2019 ANNUAL
REPORT
C A P I TA L L I M I T E D
CONTENTS
Company Particulars
Manager’s Report
Top 20 Positions
Directors’ Report to Shareholders
Auditor’s Independence Declaration
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
2
3
5
6
12
13
14
15
16
17
35
36
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CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
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COMPANY PARTICULARS
CADENCE CAPITAL LIMITED
PRIME BROKERS AND CUSTODIANS OF THE COMPANY
A.B.N. 17 112 870 096
DIRECTORS
Karl Siegling
James Chirnside
Wayne Davies
Jenelle Webster (appointed 27 September 2018)
SECRETARY
Wayne Davies
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
MANAGER OF THE COMPANY
Cadence Asset Management Pty Limited
ABN: 68 106 551 062
For all enquiries relating to shareholdings, dividends
(including participation in the Dividend Reinvestment
Plan) and related matters, please contact the share
registrar.
REGISTERED OFFICE
AUDITORS
Level 11, 131 Macquarie Street,
Sydney, NSW, 2000
CONTACT DETAILS
Level 11, 131 Macquarie Street,
Sydney, NSW, 2000
Telephone: (02) 8298 2450
Fax: (02) 8298 2499
Email: info@cadencecapital.com.au
Website: www.cadencecapital.com.au
For enquiries regarding net asset backing
(as advised each month to the Australian Securities
Exchange) refer to asx.com.au or call (02) 8298 2450
Pitcher Partners
Level 16, Tower 2 Darling Park
201 Sussex Street
Sydney NSW 2000
ASX CODE
Cadence Capital Limited Ordinary Shares (CDM)
COUNTRY OF INCORPORATION
Australia
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CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
MANAGER’S REPORT
SUMMARY OF RESULTS
• Loss after tax of $59.3m
• Fund gross performance of -20.6%
• 2.0c fully franked Final Dividend payable on the 30th October 2019
• Yield of 6.7% fully franked (9.5% gross including franking)
• CDM trading at a discount to NTA
• Ongoing on-market share buy-back for up to 10% of CDM shares
COMPANY PERFORMANCE
For the financial year ended 30 June 2019, Cadence Capital Limited (“the Company”) produced a full year loss after
tax of $59.3m. The portfolio performed poorly during the past financial year, delivering one of its worst performances
since the Company’s inception 13 years ago.
There was significant volatility through the year with an 18% correction in global equities in the December quarter
followed by a 21% rally back to previous highs by June 2019. More specifically for Cadence Capital Limited, a small
number of stocks during the year contributed large negative returns for the Company, most notable were ARQ Group,
Emeco Holdings and Teva Pharmaceutical Industries.
The correction in late 2018 did provide an opportunity to initiate positions at compelling valuations in several
domestic and international companies. Some of these stocks are now becoming significant positive contributors to
Company performance.
DIVIDENDS
The Company announced a 2.0 cents per share fully franked final dividend. This brings the 2019 fully franked full
year dividend up to 5.0 cents per share equating to a 6.7% annual fully franked yield, or a 9.5% gross yield (grossed
up for franking credits) based on the CDM share price of $0.75 on the date of the dividend announcement. The
Ex-Date for the dividend is the 18 October 2019 and the payment date for the dividend is the 30 October 2019. The
dividend re-investment plan (DRP) is not in operation for this final dividend as the Company’s shares are trading at a
large discount to the underlying NTA per share of the Company.
DISCOUNT TO NTA
Cadence Capital Limited shares (ASX: CDM) are trading at a substantial discount to Pre-Tax and Post-Tax NTA per
share. The Company implemented an on-market share buy-back of up to 10% of its shares, which is well timed post
the 30th June tax loss selling. The share buy-back will increase the NTA per share for all existing Cadence Capital
Limited shareholders. Board and management, who are the largest investors in the Company, continue their ongoing
buying of CDM shares.
The largest factor affecting the CDM share price over recent times has been the move from trading at a premium
to NTA to a discount to NTA. This move from premium to discount has been twice as large as the negative
performance of the Company. That is to say, a change in investor sentiment has resulted in a share price fall greater
than actual losses incurred. We believe this presents an opportunity for investors to purchase a Listed Investment
Company that has a track record of performance and consistent fully franked dividends over the long term at a
discount to NTA.
OUTLOOK
We have seen volatility in global markets increase in the past 18 months as uncertainty around future economic
growth has risen. Investors are grappling with the prospect of slowing economic growth and rising geopolitical risks
on one hand, and the need to generate returns in an ultra-low interest rate world on the other. This environment is
likely to continue with several central banks globally recently moving to cut interest rates further.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
3
MANAGER’S REPORT CONT’D
We are being very selective in our stock selection and continue to look for companies which are undervalued relative
to their growth profiles. This currently tends to take the form of turnarounds, ‘under the radar’, or ‘out of favour’
opportunities. The increase in market volatility is also leading to an increased number of trading opportunities for
the fund.
Over the past 6 months the liquidity and concentration of the Company’s portfolio has improved significantly.
This continues to be a focus for the investment team. We believe this has reduced risk and will deliver better risk-
adjusted returns for our shareholders.
As Managers of your Company, we aim to provide shareholders with clear and transparent communication. We do
this through monthly investment updates, quarterly webcasts, investor presentations, market insights, as well as
annual and half yearly profit announcements. We would encourage you to register to receive regular updates at
www.cadencecapital.com.au/newsletter.
Please feel free to contact us at info@cadencecapital.com.au with any feedback to improve our communication and
engagement with you.
I would like to take this opportunity to thank our investors for their continued support.
Karl Siegling
Managing Director
Cadence Asset Management Pty Limited
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CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
LONG AND SHORT POSITIONS
Long Positions
Company Name
MNY
CIA
MQG
STO
BIN
ARQ
ECX
SVW
1717 HK
NBL
QCOM US
**
RMC
SMR
SHJ
ALL
TWE
XIP
JD US
700 HK
Money3 Corp Ltd
Champion Iron Ltd
Macquarie Group Ltd
Santos Ltd
Bingo Industries Ltd
ARQ Group Ltd
Eclipx Group Ltd
Seven Group Holdings Ltd
Ausnutria Dairy Corp Ltd
Noni B Ltd
Qualcomm Inc
Deepgreen Metals
Resimac Group Ltd
Stanmore Coal Ltd
Shine Corporate Ltd
Aristocrat Leisure Ltd
Treasury Wine Estates Ltd
Xenith IP Group Ltd
JD.COM Inc
Tencent Holdings Ltd
TOP 20 POSITIONS
AS AT 30 JUNE 2019
Exposure
$
$18,752,280
$16,571,374
$15,410,055
$15,090,064
$14,772,849
$14,676,254
$13,809,821
$13,232,295
$11,497,372
$10,734,896
$10,552,491
$9,656,744
$9,249,187
$8,572,088
$8,429,656
$7,536,722
$6,891,727
$5,307,578
$5,282,541
$4,606,021
% Of
Equity
5.62%
4.97%
4.62%
4.52%
4.43%
4.40%
4.14%
3.97%
3.45%
3.22%
3.16%
2.89%
2.77%
2.57%
2.53%
2.26%
2.07%
1.59%
1.58%
1.38%
Total Top 20 Long and Short Positions
** A Pre-IPO investment in the Materials sector
$220,632,014
66.14%
TOTAL PORTFOLIO POSITIONS:
Portfolio Net Exposure Long Positions
Portfolio Net Exposure Short Positions
Total Portfolio Net Exposure
$267,850,966
80.29%
$7,020,695
2.10%
$260,830,271
78.19%
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
5
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2019
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 2019.
PRINCIPAL ACTIVITY
The principal activity of the Company was investing primarily in securities listed both in Australia and internationally.
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 loss before tax of $87,570,953 (2018: operating
profit before tax of $54,022,429) and an operating loss after tax of $59,307,818 (2018: operating profit after tax of
$41,166,747).
REVIEW OF OPERATIONS
Investments are valued continuously to market value. For the year ended 30 June 2019, net investments were
valued at $260,830,271 (2018: $299,248,664). Further information regarding the performance of the entity during the
reporting period is provided in the Manager’s Report, which precedes this report.
FINANCIAL POSITION
The net asset value of the Company for the current financial period ended was $333,591,433 (2018: $412,648,397).
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
During the year there were no significant changes in the state of affairs of the Company.
DIVIDENDS PAID OR RECOMMENDED
The Board have declared a 2.0 cent per share fully franked final dividend payable on 30 October 2019. The Ex-Date
for the dividend is the 18 October 2018.
