| Mon 24 Feb 2003, 9:31 | | Cadiz - Audited Results |
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CADIZ HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/007258/06)
ISIN ZAE000017661
Share code CDZ
("CADIZ")
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002
FINANCIAL HIGHLIGHTS
Gross operating revenue up by 32% to R153 million
Attributable earnings up 6% to R63 million
Headline earnings per share up 10% to 32.9 cents
ABRIDGED GROUP BALANCE SHEET
Audited Audited
31-Dec-02 31-Dec-01
R `000 R `000
Assets 485,436 480,782
Fixed assets 5,539 3,430
Deferred taxation 22,670 26,733
Investment and trading securities 311,829 324,446
Other assets 2,016 3,719
Receivables and prepayments 68,202 56,008
Cash and cash equivalents 75,180 66,446
Shareholders` equity 286,845 250,310
Ordinary share capital and premium 87,679 90,769
Reserves 199,166 159,541
Liabilities 198,591 230,472
Compulsory convertible debentures 116,265 96,645
Preference share capital in subsidiary - 50,000
Deferred taxation 3,074 3,941
Accounts payable 75,040 79,886
Trading account liabilities 4,212 -
Shareholders` equity and liabilities 485,436 480,782
Net asset value per share (cents) 150 131
Net tangible asset value per share (cents) 140 119
ABRIDGED GROUP INCOME STATEMENT
Audited Audited
31-Dec-02 31-Dec-01
R `000 R `000
Gross operating revenue 153,275 116,278
Continuing 153,275 115,760
Discontinued - 518
Operating expenses (86,146) (74,527)
Continuing (86,146) (68,384)
Discontinued - (6,143)
Operating profit 67,129 41,751
Net investment income 9,171 28,718
Net income from investments 23,754 27,246
Unrealised foreign exchange (loss)/gain (14,583) 1,472
Net income before taxation 76,300 70,469
Taxation (13,378) (11,111)
Attributable earnings 62,922 59,358
Surplus on sale of private client business - (715)
Surplus on sale of Safex seats - (502)
Headline earnings 62,922 58,141
Weighted average number of shares 191,453 193,582
Diluted weighted average number of shares 201,176 194,287
Earnings per share
Basic (cents) 32.9 30.7
Diluted (cents) 31.3 30.6
Headline earnings per share
Basic (cents) 32.9 30.0
Diluted (cents) 31.3 29.9
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Share Capital Reserves Total
R`000 and Premium
Balance as at 31 December 2001 90,769 159,541 250,310
Attributable earnings - 62,922 62,922
Dividends declared and distributed - (19,618) (19,618)
Reserve resulting from deferred
tax asset on trademarks - (3,679) (3,679)
Treasury shares 581 - 581
Adjustment relating to the
consolidation of CHEST (3,671) - (3,671)
Balance as at 31 December 2002 87,679 199,166 286,845
ABRIDGED GROUP CASH FLOW STATEMENT
Audited Audited
31-Dec-02 31-Dec-01
R `000 R `000
Cash retained from operating activities 43,243 58,091
Cash generated from operating activities 62,861 74,456
Dividends paid (19,618) (16,365)
Cash flows from banking activities - (310,548)
Cash flows from investing activities (29,139) 79,471
Cash flows from financing activities (3,090) (2,296)
Net change in cash and cash equivalents 11,014 (175,282)
Exchange movement on cash balances (2,280) 2,311
Cash and cash equivalents at the
beginning of the year 66,446 239,417
Cash and cash equivalents at the
end of the year 75,180 66,446
REVIEW OF RESULTS
The Board of Cadiz Holdings Limited is pleased to announce the results for the
2002 financial year. In all dimensions, 2002 was a relatively stable year for
Cadiz when compared to the turbulence experienced during the growth and
consolidation phases from 1998 to 2001.
All business units now have a clear strategic fit within our value proposition
that employs derivative instrument technology to manage the risk-return paradox
on behalf of our clients. Staff numbers at Cadiz have been pared down to just
over 70 individuals - a very manageable team.
This stability and focus contributed to an environment that yielded very strong
operational performances for the period.
Gross operating revenue for the group at R153 million was 32% higher than the
figure for the 2001 financial year - a very pleasing performance given the state
of the sector and generally subdued financial market activity.
Operating expenses of the business grew by some 16% when compared to 2001. This
increase includes a larger allocation for performance bonuses, which have a
strong correlation to operating profit.
The increase in operating profit from R42 million to R67 million reflects a very
impressive 61% year-on-year increase.
At a strategic level, Cadiz made a decision to focus our energies on the
abundant opportunities that we see in South Africa. This is contrary to the
strategies of many other South African businesses who have sought rapid global
expansion over the past few years.
Based on this focused South African strategy, in January 2002 a decision was
taken to invest some R50m of the group`s capital into hard currencies. This
diversifies the currency exposure of the net asset value of the group, arguably
the biggest risk exposure that we have.
Given the strength of the Rand in late 2002, the impact of this decision is
reflected in an unrealised foreign exchange loss of some R14.6 million for the
year. Aside from the foreign exchange effect, there is an additional year-on-
year decline in net income from investments of some 13%. This stems largely from
the interest rate differentials between South Africa and the countries in which
our international portfolio is invested.
As a result of all of the above, attributable income for the period increased by
6% to R63m. This translated into headline earnings of 32.9 cents per share for
the year - a 10% increase over 2001.
