Concepts & Trends

Brand Leaders Plus Income Fund. Brand Leaders Plus Income Fund. Annual Financial Statements

Description
Brand Leaders Plus Income Fund Annual Financial Statements December 31, 2015 MANAGEMENT RESPONSIBILITY FOR FINANCIAL REPORTING The accompanying financial statements have been prepared by Harvest Portfolios
Published
of 20
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Related Documents
Share
Transcript
Brand Leaders Plus Income Fund Annual Financial Statements December 31, 2015 MANAGEMENT RESPONSIBILITY FOR FINANCIAL REPORTING The accompanying financial statements have been prepared by Harvest Portfolios Group Inc. in its capacity as Manager of the Fund and approved by the Board of Directors of the Manager. The Fund s Manager is responsible for the information and representation contained in these financial statements. The Manager maintains appropriate processes to ensure that relevant and reliable financial information is produced. The financial statements have been prepared in accordance with International Financial Reporting Standards and include certain amounts that are based on estimates and judgments made by the Manager. The significant accounting policies, which the Manager believes are appropriate, are described in Note 3 to the financial statements. PricewaterhouseCoopers LLP is the external auditor of the Fund. They have audited the financial statements in accordance with Canadian generally accepted auditing standards to enable them to express to the unitholders their opinion on the financial statements. Their report is included as an integral part of the financial statements. On behalf of Harvest Portfolios Group Inc., Signed Michael Kovacs Signed Daniel Lazzer Michael Kovacs President and Chief Executive Officer Daniel Lazzer Chief Financial Officer Oakville, Canada March 21, March 21, 2016 Independent Auditor s Report To the Unitholders of Brand Leaders Plus Income Fund (the Fund) We have audited the accompanying financial statements of the Fund, which comprise the statements of financial position as at December 31, 2015 and 2014 and the statements of comprehensive income (loss), changes in net assets attributable to holders of redeemable units and cash flows for the year ended December 31,2015 and for the period from July 24, 2014 (commencement of operations) to December 31, 2014, and the related notes, which comprise a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. PricewaterhouseCoopers LLP PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2 T: , F: PwC refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership. 2 Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as at December 31, 2015 and 2014 and its financial performance and its cash flows for the year ended December 31, 2015 and for the period from July 24, 2014 to December 31, 2014 in accordance with International Financial Reporting Standards. (Signed) PricewaterhouseCoopers LLP Chartered Professional Accountants, Licensed Public Accountants Toronto, Ontario 3 STATEMENTS OF FINANCIAL POSITION As at December 31, Assets Current assets Investments $ 42,520,013 $ 45,066,201 Cash 136, ,628 Dividends receivable 90,021 52,277 42,746,272 45,276,106 Liabilities Current liabilities Distributions payable (Note 4) 268, ,236 Unrealized depreciation on foreign currency forward contracts (Note 6) 574,273 32, , ,562 Net assets attributable to holders of redeemable units $ 41,903,302 $ 44,975,544 Net assets attributable to holders of redeemable units Series A $ 39,562,092 $ 41,584,318 Series U (CAD) 2,341,210 3,391,226 Series U (USD) 1,685,415 2,927,888 Number of redeemable units outstanding (Note 4) Series A 4,683,168 4,572,949 Series U 198, ,550 Net assets attributable to holders of redeemable units per unit Series A $ 8.45 $ 9.09 Series U (CAD) Series U (USD) The accompanying notes are an integral part of these financial statements. 