Half Yearly Report

Half Yearly Report

CIC CAPITAL LIMITED

("CICC" or the "COMPANY")

Half yearly report for the 6 months ended 31 July 2013

CHAIRMAN'S STATEMENT

Our focus is to earn-in equity interests in quality companies as compensation for our services.

In the 6 months ended July 31 2013, CIC Capital Ltd ("CIC Capital" or the "Company") earned revenues of CAD$6,862,354 (2012: CAD$491,381) and profit before taxation of CAD$5,944,993 (2012: CAD$115,437 before restatement to include a gain on investments at fair value of CAD$31,019,645). Cash at end of period was CAD$38,747. We have continued our focus not to incur any new debt. In the half year we reduced historical debt and converted director and officer fees to B Class special non-voting shares. The readiness of directors to agree to this type conversion demonstrates, in our view, our focus to use cash resources to reduce debt and grow the Company. Operating costs are low and we will strive to maintain efficiencies, invest in our staff resources and expand our capabilities.

The Company is a consulting and advisory company, operating primarily in the mining and energy infrastructure sectors. The Company seeks to provide consulting and advisory services to entities operating at various stages of resource development, and the exclusive right to control the public listing process of any client company if the client company is an unlisted company. The Company principally seek equity interests in client companies in return for its services.

Revenue in the period has principally been earned from services provided to CIC Gold Limited ("CIC Gold" or "CICG") valued, in total, at CAD$6,499,825. CIC Gold settled these transactions by issuing CIC Capital with new shares, a total of 13.68 million new shares being issued to us. At 31 January 2013, CIC held 58,160,000 shares (or 48.46%) in CIC Gold. These additional transactions have raised the Company's total holding to 71,840,000 shares, being 59.87%. The Company has attributed a value of the shares of GBP0.30 a share. We continue to supply services to CIC Gold. The Company is designated as an investment entity under IFRS 10 and the investments in CIC Gold are accounted for under this basis.

CIC Gold is a precious metals company focused on gold mineral assets. CICG was established by CIC Capital and its Chinese precious metals miner shareholders to establish a specific publicly traded Precious Metals Company. CIC Gold's focus is on mineral property assets where medium to large gold oxide mining may be conducted in the short term, mineral property assets that the directors consider to be undervalued or have strong fundamentals and attractive growth prospects, and de-risk those assets by way of exploration or mining.

The Company holds a 48.36% interest in CIC Fuels Limited ("CICF") which is a non-publicly listed entity as at 31 July 2013. CICF focuses on alternative heavy oil emulsion fuels technologies. The value of the Company's interest in CICF used in our accounts is consistent with previous transactions of these shares with third parties.

I would like to take this opportunity to thank staff and shareholders for their continued support and belief in the Board strategies for the Company's direction.

Stuart J. Bromley

Chairman/Founder

CIC Capital Ltd.

CIC CAPITAL LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Six Months Ended July 31, 2013

(In Canadian Dollars CAD$)

Other reserves includes the unrealised movements on available for sale financial assets.

1. General information

CIC Capital is a public company incorporated on June 20, 2003 under the Canada Business Corporations Act and quoted on the AIM market of the London Stock Exchange. The Company subsequently de-listed its shares from trading on the Canadian CNSX as of June 24, 2011 but remains a reporting issuer in Canada.

The Company is a consulting and advisory company, operating primarily in the mining and energy infrastructure sectors. The Company seeks to provide consulting and advisory services to entities operating at various stages of resource development, and the exclusive right to control the public listing process of any client company if the client company is an unlisted company. The Company principally seek equity interests in client companies in return for its services.

This financial information has been prepared in accordance with the principles of IFRS as adopted by the European Union. The standards have been applied consistently (except as otherwise stated).

The standards have been applied consistently. The non-statutory financial statements for the year ended January 31 2013, which are available from the Company's website, were prepared under IFRS and IFRIC interpretations as adopted by the EU and IASB. The auditors reported on those accounts and their Audit Report was unqualified with an emphasis of matter in respect of going concern. For the year to January 31 2014, the financial statements will be prepared under IFRS as prescribed by the IASB, and not as adopted by the EU. There is no significant impact of this change to the audited January 21 2013 accounts.

The Company is classified as an investment entity, which is detailed further in note 2 to this financial information.

