TIDMAGA
RNS Number : 7078K
Aga Rangemaster Group PLC
24 August 2012
24(th) August 2012
FOR IMMEDIATE RELEASE
AGA RANGEMASTER GROUP PLC
2012 HALF-YEARLY FINANCIAL REPORT
Resilient performance : growth expected for full year
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 2012.
Half year to 30(th) June 2012 2011
Continuing operations GBPm GBPm
------ ------
Revenue 119.2 121.4
Operating profit excluding property profit 1.5 2.1
Profit before tax 1.6 4.2
Basic earnings per share 1.9p 4.3p
Underlying basic earnings per share excluding
non-recurring costs 3.9p 4.8p
Total equity 123.1 174.9
Interim dividend - 0.8p
Net cash 11.9 25.2
Financial and operational highlights
-- Classic AGA cooker volumes up 4%:
- Positive reception for iTotal Control since May launch.
- Largest ever AGA with 5-ovens launches in September.
-- European export growth achieved for Rangemaster. Ireland remains challenging.
-- Resurgence at Fired Earth with revenues up 7%.
-- Cash balances reduced on legal case settlement and increased pension contributions.
-- Agreement on clear stable medium-term financing plan for the
pension scheme in sight and includes limits on pension
contributions and dividend payments.
-- Growth in 2012 expected in spite of subdued markets with onus
on new products and internationalisation.
"The continued challenges in the economy and lack of activity in
the property market have clearly had an impact on demand in the
first half as customers delay purchasing big ticket items. However,
our investment in innovation, efficiency drive and great product
offer ensures that we are well placed to respond when the market
recovers. Our recent collaboration with the Chinese group Vatti
demonstrates the opportunities ahead to enter into new
markets."
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
2012 INTERIM MANAGEMENT REPORT
Overview
The initial signs of market improvements early in the year were
not sustained resulting in a further period of weak demand - with
the product introductions having maintained rather than expanded
revenues. Good sales progress for AGA cookers and for Rangemaster
in Europe and a much better performance by Fired Earth were the
most encouraging features of a period in which consumers lacked
confidence and the willingness to invest in their kitchens at
anywhere close to the levels of five years ago. Yet with
operational gearing enhanced by the continuing rationalisation
programmes we fully expect that even a limited market pick up could
readily improve the performance of the business.
Half year performance
Revenues in the first half were GBP119.2 million - 1.8% down on
the first half of 2011, 0.7% down at constant exchange rates. There
was no appreciable shift in the overall geographical balance of the
business with UK sales being 63% of the total; Europe 22% and the
rest of the world 15%. Operating profits were GBP1.5 million
against GBP2.1 million - excluding property profits.
Rationalisation of the AGA Rangemaster distribution and retail
structures - made possible by the newer, easier to install products
- gave rise to a non-recurring cost of GBP1.4 million. The board
has decided not to pay an interim dividend (which cost GBP0.5
million last year at 0.8 pence per share) as part of the agreement
reached in principle with the trustee of the Group's main pension
scheme to restructure the financing arrangements for the scheme
through to the end of 2015. The aim is to provide medium-term
clarity and stability.
Operating performances
That the excellent work on product and the continuing programmes
of cost reduction and efficiency improvements did not totally
offset the impact of a weak demand backcloth shows just how tough
our core markets continue to be. Classic AGA volumes were up 4% -
responding particularly well to our spring promotion and stock
clearance programme. The iTotal Control, showing the AGA can be a
futuristic product which can be controlled remotely, gained great
coverage following its launch in May and its inclusion in a garden
kitchen at the Chelsea Flower Show. The Total Control, launched in
2011, is now established on display on the Continent and in North
America raising sales expectations for the second half. It is a
more readily exportable product now being factory finished, in
electric and not requiring a flue. The 5-oven electric AGA - the
size of the traditional 4-oven model - is out at the start of
September, largely completing a phase of our product development
programme for AGA and providing an excellent sales platform.
Our Rayburn and Stanley solid fuel ranges are being more closely
aligned using our Waterford Stanley factory and distribution centre
in Waterford. Waterford Stanley is having continued success with
stove operations and we hope to expand that in the UK. With the
major renovation and eco markets still so slow, unsurprisingly
Rayburn and Stanley sales were down again. Waterford Stanley had a
particularly difficult spring as tax increases in Ireland impacted
consumers. Our annual revenues in Ireland are now running GBP10
million lower than they were five years ago.
