MBN Corporation (MBN) 2018年年度報告「TSX」.pdf

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1、2018 ANNUAL REPORTMBN CORPORATIONA NOTE ON FORWARD LOOKING STATEMENTSThis document may contain forward looking statements,including statements regarding:MBN,its strategies,goals and objectives;prospects;futureperformance or condition;possible future actions to be taken by MBN;and the performance of

2、investments,securities,issuers or industries in whichMBN may from time to time invest.Forward looking statements include statements that are predictive in nature,that depend upon or refer to futureresults,events,circumstances,expectations and performance,or that include words such as“expects”,“antic

3、ipates”,“intends”,“plans”,“believes”,?beliefs as of the date of this document regarding future results,events,circumstances,expectations or performance and are inherently subject to,among other things,risks,uncertainties and assumptions about MBN and economic factors.Forward looking statements are n

4、ot guarantees of futureperformance,and actual results,events,circumstances,expectations or performance could differ materially from those expressed or implied in anyforward looking statements contained in this document.Factors which could cause actual results,events,circumstances,expectations or per

5、formanceto differ materially from those expressed or implied in forward looking statements include,but are not limited to:general economic,political,market?statutory and regulatory developments;unexpected judicial or regulatory proceedings;and catastrophic events.Readers are cautioned that theforego

6、ing list of factors is not exhaustive and to avoid placing undue reliance on forward looking statements due to the inherent uncertainty of such?result of new information,future developments,or otherwise.TABLE OF CONTENTSCorporate ProfileShareholders Messageand OutlookInvestment PhilosophyManagement

7、Report of Fund PerformanceManagements Responsibilityfor Financial ReportingIndependent Auditors ReportFinancial StatementsNotes to Financial StatementsDividends2018 Tax InformationMiddlefield Funds FamilyCorporate Information234991014232324MIDDLEFIELD CORPORATE PROFILE?Investment Manager which creat

8、es investment products designed?Exchange-Traded Funds,Mutual Funds,Private and Public Resource?Estate Investment Funds and Partnerships.?by our own professionals while some involve strategic partnerships?offerings.Our investment team comprises portfolio managers,analysts?Advisor with respect to the

9、strategic outlook for the energy sector.In?Their fundamental company level research is often non-consensus and provides guidance on overall portfolio construction and security selection.?Advisors in helping clients achieve their investment objectives.CALGARY?Calgary,Alberta T2N 3C8 LONDON288 Bishops

10、gate?EC2M 4QP SAN FRANCISCO One Embarcadero Center?TORONTO First Canadian Place?MIDDLEFIELD GLOBAL EQUITY TEAMPROVIDING INVESTORS WITH ACCESSTO SECTORS THAT ARE UNDERREPRESENTED IN CANADAMIDDLEFIELDS TSX-LISTED FUNDS?DEAN ORRICO?InnovationGlobalDIVIDEND FUNDT?“?EF.UN?LS?BL.UN?HWF.UN?GDG.UN?RCO.UN?MC

11、TE SPLIT CORP?ENS ENS.PR.A?Global Real Estate&E-Commerce DIVIDEND FUND?GEC.UN?IDR2?for North American investors but the ongoing negotiations with China dominated the headlines and exacerbated market?times compared to nine from the Fed during the recent tightening cycle.The market is not pricing in a

12、ny further interest rate?going forward.As previously announced,MBN is focused on new strategic opportunities having the potential to generate attractive risk-?2 MBN CORPORATION2?COMMITMENT?situations where there exists the strong possibility of near termcapital appreciation and excellent long-term g

13、rowth potential.?disciplined investment process and the appropriate structuringof each transaction.The most effective way to align the interests of managementand those of its shareholders is through management having?personal investments in MBN.?ANNUAL MANAGEMENT REPORT OF FUND PERFORMANCE FOR THE Y

14、EAR ENDED DECEMBER 31,2018?4 MBN CORPORATION?This annual management report of fund performance contains financial highlights and should be read in conjunction with the complete audited annual financial statements of the investment fund that follow this report.Shareholders may contact us by calling 1

15、-888-890-1868,by writing to us at Middlefield Group at one of the addresses on the back cover or by visiting our website at to request a copy of the investment funds annual financial statements,proxy voting policies and procedures,proxy voting disclosure record or quarterly portfolio disclosure.Mana

16、gement Report of Fund Performance Investment Objective and Strategies The investment objective of MBN Corporation(“MBN”)is to create long-term value through a dual track strategy of:(i)growing MBNs assets under management through mergers with other investment funds;and(ii)pursuing opportunities with

17、 the broader financial services sector to acquire investment management companies and/or establish such companies working with proven investment managers.Risk MBN is exposed to several risks that may affect its performance.The overall risk of MBN is as described in its prospectus dated July 24,2007.

18、During the past year,the overall risk level of MBN may have been impacted as follows:Market Risk Market risk describes MBNs exposure to volatility in the market value of its underlying securities.Equity markets,interest rates and commodity prices may exhibit volatility due to slowing global growth,e

19、arnings momentum and uncertainty surrounding global trade agreements.MBN seeks to mitigate risk through active management and diversification.Results of Operations Investment Performance During 2018,the total equity of MBN increased from$30.0 million at December 31,2017 to$39.9 million at December 3

20、1,2018.On a per equity share basis,total equity increased from$7.69 at December 31,2017 to$8.39 at December 31,2018.MBN recorded a net gain on its investment portfolio of approximately$2.7 million or$0.64 per share in 2018.Revenue and Expenses Profit before expenses for the year ended December 31,20

21、18 amounted to approximately$3.7 million,up from a loss of approximately$2.7 million in 2017,due to the net gain on the investment portfolio.Expenses for 2018 totalled approximately$0.8 million.The management expense ratio(“MER”)increased from 1.70%in 2017 to 1.94%in 2018.During 2018,profit after ta

22、x increased to$2.9 million from a loss of$3.3 million in the prior year.On a per equity share basis,the profit during 2018 was$0.69 comparing to a loss of$0.84 in 2017.Trends In late December and January,central banks across most developed markets adopted a more dovish tone regarding future monetary

23、 policy.Specifically,the market is now pricing in zero interest rate hikes in 2019 from the FOMC,which has taken its quantitative easing program off autopilot.The European Central Bank has indicated short-term borrowing rates will remain at current levels at least through the summer while the Bank o

24、f Japan has decided to leave their stimulus settings unchanged at its final policy meeting of last year.As a result,the risk of the sort of monetary policy headwinds which impacted investor sentiment in 2018 has largely dissipated.Related Party Transactions Pursuant to a management agreement,Middlef

25、ield Limited(the“Manager”)receives a management fee.For further details,please see the“Management Fees”section of this report.Middlefield Capital Corporation(“MCC”or the“Advisor”),the Advisor to MBN and a company under common control with the Manager,receives advisory fees from the Manager out of th

26、e management fee.MCC also receives brokerage commissions in connection with securities transactions from MBN.All brokerage commissions paid by MBN to MCC were at or below market rates.For further details,please see the notes to the financial statements.Management Fees Management fees are calculated

27、at 1.1%per annum of the net asset value of MBN and are split between the Manager and the Advisor.The Manager receives fees for the general administration of MBN,including maintaining the accounting records,executing securities trades,monitoring compliance with regulatory requirements,and negotiating

28、 contractual agreements,among other things.The Advisor receives fees from the Manager for providing investment advice in respect of the portfolio in accordance with the investment objectives and strategies of MBN.Recent Developments On August 29,2018,MBN merged with Globalance Dividend Growers Corp.