This Interim Report is unaudited, does not constitute statutory financial statements and has not been reviewed by the Company's auditors. The Interim Report for the six months ended July 31 2013 was approved by the Directors on October 30, 2013.

The comparative period presented is that of the six months ended July 31, 2012. The directors are of the opinion that due to the nature of the group's activities and the events during that period these are the most appropriate comparatives for the current period. The interim financial information is presented in Canadian Dollars (CAD$), unless otherwise stated.

2. Significant Accounting Policies

The interim financial information for the six months ended July 31, 2013 has been prepared on the basis of the accounting policies set out in the most recently published financial statements for the group for the year ended January 31 2013 which are available on the Company's website www.ciccapital.com.

The group had the following significant accounting policies as at 31 January 2013:

Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the group's activities. Revenue is shown net of value added tax, returns, rebates and discounts and after eliminating sales within the group.

The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met. The group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Investments / Non-current assets

Non-current assets classified as available for sale are measured at the lower of their carrying amount and fair value less costs to sell. Fair value is the underlying principle and is defined as "the price that would be received to sell an asset in an orderly transaction between market participants at the measurements date", in the guidelines issued by the International Private Equity and Venture Capital valuation board. Fair value is therefore an estimate and, as such, determining fair value requires the use of judgement. The majority of the group's assets are unquoted investments. These are valued with reference to recent reported relevant transactions.

Available for sale investments - valuation

The group reviews the fair value of its unquoted equity instruments at each statement of financial position date. This requires management to make an estimate of the fair value of the unquoted securities in the absence of an active market. Uncertainty also exists due to the early stage of development of certain of the investments.

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction on the measurement date.

When available, the group measures the fair value of an investment using quoted prices in an active market for that investment. A market is regarded as active if the quoted prices are readily and regularly available and represent actual and regularly occurring market transactions on arm's length basis.

If a market for a financial instrument is not active, then the group establishes fair value using a valuation technique. Valuation techniques include using recent arm's lengths transactions between knowledgeable, willing parties (if available), reference to the current fair value of other instruments that are substantially the same, discounted cash flow analyses and option pricing models. The chosen valuation technique makes maximum use of the market inputs, relies as little as possible on estimates specific to the group, incorporates all factors that market participants would consider in setting a price, and is consistent with accepted economic methodologies for pricing financial instruments. Inputs to valuation techniques reasonably represent market expectations and measures of the risk-return factors inherent in the financial instrument. The group calibrates valuations techniques and tests them for validity using prices from observable current market transactions in the same instrument or based on other available observable market data.

The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e the fair value of the consideration given or received, unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (ie without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. When transaction price provides the best evidence of fair value at initial recognition, the financial instrument is initially measured at the transaction price and any difference between this price and the value initially obtained from the valuation model is subsequently recognized in other comprehensive income on an appropriate basis over the life of the instrument but not later than when the valuation is supported wholly by observable market data or the transaction is closed out.

Recoverability of trade receivables

Included within trade receivables of CAD$10，247，139（2012: nil) are amounts in respect of the sales of equities. The directors have reviewed the likelihood of recovery of these receivables, as well as obtaining certain confirmations from these companies, and consider that these balances are recoverable and no provision is required.

Going concern

The non-statutory financial statements have been prepared on the assumption that the group will continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations. In assessing whether the going concern assumption is appropriate, management takes into account all available information for the foreseeable future, in particular for the twelve months from the date of approval of the non-statutory financial statements.

Although the current ongoing economic conditions create uncertainty, the group's forecasts and projections, taking account of reasonable possible changes in trading performance, together with mitigation actions that are within management's control show that the group is expected to be able to operate within the level of its available resources.

The directors are carefully monitoring cash resources across the group and have instigated a number of initiatives to ensure funding will be available for future operations and to reduce debt. Significant working capital has been raised and used to reduce debt.

In undertaking this assessment, the directors have reviewed the underlying ongoing costs of the group undertaking its business and generating ongoing income (and cash) to cover these. The directors have also considered the recovery of a discrete number of key trade receivables, and based on confirmations received from these companies, the directors expect to recover these trade receivables by December 2013.

Additionally, Stuart Bromley has continued to provide his ongoing support for at least 12 months from the date of approval of this non-statutory interim financial information.

Following the review of ongoing performance and cash flows, the directors have a reasonable expectation that the group has adequate resources to continue operational existence for the foreseeable future, subject to the sale of these equity interests. For this reason they continue to adopt the going concern basis in preparing these non-statutory financial statements.

