Why Cadence Opportunities Fund Maintains Dividends Despite 36% Profit Drop
Cadence Opportunities Fund Limited reported a 36% drop in profit after tax for FY2025 but maintained its fully franked final dividend at 7.0 cents per share, signaling confidence despite softer earnings.
- 36% decline in profit after tax to $1.49 million
- Revenue down 19% to $3.5 million
- Final dividend maintained at 7.0 cents per share, fully franked
- Net tangible asset backing slightly decreased to $2.04 per share
- Positive operating cash flow of $9.58 million, reversing prior year’s negative cash flow
Financial Performance Overview
Cadence Opportunities Fund Limited has released its preliminary final results for the year ended 30 June 2025, revealing a notable contraction in profitability amid a softer revenue environment. The fund’s revenue from ordinary activities declined by 19% to $3.5 million, while profit after tax fell 36% to $1.49 million compared to the previous year. This marks a significant earnings adjustment, reflecting market headwinds and investment performance challenges during the period.
Despite the earnings dip, the company has elected to maintain its final dividend at 7.0 cents per share, fully franked, consistent with the prior year’s payout. This decision underscores management’s commitment to delivering shareholder returns and confidence in the fund’s underlying cash flow generation.
Capital and Balance Sheet Highlights
The net tangible asset backing per share saw a marginal decline to $2.04 from $2.08, indicating a relatively stable asset base despite the profit contraction. The fund’s balance sheet remains robust with total assets increasing to $44.9 million, supported by cash and financial assets valued at fair market prices.
Notably, Cadence continued its on-market share buy-back program during the year, reflecting an active capital management approach aimed at enhancing shareholder value. The buy-back, approved for up to 800,000 shares, complements the dividend strategy and signals management’s confidence in the company’s valuation.
Cash Flow and Operational Insights
Operating cash flow turned positive at $9.58 million, a marked improvement from the prior year’s negative $18.5 million. This reversal suggests improved liquidity and operational efficiency, providing a solid foundation for sustaining dividends and funding ongoing investment activities.
The fund’s income was derived from a mix of dividend income, interest, and gains on investments, although net realised and unrealised gains were lower than the previous year. Expenses, including management fees and finance costs, increased moderately but remained controlled relative to revenue.
Outlook and Strategic Considerations
While the results reflect a challenging year, the maintenance of dividend payments and positive cash flow highlight resilience. The fund’s exposure to both domestic and international securities markets suggests that future performance will be influenced by global economic conditions and market volatility.
Investors will be watching closely for the final audited results and any commentary on strategic shifts or portfolio adjustments. The continuation of the share buy-back program also remains a key factor in assessing the company’s capital allocation priorities going forward.
Bottom Line?
Cadence’s steady dividend amid profit pressures signals cautious optimism but invites scrutiny on future growth and capital strategy.
Questions in the middle?
- How will Cadence manage profit pressures in a volatile market environment?
- What impact will ongoing share buy-backs have on shareholder value and liquidity?
- Will the fund adjust its dividend policy if earnings do not recover in the next fiscal year?