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JDH - John Daniel Holdings Limited - Terms of a specific issue of shares for cash to related parties JOHN DANIEL HOLDINGS LIMITED Incorporated in the Republic of South Africa Registration number: 1998/013215/06 JSE Code: JDH - ISIN: ZAE000136677 ("the Company" or "JDH" or "the Group") TERMS OF A SPECIFIC ISSUE OF SHARES FOR CASH TO RELATED PARTIES INTRODUCTION Shareholders are advised that the board of directors of the Company propose a specific issue of shares for cash to related parties. REASON AND TERMS OF THE SPECIFIC ISSUE During the last calendar year and financial year ended 30 September 2011 the directors of the Company committed an enormous amount of time to examining and improving the Group`s performance organically and structurally. The Group has prioritised payments to suppliers and funding for working capital to turn the group around as opposed to allocating cash flow to the directors. The liabilities due to each director have been accrued in the books of JDH. The table below reflects proposed payments in shares to each director in order to eliminate amounts due to them. The proposed extinguishing of the respective liabilities are not part of a share incentive scheme and do not render the independent non-executive directors non independent. Accordingly, the Company proposes a specific issue of shares at 7 (seven) cents per share to the directors of the Company, who are related parties in terms of the JSE Listings Requirements ("Listings Requirements"). The Specific Issue and resultant extinguishing of the liability will further strengthen the financial position of the company and demonstrates the commitment of the board to the turnaround of the JDH group. Currently no directors hold shares in JDH. The details of the proposed Specific Issue are as follows: Director Rand value as Number of % of total % of total at 28 shares to issued issued
February 2012 be issued share share capital capital (Pre (Post Specific Specific
Issue) Issue) R Connellan (Chairman)# R80 000 1 142 857 0.31% 0.28% K Rayner# R140 000 2 000 000 0.54% 0.50% B Topham# R80 000 1 142 857 0.31% 0.28% D van der Merwe (FD) R715 691.04 10 224 158 2.75% 2.54% T Gregory (CEO) R1 146 666.01 16 380 943 4.40% 4.07% Total R2 162 357.05 30 890 815 8.31% 7.67% # Independent non-executive Due to the Specific Issue being at a discount of approximately 21% to the 30 day volume weighted average price of JDH, an ordinary resolution will need to be presented and approved by a minimum of 75% of JDH shareholders eligible to vote in general meeting, being all shareholders excluding the related parties and their associates. In terms of the Companies Act, 2008 a special resolution will also be proposed as the issue is to directors. The two resolutions will be inter conditional. A fairness opinion from an independent expert and a fairness opinion from the directors on the Specific Issue in accordance with the Listings Requirements will be included in the circular to qualifying shareholders detailed below. SALIENT COMPARISON The following three transactions bear relevance to the proposed Specific Issue; - The loan agreement with Escalator Capital Limited ("Escalator") provides for a conversion of debt to equity at 6 (six) cents per share. - Lazaron Biotechnologies (SA) Limited ("Lazaron") shareholders have been provided the opportunity to swap Lazaron shares for JDH shares at an effective price of 5 (five) cents per share. - Escalator, through the underwriting of the JDH rights offer converted its loan to the Company at 7 (seven) cents per share. PRO FORMA FINANCIAL EFFECTS The unaudited pro forma financial effects have been prepared to illustrate the impact of the proposed Specific Issue on the reported financial information of JDH for the 15 months ended 30 September 2011, had the proposed Specific Issue occurred on 1 July 2010 for statement of comprehensive income purposes and on 30 September 2011 for statement of financial position purposes. The pro forma financial effects have been prepared using accounting policies that comply with IFRS and that are consistent with those applied in the audited results of JDH for the 15 month period ended 31 September 2011. The unaudited pro forma financial effects set out below are the responsibility of JDH`s directors and have been prepared for illustrative purposes only and because of their nature may not fairly present the financial position, changes in equity, results of operations or cashflows of JDH after the Specific Issue. Before After After After After JDH Lazaron Lazaron Lazaron Rights Assets Rights Rights
Offer acquisitio Offer "C" Offer and "A" n "B" Pro Forma Before "D"
