Kingspan Group plc

Gene Murtagh - CEO Geoff Doherty - CFO

Gregor Kuglitsch - UBS Yves Bromehead - Exane BNP Paribas Robert Eason - Goodbody Emily Biddulph - JPMorgan Florence O'Donoghue - Davy Lushanthan Mahendrarajah - Berenberg Paul Cahill - Investec Andy Murphy - Bank of America Merrill Lynch

Great. Good morning everybody and welcome to the 2017 Year End Results Presentation for Kingspan.

I’m joined here by Geoff and Katrina and we get straight into our slide 9 which is titled 2017 in summary. In essence, revenue was up 18% a lot of which presentation in revenue and just we did break on its asset.

We got to the presentation under trading profit as up to almost €378 million which resulted in a basic EPS left of 11% of the prior year. So all-in-all I'd say a reasonably healthy performance of the business last year.

By division, the panel growth was 17% and again we go through the detail of that business by business later on. Boards were up 12% and slight there amounts €205 million of share with an excellent first full year of trading for this business.

The environmental business continued with its recovery of margin and profitability and that’s something we expect to continue on into this year as well of course and the access floor business had a relatively solid year of the patterns been network we’ve been reporting of the last year to where the UK has been strong and the U.S. has been weaker.

Again, we will give you more color on that as we go with the presentation. So, on slide 10, I'll hand over to Geoff on the financials

Thanks Gene. Just to deal with some of the financial highlights in the first instance and Group revenue is at €3.67 billion up 18% versus 2016.

The trading profit of 11% to €377.5 million, EBITDA of 9%, earnings per share of €159 million up 11% year-over-year, the total dividend for the year €0.37 of 10% of asset includes the final dividend of €0.26 per share. Free cash flow on and I'll come to divisional result in a second, free cash flow for the year €198.5 million.

Net debt at the end of 2017 was €463.9 million and up €36 million with clearly one of the key features of cash performance of the European, the acquisition commenced, again I'll come to that. Our trading margin was down 70 basis points to 10.3% for the year and we look at the divisional split of that.

Leverage remains at approximately 1.05 times and the asset EBITDA on return of capital changed progress of 50 basis points to 17.8%. Turning to Page 11 which shows the divisional performance from a margin perspective.

On the left-hand side of that page is just reflect over the last five years and by division and clearly a key backdrop and theme [indiscernible] in 2017 was the recovery legislation and that was impacted or reflected rather in the margin performance of particularly the panel on board division. So, the integrated panel margin was 10% in 2017 versus 11.2% in 2016.

In selection board, 11.9% reflecting in particular to the strong cook mix across the business and Light & Air 7.2% which is in line with what we guided for the first full year of the trading in the division. Environmental continues to progress recording a 9% trading margin of 2017.

Access Floors at 11.8% and all of that combining to give us 10.3% for the group for the year. Turning to page, to bridge both sales and trading profit for the year.

Sales to deal with currency in the first instance, the key currency move in the year was the pound sterling versus the euro. To be specific about the average rate was 87.60 in 2017 versus 81.90 in 2016.

So that impacted translation. So, sales perspective but not $68 million or 2% of sales year-on-year, acquisitions contributed at 9.5% of $295 million in 2017.

Underlying sales grew by a little under 11% and in very broad term the split of that is about 8% price and 3% volume given the total revenue for the year of €3.67 billion and from a profit perspective the currency piece impacted profitability by €10 million or 3%, acquisitions contributed €26.5 million in 2017 and underlying profitability grew by €20 million in 2017. Turning next to, touch flow performance across page 13 and going to the left hand side of the page, EBITDA €441.7 million, working capital with an outflow of €85.3 there is essentially three components to that, our sales growth of 11% in the year, that require a working capital investments of €44 million in the year throughout that 85, €44 million was just reflective of sales growth in the year, €20 million of the working capital move is the difference between the working capital position of acquired businesses on date of acquisition to that year-end.