4 STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the year ended December 31, 2015 and for period from July 24, 2014 (commencement of operations) to December 31, Income Net gain (loss) on investments Dividends $ 1,457,220 $ 673,423 Net realized gain (loss) on sale of investments 1,847, ,547 Net change in unrealized appreciation (depreciation) of investments 5,654,985 2,788,764 Net gain (loss) on investments 8,959,307 3,703,734 Net gain (loss) on derivatives Net realized gain (loss) on options written 76, ,762 Net realized gain (loss) on foreign exchange (7,062,595) (2,959,953) Net change in unrealized appreciation (depreciation) of foreign exchange (536,867) (31,647) Net gain (loss) on derivatives (7,522,838) (2,819,838) Total income (net) $ 1,436,469 $ 883,896 Expenses (Note 5) Management fees 366, ,150 Withholding taxes 196,297 77,694 Unitholder reporting costs 96,175 72,685 Audit fees 29,392 37,778 Transfer agency fees 16,197 9,831 Custodian fees and bank charges 36,999 11,617 Independent Review Committee fees 5,008 5,146 Filing fees 22,105 7,904 Legal fees 14,248 45,005 Transaction costs (Note 8) 50,343 37,324 Total expenses $ 832,844 $ 474,134 Increase (decrease) in net assets attributable to holders of redeemable units $ 603,625 $ 409,762 Increase (decrease) in net assets attributable to holders of redeemable units - Series A $ 75,692 $ 160,383 Increase (decrease) in net assets attributable to holders of redeemable units - Series U 527, ,379 Increase (decrease) in net assets attributable to holders of redeemable units per unit - Series A (Note 4) $ 0.02 $ 0.03 Increase (decrease) in net assets attributable to holders of redeemable units per unit - Series U (Note 4) The accompanying notes are an integral part of these financial statements. 5 STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS ALL SERIES For the year ended December 31, 2015 and for period from July 24, 2014 (commencement of operations) to December 31, Net assets attributable to holders of redeemable units beginning of year $ 44,975,544 $ - Increase (decrease) in net assets attributable to holders of redeemable units $ 603,625 $ 409,762 Redeemable unit transactions Proceeds from issue of redeemable units - 50,397,876 Reinvestment of distributions to holders of redeemable units 27,698 - Cancellation of redeemable units (106,611) (1,074,400) Redemption of redeemable units (378,791) - Payment to redeemable unitholders on fractional units on transfer from Series U to Series A (75) (5) Agents fees - (2,645,889) Cost of issue - (755,969) Net unitholders transactions $ (457,779) $ 45,921,613 Distributions to holders of redeemable units Return of capital (3,218,088) (1,355,831) Total distributions to holders of redeemable units $ (3,218,088) $ (1,355,831) Net assets attributable to holders of redeemable units end of year $ 41,903,302 $ 44,975,544 The accompanying notes are an integral part of these financial statements. 6 STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS SERIES A For the year ended December 31, 2015 and for period from July 24, 2014 (commencement of operations) to December 31, Net assets attributable to holders of redeemable units beginning of year $ 41,584,318 $ - Increase (decrease) in net assets attributable to holders of redeemable units $ 75,692 $ 160,383 Redeemable unit transactions Proceeds from issue of redeemable units - 46,829,500 Reinvestment of distributions to holders of redeemable units 27,698 - Cancellation of redeemable units (106,611) (1,059,033) Transfer of redeemable units from Series U 958,419 71,068 Agents fees - (2,458,549) Cost of issue - (702,443) Net unitholders transactions $ 879,506 $ 42,680,543 Distributions to holders of redeemable units Return of capital (2,977,424) (1,256,608) Total distributions to holders of redeemable units $ (2,977,424) $ (1,256,608) Net assets attributable to holders of redeemable units end of year $ 39,562,092 $ 41,584,318 STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS SERIES U For the year ended December 31, 2015 and for period from July 24, 2014 (commencement of operations) to December 31, Net assets attributable to holders of redeemable units beginning of year $ 3,391,226 $ - Increase (decrease) in net assets attributable to holders of redeemable units $ 527,933 $ 249,379 Redeemable unit transactions Proceeds from issue of redeemable units - 3,568,376 Redemption of redeemable units (378,791) (15,367) Transfer of redeemable units to Series A (958,494) (71,073) Agents fees - (187,340) Cost of issue - (53,526) Net unitholders transactions $ (1,337,285) $ 3,241,070 Distributions to holders of redeemable units Return of capital (240,664) (99,223) Total distributions to holders of redeemable units $ (240,664) $ (99,223) Net assets attributable to holders of redeemable units end of year $ 2,341,210 $ 3,391,226 The accompanying notes are an integral part of these financial statements. 