Kingspan : Final Results

KINGSPAN GROUP PLC

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014

Kingspan, the global leader in high performance insulation and building envelope solutions, reports its preliminary results for the year ended 31 December 2014.

Financial Highlights:

·    Revenue up 6% to €1.89bn.

·    Trading profit up 21% to €148.5m.

·    Group trading margin of 7.9%, an increase of 100bps.

·    Basic EPS up 21% to 62.6 cent.

·    Final dividend per share of 10 cent. Total dividend for the year up 16% to 16.25 cent.

·    An increase in net debt to €125.5m (2013: €106.7m). Net debt to EBITDA of 0.66x (2013: 0.66x).

·    Increase in ROCE by 110bps to 13.4% (2013:12.3%).

Operational Highlights:

·    Insulated Panels sales and trading profit up 7% and 18% respectively, reflecting strong margin improvement, particularly in the United Kingdom, North America, Australasia, and Kingspan Energy, our integrated solar panel business.

·    Insulation Boards sales and trading profit up 8% and 35% respectively, owing to robust performance in both the UK and Benelux markets, and the continued growth of Kooltherm's® market presence more widely.

·    A positive data centre activity backdrop was beneficial to Access Floors in the Americas, and improving office volume in the UK led to overall sales in line with the prior year (H2 +7%) and trading profit up 12%.

·    Stability at the Environmental division remained the priority, and the many new initiatives underway should lead to profit growth in 2015.

·    Three acquisitions were completed during the year: Dri-Design, a high end architectural façade business in the US, Pactiv Insulation, a rigid foam board producer in the US, and PAL Insulation, a Dubai based supplier of ducting insulation. The combined consideration for these was €114.4m.

Summary Financials:

Gene Murtagh, Chief Executive of Kingspan commented:

"We are very pleased to report another strong year of profit growth at Kingspan, helped particularly by double-digit growth in our UK and North American businesses. Conditions in our core markets are improving, and our activity pipeline starting the new year is encouraging.We are delivering on our strategic goal of broadening our geographic base through acquisitions, and will focus intensively this year on the integration of the companies acquired in 2014 and the Joris Ide and Vicwest businesses when those deals are completed."

For further information contact:

Business Review

2014 proved to be another positive year for Kingspan, with global sales and trading profit growing 6% and 21% respectively. The resultant earnings improvement was 21% to 62.6 cent per share (2013: 51.7 cent per share).

The trading pattern reflected an uncharacteristically strong start to the year, leading to a more stable performance through mid-year, culminating in a strong final quarter in most of our markets. The macro-economic environment remained mixed, with clear improvement evident in the key non-residential markets in both the UK and US, contrasting with weaker activity levels in pockets of Continental Europe. Germany, one of our larger end markets, was relatively stable, levelling off from the growth levels experienced there in recent years. Trading in the Netherlands improved marginally and, more importantly, the future pipeline showed encouraging signs that ought to bear fruit over the coming years. Australasia continued its growth pattern for Kingspan, owing mainly to penetration growth.

Exiting 2014, the general mood across our core markets, and our activity pipeline, were encouraging.

Insulated Panels

(1)   Comprising acquisition impact +1%, volume +3%, price/mix +3% and currency impact nil

UK

Growth resumed in Kingspan's Insulated Panel business in the UK during 2014, after a number of relatively stable years. Some large-scale conversion successes played a part in this improvement, along with a more general lift in the sectors we are most exposed to. These sectors include low-rise non-residential buildings in the retail, distribution and manufacturing space among others. Benchmark®Architectural continues to challenge traditional and conventional high end facades, a journey that will likely last for many years. Kingspan Energy, our Integrated Rooftop Solar PV and Insulated Panel offering, posted a significant improvement over prior year, and again exited the year with an encouraging pipeline. Standards of building envelope continue to rise, evident from continually increasing insulation thicknesses, and geared towards advancing the lifetime energy performance of these buildings for their owners/occupiers. The UK has been, and remains, a prominent global voice on this front.

Mainland Europe & Middle East

Given the mixed backdrop across Mainland Europe, our performance varied somewhat. Sales in Germany were broadly flat whilst a slight improvement was experienced in the Netherlands. France showed encouraging improvement in commercial and industrial applications where penetration growth is capable of advancing significantly over the medium to longer term. Central and Eastern Europe weakened towards year-end, partly linked to the Russian crisis, and Turkey's economic fragility continued to weigh on volumes there. Across the wider Gulf region, both activity and pipeline have been strong and should lead to a positive outcome in 2015.

