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JDH
JDH
JDH - John Daniel Holdings - Abridged Audited Financial Statements for the year
ended 30 June 2010
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")
ABRIDGED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010
Abridged Audited Statement of Financial Position as at 30 June 2010
2010 2009 2008
Audited Restated Restated
Group Group Group
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and 3 204 4 208 5 668
equipment
Intangible assets 936 1 790 1 750
Deferred tax 3 365 3 222 3 222
Total current assets 1 270 7 848 2 563
TOTAL ASSETS 8 775 17 068 13 203
EQUITY AND LIABILITIES
Equity 1 170 (3 435) 1 068
Non-controlling interest
(433) 2 006 2 860
Non-current liabilities
Interest bearing 121 263 -
borrowings
Deferred tax 182 1 066 1 066
Total current
liabilities, short term 7 735 17 168 8 209
interest bearing
borrowings and
shareholders` loans
TOTAL EQUITY AND 8 775 17 068 13 203
LIABILITIES
Net asset value 1 170 (3 435) 1 068
Net tangible asset value 234 (5 225) (682)
Net asset value per
share (cents) 0.78 (5.87) 1.83
Net tangible asset value
per share (cents) 0.16 (8.93) (1.17)
Abridged Audited Statement of Comprehensive Income for the year ended 30 June
2010
2010 2009 2008
Audited Restated Restated
Group Group Group
R`000 R`000 R`000
REVENUE 5 714 6 928 4 815
COST OF SALES (4 093) (4 781) (2 988)
GROSS PROFIT 1 621 2 147 1 827
Other income 125 1 406 1 500
Selling, distribution
and administration (10 811) (7 592) (8 803)
expenses
LOSS BEFORE NET FINANCE
COSTS AND TAXATION (9 065) (4 039) (5 476)
Net Finance costs (1 046) (1 318) (207)
Taxation income 1 027 - 1 610
LOSS FOR THE YEAR (9 084) (5 357) (4 073)
Attributable to non-
controlling interest 2 439 853 258
NET LOSS ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS (6 645) (4 504) (3 815)
BASIC AND HEADLINE LOSS
Basic loss (6 645) (4 504) (3 815)
Headline loss (5 503) (5 547) (815)
Basic loss per share
(cents) attributable to
equity holders of the 8.13) (7.70) (6.52)
parent
Headline loss per share
(cents) attributable to
equity holders of the (6.74) (9.48) (1.39)
parent
Number of shares in 150 500 000 58 519 579 58 519 579
issue
Weighted average number
of shares 81 703 640 58 519 579 58 519 579
There are no securities with potential dilutive effects as at 30
June 2010 (2009: Nil) and accordingly, diluted loss per share
equals basic loss per share, and headline loss per share equals
diluted headline loss per share.
RECONCILIATION BETWEEN
BASIC LOSS AND HEADLINE
LOSS
IAS 33 Basic loss (6 645) (4 504) (3 815)
IAS 16 Profit on
disposal of property - (1 043) -
plant and equipment
IAS 36 Impairment of
property, plant and 516 - -
equipment
IAS 36 Impairment of
intangible assets 626 - -
IAS 36 Impairment of - - 3 000
investment held for sale
Headline Loss (5 503) (5 547) (815)
Abridged Audited Segmental Information for the year ended 30 June 2010
The Group has adopted IFRS 8 Operating Segments as its segmental reporting
standard which requires an entity to report financial and descriptive
information about its reportable segments, which are operating segments or the
aggregation of operating segments that meet specified criteria. Operating
segments are components of an entity in respect of which separate financial
information is available is evaluated regularly by management.