Dividends paid are as follows:
Fully franked 2019 interim dividend of 3.0 cents per share was paid on 13 May 2019
Fully franked 2018 final dividend of 4.0 cents per share was paid on 17 September 2018
Fully franked 2018 interim dividend of 4.0 cents per share was paid on 23 April 2018
Fully franked 2017 final dividend of 4.0 cents per share was paid on 18 September 2017
$
9,608,670
12,718,306
12,628,489
10,960,453
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 (Retired on the 27 September 2018)
Jenelle Webster (Appointed on the 27 September 2018)
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CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
DIRECTORS’ REPORT TO SHAREHOLDERS FOR
THE YEAR ENDED 30 JUNE 2019 CONTD’
INFORMATION ON DIRECTORS
Karl Siegling (Chairman)
Karl Siegling has 26 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 a MBA from INSEAD in France. Karl
holds a Post Graduate Diploma in Finance with the Securities Institute of Australia (FINSIA). 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. He then worked within the Equities Research Division of Deutsche
Morgan Grenfell before studying a MBA at INSEAD and working as a Summer Associate within 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) focused on investing in early stage and expansion capital for financial services
and technology companies. Karl worked as a consultant for Wilson Asset Management, researching stocks, before
setting up Cadence Asset Management Pty Limited.
Karl has been the Chairman and Managing Director of Cadence Asset Management Pty Limited (The Manager), for
15 and a half years. Karl is also a Director of ARQ Group Limited (ARQ) and Cadence Opportunities Fund Limited.
Karl has been the Chairman and Managing Director of Cadence Capital Limited for 14 and a half years.
James Chirnside (Non-Executive Director)
James Chirnside has worked in financial markets for 34 years mostly as an equities fund manager across a broad
range of markets and sectors. As a fund manager, he was mainly focused in emerging and frontier markets. In
addition, he has also been a proprietary metals trader, derivatives broker, and fund promoter in Sydney, Hong Kong,
London, and Melbourne.
James studied for a Bachelor’s degree in Business Administration at Edith Cowan University in Perth. James is also
a director of Dart Mining NL (DTM), WAM Capital Limited (WAM), Mercantile Investment Company Ltd (MVT), and
Ask Funding Ltd (ASK). James has been a Director of the Company for the past 14 and a half years.
Jenelle Webster (Non-Executive Director)
Jenelle is a member of Chartered Accountants, Chartered Secretaries, Institute of Internal Auditors and a Registered
Company Auditor, with over 20 years financial accounting and reporting experience within both the public and
private sectors. Jenelle has been responsible for, and conducted, the audit of ASX listed companies, Listed
Investment Companies (LICs), funds, disclosing entities, large propriety limited companies and Not-For-Profit
organisations. In addition to performing statutory audits, Jenelle has provided internal audit and evaluation services
to a large number of public, private and community sector organisations. Jenelle is also a director of Whitefield
Limited (WHF). Jenelle has been a Director of the Company for the past 11 months.
Wayne Davies (Non-Executive Director and Company Secretary)
Wayne Davies has over 17 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 long-standing member of the Cadence Asset Management team
and has been the Chief Operating Officer of Cadence Asset Management for the past 12 years. Wayne Davies
previously worked with Theorema Asset Management in London and was a director of Theorema Europe Fund and
Theorema Europe Fund Plus. Wayne is also a Director of Cadence Opportunities Fund Limited. Wayne has been a
Director of the Company for the past 5 and a half years.
COMPANY SECRETARY
Wayne Davies held the position of Company Secretary at the end of the financial year.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
7
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
DIRECTORS’ MEETINGS
Karl Siegling (Chairman)
James Chirnside
Wayne Davies
Ronald Hancock
Jenelle Webster
AUDIT COMMITTEE MEETINGS
James Chirnside (Chairman)
Karl Siegling
REMUNERATION REPORT (AUDITED)
No. eligible to attend
Attended
7
7
7
2
5
7
7
7
2
5
No. eligible to attend
Attended
2
2
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 below.
2019
Short-term Employee Benefits - Directors Fees:
Cash Salary
$
Superannuation
$
James Chirnside
Jenelle Webster
Ronald Hancock
Wayne Davies
27,397
20,548
6,849
13,699
68,493
2,603
1,952
651
1,301
6,507
2018
Short-term Employee Benefits - Directors Fees:
Cash Salary
$
Superannuation
$
James Chirnside
Ronald Hancock
Wayne Davies
27,397
27,397
13,699
68,493
2,603
2,603
1,301
6,507
Total
$
30,000
22,500
7,500
15,000
75,000
Total
$
30,000
30,000
15,000
75,000
8
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
REMUNERATION REPORT (AUDITED) (Continued)
(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. In its capacity as Manager, Cadence
Asset Management Pty Limited was paid a management fee of $3,449,970 (inclusive of GST) (2018: $3,953,731).
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 2019, the balance payable to the manager was $116,368 (inclusive of GST) (2018: $199,847).
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 no performance fee was payable to Cadence Asset Management Pty Limited (2018:
2,979,620 inclusive of GST). As at 30 June 2019, there was no balance payable to the manager (2018: $2,979,620,
inclusive of GST).
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
mainboard activities and membership of committees. Directors’ fees are not linked to the performance of the
Company.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
9
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
REMUNERATION REPORT (AUDITED) (Continued)
(d) Shareholdings
As at the 31st August 2019, the Company’s key management personnel indirectly held the following shares in the
Company:
Acquisitions
Disposals
Shareholdings
Karl Siegling
Wayne Davies
James Chirnside
Jenelle Webster
(Appointed 27/9/18)
Balance at
1 July 2018
21,358,504
835,236
26,851
-
1,240,778
27,998
-
30,000
22,220,591
1,298,776
End of Remuneration Report.
EVENTS AFTER THE REPORTING PERIOD
Balance at
31 August 2019
22,599,282
863,234
26,851
30,000
23,519,367
-
-
-
-
-
The Board have declared a 2.0 cent per share fully franked final dividend payable on 30 October 2019. The Ex-Date
for the dividend is 18 October 2019.
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.
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.
The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
10
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
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 Pitcher Partners, the Company’s auditor, did not perform any other services in addition to their
statutory duties for the Company. Related entities of Pitcher Partners, 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 for the following reasons:
•
•
all non-audit services do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided do not compromise the general principles relating to auditor independence in
accordance with the APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional
and Ethical Standards Board.
ROUNDING OF AMOUNTS
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the
amounts in the directors’ report and in the financial report have been rounded to the nearest dollar unless
otherwise stated.
CORPORATE GOVERANCE STATEMENT
The Company’s Corporate Governance Statement for the year ended 30 June 2019 is provided on the Company’s
website at www.cadencecapital.com.au/wp-content/uploads/2019/09/CDM-Corp-Governance-Statement-
June-2019.pdf.
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 12 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 24th September 2019
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
11
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF CADENCE CAPITAL LIMITED
ABN 17 112 870 096
Level 16, Tower 2 Darling Park
201 Sussex Street
Sydney NSW 2000
Postal Address
GPO Box 1615
Sydney NSW 2001
Level 16, Tower 2 Darling Park
201 Sussex Street
p. +61 2 9221 2099
Sydney NSW 2000
e. sydneypartners@pitcher.com.au
Postal Address
GPO Box 1615
Sydney NSW 2001
p. +61 2 9221 2099
e. sydneypartners@pitcher.com.au
AUDITOR’S INDEPENDENCE DECLARATION
In relation to the independent audit of the financial report of Cadence Capital Limited for the
TO THE DIRECTORS OF CADENCE CAPITAL LIMITED
year ended 30 June 2019, to the best of my knowledge and belief, there have been:
ABN 17 112 870 096
(i) no contraventions of the auditor independence requirements of the Corporations Act
2001; and
In relation to the independent audit of the financial report of Cadence Capital Limited for the
(ii) no contraventions of any applicable code of professional conduct.
year ended 30 June 2019, to the best of my knowledge and belief, there have been:
(i) no contraventions of the auditor independence requirements of the Corporations Act
2001; and
(ii) no contraventions of any applicable code of professional conduct.
