CADENCE OPPORTUNITIES FUND
LIMITED
A.B.N. 37 627 359 166
ANNUAL REPORT
FOR THE YEAR ENDED
30 JUNE 2022
CONTENTS
Company Particulars
Manager’s Report
Top 20 Positions
Directors’ Report to Shareholders
2
3
5
6
Auditor’s Independence Declaration
12
Statement of Profit or Loss and Other Comprehensive Income
13
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
14
15
16
17
34
35
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
COMPANY PARTICULARS
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
DIRECTORS:
Karl Siegling
Wayne Davies
Susan Oakes
Jolanta Masojada (Appointed 24 September 2021)
SECRETARY:
Wayne Davies
MANAGER OF THE COMPANY:
Cadence Asset Management Pty Limited
ABN: 68 106 551 062
REGISTERED OFFICE:
CONTACT DETAILS:
PRIME BROKER:
SHARE REGISTRAR:
AUDITORS:
ASX CODE:
Level 11, 131 Macquarie Street
Sydney, NSW 2000
Level 11, 131 Macquarie Street
Sydney, NSW 2000
Telephone: (02) 8298 2450
Fax: (02) 8298 2499
Email:
Website:
info@cadencecapital.com.au
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
BNP Paribas
10 Harewood Avenue
London NW1 6AA
Boardroom Pty Limited
Mail Address: GPO Box 3993, Sydney NSW 2001
Telephone:
Fax:
(02) 9290 9600
(02) 9279 0664
For all enquiries relating to shareholdings, dividends
(including participation in the Dividend Reinvestment
Plan) and related matters, please contact the share
registrar.
Pitcher Partners Sydney
Level 16 Tower 2, Darling Park
201 Sussex St
Sydney, NSW 2000
Cadence Opportunities Fund Limited
Ordinary Shares (CDO)
COUNTRY OF INCORPORATION:
Australia
2
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
MANAGER’S REPORT
SUMMARY OF RESULTS
• Fund gross performance of +1.5%, outperforming All Ordinaries Accumulation Index by 9.0%
• Past two years the fund is up 41.9% p.a., outperforming the index by 32.1% p.a.
• 7.5c fully franked final dividend
• 25% increase on last year’s ordinary dividends
• Annualised yield of 6.3% fully franked (8.9% gross including franking)
• DRP will be operating at 5% discount for the final dividend
• Statutory loss after tax of $1.5m
COMPANY PERFORMANCE
Cadence Opportunities Fund Limited (ASX: CDO) ended the financial year with the fund up 1.5%,
outperforming the All Ordinaries Accumulation Index by 9.0%. Over the past two years the fund is up
41.9% per annum, outperforming the index by 32.1% per annum. The top contributors to performance
during the financial year were Whitehaven Coal, Upstart Holdings, TMC The Metals Company, Tuas,
Terracom, DigitalOcean Holdings and Stanmore Coal. The largest detractors from performance were
Nitro Software, Betmakers Technology, Bed Bath and Beyond, Sofi Technologies and Aussie
Broadband.
Trading opportunity is cyclical. This year saw a marked skew between trading opportunities in the first
half of the financial year and significantly less trading opportunity in the second half. The last year has
seen significant trend changes across stock markets, interest rates, inflation, energy prices and
commodity prices. This has led to very different types of stocks performing well in 2022 compared to
2021. The fund's portfolio composition has changed significantly over the past 2 years and entering
the 2023 financial year. Sectors with strong pricing power in an inflationary period are performing very
well.
The graph below details the movement of Pre-Tax NTA from 30 June 2021 to 30 June 2022.
DIVIDENDS
The Company announced a 7.5 cents per share fully franked final dividend, being a 25% increase on
last year’s ordinary dividends. This is a 25% increase on the previous year’s ordinary dividends of
12.0 cents per share reflecting the strong performance of the fund over the past few years and the
build-up of profit reserves. This full year dividend of 15.0 cents per share fully franked equates to a
6.3% fully franked yield or an 8.9% gross yield (grossed up for franking credits) based on the share
3
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
price of $2.40 per share on the date of the dividend announcement. After paying this dividend the fund
still has 44 cents per share of profits reserves to pay future dividends.
The Ex-Date for the dividend is the 17th October 2022. The payment date for the dividend is the 28th
October 2022.
The Dividend Re-Investment Plan (“DRP”) is in operation for the year-end dividend. The issue price
will be at a 5% discount to the weighted average of the prevailing share price over the relevant DRP
pricing period. If you are not registered for the DRP and you would like to participate, please contact
Boardroom on 1300 737 760.
OUTLOOK
The fund has navigated a volatile environment over the year as we saw significant falls in many equity
markets in the second half of the year. Following our scaling process, we have seen exposure reduce
and cash levels build as we preserve our capital for future opportunities.
Importantly, future interest rate expectations have changed dramatically. One year ago, the Reserve
Bank of Australia forecast 0% cash rates until 2024. Now the market expects cash rates over 3% by
the end of 2022. This will be one of the most important trends to monitor in determining the direction
of future asset prices.
The fund has started 2023 in a strong position with high cash and liquidity levels and a market which
has started to offer more trading opportunities. We continue to focus on implementing the Cadence
process that has served us well through market cycles.
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
at
to
https://www.cadencecapital.com.au/newsletter-cdo/.
