Wrap Text
Reviewed Second Interim Financial Statements for the 12 Months Ended 30 September 2012
JOHN DANIEL HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: JDH - ISIN: ZAE000044343
("the Company" or "JDH" or "the Group")
REVIEWED SECOND INTERIM FINANCIAL STATEMENTS FOR THE 12 MONTHS
ENDED 30 SEPTEMBER 2012
OPERATIONAL REVIEW
Group overview
The Directors are pleased to inform shareholders of sustained
improvement in the Group’s performance for the period under
review, resulting in a return to profitability. The Group’s
restructuring continues to benefit the subsidiaries resulting in
an improvement in the period, remedying solvency issues and
generating substantial revenue growth.
The Company changed its year end to 31 December each year and
accordingly reviewed results for the 12 months ended 30
September 2012 have been presented in accordance with the JSE
Listings Requirements.
Turnover increased by 323% to R27 million for the 12 month
period ended 30 September 2012 compared to the comparative
period for the 15 months ended 30 September 2011. The Group’s
net asset value improved to 4.76 cents per share, an increase of
175%, notwithstanding an increase of 182% in the issued share
capital of the Company. Total tangible net assets increased to
R21.1 million from R2.7 million, an improvement of 674%. The
current ratio is 1.82 with current assets exceeding current
liabilities by R8.8 million.
JDH continues to conduct business as an investment holding
company, focusing on investing in companies which operate in
niche markets that are strategic in nature. Preference is given
to companies which have clear African and Global markets. In
particular, these companies are required to produce products or
provide services with high barriers to entry and generate high
gross profit margins.
Below is an overview of the JDH Group’s operations during the
period.
Biotechnology
The Group’s Biotechnology operations incorporate the results of
Cryo-Save SA (Pty) Ltd (“Cryo-Save SA”) and Lazaron
Biotechnologies (SA) Limited (“Lazaron”). The combined turnover
of the two companies contributed 56% of the Group’s total
turnover and amounted to R15.3 million for the 12 month period.
This represents an increase of 164% compared to the 15 month
comparative period.
In terms of the agreement between Cryo-Save NV and JDH, Cryo-
Save NV established a state of the art cryogenic laboratory in
Cape Town as the operational base of Cryo-Save SA. The new
facility operates to the highest quality standards applied
internationally by Cryo-Save Group NV. The new Cryo-Save SA lab
became fully operational in October 2011.
The Biotechnology operations expanded into two other African
countries during the period. The African expansion will continue
with the objective of establishing Cryo-Save SA as the pre-
eminent family stem cell bank in Africa.
The restructuring has resulted in Lazaron becoming profitable
for the first time since its incorporation. The directors
continue to evaluate further opportunities for Lazaron.
Agricultural packaging
Vinguard Limited’s (“Vinguard”) turnover increased by 775% from
R368 000 for the 15 months to 30 September 2011 to R3.2 million
for the 12 months to 30 September 2012.
The restructuring of Vinguard’s operations and the reengineering
of the production process evidenced significant reduction in the
manufacturing cost per unit during the period under review. This
enhanced the Company’s competitiveness and resulted in increased
market share under difficult market conditions.
Vinguard’s local season begins in October and the loss reported
for the period under review reflects the gearing up for the new
season.
Vinguard is now well positioned to expand in the market segments
in which it competes.
Financial services
JDH Credit Services (Pty) Ltd (“Credit Services”) reflected
similar growth as the rest of the group. During the period under
review the loan book increased by 184.21% from R3.8 million at
30 September 2011 to R10.8 million by 30 September 2012,
excluding interest and fees.
JDH acquired 100% of Credit Services effective 1 September 2011.
The acquisition was the first in the new JDH Financial Services
Division.
The unsecured micro finance environment is growing at a rapid
rate and Credit Services is ideally positioned to maximise the
opportunity. Credit Services provides loans to third party
company employees and secures repayment through the payroll
deductions.
