TIDMAGA
27th August 2010
FOR IMMEDIATE RELEASE
AGA RANGEMASTER GROUP PLC
2010 HALF-YEARLY FINANCIAL REPORT
RANGEMASTER DRIVES IMPROVED PROFIT PERFORMANCE
HIGHLIGHTS
AGA Rangemaster Group plc ("the Group"), the consumer brands group, is pleased
to announce its interim results for the half year ended 30th June 2010.
Half year to 30th June 2010 2009
GBPm GBPm
______________
Revenue 123.4 117.8
EBITDA 20.5* 2.0
Operating profit / (loss) before amortisation 1.6 (0.9)
Operating profit / (loss) 0.8 (1.7)
Profit / (loss) before tax 16.4 (2.4)
Basic earnings / (loss) per share 17.6p (2.3p)
Equity attributable to equity holders of the parent 132.6 151.3
Dividend proposed 0.7p -
Net cash 22.4 2.3
* includes GBP16.3 million pension curtailment gain
Financial and operational highlights
- Revenues increased by 5% and operating profits improved in line with the
expected impact of operational gearing.
- Using the successful Rangemaster business model in the UK and North America
is raising efficiencies and reducing costs.
- Net cash of GBP22.4 million is over GBP20 million higher than at the previous
half year driven by continued sound working capital management.
- Dividend payments restored at 0.7 pence per share.
- Order intake remains up indicating improvements seen so far this year
should continue through the second half.
"2010 is proving encouraging with Rangemaster driving improved profit
performance even though consumers remain cautious. Rangemaster's export growth,
product innovation and the breadth of its range of appliances are providing a
stimulus and we look to it, alongside AGA, to trigger the operational gearing
we have in place and we expect this to drive longer term earnings momentum."
William McGrath
Chief Executive
Enquiries:
William McGrath, Chief Executive 020 7404 5959 (today)
Shaun Smith, Finance Director 01926 455 731 (thereafter)
Simon Sporborg / Charlotte Kenyon (Brunswick) 020 7404 5959
AGA RANGEMASTER GROUP PLC
2010 INTERIM MANAGEMENT REPORT
Overview
The Group followed up a profitable second half to 2009 with an improved and
profitable first half to the year as markets bounced back after a slow start.
Overall revenues were up by nearly 5% with growth at AGA and Rangemaster partly
offset by revenue declines at Rayburn, Stanley and Fired Earth. A further
strong cash management performance resulted in the Group ending the period with
over GBP22 million of net cash, an increase of over GBP20 million from a year
earlier. The current level of sales leads suggest that the improving trends
should continue into the second half even though the level of housing mortgage
approvals - a key lead indicator for us - is suggesting the market is now flat
year-on-year.
Broadening the use of the successful business processes of Rangemaster across
the Group, along with a vibrant product development programme, is delivering
results. The enthusiasm of consumers for our products provides confidence that
the fundamental strengths of the Group will provide the renewed impetus into a
more sustained upturn.
Half year performance
Revenue in the first half was GBP123.4 million up from GBP117.8 million in the
first half of 2009. The UK provided 62% of sales, Europe 23% with 15% in North
America and the Rest of the World.
EBITDA of GBP20.5 million was boosted in the half year by a pension curtailment
gain of GBP16.3 million and was GBP18.5 million higher than the previous half year.
Operating profit before amortisation of GBP1.6 million compares with an operating
loss before amortisation in the previous half year of GBP0.9 million.
Underlying earnings per share - excluding non-recurring costs of GBP0.7 million
and the post tax curtailment gain of GBP11.7 million - was 1.7 pence per share
compared with a loss of 0.4 pence in the first half of 2009.
Given the improving performance and more stable markets the directors have
decided to reintroduce an interim dividend at 0.7 pence per share. Future
dividend payments will reflect the performance and the available cash resources
of the Group.
Operating performances
The Group responded swiftly and firmly to the recession. Over the last 18
months major steps have been taken to integrate more fully our kitchen
appliance brands in the UK and in North America while keeping the clear
definitions for the individual brands. The management structures in the UK and
in North America have been streamlined and the Group aims to have a single set
of processes across the Group. Such responses strengthen the capacity of the
business to deal with weak consumer demand.
Our cast iron cooker brands are AGA, Rayburn and Stanley. The AGA brand
rebounded with sales volumes up. For AGA, sales to existing owners upgrading
their models have become significant and in addition over 300 owners have
upgraded their burner systems this year. Current levels of sales leads and
retail footfall suggest a continuing improvement in the second half year. The
all-in-one cooker-boiler brands, Rayburn and Stanley, were down as consumer
enthusiasm for solid fuel and wood burning models fell away. Overall, sales
volumes for cast iron cookers were down 10% from 6,500 to 5,850.
For the cooker-boiler lines we are looking at ways to make the products more
widely accessible and better understood in the plumbing and heating market. We
also opened our first AGA Rayburn 'Energy Management Centre' in Kidderminster
this week - close to our Telford development centre and training school - in
order to put our products and brands at the centre of both a consumer and trade
shift in focus towards modernising the approach to sourcing and costing of
energy in the home.