updates
register
receive
regular
you
to
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
4
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
TOP 20 POSITIONS AS AT 30 JUNE 2022
LONG AND SHORT POSITIONS
Long Positions
Company Name Exposure % of
BHP
WHC
NHC
AGL
TER
AMP
SMR
WEB
9988 HK
WDS
STO
BCB
FLT
BHP Group Ltd
Whitehaven Coal Ltd
New Hope Corp Ltd
AGL Energy Ltd
Terracom Ltd
AMP Ltd
Stanmore Coal Ltd
Webjet Ltd
Alibaba Group Holding Ltd
Woodside Energy Group Ltd
Santos Ltd
Bowen Coking Coal Ltd
Flight Centre Travel Group
$ Equity
$1,916,640
5.47%
$1,792,252
5.12%
$1,436,748
4.10%
$1,341,863
3.83%
$1,150,040
3.29%
$773,550
2.21%
$771,334
2.20%
$640,800
1.83%
$640,475
1.83%
$638,838
1.82%
$593,600
1.70%
$529,690
1.51%
$520,800
1.49%
Short Positions
Company Name
FMG
TGH US
MIN
NXT
TSM US
SGM
AMR US
Fortescue Metals Group Ltd
Textainer Group Holdings Ltd
Mineral Resources Ltd
NextDC Ltd
Taiwan Semiconductor Manufacturing Co Ltd
Sims Ltd
Alpha Metallurgical Resources Inc
Exposure
$
$675,256
$661,224
$659,851
$558,600
$532,998
$498,468
$495,790
% of
Equity
1.93%
1.89%
1.88%
1.60%
1.52%
1.42%
1.42%
Total Top 20 Long and Short Positions Exposure $8,664,442 24.75%
TOTAL PORTFOLIO POSITIONS:
Portfolio Net Exposure Long Positions
$17,303,199 49.43%
Portfolio Net Exposure Short Positions
$7,764,124 22.18%
Total Portfolio Net Exposure
$9,539,076 27.25%
5
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED
30 JUNE 2022
The Directors of Cadence Opportunities Fund Limited (“the Company”) submit herewith their report together
with the financial report of Cadence Opportunities Fund Limited for the financial year ended 30 June 2022.
PRINCIPAL ACTIVITY
The principal activity of the Company is 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 $2,584,749 (2021: operating
profit before tax of $7,960,519) and an operating loss after tax of $1,520,202 (2021: operating profit after tax
of $5,594,046).
REVIEW OF OPERATIONS
Investments are valued continuously to market value. For the year ended 30 June 2022, net investments
were valued at $13,078,908 (2021: $19,660,386). 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 year ended was $35,008,765 (2021:
$21,965,936).
DIVIDENDS PAID OR RECOMMENDED
The Board have declared a 7.5 cent per share fully franked final dividend payable on the 28 October 2022.
The Ex-Date for the dividend is 17 October 2022.
Dividends paid are as follows:
1,129,373
Fully franked 2022 interim dividend of 7.5 cents per share was paid on 14 April 2022
1,103,621
Fully franked 2021 final dividend of 12.0 cents per share was paid on 29 October 2021
Fully franked 2021 special dividend of 3.0 cents per share was paid on 29 October 2021 275,905
311,052
Fully franked 2020 final dividend of 6.0 cents per share was paid on 16 October 2020
$
DIRECTORS
The names of the Directors of Cadence Opportunities Fund Limited who held office during or since the end
of the financial year are:
Karl Siegling
Wayne Davies
Susan Oakes
Jolanta Masojada (Appointed 24 September 2021)
The following persons were Directors of the Company during the financial year and up to the date of this
report:
INFORMATION ON DIRECTORS
Karl Siegling (Chairman)
Karl Siegling has 29 years investment experience in the financial sector both in Australia and overseas. He
holds a Bachelor of Commerce and a Law degree from the University of Melbourne and a MBA from
INSEAD in France. Karl holds a Post Graduate Diploma in Finance with the Securities Institute of Australia
(FINSIA). He commenced work in the Financial Services sector in Australia with Deutsche Morgan Grenfell,
trading overnight currencies, bonds and bond options on the Sydney Futures Exchange. He then worked
within the Equities Research Division of Deutsche Morgan Grenfell before studying an 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.
6
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED
30 JUNE 2022
INFORMATION ON DIRECTORS (Continued)
Karl Siegling (Chairman)(Continued)
Karl has been the Chairman and Managing Director of Cadence Asset Management Pty Limited (the
Manager), for 18 and a half years. Karl is also a Director of Cadence Capital Limited. Karl has been the
Chairman and Managing Director of Cadence Capital Limited for 16 and a half years. Karl has been a
Director of the Company for the past 4 years.
Wayne Davies (Non-Executive Director and Company Secretary)
Wayne Davies has over 20 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 15 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 has been a Director of
Cadence Capital Limited for the past 8 and a half years. Wayne has been a Director of the Company for the
past 4 years. Wayne is a member of the Audit & Risk Committee and a member of the Nomination and
Remuneration Committee.
Susan Oakes (Non-executive Director)
Susan Oakes has over 30 years financial services industry experience. Susan has worked in trading room
roles in Sydney, London and New York. Susan is a former director and business head at Merrill Lynch and
has also worked as a risk consultant at the Commonwealth Bank of Australia.
Susan has worked in trading roles at Genesis Proprietary Trading, Phoenix Trading Group, Aliom Holdings
Limited & TransMarket Group. Susan possesses extensive experience and knowledge in trading and
portfolio management. Susan Oakes holds an MBA from the Australian Graduate School of Management,
UNSW, specialising in business risk and is also a graduate member of the Australian Institute of Company
Directors (GAICD). Susan has been a Director of the Company for the past four years. Susan is the
chairman of the Audit & Risk Committee and a member of the Nomination and Remuneration Committee.
is Principal of MasMarket Advisers, providing strategic
Jolanta Masojada (Non-executive Director) (Appointed 24 September 2021)
Jolanta Masojada
investor relations and
communications advice to listed companies. She has more than 25 years’ experience in financial markets
and equity research in the media and technology sectors in Australia and the US. Jolanta was formerly
Director of Equity Research at Credit Suisse and Deutsche Bank, with previous roles at Macquarie Bank and
Pierson Sal. Oppenheim in New York.
Jolanta is a graduate of the University of KwaZulu-Natal and Cambridge University. She is a Non-Executive
Director of Bailador Technology Investments (ASX:BTI), a fellow of the Financial Services Institute of
Australasia, a graduate of the Australian Institute of Company Directors and a Certified Investor Relations
Officer (CIRO) of the Australasian Investor Relations Association (AIRA). Jolanta is the chairman of the
Nomination and Remuneration Committee and a member of the Audit & Risk Committee.
COMPANY SECRETARY
Wayne Davies held the position of Company Secretary at the end of the financial year.
DIRECTORS’ MEETINGS
No. eligible to attend
Attended
Karl Siegling (Chairperson)
Wayne Davies
Susan Oakes
Jolanta Masojada (Appointed 24/09/2021)
5
5
5
4
5
5
5
4
AUDIT COMMITTEE MEETINGS
No. eligible to attend
Attended
Susan Oakes (Chairperson)
Jolanta Masojada (Appointed 24/09/2021)
Wayne Davies
2
1
2
2
1
2
7
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED
30 JUNE 2022
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for each Director of Cadence Opportunities Fund
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.
