2012 Full Year Results

8th March 2013

FOR IMMEDIATE RELEASE

AGA RANGEMASTER GROUP PLC

2012 FULL YEAR RESULTS

GROWTH IN PROFITS ACHIEVED AND DEVELOPMENT PLATFORMS ESTABLISHED

Strategic and operational highlights

·; Continued growth in profits.

·; Sales of AGA cookers; Fired Earth tiles and Marvel refrigerators in North America showing encouraging progress.

·; Cost and efficiency programmes remain pre-requisites to driving profitability in flat core markets.

·; New pension financing and banking agreements finalised in November provide clear, stable platform on which to build. Net cash position maintained after one-off pension contribution made.

·; International investments and collaborations - such as that in China - provide a framework for more rapid expansion.

·; Current initiatives expected to build sales momentum after a slow January and with February more encouraging.

William McGrath, Chief Executive commented: "2012 was a year which required the most determined efforts to achieve profit growth. While a market upturn in the near future is unlikely our prospects are good. We have heritage brands with contemporary relevance which creates tremendous opportunities in both established and new markets for us. With major marketing initiatives imminent we expect to see greater impetus in the coming months."

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'How the AGA cooker became an icon' - the story of the extraordinary team behind the rise of the AGA brand in the 1930s is published today.

AGA RANGEMASTER GROUP PLC

2012 FULL YEAR RESULTS

CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT

Overview

The strength of our product offering and the efficiencies of our operations increased further in 2012, but there was little respite to the long running weakness of the consumer markets in which we operate. We are, therefore, pleased that we were able to increase profitability once again even though overall revenues fell by £6 million. At the same time we achieved significant progress in reaching an agreement with the trustee of the Group's main pension scheme on the funding needs of the scheme through to the end of 2021, and on the longer term plans for the scheme. These steps enabled us to finalise a new financing structure, which should ensure that the exciting brands within the Group can now capitalise on development opportunities to show exactly what they can achieve in international markets.

Key features of the year were:

The rise in operating profit pre-amortisation from £8.0 million to £8.6 million and from £6.1 million to £6.5 million after amortisation. These results were achieved on revenues which fell from £250.9 million to £244.6 million.

We retained a good net cash position. During the year we made contributions and deficit recovery payments into the Group's main pension scheme totalling nearly £20 million, and paid £5.2 million after a final German court judgement on the buyout value placed on minority shares in a German company acquired in 1998. At the year end the Group still had net cash of £5.5 million compared with £31.3 million a year before. There are no deficit recovery payments due to the pension scheme in 2013 or 2014.

Alongside our market-leading position in the UK, our products are finding new, fast-growing international markets. Our reciprocal collaboration with the Chinese group Vatti shows a way forward as we look to leverage our brands, our excellent product development programmes and distribution structures more effectively.

We continued to address parts of the business that have struggled during the recessionary period. The sharp reduction in losses at Fired Earth and its continuing momentum highlight the benefits from such business turnarounds.

Sales in our core markets are linked to the level of housing transactions, and those levels are beginning to edge up, helped by the onus the Government are placing on the housing and construction sectors to generate growth. However, current trading conditions continue to be flat. This means that our additional focus on strategic positioning in international markets is likely to prove crucial to delivering renewed momentum.

We commented in November that with the pension scheme funding agreement, the board will only propose a dividend to be paid where specific agreement is reached with the trustee of the Group's main pension scheme. There is no final dividend proposed for 2012.

Strategic progress

Our objective is to be a market leader internationally in the premium range cooker markets in which we operate, and capitalise on that position to sell a broader range of home and kitchen orientated products. As these consumer markets have been quiet in recent years, we continue to concentrate on efficiency gains and cost control measures. Thus while revenues have stagnated, we have seen profits stabilise and then edge forward without a recovery in activity levels to anywhere close to levels of five years ago.

Of our cast iron cooker brands, AGA had an encouraging year while the cooker/boiler lines Rayburn and Stanley less so. Total cast iron sales at 10,300 were down on the 11,000 units last year and well down on the peak years of 2006/2007 when sales were 19,600 units. Electric models dominated for AGA, accounting for almost two thirds of sales and with AGA Total Control now available in 5 oven form as well as 3 ovens we expect the move to electric to continue. The message is that the modern AGA cooker 'works for you', putting the owner in control of costs, cooking quality and the warmth of the home. We are now looking to take the critical step of growing our export markets, offering a straightforward product proposition built around flexibility of operation and ease of installation and maintenance. Rayburn and Stanley have also produced restated consumer propositions around their use of wood and its link to multi fuel energy management in the home - themes with great long-term potential.

There has been some range rationalisation and a concentration on Coalbrookdale as the production source for cast iron range cookers, with wood burning cookers and stoves - a rapidly expanding category - produced at Waterford Stanley in Ireland.

For Rangemaster, 2012 was a satisfactory year even though cooker volumes overall fell back to just below 60,000 units from 62,000 in a market in which the lower value segments did best. Our volumes were significantly below the peak of 2007 of 76,000. We still saw our average unit selling price edge ahead even though average market prices fell and we retained a UK market share of over 50% by value. 27% of Rangemaster revenue was outside the UK (2011: 25%).

In North America, we saw a modest pickup in volumes for our undercounter refrigerators - a noteworthy achievement as we had lost a major OEM account in the prior year. Our segmentation between Marvel and Marvel Professional Series worked well enabling us to compensate for this loss. We have an improved distribution base and a widened direct customer list. There is now quite a significant change in underlying sentiment in the premium appliance sector and an expectation of volume growth ahead.

Our home fashions businesses have for some years seen weak returns in slow markets. Fired Earth achieved a far better result in 2012 cutting operating losses substantially and the trend lines in the business are the best for some years led by the tremendous tile offering. For Grange, the advent of 'My Grange' is designed to be the trigger for a similar bounce back, although at present with the American operation still declining in revenue terms, the business position is particularly difficult and further cost reduction steps are being made.

What we are yet to see coming through in 2012 is the strategically important shift in the UK/international balance of business with 37% of the revenues still generated outside the UK - short of the targeted 50%. The longer term importance of the strategic links with groups like Vatti of China and with product supplied to and sourced from the Chinese markets are crucial in delivering on the plan. More immediately we also expect North America to be the fastest growing market for us in the year ahead.

The strength of the Group's heritage as an innovator and how that record can be relevant today was key in 2012. We have great stories from Britain to take to the world - a world enthusiastic for premium quality British made goods.

Current trading

The pressures on consumers have reduced the number of house moves and larger improvement initiatives. These factors have impacted our operations for some years, and we have to prepare for a continuation of the flat markets we have been seeing. That in turn is reflected in cost reduction measures already underway, most notably seen in further rationalisation programmes involving Waterford Stanley in Ireland and Grange in North America. We are at the same time determined to allocate resources to obtain the best returns from the product innovations of recent years, through which we can establish positions in faster growing markets whereby we can make use of the operational gearing available within the businesses.

So far this year we have seen a slow January and a positive February. There is a notable pick up against last year for AGA Marvel in North America and for Fired Earth. AGA orders are flat and Rangemaster orders have trended down pending the sales and marketing initiatives planned for this spring. The cost and revenue initiatives we have taken suggest that 2013 will see more progress and we look forward with some confidence.

Revenue

Group revenues decreased by 2.5% to £244.6 million from the £250.9 million reported in 2011. On a constant currency basis revenues were down 1.3% as the Euro weakened during the year. Second half revenues of £125.4 million were 3.2% down (2011: £129.5 million) and compared with first half revenues of £119.2 million, down 1.8% on the £121.4 million reported in the first half of 2011. Of total revenues 37% were outside the UK (2011: 37%).

Operating profit

The operating profit for the year was £6.5 million, up from the operating profit of £6.1 million reported in 2011. The second half profit of £5.0 million followed on from a first half profit of £1.5 million as the Group benefitted more fully from the operational efficiencies implemented since 2008. In 2009 revenues were £245.0 million and the Group made an operating loss of £1.5 million - the 2012 results demonstrate the significant progress made in profitability terms on the same level of revenue.

Non-recurring costs

The non-recurring costs amounted to £1.7 million and arise from the reorganisation of our AGA Rangemaster distribution operations and retail structures. In 2011 non-recurring costs were £2.1 million, the benefits of which are now coming through.

Finance costs

Net finance costs for the year were £0.2 million (2011: £0.4 million finance income). During the year the average interest rate on cash deposits was 0.4% and over 1% on borrowings, which was primarily the interest cost of currency loans held for hedging purposes.

Profit before tax

Profit before tax in the year was £8.4 million (2011: £7.5 million).

Taxation

The Group had a tax charge of £1.6 million (2011: £5.4 million tax credit) on profits before tax of £8.4 million. The additional deficit recovery contributions paid into the pension scheme made cash tax payable minimal.

Moving forward the Group expects the tax rate to be slightly above the UK standard rate of 23% from 1st April 2013 and the impact of the deficit recovery contributions will significantly reduce cash tax payments.

Earnings per share

Basic earnings per share on continuing operations is 10.0 pence (2011: 18.8 pence) based on an average number of shares in issue of 69.3 million (2011: 69.3 million). Adjusted underlying earnings per share (excluding pension credits and non-recurring costs and based on a standard UK tax rate) were 7.1 pence (2011: 7.1 pence).

Dividends

The directors are not recommending a final dividend. This follows the agreement with the trustee of the Group's main pension scheme on the funding of the scheme following the 2011 actuarial valuation. This means no dividends are to be paid in relation to the 2012 results (2011: 1.9 pence per share). The cash cost of the final 2011 dividend paid in June 2012 was £0.8 million (2011: £1.2 million).

Discontinued operations

The post tax profit from discontinued operations was £nil in 2012. In 2011 the post tax profit from discontinued operations of £2.7 million included a tax credit following the agreement on prior year tax returns of £5.7 million and a charge of £3.0 million to adjust continuing provision levels after a German appeal court provided a judgement on the value of the minority interest in a company acquired by the Group in 1998.

Cash flow

The Group has continued with its disciplined approach to cash management. Cash flow generated from operating activities of £2.1 million in the year was the same as the £2.1 million generated in 2011 and resulted from a determined effort to manage working capital while supporting the international development of the business.

The net outflow from working capital in the year was £5.5 million (2011: £5.5 million outflow).

Significant pension deficit recovery contributions totalling £16.0 million (2011: £2.0 million) consumed a large proportion of the Group's cash balances in the year. No further deficit recovery payments are scheduled until the £4.0 million due in the second half of 2015.

Cash flows relating to discontinued operations amounted to £6.0 million (2011: £1.2 million) primarily in respect of the supplemental payment set by a German appeal court to buy out the minority shareholders in a business acquired in 1998.

Capital expenditure including intangibles in the year totalled £6.4 million compared to £8.4 million in 2011. The charge for depreciation and amortisation of intangibles in 2012 was £7.2 million (2011: £7.3 million).

Proceeds of £1.0 million were received from the disposal of assets held for sale and property, plant and equipment (2011: £7.5 million).

The resulting net cash position at 31st December 2012 was £5.5 million (2011: £31.3 million).

Pensions

The deficit in the Group's pension schemes at the end of 2012 included in the financial statements was £11.0 million on an accounting basis compared with a surplus of £5.3 million a year earlier. The change over the year reflects the significant fall in corporate bonds yields which reduced the liability discount rate used at the year end.

BUSINESS REVIEW

Our business model

AGA Rangemaster sets out to be an international leader in range cooking and to have a wider range of appliance and kitchen products to reinforce the attractions of having a range cooker at the heart of the home. We support this with a wider home fashions offering with Fired Earth and Grange. We have great, long established brands like AGA and La Cornue and younger vibrant brands like Falcon and Rangemaster that are helping to develop our end markets. We have an embedded dealer structure and for more specialist lines we add some owned retail outlets. We also have in place some international structures with local production capabilities most notably with AGA Marvel in North America to complement our UK strengths. We believe that modern marketing techniques assist in the identification of niche customer bases and will help drive the volume growth and margin benefits from the sustained investment and commitments to manufacturing of our anchor products.

The product mix

Cast iron cookers

The iconic AGA cooker is our best known product. Today's AGA is able to provide flexibility in use while retaining the qualities for which it has been known for ninety years. The AGA Total Control in 3 and 5 oven formats is now the flagship product providing more ways to manage cost and energy consumption in operation.

In 2012 we responded to continuing tough market conditions by raising factory efficiencies further and by reducing the number of retail outlets. This is possible as the AGA sales process is becoming simpler. Today's electric AGA cooker is made and assembled in the factory. It is easier and quicker to install and to move and it has the capability of being vented into the room in a central island. These features assist the progress in international markets. We are focusing now on the nature of the sales staff making the case for the AGA cooker. The AGA needs to be sold by people who are also owners or fully familiar with the product and who understand the lifestyle they are selling - hence the slow and crucial work to ensure that in overseas markets there are enough real users of the products involved in selling processes providing a personalised service. We are providing an incentive package to create a network of AGA-owning ambassadors.

With almost two thirds of AGA cooker sales being of electric models, the AGA is able to address new customer bases enthused to have a product at home working for them giving them control of running costs (from £5 a week) for the best cooked food on demand and control of the warmth of the home. The AGA cooker is a great facilitator in contemporary lifestyles. We believe this is the right approach to the sales proposition and will be a major driver of AGA cooker sales in the years ahead.

These themes are not new. In the 1930s a team led by W T Wren, the managing director of AGA Heat Limited changed the way the British thought of their home by putting the highly functional AGA cooker at its heart. We have produced a booklet exploring the remarkable people and social changes that made the AGA brand such an icon. We aim to recapture the entrepreneurial spirit of that time.

Other range cookers / appliances

Rangemaster has a well established position at the premium end of the range cooker market - driven by product quality. The new campaign for the brand emphasises that Rangemaster builds on experience - seen in the sturdy frame, meticulous assembly and the 'car' quality paint finishes of the products. Year after year, through work on product development across our brands; which include Falcon, Mercury and Redfyre, we see feature and benefit enhancements as well as production efficiency gains.

2012 saw a fall in the volume of sales in the UK as some consumers traded down to lower price point alternatives. We have a strong new product launch programme focusing in on a contemporary range of cookers out this spring. We saw the average consumer price paid increase reflective of the mix achieved. We maintained our position as having close to half the range cooker market in the UK by value. We saw growth on the near Continent where the tough economic backcloth for France did not prevent a sales increase. Our wider range of appliances covering splash backs, cooker hoods, refrigeration, dishwashers and sinks kept the proportion of revenue for Rangemaster for lines beyond cookers at circa 30 pence for every 100 pence of cooker sales.

Our largest appliance business outside the UK is AGA Marvel in North America. Marvel was originally acquired in 2006 to provide a refrigeration platform on which to add cooker products. Rationalisation plans were accelerated with two factories being moved to one new one and a further factory in Canada subsequently being merged into the Greenville facility. We have a strong and continuing product development programme which has responded to regulatory changes which continue to raise efficiency requirements. Our premium Marvel Professional Series has proved a particular success in the year since its launch. We have strengthened our sales team and overhauled our dealer base notably on the West Coast. We are offering a more comprehensive and cost effective suite of hot and cold products. In a slowly improving market place we now expect an upturn in our business which, with the levels of operational gearing available in the business, should translate into a marked profit improvement.

Home fashions brands

Fired Earth saw a much improved performance in 2012 led by rigorous cost control and improved sales in the core tile category. A new format of small high street stores is working well - seen in Dulwich, Blackheath and Winchester and most recently in Marlow and some of the larger out of town stores have been reassessed. We have taken over Bristol and Harrogate stores from franchisees and relocated the Bath store.

Fired Earth has a strong experienced management team targeted to return the business to profitability. We continue to work towards a valorisation point when we expect that the improved performance and prospects will be reflected in the value to be placed on the operation. Fired Earth's current tile offering with its particular American and North African influences has reasserted its position as the style and trend setter in the sector.

Grange continues to operate in particularly challenging markets, most particularly in North America where a further rationalisation programme has been undertaken to cut the cost base. With the 'My Grange' technology we have the ability to change the way purchasing furniture for the home is approached with the consumer having far greater direct involvement in the product finish, designing it to their individual taste. We believe that this - with the direct factory link - can set Grange apart providing the stimulus to generate the additional revenue needed to provide the return to profitability we have been seeking. 'My Grange' is now available in 16 Grange own stores and in 27 dealer stores across the world. Grange make kitchens for Fired Earth and its wider offering is available online from Fired Earth.

International expansion

We have the target of moving from having 37% of our business being outside the UK to around 50%. This is a position we have achieved before - prior to the foodservice disposal over 50% of the business was generated outside the UK. This will now be achieved through the business and platforms we have and through creating strategic links.

The Group has a well established position on the near Continent and is achieving good growth notably in France, Holland and Belgium for our range cookers. Gross revenues were over £10.0 million in 2012. We are also starting to make inroads into the German market.

A key development feature of 2012 was establishing the reciprocal trading relationship with the Chinese manufacturer Vatti. The objectives set for 2013 are to have product approvals in place and AGA Rangemaster products being sold in China through the Vatti dealer structures and to bring Vatti-made products to Europe.

Close working relationships with Vatti have been developed over the last two years and the plans are on track for product launches in the UK and in China. Vatti is a fast growing twenty year old quoted group that has specialised in gas burner technology; they made the torches for the Beijing Olympic Games. For range cookers to succeed in China we need to show that our cookers cook Chinese meals to the standard of the two burner cooktops typically found in China - as well as providing wider options for baking and roasting. Success is also linked to an evolution in the floor plan of Chinese homes to create kitchen living space which puts the range at the heart of the home. Vatti has a strong dealer structure through which familiarity with the range cooker concept can quickly emerge.

Pension scheme funding

During 2012 the Group worked closely with the trustee of the Group's main pension scheme as the actuarial valuation as at 31st December 2011 was completed. Agreement was reached under which the Group made total contributions into the scheme in 2012 of £19.5 million, including a £16.0 million deficit recovery payment, and no further deficit recovery contributions are to be made until a £4.0 million payment is due in the second half of 2015. Annual deficit recovery contributions would then run from 2016 to 2021 inclusive at £10 million to eliminate the appraised deficit by 2022, with an additional £30 million payable in 2020. As part of the agreement the level of bank guarantees of possible future contributions provided to the scheme by the Group was reset at £30 million, a reduction from £50 million. The aim was to provide clarity and stability for the Group in the medium-term. The agreement facilitated finalisation in November 2012 of £60 million of new bank lines with a strong banking group. The facilities run though to the end of 2015 and replaced maturing lines dating from 2008.

Actuarial valuations are heavily driven by prevailing gilt yields and these have generally been negative in real terms in the last three years taking inflation into account and consequently appraised liabilities have risen sharply - even though underlying liabilities in cash terms are largely known and fluctuate little. Following the sharp fall in gilt yields over the second half of 2011, the actuarial deficit was appraised at £227.7 million at 31st December 2011 - the actuarial report a year earlier having shown a deficit of £62 million. Market conditions overall improved over 2012, and this should be reflected in a reduction in the actuarial deficit over the year ended 31st December 2012. Should market conditions permit, the Group will support further steps to reduce the level of contingent dependency of the scheme on the Group. Meanwhile the agreement with the trustee means that the resources of the Group will be built up with payments to shareholders to be made only with trustee consent before the end of 2015.

Building on our progress

The Group continues to face up to challenging market conditions. The continuing systematic work to reduce the cost base will see major initiatives at Waterford Stanley and Grange where there are opportunities in both North America and in the French production facilities. We are also looking at ways to focus resources on the areas of the business central to the investment success.

2012 highlighted that we have brands with great heritage which have international reach. We identified the original patent granted by Queen Anne to Abraham Darby to make cooking pots in Coalbrookdale - now a world heritage site - the rationale was that it would bring quality product to a domestic market at a good price; substitute for imports and bring export growth. Still familiar themes. We supported efforts to highlight that Abraham Darby helped trigger the tradition that has made the Midlands a hub of innovation and design. We were delighted to be voted 'Midlands Best Brand' by the 'Birmingham Made Me' Design Expo in June 2012. We were enthusiastic supporters of the food and heritage components of the Government's 2012 'Great Campaign'.

We have recently produced a publication about what made the AGA cooker an icon and changed the way we live. The themes have continuing international resonance. We are excited that Fired Earth is now working with Transport for London to produce tile ranges based on its formidable archive.

The task for 2013 is to harness the heritage of the Group to move our current business model forward to provide the revenue growth that will show the benefits we have available through our supply chain and manufacturing capacities. The effort of recent years to create and deliver on these themes should be demonstrable throughout 2013.

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED BALANCE SHEET

CONSOLIDATED CASH FLOW STATEMENT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

NOTES

1. Segmental analysis

The directors consider that there are two operating segments namely AGA and Rangemaster.

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.

Disclosures in respect of revenues from external customers and non-current assets are provided below:

2. Dividends

The directors are not recommending a final dividend in respect of the financial year ended 31st December 2012 (2011: 1.1 pence per share).

3. Exchange rates

The income statements of overseas subsidiaries are translated into sterling using average exchange rates and balance sheets are translated at year end rates.

4. Net pension credit

5. Tax on profit for the year

In 2011 the tax credit relating to continuing operations included a non-recurring £6.1m credit being a release of the provisions made for tax in respect of prior year tax returns now agreed, split between a £11.0m credit in respect of corporation tax and a charge of £4.9m in respect of deferred tax. The tax credit of £5.7m, included in discontinued operations, relates to adjustments in respect of prior years for previously discontinued operations.

Factors affecting the future tax charge

A reduction in the UK corporation tax rate from 26% to 24% was substantively enacted in March 2012 and was effective from 1st April 2012. A further reduction from 24% to 23% was substantively enacted in July 2012 and will be effective from 1st April 2013. Accordingly, the substantively enacted rates have been applied in the measurement of the Group's deferred tax assets and liabilities as at 31st December 2012.

In addition, the Government announced its intention to reduce further the UK corporation tax rate to 21% from 1st April 2014. The aggregate impact of the proposed reductions from 23% to 21% would reduce the deferred tax assets by approximately £0.4m.

6. Earnings per share ('EPS')

7. Non-recurring costs

The non-recurring costs amounted to £1.7m and related to the reorganisation of our AGA Rangemaster distribution operations and retail structures.

In 2011 the non-recurring costs amounted to £2.1m of which £0.4m related to the reorganisation of our AGA Marvel US and Canadian manufacturing and distribution operations, £0.9m related to the impairment of assets held for sale, £0.3m related to costs of finalising prior period tax returns and £0.5m related to the cost of redundancies and employee matters arising from the introduction of new systems and new products.

2013 financial calendar

The 2012 full year results were approved by the board of directors on 8th March 2013. The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31st December 2012 and 2011. The financial information within this announcement is prepared in line with the accounting policies presented within the Company's statutory accounts for the current and previous years. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the Company's Annual General Meeting. The Company's auditor has reported on these accounts; its reports were unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006.