TIDMGIF
RNS Number : 7617C
Gulf Investment Fund PLC
25 February 2022
Gulf Investment Fund PLC
25 February 2022
Legal Entity Identifier: 2138009DIENFWKC3PW84
Gulf Investment Fund plc
Interim report for the six months ended 31 December 2021
- Net asset value rose 7.6% vs benchmark increase of 7.4%
- Share price up 5.4%
- Final dividend of 2.47c to be paid on 11 March 2022
- GIF shares ended the period trading at 7.6% discount to NAV (5 year average discount 12%)
Anderson Whamond, Chairman of Gulf Investment Fund plc,
commented:
"During the six-month period, GCC markets benefited from rising
hydrocarbon and oil prices.
"For 2021 as a whole the post-lockdown recovery in GCC has been
more consistent than other economies. The GCC rose 31.4 per cent
versus the MSCI World index which increased 20.1 per cent and the
MSCI EM index which fell 4.6 per cent. In addition to economic
diversification in the region, the IMF expects higher gas and oil
prices to mean the GCC returns to a fiscal surplus in 2023. The IMF
has upgraded its 2022 GCC forecast to 4.2 per cent GDP growth.
"The GIF NAV continues to outperform its benchmark. Since
December 2017, when the investment mandate widened to Gulf-wide,
the NAV is up 107.5 per cent versus the benchmark's 80 per cent
rise.
"GIF remains overweight Qatar. While Qatar is trading at a
discount to its GCC peers, valuations are compelling given the
upside from the promising macro backdrop. Additionally, Qatar's
plan to allow full foreign ownership of listed companies could
attract as much as QAR5.4 billion inflows."
Anderson Whamond
Chairman
Gulf Investment Fund Plc
+44 (0) 1624 692600
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 2021.
Results
For the six months ending 31 December 2021, Net Asset Value per
Share ('NAV') rose 7.6% to USD1.8870 compared with a rise of 7.4%
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
5.4% for the period.
At the Annual General Meeting on 31st December 2021 a final
dividend of USD 2.47 cents per ordinary share for the year ended 30
June 2021 was approved. The dividend will be paid on 11 March 2022
with an ex-dividend date of 13 January 2022.
The main corporate event of the period was a 100% tender offer.
5,497,652 shares were tendered and cancelled. The total number of
shares in issue is now 46,320,172.
Markets in the GCC region benefited from rising hydrocarbon
prices and improving trends in global stock markets. As at 31
December 2021 GIF had 28 holdings: 14 in Saudi Arabia, 9 in Qatar,
4 in the UAE and 1 in Kuwait.
Outlook, risks and uncertainties
GCC economies are benefitting from higher oil and gas prices and
increased oil production. Higher oil prices boost GCC government
balance sheets, complementing fiscal reforms.
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.
The board is keen to explore ways of both narrowing the discount
and of attracting new shareholders to the share register and is
working closely with the investment Management team and the
Company's broker.
Anderson Whamond
Chairman
24 February 2022
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 2021 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.
Anderson Whamond
Chairman
24 February 2022
Report of the Investment Manager and the Investment Adviser
Regional Market Overview:
Country / Region Index 31-Dec-20 30-Jun-21 1H2021 31-Dec-21 2H2021 FY2021
Qatar DSM Index 10,436 10,731 2.8% 11,626 8.3% 11.4%
Saudi Arabia SASEIDX Index 8,690 10,984 26.4% 11,282 2.7% 29.8%
Dubai DFMGI Index 2,492 2,811 12.8% 3,196 13.7% 28.2%
Abu Dhabi ADSMI Index 5,045 6,835 35.5% 8,488 24.2% 68.2%
Kuwait KWSEAS Index 5,546 6,387 15.2% 7,043 10.3% 27.0%
Oman MSM30 Index 3,659 4,063 11.1% 4,130 1.6% 12.9%
Bahrain BHSEASI Index 1,490 1,588 6.6% 1,797 13.2% 20.6%
S&P GCC SEMGGCPD Index 114 140 22.4% 150 7.4% 31.4%
Brent CO1 Comdty 51.8 75.1 45.0% 77.8 3.5% 50.2%
MSCI EM MXEF Index 1,291 1,375 6.5% 1,232 -10.4% -4.6%
MSCI World MXWO Index 2,690 3,017 12.2% 3,232 7.1% 20.1%
------------------ ---------------- ---------- ---------- ------- ---------- ------- -------
Source: Bloomberg
Global stock markets saw a broad-based sell off during the
second half of 2021. When it emerged that the new omicron variant
may not be as potent as initially anticipated, global stock markets
rebounded. During the period 2H2021, the MSCI World index rose 7.1
per cent, while MSCI EM Index was down 10.4 per cent.
The price of oil (Brent) rose 3.5% in 2H2021, reaching US$78 per
barrel after declining amid concerns over the impact of the omicron
variant.
After recording a gain of 22.4% in 1H2021, the S&P GCC
indices continued its strong performance in 2H2021, up 7.4 per
cent. The positive performance was led by Abu Dhabi market
advancing 24.2 per cent, followed by Dubai with a 13.7 per cent
increase. Bahrain performed similarly rising 13.2 per cent. Kuwait,
Qatar and Saudi Arabia gained 10.3 per cent, 8.3 per cent and 2.7
per cent, respectively.
For 2021 as a whole the post-lockdown recovery in GCC has been
more consistent than other economies. The S&P GCC Composite
index rose 31.4 per cent versus the MSCI World index which rose
20.1 per cent and the MSCI EM index which fell 4.6 per cent. Brent
rose 50.2 per cent in 2021.
All GCC markets posted double digit gains in 2021: Abu Dhabi and
Saudi Arabia led the pack rising 68.2 per cent and 29.8 per cent,
respectively. Dubai and Kuwait rose 28.2 and 27 per cent
respectively. Bahrain was up 20.6 per cent. Oman gained 12.9 per
cent, while Qatar was up 11.4 per cent.
GCC: recovery continues to gather pace
The IMF has revised upward its 2022 forecast GCC GDP growth rate
by 0.4 per cent to 4.2 per cent as oil demand recovers and progress
is made towards full inoculation.
These vaccine rollouts and higher oil prices should boost
confidence and activities in the non-oil sector, which are set to
grow 3.8 and 3.4 per cent in 2021 and 2022, respectively. Overall,
the non-hydrocarbon economy is projected to have outperformed the
oil economy in 2021.