And the balance of €21 million of the working capital, increased is reflect the average working capital to sales ratio moving by other 0.5% from 12.5 to 13%, and that’s really reflected the higher value of the inventory and particularly reflecting the year-on-year inflation. And other than that, from a free cash perspective interest €16.8 million and tax €61.6 million, net CapEx €85.6 million, that's a little over than our, what we as guided of €100 million that's purely down to timings and phasing, that will naturally feed through, in our 2018 financial year.

So, the free cash flow performance of the business €198.5 million. And on page 14, as we said the reconciliation of the debt opening and closing.

We start the year, €428 million, free cash reduced that by 198.5, acquisitions a $168 .2 million to three principle acquisitions in the year from a cash perspective would have been Isoeste in Brazil and CPI and Brakel in our Light & Air division. The dividend cash was €61.7 million.

So, all of that lands us at a debt number of €463 million by year-end. Again, in our November trading statement we had indicated a debt guidance for year-end of €400 million.

The change is that the Brakel acquisition was completed after that, and that really is the principal reason for the higher debt versus the November statement. Page 16 just sets out the - sorry Page 15 rather on return on capital employed.

Just to highlight that we continue to make ongoing progress on returns on capital employed in 2017 was 17.8%, up 50 basis points from where we were in 2016. So, we continue to incrementally build that over time.

And Page 16, sets out the strength of the group's balance sheet. Our total available cash balances and committed undrawn facilities approximately €900 million and we will use about €440 million of that when we complete the Synthesia and Balex acquisitions in the first half of this year, but that will give us strong headroom notwithstanding.

The key financing initiatives during 2017 where we arranged a €175 million private placement in December which we drew in January just gone. And in mid-year, we signed a 5-year €500 million revolving credit facility with a syndicate of banks that expires in June 2022.

So, the weighted average maturity of our debt facilities is 6.5 years. And Page 17 sets out the sales by key geography, and you'll see on the left-hand side of the page the split for '17.

So, Ireland is 4% of sales, Britain & Northern Ireland is 25%, Mainland Europe 44%, the Americas 20% and Rest of the World is 7% and the table sets out the year-on-year growth. So, you can see the U.K.

grew by 9%, Mainland Europe reflecting the acquisitions in the year predominantly driving it forward by 26%. The Americas up 17% with Brazil featuring in particular later on in the year and Ireland up 17% in the year and Rest of World up 7%.

So, all of that gave us sales growth of 18% or 20% at constant exchange rate. So, with that, I'll hand back to Gene.

Great. Thank you, Geoff.

We're on Page 18 which is titled Insulated Panels. A good year for this division.

Underlying sales were up 12% and in essence it was a strong performance across most of Continental Europe, I’d say in particular the Netherlands, France, and increasingly the Nordics as well. The U.K., well, I'd say reasonable for the first half of the year, in fact probably quite strong.

And then as we reported late last year we saw an increasing number of postponements et cetera, and that's continued into this year, which we can talk about more, in more depth, I am sure during the Q&A. So that's the trend that we expect to see continue into this year.

So low rise, non-residential construction in the UK and we're seeing weakness in that sector. And in the US.

it was strong and as we point out somewhat compensating for a weaker Canada. A good portion of our sales in Canada would have been in the Western Canada and Alberta region, I think for obvious reasons all in related to the taxes, that's been weaker in recent times.

But the US strong continuing growth in the conversion rate from traditional systems in that market. We stepped into Latin America during the year, with acquisitions in both Brazil and Colombia.

And again, we see a very encouraging trend in the and the volume increases in those businesses as we speak. Since the acquisition we have also made a decision in Brazil to expand to a further site which will be near Sao Paulo, so that will be a new green field site that get under construction during this year to satisfy the growing demand for insulated panels in that market.

Dri-design was positive and QuadCore, which is obviously a key technology for the insulated panels business represents about 4% of sales in the year in total. And that obviously takes into account the dilution effect from acquisitions as well, so 4% overall and that was 15% in the UK.

And we'd expect -- still we would expect this over the next four, five years to be approximately 50% of insulated Panel sales and that would be a significant feature of the business both from a product offering but also from a margin maintenance perspective. The Middle East, Turkey, has been I'd say predictably weak, although the pipeline remains healthy.

