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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Middlefield Canadian Income Pcc | LSE:MCT | London | Ordinary Share | GB00B15PV034 | RED PART PREF SHS NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -1.00 | -0.99% | 100.00 | 100.00 | 101.50 | 102.50 | 100.00 | 102.50 | 129,730 | 16:27:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trust,ex Ed,religious,charty | 2.5M | -3.62M | - | N/A | 0 |
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Middlefield Canadian Income PCC (the "Company")
(a protected cell company incorporated in Jersey with registration
number 93546)
Including Middlefield Canadian Income - GBP PC (the "Fund"), a cell of
the Company
Announcement of Half-yearly Results
The Company announces its half-yearly results for the period ended 30
June 2017, as approved by the Board of directors on 14 September, 2017.
The full half-yearly financial report will be made public and sent to
all shareholders during September, 2017.
For further information about this announcement contact:
Assistant Secretary
JTC Fund Solutions (Guernsey) Limited
Tel.: 01481 702400
Dean Orrico
President
Middlefield International Limited
Tel.: 01203 7094016
MIDDLEFIELD CANADIAN INCOME PCC
including MIDDLEFIELD CANADIAN INCOME - GBP PC
a cell of the Company
Half Yearly Report and Condensed Financial Statements (Unaudited)
For the period 1 January 2017 to 30 June 2017
Table of Contents
Responsibility Statement 3
Chairman's Report 4
Interim Investment Manager's Report (Unaudited) 5
Condensed Financial Statements of the Fund (Unaudited)
Condensed Statement of Financial Position of the Fund (Unaudited)
9
Condensed Statement of Comprehensive (Loss)/Income of the Fund
(Unaudited) 10
Condensed Statement of Changes in Redeemable Participating Preference
Shareholders' Equity of the Fund (Unaudited) 11
Condensed Cash Flow Statement of the Fund (Unaudited) 12
Notes to the Condensed Financial Statements of the Fund (Unaudited)
13
Financial Statements of the Company (Unaudited)
Statement of Financial Position of the Company (Unaudited) 26
Notes to the Financial Statements of the Company (Unaudited)
27
Management and Administration IBC
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.
-- the Chairman's Report and Interim Manager's Report include a fair review
of the development, performance and position of the Company 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 Guidance and Transparency
Rules.
-- the Interim Investment Manager's Report and note 11 to the financial
statements include a fair review of related party transactions and
changes therein, as required by DTR 4.2.8.R of the Disclosure Guidance
and Transparency Rules.
By order of the Board
Director Director
Date: 14 September 2017
CHAIRMAN'S REPORT
It is my pleasure to introduce the 2017 Semi-Annual Financial Report for
Middlefield Canadian Income PCC ("MCI"). MCI has established one
closed-end cell known as Middlefield Canadian Income - GBP PC (the
"Fund"). The Fund invests in a broadly diversified portfolio comprised
primarily of Canadian and American equity income securities with the
objective of providing shareholders with high dividends as well as
capital growth over the longer term.
We continue to be pleased with the long-term performance of the Fund.
Since inception in 2006, the Fund's net asset value has generated a
cumulative return of 121.3%, significantly outpacing both of its
benchmark indices: the S&P TSX Composite High Dividend Index and the
S&P/TSX Composite Index, which have generated cumulative period returns
of 89.2% and 71.6%, respectively. Total shareholder return, based on the
share price performance plus distributions, for the 6 months to 30 June
2017 was 1.4% in GBP terms. The NAV total return for the period was down
2.2% in GBP terms for the Fund, while its benchmark S&P TSX Composite
High Dividend Index was down 0.3% in GBP terms. On a rolling 12-month
performance, the Fund's share price has increased by 26.4%.
At the end of 2016, just less than 73% of the portfolio was invested in
Canadian stocks, with approximately 22% of the portfolio invested in
U.S. equities. At the midway point in 2017, the Fund's Canadian
holdings exceeded 80% versus approximately 15% in U.S. and international
equities. While the Fund has the ability to invest up to 40% of the
portfolio outside of Canada, greater investment in Canada is supported
by positive macroeconomic growth, as both the OECD and Bank of Canada
are projecting the Canadian market to realize real GDP growth of 2.8% in
2017. As a result of the positive economic momentum and political
stability in Canada relative to other developed markets, we believe
Canadian equities will continue to generate competitive total returns.
In the first six months of the year, the Fund repurchased a total of
450,000 redeemable participating preference shares in six separate
transactions, at a weighted average price of 105 pence. As a result,
the number of shares with voting rights in issue is now approximately
106.5 million.
We tactically manage the amount of gearing in the Fund, ranging from
12.6% to 21.7% over the course of the past twelve months. At the end of
June, we stood with net gearing of approximately 18.4% and continue to
closely monitor market conditions to determine the appropriate level for
the Fund, effectively increasing gearing to invest in securities that
are attractively valued and reducing it with proceeds from positions
that are overvalued.
We also made some strategic asset allocation decisions in the first half
of the year in response to an improved economic backdrop and the
expectation of continued low interest rates. Specifically, REITs are
the largest weighting in MCI's portfolio, with a significant emphasis on
large, liquid issuers who have the ability to generate organic growth
over time. The portfolio changes completed in the first half of the
year are described in more detail in the Interim Management Report.
Outlook
Beginning in July 2017, the Fund has announced that its quarterly
dividend will increase from 1.25p per share to 1.275p per share,
equating to 5.1p per annum. The increase reflects the Fund's
longstanding focus on companies which pay growing levels of dividends
over time. Looking forward, our manager remains bullish on Canadian and
U.S. equities due to fundamentals underpinning continued revenue and
earnings growth. The Fund is well positioned to benefit from these
trends and remains focused on investing in income-oriented issuers with
strong management teams, good balance sheets and sustainable, growing
dividends, while providing access to sectors and geographies that are
under-represented in British investor portfolios.
We thank you for your continued support.
Nicholas Villiers
Chairman
Date: 14 September 2017
INTERIM INVESTMENT MANAGER'S REPORT
Six months to 30 June 2017 (Unaudited)
On the invitation of the Directors of the Company, this interim
investment manager's 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 Guidance and Transparency Rules. It
should not be relied upon by any party for any purpose other than as
stated above.
Middlefield Canadian Income PCC ("MCI") is a closed-ended investment
company incorporated in Jersey on 24 May 2006. MCI has established one
closed-end cell known as Middlefield Canadian Income - GBP PC (the
"Fund", which term includes, where the context permits, MCI 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 the FTSE UK All-Share index effective 20 June 2011.
