Financial Statements of
PENDER GROWTH FUND INC.
And Independent Auditor's Report thereon
Year ended December 31, 2023
MANAGEMENT RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying financial statements of Pender Growth Fund Inc. are the responsibility of management. They have been prepared in accordance with IFRS Accounting Standards. PenderFund Capital Management Ltd. (the "Manager") has developed and maintains a system of internal controls to provide reasonable assurance that all assets are safeguarded and to produce relevant, reliable and timely financial information, including the accompanying financialstatements.
The Board of Directors is responsible for ensuring the Manager fulfils its responsibility. The Audit Committee meets with the Manager and the external auditors to review both the financial statements and the findings of the audit prior to the submission of the financial statements to the Board of Directors. The external auditors have unrestricted access to the Audit Committee. The Audit Committee also considers, for review by the Board of Directors and approval by the shareholders, the engagement or re-appointment of the external auditors.
These financial statements have been approved by the Board of Directors and have been audited by KPMG LLP, Chartered Professional Accountants, on behalf of the shareholders. The auditors' report outlines the scope of their audit and their opinion on the financial statements.
"David Barr" | "Gina Jones" | |
David Barr | Gina Jones | |
Chief Executive Officer | Chief Financial Officer | |
PenderFund Capital Management Ltd. | PenderFund Capital Management Ltd. |
April 4, 2024
KPMG LLP
PO Box 10426 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Canada
Telephone (604) 691-3000
Fax (604) 691-3031
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Pender Growth Fund Inc.
Opinion
We have audited the financial statements of Pender Growth Fund Inc. (the "Company"), which comprise:
- the statements of financial position as at December 31, 2023 and December 31, 2022
- the statements of comprehensive income for the years then ended
- the statements of changes in equity for the years then ended
- the statements of cash flows for the years then ended
- and notes to the financial statements, including a summary of material accounting policy information (hereinafter referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2023 and December 31, 2022, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the "Auditor's Responsibilities for the Audit of the Financial Statements" section of our auditor's report.
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.
Pender Growth Fund Inc.
Page 2
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matter described below to be the key audit matter to be communicated in our auditor's report.
Valuation of certain financial instruments that are not quoted in an active market Description of the matter
We draw attention to Note 2(d), Note 3(a)(ii) and Note 11 to the financial statements. The Company holds certain financial instruments that are not quoted in an active market of $11,591,723 where the Company uses valuation models that use significant unobservable market inputs including revenue multiples.
Why the matter is a key audit matter
We identified the valuation of certain financial instruments that are not quoted in an active market as a key audit matter. This matter represented an area of significant risk of material misstatement due to a high degree of subjectivity required to evaluate the Company's significant unobservable inputs in determining the fair value. Significant auditor judgement was required to evaluate the results of audit procedures related to the significant unobservable inputs.
How the matter was addressed in the audit
The primary procedures we performed to address this key audit matter included the following:
With the involvement of valuation professionals with specialized skills, industry knowledge and relevant experience, we tested the valuation of certain financial instruments that are not quoted in an active market. We did this by comparing the selected revenue multiples to third-party industry data for comparable public company multiples.
Other Information
Management is responsible for the other information. Other information comprises the information included in Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions.
Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.
Pender Growth Fund Inc.
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We obtained the information included in Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditor's report.
We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are 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 Canadian generally accepted 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 the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.
We also:
-
Identify and assess the risks of material misstatement of the financial statements, 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.
Pender Growth Fund Inc.
Page 4
- 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 management.
- Conclude on the appropriateness of management's 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 statements 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 statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Communicate with those charged with governance 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.
- Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
- Determine, from the matters communicated with those charged with governance, those matters that were of most significance in the audit of the financial statements 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 auditor's report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Chartered Professional Accountants
The engagement partner on the audit resulting in this auditor's report is Nik Assanand
Vancouver, Canada
April 4, 2024
PENDER GROWTH FUND INC.