The primary cost in the business is interest on loan capital
required to fund the growth of the loan book. Management are
actively seeking alternative funding options to reduce costs,
thereby improving profitability.
PROSPECTS
Key elements of the on-going restructure process are the
continued turnaround of subsidiaries through product and market
extension, aggressive trading and cost reduction, expansion into
selected African countries and the acquisition of new
subsidiaries which are profit generating and aligned with the
group’s strategy.
The abovementioned approach is aimed at developing a robust and
complementary Group of companies which provide sustainable
returns.
RESULTS
Presented below are the reviewed results for the 12 month period
ended 30 September 2012.
Reviewed Statement of Financial Position as at 30 September 2012
30 30
September September
2012 2011
Reviewed Audited
Group Group
R’000 R’000
ASSETS
Non-current assets
Property, plant and equipment 4 764 4 572
Intangible assets 1 825 1 555
Other financial assets 3 957 2 323
Deferred tax 11 233 11 404
Total current assets 19 400 6 293
TOTAL ASSETS 41 179 26 147
EQUITY AND LIABILITIES
Equity 21 126 2 729
Non-controlling interest 677 1 118
Non-current liabilities
Interest bearing borrowings 8 012 13 477
Deferred tax 733 495
Total current liabilities, short
term interest bearing borrowings
and shareholders’ loans 10 631 8 328
TOTAL EQUITY AND LIABILITIES 41 179 26 147
Net asset value 21 126 2 729
Net tangible asset value 19 301 1 173
Net asset value per share (cents) 4.76 1.73
Net tangible asset value per share
(cents) 4.35 0.75
Reviewed Statement of Comprehensive Income for the 12 months
ended 30 September 2012
12 months 15 months
ended 30 ended 30
September September
2012 2012
Reviewed Audited
Group Group
R’000 R’000
REVENUE 27 319 6 464
COST OF SALES (9 130) (2 484)
GROSS PROFIT 18 189 3 980
Other income 1 310 2 260
Selling, distribution and
administration expenses (16 312) (12 396)
PROFIT / (LOSS) BEFORE NET FINANCE
COSTS AND TAXATION 3 187 (6 156)
Net finance costs (2 131) (999)
Taxation (438) 7 435
PROFIT FOR THE YEAR 618 280
Attributable to non-controlling
interest (614) 426
NET PROFIT ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS 1 232 706
BASIC AND HEADLINE EARNINGS
Basic earnings 1 232 706
Headline earnings 1 240 204
Basic earnings per share (cents)
attributable to equity holders of
the parent 0.30 0.47
Headline earnings per share (cents)
attributable to equity holders of
the parent 0.31 0.14
Number of shares in issue 444 131 678 157 652 363
Weighted average number of shares 404 471 183 150 970 550
RECONCILIATION BETWEEN BASIC
EARNINGS AND HEADLINE EARNINGS
IAS 33 Basic earnings 1 232 706
IAS 16 Loss disposal of property
plant and equipment 8 30
IAS 36 Reversal of impairment of
intangible assets - (532)
Headline earnings 1 240 204
Reviewed Segmental Information for the 12 months ended 30
September 2012
R’000 R’000 R’000 R’000 R’000 R’000
12 months ended 30
September 2012
Biotech- Packag- Financia Corporat Elimin- Consoli
nology ing l e ations -dated
Revenues 15 280 3 220 3 664 8 271 (3 117) 27 319
TOTAL
EXTERNAL
REVENUE 27 319
Operating
profit/(lo (444) (1 804) 2 253 4 518 (1 336) 3 187
ss)
15 months ended 30
September 2011
Biotech- Packag- Financia Corporat Elimin- Consoli
nology ing l e ations -dated
Revenues 5 797 368 126 1 549 (1 376) 6 464
TOTAL
EXTERNAL 6 464
REVENUE
Operating
profit/(lo (2 944) (361) (49) (2 802) - (6 156)
ss)
Reviewed Statement of Changes in Equity for the 12 months ended
30 September 2012
Share Non Accumul- Minority Total
capital distribute- ated loss interest equity
able
reserves
R’000 R’000 R’000 R’000 R’000
Balance at 1
July 2010 35 665 7 729 (42 225) (433) 736
Total
comprehensive
profit for
the 15 months - - 706 (426) 280
Issue of 831 - - - 831
shares
Change in
ownership - 23 - (23) -
Business
combinations - - - 2 000 2 000
Balance at 30
September
2011 36 496 7 752 (41 519) 1 118 3 847
Total
comprehensive
profit for
the 12 months - - 1 232 (614) 618
