TIDMAGA
RNS Number : 0575N
Aga Rangemaster Group PLC
26 August 2011
AGA RANGEMASTER GROUP plc Juno Drive Leamington Spa Warwickshire
CV31 3RG
26(th) August 2011
Tel: 01926 455 755 Fax: 01926 455 749 www.agarangemaster.com
FOR IMMEDIATE RELEASE
AGA RANGEMASTER GROUP PLC
2011 HALF-YEARLY FINANCIAL REPORT
STREAMLINED PROCESSES BRING IMPROVED PROFIT PERFORMANCE
AGA Rangemaster Group plc ('the Group'), the specialist in range
cooking and kitchen living, is pleased to announce its interim
results for the half year ended 30(th) June 2011.
2011 2010
Half year to 30(th) June GBPm GBPm
Revenue 121.4 123.4
EBITDA* - continuing 8.0 4.2
Operating profit before amortisation 3.8 1.6
Operating profit 2.9 0.8
Profit before tax - continuing 4.2 16.4
Basic earnings per share - continuing 4.3p 17.6p
Basic earnings per share excluding post tax
curtailment gain and non-recurring costs 4.8p 1.7p
Total equity 179.7 133.0
Interim dividend 0.8p 0.7p
Net cash 25.2 22.4
* Earnings Before Interest, Tax, Depreciation, Amortisation for
2010 excludes the GBP16.3 million curtailment gain.
Financial and operational highlights
0 Operating profit increased to GBP2.9 million (half year 2010:
GBP0.8 million).
0 Net cash at 30(th) June 2011 of GBP25.2 million (30(th) June
2010: GBP22.4 million).
0 Launch of AGA Total Control key to future growth prospects for
cast iron cookers.
0 Rangemaster remains a clear UK market leader and exports were
a record 27% of cooker sales.
0 Improved performance at AGA Marvel, Grange and Fired
Earth.
0 Interim dividend up by 14% to 0.8 pence.
"In these tough market conditions we are encouraged by the
performance of our market leading products. Whilst recent events
suggest an even tougher autumn ahead, the second half should see
the impact of newly launched products gather pace. Most
significantly the AGA Total Control will be a factor in driving UK
sales performance and its European launch is scheduled for this
autumn. The Group is confident that it is well positioned to be a
major beneficiary of any upturn in consumer confidence because of
the investment in product and the operational gearing of the
business."
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 020 7404 5959
(Brunswick)
AGA RANGEMASTER GROUP PLC
2011 INTERIM MANAGEMENT REPORT
Overview
The year started brightly but headwinds increased in the spring
leaving overall sales down 1.6% at GBP121.4 million. The marked
rise in operating profit to GBP2.9 million from GBP0.8 million
reflected good progress from our streamlined organisations. Of
particular note were the reduced losses at AGA Marvel and Fired
Earth. The further rise in the net cash position to GBP25.2 million
from GBP22.4 million underlines the progress made.
Recent events suggest an even tougher autumn ahead. Nonetheless,
the second half should see the impact of recently launched products
gather pace. Most significantly the AGA Total Control will be a
factor in driving UK sales performance and its European launch
scheduled for the autumn will help to confirm the scale of the
growth potential to come. The Group is confident that it is well
positioned to be a major beneficiary of any upturn in consumer
confidence because of the investment in product and the operational
gearing of the business.
Half year performance
Revenue in the first half was GBP121.4 million - GBP2.0 million
below the sales in the first half of 2010. UK sales represented 61%
of total sales, Europe 23% and North America and the rest of the
world 16%. EBITDA was up to GBP8.0 million from GBP4.2 million,
excluding the benefit in 2010 of the GBP16.3 million pension
curtailment gain. Operating profit before amortisation was also
well ahead at GBP3.8 million compared with GBP1.6 million. A
non-recurring cost of GBP0.3 million has been included in 2011 to
cover the completion of the North American manufacturing and
distribution integration. Profit before tax from continuing
operations was GBP4.2 million and earnings per share from
continuing operations were 4.3 pence. Against the background of a
steady performance but continued uncertain markets, the Board has
decided to increase the dividend by 14% from 0.7 pence per share to
0.8 pence per share. Future dividend payments will reflect the
performance and outlook and the available cash resources of the
Group.
Operating performances
The Group is seeing the benefits of the work undertaken to raise
operational efficiencies through closer integration of the cooker
and refrigeration operations both in the UK and in North America.
Tangible benefits, from supply chain management through to
distribution and service support, have maintained downward pressure
on the cost base even though input costs are being impacted by
higher inflation. These process improvements will continue as new
operational I.T. support systems are fully implemented over the
next year.
AGA volumes were unchanged and overall cast iron sales volumes
are down by 7% to 5,500 units. Rayburn and Stanley volumes were
markedly lower, notably in Ireland.
