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KINGSPAN GROUP PLC

HALF-YEARLY FINANCIAL REPORT

(Six months ended 30 June 2011)

KINGSPAN GROUP PLC

2011 HALF-YEARLY REPORT

Kingspan, the global leader in high performance insulation and building envelope solutions, reports interim results for the half year ended 30 June 2011

Highlights:

Financial Highlights:

·; Revenue up 32% to €736m, an increase of 16% excluding the acquisition of CRH Insulation Europe (CIE)

·; Trading profit up 24% to €44.2m, an increase of 17% excluding the acquisition of CIE. Group trading margin of 6.0% in line with full year 2010

·; Basic EPS up 38% to 17.3 cent

·; Interim dividend per share up 12.5% to 4.5 cent

·; Net debt of €216.5m (H1 2010: €135.1m) due principally to the impact of the acquisition of CIE. Interest cover of 12.2 times

Operational Highlights:

·; Insulated Panels divisional sales up 22% with growth across all key regions

·; Insulation Boards divisional sales up 86%, an increase of 14% excluding the acquisition of CIE, with increased geographical balance following the acquisition

·; Environmental & Renewables divisional sales up 17% reflecting buoyant sales in Mainland Europe

·; Access Floors divisional sales down 5% overall with strong datacentre volumes partially offsetting a decrease in office activity

Summary Financials:

Gene Murtagh, Chief Executive Officer, commented:

"Kingspan has had a good first half in 2011 with strong organic growth complementing our recent acquisition which will bring even greater balance to our mix of geographies and products. Kingspan continues to outperform both the market and the general macro environment with our range of high performance solutions although we remain very mindful in the period ahead of renewed global uncertainties and their possible impacts."

For further information contact:

Ed Micheau: Murray Consultants Tel: +353 1 4980300/+353 86 8037155

BUSINESS REVIEW

During the first six months of 2011, activity throughout the Group was strong benefiting from the growth in order book recorded towards the end of last year which continued through the first quarter of 2011. In addition to the robust underlying growth across the businesses, the Group also absorbed the CIE Insulation acquisition which completed during the first quarter of 2011. As a consequence, Group sales growth of 32% was recorded in H1 2011, up 16% excluding the CIE acquisition, and Group trading profit grew by 24% to €44.2m. Operating profit after amortisation grew by 26% to €41.7m.

This result was achieved against a backdrop of an untypically robust start to the year, helped by more favourable weather conditions compared to early 2010, with momentum easing industry-wide during the second quarter. Trends in general building activity in the UK and North America were solid in the period, although were less buoyant from quarter two. Furthermore, continued upward momentum was experienced in much of Western and Central Europe with a solid trading pattern in Australia and New Zealand. The trading pattern throughout the Group broadly reflected these trends in H1 whilst significantly outperforming the overall macro environment.

Raw material inflation, and its recovery, was a prominent feature of the first half of 2011 with key inputs of both steel and chemicals rising sharply. As previously indicated, we expect approximately €80m of cost inflation during the full year, and whilst presenting a tough challenge, the recovery of these costs is on track. The Group's overall trading margin of 6% was in line with the margin recorded in full year 2010 although it is down 40bps on the first half of 2010 due to the mix of divisional earnings.

Operating Segments:

Insulated Panels

(1) Comprising volume growth +14%, price/mix +8% and currency impact 0%

Overall

The division recorded a strong performance in the period with buoyant activity in most key markets. The increase in the division's trading margin reflects the impact of volume growth and the associated operating leverage.

United Kingdom

Sales volume of Insulated Panels in the UK grew by 16%, or by 27% in value, in the period. Whilst growth was achieved in almost all sectors, retail and refurbishment activity were the key drivers as well as continually improving insulation standards. Approximately 20% of all volumes in the period represented refurbishment activity, a trend which is likely to increase as demand builds for the Group's Powerpanel® product and Kingspan's "Insulate & Generate" concept. Powerpanel® is an integrated insulated panel and solar energy generation solution and should represent a significant opportunity for building occupiers to make meaningful progress on a net zero energy objective. Sales of this new product suite began in quarter two, during which orders were received for what will be some of the largest on-roof photovoltaic installations in the UK. Order intake volume in the period grew by 6% compared to the first half of last year and although we anticipate this positive trend continuing for the remainder of the year, the project pipeline would indicate that the percentage growth will moderate somewhat in the second half of the year.

Mainland Europe

Sales volume in the region increased by 14%, or by 22% in value, year on year in the period driven by strong growth in Germany, Belgium and the Netherlands, offsetting lower volumes in Hungary, the Czech Republic and, in particular, Poland. Sales volume in Turkey was strong but, as in Poland, margins came under significant pressure with overcapacity limiting the near-term recovery of raw material increases in these markets. Order intake has largely mirrored this pattern, up 9% overall by volume, strongest in Western Europe and Turkey, offsetting general weakness in Eastern Europe.

North America

Sales volume growth of 7%, or by 15% in value, was achieved in this region, reflecting the very strong orderbook at the start of the year. Activity and penetration growth in the low-rise commercial/industrial sectors were key in delivering this outcome. In addition, food storage applications were strong by volume, albeit with lower margins. Insulated architectural facades, a cornerstone of future growth, secured orders in excess of H1 2010 but project slippage resulted in lower sales growth than expected. North American order intake reduced by 8% in the period, markedly down in quarter two, reflecting a weaker backdrop when compared with the same period last year when a number of sizeable contracts were won. Notwithstanding this, the orderbook at the end of the period was 7% higher than a year earlier.

Australia/New Zealand

2010 was a year of great progress in the region, ending with an orderbook considerably up on prior year. This order book supported sales volume growth in excess of 20% during the first half of 2011 displaying growth in penetration and a positive general building environment. In quarter two there was some evidence of a slowdown in intake levels.

Ireland

Although activity was exceptionally low, sales volume in Ireland grew by 8%, or by 20% in value. Order intake improved by 15% which is somewhat encouraging albeit from a low base.

Insulation Boards

(1) Comprising growth from acquisition +72%, price/mix +9%, volume +4% and currency impact +1%

Overall

The division recorded a strong first half performance with the key highlight being the acquisition and subsequent integration of CIE. The acquisition contributed €85.7m of sales and €2.4m of trading profit in the period net of integration costs incurred. The divisional margin is broadly in line with the full year trading margin of 6.7% in 2010 but is down on the first half margin recorded in H1 2010. This reflects the mix of business year on year, in particular the initially lower margin lines in the acquired business. As with Insulated Panels, the inflationary pressure from chemical price increases was a prominent feature of the first half. The business is on course to recover these increases which will continue through quarter three.

United Kingdom

Sales volume in the UK grew by 34%, or by 37% in value, with 28% (22% in value) of this due to the impact of the CIE acquisition. Housing construction has grown marginally over prior year, which when combined with strong progress in insulation sales to the refurbishment sector and the continued growth in penetration of Kingspan's Kooltherm® range, delivered a solid result in the period.

Mainland Europe

Sales in this region were exceptionally strong during the period, growing in volume by 423%, or by 478% in value, driven substantially by the CIE acquisition. Underlying sales volumes (excluding the CIE acquisition) were up by 21%, or up by 49% in value. Penetration of high performance insulation in Continental Europe significantly lags that of the UK and Ireland. However, the conversion pattern to higher performance insulants is likely to continue shifting in the direction of Kingspan's technology, as evidenced by recent sales trends. Our near term focus will remain on conversion in the Benelux and Germany in particular and ensuring that our capacity is geared accordingly.

Australia/New Zealand

Following the full integration of the AIR-CELL acquisition during 2010 and notwithstanding the natural disasters earlier this year in both countries, sales volume in this region grew by 6%, or by 25% in value, in the first half in 2011. The region is vastly under-penetrated by modern insulants which promote energy efficiency in both summer and winter periods. Kingspan's team in Australia and New Zealand continue to demonstrate the potential for the Group's Kooltherm® and other products despite the tough market conditions to-date this year.

Ireland

The construction market in Ireland has suffered a dramatic contraction in recent times, and remains subdued, resulting in sales volume down by 16%, or down by 4% in value. The refurbishment market has been somewhat resilient, and at approximately 50% of current activity, is providing some foundation for activity at present.