INCOME OBJECTIVE
The Fund invests in a broadly diversified portfolio comprised primarily
of Canadian and U.S. equity income securities with the objective of
providing shareholders with high dividends as well as capital growth
over the longer term. The Fund intends to pay dividends on 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 the United States and listed on Canadian and American stock
exchanges, which the investment manager believes will provide an
attractive level of distributions, together with the prospect for
capital growth and organic growth over time.
PERFORMANCE SUMMARY
After a volatile start to the year, equity markets finished 2016 on a
high note, with major North American indices at or just below their
all-time highs. Early this year, the momentum continued, as the Dow
Jones Industrial Index reached new heights in January and the S&P500 and
S&P/TSX Composite Indices were both at or near record highs. Volatility
remained subdued at that time, as many investors sat on the sidelines
awaiting further clarity on President Trump's policy agenda. Volatility
has since increased, with markets negatively impacted by the UK election
as well as the lack of progress on major policy agenda items such as tax
reform and financial deregulation in the U.S.
While Canada's economic growth outpaced its G-8 peers, posting a first
quarter annualized GDP growth of 3.7%, Canadian equities were relative
underperformers in the first half of the year with the S&P/TSX Composite
Index posting a modest total return of approximately 1.5%. Economic
growth allowed the Bank of Canada to increase its overnight interest
rate by 25 basis points on 12 July 2017 and a significant majority of
economists are anticipating another rate increase at the Bank's October
meeting. Concerns over the potential impact of a correction in
residential housing prices and the North American Free Trade Agreement
renegotiation with the U.S. and Mexico provide potential headwinds to
the Canadian equity markets over the balance of the year. While White
House rhetoric raises concerns regarding global trade and currency
markets, a recent agreement on Mexican sugar imports and their
willingness to renegotiate rather than withdraw from NAFTA shows that
the U.S. is open to negotiation.
Global markets had a positive start to the year with U.S. indices
finishing the second quarter near all-time highs. The U.S. economy
rebounded in the second quarter, following a slower than expected start
to the year, driven by employment gains and growth in consumer spending
and capital investment. As a result, the Federal Open Market Committee
("FOMC") voted unanimously to raise the overnight lending rate by 25
basis points for the third consecutive quarter, while also announcing
plans to begin reducing the Federal Reserve's holdings of treasury and
mortgage-backed securities. The FOMC's outlook anticipates another rate
increase in 2017. Notably, U.S. corporate earnings increased by
approximately 14% in the first quarter, continuing the momentum that
began in the second half of 2016. With market valuation multiples
above historic averages, we believe the recent acceleration in earnings
growth should support the next move higher in stock prices.
Yields on 10-year U.S. treasury bonds remained stable through the first
six months of the year, closing at 2.3%. The yield curve has flattened
in recent months as long-term rates decreased while the FOMC hiked
short-term rates. The flattened curve has caused the Financials sector
to underperform the S&P 500 over the six month period. Looking ahead,
we expect U.S. banks will demonstrate growth in earnings, making current
valuations increasingly compelling. Our top holding in the Financials
sector at 30 June 2017 was The Blackstone Group, a well-established
multinational asset manager focused on private equity and credit
strategies. This position was initiated in March of this year.
Blackstone pays a dividend of 5.2% and is anticipated to generate
significant earnings growth due to the increasing institutional investor
demand for alternative asset strategies.
INTERIM INVESTMENT MANAGER'S REPORT (continued)
Six months to 30 June 2017 (Unaudited)
PERFORMANCE SUMMARY (continued)
After averaging US$43 per barrel in 2016, oil prices traded as high as
US$55 during the first half of the year before falling back to US$46 at
June 30. Despite the production cut orchestrated by OPEC, prices
continue to be negatively affected by increased output from Libya,
Nigeria and U.S. shale. As demand increases and OPEC curtails
production, we expect oil prices to gradually move higher in the second
half of 2017. The Fund's energy exposure is geographically biased
towards Canada with a preference for pipeline companies over producers.
In March, the U.S. State Department provided a permit for the
long-delayed Keystone XL pipeline, which could bring more than 800,000
barrels per day of Alberta heavy crude to export facilities in the
southern U.S. and directly benefits our position in TransCanada
Corporation. In June of this year, the Fund initiated a position in
another major pipeline company, Kinder Morgan Canada, through its IPO
which was priced at a discount to its peer group. We believe the
company is amongst the most attractive issuers in the Canadian pipeline
sector as it controls a number of systems and terminals, as well as
various crude oil loading facilities. One of its primary assets, the
Trans Mountain pipeline, transports approximately 300,000 barrels per
day of crude oil and refined petroleum products and is the only pipeline
in Canada transporting crude oil and refined products to the west coast.
On November 29, 2016, the Government of Canada granted Kinder Morgan
approval for its $7.4 billion Trans Mountain Expansion Project, which is
anticipated to increase capacity to the BC coast to 890,000 barrels per
day by the end of 2019. A key contributor to the Fund's performance in
its pipeline weighting was the announced acquisition of Veresen Inc. by
Pembina Pipelines in April of this year. Pembina is a long time core
holding in the Fund and agreed to pay a 22% premium to acquire 100% of
Veresen. The transaction is expected to close before the end of 2017.
Real Estate Investment Trusts are an attractive asset class since
commercial real estate provides consistent income and the potential for
capital appreciation. Fundamentals are stable and REITs exhibit
inflation linked revenues with a low correlation to broader equity
markets. The Fund has become increasingly focused on REITs which have a
history of growing their asset base and cash flow. A good example is
Dream Global REIT, which is focused on office real estate in Germany and
the Netherlands. Dream has had success in solidifying and diversifying
its tenant base and, given the quality portfolio of assets assembled
over the years, we initiated a position in the REIT which yields 7.3%
and trades at a discount to NAV. The Fund remains well diversified
across other REIT sub-sectors, with a new investment in First Capital
Realty Inc. which is one of Canada's largest owners, developers and
managers of grocery anchored, retail-focused urban properties with over
$1 billion of development planned over the next few years. In light of
the aging population and limited supply of long term care and retirement
homes, the Fund also owns Sienna Senior Living REIT which manages over
40 facilities across Canada and also develops high quality seniors
living residences.
