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Middlefield Canadian Income PCC : Half-yearly report(dpa-AFX International Compact Via Acquire Media NewsEdge) Middlefield Canadian Income PCC (the "Company") Including Middlefield Canadian Income - GBP PC (the "Fund"), a cell of the Company Registered No: 93546 Announcement of Interim Results The Company announces its interim results for the period ended 30 June 2014 as approved by the Board of Directors on 14 August 2014. The full Interim Financial Report is expected to be sent to all shareholders during August 2014. Enquiries: Secretary Kleinwort Benson (Channel Islands) Corporate Services Limited Tel: + 44 (0) 1534 613000 Director Dean Orrico Tel: +44 (0) 20 3709 4016 Broker and Adviser Canaccord Genuity Limited Andrew Zychowski / Neil Brierly / Helen Goldsmith Tel: +44 (0) 20 7523 8000 Management and Administration Directors Nicholas Villiers (Chairman) Raymond Apsey Philip Bisson Thomas Grose Dean Orrico Administrator and Secretary Kleinwort Benson (Channel Islands) Corporate Services Limited Wests Centre St. Helier Jersey JE4 8PQ Registered Office Wests Centre St. Helier Jersey JE4 8PQ Investment Advisor Middlefield International Limited 288 Bishopsgate London EC2M 4QP Investment Manager Middlefield Limited 812 Memorial Drive NW Calgary, Alberta Canada T2N 3C8 Legal Advisers: In England Norton Rose Fulbright LLP 3 More London Riverside London SE1 2AQ In England Ashurst Broadwalk House 5 Appold Street London EC2A 2HA In Jersey Carey Olsen 47 Esplanade St. Helier Jersey JE1 0BD In Canada Fasken Martineau DuMoulin LLP Bay Adelaide Centre Box 20, Suite 2400 333 Bay Street Toronto, Ontario Canada M5H 2T6 Canaccord Genuity Limited Broker and Adviser 9th Floor 88 Wood Street London EC2V 7QR Custodian RBC Investor Services Trust 335 - 8th Avenue SW 23rd Floor Calgary, Alberta Canada T2P 1C9 Registrar Capita Registrars (Jersey) Limited 3 Castle Street St. Helier Jersey JE2 3RT Auditors Deloitte LLP Lord Coutanche House 66-68 Esplanade St. Helier Jersey JE4 8WA CREST Agent, UK Paying Agent and Transfer Agent Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Responsibility statement We confirm that to the best of our knowledge: * the interim report and financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the Fund. * the Interim Management report includes a fair review of the development, performance and position of the Company and the Fund and a description of the principal risks and uncertainties as disclosed in note 16 to the financial statements, that it faces for the next six months as required by DTR 4.2.7.R of the Disclosure and Transparency Rules. * the Interim Management report includes a fair review of related party transactions and changes therein, as required by DTR 4.2.8.R of the Disclosure and Transparency Rules. By order of the Board Raymond Apsey Nicholas Villiers Director Director Date: 14 August 2014 INTERIM MANAGEMENT REPORT Six months to 30 June 2014 (unaudited) On the invitation of the Directors of the Company, this interim management report is provided by Middlefield Limited, which acts as the investment manager of the Fund. This statement has been prepared to provide additional information to Shareholders as a body to meet the relevant requirements of the UK Listing Authority's Disclosure and Transparency Rules. It should not be relied upon by any party for any purpose other than as stated above. Middlefield Canadian Income PCC is a closed-ended investment company incorporated in Jersey on 24 May 2006. The Company has initially established one closed-ended Cell known as Middlefield Canadian Income - GBP PC (referred to as the "Fund" which term includes, where the context permits, the Company acting in respect of Middlefield Canadian Income - GBP PC). Admission to the Official List of the UK Listing Authority and dealings in redeemable participating preference shares commenced on 6 July 2006. The Fund was admitted to FTSE UK All-Share Index effective 20 June 2011. Investment Objective The Fund seeks to provide Shareholders with a high level of dividends as well as capital growth over the longer term. The Fund intends to pay dividendson a quarterly basis each year. The Fund will seek to achieve its investment objective by investing predominantly in the securities of companies and REITs domiciled in Canada and listed on a Canadian Stock Exchange, which the investment manager believes will provide an attractive level of distributions, together with the prospect for capital growth. Performance Summary North American equity markets rallied over the first half of 2014 with Canadian capital market returns driven by the strong performance of the energy sector, which benefited from rising oil and gas prices during the second quarter. In addition, REITs and utilities posted solid returns resulting from a rebound in the pace of economic activity as well as a decline in long-term interest rates over the last several months. With almost half of the Fund's assets allocated to these three sectors, MCI generated net asset value total returns of 12.6% and 8.8% for the one year and six month periods ended 30 June 2014 respectively. As a result, the Fund outperformed its benchmark S&P/TSX Composite High Dividend Index on a GBP currency-adjusted basis by 3.1% and 0.6%, over the same periods respectively. We believe the Canadian economy is underpinned by strong positive fundamentals. With corporate profits increasing at the fastest pace since 2011 and capacity utilisation rates near a seven-year high, we expect a rise in business investment spending over the coming months. In addition, we believe Canadian export activity will improve over the remainder of the year, assisted by a strengthening U.S. economy and a more competitive Canadian dollar. Notwithstanding a modest increase in inflation, which was largely attributable to higher energy prices, the Bank of Canada has recently announced its intention to maintain its benchmark rate at 1%. We expect Canadian interest rates to remain relatively low for the foreseeable future, thereby creating a suitable environment for sustained economic prosperity. We expect that global growth will continue to accelerate led by the ongoing recovery in developed economies. Despite adverse weather conditions in the first quarter, rising geo-political tensions in the Middle East and the Ukrainian crisis, U.S. and European economies grew during the first six months of the year. Recovery in the Eurozone is underpinned by continued monetary support and strengthening consumer confidence. The commitment on the part of the ECB to do "whatever it takes" to preserve the Euro has successfully driven down interest rates and will serve to support financing and industrial activity in the region. In the U.S. consumers and corporations remain very well positioned to increase spending after enduring