TIDMGIF
RNS Number : 3934Q
Gulf Investment Fund PLC
26 February 2021
Gulf Investment Fund PLC
26 February 2021
Legal Entity Identifier: 2138009DIENFWKC3PW84
Gulf Investment Fund plc
Interim report for the six months ended 31 December 2020
- Net asset value increased by 22 per cent vs. benchmark increase of 17 per cent.
- Share price up by 17.5 per cent.
- Final dividend of 3c a share to be paid on 5 March 2021.
- GIF share price trading at 10.9 per cent discount to NAV vs.
the five-year average discount of 13.1 per cent.
Nicholas Wilson, Chairman of Gulf Investment Fund plc,
commented:
"This was another period of outperformance.
Investing in the region is not just all about oil. It is about
the process of diversification, infrastructure spending, expansion
of the non-oil and gas sector, privatization, and economic, social,
and capital market reforms. The region also offers good dividend
returns, with an estimated 4.9% yield for 2021 for GCC markets as
whole, versus 2.2% for emerging markets generally (MSCI EM) and
1.9% for MSCI World.
We expect oil prices will recover in 2021 on the back of
economic recovery and that the regional narrative will change from
austerity to growth with economic momentum growing.
"The Board continue to view the future of the Company with
confidence expecting improved growth in the region as a whole, as
the vaccine continues to be rolled out and GCC economies fully
reopen."
Enquiries:
Nicholas Wilson
Gulf Investment Fund Plc
+44 (0) 1624 622 851
William Clutterbuck / Alasdair Lennon
Maitland/AMO
+44 (0) 20 7379 5151
gulfinvestmentfund-maitland@maitland.co.uk
Chairman's Statement
On behalf of the board, I am pleased to present the interim
results for Gulf Investment Fund Plc ("GIF") for the six months
ending 31 December 2020.
Results
For the six months ending 31 December 2020, Net Asset Value per
Share ("NAV") rose by 22% to 1.5069 compared with a rise of 17% in
the S&P GCC Composite Index. Following a slight widening of the
discount at which GIF shares trade to NAV, the share price rose
17.5% in the period.
At the Annual General Meeting on 13 November 2020 a final
dividend of USD 3.0 cents per ordinary share for the year ended 30
June 2020 was approved. The dividend will be paid on 5 March 2021
with an ex-dividend date of 4 February 2021.
The main corporate event of the period was a 100% tender offer
approved by shareholders at an extraordinary general meeting on 10
December 2020. As announced on 21 January 2021, of the 40,643,418
shares tendered 5,757,536 shares were transferred into treasury
with the balance of 34,885,882 shares being cancelled. As a result,
the total number of shares with voting rights is now
51,817,824.
Markets in the GCC region benefited from steadying hydrocarbon
prices and improving trends in global stock markets. At the end of
the period, GIF had 32 holdings: 15 in Saudi Arabia, 8 in Qatar, 2
in Kuwait and 7 in the UAE.
Outlook, risks and uncertainties
Fluctuations in oil and gas prices will continue to affect GCC
economies as countries deal with budget deficits. The geopolitics
of the region, despite the resolution of the Qatar blockade, remain
an area of risk.
The main risks and uncertainties faced by the Company are:
geopolitical events, market risks, investment and strategy risks,
accounting, legal and regulatory risks, operational risks and
financial risks. Information on each of these is given in the
Business Review section of our Annual Report each year.
That said the Board continues to view the future of the Company
with confidence expecting improved growth in the region as a whole,
as progress in the non-hydrocarbon sector in a number of GCC
members helps to balance their economies.
As disclosed in the Circular, the Board committed to implement
certain proposals, including the introduction of an enhanced
dividend policy, targeting an annual dividend equivalent to 4 per
cent. of its Net Asset Value at the end of the preceding year and
the introduction of a semi-annual 100 per cent. liquidity
mechanism. The Board expect to make a further announcement in
relation to the implementation of these proposals as soon as
practicable.
Nicholas Wilson
Chairman
25 February 2021
Director's Responsibility Statement
The Directors confirm that, to the best of their knowledge:
a) the condensed set of financial statements has been prepared
in accordance with IAS 34;
b) the interim management report and Chairman's statement
include a fair review of the information required by the Disclosure
and Transparency Rule 4.2.7R (indication of important events during
the first six months and a description of the principal risks and
uncertainties for the remaining six months of the year
respectively);
c) in accordance with Disclosure and Transparency Rule 4.2.8R
there have been no related party transactions during the six months
to 31 December 2020 and therefore nothing to report on any material
effect by such a transaction on the financial position or the
performance of the Company during that period; and there have been
no changes in this position since the last Annual Report that could
have a material effect on the financial position or performance of
the Company in the first six months of the current financial
year.
d) in accordance with Disclosure and Transparency Rule 6.4.2,
the Company confirms that its Home State is the United Kingdom.
The interim financial report has not been audited by the
Company's Independent Auditor.
Nicholas Wilson
Chairman
25 February 2021
Report of the Investment Manager and the Investment Adviser
Regional Market Overview
The year 2020 was an extraordinary one for the global markets.
The unprecedented stimulus measures and vaccine breakthroughs
following the coronavirus crash led to a rapid rebound in stocks
sending them to record highs. The MSCI World Index gained 14.1 per
cent. The MSCI Emerging Markets Index followed global markets
higher, up 15.8 per cent. Brent recovered at the end of the year
but still closed the year 21.5 per cent lower than at the start of
2020.
GCC markets had a mixed performance. Most remained in the red
for much of the year, hit by coronavirus and the oil price decline.
Saudi Arabia outperformed its GCC peers, gaining 3.6 per cent in
2020, while Qatar was flat in 2020 and other GCC markets ended the
year in the red.
Country (Index) 31-Dec-19 30-Jun-20 1H2020 31-Dec-20 2H2020 FY2020
Qatar (DSM) 10,425.5 8,998.6 -13.7% 10,436.0 16.0% 0.1%
---------- ---------- ------- ---------- ------- -------
Saudi (TASI) 8,389.2 7,224.1 -13.9% 8,689.5 20.3% 3.6%
---------- ---------- ------- ---------- ------- -------
Dubai (DFMGI) 2,764.9 2,065.3 -25.3% 2,492.0 20.7% -9.9%
---------- ---------- ------- ---------- ------- -------
Abu Dhabi (ADI) 5,075.8 4,285.8 -15.6% 5,045.3 17.7% -0.6%
---------- ---------- ------- ---------- ------- -------
Kuwait (KWSE) 6,282.5 5,130.7 -18.3% 5,546.0 8.1% -11.7%
---------- ---------- ------- ---------- ------- -------
Oman (MSI) 3,981.2 3,516.0 -11.7% 3,658.8 4.1% -8.1%
---------- ---------- ------- ---------- ------- -------
Bahrain (BAX) 1,610.2 1,277.6 -20.7% 1,489.8 16.6% -7.5%
---------- ---------- ------- ---------- ------- -------
S&P GCC Composite 116.1 97.4 -16.1% 114.1 17.1% -1.7%
---------- ---------- ------- ---------- ------- -------
Crude (Brent) 66.0 41.2 -37.7% 51.8 25.9% -21.5%
---------- ---------- ------- ---------- ------- -------
Emerging Markets
(MSCI EM) 1,114.7 995.1 -10.7% 1,291.3 29.8% 15.8%
---------- ---------- ------- ---------- ------- -------
World (MXWO) 2,358.5 2,201.8 -6.6% 2,690.0 22.2% 14.1%
---------- ---------- ------- ---------- ------- -------
Source: Bloomberg
GCC Budget and Economic Update
GCC countries delivered a comprehensive response to limit the
spread and impact of the coronavirus including strict lockdown
measures, and also launched a series of relief measures for
businesses and individuals. These stimulus packages added to
governments' existing spending commitments, even as public revenues
declined as the oil price fell and lockdowns impacted domestic
economic activity. Despite the emergency response that dominated
the year, GCC governments' core policy of diversification away from
the oil sector continued.