Healthcare was the second-best performing sector in the S&P 500 in the
first half of the year, trailing only information technology. Investor
concerns related to drug pricing and healthcare reform gave way to
attractive valuations which were not reflective of underlying
fundamentals. Although the Republican majority in Congress has failed to
pass a bill to repeal and replace The Patient Protection and Affordable
Care Act, we believe the market will begin to rotate more capital into
healthcare in the coming months due to its attractive relative
valuation. Middlefield has developed specific expertise in the
healthcare sector where it manages several mandates for Canadian
investors. Our top healthcare idea continues to be Bristol-Myers Squibb,
which pays a 2.7% yield and is a leading player in the emerging
immuno-oncology pharmaceutical sector. We have also initiated a
position in Swiss company F. Hoffmann-La Roche AG. Like Bristol Myers,
Roche possesses a very deep pipeline of new oncology drugs and, in the
first half of 2017, group sales at Roche rose 5% to CHF 26.3 billion,
with core earnings per share growing 6%.
The Canadian dollar was very volatile relative to the British pound and
US dollar in 2017. More specifically, due to the positive momentum in
the Canadian economy as well as geopolitical issues in both the UK and
US, the Canadian dollar has appreciated significantly against GBP and
USD since May of this year.
INTERIM INVESTMENT MANAGER'S REPORT (continued)
Six months to 30 June 2017 (Unaudited)
PERFORMANCE SUMMARY (continued)
The asset class weightings for the Fund as at 30 June 2017 were:
Asset Class Portfolio Weighting
Real Estate 23.3%
Pipelines 17.8%
Financials 14.8%
Energy 10.3%
Industrials 9.2%
Power & Utilities 5.2%
Health Care 5.1%
Bonds and Convertible Debentures 5.1%
Consumer Discretionary 4.8%
Materials 3.1%
Other 1.3%
Telecommunications 0.0%
Consumer Staples 0.0%
Technology 0.0%
DIVIDS
The Fund paid quarterly dividends of 1.25 pence per share in each of
January and April 2017. The Fund's Board of Directors announced in late
April that its quarterly dividend payable will increase from 1.25p per
share to 1.275p per share, equating to 5.1p per annum, commencing July
2017. A major factor behind the dividend increase was the Fund's focus
on portfolio companies committed to growing their dividends as a result
of their stable and growing cash flows.
RELATED PARTY TRANSACTIONS
Related party transactions are disclosed in greater detail in Note 11 of
the Notes to the Condensed Financial Statements of the Fund (unaudited).
There have been no material changes in the related party transactions
from those described in the 2016 Annual Report.
MATERIAL EVENTS
On 6 January 2017, 11 January 2017 and 17 January 2017, MCI announced
that it had purchased for cash 50,000 redeemable participating
preference shares at a price per share of 105.5 pence, 107 pence and 106
pence, respectively. On 19 January 2017, 20 January 2017 and 7 February
2017, MCI announced that it had purchased for cash 100,000 redeemable
participating preference shares at a price per share of 104.75 pence,
103.5 pence and 102.5 pence, respectively. In each case, the price of
the repurchased shares represented a discount to the Fund's prevailing
net asset value and the repurchased shares were held in treasury.
The Board of MCI is not aware of any significant event or transaction
which has occurred between 1 July 2017 and the date of publication of
this statement which could have a material impact on the financial
position of the Fund.
INTERIM INVESTMENT MANAGER'S REPORT (continued)
Six months to 30 June 2017 (Unaudited)
PRINCIPAL RISKS AND UNCERTAINTIES
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 are included at pages 10 and 11 of the
2016 Annual Report and in Note 16 of the Notes to the Condensed
Financial Statements of the Fund (unaudited).
OUTLOOK
We believe that the Fund is well positioned to continue to provide
attractive long-term returns, on both a relative and absolute basis.
Looking forward, we remain bullish on Canadian and U.S. equities due to
fundamentals underpinning continued revenue and earnings growth. Other
global risks include a European banking system that remains
under-capitalized, political uncertainty in Italy, Brazil and Germany,
and the ongoing de-leveraging of the Chinese economy. In light of these
concerns, active management and global diversification are critical to
achieving superior risk-adjusted returns. Our philosophy remains
centered on investing in income-oriented issuers with strong management
teams, good balance sheets, growing dividends and robust organic growth
opportunities. We believe that Canada remains an attractive
jurisdiction for foreign investment and that the equity income sector
will benefit from the anticipated improvements in global growth and the
ongoing demand for income.
Middlefield Limited
Date: 14 September 2017
Past performance is not a guide to future performance.
This half-yearly financial report is available at:
www.middlefield.co.uk.
CONDENSED STATEMENT OF FINANCIAL POSITION OF THE FUND (Unaudited)
As at 30 June 2017
with unaudited comparatives as at 30 June 2016
and audited comparatives as at 31 December 2016
Notes 30.06.2017 30.06.2016 31.12.2016
GBP GBP GBP
Current assets
Securities
(at fair value through profit or loss) 3 & 17 148,665,230 126,046,085 146,332,071
Accrued bond interest 75,606 59,532 92,472
Accrued bank interest 2,635 1,119 1,421
Accrued dividend income 686,991 320,907 373,488
Other receivables 2 2 2
Securities receivable 1,650,041 7,038,767 -
Prepayments 4,857 15,880 34,383
Cash and cash equivalents 4 6,819,085 8,232,290 10,338,576
157,904,447 141,714,582 157,172,413
Current liabilities
Other payables and accruals 5 (339,468) (340,817) (359,108)
Securities payable (1,623,215) (3,922,089) -
Interest payable (16,006) (22,483) (46,920)
Loan payable 14 (35,439,162) (28,694,202) (30,061,412)
(37,417,851) (32,979,591) (30,467,440)
Net assets 120,486,596 108,734,991 126,704,973
Equity attributable to equity holders
Stated capital 6 49,704,414 50,342,977 50,174,414
Retained earnings 70,782,182 58,392,014 76,530,559
Total Shareholders' equity 120,486,596 108,734,991 126,704,973
Net asset value per redeemable participating preference 113.15p 101.51p
share 7 118.49p
The financial statements and notes on pages 9 to 25 were approved by the
Directors on 14 September 2017 and signed on behalf of the Board by:
Director Director
The accompanying notes on pages 13 to 25 form an integral part of these
financial statements.