Environmental & Renewables

Sales in this division grew by 17% in the first half driven principally by activity in Continental Europe, particularly in France. Fuel storage and water treatment products were relatively flat in the UK and were slightly down in Ireland where the new build sector remains exceptionally weak. Recent legislation governing future domestic waste water standards in Ireland will provide scope for medium term growth as inefficient traditional solutions require replacement. This trend is also to be expected across Europe, which along with Renewables activity, will be a clear area of focus for growth within this division.

The Renewables product offering comprising solarthermal, air-sourced heat pumps, hot water storage and rainwater harvesting all recorded encouraging growth as the shift towards more compelling and economic renewable solutions gathers momentum. The UK market has delivered the majority of this growth to date. However, significant progress has also been made in North America, and sizeable specifications have been achieved in China. The UK's Renewable Heat Initiative (RHI) should also serve to accelerate demand for certain elements of this product range going forward.

As in previous years, the environmental tank business continues to be impacted by the polyethylene raw material related warranty issues dating back to 2002/2003. Full provision has now been made for the expected warranty claims through to the expiry of the warranty period. The Group's legal claim against the supplier, Borealis, for the full recovery of past and potential future losses was heard in the High Court in London with the hearing concluding in July 2011. A judgment is anticipated in the early part of 2012.

Access Floors

(1) Comprising volume -4%, price/mix +2% and currency impact -3%

The Group's Access Floors division is geared predominately towards the new build office and data warehousing sectors, mainly in North America and the UK. The decrease in trading margin reflects the combination of the year on year volume decline and relative business mix.

Globally, the datacenter market has been robust during the downturn years and has been providing the base activity for the US business in recent times. As a sector, the datacenter market is forecast to grow substantially over the medium to longer term and Kingspan's new range of products and geographic strategies have been tailored to captalise on this opportunity.

Office construction, on the other hand, is a highly cyclical segment clearly evidenced by the dramatic reduction experienced in the UK during last year, and currently being experienced in the US. This has substantially impacted demand for our "bare" products, which are forecast to weaken further in the US for the foreseeable future. However, gradual improvement in the UK is expected from 2012 with volume growth unlikely in the US until 2013.

FINANCIAL REVIEW

Overall

The Group trading margin in the first half of the year was 6.0%, compared to 6.4% in the first half of 2010. The decrease reflects the divisional mix of earnings year on year as well as the initially lower margins on the CIE acquired businesses. Group trading profit grew by 24% from €35.7m to €44.2m, driven principally by a 16% increase in underlying sales. Group trading profit was up 17% excluding the impact of CIE. The amortisation charge in respect of intangibles of €2.5m was in line with the charge in the first half of 2010, with the incremental charge in respect of CIE offset by an amount related to intangibles which had been fully written off in 2010. Group operating profit, after amortisation, grew by 26% to €41.7m. Profit after tax was €29.2m compared to €21.3m in the first half of 2010 driven in the main by the increase in operating profit.

Free Cash Flow

The Group achieved a free cash flow of €32.4m (H1 2010: €28.7m), an increase of 13%, which is stated after net capital expenditure of €10.6m (H1 2010: €4.4m). An analysis of free cash flow is set out in the table below:

*Earnings before finance costs, income taxes, depreciation and intangible asset amortisation.

Working Capital

Working capital increased by €14.7m in the first half of 2011 (increase of €8.7m in H1 2010). This reflects the incremental working capital required to support the underlying sales growth of 16% in the period.

Retirement Benefits

The Group has two legacy defined benefit pension schemes in the UK. These schemes have been closed and the liability relates only to past service. All current service pension provision is made under defined contribution arrangements.

Finance Costs

Net finance costs of €5.6m were recorded in the first half of 2011 compared to €7.6m in the comparable period in 2010. A non cash finance amount of €0.3m was charged in respect of FX and mark-to-market adjustments relating to the Group's 2005 Private Placement. The comparable charge was €2.6m in H1 2010 with the associated swap designated as a cashflow hedge from February 2010 resulting in lower income statement volatility. Effective hedges have been put in place for the newly issued Private Placement in August 2011.

