Annual Report
& Financial
Statements
2
0
2
2
Pathways to
a Sustainable
Energy Future
Understanding
the Opportunity
There is public and political
will to radically rethink
global energy security.
Page 2
Energy
Conservation
Saving energy is the
cheapest, safest and
cleanest way to reduce our
reliance on fossil fuels.
Page 6
Energy
Transition
Diversifi cation of the energy
network is key to our future
energy security.
Page 10
Pictured on the right is the Depot Boijmans Van Beuningen in
Rotterdam in the Netherlands. The Depot stores the artwork for
the adjacent museum of the same name. The museum’s collection
comprises more than 151,000 objects, only eight percent of
which can be displayed in the museum. In Depot Boijmans Van
Beuningen the public can enjoy the remainder of the collection.
Depot Boijmans Van Beuningen
Rotterdam, The Netherlands
Insulation
Kooltherm range
Light + Air
BA/RC Glazing System
With fi ve diff erent climate zones and the invaluable nature of the
collection, thermal effi ciency and security were key considerations
in the choice of building envelope solutions. Kingspan worked with
the architects, MVRDV, to customise the optimal solution.
Our reliance on fossil
fuels has expanded
from a climate
crisis to an energy
poverty crisis.
Scan here to watch
our full interactive
story online
Global consumption has increased
50% in the last 20 years.
2021 was an all-time high for global
energy use. The world is facing a global
climate crisis and we continue to add
fuel to the fire. 82% of primary energy
consumption continues to come from
fossil fuels.
50% 9
In Focus
Understanding
the Opportunity
There is public and political
will to radically rethink global
energy security.
See page 2
In Focus
Energy
Conservation
Saving energy is the cheapest,
safest and cleanest way to
reduce our reliance on fossil
fuels. Kingspan is enabling
conservation in the built
environment with our full
spectrum of insulation solutions.
See page 6
In Focus
Energy
Transition
Diversification of the energy
network is key to our future
energy security.
See page 10
1
In focus
Understanding
the Opportunity
Transition opportunity
Current public and political will presents
global leaders with a unique opportunity to
progress the energy transition agenda.
Even in advanced markets, such as the EU,
energy transition is a big challenge.
The EU’s renewable energy share grew from
11% in 2006 to 22% in 2021. The plan now is
to double that by 2030.
ENERGY COST AND
AVAILABILITY HAS A
SIGNIFICANT IMPACT
ON EU HOUSEHOLD
BUDGETS.
In the midst of
every crisis, lies
great opportunity.
- Albert Einstein
22%
The EU’s renewable
energy share in 2021
was only 22.2%.
45%
The EU hopes to increase
their renewable energy
share to 45% by 2030.
27%
of total EU energy consumption is by households.
77%
of EU household energy is used for heating and cooling.
70%
almost 70% of EU energy still comes from fossil fuels.
Progress towards renewable energy source targets for EU 27
50%
40%
30%
20%
10%
s
s
o
r
g
n
i
y
g
r
e
n
e
l
e
b
a
w
e
n
e
r
f
o
e
r
a
h
S
n
o
i
t
p
m
u
s
n
o
c
y
g
r
e
n
e
l
a
n
fi
2
In Focus
Understanding the Opportunity
3
The Dean Hotel
Cork, Ireland
Insulated Panels
K-Roc Karrier
0%
2005
2010
2015
2020 2030
2020 target
2030 target (current)
2030 target (proposed)
Linear 2030 trajectory
Renewable energy share
Kingspan Group plc Annual Report & Financial Statements 2022
Faced with energy shortfalls and
high prices, governments have so far
committed well over $500billion
to shield consumers from the
immediate impacts.
$2trillion
New policies in major energy markets will
help propel annual clean energy investment
to more than $2trillion by 2030 in the STEPS
(Stated Policies Scenario), a rise of more
than 50% from today.
- IEA World Energy Outlook 2022
THIS CRISIS IS
DIFFERENT, TODAY
THERE ARE PATHWAYS
TO A SUSTAINABLE
ENERGY FUTURE.
Swansea Arena
Swansea, Wales
Insulated Panels
Eurobond Rainspan
Energy
Conservation
It is estimated that over 75% of the EU’s
building stock is energy inefficient.
If we can make our buildings more
efficient, we can save a considerable
amount of energy annually, driving down
the need for, and reliance upon, fossil fuel
energy production.
Energy
Transition
Solar energy is the most abundant,
and one of the most renewable energy
resources on earth. According to the
National Oceanic and Atmospheric
Administration (NOAA), 173,000
terawatts of solar energy strike the earth
continuously which is more than 10,000
times the world’s total energy use.
Every community, indeed every building,
can play a part in transitioning to
smarter, renewable energy sources.
AT KINGSPAN WE’RE WORKING
TO INNOVATE AND DEPLOY NEW
TECHNOLOGIES THAT ADDRESS THESE
OPPORTUNITIES AT A GLOBAL SCALE.
4
Kingspan Group plc Annual Report & Financial Statements 2022
In Focus
Understanding the Opportunity
5
In focus
Energy
Conservation
SAVING ENERGY IS THE
CHEAPEST, SAFEST
AND CLEANEST WAY TO
REDUCE OUR RELIANCE
ON FOSSIL FUELS.
45%
Insulation renovation alone could
reduce EU households’ home
heating energy use by up to 45%.
Ref: BPIE - Putting a Stop to Energy Waste
If we make our buildings
more effi cient we can save a
considerable amount of energy
annually, driving down the need
for, and reliance upon, fossil fuel
energy production.
Kingspan is enabling this
transition through its full
spectrum of building envelope
solutions.
Here are our products in action
Neuenstadt am Kocher
Germany
Insulated Panels;
Light + Air
KS1000 RW; Built-in light
domes; Smoke and Heat
Exhaust Ventilators
Simon Wegener©
SK Battery America
Georgia, USA
SK Battery America, a leading developer of
lithium-ion batteries for EVs, invested $2.6
billion in two battery manufacturing plants. The
massive 2.4 million square foot facility is as long
as 13 football fi elds and will employ 3,000 people
by the end of 2023, representing one of the
largest investments in a job-creating initiative in
Georgia’s history.
A poorly insulated home can lose:
30%
of its heat
through the
attic
25-30%
through the walls
10%
through
the fl oor
10%
through the
windows
and doors
Just as the EV industry is
about performance and
effi ciency, so too is Kingspan’s
QuadCore™ insulated panel,
off ering best-in-class thermal
performance and faster build
times versus traditional wall
assemblies.
- Brent Trenga
Sustainability Director, Kingspan
North America
6
Kingspan Group plc Annual Report & Financial Statements 2022
Kingspan Group plc Annual Report & Financial Statements 2022
In Focus
Energy Conservation
7
40%
Designed to achieve
a 40% carbon reduction over
building regulations beyond
the baseline of Part L of the
2010 Building Regulations.
Dixon Hotel
London, England
Insulation
Thermataper TT47;
Thermaroof TR27
Conservation in
architecture
and energy
The newest addition to Marriott’s
Autograph Collection blends the
building’s Edwardian past with more
modern styling, including modern,
advanced insulation.
The completed renovation achieved a
‘Very Good’ rating under BREEAM 2014.
Roof replacement
without
compromise -
Neuenstadt am
Kocher, Germany
The client’s objective was to renovate
the existing roof quickly, smoothly and
cost effectively, while also creating
better lighting and working conditions
inside the building.
Kingspan Insulated Panels and
Kingspan Light + Air worked
together to provide planning and
implementation services to the client.
Simon Wegener©
High-performing
KS1000 RW insulated panels
were chosen for thermal
performance and build-speed
advantages.
Cost effective
Ease of installation reduced
project labour costs while
the improved thermal
performance reduced the
energy running costs of the
building for the long-term.
Improved working
conditions
The built-in light domes
improved indoor working
conditions and reduced
energy consumption from
artificial lighting.
CONSERVATION IS IMPORTANT BUT IT’S ONLY ONE LEG
OF THE JOURNEY TO A BRIGHTER ENERGY FUTURE.
We also need to diversify away from fossil fuel generated energy and Kingspan is supporting this transition.
8
Kingspan Group plc Annual Report & Financial Statements 2022
In Focus
Energy Conservation
9
In focus
Energy
Transition
THERE IS NO SINGLE
PERFECT RENEWABLE
ENERGY SOURCE TO
TRANSITION TO.
Diversifi cation of the energy network is
key to our future energy security.
Communities and individual buildings
need to be able to sustainably serve
their needs in energy and heat. In some
places, that future is already here, and
so is Kingspan.
Here are some of the ways Kingspan is supporting that transition:
1
Thermal energy at
a municipal level
In a district heating system, the heat in
your building, your neighbours’ buildings,
and the nearby offi ce, is all being piped
from the same centralised source.
This centralisation is more effi cient
than heat being generated by each
individual building.
The energy powering the heating system
can come from renewable sources or
waste heat from other industries such
as data centres.
INVESTMENT IN
RENEWABLE ENERGY
Wind
Data
Centre
Solar
Gas
Oil
Coal
Biomass
Individual
Gas
Central
Heat Pump
Connection
to other cities
Germany alone
will invest
€3bn
in District Heating by 2028,
supported by the EU.
Targeting reductions
of approximately
4m tonnes
of CO2e per year.
IKON, Global
Innovation Centre
Kingscourt, Ireland
10
Kingspan Group plc Annual Report & Financial Statements 2022
In Focus
Energy Transition
11
Kingspan LOGSTOR is supporting
this transition by supplying
pre-insulated pipes to district
heating networks.
One such project is the FWS-West district
heating project in Hamburg which aims to
transport climate-friendly district heat from the
planned CHP plant in Dradenau and industrial
waste heat in south Hamburg.
Logstor
Pre-insulated pipe system
FWS-West
Hamburg
Enabling the
transition away
from coal powered
heating.
360k tonnes
estimated annual
savings of CO2e.
20k households
converted from
fossil fuel
generated heating.
2
Solar energy built-in
Solar accounts for just 3.6% of global electricity
generation today. That’s going to change - fast.
REPowerEU propose to grow from c.200 GW
installed capacity today, to 600 GW of newly
installed solar power generation by 2030.
The EU is also considering phasing in
requirements to install solar power on all new
public and commercial buildings.
That’s where Kingspan PowerPanelTM fi ts in.
PowerPanelTM is Kingspan’s fi rst fully integrated
insulated panel with solar generation.
It’s already in action at our Kingscourt Insulated Panels Facility in Ireland
7,500 m2
of roof replaced in
10 days
380 MWh
solar generation
annually
123 tonnes
CO2e saved
annually
2x lux levels
from upgraded Kingspan
Light + Air daylighting
products
THE COMBINATION OF ENERGY
CONSERVATION AND ENERGY
TRANSITION ARE THE PATH FORWARD.
AT KINGSPAN, WE WILL CONTINUE TO
INNOVATE TO SUPPORT THIS SHIFT.
See more about our
strategic pillars
on pages 26-27
In Focus
Innovation
Planet
Passionate
Completing
the Envelope
Global
Energy Transition
13
Hamburg,
Germany
12
Kingspan Group plc Annual Report & Financial Statements 2022
Legacy Magnet Academy
California, USA
Insulated Panels
Dri-Design
Contents
Our Impact
We are Planet Passionate
Our Global Reach
Summary Financials
Business & Strategic Report
Chairman’s Statement
Business Model & Strategy
Chief Executive’s Review
Financial Review
Risk & Risk Management
Sustainability Report
Directors’ Report
The Board
Report of the Nominations
& Governance Committee
Report of the Remuneration
Committee
Report of the Audit &
Compliance Committee
Report of the Directors
Financial Statements
Independent Auditor’s Report
Financial Statements
Notes to the Financial Statements
15
16
17
18
21
24
32
43
48
56
74
78
88
110
118
129
130
138
145
Other Information
Alternative Performance Measures 190
Principal Subsidiaries and
Substantial Undertakings
Shareholder Information
Group 5 Year Summary
193
195
196
This copy of the statutory annual
report of Kingspan Group plc
for the year ended 31 December
2022 is not presented in the
ESEF-format as specified in the
Regulatory Technical Standards
on ESEF (Delegated Regulation
(EU) 2019/815). The ESEF annual
report is available at: https://
www.kingspan.com/group/
investors/reports-presentations.
Our
Impact
Our products directly
enable lower carbon
and healthier buildings,
now and into the
future.
Kingspan’s insulation
systems, sold in 2022,
will save an estimated
771 million MWh of
energy or 173 million
tonnes of CO2e over
their lifetime.
1 Assumes 60 year product life; based
on an EU airline disclosure of over
9.2m tonnes of CO2e emissions for 12
months to March 2022
2 Assumes a 20 year product life
3 Assumes 10 x 60W bulbs per home
Ultra Energy-Efficient
Recycled Materials
Conserved Water
Natural Daylight
173m tonnes
173 million tonnes of CO2e will
be saved over the life of our
insulation systems sold in 2022
Enough to power a major
airline for over 15 years1
803m
In 2022 alone we upcycled 803
million waste plastic bottles
Enough recycled bottles to
fill over 1,000 football pitches
48bn litres
Over 48 billion litres of rainwater
will be harvested by our tanks
produced in 2022
Enough water to fill over
600 million baths2
9bn lumens
The capacity to create 9 billion
lumens of natural light annually
through our daylighting systems
Enough to light
up 1 million homes3
14
Kingspan Group plc Annual Report & Financial Statements 2022
Contents / Our Impact
15
We Are Planet
Passionate
Through Planet Passionate we will
reduce carbon and energy intensity
in both our manufacturing
processes and products, and
continue our relentless pursuit to
help enable lower carbon buildings
that deliver more performance and
value, with clear targets to strive
for by 2030.
Gene M. Murtagh
Our Commitments
Our Global
Reach
Read more about
Planet Passionate
on page 64
5
9
2022 was another year of
global expansion with our
manufacturing footprint
growing from 198 sites to 212.
2
2
2
3
2
2
9
14
15
13
39
29
7
5
4
2
5
13
11
3
4
16
4
5
7
13
3
5
2
2
3
2
4
4
2
2
2
2
2
Carbon
Energy
@ Net Zero Carbon Manufacturing by 2030
@ 60% direct renewable energy use by 2030
@ 50% reduction in product CO2e intensity from
@ 20% on-site renewable energy generation by 2030
primary suppliers by 2030
@ Zero emission company funded cars by 2025
@ Solar PV systems on all wholly owned sites by 2030
Circularity
Water
@ Zero company waste to landfi ll by 2030
@ Harvest 100 million litres of rainwater annually by
@ Recycle 1 billion PET bottles into our manufacturing
2030
process annually by 2025
@ Support 5 ocean clean-up projects by 2025
@ QuadCore™ products utilising recycled PET
by 2025
2
2
2
2
2
2
2
2
2
Europe
Austria
Azerbaijan
Belgium
Bosnia
Bulgaria
Croatia
Czech Republic
Denmark
Estonia
Finland
France
Germany
Hungary
Ireland
Italy
Kazakhstan
Latvia
Lithuania
Netherlands
N. Ireland
Norway
Poland
Portugal
Romania
Serbia
Slovakia
Slovenia
Spain
Sweden
Switzerland
UK
Ukraine
Middle East
Qatar
Turkey
UAE
Africa
Egypt
Morocco
Our Locations
Americas
Brazil
Canada
Chile
Colombia
Mexico
Panama
Peru
Uruguay
USA
Read more
about our global
strategic pillars
on page 26-27
2
2
3
2
4
3
Sales
Manufacturing
Asia
China
India
Indonesia
Kyrgyzstan
Malaysia
Philippines
Singapore
Vietnam
Australasia
Australia
New Zealand
16
Kingspan Group plc Annual Report & Financial Statements 2022
We Are Planet Passionate / Our Global Reach
17
Summary Financials
9
Revenue
€8.3bn
+28%
2021: €6.5bn
9
EBITDA1
€998.3m
+12%
2021: €893.2m
1 Earnings before fi nance costs, income taxes, depreciation,
amortisation and non trading item
2 Operating profi t before amortisation of intangibles and
non trading item
3 Trading profi t divided by total revenue
9
9
Trading Profi t2
Trading Margin3
Profi t After Tax
9
EPS
€833.2m
+10%
2021: €754.8m
10.0%
-160bps
2021: 11.6%
€616.0m
+8%
329.5c
+8%
2021: €570.6m
2021: 305.6c
Driving
Sustainability,
Innovation and
Performance
Cincinnati Children’s
Hospital Utility Plant
Ohio, USA
Insulated Panels
Morin Matrix Series
18
Kingspan Group plc Annual Report & Financial Statements 2022
Summary Financials
19
Chairman’s
Statement
Jost Massenberg
I am pleased to report on
another year of record
performance by Kingspan,
in what turned out to be
a year of two halves. Solid
momentum in the early part
of 2022 gave way to more
challenging conditions in
the second half, delivering
total revenue for the year of
€8.3bn (2021: €6.5bn) and
record trading profits of
€833m (2021: €755m).
9
Revenue
€8.3bn
+28%
2021: €6.5bn
Delivering on strategy
This excellent result, against a backdrop of global uncertainty
in many of our markets, demonstrates the success of our core
strategy centred around the four key pillars of Innovation, Planet
Passionate, Global, and Completing the Envelope.
Our strong balance sheet enabled us to pursue investment
opportunities that bolster this strategy. During the year, we
achieved a new milestone in ‘Completing the Envelope’ by
establishing a new global Roofing + Waterproofing division
through the acquisition of Ondura Group, a global provider of
roofing solutions, and Derbigum, a leading Belgian based provider
of waterproofing membranes. In parallel, we have continued
our organic global growth, with several new facilities either
commissioned or in progress during the year including in Vietnam,
Australia, Brazil and the US.
We also continued to invest in new high performance technologies
with the development of the A-rated AlphaCore® insulation
board, and the new QuadCoreTM LEC (lower embodied carbon)
insulated panel, both of which will be launched to market in early
2023, and will help our end users to reduce the carbon footprint
of the built environment. Throughout the year we continued to
make meaningful progress in our Planet Passionate programme,
including further advances in absolute carbon emission reduction
across our global operations, full details of which will be published
shortly in our 2022 Planet Passionate Sustainability Report.
Dividend
Thanks to these positive results, the Board is pleased to
recommend a final dividend of 23.8 cent per share, which if
approved at the Annual General Meeting, will give a total dividend
for the year of 49.4 cent (compared to 45.9 cent in the prior
year). This is in line with the Company’s previously announced
shareholder returns policy. If approved, the final dividend will be
paid (subject to Irish withholding tax rules) on 9 May 2023 to
shareholders on the register at close of business on 14 April 2023.
Łódź Zoo
Łódź, Poland
Insulated Panels
K-Roc Karrier Panel
20
Chairman's Statement
21
Kingspan Group plc Annual Report & Financial Statements 2022Business & Strategic Report I extend my
sincere thanks to
management and
all our colleagues
across the business
for your hard work
and contribution to
Kingspan’s success
in 2022.
Management and employees
Kingspan is a team of over 22,000
talented and dedicated people. On
behalf of the Board, I particularly
want to welcome those who joined
the business during this past year.
They joined a pioneering team of
colleagues and innovators who make
a difference to our planet and the
climate challenge every day. During
2022, the Board and I were delighted
to meet and hear from many of
you on our trips to LATAM and the
Nordics, amongst others.
I extend my sincere thanks to
management and all our colleagues
across the business for your hard
work and contribution to Kingspan’s
success in 2022. I look forward to
meeting many more of you from the
Kingspan team on our site visits later
this year.
Ukraine and Turkey
Like so many others, we were shocked
as events unfolded in Ukraine last
year. I particularly want to send
my good wishes to our Ukrainian
colleagues, their families and their
loved ones. In response, Kingspan
supported the establishment of five
UNICEF Blue Dot Hubs, to provide
support and protection to those
fleeing the war. We also announced
our proposed €200m investment in a
new Building Technology Campus in
Ukraine where we will manufacture
a range of products to help meet
Ukraine’s vision of rebuilding a low
carbon built environment to the
highest levels of energy-efficiency.
We intend to establish this campus as
soon as conditions permit, and indeed
significant preparatory work is already
under way.
We were also deeply distressed by
the recent earthquake in Turkey and
Syria which has had a devastating
impact on many of our colleagues
in our Turkish facilities. Kingspan is
already providing practical support
to those on the ground, and on
behalf of the Board, I extend our
sincerest sympathies and support to
all those affected.
Board governance
In last year’s Annual Report, I
highlighted the Board’s key areas of
focus around governance. Following
on from that, the Board appointed
Better Boards to carry out an
independent review of the Board, into
its effectiveness, culture, committees,
and composition. The review found
that the Board and its committees
were working effectively, whilst also
highlighting the need to further build
diversity and international experience
at Board level. The Board has adopted
all the recommendations of the Better
Boards report, including formally
underpinning its commitment to
improving diversity through the
adoption of Kingspan’s Board Diversity
Policy. Further details of Better Boards
report and recommendations are set
out in the Report of the Nominations
& Governance Committee.
Board changes
During the year, we were delighted to
welcome Senan Murphy to the Board
as an independent non-executive
director. Senan brings a wealth of
industry and financial experience
across multiple sectors including
banking, building materials and
renewable energy. We are also very
pleased to announce the appointment
of Louise Phelan, who will join
the Board in April this year as an
independent non-executive director.
Louise is a highly respected business
leader and adviser, with experience
leading global organisations in
both the renewable energy and
finance sectors. We look forward to
benefitting from their experience in
the years ahead.
Following the conclusion of this
year’s Annual General Meeting in
April, both Michael Cawley and John
Cronin will be retiring from the Board
on the expiration of their terms of
office. Both Michael and John have
been valued Board and committee
members over the past nine years.
On behalf of the Board, I would like to
thank them both for their significant
contributions to Kingspan during
those years.
Looking ahead
No doubt 2023 will bring fresh
challenges to Kingspan and the wider
global community. However, I remain
confident that Kingspan’s strong
balance sheet and management’s
relentless focus on delivering on its
strategy, will continue to build on
the success of prior years in bringing
sustainable long-term value to our
stakeholders whilst supporting the
climate change goals of our end users
across the globe.
Jost Massenberg
Chairman
21 February 2023
9
Trading Profit
€833m
+10%
2021: €755m
22
Business & Strategic Report
Chairman's Statement
23
Kingspan Group plc Annual Report & Financial Statements 2022 Our Business Model
and Strategy
Our mission is to accelerate
a zero emissions future built
environment with people
and planet at its heart.
We believe buildings
of the future should:
Harness the power of the
Harness the power of the
natural environment
natural environment
@ Through natural daylighting
@ Through natural daylighting
and natural ventilation.
and natural ventilation.
Conserve energy
and reduce
carbon emissions
@ Through ultra energy
effi cient building envelopes
and building services.
Generate their own
renewable resources
@ Through solar energy,
rainwater harvesting and
wastewater treatment.
Our Solutions
Conserve energy and
reduce carbon emissions
Harness the power of the
natural environment
Insulated Panels
Data + Flooring
Light + Air
Kingspan Insulated Panels is
the world’s largest and leading
manufacturer of high-performance
insulated panel building envelopes.
Powered by Kingspan’s proprietary
and diff erentiated 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.
Kingspan is the world’s largest supplier
of raised access fl ooring and data
centre airfl ow management systems.
Raised access fl ooring is the most cost
eff ective way of creating a fl exible
working environment by utilising the
fl oor void to manage the distribution
of M&E services and HVAC systems.
Our systems have many benefi ts
including optimising overall building
height, achieving faster construction
with greater design fl exibility, enabling
easier reconfi guration of a workspace,
and improving indoor air quality.
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 aff ecting
occupant wellbeing in buildings.
Generate their own
renewable resources
Insulation
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 off er multiple
advantages including more internal
fl oorspace and daylight. In 2021 we
extended our exposure in insulation
to pre-insulated pipe systems
which service the district heating
segment. Industrial insulation is a
segment which contains signifi cant
opportunity for Kingspan to expand
in the future. 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. Kingspan has innovative
and ultra-performance products in
both piping and ducting insulation.
Roofi ng + Waterproofi ng
PowerPanel™
Kingspan has a long established
interest in developing a roofi ng
and waterproofi ng segment to
complement our insulation board
off ering. Roofi ng membrane and
roofi ng components are essential
elements for the energy effi ciency
and water protection of a building
envelope. Through the acquisitions
of Ondura Group and Derbigum
in 2022, Kingspan will have an
annual run rate in this segment of c.
€500m. Going forward we expect to
off er single component membrane
solutions and to also supply roof
systems incorporating membrane
and insulation, giving our customers
increased warranty protection from a
single trusted supplier.
PowerPanel™ is part of our Insulated
Panels division. It is an engineering
innovation from Kingspan which has
integrated our QuadCore™ insulated
panel with solar technology, enabling
a single fi x installation of high-
performance insulated panel with
solar power generation.
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.
24
Kingspan Group plc Annual Report & Financial Statements 2022
Business & Strategic Report
Our Solutions
25
Our Strategic
Pillars
Our business model and
our strategic pillars
enable the ongoing
conversion to ultra-
performance building
envelopes from outdated,
ineffi cient, methods of
construction.
Santa Monica High
School Discovery Building
California, USA
Data + Flooring
ConCore®
Innovation
Kingspan’s innovation agenda is driven across four
key themes - performance, solutions, sustainability,
and digitalisation.
We have a persistent focus on iterative performance
improvements in our current portfolio including
characteristics relating to thermal, structural,
sustainability, fi re and smoke. We innovate solutions
to enable architects and building designers to create
sustainable buildings, such as our integrated insulated
panel with solar-PV, PowerPanel™. And by progressively
surfacing our products digitally, we are making it easier to
fi nd them, specify them, buy them and track them.
Planet Passionate
Our Planet Passionate agenda is inextricably linked
with innovation. Planet Passionate is Kingspan’s
10-year sustainability programme which aims to
impact three big global issues – climate change,
circularity and protection of our natural world.
By setting ourselves challenging targets in the areas of
carbon, energy, circularity and water, we aim to make
signifi cant advances in both our business operations and
our products.
Completing the Envelope
Our strategy of ‘Completing the Envelope’ aims to
take our innovation and sustainability DNA and apply
them to a wider portfolio of products which are
complementary to our current off ering.
Our solutions driven approach deepens our relationships
with our customers and extends the opportunities to make
buildings better for the future.
Global
Kingspan is a truly global business, trading in
over 80 countries with 212 manufacturing sites
across the globe.
We aim to continue expanding globally to bring ultra-
performance building envelope solutions to markets which
are at an earlier stage in their evolution to sustainable and
effi cient methods of construction.
Strategic Highlights 2022
Innovation
Planet Passionate
Expansion
PowerPanel™
PowerPanel™ is a fully integrated,
factory manufactured, insulated
panel with solar PV. The initial
launch in the UK and Ireland
shows encouraging early signs and
preparation is now underway for
production in additional regions.
Internal carbon charge
From the 1st of January 2023 each
business unit will have an internal
charge of €70 per tonne for all energy
related carbon emissions (excluding
process and biogenic emissions).
This will help to further incentivise
the rapid deployment of
decarbonisation projects to support
the achievement of our net zero
carbon manufacturing target.
Roofi ng + Waterproofi ng
In 2022 Kingspan established its
Roofi ng + Waterproofi ng division
through the acquisition of Ondura
Group and Derbigum. Roofi ng has
been a targeted area of expansion
as a complementary category to our
energy effi cient building envelope
solutions. The 12-month revenue run
rate for this newly established division
should reach c. €500m.
QuadCoreTM (LEC)
Our Innovation and Planet Passionate
teams worked in partnership to
take signifi cant steps forward in the
development of lower embodied
carbon alternatives for our
QuadCore™ insulated panel products
produced in the UK and Ireland.
QuadCore™ LEC will have c.17%
lower embodied carbon (based on
LCA modules A - C) when compared
to the existing Quadcore™ insulated
panel product.
AlphaCore®
Part of our R&D agenda is working
and engaging with innovators
and small-scale manufacturers
of pioneering materials. In 2022
this led to a breakthrough in the
development of AlphaCore® which is
currently building a specifi cation bank
and is likely to advance further in the
years ahead.
Energy and Carbon
2022 saw a reduction of 26% in Scope
1 & 2 carbon emissions from a 2020
baseline. This reduction was achieved
through reduction in use of high GWP
blowing agents in North America, the
implementation of new renewable
energy contracts and the deployment
of 18 new rooftop solar-PV projects
across our business which have the
capacity to generate 6.4 GWh of
energy annually.
Bio-based Insulation
In March 2022, Kingspan completed
the acquisition of Troldtekt, a wood
fi bre acoustic insulation producer in
Denmark, marking our fi rst signifi cant
step into the ‘bio-based insulation’
category. This is an area in which we
expect to make further advances in
the foreseeable future.
Global
We continued to expand organically
in 2022, including breaking ground
on our fi rst facility in South East Asia,
Vietnam, late in the year. We have a
signifi cant amount of planned new
lines and facilities, which will add over
10% to our current global footprint
over the next three years. Within
those plans is our ambition to invest
over €200m in a Building Technology
Campus in Ukraine.
26
Kingspan Group plc Annual Report & Financial Statements 2022
Business & Strategic Report
Our Strategic Pillars
27
Our
Strategic
Goals
Our strategic goals are aligned with our mission
to accelerate a zero emissions future built
environment with people and planet at its heart.
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.
To advance materials,
building systems and
digital technologies
to address issues such
as climate change,
circularity and the
protection of our
natural world.
To be the world’s
leading provider of
low energy building
envelopes – Insulate
and Generate.
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.
Innovation
Global
Planet Passionate
Completing the Envelope
Hartman Marine Group
Urk, The Netherlands
Insulated Panels
QuadCoreTM;
Dri-Design; Multideck
Read more
about our strategic
pillars on page 26
Our Belief
Our Culture and Values
Code Of Conduct
Historically, construction has taken
from nature with little consideration
given to the finite resources available.
Buildings were constructed without
contemplating how they might
impact future generations. We believe
that buildings now and into 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 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.
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 global goal
across the business.
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.
Over 95% of Kingspan employees
have completed online training on our
updated Code of Conduct since its
launch in 2021. 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:
@ Clear, ethical and honest
behaviours and communications;
@ Compliance with the law;
@ Respect for the safety and
wellbeing of colleagues;
@ Protection of our Group assets;
and
@ Upholding our commitment to a
more sustainable future.
Please see
further
detail at:
28
Kingspan Group plc Annual Report & Financial Statements 2022
Our Strategic Goals / Our Values
29
Business & Strategic Report
2022 In a Nutshell
Trading Profit1
Applications
Revenue
€8.3bn
+28%
2021: €6.5bn
€833.2m
+10%
2021: €754.8m
Retail
Distribution
Leisure
Accommodation
Food
Manufacturing
Data Management
Infrastructure
How we operate
212
Global manufacturing
facilities
22,000+
Employees
Management controls
Quality systems
Responsible supply
chain partnerships
How we create value
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 are reducing our environmental impacts throughout our Planet
Passionate initiatives
The Dean Hotel
Cork, Ireland
Insulated Panels
K-Roc Karrier
15%
Other
85%
Energy Efficiency & Conversion
34%
Via Distribution
66%
Direct
24%
Residential
9%
Office
& Data
67%
Commercial & Industrial
Drivers
Channel
Sector
23%
Refurbishment
77%
New Build
End-Market
Value created
EBITDA2
€998.3m
+12%
2021: €893.2m
Products
Geography
Insulation
20%
Roofing +
Waterproofing
2%
Light
+ Air
8%
Western &
Southern
Europe
46%
Central &
Northern
Europe
26%
Insulated
Panels
62%
Water +
Energy
4%
Data +
Flooring
4%
Rest of
World
6%
Americas
22%
EPS
329.5c
+8%
2021: 305.6c
ROCE
15.9%
2021: 19.5%
Dividend
49.4c
+8%
2021: 45.9c
1 Operating profit before amortisation of intangibles and non trading item.
2 Earnings before finance costs, income taxes, depreciation, amortisation and non
trading item.
30
In a Nutshell
31
Kingspan Group plc Annual Report & Financial Statements 2022Business & Strategic Report
Santa Monica High School
Discovery Building
California, USA
Data + Flooring
ConCore ®
Chief
Executive’s
Review
Gene M. Murtagh
Business Review
The 2022 outcome for the Group as a
whole was relatively pleasing given the
accumulating uncertainty as the year
progressed. Over-life carbon saved in
buildings using insulation systems we
manufactured in 2022 is an estimated
173 million tonnes of CO2e, driving
record revenue of €8.3bn and record
trading profit of €833m. This was
achieved at a time of exceptional
inflation and unprecedented
disruption in supply chains globally,
which was less a feature in the latter
part of the year.
The performance of individual markets and economies varied
significantly with the Americas, Germany and Australasia the
most stable for Kingspan, with much of Europe weaker. The
pattern of trade was also at odds with prior periods where
many of our routes to market built inventory in the earlier part
of the year, largely out of caution, followed by industry-wide
efforts to lower stock levels in the second half.
Virtually all walks of life have been and will be further impacted
by the prevailing energy cost and availability dynamics. This has
understandably led to broader and growing concerns which may
weigh on demand in the year or so ahead. Conversely, it has also
generated an unprecedented impetus amongst governments
and society in general to ensure measures are taken to curtail
reliance on fossil fuel. Conservation in buildings is a key
component of this given almost 40% of all global energy related
carbon emissions emanate from buildings and construction. Our
solutions can, and are, playing a meaningful long-term role in
this process.
Operational Summary
@ Record year overall in a testing environment
and a tougher second half.
@ Insulated Panels sales increase of 23% driven
by raw material price growth and a 46%
increase in global sales volume of QuadCoreTM.
Ground-breaking Lower Embodied Carbon
(LEC) insulated panel launched recently.
@ Insulation sales strongly ahead by 40%
driven by inflation and acquisitions. District
heating applications a standout performer.
Significant progress on entry into the
bio-based insulation category. AlphaCore®
launching shortly. Technical insulation now
comprising 35% of divisional revenue.
@ Roofing + Waterproofing platform embedded.
Annualised revenue run rate in excess of
€500m. Ondura Group acquisition completed
in September 2022 following Derbigum
acquisition and strategic minority investment
of 24% in Nordic Waterproofing.
@ Technical insulation and roofing significantly
increase the Group’s exposure to RMI.
@ Significant progress at Light + Air, with a sales
increase of 27% and margins progressing year
on year.
@ Strong performance in Data + Flooring
with sales up 33% and a strong data centre
solutions pipeline into 2023.
@ Invested a total of €1.3bn in acquisitions,
purchase of minority interest and capex
during the year.
Read more
about our strategic
pillars on page 26-27
Financial Highlights
28% 9
Revenue up 28% to €8.3bn,
(pre-currency, up 25%)
10% 9
Trading profit1 up 10% to €833m,
(pre-currency, up 7%)
9%
Acquisitions contributed 9% to
sales growth and 8% to trading
profit growth in the year
8% 9
Profit after tax of €616.0m (2021: €570.6m).
Effective tax rate of 17.5% (2021: 17.2%)
160bps ª
Group trading margin2 of 10.0% (2021:
11.6%), a decrease of 160bps
8% 9
Basic EPS up 8% to 329.5 cent (2021: 305.6
cent). Diluted EPS also up 8% to 326.9 cent
(2021: 303.0 cent)
23.8c
Final dividend per share of 23.8 cent (2021:
26.0 cent) giving a total dividend for the
year of 49.4 cent (2021: 45.9 cent)
1.62x
Year end net debt3 of €1,539.6m (2021:
€756.1m). Net debt to EBITDA4 of 1.62x
(2021: 0.88x)
15.9%
ROCE of 15.9% (2021: 19.5%), or 16.5% after
annualised impact of acquisitions
1 Operating profit before amortisation of
intangibles and non trading item
2 Trading profit divided by total revenue
3 Net debt pre-IFRS 16 per banking covenants
4 Net debt to EBITDA is pre-IFRS 16 per banking
covenants
32
Business & Strategic Report
Chief Executive’s Review
33
Kingspan Group plc Annual Report & Financial Statements 2022 Planet Passionate Targets
(Progress from base year)
Underlying Business
Whole Business
Target
Year
2020
2022
2020
2022
Carbon
@ Net Zero Carbon Manufacturing - scope
1 & 2 GHG emissions1 (t/CO2e)
@ 50% reduction in product CO2e intensity
from primary supply partners (%)
@ Zero emission company funded cars
(annual replacement %)
Energy
@ 60% Direct renewable energy (%)
@ 20% On-site renewable energy generation (%)
@ Solar PV systems on all wholly owned
facilities (%)
@ Net Zero Energy (%)
Circularity
@ Zero company waste to landfill (tonnes)
@ Recycle 1 billion PET bottles into our
manufacturing processes annually
(million bottles)
@ QuadCore™ products utilising recycled PET
(no. of sites)
Water
@ Harvest 100 million litres of rainwater
annually (million litres)
@ Support 5 ocean clean-up projects
(no. of projects)
2030
2030
2025
2030
2030
2030
2020
2030
2025
2025
2030
2025
410,2242
242,734
517,9722,3
385,1573
-
11
0.04
60
19.5
4.9
21.7
100
34.3
7.2
41.5
100
-
11
19.5
4.9
21.7
100
0.04
584
33.4
7.1
35.2
n/a5
18,642
9,081
18,642
10,828
573
803
573
803
1
3
1
3
20.1
26.3
20.1
26.4
1
3
1
3
Underlying Business includes manufacturing, assembly and R&D sites within the Kingspan Group in 2020 plus all organic growth.
Whole Business includes all manufacturing, assembly and R&D sites within the Kingspan Group, including acquisitions since 2020.
1: Excluding biogenic emissions. Scope 2 GHG emissions calculated using market-based methodology.
2: Restated figures due to improved data collection & change in calculation methodologies.
3: GHG emissions were recalculated due to acquisitions that occurred in 2021 & 2022.
4: Excluding recent acquisitions due to unavailability of data at this time.
5: As we retire our Net Zero Energy target in favour of a carbon charge, newly acquired businesses are not included for this target.
The table below provides further detail on the progress within Kingspan by category:
Planet Passionate and our impact
The vast majority of what we
provide to the market enables
others to dramatically reduce energy
consumption and its related GHG
emissions. That estimated impact
during 2022 was 173 million tonnes of
CO2e saved from insulation systems
we sold during the year, taking into
account their contributions over the
life of the building infrastructure that
they serve.
Internally, our Planet Passionate
initiative once again made
tremendous progress, despite being
hampered by supply issues, largely
related to the procurement of solar
panels from Asia.
In summary, 18 solar PV projects were
completed across our facilities during
the year which will generate 6.4 GWh
of renewable electricity annually.
803 million PET bottle equivalent of
recycled material was processed across
the Group, and 14 rainwater harvesting
systems were installed. In addition,
58% of all new company funded cars
in the year were replaced with zero
emission vehicles, and our waste to
landfill for the whole business reduced
by 42% since 2020.
Investing in our future
Between organic and inorganic
initiatives, we invested a total of
€1.3bn during the year. Capital
projects, mainly focused on capacity
expansion, amounted to €276m and
included significant projects either
completed or commenced in the US,
Brazil, France, Germany, Vietnam and
Australia. Preparatory work is also
underway for the Ukraine Technology
Campus that we announced last year.
