2010 annual repandacc

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ANNUAL REPORT & ACCOUNTS 2010


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iNTRODUCTiON

AGA Rangemaster Group plc Annual Report and Accounts2010

Contents:

Business and inance review

Chairmans statement 2

Chie executives review 6

Key risks and uncertainties 10

Governance

Corporate social responsibility 14

The board 20

Directors' report 22

Statement o directors responsibilities 26

Corporate governance 27

Remuneration report 34

Financial statements

Consolidated income statement 42

Consolidated statement o comprehensive

income/(losses) 43

Consolidated balance sheet 44

Consolidated cash low statement 45

Consolidated statement o changes in equity 46

Notes to the accounts 48

Independent auditor's report - Group 80

Five year inancial history 81

Parent company accounts 82

Notes to company accounts 83

Independent auditor's report - Company 88

AGA Rangemaster s a specalst n range cookng and ktchen lvng. The Group s known or ts longstandng

hertage and techncal ecellence and nnovaton. its prmary producton acltes are n the UK and n

Mchgan, USA and t has, through ts renowned brands, a strong nternatonal platorm or epanson.

Wllam McGrath, Che Eecutve commented on the 2010 ull year results: Our two core brands,Rangemaster and the classc AGA, put n strong perormances and were key to the near 6% revenue

ncrease we saw durng 2010. We epect smlar trend lnes n 2011 n spte o the clouds over consumer

markets. Strong nances, good operatonal gearng and nvestment n new products were the themes o

2010 whch wll brng clear cut progress n 2011.


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AGA Rangemaster Group plc Annual Report & Accounts 2010 1

Revenues rose nearly 6% to 259.1 mllon n

the year; operatng prot beore amortsaton

ncreased to 6.9 mllon (2009: 0.1 mllon)

and prot beore ta ncludng penson

curtalment gans was 19.9 mllon (2009:

0.5 mllon).

Net cash rose to 34.6 mllon rom 28.0

mllon at the end o 2009 and 5.8 mllon

at the end o 2008 refectng contnung tght

cost and cash fow management.

Dvdends were restored or the year at a totalo 1.7 pence per share (2009: nl) - a sgn o the

Groups condence n ts prospects.

Product development programmes o recent

years are now provdng tracton n estng

and new markets. We epect ths to support

the trend or range cookers to take share rom

equvalent bult-n ormats.

Year to 31st

December

2010

m

2009

m

Revenue 259.1 245.0

EBiTDA(beore non-recurrng costs)

29.8

12.6

Operatng prot

beore amortsaton

6.9

0.1

Operatng prot/(loss) 5.1 (1.5)

Prot beore ta 19.9 0.5

Basc earnngs per share 21.7p 2.5p

Total equty 167.1 134.3

Total dvdend 1.7p

Net cash 34.6 28.0

Strategic and operational highlights


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Our plans to develop the busness are then refected n the

progress made at Rangemaster. Snce the repostonng n

2002 the brand and operaton has moved rom breakeven

to delverng the Groups KPi target o 10% return on sales.

We have a actory n Leamngton Spa whch uses modern

robotcs to ensure our cookng cavtes are the best n

the sector. We are the rst range cooker manuacturer to

receve Energy Savng Trust certcaton across all ts dualuel and nducton cookers. Progress contnues to come

rom product nnovaton. We have succeeded n makng

nducton a manstream rather than a specalst technology

due to the prce ponts we have and t now accounts or

almost 10% o Rangemaster cooker volumes. Progress

comes rom closely workng wth our dealers over 200

o whch have Rangemaster Desgn Centres and we have

epanded the brand oerng so that or every pound spent

on Rangemaster cookers n the UK a urther 30 pence s

spent on other Rangemaster applances. Growth also comes

rom nternatonal epanson wth almost a quarter o cooker

sales volumes beng outsde Brtan. We are now lookng torase that proporton to over 30%.

We beleve that our cast ron cooker portolo wll see sales

growth as our product development programmes algn our

products wth changng consumer needs. Research shows

that t s the combnaton o a warm welcome home

alongsde cookng qualty that has attracted generatons

o households to AGA, Rayburn and Stanley. Wth the

modern programmable AGA n partcular, the AGA s more

feble operatonally and wll, n uture, become stll more

so. The electrc AGA can play a part n helpng make use

o renewable energy generated locally a key way to avod

the transmsson losses suered by the electrcty grd. WthRayburn and Stanley we have added condensng bolers and

more adaptable fung as we drve the dea harder o havng a

sngle applance at the heart o the home provdng cookng,

hot water and central heatng. Here agan our engneers

have worked out how to make our products part o a

system ncorporatng renewables through our Eco-

Connect packages. We also have n place an nstallaton

arrangement wth the Mark Group or solar hot water and

solar electrc panels.

We beleve that customers want to buy a wder range ocomplementary products or ther home and n partcular,

ktchen needs hence our ownershp o Fred Earth and

Grange. Fred Earth has struggled or some years to be

protable n spte o beng wdely apprecated or ts product

leadershp and brand. We have now narrowed the product

ocus o Fred Earth keepng tles as the domnant range and

have supplemented our oerng through the Tle Bascs

range whch wdens the prcng spectrum. Our KPi remans

to return Fred Earth and Grange to overall protablty and

progress has been made durng the year.

We also took the urther step to help ensure Fred Earth

acheves ts KPi target by brngng n the eperenced retaler

and venture captalst, Andrew Manders, to run Fred Earth

on an nterm bass and to assess a long-term operatonal

ramework or the busness. Fred Earth now operates o a

lower ed cost base wth hgher net margns reducng the

run rate o losses although sales revenues are fat.

Ktchens are also a key part o the Grange and Fred Earths

product portolo and Charle Smallbone has also developed

three new ktchen ranges or them made by Grange n

France. They are helpng to attract a wder and energetc

range o dealers nternatonally to the Grange brand. The

dea o showng a complete ktchen ncludng applancesmay prove to be the model or the uture or AGA, La Cornue

and Grange n nternatonal markets as well as or Fred

Earth n the UK.

Cara insert stove AGA Rayburn solar panels


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4 AGA Rangemaster Group plc Annual Report & Accounts 2010

People

The enthusasm and energy o our employees has been a

partcular eature o the year. We have adapted well to new

deas and processes that wll ensure we are compettve

and have the qualty and nnovatve products requred by

our customers.

Peter Tom let the board ater s years n whch he made

a major contrbuton to the Groups strategc development,latterly as senor non-eecutve drector. He was replaced

by Paul Dermody as senor non-eecutve drector, and Jon

Carlng whose career has been n desgn and engneerng

wthn the premum car ndustry notably Jaguar and

Aston Martn and who has recently joned Rolls-Royce

aero-engne operatons.

Current trading

The reduced cost base and ncreased ecences made over

the past three years means that the Groups operatonal

gearng should, wth revenue growth, brng good progress.

We have planned or contnung growth n revenue.

However, as the actors aectng tradng (the UK housngmarket and consumer condence) reman ragle, we are

ready to respond to dcult market condtons. Our new

product launches wll, we epect, have a postve mpact.

The ocus on cash management and costs n recent years

wll be sustaned.

AGA and Rayburn started 2011 encouragngly, wth strong

marketng and product launch programmes n place, already

refected n lead generaton and home survey numbers. We

epect the 2010 bounce-back n sales to be sustaned. For

Fred Earth the stronger end to 2010 has gven way to a more

volatle start n 2011. Our upgraded transactonal webste s

perormng encouragngly. Rangemaster has had a sound

start to 2011, wth UK orders satsactory so ar ths year and

more progress beng acheved on the contnent. The North

Amercan markets contnue to be quet.

We have condence n the strategc drecton we have taken

n recent years even though our consumer markets have

been bueted by challengng economc condtons. The

systematc work to mprove our operatons and the ocus on

nches n our market places where we can epand our market

postons wth relevant and ectng products does provde

epectatons or strengthened nancal perormance. We,

thereore, epect 2011 to be a year o clear cut progress.

John Coleman

Charman

11th March 2011

CHA iRM ANS STATEME NT CONTiNUED


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Induction cooking is becoming mainstream in the UK, and is

available across the Rangemaster, Falcon and Mercury brands

demonstrating our ability to develop and apply patentable

technology.

Renowned or its energy eciency, induction cooking oers

consumers a sae, cool cooking option that is eature rich,

incredibly fexible and more responsive than other options.

All Rangemaster induction models are the rst and only ovens

and hobs to date to receive Energy Saving Trust certication.

The eciency o an induction hob depends on a number o

actors and the choice o cookware is key. Cookware sold by

AGA and Divertimenti is a signicant part o our product

oering. With sales growing rapidly online, 2010 was a

strong year. The high recognition o Divertimenti as London'spremier cookware outlet is underpinned by our successul

cookery schools which attract many top ches to lead classes

each term.



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CHiEF ExECUTiVES REViEW

Business and finance review

2010 saw mproved results due to operatonal process

ecences, our strengthenng product portolo, and our

contnued ocus on leveragng our market leadng brands.