In May 2011 we unveiled a major step change for AGA. The
exciting launch of the AGA Total Control centred on the theme of
"On when you need it; off when you don't" makes an AGA cooker, with
three independent cast iron, radiant heat cooking ovens and two
hotplates, more flexible and cheaper to run. The AGA Total Control
is at the core of our long term growth strategy and is attracting a
new audience that is attracted to the food quality and warm home
created by the AGA, but needs the greater flexibility of Total
Control and a product that works to their timetable. Leads are
encouraging and we have now received orders for well over 300 units
since the launch. The awareness and profile of AGA Total Control,
which has been established in a short space of time has been
remarkably good. The greatest opportunity may prove to be outside
the UK. Awareness of the AGA brand overseas is often high and now
with the additional benefits for consumers and dealers of the new
model being factory built and quick and straightforward to install,
there is every chance that the niche market currently occupied will
be appreciably widened. AGA Total Control is central to the Group's
expectations in the years ahead that overall cast iron cooker sales
will recover to the 2007 level of 19,600 units.
In April we acquired Redfyre - the well-known cast iron brand
which complements, in particular, our Stanley range. The Group will
in future have AGA Rayburn and Stanley Redfyre as axes for the cast
iron cooker-boiler market. In Ireland our stove business is
achieving record volumes driven by product made in Waterford and
has important new launches this autumn.
Rangemaster continued to perform well maintaining its market
share in UK range cookers at over 50% by value - even in markets
that were weak and value orientated. Growth continued on the
continent. Cooker volumes overall were down around 1%. Within the
product offering, we saw volume increases for the recently launched
100cm and induction cookers. A record 27% of Rangemaster cooker
sales volumes were outside the UK with France, in particular,
continuing to grow well.
The kitchen specialist market in which the wider spectrum of
Rangemaster products including refrigeration and sinks are
available is a source of growth for our premium Falcon and Mercury
brands. Close co-operation with kitchen and appliance specialists
has helped our brands maintain strong positions within all trade
channels. Over 30% of Rangemaster sales were for products other
than cookers.
At Fired Earth, losses were much reduced and this has helped
bolster the Group's performance. In May proposals were agreed to
provide management of Fired Earth with an equity interest in the
operation. This autumn sees a new store opening in Dulwich Village
- the first for three years - two new major refurbishments, as well
as significant tile and bathroom launches. The kitchen ranges
designed by Charlie Smallbone and made by Grange incorporating
Group appliances are now complete and the onus is on converting the
leads generated into home installations.
International developments
In North America, markets continued to be weak but the Group
performed better overall on lower revenues. The rationalisation
into a single manufacturing and distribution centre in Greenville,
Michigan has been the key to progress. The closure of our
Kitchener, Ontario hot side operation is the final step in the
three-year programme which has substantially reduced the cost base
and helped provide a clear and attractive proposition for dealers
and end users, covering the key appliances in the kitchen.
An aim of the Group is to have over half its business outside
the UK and it continues to seek out new market opportunities to
widen its geographical reach for AGA and Rangemaster. With the
opportunities now available with AGA Total Control the expectations
for international sales growth are increasing.
A strength of the Grange and La Cornue operations is that they
already have strong international platforms. Grange operates in
over 40 countries; the USA at nearly 20% of revenues is still its
largest market. The last year has seen 7 dealer stores open in the
Middle East and in Asia. Grange's performance has improved with
revenues rising and losses reduced. La Cornue, similarly, is making
good progress in attracting a more international clientele - France
accounts for under 40% of revenues. La Cornue and Grange are both
raising their profiles in the kitchen cabinetry market. The
upgraded dealer showroom in Istanbul opening in October epitomises
all these development trends.
Pension scheme
The surplus in the pension scheme on an IAS 19 accounting basis
increased in the first half to GBP22.7 million; assets were
GBP762.0 million and liabilities were GBP739.3 million. The IAS 19
balance sheet position had improved by GBP62.3 million since 30(th)
June 2010. The Group and the trustee are now carefully analysing
the scheme data in the run up to the next triennial valuation to be
dated 31(st) December 2011. The current recovery plan was based on
a deficit of GBP84 million at 31(st) December 2009 and requires
deficit recovery payments totalling GBP10 million each year from
2012.
The Company continues to provide GBP50 million of guarantees
under the terms of "the 2020 Agreement" with the trustee in support
of the Group's potential obligation to the scheme in 2020 under the
agreement. The objective is to have the scheme fully funded on a
self sufficiency basis by 2020 using a gilts-related discount rate.
The yields on shorter-dated gilts are currently at record low
levels and well below the inflation rate resulting in an extremely
conservative basis on which to calculate liabilities.
