2012
Annual
Report
For personal use only CONTENTS
Company Particulars 1
Manager’s Report 2
Market Value of Investments as at 30 June 2012 5
Corporate Governance Statement 6
Directors’ Report to Shareholders 8
Auditor’s Independence Declaration 13
Statement of Comprehensive Income 14
Statement of Financial Position 15
Statement of Changes in Equity 16
Statement of Cash Flows 17
Notes to the Financial Statements 18
Directors’ Declaration 39
Independent Auditor’s Report 40
ASX Additional Information 42
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
For personal use only COMPANY PARTICULARS
CADENCE CAPITAL LIMITED
A.B.N. 17 112 870 096
DIRECTORS:
Karl Siegling
James Chirnside
Geoffrey Wilson
SECRETARY:
Karl Siegling
MANAGER OF THE COMPANY:
Cadence Asset Management Pty Limited
ABN: 68 106 551 062
REGISTERED OFFICE:
Level 11, 131 Macquarie Street,
Sydney, NSW, 2000
DIRECTOR OF THE MANAGER:
Mr Karl Siegling
CONTACT DETAILS:
Level 11, 131 Macquarie Street,
Sydney, NSW, 2000
Telephone: (02) 8298 2444
Fax: (02) 8298 2499
Email: info@cadencecapital.com.au
Website: www.cadencecapital.com.au
For enquiries regarding net asset backing
(as advised each month to the Australian Securities Exchange)
refer to asx.com.au or call (02) 8298 2444
PRIME BROKER AND CUSTODIAN
OF THE COMPANY:
Citigroup Global Markets Australia Pty Ltd
Level 21, 2 Park Street
Sydney, NSW, 2000
SHARE REGISTRAR:
Boardroom Pty Limited
Mail Address: GPO Box 3993
Sydney, NSW, 2001
Telephone: (02) 9290 9600
Fax: (02) 9279 0664
For all enquiries relating to shareholdings, dividends
(including participation in the Dividend Reinvestment Plan)
and related matters, please contact the share registrar.
AUDITORS:
Moore Stephens Sydney
Level 7, 20 Hunter Street,
Sydney, NSW, 2000
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
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For personal use only MANAGER’S REPORT
SUMMARY OF RESULTS
• Gross Portfolio increased +5.49% for the year ended 30 June 2012 outperforming the All Ordinaries Accumulation
• Index by 12.53% and the Small Ordinaries Accumulation Index by 20.10%. This was achieved whilst holding on
• average 33% in cash.
• Record 8.0 cent per share fully franked full year dividend: 4.0 cent final and 4.0 cent special dividend.
• The dividends paid for FY 2012 represent a 10.5% fully franked yield based on the 30th June 2012 share price of
• $1.19.
• Large Franking Credit balance and Profits Reserve secures medium term fully franked dividend yield.
• Over the past year, consistently ranked by ASX as one of the top three Australian Equities Listed Investment
• Companies over 1, 3 and 5 years in their LMI Quarterly Updates.
• Fund ranked by E.L & C Baillieu as the Number 1 Australian Equities Listed Investment Company over 3 and 5
• years in the Listed Investment Company Sector Report of 18th July 2012.
• Post year end 98% of CDM options were exercised and CDM placement closed oversubscribed.
SHAREHOLDER PERFORMANCE
For the financial year ended 30 June 2012, Cadence Capital Limited produced a gross performance of +5.49%
compared to a decrease in the All Ordinaries Accumulation Index of -7.04% and a decrease in the Small Ordinaries
Accumulation Index of -14.61%. We are pleased that since its inception almost 7 years ago Cadence Capital Limited
has outperformed the All Ordinaries Accumulation Index by 16.34% per annum. It should also be noted that this
outperformance has been achieved with lower than market risk and exposure.
outperformance has been achieved with lower than market risk and exposure.
Performance* to 30th June 2012
CDM**
All Ords
Outperformance
1 Month
1 Year
2 Years
3 Years
4 Years
5 Years
Since Inception (81 months)
Since Inception Annualised (81 months)
1.13%
5.49%
92.00%
134.85%
98.62%
63.28%
223.76%
19.01%
0.25%
-7.04%
4.27%
18.64%
-7.64%
-18.83%
19.44%
2.67%
+0.88%
+12.53%
+87.73%
+116.21%
+106.26%
+82.11%
+204.32%
+16.34%
* Before Management and Performance Fees **These numbers include the franking value of the substantial RHG dividend received in May 2011
Over the past year, Cadence Capital Limited has been consistently ranked by ASX as one of the top three Australian
Equities Listed Investment Companies over 1, 3 and 5 years in their LMI Quarterly Updates. Cadence Capital
Limited has also recently been ranked by E.L & C Baillieu as the Number 1 Australian Equities Listed Investment
Company over 3 and 5 years in its Listed Investment Company Sector Report of 18th July 2012.
Positions that performed well for the Company in 2012 were RHG Ltd, McMillan Shakespeare Ltd, Flexigroup Ltd,
Bravura Solutions Ltd and Central Petroleum Ltd. Positions that underperformed for the Company in 2012 were
Coffey International Ltd and Firstfolio Ltd. During the year the Company on average held 33% in cash.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
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MANAGER’S REPORT Contd’
CDM
All
Ords
Source: E.L. & C. Baillieu Stockbroking Ltd - Listed Investment Companies - Sector Report - 18 July 2012
DIVIDENDS AND DIVIDEND POLICY
Cadence Capital Limited announced a full year dividend of 8 cents per share made up of 4 cents per share final
dividend and 4 cents per share special dividend. Combined with the interim dividend of 4 cents per share plus a 0.5
cent per share special this equates to 12.5 cents of dividends per share over the past year. This equates to 10.5%
fully franked yield based on the CDM share price of $1.19 for the year ended 30th June 2012.
The stated dividend policy of Cadence Capital Limited is to pay a continued and growing ordinary dividend stream
over time. More recently the company has paid out special dividends in line with the significant Franking Credits
that have accrued. The Franking Credits and Profits Reserve create relative certainty around dividends in the
medium term.
CDM
All
Ords
Source: E.L. & C. Baillieu Stockbroking Ltd - Listed Investment Companies - Sector Report - 18 July 2012
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
3
For personal use only MANAGER’S REPORT Contd’
OPTIONS AND PLACEMENT
Post year end 98% of CDM options were exercised and the CDM placement in September 2012 closed
oversubscribed. We believe that both the placement and the option exercise should achieve the following
objectives:
• attract new long term investors, particularly investors who value fully franked dividends and capital growth,
• expand the market capitalization and improve liquidity,
• improve the research coverage available to the company and,
• spread the fixed administration costs of the Company across a larger asset base.
THE YEAR AHEAD
The performance of the Australian stock market has proven very poor over the past few years. Hindsight shows that
as a risk adjusted investment the All Ordinaries Accumulation Index has been a poor investment. The combination
of poor returns and high volatility has been a very poor combination for investments closely replicating the All
Ordinaries Accumulation Index.
We believe a strategy with an open mandate, which is able to selectively invest in undervalued companies and avoid
or short over valued companies, as well as continuously allocating risk between equities and cash continues to be a
compelling method to manage capital in this environment.
The equities market will continue to provide opportunities in individual companies and specific industries with
specific earnings profiles. The process of trying to guess where the overall market will trade in light of significant
macroeconomic events, uncertainty and ambiguity, will continue to be a difficult and risky process. Fortunately this
is not how we manage capital.
We remain committed to our investment strategy as outlined in our Prospectus seven years ago and are pleased
that this investment strategy has produced good returns for our shareholders and our own shareholdings within the
Company.
I would like to take this opportunity to thank our investors for their continued support.
