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HERITAGE COLLECTION HOLDINGS LIMITED - UNAUDITED INTERIM REPORT FOR THE SIX
MONTHS ENDED 30 JUNE 2004
HERITAGE COLLECTION HOLDINGS LIMITED
INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA
REGISTRATION NUMBER 1998/07269/06
ISIN CODE : 000023594
SHARE CODE : HCL
UNAUDITED INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2004
GROUP INCOME STATEMENT Unaudited Unaudited Audited
30 June 30 June 31 Dec
2004 2003 2003
R000`s R000`s R000`s
Revenue 43,492 44,006 99,748
Operating loss (1,679) (7,487) (11,754)
Investment income 62 - 811
Loss on ordinary (1,617) (7,487) (10,943)
activities before
finance cost
Finance costs (1,593) (1,823) (4,558)
Loss before exceptional (3,210) (9,310) (15,501)
items
Forex loss - (3,774) -
Realisation of business (2,352) - -
Additional provision on (3,481) - -
historical debtors
Loss before taxation (9,043) (13,084) (15,501)
Taxation - - 3,671
Total loss for the year (9,043) (13,084) (11,830)
Headline loss per share (10.9) (14.7) (13.3)
(cents)
Loss per share (cents) (10.2) (14.7) (13.3)
Weighted number of
shares issued 88,912,885 88,912,885 88,912,885
Reconciliation of
Headline Loss
Net loss for year (9,043) (13,084) (11,830)
Loss on disposal fixed (632) - (10)
assets
Headline loss (9,675) (13,084) (11,840)
GROUP BALANCE SHEET
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2004 2003 2003
R000`s R000`s R000`s
Assets
Non-current assets 18,746 19,455 17,926
Current Assets 51,118 71,190 70,507
Inventory 10,841 11,704 10,350
Accounts receivable 35,435 52,249 56,173
Cash and cash 4,842 7,237 3,984
equivalents
Total assets 69,864 90,645 88,433
Equity and liabilities
Shareholders` interest 16,375 25,916 26,049
Long Term Liabilities 9,614 8,000 9,523
Current liabilities 43,875 56,729 52,861
Taxation - 41 -
Accounts payable 28,341 34,368 30,908
Current portion of long 67 630 1,333
term liabilities
Cash and cash 15,467 21,690 20,620
equivalents
Total equity and 69,864 90,645 88,433
liabilities
Net asset value per 18.4 29.1 29.3
share (cents)
GROUP CASH FLOW -
STATEMENT
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2004 2003 2003
R000`s R000`s R000`s
Cash flows from 7,943 4,935 (151)
operating activities
Cash generated from (9,177) (11,871) 2,534
operations
Net change in working 17,680 16,806 (2,685)
capital
Taxation paid (560) - -
Cash flows from (757) (17) 556
investing activities
Cash flows from (1,175) (4,498) (2,168)
financing activities
Net change in cash and 6,011 420 (1,763)
cash equivalents
Cash resource at (16,636) (14,873) 14,873
beginning of period
Cash resource at end of (10,625) (14,453) (16,636)
period
STATEMENT OF CHANGES IN
EQUITY
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2004 2003 2003
R000`s R000`s R000`s
Balance at beginning of 26,049 39,000 39,000
period
Net loss for the year (9,675) (13,084) (11,830)
Realisation of - - (1,121)
temporary difference on
intangibles
Balance at end of 16,375 25,916 26,049
period
SEGMENTAL ANALYSIS
30 June 31 Dec
2004 2003
South Other South Other
Africa African Africa African
Countri Countries
es
R000`s R000`s R000`s R000`s
Revenue 40,689 2,803 89,691 10,057
Operating (loss) / (8,755) (288) (3,385)
Profit (8,445)
Assets employed 66,769 3,095 84,537 3,896
COMMENTS
Hercol is showing considerable improvements in its results for the six-month
period under review compared to the same period last year.
These improvements emerge from the extensive consolidation and restructuring
process disclosed last year. The results of this programme are now flowing
through to the income statement.
Revenue is virtually unchanged at levels similar to last year and operating
profit improved by R5,8 million. This reflects management`s policy of
consolidating before moving into an expansionary phase. One significant benefit
of this has been the greatly improved quality of the group`s debtors` book.
Through a process of more focused offers and more refined name selection, bad
debts have been reduced to the satisfactory levels last achieved five years ago.
This has resulted in increasingly positive cash flows which are being used to
reduce gearing levels.
During the period under review, Hercol disposed of its interest in Heritage
Collection.The net effect of this transaction results in the reduction of the
Group liabilities.
The process of business review and restructuring remains ongoing, with overhead
costs having being further reduced by 8% on a year-by-year basis. It is
anticipated that further significant cost savings will occur within the next
reporting period as the company has moved its head office and warehouse to new
premises and additional staff savings have been effected.
The non-current assets do not include intangible value attributed to the cost of
acquiring the Reader`s Digest franchise rights in Sub-Saharan Africa, nor do
they include any value of the group`s wholly owned mailing list of customers.
Management is currently pursuing a number of possible joint venture
opportunities which it is hoped will further help to expand Hercol`s publishing
and marketing activities in the future.
The directors believe that Hercol has effectively reached its turnaround point
and is poised to resume growth.
ACCOUNTING POLICIES
The unaudited results of the group for the six months ended 30 June 2004 have
been prepared on a basis consistent with the Audited Annual Financial Statements
at 31 December 2003. The principal accounting policies conform with the South
African Statements of Generally Accepted Accounting Practice.
ON BEHALF OF THE BOARD
B L LLOYD
Managing Director
CAPE TOWN, 1 October 2004
Registered Address: 21 Dreyer Street, Sanclare Building,
First Floor, Claremont
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd,
4th Floor, Edura House, 41 Fox Street,
Johannesburg, 2001
Website: www.readersdigest.co.za
Date: 01/10/2004 01:39:13 PM
Produced by the JSE SENS Department
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