Rangemaster had a further strong performance with revenues up around 10% and
with the operational gearing of our well invested Leamington Spa factory
boosting profitability. While cooker volumes in the UK were flat, average
selling prices were up with a shift to higher specification products and a
broadening of the model ranges. 25% of cooker sales volumes were outside the UK
with France now comfortably above Ireland as the primary export market. Sales
of the wider product range of splashbacks, hoods, fridges and sinks did well,
particularly through our 192 design centres. Sales to the kitchen specialist
market were well up including sales of Mercury cookers. Of total Rangemaster
sales, for every GBP1 spent on cookers in the UK 30 pence is spent on other
Rangemaster products.
In North America progress to create an integrated hot and cold offering under
the AGA Marvel brand continued. For three years Marvel sales have declined.
Now, from our new and efficient facility in Greenville, Michigan, sales are
improving. This has been helped by the product quality and specification
improvements made possible by the capital investment in the facility. Recently
we have set about moving hot side production from our Kitchener, Ontario
facility to Greenville which is to be our production and distribution hub for
North America. With refrigeration sales up and cooker sales set to improve
following the launch of the AGA PRO+, prospects look much improved.
Fired Earth had a particularly strong period of customer engagement with a
positive response to the new, free catalogue, the 'Tile Basics' tile campaign
and the fitted kitchen launch. Footfall, web traffic and brochure requests rose
significantly. Despite more, but smaller orders, the business continued to make
losses. A detailed review has led to the appointment of an experienced retail
interim managing director. The plan is to have an operation sharply focused on
an expanded core tile and paint range and for sales plans for the developing
kitchen living operation to be driven by the designer, Charles Smallbone.
These steps are designed to eliminate the losses which are expected to be
around GBP2 million this year. These plans will be in place by the end of 2010,
at which time the Board will review the next phase in the development of Fired
Earth as a well recognised sector-leading home fashions brand.
Dealers of Grange, our international furniture operation - some of whom are
already selling our appliances - will be offered the Charles Smallbone
Grange-made kitchens. A Grange store in Rue du Bac in Paris is being refitted
to display them before the up-and-coming Maison d'Objet exhibition in Paris.
Grange had a better first half having reduced the cost base significantly,
breaking even in Europe and with US losses now linked to high rents in some of
its design centre locations.
Continuing operational initiatives
The Group continues to take steps to limit costs and raise efficiency levels.
Current initiatives involve the integration project at AGA Marvel and the
repositioning of Fired Earth. In addition, we have looked at the sales
structures across the Group to ensure that sales staff have the right skills,
focus, information and support to optimise the conversion of sales leads.
Linking this effort closely with the work to increase leads through our central
marketing initiatives on brochure fulfilment, web development and with the call
centre should all help drive revenue. With our selective marketing, our large
1.2 million customer database and our 240,000 email addresses, we feel the
market presence and perception of our brands continue to improve.
Pension scheme
The pension scheme deficit as calculated on an IAS 19 accounting basis at 30th
June 2010 was GBP39.6 million, compared with GBP40.5 million at 31st December 2009.
The full triennial valuation of the pension scheme undertaken by Towers Watson
Limited on the actuarial basis as at 31st December 2008 has now been signed by
the scheme actuary and has been submitted to the Pensions Regulator. The
actuarial deficit as at that date has been assessed at GBP161.3 million when
there was a GBP57.5 million surplus on an accounting basis. Recalculated at 31st
December 2009, the actuarial deficit is considered to be GBP84.0 million compared
with the accounting deficit of GBP40.5 million as at that date.
Under the recovery plan now agreed with the trustee of the scheme, the Group
will make deficit contributions to the scheme of GBP2.0 million in 2010 and 2011,
and (assuming the triennial valuation to be undertaken as at 31st December 2011
subsequently does not change the contributions schedule) thereafter GBP10.0
million per annum from 2012 to 2020 inclusive with a bullet payment of GBP48.0
million on 31st December 2020. In 2011, a normal service contribution of around
GBP2.5 million is expected after it was reduced for three years to around GBP1.0
million because of the prepayment made in 2007.
The Group continues to provide GBP50.0 million of guarantees in support of the
Group's potential obligation to the pension scheme in 2020 under a long-term
funding agreement to make the scheme fully funded on a self-sufficiency basis
by that date.
In 1997 when ACT tax credits were abolished, the Group immediately responded by
starting to focus actively on reducing pension costs. From that point the Group
has been working hard and closely with the trustee of the scheme to ensure that
the obligations to members are met while the costs to the Group are carefully
monitored and managed. In particular, in 2001 the scheme was closed to new
entrants on the defined benefit basis of pension provision, and appropriate
modifications to future pension accrual have been made since then including the
freezing of current member pensionable salaries in 2009/2010. This has given
rise to total curtailment gains of GBP20.1 million under IAS 19. Shifts to more
defensive bond allocations were made in 2001 and 2007. Further liability and
risk management exercises will be undertaken when and where appropriate.
Current trading and prospects
We are moving into the key autumn selling season and the current level of leads
across our brands does suggest a reasonable sales period ahead although the
consumer mood is currently more subdued than in the spring.
Factors providing us with some confidence include: the new 'AGA Guide' which is
generating excellent consumer interest; an upturn in kitchen leads following
the launch of the new Bastide fitted range; and a strong portfolio of
established and new products from Rangemaster, reflected this autumn with the
launch of the new 100 cm wide 'Professional+ 100' range.
Against a background where consumers remain extremely cautious about committing
to larger value purchases we do not expect a substantial profit rebound.
However, we have put in place all the groundwork which is needed to ensure we
benefit from an improving mood among our targeted customer base when it comes.