several years of debt reduction. As the largest trading partner of the U.S. and a net exporting economy, we believe Canada will continue to benefit from these improving global economic trends. We are witnessing renewed interest in the Canadian energy sector in 2014, which has been supported by stronger commodity prices, a lower Canadian dollar and increased merger and acquisition activity. As represented by the S&P/TSX Capped Energy Index, the Canadian energy sector generated a year-to-date return for the period ended 30 June 2014 of 24.1%. New oil supply is expensive to develop and global production remains constrained by approximately three million barrels per day as a result of international sanctions against Iran and ongoing production issues in Libya. Increased U.S. shale oil production has largely offset global supply disruptions, thereby stabilising oil prices between US$90 to US$110 per barrel. We expect the spread between WTI and Brent oil prices to narrow as the completion of several energy infrastructure projects alleviate the bottleneck at Cushing in Oklahoma. We believe that the prices realised by Canadian producers will increase as improved access to U.S. refineries cause heavy oil differentials to narrow. In addition, we expect unconventional shale oil production to peak in 2016, which should further support the Canadian energy sector. The fundamentals in the natural gas sector have improved significantly over the past 24 months. Increased industrial demand, cold weather and a reduction in supply growth have reduced current storage inventories to near-decade lows. Restoring U.S. inventories to the five-year average would require record levels of injections, which are unlikely since the number of U.S. natural gas rigs in operation is at a 13 year low. Accordingly, we expect gas prices to remain strong as we head into 2015. Longer term, the development of LNG export facilities, commencing in 2016, should enable producers to access European and Asian markets where gas sells at a significant premium to North American prices. With respect to real estate, given a portfolio allocation of approximately 11% relative to its benchmark weighting of 6.1% as at the end of June, the Fund continues to be well positioned to capitalise on attractive valuations in this sector. Government bond yields in many developed countries remain near historic lows, which have resulted in strong demand for income producing real estate and infrastructure assets. Real estate supply remains relatively low versus prior cycles, indicating that rental growth should accelerate as occupancy and employment continue to improve. Moreover, the replacement value of buildings should escalate as land, construction costs and inflation trend higher. While we expect volatility to persist as investors adjust their expectations to reflect a normalised cost of capital and higher interest rates, valuations are compelling and should be supported by strong balance sheets, low payout ratios and dividend growth. We remain focused on real estate and infrastructure investments that: 1) have good organic growth potential; 2) demonstrate above average cash flow growth and/or will benefit from economic expansion; 3) possess strong management teams with a track record of prudent capital allocation; and 4) operate in regions where interest rates are expected to remain relatively low and/or gradually increase in response to growth in economic activity. The asset class weightings for the Fund as at 30 June 2014 were: Asset Class Portfolio Weighting Energy 28.4% Financials 19.7% Real Estate 10.8% Utilities 9.5% Bonds and Convertible Debentures 9.3% Industrials 6.8% Power and Pipeline 5.1% Materials 3.7% Consumer Discretionary 3.0% Consumer Staples 1.8% Metals and Mining 1.5% Other 0.4% DividendsThe Fund paid quarterly dividends of 1.25 pence per share in each of January, April and July 2014. Related Party Transactions Related party transactions are disclosed in note 13 to the condensed set of financial statements of the Fund. There have been no material changes in the related party transactions from those described in the 2013 Annual Report. Material Events On 14 April, the Company announced that it had purchased for cash 50,000 shares of the Fund at a price per share of 98.75 pence, which represented a discount to the Fund's prevailing net asset value. The repurchased shares were held in treasury. In addition, further to the announcements issued in May, the Company sold for cash a total of 750,000 shares of the Fund out of treasury. Each sale out of treasury was at a premium to the Fund's prevailing net asset value. The Board of Middlefield Canadian Income PCC is not aware of any significant event or transaction which has occurred between 1 July 2014 and the date of publication of this statement which could have a material impact on the financial position of the Fund. There are a number of potential risks and uncertainties, which could have a material impact on the Fund's performance over the remaining six months of the year and could cause actual results to differ materially from expected and historical results. Further information on the principal risks and uncertainties of the Fund are included in the 2013 Annual Report and in note 16 to the condensed set of financial statements. Outlook We remain constructive on the outlook for the Canadian economy, which we believe is underpinned by strong positive fundamentals. It is our view that global economic growth is accelerating, led by the expansion of developed economies such as the U.S., the U.K. and continental Europe. Our expectation with respect to Europe has been for a moderate but sustained expansion over the next several years. We expect growth will continue to broaden with consumption and investment increasing, which, in turn, should decrease the dependence of the Eurozone recovery on international markets. In the U.S., the deleveraging drag is waning and evidence of continued economic growth is emerging, such as strong payroll gains, labour market improvements, a rise in auto sales and housing starts and a notable increase in household net worth. We believe these positive global economic trends will support demand for Canadian exports and help sustain Canadian economic growth over the coming months. The Fund remains focused on investing in income-oriented issuers with strong management teams, good balance sheets and sustainable dividends that are well- positioned to benefit from the relative strength of the North American economy.We continue to believe that the high dividend-paying equity income sector will benefit from anticipated improvements in global growth and an ongoing demand for income. Middlefield Limited Date: 14 August 2014 Past performance is not a guide to future performance. This interim management report is available at: www.middlefield.co.uk. CONDENSED