AGA.L Regulatory News (AGA)

22nd 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 30th June 2014. 

Financial highlights

Operational highlights

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 McGrathChief Executive

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 £123.5 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 £2.4 million from £1.5 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 £2.4 million down £3.6 million on the 30th 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 £1 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 £4,995 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 14th 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 110th 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 £123.5 million was 3.3% higher than that in the first half of 2013 of £119.5 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 £2.4 million was up 60% on the operating profit in the first half of 2013 (£1.5 million).

Pensions - The half year pension charge of £2.0 million (half year 2013: £1.8 million) was above 2013's level with both the service charge and interest cost being marginally higher.

At 30th June 2014, the assets of the pension schemes have risen by £10.4 million since the start of the year after payments had been made of £19.4 million. The fall in 'AA' discount rates, however, still causes the liabilities as appraised to rise by £21.3 million leaving the deficit at the end of the period at £46.7 million.

Having made a £16.0 million deficit contribution in 2012, the Group's next contribution will be £4.0 million in December 2015. Recovery contributions then adjust to £10.0 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 £0.4 million and income of £0.9 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 £1.4 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 £2.2 million.

Finance costs - The finance cost at £0.7 million was in line with the first half of 2013 and relates to the costs of the £60.0 million of bank facilities put in place in November 2012, the £30.0 million of pension scheme guarantees provided and interest payable on the Group's EUR and USD hedging loans.

Taxation - The tax charge of £0.3 million for the half year (half year 2013: £nil) 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 30th 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: £nil). 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 £0.2 million (half year 2013: £0.6 million). 

Balance sheet - The balance sheet remained in a strong position, with low levels of debt at 30th June 2014.

Working capital at the period end which, in accordance with the trading cycle rises in the first half, was £23.6 million (30th June 2013: £26.0 million).

The net pension deficit was £46.7 million and compares to a net deficit of £35.8 million at 31st December 2013 and £15.6 million at 30th June 2013. The increase is primarily a result of the lower discount rate used - down from 4.5% at 31st December 2013 to 4.3% at 30th June 2014 - which has the impact of increasing the schemes' liabilities.

Net debt at £2.4 million was lower than last half year (30th June 2013: net debt £6.0 million, 31st December 2013: net cash £5.9 million).

Net assets of the Group at 30th June 2014 were £109.5 million, down from the £120.7 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 £3.7 million in the period (half year 2013: £6.5 million outflow). In line with normal seasonality, there was a working capital outflow of £7.8 million (half year 2013: £8.6 million outflow). In the second half of 2013 the working capital inflow was £9.0 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 £3.1 million (half year 2013: £1.7 million) and there was a depreciation charge of £2.4 million (half year 2013: £2.3 million). Expenditure on intangibles, in particular development costs, was £1.4 million (half year 2013: £1.4 million) and compares to an amortisation charge of £1.2 million (half year 2013: £1.1 million).

By order of the board:

AGA RANGEMASTER GROUP PLC

2014 HALF-YEARLY FINANCIAL REPORT

CONSOLIDATED INCOME STATEMENT

All operations are continuing.

AGA RANGEMASTER GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

AGA RANGEMASTER GROUP PLC

CONSOLIDATED BALANCE SHEET

AGA RANGEMASTER GROUP PLC

CONSOLIDATED CASH FLOW STATEMENT

AGA RANGEMASTER GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

AGA RANGEMASTER GROUP PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

The interim condensed consolidated financial statements of the Group for the six months ended 30th June 2014 were authorised for issue in accordance with a resolution of the directors on 22nd 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 31st December 2013 were approved by the board of directors on 7th 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 30th 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 31st 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 31st 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 30th 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 31st 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 31st December 2013, which are summarised below:

3. ACCOUNTING POLICIES

The interim condensed consolidated financial statements have been prepared using the same accounting policies as used in the preparation of the Group's Annual Report and Accounts for the year ended 31st December 2013 except for the adoption of new standards and interpretations effective as of 1st 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 30th June 2014. Net operating costs included reorganisation costs of £0.4 million and income of £0.9 million relating to a lease assignment of a London shop.

The non-recurring costs during the period to 30th June 2013 of £1.4 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 £2.2 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 30th June 2014 has been charged at the estimated rates chargeable for the full year in the respective jurisdictions as follows:

Factors affecting the future tax charge:

Reductions in the UK corporation tax rate, to 21% from 1st April 2014 and to 20% from 1st 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 30th June 2014.

7. DISCONTINUED OPERATIONS

In the period to 30th June 2014 costs paid amounted to £0.2 million and primarily related to claims in relation to divested businesses. In the period to 30th June 2013, payments of £0.6 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:

9. PROPERTY, PLANT & EQUIPMENT

During the six months to 30th June 2014 the Group purchased £3.1 million of property, plant and equipment (period to 30th June 2013: £1.7 million). Depreciation in the period was £2.4 million (period to 30th June 2013: £2.3 million). Exchange rate movements also reduced the property, plant and equipment balance by £0.5 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:

11. CASH AND BORROWINGS

The Group's bank borrowings are primarily loan advances denominated in a number of currencies and have floating interest rates based on LIBOR or foreign equivalents.

At 30th June 2014 the non-current borrowings are split £0.2 million secured (30th June 2013: £0.3 million) and £13.7 million unsecured (30th June 2013: £14.8 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 30th June 2014 (30th June 2013 and 31st December 2013: 69.3 million). This represents £32.5 million of share capital.

On 17th 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 £1.28 and the fair value of the EPS element is £1.73.

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 31st December 2013.

14. FINANCIAL INSTRUMENTS

Hedge of net investment in foreign operations

Included in borrowings at 30th 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 30th June 2014, the gain of £0.3 million on the retranslation of the EUR loan and the gain of £0.2 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 £30.0 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 31st December 2020.

The Group had no other material contingent liabilities arising in the normal course of business at 30th June 2014.

The Group had capital commitments of £2.4 million at 30th June 2014 (31st December 2013: £1.7 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 £0.1 million (half year 2013: £0.1 million). The amount outstanding at 30th June 2014 was £0.2 million (30th June 2013: £0.1 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:

The directors of AGA Rangemaster Group plc are listed in the Annual Report and Accounts for 31st December 2013, a copy of which is available at www.agarangemaster.com. On 1st May 2014 Paul Dermody resigned as a non-executive director and on 1st July 2014 Bob Ivell was appointed as an independent non-executive director.

By order of the board:

W B McGrath S M SmithChief 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 30th 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 30th 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 LLPBirmingham

22nd August 2014

AGA RANGEMASTER GROUP PLC

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Head office and registered office

AGA Rangemaster Group plcJuno DriveLeamington SpaWarwickshireCV31 3RGTelephone: +44 (0)1926 455 755Fax: +44 (0)1926 455 749E-mail: info@agarangemaster.comWebsite: www.agarangemaster.com

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Ernst & Young LLP

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