29、(“Globalance”),with MBN as the continuing entity.MBN issued 1,335,147 shares at a value of$10,957,748 in exchange for the assets of Globalance.The number of shares issued was calculated using an exchange ratio based on the relative net asset values of MBN and Globalance as at the close of trading on

30、 August 28,2018,in accordance with the terms of the mergers.ANNUAL MANAGEMENT REPORT OF FUND PERFORMANCEFOR THE YEAR ENDED DECEMBER 31,2018?MIDDLEFIELD 2018 ANNUAL REPORT?On September 18,2018,MBN received approval from the Toronto Stock Exchange to make a normal course issuer bid for its equity shar

31、es.The notice of intent(the“Notice”)enables MBN to purchase up to 398,448 equity shares,being 10%of the public float of the equity shares,during the 12 month period from September 23,2018 to September 22,2019.Shareholders may obtain a copy of the Notice,without charge,by contacting MBN.Financial Hig

32、hlights Total Equity is calculated in accordance with International Financial Reporting Standards(“IFRS”).“Net Asset Value”is calculated in accordance with section 14.2 of National Instrument 81-106“Investment Fund Continuous Disclosure”(“NI 81-106”)and is used for transactional pricing purposes.The

33、 following tables show selected key financial information about MBN and are intended to help you understand MBNs financial performance for the indicated periods.Ratios and Supplemental Data are derived from MBNs Net Asset Value.(1)This information is derived from MBNs audited annual financial statem

34、ents.(2)Total Equity is based on the actual number of equity shares outstanding at the relevant time.The increase(decrease)from operations is based on the weighted average number of equity shares outstanding over the financial year.This schedule is not a reconciliation of Total Equity since it does

35、not reflect securityholder transactions as shown on the Statements of Changes in Equity and accordingly columns may not add.(3)Distributions were paid in cash.MBNs Total Equity per Equity Share(1)2018 2017 2016 2015 2014 Total Equity,Beginning of Year$7.69$8.48$7.93$7.03$6.68 INCREASE(DECREASE)FROM

36、OPERATIONS:Total Revenue 0.25 0.10 0.09 0.16 0.05 Total Expenses(excluding distributions)(0.16)(0.14)(0.15)(0.12)(0.12)Realized Gains(Losses)for the Year 0.88 (0.60)0.49 0.55 0.81 Unrealized(Losses)Gains for the Year (0.24)(0.19)0.02 0.26 (0.44)Transaction Costs on Purchase and Sale of Investments (

37、0.04)(0.01)(0.01)(0.01)(0.02)TOTAL INCREASE(DECREASE)FROM OPERATIONS(2)0.86 (0.79)0.55 0.90 0.35 DISTRIBUTIONS:From Net Investment Income 0.08 -From Capital Gains 0.08 -TOTAL DISTRIBUTIONS(3)0.16 -Total Equity,End of Year$8.39$7.69$8.48$7.93$7.03 ANNUAL MANAGEMENT REPORT OF FUND PERFORMANCE FOR THE

38、YEAR ENDED DECEMBER 31,2018?6 MBN CORPORATION?Ratios and Supplemental Data 2018 2017 2016 20152014 Total Assets(000s)(1)$40,853$30,122$33,990$33,062$30,089 Total Net Asset Value(000s)(1)$39,863$30,031$33,900$32,970$30,008 Number of Equity Shares Outstanding(1)4,750,898 3,904,651 3,997,851 4,155,551

39、4,265,751 Management Expense Ratio(“MER”)(2)1.94%1.70%1.77%1.65%1.65%MER(excluding interest expense and issuance costs)(2)1.94%1.70%1.77%1.65%1.65%Trading Expense Ratio(3)0.52%0.10%0.10%0.14%0.33%Portfolio Turnover Rate(4)855.53%693.12%870.87%1,265.21%859.97%Net Asset Value per Equity Share$8.39$7.6

40、9$8.48$7.93$7.03 (1)This information is provided as at December 31 of the year shown.(2)The MER is based on total expenses(excluding commissions and other portfolio transaction costs)for the stated year and is expressed as an annualized percentage of daily average Net Asset Value during the year.The

41、 MER excluding interest expense and issuance costs has been presented separately as it expresses only the ongoing management and administrative expenses of MBN as a percentage of average Net Asset Value.Issuance costs are one-time costs incurred at inception,and the inclusion of interest expense doe

42、s not consider the additional revenues that have been generated from the investment of the leverage in income-generating assets.(3)The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average Net Asset Value durin

43、g the year.(4)MBNs portfolio turnover rate indicates how actively MBNs portfolio investments are managed.A portfolio turnover rate of 100%is equivalent to MBN buying and selling all of the securities in its portfolio once in the course of the year.The higher MBNs portfolio turnover rate in a year,th

44、e greater the trading costs payable by MBN in the year,and the greater the chance of an investor receiving taxable capital gains in the year.There is not necessarily a relationship between a high turnover rate and the performance of a fund.ANNUAL MANAGEMENT REPORT OF FUND PERFORMANCEFOR THE YEAR END

45、ED DECEMBER 31,2018?MIDDLEFIELD 2018 ANNUAL REPORT 7?Past Performance The performance information shown,which is based on Net Asset Value,does not take into account sales,redemption,distribution or other optional charges that would have reduced returns or performance.How MBN has performed in the pas

46、t does not necessarily indicate how it will perform in the future.Year-By-Year Returns The bar chart shows how MBNs performance has varied from year-to-year for each of the years shown.The chart indicates,in percentage terms,how much an investment made the first day of each financial year would have

47、 grown or decreased by the last day of the financial year.Annual Compound Returns Periods Ended December 31,2018 One Year Three Years Five Years Ten Years MBN Corporation 11.24%2.54%5.08%5.39%S&P/TSX Composite Total Return Index-8.89%6.37%4.06%7.92%The S&P/TSX Composite Total Return Index(the“Index”

48、)is comprised of Canadian stocks traded on the Toronto Stock Exchange and is designed to represent the Canadian equity market.MBNs total return of 11.24%overperformed the-8.89%total return generated by the Index.?The Funds total return of 11.24%in 2018 outperformed the-8.89%return generated by the I