C I CHANDRAN
Partner
PITCHER PARTNERS
Sydney
C I CHANDRAN
Partner
24 September 2019
PITCHER PARTNERS
Sydney
24 September 2019
Adelaide Brisbane Melbourne Newcastle Perth Sydney
Pitcher Partners is an association of independent firms.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional
Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which
are separate and independent legal entities.
pitcher.com.au
Adelaide Brisbane Melbourne Newcastle Perth Sydney
12
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
12
Pitcher Partners is an association of independent firms.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional
Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which
pitcher.com.au
are separate and independent legal entities.
12
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
INCOME
Net realised and unrealised (loss)/gain on investments
Dividends received
Interest received
Other income
Total (Loss)/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
2
Other expenses from ordinary activities
Total Expenses
Note
2019
$
2018
$
(91,366,977)
10,178,069
1,168,298
102,452
49,272,192
17,723,008
1,657,711
70,471
(79,918,158)
68,723,382
(1,676,631)
(3,214,744)
-
(135,693)
(75,000)
(574,516)
(316,589)
(1,161,478)
(92,973)
(130,901)
(2,094)
(113,492)
(78,222)
(80,462)
(2,293,339)
(3,684,158)
(2,776,464)
(272,700)
(75,000)
(3,891,037)
(501,788)
(711,468)
(100,953)
(132,360)
(473)
(111,911)
(97,066)
(52,236)
(7,652,795)
(14,700,953)
(Loss)/Profit before income tax
(87,570,953)
54,022,429
Income tax benefit/(expense)
3(a)
28,263,135
(12,855,682)
(Loss)/Profit attributable to members of the Company
11
(59,307,818)
41,166,747
Other comprehensive income
Other comprehensive income for the period, net of tax
-
-
Total comprehensive (loss)/income for the period
(59,307,818)
41,166,747
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
13
13
(18.3 cents)
13.5 cents
(18.3 cents)
13.5 cents
The accompanying notes form part of these financial statements.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
13
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit or loss
Deferred tax asset
TOTAL ASSETS
LIABILITIES
Bank overdrafts
Trade and other payables
Financial liabilities at fair value through profit or loss
Current tax liability
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Profits reserve
Accumulated losses
TOTAL EQUITY
Note
2019
$
2018
$
12
5
6
74,779,920
128,005,890
1,094,986
3,116,926
267,850,966
396,415,365
3(b)
47,562,766
19,283,217
391,288,638
546,821,398
12
7
8
3(c)
50,158,911
28,154,892
517,599
4,634,000
7,020,695
97,166,701
-
4,217,408
57,697,205
134,173,001
333,591,433
412,648,397
9
10
11
429,797,443
427,219,613
16,938,027
39,265,003
(113,144,037)
(53,836,219)
333,591,433
412,648,397
The accompanying notes form part of these financial statements.
14
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Note
Issued Capital
$
Accumulated
Losses
$
Profits
Reserve
$
Total Equity
$
Balance at 1 July 2017
372,439,698
(53,836,219)
21,687,197
340,290,676
Profit for the year
Transfer to profits reserve
Other comprehensive income for the
year
Transactions with owners:
Shares issued via dividend
reinvestment plan
Shares issued via placement
Capitalised share issue cost
Deferred tax on Capitalised share issue
cost
11
10
9
9
-
-
-
5,196,551
50,060,598
(681,763)
204,529
41,166,747
-
41,166,747
(41,166,747)
41,166,747
-
-
-
-
-
-
5,196,551
50,060,598
(681,763)
204,529
Dividends paid
4(a)
-
-
(23,588,941)
(23,588,941)
Balance at 30 June 2018
427,219,613
(53,836,219)
39,265,003
412,648,397
Loss for the year
Transfer to profits reserve
Other comprehensive income for the
year
Transactions with owners:
Shares issued via dividend
reinvestment plan
On-Market Share Buy-Back
Dividends paid
Balance at 30 June 2019
11
10
9
9
4(a)
-
-
-
2,781,914
(204,084)
-
(59,307,818)
-
-
-
-
-
-
-
-
(59,307,818)
-
-
2,781,914
(204,084)
(22,326,976)
(22,326,976)
429,797,443
(113,144,037)
16,938,027
333,591,433
The accompanying notes form part of these financial statements.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
15
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Note
2019
$
$
2018
$
$
CASH FLOWS FROM OPERATING ACTIVITIES
Proceeds from the sale of investments
491,850,840
760,802,375
Payments for the purchase of investments
(544,247,687)
(789,870,784)
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
10,433,469
1,168,298
102,452
(3,298,224)
(2,979,620)
(1,161,478)
(1,676,630)
(574,516)
(863,929)
(4,233,822)
19,628,114
1,657,711
70,471
(3,637,670)
(2,574,459)
(711,468)
(2,293,339)
(4,373,000)
(1,108,729)
(6,444,595)
NET CASH (USED IN)/ OPERATING ACTIVITIES
12(b)
(55,480,847)
(28,855,373)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Share issue transaction costs
Proceeds from shares issued
On-market share buy-back
NET CASH (USED IN)/ PROVIDED BY
FINANCING ACTIVITIES
NET (DECREASE)/ INCREASE IN CASH HELD
CASH AND CASH EQUIVALENTS AS AT BEGINNING OF
THE FINANCIAL YEAR
CASH AND CASH EQUIVALENTS AS AT END OF THE
FINANCIAL YEAR
(19,545,058)
(18,392,390)
-
-
(681,763)
50,060,598
(204,084)
-
(19,749,142)
30,986,445
(75,229,989)
2,131,072
99,850,998
97,719,926
12(a)
24,621,009
99,850,998
NON-CASH TRANSACTIONS:
Shares issued via dividend reinvestment plan
2,781,914
5,196,551
The accompanying notes form part of these financial statements.
16
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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(k).
The financial report was authorised for issue on 24th September 2019 by the Board of Directors.
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 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 2019 | A.B.N. 17 112 870 096
17
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 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.
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.
18
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(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 the current
liabilities on the statement of financial position.
(d) Trade and Other Receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less provision for expected credit loss. Trade and other receivables are
generally due for settlement within 30 days. They are presented as current assets unless collection is not
expected for more than 12 months after the reporting date.
(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 nominal
amounts and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
The carrying amount of trade and other payables represent their fair value.
(f) Impairment
At each reporting date, the Company shall measure the loss allowance on financial assets at amortised cost
(cash, due from broker and receivables) at an amount equal to the lifetime expected credit losses if the credit risk
has increased significantly since initial recognition. If, at the reporting date, the credit risk has not increased
significantly since initial recognition, the Company shall measure the loss allowance at an amount equal to
12-month expected credit losses. Significant financial difficulties of the counter party, probability that the counter
party will enter bankruptcy or financial reorganisation, and default in payments are all considered indicators that a
loss allowance may be required. If the credit risk increases to the point that it is considered to be credit impaired,
interest income will be calculated based on the gross carrying amount adjusted for the loss allowance. A
significant increase in credit risk is defined by management as any contractual payment which is more than 30
days past due. Any contractual payment which is more than 90 days past due is considered credit impaired.
(g) Rounding of Amounts
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts
in the financial report has been rounded to the nearest dollar unless otherwise stated.
(h) 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.
(i) 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 securities
which are listed Internationally.
(j) 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 2019 | A.B.N. 17 112 870 096
19
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(k) 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 2019. 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.
(l) 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.
(m) Profits Reserve
The profits reserve is made up of amounts transferred from current and retained earnings that are preserved for
future dividend payments.
(n) Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
(o) New and amended standards adopted by the Company
The Company had to change some of its accounting policies as a result of new and revised accounting standards
which became effective for the first time in the current reporting period. The affected policies are:
AASB 9 Financial Instruments (and applicable amendments)
AASB 9 became effective for annual periods beginning on or after 1 January 2018. It addresses the classification,
measurement and derecognition of financial assets and liabilities and replaces the multiple classification and
measurement models in AASB 139. The derecognition rules have not changed from the previous requirements,
and the Company does not apply hedge accounting.
Derivative and equity instruments are measured at fair value through profit or loss unless, for equity instruments
not held for trading, an irrevocable option is taken to measure at fair value through other comprehensive income.
AASB 9 also introduces a new expected credit loss (ECL) impairment model.
AASB 9 has been applied retrospectively by the Company and did not result in a change to the classification or
measurement of financial instruments in either the current or comparative period. The Company’s financial assets
and financial liabilities continue to be classified as fair value through profit or loss. There was no material impact
on adoption from the application of the new impairment model.
AASB 15 Revenue from Contracts with Customers
AASB 15 became effective for annual period beginning on or after 1 January 2018 which is based on the
principle that revenue is recognised when control of a good or service transfers to a customer - so the notion of
control replaces the existing notion of risks and rewards.
