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CDZ
CDZ
CDZ - Cadiz Holdings Limited - Interim results for the six months ended 30
September 2009
(Incorporated in the Republic of South Africa)
(Registration number 1997/007258/06)
JSE share code: CDZ ISIN: ZAE000017661
("Cadiz", "the group" or "the company")
KEY FEATURES
* Headline earnings per share up 102% to 17.2 cents
* Operating profit up 95% to R48.5 million
* Unit trust assets increase by 58% to R3.9 billion
* Top ranked derivatives house for 13th consecutive year
* Rated Best Financial Services Company to Work For
CADIZ HOLDINGS LIMITED
CONDENSED GROUP INTERIM STATEMENT OF
COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12
months
30-Sep-09 30-Sep-08 31-Mar-
09
R `000 R `000 R `000
Gross operating revenue 166 276 157 592 334 616
Interest income 6 349 8 239 17 655
Net investment income 11 720 (9 863) 14 788
Net income/(loss) from 14 277 (4 605) 12 889
investments
Foreign exchange (loss)/gain (2 557) (5 258) 1 899
Income attributable to - - -
linked assets
Net fair value gains on 1 687 1 617 3
linked financial instruments 504
Linked liability adjustment (1 687) (1 617) (3
504)
Operating expenses (135 844) (131 048) (276
055)
Operating profit 48 501 24 920 91 004
Finance costs (2 079) (2 985) (4 076)
Profit before taxation 46 422 21 935 86 928
Taxation (10 724) (5 727) (24 370)
Total comprehensive income 35 698 16 208 62 558
Reconciliation of headline
earnings:
Total comprehensive income 35 698 16 208 62 558
Goodwill impairment 1 881 1 072 2 436
Intangible assets - 2 144 11
derecognition and impairment 173
Taxation impact - (600) (3
128)
Profit on disposal of - - (21)
equipment
Taxation impact - - 3
Headline earnings 37 579 18 824 73 021
Issued number of shares 245 138 245 138 245 138
(`000)
Consolidated number of 218 126 221 367 218 126
shares (`000)
Weighted average number of 218 126 221 193 220 195
shares (`000)
Diluted weighted average 218 403 221 766 220 453
number of shares (`000)
Earnings per share (cents)
Basic 16.4 7.3 28.4
Diluted 16.3 7.3 28.4
Headline earnings per share
(cents)
Basic 17.2 8.5 33.2
Diluted 17.2 8.5 33.1
CADIZ HOLDINGS LIMITED
CONDENSED GROUP INTERIM Unaudited Unaudited Audited
STATEMENT OF FINANCIAL
POSITION
30-Sep-09 30-Sep-08 31-Mar-
09
R `000 R `000 R `000
ASSETS
Non - current assets 1 425 249 915 570 1 152
668
Plant and equipment 7 870 6 369 5 690
Intangible assets 274 493 289 883 277 334
Deferred taxation 16 843 16 551 16 965
Investments backing linked 1 016 595 486 299 747 704
funds
Other financial assets 106 166 108 984 100 398
Receivables and prepayments 3 282 7 484 4 577
Current assets 696 404 890 694 855 022
Other financial assets 232 532 74 680 190 688
Receivables and prepayments 365 734 649 787 578 589
Taxation 2 399 380 2 825
Cash and cash equivalents 95 739 165 847 82 920
Total assets 2 121 653 1 806 264 2 007
690
EQUITY
Capital and reserves
Ordinary share capital and 2 902 2 861 2 869
premium
Treasury shares (70 639) (66 679) (70 639)
Share - based payment 33 668 26 152 30 712
reserve
Retained earnings 607 738 551 473 596 996
Total equity 573 669 513 807 559 938
LIABILITIES
Non - current liabilities 1 034 397 518 446 762 367
Deferred taxation 9 579 12 168 7 324
Linked investment contract 1 016 595 486 299 747 704
liabilities
Trade and other payables 8 223 19 979 7 339
Current liabilities 513 587 774 011 685 385
Trade and other payables 449 493 744 232 656 548