The Group has great brands that are attracting new aspirational consumers and
an excellent product portfolio and pipeline. This gives us confidence in the
prospects for the Group.
Financial review
Operating profit - The Group operating profit was GBP0.8 million compared to a
loss of GBP1.7 million in the first half of 2009.
Net pension credit - The net pension credit of GBP16.4 million (half year 2009:
GBP0.8 million) includes a curtailment gain of GBP16.3 million following the
freezing of pensionable salaries for the majority of the scheme members early
in the year. The pensionable salaries of the other scheme members had already
been frozen in the second half of 2009 which gave rise to a curtailment gain of
GBP3.8 million.
Non-recurring costs - Non-recurring costs were GBP0.7 million in the period (full
year 2009: GBP3.6 million). These mainly relate to the announced closure of our
Canadian manufacturing operation which will have been moved into our Greenville
plant by the end of November. The move is expected to deliver annualised
savings of GBP0.6 million in 2011.
Finance income / costs - The net finance costs were GBP0.1 million (half year
2009: GBP0.2 million) reflecting the low rate of interest earned on cash deposits
offset by interest payable on the Group's EUR and USD hedging loans.
Taxation - The effective tax rate for the year is forecast at 26.2% compared to
an effective rate of nil in 2009. The income tax expense relates to deferred
tax on pensions. Deferred tax has been accounted for at a rate of 28.0% as the
Finance (No. 2) Bill 2010 was not substantively enacted until after the balance
sheet date.
Earnings per share - Reported basic earnings per share were 17.6 pence (half
year 2009: 2.3 pence loss). The average number of shares in issue was 69.2
million, unchanged from the previous half year and year end. Adjusted
underlying earnings per share (excluding the post tax pension curtailment gain
and non-recurring costs) were 1.7 pence (half year 2009: 0.4 pence loss).
Dividends - An interim dividend of 0.7 pence per share has been proposed (2009:
nil).
Cashflow - The Group continues to place great emphasis on managing its
operating cashflow and the result was a small GBP1.8 million cash outflow in the
period (half year 2009: GBP2.0 million inflow). The working capital outflow was
GBP5.4 million (half year 2009: GBP2.7 million inflow) and followed a full year
inflow in 2009 of GBP22.9 million.
Net capital expenditure in the period was tightly controlled and totalled GBP1.2
million (half year 2009: GBP4.3 million) and compares to a depreciation charge of
GBP3.2 million (half year 2009: GBP3.4 million). The 2009 capital expenditure
figure included a GBP2.8 million payment for the Marvel factory in the USA.
The total cash outflow from operating and investing activities was GBP5.5 million
(half year 2009: GBP5.9 million).
Balance sheet - The balance sheet continues to remain strong with net cash of
GBP22.4 million (30th June 2009: GBP2.3 million). Working capital at the period end
was well controlled at GBP19.4 million (30th June 2009: GBP34.1 million).
The IAS 19 net pension deficit was revalued to GBP39.6 million and compares to a
deficit of GBP40.5 million at 31st December 2009 and GBP13.8 million at 30th June
2009.
Net assets of the Group at 30th June 2010 were GBP133.0 million, little changed
from the GBP134.3 million at the end of last year.
Risks and uncertainties - There are a number of risks and uncertainties which
could have a material impact on the Group's performance over the remaining six
months of the financial year and could cause actual results to differ from
expected and historical results. The directors do not consider that the
principal risks and uncertainties have changed since the publication of the
Annual Report and Accounts for the year ended 31st December 2009. A detailed
explanation of the key risks and uncertainties can be found on pages 12 to 13
of the Annual Report & Accounts 2009, a copy of which is available at
www.agarangemaster.com.
By order of the board:
J Coleman W B McGrath
Chairman Chief Executive
27th August 2010
AGA RANGEMASTER GROUP PLC
2010 HALF-YEARLY FINANCIAL REPORT
CONSOLIDATED INCOME STATEMENT
Half year Half year Year to
to June to June December
2010 2009 2009
Unaudited Unaudited Audited
______________________________________
Note GBPm GBPm GBPm
Revenue 123.4 117.8 245.0
Net operating costs (122.6) (119.5) (246.5) ________________________________________________________________________________________
Group operating profit / (loss) 0.8 (1.7) (1.5)
Net pension credit 10 16.4 0.8 5.4
Non-recurring cost 4 (0.7) (1.3) (3.6)
________________________________________________________________________________________
Profit /(loss) before net finance costs and income tax 16.5 (2.2) 0.3
Finance income 0.1 0.2 1.1
Finance costs (0.2) (0.4) (0.9)
________________________________________________________________________________________
Profit / (loss) before income tax 16.4 (2.4) 0.5
Income tax expense 6 (4.3) - -
________________________________________________________________________________________
Profit / (loss) for the period 12.1 (2.4) 0.5
________________________________________________________________________________________
Profit / (loss) attributable to:
Equity holders of the parent 12.2 (1.6) 1.7
Non-controlling interests (0.1) (0.8) (1.2)
________________________________________________________________________________________
Profit / (loss) for the period 12.1 (2.4) 0.5
________________________________________________________________________________________
Earnings / (loss) per share attributable
to equity holders of the parent 7 P P P
Basic 17.6 (2.3) 2.5
Diluted 17.6 (2.3) 2.5
________________________________________________________________________________________
p p p
Dividend per share - proposed or paid 8 0.7 - -
________________________________________________________________________________________
All the above results relate to continuing operations.