The Company’s main sources of income are interest, dividends and distributions, and gains on financial
instruments at fair value. All of these are outside the scope of the new revenue standard. As a consequence, the
adoption of AASB 15 does not have a significant impact on the Company’s accounting policies or the amounts
recognised in the financial statements.
20
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(p) New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning after 1 January 2019, and have not been early adopted in preparing these financial statements. None
of these are expected to have a material effect on the financial statements of the Company.
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
3. TAXATION
(a) Current Income Tax (Benefit)/Expense
The prima facie tax on (loss)/profit from ordinary activities before income tax
is reconciled to the income tax (benefit)/expense as follows:
Prima facie tax (benefit)/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
Franking credits on dividends received
Prior years under/over
Other
Effective tax rate
The effective tax rate for FY2019 is (32.3%) reflecting the benefit to the
Company of franking credits received on dividend income during the year.
Total income tax (benefit)/expense results in a:
Current tax (asset)/ liability
Movement in deferred tax assets
(b) Deferred Tax Assets
Provisions
Capitalised share issue costs
Fair value adjustments
Tax losses
2019
$
2018
$
66,309
43,300
-
-
11,913
78,222
52,095
95,395
(26,271,286)
16,206,729
923,945
99,447
(92,588)
1,679,983
813,724
(242,209)
(3,079,817)
(5,599,942)
159,174
(2,010)
-
(2,603)
(28,263,135)
12,855,682
(32.3%)
23.8%
(33,424,300)
12,070,763
5,161,165
784,919
(28,263,135)
12,855,682
8,790
147,132
7,590
212,451
10,633,019
15,730,063
36,773,825
3,333,113
47,562,766
19,283,217
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
21
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
3. TAXATION (Continued)
(b) Deferred Tax Assets (Continued)
Movement in deferred tax assets
Balance at the beginning of the period
(Debited)/Credited to the profit or loss
Movement relating to under/over adjustment
Charged directly to equity
(c) Current Tax Liabilities /(Assets)
Movement in current tax liabilities /(Assets)
Balance at the beginning of the period
Current year income tax on operating profit
Income tax paid
Income tax received
Prior year under/(over)
At reporting date
4. DIVIDENDS
(a) Dividends paid
Dividends paid by the Company
2019
Dividends paid by the Company
for the year ended 30 June 2019
Interim 2019 Ordinary
Final 2018 Ordinary
Total Amount
2019
$
2018
$
19,283,217
19,863,607
28,263,135
(784,919)
16,414
-
-
204,529
47,562,766
19,283,217
4,217,408
(1,408,760)
-
12,070,763
(4,233,822)
(7,841,570)
-
1,409,965
16,414
(12,990)
-
4,217,408
22,326,976
23,588,941
Cents
per
share
3.0
4.0
Date of
payment
13 May 19
17 September 18
Tax rate for
franking
credit
%
Franked
Total Amount
$
30%
30%
100%
100%
9,608,670
12,718,306
22,326,976
The Board have declared a 2.0 cent per share fully franked final dividend payable on 30 October 2019. The Ex-Date
for the dividend was the 18 October 2019.
2018
Dividends paid by the Company
for the year ended 30 June 2018
Interim 2018 Ordinary
Final 2017 Ordinary
Total Amount
22
Cents
per
share
4.0
4.0
Date of
payment
23 April 18
18 September 17
Tax rate for
franking
credit
%
Franked
Total Amount
$
30%
30%
100%
100%
12,628,489
10,960,452
23,588,941
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
4. DIVIDENDS (Continued)
(b) Dividend franking account
The balance of the franking account at year end is adjusted for franking
credits and debits arising from receipts or payments of income tax and
franking credits arising from dividends receivable.
2019
$
2018
$
4,634,383
11,106,856
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
419,364
551,963
123,659
1,958,769
807,363
350,794
1,094,986
3,116,926
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. Trade and other
receivables are not past due or impaired and are of a good credit quality.
6. FINANCIAL ASSETS
Long positions - held for trading financial assets:
Investments at fair value
7. TRADE AND OTHER PAYABLES
Trade creditors
Sundry creditors - related parties
Sundry creditors - other
267,850,966
396,415,365
267,850,966
396,415,365
48,395
119,868
349,336
517,599
987,666
3,475,620
170,695
4,634,000
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 $119,868 (inclusive of GST) (2018: $3,475,620) to the
manager, Cadence Asset Management Pty Limited.
8. FINANCIAL LIABILITIES
Short positions: Listed investments at fair value – held for trading
7,020,695
80,100,009
Swap positions – held for trading
-
17,066,692
7,020,695
97,166,701
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.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
23
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
9. ISSUED CAPITAL
(a) Paid-up Capital
Ordinary shares fully paid
Capitalised share issue costs
Deferred tax asset on capitalised share issue costs
2019
$
2018
$
432,693,872
430,116,042
(4,137,756)
(4,137,756)
1,241,327
1,241,327
429,797,443
427,219,613
2019
Date
Details of the issue
Share Price
$
No. of Shares
Issue Value
$
Balance at the beginning of the year
317,957,644
430,116,042
17 September 2018
DRP
$1.19326
2,331,352
2,781,914
June 2019
2018
Date
On-Market Share Buy-
Back
$0.77946
(261,828)
(204,084)
320,027,168
432,693,872
Details of the issue
Share Price
$
No. of Shares
Issue Value
$
Balance at the beginning of the year
274,011,321
374,858,893
18 September 2017
3 November 2017
10 November 2017
23 April 2018
DRP
SPP
$1.25929
1,938,714
2,441,397
$1.25900
14,131,997
17,792,184
Placement
$1.25900
25,630,193
32,268,414
DRP
$1.22702
2,245,419
2,755,154
317,957,644
430,116,042
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.
24
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
9. ISSUED CAPITAL (Continued)
(b) Capital Management (Continued)
On the 15th May 2019 the Company approved an on-market share buy-back of up to 31.79 million of its ordinary
shares. The share buy-back period commenced on the 1st June 2019 and will finish no later than the 31st May 2020.
10. PROFITS RESERVE
Profits Reserve
Movement in Profits Reserve
Opening balance
Transfer from retained earnings
Dividends paid (Note 4)
2019
$
2018
$
16,938,027
39,265,003
39,265,003
-
21,687,197
41,166,747
(22,326,976)
(23,588,941)
16,938,027
39,265,003
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
(53,836,219)
(53,836,219)
(Loss)/ Profit attributable to members of the Company
(59,307,818)
41,166,747
Transfer to profits reserve
12. CASH FLOW INFORMATION
(a) Reconciliation of cash
-
(41,166,747)
(113,144,037)
(53,836,219)
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
Bank overdrafts
74,779,920
128,005,890
(50,158,911)
(28,154,892)
24,621,009
99,850,998
The weighted average interest rate for cash and cash equivalents as at June 2019 is 0.67% (June 2018: 1.42%).
The weighted average interest rate for cash overdrafts as at June 2019 is 3.17% (June 2018: 0.48%). The Company
has Prime Brokerage facilities, including lending, and Custody arrangements with Deutsche Bank AG and Custody
arrangements with Bank of New York Mellon. The Prime Brokerage 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 Prime Brokers under the Prime Brokerage Agreement.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
25
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
12. CASH FLOW INFORMATION (Continued)
(b) Reconciliation of Operating Profit after Income Tax
2019
$
2018
$
Operating (loss)/profit after income tax
(59,307,818)
41,166,747
Movement in fair value on financial assets and liabilities
38,418,393
(93,304,076)
Changes in assets and liabilities:
Decrease in trade and other receivables
(Increase)/Decrease in deferred tax assets
(Decrease)/Increase in trade and other payables
Decrease in current tax asset
(Decrease)/Increase in current tax liability
Net cash used in by Operating Activities
(c) Non-cash Financing Activities
2,021,940
19,592,801
(28,279,549)
784,919
(4,116,405)
(2,721,932)
-
(4,217,408)
1,408,760
4,217,408
(55,480,847)
(28,855,373)
During the financial year the Company issued the following shares through its Dividend Reinvestment Plan:
- 2,331,352 shares at $1.19326 on 17 September 2018
During the previous financial year the Company issued the following shares through its Dividend Reinvestment Plan:
- 1,938,714 shares at $1.25929 on 18 September 2017
- 2,245,419 shares at $1.22702 on 23 April 2018
13. EARNINGS PER SHARE
Basic and diluted (loss)/ earnings per share
(Loss)/ profit after income tax used in the calculation of
earnings per share
Weighted average number of ordinary shares outstanding
during the year used in calculation of basic earnings per share
2019 Cents
Per Share
2018 Cents
Per Share
(18.3)
2019
$
13.5
2018
$
(59,307,818)
41,166,747
No.