Karl Siegling
Managing Director
Cadence Asset Management Pty Limited
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
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MARKET VALUE OF TOP 20 POSITIONS
AS AT 30 JUNE 2012
ASX
COMPANY NAME
MARKET VALUE
%
RHG
RHG Ltd
MMS McMillan Shakespeare Limited
FXL
RKN
BVA
ANZ
NAB
Flexigroup Limited
Reckon Ltd
Bravura Solutions Ltd
Australia & New Zealand Banking Group
National Australia Bank Ltd
MQG Macquarie Group Limited
DCG
COF
SPT
CTP
RFG
Decmil Group Limited
Coffey International Limited
Spotless Group Ltd
Central Petroleum Ltd
Retail Food Group
VMG
VDM Group Limited
STB
JKA
TIN
South Boulder Mines Ltd
Jacka Resources Ltd
Tin International Ltd
GMY
Goldfields Money Ltd
VMGO VDM Group Limited Options
COM Comops Limited
$12,926,525
24.79%
$3,760,829
$2,640,037
$2,557,082
$2,394,520
$1,960,075
$1,515,293
$1,395,862
$911,672
$800,461
$669,375
$620,529
$614,628
$545,769
$382,003
$220,500
$209,100
$154,030
$131,052
$94,197
7.21%
5.06%
4.90%
4.59%
3.76%
2.91%
2.68%
1.75%
1.53%
1.28%
1.19%
1.18%
1.05%
0.73%
0.42%
0.40%
0.30%
0.25%
0.18%
Total Top 20 Long and Short Positions – Net Exposure %
73.48%
$34,503,539 66.16%
$34,503,539
MARKET VALUE OF TOTAL PORTFOLIO POSITIONS:
Total Portfolio Long Positions
Total Portfolio Short Positions
$34,898,635 66.91%
- -
Total Portfolio Net Exposure
$34,898,635 66.91%
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
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CORPORATE GOVERNANCE STATEMENT
All the best practice recommendations of the Australian Stock Exchange Corporate Governance Council have been
applied throughout the financial year, unless otherwise stated. These practices are dealt with under the following
headings: Board of Directors and its Committees, Composition of the Board, Remuneration of Directors and
Executives, Ethical Standards, The Role of Shareholders, Board’s Policy on Dealing in Shares, Independent
Professional Advice and Access to Company Information and Conflict of Interest.
BOARD OF DIRECTORS AND ITS COMMITTEES
Subject at all times to any written guidelines issued by the Board of Directors of Cadence Capital Limited, the day-
to-day management and investment of funds is carried out by Cadence Asset Management Pty Limited
(the “Manager”) pursuant to a management agreement.
The Board is responsible for the overall Corporate Governance of the Company including the strategic direction,
establishing goals for the appointed Manager and monitoring the achievement of these goals. The Board reviews the
reports of its Manager on the financial performance of the Company.
The Company has formed an Audit Committee consisting of:
Chairman
James Chirnside
Executive Director
Karl Siegling
The Audit Committee consists of 2 members and is only 50% independent. Whilst the Company agrees with the
benefits of a larger Audit Committee and also of it consisting of a majority of independent Directors, due to both the
size of the Board and of the Company, it believes that the current Audit Committee has both the level of expertise
and independence that it requires.
The Committee’s responsibilities are to:
(a) oversee the existence and maintenance of internal controls and accounting systems;
(b) oversee the financial reporting process;
(c) review the annual and half-year financial reports and recommend them for approval by the Board of Directors;
(d) nominate external auditors; and
(e) review the existing external audit arrangements.
COMPOSITION OF THE BOARD
The skills, experience and expertise relevant to the position of each director who is in office at the date of the
Annual Report and their term in office are detailed in the Directors’ Report.
The only independent director of the Company is James Chirnside.
The Board comprises the Chairman and two other non-executive Directors who consider the composition of the
Board and appointment of new Directors. The Board identifies suitable candidates to fill vacancies as they arise.
The performance of each Director is reviewed by the Chairman periodically. At every annual general meeting one
third of the Directors retire from office and are eligible for re-election. Shareholder approval is required on the
composition of the Board.
The Board is 33% independent. Whilst the Company agrees with the benefits of a majority of independent
Directors, it believes that it can better achieve the results of the Company with the current Board’s level of
expertise and without burdening shareholders with the potentially significant costs associated with adding further
independent Directors.
The Chairman is not independent. The Company believes that an independent Chairman does not necessarily
improve the function of the Board. The Company believes that when the Chairman is a significant driver behind
the business and is a sizeable shareholder, it adds value to the Company.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
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CORPORATE GOVERNANCE STATEMENT Contd’
Given the size of the Board a nomination committee has not been formed. The Board as a whole considers the
composition of the Board and appointment of new Directors. The Board identifies suitable candidates to fill
vacancies as they arise.
REMUNERATION OF DIRECTORS AND EXECUTIVES
The maximum total remuneration of the Directors of the Company has been set at $55,000 per annum to be divided
in such proportions as they agree. The scope of the Company’s operations and the frequency of Board meetings are
principal determinants of the fee level. Further detail is provided in the Directors’ Report.
No separate Remuneration Committee has been established by the Company as the Company does not believe that
this adds any value to its Corporate Governance.
The Chairman of Cadence Capital Limited is the sole Director of Cadence Asset Management Pty Limited. Further
detail is provided in the Directors’ Report and Note 15 of the financial statements.
ETHICAL STANDARDS
The Board aims to ensure that all Directors and its Manager act with the utmost integrity and objectivity and
endeavour to enhance the reputation of the Company.
THE ROLE OF SHAREHOLDERS
The Board of Directors aims to ensure that the shareholders are informed of all major developments affecting the
Company’s state of affairs. Information is communicated to shareholders through the Annual Report, quarterly
webcasts, monthly investment update and asset backing data, monthly estimated NTA’s and Half-Year Financial
Report lodged with the Australian Securities Exchange.
The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of
accountability and identification with the Company’s strategy and goals.
BOARD’S POLICY ON DEALING IN SHARES
Subject to them not being in possession of undisclosed price sensitive information, Directors may deal in shares of
the Company when appropriate. As Cadence Capital Limited is an investment company announcing its estimated
NTA’s, exposures and its top holdings on a monthly basis, the Board believes the shareholders are generally fully
informed.
INDEPENDENT PROFESSIONAL ADVICE AND ACCESS TO COMPANY INFORMATION
Each Director has the right to access all relevant information and subject to prior consultation with the Chairman,
may seek independent professional advice at the entity’s expense. A copy of advice received by the Director is made
available to all other members of the Board.
CONFLICT OF INTEREST
In accordance with the Corporations Act 2001, the Directors must keep the Board advised, on an ongoing basis, of
any interests that could potentially conflict with those of the Company. Where the Board believes that a significant
conflict exists the Director concerned does not receive the relevant Board papers and is not present at the meeting
whilst the item is considered.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
7
For personal use only DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2012
The Directors of Cadence Capital Limited (“the Company’) submit herewith their report together with the financial
report of Cadence Capital Limited for the financial year ended 30 June 2012.
PRINCIPAL ACTIVITY
The principal activity of the Company was investing primarily in securities listed on the Australian Stock Exchange.
The Company may take short positions and may also deal in derivatives for hedging purposes. No significant
changes in the nature of these activities occurred during the financial year.
OPERATING RESULTS
Investment operations over the year resulted in an operating profit before tax of $1,326,553 (2011: operating
profit before tax of $12,433,549) and an operating profit after tax of $2,763,546 (2011: operating profit after tax of
$13,148,125).
REVIEW OF OPERATIONS
Investments are valued continuously to market value. For the year ended 30 June 2012, net investments were valued
at $34,898,635 (2011: $29,897,039).
FINANCIAL POSITION
The net asset value of the Company for the current financial period ended was $52,153,951 (2011: $40,131,337).
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
During the financial year the Company conducted a bonus issue under which one new Cadence Capital Limited
option was issued to shareholders for every existing Cadence Capital Limited share held by them at the record date
19th August 2011. The option strike price is $1.25 and they can be exercised on or before the 15th September 2012.
During this financial year 9,108,685 options have been exercised.
DIVIDENDS PAID OR RECOMMENDED
The Board have declared an 8.0 cent per share fully franked dividend (4.0 cents final dividend and 4.0 cents special
dividend) payable on 29th October 2012. The Ex Date for the dividend is 15th October 2012.
Dividends paid are as follows:
Fully franked 2012 interim dividend of 4.0 cents per share was paid on 2 April 2012
Fully franked 2012 special dividend of 0.5 cents per share was paid on 2 April 2012
Fully franked 2011 final dividend of 3.0 cents per share was paid on 6 October 2011
Fully franked 2011 special dividend of 3.0 cents per share was paid on 6 October 2011
Fully franked 2011 interim dividend of 3.0 cents per share was paid on 14 March 2011
$
1,491,216
186,402
928,255
928,255
819,649
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
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DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
DIRECTORS AND DIRECTORS’ RELEVANT INTERESTS
The following persons were Directors of the Company during the whole of the financial year and up to the date of
this report. At the date of this report the Directors indirectly held the following:
Karl Siegling
Geoffrey Wilson
James Chirnside
6,976,069 Ordinary shares
1,560,000 Ordinary shares
25,932 Ordinary shares
At the date of this report the Directors held no options as they had already expired.