Kingspan is also in the early stages of developing a presence in key markets in Africa. Early indications and contracts won have both been encouraging.

Americas

2014 was a year of significant advancement for our Insulated Panels business in North America. By mid-year, a record order-book and rising penetration pointed towards a strong second half, which duly materialised. Further sizeable projects were converted from traditional systems, boding well for the early part of 2015. The energy agenda is firmly centre stage in the US at present, with efficiency and conservation being key. Our role in this improving dynamic will be to continue driving penetration growth through specification.

In addition, we are in the early stages of exploring entry into the neighbouring Mexican market.

Australasia

Similar to North America, the growth in low-energy buildings continues to push ahead in Australia and New Zealand. Our volume grew significantly in 2014 and we expect to build upon this in 2015.

Ireland

Volumes in this market are still relatively low by historic comparison, albeit with a significant growth in activity in 2014. This momentum is likely to continue as Ireland gradually rebuilds itself, and the overhang from the 'boom' years gets absorbed, giving way to further newbuild opportunity.

Insulation Boards

(1)   Comprising growth from acquisition impact +3%, price/mix +1%, volume +2% and currency impact +2%

(2)   Restated to reflect adoption of IFRS 11 'Joint Arrangements'

UK

The strong revenue growth pattern reported in the first half of the year continued through to year-end, driven by a combination of positive residential and non-residential construction, and continued penetration growth of Kooltherm®. Albeit still at embryonic levels, specifications continue to grow for Optim-R®as an 'ultra-thin' insulation solution. Housing activity growth eased off somewhat in late 2014 after a relatively strong run for the previous couple of years. Forecasts for this segment remain positive, as they do for office construction, both of which present scope for further insulation volume growth in the coming years.

Mainland Europe

Insulation Boards sales volume showed a marked improvement in the Benelux with mid-single digit growth in Germany. This, as in recent years, is being predominately driven by the rising adoption of Kooltherm®in Western Europe. Further growth through specification will remain the medium to longer term focus in this region. Central European markets also provided growth as high performance rigid board begins to take a foothold from traditional alternatives. These regions are already well disposed towards Insulated Panel as a thermally efficient form of construction which should bode well for Board as a thermal solution. Our recently commissioned PIR Board facility in Eastern Germany is ideally situated to service this and key surrounding target markets.

North America

Following our acquisition of Pactiv Insulation during the third quarter, Kingspan's rigid board presence, and relevance, in North America has increased substantially. This business currently features XPS extruded polystyrene as a technology. Given the low penetration of this form of insulation in North America, our primary near-term focus will be on expanding our sales and capacity of XPS. Medium and longer term this product set will be complemented by the introduction of Kooltherm®and Optim-R®to the North American market.

Australasia and Middle East

Building upon the progress of recent years, penetration of Kooltherm®rigid board continued to forge ahead in Australia, again displacing lower performing insulation alternatives that still dominate the region. The process of establishing a new manufacturing facility in Melbourne has commenced to bolster this momentum and is scheduled for production in early 2017.

Our insulation presence in the Gulf and Middle East regions received a significant boost following the acquisition of PAL in late 2014. PAL's primary business is the delivery of ducting insulation, and has now begun the process of incorporating Kingspan's wider product set into the many markets it serves.

Ireland

Insulation revenue in Ireland grew by mid-single digit levels, reflecting the growing presence of Kooltherm®in this market. Volume slippage in other product sets was experienced as margin took priority over volume. Construction forecasts suggest that recent momentum is likely to continue into 2015 and beyond, a trend that Kingspan is ideally positioned to capitalise on.

Access Floors

(1)   Comprising volume +5%, price/mix -6% and currency impact +2%

2014 was a year characterised by solid data centre related activity in North America compensating for stubbornly lethargic office construction activity. This is in stark contrast to the UK market that appears to be midway through an upward cycle in office construction. The latter is likely to lead to notable growth in Access Floor applications through 2015 and 2016 given the late cycle nature of when flooring is installed.

In North America, whilst maintaining our market share in the weaker office market, our focus has been primarily on advancing energy efficient and more complete air distribution systems that are incorporated as an integrated floor application. Our unique range is used as the primary chassis for intelligently distributing air to cool individual data servers. The full commercialisation of this product set is our key near-term focus, in advance of more general office construction activity which is forecast to improve from late 2015 onward.