The robust recovery is based on well-judged macroeconomic and
pandemic management measures taken in 2020 and 2021. With oil
prices back at their highest levels since 2014 this is helping to
improve public finances, with the IMF forecasting GCC returning to
a fiscal surplus in 2023.
IMF GDP growth forecast 2021 and 2022
Real GDP Growth 2018 2019 2020 2021e 2022e
GCC 2.0% 1.0% -4.8% 2.5% 4.2%
GCC oil GDP 2.5% -1.5% -5.9% 0.3% 5.3%
GCC non-oil GDP 1.7% 2.7% -3.9% 3.8% 3.4%
================= ===== ====== ====== ====== ======
Source: IMF World Economic Outlook and Regional Economic Outlook
October 2021
The IMF also referred to new challenges facing the region. This
includes rising inflation from supply disruption, higher commodity
prices and the threat of more virulent variants. All could impact
the recovery.
GCC Budget and Economic Update
Saudi Arabia's fiscal position is expected to turnaround after
years of deficits. The Kingdom projects government revenues to
reach US$278.7 billion, a 12 per cent increase from 2021, leading
to an expected surplus of US$24 billion (2.5% of GDP).
Saudi Arabia 2022 Budget
US$ Billions 2019 2020 2021 2022
Revenue 260.0 222.1 248.0 278.7
------- ------- -------- -------
Expenditure 294.4 272.0 264.0 254.7
------- ------- -------- -------
Surplus/ (Deficit) (34.9) (49.9) (16.0) 24.0
------- ------- -------- -------
Nominal GDP 833.3 773.9 796.3 960.0
------- ------- -------- -------
Public Debt 180.8 201.1 249.9 -
------- ------- -------- -------
Surplus/ (Deficit) - % of GDP -4.2% -6.4% -2.7% 2.5%
------- ------- -------- -------
Public Debt - % of GDP 21.7% 26.0% 31.4% -
------- ------- -------- -------
Source: Saudi Arabia MoF; Table contains budgeted numbers for
respective year
Saudi's government spending should reduce from US$264 billion in
2021 to US$254.7 billion in 2022. Nevertheless, the government is
committed on healthcare and education expenditures, in line with
the drive to enhance quality of life as well as diversifying its
economy and localisation.
The anticipated Saudi US$24 billion budget surplus in 2022 is a
contrast to the 2.7 per cent budget deficit in 2021 and would be
Saudi's first surplus since 2013. The surpluses will boost reserves
and support national development funds and Saudi's sovereign wealth
fund, the Public Investment Fund (PIF).
Real GDP growth is expected to reach 7.4 per cent in 2022 driven
by continued economic recovery and strengthening of the private
sector. The Investment Adviser echoes the government's sentiment of
driving economic growth by increasing the role of the private
sector.
Saudi Arabia announced plans to reach net zero carbon emissions
by 2060. The Kingdom also launched the Riyadh Sustainability
Strategy, with an aim of reducing the carbon emissions in the city
by 50 per cent making the city one of the world's most sustainable.
The strategy will see US$92 billion invested in sustainability
initiatives and projects, stimulating the private sector and
creating 350,000 new jobs.
Saudi Arabia launched the National Investment Strategy (NIS), a
key enabler to deliver on Vision 2030. The strategy includes
several initiatives with an objective to raise the private sector's
contribution to GDP to 65 per cent; increase the contribution of
FDI to GDP to 5.7 per cent; increase the contribution of non-oil
exports to GDP from 16 to 50 per cent; and reduce the unemployment
rate to 7 per cent. Moreover, the new strategy seeks to draw up
comprehensive investment plans for sectors, including
manufacturing, renewable energy, transport and logistics, tourism,
digital infrastructure and health care. The Kingdom will invest
more than SAR12 trillion (US$3.2 trillion) by 2030 to spur local
economic growth, of which the Shareek program initiatives will
inject SAR5 trillion, the Public Investment Fund is set to
contribute SAR3 trillion, and the remaining SAR4 trillion will come
from investments facilitated by the NIS.
Saudi Arabia also launched the National Transport and Logistics
Strategy mainly aimed at positioning the kingdom as a global
logistics hub. The Kingdom will invest more than US$133 billion by
2030 to expand its transport sector and has plans for more than 300
projects, including new flagship airline, to expand the sector.
Additionally, the Saudi Crown Prince announced US$13 billion
tourism strategy to develop Saudi Arabia's Asir region into a
global tourism hub. It aims to attract more than 10 million
visitors by 2030.
Qatar's 2022 budget forecasts total revenue of US$53.8 billion,
up 22.4 per cent on 2021, based on an assumed oil price of
US$55/barrel up from $40/barrel in 2021. Government spending should
increase by 4.9 per cent related to the upcoming FIFA World Cup
2022. The budget also sees huge spending on infrastructure
projects, development, and public services projects, including
health and education.
Qatar 2022 Budget
US$ Billion 2017 2018 2019 2020 2021 2022
Total Revenues 46.7 48.1 58.0 58.0 44.0 53.8
------ ------ ----- ----- ------ ------
Total Expenditures 54.5 55.8 56.8 57.8 53.5 56.1
------ ------ ----- ----- ------ ------
Surplus / (Deficit) (7.8) (7.7) 1.2 0.1 (9.5) (2.3)
------ ------ ----- ----- ------ ------
Oil Price Assumption (USD/bbl) 45.0 45.0 55.0 55.0 40.0 55.0
------ ------ ----- ----- ------ ------
Source: Qatar MoF; Table contains budgeted numbers for
respective year
Qatar is anticipated to post a strong growth rebound among the
GCC, with LNG demand underpinning medium-term prospects. The growth
is likely to be spurred by construction work on the giant North
Field Expansion Project as Qatar Petroleum is expected to sign the
bulk of its project-related deals. The liquified natural gas (LNG)
investment pipeline along with continued spending on infrastructure
projects for FIFA World Cup 2022 is likely to increase
non-hydrocarbon GDP growth. Additionally, Qatar is expected to
record trade and current account surpluses on the strength of LNG
exports.
The UAE approved a budget worth US$79 billion for the next four
years (2022-2026), as the country embarks on an aggressive economic
transformation plan. Around US$16 billion was approved for 2022
alone, with most allocated to development and social benefits
projects (41.2 per cent) education (16.3 per cent) and healthcare
(8.4 per cent). It's clear that the UAE is refocusing its efforts
not only on growth, but also on the wellbeing of residents.