Saudi Arabia's 2021 budget shows a continued commitment to
achieving fiscal stability and sustainable long-term economic
growth amid oil market volatility. Planned expenditure for 2021 is
US$264 billion, with focus on promoting economic growth and better
spending efficiency.
Table: Saudi Arabia Budget 2021 and Medium Term Projections
US$ Billions 2020 2021 2022 2023
Revenue 222.1 226.4 230.4 247.5
------- ------- ------- ------
Expenditure 272.0 264.0 254.7 250.9
------- ------- ------- ------
Surplus/ (Deficit) (49.9) (37.6) (24.3) (3.5)
------- ------- ------- ------
Nominal GDP 773.9 764.3 811.2 861.9
------- ------- ------- ------
Public Debt 201.1 249.9 270.1 273.6
------- ------- ------- ------
Surplus/ (Deficit) - % of GDP -6.4% -4.9% -3.0% -0.4%
------- ------- ------- ------
Public Debt - % of GDP 26.0% 32.7% 33.3% 31.7%
------- ------- ------- ------
Source: Saudi Arabia MoF; Table contains budgeted numbers for
respective year
Spending in Saudi remains focused on building the non-oil
economy, which will support higher economic and social returns, as
well as job creation. The government is committed to spending on
healthcare and education, as part of the Vision 2030 objectives of
creating a better quality of life and a diversified economy with
higher local content.
The budget deficit in 2021 is expected to be US$38 billion (4.9
per cent of the estimated 2021 GDP), an improvement on US$79
billion (12 per cent of GDP) expected for 2020, owing largely to
improving oil revenues. Public debt in 2021 is expected to reach
US$250 billion (32.7 per cent of the estimated 2021 GDP) vs. US$228
billion (34.3 per cent of GDP) estimated for 2020 and 22.8 per cent
of GDP in 2019.
Real GDP growth in Saudi is expected to reach 3.2 per cent in
2021 driven by economic recovery and strengthening of the private
sector. The Investment Adviser agrees with the government's
sentiment of driving economic growth by increasing the role of the
private sector.
Saudi Arabia's PMI (Purchasing manager's Index) rose to 57.0 in
December from 54.7 in November, the highest reading since November
2019. Output and new work rose sharply in December, with the latter
driven by increased domestic demand as new export order growth was
slower than in November. Firms increased purchasing activity and
inventories on the back of increased demand.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com for Chart: PMI data shows recovering
regional economic activity and positive risk sentiment
The UAE PMI rose to 51.2 in December from 49.5 in November, as
output witnessed a solid rise underpinned by rising new orders.
Qatar's PMI eased slightly from 52.5 in November to 51.8 in
December, broadly in line with the fourth quarter average of 51.9
and well above the long-run trend level of 49.6.
Dubai and the UAE approved several structural reforms in 2020
including allowing foreign investors to own 100 per cent of onshore
companies in some sectors and new more flexible visa regulations.
These measures should start yielding benefits in 2021. The new
agreement with Israel has already led to an estimated 50,000
visitors from there, which has helped to offset the decline in
visitor numbers from traditional markets. Finally, Dubai's Expo2020
is set to go ahead from October 2021, which should spur the
recovery in tourism in 2H2021. Dubai began rolling out coronavirus
vaccines in December 2020, and as the vaccination program in other
countries continue, it is expected that restrictions in the UK,
Europe and elsewhere would start to see some easing in Q1 2021.
With the global economy likely to rebound from 2H2021, accordingly,
the outlook for Dubai's transport, logistics and hospitality
sectors looks brighter.
Additionally, the central bank of UAE (CBUAE) extended parts of
the Targeted Economic Support Scheme. Under this extension, the
CBUAE will extend the duration of the zero cost facility of AED50
billion (US$13.5 billion), which benefits retail and corporate
banking customers and facilitates liquidity management for banks
through collateralised funding at zero cost, for an additional
period of six months.
The Dubai government has approved a budget of US$15.6 billion
for 2021 with an estimated deficit of US$1.3 billion. The 2021
budget makes a provision for a 1.6 per cent increase in total
expenditure over the revised budget of 2020 (US$15.3 billion).
Revenues are expected to recover in 2021 as activity normalises.
Total revenue is projected at US$14.3 billion in 2021, almost 70
per cent of which is non-tax (fee income, investment income and oil
& gas income). Dubai government expects GDP to shrink by 6.2
per cent in 2020 before recovering 4 per cent in 2021.
Table: Dubai budget 2021
US$ billions 2016 2017 2018 2019 2020 2021
Revenue 12.6 12.2 13.7 13.9 17.4 14.3
----- ------ ------ ------ ------ ------
Expenditure 12.6 12.9 15.4 15.5 18.1 15.6
----- ------ ------ ------ ------ ------
Surplus/ (Deficit) - (0.7) (1.7) (1.6) (0.7) (1.3)
----- ------ ------ ------ ------ ------
Source: Dubai MoF; Table contains budgeted numbers for
respective year
The UAE Cabinet also approved the US$15.8 billion federal budget
for 2021. This focuses on social and economic development. The
budget aims to expand development plans and projects to raise the
standard of living for Emiratis and residents. A large share of the
2021 budget will be allocated to social development including
social welfare, health and education.
Qatar's 2021 budget sees huge spending on major projects, as
well as on education and health, affirming the importance of these
sectors. US$19.8 billion has been allocated for major projects, a
37 per cent of the total expenditure worth US$53.5 billion. The
budget also allocated funds to develop citizens' lands by providing
an integrated infrastructure of water, electricity, sewage, roads,
and all other facilities in different regions of the country.
Development of these lands will lead to the expansion of
residential communities, which would enhance urban expansion.
Table: Qatar budget 2021
US$ Billion 2016 2017 2018 2019 2020 2021
Total Revenues 42.9 46.7 48.1 58.0 58.0 44.0
------- ------ ------ ----- ----- ------
Total Expenditures 55.6 54.5 55.8 56.8 57.8 53.5
------- ------ ------ ----- ----- ------
Surplus / (Deficit) (12.8) (7.8) (7.7) 1.2 0.1 (9.5)
------- ------ ------ ----- ----- ------
Oil Price Assumption (USD/bbl) 48.0 45.0 45.0 55.0 55.0 40.0
------- ------ ------ ----- ----- ------
Source: Qatar MoF; Table contains budgeted numbers for
respective year
The Investment Adviser believes Qatar's new budget showcases its
resilience and durability.
Oman's government drew up a budget for 2021 with the objective
of economic expansion and efficient spending. Higher non-oil
revenues, economic growth and diversification, optimal public
spending, increasing domestic and foreign investment and enabling
the private sector to help achieve economic growth and job creation
were the key goals. Public expenditures are expected at US$28.3
billion, while revenues are expected to reach US$22.5 billion,
leaving a deficit of US$5.8 billion. The implementation of 5 per
cent VAT in 2021 is expected to add US$779 million in tax
revenue.
Table: Oman budget 2021
US$ Billion 2016 2017 2018 2019 2020 2021
Total Revenues 22.4 22.6 26.3 26.3 27.8 22.5
------ ------ ------ ------ ------ ------
Total Expenditures 30.9 30.4 32.5 33.5 34.3 28.3
------ ------ ------ ------ ------ ------
Surplus / (Deficit) (8.6) (7.8) (6.2) (7.3) (6.5) (5.8)
------ ------ ------ ------ ------ ------
Oil Price Assumption (US$/bbl) 45.0 45.0 50.0 58.0 58.0 45.0
------ ------ ------ ------ ------ ------
Source: Oman MoF; Table contains budgeted numbers for respective
year
Oman also announced a new medium-term fiscal plan (National Plan
for Fiscal Balance 2020-2024) with an introduction of the GCC's
first income tax on wealthy individuals from 2022. The Sultanate
aims to bring the budget deficit down to 1.7 per cent of GDP by
2024. Oman also plans to raise debt in 2021 outside of the
government's balance sheet by transferring its 60 per cent stake in
Block 6, the largest oil-producing block (650k barrels per day) to
a new entity that could then tap international capital markets.