AGA RANGEMASTER GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half year Half year Year to
to June to June December
2010 2009 2009
Unaudited Unaudited Audited
____________________________________
GBPm GBPm GBPm
Profit/ (loss) for the period 12.1 (2.4) 0.5
________________________________________________________________________________________
Exchange adjustments on hedge of net investments (0.1) 2.1 1.6
Exchange differences on translation of foreign
operations (1.7) (11.6) (9.3)
Actuarial losses on defined benefit pension schemes (16.0) (72.7) (104.5)
Deferred tax on actuarial losses 4.3 20.4 29.3
________________________________________________________________________________________
Other comprehensive losses for the period (13.5) (61.8) (82.9)
________________________________________________________________________________________ Total comprehensive losses for the period (1.4) (64.2) (82.4)
________________________________________________________________________________________
Attributable to:
Equity holders of the parent (1.3) (63.5) (81.1)
Non-controlling interests (0.1) (0.7) (1.3)
________________________________________________________________________________________
Total comprehensive losses for the period (1.4) (64.2) (82.4)
________________________________________________________________________________________
AGA RANGEMASTER GROUP PLC
CONSOLIDATED BALANCE SHEET
Half year Half year Year to
to June to June December
2010 2009 2009
Unaudited Unaudited Audited
_________________________________________
Note GBPm GBPm GBPm
Non-current assets
Goodwill 66.7 65.8 66.9
Intangible assets 22.2 22.2 23.2
Property, plant and equipment 9 48.9 54.3 50.8
Deferred tax assets 21.7 5.5 21.7
________________________________________________________________________________________
159.5 147.8 162.6
________________________________________________________________________________________
Current assets
Inventories 44.9 54.8 46.0
Trade and other receivables 36.4 33.7 31.7
Current tax assets 1.8 2.1 1.8
Cash and cash equivalents 11 39.7 38.5 45.0
________________________________________________________________________________________
122.8 129.1 124.5
________________________________________________________________________________________
Assets held for sale 3.2 1.7 3.1
________________________________________________________________________________________
Total assets 285.5 278.6 290.2
________________________________________________________________________________________
Current liabilities
Borrowings 11 (1.7) (5.7) (1.3)
Trade and other payables (61.9) (54.4) (63.2)
Current tax liabilities (16.8) (9.1) (18.4)
Current provisions 12 (2.2) (2.1) (2.4)
________________________________________________________________________________________
(82.6) (71.3) (85.3)
________________________________________________________________________________________
Net current assets 40.2 57.8 39.2
________________________________________________________________________________________
Non-current liabilities
Borrowings 11 (15.6) (30.5) (15.7)
Retirement benefit obligation 10 (39.6) (13.8) (40.5)
Deferred tax liabilities (6.1) (1.5) (6.1)
Provisions 12 (8.6) (9.1) (8.3)
________________________________________________________________________________________
(69.9) (54.9) (70.6)
________________________________________________________________________________________
Total liabilities (152.5) (126.2) (155.9)
________________________________________________________________________________________
Net assets 133.0 152.4 134.3
________________________________________________________________________________________
Equity
Share capital 13 32.5 32.5 32.5
Share premium account 29.6 29.6 29.6
Other reserves 84.0 85.9 85.8
Retained (losses) / earnings (13.5) 3.3 (14.1)
________________________________________________________________________________________
Equity attributable to equity holders of the parent 132.6 151.3 133.8
Non-controlling interest 0.4 1.1 0.5
________________________________________________________________________________________
Total equity 133.0 152.4 134.3
________________________________________________________________________________________
AGA RANGEMASTER GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
Half year Half year Year to
to June to June December
2010 2009 2009
Unaudited Unaudited Audited
___________________________________
Note GBPm GBPm GBPm
Cash flows from operating activities
Profit / (loss) before income tax 16.4 (2.4) 0.5
Reconciliation of profit / (loss) before income
tax to net cash flows:
Net finance costs / (income) 0.1 0.2 (0.2)
Depreciation of property, plant and equipment 9 3.2 3.4 7.1
Impairment of assets held for sale - - 0.8
Amortisation of intangible assets 0.8 0.8 1.6
Loss on disposal of property, plant and equipment - - 0.1
Share-based payments expense 0.1 0.1 0.2
Decrease in inventories 0.8 5.6 15.3
(Increase) / decrease in receivables (5.3) 3.2 5.6
(Decrease) / increase in payables (0.9) (6.1) 2.0
Decrease in provisions (0.1) (1.5) (1.3)
Movement in pensions (16.9) (1.3) (6.4)
_______________________________________________________________________________________
Cash (used in) / generated from operating activities (1.8) 2.0 25.3
Finance (costs) / income (0.1) (0.2) 0.2
Tax (payment) / receipt (1.6) (2.5) 4.0
_______________________________________________________________________________________
Net cash (used in) / generated from operating
activities (3.5) (0.7) 29.5
_______________________________________________________________________________________
Cash flows from investing activities
Disposal proceeds from sale of subsidiaries less costs (0.2) 0.3 (0.4)
Purchase of Mercury - - (0.5)
Purchase of property, plant and equipment 9 (1.2) (4.3) (6.2)
Expenditure on intangibles (0.6) (1.2) (1.9)
_______________________________________________________________________________________
Net cash used in investing activities (2.0) (5.2) (9.0)
________________________________________________________________________________________
Cash flows from financing activities
Repayment of borrowings - (3.3) (20.5)
New bank loans raised 0.2 5.3 2.6
