Cadence Capital Limited Annual Report 2020

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FY2020 Annual Report · Cadence Capital Limited

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2020 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

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

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

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

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

SUMMARY OF RESULTS

MANAGER’S REPORT

Fund gross performance of -4.9%

Loss after tax of $10.9m
2.0c fully franked final dividend payable on the 30 October 2020

•
• Outperforming All Ords. Accum. Index by 2.3%
•
•
• Yield of 5.7% fully franked (8.1% gross including franking)
• CDM at a 22% discount to NTA
• Ongoing on-market share buy-back for up to 10% of CDM shares

COMPANY PERFORMANCE

Cadence Capital Limited (ASX: CDM) completed the financial year down 4.9%, outperforming the All Ordinaries
Accumulation Index by 2.3%, and produced a full year loss after tax of $10.9m.

Equity markets fell approximately 35% over late February to mid- March 2020 as Covid-19 spread globally and
economies were shut down. Cadence Capital Limited scaled out of its positions as the market fell, with the Company
being less than 35% invested in late March. As markets recovered in April and May the Company re-deployed its
cash and scaled back into both new and existing positions.

This correction provided an opportunity to initiate positions at compelling valuations in several domestic and
international companies. Some of these stocks are now significant positive contributors to Company performance.
The Portfolio has started the new financial year well, outperforming the All Ordinaries Accumulation Index.

DIVIDENDS

The Company announced a 2.0 cents per share fully franked final dividend. This brings the 2020 fully franked full
year dividend up to 4.0 cents per share equating to a 5.7% annual fully franked yield, or a 8.1% gross yield (grossed
up for franking credits) based on the CDM share price of $0.705 on the date of the dividend announcement. The
Ex-Date for the dividend is the 19 October 2020 and the payment date for the dividend is the 30 October 2020. 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 continue trading at substantial discounts to Pre-Tax and Post-Tax NTA per share.
The Company has implemented an on-market share buy-back which will increase the NTA per share for all existing
Cadence Capital Limited shareholders. Board and management, who are the largest investors in the Company, also
continue ongoing buying of CDM shares.

This discount to NTA continues to present an opportunity for investors to purchase a Listed Investment Company
with a long-term track record and fully franked dividends at a discount to NTA.

OUTLOOK

Cadence Capital Limited has had a good start to the new financial year outperforming the All Ordinaries
Accumulation Index whilst being less than fully invested. We are pleased that this strong performance has been
delivered across both new and existing positions, and both domestically and internationally.

Over the past 18 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 continue delivering good
risk-adjusted returns for our shareholders.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

MANAGER’S REPORT CONT’D

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

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

LONG AND SHORT POSITIONS

Long Positions

Company Name

RMC

MQG

SHJ

MNY

UWL

APX

EML

CCP

ARB

APE

Resimac Group Ltd.

Macquarie Group Ltd.

Deepgreen Metals Inc.

Shine Corporate Ltd.

Money3 Corporation Ltd.

Uniti Group Ltd.

Appen Ltd.

EML Payments Ltd.

Credit Corp Group Ltd.

Arb Corporation Ltd.

AP Eagers Ltd.

700 HK

Tencent Holdings Ltd.

STO

ALX

CCX

QUB

AAPL US

LYC

QCOM US

BABA US

Santos Ltd.

Atlas Arteria

City Chic Collective Ltd.

Qube Holdings Ltd.

Apple Inc.

Lynas Corporation Ltd.

Qualcomm Inc.

Alibaba Group Holding

TOP 20 POSITIONS AS AT 30 JUNE 2020

Exposure
$

$14,968,711

$10,142,909

$9,985,273

$9,807,175

$8,752,537

$8,617,795

$8,140,800

$7,876,328

$7,344,552

$6,946,650

$6,910,083

$6,885,987

$5,686,900

$5,328,756

$5,209,343

$5,080,805

$5,019,699

$4,962,507

$4,875,983

$4,823,882

% Of
Equity

4.98%

3.38%

3.32%

3.27%

2.91%

2.87%

2.71%

2.62%

2.45%

2.31%

2.30%

2.29%

1.89%

1.77%

1.73%

1.69%

1.67%

1.65%

1.62%

1.61%

Total Top 20 Long Positions

** A Pre-IPO investment in the Materials sector

$147,366,674

49.06%

TOTAL PORTFOLIO POSITIONS:

Portfolio Net Exposure Long Positions

Portfolio Net Exposure Short Positions

Total Portfolio Net Exposure

$277,442,708

92.37%

$7,553,990

2.52%

$269,888,718

89.86%

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2020

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 2020.