CONDENSED STATEMENT OF COMPREHENSIVE (LOSS)/INCOME OF THE FUND
(Unaudited)
For the period 1 January 2017 to 30 June 2017 with unaudited
comparatives for the period 1 January 2016 to 30 June 2016
and audited comparatives for the year ended 31 December 2016
Six months
ended Year ended
30 June 31 December
Six months ended 30 June 2017 2016 2016
Notes Revenue Capital Total Total Total
GBP GBP GBP GBP GBP
Revenue
Dividend and interest income 8 4,101,593 - 4,101,593 2,216,437 5,196,054
Net movement in the fair value of securities (at fair
value through profit or loss) 9 - (6,081,853) (6,081,853) 20,171,429 40,039,753
Net movement on foreign exchange - 458,134 458,134 (2,507,200) (3,213,670)
Total (loss)/revenue 4,101,593 (5,623,719) (1,522,126) 19,880,666 42,022,137
Expenditure
Investment management fees 172,578 258,868 431,446 332,013 743,275
Custodian fees 7,406 - 7,406 6,589 14,446
Sponsor's fees 123,270 - 123,270 94,861 212,364
Other expenses 198,220 - 198,220 184,055 378,931
Operating expenses 501,474 258,868 760,342 617,518 1,349,016
Net operating (loss)/profit before finance costs 3,600,119 (5,882,587) (2,282,468) 19,263,148 40,673,121
Finance cost (101,396) (152,094) (253,490) (192,152) (413,141)
(Loss)/profit before tax 3,498,723 (6,034,681) (2,535,958) 19,070,996 40,259,980
Withholding tax expense (545,862) - (545,862) (267,160) (640,730)
Net (loss)/profit 2,952,861 (6,034,681) (3,081,820) 18,803,836 39,619,250
(Loss)/profit per redeemable participating preference
share - basic and diluted 10 2.77p (5.66)p (2.89)p 17.45p 36.89p
The Company including the Fund has no other items of income or expense
for the current and prior periods and accordingly the net (loss)/profit
for the current and prior periods represent total comprehensive
(loss)/income.
There are zero earnings attributable to the management shares. All
activities derive from continuing operations.
The accompanying notes on pages 13 to 25 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 2017 to 30 June 2017 with unaudited
comparatives for the period 1 January 2016 to 30 June 2016
and audited comparatives for the year ended 31 December 2016
Stated capital account Retained income Total
Notes GBP GBP GBP
At 1
January
2016 51,158,937 42,288,484 93,447,421
Profit for
the
period - 18,803,836 18,803,836
Repurchase
of shares (815,960) - (815,960)
Dividends
paid 12 - (2,700,306) (2,700,306)
At 30 June
2016 50,342,977 58,392,014 108,734,991
Profit for
the
period - 20,815,414 20,815,414
Repurchase
of shares (168,563) - (168,563)
Dividends
paid - (2,676,869) (2,676,869)
At 31
December
2016 50,174,414 76,530,559 126,704,973
Loss for
the
period - (3,081,820) (3,081,820)
Repurchase
of shares 6 (470,000) - (470,000)
Dividends
paid 12 - (2,666,557) (2,666,557)
At 30 June
2017 49,704,414 70,782,182 120,486,596
The accompanying notes on pages 13 to 25 form an integral part of these
financial statements.
CONDENSED CASH FLOW STATEMENT OF THE FUND (Unaudited)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
Year ended
Six months ended 30 June 31 December
2017 2016 2016
GBP GBP GBP
Cash flows (used in)/from operating activities
Net (loss)/profit (3,081,820) 18,803,836 39,619,250
Adjustments for:
Net movement in the fair value of securities (at fair
value through profit or loss) 6,081,853 (20,171,429) (40,039,753)
Realised (gain)/loss on foreign exchange (399,724) 1,652,277 3,324,777
Unrealised (gain)/loss on foreign exchange (58,410) 854,923 (111,107)
Payment for purchases of securities (86,817,631) (51,787,184) (105,274,256)
Proceeds from sale of securities 78,402,622 55,806,463 108,875,872
Operating cash flows before movements in
working capital (5,873,110) 5,158,886 6,394,783
Increase in receivables (1,918,367) (7,109,671) (175,230)
Increase in payables and accruals 1,572,659 3,992,757 113,396
Net cash (used in)/from operating activities (6,218,818) 2,041,972 6,332,949
Cash flows from/(used in) financing activities
Repayment of borrowings (104,021,639) (63,015,341) (120,649,278)
New bank loans raised 109,399,389 67,345,895 126,347,043
Payments for repurchase of shares (470,000) (815,960) (984,523)
Dividends paid (2,666,557) (2,700,306) (5,377,175)
Net cash from/(used in) financing activities 2,241,193 814,288 (663,933)
Net (decrease)/increase in cash and cash equivalents (3,977,625) 2,856,260 5,669,016
Cash and cash equivalents at the beginning of period 10,338,576 7,883,230 7,883,230
Effect of foreign exchange rate changes 458,134 (2,507,200) (3,213,670)
Cash and cash equivalents at the end of period 6,819,085 8,232,290 10,338,576
Cash and cash equivalents made up of:
Cash at bank 6,819,085 8,232,290 10,338,576
The accompanying notes on pages 13 to 25 form an integral part of these
financial statements.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
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 the United States 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 28 Esplanade, St
Helier, Jersey JE2 3QA, Channel Islands.
The Fund's shares have been admitted to the Official List of the FCA and
to trading on the London Stock Exchange's Main Market for listed
securities.
The functional and presentational currency of the Company is Sterling
("GBP").
The Company and the Fund have no employees.
The half-yearly report has not been audited or reviewed by the auditor,
Deloitte LLP, pursuant to the Auditing Practices Board guidance on
'Review of Interim Financial Information'.
The information presented for the year ended 31 December 2016 does not
constitute the statutory financial statements of the Company. Copies of
the statutory financial statements for that year have been delivered to
the Registrar of Companies in Jersey and to the UK Financial Conduct
Authority's National Storage Mechanism. Copies are also available from
the Company's website www.middlefield.co.uk. The auditor's report on
those financial statements was unqualified.
2. Accounting Policies
a. Basis of preparation
The condensed financial information for the period ended 30 June 2017
has been prepared in accordance with IAS 34 'Interim Financial
Reporting' as adopted by the European Union. The condensed interim
financial information should be read in conjunction with the annual
financial statements for the year ended 31 December 2016, which have
been prepared in accordance with International Financial Reporting
Standards (IFRS).
The condensed financial statements have been prepared on the historical
cost 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 (SORP) '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.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
(Continued)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
2. Accounting Policies (continued)
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 2016, as described in those financial statements.