_______________________________________________________________________________________
Net cash generated from / (used in) financing
activities 0.2 2.0 (17.9)
_______________________________________________________________________________________
Effects of exchange rate changes - (0.5) (0.5)
_______________________________________________________________________________________
Net (decrease) / increase in cash and cash equivalents (5.3) (4.4) 2.1
Cash and cash equivalents at beginning of period 45.0 42.9 42.9
_______________________________________________________________________________________
Cash and cash equivalents at end of period 11 39.7 38.5 45.0
_______________________________________________________________________________________
AGA RANGEMASTER GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Half year to 30th June 2010
Equity attributable to equity holders of the parent
Non-
Share Share Other Retained controlling Total
capital premium reserves earnings Total interests equity
_________________________________________________________________________________________
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1st January 2010 32.5 29.6 85.8 (14.1) 133.8 0.5 134.3
Comprehensive income
Profit / (loss) for the
period - - - 12.2 12.2 (0.1) 12.1
Other comprehensive(losses) /
income:
Exchange adjustments on hedge
of net investments - - (0.1) - (0.1) - (0.1)
Exchange differences on
translation of foreign
operations - - (1.7) - (1.7) - (1.7)
Actuarial losses on defined
benefit pension schemes - - - 16.0) (16.0) - (16.0)
Deferred tax on actuarial
losses - - - 4.3 4.3 - 4.3
_________________________________________________________________________________________
Total comprehensive (losses)/
income for the period ended
30th June 2010 - - (1.8) 0.5 (1.3) (0.1) (1.4)
Share based payments - - - 0.1 0.1 - 0.1
__________________________________________________________________________________________
At 30th June 2010 32.5 29.6 84.0 (13.5) 132.6 0.4 133.0
__________________________________________________________________________________________
Half year to 30th June 2009
Equity attributable to equity holders of the parent
Non-
Share Share Other Retained controlling Total
capital premium reserves earnings Total interests equity
__________________________________________________________________________________________
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1st January 2009 32.5 29.6 95.5 57.1 214.7 1.8 216.5
Comprehensive income
Loss for the period - - - (1.6) (1.6) (0.8) (2.4)
Other comprehensive
(losses) / income:
Exchange adjustments on
hedge of net investments - - 2.1 - 2.1 - 2.1
Exchange differences on
translation of foreign
operations - - (11.7) - (11.7) 0.1 (11.6)
Actuarial losses on
defined benefit pension
schemes - - - (72.7) (72.7) - (72.7)
Deferred tax on actuarial
losses - - - 20.4 20.4 - 20.4
__________________________________________________________________________________________
Total comprehensive losses for
the period ended 30th June 2009 - - (9.6) (53.9) (63.5) (0.7) (64.2)
Share based payments - - - 0.1 0.1 - 0.1
__________________________________________________________________________________________
At 30th June 2009 32.5 29.6 85.9 3.3 151.3 1.1 152.4
__________________________________________________________________________________________
AGA RANGEMASTER GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31st December 2009
Equity attributable to equity holders of the parent
Non-
Share Share Other Retained controlling Total
capital premium reserves earnings Total interests equity
__________________________________________________________________________________________
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1st January 2009 32.5 29.6 95.5 57.1 214.7 1.8 216.5
Comprehensive income
Profit / (loss) for the year - - - 1.7 1.7 (1.2) 0.5
Other comprehensive (losses) / income:
Exchange adjustments on hedge
of net investments - - 1.6 - 1.6 - 1.6
Exchange differences on translation
of foreign operations - - (9.2) - (9.2) (0.1) (9.3)
Actuarial losses on defined benefit
pension schemes - - - (104.5)(104.5) - (104.5)
Deferred tax on actuarial
losses - - - 29.3 29.3 - 29.3
___________________________________________________________________________________________
Total comprehensive losses for
the year ended 31st December
2009 - - (7.6) (73.5) (81.1) (1.3) (82.4)
Transfer between reserves - - (2.1) 2.1 - - -
Share based payments - - - 0.2 0.2 - 0.2
__________________________________________________________________________________________
At 31st December 2009 32.5 29.6 85.8 (14.1) 133.8 0.5 134.3
__________________________________________________________________________________________
AGA RANGEMASTER GROUP PLC
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
The interim condensed consolidated financial statements of the Group for the
six months ended 30th June 2010 were authorised for issue in accordance with a
resolution of the directors on 26th August 2010.
AGA Rangemaster Group is a public limited company incorporated and domiciled in
the UK whose shares are publicly traded on the London Stock Exchange.
The principal activities of the Group are the manufacture and sale of range
cookers and related home fashions products.
The interim condensed consolidated financial statements do not comprise the
Group's statutory accounts as defined by section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31st December 2009 were approved by the
board of directors on 12th March 2010 and were delivered to the Registrar of
Companies. The auditors' report on those accounts was unqualified, it did not
contain an emphasis of matter paragraph and did not contain any statement under
section 498(2) or (3) of the Companies Act 2006.
The financial information presented here is unaudited but has been reviewed by
the Group's auditor, Ernst & Young LLP. Its review opinion appears at the end
of these notes.
2. BASIS OF PREPARATION
The interim condensed consolidated financial statements for the six months
ended 30th June 2010 have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with International
Accounting Standard 34 (IAS 34) 'Interim Financial Reporting' as adopted by the
European Union.