2022
Short-term Employee Benefits -
Directors Fees:
Susan Oakes
Jolanta Masojada
Wayne Davies
2021
Short-term Employee Benefits -
Directors Fees:
Susan Oakes
Wayne Davies
Cash Salary
Superannuation
$
$
Total
$
23,864
20,455
11,932
56,251
2,386
2,045
1,193
5,624
26,250
22,500
13,125
61,875
Cash Salary
$
Superannuation
$
Total
$
13,698
6,850
20,548
1,302
650
1,952
15,000
7,500
22,500
The following table reflects the Company's performance and Director's remuneration since the Company’s
inception:
2022
2021
2020
2019
Operating(loss)/profit after tax($)
Dividends (cents per share)
NTA after tax ($ per share)
Total directors remuneration($)
Shareholders equity($)
(1,520,202)
15.0
2.30
61,875
35,008,765
5,594,046
15.0
2.44
22,500
21,965,936
1,540,980
6.0
1.64
22,500
8,429,424
293,394
-
1.32
11,250
5,853,444
(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 Opportunities Fund Limited. In its capacity
as Manager, Cadence Asset Management Pty Limited was paid a management fee of $488,153 (inclusive of
GST) (2021: $256,190). This is equivalent to 0.125% 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
1.25% of the gross value of the portfolio per annum. As at 30 June 2022, the management fee payable to the
Manager was $39,741 (2021: $29,011).
8
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED
30 JUNE 2022
REMUNERATION REPORT (Continued)
(b) Director Related Entities Remuneration (Continued)
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 15% (plus GST) of the amount of the increase in the value of the portfolio.
No performance fee is payable in respect of any performance period, where the portfolio has decreased in
value over that period. For the year ended 30 June 2022 no performance fee was earned by Cadence Asset
Management Pty Limited (2021: $1,721,228 (inclusive of GST)). As at 30 June 2022, no performance fee
was payable to the Manager (2021: $1,721,228).
Cadence Asset Management Pty Limited employs accounting personnel to provide accounting services to
Cadence Opportunities Fund Limited. These services are provided on commercial terms and include a
standard charge of $4,180 (inclusive of GST) per month and an additional charge of $6,600 (inclusive of
GST) is charged for preparing the half year and full year financial statements. As at 30 June 2022, the
balance payable to the Manager for these services was $6,600 (2021: $3,500).
(c) Compensation Practices
The Board from time to time determines remuneration of Non-Executive Directors within the maximum
amount approved by the shareholders. Non-Executive Directors are not entitled to any other remuneration.
Fees and payments to Non-Executive Directors reflect the demands that are made on and the
responsibilities of, the Directors and are reviewed annually by the Board. The Company determines the
remuneration levels and ensures they are competitively set to attract and retain appropriately qualified and
experienced Directors.
Directors’ base fees are presently limited to a maximum of $100,000 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.
(d) Shareholdings
The Company’s key management personnel (KMP) directly and indirectly held the following shares in the
Company:
Acquisitions
Disposals
Shareholdings
Karl Siegling
Wayne Davies
Jolanta Masojada
Susan Oakes
Balance at
1 July 2021
2,739,555
113,736
-
2,883,014
29,723
390,256
9,540
10,824
2,493
413,113
-
-
-
-
-
Balance at
30 June 2022
3,129,811
123,276
10,824
32,216
3,296,127
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. There have been no other changes in
KMP interests between balance date and the date of this report.
End of Remuneration Report.
9
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED
30 JUNE 2022
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The Company raised $15.5 million and listed and started trading on the ASX under the ticker CDO on Friday
19th November 2021.
EVENTS AFTER THE REPORTING PERIOD
The Board have declared a 7.5 cent per share fully franked final dividend payable on the 28 October 2022.
The Ex-Date for the dividend is 17 October 2022.
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 paid 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 year, 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.
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 Sydney, the Company’s auditor, did perform 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
(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.
10
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
DIRECTORS’ REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED
30 JUNE 2022
CORPORATE GOVERANCE STATEMENT
The Company’s Corporate Governance Statement for the year ended 30 June 2022 is provided on the
Company’s website at https://cadencecapital.b-cdn.net/wp-content/uploads/2022/09/CDO-Corp-Governance-
Statement-September-2022-updated.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 26 September 2022
11
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
Auditor’s Independence Declaration
To the Directors of Cadence Opportunities Fund Limited
A.B.N. 37 627 359 166
In relation to the independent audit of the financial report of Cadence Opportunities Fund
Limited for the year then ended 30 June 2022, 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
26 September 2022
Adelaide Brisbane Melbourne Newcastle Perth Sydney
12
Pitcher Partners is an association of independent firms.
An independent New South Wales Partnership. ABN 17 795 780 962. Liability limited by a scheme approved under Professional
Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which
are separate and independent legal entities.
pitcher.com.au
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
INCOME
Net realised and unrealised (loss)/gain on investments
Dividends received
Interest received
Other income
Total (Loss)/Income
EXPENSES
Finance costs
Brokerage expenses on share purchases
Directors fees
Dividends on short positions
Stock loan fees
Custody fees
Audit and taxation fees
Management fees
Performance fees
ASX Fees
Registry fees
Legal fees
Other expenses from ordinary activities
Total Expenses
Note
s
2022
$
(2,364,981)
1,342,435
11,226
-
(1,011,320)
(91,527)
(594,816)
(61,875)
(58,035)
(38,755)
(46,800)
(60,917)
(454,870)
-
(100,153)
(29,393)
-
(36,288)
(1,573,429)
2
2021
$
10,216,240
72,523
2,046
20,196
10,311,005
(54,918)
(287,006)
(22,500)
(495)
(6,854)
(64,825)
(42,173)
(238,723)
(1,603,871)
-
(11,756)
(9,307)
(8,058)
(2,350,486)
(Loss)/Profit before income tax
(2,584,749)
7,960,519
Income tax benefit/(expense)
3(a)
1,064,547
(2,366,473)
(Loss)/ Profit attributable to members of the Company
(1,520,202)
5,594,046
Other comprehensive income
Other comprehensive income for the year, net of tax
-
-
Total comprehensive (loss)/ income for the year
(1,520,202)
5,594,046
Basic (loss)/ earnings per share
Diluted (loss)/ earnings per share
12
12
(11.6) cents
75.2 cents
(11.6) cents
75.2 cents
The accompanying notes form part of these financial statements.