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 $16,882,749 (2019: $87,570,953) and
an operating loss after tax of $10,878,268 (2019: $59,307,818).

There was significant volatility in the second half of the year with equity markets falling over 35% during late
February and March, as many economies were shut down in response to the spread of Covid-19. Cadence Capital
Limited moved into cash as the market fell, with the Company being less than 35% invested in late March. As
markets recovered in April and May the Company re-deployed its cash and scaled back into both new and existing
positions. This correction provided an opportunity to initiate positions at compelling valuations in several domestic
and international companies.

REVIEW OF OPERATIONS

Investments are valued continuously to market value. For the year ended 30 June 2020, net investments were
valued at $269,888,718 (2019: $260,830,271). 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 $300,354,519 (2019: $333,591,433).

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 2020. The Ex-Date
for the dividend is the 19 October 2020.

Dividends paid are as follows:

Fully franked 2020 interim dividend of 2.0 cents per share was paid on 13 May 2020
Fully franked 2019 final dividend of 2.0 cents per share was paid on 30 October 2019
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

6,166,630
6,313,827
9,608,670
12,718,306

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 and Jenelle Webster

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2020 CONTD’

INFORMATION ON DIRECTORS

Karl Siegling (Chairman)
Karl Siegling has 27 years investment experience in the financial services 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
16 and a half years. Karl is also a Director of Webcentral Group Limited (WCG) and Cadence Opportunities Fund
Limited. Karl has been the Chairman and Managing Director of Cadence Capital Limited for 15 and a half years.

James Chirnside (Non-Executive Director)
James Chirnside has worked in financial markets for 35 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 15 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 1 and a half years.

Wayne Davies (Non-Executive Director and Company Secretary)
Wayne Davies has over 18 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 13 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 6 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 2020 | A.B.N. 17 112 870 096

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2020 CONTD’

DIRECTORS’ MEETINGS

Karl Siegling (Chairperson)

James Chirnside

Wayne Davies

Jenelle Webster

AUDIT COMMITTEE MEETINGS

Jenelle Webster (Chairperson)

James Chirnside

Wayne Davies

REMUNERATION REPORT (AUDITED)

No. eligible to attend

Attended

No. eligible to attend

Attended

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.

2020
Short-term Employee Benefits - Directors Fees:

Cash Salary
$

Superannuation
$

James Chirnside

Jenelle Webster

Wayne Davies

27,397

13,699

68,493

2,603

1,301

6,507

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

Total
$

30,000

15,000

75,000

Total
$

30,000

22,500

7,500

15,000

75,000

The following table reflects the Company’s performance and Director’s remuneration over five years:

2020

2019

2018

2017

2016

Operating(loss) profit after tax ($)

(10,878,268)

(59,307,818)

41,166,747

36,952,243

(30,882,043)

Dividends (cents per share)

NTA after tax ($ per share)

4.0

0.98

5.0

1.04

8.0

1.30

8.0

1.24

9.0

1.19

Total directors remuneration($)

75,000

Shareholders equity($)

300,354,519

333,591,433

412,648,397

340,290,676

320,589,447

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2020 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 $2,818,612 (inclusive of GST) (2019: $3,449,970).
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 2020, the balance payable to the manager was $128,426 (inclusive of GST) (2019: $116,368).

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 (2019: nil).
As at 30 June 2020, there was no balance payable to the manager (2019: nil).

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.