7 STATEMENTS OF CASH FLOWS For the year ended December 31, 2015 and for period from July 24, 2014 (commencement of operations) to December 31, Operating activities Increase (decrease) in net assets attributable to holders of redeemable units $ 603,625 $ 409,762 Add (deduct) items not affecting cash Realized (gain) loss on sale of investments (1,847,102) (241,547) Realized (gain) loss on options written (76,624) (171,762) Change in unrealized (appreciation) depreciation of investments (5,654,985) (2,788,764) Change in unrealized (appreciation) depreciation of foreign exchange 536,867 31,647 Proceeds from sale of investments 19,388,875 6,915,372 Purchases of investments (9,263,976) (48,811,147) Net change in non-cash assets and liabilities (32,664) (19,951) Net cash flow provided by (used in) operating activities $ 3,654,016 $ (44,676,390) Financing activities Proceeds from redeemable units issued - 50,397,876 Payment to redeemable unitholders on fractional units on transfer from Series U to Series A (75) (5) Redemption and cancellation of redeemable units (485,402) (1,074,400) Agents fees - (2,645,889) Issuance costs - (755,969) Distributions paid to holders of redeemable units (net of reinvested distributions) (3,189,929) (1,087,595) Net cash flow provided by (used in) financing activities $ (3,675,406) $ 44,834,018 Net increase (decrease) in cash during the year (21,390) 157,628 Cash, beginning of the year 157,628 - Cash, end of the year $ 136,238 $ 157,628 Supplemental disclosure of cash flow information Dividends received, net of withholding taxes* $ 1,223,179 $ 543,522 *included in operating activities The accompanying notes are an integral part of these financial statements. 8 SCHEDULE OF INVESTMENTS As at December 31, 2015 Number Security of Shares Average Cost ($) Carrying Value ($) % of Net Assets EQUITIES Consumer Discretionary Issuers 110,000 Ford Motor Company 1,784,821 2,152, ,900 McDonald's Corporation 1,330,544 2,116, ,115,365 4,269, Consumer Staples Issuers 12,700 Anheuser-Busch InBev NV ADR 1,548,965 2,205, ,500 Diageo PLC ADR 1,788,400 2,045, ,400 Kellogg Co. 1,520,347 2,148, ,500 Kimberly-Clark Corporation 1,481,923 2,210, ,400 PepsiCo, Inc. 1,531,697 2,137, ,700 The Coca-Cola Company 1,587,071 2,130, ,458,403 12,877, Energy Issuers 31,000 Royal Dutch Shell PLC Class A ADR 2,543,372 1,971, ,543,372 1,971, Financials Issuers 39,600 HSBC Holdings PLC ADR 2,321,950 2,171, ,500 JPMorgan Chase & Co. 1,506,729 2,155, ,828,679 4,326, Healthcare Issuers 15,400 Johnson & Johnson 1,691,343 2,197, ,691,343 2,197, Industrials Issuers 19,600 Deere & Company 1,879,020 2,076, ,200 General Electric Company 1,918,416 2,172, ,797,436 4,248, Information Technology Issuers 14,600 Accenture PLC Class A 1,377,117 2,119, ,500 Apple Inc. 1,428,428 1,973, ,400 Cisco Systems, Inc. 1,571,352 2,127, ,500 Intel Corporation 1,613,634 2,081, ,300 International Business Machines Corporation 2,302,819 2,160, ,100 Microsoft Corporation 1,348,316 2,165, ,641,666 12,628, Total investments 34,076,264 42,520, Foreign currency forward contract (Note 6) (574,273) (1.4) Other assets less liabilities (42,438) (0.1) Net assets attributable to holders of redeemable units 41,903, NOTES TO THE ANNUAL FINANCIAL STATEMENTS December 31, GENERAL INFORMATION Brand Leaders Plus Income Fund (the Fund ) is an investment fund established under the laws of the Province of Ontario pursuant to a Declaration of Trust dated June 26, 2014 and as amended and restated, being the inception date. There was no significant activity in the Fund from the date of inception to commencement of operations on July 24, On July 24, 2014, the Fund completed an initial public offering of 4,467,950 Series A units at $10.00 per unit for gross proceeds of $44,679,500 and 332,050 Series U units at $10.00 USD per unit for gross proceeds of $3,320,500 USD ($3,568,376 CAD). On August 12, 2014, an overallotment option was exercised for an additional 215,000 Series A units at a price of $10.00 per unit for gross proceeds of $2,150,000. The address of the Fund s registered office is 710 Dorval Drive, Oakville, Ontario L6K 3V7. The Fund s investment objectives are to provide unitholders with monthly cash distributions, the opportunity for capital appreciation and lower overall volatility of Portfolio returns than would otherwise be experienced by owning Equity Securities of the Brand Leaders directly. As part of the investment strategy, the Fund will invest in an equally-weighted portfolio of equity securities of 20 Brand Leaders from the Brand Leaders Investable Universe that have a market capitalization of at least US$10 billion at the time of investment. The Fund offered Series A units and Series U units. The Series U units are designed for investors who want to make their investment in U.S. dollars and will not be listed on a stock exchange, but are convertible into Series A Units on a monthly basis. 