2015
ANNUAL
REPORT
Performance | Yield | Commitment
CONTENTS
Company Particulars 2
Manager’s Report 3
Market Value of Top 20 Positions as at 30 June 2015 5
Directors’ Report to Shareholders 6
Auditor’s Independence Declaration 11
Corporate Governance Statement 12
Statement of Profit or Loss and Other Comprehensive Income 15
Statement of Financial Position 16
Statement of Changes in Equity 17
Statement of Cash Flows 18
Notes to the Financial Statements 19
Directors’ Declaration 38
Independent Auditor’s Report 39
ASX Additional Information 41
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
1
COMPANY PARTICULARS
CADENCE CAPITAL LIMITED
A.B.N. 17 112 870 096
DIRECTORS
Karl Siegling
James Chirnside
Wayne Davies
Ronald Hancock
SECRETARY
Wayne Davies (Appointed 10th November 2014)
MANAGER OF THE COMPANY
Cadence Asset Management Pty Limited
ABN: 68 106 551 062
REGISTERED OFFICE
Level 11, 131 Macquarie Street,
Sydney, NSW, 2000
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
PRIME BROKER AND CUSTODIANS
OF THE COMPANY
Deutsche Bank AG
Winchester House,1 Great Winchester Street
London EC2N 2DB
The Bank of New York Mellon
160 Queen Victoria Street,
London EC4V 4LA
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 15, 135 King Street
Sydney NSW, 2000
ASX CODE
Cadence Capital Limited Ordinary Shares (CDM)
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
COUNTRY OF INCORPORATION
Australia
2
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
MANAGER’S REPORT
SUMMARY OF RESULTS
• Net Profit before tax $24.7 million,
• Net Profit after tax $19.3 million,
• 5.0c fully-franked final dividend and 1.0c fully-franked special dividend payable on the 29th October 2015,
• Annualised yield of 7.6% fully-franked (10.9% grossed-up) based on the 31st July 2015 share price,
• Fund gross performance of 11.42% outperforming the market by 5.75%,
• Overseas investments contributed strongly to outperformance in 2015.
SHAREHOLDER PERFORMANCE
Performance* to 30th June 2015
CDM**
All Ords
Outperformance
1 Month
1 Year
2 Years
3 Years
4 Years
5 Years
8 Years
Since Inception (9.8 years)
Since Inception Annualised (9.8 years)
-2.15%
11.42%
30.27%
59.14%
67.87%
205.54%
159.83%
415.22%
18.31%
-5.40%
5.67%
24.31%
50.01%
39.44%
56.42%
21.77%
79.17%
6.16%
+3.25%
+5.75%
+5.96%
+9.13%
+28.43%
+149.12%
+138.06%
+336.05%
+12.15%
* Before Management and Performance Fees **These numbers include the franking value of the substantial RHG dividend received in May 2011
For the financial year ended 30 June 2015, Cadence Capital Limited produced a positive gross performance
of 11.42% compared to an increase in the All Ordinaries Accumulation Index of 5.67% and an increase in the
Small Ordinaries Accumulation Index of 0.44%. We are pleased that since its inception almost 10 years ago
Cadence Capital Limited has outperformed the All Ordinaries Accumulation Index by 12.15% per annum. It
should also be noted that this outperformance has been achieved with lower than market exposure, with the
Company holding on average 24.2% cash since inception.
SECTOR PERFORMANCE (% RETURNS)
Energy
Materials
Industrial
Technology
Communications
Other
Software & Services
Consumer Services
Telecommunication Services
Banks
Consumer, Cyclical
Consumer, Non-cyclical
Diversified Financials
-20%
-10%
0%
10%
20%
30%
40%
50%
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
3
MANAGER’S REPORT Contd’
The sectors that performed well for the Company during the year were Diversified Financials, Consumer Non-
cyclical, Consumer Cyclical and Banks while the sectors that underperformed for the company were Materials
and Energy. Stock positions that performed well for the Company in 2015 were Gilead Sciences Inc., Henderson
Group Plc., IInet Limited, Luxottica Group SPA, Macquarie Group Limited and Mastercard Inc. Stock positions
that underperformed for the Company in 2015 were Arrium Limited, Liquefied Natural Gas Limited and WDS
Limited.
SUMMARY AND OUTLOOK
Cadence Capital Limited performed well over what was another difficult and volatile year. We were especially
pleased with the performance of the company’s overseas investments. Over the past financial year the
company’s overseas investments significantly outperformed its domestic investments.
We have continued adding to our overseas investments over the past year with the company at year end
having more than 38% invested in global listed equities. At year end a further 21% of domestic investments
were earning the majority of their income from overseas, creating a portfolio with approximately 59%
exposure to overseas earnings. These overseas investments are continuing to benefit from a strong global
equities market compared to Australia and a weakening Australian Dollar.
The equities market will continue to provide opportunities in individual companies with specific earnings
profiles in specific industries and economies around the globe. 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 and we are pleased that this investment strategy has
produced good returns for our shareholders and our own investments in 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
4
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
MARKET VALUE OF TOP 20 POSITIONS
AS AT 30 JUNE 2015
LONG AND SHORT POSITIONS
LONG POSITIONS
COMPANY NAME
MARKET VALUE
% OF
EQUITY
Macquarie Group Limited
$ 39,004,764
12.35%
MQG
LUX IM
HGG
GILD US
MA US
MLB
BOQ
NAB
RFG
ANZ
IIN
MNK US
V US
CBA
WBC
AIG US
AGN US
C US
HFR
Luxottica Group SPA
Henderson Group Plc
Gilead Sciences Inc
Mastercard Inc
Melbourne IT Ltd
Bank of Queensland Ltd
National Australia Bank Ltd
Retail Food Group
$ 21,223,558
$ 20,278,350
$ 19,596,886
$ 17,890,619
$ 16,676,316
$ 15,628,028
$ 13,411,006
$ 12,539,863
Australia & New Zealand Banking Group
$ 11,197,228
IInet Limited
Mallinckrodt Plc.
Visa Inc
Commonwealth Bank of Australia
Westpac Banking Corp.
American International Group
Allergan Plc.
Citigroup Inc.
Highfield Resources Ltd.
$ 10,577,672
$ 10,042,935
$ 9,671,273
$ 7,133,894
$ 6,748,285
$ 6,657,662
$ 6,437,746
$ 6,199,896
$ 5,309,598
6.72%
6.42%
6.20%
5.66%
5.28%
4.95%
4.25%
3.97%
3.55%
3.35%
3.18%
3.06%
2.26%
2.14%
2.11%
2.04%
1.96%
1.68%
% OF
EQUITY
SHORT POSITIONS
COMPANY NAME
MARKET VALUE
RIO
Rio Tinto Limited
$ 6,739,175
2.13%
Total Top 20 Long and Short Positions – Net Exposure %
$ 249,486,404
79.00%
MARKET VALUE OF TOTAL PORTFOLIO POSITIONS:
Total Portfolio Long Positions
Total Portfolio Short Positions
Total Portfolio Net Exposure
$ 293,689,355
92.99%
$ 13,671,193
4.33%
$ 280,018,162
88.66%
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
5
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2015
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 2015.