Rangemaster continued to prove resilient with sales by value
down 1%, in line with the UK range cooker market, in the first half
where Rangemaster has a market share by value of close to 50%.
There are some indicators of market improvement. We continue to
lead and expand the market on the Continent notably in France where
sales were up again. The active marketing programme for 2012 on the
Continent highlights the range cooker as one of the distinctive
British specialisms - it dates back to its invention at our
Leamington Spa factory in 1830 - has worked well. We have recently
gained over 200 new displays with two major French retailers which
will grow sales in the second half.
At Fired Earth the strong progress we have made over the last
year continued with sales up nearly 7% and order intake, notably
for the core tile lines, was encouraging. Margins were maintained
and our newly refurbished stores around London did particularly
well. New store openings in Dulwich and Winchester have been
successful and are now being followed with a new 1,000 sq ft store
in Blackheath which has just opened. A valorisation process is
still expected in 2013.
International developments
In North America markets proved patchy after a promising start
to the year. Our new premium Marvel Professional line is
successfully replacing sharply reduced Original Equipment
Manufacturer ('OEM') sales. Our production and distribution
structures in North America based in Greenville, Michigan are well
established and we have strengthened our dealer base during the
year. We have the capacity to grow rapidly as market conditions
allow.
Grange has introduced the 'My Grange' concept in its owned
retail outlets and there is a roll out programme for our
international dealers. 'My Grange' provides the online ordering
capability to specify colour and finish which can change the
business model for Grange and its dealers being less space and
inventory-intensive than traditional ways to sell furniture. We
expect the impact to increase in the second half helping the
operations outside North America to be profitable. In North
America, losses have continued and further reorganisation is being
planned.
La Cornue had a strong first half. It has seen new product and
sales concepts introduced - notably the '1908' hybrid of the La
Cornue vaulted oven and a Rangemaster hob and the 'W' series cooker
developed by a renowned furniture designer. We are moving to a new
flagship store in Paris this autumn and in the AGA Divertimenti
store in Brompton Road, London the new La Cornue store layout has
been introduced.
Collaboration with Vatti
As announced in July, the Group has entered into a bilateral
collaboration agreement with the Chinese gas burner appliance group
'Vatti'. This will see AGA, La Cornue and Rangemaster products sold
in China with a first 'Image Shop' opening in the next six months
and a roll out programme for Rangemaster products in 500 shops to
be implemented over the next two years. In addition, we are working
to develop with Vatti a new range of built-in oven products to be
made by Vatti for their own Chinese markets and for European
markets which we will distribute. The collaboration was launched
immediately prior to the Olympics where Vatti showcased the 2008
torch which they designed and made.
Pension funding
During the first half of 2012, the surplus on the accounting
basis in the Group's main pension scheme at the end of 2011 of
GBP6.8 million moved to a deficit of GBP41.9 million. Assets
totalled GBP759.7 million at 30(th) June 2012, compared with
GBP758.3 million at 31(st) December 2011. The yield on 'AA'
corporate bonds used to value liabilities fell, reducing the
discount rate from 4.8% to 4.4%.
The Group is close to finalising discussions with the trustee of
the Group's main pension scheme about the scheme's triennial
actuarial valuation as at 31(st) December 2011 which is
substantially complete. The funding deficit at this date is likely
to be higher than the deficit of GBP161 million disclosed by the
previous triennial actuarial valuation undertaken as at 31(st)
December 2008 and the deficit of GBP62 million indicated in the
subsequent actuarial update report prepared on a rolled forward
basis as at 31(st) December 2010. The movement primarily results
from the sharp fall in gilt yields over the second half of 2011.
The movement in gilt yields has adversely impacted the funding
position of most UK pension schemes.
Agreement has been reached in principle with the trustee
regarding deficit recovery contributions which would mean that a
total deficit recovery contribution of GBP16 million will be made
in the calendar year 2012, with the next deficit recovery
contribution, amounting to GBP4 million, being made in the second
half of 2015 prior to the expected completion of the next triennial
actuarial valuation, to be undertaken as at 31(st) December 2014.
As part of this agreement, guarantees currently provided to the
pension scheme would reduce from GBP50 million to GBP30 million.
The return expected by the scheme is higher than the return on cash
held by the Group to back the guarantee. Trustee consent would be
needed for dividend payments through to the practical completion of
the 2014 actuarial valuation. Under the agreement, deficit recovery
contributions thereafter would be GBP10 million per annum from 2016
to 2021 inclusive, with a lump sum contribution of GBP30 million
equating to the remaining guarantees to be paid at the end of
2020.
