FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of November
Commission File Number
WATERFORD WEDGWOOD PLC
(Translation of registrant's name into English)
1/2 UPPER HATCH ST, DUBLIN 2, IRELAND
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F..X.. Form 40-F.....
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ..... No ..X...
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ________
Waterford Wedgwood plc
("Waterford Wedgwood" or "the Group")
Interim Results for the six months to 30 September 2004
Interim results to 30 September 2004
Waterford Wedgwood, the luxury lifestyle group, today reports a pre-tax profit
of EUR8.9 million for the six months to 30 September 2004, compared with a loss
before tax of EUR44.8 million for the same period in 2003. This pre-tax profit
includes an exceptional profit of EUR103.2 million from the sale of All-Clad,
the US-based premium cookware business. Operating loss for the period was
EUR21.4 million compared with a EUR4.2 million profit for the same period in
2003.
Highlights
- Net debt is EUR280.7 million, down from EUR429.9 million at 30 September
2003. The All-Clad proceeds substantially reduced long-term debt and
facilitated ongoing balance sheet restructuring
- As announced on 21 October 2004, sales for the six months to September
30 were EUR356.0 million. On a like-for-like basis (adjusted for the
All-Clad disposal and currency movements), this was 5% down on 2003
- Reported sales (including All-Clad and at actual exchange rates) fell
more sharply, from EUR405.8 million to EUR356.0 million
- The changes outlined in our Plan for Growth in June are in progress.
These interim results include a charge of EUR25.3 million for working
capital reduction programme. Substantial inventory reduction is
currently being implemented. Price increases have been announced in
major markets, to be implemented in the first quarter of calendar 2005
- Current trading remains very challenging. October sales were 10% down
on the same period last year on a like-for-like basis (excluding
All-Clad and currency movements) although indications on trading in
November suggest some improvement
Royal Doulton Update
- Discussions with Royal Doulton about a possible recommended offer are
progressing. There can be no certainty that a formal offer will be made
- A circular will be issued to shareholders shortly to convene an
extraordinary general meeting at which various shareholder approvals
will be sought. These approvals are required for the purpose of the
proposed underwritten Rights Issue announced on 21 October
Redmond O'Donoghue, Group Chief Executive, commented:
"As previously advised, although market share was maintained, sales in the six
months were disappointing. Our Group and our industry continue to face
challenging times.
"While we enjoy market-leading positions in each of our product areas, we accept
that these results are not good enough. We have considerably strengthened senior
management and mapped out our Plan for Growth. We are committed to implementing
this strategy as quickly as possible.
"A successful acquisition of Royal Doulton would increase the volume through our
factories without substantially increasing production costs, as well as
providing further synergistic benefits. Evaluation of the possible offer for
Royal Doulton, announced at our AGM on 21st October 2004, is progressing.
Consistent with this, the posting of the shareholder circular is a tangible step
forward.
"Current trading remains difficult. However, indications on trading in November
suggest some improvement."
Enquiries:
Waterford Wedgwood +353 1 4781 855
Redmond O'Donoghue, Group Chief Executive Officer
Peter Cameron, Group Chief Operating Officer
Paul D'Alton, Group Chief Financial Officer
Powerscourt (UK/International media) +44 207 236 5615
Rory Godson +44 7909 926 020
Dennehy Associates (Ireland) +353 1 676 4733
Michael Dennehy +353 87 2556923
College Hill (Investor Relations) +44 207 457 2020
Kate Pope +44 7798 843276
Mark Garraway +44 7771 860938
Waterford Wedgwood plc
("Waterford Wedgwood" or "the Group")
Chief Executive's Statement
At this stage last year, we reported some signs of improvement. Unfortunately,
the improvements proved to be a temporary respite and the six months to 30
September 2004 have been very difficult, illuminated only by the sale of
All-Clad, our US premium cookware business, for a very favourable price, and by
our negotiation of a new bank lending facility with more flexible terms.