Understandably progress has been
slow to date although we anticipate
investing over €200m in the project
over the next four years.
Acquisitions have long been a
prominent feature of our strategy
and in 2022 we invested a total
of €1,054m, a record, in adding
geographic footprint and new
business lines to our portfolio
including deferred consideration and
a strategic minority investment. In
total six transactions were completed,
the largest of which was Ondura, a
French headquartered global provider
of roofing solutions. Together with
Derbigum, this now forms the
platform for expansion deeper into the
Roofing + Waterproofing arena with
combined annual run-rate revenues
of approximately €500m entering
the current year. In addition, we also
acquired a 24% strategic holding in
Nordic Waterproofing.
Innovation at work
The nucleus of our innovation
agenda is focused on driving product
improvement across thermal,
renewable content, embodied
carbon and fire performance, while
also incorporating more bio-based
solutions across our portfolio.
PowerPanelTM and RooftricityTM made
it to market during 2022 with very
encouraging early signs. We have
limited the launch to Ireland and
the UK for the time being due to
component supply constraints. Initial
preparations are now underway for
PowerPanelTM production enablement
in the US, France and the Czech
Republic, likely entering production
sometime in 2024.
Our QuadCoreTM LEC (Lowered
Embodied Carbon) insulated panel
launched recently, giving rise to an
estimated 17% reduction in embodied
carbon (in life cycle modules A - C)
relative to existing product. We aim
to achieve further reductions in
embodied carbon as we progress
towards our 2030 supply chain targets.
This is an exciting new departure which
we are confident will resonate strongly
with our global blue chip client base
and beyond.
QuadCoreTM 2.0 development
is significantly advanced, and
AlphaCore® is launching imminently
following the acquisition of Calostat®
technology in late 2022. Progress is
also being made on the bio-based
insulation front, albeit at a somewhat
slower pace than we would like.
Product and system integrity
By the end of 2022, 26 of our sites
were certified to ISO 37301, with a
plan to have 58 sites certified to the
standard by the end of 2023. ISO
37301 is the leading global standard
for establishing, developing and
monitoring compliance systems.
Our enhanced product integrity
programme is now deeply embedded
across the Group. To date, 133 of our
sites have been audited by the Group
Compliance and Certification Team.
In addition, 651 third party external
products and system audits took
place throughout 2022.
Intensity Indicators
Carbon Intensity (tCO2e/€m)
Energy Intensity (MWh/€m)
Landfill Waste Intensity (t/€m)
Water Intensity (million lt/€m)
Change over 2020 base year
54% reduction
28% reduction
68% reduction
16% reduction
Plastchem
Hardenberg, The Netherlands
Insulated Panels
QuadCoreTM
34
Kingspan Group plc Annual Report & Financial Statements 2022
Business & Strategic Report
Chief Executive’s Review
35
Insulated Panels
The global and diverse nature of
this business was reflected in the
broad and varying performances
of the different regional businesses
and trends. Overall, the trading
result has demonstrated growth,
albeit that volumes became more
challenged during the second half.
Advanced insulation cored products
represented 85% of insulated
panels sales volumes, whilst mineral
fibre cored was 11% with older
generation materials comprising the
balance. QuadCore TM, our highly
differentiated and unique core
material, represented 17% of insulated
panels volume, having grown by 46%
over prior year. Further progress is
anticipated during 2023.
PowerPanelTM made its market
entry, and we anticipate this family
of ground-breaking solutions to
feature prominently over the longer
term. Supply chain consistency
and reliability has been a challenge
and we continue to explore ways of
ensuring this is addressed.
NAU High-Performance
Athletic Centre
Arizona, USA
Insulated Panels
KS Series Mini Micro-Rib
9
Turnover
€5,181.5m
+23%(1)
2021: €4,229.2m
9
Trading Profit
€548.7m
+6%
2021: €519.8m
Trading Margin
10.6%
-170bps
2021: 12.3%
1 Comprising underlying
+17%, currency +4% and
acquisitions +2%. Like-
for-like volume -7%.
GRID
Dundee, UK
Insulation
Kooltherm K103
Floorboard;
GreenGuard GG300
Insulation
Worldwide sales grew
encouragingly by 40% over prior
year. Much of the growth was
delivered through pricing, and
indeed the acquisitions added
during 2022. Sales volumes
in Logstor®, Kingspan’s main
technical insulation platform and
now 25% of the division, grew
by 18% in the second half of the
year which was the first like-
for-like period under Kingspan
ownership. Insulation board
activity represents approximately
60% of the division with like-for-
like volume decreasing by 10% in
the year.
The two larger businesses acquired
were Logstor (June 2021) and
Troldtekt (April 2022), both Danish
headquartered, but in entirely
different markets with significant
growth potential. Logstor, the larger
of the two, focuses primarily on pre-
insulated pipes for district heating
(and cooling) infrastructure, an area
of ever-growing opportunity as
the world accelerates towards
clean power generation and
distribution. Our capacity will be
increased by 30% during the current
year, and by a further 50% over
the following three years. Troldtekt
addresses both the acoustic and
bio-based insulation segments.
Again, we expect to grow capacity
by 60% over the next two years
or so reflecting the opportunity
afforded by the extension of
applications and geography.
On the innovation and new product
agenda, AlphaCore® launches
imminently following the acquisition
of Calostat® technology. An A-Class
Optim-R® should reach market in
early 2024. We are in the process of
assembling the leadership and skills
required to enter the stone wool
segment which is part of our long-
established ambition to be the sole
global provider of the ‘full spectrum’
of thermal solutions.
9
Turnover
€1,658.3m
+40%(1)
2021: €1,182.9m
9
Trading Profit
€165.2m
+13%
2021: €146.7m
Trading Margin
10.0%
-240bps
2021: 12.4%
1 Comprising underlying
+12%, currency +2% and
acquisitions +26%.
36
Kingspan Group plc Annual Report & Financial Statements 2022
Business & Strategic Report
Chief Executive’s Review
37
Light + Air
In 2022 this business delivered
strong progress with revenue
and trading profit both ahead,
by 27% and 45% respectively.
Notable growth was achieved
in the Central European and
Southern European businesses.
North America also improved its
performance, enhanced by the
addition of the Solatube® product
set and business model, which
we anticipate rolling out more
regionally across the US over
the coming years.
As the Group grows, so too will the
divisional structure that supports it. To
that end, going forward the Light, Air
and Water businesses will be reported
as one enlarged division. Combining
the service businesses of both,
leveraging the online success at Water
+ Energy, and having a wider global
route to market and channel synergy
will make this combination compelling
over the longer term. The enlarged
division will have real global scale and
scope, with revenue run-rate expected
to be approximately €1bn in 2023.
San Diego Symphony
California, USA
Light + Air
UniQuad®
Cladding + Wall System
Roofing +
Waterproofing
The maiden year for this new
business was marked by two
meaningful acquisitions, Ondura
and Derbigum, acquired in
September 2022 and June 2022
respectively.
The annualised revenue run rate
is approximately €500m. This
combination brings Kingspan into
both flat and pitched roof membrane
solutions, from the primary outer
layer of the roof to the secondary
underlay. In both applications, the
core basis of our strategy is to create
pull-through for Insulation products
through a warranted system-sell. Early
progress has been encouraging. From
a roofing technology perspective, we
intend to broaden our portfolio of
waterproofing, and our geographic
presence, through both organic and
inorganic routes. The trading margin
reported reflects acquisition and other
related costs during 2022.
Turnover
€153.2m
Trading Profit
€8.5m
Trading Margin
5.5%
9
Turnover
9
9
Trading Profit
Trading Margin
€700.7m
+27%(1)
€52.3m
+45%
7.5%
+100bps
2021: €552.2m
2021: €36.0m
2021: 6.5%
1 Comprising
underlying
+15%, currency
+ 2% and
acquisitions
+10%
Hoven Restaurant
Loen, Norway
Roofing + Waterproofing
Derbigum® SP4 FR;
Derbigum® GC
38
Kingspan Group plc Annual Report & Financial Statements 2022
Business & Strategic Report
Chief Executive’s Review
39
Read more
in our Business &
Strategic Report
on page 24
Looking ahead
2022 was a bumpy year with the
strong performance in the fi rst
half giving way to a more subdued
environment in the second half of
the year. The combination of war
in Ukraine, the consequential steep
energy and consumer infl ation,
and an industry overstocked due
to supply chain concerns were all
factors that weighed on second
half demand and performance.
The more recent performance of our
business has diff ered signifi cantly by
sector, end-market and geography.
Within the mix of business there are
strong sectors of out-performance led
by a need for ultra-energy effi ciency
and lower carbon. This is a theme
which is likely to play out more fully in
the medium term as society grapples
with the need for a step change in
energy effi ciency and de-carbonisation.
It is diffi cult to look too far ahead
in this environment. We anticipate
delivering a broadly similar trading
profi t in the fi rst quarter of 2023 to
that of 2022, aided in part by the
contribution from acquisitions. We
are mindful of a more demanding
comparative to come in the second
quarter. Longer term, Kingspan is
very well placed given the powerful
combination of our global scale,
diversity of our end-markets, strong
innovation agenda and an ongoing
societal drive for energy effi ciency.
Gene M. Murtagh
Chief Executive Offi cer
21 February 2023
Plastchem
Hardenberg,
The Netherlands
Insulated Panels
QuadCoreTM
Data + Flooring
Strong progress was again achieved
in the data solutions activity in
this business as large scale cloud
services infrastructure continued to
expand globally, and as our share of
those internal solutions grew.
This trajectory and the active pipeline
of live projects give us confi dence that
further growth ought to be delivered
during the current year.
Santa Monica High School
Discovery Building
California, USA
Data + Flooring
ConCore®
9
Turnover
9
9
Trading Profi t
Trading Margin
€360.1m
+33%(1)
€43.1m
+33%
12.0%
+10bps
2021: €271.4m
2021: €32.3m
2021: 11.9%
1 Comprising
underlying +26%
and currency +7%
Water + Energy
This business delivered a reasonably
solid outcome for the year owing
to some recovery of position in
the Australian market, albeit
with margin pressures elsewhere
refl ecting a lag in the recovery of
raw material infl ation.
Trading Profi t
Trading Margin
Loch Insh Outdoor Centre
Inverness, UK
Water + Energy
Klargester BioDisc®
Commercial Sewage
Treatment Plant
9
Turnover
€287.1m
+10%(1)
€15.4m
-23%
2021: €261.3m
2021: €20.0m
5.4%
-220bps
2021: 7.6%
1 Comprising
underlying +6%,
currency +1% and
acquisitions +3%
40
Kingspan Group plc Annual Report & Financial Statements 2022
Business & Strategic Report
Chief Executive’s Review
41
Financial
Review
Geoff Doherty
The Financial Review
provides an overview
of the Group’s financial
performance for the
year ended 31 December
2022 and of the Group’s
financial position at
that date.
Overview of results
Group revenue increased by 28% to €8.3bn (2021: €6.5bn) and
trading profit increased by 10% to €833.2m (2021: €754.8m) with
a decrease of 160 basis points in the Group’s trading profit margin
to 10.0% (2021: 11.6%). Basic EPS for the year was 329.5 cent
(2021: 305.6 cent), representing an increase of 8%.
The Group’s underlying sales and trading profit growth by division
are set out below:
Sales
Underlying
Currency Acquisition
Total
Insulated Panels
Insulation
Light + Air
Roofing +
Waterproofing
Water + Energy
Data + Flooring
Group
+17%
+12%
+15%
-
+6%
+26%
+16%
+4%
+2%
+2%
-
+1%
+7%
+3%
+2%
+26%
+10%
+23%
+40%
+27%
+100%
+100%
+3%
-
+9%
+10%
+33%
+28%
The Group’s trading profit measure is earnings before interest, tax,
amortisation of intangibles and non trading item:
Trading Profit
Underlying
Currency Acquisition
Depot Boijmans
van Beuningen
Rotterdam, The Netherlands
Insulation
Kooltherm range
Light + Air
BA/RC Glazing System
Insulated Panels
Insulation
Light + Air
Roofing +
Waterproofing
Water + Energy
Data + Flooring
Group
+1%
-16%
+29%
-
-26%
+24%
-1%
+4%
+2%
+2%
-
-
+9%
+3%
+1%
+27%
+14%
Total
+6%
+13%
+45%
+100%
+100%
+3%
-
+8%
-23%
+33%
+10%
42
Kingspan Group plc Annual Report & Financial Statements 2022
Financial Review
43
The key drivers of sales and trading profit performance in each
division are set out in the Business Review.
Business & Strategic Report Finance costs (net)
Finance costs for the year increased
by €1.4m to €37.7m (2021: €36.3m).
The Group’s net interest expense on
borrowings (bank and loan notes net
of interest receivable) was €34.6m
(2021: €32.2m). This increase reflects
higher average gross debt levels in
2022. In particular, this includes the
interest expense relating to the two
new acquisition related financing
facilities with an aggregated value
of €800m which were arranged and
fully drawn in 2022. Lease interest of
€4.7m (2021: €3.7m) was recorded
for the year. €0.1m (2021: €0.2m)
was recorded in respect of a non-
cash finance charge on the Group’s
defined benefit pension schemes.
Taxation
The tax charge for the year was
€130.6m (2021: €118.4m) which
represents an effective tax rate of
17.5% (2021: 17.2%). The increase in
the effective rate reflects, primarily,
the change in the geographical mix
of earnings year on year.
Dividends
The Board has proposed a final
dividend of 23.8 cent (2021: 26.0
cent) per ordinary share payable on 9
May 2023 to shareholders registered
on the record date of 14 April 2023.
An interim dividend of 25.6 cent per
ordinary share was declared during
the year (2021: 19.9 cent). In summary,
therefore, the total dividend for 2022
is 49.4 cent compared to 45.9 cent
for 2021. This payout is in line with our
shareholder returns policy.
Retirement benefits
The primary method of pension
provision for current employees
is by way of defined contribution
arrangements. The Group has three
legacy defined benefit schemes
in the UK which are closed to new
members and to future accrual. The
total pension contributions to these
schemes for the year amounted to
€1.8m (2021: €nil) and the expected
contributions for 2023 are €nil (2021:
€nil). On 6 December 2022, the Group
completed a bulk insurance annuity
insurance policy ‘buy in’ for the
Colt Life Assurance and Retirement
Scheme (‘CLARS’). This buy-in ensures
an insurance asset that fully matches
44
the remaining pension liability and
was net settled in cash for an amount
of €15.9m in January 2023. There
was no impact on profit before tax
from this transaction. In addition, the
Group has a number of smaller defined
benefit pension liabilities in Mainland
Europe. The net pension liability in
respect of all defined benefit schemes
was €49.5m as at 31 December 2022
(2021: €28.0m) with the increase
reflecting, primarily, a decrease in the
value of scheme assets during the year
partially offset by actuarial gains on
scheme liabilities.
Intangible assets and goodwill
Intangible assets and goodwill
increased during the year by €685.5m
to €2,687.3m (2021: €2,001.8m).
Intangible assets and goodwill of
€708.9m (2021: €418.9m) were
recorded in the year relating to
acquisitions completed by the Group.
An increase of €9.0m (2021: increase
of €50.9m) arose due to year end
exchange rates used to translate
intangible assets and goodwill other
than those denominated in euro.
There was an annual amortisation
charge of €32.4m (2021: €29.5m).
Financial key performance
indicators
The Group has a set of financial key
performance indicators (KPIs) which
are presented in the table below.
These KPIs are used to measure the
financial and operational performance
of the Group and to track ongoing
progress in achieving medium and
long term targets to maximise
shareholder return.
Key Performance
Indicators
Basic EPS
growth
Sales
performance
2022
2021
+8% +48%
+28% +42%
Trading margin
10.0% 11.6%
Free cashflow
(€m)
Return on
capital
employed
Net debt/
EBITDA
392.5
127.1
15.9% 19.5%
1.62x
0.88x
(a) Basic EPS growth. The growth in
EPS is accounted for primarily by
a 10% increase in trading profit
partially offset by an increase in
the Group’s effective tax rate by
30 basis points to 17.5% and an
increase in minority interest. The
effective tax rate increased due to
the geographical mix of earnings
year on year. The minority interest
amount increased reflecting
the performance at the Group’s
operations which have minority
stakeholders.
(b) Sales performance of +28%
(2021: +42%) was driven by a 16%
increase in underlying sales, a 9%
contribution from acquisitions
and positive currency translation
of 3%. The increase in underlying
sales reflected a combination of
strong year on year price growth
due to raw material inflation offset
by an overall reduction in volume
particularly in the second half of
the year as global construction
markets eased.
(c) Trading margin by division is set
out below:
2022
2021
10.6% 12.3%
10.0% 12.4%
5.5%
-
Insulated
Panels
Insulation
Roofing +
Waterproofing
Light + Air
7.5% 6.5%
Water + Energy
5.4% 7.6%
Data + Flooring
12.0% 11.9%
The Insulated Panels division trading
margin decreased year on year
reflecting the market mix of sales,
inventory cost dynamics as well as
negative operating leverage driven
by year on year volume declines.
The trading margin decrease in the
Insulation division reflects, in the
main, negative operating leverage
associated with year on year
volume declines and the category
mix of sales. The increased trading
margin in Light + Air reflects
activity growth, investment in
specification and other processes
as the division continues to scale up.
The Water + Energy trading margin
decrease reflects lag in the recovery
of inflation in the first half of the
year. The trading margin in Data +
Flooring is consistent year on year.
(d) Free cashflow is an important
indicator and reflects the amount
of internally generated capital
available for re-investment
in the business or for distribution
to shareholders.
Free cashflow
EBITDA*
Lease
payments
Movement
in working
capital**
Movement in
provisions
Net capital
expenditure
Net interest
paid
Income taxes
paid
Other
including non-
cash items
Free
cashflow
2022
€m
2021
€m
998.3
893.2
(50.6)
(38.6)
(136.2)
(429.3)
7.7
6.9
(250.6)
(163.6)
(31.9)
(34.5)
(158.4)
(126.8)
14.2
19.8
392.5
127.1
*
Earnings before finance costs,
income taxes, depreciation,
amortisation and non trading item
** Excludes working capital on
acquisition but includes working
capital movements since that point
Working capital at year end
(f) Net debt to EBITDA measures the
was €1,195.9m (2021: €977.8m)
and represents 14.5% (2021:
13.8%) of annualised sales based
on fourth quarter sales. This
metric is closely managed and
monitored throughout the year
and is subject to a certain amount
of seasonal variability associated
with trading patterns and the
timing of significant purchases
of steel and chemicals. The 16%
growth in underlying sales in
2022 required a consequential
investment in working capital to
support the sales growth. The
December 2022 working capital
position is untypically high
reflecting higher than normal
inventory levels although these
have been reducing through the
second half. The business took the
opportunity to build an element of
buffer stocks earlier in the year due
to availability constraints and has
been steadily working through this
in the second half as supply chain
bottlenecks and pricing eased. We
expect working capital levels to
normalise further during 2023.
(e) Return on capital employed,
calculated as operating profit
divided by total equity plus net debt,
was 15.9% in 2022 (2021: 19.5%)and
was 16.5% with annualised impact
of acquisitions. The decrease
year on year reflects the 160bps
reduction in trading margin and
elevated levels of working capital.
The creation of shareholder value
through the delivery of long term
returns well in excess of the Group’s
cost of capital is a core principle of
Kingspan’s financial strategy.
ratio of net debt to earnings and at
1.62x (2021: 0.88x) is comfortably
less than the Group’s banking
covenant of 3.5x in both 2022 and
2021. The calculation is pre-IFRS
16 in accordance with the Group’s
banking covenants.
Acquisitions and capital expenditure
During the year the Group made a
number of acquisitions for a total
upfront consideration of €887.0m.
In April 2022, the Group acquired
100% of the share capital of Troldtekt,
a Danish natural acoustic insulation
producer. The total consideration,
including net debt acquired amounted
to €220.4m.
In September 2022, the Group acquired
100% of the share capital of Ondura
Group, a French headquartered global
provider of roofing membranes and
associated roofing solutions, for a
total consideration, including net debt
acquired of €515.6m.
The Group also made a number of
smaller acquisitions during the year for a
combined cash consideration of €151.0m:
@ The Roofing + Waterproofing division
acquired 100% of the share capital
of Derbigum, a Belgian producer of
waterproofing membranes for a total
consideration, including net debt
acquired of €95.0m in June 2022;
@ The Insulated Panels division
acquired 100% of the share capital of
THU Perfil in February 2022 and 100%
of the share capital of Invespanel in
Spain in September 2022;
Financial Review
45
Kingspan Group plc Annual Report & Financial Statements 2022Business & Strategic Report
Net debt/EBITDA
EBITDA/Net interest
Covenant
Maximum 3.5
Minimum 4.0
Key financial covenants
The majority of Group borrowings
are subject to primary financial
covenants calculated in accordance
with lenders’ facility agreements
which exclude the impact of IFRS 16:
@ A maximum net debt to EBITDA
ratio of 3.5 times; and
@ A minimum EBITDA to net interest
coverage of 4 times.
The performance against these
covenants in the current and
comparative year is set out above.
Investor relations
Kingspan is committed to
interacting with the international
financial community to ensure a
full understanding of the Group’s
strategic plans and its performance
against these plans. During the year,
the executive management and
investor team presented at 11 capital
market conferences and conducted
624 institutional one-on-one and
group meetings.
Share price and market
capitalisation
The Company’s shares traded in
the range of €43.60 to €106.65
during the year. The share price at
30 December 2022 was €50.58 (31
December 2021: €105.00) giving a
market capitalisation at that date
of €9.2bn (2021: €19.0bn). Total
shareholder return for 2022 was
-51.5% (2021: +84%).
Financial risk management
The Group operates a centralised
treasury function governed by a
treasury policy approved by the
Group Board. This policy primarily
2022
Times
1.62
28.7
2021
Times
0.88
26.2
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.
On behalf of the Board
Geoff Doherty
Chief Financial Officer
21 February 2023
@ The Insulation division acquired
the assets of Calostat in the UK in
September 2022.
The Group’s organic net capital
expenditure during the year was
€250.6m encompassing a number of
strategic capacity enhancements and
ongoing maintenance.
EU Taxonomy and TCFD
Climate related disclosures are required
under the EU Taxonomy Regulation
(Sustainable finance taxonomy -
Regulation (EU) 2020/852) and by the
Task Force on Climate-related Financial
Disclosures (TCFD). The disclosures
will be included in our 2022 Planet
Passionate Sustainability Report that
will be published at a later date within
the required timeframe.
Non trading item
The Group recorded a non trading
charge of €16.5m (2021: €nil) in the
year in respect of the Group’s net loss
on the complete divestment of its
Russian operations.
Capital structure and Group financing
The Group funds itself through a
combination of equity and debt. Debt
is funded through syndicated bank
facilities and private placement loan
notes. The primary bank debt facility is
a €800m sustainability linked Revolving
Credit Facility arranged in May 2021,
maturing in May 2026, and which was
undrawn at year end. The Revolving
Credit Facility was increased by €100m
in December 2022 under the facility’s
accordion clause.
In April 2022, the Group arranged two
additional banking finance facilities
with an aggregate value of €800m
(€500m maturing in April 2024, €300m
in April 2025). The facilities were fully
drawn at year end.
In addition, as part of the Group’s
debt funding structure, the Group
has total private placement loan
notes of €1,322.0m (2021: €1,377.1m)
which have a weighted average
maturity of 5.7 years (31 December
2021: 6.4 years).
The weighted average term, as at
31 December 2022, of all drawn debt
was 4.1 years (31 December 2021:
6.3 years).
The Group has significant available
committed undrawn facilities and
cash balances which, in aggregate,
were €1.45bn at 31 December 2022
(31 December 2021: €1.3bn).
Net debt
Net debt increased by €783.5m during 2022 to €1,539.6m (2021: €756.1m). This is analysed in the table below:
Movement in net debt
Free cashflow
Acquisitions and divestments
Purchase of financial asset
Deferred consideration paid
Purchase of non-controlling interests
Share issues
Repurchase of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Cashflow movement
Exchange movements on translation
Movement in net debt
Net debt at start of year
Net debt at end of year
2022
€m
392.5
(893.4)
(113.3)
(45.4)
(2.0)
-
(1.4)
(93.7)
(3.5)
(760.2)
(23.3)
(783.5)
(756.1)
(1,539.6)
2021
€m
127.1
(540.2)
(5.0)
-
-
0.1
(46.9)
(73.5)
(3.2)
(541.6)
21.7
(519.9)
(236.2)
(756.1)
46
Kingspan Group plc Annual Report & Financial Statements 2022
Business & Strategic Report
Financial Review
47
Risk & Risk
Management
CEBRA Architecture
Offices
Aarhus, Denmark
Insulation
Troldtekt V-Line
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 26
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 assist the Board by taking delegated
responsibility for 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 at each board meeting on its activities, both for
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 110.
The Board monitors the Group’s risk management systems
through its consultation with the Audit & Compliance Committee
but also through the Group’s divisional monthly management
meetings, where at least two executive directors are present.
Business risks and trends are the focus of each division’s monthly
management meeting, where divisional business performance
is also assessed against budget, forecast and prior year. Key
performance indicators are also 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 detailed risk assessment for
their business. This assessment involves evaluating group-wide
risks, as put forward by the Board, and 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
following principal risks and uncertainties that could potentially
impact upon the Group’s short to medium term strategic goals:
Innovation
Global
Planet Passionate
Completing the Envelope
Volatility in the macro environment
Risk and impact
Actions to mitigate
Kingspan products are targeted at both the
residential and non-residential (including
industrial, retail, commercial, public sector
and high rise offices) 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 and wars in some regions,
interest rates, business/consumer confidence
levels, supply chain disruption, unemployment,
and population growth).
While construction markets are inherently
cyclical, changing building and environmental
regulations continue to act as an underlying
positive structural trend in demand for many
of the Group’s products.
Product failure
Risk and impact
A key risk to the Kingspan 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.
The exposure to cyclicality or downturn of any one construction market
is partially mitigated by the Group’s geographic diversification, by end
application and by product.
As set out in the Business Model & Strategy, the Group has mitigated
this risk through diversification as follows:
@ an established globalisation strategy resulting in 212 global
manufacturing sites and a commercial presence in more than 80
countries;
@ the launch of new innovative products and an approach of continual
improvements to existing product lines; and
@ acquisitions made during the year enhance the geographic and
product diversification of the Group.
The full details of these diversifications are set out in the Business Model
& Strategy section of this Annual Report.
Actions to mitigate
Dedicated structures and processes are in place to manage and monitor
product quality controls throughout the business:
@ New products go through rigorous internal testing at the Group’s
Global Innovation Centre, IKON, and the industry leading Kingspan
Fire Engineering Research Centre prior to proceeding to a certification
process which is undertaken by internationally recognised and
independent authorities, before being 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 commitment to product safety. The Group Product Compliance
team completed the audit of 98 manufacturing sites in 2022.
@ A Group Marketing Integrity Manual (MIM) has been designed to
incorporate the Group Code of Conduct as well as the incoming UK
Code for Construction Product Information. The MIM establishes a
compliance framework for product marketing materials and websites.
Compliance with the MIM is subject to audit by the Group Internal
Audit function under a dedicated audit programme.
@ The Group’s Product Compliance function has been accredited to
the leading independent standard in compliance, ISO 37301. 26
manufacturing sites are already certified to ISO 37301 with a further
32 sites to be certified in 2023.
@ The terms of reference for the Audit & Compliance Committee 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 Engineering Research
Centre using Kingspan products allows for more expedient and
significant testing to take place.
@ Effective training is delivered to our employees.
@ Proactively monitor the public policy, regulatory and legislative
environment.
48
Kingspan Group plc Annual Report & Financial Statements 2022
Risk & Risk Management
49
Business & Strategic Report
Innovation
Global
Planet Passionate
Completing the Envelope
Innovation
Global
Planet Passionate
Completing the Envelope
Failure to innovate
Risk and impact
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.
Laws and regulations
Risk and impact
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.
Actions to mitigate
@ Innovation is one of Kingspan’s four strategic pillars to increasing
shareholder value and therefore plays a critical 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.
@ The Group’s innovation strategy is intertwined with its Planet
Passionate sustainability strategy. Ambitious Planet Passionate goals
require the Group to invest in expanding its existing range of highly
sustainable building products and establish market leading supply
chains for sustainable raw materials.
@ This risk is further mitigated by continuing innovation and
compelling marketing programmes. The launch of the IKON Global
Innovation Centre in 2019 has served to enhance the capabilities of
the Group to innovate.
@ The Kingspan Fire Engineering Research Centre enables large
scale fire testing to industry regulation standards thereby
accelerating the pace of innovation and certification on the path to
commercialisation.
@ 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.
Actions to mitigate
@ 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. Issued policies include, but are not limited to,
the following:
- Sanctions Compliance Policy
- Anti-Fraud, Bribery and Corruption Policy
- Competition Law Compliance
- Directors’ Guidance Policy
@ A comprehensive framework of policies is in place that set out the
ways employees and suppliers are expected to conduct themselves.
@ The Group’s publicly available 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 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, and findings reported to the Audit &
Compliance Committee.
Climate change
Risk and impact
Actions to mitigate
Kingspan’s products provide a solution to help
mitigate climate change, particularly with
respect to reducing carbon emissions in the
built environment. Climate change is therefore
both an opportunity and a risk for Kingspan.
Transforming building and construction is an important element of
addressing the climate crisis as they represent approximately 39% of
global greenhouse gas emissions. Kingspan is uniquely placed to help
support the decarbonisation of the building sector via our extensive
offering of high-performance, energy saving systems and solutions.
Climate risks within our business include
regulatory changes, substitution risk should we
fail to maintain our market leading offering,
rising energy or carbon prices within our own
operations or in our supply chain, and physical
risk to our operations or those of our suppliers.
Risks relating to climate change are managed through a multi-
disciplinary, and company wide, risk management process.
Examples of how climate change risks are mitigated include:
Planet Passionate
@ Following the successful completion of our Net Zero Energy
programme (our programme that focused on reducing energy
consumption and increasing renewable energy use where possible),
Kingspan launched the next stage of our sustainability journey in
2020, our 10-year Planet Passionate programme, which includes 12
ambitious targets in the areas of Carbon, Energy, Circularity and
Water. This strategic agenda will enable significant advances in the
sustainability of both our business operations and our products.
Innovation
@ Our innovation agenda is inextricably linked with our Planet
Passionate programme, helping us to drive market leading products
in the areas of carbon savings and sustainability. Innovation is
supported through ongoing investments such as the opening of the
IKON Global Innovation Centre in 2019.
@ In 2022, our insulation products sold globally are estimated to
save 173 million tonnes of CO2e over their lifetime. In addition, we
estimate 48 billion litres of rainwater will be harvested over the
lifetime of the tanks we produced and we recycled 803 million waste
plastic bottles in to our manufacturing processes.
Digitalisation
@ Digital adoption is a key factor to enabling more efficiency and
sustainability in manufacture, delivery, construction and operations
of our built environment.
@ Enhanced digitalised processes for customer engagement provide
faster and deeper insight into the sustainability demands of our
customers.
@ Under the leadership of the Group Director of Digital, our 2022
Building Information Modelling (BIM) & Digital Innovation
Programme drove the enhancement and introduction of several
tools to improve the workflows of our customers. Utilising the latest
digital technologies, Kingspan aims to empower its customers and
partners with tailored digital solutions.
Global Presence
@ Kingspan operates out of 212 manufacturing sites across the globe,
diversifying our physical risk from climate change. We have also built
relationships with a wide range of global supply partners to limit the
reliance on any one supplier or even a small number of suppliers.
50
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Innovation
Global
Planet Passionate
Completing the Envelope
Innovation
Global
Planet Passionate
Completing the Envelope
Business interruption (including IT continuity)
Risk and impact
Actions to mitigate
Employment development and retention
Risk and impact
Actions to mitigate
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 are threatened by
natural and man-made perils and are affected
by the level of investment available to improve
them.
The building industry 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.
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 106 plants in the Insulated
Panels division or 43 plants in the Insulation 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 optimising Kingspan’s risk profile.
@ 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.
@ 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.
Credit risks and credit control
Risk and impact
Actions to mitigate
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 €1,136.8m (2021:
€1,022.9m) expressed net of provision for
default in payment. This represents a net
risk of 14% (2021: 16%) of sales. Of these net
receivables, approximately 60% (2021: 61%)
were covered by credit insurance or other
forms of collateral such as letter of credit and
bank guarantees.
@ Each business unit has rigorous procedures and credit control
functions for managing its receivables and takes appropriate 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.
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.
@ 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.
@ Kingspan’s leadership team holds an annual Talent Forum each year
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.
@ In 2021 we redesigned and relaunched Kingspan’s Internal Career
Portal which provides an open and transparent forum for Kingspan
employees to learn about and apply for career opportunities across
all our businesses worldwide. It has a wealth of information about
the types of roles and skills that are in demand to deliver on our
strategic objectives.
@ Graduates participated in our Yours to Shape development
programme which was in its sixth consecutive year in 2022. The
objective of the programme is to provide new graduates with a
network to collaborate across the Group and develop the capabilities
to drive their career in Kingspan. It spans 12-months of interactive
workshops, peer coaching, masterclasses with senior executives and
assignments on the Promote e-learning platform.
@ PEAK (Programme for Executive Acceleration in Kingspan) was
launched in 2018 and is targeted at middle to senior managers who
are currently, or will soon commence, managing a team. It aims to
increase leadership diversity by deepening and widening the pool
of potential senior leaders to match the increasing scale and global
nature of the business.
@ An Advanced Management Programme was launched in 2021 in
partnership with INSEAD’s executive business school in France. This
new programme supports Kingspan’s senior leaders on engaging
with enterprise level goals in a more collaborative way while
transforming their leadership capabilities to drive significant long
term growth.
Health and safety
Risk and impact
Actions to mitigate
The nature of Kingspan’s operations can expose
its contractors, customers, suppliers and other
individuals to potential health and safety risks.
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.
Health and safety incidents can lead to loss of
life or severe injuries.
@ 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.
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Risk & Risk Management
53
Kingspan Group plc Annual Report & Financial Statements 2022Business & Strategic Report
Innovation
Global
Planet Passionate
Completing the Envelope
Fraud and cybercrime
Risk and impact
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.
Actions to mitigate
@ The Group issues extensive guidance and policies, which include
critical process and control policies for the mitigation of fraud risk,
and they must be effectively adopted by all Group businesses.
@ The Group internal audit programme includes rigorous tests of
financial controls and general IT controls to ensure they align with
Group policies that mitigate fraud risk.
@ All fraud and cybercrime attempts, successful and unsuccessful, are
reported to the Group Audit & Compliance Committee.
@ The Group’s cyber strategy is designed by a multi-discipline Group IT
function with input from external expertise and our Group Head of
Cyber Security. The Group Head of Cyber Security is responsible for
owning and executing the Group’s cyber security strategy to ensure
critical assets and technologies are protected against cyber risk.
@ Our Cyber Security Roadmap, published internally in 2022, sets out
the phased milestones for the implementation of improved cyber
risk policies and projects over a period of 30 months to enhance the
Group’s security posture.
@ Pro-active cyber security services are in place which provide
global 24/7 critical security services that include managed threat
protection (Security Information and Event Management - SIEM),
managed detection and incident response services, including access
to trusted and experienced cyber security advisors.
@ Group Internal Audit & Compliance function perform cyber audits
with dedicated audit programmes in addition to separate audits of
IT general controls. Findings of cyber audits are reported to the
Audit & Compliance Committee and outputs form part of enhanced
IT policies.
@ Mandatory implementation of multi-factor authentication (MFA) on
all internet facing and business critical services group-wide.
@ High frequency phish testing performed globally.
@ Kingspan corporate assets can be swiftly ‘auto-contained’ in
the event of a significant cyber security incident to limit the
business impact.
Acquisition and integration of new businesses
Risk and impact
Actions to mitigate
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.
@ New acquisitions are categorised as higher risk from a financial
controls, IT general controls, and product compliance perspective
and are therefore subject to greater internal audit focus in the initial
12 month period post-acquisition.
@ Kingspan also has a strong track record of successfully integrating
acquisitions and therefore management has extensive knowledge in
this area which it utilises for each acquisition.
Tide Academy
California, USA
Insulated Panels
Dri-Design
54
Kingspan Group plc Annual Report & Financial Statements 2022
Business & Strategic Report
Risk & Risk Management
55
Sustainability
Report
Kingspan’s mission
We recognise the vital importance of achieving this while:
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 via our
systems and solutions that
help to save more energy,
carbon and water.
@ enhancing the safety and wellbeing of people in buildings;
@ supporting the transition to a 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 defi nes us is our relentless pursuit for
better building performance whilst incorporating our Planet
Passionate programme into everything we do. Our commitment
to sustainability is instilled throughout our business.
In developing our approach to sustainability, we incorporate
guidelines from recognised associations such as the
Sustainable Accounting Standards Board (SASB) and the Task
Force on Climate-related Financial Disclosures (TCFD). We are
also currently undergoing a double materiality assessment,
which we will report on in more detail next year.
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 our Kingspan Planet Passionate Sustainability
Report in March 2023 with more detail on how we contribute
to the SDGs.
173m tonnes
173 million tonnes of CO2e will
be saved over the life of our
insulation systems sold in 2022
Enough to power a major
airline for over 15 years1
1 Assumes 60 year product life; based on an EU airline disclosure of
over 9.2m tonnes of CO2e emissions for 12 months to March 2022
We believe the answers lie in
challenging building industry
traditions with innovation
in advanced materials and
digital technologies.
Kingspan Modesto
California, USA
Insulated Panels
Annually Generating
1,400MWh
(estimated)
Read more
about Planet
Passionate
on page 64
56
Kingspan Group plc Annual Report & Financial Statements 2022
Business & Strategic Report
Sustainability Report
57
Product
Passionate
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 effi ciency. 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 proofi ng
their investment, generating returns through enhanced
internal space and operational performance, and
facilitating effi cient construction through thinner,
lighter and safer to handle materials. Increasingly
we are enhancing our service and solutions through
digitalising our off er. By surfacing all of our products
digitally, we’re making it easier to fi nd them, specify
them, buy them, build with them and track them.
Kingspan’s insulation systems, sold in 2022, will save
an estimated 771 million MWh of energy or 173 million
tonnes of CO2e over their lifetime.
Today, the construction and operation of buildings
together account for 40% of energy related carbon
emissions. The energy effi ciency of buildings is
therefore fundamental in combating climate change.
Our advanced building envelope solutions help
building owners to reduce energy emissions. Our
solutions also help to enhance occupant health and
wellbeing through improved thermal comfort, natural
daylighting, natural ventilation, and increased space.
1 Assumes 60 year product life; based
on an EU airline disclosure of over
9.2m tonnes of CO2e emissions for 12
months to March 2022
2 Assumes a 20 year product life
3 Assumes 10 x 60W bulbs per home
Ultra Energy-Effi cient
Recycled Materials
Conserved Water
173m tonnes
173 million tonnes of CO2e will
be saved over the life of our
insulation systems sold in 2022
Enough to power a major
airline for over 15 years1
803m
In 2022 alone we upcycled 803
million waste plastic bottles
Enough recycled bottles to
fi ll nearly 1,000 football
pitches
48bn litres
Over 48 billion litres of rainwater
will be harvested by our tanks
produced in 2022
Enough water to fi ll over
600 million baths2
Natural Daylight & Ventilation
9bn lumens
The capacity to create 9 billion
lumens of natural light annually
through our daylighting systems
Enough to light
up 1 million homes3
Our advanced
building envelope
solutions help
building owners
to reduce their
energy use and
greenhouse gas
emissions.
