| Thu 6 Sep 2001, 0:00 | | Heritage Collection Holdings Limited - Interim Rep |
|
HERITAGE COLLECTION HOLDINGS LIMITED
REGISTRATION NUMBER 1998/07269/06
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2001
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Unaudited
30 June 2001 30 June 2000 31 Dec 2000
R000's R000's R000's
Revenue
68,479 113,870 189,153
Operating profit
2,632 23,788 16,945
Interest paid
(1,623) (1,115) (3,389)
Operating profit before
exceptional items 1,009 22,673 13,556
Exceptional items:
Bad debt write-offs (44,554)
Inventory write-off (1,094)
Share trust write-off (2,772)
Litigation settlements (656)
Operating (loss)/profit
before taxation (48,067) 22,673 13,556
Taxation
14,666 (4,506) (3,204)
Net (loss) / profit for
the year (33,402) 18,167 10,352
Headline (loss) /
earnings per share 1,1 20.3 13.7
(cents)
Earnings per share
(cents) (36,5) - 11.6
Number of share issue
88,912,885 88,912,885 88,912,885
Weighted number of
share issue 88,912,885 88,912,885 88,912,885
ABRIDGED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Unaudited
30 June 2001 30 June 2000 31 Dec 2000
. R000's R000's
Assets
Non-current assets
50,213 19,939 39,538
Current Assets
Inventory
23,010 26,282 18,412
Accounts receivable
64,687 146,268 130,926
Cash and cash
equivalents 2,521 2,637 2,704
90,218 175,187 152,042
Total assets
140,431 195,126 191,580
Capital employed
Shareholders'
interest 73,659 92,953 107,061
Non-current liabilities
Deferred taxation
586
Long term
liabilities 10,052 3,823 10,941
10,052 4,409 10,941
Current liabilities
Taxation
5,106 21
Accounts payable
34,837 67,395 51,165
Current portion of
long term liabilities 1,218 - 1,468
Cash and cash
equivalents 20,665 25,263 20,924
56,720 97,764 73,578
Total equity and
liabilities 140,431 195,126 191,580
Net tangible asset
value per share (cents) 82.8 104.5 120.4
CASH FLOW STATEMENT
Unaudited Unaudited Unaudited
30 June 2001 30 June 2000 31 Dec 2000
R000's R000's R000's
Cash flows from
operating activities 1,928 (25,015) (27,176)
Cash generated from
operations 1,165 22,673 (27,399)
Net change in
working capital 784 (45,674) 7,003
Taxation paid
(21) (2,014) (5,002)
Dividend paid
- (1,778)
Cash flows from
investing (713) (7,189) (7,052)
Acquisition of
subsidiary net of cash - (1,767) -
acquired
Investments
- (2,610)
Net investment in
tangible assets (713) (5,422) (4,442)
Cash flows from
financing activities (1,139) 3,842 10,272
Net change in debt
(1,139) 3,842 10,272
Net change in cash and
cash equivalents 76 (28,362) (23,956)
Registered address: 901 Broadway Centre, Hertzog Boulevard,
Heerengracht, Cape Town 8001
Transfer Secretaries: Computershare Services Limited,
4th Floor, Edura House, 41 Fox Street, Johannesburg 2001
DIRECTORS' COMMENTS
The difficult retail conditions that have been experienced during the six-
month period under review have had an effect on the earnings of the group.
The weak trading conditions experienced by the group were also compounded by
the postal strike, the effects of which lasted longer than the actual
strike, and which caused disruptions to normal business through reduced
customer responses, lowered cash flow and a delay in marketing activities.
The Directors of the company have agreed that the group undertake a process
of consolidation looking at all aspects of the business and preparing it for
future growth.
Revenue of the group is down 39.9% compared with the same period last year,
mainly as a result of the softness in the market and effect of the postal
strike. As a result of the consolidation process, mailings have become more
focused, staff levels have been reduced and overheads have been cut back.
The cost-cutting exercise that was previously implemented has continued and,
with the current review of costs, will positively increase the earnings of
the group over the next twelve months.
Operating profit of R1 million for the period is marginally better than
break-even and has been calculated before taking into account a number of
exceptional items, some of which form part of the process of consolidation,
and some of which relate to the arbitration process which arose from the
aborted NuClicks transaction. The process of consolidation has also
included a review of the debtors' book and it has been decided to stream-
line the debtors' recovery process by writing off the older portion of the
book, and continuing on an aggressive collection policy using in-house and
external resource.
The NuClicks acquisition process took up much of management's time and,
while an amicable settlement was reached, certain aspects of the business
suffered. Costs relating to the litigation and arbitration process were
written off during the period. It was also decided to write down the loan
made by the company to the Staff Share Option Trust and to write off certain
inventory which does not form part of the future trading of the business.
The focus on the cash flow in terms of the consolidation process has
resulted in a minimal positive net change in cash compared to heavy
borrowings which were incurred during the comparative period ending June
2000. Accounting policies are consistent with those applied during this
competitive period.
PROSPECTS
Whilst it is anticipated that the difficult retail trading conditions will
continue for the following six months, the Directors are confident that,
with the consolidation process achieving the desired results, the group will
make a modest operating profit, before exceptional items, for the current
financial year. It is anticipated that the company will return to normal
profitability in the new financial year. This will be as a result of the
more focused mailing plan, and the more efficient operations in the
warehouse and other areas of the business.
The group continues to occupy a unique position in the world-wide flow of
products from Reader's Digest Incorporated which continues to provide up to
date material at competitive prices in the form of best selling books and
musical titles. The association with Reader's Digest enables the company to
expand its market through focused marketing without significantly increasing
costs.
Heritage Collection household products have been reviewed and the mailing
weeks streamlined. This will result in better quality business and a
contribution to group operating earnings.
B L LLOYD J A BESTER
Managing Director Financial Director
