Wrap Text
Summarised consolidated preliminary results for the year ended 31 March 2015
CADIZ HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
("Cadiz", "the group" or "the company")
Registration number: 1997/007258/06
JSE share code: CDZ
ISIN: ZAE000017661
KEY FEATURES
- Restructured the Asset Management business to return to profitability
- Diluted HEPS loss of 23.0 cents per share
- Assets under management of R20.7 billion
- Maintained level 3 BBBEE status
SUMMARISED CONSOLIDATED PRELIMINARY RESULTS
for the year ended 31 March 2015
SUMMARISED CONSOLIDATED PRELIMINARY STATEMENT OF COMPREHENSIVE INCOME
(R thousands) Audited Audited
% 12 months 12 months
Change Notes 31 Mar 15 31 Mar 14
Continuing operations
Gross operating revenue (12) 121 277 138 593
Interest income (37) 17 122 27 138
Net investment income (85) 7 016 47 223
Net income from investments 7 240 47 171
Foreign exchange (loss)/gain (224) 52
Income attributable to linked assets 7 4 807 4 486
Net fair value gains on linked
financial instruments 502 060 532 108
Linked liability adjustment (497 253) (527 622)
Fair value adjustment on third-party
mutual fund interests (79) (7 997) (37 955)
Operating expenses (0) (164 569) (165 386)
Restructuring costs 5 (40 350) -
Impairment of financial assets at
amortised cost 2 (17 353) -
Impairment of goodwill 3 (160 000) -
Operating (loss)/profit (240 047) 14 099
Finance costs (13) (124)
Share of loss of associate (921) (3 843)
Impairment of investment in associate 4 (28 400) -
(Loss)/Profit before taxation (269 381) 10 132
Taxation 18 105 (2 332)
Total comprehensive (loss)/income from
continuing operations (251 276) 7 800
Discontinued operation
Loss from discontinued operation - (1 904)
Total comprehensive (loss)/income (251 276) 5 896
(Loss)/Earnings per share (cents)
Basic - from continuing operations (111.4) 3.3
Basic - from discontinued operation - (0.8)
(111.4) 2.5
Diluted - from continuing operations (111.4) 3.3
Diluted - from discontinued operation - (0.8)
(111.4) 2.5
Notes to the summarised consolidated
preliminary statement of comprehensive income
Reconciliation of headline earnings:
(Loss)/Profit attributable to equity holders of the company (251 276) 5 896
Remeasurements included in equity-accounted earnings - 102
Taxation impact - (28)
Loss on disposal of plant and equipment - 284
Taxation impact - (80)
Impairment of plant and equipment 1 497 -
Taxation impact (419) -
Impairment of goodwill 160 000 -
Impairment of investment in associates 28 700 -
Taxation impact (300) -
Impairment of computer software 13 942 -
Taxation impact (3 904) -
Headline (loss)/earnings (51 760) 6 174
Headline (loss)/earnings per share (cents)
Basic (23.0) 2.7
Diluted (23.0) 2.7
Share information:
Issued number of shares ('000) 245 823 245 823
Consolidated number of shares ('000) 225 505 225 505
Weighted average number of shares ('000) 225 476 231 409
Diluted weighted average number of shares ('000) 225 477 231 479
SUMMARISED CONSOLIDATED PRELIMINARY STATEMENT OF FINANCIAL POSITION
(R thousands) Audited Audited
Note 31 Mar 15 31 Mar 14
ASSETS
Intangible assets 66 891 239 285
Plant and equipment 4 500 5 086
Interests in associates - equity accounted 4 31 153 60 474
Deferred taxation 44 740 22 843
Investments backing linked funds 5 989 506 5 616 688
Investment property 323 473 336 689
Loans and receivables 242 048 94 720
Financial assets - at fair value 3 765 249 3 856 625
Interest in associates - at fair value 336 364 471 813
Non-current assets held for sale 16 400 -
Cash and cash equivalents 1 305 972 856 841
Financial assets - at amortised cost 82 863 97 745
Financial assets - at fair value 266 333 416 232
Interests in associates - at fair value 87 586 14 795
Receivables and prepayments 55 729 61 180
Taxation 1 141 2 679
Cash and cash equivalents 38 551 126 906
Total assets 6 668 993 6 663 913
EQUITY
Capital and reserves
Ordinary share capital and premium 16 991 16 991
Treasury shares (52 919) (52 880)