Amager Bakke
Copenhagen, Denmark
Roofi ng + Waterproofi ng
Derbigum ® GC WW
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Kingspan Group plc Annual Report & Financial Statements 2022
Business & Strategic Report
Sustainability Report
59
Integrity of Product
Information for
the Digital Era
Product
Compliance
Ensuring the safe performance and
use of our products is central to our
approach to product development,
testing, support and marketing.
At Kingspan we have implemented
a global product compliance
and marketing programme that
ensures the accuracy of our product
information, operating to the ISO
37301 global compliance standard
and underpinned by a culture of
integrity, honesty and compliance
with the law.
In late 2022, we introduced a
new global Environmental Claims
Guide to ensure that all marketing
claims relating to the sustainability
performance of our products are
robust and support our group vision
of making a meaningful impact on
decarbonisation and circularity in the
built environment.
In parallel, we are developing and
delivering a technology backbone for
accurate digital product information
that enables project effi ciencies and
better design decisions.
Product compliance operates fi rst
and foremost to the high standards
set out in our Group Code of
Conduct, which has been rolled out
to all employees across the Group.
The Kingspan Code of Conduct
incorporates a whistleblower policy
which was enhanced in 2021 with
higher visibility in all manufacturing
sites across the Group.
To support product compliance
at senior management levels, a
new group-wide Directors’ Duties
handbook was introduced in February
2022 with associated training.
The Group Compliance and
Certifi cation function, which
was established in 2021, operates
to the ISO 37301 compliance
standard with internal auditing
and Board oversight. ISO 37301 is
an internationally recognised Type
A management system standard
which sets out the requirements and
provides guidelines for establishing,
developing, implementing, evaluating,
maintaining, and continually
improving a compliance management
system (CMS).
The following structures are now
in place:
@ Group Head of Compliance
and Certifi cation (appointed in
January 2021) reporting directly to
the Group CEO.
@ Product Compliance Offi cers
in each business across
Kingspan Group who provide
monthly reports to the
Group Head of Compliance
together with updates to their
divisional boards.
@ The role of the Kingspan
Group Audit Committee has
been expanded into an Audit
& Compliance Committee,
with responsibility to monitor
compliance in product testing
and marketing.
@ The role of the Kingspan Group
Internal Auditing function has
been expanded into an Internal
Audit & Compliance function to
audit product and marketing
compliance.
@ The Group Head of Compliance
and Certifi cation and the Head
of Internal Audit & Compliance
report regularly to the Audit &
Compliance Committee.
Havenlofts
Rotterdam,
The Netherlands
Insulation
TEK Bouwsysteem
9
Sites Certifi ed
to ISO 37301
26
+189%
2021: 9 sites certifi ed
Read more
see Planet
Passionate
on page 64
60
Kingspan Group plc Annual Report & Financial Statements 2022
Business & Strategic Report
Sustainability Report
61
A wide range of Kingspan insulated
panels carry an FM (FM Global) or
LPCB (Loss Prevention Certifi cation
Board) Approval, both of which are
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 certifi cation bodies take
samples of insulated panels from
our factories and send them to their
own laboratories for fi re testing to
verify ongoing compliance. These
independent audits also include
assessments of change control,
formulations, processing parameters,
labelling and internal testing.
The Kooltherm® range of insulation
boards and KoolDuct® pre-insulated
ductwork are manufactured with a
phenolic insulation core, which has
been proven to off er superior fi re
and smoke performance to other
commonly used rigid thermoset
insulants.
A comprehensive range of building
facade systems incorporating our
insulation board and insulated panels
products have successfully passed
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) and MSZ 14800-
6 (Hungary). As it relates to large
scale fi re tests, there are a total of
15 systems incorporating Kooltherm®
which have met the requirements
of BR135 when tested to BS 8414
(UK) and there are 6 insulated panel
based systems that have met the
requirements of BR 135 when tested
to BS 8414.
During 2022, a total of 651 third party
external products and system audits
were carried out, providing reassurance
on the safety of our products.
Product Safety
and Testing
The safety of those working with our
products, and living in buildings that
have used our products, is absolutely
paramount at Kingspan.
A cornerstone of our global
compliance programme has been
the opening of Kingspan’s new Fire
Engineering Research Centre (FERC)
in Holywell, Wales which has enabled
a signifi cant increase in the frequency
and scope of fi re testing of products.
The testing carried out at FERC is also
building a bank of knowledge which
is helping to ensure that fi re safety
continues to be central to Kingspan
product innovation.
Fire safety is often reduced to a
simplistic “combustible” versus “non-
combustible” defi nition, based on a
small-scale test. Important factors
such as building design, installation
methodology and the interaction of
the diff erent materials in the actual
system are not tested in small-scale
materials classifi cation testing.
Hence, our approach to the safe use
of our insulation and insulated panel
products in buildings is founded on
the principle that system testing is the
best way to assess fi re performance
of any roof or cladding system,
regardless of the classifi cation of the
insulation materials used.
Wetterbest
Timisoara, Romania
Insulated Panels
Annually Generating
334MWh
(estimated)
62
Kingspan Group plc Annual Report & Financial Statements 2022
Integrity of
Product Marketing
The Group Compliance Manual,
which was fi rst published in January
2021 and covers all aspects of
the processes which have been
implemented across the Kingspan
Group, includes the requirement for a
Register of External Certifi cates and
Test Reports for each product.
In 2021, the Marketing Integrity
Manual (MIM) was launched to ensure
that the information in the Product
Compliance Register is represented
truthfully and accurately in product
marketing information.
The Marketing Integrity Manual is
built on 11 principles aligned with
the UK Code of Construction
Product Information. The overall
programme includes:
@ Group MIM e-learning which
has been rolled out across all
marketing team members.
@ Fire Approvals e-learning which
has been rolled out for appropriate
marketing team members.
@ A Skills, Knowledge, Experience
and Behaviour (SKEB) competency
assessment model which has
been introduced with associated
training and strict rules for
publishing product information.
@ A sign-off approvals process which
has been implemented for our
new global website infrastructure.
Furthermore, an internal ISO 37301
accredited auditing team has been
appointed specifi cally for the MIM
programme.
Workflows
Manage compliance of products data. Generate PCR
Documentation
Documentation
Generate DoP (60 data points), Datasheets (16 data points),
Brochures (40 data points),
PIM
ERP/CRM
Exchange trusted products data with
divisional ERP systems
Web
Push trusted technical products
data to core Web .
Advanced Web
Advanced Web
Advanced Web
Push trusted product technical product data
to e-commerce, Configurators, BIM tools
Generate product Digital Passport
Product integrity is a fundamental aspect of our overall
value proposition to our customers. This programme will
drive market-leading infrastructure, technology and
knowledge to support this important agenda.
Gene M. Murtagh
Business & Strategic Report
Sustainability Report
63
Hradec Králové, Czech Republic
Insulated Panels
Annually Generating
417MWh
(estimated)
Planet
Passionate
Increasingly our customers want
solutions which not only enable
them to preserve resources,
but solutions which are also
sourced and manufactured in an
environmentally responsible way.
In December 2019 Kingspan launched the next
phase of our sustainability journey, our Planet
Passionate programme. Through this programme we
are working with our suppliers and throughout our
business to meet our ambitious goals in the areas
of carbon, energy, circularity and water. In an eff ort
to reduce a key source of carbon in construction,
embodied carbon, we are targeting Net Zero Carbon
Manufacturing by 2030 and a 50% reduction in
carbon intensity from our primary suppliers by 2030.
Our Global Head of Innovation works together with
our Global Head of Sustainability, and our CEO, to
ensure that product development is closely aligned
with our Planet Passionate objectives.
In 2021, we chose to voluntarily update our existing
science-based targets. These more ambitious targets
were approved by the Science-Based Initiative in June
2021 and classifi ed our ambition as aligned with a
1.5°C future.
Planet Passionate
Targets
Target
Year
Underlying
Business
Whole
Business
2020
2021
2022
2020
2021
2022
Carbon
@ Net Zero Carbon
Manufacturing (scope 1 & 2
GHG emissions1 - tCO2e)
@ 50% reduction in product
CO2e intensity from primary
supply partners (%)
@ Zero emission company cars
- annual replacement (%)
2025
Energy
@ 60% Direct renewable
energy (%)
@ 20% on-site renewable
energy generation (%)
@ Solar PV systems on all
wholly owned sites(%)
@ Net Zero Energy (%)
Circularity
@ Zero company waste to
landfi ll (tonnes)
@ Recycle 1 billion PET bottles
into our manufacturing
processes annually (million
bottles)
@ QuadCoreTM products
utilising recycled PET (no. of
sites)
Water
@ Harvest 100 million litres
of rainwater annually
(million litres)
@ Support 5 ocean clean-up
projects (no. of projects)
2030
410,224 2
389,299 2 242,734
517,972 2,3
519,576 2,3 385,157 3
2030
-
11
-0.53
0.04
29
60
2030
19.5
25.8 2
34.3
2030
4.9
5.1 2
7.2
2030
21.7
28.4
41.5
2020
100
100
100
-
11
19.5
4.9
21.7
100
-0.53
0.04
28.5
58 4
24.9 2
33.4
4.9 2
7.1
29.2
35.2
100
n/a5
2030
18,642
16,359 2
9,081
18,642
17,150 2
10,828
2025
573
843
803
573
843
803
2025
1
1
3
1
1
3
2030
20.1
20.5 2
26.3
20.1
20.5 2
26.4
2025
1
2
3
1
2
3
Underlying Business includes manufacturing and assembly sites within the Kingspan Group in 2020 plus their organic growth.
Whole Business includes all manufacturing and assembly sites within the Kingspan Group, including additions since 2020.
1: Excluding biogenic emissions.
2: Restated fi gures due to improved data collection methodologies.
3: GHG emissions were recalculated due to acquisitions that occurred in 2021 and 2022.
4: Excluding recent acquisitions due to unavailability of data at this time.
5: As we retire our Net Zero Energy target in favour of a carbon charge, newly acquired businesses are not included for this target.
64
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Business & Strategic Report
Sustainability Report
65
Carbon & Energy
Through our Planet Passionate programme, we
aim to enable low carbon buildings, not only in
the operational phase but also in the upfront and
construction phase. 2022 highlights include:
@ Internal carbon charge: From the 1st of
January 2023 each business unit will have
an internal charge of €70 per tonne for all
energy related emissions (excluding process
and biogenic emissions) emitted. This will help
to further incentivise the rapid deployment
of decarbonisation projects to support
the achievement of our Net Zero Carbon
manufacturing target.
@ Scope 1 & 2 GHG emissions: A 37% reduction was
achieved in 2022 via the implementation of new
renewable energy contracts, deployment of solar
PV systems and reduction in the use of high Global
Warming Potential (GWP) blowing agents.
@ Scope 3 GHG emissions: A key facet of our
decarbonisation plan is to reduce our upstream
carbon emissions, particularly as they relate to
our purchased goods and services which in 2022
accounted for over 86% of our total value chain
emissions. We have had signifi cant engagement
with our key raw material suppliers and tracking
of their decarbonisation plans, and we had over
50 meetings on supply chain engagement in 2022.
One outcome of the engagement programme was
our increased investment in H2 Green Steel which
aims to produce steel with 95% reductions in CO2
emissions compared to traditional steelmaking.
This is a clear signal to the market about what
we expect from our suppliers over the short to
medium term.
@ Product: In 2022, we launched our new
QuadCore™ LEC insulated panel which has over
50% recycled content by weight and an estimated
embodied carbon reduction of 17% carbon
(across LCA modules A - C) versus the existing
QuadCore™ insulated panel product.
@ Zero emission cars: We installed an additional
82 new EV charging stations across our business,
bringing the total number of systems to 198 in
2022. In addition, we converted 58% of our annual
replacement cars to zero emissions cars.
@ Renewable energy use: 19 new renewable energy
projects that came online in 2022 will produce
more than 9.9 GWh of energy annually. We
also made signifi cant progress with our energy
suppliers, converting 24 electricity contracts (63
GWh) to renewable electricity.
@ On-site renewable energy generation: We
deployed 18 new rooftop solar-PV projects across
our business that will generate 6.4 GWh annually.
Circularity
Water
We are embedding circularity principles within our
operations and product development processes
to support the transition to a circular economy
within the built environment
@ Product certifi cation: Kingspan Data +
Flooring has been awarded the prestigious
Cradle to Cradle certifi cation at Bronze level,
based on an impartial and independent
evaluation of material health, material
reutilisation, renewable energy, water
stewardship and social fairness.
@ Product: In 2022 Kingspan Data + Flooring
developed its new RMG 600+ raised access
fl oor product which will have 97% recycled
content by weight (an increase of 17% from
this exiting RMG600 product). This product is
due to launch in Q1 2023.
@ Waste reduction: We recycled 63% of our
waste in 2022 and we continued our research
into ways to minimise waste. Recycling trials
are ongoing to investigate ways in which
Kingspan factory waste could be reutilised to
add value to other industries while helping us
divert waste from landfi ll.
@ Recycling: We have plans for two glycolysis
chemical recycling facilities underway, with
the fi rst to start construction in Q2 2023.
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.
@ In 2022, we installed 14 rainwater harvesting
systems across our business, adding 40 million
litres to our capacity. In total, we harvested
26.4 million litres of rainwater during the year.
@ We are delighted to announce our 3-year
partnership with the Clearbot Project to
support the removal of waste from rivers in
Kerala, India. Established in 2019, Clearbot
is a clean tech start-up with an ambitious
mission: to restore the balance between
humanity and the oceans. Clearbot creates
unmanned, electric, emissions-free robots.
These robots tackle challenges including -
inspection and monitoring, intervention and
cleaning of urban waterways.
@ Clearbot Neo, which will be in use in Kerala,
can collect up to 15 litres of oil and 200
kilograms of fl oating trash per day.
Saas-Fee
Alps Switzerland
Water + Energy
BlueMaster®
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67
People
Passionate
Attract, Retain and Develop
What has been achieved at
Kingspan would not be possible
without the people that work
hard every day to drive the
business forward. A dynamic
and motivated workforce is
key to delivering 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 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.
Read more
see Planet
Passionate
on page 64
Training and Development
During 2022 Kingspan continued to
invest in developing leader capability
and strengthening and deepening
our talent pipelines to support
workforce sustainability. Our people
play a critical role in delivering our
purpose and strategy, aligned to our
values. Customer centricity is at the
heart of our leadership development,
underpinned by our focus on high
performance and continuous
innovation. We encourage our
leaders to grow their careers in
line with the growth of the Group.
At Kingspan we are more than
aware of the key role leaders play in
achieving our strategy including our
Planet Passionate goals. Our formal
leadership development programmes
are designed to equip our business
leaders to drive the achievement of
our mission to accelerate a net zero
emissions future with the wellbeing
of people and planet at its heart.
Yours to Shape - Graduate
Attraction and Development
To continue to build leadership
pipelines Kingspan further invested
in our global graduate attraction
and development programme,
Yours to Shape. Over 190 graduates
completed the programme since it
was launched in its current format.
The programme’s objective is to
support the successful transition
of graduates from university to
Kingspan, create an international
collaborative network within the
Group and develop the capabilities
to drive their career in Kingspan
forward. As a result of the global
attraction campaign, 45 participants
were hired for all divisions around the
world. It is clear from the campaign
that graduates are consistently
attracted to Kingspan for its active
and practical focus on sustainability.
This year we attended University
Career Fairs in-person and virtually
across all regions. In line with our
Planet Passionate goals, to off set
our carbon emissions produced by
attending each of these Career Fairs
we partnered with Naturefund to
plant a tree in Costa Rica for every
person who registered their interest
in our Graduate Programme at
each Career Fair. This provided the
students with an opportunity to
give back to the planet and make
a diff erence in the fi ght against
climate change. As a result, we are
committed to planting 500+ trees
in Costa Rica on behalf of students
across the globe.
The development programme spans
12-months of virtual and in-person
workshops and assignments, peer
coaching and masterclasses with
senior executives. In 2022 the fi rst
half of the programme was all
delivered virtually and by the second
half in-person learning events were
possible. Graduates visited our Joris
Ide head quarters in Belgium as
well as continuing their in-person
learning workshops.
Each year the graduates work in
cross-functional, regional teams and
work on diverse business projects.
The criteria for projects are that
they must be innovative, aligned
to Kingspan strategic priorities
which includes sustainability and
have a commercial benefi t. In
2022 six projects were showcased
to senior leaders in IKON and the
presentations were live streamed
to our facilities around the world.
The level of innovation and the
integration of sustainability into the
projects was inspiring. The projects
will be taken forward for further
assessment with an aspiration of
integration into the existing product
range. Divisions have also taken
forward innovative ideas to conserve
energy and reduce waste.
The Yours to Shape programme is a
key pillar for Kingspan’s leadership
development strategy. As talented
people continue to join and develop
fulfi lling careers the longer-term
high performance of the Group is
safeguarded.
Programme for Executive
Acceleration in Kingspan (PEAK)
The PEAK programme was launched
in 2018. This is an accelerated
development programme focused
on supporting the transition to a
more senior leadership position. The
core objective of the programme
is to deepen Kingspan’s leadership
strength to match the increasing
scale and global nature of the
business. An executive sponsor
partners with participants during
the programme, sharing leadership
challenges and encouraging open
discussion to learn together. Over
125 executives have participated in
PEAK with over 50% of participants
being promoted in the business soon
after completing the programme.
PEAK strengthens cross divisional
relationships, as well as enabling
further integration of executive talent
from recent acquisitions.
Developing Leaders as
Coaches (DLAC)
During 2022 Kingspan continued
the Developing Leaders as Coaches
programme. This is a cross divisional
programme which focuses on
developing leaders’ coaching
capability with the aim of being
more eff ective in critical people
conversations. This has led to the
development of a Kingspan Code of
Coaching which clarifi es the rules
of engagement and aligns with
the Company’s core values and
Code of Conduct. In Q4 of 2022 we
rolled out a Developing Leadership
Coaching Capability Programme
similar to DLAC. This time it was an
international programme hosting
participants from Ireland, UK and
throughout Europe. We will continue
to roll out this programme next year
to ensure the ongoing development of
formal coaching skills and consistency
of practice globally. In parallel, we
continue to assign internal coaches
and mentors to sponsor high potential
managers with particular emphasis on
accelerating emerging female leaders
to senior leadership positions.
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69
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 ongoing
review at a facility and divisional
level. We hosted a H&S Forum at
IKON in December, attended by over
20 H&S professionals from across
the global business. There were a
number of presentations made
during the forum, covering topics
such as H&S management systems,
learnings from serious incidents,
best practice commissioning of new
machinery, and employee training.
While we are pleased to report there
were no fatalities in Kingspan in
2022, we are always striving to
advance our health and safety
culture and sustain a safe working
environment for our employees.
Hazard Identifi cation Processes
include (but are not limited to):
@ All near misses are assessed and
processes are updated.
@ Employees are encouraged to
make suggestions for process
improvements.
@ Safety walks by responsible
persons.
@ Periodic workplace inspections.
@ Risk assessment on new machines
at installation.
Initiatives implemented
throughout 2022
@ COVID-19 safety measures were
an ongoing priority for 2022 and
many safety initiatives to support
the safe return to work were
implemented across the Group.
@ Contractor management and
musculoskeletal disease prevention
programmes introduced by Water
+ Energy sites in Australia.
@ Roll out of standardised divisional
lock-out tag-out try-out (LOTOTO)
procedures across all Insulation
business units.
@ Site specifi c safety improvements
including machinery guarding
and electrical safety upgrades in
Data + Flooring.
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,
46% of our most recent graduate
programme are female and 25% of
our senior executive team, reporting
to the CEO, are female.
Gender Balance
Injury Frequency Rate
Fatalities
2022
2021
2020
79% 21%
2022
1.0
80% 20%
2021
81% 19%
2020
1.2
1.2
2022
2021
2020
0
1
1
Male
Female
p/100k hours
Supporting a School build
in Madagascar ‘L’Ecole
des Petits Géants’
(The School of Little Giants)
Our Communities
In Autumn 2021, we launched
Planet Passionate Communities,
the philanthropic arm of our 10-
year Planet Passionate programme.
At the heart of Planet Passionate
Communities is an ambition to create
a positive legacy as a business.
providing them with the expertise,
products and fi nancial contributions
- all combining to €1.5m to develop
critical infrastructure in healthcare
and education with sustainability
at its core. All in a rapid response to
complex global issues.
Locally, our businesses are devoting
their time and resources to support
community projects. The idea: to
build a world that’s powered by
renewable energy, has net-zero
carbon, manages water sustainably,
and protects the earth’s valuable
resources by reducing, re-using
and recycling.
On a global level, we’ve joined
forces with GOAL, the international
humanitarian response agency, in
a fi ve-year partnership that will
make lives better for some of the
world’s most vulnerable people.
Over these fi ve years, we will be
More about GOAL
Humanitarian aid agency GOAL
was founded in 1977 and is
headquartered in Dublin. Over
the last four decades, you’ll fi nd
GOAL has responded to major
humanitarian crisis after crisis.
Today, it’s working with vulnerable
communities in 15 countries to help
those facing poverty, confl ict, hunger
and climate change. GOAL brings
emergency food and shelter when a
crisis strikes; expertise and resources
to strengthen healthcare systems;
training leading to meaningful work
and income; and education and
support to fi ght hunger.
Puerto Cortés Hospital Honduras
When the COVID-19 pandemic hit
Honduras, the Public Hospital of
Puerto Cortés was nominated as the
fi rst line of response. When Hurricane
Eta and Hurricane Iota storms hit
later the same year, it became clear
that the hospital simply couldn’t
cope. The chosen solution gave a
chance for GOAL and Kingspan to
join forces in building a new, state of
the art hospital wing just 10 meters
away from the existing Hospital.
With 12 new beds, shared equally
between a female and a male ward,
this would add capacity for providing
critical care to patients. The new Sayri
Molina wing, named after a GOAL
employee who lost her life to the
pandemic, will use a combination of
Kingspan’s building envelope panel
solutions for walls and roofs, and
Cleanroom Modular Unit technology
(prefabricated panels) providing
hygienic and safe rooms.
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71
Our policies
Aims
@ Comply with all local laws in the
countries we operate in.
@ Ensure supply chain accountability.
Modern slavery
Slavery and human traffi cking 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 traffi cking statement
each fi nancial 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 continues to develop its
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. In 2022, we adopted and
published our Group Supplier Policy
which sets out our expectations of
suppliers in terms of business practices
and integrity, ethical employment
practices, anti-corruption and bribery
and environmental responsibility.
EcoVadis
In late 2021, Kingspan subscribed to
EcoVadis. The EcoVadis sustainability
management platform will help us to
monitor and track our suppliers ESG
performance, promote transparency,
reduce risk and identify areas for
improvement. EcoVadis is a sustainability
rating platform which assesses a
company supply chain network
under environmental, ethics, labour
and human rights, and sustainable
procurement criteria. The outcome of
the assessment process is a company
scorecard which provides an overall ESG
performance rating of the supplier. In
2022, we began the roll out of EcoVadis
questionnaire requests across our key
supplier base. To date we have received
score cards that cover 41% of our key
supply base by spend.
Customer experience programme
Our Customer Experience programme is
all about capturing what, how and why
our customers experience the things they
do. During 2022 we received feedback
from over 14,500 customers in over
90 countries. As customer experience
becomes more important in a digital
world, our feedback programme gives
us a means to hear what our customers
have to say about their experience with
us, keeps our fi nger on the pulse and
provides us with the insights to develop
and drive new digital technologies to
help make meaningful change happen.
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BaseCamp Lyngby
Copenhagen, Denmark
Roofi ng + Waterproofi ng
Derbigum ® GC AR
The Board
Non-executive Chairman
Jost
Massenberg
(Age 66)
Germany
Independent
Jost Massenberg was appointed to the Board in February 2018, and was appointed as non-
executive Chairman of Kingspan in 2021.
Key strengths: Jost brings extensive board level experience, including at chairman and
chief executive level, and has a wealth of industry experience in European steel and major
manufacturing businesses. His in-depth knowledge of the steel industry and its workings
furnish him with a keen understanding of the sector and challenges being addressed by
Kingspan in decarbonising its supply chain.
Previous relevant experience: Jost is the former Chairman of VTG Aktiengesellschaft and
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.
Qualifications: PhD Business Admin.
Chief Executive Officer
Gene M.
Murtagh
(Age 51)
Ireland
Gene Murtagh is the Group Chief Executive Officer. He was appointed to the Board in
November 1999.
Key strengths: Gene has extensive experience across almost 30 years with Kingspan at
operational and leadership levels. His deep knowledge of all of the Group’s businesses and
the wider construction materials industry, brings valuable insight to lead the Group’s strategy
and to advance our strategic pillars of Innovation, Planet Passionate, Completing the Envelope
and Global.
Previous Kingspan roles: Gene joined the Group in 1993, and was appointed Chief Executive
Officer 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 Panels business and of the Water +
Energy business.
Executive directors
Geoff
Doherty
(Age 51)
Ireland
Russell
Shiels
(Age 61)
United States
of America
Gilbert
McCarthy
(Age 51)
Ireland
Geoff Doherty is the Group Chief Financial Officer. He joined the Group, and was appointed to
the Board, in January 2011.
Key strengths: Geoff is a qualified chartered accountant, and brings extensive experience of
capital markets and financial management in an international manufacturing environment.
He oversees compliance of the Group’s financial controls and cyber security programmes.
Previous relevant experience: Prior to joining Kingspan, Geoff was the Chief Financial Officer
of Greencore Group plc and Chief Executive Officer of its property and agribusiness activities.
Principal external appointments: Non-executive director of Ryanair Holdings plc.
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.
Key strengths: Russell brings to the Board his particular knowledge of the building
envelope market in the Americas, as well as his deep understanding of the global office and
data centre market.
Previous Kingspan roles: Russell has experience in many of the Group’s key businesses, and
was previously managing director of Kingspan’s Building Components and Raised Access Floors
businesses in Europe.
Gilbert McCarthy is Managing Director of Kingspan’s Insulated Panels businesses in EMEAA.
He was appointed to the Board in September 2011.
Key strengths: Gilbert brings to the Board his extensive knowledge of the building envelope
industry, in particular in Western Europe and Australasia.
Previous Kingspan roles: He joined Kingspan in 1998, and has held a number of senior
management positions including managing director of the Off-Site division and general
manager of the Insulation business.
Board Committees:
Audit & Compliance
Nominations & Governance
Remuneration
Munch Museum
Oslo, Norway
Insulated Panels
Paroc AST®
Leadership
and Experience
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75
Non-executive directors
Non-executive directors (continued)
Linda
Hickey
(Age 61)
Ireland
Independent
Linda Hickey was appointed to the Board in June 2013, and is appointed as the Senior
Independent Director and the Workforce Engagement Director.
Key strengths: Linda’s considerable knowledge and experience of capital markets and
corporate governance provide important insights to the Board. In addition, she brings
experience relating to environmental, social and governance matters from her board level
positions to draw from as Senior Independent Director.
Michael
Cawley
(Age 68)
Ireland
Independent
John
Cronin
(Age 63)
Ireland
Independent
Anne
Heraty
(Age 62)
Ireland
Independent
Previous relevant 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. She also previously served as Chair of the Irish Blood Transfusion Service.
Qualifications: B.B.S.
Principal external appointments: Non-executive director of Cairn Homes plc and
Greencore Group plc.
Michael Cawley was appointed to the Board in May 2014.
Key strengths: Michael’s 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. In addition, Michael has broad experience on governance matters
and in addressing climate-related risks from his board positions at Hostelworld Group plc and
previously at Flutter Entertainment plc.
Previous relevant experience: He is a chartered accountant and was formerly Chief
Operating Officer & Deputy Chief Executive of Ryanair.
Qualifications: B. Comm., F.C.A.
Principal external appointments: Chairman of Hostelworld Group plc, and non-executive
director of Ryanair Holdings plc.
John Cronin was appointed to the Board in May 2014.
Key strengths: John is a qualified solicitor and is a member of the International Bar
Association. He has extensive experience in advising corporates, including on matters of risk
and corporate governance. His valuable legal, corporate governance and capital markets
experience brings a unique perspective to the Board.
Previous relevant experience: John is a former partner and chairman of McCann FitzGerald.
He is a past President of the British Irish Chamber of Commerce.
Qualifications: B.A. (Mod) Legal Science; Solicitor in Ireland and England & Wales.
Anne Heraty was appointed to the Board in August 2019.
Key strengths: Anne brings a wealth of experience from a career in running an international
business and from her current role on the board of Ibec. As former Chief Executive Officer of
Ireland’s largest recruitment and outsourcing company, Anne has unparalleled experience of
talent development and retention strategies. Anne also sits on the sustainability committee of
Outsourcing Inc.
Previous relevant experience: Anne is the founder and former Chief Executive Officer of Cpl
Resources Limited (formerly Cpl Resources plc). She previously held a number of other public
and private non-executive directorships.
Qualifications: B.A. in Mathematics & Economics.
Principal external appointments: Non-executive director of Ibec, Outsourcing Inc. and Cpl
Resources Limited
Board Committees:
Audit & Compliance
Nominations & Governance
Remuneration
Éimear
Moloney
(Age 52)
Ireland
Independent
Éimear Moloney was appointed to the Board in April 2021.
Key strengths: Éimear has excellent knowledge and experience of capital markets and asset
management. She has extensive financial and board governance experience as a fellow of
the Institute of Chartered Accountants in Ireland, and a fellow of the Institute of Directors in
Ireland. She also brings valued compliance experience from the pharmaceutical manufacturing
environment to the Board and the Audit & Compliance Committee.
Previous relevant experience: Éimear was previously a senior investment manager in Zurich
Life Assurance (Irl) plc.
Qualifications: B.A. Accounting & Finance; MSc. Investment and Treasury.
Principal external appointments: Non-executive director of Hostelworld Group plc, Irish
Continental Group plc and Chanelle Pharmaceuticals Group.
Paul
Murtagh
(Age 49)
United States
of America
Paul Murtagh was appointed to the Board in April 2021.
Key strengths: Paul is the Chairman and Chief Executive Officer of Tibidabo Scientific
Industries Ltd and previously worked in investment banking at Merrill Lynch in New York and
Sydney. He brings to the Board his excellent understanding of the US market and his significant
experience in building successful global businesses.
Previous relevant experience: Paul was formerly the Chairman and Chief Executive Officer of
Faxitron Bioptics LLC and Chairman of Deerland Probiotics & Enzymes Inc.
Senan
Murphy
(Age 54)
Ireland
Independent
Qualifications: B. Comm International.
Principal external appointments: Non-executive director in a number of private companies.
Senan Murphy was appointed to the Board in October 2022.
Key strengths: Senan has over 30 years’ experience in international business across multiple
industries including building materials, renewable energy, financial services and banking.
Previous relevant experience: He was previously the Group Finance Director of CRH plc
where he also had responsibility for driving and reporting performance against the company’s
sustainability targets. Prior to joining CRH he was Bank of Ireland Group’s Chief Operating
Officer, having previously held positions as Chief Operating Officer and Finance Director at
Ulster Bank, Chief Financial Officer at Airtricity and numerous senior financial roles in GE, both
in Europe and the US.
Principal external appointments: He is a non-executive director of Bluestar Energy Capital,
a US-based global investor in energy transition and renewable energy. He is also a member of
the UCD College of Business Irish Advisory Board.
Company Secretary
Lorcan
Dowd
(Age 54)
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.
Board Committees:
Audit & Compliance
Nominations & Governance
Remuneration
Businesspark ML
Echt-Susteren,
The Netherlands
Insulated Panels
JI Wall 1000SF PIR
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77
Report of the Nominations
& Governance Committee
Jost Massenberg
Dear Shareholder
I am pleased to present
the 2022 Nominations &
Governance Committee
report covering the work and
activities of the committee
during the year.
The Kingspan Board recognises that the values, integrity and
behaviours that shape our culture and corporate governance
are the foundation of long-term success. We are committed to
ensuring that our long-term ambitions go hand in hand with high
standards of corporate governance, in line with the principles
of the 2018 UK Corporate Governance Code. We continually
enhance our corporate governance practices and disclosures 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. We consistently strive to ensure that our reporting
continues to be meaningful in detailing how we integrate the UK
Corporate Governance Code’s principles into our decision making,
and we have made enhancements to our governance processes,
based on our purpose, values, and strategy, all of which contribute
to reducing business risk for stakeholders. At the heart of all these
endeavours is an entrepreneurial Board that adheres to high
standards of governance.
NodeCowork
North Devon, UK
Insulation
Kooltherm K103;
GreenGuard GG300
In 2022, the committee appointed
Better Boards to carry out an
independent evaluation of the Board,
including its effectiveness, Board
culture, Board committees, and
Board composition and diversity. The
timing of this review was important,
as it followed my appointment in
2021 as independent Chairman of the
Board, and also precedes a period of
transition for the Board whereby a
number of long serving non-executive
directors are due to retire in the near-
term. The external evaluation process
gave valuable insights into the Board
and its committees, and a summary
of the Better Boards’ report and
recommendations are set out later in
this report.
At Kingspan, we have always
welcomed shareholder feedback
and, where feasible, we seek to
incorporate that feedback into our
decision making and reporting.
During the year, I was delighted to
have the opportunity to engage with
our shareholders in relation to our
strategy, governance, remuneration
and sustainability proposals. I wrote
to shareholders representing over
70% of the register, and was very
pleased to meet with several of our
top shareholders to gain a greater
understanding of some of the matters
raised at our Annual General Meeting
(‘AGM’). A key topic of discussion
with shareholders was the future
composition and diversity of our
Board, which has culminated in the
adoption of Kingspan’s Board Diversity
Policy. Further details of our response
to these shareholder engagements
are set out later in this report.
I would like to thank all of those who
provided their feedback to the Board
during our various engagements, and
I look forward to continuing these
conversations both in the run up to
and following our AGM this year.
Jost Massenberg
Chairman
21 Feb 2023
Boatman’s House
London, UK
Insulated Panels
SFS light steel
frame system
During the year, I was delighted to have the
opportunity to engage with our shareholders
in relation to our strategy, governance,
remuneration and sustainability proposals.
78
78
Kingspan Group plc Annual Report & Financial Statements 2022
Report of the Nominations & Governance Committee
79
Directors’ Report Corporate Governance
Statement
Kingspan is committed to
operating best practice standards
of good governance, accountability
and transparency. This tone is set
by the Group Board of Directors
and communicated throughout
the Group regardless of division or
geographical location.
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’) and the
Irish Corporate Governance Annex
(the ‘Annex’).
Both the Code and the Annex can be
obtained from the following websites
respectively: www.frc.org.uk and
www.euronext.com
Statement of compliance
The directors confirm that the
Company has throughout the
accounting period ended 31
December 2022 complied with the
provisions of the Code and the
Annex as set out below.
Board committees
The Board has established three
standing committees: Audit &
Compliance, Nominations &
Governance, and Remuneration.
All committees of the Board have
written terms of reference setting
out their authorities and duties
(available on the Group’s website
www.kingspan.com). The members
of each committee as at the date
hereof, and the date of their first
appointment to the committee, are
set out in the adjacent tables. The
details of each committee’s activities
during the year are detailed in their
respective reports as set out in this
Annual Report.
Attendance at Board and Committee
meetings is also set out in the
adjacent tables.
Carson Wealth
Management
Nebraska, USA
Insulated Panels
QuadCore™
Audit & Compliance Committee
Michael Cawley (Chair)
Anne Heraty
Éimear Moloney
Senan Murphy
Nominations & Governance Committee
Jost Massenberg (Chair)
John Cronin
Linda Hickey
Remuneration Committee
Linda Hickey (Chair)
Michael Cawley
Anne Heraty
Appointed 2014
Appointed 2019
Appointed 2021
Appointed 2022
Appointed 2019
Appointed 2014
Appointed 2021
Appointed 2015
Appointed 2014
Appointed 2021
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Attendance at AGM, Board and Committee meetings
during the year ended 31 December 2022
AGM 2022
Board
Audit
& Compliance
Nominations
& Governance
Remuneration
(maximum 7)
(maximum 5)
(maximum 2)
(maximum 3)
Jost Massenberg
Gene M. Murtagh
Geoff Doherty
Russell Shiels
Gilbert McCarthy
Linda Hickey
Michael Cawley
John Cronin
Anne Heraty
Éimear Moloney
Paul Murtagh
Senan Murphy*
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
N/A
7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
2/2
5/5
5/5
5/5
2/2
* Appointed as a director as of 1 October 2022
2/2
2/2
2/2
3/3
3/3
3/3
80
Kingspan Group plc Annual Report & Financial Statements 2022
Report of the Nominations & Governance Committee
81
Directors’ Report
The Nominations & Governance
Committee met twice in 2022. The
activities of the committee included
the following matters:
@ Consider the feedback from the
AGM;
@ Agree shareholder
engagement process;
@ Consider the feedback from
shareholder engagement;
@ Set the criteria and process for the
appointment of a non-executive
director;
@ Recommend the appointment of
Senan Murphy to the Board;
@ Agree the terms of reference for
the independent Board evaluation
by Better Boards;
@ Consider the report from Better
Boards and agree next steps and
responses; and
@ Recommend adoption of a Board
Diversity Policy.
Further details of the Board renewal
process, and the key outcomes of the
Better Boards review are outlined later
in this report.
Board responsibilities
There is a clear division of
responsibilities within the Group
between the Board and executive
management, with the Board
retaining control of key 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
of 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
82
refreshment and renewal on an on-
going basis.
As a means of fostering open dialogue
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. Each of these settings lends
itself to a level of scrutiny, discussion
and challenge, in a collaborative
atmosphere.
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 such as remuneration
and succession. The Company
has procedures whereby all new
directors receive formal induction
and familiarisation with Kingspan’s
business operations, sustainability
matters and systems on appointment,
including trips to manufacturing sites
with in-depth explanations of the
processes involved at the site.
Workforce engagement
The Board recognises the importance
of engaging with all of our key
stakeholders, as set out in Provision
5 of the Code. Elsewhere in this
Annual Report we have detailed the
long-lasting partnerships we have
developed with customers, suppliers
and communities. We are also aware
of the value of engagement with
our workforce. Our people are key
to developing and delivering on our
strategy, and are fundamental to our
long-term success.
Linda Hickey is appointed as the
director responsible for workforce
engagement to facilitate the
channelling of employee views to
Board discussions. During the year,
she had the opportunity to hear
employee views on a range of topics
through participation in our graduate
development programme, and by
meeting employees on site during
Board visits. In 2022 we worked with our
employee representatives to establish
a European Works Council which will
provide a structure to engage with
our employees at a European level on
the development of the business, as
well as employment, investments and
transnational issues. The first meeting
of the European Works Council will
take place in the first half of 2023,
and we look forward to constructive
engagement with our employee
representatives through this forum.