Statements of Financial Position
As at December 31, 2023 and 2022 | |||||
Notes | 2023 | 2022 | |||
Assets | |||||
Cash | $ | 1,102,966 | $ | 1,552,667 | |
Income taxes receivable | 12 | 546,626 | 3,502,595 | ||
Divestment proceeds receivable | 177,485 | 1,916,139 | |||
Interest receivable | 21,507 | 162,932 | |||
Prepaid expenses | 9,113 | 6,770 | |||
Due from related parties | 5 | - | 3,023,368 | ||
Investments | 4, 5, 11 | 72,826,136 | 66,299,539 | ||
Total assets | 74,683,833 | 76,464,010 | |||
Liabilities | |||||
Share repurchase payable | 25,708 | 13,186 | |||
Accounts payable and accrued liabilities | 175,898 | 142,880 | |||
Due to related parties | 5 | 4,596,049 | - | ||
Interest payable | - | 31,864 | |||
Deferred income tax liability | 12 | - | 1,536,825 | ||
Loan payable | 9 | - | 4,500,000 | ||
Total liabilities | 4,797,655 | 6,224,755 | |||
Shareholders' equity | |||||
Class C Common shares: | |||||
Contributed capital | 7 | 16,059,937 | 17,442,542 | ||
Retained earnings | 53,826,241 | 52,796,713 | |||
Total Shareholders' Equity | $ | 69,886,178 | $ | 70,239,255 | |
Number of shares outstanding | 7 | 7,368,229 | 7,569,929 | ||
Total shareholders' equity per share | $ | 9.48 | $ | 9.28 |
The accompanying notes are an integral part of these financial statements.
Approved on behalf of the Board of Directors:
"David Barr" | Director | "Kelly Edmison" | Director |
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PENDER GROWTH FUND INC.
Statements of Comprehensive Income
Years ended December 31, 2023 and 2022
Notes | ||
Revenue: | ||
Interest (reversal) income | 6 | $ |
Foreign exchange loss | ||
Changes in fair value of investments: | ||
Net realized loss | ||
Net change in unrealized appreciation (depreciation) | ||
Total revenue | ||
Operating Expenses: | ||
Management fees | 5 | |
Transaction costs | ||
Administration expenses | ||
Audit and professional fees | ||
Interest and financing expenses | 9 | |
Directors' fees | ||
Legal fees | ||
Custody and recordkeeping fees | ||
Total operating expenses | ||
Net operating income (loss) before performance fees | $ | |
Other Items: | ||
Performance fees | 5 | |
Fees waived by the Manager | 5 | |
Net amount | ||
Amount of Pender Private Investments | ||
Inc.'s ("PPI") performance fee earned by | ||
the Manager attributable to the Company's | ||
ownership of PPI shares | 4, 5 | |
Total performance fees adjustment | ||
Net loss before income taxes recovery | $ | |
Income taxes recovery | 12 | |
Current | ||
Deferred | ||
Total income taxes recovery | ||
Net income (loss) | $ | |
Net income (loss), per share: | ||
Class C shares | $ |
Weighted average number of non-redeemable
Class C shares outstanding
The accompanying notes are an integral part of these financial statements.
ended | ended | 2023 | 2022 | |||
47,075 | $ | $ | (15,124) | $ | 278,949 | |
(147) | (1,481) | (2,225) | ||||
(8,372,437) | (8,948,170) | (13,556,891) | ||||
13,557,686 | 17,994,943 | (125,989,078) | ||||
5,232,177 | 9,030,168 | (139,269,245) | ||||
337,507 | 887,713 | 814,101 | ||||
(2,914) | 210,510 | 37,749 | ||||
(145,307) | 209,792 | 356,646 | ||||
72,984 | 198,029 | 220,876 | ||||
- | 177,448 | 538,858 | ||||
16,909 | 58,976 | 54,565 | ||||
13,220 | 27,217 | 22,720 | ||||
3,647 | 15,654 | 27,785 | ||||
296,046 | 1,785,339 | 2,073,300 | ||||
4,936,131 | $ | 7,244,829 | (141,342,545) | |||
743,679 | 693,716 | (24,353,179) | ||||
(185,920) | (173,429) | 6,088,295 | ||||
557,759 | 520,287 | (18,264,884) | ||||
- | 7,231,839 | 25,768,997 | ||||
557,759 | 7,752,126 | 7,504,113 | ||||
4,378,372 | $ | (507,297) | (148,846,658) | |||
- | (1,792,043) | - | (3,031,126) | |||
- | 506,798 | (1,536,825) | (17,976,570) | |||
- | (1,285,245) | (1,536,825) | (21,007,696) | |||
4,378,372 | $ | 1,285,245 | $ | 1,029,528 | $ | (127,838,962) |
0.59 | $ | 0.17 | $ | 0.14 | $ | (16.85) |
7,440,154 | 7,582,854 | 7,519,637 | 7,588,183 |
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PENDER GROWTH FUND INC.
Statements of Changes in Equity
Years ended December 31, 2023 and 2022 | |||||
Class C shares | Note | 2023 | 2022 | ||
Balance, beginning of year | $ | 70,239,255 | $ | 198,643,655 | |
Net income (loss) | 7(c) | 1,029,528 | (127,838,962) | ||
Share repurchased | 7(b) | (1,382,605) | (565,438) | ||
Balance, end of year | $ | 69,886,178 | $ | 70,239,255 |
The accompanying notes are an integral part of these financial statements.
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PENDER GROWTH FUND INC.
Statements of Cash Flows
Years ended December 31, 2023 and 2022 | ||||
2023 | 2022 | |||
Cash provided by (used in): | ||||
Operating: | ||||
Net income (loss) | $ | 1,029,528 | $ | (127,838,962) |
Adjustments for: | ||||
Interest reversal (income) | 15,124 | (278,949) | ||
Foreign exchange loss | 1,481 | 2,225 | ||
Net realized loss on sales of investments | 8,948,170 | 13,556,891 | ||
Net change in unrealized (appreciation) depreciation on investments | (17,994,943) | 125,989,078 | ||
Decrease (increase) in income taxes receivable | 2,955,969 | (3,502,595) | ||
Decrease in due from related parties | 3,023,368 | 3,220,034 | ||
Decrease (increase) in divestment proceeds receivable | 1,738,654 | (244,690) | ||
(Increase) decrease in prepaid expenses | (2,343) | 30,843 | ||
(Decrease) increase in interest payable | (31,864) | 227 | ||
Increase in due to related parties | 4,596,049 | - | ||
Increase (decrease) in accounts payable and accrued liabilities | 33,018 | (61,060) | ||
Decrease in deferred income tax liability | (1,536,825) | (17,976,570) | ||
Decrease in income taxes payable | - | (3,031,126) | ||
2,775,386 | (10,134,654) | |||
Proceeds on disposal of investments | 6,078,702 | 23,606,154 | ||
Purchase of investments | (3,544,964) | (20,905,653) | ||
2,533,738 | 2,700,501 | |||
Interest received | 112,739 | 32,439 | ||
Net cash provided by (used in) operating activities | 5,421,863 | (7,401,714) | ||
Financing: | ||||
Repayment of loan payable | (4,500,000) | (500,000) | ||
Repurchase of shares | (1,370,083) | (552,252) | ||
Net cash provided by (used in) financing activities | (5,870,083) | (1,052,252) | ||
Net decrease in cash during the year | (448,220) | (8,453,966) | ||
Cash, beginning of year | 1,552,667 | 10,008,858 | ||
Effect of exchange rate fluctuations on cash | (1,481) | (2,225) | ||
Cash, end of year | $ | 1,102,966 | $ | 1,552,667 |
The accompanying notes are an integral part of these financial statements. |
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Pender Growth Fund Inc. published this content on 05 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 April 2024 23:29:04 UTC.