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JDH
JDH
JDH - John Daniel Holdings - Abridged Annual Financial Statements
For The Year Ended 30 June 2008
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")
Abridged Annual Financial Statements For the year ended 30 June 2008
John Daniel Holdings and its Subsidiaries
Abridged Balance Sheet as at 30 June 2008
GROUP GROUP
AUDITED AUDITED
2008 2007
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 5 668 5 804
Intangible assets 1 750 1 611
Investments - 3 000
Deferred tax 2 179 845
Total non-current assets 9 597 11 260
Total current assets 2 563 4 540
TOTAL ASSETS 12 160 15 800
EQUITY AND LIABILITIES
Equity 3 928 7 001
Non-current liabilities
Deferred tax 23 299
Total non-current liabilities 23 299
Total current liabilities and 8 209 8 500
shareholders loans
TOTAL EQUITY AND LIABILITIES 12 160 15 800
Net asset value 1 690 5 473
Net tangible asset value (60) 3 862
Net asset value per share (cents) 0.03 0.12
Net tangible asset value per share (0.001) 0.09
(cents)
John Daniel Holdings Limited and Its Subsidiaries
Abridged Income Statement for the Year Ended 30 June 2008
GROUP GROUP
AUDITED AUDITED
2008 2007
R`000 R`000
REVENUE 6 315 8 008
COST OF SALES (2 988) (4 273)
GROSS PROFIT 3 327 3 735
Other income - 5 866
Selling, distribution and (8 804) (9 077)
administration expenses
PROFIT/(LOSS) before net finance (5 477) 524
costs and tax
Finance costs (275) (259)
Interest received 68 -
Taxation income 1 610 (3 650)
(LOSS) FOR THE YEAR (4 074) (3 385)
Attributable to minorities 1 376 3501
Net (loss)/profit attributable to (2 698) 116
shareholders
Basic and headline
earnings/(loss)
Basic earnings / (loss) (2698) 116
Headline earnings / (loss) 302 (4 712)
Basic earnings / (loss) per share (0.046) 0.002
(cents) attributable to equity
holders of the parent
Headline earnings per share 0.005 (0.081)
(cents) attributable to equity
holders of the parent
Weighted average number of shares 5855975 5 806 113
`000
Number of shares in issue `000 5855975 5 855 976
Reconciliation between basic
earnings / (loss) and headline
earnings
IAS 33 Basic earnings / (loss) (2698) 116
IAS 16 Loss / (profit) on sale of - 6
property plant and equipment
IAS 39 Impairment of investment 3000 -
IFRS 3 (Profit) on sale of a - (4 847)
subsidiary
IAS 16 Impairment of property, - 13
plant and equipment
Headline earnings 302 (4 712)
John Daniel Holdings Limited and Its Subsidiaries
Abridged Segmental Information for the Year Ended 30 June 2008
Group 2008 R`000 R`000 R`000 R`000
Primary segments Biotechnology Packaging Elimination Consolidated
Revenues 2 275 2 540 - 4 815
Unallocated corporate 1 500
revenue
Total external Revenue 2 275 2 540 6 315
Segmental results (722) (2 327) - (3 049)
Unallocated group (2 428)
profit
Total result (722) (2 327) (5 477)
Group 2007 R`000 R`000 R`000 R`000
Primary segments Biotechnology Packaging Elimination Consolidated
Revenues 4 115 3 966 (73) 8 008
Attributable to - - - -
discontinuing
operations
Inter-segmental - - - -
revenues
Total external Revenue 4 115 3 966 (73) 8 008
Segmental results (195) (3 322) 3 227 (290)
Unallocated group 814
profit
Total result (195) (3 322) 3 227 524
John Daniel Holdings Limited and Its Subsidiaries
Abridged Statement of Changes in Equity for the Year Ended 30 June 2008
Capital Non Share Accumulat Minority Total
Distri- option ed interest
butable liability profit /
reserve (loss)
R`000 R`000 R`000
R`000 R`000
R`000
GROUP
Balance as at 23 915 12 441 98 (33 318) 5 640 8 776
30 June 2006
Shares Issued 500 - - - - 500
Options expired - - (11) - - (11)
Profit on sale - 1 620 - - - 1 620
of shares in
subsidiary
Changes in - 111 - - (610) (499)