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 2020 | A.B.N. 17 112 870 096

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2020 CONTD’

REMUNERATION REPORT (AUDITED) (Continued)

(d) Shareholdings

The Company’s key management personnel directly and indirectly held the following shares in the Company:

Acquisitions

Disposals

Shareholdings

Karl Siegling

Wayne Davies

James Chirnside

Jenelle Webster

Balance at
1 July 2019

22,322,355

863,234

26,851

30,000

1,516,214

141,745

3,173

23,242,440

1,661,132

Balance at
30 June 2020

23,838,569

1,004,979

26,851

33,173

24,903,572

Since the 30 June 2020, Karl Siegling has been an ongoing buyer of the Company’s shares. These purchases are
announced on the ASX website.

End of Remuneration Report.

EVENTS AFTER THE REPORTING PERIOD

The Board have declared a 2.0 cent per share fully franked final dividend payable on 30 October 2020. The Ex-Date
for the dividend is 19 October 2020.

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.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

DIRECTORS’ REPORT TO SHAREHOLDERS FOR THE YEAR ENDED 30 JUNE 2020 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 (including Independence Standards).

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 2020 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 30th September 2020

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

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

p. +61 2 9221 2099
e. sydneypartners@pitcher.com.au

In relation to the independent audit of the financial report of Cadence Capital Limited for the
year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have
been:

(i) no contraventions of the auditor’s independence requirements of the Corporations Act

2001; and

(ii) no contraventions of APES 110 Code of Ethics for Professional Accountants (including

Independence Standards).

C I Chandran
Partner

Pitcher Partners
Sydney

30 September 2020

Adelaide Brisbane Melbourne Newcastle Perth Sydney

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

Pitcher Partners is an association of independent firms.

An independent New South Wales Partnership. ABN 35 415 759 892. 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

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED
30 JUNE 2020

INCOME

Net realised and unrealised loss on investments

(15,731,004)

(91,366,977)

Note

2020
$

2019
$

Dividends received

Interest received

Other income

Total Loss

EXPENSES

Finance costs

Management fees

Assignment fees

Directors fees

Dividends on short positions

Stock loan fees

4,685,227

10,178,069

437,734

18,594

1,168,298

102,452

(10,589,449)

(79,918,158)

(1,198,880)

(2,626,434)

(110,860)

(75,000)

(209,704)

(55,147)

(1,676,631)

(3,214,744)

(135,693)

(75,000)

(574,516)

(316,589)

Brokerage expenses on share purchases

(1,482,155)

(1,161,478)

ASX fees

Registry fees

Legal fees

Custody fees

Audit and taxation expenses

Other expenses from ordinary activities

(73,845)

(114,221)

(5,902)

(187,347)

(76,825)

(76,980)

(92,973)

(130,901)

(2,094)

(113,492)

(78,222)

(80,462)

Total Expenses

Loss before income tax

Income tax benefit

(6,293,300)

(7,652,795)

(16,882,749)

(87,570,953)

3(a)

6,004,481

28,263,135

Loss attributable to members of the Company

(10,878,268)

(59,307,818)

Other comprehensive income

Other comprehensive income for the period, net of tax

Total comprehensive loss for the period

(10,878,268)

(59,307,818)

Basic loss per share

Diluted loss per share

(3.4) cents

(18.3) cents

(3.4) cents

(18.3) cents

The accompanying notes form part of these financial statements.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020

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

2020
$

2019
$

19,458,443

17,386,421

74,779,920

1,094,986

277,442,708

267,850,966

3(b)

58,062,357

47,562,766

372,349,929

391,288,638

55,185,767

50,158,911

5,229,083

7,553,990

517,599

7,020,695

3(c)

4,026,570

71,995,410

57,697,205

300,354,519

333,591,433

419,919,254

429,797,443

9,723,976

16,938,027

(129,288,711)

(113,144,037)

300,354,519

333,591,433

The accompanying notes form part of these financial statements.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020

Note

Issued Capital

Accumulated
Losses
$

Profits
Reserve
$

Total Equity

Balance at 1 July 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

4(a)

2,781,914

(204,084)

(59,307,818)

2,781,914

(204,084)

(22,326,976)

Balance at 30 June 2019

429,797,443

(113,144,037)

16,938,027

333,591,433

Loss for the year

Transfer to profits reserve

Other comprehensive income for the
year

(10,878,268)

(5,266,406)

5,266,406

(9,878,189)

4(a)

(9,878,189)

(12,480,457)