Share-based payment reserve 36 452 37 610
Retained earnings 395 981 653 656
Total equity 396 505 655 377
LIABILITIES
Deferred taxation 6 713 6 590
Linked investment contract liabilities 5 838 318 5 410 476
Third-party financial liabilities arising on
consolidation of mutual funds 373 132 555 287
Provisions 15 146 5 288
Trade and other payables 39 124 30 874
Taxation 55 21
Total liabilities 6 272 488 6 008 536
Total equity and liabilities 6 668 993 6 663 913
Net asset value (cents per share) 176 291
Net tangible asset value (cents per share) 129 177
SUMMARISED CONSOLIDATED PRELIMINARY STATEMENT OF CASH FLOW
(R thousands) Audited Audited
12 months 12 months
31 Mar 15 31 Mar 14
Cash flow from operating activities
Cash flow from operations 433 682 (10 208)
Taxation paid (2 103) (8 983)
Interest received 16 002 25 067
Interest paid (13) (124)
Dividends received 3 420 11 670
Cash generated from operations 450 988 17 422
Ordinary dividends paid (9 922) (16 307)
Net cash flow from operating activities 441 066 1 115
Cash flow from investing activities
Proceeds on disposal of financial assets 1 712 42 474
Purchase of financial assets (75 499) (8 301)
Additions to intangible assets (3 447) (2 458)
Additions to plant and equipment (3 044) (2 051)
Proceeds on disposal of plant and equipment 27 23
Net cash flow from investing activities (80 251) 29 687
Cash flow from financing activities
(Repurchase)/Issue of A ordinary shares (39) 95
Repurchase of treasury shares - (8 653)
Net cash flow from financing activities (39) (8 558)
Net change in cash and cash equivalents 360 776 22 244
Cash and cash equivalents at beginning of year 983 747 961 503
Cash and cash equivalents at end of year 1 344 523 983 747
Attributable to the group 38 551 126 906
Attributable to policyholders 1 305 972 856 841
SUMMARISED CONSOLIDATED PRELIMINARY STATEMENT OF CHANGES IN EQUITY
(R thousands) Audited Audited
12 months 12 months
31 Mar 15 31 Mar 14
Share capital, share premium and treasury shares
Opening balance (35 889) (27 249)
Cancellation of shares - (8 653)
(Repurchases)/Issues of A ordinary shares (39) 13
(35 928) (35 889)
Reserves
Opening balance 691 266 700 158
Premium on issue of equity-settled share appreciation rights - 82
Employee scheme - value of services provided (1 158) 1 437
Profit on dilution of shareholding in subsidiary 3 523 -
Total comprehensive (loss)/income (251 276) 5 896
Dividends paid (9 922) (16 307)
432 433 691 266
Total shareholders' equity 396 505 655 377
SUMMARISED CONSOLIDATED PRELIMINARY SEGMENT REPORT
(R thousands) Asset
Management Advisory Investments Total
Audited 12 months to 31 March 2015
Segment revenue 113 199 23 293 6 839 143 331
Segment costs 140 819 16 521 - 157 340
Segment (loss)/profit (27 620) 6 772 6 839 (14 009)
Corporate costs (5 934)
Share-based payment expense - Advisory (2 414)
Impairment of financial assets at amortised cost (17 353)
Impairment of goodwill (160 000)
Impairment of investment in associate (28 400)
Restructuring costs (40 350)
Share of loss of associate (921)
Loss before taxation (269 381)
Gross operating revenue (external) 98 930 22 347 121 277
Audited 12 months to 31 March 2014
Segment revenue 137 222 18 209 20 107 175 538
Segment costs 143 812 13 808 - 157 620
Segment (loss)/profit (6 590) 4 401 20 107 17 918
Corporate costs (6 284)
Share before taxation on discontinued operation 2 341
Share of loss of associate (3 843)
Profit before taxation 10 132
Gross operating revenue (external) 112 887 17 411 8 295 138 593
Year-on-year percentage movement
Segment revenue (18%) 28% (66%) (18%)
Segment costs 2% (20%) N/A -
Segment profit/(loss) (319%) 54% (66%) (178%)
NOTES TO THE SUMMARISED CONSOLIDATED PRELIMINARY FINANCIAL STATEMENTS
1 BASIS OF PRESENTATION
The summarised consolidated financial statements are prepared in accordance with the
requirements of the JSE Limited Listings Requirements for preliminary reports and
the requirements of the Companies Act applicable to summary financial statements.