We're working on a number of large airport projects in that region but they are lumpy as we've experienced in the past. And but in essence we expect that to continue to be a relatively weak region for us.

Australia, not too bad and New Zealand delivering well and Ireland broadly flat year-on-year. Moving on to the Boards business, which is on slide 20, I'd say an exceptionally good year for this business for a couple of reasons.

I think the, the continuing conversions to Kooltherm was significant in the UK, Ireland, Western Europe and increasingly in the Nordic region where we've just made a decision to invest in a new greenfield facility for Kooltherm in Sweden over the course of the next 18 months. So those regions were strong and the conversion of Kooltherm was strong, but also inflation which actually I wanted to mentioned in panel was a significant feature in terms of having to pass on that.

So, I'd say we did that with 95% success, I would say across the businesses and that was a key feature of performance of the PIR insulation business in all markets. North America, the volume is not bad, its increasingly competitive, I would say in the XPS area, but we're continuing now obviously with the expansion of the business, through the new facility or new lines we've invested in Winchester, and Virginia.

So that's up and running pretty much as planned at this stage. And in the insulation business largely around ducting applications and also the introduction of Kooltherm, we saw significant growth in the Middle East, the North African regions in this business.

Australia then a new Kooltherm facility up and running that's serving obviously the Australasian region, but is also delivering products into Southeast Asia and even back as far as the Middle East as a result of the capacity type as we still have across the rest of the region. So that's kind of an unexpected direction of travel for that business but positive obviously in the short term.

And then in Irelands, Kooltherm improved significantly over the last couple of years. And again, the trend we will see continuing the current period in Ireland.

On slide 21, Light & Air. It's just €205 million of sales and as pointed out before and we would expect the run rate for this year without any prior acquisitions to be in the region of €300 million.

And that should be eventually getting up to the probably not this year, but eventually getting up to the margin run rate of the overall growth. That's what the intention is.

And so, the priority for this year will be bedding down the acquisitions as continued with last year both in North America and in Europe. And we'll take a breath before we move again.

But our ambitions for this division are significant as we've outlined in the past. Environmental, as Geoff pointed out, saw a significant margin recovery on profitability.

And that remains consistent team. The business operating return of 9%, and that I think can expand further indeed over the medium term.

So, continued focus on growing this business beyond the traditional base of the UK And Ireland expanding into Continental Europe, we've also got eyes on the Nordics for this business. And indeed, North America where it has really just an embryonic presence with significant scope to expand this business as its product range served to U.S.A.

So that's an area that we'll be getting focused again, I'd say over the medium term. Lastly on the Divisions, Access Floors.

Underlying sales were 4%, and again the trend there has continued where the U.S. was reasonably stable, the UK has been strong for the last couple of years.

But I'd say as we highlighted before, and nothing to do with the Brexit scenario at all we would have expecting a cyclical reduction in office construction in the UK and late this year and into 2019. And I'd say we're seeing increasing evidence of that.

And it's just to be expected in the office construction cycle. And finally, on our outlook.

I'd say, we the business grow through a relatively slow January. Of course, not to read into that at all.

It's construction and it's winter. So, I wouldn't but that down at the trend at all.

We expect to see an improvement in momentum and have been seeing already in a number of markets through February. But the UK, we would have to find towards has being, weak in January probably less weak in February, but nonetheless the business is trading significant off prior year.

And that's a pattern we don't see any catalyst to change that pattern I would say over the next certainly for the foreseeable future in 2018. And volumes of insulation, higher holding up well in the UK.

And I'd say, significantly supported by the growing sales of Kooltherm in almost all application. And that's really resulting as I alluded earlier.

Actually, if anything we've got a capacity issue in the insulation business. And obviously that will be released on by the use of the Australian facility and obviously by the introduction of the new capacity in the Nordics late in 2019.

And then the evolving new frontiers it's exciting for us Latin America. As I said, we got up on a good start and there is a capacity shortage even, which is obviously a great problem to have in Brazil.

We're addressing that and obviously the impending investment in Southern Europe through the Synthesia business is also exciting for us getting into the Iberian market, with these businesses. As well as insulated panels and boards, obviously it opens up a technology platform for us through the polyol chemical business.

