ACENCIA DEBT STRATEGIES LIMITED

HALF YEARLY REPORT AND UNAUDITED CONDENSED FINANCIAL STATEMENTS 2015

ACENCIA DEBT STRATEGIES LIMITED CONTENTS

Summary Information 2-4

Responsibility Statement 5

Chairman’s Statement 6-9

Independent Review Report 10

Unaudited Condensed Financial Statements:

Condensed Statement of Comprehensive Income 11

Condensed Statement of Changes in Equity 12-14

Condensed Statement of Financial Position 15

Condensed Statement of Cash Flows 16

Notes to the Unaudited Condensed Financial Statements 17-30

Management and Administration 31

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ACENCIA DEBT STRATEGIES LIMITED SUMMARY INFORMATION For the six month period ended 30 June 2015

Principal Activity AcenciA Debt Strategies Limited (“the Company” or “AcenciA”) is an authorised closed-ended investment scheme domiciled in Guernsey. The Company is premium listed and traded on the main market of the London Stock Exchange.

Change in functional and presentation currency The Directors have reassessed the Company’s functional currency and have concluded that, on the basis of the below, the functional currency has changed from Sterling to US Dollar with effect from 6 February 2015:

• the cancellation of the Sterling USD hedge in 2014, • the sale of the last of the Sterling investments by 31 December 2014, and • the payment of US$101,025,026 (£64,855,251) in relation to the Tender Offer on 6 February 2015 out of cash that accumulated prior to the cancellation of the Sterling USD hedge.

In light of this, the Directors’ have aligned the Company’s presentation currency by changing it from Sterling to USD with effect from 6 February 2015. For further information refer to note 4.

Investment Objective and Policy The Company’s investment objective is to produce annual returns in excess of 3-month US Dollar LIBOR plus 5 per cent over a rolling 3-year period, with annual standard deviation of under 5 per cent. On 23 April 2015, the Board approved an amendment to the Company’s investment objective to make reference to the US Dollar LIBOR instead of Sterling LIBOR.

The Company’s investment policy is to invest in an actively managed portfolio of predominantly debt-oriented hedge funds. In accordance with the resolution passed at the EGM dated 25 September 2014 and with the amended Article 36.1 of the Company’s Articles of Incorporation, the Directors shall call a general meeting of Shareholders in September 2017 at which an ordinary resolution shall be proposed to approve the voluntary winding up of the Company (the “2017 Winding-up Resolution”) with effect from 31 December 2017. The Company will place such redemption notices as necessary ahead of the possible winding-up date of 31 December 2017, and will not, in the interim, make any new investments in funds which have lock-up or capital commitment periods beyond this date. The future of the Company is discussed below.

Dividend Policy The Company’s dividend policy is to pay an annualised dividend equivalent to 3.5 per cent of net assets by means of interim dividend payments. During the period to 30 June 2015, the Company paid a dividend of 1.95p per share totalling £1,085,475 (US$1,666,312) (year ended 31 December 2014: US$ 7,435,621 and period ended 30 June 2014: US$ 3,757,410). For further information refer to note 5.

Change of Directors Mr W Simpson was appointed as a Director of the Company on 13 April 2015. On 27 May 2015, Mr J Le Pelley resigned as Chairman and Mr W Scott was appointed as Chairman.

The Directors who held office during the period to 30 June 2015 and as at the date of this report are listed on page 31.

Principal risks and uncertainties for the next financial period The Board reviews risks each quarter and monitors the existing risk control activity designed to mitigate these risks.

The principal risks associated with the Company are:

• Operational risk. The Board is ultimately responsible for all operational facets of performance including cash management, asset management, regulatory and listing obligations. The Company has no employees and so enters into a series of contracts/legal agreements with a series of service providers to ensure that both operational performance and regulatory obligations are met. The Board performs on-going internal monitoring of operational processes and controls and receives regular reports from the administrators of the Company on operational breaches and errors, adherence to policies and procedures and compliance reporting to reduce the risk of fraud and bribery. The Company is required to comply with the UK Listing Authority rules. Any failure to comply could lead to criminal or civil proceedings. The Sub-Manager and Administrator monitor compliance with regulatory requirements and the Administrator reports at quarterly Board meetings.

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ACENCIA DEBT STRATEGIES LIMITED SUMMARY INFORMATION, continued For the six month period ended 30 June 2015

• Investment risk. Although the Board is ultimately responsible for the investment objective and policy, the day-to-day investment strategy is delegated, by the Investment Manager, to the Sub-Manager and Investment Adviser. The success of the Company depends on the diligence and skill of the Sub-Manager and Investment Adviser. There is a risk that any underperformance of funds which the Company’s capital is invested in would lead to a reduction of the Company’s Net Asset Value or of the share price rating. The Board formally monitors the investment performance each quarter, when the Sub-Manager reports on the performance of the Company’s portfolio at the quarterly Board meetings. The Sub-Manager and Investment Adviser carry out extensive due diligence on the underlying invested funds and monitor performance regularly. The investment guidelines and restrictions, as detailed in the prospectus of the Company, ensure adequate diversification and are regularly monitored by the Sub-Manager.

• Share price discount risk. The Company has a Discount Target mechanism which was designed to mitigate this risk. The share price is continually monitored and, if appropriate, the Company Enhanced Share Buy-back Program is utilised to help control share price discount levels. Furthermore, the Board also considers whether any additional control measures need to be taken. On 29 January 2014, the Company announced a narrowing of the Discount Target from 10% to 7.5% and in June 2014 this was further reduced to 2.5%. At the EGM on 25 September 2014, a resolution was passed to adopt a maximum discount target of 5% with effect from 1 January 2015.

Asset Allocation by Hedge Fund Strategy The estimated allocation to underlying hedge fund strategies as at 30 June 2015 was as follows:

* Estimate by Saltus Partners LLP based on interviews with a sample of underlying managers.

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ACENCIA DEBT STRATEGIES LIMITED SUMMARY INFORMATION, continued For the six month period ended 30 June 2015

Analysis of Significant Investments The significant direct holdings of the Company as at 30 June 2015 are set out in the first table below. Of these, 3 are fund of fund vehicles managed by Sandalwood Securities, Inc. (“Sandalwood”), the Company’s Investment Adviser. The significant holdings on a look-through basis (i.e. showing the effective exposure to underlying single manager hedge funds, ignoring the fund of fund vehicles) are set out in the second table below.

The Company’s Significant Direct Holdings

Fair Value % of Name of investment Strategy US$ Portfolio Value Fund of Funds Managed by Sandalwood Bodleian Partners Class A Limited Partnership Fund of Funds 36,167,580 40.07 Sandalwood Debt Fund A Limited Partnership Fund of Funds 33,870,284 37.52 Sandalwood Debt Fund B Limited Partnership Fund of Funds 11,417,710 12.65 Sub Total 81,455,574 90.24 Single Manager Funds Elliott International Fund Multi-strategy credit 8,816,441 9.77 Sub Total 8,816,441 9.77 Total 90,272,015 100.00

The Company’s investment portfolio on a look-through basis comprised the following principal holdings:

Fair Value % of Name of investment* Strategy US$ Portfolio Value Elliott Associates, LP Multi-strategy credit 12,858,577 13.18 Third Point Partners (QP), LP Event Driven 12,126,324 12.43 Redwood Domestic Fund, LP Multi-strategy credit 12,031,511 12.33 Canyon Balanced Fund, L.P. Multi-strategy credit 11,663,993 11.96 York Credit Opportunities Fund Multi-strategy credit 11,232,738 11.51 Anchorage Capital Partners, LP Distressed securities 9,645,801 9.89 Centerbridge Credit Partners Distressed securities 8,898,344 9.12 Jet Capital Concentrated Fund Multi-strategy credit 6,865,435 7.04 Scoggin Worldwide Investors, LP Distressed securities 4,888,808 5.01 Appaloosa Investment. LP Distressed securities 2,745,494 2.81 Thoroughbred Fund, LP Distressed securities 2,585,825 2.65 Centerbridge Credit Partners, SP Distressed securities 372,026 0.38

Other portfolio items (5,642,861) (5.86)

Total 90,272,015 92.45

* In several cases the exposure to these funds is made up of a combination of an indirect investment in the domestic funds and a direct investment in the overseas sister fund, which has similar but not identical portfolio composition.

