| Mon 2 Aug 2004, 8:42 | | Interim Results For The Six Months Ended 30 June 2 |
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Cadiz - Unaudited Interim Results For The Six Months Ended 30 June 2004
CADIZ HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/007258/06)
ISIN ZAE000017661
Share code CDZ
(`CADIZ`)
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2004
HIGHLIGHTS
* Gross operating revenue up by 5.2% to R102.7 million
* Diluted headline earnings per share up by 2.7% to 19.1 cents
* Black Economic Empowerment shareholding at 27%
* Specific payment to shareholders of 32 cents per share
GROUP INCOME STATEMENT Unaudited Unaudited Audited
six six twelve
months months months
30-Jun-04 30-Jun-03 31-Dec-03
R `000 R `000 R `000
Gross operating revenue
102,739 97,707 194,336
Operating expenses
(57,928) (55,985) (115,795)
Goodwill amortised
(1,393) (687) (2,080)
--------- --------- ---------
Operating profit 43,418 41,035 76,461
Net investment income 11,578
5,215 7,888
--------- --------- ---------
Net income from investments 24,382
11,395 15,492
Unrealised foreign exchange losses
(6,180) (7,604) (12,804)
--------- --------- ---------
Net income before taxation
48,633 48,923 88,039
Taxation
(11,285) (12,705) (21,895)
--------- --------- ---------
Net income after taxation 66,144
37,348 36,218
--------- --------- ---------
Reconciliation of headline earnings
Net income after taxation 66,144
37,348 36,218
Goodwill amortised
1,393 687 2,080
--------- --------- ---------
Headline earnings 68,224
38,741 36,905
--------- --------- ---------
Issued number of shares (`000) 239,810 239,810 239,810
Consolidated number of shares 206,525 187,553 188,069
(`000)
Weighted average number of shares 187,016 189,553 188,689
(`000)
Diluted weighted average number of 203,055 198,115 198,811
shares (`000)
Earnings per share (cents)
Basic 20.0 19.1 35.1
Diluted 18.4 18.3 33.3
Headline earnings per share (cents)
Basic 20.7 19.5 36.2
Diluted 19.1 18.6 34.3
GROUP BALANCE SHEET Unaudited Unaudited Audited
30-Jun-04 30-Jun-03 31-Dec-03
R `000 R `000 R `000
Assets
Fixed assets 6,257 5,736 4,907
Deferred taxation 20,499 23,469 21,840
Goodwill 24,385 26,839 25,779
Investments and trading securities 222,956 317,514 356,879
Receivables and prepayments 95,880 71,204 70,499
Taxation 7,742 2,829 4,542
Cash and cash equivalents 135,202 80,652 105,621
--------- --------- ---------
Total assets 512,921 528,243 590,067
--------- --------- ---------
Equity and reserves 367,547 295,758 325,684
--------- --------- ---------
Ordinary share capital and premium 106,216 81,445 81,445
Reserves 261,331 214,313 244,239
--------- --------- ---------
Liabilities 145,374 232,485 264,383
--------- --------- ---------
Deferred taxation 7,928 3,917 7,805
Trade and other payables 127,668 93,417 108,910
Compulsory convertible debentures - 128,052 139,839
Trading liabilities 9,778 7,099 7,829
--------- --------- ---------
Total equity and liabilities 512,921 528,243 590,067
--------- --------- ---------
Net asset value (cents per share) 178 158 173
Net tangible asset value (cents per 160 133 152
share)
ABRIDGED GROUP CASH FLOW STATEMENT Unaudited Unaudited Audited
six six twelve
months months months
30-Jun-04 30-Jun-03 31-Dec-03
R `000 R `000 R `000
Cash flow from operating activities 17,133 23,313 74,368
--------- --------- ---------
Cash generated from operations 39,870 44,384 95,439
Dividends paid (22,737) (21,071) (21,071)
--------- --------- ---------
Cash flow from investing activities (14,505) (8,876) (31,616)
Cash flow from financing activities 27,252 (6,234) (6,234)
--------- --------- ---------
Net change in cash and cash 29,880 8,203 36,518
equivalents
Effect of exchange rate adjustment (299) (2,731) (6,077)
Cash and cash equivalents at 105,621 75,180 75,180
beginning of period
--------- --------- ---------
Cash and cash equivalents at end of 135,202 80,652 105,621
period
--------- --------- ---------
ABRIDGED GROUP STATEMENT OF CHANGES Unaudited Unaudited Audited
IN EQUITY
six six twelve
months months months
30-Jun-04 30-Jun-03 31-Dec-03
R `000 R `000 R `000
Share capital and premium
Opening balance 81,445 87,679 87,679
Treasury shares sold to Makana 38,814 - -
Financial Services
Treasury shares sold on exercise of 1,568 - -
options