Ths all helped mprove results, despte our markets

remanng quet. A good lead ndcator has been mortgage

approvals n the UK whch pcked up n late 2009 and then

remaned largely fat durng 2010 at levels under hal the

market peak o 2007. Mortgage approval levels have started

slowly n 2011. The UK applance markets were margnally

ahead wth our core sub-sector o range cookers perormng

better than the wder cooker market. The North Amercan

applance markets were up 3.3% wth the premum end

weaker, most notably n the second hal o the year.

Aganst ths background, we worked methodcally to rase

ecences. The ntegraton o AGA, Rangemaster and

Stanley nto one structure has worked well and there are

now closely dented projects wthn the manuacturng,

dstrbuton and servce support areas o the busness

that wll brng urther benets. Smlarly, n North Amerca

AGA Marvel s now operatng as a sngle operaton usng

methodologes created n the UK or AGA Rangemaster. in

November 2010 the transer o hot sde producton rom

Ktchener near Toronto to our manuacturng and dstrbuton

hub n Greenvlle, Mchgan took place. Such ecency

mprovements are crtcal gven renewed cost pressures as

commodty and component prces rse. We have an Asan

Sourcng Oce based n Hong Kong whch ensures we have

a feble approach to nternatonal sourcng. The team

s also part o the push to sell our products nto emergng

markets. in all our markets we keep close control o key

nputs lke steel, electrcty and gas takng hedged postons

where economcal and practcal whlst also lookng tomtgate nfatonary pressures through sellng prce

ncreases. Our two-year electrcty and gas deal entered

nto at the end o 2009 has, or eample, proved worthwhle

as prces have subsequently rsen sharply. We eel that we

have undamentally reduced the cost base and that there s

delverable operatonal gearng avalable to the Group.

Cast iron cookers : AGA, Rayburn and Stanley

2008 and 2009 saw sharp alls n demand or cast ron

cookers, most notably n ireland. in 2010 AGA sales partally

recovered but Rayburn and Stanley sales dd not. Overall

wth sales o 11,650 unts we moved urther away rom our2007 sales level and our KPi o 19,600 unts. The mproved

AGA sales refected the return o some condence to our

customer base. Our good lead generaton was helped by our

Ocal Gude to purchasng an AGA whch summarses

the key eatures o why so many people love and chersh

ther AGA and how easy to buy and how feble the modern

products are. We are now lookng to have AGA cookers n

more ktchen specalst stores showng the AGA n modern

ktchen ormats where bult-n lnes are typcally ound.

We have also segmented our market by ocusng nter ala,

on entry level prces, notably wth the two-oven ol AGA

at 4,995 and the emergng markets or home energymanagement wth the new Kddermnster centre. Trade up

programmes and burner upgrades to add programmablty

to estng models have become a well-developed and a

noteworthy adjunct to the busness. We are also epandng

our grass roots contact wth consumers through our

2010/2011 sponsorshp o the AGA Lades Pont-to-Pont

races, whch wll culmnate n the nal at Cheltenham on

4th May.

Rayburn has seen a complete product lne overhaul n the

last our years. The 600 Seres s steadly buldng a poston

n the ol and gas market gven ts A rated condensng boler

and ts larger ovens. We are addng a conventonal fuemodel to a power fue opton whch materally epands the

target market or Rayburn by smplyng many nstallatons.

in 2010 demand was lower or wood burnng models a

Grange has developed a highly unctional coee table or

contemporary liestyles which has our or six sections which canbe repositioned to provide soa tables ideal or T.V. dinners and

or watching or using laptop computers.


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trend we epect to see reverse as the ol prce moves back

up. We have looked agan at our routes to market and are

workng to establsh closer lnks n the heatng and plumbng

specalst sector to emphasse that the Rayburn or Stanley

can be the hub o a domestc heatng system potentally

ncorporatng renewables such as solar collectors where

systems need to be ntegrated. Our epanded presence n

the stove market supports ths trend. indeed, success n

stoves was central to sustanng our poston n what were

eceptonally dcult markets n ireland. The Cara nsert

stove whch makes a sold uel re up to three tmes more

ecent than an open re helped stove volumes n ireland

rse 30%.

Rangemaster cookers and other appliances

2010 was another successul year or the Rangemaster

operatons. Cooker volumes were up by nearly 5% to

63,900 stll well short o the 76,000 unts establshed as

the base level KPi n 2007. The capacty o the Leamngton

Spa actory s 100,000 unts. The product manuacturng

ecency programme contnues to be strong seen, or

eample, n the epanded use o robotcs and speccally

the new nternally desgned and patented sngle pece base

rame provdng soldty to the products.

The range cooker market outperormed the overall cooker

market n the UK. We are determned to underlne the

vrtues o havng a range at the heart o the ktchen movng

the centre o gravty o a household rom the sttng room to

the ktchen and how t brngs greater feblty than bult-n

equvalent products and can oten be less costly. We now

have a strong overall portolo o products wth rergeraton

lnes ncludng sde-by-sde and ntegrated models. We

contnue to epand our contnental operatons, buldng up

Rangemaster DxD ridge reezer

Rayburn 600 Heatranger

Fired Earth Jura washstand

Marvel Premium dual zone wine centre


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CHiEF ExECUTiVES REViEW CONTiNUED

desgn centres equvalent to those n the UK. Wth nducton

sales growng rapdly and wth the 100cm models startng to

mpact n a sub sector o the range cooker market n whch

we prevously dd not have a product oerng, and wth new

desgns beng prepared or launch, volumes are epected to

rse urther ths year.

Our Nottngham plant makes specalsed parts or our

cookers and s also the last sgncant domestc stanless

steel snk manuacturng aclty n the UK. We have been

nvestng to enhance our desgn capabltes epandng our

Rangemaster snk brand alongsde our trade brand, Lesure.

in North Amerca, AGA Marvel had a tough second

hal as the housng market remaned slow and hgher

end applances struggled as a sub sector. Our hot-sde

operaton, encompassng sales o Heartland and AGA

branded cookers, was quet. We have ntegrated our dealer

structures to have the strongest oerng possble actng as

dstrbutor ourselves n Canada. Our product portolo has

been strengthened wth new Energy Star rated products,

a new orced ar platorm or beverage centres and a clear

door rergerator. All these new lnes made n our actory

n Mchgan wll enable us to benet quckly when market

condtons mprove.

Cookware sold by AGA and Dvertment s a sgncant

part o our product oerng. 2010 was a strong year and

onlne sales grew rapdly. The great reputaton o Dvertment

and ts two fagshp London stores was underpnned by our

successul cookery schools whch attract top ches to lead

termly classes and by supplers lookng to Dvertment as

a natural partner when launchng new products. At AGA

we are launchng complete new ranges o cast ron and

stanless steel saucepans ths sprng n order to tap nto theconsderable growth opportuntes n the cookware busness.

Fred Earth made a loss as revenues were fat. Larger

bathroom and ktchen nstallatons were slow but the tle

busness, backed by the launch last sprng o the Tle Bascs

range saw revenues up 3% wth orders up 5%.

Grange was close to breakeven n Europe wth ratonalsaton

n France now producng a good balance wth our Romanan

actory establshed n 2004. Our modular lnes, typed by

bespoke wall-to-celng bookcases, represent 20% o sales

and contnue to gan recognton. Our dealers see Granges

hertage supplemented by modern desgn as makng Grange

a growng orce n ther market places. Our nnovatve

mult-unctonal coee table eptomses the new vbrancy

o Grange.

it s n North Amerca, where Grange has a ed cost

rental structure and wth revenues fat at $7 mllon, that

t contnues to make losses. New products ncreased sales

to key specalst customers and the benets o systematc

marketng ntatves provde a bass to epect contnung

progress n 2011. Workng more closely wth the Groups

customer database s key to mprovng perormance.

We contnue to develop our approach to customer

relatonshp management.

Customer relationship management

By ocusng on the rst 60 days ater ntal enqury and

talorng our responses to each enqurer, we have ncreased

the converson rato rom enqury to order across our

brands, most notably wthn our own AGA Shops n the UK.

Leveragng the Groups customer database remans one o

our key KPis. Our database o over 1.3 mllon households

contnues to grow, enablng us to contact prospects and

customers about news and events.

We have ncreased our contact wth the people on our

database through varous channels, ncludng onlne, where

we have developed our webste, emal and socal medanteracton. As a result o ths, we are pleased that central

brochure requests have ncreased by 30% whle onlne sales

have ncreased by 40% n the past year.


This new La Cornue premium kitchen incorporates a La Cornue range,

a rotisserie, rerigeration and wine conservation units and elegant

cabinetry.


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Pension funding

The Groups man penson scheme s large relatve to the sze

o the Group. On an iAS 19 accountng bass at 31st December

2010 the Groups penson schemes had a net surplus o 7.1

mllon on assets o 759.5 mllon compared to a dect o

40.5 mllon n 2009. Ths wll gve rse to a net penson

credt o crca 3.0 mllon n 2011 (2010: 0.1 mllon).

The man penson schemes last ormal trennal actuaral

valuaton was as at 31st December 2008. The current recovery

plan put n place on completon o that valuaton requres

payments or guarantees o 2 mllon n 2011, 10 mllon a

year rom 2012 to 2020 nclusve, and a bullet payment o

48 mllon on 31st December 2020. The ndcatons are that

the actuaral poston has mproved apprecably.