R`000 R`000 R`000 R`000 R`000
30 June 2010
Biotech- Packag- Corpo- Elimin- Consoli-
nology ing rate ations dated
Revenues 1 937 3 777 1 353 (1 353) 5 714
TOTAL
EXTERNAL 5 714
REVENUE
Operating
loss (992) (6 369) (11 102) 9 398 (9 065)
30 June 2009
Biotech- Packag- Corpo- Elimin- Consoli-
nology ing rate ations dated
Revenues 2 276 4 652 1 452 (1 452) 6 928
TOTAL
EXTERNAL 6 928
REVENUE
Operating
loss (1 229) (3 019) 209 - (4 039)
30 June 2008
Biotech- Packag- Corpo- Elimin- Consoli-
nology ing rate ations dated
Revenues 2 275 2 540 1 454 (1 454) 4 815
TOTAL
EXTERNAL 4 815
REVENUE
Operating
loss (721) (2 327) (2 081) (347) (5 476)
Abridged Audited Statement of Changes in Equity for the Year Ended 30 June 2010
Share Non Accumul- Minority Total
capital distribute- ated loss interest equity
able
reserves
R`000 R`000 R`000 R`000 R`000
Balance as at
30 June 2008 24 415 13 127 (35 852) 2 238 3 928
Prior period
error - (5 359) 4 737 622 -
Balance at 1
July 2008 as
restated 24 415 7 768 (31 115) 2 860 3 928
Total
comprehensive
loss for the
year - - (4 504) (853) (5 357)
Share options
forfeited - (39) 39 - -
Balance at 1
July 2009 24 415 7 729 (35 580) 2 007 (1 429)
Total
comprehensive
loss for the
year - - (6 645) (2 439) (9 084)
Issue of 11 893 - - - 11 893
shares
Share issue
expenses (643) - - - (643)
Balance at 30
June 2010 35 665 7 729 (42 225) (432) 737
Abridged Audited Cash Flow Statement for the Year Ended 30 June 2010
2010 2009 2008
Audited Restated Restated
Group Group Group
R`000 R`000 R`000
NET CASH
INFLOW/(OUTFLOW) FROM 21 (11 878) (679)
OPERATING ACTIVITIES
NET CASH
(OUTFLOW)/INFLOW FROM (200) 2 149 372
INVESTING ACTIVITIES
NET CASH
(OUTFLOW)/INFLOW FROM (129) 11 029 (60)
FINANCING ACTIVITIES
(Decrease) / Increase in
cash and cash (308) 1 300 (367)
equivalents
Cash and cash
equivalents at the 342 (958) (591)
beginning of the year
Cash and cash
equivalents at the end 34 342 (958)
of the year
Note to the Abridged Audited Financial Statements for the Year Ended 30 June
2010
Prior period errors
The reported prior period figures were restated for:
IAS 27 requires the allocation of comprehensive losses to the owners of the
parent company and to the non-controlling (minority) interest. The appropriate
allocation of losses to the non-controlling interest is performed even if the
non-controlling interest reflects a deficit balance.
Prior to the amendments to IAS 27, which became effective for financial periods
starting on or after 1 July 2009, the allocation of losses to the non-
controlling interest was limited to the investment. The restatement to the prior
period figures is performed to the extent that the non-controlling interest for
the 2009 and prior financial years reflected a deficit balance.
The non-distributable reserve (NDR) was disclosed in prior periods as arising
from goodwill. The NDR has now been transferred to retained income in the first
year of adopting the International Financial Reporting Standard (IFRS).
2010 2009 2008
Audited Restated Restated
Group Group Group
R`000 R`000 R`000
STATEMENT OF FINANCIAL
POSITION
Non-controlling interest - (1 516) (622)
Opening accumulated loss - (3 843) (4 737)
Non-distributable - 5 359 5 359
reserve
STATEMENT OF
COMPREHENSIVE INCOME
Attributed to non-
controlling interest - 894 1 165
Attributed to equity
holders of the parent - (894) (1 165)
Comments
REVIEW OF RESULTS AND FINANCIAL POSITION
The audited consolidated financial results for the year ended 30 June 2010
represents income from the corporate head office and the group`s two trading
subsidiaries, Vinguard Ltd ("Vinguard") and Lazaron Biotechnologies (SA) Ltd
("Lazaron"). The group, excluding minorities, has shown a loss of R6.6 million.
An amount of R4.2 million of this loss is attributable to the main trading
subsidiary of the group, Vinguard, of which a large portion was made up of
impairments, provisions for bad debts, foreign currency.
Group revenue is down by 17.5% with Vinguard`s revenue reducing by 18.8%.
Vinguard`s ability to export was impeded, as a result of the strong Rand,
resulting in severe cash flow constraints within the group.
While Lazaron`s revenues contracted by 14.9% it continued to contribute a third
of the group`s revenue. The operating expenses of the business were sufficiently
controlled reducing the Lazaron loss for the year by 20%, despite the reduction
in turnover.
The group has had to restate the prior year figures due to the early erroneous
adoption of ED202, whereby losses were allocated to minorities in excess of
their contribution. The group`s new auditors also were of the view that the non-
distributable reserve should have been transferred to distributable reserves in
a previous period.
Stakeholders` attention is drawn to the fact that the conversion of the loan
from Golden Oak Corporate Advisors Pty Ltd ("Golden Oak") was effected,
resulting in NAV and NTAV respectively increasing from (5.9c) to 0.8c per share
and (8.9c) to 0.2c per share. Although the basic loss per share increased by
5.6%, headline loss showed a decrease of 28.9%. The financial position of the
Group was addressed through a refinancing package, refer Events After Reporting
Period section below.
The sustainability of the group has in the short term been addressed through the
increased funding. The directors are confident that the combination of
aggressive management of the existing subsidiaries and further strategic
acquisitions will ensure the future sustainability of the group.
OPERATIONAL REVIEW
Group Overview
In the year under review JDH continued to conduct business as a venture capital
investment holding company, and will continue to do so, focusing on investing in
companies which have clear African and Global markets, companies which are niche
players and strategic in nature. In particular, these companies are required to
produce products or provide services with high barriers to entry and have
minimal competition. Currently JDH, has two such subsidiaries i.e. Lazaron
Biotechnologies and Vinguard.
Vinguard
Vinguard managed to almost triple its customer base in South African during the
last South African season. The product has proved its efficacy and table grape
farmers reported excellent results on exports. The strong Rand impacted on the
company`s competitiveness in the export market resulting in reduced sales to
traditional Egyptian market. The decline in export volumes was counteracted to
an extent by exports to India. The company`s reduced international
competitiveness and corresponding revenue decline negatively impacted on the
group`s financial position.