Standard and Interpretation in issue is 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) and approved by the EU
but is not yet effective and therefore has not yet been adopted by the
Company and the Fund:
-- IFRS 9 Financial Instruments (Effective date for periods beginning on or
after 1 January 2018)
IFRS 9 deals with classification and measurement of financial assets and
its requirements represent a significant change from the existing
requirements in IAS 39 in respect of financial assets: amortised cost
and fair value. Financial assets are measured at amortised cost when the
business model is to hold assets in order to collect contractual cash
flows. All other financial assets are measured at fair value with
changes recognised in profit or loss. For an investment in an equity
instrument that is not held for trading, an entity may on initial
recognition elect to present all fair value changes from the investment
in other comprehensive income. Once adopted, IFRS 9 will be applied
retrospectively, subject to certain transitional provisions. The
standard is not expected to have a significant impact on the financial
statements since all of the Company's financial assets are designated at
fair value through profit and loss.
The adoption of this Standard and Interpretation may require additional
disclosure in future financial statements. None is expected to affect
the financial position of the Company and the Fund in future periods.
d. Business and geographical segments
The Directors are of the opinion that the Fund is engaged in a single
segment of business investing predominantly in securities and REITs
domiciled in Canada and the U.S. to which the Fund is solely exposed and
therefore no segment reporting is provided.
3. Securities (at fair value through profit or loss)
30.06.2017 30.06.2016 31.12.2016
GBP GBP GBP
Quoted/listed Equities 141,280,188 117,790,191 138,878,770
Quoted/listed Bonds 7,385,042 8,255,894 7,453,301
148,665,230 126,046,085 146,332,071
Please refer to Note 17 for the Schedule of
Investments.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
(Continued)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
4. Cash and cash equivalents
30.06.2017 30.06.2016 31.12.2016
GBP GBP GBP
Cash at bank 6,819,085 8,232,290 10,338,576
Cash and cash equivalents comprise cash held by the Fund and bank
balances with an original maturity of three months or less. The carrying
value of these assets approximates to their fair value.
5. Other payables and accruals
30.06.2017 30.06.2016 31.12.2016
GBP GBP GBP
Investment management fees 210,290 174,868 212,389
Sponsor's fees 60,083 49,962 60,683
Audit fees 14,877 38,911 26,926
Administration fees 30,042 24,981 30,341
General expenses 13,031 28,169 15,867
Registrar's fees 8,159 21,443 9,901
Custodian fees 2,986 2,483 3,001
339,468 340,817 359,108
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 GBP
Management shares issued
At 31 December 2016 2 2
At 30 June 2017 2 2
Redeemable participating preference shares issued
At 31 December 2016 106,937,250 50,174,412
06 January 2017 50,000 shares of no par value repurchased
at 105.50 pence each (50,000) (52,750)
11 January 2017 50,000 shares of no par value repurchased
at 107.00 pence each (50,000) (53,500)
17 January 2017 50,000 shares of no par value repurchased
at 106.00 pence each (50,000) (53,000)
19 January 2017 100,000 shares of no par value repurchased
at 104.75 pence each (100,000) (104,750)
20 January 2017 100,000 shares of no par value repurchased
at 103.50 pence each (100,000) (103,500)
07 February 2017 100,000 shares of no par value repurchased
at 102.50 pence each (100,000) (102,500)
At 30 June 2017 106,487,250 49,704,412
Total stated capital at 30 June 2017 49,704,414
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
(Continued)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
6. Stated capital account (continued)
The holders of redeemable participating preference shares are entitled
to receive 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 per cent. of the shares then in issue, or such lesser percentage
as the Directors may decide.
At the period end, there were 18,195,000 (30 June 2016: 17,570,000, 31
December 2016: 17,745,000) treasury shares in issue. Treasury shares
have no value and no voting rights.
7. Net asset value per redeemable participating preference
share
The net asset value per share of 113.15p (30 June 2016: 101.51p, 31
December 2016: 118.49p) is based on the net assets at the period end of
GBP120,486,596 (30 June 2016: GBP108,734,991, 31 December 2016:
GBP126,704,973) and on 106,487,250 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
2016: 107,112,250 shares, 31 December 2016: 106,937,250 shares).
8. Dividend and interest income
Period ended 30.06.2017
Revenue Capital Total 30.06.2016 31.12.2016
GBP GBP GBP GBP GBP
Bond and debenture
interest 207,487 - 207,487 219,450 436,079
Bank and loan
interest 40,133 - 40,133 40,074 70,603
Dividend income 3,853,973 - 3,853,973 1,956,913 4,689,372
4,101,593 - 4,101,593 2,216,437 5,196,054
9. Net movement in the fair value of securities
Period ended 30.06.2017
Revenue Capital Total 30.06.2016 31.12.2016
GBP GBP GBP GBP GBP
Net movement in the fair value of securities
(at fair value through profit or loss) - (6,081,853) (6,081,853) 20,171,429 40,039,753
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
(Continued)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
10. Profit per redeemable participating preference share -
basic and diluted
The revenue gain per share is based on GBP2,952,861 (30 June 2016:
GBP1,454,106, 31 December 2016: GBP3,487,017) net revenue gain on
ordinary activities and a weighted average of 106,539,184 (30 June 2016:
107,779,008, 31 December 2016: 107,410,269) shares in issue. The capital
loss per share is based on GBP6,034,681 (30 June 2016: GBP17,349,730 net
capital gain, 31 December 2016: GBP36,132,233 net capital gain) net
capital loss for the period and a weighted average of 106,539,184 shares
in issue (30 June 2016: 107,779,008, 31 December 2016: 107,410,269).
11. Related party transactions
The Directors are regarded as related parties.
Total Directors' fees paid during the period amounted to GBP42,500 of
which zero was due at the period end (30 June 2016: GBP42,500 of which
zero was due at the period end, 31 December 2016: GBP85,000 of which
zero was due at the year end).
The Investment Manager is also regarded as a related party due to common
ownership. Total management fees paid during the period amounted to
GBP431,446 (30 June 2016: GBP332,013, 31 December 2016: GBP743,275).
These fees for the above are all arms' length transactions.
12. Dividends
Dividends of 1.25 pence per share were paid on a quarterly basis during
the period in the months of January and April totalling GBP2,666,557 (30
June 2016: GBP2,700,306). On 31 July 2017, a dividend of GBP1,357,712
was paid. In accordance with the requirements of IFRS, as this was
approved on 6 July 2017, being after the Statement of Financial Position
date, no accrual was reflected in the 2017 interim financial statements
for this amount of GBP1,357,712 (7 July 2016: GBP1,338,903).
13. Taxation
The Company adopted UK tax residency on 11 October, 2011. 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. As an investment trust, all capital gains
are exempt from UK corporate tax. 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.