Current trading and prospects
As expected sales across the quieter summer trading period have
tracked those of 2010 and we have put the onus on lead generation
for the major sales period in the autumn. Here, some trend lines
are encouraging although the continuing slow UK housing market and
the growing pressure on consumers' budgets does increase the risks
of a difficult autumn selling season. That does not detract from
our confidence that we have the sales product mix to make us a
major beneficiary when markets improve.
With AGA Total Control we have the product to galvanise our
markets both at home and overseas. The level of interest generated;
the enthusiasm of our retail dealer teams for the product and the
excellent comments from the growing owner base, all suggest strong
sales potential.
Against this background we remain optimistic that 2011 can still
be a year of clear cut progress for the Group.
Financial review
Revenue - The revenue of GBP121.4 million was slightly lower
than last half year's GBP123.4 million reflecting the quieter
markets witnessed, particularly in the second quarter.
Operating profit - The operating profit was GBP2.9 million
compared to a profit of GBP0.8 million in the first half of 2010.
The GBP2.1 million increase was due in large part to the
streamlining of processes introduced in recent years. In addition,
in January the Group received GBP7.6 million on the exercise of an
option to acquire the freehold of certain properties. The net
profit on the disposal was GBP0.8 million while the first half of
2010 included GBP0.4 million of rent on these properties.
Net pension credit - The half year pension credit of GBP1.5
million was the net of the current service costs of GBP1.7 million
(half year 2010: GBP1.5 million) and investment returns of GBP3.2
million (half year 2010: GBP1.6 million). In the half year to
30(th) June 2010 the pension credit was GBP16.4 million which
included a curtailment gain of GBP16.3 million following the
freezing of pensionable salaries for the majority of the scheme
members.
Non-recurring costs - Non-recurring costs were GBP0.3 million in
the period (half year 2010: GBP0.7 million). These mainly relate to
the final phase of the reorganisation of our AGA Marvel US and
Canadian manufacturing and distribution operations. The total cost
in the year is expected to be around GBP0.5 million with annualised
savings of GBP0.4 million targeted.
Finance income / costs - The net finance income was GBP0.1
million (half year 2010: finance cost GBP0.1 million) reflecting
the 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
28.6% (including the GBP0.1 million deferred tax adjustment
following the reduction in the corporation tax rate as discussed in
note 6) compared to 26.2% in the first half of 2010. Deferred tax
has been accounted for at a rate of 26.0%. Tax thereafter should
track the UK standard rate.
Earnings per share - Basic earnings per share for continuing
operations were 4.3 pence (half year 2010: 17.6 pence). The average
number of shares in issue was 69.3 million (69.2 million the
previous half year and year end). Adjusted underlying earnings per
share (excluding the post tax pension curtailment gain and
non-recurring costs) were 4.8 pence (half year 2010: 1.7
pence).
Dividends - An interim dividend of 0.8 pence per share is
declared (half year 2010: 0.7 pence). A final dividend of 1.0 pence
per share was paid during the period at a cash cost of GBP0.7
million.
Discontinued costs - GBP0.9 million has been incurred during the
period in relation to subsidiaries sold in 2007.
Balance sheet - The balance sheet continues to remain strong
with net cash of GBP25.2 million (30(th) June 2010: GBP22.4
million). Working capital at the period end was GBP21.7 million
(30(th) June 2010: GBP19.4 million).
The IAS 19 net pension surplus was revalued to GBP22.7 million
and compares to a surplus of GBP7.1 million at 31(st) December 2010
and a deficit of GBP39.6 million at 30(th) June 2010. The
improvement is primarily a result of the increased discount rate,
up from 5.4% at 31(st) December 2010 to 5.55% which reduced the
scheme liabilities.
Net assets of the Group at 30(th) June 2011 were GBP179.7
million, up from the GBP167.1 million at the end of last year
primarily due to the actuarial gain in the period.
Cashflow - The operating cash outflow was GBP11.9 million in the
period (half year 2010: GBP1.8 million outflow). The business plan
assumed growth driven by new products which resulted in a working
capital outflow of GBP15.6 million (half year 2010: GBP5.4 million
outflow) and followed a full year inflow in 2010 of GBP8.7 million.
GBP7.7 million was received during the period from property, plant
and equipment disposals (half year 2010: GBPnil).
Capital expenditure in the period was tightly controlled at
GBP2.5 million (half year 2010: GBP1.2 million) and compares to a
depreciation charge of GBP3.0 million (half year 2010: GBP3.2
million).
The total cash outflow from operating and investing activities
was GBP8.6 million (half year 2010: GBP5.5 million).
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 31(st) December 2010. A
detailed explanation of the key risks and uncertainties can be
found on pages 12 and 13 of the Annual Report and Accounts 2010, a
copy of which is available at www.agarangemaster.com.