The Listings Requirements require preliminary reports to be prepared in accordance
with the framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Pronouncements
as issued by the Financial Reporting Standards Council and to also, as a minimum,
contain the information required by IAS 34 - Interim Financial Reporting. The accounting
policies applied in the preparation of the consolidated financial statements from which
the summarised consolidated financial statements were derived are in terms of IFRS and
are consistent with those accounting policies applied in the preparation of the previous
consolidated annual financial statements.
The summarised consolidated preliminary financial statements have been prepared under
the supervision of the finance director, Mr F C Shaw (CA) SA.
2 IMPAIRMENT OF FINANCIAL ASSETS AT AMORTISED COST
Makana funded the acquisition of 34.4 million Cadiz shares through the issue of
preference shares redeemable in February 2017. Makana is a fully functioning investment
company and the Cadiz shares and other assets support this liability. Following the
decrease in the Cadiz share price management has considered the recoverability of
the preference shares and provided R17.4 million against the R65.6 million Makana
preference shares. Cadiz has also not recognised R2.2 million dividends accrued on
the preference shares since September 2014.
3 IMPAIRMENT OF GOODWILL
After taking into account the decline in assets under management in the cash-generating
unit, the business has been restructured. This has resulted in an impairment of the
carrying value of the goodwill by R160.0 million to R66.9 million based on a
value-in-use valuation. The estimates used to test goodwill were as follows:
Assets under management at 31 March 2015 of R20.7 billion (2014: R28.5 billion),
annual average asset growth in assets of 16.0% applied over a ten-year cash projection
period (2014: 16.7%), average fees of 0.42% (2014: 0.45%), an average cost-to-income
ratio of 84% (2014: 75%), a weighted average cost of capital of 20.0% (2014: 22.0%)
and a long-term growth rate of 6% (2014: 6%).
4 IMPAIRMENT OF INVESTMENT IN ASSOCIATE - EQUITY ACCOUNTED
The recoverable amount of the investment in associate has been determined based on
fair value less cost to sell calculations.
During the period BNP Paribas Securities South Africa Holdings, the associate in
which Cadiz holds 40%, has started making profits. However, based on the current
revenue mix and the previous delays experienced, management has revised revenue
and cost growth estimates and impaired the carrying value of the associates by
R28.4 million to R31.2 million. The estimates used to test for impairment in
investments in associates were as follows:
Annual average growth in revenue and costs of 10.5% and 5.2% respectively
(2014: 22.2% and 9.3%), a weighted average cost of capital of 20% (2014: 20.0%)
and a long-term growth rate of 6% (2014: 6%). This has been tested against the
estimated call option price receivable should BNP Paribas exercise their call
option in October 2016.
The estimates to determine the value on the basis where BNP exercises their call option,
were annual average growth in revenue and costs of 10.4% and 0% respectively over the
18-month period up until the exercise of the option by BNP Paribas SA and a weighted
cost of capital of 18%. The value determined under this basis was lower and was used
as the recoverable amount of the investment in associate. In valuing the option Cadiz
has not taken into account the possible benefit that may arise due to the change in the
original BNP Paribas business plan and the possible exclusion of incentives paid to
retain staff.
5 RESTRUCTURING COSTS
(R thousands) 31 Mar 15
Retrenchment costs 8 270
Computer software impairment 13 942
Furniture and equipment impairment 1 499
Onerous lease 2 661
Onerous contracts 5 691
Prepayments release 8 287
40 350
Management restructured the business during the year to reduce the fixed cost base.
The above once-off restructuring costs are in respect of the staff retrenched,
impairing the administration platform which has been outsourced to Maitland, staff
being transferred to Maitland, closure of the regional offices, reduction in the
office rental space and onerous contracts.
6 FINANCIAL RISK MANAGEMENT
The group is exposed to a variety of financial risks which include credit risk,
market risk (including currency, price and interest rate risk) and liquidity risk.
The group's risk management programme focuses on the unpredictability of financial
markets and seeks to limit potential adverse effects on the group, while operating
within a framework that ensures alignment with the group's overall strategy and
risk appetite.
The summarised preliminary financial statements do not include all financial risk
management information and disclosures required in the annual financial statements;
they should be read in conjunction with the group's annual financial statements as at
31 March 2015. There have been no change in the risk mangement department or in any
risk management policies since the year-end.