So that pretty much captures what we've got to say on the presentation, and now we'll open it up to questions.

[Technical Difficulty] The kind of acceptance from all the acquisitions that you've done late last year.

Gregor, can I just interrupt you, you've just kind of joined us mid-flight, so would you mind starting again? Q - Gregor Kuglitsch Okay, so okay.

Alright, maybe I'll start again. So, I'll start with raw mats, so I was asking what the deal was for last year in absolute terms like between chemical and the deal kind of what the rate of inflation was in 2017 and what you expect for 2018, that would be helpful.

The second question is on M&A. Can you remind us perhaps with the timing of the various transactions, what that implies for revenue, profit contribution in 2018?

And I guess some will roll I guess into 2019. And then you mentioned some points on margins, I think you were talking particularly, I mean you said environmental perhaps that steps forward, but can you give us a broader margin picture perhaps for the group or indeed any detail you care to share on, on the divisions, kind of the trend, obviously it's got a lot of moving parts?

And then finally, a quick one on working capital, could you just give us a sense whether some of the outflows you saw last year you see is temporary? Will any of that you will recover or is it kind of now 13% of sales and then that's how it's going to shake out?

Thanks.

Okay, on the raw material fronts, we'd be 3800 million steels, 550 off chemicals, that's probably the bills for both of those. And during the year and combined we experienced in excess of 200 million of inflation, and as we said earlier, the vast majority of that was recaptured from the markets.

The trend we're seeing so far into this year is I would say stable, and high but stable and we wouldn't see much scope for further increase and I think more importantly on the chemical side, at least from the first quarter it's flowing whereas obviously it was constrained in our location for a chunk of last year. So, it's a stable and high is the situation.

There is some pressure I would say from the steel community to increase in Europe, which we wouldn't feel supported by demand. So, let’s see how that involves during the second quarter.

But owing to further tariffs in North America, we do anticipate an increase in steel across that market imminently. Your point on acquisitions, maybe once more.

Well, how much kind of revenues profit maybe this one is for Geoff really in terms of how obviously there is different timings, I think, but all of them have closed. So, I understand perhaps how much revenue you expect this year and then perhaps how much carries over into 2019 and similar on profit, just for modeling purposes really.

Yeah, I mean, the timing of Synthesia and Balex we've outlined in the statement that we expect both those transactions to complete before mid-year of this year. In terms of carryover from acquisitions already completed, there’s about €190 million of revenues that carryover into 2018 from 2017 for acquisitions which we’ve completed.

And the combination of Balex and Synthesia on a full-year basis in terms of revenues is approximately €500 million revenues between the two. So, the precise timing of both of those will determine what the 2019 versus 2018 impact is, but that’s the shape of those.

Great. Thank you.

And again, Gregor, just to pick up on your working capital question. Our average over the last four years has been 12.5%.

We don’t see any reason why that won’t be the average over the course of the next couple of years. So, it's a little bit higher than that at 2017.

So, I think we would see that normalizing over time.

Thank you. And on margins, any comments?

On margins, I mean, our medium-term margin guidance remained at or around 10%. When you take account of the portfolio of businesses that we have, Panels is currently at 10%.

Boards had a particularly strong margin performance in 2017. I think it will be difficult to maintain it at those levels, but still ahead of 10%.

Light & Air, up 7% in 2017 and we would expect to make further progress on that through 2018 to approximately 8%. And Environmental, as Gene has indicated we’d expect to kind of incrementally build from a 9% that we earned in 2017.

But, again, 10% is probably the margin - the medium-term margin goal for that division. So overall that leaves the group at or around 10% level.

All right. So, I have three questions if I may.

First one is the margins in the U.K. Insulated Panels, which seem to be higher than the other regions.

What is your view in terms of the full-year 2018 Insulated Panel margins? And do you expect margin increases in Central Europe, Germany and the U.S.

to offset pressures in the U.K?

No would be the answer to that. I think there's obviously going to be some margins, not at the gross levels but there will be a net margin contraction, obviously, in the U.K.

as the top line comes off. It's about EUR450 million in revenue, and Geoff's I think indicated what we expect that revenue to come off by.

