreement in the event of a change of
control of the Company. The Company’s
Performance Share Plan contains change
of control provisions which allow for the
acceleration of the exercise of share awards
in the event of a change of control of
the Company.
There are no agreements between the
Company and its Directors or employees
providing for compensation for loss of office or
employment (whether through resignation,
purported redundancy or otherwise) that
occurs because of a takeover bid.
162
Kingspan Group plc Annual Report & Financial Statements 2020 PRINCIPAL SUBSIDIARY UNDERTAKINGS
List of principal subsidiary and joint venture companies and the percentage shareholding held by Kingspan Group plc, either directly
or indirectly pursuant to Section 314 of the Companies Act 2014:
% Shareholding
Nature of Business
IRELAND
Aerobord Limited
Kingscourt Trustee Company Limited
Kingspan Century Limited
Kingspan Holdings (Irl) Limited
Kingspan Holdings (North America) Limited
Kingspan Holdings (Overseas) Limited
Kingspan Holdings Limited
Kingspan Insulation Limited
Kingspan International Finance Unlimited Company
Kingspan Light & Air Limited
Kingspan Limited
Kingspan RE Limited
Kingspan Securities 2016 Designated Activity Company
Kingspan Securities 2017 Designated Activity Company
Kingspan Securities Limited
Kingspan Securities No. 2 Limited
Kingspan Tate Limited
Kingspan Water & Energy Limited
KSP Property Limited
UNITED KINGDOM
Colt Group Limited
Colt International Licensing Limited
Colt International Limited
Colt Investments Limited
Ecotherm Insulation (UK) Limited
KSP Europe Limited
Euroclad Group Limited
Fuel Tank Shop Limited
Joris Ide Limited
Kingspan Access Floors Limited
Kingspan Energy Limited
Kingspan Light & Air (UK & Ireland) Limited
Kingspan Water & Energy Limited
Kingspan Group Limited
Kingspan Insulation Limited
Kingspan Limited
Kingspan Services (UK) Limited
Kingspan Technical Insulation Limited
Kingspan Timber Solutions Limited
Kingspan Trustee Company Limited
Springvale Insulation Limited
Tanks Direct Limited
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Manufacturing
Trustee Company
Manufacturing
Management & Procurement
Holding Company
Holding Company
Holding Company
Manufacturing
Finance Company
Sales & Marketing
Manufacturing
Property Company
Finance Company
Finance Company
Finance Company
Finance Company
Sales & Marketing
Manufacturing
Property Company
Holding Company
Product Development
Sales & Marketing
Holding Company
Manufacturing
Finance Company
Manufacturing
Sales & Marketing
Manufacturing
Manufacturing
Sales & Marketing
Manufacturing
Manufacturing
Holding Company
Manufacturing
Manufacturing
Management & Procurement
Manufacturing
Manufacturing
Trustee Company
Manufacturing
Sales & Marketing
163
Financial Statements % Shareholding
Nature of Business
AUSTRALIA
Kingspan Insulation Pty Limited
Kingspan Insulated Panels Pty Limited
Kingspan Water & Energy Pty Limited
Tate Asia-Pacific Pty Limited
AUSTRIA
Kingspan GmbH
Colt International GmbH
BELGIUM
Colt International NV
isomasters NV
Joris Ide NV
Kingspan Access Floors Europe NV
Kingspan Door Components SA
Kingspan Insulation NV
Kingspan Light & Air Belgium NV
Kingspan NV
Epur SA
BOSNIA AND HERZEGOVINA
Kingspan D.O.O.
BRAZIL
Kingspan-Isoeste Construtivos Isotérmicos S/A.
Kingspan Isoeste Trade Importadora E Exportadora Limitada
CANADA
Kingspan Insulated Panels Limited
Tate ASP Access Floors Inc.
Vicwest Inc.
CHILE
Synthesia Technology S.p.A.
CHINA
Colt (China) Manufacturing Company Limited
COLUMBIA
Kingspan Comercial S.A.S.
PanelMET S.A.S.
Synthesia Technology S.A.S.
COSTA RICA
Acusterm Costa Rica S.R.L.
CROATIA
Kingspan D.O.O.
CZECH REPUBLIC
Balex Metal S.R.O.
Colt International S.R.O.
Kingspan A.S.