Fair values
The carrying amounts and the fair values of the group's financial assets and liabilities
are the same. Where assets are held at amortised cost, the fair values approximate the
carrying values as these have floating rates.
Fair value measurements recognised in the statements of financial position
The following table provides an analysis of the financial instruments that are measured
subsequent to initial recognition at fair value, grouped into levels 1 to 3 based on
the degree to which the fair value is observable.
- level 1 fair value measurements are those derived from quoted prices (unadjusted)
in active markets for identifiable assets or liabilities;
- level 2 fair value measurements are those derived from inputs other than quoted
prices included within level 1 that are observable for the asset or liability,
either directly or indirectly; and
- level 3 fair value measurements are those derived from valuation techniques that
include inputs for the asset or liability that are not based on observable market
data.
Valuation techniques and assumptions applied for the purposes of measuring fair value
The fair values of financial assets and financial liabilities are determined as follows:
For level 1:
- The fair values of financial assets and financial liabilities with standard terms
and conditions and traded on active liquid markets are determined with reference
to quoted market prices.
For level 2:
- The fair values of other financial assets and financial liabilities (excluding
derivative instruments) are determined in accordance with generally accepted
pricing models based on discounted cash flow analysis using prices from observable
current market transactions and dealer quotes for similar instruments.
- Observable inputs generally used to measure the fair value of securities classified
as level 2 include benchmark yields, reported secondary trades, broker-dealer quotes,
issuer spreads, benchmark securities, bids, offers and reference data.
- The fair values of derivative instruments are calculated using quoted prices.
Where such prices are not available, discounted cash flow analysis is performed
using the applicable yield curve for the duration of the instruments for non-optional
derivatives, and option pricing models for optional derivatives. Foreign currency
forward contracts are measured using quoted forward exchange rates and yield curves
derived from quoted interest rates matching maturities of the contracts. Interest
rate swaps are measured at the present value of future cash flows estimated and
discounted based on the applicable yield curves derived from quoted interest rates.
- The fair value of financial guarantee contracts is determined using option pricing
models where the main assumptions are the probability of default by the specified
counterparty extrapolated from the market-based credit information and the amount
of loss, given the default.
For level 3:
- Determinations to classify fair value measures within level 3 of the valuation
hierarchy are generally based on the significance of the unobservable factors when
compared to the overall fair value measurement. The group applies various due
diligence procedures, as considered appropriate, to validate the underlying
information used in the valuations.
Group
(R thousands) Level 1 Level 2 Level 3 Total
31 Mar 15
Investments backing linked funds
Financial assets - designated at fair
value through profit or loss
- Collective investment schemes - 4 461 - 4 461
- Debentures - listed - 261 476 - 261 476
- Debentures - unlisted - 1 306 915 29 603 1 336 518
- Domestic equities - listed 646 976 - - 646 976
- Domestic equities - unlisted - - 4 4
- Fixed income securities - listed 277 641 104 077 - 381 718
- International equities - listed - 1 134 096 - 1 134 096
Interests in associates - measured at
fair value
Collective investment schemes - 309 879 26 485 336 364
Investment property - - 323 473 323 473
Non-current assets held for sale - - 16 400 16 400
Financial assets - designated at fair
value through profit or loss
Private equity investments - - 8 998 8 998
Collective investment schemes - 123 307 - 123 307
Fixed income securities - listed 30 004 12 210 - 42 214
Fixed income securities - unlisted - - 6 220 6 220
Investment-linked policies 3 021 - 3 021
Other investments - 266 - 266
Financial assets - at fair value
through profit or loss
Listed investments 82 307 - - 82 307
Interests in associates - measured at
fair value
Collective investment schemes - 87 153 433 87 586
Interest in associates - equity accounted - - 31 153 31 153
1 036 928 3 346 861 442 769 4 826 558
Level 3 reconciliations
(R thousands) Investment
property
Interest in and non- Financial
associates current assets -
- equity assets held at fair
accounted for sale value Total
Balance at beginning of year - 336 689 11 988 348 677
Additions - 1 377 35 1 412
Revalued to fair value less
cost to sell 43 908 - - 43 908
(Loss)/Profit recognised in profit
or loss (12 755) 1 807 (6 104) (17 052)