The UAE government announced "Projects of the 50" an initiative
to boost the country's competitiveness and attract AED550 billion
in foreign direct investment by 2030. The "Projects of the 50" is a
series of developmental and economic projects that includes
establishing 500 national companies equipped with Fourth Industrial
Revolution Technologies, increasing the contribution of the
manufacturing sector by 30 per cent in the next 5 years, achieving
10 per cent annual increase in exports, and spending up to AED24
billion on getting 75,000 Emiratis into private sector jobs.
The UAE also announced plans to achieve net zero carbon
emissions by 2050, becoming the first gulf state to commit to net
zero. This would see US$163 billion being invested in clean and
renewable energy sources over the next three decades.
Kuwait intends to implement largest government restructuring in
its history, which includes plans to merge ministries, abolish
others and create new strategies as part of the restructuring
roadmap over the next four years. The plan also aims at reviewing
investment, foreign ownership, bankruptcy, and public-private
partnership laws. These steps are expected to maintain control over
public spending and lead to efficiency gains across the public
sector.
Oman has set a budget of US$31.4 billion for 2022, up 11 per
cent on 2021. Revenue for 2022 is projected at US$27.5 billion,
based on an oil price of US$50/barrel, resulting in a deficit of
US$3.9 billion or 5 per cent of GDP in 2022. Higher oil prices
along with fiscal reforms, are expected to narrow the deficit and
slow a rise in debt levels over the next few years.
Oman 2022 Budget
US$ Billion 2017 2018 2019 2020 2021 2022
Total Revenues 22.6 24.7 26.3 27.8 22.5 27.5
------ ------ ------ ------ ------ ------
Total Expenditures 30.4 32.5 33.5 34.3 28.3 31.4
------ ------ ------ ------ ------ ------
Surplus / (Deficit) (7.8) (7.8) (7.3) (6.5) (5.8) (3.9)
------ ------ ------ ------ ------ ------
Oil Price Assumption (US$/bbl) 45.0 50.0 58.0 58.0 45.0 50.0
------ ------ ------ ------ ------ ------
Source: Oman MoF; Table contains budgeted numbers for respective
year
GCC stock markets: IPO activity in 2022
2022 should be another busy year of initial public offerings
(IPO). Saudi Arabia's stock market, which is reviewing multiple IPO
requests, is also considering allowing special purpose acquisition
company (SPACs) to list on exchange.
In a bid to revive years of lackluster stock listings, the Dubai
government announced plans to list ten government entities on the
Dubai Financial Market (DFM). The move aims to double its market
capitalization to US$817 billion. Dubai Electricity and Water
Authority (Dewa), Tecom Group (business parks unit of Dubai
Holding), Salik (road toll system), Emirate's subsidiaries, Dubai
Airport Duty Free and DP World (ports & logistics operator) all
may seek IPOs.
On top of this Dubai plans to launch a US$545 million
market-maker fund to further boost trading on its stock market. It
has also approved a US$250 million fund to encourage technology
companies to list on the local stock market. All in, the increasing
activity of capital markets across the region, particularly around
IPOs shows growing confidence in the region.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com Chart: Major 2021 Listings
OPEC+ continues to ease output cuts
During the period, OPEC+ continued unwinding its
pandemic-induced production cuts. OPEC+ agreed to increase supply
by 0.4 million barrels per day (bpd) each month, from August 2021
to phase out 5.8 million bpd of existing output cuts implemented
during the covid crisis last year. OPEC+ forecasts world oil demand
will grow by 4.2 million bpd in 2022.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com Chart: GCC countries fiscal breakeven
oil price (2022E)
Other Recent Developments
Saudi Arabia rating upgrade
Moody's revised Saudi's outlook to stable from negative and
maintained its sovereign's rating at A1. It estimates the volume of
public debt as a percentage of GDP to fall to 25 per cent by 2025
from 32.5 per cent in 2020.
Rating agency, Fitch revised Saudi Arabia's outlook to stable
from negative and maintained the sovereign's rating at A, while
forecasting a drop in deficit to 3.3 per cent in 2021 from 11.2 per
cent in 2020.
Bahrain upgrade
S&P revised Bahrain's outlook to stable from negative as
fiscal reforms and higher oil prices are seen to improve the
sovereign's fiscal position. It forecasts a decline in fiscal
deficit from 13 per cent in 2020, to about 7 per cent of GDP in
2021.
Oman upgrade
Fitch revised Oman's outlook to stable from negative following
improvements in fiscal metrics such as government debt/GDP and the
budget deficit, driven by higher oil prices and fiscal reforms, and
a lessening of external financing pressures.
Kuwait rating update
S&P downgraded Kuwait's sovereign credit rating to 'A+' from
'AA-' with negative outlook amid rising deficit and the absence of
a comprehensive financing strategy to augment its depleted GRF.
Saudi Arabia bond issuance
Saudi Arabia sold US$3.25 billion in dual-tranche bonds
(attracting US$11 billion in orders) completing its third
international issuance in 2021. The first tranche was for US$2
billion maturing in 9.5 years and yielding 2.25 per cent, while the
second was for US$1.25 billion maturing in 30 years and yielding
3.25 per cent.
Saudi PIF Plans to Issue Green Debt
Saudi Arabia's Public Investment Fund (PIF) plans to announce
its first green sukuk issuance, as it looks to increase the role
that Environmental, Social and Governance principles (ESG) play in
its investments. Furthermore, the Kingdom aims to deploy 50 per
cent of its investments in renewable and sustainable power
sources.
Saudi Arabia Announces Human Capability Development Program
The Saudi Crown Prince launched the Human Capability Development
Program (HCDP) in line with its Vision 2030. The program aims to
boost the citizen's capabilities, locally and globally and includes
89 initiatives aimed at achieving 16 strategic objectives of Saudi
Vision 2030.
Saudi Arabia plans world's largest floating industrial
complex
The Saudi Crown Prince announced the launch of NEOM's industrial
city known as OXAGON, the largest floating industrial complex in
the world. The net-zero city will be powered by 100 per cent clean
energy and is positioned to be one of the world's most
technologically advanced logistics hubs with state-of-the-art
integrated port and airport connectivity.