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ACENCIA DEBT STRATEGIES LIMITED RESPONSIBILITY STATEMENT

Each of the Directors currently in office, whose names are listed on page 31 of the Unaudited Condensed Financial Statements (“the Financial Statements”) confirm that, to the best of their knowledge and belief:

• The Financial Statements comprising the Condensed Statement of Comprehensive Income (unaudited), the Condensed Statement of Changes in Equity (unaudited), the Condensed Statement of Financial Position (unaudited), the Condensed Statement of Cash Flows (unaudited) and the Unaudited Related Notes 1 to 24 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

• The Half Yearly Report which includes a fair review of the information detailed in the Summary Information and the Chairman’s Statement provides a fair review of the information required by:-

I. DTR4.2.7, being an indication of important events that have occurred during the first six months of 2015 and a description of the principal risks and uncertainties for the remaining six months of 2015; and

II. DTR4.2.8, being disclosure of related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so.

The Directors of the Company are listed on page 31.

W Scott R Battey Chairman Director

Date: 21 August 2015

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ACENCIA DEBT STRATEGIES LIMITED CHAIRMAN'S STATEMENT For the six month period ended 30 June 2015

As the newly elected Chairman of AcenciA Debt Strategies Limited, I am pleased to present our shareholders with the Interim Report of AcenciA Debt Strategies Limited covering the period from 1 January 2015 to 30 June 2015.

Performance Review

Over the six month period, the net asset value per share increased by 1.8% per cent to US$1.73 (taking account of dividends paid). Total Shareholder returns were up 0.1% per cent to a share price of 103.62p and total dividends of 1.95p paid during the time period.

Investment Review

2015 has been a satisfactory year so far for the Company. Many investors worldwide have struggled over the first two quarters of 2015, so we are pleased that over this period, AcenciA was able to post a positive total return in NAV terms in a low volatility manner. The Company continues to uphold its successful investment strategy of holding a concentrated portfolio which focuses on establishing investment partnerships with superior hedge fund managers tasked with finding a multitude of event-driven and multi-strategy credit opportunities.

One of the major events of the past six months has been the continued downward pressure on commodity prices, which has continued to create interesting opportunities within the sector for our fund managers. Furthermore, the financial failure of various sovereign government entities has been a prevalent theme so far in 2015. With Greece defaulting on its debts and Puerto Rico’s indebtedness catching the attention of global markets, certain underlying managers are selectively investing in the sovereign credit sphere.

A detailed review of the underlying managers’ holdings shows that our low risk portfolio resembles no investable index. Our fund managers’ own contrarian, out-of-favour, deep value securities consist of both corporate debt and equity. Going forward, the portfolio remains positioned to take advantage of an evolving global opportunity set.

Company News

Since we last reported to shareholders in the 2014 year end accounts, we have carried out the changes to the investment strategy. We have implemented a more focused portfolio, containing some of the most impressive distressed and event driven managers. Furthermore, the Company removed its sterling hedge in 2014, which had been increasingly difficult to manage and a drag on returns as it forced us to hold cash and liquid investments which we would otherwise not have held.

At the Company's annual general meeting, shareholders approved a resolution proposing that the denomination of the issued share capital of the Company be changed from Sterling to US Dollars. This change has taken effect from 27 May 2015. Henceforth, US Dollars will be the relevant currency for the purposes of (amongst other things) trading in the Company's shares and the declaration and payment of dividends.

At the conclusion of the AGM on 27 May 2015, Mr James Le Pelley retired as a Non-Executive Director. On behalf of the Board, I would like to thank Jim for the significant contribution that he has made during his tenure as Non- Executive Chairman. His extensive knowledge and pragmatic advice will be sorely missed.

The Board is also pleased to welcome William Simpson as a Non-Executive Director, with effect from 13 April 2015. William is a partner at Ogier, an international law firm, where he specialises in investment funds, similar structures and related matters. He brings many years of relevant experience across several jurisdictions. We look forward to working together for the benefit of shareholders.

We believe that these changes, both to the structure and the investment strategy, are likely to give us the best chances of producing risk-adjusted returns ahead of those that are available from any global asset class or any set of fund managers over the next three years.

On 6 February 2015, the Company announced the results of the Tender Price being 111.06p and the return of capital to Qualifying Shareholders occurred on 12 February 2015.

Following the settlement of the Tender Offer above, the Directors reassessed the Company’s functional currency and concluded that this had changed from Sterling to US Dollar with effect from 6 February 2015. For further details see the Company’s Annual Report 2014. As a result, the Directors also changed the Company’s presentational currency to US Dollar with effect from 6 February 2015.

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ACENCIA DEBT STRATEGIES LIMITED CHAIRMAN'S STATEMENT, continued For the six month period ended 30 June 2015

Share buyback programme

In line with its commitment to Shareholders, the Company has continued its share buyback programme throughout the period. The quarterly rebalance of the FTSE UK Index Series in June saw the Company moved from the FTSE All- Share to the FTSE Fledgling Index which lead to some technical selling from index tracking funds. In total during the period, the Company acquired 700,000 ordinary shares of nil par value for cancellation at an average price of 104.2p per share, representing a 9.1% discount to the prevailing net asset value per share. As at the 30th June 2015, the share price traded at a 5.8% discount to net asset value.

Dividend

The Board is pleased to declare a second interim dividend of 3.03 cents per share, representing 1.75% of the USD NAV per share on 30 June 2015. This represents an annualised yield of 3.69% based on the closing share price of the Company on 19 August 2015 of 164.13 cents. It will be paid on 14 October 2015. The record date will be 4 September 2015 and the shares will go ex-dividend on 3 September 2015.

Performance Summary

For the half year ended 30 June 2015, the Company’s NAV per share increased 1.8% in total return terms, with dividends totalling 1.95p having been paid and a closing NAV of US$1.73. Total Shareholder returns were up 0.1% per cent to a share price of US$1.63 and total dividends of 1.95p paid during the time period. The discount narrowed from -6.1% to -5.8%.

Share Price and Discount Performance

30 June 2015 31 December 2014 From: 6 month NAV* US$1.73 US$1.73 NAV (TR)** 1.8% Price* US$1.63 US$1.63 Price (TR)** 0.1% Discount 6.0% 6.1%

*Please note that numbers are rounded to 2 decimal places **includes dividends

For the same period the S&P 500 returned 0.2%, the Credit Suisse Leverage Loans index increased 2.9% and the Barclay’s High Yield Index rose 2.9%. AcenciA continued to exhibit both low volatility and a material lack of correlation to equity markets.

Source: Bloomberg

Distressed

US Corporate credit was at the forefront of the distressed credit world at the start of 2015, with 26 publicly-traded companies filing for bankruptcy in the US in the first quarter. According to Bank of America Merrill Lynch, the amount of outstanding US distressed bonds has more than doubled in the past year to US$121 billion; the default rate increased in Q1 to 3.0% from 1.8% in December1. In line with this expansion, we note that several of the underlying fund credit managers have increased the size of their investment teams in recent months as they find an increasing number of opportunities to review. Some specific examples of the distressed opportunities that have arisen over the period are set forth below.

The largest bankruptcy of Q1 was Caesars Entertainment (hotels and casinos) with US$18 billion in debt. Several of the underlying fund managers have exposure to Caesars Entertainment through both equity and debt opportunities. Creditors are currently waiting for the company to file its reorganisation proposal, which could come out at any date between the time of writing and November, if granted an extension.

The sale of Indiana Toll Roads was announced in March and those bonds have appreciated to close to par, prompting the underlying fund managers to start exiting that position after achieving gains of approximately 45% over time. Another contributor was the bonds of the forestry company Emerald Plantation, which appreciated up to 90¢ on the dollar, as the liquidating company sold more assets. These bonds were bought for as low as 15¢ approximately two years ago.

1 J.P. Morgan research 2015 7

ACENCIA DEBT STRATEGIES LIMITED CHAIRMAN'S STATEMENT, continued For the six month period ended 30 June 2015

In terms of losing positions, one underlying fund manager suffered a setback during the first quarter in bonds of the Austrian bank Hypo Alpe-Adria, as Austria declared a 15 month moratorium on their debt payments at the end of February, casting doubt on the bonds’ state guarantee. Another underlying fund manager saw mark-to-market losses on Puerto Rico’s Cofina bonds in March as politicians suggested they be restructured.

The arrival of the second quarter saw sovereign credit take centre stage, as Greece did not reach an agreement with its creditors and defaulted on an IMF payment due 30 June 2015, and Puerto Rico’s governor announced for the first time that the US territory cannot pay its US$72 billion of external debt. Nonetheless, several of the Company’s underlying fund managers believe various Puerto Rico credits are an attractive opportunity and are well covered due to their seniority and/or collateral.