In 2023 Kingspan will be launching
its People Passionate programme
across all its businesses which will
develop wider employee engagement
across the Group on a broad range
of issues including culture, vision,
health and well-being, and training
and development. These processes 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 provide feedback.
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 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. 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 Group, to
elect directors, to declare dividends,
to appoint or reappoint auditors and
to fix the remuneration of auditors
and directors. At the 2022 AGM,
shareholders were provided with the
facility to attend and participate
either in person, by proxy or on-line
using the latest technology platforms.
Kingspan is committed to a continuing
engagement with shareholders at and
around our AGM.
The Chairman of the Board of
Directors presides 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, both on a show of
hands and at a poll, the Chairman
shall have a casting vote. Further
details of shareholders rights with
respect to the General Meetings are
set out in the Shareholder Information
section of this Annual Report.
Board diversity
At our AGM last year, there were
approx. 24% of votes cast against the
re-election of the Chairman to the
Board. Both prior to and following
the AGM the Company engaged
extensively with shareholders to
develop a deeper understanding
of any concerns shareholders may
have. The Company wrote out to
shareholders representing over 70%
of the register, with the Chairman
and the Senior Independent Director
also meeting several of the top
shareholders to discuss matters arising
from the AGM. It was clear from these
shareholder engagements that the
vote primarily reflected shareholders’
views about Board refreshment
and diversity.
The Board has now adopted a Board
Diversity Policy, which supports the
recommendations set out in the
Hampton-Alexander Review on gender
diversity. The Board intends to:
@ increase female representation
on the Board over the coming
years to achieve the best practice
benchmark of a minimum 40%
representation of both genders;
and
@ increase the international
representation on the Board.
A copy of the Board’s policy is
available on the Group’s website
www.kingspan.com. The Board
intends to achieve these objectives
through future appointments as the
Board is refreshed, having regard
for the need to maintain a stable
and effective Board during the
transition period. To this end, three
of the last five non-executive director
appointments have been female. The
Board currently comprises nine male
and three female (25%) directors
(including the Senior Independent
Director), which will change to seven
male and four female (36%) following
the appointment of Louise Phelan
and the retirement of Michael Cawley
and John Cronin at our forthcoming
AGM. This will meet the target set
by the Irish Government’s Balance
for Better Business of 33% female
representation on Boards by 2023,
as the Company moves progressively
towards the gender and international
diversity targets set out in our Board
Diversity Policy.
Board composition and renewal
Kingspan is committed to the on-
going refreshment and renewal
of the Board, which is essential to
bring fresh thinking and constructive
challenge to the Board’s decision
making. The Nominations &
Governance Committee leads the
process for Board appointments while
ensuring plans are in place for orderly
succession to both the Board and
senior management positions.
In considering candidates for
appointment as non-executive
directors, the committee remains
guided by the principle that all
appointments will be made based
on merit and skills, whilst having
regard to our Board Diversity Policy,
including, diversity of gender, age,
nationality and ethnicity. The Board
believes that international skills and
experience are equally as important
as nationality, and will have
regard to both factors in making
appointments.
In 2022, the committee led the
search for the appointment of a new
independent non-executive director.
In considering the appointment, the
committee had regard to the planned
changes to the Board in the near-
term, particularly the prospective
retirement of Michael Cawley as a
non-executive director and current
chair of the Audit & Compliance
Committee. The committee agreed
the criteria for the new appointment,
to include relevant financial skills, a
background in industry, and broad
international experience (particularly
in the Americas). The committee
considered whether or not to engage
a firm of consultants to assist in
the process of recruiting the new
non-executive director, and agreed
that in order to ensure best fit with
the Company, it would use the
extensive knowledge and contacts
of the committee to identify suitable
candidates.
The committee maintains a pool
of potential candidates, and after
considering Senan Murphy’s skillset,
which comprises more than 30
years’ experience in international
business across multiple industries
including building materials,
renewable energy, financial services
and banking, he was considered the
most suitable candidate. Mr Murphy’s
appointment broadens the skillset
and diversity of the Board while
reflecting our increasingly global
footprint as a business.
Aligning succession planning
to Kingspan’s wider strategy is
a cornerstone of strong Board
governance, and has been, and
will continue to be, a focus of the
committee. A fundamental aspect
of overseeing appointments to
senior management remains the
development of a diverse leadership
pipeline. Among Kingspan’s senior
management team, 25% of senior
leadership roles reporting directly to
the CEO are held by females, which
compares to the target set by the
Irish Government’s Balance for Better
Business of 26% females in senior
leadership roles by 2022. Furthermore,
this year 28% and 34% of attendees
on Kingspan’s senior management and
graduate development programmes
respectively were female, and 76%
and 41% of the participants in the
respective programmes were from
an international (non UK/Irish)
background, as Kingspan is attracting
more and more diversity into senior
leadership roles.
Key strengths and relevant experience
of each Director are set out on pages
75 to 77, and a breakdown of the
background and principal skills and
experience of the non-executive
directors on the Board is set out in the
table overleaf.
Report of the Nominations & Governance Committee
83
Kingspan Group plc Annual Report & Financial Statements 2022Directors’ Report Experience/Skillset
Resident
International
Financial
Banking
Governance
Leadership
Industry
Environmental*
Risk
Legal
Workforce
Jost
Massenberg
Germany
Linda
Hickey
Ireland
Michael
Cawley
John
Cronin
Anne
Heraty
Éimear
Moloney
Paul
Murtagh
Senan
Murphy
Ireland
Ireland
Ireland
Ireland
USA
Ireland
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
*In particular, with respect to Kingspan’s markets, raw materials and Planet Passionate strategy.
Board 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 the performance of
the Board, and the conduct of Board
and committee meetings annually,
and an externally facilitated review
of the Board’s general corporate
governance is carried out in every
third year.
The Chairman conducts his review
through a series of one to one
meetings with each of the executive
and non-executive directors, as well
as by receiving feedback through the
Senior Independent Director of the
non-executive directors’ collective
views on the workings of the Board.
An external independent evaluation
of the Board’s performance was
carried out in 2022 by Better Boards.
The review format included a
questionnaire completed by all Board
members, a review of the Board
papers, and a series of one to one
interviews conducted with each of the
executive and non-executive directors.
The evaluation also measured the
Board against selected peers.
The key areas of focus for the review
were: Board leadership; Board culture;
the Board committees; and Board
composition and diversity. The results
of the review were discussed by the
Committee and presented to the
Board at its meeting in December
2022. Overall the results were very
positive, with the conclusion that
the Board operates effectively, that
there was a seamless transition to
the new Chair, and that the Audit &
Compliance Committee was effective
in overseeing product compliance in
line with its new terms of reference.
The review addressed in particular
the Board’s composition and
diversity, and noted that the Board
was evolving, with a number of
long serving non-executive directors
due to retire in the near-term.
In addition the review addressed
succession planning for the roles of
Senior Independent Director and the
Workforce Engagement Director, and
the need to ensure continuity across
both roles. The review recommended
that the Board should adopt a formal
Board Diversity Policy setting out its
commitment to improving diversity
on the Board, and that it should
proactively use upcoming Board
vacancies to respond to gender
and diversity targets, having regard
for the need to maintain a stable
and effective Board during the
transition period.
A number of other themes for further
consideration were also proposed, as
summarised below:
@ Chairman to use one to one
meetings with directors to
maintain Board effectiveness;
@ Board to seek on-going assurance
of consistency of Kingspan culture
throughout the Group;
@ Enhanced reporting from sub-
committees to the Board; and
@ Effective succession planning and
induction process for the Board over
near-term, including for the role of
the Senior Independent Director.
The Board has endorsed all the
recommendations of the Better Boards
report, and has adopted the Board
Diversity Policy referred to above. The
Board will monitor progress against
the agreed action plan designed to
further enhance Board effectiveness.
Conflicts of interests
The Board recognises the importance
of independent representation to the
effective functioning of the Board, as
well as providing scrutiny and (where
necessary) challenge to management,
as part of an effective governance
framework. The committee has
adopted a Conflicts of Interest Policy
which guides all decisions of the Board
when actual or potential conflicts of
interest might arise.
its committee meetings, including the
Remuneration Committee of which
she is chair, and that she has always
exercised her judgement as a non-
executive director, and as the Senior
Independent Director, independent
of any other relationships within
the Board. The Board also took into
account her unrivalled experience
in capital markets and governance,
which is hugely valuable to the
Company and its shareholders, and
concluded that her independence was
not affected.
External commitments
Directors 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 that they have
sufficient time to fulfil their obligations
to the Company.
The committee will continue to
keep under review the external
commitments of all directors.
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 will then
be notified to and considered by the
Board. In deciding what approach to
take, the Board will consider:
@ whether the conflict needs to be
avoided or simply documented;
@ whether the conflict will
realistically impair the director’s
capacity to impartially participate
in decision-making;
@ the possibility of creating an
appearance of improper conduct
that might impair confidence in, or
the reputation of, the Company;
and
@ any measures that may be taken
to avoid or mitigate the potential
conflict.
Directors are not allowed to
participate in such considerations or
to vote regarding their own conflicts.
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, remain impartial
and independent in order to meet the
challenges of the role. Throughout
the year, more than half of the Board
(58%), 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 directors. The Board considers
that each of the non-executive
directors on the Board, excluding
Paul Murtagh, are independent.
When considering John Cronin’s
independence, the Board noted
that he was previously a partner
at McCann FitzGerald, one of the
Company’s legal advisers, from
which he retired in March 2021. The
Board also had regard to Mr. Cronin’s
experience as an accomplished
corporate lawyer who adds important
legal and regulatory experience to
the Board. In these circumstances the
Board continues to be satisfied that
Mr Cronin remains fully independent,
and that there was no material
relationship, financial or otherwise,
which might influence his judgement.
In assessing the independence of
Linda Hickey, the Board had due
regard to her length of service on the
Board, and to her previous position
as a senior executive at Goodbody
Stockbrokers, one of the Company’s
corporate brokers, from which she
retired in April 2019. Having regard to
the continuing evolution of the Board,
the committee agreed to extend
the term of Ms Hickey for a period
of up to three years to 2025 (subject
to annual re-election at the AGM)
in order to maintain a stable and
effective Board during the period. In
assessing Ms Hickey’s independence,
the committee formed the view that
she has always expressed a strongly
independent voice at the Board and
84
Report of the Nominations & Governance Committee
85
Kingspan Group plc Annual Report & Financial Statements 2022Directors’ Report
Board Balance as at
31 December 2022
Independence*
Gender Diversity**
42%
Non-
independent
58%
Independent
75%
Male
* Planned 55% independent
from April 2023
** Planned 36% female
from April 2023
Age Range
8%
Age 40-50
Tenure
42%
Age 51-60
50%
Age 61-70
41%
More than
9 years
17%
More than
6 and Less
than 9 years
25%
Female
25%
Less than
3 years
17%
More than
3 and Less
than 6 years
Carson Wealth
Management
Nebraska, USA
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86
Kingspan Group plc Annual Report & Financial Statements 2022
Directors’ Report
Report of the Nominations & Governance Committee
87
Report of the
Remuneration Committee
Linda Hickey
Dear Shareholder
On behalf of the
Remuneration
Committee, I am
pleased to present
the 2022 Report
on Directors’
Remuneration.
Hilton Canopy Hotel
Florida, USA
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Dri-Design
88
Remuneration philosophy and policy
Kingspan’s philosophy is to pay for
performance and delivery of strategy,
based on simple straightforward
metrics, aligned with the interests of
shareholders and wider stakeholders’
interests.
During 2022, I reached out to over 70%
of our shareholder register, and was
very pleased to have the opportunity to
meet with many of our most significant
shareholders, to discuss with you
Kingspan’s remuneration philosophy
and our policy proposals as we worked
towards the triennial renewal of our
policy at our 2022 Annual General
Meeting (‘AGM’). Many of you shared
your feedback with us, both in writing
and in discussion with the Company,
and this has been very helpful in
formulating the final shape of our
updated Remuneration Policy.
During our extensive consultations
with shareholders both before and
again after the AGM, we highlighted
the significant increase in scale
and complexity of the business
over the three years since our last
Remuneration Policy was approved in
2019. Shareholders were, in general,
supportive of our proposed policy
changes, although some expressed
concerns about including the flexibility
to grant restricted shares in our
recruitment policy, as well as the
quantum and timing of the changes
to the LTIP limits. The committee was
very grateful for these shareholder
responses and has incorporated that
feedback into its decision-making as
explained below.
The committee considered the
feedback received, as well as its
responsibility to develop a remuneration
policy that is appropriate for the
strategic development of the entire
Kingspan Group, whilst also balancing
the expectations of shareholders. In
response to the feedback received,
the committee:
@ did not include the proposed
restricted share units (which had
been considered as a potential
recruitment tool) as part of the
updated Remuneration Policy;
@ granted PSP awards to the CEO
at 225% of base salary, and at
200% of base salary for the other
executive directors, as proposed
in last year’s Report of the
Remuneration Committee;
@ confirmed that there is no
current intention for any further
step-change increases in PSP
award levels; and
@ agreed to engage with shareholders
and consider their feedback before
implementing any increase above
250% of salary during the current
term of the Remuneration Policy.
As shareholders will know, Kingspan
has delivered significant year on
year earnings per share growth and
long term shareholder returns. An
important part of the committee’s
policy review was to ensure that our
executive directors continued to be
incentivised and fairly rewarded for
this growth and the returns delivered
to shareholders. The committee,
as part of the policy review, looked
carefully at both the levels and
structure of remuneration. Our
remuneration packages are weighted
significantly towards variable pay with
particular focus on the long-term as
demonstrated by our CEO’s maximum
annual bonus opportunity of 150% of
salary and long-term PSP award of
225% of salary. Incentivising longer
term sustainable performance was
very much the committee’s objective in
the review of our remuneration policy
and the increase in PSP award levels.
The committee’s policy review took a
prudent approach to increasing pay
levels, whilst noting that the executive
directors’ remuneration packages
remain below those in comparable Irish
and UK listed businesses.
We were pleased that our updated
Remuneration Policy was supported
by almost 80% of shareholders who
voted at last year’s AGM, and at the
same time the committee received
97% support for the Report of the
Remuneration Committee at our AGM.
Further details of our shareholder
engagements during the year are set
out later in this report.
2022 business performance and
pay outcomes
2022 was another record year for
Kingspan, despite challenging market
conditions. Management delivered
significant progress across its key
strategic pillars, increasing geographic
expansion and market penetration
both organically and through
acquisition, completing the envelope
through the establishment of the new
Roofing + Waterproofing division, and
continued new product development
introducing new and innovative
building solutions. The result was that
Group revenues increased to €8.3bn
(up 28%), and trading profit was
€833m (up 10%). Earnings Per Share
(‘EPS’), a key performance measure
used to determine the executives’
performance-related pay, increased to
329.5 cent (up 8% over prior year), a
new record for Kingspan.
For 2022, all of our executive directors
received basic salary increases of 4.5%
which was in line with the general
workforce increases for the markets in
which they are based, except for Russell
Shiels. As outlined in last year’s Annual
Report, in 2020 the committee carried
out a review of Russell Shiels’ role and
responsibilities, and noted that this
had increased significantly in recent
years as a result of recent organic
and inorganic expansion particularly
in LATAM. The committee agreed to
incrementally adjust Mr Shiels’ package
over the period 2021/2022, and for
2022 awarded Mr Shiels a 4% increase
in salary above US inflation (giving
a total increase of 10%) to reflect
his increased responsibilities in the
Americas. The committee is satisfied
that these changes have properly
aligned Mr Shiels’ package with his
increased responsibilities and no further
adjustment is required.
Annual bonus payments to the
executive directors for 2022 of between
82% and 86% of maximum reflect the
Group’s strong financial performance in
the year, combined with the results of
the non-financial measure of the Net
Promoter Score (NPS). Details of the
targets set and performance against
them are set out later in this report.
At the same time a combination of
external factors, including the war in
Ukraine and increased inflation leading
to general market uncertainty, have
taken a toll on Kingspan’s share price,
with Total Shareholder Return (‘TSR’)
for the 2020 PSP awards over the
three-year performance period to 31
December 2022 being broadly flat at
1.4%. This resulted in a below median
TSR performance against our selected
peer group. As a result the TSR portion
of the PSP awards did not vest, while
the strong long-term EPS growth of
61% over the three-year period resulted
in 50% of the total 2020 PSP awards
vesting during 2023.
The committee considered business
performance during 2022, as well as
over the longer three-year performance
period for the 2020 PSP awards, and
is comfortable that the formulaic
outcome of the incentives appropriately
reflects Group performance as well
as individual contribution and that
no discretion to adjust is necessary. In
particular, the committee reviewed
the share price at the time the 2020
PSP awards were granted (€61.80) to
see if market movements had created
a windfall gain for the executives over
the last three years. Noting that the
share price at the time of grant was
higher than the three month average
prior to grant and also higher than the
31 December 2022 share price (€52.29),
the committee concluded that there
were no excess gains that required the
committee to consider a scale back of
the vesting levels.
2023 remuneration
The executive directors will receive basic
salary increases of 3% in 2023, which is
below general workforce increases of
c. 4.5% to 6%, depending on region. In
determining the appropriate salaries
for the executive directors for 2023, the
committee had regard to the increases
awarded to the global workforce,
particularly in the UK and Ireland,
Western Europe and North America,
where the rates of pay for the general
workforce are set locally, and in some
cases are dictated by local legislation.
In some countries the businesses have
responded to the widespread cost of
living crisis by also making additional
one-off payments to the workforce.
The committee considers that the 3%
increase awarded to the executive
directors, which is substantially
below general workforce increases,
is appropriate in the current high
inflationary environment.
Pension benefits continue to fall for all
of the executive directors in line with the
previously approved plan, to closer align
with workforce levels.
The annual bonus maximum
opportunity and PSP award levels
remain unchanged from prior year for
2023. As the performance measures
remain aligned with the Group’s
strategy, they are also unchanged. The
targets we have set reflect stretching
performance goals in an uncertain and
challenging period ahead. Under the
policy approved by shareholders at
last year’s AGM, the committee may
adjust the 2023 PSP awards that vest
if it considers the formulaic outcome
is not representative of the underlying
performance of the Company,
investor experience or employee
reward outcome.
Conclusion
Kingspan’s strong performance in a
challenging trading environment is
reflected in the incentive outcomes for
2022. The decisions that the committee
has made, both in respect of our
remuneration policy and the operation
of that policy for 2023, are in line
with our commitment to ensure that
our remuneration framework drives
superior performance and reflects the
evolving needs of stakeholders.
I hope that you will join the Board in
approving the resolution on the Report
of the Remuneration Committee at the
AGM on 28 April 2023.
Linda Hickey
Chair of the Remuneration
Committee
89
Report of the Remuneration CommitteeKingspan Group plc Annual Report & Financial Statements 2022Directors’ Report Fixed Pay v Variable Pay
Remuneration at a Glance
40%
Fixed
Implemented
Implemented
for year ended
for year ended
31 December
31 December
2022
2022
Salary
Salary
As outlined in last year’s
Annual Report, Russell
Shiels received a base
salary increase of 10%
to refl ect his increased
responsibilities, with
the other executives
receiving a base salary
increase of 4.5% in line
with those awarded to
the general workforce.
Variable Pay
Short-term v Long-term
68%
Short-term
60%
Variable
32%
Long-term
Planned for
Planned for
year ending
year ending
31 December
31 December
20232023
The executive directors
will receive basic
increases of 3% which
is substantially below
general workforce
rates of c. 4.5% to 6%,
depending on markets.
Rationale: These
increases take account
of the wider infl ationary
pressures that the
business is experiencing
in almost all markets.
Annual incentive
Annual incentive
Long-term incentives
Long-term incentives
As provided by the approved remuneration policy, the
maximum annual bonus potential for the executive
directors is 150% of base salary, which remains
unchanged. The CEO and CFO’s annual bonus is based on
the achievement of Group EPS performance targets and,
additional non-fi nancial NPS targets. For Divisional MDs,
bonuses are based on a combination of stretching profi t
targets for their respective divisions, plus an element
of Group EPS targets and, additional non-fi nancial
NPS targets.
The 2022 targets and fi nal outturns of the annual
performance bonuses are detailed on page 99.
Annual Bonus CEO:
EPS
82%
NPS
1%
Not
Earned
17%
The Performance Share Plan (‘PSP’) awards vesting in
February 2023, relate to awards granted in 2020. These
awards were subject to EPS growth and relative TSR
performance targets measured over the three year period
from 2020 to 2022. Target and actual outturns are set
out on page 100.
Prior to confi rming the pay-outs, the committee
undertook an evaluation of whether vesting levels
refl ected Group performance, individual contribution
and any wider circumstances over the three year
period to December 2022.
PSP:
EPS
50%
TSR
0%
Not
Earned
50%
Payout (% of max.)
Payout (% of max.)
The committee has determined that there will be no
material changes to the bonus framework for 2023. The
measures will remain unchanged and maximum bonuses
will be capped at 150% of salary.
Rationale: The bonus scheme has proven eff ective at
driving a relentless focus on profi tability, while extending
the measures to include NPS, a core part of sustainable
value creation.
As approved at the AGM in 2022, awards will be made at
225% of base salary to the CEO and 200% of base salary
for the other executive directors.
Rationale: As the business continues to grow at an
exceptional rate, it is important to continue to drive
superior returns and remain competitive.
90
Kingspan Group plc Annual Report & Financial Statements 2022
Directors’ Report
Report of the Remuneration Committee
91
Directors’
Remuneration Policy
This section of the report outlines the
current policy for the remuneration of
the Company’s directors. The current
remuneration policy was approved by
shareholders at the AGM on 29 April
2022 and is set out in full in the 2021
Annual Report, and can be found
on the Company’s website at www.
kingspan.com.
@ Transparency so that it is
objectively transparent with
high levels of disclosure in the
Annual Report.
@ Alignment with shareholders by
delivering a significant proportion
of remuneration through equity,
and by setting executive share
ownership guidelines.
This approach cascades through the
organisation and has played a key role
in driving the growth of the business
and significant value creation for
stakeholders over the years.
Our remuneration philosophy
At Kingspan, we have developed a
clear philosophy around remunerating
and incentivising employees at all
levels of the organisation. As detailed
in prior reports, the principles
against which we determine our
approach to remuneration, and make
decisions, are:
@ Pay for performance ensuring
that variable remuneration is
only paid for strong performance
and maximum payouts will
only be realised for truly
exceptional performance.
@ Simplicity so that executives and
shareholders can understand our
pay arrangements without overly
complex rules.
The committee has considered the key parameters set out by the 2018 UK Corporate Governance Code (the ‘Code’),
which we believe our principles are aligned to:
Matters
Clarity
Simplicity
Risk
Predictability
Proportionality
Alignment to culture
Explanation
The policy is clear, uncomplicated and well understood by the executive
directors. It is based on measures aligned to strategy.
Aligned with our existing principle of simplicity, with clear and focused
incentive plans that do not incorporate excessive measures.
The policy is designed to discourage inappropriate risk taking and to ensure
that it is not rewarded. This is achieved by an appropriate balance between
short-term and long-term incentive plans and the introduction of non-
financial metrics, with clawback and recovery provisions and the ability of the
committee to utilise discretion to adjust formulaic outcomes.
Incentive plans are subject to established limits, with objective targets and
straight line vesting dictating payouts.
Aligned with our principle of pay-for-performance, so that any pay is fully
proportional to performance and stakeholder experience.
Our high performance culture is designed to drive superior returns for
shareholders, whilst the introduction of sustainability measures embeds our
Planet Passionate goals throughout the business.
At Kingspan, we have
developed a clear philosophy
around remunerating and
incentivising employees at all
levels of the organisation.
The policy for the key elements of an executive director’s remuneration is set out in the table below:
Key element
Operation
Opportunity and measures
Fixed remuneration
Base Salary
To attract and retain the
best global talent of the
calibre required to deliver
the Group’s strategy.
Benefits
To provide benefits which
are competitive with
the market.
Pensions
To provide a retirement
benefit which is
competitive with
the market.
Variable remuneration
Annual performance
bonus
To reward the delivery of
short-term performance
targets and business
strategy, satisfied in
cash and deferred
share awards, aligning
management interests
with shareholders and the
longer term performance
of the Group.
Base salaries are reviewed annually by
the Remuneration Committee in the last
quarter of each year. A broad assessment
of individual and business performance
is used by the committee as part of the
salary review. 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.
In addition to their base salaries, 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.
Kingspan operates a defined contribution
pension scheme for executive directors.
Pension contributions are calculated on
base salary only. Alternatively, Kingspan
may pay a cash amount subject to all
applicable employee and employer payroll
taxes and social security.
Executive directors receive an annual
performance related bonus based on the
attainment of financial and non-financial
targets set prior to the start of each year.
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 can be
delivered in cash through the bonus plan.
Any performance related bonus achieved
in excess of the cash amount is satisfied
by the grant of share awards, which are
deferred for two years.
The committee has discretion to adjust
formulaic bonus outcomes in line with
the Code.
Any increase will typically be in line with
those awarded to the broader employee pay
environment. The committee has discretion
to award higher increases in circumstances
that it considers appropriate, such as a
change in role or responsibility.
Benefits are set at a level which the
committee considers appropriate in light of
the market and depending on the role and
an individual’s circumstances.
Incumbent executive director pensions will be
reduced to 10% of salary by the end of 2024.
Newly appointed executive directors’ will be
capped at the rate applicable in the relevant
market.
The maximum potential bonus for the
executive directors is 150% of base salary.
The committee selects stretching
performance targets each year, which are
based on a mix of:
@ Group profit targets;
@ Divisional financial performance;
@ Net Promoter Score (Customer NPS).
Bonus payment for financial targets is 0%
at threshold. Bonus is paid on a straight line
basis for achieving each point on the NPS
target scale.
92
93
Kingspan Group plc Annual Report & Financial Statements 2022Report of the Remuneration CommitteeDirectors’ Report Key element
Operation
Variable remuneration (continued)
Long-term
incentive plan (LTIP)
To reward the sustained
strong performance
and delivery of Group
strategic objectives over
the longer term. Aligns
the interests of executive
directors and senior
managers with those of
the Group’s shareholders
and recognises and
rewards value creation
over the longer term.
Executive directors are entitled to
participate in Kingspan’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 Group’s underlying performance has
improved during the 3-year performance
period, and if certain financial and non-
financial ESG targets are achieved over the
performance period.
The awards are subject to a two-year post
vesting holding period.
Opportunity and measures
The maximum award level under the policy
is 300% of salary. The committee will not
increase awards above 250% of salary in the
current policy period without first engaging
with its largest investors and considering the
feedback received.
For 2023 the CEO will receive a maximum
annual award over shares with a market
value of 225% of base salary, and the other
executive directors will receive awards over
shares with a market value of 200% of
base salary.
Prior to granting an award, the Committee
sets performance conditions which it
considers to be appropriately stretching. The
performance conditions for the PSP awards
to be granted in 2023 are based on a mix of:
@ EPS growth;
@ TSR outperformance; and
@ Achievement of the Group’s Planet
Passionate targets.
On achieving the threshold performance
level for the EPS and TSR measures, 25% of
the relevant element of the award will vest,
0% of the Planet Passionate award vests on
threshold. Vesting is on a straight-line basis
between threshold and maximum levels of
performance.
The policy on non-executive directors’ remuneration is as follows:
Key element
Operation
Opportunity
Fees for non-executive directors are within the
limits set by the shareholders from time to time,
with a current aggregate limit of €975,000.
Non-executive
director fees
To reflect time
commitment, experience
and responsibilities, and
to attract and retain high
calibre non-executive
directors by offering
a market competitive
fee level.
Non-executive director fee levels are
reviewed annually.
The Chairman receives a single fee for
all their responsibilities.
Other non-executive directors receive
a basic board membership fee. The
Chair of Board committees and the
Senior Independent Director receive an
additional fee for this role.
Non-executive directors are entitled
to the reimbursement of reasonable
business expenses including any tax
(grossed up) that may be payable on
those expenses.
The following are key structural aspects of the remuneration policy in relation to the directors’ remuneration contracts:
Clawback and malus
Ensures an appropriate
balance between
risk and reward.
Covers material misstatement of financial results, material breach of executive’s
employment contract, error in contract, failure of risk management, corporate failure,
wilful misconduct, recklessness and or fraud resulting in serious damage to the financial
condition or business reputation of the Company.
Shareholding guideline
Ensures alignment
between the interests of
executive directors and
shareholders.
Post cessation of
employment and
general shareholding
requirements
Ensures alignment
between the interests
of executive directors
and shareholders.
Approach to
recruitment
To attract an executive
director of the calibre
required to shape and
deliver the Group’s
business strategy.
Termination -
Notice Periods
The period within which clawback and malus can be operated is 2 years from payment of
annual bonus and/or vesting of LTIP awards.
200% of salary to be achieved through the retention of at least 50% of all vested variable
pay awards (subject to sales to meet taxes). Achievement of guideline is measured
through beneficially owned shares only.
For new appointees, the committee may consider it appropriate to require a percentage of
the annual bonus paid to be deferred into shares (rather than just bonus in excess of 100%
of salary), in order to achieve this guideline.
All executive directors are subject to a post-employment shareholding requirement of the
lower of (i) shares or equity interests held on cessation, and (ii) 200% of salary, for 2 years
post-employment.
Achievement is measured through beneficially owned shares, and the retention of vested
deferred share and LTIP awards (subject to sales to meet taxes).
In exceptional circumstances, such as to facilitate recruitment, the committee may
exercise its discretion and grant LTIPs up to a maximum of 400% of salary.
Each of the executive directors has a service contract with the Company which provides for
12 months’ notice of termination by the Company (or, at the discretion of the Company,
payment for all or part thereof) and 6 or 12 months by the director and it is the Company’s
policy that notice periods will not exceed 12 months. The service contracts do not include
any provision for compensation for loss of office, other than the notice period provisions
set out above. There are no enhanced provisions on a change of control and there are no
specific severance arrangements.
The committee’s policy in relation to termination of service contracts is to deal with each
case on its merits having regard to the circumstances of the individual, the termination of
employment, any legal advice received and what is in the best interests of the Company
and its shareholders.
Termination - Annual
Incentive Bonus and
Long Term Incentive
Plans
Annual bonuses and PSP awards are dealt with in accordance with the rules of the relevant
plans. At the discretion of the committee (and normally where the individual has served a
minimum of 6 months of the bonus year), a pro-rata bonus may become payable at the
normal payment date for the period of service subject to full year performance targets
being met.
The default treatment for share based awards is that any unvested award will lapse on
termination of employment. However, under the rules of the Performance Share Plan, in
certain prescribed circumstances (e.g. “good leaver”), awards are eligible to vest subject to
the performance conditions being met over the normal performance period (or a shorter
period at the Committee’s discretion) and with the award being reduced by an amount to
reflect the proportion of the vesting period not actually served.
94
95
Kingspan Group plc Annual Report & Financial Statements 2022Report of the Remuneration CommitteeDirectors’ Report 2022 Remuneration Outturn
Directors’ Remuneration for year ended 31 December 2022
Executive directors
Gene
Murtagh
EUR’000
2022
Geoff
Doherty
EUR’000
2022
2021
2021
Russell
Shiels(1)
EUR’000
2022
2021
Gilbert
McCarthy
EUR’000
2022
2021
Total
EUR’000
2022
2021
Fixed Remuneration
Salary and Fees
Pension Contributions (2)
Benefits (3)
Total Fixed Remuneration
Performance Pay
Annual Incentives (4)
Cash Element
Deferred Share Awards
Long Term Incentives (5)
LTI - Value at Grant (6) (7)
LTI - Share Price Growth (6) (7)
Total Performance Pay
928
148
37
1,113
888
161
35
1,084
599
120
35
754
573
140
34
747
642
154
73
869
520
169
53
742
554
94
40
688
530
106
43
679
2,723
516
185
3,424
2,511
576
165
3,252
928
225
888
444
599
145
573
287
642
181
520
260
554
125
530
265
2,723
676
2,511
1,256
750
(115)
1,788
1,499
1,811
4,642
415
(64)
1,095
830
1,003
2,693
384
(59)
1,148
768
928
2,476
384
(59)
1,004
768
928
2,491
1,933
(297)
5,035
3,865
4,670
12,302
Total Remuneration
2,901
5,726
1,849
3,440
2,017
3,218
1,692
3,170 8,459
15,554
Non-executive directors (8)
Jost Massenberg
Linda Hickey
Michael Cawley
John Cronin
Anne Heraty
Éimear Moloney
Paul Murtagh
Senan Murphy (9)
Bruce McLennan (10)
Eugene Murtagh (10)
Total non-executive pay
Total Directors’ remuneration
(1) Russell Shiels’ remuneration is denominated
in USD, and has been converted to Euro
at the following average rates USD:1.0544
(2021: 1.1828).
(2) The Group operates a defined contribution
pension scheme for executive directors.
Certain executives have elected to
receive part of their prospective pension
entitlement as a non-pensionable cash
allowance in lieu of the pension benefit
foregone, subject to all applicable employee
and employer payroll taxes.
(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.
2022
350
105
90
75
75
75
75
19
-
-
864
2021
258
85
85
75
75
50
50
-
25
64
767
(4) The annual incentive amount is earned for
meeting clearly defined EPS growth, divisional
profit and NPS targets. Details of the bonus
plan and targets are set out on page 98 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 100 of the
Report of the Remuneration Committee.
(6) The value of the 2020 LTIP award that will
vest in 2023 has been calculated using
the average share price for December
2022, being €52.29. The calculation for
this award will be adjusted in next years’
annual report to reflect the share price
on the date of vesting (24/02/2023). The
share price decreased from the date of
grant (share price: €61.80) to the share
price used to determine the vesting value
(share price: €52.29).
9,323
16,321
(7) The value of the 2019 LTIP award that vested
in 2022 has been calculated using the share
price at the date of vesting (25/02/2022) of
€85.66. The share price increased from the
date of grant (share price: €38.80) to the
date of vesting (share price: €85.66).
(8) Non-executive directors receive a base fee
of €75,000 per annum, plus an additional
fee of €15,000 for chairmanship of Board
committees, as well as for the Senior
Independent Director. They do not receive
any pension benefit, or any performance or
share based remuneration.
(9) Senan Murphy was appointed as a non-
executive director on 1 October 2022.
(10) Bruce McLennan and Eugene Murtagh both
retired as non-executive directors on 30 April
2021.
Total Pay
over 5 Years
Fixed Pay
Annual Bonus
(Malus and
clawback
provisions apply)
LTIP
(Malus and
clawback
provisions apply)
Shareholding
Requirement
(200% of Salary)
Year 1
Year 2
Year 3
Year 4
Year 5
Salary
Benefits
Pension
Up to
100% of
salary in
cash
Excess bonus in shares
Two year deferral
period
No further
performance
conditions
Three-year performance period
Two-year post-vesting
holding period
No further
performance
conditions
Executive directors’ minimum shareholding requirement
Massé Charpente
Serrurerie
Rochetrejoux, France
Insulated Panels
JI Wall 1000SF;
JI 42-252-1010;
JI 60-160-800
96
97
Kingspan Group plc Annual Report & Financial Statements 2022Report of the Remuneration CommitteeDirectors’ Report Bonus
measure
Max.
opportunity/
weighting
(as % salary)
EPS
NPS
EPS
NPS
140%
10%
140%
10%
Threshold
target
Target for
maximum
Performance Outcome
(% of weighted
measure)
Total payout
(% max.
opportunity)
275.04 cent
336.16 cent 329.5 cent
87.5%
82.8%
NPS of 41 to 46
41
16.7%
275.04 cent
336.16 cent 329.5 cent
87.5%
82.8%
Chief
Executive
Chief
Financial
Officer
Russell
Shiels
Divisional
profit
70%
90% of
prior year
105% of
prior year
138%
NPS of 41 to 46
41
16.7%
100%
EPS
NPS
Gilbert
McCarthy
Divisional
profit
EPS
NPS
70%
10%
70%
70%
10%
275.04 cent
336.16 cent 329.5 cent
75.1%
Divisional NPS range not disclosed
90% of
prior year
105% of
prior year
112%
57.1%
100%
275.04 cent
336.16 cent 329.5 cent
75.1%
Divisional NPS range not disclosed
0.0%
De Groene Kaap
Rotterdam,
The Netherlands
Insulation
Kooltherm K8
85.5%
81.7%
Base salary
All of the executive directors, except
for Russell Shiels, received basic salary
increases for 2022 of 4.5% which was
in line with the general workforce
increases for the markets in which
they are based and within the overall
global workforce range of c.3% to
6%. As outlined in last year’s Annual
Report, in 2020 the committee carried
out a review of Mr Shiels’ role and
responsibilities, and noted that this
had increased significantly in recent
years as a result of recent organic
and inorganic expansion particularly
in LATAM. The committee agreed
to incrementally adjust Mr Shiels’
package over the period 2021/2022,
and awarded Mr Shiels a 4% increase
over US inflation in 2022 (giving
a total increase of 10%) to reflect
his increased responsibilities in the
Americas. The committee is satisfied
that these changes have properly
aligned Mr Shiels’ package with his
increased responsibilities and no
further adjustment is required.
Pension
As outlined in previous Annual
Reports, all executive directors’
contractual pension contributions
will be reduced to 10% of base salary
by the end of 2024. This approach
was adopted by the committee
and subsequently supported by
shareholders following feedback on
the 2019 Remuneration Policy. While
recognising that certain shareholders
may have differing expectations on
the timing of the pension reductions,
the committee believes this approach
fairly and appropriately balances
the legacy contractual entitlement
of each of the executive directors
with the general expectations of
shareholders and wider stakeholders.
Executive Director
Gene Murtagh
Geoff Doherty
Gilbert McCarthy
Russell Shiels
Pension Contribution
2021
2022
2023
2024
2025
18%
24%
20%
33%
16%
20%
17%
24%
14%
16%
14%
18%
12%
13%
12%
14%
10%
10%
10%
10%
2022 performance related bonus
In 2022 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 principally (93%
of total opportunity) on Group EPS
growth targets over prior year, with
the maximum annual performance
related bonus being payable on the
achievement of 110% Group EPS
growth over prior year. The committee
considered this to be a stretching
target, particularly in light of the
global market conditions that were
evident from the end of the prior
year. The achievement of record
EPS growth in such a challenging
environment was an excellent
result both individually and by the
organisation as a whole, and resulted
in the CEO and CFO achieving 87.5%
of their maximum bonus opportunity
against this metric.
For each of the Divisional MDs,
up to 46.5% of their total bonus
opportunity was based on achieving
stretching divisional profit targets,
with maximum bonus being payable
on the achievement of 5% divisional
profit growth. Strong divisional
performance resulted in 100% of the
maximum bonus opportunity being
achieved by the Divisional MDs in
respect of these financial metrics.
Additional commentary on each of
the divisions’ performance is set out in
the Chief Executive’s Review. A further
46.5% of the Divisional MDs’ total
bonus opportunity was payable on the
achievement of the same stretching
Group EPS targets as for the CEO
and CFO, ensuring a healthy balance
between incentivising divisional and
Group growth.
Up to 7% of each of the executive
directors’ total bonus opportunity
(i.e. 10% of base salary) was based
on achieving Group or divisional Net
Promoter Score® (“NPS”) targets.