No.
323,943,616
304,188,912
Weighted average number of ordinary shares and options outstanding
during the year used in calculation of diluted earnings per share
323,943,616
304,188,912
Reconciliation of weighted average number of shares:
Weighted average number of ordinary shares used in calculation of basic
earnings per share
323,943,616
304,188,912
Add:
Weighted average number of potential ordinary shares used in the
calculation of diluted earnings per share
-
-
Weighted average number of shares used in the calculation of diluted
earnings per share
323,943,616
304,188,912
26
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
14. FINANCIAL RISK MANAGEMENT
Financial Risk Management Policies
The Company’s financial instruments consist of money market instruments, short and long term investments,
accounts receivable and payable.
(1) 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, foreign currency 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.
(b) Credit Risk
The Company takes on exposure to credit risk, which is the risk that a counterparty (prime broker, custodian,
subcustodian 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 facilities, including lending, and Custody facilities with its prime broker
and custodian Deutsche Bank AG and Custody facilities with 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 or custodian that is being used by the Company, 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 AG 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 AG’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.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
27
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
14. FINANCIAL RISK MANAGEMENT (Continued)
(c) Liquidity Risk (Continued)
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.
(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:
Net Denominated Net Assets
AUD/USD Exchange Rate: $0.7020 (2018: 0.7405)
Canadian Dollars:
Net Denominated Net Assets
AUD/CAD Exchange Rate: $0.9193
2019
2018
$5,938,182
$8,531,315
$3,218,055
-
(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.
(g) 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.
28
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
14. FINANCIAL RISK MANAGEMENT (Continued)
(g) Financial instrument composition and maturity analysis (Continued)
2019
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
Balances owed by brokers
Other receivables
Total Assets
Liabilities
0.67%
74,779,920
-
-
-
-
74,779,920
Financial liabilities
-
-
Cash overdrafts
3.17%
50,158,911
Balances due to brokers
Other payables
Total liabilities
-
-
-
-
50,158,911
-
-
-
-
-
-
-
-
-
-
267,850,966
267,850,966
-
74,779,920
419,364
675,622
419,364
675,622
268,945,952
343,725,872
7,020,695
7,020,695
-
50,158,911
48,395
469,204
48,395
469,204
7,538,294
57,697,205
2018
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
Balances owed by brokers
Other receivables
Total Assets
Liabilities
1.42%
128,005,890
-
-
-
-
128,005,890
Financial liabilities
-
-
Cash overdrafts
0.48%
28,154,892
Balances due to brokers
Other payables
Total liabilities
-
-
-
-
28,154,892
Other payables are expected to be paid as follows:
- Less than 6 months
- 6 months to one year
-
-
-
-
-
-
-
-
-
-
396,415,365
396,415,365
-
128,005,890
1,958,769
1,958,769
1,158,157
1,158,157
399,532,291
527,538,181
97,166,701
97,166,701
-
28,154,892
987,666
987,666
3,646,334
3,646,334
101,800,701
129,955,593
2019
$
2018
$
469,204
3,646,334
-
-
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
29
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
14. FINANCIAL RISK MANAGEMENT (Continued)
(h) 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 Contracts for Difference, Financial
Liabilities, Initial Public Offerings and Placements in which the Company has subscribed to during the year. The
fair value of Contracts for Difference and Financial Liabilities have been determined using market inputs of the
underlying investments. Initial Public Offerings and Placements are investments that have not listed on the
Australian Stock Exchange as at 30 June 2019 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 2019
Financial assets
Level 1
$
Level 2
$
Level 3
$
Total
$
257,682,694
292,129
9,876,143
267,850,966
Financial liabilities
(7,020,695)
-
-
(7,020,695)
Total
250,661,999
292,129
9,876,143
260,830,271
Level 3 asset class is made of two pre-IPO investments. DeepGreen Metals Inc is valued at the weighted average
cost of most recent purchases and TIN International is valued at cost.
30 June 2018
Financial assets
Level 1
$
Level 2
$
Level 3
$
Total
$
395,903,838
292,129
219,399
396,415,366
Financial liabilities
(80,100,009)
(17,066,692)
-
(97,166,701)
Total
315,803,829
(16,774,563)
219,399
299,248,665
(i) Sensitivity Analysis
The Company has performed a sensitivity analysis relating to its exposure to interest rate risk, foreign currency 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.
30
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
14. FINANCIAL RISK MANAGEMENT (Continued)
(i) Sensitivity Analysis (Continued)
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%
2019
$
2018
$
28,859
(28,859)
(210,553)
210,553
20,202
(147,387)
(20,202)
147,387
Foreign Currency Risk Sensitivity Analysis
At 30 June 2019, 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%
2019
$
2018
$
294,983
161,243
(294,983)
(161,243)
206,488
(206,488)
112,870
(112,870)
Market Risk Sensitivity Analysis
At 30 June 2019, 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%
2019
$
2018
$
5,216,605
6,630,260
(5,216,605)
(6,630,260)
3,651,624
4,641,182
(3,651,624)
(4,641,182)
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
31
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
15. KEY MANAGEMENT PERSONNEL COMPENSATION
The names and position held of the Company’s key management personnel (including Directors) in office at any
time during the financial year are:
Karl Siegling
Wayne Davies
Chairman
Non-Executive Director and Company Secretary
Ronald Hancock (retired 27 September 2018)
Non-Executive Director
James Chirnside
Non-Executive Director
Jenelle Webster (appointed 27 September 2018) 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 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
2019
$
68,493
6,507
75,000
2018
$
68,493
6,507
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 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.
(c) Shareholdings
As at 30 June 2019, the Company’s key management personnel indirectly held the following shares in the
Company:
Balance at 1 July 2018
Acquisitions
Retired from
Board
Balance at 30 June 2019
Karl Siegling
Wayne Davies
Ronald Hancock
(Retired 27/9/18)
James Chirnside
Jenelle Webster
(Appointed 27/9/18)
21,358,504
835,236
400,000
26,851
963,851
27,998
-
-
-
30,000
-
-
22,322,355
863,234
(400,000)
-
-
-
26,851
30,000
22,620,591
1,021,849
(400,000)
23,242,440
32
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
15. KEY MANAGEMENT PERSONNEL COMPENSATION (Continued)
(c) Shareholdings (Continued)
As at 30 June 2018, the Company’s key management personnel indirectly held the following shares in the
Company:
Balance at 1 July 2017
Acquisitions
Disposals
Balance at 30 June 2018
Karl Siegling
19,989,659
Wayne Davies
Ronald Hancock
James Chirnside
772,418
400,000
26,851
1,368,845
62,818
-
-
21,188,928
1,431,663
-
-
-
-
-
21,358,504
835,236
400,000
26,851
22,620,591
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.
16. RELATED PARTY TRANSACTIONS
All transactions with related entities were made on normal commercial terms and conditions.
Karl Siegling is the sole Director and a beneficial owner of Cadence Asset Management Pty Limited, the entity
appointed to manage the investment portfolio of Cadence Capital Limited. In its capacity as Manager, Cadence
Asset Management Pty Limited was paid a management fee of $3,449,970 (inclusive of GST) (2018: $3,953,731).
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 2019, the balance payable to the manager was $116,368 (inclusive of GST) (2018: $199,847).
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
•
• where the All Ordinaries Accumulation Index has decreased over that period, the amount of the increase in the
the level of the portfolio exceeds this increase, or
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 no performance fee was payable to Cadence Asset Management Pty Limited (2018:
2,979,620 inclusive of GST). As at 30 June 2019, there was no balance payable to the manager (2018: $2,979,620,
inclusive of GST).
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.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
33
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019 CONTD’
17. EVENTS AFTER THE REPORTING PERIOD
The Board have declared a 2.0 cent per share fully franked final dividend payable on 30 October 2019. The Ex-Date
for the dividend is 18th October 2019.
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 2019 (2018: nil).
19. CAPITAL COMMITMENTS
No capital commitments exist for placements entered into before 30 June 2019 which settle after year end.
(2018: nil).
20. 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.