By order of the board:
J Coleman W B McGrath
Chairman Chief Executive
26(th) August 2011
AGA RANGEMASTER GROUP PLC
2011 HALF-YEARLY FINANCIAL REPORT
CONSOLIDATED INCOME STATEMENT
Half year Half year Year to
to June to June December
2011 2010 2010
Unaudited Unaudited Audited
Note GBPm GBPm GBPm
Continuing operations
Revenue 121.4 123.4 259.1
Net operating costs (118.5) (122.6) (254.0)
Operating profit 2.9 0.8 5.1
Net pension credit 12 1.5 16.4 16.4
Non-recurring costs 4 (0.3) (0.7) (1.4)
Profit before net finance income
and
income tax 4.1 16.5 20.1
Finance income 0.4 0.1 0.2
Finance costs (0.3) (0.2) (0.4)
Profit before income tax 4.2 16.4 19.9
Income tax expense 6 (1.2) (4.3) (5.0)
Profit for the period 3.0 12.1 14.9
Discontinued operations
Post tax loss from discontinued
operations 7 (0.9) - -
Profit for the period 2.1 12.1 14.9
Profit attributable to:
Equity holders of the parent 2.1 12.2 15.0
Non-controlling interests - (0.1) (0.1)
Profit for the period 2.1 12.1 14.9
Earnings per share attributable
to equity holders of the parent
- continuing operations 8 p p p
Basic 4.3 17.6 21.7
Diluted 4.3 17.6 21.7
Earnings per share attributable
to equity holders of the parent
- total operations 8 p p p
Basic 3.0 17.6 21.7
Diluted 3.0 17.6 21.7
AGA RANGEMASTER GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half year Half year Year to
to June to June December
2011 2010 2010
Unaudited Unaudited Audited
GBPm GBPm GBPm
Profit for the period 2.1 12.1 14.9
Exchange adjustments on hedge of net
investments (0.1) (0.1) -
Exchange differences on translation of
foreign operations 1.8 (1.7) (1.1)
Actuarial gains / (losses) on defined
benefit pension schemes 12.7 (16.0) 26.6
Deferred tax on actuarial (gains) /
losses (3.3) 4.3 (7.2)
Other comprehensive income / (losses)
for the period 11.1 (13.5) 18.3
Total comprehensive income / (losses)
for the period 13.2 (1.4) 33.2
Attributable to:
Equity holders of the parent 13.3 (1.3) 33.3
Non-controlling interests (0.1) (0.1) (0.1)
Total comprehensive income / (losses)
for the period 13.2 (1.4) 33.2
AGA RANGEMASTER GROUP PLC
CONSOLIDATED BALANCE SHEET
Half year Half year Year to
to June to June December
2011 2010 2010
Unaudited Unaudited Audited
Note GBPm GBPm GBPm
Non-current assets
Goodwill 67.6 66.7 66.7
Intangible assets 24.4 22.2 22.9
Property, plant and equipment 11 40.3 48.9 40.8
Retirement benefit surplus 12 24.4 - 8.6
Deferred tax assets 8.5 21.7 11.8
165.2 159.5 150.8
Current assets
Inventories 47.5 44.9 42.8
Trade and other receivables 37.0 36.4 30.6
Current tax assets 1.8 1.8 1.8
Cash and cash equivalents 13 42.2 39.7 51.7
128.5 122.8 126.9
Assets held for sale 3.5 3.2 10.2
Total assets 297.2 285.5 287.9
Current liabilities
Borrowings 13 (1.5) (1.7) (1.7)
Trade and other payables (62.8) (61.9) (67.5)
Current tax liabilities (21.5) (16.8) (20.4)
Current provisions 14 (8.5) (2.2) (2.1)
(94.3) (82.6) (91.7)
Net current assets 34.2 40.2 35.2
Non-current liabilities
Borrowings 13 (15.5) (15.6) (15.4)
Retirement benefit obligation 12 (1.7) (39.6) (1.5)
Deferred tax liabilities (4.0) (6.1) (4.0)
Provisions 14 (2.0) (8.6) (8.2)
(23.2) (69.9) (29.1)
Total liabilities (117.5) (152.5) (120.8)
Net assets 179.7 133.0 167.1
Equity
Share capital 15 32.5 32.5 32.5
Share premium account 29.6 29.6 29.6
Other reserves 86.5 84.0 84.7
Retained earnings / (losses) 30.8 (13.5) 19.9
Equity attributable to equity
holders of the parent 179.4 132.6 166.7
Non-controlling interests 0.3 0.4 0.4
Total equity 179.7 133.0 167.1
AGA RANGEMASTER GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
Half year Half year Year to
to June to June December
2011 2010 2010
Unaudited Unaudited Audited
Note GBPm GBPm GBPm
Operating activities
Profit before income tax -
continuing operations 4.2 16.4 19.9
Loss before income tax -
discontinued operations (0.9) - -
Reconciliation of profit /
(loss) before income tax to net
cash flows:
Net finance (income) / costs (0.1) 0.1 0.2
Depreciation of property, plant
and equipment 11 3.0 3.2 6.5
Amortisation of intangible
assets 0.9 0.8 1.8
(Profit) / loss on disposal of
property, plant and equipment 11 (0.8) - 0.1
Share-based payments expense 0.1 0.1 0.1
(Increase) / decrease in