The Oman government will start reducing power and water
subsidies in January 2021, in line with the medium-term fiscal
plan. Initially, households earning more than US$3,260 per month
will not be entitled to a subsidy, and by 2025, all utility
subsidies are to be phased out.
Saudi led quartet ended Qatar's 43-month blockade
On January 5, GCC leaders signed a solidarity and stability
agreement to end a 43-month long blockade against Qatar. The
Investment Adviser believes the end of the blockade will bring
political stability in the region and build a stronger GCC block.
The opening of airspace and land borders will help tourism (both
leisure and business) and trade & investment in the region.
Real estate and hospitality sectors will benefit as the pandemic
eases and GCC tourists start to visit Qatar. Additionally, Qatari
bank's funding and liquidity profile would also get a boost. Qatari
banking system had witnessed US$30 billion outflow of deposits when
the blockade was imposed which was managed by US$40 billion
liquidity injection by the government.
GCC Other Economic Update 2H20
UAE ADNOC oil discovery of 2 billion barrels -boosting reserves
to 107 billion
UAE's state-run ADNOC discovered 2 billion barrels of oil
boosting reserves to 107 billion, in addition to 22 billion barrels
of unconventional crude. Abu Dhabi's Supreme Petroleum Council
approved US$122 billion of capex for 2021-25.
OPEC+ agrees to increase output by 500,000 bpd starting January
2021
In light of the current oil market fundamentals and the outlook
for 2021, OPEC+ countries agreed to adjust production by 500,000
bpd, starting January 2021. This will bring down the total
production cuts at the start of 2021 to 7.2 million bpd. from
earlier 7.7 million bpd.
Saudi Arabia to cut production in February and March 2021
Saudi Arabia committed to extra, voluntary oil output cuts of 1
million bpd in February and March as part of a deal under which
most OPEC+ producers will hold production steady during new
lockdowns. Brent hit 11-month high to close the week ending 8(th)
January 2021 at US$56 per barrel.
Saudi Arabia to Saudise' accountancy profession
The Ministry of Human Resources and Social Development decided
to Saudise the accountancy profession, targeting to create,
initially, around 10,000 jobs for Saudis. This comes in line with
the government's strategy and additional professions are expected
to follow in 2021.
Saudi Arabia increased the size of weekly bill offering
SAMA increased the size of its weekly bill offering from SAR3
billion to 10 billion to help banks manage their liquidity, which
has increased recently, partly driven by SAMA's support initiatives
that included providing banks with interest-free deposits.
Bahrain extends loan repayment deferrals by additional 6
months
The Central Bank of Bahrain extended loans repayment deferral by
an additional six months starting January to help corporate and
individual borrowers manage with the impact of the health
crisis.
Masraf Al Rayan and Al Khaliji entered into merger agreement
On 7(th) January 2021, the Boards of Masraf Al Rayan (MARK) and
Al Khaliji (KCBK) approved a merger agreement to create the largest
Shari'ah-compliant bank in Qatar with combined assets worth around
QAR172 billion (US$47 billion). Following the merger, KCBK's
business will be absorbed into MARK's business. MARK will issue
0.50 shares for every KCBK share, corresponding to a total of 1,800
million new shares to be issued to KCBK shareholders.
Saudi Arabia announced initiatives to support Industrial and
Tourism sectors
A SAR3.7 billion Saudi Industrial Development Fund (SIDF) was
announced to support 536 private sector industrial enterprises hit
by the pandemic. A new Saudi Tourism Development Fund with initial
capital of US$4 billion was also announced. The latter Fund
recently signed a US$43bn deal for tourism development projects.
The Fund aims to provide investment to develop the tourism sector
with the support of private and investment banks. Tourism is a key
driver of Vision2030, and the Fund can be expected to play an
important role in attracting and supporting investments,
incentivizing the development of, and overcoming some of the
challenges facing the Saudi tourism sector. Domestic and
international businesses involved in the tourism and related
sectors are expected be the key beneficiaries of this initiative.
Additionally, the Saudi Ministry of Environment, Water and
Agriculture announced 94 agricultural investment opportunities to
the private sector.
Saudi Arabia excluded property deals from VAT
Saudi Arabia excluded property deals from VAT and introduced a
new 5 per cent tax on transactions to boost the property sector and
help citizens seeking to buy homes. The government will also waive
the cost of the new Real Estate Transaction Tax for Saudi citizens
purchasing their first home, provided that the amount does not
exceed SAR1 million (US$266,442). This measure supports the
country's vision of increasing home ownership to 70 per cent by
2030.
Saudi bourse Tadawul officially launches derivatives market
Saudi Arabia launched the country's first exchange traded
derivative market and clearing house as a part of its strategy to
make its equity market more attractive to foreign investors.
UAE signed US$10 billion gas infrastructure deal
The Abu Dhabi National Oil Company signed a US$10 billion gas
infrastructure deal with a consortium of investors, backed by an
US$8 billion bridge loan provided by 17 banks.
Kuwait Ratings Update
Moody's lowered Kuwait's credit rating to A1 from Aa2, quoting
liquidity risks due to the depletion of the General Reserve Fund,
the absence of a debt law and broader fiscal reforms taking place
amid continued political disputes that have hampered effective
policymaking.
Oman Ratings Update
Fitch Ratings cut Oman's credit rating for a second time this
year to BB- (outlook negative), citing the "continued erosion of
its fiscal and external balance sheets". The ratings agency expects
Oman to report a fiscal deficit of 20 per cent of GDP in 2020
versus 9 per cent in 2019.
S&P also cut Oman's credit rating for a second time this
year, to B+ (outlook stable), due to the impact of lower oil
revenue and the COVID pandemic on the its finances.
Bahrain Ratings Update
Fitch lowered Bahrain's long-term credit rating from BB- to B+,
deeper into the non-investment grade zone, due to concerns about
the widening fiscal deficit and increasing public debt levels,
which continue to weigh on the nation's already low foreign
exchange reserves.
Bahrain raised its debt ceiling
The government raised its debt ceiling for the second time in
three years, by BHD2 billion to BHD15 billion (US$39.8 billion), in
an effort to help plug its public financing gap.
GIF Portfolio structure
Country allocation
GIF's weightings in GCC markets are based on the Investment
Adviser's assessment of outlook and valuation. Compared to the
benchmark, GIF remained overweight Qatar (33.3 per cent of NAV vs.
a S&P GCC Qatar weighting of 13.9 per cent) and overweight UAE
(19.2 per cent vs S&P GCC of 11.9 per cent). GIF is underweight
Saudi Arabia (42.0 per cent vs S&P GCC weighting of 60.6 per
cent) and Kuwait (5.2 per cent vs S&P GCC of 10.7 per
cent).
During the period (2H2020), the Fund's exposure to Saudi Arabia
and the UAE was increased by 10.5 per cent and 5.1 per cent,
respectively while exposure to Kuwait was reduced by 11.6 per cent.
The fund's cash position reduced to 0.4 per cent of NAV as of 31
December 2020 (30 June 2020: 5.5 per cent).
As of 31 December 2020, GIF had 32 holdings: 15 in Saudi Arabia,
8 in Qatar, 2 in Kuwait and 7 in the UAE (vs. 31 holdings in
2Q2020: 13 in Saudi Arabia, 8 in Qatar, 7 in Kuwait and 3 in the
UAE).
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com for a chart depicting country
allocation 2020.