14. Loan payable
The Fund has a Credit Facility Agreement with Royal Bank of Canada
("RBC") whereby RBC provides an on Demand Credit Facility (the "Credit
Facility"), with a maximum principal amount of the lesser of CAD
65,000,000 and 25 per cent. of the total asset value of the Fund.
As at 30 June 2017, the Bankers' Acceptance drawn under the Credit
Facility totals CAD 60,000,000 (GBP equivalent of GBP35,439,162) (period
ended 30 June 2016: CAD 50,000,000 (GBP equivalent of GBP28,694,202),
year ended 31 December 2016: CAD 50,000,000 (GBP equivalent
GBP30,061,412)).
As at 30 June 2017, pre-paid interest and stamping fees of GBP112,606
(period ended 30 June 2016: GBP80,070, year ended 31 December 2016:
GBP63,822) were paid on the Bankers' Acceptance and these costs are
being amortised over 90 and 30 days. Interest paid on the Bankers'
Acceptance totalled GBP182,905 (period ended 30 June 2016: GBP135,793,
year ended 31 December 2016: GBP263,417).
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 cent. per annum is payable.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
(Continued)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
15. Security agreement
In conjunction with entering into the Credit Facility, the Fund has
entered into a General Security Agreement with RBC, pursuant to which,
the Fund has granted RBC interests in respect of collateral, being all
present and future 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 the investments, accrued income, 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, loans and reserve accounts. The Investment Manager
manages and adjusts its capital in response to general economic
conditions, the risk characteristics of the underlying assets and
working capital requirements. Generally speaking, the Fund will reduce
leverage when investments are likely to decrease in value and will
increase leverage when investment appreciation is anticipated. In order
to maintain or adjust its capital structure, the Fund may borrow or
repay debt under its Credit Facility or undertake other activities
deemed appropriate under the specific circumstances. The Fund and the
Company do not have any externally imposed capital requirements.
However, the Fund is subject to bank covenants in respect of leverage
and complied with those covenants in the 6 months to 30 June 2017 and in
2016.
Investment and trading activities
It is intended that the Fund will continue throughout its life to be
primarily invested in a Canadian and U.S. 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 a commitment that it has entered into with the Fund.
The Fund's principal assets are bank balances and cash, other
receivables 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. Where the Investment Manager makes an investment in debt or
corporate securities, the credit rating of the issuer is taken into
account to manage the Company's exposure to risk of default.
Investments in debt or corporate securities are across a variety of
sectors and geographical markets, to avoid concentration of credit risk.
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.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
(Continued)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
16. Financial instruments (continued)
Market price risk (continued)
It is the business of the Investment Manager to manage the portfolio and
borrowings to achieve the best returns. The Directors manage the risk
inherent in the portfolio by monitoring, on a formal basis, the
Investment Manager's compliance with the Company's stated investment
policy and reviewing investment performance.
Country risk
On 17 January 2012 the Financial Reporting Council ("FRC") released
"Responding to the increased country and currency risk in financial
reports". This update from the FRC included 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 Fund invests primarily in Canadian and U.S. securities. The
Investment Manager monitors the Company's exposure to foreign currencies
on a daily basis. The Board has reviewed the disclosures and believes
that no additional disclosures are required because the Canadian and
U.S. economies are stable.
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, 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 2017.
Level Level
Level 1 2 3 Total
GBP GBP GBP GBP
Financial assets
Securities
(at fair value through profit or loss) 148,665,230 - - 148,665,230
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
(Continued)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
16. Financial instruments (continued)
Fair value measurements (continued)
The following table presents the Fund's financial assets and liabilities
by level within the valuation hierarchy as of 31 December 2016.
Level Level
Level 1 2 3 Total
GBP GBP GBP GBP
Financial assets
Securities
(at fair value through profit or loss) 146,332,071 - - 146,332,071
The Fund holds securities that are traded 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 2017, if the market prices of the securities had been 30%
higher with all other variables held constant, the increase in net
assets attributable to holders of redeemable participating preference
shares would have been GBP44,599,569 (30 June 2016: GBP37,813,826,
December 2016: GBP43,899,621), arising due to the increase in the fair
value of financial assets at fair value through profit or loss by
GBP44,599,569 (30 June 2016: GBP37,813,826, 31 December 2016:
GBP43,899,621).
At 30 June 2016, 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 2017, 30 June 2016 and 31 December 2016:
Floating rate assets
30.06.2017 30.06.2016 31.12.2016
GBP GBP GBP
Assets
Debt securities 7,385,042 8,225,894 7,453,301
Cash and cash equivalents 6,819,085 8,232,290 10,338,576
14,204,127 16,458,184 17,791,877
Liabilities
Loan payable 35,439,162 28,694,202 30,061,412
35,439,162 28,694,202 30,061,412
The above analysis excludes short term debtors and creditors as all
material amounts are non interest-bearing.
Interest rate sensitivity analysis
At 30 June 2017, 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 would
have decreased by GBP292,498 (30 June 2016: GBP266,023, 31
December 2016: GBP245,372) due to the decrease in market value of listed
debt securities, an increase in interest payable on the loan and to a
lesser extent an increase in interest earnings on cash and cash
equivalents.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
(Continued)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
16. Financial instruments (continued)
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
and cash 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 and U.S. companies
and REITs listed on Canadian Stock Exchange and are actively traded.