DENMARK
Kingspan A/S
Kingspan Insulation ApS
ESTONIA
Kingspan Insulation oü
Kingspan oü
100
100
85
100
100
100
100
62.5
100
100
100
100
100
100
100
100
51
51
100
100
100
100
100
51
51
100
100
100
100
100
100
100
100
100
100
Manufacturing
Manufacturing
Manufacturing
Sales & Marketing
Sales & Marketing
Sales & Marketing
Sales & Marketing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Sales & Marketing
Manufacturing
Sales & Marketing
Manufacturing
Sales & Marketing
Manufacturing
Sales & Marketing
Manufacturing
Sales & Marketing
Manufacturing
Sales & Marketing
Manufacturing
Sales & Marketing
Sales & Marketing
Sales & Marketing
Sales & Marketing
Sales & Marketing
Manufacturing
Sales & Marketing
Sales & Marketing
Sales & Marketing
Sales & Marketing
164
Kingspan Group plc Annual Report & Financial Statements 2020 FINLAND
Kingspan Insulation Oy
Kingspan Oy
FRANCE
Colt France S.a.r.l.
Comptoir du Batiment et de L'Industrie SAS
Groupe Bacacier SAS
Isocab France SAS
Joris Ide Auvergne SAS
Joris Ide Sud Ouest SAS
Kingspan Light & Air SAS
Kingspan S.a.r.l.
Profinord S.a.r.l.
Societe Bretonne de Profilage SAS
GERMANY
Colt International GmbH
Essmann Gebäudetechnik GmbH
Hype GmbH
Joris Ide Deutschland GmbH
Kingspan Access Floors GmbH
Kingspan Environmental GmbH
Kingspan GmbH
Kingspan Holding GmbH
Kingspan Insulation GmbH & Co. KG
Kingspan Services Deutschland GmbH
Schütze GmbH
STG Beikirch GmbH
Technocon GmbH
HONG KONG
Chemprogress HK Ltd
HUNGARY
Essmann Hungaria Kft.
Kingspan Kereskedelmi Kft.
Joris Ide Kft.
INDIA
Kingspan Jindal Private Limited
ISLE OF MAN
Aslan General Insurance Limited
LATVIA
Kingspan SIA
Balex Metal SIA
LITHUANIA
Balex Metal UAB
Kingspan UAB
MALTA
KSP Finance (Europe) Limited
KSP Holdings (Europe) Limited
KSP Investments (Europe) Limited
MEXICO
Kingspan Insulated Panels S.A. DE C.V.
Synthequimica Mexicana S.R.L. DE C.V.
% Shareholding
Nature of Business
100
100
100
100
85
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
100
100
100
Manufacturing
Sales & Marketing
Sales & Marketing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Sales & Marketing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Sales & Marketing
Sales & Marketing
Holding Company
Manufacturing
Sales & Marketing
Manufacturing
Manufacturing
Design Services
Sales & Marketing
Sales & Marketing
Manufacturing
Manufacturing
Manufacturing
Insurance
Sales & Marketing
Manufacturing
Sales & Marketing
Sales & Marketing
Finance Company
Finance Company
Finance Company
Manufacturing
Sales & Marketing
165
Financial Statements MOROCCO
SM Polyurethanes S.á.r.l.
NETHERLANDS
Colt International Beheer BV
Colt International BV
Colt International Holding BV
Colt International Productie BV
Hoesch Bouwsystemen B.V.
Kingspan B.V.
Kingspan Holding Netherlands B.V.
Kingspan Insulation B.V.
Kingspan (MEATI) B.V.
Kingspan Unidek B.V.
Joris Ide Netherlands B.V.
Kingspan Light & Air Production NL B.V.
Kingspan Light & Air NL B.V.
NEW ZEALAND
Kingspan Insulation NZ Limited
Kingspan Limited
NORWAY
Kingspan AS
Kingspan Insulation AS
Kingspan Miljo AS
Vestfold Plastindustri AS
PANAMA
Acusterm Panama S.A.
Huurre Panama S.A.
Synthesia Technology S.A.
PERU
Synthesia Technology S.A.C.
POLAND
Balex Metal Sp. Z o.o.
Colt International Sp Z o.o.
Essmann Polska Sp. Z o.o.
Kingspan Environmental Sp. Z o.o.
Kingspan Sp. Z o.o.
PORTUGAL
Colt Portugal SA
QATAR
Kingspan Insulation WLL
ROMANIA
Kingspan S.R.L.
Joris Ide S.R.L.
RUSSIA
Kingspan LLC
Kingspan Nevinnomyssk LLC
% Shareholding
Nature of Business
100
100
100
100
100
100
100
100
100
85
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
Sales & Marketing
Holding Company
Sales & Marketing
Holding Company
Manufacturing
Sales & Marketing
Sales & Marketing
Holding Company
Manufacturing
Holding Company
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Sales & Marketing
Sales & Marketing
Sales & Marketing
Sales & Marketing
Sales & Marketing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Sales & Marketing
Manufacturing
Sales & Marketing
Sales & Marketing
Manufacturing
Manufacturing
Sales & Marketing
Sales & Marketing
Sales & Marketing
Manufacturing
Manufacturing
Manufacturing
166
Kingspan Group plc Annual Report & Financial Statements 2020 % Shareholding
Nature of Business
SAUDI ARABIA
Colt Arabia Limited
SERBIA
Kingspan D.O.O.