Earnings per share 0.47 0.50 0.50 0.50 (cents) 0.50 Diluted earnings 0.47 0.50 0.50 0.50 per share (cents) 0.50 Headline earning 0.14 0.36 0.36 0.36 per share (cents) 0.36 Diluted headline 0.14 0.36 0.36 0.36 earnings per share (cents) 0.36
Net asset value per 1.73 4.59 4.59 4.59 share (cents) 4.59
Tangible net asset 0.75 4.17 4.17 4.17 value per share (cents)
4.17 Weighted average 150 971 150 971 150 971 150 971 number of shares in issue (`000) 150 971 Number of shares in 157 652 371 938 371 938 371 938 issue (`000)
371 938 After Lazaron Adjustment Adjustment Change (%) Rights Offer after after and Pro Forma Specific Specific
Before "D" Issue to Issue post year end "E" year end "F" Earnings per share 0.50 0.47 0.46 2% (cents) Diluted earnings 0.50 0.47 0.46 (2%) per share (cents) Headline earning 0.36 0.34 0.33 136% per share (cents) Diluted headline 0.36 0.34 0.33 136% earnings per share (cents) Net asset value per 4.59 4.68 4.70 172% share (cents) Tangible net asset 4.17 4.28 4.32 476% value per share (cents) Weighted average 150 971 150 971 150 971 0% number of shares in issue (`000) Number of shares in 371 938 395 349 402 829 156% issue (`000) Assumptions: 1. The "Before" column is extracted from the Company`s audited, published results for the year ended 30 September 2011. 2. For Statement of Financial Position purposes, it has been assumed that the transactions occurred on 30 September 2011 and for Statement of Comprehensive Income Statement purposes the transaction has been assumed to have occurred on 1 July 2010. 3. Column "A" reflects the post 30 September 2011 full subscription for the JDH rights offer to the value of R15 million which was detailed in a circular to shareholders dated 26 September 2011. The proceeds of the rights offer were used to settle non-current liabilities and the balance applied to current liabilities. Transaction costs of R654 000 were treated as share issue expenses. For Statement of Comprehensive Income purposes, the rights offer proceeds were assumed to have been received at the beginning of the period which allowed JDH to avoid incurring the cost of funding included under non-current liabilities comprising raising fees of R821 000 and interest of R726 000. An income tax impact is calculated at the 28% company marginal tax rate. 4. Column "B" reflects the post 30 September 2011 acquisition of Lazaron Biotechnologies (SA) Limited ("Lazaron") assets for an acquisition consideration of R1 million and the subsequent on selling of assets to Cryo-Save SA, which established a 50/50 joint venture with JDH, at the same value. There is no impact on the Group consolidated balance sheet as the assets remain within the Group. Income tax impact is calculated at the 28% company marginal tax rate. 5. Column "C" reflects the post 30 September 2011 Lazaron rights offer, assuming that the rights offer will be fully subscribed for (since the rights offer is only set to close on Friday, 20 January 2012) raising R4.4 million. Cash proceeds generated from non-controlling shareholders amounts to R3.2 million and the balance of R1.2 million raised from JDH following rights. The R1.2 million raised from JDH has been assumed to be utilised to partially repay the intercompany loan account owing to JDH by Lazaron. Income tax impact is calculated at the 28% company marginal tax rate. 6. Column "E" reflects the share issue to settle / capitalise outstanding directors salaries of R1 638 757.05 included in accounts payable at 30 September 2011 at an issue price of 7 cents per share resulting in a total of 23 410 815 new shares being issued. 7. Column "F" reflects the share issue to directors for cash based on the projected cumulative unpaid salaries up until 28 February 2012 amounting to R523 600. The shares are assumed to be issued at 7 cents per share resulting in a total of 7 480 000 new shares being issued. 8. Transaction costs for "E" and "F" estimated to amount to R290 000 and were proportionally allocated to "E" and "F" based on the shares issued. Transaction costs have been treated as share issue expenses. 9. Notional taxation of 28% has been assumed on the transaction costs. DOCUMENTATION AND SALIENT DATES A circular to qualifying shareholders detailing the terms of the Specific Issue and containing a notice of general meeting will be drafted and delivered to relevant shareholders within 28 days of this announcement, failing which approval will be sought from the JSE to deliver at a later date. Salient dates of the general meeting to present and approve the inter conditional ordinary and special resolutions shall be announced in due course. Johannesburg 19 January 2012 Sponsor Arcay Moela Sponsor (Proprietary) Limited Date: 19/01/2012 10:30:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
