TIDMAGA
RNS Number : 7893P
Aga Rangemaster Group PLC
22 August 2014
22(nd) August 2014
FOR IMMEDIATE RELEASE
AGA RANGEMASTER GROUP PLC
2014 HALF-YEARLY FINANCIAL REPORT
Sound trading : Product mix in place to raise sales tempo
AGA Rangemaster Group plc ('the Group'), the specialist in range
cooking and kitchen living, today reports its interim results for
the half year ended 30(th) June 2014.
Financial highlights
-- Revenues of GBP123.5 million (2013: GBP119.5 million) were
up 3.3% for the half year - up 9.7% in the UK.
-- Group operating profits were up 60% to GBP2.4 million for
the half year (2013: GBP1.5 million). Our expectations for
full year 2014 operating profit remain unchanged with performance
expected to be well ahead of last year (full year 2013: GBP8.2
million).
-- Group on track to show strong profit before tax growth (after
pension and finance costs) for the full year. The first half
loss before tax fell to GBP0.3 million from the loss of GBP2.4
million in the first half of 2013.
-- Net debt reduced to GBP2.4 million (30(th) June 2013: GBP6.0
million) reflecting increased cash generation.
Operational highlights
-- AGA continues to make good progress with sales and orders
significantly up. New products are performing well with over
60% of orders in the first six months from products launched
in the last three years.
-- Rangemaster is seeing activity levels continue to increase
with sales volumes up over 10% in the UK.
-- New product launches in the second half, including AGA City60
and Rangemaster 60, are expected to contribute to further
sales momentum.
-- Fired Earth and AGA Marvel in North America are performing
strongly while Waterford Stanley in Ireland and Grange in
North America continue to experience challenging trading conditions.
William McGrath, Chief Executive said: "We are happy with the
progress achieved during the period, given our markets are
improving but remain varied. We now have the market wind behind us
and the product and distribution in place to benefit. The AGA
City60, in particular, can grab the attention of new urban
consumers and is an important ingredient to our growth plans."
William McGrath
Chief Executive
Enquiries:
William McGrath, Chief Executive 020 7404 5959 (today)
Shaun Smith, Finance Director 01926 455 731 (thereafter)
Simon Sporborg / Venetia Hendy 020 7404 5959
(Brunswick)
AGA RANGEMASTER GROUP PLC
2014 INTERIM MANAGEMENT REPORT
Overview
The Group finished the first half in a strong position on which
to build. Trading for our brands progressed well - the impact in
part offset by setbacks in Ireland and for Grange in North America.
Our addressable markets are being widened by our product
introductions in the UK and the distribution structures created
internationally are expected to show they can make meaningful
contributions. We are also now considering valorisation options for
Fired Earth that reflect the noteworthy improvement in its
performance over the last three years. Overall we are looking
towards seeing material progress in the process of creating a
strong world-leading cooker-led business.
Revenues in the first half were GBP123.5 million up 3.3% - of
which 66% was in the UK where sales grew 9.7%. At constant
currency, revenues grew by 5.4%. The proportion of overseas sales
fell to 34% from 38%. Operating profit increased to GBP2.4 million
from GBP1.5 million last half year. The exceptional costs of
reorganising our Irish and North American businesses incurred in
2013 were not recurring but because sales fell the businesses did
not recover profitability.
The finance position of the Group continued to be strong with
net debt of GBP2.4 million down GBP3.6 million on the 30(th) June
2013 level - indicating the close control of working capital
continues.
Operating performances
The rapid change to the AGA product mix has continued with over
60% of AGA products ordered in the first half being Total Control
launched in May 2011 or Dual Control introduced in July 2013. The
greater flexibility of our electric factory-finished programmable
products has widened our markets. We saw further progress with
orders up 8% in the first half. We are now adding a gas fired AGA
cooker with 3 or 5 gas ovens to our AGA Dual Control lines. It has
separately controlled electric hot plates. Running it all week -
the traditional AGA way - can cost under GBP1 per day. We expect
this will increase the numbers of existing owners trading up as
well as adding new customers.