34
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
DIRECTORS’ DECLARATION
The Directors of Cadence Capital Limited declare that:
1. The financial statements as set out in pages 13 to 34 and the additional disclosures included in the Directors’
Report designated as ‘Remuneration Report’, as set out on pages 8 to 10 are in accordance with the Corporations
Act 2001, including:
(a) complying with Australian Accounting Standards, which, as stated in Note 1 to the financial statements,
constitutes compliance with International Financial Reporting Standards (IFRS), the Corporations
Regulations 2001 and other mandatory professional reporting requirements; and
(b) giving a true and fair view of the financial position of the Company as at 30 June 2019 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 24th day of September 2019
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
35
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF CADENCE CAPITAL LIMITED
Level 16, Tower 2 Darling Park
201 Sussex Street
Sydney NSW 2000
Postal Address
GPO Box 1615
Sydney NSW 2001
Level 16, Tower 2 Darling Park
p. +61 2 9221 2099
201 Sussex Street
e. sydneypartners@pitcher.com.au
Sydney NSW 2000
Postal Address
GPO Box 1615
Sydney NSW 2001
p. +61 2 9221 2099
e. sydneypartners@pitcher.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF CADENCE CAPITAL LIMITED
ABN 17 112 870 096
INDEPENDENT AUDITOR’S REPORT
Report on the Audit of the Financial Report
TO THE MEMBERS OF CADENCE CAPITAL LIMITED
ABN 17 112 870 096
Opinion
We have audited the financial report of Cadence Capital Limited (“the Company”), which
comprises the statement of financial position as at 30 June 2019, the statement of
Report on the Audit of the Financial Report
comprehensive income, the statement of changes in equity and the statement of cash flows
for the year then ended, and notes to the financial statements, including a summary of
Opinion
significant accounting policies, and the Directors’ Declaration.
We have audited the financial report of Cadence Capital Limited (“the Company”), which
In our opinion, the accompanying financial report of Cadence Capital Limited has been
comprises the statement of financial position as at 30 June 2019, the statement of
prepared in accordance with the Corporations Act 2001, including:
comprehensive income, the statement of changes in equity and the statement of cash flows
for the year then ended, and notes to the financial statements, including a summary of
(i) giving a true and fair view of the Company’s financial position as at 30 June 2019 and of
significant accounting policies, and the Directors’ Declaration.
its financial performance for the year then ended; and
its financial performance for the year then ended; and
In our opinion, the accompanying financial report of Cadence Capital Limited has been
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
prepared in accordance with the Corporations Act 2001, including:
Basis for Opinion
(i) giving a true and fair view of the Company’s financial position as at 30 June 2019 and of
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
for the Audit of the Financial Report section of our report. We are independent of the
Company in accordance with the auditor independence requirements of the Corporations Act
Basis for Opinion
2001 and the ethical requirements of the Accounting Professional and Ethical Standards
We conducted our audit in accordance with Australian Auditing Standards. Our
Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant
responsibilities under those standards are further described in the Auditor’s Responsibilities
to our audit of the financial report in Australia. We have also fulfilled our other ethical
for the Audit of the Financial Report section of our report. We are independent of the
responsibilities in accordance with the Code.
Company in accordance with the auditor independence requirements of the Corporations Act
We confirm that the independence declaration required by the Corporations Act 2001, which
2001 and the ethical requirements of the Accounting Professional and Ethical Standards
has been given to the Directors of the Company, would be on the same terms if given to the
Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant
Directors as at the time of this auditor’s report.
to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the Directors of the Company, would be on the same terms if given to the
Directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Adelaide Brisbane Melbourne Newcastle Perth Sydney
Pitcher Partners is an association of independent firms.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional
Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which
are separate and independent legal entities.
pitcher.com.au
Adelaide Brisbane Melbourne Newcastle Perth Sydney
36
Pitcher Partners is an association of independent firms.
36
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional
Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which
are separate and independent legal entities.
pitcher.com.au
36
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF CADENCE CAPITAL LIMITED
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current year. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matters
Key audit matter
Existence and Valuation of Financial Assets and completeness of Financial Liabilities
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current year. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Refer to Note 6: Financial Assets and Note 8: Financial Liabilities
How our audit addressed the matter
Our procedures included, amongst others:
• Understanding and evaluating the
How our audit addressed the matter
investment management process and
controls;
We focused our audit effort on the
completeness, valuation and existence of the
Key audit matter
Company’s financial assets and financial
liabilities as they are its largest asset and
Existence and Valuation of Financial Assets and completeness of Financial Liabilities
liability and represents the most significant
Refer to Note 6: Financial Assets and Note 8: Financial Liabilities
driver of the Company’s Net Tangible Assets
We focused our audit effort on the
and profits.
completeness, valuation and existence of the
Financial assets and liabilities mostly consist
Company’s financial assets and financial
of listed Australian and International
liabilities as they are its largest asset and
securities. Investments are valued by
liability and represents the most significant
multiplying the quantity held by the
driver of the Company’s Net Tangible Assets
respective market price, cost or estimated
and profits.
value per security for unlisted investments.
Financial assets and liabilities mostly consist
of listed Australian and International
securities. Investments are valued by
multiplying the quantity held by the
respective market price, cost or estimated
value per security for unlisted investments.
• Reviewing and evaluating the
Our procedures included, amongst others:
independent audit report on internal
controls (ASAE 3402 Assurance Reports
on Controls at a Service Organisation)
investment management process and
for the Custodians;
controls;
have been any changes to these controls
independent audit report on internal
or their effectiveness from the periods to
controls (ASAE 3402 Assurance Reports
which the audit reports relate and where
on Controls at a Service Organisation)
necessary performing additional
for the Custodians;
procedures;
• Making enquiries as to whether there
• Reviewing and evaluating the
• Understanding and evaluating the
• Making enquiries as to whether there
• Obtaining a confirmation of the financial
have been any changes to these controls
assets and financial liabilities holdings
or their effectiveness from the periods to
directly from the Custodians;
which the audit reports relate and where
necessary performing additional
• Assessing the Company’s valuation of
procedures;
individual financial assets and financial
liabilities holdings to independent
• Obtaining a confirmation of the financial
sources; For investments where there
assets and financial liabilities holdings
was little or less observable market data,
directly from the Custodians;
obtaining and assessing other relevant
• Assessing the Company’s valuation of
valuation data;
individual financial assets and financial
• Evaluating the accounting treatment of
liabilities holdings to independent
revaluations of financial assets and
sources; For investments where there
financial liabilities for current/deferred tax
was little or less observable market data,
and unrealised gains or losses;
obtaining and assessing other relevant
valuation data;
• Assessing the adequacy of disclosures in
the financial statements.
• Evaluating the accounting treatment of
revaluations of financial assets and
financial liabilities for current/deferred tax
and unrealised gains or losses;
• Assessing the adequacy of disclosures in
the financial statements.
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
37
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
37
37
Accuracy of Management and Performance Fees
Refer to Note 7: Trade and Other Payables, Note 16: Related Party Transactions and
Remuneration Report
We focused our audit effort on the accuracy
Our procedures included, amongst others:
of management and performance fees as
they are significant expenses of the
Company and their calculation may require
adjustments for events in accordance with
the Investment Management Agreement
between the Company and the Investment
Manager.
In addition to their quantum, as these
transactions are made with related parties,
there are additional inherent risks associated
with these transactions, including the
potential for these transactions to be made
on terms and conditions more favourable
than if they had been with an independent
third-party.
• Making enquiries with the Investment
Manager and the Directors with respect
to any significant events during the year
and associated adjustments made as a
result, in addition to reviewing ASX
announcements;
• Testing key inputs including adjustments
for events used in the calculation of
management and performance fees and
performing a recalculation in accordance
with our understanding of the Investment
Management Agreement;
• Assessing the adequacy of disclosures
made in the financial statements.
Other Information
The Directors are responsible for the other information. The other information comprises the
information included in the Company’s Annual Report for the year ended 30 June 2019, but
does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The Directors of the Company are responsible for the preparation 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 controls as the Directors determine is necessary
to enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
In preparing the financial report, the Directors are responsible for assessing the ability of the
professional judgement and maintain professional scepticism throughout the audit. We also:
Company to continue as a going concern, disclosing, as applicable, matters related to going
•
concern and using the going concern basis of accounting unless the Directors either intend to
Identify and assess the risks of material misstatement of the financial report, whether due
liquidate the Company or to cease operations, or have no realistic alternative but to do so.
to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
Auditor’s Responsibilities for the Audit of the Financial Report
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
Our objectives are to obtain reasonable assurance about whether the financial report as a
misrepresentations, or the override of internal control.
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
• Obtain an understanding of internal control relevant to the audit in order to design audit
but is not a guarantee that an audit conducted in accordance with the Australian Auditing
procedures that are appropriate in the circumstances, but not for the purpose of
Standards will always detect a material misstatement when it exists. Misstatements can arise
expressing an opinion on the effectiveness of the Company’s internal control.
from fraud or error and are considered material if, individually or in the aggregate, they could
• Evaluate the appropriateness of accounting policies used and the reasonableness of
reasonably be expected to influence the economic decisions of users taken on the basis of
accounting estimates and related disclosures made by the Directors.
this financial report.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of
As part of an audit in accordance with the Australian Auditing Standards, we exercise
accounting and, based on the audit evidence obtained, whether a material uncertainty
professional judgement and maintain professional scepticism throughout the audit. We also:
exists related to events or conditions that may cast significant doubt on the Company’s
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
•
An independent New South Wales Partnership.
ability to continue as a going concern. If we conclude that a material uncertainty exists,
Identify and assess the risks of material misstatement of the financial report, whether due
we are required to draw attention in our auditor’s report to the related disclosures in the
to fraud or error, design and perform audit procedures responsive to those risks, and
financial report or, if such disclosures are inadequate, to modify our opinion. Our
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
conclusions are based on the audit evidence obtained up to the date of our auditor’s
The risk of not detecting a material misstatement resulting from fraud is higher than for
report. However, future events or conditions may cause the Company to cease to
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
38
continue as a going concern.
misrepresentations, or the override of internal control.
• Evaluate the overall presentation, structure and content of the financial report, including
• Obtain an understanding of internal control relevant to the audit in order to design audit
the disclosures, and whether the financial report represents the underlying transactions
procedures that are appropriate in the circumstances, but not for the purpose of
and events in a manner that achieves fair presentation.
expressing an opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
We communicate with the Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in
accounting estimates and related disclosures made by the Directors.
internal control that we identify during our audit.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of
We also provide the Directors with a statement that we have complied with relevant ethical
accounting and, based on the audit evidence obtained, whether a material uncertainty
requirements regarding independence, and to communicate with them all relationships and
exists related to events or conditions that may cast significant doubt on the Company’s
other matters that may reasonably be thought to bear on our independence, and where
ability to continue as a going concern. If we conclude that a material uncertainty exists,
applicable, related safeguards.
we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our
From the matters communicated with the Directors, we determine those matters that were of
conclusions are based on the audit evidence obtained up to the date of our auditor’s
most significance in the audit of the financial report of the current period and are therefore the
report. However, future events or conditions may cause the Company to cease to
key audit matters. We describe these matters in our auditor’s report unless law or regulation
continue as a going concern.
precludes public disclosure about the matter or when, in extremely rare circumstances, we
• Evaluate the overall presentation, structure and content of the financial report, including
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest
the disclosures, and whether the financial report represents the underlying transactions
benefits of such communication.
and events in a manner that achieves fair presentation.
We communicate with the Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of
most significance in the audit of the financial report of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
39
39
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF CADENCE CAPITAL LIMITED
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current year. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
How our audit addressed the matter
Accuracy of Management and Performance Fees
Key audit matter
Refer to Note 7: Trade and Other Payables, Note 16: Related Party Transactions and
Existence and Valuation of Financial Assets and completeness of Financial Liabilities
Remuneration Report
Refer to Note 6: Financial Assets and Note 8: Financial Liabilities
We focused our audit effort on the accuracy
We focused our audit effort on the
of management and performance fees as
completeness, valuation and existence of the
they are significant expenses of the
Company’s financial assets and financial
Company and their calculation may require
liabilities as they are its largest asset and
adjustments for events in accordance with
liability and represents the most significant
the Investment Management Agreement
driver of the Company’s Net Tangible Assets
between the Company and the Investment
and profits.
Manager.
Our procedures included, amongst others:
Our procedures included, amongst others:
• Making enquiries with the Investment
• Understanding and evaluating the
• Reviewing and evaluating the
Manager and the Directors with respect
to any significant events during the year
investment management process and
and associated adjustments made as a
controls;
result, in addition to reviewing ASX
announcements;
independent audit report on internal
• Testing key inputs including adjustments
controls (ASAE 3402 Assurance Reports
for events used in the calculation of
on Controls at a Service Organisation)
management and performance fees and
for the Custodians;
performing a recalculation in accordance
with our understanding of the Investment
have been any changes to these controls
Management Agreement;
or their effectiveness from the periods to
• Assessing the adequacy of disclosures
which the audit reports relate and where
made in the financial statements.
necessary performing additional
procedures;
• Making enquiries as to whether there
Financial assets and liabilities mostly consist
In addition to their quantum, as these
of listed Australian and International
transactions are made with related parties,
securities. Investments are valued by
there are additional inherent risks associated
multiplying the quantity held by the
with these transactions, including the
respective market price, cost or estimated
potential for these transactions to be made
value per security for unlisted investments.
on terms and conditions more favourable
than if they had been with an independent
third-party.
Other Information
• Obtaining a confirmation of the financial
assets and financial liabilities holdings
The Directors are responsible for the other information. The other information comprises the
directly from the Custodians;
information included in the Company’s Annual Report for the year ended 30 June 2019, but
does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we
do not express any form of assurance conclusion thereon.
• Assessing the Company’s valuation of
individual financial assets and financial
liabilities holdings to independent
sources; For investments where there
In connection with our audit of the financial report, our responsibility is to read the other
was little or less observable market data,
information and, in doing so, consider whether the other information is materially inconsistent
obtaining and assessing other relevant
with the financial report or our knowledge obtained in the audit or otherwise appears to be
valuation data;
materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
• Evaluating the accounting treatment of
revaluations of financial assets and
financial liabilities for current/deferred tax
and unrealised gains or losses;
Responsibilities of the Directors for the Financial Report
The Directors of the Company are responsible for the preparation 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 controls as the Directors determine is necessary
to enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
the financial statements.
• Assessing the adequacy of disclosures in
In preparing the financial report, the Directors are responsible for assessing the ability of the
Company to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of
this financial report.
37
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
38
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
38
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF CADENCE CAPITAL LIMITED
Accuracy of Management and Performance Fees
Refer to Note 7: Trade and Other Payables, Note 16: Related Party Transactions and
Remuneration Report
We focused our audit effort on the accuracy
Our procedures included, amongst others:
of management and performance fees as
they are significant expenses of the
Company and their calculation may require
adjustments for events in accordance with
the Investment Management Agreement
between the Company and the Investment
Manager.
In addition to their quantum, as these
transactions are made with related parties,
there are additional inherent risks associated
with these transactions, including the
potential for these transactions to be made
on terms and conditions more favourable
than if they had been with an independent
third-party.
• Making enquiries with the Investment
Manager and the Directors with respect
to any significant events during the year
and associated adjustments made as a
result, in addition to reviewing ASX
announcements;
• Testing key inputs including adjustments
for events used in the calculation of
management and performance fees and
performing a recalculation in accordance
with our understanding of the Investment
Management Agreement;
• Assessing the adequacy of disclosures
made in the financial statements.
Other Information
The Directors are responsible for the other information. The other information comprises the
information included in the Company’s Annual Report for the year ended 30 June 2019, but
does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The Directors of the Company are responsible for the preparation 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 controls as the Directors determine is necessary
to enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
In preparing the financial report, the Directors are responsible for assessing the ability of the
professional judgement and maintain professional scepticism throughout the audit. We also:
Company to continue as a going concern, disclosing, as applicable, matters related to going
•
concern and using the going concern basis of accounting unless the Directors either intend to
Identify and assess the risks of material misstatement of the financial report, whether due
liquidate the Company or to cease operations, or have no realistic alternative but to do so.
to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
Auditor’s Responsibilities for the Audit of the Financial Report
The risk of not detecting a material misstatement resulting from fraud is higher than for
As part of an audit in accordance with the Australian Auditing Standards, we exercise
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
professional judgement and maintain professional scepticism throughout the audit. We also:
Our objectives are to obtain reasonable assurance about whether the financial report as a
misrepresentations, or the override of internal control.
whole is free from material misstatement, whether due to fraud or error, and to issue an
•
Identify and assess the risks of material misstatement of the financial report, whether due
• Obtain an understanding of internal control relevant to the audit in order to design audit
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
to fraud or error, design and perform audit procedures responsive to those risks, and
but is not a guarantee that an audit conducted in accordance with the Australian Auditing
procedures that are appropriate in the circumstances, but not for the purpose of
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
Standards will always detect a material misstatement when it exists. Misstatements can arise
expressing an opinion on the effectiveness of the Company’s internal control.