Changes in accounting standards

IFRS 10, 11 and 12 are effective for the year ended 31 January 2014, therefore these standards have been adopted as part of the preparation of the results for the period ended 31 July 2014. The principal changes as a result of these standards arise from IFRS 10, as well as "Investment Entities" (Amendments to IFRS 10, IFRS 12 and IAS 27).

Under IFRS 10, companies are able to consider whether they are classed as an investment entity. An investment entity is an entity that:

(a) obtains funds from one or more investors for the purpose of providing those investor(s) with investment management services;

(b) commits to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and

(c) measures and evaluates the performance of substantially all of its investments on a fair value basis.

In assessing whether a company meets the definition of an investment entity, the following characteristics must be considered:

(a) it has more than one investment;

(b) it has more than one investor;

(c) it has investors that are not related parties of the entity; and

(d) it has ownership interests in the form of equity or similar interests.

The directors have considered the definition of an investment entity in IFRS 10 as well as the associated application guidance. The stated activity of the Company is to achieve capital appreciation by gaining securities of private and public companies. The directors considered that CIC Capital met the definition of an investment entity on the following basis:

1) It has more than one investment

2) It has more than one investor

3) The investors in CIC are not related parties of CIC

4) The ownership interests in the investments are in the form of equity

Investments held by designated investment entity are measured at fair value through profit or loss in accordance with IAS 39 "Financial Instruments: Recognition and Measurement". This represents a change in accounting policy for the group and requires the previous audited period to restated.

The impact of this change on the consolidated statement and statement of financial position for the year ended 31 January 2013 is detailed below:

There was no impact of the change in accounting policies on the Consolidated Statement of Cash Flows for the year ended 31 January 2013. The impact of the change in accounting policies for the unaudited interim financial information for the six month period to 31 July 2012 was as follows:

There was no impact of the change in accounting policies on the Consolidated Statement of Cash Flows for the year ended 31 January 2013

There was no impact of the change in accounting policies on the audited financial statements for the year to 31 January 2012.

As the Company does not hold any entities that are classified as joint arrangements, there has been no impact in the application of IFRS 11.

Significant accounting judgments, estimates and assumptions

For equity interests held by the Company or options to acquire equity interests in non-public companies, these are classified as Investments and the valuation of these interests is not recorded unless equity has been sold pre-IPO to non-related investors or parties. This price is then used to value the remaining shareholding held by the Company. Actual sales of any equity in these companies is recorded.

Paragraph 27A of IFRS 7 states that the level within the fair value hierarchy at which an investment measured at fair value is categorised, is determined on the basis of the lowest level input that is significant to the measurement of fair value in its entirety. The Company therefore values shares in entities in which it hold equity at the pre-IPO price established by arms-length investors (Level 3 in the established Fair Value hierarchy).

3. Business Segments

For the purpose of IFRS8, the Chief Operating Decision Maker "CODM" takes the form of the board of directors. The directors are of the opinion that the business of the group comprises a single activity being investments and advice within emerging markets.

The analysis of the group's turnover, gross profit, assets, liabilities, additions to plant, property and equipment and depreciation and amortization by the component used by the CODM to make decisions about operating matters is as follows:

4. TAXATION

The Company is a Canadian Federal Corporation subject to a corporate tax rate of 25% (at July 31, 2013).

5. AVAILABLE FOR SALE FINANCIAL ASSETS 

Current Assets (Level 1 fair value hierarchy IFRS)

Shares, options and warrants ("securities") received as consideration are recognised when the services have been performed or the agreed effort has been expended, pursuant to a contract or agreement, the securities have been received by the Company, and the value of the securities received is measurable by way of the securities being listed on a stock exchange.

The fair value of the listed equity securities are based upon their current bid prices in active markets. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis.

For equity interests held by the group or options to acquire equity interests in non-public companies, the valuation of those interests is recorded at the lower of cost and fair value less costs to sell. Actual sale of any equity in those companies is recorded. It is anticipated that the group will in future record valuations based on certainty of value.

