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Further detailed cautionary announcement: R100m rights offer, convertible loan, acquisition and disposal of assets
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")
FURTHER DETAILED CAUTIONARY ANNOUNCEMENT RELATING TO A PROPOSED R100 MILLION
PARTIALLY UNDERWRITTEN RIGHTS OFFER AND ASSOCIATED CONVERTIBLE LOAN,
PROPOSED ACQUISITION OF ASSETS (“THE ACQUISITIONS”), PROPOSED DISPOSAL OF
MANUFACTURING ASSETS (“THE DISPOSAL”) AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
1. Introduction
As previously announced on 7 November 2013 and 20 December 2013, the board of JDH is proceeding
with a rights offer of R100 million at an issue price of 14 cents per share. The rights offer will be partially
underwritten by its controlling shareholder, Escalator Capital (RF) Limited (“Escalator Capital”) through the
capitalisation of its existing and future loan account in JDH expected to amount to approximately R45 million
at the date of the rights offer. In addition, Escalator Capital has advised of its intention to provide a
funding facility to JDH up to R100 million, less the proceeds of the intended rights offer. The funding
facility will be convertible into ordinary shares in JDH at the rights offer price, subject to any necessary
shareholder approval (“the Convertible Loan”). The period of conversion and other salient terms are still in
the process of being negotiated.
The Company has decided to expand its financial services business and requires an injection of capital
and loan funding in order to grow the underlying operations. In addition, the Company is busy with
negotiations for the acquisition of a number of growth businesses from Escalator Capital or other related
parties. The agreements are close to being finalised and an announcement will be published during
January 2014.
With regard to the disposal of certain assets as previously announced by a minor subsidiary of JDH,
namely Vinguard, the board advises that the due diligence has been successfully concluded, the majority
of the conditions precedent have now been met and a circular convening a General Meeting on
24 January 2014 has been posted to Vinguard shareholders. The effective date of the Disposal is likely to
be 1 February 2014. The Disposal does not require approval by shareholders of JDH.
2. Updated Pro forma financial effects
As previously announced, the purchase consideration has been amended. Accordingly updated pro forma
financial effects on the Disposal are presented below.
The table below sets out the pro forma financial effects of the disposal on the headline earnings and
earnings and net asset value per share of JDH, based on the published unaudited interim results of the
Company for the financial period ended on 30 June 2013, as if the disposal had been implemented on
1 January 2013. The financial effects are the responsibility of the directors of the Company, are prepared
for illustrative purposes only and, because of their nature, may not fairly present the financial position of
the company, changes in its equity or the results of its operations or cash flows after the Disposal.
Disposal of
Before Sale Assets % Change
Attributable earnings per ordinary share (cents) 0.004 0.587 13 616%
Headline earnings per share (cents) 0.010 0.234 2 157%
Net asset value per share (cents) 4.894 5.061 3%
Net tangible asset value per share (cents) 4.484 4.902 9%
Weighted average shares in issue (000’s) 444 132 444 132 0%
Ordinary shares in issue at period end (000's) 444 132 444 132 0%
Notes:
1. The "Before" column is extracted from the Company`s unaudited, published results for the interim
period ended 30 June 2013;
2. For Statement of Financial Position purposes, it has been assumed that the Disposal occurred on
30 June 2013 and for Statement of Comprehensive Income purposes the Disposal has been
assumed to have occurred on 1 January 2013;
3. The Purchaser will acquire the Sale Assets for R5 million plus up to R600 000 for the intellectual
property, the face value of the business liabilities and the value of stock, to be established within 7
business days after the fulfillment of the conditions precedent. For purposes of the pro forma
financial effects these have been assumed to be equal to the carrying value of R945 470 at 30 June
2013 for Statement of Financial Position and R451 461 at 1 January 2013 for Statement of
Comprehensive Income purposes;
4. A portion of the proceeds of the transaction will be applied to settle creditors;
5. Surplus proceeds will be used to partially settle interest bearing debt and realise interest savings;
6. The pro-forma financial effects include an adjustment to exclude the operating results directly
related to disposal assets for the Statement of Comprehensive Income purposes which assumes
the transaction takes place on 1 January 2013. A similar adjustment for the Statement of Financial
Position is excluded as it is assumed that the transaction takes place on 30 June 2013 the end of
the period.
7. The financial effects have been adjusted for minority interests in Vinguard;
8. Capital gains tax has been incorporated in taxable income at the capital gains tax inclusion rate of
66.6%;
9. Normal taxation has been calculated at the corporate rate of 28%;
10. The transaction has no impact on the issued share capital of the company;
11. Transaction and other costs totaling R800 000 have been assumed.
The pro forma financial effects of the rights offer, convertible loan and other planned acquisitions will be
announced in due course.
3. Renewal of cautionary announcement
Shareholders are advised to continue to exercise caution when dealing in their shares until a full
announcement has been published detailing the proposed rights offer, convertible loan and acquisitions as
well as the pro forma financial effects thereof.
Johannesburg
10 January 2014
Sponsor
Arcay Moela Sponsors Proprietary Limited
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