Another sovereign situation saw a positive development in Q2, producing gains for our managers. In June, Iceland announced agreements with its banks’ creditors (mostly hedge funds) and its intention to lift capital controls which will allow foreign investors to repatriate proceeds. Distressed, continued

Going forward, many of the underlying fund managers continue to be focused primarily on distressed opportunities in the energy, renewable energy, real estate, commodities, shipping and consumer retail sectors.

Structured Credit

The first half of 2015 saw positive trends in real estate fundamentals continue, as US residential housing appreciated at approximately 4% year over year and commercial real estate continued to benefit from a strengthening economy. This positive trend, as well as the current low interest environment, has provided a recent tailwind for Residential Mortgage Backed Securities (RMBS).

Additionally, the underlying fund managers continue to monitor the Commercial Mortgage Backed Security (CMBS) market as an increasing volume of maturities (the “maturity wall” that peaks in 2017) may generate distressed opportunities. For now, the refinancing market is strong which has allowed properties facing debt maturities to roll over obligations, thus extending their ultimate maturities.

However, our underlying fund managers’ positive performance in the Structured Credit sphere is primarily the result of extracting value through a proactive approach to the structures that contain the underlying credits, be they corporate or real estate. For example, some underlying fund managers are currently benefitting from issuing and managing CLOs and retaining the equity tranche. Another example is the double-digit returns achieved YTD by a fund manager that re-securitises bonds for enhanced exposure to legacy subprime mortgages.

For several underlying fund managers, structured credit continues to be an attractive way of investing in the underlying assets at a discount. The complex structure of these bonds often hides their true value, which allows the underlying fund managers the opportunity to find good investments by completing their rigorous analytics on individual securities.

Event-Driven Equity

The economic environment in the first half of 2015 continued to be supportive of event-driven investing. As the economic cycle continued, companies increasingly focused on optimising their balance sheets, seeking growth through acquisitions, and returning capital to shareholders. Despite flat performance in the broader US equity market over the period, the underlying fund managers have achieved attractive returns on their process-driven situations, where company management have taken action to enhance shareholder value. Some specific examples of these events are set forth below.

In April alone the underlying fund managers in the portfolio benefitted from several events: 1) Japanese robotics manufacturer Fanuc agreed to increased distributions to shareholders, 2) UK money manager Alliance Trust agreed to add independent directors to its board, 3) enterprise software company Informatica announced its sale after an underlying fund manager initiated an activist position in January, and 4) Nomad Holdings acquired Iglo Foods, executing on its strategy to consolidate packaged foods businesses in Europe.

This trend continued in May, as one of the Company’s underlying fund managers saw its contested proposal for three board seats at Sotheby’s accepted. Also in May, another underlying fund manager announced a large stake in Yum Brands (owner of KFC, Pizza Hut, and Taco Bell), which could benefit from spinning off certain business units.

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ACENCIA DEBT STRATEGIES LIMITED CHAIRMAN'S STATEMENT, continued For the six month period ended 30 June 2015

In June, an underlying fund manager’s activist position in energy pipeline company Williams rallied strongly upon receiving a buyout offer (though it was rejected). Among new situations, one underlying fund manager disclosed a 7% stake in Citrix Systems in June and made several activist proposals to management, which the market reacted to positively.

Finally, announced mergers have been another profitable investment area. Examples include: Allergan/Actavis, Salix Pharmaceuticals/Valeant, Lorillard/Reynolds and Time Warner Cable/Charter Communications. The Kabel Deutschland minority shareholder litigation in Germany has also generated gains for the underlying fund managers.

Outlook

AcenciA’s underlying fund managers’ expertise extends to many types of securities. These include equities (many of which are subject to an activist campaign by a number of our managers), various types of debt securities including distressed, high yield, asset-backed, mezzanine, bank debt, CLOs, long/short credit, sovereign credit, etc. This diverse set of securities and strategies allows for a robust opportunity set which these superior investment organisations have successfully exploited over time.

Over long time frames, markets have exhibited two generic characteristics, smooth sailing and choppy seas, with the latter brought about by a multitude of factors resulting in significant disruption and price destruction. From 1997 to 2000 the S&P 500 doubled, it then lost half its value through 2002, it doubled again through 2007, whereupon it again lost half its value through March of 2009, and has, since then, tripled. This is significant volatility.

Investor psychology is put to the test at the lows as fear takes over, investors bail out, and then re-enter at higher price levels. They too often get whipsawed. Your Company has significantly reduced this volatility as our underlying managers invest in debt instruments and also maintain short positions.

The good news about market disruptions is that they allow for savvy investors to buy securities with a significant margin of safety as others flee. We appear to be entering one of these types of periods of market opportunity.

W Scott Chairman Date: 21 August 2015

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ACENCIA DEBT STRATEGIES LIMITED INDEPENDENT REVIEW REPORT TO ACENCIA DEBT STRATEGIES LIMITED For the six month period ended 30 June 2015

Introduction We have been engaged by the Company to review the Unaudited Condensed set of Financial Statements in the half yearly report for the six months ended 30 June 2015 which comprises the Condensed Statement of Comprehensive Income, the Condensed Statement of Changes in Equity, the Condensed Statement of Financial Position, the Condensed Statement of Cash Flows and related notes 1 to 24.

We have read the other information contained in the half yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of Financial Statements.

Directors' Responsibilities The half yearly report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half yearly report in accordance with the Disclosure and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

As disclosed in note 3, the Annual Audited Financial Statements of the Company are prepared in accordance with International Financial Reporting Standards (IFRSs), as adopted by the European Union. The Unaudited Condensed set of Financial Statements included in this half yearly report has been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting”, as adopted by the European Union.

Our Responsibility Our responsibility is to express to the Company a conclusion on the Unaudited condensed set of Financial Statements in the half yearly report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting its responsibilities in respect to half yearly financial reporting in accordance with the Disclosure and Transparency Rules of the United Kingdom’s Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement, or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of Review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, “Review of Interim Financial Information performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion Based on our review, nothing has come to our attention that causes us to believe that the Unaudited Condensed set of Financial Statements in the half yearly report for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

BDO Limited Chartered Accountants Place du Pre, Rue du Pre, St Peter Port, Guernsey

Date: 21 August 2015

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ACENCIA DEBT STRATEGIES LIMITED CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) For the six month period ended 30 June 2015

Restated Restated Six months to Year to 31 Six months to 30 June 2015 December 2014 30 June 2014 (unaudited) (audited) (unaudited) Notes US$ US$ US$

Net gains on investments at fair value through profit or loss 7 1,522,487 16,605,538 4,329,759 Other gains/(losses) 8 408,963 (4,135,120) 4,316,244 1,931,450 12,470,418 8,646,003

Income Interest receivable 11,332 15,447 9,648

Expenses Net management fee 9 134,683 528,429 233,790 Performance fees 9 - (1,122,203) (829,214) Administration fees 9 (62,311) (239,548) (118,783) Directors’ fees 9 (62,621) (136,967) (68,580) Custodian fees 9 (24,126) (106,274) (54,018) Other expenses 9 (184,467) (1,280,503) (342,377) (198,842) (2,357,066) (1,179,182) Net expenses (187,510) (2,341,619) (1,169,534)

Operating profit 1,743,940 10,128,799 7,476,469

Finance costs 20 (36,046) (207,525) (103,910) Profit for the financial period/year 1,707,894 9,921,274 7,372,559

Other comprehensive income that will not be reclassified subsequently to profit or loss: Foreign currency adjustment on translation to presentation currency (96,699) (12,346,932) 7,105,249

Total comprehensive income 1,611,195 (2,425,658) 14,477,808

Basic and Diluted Earnings per Ordinary Share 11 3.07c 8.59c 6.31c

Weighted Average Number of Ordinary Shares outstanding 11 55,626,962 115,527,321 116,817,782

All items in the above statement derive from continuing operations.

All income is attributable to the Ordinary Shares of the Company.

The accompanying notes on pages 17 to 30 form an integral part of the Unaudited Condensed Financial Statements.