49、ndex.The Funds performance was positively impacted by subsector allocation and stock selection.Annual Total Returns%?ANNUAL MANAGEMENT REPORT OF FUND PERFORMANCE FOR THE YEAR ENDED DECEMBER 31,2018?8 MBN CORPORATION?Summary of Investment Portfolio AS AT DECEMBER 31,2018 Top Twenty-Five Holdings*DESC

50、RIPTION%OF NET ASSET VALUE1 Bristol-Myers Squibb Company 2.72 Enbridge Inc.2.73 Merck&Co.,Inc.2.64 Pfizer Inc.2.25 WPT Industrial Real Estate Investment Trust 2.26 AGF Management Limited 1.87 Bank of Nova Scotia 1.78 JPMorgan Chase&Co.1.79 Brookfield Property Partners L.P.1.710 Freehold Royalties Lt

51、d.1.611 ARC Resources Ltd.1.512 The Goldman Sachs Group,Inc.1.413 Power Financial Corporation 1.314 Canadian Imperial Bank of Commerce 1.315 Bank of America Corporation 1.316 Shaw Communications Inc.1.217 TransCanada Corporation 1.218 TransAlta Corporation 1.1“Top Twenty-Five Holdings”excludes any t

52、emporary cash investments.*MBN has only 18 holdings.ASSET CLASS%OF NET ASSET VALUEFinancials 10.5Healthcare 7.5Pipelines 3.9Real Estate 3.9Energy 3.1Communication Services 1.2Utilities 1.0Cash and Short-Term Investments 71.2Other Net Liabilities (2.3)100.0TOTAL NET ASSET VALUE$39,862,900 TOTAL ASSET

53、S$40,852,989The Summary of Investment Portfolio may change over time due to ongoing portfolio transactions.Please visit for the most recent quarter-end Summary of Investment Portfolio.MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTINGFrancisco Z.RamirezPresident?Catherine E.Rebuldela?9?Committee.?Co

54、mmittee.INDEPENDENT AUDITORS REPORT?audit.We also:?control.?FINANCIAL STATEMENTS?10 MBN CORPORATION?Statements of Financial Position AS AT DECEMBER 31(In Canadian Dollars)2018 2017 ASSETS Current Assets Investments at Fair Value through Profit or Loss$12,400,207$15,649,104 Cash 28,389,635 14,449,181

55、 Accounts Receivable 63,147 23,710 Total Assets 40,852,989 30,121,995 LIABILITIES Current Liabilities Distributions Payable 385,392 -Accounts Payable Portfolio Securities 421,773 -Accounts Payable and Accrued Liabilities 182,924 90,596 Total Liabilities 990,089 90,596 Net Assets$39,862,900$30,031,39

56、9 EQUITY Shareholders Equity(Note 9)$27,469,000$34,214,663 Retained Earnings(Deficit)12,393,900(4,183,264)Total Equity$39,862,900$30,031,399 Equity Shares Issued and Outstanding 4,750,898 3,904,651 Total Equity per Share$8.39$7.69 The accompanying notes to financial statements are an integral part o

57、f these financial statements.Approved by the Board of Directors:Director:Vince Greco Director:Catherine Rebuldela FINANCIAL STATEMENTS?MIDDLEFIELD 2018 ANNUAL REPORT11?Statements of Comprehensive Income(Loss)FOR THE YEARS ENDED DECEMBER 31 (In Canadian Dollars)2018 2017 REVENUE(LOSS)Income from Inve

58、stments$755,438$227,410 Interest Income 294,832 163,171 Securities Lending Income(Note 11)1,475 1,591 Foreign Exchange Gain(Loss)1,163,091 (310,247)Other Changes in Fair Value of Financial Assets and Financial Liabilities at Fair Value through Profit or Loss Net Realized Gain(Loss)from Investment Tr

59、ansactions 2,537,255 (2,042,393)Change in Net Unrealized Loss on Investments (1,079,670)(776,277)Change in Net Unrealized Gain on Foreign Currency Transactions 63,213 14,269 Total Revenue(Loss)3,735,634?(2,722,476)OPERATING EXPENSES(Note 8)Audit Fees 21,351 16,071 Custodial Fees 2,724 1,953 Fund Adm

60、inistration Costs 101,826 81,303 Legal Fees 116,372 26,456 Management Fee 378,167 372,899 Securityholder Reporting Costs 27,902 36,124 Transaction Costs(Note 10)173,159?31,934 Total Operating Expenses 821,501?566,740 Profit(Loss)before Tax 2,914,133?(3,289,216)Withholding Taxes 20,482?14,720 Profit(

61、Loss)after Tax$2,893,651?$(3,303,936)Profit(Loss)after Tax per Equity Share(Note 9)$0.69?$(0.84)The accompanying notes to financial statements are an integral part of these financial statements.FINANCIAL STATEMENTS?12 MBN CORPORATION?Statements of Cash Flows FOR THE YEARS ENDED DECEMBER 31(In Canadi

62、an Dollars)2018 2017 CASH FLOWS FROM(USED IN)OPERATING ACTIVITIES Profit(Loss)after Tax$2,893,651$(3,303,936)Adjustments:Purchases of Investments(1,170,103,160)(154,760,662)Proceeds from Sale of Investments 1,175,231,415 160,452,802 Foreign Exchange(Gain)Loss(1,226,304)295,978 Net Realized(Gain)Loss

63、 from Investment Transactions(2,537,255)2,042,393 Change in Net Unrealized Loss on Investments 1,079,670 776,277 5,338,017 5,502,852 Net Change in Non-Cash Working Capital 57,027 31,043 Net Cash from Operating Activities 5,395,044 5,533,895 CASH FLOWS FROM(USED IN)FINANCING ACTIVITIES Proceeds from

64、Issue of Equity Shares 10,957,748 -Repurchase of Equity Shares(3,238,322)(564,294)Distributions Paid to Shareholders(400,320)-Net Cash from(used in)Financing Activities 7,319,106 (564,294)Net Increase in Cash 12,714,150 4,969,601 Foreign Exchange Gain(Loss)1,226,304 (295,978)Cash at Beginning of Yea

65、r 14,449,181 9,775,558 Cash at End of Year$28,389,635$14,449,181 The accompanying notes to financial statements are an integral part of these financial statements.Statements of Changes in Equity FOR THE YEARS ENDED DECEMBER 31 (In Canadian Dollars)Shareholders Equity Retained Earnings(Deficit)Total

66、Balance at January 1,2017$35,146,663$(1,247,034)$33,899,629 Loss after Tax-(3,303,936)(3,303,936)Repurchase of Equity Shares(932,000)367,706 (564,294)Balance at December 31,2017$34,214,663$(4,183,264)$30,031,399 Balance at January 1,2018$34,214,663$(4,183,264)?$30,031,399Reduction in Stated Capital(