As announced on 21 October 2004, total sales for the six months to 30 September
2004 were EUR356.0 million, down 5% on a like-for-like basis (at constant
currency and excluding All-Clad). At actual exchange rate and including
All-Clad, sales were down 12% from EUR405.8 million. Sales were lower for a
number of reasons including reduced revenues from the United States due to the
weakness of the US Dollar and a softening of customer demand in the core markets
of the UK and the US. Weaker demand was experienced across the industry.
Although we benefited from reduced costs in the period, these reductions were
not enough to shield us from the impact of lower sales revenues and the falling
value of the US Dollar. Operating profit of EUR4.2 million in the same period
last year thus became an operating loss of EUR21.4 million in the period under
review.
Financing costs were EUR43.8 million, up from EUR12.9 million. This was largely
due to a series of one-off payments relating to the new financing arrangements
put in place during the half-year. EUR13.7 million was written off for the costs
of previous refinancing. In addition, there were EUR5.8 million of makewhole
payments to holders of Private Placement Notes, EUR4 million of fees to our
former bank syndicate and EUR2.7 million of amortisation of the
previously-incurred financing costs. The balance was due to interest payments.
In addition to these non-recurring financing charges, we have implemented
certain strategic decisions that have impacted these half-year results, such as
inventory reduction charges, the cost of downtime at our manufacturing plants
and a decision to exit certain retail channels in the United States incompatible
with our brands' image. We feel that these strategic decisions will be of
benefit going forward.
The sale of All-Clad for $250 million cash (EUR206 million) and the resultant
gain enabled the Group to return to profitability despite losses at an operating
level. The gain on the All-Clad disposal was EUR103.2 million which helped to
mitigate the effects of the substantial financing-related charges, further
dollar weakness and the charge of EUR25.3 million to our profit and loss account
caused by our programme to reduce working capital. The net effect was to turn
the operating loss into a pre-tax profit of EUR8.9 million compared with a
pre-tax loss of EUR44.8 million a year earlier.
Trading since the end of the half-year has continued to be difficult. Sales in
October were down 10% on the same period last year on a like-for-like basis
(excluding All-Clad and currency movements), although indications on trading in
November suggest some improvement.
As outlined in June, we are implementing a six-point Plan for Growth, which is
intended to substantially reduce costs, improve margins and restore our Group to
operating profitability and long-term growth. For example, we have already
reduced our Stock Keeping Units ('SKUs') by 40%, thereby reducing our working
capital requirement, and have announced price increases in major markets, to be
implemented in the first quarter of calendar 2005.
The possible recommended offer for Royal Doulton is a very attractive prospect
which we believe would contribute to the consolidation of the ceramics industry.
These discussions are progressing and we will issue further updates in due
course; however, there can be no certainty that a formal offer will be made. A
circular will be issued shortly to convene an extraordinary general meeting at
which independent shareholder approval will be sought for a waiver under Rule 9
of the Irish Takeover Rules which has been granted by the Irish Takeover Panel;
additionally, shareholder approval will be sought for an increase in authorised
share capital and renewal of various allotment authorities, each for the
purposes of the proposed Rights Issue.
Despite current difficulties, we remain confident of the long-term prospects of
this business for the following reasons:
- We have world-leading brands with strong market positions in some of
the world's leading economies including the US, Japan and the UK
- Those brands are in remarkably good shape and continue to enjoy
premium pricing
- Our plants are world-class and have had huge capital and state-of-
the-art restructuring investment (c. EUR300 million) in recent years.