As at 30 June 2017, the Fund's ability to manage liquidity risk was as
follows:
Less than 3 months More than
1 month 1 to 3 months to 1 year 1 year Total
GBP GBP GBP GBP GBP
Assets
Securities (at
fair value
through profit
or loss) 148,665,230 - - - 148,665,230
Accrued bond
interest 75,606 - - - 75,606
Accrued dividend
income 686,991 - - - 686,991
Accrued bank
interest 2,635 - - - 2,635
Other
receivables 2 - - - 2
Securities
receivable 1,650,041 - - - 1,650,041
Prepayments 4,858 - - - 4,858
Cash and cash
equivalents 6,819,085 - - - 6,819,085
157,904,448 - - - 157,904,448
Liabilities
Loan payable (2,960,341) (32,478,821) - - (35,439,162)
Other payables
and accruals (339,468) - - - (339,468)
Securities
payable (1,623,216) - - - (1,623,216)
Interest payable (16,006) - - - (16,006)
(4,939,031) (32,478,821) - - (37,417,852)
152,965,417 (32,478,821) - - 120,486,596
As at 30 June 2016, the Fund's ability to manage liquidity risk was as
follows:
Less than 1 to 3 3 months More than
1 month months to 1 year 1 year Total
GBP GBP GBP GBP GBP
Assets
Securities (at
fair value
through profit
or loss) 126,046,085 - - - 126,046,085
Accrued bond
interest 59,532 - - - 59,532
Accrued dividend
income 320,907 - - - 320,907
Accrued bank
interest 1,119 - - - 1,119
Other
receivables 2 - - - 2
Securities
receivable 7,038,767 - - - 7,038,767
Prepayments 15,880 - - - 15,880
Cash and cash
equivalents 8,232,290 - - - 8,232,290
141,714,582 - - - 141,714,582
Liabilities
Loan payable - (28,694,202) - - (28,694,202)
Other payables
and accruals (340,817) - - - (340.817)
Securities
payable (3,922,089) - - - (3,922,089)
Interest payable (22,483) - - - (22,483)
(4,285,389) (28,694,202) - - (32,979,591)
137,429,193 (28,694,202) - - 108,734,991
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
(Continued)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
16. Financial instruments (continued)
Liquidity risk (continued)
As at 31 December 2016, the Fund's ability to manage liquidity risk was
as follows:
3
months More
Less than 1 1 to 3 to 1 than 1
month months year year Total
GBP GBP GBP GBP GBP
Assets
Securities (at
fair value
through profit
or loss) 146,332,071 - - - 146,332,071
Accrued bond
interest 92,472 - - - 92,472
Accrued dividend
income 373,488 - - - 373,488
Accrued bank
interest 1,421 - - - 1,421
Other
receivables 2 - - - 2
Prepayments 34,383 - - - 34,383
Cash and cash
equivalents 10,338,576 - - - 10,338,576
157,172,413 - - - 157,172,413
Liabilities
Other payables
and accruals (359,108) - - - (359,108)
Interest payable (46,920) - - - (46,920)
Loan payable - (30,061,412) - - (30,061,412)
(406,028) (30,061,412) - - (30,467,440)
156,766,385 (30,061,412) - - 126,704,973
Currency risk
The Fund is denominated in GBP, whereas the Fund's principal investments
are denominated in CAD and USD. 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
2017 2016 31 December 2016
GBP GBP GBP
Assets
Cash and cash equivalents 5,286,546 4,584,760 1,557,425
Canadian equities 120,919,561 90,951,064 106,270,008
Canadian debt 6,149,428 8,255,893 7,453,301
Accrued income 746,132 340,577 467,381
Securities receivable 1,650,041 7,038,767 -
134,751,708 111,171,061 115,748,115
Liabilities
Loan payable (35,439,162) (28,694,202) 30,061,412
Interest payable (16,006) (22,484) 46,920
Securities payable (1,623,215) (3,922,089) -
(37,078,383) (32,638,775) 30,108,332
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
(Continued)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
16. Financial instruments (continued)
Currency risk (continued)
The Fund's net exposure to USD currency at the period end was as
follows:
30 June 30 June
2017 2016 31 December 2016
GBP GBP GBP
Assets
Cash and cash equivalents 1,058,990 3,374,171 8,438,759
United States equities 17,417,154 26,839,129 32,608,762
United States debt 1,235,614 - -
Accrued income 19,101 40,980 -
19,730,859 30,254,280 41,047,521
The Fund's net exposure to CHF currency at the period end was as
follows:
30 June 30 June
2017 2016 31 December 2016
GBP GBP GBP
Assets
Swiss equities 2,943,473 - -
2,943,473 - -
Sensitivity analysis
As at 30 June 2017, had GBP strengthened against the CAD by 5%, with all
other variables held constant, the decrease in net assets attributable
to shareholders would amount to approximately GBP4,883,666 (30 June
2016: GBP3,926,614, 31 December 2016: GBP4,281,989). Had GBP weakened
against the CAD by 5%, this would amount to an increase in net assets
attributable to shareholders of approximately GBP4,883,666 (30 June
2016: GBP3,926,614, 31 December 2016: GBP4,281,989).
As at 30 June 2017, had GBP strengthened against the USD by 5%, with all
other variables held constant, the decrease in net assets attributable
to shareholders would amount to approximately GBP986,543 (30 June 2016:
GBP1,512,714, 31 December 2016: GBP2,052,376). Had GBP weakened against
the USD by 5%, this would amount to an increase in net assets
attributable to shareholders of approximately GBP986,543 (30 June 2016:
GBP1,512,714, 31 December 2016: GBP2,052,376).
As at 30 June 2017, had GBP strengthened against the CHF by 5%, with all
other variables held constant, the decrease in net assets attributable
to shareholders would amount to approximately GBP147,173 (30 June 2016:
GBP0, 31 December 2016: GBP0). Had GBP weakened against the CHF by 5%,
this would amount to an increase in net assets attributable to
shareholders of approximately GBP147,173 (30 June 2016: GBP0, 31
December 2016: GBP0).
