REG - Gulf Investment Fund - Annual Financial Report
17/10/2024 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241017:nRSQ4776Ia&default-theme=true
RNS Number : 4776I Gulf Investment Fund PLC 17 October 2024
17 October 2024
Legal Entity Identifier: 2138009DIENFWKC3PW84
Gulf Investment Fund (GIF)
Annual report for the year ended 30 June 2024
· Net Asset Value (NAV) up 10.2 per cent vs the benchmark index which
rose 2.6 per cent
· GIF shares ended the period trading at an 8 per cent discount to NAV
· Directors have put forward proposals to Shareholders for the Company
to be wound up following launch of tender offer
Performance
During the last 12 months, GIF NAV rose 10.2 per cent (including dividends)
vs. S&P GCC Composite Index, which rose 2.6 per cent. Since the mandate
widened from Qatari-focused to Gulf-wide in December 2017, NAV has risen 198.7
per cent (dividend adjusted), as against the 85.3 per cent returns recorded by
S&P GCC total return index. On 30 June 2024, GIF share price was trading
at a 8 per cent discount to NAV vs. five-year average discount of 6 per cent.
Dubai was the best performing market in the GCC region over the last 12
months, rising 6.3 per cent followed by Bahrain (up 3.5 per cent) and Saudi
Arabia (up 1.9 per cent). Abu Dhabi was down 5.1 per cent and Oman down 1.7
per cent, while Kuwait and Qatar fell marginally by 1.3 and 1.1 per cent
respectively.
Portfolio Changes
Gulf Cooperation Council (GCC) markets declined 3.9 per cent in the second
quarter of 2024, in contrast to MSCI World's increase of 2.2 per cent and the
MSCI Emerging Market rise of 4.1 per cent. Year to date GIF was up 0.6 per
cent vs benchmark (down 1.7 per cent), outperforming the benchmark by 2.3 per
cent. GIF annualized performance since December 2017 (when the investment
mandate changed from Qatar-focused to Gulf-wide) was up by 18.1 per cent
versus S&P GCC Composite Index up by 9.8 per cent annualized and MSCI EM
Index down by 0.2 per cent annualized.
Over the last twelve months, the S&P GCC index saw a 2.6 per cent
increase, compared to a 9.8 per cent rise for the MSCI EM and 18.4 per cent
gain for the MSCI World. GIF also performed well, posting a 10.2 per cent
increase, outperforming the benchmark by 7.5 per cent.
Outlook
The GCC region has a positive economic outlook, with real GDP growth projected
to rebound to 2.4 per cent in 2024 and rise to 4.9 per cent in 2025.
This forecast is driven by substantial GDP increases in the UAE and Saudi
Arabia, supported by oil production increases later in 2024 and a global
economic recovery. GCC growth is not solely dependent on oil since non-oil
sectors are expected to sustain robust growth in the medium term. GCC
infrastructure project awards for H1 2024 now stand at $104.6 bn.
Tender Offer
On 22 August 2024, the Company announced the launch of a tender offer for up
to 100 per cent. of each Shareholder's holding in the Company. The Company
received irrevocable commitments pursuant to the Tender Offer to tender Shares
which resulted in the minimum size condition in respect of the Tender Offer
(being a post Tender Offer share capital of not less than 38,000,000 Shares)
not being met. As a result, the Tender Offer did not proceed in accordance
with tender terms and conditions set out in the Circular of the Company dated
28 November 2023.
As set out in the Circular, the Directors instead put forward proposals to
Shareholders for the Company to be wound up with a view to returning cash to
Shareholders or to enter into formal liquidation.
Anderson Whamond
Chairman
Gulf Investment Fund Plc
+44 (0) 1624 630400
William Clutterbuck / Rachel Cohen
H/Advisors Maitland
+44 (0) 20 7379 5151
gulfinvestmentfund-maitland@h-advisors.global
(mailto:gulfinvestmentfund-maitland@h-advisors.global)
Chairman's Statement
I present your company's Annual Report and Financial Statements for the 12
months to 30 June 2024.
In the 12 months, Gulf Investment Fund PLC's (GIF - "the Company" and "the
Fund") net asset value per share (NAV) rose 10.2% (including dividends) to
US$2.51, outperforming the benchmark (S&P GCC Composite Index) which was
up 2.6% on the same basis, by 7.6%. Over the year the GIF share price
decreased 3.8% from US$2.40 to US$2.31.
The background to this performance is that the GIF NAV has grown 198.7%
(including dividends) since the mandate widened from Qatar-focused to
Gulf-wide in December 2017. Since then the GIF NAV has outperformed its
benchmark by 113.4%. $100 invested in the company in December 2017 is now
worth $298.7. $100 invested in the benchmark would be worth $185.3.
Over the 12 months to the end of June 2024 GIF paid dividends of US cents 8.1
which is a yield of 3.2% of the NAV at 30 June 2024. This is in line with the
enhanced dividend policy.
GCC remains a higher growth economic region, mostly overlooked by
international investors
GIF is the only London-listed investment company focused on Gulf Cooperation
Council (GCC) countries. These states now represent approximately 7.1 % of
the MSCI Emerging index, from 1.20% in June 2017.
The GCC is more than an oil and gas story. Governments in the region are
encouraging non-hydrocarbon economic development with some success. Non-oil
GDP is growing ahead of overall GDP growth in the region. In the 12 months
ending June 2024, GIF was overweight Industrials (25.6% of NAV), Materials
(16.6% of NAV) and Consumer Discretionary (5.1% of NAV). Further details are
in the Managers report below.
The GCC region has been overshadowed by the events of October 2023 and the
subsequent war. Although these events have had limited impact on the GCC
markets, they have had a significant impact on retail investor sentiment with
respect to GIF itself.
Results
Results for the 12 months showed a profit of $9,437,583 generated from fair
value adjustments, realised gains/losses and dividend income. This is
equivalent to a basic earnings per share of US cents 23.38 (2023 US cents
40.14).
Ongoing charges rose to 1.89% of NAV from 1.67% in the previous year. This
reflects a smaller NAV following the tender offers, and inflation generally.
Investment Adviser
As advised in last year's annual report Bijoy Joy took over from Jubin Jose as
of January 1(st) this year. He and his team have continued to outperform.
Tender Offer - Post Balance Sheet Event
On 22 August 2024, the Company announced the launch of a tender offer for up
to 100 per cent. of each Shareholder's holding in the Company. The Company
received irrevocable commitments pursuant to the Tender Offer to tender Shares
which resulted in the minimum size condition in respect of the Tender Offer
(being a post Tender Offer share capital of not less than 38,000,000 Shares)
not being met. As a result, the Tender Offer did not proceed in accordance
with tender terms and conditions set out in the Circular of the Company dated
28 November 2023.
As set out in the Circular, the Directors instead put forward proposals to
Shareholders for the Company to be wound up with a view to returning cash to
Shareholders or to enter into formal liquidation.
Tender Offer - Post Balance Sheet Event (continued)
The Company published a circular on 4 October 2024 setting out details of the
Proposals and to convene an extraordinary general meeting on 29 October 2024
at which approval for the Proposals will be sought from shareholders. As such
the Directors expect that the Company will cease operations at that time and
expect to wind up the Company as soon as is reasonably practicable thereafter.
The Directors therefore have concluded that the financial statements should be
prepared on a non-going concern basis. The effect of this is outlined in note
13.1.
In making this assessment, the Directors have considered the steps taken
towards liquidating the Company and other information available to the date of
approval of these financial statements.