Our incremental unit costs are comparable to China, resulting in a
direct benefit to the bottom line from any growth in sales
- The All-Clad experience demonstrates how we can transfer our marketing
skills to new product areas
- Our strong designer alliances (e.g. Vera Wang, John Rocha, Jasper
Conran) remain an important and growing part of our business
Sector Overview
Crystal
The Group's crystal brands recorded sales of EUR120.8 million (2003: EUR135.4
million), down 7.1% at constant exchange rates (10.8% at prevailing rates),
mainly due to continued weaker trading for Waterford Crystal in the United
States. Crystal sales in most other territories including Ireland, the UK and
mainland Europe maintained or improved on the same period last year. To address
this, John Foley, chief executive of Waterford Crystal, has been given the added
responsibility for the Waterford business in the United States and is now based
in this important market, from which he is giving renewed focus and energy to
Waterford's worldwide business. In October, we launched a new range, Black by
John Rocha. The alliance with John Rocha has been successful for a number of
years.
Ceramics
Sales of ceramic products were EUR158.4 million (2003: EUR170.3 million), down
7.1% at constant exchange rates (7.0% at prevailing rates) due to continuing
market softness in the US and UK. More encouragingly, sales in the important
Japanese market remained level. A number of new ranges will be presented to the
market in the near future.
Other products
Our other products sales were EUR52.6 million (2003: EUR55.6 million), up 0.4%
at constant exchange rates (down 5.4% at prevailing rates). This segment
includes Spring, our Swiss-based premium cookware company, which enjoyed growth
of 19%.
Plan for Growth
In June, we announced our six point Plan for Growth, the key strategy to return
your group to financial health. We have made progress under each of the
headings:
- Sale of All-Clad
All-Clad has been sold for an attractive price; this has facilitated our
actions to reduce working capital.
- Working Capital
The business uses too much working capital. This is being reduced,
principally through a reduction in inventory. We have introduced short-time
working throughout our manufacturing operations. This has reduced our cash
costs and is helping to lower inventory.
- Marketing Spend
We are committed to increased marketing expenditure over the next two years
in order to drive revenue growth, notwithstanding the current difficulties
of the business.
- Marketing Initiatives
Waterford, Wedgwood and Rosenthal are each developing a set of exciting
marketing initiatives to be introduced next year. These are expected to
contribute to sales growth in fiscal 2006 and beyond. Black by John Rocha
has been launched to encouraging indications.
- Increased Factory Utilisation
Over the past seven years, we have invested about EUR300 million in
technology and rationalisation of plants. This gives us low incremental
unit costs. A successful acquisition of Royal Doulton would increase the
volume through our factories without substantially increasing production
costs.
- Strengthened Management:
During the period, Peter Cameron was appointed Chief Operating Officer,
Paul D'Alton was appointed Chief Financial Officer and John Foley, who was
given worldwide responsibility for Waterford Crystal, has relocated to the
US, our most important market.
Redmond O'Donoghue
Group Chief Executive
19 November 2004
Waterford Wedgwood plc
("Waterford Wedgwood" or "the Group")
Consolidated Profit and Loss Account
6 months ended
(unaudited)
30 September 30 September
Note 2004 2003
EURm EURm
Sales by category
Crystal 120.8 135.4
Ceramics 158.4 170.3
Other products 52.6 55.6
----------- -----------
Total sales - continuing operations 331.8 361.3
Discontinued operations 24.2 44.5
----------- -----------
Total Group sales 356.0 405.8
=========== ===========