The interim condensed consolidated financial statements do not include all the
information and disclosures required in the annual financial statements and
should be read in conjunction with the Group's Annual Report and Accounts as at
31st December 2009 which have been prepared in accordance with International
Financial Reporting Standards as adopted by the European Union.
The directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the
half-yearly condensed financial statements.
3. ACCOUNTING POLICIES
The interim condensed consolidated financial statements have been prepared
using the same accounting policies as used in the preparation of the Group's
Annual Report and Accounts for the year ended 31st December 2009 except for the
adoption of new standards, interpretations and amendments, noted below. The
adoption of these standards, interpretations and amendments did not have any
material impact on the financial position or performance of the Group.
IAS 27 - Consolidated and Separate Financial Statements (amended)
This amendment reflects changes to the accounting for non-controlling
(previously minority) interests. It deals primarily with the accounting for
changes in ownership interests in subsidiaries after control is obtained, the
accounting for the loss of control of subsidiaries, and the allocation of
profit or loss to controlling and non-controlling interests in a subsidiary.
IAS 38 - Intangible Assets (amended)
This amendment clarifies that an intangible asset that is separable only
together with a related contract, identifiable asset or liability is recognised
separately from goodwill together with the related item. Also complementary
intangible assets with similar useful lives may be recognised as a single
asset.
IAS 39 - Financial Instruments: Recognition and Measurement (amended)
This amendment addresses the designation of a one-sided risk in a hedged item
and the designation of inflation as a hedged risk or portion in particular
situations.
IFRS 2 - Share-based Payments - Group Cash-settled Share-based Payments
Transactions (amended)
This standard has been amended to clarify the accounting for group cash-settled
share-based payment transactions, superseding IFRIC 8 and IFRIC 11.
IFRS 3 - Business Combinations (revised)
This revised standard applies the acquisition method to business combinations.
All payments to purchase a business are recorded at fair value at the
acquisition date, with contingent payments classified as debt and subsequently
re-measured through the income statement. There is a choice on an
acquisition-by-acquisition basis to measure the non-controlling interest in the
acquiree either at fair value or at the non-controlling interest's
proportionate share of the acquiree's net assets. All acquisition costs are
expensed.
IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations (amended)
This amendment specifies that if an entity is committed to a plan to sell a
subsidiary, then it should classify all of that subsidiary's assets and
liabilities as held for sale when the held for sale criteria are met and
disclosures for discontinued operations are required by the parent when a
subsidiary meets the definition of a discontinued operation.
IFRIC 17 - Distributions of Non-cash Assets to Owners
This interpretation provides guidance on accounting for arrangements whereby an
entity distributes non-cash assets to shareholders either as a distribution of
reserves or as dividends.
Amendments to the following standards did not have any impact on the accounting
policies, financial position or performance of the Group:
IAS 1 - Presentation of Financial Statements
IAS 7 - Statement of Cash Flows
IAS 17 - Leases
IAS 36 - Impairment of Assets
IFRS 8 - Operating Segments
IFRIC 16 - Hedge of a Net Investment in a Foreign Operation
4. NON-RECURRING COSTS
The non-recurring costs during the period to 30th June 2010 relate to
redundancy and reorganisation programmes primarily at AGA Marvel.
5. SEGMENTAL ANALYSIS
The directors consider that there are two operating segments namely AGA (which
comprises the brands and operations of AGA, Fired Earth, Waterford Stanley and
Grange) and Rangemaster (which comprises the brands and operations of
Rangemaster, AGA Marvel, Heartland, La Cornue and Divertimenti). Two areas of
the business were identified over which the directors allocate resource, plan
purchasing, manufacturing, combined sales targets and incentives and marketing
programmes. These areas were determined to be the level at which the chief
operating decision maker makes decisions and were deemed to be the operating
segments of 'AGA' and 'Rangemaster'. The strategy as set by the board is for
the Group to be seen as a Global Consumer Brand which sells range cookers and
related kitchen products internationally with cross selling opportunities
creating appreciable competitive advantage for all our individual brands.
The operating results of the operating segments, for which discrete information
is available, are regularly reviewed by the chief executive and his senior
management team to make decisions about the resources to be allocated to the
segments and assess their performance. The two operating segments are
considered to meet the aggregation criteria as they have similar economic
characteristics, products and services, production processes, types and classes
of customer and methods of distribution. Management's focus is on the cross
selling of all consumer products to our customer database. - e.g. AGA Marvel is
responsible for distributing product manufactured in the UK at our Leamington Spa
(range cookers) and Telford (cast iron cookers) factories, which are then sold in
North America under the AGA brand.
Our customers are substantially of the same demographic. At the heart of our
sales strategy we look to sell packages of products to our customer base which,
for example, may include AGA, Fired Earth, Rangemaster or AGA Marvel branded
products and, in addition, this is how our senior management are now
incentivised - on delivery of Group targets. Therefore the directors consider
that there is only one reportable aggregated segment. All disclosures required
under IFRS 8 and IAS 34 have therefore already been given in these interim
condensed consolidated financial statements.