In addition, we are introducing the AGA City60 aimed at
materially widening our customer base. Being the width, height and
depth of standard kitchen cabinets and being room vented and
factory-finished, it should attract consumers who like the idea of
radiant heat food and like the cooking capabilities of a product
that addresses all cooking methods. Priced at GBP4,995 and having
wheels which make it moveable when you move house, it can attract
urban, younger audiences. We have a striking new 'Urban
Regeneration' advert to help drive our campaign. The factory launch
is in the first week of September and it will then be available
internationally.
We are also addressing the continued fall off in sales of oil
and solid fuel cast iron cookers under the Rayburn and Stanley
brand names. We have introduced updated products - many this year -
and will be providing these cooker / heating products with AGA
Rayburn badges in the UK and AGA Stanley in Ireland. These products
fit in with our wider heating stove products sold under the AGA and
Stanley brands.
The slow Irish cooker market combined with the mild winter meant
that the benefits of last year's rationalisation of our Waterford
sites were absorbed by having to operate at lower production and
sales levels. Waterford Stanley made a first half loss. We have
brought in a new managing director and have plans to return to
profitability in the second half on its new lower cost base.
Rangemaster had a good first half with cooker sales volumes
picking up after a slow start to finish up over 8%. That was driven
by a strong sales performance in the UK - up over 10% - but a
decline in France, our largest export market which is currently
slow and competitive. We have increased share by value of the UK
range cooker market above the 50% base. We have seen strong sales
growth with Dixons Carphone, John Lewis and the independent's
buying group, CIH. We expect second half sales growth to come from
new products led by the Nexus and from the move back into 60cm
markets with products sourced internationally and made to our
specifications to match established product ranges. They will be
available initially through Dixons Carphone.
AGA Marvel had a very encouraging first half with sales volumes
up well over 10% for the second year running. With new regulations
coming into force on 14(th) September 2014 and with our major
cabinet redesign being implemented as a consequence, we expect to
have segment leading products. As the sector responds to the
regulatory changes, we are now increasing our supply of OEM
products - with Electrolux becoming again an important customer. We
expect our factory in Greenville, Michigan, built during the depth
of the economic downturn and with State support, now to come into
its own.
Fired Earth had a strong profitable first half. A marked
recovery in the core tile segment drove a double digit sales
increase. The new stores opened over the last three years in the
South East are performing well in the strengthened housing market.
There has been a determined operational focus on margin and mix and
we have maintained our status as a touch point for style and
design. The Group is committed to a valorisation exercise this year
and options are under active consideration - made possible by the
profit recovery achieved since 2011.
Grange has continued to see a satisfactory European performance
offset by a weak North American operation where performance for the
first half has been impacted by the adjustment to a reduced store
footprint. For Grange overall, dealers are enthralled by the
product and marketing initiatives underway in this, Grange's
110(th) anniversary year.
International developments
This autumn should see our first sales to consumers in China
after over two years effort to obtain the required accreditations
in a category previously not known in the Chinese market. Vatti has
placed its first order to buy products for its dealer structure.
Our sales team based at our sourcing office in Hong Kong are now
orchestrating the launch program. With our reciprocal trading deal
with Vatti we will, for the first time, be importing cooker hoods -
one of its specialist areas. Our new agent in Germany is making
good progress in introducing range cooking to a market which has
been traditionally completely dominated by built-in cookers.
Current trading and outlook
Our markets have picked up but remain inconsistent and variable.
Uncertainties around mortgage availability and interest rates are a
contributing factor. Even so, the willingness of consumers choosing
to spend money on kitchen appliances has increased in the UK and in
North America. We also hope that our new product introductions
widen our addressable market amongst those who may be familiar with
our brands but not consider them as relevant to their home and
lifestyles. If that boosts sales further we will see the benefits
of operational gearing that the rationalisation programmes in
recent years have created. We expect that the move into 60cm
cookers for AGA and then for Rangemaster will be of particular
note.
At the half year order intake was up 6% with the trend line at
Rangemaster above the average - something that has continued. Fired
Earth had a strong sale period leaving order intake so far this
year up over 14%. The weak performance in Ireland has bottomed out
but still leaves us work to do to obtain the benefits of last
year's rationalisation plan - something that applies equally to
Grange in America.