Purchase of treasury shares (15,611) (6,234) (6,234)
--------- --------- ---------
106,216 81,445 81,445
--------- --------- ---------
Reserves
Opening balance 244,239 199,166 199,166
Surplus on sale of treasury shares 2,326 - -
to Makana Financial Services
Surplus on sale of treasury shares 155 - -
on exercise of options
Net income after taxation 37,348 36,218 66,144
Dividends paid (22,737) (21,071) (21,071)
--------- --------- ---------
261,331 214,313 244,239
--------- --------- ---------
Total shareholders` funds 367,547 295,758 325,684
--------- --------- ---------
ABRIDGED GROUP LIQUIDITY PROFILE Less than More than Total
1 year 1 year
R `000 R `000 R `000
As at 30 June 2004
Investments and trading securities 65,733 157,223 222,956
Receivables and prepayments 84,312 11,568 95,880
Taxation 7,742 - 7,742
Cash and cash equivalents 135,202 - 135,202
Trade and other payables (110,265) (17,403) (127,668)
Trading account liabilities (9,778) - (9,778)
--------- --------- ---------
172,946 151,388 324,334
--------- --------- ---------
REVIEW OF RESULTS
The Board of Cadiz Holdings Limited (`Cadiz`) is pleased to announce the results
for the six months to June 2004.
Gross operating revenue totalled R102.7 million for the six months which is up
5.2% on the same period last year. Operating expenses for the period were 3.5%
higher at R57.9 million. Operating expenses have been contained due to a
reduction in remuneration incentive payments and a general focus on costs.
Operating profit of R43.4 million, after the deduction of R1.4 million for
goodwill amortisation, is up 5.8% over last year.
The investment portfolio generated a return of R5.2 million for the six months
after deduction of unrealised foreign exchange losses of R6.2 million (2003:
R7.6 million). This is R2.7 million lower than the R7.9 million earned for the
same period last year. As at 30 June 2004 the non-Rand component of our primary
capital was R83.5 million. During the period certain investments were realised
and the proceeds utilised to redeem the convertible debentures.
Net income before taxation of R48.6 million is 0.6% lower than 2003. The tax
charge of R11.3 million reflects an effective tax rate of 23.2%, down from the
26.0% effective rate for 2003. The main reason for this reduction is that the
June 2003 taxation charge included a prior period charge of R2.8 million.
The above items translate into a 5.0% increase in headline earnings from R36.9
million in 2003 to R38.7 million for the equivalent period in 2004 and an
increase in diluted headline earnings per share of 2.7% to 19.1 cents.
Net asset value per share as at 30 June 2004 was 178 cents, up 12.7% up from
June 2003. Net tangible asset value per share as at 30 June 2004 was 160 cents,
up 20.3% from June 2003.
The Group continued to generate solid cash flows from operations. Cash and cash
equivalents on hand at 30 June 2004 are R135.2 million which is an increase of
R29.6 million from 30 December 2003 after the payment of dividends in April 2004
of R22.7 million.
OPERATIONAL REVIEW
The table below shows that the operating activities of the Group generated 95%
of the total revenue (R108.0 million) in the six months to June 2004. This high
percentage contribution is again partly a reflection of the disappointing
performance of the investment portfolio due to unrealised foreign exchange
losses.
REVENUE ANALYSIS
2004 2003 % Change
R`000 % of R`000 % of 2004/2003
total total
Securities 43,957 41% 45,705 43% (4%)
Structuring 35,586 33% 30,710 29% 16%
Asset management 23,196 21% 21,292 20% 9%
--------- ----- -------- ----- ------
Gross operating 102,739 95% 97,707 92% 5%
revenue
Net income from 11,395 11% 15,492 15% (26%)
investments
Unrealised foreign (6,180) (6%) (7,604) (7%) 19%
exchange losses
--------- ----- -------- ----- ------
Net investment 5,215 5% 7,888 8% (34%)
income
--------- ----- -------- ----- ------
Total 107,954 100% 105,595 100% 2%
--------- ----- -------- ----- ------
SECURITIES
The securities businesses in aggregate contributed 41% of total revenue for the
period, down from 43% for the first half of 2003. In Rand terms, the
contribution of securities declined marginally by 4% period-on-period. This is
considered to be an impressive performance in tough markets where volumes are
lower.