STATEMENT OF FINANCIAL POSITION OF THE FUND (unaudited) As at 30 June 2014 with unaudited comparatives as at 30 June 2013 and audited comparatives as at 31 December 2013 Notes 30.06.2014 30.06.2013 31.12.2013 £ £ £ Current assets Securities (at fair value through 3 & 17 profit or loss) 143,651,418 129,597,718 129,529,929 Accrued bond interest 140,318 213,091 171,091 Accrued bank interest 4,216 2,979 3,003 Accrued dividend income 406,845 375,287 382,768 Other receivables 2 2 2 Prepayments 15,985 15,235 31,503 Cash and cash equivalents 4 16,022,119 3,906,640 6,656,549 -------------- --------------- ------------- 160,240,903 134,110,952 136,774,845 -------------- --------------- ------------- Current liabilities Other payables and accruals 5 (391,279) (430,818) (390,422) Interest payable (130,090) (86,894) (1,989) Loan payable (35,412,290) (18,661,637) (19,795,302) -------------- --------------- ------------- (35,933,659) (19,179,349) (20,187,713) -------------- --------------- ------------- Net assets 124,307,244 114,931,603 116,587,132 -------------- --------------- ------------- Equity attributable to equity holders Stated capital account 6 51,562,492 50,796,973 50,796,973 Retained earnings 72,744,752 64,134,630 65,790,159 -------------- --------------- ------------- Total Shareholders' equity 124,307,244 114,931,603 116,587,132 -------------- --------------- ------------- Net asset value per redeemable participating 7 preference share 114.32p 106.39p 107.92p -------------- --------------- ------------- The financial statements were approved by the Directors on 14 August 2014 and signed on behalf of the Board by: Raymond Apsey Nicholas Villiers Director Director The accompanying notes form an integral part of these financial statements. CONDENSED STATEMENT OF COMPREHENSIVE INCOME OF THE FUND (unaudited) For the period 1 January 2014 to 30 June 2014 with unaudited comparatives for the period 1 January 2013 to 30 June 2013 and audited comparatives for the year ended 31 December 2013 Six months Year ended ended 30 June 31 2013 December Six months ended 30 June 2014 2013 Notes Revenue Capital Total Total Total £ £ £ £ £ Revenue Dividend and interest income 8 3,150,441 - 3,150,441 3,011,058 6,403,116 Net movement in the fair 9 value of securities (at fair value through profit or loss) - 7,894,523 7,894,523 7,688,708 8,552,600 Net movement on foreign exchange - 6,634 6,634 (204,507) 1,307,905 -------------------------------- ------------- ----------- Total revenue 3,150,441 7,901,157 11,051,598 10,495,259 16,263,621 -------------------------------- ------------- ----------- Expenditure Investment management fees 161,551 242,327 403,878 495,616 900,342 Custodian fees 5,770 - 5,770 5,716 11,513 Sponsor's fees 115,394 - 115,394 114,348 230,285 Other expenses 185,545 - 185,545 193,260 446,992 -------------------------------- ------------- ----------- Operating expenses 468,260 242,327 710,587 808,940 1,589,132 -------------------------------- ------------- ----------- Net operating profit before finance costs 2,682,181 7,658,830 10,341,011 9,686,319 14,674,489 Finance cost (100,333) (150,499) (250,832) (175,865) (382,946) -------------------------------- ------------- ----------- Profit before tax 2,581,848 7,508,331 10,090,179 9,510,454 14,291,543 Withholding tax expense (434,780) - (434,780) (359,983) (784,736) -------------------------------- ------------- ----------- Net profit 2,147,068 7,508,331 9,655,399 9,150,471 13,506,807 -------------------------------- ------------- ----------- Profit per redeemable participating preference share - basic and diluted 10 1.98p 6.94p 8.92p 8.59p 12.59p -------------------------------- ------------- ----------- TheCompany including the Fund has no other items of income or expense for the current and prior period and accordingly the net profit for the current and prior periods represent total comprehensive income. There are zero earnings attributable to the management shares. All activities derive from continuing operations. The accompanying notes form an integral part of these financial statements. CONDENSED STATEMENT OF CHANGES IN REDEEMABLE PARTICIPATING PREFERENCE SHAREHOLDERS' EQUITY OF THE FUND (unaudited) For the period 1 January 2014 to 30 June 2014 with unaudited comparatives for the period 1 January 2013 to 30 June 2013 and audited comparatives for the year ended 31 December 2013 Stated capital account Retained income Total Notes £ £ £ At 1 January 2013 47,110,708 57,630,590 104,741,298 Profit for the period - 9,150,471 9,150,471 Issue of shares 3,686,265 - 3,686,265 Dividends paid 11 - (2,646,431) (2,646,431) --------------------------------------------------- At 30 June 2013 50,796,973 64,134,630 114,931,603 --------------------------------------------------- Profit for the period - 4,356,336 4,356,336 Issue of shares - - - Dividends paid - (2,700,807) (2,700,807) --------------------------------------------------- At 31 December 2013 50,796,973 65,790,159 116,587,132 --------------------------------------------------- Profit for the period - 9,655,399 9,655,399 Issue of shares 6 765,519 - 765,519 Dividends paid 11 - (2,700,806) (2,700,806) --------------------------------------------------- At 30 June 2014 51,562,492 72,744,752 124,307,244 --------------------------------------------------- The accompanying notes form an integral part of these financial statements. CONDENSED CASH FLOW STATEMENT OF THE FUND (unaudited) For the period 1 January 2014 to 30 June 2014 with unaudited comparatives for the period 1 January 2013 to 30 June 2013 and audited comparatives for the year ended 31 December 2013 Year ended Six months ended 30 June 31 December 2014 2013 2013 £ £ £ Cash flows from operating activities Net profit 9,655,399 9,150,471 13,506,807 Adjustments for: Net movement in the fair value of securities (at fair value through profit or loss) (7,894,523) (7,688,708) (8,552,600) Realised (gain) loss on foreign exchange (627,175) 664,518 (2,306,576) Unrealised loss (gain) on foreign exchange 620,541 (460,011) 998,671 -------------- --------------- -------------- Operating cash flows before movements in working capital 1,754,242 1,666,270 3,646,302 Decrease in other receivables 21,001 16,872 35,101 Increase (decrease) in other payables and accruals 128,958 77,495 (47,808) -------------- --------------- -------------- Net cash generated from operating activities 1,904,201 1,760,637 3,633,595 -------------- --------------- -------------- Cash flows used in investing activities Payment for purchases of securities (37,300,431) (72,522,878) (117,092,886) Proceeds from sale of securities 31,073,465 62,115,803 107,617,492 -------------- --------------- -------------- Net cash used in investing activities (6,226,966) (10,407,075) (9,475,394) -------------- --------------- -------------- Cash flows from financing activities Dividends