I mean we have indicated that we have seen intake year-to-date up by the order of 15% or so, so if you take out over the full year, off revenue basis for EUR150 million and you can do that math on that. And on the operating leverage that we have indicated previously of at or round 20%, would hold during that case as well.

So that's the kind of shake of the insight.

Thank you. My second question would be on the M&A transactions.

I think if we look at your M&A track record in the last three years that was quite a material focus on strong stone wool based insulated panels in Europe. Could you comment on your strategy in terms of foam versus stone wool and how much of your organic CapEx strategy in terms of Greenfield and are actually in stone wool?

Almost nothing is the answer to the last one. We have very little organic CapEx is fiber focused.

Actually, I wanted to highlight, the fiber pieces as being significant at all we did the power business and the euro bond business, but in the scheme of the overall group, that'd be a very minor part of the strategy. Overall as a business we'd be about as a panels business.

We would be about 12% fiber hand obviously 88% foam. And that's the pattern in the overall wider market, that's the pattern that's been relatively stable for quite some time.

If anything, probably foam's been gaining share, we do see applications where people just want that product for a number of reasons and we've been offering, as you probably known for 15 years across much of Europe.

Thank you. And lastly, on the environmental division, so we are back kind of long term target that you had set yourself of between 9% to 10%, you mentioned that you expect further margin accretion.

Are you becoming more confident in terms of the overall medium-term margin targets and could you maybe give us a sense of where you would expect the environmental margins to get to?

I think I think around 10% is again, where that ought to be achievable and probably the relative near-term, and after that to be honest scope for margin expansion will be fairly limited.

Good morning everyone. In relation to clinic, the cost recovery that you achieved over the last 12 months, obviously very disciplined on that.

And how are your competitors on that front and I suppose where I'm coming from, given that you would appear to have led on the cost recovery, is there opportunities to on the market share front this year as they play catch-ups. So maybe just a kind of general commentary around that and maybe highlighting some markets where, you were going for kind of price over volume and as that may evolve in the current year.

So just a general question about the competitor's landscape, you don't give the cost recovery. And then my kind of second question is around and environmental.

And but for me, it's first time that your kind of stressed kind of the opportunity in Americas and that business. So maybe if you just kind of elaborate on that?

What sort of timescale should we be thinking about in terms of a more sizable American component to Environmental. And then from the financial question.

Just on the effect on the tax rate was a bit lower than my expectations for 2017. What should we be penciling in for the next couple of years?

And what's the dynamics behind the lower effective tax rate in '17?

Okay, Robert. So, from the cost recovery perspective, you have the big numbers in terms of the approximate €200 million last year.

And we obviously were extremely focused on that. It was simply an unavoidable task in the business because of the magnitude.

So, we recovered that and in fact recovered all of that. And I would say for the early part of that process, the market was necessarily following us.

What ensued over the year was that the capacity constraints we're so pronounced in the chemical sector, but actually these have no choice. So, I would say that's into the third quarter and year-end, I would say broadly speaking, the market had got there and itself.

Now what we've seen since then is the flattened out and in some markets depending just geographically maybe chemicals of actually probably topped out and have got a little bit weaker. And then the third, that they're slowing as well, which is obviously really.

What's happening in the present time period is that we will be really resolute in holding our position as long as possible if this does turn. But unfortunately, compensation doesn't necessarily share that and so that's like.

So, I think it will be a balance first particularly during the first half of this year in terms of how we drove the market share versus managing the price. So, I'd say it's a new increase there.

And on the Environmental business. Yes, it's absolutely right for us to highlight the ambitions geographically for us and obviously into further into Europe and into North America.

But really, we should say there is nothing of scale imminent to North America, it's more that the regional teams beginning to holding on this as an opportunity rather than something substantially near term.

Okay. Rather just to think of on your effective tax rate question.

The effective tax rate in 2017 was 17.5% which is reduction of about 1 percentage point from where we were previously. Assuming the same broad mix of earnings by geography, 17.5% is our guidance on effective rate for this year.