The strong financial performance of the securities activities and its components
is again mirrored and underpinned by another compelling showing in the Financial
Mail Survey of Research and Analysts. Cadiz Financial Strategists was rated the
best Research and Dealing house in derivatives in South Africa for an
unparalleled eighth successive year. In addition, the firm was rated first in
Risk Management Research and Innovative Research for the third successive year,
first in Quantitative Research for the second successive year, and fifth in
Fixed Income Research. Cadiz again earned five first places out of seven
categories entered in the survey in the face of stiff competition from some of
the largest local and global financial markets players.
STRUCTURING
The structuring activities of Cadiz increased their contribution to total
revenue from 29% to 33% period-on-period. In Rand terms, this reflects a 16%
period-on-period increase from R30.7 million to R35.6 million. The structuring
activities have been broadened to include individual stocks and baskets of
stocks. This is a growth area in South Africa. A significant portion of income
from structuring activities arises from structures that we have implemented in
the past. As stated in previous periods we remain confident that structuring
activities and earnings at Cadiz will continue to show growth, albeit with
potential volatility.
ASSET MANAGEMENT
The asset management activities of Cadiz contributed some R23.2 million in
revenue to the Group in the six months to 30 June 2004 - an increase of 9%
period-on-period. The main reason for this increase is that the newly acquired
Prodigy-Coris Asset Management (Proprietary) Limited was included for the full
six months in 2004 compared to three months in the first half of 2003. Total
assets under management are at R12.5 billion. The business has been awarded some
new mandates from smaller clients. However this has been offset by approximately
R330 million in withdrawals due to benefit payments by one of the funds during
the period.
We have continued to deliver solid returns to add to our impressive seven year
performance track record.
Within asset management, we anticipate that the lag in revenue contribution by
the investment products team in the first six months of 2004 will be countered
by a stronger showing in the second half. A view that is based on a very
positive reception by the market to recent innovative products, and increasing
inflows.
The hedge fund operation is building a very solid track record in extremely
testing and volatile market conditions. Funds under management are increasing
steadily and stand at R136.5 million as at 30 June. We remain optimistic about
the prospects for this team to show strong revenue growth in the years ahead.
INVESTMENTS
Net investment income declined by 33.9% to R5.2 million from R7.9 million. The
major reasons for the decrease were the maturity of a portion of the high
yielding R150 Government bonds (the proceeds of which have been invested at
lower current interest rates), and lower returns from the offshore investments
portfolio (R1.3 million) and the funds invested in our hedge fund (R0.9
million). These lower returns were partly offset by a R1.4 million reduction in
the period-on-period unrealised foreign exchange losses which improved from a
loss of R7.6 million to a loss of R6.2 million for the six months. In line with
our strategy of currency diversification we have maintained our foreign currency
investments at 22.7% of Group capital.
SPECIFIC PAYMENT TO SHAREHOLDERS
Cadiz has decided that the current level of capital is surplus to the Group`s
requirements. This has been partially addressed by way of a specific payment to
shareholders of 32 cents per share out of the share premium of the company.
After the specific payment Cadiz will have accumulated capital of R301.5 million
and will continues to invest the surplus funds in an effort to achieve the best
risk adjusted returns taking into account the possible future needs of the
Group.
The specific payment is subject to the passing of the requisite resolutions by
the shareholders in a general meeting to be held on Tuesday, 7 September 2004
and the approval of the JSE Securities Exchange South Africa. The members of the
Board who beneficially own or control Cadiz shares intend to vote in favour of
the distribution.
The impact of the specific payment for purposes of comparative analysis are set
out below. The pro forma analysis has been calculated on the assumption that the
specific payment to shareholders was made on 1 January 2004, and that the net
cash outflow after taking into account the inflows on treasury shares and those
held by Cadiz Holdings Limited Employee Share Trust on 30 June 2004 is R66.0
million.