6. TAXATION
Corporation tax for the interim period to 30th June 2010 has been charged at
the estimated rates chargeable for the full year in the respective
jurisdictions as follows:
Half year Half year Year to
to June to June December
2010 2009 2009
_________________________________________
GBPm GBPm GBPm
Current tax
UK corporation tax - - 1.9
Overseas tax - - 1.1
____________________________________________________________________________________
- - 3.0
Deferred tax
UK corporation tax 4.3 - (0.8)
Overseas tax - - (2.2)
____________________________________________________________________________________
4.3 - (3.0)
____________________________________________________________________________________
Total income tax expense 4.3 - -____________________________________________________________________________________
UK corporation tax 4.3 - 1.1
Overseas tax - - (1.1)
____________________________________________________________________________________
Total income tax expense 4.3 - -
____________________________________________________________________________________
Factors affecting the future tax charge:
On 22nd June 2010, the UK Chancellor of the Exchequer announced a number of
corporate tax reforms. The following changes to corporation tax will have an
impact on the Group:
* Corporation tax rate reduction from 28% to 24%, over 4 years. This
reduction will be staggered as a 1% reduction each year, with the first
reduction to 27% effective from 1st April 2011.
* Reduction in the tax amortisation rate on plant and machinery additions
from 20% to 18% per annum from 1st April 2012.
The reduction in the corporation tax rate to 27% was substantively enacted on
the 21st July 2010. The full tax impact of these changes is estimated to be
GBP0.1 million per 1% movement in the taxation rate.
7. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is based on the
following data:
Half year Half year Year to
to June to June December
2010 2009 2009
___________________________________________
GBPm GBPm GBPm
Earnings
Profit / (loss) after tax 12.1 (2.4) 0.5
Non-controlling interests 0.1 0.8 1.2
________________________________________________________________________________________
Profit / (loss) attributable to equity holders
of the parent 12.2 (1.6) 1.7
________________________________________________________________________________________
Weighted average number of shares in issue million million million
For basic EPS calculation 69.2 69.2 69.2
Dilutive effect of share options - - -
________________________________________________________________________________________
For diluted EPS calculation 69.2 69.2 69.2
________________________________________________________________________________________
Total operations p p p
Basic 17.6 (2.3) 2.5
Diluted 17.6 (2.3) 2.5
________________________________________________________________________________________
8. DIVIDENDS
Half year Half year Year to
to June to June December
2010 2009 2009
GBPm GBPm GBPm
Nil final dividend for the year ended - - -
31st December 2009 (2008: nil)
Nil interim dividend paid (2009: nil) - - -
________________________________________________________________________________________
Amounts recognised as distributions to
equity holders of the parent in the period - - -
________________________________________________________________________________________
The directors are proposing to pay an interim dividend in respect of the
financial year ending 31st December 2010 of 0.7 pence per share (year to 31st
December 2009: nil).
9. PROPERTY, PLANT & EQUIPMENT
During the six months to 30th June 2010 the Group purchased GBP1.2 million of
property, plant and equipment (period to 30th June 2009: GBP4.3 million of which
GBP2.8 million, related to the building of the new Marvel factory in the US and
was included in payables at 31st December 2008). Depreciation in the period was
GBP3.2 million (period to 30th June 2009: GBP3.4 million). Disposals in the period
were GBPnil (period to 30th June 2009: GBPnil).
10. RETIREMENT BENEFITS
Defined benefit scheme assets have been valued at a market value on 30th June
2010 at GBP711.6 million (30th June 2009: GBP637.5 million and 31st December 2009:
GBP716.0 million) and the defined benefit liabilities at GBP751.2 million (30th
June 2009: GBP651.3 million and 31st December 2009: GBP756.5 million), giving a
GBP39.6 million deficit at the interim date (30th June 2009: GBP13.8 million and
31st December 2009: GBP40.5 million). The liabilities have been rolled forward
from 31st December 2009 and adjusted to take account of lower Retail Prices
Index inflation expectations and the decrease in bond yields, which has reduced
the discount rate from 5.7% to 5.3%.
The net pension credit for the period of GBP16.4 million includes a curtailment
gain of GBP16.3 million in respect of the freezing of pensionable salaries for
those members whose pensionable salaries were not frozen in 2009 (period to
30th June 2009: GBP0.8 million and year to 31st December 2009: GBP5.4 million which
included a GBP3.8 million curtailment gain).
11. CASH & BORROWINGS
Cash
Cash and cash equivalents at 30th June 2010 was GBP39.7 million (30th June 2009:
GBP38.5 million and 31st December 2009: GBP45.0 million) and includes GBP22.5 million
which is collateralised against a bank guarantee that the Group has provided to
the AGA Rangemaster Group Pension Scheme.
Borrowings
30th June 30th June 31st December
2010 2009 2009
_______________________________________
GBPm GBPm GBPm
Bank borrowings
Current (unsecured) 1.7 5.7 1.3
Non-current 15.6 30.5 15.7
_______________________________________________________________________________
Total 17.3 36.2 17.0
_______________________________________________________________________________
Current and non-current bank borrowings included GBPnil obligations under finance
leases at 30th June 2010 (30th June 2009: GBPnil and 31st December 2009: GBP0.1
million).
The Group's bank borrowings are primarily loan advances denominated in a number
of currencies and have floating interest rates based on LIBOR or foreign
equivalents.
At 30th June 2010 the non-current borrowings are split GBP0.4 million secured
(30th June 2009: GBP0.4 million) and GBP16.9 million unsecured (30th June 2009:
GBP30.1 million).
12. PROVISIONS
During the period GBP0.5 million has been spent in respect of the redundancy and
reorganisation programmes at AGA Rangemaster in the UK that was provided for at
31st December 2009. A provision of GBP0.5 million has been made for an ongoing
rationalisation programme at AGA Marvel.