SINGAPORE
Colt Ventilation East Asia Pte Limited
Hoesch Bausysteme Pte Limited
SLOVAKIA
Balex Metal A.S.
Colt International S.R.O.
Kingspan S.R.O.
Kingspan Light & Air Production SVK S.R.O.
SLOVENIA
Kingspan D.O.O.
SPAIN
Colt España SA
Huurre Iberica S.A.
Kingspan Insulation S.A.
Kingspan Shaped Solutions SL
Kingspan Suelo Technicos S.L.
Synthesia Technology Europe SLU
Teczone Española S.A.
SWEDEN
Kingspan AB
Kingspan Insulation AB
SWITZERLAND
Colt International (Schweiz) AG
Kingspan GmbH
TURKEY
Kingspan Yapi Elemanlari A.S.
UKRAINE
Balex Metal LLC
Kingspan Ukraine LLC
UNITED ARAB EMIRATES
Colt International LLC
Kingspan Insulated Panels Manufacturing LLC
Kingspan Insulation LLC
UNITED STATES
ASM Modular Systems Inc.
CPI Daylighting Inc.
Daylighting Contracts Inc.
Dri-Design Inc.
Kingspan Insulated Panels Inc.
Kingspan Insulation LLC
Kingspan Light & Air LLC
Morin Corporation
Pre-insulated Metal Technologies Inc.
Synthesia Technology Inc.
Tate Access Floors Inc.
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
85
100
100
100
85
90
100
100
100
95
100
100
100
100
100
100
100
Manufacturing
Sales & Marketing
Sales & Marketing
Sales & Marketing
Manufacturing
Sales & Marketing
Sales & Marketing
Manufacturing
Sales & Marketing
Sales & Marketing
Manufacturing
Manufacturing
Manufacturing
Sales & Marketing
Manufacturing
Manufacturing
Sales & Marketing
Manufacturing
Sales & Marketing
Sales & Marketing
Manufacturing
Sales & Marketing
Property Company
Sales & Marketing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Sales & Marketing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Pursuant to section 316 of the Companies Act 2014, a full list of subsidiaries will be annexed to the Company’s Annual Return to be
filed in the Companies Registration Office in Ireland.
167
Financial Statements OTHER INFORMATION
5 Year
Summary
2020
2019
2018
2017
2016
Results (amounts in €m)
Revenue
Trading profit
Profit before tax
Operating cashflow
Equity (amounts in €m)
Gross assets
Working capital
Total shareholder equity
Net debt
Ratios
4,576.0
508.2
459.7
750.8
5,341.6
450.8
2,397.6
236.2
Net debt as % of total shareholders’ equity
Current assets / current liabilities
Net debt / EBITDA
9.9%
2.21
0.40
Per Ordinary Share (amounts in €cent)
Earnings
Operating cashflows
Net assets
Dividends
206.2
414.3
1,323.1
20.6
4,659.1
497.1
454.4
627.1
4,288.4
582.8
2,120.4
633.2
29.9%
1.66
1.09
204.6
347.3
1,174.2
13.0
4,372.5
445.2
404.9
530.3
4,029.4
543.9
1,788.9
728.3
40.7%
1.59
1.40
184.0
294.9
994.7
42.0
3,668.1
377.5
346.5
362.5
3,235.6
477.8
1,568.0
463.9
29.6%
1.65
1.05
159.0
202.1
876.7
37.0
3,108.5
340.9
314.0
377.1
3,004.6
382.7
1,471.5
427.9
29.1%
1.56
1.06
143.8
212.3
828.4
33.5
Average number of employees
15,424
14,529
13,469
11,133
10,396
REVENUE
(€m)
2020
2019
2018
2017
2016
TRADING PROFIT
(€m)
2020
2019
2018
2017
2016
EPS
(cent)
2020
2019
2018
2017
2016
DPS
(cent)
2020
2019
2018
2017
2016
4,576.0
4,659.1
4,372.5
3,668.1
3,108.5
508.2
497.1
445.2
377.5
340.9
206.2
204.6
184.0
159.0
143.8
20.6
13.0
42.0
37.0
33.5
168
Kingspan Group plc Annual Report & Financial Statements 2020
Aligned with our Planet Passionate
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our environmental impact, this report
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Recycling paper reduces waste that would
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effects of climate change and growing pressures
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move towards a low-carbon circular economy.
Paper is a truly sustainable product, and recycled
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