UAE Central Bank Starts Gradual Curb of Stimulus Measures
The UAE Central Bank has started a gradual withdrawal of its
Targeted Economic Support Scheme (TESS) launched in response to the
pandemic as the economy shows signs of gradual recovery. However,
the Central Bank will not change the temporarily reduced reserve
requirements for banks for now. Furthermore, it expects the UAE
economy to grow at 2.1 per cent in 2021 and 4.2 per cent in
2022.
UAE bond issuance
The UAE government has secured US$4 billion in its first
multi-tranche bond sale, after attracting over US$22.5 billion in
demand. The multi-tranche issue included a US$1 billion 10-year at
70 bps over US treasuries (UST), a US$1 billion 20-year at 105 bps
over UST, and US$2 billion in 40-year Formosa bonds at 3.25 per
cent.
UAE's ADNOC to invest US$127 billion up to 2026
UAE's state-run oil company ADNOC announced a capital spending
plan of US$127 billion for 2022-2026 as it reported a 4 billion
barrels of oil and 16 trillion cubic feet of gas increase in
hydrocarbon reserves. The investment is expected to help the
company expand its upstream production capacity and downstream
portfolio, as well as its low carbon fuels business and clean
energy ambitions.
UAE adopts four-and-a-half-day week
The UAE announced that Friday afternoon, Saturday and Sunday
will now be the new weekend for federal government employees. This
will better align the UAE with global markets and improve work-life
balance.
Bahrain increases VAT to 10 per cent
Bahrain's parliament doubled VAT to 10 per cent. The rise could
yield receipts of about 3 per cent of GDP in the next few years, up
from about 1.7 per cent this year.
Bahrain new tourism strategy
This seeks to increase the number of tourists to the kingdom to
14.1 million by 2026. The strategy seeks to increase the
contribution of tourism to GDP to reach 11.4 per cent by 2026.
GIF portfolio
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 (42.6
per cent of NAV vs. the S&P GCC Qatar weight of 11.9 per cent),
overweight UAE (19.4 per cent vs S&P GCC of 13.5 per cent). GIF
is underweight Saudi Arabia (33.2 per cent vs S&P GCC weighting
of 61.5 per cent) and Kuwait (4.3 per cent vs S&P GCC of 10.6
per cent). The fund's cash weighting was 0.6 per cent on 31
December 2021.
During the quarter, exposure to Saudi Arabia increased 4.5 per
cent, while exposure to UAE reduced by 2.9 per cent as valuations
looked stretched.
The fund's Qatar overweight arises from Qatar's macroeconomic
resilience, growth prospects and attractive valuations. While Qatar
is trading at a discount to its GCC peers, valuations are
compelling given the upside from the promising macro backdrop. The
North Field Expansion (a 64 per cent increase in LNG production)
and FIFA World Cup activities should mean stronger economic
activity in 2022. Additionally, Qatar's plan to allow full foreign
ownership of listed companies could attract as much as QAR5.4
billion inflows.
The fund remains underweight Saudi Arabia due to relatively
expensive valuations. Following the Shareek program announcements,
major Saudi stocks, particularly banks rallied. On 31 December 2021
Saudi was trading on a P/E multiple of 25 times compared to MSCI EM
on 14 times.
GIF ended the quarter with 28 holdings: 14 in Saudi Arabia, 9 in
Qatar, 4 in the UAE and 1 in Kuwait.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com for a chart depicting country
allocation 2020.
Top 10 Holdings
Company Country Sector % NAV weighting
Emaar Properties Company UAE Real Estate 8.5%
Qatar Gas Transport Qatar Energy 7.9%
Masraf Al Rayan Qatar Financials 7.7%
Commercial Bank of Qatar Qatar Financials 7.2%
Industries Qatar Qatar Industrials 5.3%
Dubai Islamic Bank UAE Financials 5.0%
Air Arabia UAE Industrials 5.0%
Qatar Navigation Qatar Industrials 4.6%
Qatar National Bank Qatar Financials 4.5%
Gulf Bank of Kuwait Kuwait Financials 4.3%
========================== ========= ============= ================
Source: QIC
The ongoing recovery in the GCC region is expected to solidify
in 2022 as restrictions are further lifted and vaccines are rolled
out. The Investment Adviser seeks companies likely to benefit from
the recovery. That said we expect markets will remain volatile in
the near term, and hence will continue to focus on companies with
solid balance sheets and stable cash flows, trading at attractive
valuations.
Emaar Properties (EMAAR) and Qatar Gas Transport (QGTS) were
GIF's top holdings owing to their strong fundamentals. The
Investment Adviser increased exposure to Qatar Gas Transport, while
reducing exposure to Qatar National Bank.
Embedded image removed -please refer to the Company's website
www.gulfinvestmentfundplc.com for a chart depicting sector
exposure.
The financial sector remains the largest exposure for GIF at
43.7 per cent of NAV. The Investment Adviser believes that most GCC
banks have strong capital and liquidity buffers to safeguard them
from systematic risk. That said, 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 compared to the index.
The Investment Adviser increased exposure to the real estate
sector to 11.1 per cent of NAV (vs 6.5 per cent in 2Q 2021), while
investments in the consumer and industrial sectors were reduced as
valuations looked stretched.
Profile of Top Five Holdings:
Emaar Properties (8.5 per cent of NAV)
Emaar Properties (EMAAR) is the UAE's largest real estate
developer. The Group's business encompasses UAE & International
Development, Emaar Malls, Emaar Hospitality, and Entertainment
& Leasing. The brand EMAAR has a varied retail asset portfolio,
which includes the Burj Khalifa, Dubai Mall, and Dubai Fountain.
The reopening of the economy is expected to boost demand for retail
operators. Additionally, the recovery in the real estate sector
supported by the strong property sales will support topline growth.
EMAAR also has a growing presence in international markets such as
India, Egypt, KSA, and Turkey. Furthermore, the developer has a
strong balance sheet, a strong credit profile, substantial debt
coverage, and has generated significant brand loyalty.
Qatar Gas Transport (7.9 per cent of NAV)
Qatar Gas Transport Company (Nakilat) is a leader in energy
transportation, with the world's largest LNG shipping fleet of 74
vessels. It is responsible for transporting the country's LNG
production to its global customers and is integral to the state's
LNG supply chain. Taking fleet management in-house and the huge
North Field Expansion project should generate further growth. It
plans to expand capacity with ship building agreements for 100+
vessels worth over QAR70 billion. Nakilat is set to be a major
beneficiary of Qatar's LNG expansion. Given the long-term nature of
its charter, Nakilat has a Stable profile with industry-leading
EBITDA margins and attractive dividend/FCF yields.