67、12,814,411)12,814,411 -Profit after Tax-2,893,651?2,893,651Distributions to Shareholders-(781,576)(781,576)Repurchase of Equity Shares(4,889,000)1,650,678 (3,238,322)Proceeds from Issue of Equity Shares 10,957,748-?10,957,748Balance at December 31,2018$27,469,000$12,393,900?$39,862,900FINANCIAL STAT

68、EMENTS?MIDDLEFIELD 2018 ANNUAL REPORT13?Schedule of Investment Portfolio AS AT DECEMBER 31,2018 (IN CANADIAN DOLLARS)Description No.of Securities Average Cost Fair Value AGF Management Limited 150,000$926,880$723,000 Bank of America Corporation 15,000 498,808 504,801 Bank of Nova Scotia 10,000 718,2

69、00 680,500 Canadian Imperial Bank of Commerce 5,000 527,500 508,400 JPMorgan Chase&Co.5,000 669,909 666,648 Power Financial Corporation 20,000 515,430 516,600 The Goldman Sachs Group,Inc.2,500 569,739 570,394 FINANCIALS:10.2%4,426,466 4,170,343 Bristol-Myers Squibb Company 15,000 1,066,029 1,064,917

70、 Merck&Co.,Inc.10,000 1,001,705 1,043,610 Pfizer Inc.15,000 855,804 894,259 HEALTHCARE:7.4%2,923,538 3,002,786 Enbridge Inc.25,000 1,103,323 1,060,250 TransCanada Corporation 10,000 554,709 487,500 PIPELINES:3.8%1,658,032 1,547,750 Brookfield Property Partners L.P.30,000 795,961 660,600 WPT Industri

71、al Real Estate Investment Trust 50,000 836,451 877,528 REAL ESTATE:3.8%1,632,412 1,538,128 ARC Resources Ltd.75,000 1,023,428 607,500 Freehold Royalties Ltd.75,000 895,719 620,250 ENERGY:3.0%1,919,147 1,227,750 Shaw Communications Inc.20,000 504,798 494,200 COMMUNICATION SERVICES:1.2%504,798 494,200

72、 TransAlta Corporation 75,000 560,555 419,250 UTILITIES:1.0%560,555 419,250 TRANSACTION COSTS(Note 10)(5,156)TOTAL INVESTMENTS:30.4%13,619,792 12,400,207 CASH:69.6%28,389,635 28,389,635 Total Investment Portfolio,Including Cash$42,009,427$40,789,842 NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2018 AND

73、 2017?14 MBN CORPORATION?1.MBN Corporation MBN Corporation(“MBN”)is a corporation continued under the laws of Alberta.On February 23,2012,Middlefield Tactical Energy Corporation amalgamated with Middlefield Bancorp Limited(“Bancorp”)and changed its name to MBN Corporation.Middlefield Limited,a compa

74、ny incorporated in Alberta,is the manager of MBN(the“Manager”).Middlefield Capital Corporation(“MCC”or the“Advisor”),a company under common control with the Manager,is the advisor to MBN.Groppe,Long&Littell acts as special advisor to MCC.MBN was listed on the Toronto Stock Exchange(“TSX”)and effecti

75、vely commenced operations on August 2,2007 when it first issued securities through an initial public offering under the trading symbol“OCF”.On February 27,2012,MBN commenced trading on the TSX under the new symbol“MBN”.The previous trading symbol was“OCF”.Since“MBN”was also the trading symbol for Ba

76、ncorp,the historical price series for Bancorp is no longer applicable following the amalgamation.The appropriate historical price series for MBN is that which appears under the symbol“OCF”.On August 28,2013,MBN merged with Uranium Focused Energy Fund(“Uranium”),with MBN being the continuing fund.On

77、August 29,2018,MBN merged with Globalance Dividend Growers Corp.(“Globalance”),with MBN as the continuing entity.The address of MBNs registered office is 812 Memorial Drive N.W.,Calgary,Alberta.These financial statements,expressed in Canadian Dollars,were authorized for issuance by the board of dire

78、ctors of MBN on March 22,2019.2.Investment Objective and Strategy MBNs investment objective is to create long-term value through a dual track strategy of:(i)growing MBNs assets under management through mergers with other investment funds;and(ii)pursuing opportunities with the broader financial servi

79、ces sector to acquire investment management companies and/or establish such companies working with proven investment managers.3.Basis of Presentation These financial statements have been prepared in accordance with International Financial Reporting Standards(“IFRS”)as published by the International

80、Accounting Standards Board(“IASB”)and as required by Canadian securities legislation and the Canadian Accounting Standards Board.4.Summary of Significant Accounting Policies A.Basis of Accounting MBN has adopted the following standards,interpretations and amendments for the first time for the year b

81、eginning on January 1,2018.Transition to IFRS 9 Financial Instruments(“IFRS 9”)The adoption of IFRS 9 has been applied retrospectively by MBN.IFRS 9 requires assets to be carried at amortized cost or fair value,with changes in fair value recognized in profit and loss or other comprehensive income,ba

82、sed on the entitys business model for managing financial assets and the contractual cash flow characteristics of the financial assets.Upon adoption of IFRS 9,MBNs financial assets and the liabilities previously classified at fair value through profit or loss(“FVTPL”)and amortized cost under IAS 39“F

83、inancial Instruments:Recognition and Measurement”,continued to be classified at FVTPL and amortized cost.There is no impact on MBNs Total Equity as a result of the adoption of IFRS 9.Classification,Measurement,Impairment and Hedge Accounting MBN classifies its investments in debt and equity securiti

84、es based on its business model for managing those financial assets and the contractual cash flow characteristics of the financial assets.These financial assets are managed and their performance is evaluated on a fair value basis.MBN also manages these financial assets with the objective of realizing

85、 cash flows through sales.Further,an option to irrevocably designate any equity securities at fair value through other comprehensive income(“FVOCI”)has not been taken.Consequently,these financial assets are mandatorily measured at FVTPL.Financial assets or financial liabilities held for trading are

86、those acquired principally for the purpose of selling or repurchasing in the near future or on initial recognition they are a part of a portfolio of identified financial instruments that MBN manages together and has a recent actual pattern of short term profit taking.All derivatives and short positi

87、ons are included in this category and mandatorily measured at FVTPL.The financial assets and liabilities measured at amortized cost include cash collateral posted on derivative positions,accrued income,due to and from brokers and other short term receivables and payables.IFRS 9 replaced the incurred

88、 loss model in IAS 39 with the expected credit loss model(“ECL”),as the new impairment model for financial assets carried at amortized cost.MBNs financial assets measured at amortized cost consist of trade receivables with no financing component and which have maturities of less than 12 months,as su

89、ch,it has chosen to NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2018 AND 2017?MIDDLEFIELD 2018 ANNUAL REPORT15?4.Summary of Significant Accounting Policies(continued)A.Basis of Accounting(continued)apply the simplified ECL approach,whereby any loss allowance is recognized based on the lifetime of ECLs