INFORMATION ON DIRECTORS
Karl Siegling (Chairman and Company Secretary)
Karl has over 16 years investment experience in the financial sector both in Australia and overseas. He holds a
Bachelor of Commerce and a Law degree from the University of Melbourne and an MBA specialising in Finance and
Entrepreneurial Endeavours from INSEAD in France. Karl has also completed the Post Graduate Diploma in Finance
with the Securities Institute of Australia. He commenced work in the Financial Services sector in Australia with
Deutsche Morgan Grenfell, trading overnight currencies, bonds and bond options on the Sydney Futures Exchange.
Then he worked within the Equities Research Division of Deutsche Morgan Grenfell before moving to the Equities
Division of Goldman Sachs in London.
Upon returning to Australia, Karl was the Managing Director of eFinancial Capital Limited (a subsidiary of
Challenger International Limited), which was a private equity fund with Pooled Development Fund status, focused
on investing early stage and expansion capital. The fund invested in financial services and Australian internet
based technology companies. For two and a half years Karl worked as a consultant for Wilson Asset Management
(International) Pty Limited researching stocks for the Wilson group of funds. He is also the managing director of the
manager, Cadence Asset Management Pty Limited.
Geoffrey Wilson (Non-executive Director)
Geoffrey Wilson has had 33 years experience in the Australian and international securities industry. He holds a
Bachelor of Science Degree and a Graduate Management Qualification. He is also a Fellow of the Institute of
Company Directors and a Fellow of the Financial Services Institute of Australia.
Geoffrey Wilson is the Chairman of WAM Active Limited (appointed July 2007), WAM Capital Limited (appointed
March 1999), WAM Research Limited (appointed June 2003) and Australian Stockbrokers Foundation. He is a
Director of Australian Leaders Fund Limited (formerly known as Wilson Leader’s Fund Ltd) (appointed October
2003), Clime Capital Limited (appointed November 2003), Incubator Capital Limited (appointed Feb 2000),
the Sporting Chance Cancer Foundation, Australian Fund Managers Foundation, Australian Children’s Music
Foundation, Odyssey House McGrath Foundation and he is a Member of the Second Bite NSW Advisory Committee.
He is also a Director of investment management companies Wilson Asset Management (International) Pty Limited,
MAM Pty Limited, Boutique Asset Management Pty Limited and Boutique Investment Management Pty Ltd.
James Chirnside (Non-executive Director)
James Chirnside has been exclusively focused in emerging markets and absolute return investment strategies for
twenty-three years in Sydney, Hong Kong, London and Melbourne. Mr Chirnside is a shareholder and Managing
Director of Asia Pacific Asset Management, a specialist emerging market and alternative investment firm based
in Sydney. Mr Chirnside previously worked for Challenger Financial Group in Sydney. Prior to this he managed
emerging market hedge funds in Hong Kong and London for Regent Fund Management (now Charlemagne Capital).
Between 1988 and 1992 Mr Chirnside ran a Proprietary-trading book for County NatWest Investment Bank based
in London. Here he was primarily focussed on Country Funds and derivative arbitrage strategies. James Chirnside is
also a director of WAM Capital Limited and India Equities Fund Limited.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
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DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
COMPANY SECRETARY
Karl Siegling held the position of company secretary at the end of the financial year.
DIRECTORS’ MEETINGS
Karl Siegling
Geoffrey Wilson
James Chirnside
4
4
4
4
4
4
No. eligible to attend Attended
AUDIT COMMITTEE MEETINGS
Karl Siegling
James Chirnside
2
2
2
2
No. eligible to attend Attended
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for each Director of Cadence Capital Limited.
(a) Remuneration
There are no executives that are paid by the Company. Cadence Asset Management Pty Limited provides day to day
management of the Company and is remunerated as outlined in Note 16 – Related Parties Transactions.
Short-term Benefits - Directors Fees:
Geoffrey Wilson
James Chirnside
Post-employment Benefits - Superannuation
2012
$
13,761
13,761
2,478
30,000
2011
$
13,761
13,761
2,478
30,000
(b) Compensation Practices
The Board from time to time determines remuneration of Non-Executive Directors within the maximum amount
approved by the shareholders. Non-Executive Directors are not entitled to any other remuneration.
Fees and payments to Non-Executive Directors reflect the demands that are made on and the responsibilities of, the
Directors and are reviewed annually by the Board. The Company determines the remuneration levels and ensures
they are competitively set to attract and retain appropriately qualified and experienced Directors.
Directors’ base fees are presently limited to a maximum of $55,000 per annum between the three directors. Non-
Executive Directors do not receive bonuses nor are they issued options on securities. Directors’ fees cover all main
board activities and membership of committees. Directors’ fees are not linked to the performance of the Company.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
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DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
REMUNERATION REPORT (AUDITED) contd’
(c) Shareholdings
As at 30 June 2012, the Company’s key management personnel indirectly held the following shares in the
Company:
Shareholdings
Balance at
1 July 2011
Acquisitions
Disposals
Balance at 30
June 2012
Karl Siegling
Geoffrey Wilson
James Chirnside
3,237,474
2,050,000
12,966
5,300,440
637,983
-
-
(490,000)
12,966
-
650,949
(490,000)
3,875,457
1,560,000
25,932
5,461,389
As at 30 June 2012, the Company’s key management personnel indirectly held the following options in the
Company:
Optionholdings
Balance at
1 July 2011
Bonus 1:1
Option Issue
Disposals
Options
Exercised
Balance at 30
June 2012
Karl Siegling
Geoffrey Wilson
James Chirnside
-
-
-
-
3,237,474
-
(230,362)
3,007,112
2,050,000
(2,050,000)
-
12,966
-
(12,966)
-
-
5,300,440
(2,050,000)
(243,328)
3,007,112
EVENTS AFTER THE REPORTING PERIOD
The Board of Directors of Cadence Capital Limited have declared an 8.0 cent per share fully franked final dividend
(4.0 cents final dividend and 4.0 cents special dividend) payable on 29th October 2012. The Ex Date for the
dividend is 15th October 2012.
The $ 1.25 CDM options expired on the 15th September 2012. 26,932,680, options were exercised by the date of
this report.
On the 21 September 2012 Cadence Capital Limited completed its share placement of $11.4 million ( being the
maximum allowable under ASX listing rule 7.1 ) at $ 1.37 per share.
No other matters or circumstances have arisen since the end of the financial period which significantly affects or
may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the
Company in subsequent financial years.
FUTURE DEVELOPMENTS
The Company will continue to pursue its policy of investment during the next financial year.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
11
For personal use only DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
ENVIRONMENTAL ISSUES
The Company’s operations are not regulated by any environmental regulation under a law of the Commonwealth or
of a State or Territory.
INDEMNIFICATION AND INSURANCE OF OFFICERS OR AUDITORS
During the year the Company did pay a premium in respect of a contract insuring the Directors of the Company, the
Company Secretary and any related body corporate against liability incurred as such by a Director or Secretary to
the extent permitted by the Corporations Act 2001.
No indemnities have been given or insurance premiums paid during or since the end of the financial period, for any
person who is or has been an auditor of the Company.
BONUS 1:1 OPTION ISSUE
During the year the Company conducted a bonus issue under which one new Cadence Capital Limited option was
issued to shareholders for every existing Cadence Capital Limited share held by them at the record date 19th August
2011. The option strike price was $1.25 and it was exercisable on or before the 15th September 2012. At the date of
this report the number of exercised options was 26,932,680.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for
all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
NON-AUDIT SERVICES
During the year Moore Stephens Sydney, the Company’s auditor, did not perform any other services in addition
to their statutory duties for the Company. Moore Stephens Sydney Pty Limited, a related party of the Company’s
auditor, performed taxation services for the Company. Details of the amounts paid to the auditors and their related
parties are disclosed in Note 2 to the financial statements.
The Board of Directors, in accordance with advice from the Audit Committee, is satisfied that the provision of
non-audit services during the year is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001. The Directors are satisfied that the services disclosed in Note 2 did not compromise the
external auditor’s independence.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor’s Independence Declaration as required under Section 307C of the Corporations Act 2001 is
set out on page 13 of this Annual Report.