PRINCIPAL ACTIVITY
The principal activity of the Company was investing primarily in securities listed globally. 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 $24,702,344 (2014: operating
profit before tax of $26,423,066) and an operating profit after tax of $19,348,194 (2014: operating profit after
tax of $20,085,487).
REVIEW OF OPERATIONS
Investments are valued continuously to market value. For the year ended 30 June 2015, net investments were
valued at $280,018,162 (2014: $137,735,570).
FINANCIAL POSITION
The net asset value of the Company for the current financial period ended was $315,829,479
(2014: $245,691,848).
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
In January 2014 the Company issued for free 159,194,579 Options (1 for 1 bonus issue) exercisable at $1.43 on
or before 31st August 2015. During the past financial year 46,461,705 Options were exercised. (2014: 8,121,492
Options were exercised)
DIVIDENDS PAID OR RECOMMENDED
The Board have declared a 5.0 cent per share fully franked final dividend and a 1.0 cent per share fully franked
special dividend payable on 29th October 2015. The Ex-Date for the dividend is 20th October 2015.
Dividends paid are as follows:
$
Fully franked 2015 interim dividend of 5.0 cents per share was paid on 10 April 2015
Fully franked 2014 final dividend of 5.0 cents per share was paid on 30 September 2014
Fully franked 2014 interim dividend of 5.0 cents per share was paid on 24 April 2014
Fully franked 2013 final dividend of 5.0 cents per share was paid on 30 September 2013
11,111,185
9,898,166
8,379,173
6,027,806
DIRECTORS
The following persons were Directors of the Company during the financial year and up to the date of this
report:
Karl Siegling
James Chirnside
Wayne Davies
Ronald Hancock
6
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
INFORMATION ON DIRECTORS
Karl Siegling (Chairman and Company Secretary)
Karl Siegling has over 19 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.
James Chirnside (Non-executive Director)
James Chirnside has been exclusively focused on investment management for thirty years in Sydney, Hong
Kong, London, and Melbourne. Mr Chirnside is a Director of Mann Distribution Pty Ltd, a marketing agent
for Mannbio Holdings Ltd. Mannbio Holdings is a specialist Biopharma Fund Manager founded in the UK by
investor Jim Mellon.
James ran Asia Pacific Asset Management between 2002 and 2012. APAM was an Australian and Asian equities
fund, and Fund of Fund manager. From 2000-2001 James worked for Challenger Financial Group in Sydney as
a product development manager responsible for hedge fund investments. During the 1990’s James managed
emerging market hedge funds in Hong Kong and London for Regent Fund Management - now AIM listed
Charlemagne Capital. Between 1988 and 1992 James 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, Mercantile Investment Company Ltd,
Murchison Metals Ltd and Sandon Capital Opportunities Ltd (formerly Mothercare Australia Ltd).
Ronald Hancock (Non-executive Director)
Ronald Hancock is a fellow of the Institute of Chartered Accountants Australia with extensive experience in the
financial services industry. He was the Managing Director of Wide Bay Australia Limited and retired in February
2013. He was a foundation Director and Manager of the Burnett Permanent Building Society formed in 1966,
which subsequently merged with other Queensland societies to form Wide Bay Capricorn Building Society Ltd,
subsequently Wide Bay Australia Ltd.
Ronald Hancock was a practising Chartered Accountant and continued to practise during the establishment
period of the Society. He retired from accountancy in 1994 after 32 years and is also a Director of several private
companies.
Wayne Davies (Non-executive Director)
Wayne Davies has over 13 years funds management experience in Equity Long/Short Funds both in Australia
and overseas. He is both a member of the South African Institute of Chartered Accountants and the Chartered
Institute of Management Accountants. Wayne Davies is a founding member of the Cadence Asset Management
team and has been the Chief Operating Officer of Cadence Asset Management for the past 8 years. Wayne
Davies worked with Theorema Asset Management in London and still remains a director of Theorema Europe
Fund and Theorema Europe Fund Plus.
COMPANY SECRETARY
Wayne Davies held the position of Company Secretary at the end of the financial year.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
7
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
DIRECTORS’ MEETINGS
Karl Siegling
James Chirnside
Wayne Davies
Ronald Hancock
AUDIT COMMITTEE MEETINGS
Karl Siegling
James Chirnside
REMUNERATION REPORT (AUDITED)
No. eligible to attend
Attended
4
4
4
4
4
4
4
4
No. eligible to attend
2
2
Attended
2
2
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 Employee Benefits - Directors Fees:
James Chirnside
Ronald Hancock
Wayne Davies
Post-employment Benefits - Superannuation
2015
$
27,397
27,397
13,699
6,507
75,000
2014
$
27,460
27,460
13,730
6,350
75,000
(b) Director Related Entities Remuneration
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. Wayne Davies is also a beneficial
owner of Cadence Asset Management Pty Limited. In its capacity as Manager, Cadence Asset Management Pty
Limited was paid a management fee of $3,019,310 (inclusive of GST) (2014: $2,203,562). 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 2015, the balance payable to the manager was $161,957 (inclusive of GST) (2014: $132,844).
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 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.
8
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
REMUNERATION REPORT (AUDITED) (Continued)
(b) Director Related Entities Remuneration (Continued)
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 2015, a performance fee of $2,778,884 (inclusive of GST)
(2014: $12,800) was payable to Cadence Asset Management Pty Limited. As at 30 June 2015, the balance
payable to the manager was $2,778,884 (inclusive of GST) (2014: $12,800).
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 additional charge of $3,500 (inclusive of GST) is charged for
preparing the half year and full year financial statements.
(c) 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 $80,000 per annum between the four 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.
(d) Shareholdings
As at the date of this Report, the Company’s key management personnel indirectly held the following shares in
the Company:
Shareholdings
Karl Siegling
Wayne Davies
Ronald Hancock
James Chirnside
Balance at
1 July 2014
8,792,686
353,989
279,860
26,851
9,453,386
Acquisitions
Disposals
9,154,165
312,458
120,140
-
9,586,763
-
-
-
-
-
As at the date
of this Report
17,946,851
666,447
400,000
26,851
19,040,149
As at the date of this Report, the Company’s key management personnel indirectly held the following options
in the Company:
Optionholdings
Karl Siegling
Wayne Davies
Ronald Hancock
James Chirnside
Balance at
1 July 2014
8,519,166
344,442
279,860
25,932
9,169,400
End of Remuneration Report.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
Options
Exercised
8,519,166
285,000
120,140
-
8,924,306
Options
Lapsed
-
59,442
159,720
25,932
245,094
As at the date
of this Report
-
-
-
-
-
9
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
EVENTS AFTER THE REPORTING PERIOD
The Board have declared a 5.0 cent per share fully franked final dividend and a 1.0 cent per share fully franked
special dividend payable on 29th October 2015. The Ex-Date for the dividend is 20th October 2015. Cadence
Capital Limited’s options expired on 31st August 2015. On the 28th September 2015 the Company announced a
placement (Option shortfall) of up to 37.9 million shares.
