| Tue 30 Jul 2002, 0:00 | | Cadiz Holdings Ltd - Interim Results For The Six M |
|
Cadiz Holdings Ltd - Interim results for the six months ended 30 June
2002
CADIZ HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/007258/06)
ISIN Code: ZAE000017661
Share Code: CDZ
Interim results for the six months ended 30 June 2002
FINANCIAL HIGHLIGHTS
Gross revenue up by 32% to R87,1 million
Attributable income up by 33% to R35,8 million
Headline earnings per share up by 36% to 18,68 cents
ABRIDGED GROUP INCOME STATEMENT
Unaudited Unaudited Audited
six months six months twelve months
to to to
30 June `02 30 June `01 31 Dec `01
R`000 R`000 R`000
Gross revenue 87,108 66,040 148,010
Continuing operations 87,108 64,677 147,488
Discontinued operations - 1,363 522
Operating expenses (42,152) (31,566) (73,055)
Continuing operations (42,152) (25,555) (66,912)
Discontinued operations - (6,011) (6,143)
Net income before
Taxation 44,956 34,474 74,955
Taxation (6,853) (5,341) (11,111)
Net income after
taxation 38,103 29,133 63,844
Preference dividends (2,344) (2,321) (4,486)
Attributable income 35,759 26,812 59,358
Reconciliation between
earnings and headline
earnings from continuing
operations.
Attributable income 35,759 26,812 59,358
Surplus from sale
of Safex seats - - (502)
Surplus from sale of
private client business - (715) (715)
Provision for
retrenchment costs - 710 -
Headline earnings 35,759 26,807 58,141
Net loss after tax
from discontinued
operations - 4,648 4,435
Headline earnings
from continuing
operations 35,759 31,455 62,576
Headline earnings
per share (cents) 18.68 13.70 29.93
Headline earnings
per share from
continuing
operations (cents) 18.68 16.07 32.21
Diluted headline
earnings per share
(cents) 17.81 13.70 29.93
Diluted headline
earnings per share from
continuing
operations (cents) 17.81 16.07 32.21
Weighted average
number of shares 191,407 195,708 194,287
Diluted weighted
average number of shares 200,742 195,708 194,287
ABRIDGED GROUP BALANCE SHEET
Unaudited Unaudited Audited
six months on six months on twelve months on
30 June `02 30 June `01 31 Dec `01
R`000 R`000 R`000
Assets 461,775 388,267 461,418
Cash and cash
equivalents 50,299 13,880 52,371
Accounts receivable
and other accounts 39,916 51,780 39,049
Investments and
trading securities 328,110 308,872 319,157
Other assets 12,567 4,037 20,678
Fixed assets 3,584 4,319 3,430
Deferred taxation 27,299 5,379 26,733
Total assets 461,775 388,267 461,418
Shareholders` equity
Ordinary share capital
and premium 90,786 96,248 90,769
Reserves 175,106 95,672 159,541
Ordinary shareholders`
funds 265,892 191,920 250,310
Preference share
capital in subsidiary 50,000 50,000 50,000
Shareholders` equity 315,892 241,920 300,310
Liabilities
Compulsory convertible
debentures 105,940 88,063 96,645
Deposits and repurchase
agreements - 18,338 -
Deferred taxation 4,008 3,191 3,941
Creditors and provisions 35,935 36,755 60,522
Liabilities 145,883 146,347 161,108
Shareholders` equity
and liabilities 461,775 388,267 461,418
ABRIDGED GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
six months to six months to twelve months to
30 June `02 30 June `01 31 Dec `01
R`000 R`000 R`000
Cash retained from
operations 7,018 12,527 70,700
Cash generated from
operating activities 26,686 28,892 87,065
Dividends paid (19,668) (16,365) (16,365)
Cash flows (utilised in)/
from investing
activities (9,107) (1,123) 66,862
Cash flows
from/(utilised in)
financing activities 17 3,183 (2,296)
Cash flows /(utilised in)
banking activities - (228,360) (310,548)
Net change in cash and
cash equivalents (2,072) (213,773) (175,282)
Cash and cash equivalents
At the beginning
of the period 52,371 227,653 227,653
At the end of the period 50,299 13,880 52,371
ABRIDGED STATEMENT OF CHANGES
IN EQUITY
Share Capital Reserves Total
& Premium
Balance as at 31 December 2001 90,769 159,541 250,310
Attributable income - 35,759 35,759
Dividends declared and distributed - (19,668) (19,668)
Adjustment resulting from the
consolidation
of "CHEST" 17 (526) (509)
Balance as at 30 June 2002 90,786 175,106 265,892
These results where prepared in accordance with General Accepted
Accounting Policies and are consistent with prior periods.
REVIEW OF RESULTS
The period from 1999 to 2000 was characterised by much excitement,
diversification and exuberant growth for Cadiz. 2001 was notable for the
significant turbulence and stresses brought about by the need for the
group to rationalise activities and return to a focus on core
competencies. Cadiz was fortunate to have been a leader in the sector in
terms of recognising and pre-empting market conditions and trends. This
was most evident in our decision to de-register our banking license.
By comparison, the first half of 2002 was a very stable period for the
group. Our people were able to get down to business as usual, without
excessive distractions and internal focus. Our energies were directed
instead to the appropriate activities of research, idea generation and
customer service. The rewards of these efforts are presented above.
Gross revenue of the group for the six months to June 2002 reflects a
strong 32% increase over the corresponding period last year. Revenue
from continuing operations was 35% higher. Encouragingly, the
contribution of the team-based revenue relative to the revenue from
investment of the shareholders` portfolio was significantly higher than
in 2001. Team-based gross revenue from continuing operations grew by
45%, which had a significant effect on both the variable expenses (in
the form of bonuses) and the tax charge. The effective tax rate of
15.37% remains comparable with the 15.5% of June 2001.
Operating expenses reflect a significant increase of 34% for the period.
The main contributor to the increase in this line item was an increase
in variable expenses, largely attributable to a higher Rand bonus pool
provision. The fixed operating costs of the business declined by 6% as
compared to June 2001.
Attributable income increased by 33% over last year to R35,8 million.
This equates to an increase in earnings per share of 36.4% - from 13,70
cents to 18,68 cents. On a comparable basis, earnings per share from
continuing operations increased by 16.3% from 16,07 cents to 18,68
cents. On a fully diluted basis, this increase from continuing
operations is 10.8% from 16,07 cents to 17,81 cents per share.
In line with previous years, no dividend has been declared at the
interim stage.
Operational review
The gross revenue contributions of the group`s business activities were
as follows:
June 2002 June 2001
Securities 40% 37%
Equity derivatives 23% 25%
Fixed Income 10% 6%
Stockbroking 7% 6%
Structuring 27% 30%
Asset management 24% 17%
Investments 9% 16%
100% 100%
The group`s operating businesses, namely securities, structuring and
asset management, generated gross revenue of some R79,1 million for the
first six months of 2002. This is 91% of the group`s total revenue -
significantly greater than the 84% for the same period last year. This
percentage can be attributed to both the group`s enhanced trading
performance and the decline in investment revenues attributable to the
management of the group`s capital base.
The investment revenues for the six months to June 2002 were
disappointing relative to 2001. In January, a decision was made to
invest a portion (some R50 million) of the group`s capital in hard
currency. This was done in order to diversify the currency exposure of
the net asset value (NAV) of the business - arguably the biggest risk
exposure that we have. Since then the Rand has strengthened fairly
significantly. This has contributed to a mark-to-market currency loss on
that portion of the capital base of some R3.5 million on an after tax
basis.
We remain committed to an ongoing strategy of diversifying the currency
denomination of our capital in the long term and are therefore not
unduly concerned about incurring short-term mark-to-market losses as a
result of exchange rate volatility.
The aggregate contribution to gross income of the securities businesses
climbed from 37% to 40%.
One of the major highlights for the period to June 2002 was the strong
showing of the Cadiz teams in the 2002 Financial Mail analyst of the
year awards. We are proud to have been rated as the best derivative
house in South Africa in both the research and dealing categories for
the sixth successive year. In addition, the research team led by
Professor Dave Bradfield was rated first in both risk management and
innovative topics and second in quantitative research. The fixed income
team achieved a third place rating in the research category - an
outstanding performance in a division of heavyweight competitors.
Overall, Cadiz only entered in seven categories in the survey and
achieved six top-three awards - four first-places, one second-place and
one third-place.
The financial contribution of securities was underpinned by a very
strong performance by the fixed income team relative to the previous
period. This team has shown remarkable resilience in being able to
consistently grow revenues in a very mature and competitive market.
The strong performance of the stockbroking team should likewise be seen
against a backdrop of an extremely competitive and mature trading
environment, which has seen significant attrition recently. The first
class research ratings achieved by Professor Dave Bradfield and his team
contributed to the improved stockbroking revenues.
Our equity derivative team backed their number one ratings in research
and dealing with a commensurate financial performance for the six months
in generating some 23% of the group`s gross revenue.
Structuring activity was a smaller relative contributor this half-year,
but in absolute Rand terms the contribution was higher than that for
last June.
The consistent value proposition of Cadiz Specialised Asset Management
again delivered a meaningful 24% contribution to group income. The
team`s success has been underpinned by the strong financial performance
of their specialised portfolios, which, due to the embedded derivative
structures, thrive in volatile financial markets.
Another landmark achievement for the period to June 2002 was the award
to Cadiz as the Best Sponsoring Company by Inroads South Africa. This
programme, based upon a well-proven US model, provides high potential
black undergraduates with extensive internship opportunities at leading
South African and international corporates. Key Cadiz employees were
also recognised in the best mentor and best corporate advisor awards.
Prospects
Cadiz is lean and focused. Our core businesses have established track
records of market leadership. Our professional staff compliment is very
stable. The unique Cadiz culture is bubbling. We are confident that our
persistent focus on improved customer relationships; innovative ideas
and best- of-breed solutions will continue to deliver tangible benefits
for all our stakeholders.
On behalf of the board of directors
Colin Hall Ray Cadiz
Chairman CEO
CADIZ HOLDINGS LIMITED
Directors
C A Hall (Chairman) *
R F G Cadiz (CEO)
I Kilian
B H Kent *
S J Saunders *
D H Lawrence *
(* Non-executive directors)
Registered address
1st Floor, Fernwood House
The Oval
1 Oakdale Road
Newlands
7700
P O Box 44547,
Claremont, 7735.
Transfer Secretaries
Computershare Services Limited
Registration number:1987/003382/06
11 Diagonal Street
Johannesburg, 2001.
PO Box 1053
Johannesburg, 2000.
Company Secretary: E-mail: irma.kilian@cadiz.co.za
Sponsor: Investec
Date: 30/07/2002 10:00:00 AM Produced by the JSE SENS Department