Issue of 18 900 - - - 18 900
shares
Change in
ownership - (1 736) - 1 460 (276)
Business
combinations - - - (1 287) (1 287)
Balance at 30
September
2012 55 396 6 016 (40 287) 677 21 802
Reviewed Cash Flow Statement for the 12 months ended 30
September 2012
12 months 15 months
ended 30 ended 30
September September
2012 2011
Reviewed Audited
Group Group
R’000 R’000
NET CASH OUTFLOW FROM OPERATING
ACTIVITIES (12 412) (8 406)
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES (3 465) (582)
NET CASH INFLOW FROM FINANCING
ACTIVITIES 15 967 9 263
Increase in cash and cash
equivalents 90 275
Cash and cash equivalents at the
beginning of the year 309 34
Cash and cash equivalents at the end
of the year 399 309
Notes to the Financial Statements for the 12 months ended 30
September 2012
REVIEW OF RESULTS AND FINANCIAL POSITION
The 30 September 2012 consolidated reviewed financial results
represents the trading results of the JDH corporate head office
and its subsidiaries active in the financial services,
biotechnology and agricultural packaging markets.
The JDH restructure process initiated in September 2010
materially impacted on the operations of the group during the 30
September 2011 financial period. The changes included, inter
alia, the re-constitution of the board of directors,
repositioning the strategic direction of the Group and its
trading subsidiaries, aggressive cost reduction measures in
certain operational areas while increasing investment in others.
The benefits of the measures implemented resulted in improved
trading performance during the last quarter of the 30 September
2011 financial period. These improvements continued to realise
enhanced operational performance during the 12 months ended 30
September 2012.
Strategic acquisitions contributed to both profitability and
sustainability.
In addition, the directors announced two partially underwritten
rights offers in June 2011 to recapitalise the Group and ensure
its solvency. The JDH rights offer of R15 million concluded in
October 2011 and was fully subscribed. The R4.4 million rights
offer announced by the board of Lazaron concluded in January
2012 and raised R3.2 million including a further R1.5 million
investment by JDH in Lazaron. These actions also reduced the
external interest burden.
The impact of the restructure measures are reflected in the
improved trading performance of the Group.
Group turnover increased to R27.3 million for the 12 months
ended 30 September 2012. This is a 323% increase in turnover
compared to the R6.5 million achieved for the comparative 15
months ended 30 September 2012.
Operational expenses increased by 40.6% to R16.3 million for the
12 months ended 30 September 2012 compared to the R11.6 million
for the 15 months ended 30 September 2011. Key elements of the
increase include the startup costs for the new Cryo-Save
operation, moving the companies’ offices to new premises, the
increase in shared services infrastructure to facilitate the new
acquisitions and the increased operational expenses resulting
from investment in operational support structures and resources
required to underpin the continued turnover growth.
The increase in operational expenses of 40.6% was leveraged in
the period to grow turnover by 323%, resulting in a profit
before interest and taxation (“EBIT”)of R2.2 million compared to
the loss of R5.3 million for the comparative period.
The reduction in non-controlling interest is due to a
combination of the subsidiaries improved operational results and
the increase in JDH’s investment in Lazaron.
The result of the restructure process and the corporate actions
is reflected in the dramatic improvement in the Group’s
statement of financial position; which is largely due to the:
- Improvement in operational results with turnover
translating into accounts receivable and cash receipts;
- The funding of the Credit Services short term loan book
with long term funding;
- Stringent overhead controls; and
- The recapitalisation of the Group through the JDH and
Lazaron rights offers.