Signed in accordance with a resolution of the Board of Directors of the Company:
Karl Siegling
Director
Dated in Sydney, this 27 September 2012
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
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AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF CADENCE CAPITAL LIMITED
Level 7, 20 Hunter Street
Sydney NSW 2000
Level 7, 20 Hunter Street
T +61 (0)2 8236 7700
Sydney NSW 2000
F +61 (0)2 9233 4636
T +61 (0)2 8236 7700
www.moorestephens.com.au
F +61 (0)2 9233 4636
In accordance with the requirements of section 307C of the Corporations Act 2001, I declare that, to the best of my
knowledge and belief, during the year ended 30 June 2012 there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
Moore Stephens Sydney
Chartered Accountants
Scott Whiddett
Partner
Dated in Sydney, this 27th day of September 2012
Moore Stephens Sydney ABN 90 773 984 843. Liability limited by a scheme approved under Professional Standards Legislation*
*Other than for the acts or omissions of financial services licensees. An independent member of Moore Stephens International Limited -
members in principal cities throughout the world The Sydney Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
13
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2012
INCOME
Proceeds from sale of investments
Cost of investments sold
Realised (loss)/ gain on investments
Unrealised loss on investments
Dividends received
Interest received
Underwriting fees
Other revenue from ordinary activities
Total Income
EXPENSES
Finance costs
Management fees
Performance fees
Assignment fees
Directors fees
Brokerage expenses on share purchases
Other expenses from ordinary activities
Total Expenses
NOTES
2012
$
2011
$
14,668,792
(15,127,951)
(459,159)
(3,811,648)
6,223,972
570,461
10,084
15,882
2,549,592
-
(442,356)
(431,439)
(36,882)
(30,000)
(70,047)
(212,315)
(1,223,039)
34,709,464
(31,458,729)
3,250,735
(2,659,709)
14,828,052
117,588
7,601
-
15,544,267
(24,634)
(357,296)
(2,336,856)
(113,719)
(30,000)
(95,875)
(152,338)
(3,110,718)
PROFIT BEFORE INCOME TAX
1,326,553
12,433,549
Income tax benefit
Profit attributable to members of the Company
3(a)
11
1,436,993
2,763,546
714,576
13,148,125
Other comprehensive income/(loss)
Other comprehensive income for the year, net of tax
-
-
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
2,763,546
13,148,125
Basic earnings per share
Diluted earnings per share
13
13
8.3 cents
47.8 cents
8.3 cents
47.8 cents
The accompanying notes form part of these financial statements.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
14
For personal use only STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2012
ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets
Deferred tax asset
TOTAL ASSETS
LIABILITIES
Trade and other payables
Deferred tax liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Asset revaluation reserve
Profits reserve
(Accumulated losses)/ Retained earnings
8
9
10
11
TOTAL EQUITY
NOTES
2012
$
2011
$
12 (a)
5
6
3(b)
15,155,601
233,767
34,898,635
3,096,827
11,423,139
277,641
29,897,039
1,641,680
53,384,830
43,239,499
7
3(d)
1,212,725
18,154
3,108,162
-
1,230,879
3,108,162
52,153,951
40,131,337
42,642,987
-
11,018,104
(1,507,140)
29,849,791
-
-
10,281,546
52,153,951
40,131,337
The accompanying notes form part of these financial statements.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
15
For personal use only STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2012
TOTAL EQUITY AS AT 1 JULY 2011
Profit attributable to members of the Company
Shares issued in the year through DRP
Shares issued in the year through Options being exercised
Shares bought back in share buy-back programs during the
year
NOTES
11
8
8
8
2012
$
40,131,337
2,763,546
1,407,339
11,385,857
2011
$
27,506,039
13,148,125
311,788
-
-
(14,966)
55,688,079
40,950,986
Dividends paid or provided for
4
(3,534,128)
(819,649)
TOTAL EQUITY AS AT 30 JUNE 2012 ATTRIBUTABLE
TO MEMBERS OF THE COMPANY
52,153,951
40,131,337
The accompanying notes form part of these financial statements.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
16
For personal use only STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Dividends received
Interest received
Other income received
Income tax refund
Management fees paid
Performance fees paid
Brokerage expenses on share purchases
Interest paid
Payments for administration expenses
NET CASH FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of investments
Payments for the purchase of investments
NET CASH (USED IN)/ FROM INVESTING
ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Shares issued during the year
Share buy-back
NET CASH FROM/ (USED IN) FINANCING
ACTIVITIES
NOTES
3(c)
12(b)
2012
$
$
6,128,464
570,461
10,084
-
(438,333)
(2,328,930)
(70,047)
-
(364,612)
3,507,087
2011
$
$
15,064,021
117,588
15,171
189,153
(348,122)
(313,491)
(95,875)
(24,634)
(195,779)
14,408,032
14,660,827
(23,694,520)
(9,033,693)
34,980,961
(33,254,620)
1,726,341
(2,126,789)
11,385,857
-
9,259,068
(507,861)
-
(14,965)
(522,826)
NET INCREASE IN CASH HELD
CASH AS AT BEGINNING OF THE FINANCIAL YEAR
3,732,462
11,423,139
15,611,547
(4,188,408)
CASH AS AT END OF THE FINANCIAL YEAR
12(a)
15,155,601
11,423,139
The accompanying notes form part of these financial statements.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
17
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Cadence Capital Limited (“the Company”) is a listed public company, incorporated and domiciled in Australia.
BASIS OF PREPARATION
The financial statements are general purpose financial statements that have been prepared in accordance with
Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of
the Australian Accounting Standards Board and the Corporations Act 2001. The Company is a for-profit entity for
financial reporting purposes under Australian Accounting Standards.
Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has
concluded would result in financial statements containing relevant and reliable information about transactions,
events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the
financial statements and notes also comply with International Financial Reporting Standards as issued by the IASB.
Material accounting policies adopted in the preparation of these financial statements are presented below. They have
been consistently applied unless otherwise stated.
The financial statements have been prepared on an accruals basis and are based on historical costs with the exception
of cash flow information, “held-for-trading” financial assets and certain other financial assets and liabilities, which
have been measured at fair value.
ACCOUNTING POLICIES
(a) Investments
i) Classification
Investments consist of shares in publicly listed and unlisted companies and fixed interest securities.
It is considered that the information needs of shareholders in a company of this type are better met by stating
investments at fair value rather than historical cost and by presenting the Statement of Financial Position on a
liquidity basis.
The Company makes short sales in which a borrowed security is sold in anticipation of a decline in the market value
of that security, or it may use short sales for various arbitrage transactions. Short sales are classified as financial
liabilities at fair value through the Statement of Comprehensive Income.
ii) Recognition and Initial Measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes
a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are
delivered within timeframes established by marketplace convention. Trade date is the date on which the Company
commits to purchase or sell the assets.
Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified
as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit
or loss are expensed to the Statement of Comprehensive Income immediately.
Financial assets are classified and measured at fair value with changes in value being recognised in the Statement of
Comprehensive Income.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
18
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
iii) Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is
transferred to another party whereby the entity no longer has any significant continuing involvement in the risks
and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either
discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished
or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or
liabilities assumed, is recognised in the Statement of Comprehensive Income.
iv) Valuation
All investments are classified and measured at fair value, being market value, including the potential tax charges
that may arise from the future sale of the investments. These fair value adjustments are recognised in the Statement
of Comprehensive Income. Valuation techniques are applied to determine the fair value for all unlisted securities,
including recent arm’s length transactions and reference to similar instruments.
v) Unrealised Gains
Unrealised gains were previously included in the operating result for the year and were transferred to an asset
revaluation reserve, net of the potential tax charges that may arise from the future sale of the investments.
This will not be done going forward.
vi) Investment income
Dividend income is recognised in the Statement of Comprehensive Income on the day on which the relevant
investment is first quoted on an “ex-dividend” basis.
Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.
vii) Derivative Instruments
Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken to
the Statement of Comprehensive Income.
viii) Financial Liabilities
Borrowed stock is classified as financial liabilities at fair value through the Statement of Comprehensive Income.
Realised and unrealised gains and losses arising from changes in fair value are included in the Statement of
Comprehensive Income in the year in which they arise.