No other matters or circumstances have arisen since the end of the financial year 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.
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.
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 11 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 30th day of September 2015
10
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
AUDITOR’S INDEPENDENCE DECLARATION
Level 15, 135 King Street
Sydney NSW 2000
GPO Box 473
Sydney, NSW 2001
T +61 (0)2 8236 7700
F +61 (0)2 9233 4636
www.moorestephens.com.au
Auditor’s Independence Declaration
to the directors of Cadence Capital Limited
As lead auditor for the audit of Cadence Capital Limited for the year ended 30 June 2015, I
declare that to the best of my knowledge and belief, 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.
This declaration is in respect of Cadence Capital Limited during the period.
Moore Stephens Sydney
Chartered Accountants
Scott Whiddett
Partner
Dated in Sydney, 30 September 2015
Moore Stephens Sydney ABN 90 773 984 843. 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 2015
11
CORPORATE GOVERNANCE STATEMENT
A description of the Company’s corporate governance practices are set out below. All these practices, unless
otherwise stated, were in place the entire year and comply with the 3rd Edition of the Australian Securities
Exchange (“ASX”) Corporate Governance Principles and Recommendations of the ASX Corporate Governance
Council (“ASX Principles and Recommendations”). For further information please refer to the company
website.
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 board aims to ensure that all directors and the Manager act with the utmost integrity and objectivity,
and endeavours to enhance the reputation of the Company. The board should act in a manner designed to
create and build sustainable value for shareholders.
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 independent directors of the
Company are James Chirnside and Ronald Hancock.
The Board comprises of the Chairman and three 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 must retire from office and be eligible for re-election. Shareholder
approval is required on the composition of the Board.
The Board is 50% 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.
An independent director is considered to be a director:
(a) who is not a member of management;
(b) who has not within the last three years been employed in an executive capacity by the Company or been
a professional adviser or consultant to the Company;
(c) is not a significant supplier to the Company;
(d) has no material contractual relationship with the Company other than as a director; and
(e) is free from any interest or business or other relationship which could materially interfere with the
director’s ability to act in the best interests of the Company.
As the Company’s operations are primarily conducted through Cadence Asset Management Pty Limited,
the Company does not presently have any full time employees and hence the Board considers setting
measureable diversity objectives is not appropriate.
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.
12
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
CORPORATE GOVERNANCE STATEMENT Contd’
REMUNERATION OF DIRECTORS AND EXECUTIVES
The maximum total remuneration of the Directors of the Company has been set at $80,000 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.
AUDIT COMMITTEE
The Company has formed an Audit Committee consisting of:
James Chirnside
Chairman
Karl Siegling
Executive Director
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.
The external audit firm partner responsible for the Company’s audit attends Audit Committee meetings by
invitation and presents to the Audit Committee twice per year. The Audit Committee formally reports to the
Board after each of its meetings.
EXTERNAL AUDITOR
The Company and Audit Committee policy is to appoint an external auditor who clearly demonstrates quality
and independence. Moore Stephens Sydney was the external auditor in June 2015. It is Moore Stephens’ policy
to rotate audit engagement partners on listed companies in accordance with the Corporations Act 2001.
The external auditor is requested to attend the AGM and to be available to answer shareholder questions
about the conduct of the audit and the preparation of the audit report.
RISK MANAGEMENT POLICY
The Board acknowledges that it is responsible for the overall system of internal control but recognises that no
cost effective internal control system will preclude all errors and irregularities. The Board has delegated the
responsibility for reviewing the risk profile and reporting on the operation of the internal control system to the
Audit Committee.
Risks are identified and assessed by the Company’s Board as well as by the Company’s auditors. Controls are
implemented to deal with risks based on the assessment of:
• the nature and extent of the risk facing the Company;
• the extent and categories of risks which the board considers acceptable to bear;
• the likelihood of the risk materialising;
• the Company’s ability to minimize the risk of incident and its resultant impact on the business should a
particular risk materialise; and
• the sorts of operating particular controls relative to the benefit obtained by managing the relevant risk.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
13
CORPORATE GOVERNANCE STATEMENT Contd’
RISK MANAGEMENT POLICY CONTINUED
The Manager, Cadence Asset Management Pty Ltd, as well as by the Company’s auditors will report any
instances of control or policy failure or breach to enable the Board to consider whether relevant controls
require reassessment, strengthening or improvement and whether the level of monitoring by the board is
adequate.
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.
14
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME FOR THE YEAR
ENDED 30 JUNE 2015
NOTE
2015
$
2014
$
INCOME
Net realised and unrealised gain on investments
20,910,998
21,733,791
Dividends received
Interest received
Underwriting fees
Total Income
EXPENSES
Finance costs
Management fees
Performance fees
Assignment fees
Directors fees
Dividends on short positions
Stock loan fees
Brokerage expenses on share purchases
ASX fees
Registry fees
Legal fees
Custody fees
Audit and taxation fees
Other expenses from ordinary activities
Total Expenses
2
9,515,790
2,035,499
13,950
6,889,840
1,555,865
10,560
32,476,237
30,190,056
(683,116)
(2,813,448)
(2,589,415)
(228,052)
(75,000)
(212,479)
(62,244)
(575,514)
(158,926)
(157,704)
(23,334)
(88,474)
(60,850)
(45,337)
(117,610)
(2,053,318)
(11,927)
(87,173)
(75,000)
(162,400)
(14,800)
(546,234)
(103,462)
(173,517)
(289,396)
(17,106)
(50,119)
(64,928)
(7,773,893)
(3,766,990)
Profit before income tax
24,702,344
26,423,066
Income tax expense
3(a)
(5,354,150)
(6,337,579)
Profit attributable to members of the Company
11
19,348,194
20,085,487
Other comprehensive income
Other comprehensive income for the period, net of tax
-
-
Total comprehensive income for the period
19,348,194
20,085,487
Basic earnings per share
Diluted earnings per share
13
13
9.5 cents
13.8 cents
9.5 cents
13.7 cents
The accompanying notes form part of these financial statements.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
15
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015
ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets
Deferred tax asset
TOTAL ASSETS
LIABILITIES
Cash overdrafts
Trade and other payables
Financial liabilities
Current tax liabilities
Deferred tax liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Profits reserve
Accumulated losses
TOTAL EQUITY
NOTE
12(a)
5
6
3(b)
12(a)
7
8
3(c)
3(d)
2015
$
2014
$
32,673,014
5,279,525
96,764,733
18,891,137
293,689,355
145,120,842
4,670,150
3,880,442
336,312,044
264,657,154
2,596
3,384,369
13,671,193
3,424,407
2,938,702
6,164,358
7,385,272
20,571
-
2,456,403
20,482,565
18,965,306
315,829,479
245,691,848
9
10
11
302,996,147
231,197,359
22,708,886
18,247,326
(9,875,554)
(3,752,837)
315,829,479
245,691,848
The accompanying notes form part of these financial statements.