paid (2,700,806) (2,646,431) (6,042,477) New bank loans raised 15,616,988 3,387,351 10,465,294 Proceeds from issue of shares 765,519 3,686,265 3,686,265 Repayments of borrowings - (98,199) (5,347,238) -------------- --------------- -------------- Net cash generated from financing activities 13,681,701 4,328,986 2,761,844 -------------- --------------- -------------- Net increase (decrease) in cash and cash equivalents 9,358,936 (4,317,452) (3,079,955) Effect of foreign exchange rate changes 6,634 (204,507) 1,307,905 Cash and cash equivalents at beginning of period 6,656,549 8,428,599 8,428,599 -------------- --------------- -------------- Cash and cash equivalents at end of period 16,022,119 3,906,640 6,656,549 -------------- --------------- -------------- Cash and cash equivalents made up of: Cash at bank 16,022,119 3,906,640 6,656,549 -------------- --------------- -------------- The accompanying notes form an integral part of these financial statements.NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (unaudited) For the period 1 January 2014 to 30 June 2014 with unaudited comparatives for the period 1 January 2013 to 30 June 2013 and audited comparatives for the year ended 31 December 2013 1. General Information The Company is a closed-ended investment company incorporated in Jersey on 24 May 2006. The Company has one closed-ended Cell: Middlefield Canadian Income - GBP PC, also referred to as the "Fund". The Fund seeks to provide Shareholders with a high level of dividends as well as capital growth over the longer term. The Fund intends to pay dividends on a quarterly basis each year. The Fund seeks to achieve its investment objective by investing predominantly in the securities of companies and REITs domiciled in Canada and listed on a Canadian Stock Exchange that the Investment Manager believes will provide an attractive level of distributions, together with the prospect for capital growth. The address of the Company's registered office is Wests Centre, St. Helier, Jersey, JE4 8PQ, Channel Islands. The Fund's shares are listed on the London Stock Exchange. The Company and the Fund have no employees. The functional and presentational currency of the Company and the Fund is Sterling ("£"). The half-yearly report has not been audited or reviewed by the auditors Deloitte LLP pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information'. The information presented for the year ended 31 December 2013 does not constitute the statutory financial statements of the Company and the Fund. Copies of the statutory financial statements for that year have been delivered to the Registrar of Companies in Jersey. The auditors' report on those financial statements was unqualified. 2. Accounting Policies a. Basis of preparation The condensed financial information for the period ended 30 June 2014 has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. The condensed interim financial information should beread in conjunction with the annual financial statements for the year ended 31 December 2013, which have been prepared in accordance with International Financial Reporting Standards (IFRS). The condensed financial statements have been prepared under the historicalcost basis, except for the revaluation of fair value through profit or loss investments, and in accordance with IFRS. The condensed statement of comprehensive income is presented in accordance with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in January 2009 by the Association of Investment Companies ("AIC"), to the extent that it does not conflict with IFRS. The condensed statement of financial position, condensed statement of comprehensive income, condensed statement of changes in redeemable participating preference shareholders' equity and condensed cash flow statement refer solely to the Fund. The non-cellular assets comprise two Management Shares. However, there has been no trading activity with regards to the non-cellular assets.b. Going concern In the opinion of the Directors, there is a reasonable expectation that the Company and the Fund have adequate resources to continue in operational existence for the foreseeable future. For this reason the financial statements have been prepared on the going concern basis. The Directors have arrived at this opinion by considering, inter alia, the following factors: * the Fund has sufficient liquidity to meet all on-going expenses and repayment of external borrowings; and * the portfolio of investments held by the Fund materially consists of listed investments which are readily realisable and therefore the Fund will have sufficient resources to meet its liquidity requirements. c. Standards and Interpretations Except as described below the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2013, as described in those financial statements. Standards and Interpretations in issue not yet adopted. At the date of authorisation of these financial statements, the following Standard or Interpretation has been issued by the International Accounting Standards Board (IASB) but is not approved by the EU and therefore has not yet been adopted by the Fund: * IFRS 9 (revised April 2009) Financial Instruments: Classification and Measurement effective for annual periods beginning on or after 1 January 2018; * IFRS 13 (amended) "Measurement of short-term receivables and payables" effective date is 1 July 2014; * IFRS 15 "Revenue from contracts with customers" effective 1 January 2017; * IAS 24 (amended) "Definition of 'related party'" effective 1 July 2014. The adoption of some of these Standards and Interpretations may require additional disclosure in future financial statements. None are expected to affect the financial position of the Fund. d. Business and geographical segments The Directors are of the opinion that the Fund is engaged in a single segment of business of investing predominantly in securities and REITs domiciled in Canada to which the Fund is solely exposed and therefore no segment reporting is provided. 3. Securities (at fair value through profit or loss) 30.06.2014 30.06.2013 31.12.2013 £ £ £ Equities 130,365,456 110,852,016 111,575,690 Debentures 13,285,962 18,745,702 17,954,239 ------------------------------------------- ------------- ------------ 143,651,418 129,597,718 129,529,929 ------------------------------------------- ------------- ------------ Please refer to Note 17 for the Schedule of Investments. 4. Cash and cash equivalents 30.06.2014 30.06.2013 31.12.2013 £ £ £ Cash at bank 16,022,119 3,906,640 6,656,549 -------------- -------------- -------------Cash and cash equivalents comprise bank balances and cash held by the Fund. The carrying value of these assets approximates their fair value. 