Next, the behind this really is pretty much in every significant that we're operating as well as the moves by governments to reduce taxation rates. So, there's been a lot of discussion around coverage around reduction in the rates in the U.S.

that helps us but also the UK is reducing and it's reduced by 1% to 19% in 2017. The tax rate in Belgium as well which is currently 34% is moving to 25% by 2020.

So, there is just a not the small selection of the markets that we are in where there are moves to reduce the tax rate. So, it’s a combination of all of those that has eased the tax percentage for Kingspan.

Sorry, can I just have one further follow-on question, if you wouldn't mind. Just on Kooltherm can you kindly gave us the penetration on QuadCore, 4 percentage group level, 15% in the U.K.

How has the penetration of the Kooltherm evolved in the U.K. and then maybe just in the wider European market?

Yeah. It’s about 35% of the overall business, Robert and probably that percentage hasn't shifted as pronounced as you might expected, but that's because of layering in other technologies through acquisitions, et cetera.

Like on an absolute level, it’s been growing out in excess of 10% per annum. And as you point out significantly in the U.K.

it would be approximately 50% of the business in the U.K.

Good morning guys. I’ve got two, three questions, please.

First one's on the U.K. I don't expect you obviously to comment on sort of the weekly trading, but of that 15% that you're down year-to-date, do you think it’s still getting sequentially worse?

And then secondly sort of sticking on that market, do you think that the tough environment in the U.K. is sort of already influencing competitors' decisions on sort of price/cost?

Is it making the competitive environment more difficult?

Emily, good mooring. Yes.

In the U.K., it's not got sequentially worse, in fact, it's probably eased a little sequentially. But again, it's very early to be kind of pointing at that as a pattern.

So, I’d say, January is obviously very bad, February less bad and let’s see how that evolves. But I honestly can't see any scenario whereby sales in that business can reach the levels that it did in 2017.

I think for obvious reasons there's going to be pullback on investment in that sector. In terms of the price and cost and how that’s effecting share, probably our biggest challenge in the U.K.

business in Insulated Panels is that its relative competitiveness against traditional systems as it's built up that we’ve been converting against forever. And that gap has obviously expanded the loss as we tried to recover the cost.

So vis-à-vis other generic insulated panel types, I'd say our competitive position hasn’t changed. But against built up on site systems, it has worsened and as a result that’s probably been even a little bit of reverse conversion on that front.

But that, to be quite honest, aside from being [indiscernible] presently, it’s not a trend we'd be remotely concerned about because the panel will find it's normal competitive position once materials relax.

Thank you. I have three questions, if that’s okay.

The first is just on pricing. Just wondering, I guess, this is for Geoff.

Is there an annualization effect of the selling price increases that you had put through last year to take into account for modeling purposes for this year? The second one then is just on M&A, two parts, really, one is specifically on Synthesia.

Just be very interested hear the kind of logic around the whole chemical dimension off what would hopefully be acquired in the near future. And then secondly in terms of M&A given all the activity at the back end of last year, should we expect a bit of slower, kind of activity pipeline, starting in the first half of this year.

And then finally, if I can go back to the UK, just wondering what you’re seeing in the apart from the non-res side in terms of maybe the residential sector and then also just go back to say the crisis 07, 08 the downturn there. Is there differences this time compared to that.

I guess I am asking just as last time it was a construction across the board and this time it's more just non-residential base. Just be very interested to hear your thoughts, in terms of how this compares with say a decade ago when we’re in the last kind of big downturn in the UK?

And, just on pricing and the price growth overall for 2017 was 8% and that was more weighted towards the second half of the year, than the first. So, there will be a carryover of pricing into the first half of this year of the order of 4% to 5% on price that is considerably as we go into the second half of the year.

And Synthesia, there's 3 dimension to it, Panels and Boards are pretty obvious and self-explanatory. Then there is the third dimension which is relates to what we call polyol, so if you in broad terms there are two components in a polyurethane system one is them is MDI and the other is the polyol blend which gives the product its characteristics in terms of thermal and fire et cetera, so if you like that the part of the chemistry, that's we have been focusing on, it's a business for decades, now it's given, now it's given us our IP and its given us our QuadCore, et cetera.