Taxation 7 923 3 648 13 424
Trading liabilities 56 171 26 131 15 413
Total liabilities 1 547 984 1 292 457 1 447
752
Total equity and liabilities 2 121 653 1 806 264 2 007
690
Net asset value (cents per 263 232 257
share)
Net tangible asset value 134 99 125
(cents per share)
CADIZ HOLDINGS LIMITED
CONDENSED GROUP INTERIM CASH
FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12
months
30-Sep-09 30-Sep-08 31-Mar-
09
R `000 R `000 R `000
Cash flow from operating 22 125 58 101 102 890
activities
Cash generated from 60 745 89 510 150 867
operations
Taxation paid (13 351) (15 674) (32 242)
Dividends paid (25 269) (15 735) (15 735)
Cash flow from investing (9 567) 15 954 (110
activities 110)
Cash flow from financing 346 (28 675) (36 774)
activities
Net change in cash and cash 12 904 45 380 (43 994)
equivalents
Effect of exchange rate (85) (4 089) 2 358
adjustment
Cash and cash equivalents at 82 920 124 556 124 556
beginning of period
Cash and cash equivalents at 95 739 165 847 82 920
end of period
CONDENSED GROUP INTERIM
STATEMENT OF CHANGES IN
EQUITY
Unaudited Unaudited Audited
6 months 6 months 12
months
30-Sep-09 30-Sep-08 31-Mar-
09
R `000 R `000 R `000
Share capital, share premium
and treasury shares
Opening balance (67 770) (37 117) (37 117)
Issue of shares 33 51 59
Capital reduction - (29 244) (29 223)
Sale of treasury shares on - 2 492 3
exercise of options 722
Delivery of treasury shares - - 3
in settlement of deferred 318
consideration
Purchase of treasury shares - - (8
529)
(67 737) (63 818) (67 770)
Reserves
Opening balance 627 708 574 229 574
229
Premium on issue of equity 313 518
settled share appreciation 569
rights
Sale of treasury shares on - (2 492) (3 371)
exercise of options
Employee share option scheme 2 956 4 897 9
- value of services provided 458
Total comprehensive income 35 698 16 208 62
558
Dividends paid (25 269) (15 735) (15 735)
641 406 577 625 627
708
Total shareholders` funds 573 669 513 807 559
938
CADIZ HOLDINGS
LIMITED
CONDENSED GROUP INTERIM
SEGMENTAL REPORT
Unaudited 6 Asset & Securities Investments Total
months 30-Sept- Wealth & & Capital R`000
09 Management Structuring R`000
R`000 R`000
Segment 80 347 94 086 8 319 182 752
revenue
Segment costs 60 000 60 910 1 842 122 752
Segment 20 347 33 176 6 477 60 000
profit
Corporate 13 578
costs
Profit before 46 422
taxation
Gross 74 111 92 165 166 276
operating
revenue
Unaudited 6 Asset & Securities Investments Total
months Wealth & & Capital R`000
30-Sept-08 Management Structuring R`000
R`000 R`000
Segment 73 148 84 262 (6 495) 150 915
revenue
Segment costs 58 173 52 826 1 607 112 606
Segment 14 975 31 436 (8 102) 38 309
profit
Corporate 16 374
costs
Profit before 21 935
taxation
Gross 74 034 83 558 157 592
operating
revenue
Sept year - on
- year %
Segment 36% 6% 57%
profit
Unaudited 12 Asset & Securities Investments Total
months 31-Mar- Wealth & & Capital R`000
09 Management Structuring R`000
R`000 R`000
Segment 148 664 188 693 20 429 357 786
revenue
Segment costs 113 274 115 857 3 338 232 469
Segment 35 390 72 836 17 091 125 317
profit
Corporate 38 389
costs
Profit before 86 928
taxation
Gross 146 547 188 069 334 616
operating
revenue
FINANCIAL PERFORMANCE
The Cadiz group has posted a turnaround in performance for the six months to 30
September 2009 ("the period"), driven by significantly improved returns on the
group`s investment capital, tight cost controls and higher operating revenue.