90、.Given the short-term nature and high credit quality of the trade receivables,this amendment has not had a material impact on the financial statements and these trade receivables are not considered impaired.MBN does not apply general hedge accounting to any of its derivatives positions.B.Financial I

91、nstruments MBNs financial instruments may include:short-term investments,fixed income,equities,structured products,derivatives(collectively referred to as“investments”),cash,accounts receivable portfolio securities sold,income and interest receivable,accounts receivable,prepaid expenses,accounts pay

92、able portfolio securities purchased,accounts payable and accrued liabilities and distributions payable.MBN recognizes financial instruments at fair value upon initial recognition,plus transaction costs in the case of financial instruments measured at amortized cost.Regular way purchases and sales of

93、 financial assets are recognized at their trade date.MBNs investments and derivative assets and liabilities are measured at fair value.All other financial assets and liabilities are measured at amortized cost.Under this method,financial assets and liabilities reflect the amount required to be receiv

94、ed or paid,discounted,when appropriate,at the contracts effective interest rate.MBNs 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 securityholders.MBN only offsets financial

95、 assets and financial liabilities if MBN has a legally enforceable right to offset recognized amounts and either intends to settle on a net basis or to realize the asset and settle the liability simultaneously.C.Fair Value Measurement MBNs own credit risk and the credit risk of the counterparty are

96、taken into account in determining the fair value of financial assets and financial liabilities,including derivative instruments.Investments and futures contracts are valued at fair value using the policies described below.Fair value is the price that would be received to sell an asset or paid to tra

97、nsfer a liability in an orderly transaction between market participants at the measurement date.The fair value of financial assets and liabilities traded in active markets are based on quoted market prices at the close of trading on the reporting date.MBN uses the last traded market price for both f

98、inancial assets and financial liabilities where the last traded price falls within that days 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 the

99、specific facts and circumstances.The fair value of financial assets and liabilities that are not traded in an active market(for example,over-the-counter derivatives)is determined by using valuation techniques.MBN uses a variety of methods and makes assumptions that are based on market conditions exi

100、sting at each reporting date.Valuation techniques used include the use of comparable recent arms length transactions,reference to other instruments that are substantially the same,discounted cash flow analysis,option pricing models and other valuation techniques commonly used by market participants

101、making the maximum use of market inputs and relying as little as possible on entity specific inputs.D.Shareholders Equity MBNs equity shares are classified as equity as MBN has full discretion with respect to the extent and timing of the repurchase of equity shares.Incremental costs directly attribu

102、table to the issue or redemption of equity shares are recognized directly in equity as a deduction from the proceeds or part of the acquisition cost.Where MBN repurchases its own equity shares,the consideration paid,including any directly attributable incremental costs,is deducted from equity attrib

103、utable to MBNs securityholders until the shares are cancelled,re-issued or disposed of.Where such shares are subsequently sold or reissued,any consideration received is included in equity attributable to MBNs equity holders.E.Derivative Transactions MBN may use derivatives,such as futures contracts,

104、to hedge against losses caused by changes in exchange rates,commodity or index prices.Futures contracts are valued using the last traded price of the accredited futures exchange on which the corresponding futures contract is primarily traded.The value of a futures contract fluctuates daily,and cash

105、settlements made daily,where applicable,by MBN are equal to the unrealized gains or losses on a“mark to market”basis.These unrealized gains or losses are recorded and reported as such until MBN closes out the contract or the contract expires.Margin paid or deposited in respect of a futures contract

106、is reflected in the Statements of Financial Position.Any change in the margin requirement is settled daily.Realized gains or losses from derivative instruments are included in the Statements of Comprehensive Income Net Realized Gain(Loss)from Investment Transactions.Derivative transactions can only

107、be made with counterparties that have a minimum acceptable credit rating.NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2018 AND 2017?16 MBN CORPORATION?4.Summary of Significant Accounting Policies(continued)F.Investment Transactions and Income Recognition Investment transactions are accounted for as of

108、the trade date and any realized gains or losses from such transactions are calculated on an average cost basis.Average cost does not include amortization of premiums or discounts on fixed income securities with the exception of zero coupon bonds.The change in the difference between fair value and av

109、erage cost of the investments is recorded as unrealized gain(loss)on investments.Income from investments is recognized on the ex-dividend or ex-distribution date.Interest income shown on the Statements of Comprehensive Income represents the interest from bank deposits received by MBN and,if MBN hold

110、s fixed income investments,coupon interest accounted for on an accrual basis.MBN does not amortize premiums paid or discounts received on the purchase of fixed income securities except for zero coupon bonds which are amortized on a straight line basis.Interest income is the tax basis of calculating

111、the interest received and which is subject to tax.Income distributions received are treated consistently with dividends and interest and recorded in income in the Statements of Comprehensive Income.G.Profit or Loss after Tax per Equity share Profit or loss after tax per equity share in the Statement

112、s of Comprehensive Income represents the profit or loss after tax divided by the average equity shares outstanding during the year.H.Taxation MBN does not qualify as a mutual fund corporation under the provisions of the Income Tax Act(Canada)(the”Act”).As a result,it is not entitled to a refund of t

113、ax paid in respect of its net realized capital gains.MBN currently incurs withholding taxes imposed by certain countries on investment income and capital gains.Such income and gains are recorded on a gross basis and the related withholding taxes are shown separately in the Statements of Comprehensiv

114、e Income.I.Foreign Currency Translation Foreign currency amounts are translated into Canadian dollars as follows:fair value of investments,forward currency contracts and other assets and liabilities,at the closing rate of exchange on each business day;income and expenses,and purchases,sales and sett

115、lements of investments,at the rate of exchange prevailing on the respective dates of such transactions.J.Critical Accounting Estimates and Judgments The preparation of financial statements requires management to use judgment in applying its accounting policies and to make estimates and assumptions a

116、bout the future.The following discusses the most significant accounting judgments and estimates that MBN has made in preparing the financial statements:Determination of Functional Currency Functional currency is the currency of the primary economic environment in which MBN operates.If indicators of

117、the primary economic environment are mixed,then management uses its judgment to determine the functional currency that most faithfully represents the economic effect of the underlying transactions,events and conditions.The majority of MBNs investments and transactions are denominated in Canadian dol

118、lars.Investor subscriptions and redemptions are also received and paid in Canadian dollars.Accordingly,management has determined that the functional currency of MBN is Canadian dollars.Fair Value Measurement of Derivatives and Securities Not Quoted in an Active Market MBN may hold financial instrume

119、nts that are not quoted in active markets,including derivatives.Fair values of such instruments are determined using valuation techniques and may be determined using reputable pricing sources(such as pricing agencies)or indicative prices from market makers.Broker quotes as obtained from the pricing

120、sources may be indicative and not executable or binding.Where no market data is available,MBN may value positions using its own models,which are usually based on valuation methods and techniques generally recognized as standard within the industry.The models used to determine fair values are validat