The objective of the agreement is to provide a clear, stable
framework within which both the pension scheme and the Group can
operate in the coming years. The long-term objective of reaching
self-sufficiency when reasonably practicable under the existing
arrangements remains for the scheme. A further update will be
provided when the requisite documentation has been finalised.
Current trading and outlook
The Group has tremendous brands, the best generation of products
it has ever had and capacity available in most of its factories.
With the established UK and Irish markets likely to remain weak for
some time in the current economic environment, the onus is on new
markets such as China and on raising market penetration in markets
like North America, where our market position is not yet fully
developed.
In relation to the business, the pension scheme is large in
scale although it is reasonably well funded for most scenarios.
This is a key factor in assessing the resources available for the
development of the Group. The medium-term financing framework for
the scheme includes constraints on dividend payments as resources
need to be available to build the intrinsic strengths of the
business. The board is focused on achieving outcomes which are in
the best interests of all stakeholders given these constraints.
In trading terms the Group has seen the usual quiet summer
period and is galvanised for a strong autumn sales push with lines
like AGA Total Control and a resurgent Fired Earth in the forefront
even if markets remain subdued. We are focusing on home movers who
are likely to find our newer models and lines particularly relevant
to their needs and on export markets. As a result of these and
other initiatives the Group expects to make up the revenue
shortfall of the first half to show growth in the full year.
Financial review
Revenue - The revenue of GBP119.2 million was slightly lower
than last half year's GBP121.4 million reflecting the quieter
markets witnessed during the period and the GBP1.4 million impact
of exchange rate movements.
Operating profit - The operating profit was GBP1.5 million
compared to a profit of GBP2.1 million in the first half of 2011
(excluding the GBP0.8 million profit on disposal of assets held for
sale). The GBP0.6 million decrease in operating profit reflected
the revenue fall and lower margin on sales in Ireland.
Net pension credit - The half year pension credit of GBP1.5
million (half year 2011: GBP1.5 million) was the net of the current
service costs of GBP1.9 million (half year 2011: GBP1.7 million)
and investment returns of GBP3.4 million (half year 2011: GBP3.2
million).
Non-recurring costs - Non-recurring costs were GBP1.4 million in
the period (half year 2011: GBP0.3 million). They mainly relate to
the reorganisation of our AGA Rangemaster retail and distribution
operations as explained in the 2011 financial statements. The total
cost in 2012 is expected to be around GBP1.6 million with
annualised savings of GBP1.8 million targeted.
Finance income / costs - The net finance income was GBPnil (half
year 2011: net finance income 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
25.0% compared to 28.6% in the first half of 2011. UK deferred tax
balances have been accounted for at a rate of 24.0% at 30(th) June
2012. Tax thereafter in the UK should track the UK standard rate,
although foreign tax rates may vary. Cash tax payments will be
negligible.
Earnings per share - Basic earnings per share for continuing
operations were 1.9 pence (half year 2011: 4.3 pence). The average
number of shares in issue was 69.3 million (the same as the
previous half year and year end). Underlying earnings per share
which excludes non-recurring costs were 3.9 pence (half year 2011:
4.8 pence).
Dividends - The board has decided not to pay an interim dividend
as part of the agreement in principle reached over future pension
contributions (half year 2011: 0.8 pence). The 2011 final dividend
of 1.1 pence per share was paid during the period at a cash cost of
GBP0.8 million.
Discontinued operations - Payments made during the first half of
2012 amounting to GBP1.4 million were fully provided for at 31(st)
December 2011 and expected future settlements are fully provided at
30(th) June 2012. In the half year to 2011 GBP0.9 million was
incurred during the period in relation to subsidiaries sold in
2007.
Balance sheet - The balance sheet continues to remain strong
with net cash of GBP11.9 million (30(th) June 2011: GBP25.2
million). Working capital at the period end was GBP24.3 million
(30(th) June 2011: GBP20.9 million).
The IAS 19 net pension deficit was GBP44.6 million and compares
to a net surplus of GBP5.3 million at 31(st) December 2011 and a
surplus of GBP22.7 million at 30(th) June 2011. The reduction is
primarily a result of the lower discount rate used - down from 4.8%
at 31(st) December 2011 to 4.4% - which increased the scheme
liabilities.
Net assets of the Group at 30(th) June 2012 were GBP123.1
million, down from the GBP167.7 million at the end of last
year.