Masraf Al Rayan (7.7 per cent of NAV)
Masraf Al Rayan (MARK) is a Sharia bank, offering corporate and
personal banking, asset management, treasury and trade finance. The
bank has expanded its operations in United Kingdom through its
subsidiary Al Rayan Bank PLC. Post-merger with Al Khalij Commercial
Bank, MARK emerges as one of the largest Sharia compliant banks
with over US$47 billion total assets, as of 2021. MARK is expected
to remain cost efficient with cost to Income ratio below 25 per
cent. Post-merger cost synergies will further enhance its
efficiency ratio. MARK's asset quality remains robust as indicated
by a NPL ratio of 1.67 per cent reflecting prudent risk management
policies. Asset quality to remain superior as primary exposure is
to the government sector. Furthermore, MARK is strongly capitalized
and has one of the lowest non-performing-loans ratios in the
sector.
Commercial Bank of Qatar (7.2 per cent of NAV)
Commercial Bank of Qatar (CBQ) is the second-largest commercial
bank in Qatar. As part of its 5-year turnaround strategy, it is
strengthening its balance sheet by cautiously managing its risk
exposure. CBQK is selectively growing credit as it continues to
de-risk the portfolio away from property exposure and into the
high-quality public sector. Banks Govt. & Public sector lending
increased to 18per cent in 2021 from 9 per cent in 2018. Under its
diversification strategy, CBQ has expanded its GCC footprint
through strategic partnerships with associated banks, which include
the National Bank of Oman (NBO) in Oman, United Arab Bank (UAB) in
the UAE and its subsidiary Alternatifbank in Turkey. CBQK possess
strong and stable management, having good track record and have
delivered business plan targets on consistent basis.
Industries Qatar (5.3 per cent of NAV)
Industries Qatar (IQ) mainly operates in steel, petrochemicals,
and fertilizers sectors. The significant uptick in commodity prices
along with the growth momentum prompted by the easing of lockdown
related restrictions is expected to have positive impact on the
company's earning trajectory. In addition, we expect a favorable
financial impact on IQ's earnings following the recent acquisition
of the remaining 25 per cent stake in its Fertilizer JV "QAFCO" and
the extension of feedstock gas arrangements until 2035.
Furthermore, IQ may seek similar opportunities, acquiring remaining
stakes in other JVs which would give the company more exposure to
petrochemicals.
GIF Performance:
NAV rose 7.6 per cent during 2H2021, while the Fund's benchmark,
the S&P GCC Index, rose 7.4 per cent.
For 2021, GIF NAV is up 29.8 per cent vs benchmark index up 35.2
per cent, so GIF underperformed its benchmark by 5.4 per cent. The
underperformance arose in Q1 because the fund was underweight Saudi
Arabia when the $1.3 trillion Shareek program to boost private
investments fueled a market rally. The fund outperformed in the
following 3 quarters.
Since the investment mandate widened from Qatari-focused to
Gulf-wide in December 2017, NAV has risen 107.5% (dividend
included), as against the 80.0% returns recorded by S&P GCC
total return index. On 31 December 2021, the GIF share price was
trading at a 7.6 per cent discount to NAV, below the five-year
average discount of 12.0 per cent.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com for a chart depicting GIF NAV v
Reference Index.
GCC Outlook:
The GCC remains well positioned for robust growth, led by easing
restrictions, sustained economic recovery and wider vaccine
coverage than most countries. The IMF expects high mid-single digit
GDP growth, partly on the back of higher oil prices. Higher oil
prices will boost GCC government balance sheets, complementing
fiscal reforms. We foresee all GCC countries reporting fiscal
surpluses in 2022.
In Saudi Arabia, the government is pressing ahead with an
ambitious reform agenda to deliver economic growth, following a
slow start in recent years. Higher oil prices have refilled the
Kingdom's coffers and are likely to provide additional resources
for PIF and state funds to press ahead with investment plans. Saudi
remains our second largest portfolio holdings at 33.2%, with
exposure mainly in the financial sector of 11.3% to ride on the
nation's progressive economic reforms.
Qatar is the biggest beneficiary of rising energy prices, while
the FIFA World Cup preparation works, and LNG production expansion
are growth drivers. The North Field project should boost LNG
capacity by 64% with Nakilat (7.9% of NAV) set to be a beneficiary
of the expansion. Qatar's external and fiscal positions are in a
sweet spot, one of the strongest positions in the GCC.
UAE is enjoying a cyclical recovery, in particular Dubai, which
was impacted last year due to Covid restrictions. The easing of
these is boosting economic activity in tourism and retail. As the
economy reopens, EMAAR (8.5% of NAV) with a varied retail asset
portfolio should benefit from footfall rise in malls and shopping
markets. Elsewhere, the switch to a Monday-Friday work week is also
expected to improve UAE's prospects in the medium term.
Overall, we see strong opportunities among the stocks benefiting
from re-opening. Regional banks should benefit from higher
short-term interest rates. We see opportunities arising from
sustained high commodity prices and supply disruptions coinciding
with re-opening pent-up demand.
While global investors generally are underweight Qatar, Kuwait,
and Saudi, the GCC weighting in EM indexes should increase as IPOs
join the market, as Public Investment Fund PIF/government stake
sales are made, and foreign ownership limits (FOL) are raised.
Qatar's weighting should increase as FOL are eased and likely
attracting US$1.1-1.4bn of inflows, making us highly positive on
the country. Global investors interest in GCC should increase.
Therefore, foreign inflows to the GCC will continue, attracted by
credible fixed currency rates, generous dividend yields, high oil
prices and market reforms.
Valuation:
Market Market Cap. PE (x) PB (x) Dividend Yield (%)
US$ billion 2022E 2023E 2022E 2023E 2022E 2023E
Qatar 174 13.32 12.93 1.93 1.81 3.82 4.15
Saudi Arabia 2790 21.33 19.44 2.99 2.75 2.65 2.95
Dubai 95 11.27 9.93 1.14 1.07 3.69 3.85
Abu Dhabi 411 18.19 17.04 2.32 2.22 2.59 2.70
Kuwait 141 16.07 14.00 1.68 1.60 NA NA
S&P GCC 3,323 16.84 15.28 2.17 2.04 5.15 5.49
MSCI EM 22,455 12.10 10.99 1.64 1.50 3.17 3.44
MSCI World 63,780 18.07 16.64 2.87 2.65 1.96 2.07
============== ============ ====== ====== ====== ====== ========== =========
Source: Bloomberg, as of 30 January 2022; Market Cap. as of 27
January 2021
Epicure Managers Qatar Limited Qatar Insurance Company
S.A.Q.