121、ed and periodically reviewed by experienced personnel of the Manager,independent of the party that created them.The models used for private equity securities are based mainly on earnings multiples adjusted for a lack of marketability as appropriate.Models use observable data,to the extent practicabl

122、e.However,areas such as credit risk(both own and counterparty),volatilities and correlations require the Manager to make estimates.Changes in assumptions about these factors could affect the reported fair values of financial instruments.MBN considers observable data to be market data that is readily

123、 available,regularly distributed and updated,reliable and verifiable,not proprietary,and provided by independent sources that are actively involved in the relevant market.Refer to Note 5 for further information about the fair value measurement of MBNs financial instruments.NOTES TO FINANCIAL STATEME

124、NTS DECEMBER 31,2018 AND 2017?MIDDLEFIELD 2018 ANNUAL REPORT17?4.Summary of Significant Accounting Policies(continued)K.Securities Lending MBN may enter into securities lending transactions.These transactions involve the temporary exchange of securities as collateral with a commitment to deliver the

125、 same securities on a future date.Income is earned from these transactions in the form of fees paid by the counterparty and,in certain circumstances,interest paid on securities held as collateral.Income earned from these transactions is recognized on an accrual basis and is included in the Statement

126、s of Comprehensive Income.5.Fair Value Disclosure MBN classifies fair value measurements within a hierarchy which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities(Level 1)and the lowest priority to unobservable inputs(Level 3).The tables be

127、low summarize the fair value of MBNs financial instruments as at December 31,2018 and 2017,using the following fair value hierarchy:Level 1 Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.Level 2 Inputs ot

128、her than quoted prices that are observable for the asset or liability either directly or indirectly,including inputs in markets that are not considered to be active.Level 3 Inputs that are unobservable and where there is little,if any,market activity.Inputs into the determination of fair value requi

129、re significant management judgment or estimation.As at December 31,2018 Description Level 1 Level 2 Level 3 Total Equities$12,400,207$-$-$12,400,207 As at December 31,2017 Description Level 1 Level 2 Level 3 Total Equities$15,649,104$-$-$15,649,104 All fair value measurements are recurring.The carry

130、ing values of cash,income and interest receivable,accounts receivable and accounts payable and accrued liabilities,approximate their fair values due to their short-term nature.Fair values of MBNs investments are classified as Level 1 when the related security is actively traded and a quoted price is

131、 available.If an instrument classified as Level 1 subsequently ceases to be actively traded,it is transferred out of Level 1.In such cases,instruments are reclassified into Level 2,unless the measurement of its fair value requires the use of significant unobservable inputs,in which case it is classi

132、fied as Level 3.A.Equities and Warrants MBNs investments in equities and warrants are classified as Level 1 when the security is actively traded and a reliable price is observable.Certain investments in equities and warrants do not trade frequently and therefore observable prices may not be availabl

133、e.In such cases,fair value is determined using observable market data(e.g.,transactions for similar securities of the same issuer)and the fair value is classified as Level 2,unless the determination of fair value requires significant unobservable data,in which case the measurement is classified as L

134、evel 3.B.Debt Securities Debt securities include primarily government or corporate bonds and are classified as Level 1 when the securities are actively traded.Debt securities which are valued using models with inputs including interest rate curves,credit spreads and volatilities are generally observ

135、able and therefore these debt securities have been classified as Level 2.MBNs policy is to recognize transfers in and out of the fair value hierarchy levels as at the end of the reporting period for transfers between Levels 1 and 2 and as at the date of the transfer for transfers in and out of Level

136、 3.No transfers between levels have occurred during the years ended December 31,2018 and 2017.6.Financial Risk Management In the normal course of business,MBN is exposed to a variety of financial risks:price risk,interest rate risk,foreign exchange rate risk,liquidity risk,credit risk and concentrat

137、ion risk.MBNs primary risk management objective is to protect earnings and cash flow and,ultimately,shareholder value.Risk management strategies,as discussed below,are designed and implemented to ensure MBNs risks and related exposures are consistent with its objectives and risk tolerance.NOTES TO F

138、INANCIAL STATEMENTS DECEMBER 31,2018 AND 2017?18 MBN CORPORATION?6.Financial Risk Management(continued)Most of MBNs risks are derived from its investments.The value of the investments within the MBN portfolio can fluctuate on a daily basis as a result of changes in interest rates,economic conditions

139、,commodity prices,the market and company news related to specific securities held by MBN.The investments are made in accordance with MBNs risk management policies.The policies establish investment objectives,strategies,criteria and restrictions.The objectives of these policies are to identify and mi

140、tigate investment risk through a disciplined investment process and the appropriate structuring of each transaction.A.Price Risk Price risk is the risk that changes in the prices of MBNs investments will affect MBNs income or the value of its financial instruments.MBNs price risk is driven primarily

141、 by volatility in commodity and equity prices.Rising commodity and equity prices may increase the price of an investment while declining commodity and equity prices may have the opposite effect.MBN mitigates price risk by making investing decisions based upon various factors,including comprehensive

142、fundamental analysis prepared by industry experts to forecast future commodity and equity price movements.MBNs market positions are monitored on a daily basis by the portfolio manager and regular financial reviews of publicly available information related to MBNs investments are performed to ensure

143、that any risks are within established levels of risk tolerance.MBN is exposed to price risk through the following financial instrument:2018 2017 Investments at FVTPL$12,400,207$15,649,104 Based on the above exposure at December 31,2018,a 10%increase or decrease in the prices of MBNs investments woul

144、d result in a$1,240,021(2017$1,564,910)increase or decrease in total equity of MBN,with all other factors held constant.B.Interest Rate Risk Interest rate risk describes MBNs exposure to changes in the general level of interest rates.Interest rate risk arises when MBN invests in interest-bearing fin

145、ancial assets such as cash and debt securities and utilizes financial liabilities such as loan payable.In respect of cash balances and loan payable,MBNs interest income and expense are positively correlated to interest rates in that rising interest rates increase both interest income and expense whi

146、le the reverse is true in a declining interest rate environment.MBN is also exposed to the risk that the value of financial assets such as corporate and government debt will fluctuate due to changes in the prevailing levels of market interest rates.The value of such financial assets is negatively co

147、rrelated to interest rates.MBN has not hedged its exposure to interest rate movements.MBN seeks to mitigate this risk through active management,which involves monitoring debt levels and analysis of economic indicators to forecast Canadian and global interest rates.The tables below summarize MBNs exp

148、osure to interest rate risk by remaining term to maturity:As at December 31,2018 Less than 1 Year 1 to 5 Years Greater than 5 Years Total Cash$28,389,635$-$-$28,389,635 As at December 31,2017 Less than 1 Year 1 to 5 Years Greater than 5 Years Total Cash$14,449,181$-$-$14,449,181 Based on the above e

