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HERITAGE COLLECTION HOLDINGS
LIMITED
REGISTRATION NUMBER 1998/07269/06
ISIN : 000023594
SHARE CODE: HCL
AUDITED FINANCIAL RESULTS FOR THE
YEAR ENDED 31 DECEMBER 2002
GROUP INCOME STATEMENT Audited Audited
31-Dec-02 31-Dec-01
(R"000) (R"000)
Revenue 110,545 137,081
Operating profit 15,539 3,697
Interest paid (4,831) (4,080)
Operating profit/ (loss) before 10,708 (443)
exceptional items
Bad debt write-off (11,236) (52,273)
Share trust write-off - (3,150)
Litigation settlements - (656)
Loss before taxation (528) (56,522)
Taxation (1,211) (5,517)
Accumulated loss for the period (1,739) (62,039)
Headline loss per share (cents) (7,6) (66,7)
Loss per share (cents) (1,9) (69,8)
Number of shares in issue (R"000) 88,913 88,913
Reconciliation of Headline Loss
Net loss for year (1 739) (62 039)
Share Trust write-off - 3 150
Profit on disposal fixed assets (5 085) (414)
Headline loss (6 824) (59 303)
GROUP BALANCE SHEET
Audited Audited
31-Dec-02 31-Dec-01
(R"000) (R"000)
Assets
Non-current assets 18,901 26,905
Current Assets
Inventory 12,518 16,752
Accounts receivable 65,193 71,857
Cash and cash equivalents 6,873 4,739
84,584 93,348
Total assets 103,485 120,253
Capital employed
Shareholder"s interest 39,000 42,949
Non-current liabilities
Long-term liabilities 8,887 9,789
Provision for post-retirement 2,933 4,028
medical aid benefits
11,820 13,817
Current liabilities
Accounts payable 30,878 37,147
Bank liabilities 21,746 25,909
Taxation 41 431
52,665 63,487
Total equity and liabilities 103,485 120,253
Net asset value per share (cents) 43,9 48,3
GROUP CASH FLOW STATEMENT
Audited Audited
31-Dec-02 31-Dec-01
(R"000) (R"000)
Cash flows from operating 431 (423)
activities
Cash generated from operations 131 (45,987)
Investment income 1021 280
Finance costs (4,831) (4,080)
Net change in working capital 3,825 48,872
Taxation (paid) received 285 492
Cash flows from investing 7,095 (1,072)
activities
Cash flows from financing (1,229) (1,455)
activities
Increase/ (decrease) in cash & cash 6 297 (2 950)
equivalents
Cash & cash equivalents at (21 170) (18 220)
beginning of year
Cash & cash equivalents at end of (14 873) (21 170)
year
STATEMENT OF MOVEMENTS IN EQUITY
Audited Audited
31-Dec-02 31-Dec-01
(R"000) (R"000)
Balance at beginning of year 42 949 105 144
Change in accounting policy - (156)
Restated balance 42 949 104 988
Net loss for the year (1 739) (62 039)
Realisation of deferred tax on (2 210) -
intangibles
Balance at end of year 39 000 42 949
SEGMENTAL ANALYSIS
South Africa Total
(R"000) (R"000)
Revenue 98 709 110 545
Operating profit 1 953 3 282
Assets employed 91 613 103 485
* Operating profit after interest
paid improves by R11,8 million
* Improved debt collection
DIRECTORS" COMMENTS
The operating profit before exceptional items has improved by R11,8 m due to the
effect of cost-savings, restructuring and refocusing of group marketing
activities.
Staff levels and overheads remain an area of focus. Cost reductions can be
expected to continue as a result of this process.
The collection of debt receives high priority with new collection and billing
techniques continually under review. The results of initiatives taken during
the year are starting to manifest themselves with improved collections from
recent mailings and significant recoveries from debtors written off in previous
years.
The focus on cash flow continues, and the resources of the business are
carefully managed.
The non-current assets do not include any intangible value attributed to the
cost of acquiring the licence of the Readers Digest trademark in South Africa.
Our ongoing relationship with Readers Digest Incorporated continues to provide
state-of-the art marketing techniques which have been proven worldwide and up-to
date products at competitive prices in the form of best-selling books, videos
and music collections, which enhance the group"s business prospects.
PROSPECTS
The directors are confident that the group will continue to show improvement and
anticipate an operating profit before exceptional items for the forthcoming
financial year.
The improvement in the rand/dollar exchange rate, if maintained, will be
extremely beneficial to the company as all product-costing is dollar-based.
ACCOUNTING POLICIES
The audited results of the group for the twelve months ended 31 December 2002
have been prepared on a basis consistent with the prior year
The principle accounting policies applied in the preparation of these financial
results conform with the South African statements of Generally Accepted
Accounting Practice.
The financial results have been audited by BDO Spencer Steward (Cape Town) Inc.
and their unqualified audit opinion is available for inspection at the company"s
registered office.
B L LLOYD J A BESTER
Managing Director Financial Director
28 March 2003
Registered address: 10 Mill Street, Newlands, 7708
Transfer Secretaries: Computershare Services Limited
70 Marshall Street, Johannesburg, 2001
Website: www.readersdigest.co.za
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