Headline Group Limited : Welcome

Background

The company was listed on the Australian Stock Exchange (ASX code HLD) in 1993 as Skansen Holdings Limited.

In May 2003, Skansen Holdings Limited changed its name to HomeLeisure Limited.

As a result of the sale of the HomeLeisure Housewares business in 2007, the Company has a contractual obligation to change its name.

The Directors have decided to change the Company name to Headline Group Limited. This name will enable the Company to retain the existing ASX code of HLD. The General Meeting for the name change was held on 24th October 2007.

History - 2005 to June 2008

Headline Group Limited (then known as HomeLeisure Limited) was made up of a disparate group of 8 businesses units, across three Divisions in three Australian States and the United Kingdom.

Gordon Elkington, joined the Company, as Managing Director, in late 2004 and in 2005 set about developing an understanding for the businesses and the markets in which they operated.

The businesses had few actionable synergies and with the exception of the Giftware Division (‘Skansen”), were vulnerable to escalating market pressures. The Giftware Division, although ignored for a number of years, contributed strongly to profitability and cash flow.

The Housewares Division profitability and growth outlook was poor due to cheap imports from China, rising oil prices and increased raw material costs, whilst the Entertainment Division, being in the business of distribution of DVD’s and CD’s, was experiencing piracy, digital downloading and compression of retail price points.

After a period of assessment it became apparent that the company must be restructured and that the level of bank debt, which had peaked at circa $18 million, was unsustainable. The board then set about the complex and time consuming task of disposing of 7 of the 8 businesses units whilst at the same time maintaining a stable environment.

The following highlights the milestones that have been achieved during the period:

2005
- Sale of the Horticulture business.

2006
- Sale of the hardware business.
- Sale of the O’Cedar business.

2007
- Sale of the Central Station Records business.
- Sale of the MRA Entertainment business.
- Sale of the Queensland property (formally housing MRA Entertainment).
- Sale of the Plastics division (completed in November).
- Closure of Skansen’s loss making UK venture.
- Closure of numerous non-trading and discontinued business structures.
- Closure of the premises and restructure of corporate personnel (saving $900,000 per year).
- Name change to Headline Group Limited (HomeLeisure was sold with the Plastics division).
- Evaluated Giftware growth opportunities and commenced turnaround process.
- Identified and investigated more than twenty (20) acquisition opportunities.

2008 (to June)
- Creation of Skansen Pty Ltd as a wholly owned subsidiary of Headline.
- Relocation of Skansen to modern and less expensive premises.
- Restructured Skansen Management (Gordon Elkington became interim CEO to drive improvement).
- Change of financial year end from December to June (reducing complexity and cost).
- Sold the 151 Awaba St property on the NSW Central Coast ($2.8 million expected in September).
- Sought and gained DA approval to correct non compliance issues at 151 Awaba.
- Identified and investigated further five (5) acquisition opportunities.

Summary

Much has been achieved with the result that Headline is now debt free with cash on deposit of $7.1million; circa $13.5 million by December and with the giftware business capable of generating a profit of circa $2 million in the next twelve months and negotiations are in progress with three investment prospects.

In short Headline is secure and well placed to take advantage of business investment opportunities which are now more numerous and more realistically priced as a result of prevailing economic conditions. The key to the way forward is to remain patient while looking for value and real opportunity.

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