equity holdings
of subsidiaries
Net profit for - - - 116 (3 501) (3 385)
the period
Balance as at 24 415 14 172 87 (33 202) 1 529 7 001
30 June 2007
Options - - (48) 48 - -
exercised
Profit on sale - 347 - - - 347
of shares in
subsidiary
Changes in - (1 431) - - 2 085 654
equity holdings
of subsidiaries
Net profit for - - - (2 698) (1 376) (4 074)
the period
24 415 13 088 39 (35 852) 2 238 3 928
John Daniel Holdings Limited and Its Subsidiaries
Abridged Cash Flow Statement for the Year Ended 30 June 2008
GROUP GROUP
AUDITED AUDITED
2008 2007
R`000 R`000
NET CASH (OUTFLOW) / INFLOW FROM OPERATING 820 (1 445)
ACTIVITIES
NET CASH (OUTFLOW) / INFLOW FROM INVESTING 372 246
ACTIVITIES
NET CASH INFLOW/(OUTFLOW) FROM FINANCING (1 559) 1 587
ACTIVITIES
Increase / (Decrease) in cash and cash (367) 388
equivalents
Cash and cash equivalents at the beginning of (591) (979)
the year
Cash and cash equivalents at the end of the (958) (591)
year
Comments
REVIEW OF RESULTS AND FINANCIAL POSITION
The consolidated financial results under review for the year ended 30 June 2008
represents income from the Group`s two trading subsidiaries Vinguard Limited
("Vinguard") and Lazaron Biotechnologies (SA) Limited ("Lazaron"). The abridged
results have been prepared in accordance with IAS 34 - Interim Financial
Reporting.
The Group, excluding minorities, has shown a loss of R2.7M for the year ending
30 June 2008. This is mainly attributable to the R3M impairment of the Group`s
investment in the start-up company Africa Sanitation Solutions Limited
("AfriSan"). While the Directors believed it prudent to rather impair the
investment at this juncture this does not necessarily mean that value will not
flow from this investment at a later stage, specifically given AfriSan`s
patented intellectual property, the level of external investment already
committed in the company and the need for the roll-out of more environmentally
friendly sanitation systems world-wide.
It should be noted that the above-mentioned impairment is a reconciling item
between basic and headline earnings. The Group shows headline earnings of R302
000 which, if compared to the prior year`s headline loss of R4.7M and
considering the cash flow constraints the Group experienced, is acceptable to
the Directors.
The Group has experienced working capital constraints during the year under
review and in particular this was as a result of cash flow constraints
experienced in the Group`s subsidiary Vinguard which will be dealt with in more
detail in the operational review.
At the beginning of 2008 a strategic decision was taken to refocus the core
business of the Holding Company. To this end it was clear that a substantial
refinancing package would be required along with renewed efforts to increase
shareholding in the Group`s subsidiaries.
This culminated in the acquisition by the Holding Company of an additional
36.69% shares in Vinguard previously held by Mondi taking the Group`s holding to
73.38%. The Group has already provided loans to Vinguard to the value of R3.7M
as at 30 June 2008. Given the stage of development of Vinguard and its
strategic nature within the global table grape market a decision was taken to
enter into an agreement with Golden Oak Corporate Advisors (Pty) Ltd ("Golden
Oak") as part of the previously mentioned refinancing package. More details of
this will be provided herein below under Post Balance Sheet Events.
The Group has managed to maintain its gross profit margin above 50% despite a
smaller group turnover down from R8M to R6.3M. The reason for the drop in
turnover primarily being a lack of adequate working capital and not a decrease
in market penetration or size.