24 February 2022 24 February 2022
Income Statement
(Unaudited) (Unaudited)
Note For the period from For the period from
1 July 2021 to 1 July 2020 to
31 December 2021 31 December 2020
US$'000 US$'000
---------------------------------------------------------------- ----- -------------------- --------------------
Income
Net change in investment at fair value through profit or loss (11,874) 24,799
Distribution received from subsidiary 20,000 -
Interest income on loan 70 1,055
Total net income 8,196 25,854
---------------------------------------------------------------- ----- -------------------- --------------------
Expenses
Expenses 5 309 463
Total operating expenses 309 463
---------------------------------------------------------------- ----- -------------------- --------------------
Profit before tax 7,887 25,391
Income tax expense - -
---------------------------------------------------------------- ----- -------------------- --------------------
Retained profit for the period 7,887 25,391
---------------------------------------------------------------- ----- -------------------- --------------------
Basic and diluted profit per share (cents) 3 15.76 27.46
---------------------------------------------------------------- ----- -------------------- --------------------
Statement of Comprehensive Income
(Unaudited) (Unaudited)
For the period from For the period from
1 July 2021 to 1 July 2020 to
31 December 2021 31 December 2020
US$'000 US$'000
------------------------------------------- -------------------- --------------------
Profit for the period 7,887 25,391
Other comprehensive income - -
Total comprehensive profit for the period 7,887 25,391
-------------------------------------------- -------------------- --------------------
Statement of Financial Position
(Unaudited) (Audited)
Note At 31 December 2021 At 30 June 2021
US$'000 US$'000
------------------------------------------------------------ ------------ -------------------- ----------------
Current Assets
Investment at fair value through profit or loss -
comprising: 1(a)
* equity interest in subsidiary 76,778 88,652
* loan to subsidiary 10,416 1,934
87,194 90,586
Other receivables and prepayments 131 332
Cash and cash equivalents 11 284 127
------------------------------------------------------------ ------------ -------------------- ----------------
Total current assets 87,609 91,045
============================================================ ============ ==================== ================
Equity
Issued share capital 521 576
Reserves 86,962 90,375
Total equity 87,483 90,951
------------------------------------------------------------ ------------ -------------------- ----------------
Current liabilities
Other creditors and accrued expenses 4 126 94
Total current liabilities 126 94
------------------------------------------------------------ ------------ -------------------- ----------------
Total equity & liabilities 87,609 91,045
============================================================ ============ ==================== ================
Statement of Changes in Equity
Share capital Reserves Total
US$'000 US$'000 US$'000
---------------------------------------------------- -------------- --------- ---------
Balance at 1 July 2020 925 113,018 113,943
Total comprehensive income for the period
Profit for the period - 25,391 25,391
Total comprehensive income for the period - 25,391 25,391
---------------------------------------------------- -------------- --------- ---------
Contributions by and distributions to owners
Dividends paid - - -
Total contributions by and distributions to owners - - -
---------------------------------------------------- -------------- --------- ---------
Balance at 31 December 2020 925 138,409 139,334
---------------------------------------------------- -------------- --------- ---------
Share capital Reserves Total
US$'000 US$'000 US$'000
---------------------------------------------------- -------------- --------- ---------
Balance at 1 July 2021 576 90,375 90,951
Total comprehensive income for the period
Profit for the period - 7,887 7,887
Total comprehensive income for the period - 7,887 7,887
---------------------------------------------------- -------------- --------- ---------
Contributions by and distributions to owners
Dividends paid - (1,275) (1,275)
Shares subject to tender offer (55) (9,772) (9,827)
Tender offer expenses (253) (253)
Total contributions by and distributions to owners (55) (11,300) (11,355)
---------------------------------------------------- -------------- --------- ---------
Balance at 31 December 2021 521 86,962 87,483
---------------------------------------------------- -------------- --------- ---------
Statement of Cash Flows
(Unaudited) (Unaudited)
Note For the period from For the period from
1 July 2021 to 1 July 2020 to
31 December 2021 31 December 2020
US$'000 US$'000
--------------------------------------------------------------- ----- -------------------- --------------------
Cash flows from operating activities
Received from investment at fair value through profit or loss 11,592 861
Operating expenses paid (81) (531)
Net cash generated from operating activities 11,511 330
--------------------------------------------------------------- ----- -------------------- --------------------
Financing activities
Dividends paid (1,275) -
Cash used in tender offer (9,827) -
Tender expenses (253) -
Net cash used in financing activities (11,355) -
--------------------------------------------------------------- ----- -------------------- --------------------
Net increase in cash and cash equivalents 156 330
Effects of exchange rate changes on cash and cash equivalents 1 3
Cash and cash equivalents at beginning of period 127 217
--------------------------------------------------------------- ----- -------------------- --------------------
Cash and cash equivalents at end of period 11 284 550
--------------------------------------------------------------- ----- -------------------- --------------------
Notes to the Interim Financial Statements
1(a) Investment at fair value through profit or loss
31 December 2021 30 June 2021
US$'000 US$'000
-------------------------------- ----------------- -------------
Equity interest in subsidiary 76,778 88,652
Loan to subsidiary 10,416 1,934
-------------------------------- ----------------- -------------
Total investment in subsidiary 87,194 90,586
-------------------------------- ----------------- -------------
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$10,416,171
(2020: US$64,570,629), 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 2021 the Subsidiary held 19 P-Notes with a value
of US$38,530,006, (June 2021 21 P-Notes US$41,621,442) held to
obtain exposure to Saudi Arabia where direct investment in equities
is not possible for foreign investors.
Purchases and sales of investments are recognised on trade date
- the date on which the Company commits to purchase or sell the
asset. Investments are initially recorded at fair value, and
transaction costs for all financial assets and financial
liabilities carried at fair value through profit and loss are
expensed as incurred.
Gains and losses (realised and unrealised) arising from changes
in the fair value of the financial assets are included in the
income statement in the year in which they arise.
