| Thu 21 Feb 2002, 0:00 | | Cadiz Holdings Limited - Annual Financial |
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CADIZ HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/007258/06)
Share Code : CDZ
ISIN Code : ZAE000017661
FINANCIAL HIGHLIGHTS / Headline earnings per share after discontinued
operations up by 22.6 % to 32.2 cents (2000: 26.3 cents). Attributable
income increased by 10.8%. Net tangible asset value per share up by 30% to
117 cents (2000: 90 cents). Assets under management now R4 billion.
REVIEW OF RESULTS / The Board of Cadiz Holdings Limited ("Cadiz") is pleased
to announce the results for the 2001 financial year. Headline earnings per
share after discontinued operations of 32.2 cents increased by 22.6%
relative to the prior period.
The core businesses of Cadiz Holdings revolve around the usage of derivative
instruments. In 2001, non-core Group activities were discontinued. These
included private equity, information technology, risk management, wrap
funds, private clients and the de-registration of the banking license.
Gross revenue for 2001 amounted to R147.5 million. Discontinuance of non-
core businesses removed a net cost of some R5.6million for the year.
Attributable income of R59.4 million was 10.8% higher than that of the prior
period. The weighted number of shares in issue as at December 2001 was
194.2million, compared to 213.5million as at December 2000. This was due to
the consolidation of shares held by the Employee Share Trust for the full 12-
month period for the 2001-year relative to the partial consolidation for
2000.
Material changes in the balance sheet of the Group reflect the de-
registration of Cadiz Investment Bank Limited in 2001, which resulted in a
decline in assets and liabilities. The increase in shareholders' equity is
due to the recognition of a deferred tax asset, resulting from the
amortisation of trademarks acquired in 1998 and written off against the
share premium. The South African Revenue Service approved the amortisation
of trademarks in 2001.
Total ordinary shareholders' funds of the Group as at December 2001 were
R250 million and net tangible asset value per share was 117 cents (2000: 90
cents). Including the deferred tax asset, net asset value per share was 130
cents (2000: 92 cents).
OPERATIONAL REVIEW / During the course of 2001, the activities of the Group
were consolidated into three key areas - Securities, Structuring and
Specialised Asset Management.
2001 2000
Securities 34.4% 26.1%
Equity Derivatives 21.7% 16.9%
Fixed income 6.4% 4.4%
Stockbroking 6.3% 3.5%
Structuring 25.1% 33.7%
Asset Management 19.6% 17.9%
Investments 20.9% 22.6%
100% 100%
Securities / The equity derivative business is the original business of
Cadiz and was used as the base for consolidation of all Group research and
distribution activities in equities, fixed income and derivatives. This was
done to ensure consistency and synergy between the component businesses. The
contribution of the Securities business to Group income grew from 26.1% in
2000 to 34.4% in 2001.
The increased contribution of equity derivatives, at 21.7% of Group income,
is especially pleasing given the base performance for last year. Customers
rated the Cadiz equity derivative team as the best derivative research and
dealing team in South Africa for the fifth consecutive year.
The quality of the increased contribution by the fixed income team from 4.4%
to 6.4% should be seen in the light of a market that showed little
volatility for the greater part of the period in question.
Likewise, the significant percentage increase from 3.5% to 6.3% by the
stockbroking operation is particularly pleasing given the degree of
attrition evident in that sector.
Structuring / Cadiz designs and implements derivative-based transactions for
retail, wholesale and corporate customers. Although the contribution of
structuring to Group income in 2001 was a solid 25.1%, it was down markedly
from 33.7% in 2000. This is largely due to a change in business strategy of
the "Corporate Solutions" team, which contributed 11% of the Group earnings
in 2000. Investment-banking transactions were deemed to be contrary to the
basic risk philosophy of Cadiz and are no longer pursued. Instead, attention
is now focused on the conceptualisation of derivative-based solutions for
the corporate market. The existing investment portfolio is held in the
balance sheet at a conservative fair value.
Specialised Asset Management / Cadiz Specialised Asset Management ("CSAM")
ended 2001 in slight excess of R4 billion of wholesale assets under
management, up from R3.8 billion the previous year. In addition, CSAM
successfully launched a series of innovative products for retail investors.
These products managed to secure inflows of assets of around R200 million in
2001. The result was an increased contribution to Group revenues of 19.6%
versus 17.9% for 2000.
Investments / This reflects the return on the primary capital of the
business.
The contribution fell from 22.6% of Group income in 2000 to 20.9% in 2001.
PROSPECTS / 1999 was the first year for us as a public company. It was a
honeymoon year. The markets of 2000 and 2001 provided a stern test for a
young financial services operation such as Cadiz. The lessons learnt were
extremely valuable. We have managed to survive and grow. We have confidence
in our business model and in the strength of our corporate culture.
We have emerged from 2001 as a leaner organisation. Our Group now focuses on
businesses that we know well and in which we have an established track
record and competitive advantage.
The Cadiz people remain our key asset. Our team of professionals is stable
and motivated.
In our first attempt, Cadiz was rated as the 14th best company to work for
in South Africa in 2001. We are proud of this achievement and are determined
to improve.
The tradeoff between risk and return provides an enduring challenge.
Managing this tradeoff is the purpose for which derivative instruments were
invented. Cadiz has always approached the tradeoff between risk and return
differently - we put risk first. Derivatives are our business.
The volatility induced by a number of events in 2001 has stimulated the
market to fundamentally re-evaluate risk. We are ideally positioned to grow
as these new realities take hold.
The consolidation phase of Cadiz is now over. We are now focussed upon the
businesses we know best. From this base we will eagerly embrace the future.
DIVIDENDS / The Board has declared a final cash dividend of 10.25 cents per
ordinary share for the financial year ending 31 December 2001 (2000: 8.36
cents). The dividend is covered three times by headline earnings after
dicontinued operations.
Last day to trade cum dividend Friday 8 March 2002
Trading commences ex dividend Monday 11 March 2002
Record date Friday 15 March 2002
Date of payment Monday 18 March 2002
Certified shareholders may not dematerialise or re-materialise their share
certificates between 4 March 2002 and 15 March 2002, both dates inclusive.
On behalf of the Board of Directors
Colin Hall Ray Cadiz
Chairman CEO
Cape Town
21 February 2002
AUDITED AUDITED
TWELVE MONTHS TWELVE MONTHS
31-DEC-01 31-DEC-00
R'000 R'000
ABRIDGED GROUP INCOME STATEMENT
Gross revenue 147,488 142,554
Operating expenses (66,912) (69,722)
Net income before discontinued operations 80,576 72,832
Discontinued operations and profit on
Disposal (5,621) (3,650)
Net income before taxation 74,955 69,182
Taxation (11,111) (10,900)
Net income after taxation 63,844 58,282
Preference dividends (4,486) (4,732)
Attributable income (59,358) 53,550
Earnings per share (cents) 30.55 25.08
Headline earnings per share (cents) 29.93 25.08
Headline earnings per share after
discontinued 32.21 26.28
operations (cents)
Net weighted number of shares in issue 194,287 213,517
Reconciliation between earnings per share
and headline earnings per share after
discontinuance
Net profit attributable to ordinary
shareholders 59,358 53,550
Operating costs of discontinued operations
after taxation 4,436 2,555
Add back profit on the sale of the private
clients business (715) -
Add back profit on sale of SAFEX seats (502) -
Headline earnings per share after
discontinued operations 62,577 56,105
AUDITED AUDITED
31-DEC-01 31-DEC-00
R'000 R'000
ABRIDGED GROUP BALANCE SHEET
Assets 461,418 734,046
Cash and cash equivalents 52,371 227,653
Advances and other accounts 39,049 95,517
Investment and trading securities 319,157 385,453
Other assets 20,678 16,524
Fixed assets 3,430 3,996
Deferred taxation 26,733 4,903
461,418 734,046
Shareholders' equity and liabilities
Equity 300,310 228,123
Ordinary share capital and premium 90,769 93,065
Reserves 159,541 85,058
Ordinary shareholders' funds 250,310 178,123
Preference share capital in subsidiary 50,000 50,000
Liabilities 161,108 505,923
Compulsory convertible debentures 96,645 80,336
Deposits and repurchase agreements - 367,016
Deferred taxation 3,941 11,687
Creditors and provisions 60,522 46,884
461,418 734,046
AUDITED AUDITED
TWELVE MONTHS TWELVE MONTHS
31-DEC-01 31-DEC-00
R'000 R'000
ABRIDGED GROUP CASH FLOW STATEMENT
Cash retained from operating activities 70,700 66,161
Cash flows (utilised in) / from banking
activities (310,548) (75,061)
Cash flows from / (utilized in) in investing
activities 66,862 (12,438)
Cash flows from financing activities (2,296) (33,0O39)
Cash and cash equivalents at the beginning
of the year 227,653 131,908
Cash and cash equivalents at the end of
the year 52,371 227,653
Net (decrease) / increase in cash and
cash equivalents 175,282 95,745
SHARE CAPITAL
AND PREMIUM RESERVES TOTAL
ABRIDGED STATEMENT OF CHANGES IN
EQUITY
Balance as at 31 December 2000 93,065 85,058 178,123
Net profit attributable ordinary
shareholders - 59,358 59,358
Dividends declared - (16,365) (16,365)
Reserve resulting from deferred tax
asset on trademarks - 31,377 31,377
Movement in foreign currency
translation reserve - 113 113
Treasury shares (581) - (581)
Adjustment relating to the consolidation
of CHEST (1,715) - (1,715)
Balance as at 31 December 2000 90,769 159,541 250,310
Directors
C A Hall (Chairman) * R F G Cadiz (CEO) I Kilian
W V G Scotcher * B H Kent * S J Saunders *
D H Lawrence * ( * Non - executive directors )
Transfer secretaries
Mercantile Registrars Limited
Reg No 1987/003382/06
8th Floor 11 Diagonal Street
Johannesburg 2001
Company Secretary
E-mail: irma.kilian@cadiz.co.za
Registered address
1st Floor, Fernwood House
Fedsure Oval, 1 Oakdale Road
Newlands, 7700
P O Box 44547, Claremont, 7735