(b) Income Tax
The income tax expense (benefit) for the year comprises current income tax expense (income) and deferred tax
expense (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using
applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are
therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the
year as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates
to items that are recognised outside profit or loss.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result
where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be
recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no
effect on accounting or taxable profit or loss.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
19
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their
measurement also reflects the manner in which management expects to recover or settle the carrying amount of the
related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that
it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be
utilised.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that
net settlement or simultaneous realisation and settlement of the respective asset and liability will occur.
Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax
assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity
or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of
the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or
liabilities are expected to be recovered or settled.
(c) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, at call deposits with banks or financial institutions, fixed interest
securities maturing within three months and bank overdrafts. Bank overdrafts are shown within short-term
borrowings in current liabilities in the Statement of Financial Position.
(d) Trade and Other Receivables
Trade and other receivables are non-derivative financial assets and are initially recognised at fair value. They are
subsequently stated at their amortised cost less impairment losses (refer Note 1 (f)).
(e) Trade and Other Payables
Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services
received by the Company during the reporting period which remains unpaid. Due to their short-term nature they
are measured at amortised cost and not discounted. The balance is recognised as a current liability with the amount
being normally paid within 30 days of recognition of the liability.
(f) Impairment of Assets
At each reporting date, the Company reviews the carrying values of its tangible assets to determine whether there is
any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset,
being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value.
Any excess of the asset’s carrying value over its recoverable amount is expensed to the Statement of Comprehensive
Income.
(g) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the
amount of the GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances
the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from,
or payable to, the ATO is included as an asset or liability in the Statement of Financial Position.
Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
20
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
(h) Segment Reporting
The financial report is for the individual entity Cadence Capital Limited. It is a publicly listed company limited by
shares, incorporated and domiciled in Australia.
The Company is engaged in investment activities conducted predominantly in Australia and derives revenue and
investment income from listed and unlisted securities and fixed interest securities.
The Company has a diversified portfolio of investments, with only the Company’s investments in RHG Limited,
McMillan Shakespeare Limited, Flexigroup Limited and Bravura Solutions Limited comprising more than 10% of
the company’s income in year to 30 June 2012 (2011: RHG Limited, Bravura Solutions Limited and South Boulder
Mines Limited).
(i) Comparative Figures
Where required by accounting standards, comparative figures have been adjusted to conform with changes in
presentation for the current financial year.
(j) Critical Accounting Estimates and Judgements
The Directors evaluate estimates and judgements incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events and
are based on current trends and economic data, obtained both externally and within the Company.
The Directors are of the opinion that there are no key sources of estimation at the Statement of Financial Position
date and there is no instance of application of judgements.
(k) Profits Reserve
The profits reserve is made up of amounts allocated from retained earnings that are preserved for future dividend
payments.
(l) New Standards and Interpretations not yet Effective
There are no impending new accounting standards that will result in any material changes in relation to amounts
recognised in the financial statements.
The financial report was authorised for issue on 27th September 2012 by the Board of Directors.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
21
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
2. AUDITOR’S REMUNERATION
Remuneration of the auditor of the Company for:
Auditing or reviewing the financial report
Non-audit Services
Other services provided by a related practice of the auditor:
Taxation services
Other services
3. TAXATION
(a) Current Income Tax Benefit
The prima facie tax on profit/(loss) from ordinary activities before
income tax is reconciled to the income tax expense/(benefit) as follows:
2012
$
2012
$
2011
$
2011
$
33,902
28,158
6,888
4,645
45,435
7,205
-
35,363
Prima facie tax expense/(benefit) on profit/(loss) from ordinary activities
before income tax at 30%
397,966
3,730,065
Imputation credit gross up
Penalties and fines
Franked dividends receivable – prior year
Franked dividends receivable – current year
Under provision of prior year income tax
Rebates/tax offsets
Imputation credits converted to a loss
Total income tax expense results in a:
Total income tax expense results in a:
Movement in deferred tax liabilities
Movement in deferred tax assets
781,774
86
24,499
(34,997)
(408)
1,935,280
20
95,290
(24,499)
201
(2,298,205)
(6,450,933)
(307,708)
-
2012
2011
(1,436,993)
$
(714,576)
$
18,154
(1,455,147)
(238,290)
(476,286)
(1,436,993)
(714,576)
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
22
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
(b) Deferred Tax Assets
Provisions
Capitalised share issue costs
Fair value adjustments
Tax losses
Movement in deferred tax assets
Balance at the beginning of the period
Credited to the Statement of Comprehensive Income
(c) Current Tax Asset/(Liabilities)
Movement in current tax asset/(liabilities)
Balance at the beginning of the period
Tax refund received
(d) Deferred Tax Liabilities
Income provisions
Movement in deferred tax liabilities
Balance at the beginning of the period
Debited to the Statement of Comprehensive Income
At reporting date
2012
$
2011
$
5,790
8,984
1,703,522
1,378,531
8,310
-
559,622
1,073,748
3,096,827
1,641,680
1,641,680
1,455,147
3,096,827
-
-
-
18,154
18,154
-
18,154
18,154
1,165,394
476,286
1,641,680
189,153
(189,153)
-
-
-
238,290
(238,290)
-
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
23
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
4. DIVIDENDS
(a) Dividends paid
Dividends paid by the Company
2012
2012
$
2011
$
3,534,128
819,649
Dividends paid by the Company
for the year ended 30 June 2012
Cents per share
Date of
payment
Tax for
franking
credit
%
Franked
Total Amount
$
Interim 2012 - Ordinary and
special
Final 2011 - Ordinary and special
4.5
6.0
Total Amount
2 April 2012
30%
100%
1,677,618
6 October 2011
30%
100%
1,856,510
3,534,128
The Board have declared an 8 cent per share fully franked dividend (4.0 cents final dividend and 4.0 cents special
dividend) payable on 29th October 2012. The Ex Date for the dividend is 15th October 2012.
2011
Dividends paid by the Company
for the year ended 30 June 2011
Cents per share
Date of
payment
Tax for
franking
credit
%
Franked
Total amount
$
Interim 2011 - Ordinary
Total Amount
3.0
14 March 2011
30%
100%
819,649
819,649
(b) Dividend franking account
Balance of franking account at year end adjusted for franking credits,
arising from payment of provision for income tax and dividends
recognised as receivables and franking credits that may be prevented from
distribution in subsequent financial years.
7,015,360
5,214,311
Subsequent to the reporting period the franking account would be reduced by the franking credit attached to the proposed
dividend disclosed in (a) above.
The Company’s ability to continue to pay franked dividends is dependent upon the receipt of franked dividends from
investments and the Company paying tax.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
24
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
5. TRADE AND OTHER RECEIVABLES
Trade debtors
Income receivable
Sundry debtors
2012
$
2011
$
7,965
177,171
48,631
233,767
-
81,663
195,978
277,641
Trade debtors relate to outstanding settlements, are non-interest bearing and are secured by the Australian Securities
Exchange – National Guarantee Fund. They are settled within 3 days of the purchase being executed. Income receivable
relates to accrued income, it is not interest bearing and is unsecured.
6. FINANCIAL ASSETS
Long positions - held for trading financial assets:
Listed investments at fair value
Placements
Total financial assets
34,898,635
-
34,898,635
29,497,039
400,000
29,897,039
The market values of the top 20 individual investments as at 30 June 2012 are disclosed on page 5 of the Annual Report.
7. TRADE AND OTHER PAYABLES
Trade creditors
Sundry creditors - related parties
Dividends payable on short positions
Sundry creditors – other
646,675
531,886
-
34,164
400,000
2,655,159
15,882
37,121
1,212,725
3,108,162
Trade creditors relate to outstanding settlements. They are non-interest bearing and are secured by the Australian
Securities Exchange – National Guarantee Fund. They are settled within 3 days of the purchase being executed.
Sundry creditors – other, are settled within the terms of payment offered, which is usually within 30 days.