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ACENCIA DEBT STRATEGIES LIMITED CONDENSED STATEMENT OF CHANGES IN EQUITY For the six month period ended 30 June 2015

Distributable Accumulated Translation Total Reserves Losses Reserve Equity Notes US$ US$ US$ US$ Six months to 30 June 2015 (unaudited)

At 31 December 2014 restated 205,575,988 (37,410,616) (71,758,794) 96,406,578

Total comprehensive income: Profit for the financial period - 1,707,894 1,707,894 Other comprehensive income: Foreign currency adjustment on translation to presentation currency - - (96,699) (96,699) Total comprehensive income for the period - 1,707,894 (96,699) 1,611,195

Transactions with owners: Ordinary Shares acquired and cancelled during the period 16(b) (1,148,191) - - (1,148,191) Dividends paid 5 - (1,666,312) - (1,666,312) Total transactions with owners (1,148,191) (1,666,312) - (2,814,503)

At 30 June 2015 204,427,797 (37,369,034) (71,855,493) 95,203,270

The accompanying notes on pages 17 to 30 form an integral part of the Unaudited Condensed Financial Statements.

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ACENCIA DEBT STRATEGIES LIMITED CONDENSED STATEMENT OF CHANGES IN EQUITY, CONTINUED For the six month period ended 30 June 2015

Restated Restated Restated Restated Restated Share Distributable Accumulated Translation Total Premium Reserve Losses Reserve Equity Notes US$ US$ US$ US$ US$ Year to 31 December 2014 (audited)

At 31 December 2013 - 312,078,458 (39,896,268) (59,411,863) 212,770,327

Total comprehensive income: Profit for the financial year - - 9,921,274 - 9,921,274 Other comprehensive income: Foreign currency adjustment on translation to presentation currency - - - (12,346,932) (12,346,932) Total comprehensive income for the year - - 9,921,274 (12,346,932) (2,425,658)

Transactions with owners: Transfer to Share Premium 16(a) & (b) 5,477,444 (5,477,444) - - - Ordinary Shares acquired and cancelled during the year 16(a) (106,502,470) - - - (106,502,470) Tender offer shares 101,025,026 (101,025,026) - - - Dividends paid 5 - - (7,435,621) - (7,435,621) Total transactions with owners - (106,502,470) (7,435,621) - (113,938,091)

At 31 December 2014 - 205,575,988 (37,410,615) (71,758,795) 96,406,578

The accompanying notes on pages 17 to 30 form an integral part of the Unaudited Condensed Financial Statements.

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ACENCIA DEBT STRATEGIES LIMITED CONDENSED STATEMENT OF CHANGES IN EQUITY, CONTINUED For the six month period ended 30 June 2015

Restated Restated Restated Restated Restated Share Distributable Accumulated Translation Total Premium Reserve Losses Reserve Equity Notes US$ US$ US$ US$ US$ Six months to 30 June 2014 (unaudited)

At 31 December 2013 - 312,078,458 (39,896,268) (59,411,863) 212,770,327

Total comprehensive income: Profit for the financial period - - 7,372,559 - 7,372,559 Other comprehensive income: Foreign currency adjustment on translation to presentation currency - - - 7,105,249 7,105,249 Total comprehensive income for the period - - 7,372,559 7,105,249 14,477,808

Transactions with owners: Transfer to Share Premium 16(a) & (b) 1,914,460 (1,914,460) - - - Ordinary Shares acquired and cancelled during the period 16(a) (1,914,460) - - - (1,914,460) Dividends paid 5 - - (3,757,410) - (3,757,410) Total transactions with owners - (1,914,460) (3,757,410) - (5,671,870)

At 30 June 2014 - 310,163,998 (36,281,119) (52,306,614) 221,576,265

The accompanying notes on pages 17 to 30 form an integral part of the Unaudited Condensed Financial Statements.

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ACENCIA DEBT STRATEGIES LIMITED CONDENSED STATEMENT OF FINANCIAL POSITION As at 30 June 2015

Restated Restated 30 June 2015 31 December 2014 30 June 2014 (unaudited) (audited) (unaudited) Notes US$ US$ US$ Non-current assets Investments at fair value through profit or loss 7 90,272,015 93,721,586 194,118,983

Current assets Derivatives 22 - - 2,168,496 Investment sales proceeds receivable 7 3,916,217 39,489,348 7,498,013 Prepayments 36,844 76,692 180,588 Other receivables 101,947 441,957 280,152 Cash and cash equivalents 12 1,004,446 64,794,070 18,856,698 Total current assets 5,059,454 104,802,067 28,983,947

Current liabilities Tender offer share dealing payable - 101,025,026 783,022 Other payables 14 128,199 1,092,049 743,643 Total current liabilities 128,199 102,117,075 1,526,665

Net current assets 4,931,255 2,684,992 27,457,282

Net assets 95,203,270 96,406,578 221,576,265

Equity Share capital 15 - - - Share premium 16(a) - - - Distributable reserve 16(b) 204,427,797 205,575,988 310,163,998 Translation reserve 16(c) (71,855,493) (71,758,795) (52,306,614) Accumulated losses 16(d) (37,369,034) (37,410,615) (36,281,119) Total equity 95,203,270 96,406,578 221,576,265

Net asset value per Ordinary Share 19 173.21c 173.19c 190.99c

Number of Ordinary Shares 19 54,965,360 55,665,360 116,016,949

The Unaudited Condensed Financial Statements on pages 11 to 30 were approved by the Board of Directors and authorised for issue on 21 August 2015. They were signed on its behalf by:-

W Scott R Battey Director Director

The accompanying notes on pages 17 to 30 form an integral part of the Unaudited Condensed Financial Statements.

15 ACENCIA DEBT STRATEGIES LIMITED CONDENSED STATEMENT OF CASH FLOWS For the six month period ended 30 June 2015

Restated Restated Six months to Year to Six months to 30 June 2015 31 December 2014 30 June 2014 (unaudited) (audited) (unaudited) Notes US$ US$ US$ Cash inflows / (outflows) from operating activities Operating profit for the period / year 1,743,940 10,128,799 7,476,469 Adjustment for: Movement in unrealised (gains) / losses on investments 7 (5,429,818) 25,658,352 (384,139) Realised gains / (losses) on investments 7 4,214,039 (42,052,599) (3,853,065) Movement in unrealised losses on forward foreign exchange contracts 8 - 3,040,315 944,802

Decrease / (increase) in prepayments and other receivables 379,337 (208,671) (104,060) (Decrease) / increase in other payables (962,755) 295,794 (215,239) (55,257) (3,138,010) 3,864,768

Purchase of investments 18 - (16,767) (458,268) Sales of investments 18 40,104,865 67,804,942 2,366,797 40,104,865 67,788,175 1,908,529

Net cash inflow from operating activities 40,049,608 64,650,165 5,773,297

Cash outflows from financing activities Ordinary Shares acquired and cancelled 2 & 15 (102,071,884) (5,477,444) (1,131,438) Dividends paid 5 (1,666,312) (7,435,621) (3,757,410) Facility fee paid 20 (36,046) (207,525) (103,910) Net cash outflow from financing activities (103,774,242) (13,120,590) (4,992,758)

Net (decrease) / increase in cash and cash equivalents (63,724,634) 51,529,575 780,539

Foreign currency movement on translation to presentation currency (64,990) (4,216,087) 595,577

Cash and cash equivalents at beginning of period / year 64,794,070 17,480,582 17,480,582

Cash and cash equivalents at end of period / year 12 & 18 1,004,446 64,794,070 18,856,698

The accompanying notes on pages 17 to 30 form an integral part of the Unaudited Condensed Financial Statements.

16 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS For the six month period ended 30 June 2015

1. GENERAL INFORMATION The Company was incorporated as a company with limited liability in Guernsey on 13 October 2005 and is an authorised closed-ended investment scheme domiciled in Guernsey. The Ordinary Shares are listed on the London Stock Exchange.

As described in note 4 in more detail, during the period the Directors have reassessed the Company’s functional currency and have concluded that the functional currency has changed from Sterling to US Dollar with effect from 6 February 2015. In light of this, the Directors’ have aligned the Company’s presentation currency by changing it from Sterling to US Dollar. In accordance with IFRS the comparative periods have been restated as if USD had always been the presentation currency.

The financial information for the year ended 31 December 2014 is derived from the financial statements delivered to the UK Listing Authority which have been translated to the new presentation currency as discussed above. For further information refer to note 4. The Auditor reported on these financial statements, their report was unqualified. Their report did not contain a statement under Section 263 (2) of the Companies (Guernsey) Law, 2008.