NPS is a measure of both brand
loyalty and brand advocacy and
is one of many metrics we use to
measure customer experience as part
of the global Voice of the Customer
programme. As the programme
has scaled, an external review by an
independent third party has been
introduced who validates the NPS
scores and underlying methodology.
The overall Group NPS score for the
year was 41, which was somewhat
behind prior year and at the lower
end of target, whilst at a divisional
level NPS scores varied with some
showing improvements but others
falling below target. This reflects in
part the impacts experienced by
supply chain shortages, the difficulties
of passing on high raw material
cost inflation during the year, and
the ambitious targets set by the
committee for this important metric
of strategic performance.
Each executive’s performance against
targets, and bonus achieved, is set out
in the table adjacent. The committee
was satisfied that the formulaic
outturn of the bonus plan for 2022 was
an accurate reflection of underlying
company performance, individual
contribution and a holistic evaluation
of wider circumstances. In particular,
the committee considered the
record financial performance of the
Group, and the substantial growth in
headcount and operational footprint.
All bonuses earned in excess of 100%
of base salary will be satisfied by the
grant of share awards, which are
deferred for two years.
98
99
Kingspan Group plc Annual Report & Financial Statements 2022Report of the Remuneration CommitteeDirectors’ Report Performance Share Plan
In 2020, the committee granted PSP Awards that were 50% based on EPS
growth targets and 50% based on TSR targets as outlined below.
Weighting
Targets
Performance
Payout
(% of max.)
EPS
TSR
50%
50%
6% -12% CAGR
17.2% CAGR
100%
Median to
Upper Quartile
43rd percentile
0%
The peer group against which TSR performance was measured was as follows:
Armstrong World Industries Inc
LafargeHolcim Ltd
Boral Ltd
Mowhawk Industries Inc
Compagnie de Saint Gobain S.A.
Owens Corning Inc.
Cornerstone Building Brands Inc
Rockwood Intl. A/S
CRH plc
Geberit AG
Grafton Group plc
Sika AG
Travis Perkins plc
Wienerberger AG
Ventura College
California, USA
Insulated Panels
Dri-Design
The committee reviewed the extent to
which the vesting targets in respect
of the PSP Awards granted in 2020
had been met by reference to the EPS
and TSR targets over the three-year
performance period to 31 December
2022. The committee noted that
a combination of external factors,
including the war in Ukraine and
increased inflation leading to general
market uncertainty had impacted
Kingspan’s share price, with TSR
over the three-year performance
period being broadly flat at 1.4%.
This resulted in a below median TSR
performance against the selected peer
group. As a result the TSR portion of
the 2020 PSP awards did not vest. At
the same time, strong long-term EPS
growth of 61% over the three-year
period resulted in the EPS targets being
exceeded and 50% of the total 2020
PSP awards vesting. In addition, and
in line with the approach to reviewing
bonus payouts, the committee
reviewed overall performance and
stakeholder experience during the
three-year period up to 31 December
2022. Following a review of the vesting
levels, the committee was satisfied
that they reflected company and
individual performance over the three-
year period.
In respect of PSP awards granted
during the year, the committee
implemented the increase in the level
of awards as flagged in last year’s
Remuneration Policy and Report
as approved at the 2022 AGM. The
committee granted awards to the
CEO equivalent to 225% of base
salary, and 200% of base salary
for the other executive directors
(increased from 200% and 175% of
salary respectively). There are no
increases to award levels for 2023 and
following shareholder engagement
and feedback, the committee has
agreed not to increase PSP award
levels above 250% of salary during
the current policy period without
first engaging with shareholders and
considering their feedback.
The table below sets out the total number of PSPs held by the directors and the Company Secretary during the year:
Director
Gene M. Murtagh
Unvested
Vested
Geoff Doherty
Unvested
Vested
Russell Shiels
Unvested
Vested
Gilbert McCarthy
Unvested
Vested
Company Secretary
Lorcan Dowd
Unvested
Vested
At 31
Dec
2021
Granted
during
year
Vested
during
year
Exercised
or lapsed
during
year
At 31
Dec
2022
Option
price €
Earliest
exercise date
Latest
expiry date
89,988
24,803
(38,642)
36,578
-
38,642
126,566
24,803
-
50,024
14,316
(21,396)
-
-
-
-
76,149
75,220
151,369
42,944
-
-
21,396
(21,396)³
-
50,024
14,316
-
(21,396)
42,944
46,276
14,677
(19,797)
-
41,156
-
-
19,797
(19,797)⁴
-
46,276
14,677
-
(19,797)
41,156
46,276
88,793
13,240
(19,797)
-
39,719
-
19,797
(24,812)²
83,778
135,069
13,240
-
(24,812)
123,497
11,344
18,257
2,266
(4,378)
-
9,232
-
4,378
(5,230)1
17,405
29,601
2,266
-
(5,230)
26,637
24/02/2023
22/08/2029
26/02/2021
25/02/2026
24/02/2023
22/08/2029
-
-
24/02/2023
22/08/2029
-
-
24/02/2023
22/08/2029
23/02/2019
25/02/2026
24/03/2023
23/02/2029
23/02/2019
25/02/2026
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
2
3
4
Exercised on 18/02/2022. Market value on day of exercise €89.69.
Exercised on 22/02/2022. Market value on day of exercise €85.10.
Exercised on 05/05/2022. Market value on day of exercise €83.50.
Exercised on 08/11/2022. Market value on day of exercise €53.72.
100
101
Report of the Remuneration CommitteeKingspan Group plc Annual Report & Financial Statements 2022Directors’ Report Deferred Share Plan
Director
At 31
Dec
2021
Granted
during
year
Vested &
transferred
during year
At 31
Dec 2022
Earliest vesting/
transfer date
Gene M. Murtagh
Unvested
Geoff Doherty
Russell Shiels
Unvested
Unvested
Gilbert McCarthy
Unvested
813
525
488
-
5,021
3,242
3,107
2,998
(813)
(525)
(488)
-
5,021
3,242
3,107
2,998
31/03/2024
31/03/2024
31/03/2024
31/03/2024
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:
Shareholding
at 31 Dec 2022¹
(% Salary)
Shareholding
requirement met
(200% salary)
6,086%
2,240%
1,790%
2,670%
Yes
Yes
Yes
Yes
Executive directors
Gene M. Murtagh
Geoff Doherty
Russell Shiels
Gilbert McCarthy
Non-executive directors
Jost Massenberg (Chairman)
Linda Hickey
Michael Cawley
John Cronin
Anne Heraty
Éimear Moloney
Paul Murtagh
Senan Murphy²
Company Secretary
Lorcan Dowd
31 Dec 2022
31 Dec 2021
1,080,020
1,079,207
256,635
219,797
282,833
-
5,000
30,600
8,000
2,250
2,000
-
-
240,039
200,000
258,021
-
5,000
30,600
8,000
2,250
-
-
-
3,457
3,318
Expressed as a percentage of base salary on 31 December 2022 and calculated using the average share price for December 2022.
(1)
(2) Appointed as a director as of 1 October 2022.
As at 16 February 2023, there have
been no changes in the directors’ and
secretary’s interests in shares since 31
December 2022.
Non-executive directors
The non-executive directors each
received fees which are approved
by the Board as a whole. The
Chairman’s fee is €350,000. The
basic non-executive director fee
is €75,000. An additional fee of
€15,000 is paid for chairing the
Remuneration Committee and the
Audit & Compliance Committee, as
well as for the Senior Independent
Director to reflect the additional role
and responsibilities.
Massé Charpente
Serrurerie
Rochetrejoux, France
Insulated Panels
JI Wall 1000SF;
JI 42-252-1010;
JI 60-160-800
102
103
Report of the Remuneration CommitteeKingspan Group plc Annual Report & Financial Statements 2022Directors’ Report Implementation of
Remuneration Policy
for 2023
The core principles of our
remuneration philosophy as outlined
earlier, frame our approach to 2023,
namely reward for high-performance,
simplicity, transparency and
alignment with shareholders.
Base salary and pension
Notwithstanding the highly
inflationary environment, the
executive directors will receive basic
salary increases of 3% in 2023, which
compares with general workforce
increases of c.4.5% to 6%, depending
on region. In determining the
appropriate salaries for the executive
directors for 2023, the committee had
regard to the rates awarded to the
global workforce, particularly in the
UK and Ireland, Western Europe and
North America, where the rates of
pay for the general workforce are set
locally, and in some cases are dictated
by local legislation. In some countries
the businesses have responded to the
widespread cost of living crisis by also
making additional one-off payments
to the workforce. The committee
considers that the 3% increase
awarded to the executive directors,
which is substantially below general
workforce rates, is appropriate in the
current high inflationary environment.
As outlined previously, pension
contributions of all incumbent
executives are being reduced
incrementally to 10% by December
2024 with rates applicable for 2023
set out in the table on page 98.
Annual bonus
The maximum bonus opportunity
for all the executive directors remains
at 150% of salary (unchanged
from 2022). Up to 100% of salary
earned through the bonus plan is
delivered in cash, and any bonus
earned in excess of that amount
is deferred into shares in the
Company for two years. For 2023,
the committee has set stretching
targets based on the budget for
the year and market expectations,
noting the continuing backdrop of
high inflation rates impacting the
construction market sentiment
globally. Targets are commercially
sensitive and will be disclosed
retrospectively with performance
against them in the 2023 Report of
the Remuneration Committee.
Peer group for 2023 grant for PSP awards:
Performance share awards
For 2023, the CEO will receive a PSP
award over shares with a market
value of 225% of base salary, and
the other executive directors will
receive PSP awards over shares with a
market value of 200% of base salary.
These grant levels are unchanged
from prior year. As outlined above,
following shareholder engagement
and feedback, the committee has
agreed not to increase PSP award
levels above 250% of salary during
the current policy period without
first engaging with shareholders and
considering their feedback. Overall,
the annual bonus and long-term
performance incentive opportunity,
at up to 375% of salary in aggregate,
remains below arrangements at
similarly sized UK and Irish businesses.
The committee reviews annually the
performance framework for the PSP
scheme. For the 2023 PSP Awards,
the committee has selected the same
performance measures as the 2022
awards based 45% on EPS growth,
45% on relative TSR and 10% on our
ESG Planet Passionate goals. The peer
group against which TSR performance
will be measured is set out in the
below table.
Armstrong World Industries Inc
Boral Ltd
Builders Firstsource Inc
Carlisle Construction Materials LLC
Compagnie de Saint Gobain SA
CRH plc
Grafton Group plc
Lafarge Holcim Ltd
Masco Corporation
Mohawk Industries Inc
Owens Corning Inc
Recticel NV
Rockwool Intl. AS
Sika AG
Wienerberger AG
The committee reviewed the
suitability of the constituent members
of the PSP peer group, and noted
that Cornerstone Building Brands
Inc had delisted during the year, and
also agreed to remove Geberit AG
and Travis Perkins plc as they were no
longer considered best fit as peers.
The committee then considered
potential replacements to add to
the TSR peer group, having regard to
market sector, size and geography
and agreed to select Builders
Firstsource Inc, Carlisle Construction
Materials LLC, Masco Corporation
and Recticel NV as replacements with
effect for all future PSP grants.
The committee also reviewed
the EPS targets to ensure they
included significant stretch over
the performance period ahead and
are aligned with our principles of
alignment and pay-for-performance.
Having regard to the uncertain
macro environment affecting our
end-markets globally, and the record
level of EPS achieved in prior year, the
committee considered that target
EPS growth of 3% to 6% compound
over the three-year performance
period was a proper stretch target
and appropriately aligned with our
risk appetite as well as internal and
external forecasts.
There are no changes to the ESG measures included in the LTIP, which are measured against Kingspan’s ambitious Planet
Passionate goals, drawing a clear focus on achieving one of our core strategic pillars. Details of our achievements against
our Planet Passionate targets are given in the below table.
PSP Performance Measure
Performance
Measure
Weighting Percentage
vesting at
threshold
Threshold
vesting
target
Maximum
vesting
target*
Financial
targets
EPS
TSR
45%
45%
25% 3% p.a.
6% p.a
25%
Median
Upper
quartile
*Straight line vesting between threshold and maximum vesting
Performance
Measure
Weighting Percentage
vesting at
threshold
2020
Base Year
2021
Actual
2022
Actual
2025
Target
2030
Target
Planet
Passionate
Annual
Targets
Carbon
Energy
Net Zero Carbon
Manufacturing
(scope 1 & 2 GHG
emissions - tCO2e)
Zero emissions
company funded
cars - annual
replacement (%)
60% Direct
Renewable
Energy Use (%)
20% On-site energy
generation (%)
Solar PV systems
on all wholly
owned facilities (%)
Circularity Zero company
waste to landfill
(tonnes)
Recycle 1 billion
PET bottles into
our manufacturing
processes annually
(million bottles)
QuadCoreTM
products utilising
recycled PET
(no. of sites)
Harvest 100
million litres of
rainwater annually
(million litres)
Water
1%
0% 410,224
389,299 242,734
-
1%
0%
11
29
60
100
1%
1%
1%
1%
1%
0%
19.5
25.8
34.3
0%
0%
4.9
21.7
4.9
7.2
28.4
41.5
0%
18,642
16,359
9,081
-
-
-
-
0%
573
843
803
1,000
0
-
60
20
100
0
-
1%
0%
1
1
3
19
-
1%
0%
20.1
20.5
26.3
-
100
For further details on the Planet Passionate targets please see page 65.
104
105
Kingspan Group plc Annual Report & Financial Statements 2022Report of the Remuneration CommitteeDirectors’ Report
Committee Governance
Non-executive director fees
As reported last year, the independent non-executive Chairman’s fee has been set at €350,000 for the year ahead. There
is also no change from prior year to the basic non-executive fees of €75,000. A separate additional fee of €15,000 is
paid to the chairs of the Remuneration Committee and the Audit & Compliance Committee, as well as for the Senior
Independent Director.
The graph below shows the Company’s TSR performance against the performance of the ISEQ and FTSE indices over the
10-year period to 31 December 2022:
Total Shareholder Returns
1,600
1,400
1,200
1,000
800
600
400
200
0
Kingspan
ISEQ
FTSE 250
FTSE 100
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
CEO Remuneration vs Kingspan Performance
€10,000
€8,000
€6,000
330c
306c
285%
€4,000
184c
205c
206c
€2,000
€0
-€2,000
147%
155%
2018
2019
2020
2021
2022
'
)
0
0
0
€
(
n
o
i
t
a
r
e
n
u
m
e
R
O
E
C
Fixed
Remuneration
Total Performance
Pay (excl. share
price growth)
LTI Share
Price Growth
TSR
EPS
350
300
250
200
138%
150
100
50
)
%
(
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
s
g
n
n
r
a
E
i
Committee membership and attendance
Name
Linda Hickey (Chair)
Michael Cawley
Anne Heraty
Number of Meetings Attended
Maximum Possible Meetings
3
3
3
3
3
3
Key strengths and relevant experience of each member of the Committee is set out on page 84.
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 or her own remuneration are discussed.
The Company Secretary acts as the secretary to the committee. The terms of reference are available on the Company’s
website: www.kingspan.com
FEB
JUN
DEC
Key activities during the year
Salary and fees
Engage independent consultants for policy and benchmark review
Review implementation of overall remuneration policy
Review and approve executives’ salary, role and responsibilities for 2023
Review and approve non-executives’ fees for 2023
Review remuneration benchmarking report
Review non-financial performance measures
Review and approve Chairman’s fee
Performance pay
Assess Group and individual performance against targets for 2021
Review executive bonus measures and weighting for 2023
Agree Group and individual performance targets for 2023
PSP Awards
Assess performance of 2019/2021 PSP Awards against targets
Determine percentage of 2019/2021 PSP Awards which vest
Review performance measures for grants of PSP Awards for 2022
Agree targets and level for grants of PSP Awards for 2022
Review non-financial Planet Passionate measures for 2022
Review and approve PSP Sub-Plan
Governance
Review and approve Report of the Remuneration Committee for Annual Report 2021
Update on governance and remuneration trends generally
Consider shareholder votes and feedback from AGM 2022
Engage with shareholders post AGM
Review and update of remuneration policy
Engage with shareholders on remuneration policy
Consider shareholder outreach and feedback
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 also provided some leadership and development services to Kingspan
during the year. The committee concluded that the associated fee for the provision of this service was not material
and would not affect Korn Ferry’s independence and objectivity. Accordingly, the committee is satisfied that the advice
obtained was objective and independent.
106
107
Kingspan Group plc Annual Report & Financial Statements 2022Report of the Remuneration CommitteeDirectors’ Report
Shareholder Voting
The following table summarises the details of votes cast in respect of the resolutions on the Directors’ remuneration policy
and the Report of the Remuneration Committee at the 2022 AGM.
Resolution
Votes For
Votes Against
Total Votes
Number
%
Number
%
Number % Of Total
Voting
Rights
Votes
Withheld
Directors’
Remuneration Policy
Report of the
Remuneration Committee
118,371,401
79.85% 29,864,415
20.15% 148,235,816
81.61%
37,146
144,299,108
97.34%
3,937,125
2.66% 148,236,233
81.61%
36,729
The committee always
welcomes shareholder
feedback and seeks
to incorporate that
feedback, where
feasible, into its
decision making
and response.
Shareholder engagement
The committee always welcomes
shareholder feedback and seeks to
incorporate that feedback, where
feasible, into its decision making
and response.
During the year the committee
engaged extensively with
shareholders. Firstly, in advance of the
2022 AGM we contacted shareholders
representing c. 70% of the register
and the committee Chair met and
spoke the majority of our top 10
shareholders, sharing with them our
draft Remuneration Policy proposals.
Whilst there was general support
from shareholders for the proposed
changes, following this engagement
the draft policy was amended on the
basis of feedback received to omit the
proposed restricted share units (which
had been considered as a potential
recruitment tool), before being put to
shareholders for approval. At the AGM,
the updated Remuneration Policy was
supported by our shareholders, with
almost 80% of the votes cast in favour
of the Policy, and at the same time
the committee was pleased to receive
97% support for the Report of the
Remuneration Committee.
Following the AGM the committee
engaged once more with our
shareholders, writing out to those
representing over 70% of the register,
and the committee Chair met
with several of our most significant
shareholders, receiving feedback
overall from shareholders representing
45% of the register. In engaging with
shareholders around the AGM, we
developed a clear understanding of the
concerns of those who voted against
the updated Remuneration Policy, as
108
well as those who supported it. While
many shareholders acknowledged
the significant increase in the scale
and complexity of the business during
recent years, some shareholders
expressed concerns about the increase
in the maximum LTIP award level in
the policy and timing of the changes.
Having considered the feedback, the
committee noted its responsibility
to develop a remuneration policy
that is appropriate for the strategic
development of the entire Kingspan
Group, whilst also balancing
the external expectations of
some shareholders.
During the one to one engagements
with the Chair, most of the feedback
indicated that shareholders were
primarily concerned about the
maximum award level in the
policy and not the actual level of
increases proposed for 2022 PSP
awards. Therefore, the committee
implemented the increase in the
level of PSP Awards as proposed for
2022, and will make PSP awards at
the same level for 2023, being an
award of 225% of base salary for
the CEO, and 200% of base salary
for the other executive directors
(increased from 200% and 175% of
salary respectively). As a response to
feedback received on the maximum
policy limit, the committee has
agreed not to increase PSP award
levels above 250% of salary during
the current policy period without first
engaging again with shareholders
and considering their feedback. The
committee is very grateful to those
shareholders who engaged with
the Company during the year, and
whose feedback has helped shape our
current Remuneration Policy.
San Diego Symphony
California, USA
Light + Air
UniQuad®
Cladding + Wall System
Directors’ Report
109
Kingspan Group plc Annual Report & Financial Statements 2022Report of the Remuneration Committee Report of the Audit &
Compliance Committee
Michael Cawley
As chairman of the Audit &
Compliance Committee, I am
pleased to present the report
of the committee for the
year ended 31 December 2022
to stakeholders and wider
society.
Vaccines Manufacturing
and Innovation Centre
Oxfordshire, UK
Insulated Panels
QuadCoreTM
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) in the last twelve months.
The Audit & Compliance Committee focused particularly on
the appropriateness of the Group’s financial statements. The
Audit & Compliance Committee has satisfied itself, and has
advised the Board accordingly, that the 2022 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 note 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 ongoing basis.
Further details regarding these matters are also set out in this
report on page 48.
The Audit & Compliance 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.
The Audit & Compliance Committee also has responsibility for
reviewing the effectiveness of the controls and processes relating
to product compliance and monitoring the culture of compliance
across the Group.
Michael Cawley
Chairman, Audit & Compliance Committee
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 and IT general
controls. Additionally, with effect
from December 2020, the committee
has responsibility for reviewing the
effectiveness of the processes and
controls associated with product
certification and the marketing of the
Group’s products.
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,
Group Internal Audit, and other
members of the senior management
team in fulfilling these responsibilities.
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
and risk management controls;
4. The Group’s product compliance
and certification function;
5. Compliance with the Group
Marketing Integrity Manual; and
6. Governance.
Committee membership
As at 31 December 2022, the Audit &
Compliance Committee comprises four
independent non-executive directors
who are Michael Cawley (chairman),
Anne Heraty, Éimear Moloney and
Senan Murphy. Senan Murphy joined
the committee in October 2022. The
biographies of each can be found on
pages 76 to 77.
F.C.A, have appropriate recent and
relevant financial experience.
The Board considers that the
committee 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., and its
member, Senan Murphy B.Comm.,
Meetings
The committee met five times during
the year ended 31 December 2022
and attendance at the meetings is
noted below. Matters under review by
the Audit & Compliance Committee
at each meeting is also noted
overleaf.
Committee Member
Attended
Eligible
Appointment Date
Michael Cawley
Anne Heraty
Éimear Moloney
Senan Murphy
5
5
5
2
5
5
5
2
2014
2019
2021
2022
Mexican Radio
Oklahoma, USA
Light + Air
Briteway™ Canopy System
110
110
Kingspan Group plc Annual Report & Financial Statements 2022
Report of the Audit & Compliance Committee
111
Kingspan Group plc Annual Report & Financial Statements 2022Directors’ Report
Feb Jun Aug Oct Nov
Audit & Compliance Committee Activities
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 Auditor (EY)
Ongoing assessment of auditor performance
Approval of external audit plan
Review reports and correspondence from the auditor to the Audit & Compliance Committee
Confirm auditor independence and consider non-audit services and materiality of related fees
Review and consideration of audit fees
Internal Audit and Risk Management Controls
Review of internal audit reports and monitor progress on open actions
Approve internal audit plan and resources, taking account of risk management
Review of financial and IT general controls
Review of Group cybersecurity strategy
Review of internal audit reports for cybersecurity controls
Review and approve the structure of the internal audit team
Review details of global fraud and cyber-attack attempts and management response
Monitor Group whistleblowing procedures and reports
Assessment of compliance with Group Global Sanctions policy
Review of Group liquidity position
Assessment of the principal risks and effectiveness of internal control systems
Product Compliance & Certification
Review and approve internal audit plan for audit of product marketing compliance with
Group Marketing Integrity Manual
Review of internal audit reports relating to product marketing compliance
Review and consider the structure and expertise of the product compliance and
certification team
Meetings and updates from Group Head of Compliance & Certification
and divisional compliance teams
Discussions with divisional management on product compliance and certification matters
as well as site visits
Governance
Review accounting regulator correspondence
Evaluation of external and internal audit functions
Review and approve Directors’ Compliance Statement
Each quarterly committee meeting
was attended by the Group Chief
Financial Officer and the Head of
Internal Audit & Compliance. The
external auditor also attended each
quarterly meeting. The Company
Secretary is the secretary of the
Audit & Compliance Committee and
also attended each meeting. Other
directors can attend the meetings
as required.
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 84 within the
Corporate Governance Statement,
the review of 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 ended 31 December 2022.
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 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 Company’s
position and performance, business
model and strategy.
In respect of the year to 31 December
2022, the committee reviewed:
@ the Group’s Trading Updates
issued in April, June and
November 2022;
@ the Group’s Interim Report for the
six months to 30 June 2022; and
@ the Preliminary Announcement
and Annual Report to 31
December 2022.
In carrying out these reviews, the
committee:
@ reviewed the appropriateness
of Group accounting policies
and monitored changes to, and
compliance with, accounting
standards on an ongoing basis;
@ discussed with management
and the external auditor the
critical accounting policies and
judgements that had been
applied;
@ compared the results with
management accounts
and budgets, and reviewed
reconciliations between these and
the final results;
@ discussed a report from the
external auditor at that meeting
identifying the significant
accounting and judgemental
issues that arose in the course of
the audit;
@ considered the management
representation letter requested by
the external auditor for any non-
standard issues and monitored
action taken by management as a
result of any recommendations;
@ discussed with management
future accounting developments
which are likely to affect the
financial statements;
@ reviewed the budgets and
strategic plans of the Group 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,
treasury matters and tax matters.
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 Company’s
position and
performance, business
model and strategy.
The primary areas of judgement
considered by the committee in
relation to the Group’s 2022 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
reviews the businesses covered in
its annual Internal Audit Plan, as
agreed by the committee, and
reports its 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 with information on
the adequacy and appropriateness of
provisions in these areas.
112
Report of the Audit & Compliance Committee
113
Kingspan Group plc Annual Report & Financial Statements 2022Directors’ Report
Primary areas of
judgement
Adequacy of warranty
provisions
Recoverability of
trade receivables and
adequacy of provision
Accounting for
acquisitions
Consideration of
impairment of
goodwill
Valuation of inventory
and adequacy of
inventory provision
Taxation
Committee activity
The committee reviewed the judgements applied by management in assessing both specific
and risk based warranty provisions at 31 December 2022. 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
provision for expected credit loss at 31 December 2022. The committee reviewed and
discussed with management the monthly board report which sets out aged analysis of gross
receivables balances and associated provisions for expected credit loss and reviewed security
(including credit insurance) that is in place. Expected credit loss 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.
Total acquisition consideration in 2022 amounted to €887.0m. 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.
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 10 to the
financial statements.
EY also provided the committee with their evaluation of the impairment review process.
Kingspan completed 6 acquisitions during the financial year. The measurement of goodwill is
not yet finalised for all acquisitions but the methodology of the assessments of such items of
goodwill was presented to the committee and the results were deemed appropriate.
The committee reviewed the valuation and provisioning for inventory at 31 December 2022.
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.
External auditor
The Audit & Compliance Committee
has responsibility for overseeing the
Group’s relationship with the external
auditor including reviewing the audit
team, 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 2021 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, independence 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
2022 year end audit, the committee
approved the external auditor’s
work plan and resources and agreed
with the auditor’s various key areas
of focus, including accounting for
acquisitions, warranty provisions and
revenue recognition.
During the year the committee met
with the external auditor 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:
@ a requirement that the PIE
changes its statutory auditor every
ten years (following rotation, the
statutory audit firm cannot be
reappointed for four years);
@ a requirement that certain
procedures are followed for the
selection of the new statutory
auditor; and
@ 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.
With regards audit firm rotation, EY,
has been the external auditor since
the financial year commencing 1
January 2020.
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 1
May 2020, following a formal tender
process in which several leading global
firms submitted written tenders and
delivered in-person presentations. The
lead audit partner is rotated every five
years and is currently Pat O’Neill.
The committee received confirmation
from the external auditor that they
are independent of the Group under
the requirements of the IAASA Ethical
Standard for Auditors (Ireland) 2020.
The external auditor 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
To further ensure independence,
the committee has a policy on the
provision of non-audit services by
the external auditor that seeks to
ensure that the services provided by
the external auditor are not, or are
not perceived to be, in conflict with
auditor independence. By obtaining
an account of all relationships
between the external auditor and
the Group, and by reviewing the
economic importance of the Group
to the external auditor 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. The
committee’s policy on the provision
of non-audit services by the Group’s
external auditor is fully compliant with
EU Audit Reform legislation.
An analysis of fees paid to the
external auditor, including the
non-audit fees, is set out in Note
6 and below:
Audit V Non-Audit Services (€m)
2022
2021
2020
2019
4.1
0.1
3.7
0.3
2.7
0.1
2.6
0.9
Audit Services
Non-Audit Services
2018
2.0
0.7
114
Kingspan Group plc Annual Report & Financial Statements 2022
Report of the Audit & Compliance Committee
115
Directors’ Report
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 auditor 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 function
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 and product
marketing. The Head of Internal Audit
& Compliance also reports 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
116
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 overseen by
the Group Chief Financial Officer and
the committee is satisfied that this
plan is being properly executed.
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 the Group. Full details
of this risk assessment and the key
risks identified are set out in the Risks
& Risk Management section of this
Annual Report on pages 49 - 54.
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 Report of the Directors
on page 120.
Product compliance & certification
With effect from December 2020,
the Audit & Compliance Committee
has responsibility for reviewing the
effectiveness of the processes and
controls associated with product
compliance and monitoring the culture
of compliance across the Group.
The Group product compliance
framework can be split into two
categories:
1. Compliance of products with
product specific laws and
regulations, testing, certification
and accreditation; and
2. The accuracy and consistency of
product marketing materials.
The Group Product Compliance &
Certification Team, led by the Group
Head of Compliance & Certification,
is independent of divisional
management and performs the
following functions:
@ Supports compliance governance
across the Group in implementing
policies, processes, and procedures
to ensure continued improvement
in management systems. This
includes ownership of the Group
Product Compliance Policy;
@ Performs extensive audits of
processes and controls associated
with product compliance and the
monitoring of compliance across
the Group; and
@ Leads the Group Compliance
Management System (CMS) which
has achieved the international ISO
37301 standard.
The Audit & Compliance Committee
meet with the Group Head of
Compliance & Certification for
updates on the Group’s compliance
and certification agenda. This
includes updates on the product
compliance audit schedule and the
results of completed audits as well
as reviewing the Group Compliance
Auditing Guidelines. The Audit &
Compliance Committee also visit sites
with the Group Product Compliance
& Certification team to better
understand the product compliance
culture at an operational level.
The Audit & Compliance Committee
also meet regularly with the Group
Head of Internal Audit & Compliance
in relation to product marketing
compliance matters. Following the
adoption of the Group Marketing
Integrity Manual in September
2021, the Group Internal Audit Plan
includes specific audits, performed
by appropriately trained internal
auditors, of product marketing
compliance with the Group Marketing
Integrity Manual.
Read more
in our Sustainability
Report on pages
56 - 73
NFL
California, USA
Data + Flooring
ConCore®
The Audit & Compliance Committee
noted the following product
compliance highlights in 2022:
@ Incorporation of newly acquired
businesses into the Compliance
Management System (CMS).
to work together to address any
instances of fraud, abuse, and other
misconduct in the workplace.
@ An additional 17 sites have been
accredited with the leading
international compliance
standard, ISO 37301. This now
brings the total number of sites
with this accreditation to 26 with
a plan to have 58 sites certified to
the standard by the end of 2023.
@ Updated Group Compliance
Auditing Guidelines issued.
@ 98 internal product compliance
audits were conducted by the
Group Product Compliance and
Certification team.
@ 651 external product compliance
audits were conducted by
independent certification bodies.
@ 19 product marketing audits were
performed by the Group Internal
Audit & Compliance team.
@ ISO 37301 education and training
systems launched.
@ Recruitment of additional
compliance experts for Group
Internal Audit and Group
Compliance & Certification teams.
@ Divisional Compliance Managers
reporting to Group Compliance &
Certification team monthly.
@ Product compliance registers in
place across all divisions.
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 service to allow all
employees to raise their concerns
about their working environment and
business practices. This service then
allows management and employees
Any instances of fraud, abuse
or misconduct reported on the
whistleblowing service are reported
to the Head of Internal Audit &
Compliance and the Company
Secretary, who ensure each incident
is appropriately investigated and
then report to the committee details
of the incident, key control failures,
any financial loss and actions for
improvement. All reports through
the whistleblower line and all fraud
attempts are presented at each Audit
& Compliance Committee meeting.
During the year, the committee
reviewed the Group’s whistleblowing
process and were satisfied with the
design and operating effectiveness of
the process.
Report of the Audit & Compliance Committee
117
Kingspan Group plc Annual Report & Financial Statements 2022Directors’ Report
The directors of Kingspan Group
plc (“Kingspan”) have pleasure in
presenting their report with the
audited financial statements for the
year ended 31 December 2022.
This Report of the Directors and the Business & Strategic Report
on pages 20-73 together comprise the ‘Management Report’
for the purposes of the Transparency (Directive 2004/109/EC)
Regulations 2007 of Ireland and the Disclosure Guidance and
Transparency Rules of the UK Financial Conduct Authority.
Report of
the Directors
Gene M. Murtagh
Geoff Doherty
Băicoi, Romania
Insulated Panels
Annually Generating
422MWh
(estimated)
Information incorporated by reference
The following information is provided in other appropriate sections of this Annual Report and the financial statements
and is incorporated into this Report of the Directors by reference:
Information
A review of the business of the Group.
The Group’s Key Performance Indicators.
A description of likely future developments in the Group’s
business.
A description of the principal risks and uncertainties that
could affect the Group’s business.
The Company’s application of the principles, and compliance
with the provisions, of the 2018 UK Corporate Governance
Code and the Irish Corporate Governance Annex.
Reported in
Chief Executive’s Review
Financial Review
Page(s)
32-41
43-47
Chief Executive’s Review
41
Risk & Risk Management
49-54
Report of the Nominations
& Governance Committee
78-86
The names and biographical details of the Directors.
The Board
The Directors’ and Company Secretary’s interests in shares
and debentures.
Report of the Remuneration
Committee
The Group’s financial risk management objectives and policies
and a description of the use of financial instruments.
Financial Statements,
Note 20
75-77
101-103
170-177
The amount of interim dividends (if any) paid by the
Company during the year and the amount (if any) that the
directors recommend should be paid by way of final dividend.
Information required by the European Union (Disclosure of
Non-Financial and Diversity Information by certain large
undertakings and groups) Regulations 2017.
Financial Review
44
Sustainability Report
56-72
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
Manufacture of insulated
panels, structural framing and
metal facades.
Water + Energy
Manufacture of energy and
water solutions and all related
service activities.
Insulation
Manufacture of rigid insulation
boards, technical insulation and
engineered timber systems.
Data + Flooring
Manufacture of data centre
storage solutions and raised
access floors.
Light + Air
Manufacture of daylighting,
smoke management, ventilation
systems and service activities.
Roofing + Waterproofing
Manufacture of roofing and
waterproofing solutions
for renovation and new
construction of buildings.
Read more
about our directors
on page 75-77
Kingspan’s six key business divisions offer a suite of complementary building
envelope solutions for both the new build and refurbishment markets.
118
118
Kingspan Group plc Annual Report & Financial Statements 2022
Report of the Directors
119
Kingspan Group plc Annual Report & Financial Statements 2022Directors’ Report @ Reviewing reports from the Group
Head of Compliance relating to
product compliance, certification
and accreditation, including
implementation status of the
Group’s ISO 37301 Compliance
Management Systems targets;
@ Auditing compliance with the
Group Marketing Integrity Manual
incorporating the CCPI best
practice principles; and
@ Monitoring the culture of
compliance across the Group.
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.
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
The information required by
Regulation 21 of the above
Regulations as at 31 December 2022 is
set out below.
Structure of the Company’s
share capital
At 31 December 2022, the Company
had an authorised share capital
comprised of 250,000,000 (2021:
250,000,000) ordinary shares of €0.13
each and the Company’s total issued
share capital comprised 183,591,682
(2021: 183,591,682) ordinary shares.
TopTex
La Louvière, Belgium
Insulated Panels
JI Wall 1000VB PIR
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.
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
2022, the Group’s research and
development expenditure amounted
to €60.3m (2021: €40.9m). Research
and development expenditure is
generally expensed in the year in
which it is incurred. Kingspan’s
continuing investment in research and
development involves a number of key
projects which include:
@ PV solar-integrated
PowerPanel™ Wall;
@ QuadCore™ 2.0;
@ Kooltherm® 200 series;
@ Launch of lower embodied carbon
insulated panel;
@ Decarbonisation of materials;
@ Digitalisation of the construction
industry;
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.
This is done 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:
@ Budgets and strategic plans
are approved annually by the
Board and compared to actual
performance and forecasts on a
monthly basis;
@ Translucent insulated solutions;
@ Sufficiently sized finance
@ Lower carbon acoustic solutions;
and
@ Bio-based low carbon insulation.
teams with appropriate level of
experience and qualifications
throughout the Group;
@ Formal Group Accounting Manual
in place which clearly sets out the
Group financial policies in addition
to the formal controls;
@ Formal IT and treasury policies and
controls in place;
@ Centralised tax and treasury
functions;
@ Sales are submitted and reviewed
on a weekly basis whilst full
reporting packs are submitted and
reviewed on a monthly basis; and
@ Internal audit function review
financial controls and report
results /findings on a quarterly
basis to the Audit & Compliance
Committee.
The main features of the Group’s
internal control and risk management
systems that relate specifically to the
Group’s consolidation process are:
@ The review of reporting packages
for each entity as part of the year
end audit process;
@ The reconciliation of reporting
packages to monthly
management packs as part of
the audit process and as part of
management review;
@ The validation of consolidation
journals as part of the
management review process and
as an integral component of the
year end audit process;
@ The review and analysis of results
by the Chief Financial Officer and
the internal auditors with the
management of each division;
@ Consideration by the Audit &
Compliance Committee of the
outcomes from the annual risk
assessment of the business; and
@ 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.
In addition, the remit of the Audit &
Compliance Committee also includes
reviewing the effectiveness of the
controls and processes relating to
product compliance by:
120
Report of the Directors
121
Kingspan Group plc Annual Report & Financial Statements 2022Directors’ Report Analysis of registered shareholding accounts as at 31 December 2022:
Shareholding range
Number of accounts
% of total
Number of shares
held
% of total
1 - 1,000
1,001 - 10,000
10,001 - 100,000
100,001 - 1,000,000
Over 1,000,000
1,410
563
42
3
3
2,021
69.76
27.86
2.08
0.15
0.15
100.00
613,413
1,557,818
926,289
392,162
180,102,000
183,591,682
0.33
0.85
0.51
0.21
98.10
100.00
As at 16 February 2023, the Company had received notification of the interests outlined in the table below, in its ordinary
share capital, which were equal to, or in excess of, 3%:
Notification Date
Shareholder
27/01/2021
10/02/2023
14/09/2022
16/08/2022
30/06/2022
07/11/2022
Eugene Murtagh
Blackrock, Inc.
The Capital Group Companies, Inc.
FMR LLC
Allianz Global Investors GmbH
Generation Investment Management LLP
Shares held
27,018,000
12,742,227
12,656,818
9,140,784
9,036,243
7,273,788
%
14.88%
7.00%
6.97%
5.03%
4.97%
4.00%
The number of shares held as treasury
shares at the beginning of the year
was 2,254,140 (1.24% of the then
issued share capital (excluding treasury
shares)) with a nominal value of
€293,037. A total of 287,028 shares
(0.16% of the issued share capital
(excluding treasury shares)) with a
nominal value of €37,313 were re-
issued during the year consequent to
the exercise of share options under
the Kingspan Group Performance
Share Plan and the Kingspan Group
Employee Benefit Trust. A further 15,361
shares (with a nominal value of €1,997)
were bought back by the Company
and held in treasury for the purpose of
the Deferred Bonus Scheme, leaving a
balance held as treasury shares as at
31 December 2022 of 1,982,473 (1.09%
of the issued share capital (excluding
treasury shares)) with a nominal value
of €257,721.