149、xposure at December 31,2018,a 1%per annum increase or decrease in interest rates would result in a$283,896(2017$144,492)increase or decrease in total equity of MBN,with all other factors held constant.C.Foreign Exchange Rate Risk Foreign exchange rate risk describes the impact on the underlying valu

150、e of financial instruments due to foreign exchange rate movements.The Canadian dollar is MBNs functional and reporting currency.Foreign investments,commodities,cash,receivables and payables denominated in foreign currencies are affected by changes in the value of the Canadian dollar compared to fore

151、ign currencies.As a result,financial assets may depreciate/appreciate in the short-term due to the strengthening/weakening of the Canadian dollar against other currencies,and the reverse would be true for financial liabilities.MBNs exposure to foreign exchange risk relates primarily to its investmen

152、t in securities,which are denominated in U.S.dollars.MBN has not hedged its exposure to currency fluctuations;however,it closely monitors relevant foreign exchange currency movements.MBN is exposed to foreign exchange rate risk through the following financial instruments:NOTES TO FINANCIAL STATEMENT

153、S DECEMBER 31,2018 AND 2017?MIDDLEFIELD 2018 ANNUAL REPORT19?6.Financial Risk Management(continued)C.Foreign Exchange Rate Risk(continued)2018 2017 Investments at FVTPL$5,622,157$8,645,254 Cash 4,036,766 14,129,952 Dividend Receivable 4,323 -Total Exposure$9,663,246$22,775,206 Based on the above exp

154、osure at December 31,2018,a 10%increase or decrease in the Canadian dollar against the U.S.dollar would result in a$966,325(2017$2,277,521)decrease or increase in total equity of MBN,with all other factors held constant.D.Liquidity Risk Liquidity risk is defined as the risk that MBN may not be able

155、to settle or meet its obligations when due.MBNs obligations are due within one year.Liquidity risk is managed by investing the majority of MBNs assets in investments that are traded in an active market and can be readily sold.MBN retains sufficient cash to maintain liquidity and comply with liquidit

156、y requirements as outlined by securities legislation and its investment policies.MBN may invest in securities that are not traded on a public stock exchange or that may be illiquid.As a result,MBN may not be able to dispose of these investments in a timely manner.MBN mitigates this risk through acti

157、ve management,which involves detailed analysis of such private entities to ensure they are financially sound and would be attractive to potential investors if a sale is necessary.MBNs investment policies and securities legislation limit the amounts invested in illiquid securities and these limits ar

158、e monitored.As at December 31,2018 and 2017,MBN did not hold any illiquid securities.The tables below present MBNs financial liabilities based on the remaining period to the contractual maturity date.The amounts in the tables reflect the contractual undiscounted cash flows.As at December 31,2018 Fin

159、ancial Liabilities Less than 1 Month 1 to 3 Months 3 Months to 1 Year Total Distributions Payable$385,392$-$-$385,392 Accounts Payable-Portfolio Securities?421,773 -421,773 Accounts Payable and Accrued Liabilities 165,924 17,000 -182,924 Total$973,089$17,000$-$990,089 As at December 31,2017 Financia

160、l Liabilities Less than 1 Month 1 to 3 Months 3 Months to 1 Year Total Accounts Payable and Accrued Liabilities$90,596$-$-$90,596 Total$90,596$-$-$90,596 E.Credit Risk Credit risk represents the financial loss that MBN would experience if a counterparty to a financial instrument failed to meet its o

161、bligations to MBN.The carrying amounts of financial assets represent the maximum credit exposure.All transactions executed by MBN 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 broke

162、r has received payment.Payment is made on a purchase only once the broker has received the securities.The trade will fail if either party fails to meet its obligations.There is no significant credit risk related to MBNs receivables.MBN has established various internal controls to help mitigate credi

163、t risk,including prior approval of all investments by the Advisor whose mandate includes conducting financial and other assessments of these investments on a regular basis.MBN has also implemented policies which ensure that investments can only be made with counterparties that have a minimum accepta

164、ble credit rating.As at December 31,2018 and 2017,MBN did not invest in any debt instruments.NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2018 AND 2017?20 MBN CORPORATION?6.Financial Risk Management(continued)F.Concentration Risk MBN is exposed to the possible risk inherent in the concentration of the

165、investment portfolio in a small number of industries or investment sectors.The Manager moderates this risk through careful selection of securities in several investment sectors.At December 31,2018 and 2017,the percentages of MBNs total equity invested in each investment sector were as follows:As a%o

166、f Total Equity Sector 2018 2017 Financials 10.5?17.8 Healthcare 7.5?9.3 Pipelines 3.9?8.6 Real Estate 3.9?3.6 Energy 3.1?3.5 Communication Service 1.2-Utilities 1.0-Technology -?7.1 Consumer Discretionary -2.2 Total 31.1 52.1 7.Capital Management MBNs capital is its total equity.MBNs objective when

167、managing capital is to safeguard MBNs ability to continue as a going concern in order to provide returns for shareholders,maximize shareholder value and maintain financial strength.MBN manages and adjusts its capital in response to general economic conditions,the risk characteristics of the underlyi

168、ng assets and working capital requirements.In order to maintain or adjust its capital structure,MBN may enter into repurchase agreements or undertake other activities deemed appropriate under the specific circumstances.MBN is not subject to any externally imposed capital requirements.8.Management Fe

169、e and Operating Expenses The Manager provides investment and administrative services to MBN.In consideration for such services,the Manager receives a management fee equal to 1.1%per annum of the Net Asset Value,calculated and paid monthly in arrears based on the average Net Asset Value of the preced

170、ing month.The Manager is reimbursed for reasonable costs related to maintaining MBN and preparation and distribution of financial statements and other documents to shareholders.MBN is responsible for the payment of all expenses relating to the operation of MBN and the carrying on of its business.9.S

171、hareholders Equity MBN is authorized to issue an unlimited number of transferable,non-redeemable equity shares,each of which represents an equal,undivided interest in the total equity of MBN.MBN is also authorized to issue an unlimited number of shares designated as Class M Shares(the“Class M Shares

172、”)of which there are 100 Class M Shares issued and outstanding.The holders of Class M Shares are not entitled to receive dividends but are entitled to one vote per share.The Class M Shares are redeemable at the option of either MBN or a holder thereof at a price of$1.00 per share.The Class M Shares

173、rank subsequent to the equity shares with respect to distributions on the dissolution,liquidation or winding-up of MBN.A trust established for the benefit of the holders from time to time of the equity shares owns all of the issued and outstanding Class M Shares.On August 29,2018,MBN issued 1,335,14

174、7 shares in exchange for units of merged Globalance Dividend Growers Corp.During the year ended December 31,2018,MBN purchased 488,900 equity shares(2017 93,200)pursuant to a normal course issuer bid.The average number of equity shares outstanding during 2018 was 4,204,405(2017 3,940,061).This numbe