Portfolio
Top 5 holdings
Company Country Sector % share of GIF NAV
Commercial Bank of Qatar Qatar Financials 5.3%
--------- ------------- -------------------
Qatar Gas Transport Qatar Energy 5.0%
--------- ------------- -------------------
Industries Qatar Qatar Industrials 5.0%
--------- ------------- -------------------
Al Khaleej Commercial Bank Qatar Financials 5.0%
--------- ------------- -------------------
Qatar Insurance Qatar Financials 5.0%
--------- ------------- -------------------
Source: QIC
The Investment Adviser follows a detailed bottom-up stock
picking strategy, which has led the fund's outperformance in
different economic cycles.
In the current scenario, the Investment Adviser believes that
markets will remain volatile, and plans to focus on companies with
solid balance sheet and stable cash flows, at attractive
valuations.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com for a chart depicting Sector
Allocation.
The Financial sector remained the largest sector allocation for
GIF at 31.0 per cent of NAV. The Investment Adviser believes that
most GCC banks have strong capital and liquidity buffers to
safeguard them from systematic risk. However, lower interest rates
along with an expected increase in non-performing loans could
impact profitability in the near term. As a result, GIF remained
underweight the sector.
The COVID slowdown has accelerated consolidation in the GCC
Banking sector. This can be seen from merger talks between National
Commercial Bank (NCB) and Samba in Saudi Arabia and recent merger
deal between Masraf Al Rayan (MARK) and Alkhalij Commercial Bank
(KCBK) in Qatar.
Industrials continued to be the second largest exposure in the
fund at 30.8 per cent.
Profile of Top Five Holdings:
Commercial Bank of Qatar (5.3% of NAV)
Commercial Bank of Qatar (CBQ) is the second largest commercial
bank in Qatar. Under its 5-year turnaround strategy, it is
strengthening its balance sheet by cautiously managing risk. Under
its diversification strategy, CBQ has expanded its GCC footprint
through strategic partnerships with associated banks - the National
Bank of Oman (NBO) in Oman, United Arab Bank (UAB) in the UAE and
subsidiary Alternatifbank in Turkey. For 2020, CBQ reported net
profit of US$357 million (vs. US$555 million in 2019). Excluding
US$218 million losses from international operations, 2020 net
profit would have been US$575 million. As at 31-December-2020, the
Bank has total assets of US$42.2 billion. We expect healthy growth
in the bottom line in the forecasted period led by strong growth in
loan book and normalisation of provisions as high provision cycle
comes to an end.
Qatar Gas Transport (5.0% of NAV)
Qatar Gas Transport Company (Nakilat), established in 2004, is a
leader in energy transportation, with the world's largest Liquified
Natural Gas (LNG) carrier fleet in operation. This comprises 74
vessels including 69 LNG vessels, 4 LPG vessels and 1 floating
storage regasification unit FSRU vessel. It is placed to benefit
from increased transport demand arising from Qatar's North Field
expansion plan. For 2020, Nakilat reported a net profit of US$318.7
million vs. US$275.3 million in 2019, an increase of 15.8 per
cent.
Industries Qatar (5.0% of NAV)
Industries Qatar (IQ) mainly operates in steel, petrochemicals
and fertilizers business. We expect favorable financial impact on
IQs earnings from recent acquisition of remaining 25 per cent stake
in its Fertilizer JV "QAFCO" and extension of feedstock gas
arrangements until 2035. Additionally, IQ may seek similar
opportunities acquiring remaining stakes in other JVs which would
give the company more exposure to petrochemicals. For 2020, IQ
reported a net profit of US$542.5 million vs. US$707.3 million in
2019.
Al Khaleej Commercial Bank (5.0% of NAV)
Incorporated in 2007, Al Khalij Commercial Bank (KCBK) is a
commercial bank headquartered in Doha, Qatar. Qatari Government
entities are major shareholders in the Bank with more than 47 per
cent ownership. KCBK's principal business activities include
wholesale banking, treasury services and personal banking. KCBK has
a network of 4 branches (including the head office) in Qatar, and 3
branches overseas. For 2020, KCBK reported net profit of US$188
million vs. US$178 million in 2019, an increase of 5.7 per cent. As
at 31-December-2020, the Bank has total assets of US$15.5 billion.
KCBK and MARK recently approved the merger agreement which will
create largest Islamic Bank in Qatar with combined assets worth
US$49 billion as of 4Q2020.
Qatar Insurance (5.0% of NAV)
Qatar Insurance Company (QIC) is a composite insurer with a
consistent performance history of over 50 years and a global
underwriting footprint. Founded in 1964, QIC was the first domestic
insurance company in the State of Qatar. Today, QIC is the market
leader in Qatar and a dominant insurer in the GCC and MENA region.
QIC is one of the highest rated insurers in the Gulf region with a
rating of A/Stable from Standard & Poor's and A (Excellent)
from A.M. Best. For 2020, QIC reported a net loss of US$40.5
million vs. a net profit of US$133 million in 2019. The
underwriting performance of QIC Global, namely, Qatar Re, Antares,
QIC Europe Limited, and the Gibraltar-based insurance companies,
was negatively impacted by COVID-19 and the lockdown in key
economies. Despite pandemic, QIC was able to grew its Gross Written
Premiums by 4 per cent YoY in 9M2020 to QAR 10.2 billion led by
hardening of premium rates in the commercial insurance market and
the continued expansion of domestic online business, which
delivered stable returns.
Performance
NAV rose 22.2 per cent in 2H2020. The fund's benchmark, the
S&P GCC index, was up 17.1 per cent.
For 2020, GIF NAV is up 7.8 per cent vs the benchmark index down
1.7 per cent, so GIF outperformed its benchmark by 9.5 per
cent.
Looking back to when the investment mandate widened from
Qatari-focused to Gulf-wide in December 2017, NAV has risen 59.9
per cent (dividend included), against the S&P GCC total return
of 33.1 per cent.
On 31 December 2020, the GIF share price was trading at a 10.9
per cent discount to NAV. The five-year average discount was 13.1
per cent.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com for a chart depicting GIF NAV.
Outlook
The Investment Adviser emphasizes that investing in the region
is not just all about oil. It is about the process of
diversification, infrastructure spending, expansion of the non-oil
and gas sector, privatization, and economic, social, and capital
market reforms. The Investment Adviser continues to see greater
opportunities going forward in the region.
The improving PMI measures in the region are telling
Expansion of the North Field in Qatar will increase Qatar's
hydrocarbon production by about 64 per cent in 4 to 5 years. The
upcoming FIFA World Cup will generate opportunities for the region
and specifically to Qatar. Forecasts indicate that upwards of 1.7
million people could visit Qatar during the tournament with
approximately 500,000 visitors in the country on the busiest days.
Socio-economic and capital market reforms in Saudi continue to
throw up opportunities for long term investors. Valuations in the
region and especially in UAE (despite the current challenges being
faced) are attractive. Additionally, the pandemic has thrown open
opportunities for many sectors looking for consolidation to form
stronger entities in order to gain market share and improve
operational efficiency. Going forward, we believe consolidation is
going to accelerate in multiple sectors in order to increase
profitability.
To sum up, these opportunities are compelling when compared to
investment opportunities elsewhere given the recent strong rally in
the global equity markets which has pushed markets into expensive
territory. Additionally, one should not ignore the dollar-linked
superior dividend yield in the region.
The Investment Adviser believes that oil prices will recover in
2021 on the back of economic recovery and that the regional
narrative will change from austerity to growth with economic
momentum gaining foothold from 2021 onwards. GCC markets typically
outperform global/EM during risk-off periods, after the initial
sharp recovery. This flows from their defensive qualities, which
include higher local participation, US$-pegged currencies, low
betas versus EM, and low correlation.