And so obviously in terms of the development of future solutions for the business having that kind of chemistry in-house will be really important, because there is a lot skills and experience in that Spanish organization, which we clearly will be layering on people into and vice versa. So, to become a significant part of the product development for PIR systems and QuadCore et cetera into the future.

And its own right incidentally aside from it supplying our business, it does obviously supply lots of third-party, and naturally as you'd expect, we'll wanting to just grow that as an independent component in any event as if, we're just fabric business. So, we will be encouraging further expansion of that business internationally as well.

And in terms of the acquisitions pipeline, would it be slower, and all likely yes, like obviously the lion's share of what we announced last year, has yet to transact in the current year and so if you set back, we've already got 440 million of acquisitions to do this year and obviously absorb those and get comfortable with those et cetera. And so yes obviously there will be bits and pieces here and there, but overall, I have to say a longer-term pipe is still very encouraging, obviously I have to just steer [ph] this in terms of our ability to digest this.

And then lastly, whether UK, not in our views at all that the present time, and with respect to a comparison to the last downturn, I think it feels very different, for totally different reasons, and obviously back than there was precise cash drive up so the ability for people to develop actually just ceased, and so there are obviously isn't that dynamic and spec development, I'd say was a very significant feature of the UK market back then. And while subscribe tenancy over the last couple of years, it's much less a feature than it was last time.

So obviously that's the part where we see pulling in rapidly. So, the developments that are happening are obviously supported by promotors rather than spec development.

So, I honestly don't see a comparison to that period at all and we'd be first to say it if we did.

I have plenty of questions. First, more of a clarification really.

When you say Insulated Panel order intake's down 15% year-on-year. Not year-to-date, year-on-year.

[indiscernible] price increases broadly second half more or less. Just a clarification what that actually means for your volume intake year-on-year, that minus 20%.

And then secondly, your pricing strategy for this year, obviously there's some of that coming across nicely (inaudible) mentioned, but assuming what you said cost [inflation] broadly flat. That made you keep your prices broadly flat share as well.

Okay. On the first one, well it's with the 15% down year-on-year.

That reflects same period last year compared to same period this year, down 15% in value.

And then just take the pricing point. We were to absolutely our position at the present time as flat pricing assuming no move in raw materials.

But obviously the raw material is such a substantial component. Ultimately our pricing will be informed by that to some extent.

But our position to the market right now is stability in pricing.

Okay. And just on the volume inside to that down around 20 then?

That's correct. So that's a very correct.

Approximately 20% for the first six weeks.

Thank you very much. And just a couple of questions.

I know there is other question Kooltherm. But I just want to you described it as structural shift to Kooltherm.

I know that previously in Kooltherm, the boost in Kooltherm sales has been described in some senses as a switch to long term to products. So, I'm just wondering to what extent you can give us a feel for how much of the pickup in Kooltherm sales structural?

How much maybe due to substitution effect? And on Germany describe the environment deep deep competitive and reference there to huge increase in capacity.

And again, just a bit more color on that. With the reference to deducting insulation.

I know previously you've mentioned that technical insulation in an area that might be of great interest here in the future. I'm just wondering to what extent that you already have technical solution in your portfolio was just not really identified?

And then finally, small question on Ireland. As you described a panel market.

I know it's very small part of business, but panel market is flat year-on-year. And again, if there is any more color you can giving us.

Okay. We'll take that in a reverse order Paul.

I've been I would say obviously the construction environment is very healthy in Ireland. And the fact Ireland's business is flat is nothing to be raise to that at all.

It hasn't recovered to anything like what it was. So, it's very project sensitive.

And into this year already I think we'll see substantial growth in that. So really four or five substantial projects in or out of the year shifts us that kind of percentage in Ireland.

So, it was stable and I think it will be better again this year. In terms of the ducting and tech insulation piece, yes, obviously we've been focusing increasingly on that.