Three years ago the Company reached a long-term undng

agreement wth the trustee o the scheme to make the scheme

ully unded on a sel-sucency bass by 31st December

2020. Ths agreement s ntended to provde a new recovery

plan rom the 2011 trennal actuaral valuaton. The Company

contnues to provde 50 mllon o guarantees n support othe Groups potental oblgaton to the scheme n 2020 under

the agreement.

in the meantme the Company and trustee contnue to look

to take steps to reduce the rsks and mnmse the volatlty

o the scheme and to take measures such as the reezng

o current member pensonable salares whch wll manage

down the potental eposure o the Group n the long run.

Finance strategy

The Group seeks to mantan a strong balance sheet to und

ts development opportuntes whlst also beng mndul o

the scale o the man penson scheme.

The Group has contnued wth a rgorous and dscplned

approach to cost and cash management. The result s both

mproved protablty and an ncrease n net cash rom 28.0

mllon at the start o the year to 34.6 mllon at the end o

2010. We thereore have the nancal resource to assst the

Group to pursue ts development plans.

Revenue

Group revenues ncreased by 5.8% to 259.1 mllon rom

the 245.0 mllon reported n 2009. Second hal revenues

o 135.7 mllon were up 6.7%, an ncrease over the growth

eperenced n the rst hal when revenues were 123.4

mllon, up 4.8% on the 117.8 mllon reported n the rst

hal o 2009. O total revenues 37% were outsde the UK

(2009: 36%).

Operating profit

The operatng prot or the year was 5.1 mllon, much

mproved rom the loss o 1.5 mllon reported n 2009. The

second hal prot o 4.3 mllon ollowed on rom a rst hal

prot o 0.8 mllon as the Group benetted more ully rom

the operatonal ecences mplemented n 2008 and 2009.

Non-recurring costs

Non-recurrng costs n the year totalled 1.4 mllon. The

cost o transerrng our hot-sde busness rom Canada to

Greenvlle was $1.0 mllon (0.7 mllon) and s epected

to delver cost savngs o $0.9 mllon n 2011. integratng

the sales dstrbuton structure or the Group n ireland

cost 0.3 mllon. Stanley s now the irsh local dstrbutor

or our applance brands n ireland. in addton, there were

headcount reductons at AGA and Fred Earth.

Finance costs

Net nance costs or the year were 0.2 mllon (2009: 0.2

mllon nance ncome). Durng the year the average nterest

rate on cash deposts was 0.3% and over 1% on borrowngs,whch was prmarly the cost o currency loans held or

hedgng purposes.


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Profit before tax

Prot beore ta n the year was 19.9 mllon (2009:

0.5 mllon) and ncluded a penson curtalment gan o

16.3 mllon as we roze the pensonable salary or all

scheme members whose salares were not rozen n 2009.

Taxation

The Groups ta charge was 5.0 mllon (2009: nl)

on prots beore ta o 19.9 mllon. The Group ta rate

was 25.1%.

Movng orward the Group epects to pay ta at around the

UK standard rate o 27% once the benet o the ta losses

arsng durng the economc slow down have been utlsed.

Earnings per share

Basc earnngs per share were 21.7 pence (2009: 2.5 pence)

based on an average number o shares n ssue o 69.2

mllon (2009: 69.2 mllon).

Dividends

The board s proposng a nal dvdend o 1.0 pence per share

makng the ull year dvdend 1.7 pence (2009: nl pence).

The cash cost o the total dvdend or the ull year wll be

1.2 mllon. The nal dvdend wll be pad on 3rd June 2011.

Cashflow

The Group has contnued wth ts dscplned approach to

cash management. The outcome was cash fow generated

rom operatng actvtes o 15.7 mllon n the year whch

ollowed on rom the 25.3 mllon generated n 2009

and resulted rom a determned eort to destock urther

and manage workng captal down n the ace o dcult

economc condtons.

The net nfow rom workng captal n the year was 8.7

mllon (2009: 22.9 mllon).

Captal ependture ncludng ntangbles n the year totalled

5.7 mllon compared to 8.1 mllon n 2009 (whch

ncluded a 2.8 mllon payment on the AGA Marvel aclty

n the US). The deprecaton and amortsaton o ntangbles

charge n 2010 was 8.3 mllon (2009: 8.7 mllon).

The resultng net cash poston at 31st December 2010 was

34.6 mllon (2009: 28.0 mllon).

Other itemsThe Group receved cash o 7.6 mllon on 7th January 2011

on the eercse o an opton held by Nagara Corporaton

to acqure the reeholds o certan propertes used by

operatons t acqured rom the Group n 1999. Net ncome n

2010 rom these propertes was 0.8 mllon ollowng a rent

revew n 2009, and the sale wll gve rse to a book prot n

2011 o over 0.6 mllon.

The Group epects a judgment rom a German court ths

year relatng to the valuaton o a mnorty shareholdng n

a busness whch the Group acqured n 1998 and sold n

2001. A provson to meet possble costs arsng has been

mantaned or some years.Key risks and uncertainties facing the Group

The board regularly revews the rsks aced by the Group,

ncludng socal, envronmental and ethcal ssues. The

drectors consder the major rsks to delverng the Group's

strategy are those set out on pages 12 to 13. The board

recognses the prole o the rsks changes constantly and

addtonal rsks not presently known, or that are deemed

mmateral, may also mpact on delvery o the Group's

strategy. Detals o our systems o nternal control and rsk

management are set out on pages 30 to 32 o the corporate

governance report and ths descrbes the processes through

whch rsks are assessed, managed and mtgated.


Le Bain de Bateau rom Fired Earths bathroom collection Stanley Supreme


13/92

Our range o Grange made kitchens designed by Charlie Smallbone is sold under the Fired Earth brand in

the UK and as part o the Grange Cuisine collection internationally. Aesthetic styling runs rom the much-loved

traditional Bastide through classic Moderne and on to the on-trend and stunning Night & Day shown above.



14/92


RiSK POTENTiAL iMPACT STRATEGY TO MiTiGATE

Competition

Compettors ntroduce upgraded products

and add to marketng programmes.

Downward pressure on prcng sector

accepts lower margns.

Market share could be lost to compettors

wthout contnung product nnovaton and

strong marketng support.

Reduced demand or our products and negatve

operatonal gearng we were to become less

prce compettve.

introduce new products that are wellresearched and market tested.

investment n new product developmentand desgn capabltes.

Montor our market poston and compettorstrateges.

Constant value engneerng programmes tobe prce compettve.

Customer/supplier relationshipsSome key relatonshps are central to

tradng perormance.

Loss o crtcal supplers/customers could

have a materal mpact on ndvdual company

volumes.

interrupton to supply can stop producton and

mpact protablty.

Sales teams meet regularly wth senormanagement o key customers.

Regular montorng o customer servce. The supply chan team holds regular revew

meetngs wth supplers.

Where possble we mantan multplesupply sources.

Group seeks to avod one sales accountor suppler beng materal to overall

perormance.

Dividend policy

Weak markets and penson scheme

volatlty could mpact the Groups ablty

to be progressve wth dvdend payments.

Low dvdend levels restrct the nvestment

case.

The Group mantans a medum-termdvdend cover polcy o t beng covered 2.5

tmes out o ully taed earnngs.

Economic conditions

The economc envronment may mpact

consumer spendng plans.

The global economc recovery could

ncrease raw materal prces urther.

A lack o consumer condence may reduce

Group sales, prmarly o consumer applances

and household products mpactng producton

levels and protablty.

Reduced protablty, avalablty and qualty o

components.

The Group montors economc condtons npartcular housng market trends n the UK

and the US.

The Group seeks to dversy sales awayrom the UK to reduce ndvdual market

dependency.

internal processes contnually montorprces and the avalablty o raw materals.

Use o our Asan Sourcng Oce.

Environment

Manuacturng our product mpacts theenvronment.

Energy to run our products s ecessve.

Falure to manage our envronmental mpactscould damage our brand, lead to government/

regulatory actons resultng n nes or

enorcement notces.

We nvest to mprove envronmentalperormance.

We have envronmental mpact targetsas part o our iSO 14001:2004 and

Envronmental Management System

programmes.

We undertake to be a responsblemanuacturer and ensure complance wth

all new producton regulatons.

We treat eectve energy management nthe home as a prorty.

The results are montored at board level.

KEY RiSKS & UNCERTAiNTiES


15/92


RiSK POTENTiAL iMPACT STRATEGY TO MiTiGATE

Financial

Foregn echange and nterest rates as we

manuacture and sell across the world.

The Group uses bank acltes that requre

renewal rom tme to tme.

See note 19 to the accounts or urther

detals.

Sgncant movements can mpact both

protablty and cash fow o the Group.

Underperormance could lead to breaches n

bank covenants, a lack o nance avalablty

and ncreased costs.

The Group osets currency fows wthn theGroup wherever possble.

Forward oregn echange contracts areentered nto where necessary.

Treasury polcy sets the ramework orhedgng currency and nterest rate rsks.

Covenants are mantaned aganst orecasts. Consstent dalogue held wth bankng

group.

Intellectual property

Falure to denty the volaton o our rghts

could lead to unar competton.

Others may mtate our products breachng our

patents, trademarks and copyrghts damagng

our brands and protablty.

Montor the market to denty breaches oour propretary rghts.

Take legal acton wherever approprate.