inventories (4.4) 0.8 3.1
(Increase) / decrease in
receivables (5.8) (5.3) 0.8
(Decrease) / increase in
payables (5.4) (0.9) 4.8
Increase / (decrease) in
provisions 0.2 (0.1) (0.4)
Movement in pensions (2.9) (16.9) (21.2)
Cash (used in) / generated from
operating activities (11.9) (1.8) 15.7
Net finance income / (costs) 0.1 (0.1) (0.2)
Tax payment (0.1) (1.6) (2.3)
Net cash (used in) / generated
from operating activities (11.9) (3.5) 13.2
Investing activities
Acquisitions / disposal related
costs 10 (0.6) (0.2) (0.4)
Purchase of property, plant and
equipment 11 (2.5) (1.2) (3.7)
Expenditure on intangibles (1.3) (0.6) (2.0)
Proceeds from disposal of
property, plant and equipment 11 7.7 - 0.1
Net cash generated from / (used
in) investing activities 3.3 (2.0) (6.0)
Financing activities
Dividends paid 9 (0.7) - (0.5)
Repayment of borrowings (0.2) - (0.2)
New bank loans raised - 0.2 0.3
Net cash (used in) / generated
from financing activities (0.9) 0.2 (0.4)
Effects of exchange rate changes - - (0.1)
Net (decrease) / increase in
cash and cash equivalents (9.5) (5.3) 6.7
Cash and cash equivalents at
beginning of period 51.7 45.0 45.0
Cash and cash equivalents at end
of period 13 42.2 39.7 51.7
AGA RANGEMASTER GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Half year to 30th June 2011
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 1(st)
January 2011 32.5 29.6 84.7 19.9 166.7 0.4 167.1
Comprehensive
income
Profit for the
period - - - 2.1 2.1 - 2.1
Other
comprehensive
income:
Exchange
adjustments
on hedge of
net
investments - - (0.1) - (0.1) - (0.1)
Exchange
differences
on
translation
of foreign
operations - - 1.9 - 1.9 (0.1) 1.8
Actuarial
gains on
defined
benefit
pension
schemes - - - 12.7 12.7 - 12.7
Deferred tax
on actuarial
gains - - - (3.3) (3.3) - (3.3)
Total
comprehensive
income for
the period
ended 30(th)
June 2011 - - 1.8 11.5 13.3 (0.1) 13.2
Dividends paid - - - (0.7) (0.7) - (0.7)
Share based
payments - - - 0.1 0.1 - 0.1
At 30(th) June
2011 32.5 29.6 86.5 30.8 179.4 0.3 179.7
Half year to 30(th) 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 1(st)
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 30(th)
June 2010 - - (1.8) 0.5 (1.3) (0.1) (1.4)
Share based
payments - - - 0.1 0.1 - 0.1
At 30(th) June
2010 32.5 29.6 84.0 (13.5) 132.6 0.4 133.0
Year ended 31(st) December 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 1(st)
January 2010 32.5 29.6 85.8 (14.1) 133.8 0.5 134.3
Comprehensive
income
Profit /
(loss) for
the year - - - 15.0 15.0 (0.1) 14.9
Other
comprehensive
income /
(losses):
Exchange
differences
on
translation
of foreign
operations - - (1.1) - (1.1) - (1.1)
Actuarial
gains on
defined
benefit
pension
schemes - - - 26.6 26.6 - 26.6
Deferred tax
on actuarial
gains - - - (7.2) (7.2) - (7.2)
Total
comprehensive
income /
(losses) for
the year
ended 31(st)
December
2010 - - (1.1) 34.4 33.3 (0.1) 33.2
Dividends paid - - - (0.5) (0.5) - (0.5)
Share based
payments - - - 0.1 0.1 - 0.1
At 31(st)
December
2010 32.5 29.6 84.7 19.9 166.7 0.4 167.1
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 30(th) June 2011 were authorised for
issue in accordance with a resolution of the directors on 25(th)
August 2011.
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, kitchen and related home fashions
product.
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
31(st) December 2010 were approved by the board of directors on
11(th) March 2011 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 30(th) June 2011 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 31(st) December 2010 which
have been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union.
The directors have assessed the financial position and the
future funding requirements of the Group and compared them to the
level of available committed borrowing facilities. Certain of the
Group's committed bank facilities mature in 2012. The Group will
open renewal negotiations in due course and has, at this stage, not
sought any written commitment that the facilities will be renewed.
Preliminary discussions have been positive and there is nothing to
suggest that renewal may not be forthcoming on acceptable terms.