Environmental

Sales in this division were broadly stable in 2014.

In our water business, revenue was marginally ahead on prior year, after a relatively sluggish start and picked up towards year end. Water treatment products performed best, with rainwater harvesting lagging despite the anticipated growth in this market. That dynamic may change as regulated water charges and conservation initiatives continue to increase in the future.

The micro-wind business saw the soft launch of the KW15 turbine in the fourth quarter, and interest levels are encouraging for 2015. Conventional fuel storage products performed well, and an expanding product set is designed to position the business for future growth not only in the UK and Ireland, but also more internationally.

Renewables remains competitive, both in solar thermal and hot water storage. We plan to see this phase of market instability through by maintaining our market share and investing further in lower cost manufacturing techniques to ensure our sustained presence in this sector longer term.

Innovation

The process of 'staying ahead' is a central theme throughout Kingspan.

Much of the emphasis in recent years has focused on 'core' performance, predominately from both a thermal and fire perspective. Kooltherm®remains a key platform for growth, and will in the coming 2-3 years see itself transition to the next generation with notably improved thermal values, from an evolving set of inputs. Optim-R®, our vacuum insulated offering, was launched in 2013. Technically and commercially it is positioned at the very upper end, and as a result, the process of building volume scale in this product can be expected to be gradual.

IPN Quadcore®is being developed for a more mainstream Insulated Panel offering. It is a unique Kingspan hybrid formulation that moves rigid foam in Insulated Panels to a completely new level, providing up to 25% in thermal advantage per thickness over the industry average. It will be launched in limited applications by mid-year 2015 and rolled out more globally in the following two years or so.

Net Zero Energy

A number of years back we set ourselves the goal of achieving Net Zero Energy status throughout Kingspan by 2020. This entails everything ranging from the procurement of renewable energy to local on-site generation of renewable power. While the rate of expansion of Kingspan in recent years might have rendered the 2020 target difficult to achieve, we remain largely on plan and expect to reach 50% by the end of 2017. The table below outlines that progress.

A=Actual; P=Plan

Our Strategy

For some time now, we have been pursuing a three pillar strategy:

-   Conversion from traditional insulation and building techniques to high performance solutions.

-   Innovating within our space to consistently maintain a competitive edge.

-   Broadening our geographies, with primary focus on Mainland Europe, the Americas, Gulf & Middle East and Australasia.

The delivery of these objectives, within the scope of a conservatively managed balance sheet which has served the Group well, will remain the focus of our execution for the foreseeable future.

Financial Review

Overview of results

Group revenue increased by 6% to €1.89bn (2013: €1.78bn) and trading profit increased by 21% to €148.5m (2013: €122.8m) resulting in an improvement of 100 basis points in the Group's trading profit margin to 7.9% (2013: 6.9%). Basic EPS for the year was 62.6 cent (2013: 51.7 cent), representing an increase of 21%.

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

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

Change in accounting policy and reclassification

IFRS 11 'Joint Arrangements' has been adopted as required by IFRS for the year ended 31 December 2014. All comparatives have been restated accordingly. Further details are set out in note 10.

Finance costs (net)

Finance costs for the year increased by €0.4m to €14.0m (2013: €13.6m). Finance costs included a non-cash charge of €0.1m (2013: €0.3m) in respect of the Group's legacy defined benefit pension schemes. A net non-cash charge of €0.8m (2013: credit of €0.7m) was recorded in respect of swaps on the Group's USD private placement notes. The Group's net interest expense on borrowings (bank and loan notes) was €13.1m compared to €14.0m in 2013. This decrease reflects lower average net debt levels in 2014 compared to 2013 and favourable financing initiatives undertaken in 2014. The interest expense is driven extensively by gross debt balances with cash yields negligible in the current environment. Average gross debt during the year was €304m (2013: €298m) with average cash balances amounting to €186m (2013: €158m). The average is calculated by reference to the month end position.

Non trading items

The Group recorded a non trading charge of €2.1m (2013: charge of €3.5m) in the year. The charge is a composite item comprising an impairment of €2.1m in respect of certain goodwill within the Environmental division, a loss of €2.7m on the disposal of a property asset and a credit of €2.7m in respect of a surplus deferred consideration accrual on an acquisition made in a prior year. The charge in the prior year is a composite item which is set out in further detail in the Group's 2013 annual report.