The Company invests in a portfolio consisting primarily of debt-oriented hedge funds. The Company’s investment strategy is to provide annual returns in excess of 3-month US Dollar LIBOR plus 5 per cent over a rolling 3 year period and annual standard deviation of under 5 per cent. On 23 April 2015, the Board approved an amendment to the Company’s investment objective to make reference to the US Dollar LIBOR instead of Sterling LIBOR.

2. COMPANY RESTRUCTURING AND TENDER OFFER At the EGM on 25 September 2014, Shareholders voted in favour of Continuation Proposals for the Company. The salient points of the terms of the continuation proposals which were passed are as follows:

• The Company’s articles were amended to remove the requirement for a winding-up vote to be held in 2014 and instead a provision is included that a winding-up vote be held in September 2017 for the Company to be wound up with effect from 31 December 2017.

• The Company amended its investment policy and strategy to allow the Sub-Manager to run a more high-conviction and concentrated portfolio, and remove the currency hedging which was employed over the life of the Company.

• The Company has an amended fee structure in relation to Performance fees paid to the Investment Manager, with effect from 1 January 2015. See below Investment Manager fee arrangements section for further details.

• The Company implemented a new discount control policy, adopting a maximum discount target of 5%, undertaking share buybacks to support this target.

• The Shareholders not wishing to maintain their full investment in the ongoing vehicle were able to tender all or some of their shares for repurchase pursuant to a tender offer which the Company undertook in February 2015.

Tender Offer The Continuation Proposals which were passed at the EGM included proposals for a Tender Offer. As a result, 58,396,589 Ordinary Shares (“Tender Shares”), representing 51.20%, of the Company’s issued share capital were tendered by Qualifying Shareholders for repurchase pursuant to the Tender Offer.

As announced on 6 February 2015, the price for the Company’s repurchase of these Tender Shares was 111.06p and the return of capital to Qualifying Shareholders took place on 12 February 2015.

Due to the Tender Offer resolution being passed at the EGM in September 2014 and the subsequent 58,396,589 Ordinary Shares being tendered, the Company was obligated to pay at that date the tender offer share price and accordingly, the Company has recognised the resulting liability of £64,855,251 within the 31 December 2014 financial statements.

Following the acquisition and cancellation by the Company of these Tender Shares and a further acquisition and cancellation of 700,000 Ordinary Shares during the period, the total number of voting rights in the Company as at reporting date is 55,965,360. For further details on Ordinary Shares see note 15.

17 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

2. COMPANY RESTRUCTURING AND TENDER OFFER, continued

Investment Manager fee arrangements With effect from 1 January 2015, in accordance with the continuation proposals and a Supplemental Investment Management Agreement dated 26 March 2015, the performance fee is calculated as follows:

i. On the basis of a US Dollar Net Asset Value per Share rather than a Sterling Net Asset Value per Share; ii. By reference to the lower of the Net Asset Value at a calculation point or the mid-market price of a Share at the close of trading on that date, adjusted upwards to take account of any Performance fee paid or accrued in the previous calculation period and downwards to take account of any distributions paid in the previous calculation period (the “Adjusted NAV”), and; iii. By reference to a five per cent compounding hurdle (rather than the current hurdle of three per cent over the immediately preceding accounting period).

Investment objective amendments On 23 April 2015, the Board approved an amendment to the Company’s investment objective to make reference to the US Dollar LIBOR instead of Sterling LIBOR, this realignment will better reflect the recent change in investment policy as detailed further above. The investment objective of the Company, therefore, has been amended as follows:

To produce annual returns in excess of 3-month US Dollar LIBOR plus 5 per cent over a rolling 3-year period, with annual standard deviation of under 5 per cent.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation & Statement of Compliance

Statement of compliance These Unaudited Condensed Financial Statements have been prepared in accordance with International Accounting Standard (IAS) 34 “Interim Financial Reporting”, as adopted by the European Union. They do not include all the information and disclosures required in annual financial statements and should be read in conjunction with the Company’s Annual Audited Financial Statements for the year ended 31 December 2014.

The Company does not operate in an industry where significant or cyclical variations, as a result of seasonal activity, are experienced during the financial period.

Significant Accounting Policies Except for the change in functional and presentation currency (see note 4 for further information), the accounting policies applied by the Company in these Unaudited Condensed Financial Statements are the same as those applied by the Company in its Audited Annual Financial Statements for the year ended 31 December 2014.

New, revised and amended standards applicable to future reporting periods There are no new accounting standards, interpretations and amendments that have been adopted in the current year which have had a material impact in these financial statements.

Whilst the board are still assessing standards and interpretations that were in issue at the date of these unaudited condensed financial statements but not yet effective, initial expectations are that these will not have a material impact on future financial statements of the company.

The Directors believe that the Financial Statements contain all of the information required to enable Shareholders and potential investors to make an informed appraisal of the investment activities and profits and losses of the Company for the period to which they relate and not omit any matter or development of significance.

18 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

4. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES In the application of the Company’s accounting policies, which are described in note 3 to the Unaudited Condensed Financial Statements, management is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from their sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate was revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying accounting policies:

a) Functional currency and presentation currency The Directors have reassessed the Company’s functional currency and have concluded that, on the basis of the below, the functional currency has changed from Sterling to US Dollar with effect from 6 February 2015:

• the cancellation of the Sterling USD hedge in 2014, • the sale of the last of the Sterling investments by 31 December 2014, and • the payment of US$101,025,026 (£64,855,251) in relation to the Tender Offer on 6 February 2015 out of cash that accumulated prior to the cancellation of the Sterling USD hedge.

In restating the comparatives the assets and liabilities have been translated using the respective period end rates. The income and expenses have been translated using average rates. Specific items of equity such as dividends, share issues and buybacks have been translated at the rate applicable on that date. Other equity items such as accumulated losses, have been translated using the average rate for each six month period which approximates to actual rates. The resulting balancing amount has been recognised in a translation reserve in other comprehensive income.

Key sources of estimation uncertainty The following are the key assumptions and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Fair value of Investments at fair value through profit or loss The Company invests in debt-oriented hedge funds. The investments are valued at the net asset value of that fund as at the relevant valuation date in accordance with the terms of the funds and as notified by the relevant fund manager / administrator. However, the valuation date may be non-coterminous with the valuation date of the Company and hence in such cases the latest valuation as adjusted for estimates provided by the fund manager is used (estimated NAVs are based on estimated movements since the last published NAV taking into account capital introductions, distributions, dividends and estimated performance). As at 30 June 2015, 100% (31 December 2014: 100%; 30 June 2014: 74%) of the fair value attributed to the Company’s investment portfolio was based on final net asset values of the underlying investments. The Directors consider these net asset values reported to best represent the fair value of investments as the underlying fund managers / administrators adopt fair value accounting for their underlying investments when generating their net asset values.

Critical judgements in applying accounting policies, continued: When the Directors consider the net asset value of those funds not to represent fair value, certain adjustments have been made. In these circumstances the reported net asset values by the underlying fund managers / administrators are adjusted to establish the fair value. These adjustments have been applied with care and in good faith by the Directors in consultation with the Sub-Manager. Such adjustments may be based on sales negotiations that the Company is currently undertaking and other externally available evidence.

19 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

5. DIVIDENDS The Company’s dividend policy is to pay annual dividends totalling 3.5% of the Company’s net asset value by means of interim payments.

The Directors have declared an interim dividend in relation to the six months ended 30 June 2015 of 3.03c per share which will be paid on 14 October 2015 to Shareholders on the register at 4 September 2015. The ex- dividend date will be 3 September 2015. In accordance with IAS 10, this dividend has not been included within the Unaudited Condensed Financial Statements.

The Directors declared an interim dividend of 1.95p per share in relation to the year ended 31 December 2014 which was paid on 28 May 2015, at a total cost of £1,085,475 (US$1,666,312).

The Directors declared an interim dividend of 1.99p per share in relation to the six months ended 30 June 2014 which was paid on 26 September 2014, at a total cost of £2,269,834 (US$3,678,211).

The Directors declared an interim dividend of 1.92p per share in relation to the six months ended 31 December 2014 which was paid on 2 May 2014, at a total cost of £2,241,445 (US$3,757,410).

6. SEGMENTAL INFORMATION Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of the Company.

For management purposes, the Company is organised into one main operating segment, which focuses on long term growth from investments. All of the Company’s activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based upon analysis of the Company as one segment. The financial results from this segment are equivalent to the Financial Statements of the Company as a whole.

In terms of the funds in which the Company invests, these are incorporated in the United States. The underlying investments in those funds however, may be in other countries.