Lazaron
Lazaron experienced a small decrease in turnover, which is mainly ascribed to a
reduction in disposable household income throughout the target client base. This
is evident by the many requests for extended credit terms for the service.
During the period under review the company was accepted as a full member of the
Asia Pacific Cord Blood Banking Consortium, a consortium of some of the largest
cord blood banks in the world and is set to build on this relationship in the
future. The management are committed to intensifying research and development
thereby ensuring Lazaron`s ability to provide industry leading products and
services.
EVENTS AFTER REPORTING PERIOD, REPORTABLE IRREGULARITY AND APPOINTMENT OF NEW
DIRECTORS
The Company has entered into a finance restructure agreement ("the first
agreement") with Escalator Capital Limited ("Escalator"). In terms of the first
agreement the Company has secured a loan of R1 million with a further R2 million
being made available after conclusion of a second loan agreement. This has
resulted in a restructure of the current boards of the Company and its
subsidiaries. Escalator is not a related party to JDH. In terms of the
restructure three new executive directors, independent of Escalator, have been
appointed to the current boards of JDH and its subsidiaries. They are Mr Terence
Patrick Gregory, Mr Dirk Petrus Van Der Merwe and Mr Louis Frank Rehrl.
Shareholders are also advised that on the 6th of August 2010 IRBA received a
Reportable Irregularity report dated 29 July 2010 in terms of section 45(1) of
the Auditing Profession Act 2005 (Act Nr 26 of 2005) issued by PKF (Cpt) Inc
("PKF") in connection with the company.
IRBA was informed that PKF had reason to believe that in the conduct of the
affairs of the company a Reportable Irregularity within the Auditing Profession
Act, 2005 (Act Nr 26 of 2005) had taken place or was taking place which has
caused, or is likely to cause, financial loss to the company. This irregularity
related to the substantial deterioration of the company`s financial position at
that date. The company was given 30 days to rectify this irregularity.
During this time the company entered into discussions with Escalator in order to
restructure the business and secure funding. A facility of R3 million was
approved by Escalator in September with an amount of R1 million made available
immediately.
Accordingly in the opinion of the directors no further Reportable Irregularity
exists. Shareholders are referred to the prospects section below.
ACQUISITIONS AND DISPOSALS
There were no acquisitions or disposals during the current year under review.
ISSUE OF SHARES
During the year under review 91 980 241 ordinary shares were issued at a
weighted average issue price of 12.93 cents per share to convert R11 893 045 of
the Golden Oak loan to equity.
PROSPECTS
The turnaround of current subsidiaries through product and market extension,
aggressive trading and cost reduction is being initiated. This includes the
establishment of a dedicated sales division within Lazaron Biotechnologies,
evaluation of product range extension in both subsidiaries, development of new
markets for both subsidiaries and rationalization of administration and support
structures. Ongoing shareholders support is required to continue to develop the
current companies and look for new opportunities.
In addition initiatives will be launched shortly aimed at further acquisition
with the specific intention of broadening the group`s interests within the core
focus areas mentioned above. The management team hopes to update the
shareholders on these new initiatives and on the work being done to make the
current subsidiaries more successful in due course.
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 support of certain parties to
the group and in particular by the holding company to its subsidiaries.
DIVIDENDS
No dividends have been declared and no dividend is proposed.
ACCOUNTING POLICIES
The abridged financial statements have been declared 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 Company`s Act and the JSE Listing Requirements. 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 AM Smith and Company Inc, whose unqualified
audit report, modified with an emphasis of matter, is available for inspection
at the registered offices of the company.
The emphasis of matter states that "without qualifying our opinion, we draw
attention to the directors report that indicates that the company incurred a net
loss of R6 644 628 after minority interest for the year ended 30 June 2010. The
Directors` Report also indicates that these conditions along with other matters
indicate the existence of a material uncertainty which may cast significant
doubt on the company`s ability to continue as a going concern."
APPOINTMENT OF NEW AUDITORS
The company appointed AM Smith and Company Inc as new auditors on 21 September
2010, replacing PKF (CPT) Inc.
FURTHER CAUTIONARY ANNOUNCEMENT
Further to the cautionary announcement dated 21 September 2010, shareholders are
advised to continue exercising caution in dealing with the company`s securities
until the terms of the second loan agreement with Escalator are announced.
For and on behalf of the Board
HD Minnie
Stellenbosch
15 October 2010
Directors: TP Gregory, DP van der Merwe, LF Rehrl, NJ Ackermann, HD Minnie, S
Tshiki, S Serex
Company Secretary: C Esterhuizen
Registered Office: Infruitec Northern Terrain, Lelie Street, Stellenbosch 7600,
PO Box 1243, Stellenbosch 7599
Transfer Secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall
Street, Marshalltown 2001, PO Box 61051, Marshalltown 2107
Auditors: AM Smith and Company Inc
Sponsor: Arcay Moela Sponsor (Pty) Limited
Date: 15/10/2010 07:05:07 Produced by the JSE SENS Department.
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