16
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
ISSUED CAPITAL ACCUMULATED
NOTE
$
LOSSES
$
PROFITS
RESERVE
$
TOTAL
EQUITY
$
Balance at 1 July 2013
155,566,625
(3,752,837)
12,568,818
164,382,606
Profit for the year
Transfer to profits reserve
11
10
20,085,487
-
20,085,487
(20,085,487)
20,085,487
-
-
-
Other comprehensive
income for the year
Shares issued via dividend
reinvestment plan
Shares issued via exercise of
options
Shares issued via
placements
Dividends paid
9(a)
3,496,963
10
10
4(a)
11,613,734
60,520,037
-
Profit for the year
Transfer to profits reserve
Other comprehensive
income for the year
Shares issued via dividend
reinvestment plan
Shares issued via exercise of
options
Dividends paid
11
10
9(a)
10
4(a)
-
-
-
5,358,550
66,440,238
-
-
-
-
-
-
-
-
-
-
Balance at 30 June 2014
231,197,359
(3,752,837)
18,247,326
245,691,848
(14,406,979)
(14,406,979)
19,348,194
-
19,348,194
(25,470,911)
25,470,911
-
-
3,496,963
11,613,734
60,520,037
-
-
5,358,550
66,440,238
-
-
-
-
-
-
-
(21,009,351)
(21,009,351)
Balance at 30 June 2015
302,996,147
(9,875,554)
22,708,886
315,829,479
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
17
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Proceeds from the sale of investments
Payments for the purchase of investments
Capital return on investments
Dividends received
Interest received
Other income received
Management fees paid
Performance fees paid
Brokerage expenses on share purchases
Interest paid
Dividends paid on shorts
Payments for administration expenses
Income tax paid
NOTE
2015
$
$
2014
$
$
540,473,533
191,911,156
(653,026,793)
(227,278,688)
-
8,761,126
2,035,499
13,950
2,856,802
6,553,450
1,608,880
40,530
(2,784,335)
(2,023,330)
(12,800)
(575,514)
(683,116)
(242,449)
(707,717)
(40,538)
(546,234)
(117,610)
(162,400)
(753,827)
(5,196,425)
(5,563,314)
NET CASH USED IN OPERATING ACTIVITIES
12(b)
(111,945,041)
(33,515,123)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Proceeds from shares issued
(15,650,799)
(10,910,010)
66,440,227
71,913,201
NET CASH PROVIDED BY FINANCING ACTIVITIES
50,789,428
61,003,191
NET (DECREASE)/ INCREASE IN CASH HELD
(61,155,613)
27,488,068
CASH AND CASH EQUIVALENTS AS AT BEGINNING OF THE
FINANCIAL YEAR
CASH AND CASH EQUIVALENTS AS AT END OF THE
FINANCIAL YEAR
93,826,031
66,337,963
12(a)
32,670,418
93,826,031
The accompanying notes form part of these financial statements.
18
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Cadence Capital Limited (“the Company”) is a listed public company, incorporated and domiciled in Australia.
BASIS OF PREPARATION
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations, issued by the Australian Accounting Standards Board (‘AASB’) and the
Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply
with International Financial Reporting Standards as issued by the International Accounting Standards Board
(‘IASB’).
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 under the historical cost convention, except for, where applicable,
cash flow information, “held-for-trading” financial assets and certain other financial assets and liabilities, which
have been measured at fair value.
The preparation of the financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Company’s accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed in Note 1(j).
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 profit or loss 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 profit or loss.
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 profit or loss immediately.
Financial assets are classified and measured at fair value with changes in value being recognised in the profit or
loss.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
19
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(a) Investments (Continued)
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 profit or loss.
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 profit or loss. 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) Investment income
Dividend income is recognised in the profit or loss 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.
vi) Derivative Instruments
Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken
to the profit or loss.
vii) Financial Liabilities
Borrowed stock is classified as financial liabilities at fair value through the profit or loss. Realised and unrealised
gains and losses arising from changes in fair value are included in the profit or loss in the year in which they
arise.
(b) Income Tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on
the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods,
where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to
apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or
substantively enacted, except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset
or liability in a transaction that is not a business combination and that, at the time of the transaction, affects
neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated with investments in subsidiaries, associates or interests
in joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date.
Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable
profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets
are recognised to the extent that it is probable that there are future taxable profits available to recover the
asset.
20
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Income Tax (Continued)
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax
assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to
the same taxable entity or different taxable entity’s which intend to settle simultaneously.
(c) Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-
term, highly liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value. For the statement
of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown
within borrowings in current liabilities on the statement of financial position.
(d) Trade and Other Receivables
Trade and other receivables relate to outstanding settlements as well as accrued income in relation to interest
and dividends receivable. Trade receivables are generally due for settlement within 30 days.
(e) Trade and Other Payables
These amounts represent liabilities for outstanding settlements as well as services provided to the Company
prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured
at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of
recognition.
(f) Impairment of Assets
At each reporting date, the Company reviews the carrying values of its non-financial 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 profit or loss.
(g) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), unless GST
incurred is not recoverable from the Australian Taxation Office (ATO). In this case it is recognised as part of the
cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the
Statement of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash
flows.
(h) Segment Reporting
The Company has only one segment. The Company operates predominately in Australia and in one industry
being the securities industry, deriving revenue from dividend income, interest income and from the sale of its
financial assets at fair value through profit or loss, however the Company has foreign exposures as it invests in
companies which operate internationally.
(i) Comparative Figures
Where required by accounting standards, comparative figures have been adjusted to conform with changes in
presentation for the current financial year.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
21
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(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.
Income tax
The entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required
in determining the provision for income tax. There are many transactions and calculations undertaken during
the ordinary course of business for which the ultimate tax determination is uncertain. The Company recognises
liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where
the final tax outcome of these matters is different from the carrying amounts, such differences will impact the
current and deferred tax provisions in the period in which such determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Company considers it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
There are no estimates or judgements that have a material impact on the Company’s financial results for the
year ended 30 June 2015. All material financial assets are valued by reference to quoted prices and therefore
no significant estimates or judgements are required in respect of their valuation.
(k) Issued Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
(l) Profits Reserve
The profits reserve is made up of amounts transferred from current and retained earnings that are preserved
for future dividend payments.