The strategy of combining aggressive management of existing
subsidiaries and further strategic acquisitions is aimed at
ensuring the future sustainability of the Group.
CORPORATE ACTIONS
The directors announced two partially underwritten rights offers
in June 2011 with the main objective of recapitalising the
Group.
The JDH rights offer concluded on 14 October 2011 and was fully
subscribed, resulting in 214 285 714 rights offer shares being
issued to shareholders, shareholders who applied for excess
shares and Escalator the underwriter. By virtue of its
underwriting, Escalator became the controlling shareholder in
JDH, exceeding the 35% mandatory offer threshold. The JDH
minority shareholders approved a waiver of the mandatory offer
from Escalator in a general meeting held on 17 October 2011.
The Lazaron corporate action comprised of a:
- section 112 disposal of assets;
- R4.4 million rights offer;
- general offer by JDH to Lazaron’s shareholders to acquire
the Lazaron shares in exchange for JDH shares in the ratio
5 Lazaron shares for 1 JDH share; and
- Section 124 compulsory acquisition to acquire the balance
of the Lazaron shares.
The section 112 resolution approved by Lazaron shareholders on 7
December 2011 disposed of the Lazaron sales infrastructure and
certain laboratory equipment to JDH, who in turn on sold these
assets to Cryo-Save SA. This transaction removed all significant
overheads from Lazaron whilst retaining annuity income from the
existing client base.
The Lazaron rights offer closed on 20 January 2012 and was
partially subscribed, with 73% of the available rights offer
shares taken up, increasing the total Lazaron shares in issue to
369 970 339. JDH acquired 150 000 000 Lazaron rights offer
shares by virtue of agreeing to partially underwrite the Lazaron
rights offer to the value of R1.5 million. The additional
investment increased JDH’s interest in Lazaron to 44.18%
The JDH general offer to Lazaron shareholders opened on 23
January 2012 and closed on 9 March 2012 with approximately 91%
of Lazaron shareholders electing to swap their Lazaron shares
for JDH shares in the 5:1 ratio. This resulted in JDH acquiring
a further 187 883 066 Lazaron shares increasing JDH’s interest
in Lazaron to 95.41%.
The general offer circular to Lazaron shareholders indicated
that, in accordance with the provisions of section 124 of the
Companies Act, if within 4 months after the date of the general
offer, the general offer was accepted by Lazaron shareholders
holding at least 90% of the offer shares, JDH would become
entitled to a compulsory acquisition of the remaining offer
shares on the same terms that applied to Lazaron shareholders
who accepted the general offer.
A circular to Lazaron shareholders was distributed on 25 April
2012 informing the remaining shareholders of JDH’s intention to
acquire all of the remaining offer shares in terms of section
124 of the Companies Act.
The section 124 offer concluded on 25 June 2012 on which date
JDH acquired the remaining Lazaron shares and Lazaron became a
wholly owned subsidiary.
On 12th July 2012 shareholders were advised to exercise caution
when dealing with their securities in the company as JDH had
entered into negotiations with Escalator Capital Limited
(“Escalator”) and Escalator Capital Global Limited with the
intention of acquiring some or all of the equity and /or assets
of Escalator Capital. Escalator Capital is the controlling
shareholder of JDH. If negotiations are successfully concluded,
they may have a material effect on the price of the Company’s
securities.
EVENTS AFTER THE REPORTING PERIOD
The negotiations with Escalator are continuing and shareholders
are accordingly advised to continue to exercise caution in
dealing in their securities
CONTINGENCIES
Litigation has been suspended against a former employee of
Vinguard who obtained a CCMA ruling granting a R100 000 cash
settlement and the issue of shares in Vinguard. The former
employee seems to have abandoned his claim in light of the
counter claim by Vinguard for the PAYE payable on the possible
issue of Vinguard shares.
APPOINTMENT OF NEW DIRECTORS
The appointment of Mr E Engelbrecht as a non-executive director
was announced on 27 February 2012. Mr Engelbrecht is a director
of Escalator, the controlling shareholder of JDH.