20 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

7. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS Restated Restated Six months to Year to Six months to 30 June 2015 31 December 2014 30 June 2014 (unaudited) (audited) (unaudited) US$ US$ US$ Fair value through profit or loss investments Opening fair value as at beginning of period/year 93,721,586 191,616,167 191,616,167 Purchases* - 151,797,111 458,268 Sales - proceeds* (4,571,344) (260,439,657) (8,469,161) - realised gains on sales (4,214,039) 42,052,599 3,853,065 Movement in unrealised gains on investments 5,429,818 (25,658,352) 384,139 Foreign currency gains/(losses) on translation to presentation currency (94,006) (5,646,282) 6,276,505 Closing fair value at end of period/year 90,272,015 93,721,586 194,118,983

Closing cost 73,215,825 82,095,214 153,340,730 Unrealised gains on investments 17,056,190 11,626,372 40,778,253 Closing fair value at end of period/year 90,272,015 93,721,586 194,118,983

Realised (losses)/gains on sales (4,214,039) 42,052,599 3,853,065 Movement in unrealised gains on investments 5,429,818 (25,658,352) 384,139 1,215,779 16,394,247 4,237,204

Investment income 306,708 211,291 92,555

Total gains on investment designated at fair value through profit or loss 1,522,487 16,605,538 4,329,759

Further information and analysis of the investments is included in the Summary Information on pages 3 and 4.

* the purchase and sales of investments includes non-cash purchases of US$ nil (31 December 2014: US$151,780,344 and 30 June 2014: US$ nil) and non-cash sales of US$ nil (31 December 2014: US$151,780,344 and 30 June 2014: US$ nil).

As at 30 June 2015, US$3,916,217 (31 December 2014: US$39,489,348 and 30 June 2014: US$7,498,013) of investment sales proceeds were receivable.

21 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

7. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS, continued

Fair value measurement The following table presents the Company’s financial assets and liabilities at fair value through profit or loss by level within the valuation hierarchy:

30 June 2015 (unaudited) % of net Level 1 Level 2 Level 3 Total assets US$ US$ US$ US$ % Fair value assets Designated as FVTPL - 90,272,015 - 90,272,015 94.82

31 December 2014 (audited) Restated Restated Restated Restated % of net Level 1 Level 2 Level 3 Total assets US$ US$ US$ US$ % Fair value assets Designated as FVTPL - 93,721,586 - 93,721,586 97.21

30 June 2014 (unaudited) Restated Restated Restated Restated % of net Level 1 Level 2 Level 3 Total assets US$ US$ US$ US$ % Fair value assets Designated as FVTPL - 194,118,983 - 194,118,983 87.61 Held for trading - derivatives - 2,168,496 - 2,168,496 0.98

Investments in quoted investment funds in a non-active market or unlisted investment funds (“investment funds”) are valued based on the reported net asset value per share as provided by the investee fund’s administrator or investment manager. The Company’s ability to redeem its investment with the investment fund on the reporting date at the reported net asset value, will determine whether the investee fund will be categorised within level 2 of the fair value hierarchy.

The valuation and classification of the investments and derivatives are reviewed on a regular basis. The Board determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

There were no transfers between Level 1 and Level 2 fair value measurements during the period ended 30 June 2015 (31 December 2014: US$ nil and 30 June 2014: US$ nil). There were no transfers into or out of Level 3 fair value measurements during the current or prior reporting periods.

Valuation methodology During the period, there have been no changes to the valuation methodologies used by the Company, these valuation methodologies have not changed from the last Annual Audited Financial Statements to 31 December 2014.

8. OTHER GAINS AND LOSSES Restated Restated Six months to Year to Six months to 30 June 2015 31 December 2014 30 June 2014 (unaudited) (audited) (unaudited) US$ US$ US$ Held for trading: Derivatives (note 22) - Realised (losses) / gains - (1,548,432) 5,558,030 - Unrealised losses - (3,040,315) (944,802)

Realised foreign currency gains/(losses) 408,963 453,627 (296,984) 408,963 (4,135,120) 4,316,244

22 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

9. EXPENSES Restated Restated Six months to Year to Six months to 30 June 2015 31 December 2014 30 June 2014 (unaudited) (audited) (unaudited) US$ US$ US$

Management fees payable 482,525 2,125,481 1,080,355 Sandalwood management fee rebate (617,208) (2,653,910) (1,314,145) Net management fee rebate (134,683) (528,429) (233,790)

Performance fees - 1,122,203 829,214 Administration fees 62,311 239,548 118,783 Directors’ fees 62,621 136,967 68,580 Custodian fees 24,126 106,274 54,018 Other expenses: Marketing expenses 46,674 232,041 130,861 Auditor’s remuneration for audit services 18,369 68,566 23,427 Restructuring/continuation expenses - 467,785 - Legal and professional fees 62,358 153,829 100,748 Sundry expenses 57,066 358,282 87,341 184,467 1,280,503 342,377 333,525 2,885,495 1,412,972 Total expenses 198,842 2,357,066 1,179,182

The Sandalwood Securities, Inc. (“Sandalwood”) management fee rebate is the management fee levied by Sandalwood, the Investment Advisor, in the Sandalwood funds invested in by AcenciA. This management fee rebate is treated as a reduction to the AcenciA management fee, so as to avoid duplication in fees paid to Sandalwood. As at 30 June 2015, an amount of US$101,947 (31 December 2014: US$426,525 and 30 June 2014: US$255,134) was due in respect of this rebate and is included within other receivables.

The management fee charged by Sandalwood in relation to its funds is 1.5% per annum or 1% per annum of the net asset value of each fund. These percentage rates are higher than the Management fee charges to the Company, hence the management fee rebate is greater than the management fee expense of the Company.

The Company has no employees. The Directors are the only key management personnel of the Company. Their remuneration disclosed above is all in respect of short-term benefits.

Management and Performance fees The Company is responsible for the fees of Saltus (CI) Limited, the Investment Manager, in accordance with the Management Agreement between the Company and the Investment Manager dated 2 November 2005 (as amended on 4 March 2015).

For the services performed under the Management Agreement, the Company pays the Investment Manager a management fee equal to 1% per annum of total assets.

The Investment Manager compensates the Investment Adviser and the Sub-Manager for their services to the Company under the terms of the Investment Advisory Agreement and Sub-Management Agreement.

In addition to the management fee, subject to satisfaction of the High Water Mark Provision and the Performance Hurdle Provision, the Investment Manager will be entitled to a performance fee.

23 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

9. EXPENSES, continued

Management and Performance fees, continued On 4 March 2015, A supplemental Investment Management Agreement was signed in which the calculation of the performance fee was amended as follows:

i. On the basis of a US Dollar Net Asset Value per Share rather than a Sterling Net Asset Value per Share; ii. By reference to the lower of the Net Asset Value at a calculation point or the mid-market price of a Share at the close of trading on that date, adjusted upwards to take account of any Performance fee paid or accrued in the previous calculation period and downwards to take account of any distributions paid in the previous calculation period (the “Adjusted NAV”), and; iii. by reference to a five per cent compounding hurdle (rather than the current hurdle of three per cent over the immediately preceding accounting period).

The performance Fee is calculated in respect of each period of twelve months ending 31 December in each year (a “Calculation Period”) and shall accrue on a monthly basis taking account of the number of shares in issue at each month end. The performance fee will only accrue and be payable in respect of each calculation period if the Adjusted NAV is greater than such figure as at close of business on 31 December 2013 (restated in US Dollars, the Sterling / US Dollar exchange rate being as stated on Bloomberg at close of business on 31 December 2014) and greater than such figure as at the end of all subsequent Calculation periods, the excess over the previous figure being the “High Watermark Growth”; and the Adjusted NAV has increased throughout the calculation period by an amount greater than the Performance Hurdle, such excess being the “Performance Hurdle Excess”.

The performance fee is equivalent to 10 per cent of the High Watermark Growth.

Under the Performance Hurdle Provision the Company’s Net Assets must have increased by at least 5 per cent (rather than 3 per cent) during the relevant Accounting Period after taking account of any dividend paid. The High Water Mark for the Company for the period ended 30 June 2015 was 173.19c (111.18p) (31 December 2014: 173.19c (109.75p) and 30 June 2014: 190.99c (110.00p)) per Ordinary Share after taking account of the dividends paid during the period. During the period a performance fee of US$ nil was payable (31 December 2014: US$1,122,203 and 30 June 2014: US$829,214). The High Water Mark of the Company for the next period is 175.03c.