Capital repayment - - (3 672) (3 672)
Transfer from level 2 to 3 - - 69 496 69 496
Balance at end of period 31 153 339 873 71 743 442 769
Group
(R thousands) Level 1 Level 2 Level 3 Total
31 Mar 14
Investments backing linked funds
Financial assets - designated at fair
value through profit or loss
- Collective investment schemes - 12 914 - 12 914
- Debentures - listed 170 186 - - 170 186
- Debentures - unlisted - 1 795 269 - 1 795 269
- Domestic equities - listed 613 558 - - 613 558
- Domestic equities - unlisted - 17 541 - 17 541
- Fixed income securities - listed 330 908 - - 330 908
- International equities - listed 47 149 - - 47 149
- International equities - unlisted - 869 099 - 869 099
Interest in associates - measured at
fair value
Collective investment schemes - 471 813 - 471 813
Investment property - - 336 689 336 689
Financial assets - designated at fair
value through profit or loss
Private equity investments - - 7 963 7 963
Collective investment schemes - 175 855 - 175 855
Fixed income securities - unlisted - 54 373 - 54 373
Investment-linked policies - 4 078 - 4 078
Other investments - 608 - 608
Financial assets - at fair value
through profit or loss
Conversion option
- Related conversion option at
fair value - - 4 025 4 025
Listed investments 169 330 - - 169 330
Interests in associates - measured
at fair value
Collective investment schemes - 14 795 - 14 795
1 331 131 3 416 345 348 677 5 096 153
Level 3 reconciliations
(R thousands) Financial
assets -
Investment at fair
property value Total
Balance at beginning of year 153 372 15 953 169 325
Additions 184 944 - 184 944
Losses recognised in profit or loss (1 627) (965) (2 592)
Capital repayment - (3 000) (3 000)
Balance at end of year 336 689 11 988 348 677
All investment properties are valued by an independent valuator on a three-year
rolling cycle and are sensitive to the property market.
The financial assets at fair value included in level 3 consist of the investment in
Makana of RNil (March 2014: R4.0 million), the investment in Rotimode of R0.9 million
(March 2014: R0.9 million), the investment in KayaGas of R8.1 million
(March 2014: R7.1 million) and investments in African Bank Limited of R62.7 million
(March 2014: RNil).
In determining the fair value of the Makana option included in the financial assets
at fair value the Vandermark valuation model was used. Significant inputs into the
model were the exercise price, current market price of Makana based on a valuation
of the underlying investments, standard deviation of expected returns of 16.8%
(March 2014: 16.8%), risk-free rate of 7.1% (March 2014: 7.1%) and a dividend yield
of 0% (March 2014: 0%).
The investments in African Bank Limited have been valued using guidance provided by
the curator of African Bank Limited, senior debt being valued at 90% of the face value
and subordinated debt valued at nil. African Bank Limited Preference shares are valued
at 1 cent per share. If the senior debt would have been valued at 80% of the face value,
the carrying amount of the financial asset would have been reduced by R7.0 million.
The recoverable amount of the investment in associate has been determined based on
fair value less cost to sell calculations. The estimates to determine the fair value
were annual average growth in revenue and costs of 10.4% and 0% respectively over the
18-month period up until the exercise of the option by BNP Paribas and a weighted cost
of capital of 18%. If the growth in revenue and long-term growth rates were 10% lower
and the weighted average cost of capital was 10% higher than management's estimates
with all other variables remaining constant, the carrying value of the investment in
associates would have reduced by R5.1 million (2014: R12.2 million).
The investment in Rotimode represents the consideration settled. The investment in
KayaGas is secured and therefore no sensitivities were deemed necessary.
The fair value liabilities in the group are the linked investment contract liabilities
and the third-party financial liabilities arising on consolidation of the mutual funds
which mirror the fair value hierarchy of the linked assets.
POST-BALANCE SHEET EVENTS
The directors are not aware of any post-balance sheet events that materially affect the
financial results or the financial position of the group as presented in the summarised
consolidated preliminary results.
COMMENTARY
FINANCIAL PERFORMANCE
Profitability for the year was impacted by the group's core business, Cadiz Asset
Management, experiencing a decline in assets under management. Cadiz Corporate Solutions
and BNP Paribas Securities both posted improved performances for the period.
Cadiz Asset Management has been restructured over the past six months in order to reduce
the fixed cost base and to make our administration cost base more variable. This has been
achieved by outsourcing the administrative function, reducing staff including the transfer
of staff to our outsource provider and scaling back on regional and head office space.