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 also contain
the rules relating to the appointment
and removal of directors, rules relating
to amending the Articles, 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 from 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 uncertificated
form (through the Euroclear Bank
system or (via a holding of CDIs) the
CREST system).
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 be effected
by means of a relevant system in the
manner provided for in the Regulation
(EU) No. 909/2014 of the European
Parliament and of the Council of 23
July 2014 (the “CSD 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 CSD
Regulations.
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 (‘AGM’)
following his or her co-option.
The Articles require that at each
AGM 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
AGM to be held on 28 April 2023.
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 AGM held on 29
April 2022. 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 on 29 July 2023
unless renewed and resolutions to
that effect are being proposed at the
AGM to be held on 28 April 2023.
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 AGM held on
29 April 2022, 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 AGM to be held on 28 April
2023, 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 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.
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 75 to 77. Mr. Senan Murphy was
appointed as a non-executive director
on 1 October 2022. Mr. Michael
Cawley and Mr. John Cronin will be
retiring as non-executive directors
following the conclusion of the AGM
on 28 April 2023.
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.
122
Kingspan Group plc Annual Report & Financial Statements 2022
Report of the Directors
123
Directors’ Report 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 20 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 (2021: €nil).
Subsidiary Companies
Kingspan is a truly global business,
trading in over 80 countries with 212
manufacturing sites across the globe.
The Company’s principal subsidiaries
and substantial undertakings at
31 December 2022, country of
incorporation and nature of business
are listed on pages 193 to 194 of this
Annual Report.
The Company does not have any
branches outside of Ireland.
Significant Events Since Year End
There have been no significant events
since the year end which would
require adjustment to, or disclosure in
this report.
Going Concern
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. 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 adopt the going
concern basis in preparing the
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 2026.
The directors concluded that three
years was an appropriate period for
the assessment, having had regard to:
@ the Group’s rolling Strategic Plan
which extends to 2026;
@ the Group’s long-term funding
commitments, some of which fall
to be repaid during the period;
@ the inherent short-cycle nature of
the construction market including
the Group’s order bank and
project pipeline; and
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and substantial
undertakings on
pages 193-194
@ the potential impact of macro-
economic events and political
uncertainty in some regions.
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.
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 2022.
In making this assessment, the
directors have considered the resilience
of the Group, taking account of its
current position and the 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 such 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
as at 31 December 2022 and of the
profit or loss of the Group for that
period. In preparing those financial
statements, the directors are
required to:
@ select suitable accounting policies
and then apply them consistently;
@ make judgements and estimates
that are reasonable and prudent;
@ state whether applicable IFRSs
have been followed, subject to
any material departures disclosed
and explained in the financial
statements; and
@ 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.
Kingspan is truly a
global business, trading
in over 80 countries
with 212 manufacturing
sites across the globe.
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:
@ 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
@ 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.
124
Kingspan Group plc Annual Report & Financial Statements 2022
Report of the Directors
125
Directors’ Report 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
auditor is aware of that information.
So far as the directors are aware,
there is no relevant information of
which the Group’s statutory auditor
is unaware.
Auditor
In accordance with Section 383(2)
of the Companies Act 2014, the
Company’s auditor, EY, will continue
in office. EY were first appointed as
the Company’s auditor on 1 May
2020, with effect for the financial
year ending 31 December 2020. A
resolution authorising the directors to
determine their remuneration will be
proposed at the AGM.
On behalf of the Board
Gene M. Murtagh
Chief Executive Officer
Geoff Doherty
Chief Financial Officer
21 February 2023
They are also satisfied in compliance
with Provision 27 of the 2018 UK
Corporate Governance Code:
@ 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”).
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.
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Salzburg, Austria
Insulated Panels
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We have innovated a portfolio
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126
Kingspan Group plc Annual Report & Financial Statements 2022
Directors’ Report
Report of the Directors
127
The “C” House
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Financial
Statements
130
Independent Auditor’s Report
Consolidated Income Statement
138
Consolidated Statement of Comprehensive Income 138
139
Consolidated Statement of Financial Position
140
Consolidated Statement of Changes in Equity
142
Consolidated Statement of Cash Flows
143
Company Statement of Financial Position
144
Company Statement of Changes in Equity
144
Company Statement of Cash Flows
Notes to the Financial Statements
1 Statement of Accounting Policies
2 Segment Reporting
3 Non Trading Item
4 Employees
5 Finance Expense And Finance Income
6 Profit For The Year Before Income Tax
7 Directors’ Remuneration
8
Income Tax Expense
9 Earnings Per Share
10 Goodwill
11 Other Intangible Assets
12 Property, Plant And Equipment
13 Financial Assets
14 Inventories
15 Trade And Other Receivables
16 Trade And Other Payables
17 Leases
18 Interest Bearing Loans And Borrowings
19 Deferred Contingent Consideration
20 Financial Risk Management and
Financial Instruments
21 Provisions For Liabilities
22 Deferred Tax Assets And Liabilities
23 Business Combinations
24 Share Capital
25 Share Premium
26 Treasury Shares
27 Retained Earnings
28 Dividends
29 Non-Controlling Interest
30 Reconciliation Of Net Cash Flow To
145
145
154
157
157
158
159
159
160
161
161
163
164
165
165
166
166
167
168
169
170
178
178
179
182
182
182
183
183
183
Movement In Net Debt
184
31 Guarantees And Other Financial Commitments 184
185
32 Pension Obligations
189
33 Related Party Transactions
189
34 Events Subsequent To Year End
189
35 Approval Of Financial Statements
Other Information
Alternative Performance Measures
190
Principal Subsidiaries and Substantial Undertakings 193
195
Shareholder and other Information
196
5 Year Summary
128
Kingspan Group plc Annual Report & Financial Statements 2022
Financial Statements
129
Independent Auditor’s Report
to the Members of Kingspan Group plc
Report on the audit of the
financial statements
Opinion
We have audited European Single Electronic
Format financial statements (‘the financial
statements’) of Kingspan Group plc (‘the
Company’) and its subsidiaries (‘the
Group’) for the year ended 31 December
2022, 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:
@ the Group financial statements give
a true and fair view of the assets,
liabilities and financial position of the
group as at 31 December 2022 and of
its profit for the year then ended;
@ the Company financial statements
give a true and fair view of the assets,
liabilities and financial position of the
Company as at 31 December 2022;
@ the Group financial statements have
been properly prepared in accordance
with IFRS as adopted by the
European Union;
@ 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
@ the Group financial statements and
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.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(Ireland) (ISAs (Ireland)) and applicable
law. Our responsibilities under those
130
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
parent company’s ability to continue
to adopt the going concern basis of
accounting included:
@ 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;
@ We obtained management’s going
concern assessment, including
the cash forecasts and covenant
calculations for the going concern
period, which covers a period of at
least 12 months from the date the
financial statements are authorised
for issue;
@ 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 Group;
@ 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;
@ We have performed reverse stress
testing in order to identify what factors
would lead to the Group utilising all
liquidity or breaching the financial
covenants during the going concern
period; and
@ 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 Covid-19 pandemic and the ongoing
war in Ukraine has not had a detrimental
impact on the Group which has seen
an increase in trading profit in all of its
five legacy operating segments during
2022. The Group continued to generate
significant operating cash flows of €692
million in 2022. The Group is not expected
to be significantly impacted by Covid-19
or the ongoing war in Ukraine in the going
concern assessment period. Further, the
Group has access to significant liquidity.
The majority of the Group’s long-term
funding commitments (83% or €1.1
billion) matures after February 2025. At 31
December 2022, the Group has unrestricted
cash and cash equivalents of €0.65 billion
and unused committed debt facilities of up
to €0.8 billion from a revolving bank credit
facility expiring in May 2026.
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 parent 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.
Overview of our audit approach
Key audit matters
@ The key audit matters that we identified in the current year were:
» Warranty provisions
» Revenue recognition
» Accounting for significant acquisitions
Audit scope
@ We performed an audit of the complete financial information of 26 components and performed audit
procedures on specific balances for a further 35 components
@ We performed procedures at a further 21 components that were specified by the Group audit team in
response to specific risk factors
@ The components where we performed full or specific audit procedures accounted for 74% of the Group’s Profit
before tax adjusted for the Non trading item, 72% of the Group’s Revenue and 81% of the Group’s Total Assets
@ ‘Components’ represent business units across the Group considered for audit scoping purposes
Materiality
@ Overall Group materiality was assessed to be €38.2 million which represents approximately 5% of Profit before
tax adjusted for the Non trading item.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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 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.
Risk
Our response to the risk
Warranty provisions
(2022: €181.5 million,
2021: €142.7 million)
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 Audit and Compliance Committee
Report (page 110); the Statement of Accounting
Policies (page 145); and note 21 of the Group
Financial Statements (page 178).
We performed audit procedures that included
understanding the Company’s process for
recording and monitoring potential warranty
claims incorporating management’s review of
significant assumptions used in the provision
calculation and the
recording of the resulting amounts (including
walkthroughs of the design and implementation
of relevant controls); consideration of the nature
and basis of the provision; 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 tested the validity, completeness and accuracy
of the data used in the calculations of product
return rates. We evaluated and challenged the
Group’s assumptions in relation to potential failure
rates, considering past failure rates, the costs
estimated for remediation, examining related
settlements where necessary. We considered
whether alternative rates to those employed by
management might be more appropriate.
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 Provisions, Contingent Liabilities and
Contingent Assets.
The above procedures are performed both locally
and by the Group audit team.
131
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsIndependent Auditor’s Reportto the Members of Kingspan Group plc (continued) Risk
Our response to the risk
Revenue recognition
(2022: €8,340.9 million,
2021: €6,497.0 million)
We performed procedures on revenue at all relevant in-
scope components, as outlined in further detail in the
‘Tailoring the scope’ section below.
The Group has a number of revenue
streams with different revenue
recognition policies across its divisions.
Detailed transactional testing of revenue recognised
throughout the year was performed, commensurate
with the higher audit risk assigned to revenue.
Key observations communicated
to the Audit Committee
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.
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 €38.2 million (2021: €34.5 million),
which is approximately 5% of Group’s
Profit before tax adjusted for the Non
trading item. 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
the Group’s Profit before tax adjusted
for the Non trading item 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.
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 Audit and Compliance
Committee Report (page 110); the
Statement of Accounting Policies (page
145); and note 2 of the Group Financial
Statements (page 154).
Dependent on the nature of the revenue recognised
at each component, we obtained an understanding of
each in-scope component’s revenue recognition policy
and how it was applied, including a walkthrough of
the design and implementation of relevant controls;
examined supporting documentation including
customer contracts, statements of works or purchase
orders, sales invoices, customer balance confirmations
and cash receipts. In addition, we performed cut-off
procedures, revenue journal testing and customer
balance confirmations. In some components data
analytics procedures were also performed.
We audited key financial statement disclosures for
compliance with IFRS 15 Revenue from Contracts with
Customers.
Risk
Our response to the risk
Key observations communicated
to the Audit Committee
Accounting for
significant acquisitions
Significant acquisitions identified during
the year relate to Troldtekt in Denmark
(consideration of
€220.4 million), Derbigum in Belgium
(consideration of €95.0 million) and
Ondura Group in France (consideration of
€515.6 million).
There is a risk of improper accounting for
the treatment of acquired businesses,
due to the level of estimation uncertainty
included in management’s assessments.
Specifically, fair value adjustments
to property, plant and equipment
(PP&E) and the need for complex and
judgemental valuation techniques
to be utilised, the recognition and
valuation of fair value adjustments
to provisions recorded in the opening
balance sheets, require significant
estimates and judgements to be made
by management.
Refer to the Audit and Compliance
Committee Report (page 110); the
Statement of Accounting Policies (page
145); and note 23 of the Group Financial
Statements (page 179).
We obtained an understanding of the Group’s
process for accounting for acquisitions, including a
walkthrough of the design and implementation of
relevant controls.
Our procedures were focused
on Troldtekt and Derbigum with
limited work on Ondura given the
timing of this acquisition.
We completed detailed procedures on the opening
balance sheets, purchase price allocations and fair
value adjustments. We reviewed key agreements
including the share purchase agreements for
each acquisition to understand the key terms and
conditions. We identified the key assumptions and
judgements made by management and challenged
the appropriateness thereof by reference to external
information, where available.
In respect of the recognition and valuation of the
fair value adjustments to PP&E and provisions, we
examined how the Group identified all material
adjustments, obtained related evidence and examined
the key assumptions and calculations used to
ensure they were recorded in accordance with IFRS 3
Business Combinations.
We also performed an evaluation of any experts
engaged by management and sought assistance
from our own specialists where necessary. Whilst our
procedures were principally focused on recognition
and valuation, we also assessed the completeness of
recorded provisions.
We also considered the adequacy of the
related disclosures.
Our observations included an
outline of the range of audit
procedures performed, and the
results of our related testing,
including the fact that the
purchase price allocations
for all three acquisitions were
preliminary to the extent disclosed
in the related financial statements
footnote, that the provisional
fair value adjustments made in
the preliminary allocations did
not result in material fair value
adjustments, subject to the
necessary finalisation of the fair
value reviews and purchase price
allocations. Our planned audit
procedures in respect of significant
acquisitions were completed
without exception.
Starting Basis
Adjustments
Materiality
@ Group's Profit before tax - €746.6m
@ Non-trading item - loss of €16.5m
@ Group's Profit before tax adjusted for the Non trading item - €763.1m
@ Materiality of €38.2m (5% of materiality basis)
We determined materiality for the
Company to be €13.5 million (2021: €14.1
million), 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% (2021:
50%) of our planning materiality, namely
€19.1 million (2021: €17.25 million). 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 €3.5 million to
€5.25 million (2021: €3.0 million to
€5.625 million).
Reporting threshold
Reporting threshold is an amount below
which identified misstatements are
considered as being clearly trivial. We
agreed with the Audit Committee that we
would report to them all uncorrected audit
differences in excess of €1.91 million, 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 consolidated
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).
132
133
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsIndependent Auditor’s Reportto the Members of Kingspan Group plc (continued)Independent Auditor’s Reportto the Members of Kingspan Group plc (continued) Of the remaining components, which
together represent 17% of the Group’s
Profit before tax adjusted for the Non
trading item, none is individually greater
than 1% of the Group’s Profit before tax
adjusted for the Non trading item. 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.
The charts below illustrate the
coverage obtained from the work
performed by our audit teams based on
continuing operations.
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 93 components
covering entities across Europe, the
Americas, the Middle East and Australia,
which represent the principal business units
within the Group.
Of the 93 components selected, we
performed an audit of the complete
financial information of 26 components
(‘full scope components’) which were
selected based on their size or risk
characteristics. For the remaining
35 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 61 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 11 components.
The reporting components where we
performed either full or specific scope
audit procedures accounted for 74% of
the Group’s Profit before tax adjusted
for the Non trading item, 72% of the
Group’s Revenue and 81% of the Group’s
Total Assets.
The full scope components contributed
45% of the Group’s Profit before tax
adjusted for the Non trading item, 48%
of the Group’s Revenue and 62% of
the Group’s Total Assets. The specific
scope components contributed 29% of
the Group’s Profit before tax adjusted
for the Non trading item, 24% of the
Group’s Revenue and 19% 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 7% and 2%
respectively of the Group’s Profit before
tax adjusted for the Non trading item
from continuing operations, 1% and 5%
respectively of the Group’s Revenue and
0% and 2% 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.
Group's Profit before tax adjusted
for the Non trading item
Group's Revenue
Group's Total Assets
Other
procedures
17%
Review scope
5%
Other
procedures
22%
Review scope
2%
Other
procedures
17%
Specificied
procedures
1%
Specificied
procedures
0%
Full scope
45%
Specific
scope
24%
Full scope
48%
Specific
scope
19%
Full scope
62%
Review scope
2%
Specificied
procedures
7%
Specific
scope
29%
134
Corporate Governance Statement
We report, in relation to information given
in the Corporate Governance Statement
included in the Directors’ Report and
elsewhere in the Annual Report that:
@ 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;
@ 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
@ 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.
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 or non-EY firms operating
under our instruction. Of the 26 full scope
components, audit procedures were
performed on 4 of these directly by senior
members of the Group audit team and
on 22 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 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.
During the current year’s audit cycle,
visits were undertaken by the primary
audit team to component teams in
the Netherlands, UK, Denmark, Germany,
France. The Group audit team performed
virtual visits in respect of our other key
component teams in Poland and the UAE.
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 primary team interacted regularly with
the component teams where appropriate
during various stages of the audit, reviewed
key working papers and were responsible
for the scope and direction of the audit
process. 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:
@ the disclosures in the Annual Report
set out on pages 48 to 54 that describe
the principal risks and explain how they
are being managed or mitigated;
@ the Directors’ confirmation set out
on page 125 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;
@ the Directors’ statement set out on
page 124 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 parent 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;
@ 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
@ the Directors’ explanation set out
on pages 124 and 125 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.
135
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsIndependent Auditor’s Reportto the Members of Kingspan Group plc (continued)Independent Auditor’s Reportto the Members of Kingspan Group plc (continued) 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:
@ Fair, balanced and understandable
(set out on pages 125 and 126) – 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 parent company’s
performance, business model and
strategy, is materially inconsistent with
our knowledge obtained in the audit; or
@ Audit Committee reporting (set out
on pages 110 to 117) – the section
describing the work of the Audit
Committee does not appropriately
address matters communicated by us
to the Audit Committee or is materially
inconsistent with our knowledge
obtained in the audit; or
@ Directors’ statement of compliance with
the UK Corporate Governance Code
(set out on page 80) – 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:
@ 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
@ 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, to the best of our
knowledge and belief, are 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 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 required by sections 305 to 312
of the Act, which relate to disclosures of
Directors’ remuneration and transactions,
are not complied with by the Company.
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 2021.
The Companies Act 2014 also requires
us to report to you if, in our opinion, the
Company has not provided the information
required by Section 1110N in relation to its
remuneration report for the financial year
31 December 2021. We have nothing to
report in this regard.
The Listing Rules of the Irish Stock
Exchange require us to review:
@ the Directors’ statement, set out on
pages 124 and 125, in relation to going
concern and longer-term viability
@ the part of the Corporate Governance
Statement on page 80 relating to
the Company’s compliance with
the provisions of the UK Corporate
Governance Code and the Irish
Corporate Governance Annex specified
for our review
@ certain elements of disclosures in the
report to shareholders by the Board on
Directors’ remuneration
Respective responsibilities
Responsibilities of Directors for the
financial statements
As explained more fully in the Directors’
Responsibility Statement set out on pages
125 and 126, the Directors are responsible
for the preparation of the financial
statements in accordance with the
applicable financial reporting framework
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 parent 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
parent company or to cease operations, or
has no realistic alternative but to do so.
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. The period of
total uninterrupted engagement including
previous renewals and reappointments of
the firm is three years.
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 Committee.
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
22 February 2023
@ 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 Committee
and correspondence received from
regulatory bodies
@ 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
@ 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 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.
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.
Explanation to what extent the audit
was considered capable detecting
irregularities, including fraud
Irregularities, including fraud, are
instances of non-compliance with laws
and regulations. We design procedures
in line with our responsibilities, outlined
above, to detect irregularities, including
fraud, that could reasonably be expected
to have a material effect on the financial
statements. The risk of not detecting a
material misstatement due to fraud is
higher than the risk of not detecting one
resulting from error, as fraud may involve
deliberate concealment by, for example,
forgery or intentional misrepresentations,
or through collusion. In addition, the
further removed any non-compliance
is from the events and transactions
reflected in the financial statements, the
less likely it is that our procedures will
identify such non-compliance. The extent
to which our procedures are capable of
detecting irregularities, including fraud
is detailed below. However, the primary
responsibility for the prevention and
detection of fraud rests with both those
charged with governance of the Company
and management.
Our approach was as follows:
@ 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
136
137
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsIndependent Auditor’s Reportto the Members of Kingspan Group plc (continued)Independent Auditor’s Reportto the Members of Kingspan Group plc (continued) Consolidated Income Statement
For The Year Ended 31 December 2022
Consolidated Statement of Financial Position
As At 31 December 2022
REVENUE
Cost of sales
GROSS PROFIT
Operating costs, excluding intangible amortisation
TRADING PROFIT
Intangible amortisation
Non trading item
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
Gene M. Murtagh
Chief Executive Officer
Geoff Doherty
Chief Financial Officer
21 February 2023
Consolidated Statement of Comprehensive Income
For The Year Ended 31 December 2022
Profit for the year
Other comprehensive (loss)/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
Equity investments at FVOCI - net change in fair value
Total other comprehensive (loss)/income
Total comprehensive income for the year
Attributable to owners of Kingspan Group plc
Attributable to non-controlling interests
138
Note
2
2
11
3
5
5
6
8
29
9
9
2022
€m
8,340.9
(6,124.6)
2,216.3
(1,383.1)
833.2
(32.4)
(16.5)
784.3
(39.4)
1.7
746.6
(130.6)
616.0
598.0
18.0
616.0
2021
€m
6,497.0
(4,640.9)
1,856.1
(1,101.3)
754.8
(29.5)
-
725.3
(36.3)
-
689.0
(118.4)
570.6
554.1
16.5
570.6
329.5c
305.6c
326.9c
303.0c
Note
2022
€m
2021
€m
616.0
570.6
(24.7)
-
(20.3)
4.9
(32.6)
(72.7)
543.3
521.3
22.0
543.3
123.1
0.3
21.5
(5.5)
-
139.4
710.0
691.8
18.2
710.0
32
22
13
29
ASSETS
NON-CURRENT ASSETS
Goodwill
Other intangible assets
Financial assets
Property, plant and equipment
Right of use assets
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
Deferred contingent consideration
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 INTEREST
TOTAL EQUITY
Gene M. Murtagh
Chief Executive Officer
Geoff Doherty
Chief Financial Officer
21 February 2023
Note
2022
€m
2021
€m
10
11
13
12
17
32
22
14
15
20
18
16
21
17
19
18
32
21
18
17
22
19
24
25
26
2,495.5
191.8
93.6
1,437.9
205.3
3.3
40.1
4,467.5
1,235.8
1,328.4
0.4
649.3
3,213.9
7,681.4
1,368.7
74.0
43.2
174.9
85.0
54.9
1,800.7
52.8
107.5
2,103.9
153.6
55.2
12.2
2,485.2
4,285.9
3,395.5
23.9
112.4
0.7
(56.9)
(288.0)
3,527.6
3,319.7
1,908.6
93.2
13.2
1,155.8
155.5
17.9
34.7
3,378.9
1,138.9
1,228.4
0.3
641.4
3,009.0
6,387.9
1,389.8
67.8
35.0
41.7
77.4
57.7
1,669.4
45.9
74.9
1,320.1
123.0
34.7
160.6
1,759.2
3,428.6
2,959.3
23.9
94.4
0.7
(57.3)
(277.7)
3,108.1
2,892.1
29
75.8
67.2
3,395.5
2,959.3
139
Kingspan Group plc Annual Report & Financial Statements 2022Financial Statements Consolidated Statement of Changes in Equity
For The Year Ended 31 December 2022
Consolidated Statement of Changes in Equity
For The Year Ended 31 December 2021
C a pital R ede m ptio n R eserve
Treasury Sh ares
Sh are Pre m iu m
Sh are B ased P a y m ent R eserve
P ut O ptio n Lia bility R eserve
C ash Flo w H ed gin g R eserve
R evalu atio n R eserve
Tra nslatio n R eserve
R etain ed Earnin gs
Sh are C a pital
w n ers
N o n- C o ntrollin g Interest
Total A ttrib uta ble to O
Total Eq uity
of th e P arent
C a pital R ede m ptio n R eserve
Treasury Sh ares
Sh are Pre m iu m
Sh are B ased P a y m ent R eserve
P ut O ptio n Lia bility R eserve
C ash Flo w H ed gin g R eserve
R evalu atio n R eserve
Tra nslatio n R eserve
R etain ed Earnin gs
Sh are C a pital
w n ers
N o n- C o ntrollin g Interest
Total A ttrib uta ble to O
Total Eq uity
of th e P arent
Balance at 1 January 2022
23.9
94.4
0.7
(57.3)
(108.5) 0.6
57.3
0.7 (227.8) 3,108.1
2,892.1
67.2
2,959.3
Balance at 1 January 2021
23.8
95.6 0.7 (11.6) (229.9) 0.3 40.4 0.7 (168.3) 2,597.2 2,348.9 48.7 2,397.6
€m
€m €m
€m
€m €m €m €m
€m
€m
€m
€m
€m
€m
€m €m
€m
€m €m €m €m
€m
€m
€m €m
€m
-
-
-
-
-
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:
Settlement of put option
Purchase of NCI
Dividends to NCI
Fair value movement
18.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.8
(1.4)
-
Transactions with owners
-
18.0
Total comprehensive income for the year
Profit for the year
-
-
-
-
0.4
-
-
-
-
-
-
-
-
-
-
-
-
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss
Exchange differences on
translating foreign operations
-
-
-
-
(28.7)
-
-
-
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
Equity investments at FVOCI –
net change in fair value
Total comprehensive
income for the year
Balance at 31 December 2022
-
23.9 112.4
-
(56.9)
-
0.7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18.4
- (11.4)
-
-
-
-
-
-
-
-
-
(9.2)
-
-
-
-
-
-
(2.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18.4
2.5
(8.9)
(10.6)
-
(93.7)
-
(1.4)
(93.7)
-
-
-
-
-
36.6
-
-
(16.0)
(28.3)
(0.4)
-
-
8.3
(0.4)
-
(16.0)
(8.3)
(1.6)
(3.5)
-
18.4
(8.9)
-
(1.4)
(93.7)
-
(2.0)
(3.5)
(16.0)
20.6
(130.5)
(93.7) (13.4)
(107.1)
-
598.0
598.0
18.0
616.0
-
-
-
-
-
(28.7)
4.0
(24.7)
(20.3)
(20.3)
4.9
4.9
(32.6)
(32.6)
-
-
-
(20.3)
4.9
(32.6)
(28.7)
-
(137.2) 0.6
-
55.1
-
-
550.0
0.7 (207.2) 3,527.6
521.3
3,319.7
22.0
75.8
543.3
3,395.5
-
-
-
0.1
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
(1.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.2
(46.9)
-
Transactions with owners
0.1
(1.2)
Total comprehensive income for the year
Profit for the year
-
-
-
-
(45.7)
-
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 gains on defined
benefit pension scheme
Income taxes relating to
actuarial gains on defined
benefit pension scheme
Total comprehensive
income for the year
Balance at 31 December 2021
-
(57.3)
-
23.9
-
94.4
-
0.7
-
-
-
-
-
-
-
-
121.4
-
(108.5) 0.6 57.3
0.3
-
-
-
-
-
-
-
-
-
-
-
-
- 17.7
-
9.7
- (10.5)
-
-
-
-
-
-
-
-
-
-
- 16.9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17.8
3.8
13.5
10.5
-
(73.5)
-
(46.9)
(73.5)
-
-
-
-
-
17.8
13.5
-
(46.9)
(73.5)
-
-
(59.5)
-
-
-
-
-
(59.5)
3.5
(3.2)
-
3.5
(3.2)
(59.5)
(59.5)
(59.2)
(148.6)
0.3
(148.3)
-
554.1
554.1
16.5
570.6
-
-
-
-
-
-
-
-
0.3
-
-
-
0.3
-
121.4
1.7
123.1
21.5
21.5
(5.5)
(5.5)
-
-
21.5
(5.5)
-
0.7
-
570.1
(227.8) 3,108.1
691.8
2,892.1
18.2
67.2
710.0
2,959.3
-
-
0.3
-
121.4
140
141
Kingspan Group plc Annual Report & Financial Statements 2022Financial Statements Consolidated Statement of Cash Flows
For The Year Ended 31 December 2022
Company Statement of Financial Position
As At 31 December 2022
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
2022
€m
2021
€m
13
15
16
16
24
25
26
27
1,238.5
1,226.7
300.1
0.4
318.4
0.1
1,539.0
1,545.2
195.5
0.2
195.7
137.7
0.2
137.9
1,343.3
1,407.3
23.9
112.4
0.7
(56.9)
1,263.2
23.9
94.4
0.7
(57.3)
1,345.6
1,343.3
1,407.3
In accordance with section 304 of the Companies Act 2014, the Company’s loss for the financial year was €0.5m (2021: profit of €136.0m).
Gene M. Murtagh
Chief Executive Officer
Geoff Doherty
Chief Financial Officer
21 February 2023
OPERATING ACTIVITIES
Profit for the year
Add back non-cash and/or non-operating expenses:
Income tax expense
Depreciation
Amortisation of intangible assets
Impairment of non-current assets
Loss on divestment of subsidiary
Employee equity-settled share options
Finance income
Finance expense
(Profit)/loss 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)
Purchase of non-controlling interest
Purchase of financial asset
Divestment of subsidiary
Payment of deferred contingent consideration
Interest received
Net cash flow from investing activities
FINANCING ACTIVITIES
Drawdown of loans
Repayment of loans and borrowings
Settlement of derivative financial instrument
Payment of lease liability
Proceeds from share issues
Repurchase of shares
Dividends paid to non-controlling interest
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
2022
€m
2021
€m
616.0
570.6
8
6
11
12
3
5
5
6
32
23
13
19
30
30
30
17
24
26
29
28
30
130.6
165.1
32.4
-
16.5
18.4
(1.7)
39.4
(0.4)
-
14.6
25.7
(176.5)
7.7
(3.8)
884.0
(158.4)
(33.6)
692.0
(269.2)
18.6
(887.0)
(2.0)
(113.3)
(6.4)
(45.4)
1.7
(1,303.0)
846.0
(66.0)
-
(50.6)
-
(1.4)
(3.5)
(93.7)
630.8
19.8
(11.9)
641.4
118.4
138.4
29.5
3.1
-
17.7
-
36.3
0.4
0.4
(525.7)
(298.8)
395.2
6.9
(1.8)
490.6
(126.8)
(34.6)
329.2
(168.8)
5.2
(540.2)
-
(5.0)
-
-
0.1
(708.7)
55.1
(263.2)
18.5
(38.6)
0.1
(46.9)
(3.2)
(73.5)
(351.7)
(731.2)
42.9
1,329.7
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
649.3
641.4
142
143
Kingspan Group plc Annual Report & Financial Statements 2022Financial Statements Company Statement of Changes in Equity
For The Year Ended 31 December 2022
Notes to the Financial Statements
For The Year Ended 31 December 2022
Share
Capital
Share
Premium
€m
€m
Capital
Redemption
Reserves
€m
Treasury
Shares
Retained
Earnings
Shareholders’
Equity
€m
€m
€m
Balance at 1 January 2022
23.9
94.4
0.7
(57.3)
1,345.6
1,407.3
Shares issued
Repurchase of shares
Employee share based compensation
Dividends paid
Transactions with owners
Loss for the year
-
-
-
-
-
-
18.0
-
-
-
18.0
-
-
-
-
-
-
-
1.8
(1.4)
-
-
0.4
-
(6.6)
-
18.4
(93.7)
(81.9)
(0.5)
13.2
(1.4)
18.4
(93.7)
(63.5)
(0.5)
Balance at 31 December 2022
23.9
112.4
0.7
(56.9)
1,263.2
1,343.3
Share
Capital
Share
Premium
€m
€m
Capital
Redemption
Reserves
€m
Treasury
Shares
Retained
Earnings
Shareholders’
Equity
€m
€m
€m
Balance at 1 January 2021
23.8
95.6
0.7
(11.6)
1,265.4
1,373.9
Shares issued
Repurchase of shares
Employee share based compensation
Dividends paid
Transactions with owners
Profit for the year
0.1
-
-
-
0.1
-
(1.2)
-
-
-
(1.2)
-
-
-
-
-
-
-
1.2
(46.9)
-
-
-
-
17.7
(73.5)
0.1
(46.9)
17.7
(73.5)
(45.7)
(55.8)
(102.6)
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, technical insulation,
architectural facades, roofing and
waterproofing solutions, data and flooring
technology, daylighting and ventilation
systems and water and energy solutions.
The Group’s Principal Subsidiaries and
Substantial Undertakings are set out on
page 193 to 194.
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:
@ measurement at fair value of share
based payments at initial date
of award;
@ certain financial assets (including
derivative financial instruments) and
deferred contingent consideration
recognised and measured at fair value;
and
@ 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 190 to 192.
Changes in Accounting Policies and Disclosures
-
136.0
136.0
New and amended standards and interpretations effective during 2022
Balance at 31 December 2021
23.9
94.4
0.7
(57.3)
1,345.6
1,407.3
The following amendments to standards and interpretations are effective for the Group from 1 January 2022 and do not have a material
effect on the results or financial position of the Group:
Company Statement of Cash Flows
For The Year Ended 31 December 2022
OPERATING ACTIVITIES
(Loss)/profit for the year after tax
Net cash flow from operating activities
FINANCING ACTIVITIES
Change in receivables
Change in payables
Repurchase of shares
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
144
2022
€m
(0.5)
(0.5)
18.3
57.8
(1.4)
19.8
(93.7)
0.8
0.1
0.3
0.4
2021
€m
136.0
136.0
(82.3)
66.6
(46.9)
0.1
(73.5)
(136.0)
0.1
-
0.1
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
Annual improvements to IFRS Standards 2018-2020
Effective Date – periods
beginning on or after
1 January 2022
1 January 2022
1 January 2022
1 January 2022
145
Kingspan Group plc Annual Report & Financial Statements 2022Financial Statements 1 Statement of Accounting Policies (continued)
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:
IFRS 17 Insurance Contracts
Amendments to IAS 12 Income Taxes -
Deferred Tax related to Assets and Liabilities arising from a Single Transaction
Amendments to IAS 1 Presentation of Financial Statements
and IFRS Practice Statement 2 - Disclosure of Accounting Policies
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors
- Definition of Accounting Estimates
Amendments to IFRS 17 Insurance Contracts: Initial Application of IFRS 17 and IFRS 9
– Comparative information
Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or
Non-current Date, Classification of Liabilities as Current or Non-current – Deferral of Effective Date and
Non-current Liabilities with Covenants
Effective Date – periods
beginning on or after
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2024*
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
1 January 2024*
*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 six
operating segments: Insulated Panels,
Insulation, Water + Energy, Data + Flooring,
Light + Air and Roofing + Waterproofing.
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 in the contract then a single
purchase order is identified and the
revenue is recognised over time.
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 Consolidated
Income Statement 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.
and amount, are disclosed separately
in order for the user to obtain a proper
understanding of the financial information.
Non-trading items include gains or
losses on the disposal or acquisition
of businesses and material related
acquisition and integration costs, and
material impairments to the carrying
value of intangible assets or property,
plant and equipment. It is determined by
management that each of these items
relate to events or circumstances that are
non-recurring in nature.
the acquiree is re-measured at the
acquisition date through the Consolidated
Income Statement or the Consolidated
Statement of Other Comprehensive
Income.
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
Consolidated Income Statement as incurred.
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
Consolidated Income Statement.
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:
@ the fair value of the consideration
transferred; plus
@ the recognised amount of any non-
controlling interests in the acquiree;
plus
@ if the business combination is achieved in
stages, the fair value of the pre-existing
equity interest in the acquiree; less
@ the net recognised amount (generally
fair value) of the identifiable assets
acquired and liabilities assumed.
Non trading items
Non trading items refer to certain
items, which by virtue of their nature
If the business combination is achieved
in stages, the fair value of the acquirer’s
previously held equity interest in
Following initial recognition, goodwill is
measured at cost less any accumulated
impairment losses.
146
147
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 1 Statement of Accounting Policies (continued)
1 Statement of Accounting Policies (continued)
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 Consolidated 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
Consolidated 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.
The estimated useful lives are as follows:
Customer relationships
2 - 6 years
Trademarks & Brands
2 - 12 years
Patents
Technological know how
and order backlogs
8 years
1 - 10 years
Exchange rates of material currencies used were as follows:
Amortisation methods, useful lives and
residual values are reviewed at each
reporting date and adjusted as necessary.
Foreign currency
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
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 Consolidated Income
Statement, except when deferred in equity
as qualifying net investment hedges,
which are recognised in the Consolidated
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
2022
2021
2022
2021
0.853
1.054
1.370
1.517
24.562
4.685
391.09
5.442
0.860
1.183
1.483
1.575
25.642
4.565
358.52
6.381
0.886
1.067
1.444
1.569
24.143
4.680
400.190
5.632
0.838
1.133
1.442
1.558
24.851
4.588
368.89
6.309
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:
@ Assets and liabilities at each reporting
date are translated at the closing rate
at that reporting date.
@ 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 Consolidated
Statement of Comprehensive Income and
accumulated as a separate component of
equity, the Translation Reserve.
148
On disposal of a foreign operation, any
such cumulative retranslation differences,
previously recognised in equity, are
reclassified to the Consolidated 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.
@ Raw materials are valued at
the purchase price including
transport, handling costs and net of
trade discounts.
@ 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 Consolidated 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 provided using liability
method on 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.
The Group offsets deferred tax assets
and deferred tax liabilities only if it has a
legally enforceable right to set off 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
Consolidated Income Statement in line with
the underlying asset.
Revenue grants are recognised in the
Consolidated 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
Freehold land is stated at cost and is not depreciated.
2% - 2.5% on cost
4% to 20% on cost
10% to 20% on cost
12.5% to 33% on cost
10% to 25% on cost
149
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 1 Statement of Accounting Policies (continued)
1 Statement of Accounting Policies (continued)
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
Consolidated 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. The cost of the right of use asset
consists of the initial measurement
of the lease liability, any initial direct
costs incurred in entering into the lease,
restoration costs and any payments made
on or before the lease commencement
date, net any lease incentives received.
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 Consolidated 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.
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
Consolidated 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 expense.
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 price
that would be received to sell an asset
or paid to transfer a liability in an orderly
transaction between market participants
at the measurement date. 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 Consolidated
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 Consolidated 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
Consolidated 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 Consolidated Income Statement with
the objective of achieving full amortisation
by maturity of the hedged item.
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
Consolidated 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 Consolidated 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
Consolidated 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 Consolidated
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 Consolidated
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 Consolidated 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 Consolidated 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.
150
151
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 1 Statement of Accounting Policies (continued)
1 Statement of Accounting Policies (continued)
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 Consolidated Income Statement.
Interest income is recognised as it accrues
using the effective interest rate method.
Finance Expense
Finance expense comprises negative
interest charged on cash balances held
in certain currencies, interest payable on
borrowings calculated using the effective
interest rate method, fair value gains and
losses on hedging instruments that are
recognised in the Consolidated 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
Consolidated 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 fully 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 Consolidated 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 Consolidated 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 the
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 Consolidated
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 interest
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 Consolidated Income
Statement and within equity in the
Consolidated Statement of Financial
Position, distinguished from shareholders’
equity attributable to owners of the
parent company.
Accounting Estimates
and Judgements
In the process of applying the Group’s
accounting policies, as set out on pages
145 to 153, 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 affect
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 Group
has considered the impact of climate
change on the consolidated financial
statements, including the carrying value of
assets, the useful economic life of assets,
and provisions.