In addition, the board announced the appointment of a new
company secretary, CL Tromp, on 6 June 2012.
ACQUISITIONS AND DISPOSALS
JDH increased its stake in Lazaron from 27.45% to 100.00% during
the period. The increased investment in Lazaron at a cost of
R4.8 million was obtained as follows:
- Acquired 150 000 000 Lazaron shares in terms of JDH’s
undertaking to partially underwrite the Lazaron rights
offer to the value of R1.5 million;
- Acquired 187 883 066 Lazaron shares as a result of the
general offer to Lazaron non-controlling shareholders. The
offer comprised 1 JDH share for every 5 Lazaron shares
held, with the total issue value of the JDH shares
amounting to R2.6 million; and
- Acquired 18 630 857 Lazaron shares as a result of the
section 124 compulsory acquisition of the remaining Lazaron
shares on the same terms as listed above. The value of JDH
shares issued amounted to R260 832.
There were no disposals during the period under review.
As noted elsewhere, the board is actively investigating
acquisition opportunities aimed at improving earnings and cash
generation for the group.
ISSUE OF SHARES
During the period under review the following share issues, all
at 7 cents a share, were approved by shareholders and the shares
listed for trade on the JSE:
Share issue Number of Total value of
(date of issue) shares issued shares
R
Issue of shares in terms of
the JDH rights offer (14
October 2011) 214 285 714 15 000 000
Issue of shares to directors
for additional services
rendered and/or fees (2 March
2012) 30 890 815 2 162 357
Issue of shares to Lazaron
shareholders in terms of the
JDH general offer (9 March
2012) 37 576 613 2 630 363
Issue of shares to Lazaron 3 726 173 260 832
shareholders in terms of the
JDH section 124 compulsory
acquisition general offer (25
June 2012)
Total (before deduction for 286 479 315 20 053 552
share issue expenses)
No shares were issued during the period in terms of the
directors’ general authority to issue shares.
At the end of the interim period the issued share capital
increased to 444 131 678 shares.
GOING CONCERN
The directors are of the opinion that the group will continue as
a going concern for the foreseeable future due to the continued
financial support of certain parties to the group and in
particular by the Company to its subsidiaries.
DIVIDENDS
No dividends have been declared and no dividend is proposed.
ACCOUNTING POLICIES AND BASIS OF PREPARATION OF RESULTS
The abridged financial statements have been prepared in
accordance with IAS 34 – Interim Financial Reporting in
accordance with the accounting policies that comply with
International Financial Reporting Standards and in the manner
required by the Companies Act and the JSE Listing Requirements.
The principle accounting policies adopted in preparation of
these financial statements are consistent with those of the
prior period.
The results of the Company were reviewed but not audited by the
auditors and the opinion was not modified. The review opinion
is available for inspection at the Company’s registered office.
AUDITORS
The shareholders resolved to re-appoint AM Smith and Company
Inc. as the Group auditors on 2 March 2012 at the annual general
meeting.
For and on behalf of the Board
TP Gregory
Pretoria
10 December 2012
Directors: RJ Connellan* (Chairman), TP Gregory (Chief Executive
Officer), DP van der Merwe (Financial Director), E Engelbrecht
(Non-Executive), KA Rayner*, BR Topham*. (* Independent Non-
Executives)
Company Secretary: CL Tromp
Registered Office: Acasia House, Green Hill Village Office Park,
on Lynnwood, Cnr Botterklapper and Nentabos Street, The Willows,
Pretoria East, PO Box 39660, Garsfontein East 0060
Transfer Secretaries: Link Market Services (Pty) Ltd, 13th Floor
Rennie House, 19 Ameshoff Street, Braamfontein 2000, PO Box
4844, Johannesburg 2000
Auditors: AM Smith and Company Inc
Sponsor: Arcay Moela Sponsors (Pty) Ltd
Date: 10/12/2012 12:37:00 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.
Sharenet Sites 
