TIDMGIF
RNS Number : 8352F
Gulf Investment Fund PLC
26 February 2018
26 February 2018
Legal Entity Identifier: 2138009DIENFWKC3PW84
Gulf Investment Fund plc
Interim Results for the six months ended 31 December 2017
Nick Wilson, Chairman, said:
"The six-month period was eventful and volatile. Following the
travel restrictions and other measures announced by Saudi Arabia,
UAE, Bahrain and Egypt on 5 June, the Qatar Exchange Index fell
sharply by 23% by the end of November. The subsequent recovery in
the Qatar Exchange was spirited, bolstered by optimism on GDP
growth and a continuing recovery in the oil price."
Highlights
-- Net Asset Value per Share fell by 1.30% compared to a fall in
the Qatar Exchange Index of 5.61%
-- Following a slight narrowing of the discount the shares rose 0.75%
-- Dividend of 3.0 cents per share for the year ended 30 June 2017 was paid on 9 February 2018
-- Change of investment policy from Qatar-focused to broader
Gulf focus took effect in December
-- Change of name from Qatar Investment Fund plc to Gulf Investment Fund plc
Nick Wilson added:
"The new investment policy means we have a wider investment
universe and more flexibility to identify attractive opportunities
in the Gulf Cooperation Council (GCC) region. The fund is still
predominantly invested in Qatar over the short term given that
Qatar is trading at an attractive valuation compared to other GCC
markets. We are monitoring developments in other GCC countries and
will be increasing exposure to other GCC countries as we identify
attractive investment opportunities.
"These markets are an attractive long-term investment
opportunity. Governments in the region are expanding their non-oil
sectors with infrastructure development and investment in the
social sectors. This non-oil growth is expected to have increased
to 2.6 per cent in 2017 as government budgets improve. Populations
continue to grow, fuelling personal consumption which should
benefit domestic consumer and services sector companies"
For further information:
Nicholas Wilson +44 (0) 1624 692 600
Qatar Investment Fund plc
Andrew Potts +44 (0) 20 7886 2500
Panmure Gordon
William Clutterbuck +44 (0) 20 7379 5151
Chairman's Statement
On behalf of the Board, I am pleased to present the interim
results for Gulf Investment Fund Plc for the six-months ending 31
December 2017.
Results
During the six months ending 31 December 2017, Net Asset Value
per Share ("NAV") fell by 1.30% compared to a fall in the Qatar
Exchange Index of 5.61% and a rise of 14.60% in the MSCI Emerging
Markets Index. The S&P GCC Composite Index fell by 1.05%.
Following a slight narrowing of the discount at which the shares
trade to NAV, the shares rose 0.75%, from US$0.8988 at 30 June 2017
to US$0.9055 at 31 December 2017. At the Annual General Meeting on
16 November 2017, QIF shareholders approved a final dividend of 3.0
cents per ordinary share in respect of the year ended 30 June 2017.
The dividend was paid on 9 February 2018 to ordinary shareholders
on the register as at 5 January 2018.
The six-month period was eventful and volatile. Following the
measures announced by Saudi Arabia, UAE, Bahrain and Egypt on 5
June, the Qatar Exchange Index fell sharply from 9940 to a low of
7664 at the end of November, a decline of 23%. The subsequent
recovery was spirited, bolstered by optimism on GDP growth and a
continuing recovery in the oil price. At the end of the period, the
Company had a total of 20 holdings: 13 in Qatar, 5 in UAE and 2 in
Oman.
Change in investment policy
On 16 October, the Board announced its intention to change the
investment policy of the Company from a largely Qatar-focused
investment strategy to a broader Gulf Cooperation Council ("GCC")
investment strategy.
Previously, the investment policy enabled the Company to invest
up to 15% of the Company in GCC countries (namely Saudi Arabia,
Kuwait, UAE, Oman and Bahrain) other than Qatar.
The change in investment policy removed the 15% limit and
enables the Company to increase its investment allocation to other
GCC countries and provide the Investment Adviser with a wider
investment universe and more flexibility to identify attractive
opportunities in the GCC region.
Alongside the amended investment policy the Board put forward a
number of proposals including:
(i) making a tender offer for up to 10% of the issued Share Capital of the Company
(ii) cancelling the discontinuation vote that was scheduled for
the 2018 annual general meeting and replacing it with a
continuation vote for the 2021 annual general meeting and every
three years thereafter;
(iii) making a tender offer to shareholders for up to 100% of
the Company's share capital in 2020 subject to Shareholder approval
to be sought in 2020; and
(iv) proposing to change the name of the Company to Gulf Investment Fund plc.
All of these changes were subject to the approval of the
Company's shareholders at an Extraordinary General Meeting (EGM),
other than the tender offer in 2020 which will be subject to
shareholder approval in 2020. The Extraordinary General Meeting was
held on 7 December 2017, at which a poll was called for on 8
December 2017 and all resolutions were passed.
Tender offer
Following the passing of the resolutions at the EGM on 7
December 2017 to give effect to the Tender Offer, 10,273,471 Shares
were tendered under the Tender Offer at the tender offer price of
USD0.9933 per share. These shares were cancelled leaving the
Company with 92,461,242 Shares in issue (excluding treasury
shares).
Related Party Transactions
Details of any related party transactions are contained in the
annual report as well as being addressed in note 8 of this interim
report
Post balance sheet events
Details of these can be found in note 14 following the
accompanying financial statements.
Outlook, risks and uncertainties
Fluctuations in oil and gas prices will continue to impact GCC
economies as countries deal with budget deficits. The geopolitics
of the region and, in particular, the dispute between Qatar and
other members of the GCC brings continuing economic
uncertainty.
The Board believes that the principal risks and uncertainties
faced by the Company continue to fall in the following categories;
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 continues to view the future of the Company with
confidence expecting healthy if slower growth in the region as a
whole, as growth in the non-hydrocarbon sector in a number of GCC
members helps to balance their economies.
Nicholas Wilson
Chairman
23 February 2018
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 2017 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
23 February 2018
Regional Market Overview
Report of the Investment Manager and the Investment Adviser
Global stock markets ended 2017 on record highs, gaining US$9.0
trillion in value over the year, led by gains in both emerging as
well as advanced markets. The MSCI World index recorded a gain of
20.0 per cent during the year aided by strong emerging market
performance (up 34.9 per cent). However, the S&P GCC Composite
index closed the year down 0.5 per cent on concerns over recent
regional geopolitical tensions and the political purge in Saudi
Arabia.