The directors' assessment included a review of the Group's
financial forecasts, financial instruments and hedging arrangements
for the 15 months from the balance sheet date. The directors
considered a range of potential scenarios within the key markets
the Group serves and how these may impact on cash flows, facility
headroom and banking covenants. The directors also considered what
mitigating actions the Group could take to limit any adverse
consequences. Having undertaken this assessment, the directors have
a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future and so
determined that it is appropriate for the 2011 half-yearly
financial report to be prepared on a going concern basis.
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 31(st) December 2010 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 24 - Related Party Transactions (amendment)
This amendment clarifies the definitions of a related party. The
new definitions emphasise a symmetrical view of related party
relationships as well as clarifying in which circumstances persons
and key management personnel affect related party relationships of
an entity. Secondly, the amendment introduces an exemption from the
general related party disclosure requirements for transactions with
a government and entities that are controlled, jointly controlled
or significantly influenced by the same government as the reporting
entity.
IAS 32 - Financial Instruments (amendment)
This amendment alters the definition of a financial liability in
IAS 32 to enable entities to classify rights issues and certain
options or warrants as equity instruments. The amendment is
applicable if the rights are given pro rata to all of the existing
owners of the same class of an entity's non-derivative equity
instruments, to acquire a fixed number of the entity's own equity
instruments for a fixed amount in any currency.
IFRIC 14 - Prepayments of a Minimum Funding Requirement
(amendment)
This amendment provides further guidance on assessing the
recoverable amount of a net pension asset, permitting an entity to
treat the prepayment of a minimum funding requirement ('MFR') as an
asset. The Group is not subject to MFRs.
In May 2010, the International Accounting Standards Board issued
its third omnibus of amendments to its standards, primarily with a
view to removing inconsistencies and clarifying wording. There are
separate transitional provisions for each standard. The adoption of
the following amendments resulted in changes to accounting
policies, but did not have any impact on the financial position or
performance of the Group:
IFRS 3 - Business Combinations
The measurement options available for non-controlling interests
('NCI') have been amended. Only components of NCI that constitute a
present ownership interest, that entitles their holder to a
proportionate share of the entity's net assets in the event of
liquidation, shall be measured at either fair value or at the
present ownership instruments' proportionate share of the
acquiree's identifiable net assets. All other components are to be
measured at their acquisition date fair value.
IFRS 7 - Financial Instruments - Disclosures
This amendment was intended to simplify the disclosures provided
by reducing the volume of disclosure around collateral held and
improving disclosures by requiring qualitative information to put
the quantitative information in context.
IAS 1 - Presentation of Financial Statements
This amendment clarifies that an option to present an analysis
of each component of other comprehensive income may be included
either in the statement of changes in equity or in the notes to the
financial statements. The Group provides this analysis in the
statement of changes in equity.
IAS 34 - Interim Financial Statements
The amendment requires additional disclosures for fair values
and changes in classification of financial assets, as well as
changes to contingent assets and liabilities in the interim
condensed financial statements.
Amendments to the following standards did not have any impact on
the accounting policies, financial position or performance of the
Group:
IAS 27 - Consolidated and Separate Financial Statements
IFRS 3 - Business Combinations (Contingent Consideration)
IFRIC 13 - Customer Loyalty Programmes
4. NON-RECURRING COSTS
The non-recurring costs during the period to 30(th) June 2011 of
GBP0.3 million (half year 2010: GBP0.7 million) primarily relate to
the second phase of redundancy and reorganisation programmes at our
AGA Marvel US and Canadian manufacturing operations.
5. SEGMENTAL ANALYSIS
The directors consider that there are two operating segments
namely AGA (which comprises the brands and operations of AGA, Fired
Earth, Grange, Redfyre and Waterford Stanley) and Rangemaster
(which comprises the brands and operations of AGA Marvel,
Divertimenti, Heartland, La Cornue and Rangemaster). 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 ('CODM') 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
CODM, which consists of the chief executive and his senior
management team, to make decisions about the resources to be
allocated to the segments and assess their performance.
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. In addition, in
2010 Waterford Stanley became the distributor for Rangemaster
products into Ireland as well as Rayburn and Grange has developed
products to be sold under its own brand and the Fired Earth
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 against Group
targets.
The two operating segments are considered to meet the
aggregation criteria of IFRS 8 in full and so 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. 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. The directors consider the
aggregated reportable segment to be the manufacture and sale of
range cookers, kitchen and related home fashions product, from
which the Group derives most of its revenue. All Group companies
are subject to similar economic forces and comparable regulatory
environments.
