Heritage Brands : Annual Report 31 July 2021 including Chairman's letter and details of Shareholding

Heritage Brands Ltd and Controlled Entities

ACN 081 149 635

Financial Statements

For the Year Ended 31 July 2021

Heritage Brands Ltd and Controlled Entities

ACN 081 149 635

Contents

For the Year Ended 31 July 2021

	Page
Financial Statements
Chairman's Report	1
Directors' Report	2
Corporate Governance Statement	13
Auditor's Independence Declaration under Section 307C of the Corporations Act 2001	16
Statement of Profit or Loss and Other Comprehensive Income	17
Statement of Financial Position	18
Statement of Changes in Equity	19
Statement of Cash Flows	20
Notes to the Financial Statements	21
Directors' Declaration	53
Independent Auditor's Report	54

Heritage Brands Ltd and Controlled Entities

ACN 081 149 635

Chairman's Report

Dear Shareholder,

Heritage Brands Limited ('Heritage' or the 'Company') is pleased to advise that the Company has delivered a material improvement for the financial year ended 31 July 2021 with EBITDA of $2.1m (FY20: $1.7m) and net profit after tax of $106k (FY20: $2.4m loss).

Heritage continues to be impacted by the Covid lockdowns in key cities and key retailers which has caused a significant downturn in sales in both our beauty and self-tanning brands. However, our investment in pure essential oils and skin care has seen solid growth year-on-year and has been a significant contributor to the improved profitability of the Company.

Despite these challenges, the improved results in 2021 have set the platform for continued improvement through:

• a further restructure of the Company's overhead base which is now more aligned with current and forecast trading conditions;
• negotiating more equitable trading terms and improvement in distribution points with key retailers;
• more targeted and profitable promotional activity, rather than market share at any cost;
• investment in and growth of online ecommerce channels and export initiatives with a focus on our pure essential oil brands and skin care. In particular, In Essence and Le Tan are experiencing strong growth in key Asian markets;
• improving margin within the colour cosmetics portfolio; and
• ensuring that our existing portfolio and all new product development is ethical, sustainable and reduces the impact on our environment and their communities.

In light of the enduring economic impact of the Covid pandemic, especially in New South Wales and Victoria, we will continue to review all aspects of the business. Whilst the start to the first half of the 2022 financial year has shown improved results, we maintain a cautious outlook due to the continued uncertainty surrounding the economic health of retail markets both here and abroad.

Maxim Krok

Chairman

30th September 2021

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Heritage Brands Ltd and Controlled Entities

ACN 081 149 635

Directors' Report

31 July 2021

The directors' submit the financial report of the Heritage Brands Ltd ('the Company') and its controlled entities ('the Group') for the financial year ended 31 July 2021.

1. General information Information on directors

The names, qualifications, experience and special responsibilities of each person who has been a director during the year and to the date of this report are:

KROK, Maxim	Non-Executive Chairman
Qualifications	BProc LLB
Experience	Entrepreneur and Investor with over 37 years' experience across a wide range of
	business sectors, including pharmaceuticals, cosmetics, FMCG and medical
	devices, both as an Executive and Non-Executive Director.
Special responsibilities	Chairman of the Board of Directors
Other current directorships in	None
listed entities
Other directorships in listed	None
entities held in the previous
three years
KAPLAN, Elliott	Director
Qualifications	B Acc, CA
Experience	Extensive board level experience in both private and public listed companies. His
	experience, from both an investor and investee perspective, spans a diverse
	range of industries including manufacturing, environmental, distribution and
	services. Mr Kaplan is the former CEO and MD of CVC Private Equity Limited and
	has served as a non-executive Director and Chairman of a number of unlisted
	companies and ASX listed companies.

Special responsibilities

Other current directorships in listed entities

Other directorships in listed entities held in the previous three years

MASON, Stephen

Qualifications

Experience

Special responsibilities

Other current directorships in listed entities

Other directorships in listed entities held in the previous three years

Chairman of the Remuneration Committee

None

Chairman and non-executive Director of Pro-Pac Packaging Limited

Non-Executive Director

LLB, BComm, DipCM, FCPA, FGIA, FCSA, JP

Former CEO of Creative Brands Pty Ltd and Finance Director of ASX-listed Lemarne Corporation Limited for over 10 years and Company Secretary for 20 years. Currently CEO of the Australian Patients Association.

Member of the Audit, Risk and Corporate Governance Committee None

None

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Heritage Brands Ltd and Controlled Entities

ACN 081 149 635

Directors' Report (continued)

31 July 2021

1. General information

Information on directors (continued)

MCCARTNEY, William	Non-Executive Director
Experience	Over 53 years' experience in the cosmetic fragrance, toiletry, food and flavour
	industries in Australia, South East Asia and China.
	Former MD and CEO of Bronson and Jacobs Group, Sunspirit Aromatherapy,
	Australian Plantations, Essential Oils of Tasmania, Bridestowe Estate, Kenkay
	Pharmaceuticals (for over 35 years) and former Non-Executive Director Leap
	Legal Software. Currently Group Director Business Development Bontoux SA.
Special responsibilities	Member of the Remuneration Committee
Other current directorships in	None
listed entities
Other directorships in listed	None
entities held in the previous
three years
SMITH, Brent	Director
Qualifications	B Bus, F.Fin
Experience	Senior corporate finance executive with over 20 years' experience in principal
	investment and corporate advisory.
Special responsibilities	Chairman of the Audit, Risk and Corporate Governance Committee
Other current directorships in	None
listed entities
Other directorships in listed	None
entities held in the previous
three years
GENDIS, Constantinos	Managing Director and Chief Executive Officer
Qualifications	B. App Sc, Grad Dip Marketing
Experience	Over 27 years' experience in the FMCG Industry both locally and abroad.
Special responsibilities	Managing Director
Other current directorships in	None
listed entities
Other directorships in listed	None
entities held in the previous
three years

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Principal activities and significant changes in nature of activities

The principal activities of the Group during the financial year were the selling and distribution of branded cosmetics, toiletries, skincare, nail care products, oils and fragrances.

There were no significant changes in the nature of the Group's principal activities during the financial year.

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