Sundry creditors – related parties, includes fees payable of $492,305 (inclusive of GST) (2011: $2,533,119)
to the manager, Cadence Asset Management Pty Limited and $39,581 (2011: $122,040) that was payable
to MAM Pty Limited for assignment fees. Refer to Note 16 for further information on Related Parties.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
25
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
8. ISSUED CAPITAL
(a) Paid-up Capital
Ordinary shares fully paid
Costs of share issue
Deferred tax asset on capitalised costs of share issue
2012
$
2011
$
42,968,094
30,174,898
(464,437)
139,330
(464,437)
139,330
42,642,987
29,849,791
2012
Date
Balance at the beginning of the
year
Details of the issue
Share Price
$
No. of Shares
Issue Value
$
27,601,814
30,174,898
6 October 2011
DRP
$1.16199
605,789
703,928
September 2011
Exercise of Options
$1.2500
3,340,026
4,175,033
February 2012
Exercise of Options
$1.2500
5,732,759
7,165,949
2 April 2012
May 2012
2011
Date
DRP
$1.27656
551,025
703,411
Exercise of Options
$1.2500
35,900
44,875
37,867,313
42,968,094
Details of the issue
Share Price
$
No. of Shares
Issue Value $
Balance at the beginning of the
year
July 2010
14 March 2011
On-Market Share
DRP
$0.7483
$1.11279
27,341,628
29,878,076
(20,000)
(14,966)
280,186
311,788
27,601,814
30,174,898
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
26
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
Holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one
vote per share at shareholder meetings, otherwise each member present at a meeting or by proxy has one vote on a
show of hands. In the event of the winding up of the Company, ordinary shareholders rank after creditors and share
in any proceeds on winding up in proportion to the number of shares held.
(b) Capital Management
Management controls the capital of the Company in order to maintain a good debt to equity ratio, provide the
shareholders with adequate returns and ensure that the Company can fund its operations and continue as a going
concern.
The Company’s debt and capital includes ordinary share capital and financial liabilities, supported by financial asets.
There are no externally imposed capital requirements.
Management effectively manages the Company’s capital by assessing the Company’s financial risks and adjusting
its capital structure in response to changes in these risks and in the market. These responses include the management
of debt levels, distributions to shareholders and share issues.
2012
$
2011
$
9. ASSET REVALUATION RESERVE
Movement in Asset Revaluation Reserve
Opening balance
Transfer (to) /from retained earnings
-
-
-
-
-
555,061
(555,061)
This asset revaluation reserve was previously used to record increments and decrements on the revaluation of the
investments, net of potential tax as described in accounting policy Note 1(a) (v). We do not intend retaining the asset
revaluation account going forward.
10. PROFITS RESERVE
Profits Reserve
Movement in Profits Reserve
Opening balance
Transfer from retained earnings
11,018,104
-
11,018,104
11,018,104
A Profit Reserve has been created representing amounts allocated from retained earnings that are preserved for future
dividend payments.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
27
-
-
-
-
-
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
11. RETAINED EARNINGS
Opening balance
Profit attributable to members of the Company
Transfer (to) profit reserve
Transfer from asset revaluation reserve
Dividends paid (Note 4)
2012
$
2011
$
10,281,546
(2,601,991)
2,763,546
13,148,125
(11,018,104)
-
(3,534,128)
-
555,061
(819,649)
(1,507,140)
10,281,546
12. CASH FLOW INFORMATION
(a) Reconciliation of cash
Cash at the end of the period as shown in the Statement of Cash Flows is
reconciled to the related items in the Statement of Financial Position as
follows:
Cash and cash equivalents
15,155,601
11,423,139
The weighted average interest rate for cash and cash equivalents as at June 2012 is 3.25% (June 2011: 4.50%).
The Company has a Prime Brokerage lending facility with Citigroup Global Markets Limited and Citigroup Global
Markets Australia Pty Ltd its Prime Broker and Custodian. This at call facility is secured by a first charge over the
financial assets of the Company.
The Company has granted a fixed and floating charge over all of the Company’s right, title and interest in the assets
transferred to the Custodian, including those transferred to the Custodian in accordance with Prime Brokerage
Agreement, and any right which arises after the date of the Charge to receive cash or return of property from
Citigroup under the Prime Brokerage Agreement, as security for payments and performance by the Company of all of
its obligations to Citigroup under the Prime Brokerage Agreement.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
28
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
(b) Reconciliation of Operating Profit after Income Tax
Operating profit after income tax
2,763,546
13,148,125
Add/ (Less) items classified as Investing/Financing Activities:
Realised loss/ (gain) on sale of investments
459,159
(3,250,735)
2012
$
2011
$
Add non-cash items:
Unrealised loss on investments
Net cash provided by Operating Activities before changes in
assets and liabilities:
Decrease in receivables
(Increase) in deferred tax assets
(Decrease)/Increase in trade and other payables
(Decrease)/increase in deferred tax liabilities
Decrease in current tax assets
Net cash from Operating Activities
(c) Non-cash Financing Activities
3,811,648
2,659,709
51,839
(1,455,147)
(2,142,112)
18,154
-
106,716
(476,286)
2,269,640
(238,290)
189,153
3,507,087
14,408,032
During the financial year the Company issued the following shares through its Dividend Reinvestment Plan:
605 789 shares at $1.16199 on 6 October 2011
551,025 shares at $1.27656 on 2 April 2012
During the previous financial year the Company issued the following shares through its Dividend Reinvestment Plan:
280,186 shares at $1.11279 on 14 March 2011
13. EARNINGS PER SHARE
Profit after income tax used in the calculation of earnings per share
2,763,546
13,148,125
Weighted average number of ordinary shares outstanding
during the year used in calculation of basic earnings per share
33,236,125
27,493,218
No.
No.
Weighted average number of ordinary shares and options
outstanding during the year used in calculation of
diluted earnings per share
33,236,125
27,493,218
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
29
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
14. FINANCIAL RISK MANAGEMENT
Financial Risk Management Policies
The Company’s financial instruments consist of money market instruments, short and long term investments, accounts
receivable and payable.
(i) Financial Risk Exposures and Management
The main risks the Company is exposed to through its financial instruments are interest rate risk, liquidity risk,
credit risk and market risk.
(a) Terms, Conditions and Accounting Policies
The Company’s accounting policies are included in Note 1, while the terms and conditions including interest rate risk of
each class of financial asset, financial liability and equity instrument, both recognised and unrecognised at Statement of
Financial Position date are included under the appropriate note for that instrument.
(b) Credit Risk
The Company takes on exposure to credit risk, which is the risk that a counterparty (prime broker, custodian and brokers)
will be unable to pay amounts in full when due.
All transactions in listed securities are settled/paid for upon delivery using approved brokers. The risk of default is
considered minimal, as delivery of securities sold is only made once the broker has received payment.
Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails
to meet their obligation.
There are risks involved in dealing with custodians or prime brokers who settle trades. Under certain circumstances,
including certain transactions where the Company’s assets are pledged as collateral for leverage from a prime
broker/custodian, or where the Company’s assets are held at a prime broker/custodian, the securities and assets deposited
with the prime broker/custodian may be exposed to a credit risk with regards to such parties. In addition, there may be
practical or timing problems associated with enforcing the Company’s rights to its assets in case of an insolvency of any
such party.
The Company maintains a Prime Brokerage lending facility and custody account with its prime broker and primary
custodian Citigroup Global Markets Limited and Citigroup Global Markets Australia Pty Ltd. There is no guarantee that
Citigroup or any other prime broker/custodian that the Company may use from time to time, will not become insolvent.
In an insolvency or liquidation of a prime broker/custodian that has custody of Company assets, there is no certainty that
the Company would not incur losses due to its assets being unavailable for a period of time or ultimately less than full
recovery of its assets, or both. Because substantially all of the Company’s assets are custodied with a single prime broker
and in some cases a single major Australian bank, such losses could be significant and materially impair the ability of
the Company to achieve its investment objective.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
30
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
(c) Liquidity Risk
Liquidity risk represents the risk that an entity will encounter difficulty in meeting obligations associated with financial
liabilities. The Company’s major cash outflows are the purchase of securities and dividends paid to shareholders,
the levels of which are managed by the Board and the management company. The Company’s inward cash flows depend
upon the level of sales of securities, dividends, interest received and any exercise of options that may be on issue.
The Company monitors its cashflow requirements daily by reference to known transactions to be paid or received.
The Company may hold a portion of its portfolio in cash and short-term fixed interest securities sufficient to ensure that
it has cash available to meet all payments. Alternatively, the Company can increase its level of sales of the readily
tradeable securities it holds to increase cash inflows or it can use its lending facility with its Prime Broker Citigroup.
(d) Market Risk
Market risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices.
By its nature, as an investment company that invests in tradeable securities, the Company will always be subject to
market risk as it invests its capital in securities which are not risk free as the market price of these securities can
fluctuate.