2. BASIS OF PRESENTATION These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). These financial statements were authorized for issue by Harvest Portfolios Group Inc. (the Manager ) on March 21, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial instruments The Fund recognizes financial instruments at fair value upon initial recognition, plus transaction costs in the case of financial instruments not measured at fair value through profit or loss (FVTPL). Transaction costs on financial assets and liabilities at FVTPL are expensed as incurred. Regular way purchases and sales of financial assets are recognized at their trade date. The Fund s investments and derivative assets and liabilities are measured at fair value through profit or loss (FVTPL), including investments which have been designated at FVTPL. Derivative assets and liabilities are classified as held-for-trading (HFT). The Fund s obligation for net assets attributable to holders of redeemable units is presented at the redemption amount. All other financial assets and liabilities are measured at amortized cost. Under this method, financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate, at the contract s effective interest rate. Carrying values of other financial assets and liabilities at amortized cost and net assets attributable to holders of redeemable units approximate their fair values due to the short term to maturity. The Fund s accounting policies for measuring the fair value of its investments and derivatives are identical to those used in measuring its net asset value (NAV) for transactions with unitholders. As at December 31, 2015 and December 31, 2014, there were no differences between the Fund s NAV per security and its net assets per security calculated in accordance with IFRS. Fair value of investments and derivatives Investments and derivatives that are traded in an active market are valued at their closing prices through recognized public stock exchanges or through recognized investment dealers on the valuation date. The Fund uses the last traded market price that falls within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Manager determines the point within the bid-ask spread that is most representative of fair value based on specific facts and circumstances. Investments held are represented by equities. Derivatives held include options and foreign currency forward contracts. 10 Investments and derivatives held that are not traded in an active market are valued using valuation techniques, on such basis and in such a manner established by the Manager. The value of any security for which, in the opinion of the Manager, the published market quotations are not readily available shall be the fair value as determined by the Manager. The fair values of certain securities may be determined using valuation models that are based, in part, on assumptions that are not supported by observable market inputs. These methods and procedures may include, but are not limited to, performing comparisons with prices of comparable or similar securities, obtaining valuation related information from issuers and/or other analytical data relating to the investment and using other available indication of value. These values are independently assessed internally to ensure that they are reasonable. However, because of the inherent uncertainty of valuation, the estimated fair values for the aforementioned securities and interests may be materially different from the values that would be used had a ready market for the security existed. The fair values of such securities are affected by the perceived credit risks of the issuer, predictability of cash flows and length of time to maturity. Classification of redeemable units Under IFRS, IAS 32 Financial Instruments Presentation requires that units or shares of an entity which include a contractual obligation for the issuer to repurchase or redeem them for cash or another financial asset be classified as a financial liability unless certain criteria are met. In addition to the annual redemption at 100% of NAV, the Fund's units are redeemable at 95% of their market price monthly. As a result, the Fund's units contain multiple contractual obligations and are presented as financial liabilities as they do not meet the criteria for classification as equity. Cash Cash is comprised of cash on deposit. Investment transactions and
Search
Related Search
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks