TIDMAGA
RNS Number : 0434W
Aga Rangemaster Group PLC
14 August 2015
14(th) August 2015
FOR IMMEDIATE RELEASE
AGA RANGEMASTER GROUP PLC
2015 HALF YEAR RESULTS
REVENUES AND OPERATING PROFITS UP AND MARKETS IMPROVING
TIMETABLE SET FOR ACQUISITION BY THE MIDDLEBY CORPORATION
('MIDDLEBY')
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 2015.
Financial highlights
-- Revenues of GBP125.4 million (2014: GBP123.5 million) were
up 1.5% in the half year.
-- Operating profits were up 16.7% to GBP2.8 million for the
half year (2014: GBP2.4 million). Our expectations for the
full year 2015 operating profit remain unchanged.
-- Increased pension charges and professional costs associated
with the offer by Middleby resulted in a loss before tax of
GBP4.0 million (2014: GBP0.3 million).
-- Net debt of GBP3.4 million at 30(th) June 2015 (2014: GBP2.4
million) reflected higher investment in inventories given
the order outlook.
Operational highlights
-- The year started slowly but picked up towards the half year.
The new generation of AGA and Rangemaster products are expected
to provide a continuing impetus to the business. Trading performances
at AGA Marvel, the North American cooker and under counter
fridge business, and Fired Earth, the tile business, were
particularly strong.
Offer by Middleby
-- The Court Meeting and the General Meeting to consider the
Scheme of Arrangement to implement the proposed offer by Middleby
to acquire the entire issued share capital of the Group for
185 pence per share will take place on 8(th) September 2015.
Subject to shareholder approval the Scheme of Arrangement
is expected to become effective on 23(rd) September 2015.
William McGrath, Chief Executive said: "Our product investment
programmes have ensured we are ready to benefit from the improving
trading backcloth. Working with Middleby should provide additional
momentum to enable our operations to thrive."
Enquiries:
William McGrath, Chief Executive 01926 455 731
Shaun Smith, Finance Director 01926 455 731
Simon Sporborg / Nina Coad (Brunswick) 020 7404 5959
AGA RANGEMASTER GROUP PLC
2015 INTERIM MANAGEMENT REPORT
Overview
On 15(th) July 2015, the Boards of the Group and Middleby
announced the terms of a recommended cash offer for the Group at
185 pence per share. Completion of the transaction, which will be
implemented by means of a Scheme of Arrangement, is expected to
take place by 23(rd) September 2015. Documentation convening the
Court Meeting and the General Meeting of the Group for 8th
September 2015 is to be sent to shareholders on 17(th) August
2015.
First half trading showed the Group make further progress, even
though UK market conditions at the start of the period had been
subdued. Revenues in the first six months were GBP125.4 million, up
1.5% on 2014 - up 2.1% at constant currency. Operating profit
increased to GBP2.8 million from GBP2.4 million in the period and
the pattern of profits, heavily weighted to the second half of the
year, is expected to continue.
The financial position of the Group continues to be strong with
net debt at 30(th) June 2015 of GBP3.4 million compared with GBP2.4
million a year earlier.
Operating performances
The year started quite slowly for AGA cooker sales with
consumers continuing to be cautious. Following the election there
has been a marked change in attitude. The Dual Control lines first
introduced in late 2013 are now well established as the
best-selling models. The AGA City60 is established in the market
and is attracting a wider audience to the brand. A gas hob version
is to be launched this autumn. Of the sales volumes in the first
half over 75% were of models launched since mid-2011.
In the UK, Rangemaster had a strong end to the period after a
slow start as greater consumer confidence and higher household
incomes fed through into expenditure on the home and into house
moves. Rangemaster did well with key customers including Dixons
Carphone, AO and the independent buying group CIH. John Lewis is
now taking more Rangemaster lines and we expect sales to increase
as the year progresses. The Rangemaster 60cm line is now firmly
established in the market. International sales were ahead of the
prior year. We entered the Chinese market and have now made our
first sales to consumers.
Sales of cast iron cookers and stove sales in Ireland continued
to be slow through a mild spring, which means that Waterford
Stanley is yet to return to profitability. There is, however, a
marked Dublin-led economic recovery in Ireland from which
Rangemaster is benefiting.
AGA Marvel in North America had an excellent first half to the
year, with strong sales growth continuing following the launch of
our new generation of products last year. Our Greenville Michigan
factory, in which we consolidated three factories, is operating at
its highest production level since it was opened in 2011.
Fired Earth continued to see strong, profitable growth. Its
leading tile range continues to differentiate Fired Earth and is
driving the business towards a record sales level.
Grange now operates from a reduced cost base following a further
site consolidation in St Symphorien. It has upgraded its retail
presentation and is performing satisfactorily in Europe, but is
still loss making in North America, where a small team is based in
the New York Design Centre.
Current trading and prospects
Our core market remains the UK, and with an economic and
political backdrop that is likely to be conducive to increased
levels of consumer spending on household goods, from which we
expect to see the recent trends of higher sales and profits
continue.
With the products brought to market over recent years now well
established in their market places, we can look to the remainder of
2015 with confidence.
Offer from Middleby
An offer for the Group has been received from Middleby which the
Group's Board has recommended. The related documentation, in which
the Board explains its rationale for recommending the proposed
offer, is being sent to shareholders on 17(th) August 2015.
As part of an agreement on pensions, which is conditional on
shareholder acceptance of the offer as proposed, the Trustee of the
Group's main pension scheme will be concluding the triennial
actuarial valuation of the pension scheme being undertaken as at
31(st) December 2014 on a scheme funding basis that will take
account of the support offered by Middleby, and which will show a
deficit on this basis of GBP84 million (deficit as at 31(st)
December 2011: GBP228 million). If the transaction does not take
place the triennial actuarial valuation would need to be completed
without the support offered by Middleby. The deficit recovery plan
that will be put in place on completion of the 2014 triennial
actuarial valuation, on the basis that support is provided by
Middleby, will include the payment into the pension scheme of a
special contribution funded by Middleby of GBP10 million shortly
after completion of the takeover, another GBP10 million during
January 2016 and further deficit recovery contributions of up to
GBP2.5 million per annum to be paid by the Group over a six year
period commencing in 2018.
The covenant offered by Middleby should materially strengthen
the pension scheme's security for its members and beneficiaries. In
addition to the special contributions funded by Middleby totalling
GBP20 million to be paid into the pension scheme by January 2016,
Middleby will provide to the pension scheme an unconditional
guarantee of the Group's obligations to the pension scheme of up to
GBP60 million, together with a further conditional guarantee of the
Group's obligations to the pension scheme as set out on the
scheme's schedule of contributions in place from time to time
prospectively of up to an initial GBP95 million.
Should the shareholders accept the terms of the recommended cash
offer then I, along with the other non-executives, will be standing
down from the Group's Board and AGA Rangemaster Group plc will
cease to be a separately quoted public company. It has been a
privilege to work for a Group that has such great brands and I
should like to record the gratitude of the Board to the employees
of the Group and its subsidiaries that have achieved so much to put
the Group in a position to grow - growth which Middleby, with its
financial depth and international breadth, makes more readily
achievable.
Financial review
Revenue - The revenue of GBP125.4 million was 1.5% higher than
the GBP123.5 million in the first half of 2014 - in constant
currency the increase was 2.1%. The period was characterised by a
slow start and a stronger finish.
Operating profit - The operating profit at GBP2.8 million was up
16.7% on the GBP2.4 million operating profit reported in the first
half of 2014.
Pensions - The half year pension charge of GBP2.7 million (half
year 2014: GBP2.0 million) was up as the higher year end net
deficit on an IAS 19 basis of GBP72.0 million at 31(st) December
2014 (31(st) December 2013: GBP35.8 million) increased both the
interest cost and the service charge - see note 9.
At 30(th) June 2015, after taking into account benefits and
other payments of GBP22.1 million made from the pension schemes
over the half year to 30(th) June 2015, the assets of the pension
schemes had decreased by GBP9.1 million since the start of the
year. The increase in corporate bond yields over the half year to
30(th) June 2015 was the principal cause of the decrease in the
valuation of the pension schemes' liabilities by GBP34.4 million.
The resulting net deficit on an IAS 19 basis was GBP46.7 million at
30(th) June 2015, which was the same as the net deficit a year
earlier. An update on the Group scheme's actuarial valuation as at
31(st) December 2014 is included in the 'Offer from Middleby'
section.
Net operating costs - Net operating costs included income of
GBP0.7 million (half year 2014: GBP0.9 million) relating to lease
assignments of certain London shops.
Non-recurring costs - There were GBP3.4 million of non-recurring
costs during the period to 30(th) June 2015, GBP3.0 million
relating to the professional costs incurred in respect of the
proposed acquisition of the Group by Middleby. Costs of GBP0.4
million have also been incurred in respect of a significant ongoing
Group restructuring project in the UK as a result of the AGA
products being factory finished. Further non-recurring costs may be
incurred in the second half.
Finance costs - The finance cost at GBP0.7 million was in line
with the first half of 2014 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 from these
facilities and interest payable on the Group's EUR and USD hedging
loans.
Taxation - The tax credit of GBP0.1 million for the half year
(half year 2014 charge: GBP0.3 million) includes a tax credit of
GBP0.3 million for transaction costs. UK deferred tax balances have
been accounted for at a rate of 20% at 30(th) June 2015.
Earnings / loss per share - The basic loss per share increased
to 5.6 pence after non-recurring costs and the increased pension
charge (half year 2014: 0.9 pence). The average number of shares in
issue was 69.3 million (the same as the previous half year and year
end). The underlying earnings per share before non-recurring costs
and pension charges, at standard UK tax rates, increased to 2.5
pence (half year 2014: 1.9 pence).
Dividends - The Board has decided not to pay an interim dividend
(half year 2014: GBPnil).
Balance sheet - The balance sheet remained in a good position.
At the period end, working capital, which increased in line with
the normal trading cycle in the first half, was GBP22.6 million
(30(th) June 2014: GBP23.6 million).
The net pension deficit on an IAS 19 basis at 30(th) June 2015
was GBP46.7 million and compares to a net deficit of GBP72.0
million at 31(st) December 2014 and GBP46.7 million at 30(th) June
2014. The decrease over the half year to 30(th) June 2015 was
primarily a result of the higher liability discount rate adopted -
up from 3.5% at 31(st) December 2014 to 3.75% at 30(th) June 2015 -
which had the impact of decreasing the pension schemes' appraised
liabilities.
Net debt at GBP3.4 million was higher than the GBP2.4 million at
30(th) June 2014 and included a payment to Fired Earth management
under the cash settled share based payment arrangement of GBP1.1
million in the period (31(st) December 2014: net cash GBP9.2
million).
Net assets of the Group at 30(th) June 2015 were GBP104.1
million, up from the GBP90.7 million at the end of last year,
primarily as a result of the decrease in the pension deficit.
Cashflow - The cash used in operating activities saw a higher
first half outflow of GBP8.5 million in the period (half year 2014:
GBP3.7 million outflow). In line with normal seasonality, there was
a working capital outflow of GBP8.9 million (half year 2014: GBP7.8
million outflow). In the second half of 2014 the working capital
inflow was GBP9.8 million. GBP1.1 million was paid to Fired Earth's
management in the period.
Capital expenditure in the period was GBP2.9 million (half year
2014: GBP3.1 million) and the depreciation charge GBP2.3 million
(half year 2014: GBP2.4 million). Expenditure on intangibles,
primarily development costs, was GBP1.3 million (half year 2014:
GBP1.4 million) and compares to an amortisation charge of GBP1.2
million (half year 2014: GBP1.2 million).
Banking facilities - The Group's committed bank facilities
mature on 31(st) August 2016. Assuming that the Group becomes part
of Middleby it is envisaged that it will review the Group's ongoing
banking requirements. In the event that the acquisition did not
take place the facilities will need to be renegotiated.
By order of the Board:
J Coleman
Chairman
14(th) August 2015
AGA RANGEMASTER GROUP PLC
2015 HALF-YEARLY FINANCIAL REPORT
CONSOLIDATED INCOME STATEMENT
Half year Half year Year to
to June to June December
2015 2014 2014
Note Unaudited Unaudited Audited
GBPm GBPm GBPm
Revenue 125.4 123.5 261.1
Net operating costs 4 (122.6) (121.1) (251.5)
Group operating profit 2.8 2.4 9.6
Pension charge 9 (2.7) (2.0) (4.1)
Non-recurring costs 4 (3.4) - -
Fair value movement - - (3.3)
(Loss) / profit before finance costs
and tax (3.3) 0.4 2.2
Finance costs (0.7) (0.7) (1.5)
(Loss) / profit before tax (4.0) (0.3) 0.7
Tax credit / (expense) 6 0.1 (0.3) (0.6)
(Loss) / profit for the period
attributable to equity holders
of the parent (3.9) (0.6) 0.1
(Loss) / earnings per share attributable
to equity holders of the parent: 7 p p p
Basic (5.6) (0.9) 0.1
Diluted (5.6) (0.9) 0.1
All operations are continuing.