Cashflow - The cash used in operating activities saw a small
improvement at GBP11.1 million in the period (half year 2011:
GBP11.9 million outflow). The business plan assumed growth driven
by new products which, along with normal seasonality, resulted in a
working capital outflow of GBP13.1 million (half year 2011: GBP15.6
million outflow) and followed a full year outflow in 2011 of GBP5.5
million. GBP1.4 million was paid during the period in respect of
the German minority interest settlement and other discontinued
claims. Further claims are expected to be paid in the second half
of the year.
Capital expenditure in the period was tightly managed at GBP0.8
million (half year 2011: GBP2.5 million) and compares to a
depreciation charge of GBP2.8 million (half year 2011: GBP3.0
million). Expenditure on intangibles, in particular development
costs, was GBP1.1 million (half year 2011: GBP1.3 million) and
compares to an amortisation charge of GBP0.9 million (half year
2011: GBP0.9 million).
By order of the board:
J Coleman W B McGrath
Chairman Chief Executive
23(rd) August 2012
AGA RANGEMASTER GROUP PLC
2012 HALF-YEARLY FINANCIAL REPORT
CONSOLIDATED INCOME STATEMENT
Half year Half year Year to
to June to June December
2012 2011 2011
Note Unaudited Unaudited Audited
GBPm GBPm GBPm
Continuing operations
Revenue 119.2 121.4 250.9
Net operating costs (117.7) (118.5) (244.8)
Group operating profit 1.5 2.9 6.1
Net pension credit 11 1.5 1.5 3.1
Non-recurring costs 4 (1.4) (0.3) (2.1)
Profit before finance income /
(costs) and tax 1.6 4.1 7.1
Finance income 0.2 0.4 1.0
Finance costs (0.2) (0.3) (0.6)
Profit before tax 1.6 4.2 7.5
Tax (expense) / credit 6 (0.4) (1.2) 5.4
Profit for the period from continuing
operations 1.2 3.0 12.9
Discontinued operations
(Loss) / profit for the year from
discontinued operations 7 - (0.9) 2.7
Profit for the period 1.2 2.1 15.6
Profit attributable to:
Equity holders of the parent 1.3 2.1 15.7
Non-controlling interests (0.1) - (0.1)
Profit for the period 1.2 2.1 15.6
Earnings per share attributable
to equity holders of the parent
- continuing operations 8 p p p
Basic 1.9 4.3 18.8
Diluted 1.9 4.3 18.8
Earnings per share attributable
to equity holders of the parent
- total operations 8 p p p
Basic 1.9 3.0 22.7
Diluted 1.9 3.0 22.7
AGA RANGEMASTER GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half year Half year Year to
to June to June December
2012 2011 2011
Unaudited Unaudited Audited
GBPm GBPm GBPm
Profit for the period 1.2 2.1 15.6
Exchange adjustments on hedge of net
investments 0.3 (0.1) -
Exchange differences on translation of
foreign operations (2.2) 1.8 (0.8)
Actuarial (losses) / gains on defined
benefit pension schemes (56.8) 12.7 (10.5)
Deferred tax on actuarial losses / (gains) 13.6 (3.3) 2.3
Other comprehensive (losses) / income
for the period (45.1) 11.1 (9.0)
Total comprehensive (losses) / income
for the period (43.9) 13.2 6.6
Attributable to:
Equity holders of the parent (43.8) 13.3 6.8
Non-controlling interests (0.1) (0.1) (0.2)
Total comprehensive (losses) / income
for the period (43.9) 13.2 6.6
AGA RANGEMASTER GROUP PLC
CONSOLIDATED BALANCE SHEET
30(th) June
2011
30(th) Unaudited 31(st) December
June 2012 Restated 2011
Note Unaudited (note 6) Audited
GBPm GBPm GBPm
Non-current assets
Goodwill 65.8 67.6 66.7
Intangible assets 23.5 24.4 23.9
Property, plant and equipment 10 38.5 40.3 40.8
Retirement benefit surplus 11 - 24.4 6.8
Other receivables 0.5 0.8 0.7
Deferred tax assets 15.6 5.4 4.1
143.9 162.9 143.0
Current assets
Inventories 48.9 47.5 45.5
Trade and other receivables 34.9 36.2 30.8
Current tax assets 1.0 1.8 1.0
Cash and cash equivalents 12 29.7 42.2 48.1
114.5 127.7 125.4
Assets held for sale 2.6 3.5 2.6
Total assets 261.0 294.1 271.0
Current liabilities
Borrowings 12 (2.8) (1.5) (1.4)
Trade and other payables (59.5) (62.8) (65.4)
Current tax liabilities (2.9) (21.5) (2.9)
Provisions 13 (7.9) (8.5) (10.2)
(73.1) (94.3) (79.9)
Net current assets 41.4 33.4 45.5
Non-current liabilities
Borrowings 12 (15.0) (15.5) (15.4)
Retirement benefit obligation 11 (44.6) (1.7) (1.5)
Deferred tax liabilities (3.3) (5.7) (5.0)
Provisions 13 (1.9) (2.0) (1.5)
(64.8) (24.9) (23.4)
Total liabilities (137.9) (119.2) (103.3)
Net assets 123.1 174.9 167.7
Equity
Share capital 14 32.5 32.5 32.5
Share premium account 29.6 29.6 29.6
Other reserves 82.1 86.5 84.0
Retained (loss) / earnings (21.2) 26.0 21.4
Equity attributable to equity holders
of the parent 123.0 174.6 167.5
Non-controlling interests 0.1 0.3 0.2
Total equity 123.1 174.9 167.7
AGA RANGEMASTER GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
Half year Half year Year to
to June to June December
2012 2011 2011
Note Unaudited Unaudited Audited
GBPm GBPm GBPm
Operating activities
Profit / (loss) before tax
Continuing operations 1.6 4.2 7.5
Discontinued operations - (0.9) (3.0)
Reconciliation of profit / (loss) before
tax to net cash flows:
Net finance costs - (0.1) (0.4)
Depreciation of property, plant and equipment 10 2.8 3.0 5.4
Impairment of assets held for sale - - 0.9
Amortisation of intangible assets 0.9 0.9 1.9
Profit on disposal of property, plant
and equipment, intangibles and assets
held for sale - (0.8) (0.6)
Share based payments expense 0.1 0.1 -
Increase in inventories (3.8) (4.4) (2.8)
Increase in receivables (4.1) (5.8) (0.8)
Decrease in payables (5.2) (5.4) (1.9)
(Decrease) / increase in provisions (0.5) 0.2 2.6
Pension credit and normal contributions (2.9) (2.9) (6.7)
Cash (used in) / generated from operating
activities (11.1) (11.9) 2.1
Deficit recovery pension contributions (4.0) - (2.0)
Cashflows related to discontinued operations (1.4) - (1.2)
Net finance (costs) / income (0.2) 0.1 0.1
Tax (payment) / receipt - (0.1) 0.6
Net cash used in operating activities (16.7) (11.9) (0.4)
Investing activities
Acquisition of business - (0.6) (0.7)
Purchase of property, plant and equipment 10 (0.8) (2.5) (5.5)
Expenditure on intangibles (1.1) (1.3) (2.9)
Proceeds from disposal of property, plant
and equipment - 0.1 -
Proceeds from disposal of assets held
for sale 10 - 7.6 7.5
Net cash (used in) / generated from investing
activities (1.9) 3.3 (1.6)
Financing activities
Dividends paid 9 (0.8) (0.7) (1.2)
Repayment of borrowings - (0.2) (0.3)
New bank loans raised 1.0 - -
Net cash generated from / (used in) financing
activities 0.2 (0.9) (1.5)
Effects of exchange rate changes - - (0.1)
Net decrease in cash and cash equivalents (18.4) (9.5) (3.6)
Cash and cash equivalents at beginning
of period 48.1 51.7 51.7
Cash and cash equivalents at end of period 12 29.7 42.2 48.1
AGA RANGEMASTER GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Half year to 30(th) June 2012
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 2012 32.5 29.6 84.0 21.4 167.5 0.2 167.7
Comprehensive income
Profit for the period - - - 1.3 1.3 (0.1) 1.2
Other comprehensive income:
Exchange adjustments
on hedge of net investments - - 0.3 - 0.3 - 0.3
Exchange differences
on translation of foreign
operations - - (2.2) - (2.2) - (2.2)
Actuarial losses on defined
benefit pension schemes - - - (56.8) (56.8) - (56.8)
Deferred tax on actuarial
losses - - - 13.6 13.6 - 13.6
Total comprehensive income
for the period ended
30(th) June 2012 - - (1.9) (41.9) (43.8) (0.1) (43.9)
Dividends paid - - - (0.8) (0.8) - (0.8)
Share based payments - - - 0.1 0.1 - 0.1
At 30(th) June 2012 32.5 29.6 82.1 (21.2) 123.0 0.1 123.1
Half year to 30(th) June 2011
Equity attributable to equity holders
of the parent
--------------------------------------------------------
Retained
earnings Non-
Share Share Other (Restated controlling Total
capital premium reserves note 6) Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1(st) January 2011 32.5 29.6 84.7 15.1 161.9 0.4 162.3
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 26.0 174.6 0.3 174.9
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 2012 were authorised for
issue in accordance with a resolution of the directors on 23(rd)
August 2012.
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
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
31(st) December 2011 were approved by the board of directors on
9(th) March 2012 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 2012 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 2011 which
have been prepared in accordance with International Financial
Reporting Standards ('IFRS') as adopted by the European Union.
GOING CONCERN
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. The Group's
committed bank facilities mature in 2012 and 2013. The Group has
opened renewal discussions and these have been positive. The
directors' assessment included a review of the Group's financial
forecasts, financial instruments and hedging arrangements for the
15 months from 30(th) June 2012. The directors considered a range
of potential scenarios within the key markets the Group serves
including future potential arrangements with the trustee on the
funding of the Group's main pension scheme and how these may impact
on cash flows, facility headroom and banking covenants. The outcome
of these pensions discussions are expected to be finalised later
this year. However an agreement has been reached in principle with
the trustee as set out in this interim management report. The
directors have also taken into consideration current developments
in the Eurozone countries and have 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 it has
been determined that it is appropriate for the 2012 interim
condensed consolidated financial statements to be prepared on a
going concern basis.
ESTIMATES
The preparation of the interim condensed consolidated financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Future actual results may differ from these estimates.
In preparing these interim condensed consolidated financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those applied to the
Group's Annual Report and Accounts for the year ended 31(st)
December 2011.
AGA RANGEMASTER GROUP PLC
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
RISKS & UNCERTAINITIES
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 2011, which are summarised below:
-- Pension scheme - the Group is the sponsor of a large pension
scheme and can be called on to meet funding deficits.
-- Funding - the Group's bank facilities require renewal in 2012 and 2013.
-- General economic conditions - the Group's operations are
sensitive to the global economic conditions and to developments in
Eurozone countries. The Group has an operating subsidiary in
Ireland. The Group has little exposure to Greece and Spain.
-- Financial instruments - the Group is exposed to foreign
exchange risks, particularly, movements in the Euro and interest
rate risks.
-- Competition / margin erosion.
-- Intellectual property - failure to protect our brands.
-- Over reliance on any individual customer or supplier.
-- People - the potential loss of key personnel.
-- Legal, regulatory and litigation.
-- Health, safety and environmental.
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 2011 except for the adoption of new
amendments, noted below. The adoption of these amendments did not
have any material impact on the financial position or performance
of the Group.
-- IFRS 7 Financial Instruments: Disclosures
-- IAS 12 Income Tax - Deferred Taxes: Recovery of Underlying Assets
Certain new standards, interpretations and amendments to
existing standards have been published that are mandatory for the
Group's future accounting periods which the Group has not early
adopted. The relevant ones effective for the year ended 31st
December 2013 are set out below:
-- IFRS 10 Consolidated Financial Statements; IAS 27 Separate Financial Statements
-- IFRS 11 Joint Arrangements; IAS 28 Investments in Associates and Joint Ventures
-- IFRS 12 Disclosure of Interests in Other Entities
-- IFRS 13 Fair Value Measurement
-- IAS 1 Presentation of Items of Other Comprehensive Income
-- IAS 19 Employee Benefits (revised)
The Group has considered the above standards, interpretations
and amendments. The Group will comply with these from the
respective effective dates. The directors anticipate that the
adoption of these standards and interpretations in future periods
will have no material impact on the financial statements except for
the adoption of IAS 19 Employee Benefits which is likely to have an
impact on the pension credit in the income statement due to the use
of the discount rate instead of a rate of return on assets for
calculating the expected return on pension schemes' assets.
AGA RANGEMASTER GROUP PLC
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
4. NON-RECURRING COSTS
The non-recurring costs during the period to 30(th) June 2012 of
GBP1.4 million relate to the previously announced redundancy and
reorganisation programme for our retail and distribution operations
(half year 2011: GBP0.3 million to cover the completion of our AGA
Marvel US and Canadian operations manufacturing and distribution
reorganisation).
5. SEGMENTAL ANALYSIS
The directors consider that there are two operating segments
namely AGA (which comprises the brands and operations of AGA
Rayburn, 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 and manufacturing, have combined
sales targets, 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, kitchen and related home fashions
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. Waterford
Stanley is the distributor for Rangemaster and Rayburn products
into Ireland and Grange has developed products that are 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 to achieve 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 aggregated reportable segment. All
disclosures required under IFRS 8 and IAS 34 have therefore already
been given in these interim condensed consolidated financial
statements. The aggregation criteria has been met as the segments
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. The
recently announced reorganisation of the retail and distribution
operations further integrates our two operating segments, as we
continue to enhance our Global Consumer Brand.
AGA RANGEMASTER GROUP PLC
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
6. TAXATION
Corporation tax for the interim period to 30(th) June 2012 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
2012 2011 2011
GBPm GBPm GBPm
Current tax
UK corporation tax - 1.1 (10.9)
Overseas tax - - (0.6)
- 1.1 (11.5)
Deferred tax
UK deferred tax 0.6 0.1 6.1
Overseas deferred
tax (0.2) - -
0.4 0.1 6.1
Total income tax expense
/ (credit) 0.4 1.2 (5.4)
Total UK tax 0.6 1.2 (4.8)
Total overseas tax (0.2) - (0.6)
Total income tax expense
/ (credit) 0.4 1.2 (5.4)
The balance sheet at 30(th) June 2011 has been restated for
deferred tax as in resolving a number of prior year deferred tax
items, it was identified that the deferred tax balances recorded in
prior years needed to be recalculated. The balance sheet presented
at 30(th) June 2011 has been restated to increase deferred tax
liabilities by GBP1.7 million to GBP5.7 million and reduce deferred
tax assets by GBP3.1 million to GBP5.4 million, thereby reducing
retained earnings by GBP4.8 million - also see note 21 of the 2011
Annual Report and Accounts.
Factors affecting the future tax charge:
A reduction in the UK corporation tax rate from 28% to 26% was
substantively enacted in March 2011 and was effective from 1(st)
April 2011. A further reduction from 26% to 25% was substantively
enacted in July 2011 with effect from 1(st) April 2012, however, a
subsequent reduction from 25% to 24% was substantively enacted in
March 2012 and will now be effective from 1(st) April 2012.
Accordingly a rate of 24% has been applied in the measurement of
the Group's deferred tax assets and liabilities as at 30(th) June
2012. In addition, the Government announced in March 2012 its
intention to further reduce the UK corporation tax rate to 23% from
1(st) April 2013 (which was substantively enacted on 3(rd) July
2012) and to 22% from 1(st) April 2014. It is not anticipated that
these reductions nor subsequent reductions to 22% once
substantively enacted, will have a material effect on the company's
future current or deferred tax charges.
7. DISCONTINUED OPERATIONS
In the period to 30(th) June 2012 the loss from discontinued
operations was nil, as costs paid during the first half of 2012,
amounting to GBP1.4m were fully provided at 31(st) December 2011
and primarily related to the settlement of the remaining minority
litigation - see note 13. In the period to 30(th) June 2011,
settlements of GBP0.9 million were made during the period in
relation to subsidiaries sold in 2007 which were not fully provided
for.
AGA RANGEMASTER GROUP PLC
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
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
2012 2011 2011
GBPm GBPm GBPm
Earnings for the purpose of the basic
and diluted EPS
Profit after tax 1.2 3.0 12.9
Non-controlling interests 0.1 - 0.1
Profit attributable to equity holders
of the parent - continuing operations 1.3 3.0 13.0
Profit after tax - discontinued operations - (0.9) 2.7
Profit attributable to equity holders
of the parent - total 1.3 2.1 15.7
Weighted average number of shares in issue million million million
For basic EPS calculation 69.3 69.3 69.3
Dilutive effect of share options - - -
For diluted EPS calculation 69.3 69.3 69.3
Earnings per share attributable to equity holders
of the parent
Continuing operations p p p
Basic 1.9 4.3 18.8
Diluted 1.9 4.3 18.8
Discontinued operations p p p
Basic - (1.3) 3.9
Diluted - (1.3) 3.9
Total operations p p p
Basic 1.9 3.0 22.7
Diluted 1.9 3.0 22.7
9. DIVIDENDS
Half
Half year year Year to
to June to June December
2012 2011 2011
GBPm GBPm GBPm
Final dividend paid of 1.1 pence
for the year ended 31(st) December
2011 (2010: 1.0 pence) 0.8 0.7 0.7
Interim dividend paid of 0.8 pence - - 0.5
Amounts recognised as distributions
to equity holders of the parent
in the period 0.8 0.7 1.2
------------------------------------- ---------- --------- ----------
The board has decided not to pay an interim dividend (half year
to 30(th) June 2011: 0.8 pence per share).