Group operating loss - continuing
operations (23.7) (1.8)
Discontinued operations 2.3 6.0
----------- -----------
Total Group operating (loss)/profit (21.4) 4.2
Profit on sale of All Clad business 103.2 -
Loss relating to working capital
reduction (25.3) -
programme
Loss relating to restructuring and
severance cost (3.2) (32.7)
Profit on sale of fixed assets 2.1 -
Goodwill amortisation 5 (2.7) (3.4)
----------- -----------
Group profit/(loss) before financing 52.7 (31.9)
costs
Financing costs 3 (43.8) (12.9)
----------- -----------
Profit/(loss) on ordinary activities
before taxation 8.9 (44.8)
Taxation on profit/ (loss) on ordinary
activities (0.7) 1.7
----------- -----------
Profit/ (loss) on ordinary activities
after taxation 8.2 (43.1)
Minority interests (0.6) 0.4
----------- -----------
Retained profit/ (loss) for the period 7.6 (42.7)
----------- -----------
Loss per ordinary share before goodwill
amortisation and exceptional items 4 (4.71c) (0.79c)
(cents)
Earnings/ (loss) per ordinary share
(cents) 4 0.76c (5.15c)
Diluted earnings/ (loss) per ordinary 0.76c (5.15c)
share (cents)
Waterford Wedgwood plc
("Waterford Wedgwood" or "the Group")
Consolidated Balance Sheet
As at
(unaudited)
30 September 30 September
2004 2003
Note EURm EURm
Fixed assets
Intangible assets 5 42.1 106.5
Tangible assets 183.0 207.9
Financial assets 14.5 14.8
----------- -----------
239.6 329.2
=========== ===========
Current assets
Stocks 289.0 307.2
Debtors 152.0 193.2
Cash and deposits 26.6 32.3
----------- -----------
467.6 532.7
Creditors (amounts falling due within
one
year) (160.8) (201.6)
Bank loans and overdrafts - (49.4)
----------- -----------
Net current assets 306.8 281.7
----------- -----------
Total assets less current liabilities 546.4 610.9
Creditors (long and medium debt) (307.3) (412.8)
Other long term creditors (37.3) (36.2)
Provisions for liabilities and charges (1.2) (1.1)
----------- -----------
200.6 160.8
=========== ===========
Capital and reserves
Called up share capital 73.5 57.2
Share premium account 213.7 194.3
Revaluation reserve 7.2 9.3
Profit and loss account (100.6) (106.3)
Capital conversion reserve fund 2.6 2.6
----------- -----------
Shareholders' funds - equity interests 196.4 157.1
Minority interests - equity interests 4.2 3.7
----------- -----------
200.6 160.8
=========== ===========
Waterford Wedgwood plc
("Waterford Wedgwood" or "the Group")
Consolidated Cash Flow
6 months ended
(unaudited)
30 September 30 September
2004 2003
EURm EURm
Group operating (loss)/ profit (21.4) 4.2
Restructuring spend (9.2) (11.3)
Depreciation 17.7 18.5
Working capital (29.5) (52.7)
----------- -----------
Cashflow from operations (42.4) (41.3)
Financing costs (29.6) (14.1)
Capital expenditure (net) (2.0) (19.8)
Taxation paid (2.2) (5.9)
Dividends paid - (7.6)
----------- -----------
Net Group cashflow (76.2) (88.7)
Exchange (0.1) 15.5
Disposal of All Clad business 194.9 -
Amortisation and write-off of financing fees (16.4) -
Opening debt (382.9) (356.7)
----------- -----------
Closing debt (280.7) (429.9)
=========== ===========
Waterford Wedgwood plc
("Waterford Wedgwood" or "the Group")
Reconciliation of movement in shareholders' funds
6 months ended
(unaudited)
30 September 30 September
2004 2003
EURm EURm
Profit/ (loss) for the period 7.6 (42.7)
Exchange translation effect on net overseas
investments (5.5) (1.7)
----------- -----------
Total recognised gains/(losses) for the
period 2.1 (44.4)
Scrip dividend - 1.7
Shareholders' funds at beginning of period 194.3 199.8
----------- -----------
Shareholders' funds at end of period 196.4 157.1
=========== ===========
Notes to the Interim Consolidated Financial Statements
1. Basis of Preparation of Unaudited Interim Consolidated Financial
Statements
These unaudited interim consolidated financial statements have been prepared
applying the accounting policies described on page 14 of the published accounts
for the year ended 31 March 2004.