Valuations
Market Market PE (x) PB (x) Dividend Yield
Cap. (%)
US$ billion 2021E 2022E 2021E 2022E 2021E 2022E
------------ ------ ------ ------ ------ -------- -------
Qatar 149.3 14.15 12.55 1.59 1.50 3.76 4.11
------------ ------ ------ ------ ------ -------- -------
Saudi Arabia 2,415.2 19.63 16.58 1.97 1.88 2.90 3.34
------------ ------ ------ ------ ------ -------- -------
Dubai 76.5 12.14 9.23 0.87 0.82 3.47 4.37
------------ ------ ------ ------ ------ -------- -------
Abu Dhabi 216.3 15.76 13.81 1.57 1.53 4.12 4.47
------------ ------ ------ ------ ------ -------- -------
Kuwait 107.2 NA 15.43 0.87 0.83 NA 3.14
------------ ------ ------ ------ ------ -------- -------
S&P GCC 2,837.9 19.26 14.94 1.55 1.48 4.96 3.65
------------ ------ ------ ------ ------ -------- -------
MSCI EM 24,411.5 16.82 14.54 1.64 1.53 2.17 2.43
------------ ------ ------ ------ ------ -------- -------
MSCI World 60,537.4 21.50 18.58 2.84 2.65 1.92 2.05
------------ ------ ------ ------ ------ -------- -------
Source: Bloomberg; Valuations as of 11-February-2021; Market Ca
p. as at 10-February-2021
Epicure Managers Qatar Limited Qatar Insurance Company
S.A.Q.
25 February 2021 25 February 2021
Income Statement
(Unaudited) (Unaudited)
Note For the period from For the period from
1 July 2020 to 1 July 2019 to
31 December 2020 31 December 2019
US$'000 US$'000
------------------------------------------------------------- ----- -------------------- --------------------
Income
Net change in investment at fair value through profit or
loss 24,799 5,649
Interest income on loan 1,055 1,789
Total net income 25,854 7,438
------------------------------------------------------------- ----- -------------------- --------------------
Expenses
Expenses 5 463 444
Total operating expenses 463 444
------------------------------------------------------------- ----- -------------------- --------------------
Profit before tax 25,391 6,994
Income tax expense - -
------------------------------------------------------------- ----- -------------------- --------------------
Retained profit for the period 25,391 6,994
------------------------------------------------------------- ----- -------------------- --------------------
Basic and diluted profit per share (cents) 3 27.46 7.56
------------------------------------------------------------- ----- -------------------- --------------------
Statement of Comprehensive Income
(Unaudited) (Unaudited)
For the period from For the period from
1 July 2020 to 1 July 2019 to
31 December 2020 31 December 2019
US$'000 US$'000
------------------------------------------------------------- ----- -------------------- ----------------------
Profit for the period 25,391 6,994
Other comprehensive income - -
Total comprehensive profit for the period 25,391 6,994
------------------------------------------------------------- ----- -------------------- ----------------------
Statement of Financial Position
(Unaudited) (Audited)
Note At 31 December 2020 At 30 June 2020
US$'000 US$'000
------------------------------------------------------------- ----------- -------------------- ----------------
Current Assets
Investment at fair value through profit or loss -
comprising: 1(a)
* equity interest in subsidiary 74,032 49,233
* loan to subsidiary 64,571 63,154
138,603 112,387
Other receivables and prepayments 378 1,452
Cash and cash equivalents 11 550 217
------------------------------------------------------------- ----------- -------------------- ----------------
Total current assets 139,531 114,056
============================================================= =========== ==================== ================
Equity
Issued share capital 925 925
Reserves 138,409 113,018
Total equity 139,334 113,943
------------------------------------------------------------- ----------- -------------------- ----------------
Current liabilities
Other creditors and accrued expenses 4 197 113
Total current liabilities 197 113
------------------------------------------------------------- ----------- -------------------- ----------------
Total equity & liabilities 139,531 114,056
============================================================= =========== ==================== ================
Statement of Changes in Equity
Share capital Reserves Total
US$'000 US$'000 US$'000
---------------------------------------------------- -------------- --------- --------
Balance at 1 July 2019 925 123,933 124,858
Total comprehensive income for the period
Profit for the period - 6,994 6,994
Total comprehensive income for the period - 6,994 6,994
---------------------------------------------------- -------------- --------- --------
Contributions by and distributions to owners
Dividends paid - (2,774) (2,774)
Total contributions by and distributions to owners - (2,774) (2,774)
---------------------------------------------------- -------------- --------- --------
Balance at 30 December 2019 925 128,153 129,078
---------------------------------------------------- -------------- --------- --------
Share capital Reserves Total
US$'000 US$'000 US$'000
---------------------------------------------------- -------------- --------- --------
Balance at 1 July 2020 925 113,018 113,943
Total comprehensive income for the period
Profit for the period - 25,391 25,391
Total comprehensive income for the period - 25,391 25,391
---------------------------------------------------- -------------- --------- --------
Contributions by and distributions to owners
Dividends paid - - -
Total contributions by and distributions to owners - - -
---------------------------------------------------- -------------- --------- --------
Balance at 30 December 2020 925 138,409 139,334
---------------------------------------------------- -------------- --------- --------
Statement of Cash Flows
(Unaudited) (Unaudited)
Note For the period from For the period from
1 July 2020 to 1 July 2019 to
31 December 2020 31 December 2019
US$'000 US$'000
--------------------------------------------------------------- ----- -------------------- --------------------
Cash flows from operating activities
Received from investment at fair value through profit or loss 861 3,235
Operating expenses paid (531) (478)
Net cash generated from operating activities 330 2,757
--------------------------------------------------------------- ----- -------------------- --------------------
Financing activities
Dividends paid - (2,774)
Net cash used in financing activities - (2,774)
--------------------------------------------------------------- ----- -------------------- --------------------
Net increase/(decrease) in cash and cash equivalents 330 (17)
Effects of exchange rate changes on cash and cash equivalents 3 (1)
Cash and cash equivalents at beginning of period 217 272
--------------------------------------------------------------- ----- -------------------- --------------------
Cash and cash equivalents at end of period 11 550 254
--------------------------------------------------------------- ----- -------------------- --------------------
Notes to the Interim Financial Statements
1(a) Investment at fair value through profit or loss
31 December 2020 30 June 2020
US$'000 US$'000
-------------------------------- ----------------- -------------
Equity interest in subsidiary 74,032 49,233
Loan to subsidiary 64,571 63,154
-------------------------------- ----------------- -------------
Total investment in subsidiary 138,603 112,387
-------------------------------- ----------------- -------------
The Company has one subsidiary, Epicure Qatar Opportunities
Holdings Limited ("the Subsidiary"), which holds the portfolio of
investments and has the investment management and custodian
agreements. The investment in subsidiary is stated at fair value
through profit or loss in accordance with the IFRS 10 Investment
Entity Consolidation Exception. The fair value of the investment in
Subsidiary is based on the year-end net asset value of the
Subsidiary as reported by the Administrator. The loan to
Subsidiary, with an aggregate principal amount of US$64,570,629
(2019: US$63,154,393), is included within this balance. The loan is
subject to interest on the aggregate principal amount drawn down
from 1 January 2011, at the US prime rate per annum. All loan
repayments made by the Subsidiary will first be deducted from the
outstanding loan interest before being applied to the principal
balance. The loan is secured by fixed and floating charges over the
assets of the Subsidiary and is repayable on demand. Additions and
disposals regarding the investment in subsidiary are recognised on
trade date.
1(b) Financial assets at fair value through profit or loss held by the Subsidiary
The Subsidiary holds a portfolio of quoted equities and P-Notes
which are classified as fair value through profit or loss. The fair
value for quoted equities is based on the current bid price ruling
at the year-end without regard to selling prices. The fair value of
P-Notes is based on the quoted period-end bid price of the
underlying equity to which they relate. P-Notes are promissory
notes issued by certain counterparty banks that are designed to
offer the holder a return linked to the performance of a particular
underlying equity security or market and used where direct
investment in the relevant underlying equity security or market is
not possible for regulatory or other reasons. To the extent
dividends are received on the securities to which the P-Notes are
linked, these are taken to investment income.