The Company can seek to reduce market risk by not being overly exposed to one company or one particular sector of
the market. The Company does not have set parameters as to a minimum or maximum amount of the portfolio that can
be invested in a single company or sector.
(e) Interest Rate Risk
Any excess cash and cash equivalents of the Company are invested at short-term market interest rates. Floating rate
instruments expose the Company to cash flow risk, whereas short term fixed rate instruments expose the Company
to interest rate risk. Excess cash and cash equivalent balances are monitored closely and are generally moved into
short-term bank bills.
(ii) Financial instrument composition and maturity analysis
The tables on the next page reflect the undiscounted contractual settlement terms for financial instruments of a fixed
period of maturity, as well as the Company’s expectations of the settlement period for all other financial instruments.
As such, the amounts may not reconcile to the Statement of Financial Position.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
31
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
2012
Assets
Financial assets
Cash and cash equivalents
Other receivables
Total assets
Liabilities
Balances due to brokers
Other payables
Total liabilities
2011
Assets
Financial assets
Cash and cash equivalents
Other receivables
Total assets
Liabilities
Balances due to brokers
Other payables
Total liabilities
Interest bearing
Weighted Average
Interest Rate
Less than 90
days
$
More than 1
year
$
Non-interest
bearing
$
Total
$
-
3.25%
-
-
-
-
15,155,601
-
15,155,601
-
-
-
-
-
-
-
-
-
-
34,898,635
-
233,767
35,132,402
34,898,635
15,155,601
233,767
35,132,402
646,675
566,050
646,675
566,050
1,212,725
1,212,725
Interest bearing
Weighted Average
Interest Rate
Less than 90
days
$
More than 1
year
$
Non-interest
bearing
$
Total
$
-
4.50%
-
-
-
-
11,423,139
-
11,423,139
-
-
-
-
-
-
-
-
-
-
29,897,039
-
277,641
30,174,680
29,897,039
11,423,139
277,641
41,597,819
400,00
2,708,162
3,108,162
400,00
2,708,162
3,108,162
2012
$
2011
$
566,050
-
2,708,162
-
Other payables are expected to be paid as follows:
- Less than 6 months
- 6 months to one year
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
32
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
(iii) Financial Instruments Measured at Fair Value
The financial assets and liabilities recognised at fair value in the Statement of Financial Position have been analysed and
classified using a fair value hierarchy reflecting the significance of the inputs in making the measurements. The fair value
hierarchy consists of the following levels:
Level 1: Quoted prices in active markets for identical assets or liabilities
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly
(as prices) or indirectly (derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Included within level 1 of hierarchy are listed investments. The fair values of these financial assets and liabilities have
been based on the closing quoted last sales prices at the end of the reporting period, excluding transaction costs.
Level 1
$
Level 2
$
Level 3
$
Total
$
2012
Financial assets
Financial liabilities
Total
2011
34,620,622
-
34,620,622
278,013
-
278,013
Level 1
$
Level 2
$
Level 3
$
Financial assets
Financial liabilities
Total
29,897,039
-
29,897,039
-
-
-
-
-
-
-
-
-
34,898,635
-
34,898,635
Total
$
29,897,039
-
29,897,039
(iv) Sensitivity Analysis
The Company has performed a sensitivity analysis relating to its exposure to interest rate risk, and market risk at balance
date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a
change in these risks.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
33
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
Interest Rate Sensitivity Analysis
The sensitivity analyses below have been determined based on the Company’s exposure to interest rates at the reporting
date and the stipulated change taking place at the beginning of the financial year and held constant through the reporting
period. The effect on loss and equity as a result of changes in the interest rate, with all other variables remaining constant
would be as follows:
Change in profit before tax
- Increase in interest rate by 1%
- Decrease in interest rate by 1%
Change in equity
- Increase in interest rate by 1%
- Decrease in interest rate by 1%
2012
$
2011
$
146,228
(146,228)
146,228
(146,228)
16,582
(16,582)
16,582
(16,582)
Market Risk Sensitivity Analysis
At 30 June 2012, the effect on loss and equity as a result of changes in the market risk, with all other variables remaining
constant would be as follows:
Change in profit before tax
- Increase in interest rate by 2%
- Decrease in interest rate by 2%
Change in equity
- Increase in interest rate by 2%
- Decrease in interest rate by 2%
2012
$
2011
$
488,567
(488,567)
488,567
(488,567)
412,949
(412,949)
412,949
(412,949)
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
34
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
15. KEY MANAGEMENT PERSONNEL COMPENSATION
The names and position held of the Company’s key management personnel (including Directors) in office at any time
during the financial period are:
Karl Siegling Chairman and Company Secretary
Geoffrey Wilson Non-Executive Director
James Chirnside Non-Executive Director
(a) Remuneration
There are no executives that are paid by the Company. Cadence Asset Management Pty Limited, the investment manager of
the Company, remunerates Karl Siegling as a consultant and as a director of the Company. The manager also provides day
to day management of the Company and is remunerated as outlined in Note 16 – Related Parties Transactions.
Short-term Benefits - Directors’ Fees
Post-employment Benefits - Superannuation
(b) Compensation Practices
2012
$
2011
$
27,522
2478
30,000
27,522
2,478
30,000
The Board from time to time determines remuneration of Non-Executive Directors within the maximum amount approved
by the shareholders. Non-Executive Directors are not entitled to any other remuneration.
Fees and payments to Non-Executive Directors reflect the demands that are made on, and the responsibilities of, the
Directors and are reviewed annually by the Board. The Company determines the remuneration levels and ensures they are
competitively set to attract and retain appropriately qualified and experienced Directors.
Directors’ base fees are presently limited to a maximum of $55,000 per annum between the three Directors. Non-Executive
Directors do not receive bonuses nor are they issued options on securities. Directors’ fees cover all main board activities
and membership of committees. Directors’ fees are not linked to the performance of the Company.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
35
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
(c) Shareholdings
As at 30 June 2012, the Company’s key management personnel indirectly held the following shares in the Company:
Director
Balance at 1st July
2011
Acquisitions
Disposals
Balance at 30 June
2012
Karl Siegling
Geoffrey Wilson
James Chirnside
3,237,474
2,050,000
12,966
5,300,440
637,983
-
12,966
650,949
-
(490,000)
-
3,875,457
1,560,000
25,932
(490,000)
5,461,389
As at 30 June 2012, the Company’s key management personnel indirectly held the following options in the Company:
Director
Balance at 1st July
2011
Bonus 1:1
Option Issue
Disposals
Options
Exercised
Balance at 30 June
2012
Karl Siegling
Geoffrey Wilson
James Chirnside
-
-
-
-
3,237,474
-
(230,362)
3,007,112
2,050,000
(2,050,000)
12,966
-
5,300,440
(2,050,000)
-
(12,966)
(243,328)
-
-
3,007,112
As at 30 June 2011, the Company’s key management personnel indirectly held the following shares in the Company:
Director
Balance at 1st July
2011
Acquisitions
Disposals
Balance at 30 June
2012
Karl Siegling
Geoffrey Wilson
James Chirnside
3,102,485
2,050,000
12,966
5,165,451
134,989
-
-
134,989
-
-
-
-
3,237,474
2,050,000
12,966
5,300,440
Directors and Director related entities disposed of and acquired ordinary shares in the Company on the same terms and
conditions available to other shareholders. The Directors have not, during or since the end of the financial year, been granted
options over unissued shares or interests in shares of the Company as part of their remuneration.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
36
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
16. RELATED PARTY TRANSACTIONS
All transactions with related entities were made on normal commercial terms and conditions.
Karl Siegling is the sole Director and a beneficial owner of Cadence Asset Management Pty Limited, the entity
appointed to manage the investment portfolio of Cadence Capital Limited. In its capacity as Manager, Cadence Asset
Management Pty Limited was paid a management fee of $474,724 (inclusive of GST, 2011: $383,440). This is
equivalent to 0.08333% of the value of the portfolio calculated on the last business day of each month. Over a full year,
the monthly management fee will be comparable to a fee of 1% of the gross value of the portfolio per annum. As at 30
June 2012, the balance payable to the manager was $25,796 (inclusive of GST, 2011: $21,773).