Bank interest payable increased by €0.3m due to higher average borrowings in 2011 as a result of increased debt levels associated with the acquisition of CIE partially offset by lower commitment fees than in H1 2010 due to higher drawn debt levels.

Taxation

The tax charge for the period represents an effective tax rate of 18% (H1 2010: 15.0%). The increase in the effective rate reflects the relative geographic mix of earnings year on year.

Net Debt

Net debt increased by €87.8m from €128.7m at 31 December 2010 to €216.5m at 30 June 2011. The key components of the debt movement were €32.4m generated in free cashflow offset by €107.1m incurred in respect of the acquisition of CIE (net of disposal proceeds). In addition, an amount of €0.3m was paid in respect of the acquisition of the remaining interest in a subsidiary. Furthermore, deferred consideration amounts of €2.2m were paid in respect of acquisitions made in previous years.

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

·; The ratio of net debt to EBITDA of a maximum 3.5 times; and

·; EBITDA to net interest charge of a minimum 4.0 times

The actual performance compared to the covenants is set out below:

*Earnings before finance costs, income taxes, depreciation, intangible asset amortisation and non-trading items (net of related tax).

The maturity profile of Group debt facilities is set out below:

*on a pro-forma basis, net debt as at 30 June 2011 adjusted for Private Placement issued on 10 August 2011

Related Party Transactions

There were no changes in related party transactions from the 2010 Annual Report that could have a material effect on the financial position or performance of the Group in the first half of the year.

Principal Risks & Uncertainties

Details of the principal risks and uncertainties facing the Group can be found in the 2010 Annual Report. These risks, but in particular macro-economic construction activity in key markets, fluctuating raw material costs and volatile currencies, remain the most likely to affect the Group in the second half of the current year. The Group actively manages these and all other risks through its control and risk management processes.

Dividend

The Board has declared an interim dividend of 4.5 cent per share, an increase of 12.5% on the 2010 interim dividend of 4.0 cent per share. The interim dividend will be paid on 23 September 2011 to shareholders on the register on the record date 2 September 2011.

Subsequent Event

On 10 August 2011, the Group completed a ten year US private placement issuance of $200m maturing in August 2021. Of this amount $81.4m was retained in US dollars with the balance of $118.6m swapped into GBP. This issuance extends the average maturity of Group net debt by 2.75 years to 5.5 years.

Board Changes

The Company is pleased to announce the appointment of Mr. Gilbert McCarthy to the Board of the Company, with effect from 1 September 2011. Mr. McCarthy, who has been with the Group for the past 13 years, is currently the managing director of the Group's Insulated Panels businesses in the UK, Ireland, Western Europe and Australia, and was previously managing director of the Off-site Division and general manager of the Irish Insulation Board business.

The Company also announces that Mr. Noel Crowe will be resigning from the Board with effect from 31 August 2011, and will be leaving the business in early November. The Board would like to thank Mr. Crowe for his contribution to the Environmental & Renewables Division over the past ten years.

OUTLOOK

During the first half of 2011, penetration growth, rising refurbishment activity and geographic expansion all combined to drive the business forward. The pace of growth, however, eased during quarter two and is likely to ease further in the second half reflecting the limited evidence to date of a sustained economic recovery in the Group's key markets.

Steel and chemical raw material prices in the third quarter are likely to remain broadly flat over quarter two, reflecting the recent tempering in global demand for both materials, particularly in Asia.

The order book and pipeline in both the Insulated Panels and Insulation Boards businesses remains higher than a year earlier. This, when combined with progress on the integration of the CIE acquisition, should result in continuing momentum throughout the business, albeit at a lower level than in the first half of the year. However, we remain very mindful in the period ahead of renewed global uncertainties and their possible impacts.

The Group's range of high performance solutions, market positions and increasing geographic diversity, combined with its balance sheet strength, positions the business well for the future.