At 31 December 2020 the Subsidiary held 15 P-Notes with a value
of US$32,604,000, (June 2020 14 P-Notes US$37,048,232) held to
obtain exposure to Saudi Arabia where direct investment in equities
is not possible for foreign investors.
Purchases and sales of investments are recognised on trade date
- the date on which the Company commits to purchase or sell the
asset. Investments are initially recorded at fair value, and
transaction costs for all financial assets and financial
liabilities carried at fair value through profit and loss are
expensed as incurred.
Gains and losses (realised and unrealised) arising from changes
in the fair value of the financial assets are included in the
income statement in the year in which they arise.
Investments held by the Subsidiary
31 December 2020: Financial assets at fair value through profit
or loss; all quoted equity securities or P-Notes:
Security name Number US$'000
Commercial Bank of Qatar (CBQK QD) 3,344,953 4,036
Qatar Gas Transport (QGTS QD) 4,408,992 3,850
Industries Qatar (IQCD QD) 1,289,008 3,847
Qatar Insurance (QATI QD) 5,903,063 3,828
Al Khaleej Bank (KCBK QD) 7,586,138 3,791
Saudi Ceramic Company* 252,152 3,221
Dubai Islamic Bank (DIB) 2,433,030 3,053
Fawaz Abdulaziz Al* 523,994 3,040
Gulf International Services (GISS QD) 6,466,522 3,020
Aramex (ARMX) 2,281,259 2,720
Emaar Properties Company (EMAAR UH) 2,751,463 2,644
Al Moammar Information Systems Co. Shamal* 102,810 2,632
Saudi Ground Services* 284,653 2,430
Middle East Healthcare* 252,202 2,351
Agility Public Warehousing AGLTY 1,053,371 2,336
Qatar Navigation (QNNS QD) 1,200,000 2,323
Leejam Sports Co* 109,715 2,259
United International Transportation Co* 223,044 2,255
First Abu Dhabi Bank (FAB) 637,794 2,240
Saudi International Petrochemical Co SHAMAL* 480,000 2,215
Saudi Arabian Mining Co&* 204,657 2,205
National Commercial Bank* 180,000 2,078
Arabian Centres Limited* 302,674 2,020
AIR ARABIA B23DL40 5,800,000 2,005
Aldrees Petroleum and Transport Serv Co* 100,000 1,729
Integrated Holding Company 1,410,520 1,684
Company for Co-op Insurance* 72,973 1,549
Banque Saudi Fransi - SHAMAL 05.06.19* 156,118 1,314
Dallah Healthcare* 101,587 1,306
ABU DHABI Commercial Bank (ADCB UH) 700,000 1,155
Ras Al Khaimah Ceramics Co 2,469,211 1,001
Masraf Al Rayan (MARK QD) 636,052 789
------------------------------------------------ ------------------ --------
Total 76,926
------------------------------------------------ ------------------ --------
*P-notes
2 Net Asset Value per Share
The net asset value per share as at 31 December 2020 is
US$1.5069 per share based on 92,461,242 ordinary shares in issue as
at that date (30 June 2020: US$1.2323 based on 92,461,242 ordinary
shares in issue).
3 Profit per Share
Basic and diluted profit/(loss) per share is calculated by
dividing the profit attributable to equity holders of the Company
by the weighted average number of ordinary shares in issue during
the period:
31 December 2020 31 December 2019
----------------------------------------------------------------- ----------------- -----------------
Profit attributable to equity holders of the Company (US$'000) 25,387 6,994
Weighted average number of ordinary shares in issue (thousands) 92,461 92,461
----------------------------------------------------------------- ----------------- -----------------
Basic profit per share (cents per share) 27.46 7.56
----------------------------------------------------------------- ----------------- -----------------
4 Other payables and accrued expenses
31 December 2020 30 June 2020
US$'000 US$'000
------------------------------- ----------------- -------------
Administration fee payable 51 52
Accruals and sundry creditors 146 61
------------------------------- ----------------- -------------
197 113
------------------------------- ----------------- -------------
5 Charges and Fees
31 December 2020 31 December 2019
US$'000 US$'000
Administrator and Registrar's fees (see below) 100 100
Audit fees 17 17
Custodian fees (see below) 1 1
Directors' fees and expenses 99 158
Directors' insurance cover 15 15
Broker fees 26 26
Other 205 127
------------------------------------------------ ----------------- -----------------
Other expenses 463 444
------------------------------------------------ ----------------- -----------------
Investment management fees and custodian fees borne by the
Subsidiary were US$585,762 and US$85,903 respectively (2019:
US$569,055 and US$107,636 respectively).
Investment Manager's fees
Annual fees
The Investment Manager is entitled to an annual fee of 0.90% of
the net asset value of the Company.
Management fees for the period ended 31 December 2020 amounted
to US$585,762 (31 December 2019: US$569,055) and the amount accrued
but not paid at the period-end was US$322,754 (31 December 2019:
US$297,232). This fee is borne by the Subsidiary.
Custodian fees
The Custodian is entitled to receive fees of US$7,200 per annum
and US$25 per processed transaction.
In addition the Custodian is entitled to receive fees of 8 basis
points per annum in respect of Qatari securities held by the
Subsidiary and 10 basis points per annum in respect of non-Qatari,
GCC securities held by the Subsidiary and $45 per settled
transaction (Qatar)/$50 per settled transaction (GCC excluding
Qatar). From 1 March 2013 the custodian agreed to a 25% reduction
in custodian fees relating to the Qatari market.
Custodian and sub-custodian fees for the period ending 31
December 2020 amounted to US$85,903 (31 December 2019: US$107,635).
This fee is borne by the Subsidiary
Administrator and Registrar fees
The Administrator is entitled to receive a fee of 12.5 basis
points per annum of the net asset value of the Company between US$0
and US$100 million, 10 basis points of the net asset value of the
Company above US$100 million.
This is subject to a minimum monthly fee of US$15,000, payable
quarterly in arrears. The Administrator receives an additional fee
of GBP1,200 per month for providing monthly valuation data to the
Association of Investment Companies.
5 Charges and Fees continued
Administrator and Registrar fees continued
The Administrator assists in the preparation of the financial
statements of the Company and provides general secretarial
services.
Administration fees paid for the period ending 31 December 2020
amounted to US$99,665 and US$9,482 for additional services (31
December 2019: US$100,053 and US$9,857 respectively).
Directors' Remuneration
The maximum amount of remuneration payable to the Directors
permitted under the Articles of Association is GBP200,000 per
annum.
Nick Wilson as non-executive chairman is entitled to receive an
annual fee of GBP52,500. He also receives an additional fee in
respect of his work regarding the Company's share buy-back
programme of GBP10,000 per annum.
Paul Macdonald as non-executive director and chairman of the
audit committee was entitled to receive GBP37,500 per annum. Mr.
MacDonald did not stand for re-election as a Director and
consequently retired on 20 November 2020.
David Humbles and Neil Benedict in their capacity as
non-executive directors receive GBP35,000 each per annum.
The Directors are each entitled to receive reimbursement of any
expenses incurred in relation to their appointment. Total fees and
expenses paid to the Directors for the period ended 31 December
2020 amounted to US$98,914 (31 December 2019: US$158,376).
6 Taxation
Isle of Man taxation
The Company is resident for taxation purposes in the Isle of Man
by virtue of being incorporated in the Isle of Man and is subject
to taxation at the rate of 0% in the Isle of Man.
7 Related Party Transactions
Parties are considered to be related if one party has the
ability to control the other party or to exercise significant
influence over the other party in making financial or operational
decisions.