13
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit or loss
Current tax asset
Deferred tax asset
TOTAL ASSETS
LIABILITIES
Cash overdrafts
Trade and other payables
Financial liabilities at fair value through profit or loss
Current tax liability
Deferred tax liability
Note
11(a)
5
6
3(d)
3(b)
11(a)
7
8
3(d)
3(c)
2022
$
24,024,178
2,857,497
20,843,032
56,203
332,239
2021
$
11,404,356
3,036,586
21,396,111
-
14,572
48,113,149
35,851,625
2,502,848
2,837,412
7,764,124
-
-
7,491,825
3,220,591
1,735,725
611,359
826,189
TOTAL LIABILITIES
13,104,384
13,885,689
NET ASSETS
EQUITY
Issued capital
Profits reserve
Accumulated losses
TOTAL EQUITY
35,008,765
21,965,936
9
10
31,920,498
7,850,109
(4,761,842)
14,848,568
7,117,368
-
35,008,765
21,965,936
The accompanying notes form part of these financial statements.
14
-
-
-
-
-
-
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 17 112 870 096
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
Issued capital
Note
$
Accumulated
losses
$
Profits
reserve
$
Total equity
$
Balance at 1 July 2020
6,595,050
-
1,834,374
8,429,424
Profit for the year
Transfer to profits reserve
10
5,594,046
-
5,594,046
(5,594,046)
5,594,046
Other comprehensive income
for the year
Transactions with owners:
Shares issued (net of costs)
Dividend paid
Balance at 30 June 2021
14,848,568
9
4
8,253,518
18,294,586
-
-
-
18,294,586
(311,052)
(311,052)
7,117,368
21,965,936
Loss for the year
Transfer to profits reserve
10
(1,520,202)
-
(1,520,202)
(3,241,640)
3,241,640
Other comprehensive income
for the year
Transactions with owners:
Shares issued (net of costs)
Shares issued via DRP
Dividends paid
9
9
4
15,908,480
1,163,450
-
(2,508,899)
(2,508,899)
Balance at 30 June 2022
31,920,498
(4,761,842)
7,850,109
35,008,765
The accompanying notes form part of these financial statements.
15
-
-
8,253,518
-
-
15,908,480
1,163,450
-
-
-
-
-
-
-
-
-
-
-
-
-
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
Note
2022
$
2021
$
CASH FLOWS FROM OPERATING ACTIVITIES
Proceeds from the sale of investments
Payments for the purchase of investments
Dividends received
Interest received
Other income received
Management fees paid
Performance fees paid
Brokerage expenses on share purchases
Dividends on shorts
Finance costs
Income tax paid
Administration expenses paid
NET CASH GENERATED BY/ (USED IN)
OPERATING ACTIVITIES
11(b)
CASH FLOWS FROM FINANCING ACTIVITIES
NET CASH PROVIDED BY FINANCING
ACTIVITIES
NET INCREASE IN CASH AND CASH
EQUIVALENTS HELD
CASH AND CASH EQUIVALENTS AS AT
BEGINNING OF THE FINANCIAL YEAR
CASH AND CASH EQUIVALENTS AS AT
END OF THE FINANCIAL YEAR
11(a)
138,001,697
(140,542,923)
70,340
2,046
20,196
(342,619)
(83,300)
(287,006)
(495)
(54,918)
(1,627,621)
(257,262)
347,319,175
(341,439,805)
1,343,547
11,226
-
(444,140)
(1,603,871)
(594,816)
(51,928)
(91,527)
(666,275)
(355,222)
(
1
7
4
0
2
0
,
,
2
,
3
0
0
5
(
4
4
4
,
3
0
(
6
1
2
4
8
(
9
,
2
3
2
6
9
(
,
,
8
2
5
6
(
3
7
3
4
1
4
0
(
,
)
,
9
9
0
2
0
(
9
)
5
)
5
0
1
1
)
7
6
,
8
,
)
6
)
2
2
6
7
2
,
)
6
2
1
)
3,426,364
(5,101,865)
14,182,435
8,233,618
17,608,799
3,131,753
6
3,912,531
780,778
21,521,330
3,912,531
0
1
,
1
4
6
Net Proceeds from shares issued 15,527,884
Dividends paid (1,345,449)
8,544,670
(311,052)
NON-CASH TRANSACTIONS:
Shares issued via dividend reinvestment plan
11(c)
1,163,471
-
The accompanying notes form part of these financial statements.
16
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Cadence Opportunities Fund 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 statement of financial position is presented on a liquidity basis. Assets and liabilities are presented in
decreasing order of liquidity and do not distinguish between current and non-current. The Company
manages financial assets and financial liabilities at fair value through profit or loss based on the economic
circumstances at any given point in time, as well as to meet any liquidity requirements.
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 statements are presented in Australian dollars, which is the Company's functional and
presentation currency.
The financial report was authorised for issue on 26 September 2022 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.
17
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(a) Investments (Continued)
ii) Recognition and Initial Measurement (Continued)
Financial assets are classified and measured at fair value with changes in value being recognised in the
profit or loss.
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 expired. 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
18
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Income Tax (Continued)
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.
(c) Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other
short-term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For
the statement of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts,
which are shown within the current liabilities on the statement of financial position.
(d) Trade and Other Receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method, less provision for expected credit loss. Trade and other receivables
are generally due for settlement within 30 days. They are presented as current assets unless collection is
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
19
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(i) Segment Reporting(Continued)
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.
(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
period ended 30 June 2022 (2021: none). 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) Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
(p) 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 1 July 2021 that has had a material impact on the accounts
recognised in the prior periods or will affect the current or future periods.
20
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(q) New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations have been issued but are not yet
effective at 30 June 2022. These have not been early adopted in preparing these financial statements and
are not expected to have a material impact when adopted.