OPERATIONAL REVIEW
Group Overview
JDH continues to conduct business as a venture capital Investment Holding
Company, focusing on investing in high technology start-up companies. In
particular, these companies are required to produce products or provide services
with high barriers to entry, have clear global markets, with minimal
competition, and be strategic in nature, both in local and global markets.
Currently JDH, has two such subsidiaries i.e. Lazaron Biotechnologies and
Vinguard.
JDH has been instrumental in establishing these subsidiaries and has provided
resources and capital to nurture these companies through their critical start up
phase to the point of being established trading entities, with a clear and
defined market and business strategy. The Board remains committed towards
supporting and nurturing these investments in order to grow them to the point
where they take up their rightful place in their respective local and global
markets. Both subsidiaries are operational in highly strategic growth
industries, have limited competition and offer high barriers to entry. The
aforementioned refinance package will make available the additional working
capital required for both companies to now actively pursue growth and
profitability.
Vinguard Limited ("Vinguard")
The management of Vinguard has reported that Vinguard`s market penetration has
improved significantly in the year under review. The company has however been
unable to capitalise on this market penetration due to a lack of working
capital. This has resulted in Vinguard again incurring losses, as the company
could not raise finance in order to meet orders or extend credit terms. As
mentioned above the refinancing of the Group will now make available the working
capital to exploit this market penetration.
Due to the availability of working capital Vinguard has commenced with full
production to meet the demands of its current sizeable order book.
Vinguard primarily manufactures polymeric So2 sheets for optimal post harvest
protection of table grapes. The Vinguard product was developed in a 6 year
research project at Stellenbosch University and is one of only two similar
products available in the global market. The product extends the post harvest
storage life of table grapes for up to ten weeks and has registered its patents
in all major table grape producing countries. During the past four years the
products efficacy has been proven in thirteen of the largest table grape
producing countries with independent scientific verifications from various
prestigious research organizations inter alia the Vulcani Institute in Israel,
the University of Vitoria in Sicily and various other institutions. The product
has been approved for use by the largest supermarket chains in the United
Kingdom, this market being one of the major markets for high quality table
grapes. The potential global market for the product is considered to be up to
R500M per annum.
Lazaron Biotechnologies (SA) Limited ("Lazaron")
Lazaron has again performed adequately and has had another cash flow positive
year. The Board has however decided that Lazaron would benefit from renewed
marketing efforts and to this end has made available additional working capital
to Lazaron to fund an aggressive marketing drive which is currently underway.
Lazaron has strengthened its relationship with one of the largest private
healthcare providers and continues to do so as preferred supplier to the Medi-
Twinkle program. Together with the African Independent Insurance Group a unique
stem cell insurance product has been developed and is now exclusively available
to Lazaron clients.
Following a feasibility study JDH is currently considering funding options for
the establishment of the separate animal biocell laboratory of which
stakeholders were previously informed. Lazaron has researched, developed and
patented a stem cell treatment for the regeneration of damaged tendons in
horses. This research project was funded by Lazaron and conducted over a three
year period at Stellenbosch University.
Stakeholders` attention is drawn to the fact that Lazaron originally anticipated
a second issue of shares in order to raise further working capital and to date
this has not been necessary due to the positive cash flow of the company.
PROSPECTS
The Board is pleased to advise stakeholders that the Group is now better funded
than it has ever been at any time in its history. Venture capital investments by
their very nature carry an extremely high risk and the industry`s failures are
far more widely reported on than its successes. Commercialising new technologies
and products carries with it huge uncertainties and in many instances are
reliant on assumptions relating to market acceptance, uptake, profitability and
many other factors. This, more so, being the case with introducing new
technologies into a sceptical global marketplace. Prior to investing into any
new technologies the Board rigorously and with due care investigates the
potential commercial outcomes prior to committing to any investment. This
includes engaging with an array of special advisors and the very best and
competent business advisors available to the Group.