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
(Continued)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
17. Schedule of Investments - Securities (at fair value through
profit or loss)
As at 30 June 2017
Shares or Bid-Market % of Net % of
Description Par Value Book Cost Value Assets Portfolio
GBP GBP
Equities:
Bermuda -
Quoted
Investments
Real Estate
Brookfield
Property
Partners LP 225,000 2,564,219 4,074,672 3.38% 2.74%
Canada -
Quoted
Investments
Consumer
Discretionary
Enercare Inc. 350,000 1,663,856 4,091,419 3.40% 2.75%
Energy
Birchcliff
Energy Ltd 85,000 1,300,141 1,264,712 1.05% 0.85%
Birchcliff
Energy Ltd -
Preferred
Shares 40,000 636,779 594,684 0.49% 0.40%
Cardinal
Energy Ltd. 550,000 2,671,828 1,571,479 1.30% 1.06%
Enbridge
Income Fund
Holdings
Inc. 150,000 3,095,309 2,860,496 2.37% 1.92%
Ensign Energy
Services
Inc. 950,000 4,650,820 3,885,721 3.23% 2.61%
Freehold
Royalties
Ltd. 260,000 1,786,134 2,002,080 1.66% 1.35%
Keyera Corp. 60,000 1,367,358 1,449,365 1.20% 0.98%
Kinder Morgan
Canada
Limited 425,000 3,994,222 3,988,125 3.31% 2.68%
Peyto
Exploration &
Development
Corp. 220,000 3,923,981 3,063,407 2.54% 2.06%
Vermillion
Energy Inc. 160,000 5,226,044 4,862,042 4.04% 3.27%
Financials
Alaris Royalty
Corp. 225,000 3,048,199 3,062,340 2.54% 2.06%
Bank of Nova
Scotia 100,000 4,832,372 4,620,778 3.84% 3.11%
National Bank
of Canada 150,000 4,168,974 4,841,591 4.02% 3.26%
Royal Bank of
Canada 35,000 1,172,417 1,950,686 1.62% 1.31%
Healthcare
Sienna Senior
Living Inc. 150,000 1,565,020 1,596,969 1.33% 1.07%
Industrials
CanWel
Building
Materials
Group Ltd. 985,000 3,594,002 3,818,677 3.17% 2.57%
Chorus
Aviation
Inc. 850,000 3,806,040 3,809,252 3.16% 2.56%
Morneau
Shepell Inc. 200,000 2,355,373 2,460,068 2.04% 1.65%
Parkland Fuel
Corporation 200,000 2,261,642 3,511,673 2.91% 2.36%
Materials
Chemtrade
Logistics
Income Fund 425,000 4,494,020 4,557,498 3.78% 3.07%
Pipelines
AltaGas Ltd. 185,000 3,352,893 3,223,074 2.68% 2.17%
Gibson Energy
Inc. 375,000 3,489,924 3,698,993 3.07% 2.49%
Pembina
Pipeline
Corporation 200,000 4,170,718 5,087,302 4.22% 3.42%
TransCanada
Corporation 65,000 2,328,722 2,378,915 1.97% 1.60%
Veresen Inc. 350,000 2,516,491 3,798,878 3.15% 2.56%
Power and
Utilities
Capital Power
Corporation 300,000 4,413,665 4,310,750 3.58% 2.90%
Northland
Power Inc. 255,000 2,554,483 3,485,768 2.89% 2.34%
Real Estate
American Hotel
Income
Properties
REIT LP 400,000 2,433,235 2,359,294 1.96% 1.59%
Automotive
Properties
Real Estate
Investment
Trust 500,000 3,274,088 3,272,187 2.72% 2.20%
Dream Global
Real Estate
Investment
Trust 540,000 3,399,179 3,489,147 2.90% 2.35%
First Capital
Realty Inc. 300,000 3,808,779 3,512,265 2.92% 2.36%
H&R Real
Estate
Investment
Trust 350,000 4,280,865 4,562,388 3.79% 3.07%
Pure
Industrial
Real Estate
Trust 950,000 2,528,057 3,868,827 3.21% 2.60%
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE FUND (Unaudited)
(Continued)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
17. Schedule of Investments - Securities (at fair value through
profit or loss) (continued)
As at 30 June 2017
Shares or % of
Par Bid-Market Net % of
Description Value Book Cost Value Assets Portfolio
GBP GBP
Real Estate (continued)
RioCan Real Estate Investment Trust 190,000 3,031,341 2,704,237 2.24% 1.82%
Smart Real Estate Investment Trust 170,000 3,383,382 3,229,802 2.68% 2.17%
Switzerland - Quoted Investments
Healthcare
Roche Holding AG 15,000 2,926,769 2,943,473 2.44% 1.98%
United States - Quoted Investments
Financials
JP Morgan Chase & Co. 60,000 1,844,731 4,222,336 3.50% 2.84%
The Blackstone Group L.P. 250,000 6,193,257 6,416,725 5.33% 4.32%
Healthcare
Bristol-Myers Squibb Company 110,000 4,817,419 4,718,583 3.92% 3.17%
Real Estate
Washington Prime Group Inc. 320,000 2,431,889 2,059,510 1.71% 1.39%
Total equities: 131,358,637 141,280,188 117.26% 95.03%
Debt:
Canada - Quoted Investments
Great Canadian Gaming Corporation 6.625% due 25 July
2022 2,000,000 1,272,795 1,225,588 1.02% 0.83%
Kelt Exploration Ltd. 5% due 31 May 2021 2,000,000 1,072,226 1,564,959 1.30% 1.05%
Quebecor Inc 6.625% due 15 January 2023 3,500,000 2,355,635 2,256,297 1.87% 1.52%
Tricon Capital Group 5.6% due 31 March 2020 1,500,000 961,477 1,102,584 0.91% 0.74%
United States - Quoted Investments
Tricon Capital Group 5.75% due 31 March 2022 1,500,000 1,221,200 1,235,614 1.03% 0.83%
Total debt: 6,883,333 7,385,042 6.13% 4.97%
Total investments 138,241,970 148,665,230 123.39% 100.00%
STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Unaudited)
As at 30 June 2017
with unaudited comparatives as at 30 June 2016
and audited comparatives as at 31 December 2016
Notes 30.06.2017 30.06.2016 31.12.2016
GBP GBP GBP
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 and notes on pages 26 to 27 were approved by
the directors on 14 September 2017 and signed on behalf of the Board by:
Director Director
NOTES TO THE CONDENSED FINANCIAL STATEMENTS OF THE COMPANY (Unaudited)
For the period 1 January 2017 to 30 June 2017
with unaudited comparatives for the period 1 January 2016 to 30 June
2016
and audited comparatives for the year ended 31 December 2016
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 note 1 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 period or the
preceding period.
There are no standards and interpretations in issue but not effective
that the Directors believe would or might have a material impact on the
financial statements of the Company.
Judgments and estimates used by the Directors
The preparation of financial statements in compliance with IFRS requires
the Directors to make judgments, 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 judgments 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
judgment 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 GBP
Management shares issued
At 30 June 2017, 31 December 2016 and 30 June 2016 2 2
3. Taxation
The Company adopted UK tax residency on 11 October, 2011. 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.
Management and Administration
Directors Nicholas Villiers (Chairman)
Raymond Apsey
Philip Bisson
Thomas Grose
Dean Orrico
Administrator and Secretary JTC Fund Solutions (Jersey) Limited
28 Esplanade
St. Helier
Jersey, JE2 3QA
Assistant Secretary JTC Fund Solutions (Guernsey) Limited
(since 1 December, 2016) Ground Floor, Dorey Court
Admiral Park
St Peter Port
Guernsey, GY1 2HT
Registered Office 28 Esplanade
St Helier
Jersey, JE2 3QA
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
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
Management and Administration (Continued)
Broker and Adviser Canaccord Genuity Limited
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
Auditor Deloitte LLP
P O Box 403
Gaspé House
66-72 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
END OF ANNOUNCEMENT
E&OE - in transmission
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Middlefield Canadian Income PCC via Globenewswire
http://www.middlefield.co.uk/
(END) Dow Jones Newswires
September 18, 2017 02:00 ET (06:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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