31-Dec-2016 29-Jun-2017 1H2017 31-Dec-2017 2H2017 FY2017
--------------------- ------------ ------------ ------- ------------ ------- -------
Qatar (QE) 10436.8 9030.4 -13.5% 8523.4 -5.6% -18.3%
--------------------- ------------ ------------ ------- ------------ ------- -------
Saudi Arabia (TASI) 7210.4 7425.7 3.0% 7226.3 -2.7% 0.2%
--------------------- ------------ ------------ ------- ------------ ------- -------
Dubai (DFMGI) 3530.9 3392.0 -3.9% 3370.1 -0.6% -4.6%
--------------------- ------------ ------------ ------- ------------ ------- -------
Abu Dhabi (ADI) 4546.4 4425.4 -2.7% 4398.4 -0.6% -3.3%
--------------------- ------------ ------------ ------- ------------ ------- -------
Kuwait (KWSE) 5748.1 6762.8 17.7% 6408.0 -5.2% 11.5%
--------------------- ------------ ------------ ------- ------------ ------- -------
Oman (MSI) 5782.7 5118.3 -11.5% 5099.3 -0.4% -11.8%
--------------------- ------------ ------------ ------- ------------ ------- -------
Bahrain (BAX) 1220.5 1310.0 7.3% 1331.7 1.7% 9.1%
--------------------- ------------ ------------ ------- ------------ ------- -------
S&P GCC Composite 99.4 100.1 0.6% 98.9 -1.1% -0.5%
--------------------- ------------ ------------ ------- ------------ ------- -------
MSCI World 1753.0 1921.5 9.6% 2103.5 9.5% 20.0%
--------------------- ------------ ------------ ------- ------------ ------- -------
MSCI EM 858.4 1008.8 17.5% 1158.5 14.8% 34.9%
--------------------- ------------ ------------ ------- ------------ ------- -------
Brent 56.1 47.4 -15.5% 66.9 41.0% 19.1%
--------------------- ------------ ------------ ------- ------------ ------- -------
Source: Bloomberg, S&P Website
Geopolitical tensions between Qatar and its neighbours and lower
oil prices (down 15.5 per cent) were the key concerns for the
region during 1H2017. The Qatari market dropped 13.5 per cent since
the commencement of the blockade. The S&P GCC Composite index
rose marginally during the period. However, Saudi Arabia rose 3.0
per cent in 1H2017, following the news of its inclusion in MSCI
Emerging Markets watchlist and the promotion to Crown Prince of
former Deputy Crown Prince, Mohammed bin Salman. Kuwait and Bahrain
stock markets joined Saudi Arabia and ended the period in
green.
During 2H 2017, GCC markets witnessed high volatility, with the
S&P GCC Composite index declining by 1.1 per cent as investor
sentiment remained subdued. This was primarily due to increased
tensions between Saudi Arabia and Iran and the recent political
purge in Saudi Arabia. All GCC markets ended in the red, except for
Bahrain (up 1.7 per cent) during the 2H 2017. The Saudi, Dubai and
Abu Dhabi market dropped 2.7 per cent, 0.6 per cent and 0.6 per
cent, respectively. Qatari market gained 10.5 per cent during the
month of December, helping it to limit losses to 5.6 per cent for
the period. Kuwait was down 5.2 per cent. Crude prices closed 17
per cent higher in the quarter following the extension to the OPEC
agreement to December 2018.
Change of investment policy
The new investment policy removed the 15 per cent NAV ceiling on
the Fund investing in GCC countries outside Qatar. The Investment
Adviser now has a wider investment universe in which to identify
attractive opportunities in the GCC region.
The reference index for the Fund is now the S&P GCC
Composite Index (previously: QE Index), whilst not being a formal
benchmark for the Fund.
The Investment Adviser's task is to identify emerging investment
opportunities and positive fundamental factors that have not yet
been priced in by the market. The Investment Adviser follows a
top-down approach monitoring macro trends and identifying promising
sectors and companies in GCC countries.
The new investment policy commenced on 7 December 2017. As at
31st December GIF's allocation to Qatar was 85 per cent. We expect
to retain a significant overweight position in Qatar over the short
term while Qatar is trading at an attractive valuation compared to
other GCC markets. We are monitoring developments in other GCC
countries and will be increasing exposure to other GCC countries as
we identify attractive investment opportunities.
For the period since the adoption of the new investment policy
until 31 December 2017, GIF has outperformed the S&P GCC
Composite Index by 5.3 per cent as Qatar outperformed the rest of
the GCC.
Looking Ahead - GCC
The Investment Adviser believes that GCC markets are an
attractive long-term investment opportunity. Governments in the GCC
are expanding their non-oil sectors with infrastructure development
and investment in the social sectors.
The Investment Adviser has identified the following key themes
for investment in GCC.
-- Banks: The GCC banking sector tends to enjoy strong asset
quality and capitalisation, along with government support and
growth from infrastructure investments.
-- Real Estate & Housing Finance: Rising population and an
undersupplied residential market in most of the GCC countries is
expected to create robust demand for residential construction and
housing finance.
-- Healthcare & Education: Shortage of medical services and
education will continue to create a need for government spending on
social development and these sectors have seen high allocations in
recent government budgets.
-- Tourism: Governments in the GCC are promoting their countries
as tourist destinations. Tourism should drive demand for
hospitality, travel and infrastructure sectors and create
employment.
-- Retail: Rising population, high spending power and increasing
tourism should create opportunities for retail businesses.
-- Industrials: The petrochemical sector contributed c.30 per
cent to GDP in 2014 making it a key non-oil GCC export sector. The
world petrochemical market is poised to grow at 8.8 per cent
annually until 2022.
-- Localisation and Privatisation: GCC countries are encouraging
the transfer of knowledge and technology, and creating
opportunities in manufacturing, maintenance, repair, research and
development. Localization of business activity will be achieved
through direct investments and strategic partnerships with leading
sector companies. Privatization can improve productivity and the
quality of services in education, healthcare, transportation and
utilities.
Several GCC markets have been upgraded to emerging market from
frontier market status in recent months. Across the region
governments are seeking to encourage foreign investment. The
privatisation of public assets, easing of foreign ownership
restrictions and more transparency should accelerate the upgrade of
further GCC markets over the next years.
GCC nations are diversifying away from oil and gas. The US$100
billion Aramco IPO forms the centrepiece of the Saudi non-oil
diversification reforms alongside the US$500 billion plan to
develop the NEOM business and industrial zone linking with Jordan
and Egypt. The UAE plans to invest US$163 billion on renewable
energy projects. Qatar is expected to spend over US$200 billion
(from 2015 to 2021) on projects ahead of the FIFA World Cup 2022.
As part of the Kuwait Development Plan (KDP), the nation plans to
spend around US$160 billion over 500 projects, including
infrastructure, utilities and housing investments. Oman plans to
invest about US$35 billion on tourism related projects, which is
expected to double visitor numbers by 2040.
GCC countries, historically used to large fiscal surpluses, have
tightened their belts in recent years following oil price falls. As
a result, non-oil growth has started to be impacted. Recent higher
oil prices have provided more budget flexibility and as a result
non-oil growth is expected to have increased to 2.6 per cent in
2017, from 1.8 per cent in 2016.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com for a chart depicting Overall
Budgeted Expenditure Levels.
Most gulf economies continue to focus on education and
healthcare. Saudi Arabia has allocated 40 per cent of its budget to
these sectors, a trend seen across the GCC.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com for a chart depicting GCC Spending on
Key Sectors.
Note: Key Sectors includes Education, Health, Infrastructure and
other social developments
The International Monetary Fund (IMF) expects the GCC to have a
current account surplus in 2017 as oil prices recover. Saudi
Arabia's shortfall reached 9 per cent of GDP in 2015, but is
expected to record a surplus of 0.6 per cent in 2017.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com for a chart depicting GCC Fiscal and
Current Account Balance as a per cent of GDP.
Other Recent Developments
India looks to boost Qatar LNG import volume
India's LNG imports are expected to rise by 10 per cent, to over
30 million metric ton per annum (MTPA) by 2020, versus 19 million
MTPA in 2016.
India is Qatar's third largest export destination. Currently,
the Qatar-India trade is around US$10 - US$10.5 billion, of which
US$9 - US$9.5 billion is the value of Qatar's exports to India,
mostly LNG and petrochemicals.
Qatar signs 15-year LNG deal with Bangladesh
Qatar's RasGas sealed a 15-year LNG Sales and Purchase Agreement
(SPA) with Bangladesh Oil, Gas and Mineral Corporation
(Petrobangla). RasGas will supply 2.5 million MTPA of LNG to
Petrobangla for 15 years.
Qatargas to deliver 1.5 million MTPA of LNG to Turkey's
Botas
Qatargas signed a medium-term SPA with Turkey's Botas to deliver
1.5 MTPA of LNG for three years starting in October 2017.
Qatargas and Shell sign new LNG deal
Qatargas also signed a SPA with Shell to deliver up to 1.1 MTPA
of LNG for five years. This deal provides Qatargas with access to
Shell's gas sales portfolio in the United Kingdom and continental
Europe, as well as the flexibility to manage LNG deliveries to its
global client portfolio.
Hamad Port eyes 35 per cent of region's trade in 2 years, says
transport minister
The US$7.4 billion Hamad Port, covering 30,000 square
kilometres, has already won 27 per cent of the regional trade in
the Middle East since opening in December 2015. Part of the port's
strategy is to gain 35 per cent of the total regional trade in 2018
thanks to its strategic location and superior facilities.
Qatar's Transport minister has praised the private sector's role
in the construction and operation of the Hamad Port, which was
responsible for 60 per cent of the work. The private sector will
have a major portion of the construction work of the second phase,
with projects worth QAR 5 billion to be completed and delivered
between 2020 and 2021.
Saudi retail market to top US$142bn in 2021
Saudi Vision 2030 will drive the Kingdom's retail market to a
record-high of US$142 billion by 2021, according to Alpen Capital.
As a result, research firm AT Kearney says the Kingdom has the
third-highest retail potential among emerging markets in Europe,
the Middle East, and Africa.
Saudi Arabia pays SAR 525 billion of private sector bills
Saudi Arabia has paid the majority of SAR 525 billion worth of
invoices from the private sector received within 60 days of
receipt, as the kingdom seeks to settle its dues that have caused
mayhem for contractors.
GCC construction projects value hits US$2.4 trillion
BNC Construction Intelligence estimated the total value of
21,893 active construction projects in the GCC at US$2.4 trillion
at the beginning of September 2017 as Gulf countries are determined
to carry out important infrastructure projects.
The urban construction contracts constitute 80 per cent of the
contracts awarded for all sectors in GCC and in dollar terms this
translates to 49 per cent of the total contracts awarded. The total
value of urban construction projects reached US$1.18 trillion
Dubai's industrial sector to grow by additional Dh18 billion by
2030
According to the Government of Dubai, under the Dubai Industrial
Strategy, the industrial sector is expected to grow by an
additional Dh18 billion by 2030, creating 27,000 jobs, with exports
forecast to increase by Dh16 billion.
Saudi Arabia to spend US$6.9bn on tourism initiatives
Saudi Arabia's National Transformation Program (NTP) 2020 has
approved 13 initiatives submitted by the Saudi Commission for
Tourism & National Heritage (SCTH) with a budget of over SAR 26
billion (US$6.93 billion). This amount will be allocated to tourism
and national heritage projects and initiatives implemented through
SCTH and its partners in the public and private sectors.
Moody's downgrades Bahrain, Oman ratings
Moody's Investors Service has downgraded Bahrain's long-term
issuer rating to B1 from Ba2 and maintained the negative outlook
while Oman's long-term issuer and senior unsecured bond ratings has
been downgraded to Baa2 from Baa1 and the outlook changed to
negative from stable.
According to Moody's view the credit profile of the Bahrain will
continue to weaken significantly in the coming years, predominantly
because despite some fiscal reform efforts there is a lack of a
clear and comprehensive consolidation strategy. However, the key
driver for Oman's rating downgrade was the country's limited than
expected progress towards addressing structural vulnerabilities to
a weak oil price environment, reflecting institutional capacity
constraints to address the large fiscal and external
imbalances.
UAE transport projects' valued at US$87 billion in 1H 2017
The total value of 481 active transport projects exceeded AED
321.49 billion (US$87.6 billion) in the first half of 2017,
according to BNC Network. Of these, 364 projects with a combined
value of $36.5 billion are road projects while 39 projects with a
value of $33.9 billion are rail projects.
Moody's puts Qatar's banks on negative watch amid regional
dispute
Moody's Investors Service changes its outlook from stable to
negative following Qatar's dispute with its Gulf neighbours stating
if the current rift between Qatar and its neighbouring Gulf
countries is prolonged, it could trigger outflows of foreign
deposits and other external funding leading to a liquidity crunch
in the banking sector.
The lifting of restriction on women driving in Saudi will have a
huge impact on the economy
Female participation in the Saudi workforce stood at just 19 per
cent in 2016, compared with 65 per cent for men, according to EFG
Hermes. The increase in women in the workforce will increase the
disposable incomes thereby increasing the purchasing power in the
economy. Saudi Arabia's National Transformation Programme, aims to
raise the percentage of the country's women in work to 28 per cent
by 2020.
Qatar to comfortably raise US$ 9 billion from bonds, says QFC
chief
Yousef Al Jaida, chief executive of the Qatar Financial Centre
(QFC) has stated that the Qatari government will comfortably be
able to raise US$9 billion through international bond issuance in
2018.
OPEC and Non-OPEC members agreed to extend oil production cut to
end of 2018
OPEC and non-OPEC members, including Russia, have agreed to
extend oil production cuts until the end of 2018 amid measures to
clear global glut of crude oil. The new agreement will be from
January 2018 to December 2018 and a review will be conducted in
June 2018 to assess the impact.
The deal could support the oil market and help oil prices to
maintain their recent strength, resulting in a better outlook for
revenue of GCC countries'.
Global gas consumption set to jump 53 per cent by 2040
Global gas consumption will increase by 53 per cent between 2017
and 2040, according to the Doha-based Gas Exporting Countries
Forum. Growth is expected to be led by non-OECD Asia, followed by
the Middle East and Africa. The share of natural gas in the global
energy mix will increase from 22 per cent in 2016 to 26 per cent in
2040.
In GCC, the combined value of the 361-active oil and gas
projects has crossed US$331.4 billion in November 2017, according
to the BNC Network, the largest and most comprehensive project
research and intelligence provider in the Middle East and North
Africa (MENA) region.
Most GCC central banks raise policy rates after Fed rate
hike
The central banks of four GCC countries, Saudi Arabia, UAE,
Bahrain, and Qatar, increased interest rates after the US Fed
raised interest rates by 0.25 per cent.
Moody's expects performance of the GCC banking sector to be
resilient in 2018
Rating agency Moody's expects the banking sector in the GCC to
deliver a stable performance in 2018, reflecting strong financial
fundamentals, particularly in the UAE and Saudi Arabia. Slow
economic growth, fiscal and geopolitical risks are expected to pose
challenges to profitability and loan quality of the region's banks,
but Moody's expects strong capitalization levels with high
loan-loss reserves to provide banks with strong loss-absorption
capacity.
Moody's forecasts that real GDP growth in the region will pick
up to around 2 per cent in 2018 from 0 per cent in 2017. Although
fiscal consolidation efforts in the region will persist, key
regional infrastructure projects such as the UAE Expo 2020, World
Cup Qatar 2022 and the Saudi National Transformation Programme
(NTP) are expected to support capital spending and credit growth,
which should expand by 5 per cent in 2018.
GCC consumer prices rise by 1.3 per cent
GCC countries have posted a 1.3 per cent rise in prices for the
12-month period ending October 2017, according to GCC-Stat, the
Statistical Centre for Gulf Cooperation Council (GCC) states. The
highest rise in prices were recorded for tobacco at 80.5 per cent,
miscellaneous 3.7 per cent, education 3 per cent and transport 2
per cent. On the other hand, prices for recreation fell by 3.7 per
cent, clothing and footwear fell by 1.4 per cent, and restaurant by
0.4 per cent.
Over the 12 months ending in October 2017, the country-wise
contributions to the overall GCC consumer price change were UAE (1
percentage point), Kuwait (0.2 percentage points), Bahrain, Oman
and Qatar (0.1 percentage point each), while Saudi Arabia recorded
a negative contribution of 0.1 percentage point.
GCC's insurance sector poised for strong growth in next five
years
Insurance industry across the GCC is poised for strong growth
during the next five years, mainly supported by the economic
diversification program undertaken by governments, supportive
population dynamics and changing regulations that have introduced
mandatory health insurance cover in many countries, according to a
recent forecast by Alpen Capital. The forecast projects GCC
insurance market to grow at a compounded annual growth rate (CAGR)
of 10.9 per cent from US$26.2 billion in 2016 to US$44 billion in
2021.
GCC construction market expands 30 per cent in 2017
The GCC construction market showed relative resilience in its
performance, recording a 30 per cent pick-up by the end of October
2017, according to the MENA Research Partners. With the value of
total active projects in the GCC at around US$2.6 trillion,
equivalent to 160 per cent of GDP, the regional construction market
presents sufficient depth and opportunities for investors and
regional market participants over the years to come. The UAE and
Saudi Arabia together account for 70 per cent of the value of
active projects. The value of completed projects during 2017 was
US$130 billion, versus US$100 billion for the full-year in
2016.
GCC food services sector to grow to US$29 billion by 2020
The GCC food service market is set to grow at a compound annual
growth rate (CAGR) of 8 per cent and is tipped to hit the US$29.3
billion mark by 2020, up from US$21.5 billion registered in 2016
and US$20.1 billion in 2015, according to Al Masah Capital Limited.
Key drivers include growing population, improving tourism sector,
rising disposable income, and changing dietary habits.
US$200 billion projects underway in Gulf hospitality sector
Over 2,000 hospitality and leisure projects are currently
underway in the GCC with a combined estimated value of US$200
billion. An estimated US$64 billion worth of related projects are
in the construction pipeline stage, highlighting the focus on
strengthening the regional tourism ecosystem.
Saudi Arabia reopens October domestic sukuk issue with US$1.78
billion
Saudi Arabia has issued SAR 6.68 billion (US$1.78 billion) of
Islamic bonds by reopening a domestic sukuk issue that it
originally made in October 2017. The first tranche, amounting to
SAR 1.05 billion, matures in 2022. The second tranche, due in 2024,
is SAR 3.53 billion, while the third tranche, due in 2027, is SAR
2.1 billion.
Abu Dhabi said to start selling treasury bills in 2018
Abu Dhabi plans to start selling treasury bills for the first
time in 2018 as it seeks to develop its local-currency debt market.
The government is working with international and local banks on how
the notes will be structured. Regular sales could follow once the
regulatory structures are in place.
Oman to delay VAT implementation until 2019, says local
media
Oman's Ministry of Finance has reportedly postponed the
implementation of value-added tax (VAT) until 2019, according to
Omani media reports. Citing ministry sources, the Times of Oman
reported that certain products, such as tobacco and energy and soft
drinks, will be taxed from mid-2018. Saudi Arabia and the UAE have
implemented VAT from 1 January 2018 at the rate of 5 per cent for
majority of goods and services.
Kuwait upgraded to FTSE Emerging Market Index
Kuwait's inclusion in the emerging-markets list by FTSE Russell
is anticipated to lead to inflows of c.US$700 million from
investors. The final weighting of the country and the stocks to be
included will be determined primarily by the liquidity for the
period preceding the actual inclusion. The weights will also depend
on whether the implementation will be in one or two phases.
According to Arqaam Capital Research and EFG Hermes, the weight of
Kuwait in the FTSE EM + China A All Cap Index will be around 0.5
per cent.
The move is anticipated to increase the attractiveness of
investors not only towards Kuwait but the entire GCC region.
Qatar: Corporate profits down 6.0 per cent in 9M 2017
The combined profit of Qatari listed companies was down 6.0 per
cent in 9M 2017 compared to 9M 2016. On a quarterly basis, the
combined profit of Qatari listed companies saw a decline of 1.1 per
cent in Q3 2017 compared to the same period last year.
Sector Profitability (net profit/loss in QAR 000's)
Sector 9M 2016 9M 2017 % change Q3 2016 Q3 2017 % change
-------------------------------- ----------- ----------- --------- -------------- -------------- ---------
Banks & Financial Institutions 15,956,630 16,435,121 3.0% 5,263,469 5,634,019 7.0%
-------------------------------- ----------- ----------- --------- -------------- -------------- ---------
Services &Consumer Goods 1,575,139 1,317,356 -16.4% 473,262 454,914 -3.9%
-------------------------------- ----------- ----------- --------- -------------- -------------- ---------
Industry 5,991,646 5,480,100 -8.5% 1,770,002 1,880,189 6.2%
-------------------------------- ----------- ----------- --------- -------------- -------------- ---------
Insurance 999,405 440,884 -55.9% 240,057 (190,183) -179.2%
-------------------------------- ----------- ----------- --------- -------------- -------------- ---------
Real Estate 3,316,325 3,086,550 -6.9% 796,133 722,638 -9.2%
-------------------------------- ----------- ----------- --------- -------------- -------------- ---------
Telecoms* 1,831,769 1,558,684 -14.9% 369,911 461,904 24.9%
-------------------------------- ----------- ----------- --------- -------------- -------------- ---------
Transportation 1,656,605 1,126,373 -32.0% 502,291 345,522 -31.2%
-------------------------------- ----------- ----------- --------- -------------- -------------- ---------
Total 31,327,519 29,445,068 -6.0% 9,415,125 9,309,003 -1.1%
-------------------------------- ----------- ----------- --------- -------------- -------------- ---------
Source: Qatar Exchange; *Excluding Vodafone Qatar because of
31(st) March year end
Profits in the Banking and Financial Services sector rose 3.0
per cent in 9M 2017. Growth was driven by a 3.1 per cent rise in
net income of Qatari listed banks. During the first nine months of
2017 credit growth remained healthy, up 6.0 per cent, driven by
public sector growth (+12.5 per cent). Profit of conventional banks
rose 3.6 per cent during 9M 2017, compared to a 1.6 per cent rise
in the profits of Islamic banks. Qatar National Bank (QNB) reported
a profit growth of 6.2 per cent in 9M 2017. Qatar Islamic Bank, Al
Khalij Commercial Bank, Qatar International Islamic Bank, Ahli Bank
and Doha Bank also reported profit growth of 10.6 per cent, 6.7 per
cent, 5.1 per cent, 2.9 per cent and 2.9 per cent, respectively.
Commercial Bank of Qatar reported a fall in profit, down 48.1 per
cent, mainly due to a substantial rise in loan loss provisions,
while Masraf Al Rayyan Bank's profit remained almost flat.
Profits in the Services & Consumer Goods sector dropped 16.4
per cent during 9M 2017, primarily due to a decline in profits of
Qatar Fuel (-17.0 per cent), following new terms for fuel supplies
and an increase in pension contributions. In the same period,
Mannai Corporation, Salam International, and Qatar Cinema also
reported lower profits. However, Widam, Medicare, and Zad Holding
Co. reported a rise in profits in 9M 2017.
Profits in the Industrials sector dropped 8.5 per cent in 9M
2017, as most companies in the sector, excluding Qatar Electricity
& Water Co. and Mesaieed Holding, reported reduced profits.
Sector heavyweight Industries Qatar's profit fell 13.5 per cent on
reduced sales volumes, depressed fertiliser prices, and tightened
operating margins.
In 9M 2017, the profit of the Insurance sector fell 55.9 per
cent compared to 9M 2016, as Qatar Insurance Company and Qatar
General & Reinsurance Company reported profit drops of 57.2 per
cent and 81.4 per cent, respectively. Alkhalij Takaful also
reported 10.6 per cent fall in net profit during the same
period.
Real Estate sector profits in 9M 2017 declined 6.9 per cent,
driven by a significant drop in profits of Barwa, United Dev.
Company and Mazaya Qatar, but the drop was limited by a rise in
profits of Ezdan (up 9.1 per cent).
The Qatari Telecom sector comprises of Vodafone Qatar and
Ooredoo. Ooredoo reported a 14.9 per cent fall in profits in 9M
2017, mainly due to higher tax expense, increase in royalties,
lower foreign currency gains and challenging market conditions in
Qatar. Vodafone Qatar is excluded from this profit comparison,
since its fiscal year ends on 31 March.
In the Transportation sector, profits declined 32.0 per cent, as
Qatar Navigation Company and Qatar Gas Transport Company reported
profit declines of 52.2 per cent and 18.9 per cent, respectively in
9M 2017. However, Gulf Warehousing Company reported a 4.8 per cent
growth in profits for the same period.
Portfolio Structure
Country Allocation
As at 31 December 2017, GIF had 20 holdings: 13 in Qatar, 5 in
the UAE and 2 in Oman (Q3 2017: 28 holdings: 16 in Qatar, 9 in the
UAE and 3 in Oman). The Investment Adviser reduced exposure to UAE
to 8.0 per cent of NAV from 10.4 per cent. The cash weighting was
5.1 per cent (Q3 2017: 2.4 per cent).
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com for a chart depicting Country
Allocation (% of NAV).
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com for a chart depicting Sector
Allocation (% of NAV).
The Qatari banking sector (including financial services) is the
Fund's largest sector holding at 40.9 per cent of NAV. Qatari
industrials is second at 27.2 per cent of NAV (Q3 2017: 25.5 per
cent).
Qatar National Bank (QNB) remains GIF's largest holding at 17.4
per cent of NAV. Other holdings include Abu Dhabi Commercial Bank
(2.2 per cent of NAV), Dubai Islamic Bank (2.7 per cent of NAV) and
Emaar Properties based in UAE (2.0 per cent of NAV).
Top 10 Holdings
Company Name Sector % share of NAV
------------------------------ ---------------------------- ---------------
Qatar National Bank Banks & Financial Services 17.4%
------------------------------ ---------------------------- ---------------
Industries Qatar Industrials 9.8%
------------------------------ ---------------------------- ---------------
Masraf Al Rayan Banks & Financial Services 9.6%
------------------------------ ---------------------------- ---------------
Qatar Electricity & Water Co Industrials 9.4%
------------------------------ ---------------------------- ---------------
Ooredoo Telecoms 9.1%
------------------------------ ---------------------------- ---------------
Qatar Gas Transport Transportation 6.7%
------------------------------ ---------------------------- ---------------
Barwa Real Estate Real Estate 6.2%
------------------------------ ---------------------------- ---------------
Commercial Bank of Qatar Banks & Financial Services 6.0%
------------------------------ ---------------------------- ---------------
Gulf International Services Industrials 4.3%
------------------------------ ---------------------------- ---------------
Qatar National Cement Co Industrials 3.6%
------------------------------ ---------------------------- ---------------
Source: QIC
GIF's top 10 holdings were unchanged from 3Q 2017. The holdings
in Qatar Gas Transport and Ooredoo were increased while holdings in
Qatar National Bank and Masraf Al Rayan were reduced.
Profile of Top Five Holdings:
Qatar National Bank (17.4% of NAV)
Qatar National Bank (QNB) is a high-quality proxy stock for
Qatari economic growth given its strong ties with the public sector
and access to state liquidity. QNB is a dominant state-owned
participant in the Banking sector and plays an important role in
the development of the Qatari economy and in funding key
infrastructure projects. The largest shareholder in QNB is the
Government of Qatar through the Qatar Investment Authority (QIA),
with a 50% equity stake. The government is strongly committed to
support QNB, thus enhancing its economic importance. QNB is the
largest bank in Qatar with total assets of QAR 811.1 billion
(US$222.8 billion) as at 31(st) December 2017. For FY2017, QNB
reported a 6.2% YoY growth in net profit to QAR 13.1 billion
(US$3.6 billion). QNB is well positioned to reap the benefits of
the rapid expansion of the domestic economy and has been growing
its presence in overseas markets as well. The bank, through its
subsidiaries and associate companies, operates in more than 31
countries, through more than 1,230 branches, supported by more than
4,300 ATMs and employs more than 28,200 staff.
Industries Qatar (9.8% of NAV)
Industries Qatar (IQCD) is a holding company with interests in
petrochemicals via 80% owned Qatar Petrochemical Co., fertilizers
via 75% owned Qatar Fertilizer Co., steel via its wholly owned
subsidiary Qatar Steel Co. and fuel additives via 50% owned Qatar
Fuel Additives Co. For 9M2017, the company's net profit declined
13.5% YoY to QAR 2.4 billion (US$0.7 billion) on reduced sales
volumes, depressed fertiliser prices, and tightened operating
margins. IQCD expects operational performance to improve with the
on-going cost optimization programs.
Masraf Al Rayan (9.6% of NAV)
Masraf Al Rayan (MARK) has three main business divisions, namely
retail banking, wholesale banking and private banking. Besides
this, the bank offers investment banking and treasury products.
MARK had a network of 13 branches in strategic locations across
Qatar, and a total of 80 ATMs. As at end December 2017, its
financing assets stood at QAR 72.1 billion (US$19.8 billion). In
FY2017, MARK reported a net profit of QAR 2.0 billion (US$0.6
billion).
Qatar Electricity & Water Co. (9.4% of NAV)
Qatar Electricity & Water Co. (QEWS) was established in 1990
as the first private sector company engaged in electricity
production and water desalination businesses. The company is the
second largest utility company in the North Africa and Middle East
region. In Qatar, the company enjoys a c.62% market share in the
electricity business, while in the water desalination business it
commands a 79% market share. Over the past decade, the company has
been the key beneficiary of rapid development in Qatar, coupled
with the growth in population, resulting in increased demand for
electricity and water. Additionally, the company is setting up
presence overseas, with the establishment of Nebras Power Company
(60% owned by QEWS), which invests globally in new and existing
power generation and water desalination projects. QEWS has long
term purchase agreements with government-owned Kahramaa; hence, the
company has a low-risk business model, with secure and visible
earnings and cash flows. For 9M2017, the company reported net
profit of QAR 1.2 billion (US$0.3 billion).
Ooredoo (9.1% of NAV)
Ooredoo (ORDS) is a leading international communications company
delivering mobile, fixed, broadband internet and corporate managed
services tailored to the needs of consumers and businesses across
markets in the Middle East, North Africa and Southeast Asia.
Serving consumers and businesses in 10 countries, Ooredoo delivers
leading data experience through a broad range of content and
services via its advanced, data-centric mobile and fixed networks.
Ooredoo has a presence in several markets such as Qatar, Kuwait,
Oman, Algeria, Tunisia, Iraq, Palestine, the Maldives, Myanmar and
Indonesia. The company reported revenues of QAR 24.5 billion
(US$6.7 billion) and net profit of QAR 1.6 billion (US$0.4 billion)
in 9M2017 and had a consolidated global customer base of 150
million customers as at 30 September 2017.
Economic Outlook
GDP growth in the GCC is estimated at 0.5 per cent in 2017.
Non-oil growth is expected to increase to 2.6 per cent in 2017 as
government budgets improve. Populations continue to grow, fuelling
personal consumption which should benefit domestic consumer and
services sector companies.
The IMF expects GDP growth to increase to 2.2 per cent 2018 with
non-oil growth easing to 2.4 per cent. Over the medium-term,
non-oil growth is projected at 3.4 per cent. The introduction of
VAT in the UAE and Saudi Arabia should generate additional
government revenues of 1.5-1.6 per cent of their respective
GDPs.
Some risks remain. The recent meeting between GCC officials has
made some progress towards a resolution of the seven-month
Saudi-led blockade of Qatar. The Investment Adviser believes that
the dispute will be resolved eventually but the timing is
uncertain. Increased tensions between Saudi Arabia and Iran and the
anti-corruption crackdown in Saudi Arabia could lead to short term
volatility in capital markets.
Valuations
Market Market Cap. PE (x) PB (x) Dividend Yield (%)
-------------- ------------ -------------- -------------- ---------------------
US$ billion 2018E 2019E 2018E 2019E 2018E 2019E
-------------- ------------ ------ ------ ------ ------ ---------- ---------
Qatar 98.8 10.68 11.34 1.32 1.17 4.69 4.68
-------------- ------------ ------ ------ ------ ------ ---------- ---------
Saudi Arabia 450.2 11.63 11.53 1.43 1.43 4.07 4.07
-------------- ------------ ------ ------ ------ ------ ---------- ---------
Dubai 80.7 7.63 7.39 1.06 0.93 4.76 4.48
-------------- ------------ ------ ------ ------ ------ ---------- ---------
Abu Dhabi 116.9 7.62 9.66 1.28 1.20 5.54 5.46
-------------- ------------ ------ ------ ------ ------ ---------- ---------
Oman 14.3 9.48 9.48 0.95 0.95 NA NA
-------------- ------------ ------ ------ ------ ------ ---------- ---------
MSCI EM 10640.1 11.68 11.14 1.51 1.16 2.88 2.65
-------------- ------------ ------ ------ ------ ------ ---------- ---------
Source: Bloomberg, Prices as of 04 January 2018
Epicure Managers Qatar Limited Qatar Insurance Company
S.A.Q.
23 February 2018 23 February 2018
Consolidated Income Statement
(Unaudited) (Unaudited)
Note For the period from For the period from
1 July 2017 to 1 July 2016 to
31 December 2017 31 December 2016
US$'000 US$'000
------------------------------------------------------------------- ----- -------------------- --------------------
Income
Dividend income on quoted equity investments - -
Realised loss on sale of financial assets at fair value through
profit or loss (4,979) (4,719)
Net changes in fair value on financial assets at fair value
through profit or loss 3,392 13,417
Commission rebate income on quoted equity investments 12 - 12
Total net (expense)/income (1,587) 8,710
------------------------------------------------------------------- ----- -------------------- --------------------
Expenses
Investment Manager's fees 6 507 710
Other expenses 6 558 556
--------------------
Total operating expenses 1,065 1,266
------------------------------------------------------------------- ----- -------------------- --------------------
(Loss)/profit before tax (2,652) 7,444
Income tax expense - -
------------------------------------------------------------------- ----- -------------------- --------------------
Retained (loss)/profit for the period (2,652) 7,444
------------------------------------------------------------------- ----- -------------------- --------------------
Basic and diluted (loss)/earnings per share (cents) 3 (2.60) 6.41
------------------------------------------------------------------- ----- -------------------- --------------------
Consolidated Statement of Comprehensive Income
(Unaudited) (Unaudited)
For the period from For the period from
1 July 2017 to 1 July 2016 to
31 December 2017 31 December 2016
US$'000 US$'000
----------------------------------------------------------------------- -------------------- --------------------
(Loss)/profit for the period (2,652) 7,444
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
----------------------------------------------------------------------- -------------------- --------------------
Currency translation differences 184 85
------------------------------------------------------------------------ -------------------- --------------------
Total items that are or may be reclassified subsequently to profit or
loss 184 85
------------------------------------------------------------------------ -------------------- --------------------
Other comprehensive income for the period (net of tax) 184 85
------------------------------------------------------------------------ -------------------- --------------------
Total comprehensive (loss)/profit for the period (2,468) 7,529
------------------------------------------------------------------------ -------------------- --------------------
Consolidated Balance Sheet
(Unaudited) (Audited)
Note At 31 December 2017 At 30 June 2017
US$'000 US$'000
------------------------------------------------------- ----- -------------------- ----------------
Current Assets
Financial assets at fair value through profit or loss 1 96,216 102,124
Other receivables and prepayments 2,017 2,468
Cash and cash equivalents 13 3,630 10,670
------------------------------------------------------- ----- -------------------- ----------------
Total current assets 101,863 115,262
======================================================= ===== ==================== ================
Equity
Issued share capital 925 1,032
Reserves 4 100,489 113,138
Total equity 101,414 114,170
------------------------------------------------------- ----- -------------------- ----------------
Current liabilities
Other creditors and accrued expenses 5 449 1,092
Total current liabilities 449 1,092
------------------------------------------------------- ----- -------------------- ----------------
Total equity & liabilities 101,863 115,262
======================================================= ===== ==================== ================
Consolidated Statement of Changes in Equity
Share Capital Distributable Reserves Retained Earnings Other Reserves Total
(note 4)
US$'000 US$'000 US$'000 US$'000 US$'000
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Balance at 01 July 2017 1,032 86,486 25,425 1,227 114,170
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Total comprehensive income
for the period
Loss for period - - (2,652) - (2,652)
Other comprehensive income
Foreign currency translation
differences - - - 184 184
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Total other comprehensive
income - - - 184 184
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Total comprehensive loss for
the period - - (2,652) 184 (2,468)
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Contributions by and
distributions to owners
Dividends payable - - - - -
Shares repurchased to be - - - - -
held in treasury
Shares subject to tender
offer (103) (10,205) - 103 (10,205)
Tender offer expenses - (83) - - (83)
Shares in treasury cancelled (4) - - 4 -
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Total contributions by and
distributions to owners (107) (10,288) - 107 (10,288)
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Balance at 31 December 2017 925 76,198 22,773 1,518 101,414
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
* Retained earnings include realised gains and losses on the
sale of assets at fair value through profit or loss and net changes
in fair value on financial assets at fair value through profit or
loss. The level of dividend is calculated based only on a
proportion of the dividends received during the year, net of the
Company's attributable costs.