Taxation

The tax charge for the year was €21.0m (2013: €12.8m) which represents an effective tax rate of 16.4% (2013: 13.8%) on earnings before amortization and non trading items.

Dividends

The Board has proposed a final dividend of 10 cent per ordinary share payable on 15 May 2015 to shareholders registered on the record date of 24 April 2015. When combined with the interim dividend of 6.25 cent per share, the total dividend for the year increased to 16.25 cent (2013: 14.0 cent), an increase of 16%.

Retirement benefits

The Group has two legacy defined benefit schemes which are closed to new members and to future accrual. In addition, the Group assumed a defined benefit pension liability in respect of current and former employees of ThyssenKrupp Construction acquired during 2012. The net pension liability in respect of these schemes and obligations was €11.7m (2013: €7.7m) as at 31 December 2014.

Key performance indicators

The Group has a set of key performance indicators which are set out in the table below:

(a) Basic EPS growth. The growth in EPS is accounted for by the 21% increase in trading profit, generating a 19% increase in profit after tax.

(b) Sales growthof 6% (2013: 10%) was driven by a 1% contribution from acquisitions, a 4% increase in underlying sales and a 1% increase due to the effect of currency translation.

(c) Trading marginby division is set out below:

The Insulated Panels division trading margin reflects an increase in overall margin due to positive overall operating leverage within the division, reflecting increased volume, and a positive business mix oriented towards higher specification industrial and architectural applications. The trading margin improvement in the Insulation Boards division reflects some recovery in overall margin, continuing progression in Kooltherm®volumes and a positive business mix in Mainland Europe. The modest decrease in the Environmental trading margin reflects the relative product mix year on year, in particular a decline in renewables. The increase in trading margin in Access Floors reflects the year on year sales mix between domestic and international markets as well as the office and data centre product mix.

(d) Free cashflowis an important indicator and it reflects the amount of internally generated capital available for re-investment in the business or for distribution to shareholders.

*Earnings before finance costs, income taxes, depreciation and amortisation

Working capital at year end was €263.3m (2013: €212.5m) and represents 13.4% (2013: 12.0%) of annual turnover. This metric is 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.

(e) Return on capital employed, calculated as operating profit divided by total equity plus net debt, was 13.4% in 2014 (2013: 12.3%). The creation of shareholder value through the delivery of long term returns well in excess of the Group's cost of capital is a core principle of Kingspan's financial strategy.

(f) Net debt to EBITDAmeasures the ratio of debt to earnings and at 0.66x is comfortably less than the Group's banking covenant of 3.5x in both 2014 and 2013.

Capital Structure and Group Financing

The Group funds itself through a combination of equity and debt. Debt is funded through a combination of syndicated bank facilities and private placement loan notes. The primary bank debt facility is a €300m revolving credit facility, with a syndicate of international banks, entered into in April 2012 and amended in March 2014. The facility, which was undrawn at year end, was favourably amended from a pricing perspective with the term extended to March 2019. In December 2014 the Group agreed a €127.5m private placement loan note with equal maturities of 6, 8 and 10 years. These notes will be drawn in March 2015 to fund the repayment of pre-existing loan notes of $158m. In December 2014, the Group agreed bi-lateral facilities of €190m with three banks with a two year maturity which were undrawn at year-end. The Group has two US Private Placement loan notes in issue and the total Private Placement debt outstanding at year-end was $400m. $158m of this matures in March 2015, $42m matures in March 2017 with the balance of $200m maturing in August 2021.

The Group has significant available undrawn facilities which provide appropriate headroom for ongoing operational requirements and development funding.

Net debt

Net debt increased by €18.8m during 2014 to €125.5m (2013: €106.7m). This is analysed in the table below:

Key financial covenants

The majority of Group borrowings are subject to primary financial covenants calculated in accordance with lenders' facility agreements:

-   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 below:

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 presented at nine capital market conferences and conducted 320 institutional one-on-one and group meetings.

Share price and market capitalisation

The Company's shares traded in the range of €11.23 to €14.67 during the year. The share price at 31 December 2014 was €14.35 (31 December 2013: €13.00) giving a market capitalisation of €2.46 billion (2013: €2.21 billion). Total shareholder return for 2014 was 11.64%.

Financial risk management

The Group operates a centralised treasury function governed by a treasury policy approved by the Group Board. This policy primarily covers foreign exchange risk, credit risk, liquidity risk and interest rate risk. The principal objective of the policy is to minimise financial risk at reasonable cost. Adherence to the policy is monitored by the CFO and the Internal Audit function. The Group does not engage in speculative trading of derivatives or related financial instruments.