Restructuring costs of R40.4 million have been included in the current results.
The group's staff head count is 48% lower at 50 (March 2014: 97).
Cadiz has provided R17.4 million against its loan funding to empowerment partner,
Makana Investment Corporation (Makana), and written down the carrying value of its
investment in Makana, partly as a result of the decline in the Cadiz share price.
Cadiz also impaired the Cadiz Asset Management goodwill by R160 million to R66.9 million
which we believe fairly represents our current view of the business. The carrying value
of the investment in the BNP Paribas Securities associate has been written down by
R28.4 million to R31.2 million.
These factors have contributed to a headline loss of R51.8 million. The diluted losses
per share are 111.4 cents per share with headline losses per share being 23.0 cents.
These results are in line with the trading statements released on SENS on 2 March 2015
and 28 May 2015.
If other non-recurring items are also excluded from the headline loss Cadiz would have
reported a loss after tax for the year of R17.0 million.
OPERATIONAL PERFORMANCE
Gross segment revenue is 18% lower at R143.3 million primarily as a result of the decline
in the Asset Management segment revenue.
Gross segment expenses were tightly managed and were in line with the previous year
despite increased costs in the Advisory segment on higher revenues.
Group segment losses were R14.0 million (2014: profit of R17.9 million).
ASSET MANAGEMENT
Cadiz has continued to focus on building an independent asset management company which
aims to deliver strong long-term investment performance and excellent client service
based on a well-established investment philosophy and process. We offer a focused range
of high-conviction investment solutions to institutional and high net worth individuals
in South Africa.
Revenue decreased by 18% to R113.2 million while expenses of R140.8 million were 2%
lower excluding the restructuring costs of R40.4 million. The business incurred a loss
of R27.6 million compared to R6.6 million last year.
Total assets under management declined by R7.8 billion from March 2014 to R20.7 billion
at year-end. At 31 March 2015 assets under management within Cadiz Collective Investments
were R6.6 billion (32% of total assets under management) and Cadiz Life were R5.8 billion
(28% of total assets under management).
ADVISORY
Cadiz Corporate Solutions, the group's advisory business, in which 30% has been allocated
to management, advised on several local and an increasing number of cross-border M&A
transactions. The lack of opportunities in the resources sector was supplemented by revenue
streams from other sectors.
Revenue increased by 28% to R23.3 million while costs were 20% higher at R16.5 million.
The business made a profit before taxation of R6.8 million compared to R4.4 million in 2014.
INVESTMENTS
At year-end the group's investment portfolio totalled R262.8 million (March 2014:
R306.2 million). Revenue from investments decreased by 66% to R6.8 million after a
R4.0 million mark-to-market loss on the Makana conversion option, a R2.6 million loss
due to exposure to African Bank in underlying investment portfolios.
At the end of the year the capital was invested as follows:
- R48.7 million invested in liquid assets for regulatory capital adequacy;
- R5.5 million invested in liquid assets for short-term commitments;
- R8.1 million loan to BNP Paribas Securities for capital adequacy purposes;
- R48.2 million funding after a provision of R17.4 million to Makana, secured by Cadiz
shares. Cadiz has not recognised R2.2 million dividends accrued since September 2014.
Makana holds various unlisted investments which cover the value of the funding, however
management consider it appropriate to provide against the funding;
- R18.5 million option to acquire 24.8% of Makana who holds a majority stake in
Sebenza Forwarding and Shipping, and empowerment stakes in Hulamin, Foskor, Tellumat,
Kayagas and various mining rights. The value of the conversion right was reduced in
the year due to a decline in the underlying investments including the Cadiz share price;
- R17.6 million invested in non-core unlisted investments which are unlikely to be realised
in the short to medium term; and
- R116.2 million held as a prudent operational buffer held in liquid assets with market
exposure.
Net asset value of R396.5 million (175.8 cents per share) comprises R163.5 million
(72.5 cents per share) liquid assets, R25.7 million (11.4 cents per share) unlisted
investments, R31.2 million (13.8 cents per share) investment in BNP Paribas Securities,
R66.7 million (29.6 cents per share) in Makana and R4.5 million (2.0 cents per share)
fixed assets, and R104.9 million (46.5 cents per share) in intangible assets.