Investments held by the Subsidiary
31 December 2021: Financial assets at fair value through profit
or loss; all quoted equity securities or P-Notes:
Security name Number US$'000
Emaar Properties Company (EMAAR UH) 5,612,372 7,425
Qatar Gas Transport (QGTS QD) 7,293,698 6,599
Commercial Bank of Qatar (CBQK QD) 3,412,538 6,231
Dubai Islamic Bank (DIB) 3,042,274 4,447
AIR ARABIA B23DL40 11,098,177 4,351
Qatar Navigation (QNNS QD) 1,903,520 3,972
Industries Qatar (IQCD QD) 860,502 3,646
Masraf Al Rayan USD* 2,860,493 3,644
Saudi Tadawul Group Holding Co* 106,100 3,537
Jarir Marketing Co* 64,586 3,357
Qatar National Bank USD* 575,496 3,160
Masraf Al Rayan (MARK QD) 2,453,767 3,126
Saudi Ceramic Company* 205,597 3,017
Qatar Insurance (QATI QD) 4,240,000 2,999
Saudi Airlines Catering Co* 137,390 2,846
Saudi Ground Services* 358,223 2,819
Al Moammar Information Systems Co. Shamal* 63,473 2,559
Gulf Bank of Kuwait 2,750,000 2,523
Company for Co-op Insurance* 122,440 2,478
Arabian Internet and Communication* 48,761 2,444
Saudi Telecom* 46,000 1,362
Arab National Bank - Shamal* 225,000 1,358
Barwa Real Estate (BRES QD) 1,519,801 1,277
Alinma Bank* 200,000 1,276
Gulf Bank of Kuwait USD* 1,350,000 1,238
Industries Qatar USD* 241,354 1,023
Saudi British Bank B12LSY7* 104,959 922
Union Properties Company (UPP UH) 9,423,761 818
Saudi Industrial Services Co* 100,000 818
Qatar National Bank (QNBK QD) 129,693 712
Qatar Gas Transport USD* 402,256 364
Banque Saudi Fransi - SHAMAL 05.06.19* 25,000 308
Qatar United Development Company (UDCD QD) 569,405 241
---------------------------------------------- ------------------ --------
Total 86,897
---------------------------------------------- ------------------ --------
*P-notes
2 Net Asset Value per Share
The net asset value per share as at 31 December 2021 is
US$1.8887 per share based on 46,320,172 ordinary shares in issue as
at that date (30 June 2021: US$1.7552 based on 51,817,824 ordinary
shares in issue).
3 Profit per Share
Basic and diluted profit/(loss) per share is calculated by
dividing the profit attributable to equity holders of the Company
by the weighted average number of ordinary shares in issue during
the period:
31 December 2021 31 December 2020
----------------------------------------------------------------- ----------------- -----------------
Profit attributable to equity holders of the Company (US$'000) 7,887 25,391
Weighted average number of ordinary shares in issue (thousands) 50,055 92,461
----------------------------------------------------------------- ----------------- -----------------
Basic profit per share (cents per share) 15.76 27.46
----------------------------------------------------------------- ----------------- -----------------
4 Other payables and accrued expenses
31 December 2021 30 June 2021
US$'000 US$'000
------------------------------- ----------------- -------------
Administration fee payable 40 39
Accruals and sundry creditors 86 55
------------------------------- ----------------- -------------
126 94
------------------------------- ----------------- -------------
5 Charges and Fees
31 December 2021 31 December 2020
US$'000 US$'000
Administrator and Registrar's fees (see below) 83 100
Audit fees 17 17
Custodian fees (see below) 1 1
Directors' fees and expenses 86 99
Directors' insurance cover 23 15
Broker fees 28 26
Other 71 205
------------------------------------------------ ----------------- -----------------
Other expenses 309 463
------------------------------------------------ ----------------- -----------------
Investment management fees and custodian fees borne by the
Subsidiary were US$373,438 and US$44,328 respectively (2020:
US$585,762 and US$85,903 respectively).
Investment Manager's fees
Annual fees
The Investment Manager is entitled to an annual fee of 0.80% of
the net asset value of the Company.
Management fees for the period ended 31 December 2021 amounted
to US$373,438 (31 December 2020: US$585,762) and the amount accrued
but not paid at the period-end was US$182,957 (31 December 2020:
US$322,754). 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 2021 amounted to US$44,328 (31 December 2020: US$85,903).
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$12,000, payable
quarterly in arrears. The Administrator receives an additional fee
of US$1,200 per month for providing monthly valuation data to the
Association of Investment Companies.5
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 2021
amounted to US$82,688 and US$8,594 for additional services (31
December 2020: US$99,665 and US$9,482 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 was entitled to receive an
annual fee of GBP43,750.
David Humbles as non-executive chairman of the Audit Committee
is entitled to receive an annual fee of GBP26,250.
Neil Benedict and Anderson Whamond in their capacity as
non-executive directors receive GBP24,500 each per annum.
From 1 January 2022 Anderson Whamond replaced Nick Wilson as
non-executive chairman and is entitled to receive an annual fee of
GBP35,000.
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
2021 amounted to US$85,898 (31 December 2020: US$98,914).
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.
On 7 October 2021, the Company concluded a tender offer for
5,497,652 shares at a price of US$1.7877 per share. These shares
were purchased by the Company and the funds paid to tendering
shareholders on 3 November 2021.
In the Circular published by the Company on 25 March 2021 the
Board announced the implementation of an enhanced dividend policy
targeting an annual dividend equivalent to 4 per cent. of Net Asset
Value at the end of the preceding year, to be paid in semi-annual
instalments.
The Net Asset Value per Share at 30 June 2020 was US$1.2323 per
share and pursuant to the above stated policy, the directors
declared a first interim dividend for the year ended 30 June 2021
of 2.46 cents per ordinary share.
The dividend was paid on 17 September 2021 to ordinary
shareholders on the register as at 20 August 2021 (the "Record
Date").
The shareholders also approved a dividend of 2.47 cents per
share on 31 December 2021. This will be paid to shareholders in
March 2022.
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 2021.
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 2021 .
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 2021 30 June 2021
US$'000 US$'000
--------------------------- ----------------- -------------
Bank balances 284 127
Cash and cash equivalents 284 127
--------------------------- ----------------- -------------
12 Post Balance Sheet Events
There were no post balance sheet events.