We expect AGA Marvel to trade ahead of recent positive run rates
as the market adjusts to the introduction of new regulations in
North America.
Taken overall, the indicators are encouraging that we will see a
higher revenue growth rate in the second half bringing improved
trading results for the year.
Financial review
Revenue - The revenue of GBP123.5 million was 3.3% higher than
that in the first half of 2013 of GBP119.5 million. Market
conditions were variable during the period. June was noteworthy as
a strong month. At constant currencies, revenues were up 5.4%.
Operating profit - The operating profit at GBP2.4 million was up
60% on the operating profit in the first half of 2013 (GBP1.5
million).
Pensions - The half year pension charge of GBP2.0 million (half
year 2013: GBP1.8 million) was above 2013's level with both the
service charge and interest cost being marginally higher.
At 30(th) June 2014, the assets of the pension schemes have
risen by GBP10.4 million since the start of the year after payments
had been made of GBP19.4 million. The fall in 'AA' discount rates,
however, still causes the liabilities as appraised to rise by
GBP21.3 million leaving the deficit at the end of the period at
GBP46.7 million.
Having made a GBP16.0 million deficit contribution in 2012, the
Group's next contribution will be GBP4.0 million in December 2015.
Recovery contributions then adjust to GBP10.0 million per annum
pending the recovery plan emanating from the 2014 actuarial
valuation. The length and nature of the recovery plan will take
into account the strength of the corporate covenant and under new
regulations the developmental growth plans of the business.
Net operating and non-recurring costs - Net operating costs
included reorganisation costs of GBP0.4 million and income of
GBP0.9 million relating to a lease assignment of a London shop.
There were no separately reported non-recurring costs in the first
half of 2014.
Non-recurring costs were GBP1.4 million in the first half of
2013 and mainly related to rationalisation programmes involving
Waterford Stanley in Ireland and Grange in North America. The total
cost in 2013 was GBP2.2 million.
Finance costs - The finance cost at GBP0.7 million was in line
with the first half of 2013 and relates to the costs of the GBP60.0
million of bank facilities put in place in November 2012, the
GBP30.0 million of pension scheme guarantees provided and interest
payable on the Group's EUR and USD hedging loans.
Taxation - The tax charge of GBP0.3 million for the half year
(half year 2013: GBPnil) arises on profits in the UK, with no tax
relief being recognised on overseas losses. UK deferred tax
balances have been accounted for at a rate of 20% at 30(th) June
2014. The Group's UK tax charge should be in line with the UK
standard rate, but foreign tax rates may vary.
Earnings / loss per share - The basic loss per share reduced to
0.9 pence (half year 2013: 3.5 pence loss). The average number of
shares in issue was 69.3 million (the same as the previous half
year and year end).
Dividends - The board has decided not to pay an interim dividend
(half year 2013: GBPnil). Under an agreement reached over future
pension contributions as part of the 2011 actuarial valuation,
agreement with the pension trustee would be required prior to a
dividend payment being made.
Discontinued operations - Payments made during the first half of
2014 amounted to GBP0.2 million (half year 2013: GBP0.6
million).
Balance sheet - The balance sheet remained in a strong position,
with low levels of debt at 30(th) June 2014.
Working capital at the period end which, in accordance with the
trading cycle rises in the first half, was GBP23.6 million (30(th)
June 2013: GBP26.0 million).
The net pension deficit was GBP46.7 million and compares to a
net deficit of GBP35.8 million at 31(st) December 2013 and GBP15.6
million at 30(th) June 2013. The increase is primarily a result of
the lower discount rate used - down from 4.5% at 31(st) December
2013 to 4.3% at 30(th) June 2014 - which has the impact of
increasing the schemes' liabilities.
Net debt at GBP2.4 million was lower than last half year (30(th)
June 2013: net debt GBP6.0 million, 31(st) December 2013: net cash
GBP5.9 million).
Net assets of the Group at 30(th) June 2014 were GBP109.5
million, down from the GBP120.7 million at the end of last year,
primarily as a result of the increase in the pension deficit as
calculated under IAS 19.