We have a product called KoolDuct which obviously shares part of the Kooltherm technology, and we have other polyurethane versions of this and predominately in the Middle East and we also have pipe insulation, so literally hot and cold-water piping insulation that presently is produced predominately in the U.K. and in Belgium.

But we have obviously plans to expand that product. So, we do have a product and a manufacturing platform to grow that and I suppose our ambitions would be more substantial than that globally.

And, yeah, it's an area we're going to continue to focus on as we highlight to come back a couple of years. The state of the German market is largely around insulated panels where there has been significant capacity expansion in the last two years I’d say in particular.

Our capacity way beyond what the demand is. So, I think it's just going to take some time for the market to be able to absorb that capacity.

And as a result, I think it's going to be a highly price competitive market, I’d say for the foreseeable future. So healthy at a volume level, but it's unusually low price, I’d say for the German market if we look back in time.

And then on Kooltherm, as you rightly point out, there would have been some short-term shifting across, I’d say from PIR to Kooltherm due to the lack of availability and that was something we clearly used to our advantage last year and we’ll continue to do. But if anything, that probably accelerated our focus architecturally in terms of pushing this product over PIR and that’s the strategy obviously we’re sticking with for the longer term.

So, there might be I’d say some flow-back to PIR as MDI loosens up, but it won’t materially affect the kind of structural dimension to this product at all.

Very good. Just on Germany, could you clarify, I mean, I understand, it was about 10% of panel sales.

That may have been old….

10% of panel sales. Yes, probably little more actually.

Hi, thanks. Couple of more questions for me.

Firstly, you mentioned CapEx carryovers. So, if you could kind of give us the shape of CapEx maybe this year and next as you see the projects kind of coming through?

And then could you help us kind of obviously you've given us the geographic split on Slide 17. I guess, I'd be interested, A, in a little bit more granularity, particularly as it relates to Europe.

And I don't know if you've done the exercise, I assume you have. But if you could perhaps take into consideration all the acquisitions of late last year on pro forma basis if you could rattle through the big countries that will be quite helpful for our analysis, particularly obviously contextualizing the U.K.

because that's been diluted further. Thanks.

On CapEx, Gregor, guidance for this year is €120 million. That was slightly based just on the phasing of spend that we had already earmarked for 2017.

Its early days in terms of 2019, but I would expect the CapEx the similar number for 2019 at this point. In terms of the mix of sales, when we complete the acquisitions of Synthesia and Balex, we would expect the UK dimension to our sales to be about 20% after that as compared to the 25% now.

And the Mainland European sales currently at 44% of sales and there are three geographies that makeup pretty much three quarters of that. France which is about 10% of sales, Germany similar number, similar percentage rather, and the Benelux is about 11%, with the balance of our European sales being in Eastern Europe and the Nordic region.

So that's an outline of the profile of the sales.

Two, if I may. First of the all on the UK.

Could you give us a sense on the slowdown you are seeing, whether you sense is that this is kind of just the temporary deferrals or cancellations of particular projects, if you can give us a bit more for a steer around, which sectors or which industries you were seeing the deferrals coming through? And then secondly, just on the M&A, you kind of gave us little combined revenues for the outstanding deals.

Could you give us a steer or give us a figure for what the actual spend is for those and any additional spends on deferrals from previous news that are going to come through this year?

So, and that's great. On the UK, actually we've had no translation, and in terms of projects, projects have not been cancelled, It's just postponements.

So, on the overall piece of our insulated panel business, and the pipeline actually is quite healthy. It's really the question of execution, and so the jobs are there but just investors just don't seem to be pulling the trigger at the pace that they were 6 to 12 months ago.

So, it's not been the case of cancellations, everything is being underway and it continues.

From, an acquisitions cash perspective, at this point, we expect cash of EUR440 million for 2018 which is the completion of Synthesia and Balex acquisition, at this point we are not anticipating any deferred consideration payments coming through cash flow in 2018, there is a deferred consideration mechanism for the Brazilian acquisition, but that's unlikely to play for couple of years. So, 440 is the committed spend at this point.

Thanks for questions and we look forward to speaking to all of you next week under and [indiscernible]. So, thank you all for joining.

Unidentified Company Speaker Thank you.