Appendix
Unaudited consolidated financial information
Consolidated Income Statement
(Unaudited) (Unaudited)
For the period For the period
from 1 July 2021 from 1 July 2020
to 31 December to 31 December
2021 2020
US$'000 US$'000
---------------------------- ------------------ --------------------
Income
Dividend income on quoted
equity
investments 430 593
Realised gain on sale
of financial assets at
fair value through profit
or loss 13,483 20,404
Net changes in fair value
on financial assets at
fair value through profit
or loss (5,249) 5,346
Commission 12 114
Interest income - -
Total net income 8,676 26,457
----------------------------- ------------------ --------------------
Expenses
Investment manager's
fees 373 586
Other expenses 416 480
Total operating expenses 789 1,066
----------------------------- ------------------ --------------------
Profit before tax 7,887 25,391
Income tax expense - -
---------------------------- ------------------ --------------------
Profit for the year 7,887 25,391
----------------------------- ------------------ --------------------
Basic profit per share
(cents) 15.76 27.46
----------------------------- ------------------ --------------------
Diluted profit per share
(cents) 15.76 27.46
----------------------------- ------------------ --------------------
Notes:
1) Consolidated information has been presented to assist the
user in interpreting the results of the Company and to be
consistent with previous years. This information consolidates the
results of the Subsidiary with the Company. It is based on IFRS
requirements that would apply if the IFRS 10 consolidation
exception for investment entities did not apply to the Company.
2) Where relevant to understanding the risks of financial
instruments held by the Company certain disclosures relating to the
subsidiary's assets and liabilities have been given in the notes to
the Financial Statements and would be relevant to understanding the
consolidated position presented in this appendix.
Consolidated Statement of Comprehensive Income
(Unaudited) (Unaudited)
For the period from For the period from
1 July 2021 to 1 July 2020 to
31 December 2021 31 December 2020
US$'000 US$'000
-------------------- --------------------
Profit for the year 7,887 25,391
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Currency translation differences - -
----------------------------------------------------------------------- -------------------- --------------------
Total items that are or may be reclassified subsequently to profit or - -
loss
----------------------------------------------------------------------- -------------------- --------------------
Other comprehensive expense for the year (net of tax) - -
----------------------------------------------------------------------- -------------------- --------------------
Total comprehensive income for the year 7,887 25,391
------------------------------------------------------------------------ -------------------- --------------------
Consolidated Statement of Financial Position
At 31 December At 30 June 2021
2021
US$'000 US$'000
------------------------------ --------------- ----------------
Assets
Financial assets at fair
value through profit or
loss 86,897 88,394
Other receivables and
prepayments 125 1,080
Cash and cash equivalents 786 1,802
------------------------------- --------------- ----------------
Total assets 87,808 91,276
=============================== =============== ================
Equity
Issued share capital 521 518
Reserves 86,962 90,433
Total equity 87,483 90,951
------------------------------- --------------- ----------------
Current liabilities
Other payables and accrued
expenses 325 325
------------------------------- --------------- ----------------
Total current liabilities 325 325
------------------------------- --------------- ----------------
Total equity and liabilities 87,808 91,276
=============================== =============== ================
Consolidated Statement of Changes in Equity
Share capital Distributable Retained Foreign Capital Total
reserves earnings currency redemption
translation reserve
reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------- -------------- -------------- -------------- ------------- -------------- --------
Balance at 1
July 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
--------------- -------------- -------------- -------------- ------------- -------------- --------
Balance at 1
July 2021 576 15,096 73,543 (221) 1,957 90,951
Total
comprehensive
income for the
period
Profit for the
period - - 7,887 - - 7,887
Other
comprehensive
income
Foreign - - - - - -
exchange
translation
differences
--------------- -------------- -------------- -------------- ------------- -------------- ----------
Total other - - - - - -
comprehensive
expense
--------------- -------------- -------------- -------------- ------------- -------------- ----------
Total
comprehensive
income for
the period - - 7,887 - - 7,887
--------------- -------------- -------------- -------------- ------------- -------------- ----------
Contributions
by and
distributions
to owners
Dividends paid - - (1,275)
Shares subject
to tender
offer (55) (9,827) 55 (9,827)
Tender offer - (253) - - - -
expenses
Total - - - - - -
contributions
by and
distributions
to owners
--------------- -------------- -------------- -------------- ------------- -------------- ----------
Balance at 31
December 2021 521 5,016 80,155 (221) 2,012 87,483
--------------- -------------- -------------- -------------- ------------- -------------- ----------
Consolidated Statement of Cash Flows
(Unaudited) (Unaudited)
For the period For the period
from from
1 July 2021 to 1 July 2020 to
31 December 2021 31 December 2020
US$'000 US$'000
------------------ ------------------
Cash flows from operating
activities
Purchase of investments (90,901) (107,313)
Proceeds from sale of
investments 101,290 163,664
Dividends received 452 719
Operating expenses paid (530) (1,179)
Interest received 12 -
Net cash generated from
operating activities 10,323 55,891
-------------------------------- ------------------ ------------------
Financing activities
Dividends paid (1,275) -
Cash used in tender offer (9,827) -
Tender expenses (253) -
Net cash used in financing (11,355) -
activities
------------------------------- ------------------ ------------------
Net (decrease)/increase
in cash and cash equivalents (1,032) 55,891
Effects of exchange rate
changes on cash and cash
equivalents 16 45
Cash and cash equivalents
at beginning of the period 1,802 6,433
-------------------------------- ------------------ ------------------
Cash and cash equivalents
at end of the period 786 62,369
-------------------------------- ------------------ ------------------
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
2021 2020
US$'000 US$'000
Management fee (note 5) 373 586
------------ ------------
Other operating expenses 416 480
------------ ------------
Total management fee and other
operating expenses for the period 789 1,066
------------ ------------
Total annualised expenses 1,578 2,132 a
------------ ------------
Average net assets in the period 92,073 128,369 b
------------ ------------
Ongoing charges (c=a/b) 1.71% 1.66% 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 2021, the share price was 1.7350c and the unaudited
NAV per share was 1.8887c, giving a discount of 5.7%. 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 2021. 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 2021 90,951,575 51,817,242 1.7552 a
----------- ----------------- ----------- ------
31 December 2021 87,483,487 46,320,172 1.8887 b
----------- ----------------- ----------- ------
PTD Change in NAV 7.60% c
(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 BUGDDCXDDGDS
(END) Dow Jones Newswires
February 25, 2022 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