Cashflow - The cash used in operating activities saw a lower
first half outflow of GBP3.7 million in the period (half year 2013:
GBP6.5 million outflow). In line with normal seasonality, there was
a working capital outflow of GBP7.8 million (half year 2013: GBP8.6
million outflow). In the second half of 2013 the working capital
inflow was GBP9.0 million.
The business plan assumes that growth will be achieved driven by
new product introductions and efficiency gains will arise from
higher capital expenditure. Capital expenditure in the period was
GBP3.1 million (half year 2013: GBP1.7 million) and there was a
depreciation charge of GBP2.4 million (half year 2013: GBP2.3
million). Expenditure on intangibles, in particular development
costs, was GBP1.4 million (half year 2013: GBP1.4 million) and
compares to an amortisation charge of GBP1.2 million (half year
2013: GBP1.1 million).
By order of the board:
J Coleman W B McGrath
Chairman Chief Executive
22(nd) August 2014
AGA RANGEMASTER GROUP PLC
2014 HALF-YEARLY FINANCIAL REPORT
CONSOLIDATED INCOME STATEMENT
Half year Half year Year to
to June to June December
2014 2013 2013
Note Unaudited Unaudited Audited
GBPm GBPm GBPm
Revenue 123.5 119.5 250.4
Net operating costs 4 (121.1) (118.0) (242.2)
Group operating profit 2.4 1.5 8.2
Pension charge 10 (2.0) (1.8) (3.5)
Non-recurring costs 4 - (1.4) (2.2)
Profit / (loss) before finance (costs)
/ income and tax 0.4 (1.7) 2.5
Finance income - - 0.1
Finance costs (0.7) (0.7) (1.5)
(Loss) / profit before tax (0.3) (2.4) 1.1
Tax expense 6 (0.3) - (0.4)
(Loss) / profit for the period (0.6) (2.4) 0.7
(Loss) / profit attributable to:
Equity holders of the parent (0.6) (2.4) 0.8
Non-controlling interests - - (0.1)
(Loss) / profit for the period (0.6) (2.4) 0.7
(Loss) / earnings per share attributable
to equity holders of the parent: 8 p p p
Basic (0.9) (3.5) 1.2
Diluted (0.9) (3.5) 1.1
All operations are continuing.
AGA RANGEMASTER GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half year Half year Year to
to June to June December
2014 2013 2013
Unaudited Unaudited Audited
GBPm GBPm GBPm
(Loss) / profit for the period (0.6) (2.4) 0.7
------------------------------------------- ----------- ----------- ----------
Other comprehensive (losses) / income
to be reclassified to profit or loss
in subsequent periods:
Exchange adjustments on hedge of net
investments 0.5 (0.9) -
Exchange differences on translation of
foreign operations (2.8) 4.3 0.4
Tax on items taken to reserves - - (0.4)
Net other comprehensive (losses) / income
to be reclassified to profit or loss
in subsequent periods (2.3) 3.4 -
Items not to be reclassified to profit
or loss in subsequent periods:
Actuarial (losses) / gains on defined
benefit pension schemes (10.5) 23.3 2.3
Tax on items taken to reserves 2.1 (5.4) (2.3)
Net other comprehensive (losses) / income
not to be reclassified to profit or loss
in subsequent periods (8.4) 17.9 -
Other comprehensive (losses) / income
for the period (10.7) 21.3 -
Total comprehensive (losses) / income
for the period (11.3) 18.9 0.7
Attributable to:
Equity holders of the parent (11.3) 18.9 0.8
Non-controlling interests - - (0.1)
Total comprehensive (losses) / income
for the period (11.3) 18.9 0.7
AGA RANGEMASTER GROUP PLC
CONSOLIDATED BALANCE SHEET
30(th)
June 30(th) June 31(st) December
2014 2013 2013
Note Unaudited Unaudited Audited
GBPm GBPm GBPm
Non-current assets
Goodwill 64.1 67.5 65.4
Intangible assets 24.9 25.8 25.5
Property, plant and equipment 9 38.7 38.5 38.6
Other receivables 0.2 0.3 0.2
Deferred tax assets 13.4 8.6 11.4
141.3 140.7 141.1
Current assets
Inventories 46.7 46.9 45.1
Trade and other receivables 34.9 34.7 35.2
Cash and cash equivalents 11 12.5 10.1 21.2
94.1 91.7 101.5
Assets held for sale 2.2 2.3 2.2
Total assets 237.6 234.7 244.8
Current liabilities
Borrowings 11 (1.0) (1.0) (1.0)
Trade and other payables (58.0) (55.6) (63.9)
Current tax liabilities (4.1) (2.7) (4.0)