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 follows:
Impairment (Note 10)
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 10. The Group also
considered the potential impact of climate
change. This is an area of estimation
and judgement.
Guarantees & warranties (Note 21)
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 15)
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.
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
and judgement.
Valuation of inventory (Note 14)
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
and judgement.
Leases (Note 17)
Income taxes (Note 8)
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 (IBR). 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 23)
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.
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.
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 and
judgement.
Deferred Contingent Consideration
(Note 19)
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.
152
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Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 2 Segment Reporting
2 Segment Reporting (continued)
In identifying the Group’s operating segments, management based its decision on the product supplied by each segment and the fact
that each segment is managed and reported separately to the Chief Operating Decision Maker. These operating segments are monitored
and strategic decisions are made on the basis of segment operating results.
The Group established a new division, Roofing + Waterproofing, during the financial year. This encompasses the Group’s waterproof
membrane roofing solutions activities which has resulted from the acquisition of Ondura Group and Derbigum during the financial year.
There were no operations or activities in 2021 that are related to the new segment and therefore no changes have been made to the
comparatives in relation to the new division.
Operating segments
The Group has the following six operating segments:
Insulated Panels
Manufacture of insulated panels, structural framing and metal facades.
Insulation
Light + Air
Water + Energy
Data + Flooring
Manufacture of rigid insulation boards, technical insulation and engineered timber systems.
Manufacture of daylighting, smoke management, ventilation systems and service activities.
Manufacture of energy and water solutions and all related service activities.
Manufacture of data centre storage solutions and raised access floors.
Roofing + Waterproofing
Manufacture of roofing and waterproofing solutions for renovation and new construction of buildings.
Analysis by class of business
Segment revenue and disaggregation of revenue
Insulated
Panels
€m
Insulation Light + Air
€m
€m
Water +
Energy
€m
Data +
Flooring
€m
Roofing +
Waterproofing
€m
Total
2022
€m
Total
2021
€m
Trading profit – 2022
Intangible amortisation
Non trading item
548.7
(13.0)
(16.5)
165.2
(9.4)
-
Operating profit – 2022
519.2
155.8
Trading profit – 2021
Intangible amortisation
519.8
(13.7)
146.7
(8.6)
506.1
138.1
Operating profit - 2021
Net finance expense
Profit for the year before tax
Income tax expense
Net profit for the year
Segment assets
52.3
(4.6)
-
47.7
36.0
(5.8)
30.2
15.4
(0.5)
-
43.1
(0.1)
-
8.5
(4.8)
-
833.2
(32.4)
(16.5)
14.9
43.0
3.7
784.3
20.0
(1.2)
32.3
(0.2)
18.8
32.1
-
-
-
754.8
(29.5)
725.3
(36.3)
689.0
(118.4)
570.6
(37.7)
746.6
(130.6)
616.0
Insulated
Panels
€m
Insulation Light + Air
€m
€m
Water +
Energy
€m
Data +
Flooring
€m
Roofing +
Waterproofing
€m
Total
2022
€m
Total
2021
€m
Insulated
Panels
€m
Insulation Light + Air
€m
€m
Water +
Energy
€m
Data +
Flooring
€m
Roofing +
Waterproofing
€m
Total
€m
Assets – 2022
Assets – 2021
3,350.6
3,266.4
1,683.4
1,309.4
686.5
665.0
247.6
243.5
240.4
227.2
783.1
-
6,991.6
5,711.5
Total revenue – 2022
Total revenue – 2021
5,181.5
4,229.2
1,658.3
1,182.9
Disaggregation of revenue 2022
Point of Time
Over Time & Contract
Disaggregation of revenue 2021
Point of Time
Over Time & Contract
5,147.7
33.8
5,181.5
4,210.9
18.3
4,229.2
1,633.1
25.2
1,658.3
1,152.0
30.9
1,182.9
700.7
552.2
409.5
291.2
700.7
296.3
255.9
552.2
287.1
261.3
360.1
271.4
153.2
-
8,340.9
6,497.0
286.6
0.5
287.1
258.8
2.5
261.3
325.4
34.7
360.1
240.1
31.3
271.4
153.2
-
153.2
7,955.5
385.4
8,340.9
-
-
-
6,158.1
338.9
6,497.0
The disaggregation of revenue by geography is set out in more detail on page 156.
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.
Derivative financial instruments
Cash and cash equivalents
Deferred tax asset
Total assets as reported in the Consolidated Statement of Financial Position
Segment liabilities
0.4
649.3
40.1
0.3
641.4
34.7
7,681.4
6,387.9
Insulated
Panels
€m
Insulation Light + Air
€m
€m
Water +
Energy
€m
Data +
Flooring
€m
Roofing +
Waterproofing
€m
Total
2022
€m
Total
2021
€m
Liabilities – 2022
Liabilities – 2021
(1,080.7)
(1,240.7)
(320.8)
(307.1)
(248.1)
(218.1)
(95.7)
(98.4)
(77.9)
(74.4)
(163.7) (1,986.9)
-
(1,938.7)
Interest bearing loans and borrowings (current and non-current)
Derivative financial instruments (current and non-current)
Income tax liabilities (current and deferred)
Total liabilities as reported in the Consolidated Statement of Financial Position
(2,188.9) (1,397.5)
-
(92.4)
-
(110.1)
(4,285.9) (3,428.6)
154
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Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 2 Segment Reporting (continued)
Other segment information
Capital investment – 2022 *
Capital investment – 2021 *
Depreciation included in segment result – 2022
Depreciation included in segment result – 2021
Non-cash items included in segment result –
2022
Non-cash items included in segment result –
2021
Insulation
€m
136.8
94.2
Insulated
Panels
€m
178.8
164.3
(85.1)
(77.7)
12.1
32.3
(41.7)
(32.2)
(18.9)
(15.8)
(10.0)
(4.1)
(1.4)
(1.3)
(1.5)
(0.1)
(18.4)
(10.2)
(3.4)
(1.4)
(1.1)
(1.6)
-
(17.7)
* Capital investment also includes fair value of property, plant and equipment and intangible assets acquired in business combinations.
Analysis of segmental data by Geography
Income Statement Items
Revenue – 2022
Revenue – 2021
Statement of Financial Position Items
Non-current assets – 2022 *
Non-current assets – 2021 *
Other segmental information
Capital investment – 2022
Capital investment – 2021
Western &
Southern
Europe
€m
Central &
Northern
Europe
€m
Americas
Rest of
World
Total
€m
€m
€m
3,850.2
3,239.8
2,133.3
1,629.8
1,823.7
1,269.8
533.7
357.6
8,340.9
6,497.0
2,248.0
1,535.8
1,121.9
842.2
318.3
97.3
167.9
130.6
784.4
720.8
45.2
66.3
273.1
245.4
4,427.4
3,344.2
20.0
10.5
551.4
304.7
* Total non-current assets excluding deferred tax assets.
The Group is trading in over 80 countries worldwide. Foreign regions of operation are as set out above and specific countries of operation
are highlighted separately below on the basis of materiality where revenue exceeds 15% of total Group revenues. Revenues, non-current
assets and capital investment (as defined in IFRS 8) attributable to France were €1,238.1m (2021: €988.3m), €734.1m (2021: €251.2m) and
€161.1m (2021: €29.3m) respectively.
Revenues, non-current assets and capital investment (as defined in IFRS 8) attributable to the country of domicile (Ireland) were €256.5m
(2021: €206.0m), €168.0m (2021: €89.0m) and €15.5m (2021: €19.3m) respectively.
The country of domicile (Ireland) is included in Western & Southern Europe. Western & Southern Europe also includes France, Benelux,
Spain, and Britain while Central & Northern Europe includes Germany, the Nordics, Poland, Hungary, Romania, Czech Republic, the Baltics
and other South Central European countries. Americas comprises the US, Canada, Central Americas and South America. Rest of World is
predominantly Australasia and the Middle East.
There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8. The individual
entities within the Group each have a large number of customers spread across various activities, end-uses and geographies.
Light +
Air
€m
Water +
Energy
€m
Data +
Flooring
€m
Roofing +
Waterproofing
€m
Total
€m
3 Non Trading Item
Loss on disposal of subsidiary
2022
€m
16.5
2021
€m
-
8.8
8.4
(8.1)
(7.0)
6.2
5.5
(6.6)
(5.7)
208.7
-
551.4
304.7
(4.7)
-
(165.1)
(138.4)
During the year the Group’s Russian operations were divested in full which resulted in a loss on disposal of €16.5m (2021: €nil).
4 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 32)
Share based payments and awards
Actuarial losses/(gains) recognised in other comprehensive income
2022
Number
12,491
4,598
3,501
2021
Number
11,062
3,873
2,945
20,590
17,880
2022
€m
1,025.2
128.3
32.3
18.4
1,204.2
20.3
1,224.5
2021
€m
832.8
104.5
26.3
17.7
981.3
(21.5)
959.8
c) Employee share based compensation
The Group currently operates a number of equity settled share based payment schemes; a Performance Share Plan (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.
Performance Share Plan (PSP)
Outstanding at 1 January
Granted
Forfeited
Lapsed
Exercised
Outstanding at 31 December
Of which, exercisable
Number of PSP Options
2021
2022
1,713,261
347,121
(60,747)
-
(284,756)
1,714,879
1,772,438
397,929
(67,236)
-
(389,870)
1,713,261
554,517
337,352
The Group recognised a PSP expense of €18.4m (2021: €17.7m) in the Consolidated 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
€71.33 (2021: €82.55). The weighted average contractual life of share options outstanding at 31 December 2022 is 4.2 years (2021: 4.6
years). The weighted average exercise price during the period was €0.13 (2021: €0.13).
156
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Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 4 Employees (continued)
6 Profit For The Year Before Income Tax
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
2022 Awards
2021 Awards
2021 Awards
22 February 2022
23 August 2021
24 February 2021
€88.60
€0.13
36.7%
1.25%
(0.2%)
3 years
€96.16
€0.13
35.9%
0.42%
(0.8%)
3 years
€61.0
€0.13
35.6%
0.51%
(0.7%)
3 years
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 losses/(gains)
(Profit)/loss on sale of property, plant and equipment
Analysis of total auditor’s remuneration
The resulting weighted average fair value of options granted in the year was €61.55 (2021: €51.41).
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 and its Net Promotor
Score (NPS). 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, 21,438 (2021: nil) awards were granted under the DBP and 2,272 (2021: 15,718) awards were exercised. 21,438 awards
remain outstanding at 31 December 2022. A charge of €0.9m was recognised in the Consolidated Income Statement for 2022 (2021:
€1.5m).
5 Finance Expense And Finance Income
Finance expense
Lease interest
Deferred contingent consideration fair value movement
Bank loan interest
Private placement loan note interest
Other interest
Finance income
Interest earned
Net finance expense
2022
€m
4.7
-
10.1
24.5
0.1
39.4
(1.7)
37.7
2021
€m
3.7
0.1
5.4
26.8
0.3
36.3
-
36.3
€0.7m of borrowing costs were capitalised during the year (2021: €3.9m). No costs were reclassified from other comprehensive income to
profit during the year (2021: €nil).
2022
€m
339.5
60.3
165.1
32.4
-
13.0
(0.4)
Other EY
Offices
2021
€m
-
2.7
-
2.7
2021
€m
277.1
40.9
138.4
29.5
3.1
(2.0)
0.4
Total
2021
€m
1.0
2.7
0.3
4.0
2021
€m
0.7
2.7
0.6
4.0
3.1
7.1
Audit of Group
Audit of other subsidiaries
Tax compliance and advisory services
EY Ireland
2022
€m
1.4
-
-
1.4
Other EY
Offices
2022
€m
-
2.7
0.1
2.8
Total
2022
EY Ireland
2021
€m
1.4
2.7
0.1
4.2
€m
1.0
-
0.3
1.3
Included in Audit of Group are total fees of €0.4m which are due to EY in respect of the audit of the Parent Company (2021: €0.4m).
7 Directors’ Remuneration
Fees
Other emoluments
Pension costs
Performance Share Plan accounting charge
2022
€m
0.9
6.3
0.5
7.7
3.5
11.2
In accordance with the Statement of Accounting Policies (Share-Based Payment Transactions) and Note 4, the Performance Share Plan
accounting charge of €3.5m (2021: €3.1m) is the fair value expense, accounted for in accordance with IFRS 2, of equity settled share-based
payments attributable to directors for the period. The fair value of each equity settled share-based payment is determined at grant date
and is recognised as an employee expense in the Consolidated Income Statement on a straight-line basis over the vesting period.
Pursuant to the Companies Act 2014 and related guidance, the Report of the Remuneration Committee reports share-based payments
which vested in the period, and they are measured at market value rather than fair value. This explains differences between the total
Directors’ Remuneration expense of €11.2m in this Note and the total Director’s Remuneration expense of €9.3m in the Report of the
Remuneration Committee.
Aggregate gains of €4.9m (2021: €2.9m) were realised with respect to share options exercised by directors during the financial year.
Details of the number of share options exercised by each director, the market value of the shares on the date of exercise, and the exercise
price are included in the Performance Share Plan section of the Report of the Remuneration Committee.
A detailed analysis of directors’ remuneration is contained in the Report of the Remuneration Committee.
158
159
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 8
Income Tax Expense
9 Earnings Per Share
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
2022
€m
2021
€m
148.9
1.0
149.9
(18.7)
(0.6)
(19.3)
129.3
1.1
130.4
(14.7)
2.7
(12.0)
130.6
118.4
The following table is the numerical reconciliation between tax expenses and the product of accounting profit multiplied by the applicable
tax rate:
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
2022
€m
2021
€m
746.6
689.0
93.3
21.5
33.7
(1.6)
(16.3)
86.1
17.5
27.3
(1.9)
(10.6)
130.6
118.4
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. Changes in the geographical mix of future earnings will also impact the total tax charge.
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 €31.8m (2021: €23.7m) consisting mainly of tax
losses forward. €0.1m (2021: €0.3m) 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 €19.6m (2021: €16.1m) have not been
recognised for withholding tax that would be payable on unremitted earnings of €391.3m (2021: €322.2m) in certain subsidiaries.
The calculations of earnings per share are based on the following:
Profit attributable to ordinary shareholders
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
Basic earnings per share
Diluted earnings per share
2022
€m
2021
€m
598.0
554.1
Number of
shares (‘000)
2022
Number of
shares (‘000)
2021
181,487
1,451
182,938
2022
€ cent
329.5
326.9
181,348
1,565
182,913
2021
€ cent
305.6
303.0
Dilution is attributable to the weighted average number of share options outstanding at the end of the reporting period.
The number of options which are anti-dilutive and have therefore not been included in the above calculations is nil (2021: nil).
10 Goodwill
At 1 January
Additions relating to acquisitions (Note 23)
Net exchange movement
Carrying amount 31 December
At 31 December
Cost
Accumulated impairment losses
Carrying amount
2022
€m
1,908.6
578.7
8.2
2021
€m
1,478.8
380.4
49.4
2,495.5
1,908.6
2,563.2
(67.7)
1,976.3
(67.7)
2,495.5
1,908.6
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.
The Group has established a new division, Roofing + Waterproofing, during the financial year. This encompasses the Group’s waterproof
membrane roofing solution activities which has resulted from the acquisition of Ondura Group and Derbigum during the financial year.
On that basis and following an assessment of the Group’s CGUs, Roofing + Waterproofing is listed as a separate CGU below. A total of 12
(2021: 11) CGUs have been identified and these are analysed between the six business segments in the Group as set out below. Assets and
liabilities have been assigned to the CGUs on a reasonable and consistent basis.
160
161
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 Cost
At 1 January
Acquisitions (Note 23)
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 2022
2021
Cost
At 1 January
Acquisitions (Note 23)
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 2021
Other intangibles relate primarily to technological know how and order backlogs.
Customer
Relationships
€m
Patents &
Brands
€m
Other
Intangibles
€m
50.4
75.9
0.5
126.8
40.8
9.5
0.4
50.7
76.1
157.7
40.7
0.8
199.2
92.7
15.9
0.5
109.1
90.1
60.1
13.6
1.0
74.7
41.5
7.0
0.6
49.1
25.6
Customer
Relationships
€m
Patents &
Brands
€m
Other
Intangibles
€m
48.9
0.8
0.7
50.4
35.0
5.2
0.6
40.8
9.6
134.5
19.2
4.0
157.7
76.2
13.9
2.6
92.7
65.0
40.3
18.5
1.3
60.1
29.8
10.4
1.3
41.5
18.6
Total
€m
268.2
130.2
2.3
400.7
175.0
32.4
1.5
208.9
191.8
Total
€m
223.7
38.5
6.0
268.2
141.0
29.5
4.5
175.0
93.2
10 Goodwill (continued)
11 Other Intangible Assets
Cash-generating units
Goodwill (€m)
2022
Insulated Panels
Insulation
Light + Air
Water + Energy
Data + Flooring
Roofing + Waterproofing
Total
6
1
1
1
2
1
12
2022
2021
2022
996.6
620.5
296.9
107.3
92.3
381.9
2021
962.8
457.1
287.6
110.0
91.1
-
6
1
1
1
2
-
11
2,495.5
1,908.6
Significant goodwill amounts
Management has assessed that, in line with IAS 36 Impairment of Assets, there are five CGUs that are individually significant (greater than
10% of total goodwill) that require additional disclosure and are as follows:
Panels
Western Europe
Panels
Joris Ide
Insulation
Light + Air
Roofing +
Waterproofing
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Goodwill (€m)
Discount rate (%)
Excess of value-in-use over carrying
amount (€m)
340.2
9.6
313.8
7.6
342.0
9.9
344.4
8.1
620.5
9.9
457.1
7.9
296.9
9.2
287.6
7.4
381.9
10.2
2,057.9 2,810.6 1,322.2 1,862.6 1,127.3 2,590.4
697.2
786.8
192.4
n/a
n/a
n/a
The goodwill allocated to these 5 CGUs (2021: 4 CGUs) accounts for 79% (2021: 74%) of the total carrying amount of €2,495.5m (2021:
€1,908.6m). The remaining goodwill balance of €514.0m (2021: €505.7m) is allocated across the other 7 CGUs (2021: 7 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.
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 9.2% to 18.4% (2021: 7.4% to 17.7%). 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. Net cashflows incorporate the estimated capital expenditure required to meet the Group’s Planet Passionate
targets.
Sensitivity analysis
Sensitivity analysis was performed by adjusting cash flows by 20%, the discount rate by 17%, the average operating margin of each
division by over 25% and by reducing the long-term growth rate to 1.5%. 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.
162
163
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 12 Property, Plant And Equipment
13 Financial Assets
As at 31 December 2022
Cost
Accumulated depreciation and impairment charges
Net carrying amount
At 1 January 2022, net carrying amount
Acquisitions through business combinations (Note 23)
Divestment
Additions
Disposals
Reclassification
Depreciation charge for year
Impairment charge for year
Effect of movement in exchange rates
At 31 December 2022, net carrying amount
Land and
buildings
€m
Plant,
machinery
and other
equipment
€m
Motor
vehicles
Total
€m
€m
959.7
(302.5)
657.2
551.6
85.2
(3.0)
56.8
(11.1)
(0.2)
(21.8)
-
(0.3)
657.2
1,920.6
(1,162.8)
62.3
(39.4)
2,942.6
(1,504.7)
757.8
22.9
1,437.9
585.6
58.4
(2.1)
209.6
(6.5)
(0.8)
(88.9)
-
2.5
18.6
1.3
(0.2)
9.9
(0.6)
1.0
(7.2)
-
0.1
1,155.8
144.9
(5.3)
276.3
(18.2)
-
(117.9)
-
2.3
757.8
22.9
1,437.9
Land and
buildings
€m
Plant,
machinery
and other
equipment
€m
Motor
vehicles
Total
€m
€m
As at 31 December 2021
Cost
Accumulated depreciation and impairment charges
Net carrying amount
At 1 January 2021, net carrying amount
Acquisitions through business combinations (Note 23)
Additions
Disposals
Reclassification
Depreciation charge for year
Impairment charge for year
Effect of movement in exchange rates
At 31 December 2021, net carrying amount
826.0
(274.4)
551.6
468.1
52.8
36.5
(2.6)
6.0
(17.5)
(2.3)
10.6
551.6
585.6
488.2
39.2
129.3
(2.6)
(5.6)
(77.9)
(0.8)
15.8
585.6
18.6
1,155.8
16.6
2.0
6.4
(0.4)
(0.4)
(6.0)
-
0.4
972.9
94.0
172.2
(5.6)
-
(101.4)
(3.1)
26.8
18.6
1,155.8
Included in land and buildings and plant, machinery and other equipment were amounts of €14.7m and €121.4m respectively (2021: of
€6.2m and €81.2m) relating to expenditure for assets in the course of construction. These assets have not yet been depreciated.
The Group has no material investment properties and hence no property assets are held at fair value.
No property, plant or equipment have been pledged as security for liabilities entered into by the Group.
Equity investments designated as at FVOCI
At 1 January
Additions
Fair value remeasurement
Effect of movement in exchange rates
2022
€m
13.2
113.3
(32.6)
(0.3)
2021
€m
8.2
5.0
-
-
At 31 December
93.6
13.2
In August 2022, the Group acquired a strategic minority interest of 24% in Nordic Waterproofing Holding AB. Nordic Waterproofing Holding
AB is a publicly listed company on the Nasdaq Stockholm and is a market leader in waterproofing products and services for the protection
of buildings and infrastructure. The Group does not have significant influence in this entity and therefore it is accounted for as an equity
investment.
In September 2022, the Group also increased its shareholding in H2 Green Steel.
Investments in Subsidiaries
Company
At 1 January
Share options and awards
At 31 December
2022
€m
2021
€m
1,226.7
11.8
1,212.8
13.9
1,238.5
1,226.7
The share options and awards addition reflect 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.
1,609.3
(1,023.7)
53.0
(34.4)
2,488.3
(1,332.5)
14 Inventories
Raw materials and consumables
Work in progress
Finished goods
Inventory impairment allowance
At 31 December
2022
€m
920.4
49.2
400.2
(134.0)
2021
€m
916.7
29.9
291.8
(99.5)
1,235.8
1,138.9
A total of €5.1bn (2021: €3.9bn) of inventories was included in the Consolidated Income Statement as an expense. This includes a net
income statement charge of €26.3m (2021: €19.3m) 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.
164
165
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 15 Trade And Other Receivables
Amounts falling due within one year:
Trade receivables, gross
Expected credit loss allowance
Trade receivables, net
Other receivables
Prepayments
Value added tax recoverable
2022
€m
2021
€m
1,262.3
(125.5)
1,136.8
129.9
61.7
-
1,110.3
(87.4)
1,022.9
134.5
69.2
1.8
1,328.4
1,228.4
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 €125.5m in 2022 (2021: €87.4m). This is presented in more detail in Note 20.
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.
16 Trade And Other Payables
Current
Trade payables
Accruals
Deferred income and customer prepayments
Income tax & social welfare
Value added tax
2022
€m
300.1
300.1
2022
€m
661.7
526.1
117.2
48.4
15.3
2021
€m
318.4
318.4
2021
€m
726.8
519.5
99.5
44.0
-
1,368.7
1,389.8
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.
2022
€m
195.5
0.2
195.7
2021
€m
137.7
0.2
137.9
17 Leases
Right of use asset
At 1 January 2022
Additions
Arising on acquisitions (Note 23)
Remeasurement
Terminations
Depreciation charge for the year
Reclassification
Effect of movement in exchange rates
Land and
buildings
€m
119.0
21.6
22.2
18.9
(1.1)
(28.1)
-
1.8
Plant,
machinery
and other
equipment
€m
Motor
vehicles
Total
2022
€m
€m
14.7
3.8
8.0
(0.1)
(0.1)
(4.6)
-
-
21.8
15.9
6.0
0.8
(0.5)
(14.5)
-
(0.2)
155.5
41.3
36.2
19.6
(1.7)
(47.2)
-
1.6
At 31 December 2022
154.3
21.7
29.3
205.3
At 1 January 2021
Additions
Arising on acquisitions (Note 23)
Remeasurement
Terminations
Depreciation charge for the year
Reclassification
Effect of movement in exchange rates
At 31 December 2021
Lease liability
At 1 January
Additions
Arising on acquisitions (Note 23)
Remeasurement
Terminations
Payments
Interest
Effect of movement in exchange rates
At 31 December
Split as follows:
Current liability
Non-current liability
At 31 December
Land and
buildings
€m
89.6
11.8
26.5
11.2
(2.2)
(21.9)
-
4.0
119.0
Plant,
machinery
and other
equipment
€m
6.8
3.8
2.3
5.4
(0.2)
(3.6)
(0.1)
0.3
14.7
Motor vehicles
Total
2021
€m
€m
16.6
12.8
3.4
0.7
(0.5)
(11.5)
0.1
0.2
21.8
2022
€m
158.0
39.7
25.3
19.6
(1.7)
(50.6)
4.7
1.8
196.8
43.2
153.6
196.8
113.0
28.4
32.2
17.3
(2.9)
(37.0)
-
4.5
155.5
2021
€m
114.8
27.0
32.1
17.3
(3.0)
(38.6)
3.7
4.7
158.0
35.0
123.0
158.0
Expenses of €9.6m (2021: €6.8m) relating to short term leases, leases of low-value assets and variable lease payments were recognised in
the Consolidated Income Statement.
166
167
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 18 Interest Bearing Loans And Borrowings
19 Deferred Contingent Consideration
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
Current borrowings
Non-current borrowings
Total Net debt
2022
€m
42.5
40.2
2.3
85.0
2022
€m
2021
€m
66.0
11.3
0.1
77.4
2021
€m
1,279.5
814.6
9.8
1,311.1
6.7
2.3
2,103.9
1,320.1
2022
€m
649.3
(85.0)
(2,103.9)
(1,539.6)
2021
€m
641.4
(77.4)
(1,320.1)
(756.1)
The Group’s core funding is provided by six (2021: six) private placement loan notes; one (2021: one) USD private placement totalling
$200m (2021: $200m) maturing in December 2028 and five (2021: five) EUR private placements totalling €1.1bn (2021: €1.2bn) which will
mature in tranches between March 2023 and December 2032. The notes have a weighted average maturity of 5.7 years (2021: 6.4 years).
The primary bank debt facility is a €800m revolving credit facility, which was undrawn at year end, and which matures in May 2026. The
revolving credit facility was increased by €100m in December 2022 under the facility’s accordion clause.
In April 2022, the Group arranged two additional banking finance facilities with an aggregate value of €800m (€500m maturing April
2024, €300m maturing April 2025). The facilities were fully drawn at year end.
Included in cash at bank and in hand are overdrawn positions of €1,456.8m (31 December 2021: €1,439.8m). These balances form part of
a notional cash pool arrangement and are netted against cash balances of €1,480.2m (31 December 2021: €1,463.6m). The net cash pool
balance of €23.4m (31 December 2021: €23.8m) is included in the cash and cash equivalents balance above. There is a legal right of offset
between these balances and the balances are physically settled on a regular basis.
More details of the Group’s loans and borrowings are set out in Note 20.
Net debt, which is an Alternative Performance Measure, is stated net of interest rate and currency hedges which relate to hedges of debt.
Foreign currency derivative assets of €0.4m (2021: €0.3m) and foreign currency derivative liabilities of €nil (2021: €nil) which are used
for transactional hedging are not included in the definition of net debt. Lease liabilities recognised due to the implementation of IFRS 16
and deferred contingent consideration have also been excluded from the calculation of net debt which is consistent with the terms and
conditions of the covenants as set out in the Group’s external borrowing arrangements.
At 1 January
Deferred contingent consideration arising on acquisitions (Note 23)
Movement in deferred contingent consideration arising from fair value adjustment
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
2022
€m
202.3
-
-
16.0
(45.4)
14.2
187.1
174.9
12.2
187.1
15.7
171.4
187.1
2021
€m
127.6
12.1
0.5
59.5
-
2.6
202.3
41.7
160.6
202.3
24.1
178.2
202.3
Included in the amounts paid during the period was a payment of €36.6m to acquire the remaining 15% of shares in Bacacier which were
held by a non-controlling interest.
For each acquisition for which deferred contingent consideration has been provided, an annual review takes place to evaluate if the
payment conditions are likely to be met. For the purposes of the fair value assessments all of the put option liabilities are valued using
the option price formula in the shareholder’s agreement and the most recent financial projections. These are classified as unobservable
inputs. The significant unobservable inputs used in the fair value measurements and the quantitative sensitivity analysis are shown in the
table below:
Type
Valuation technique
Deferred
contingent
consideration
Put option
liabilities
Discounted cashflow method
The net present value of the expected
payment is calculated by using a risk
adjusted discount rate. The expected
payments are valued using the earn
out formula in the shareholder’s
agreement and the most recent
financial projections.
Discounted cashflow method
The net present value of the expected
payment is calculated by using a risk
adjusted discount rate. The expected
payments are valued using the option
price formula in the shareholder’s
agreement and the most recent
financial projections.
Significant
unobservable inputs
Sensitivity of the input to the fair value
g Risk adjusted
g A 10% decrease in the risk adjusted
discount rates of
between 0.0%
and 1.5%.
g EBITDA multiples of
between 2.8 and 8.1.
discount rate would result in an increase
in the fair value of the deferred contingent
consideration of €0.1m.
g A 5% increase in the assumed profitability
of the acquired entities would result in an
increase in the fair value of the deferred
contingent consideration of €0.5m.
g Risk adjusted
discount rates of
between 0.6%
and 6.1%.
g EBITDA multiples
of between 6.5
and 8.57.
g A 10% decrease in the risk adjusted discount
rate would result in an increase in the fair
value of the put option liabilities of €0.2m.
g A 5% increase in the assumed profitability of
the acquirees would result in an increase in
the fair value of the put option liabilities of
€8.3m.
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 (2021: €nil) to €15.7m (2021: €24.1m) could arise with respect to potential deferred contingent consideration
obligations and €nil (2021: €nil) to €171.4m (2021: €178.2m) with respect to potential put option obligations.
168
169
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 19 Deferred Contingent Consideration (continued)
20 Financial Risk Management and Financial Instruments (continued)
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 €157.2m (2021: €134.8m).
The put option in the shareholders’ agreement with non-controlling shareholders of PanelMET has been exercisable since 2022. The
undiscounted expected cash outflow is estimated to be €6.4m (2021: €6.1m).
The put option in the shareholders’ agreement with non-controlling shareholders of Kingspan Jindal has been exercisable since 2022. The
undiscounted expected cash outflow is estimated to be €10.1m (2021: €14.0m).
In the case of Isoeste, PanelMET and Kingspan Jindal, 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.
20 Financial Risk Management and Financial Instruments
Financial Risk Management
In the normal course of business, the Group and Company have exposure to a variety of financial risks, including foreign currency risk,
interest rate risk, liquidity risk and credit risk. The Group’s and Company’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 and Company’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 €1,322.0m (2021: €1,377.1m). The notes have a
weighted average maturity of 5.7 years (2021: 6.4 years).
The primary bank debt facility is a €800m revolving credit facility, which was undrawn at year end and which matures in May 2026. The
Revolving Credit Facility was increased by €100m in December 2022 under the facility’s accordion clause.
In April 2022, the Group arranged two additional banking finance facilities with an aggregate value of €800m (€500m maturing April
2024, €300m maturing April 2025). The facilities were fully drawn at year end.
Both the private placements and the banking facilities (revolving credit facility and two additional banking facilities) have an interest
cover test (EBITDA: Net interest must not be less than 4 times) and a net debt test (Net debt: EBITDA must not exceed 3.5 times). These
covenant tests have been met for the covenant test period to 31 December 2022.
The Group also has in place a number of uncommitted bilateral working capital facilities to serve its working capital requirements. These
facilities total €64.0m (2021: €65.2m) 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):
As at 31 December 2022
Carrying
amount
2022
€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
Cross currency interest rate swaps used for hedging:
Carrying value
- outflow
- inflow
Foreign exchange forwards used for hedging:
Carrying value assets
Carrying value liabilities
- outflow
- inflow
As at 31 December 2021
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
854.8
1,322.0
12.1
196.8
1,251.5
187.1
892.3
1,455.7
12.1
226.6
1,251.5
189.3
61.9
65.3
2.3
50.8
1,251.5
177.1
517.9
215.2
2.1
39.8
-
4.2
310.7
286.2
6.2
70.7
-
8.0
1.8
889.0
1.5
65.3
-
-
-
-
-
-
-
(0.4)
-
-
-
Carrying
amount
2021
€m
18.0
1,377.1
2.4
158.0
1,290.3
202.3
-
-
-
-
-
-
-
-
-
-
-
-
12.4
(12.8)
(0.4)
-
12.4
(12.8)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
18.8
1,533.2
2.4
181.3
1,290.3
212.2
11.6
90.0
0.1
39.0
1,290.3
41.7
1.8
65.0
0.1
32.7
-
161.3
4.5
454.9
0.3
63.4
-
9.2
0.9
923.3
1.9
46.2
-
-
Cross currency interest rate swaps used for hedging:
Carrying value
- outflow
- inflow
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
171
170
Foreign exchange forwards used for hedging:
Carrying value assets
Carrying value liabilities
- outflow
- inflow
(0.3)
-
-
-
-
-
12.4
(12.7)
-
-
12.4
(12.7)
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 20 Financial Risk Management and Financial Instruments (continued)
20 Financial Risk Management and Financial Instruments (continued)
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 deferred 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 19.
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.
As at 31 December 2022
Weighted average
effective interest rate
Total
€m
At fixed
interest rate
€m
At floating
interest rate
€m
Under
5 years
€m
Over
5 years
€m
Bank loans
Loan notes
Euro
USD
Other
2.60%
1.76%
854.8
1,322.0
2,176.8
54.8
1,322.0
1,376.8
800.0
-
800.0
853.0
469.0
1,322.0
1.8
853.0
854.8
Total At fixed interest
rate
€m
€m
At floating
interest rate
€m
1,989.3
187.5
-
2,176.8
1,189.3
187.5
-
1,376.8
800.0
-
-
800.0
Transaction risk
The weighted average maturity of debt is 4.1 years as at 31 December 2022 (2021: 6.3 years).
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 2023, it is estimated that the Group is long GBP95m (2021: long
GBP67m) and short US$9m (2021: long US$8m). At 31 December 2022 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 2022, the impact of changing currency rates versus Euro compared to the average 2021 rates was
negative €24.7m (2021: positive €123.1m). 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 €10m (2021: €8.0m) and equity by €9m (2021: €8.0m).
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.
As at 31 December 2021
Weighted average
effective interest rate
Bank loans
Loan notes
3.0%
1.7%
Total
€m
18.0
1,377.1
1,395.1
At fixed
interest rate
€m
At floating
interest rate
€m
Under
5 years
€m
Over
5 years
€m
12.5
1,377.1
1,389.6
5.5
-
5.5
17.2
505.0
522.2
0.8
872.1
872.9
Euro
USD
Other
Total
€m
At fixed interest
rate
€m
At floating
interest rate
€m
1,202.4
182.4
10.3
1,395.1
1,202.4
176.9
10.3
1,389.6
-
5.5
-
5.5
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 €7m (2021: €nil) and equity by €7m (2021: €nil) as there are floating rate borrowings in place through the two additional banking
facilities established in 2022.
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
2022
€m
649.3
1,262.3
0.4
2021
€m
641.4
1,110.3
0.3
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.
172
173
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 20 Financial Risk Management and Financial Instruments (continued)
20 Financial Risk Management and Financial Instruments (continued)
At the year end, the Group was carrying a receivables book of €1,136.8m (2021: €1,022.9m) expressed net of provision for default in
payment. This represents a net risk of 14% (2021: 16%) of sales. Of these net receivables, approximately 60% (2021: 61%) were covered by
credit insurance or other forms of collateral such as letter of credit and bank guarantees.
At 31 December, the exposure to credit risk for trade receivables by geographic region was as follows:
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:
Western & Southern Europe
Central & Northern Europe
Americas
Rest of World
At 31 December, the exposure to credit risk for trade receivables by customer type was as follows:
Insulated Panels customers
Insulation customers
Other customers
2022
€m
690.0
219.7
248.2
104.4
1,262.3
2022
€m
755.5
237.3
269.5
1,262.3
2021
€m
669.1
155.7
221.6
63.9
1,110.3
2021
€m
692.5
207.1
210.7
1,110.3
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 2022.
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%
3%
12%
30%
100%
887.3
207.4
50.1
19.3
98.2
1,262.3
Loss
allowance
€m
10.1
6.1
5.8
5.7
97.8
125.5
The following table provides the information about the exposure to credit risk and ECL’s for trade receivables as at 31 December 2021.
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
%
2%
2%
11%
23%
93%
Gross
carrying
amount
€m
783.0
190.8
55.0
17.4
64.1
1,110.3
Loss
allowance
€m
12.8
4.7
5.9
4.1
59.9
87.4
Loss rates are based on 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.
2022
€m
87.4
5.1
(7.4)
40.3
0.1
125.5
2021
€m
65.1
10.3
(6.0)
15.3
2.7
87.4
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
There are no material trade receivables written off during 2022 (2021: €nil) which are still subject to enforcement activity.
The increase in the expected credit loss allowance during 2022 reflects sales growth during the year.
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 10 relationship banks (2021: 10).
Financial instruments by category
The carrying amount of financial assets presented in the Consolidated Statement of Financial Position relate to the following measurement
categories as defined in IFRS 9:
Financial asset at
fair value through
OCI
€m
Assets at
amortised
cost
€m
Derivatives
designated as
hedging instrument
€m
Total
€m
2022
Current:
Trade receivables, net
Other receivables
Cash and cash equivalents
Derivative financial instruments
Non-current:
Financial asset
2021
Current:
Trade receivables, net
Other receivables
Cash and cash equivalents
Derivative financial instruments
Non-current:
Financial asset
-
-
-
-
-
93.6
93.6
-
-
-
-
-
13.2
13.2
1,136.8
129.9
649.3
-
1,916.0
-
-
1,022.9
136.3
641.4
-
1,800.6
-
-
-
-
-
0.4
0.4
-
-
-
-
-
0.3
0.3
-
-
1,136.8
129.9
649.3
0.4
1,916.4
93.6
93.6
1,022.9
136.3
641.4
0.3
1,800.9
13.2
13.2
It is considered that the carrying amounts of the above financial assets approximate their fair values.