419,919,254

(129,288,711)

9,723,976

300,354,519

Transactions with owners:

On-Market Share Buy-Back

Dividends paid

Balance at 30 June 2020

The accompanying notes form part of these financial statements.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020

CASH FLOWS FROM OPERATING ACTIVITIES

Proceeds from the sale of investments

646,388,667

491,850,840

Payments for the purchase of investments

(682,903,190)

(544,247,687)

Note

2020
$

2019
$

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

3(c)

4,947,339

10,433,469

437,734

18,594

(2,614,376)

(1,482,154)

(1,198,880)

(209,704)

(905,181)

(468,535)

1,168,298

102,452

(3,298,224)

(2,979,620)

(1,161,478)

(1,676,630)

(574,516)

(863,929)

(4,233,822)

NET CASH USED IN OPERATING ACTIVITIES

12(b)

(37,989,686)

(55,480,847)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid

On-market share buy-back

NET CASH USED IN FINANCING ACTIVITIES

NET DECREASE 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

4(a)

(12,480,457)

(19,545,058)

(9,878,190)

(204,084)

(22,358,647)

(19,749,142)

(60,348,333)

(75,229,989)

24,621,009

99,850,998

12(a)

(35,727,324)

24,621,009

NON-CASH TRANSACTIONS:
Shares issued via dividend reinvestment plan

12(c)

2,781,914

The accompanying notes form part of these financial statements.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

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 30th September 2020 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.

Financial assets are classified ‘at fair value through profit or loss’ when they are held for trading for the purpose of
short-term profit taking. Realised and unrealised gains and losses arising from changes in fair value are included in
the Statement of Profit or Loss and Other Comprehensive Income in the period in which they arise.

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 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 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.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 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. Future taxable
amounts are determined based on the historical performance of the Company. Deferred tax assets are reviewed at
each reporting period.

There are no estimates or judgements that have a material impact on the Company’s financial results for the
year ended 30 June 2020. 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
There are no standards, interpretations or amendments to existing standards that are effective for the first time for
the financial year beginning on or after 1 July 2019 that will have a material impact on the accounts recognised in
the prior periods or will affect the current or future periods.

(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 2020, 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:

Audit and review of the financial report

Other assurance services

Non-audit services

Other services provided by a related practice of the auditor:

Taxation services

2020
$

2019
$

62,509

66,309

14,316

76,825

11,913

78,222

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

3. TAXATION

(a) Current Income Tax Benefit

The prima facie tax on loss from ordinary activities before income tax is
reconciled to the income tax benefit as follows:

Prima facie tax benefit on loss 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

2020
$

2019
$

(5,064,825)

(26,271,286)

452,802

92,588

923,945

99,447

(92,588)

(1,509,338)

(3,079,817)

24,287

159,174

(2,010)

(6,004,481)

(28,263,135)

(35.6%)

(32.3%)

The effective tax rate for FY2020 is (35.6%) reflecting the benefit to the Company of franking credits received on
dividend income during the year.

Total income tax benefit results in a:

Current tax liability/ (asset)

Movement in deferred tax assets

(b) Deferred Tax Assets

Provisions

Capitalised share issue costs

Fair value adjustments

Tax losses

Trading stock election

Movement in deferred tax assets

Balance at the beginning of the period

Credited to the profit or loss

Movement relating to under/over adjustment

Movement in current tax liabilities /(assets)

Balance at the beginning of the period

Current year income tax on operating loss

Income tax paid

Franking credits

Prior year under

At reporting date

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

4,519,398

(33,424,300)

(10,523,879)

5,161,165

(6,004,481)

(28,263,135)

10,140

81,811

8,790

147,132

14,151,456

10,633,019

36,749,539

36,773,825

7,069,411

58,062,357

47,562,766

19,283,217

10,523,878

28,263,135

(24,287)

16,414

58,062,357

47,562,766

4,217,408

6,004,443

(468,535)

(4,233,822)

(1,509,338)

16,414

4,026,570

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 CONTD’

4. DIVIDENDS

(a) Dividends paid

Dividends paid by the Company

2020

Dividends paid by the Company for
the year ended 30 June 2020

Interim 2020 Ordinary

Final 2019 Ordinary

Total Amount

Cents
per
share

2.0

2020
$

2019
$

12,480,457

22,326,976

Date of
payment

Tax rate for
franking
credit

% Franked

Total Amount
$

13 May 20

30 October 19

30%

100%

6,166,630

6,313,827

12,480,457

Subsequent to 30 June 2020, the Board have declared a 2.0 cent per share fully franked final dividend payable on 30
October 2020. The Ex-Date for the dividend is the 19 October 2020.