6. TAXATION
Corporation tax for the interim period to 30(th) June 2011 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
2011 2010 2010
GBPm GBPm GBPm
Current tax
UK corporation tax 1.1 - 3.9
Overseas tax - - 0.5
1.1 - 4.4
Deferred tax
UK deferred tax 0.1 4.3 0.8
Overseas deferred tax - - (0.2)
0.1 4.3 0.6
Total income tax expense 1.2 4.3 5.0
Total UK tax 1.2 4.3 4.7
Total overseas tax - - 0.3
Total income tax expense 1.2 4.3 5.0
Factors affecting the future tax charge:
Deferred tax has been calculated at the rate expected to apply
at the time at which timing differences are forecast to reverse,
based on tax rates which have been substantively enacted at the
balance sheet date. It should be noted that the Government
announced on 22(nd) June 2010 that it intended to introduce
legislation to reduce the mainstream rate of UK corporation tax
from 28% to 24% over a period of four years, beginning in April
2011. The reduction to 27% was substantively enacted on 21(st) July
2010. On 22(nd) March 2011 a further announcement was made reducing
the rate to 26% from 1(st) April 2011 and ultimately to 23% by
2014. The reduction to 26% was substantively enacted on 29(th)
March 2011. It is not anticipated that these reductions nor
subsequent reductions to 23% once substantively enacted, will have
a material effect on the company's future, current or deferred tax
charges. The full tax impact of these changes is estimated to be
GBP0.1 million per 1% movement in the taxation rate.
7. DISCONTINUED OPERATIONS
Settlements of GBP0.9 million have been made during the period
in relation to subsidiaries sold in 2007.
8. 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
2011 2010 2010
GBPm GBPm GBPm
Earnings for the purpose of the basic
and diluted EPS
Profit after tax - continuing 3.0 12.1 14.9
Non-controlling interests - 0.1 0.1
Profit attributable to equity holders
of the parent - continuing 3.0 12.2 15.0
Profit after tax - discontinued (0.9) - -
Profit attributable to equity holders
of the parent - total 2.1 12.2 15.0
Weighted average number of shares in
issue million million million
For basic EPS calculation 69.3 69.2 69.2
Dilutive effect of share options - - -
For diluted EPS calculation 69.3 69.2 69.2
Earnings per share attributable to equity holders
of the parent
Continuing operations p p p
Basic 4.3 17.6 21.7
Diluted 4.3 17.6 21.7
Discontinued operations p p p
Basic (1.3) - -
Diluted (1.3) - -
Total operations p p p
Basic 3.0 17.6 21.7
Diluted 3.0 17.6 21.7
9. DIVIDENDS
Half
Half year year Year to
to June to June December
2011 2010 2010
GBPm GBPm GBPm
Final dividend paid of 1.0 pence
for the year ended 31(st) December
2010 (2009: nil) 0.7 - -
Interim dividend paid of 0.7 pence
(2010: nil) - - 0.5
Amounts recognised as distributions
to equity holders of the parent
in the period 0.7 - 0.5
------------------------------------- ---------- --------- ----------
The directors approved an interim dividend on 25(th) August 2011
in respect of the financial year ending 31(st) December 2011 of 0.8
pence per share (year to 31(st) December 2010: total 1.7 pence per
share).
10. ACQUISITION OF REDFYRE
On 1(st) April 2011 AGA Rangemaster Group plc acquired the
business and principal assets of Redfyre Cookers and Don Heating
Products from Gazco Limited for a consideration of GBP0.8 million,
of which GBP0.2 million is payable in the second half of the year.
This is contingent on the final transfer valuation of the Redfyre
inventory. Intangibles assets increased by GBP0.4 million as a
result of this transaction in relation to the brand valuation.
Goodwill on the transaction amounted to GBP0.3 million and was
created as the Redfyre cast iron brand complements the Stanley
range. The provisional fair value of property, plant and equipment
and inventory acquired was GBP0.1 million. The revenue and the
operating profit since acquisition was not material and it was
impracticable to separate as this business is being consolidated
into the Group's other cooker operations.
11. PROPERTY, PLANT & EQUIPMENT
During the six months to 30(th) June 2011 the Group purchased
GBP2.5 million of property, plant and equipment (period to 30(th)
June 2010: GBP1.2 million). Depreciation in the period was GBP3.0
million (period to 30(th) June 2010: GBP3.2 million). Sale proceeds
in the period included GBP7.6 million in respect of the disposal of
certain properties on the exercise of an option and the profit on
disposal was GBP0.8 million (period to 30(th) June 2010: both
GBPnil).
12. RETIREMENT BENEFITS
Defined benefit scheme assets have been valued at a market value
on 30(th) June 2011 at GBP762.0 million (30(th) June 2010: GBP711.6
million and 31(st) December 2010: GBP759.5 million) and the defined
benefit liabilities at GBP739.3 million (30(th) June 2010: GBP751.2
million and 31(st) December 2010: GBP752.4 million), giving a net
GBP22.7 million surplus at the interim date (30(th) June 2010:
GBP39.6 million deficit and 31(st) December 2010: GBP7.1 million
surplus). The liabilities have been rolled forward from 31(st)
December 2010 and adjusted to take account of higher inflation
expectations and the increase in bond yields, which has increased
the discount rate from 5.40% to 5.55%.