5. Other payables and accruals 31.12.2013 30.06.2014 30.06.2013 £ £ £ Investment management fees 208,533 263,199 203,047 Sponsor's fees 56,123 60,715 58,013 Administration fees 29,790 30,357 29,007 Directors' fees 21,260 27,134 26,250 General expenses 26,498 22,761 36,693 Audit fees 38,893 12,912 26,000 Registrar's fees 6,413 8,024 7,334 Custodian fees 3,769 5,716 4,078 -------------- -------------- ------------- 391,279 430,818 390,422 -------------- -------------- ------------- 6. Stated capital account The authorised share capital of the Fund is split into two Management Shares of no par value and an unlimited number of redeemable participating preference shares of no par value, the latter of which are attributable solely to the Fund. No. of shares £ Management shares issued At 31 December 2013 2 2 ------------------------- At 30 June 2014 2 2 ------------------------- At 31 December 2013 108,032,250 50,796,971 14 April 2014 50,000 shares of no par value repurchased at 98.75 pence each (50,000) (49,375) 16 May 2014 500,000 shares of no par value issued at 110.00 pence each 500,000 550,000 16 May 2014 issue costs - (5,500) 22 May 2014 250,000 shares of no par value issued at 109.25 pence each 250,000 273,125 22 May 2014 issue costs - (2,731) ------------------------- At 30 June 2014 108,732,250 51,562,490 ------------------------- Total stated capital at 30 June 2014 51,562,492 ----------- The holders of redeemable participating preference shares are entitled toreceive in proportion to their holdings, all of the revenue profits of the Fund (including accumulated revenue reserves). Each redeemable participating preference shareholder is entitled to one vote for each share held, provided all amounts payable in respect of that share have been paid. Management shares are non-redeemable, have no right in respect of the accrued entitlement, and have no right to participate in the assets of the Fund on a winding-up. In all other respects the management shares have the same rights and restrictions as redeemable participating preference shares. Each management share entitles the holder to one vote for each share held. Redeemable participating preference shares are redeemed at the absolute discretion of the Directors. Since redemption is at the discretion of the Directors, in accordance with the provisions of IAS 32, the redeemable participating preference shares are classified as equity. The Fund will not give effect to redemption requests in respect of more than 25 percent of the shares then in issue, or such lesser percentage as the Directors may decide. At period end there were 15,950,000 treasury shares in issue. 7. Net asset value per redeemable participating preference share The net asset value per share of 114.32p (30 June 2013: 106.39p, 31 December 2013: 107.92p) is based on the net assets at the period end of £124,307,244 (30 June 2013: £114,931,603, 31 December 2013: £116,587,132) and on 108,732,250 redeemable participating preference shares, being the number of redeemable participating preference shares in issue (excluding shares held in treasury) at the period end (30 June 2013: 108,032,250 shares, 31 December 2013: 108,032,250 shares). 8. Dividend and interest income Period ended 30.06.2014 Revenue Capital Total 30.06.2013 31.12.2013 £ £ £ £ £ Bond and debenture 466,173 - 466,173 556,995 interest 1,154,516 Bank interest 31,347 - 31,347 80,855 112,360 Dividend income 2,652,921 - 2,652,921 2,373,208 5,136,240 ----------------------------- ------------ ----------- 3,150,441 - 3,150,441 3,011,058 6,403,116 ----------------------------- ------------ ----------- 9. Net movement in the fair value of securities Period ended 30.06.2014 Revenue Capital Total 30.06.2013 31.12.2013 £ £ £ £ £ Net movement in the fair value of securities (at fair value through profit or loss) - 7,894,523 7,894,523 7,688,708 8,552,600 ----------------------------- ------------ ----------- 10. Profit per redeemable participating preference share The revenue gain per share is based on £2,147,068 net revenue gain on ordinary activities and a weighted average of 108,197,720 shares in issue. The capital gain per share is based on £7,508,331 net capital gain for the period and a weighted average of 108,197,720 shares in issue. 11. Dividends Dividends were paid on a quarterly basis during the period in the months of January and April totalling £2,700,806 (30 June 2013: £2,646,431). 12. Taxation The Company adopted UK tax residency from 11 October 2011 onwards. Since that date the Company has been managed in such a way as to be able to meet the conditions for approval as an investment trust under Section 1158 of the Corporation Tax Act 2010. Accordingly, no UK tax has been provided for. On 7 December 2012 the Company received approval from HM Revenue & Customs to be treated as an investment trust in accordance with Section 1158 of theCorporation Tax Act 2010 and will seek to remain so approved. 13. Related party transactions The directors are regarded as related parties. Total directors' fees paid during the period amounted to £41,364 of which £21,260 was due at the period end (30 June 2013: £52,966 of which £27,134 was due at the period end, 31 December 2013: £105,000 of which £26,250 was due at the year end). These fees are all arm's length transactions. 14. Loan payable The Fund entered into a Credit Agreement with Royal Bank of Canada ("RBC") on 6 October 2011, whereby RBC provides a 364-day Revolving Term Credit Facility (the "Credit Facility"), with a maximum principal amount of the lesser of CAD50,000,000 and 25% of the Total Asset Value of the Fund. The Credit Facility was renewed on 5 October 2012 as an On Demand facility. On 17 June 2014 the Credit Facility was amended to increase the maximum principle amount to CAD65,000,000. The Bankers' Acceptance drawn under the Credit Facility totals CAD65,000,000 (GBP equivalent of £35,412,290) (period ended 30 June 2013: CAD30,000,000 (GBP equivalent of £18,661,637), year ended 31 December 2013: CAD35,000,000 (GBP equivalent £19,795,302)). Pre-paid interest and stamping fees of £7,440 (period ended 30 June 2013: £89,319, year ended 31 December 2013: £102,378) were paid on the Bankers' Acceptance and these costs are being amortised over 30 days. Interest paid on the Bankers' Acceptance totalled £191,273 (period ended 30 June 2013: £117,312, year ended 31 December 2013: £343,812). Interest is calculated at an annual percentage equal to, in the case of Prime Loans, the Prime Rate minus 0.35%. In the case of a Bankers' Acceptance, a stamping fee of 0.60% per annum is payable. 15. Security agreement In conjunction with entering into the Credit Facility, the Fund has entered into a General Security Agreement. Pursuant to the terms of the General Security Agreement the Fund has granted RBC interests in respect of collateral, being all present and after-acquired personal property including the securities portfolio, as security for the Fund's obligations under the Credit Facility. 