| Wed 27 Mar 2002, 0:00 | | Heritage Collection Holdings Limited - Financial R |
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31 December 2001
HERITAGE COLLECTION HOLDINGS LIMITED
REGISTRATION NUMBER 1998/07269/06
FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2001
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited
31 Dec 2001 31 Dec 2000
Revenue 137,081 189,153
Operating 6,493 16,817
profit
Interest paid -4,080 -3,389
Operating profit before 2,413 13,428
exceptional items
Bad debt -52,273
write offs
Inventory -1,616
write off
Share trust -3,150
write off
Litigation -656
settlements
Provision for post retirement -1,178
medical aid benefits
Operating (loss)/profit before -56,460 13,428
taxation
Taxation -5,517 -3,166
Accumulated (loss)/profit for -61,977 10,262
the period
Headline (loss) /earning per -3.5 13.6
share (cents)
(Loss) / Earnings per share -69.7 11.5
(cents)
Number of shares in issue 88,912,885 88,912,885
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited
31 Dec 2001 31 Dec 2000
Assets
Non-current 27,123 38,243
assets
Current
assets
Inventory 16,752 18,412
Accounts 71,857 133,042
receivable
Cash and cash equivalents 4,674 2,704
93,283 154,158
Total assets 120,406 192,401
Capital
employed
Shareholder's 43,167 105,144
interest
Non-current
liabilities
Long-term 9,789 10,941
liabilities
9,789 10,941
Current
liabilities
Accounts 40,452 55,371
payable
Bank 26,567 20,924
liabilities
Taxation 431 21
67,450 76,316
Total equity and liabilities 120,406 192,401
Net tangible asset value per 48,5 118,3
share (cents)
CASH FLOW STATEMENT
Unaudited Unaudited
31 Dec 2001 31 Dec 2000
Cash flows from operating -1,146 -29,786
activities
Cash generated from operations -49,787 -30,009
Net change in working capital 48,524 7,003
Taxation received/(paid) 117 -5,002
Dividend paid 0 -1,778
Cashflows from investing -1,072 -4,442
Cash flows from financing -1,455 10,272
activities
Net change in cash and cash -3,673 -23,956
equivalents
DIRECTORS' COMMENTS
The year under review has been the most difficult year of trading that the
direct mail industry has faced in this country in its history and the
challenges that faced our company were exceptional.
We were faced with the introduction of the National Lottery, the
proliferation of casinos and difficult retail trading conditions, which
harmed our traditional Sweepstakes mailing packages. The rapid growth of
the cell phone industry also took an enormous amount of disposable income
away from our market.
The difficult retail conditions experienced during the 12-month period under
review has had a severe effect on the earnings of the group. The weak
trading conditions were also compounded by the postal strike at the
beginning of the year, the effects of which lasted longer than the actual
strike and which caused disruptions to the normal business through reduced
customer responses, lower cash flow and a delay in marketing activities.
The directors undertook a process of consolidation during the year and
looked at all aspects of the business in preparation for future growth as
and also introduced cost-saving measures. Revenue for the group is down
compared to the previous year, mainly as a result in the softness of the
market and the effect of the previously mentioned factors.
As a result of the consolidation process, mailings were more focused, staff
levels reduced and overheads cut - all which will provide benefits in the
future.
Operating profit (after interest paid) of R2,4 million for the period is
better than break-even and has been calculated before taking into account a
number of exceptional items. These exceptional items form part of the
process of consolidation, some of which relate to the arbitration process
which arose from the aborted New Clicks transaction and some of which,
notably the debtors, arise from the consolidation process that was
undertaken during the year. The group changed its accounting policy during
the year to conform with accounting statement AC116 and has accrued R1,2
million for post retirement medical costs in respect of pensioners. The
prior year effect was R1,8 million.
A complete review of the debtors' book was undertaken and it was decided ,
as a once-off exercise, to write off all doubtful debts and hand these over
to several outside collection agencies for collection. Furthermore, the
company has embarked on an aggressive collection policy using in-house and
external resources. The cash flow of the group has shown considerable
improvement compared to the prior year.
The other exceptional adjustments included a write-down of the loan made by
the company to the staff share option trust, the write-off of inventory not
forming part of future trading of the business and the provision of medical
aid benefits payable in respect of pensioners.
PROSPECTS
As a result of the actions taken, and the more focused mailings, the
directors are confident that the group will make a modest operating profit
in the year 2002. The cost of imported goods has increased due to the
depreciation of the Rand against the Dollar, but despite this, the group is
budgeting profitability in the new financial year.
The group continues to enjoy the enormous benefits of a world-wide flow of
products from Reader's Digest International, who 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 is strong and enables the company to
expand its market through focused marketing without significantly increasing
its costs.
B L LLOYD J A BESTER
Managing Director Financial Director
Registered address:
901 Brodway Centre
Hertzog Boulevard
Heerengracht
Cape Town
8001
Transfer Secretaries:
Computershare Services Limited
4th Floor
Edura House
41 Fox Street
Johannesburg
27 March 2002
