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54
JOHN DANIEL HOLDINGS LIMITED AND ITS SUBSIDIARIES
INTEGRATED ANNUAL REPORT 2011
Directors’ Report -
Continued
Cryo-Save SA
On 2 June 2011, the board announced that JDH and Cryo-
Save Group N.V. (“Cryo-Save”) a leading international fam-
ily stem cell bank, signed a memorandum of understand-
ing, to establish a new stem cell bank in South Africa.
The agreement combined Cryo-Save`s leading expertise
in stem cell processing and storage with JDH`s local and
African market expertise. Cryo-Save SA offers customers
the option of storing cord tissue and stem cells from cord
blood in South Africa or off shore in Belgium.
The Lazaron laboratory located in Cape Town has been
upgraded to cater for the increase in volumes and will
meet the highest quality standards applied by Cryo-Save
around the world.
Vinguard
The Vinguard product has proved its efficacy and table
grape farmers reported excellent results on exports. The
product is well placed to penetrate the significant South
African and international export table grape industries.
The company’s operations involve a relatively extended
production and working capital cycle. The Group’s re-
strained working capital position and the resultant in-
ability to fund production resulted in a significantly re-
duced market during the 2010/2011 SA season.
The 90% reduction in turnover to R368 590 was off-set to
an extent by the reduction in operating expenses result-
ing from the rationalization of the company’s operations.
The Vinguard cost structure and processes have been
rationalized through the restructuring efforts ensuring
that the breakeven point is achieved at a 33% reduced
turnover value than in the comparative period.
The business is poised to take advantage of its reduced
overhead structure in the upcoming 2011/2012 SA table
grape season.
In addition, the board continues to drive efforts to diversi-
fy the Vinguard product offering into other produce mar-
kets as well as Northern Hemisphere production areas.
Lazaron
The establishment of a dedicated sales division in
Lazaron as part of the group restructure resulted in sig-
nificant sales growth for the business during the period
under review. The 32% increase in the company’s rev-
enue was generated in the last six months of the period
under review.
The accompanying cost involved in repositioning the
strategic direction of the business, investing in market-
ing collateral, strategic initiatives and the development
of the sales force increased the operating expense base.
The encouraging sales performance and the healthy
gross profit percentages resulted in the business ap-
proaching breakeven performance on a month to month
basis by the end of the period under review.
The restructure efforts focused on Lazaron and the resul-
tant improved performance brought about the negotia-
tions with Cryo-Save NV and the subsequent investment
in Cryo-Save SA.
Subject to shareholder approval Lazaron will contin-
ue to provide the current services but will also focus on
stem cell therapies in the future. In addition the company
will also pursue the equine therapy development.The re-
duced cost base will result in the Lazaron business be-
ing profitable whilst the therapy and equine opportuni-
ties provide potential wealth generation.
2. Review of results and financial position
The financial year end for the group was changed to
30 September resulting in the financial year comprising
a 15 month period. The consolidated financial results for
the 15 months ended 30 September 2011 represents in-
come and expenses from the John Daniel Holdings Limited
(“JDH”) corporate head office and its trading subsidiaries,
active in the financial services, biotechnology and agricul-
tural packaging markets.
The operating results for the 15 months reflected a signifi-
cant turnaround in the performance of the group and the
results were further enhanced by the recognition of certain
assets which had been impaired in the previous period.