Anderson Whamond
Chairman
16 October 2024
Business Review
This provides information about the Company's business and results for the
year ended 30 June 2024. It should be read in conjunction with the Report of
the Investment Manager and the Investment Adviser on pages 7 to 15 which gives
a detailed review of the investment activities for the year and an outlook for
the future.
Investment objective and strategy
The Company's investment objective is to capture the opportunities for growth
offered by the expanding GCC economies by investing, in listed or soon to be
listed companies on one of the GCC exchanges.
The Company applies a top-down screening process to identify those sectors
which should most benefit from sector growth trends. Fundamental industry and
company analysis, rather than benchmarking, forms the basis for both stock
selection and portfolio construction.
The investment policy is on pages 16 to 19.
Performance measurement and key performance indicators
In order to measure the success of the Company in meeting its objectives and
to evaluate the performance of the Investment Manager, the Directors take into
account the following key performance indicators:
Returns and Net Asset Value
At each quarterly Board meeting the Board reviews the performance of the
portfolio versus the S&P GCC Composite Index (local benchmark) as well as
the net asset value, income, share price and expense ratio for the Company.
Discount/Premium to Net Asset Value
The Board regularly monitors the discount/premium to net asset value. The
Directors obtained their authority at the AGM in order to be able to make
purchases through the market where they believe they can assist in narrowing
the discount to net asset value and where it is accretive to net asset value
per share.
Yield
The Board monitors the dividend income of the portfolio and the amount
available for distribution and considers the impact on the Company's annual
enhanced dividend policy of future progressive dividend payments, subject to
the absence of exceptional market events. The enhanced dividend policy targets
a yield equivalent to 4% of the GIF NAV at the end of the previous financial
year.
Principal risks and emerging risks
The Board confirms that there is an on-going process for identifying,
evaluating and managing or monitoring the key risks to the Company. These key
risks have been collated in a risk matrix document which is reviewed and
updated on a quarterly basis by the Directors. The risks are identified and
graded in this process, together with the policies and procedures for the
mitigation of the risks. Apart from the key risks outlined below the Company's
continuation is identified as an ongoing risk.
There Board confirms that there have been no emerging risks identified.
In addition to the tender offer noted on page 5 the key risks which have been
identified and the steps taken by the Board to mitigate these are as follows:
Market
The Company's underlying investments consist of listed companies. There are no
investments in companies soon to be listed. Market risk arises from
uncertainty about the future prices of the investments. This is commented on
in Notes 1 and 2 on pages 48 to 54.
Investment and strategy
The achievement of the Company's investment objective relative to the market
involves risk. An inappropriate asset allocation may result in
underperformance against the local index. Monitoring of these risks is carried
out by the Board which, at each quarterly Board meeting, considers the asset
allocation of the portfolio, the ratio of the larger investments within the
portfolio and the management information provided by the Investment Manager
and Investment Adviser, who are responsible for actively managing the
portfolio in accordance with the Company's investment policy. The net asset
value of the Company is published weekly.
Accounting, legal and regulatory
The Company must comply with the provisions of the Isle of Man Companies Acts
1931 to 2004 and since its shares are listed on the London Stock Exchange, the
Disclosure Guidance and Transparency Rules and Market Abuse Regulation (MAR)
(together the "FCA Rules")'. A breach of company law or FCA Rules could result
in the Company and/or the Directors being fined or the subject of criminal
proceedings and, in the case of a breach of the FCA Rules, could result in the
suspension of the Company's shares. The Board relies on its company secretary
and advisers to ensure adherence to company law and FCA Rules. The Board takes
legal, accounting or compliance advice, as appropriate, to monitor changes in
the regulatory environment affecting the Company.
Operational
Disruption to, or the failure of, the Investment Manager, the Investment
Adviser, the Custodian or Administrator's accounting, payment systems or
custody records could prevent the accurate reporting or monitoring of the
Company's financial position. Details of how the Board monitors the services
provided by the Investment Manager and its other suppliers, and the key
elements designed to provide effective internal control, are explained further
in the internal control section of the Corporate Governance Report on pages 23
to 31.
Financial
The financial risks faced by the Company include market price risk, foreign
exchange risk, credit risk, liquidity risk and interest rate risk. Further
details are disclosed in Notes 1(c), 2, 6 and 8.
Report of the Investment Manager and Investment Adviser
Regional Market Overview:
Country / Region Index 30-Jun-23 31-Dec-23 2H2023 30-Jun-24 1H2024 LTM
Qatar DSM Index 10,075 10,831 7.5% 9,968 -8.0% -1.1%
Saudi Arabia SASEIDX Index 11,459 11,967 4.4% 11,680 -2.4% 1.9%
Dubai DFMGI Index 3,792 4,060 7.1% 4,030 -0.7% 6.3%
Abu Dhabi ADSMI Index 9,550 9,578 0.3% 9,061 -5.4% -5.1%
Kuwait KWSEAS Index 7,030 6,817 -3.0% 6,937 1.8% -1.3%
Oman MSM30 Index 4,768 4,514 -5.3% 4,687 3.8% -1.7%
Bahrain BHSEASI Index 1,958 1,971 0.7% 2,025 2.7% 3.5%
S&P GCC SEMGGCPD Index 143 148 3.2% 142 -4.1% -1.0%
S&P GCC SEMGGCTD Index 273 285 4.4% 280 -1.7% 2.6%
Brent CO1 Comdty 75 77 2.9% 86 12.2% 15.4%
MSCI EM MXEF Index 989 1,024 3.5% 1,086 6.1% 9.8%
MSCI World MXWO Index 2,967 3,169 6.8% 3,512 10.8% 18.4%
Source: Bloomberg; LTM: Last Twelve Months
GIF Performance:
During the last 12 months, GIF NAV rose 10.2 per cent (including dividends)
vs. S&P GCC Composite Index, which rose 2.6 per cent. Since the mandate
widened from Qatari-focused to Gulf-wide in December 2017, NAV has risen 198.7
per cent (dividend adjusted), as against the 85.3 per cent returns recorded by
S&P GCC total return index. On 30 June 2024, GIF share price was trading
at a 8.0 per cent discount to NAV vs. five-year average discount of 6.0 per
cent.
Dubai was the best performing market in the GCC region over the last 12
months, rising 6.3 per cent followed by Bahrain (up 3.5 per cent) and Saudi
Arabia (up 1.9 per cent). Abu Dhabi was down 5.1 per cent and Oman down 1.7
per cent, while Kuwait and Qatar fell marginally by 1.3 and 1.1 per cent
respectively.
Report of the Investment Manager and Investment Adviser (continued)
Source: QIC, Bloomberg as of 30 June 2024; Note: #Div. Adj. NAV; Investment
Strategy widened to GCC starting 07-Dec-2017, subsequently benchmark changed
to S&P GCC Index from QE Index
GCC nations attracting foreign direct investment
The IMF upgraded its expectation of GCC GDP growth to 2.4 per cent for 2024,
and 4.9 per cent in 2025. This is partly due to momentum in the non-oil
economy. GCC nations have also enjoyed a significant increase in capital
inflows (FDI) across a range of sectors. This highlights its appeal as a
center for global business and investment.
That said Saudi Arabia, Bahrain, and Kuwait are expected to have budget
deficits this year and in 2025 due to oil prices being below their fiscal
breakeven points. Despite this, the overall budget position of the GCC is
expected to still be slightly in surplus this year, supported by strong
financial health and favourable credit ratings.