2. AUDITOR’S REMUNERATION
Remuneration of the auditor of the Company for:
Audit and review the financial report
Non-audit Services
Other services provided by a related practice of the auditor:
Taxation services
2022
$
2021
$
53,098
27,026
7,819
60,917
15,147
42,173
3. TAXATION
(a) Current Income Tax (Benefit)/ Expense
The prima facie tax on (loss)/ profit from ordinary activities before income tax is reconciled to the income tax
(benefit)/ expense as follows:
Prima facie tax (benefit)/ expense on (loss)/ profit from
ordinary activities before income tax at 30%
Imputation credit gross up
Franked dividends receivable – prior year
Franked dividends receivable – current year
Other
Prior year under/ (over)
(775,425)
129,590
-
(431,967)
13,255
-
(1,064,547)
2,388,157
(15,228)
389
-
(6,000)
(845)
2,366,473
Effective tax rate
(41.2%)
29.7%
The effective tax rate for FY2022 is -41.2% reflecting the benefit to the Company of franking credits received on
dividend income during the year.
Total income tax expense results in a:
Current tax (asset)/ liability
Movement in deferred tax assets/liabilities
Other
(b) Deferred Tax Asset
Provisions
Capitalised share issue costs
Fair value adjustment
Tax losses
Movement in deferred tax asset
Balance at the beginning of the year
Credited to the profit or loss
Charged to equity
(56,203)
(1,079,383)
71,039
(1,064,547)
11,683
55,244
83,690
181,622
332,239
14,572
317,667
-
332,239
611,358
1,755,115
-
2,366,473
7,494
7,078
-
-
14,572
6,303
1,191
7,078
14,572
21
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
3. TAXATION (Continued)
(c) Deferred Tax Liability
Provisions
Fair value adjustments
Movement in deferred tax liability
Balance at the beginning of the year
Debited/ (credited) to the profit or loss
(d) Current Tax Asset/ (Liability)
Movement in current tax asset/ (liability)
Balance at the beginning of the year
Current year income tax on operating profit
Income tax paid
Prior year under/(over)
4. DIVIDENDS
(a) Dividends paid
Dividends paid by the Company
2022
Dividends paid by the
Company for the year
ended 30 June 2022
Interim 2022 Ordinary
Final 2021 Ordinary
Final 2021 Special
Total Amount
2021
Dividends paid by the
Company for the year
ended 30 June 2021
Final 2020 Ordinary
Total Amount
Cents
Per
Share
7.5
12.0
3.0
Cents
Per
Share
6.0
2022
$
2021
$
-
-
-
826,189
(826,189)
-
(611,359)
-
666,275
1,287
56,203
1,627
824,562
826,189
402,325
423,864
826,189
(296,948)
(1,942,876)
1,627,621
844
(611,359)
2,508,899
311,052
Date of
payment
14 April 22
29 October 21
29 October 21
Tax Rate
for
franking
Credit
30%
30%
30%
%
franked
100%
100%
100%
Date of
payment
16 October 20
Tax Rate
for franking
Credit
30%
%
franked
100%
Total
Amount
$
1,129,373
1,103,621
275,905
2,508,899
Total
Amount
$
311,052
311,052
(b) Dividend franking account
The balance of the franking account at year end is adjusted for
franking credits and debits arising from receipts or payments of
income
from dividends
franking credits arising
receivable.
tax and
1,574,567
2,219,127
Subsequent to the reporting period, the franking account would be reduced by the proposed dividend disclosed
in (c). 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.
22
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
4. DIVIDENDS (Continued)
(c) Dividends not recognised during the period
Since the end of the year the Directors have declared a fully franked final dividend of 7.5 cents per share
payable on 28 October 2022. The Ex-Date for the dividend is 17 October 2022.
5. TRADE AND OTHER RECEIVABLES
Trade debtors
Income receivable
GST receivable
Miscellaneous receivable
2022
$
2,824,251
4,311
28,935
-
2,857,497
2021
$
2,888,451
5,423
137,212
5,500
3,036,586
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 2 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, therefore no expected
credit loss has been recognised.
6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Long positions - held for trading financial assets
Listed Investments at fair value
Swap positions at fair value
Unlisted Investments at fair value
7. TRADE AND OTHER PAYABLES
Trade creditors
Dividends payable on shorts
Sundry creditors - related parties
Sundry creditors - other
20,655,288
187,744
-
20,843,032
21,201,634
-
194,477
21,396,111
2,741,771
6,107
46,341
43,193
2,837,412
1,143,098
-
1,750,788
326,705
3,220,591
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 2 days of the purchase
being executed.
Sundry creditors – related parties, includes fees payable of $46,341 (inclusive of GST) (2021: $1,750,788) to
the manager, Cadence Asset Management Pty Limited.
Sundry creditors – other, are settled within the terms of payment offered, which is usually within 30 days.
8. FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
Short positions - held for trading financial liabilities:
Listed investments at fair value
7,764,124
1,735,725
The Company’s Financial Assets and Cash are used as collateral for its Financial Liabilities. Refer to Note
13(b) for further information on Credit Risk.
23
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
9. ISSUED CAPITAL
(a) Paid-up Capital
Ordinary shares fully paid
Capitalised share issue costs
Deferred tax asset on capitalised share issue costs
2022
Date
Balance at the
beginning of the year
1 July 2021
1 August 2021
29 October 2021
19 November 2021
14 April 2022
2021
Date
Balance at the
beginning of the year
1 September 2020
1 October 2020
1 November 2020
1 December 2020
1 January 2021
16 January 2021
1 March 2021
1 April 2021
1 June 2021
Details
Placement
Placement
DRP
IPO
DRP
Details
Placement
Placement
Placement
Placement
Placement
Buy-Back
Placement
Placement
Placement
2022
$
32,129,200
(298,146)
89,444
31,920,498
2021
$
14,869,214
(29,494)
8,848
14,848,568
Share Price
$
No. of
Shares
Issue value
$
$2.5983
$2.5763
$2.8210
$2.7716
$2.5729
8,984,340
115,459
97,038
252,232
5,609,228
175,648
15,233,945
14,869,214
300,000
250,000
711,547
15,546,536
451,903
32,129,200
Share Price
$
No. of
Shares
Issue value
$
$2.048
$2.066
$2.061
$2.184
$2.234
$2.291
$2.377
$2.389
$2.559
5,135,367
48,840
24,207
1,143,554
2,503,613
223,804
(214,139)
42,065
41,853
35,176
8,984,340
6,595,050
100,000
50,000
2,356,865
5,467,891
500,000
(490,592)
100,000
100,000
90,000
14,869,214
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. In the event of the winding up of the Company, ordinary
shareholders rank after creditors and share in any proceeds on winding up in proportion to the number of
shares held.