The Investment Management Agreement may be terminated by either party giving the other not less than six months’ written notice. The Sub-Management Agreement will terminate at the same time as the Investment Management Agreement terminates or otherwise on either party giving twelve months’ written notice.

The Investment Advisory Agreement may be terminated on six months’ written notice. In the event that the Investment Advisory Agreement is terminated, the Investment Adviser will remain entitled to a pro rata share of its fees to the extent that and for so long as the Company’s assets remain invested in funds which were recommended by the Investment Adviser, including any funds managed or advised by the Investment Adviser.

Administration fees The Company is responsible for the fees of the Praxis Fund Services Limited (the “Administrator”) in accordance with the Agreement made between the Company and the Administrator dated 1 October 2012 (the “Administration Agreement”).

In respect of the services provided under the Administration Agreement, the Company pays the Administrator a fee as stated below, subject to a monthly minimum of £6,250.

- 0.125% per annum of the net asset value of the Company up to £50 million - 0.10% per annum of the net asset value of the Company exceeding £50 million

After an addendum to the Administration Agreement dated 15 August 2014, the Administrator is also entitled to receive an initial registration fee of £750 and thereafter an annual fee of £500 in respect of US Foreign Account Tax Compliance Act (“FATCA”) compliance.

In addition, the Administrator is entitled to receive fees for any extraordinary duties performed which are to be charged on a time spent basis. The Administration Agreement is terminable by either side on 3 months’ notice.

24 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

9. EXPENSES, continued

Directors fees During the current and prior periods, the basic fee paid to each Director was £22,500 per annum, except for the Chairman who received £32,500 per annum and Mr Battey who receives an additional £5,000 per annum for being Chairman of the Audit Committee.

On 13 April 2015, Mr Simpson was appointed as a Director of the Company. The fee payable to Mr Simpson was agreed at £25,000 per annum.

At the AGM held on 27 May 2015, the Chairman, Mr Le Pelley, resigned and was replaced by Mr Scott. It was agreed that Mr Scott would be paid £30,000 per annum.

The fee payable to Mr Battey remains unchanged.

Custodian fees The Company is responsible for the fees of the Custodian (Bank Julius Baer & Co Limited) in accordance with the Custodian Agreement made between the Company and the Custodian dated 2 November 2005.

In respect of services provided under the Custodian Agreement, the Company pays the Custodian a quarterly fee at the rate of 0.05% per annum of the Net Asset Value of the Company subject to a minimum fee of £3,325 per quarter. The Custodian Agreement is terminable by either side on three months’ notice. The Custodian does not have any decision-making discretion relating to the investment of the assets of the Company.

10. TAX STATUS The Company is exempt from Guernsey income tax and is charged an annual exemption fee of £1,200 (2014: £600).

11. BASIC AND DILUTED EARNINGS PER ORDINARY SHARE Basic and diluted earnings per Ordinary Share are calculated by dividing profit for the period/year available by the weighted average number of Ordinary Shares outstanding during the period/year.

Restated Restated Six months to Year to Six months to 30 June 2015 31 December 2014 30 June 2014 (unaudited) (audited) (unaudited)

Weighted average number of Ordinary Shares 55,626,962 115,527,321 116,817,782 Profit for the financial period/year 1,707,894 9,921,274 7,372,559 Basic and diluted earnings per Ordinary Share 3.07c 8.59c 6.31c The weighted average number of Ordinary Shares as at 30 June 2015 is based on the number of Ordinary Shares in issue during the period under review, as detailed in note 15.

There are no instruments in issue that could potentially dilute earnings per Ordinary Share in future periods/years.

12. CASH AND CASH EQUIVALENTS

Restated Restated 30 June 2015 31 December 2014 30 June 2014 (unaudited) (audited) (unaudited) US$ US$ US$ Opening cash and cash equivalents 64,794,070 17,480,582 17,480,582 Net cash movement in the period/year (63,724,634) 51,529,575 780,539 Foreign currency movement on translation to presentation currency (64,990) (4,216,087) 595,577 Closing cash and cash equivalents 1,004,446 64,794,070 18,856,698

25 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

12. CASH AND CASH EQUIVALENTS, continued Cash and cash equivalents comprise bank balances and cash held by the Company including short-term bank deposits with an original maturity of three months or less. The carrying value of these assets approximates to their fair value.

Cash and cash equivalents were at an increased percentage of the net asset value of the Company at 31 December 2014, compared with the prior year end, due to the preparation for the settlement of the Tender Offer in February 2015. Upon settlement of the Tender Offer shares, cash and cash equivalents returned to levels which are comparable to prior periods.

13. CURRENT ASSETS AND LIABILITIES The Directors consider that the carrying amount of other receivables and other payables approximates to their fair value due to their short term nature.

14. OTHER PAYABLES Restated Restated 30 June 2015 31 December 2014 30 June 2014 (unaudited) (audited) (unaudited) US$ US$ US$ Directors' fees payable (note 9) - - 34,701 Management fee payable (note 9) 84,274 330,249 188,683 Performance fee payable (note 9) - 188,450 363,535 Auditor’s remuneration payable 10,999 43,616 64,960 Printing costs payable 3,214 9,658 12,143 Administration fees payable (note 9) 10,149 36,279 40,668 Custodian fee payable (note 9) 12,282 16,512 9,434 Registrar fee payable 7,281 4,753 8,487 Advisory fee payable - 354,377 - Sundry expenses payable - 108,155 21,032 128,199 1,092,049 743,643

15. SHARE CAPITAL

Authorised Capital The Company has the power to issue an unlimited number of shares of no par value which may be issued as Redeemable Shares or C Shares or otherwise and which may be denominated in Sterling, Euro, US Dollars or any other currency. The Company only has US Dollar Ordinary Shares in issue at the date of this report.

Ordinary Shares & Issued Capital Total Six months to 30 June 2015 (unaudited) At 1 January 2015 55,665,360 Ordinary Shares acquired and cancelled during the period (700,000) At 30 June 2015 54,965,360

Year to 31 December 2014 (audited) At 1 January 2014 117,087,877 Ordinary Shares acquired and cancelled during the year (3,025,928) Ordinary Shares acquired and cancelled for Tender Offer (58,396,589) At as 31 December 2014 55,665,360

Six months to 30 June 2014 (unaudited) At 1 January 2014 117,087,877 Ordinary Shares acquired and cancelled during the period (1,070,928) At 30 June 2014 116,016,949

26 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

15. SHARE CAPITAL, continued

Authorised Capital, continued During the current period, the Company acquired and cancelled 700,000 Ordinary Shares (31 December 2014: 61,422,517 and 30 June 2014: 1,070,928) at an average price of 164.03c per Ordinary Share. As at 30 June 2015, there was no outstanding amount payable in relation to ordinary shares acquired and cancelled by the Company (31 December 2014: US$101,025,026 and 30 June 2014: US$ £783,022).

Buy Back of Ordinary Shares and Authority to Buy Back Ordinary Shares At the Annual General Meeting held on 27 May 2015, Shareholders renewed the authority for the Company to make market purchases of its own shares.

Unless previously varied, revoked or renewed by special resolution of the Company in general meeting, this authority will expire at the conclusion of the Annual General Meeting of the Company to be held in 2016. At that meeting the Board intends to seek approval from Shareholders for a further renewal of the authority.

16. RESERVES

a) Share Premium Restated Restated Six months to Year to Six months to 30 June 2015 31 December 2014 30 June 2014 (unaudited) (audited) (unaudited) US$ US$ US$ As at beginning of period/year - - - Ordinary Shares acquired and cancelled during the period/year - (106,502,470) (1,914,460) Transfer from Distributable Reserve - 106,502,470 1,914,460 As at end of period/year - - -

b) Distributable Reserve Restated Restated Six months to Year to Six months to 30 June 2015 31 December 2014 30 June 2014 (unaudited) (audited) (unaudited) US$ US$ US$ As at beginning of period/year 205,575,988 312,078,458 312,078,458 Ordinary Shares acquired and cancelled during the period/year (1,148,191) - - Transfer to Share Premium Account - (5,477,444) (1,914,460) Transfer to Share Premium Account re Tender Offer - (101,025,026) - As at end of period/year 204,427,797 205,575,988 310,163,998

Following the approval of the cancellation of the share premium by the Royal Court in 2005 and 2007 respectively, the share premium was transferred to a distributable reserve. This reserve may be applied in any manner in which the Company’s profits available for distribution are able to be applied, including purchase of the Company’s own Shares and the payment of dividends.