Legal and regulatory

The Group als to comply wth regulatons

n the markets n whch t operates.

The Group could be held lable wth both a

reputatonal and a nancal cost.

The Group s commtted to good practceand rsk complance.

Manuacturing

Eternal events, res or workorce acton

could dsrupt producton.

Manuacturng technques and processes

can become outdated.

Dsrupton to manuacturng or a sustaned

perod can mpact prots.

Product lnes age or become obsolete or

uneconomc.

Dsaster recovery plans are n place at alloperatons.

Manuacturng technology s shared so thatbest practce levels are mantaned.

Mantan regular communcaton wthworkorce/unons.

investment n new technologes andequpment s prortsed.

Ensure busness operatng standards arehgh as seen n iSO 9001:2008 and iSO

14001:2004 accredtatons.

Pensions

The undng requrement o the Groups

penson scheme could ncrease

sgncantly.

The nances o the Group could be sgncantly

constraned by requred penson contrbutons.

The Group and the trustee have agreed along-term undng structure and manage

closely both assets and labltes.

People

Health and saety.

Falure to attract, retan and motvate

employees.

Falure to meet the approprate standards

can have a sgncant mpact on our people,

damage the brand and lead to sgncant

nancal and operatonal costs.

Loss o key people could damage the uture

prospects o the Group.

We are commtted to the hghest standardsand conduct regular audts as seen n our BS

OHSAS 18001:2007 accredtaton.

Health and saety s a key agenda tem atoperatonal and board meetngs.

incentve and remuneraton packages aredesgned to attract, retan and motvate key

sta.

Successon plannng s n place andrevewed regularly by the board.


16/92


Introduction

Corporate Socal Responsblty (CSR) s ntegral to all aspectso our operatons and our Statement o Core Prncples setsout our undertakng to act ethcally and responsbly n all ourbusness relatonshps and dealngs wth stakeholders. We arecommtted to contnuous mprovements n all aspects o CSR our polces, our systems, our perormance and our reportng.

Our programmes to enhance the sustanablty o our busnessand products nclude responsble sourcng, our communtyactvtes, our health, saety and envronmental programmesand our engagement wth employees, customers and otherstakeholders. As a manuacturer and suppler o range cookers,ktchen and related home ashons product, the Group seesproduct stewardshp as a key part o ts CSR programme. Wework to desgn our products to be more energy ecent n use,to have a hgh degree o recyclablty and to utlse eco-rendlyand sustanable energy solutons.

in addton to ths report, the Group provdes CSR relatednormaton on ts webste and ts 2010 CSR report wll bepublshed onlne n May 2011. The CSR report wll ncludeurther detals o our polces and perormance wth case studyeamples descrbng polcy mplementaton and eectveness.

Management of CSR

The che eecutve s accountable to the board or theGroups CSR polces and procedures. He s supported by theGroup HR drector and by the senor management team. Themanagement o each operaton has responsblty or CSR and saccountable to the che eecutve n respect o all CSR matters.Envronmental, health and saety polces are ncluded n theschedule o matters reserved or board approval and CSR sncluded n the ongong rsk management process.

in 2010, the Group contnued wth ts programme o nternalCSR audts whch complement the mplementaton o iSO9001:2008, iSO 14001:2004 and BS OHSAS 18001:2007. Thenternal audts cover a range o complance matters and are

undertaken by unctonal specalsts reportng to the Group HRdrector wth support rom eternal advsers, where approprate.

Durng the year, s operatons were covered by the CSR/complance audt process whch asssts wth the development

o benchmark standards o best practce across the Group. To

support ths we mplemented an onlne mprovement notce

system to streamlne the ssue resoluton process across the

Group. in addton to audt related and general health and

saety and envronmental opportuntes, the system s also

used to montor and mplement other commercal, suppler and

delvery related ssues and mprovements.

The AGA Rangemaster Group partcpates n the Carbon

Dsclosure Project and s a member o the FTSE4Goodnde and uses ths nde n conjuncton wth stakeholder

consultatons and other benchmarks to help denty key

prortes and to drve progress.

Employment and stakeholder engagement

The Group engages n proactve two way dalogue wth

stakeholders and n partcular lases wth shareholders,

employees, customers, supplers, local communtes,

government bodes, other authortes and non-governmental

organsatons. Ths engagement ncludes revews o the mpact

o our operatons on local communtes.

Management hold ace-to-ace breng sessons to keep

employees normed o developments across the Group and

to receve eedback. Employee communcatons are supported

by local newsletters. The Group-wde ntranet s regularly

updated wth normaton rom all Group companes and s

used as a communcatons medum and to renorce polces

and common themes, ncludng n relaton to health and

saety, envronmental, core values and employee benets. We

contnue to develop content and comments rom employees are

welcomed. Employees are encouraged to access the Groups

webstes and ntranet. Durng 2010, we etended awareness

to nclude employees who do not have access to computers as

part o ther dutes.

Some 73% o our employees are located at operatons

whch have ocal unon recognton and local management

hold regular meetngs through ether trade unon or works

councl orums.

CORPORATE SOCiAL RESPONSiBiLiTY

The AGA Ladies Open Championship Series o twenty nine racesat Point-to-Point events around the country, culminates in a nal at

Cheltenham on 4th May.


17/92


Human resources

We recognse that our people are key to the Groups ongongsuccess and the Group HR drector takes an actve role ndevelopng and embeddng best practce and procedurebenchmarkng around the Group.

Durng the year, the Group employed an average o 2,580 peoplen seven countres. Some 71% o our sta are located n the UK,19% elsewhere n Europe and 10% n North Amerca. 99% are

permanent employees, 71% are male and 29% are emale. Othose n management roles, ncludng retal managers, 59% aremale and 41% are emale.

Voluntary sta turnover durng the year was on average 9%across the Group. Total sta turnover was 12%.

As tradng condtons mproved through 2010 each o ouroperatons worked closely wth employee representatvesto transton back to ull tme workng and to ensure theapproprate deployment o employees to meet the growngdemands o the organsaton.

Human resources policies

The Groups polcy s to nvest n ts people and to encouragethem to develop to ther mamum potental accordng to theneeds o our operatons and our customers.

The Groups Code o Conduct or employees outlnes thestandards o ntegrty and honest conduct epected, and eplansthat breaches o Company polcy may result n dscplnaryacton and dsmssal. The Code o Conduct s publshed on theGroups webste and ncludes the whstleblowng polcy whchenables employees and others to report any breaches o theCode o Conduct, raud or any other crmnal acts n condenceand wthout ear o retrbuton. All employees worldwde mayuse the nternal whstleblowng provsons and UK and USemployees may alternatvely use the eternal ndependentservces avalable n those areas. All reports are logged andmontored by the audt and rsk commttee and approprate

nvestgatons and acton undertaken.

We support the Unversal Declaraton o Human Rghts andthe iLO Declaraton on Fundamental Prncples and Rghts atWork concernng the undamental rghts, ncludng reedom

o assocaton and the eectve recognton o the rght to

collectve barganng, the elmnaton o all orms o orced or

compulsory labour, the eectve abolton o chld labour and

the elmnaton o dscrmnaton n respect o employment

and occupaton.

The Group requres that ts operatons comply wth ts equal

opportuntes polcy and t does not tolerate harassment or

dscrmnaton n any orm. Each operaton must ensure that

there s equal opportunty o employment, retenton, promoton

and tranng regardless o race, ethnc or nat onal orgn, gender,

martal status, age, seual orentaton, relgon, trade unon

membershp or dsablty and that approprate consderaton s

gven to dsabled applcants n terms o employment takng nto

account local legslaton.

Training and development

The Group nvests n the capabltes o ts employees and

encourages them to be nvolved ully n ther development

and tranng. Some 1,215 days o o-the-job tranng were

recorded durng the year. Ths s n addton to on-the-job and

tool-bo tranng.

A total o 66 employees n the UK recently completed the

n-house management programme. Ths was launched n

2009 wth the insttute o Leadershp and Management and

ocuses on leadershp, management and supervsory sklls.

A total o 160 manuacturng, warehouse based and

customer servce employees completed Natonal Vocatonal

Qualcatons (NVQs) n the UK.

At the AGA Rangemaster stes n the UK, a number o

apprentces have been recruted, ncludng techncans

to take up postons n the mantenance and prototype

teams and producton apprentceshps destned or the

shop foor. Alongsde ths ntake o new recruts a plot

development programme has been ntated or a group

o estng employees who wll complete relevant NVQs

n manuacturng.


18/92



Environmental, health and safety

The Group recognses that t s part o the wder communtyand that t has a responsblty to act n a way that respectsthe envronment and the well-beng o others. The Group scommtted to the contnuous mprovement o ts envronmental,health and saety (EHS) perormance and to enhancng theoverall sustanablty o ts operatons, products and servces. Asummary o our progress durng the year s ncluded here andurther detals wll be ncluded n our 2010 CSR report.

The Groups EHS polces are underpnned by detaledprocedures wthn each o the Groups operatons. Managementare responsble or ther mplementaton and or keepngall concerned normed o best practce and the statutoryrameworks. Polces and practces are revewed and updatedor changes n legslaton and employees are made aware othe polces and ther responsblty to ensure that these areeectvely appled. The che eecutve s accountable to theboard or EHS matters, supported by the Group HR drector.in practce all employees are responsble or mplementng ourEHS polces and or dentyng opportuntes or mprovement.

The Group HR drector ensures perormance s regularlyrevewed, that objectves and targets are set or mprovement

and or the benchmarkng, leveragng and the promoton obest practce. As noted above, the system o CSR/complanceaudts supports ths work and eternal consultants are utlsedwhen specc needs arse. Perormance s regularly revewed bythe board.

Health and safety targets and performanceit s mportant or the Group to provde and mantan a saeenvronment or all employees, customers and other vstors tots premses and the wder workplace. The Group comples wththe relevant health and saety legslaton n the jursdctonsn whch t operates. The Groups health and saety polcy andperormance s regularly revewed by the board.

The Group uses a number o key perormance ndcators

(KPis), to montor accdent requences, accdent causesand the amount o tme lost at all operatons and sets annualmprovement targets.

All our locatons have health and saety management systems

n place and the Groups our UK manuacturng stes areaccredted to BS OHSAS 18001:2007, the occupatonal healthand saety standard. Durng 2011, our objectve s to acheveaccredtaton at our urther locatons, ncludng our two stesn North Amerca.

Our long-term am s to have no accdents, and we madeprogress towards ths goal durng the year. Across the Groupthe requency o lost tme accdents (LTAs) per 100,000 hours

was down by 25% to 0.69 LTAs per 100,000 hours worked.Ths was ahead o our mprovement target o 5%. The lost tmedue to accdents as a proporton o workng tme was down by45% to 0.13% aganst our 15% mprovement target. Ths wasdue to the reduced accdent requency and a 26% reductonn the average lost tme per LTA to 23 days whch was aheado the targeted 10% reducton. The mprovements are dueto our embedded rsk management practces and return towork ntatves whch apply unversally but speccally targetlocatons wth below average perormance.

We montor accdent causes on a consstent global bass, wththe most common cause o accdents across the Group bengcuts and abrasons. We wll contnue to ocus on reducngaccdents n ths area, partcularly at locatons wth below

average perormance.

2010

2009

2008

2009

2008

2009

2008

2010 20100.69

0.92

1.14 22

31

23

0.20%

0.23%

0.13%

*

* Lost tme accdent (LTA): accdent whch results n one or more days lost tme.

Environmental targets and performance

We work to mnmse the envronmental mpact o our busnesson the envronment and to enhance the sustanablty o theproducts we make and sell. The Groups envronmental mpactsnclude energy use and transport and the resultant clmatechange related emssons, water consumpton and the wasteand recyclng arsng rom our manuacturng processes andgeneral busness operatons. The envronmental data n ths

The AGA Marvel workorce at Greenville, Michigan celebrate

achieving ISO 9001:2008 and ISO 14001:2004 accreditation.


19/92


report covers 100% o Group revenue. Further detals o our

perormance wll be ncluded n the 2010 CSR report.

The Group's CO2 emssons ntensty durng 2010 was up 2%

on the pror year at 105 tonnes per mllon o sales whch s not

on track to acheve our target o a 5% reducton over the two

year perod 2010-11. Total 2010 CO2 emssons due to energy

use and n-house transport were some 28,630 tonnes, up rom

25,963 tonnes n 2009 but less than the 32,525 tonnes emtted

n 2008.

Waste ntensty ncreased by 6% n the year to 32 tonnes per

mllon sales. Our target s or a 5% reducton n waste ntensty

over the two year perod 2010-11. Total waste was 8,739 tonnes

whch s up rom 7,652 tonnes n 2009 but was lower than the

9,276 tonnes reported n 2008. The proporton o total waste

whch was recycled was 71% durng the year whch was lower

than the 74% acheved n 2009 but above the 62% reported

n 2008.

The small ncrease n CO2 emssons and waste ntensty durng

2010 was the result o manuacturng transtonng back to ull

tme workng durng the year.

Achevng reductons n water use was a major ocus durng theyear. As a result, water use was down 28% to 51,616m3 (2009

restated: 71,990m3) and water ntensty was down 34% durng

the year to 189m3 per mllon sales whch s ahead o the

target or a 5% reducton n water ntensty over the two year

perod 2010-11.

The Group supports the adopton and mplementaton o

envronmental management systems across ts operatons.

Ten locatons have envronmental management systems n

place coverng over 90% o sales rom manuacturng stes.

AGA Marvel n Greenvlle, Mchgan acheved accredtaton to

iSO 14001:2004 durng the year, brngng the total number o

accredted stes to our and the proporton o manuacturng

ste sales covered by iSO 14001:2004 to 49%. Durng 2011

our objectve s to acheve accredtaton at a urther ve stes

world-wde to ncrease the proporton o manuacturng stes

accredted to iSO 14001:2004 to over 80% o sales.

CO2

intensity*

Tonnes/m revenue**

105

103

108

2010

2009

2008

32

30

31

189

286

300

Waste intensity~

Tonnes/m revenue**

2010

2009

2008

2010

2009

2008

Water intensity#

m3/m revenue**

* includes emssons due to energy use and due to n-house transport operatons.

** Constant currency bass, ncludes nter-company sales.

# 2009 water use was restated due to a one o rrgaton project at the new AGA

Marvel ste n Greenvlle.

~ Hazardous and non hazardous waste. includes recycled materal.

Environmental improvement initiatives

As the Group etends ts accredtaton to iSO 14001:2004

across ts operatons, we use accredtaton as a platorm

or contnuous mprovement and harmonsng best practce

technques through ormal energy mprovement workng

partes. Where approprate, successul energy mprovement

ntatves are dssemnated across our operatons. For eample:

The AGA Marvel aclty n Greenvlle reduced heatng costs

by utlsng radant heat rom the powder pant plant to heat

the actory durng the colder months. We are revewng the

easblty o ntroducng smlar schemes at our other plants.

The AGA Rangemaster ste n Leamngton Spa successully

mplemented ranwater harvestng technques to reduce water

use and we are now revewng the potental to etend ths to

other locatons.

AGA Marvel undertook a project to reduce the amount o waste

oam created n the rergeraton oamng process. A process

redesgn encapsulatng the oam wthn the cabnet wll save

appromately 45,000 lbs o oam annually, whch would

prevously have been dsposed o to landll. Ths new process

has also created hgher nsulaton values whch has successully

aded our goal to create rergeraton unts that requre less

energy and oer a smaller carbon ootprnt.

Compliance

There were no envronmental or health and saety related nes,

penaltes or prosecutons reported durng the year.

PELLiER

NOiR

Bircheld Harriers has had our Commonwealth heptathlon champions since the Group started

sponsoring the club in 1984. Judy Simpson, Denise Lewis, Kelly Sotherton and Louise Hazel are

shown here at an AGA undraiser or the Bircheld athletes or London 2012.


20/92



Product stewardship

The Group contnues to place great emphass on consumer andenvronmental ssues. We are commtted to mnmsng theenvronmental mpact o our products durng manuacture, nuse and at the end o le. We am to oer our customers welldesgned, qualty products whch have been sustanably sourced,are energy ecent and have a hgh degree o recyclablty.Durng 2010, we set up a Group-wde orum to dscuss productlegslaton and best practce on a global bass and to ocus on

new developments n ths area and how these changes can belnked to support commercal busness opportuntes.

We are also pursung eco-rendly and sustanable energysolutons to help ensure that our products address ncreasngconcerns over the use o energy and the related CO2 emssons.All Rangemaster branded nducton and dual uel cookershave been certcated by the Energy Savng Trust. Only themost energy ecent products carry the Energy Savng Trustrecommended logo, makng t quck and easy or customers tond products that wll cost less to run, contrbute to savngson energy blls and help reduce envronmental mpacts(see www.energysavngtrust.org.uk or urther detals).

The AGA Rayburn Eco-Connect Panel won the innovatve Product

o the Year award at the OFTEC Awards or Ecellence 2010.Wth the Rayburn cooker at ts heart, the Eco-Connect Panellnks a wde range o products whch can nclude any or all othe ollowng tems - domestc hot water system, central heatngsystem, wood burnng stove, underfoor heatng, solar hot waterpanels - ensurng that energy s ntellgently drawn rom thegreenest source at all tmes wthout havng to adjust buttons orswtches (see www.aga-rayburn.co.uk or urther detals).

Supply chain ethical trading policy

The board recognses the mportance o managng ts supplychan to ensure, so ar as s practcable, that ts drect andndrect supplers adopt the same core prncples as the Group.The Group rst ntroduced an ethcal tradng polcy n 2002.

Ths encompasses a set o global sourcng prncples coverngar terms o employment, human rghts, health and saety, equalopportuntes and good envronmental practce. All operatngcompanes are requred to revew suppler complance wth thspolcy, denty any areas o non-conormance and take acton

where approprate. The Group montors the qualty, desgnand avalablty o all sourced components and products, toensure hgh standards are mantaned. The Groups supplerdevelopment programme has been updated to nclude amore comprehensve montorng questonnare to help ensuresupplers conorm to standards set by the Group.

All prnt and paper sourced by the Group s accredted toForest Stewardshp Councl (FSC) and the Program or the

Endorsement o Forest Certcaton (PEFC) standards.Customers

The Groups customer servce strategy s to respond rapdly toevolvng customer demand, to denty and antcpate emergngneeds and to mprove contnuously product avalablty, qualtyand value. Our qualty management systems help ensure thatour products meet or eceed customer requrements wth90% o the Groups manuacturng capacty accredted to iSO9001:2008.

in the comng year we wll urther engage wth our customers torenorce our product stewardshp and other customer relatedntatves. Our customer relatonshp management team keepsowners and potental owners o our products up to date on our

new product and sales ntatves.Communications

Evolvng technology makes t now ar easer or customers -actual and potental - to communcate wth the Group and wtheach other. in addton, to workng systematcally to keep ts webstes up to date, AGA Cookshop, Dvertment and Fred Earth,n partcular, have establshed and upgraded ther transactonalwebstes. in addton, socal meda s an ectng and currentdevelopment to whch the Group s respondng actvely. Thscan be seen wth the AGA and Rangemaster brands presenceon Facebook and the Group's presence on Twtter.

Community involvement

Each o our operatons and ther employees are encouraged to

become nvolved wth and to support local communty projects,educatonal establshments, chartes and other causes. Thssupport takes varous orms ncludng donatons, undrasng, payrollgvng or personal tme and commtment. Our retal operatons alsoorganse events and allow chartes to hold meetngs n ther outlets.

The AGA Rayburn Eco-Connect Panel was the overall winner o theInnovative Product o the Year at the OFTEC Awards or Excellence 2010,

and the Rayburn 680 KCD was one o the runners up in the same category.


21/92


Chartable ntatves nclude nancal and product donatons,equpment mantenance and employee nvolvement.

Durng the year, the Group etended ts lnks wth educatonalestablshments and supported a number o educatonal anddevelopmental causes. Eamples nclude:

The Group contnued to rase unds and awareness or ThePlace2Be - a natonal chldrens charty whch works at alocal level n schools across the UK provdng emotonal and

therapeutc support to chldren, ther amles, teachers andother school sta. The charty oers one-to-one counsellng,group sessons, and lunchtme sessons at The Place2Talk.Our retal shops have hosted a number o undrasng eventsor The Place2Be throughout the country. Many sold specallydesgned cupcakes, whle others held cookery demonstratons.Durng the year, the Group partcpated n the 'Place at theTable' campagn, whch ran or a week n November 2010.it was desgned to encourage people to m and matchundrasng deas n ways that concentrated on socal eatng.The campagn rased more than 7,500 or The Place2Be.

The Group s workng n partnershp wth Knowledge TranserPartnershp ('KTP') and the Brmngham insttute O Art

and Desgn ('BiAD'). The ocus o the KTP s on renewabletechnology, undertaken by a recently qualed person,recruted to speccally work on a dedcated project. TheKTP wll run or two years and enables new capabltes to beembedded nto the busness and has beneted and contnuesto benet a wde range o busnesses across many sectors.

AGA Rangemaster partnered wth North LeamngtonCommunty School and Arts College as part o the CBi'Busness n the Classroom' ntatve. The ams o thentatve are to create long-standng partnershps betweenschools and local busnesses wth the ultmate objectveto enhance students employablty by settng pupls thechallenge to develop solutons to real-le busness problems- n ths case a three month project to develop a new

nducton tranng tool or new starters and vstors to AGARangemaster n Leamngton Spa.

in addton, the Group and ts employees supported a number oother ntatves, ncludng:

AGA Rangemaster employees n Leamngton Spa contnueto support Myton Hospce n Warwck as ther chosencharty and, through payroll gvng and undrasng eventshave to date rased a total o 24,000.

The Group contnues to support Brcheld Harrers andts members as they target selecton or the Great Brtanteam or London 2012. The Brcheld Harrers have beenrepresented at every Olympc Games snce 1908, bar one.

A number o employees supported cancer chartes,ncludng a sponsored 72 hole gol marathon to rase moneyor Macmllan Cancer Support, by runnng the 3 PeaksChallenge or Ovaran Cancer Acton and n the Race or Leto support Cancer Research UK.

AGA Marvel n Greenvlle, Mchgan worked wth a localorgansaton to adopt ve less ortunate amles n therlocal communty. Employees donated a wde range ogts ncludng; clothes, ood, gt cards and chldrens toys.A number o employees volunteered ther tme to wrappresents and to delver them to each o the amles.

AGA Rangemaster n the UK s supportng the Lades' OpenChamponshp Seres o races and wll be hostng a race ateach o 29 Pont-to-Pont race meetngs throughout the UK,and culmnates wth a nal at the Hunter Chase Evenng atCheltenham Racecourse on 4th May 2011.

Detals o other ntatves to support local chartes and communtyevents wll be ncluded n the Groups 2010 CSR report.

Verification

in addton to our nternal CSR audt programme, thoseoperatons certed to iSO 14001:2004 and other standards aresubject to regular eternal audts. Snce March 2002 the Grouphas also been advsed by CSR Consultng Ltd, who assst theCompany n evaluatng ts polces and procedures and wth thereportng and revew o ts CSR related perormance. CSR related

rsks are ncluded n the Groups rsk management process andat present the board does not beleve that an overall eternalCSR audt would be approprate. However, where requred theGroup utlses eternal specalsts as necessary. The normatonn ths CSR report s not subject to audt by Ernst & Young LLP.

AGA Rangemaster employees at the Ketley

site proudly sporting their NVQ certicates.


22/92

John Coleman (B*,A,N*,R)

Chairman (independent)

John Coleman was apponted an

ndependent non-eecutve drector

n March 2008 and became charman

o the board n May 2008. John chars

the nomnaton commttee and became

a member o the audt and rsk and

remuneraton commttees n January

2010. John s currently non-eecutve

charman o Holdaybreak plc and a

non-eecutve drector o Travs Perkns

plc. He was che eecutve o House o

Fraser plc rom 1996 to 2006. He s achartered management accountant.

William McGrath (B)

Chief executive

Wllam McGrath was apponted che

eecutve n March 2001. Wllam joned

the Group as nance drector n October

1997 rom Aggregate industres plc

where he had become nance drector

n 1992. He had prevously worked n the

nvestment bankng and constructon

sectors. He s a qualed accountant and

a hstory graduate.

Shaun Smith (B)

Finance director

Shaun Smth was apponted to the board

as nance drector n March 2001. Shaun

joned the Group rom Marks and Spencer

plc n 1989 and worked n treasury

becomng the group treasurer n 1999.

He s a co-opted member o the audt

commttee o Brmngham Cty Unversty.

He s a qualed treasurer and economcs

graduate.

THE BOARD



23/92


B - Board memberA - Audt and rsk commttee memberN - Nomnaton commttee memberR - Remuneraton commttee member

* denotes charman o the board or commttee

Jon Carling (B,A,N,R)

Non-executive director(independent)

Jon Carlng was apponted an

ndependent non-eecutve

drector n October 2010. Jon

was apponted an eecutve

vce presdent at Rolls Royce

n February 2011. Pror to that

he was che operatng ocer

at Aston Martn Lagonda

and held a number o senor

engneerng postons wth

Jaguar Cars. He s a graduate

n mechancal engneerng.

Paul Dermody OBE (B,A*,N,R)

Non-executive director (seniorindependent director)

Paul Dermody joned the board

n March 2004 and chars the

audt and rsk commttee. Paul

became the Companys senor

ndependent drector n

November 2010. Paul s a

non-eecutve drector o

Majestc Wne PLC and

Charman o the trustees o The

Natonal Football Museum. He

was ormerly che eecutve o

De Vere Group Plc. He sa chartered management

accountant.

Paul Jackson (B,A,N,R*)

Non-executive director(independent)

Paul Jackson joned the board n

December 2005 and chars the

remuneraton commttee. Paul has

spent hs career n advertsng.

He started hs career wth Saatch

& Saatch and later became

eecutve managng partner and

vce charman o Ammrat Purs

Lntas. He joned Oglvy & Mather,

part o the WPP Group n 1999.

He was a drector at Oglvy Group

and Che Eecutve o Oglvy &Mather untl 2007.

Pam Sissons

Company secretary

Pam Sssons joned the

Group n 1999 and was

apponted company

secretary n October

2004. She s a Fellow o

the Chartered insurance

insttute and an Assocate

o the Chartered insttute

o Secretares and

Admnstrators.


24/92

DiRECTORS REPORT


Directors report

The drectors present ther report on the aars o the

Company and the Group, together wth the nancal

statements and the ndependent audtors reports or the

year ended 31st December 2010.

Principal activities

AGA Rangemaster Group plc s a publc lmted company

ncorporated n England, regstered number 00354715,

wth ts regstered oce at Juno Drve, Leamngton Spa,

Warwckshre CV31 3RG.

The prncpal actvtes o the Group are the manuacture

and sale o range cookers, ktchen and related home ashons

product. The prncpal actvty o the Company s that o a

holdng company. The prncpal tradng subsdares and the

countres n whch they operate are shown on page 79.

Business review

The Company s requred under the Companes Act 2006

(CA2006) to set out n ths report, among other matters,

a ar revew o the busness o the Group through a

balanced and comprehensve analyss o the development

and perormance durng the nancal year and the poston

o the Group at the year-end, consstent wth the sze andcomplety o the busness.

The charmans statement on pages 2 to 4 and the che

eecutves busness revew on pages 6 to 10 provde

detaled normaton relatng to the Group, ts prncpal

actvtes and strategy, ts perormance durng the year and

ts prospects or uture development opportuntes. Detals

o the prncpal rsks and uncertantes acng the Group

are set out on pages 10 to 13. inormaton relatng to the

envronment, employees and stakeholders are set out n

the corporate socal responsblty report on pages 14 to 19.

The corporate governance report s set out on pages 27 to33. The statements and reports are ncorporated nto ths

drectors' report by reerence.

Ths normaton s prepared solely to assst shareholders to

assess the Companys strateges and the potental or those

strateges to succeed. The drectors report should not be

reled upon by any other party or or any other purpose.

Forward lookng statements have been made by the

drectors n good ath based on the normaton avalable

to them up to the tme o ther approval o ths report and

such statements should be treated wth cauton due to the

nherent uncertantes, ncludng economc and busness

rsk actors.

Results and dividends

The prot attrbutable to equty shareholders or the perod

was 15.0 mllon (2009: 1.7 mllon) and s shown n

the consoldated ncome statement. An nterm dvdend

o 0.7 pence per share was pad on 1st December 2010.

The drectors recommend a nal dvdend o 1.0 pence

per share be pad on 3rd June 2011 to those shareholders

on the regster at 26th Aprl 2011. Ths would brng the

total dvdend or the year ended 31st December 2010 to

1.7 pence per share (2009: nl). The payment o the nal

dvdend s subject to shareholder approval at the Annual

General Meetng (AGM).

Post balance sheet event

On 7th January 2011, the Group receved cash o 7.6 mllon

on the eercse o an opton held by Nagara Corporaton

to acqure the reeholds n certan propertes used by the

metals processng operatons t acqured rom the Group

n 1999. Net ncome n 2010 rom these propertes was

0.8 mllon ollowng a rent revew n 2009, and the sale

wll gve rse to a book prot n 2011 o over 0.6 mllon.

Directors and their interests

The names and bographcal detals o those persons servng

as drectors o the Company as at the date o ths report areshown on pages 20 and 21. Detals o changes to the board

durng the year and o the drectors oerng themselves

or electon or re-electon at the AGM are set out n the

corporate governance report on pages 27 and 30. Detals

o drectors servce agreements or letters o appontment

are set out n the drectors remuneraton report on pages

38 and 39.

The nterests o the drectors n shares o the company and

share optons are set out n the drectors remuneraton

report n the tables on pages 37 and 41.

Directors indemnities

in accordance wth the Companys artcles o assocaton,

the Company has provded an ndemnty to each o ts

drectors n respect o lablty ncurred as a result o ther

oce, to the mamum etent permtted by the law. Ths

provson, whch s a qualyng thrd party ndemnty

provson as dened by secton 234 o the CA2006, was n

orce throughout the nancal year and remans n orce. The

Company has also purchased and mantaned throughout

the same perod approprate drectors and ocers

lablty nsurance coverage n respect o the Company, ts

subsdares, ts drectors and ocers. Nether the nsurance

nor the ndemntes provde cover where the relevant

drector or ocer has acted raudulently or ntentonally

breached the law.


25/92


The Trust Deeds to the Companys prncpal UK penson

scheme ncludes the provson o an ndemnty rom the

Company to the scheme trustees drectors, save n the case

o gross neglgence or conscous bad ath and only to the

etent that the provson o the ndemnty to such drectors

would not nrnge applcable legal requrements.

Articles of association

The board o drectors may eercse all the powers o the

Company, subject to the provsons o relevant statutes, the

Companys artcles o assocaton (the Artcles) and any

drectons gven by a specal resoluton o the shareholders.

The Artcles, or nstance, contan certan specc provsons

and restrctons regardng the Companys power to borrow

money. Powers relatng to the ssung and buyng back

o shares are ncluded n the Artcles and are subject to

such authortes beng approved annually by shareholders

at the AGM, should the drectors recommend that t

remans approprate to retan such leblty. The rules or

the electon and re-electon o drectors are set out n the

Artcles and are detaled n the corporate governance report

on page 30. The Artcles can only be changed by a specal

resoluton passed n a general meetng o shareholders.

Share capital

As at the date o ths report, the ssued share captal o the

company s 32,467,604 dvded nto 69,264,223 ordnary

shares o 4678

pence each. The Company does not have

an authorsed share captal ollowng shareholder approval

at the 2010 AGM o the deregulatng provsons under

the CA2006. Detals o the Companys share captal are

provded n note 22 to the accounts.

All o the ordnary shares rank equally wth respect to votng

rghts and rghts to receve dvdends. On a show o hands at

a general meetng every holder o ordnary shares present nperson or by proy and enttled to vote shall have one vote.

On a poll each share carres the rght to one vote. Deadlnes

on eercsng votng rghts are set out n the Notce o AGM

and n the Form o Proy.

There are no specc restrctons on the sze o a holdng nor

on the transer o shares, whch are both governed by the

general provsons o the Artcles and prevalng legslaton.

The drectors are not aware o any agreements between

holders o the Companys shares that mght result n

restrctons on the transer o securtes or on votng rghts.

Under the Artcles, the drectors have the power to suspend

votng rghts where the holder o shares als to comply wth

a notce ssued under secton 793 o the CA2006.

Detals o share-based payments can be ound n note 23 to

the accounts. Partcpants n employee share schemes have

no votng rghts n respect o the shares subject to those

awards untl the allocatons are eercsed, at whch tme the

shares rank equally wth all other ordnary shares n ssue.

No such schemes have any rghts wth regard to control o

the Company.

Under the Artcles, the drectors have authorty to ssue

ordnary shares up to an aggregate nomnal value o

10,818,136 (beng appromately one thrd o the nomnal

value o the Companys ssued ordnary share captal) as set

at the 2010 AGM.

Change of control

There are a number o agreements that take eect ater,

or termnate upon, a change o control o the Company,

such as commercal contracts, bank aclty agreements,

guarantees, property agreements and employee share plans.

None o these are consdered to be sgncant n terms o

ther lkely mpact on the busness o the Group as a whole.

Furthermore, the drectors are not aware o any agreements

between the Company and ts drectors or employees that

provde or compensaton or loss o oce or employment

that occurs because o a takeover bd.

Substantial shareholdings

As at the date o ths report, the Company had been

noted, n accordance wth chapter 5 o the Dsclosure

and Transparency Rules, or through other dsclosures, o

substantal nterests n the share captal o the Company as

set out n the table on page 24.

Employees

The average number o employees wthn the Group s shown

n note 5 to the accounts. The Group s commtted to the ar

and equtable treatment o all ts employees, rrespectve ose, race, age, relgon, dsablty or seual orentaton. To

ths end, polces have been mplemented to ensure ths s

practsed at recrutment and then contnues throughout

an ndvduals employment wth the Group. The Group

encourages recrutment, tranng, career development and

promoton on the bass o apttude and ablty, wthout

regard to dsablty. it s also commtted to retanng and

retranng as necessary employees who become dsabled

durng the course o ther employment.

The Group has a polcy o actvely communcatng

normaton to employees concernng the development o

the Group and how ths may aect ther nterests and o

ensurng ther approprate nvolvement. The Group has a

global ntranet whch employees can access whch provdes


26/92

DiRECTORS' REPORT CONTiNUED


up to date normaton on developments around the

Group. Employee nvolvement n the Groups perormance

contnues to be encouraged through share ownershp.

Further detals o the Groups human resources polces are

provded on page 15 o the corporate socal responsblty

report.

Charitable and political donations

Chartable donatons made durng the year were 36,386

(2009: 4,801). These donatons were made across

the operatons prncpally to local chartes servng the

communtes n whch the Group operates. No poltcal

donatons or poltcal ependture were made durng the

year (2009: nl).

Research and development

Research and development plays an mportant role n

the development o the Group. Product nnovaton has

been a key eature o the Groups strategy. Development

departments across the Group are ncreasngly workng

together to develop products or our nternatonal customer

base. The Group captalses certan development spend

under iAS 38. Durng the year, the Group captalsed

ependture on development o 1.7 mllon (2009: 1.7

mllon). The aggregate ependture n the last ve years

has been 11.8 mllon.

Supplier payment policy

The Groups polcy s to settle terms o payment wth

supplers when agreeng the terms o each transacton,

ensurng that supplers are made aware o the terms

o payment and to endeavour to abde by those terms

and condtons, subject to the suppler perormng to ts

oblgatons.

Group trade payables at the year end equated to 76 days

o related purchases (2009: 77 days). The Company s a

holdng company and does not have trade credtors.

Treasury management

The Groups polcy on the use o nancal nstruments and

the management o nancal rsks s set out n note 19 to

the accounts.

Going concern

The drectors have assessed the nancal poston and the

uture undng requrements o the Group and the Company

and compared them to the level o avalable commtted

borrowng acltes. Detals o cash and borrowng

acltes are set out n note 19 to the accounts. The

Groups objectves, polces and processes or managngts captal; ts nancal rsk management objectves; detals

o ts nancal nstruments and hedgng actvtes; and ts

eposure to credt rsk and lqudty rsk are set out n note

19 to the accounts.

The drectors assessment ncluded a revew o the

Groups nancal orecasts, nancal nstruments and

hedgng arrangements or the 15 months rom the balance

sheet date. The drectors consdered a range o potental

scenaros wthn the key markets the Group serves and

how these may mpact on cash low, aclty headroom and

bankng covenants.

The Group and Companys busness actvtes, together

wth the actors lkely to aect ts uture development,

perormance and poston are set out n the charman's

statement on pages 2 to 4 and the che eecutves busness

revew on pages 6 to 10. The drectors also consdered what

mtgatng actons the Group could take to lmt any adverse

consequences.

Havng undertaken ths assessment, the drectors have a

reasonable epectaton that the Company and the Group

have adequate resources to contnue n operatonal

estence or the oreseeable uture and so determne that

t s approprate or the 2010 Company and Group nancal

statements to be prepared on a gong concern bass.

Notiying person(s)

% o voting rightsand issued share

capital

Ordinaryshares o

46 7/8p eachNature o

holding

Penson insurance Corporaton Ltd 19.00 13,155,000 drect

J O Hambro Captal Management Group Ltd 11.03 7,639,309 drect

J P Morgan Chase & Co 6.15 4,256,476 ndrect

Penson Corporaton GP Ltd and others 5.34 3,698,229 drect

Prudental plc group o companes 3.89 2,694,715 drect

Legal & General Group Plc 3.81 2,644,302 drect


27/92


Disclosure of audit information

Each o the persons who s a drector at the date o approval

o ths annual report conrms that:

so ar as each o the drectors s aware, there s no

relevant audt normaton o whch the Companys

audtor s unaware; and

the drector has taken all steps that he ought to have

taken as a drector n order to make hmsel aware o any

relevant audt normaton (as dened) and to establsh

that the Companys audtor s aware o that normaton.

Relevant audt normaton means normaton needed

by the Companys audtor n connecton wth preparng

hs report. Ths conrmaton s gven and should be

nterpreted n accordance wth the provsons o secton

418 o the CA2006.

Auditor

Ernst & Young LLP have epressed ther wllngness to

contnue n oce as ndependent audtor and resolutons

to re-appont them and to authorse the drectors to

determne ther remuneraton wll be proposed at the

orthcomng AGM.

Annual General Meeting

The AGM o the Company wll be held at Mallory Court

Hotel, Leamngton Spa, Warwckshre at 11.00 a.m. on 5th

May 2011. The notce convenng the meetng, together

wth the specal busness to be consdered and eplanatory

notes or each resoluton, s dstrbuted separately to

shareholders. it s also avalable on the Companys webste:

www.agarangemaster.com, where a copy can be vewed or

downloaded n PDF ormat by ollowng the lnk to investor

Relatons and then AGM or Report & Accounts.

By order o the board,

P M Sissons

Company Secretary

11th March 2011


28/92

STATEMENT Of DiRECTORS RESPONSibiLiTiES


Statement of directors responsibilities

The drectors are responsble or preparng the annual report,

the remuneraton report and the Group nancal statements

n accordance wth applcable laws and regulatons.

Company law requres the drectors to prepare nancal

statements or each nancal year. Under that law the

drectors have prepared the Group nancal statements n

accordance wth internatonal Fnancal Reportng Standards

(iFRS) as adopted by the European Unon (EU) and the

remuneraton report n accordance wth the applcable law.

The Group nancal statements are requred by law to gve atrue and ar vew o the state o aars o the Group and o

the prot or loss o the Group or that perod.

in preparng those nancal statements, the drectors are

requred to:

select sutable accountng polces and apply them

consstently;

make judgements and estmates that are reasonable and

prudent; and

state that the Group nancal statements comply wth

iFRS as adopted by the EU, subject to any materal

departures dsclosed and eplaned n the nancalstatements.

The drectors are responsble or keepng proper accountng

records that dsclose wth reasonable accuracy at any tme

the nancal poston o the Group and to enable them

to ensure that the Group nancal statements and the

remuneraton report comply wth the CA2006. They are

also responsble or saeguardng the assets o the Group

and hence or takng reasonable steps or the preventon

and detecton o raud and other rregulartes.

The drectors are responsble or the mantenance and

ntegrty o the Company webste. The work carred out by

the audtor does not nvolve consderaton o these matters

and, accordngly the audtor accepts no responsblty

or any changes that may have occurred to the nancal

statements snce they were ntally presented on the

webste. Legslaton n the Unted Kngdom governng the

preparaton and dssemnaton o nancal statements may

der rom legslaton n other jursdctons.

Responsibility statement

Each o the drectors conrm that to the best o ther

knowledge:

the Group nancal statements, prepared n accordance

wth iFRS as adopted by the EU and the Company nancal

statements prepared under UK GAAP, gve a true and ar

vew o the assets, labltes, nancal poston and prot

o the Company and the undertakngs ncluded n the

consoldaton taken as a whole; and

the charmans statement and che eecutves busness

revew, whch are ncorporated nto the drectors report,

ncludes a ar revew o the development and perormance

o the busness and the poston o the Company and the

undertakngs ncluded n the consoldaton as a whole,together wth a descrpton o the prncpal rsks and

uncertantes they ace.

By order o the board,

W B McGrath S M Smith

Che Eecutve Fnance Drector

11th March 2011


29/92

CORPORATE GOvERNANCE


Corporate governance

The drectors o the Company are commtted to the hghest

standards o corporate governance n the management o

the Company and the Group. The drectors consder that the

Company has appled the prncples and compled, wth the

provsons o secton 1 o the Combned Code on Corporate

Governance (the Code) adopted by the Fnancal Reportng

Councl (FRC) n June 2008, throughout the year ended

31st December 2010. Ths report, together wth the drectors

report set out on pages 22 to 25 and the remuneraton report

set out on pages 34 to 41 eplans our governance polces

and practces and descrbes how the Company has appledeach reerenced secton o the Code. Further normaton on

the Code can be ound on the FRC webste (www.rc.org.

uk). Ths statement has also been prepared n complance

wth the Dsclosure and Transparency Rules (DTR) made

by the Fnancal Servces Authorty (FSA), speccally DTR

7.2 Corporate governance statements.

A. DirectorsA.1 The board

The board o drectors s responsble to the Companys

shareholders or the success o the Company, the Groups

system o corporate governance, settng broad strategcobjectves, montorng busness and nancal perormance

and or the stewardshp o the Companys resources. The

board s satsed that t meets the Codes requrements or

eectve operaton.

The board promotes the success o the Group and provdes

leadershp wthn a ramework o prudent and eectve

controls that enable rsks and opportuntes to be assessed

and managed. in pursuance o the Groups strategy, the board

has delegated the day-to-day operatonal management

to the che eecutve but t has agreed a ormal schedule

o matters reserved solely or ts decson. The reserved

powers ensure that certan transactons, sgncant n terms

o sze or type are undertaken only ater board revew and

approval. Matters speccally reserved or board approval

cover a range o key ssues ncludng the development o

corporate strategy, long-term objectves and the approval

o annual budgets, nancal reportng and nternal controls,

treasury polcy, major changes to the rules and undng o

the Companys penson schemes, corporate governance

matters, rsk management and socal, envronmental and

ethcal matters. The matters reserved or the board are

regularly revewed and updated as necessary. Delegated

authortes are also clearly dened.

The board has a schedule o regular meetngs and may hold

addtonal meetngs as necessary. Table 1 below sets out the

names o each board drector, ther attendance at meetngs

and those board commttees o whch they were a member

durng the year ended 31st December 2010.

The terms o reerence o each board commttee are revewed

annually by the board. Followng ormal consderaton the

board may, on occason, delegate authorty to a standng

commttee consstng o at least two drectors to acltate

nal sgn-o or an agreed course o acton wthn pre-

dened parameters.

The bographcal detals o the drectors servng on the

board at the date o ths report are set out on pages 20

and 21. Durng the year the board comprsed two eecutve

drectors, wth three non-eecutve drectors servng

throughout the year and one non-eecutve drector

changng durng the year. The two eecutve drectors are

Wllam McGrath, che eecutve and Shaun Smth, nance

drector. John Coleman was apponted to the board n March

2008 and he became charman o the board n May 2008.

He met the ndependence crtera dened n the Code at the

tme o hs appontment. The ndependent non-eecutve

drectors servng on the board durng the year were Paul

Dermody, Paul Jackson, Peter Tom and Jon Carlng. Peter

Tom resgned as a drector wth eect rom 31st October

2010 havng served s years as a non-eecutve drector.Jon Carlng was apponted rom 26th October 2010.

Table 1

Director Board

Audit and risk

committee

Remuneration

committee

Nomination

committee

W B McGrath 8/8

S M Smith 8/8

J D Carling

(note 1) 1/2 0/0 0/1 0/0

J Coleman 8/8 3/3 3/3 2/2

P B Dermody 8/8 3/3 3/3 2/2

P E Jackson 8/8 3/3 3/3 2/2

P W G Tom

(note 2) 5/7 2/3 2/2 2/2

Attendance s epressed as the number o meetngs attended/number elgble to attend.

note 1 - Jon Carlng was apponted on the 26th October 2010. He was unable to attend

meetngs on one date due to pror commtments, whch were noted n advance o hs

appontment.

note 2 - Peter Tom resgne

2010 annual repandacc

Documents