(m) Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the
Company.
(n) New Accounting Standards and Interpretations not yet mandatory or early adopted
The Australian Accounting Standards Board has issued a number of new and amended Accounting
Standards and Interpretations that have mandatory application dates for future reporting periods, some of
which are relevant to the Company. The Company has decided not to adopt any of the new and amended
pronouncements. A new and amended pronouncement that is relevant to the Company, but applicable in
future reporting periods is AASB 9: Financial Instruments and its associated amending standards.
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard
replaces all previous versions of AASB 9 and completes the project to replace IAS 39 (AASB 139) - Financial
Instruments: Recognition and Measurement. This standard introduces new classification and measurement
models for financial assets, using a single approach to determine whether a financial asset is measured at
amortised cost or fair value. The accounting for financial liabilities continues to be measured in accordance
with AASB 139, with one exception, being that the portion of a change of fair value relating to the entity’s
own credit risk is to be presented in other comprehensive income unless it would create an accounting
mismatch. The Company has not early adopted AASB 9. This is not expected to have a significant impact on
the Company’s financial statements as the Company does not expect to elect any investments as not held for
trading.
The financial report was authorised for issue on 30 September 2015 by the Board of Directors.
22
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
2. AUDITOR’S REMUNERATION
Remuneration of the auditor of the Company for:
Auditing or reviewing the financial report
Other assurance services
Non-audit services
Other services provided by a related practice of the auditor:
Taxation services
2015
$
2014
$
38,170
4,334
14,960
57,464
38,695
-
14,410
53,105
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
23
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
3. TAXATION
(a) Current Income Tax Expense
The prima facie tax on profit from ordinary activities before
income tax is reconciled to the income tax expense as follows:
Prima facie tax expense on profit from ordinary activities before
income tax at 30%
Imputation credit gross up
Franked dividends receivable – prior year
Franked dividends receivable – current year
Rebates/tax offsets
Other
Total income tax expense results in a:
Current tax expense
Movement in deferred tax liabilities
Movement in deferred tax assets
(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/(Debited) to the profit or loss
Movement relating to under/(over) adjustment
Charged to equity
(c) Current Tax Liabilities
Movement in current tax liabilities
Balance at the beginning of the period
Current year income tax on operating profit
Income tax paid
Prior year under/(over)
At reporting date
(d) Deferred Tax Liabilities
Income provisions
Fair value adjustments
Movement in deferred tax liabilities
Balance at the beginning of the period
(Credited)/Debited to the profit or loss
Movement relating to under/(over) adjustment
At reporting date
24
2015
$
2014
$
7,410,703
7,927,559
783,265
323,071
596,937
125,943
(551,369)
(323,071)
(2,610,882)
(1,989,790)
(638)
-
5,354,150
6,337,578
7,674,405
(1,599,995)
(720,260)
5,354,150
496
421,915
914,626
3,333,113
4,670,150
3,880,442
720,260
69,448
-
4,670,150
5,583,885
625,609
128,084
6,337,578
6,856
527,143
13,330
3,333,113
3,880,442
3,719,668
(128,084)
-
288,858
3,880,442
20,571
-
7,674,405
5,583,885
(5,196,425)
(5,563,314)
925,856
3,424,407
-
20,571
-
-
-
2,456,403
(1,599,995)
(856,408)
-
2,456,403
2,456,403
1,830,794
625,609
-
-
2,456,403
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
2015
$
2014
$
21,009,351
14,406,979
Cents
per
share
5.0
5.0
Date of
payment
Tax rate for
franking
credit
% Franked
Total Amount
$
10 April 15
30 September 14
30%
30%
100%
100%
11,111,185
9,898,166
21,009,351
4. DIVIDENDS
(a) Dividends paid
Dividends paid by the Company
2015
Dividends paid by the Company
for the year ended 30 June 2015
Interim 2015 Ordinary
Final 2014 Ordinary
Total Amount
The Board have declared a 5.0 cent per share fully franked final dividend and a 1.0 cent per share fully franked
special dividend payable on 29th October 2015. The Ex-Date for the dividend is 20th October 2015.
2014
Dividends paid by the Company
for the year ended 30 June 2014
Interim 2014 Ordinary & special
Final 2013 Ordinary & special
Total Amount
(b) Dividend franking account
Cents
per
share
5.0
5.0
Date of
payment
Tax rate for
franking
credit
%
Franked
Total Amount
$
24 April 14
30 September 13
30%
30%
100%
100%
8,379,173
6,027,806
14,406,979
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.
9,069,012
6,644,852
Subsequent to the reporting period, the franking account would be reduced by 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.
5. TRADE AND OTHER RECEIVABLES
Trade debtors
Income receivable
Sundry debtors
3,100,293
1,861,537
317,695
5,279,525
17,685,063
1,106,873
99,201
18,891,137
Terms and Conditions
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 non-interest bearing and is unsecured.
6. FINANCIAL ASSETS
Long positions - held for trading financial assets:
Investments at fair value
Total financial assets
293,689,355
145,120,842
293,689,355
145,120,842
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
25
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
7. TRADE AND OTHER PAYABLES
Trade creditors
Sundry creditors - related parties
Sundry creditors – other
2015
$
55,342
3,189,097
139,930
3,384,369
2014
$
5,821,778
242,695
99,885
6,164,358
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 $2,944,341 (inclusive of GST) (2014: $149,144) to
the manager, Cadence Asset Management Pty Limited. Refer to Note 16 for further information on Related
Parties.
8. FINANCIAL LIABILITIES
Short positions: Listed investments at fair value - held for trading
Swap positions - held for trading
Total financial liabilities
13,322,291
348,902
13,671,193
7,385,272
-
7,385,272
The Company’s Financial Assets and Cash are used as collateral for its Financial Liabilities. Refer to Note 14(b)
for further information on Credit Risk.