Table: IMF Real GDP Growth Forecast 2024 and 2025
Real GDP Growth 2021 2022 2023 2024e 2025e
GCC 4.3% 7.0% 0.4% 2.4% 4.9%
GCC Oil GDP 0.6% 11.9% -5.9% -1.1% 6.0%
GCC Non-oil GDP 5.4% 5.3% 3.8% 3.6% 4.5%
Source: IMF Regional Economic Outlook, April 2024
Table: General Government Fiscal Balance
% of GDP 2021 2022 2023 2024e 2025e
Saudi Arabia -2.2 2.5 -2.0 -2.8 -1.6
UAE 4.0 9.9 6.3 4.5 4.0
Qatar 0.2 10.4 5.4 5.1 4.7
Kuwait 8.9 30.6 29.4 27.3 28.1
Bahrain -11.0 -5.4 -8.3 -6.9 -7.6
Oman -3.1 10.1 5.9 3.7 3.6
GCC 0.2 7.6 3.4 2.3 2.7
Source: IMF Regional Economic Outlook, April 2024
OPEC+ production cuts
OPEC+ plans to extend cuts of 3.7 mn bpd until end-2025 and reduced 2.2 mn bpd
cuts by September 2024, with a phased phase-out by September 2025. OPEC
expects crude demand to average 43.7 mn bpd in H2 2024, potentially reducing
stocks by 2.6 mn bpd if output remains stable. However, the drawdown will
decrease as OPEC+ begins phasing out the 2.2 mn bpd cuts from October 2024.
GCC countries fiscal breakeven oil price (2024E)
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com (http://www.gulfinvestmentfundplc.com) for
charts depicting fiscal breakeven oil price.
As per the latest IMF estimates released in April 2024, fiscal oil price
breakeven for Saudi, UAE, Kuwait and Oman remain within the range of previous
estimates. However, oil price breakeven for Qatar and Bahrain fiscal
requirement was lowered as the country continue to benefit from non-oil
economic activities.
GCC Project awards momentum continues
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com (http://www.gulfinvestmentfundplc.com) for
charts depicting project awards.
Q2 GCC contract awards stood at $51.7 bn with Saudi accounting for close to
60% of that amount. On an annualized basis for the first half, project awards
in the GCC stands to achieve a total close to $200 bn for the second year in a
row. The five-year average of GCC contract awards from 2018 to 2022 is close
to $100 bn.
Notable key developments in GCC countries
Aramco awards USD 25 bn of gas expansion
Saudi Aramco awarded $25 bn worth of contracts for gas expansion, relating to
phase two development of the Jafurah unconventional gas field, phase three
expansion of Aramco's Master Gas Systems, new gas rigs and ongoing capacity
maintenance. This will increase Saudi's gas production from 13.5 bn cfpd to
21.3 bn cfpd (+58 per cent) by 2030.
Saudi Arabia energy transformation
The Saudi Green Initiative aims to plant 10 bn trees and increase renewable
energy's share in the national energy mix to over 50 per cent by 2030.
Kuwait approves $1.4 bn for infrastructure projects
Kuwait's 2024-2025 budget includes 36 infrastructure projects totalling
approximately 428 mn Kuwaiti dinars (USD 1.4 bn), aimed at enhancing national
development. Additionally, 16 projects valued at KWD 72 mn (USD 237.6 mn) are
allocated to support the private sector. The budget also encompasses 19
projects worth KWD 140 mn ($462 mn) alongside ongoing construction
initiatives, reflecting a comprehensive effort to boost infrastructure and
economic growth in the country.
Qatar announces mega-entertainment district
The Smaisma Project, managed by Qatari Diar Real Estate Investment Company,
spans eight mn square meters along Qatar's eastern coast at Smaisma Beach. It
includes 16 tourism zones, resorts, a theme park, golf course, marina, and
sustainable features like smart construction and local materials. Aligned with
Qatar's Third National Development Strategy 2024-2030, the project aims to
boost non-oil sector growth and attract investments, contributing to Qatar's
economic diversification efforts. Qatari Diar, overseeing $35 bn in global
projects, underscores its role in advancing Qatar's real estate sector with
sustainable and innovative developments.
Dubai Industrial City to boost manufacturing
Dubai Industrial City has launched 13.9 mn sq.ft. of additional land capacity
to strengthen local manufacturing and supply chains in the UAE. Acquired
through a USD 111.6 mn transaction, this expansion supports initiatives like
Operation 300 bn and Dubai Economic Agenda 'D33'.
Oman Shell construction of green hydrogen station
Oman Shell started construction of the country's first green hydrogen station.
The project is supported by various government and industry partners, marking
a significant step toward sustainable mobility in Oman.
GCC IPO pipeline
GCC had 23 new listings in 1H 2024, raising around USD 3.6 bn. In terms of
number of listings, Saudi had 19 IPOs, raising around USD 2.3 bn, UAE had 4
IPOs raising around USD 2.4 bn and Kuwait had 1 IPO raising around USD 0.1 bn.
Recently listed Dr Soliman Abdul Kader Fakeeh Hospital company raised around
USD 762 mn (oversubscribed 119X), marking the largest IPO in the Saudi stock
exchange in H1 2024. This was followed by Alef Education raised around USD 514
mn (oversubscribed 39X). Moreover, there was record breaking demand for Dubai
Parkin resulting in the IPO being oversubscribed by 165X, representing the
highest ever oversubscription level achieved on the DFM.
The IPO market in the Middle East is set to remain strong in 2024, driven by a
healthy pipeline of offerings from private sector companies seeking liquidity
and capital access. While most of the IPO activity is anticipated to come from
Saudi Arabia and the UAE, there is also increasing momentum in Oman and
Qatar.
Portfolio structure
Gulf Cooperation Council (GCC) markets declined 3.9 per cent in the second
quarter of 2024, in contrast to MSCI World's increase of 2.2 per cent and the
MSCI Emerging Market rise of 4.1 per cent. Year to date GIF was up 0.6 per
cent vs benchmark (down 1.7 per cent), outperforming the benchmark by 2.3 per
cent. GIF annualized performance since December 2017 (when the investment
mandate changed from Qatar-focused to Gulf-wide) was up by 18.1 per cent
versus S&P GCC Composite Index up by 9.8 per cent annualized and MSCI EM
Index down by 0.2 per cent annualized.
Over the last twelve months, the S&P GCC index saw a 2.6 per cent
increase, compared to a 9.8 per cent rise for the MSCI EM and 18.4 per cent
gain for the MSCI World. GIF also performed well, posting a 10.2 per cent
increase, outperforming the benchmark by 7.5 per cent.
In country terms and relative to the benchmark, GIF remains overweight Qatar
(23.8 per cent vs. benchmark weight of 9.4 per cent) and Oman (2.1 per cent vs
1.0 per cent). The Fund also has an overweight to Kuwait (10.4 per cent vs 9.6
per cent) and is further underweight UAE (4.4 per cent vs benchmark weight of
17.5 per cent) as we reduced the Fund's UAE banking exposure. GIF's weighting
in Saudi Arabia, GCC's biggest market, is 59.2 per cent vs benchmark weight of
61.8 per cent.
GIF ended 2Q 2024 with 34 holdings: 21 in Saudi Arabia, 6 in Qatar, 3 in the
UAE, 3 in Kuwait and 1 in Oman maintaining its concentrated portfolio
approach. The cash position was 0.2 per cent as of 30 June 2024.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com (http://www.gulfinvestmentfundplc.com) for
charts depicting Country allocation.
Top 10 holdings
Company Country Sector
Saudi National Bank Saudi Arabia Financials
Qatar National Bank Qatar Financials
Qatar Navigation Qatar Industrials
Integrated Holding Company Kuwait Industrials
Yamama Cement Saudi Arabia Materials
Mobile Telecommunication Company Kuwait Communication Services
Saudi British Bank Saudi Arabia Financials
Saudi Ground Services Saudi Arabia Industrials
Qatar Insurance Company Qatar Financials
Commercial Bank of Qatar Qatar Financials
Source: QIC
Sector Allocation
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com (http://www.gulfinvestmentfundplc.com) for
charts depicting sector allocation.
Over the last twelve months, GIF increased its exposure to materials,
financial and communication services sectors on the back of attractive
valuation and growth prospects.
The Fund's weight in materials sector increased from 3.0 per cent of NAV to
16.6 per cent of NAV as the sector is well-positioned to benefit from robust
domestic growth in Saudi underpinned by favorable demographics. The Fund added
Yamama and City Cement among others into the portfolio over the last twelve
months. These companies are well-positioned for increase in demand given their
utilization capacity potential.
Exposure to the financial sector also increased from 35.0 per cent of NAV to
44.3 per cent of NAV as the Fund introduced companies such as Arab National
Bank and The Mediterranean & Gulf Insurance Reinsurance into the
portfolio. Additionally, the Fund has also increased exposure in holdings such
as Qatar National Bank, Commercial Bank of Qatar, Qatar Insurance Company,
Banque Saudi Fransi, Saudi British Bank and Saudi National Bank.
The Fund's exposure to the communication services sector increased from 2.6
per cent of NAV to 4.6 per cent of NAV, mainly driven by the addition of
Mobile Telecommunication Company into the portfolio.
Conversely, the Fund's exposure to the energy, consumer discretionary, and
healthcare sectors decreased significantly. The energy sector's exposure
dropped from 7.5 per cent of NAV to 1.0 per cent of NAV, primarily due to
reduced holdings in Qatar Gas Transport. In the consumer discretionary sector,
exposure decreased from 11.4 per cent of NAV to 5.1 per cent of NAV, as the
Fund exited investments in Alamar Foods, Jahez International, Leejam Sports
Company, and United Electronics Company. Furthermore, the Fund completely
divested from healthcare by selling its holding in Middle East Healthcare
(from 5.6 per cent of NAV).
Moreover, the Fund slightly decreased its exposure in industrials (from 27.9
per cent of NAV to 25.6 per cent of NAV), real estate (from 4.8 per cent of
NAV to 2.6 per cent of NAV) and utilities (from 0.8 per cent of NAV to nil).
Profile of Top Five Holdings:
Saudi National Bank (7.8 per cent of NAV)
Saudi National Bank (SNB) is Saudi Arabia's largest financial institution and
one of its most powerful institutions. It provides a range of conventional and
Shariah-compliant personal, business, and private banking solutions to
individuals, corporates, and institutional customers. SNB's robust balance
sheet, resilient business model, and healthy liquidity position enhance the
bank's capability to compete locally and regionally, as well as to enable
trade and capital movements
between the Kingdom and regional and global markets.
Qatar National Bank (5.9 per cent of NAV)
Qatar National Bank (QNBK) is among the largest financial institution in the
Middle East and Africa (MEA) region by market value and c.50 per cent owned by
Qatari sovereign. QNBK possesses healthy balance sheet, which coupled with
comfortable capital ratios and low asset quality risk make it banking
powerhouse in GCC region. The bank's focus remains on lower risk sectors such
as sovereign and related entities. Despite challenging market conditions,
QNBK's NPL ratio still one of the lowest among peers indicating the quality of
the loan book.
Qatar Navigation (5.8 per cent of NAV)
Qatar Navigation (QNNS) is one of the largest and most diversified maritime
and logistics companies in the Middle East with a focus on providing marine
transport and services, as well as supply chain solutions. Qatar's North Field
Expansion plan which is expected to boost LNG production capacity from 77 MTPA
to 142 MTPA will create demand for transportation and offshore vessels in the
medium to long term. Additionally, a stake in Nakilat (36.3 per cent) is
expected to boost the Company's bottom line.
Integrated Holding Company (5.3 per cent of NAV)
Integrated Holding Company (IHC) is headquartered in Kuwait City, and engages
in the provision of engineering solutions to the logistics industry. It
specializes in total logistics solutions, equipment hiring and leasing, heavy
lift services, oil, gas and power (energy) solutions. IHC has significant and
increasing presence in Qatar and Saudi Arabia. In Qatar, IHC is an indirect
beneficiary of North Field Expansion project due to equipment leasing
contracts through the projects' direct contractors. In KSA, IHC will attain
growth through the several planned giga-projects.
Yamama Cement (5.0 per cent of NAV)
Yamama Cement Company is one of the largest and oldest cement players in the
Kingdom of Saudi Arabia (KSA), Yamama's plant located in the central region
with capacity of 6.6 mn tons per annum (MTPA) of clinker and 7.0 MTPA of
cement grinding. The company is renowned for producing a variety of Portland
cement, including ordinary cement, salt-resistant cement and finishing cement.
With the strong momentum of contract awards in Saudi Arabia, cement players
such as Yamama are well poised to capture this growth.
GCC Outlook:
The GCC region has a positive economic outlook, with real GDP growth projected
to rebound to 2.4 per cent in 2024 and rise to 4.9 per cent in 2025. This
forecast is driven by substantial GDP increases in the UAE and Saudi Arabia,
supported by oil production increases later in 2024 and a global economic
recovery. GCC growth is not solely dependent on oil since non-oil sectors are
expected to sustain robust growth in the medium term. GCC infrastructure
project awards for H1 2024 now stand at USD 104.6 bn.
The IMF expects UAE and Saudi Arabia to enjoy real Non-Oil GDP growth of 4.1
per cent and 3.9 per cent, respectively, in 2024; and 4.2 per cent and 5.3 per
cent in 2025. GCC inflation continues to trend downwards, with the IMF
forecasting consumer price inflation to fall from 2.2 per cent in 2024 to 2.1
per cent in 2025.
GCC visitor numbers continue to rise. In Q1 2024, Qatar saw a 40 per cent
increase in visitors over the last year, reaching 1.6 mn. Saudi welcomed 60 mn
tourists in the first half of 2024, a 12 per cent increase over the same
period last year. Dubai saw international tourist visitor numbers rise by 9
per cent to 9.3 mn in the first half of the year.
The GCC markets look attractive on the back of increasing benefits of the
socio-economic reforms being rolled out in the region the large infrastructure
project awards, and undemanding valuations (see table below).
Valuation:
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com (http://www.gulfinvestmentfundplc.com) for
charts depicting market capitilisation by country.
Epicure Managers Qatar
Limited
Qatar Insurance Company S.A.Q.
16 October
2024
16 October 2024
Investment Policy
Investment objective
The Company's investment objective is to capture the opportunities for growth
offered by the expanding GCC economies by investing, through its wholly owned
subsidiary, in listed companies on one of the GCC exchanges or companies soon
to be listed on one of the GCC exchanges.
The Company applies a top-down screening process to identify those sectors
which should most benefit from sector growth trends. Fundamental industry and
company analysis, rather than benchmarking, forms the basis of both stock
selection and portfolio construction.
Assets or companies in which the Company can invest
The Company invests in listed companies on any GCC Exchanges in addition to
companies soon to be listed. The Company may also invest in listed companies,
or pre-IPO companies, in other GCC countries. The Company will also be
permitted to invest in companies listed on stock markets not located in the
GCC which will have a significant economic exposure to and/or derive a
significant amount of their revenues from GCC countries.
Whether investments will be active or passive investments
In the ordinary course of events, the Company is not an activist investor,
although the Investment Adviser will seek to engage with investee company
management where appropriate.
Holding period for investments
In the normal course of events, the Company expects to be fully invested,
although the Company may hold cash reserves pending new IPOs or when it is
deemed financially prudent. Although the Company is a long-term financial
investor, it will actively manage its portfolio.
Spread of investments and maximum exposure limits
The Company will invest in a portfolio of investee companies. The following
investment restrictions are in place to ensure a spread of investments and to
ensure that there are maximum exposure limits in place (see investment
guidelines under Investing Restrictions).
Policy in relation to gearing and derivatives
Borrowings will be limited, as at the date on which the borrowings are
incurred, to 5% of NAV. Borrowings will include any financing element of a
swap. The Company will not make use of hedging mechanisms.
The Company may utilise derivative instruments in pursuit of its investment
policy subject to:
· such derivative instruments being designed to offer the holder a
return linked to the performance of a particular underlying listed equity
security;
· a maximum underlying equity exposure limit of 15 per cent of NAV
(calculated at the time of investment); and
· a policy of entering into derivative instruments with more than
one counterparty in relation to an investment, where possible, to minimise
counterparty risk.
Policy in relation to cross-holdings
Cross-holdings in other listed or unlisted investment funds or ETFs that
invest in Qatar or other countries in the GCC region will be limited to 10 per
cent. of Net Asset Value at any time (calculated at the time of investment).
Investing restrictions
The investing restrictions for the Company are as follows:
(i) Foreign ownership restrictions
Investments in most GCC listed companies by persons other than citizens of
that specific GCC country have an ownership restriction wherein the law
precludes persons other than citizens of that specific GCC country from
acquiring a certain proportion of a company's issued share capital. It is
possible that the Company may have problems acquiring stock if the foreign
ownership interest in one or more stocks reaches the allocated upper limit.
This may adversely impact the ability of the Company to invest in certain
companies listed on the GCC exchanges.
(ii) Investment guidelines
The Company has established certain investment guidelines. These are as
follows (all of which calculated at the time of investment):
· No single investment position in the S&P GCC
Composite constituent may exceed the greater of: (i) 15 per cent. of the Net
Asset Value of the Company; or (ii) 125 per cent. of the constituent company's
index capitalisation divided by the index capitalisation of the S&P GCC
Composite Index, as calculated by Bloomberg (or such other source as the
Directors and Investment Manager may agree):
· No single investment position in a company which
is not a S&P GCC Composite Index constituent may at the time of investment
exceed 15 per cent. of the NAV of the Company; and
· No holding may exceed 5 per cent. of the
outstanding shares in any one company (including investment in Saudi Arabian
listed companies by way of derivative investment in P-Note or Swap structured
financial products); and
(iii) Conflicts management
The Investment Manager, the Investment Adviser, their officers and other
personnel are involved in other financial, investment or professional
activities, which may on occasion give rise to conflicts of interest with the
Company. The Investment Manager will have regard to its obligations under the
Investment Management Agreement to act in the best interests of the Company,
and the Investment Adviser will have regard to its obligations under the
Investment Adviser Agreement to act in the best interests of the Company, so
far as is practicable having regard to their obligations to other clients,
where potential conflicts of interest arise. The Investment Manager and the
Investment Adviser will use all reasonable efforts to ensure that the Company
has the opportunity to participate in potential investments that each
identifies that fall within the investment objective and strategies of the
Company. Other than these restrictions set out above, and the requirement to
invest in accordance with its investing policy, there are no other investing
restrictions.
Returns and distribution policy
The Company's primary investment objective was to achieve capital growth and
operate an annual dividend policy to return to shareholders distributions at
least equal to reported income for each reporting period.
Life of the Company
The Company did not have a fixed life and the Board considered it desirable
that shareholders should have the opportunity to review the future of the
Company at appropriate intervals. Consequently, prior to the results of the
September tender offer the Company received irrevocable commitments pursuant
to the Tender Offer to tender Shares which resulted in the minimum size
condition in respect of the Tender Offer (being a post Tender Offer share
capital of not less than 38,000,000 Shares) not being met. As a result, the
Tender Offer did not proceed in accordance with tender terms and conditions
set out in the circular of the Company dated 28 November 2023.
As set out in the Circular, the Directors instead put forward proposals to
Shareholders for the Company to be wound up with a view to returning cash to
Shareholders or to enter into a solvent formal liquidation.
Environmental, social and governance standards
The adoption of environmental, social, and governance (ESG) standards and
principles by governments and regulators in the GCC will play a key role in
the sustainable economic recovery of the region. It is the ambition of the
Fund's Manager to identify and mitigate key risk factors that could violate
various ESG related criteria.
The Board and the Manager believe that integrating these considerations into
our Investment Policy is in line with the Fund's aim of delivering long-term
capital growth to investors. We have always placed a strong importance on
corporate governance in our process and are now integrating further social and
environmental considerations into our investment process.
As part of the screening, we commit to not invest in companies that have
exposures to the following areas:
Countries facing UN sanctions
Conventional Weapons and firearms (producer)
Conventional Weapons and firearms (other)
Controversial weapons
Tobacco (producer)
Adult Entertainment (producer)
Adult Entertainment (other)
Gambling (operator)
Animal Testing
Thermal Coal
We source the ESG scores from 3rd party providers on a half yearly basis for
our investment universe and further screen them by rejecting or minimizing
exposures to companies with low scores.
Currently, a challenge facing ESG-concerned GCC investors is the lack of
consistent disclosures from corporates on top of the varying regulations and
standards in operation globally. The Manager expects that governments in the
GCC will seek to improve and standardise disclosures and ESG-related
obligations in the coming years. The official multi-year economic and
strategic 'visions' in Saudi Arabia, Qatar, Kuwait and the UAE include focus
on sustainability, diversification and environmentally friendly practices. We
are encouraged to see improvements in corporate sustainability reporting
standards with an increased focus of generating annual sustainability reports
by companies in the region.
We are already seeing the setting up of national sustainability goals,
revamping water security programs, launching diversity initiatives,
introducing ESG financial disclosure standards and publishing of ESG
guidelines for exchange listings. There has been a shift towards investing in
renewable energies, launching green bonds and other green financing
initiatives, with a view to facilitating green solutions across a range of
sectors. Developments such as these will further assist the Manager to
integrate ESG considerations into our investment process.
State of ESG in GCC
Various targets set by the GCC countries are as below (details from APCO-GCC
BDI 2022 report):
Saudi Arabia
Saudi plans to reach net zero by 2060. The country is expected to invest
heavily in carbon capture and clean hydrogen. It targets to reach net zero
through a "Carbon Circular Economy" approach, which advocates "reduce, reuse,
recycle and remove".
Environmental, social and governance standards (continued)
State of ESG in GCC (continued)
UAE
The UAE committed to achieve net zero by 2050, making it the first nation in
the region to do so. The UAE invested in renewable energy ventures worth
around USD 16.8 billion in 70 countries with a focus on developing nations. It
has also provided more than USD 400 million in aid and soft loans for clean
energy projects.
Qatar
Qatar calls for a reduction in carbon emissions to net zero by 2050. It is the
world's largest producer of Liquefied Natural Gas (LNG) and aims to expand
production to 127 million tonnes annually by 2027. LNG helps tackle climate
change globally in weaning off high-polluting fuels like oil and coal.
Kuwait
Kuwait does not have a documented net zero commitment. The country aims to
reduce its greenhouse gas emissions by 7.4% by 2035.
Oman
Oman's upstream oil and gas sector is evaluating a target of zero emissions by
2050, according to its Second Nationally Determined Contribution (NDC) report,
which was recently submitted to the United Nations Framework Convention on
climate change.
Bahrain
Bahrain pledges to reach net zero emissions by 2060. It will adopt a circular
carbon economy strengthened by various offsetting schemes including
carbon-capture technology and afforestation.
Report of the Directors
The Directors hereby submit their annual report together with the audited
financial statements of Gulf Investment Fund plc (the "Company") for the year
ended 30 June 2024.
The Company
The Company is incorporated in the Isle of Man and has been established to
invest primarily in quoted equities of Qatar and other Gulf Co-operation
Council (GCC) countries. The Company's investment policy is detailed on pages
16 to 19.
Results and Dividends
The results of the Company for the year and its financial position at the
year-end are set out on pages 43 to 47 of the financial statements.
The Directors manage the Company's affairs to achieve capital growth and the
Company has instituted a twice-yearly dividend policy.
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 2023 was US$2.3556 and pursuant to
the above stated policy the directors recommend a dividend of 9.42 cents per
share in respect of the year ended 30 June 2024 to be paid in two tranches.
For the year ended 30 June 2023, the Directors declared a dividend of 8.10
cents per share which was paid in two tranches with US$1,680,769 (4.05 cents
per share) being paid on 20 October 2023 to shareholders on the register as at
15 September 2023 (the "Record Date") and US$1,624,180 (4.05 cents per share)
being paid on 22 March 2024 to shareholders on the register as at 16 February
2024 (the "Record Date").
Directors
Details of Board members at the date of this report, together with their
biographical details, are set out on page 32.
Director independence and Directors' and other interests have been detailed in
the Directors' Remuneration Report on pages 36 and 37.
Creditor payment policy
It is the Company's policy to adhere to the payment terms agreed with
individual suppliers and to pay in accordance with its contractual and other
legal obligations.
Gearing policy
Borrowings will be limited, as at the date on which the borrowings are
incurred, to 5% of NAV (or such other limit as may be approved by the
shareholders in general meeting). The Company will not make use of any hedging
mechanisms.
There were no borrowings during the year (2023: US$ nil).
Donations
The Company has not made any political or charitable donations during the year
(2023: US$ nil).
Adequacy of the Information supplied to the auditors
The Directors who held office at the date of approval of this Directors'
Report confirm that, so far as each is aware, there is no relevant audit
information of which the Company's auditors are unaware; and each Director has
taken all steps that he ought to have taken as a Director to make himself
aware of any relevant audit information and to establish that the Company's
auditors are aware of that information.
Non-going concern basis of preparation
These accounts have been prepared on a basis other than going concern as prior
to the results of the September tender offer the Company received irrevocable
commitments pursuant to the Tender Offer to tender Shares which resulted in
the minimum size condition in respect of the Tender Offer (being a post Tender
Offer share capital of not less than 38,000,000 Shares) not being met. As a
result, the Tender Offer did not proceed in accordance with tender terms and
conditions set out in the circular of the Company dated 28 November 2023.
As set out in the Circular, the Directors instead put forward proposals to
Shareholders for the Company to be wound up with a view to returning cash to
Shareholders or to enter into a solvent formal liquidation.
Independent Auditors
KPMG Audit LLC has expressed its willingness to continue in office in
accordance with Section 12 (2) of the Companies Acts 1931 to 2004.
Annual general meeting
The Annual General Meeting of the Company will be held later in the year at
the Company's registered office.
A copy of the notice of Annual General Meeting will be a separate document to
this Annual Report. As well as the business normally conducted at such a
meeting, Shareholders will be asked to renew the authority to allow the
Company to continue with share buy-backs.
The notice of the Annual General Meeting and the Annual Report will be
available at www.gulfinvestmentfundplc.com
(http://www.gulfinvestmentfundplc.com) .
Corporate governance
Full details are given in the Corporate Governance Report on pages 23 to 31
which forms part of the Report of the Directors.
Substantial shareholdings
As at the date of publication of this annual report, the Company had been
notified, or the Company is aware of the following significant holdings in its
Share Capital.
Ordinary Shares
Name %
Qatar Insurance Company S.A.Q. 44.47
City of London Investment Management Co (London) 42.97
Hargreaves Lansdown Asset Management (Bristol) 3.69
Interactive Investor (Manchester) 3.05
A J Bell Securities (Tunbridge Wells) 1.17
Clearstream Banking 0.79
The above percentages are calculated by applying the shareholdings as notified
to the Company or the Company's awareness to the issued Ordinary Share Capital
as at 30 June 2024.
On behalf of the Board
Anderson Whamond
Chairman
16 October 2024
Exchange House
54-62 Athol Street
Douglas
Isle of Man
IM1 1JD
Corporate Governance Report
Compliance with Companies Acts
As an Isle of Man incorporated company, the Company's primary obligation is to
comply with the Isle of Man Companies Acts 1931 to 2004. The Board confirms
that the Company is in compliance with the relevant provisions of the
Companies Acts.
Compliance with the Association of Investment Companies (AIC) Code of
Corporate Governance
The Company is committed to high standards of corporate governance. The Board
is accountable to the Company's shareholders for good governance and this
statement describes how the Company applies the principles identified in the
UK Corporate Governance Code which is available on the Financial Reporting
Council's website: www.frc.org.uk (http://www.frc.org.uk) .
The Board of the Company has considered the principles and provisions AIC Code
of Corporate Governance as published in February 2019 (the AIC Code). The AIC
Code addresses the principles and provisions set out in the UK Corporate
Governance Code, as well as setting out additional principles and
recommendations on issues that are of specific relevance to the Company. The
AIC Code is available on the AIC's website: www.theaic.co.uk.
The Board considers that reporting against the principles and recommendations
of the AIC Code, which has been endorsed by the FRC, will provide better
information to shareholders.
The Company has complied with the recommendations of the AIC Code and the
relevant provisions of the UK Corporate Governance Code.
The UK Corporate Governance Code includes provisions relating to:
• the role of the chief executive
• executive directors' remuneration
• the need for an internal audit function
• Interaction with the workforce
For the reasons set out in the AIC Guide, and as explained in the UK Corporate
Governance Code, the Board considers these provisions are not relevant to the
position of the Company, being an externally managed investment company. All
of the Company's day-to-day management and administrative functions, with the
exception of portfolio management, risk management and service provider
performance management, are outsourced to third parties. As a result, the
Company has no executive directors, employees or internal operations. The
Company has therefore not reported further in respect of these provisions.
The Board has considered principal and emerging risks and in doing so has
identified no emerging risks to be identified.
Directors
The Directors are responsible for the determination of the Company's
investment policy and strategy and have overall responsibility for the
Company's activities including the review of the investment activity and
performance.
All the Directors are non-executive. The Board considers each of the Directors
to be independent of, and free of any material relationship with, the
Investment Manager and Investment Adviser.
The Board of Directors delegates to the Investment Manager through the
Investment Management Agreement the responsibility for the management of the
Company's assets in GCC securities in accordance with the company's investment
policy and for retaining the services of the Investment Adviser.
The Articles of Association require that all Directors submit themselves for
election by shareholders at the first opportunity following their appointment
and shall not remain in office longer than three years since their last
election or re-election without submitting themselves for re-election.
The Board meets formally at least 4 times a year and between these meetings
there is regular contact with the Investment Manager. Other meetings are
arranged as necessary. The Board considers that it meets regularly enough to
discharge its duties effectively. The Board ensures that at all times it
conducts its business with the interests of all shareholders in mind and in
accordance with Directors' duties. Directors receive the relevant briefing
papers in advance of Board and Board Committee meetings, so that should they
be unable to attend a meeting they are able to provide their comments to the
Chairman of the Board or Committee as appropriate. The Board meeting papers
are the key source of regular information for the Board, the contents of which
are determined by the Board and contain sufficient information on the
financial condition of the Company. Key representatives of the Investment
Manager attend each Board meeting. All Board and Board Committee meetings are
formally minuted.
Board composition and succession plan
Objectives of Plan
· To ensure that the Board is composed of persons who collectively
are fit and proper to direct the Company's business with prudence, integrity
and professional skills.
· To define the Board Composition and Succession Policy, which
guides the size, shape and constitution of the Board and the identification of
suitable candidates for appointment to the Board.
Methodology
The Board is conscious of the need to ensure that proper processes are in
place to deal with succession issues and the Nomination Committee assists the
Board in the Board selection process, which involves the use of a Board skills
matrix.
The matrix incorporates the following elements: finance, accounting and
operations; familiarity with the regions into which the Company invests;
diversity (gender, residency, cultural background); Shareholder perspectives;
investment management; multijurisdictional compliance and risk management. In
adopting the matrix, the Nomination Committee acknowledges that it is an
iterative document and will be reviewed and revised periodically to meet the
Company's on-going needs.
The Nomination Committee monitors the composition of the Board and makes
recommendations to the Board about appointments to the Board and its
Committees.
Directors may be appointed by the Board, in which case they are required to
seek election at the first AGM following their appointment and triennially
thereafter. Directors who are not regarded as independent are required to seek
re-election annually. In making an appointment the Board shall have regard to
the Board skills matrix.
A Director's formal letter of appointment sets out, amongst other things, the
following requirements:
· bringing independent judgment to bear on issues of strategy,
performance, resources, key appointments and standards of conduct and the
importance of remaining free from any business or other relationship that
could materially interfere with independent judgement;
· having an understanding of the Company's affairs and its position
in the industry in which it operates;
· keeping abreast of and complying with the legislative and broader
responsibilities of a Director of a company whose shares are traded on the
London Stock Exchange;
· allocating sufficient time to meet the requirements of the role,
including preparation for Board meetings; and
· disclosing to the Board as soon as possible any potential
conflicts of interest.
The Board authorises the Nomination Committee to:
· recommend to the Board, from time to time, changes that the
Committee believes to be desirable to the size and composition of the Board;
· recommend individuals for nomination as members of the Board;
· review and recommend the process for the election of the Chairman
of the Board, when appropriate; and
· review on an on-going basis succession planning for the Chairman
of the Board and make recommendations to the Board as appropriate.
The Plan will be reviewed by the Board annually and at such other times as
circumstances may require (e.g. a major corporate development or an unexpected
resignation from the Board). The Plan may be amended or varied in relation to
individual circumstances at the Board's discretion.
Board Committees
The Board has established the following committees to oversee important issues
of policy and maintain oversight outside the main Board meetings:
· Audit Committee
· Remuneration Committee
· Nomination Committee
· Management Engagement Committee
Throughout the year the Chairman of each committee provided the Board with a
summary of the key issues considered at the meeting of the committees and the
minutes of the meetings were circulated to the Board.
The committees operate within defined terms of reference. They are authorised
to engage the services of external advisers as they deem necessary in the
furtherance of their duties, at the Company's expense.
Audit Committee
The Board has established an Audit Committee made up of at least two members
and comprises, Anderson Whamond, David Humbles and Patrick Grant. The Audit
Committee is responsible for, inter alia, ensuring that the financial
performance of the Company is properly reported on and monitored. The Audit
Committee is chaired by David Humbles. The Audit Committee normally meets at
least twice a year when the Company's interim and final reports to
shareholders are to be considered by the Board but meetings can be held more
frequently if the Audit Committee members deem it necessary or if requested by
the Company's auditors. The Audit Committee will, amongst other things, review
the annual and interim accounts, results announcements, internal control
systems and procedures, preparing a note in respect of related party
transactions and reviewing any declarations of interest notified to the
Committee by the Board each on six monthly basis, review and make
recommendations on the appointment, resignation or dismissal of the Company's
auditors and accounting policies of the Company. The Company's auditors are
advised of the timing of the meetings to consider the annual and interim
accounts and the auditors shall be asked to attend the Audit Committee meeting
where the annual audited accounts are to be considered. The Audit Committee
Chairman shall report formally to the Board on its proceedings after each
meeting and compile a report to shareholders on its activities to be included
in the Company's annual report. At least once a year, the Audit Committee will
review its performance, constitution and terms of reference to ensure that it
is operating at maximum effectiveness and recommend any changes it considers
necessary to the Board for approval.
The terms of reference for the Audit Committee are available on the Company's
website www.gulfinvestmentfundplc.com (http://www.gulfinvestmentfundplc.com) .
Significant Issues
During its review of the Company's financial statements for the year ended 30
June 2024, the Audit Committee considered the following significant issue as
communicated by the auditor during their reporting:
Valuation and existence of investment in subsidiary
The valuation of the investment in subsidiary, including valuation and
existence of the portfolio of investments held by the subsidiary, is
undertaken in accordance with the accounting policies, disclosed in Notes 1(a)
and 1(b) to the financial statements. All underlying investments are
considered liquid and priced based on quoted prices in active markets and have
been categorised as Level 1 or level 2 within the IFRS 13 fair value
hierarchy. The underlying portfolio is reviewed and verified by the Manager on
a regular basis and management accounts including a full portfolio listing are
prepared each month and circulated to the Board. An independent custodian,
HSBC Bank Middle East Limited, are used to hold the assets of the underlying
investment portfolio. The underlying investment portfolio is reconciled
regularly by the Manager and a reconciliation is also reviewed by the Auditor.
Remuneration Committee
The Company has established a Remuneration Committee. The Remuneration
Committee is made up of at least two non-executive Directors who are
identified by the Board as being independent. Its members are Patrick Grant
(Chairman), Anderson Whamond, and David Humbles. The Remuneration Committee
normally meets at least once a year and at such other times as the Chairman of
the Remuneration Committee shall require. The Remuneration Committee reviews
the performance of the Directors and sets the scale and structure of their
remuneration and the basis of their letters of appointment with due regard to
the interests of shareholders. In determining the remuneration of Directors,
the Remuneration Committee seeks to enable the Company to attract and retain
Directors of the highest calibre. No Director is permitted to participate in
any discussion of decisions concerning their own remuneration. The
Remuneration Committee reviews at least once a year its own performance,
constitutions and terms of reference to ensure it is operating at maximum
effectiveness and recommend any changes it considers necessary to the Board
for approval.
The terms of reference for the Remuneration Committee are available on the
Company's website www.gulfinvestmentfundplc.com.
Nomination Committee
The Company has established a Nomination Committee which shall be made up of
at least two members and which shall comprise all independent non-executive
Directors. The Nomination Committee comprises Anderson Whamond (Chairman),
David Humbles and Patrick Grant. The Nomination Committee meets at least once
a year prior to the first quarterly Board meeting and at such other times as
the Chairman of the committee shall require. The Nomination Committee is
responsible for ensuring that the Board members have the range of skills and
qualities to meet its principal responsibilities in a way which ensures that
the interests of shareholders are protected and promoted and regularly review
the structure, size and composition of the Board. The Nomination Committee
shall, at least once a year, review its own performance, constitution and
terms of reference to ensure that it is operating at maximum effectiveness and
recommend any changes it considers necessary to the Board for approval.
The Nomination Committee will assess potential candidates on merit against a
range of criteria including experience, knowledge, professional skills and
personal qualities as well as independence, if this is required for the role.