13. SHARE CAPITAL AND OPTIONS
The number of 46 7/8 pence ordinary shares in issue amounted to 69.2 million on
30th June 2010 (30th June 2009 and 31st December 2009: 69.2 million). This
represents GBP32.5 million of share capital.
On 14th May 2010, the 369,092 Long-Term Incentive Plan options granted in May
2007 were lapsed.
14. FINANCIAL INSTRUMENTS
Included in borrowings at 30th June 2010 were loans of EUR 7.5 million and
USD 13.7 million, which have been designated as hedges of net investments in
operations based in Europe and the United States. The loans are held as a hedge
against the Group's exposure to foreign exchange risk on these investments.
During the six month period ended 30th June 2010, the gain of GBP0.5 million on
the retranslation of the EUR loan and the loss of GBP0.6 million on the
retranslation of the USD loan have been transferred to equity to offset any
gains and losses on translation of the net investments in subsidiaries.
15. CONTINGENT LIABILITIES & COMMITMENTS
The Group had no material contingent liabilities arising in the normal course
of business at 30th June 2010.
The Group has arranged GBP50.0 million of bank guarantees, to guarantee
obligations of the Group to the AGA Rangemaster Group Pension Scheme which may
arise in the period up to 2020, of which GBP22.5 million is collateral as
disclosed in note 11.
The Group had capital commitments of GBP0.8 million at 30th June 2010 (31st
December 2009: GBP0.6 million).
16. RELATED PARTY TRANSACTIONS
The Group currently recharges the Group pension scheme with the cost of
administration and independent advisers paid by the Group. The total amount
recharged in the period was GBP0.1 million (half year to 30th June 2009: GBP0.1
million). The amount outstanding at 30th June 2010 was nil (30th June 2009:
GBPnil).
17. SEASONALITY OF OPERATIONS
The normal seasonal nature of our range cooker business is to see higher
revenues and operating profits in the second half of the year than in the first
six months. Although this was not the case in 2009 it is envisaged that 2010
will revert back to norm.
AGA RANGEMASTER GROUP PLC
CAUTIONARY STATEMENT
These condensed consolidated interim financial statements contain certain
forward-looking statements. These are made by the directors in good faith based
on the information available to them up to the time of their approval of this
report but such statements should be treated with caution due to the inherent
uncertainties, including both economic and business risk factors, underlying
any such forward-looking information. The directors undertake no obligation to
update any forward-looking statements whether as a result of new information,
future events or otherwise.
The Interim Management Report ("IMR") has been prepared solely to provide
additional information to shareholders to enable them to assess the Group's
strategies and the potential for those strategies to succeed. The IMR should
not be relied on by any other party or for any other purpose.
The IMR has been prepared for the Group as a whole and therefore gives greater
emphasis to those matters which are significant to AGA Rangemaster Group plc
and its subsidiary undertakings when viewed as a whole.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors' confirm that these condensed consolidated interim financial
statements have been prepared in accordance with IAS 34 as adopted by the
European Union and that the interim management report includes a fair review of
the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
* an indication of important events that have occurred during the first six
months 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 financial year; and
* material related party transactions in the first six months and any
material changes in the related party transactions described in the last
annual report.
The directors of AGA Rangemaster Group plc are listed in the Annual Report and
Accounts for 31st December 2009, a copy of which is available at
www.agarangemaster.com.
By order of the board
W B McGrath
Chief Executive
S M Smith
Finance Director
AGA RANGEMASTER GROUP PLC
INDEPENDENT REVIEW REPORT TO THE MEMBERS OF AGA RANGEMASTER GROUP PLC
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30th
June 2010 which comprises the Consolidated Income Statement, Consolidated
Balance Sheet, Consolidated Statement of Comprehensive Income, Consolidated
Statement of Changes in Equity, Consolidated Cash Flow Statement and the
related notes 1 to 17. 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 guidance contained
in International Standard on Review Engagements 2410 (UK and Ireland) 'Review
of Interim Financial Information Performed by the Independent Auditor of the
Entity' issued by the Auditing Practices Board. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we have formed.
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 Disclosure and Transparency
Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report 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 for use in the United Kingdom. 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 set of financial statements in the half-yearly
financial report for the six months ended 30th June 2010 is not prepared, in
all material respects, in accordance with International Accounting Standard 34
as adopted by the European Union and the Disclosure and Transparency Rules of
the United Kingdom's Financial Services Authority.
Ernst & Young LLP
Birmingham
AGA RANGEMASTER GROUP PLC
MAIN ADDRESSES AND ADVISERS
Head office and registered office
AGA Rangemaster Group plc
Juno Drive
Leamington Spa
Warwickshire
CV31 3RG
Telephone: 01926 455 755
Fax: 01926 455 749
e-mail: info@agarangemaster.com
Website: www.agarangemaster.com
Registered in England No. 354715
Registrars
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Telephone (Helpline): 0871 384 2355
(Calls to this number are charged at 8p per minute from a BT landline.
Other telephone providers' costs may vary).
International (Helpline): 0044 (0) 121 415 7046
Auditors
Ernst & Young LLP
Joint financial advisers and stockbrokers
Numis Securities Limited
Execution Noble & Company Limited
2010 FINANCIAL CALENDAR
Record date for interim ordinary dividend 5th November 2010
Interim ordinary dividend payable 1st December 2010
2010 year end 31st December 2010
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