The net pension credit for the period was GBP1.5 million (period
to 30(th) June 2010: GBP16.4 million and year to 31(st) December
2010: GBP16.4 million which both included a GBP16.3 million
curtailment gain).
13. CASH & BORROWINGS
Cash
Cash and cash equivalents at 30(th) June 2011 was GBP42.2
million (30(th) June 2010: GBP39.7 million and 31(st) December
2010: GBP51.7 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
30(th) June 30(th) June 31(st) December
2011 2010 2010
GBPm GBPm GBPm
Bank borrowings
Current (unsecured) 1.5 1.7 1.7
Non-current 15.5 15.6 15.4
Total 17.0 17.3 17.1
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 30(th) June 2011 the non-current borrowings are split GBP0.3
million secured (30(th) June 2010: GBP0.4 million) and GBP15.2
million unsecured (30(th) June 2010: GBP15.2 million).
14. PROVISIONS
The Group's provisions mainly relate to the remaining costs and
claims in relation to the valuation of a minority shareholding in
Friatec, a business which the Group acquired in 1998 and sold in
2001, as part of the Pipe Systems disposal. The Group expects a
judgement from a German court in the second half of 2011, although
the exact timing of the settlement is unclear.
A provision of GBP0.3 million remains outstanding for an ongoing
rationalisation programme at AGA Marvel, which will be utilised in
the second half of the year.
15. SHARE CAPITAL AND OPTIONS
The number of 46 7/8 pence ordinary shares in issue amounted to
69.3 million on 30(th) June 2011 (30(th) June 2010 and 31(st)
December 2010: 69.2 million). This represents GBP32.5 million of
share capital.
During the period, the 48,000 Senior Executive Share Options
granted in June 2001 were lapsed.
On 18(th) April 2011, 199,185 share options were issued under
the 2010 Company Share Option Plan ('CSOP') at an exercise price of
123 pence. The fair value of these options is 46 pence. Details of
the CSOP were given on pages 36 and 37 of the Annual Report and
Accounts as at 31(st) December 2010.
On 11(th) May 2011, it was announced that the management of
Fired Earth Limited have an option to acquire up to 28% of the
equity of Fired Earth Limited. The transaction has been treated as
an employee share option and the charge for the first half of 2011
was not material.
16. FINANCIAL INSTRUMENTS
Included in borrowings at 30(th) June 2011 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 30(th) June 2011, the loss of
GBP0.3 million on the retranslation of the EUR loan and the gain of
GBP0.2 million on the retranslation of the USD loan have been
transferred to equity to offset gains and losses on translation of
the net investments in subsidiaries.
17. CONTINGENT LIABILITIES AND COMMITMENTS
The Group had no material contingent liabilities arising in the
normal course of business at 30(th) June 2011.
The Group has arranged GBP50.0 million of bank guarantees to
guarantee the obligations of the Group to the AGA Rangemaster Group
Pension Scheme which may arise in the period up to 2020.
The Group had capital commitments of GBP1.5 million at 30(th)
June 2011 (31(st) December 2010: GBP0.1 million).
18. RELATED PARTY TRANSACTIONS
The Group currently recharges the Group pension scheme with part
of the cost of administration. The total amount recharged in the
period was GBP0.1 million(half year to 30(th) June 2010: GBP0.1
million). The amount outstanding at 30(th) June 2011 was GBPnil
(30(th) June 2010: GBPnil).
19. SEASONALITY OF OPERATIONS
The normal seasonal nature of our range cooker, kitchen and home
fashions product business is to see higher revenues and operating
profits in the second half of the year than in the first six
months.
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 IMR 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 consolidated
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 31(st) December 2010, 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 30(th) June 2011 which comprises the Consolidated
Income Statement, Consolidated Statement of Comprehensive Income,
Consolidated Balance Sheet, Consolidated Cash Flow Statement,
Consolidated Statement of Changes in Equity and the related notes 1
to 19. 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 30(th)
June 2011 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
26(th) August 2011
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: +44 (0)1926 455 755 Fax: +44 (0)1926 455 749
e-mail: info@agarangemaster.com Website: www.agarangemaster.com
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Registered in England No. 354715
Registrars
Equiniti Limited 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): +44 121 415
7047
Auditors
Ernst & Young LLP
Joint financial advisers and stockbrokers
Numis Securities Limited Espirito Santo Investment Bank
2011 FINANCIAL CALENDAR
Record date for interim ordinary 11(th) November 2011
dividend 7(th) December 2011
Interim ordinary dividend 31(st) December 2011
payable
2011 year end
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FMGZRFKDGMZM
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