AGA.L Regulatory News (AGA)

AGA RANGEMASTER GROUP plcJuno DriveLeamington SpaWarwickshireCV31 3RG

26th August 2011

Tel: 01926 455 755Fax: 01926 455 749www.agarangemaster.com

FOR IMMEDIATE RELEASE

AGA RANGEMASTER GROUP PLC

2011 HALF-YEARLY FINANCIAL REPORT

STREAMLINED PROCESSES BRING IMPROVED PROFIT PERFORMANCE

AGA Rangemaster Group plc ('the Group'), the specialist in range cooking and kitchen living, is pleased to announce its interim results for the half year ended 30th June 2011.

* Earnings Before Interest, Tax, Depreciation, Amortisation for 2010 excludes the £16.3 million curtailment gain.

Financial and operational highlights

Ø Operating profit increased to £2.9 million (half year 2010: £0.8 million).

Ø Net cash at 30th June 2011 of £25.2 million (30th June 2010: £22.4 million).

Ø Launch of AGA Total Control key to future growth prospects for cast iron cookers.

Ø Rangemaster remains a clear UK market leader and exports were a record 27% of cooker sales.

Ø Improved performance at AGA Marvel, Grange and Fired Earth.

Ø Interim dividend up by 14% to 0.8 pence.

"In these tough market conditions we are encouraged by the performance of our market leading products. Whilst recent events suggest an even tougher autumn ahead, the second half should see the impact of newly launched products gather pace. Most significantly the AGA Total Control will be a factor in driving UK sales performance and its European launch is scheduled for this autumn. The Group is confident that it is well positioned to be a major beneficiary of any upturn in consumer confidence because of the investment in product and the operational gearing of the business."

William McGrathChief Executive

Enquiries:

AGA RANGEMASTER GROUP PLC

2011 INTERIM MANAGEMENT REPORT

Overview

The year started brightly but headwinds increased in the spring leaving overall sales down 1.6% at £121.4 million. The marked rise in operating profit to £2.9 million from £0.8 million reflected good progress from our streamlined organisations. Of particular note were the reduced losses at AGA Marvel and Fired Earth. The further rise in the net cash position to £25.2 million from £22.4 million underlines the progress made.

Recent events suggest an even tougher autumn ahead. Nonetheless, the second half should see the impact of recently launched products gather pace. Most significantly the AGA Total Control will be a factor in driving UK sales performance and its European launch scheduled for the autumn will help to confirm the scale of the growth potential to come. The Group is confident that it is well positioned to be a major beneficiary of any upturn in consumer confidence because of the investment in product and the operational gearing of the business.

Half year performance

Revenue in the first half was £121.4 million - £2.0 million below the sales in the first half of 2010. UK sales represented 61% of total sales, Europe 23% and North America and the rest of the world 16%. EBITDA was up to £8.0 million from £4.2 million, excluding the benefit in 2010 of the £16.3 million pension curtailment gain. Operating profit before amortisation was also well ahead at £3.8 million compared with £1.6 million. A non-recurring cost of £0.3 million has been included in 2011 to cover the completion of the North American manufacturing and distribution integration. Profit before tax from continuing operations was £4.2 million and earnings per share from continuing operations were 4.3 pence. Against the background of a steady performance but continued uncertain markets, the Board has decided to increase the dividend by 14% from 0.7 pence per share to 0.8 pence per share. Future dividend payments will reflect the performance and outlook and the available cash resources of the Group.  

Operating performances

The Group is seeing the benefits of the work undertaken to raise operational efficiencies through closer integration of the cooker and refrigeration operations both in the UK and in North America. Tangible benefits, from supply chain management through to distribution and service support, have maintained downward pressure on the cost base even though input costs are being impacted by higher inflation. These process improvements will continue as new operational I.T. support systems are fully implemented over the next year.

AGA volumes were unchanged and overall cast iron sales volumes are down by 7% to 5,500 units. Rayburn and Stanley volumes were markedly lower, notably in Ireland.

In May 2011 we unveiled a major step change for AGA. The exciting launch of the AGA Total Control centred on the theme of "On when you need it; off when you don't" makes an AGA cooker, with three independent cast iron, radiant heat cooking ovens and two hotplates, more flexible and cheaper to run. The AGA Total Control is at the core of our long term growth strategy and is attracting a new audience that is attracted to the food quality and warm home created by the AGA, but needs the greater flexibility of Total Control and a product that works to their timetable. Leads are encouraging and we have now received orders for well over 300 units since the launch. The awareness and profile of AGA Total Control, which has been established in a short space of time has been remarkably good. The greatest opportunity may prove to be outside the UK. Awareness of the AGA brand overseas is often high and now with the additional benefits for consumers and dealers of the new model being factory built and quick and straightforward to install, there is every chance that the niche market currently occupied will be appreciably widened. AGA Total Control is central to the Group's expectations in the years ahead that overall cast iron cooker sales will recover to the 2007 level of 19,600 units.

In April we acquired Redfyre - the well-known cast iron brand which complements, in particular, our Stanley range. The Group will in future have AGA Rayburn and Stanley Redfyre as axes for the cast iron cooker-boiler market. In Ireland our stove business is achieving record volumes driven by product made in Waterford and has important new launches this autumn.

Rangemaster continued to perform well maintaining its market share in UK range cookers at over 50% by value - even in markets that were weak and value orientated. Growth continued on the continent. Cooker volumes overall were down around 1%. Within the product offering, we saw volume increases for the recently launched 100cm and induction cookers. A record 27% of Rangemaster cooker sales volumes were outside the UK with France, in particular, continuing to grow well.

The kitchen specialist market in which the wider spectrum of Rangemaster products including refrigeration and sinks are available is a source of growth for our premium Falcon and Mercury brands. Close co-operation with kitchen and appliance specialists has helped our brands maintain strong positions within all trade channels. Over 30% of Rangemaster sales were for products other than cookers.

At Fired Earth, losses were much reduced and this has helped bolster the Group's performance. In May proposals were agreed to provide management of Fired Earth with an equity interest in the operation. This autumn sees a new store opening in Dulwich Village - the first for three years - two new major refurbishments, as well as significant tile and bathroom launches. The kitchen ranges designed by Charlie Smallbone and made by Grange incorporating Group appliances are now complete and the onus is on converting the leads generated into home installations.

International developments

In North America, markets continued to be weak but the Group performed better overall on lower revenues. The rationalisation into a single manufacturing and distribution centre in Greenville, Michigan has been the key to progress. The closure of our Kitchener, Ontario hot side operation is the final step in the three-year programme which has substantially reduced the cost base and helped provide a clear and attractive proposition for dealers and end users, covering the key appliances in the kitchen.

An aim of the Group is to have over half its business outside the UK and it continues to seek out new market opportunities to widen its geographical reach for AGA and Rangemaster. With the opportunities now available with AGA Total Control the expectations for international sales growth are increasing.

A strength of the Grange and La Cornue operations is that they already have strong international platforms. Grange operates in over 40 countries; the USA at nearly 20% of revenues is still its largest market. The last year has seen 7 dealer stores open in the Middle East and in Asia. Grange's performance has improved with revenues rising and losses reduced. La Cornue, similarly, is making good progress in attracting a more international clientele - France accounts for under 40% of revenues. La Cornue and Grange are both raising their profiles in the kitchen cabinetry market. The upgraded dealer showroom in Istanbul opening in October epitomises all these development trends.

Pension scheme

The surplus in the pension scheme on an IAS 19 accounting basis increased in the first half to £22.7 million; assets were £762.0 million and liabilities were £739.3 million. The IAS 19 balance sheet position had improved by £62.3 million since 30th June 2010. The Group and the trustee are now carefully analysing the scheme data in the run up to the next triennial valuation to be dated 31st December 2011. The current recovery plan was based on a deficit of £84 million at 31st December 2009 and requires deficit recovery payments totalling £10 million each year from 2012.

The Company continues to provide £50 million of guarantees under the terms of "the 2020 Agreement" with the trustee in support of the Group's potential obligation to the scheme in 2020 under the agreement. The objective is to have the scheme fully funded on a self sufficiency basis by 2020 using a gilts-related discount rate. The yields on shorter-dated gilts are currently at record low levels and well below the inflation rate resulting in an extremely conservative basis on which to calculate liabilities.

Current trading and prospects

As expected sales across the quieter summer trading period have tracked those of 2010 and we have put the onus on lead generation for the major sales period in the autumn. Here, some trend lines are encouraging although the continuing slow UK housing market and the growing pressure on consumers' budgets does increase the risks of a difficult autumn selling season. That does not detract from our confidence that we have the sales product mix to make us a major beneficiary when markets improve.

With AGA Total Control we have the product to galvanise our markets both at home and overseas. The level of interest generated; the enthusiasm of our retail dealer teams for the product and the excellent comments from the growing owner base, all suggest strong sales potential.

Against this background we remain optimistic that 2011 can still be a year of clear cut progress for the Group.

Financial review

Revenue - The revenue of £121.4 million was slightly lower than last half year's £123.4 million reflecting the quieter markets witnessed, particularly in the second quarter.

Operating profit - The operating profit was £2.9 million compared to a profit of £0.8 million in the first half of 2010. The £2.1 million increase was due in large part to the streamlining of processes introduced in recent years. In addition, in January the Group received £7.6 million on the exercise of an option to acquire the freehold of certain properties. The net profit on the disposal was £0.8 million while the first half of 2010 included £0.4 million of rent on these properties.

Net pension credit - The half year pension credit of £1.5 million was the net of the current service costs of £1.7 million (half year 2010: £1.5 million) and investment returns of £3.2 million (half year 2010: £1.6 million). In the half year to 30th June 2010 the pension credit was £16.4 million which included a curtailment gain of £16.3 million following the freezing of pensionable salaries for the majority of the scheme members.

Non-recurring costs - Non-recurring costs were £0.3 million in the period (half year 2010: £0.7 million). These mainly relate to the final phase of the reorganisation of our AGA Marvel US and Canadian manufacturing and distribution operations. The total cost in the year is expected to be around £0.5 million with annualised savings of £0.4 million targeted.

Finance income / costs - The net finance income was £0.1 million (half year 2010: finance cost £0.1 million) reflecting the interest earned on cash deposits, offset by interest payable on the Group's EUR and USD hedging loans.

Taxation - The effective tax rate for the year is forecast at 28.6% (including the £0.1 million deferred tax adjustment following the reduction in the corporation tax rate as discussed in note 6) compared to 26.2% in the first half of 2010. Deferred tax has been accounted for at a rate of 26.0%. Tax thereafter should track the UK standard rate.

Earnings per share - Basic earnings per share for continuing operations were 4.3 pence (half year 2010: 17.6 pence). The average number of shares in issue was 69.3 million (69.2 million the previous half year and year end). Adjusted underlying earnings per share (excluding the post tax pension curtailment gain and non-recurring costs) were 4.8 pence (half year 2010: 1.7 pence).

Dividends - An interim dividend of 0.8 pence per share is declared (half year 2010: 0.7 pence). A final dividend of 1.0 pence per share was paid during the period at a cash cost of £0.7 million.

Discontinued costs - £0.9 million has been incurred during the period in relation to subsidiaries sold in 2007.

Balance sheet - The balance sheet continues to remain strong with net cash of £25.2 million (30th June 2010: £22.4 million). Working capital at the period end was £21.7 million (30th June 2010: £19.4 million).

The IAS 19 net pension surplus was revalued to £22.7 million and compares to a surplus of £7.1 million at 31st December 2010 and a deficit of £39.6 million at 30th June 2010. The improvement is primarily a result of the increased discount rate, up from 5.4% at 31st December 2010 to 5.55% which reduced the scheme liabilities.

Net assets of the Group at 30th June 2011 were £179.7 million, up from the £167.1 million at the end of last year primarily due to the actuarial gain in the period.

Cashflow - The operating cash outflow was £11.9 million in the period (half year 2010: £1.8 million outflow). The business plan assumed growth driven by new products which resulted in a working capital outflow of £15.6 million (half year 2010: £5.4 million outflow) and followed a full year inflow in 2010 of £8.7 million. £7.7 million was received during the period from property, plant and equipment disposals (half year 2010: £nil).

Capital expenditure in the period was tightly controlled at £2.5 million (half year 2010: £1.2 million) and compares to a depreciation charge of £3.0 million (half year 2010: £3.2 million).

The total cash outflow from operating and investing activities was £8.6 million (half year 2010: £5.5 million).

Risks and uncertainties - There are a number of risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ from expected and historical results. The directors do not consider that the principal risks and uncertainties have changed since the publication of the Annual Report and Accounts for the year ended 31st December 2010. A detailed explanation of the key risks and uncertainties can be found on pages 12 and 13 of the Annual Report and Accounts 2010, a copy of which is available at www.agarangemaster.com.

By order of the board:

AGA RANGEMASTER GROUP PLC

2011 HALF-YEARLY FINANCIAL REPORT

CONSOLIDATED INCOME STATEMENT

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

Half year to 30th June 2011

Half year to 30th June 2010

Year ended 31st December 2010 

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 2011 were authorised for issue in accordance with a resolution of the directors on 25th August 2011.

AGA Rangemaster Group is a public limited company incorporated and domiciled in the UK whose shares are publicly traded on the London Stock Exchange.

The principal activities of the Group are the manufacture and sale of range cookers, kitchen and related home fashions product.

The interim condensed consolidated financial statements do not comprise the Group's statutory accounts as defined by section 434 of the Companies Act 2006. Statutory accounts for the year ended 31st December 2010 were approved by the board of directors on 11th March 2011 and were delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, it did not contain an emphasis of matter paragraph and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.

The financial information presented here is unaudited but has been reviewed by the Group's auditor, Ernst & Young LLP. Its review opinion appears at the end of these notes.

2. BASIS OF PREPARATION

The interim condensed consolidated financial statements for the six months ended 30th June 2011 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with International Accounting Standard 34 (IAS 34) 'Interim Financial Reporting' as adopted by the European Union.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's Annual Report and Accounts as at 31st December 2010 which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

The directors have assessed the financial position and the future funding requirements of the Group and compared them to the level of available committed borrowing facilities. Certain of the Group's committed bank facilities mature in 2012. The Group will open renewal negotiations in due course and has, at this stage, not sought any written commitment that the facilities will be renewed. Preliminary discussions have been positive and there is nothing to suggest that renewal may not be forthcoming on acceptable terms. The directors' assessment included a review of the Group's financial forecasts, financial instruments and hedging arrangements for the 15 months from the balance sheet date. The directors considered a range of potential scenarios within the key markets the Group serves and how these may impact on cash flows, facility headroom and banking covenants. The directors also considered what mitigating actions the Group could take to limit any adverse consequences. Having undertaken this assessment, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and so determined that it is appropriate for the 2011 half-yearly financial report to be prepared on a going concern basis.

3. ACCOUNTING POLICIES

The interim condensed consolidated financial statements have been prepared using the same accounting policies as used in the preparation of the Group's Annual Report and Accounts for the year ended 31st December 2010 except for the adoption of new standards, interpretations and amendments, noted below. The adoption of these standards, interpretations and amendments did not have any material impact on the financial position or performance of the Group.

IAS 24 - Related Party Transactions (amendment)

This amendment clarifies the definitions of a related party. The new definitions emphasise a symmetrical view of related party relationships as well as clarifying in which circumstances persons and key management personnel affect related party relationships of an entity. Secondly, the amendment introduces an exemption from the general related party disclosure requirements for transactions with a government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity.

IAS 32 - Financial Instruments (amendment)

This amendment alters the definition of a financial liability in IAS 32 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro rata to all of the existing owners of the same class of an entity's non-derivative equity instruments, to acquire a fixed number of the entity's own equity instruments for a fixed amount in any currency.

IFRIC 14 - Prepayments of a Minimum Funding Requirement (amendment)

This amendment provides further guidance on assessing the recoverable amount of a net pension asset, permitting an entity to treat the prepayment of a minimum funding requirement ('MFR') as an asset. The Group is not subject to MFRs.

In May 2010, the International Accounting Standards Board issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies, but did not have any impact on the financial position or performance of the Group:

IFRS 3 - Business Combinations

The measurement options available for non-controlling interests ('NCI') have been amended. Only components of NCI that constitute a present ownership interest, that entitles their holder to a proportionate share of the entity's net assets in the event of liquidation, shall be measured at either fair value or at the present ownership instruments' proportionate share of the acquiree's identifiable net assets. All other components are to be measured at their acquisition date fair value.

IFRS 7 - Financial Instruments - Disclosures

This amendment was intended to simplify the disclosures provided by reducing the volume of disclosure around collateral held and improving disclosures by requiring qualitative information to put the quantitative information in context.

IAS 1 - Presentation of Financial Statements

This amendment clarifies that an option to present an analysis of each component of other comprehensive income may be included either in the statement of changes in equity or in the notes to the financial statements. The Group provides this analysis in the statement of changes in equity.

IAS 34 - Interim Financial Statements

The amendment requires additional disclosures for fair values and changes in classification of financial assets, as well as changes to contingent assets and liabilities in the interim condensed financial statements.

Amendments to the following standards did not have any impact on the accounting policies, financial position or performance of the Group:

IAS 27 - Consolidated and Separate Financial Statements

IFRS 3 - Business Combinations (Contingent Consideration)

IFRIC 13 - Customer Loyalty Programmes

4. NON-RECURRING COSTS

The non-recurring costs during the period to 30th June 2011 of £0.3 million (half year 2010: £0.7 million) primarily relate to the second phase of redundancy and reorganisation programmes at our AGA Marvel US and Canadian manufacturing operations.

5. SEGMENTAL ANALYSIS

The directors consider that there are two operating segments namely AGA (which comprises the brands and operations of AGA, Fired Earth, Grange, Redfyre and Waterford Stanley) and Rangemaster (which comprises the brands and operations of AGA Marvel, Divertimenti, Heartland, La Cornue and Rangemaster). Two areas of the business were identified over which the directors allocate resource, plan purchasing, manufacturing, combined sales targets and incentives and marketing programmes. These areas were determined to be the level at which the chief operating decision maker ('CODM') makes decisions and were deemed to be the operating segments of 'AGA' and 'Rangemaster'. The strategy as set by the board is for the Group to be seen as a global consumer brand which sells range cookers and related kitchen products internationally with cross selling opportunities creating appreciable competitive advantage for all our individual brands.

The operating results of the operating segments, for which discrete information is available, are regularly reviewed by the CODM, which consists of the chief executive and his senior management team, to make decisions about the resources to be allocated to the segments and assess their performance. Management's focus is on the cross selling of all consumer products to our customer database - e.g. AGA Marvel is responsible for distributing product manufactured in the UK at our Leamington Spa (range cookers) and Telford (cast iron cookers) factories, which are then sold in North America under the AGA brand. In addition, in 2010 Waterford Stanley became the distributor for Rangemaster products into Ireland as well as Rayburn and Grange has developed products to be sold under its own brand and the Fired Earth brand.

Our customers are substantially of the same demographic. At the heart of our sales strategy we look to sell packages of products to our customer base which, for example, may include AGA, Fired Earth, Rangemaster or AGA Marvel branded products and, in addition, this is how our senior management are now incentivised against Group targets. 

The two operating segments are considered to meet the aggregation criteria of IFRS 8 in full and so the directors consider that there is only one reportable aggregated segment. All disclosures required under IFRS 8 and IAS 34 have therefore already been given in these interim condensed consolidated financial statements. The two operating segments are considered to meet the aggregation criteria as they have similar economic characteristics, products and services, production processes, types and classes of customer and methods of distribution. The directors consider the aggregated reportable segment to be the manufacture and sale of range cookers, kitchen and related home fashions product, from which the Group derives most of its revenue. All Group companies are subject to similar economic forces and comparable regulatory environments.

6. TAXATION

Corporation tax for the interim period to 30th June 2011 has been charged at the estimated rates chargeable for the full year in the respective jurisdictions as follows:

Factors affecting the future tax charge:

Deferred tax has been calculated at the rate expected to apply at the time at which timing differences are forecast to reverse, based on tax rates which have been substantively enacted at the balance sheet date. It should be noted that the Government announced on 22nd June 2010 that it intended to introduce legislation to reduce the mainstream rate of UK corporation tax from 28% to 24% over a period of four years, beginning in April 2011. The reduction to 27% was substantively enacted on 21st July 2010. On 22nd March 2011 a further announcement was made reducing the rate to 26% from 1st April 2011 and ultimately to 23% by 2014. The reduction to 26% was substantively enacted on 29th March 2011. It is not anticipated that these reductions nor subsequent reductions to 23% once substantively enacted, will have a material effect on the company's future, current or deferred tax charges. The full tax impact of these changes is estimated to be £0.1 million per 1% movement in the taxation rate.

7. DISCONTINUED OPERATIONS

Settlements of £0.9 million have been made during the period in relation to subsidiaries sold in 2007.

8. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share is based on the following data:

9. DIVIDENDS

The directors approved an interim dividend on 25th August 2011 in respect of the financial year ending 31st December 2011 of 0.8 pence per share (year to 31st December 2010: total 1.7 pence per share).

10. ACQUISITION OF REDFYRE

On 1st April 2011 AGA Rangemaster Group plc acquired the business and principal assets of Redfyre Cookers and Don Heating Products from Gazco Limited for a consideration of £0.8 million, of which £0.2 million is payable in the second half of the year. This is contingent on the final transfer valuation of the Redfyre inventory. Intangibles assets increased by £0.4 million as a result of this transaction in relation to the brand valuation. Goodwill on the transaction amounted to £0.3 million and was created as the Redfyre cast iron brand complements the Stanley range. The provisional fair value of property, plant and equipment and inventory acquired was £0.1 million. The revenue and the operating profit since acquisition was not material and it was impracticable to separate as this business is being consolidated into the Group's other cooker operations.

11. PROPERTY, PLANT & EQUIPMENT

During the six months to 30th June 2011 the Group purchased £2.5 million of property, plant and equipment (period to 30th June 2010: £1.2 million). Depreciation in the period was £3.0 million (period to 30th June 2010: £3.2 million). Sale proceeds in the period included £7.6 million in respect of the disposal of certain properties on the exercise of an option and the profit on disposal was £0.8 million (period to 30th June 2010: both £nil).

12. RETIREMENT BENEFITS

Defined benefit scheme assets have been valued at a market value on 30th June 2011 at £762.0 million (30th June 2010: £711.6 million and 31st December 2010: £759.5 million) and the defined benefit liabilities at £739.3 million (30th June 2010: £751.2 million and 31st December 2010: £752.4 million), giving a net £22.7 million surplus at the interim date (30th June 2010: £39.6 million deficit and 31st December 2010: £7.1 million surplus). The liabilities have been rolled forward from 31st December 2010 and adjusted to take account of higher inflation expectations and the increase in bond yields, which has increased the discount rate from 5.40% to 5.55%.

The net pension credit for the period was £1.5 million (period to 30th June 2010: £16.4 million and year to 31st December 2010: £16.4 million which both included a £16.3 million curtailment gain).

13. CASH & BORROWINGS

Cash

Cash and cash equivalents at 30th June 2011 was £42.2 million (30th June 2010: £39.7 million and 31st December 2010: £51.7 million) and includes £22.5 million which is collateralised against a bank guarantee that the Group has provided to the AGA Rangemaster Group Pension Scheme.

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 2011 the non-current borrowings are split £0.3 million secured (30thJune 2010: £0.4 million) and £15.2 million unsecured (30th June 2010: £15.2 million).

14. PROVISIONS

The Group's provisions mainly relate to the remaining costs and claims in relation to the valuation of a minority shareholding in Friatec, a business which the Group acquired in 1998 and sold in 2001, as part of the Pipe Systems disposal. The Group expects a judgement from a German court in the second half of 2011, although the exact timing of the settlement is unclear.

A provision of £0.3 million remains outstanding for an ongoing rationalisation programme at AGA Marvel, which will be utilised in the second half of the year.

15. SHARE CAPITAL AND OPTIONS

The number of 46 7/8 pence ordinary shares in issue amounted to 69.3 million on 30th June 2011 (30th June 2010 and 31st December 2010: 69.2 million). This represents £32.5 million of share capital.

During the period, the 48,000 Senior Executive Share Options granted in June 2001 were lapsed.

On 18th April 2011, 199,185 share options were issued under the 2010 Company Share Option Plan ('CSOP') at an exercise price of 123 pence. The fair value of these options is 46 pence. Details of the CSOP were given on pages 36 and 37 of the Annual Report and Accounts as at 31st December 2010.

On 11th May 2011, it was announced that the management of Fired Earth Limited have an option to acquire up to 28% of the equity of Fired Earth Limited. The transaction has been treated as an employee share option and the charge for the first half of 2011 was not material.

16. FINANCIAL INSTRUMENTS

Included in borrowings at 30th June 2011 were loans of EUR 7.5 million and USD 13.7 million, which have been designated as hedges of net investments in operations based in Europe and the United States. The loans are held as a hedge against the Group's exposure to foreign exchange risk on these investments.

During the six month period ended 30th June 2011, the loss 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.

17. CONTINGENT LIABILITIES AND COMMITMENTS

The Group had no material contingent liabilities arising in the normal course of business at 30th June 2011.

The Group has arranged £50.0 million of bank guarantees to guarantee the obligations of the Group to the AGA Rangemaster Group Pension Scheme which may arise in the period up to 2020.

The Group had capital commitments of £1.5 million at 30th June 2011 (31st December 2010: £0.1 million).

18. RELATED PARTY TRANSACTIONS

The Group currently recharges the Group pension scheme with part of the cost of administration. The total amount recharged in the period was £0.1 million(half year to 30th June 2010: £0.1 million). The amount outstanding at 30th June 2011 was £nil (30th June 2010: £nil).

19. SEASONALITY OF OPERATIONS

The normal seasonal nature of our range cooker, kitchen and home fashions product business is to see higher revenues and operating profits in the second half of the year than in the first six months.

CAUTIONARY STATEMENT

These condensed consolidated interim financial statements contain certain forward-looking statements. These are made by the directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information. The directors undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

The Interim Management Report ('IMR') has been prepared solely to provide additional information to shareholders to enable them to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.

The IMR has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to AGA Rangemaster Group plc and its subsidiary undertakings when viewed as a whole.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors confirm that these condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union and that the IMR includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

- an indication of important events that have occurred during the first six months and their impact on the condensed consolidated financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

- material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.

The directors of AGA Rangemaster Group plc are listed in the Annual Report and Accounts for 31st December 2010, a copy of which is available at www.agarangemaster.com.

By order of the board

W B McGrathChief Executive

S M SmithFinance Director

AGA RANGEMASTER GROUP PLC

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF AGA RANGEMASTER GROUP PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30th June 2011 which comprises the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Equity and the related notes 1 to 19. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30th June 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Ernst & Young LLPBirmingham

26th August 2011

AGA RANGEMASTER GROUP PLC

MAIN ADDRESSES AND ADVISERS

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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Registered in England No. 354715

Registrars

Equiniti LimitedAspect HouseSpencer RoadLancingWest SussexBN99 6DATelephone (Helpline): 0871 384 2355(Calls to this number are charged at 8p per minute from a BT landline.Other telephone providers' costs may vary).International (Helpline): +44 121 415 7047

Auditors

Ernst & Young LLP

Joint financial advisers and stockbrokers

Numis Securities LimitedEspirito Santo Investment Bank

2011 FINANCIAL CALENDAR