16. Financial instruments Fair values The carrying amounts of investments, other receivables, cash and cash equivalents and other payables approximate their fair values. Management of Capital The Investment Manager manages the capital of the Fund in accordance with the Fund's investment objectives and policies. The capital structure of the Fund consists of proceeds from the issue of preference shares and reserve accounts. The Investment Manager reviews the capital structure on a monthly basis. The Fund and the Company do not have any externally imposed capital requirements. Investment and trading activities It is intended that the Fund will continue throughout its life to be invested in a Canadian equities portfolio. The Fund's investing activities expose it to various types of risk that are associated with the financial instruments and markets in which it invests. The most important types of financial risk to which the Fund is exposed are market price risk, interest rate risk and currency risk. Credit risk Credit risk is the risk that an issuer or counterparty may be unable or unwilling to meet commitments it has entered into with the Fund. The Fund's principal assets are bank balances and cash and investments as set out in the statement of financial position which represents the Fund's maximum exposure to credit risk in relation to the financial assets. The credit risk on bank balances is limited because the counterparties are banks with high credit ratings of AA- and A+ assigned by Standard and Poor's rating agency. All transactions in listed securities are settled 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 its obligations. The Fund's maximum exposure to credit risk is the carry value of the assets on the statement of financial position. Market price risk Market price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar financial instruments traded in the market. The Fund's exposure to market price risk is comprised mainly of movements in the value of the Fund's investments. Country risk On 17 January 2012 the Financial Reporting Council ("FRC") released "Responding to the increased country and currency risk in financial reports". The FRC 17 January 2012 update for directors of listed companies includes guidance on responding to the increased country and currency risk as a result of funding pressures on certain European countries, the curtailment of capital spending programmes (austerity measures) and regime changes in the Middle East. The Board has reviewed the disclosures and believes that no additional disclosures in light of this update are required since the Canadian economy is stable with a Moody's rating of AAA. Fair value measurements IFRS 13 establishes a fair value hierarchy that prioritises the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under IFRS 13 are as follows: * Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities * Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) * Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment of management, considering factors specific to the asset or liability. The determination of what constitutes 'observable' requires significant judgment by the Fund. The Fund considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. The following table presents the Fund's financial assets and liabilities by level within the valuation hierarchy as of 30 June 2014. Level 1 Level 2 Level 3 Total £ £ £ £ Financial assets Securities(at fair value through profit or loss) 143,651,418 - - 143,651,418 The following table presents the Fund's financial assets and liabilities by level within the valuation hierarchy as of 31 December 2013. Level 1 Level 2 Level 3 Total £ £ £ £ Financial assets Securities(at fair value through profit or loss) 129,529,929 - - 129,529,929 The Fund holds securities that trade in active markets. Such financial instruments are classified as Level 1 of the IFRS 13 fair value hierarchy. There were no transfers between Level 1 and 2 during the period. Price sensitivity At 30 June 2014, if the market prices of the securities had been 30% higherwith all other variables held constant, the increase in net assets attributable to holders of redeemable participating preference shares would have been£43,095,425 (30 June 2013: £38,879,315, December 2013: £38,858,978) higher, arising due to the increase in the fair value of financial assets at fair value through profit or loss by £43,095,425 (30 June 2013: £38,879,315, 31 December 2013: £38,858,978). At 30 June 2014, if the market prices of the securities had been 30% lower with all other variables held constant, the decrease in net assets attributable to holders of redeemable participating preference shares would have been equal, but opposite, to the figures stated above. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Fund's interest rate sensitive assets and liabilities mainly comprise cash and cash equivalents, debt securities and loan payable. The cash and cash equivalents are subject to floating rates and are considered to be part of the investment strategy of the Fund. No other hedging is undertaken in respect of this interest rate risk. The following table details the Fund's exposure to interest rate risk at 30 June 2014, 30 June 2013 and 31 December 2013: Floating rate assets 30.06.2014 30.06.2013 31.12.2013 £ £ £ Assets Debt securities 13,285,962 18,745,702 17,954,239 Cash and cash equivalents 16,022,119 3,906,640 6,656,549 --------------------------------------- 29,308,081 22,652,342 24,610,788 --------------------------------------- Liabilities Loan payable 35,412,290 18,661,637 19,795,302 --------------------------------------- 35,412,290 18,661,637 19,795,302 --------------------------------------- The above analysis excludes short term debtors and creditors as all material amounts are non interest-bearing. Interest rate sensitivity analysis At 30 June 2014, had interest rates been 50 basis points higher and all other variables were held constant, the Company's net assets attributable to the redeemable participating preference shares for the year would have increased by £94,397 (30 June 2013: £265,874, 31 December 2013: £173,390) due to the increase in market value of listed debt securities and to a lesser extent due to an increase in interest payable on the loan. Liquidity risk Liquidity risk is the risk that the Fund cannot meet its liabilities as they fall due. The Fund's primary source of liquidity consists of cash andcash equivalents, securities at fair value through profit or loss and the Credit Facility. The Fund's investments are considered to be readily realisable, predominantly issued by Canadian companies and REIT's listed on a Canadian Stock Exchange and are actively traded. As at 30 June 2014, the Fund's exposure to liquidity risk was as follows: Less than 1 to 3 months 3 months More than 1 month to 1 year 1 year Total £ £ £ £ £ Assets Securities (at