JDH, through its subsidiaries Lazaron and Vinguard, has invested in technologies
researched, developed and patented by Stellenbosch University, backed by years
of research, volumes of independently verified scientific data and underscored
by the fact that two Phd-degrees were awarded in respect of each of the
technologies employed in the respective companies.
JDH has provided the start-up capital, resources and management to nurture these
companies to maturity and continues to do so. The sizeable loan and subsequent
investment into the Group by Golden Oak is considered by the Board to portray
the stage of commercial development of the underlying technologies within the
Group and the level of confidence associated with the investments at this
juncture.
As part of JDH`s refocused strategy it is the intention of the company to
investigate the possibility of making an offer to minorities in both Lazaron and
Vinguard in future. More information in this regard will be provided in due
course.
As previously announced, in order to restructure the share capital of the group,
it is intended that the authorised and issued share capital of the Company be
consolidated on the basis of 1 share for every 100 shares held. The authorised
and issued share capital before and after the share consolidation is shown
below:
Before: R
Authorised
15 000 000 000 shares of 0.000001 cents each 1 500 000
Issued:
5 851 975 905 shares of 0.000001 cents each 585 178
After:
Authorised
150 000 000 shares of 0.0001 cents each 1 500 000
Issued:
58 019 759 shares of 0.0001 cents each 585 178
Documentation will be circulated to shareholders in due course, incorporating a
notice of general meeting. Salient dates of the proposed share consolidation
will be published once documentation has been finalised.
POST BALANCE SHEET EVENTS
As announced, JDH has entered into a convertible loan agreement with Golden Oak
dated 15 July 2008 in terms of which the Company has secured a loan of R10M, of
which R6M has been received and the balance of R4M being payable by latest 15
October 2008. Golden Oak is not a related party to JDH.
The loan will be convertible at any time up to 15 July 2009, at the option of
Golden Oak following the intended consolidation of the authorised and issued
share capital of JDH detailed below. The conversion price will be the lower of
35 cents per share or a 10% discount to the 30 day Volume Weighted Average Price
("VWAP") as per the JSE Limited at the date of notification of exercise of the
option, which conversion may be subject to approval by JDH shareholders in
general meeting, in the event that the discount to the 30 day VWAP exceeds 10%
or the issue exceeds 10% of the issued share capital of the company. The loan
bears interest at the prime interest rate as published by the Standard Bank of
South Africa Limited.
It is noted that, in the event that shareholder approval for the conversion is
required, Messrs H Minnie, N Ackermann and L F Harris have irrevocably
undertaken to vote in favour of such conversion in respect of shares held by
them and their associates representing approximately 42% of the existing issued
share capital of the company and have further undertaken not to dispose of such
shares until the date of the conversion of the loan.
DIVIDENDS
No dividends have been declared or proposed for the period under review.
ACCOUNTING POLICIES
The financial statements have been prepared in accordance with the Companies Act
in South Africa, 1973, as amended, the JSE Listings Requirements, IAS 34
(Interim Financial Reporting) and International Financial Reporting Standards.
The principle accounting policies adopted in preparation of these financial
statements are consistent with those of the prior year.
AUDIT REPORT
These results have been audited by PKF (Newlands) Inc. and their unqualified
audit report with an emphasis of matter is available for inspection at the
company`s registered office.
For and on behalf of the Board
H Minnie
CEO
Stellenbosch
6 October 2008
Directors: S Tshiki (Non-executive Chairman), HD Minnie (CEO), NJ Ackermann
(Financial Director), T Mvusi (Non-Executive Director), S Serex (Non-Executive
Director)
Company Secretary: Capital Commitments Limited
Registered Office: Infruitec Northern Terrain, Lelie Street, Stellenbosch 7600,
PO Box 1243, Stellenbosch, 7599.
Transfer Secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall
Street, Marshalltown 2001. PO Box 61051, Marshalltown, 2107.
Sponsor: Arcay Moela Sponsors (Pty) Ltd
Auditors: PKF (Newlands) Inc.
Date: 06/10/2008 09:22:18 Produced by the JSE SENS Department.
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