Cadence Capital Converts Gold Gains Into Cash and Special Dividends

Gold Profits Become a Larger Cash Buffer

Cadence Capital Limited (ASX:CDM) turned a strong run in gold and precious metals into a much more defensive balance sheet in FY2026. The listed investment company reported a $33.4 million profit after tax, up from $6.3 million a year earlier, while its fund gained 20.1% and outperformed the All Ordinaries Accumulation Index by 14.4 percentage points.

The result was driven by a $57.5 million net realised and unrealised gain on investments, compared with $2.6 million in FY2025. Predictive Discovery and Robex Resources, Samsung Electronics, Lindian Resources, Kingsgate and several gold producers were among the largest contributors. Cadence said the gold price rose from US$3,300 an ounce at the start of the financial year to nearly US$5,600 in January before ending at US$4,000.

That tailwind was not treated as a reason to stay fully exposed. As gold prices fell and trends in resource stocks changed during the second half, Cadence sold down more than 80% of its gold and resources exposure. Cash and cash equivalents reached $153.5 million at 30 June, compared with $83.1 million a year earlier, while net investments fell to $109.6 million from $207.0 million on a net basis after short positions.

Fully Franked Dividends Draw on a Larger Reserve

The board declared a 3.0 cents per share fully franked final dividend and a 1.0 cent per share fully franked special dividend after year-end. Together with the 3.0 cents interim dividend, the ordinary full-year payout reaches 6.0 cents per share. Cadence said the additional special dividend lifted the annualised fully franked yield to 9.3%, or 13.2% on a gross basis, using the share price of $0.755 on 15 July.

The company’s profits reserve rose to $75.4 million, which Cadence describes as equivalent to four years of dividends at the current final-dividend rate. Its franking account stood at $14.0 million at year-end, while management said 5.4 cents per share of franking credits was enough to fully frank about two years of dividends at the current level. Those cushions support the payout, although future franked distributions remain dependent on portfolio income and tax payments.

A Strong Year Came With a Larger Performance Fee

The improvement in earnings came alongside a substantial increase in fees payable to the related investment manager, Cadence Asset Management. Management fees rose to $2.7 million, while the performance fee reached $8.7 million against nil in FY2025. The annual report says the performance fee is calculated at 20% of outperformance against the All Ordinaries Accumulation Index, subject to the agreement’s conditions.

Cadence’s net assets increased to $308.9 million from $292.3 million, and net tangible asset backing after tax rose to $1.03 per share from $0.98. The company’s share price return, including dividends and franking, was 30.6% for the year. With the portfolio now carrying materially less resource exposure, the next test is whether cash can be redeployed into the recently identified opportunities in CSL, Cochlear and Pro Medicus without sacrificing the discipline that produced the FY2026 result.