The duties of the manager are to manage the portfolio and to manage and supervise all investments, maintain the
corporate and statutory records of the Company, liaise with the ASX with respect to compliance with the ASX listing
rules, liaise with ASIC with respect to compliance with the Corporations Act 2001 and liaise with the share registrar of
the company.
In addition, Cadence Asset Management Pty Limited is to be paid, annually in arrears, a performance fee, being 20% of:
- where the level of the All Ordinaries Accumulation Index has increased over that period, the amount by which the level
of the portfolio exceeds this increase, or
- where the All Ordinaries Accumulation Index has decreased over that period, the amount of the increase in the value of
the portfolio.
No performance fee is payable in respect of any performance period, where the portfolio has decreased in value over that
period. For the year ended 30 June 2012, a performance fee of $463,007 (inclusive of GST 2011: $2,507,847) was pay-
able to Cadence Asset Management Pty Limited. As at 30 June 2012, the balance payable to the manager was $463,007
(inclusive of GST, 2011: $2,507,847).
Cadence Asset Management Pty Limited employs accounting personnel to provide accounting services to Cadence
Capital Limited. These services are provided on commercial terms and include a standard charge of $1,375 (inclusive of
GST) per month and an increased charge of $3,500 (inclusive of GST) is charged for preparing the half year and full year
financial statements.
Cadence Capital Limited has in place an Assignment Deed with Cadence Asset Management Pty Limited and MAM
Pty Limited. Geoffrey Wilson is a Director of MAM Pty Limited and entities associated with him hold its issued share
capital. In its capacity as Manager, Cadence Asset Management Pty Limited assigns a percentage of the management and
performance fee to MAM Pty Limited. Subsequent to the initial capital raising, the assignment rate was 4.05%. At 30
June 2012, an amount of $39,581 (2011: $122,040) was payable to MAM Pty Limited.
17. EVENTS AFTER THE REPORTING PERIOD
The Board of Directors of Cadence Capital Limited have declared an 8.0 cent per share fully franked final dividend
(4.0 cents final dividend and 4.0 cents special dividend) payable on 29th October 2012. The Ex Date for the dividend
is 15th October 2012.
The $ 1.25 CDM options expired on the 15th September 2012. 26,932,680 options were exercised by the date of this
report.
On the 21 September 2012 Cadence Capital Limited completed its share placement of $11.4 million ( being the maximum
allowable under ASX listing rule 7.1 ) at $ 1.37 per share.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
37
For personal use only NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012 Contd’
Other than this, there has not arisen in the interval between the end of the financial year and the date of this report any
other item, transaction or event of material and unusual nature likely, in the opinion of the Company, to significantly
affect the operations of the entity, the results of those operations, or the state of affairs of the entity, in future financial
years.
18. CONTINGENT LIABILITIES
There were no contingencies as at 30 June 2012 (2011: nil).
19. CAPITAL COMMITMENTS
There were no capital commitments as at 30 June 2012 (2011: nil).
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
38
For personal use only DIRECTORS’ DECLARATION
The Directors of Cadence Capital Limited declare that:
1. The financial statements and notes set out on pages 14 to 38 and the additional disclosures included in the Directors’
Report designated as Remuneration Report, set out on page 10, of the Company are in accordance with the Corporations
Act 2001, including:
(a) complying with Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements,
constitutes compliance with International Financial Reporting Standards (IFRS); and
(b) giving a true and fair view of the financial position of the Company as at 30 June 2012 and of its performance for
the year ended on that date;
2. The Director and the Chief Operating Officer of the Manager, Cadence Asset Management Pty Limited has declared
that:
(a) the financial records of the Company for the financial year have been properly maintained in accordance with
section 286 of the Corporations Act 2001;
(b) the financial statements and notes for the financial year comply with the Accounting Standards; and
(c) the financial statements and notes for the financial year give a true and fair view.
3. At the date of this declaration, in the Directors’ opinion there are reasonable grounds to believe that the Company will
be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Karl Siegling
Director
Dated at Sydney, this 27 September 2012
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
39
For personal use only INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF CADENCE CAPITAL LIMITED
Level 7, 20 Hunter Street
Sydney NSW 2000
Level 7, 20 Hunter Street
T +61 (0)2 8236 7700
Sydney NSW 2000
F +61 (0)2 9233 4636
T +61 (0)2 8236 7700
www.moorestephens.com.au
F +61 (0)2 9233 4636
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF CADENCE CAPITAL LIMITED
ABN 17 112 870 096
Report on the Financial Report
We have audited the accompanying financial report of Cadence Capital Limited (the “company”), which comprises the
statement of financial position as at 30 June 2012, the statement of comprehensive income, statement of changes
in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting
policies and other explanatory information and the directors’ declaration.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial report that is
free from material misstatement, whether due to fraud or error. In Note 1, the directors also state that, in accordance
with Accounting Standard AASB 101: Presentation of Financial Statements, that the financial statements comply with
International Financial Reporting Standards (IFRS).
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about
whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of
material misstatement of the financial report, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Moore Stephens Sydney ABN 90 773 984 843. Liability limited by a scheme approved under Professional Standards Legislation*
*Other than for the acts or omissions of financial services licensees. An independent member of Moore Stephens International Limited -
members in principal cities throughout the world The Sydney Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
40
For personal use only
Independence
Sydney NSW 2000
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Level 7, 20 Hunter Street
Auditor’s Opinion
In our opinion:
T +61 (0)2 8236 7700
F +61 (0)2 9233 4636
a) the financial report of Cadence Capital Limited is in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the company’s financial position as at 30 June 2012 and of its performance for the year
aaended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001.
b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 10 to 11 of the directors’ report for the year ended 30 June
2012. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion the remuneration report of Cadence Capital Limited for the year ended 30 June 2012 complies with
section 300A of the Corporations Act 2001.
Moore Stephens Sydney
Chartered Accountants
Scott Whiddett
Partner
Dated in Sydney this 27th day of September 2012
Moore Stephens Sydney ABN 90 773 984 843. Liability limited by a scheme approved under Professional Standards Legislation*
*Other than for the acts or omissions of financial services licensees. An independent member of Moore Stephens International Limited -
members in principal cities throughout the world The Sydney Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
41
For personal use only
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere
in this report.
SHAREHOLDINGS
Substantial shareholders (as at 21 September 2012)
The following have advised that they are a substantial shareholder of Cadence Capital Limited. The holding of a
relevant interest does not infer beneficial ownership. Where two or more parties have a relevant interest in the same
shares, those shares have been included for each party.
Substantial ordinary shareholders as at ex-date
No. of shares
% of total
Esselmont Pty Ltd
Yarandi Investments Pty Ltd & associated entities
Berg Family Foundation & associated entities
6,976,069
4,616,742
3,770,794
Distribution of shareholders (as at 21 September 2012)
No. of shareholders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
The number of shareholdings held in less than marketable parcels is 12.
12.543
8.301
6.780
37
116
134
425
77
789
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
42
For personal use only ASX ADDITIONAL INFORMATION Contd’
Twenty largest shareholders - Ordinary shares (as at 21 September 2012)
Name
Esselmont Pty Ltd
Yarandi Investments Pty Ltd and associated entities
Berg Family Foundation & associated entities
Mr David Teoh
Bannaby Investments Pty Ltd
MAM Pty Limited
Mr S. Gubbins & Mrs B.Gubbins
Mr A Kavangh & Mr M Mahoney
Golden Words Pty Ltd
Ms Valerie Mitchell
UBS Wealth Management Australia Nominees Pty Ltd
Mr Aaron Francis Quirk
Corfam Pty Ltd
Mr Cameron McFarlane
Mr Victor John Plummer
Robinson Page Management
National Nominees Limited
Arazan Pty Ltd
Best and Morgan Pty Ltd
Rembu Pty Ltd
Number of ordinary
shares held
Percentage of issued
capital held
6,976,069
4,616,742
3,770,794
2,481,034
2,110,262
1,560,000
1,006,803
1,004,828
1,000,000
687,500
679,447
643,980
638,500
600,000
500,000
500,000
451,082
439,973
379,500
363,104
30,409,618
12.543
8.301
6.780
4.461
3.794
2.805
1.810
1.807
1.798
1.236
1.222
1.158
1.148
1.079
0.899
0.899
0.811
0.791
0.682
0.653
54.675
STOCK EXCHANGE LISTING
Quotation has been granted for all of the ordinary shares of the Company on all Member Exchanges of the ASX
Limited.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2012
43
For personal use only