BNP PARIBAS SECURITIES
Cadiz has a 40% interest in BNP Paribas Securities South Africa Holdings which provides
South African equity market access to domestic and international institutional investors.
Cadiz' share of losses was R0.9 million (2014: R3.8 million). BNP Paribas has a call
option to purchase the stake from Cadiz from October 2016 and the period to be used to
determine the strike price of that option commenced on 1 January 2015. Management has
undertaken a valuation of the investment and considered it prudent to impair the
investment by R28.4 million. The carrying value of the investment in associates is
R31.2 million.
SHARE CAPITAL AND TREASURY SHARES
No shares were acquired during the year (2014: 7.5 million). The company issued nil
(2014: 25 324) ordinary shares to staff on vesting of awards under the Black Staff
Share Ownership Scheme.
DIRECTORS
Andrew Bonamour, William Marshall-Smith and Brian Wootton joined the board on
20 November 2014 as non-executive directors and resigned on 8 April 2015. Steven Saunders
and Totsie Memela-Khambula resigned on 20 November 2014. On 8 April 2015 Robbie Gonsalves
joined the board as an executive director. On 12 May 2015 Lulamile Xate joined the board
as a non-executive director and Ray Cadiz resigned as a director. Information regarding
the directors and secretary of the company is included in the integrated report.
PROSPECTS
As a result of recent corporate activity Cadiz now has a group of shareholders with a
common long-term goal of building a sustainable asset management business. This, together
with our lower cost base, will allow us to invest into an asset management business that
has a strong process and philosophy, and is entirely focused on investment performance
and positions the group for growth.
Cadiz Asset Management is committed to delivering strong long-term investment performance
to institutional and high net worth clients, driven by its valuation-based investment
philosophy. The restructuring has created a business which is investment and client
focused with non-core functions outsourced to specialists.
The turnaround strategy of Cadiz Asset Management announced in January this year has
progressed rapidly. Not only has administration been outsourced (on a variable cost basis),
further cost containment has been possible by ensuring that the entire business is
appropriately sized relative to our expected assets and revenues. As a result of these
actions we are confident that we have the correct investment team to deliver market-beating
investment results resulting in Cadiz Asset Management breaking even by March 2016.
This objective has been recognised by our existing clients who have retained assets with us,
both rewarding our investment team for investment performance and recognising the necessity
of steps undertaken by us.
Cadiz Corporate Solutions continues to be recognised for its independence and relationships
in the domestic corporate market, as well as in China and India where it has strategic
partnerships with two advisory firms. It has a healthy deal pipeline and will continue to
focus on the resources and infrastructure sectors, at the same time being alive to any other
opportunities.
The group will continue to retain a prudent capital base and intends to distribute annual
profits, adjusted for the non-cash impact of the associates, to shareholders.
BNP Paribas Securities will continue to focus on increasing its penetration with both
domestic and international investors.
AUDIT REPORT
These summarised consolidated financial statements for the year ended 31 March 2015 have
been audited by PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon.
The auditor also expressed an unmodified opinion on the annual financial statements from
which these summarised consolidated financial statements were derived.
A copy of the auditor's report on the summarised consolidated financial statements and
of the auditor's report on the annual consolidated financial statements are available for
inspection at the company's registered office, together with the financial statements
identified in the respective auditor's reports.
The auditor's report does not necessarily report on all of the information contained in
this announcement of financial results. Shareholders are therefore advised that, in order
to obtain a full understanding of the nature of the auditor's engagement, they should
obtain a copy of the auditor's report together with the accompanying financial information
from the issuer's registered office. Any reference to future financial performance included
in this announcement, has not been reviewed or reported on by the company's auditors.
DIVIDEND
No dividend was declared (2014: 4.4 cents per share).
On behalf of the board of directors
Peter-Paul Ngwenya Fraser Shaw
Chairman Chief executive officer
Cape Town
1 June 2015
COMPANY INFORMATION
Registered office: The Terraces, 4th Floor, 25 Protea Road Claremont, 7700
PO Box 44547, Claremont, 7735
Company secretary: C Schmahl
Directors: S P Ngwenya (Chairman)*, G W Fury*, R Gonsalves, B H Kent*, A N Matyumza*,
F C Shaw (Chief executive officer), L L Xate*
(* Non-executive directors)
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Sponsor: Investec Bank Limited
www.cadiz.co.za
Date: 01/06/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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