Provisions 12 (2.8) (3.1) (2.8)
(65.9) (62.4) (71.7)
Net current assets 28.2 29.3 29.8
Non-current liabilities
Borrowings 11 (13.9) (15.1) (14.3)
Retirement benefit obligation 10 (46.7) (15.6) (35.8)
Deferred tax liabilities (0.8) (1.2) (0.8)
Provisions 12 (0.8) (1.5) (1.5)
(62.2) (33.4) (52.4)
Total liabilities (128.1) (95.8) (124.1)
Net assets 109.5 138.9 120.7
Equity
Share capital 13 32.5 32.5 32.5
Share premium account 29.6 29.6 29.6
Other reserves 79.9 85.2 82.2
Retained loss (32.5) (8.5) (23.6)
Equity attributable to equity holders
of the parent 109.5 138.8 120.7
Non-controlling interests - 0.1 -
Total equity 109.5 138.9 120.7
AGA RANGEMASTER GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
Half year Half year Year to
to June to June December
2014 2013 2013
Note Unaudited Unaudited Audited
GBPm GBPm GBPm
Operating activities
(Loss) / profit before tax (0.3) (2.4) 1.1
Reconciliation of (loss) / profit before
tax to net cash flows:
Net finance costs 0.7 0.7 1.4
Depreciation of property, plant and
equipment 9 2.4 2.3 4.7
Amortisation of intangible assets 1.2 1.1 2.3
Loss / (profit) on disposal of property,
plant and equipment, intangibles and
assets held for sale 0.1 0.1 (1.0)
Share based payments expense 0.1 0.1 0.1
(Increase) / decrease in inventories (2.1) - 0.8
Increase in receivables (0.3) (2.7) (3.7)
(Decrease) / increase in payables (5.4) (5.9) 3.3
Decrease in provisions (0.3) - -
Pension charge 10 2.0 1.8 3.5
Pension contributions (1.8) (1.6) (4.1)
Cash (used in) / generated from operating
activities (3.7) (6.5) 8.4
Cashflows related to discontinued operations 7 (0.2) (0.6) (0.7)
Net finance costs (0.6) (0.7) (1.3)
Tax receipt - 1.3 1.7
Net cash (used in) / generated from
operating activities (4.5) (6.5) 8.1
Investing activities
Purchase of property, plant and equipment 9 (3.1) (1.7) (5.5)
Expenditure on intangibles (1.4) (1.4) (3.0)
Proceeds from disposal of property,
plant and equipment and assets held
for sale - - 1.2
Net cash used in investing activities (4.5) (3.1) (7.3)
Financing activities
Borrowing costs - (0.4) (0.3)
Repayment of borrowings - (0.3) (0.3)
Net cash used in financing activities - (0.7) (0.6)
Effects of exchange rate changes on cash
and cash equivalents 0.3 (0.6) -
Net (decrease) / increase in cash and
cash equivalents (8.7) (10.9) 0.2
Cash and cash equivalents at beginning
of period 21.2 21.0 21.0
Cash and cash equivalents at end of
period 11 12.5 10.1 21.2
AGA RANGEMASTER GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Half year to 30(th) June Equity attributable to equity holders
2014 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 2014 32.5 29.6 82.2 (23.6) 120.7 - 120.7
Comprehensive (losses)
/ income
Loss for the period - - - (0.6) (0.6) - (0.6)
Other comprehensive (losses)
/ income:
Exchange adjustments
on hedge of net investments - - 0.5 - 0.5 - 0.5
Exchange differences
on translation of foreign
operations - - (2.8) - (2.8) - (2.8)
Actuarial losses on defined
benefit pension schemes - - - (10.5) (10.5) - (10.5)
Tax on items taken to
reserves - - - 2.1 2.1 - 2.1
Total comprehensive losses
for the period ended
30(th) June 2014 - - (2.3) (9.0) (11.3) - (11.3)
Share based payments - - - 0.1 0.1 - 0.1
At 30(th) June 2014 32.5 29.6 79.9 (32.5) 109.5 - 109.5
Half year to 30(th) June Equity attributable to equity holders
2013 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 2013 32.5 29.6 81.8 (24.1) 119.8 0.1 119.9
Comprehensive (losses)
/ income
Loss for the period - - - (2.4) (2.4) - (2.4)
Other comprehensive income
/ (losses):
Exchange adjustments
on hedge of net investments - - (0.9) - (0.9) - (0.9)
Exchange differences
on translation of foreign
operations - - 4.3 - 4.3 - 4.3
Actuarial gain on defined
benefit pension schemes - - - 23.3 23.3 - 23.3
Tax on items taken to
reserves - - - (5.4) (5.4) - (5.4)
Total comprehensive income
for the period ended
30(th) June 2013 - - 3.4 15.5 18.9 - 18.9
Share based payments - - - 0.1 0.1 - 0.1
At 30(th) June 2013 32.5 29.6 85.2 (8.5) 138.8 0.1 138.9
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 2014 were authorised for
issue in accordance with a resolution of the directors on 22(nd)
August 2014.
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 2013 were approved by the board of directors on
7(th) March 2014 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. The
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 2014 have been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
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 2013 which
have been prepared in accordance with International Financial
Reporting Standards ('IFRS') as adopted by the European Union.
GOING CONCERN
The Group's committed bank facilities mature on 31(st) December
2015. The directors have considered both the business activities
and key risk and uncertainties. The directors have considered the
following factors: the Group's ability to generate cash flows, the
financial resources available to it, headroom under bank covenants
and exposure to credit risk. Based on the Group's cash flow
forecasts and projections and taking into consideration a range of
potential scenarios and sensitivities and how these may impact on
cash flows, facility headroom and bank covenants, the board is
satisfied that the Group will be able to operate within the level
of its facilities for the 15 months from 30(th) June 2014. 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 2014 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 were the same as those applied to the Group's Annual
Report and Accounts for the year ended 31(st) December 2013.
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 2013, which are summarised below:
-- Competition / margin erosion - the Group monitors its market
position and competition strategies.
-- Financial covenants and funding - the Group's bank facilities
mature at the end of 2015.
-- Financial instruments - the Group is exposed to foreign exchange
risks, particularly, movements in the Euro and interest rate
risks.
-- General economic conditions - the Group monitors global economic
conditions to assess the impact on its budget and strategic
plans.
-- Health, safety and environmental - the Group is committed to
achieving the highest standards.
-- Intellectual property - failure to protect our brands.
-- Legal, regulatory and litigation - the Group is committed to
achieving the highest standards.
-- Over reliance on any individual customer or supplier.
-- Pension scheme funding - the Group is the sponsor of a large
and mature defined benefit pension scheme and can be called
on to meet funding deficits.
-- People - the potential loss of key personnel.
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 2013 except for the adoption of new standards
and interpretations effective as of 1(st) January 2014, as noted
below.
Several new standards and amendments apply for the first time in
2014. However, they do not impact the interim condensed
consolidated financial statements or the Annual Report and Accounts
of the Group.
The nature and the impact of each new standard / amendment is
described below:
Consolidated Financial Statements IFRS 10
This standard establishes the requirement for the consolidation
of entities that a company controls.
Joint Arrangements IFRS 11
This standard outlines the accounting requirement for entities
that are subject to joint control.
Disclosure of Interests in Other Entities IFRS 12
This standard outlines disclosure requirements for interests in
subsidiaries, joint arrangements, associates and structured
entities.
These new standards have no material impact on the Group.
Offsetting Financial Assets and Financial Liabilities
(Amendments to IFRS 7)
These amendments clarify the meaning of 'currently has a legally
enforceable right to set-off' and the criteria for non-simultaneous
settlement mechanisms of clearing houses to qualify for
offsetting.