9. ISSUED CAPITAL
(a) Paid-up Capital
Ordinary shares fully paid
Costs of share issue
Deferred tax asset on capitalised costs of share issue
305,130,495
223,331,707
(3,049,073)
(3,049,073)
914,725
914,725
302,996,147
231,197,359
2015
Date
Details of the issue
Share Price
$
No. of Shares
Issue Value
$
Balance at the beginning of the year
173,967,657
233,331,707
July 2014
August 2014
September 2014
30 September 2014
October 2014
November 2014
December 2014
January 2015
February 2015
March 2015
April 2015
10 April 2015
Exercise of Options
Exercise of Options
Exercise of Options
DRP
Exercise of Options
Exercise of Options
Exercise of Options
Exercise of Options
Exercise of Options
Exercise of Options
$1.4300
$1.4300
$1.4300
$1.37049
$1.4300
$1.4300
$1.4300
$1.4300
$1.4300
$1.4300
326,419
466,779
5,209,414
7,449,462
18,459,823
26,397,547
1,808,346
2,478,320
50,100
78,669
9,580
29,495
71,643
112,497
13,699
42,178
165,435
236,572
22,118,770
31,629,841
Exercise of Options
$1.4300
14,000
20,020
DRP
$1.38173
2,084,503
2,880,230
224,322,211
305,130,495
26
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
9. ISSUED CAPITAL (Continued)
(a) Paid-up Capital (Continued)
2014
Date
Details of the issue
Share Price
$
No. of
Shares
Issue Value
$
Balance at the beginning of the year
120,556,120
157,026,984
30 September 2013
16 December 2013
January 2014
February 2014
March 2014
April 2014
24 April 2014
May 2014
2 May 2014
June 2014
DRP
Placement
Exercise of Options
Exercise of Options
Exercise of Options
Exercise of Options
DRP
Exercise of Options
$1.34699
1,182,280
1,592,513
$1.4300
37,767,430
54,007,425
$1.4300
$1.4300
$1.4300
$1.4300
$1.4111
$1.4300
34,595
128,451
49,471
183,685
1,848,356
2,643,149
6,066,227
8,674,705
1,349,640
1,904,450
32,370
46,289
DRP Shortfall Placement
$1.4400
4,990,695
7,186,601
Exercise of Options
$1.4300
11,493
16,435
173,967,657
233,331,707
As at 30 June 2015 the Company had 109,602,077 Options (ASX Code: CDMO) on issue (2014: 156,062,782
Options). These are one for one Bonus Options that were issued to Shareholders for free on the 20th January
2014 giving Option holders the right to acquire Ordinary Shares in the Company, on or before 31st August
2015, at $1.43 per Ordinary Share.
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 assets.
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. There has been no change in the
strategy adopted by the Board to control the capital of the Company since the prior year. The Company is not
subject to any externally imposed capital requirements.
10. PROFITS RESERVE
Profits Reserve
Movement in Profits Reserve
Opening balance
Transfer from retained earnings
Dividends paid (Note 4)
2015
$
2014
$
22,708,886
18,247,326
18,247,326
25,470,911
12,568,818
20,085,487
(21,009,351)
(14,406,979)
22,708,886
18,247,326
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
27
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
The Profit Reserve is made up of amounts transferred from current and retained earnings that are preserved
for future dividend payments.
11. ACCUMULATED LOSSES
Opening balance
Profit attributable to members of the Company
Transfer to profits reserve
2015
$
(3,752,837)
19,348,194
2014
$
(3,752,837)
20,085,487
(25,470,911)
(20,085,487)
(9,875,554)
(3,752,837)
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
Cash overdrafts
32,673,014
(2,596)
32,670,418
96,764,733
(2,938,702)
93,826,031
The weighted average interest rate for cash and cash equivalents as at June 2015 is 2.12% (June 2014: 2.63%).
The Company has Prime Brokerage lending facilities and Custody arrangements with Deutsche Bank AG and
Bank of New York Mellon. These facilities are secured by a first charge over the financial assets of the Company.
The Company has granted a charge over all of the Company’s right, title and interest in the assets transferred to
the Prime Broker. This includes those transferred to the Custodians and sub-custodians in accordance with Prime
Brokerage Agreements, and any right which arises after the date of the charges to receive cash or return of
property from the parties under the Prime Brokerage Agreement, as security for payments and performance by
the Company of all of its obligations to the Primebrokers under the Prime Brokerage Agreement.
(b) Reconciliation of Operating Profit after Income Tax
Operating profit after income tax
Fair value gains on financial assets
19,348,194
20,085,487
(142,282,592)
(42,446,567)
Changes in assets and liabilities:
Decrease/(Increase) in receivables
Decrease/(Increase) in deferred tax assets
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in deferred tax liabilities
Increase in current tax liabilities
Net cash used in Operating Activities
13,611,621
(17,365,988)
(789,708)
(2,779,989)
(2,456,403)
3,403,836
128,084
5,437,681
625,609
20,571
(111,945,041)
(33,515,123)
28
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
12. CASH FLOW INFORMATION (Continued)
(c) Non-cash Financing Activities
During the financial year the Company issued the following shares through its Dividend Reinvestment Plan:
- 1,808,337 shares at $1.37049 on 30 September 2014
- 2,084,503 shares at $1.38174 on 10 April 2015
During the previous financial year the Company issued the following shares through its Dividend Reinvestment
Plan:
- 1,182,280 shares at $1.34699 on 30 September 2013
- 1,349,640 shares at $1.41110 on 24 April 2014
13. EARNINGS PER SHARE
2015
$
2014
$
Profit after income tax used in the calculation of earnings per share
19,348,194
20,085,487
Weighted average number of ordinary shares outstanding
during the year used in calculation of basic earnings per share
202,656,107
145,779,738
No.
No.
Weighted average number of ordinary shares and options
outstanding during the year used in calculation of
diluted earnings per share
Reconciliation of weighted average number of shares:
203,648,089
146,904,744
Weighted average number of ordinary shares used in calculation of
basic earnings per share
202,656,107
145,779,738
Add:
Weighted average number of potential ordinary shares used in the
calculation of diluted earnings per share
991,982
1,125,006
Weighted average number of shares used in the calculation of
diluted earnings per share
203,648,089
146,904,744
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 balance date are included under the appropriate note for that instrument.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
29
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
14. FINANCIAL RISK MANAGEMENT (Continued)
(i)
Financial Risk Exposures and Management (Continued)
(b) Credit Risk
The Company takes on exposure to credit risk, which is the risk that a counterparty (prime broker, custodian,
sub-custodian and broker) will be unable to pay amounts in full when due. The maximum exposure to credit
risk by class of recognised financial assets at the end of the reporting period excluding the value of any
collateral or other security held, is equivalent to the carrying amount and classification of those financial assets
(net of any provisions) as presented in the statement of financial position.
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 or sub-
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 Prime Brokerage lending facilities and custody accounts with its prime broker and
custodian Deutsche Bank AG and Bank of New York Mellon. There is no guarantee that these or any sub-
custodian that Deutsche Bank AG may use or any other prime broker or custodian that the Company may use
from time to time, will not become insolvent. In the event of an insolvency or liquidation of a prime broker/
custodian that has custody of the Company’s 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. As substantially all of the Company’s assets may be held by a prime broker, custodian or sub-custodian
and in some cases a major Australian bank, such losses could be significant and materially impair the ability of
the Company to achieve its investment objective.
Any cash held by Deutsche Bank is not treated as client money, but rather held as collateral and is not subject to
the client monies protections conferred by the Financial Conduct Authority rules relating to client money. As a
consequence, the Company’s money is held by the Prime Broker as banker and not as a trustee or agent and the
Prime Broker will not be required to place the Fund’s money in a segregated client account, and the Company
will therefore rank equally with Deutsche Bank’s other account holders in relation thereto.