Acquisitions

During 2014 we completed three acquisitions for a combined consideration of €114.4m,Dri-Design, a high end architectural façade business in the US, Pactiv Insulation, a rigid foam board producer in the US, and PAL Insulation, a Dubai based supplier of ducting insulation.The recent performance and early integration of those businesses has been most encouraging. Since then, we have entered into agreements to acquire Vicwest Building Products in Canada for C$155m, and Joris Ide Group in Belgium for €315m. Both of these businesses offer Kingspan tremendous growth avenues, in market niches largely untouched by our current brand presence. These transactions are subject to regulatory approval in their respective jurisdictions, and we hope to be in a position to complete these processes during the first half of this year.More recently, earlier this month we bought out the 50% share in Kingspan Tarec Industrial Insulation held by our joint venture partner, Recticel NV, and will now fully integrate this premium performance pipe insulation business into our UK and Belgian Insulation Boards businesses.

Following these transactions, we expect peak net debt/EBITDA to be relatively conservative, at approximately two times.

Looking Ahead

The positive momentum experienced in late 2014 has carried through into the early part of 2015, and should lead to a solid first quarter notwithstanding a flat January. This is particularly so in the UK, North America, and Germany. Central Europe and Turkey remain somewhat fragile, owing in both cases to the neighbouring political situation, the outcomes of which remain uncertain.

Amongst our 2015 priorities will be the execution of the recently announced Joris Ide acquisition, and that of Vicwest announced late 2014, as well as completing the integration of the businesses successfully acquired during the year. This integration phase is well underway in all three cases, and their outlook is encouraging. Furthermore, maintaining a strong balance sheet will remain the bedrock of our financial strategy.

Energy costs, catalysed by recent oil prices, have been the subject of vast debate in recent months, with no clear consensus on future trends emerging. Whatever that outcome, we live in a time where concern over the future of fossil fuel is unquestionably at an all-time high. From both geopolitical and environmental perspectives, the focus on energy conservation and alternative sources is almost certain to remain relentless. With our unparalleled global solutions portfolio, this backdrop can only be encouraging for Kingspan.

On behalf of the Board

Gene Murtagh                                                              Geoff Doherty

Chief Executive Officer                                                 Chief Financial Officer

23 February 2015                                                        23 February 2015

Kingspan Group plc

Group Condensed Income Statement

for the year ended 31 December 2014

Gene M. Murtagh                                  Geoff Doherty                                              23 February 2015

Chief Executive Officer                        Chief Financial Officer                     

Kingspan Group plc

Group Condensed Statement of Comprehensive Income

for the year ended 31 December 2014

Kingspan Group plc

Group Condensed Statement of Financial Position

As at 31 December 2014

* IFRS 11 has been adopted as required by IFRS for the year ended 31 December 2014. The comparatives for the year ended 31 December 2013 have been restated (refer to Note 10)

Gene M. Murtagh                             Geoff Doherty                                           23 February 2015

Chief Executive Officer                   Chief Financial Officer                                       

Notes to the Preliminary Statement

for the year ended 31 December 2014

1    GENERAL INFORMATION                                                                                                     

The financial information presented in this report has been prepared using accounting policies consistent withInternational Financial Reporting Standards (IFRSs) as adopted by the European Union and as set out in the Group's annual financial statements in respect of the year ended 31 December 2013 except as noted below. The financial information does not include all the information and disclosures required in the annual financial statements. The Annual Report will be distributed to shareholders and made available on the Company's websitewww.kingspan.comin due course. It will also be filed with the Company's annual return in the Companies Registration Office. The auditors have reported on the financial statements for the year ended 31 December 2014 and their report was unqualified and did not contain any matters to which attention was drawn by way of emphasis. The financial information for the year ended 31 December 2013 represents an abbreviated version of the Group's statutory financial statements on which an unqualified audit report was issued and which have been filed with the Companies Registration Office.

Basis of Preparation and Accounting Policies

The financial information contained in this Preliminary Statement has been prepared in accordance with the accounting policies set out in the last annual financial statements.

IFRS does not define certain Income Statement headings. For clarity, the following are the definitions as applied by the Group:

-    'Trading profit' refers to the operating profit generated by the businesses before intangible asset amortisation and gains or losses from non trading items.

-    'Non trading items' refers to material 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 unusual due to their size or incidence.