Recoverable Amount Disclosures for Non-Financial Assets
(Amendments to IAS 36)
These amendments remove the unintended consequences of IFRS 13
Fair Value Measurement on the disclosures required under IAS 36
Impairment of Assets. In addition, these amendments require
disclosure of the recoverable amounts for the assets or
cash-generating units (CGUs) for which an impairment loss has been
recognised or reversed during the period.
These amendments have no material impact on the Group.
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
4. NET OPERATING COSTS
There were no non-recurring costs during the period to 30(th)
June 2014. Net operating costs included reorganisation costs of
GBP0.4 million and income of GBP0.9 million relating to a lease
assignment of a London shop.
The non-recurring costs during the period to 30(th) June 2013 of
GBP1.4 million related to site rationalisation programmes involving
Waterford Stanley in Ireland and the costs of closing certain
retailing outlets and the warehouse at Grange in North America. The
full year cost was GBP2.2 million.
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 and AGA Marvel branded products. 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 as
the two segments have similar economic characteristics, products
and services, production processes, types and classes of customer
and methods of distribution. All disclosures required under IFRS 8
and IAS 34 have therefore already been given in these interim
condensed consolidated financial statements. The directors consider
the aggregated reportable segment to be the manufacture and sale of
range cookers, kitchen and related home fashions products, 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 2014 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
2014 2013 2013
GBPm GBPm GBPm
Current tax
UK corporation tax 0.6 0.1 1.1
Overseas corporation
tax - (0.1) (0.1)
0.6 - 1.0
Deferred tax
UK deferred tax (0.3) - (0.3)
Overseas deferred tax - - (0.3)
(0.3) - (0.6)
Total tax expense 0.3 - 0.4
Total UK tax 0.3 0.1 0.8
Total overseas tax - (0.1) (0.4)
Total tax expense 0.3 - 0.4
Factors affecting the future tax charge:
Reductions in the UK corporation tax rate, to 21% from 1(st)
April 2014 and to 20% from 1(st) April 2015, were substantively
enacted in July 2013. Accordingly a rate of 20% has been applied in
the measurement of the Group's deferred tax assets and liabilities
as at 30(th) June 2014.
7. DISCONTINUED OPERATIONS
In the period to 30(th) June 2014 costs paid amounted to GBP0.2
million and primarily related to claims in relation to divested
businesses. In the period to 30(th) June 2013, payments of GBP0.6
million were made.
8.LOSS / EARNINGS PER SHARE
The calculation of the basic and diluted loss / earnings per
share ('EPS') is based on the following data:
Half year Half year Year to
to June to June December
2014 2013 2013
GBPm GBPm GBPm
(Loss) / earnings for the purpose of
the basic and diluted EPS
(Loss) / profit after tax (0.6) (2.4) 0.7
Non-controlling interests - - 0.1
(Loss) / profit attributable to equity
holders of the parent (0.6) (2.4) 0.8
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 0.4 - 0.3
For diluted EPS calculation 69.7 69.3 69.6
(Loss) / earnings per share attributable to
equity holders of the parent
p p p
Basic (0.9) (3.5) 1.2
Diluted (0.9) (3.5) 1.1
9. PROPERTY, PLANT & EQUIPMENT
During the six months to 30(th) June 2014 the Group purchased
GBP3.1 million of property, plant and equipment (period to 30(th)
June 2013: GBP1.7 million). Depreciation in the period was GBP2.4
million (period to 30(th) June 2013: GBP2.3 million). Exchange rate
movements also reduced the property, plant and equipment balance by
GBP0.5 million in the period.
