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CDZ
CDZ
CDZ - Cadiz Holdings Limited - Trading statement
CADIZ HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/007258/06)
JSE share code: CDZ
ISIN: ZAE000017661
("Cadiz Holdings" or "the group")
CADIZ HOLDINGS - TRADING STATEMENT
Cadiz Holdings shareholders are advised that basic and diluted earnings
and headline earnings per share for the six months ending 30 September
2011 ("the period") are anticipated to be substantially lower than the
comparable period last year and the group expects to break-even for the
period. The decline in earnings is attributable mostly to disappointing
operational performances from both the asset management and securities
segments.
The results for asset management have been impacted by difficult market
conditions leading to a substantial reduction in performance fees, lower
average assets under management relative to last year (currently R42
billion) and a high infrastructure cost base for the current assets under
management.
The strategic repositioning of the asset management business is in
progress with the integration of the institutional and retail businesses
of Cadiz Asset Management and Cadiz Wealth. In addition, the integration
of the systems platforms, business development areas and investment
processes will improve profitability by reducing costs, creating
economies of scale and operating efficiencies. The investment offering
has been refined to ensure the business applies a unified investment
management platform and process. All these changes are expected to
contribute to a reduced cost base, improved investment performance and
growth in assets under management. Cadiz Asset Management will operate
as an independent subsidiary with its own board and remuneration
structure.
The performance of the securities segment continues to be impacted by low
trading volumes and increased competition. The Cadiz transaction with BNP
Paribas ("BNPP") has also placed pressure on management resources during
the period.
The BNPP transaction is currently going through regulatory approval
processes and the general meeting for shareholders to approve the
transaction is scheduled for late October 2011. On completion of the
transaction Cadiz and BNPP will combine their respective strengths to
market and sell South African equity products to institutional investors
in South Africa and abroad. The new securities business will be branded
to reflect the names of both Cadiz and BNPP. The benefits of the
transaction are only expected to start being realised during the next
financial year.
Once the expected proceeds from the BNPP transaction have been received
in November 2011 and the capital requirements of the individual
businesses have been determined, the directors are committed to
communicating with shareholders on the group`s strategy for utilising or
distributing any surplus capital.
The group will be adopting a more decentralised business model after the
BNPP transaction is concluded. The new structure will give the individual
business units greater autonomy and accountability. The group`s head
office cost structure will be streamlined and management will in future
focus on the group`s capital and investments, monitoring the performance
of the business units and providing shared services where this makes
economic sense for the decentralised business units.
Following the completion and approval of the BNPP transaction, the group
will focus primarily on wholesale and retail asset management. The
directors and management will therefore continue to take the necessary
action to ensure the asset management business is sustainably profitable
and competitive.
Shareholders should note that specific earnings guidance will be provided
as soon as there is reasonable certainty as to the 20% range by which
earnings for the period have declined.
The group`s results for the six months ending 30 September 2011 will be
announced on SENS on Monday 7 November 2011.
The financial information on which this trading statement is based has
not been reviewed or reported on by the group`s independent auditors.
Cape Town
14 September 2011
Sponsor
Investec Bank Limited
Date: 14/09/2011 13:00:01 Produced by the JSE SENS Department.
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