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NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021 (continued)
19 Financial Risk Management and Financial Instruments (continued)
Capital Management Policies and Procedures
The Group employs a combination of debt and equity to fund its operations. As at 31 December the total capital employed in the Group
was as follows:
2021
€m
2020
€m
Net Debt
Equity
756.1
2,959.3
236.2
2,397.6
Total Capital Employed
3,715.4
2,633.8
The Board’s objective when managing capital is to maintain a strong capital base so as to maintain the confidence of investors,
creditors and the market. The Board monitors the return on capital (defined as total shareholders’ equity plus net debt), and targets a
return in excess of 20% together with a dividend level that is compatible with industry norms, but which also reflects any exceptional
market conditions.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the
advantages and security afforded by a sound capital position. The Group actively manages foreign currency and interest rate exposure,
as well as actively managing the net asset position, in order to create bottom line value. This necessitates the development of a
methodology to optimise the allocation of financial resources on the one hand and the return on capital on the other.
The Board closely monitors externally imposed capital restrictions which are present due to covenants within the Group’s core
banking facilities.
As part of its capital management strategy, the Group repurchased 600,000 shares during the year at a weighed average price of €78.16.
There were no material changes to the Group’s approach to capital management during the year.
20 Provisions for Liabilities
Guarantees and warranties
At 1 January
Arising on acquisitions (Note 22)
Provided during year
Claims paid
Provisions released
Effect of movement in exchange rates
At 31 December
Current liability
Non-current liability
2021
€m
2020
€m
119.0
12.5
58.8
(34.7)
(17.2)
4.3
142.7
109.7
16.1
50.8
(31.4)
(21.5)
(4.7)
119.0
67.8
74.9
142.7
55.7
63.3
119.0
The Group manufactures a wide range of insulation and related products for use primarily in the construction sector. Some products
carry formal guarantees of satisfactory performance of varying periods following their purchase by customers and a provision is carried
in respect of the expected costs of settling warranty and guarantee claims which arise. The Group in the course of its operations can be
party to claims, litigation or enforcement actions. Both the number of claims and the cost of settling the claim are sensitive to change.
In most cases, a reasonably reliable estimate can be made based on a range of possible outcomes. If the extent and cost of settling a
claim or potential claim or enforcement action is not yet reasonably determinable, no provision is made until such a reliable estimate can
be made. Provisions are reviewed by management on a regular basis, and adjusted to reflect the current best estimate of the economic
outflow. If it is no longer probable that an outflow of economic benefits will be required, the related provision is reversed.
For the non-current element of the provision, the Group anticipates that these will be utilised within three years of the reporting date.
Discounting of the non-current element has not been applied because the discount would be immaterial.
Kingspan Group plc Annual Report & Financial Statements 2021
Financial Statements