2019

Dividends paid by the Company for
the year ended 30 June 2019

Interim 2019 Ordinary

Final 2018 Ordinary

Total Amount

(b) Dividend franking account

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%

100%

9,608,670

12,718,306

22,326,976

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. This franking balance
is after taking into account the payment of the current tax liability of
$4,026,570 (2019:nil). (Refer Note 3c)

2020
$

2019
$

5,290,059

4,634,383

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

16,934,910

289,850

161,661

419,364

551,963

123,659

17,386,421

1,094,986

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.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

6. FINANCIAL ASSETS

Long positions - held for trading financial assets:

Listed Investments at fair value

Unliisted Investments at fair value

7. TRADE AND OTHER PAYABLES

Trade creditors

Sundry creditors - related parties

Sundry creditors - other

2020
$

2019
$

267,457,038

257,974,823

9,985,670

9,876,143

277,442,708

267,850,966

4,790,477

128,426

310,180

5,229,083

48,395

119,868

349,336

517,599

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 $128,426 (inclusive of GST) (2019: $119,868) to the
manager, Cadence Asset Management Pty Limited.

8. FINANCIAL LIABILITIES

Short positions: Listed investments at fair value – held for trading

7,553,990

7,020,695

7,553,990

7,020,695

The Company’s Financial Assets and Cash are used as collateral for its Financial Liabilities. Refer to Note 14(b) for
further information on Credit Risk.

9. ISSUED CAPITAL

(a) Paid-up Capital

Ordinary shares fully paid

Capitalised share issue costs

Deferred tax asset on capitalised share issue costs

422,815,683

432,693,872

(4,137,756)

1,241,327

419,919,254

429,797,443

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 CONTD’

9. ISSUED CAPITAL (Continued)

(a) Paid-up Capital (Continued)

2020

Date

Balance at the beginning of
the year

July 2019

August 2019

Details of the issue

Share Price
$

No. of Shares

Issue Value
$

320,027,168

432,693,872

On-market share buy-back

$0.77244

(1,123,851)

(868,109)

On-market share buy-back

$0.75667

(1,465,019)

(1,108,536)

September 2019

On-market share buy-back

$0.79378

(1,400,443)

(1,111,643)

October 2019

November 2019

December 2019

January 2020

February 2020

March 2020

May 2020

June 2020

2019

Date

On-market share buy-back

$0.77872

(912,681)

(710,726)

On-market share buy-back

$0.75355

(1,365,053)

(1,028,639)

On-market share buy-back

$0.74711

(1,036,309)

(774,238)

On-market share buy-back

$0.75902

(1,314,272)

(997,561)

On-market share buy-back

$0.71184

(2,258,209)

(1,607,493)

On-market share buy-back

$0.53746

(819,850)

(440,640)

On-market share buy-back

$0.56011

(1,033,978)

(579,145)

On-market share buy-back

$0.62778

(1,037,723)

(651,459)

306,259,780

422,815,683

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

On-Market Share Buy-Back

$0.77946

(261,828)

(204,084)

320,027,168

432,693,872

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.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

9. ISSUED CAPITAL (Continued)

(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.

On the 15 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 1 June 2019 and finished on the 31 May 2020. On the 20
May 2020 the Company announced the approval of a further on-market share buy-back of up to 30.7 million of its
ordinary shares. The share buy-back period commenced on the 5 June 2020 and will finish no later than the 4 June
2021.