As reported
Proforma Impact
cents cents %
Earnings per share
- basic 20.0 19.0 (5.0)
- diluted 18.4 17.5 (4.9)
Headline earnings per share
basic 20.7 19.8 (4.3)
diluted 19.1 18.2 (4.7)
Net asset value per share 178 146 (18.0)
Net tangible asset value per 160 128 (20.0)
share
The salient features of the specific payment to shareholders are as follows:
Last date to trade cum-dividend Thursday, 23 September 2004
Trading commences ex-dividend Monday, 27 September 2004
Record date Friday, 1 October 2004
Payment date Monday, 4 October 2004
Share certificates may not be de-materialised or re-materialised between Monday,
27 September 2004 and Friday, 1 October 2004, both dates inclusive.
A circular to shareholders setting out details of the above, a notice of a
general meeting to be held on Tuesday, 7 September 2004 and form of proxy will
be posted to shareholders in due course.
BLACK ECONOMIC EMPOWERMENT (`BEE`)
On 28 May the shareholders approved the:
* Sale of 23.5 million shares held by the Group to a consortium led by Makana
Investment Corporation (Proprietary) Limited. This was transacted at an average
price of 175 cents per share;
* Appointment of Peter-Paul Ngwenya and Sfiso Buthelezi to the Cadiz Board as
non-executive and alternate director respectively; and
* Establishment of Cadiz Black Economic Empowerment Trust which will facilitate
the planned transfer of 10% of the Group`s equity to current and future black
employees over the next five years.
On 16 April 2004, founder management shareholders and Investec facilitated a
further boost to the BEE credentials of the Group by making 21.5 million shares
available for a transaction with Worldwide Capital Limited.
Shareholders are referred to the circular dated 29 April 2004 and SENS
announcements dated 23 March 2004 and 19 April 2004 for further details of the
transactions.
The above transactions together with the shares held by black staff and the
indirect BEE shareholding held by Investec, result in 27% of the shares in Cadiz
being currently held by BEE stakeholders.
Cadiz is committed to meaningful transformation at all levels in the business
and to adopting all aspects of the Financial Sector Charter scorecard.
INSIDER TRADING
The investigation by the Financial Services Board (`FSB`) into trading in shares
of Cadiz announced on 5 May 2004 has been completed. Due to the fact that the
FSB has not found sufficient evidence to support any suspicions of irregular
share dealings the Insider Trading Directorate has decided to close the
investigation.
PROSPECTS
The first six months of 2004 reflects another period of solid incremental growth
for Cadiz. We have managed to further build on our credentials and substance,
and significantly with the BEE transactions, the diversity and relevance of the
Group to our country.
We anticipate that market conditions will remain tough for the foreseeable
future, as they have been for some five years now. Yet we are undaunted by these
expected challenges and feel that Cadiz is well sized, resourced and positioned
to compete and to continue to grow into the long term - the only horizon with
which we concern ourselves. We believe that Cadiz is rapidly gaining recognition
as a serious player in the South African financial markets.
TREASURY SHARES
In terms of the approvals granted at the Company`s Annual General Meetings on 16
May 2003 and 28 May 2004, a subsidiary of Cadiz purchased 6.6 million Cadiz
shares at an average price of 236.9 cents per share between 19 April 2004 and 23
June 2004.
BASIS OF PRESENTATION
ACCOUNTING POLICIES
The results have been prepared in accordance with AC127 (Interim Financial
Reporting). The accounting policies are consistent with those applied in the
annual financial statements for the year ended 31 December 2003.
RECLASSIFICATION OF COMPARATIVES AND ADDITIONAL DISCLOSURES
The June 2003 comparatives have been reclassified as follows:
* Goodwill amortised of R0.7 million has been reclassified to be included in
operating profit.
* Other assets of R2.0 million have been reclassified to investments and trading
securities.
* Taxation of R2.8 million previously disclosed in receivables and prepayments
has been separately disclosed.
On behalf of the Board of Directors.
Colin Hall Ray Cadiz
Chairman Chief Executive Officer
Cape Town
2 August 2004
Registered office
Ground Floor
Fernwood House
The Oval
1 Oakdale Road
Newlands
7700
P O Box 44547
Claremont
7735
www.cadiz.co.za
Directors
C A Hall (Chairman)*
R F G Cadiz (CEO)
B H Kent*
D M Lawrence*
S P Ngwenya*
S J Saunders*
N S Buthelezi*(alternate)
(* Non - executive directors)
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street
Johannesburg
P O Box 61051
Marshalltown 2107
Sponsor
Investec Bank Limited
100 Grayston Drive
Sandown, Sandton
P O Box 785700
Sandton 2146
Company secretary
FC Shaw, E.mail: fraser.shaw@cadiz.co.za
Date: 02/08/2004 08:30:14 AM Produced by the JSE SENS Department