OPERATIONAL REVIEW
The group`s operating businesses, namely securities, structuring and asset
management are shown below to have generated R153 million of gross revenue for
2002 - 94% of the group`s total revenue compared to 80% for 2001
Dec-02 Dec-01 % change
R`000 % of R`000 % of 2002/2001
total total
Securities 66,871 41% 49,966 34% 34%
Equity derivatives 40,808 25% 32,033 22% 27%
Fixed Income 14,714 9% 9,266 6% 59%
Stockbroking 11,349 7% 8,667 6% 31%
Structuring 56,672 35% 37,019 26% 53%
Asset management 29,732 18% 28,775 20% 3%
Gross operating revenue 153,275 94% 115,760 80% 32%
Net income from investments 23,754 15% 27,246 19% -13%
Unrealised foreign
exchange (loss)/gain (14,583) -9% 1,472 1%
Gross revenue 162,446 100% 144,478 100% 12%
SECURITIES
The securities businesses of Cadiz continued to contribute strongly, generating
41% of the gross revenue of the group, compared to 34% for 2001. This percentage
contribution shows that the securities businesses in aggregate grew their Rand
contribution by 34% year-on-year, which is extremely gratifying in the existing
market conditions.
The performances of equity derivatives and stockbroking were both outstanding
and the 59% year-on-year increase in contribution to the group by the fixed
income team deserves special mention.
As reported at the interim stage, the strong financial performance of the
securities team in aggregate is backed by their performances in the annual
Financial Mail analyst of the year awards. The derivative team was rated as the
best in South Africa for the sixth consecutive year in both Derivatives Research
and Derivatives Dealing. Our quantitative risk research team was rated number
one in Innovative Research and in Risk Management, coming second in Quantitative
Research. The fixed income team was rated third in Fixed Income Research.
Overall, Cadiz only entered in seven categories of the survey and achieved six
top-three awards - four first-places, one second and one third place.
STRUCTURING
The structuring activities at Cadiz continued to deliver a core part of the
revenue in 2002. Contribution from structuring increased year-on-year from 26%
to 35%.
In strict contrast to conventional "structured finance" houses, none of the
structuring activities of Cadiz are focused on tax structuring. In line with our
core value proposition, all structuring activities are driven by the common
threads of Cadiz: derivative instrument technologies and creative quantitative
solutions. The clearly defined focus of this business is the management of the
risk-return paradox on behalf of our clients.
The structuring activities are dispersed across the corporate, parastatal,
retail and pension-fund client segments. These activities - which are generally
of a once-off nature - stand in contrast to the mandate-backed activities of our
asset management team and the business done by securities where transactions are
executed on the back of ongoing research output.
ASSET MANAGEMENT
The financial markets in 2002 were extremely unpredictable and volatile. The
performance of the wholesale funds managed by our specialised asset management
team remains very competitive owing to the fact that the specialised portfolios
have embedded derivative structures that are used to manage the portfolio risk.
The portfolios thrive in volatile markets.
In Rand terms, the contribution of asset management was 3% higher in 2002
compared to 2001. The significant growth experienced in the other group
businesses resulted in a decline in percentage contribution from 20% in 2001 to
18% in 2002.
INVESTMENTS
As stated above, the group`s investment portfolio showed a 13% year-on-year
decline in contribution to gross revenue. This is largely due to the
differential between local and international interest rates.
Despite the unrealised foreign exchange loss, we remain committed to an ongoing
strategy of diversifying the currency denomination of our capital base. This is
an alternative strategy to geographic diversification of the business operations
themselves. We are confident that in the long term, the benefits of
diversification of our capital base will materialise in the form of stability
and growth in the net asset value of our company. These benefits need to be
prioritised over the inevitability of interim mark-to-market disappointments.
PROSPECTS
In August 2003, Cadiz will celebrate our tenth anniversary. We shall approach
2003 with the vigour of a ten-year old, tempered only by the significant
accumulated wisdom of our past experience.
The business feels vibrant and the culture strengthens from day to day. We
believe that our credibility as a company dedicated to customers, that delivers
innovation off a platform of solid values, is slowly being recognised as being
real and sustainable. We are optimistic about our future but realistic about
the inevitable challenges that persist in our environment and the tenacity that
we will need to confront those challenges.
AUDIT REPORT
The results are prepared in accordance with South African Statements of
Generally Accepted Accounting Practice and on a basis consistent with prior
years except for the change in accounting policy as a result of the group
adopting AC 412 (Consolidation - Special purpose entities), which has not
affected current or prior year results. The results for the year have been
audited by PricewaterhouseCoopers Inc. and their unqualified audit report is
available for inspection at the company`s registered office.
DIVIDEND ANNOUNCEMENT
Notice is hereby given of the dividend of 11.0 cents per ordinary share for the
financial year ending 31 December 2002 (2001: 10.25 cents). The dividend is
covered three times by headline earnings per share.
Last date to trade cum-dividend 13 March 2003
Trading commences ex-dividend 14 March 2003
Record date 20 March 2003
Payment date 24 March 2003
Share certificates may not be dematerialised or rematerialised between 14 March
2003 and 20 March 2003, both dates inclusive.
On behalf of the board of directors
Colin Hall Ray Cadiz
Chairman Chief Executive Officer
Cape Town
24 February 2003
Registered office
Ground Floor
Fernwood House
The Oval
1 Oakdale Road
Newlands
7700
P O Box 44547
Claremont
7735
Directors
C A Hall (Chairman)*
R F G Cadiz (CEO)
B H Kent*
S J Saunders*
D M Lawrence*
(* Non - executive directors)
Transfer secretaries
Computershare Investor Services Limited
Reg No 1958/003546/06
70 Marshall Street
Johannesburg
2001
Company Secretary
F Shaw, E.mail: fraser.shaw@cadiz.co.za
Date: 24/02/2003 09:00:00 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