174
175
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 20 Financial Risk Management and Financial Instruments (continued)
The carrying amounts of financial liabilities presented in the Consolidated Statement of Financial Position relate to the following
measurement categories as defined in IFRS 9:
20 Financial Risk Management and Financial Instruments (continued)
The principal movements in Level 3 liabilities in 2022 are set out in the table below:
2022
Current:
Borrowings
Lease liabilities
Trade payables
Accruals
Deferred contingent consideration
Non-current:
Borrowings
Lease liabilities
Deferred contingent consideration
2021
Current:
Borrowings
Lease liabilities
Trade payables
Accruals
Deferred contingent consideration
Non-current:
Borrowings
Lease liabilities
Deferred contingent consideration
Financial
liabilities at fair
value through
profit or loss
€m
Financial
liabilities
measured at
amortised cost
€m
Financial
liabilities at
fair value
though OCI
€m
Derivatives
designated
as hedging
instrument
€m
Total
€m
-
-
-
-
3.5
3.5
-
-
12.2
12.2
-
-
-
-
8.6
8.6
-
-
15.5
15.5
85.0
43.2
661.7
526.1
-
1,316.0
2,103.9
153.6
-
2,257.5
77.4
35.0
726.8
519.5
-
1,358.7
1,320.1
123.0
-
1,443.1
-
-
-
-
171.4
171.4
-
-
-
-
-
-
-
-
33.1
33.1
-
-
145.1
145.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
85.0
43.2
661.7
526.1
174.9
1,490.9
2,103.9
153.6
12.2
2,269.7
77.4
35.0
726.8
519.5
41.7
1,400.4
1,320.1
123.0
160.6
1,603.7
Deferred contingent consideration
Put option liabilities
Balance
1 Jan
2022
€m
24.1
178.2
202.3
Settlement
Fair value
movement
Arising on
acquisition
Translation
adjustment
€m
(8.8)
(36.6)
(45.4)
€m
-
16.0
16.0
€m
-
-
-
€m
0.4
13.8
14.2
The principal movements in Level 3 liabilities in 2021 are set out in the table below:
Deferred contingent consideration
Put option liabilities
Balance
1 Jan
2021
€m
10.3
117.3
127.6
Settlement
Fair value
movement
Arising on
acquisition
Translation
adjustment
€m
-
-
-
€m
0.5
59.5
60.0
€m
12.1
-
12.1
€m
1.2
1.4
2.6
Balance
31 Dec
2022
€m
15.7
171.4
187.1
Balance
31 Dec
2021
€m
24.1
178.2
202.3
During the year ended 31 December 2022, 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. The fair value of the level 2 financial liabilities below has been determined through the use of external
market data available publicly.
As at 31 December 2022
As at 31 December 2021
Private placement loan notes
1,322.0
1,251.2
2
1,377.1
1,498.2
Carrying
amount
€m
Fair Value
Level
€m
€m
Carrying
amount
€m
€m
Fair Value
Level
€m
2
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 19.
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
Equity investments
Foreign exchange contracts for hedging
Financial Liabilities
Deferred contingent consideration
Put option liabilities
Foreign exchange contracts for hedging
176
As at 31 December 2022
Level 3
€m
Level 2
€m
Level 1
€m
Level 1
€m
As at 31 December 2021
Level 3
€m
Level 2
€m
76.0
-
17.6
0.4
-
-
-
-
-
-
-
-
15.7
171.4
-
-
-
-
-
-
13.2
0.3
-
-
-
-
-
24.1
178.2
-
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
2022
€m
1,539.6
3,395.5
2021
€m
756.1
2,959.3
4,935.1
3,715.4
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 material changes to the Group’s approach to capital management during the year.
177
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 21 Provisions For Liabilities
Guarantees and warranties
At 1 January
Arising on acquisitions (Note 23)
Provided during year
Claims paid
Provisions released
Effect of movement in exchange rates
At 31 December
Current liability
Non-current liability
2022
€m
142.7
31.7
84.6
(48.1)
(28.6)
(0.8)
181.5
74.0
107.5
181.5
2021
€m
119.0
12.5
58.8
(34.7)
(17.2)
4.3
142.7
67.8
74.9
142.7
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, litigation or enforcement actions. 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 or enforcement action 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.
22 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
2022
€m
40.1
(55.2)
(15.1)
2021
€m
34.7
(34.7)
-
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.
22 Deferred Tax Assets And Liabilities (continued)
The movement in the net deferred tax position for 2022 is as follows:
Balance
1 Jan
2022
Recognised in
profit
or loss
Recognised in
equity
€m
(51.7)
(29.8)
73.3
0.7
7.5
-
€m
(3.4)
6.4
7.8
0.1
8.4
19.3
€m
-
-
(11.4)
-
-
(11.4)
Recognised
in other
comprehensive
income
€m
-
-
-
4.9
-
4.9
Translation
adjustment
Arising on
acquisitions
Balance
31 Dec
2022
€m
(0.4)
(0.4)
0.3
0.2
(0.3)
(0.6)
€m
€m
2.1
(37.1)
7.5
0.5
(0.3)
(27.3)
(53.4)
(60.9)
77.5
6.4
15.3
(15.1)
Property, plant and equipment
Intangibles
Other temporary differences
Pension obligations
Unused tax losses
The movement in the net deferred tax position for 2021 is as follows:
Balance
1 Jan
2021
Recognised in
profit
or loss
Recognised in
equity
€m
(49.0)
(25.8)
55.1
6.1
4.2
(9.4)
€m
(1.5)
3.9
7.2
(0.6)
3.0
12.0
€m
-
-
9.7
-
-
9.7
Recognised
in other
comprehensive
income
€m
-
-
-
(5.5)
-
(5.5)
Translation
adjustment
Arising on
acquisitions
Balance
31 Dec
2021
€m
(1.1)
(0.8)
(2.5)
0.4
(0.2)
(4.2)
€m
€m
(0.1)
(7.1)
3.8
0.3
0.5
(2.6)
(51.7)
(29.8)
73.3
0.7
7.5
-
Property, plant and equipment
Intangibles
Other temporary differences
Pension obligations
Unused tax losses
23 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 2022, the Group acquired 100% of the share capital of Troldtekt, a Danish natural acoustic insulation producer. The total
consideration, including net debt acquired amounted to €220.4m.
In September 2022, the Group acquired 100% of the share capital of Ondura Group, a French headquartered global provider of roofing
membranes and associated roofing solutions, for a total consideration, including net debt acquired of €515.6m.
The Group also made a number of smaller acquisitions during the year for a combined cash consideration of €151.0m:
@ The Roofing + Waterproofing division acquired 100% of the share capital of Derbigum, a Belgian producer of waterproofing
membranes for a total consideration, including net debt acquired of €95.0m in June 2022;
@ The Insulated Panels division acquired 100% of the share capital of THU Perfil in February 2022 and 100% of the share capital of
Invespanel in Spain in September 2022;
@ The Insulation division acquired the assets of Calostat in the UK in September 2022.
The table below reflects the provisional 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.
178
179
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 23 Business Combinations (continued)
23 Business Combinations (continued)
Non-current assets
Intangible assets
Property, plant and equipment
Right of use 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
Goodwill
Total consideration
Satisfied by:
Cash (net of cash acquired)
Deferred contingent consideration
Ondura
€m
Troldtekt
€m
Other*
€m
77.9
86.3
27.0
0.5
86.0
75.1
(96.2)
(21.9)
(4.2)
(2.8)
(12.1)
(21.7)
193.9
321.7
515.6
515.6
-
515.6
30.1
31.6
1.8
-
13.2
16.6
(14.7)
(0.3)
(0.8)
-
(1.0)
(5.2)
71.3
149.1
220.4
220.4
-
220.4
22.2
27.0
7.4
1.2
21.5
35.6
(52.9)
(9.5)
(1.5)
(0.1)
(5.7)
(2.1)
43.1
107.9
151.0
151.0
-
151.0
Total
€m
130.2
144.9
36.2
1.7
120.7
127.3
(163.8)
(31.7)
(6.5)
(2.9)
(18.8)
(29.0)
308.3
578.7
887.0
887.0
-
887.0
*Included in Other are certain immaterial remeasurements of prior year accounting estimates as a result of the finalisation of the
assignment of fair values to identifiable net assets.
The acquired goodwill is attributable principally to the profit generating potential of the businesses, together with cross-selling
opportunities and other synergies expected to be achieved from integrating the acquired businesses into the Group’s existing business.
In the post-acquisition period to 31 December 2022, the businesses acquired during the current year contributed revenue of €252.0m and
trading profit of €21.6m to the Group’s results.
The full year revenue and trading profit had the acquisitions taken place at the start of the year, would have been €8,762.6m and
€875.7m respectively.
The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to €132.4m. The fair value of
these receivables is €127.3m, all of which is recoverable, and is inclusive of an aggregate impairment provision of €5.1m.
There is €Nil of goodwill (2021: €34.5m) which is expected to be deductible for tax purposes.
The Group incurred acquisition related costs of €8.3m (2021: €9.4m) 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 due to the relative size
of the acquisitions and the timing of the transactions. Any amendments to these fair values within the twelve-month timeframe from the
date of acquisition will be disclosable in the 2023 Annual Report, as stipulated by IFRS 3.
Prior year acquisitions
In February 2021, the Group acquired 100% of the share capital of TeraSteel a Romanian based manufacturer of insulated panels. The total
consideration, including net debt acquired amounted to €81.6m.
In June 2021, the Group acquired 100% of the share capital of Logstor a leading global supplier of technical insulation solutions. The total
consideration, including net debt acquired amounted to €244.5m.
The Group also made a number of smaller acquisitions during the year for a combined cash consideration of €214.1m :
@ The Insulated Panels division acquired 51% of Bromyros in Uruguay, the remaining 50% of Dome Solar in France, Solarsit in France and
the assets of Krohn in Russia;
@ The Insulation division acquired Thermakraft in Australasia, Hectar in the Netherlands, the assets of Dyplast Products, Diversifoam
Products and Thermal Visions in North America;
@ The Light + Air division acquired Skydome in Western Europe and Major Industries and Solatube International in North America;
@ The Water + Energy division acquired BAGA in Sweden, Heritage Tanks in Australia and the assets of Enviro Water Tanks in Australia.
The fair values as recognised at 31 December 2021 of the acquired assets and liabilities at acquisition are set out below:
Non-current assets
Intangible assets
Property, plant and equipment
Right of use 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 interest arising on acquisition** (Note 29)
Goodwill
Joint Venture becoming subsidiary
Total consideration
Satisfied by:
Cash (net of cash acquired)
Deferred contingent consideration
Logstor
€m
TeraSteel
€m
Other*
€m
20.4
36.0
10.8
2.6
40.0
53.6
(68.7)
(5.3)
(3.9)
(1.3)
(6.9)
(4.2)
73.1
-
171.4
-
244.5
244.5
-
244.5
6.4
22.9
0.3
0.3
24.3
9.4
(19.5)
(2.2)
-
-
(0.3)
(1.1)
40.5
-
41.1
-
81.6
81.6
-
81.6
11.7
35.1
21.1
2.2
27.8
32.7
(37.1)
(5.0)
(2.5)
(1.7)
(18.5)
(2.4)
63.4
(3.5)
167.9
(1.6)
226.2
214.1
12.1
226.2
Total
€m
38.5
94.0
32.2
5.1
92.1
95.7
(125.3)
(12.5)
(6.4)
(3.0)
(25.7)
(7.7)
177.0
(3.5)
380.4
(1.6)
552.3
540.2
12.1
552.3
In the post-acquisition period to 31 December 2021, the businesses acquired during the current year contributed revenue of €478.8m and
trading profit of €64.1m 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 €6,755.7m and
€778.1m respectively.
The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to €106.0m. The fair value of
these receivables is €95.7m, all of which is recoverable, and is inclusive of an aggregate impairment provision of €10.3m.
There is €34.5m of goodwill (2020: €nil) which is expected to be deductible for tax purposes.
The Group incurred acquisition related costs of €9.4m (2020: €5.4m) relating to external legal fees and due diligence costs. These costs
have been included in operating costs in the Consolidated Income Statement.
180
181
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 24 Share Capital
26 Treasury Shares (continued)
Authorised
250,000,000 Ordinary shares of €0.13 each
(2021: 250,000,000 Ordinary shares of €0.13 each)
Issued and fully paid
Ordinary shares of €0.13 each
Opening balance – 183,591,682 (2021: 183,402,238) shares
Shares allotted– nil (2021: 189,444) shares
Closing balance – 183,591,682 (2021: 183,591,682) shares
There were no adjustments to the authorised share capital during the year (2021: nil).
Details of share options exercised are set out in Note 4 to the financial statements.
25 Share Premium
At 1 January
Re-issued treasury shares
At 31 December
2022
€m
2021
€m
32.5
32.5
23.9
-
23.9
2022
€m
94.4
18.0
112.4
23.8
0.1
23.9
2021
€m
95.6
(1.2)
94.4
During the year, the Company issued 287,028 (2021: 216,144) shares in satisfaction of obligations falling under share schemes.
The Company repurchased 15,361 shares during the year (2021: 600,000).
The Company holds 1.1% (2021: 1.2%) of the issued ordinary share capital as treasury shares.
27 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 loss for the financial
year was €0.5m (2021: profit of €136.0m).
28 Dividends
Equity dividends on ordinary shares:
2022 Interim dividend 25.6 cent (2021: 19.9 cent) per share
2021 Final dividend 26.0 cent (2020: 20.6 cent) per share
Proposed for approval at AGM
Final dividend of 23.8 cent (2021: 26.0 cent) per share
2022
€m
46.5
47.2
93.7
43.3
2021
€m
36.1
37.4
73.5
47.2
The proposed final dividend for 2022 is subject to approval by the shareholders at the Annual General Meeting and has not been included
as a liability in the Consolidated Statement of Financial Position of the Group as at 31 December 2022 in accordance with IAS 10 Events
after the Reporting Period. The proposed final dividend for the year ended 31 December 2022 will be payable on 9 May 2023 to shareholders
on the Register of Members at close of business on 14 April 2023.
During the year, the Company issued treasury shares in satisfaction of obligations falling under share schemes. The treasury shares were
issued for consideration exceeding their carrying value and the difference has been accounted for as share premium.
29 Non-Controlling Interest
In prior years, treasury shares were re-issued for consideration less than their carrying value and the difference was accounted for as an
adjustment to share premium.
26 Treasury Shares
Consideration paid
At 1 January
Repurchase of shares
Shares issued
At 31 December
Nominal value
At 1 January
Repurchase of shares
Shares issued
At 31 December
182
No. of
shares
Consideration
paid
€
2022
Total
€m
No. of
shares
Consideration
paid
€
2,254,140
15,361
(287,028)
1,982,473
25.42
94.38
6.64
28.74
57.3
1.4
(1.8)
56.9
1,870,284
600,000
(216,144)
2,254,140
6.21
78.16
5.66
25.42
No. of
shares
Nominal
value
€
2022
Total
€
No. of
shares
Nominal
value
€
2021
Total
€m
11.6
46.9
(1.2)
57.3
2021
Total
€
2,254,140
15,361
(287,028)
1,982,473
0.13
0.13
0.13
0.13
293,037
1,997
(37,313)
257,721
1,870,284
600,000
(216,144)
2,254,140
0.13
0.13
0.13
0.13
243,136
78,000
(28,099)
293,037
At 1 January
Profit for the year attributable to non-controlling interest
Arising on acquisition (Note 23)
Purchase of non-controlling interest
Dividends paid to minorities
Share of foreign operations’ translation movement
At 31 December
2022
€m
67.2
18.0
-
(9.9)
(3.5)
4.0
75.8
2021
€m
48.7
16.5
3.5
-
(3.2)
1.7
67.2
During the year the Group acquired the remaining 15% of shares in Bacacier which were held by a non-controlling interest for €36.6m.
183
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 30 Reconciliation Of Net Cash Flow To Movement In Net Debt
31 Guarantees And Other Financial Commitments (continued)
Movement in cash and bank overdrafts
Drawdown of loans
Repayment of loans and borrowings
Settlement of derivative financial instrument
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
2022
€m
19.8
(846.0)
66.0
-
(760.2)
(10.9)
(12.4)
-
(783.5)
2021
€m
(731.2)
(55.1)
263.2
(18.5)
(541.6)
(19.7)
42.7
(1.3)
(519.9)
(756.1)
(236.2)
(1,539.6)
(756.1)
Lease liabilities of €196.8m (2021: €158.0m) are excluded from net debt.
A reconciliation of liabilities arising from financing activities in 2022 is set out below.
Bank loans and borrowings
Loan notes
Derivatives
Balance
1 Jan 2022
€m
Repayments Drawdowns /
Receipts
€m
€m
Non cash
movements
€m
Balance
31 Dec 2022
€m
20.4
1,377.1
-
1,397.5
-
(66.0)
-
(66.0)
846.0
-
-
846.0
0.5
10.9
-
11.4
866.9
1,322.0
-
2,188.9
A reconciliation of liabilities arising from financing activities in 2021 is set out below.
Bank loans and borrowings
Loan notes
Derivatives
Balance
1 Jan 2021
€m
57.6
1,528.1
(19.8)
1,565.9
Repayments
€m
(50.0)
(213.2)
18.5
(244.7)
Drawdowns /
Receipts
€m
Non cash
movements
€m
Balance
31 Dec 2021
€m
12.6
42.5
-
55.1
0.2
19.7
1.3
21.2
20.4
1,377.1
-
1,397.5
31 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$200m (2021: US$200m) and €1,134.5m (2021: €1,200.5m), an undrawn bank facility of €800m (2021: €700m) and
two additional banking finance facilities with an aggregated value of €800m drawn in 2022.
Kingspan Group plc has guaranteed the relevant debts of certain of its Dutch and German subsidiaries in accordance with Article 403,
Book 2 of the Dutch Civil Code and Section 264 of the German Commercial Code (HGB) respectively. The respective entities have
therefore availed of the exemption from preparing and filing audited financial statements and management reports in the Netherlands
and Germany.
(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
32 Pension Obligations
2022
€m
96.9
97.9
194.8
2021
€m
121.3
98.4
219.7
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 €32.3m (2021: €26.3m) represents employer contributions payable to these schemes in
accordance with the rules of each plan. An amount of €5.3m (2021: €4.4m) 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 €1.8m (2021: €nil) and the expected contributions for 2023 are €nil (2021:
€nil). On 6 December 2022, the Group executed a €150.8m bulk insurance annuity insurance policy ‘buy in’ for the Colt Life Assurance
and Retirement Scheme (‘CLARS’). This buy-in ensures that an insurance asset fully matches the remaining pension liability. Therefore
for this particular scheme the Group is no longer exposed to the pension risks as outlined below. As the scheme was in an accounting
surplus position, the impact of this transaction was to record a re-measurement loss of €28.1m within the consolidated statement of
comprehensive income. There was no impact on profit before tax from this transaction.
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. €1.7m of pension entitlements have been paid to retired former employees during the year (2021: €1.6m).
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 2022.
In general, actuarial valuations are not available for public inspection; however, the results of valuations are advised to members of the
various schemes.
The UK and European defined benefit schemes expose the Group to the following risks:
Interest Rate Risk: The discount rates employed in determining the present value of the Group’s defined benefit liabilities are set with
reference to corporate bond yields. A decrease in corporate bond yields would increase the schemes’ defined benefit obligation. Such
movements in bond yields would result in volatility in the Group’s Consolidated Financial Statements.
Inflation Risk: A significant proportion of the Group’s defined benefit obligation is linked to inflation therefore higher inflation will result
in a higher defined benefit obligation (subject to the appropriate caps in place to protect the schemes against extreme inflation). This is
however expected to be offset to an extent by an increase in the value of the Group’s holdings in liability driven investments (LDI)-type
plan assets.
Longevity Risk: The present value of the Group’s defined benefit obligation is calculated with reference to the mortality of scheme
members, both during and after employment. If scheme members live longer than expected, the scheme’s benefits will need to be paid for
longer, increasing the scheme’s defined benefit obligation.
The directors note that the Group’s UK defined benefit schemes are also exposed to the following significant risk:
Asset Volatility: The Group’s defined benefit obligations are calculated using discount rates set with reference to corporate bond yields.
The schemes’ assets comprise of equities, bonds, property and LDI, all of which may fluctuate significantly in value. These assets are
expected to outperform corporate bonds in the long term, but provide volatility and risk in the short term.
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.
184
185
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 32 Pension Obligations (continued)
32 Pension Obligations (continued)
Funded Schemes Un-funded Schemes
Funded Schemes Un-funded Schemes
2022
2021
Defined benefit pension income/expense recognised in the Consolidated Income Statement
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
22.0
24.5
23.4
26.0
21.1
25.4
23.3
28.1
Rate of increase in salaries
Rate of increase of pensions in payment
Rate of increase for deferred pensioners
Discount rate
Inflation rate
-
0% - 3.03%
2.30%
4.85%
3.10%
2.50% - 3.50%
1.50% - 2.60%
-
0.40% - 3.99%
1.75% - 3.10%
22.0
24.1
23.5
25.7
-
3.08%
2.70%
1.90%
3.30%
21.1
25.4
23.3
28.1
1% - 2.75%
0%-3.15%
-
(0.15%) - 1.85%
1.35% - 3.25%
It is noted that the ‘Funded Schemes’ relate to the wholly and partly funded UK schemes and 3 partially funded immaterial European
schemes. The ‘Un-funded Schemes’ covers all other European DBOs.
The table below gives an indication of the impact of a change in the principal actuarial assumptions on the funded defined benefit
scheme liabilities.
Assumption
Change in assumption
Impact on plan liabilities
2022
2021
Funded Schemes
Discount rate
Increase/decrease by
0.5%
Decrease by 6% /
increase by 7%
Decrease by 10% / increase
by 12%
Un-Funded Schemes
Discount rate
Increase by 0.25%
Decrease by 3%
Decrease by 4%
Funded Schemes
Inflation rate
Increase/decrease by
0.5%
Increase by 4% /
decrease by 4%
Increase by 5% / decrease
by 5%
Un-Funded Schemes
Inflation rate
Increase by 0.25%
Increase by 3%
Increase by 3%
Funded Schemes
Mortality assumptions
Increase by 1 year
Increase by 3%
Increase by 4%
Un-Funded Schemes
Mortality assumptions
Increase by 1 year
Increase by 4% -6%
Increase by 4% - 6%
The sensitivity analyses above have been determined on a method that extrapolates the impact on the defined benefit obligation as
a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity analyses are based on a
change in a significant assumption, keeping all other assumptions constant. The sensitivity analyses may not be representative of an
actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.
Movements in net liability recognised in the Consolidated Statement of Financial Position
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 5)
Analysis of amount included in other comprehensive income
Actual return less interest on scheme assets
Experience (loss)/gain arising on scheme liabilities
Actuarial (loss)/gain arising from changes in demographic assumptions
Actuarial 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 €37.2m (2021: €16.9m).
In 2022, the actual return on plan assets was a loss of €118.8m (2021: gain of €1.6m).
Asset Classes and Expected Rate of Return
The assets in the scheme at each year end were as follows:
2022
€m
(1.0)
(0.3)
0.2
(1.1)
(5.0)
4.9
(0.1)
2022
€m
(119.3)
(4.1)
(0.7)
103.8
(20.3)
2021
€m
(0.7)
(1.4)
0.1
(2.0)
(4.0)
3.8
(0.2)
2021
€m
4.9
4.2
1.7
10.7
21.5
Asset Classes as % of Total Scheme Assets
Equities
Bonds (Corporates)
Cash
Property
Liability Driven Investment
Insurance Policy net of Insurance Premium due
2022
2021
10.3%
0.2%
0.6%
5.8%
19.2%
63.9%
100%
49.5%
7.1%
4.0%
3.4%
36.0%
-
100%
2021
€m
2022
€m
Funded
Schemes
Un-funded
Schemes
Funded
Schemes
Un-funded
Schemes
Net liability in schemes at 1 January
Acquired
Employer contributions
Recognised in consolidated income statement
Recognised in consolidated statement of comprehensive income
Foreign exchange movement
Net liability in schemes at 31 December
186
2022
€m
(28.0)
(2.9)
3.8
(1.2)
(20.3)
(0.9)
(49.5)
2021
€m
(45.9)
(3.0)
1.8
(2.2)
21.5
(0.2)
(28.0)
Equities
Bonds (Corporates)
Cash
Property
Liability Driven Investment
Insurance Policy net of Insurance Premium due
Fair market value of plan assets
Present value of obligation
Deficit
15.0
0.7
0.9
8.2
27.8
93.0
145.6
(159.1)
(13.5)
-
-
-
-
-
-
-
(36.0)
(36.0)
140.1
20.5
11.2
9.5
101.5
-
282.8
(266.2)
16.6
-
-
-
-
-
-
-
(44.6)
(44.6)
187
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022 32 Pension Obligations (continued)
The net pension liability is analysed as follows:
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 (Note 23)
Current service cost
Other expenses
Interest cost
Benefits paid
Settlement
Actuarial gains
Effect of movement in exchange rates
2022
€m
3.3
(52.8)
(49.5)
(6.4)
2022
€m
310.8
2.9
1.0
(0.2)
5.0
(10.9)
(0.3)
(99.0)
(14.2)
2021
€m
17.9
(45.9)
(28.0)
(0.7)
2021
€m
311.2
3.0
0.7
0.8
4.0
(11.9)
(0.1)
(16.6)
19.7
33 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 €nil dividends from subsidiaries (2021: €120.0m), and there was a net decrease in the intercompany balance of
€76.1m (2021: €19.5m increase).
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 (executive and non-executive 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 7. Dividends of €1.0m were paid to other key
management personnel (2021: €0.7m). €Nil(2021: €nil) was outstanding at year end.
(iii) During the financial year, there were no disclosable goods or services purchased from directors. During 2021, the Group purchased
legal services in the sum of €160,373 from McCann FitzGerald, a firm in which Mr John Cronin was a partner. John Cronin retired as a
partner of McCann FitzGerald in March 2021.
34 Events Subsequent To Year End
There have been no material events subsequent to 31 December 2022 which would require adjustment to, or disclosure in this report.
35 Approval Of Financial Statements
The financial statements were approved by the directors on 21 February 2023.
At 31 December
195.1
310.8
Changes in present value of scheme assets during year
At 1 January
Interest on scheme assets
Employer contributions
Benefits paid
Other expenses
Actual return less interest
Effect of movement in exchange rates
2022
€m
282.8
4.9
2.0
(9.1)
(0.6)
(119.3)
(15.1)
2021
€m
265.3
3.8
0.1
(10.2)
(0.6)
4.9
19.5
At 31 December
145.6
282.8
The weighted average duration of the defined benefit obligation at 31 December 2022 was 13.8 years (2021: 16.7 years).
188
189
Kingspan Group plc Annual Report & Financial Statements 2022Financial StatementsNotes to the Financial Statements (continued)For The Year Ended 31 December 2022Notes to the Financial Statements (continued)For The Year Ended 31 December 2022
Alternative Performance Measures
Alternative Performance Measures (continued)
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 Alternative Performance Measures (APMs) used by the Group are defined as follows:
Trading profit
This comprises the operating profit as reported in the Consolidated 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.
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 18
2022
€m
3,395.5
1,539.6
4,935.1
2021
€m
2,959.3
756.1
3,715.4
Financial Statements Reference
2022
€m
2021
€m
Operating profit before interest and tax
Consolidated Income Statement
784.3
725.3
Return on capital employed
15.9%
19.5%
Trading profit
Consolidated Income Statement
833.2
754.8
Trading margin
Measures the trading profit as a percentage of revenue.
Trading profit
Revenue
Trading margin
Financial Statements Reference
Consolidated Income Statement
Consolidated Income Statement
2022
€m
833.2
8,340.9
10.0%
2021
€m
754.8
6,497.0
11.6%
EBITDA
The Group has updated its definition of EBITDA as earnings before finance expenses, income taxes, depreciation, amortisation and non
trading items. In the prior year the Group did not record a non trading item and therefore it was not reflected in the definition of EBITDA.
Trading profit
Depreciation
EBITDA
Financial Statements Reference
Consolidated Income Statement
Consolidated Statement of Cash Flows
2022
€m
833.2
165.1
998.3
2021
€m
754.8
138.4
893.2
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.
Banking Covenants
The Net debt:EBITDA and the EBITDA:Net Interest ratios disclosed in this report are calculated in accordance with the terms and conditions
of the covenants as set out in the Group’s external borrowing arrangements. Therefore, EBITDA and Net Interest are adjusted to exclude
the impact of IFRS 16 Leases for these calculations.
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
Consolidated 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 2021 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 18
Financial Statements Reference
2022
€m
2021
€m
1,539.6
756.1
Net debt: EBITDA
Net debt as a ratio to 12 month EBITDA. For the purpose of this calculation, EBITDA is solely adjusted for the impact of IFRS 16 Leases.
Financial Statements Reference
EBITDA
Lease liability payments
Consolidated Statement of Cash Flows
EBITDA (adjusted for the impact of IFRS 16)
2022
€m
998.3
(50.6)
2021
€m
893.2
(38.6)
947.7
854.6
2022
€m
1,539.6
947.7
1.62
2021
€m
756.1
854.6
0.88
Financial Statements Reference
2022
€m
2021
€m
Financial Statements Reference
Net cash flow from operating activities
Consolidated Statement of Cash Flows
692.0
329.2
Additions to property, plant and equipment
Consolidated Statement of Cash Flows
(269.2)
(168.8)
Proceeds from disposals of property,
plant and equipment
Interest received
Lease payments
Free cash flow
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
18.6
1.7
(50.6)
5.2
0.1
(38.6)
392.5
127.1
Net debt
EBITDA (adjusted for the impact of IFRS 16)
Note 18
Net debt : EBITDA times
190
191
Kingspan Group plc Annual Report & Financial Statements 2022Financial Statements Alternative Performance Measures (continued)
Principal Subsidiaries and Substantial Undertakings
Net interest
The Group defines net interest as the net total of finance expense and finance income as presented in the Consolidated 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 5
Note 5
Note 5
2022
€m
39.4
(1.7)
(4.7)
33.0
2021
€m
36.3
-
(3.7)
32.6
Working capital
Working capital represents the net total of inventories, trade and other receivables and trade and other payables, net of transactional
foreign currency derivatives excluded from net debt.
Financial Statements Reference
Trade and other receivables
Inventories
Trade and other payables
Foreign currency derivatives excluded from net
debt
Note 15
Note 14
Note 16
Note 20
Working capital
2022
€m
2021
€m
1,328.4
1,235.8
(1,368.7)
1,228.4
1,138.9
(1,389.8)
0.4
0.3
1,195.9
977.8
Working capital ratio
Measures working capital as a percentage of October to December turnover annualised. The annualisation of turnover reflects the current
profile of the Group rather than a partial reflection of any acquisitions completed during the period.
Financial Statements Reference
Working capital
October - December turnover annualised
Working capital ratio
2022
€m
1,195.9
8,272.2
2021
€m
977.8
7,070.0
14.5%
13.8%
Total shareholder return (TSR)
Total shareholder return (TSR) 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.
Total Shareholder Return
Page 47
Financial Statements Reference
2022
%
-51.5
2021
%
83.9
%
Shareholding
Nature of
Business
%
Shareholding
Nature of
Business
AUSTRALIA
GERMANY
Kingspan Insulated Panels Pty Limited
100
Manufacturing
Alwitra GmbH
Kingspan Insulation Pty Limited
100
Manufacturing
Colt International GmbH
Kingspan Water & Energy Pty Limited
85
Manufacturing
Essmann Gebäudetechnik GmbH
100
100
100
100
100
100
100
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Sales & Marketing
Manufacturing
Joris Ide Deutschland GmbH
Kingspan Access Floors GmbH
Kingspan GmbH
Kingspan Insulation GmbH & Co. KG
Kingspan Services Deutschland GmbH 100
Sales & Marketing
LOGSTOR Deutschland GmbH
STG Beikirch GmbH
100
100
Sales & Marketing
Manufacturing
HUNGARY
Kingspan Kft
INDIA
100
Manufacturing
Kingspan Jindal Private Limited
51
Manufacturing
INDONESIA
100
100
100
51
51
100
100
Manufacturing
Manufacturing
Manufacturing
Sales & Marketing
Manufacturing
Manufacturing
Manufacturing
100
Manufacturing
PT Onduline Indonesia
100
Sales & Marketing
100
100
Manufacturing
Manufacturing
IRELAND
Kingspan Holdings (Irl) Limited
Kingspan Holdings (North
America) Limited
100
100
Management &
Procurement
Holding Company
100
Sales & Marketing
Kingspan Holdings (Overseas) Limited
100
Holding Company
Kingspan Holdings Limited
Kingspan Insulation Limited
Kingspan International Finance
Unlimited Company
Kingspan Light & Air Limited
Kingspan Limited
Kingspan Nominees Limited
Kingspan Securities Limited
100
100
100
100
100
100
100
Holding Company
Manufacturing
Finance Company
Sales & Marketing
Manufacturing
Holding Company
Finance Company
Manufacturing
Sales & Marketing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
MALAYSIA
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Onduline Building Materials
(M) SDN BHD
100
Manufacturing
MEXICO
Kingspan Insulated Panels SA DE CV
100
Manufacturing
100
100
100
100
100
100
100
100
100
100
100
BELGIUM
Imperbel NV
Joris Ide NV
Kingspan Insulation NV
BRAZIL
Kingspan Isoeste Trade Importadora
E Exportadora Limitada
Kingspan-Isoeste Construtivos
Isotérmicos S/A
CANADA
Kingspan Insulated Panels Limited
Vicwest Inc.
CZECH REPUBLIC
Kingspan AS
DENMARK
LOGSTOR Denmark Holding ApS
Troldtekt A/S
FINLAND
Kingspan Oy
FRANCE
CBI Poitou SAS
Ecodis SAS
Groupe Bacacier SAS
Isocab France SAS
Joris Ide Auvergne SAS
Joris Ide Sud Ouest SAS
Metal SAS
Onduline France SAS
Profinord Sarl
Skydôme SAS
Societe Bretonne de Profilage SAS
192
193
Kingspan Group plc Annual Report & Financial Statements 2022Financial Statements Principal Subsidiaries and Substantial Undertakings (continued)
Shareholder Information
%
Shareholding
Nature of
Business
%
Shareholding
Nature of
Business
The Annual General Meeting
Company Information
100
100
24
85
100
85
95
100
100
100
100
100
100
100
Sales & Marketing
Manufacturing
Holding Company
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Holding Company
Sales & Marketing
Manufacturing
Manufacturing
Holding Company
Manufacturing
Management &
Procurement
NETHERLANDS
Colt International Beheer BV
Colt International BV
Colt International Productie BV
Joris Ide Netherlands BV
Kingspan BV
Kingspan Holding Netherlands BV
Kingspan Insulation BV
Kingspan Light + Air NL BV
100
100
100
100
100
100
100
100
SWEDEN
Holding Company
Kingspan AB
Sales & Marketing
Kingspan Insulation AB
Manufacturing
Nordic Waterproofing Holding AB
Manufacturing
Sales & Marketing
Holding Company
Manufacturing
TURKEY
Kingspan Yapi Elemanlari AS
Onduline Avrasya Insaat
Malzemeleri Sanayi Ve Ticaret AS
Manufacturing
UNITED ARAB EMIRATES
Kingspan Light + Air Production NL BV
100
Manufacturing
Kingspan Unidek BV
100
Manufacturing
NEW ZEALAND
Kingspan Insulation NZ Limited
100
Manufacturing
PHILIPPINES
OFIC Philippines Inc.
100
Sales & Marketing
Kingspan Insulated Panels
Manufacturing LLC
Kingspan Insulation LLC
UNITED KINGDOM
Colt Group Limited
Colt International Limited
Euroclad Group Limited
Kingspan Limited
POLAND
Balex Metal Sp. Z.o.o.
CB SA
Kingspan Sp. Z.o.o.
LOGSTOR International Sp. Z.o.o.
ROMANIA
Terasteel SA
Wetterbest SA
SPAIN
Huurre Iberica SA
Kingspan Insulation SA
Synthesia Technology Europe SLU
Teczone Española SA
THU Perfil SLU
100
100
100
100
99
100
100
100
100
100
100
Manufacturing
Kingspan Group Limited
Manufacturing
Kingspan Insulation Limited
Manufacturing
Kingspan Services (UK) Limited
Holding Company
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Kingspan Water & Energy Limited
100
Manufacturing
UNITED STATES
Kingspan Insulated Panels Inc.
Kingspan Insulation LLC
Kingspan Light & Air LLC
Morin Corporation
100
100
100
100
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Pre-Insulated Metal Technologies Inc.
100
Manufacturing
Tate Access Floors Inc.
100
Manufacturing
URUGUAY
Bromyros SA
51
Manufacturing
Pursuant to section 316 of the Companies Act 2014, a full list
of subsidiaries, joint ventures and substantial undertakings will
be annexed to the Company’s Annual Return to be filed in the
Companies Registration Office in Ireland.
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.
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.
17 February 2023
28 April 2023
28 April 2023
18 August 2023
6 November 2023
HSBC Bank plc
BNP Paribas
Danske Bank AS
NatWest Bank Plc
Unicredit Bank AG
Bank of America Merrill Lynch,
2 King Edward St,
Farringdon,
London,
EC1A 1HQ,
England.
The Annual General Meeting (‘AGM’)
of the Company will be held on
Friday 28 April 2023 at 9.00 a.m.
Notice of the 2023 AGM will be
made available to view online at
http://www.kingspan.com/agm2023
You may submit your votes
electronically by accessing
Computershare’s website:
http://www.eproxyappointment.com/
You will be asked for your Shareholder
Reference Number (SRN), Control
Number, and PIN, all of which will
have been sent to shareholders in
advance of the meeting. To be valid,
your proxy vote must be received by
Computershare no later than 9.00
a.m. on Wednesday 26 April 2023 (48
hours before the meeting).
Amalgamation of
Shareholding Accounts
Financial Calendar
Preliminary Results
Trading Update
AGM
Half-Yearly Results
Trading Update
Banks
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.
Bank of America Merrill Lynch
ING Bank NV
Commerzbank
KBC Bank NV
Bank of Ireland
Stockbrokers
Goodbody,
2 Ballsbridge Park,
Ballsbridge,
Dublin 4,
Ireland.
Auditor
Ernst & Young,
Chartered Accountants,
EY Buildings,
Harcourt Centre,
Harcourt Street,
Dublin 2,
Ireland.
Solicitors
McCann FitzGerald,
Riverside One,
Sir John Rogerson’s Quay,
Dublin 2,
Ireland.
194
195
Kingspan Group plc Annual Report & Financial Statements 2022Financial Statements d
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5 Year Summary
Results (amounts in €m)
2022
2021
2020
2019
2018
Revenue
Trading profit
Net profit before tax
Operating cashflow
8,340.9
833.2
746.6
884.0
6,497.0
754.8
689.0
490.6
4,576.0
508.2
459.7
750.8
4,659.1
497.1
454.4
627.1
4,372.5
445.2
404.9
530.3
Equity (amounts in €m)
2022
2021
2020
2019
2018
Gross assets
Working capital
Total shareholder equity
Net debt
7,681.4
1,195.9
3,395.5
1,539.6
6,387.9
977.8
2,959.3
756.1
5,341.6
450.8
2,397.6
236.2
4,288.4
582.8
2,120.4
633.2
4,029.4
543.9
1,788.9
728.3
Ratios
2022
2021
2020
2019
2018
Net debt as % of total shareholders’ equity
Current assets / current liabilities
Net debt / EBITDA
45.3%
1.78
1.62
25.5%
1.80
0.88
9.9%
2.21
0.40
29.9%
1.66
1.09
40.7%
1.59
1.40
Per Ordinary Share (amounts in €cent)
2022
2021
2020
2019
2018
Earnings
Operating cashflows
Net assets
Dividends
329.5
487.1
1,870.9
49.4
305.6
270.5
1,631.8
45.9
206.2
414.3
1,323.1
20.6
204.6
347.3
1,174.2
13.0
184.0
294.9
994.7
42.0
Average number of employees
20,590
17,880
15,424
14,529
13,469
Revenue (€m)
Trading Profit (€m)
EPS (Cent)
DPS (Cent)
9
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