(b) Capital Management
Management controls the capital of the Company in order to maintain a good debt to equity ratio, provide the
shareholders with adequate returns and ensure that the Company can fund its operations and continue as a
going concern. The Company’s debt and capital includes ordinary share capital and financial liabilities,
supported by financial assets.
Management effectively manages the Company’s capital by assessing the Company’s financial risks and
adjusting its capital structure in response to changes in these risks and in the market. These responses
include the management of debt levels, distributions to shareholders and share issues. There has been no
change in the strategy adopted by the Board to control the capital of the Company. The Company is not
subject to any externally imposed capital requirements.
On 19 November 2021, the Company completed a successful capital raise of $15.5 million and listed on the
ASX under the ticker CDO.
24
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
10. PROFITS RESERVE
Profits Reserve
Movement in Profits Reserve
Opening balance
Transfer from current years earnings
Dividends paid (Note 4)
2022
$
7,850,109
2021
$
7,117,368
7,117,368
3,241,640
(2,508,899)
7,850,109
1,834,374
5,594,046
(311,052)
7,117,368
The Profit Reserve is made up of amounts transferred from current and retained earnings that are preserved
for future dividend payments.
11. CASH FLOW INFORMATION
(a) Reconciliation of cash
Cash at the end of the year as shown in the Statement of Cash Flows is reconciled to the related items in the
Statement of Financial Position as follows:
Cash and cash equivalents
Cash overdrafts
24,024,178
(2,502,848)
21,521,330
11,404,356
(7,491,825)
3,912,531
The weighted average interest rate for cash and cash equivalents as at June 2022 is 0.78% (June 2021:
0.04%). The weighted average interest rate for cash overdrafts as at June 2022 is 2.50% (June 2021:
0.95%). The Company has Prime Brokerage facilities, including lending, and Custody arrangements with
BNP Paribas. 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)/ profit after income tax
Movement in fair value on financial assets and liabilities
(1,520,202)
6,581,478
5,594,046
(10,734,241)
Changes in assets and liabilities:
Increase in trade and other receivables
Increase in trade and other payables
Increase in current tax liability
Increase in deferred tax asset
Increase in deferred tax liability
Net cash used in by Operating Activities
61,732
34,178
(836,063)
(68,570)
(826,189)
3,426,364
(2,509,030)
1,808,506
314,411
(8,269)
432,712
(5,101,865)
(c) Non-cash Financing Activities
During the financial year the Company issued the following shares through its Dividend Reinvestment Plan:
- 252,232 shares at $2.8210 on 29 October 2021
- 175,648 shares at $2.5729 on 14 April 2022
The Company issued no shares through its Dividend Reinvestment Plan during the previous financial year.
25
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
12. EARNINGS PER SHARE
Basic (loss)/ earnings per share
(Loss)/ Profit after income tax used in the calculation of
earnings per share
Weighted average number of ordinary shares outstanding
during the year used in calculation of basic earnings per share
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:
Weighted average number of ordinary shares used in calculation
of basic earnings per share
Add:
2022 Cents
per share
(11.6)
2022
$
2021 Cents
per share
75.2
2021
$
(1,520,202)
5,594,046
No.
No.
13,097,310
7,436,796
13,097,310
7,436,796
13,097,310
7,436,796
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
13,097,310
7,436,796
13. 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,
sub-custodian and broker) will be unable to pay amounts in full when due. The maximum exposure to credit
risk by class of recognised financial assets at the end of the reporting period excluding the value of any
collateral or other security held, is equivalent to the carrying amount and classification of those financial
assets (net of any provisions) as presented in the statement of financial position.
All transactions in listed securities are settled /paid for upon delivery using approved brokers. The risk of
default is considered minimal, as delivery of securities sold is only made once the broker has received
payment. Payment is made on a purchase once the securities have been received by the broker. The trade
will fail if either party fails to meet their obligation.
26
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
13. 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 BNP Paribas. There is no guarantee that these or any sub-custodian that BNP Paribas
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 BNP Paribas 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 BNP Paribas’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 price 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. The Company monitors its gross
and net exposures to the market on a daily basis.
(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.
27
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
13. FINANCIAL RISK MANAGEMENT (Continued)
(e) Foreign Currency Risk (Continued)
The following table summarises the net amount of assets and liabilities which are denominated in currencies
that the Company is significantly exposed to:
United States Dollar (USD1 =AUD1.44885) 2022 2021
Investments
Cash/ (Bank Overdraft)
USD(4,957,898)
USD1,659,080
USD(1,787,036)
USD(127,956)
USD5,132,905
USD175,007
Canadian Dollar (CAD1 =AUD1.12550)
Investments
Cash/ (Bank Overdraft)
CAD(1,064,010)
CAD701,690
CAD(362,320)
0
CAD(38,063)
CAD(38,063)
(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.
2022
Weighted
Average
Interest Rate
Interest Bearing
More than
1 year
$
Less than
90 days
$
Non-interest
bearing
$
Total
$
-
-
-
-
-
-
-
-
-
0
20,843,032
-
2,824,251
33,246
23,700,529
20,843,032
24,024,178
2,824,251
33,246
47,724,707
7,764,124
-
2,741,771
95,641
7,764,124
2,502,848
2,741,771
95,641
10,601,536
13,104,384
Assets
Financial assets
Cash and cash equivalents
Trade Debtors(<90 days)
Other receivables
Total assets
-
24,024,178
-
-
24,024,178
-
0.78%
-
-
Liabilities
Financial liabilities
Cash overdrafts
Trade Creditors(<90 days)
Other payables
-
2,502,848
-
-
-
2.50%
-
-
Total liabilities
2,502,848
28
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
13. FINANCIAL RISK MANAGEMENT (Continued)
(g) Financial instrument composition and maturity analysis (Continued)
2021
Weighted
Average
Interest Rate
Interest Bearing
More than
1 year
$
Less than
90 days
$
Assets
Financial assets
Cash and cash equivalents
Trade Debtors(<90 days)
Other receivables
Total assets
-
11,404,356
-
-
11,404,356
-
0.04%
-
-
Liabilities
Financial liabilities
Cash overdrafts
Trade Creditors(<90 days)
Other payables
-
7,491,825
-
-
-
0.95%
-
-
Total liabilities
7,491,825
-
-
-
-
-
-
-
-
-
-
Non-
interest
bearing
$
Total
$
21,396,111
-
2,888,451
148,135
24,432,697
21,396,111
11,404,356
2,888,451
148,135
35,837,053
1,735,725
-
1,143,098
2,077,493
1,735,725
7,491,825
1,143,098
2,077,493
4,956,316
12,448,141
Other payables are expected to be paid as follows:
- Less than 6 months
- 6 months to one year
2022
$
95,641
-
2021
$
2,077,493
-
(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:
Level 3:
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).
Inputs for the asset or liability are not based on observable market data (unobservable
inputs).
Included within Level 1 of the hierarchy are listed investments. The fair values of these financial assets and
liabilities have been based on the closing quoted last prices at the end of the reporting period, excluding
transaction costs.
Investments included in Level 2 of the hierarchy include amounts in relation to Contracts for Difference,
Financial Liabilities, Initial Public Offerings and Placements in which the Company has subscribed to during
the year. The fair value of Contracts for Difference and Financial Liabilities have been determined using
market inputs of the underlying investments. Initial Public Offerings and Placements are investments that
have not listed on the Australian Stock Exchange as at 30 June 2022 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.
29
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
13. FINANCIAL RISK MANAGEMENT (Continued)
(h) Financial Instruments Measured at Fair Value
30 June 2022
Financial assets
Financial liabilities
Total
30 June 2021
Financial assets
Financial liabilities
Total
Level 1
$
20,655,288
(7,764,124)
12,891,164
Level 2
$
187,744
-
187,744
Level 3
$
Total
$
-
-
-
20,843,032
(7,764,124)
13,078,908
Level 1
$
20,451,635
(1,735,725)
Level 2
$
749,999
-
Level 3
$
194,477
-
Total
$
21,396,111
(1,735,725)
18,715,910
749,999
194,477
19,660,386
In 2021 the Level 3 asset class was composed of a pre-IPO investment. DeepGreen Metals Inc was valued
at the weighted average cost of purchases. This investment listed and was sold in the financial year 2022.
(i) Sensitivity Analysis
The Company has performed a sensitivity analysis relating to its exposure to interest rate risk, foreign
currency risk and market price 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 (loss)/ profit and equity as a result of changes in the
interest rate, with all other variables remaining constant would be as follows:
Change in (loss)/ 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%
2022
$
2021
$
(32,070) (41,126)
32,070 41,126
(22,449) (28,789)
22,449 28,789
Foreign Currency Risk Sensitivity Analysis
At 30 June 2022, the effect on (loss)/ 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 (loss)/ 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%
2022
$
2021
$
(12,792) 802
12,792 (802)
8,955
(8,955) 562
(562)
30
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
13. FINANCIAL RISK MANAGEMENT (Continued)
(i) Sensitivity Analysis (Continued)
Market Price Risk Sensitivity Analysis
At 30 June 2022, the effect on (loss)/ profit and equity as a result of changes in the market price risk, with all
other variables remaining constant would be as follows:
Change in (loss)/ 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%
2022
$
2021
$
190,782 393,208
(190,782) (393,208)
133,547 275,245
(133,547) (275,245)
14. 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
Susan Oakes
Jolanta Masojada (Appointed 24 September 2021)
Chairman
Non-Executive Director and Company Secretary
Non-Executive Director
Non-Executive Director
(a) Remuneration
There are no executives that are paid by the Company. Cadence Asset Management Pty Limited, the
investment manager of the Company provides day to day management of the Company and is remunerated
as outlined in Note 15 – Related Party Transactions.
Short-term Employee Benefits - Directors’ Fees
Post-employment Benefits - Superannuation
2022
2021
$
$
56,251
5,624
61,875
20,548
1,952
22,500
(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 $100,000 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.
31
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
14. KEY MANAGEMENT PERSONNEL COMPENSATION (Continued)
As at 30 June 2021, the Company’s key management personnel indirectly held the following shares in the
Company:
Acquisitions
Disposals
Shareholdings
Karl Siegling
Wayne Davies
Jolanta Masojada
Susan Oakes
Balance at
1 July 2021
2,739,555
113,736
-
2,883,014
29,723
390,256
9,540
10,824
2,493
413,113
-
-
-
-
-
Balance at
30 June 2022
3,129,811
123,276
10,824
32,216
3,296,127
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.
As at 30 June 2021, the Company’s key management personnel indirectly held the following shares in the
Company:
Karl Siegling
Wayne Davies
Susan Oakes
Balance at
1 July 2020
Acquisitions
Disposals
1,600,001
100,000
24,000
1,724,001
1,139,554
13,736
5,723
1,159,013
-
-
-
-
Balance at
30 June 2021
2,739,555
113,736
29,723
2,883,014
15. RELATED PARTY TRANSACTIONS
All transactions with related entities were made on normal commercial terms and conditions.
Karl Siegling is the sole Director and a beneficial owner of Cadence Asset Management Pty Limited, the
entity appointed to manage the investment portfolio of Cadence Opportunities Fund Limited. In its capacity
as Manager, Cadence Asset Management Pty Limited was entitled to a management fee of $488,153
(inclusive of GST) (2021: $256,190). This is equivalent to 0.125% 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 1.25% of the gross value of the portfolio per annum. As at 30 June 2022, the management fee payable
to the Manager was $39,741 (2021: $29,011).
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 15% (plus GST) of the amount of the increase in the value of the portfolio. No performance fee is
payable in respect of any performance period, where the portfolio has decreased in value over that period.
For the year ended 30 June 2022, no performance fee was earned by Cadence Asset Management Pty
Limited (2021: $1,721,228 (inclusive of GST)). As at 30 June 2022, no performance fee was payable to the
Manager (2021: $1,721,228).
Cadence Asset Management Pty Limited employs accounting personnel to provide accounting services to
Cadence Opportunities Fund Limited. These services are provided on commercial terms and include a
standard charge of $4,180 (inclusive of GST) per month and an additional charge of $6,600 (inclusive of
GST) is charged for preparing the half year and full year financial statements. As at 30 June 2022, the
balance payable to the Manager for these services was $6,600 (2021: $3,500).
32
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
16. EVENTS AFTER THE REPORTING PERIOD
The Board have declared a 7.5 cent per share fully franked final dividend payable on the 28 October
2022. The Ex-Date for the dividend is 17 October 2022.
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.
17. CONTINGENT LIABILITIES
There were no material contingencies as at 30 June 2022 (2021: nil).
18. CAPITAL COMMITMENTS
No capital commitments exist for placements entered into before 30 June 2022 which settle after year end.
(2021: nil).
19. SEGMENT REPORTING
The Company operates from Australia and engages in investing activities, including cash and equity
instruments. The Company continues to have foreign equity and currency exposure as part of its principal
activity in making investments in listed global securities. It has no other reportable business or geographic
segments.
33
CADENCE OPPORTUNITIES FUND LIMITED
A.B.N. 37 627 359 166
DIRECTORS’ DECLARATION
The Directors of Cadence Opportunities Fund Limited declare that:
1. The financial statements as set out in pages 13 to 33 and the additional disclosures included in the
Directors’ Report designated as ‘Remuneration Report’, as set out on pages 7 to 9 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 2022 and of its
performance for the year ended on that date;
2. The Directors have been given declaration required by section 295A of the Corporations Act 2001 from the
Manager, Cadence Asset Management Pty Limited declaring that:
(a) the financial records of the Company for the financial year have been properly maintained in
accordance with section 286 of the Corporations Act 2001;
(b) the financial statements and notes for the financial year comply with the Accounting Standards; and
(c) the financial statements and notes for the financial year give a true and fair view.
3. At the date of this declaration, in the Directors’ opinion there are reasonable grounds to believe that the
Company will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Karl Siegling
Director
Dated in Sydney, this 26th day of September 2022
34
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 Opportunities Fund Limited
ABN 37 627 359 166
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Cadence Opportunities Fund Limited (“the Company"),
which comprises the statement of financial position as at 30 June 2022, 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 Opportunities Fund Limited is in
accordance with the Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the Company’s financial position as at 30 June 2022
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
35
5
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
Independent Auditor’s Report
To the Members of Cadence Opportunities Fund Limited
ABN 37 627 359 166
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 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 “Level 1” (i.e. where the
valuation is based on quoted prices in active
markets).
Our procedures included, amongst others:
▪ Obtaining an understanding of and
evaluating the design of the investment
management processes and controls;
▪ Reviewing and evaluating the independent
auditor’s 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
auditor’s
to and where
relate
necessary obtaining bridging letters;
reports
▪ 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.
36
Independent Auditor’s Report
To the Members of Cadence Opportunities Fund Limited
ABN 37 627 359 166
Key audit matter
How our audit addressed the matter
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
key inputs.
▪ Obtaining an understanding of and
evaluating the design of the processes and
controls for calculating the management and
performance fees;
Our procedures included, amongst others:
Adjustments include company dividends, tax
payments, capital raisings, capital reductions and
other relevant expenses.
includes key
The calculation of management and performance
inputs such as portfolio
fees
movements, relevant index benchmarking and
set percentages
the
Investment Management Agreement between
the Company and the Investment Manager.
in accordance with
to
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
fees
charged in excess of those mandated under the
Investment Management Agreement).
independent
third-party
(e.g.
and
▪ Making enquiries with
the
Investment
charged with
those
Manager
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;
▪ 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 2022 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.
Independent Auditor’s Report
To the Members of Cadence Opportunities Fund Limited
ABN 37 627 359 166
Responsibilities of the Directors for the Financial Report
37
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 fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• 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.
38
Independent Auditor’s Report
To the Members of Cadence Opportunities Fund Limited
ABN 37 627 359 166
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 9 of the Directors’ Report
for the year ended 30 June 2022. In our opinion, the Remuneration Report of Cadence
Opportunities Fund Limited, for the year ended 30 June 2022, 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
26 September 2022
Pitcher Partners
Sydney
Pitcher Partners is an association of independent firms.
ABN 17 795 780 962.
An independent New South Wales Partnership.
39
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 2022)
The following shareholder’s have advised that they are a substantial shareholder of Cadence Opportunities Fund
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
Esselmont Pty Ltd & associated entities
No. of shares
3,129,811
% of total
20.54
Distribution of shareholders (as at 31
August 2021)
No. of
shareholders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
76
252
154
243
18
743
The number of shareholdings held in less than marketable parcels is 15.
40
Twenty largest shareholders - Ordinary shares (as at 31 August 2021)
Name
Esselmont Pty Ltd and associates
Ms Nicole Gallin & Mr Kyle Haynes
Mr Cameron Mcfarlane
Obtainium Pty Limited
Melacca Pty Ltd
Chillara Investments Pty Ltd
369 Exponential Pty Limited <369 Exponential A/C>
Mr Neville John Collins & Mrs Judith Mary Collins
S/F A/C>
Lazy Vee Pty Ltd
Mr Luke Ormond Keighery & Mrs Angela Keighery
A/C>
Andonandon Pty Limited
Bryan & Jean Hiscock Superannuation Pty Ltd
Mr Paul Harry Ivany & Mrs Susan Regina Ivany
Bayrule Pty Ltd
Auridium Pty Ltd
Mr Kyle Bradley Haynes
Ms Nicole Joan Gallin
Mudspec Pty Ltd
Glenn Bakyew Pty Ltd
Singapore Investments Pty Ltd
Number of
ordinary
shares
held
3,129,811
482,892
454,080
373,008
250,000
186,667
169,198
168,368
145,328
132,073
123,276
120,000
114,468
108,241
103,749
100,000
100,000
100,000
96,578
90,201
6,547,938
Percentage
of issued
capital held
20.545%
3.170%
2.981%
2.449%
1.641%
1.225%
1.111%
1.105%
0.954%
0.867%
0.809%
0.788%
0.751%
0.711%
0.681%
0.656%
0.656%
0.656%
0.634%
0.592%
42.983%
STOCK EXCHANGE LISTING
Quotation has been granted for all of the ordinary shares of the Company on all Member Exchanges of the ASX
Limited.
41