175、r was used to calculate the Profit(Loss)after Tax per Equity Share.NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2018 AND 2017?MIDDLEFIELD 2018 ANNUAL REPORT21?10.Transaction Costs Brokerage commissions and other transaction costs paid in connection with securities transactions for the year ended Decemb

176、er 31,2018 amounted to$173,159(2017$31,934).Included in this amount is$29,055(2017$17,244)in brokerage commissions that were paid to MCC.All brokerage commissions paid by MBN to MCC were at or below market rates.Brokerage commissions and other transaction costs are expensed and recorded in the State

177、ments of Comprehensive Income.11.Securities Lending MBN has entered into a securities lending program with its custodian,RBC Investor Services Trust,in order to earn additional revenue.The aggregate market value of all securities loaned by MBN will not exceed 50%of the fair value of the assets of MB

178、N.MBN will receive collateral of at least 105%of the fair value of the securities on loan.Collateral held is generally comprised of cash and securities of,or guaranteed by,the Government of Canada or a province thereof,or the United States government or its agencies.Securities lending income reporte

179、d in the Statements of Comprehensive Income is net of a securities lending charge which MBNs custodian,RBC Investor Services Trust,is entitled to receive.For the years ended December 31,2018 and 2017,securities lending income was as follows:2018 2017 Gross Securities Lending Income$2,488$2,613 Secur

180、ities Lending Charges(871)(914)Net Securities Lending Income 1,617 1,699 Withholding Taxes on Securities Lending Income (142)(108)Net Securities Lending Income received by MBN$1,475$1,591 Securities lending charges represented 35%(2017 35%)of the gross securities lending income,all of which was paid

181、 to MBNs custodian.The following table summarizes the securities loaned and collateral held as at December 31,2018 and 2017.2018 2017 ($000s)($000s)Securities Loaned$1,601$3,103 Collateral Received 1,681 3,258 Collateral Percentage of Securities Loaned 105%105%12.Income Taxes and Loss Carryforwards

182、No reconciliation of the income tax was computed for December 31,2017.A reconciliation of the income taxes computed at the Canadian statutory tax rate of 27%for December 31,2018 to the effective tax rate is as follows:2018 2017 Income(Loss)before Income Taxes$2,893,651$(3,303,936)Computed Expected T

183、ax Expense 781,286 27.00%-Difference related to:Non-deductible Portion of Investment Losses 349,420 12.08%-Dividends not Taxable for Income Tax Purposes (74,178)(2.56%)-Amortization of Issuance Costs from Globalance (72,462)(2.51%)-Utilization of Previously Unrecognized Loss Carryforwards (984,066)(

184、34.01%)-Total Income Tax Expense$-$-At December 31,2018,MBN had capital losses of$13,459,970(2017$13,592,212)and non-capital losses of$11,954,851(2017$15,455,977)available for carryforward for tax purposes.The capital losses can be carried forward indefinitely.The expiry dates of the non-capital los

185、ses are as follows:NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2018 AND 2017?22 MBN CORPORATION?12.Income Taxes and Loss Carryforwards(continued)Expiry Date Amount December 31,2028$910,014 December 31,2029 2,509,396 December 31,2030 2,367,928 December 31,2031 4,545,534 December 31,2032 481,809 Decembe

186、r 31,2035 377,880 December 31,2036 418,485 December 31,2037 343,805$11,954,851 13.Distributions MBN pays quarterly distributions to shareholders starting from September 2018.For the year ended December 31,2018,distributions amounted to$0.16 per equity share(December 31,2017-$nil).DIVIDENDS(PER SHARE

187、)?23?2018 30-Sep$0.08 31-Dec$0.08 2018 TAX INFORMATION(PER SHARE)MBN Corporation will be issuing T5 slips to registered shareholders by February 28,2019.The following table outlines the allocation of the 2018 dividend for each share.?ALLOCATION DIVIDEND ELIGIBLE RECORD DATE PAYABLE DATE PER SHARE DI

188、VIDEND September 30,2018 October 15,2018$0.080000$0.080000?TOTAL$0.080000$0.080000 Holders of Shares outside of an RRSP,RRIF or DPSP should have received a T5 slip from their investment dealer.T5 tax slips report Eligible Dividends in Box 24.Eligible Dividends are subject to the gross-up and federal

189、 dividend tax credit rules.24MIDDLEFIELD FUNDS FAMILYEXCHANGE-TRADED FUNDS(ETFs)TSX Stock Symbol?TSX-LISTED FUNDS?MIDDLEFIELD MUTUAL FUNDS TRUST FUNDSFund CodeSeries A UnitsFE/LL/DSC?Series F Units?MIDDLEFIELD MUTUAL FUNDS CORPORATE CLASS FUNDSFund CodeSeries A SharesFE/LL/DSC?Series F Shares?RESOUR

190、CE FUNDS?INTERNATIONAL FUNDS?CORPORATE INFORMATION?Vice-PresidentAccounting?Vice-President?Assistant Vice-President?Assistant Vice-President?Assistant Vice-President?Associate?Associate,Investments?Manager,AccountingMF Properties LimitedKen LaiAccountant?Deloitte LLP,Chartered Professional Accountan

191、ts?Bennett JonesDLA Piper(Canada)LLPFasken Martineau DuMoulin LLPMcCarthy Ttrault?Bank of MontrealCanadian Imperial Bank of CommerceRoyal Bank of CanadaThe Bank of Nova ScotiaThe Toronto-Dominion Bank?RBC Investor Treasury Services?MFL Management LimitedMF Properties Limited?Managing DirectorSales a

192、nd Marketing?Managing Director,Investments,Regional Salesand Portfolio Manager?Managing DirectorTrading and Portfolio Manager?Managing DirectorCorporate Development?Executive Director Corporate Development?Director,Investments?Director,Sales and Marketing?Senior Vice-President?Senior Vice-President?

193、Senior Vice-President?Senior Vice-President?Vice-President?Vice-President?Vice-President?Vice-President?Vice-President?President and?President and?Managing Director and?Dennis da SilvaManaging DirectorResource Group?Former Vice-ChairmanRBC Dominion Securities Limited?Former Vice-ChairmanFour Seasons

194、 Hotels Inc.?Former ChairmanMount Sinai Hospital?Former Managing DirectorRBC Capital Markets?Groppe,Long&LittellSSR,LLC?President?PresidentMF Properties Limited?First Canadian Place58th Floor,P.O.Box 192Toronto,OntarioCanada M5X 1A6Telephone(416)362-0714Fax(416)362-7925?288 BishopsgateLondon,EnglandEC2M 4QPTelephone(0207)814-6644Fax(0207)814-6611?812 Memorial Drive NWCalgary,AlbertaCanada T2N 3C8Telephone(403)269-2100Fax(403)269-2911?One Embarcadero CenterSuite 500San Francisco,CaliforniaUSA 94111Telephone(415)835-1308Fax(415)835-1350?