The risk of not detecting a material misstatement resulting from fraud is higher than for
from fraud or error and are considered material if, individually or in the aggregate, they could
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
• Evaluate the appropriateness of accounting policies used and the reasonableness of
reasonably be expected to influence the economic decisions of users taken on the basis of
misrepresentations, or the override of internal control.
accounting estimates and related disclosures made by the Directors.
this financial report.
• Obtain an understanding of internal control relevant to the audit in order to design audit
• Conclude on the appropriateness of the Directors’ use of the going concern basis of
As part of an audit in accordance with the Australian Auditing Standards, we exercise
procedures that are appropriate in the circumstances, but not for the purpose of
accounting and, based on the audit evidence obtained, whether a material uncertainty
professional judgement and maintain professional scepticism throughout the audit. We also:
expressing an opinion on the effectiveness of the Company’s internal control.
exists related to events or conditions that may cast significant doubt on the Company’s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
•
Identify and assess the risks of material misstatement of the financial report, whether due
• Evaluate the appropriateness of accounting policies used and the reasonableness of
we are required to draw attention in our auditor’s report to the related disclosures in the
to fraud or error, design and perform audit procedures responsive to those risks, and
accounting estimates and related disclosures made by the Directors.
38
financial report or, if such disclosures are inadequate, to modify our opinion. Our
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of
conclusions are based on the audit evidence obtained up to the date of our auditor’s
The risk of not detecting a material misstatement resulting from fraud is higher than for
accounting and, based on the audit evidence obtained, whether a material uncertainty
report. However, future events or conditions may cause the Company to cease to
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
exists related to events or conditions that may cast significant doubt on the Company’s
continue as a going concern.
misrepresentations, or the override of internal control.
ability to continue as a going concern. If we conclude that a material uncertainty exists,
• Evaluate the overall presentation, structure and content of the financial report, including
• Obtain an understanding of internal control relevant to the audit in order to design audit
we are required to draw attention in our auditor’s report to the related disclosures in the
the disclosures, and whether the financial report represents the underlying transactions
procedures that are appropriate in the circumstances, but not for the purpose of
financial report or, if such disclosures are inadequate, to modify our opinion. Our
and events in a manner that achieves fair presentation.
expressing an opinion on the effectiveness of the Company’s internal control.
conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Company to cease to
• Evaluate the appropriateness of accounting policies used and the reasonableness of
We communicate with the Directors regarding, among other matters, the planned scope and
continue as a going concern.
accounting estimates and related disclosures made by the Directors.
timing of the audit and significant audit findings, including any significant deficiencies in
• Evaluate the overall presentation, structure and content of the financial report, including
internal control that we identify during our audit.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of
the disclosures, and whether the financial report represents the underlying transactions
accounting and, based on the audit evidence obtained, whether a material uncertainty
We also provide the Directors with a statement that we have complied with relevant ethical
and events in a manner that achieves fair presentation.
exists related to events or conditions that may cast significant doubt on the Company’s
requirements regarding independence, and to communicate with them all relationships and
ability to continue as a going concern. If we conclude that a material uncertainty exists,
other matters that may reasonably be thought to bear on our independence, and where
We communicate with the Directors regarding, among other matters, the planned scope and
we are required to draw attention in our auditor’s report to the related disclosures in the
applicable, related safeguards.
timing of the audit and significant audit findings, including any significant deficiencies in
financial report or, if such disclosures are inadequate, to modify our opinion. Our
internal control that we identify during our audit.
From the matters communicated with the Directors, we determine those matters that were of
conclusions are based on the audit evidence obtained up to the date of our auditor’s
most significance in the audit of the financial report of the current period and are therefore the
report. However, future events or conditions may cause the Company to cease to
We also provide the Directors with a statement that we have complied with relevant ethical
key audit matters. We describe these matters in our auditor’s report unless law or regulation
continue as a going concern.
requirements regarding independence, and to communicate with them all relationships and
precludes public disclosure about the matter or when, in extremely rare circumstances, we
other matters that may reasonably be thought to bear on our independence, and where
• Evaluate the overall presentation, structure and content of the financial report, including
determine that a matter should not be communicated in our report because the adverse
applicable, related safeguards.
the disclosures, and whether the financial report represents the underlying transactions
consequences of doing so would reasonably be expected to outweigh the public interest
and events in a manner that achieves fair presentation.
From the matters communicated with the Directors, we determine those matters that were of
benefits of such communication.
most significance in the audit of the financial report of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation
We communicate with the Directors regarding, among other matters, the planned scope and
precludes public disclosure about the matter or when, in extremely rare circumstances, we
timing of the audit and significant audit findings, including any significant deficiencies in
determine that a matter should not be communicated in our report because the adverse
internal control that we identify during our audit.
consequences of doing so would reasonably be expected to outweigh the public interest
We also provide the Directors with a statement that we have complied with relevant ethical
benefits of such communication.
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
From the matters communicated with the Directors, we determine those matters that were of
most significance in the audit of the financial report of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
39
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
39
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
39
39
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF CADENCE CAPITAL LIMITED
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 10 of the Directors’ Report
for the year ended 30 June 2019. In our opinion, the Remuneration Report of Cadence
Capital Limited, for the year ended 30 June 2019, complies with section 300A of the
Report on the Remuneration Report
Corporations Act 2001.
Opinion on the Remuneration Report
Responsibilities
We have audited the Remuneration Report included in pages 8 to 10 of the Directors’ Report
The Directors of the Company are responsible for the preparation and presentation of the
for the year ended 30 June 2019. In our opinion, the Remuneration Report of Cadence
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
Capital Limited, for the year ended 30 June 2019, complies with section 300A of the
responsibility is to express an opinion on the Remuneration Report, based on our audit
Corporations Act 2001.
conducted in accordance with Australian Auditing Standards.
Responsibilities
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.
C I CHANDRAN
Partner
24 September 2019
C I CHANDRAN
Partner
24 September 2019
PITCHER PARTNERS
Sydney
PITCHER PARTNERS
Sydney
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
40
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
40
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
40
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere
in this report.
SHAREHOLDINGS
Substantial shareholders (as at 31 August 2019)
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
22,599,282
7.12
Distribution of shareholdings (as at 31 August 2019)
Category
No. of Shareholders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
364
1,015
1,315
4,690
483
7,867
The number of shareholdings held in less than marketable parcels is 230.
CADENCE CAPITAL LIMITED ANNUAL REPORT 2019 | A.B.N. 17 112 870 096
41
ASX ADDITIONAL INFORMATION
Twenty largest shareholders - Ordinary shares (as at 31 August 2019)
Number of
ordinary shares
held
Percentage of
issued capital
held
Esselmont Pty Ltd and associates
Yarandi Investments Pty Ltd & associated entities
Southern Steel Investments Pty Limited
HSBC Custody Nominees (Australia) Limited
Avanteos Investments Limited
Naaman Pty Ltd
Netwealth Investments Limited
Nulis Nominees (Australia) Limited
Golden Words Pty Ltd
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd DRP
Mr Cameron McFarlane
Mr Keith William Kerridge
Mr Paul & Mrs Karen & Mr Luke Van Ryn
Mrs Karen Lianne Van Ryn
Graham Evans Investments Pty Limited
Andonandon Pty Ltd
Mr Aaron Francis Quirk
Arongi Pty Limited
Robinson Page Management
Bruhn Law Pty Ltd
22,599,282
11,623,533
3,617,577
3,223,333
2,196,318
2,000,000
1,697,210
1,596,029
1,372,779
1,244,754
1,221,914
925,666
919,233
913,351
900,000
863,234
857,000
845,486
825,000
813,410
7.119
3.661
1.140
1.015
0.692
0.630
0.535
0.503
0.432
0.392
0.385
0.292
0.290
0.288
0.283
0.272
0.270
0.266
0.260
0.256
60,255,109
18.980
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 2019 | A.B.N. 17 112 870 096
C A P I TA L L I M I T E D
Level 11, 131 Macquarie Street,
Sydney, NSW, 2000
Telephone: 02 8298 2450
Fax: 02 8298 2499
Email: info@cadencecapital.com.au
Website: www.cadencecapital.com.au