AGA RANGEMASTER GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half year Half year Year to
to June to June December
2015 2014 2014
Unaudited Unaudited Audited
GBPm GBPm GBPm
(Loss) / profit for the period (3.9) (0.6) 0.1
-------------------------------------------- ----------- ----------- ----------
Other comprehensive (losses) / income
to be reclassified to profit or loss
in subsequent periods:
Exchange adjustments on hedge of net
investments 0.6 0.5 (0.1)
Exchange differences on translation of
foreign operations (4.4) (2.8) (1.6)
Tax on items taken to reserves - - 0.4
Net other comprehensive (losses) / income
to be reclassified to profit or loss
in subsequent periods (3.8) (2.3) (1.3)
Items not to be reclassified to profit
or loss in subsequent periods:
Actuarial gains / (losses) on defined
benefit pension schemes 26.3 (10.5) (36.0)
Tax on items taken to reserves (5.3) 2.1 7.2
Net other comprehensive income / (losses)
not to be reclassified to profit or loss
in subsequent periods 21.0 (8.4) (28.8)
Other comprehensive income / (losses)
for the period 17.2 (10.7) (30.1)
Total comprehensive income / (losses)
for the period attributable to equity
holders of the parent 13.3 (11.3) (30.0)
AGA RANGEMASTER GROUP PLC
CONSOLIDATED BALANCE SHEET
30(th)
June 30(th) June 31(st) December
2015 2014 2014
Note Unaudited Unaudited Audited
GBPm GBPm GBPm
Non-current assets
Goodwill 63.5 64.1 65.1
Intangible assets 23.8 24.9 25.4
Property, plant and equipment 8 41.1 38.7 42.5
Other receivables 0.1 0.2 0.2
Deferred tax assets 12.0 13.4 17.9
140.5 141.3 151.1
Current assets
Inventories 49.8 46.7 49.0
Trade and other receivables 35.1 34.9 33.0
Cash and cash equivalents 10 10.9 12.5 24.2
95.8 94.1 106.2
Assets held for sale - 2.2 -
Total assets 236.3 237.6 257.3
Current liabilities
Borrowings 10 (0.5) (1.0) (0.6)
Trade and other payables (62.3) (58.0) (68.9)
Current tax liabilities (3.1) (4.1) (3.8)
Provisions and share based payments 11 (4.9) (2.8) (3.7)
(70.8) (65.9) (77.0)
Net current assets 25.0 28.2 29.2
Non-current liabilities
Borrowings 10 (13.8) (13.9) (14.4)
Retirement benefit obligation 9 (46.7) (46.7) (72.0)
Deferred tax liabilities - (0.8) -
Provisions and share based payments 11 (0.9) (0.8) (3.2)
(61.4) (62.2) (89.6)
Total liabilities (132.2) (128.1) (166.6)
Net assets 104.1 109.5 90.7
Equity
Share capital 12 32.5 32.5 32.5
Share premium account 29.6 29.6 29.6
Other reserves 76.7 79.9 80.5
Retained loss (34.7) (32.5) (51.9)
Total equity 104.1 109.5 90.7
AGA RANGEMASTER GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
Half year Half year Year to
to June to June December
2015 2014 2014
Note Unaudited Unaudited Audited
GBPm GBPm GBPm
Operating activities
(Loss) / profit before tax (4.0) (0.3) 0.7
Reconciliation of (loss) / profit before
tax to net cash flows:
Finance costs 0.7 0.7 1.5
Depreciation of property, plant and
equipment 8 2.3 2.4 4.7
Amortisation of intangible assets 1.2 1.2 2.3
Loss on disposal of property, plant
and equipment, intangibles and assets
held for sale 0.3 0.1 0.1
Share based payments expense 0.1 0.1 3.3
Non-cash tax credit (0.1) - (0.2)
Increase in inventories (1.6) (2.1) (4.1)
(Increase) / decrease in receivables (3.0) (0.3) 1.6
(Decrease) / increase in payables (4.3) (5.4) 4.5
Decrease in provisions and share based
payments (1.1) (0.3) -
Pension charge 9 2.7 2.0 4.1
Pension contributions (1.7) (1.8) (4.1)
Cash (used in) / generated from operating
activities (8.5) (3.7) 14.4
Cashflows related to discontinued operations - (0.2) (0.5)
Finance costs (0.6) (0.6) (1.3)
Tax payment - - (0.3)
Net cash (used in) / generated from
operating activities (9.1) (4.5) 12.3
Investing activities
Purchase of property, plant and equipment 8 (2.9) (3.1) (6.7)
Expenditure on intangibles (1.3) (1.4) (3.2)
Proceeds from disposal of property,
plant and equipment and assets held
for sale - - 1.1
Net cash used in investing activities (4.2) (4.5) (8.8)
Financing activities
Borrowing costs - - (0.1)
Repayment of borrowings (0.2) - (0.4)