fair value through profit or loss) 143,651,418 - - - 143,651,418 Accrued bond interest 140,318 - - - 140,318 Accrued dividend income 406,845 - - - 406,845 Accrued bank interest 4,216 - - - 4,216 Other receivables 2 - - - 2 Prepayments 15,985 - - - 15,985 Cash and cash equivalents 16,022,119 - - - 16,022,119 ------------------------------------------------------------ 160,240,903 - - - 160,240,903 ------------------------------------------------------------ Liabilities Loan payable (35,412,290) - - - (35,412,290) Other payables and accruals (391,279) - - - (391,279) Interest payable (130,090) - - - (130,090) ------------------------------------------------------------ (35,933,659) - - - (35,933,659) ------------------------------------------------------------ 124,307,244 - - - 124,307,244 ------------------------------------------------------------ As at 30 June 2013, the Fund's exposure to liquidity risk was as follows: Less than 1 to 3 3 months More than 1 month months to 1 year 1 year Total £ £ £ £ £ Assets Securities (at fair value through profit or loss) 129,597,718 - - - 129,597,718 Accrued bond interest 213,091 - - - 213,091 Accrued bank interest 375,287 - - - 375,287 Accrued dividend income 2,979 - - - 2,979 Prepayments 2 - - - 2 Other receivables 15,235 - - - 15,235 Cash and cash equivalents 3,906,640 - - - 3,906,640 ------------------------------------------------------------- 134,110,952 134,110,952 ------------------------------------------------------------- Liabilities Loan payable - - (18,661,637) - (18,661,637) Other payables and accruals (430,818) - - - (430,818) Interest payable (86,894) - - - (86,894) ------------------------------------------------------------- (517,712) - (18,661,637) - (19,179,349) ------------------------------------------------------------- 133,593,240 - (18,661,637) - 114,931,603 ------------------------------------------------------------- As at 31 December 2013, the Fund's exposure to liquidity risk was as follows: Less than 1 1-3 months 3 months More month to 1 year than 1 Total year £ £ £ £ £ Assets Securities (at fair value through profit or loss) 129,529,929 - - - 129,529,929 Accrued bond interest 171,091 - - - 171,091 Accrued dividend income 382,768 - - - 382,768 Accrued bank interest 3,003 - - - 3,003 Other receivables 2 - - - 2 Prepayments 31,503 - - - 31,503 Cash and cash equivalents 6,656,549 - - - 6,656,549 -------------------------------------------------------------- 136,774,845 - - - 136,774,845 -------------------------------------------------------------- Liabilities Other payables (390,422) - - - (390,422) and accruals Interest payable (1,989) - - - (1,989) Loan payable (19,795,302) - - - (19,795,302) -------------------------------------------------------------- (20,187,713) - - - (20,187,713) -------------------------------------------------------------- 116,587,132 - - - 116,587,132 -------------------------------------------------------------- Currency risk The Fund is denominated in GBP, whereas the Fund's principal investments are denominated in CAD. Consequently the Fund is exposed to currency risk. The Fund's policy is therefore to actively monitor exposure to currency risk. The Board reserves the right to employ currency hedging but, other than in exceptional circumstances, does not intend to hedge. The Board considers that exposure was significant at the period end. The Fund's net exposure to CAD currency at the period end was as follows: 30 June 30 June 2014 2013 31 December 2013 £ £ £ Assets Cash and cash equivalents 11,090,537 3,893,435 6,574,575 Canadian equities 108,406,528 99,927,149 97,715,786 Canadian debt 13,285,962 17,399,029 16,645,559 Accrued income 551,379 582,062 532,435 -------------- -------------- ----------------- 133,334,406 121,801,675 121,468,355 -------------- -------------- ----------------- Liabilities Loan payable (35,412,290) (18,661,637) (19,795,302) Interest payable (130,090) (86,894) (1,989) -------------- -------------- ----------------- (35,542,380) (18,748,531) (19,797,291) -------------- -------------- ----------------- The Fund's net exposure to USD currency at the period end was as follows: 30 June 30 June 2014 2013 31 December 2013 £ £ £ Assets Cash and cash equivalents 4,023,285 - 67,109 United States equities 21,958,928 10,924,867 13,859,904 United States debt - 1,346,673 1,308,680 Accrued income - 9,295 22,390 -------------- -------------- ------------------- 25,982,213 12,280,835 15,258,083 -------------- -------------- ------------------- Currency sensitivity At 30 June 2014, had GBP strengthened against the CAD by 5%, with all other variables held constant, the increase in net assets attributable to shareholders would amount to approximately £4,656,763 (30 June 2013: £4,911,430, 31 December 2013: £4,841,574). Had GBP weakened against the CAD by 5%, this would amount to a decrease in net assets attributable to shareholders of approximately £5,146,949 (30 June 2013: £5,428,423, 31 December 2013: £5,351,213). At 30 June 2014, had GBP strengthened against the USD by 5%, with all other variables held constant, the increase in net assets attributable to shareholders would amount to approximately £1,237,248 (30 June 2013: £584,801, 31 December 2013: £nil). Had GBP weakened against the USD by 5%, this would amount to a decrease in net assets attributable to shareholders of approximately £1,367,485 (30 June 2013: £646,360, 31 December 2013: £nil). 17. Schedule of Investments - Securities (at fair value through profit or loss) Shares or Bid-Market % of Net % of Description Par Value Book Cost Value Assets Portfolio £ £ Equities: Bermuda - Quoted Investments Real Estate Brookfield 305,000 3,475,941 3,721,135 Property Partners LP 2.99% 2.59% Utilities Brookfield 80,000 1,743,330 1,953,388 Infrastructure Partners LP 1.57% 1.36% Canada - Quoted Investments Consumer Discretionary Enercare Inc 400,000 1,901,549 2,677,289 2.15% 1.86% Energy AltaGas Ltd 100,000 2,019,494 2,694,310 2.17% 1.88% ARC Resources Ltd 110,000 1,465,991 1,953,279 1.57% 1.36% Birchcliff Energy Ltd 85,000 1,300,141 1,213,455 0.98% 0.84% Birchcliff Energy - Preferred Shares 43,000 684,538 631,573 0.51% 0.44% Bonavista Energy Corp 250,000 1,801,701 2,241,598 1.80% 1.56% Bonterra Energy Corporation 58,000 1,566,605 1,990,715 1.60% 1.39% Canyon Services Group Inc 250,000 1,459,702 2,593,006 2.09% 1.81% Crescent Point Energy Corp 175,000 4,254,899 4,534,397 3.65% 3.16% Enerplus Corporation 200,000 2,023,262 2,941,943 2.37% 2.05% Keyera Corporation 65,000 1,787,659 2,803,439 2.26% 1.95% Long Run Exploration Ltd 800,000 2,339,320 2,477,425 1.99% 1.72% Pembina Pipeline Corporation 75,000 1,522,272 1,882,777 1.51% 1.31% Peyto Exploration & Development Corp 95,000 1,151,780 2,086,484 1.68% 1.45% Torc Oil & Gas Ltd 400,000 1,978,561 3,217,578 2.59% 2.24% Trilogy Energy Corp 200,000 3,253,955 3,178,045 2.56% 2.21% Twin