The group`s strategy of actively managing its capital and liquidity during the
market downturn has reduced risk in the troubled environment and contributed to
a significant improvement in the return on the investment and capital portfolio
of R334.3 million. The majority of the group`s foreign currency investments,
totalling R68 million, were repatriated in the previous financial year. These
funds have been invested in higher yielding investments in the local market.
Gross operating revenue increased by 5.5% to R166.3 million. Operating costs
were well contained and increased by 3.7% to R135.8 million, which is mostly
attributed to variable costs. Prudent measures were implemented in the previous
financial year to control and manage costs.
The group`s cost-to-income ratio, after excluding direct costs related to the
group investments and intangible and goodwill amortisation/impairment charges,
decreased to 76.5% from 78.1% in 2008.
Operating profit increased 94.6% to R48.5 million. The improved performance
translated into a 99.6% increase in headline earnings to R37.6 million (2008:
R18.8 million), with diluted headline earnings per share increasing by 102.4% to
17.2 cents per share (2008: 8.5 cents). The results are in line with the
earnings guidance provided in the group`s trading statement of 13 October 2009.
SEGMENTAL AND OPERATIONAL REPORT
Following the adoption of IFRS 8: Operating Segments, the group will report
segmental financial performance according to three distinct segments based on
the manner in which the business is managed: Asset and Wealth management;
Securities and Structuring; and Investments and Capital. Shareholders are
referred to the Segmental Analysis.
ASSET AND WEALTH MANAGEMENT
Profit increased by 36% to R20.3 million as the asset and wealth management
business unit realised benefits from solid investment performance, increased
market penetration and new products.
Operational systems and processes have been enhanced to develop a robust
infrastructure. This has created the capacity to significantly expand the
current asset base within the existing infrastructure.
Asset management delivered strong investment performance across its wholesale
and retail products. Several of the funds established top rankings over one and
three-year periods.
Over the past six months, total assets under management increased by 21% to
R55.1 billion, with retail funds increasing by 34% to R8.6 billion. This
increase in retail funds includes growth of 58% in unit trust funds to just
under R4 billion, having more than doubled over the past year.
Cadiz was named the SRI Manager of the year for 2009 in the Principal Officers`
Association awards, based on the success of the Cadiz SRI Bond fund which is
managed in partnership with GreaterGood South Africa.
SECURITIES AND STRUCTURING
Profit from the securities and structuring businesses increased by 6% to R33.2
million.
While market activity slowed and trading volumes declined on the JSE, Cadiz
Securities has continued to increase market share during this period.
Cadiz`s quantitative research offering, which has been complemented by the
formation of a new equity research unit, continues to differentiate the business
in the market. This has contributed to a strong performance from the
stockbroking business.
During the period Cadiz Securities was ranked first in Derivatives Research and
Derivatives Dealing in the annual Financial Mail analyst ratings for the 13th
successive year. Cadiz was also ranked number one in the Risk Management
research, Quantitative Analysis and Innovative Research categories.
Cadiz continues to make inroads into the corporate market as an independent
specialist advisor recognised for its innovation in the corporate finance area.
The service offering has been expanded to include a specialist focus on the
mining and resources sector. A healthy deal-flow pipeline has been created
through joint venture relationships with parties in India and China and M&A
activity is expected to increase as market conditions improve.
INVESTMENTS AND CAPITAL
The significant improvement in returns from the group`s investments and capital
has contributed to profit of R6.5 million compared to a loss of R8.1 million in
the corresponding period for 2008.
The group continues to deploy its capital to grow the business and at the end of
the period the capital was invested as follows:
* R96.5 million invested in liquid assets for regulatory capital adequacy,
stock broking and working capital requirements;
* R34.1 million invested in liquid assets for future short term commitments;
* R93.7 million invested as seed capital and co-investments in asset
management products. This includes R10.9 million which is invested in
offshore asset management products;
* R61.0 million strategic investment in empowerment partner Makana; and
* R49.0 million invested in liquid assets set aside for future strategic
opportunities.