Non-Current Assets (Level 3 fair value hierarchy IFRS)

The value of investments have increased from CAD$41,650,194 at 31 January 2013 to CAD$48,150,019 as at 31 July 2013, an increase of CAD$6,499,825. Investments are made up as follows:

As at 31 July 2013 investments are held at fair value as non-current assets with any gain or loss on valuation recognised within the income statement. This treatment has changed in the current period to reflect new accounting standards to be adopted in the current financial year, further details being provided in the section 'Changes in accounting standards' in note 2.

As at 31 January 2012, CIC Capital held equity interests of 43.0% in CIC Gold and 31.5% in CIC Fuels. The Company had earned these interests for providing advisory services to these businesses, but no value was recognised for the investments for the year ended 31 January 2012. This was done on the basis that there had been no external transactions for shares in these investments, and therefore no appropriate inputs with which to determine fair value.

For the year ended 31 January 2013, CIC sold some of these interests to third parties whilst also earning additional equity interests in CIC Fuels for advisory services.

Where investments were sold to third parties (Dell Balfour, Jarada Fund and Miyazawa) agreements were entered into to purchase both CIC Gold and CIC Fuels shares from CIC Capital at GBP£0.30 a share, and deposits were paid in relation to all of these agreements. The original intention of these agreements was that the balance of the funds would be payable to CIC Capital in the event of an IPO of CIC Gold or CIC Fuels. The receipt of these funds was accounted for as revenue.

Subsequently, two of the purchasers of these shares (Jarada Fund and Dell Balfour) have amended their original agreements, so as to provide CIC Capital with a commitment to pay the balance of the funds on or prior to 31 December 2013, irrespective of whether CIC Gold or CIC Fuels obtain a listing. The Company has taken reasonable steps to obtain assurance that these funds will be paid by these parties by this date.

Given the assurance obtained by management, revenue has been recognised in full on the shares sold that relate to those agreements that have been amended, and the appropriate amount recognised within receivables. No additional revenue has been recognised in respect of the Miyazawa transaction. As at 31 January 2013 and 31 July 2013, receivables of CAD$10.18 million were included in the statement of financial position in relation to these sales.

The fair value of these investments has been established using 'Level 3' inputs as defined in the established fair value hierarchy. These are inputs that are not based on observable market data. The fair value of each investment has been established with reference to prices obtained through the above details sales of these investments by CIC Capital to third parties.

As the fair value had been established at £0.30 per share, CIC Capital revalued the remaining holdings in CIC Gold and CIC Fuels to this price. The increase in value of these holdings was included within other comprehensive income (although this treatment has changed subsequently for the year ended 31 January 2014 financial statements).

CIC Capital also earned additional equity interests in CIC Fuels in the year ended 31 January 2013, and for the period ended 31 July 2013, has earned additional equity interests in CIC Gold. After the fair value of the investments had been established, any additional equity interests were and are subsequently recorded at this fair value and are included within investments and revenue.

6. SHARE CAPITAL

Authorised:

Unlimited common shares without par value.

Share Purchase Options (CAD$):

The Company has a stock option plan which authorises the board of directors to grant incentive stock options to directors, officers and employees. The exercise price and vesting provisions of the options are determined by the board based on the market values of the shares using the closing price on the date prior to date of the grant. The continuity of options outstanding is as follows:

Issued and allotted shares outstanding (CAD$):

No ordinary shares were issued in the first half of the yearending July 31, 2013

Ordinary B Shares

During the period, 16,836,200 Ordinary B Shares were issued to settle outstanding directors fees of CAD$505,086 due to Stuart J. Bromley.

Warrants:

The following is the summary of the changes in the Company's outstanding warrants at July 31, 2013 (CAD$):

At July 31, 2013, the Company had 67,554,820 warrants outstanding.

As at July 31, 2013, there were 10,750,000 employee, director and consultant options outstanding. The weighted average remaining life for outstanding options is 0.38 years, and weighted average exercise price is CAD$0.05.

7. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the group by the weighted average number of ordinary shares in issue during the period:

Profit attributable to equity holders of the group: CAD$4,746,325 (July 31, 2012: CAD$31,136,946)

Weighted average number of ordinary shares in issue: 186,444,427 (July 31, 2012: 152,451,777)

Basic earnings per share: CAD$0.0255(July 31, 2012: CAD$0.20)

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The group has two categories of dilutive potential ordinary shares: share options and warrants. Where the group makes a loss attributable to the equity holders of the group, the warrants and share options are anti-dilutive and these contingently issuable shares are not included in the calculation.

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