Net cash used in financing activities (0.2) - (0.5)
Effects of exchange rate changes on cash
and cash equivalents 0.2 0.3 -
Net (decrease) / increase in cash and
cash equivalents (13.3) (8.7) 3.0
Cash and cash equivalents at beginning
of period 24.2 21.2 21.2
Cash and cash equivalents at end of
period 10 10.9 12.5 24.2
AGA RANGEMASTER GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Half year to 30(th) June Equity attributable to equity holders of
2015 the parent
------------------------------------------------------------
Share Share Other Retained
capital premium reserves earnings Total equity
GBPm GBPm GBPm GBPm GBPm
At 1(st) January 2015 32.5 29.6 80.5 (51.9) 90.7
Comprehensive income
/ (losses)
Loss for the period - - - (3.9) (3.9)
Other comprehensive income
/ (losses)
Exchange adjustments
on hedge of net investments - - 0.6 - 0.6
Exchange differences
on translation of foreign
operations - - (4.4) - (4.4)
Actuarial gain on defined
benefit pension schemes - - - 26.3 26.3
Tax on items taken to
reserves - - - (5.3) (5.3)
Total comprehensive income
for the period ended
30(th) June 2015 - - (3.8) 17.1 13.3
Share based payments - - - 0.1 0.1
At 30(th) June 2015 32.5 29.6 76.7 (34.7) 104.1
Half year to 30(th) June Equity attributable to equity holders of
2014 the parent
------------------------------------------------------------
Share Share Other Retained
capital premium reserves earnings Total equity
GBPm GBPm GBPm GBPm GBPm
At 1(st) January 2014 32.5 29.6 82.2 (23.6) 120.7
Comprehensive (losses)
/ income
Loss for the period - - - (0.6) (0.6)
Other comprehensive (losses)
/ income
Exchange adjustments
on hedge of net investments - - 0.5 - 0.5
Exchange differences
on translation of foreign
operations - - (2.8) - (2.8)
Actuarial losses on defined
benefit pension schemes - - - (10.5) (10.5)
Tax on items taken to
reserves - - - 2.1 2.1
Total comprehensive losses
for the period ended
30(th) June 2014 - - (2.3) (9.0) (11.3)
Share based payments - - - 0.1 0.1
At 30(th) June 2014 32.5 29.6 79.9 (32.5) 109.5
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 2015 were authorised for
issue in accordance with a resolution of the directors on 14(th)
August 2015.
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 2014 were approved by the Board of directors on
6(th) March 2015 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 report 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 2015 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 2014 which
have been prepared in accordance with International Financial
Reporting Standards ('IFRS') as adopted by the European Union.
GOING CONCERN
The directors have considered both the business activities and
key risks 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 12 months from today, being the date of
issuing this announcement. 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 2015 interim condensed consolidated financial statements to be
prepared on a going concern basis. The Group's committed bank
facilities mature on 31(st) August 2016. Assuming that the Group
becomes part of Middleby (see the additional information in the
'Offer from Middleby' section) it is envisaged that it will review
the Group's ongoing banking requirements. In the event that the
acquisition did not take place the facilities will need to be
renegotiated.
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 2014.
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 2014, 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 in August 2016.
-- 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. If the acquisition by Middleby
is agreed the corporate covenant provided by Middleby should
provide materially enhanced certainty for members.
-- People - the potential loss of key personnel.
-- Supply chain - timely supply of parts and materials.
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 2014 except for the adoption of new standards
and interpretations effective as of 1(st) January 2015, as noted
below.
Several new standards and amendments apply for the first time in
2015. 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:
Amendments to IAS 19 Defined Benefit Plans: Employee
Contributions
IAS 19 requires an entity to consider contributions from
employees or third parties when accounting for defined benefit
plans. Where the contributions are linked to service, they should
be attributed to periods of service as a negative benefit. These
amendments clarify that, if the amount of the contributions is
independent of the number of years of service, an entity is
permitted to recognise such contributions as a reduction in the
service cost in the period in which the service is rendered,
instead of allocating the contributions to the periods of service.
This amendment is effective for annual periods beginning on or
after 1(st) July 2014. This amendment did not have a material
impact on the Group.
Annual improvements 2010-2012 Cycle
These improvements are effective from 1(st) July 2014 and the
Group has applied these amendments for the first time in these
interim condensed consolidated financial statements. They
include:
IFRS 2 Share-based Payment
This improvement is applied prospectively and clarifies various
issues relating to the definitions of performance and service
conditions which are vesting conditions, including:
-- A performance condition must contain a service condition;
-- A performance target must be met while the counterparty is rendering service;
A performance target may relate to the operations or activities
of an entity, or to those of another entity in the same group;
-- A performance condition may be a market or non-market condition; and
-- If the counterparty, regardless of the reason, ceases to
provide service during the vesting period, the service condition is
not satisfied.
The above definitions are consistent with how the Group has
identified any performance and service conditions which are vesting
conditions in previous periods, and thus these amendments do not
impact the Group's accounting policies.
IFRS 3 Business Combinations
The amendment is applied prospectively and clarifies that all
contingent consideration arrangements classified as liabilities (or
assets) arising from a business combination should be subsequently
measured at fair value through profit or loss whether or not they
fall within the scope of IFRS 9 (or IAS 39, as applicable). This is
consistent with the Group's current accounting policy, and thus
this amendment does not impact the Group's accounting policy.
IFRS 8 Operating Segments
The amendments are applied retrospectively and clarify that:
-- An entity must disclose the judgements made by management in
applying the aggregation criteria in paragraph 12 of IFRS 8,
including a brief description of operating segments that have been
aggregated and the economic characteristics (e.g., sales and gross
margins) used to assess whether the segments are 'similar;' and
-- The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities.
The Group has not presented the reconciliation of segment assets
to total assets as the reconciliation is not reported to the chief
operating decision maker.
IAS 16 Property, Plant and Equipment and IAS 38 Intangible
Assets
The amendment is applied retrospectively and clarifies in IAS 16
and IAS 38 that the asset may be revalued by reference to
observable data on either the gross or the net carrying amount. In
addition, the accumulated depreciation or amortisation is the
difference between the gross and carrying amounts of the asset. The
Group did not record any revaluation adjustments during the current
interim period.
IAS 24 Related Party Disclosures
The amendment is applied retrospectively and clarifies that a
management entity (an entity that provides key management personnel
services) is a related party subject to the related party
disclosures. In addition, an entity that uses a management entity
is required to disclose the expenses incurred for management
services. This amendment is not relevant for the Group as it does
not receive any management services from other entities.
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 AND NON-RECURRING COSTS
There were GBP3.4 million of non-recurring costs during the
period to 30(th) June 2015, GBP3.0 million relating to the
professional costs incurred in respect of the proposed acquisition
of the Group by Middleby - see note 17. Costs of GBP0.4 million
have also been incurred in respect of a significant ongoing Group
restructuring project in the UK as a result of the AGA products
being factory finished. Further non-recurring costs may be incurred
in the second half.
Net operating costs during the period to 30(th) June 2015
included income of GBP0.7 million (30(th) June 2014: GBP0.9
million) relating to lease assignments of London shops.
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 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 2015 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
2015 2014 2014
GBPm GBPm GBPm
Current tax
UK corporation tax (0.3) 0.6 1.2
Overseas corporation
tax - - 0.3
(0.3) 0.6 1.5
Deferred tax
UK deferred tax (0.3) (0.3) (0.1)
Overseas deferred tax 0.5 - (0.8)
0.2 (0.3) (0.9)
Total tax (credit) / expense (0.1) 0.3 0.6
Total UK tax (0.6) 0.3 1.1
Total overseas tax 0.5 - (0.5)
Total tax (credit) / expense (0.1) 0.3 0.6
Factors affecting the future tax charge:
Reductions in the rate of UK corporation tax from 20% to 19%,
effective from 1(st) April 2017, and to 18%, effective from 1(st)
April 2020 have been proposed. The changes have not yet been
substantively enacted.
Accordingly a rate of 20% has been applied for UK current tax
and in the measurement of the Group's deferred tax assets and
liabilities as at 30(th) June 2015.
7. 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
2015 2014 2014
GBPm GBPm GBPm
(Loss) / earnings for the purpose of
the basic and diluted EPS
(Loss) / profit attributable to equity
holders of the parent (3.9) (0.6) 0.1
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 0.3 0.4 0.3
For diluted EPS calculation 69.6 69.7 69.6
(Loss) / earnings per share attributable to
equity holders of the parent
p p p
Basic (5.6) (0.9) 0.1
Diluted (5.6) (0.9) 0.1
8. PROPERTY, PLANT & EQUIPMENT
During the six months to 30(th) June 2015 the Group spent GBP2.9
million on property, plant and equipment (period to 30(th) June
2014: GBP3.1 million). Depreciation in the period was GBP2.3
million (period to 30(th) June 2014: GBP2.4 million). Exchange rate
movements also reduced the property, plant and equipment balance by
GBP0.8 million in the period.
9. 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
2015 2014 2014
GBPm GBPm GBPm
Assets and liabilities of the aggregated
schemes
Assets 874.3 839.3 883.4
Liabilities (921.0) (886.0) (955.4)
Net deficit in the schemes (46.7) (46.7) (72.0)
Amounts recognised in the consolidated
income statement
Current service cost - defined
benefit 1.5 1.3 2.6
Net interest on net defined
benefit obligation 1.2 0.7 1.5
Pension charge 2.7 2.0 4.1
Details of the movement in the Group's aggregated pension
schemes and an update on the main UK pension scheme's actuarial
valuation are included in the Interim Management Report.
10. CASH AND BORROWINGS
30(th) June 30(th) June 31(st) December
2015 2014 2014
GBPm GBPm GBPm
Cash and cash equivalents 10.9 12.5 24.2
Borrowings
Current (unsecured) borrowings (0.5) (1.0) (0.6)
Non-current borrowings (13.8) (13.9) (14.4)
Total borrowings (14.3) (14.9) (15.0)
Net (debt) / cash (3.4) (2.4) 9.2
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 2015 the non-current borrowings are split GBP0.1
million secured (30(th) June 2014: GBP0.2 million) and GBP13.7
million unsecured (30(th) June 2014: GBP13.7 million).
11. PROVISIONS AND SHARE BASED PAYMENTS
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 provisions held
reflect the remaining settlements and claims in relation to
divested businesses.
The remaining share based payment provision of GBP2.3 million
reflects the fair value of the Fired Earth Limited cash settled
arrangement based on 12,523 shares at a fair value of GBP180 each.
A payment of GBP1.1 million was made to Fired Earth management in
the period to 30(th) June 2015.
12. SHARE CAPITAL AND OPTIONS
The number of 46 7/8 pence ordinary shares in issue amounted to
69.3 million on 30(th) June 2015 (30(th) June 2014 and 31(st)
December 2014: 69.3 million). This represents GBP32.5 million of
share capital.
Details of the share option schemes were given on page 42 of the
Annual Report and Accounts as at 31(st) December 2014.
13. FINANCIAL INSTRUMENTS
Hedge of net investment in foreign operations
Included in borrowings at 30(th) June 2015 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 2015, the gain of
GBP0.5 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.
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, is equivalent to their fair value
at the balance sheet date.
14. 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 2015.
The Group had capital commitments of GBP1.8 million at 30(th)
June 2015 (31(st) December 2014: GBP0.3 million).
15. RELATED PARTY TRANSACTIONS
The Group currently recharges the AGA Rangemaster Group Pension
Scheme with part of the cost of administration. The total amount
recharged in the period was GBP0.1 million (half year 2014: GBP0.1
million). The amount outstanding at 30(th) June 2015 was GBP0.3
million (30(th) June 2014: GBP0.2 million).
16. 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 half.
17. POST BALANCE SHEET EVENT
On 15(th) July 2015 the Boards of the Group and Middleby
announced the terms of a recommended cash offer by Middleby for the
entire issued share capital of the Group for 185 pence per
share.
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.
DIRECTORS' RESPONSIBILITY STATEMENT
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 2014, a copy of
which is available at www.agarangemaster.com. On 30(th) April 2015
Paul Jackson resigned as a 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 2015 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 2015 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
14(th) August 2015
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
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FMGMRNFLGKZM
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