The group also holds R100.1 million investments and R56.2 million trading
liabilities as a hedge against Cadiz Prime Broking activities.
SUSTAINABILITY
Management is committed to social responsibility and to addressing the longer
term sustainability of the business and the environment. An eco-office project
aimed at promoting environmental sustainability through recycling, re-use and
reducing consumption at Cadiz has contributed to a reduction in energy, water
and paper usage.
Cadiz continues to improve its black economic empowerment status and has been
awarded a high A rating by EmpowerDEX.
SHARE ALLOCATION TO BLACK EMPLOYEES
During the period 4.9 million share appreciation rights and voting A ordinary
shares were issued to participants in the black employee share ownership scheme.
These vest at 20% per annum from years three to seven and staff are locked in
until 31 May 2016. The allocation was made at an initial price of 220 cents per
share and participating staff were required to pay a deposit of 5% of the
initial price. This brings the total number of rights issued to black employees
to 10.8 million of the 24 million originally approved by the shareholders.
EMPLOYER OF CHOICE
Cadiz was ranked first in the financial services category in the annual Deloitte
Best Company to Work For survey for the second consecutive year. This survey is
based on responses from staff and is a positive reflection of the level of job
satisfaction within Cadiz.
REMUNERATION SCHEME
An equity-based remuneration scheme is being considered to replace the existing
share option scheme to better align the risk and return profile of management
with shareholders. The proposed scheme, which will be subject to shareholder
approval, will result in management and senior employees being paid a portion of
their annual performance-based incentive bonus in equity with appropriate
vesting restrictions. This should reduce shareholder dilution and IFRS charges
resulting from the current share option scheme.
PROSPECTS
Cadiz has emerged strong from the market downturn but will approach the
recovering markets with caution.
The financial crisis of the past two years is likely to result in longer term
structural changes in our industry and a tightening of the regulatory
environment. Despite recent market recovery, the real effects of the turmoil are
not yet clear. Cadiz will continue to position itself for growth in all business
areas.
The group is in a healthy cash position and continues to explore strategic
opportunities which may arise from time to time.
BASIS OF PRESENTATION
The condensed financial statements have been prepared in terms of International
Financial Reporting Standards and comply with IAS34 - Interim Financial
Reporting and the Listings Requirements of the JSE Limited and the South African
Companies Act. The accounting policies are consistent with those applied in the
annual financial statements for the period ended 31 March 2009 except for the
adoption of IAS 1 (revised) - Presentation of Financial Statements and IFRS 8 -
Operating Segments, the impact of both of which is on the presentation of the
information rather than the measurement.
RECLASSIFICATION
Taxation on linked financial instruments of R35 000 has been reclassified to be
included under the linked financial instruments section of the Statement of
Comprehensive Income rather than under taxation, as previously reported in the
30 September 2008 interim results, as this disclosure better reflects the linked
nature of the taxation charge on these financial instruments.
On behalf of the board of directors
Ray Cadiz Ram Barkai
Chairman Chief Executive Officer
Cape Town
9 November 2009
(Incorporated in the Republic of South Africa)
(Registration number: 1997/007258/06)
JSE share code: CDZ
ISIN: ZAE000017661
("Cadiz", "the group" or "the company")
Registered office
Ground Floor, Fernwood House, The Oval, 1 Oakdale Road, Newlands, 7700
P O Box 44547, Claremont, 7735
www.cadiz.co.za
Directors
R F G Cadiz (Chairman)*
R Barkai (Chief Executive Officer)
C A Hall*
B H Kent*
D M Lawrence*
N S Mjoli-Mncube*
S P Ngwenya*
S J Saunders*
F C Shaw
N S Buthelezi* (alternate)
(* Non-executive directors)
Transfer secretaries
Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg
P O Box 61051, Marshalltown, 2107
Sponsor
Investec Bank Limited
Company secretary
F C Shaw
Date: 09/11/2009 08:00:01 Produced by the JSE SENS Department.
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