AGA RANGEMASTER GROUP PLC
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
10. PROPERTY, PLANT & EQUIPMENT
During the six months to 30(th) June 2012 the Group purchased
GBP0.8 million of property, plant and equipment (period to 30(th)
June 2011: GBP2.5 million). Depreciation in the period was GBP2.8
million (period to 30(th) June 2011: GBP3.0 million). Sale proceeds
in the period were nil (period to 30(th) June 2011: 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).
11. RETIREMENT BENEFITS
Defined benefit scheme assets have been valued at a market value
on 30(th) June 2012 at GBP773.4 million (30(th) June 2011: GBP762.0
million and 31(st) December 2011: GBP774.2 million) and the defined
benefit liabilities at GBP818.0 million (30(th) June 2011: GBP739.3
million and 31(st) December 2011: GBP768.9 million), giving a net
GBP44.6 million deficit at the interim date (30(th) June 2011:
GBP22.7 million surplus and 31(st) December 2011: GBP5.3 million
surplus). The liabilities have been rolled forward from 31(st)
December 2011 and adjusted to take account of lower inflation
expectations and the decrease in corporate bond yields, which has
decreased the discount rate from 4.8% to 4.4%.
The net pension credit for the period was GBP1.5 million (period
to 30(th) June 2011: GBP1.5 million and year to 31(st) December
2011: GBP3.1 million).
12. CASH & BORROWINGS
Cash
Cash and cash equivalents at 30(th) June 2012 was GBP29.7
million (30(th) June 2011: GBP42.2 million and 31(st) December
2011: GBP48.1 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
2012 2011 2011
GBPm GBPm GBPm
Bank borrowings
Current (unsecured) 2.8 1.5 1.4
Non-current 15.0 15.5 15.4
Total 17.8 17.0 16.8
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.
Of the Group's GBP75 million committed bank facilities, GBP25
million mature in November 2012 and the remainder in July and
August 2013.
At 30(th) June 2012 the non-current borrowings are split GBP0.3
million secured (30(th) June 2011: GBP0.3 million) and GBP14.7
million unsecured (30(th) June 2011: GBP15.2 million).
AGA RANGEMASTER GROUP PLC
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
13. 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 received a
judgement from a German court in the first half of 2012. GBP1.0
million has been paid in the first half of the year relating to
Friatec and GBP0.4 million for other provisions. These provisions
and the majority of the remaining settlement are expected to be
made in the foreseeable future. The remaining provision reflects
the expected settlements.
14. SHARE CAPITAL AND OPTIONS
The number of 46 7/8 pence ordinary shares in issue amounted to
69.3 million on 30(th) June 2012 (30(th) June 2011 and 31(st)
December 2011: 69.3 million). This represents GBP32.5 million of
share capital.
On 11(th) May 2011, it was announced that the management of
Fired Earth Limited had been granted 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 2012 was not material.
During the period, the 51,500 Senior Executive Share Options
granted in March 2002 and 95,962 Sharesave Plan Options granted in
September 2008 were lapsed.
On 16(th) April 2012, 826,077 share options were issued under
the 2012 Company Share Option Plan ('CSOP') at an exercise price of
84.5 pence. The fair value of the TSR element is 55.41 pence and
the fair value of the EPS element is 79.58 pence.
Details of the share option schemes were given on pages 32 and
33 of the Annual Report and Accounts as at 31(st) December 2011
although the CSOP performance conditions have been amended so the
options will only become exercisable on the achievement of EPS
growth above RPI and TSR targets.
15. FINANCIAL INSTRUMENTS
Included in borrowings at 30(th) June 2012 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 2012, the gain of
GBP0.2 million on the retranslation of the EUR loan and the gain of
GBP0.1 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.
16. CONTINGENT LIABILITIES AND COMMITMENTS
The Group had no material contingent liabilities arising in the
normal course of business at 30(th) June 2012.
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 GBP0.6 million at 30(th)
June 2012 (31(st) December 2011: GBP0.1 million).
17. 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 2011: GBP0.1
million). The amount outstanding at 30(th) June 2012 was GBPnil
(30(th) June 2011: GBPnil).
18. 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.
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 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 2011, 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 2012 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 18. 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 2012 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
23(rd) August 2012
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
This information is provided by RNS
The company news service from the London Stock Exchange
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