10. RETIREMENT BENEFITS
The composition of the pension deficit in the consolidated
balance sheet and the net pension charge in the consolidated income
statement is as follows:
Half year Half year Year to
to June to June December
2014 2013 2013
GBPm GBPm GBPm
Assets and liabilities of the aggregated
schemes
Assets 839.3 813.3 828.9
Liabilities (886.0) (828.9) (864.7)
Net deficit in the schemes (46.7) (15.6) (35.8)
Amounts recognised in the consolidated income
statement
Current service cost - defined
benefit 1.3 1.2 2.4
Net interest on net defined benefit
obligation 0.7 0.6 1.1
Pension charge 2.0 1.8 3.5
11. CASH AND BORROWINGS
30(th) June 30(th) June 31(st) December
2014 2013 2013
GBPm GBPm GBPm
Cash and cash equivalents 12.5 10.1 21.2
Borrowings
Current (unsecured) borrowings (1.0) (1.0) (1.0)
Non-current borrowings (13.9) (15.1) (14.3)
Total borrowings (14.9) (16.1) (15.3)
Net (debt) / cash (2.4) (6.0) 5.9
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 2014 the non-current borrowings are split GBP0.2
million secured (30(th) June 2013: GBP0.3 million) and GBP13.7
million unsecured (30(th) June 2013: GBP14.8 million).
12. PROVISIONS
Provisions mainly relate to the remaining costs in respect of
divested businesses, including possible warranty and indemnity
claims, other claims and other costs from third parties. Although
the majority of these provisions may be realised in the next
accounting period, the exact timing is unclear. The provision held
reflects the remaining settlements and claims in relation to
divested businesses.
13. SHARE CAPITAL AND OPTIONS
The number of 46 7/8 pence ordinary shares in issue amounted to
69.3 million on 30(th) June 2014 (30(th) June 2013 and 31(st)
December 2013: 69.3 million). This represents GBP32.5 million of
share capital.
On 17(th) April 2014, 223,219 share options were issued under
the 2012 Company Share Option Plan ('CSOP') at an exercise price of
nil. The fair value of the TSR element is GBP1.28 and the fair
value of the EPS element is GBP1.73.
158,535 April 2011 CSOP options, which were not exercisable at
the year end, were lapsed in the period.
Details of the share option schemes were given on page 40 of the
Annual Report and Accounts as at 31(st) December 2013.
14. FINANCIAL INSTRUMENTS
Hedge of net investment in foreign operations
Included in borrowings at 30(th) June 2014 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 2014, the gain 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.
Carrying value
The carrying value of the Group's financial assets, including
trade and other receivables and cash, and financial liabilities,
including trade and other payables and borrowings, as disclosed in
the consolidated balance sheet, are equivalent to their fair value
at the balance sheet date.
15. CONTINGENT LIABILITIES AND COMMITMENTS
The Group has contingent liabilities for certain potential
claims from third parties in relation to divested businesses. On
the basis of information presently available to them, the directors
believe that no material claims are likely to arise for which
provision has not been made in these accounts.
The Group has arranged GBP30.0 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 31(st) December
2020.
The Group had no other material contingent liabilities arising
in the normal course of business at 30(th) June 2014.
The Group had capital commitments of GBP2.4 million at 30(th)
June 2014 (31(st) December 2013: GBP1.7 million).
16. 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 2013: GBP0.1 million). The
amount outstanding at 30(th) June 2014 was GBP0.2 million (30(th)
June 2013: GBP0.1 million).
17. SEASONALITY OF OPERATIONS
The normal seasonal nature of our range cooker, kitchen and home
fashions products 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 interim condensed consolidated 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 interim condensed consolidated
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 interim 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 and Account.
The directors of AGA Rangemaster Group plc are listed in the
Annual Report and Accounts for 31(st) December 2013, a copy of
which is available at www.agarangemaster.com. On 1(st) May 2014
Paul Dermody resigned as a non-executive director and on 1(st) July
2014 Bob Ivell was appointed as an independent non-executive
director.
By order of the board:
W B McGrath S M Smith
Chief Executive Finance Director
AGA RANGEMASTER GROUP PLC
INDEPENDENT REVIEW REPORT TO 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 2014 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 17. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct 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 2014 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 Conduct Authority.
Ernst & Young LLP
Birmingham
22(nd) August 2014
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 cost 8 pence per minute plus additional network charges
where applicable. Lines are open 8.30am to 5.30pm).
International (Helpline): +44 121 415 7047
Auditors
Ernst & Young LLP
Financial adviser and stockbroker
Numis Securities Limited
This information is provided by RNS
The company news service from the London Stock Exchange
END
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