In the past, Ordinary Shares acquired and cancelled were dealt with through the Share Premium Reserve. A Share Premium Reserve is no longer required under Company Law, therefore, Ordinary Shares acquired and cancelled are now dealt with in the Distributable Reserve.

27 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

16. RESERVES, continued

c) Translation Reserve The translation reserve contains exchange differences arising on the conversion of the Company’s presentation currency from Sterling to US Dollar.

d) Accumulated Losses Represents the accumulation of the total comprehensive income for each period/year.

17. NET ASSET VALUE PER ORDINARY SHARE The net asset value per Ordinary Share of US$1.7321 (31 December 2014: US$ 1.7319; 30 June 2014: US$1.9099) is based on the net assets at the period end of US$95,203,270 (31 December 2014: US$96,406,578; 30 June 2014: US$221,576,265) and on 54,965,360 (31 December 2014: 55,665,360; 30 June 2014: 116,016,949) Ordinary Shares, being the number of Ordinary Shares in issue at the period end.

18. NOTES TO THE CASH FLOW STATEMENT Purchases and sales of investments are considered to be operating activities of the Company, given its purpose, rather than investing activities. The cash flows arising from these activities are shown in the Condensed Statement of Cash Flows.

Cash and cash equivalents comprise cash at bank.

19. RECONCILIATION OF ACCOUNTING NAV AND PUBLISHED NAV PER SHARE

Number of Ordinary NAV per Ordinary 30 June 2015 (unaudited) Net Asset Value Shares Share US$ No. US$ Published Net Asset Value 95,203,270 54,965,360 1.7321 Financial Statements Net Asset Value 95,203,270 54,965,360 1.7321

Restated Restated Number of Ordinary NAV per Ordinary 31 December 2014 (audited) Net Asset Value Shares Share US$ No. US$ Published Net Asset Value 197,431,604 114,061,949 1.7309 Adjustments for Tender Offer (101,025,026) (58,396,589) (1.7300)* Financial Statements Net Asset Value 96,406,578 55,665,360 1.7319 *Tender Price.

The difference between the Published Net Asset Value (“NAV”) per Ordinary Share of US$1.7309 and the Annual Audited Financial Statements NAV per Ordinary Share of US$1.7319, is due to the Published NAV being Net Asset Value per Ordinary Share before any adjustments for the Tender Offer and recognition of the resulting liability for the Tender Share payments. The Tender Shares were acquired by the Company at a 0.05% discount to the Published NAV and as a result there was an uplift in the NAV attributable to the remaining non tendered Ordinary Shares of the Company.

Restated Restated Number of Ordinary NAV per Ordinary 30 June 2014 (unaudited) Net Asset Value Shares Share US$ No. US$ Published Net Asset Value 221,576,265 116,016,949 1.9099 Financial Statements Net Asset Value 221,576,265 116,016,949 1.9099

28 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

20. BANK FACILITIES The Company had a multi-purpose multi-currency revolving overdraft and foreign exchange credit facility with Bank Julius Baer & Co Limited (the "Bank") which was entered into on 11 March 2010.

Due to the cessation of forward foreign exchange hedging activities, the Company gave notice to cancel this facility on 10 December 2014. The termination was acknowledged by the Bank on 16 December 2014. The Company had not drawn down on this facility as at 30 June 2014.

The fees paid during the period in respect of this facility were US$36,046 (31 December 2014: US$207,525 and 30 June 2014: US$103,910).

21. DERIVATIVES Before the change in functional currency to US Dollar, the Company hedged the majority of its currency exposure back to Sterling through the use of rolling forward foreign exchange contracts. This policy, which was an integral aspect of the Company’s investment strategy and reduced volatility that would otherwise have occurred as a result of fluctuations in the Sterling/US Dollar exchange rate over the period.

The Company had no outstanding commitments in respect of forward foreign exchange contracts at the reporting date or 31 December 2014. At 30 June 2014, the following commitments in respect of forward foreign exchange contracts existed with the Custodian:

As at 30 June 2014 (unaudited): Unrealised gain Maturity Date Contract amount Buy Sell US$ 28 August 2014* USD (135,500,000) USD GBP 2,161,608 28 August 2014* USD (1,100,000) USD GBP 6,888 2,168,496

*(Contracted forward rate for 28 August 2014 £1:US$1.7098).

The total gains/losses on derivatives held for trading are shown in note 8.

22. CONTINGENT LIABILITIES AND COMMITMENTS The Company has no contingent liabilities at the reporting date.

23. RELATED PARTY TRANSACTIONS The Investment Manager, the Sub-Manager and the Directors are regarded as related parties. The only related party transactions are described below:

The fees and expenses payable to the Investment Manager are explained in note 9. Management fees paid during the period were US$482,525 and the management fee balance due at the end of the period was US$84,274 (31 December 2014: US$330,249 and 30 June 2014: US$188,683). Performance fees paid during the period were US$ nil and the performance fee balance due at the end of the period was US$ nil (31 December 2014: US$188,450 and 30 June 2014: US$363,535).

There were no direct transactions with the Sub-Manager during the period.

The Directors’ fees are explained in note 9. Directors’ fees paid during the period were US$62,621 (31 December 2014: US$136,967 and 30 June 2014: US$68,580) and the Directors’ fees payable at the end of the period were US$ nil (31 December 2014: US$ nil and 30 June 2014: US$34,701).

29 ACENCIA DEBT STRATEGIES LIMITED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS, continued For the six month period ended 30 June 2015

23. RELATED PARTY TRANSACTIONS, continued During the period/year the Directors received the following amounts as dividends:

Restated Restated Six months to Year to Six months to 30 June 2015 31 December 2014 30 June 2014 (unaudited) (audited) (unaudited) US$ US$ US$ J Le Pelley 26,903 58,341 28,927 W Scott 155 335 166

24. POST PERIOD END EVENTS On 2 July 2015, 100,000 Ordinary Shares were acquired and cancelled at an average price of US$1.65 and on 13 July 2015, 127,945 Ordinary Shares were acquired and cancelled at an average price of US$1.63.

On 21 August 2015, the Directors declared an interim dividend in relation to the six months ended 30 June 2015 of 3.03c per share which will be paid on 14 October 2015 to Shareholders on the register at 4 September 2015. The ex-dividend date will be 3 September 2015.

There were no other significant post period end events that require disclosure in the Unaudited Condensed Financial Statements.

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ACENCIA DEBT STRATEGIES LIMITED MANAGEMENT AND ADMINISTRATION

Directors W Scott (Independent non-executive Director, Chairman with effect from 27 May 2015) R Battey (Independent non-executive Director) W Simpson (Independent non-executive Director) (appointed 13 April 2015) J Le Pelley (Independent non-executive Chairman) (resigned 27 May 2015)

Registered Office and Directors' Address Administrator and Secretary Sarnia House Praxis Fund Services Limited Le Truchot Sarnia House St Peter Port Le Truchot Guernsey, GY1 4NA St Peter Port Guernsey, GY1 4NA

Investment Manager Registrar Saltus (Channel Islands) Limited Capita IRG Registrars (Guernsey) Limited Sarnia House 2nd Floor Le Truchot 1 Le Truchot St Peter Port St Peter Port Guernsey, GY1 4NA Guernsey, GY1 4AE

Sub-Manager Legal Advisers in Guernsey Saltus Partners LLP Carey Olsen Fifth Floor Carey House 10 Charles II Street Les Banques London, SW1Y 4AA St Peter Port Guernsey, GY1 4BZ

Investment Adviser Legal Advisers In United Kingdom Sandalwood Securities, Inc. Macfarlanes LLP 101 Eisenhower Parkway 20 Cursitor Street Roseland London, EC4A 1LT NJ 07068 USA Burges-Salmon LLP One Glass Wharf Bristol BS2 O2X

Custodian Financial Adviser/Corporate Broker Bank Julius Baer & Co Limited Canaccord Genuity Limited (Guernsey Branch) 41 Lothbury PO Box 87 London, EC2R 7AE Lefebvre Court Lefebvre Street St Peter Port Guernsey, GY1 4BS

Independent Auditor Placing Agent BDO Limited Kepler Partners LLP P.O. Box 180 Bennet House Place du Pre 54 St James’s Street Rue du Pre London, SW1A 1JT St Peter Port Guernsey, GY1 3LL

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