Butte Energy 3,150,000 4,008,988 3,095,958 2.49% 2.16% Veresen Inc 230,000 2,056,132 2,359,045 1.90% 1.64% Whitecap Resources 500,000 3,020,026 4,516,140 3.63% 3.14% Financials Canadian Western Bank 125,000 2,247,348 2,733,706 2.20% 1.90% Gluskin Sheff & Associates Inc 180,000 2,551,541 3,125,114 2.51% 2.18% IGM Financial Inc 100,000 2,817,187 2,803,027 2.25% 1.95% Intact Financial Corporation 60,000 2,269,714 2,422,079 1.95% 1.69% Manulife Financial Corp 200,000 1,679,629 2,323,684 1.87% 1.62% Power Financial Corporation 150,000 2,655,322 2,727,803 2.19% 1.90% Industrials Magna International Inc 65,000 1,957,300 4,097,196 3.30% 2.85% Canadian National Railways Company 75,000 2,789,240 2,854,640 2.30% 1.99% Mullen Group Limited 140,000 1,422,811 2,325,332 1.87% 1.62% Materials Chemtrade Logistics Income Fund 238,500 2,227,708 2,743,493 2.21% 1.91% Metals and Mining Labrador Iron Ore Royalty Corp 125,000 2,455,494 2,100,211 1.69% 1.46% Real Estate Canadian Apartment Properties Real Trust Units 165,000 2,024,784 2,070,149 1.67% 1.44% Chartwell Retirement Residences Trust Units 600,000 3,553,598 3,571,182 2.87% 2.49% H&R Real Estate Investment Trust 200,000 2,918,062 2,543,314 2.05% 1.77% Northern Property Real Estate Investment 85,000 1,773,457 1,335,268 1.07% 0.93% Pure Industrial Real Estate Trust 950,000 2,492,913 2,383,808 1.92% 1.66% Utilities Algonquin Power & Utilities Corporation 350,000 1,375,220 1,581,610 1.27% 1.10% Capital Power Corp 170,000 2,439,737 2,440,912 1.96% 1.70% Innergex Renewable Energy Inc 375,000 2,441,347 2,223,753 1.79% 1.55% Northland Power Inc 255,000 2,554,483 2,544,056 2.05% 1.77% Transalta Corp 375,000 2,760,750 2,693,212 2.17% 1.87% Netherlands - Quoted Investments Lyondellbasell Industries 45,000 1,760,268 2,569,438 2.07% 1.79% Switzerland - Quoted Investments Tyco International Ltd 110,000 2,757,008 2,932,949 2.36% 2.04% United States - Quoted Investments Consumer Discretionary Whirlpool Corp 20,000 1,896,372 1,628,097 1.31% 1.13% Consumer Staples Kraft Foods Group Inc Com Npv 75,000 2,491,102 2,629,618 2.12% 1.83% Financials Capital One Financial Corp 55,000 1,968,380 2,656,960 2.14% 1.85% Citigroup Inc 50,000 1,531,483 1,377,022 1.11% 0.96% Discover Financial Services 65,000 1,656,186 2,355,793 1.90% 1.64% JP Morgan Chase & Co 80,000 2,459,642 2,694,039 2.17% 1.88% Prudential Financial Inc 60,000 2,580,418 3,115,012 2.51% 2.17% -------------------------------------------------- Total equities: 113,324,350 130,365,456 104.91% 90.76% -------------------------------------------------- Debt: Canada - Quoted Investments Chemtrade Logistics Income fund 5.75% due 31 December 2018 2,000,000 1,163,632 1,227,182 0.99% 0.85% Superior Plus Corp 6% due 30 June 2018 2,650,000 1,788,822 1,582,365 1.27% 1.10% Chartwell Seniors Housing Real Estate Investment Trust 5.7% due 31 March 2018 2,000,000 1,269,722 1,202,474 0.97% 0.84% Great Canadian Gaming Corp 6.625% due 25 July 2022 2,000,000 1,272,795 1,168,157 0.94% 0.81% InnVest Real Estate Investment Trust 6.75% due 31 March 2016 1,000,000 664,078 564,174 0.45% 0.39% Tricon Capital Group 5.6% due 31 March 2020 1,500,000 961,477 864,793 0.70% 0.60% Quebecor Inc 6.625% due 15 January 2023 3,500,000 2,355,635 1,993,828 1.60% 1.39% Paramount Resources 8.25% due 13 December 2017 3,000,000 1,848,026 1,717,231 1.38% 1.20% Perpetual Energy Inc. 8.75% due 15 March 2018 4,000,000 2,242,741 2,212,771 1.78% 1.54% Savanna Energy Services Corp 7.00% due 25 May 2018 1,325,000 842,150 752,987 0.61% 0.52% -------------------------------------------------- Total debt: 14,409,078 13,285,962 10.69% 9.24% -------------------------------------------------- -------------------------------------------------- Total investments 127,733,428 143,651,418 115.60% 100.00% -------------------------------------------------- STATEMENT OF FINANCIAL POSITION OF THE COMPANY (unaudited) As at 30 June 2014 with unaudited comparatives as at 30 June 2013 and audited comparatives as at 31 December 2013 Notes 30.06.2014 30.06.2013 31.12.2013 £ £ £ Current assets Other receivables 2 2 2 ------------ ------------ ----------- Net assets 2 2 2 ------------ ------------ ----------- Equity attributable to equity holders Stated capital 2 2 2 2 ------------ ------------ ----------- Total Shareholders' equity 2 2 2 ------------ ------------ ----------- The financial statements were approved by the Directors on 14 August 2014 and signed on behalf of the Board by: Raymond Apsey Nicholas Villiers Director Director NOTES TO THE FINANCIAL STATEMENTS OF THE COMPANY (unaudited) For the period ended 30 June 2014 with comparatives for the year ended 31 December 2013 1. Basis of accounting The separate financial statements of the Company have been prepared showing results of the Company only. They have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union in accordance with the accounting policies set out in notes 1 and 2 to the financial statements of the Fund. A separate Statement of Comprehensive Income, Statement of Changes in Equity and Cash Flow Statement have not been prepared as there have been no results or cash flows for the Company for this year or the preceding year. There are no standards and interpretations in issue but not effective that the directors feel will have a material impact on the financial statements of the Company. Judgements and estimates used by the directors The preparation of financial statements in compliance with IFRS requires the directors to make judgements, estimates and assumptions that affect the application of policies and reported amount of assets and liabilities, income and expenses. The estimates and associated liabilities are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent. For the purposes of these financial statements there were no specific areas in which judgement was exercised or any estimation was required by the directors. 2. The Company's stated capital The authorised share capital of the Company is split into two management shares of no par value. No. of shares £ Management shares issued -------------------- At 30 June 2014 2 2 -------------------- 3. Taxation The Company adopted UK tax residency from 11 October 2011 onwards. Since that date the Company has been managed in such a way as to be able to meet the conditions for approval as an investment trust under Section 1158 of the Corporation Tax Act 2010. Accordingly, no UK tax has been provided for. On 7 December 2012 the Company received approval from HM Revenue & Customs to be treated as an investment trust in accordance with Section 1158 of the Corporation Tax Act 2010 and will seek to remain so approved. This announcement is distributed by GlobeNewswire on behalf of GlobeNewswire clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Middlefield Canadian Income PCC via GlobeNewswire [HUG#1849025] A0MV32B15PV03R301 Copyright RTT News/dpa-AFX |