The Investment Adviser is Qatar Insurance Company S.A.Q. The
Company holds shares in Qatar Insurance Company S.A.Q. (see note
1(a)). The Investment Adviser's fees are paid by the Investment
Manager.
The Investment Manager, Epicure Managers Qatar Limited, is a
related party by virtue of its ability to make operational
decisions for the Company (via the Subsidiary) and through common
Directors. Fees paid and payable to the Investment Manager are
disclosed in note 5.
Epicure Managers Qatar Limited is a wholly owned subsidiary of
the Investment Adviser, Qatar Insurance Company S.A.Q.
8 The Company
Gulf Investment Fund plc (the "Company") was incorporated and
registered in the Isle of Man under the Isle of Man Companies Acts
1931-2004 on 26 June 2007 as a public company with registered
number 120108C.
Pursuant to an Admission Document dated 25 July 2007 there was
an original placing of up to 171,355,000 Ordinary Shares of 1 cent
each, with Warrants attached on the basis of 1 Warrant to every 5
Ordinary Shares. Following the placing on 31 July 2007, 171,355,000
Ordinary Shares and 34,271,000 Warrants were issued; the warrants
expired on 16 November 2012.
The Shares of the Company were admitted to trading on the AIM
market of the London Stock Exchange ("AIM") on 31 July 2007 when
dealings also commenced.
As a result of a further fund raising in December 2007, a
further 76,172,523 Ordinary Shares were issued, which were admitted
for trading on 13 December 2007.
On 4 December 2008, the share premium arising from the placing
of shares was cancelled and the amount of the share premium account
transferred to distributable reserves.
The Shares of the Company were admitted to trading on the Main
Market of the London Stock Exchange on 13 May 2011.
On 8 December 2017 the Company's shareholders approved a change
in investment policy from a largely Qatar focussed strategy to one
which focusses more on a broader Gulf Co-operation Council
strategy.
During the period 1 July 2020 to 31 December 2020, the Company
purchased none of its ordinary shares.
On 21 January 2021, the Company concluded a tender offer for
40,643,418 shares at a price of US$1.4940 per share. These shares
were purchased by the Company and the funds paid to tendering
shareholders on 29 January 2021.
The shareholders approved a dividend of 3.0 cents per share on
20 November 2020. This will be paid to shareholders on 5 March
2021.
The Company's agents and the Manager perform all significant
functions. Accordingly, the Company itself has no employees.
9 The Subsidiary
The Company has the following subsidiary company:
Country of incorporation Percentage of shares held
---------------------------------------------- -------------------------- --------------------------
Epicure Qatar Opportunities Holdings Limited British Virgin Islands 100%
---------------------------------------------- -------------------------- --------------------------
Epicure Qatar Opportunities Holdings Limited is a wholly owned
subsidiary of the Company and was incorporated in the British
Virgin Islands on 4 July 2007 under the provisions of the BVI
Companies Act 2001, as a limited liability company with
registration number 1415393. The principal activity of the
Subsidiary is holding investments on behalf of the Company.
10 Significant Accounting Policies
The accounting policies applied by the Company in these
condensed interim financial statements are the same as those
applied by the Company in its financial statements for the year
ended 30 June 2020.
Change in presentation from prior period
In the current period the Company has applied the requirements
of the IFRS 10 Investment Entity Consolidation Exception regarding
the presentation of the financial statements. This has resulted in
consolidated financial statements not being presented - with the
investment in Subsidiary in the Company's financial statements
stated at fair value through profit or loss. In the prior period,
the Company financial statements also accounted for the investment
in Subsidiary at fair value through profit or loss and the profit
and net asset value reported in last period's Company and
Consolidated financial statements was the same. Therefore, this
change is only a presentational change, with no change to reported
numbers.
10.1 Basis of presentation
These financial statements have been prepared in accordance with
International Financial Reporting Standard ("IFRS") IAS 34 Interim
Financial Reporting. They do not include all of the information
required for full annual financial statements and should be read in
conjunction with the financial statements of the Company as at and
for the year ended 30 June 2020 .
In accordance with IFRS 10, 'Consolidated financial statements',
the Directors have concluded that the Company falls under the
definition of an investment entity because the Company has the
following characteristics:
-- the Company has obtained funds for the purpose of providing
investors with investment management services;
-- the Company's investing policy, which was communicated
directly to investors, is investment solely for returns from
capital appreciation and investment income; and
-- the performance of investments is measured and evaluated on a fair value basis.
As a result, the Company does not consolidate its subsidiaries,
instead it is required to account for these subsidiaries at fair
value through profit or loss in accordance with IFRS 9, 'Financial
instruments' and prepares separate company financial statements
only.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires the Board of Directors to exercise its judgement in the
process of applying the Company's accounting policies. The
financial statements do not contain any critical accounting
estimates
10.2 Segment reporting
The Company is organised into one operating segment, comprising
the investment in a portfolio of equity securities in the GCC
region via the wholly owned subsidiary. The financial performance
of this portfolio is presented to and monitored by the Board of
Directors, being the chief operating decision makers as defined
under IFRS 8. 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.
11 Cash and Cash Equivalents
31 December 2020 30 June 2020
US$'000 US$'000
--------------------------- ----------------- -------------
Bank balances 550 217
Cash and cash equivalents 550 217
--------------------------- ----------------- -------------
12 Post Balance Sheet Events
On 21 January 2021, the Company concluded a tender offer for
40,643,418 shares at a price of US$1.4940 per share. 5,757,536
shares were transferred into treasury with the balance of
34,885,882 being cancelled. The funds paid to tendering
shareholders amounted to US$60,721,266 and was paid on 29 January
2021.
Appendix
Unaudited consolidated financial information
Consolidated Income Statement
(Unaudited) (Unaudited)
For the period For the period
from 1 July 2020 from 1 July 2019
to 31 December to 31 December
2020 2019
US$'000 US$'000
---------------------------- ------------------ --------------------
Income
Dividend income on quoted
equity
investments 593 504
Realised gain on sale
of financial assets at
fair value through profit
or loss 20,404 4,605
Net changes in fair value
on financial assets at
fair value through profit
or loss 5,346 3,070
Commission 114 -
Interest income - 15
Total net income 26,457 8,194
----------------------------- ------------------ --------------------
Expenses
Investment manager's
fees 586 569
Other expenses 480 596
Total operating expenses 1,066 1,165
----------------------------- ------------------ --------------------
Profit before tax 25,391 7,029
Income tax expense - -
---------------------------- ------------------ --------------------
Profit for the year 25,391 7,029
----------------------------- ------------------ --------------------
Basic profit per share
(cents) 27.46 7.60
----------------------------- ------------------ --------------------
Diluted profit per share
(cents) 27.46 7.60
----------------------------- ------------------ --------------------
Notes:
1) Consolidated information has been presented to assist the
user in interpreting the results of the Company and to be
consistent with previous years. This information consolidates the
results of the Subsidiary with the Company. It is based on IFRS
requirements that would apply if the IFRS 10 consolidation
exception for investment entities did not apply to the Company.
2) Where relevant to understanding the risks of financial
instruments held by the Company certain disclosures relating to the
subsidiary's assets and liabilities have been given in the notes to
the Financial Statements and would be relevant to understanding the
consolidated position presented in this appendix.