Share Capital Distributable Reserves Retained Earnings Other Reserves Total
(note 4)
US$'000 US$'000 US$'000 US$'000 US$'000
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Balance at 01 July 2016 1,194 103,904 36,177 1,068 142,343
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Total comprehensive income
for the period
Profit for period - - 7,444 - 7,444
Other comprehensive income
Foreign currency translation
differences - - - 85 85
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Total other comprehensive
income - - - 85 85
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Total comprehensive profit
for the period - - 7,444 85 7,529
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Contributions by and
distributions to owners
Dividends payable - - (4,116) - (4,116)
Shares repurchased to be
held in treasury - (370) - - (370)
Shares subject to tender
offer (141) (16,817) - 141 (16,817)
Tender offer expenses - (57) - - (57)
Shares in treasury cancelled (10) - - 10 -
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Total contributions by and
distributions to owners (151) (17,244) (4,116) 151 (21,360)
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Balance at 31 December 2016 1,043 86,660 39,505 1,304 128,512
----------------------------- -------------- ----------------------- ------------------ --------------- ---------
Consolidated Statement of Cash Flows
(Unaudited) (Unaudited)
Note For the period from For the period from
1 July 2017 to 1 July 2016 to
31 December 2017 31 December 2016
US$'000 US$'000
--------------------------------------------------------------- ----- -------------------- --------------------
Cash flows from operating activities
Purchase of investments (33,156) (26,528)
Proceeds from sale of investments 37,002 45,937
Dividends received - -
Operating expenses paid (1,071) (1,290)
Commission rebate - 12
Net cash generated from operating activities 2,775 18,131
--------------------------------------------------------------- ----- -------------------- --------------------
Financing activities
Cash used in tender offer (10,205) (16,817)
Tender offer expenses (83) (57)
Cash used in share repurchases - (370)
Net cash used in financing activities (10,288) (17,244)
--------------------------------------------------------------- ----- -------------------- --------------------
Net (decrease)/increase in cash and cash equivalents (7,513) 887
Effects of exchange rate changes on cash and cash equivalents 473 3
Cash and cash equivalents at beginning of period 10,670 1,447
--------------------------------------------------------------- ----- -------------------- --------------------
Cash and cash equivalents at end of period 13 3,630 2,337
--------------------------------------------------------------- ----- -------------------- --------------------
Notes to the Interim Consolidated Financial Statements
1 Investments
Investments are designated at fair value through profit or loss
on initial recognition. The Group invests in quoted equities and
quoted convertible bonds for which fair value is based on quoted
market prices. The quoted market price used for financial assets
held by the Group is the current bid price ruling at the year-end
without regard to selling prices.
Purchases and sales of investments are recognised on trade date
- the date on which the Group 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
31 December 2017 financial assets at fair value through profit
or loss: all quoted equity securities
Security name Number US$'000
-------------------------------------------- ------------- ----------------------------------------
Qatar National Bank (QNBK QD) 520,872.00 17,570
Qatar Electricity & Water Co (QEWS QD) 200,378.00 9,786
Industries Qatar (IQCD QD) 381,539.00 9,671
Ooredoo (ORDS QD) 373,821.00 9,278
Masraf Al Rayan (MARK QD) 962,055.00 8,922
Qatar Gas Transport (QGTS QD) 1,582,745.00 6,996
Barwa Real Estate (BRES QD) 727,723.00 6,352
Commercial Bank of Qatar (CBQK QD) 781,547.00 6,169
Gulf International Services (GISS QD) 925,137.00 4,493
Qatar National Cement Co (QNCD QD) 217,484.00 3,702
Dubai Islamic Bank (DIB UH) 1,705,000.00 2,873
ABU DHABI Commercial Bank (ADCB UH) 1,243,579.00 2,278
Emaar Properties Company (EMAAR UH) 1,098,408.00 2,072
Bank Muscat (BKMB OM) 2,032,580.00 2,067
Gulf Warehousing (GWCS QD) 122,250.00 1,410
Qatar United Development Company (UDCD QD) 263,727.00 1,038
Emirates National Bank of Dubai (ENBD UH) 300,000.00 670
Union National Bank (UNB UH) 450,000.00 467
Vodaphone Qatar (VFQS QD) 159,869.00 352
Ooredoo (ORDS OM) 36,631.00 50
96,216
-------------------------------------------- ------------- ----------------------------------------
2 Net Asset Value per Share
The net asset value per share as at 31 December 2017 is
US$1.0968 per share based on 92,461,242 ordinary shares in issue as
at that date (excluding 161,931 shares held in treasury), (30 June
2017: US$1.1113 based on 102,734,713 ordinary shares in issue,
excluding 493,445 shares held in treasury).
3 (Loss)/earnings per Share
Basic and diluted (loss)/earnings per share are calculated by
dividing the (loss)/profit attributable to equity holders of the
Group by the weighted average number of ordinary shares in issue
during the period:
31 December 2017 31 December 2016
----------------------------------------------------------------------- ----------------- -----------------
(Loss)/profit attributable to equity holders of the Company (US$'000) (2,652) 7,444
Weighted average number of ordinary shares in issue (thousands) 102,065 116,114
----------------------------------------------------------------------- ----------------- -----------------
Basic (loss)/earnings per share (cents per share) (2.60) 6.41
----------------------------------------------------------------------- ----------------- -----------------
4 Other Reserves
Distributable Retained earnings Foreign currency Capital redemption Total
reserves translation reserve reserve
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------- -------------------- ------------------ -------------------- -------------------- ---------
Balance at 1 July
2017 86,486 25,425 (216) 1,443 113,138
Foreign exchange
translation
differences - - 184 - 184
Retained loss for
period - (2,652) - - (2,652)
Dividends paid - - - - -
Shares repurchased - - - - -
into Treasury
Shares subject to
tender offer (10,205) - - 103 (10,102)
Tender offer
expenses (83) - - - (83)
Shares in Treasury
cancelled - - - 4 4
Balance at 31
December 2017 76,198 22,773 (32) 1,550 100,489
--------------------- -------------------- ------------------ -------------------- -------------------- ---------
5 Trade and other payables
31 December 2017 30 June 2017
US$'000 US$'000
------------------------------- ----------------- -------------
Dividend payable* - -
Due to broker - 649
Management fee payable 250 278
Administration fee payable 58 56
Accruals and sundry creditors 141 109
------------------------------- ----------------- -------------
449 1,092
------------------------------- ----------------- -------------
* a dividend of US$ 0.030 per Ordinary Share was announced, this
was approved by shareholders at the Annual General Meeting on 16
November 2017 and was paid on 9 February 2018 to ordinary
shareholders on the register as at 5 January 2018 (the "Record
Date"). The corresponding ex-dividend date was 4 January 2018.
6 Charges and Fees
31 December 2017 31 December 2016
US$'000 US$'000
Investment Manager's fees (see below) 507 710
Performance fees (see below) - -
------------------------------------------------ ----------------- -----------------
Administrator and Registrar's fees (see below) 114 114
Custodian fees (see below) 53 67
Directors' fees and expenses 167 145
Directors' insurance cover 15 16
Broker fees 26 27
Other 183 187
------------------------------------------------ ----------------- -----------------
Other expenses 558 556
------------------------------------------------ ----------------- -----------------
Investment Manager's fees
Annual fees
The Investment Manager was entitled to an annual management fee
of 1.25% of the Net Asset Value of the Group, calculated monthly
and payable quarterly in arrears. The Investment Management
Agreement was subject to termination on 31 October 2013 with a
revised agreement coming into effect from 1 November 2013. The
revised agreement sees the annual fee reduce to 1.05% of the net
asset value of the Company further reducing to an annual fee of
0.90% of the net asset value of the Company from 1 November 2016
subject to termination on 31 October 2019.
Management fees for the period ended 31 December 2017 amounted
to US$506,755 (31 December 2016: US$710,101).
Performance fees
As a result of the amended Investment Management Agreement which
came into effect on 1 November 2016 the Investment Manager is no
longer entitled to a performance fee.
The Investment Manager is responsible for the payment of all
fees to the Investment Adviser.
Custodian fees
The Custodian is entitled to receive fees of US$7,200 per annum
and US$25 per processed transaction from Gulf Investment Fund
PLC.
In addition the Custodian is entitled to receive fees of 8 basis
points per annum in respect of Qatari securities held by the group
and 10 basis points per annum in respect of non-Qatari, GCC
securities held by the group and $45 per settled transaction
(Qatar)/$50 per settled transaction (GCCC excluding Qatar).
Custodian and sub-custodian fees for the period ending 31
December 2017 amounted to US$53,095 (31 December 2016:
US$66,582).
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.
The Administrator assists in the preparation of the financial
statements of the Group and provides general secretarial
services.
Administration fees paid for the period ending 31 December 2017
amounted to US$113,626 and US$33,032 for additional services (31
December 2016: US$113,588 and US$32,129 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 GBP47,500. 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 chairman of the audit committee
is entitled to receive GBP32,500 per annum.
David Humbles and Neil Benedict in their capacity as
non-executive directors receive GBP30,000 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
2017 amounted to US$167,448 (31 December 2016: US$145,068).
7 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
technically subject to taxation on its income but the rate of tax
is zero. The Group is required to pay an annual corporate charge of
GBP250 per annum.
The Company became registered for VAT from 1 February 2011.
GCC taxation
It is the intention of the Directors to conduct the affairs of
the Company so that it is not considered to be either resident in
the GCC region or doing business in the GCC region.
Except for Kuwait the GCC countries do not impose withholding
tax on dividend distributions by companies to non-residents.
Capital gains made by the Company on disposal of shares in GCC
companies will not be subject to tax in the GCC region.
There is no stamp duty or equivalent tax on the transfer of
shares in GCC region companies.
Kuwait taxation
Since 1 January 2009 dividends paid on behalf of holdings in
Kuwait are to have withholding tax deducted at 15%.
8 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. It is
paid fees by the Investment Manager.
The Investment Manager, Epicure Managers Qatar Limited, was a
related party until 2 November 2017 by virtue of its ability to
make operational decisions for the Company and through common
directors. Following the resignation of Leonard O'Brien, the
Investment Manager is no longer a related party. Fees payable to
the Investment Manager are disclosed in note 6.
Epicure Managers Qatar Limited is a wholly owned subsidiary of
the Investment Adviser, Qatar Insurance Company S.A.Q.
9 The Company
Gulf Investment Fund plc (formerly Qatar 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.
During the period 1 July 2017 to 31 December 2017, the Company
purchased none of its ordinary shares for a total value of US$Nil
to be held in treasury. 331,514 shares had been repurchased in the
period ended 31 December 2016 for treasury but had been held for
over a year and were therefore cancelled in the current financial
period. The buy-backs are effected through distributable
reserves.
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 27 December 2017 the Company completed a tender offer at a
price of US$0.9933 per share. Under the offer 10,273,471 shares
were cancelled with US$10,204,639 being paid to participating
shareholders.
The shareholders approved a dividend of 3.0 cents per share on
16 November 2017; this was paid to shareholders on 9 February
2018.
The Company's agents and the Manager perform all significant
functions. Accordingly, the Company itself has no employees.
10 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%
---------------------------------------------- -------------------------- --------------------------
11 Significant Accounting Policies
The Interim Report of the Company for the period ending 31
December 2017 comprises the Company and its subsidiary (together
referred to as the "Group"). The accounting policies applied by the
Group in these condensed consolidated interim financial statements
are the same as those applied by the Group in its consolidated
financial statements for the year ended 30 June 2017. The interim
consolidated financial statements are unaudited.
11.1 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 consolidated financial statements of the Group
as at and for the year ended 30 June 2017.
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 Group's accounting policies. The financial
statements do not contain any critical accounting estimates
11.2 Segment reporting
The Group has one segment focusing on maximising total returns
through investing in quoted securities in Qatar and the GCC region.
No additional disclosure is included in relation to segment
reporting, as the Group's activities are limited to one business
and geographic segment.
12 Commission rebate
The Company received 50% brokerage commission rebates for all
trades done through its DLALA Qatar brokers. However, during
previous periods the Company changed its Qatar broker to AHLI
brokers to take advantage of more competitive commission rates and
no commission rebate was received. For the period ended 31 December
2017 the Group used a mixture of the DLALA and AHLI brokerages and
received US$ Nil (2016: US$ 12,317).
13 Cash and Cash Equivalents
31 December 2017 30 June 2017
US$'000 US$'000
--------------------------- ----------------- -------------
Bank balances 3,630 10,670
Cash and cash equivalents 3,630 10,670
--------------------------- ----------------- -------------
14 Post Balance Sheet Events
Shareholders received a dividend of 3.0 cents per share on 9
February 2018.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BUGDDLSDBGIX
(END) Dow Jones Newswires
February 26, 2018 02:00 ET (07:00 GMT)
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