(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.
(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.
30
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
14. FINANCIAL RISK MANAGEMENT (Continued)
(i)
Financial Risk Exposures and Management (Continued)
(e) Foreign Currency Risk
The Company undertakes certain transactions and holds assets and liabilities denominated in currencies other
than Australian Dollar (AUD), the reporting currency of the Company. The Company is therefore exposed to
currency risk, as the value of the assets and liabilities denominated in other currencies will fluctuate due to
changes in exchange rates.
The following table summarises the net amount of assets and liabilities which are denominated in currencies
that the Company is significantly exposed to:
United States Dollar:
Cash and cash equivalents
Financial Assets
Cash overdraft
Financial Liabilities
Net Denominated Net Assets
AUD/USD Exchange Rate: $0.7707 (2014:$0.9420)
Euro:
Cash and cash equivalents
Financial Assets
Net Denominated Net Assets
AUD/EURO Exchange Rate: $0.6914 (2014:N/A)
British Pound Sterling:
Cash and cash equivalents
Net Denominated Net Assets
AUD/GBP Exchange Rate: $0.4905 (2014:N/A)
Canadian Dollar:
Financial Assets
Cash overdraft
Net Denominated Net Assets
AUD/CAD Exchange Rate: $0.9629 (2014:N/A)
2015
$
2014
$
2,855,771
82,678,332
-
(348,902)
85,185,201
353,334
21,223,558
21,576,892
24,779
24,779
2,272,169
(2,596)
2,269,573
2,977,265
(2,938,707)
-
38,558
-
-
-
-
-
-
-
-
(f) 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 can be moved
into short-term bank bills or fixed term deposits.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
31
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
14. FINANCIAL RISK MANAGEMENT (Continued)
(ii) Financial instrument composition and maturity analysis
The tables below 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.
2015
Assets
Weighted
Average
Interest Rate
Interest bearing
Less than 90
days $
More than 1
year $
Non-interest
bearing
$
Total
$
Financial assets
-
-
Cash and cash equivalents
2.12%
32,673,014
Other receivables
Total assets
-
-
32,673,014
Liabilities
Financial liabilities
Cash overdrafts
Balances due to brokers
Other payables
Total liabilities
-
1.59%
-
-
-
2,596
-
-
2,596
-
-
-
-
-
-
-
-
-
293,689,355
293,689,355
-
32,673,014
5,279,525
5,279,525
298,968,880
331,641,894
13,671,193
13,671,193
-
55,342
2,596
55,342
3,329,027
3,329,027
17,055,562
17,058,158
2014
Assets
Weighted
Average
Interest Rate
Interest bearing
Less than 90
days $
More than 1
year $
Non-interest
bearing
$
Total
$
Financial assets
-
-
Cash and cash equivalents
2.63%
96,764,733
Other receivables
Total assets
Liabilities
-
-
96,764,733
Financial liabilities
-
-
Cash overdrafts
0.76%
2,938,702
Balances due to brokers
Other payables
Total liabilities
-
-
-
-
2,938,702
-
-
-
-
-
-
-
-
-
145,120,842
145,120,842
-
96,764,733
18,891,137
18,891,137
164,011,979
260,776,712
7,385,272
-
5,821,778
342,580
7,385,272
2,938,702
5,821,778
342,580
13,549,630
16,488,332
32
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
14. FINANCIAL RISK MANAGEMENT (Continued)
(ii) Financial instrument composition and maturity analysis (Continued)
Other payables are expected to be paid as follows:
- Less than 6 months
- 6 months to one year
2015
$
2014
$
3,329,027
342,580
-
-
(iii)
Financial Instruments Measured at Fair Value
AASB 13: Fair Value Measurement requires the disclosure of fair value information 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 are not based on observable market data (unobservable inputs).
Included within Level 1 of the hierarchy are listed investments. The fair values of these financial assets and
liabilities have been based on the closing quoted last prices at the end of the reporting period, excluding
transaction costs.
Investments included in Level 2 of the hierarchy include amounts in relation to Initial Public Offerings and
Placements in which the Company has subscribed to during the year. These investments have not listed on
the Australian Securities Exchange as at 30 June 2015 and therefore represent investments in an inactive
market. In valuing unlisted investments, included in Level 2 of the hierarchy, the fair value has been
determined using the valuation technique of the quoted subscription price and the amount of securities
subscribed for by the Company under the relevant offers.
30 June 2015
Financial assets
Level 1
$
293,195,255
Financial liabilities
(13,671,193)
Level 3
$
Level 2
$
494,100
-
Total
279,524,062
494,100
30 June 2014
Financial assets
Level 1
$
Level 2
$
Level 3
$
143,904,942
1,215,900
Financial liabilities
(7,385,272)
-
Total
136,519,670
1,215,900
Total
$
293,689,355
(13,671,193)
280,018,162
Total
$
145,120,842
(7,385,272)
137,735,570
-
-
-
-
-
-
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
33
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
14. FINANCIAL RISK MANAGEMENT (Continued)
(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.
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 profit 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%
2015
$
578,804
(578,804)
578,804
(578,804)
2014
$
527,830
(527,830)
527,830
(527,830)
Foreign Currency Risk Sensitivity Analysis
At 30 June 2015, the effect on profit and equity as a result of changes in the foreign currency risk, with
all other variables remaining constant would be as follows:
Change in profit before tax
- Depreciation of the AUD by 2%
- Appreciation of the AUD by 2%
Change in equity
- Depreciation of the AUD by 2%
- Appreciation of the AUD by 2%
2015
$
2,145,691
(2,145,691)
2,145,691
(2,145,691)
2014
$
771
(771)
771
(771)
34
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
14. FINANCIAL RISK MANAGEMENT (Continued)
(iv) Sensitivity Analysis (Continued)
Market Risk Sensitivity Analysis
At 30 June 2015, the effect on profit 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 market price by 2%
- Decrease in market price by 2%
Change in equity
- Increase in market price by 2%
- Decrease in market price by 2%
2015
$
2014
$
5,607,341
(5,607,341)
2,754,980
(2,754,980)
5,607,341
2,754,980
(5,607,341)
(2,754,980)
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 year are:
Karl Siegling
Wayne Davies
Ronald Hancock
James Chirnside
Chairman and Company Secretary
Non-Executive Director
Non-Executive Director
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 Party Transactions.
Short-term Employee Benefits - Directors’ Fees
Post-employment Benefits - Superannuation
2015
$
68,493
6,507
75,000
2014
$
68,650
6,350
75,000
(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 $80,000 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 2015
35
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 Contd’
15. KEY MANAGEMENT PERSONNEL COMPENSATION (Continued)
(c) Shareholdings
As at 30 June 2015, the Company’s key management personnel indirectly held the following shares in the
Company:
Balance at 1 July 2014
Acquisitions
Disposals
Balance at 30 June 2015
Karl Siegling
Wayne Davies
Ronald Hancock
James Chirnside
8,792,686
353,989
279,860
26,851
9,453,386
1,040,499
62,458
-
-
1,102,957
-
-
-
-
-
9,833,185
416,447
279,860
26,851
10,556,343
As at 30 June 2015, the Company’s key management personnel indirectly held the following options in the
Company:
Balance at 1 July 2014
Acquisitions
Karl Siegling
Wayne Davies
Ronald Hancock
James Chirnside
8,519,166
344,442
279,860
25,932
9,169,400
-
-
-
-
-
Options
Exercised
405,500
35,000
-
-
Balance at 30 June 2015
8,113,666
309,442
279,860
25,932
440,500
8,728,900
As at 30 June 2014, the Company’s key management personnel indirectly held the following shares in the
Company:
Balance at 1 July 2013
Acquisitions
Disposals
Balance at 30 June 2014
Karl Siegling
Wayne Davies
Ronald Hancock
James Chirnside
7,714,655
259,798
139,860
25,932
8,140,245
1,078,031
94,191
140,000
919
1,313,141
-
-
-
-
-
8,792,686
353,989
279,860
26,851
9,453,386
As at 30 June 2014, the Company’s key management personnel indirectly held the following options in the
Company:
Balance at 1 July 2013
Issued
Options
Exercised
Balance at 30 June 2014
Karl Siegling
Wayne Davies
Ronald Hancock
James Chirnside
-
-
-
-
-
8,519,166
344,442
279,860
25,932
9,169,400
-
-
-
-
-
8,519,166
344,442
279,860
25,932
9,169,400
Directors and Director related entities disposed of and acquired ordinary shares and options 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.
36
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015 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. Wayne Davies is also a beneficial
owner of Cadence Asset Management Pty Limited. In its capacity as Manager, Cadence Asset Management Pty
Limited was paid a management fee of $3,019,310 (inclusive of GST) (2014: $2,203,562). 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 2015, the balance payable to the manager was $161,957 (inclusive of GST) (2014: $132,844).
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 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 2015, a performance fee of $2,778,884 (inclusive of GST)
(2014: $12,800) was payable to Cadence Asset Management Pty Limited. As at 30 June 2015, the balance
payable to the manager was $2,778,884 (inclusive of GST) (2014: $12,800).
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 additional charge of $3,500 (inclusive of GST) is charged for
preparing the half year and full year financial statements.
17. EVENTS AFTER THE REPORTING PERIOD
The Board have declared a 5.0 cent per share fully franked final dividend and a 1.0 cent per share fully franked
special dividend payable on 29th October 2015. The Ex-Date for the dividend is 20th October 2015.
Cadence Capital Limited’s options expired on 31st August 2015. On the 28th September 2015 the Company
announced a placement (Option shortfall) of up to 37.9 million shares.
Other than the above 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 material contingencies as at 30 June 2015 (2014: nil).
19. CAPITAL COMMITMENTS
Capital commitments exist for placements entered into before
30 June 2015, which settle after year end.
2015
$
930,776
2014
$
2,553,000
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
37
DIRECTORS’ DECLARATION
The Directors of Cadence Capital Limited declare that:
1. The financial statements and notes set out on pages 15 to 37 and the additional disclosures included in
the Directors’ Report designated as Remuneration Report, set out on pages 8 to 9, 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 2015 and of its
performance for the year ended on that date;
2. The Directors have been given declaration required by section 295A of the Corporations Act 2001 from the
Manager, Cadence Asset Management Pty Limited declaring 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 in Sydney, this 30th day of September 2015
38
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF CADENCE CAPITAL LIMITED
Independent Auditor’s Report
to the Members of Cadence Capital Limited
A.B.N 17 112 870 096
Report on the Financial Report
Level 15, 135 King Street
Sydney NSW 2000
GPO Box 473
Sydney, NSW 2001
T +61 (0)2 8236 7700
F +61 (0)2 9233 4636
www.moorestephens.com.au
We have audited the accompanying financial report of Cadence Capital Limited (the “Company”),
which comprises the statement of financial position as at 30 June 2015, the statement of profit or
loss and other 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.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Moore Stephens Sydney ABN 90 773 984 843. 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 2015
39
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF CADENCE CAPITAL LIMITED
Auditor’s Opinion
In our opinion:
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 2015 and of its
performance for the year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and
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 8 to 9 of the directors’ report for the
year ended 30 June 2015. 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 2015
complies with section 300A of the Corporations Act 2001.
Moore Stephens Sydney
Chartered Accountants
Scott Whiddett
Partner
Dated in Sydney, 30 September 2015
40
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed
elsewhere in this report.
SHAREHOLDINGS
Substantial shareholders (as at 31 August 2015)
The following shareholder’s 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 & associated entities
Yarandi Investments Pty Ltd & associated entities
17,946,851
14,740,038
7.180
5.897
Distribution of holdings (as at 31 August 2015)
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
No. of Shareholders
243
987
1,341
3,985
342
6,898
The number of shareholdings held in less than marketable parcels is 100.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
41
ASX ADDITIONAL INFORMATION Contd’
Twenty largest shareholders - Ordinary shares (as at 31 August 2015)
Name
Esselmont Pty Ltd and associates
Yarandi Investments Pty Ltd & associated entities
Mr Victor John Plummer
Mr David Teoh
Avanteos Investments Limited
UBS Wealth Management Australia Nominees Pty Ltd
Smaller Holdings Pty Limited
Mr Mark J. Toye & Mr Stephen W. Toye A/C>
Golden Words Pty Ltd
Southern Steel Investments Pty Limited
Mr Aengus Kavanagh & Mr Matthew Mahoney A/C>
Mr Cameron McFarlane
HSBC Custody Nominees (Australia) Limited
Mr Keith William Kerridge
Mr Richard Tooher
Golden Words Pty Ltd
Mr Aaron Francis Quirk
Robinson Page Management Pty Ltd A/C>
Pershing Australia Nominees Pty Ltd
Richjeca Pty Ltd
Number of
ordinary shares
held
Percentage of
issued capital
held
17,946,851
14,740,038
3,000,000
2,481,034
1,961,352
1,824,286
1,200,000
1,192,453
1,099,650
979,910
863,531
860,000
816,086
725,330
704,268
699,301
691,123
675,999
647,462
645,226
7.180
5.897
1.200
0.993
0.785
0.730
0.480
0.477
0.440
0.392
0.345
0.344
0.326
0.290
0.282
0.280
0.276
0.270
0.259
0.258
53,753,900
21.504
STOCK EXCHANGE LISTING
Quotation has been granted for all of the ordinary shares of the Company on all Member Exchanges of the
ASX Limited.
42
CADENCE CAPITAL LIMITED ANNUAL REPORT 2015
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
Performance | Yield | Commitment