Consolidated Statement of Comprehensive Income
(Unaudited) (Unaudited)
For the period from For the period from
1 July 2020 to 1 July 2019 to
31 December 2020 31 December 2019
US$'000 US$'000
-------------------- --------------------
Profit for the year 25,391 7,029
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Currency translation differences - (35)
------------------------------------------------------------------------ -------------------- --------------------
Total items that are or may be reclassified subsequently to profit or
loss - (35)
------------------------------------------------------------------------ -------------------- --------------------
Other comprehensive expense for the year (net of tax) - (35)
------------------------------------------------------------------------ -------------------- --------------------
Total comprehensive income for the year 25,391 6,994
------------------------------------------------------------------------ -------------------- --------------------
Consolidated Statement of Financial Position
At 31 December At 30 June 2020
2020
US$'000 US$'000
------------------------------ --------------- ----------------
Assets
Financial assets at fair
value through profit or
loss 76,926 106,675
Other receivables and
prepayments 468 1,778
Cash and cash equivalents 62,369 6,433
------------------------------- --------------- ----------------
Total assets 139,763 114,886
=============================== =============== ================
Equity
Issued share capital 925 925
Reserves 138,409 113,018
Total equity 139,334 113,943
------------------------------- --------------- ----------------
Current liabilities
Other payables and accrued
expenses 429 943
------------------------------- --------------- ----------------
Total current liabilities 429 943
------------------------------- --------------- ----------------
Total equity and liabilities 139,763 114,886
=============================== =============== ================
Consolidated Statement of Changes in Equity
Share capital Distributable Retained Foreign Capital Total
reserves earnings currency redemption
translation reserve
reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------- -------------- -------------- -------------- ------------- -------------- --------
Balance at 1
July 2019 925 76,198 46,406 (221) 1,550 124,858
Total
comprehensive
income for the
period
Profit for the
period - - 7,029 - - 7,029
Other
comprehensive
income
Foreign
exchange
translation
differences - - - (35) - (35)
--------------- -------------- -------------- -------------- ------------- -------------- --------
Total other
comprehensive
expense - - - (35) - (35)
--------------- -------------- -------------- -------------- ------------- -------------- --------
Total
comprehensive
income for
the period - - 7,029 (35) - 6,994
--------------- -------------- -------------- -------------- ------------- -------------- --------
Contributions
by and
distributions
to owners
Dividends paid - - (2,774) - - (2,774)
Total
contributions
by and
distributions
to owners - - (2,774) - - (2,774)
--------------- -------------- -------------- -------------- ------------- -------------- --------
Balance at 31
December 2019 925 76,198 50,661 (256) 1,550 129,078
--------------- -------------- -------------- -------------- ------------- -------------- --------
Balance at 1
July 2020 925 76,198 35,491 (221) 1,550 113,943
Total
comprehensive
income for the
period
Profit for the
period - - 25,391 - - 25,391
Other
comprehensive
income
Foreign - - - - - -
exchange
translation
differences
--------------- -------------- -------------- -------------- ------------- -------------- ----------
Total other - - - - - -
comprehensive
expense
--------------- -------------- -------------- -------------- ------------- -------------- ----------
Total
comprehensive
income for
the period - - 25,391 - - 25,391
--------------- -------------- -------------- -------------- ------------- -------------- ----------
Contributions
by and
distributions
to owners
Dividends paid - - - - - -
Total - - - - - -
contributions
by and
distributions
to owners
--------------- -------------- -------------- -------------- ------------- -------------- ----------
Balance at 31
December 2020 925 76,198 60,882 (221) 1,550 139,334
--------------- -------------- -------------- -------------- ------------- -------------- ----------
Consolidated Statement of Cash Flows
(Unaudited) (Unaudited)
For the period For the period
from from
1 July 2020 to 1 July 2019 to
31 December 2020 31 December 2019
US$'000 US$'000
------------------ ------------------
Cash flows from operating
activities
Purchase of investments (107,313) (157,264)
Proceeds from sale of
investments 163,664 144,872
Dividends received 719 475
Operating expenses paid (1,179) (1,186)
Interest received - 15
Net cash generated from/(used
in) operating activities 55,891 (13,088)
-------------------------------- ------------------ ------------------
Financing activities
Dividends paid - (2,774)
Net cash used in financing
activities - (2,774)
-------------------------------- ------------------ ------------------
Net increase/(decrease)
in cash and cash equivalents 55,891 (15,862)
Effects of exchange rate
changes on cash and cash
equivalents 45 110
Cash and cash equivalents
at beginning of the year 6,433 19,007
-------------------------------- ------------------ ------------------
Cash and cash equivalents
at end of the year 62,369 3,255
-------------------------------- ------------------ ------------------
Glossary
Alternative performance measures (APM)
An APM is a measure of performance or financial position that is
not defined in applicable accounting standards and cannot be
directly derived from the financial statements. The Company's APMs
are set out below and are cross-referenced where relevant to the
financial inputs used to derive them as contained in other sections
of the Interim Financial report.
Ongoing charges ratio
Ongoing charges (%) = Annualised ongoing charges divided by
Average undiluted net asset value in the period
Ongoing charges are those expenses of a type which are likely to
recur in the foreseeable future, whether charged to capital or
revenue, and which relate to the operation of the investment
company as a collective fund. Ongoing charges are based on costs
incurred in the period as being the best estimate of future costs
and include the annual management charge. As recommended by the AIC
in its guidance, ongoing charges are calculated using the Company's
annualised revenue and capital expenses (excluding finance costs,
direct transaction costs, custody transaction charges,
non-recurring charges and taxation) expressed as a percentage of
the average daily net assets of the Company during the period. The
inputs that have been used to calculate the ongoing charges
percentage are set out in the following table:
Ongoing charges calculation* 31 December 31 December
2020 2019
US$'000 US$'000
Management fee (note 5) 586 569
------------ ------------
Other operating expenses 480 596
------------ ------------
Total management fee and other
operating expenses for the period 1,066 1,165
------------ ------------
Total annualised expenses 2,120 2,311 a
------------ ------------
Average net assets in the period 128,369 125,326 b
------------ ------------
Ongoing charges (c=a/b) 1.65% 1.84% c
------------ ------------
*Including expenses of the Subsidiary.
Discount and premium
Shares can frequently trade at a discount to net asset value
(NAV). This occurs when the share price (based on the mid-market
share price) is less than the NAV and investors may therefore buy
shares at less than the value attributable to them by reference to
the underlying assets. The discount is the difference between the
share price and the NAV, expressed as a percentage of the NAV. As
at 31 December 2020, the share price was 1.3400c and the audited
NAV per share was 1.5069c, giving a discount of 11.1%. A premium
occurs when the share price (based on the mid-market share price)
is more than the NAV and investors would therefore be paying more
than the value attributable to the shares by reference to the
underlying assets.
Period to date net asset value
This is the fall or rise, calculated as a percentage, in value
of the Company's assets attributable to one ordinary share since 30
June 2020. The net asset value per share is calculated by dividing
'equity shareholders' funds' by the total number of ordinary shares
in issue (excluding treasury shares). The rise in period to date
NAV is set out in the table below:
Date Equity Number of Net asset
ordinary shares value per
in issue share
30 June 2020 113,943,376 92,461,242 1.2323 a
------------ ----------------- ----------- -------
31 December 2020 139,333,603 92,461,242 1.5069 b
------------ ----------------- ----------- -------
PTD Change in NAV 22.28% c
(c=(a-b)/a)
------------ ----------------- ----------- -------
Increase in net asset value since change in investment
policy
In December 2017 there was a change in investment policy whereby
the Company's underlying subsidiary was able to invest in the
broader GCC region rather than being specifically focussed in
Qatar. The rise in NAV (dividend included) from 7 December 2019 to
31 December 2020 was 60.2%. The following table shows the movement
in NAV (including dividends) in this time:
Date GIF NAV net of GIF NAV adjusted to
dividend include dividend
7 December 2019 1.0145 1.2320 a
--------------- --------------------
31 December 2020 1.5069 1.9730 b
--------------- --------------------
Percentage movement 60.2% c
in NAV adjusted to
include dividend
c=(b-a)/a
--------------- --------------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR BSGDDXBDDGBU
(END) Dow Jones Newswires
February 26, 2021 02:00 ET (07:00 GMT)
Gulf Investment (LSE:GIF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Gulf Investment (LSE:GIF)
Historical Stock Chart
From Jul 2023 to Jul 2024