RESPONSIBILITY STATEMENT

Directors' Responsibility Statement in respect of the Half Yearly Financial Report for the six months ended 30 June 2011

Each of the directors, whose names and functions are listed in the 2010 Annual Report (with the exception of Mr. Dermot Mulvihill, who retired on 12 May 2011) confirm our responsibility for preparing the half yearly financial report in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the Transparency Rules of the Republic of Ireland's Financial Regulator and with IAS34 'Interim Financial Reporting' as adopted by the EU. We confirm that to the best of our knowledge:

a) the condensed consolidated interim financial statements comprising the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and related notes have been prepared in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the Transparency Rules of the Republic of Ireland's Financial Regulator and with IAS 34 'Interim Financial Reporting' as adopted by the EU.

b) The interim management report includes a fair review of the information required by:

i) Regulation 8(2) of the Transparency (Directive 2004/109/EC) Regulations 2007, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

ii) Regulation 8(3) of the Transparency (Directive 2004/109/EC) Regulations 2007, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

On behalf of the Board

Gene Murtagh Geoff Doherty

Chief Executive Officer Chief Financial Officer

22 August 2011 22 August 2011

INDEPENDENT REVIEW REPORT TO KINGSPAN GROUP PLC.

Introduction

We have been engaged by the company to review the condensed consolidated interim financial statements for the six months ended 30 June 2011 which comprise the condensed consolidated Income Statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Transparency (Directive 2004/109/EC) Regulations 2007 ("the TD Regulations") and the Transparency Rules of the Republic of Ireland's Financial Regulator. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this 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 for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the TD Regulations and the Transparency Rules of the Republic of Ireland's Financial Regulator.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The directors are responsible for ensuring that the condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed interim financial statements based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements for the six months ended 30 June 2011 are not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU, the TD Regulations and the Transparency Rules of the Republic of Ireland's Financial Regulator.

Roger Gillespie

For and on behalf of KPMG

Chartered Accountants, Statutory Audit Firm

1 Stokes Place

St Stephen's Green

Dublin 2

22 August 2011

Kingspan Group plc

Condensed consolidated income statement

for the half year ended 30 June 2011

Condensed consolidated statement of comprehensive income

for the half year ended 30 June 2011

Condensed consolidated statement of financial position

as at 30 June 2011

Condensed consolidated statement of changes in equity

For the half year ended 30 June 2011 (unaudited)

*Capital Redemption and Revaluation reserves are €723,000 and €713,000 respectively.

Condensed consolidated statement of changes in equity

For the half year ended 30 June 2010 (unaudited)

*Capital Redemption and Revaluation reserves are €723,000 and €713,000 respectively.

Condensed consolidated statement of changes in equity

For the financial year ended 31 December 2010 (audited)

*Capital Redemption and Revaluation reserves are €723,000 and €713,000 respectively.

Condensed consolidated statement of cash flows

for the half year ended 30 June 2011

Notes

forming part of the financial statements

1 Reporting entity

Kingspan Group plc ("the Company" or "the Group") is a public limited company registered and domiciled in Ireland. The condensed consolidated interim financial statements of the Company as at and for the six months ended 30 June 2011 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in jointly controlled entities.

The Group is primarily involved in the manufacture of high performance insulation and building envelope solutions.

The financial information presented in the half-yearly report does not represent full statutory accounts. Full statutory accounts for the year ended 31 December 2010 prepared in accordance with IFRS, upon which the auditors have given an unqualified audit report, have been filed with the Registrar of Companies.

2 Basis of preparation

The interim results for the half year to 30 June 2011 and 30 June 2010 are unaudited.

(a) Statement of compliance

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

These condensed consolidated financial statements were approved by the Board of Directors on 19 August 2011.

(b) Significant accounting policies

The accounting policies applied by the Group in the Interim Financial Statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2010.

The adoption of other new standards and interpretations (as set out in the 2010 annual report) that became effective for the Group's financial statements for the year ended 31 December 2011 did not have any significant impact on the interim financial statements.

(c) Estimates

The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing the Interim Financial Statements, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2010.

These interim results are available on the Group's website (www.kingspan.com).

3 Reporting currency

The condensed consolidated interim financial statements are presented in euro which is the functional currency of the Company.

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

The following significant exchange rates were applied during the period:

4 Operating segments

The Group has the following operating segments:

Analysis by class of business