10. PROFITS RESERVE

Profits Reserve

Movement in Profits Reserve

Opening balance

Transfer from retained earnings

Dividends paid (Note 4)

2020
$

2019
$

9,723,976

16,938,027

39,265,003

5,266,406

(12,480,457)

(22,326,976)

9,723,976

16,938,027

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

Loss attributable to members of the Company

Transfer to profits reserve

12. CASH FLOW INFORMATION

(a) Reconciliation of cash

113,144,037

10,878,268

5,266,406

53,836,219

59,307,818

129,288,711

113,144,037

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

19,458,443

74,779,920

(55,185,767)

(50,158,911)

(35,727,324)

24,621,009

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 CONTD’

12. CASH FLOW INFORMATION (Continued)

(a) Reconciliation of cash (Continued)

The weighted average interest rate for cash and cash equivalents as at June 2020 is 0.38% (June 2019: 0.67%).
The weighted average interest rate for cash overdrafts as at June 2020 is 1.09% (June 2019: 3.17%). 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.

(b) Reconciliation of Operating Profit after Income Tax

Operating loss after income tax

2020
$

2019
$

(10,878,268)

(59,307,818)

Movement in fair value on financial assets and liabilities

(9,058,446)

38,418,393

Changes in assets and liabilities:

(Increase)/Decrease in trade and other receivables

(16,291,434)

2,021,940

Increase in deferred tax assets

Increase/(Decrease) in trade and other payables

Increase/(Decrease) in current tax liability

Net cash used by Operating Activities

(10,499,591)

(28,279,549)

4,711,483

4,026,570

(4,116,405)

(4,217,408)

(37,989,686)

(55,480,847)

During the previous financial year the Company issued the following shares through its Dividend Reinvestment Plan:

- 2,331,352 shares at $1.19326 on 17 September 2018 totalling $2,781,914.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

13. EARNINGS PER SHARE

Basic loss per share

Loss 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

Weighted average number of ordinary shares and options
outstanding during the year used in calculation of
diluted earnings per share

Reconciliation of weighted average number of shares:

2020 Cents
Per Share

2019 Cents
Per Share

(3.4)

2020
$

(18.3)

2019
$

(10,878,268)

(59,307,818)

No.

312,694,333

323,943,616

312,694,333

323,943,616

Weighted average number of ordinary shares used in calculation of basic
earnings per share

312,694,333

323,943,616

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

312,694,333

323,943,616

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.

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 price 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.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 CONTD’

14. FINANCIAL RISK MANAGEMENT (Continued)

(b) Credit Risk (Continued)
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.

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 Price Risk
Market price 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 price 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:

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

14. FINANCIAL RISK MANAGEMENT (Continued)

(e) Foreign Currency Risk (Continued)

United States Dollar:

Investments

Bank Overdraft

Canadian Dollar:

Investments

Bank Overdraft

2020

2019

USD 29,203,773

USD 23,366,715

USD (22,522,981)

USD (17,428,533)

USD 6,680,792

USD 5,938,182

CAD 12,686,124

CAD (3,942,277)

CAD (9,468,069)

CAD (3,942,277)

CAD 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.

2020

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

0.38%

19,458,443

Trade debtors (<90 days)

Other receivables

Total Assets

Liabilities

19,458,443

Financial liabilities

Bank overdrafts

1.09%

55,185,767

Trade creditors (<90 days)

Other payables

Total liabilities

55,185,767

277,442,708

19,458,443

16,934,910

451,511

294,829,129

314,287,572

7,553,990

55,185,767

4,790,477

438,606

12,783,073

67,968,840

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 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

0.67%

74,779,920

Trade debtors (<90 days)

Other receivables

Total Assets

Liabilities

74,779,920

Financial liabilities

Bank overdrafts

3.17%

50,158,911

Trade creditors (<90 days)

Other payables

Total liabilities

50,158,911

Other payables are expected to be paid as follows:

- Less than 6 months

- 6 months to one year

267,850,966

74,779,920

419,364

675,622

419,364

675,622

268,945,952

343,725,872

7,020,695

50,158,911

48,395

469,204

48,395

469,204

7,538,294

57,697,205

2020
$

438,606

2019
$

469,204

(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.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

14. FINANCIAL RISK MANAGEMENT (Continued)

(h) Financial Instruments Measured at Fair Value (Continued)
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 2020 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.

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. Additional purchases of DeepGreen Metals Inc. were made over the past year.

30 June 2020

Level 1
$

Level 2
$

Level 3
$

Total
$

Financial assets

267,457,038

9,985,670

277,442,708

Financial liabilities

(7,553,990)

Total

259,903,048

9,985,670

269,888,718

30 June 2019

Level 1
$

Level 2
$

Level 3
$

Total
$

Financial assets

257,682,694

292,129

9,876,143

267,850,966

Financial liabilities

(7,020,695)

Total

250,661,999

292,129

9,876,143

260,830,271

(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.

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%

2020
$

2019
$

64,430

28,859

(64,430)

(28,859)

45,101

20,202

(45,101)

(20,202)

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 CONTD’

14. FINANCIAL RISK MANAGEMENT (Continued)

(i) Sensitivity Analysis (Continued)

Foreign Currency Risk Sensitivity Analysis
At 30 June 2020, 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%

2020
$

2019
$

63,548

294,983

(63,548)

(294,983)

44,484

206,488

(44,484)

(206,488)

Market Price Risk Sensitivity Analysis
At 30 June 2020, 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%

2020
$

2019
$

5,397,774

5,216,605

(5,397,774)

(5,216,605)

3,778,442

3,651,624

(3,778,442)

(3,651,624)

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

James Chirnside

Jenelle Webster

Chairman

Non-Executive Director and Company Secretary

Non-Executive Director

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

15. KEY MANAGEMENT PERSONNEL COMPENSATION (Continued)

(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

2020
$

68,493

6,507

75,000

2019
$

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.

As at 30 June 2020, the Company’s key management personnel indirectly held the following shares in the
Company:

Balance at 1 July 2019

Acquisitions

Disposals

Balance at 30 June 2020

Karl Siegling

22,322,355

Wayne Davies

James Chirnside

Jenelle Webster

863,234

26,851

30,000

1,516,214

141,745

3,173

23,242,440

1,661,132

23,838,569

1,004,979

26,851

33,173

24,903,572

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.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 CONTD’

15. KEY MANAGEMENT PERSONNEL COMPENSATION (Continued)

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

16. RELATED PARTY TRANSACTIONS

All transactions with related entities were made on normal commercial terms and conditions.

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 (2019:
nil). As at 30 June 2020, there was no balance payable to the manager (2019: nil).

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

17. EVENTS AFTER THE REPORTING PERIOD

The Board have declared a 2.0 cent per share fully franked final dividend payable on 30 October 2020. The Ex-Date
for the dividend is 19 October 2020.

18. CONTINGENT LIABILITIES

There were no material contingencies as at 30 June 2020 (2019: nil).

19. CAPITAL COMMITMENTS

Capital commitments exist for placements entered into before

30 June 2020, which settle after year end.

2020
$

2019
$

628,000

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.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | 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 35 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 2020 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

3. At the date of this declaration, in the Directors’ opinion there are reasonable grounds to believe that the
Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Karl Siegling
Director

Dated in Sydney, this 30th day of September 2020

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

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

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

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Cadence Capital Limited (“the Company”), which
comprises the statement of financial position as at 30 June 2020, the statement of
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 significant
accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of Cadence Capital Limited is in accordance
with the Corporations Act 2001, including:

ii.

giving a true and fair view of the Company’s financial position as at 30 June 2020
and of its financial performance for the year then ended; and

complying with Australian Accounting Standards and the Corporations Regulations
2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities 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 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code
of Ethics for Professional Accountants (including Independence Standards) (“the Code”) that
are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.

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

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CADENCE CAPITAL LIMITED

Independent Auditor’s Report
To the Members of Cadence Capital Limited
ABN 17 112 870 096

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 matter

How our audit addressed the matter

Existence and Valuation of Financial Assets and Completeness of Financial Liabilities

Refer to Note 6: Financial Assets and Note 8: Financial Liabilities
We focused our audit effort on the existence and
valuation of the Company’s financial assets and
the completeness of the Company’s financial
liabilities as they represent the most significant
driver of the Company’s Net Tangible Assets and
Profit.

The majority of the Company’s investments are
considered to be non-complex in nature with fair
value based on readily observable data from the
ASX or other observable markets. Consequently,
these investments are classified under Australian
Accounting Standards as either “Level 1” (i.e.
where the valuation is based on quoted prices in
active markets) or “Level 3” (i.e. where key inputs
to valuation are based on other observable
inputs).

Our procedures included, amongst others:
▪ Obtaining an understanding of and
investment management

evaluating
processes and controls;

the

▪ Reviewing and evaluating the independent
audit reports on the design and operating
effectiveness of internal controls (ASAE
3402 Assurance Reports on Controls at a
Service Organisation) for the Custodians;
▪ Making enquiries as to whether there have
been any changes to these controls or their
effectiveness from the periods to which the
audit reports relate to and where necessary
obtaining bridging letters;

▪ Obtaining confirmations of the investment
holdings directly from the Custodians;
▪ Assessing and recalculating the Company’s
valuation of individual investment holdings
using independent pricing sources;

▪ Evaluating

the accounting

treatment of
revaluations of financial assets and financial
liabilities
tax and
for current/deferred
unrealised gains or losses; and

▪ 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 2020 | A.B.N. 17 112 870 096

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CADENCE CAPITAL LIMITED

Independent Auditor’s Report
To the Members of Cadence Capital Limited
ABN 17 112 870 096

Key audit matter

How our audit addressed the matter

inputs. Adjustments

Accuracy and Existence of Management and Performance Fees
Refer to Note 7: Trade and other payables and Note 16: Related party transactions
We focused our audit effort on the accuracy and
existence of management and performance fees
as they are significant expenses of the Company
and their calculation requires adjustments and
include company
key
dividends, tax payments, capital raisings, capital
reductions and other relevant expenses. Key
inputs include the value of the portfolio, the
relevant comparable
performance of
benchmark and application of the correct fee
percentage in accordance with the Investment
Management Agreement between the Company
and the Investment Manager.

▪ Making enquiries with
the
Investment
Manager
charged with
those
governance with respect to any significant
events during the period and associated
adjustments made as a result, in addition to
reviewing ASX announcements and Board
meeting minutes;

Our procedures included, amongst others:
▪ Obtaining an understanding of and
evaluating the processes and controls for
calculating
and
the
performance fees;

management

and

the

their quantum, as

In addition,
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.

▪ Testing of adjustments such as company
dividends, tax payments, capital raisings,
capital reductions as well as any other
relevant expenses used in the calculation of
management and performance fees;

▪ Testing of key inputs including the value of
the portfolio, the performance of the relevant
comparable benchmark and application of
the correct fee percentage in accordance
with our understanding of the Investment
Management Agreement; and

▪ 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 2020, 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.

Pitcher Partners is an association of independent firms.

ABN 17 795 780 962.
An independent New South Wales Partnership.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CADENCE CAPITAL LIMITED

Independent Auditor’s Report
To the Members of Cadence Capital Limited
ABN 17 112 870 096

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.

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.

As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the financial report, whether due
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. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as
intentional omissions,
involve collusion,
misrepresentations, or the override of internal control.

fraud may

forgery,

• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by the Directors.

• Conclude on the appropriateness of the Directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
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, 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
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 continue as a
going concern.

• Evaluate the overall presentation, structure and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.

Pitcher Partners is an association of independent firms.

ABN 17 795 780 962.
An independent New South Wales Partnership.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CADENCE CAPITAL LIMITED

Independent Auditor’s Report
To the Members of Cadence Capital Limited
ABN 17 112 870 096

Auditor’s Responsibilities for the Audit of the Financial Report (Continued)

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, actions taken to eliminate threats or safeguards applied.

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.

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 2020. In our opinion, the Remuneration Report of Cadence Capital
Limited, for the year ended 30 June 2020, complies with section 300A of the Corporations Act
2001.

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

30 September 2020

Pitcher Partners
Sydney

Pitcher Partners is an association of independent firms.

ABN 17 795 780 962.
An independent New South Wales Partnership.

CADENCE CAPITAL LIMITED ANNUAL REPORT 2020 | A.B.N. 17 112 870 096

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 2020)

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

24,168,605

7.96

Distribution of shareholdings (as at 31 August 2020)