2. Exchange Rates
Euro exchange rates used to translate the results of the Group's principal
overseas subsidiaries were as follows:
Profit and loss
transactions
6 months ended Balance sheet as at
30.09.04 30.09.03 30.09.04 30.09.03
U.S. Dollar $1.21 $1.13 $1.24 $1.17
Sterling GBP0.67 GBP0.70 GBP0.69 GBP0.70
Yen Y133.42 Y133.59 Y137.28 Y129.57
3. Financing costs
6 months ended 6 months ended
30 September 2004 30 September 2003
EURm EURm
Interest and related costs 21.6 12.9
Amortisation of financing fees 2.7 -
Write-off of financing fees 13.7 -
Makewhole payments 5.8 -
-------------- -------------
Total financing costs 43.8 12.9
-------------- -------------
4. (Loss)/earnings per Ordinary Share
6 months ended 30 6 months ended 30
September 2004 September 2003
Profit/ No. of Per Profit/ No. of Per
(loss) shares share (loss) shares share
EURm millions cents EURm millions * cents
Loss for the
financial period
before goodwill
amortisation and
exceptional items (47.0) 997.0 (4.71) (6.6) 829.9 (0.79)
Profit on sale of
All Clad 103.2 997.0 10.34 - - -
business
Loss relating to
working capital
reduction programme (25.3) 997.0 (2.54) - - -
Loss relating to
restructuring and
severance cost (3.2) 997.0 (0.32) (32.7) 829.9 (3.95)
Profit on sale of
fixed 2.1 997.0 0.21 - - -
assets
Write off of (13.7) 997.0 (1.37) - - -
financing fees
Makewhole payments (5.8) 997.0 (0.58) - - -
Goodwill (2.7) 997.0 (0.27) (3.4) 829.9 (0.41)
amortisation
------- -------- -------- ------- -------- -------
Profit/(loss) for
the 7.6 997.0 0.76 (42.7) 829.9 (5.15)
financial period ======= ======== ======== ======= ======== =======
*The weighted average number of shares and the earnings per share for the 6
months ended 30 September 2003 have been adjusted to reflect the bonus element
of the rights issue which was announced in November 2003.
5. Intangible assets - Goodwill
EURm
Balance at 31 March 2004 100.4
Goodwill amortisation (2.7)
Charged to profit on sale of the All Clad business (56.6)
Exchange 1.0
-------
Balance at 30 September 2004 42.1
=======
Goodwill amortisation from continuing operations amounted to EUR1.4 million (30
September 2003: EUR1.4 million) and from discontinued operations amounted to
EUR1.3 million (30 September 2003: EUR2.0 million)
6. Restructuring and rationalisation provision
EURm
Balance at 31 March 2004 9.3
Charged to the profit and loss account 3.2
Utilised (9.2)
-------
Balance at 30 September 2004 3.3
=======
7. Net debt
Net debt at 30 September 2004 comprising borrowings less cash and deposits and
unamortised debt issue costs amounted to EUR280.7 million (30 September 2003:
EUR429.9 million).
8. Listed investment
The Group holds 21.16% of the issued share capital of Royal Doulton plc. The
market value of this investment at 30 September 2004 was EUR7.1 million based on
a share price of GBP0.07. The book carrying value at 30 September 2004 was
EUR8.8 million.
9. Contingent asset
Under the agreement for the sale of the All-Clad business, the Group may become
entitled to an additional contingent consideration dependent upon the final
agreed net worth of the All-Clad business at the point of sale.
Independent review report to Waterford Wedgwood plc
Introduction
We have been instructed by the company to review the financial information set
out on pages 6 to 12. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the Board of Directors. The
directors are responsible for preparing the interim report in accordance with
the Listing Rules of the Irish Stock Exchange which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board applicable in Ireland. A review consists
principally of making enquiries of management and applying analytical procedures
to the financial information and underlying financial data, and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with Auditing Standards applicable in Ireland and, therefore,
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information. This report has been
prepared for and only for the company for the purpose of the Listing Rules of
the Irish Stock Exchange and for no other purpose. We do not, in producing this
report, accept or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Review conclusion
On the basis of our review, we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2004.
PricewaterhouseCoopers
Chartered Accountants
Dublin
19 November 2004
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Waterford Wedgwood PLC
(Registrant)
By: Patrick Dowling
(Signature)*
Date:19 November 2004