-    'Operating profit' is profit before income taxes and net finance costs.

The Group makes this distinction to give a better understanding of the financial performance of the business.

The Income Statement has been expanded to include cost of sales, gross profit and operating costs in order

to assist the reader to better understand the components of profit.

The following are the new standards that were effective for the Group's financial year ending 31 December 2014. They had no significant impact on the results or financial position as set out in this Preliminary Statement.

·   IFRS 10 Consolidated Financial Statements

·   IFRS 11 Joint Arrangements

·   IFRS 12 Disclosure of Interests in Other Entities

·   IAS 27 Separate Financial Statements (2011)

·   IAS 28 Investments in Associates and Joint Ventures (2011)

·   Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)

·   Investment Entities (Amendments to IFRS 10, 12 and IAS 27)

·   Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39)

·   IFRIC 21 Levies

There are a number of forthcoming requirements of IFRSs as adopted by the EU which are not yet effective and have therefore not been adopted in these financial statements.

·   IAS 19 Amendment: Defined Benefit Plans; Employee Contributions

·   Annual Improvements to IFRSs 2010-2012 Cycle and 2011-2013 Cycle

·   Amendments to IFRS 11: Accounting for acquisitions of interests in Joint Operations

·   IFRS 14 Regulatory Deferral Accounts

·   Amendments to IAS 16 and IAS 38: Clarification of acceptable methods of depreciation and amortisation

·   Amendments to IAS 16 and IAS 41: Bearer plants

·   IAS 27: (Amendments) Equity Method in Separate Financial Statements

·   Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint venture

·   Amendments to IFRS 10, IFRS 12 and IAS 28: Investment entities: exception to consolidation

·   Amendments to IAS 1: Disclosure Initiative

·   Annual Improvements to IFRSs 2012-2014 Cycle

·   IFRS 15: Revenue from contracts with customer

·   IFRS 9 Financial Instruments (2014)

The Group does not plan to adopt these standards early and the extent of their impact has not yet been determined.

2    SEGMENT REPORTING

In identifying the Group's operating segments, management based its decision on the product supplied by each segment and the fact that each segment is managed and reported separately to the Chief Operating Decision Maker, which the Group has defined as the Board of Directors.  These operating segments are monitored and strategic decisions are made on the basis of segment operating results.

Operating segments                                                                                                                                 

The Group has the following four operating segments:                                                            

Analysis by class of business

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.

* Capital investment includes fair value of property, plant and equipment acquired in business combinations

The Group has a presence in over 70 countries worldwide.  The revenues from external customers and non-current assets (as defined in IFRS 8) attributable to the country of domicile and all foreign countries or regions of operation are as set out above and specific regions are highlighted separately on the basis of materiality.

There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8.  The individual entities within the Group each have a large number of customers spread across various activities, end-uses and geographies.

3          NON TRADING ITEMS

During the year $5.0m deferred consideration was paid relating to the Rigidal business which was acquired in 2012. The remaining provision for deferred consideration has been released as the associated EBITDA targets were not achieved.

The goodwill impairment relates to a business within the Environmental segment.

The impairment of property, plant and equipment in 2014 relates to a loss made on the disposal of an industrial building in Poland for €9.75m.

The non trading items in respect of prior year are disclosed in note 4 to the Group's 2013 annual report.

The tax effect of the above items was €0.4m (2013: €1.4m). The income tax expense for the year in the Consolidated Income Statement includes the impact of this effect.

4     FINANCE EXPENSE AND FINANCE INCOME                                

No borrowing costs were capitalised during the year (2013: €nil).

No costs were reclassified from Other Comprehensive Income to profit during the year (2013: €0.2m).

5   ANALYSIS OF NET DEBT

The Group's core funding is provided by two private placements totalling US $400m, of which US $158m matures in March 2015, US $42m matures in March 2017 and a further US $200m matures in 2021. In December 2014 the Group arranged new notes totalling €127.5m. These notes have a deferred draw down date of March 2015 and have a weighted average maturity of 8 years.

In addition the Group has a committed revolving credit facility with a syndicate of banks of €300m maturing in March 2019 and committed bilateral facilities of €190m which mature in December 2016. The facilities are fully undrawn at year end.

Net debt, which is a non GAAP measure, is stated net of interest rate and currency hedges which relate to hedges of debt. Foreign currency derivatives of €0.01m (2013: €0.5m) which are used for transactional hedging are not included in the definition of net debt.

6    RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT