WBM: Good morning and welcome to the presentation covering our 2002 results and our strategies and expectations moving into 2003. Last year our achievements were substantial. We had set out our stall in 2001 to create a balanced international consumer and foodservice business and in 2002 we went a long way towards creating it – progress at home and with acquisitions providing the necessary platform for growth in both North America and Europe. At all levels we saw the reported numbers moving firmly in the right direction. Turnover growth reflecting the increased substance of the Group; operating profit benefiting from the acquisitions; EPS sharply ahead and the overall financial position remaining strong, all providing scope to raise the dividend by 20 per cent.

This morning, I shall take you through the trading performance in more detail and finish the presentation by reviewing current trading and our strategy. In between, Shaun will provide a financial commentary on the accounts and Stephen will discuss Bongard, our most recent bakery acquisition, and more particularly will explain the market dynamics of the bakery industry and how we have set about cementing together all our foodservice operations. Our investment themes, first set out in 2001, remain consistent:

- to make Aga the centre of a brand-led lifestyle business and

- to align our foodservice operations in defensible niche markets led by bakery

What is demonstrable now is how these objectives are to be achieved.

Firstly, distilling 2002. It was the year in which:

- we aligned our UK consumer operations with a focus on an upscale market segment and derisked our operations by selling the Flavel and Leisure brands.

- we established ourselves as an energetic confident retailer with 150 shops, covering 300,000 square feet of retail space and with some outstanding new outlets.

- we made the breakthrough into the USA acquiring Domain, which in turn created the “Great Room” format to link Aga and Domain shown here.

- we set about creating a significant continental business by taking a stake in Grange, recently increased to 40 per cent.

In foodservice we moved to real force in the USA with the Belshaw and Adamatic acquisitions, which provide great potential through their routes to market.

In Europe, Bongard – the largest acquisition to date – makes us immediately a force on the continent in bakery with the opportunity again to broaden the business in refrigeration and foodservice with products already available in the Group.

The underlying feature is that each step is designed to add to what we already have. Each Group company now has tangible links with at least one other Group company. That is what was creative about 2002.

Looking in more detail first at turnover from continuing operations. At £323.3 million this was up 54 per cent. Underlying the increase was an overall 10% organic growth, with consumer contributing 15% and foodservice 5%. On a proforma basis taking a full year for the acquired businesses’ turnover was £385 million. That turnover on a proforma basis divides 57% in the UK, 24% in the US and 19% in Europe and the Rest of the World. Including the turnover of our associate, Grange, the proportion attributable to Europe and the Rest of the World rises to 26%. On that basis the turnover also divides neatly with consumer representing 52% of the business and foodservice 48%.

Operating profit before goodwill moved ahead from £20.3 million to £30.8 million with acquisitions contributing £6.1 million, half each from consumer and foodservice. Again, looking on a proforma full year contribution basis, operating profit reached £33.2 million.

Looking at results on a segmental basis. The consumer operating profit of £17.4 million was up from £9.6 million on turnover up from £107.1 million to £173.6 million – 10% return on sales. Key factors to note are:

- a record performance in its 80th anniversary year for Aga-Rayburn with the Iron Age campaign proving successful and with the upgraded retail shops buoyant. The new Six-Four series sold over 500. Aga branded cooker sales were over 9,000 on route, we expect, to the 2003 Project 10,000 target. Margins were maintained reflecting sustained productivity gains at higher volumes and Aga’s pricing power.

- Fired Earth saw sales growth, driven by 6 new store openings, increasing overall sales space by nearly 40% but the costs of expansion limited profit growth. Trends were positive with bathrooms, now in its third year, proving a growth generator accounting for 10% of sales.

- Rangemaster’s continuing turnover was actually little changed even though overall volumes fell from nearly 150,000 cookers to 50,000 with the Flavel and Leisure brand disposals. Stainless steel sinks performed well. As we hoped profits improved markedly in the second half.

- Elgin & Hall, the fireplace surround manufacturer, set about modifying the business model looking to upgraded distributor showrooms to support our revival of Aga’s Coalbrookdale cast iron stoves.

- Domain had an excellent year although US consumer confidence was seeping away towards the end of the year. Overall sales were up 8% and like for like sales were up 2%; margins were maintained and the current product ranges are strong.

In foodservice operating profits before goodwill were £13.4 million up from £10.7 million on turnover of £149.7 million up from £102.7 million. Acquisitions provide operating profits before goodwill of £3.1 million and UK bakery was strong. This highlights that it was a difficult year for the established UK foodservice businesses – Falcon and Williams.

Although Falcon achieved close to the Group’s average return on sales, it still saw turnover and profits fall sharply in its worst year for a decade as key national accounts spent less and the broader distributor base selling into the restaurant market was also quiet.

For Williams the story was similar, although Williams’ overseas outlets in Australia and China were buoyant.

Millers and Mono had excellent years with major work for Safeways, Marks and Spencer and Sainsbury’s. Millers also pushed on with its drive into service picking up more work with Somerfield and Sainsbury’s.

AFE Serviceline, part of our facilities management grouping which is creating closer links with Millers, like Millers had an excellent year and has now embarked on assimilating Troldahl, which we bought from the receivers in September 2002 to provide a widened capability to include air conditioning and also to provide more refrigeration engineers.

In the US Victory had a far better year. Production constraints were addressed by a reorganisation backed by a $1 million capital investment programme enabling output per day to rise by 30 per cent and unit costs to fall 20 per cent. Its market reputation has been enhanced enabling it to rebuild towards the company average returns on sales.

Belshaw, the doughnut equipment maker, finished the year very strongly and with a good order book. It contributed £2.5 million before goodwill in the year.

Now Shaun’s commentary on the wider financial picture.

SHAUN SMITH

Firstly, the profit and loss account moving down from operating profit before goodwill of £30.8 million. Acquisitions contributed £6.1 million and the losses of the now sold Leisure/Flavel brands amounted, as you saw at the half year, to £0.5 million. We have now ceased run off production for Beko and Kinder. The income from the disposals matched the cost of exiting these low margin business areas, which finally involved close to 300 redundancies.

With goodwill in the balance sheet of £138.2 million, there is a substantial goodwill charge in the profit and loss account - set to rise to nearly £7.8 million in 2003, up from the £6.5 million seen here in 2002.

Net interest receivable in the year was £3.2 million. Both interest receivable and payable fell as the overall financial position simplified, as cash was invested in acquisitions and loan notes relating to previous acquisitions were repaid. We also hedged a proportion of overseas investments with debt, hence the interest charge as well as income receivable. In 2003 net interest receivable, based on the current level of interest rates, is likely to be around £1.25 million.

Tax on the pre tax profit of £27.0 million - £33.5 million pre goodwill - was £7.4 million - a tax rate of 22.1% pre goodwill and 27.4% after it. Careful planning and the positions of some acquisitions should keep the 2003 tax rate at under 25% pre goodwill.

On all measures, EPS moved ahead sharply; from 9.5 to 15.2 pence basic and from 13.0 pence to 20.2 pence before goodwill amortisation. This growth was a major factor underlying the decision to raise the overall 2002 dividend by 20% from 5 pence to 6 pence which is covered 2.5 times on a FRED 26 basis.

Moving on to cashflow – where there was a strong second half performance with trading capital increasing only £7.1 million in spite of the increase in the scale of the business. In addition, we made a £7.4 million cash contribution into the pension scheme. Depreciation was £6.5 million and in 2003 it is likely to be around £9 million. Gross capital expenditure at £14.8 million, net £8.2 million, was more than twice depreciation. This reflects the additional impetus we decided to give to ensuring we are a modern, low cost producer, making it possible for us to take advantage of the greater sales opportunities the broadened business has. In 2002 major investments included new presses for Victory, the enamelling shop at Aga-Rayburn and nearly £2.5 million on new stores for Aga, Fired Earth and Domain. Also included is £2 million on the new head office which was necessary as our two year licence from Etex on Headland House expired on 9th March this year.

Looking at the balance sheet, net assets at 31st December 2002 were £271.0 million of which £138.2 million was goodwill. The very strong cash performance in the last third of the year left the cash position at £55.5 million, above earlier expectations and equivalent to 43 pence per share based on the 129.4 million shares in issue.

A quarter of the Group is now in the USA and we also have a substantial European operation. The exchange rate movements of the dollar and euro have been in opposite directions against sterling during the year and are offsetting each other in both profit and loss and balance sheet terms.

The balance sheet remains well provided, as it has been since the Pipe Systems disposal, the disposal provision has been little used to date and currently stands at £17.8 million. The provision was designed to address any historical Glynwed contingencies, notably contractual issues, tax issues and pension costs. Of these areas, pensions is the issue I should now focus on.

Groups with long industrial histories tend to have large pension schemes and managing them has become a key task. The transfer out with disposals of £135 million in liabilities in the last 4 years, the reduction in the number of active senior executive members; limiting some benefits after the ACT changes in 1997; and the closure of the scheme to new members in 2001 have all helped reduce appraised costs. Further, the scheme went more defensive entering 2000 with 74% of assets invested in equities, 2001, 66% and 2002, 40% excluding equities contractually linked to the Etex disposal. These moves have provided the Group with some protection against the equity market falls, but, with current bond yields inflating appraised liabilities, the healthy surplus position of June 2000 is likely to be found, under SSAP 24, to have moved to a deficit in the pending 2003 triennial valuation. Certainly FRS17 calculations show a 31st December 2002 net of tax deficit of £44.5 million on assets of £585.4 million compared with a small surplus at 31st December 2001. Current pension costs are now likely to rise. The active payroll has fallen appreciably in the last year and the Rangemaster rationalisation hastened the trend in 2002 and pensionable payroll will continue to fall in coming years with members leaving the scheme becoming deferred. The current pensionable payroll is around £35 million, implying a pension cost of around £6 million per annum. Under either SSAP 24 or FRS 17 this cost will now impact directly on the profit and loss. In terms of earnings per share, the impact may well be largely offset over the next three years by a reduced need for the 2001 disposal provision and may be offset under FRS 17 by net investment income. It is of particular note that the net 2002 FRS 17 profit and loss charge would have been £2.3 million. The objective is that through to 2005, falling payroll and provision movement will ensure there is no sharp sudden rise in costs.

We will update you on our pension strategy in light of Watson Wyatt’s findings which will be available prior to the half year results.

As we have said a number of times we have managed the financial position cautiously, not investing cash faster than the business was able to absorb it. We have reviewed the options available to us for using the net resources which remain available, particularly given the number of medium scale transactions undertaken. In principle our confidence in our development strategy and the opportunities still available mean that we regard making further investments, individual deals similar in shape and scale to those made to date, as the best course of action for the company and shareholders and this remains our strategy. The returns achieved on the acquisitions made to date are attractive in themselves and, as Stephen will highlight, have pleasingly created several new opportunities.

STEPHEN RENNIE

Over the last 3 years bakery has become a key driver within our foodservice operations. This morning I shall spell out why we consider it an attractive market and why it provides leavening to our overall foodservice offering. Firstly, our focus is not on industrial bakery and large scale production which provides pre-packaged bread. We focus on discontinuous production and smaller runs with a greater variety – where “fresh and flexible” matters most and this takes us into the artisan baker and in-store bakery markets.

Here we can see the processes involved in bread making.

Kneading, Forming, Refrigeration, Baking – and our equipment is the market leader in each section. Mono, Victory, Williams and Bongard are all world players.

Where the market has evolved is in the growth of Bake-off where only the final two processes of refrigeration and baking take place in the actual sales outlet. Once again, we are leaders in this field.

On the continent, most notably in Italy, France and the Benelux, artisan bakers have high market shares and the supermarkets have only slowly made in-roads. Artisans have 80% market share in France and the trip to the boulangerie is part of the culture. The market is relatively mature and the distribution structure, of which we are an integral part, is entrenched. In the UK the supermarkets dominate at the expense of the artisans. Supermarkets are in the process of upgrading their in-house offering to meet customer requirements for variety and quality and hence the strong current performance of our own Mono and Millers. In the US, the industrial baker has predominated and the artisan market has been relatively modest. The important and exciting trend in the USA is the current rise of the café/bakery market – a really fast growing sub-sector.

Here for 2001 we are highlighting the fastest growing segments within the US. The largest increases are coming from sandwiches where in limited and midscale service restaurants growth of 17.5 per cent and 16 per cent respectively is being achieved whilst the traditional hamburger and the associated frying equipment is losing out to these newcomers.

Key customers, with whom we work closely, include the rising sector stars in the USA like Panera Bread who have just voted Adamatic vendor of the year, Papa Johns and Darden, who runs Smokey Bones and Olive Garden, who have just awarded Victory a four-year contract to supply refrigeration to their 1,200 outlets in the US. These new names have added over 4,500 new outlets and have a turnover of in excess of $7billion. We are on the right side of these growth trends and expect them to become more pronounced internationally.

Now overlaying our capabilities on these markets. We are in the unique position of being able to meet all the needs of the bakery specialists for bread and for sweet goods. The graphic shows which of our operations address particular business segments and geographical markets. You will note that refrigeration is a key category as semi-prepared bread requires refrigeration and six of our seven companies are involved in this product sector.

The Bongard structure helps illustrate what we now have in place. Here is a picture showing the Bongard structure in Europe – a manufacturing site and head office in Strasbourg employing just over 300 people and producing ovens and refrigeration equipment, together with providing technical support. Turnover in 2002 was Euros 90 million. It has 38 key distributors covering France and selling to its artisan baker network. The distributors in which Bongard has invested are linked into Bongard’s own buying group, Euromat, which buys non-Bongard supplies for the baker.

In Italy Bongard has a manufacturing site producing mixers near Venice employing 100 people.

In the Benelux and in Spain it has strong sales and support teams. It is into these established structures that the Group can take its overall offering. So now when we look as a Group to Europe it is as a major force which is a long way from our previous modest export offering. We are then well positioned to grow share in some solid markets and have opportunities in growth segments. Our task is to ensure we structure ourselves to enable us to take the chances available. The focus is in the interface with the customer “who shakes the hand of the baker?”. This is our mantra.

To assist the process we are close to completing – using AFE Online’s established technology – a single international catalogue such that for each market the sales company can create its own catalogue, in hard copy or on CD, to meet the particular customer’s and country’s needs. We have produced an annotated version of the new Becker Bongard Dutch catalogue to provide a more detailed explanation of what we are doing for this market and it is available here today. You should note that we are using the established lead brand in each country wherever we are; in the USA Mono, Williams and Bongard products will be distributed under the Adamatic and Belshaw brands; in Europe all products are branded Bongard; in our new Dubai sales office through the Far East and into Australia it is all Williams branded product. For the customer we are one company able to deliver locally, more than a confederation of individual businesses.

So this year the additional story is of the exciting prospects for our sales made of products sourced from other Group companies.

The old foodservice dimension of Williams and Falcon in the Group are also wider beneficiaries of the increased levels of inter-company trading. Williams is already an established supplier to Victory in the USA. What Bongard now offers is an opening through which both businesses can move more directly into the European foodservice market – a segment allied to, but not the same as, the bakery market. Becker in Holland is now using its infrastructure and customer contacts to widen its offering and add new foodservice lines with the support of its established installation and service teams. So nothing can be taken in isolation.

All these initiatives will not be successful without support and indeed Group intervention. We have taken two key initiatives. We have established a cement fund – Group support to finance the new salesmen, engineers and marketeers needed to sell Group products. We will also finance over and above the agreed budgets the additional capital cost of new product development. We are confident that this new funding will provide rapid returns from the additional sales achieved. To emphasise our determination we are providing simple direct bonuses for management linked to sales of products first sold to another Group company for the supplier and then for the actual selling company.

The net cost for the projects highlighted will be less than £1 million. As you can see every company is now involved both locally and internationally.

These two projects highlighted, are typical of the initiatives being developed. In the case of Mono immediate product substitution is underway sourcing equipment from Bongard, Becker and Belshaw. At Adamatic gas rack ovens into Panera Bread is a major part of their sales and a new range of products is being developed by a joint Adamatic and Bongard team.

These established links have helped us win an important new three-year solus supply contract with Sainsbury’s. From 27th April this year we will provide total service cover to all 486 stores as well as provide all refrigeration, bakery and foodservice equipment worth in excess of £10 million per annum. We are entering 2003 with a better balanced and more ambitious business than we were a year ago – William.

Looking now at current trading and the medium term outlook.

Given current political and economic uncertainties we recognise that we should be relying on self help and our own initiatives. The bell weather business remains Aga-Rayburn. Home survey levels, a key indicator, are up well over 10% this year and actual sales so far this year suggest 10,000 is in our sight. Within this the Six-Four series should grow to over 10% of sales. Rayburn, ahead in 2002 at 4,300 sales, should move further ahead this year assisted by a strengthened distributor base and new product variations and designs. Cookware sales continue their rapid growth.

At Fired Earth under Beverley Nielsen’s new energetic leadership the focus is on growing the customer base and obtaining the benefit of the increased space and on improved logistics. We are meeting our targets so far this year. The new brochure, here today, linking Aga specifically with Fired Earth products will support work to use our customer databases more effectively.

Outside the UK new store formats and strengthened distribution structures should start to pay dividends. Domain had opened Fair Oaks, Washington with an Aga Domain “Great Room” format. Princeton, New Jersey, will open shortly and three more will follow this year including a new flagship store in Boston. Aga displays will go into another 10 Domain stores. Domain is now also managing our wider 12 distributor/100 dealer structure that generated Aga’s 300 US sales in 2002. Core Domain remains optimistic, although current circumstances mean that it is trading behind 2002.

With Rangemaster we have a sound base on which to build. The Elan, Classic and Rangemaster II and sink ranges have all started 2003 well and the first half comparatives are not demanding. Rangemaster is also set to move beyond its UK confines. In Europe, for example, we are working with 2 French distributors and now have displays in stores of the leading French kitchen specialist Vogica.

We have put in place for France, a structure that mirrors our US structure, with Dominique Mercier of Grange in the anchor Judy George role. Grange has already refurbished its Marseille store to include Aga and Fired Earth and next week we see the launch of the flagship Aga centre in Grange’s beautiful 10,000 square feet store in central Lyon. Grange has also taken on the French distribution role for Aga and can build on sales of 100 Agas in 2002. As the year progresses the existing Grange structure of owned and owner/driver distributor stores can accommodate more Aga distribution, not just in France but in wider Europe. This can also happen in North America and Aga will have a presence in Grange’s new store in Montreal and in the New York design centre.

In bakery in the UK the strong 2002 is continuing into 2003 in spite of the supermarket bid battles. As we have highlighted, international sales for companies like Mono will be of growing significance.

In the US the order position of Belshaw, in particular, February was a record because of its new Thermoglaze product, and of Victory is encouraging.

On the continent Bongard will benefit from its own reorganisation of the last 2 years. The continent started slowly – particularly in Italy – but orders and enquiries have picked up. Bongard expects to make good progress in 2003.

Taken together, our expectations for 2003 remain unaltered, even though the threats to our markets are obvious.

We continue to look at acquisitions. We have deliberately been managing the position to provide a period in which to assimilate what has been acquired and more specifically to ensure we reinforce success, putting more resource where we are performing strongly. Our investigation of suitable and interesting opportunities continues. The acquired businesses themselves broadened the agenda but we have the basic shape we want in place. Areas remaining at the top of our target list are complementary distribution structures for both consumer and foodservice on the continent and in North America.

In taking these steps, management’s strength is important. The recent appointments of John Lovering, ex-Sears and Homebase, and Helen Mahy of National Grid Transco, as non-executives, together with Judy George of Domain as our US Retail Director and who was recently named one of America’s 25 most influential retailers, are important steps forward in the evolution of the Group.

In addition, keeping on board the team of people that had been driving those businesses pre acquisition has to date been important in supporting our progress.

In conclusion we had a good year in 2002 and we have in place the plans to continue to implement the strategy first set out two years’ ago. We see the most important task is to confirm that the business model we have created is dynamic and effective; capable of generating earnings growth and more particularly of convincing investors that they are buying into a long term growth story. We know we have to adjust rapidly if our markets deteriorate and are ready to do so but to date that remains a contingency. The benchmarks for 2003 are:

- Aga-Rayburn delivering on Project 10,000
- Showing progress for Aga outside the UK and for that to boost Domain and Grange
- For the pump-priming cement projects to deliver real international sales
- Investing the cash on the balance sheet

We remain vigilant but optimistic.