Candidates' ability to commit sufficient time to the business of the Company
is also key, particularly in respect of the appointment of the Chairman. The
Chairman of the Nomination Committee is primarily responsible for interviewing
suitable candidates and a recommendation will be made to the Board for final
approval.
Management Engagement Committee
The Company has established a Management Engagement Committee which is made up
of at least two members who are independent non-executive Directors. The
Management Engagement Committee members are Patrick Grant (Chairman), Anderson
Whamond and David Humbles. The Management Engagement Committee will meet at
least quarterly and is responsible for reviewing the performance of the
Investment Manager and other service providers, to ensure that the Company's
management contract is competitive and reasonable for the shareholders and to
review and make recommendations to the Board on any proposed amendment to or
material breach of the management contract and contracts with other service
providers.
Board Attendance
The number of formal meetings during the year of the Board, and its
Committees, and the attendance of the individual Directors at those meetings,
is shown in the following table:
Board Audit Committee Remuneration Committee Nomination Committee Management Engagement Committee
Total number of meetings in year 8 6 1 1 4
Meetings Attended (entitled to attend)
Anderson Whamond (Chairman and Chairman of Nomination Committee) 8 (8) 6 (6) 1 (1) 1 (1) 4 (4)
Neil Benedict 4 (4) 3 (3) 0 (0) 1 (1) 2 (2)
(Chairman of Remuneration Committee and Chairman of Management Engagement
Committee)
David Humbles 8 (8) 6 (6) 1 (1) 1 (1) 4 (4)
(chairman of Audit Committee)
Patrick Grant 6 (6) 4 (4) 1 (1) 1 (1) 3 (3)
The Annual General Meeting was held on 23 December 2023.
Internal Control
The Board is responsible for the Company's system of internal control and for
reviewing its effectiveness. Its review takes place at least once a year. Such
a system is designed to manage rather than eliminate the risk of failure to
achieve business objectives and can only provide reasonable and not absolute
assurance against material misstatement or loss. The Board also determines the
nature and extent of any risks it is willing to take in order to achieve its
strategic objectives.
The Board, assisted by the Investment Manager and Investment Adviser, has
undertaken regular risk and controls assessments. The business risks have been
analysed and recorded in a risk and internal controls report which is
regularly reviewed. The Board has reviewed the need for an internal audit
function. The Board has decided that the systems and procedures employed by
the Investment Manager and Investment Adviser, including its internal audit
function provide sufficient assurance that a sound system of internal control,
which safeguards shareholders' investments and the Company's assets, is
maintained. An internal audit function, specific to the Company, is therefore
considered unnecessary.
The Board confirms that there is an on-going process for identifying,
evaluating and managing the Company's principal business and operational risks
that have been in place for the year ended 30 June 2024 and up to the date of
approval of the annual report and financial statements.
Accountability and Relationship with the Investment Manager, the Custodian and
the Administrator
The Statement of Directors' Responsibilities is set out on page 33.
The Board has delegated contractually to external third parties, including the
Investment Manager, the Investment Adviser, the Custodian and the
Administrator, the management of the investment portfolio, the custodial
services (which include the safeguarding of the assets), the day-to-day
accounting, company secretarial and administration requirements. Each of these
contracts was entered into after full and proper consideration by the Board of
the quality and cost of the services provided, including the control systems
in operation in so far as they relate to the affairs of the Company.
The Investment Manager, the Investment Adviser and the Administrator ensure
that all Directors receive, in a timely manner, all relevant management,
regulatory and financial information. Representatives of the Investment
Manager and the Administrator attend each Board meeting enabling the Directors
to probe further on matters of concern.
Continued Appointment of the Investment Manager
The Board considers the arrangements for the provision of investment
management and other services to the Company on an on-going basis. The Board
reviews investment performance at each Board meeting and a formal review of
the Investment Manager (and Investment Adviser) is conducted annually. As a
result of their annual review, NAV performance has been found to be
satisfactory and it is the opinion of the Directors that the continued
appointment of the current Investment Manager (and Investment Adviser) on the
terms agreed is in the interests of the Company's shareholders as a whole.
Relations with shareholders
The Chairman is responsible for ensuring that all Directors are made aware of
shareholders' concerns. The shareholder profile of the Company is regularly
monitored and the Board liaises with the Investment Manager to canvass
shareholder opinion and communicate views to shareholders. The Company is
concerned to provide the maximum opportunity for dialogue between the Company
and shareholders. It is believed that shareholders have proper access to the
Investment Manager at any time and to the Board if they so wish. All
shareholders are encouraged to attend annual general meetings. Together with
the Investment Manager and Investment Adviser, regular investor presentations
are held to promote a wider following for the Company.
Viability statement
The Board makes an assessment of the longer-term prospects of the Company
beyond the timeframe envisaged under the going concern basis of accounting
having regard to the Company's current position and the principal risks it
faces.
The Board does this by performing robust risk assessments using a detailed
risk matrix at each of its scheduled audit committee meetings.
Up until the recent tender offer result the Company was a long-term investment
vehicle and the Directors, therefore, believed that it was appropriate to
assess its viability over a long-term horizon. The Board considered that
assessing the Company's prospects over a period of five years was appropriate
given the nature of the Company and the inherent uncertainties of looking out
over a longer time period. The Directors believed that a five-year period
appropriately reflected the long term strategy of the Company and over which,
in the absence of any adverse change to the regulatory environment, they did
not expect there to be any significant change to the current principal risks
and to the adequacy of the mitigating controls in place. In light of the
recent tender offer the Board has assessed the time necessary for the orderly
wind up of the Company and distribution of liquidated assets to shareholders.
Owing to the liquidity of the underlying investments the Board believes this
will occur in a relatively short period of time after the Extraordinary
General Meeting.
However, because of the September tender offer, where the minimum size
condition was breached, the Directors took the decision to put forward
proposals to Shareholders for the Company to be wound up with a view to
returning cash to Shareholders or to enter a solvent formal liquidation. This
will be voted on at the Extraordinary General Meeting to be held on 29 October
2024.
Promoting the Company's Success
In accordance with corporate governance best practice, the Board is now
required to describe to the Company's shareholders how the Directors have
discharged their duties and responsibilities over the course of the financial
year following the guidelines set out in the UK under section 172 (1) of the
Companies Act 2006 (the "s172 Statement") as it applied for the company. This
Statement, from 'Promoting the Success of the Company' to "Long Term
Investment" on page 30 provides an explanation of how the Directors have
promoted the success of the Company for the benefit of its members as a whole,
taking into account the likely long-term consequences of decisions, the need
to foster relationships with all stakeholders and the impact of the Company's
operations on the environment.
The purpose of the Company is to act as a vehicle to provide, over time,
financial returns (both income and capital) to its shareholders.
The Company's Investment Objective is disclosed on page 5. The activities of
the Company are overseen by the Board of Directors of the Company. The Board's
philosophy is that the Company should operate in a transparent culture where
all parties are treated with respect and provided with the opportunity to
offer practical challenge and participate in positive debate which is focused
on the aim of achieving the expectations of shareholders and other
stakeholders alike. The Board reviews the culture and manner in which the
Investment Adviser operates at its regular meetings and receives regular
reporting and feedback from the other key service providers.
The Company is a long-term investment vehicle, with a recommended holding
period of five or more years. It is externally managed, has no employees, and
is overseen by an independent non-executive board of directors. Your Company's
Board of Directors sets the investment mandate, monitors the performance of
all service providers (including the Investment Adviser) and is responsible
for reviewing strategy on a regular basis. All this is done with the aim of
preserving and, indeed, enhancing shareholder value over the longer term.
Shareholder Engagement
The following table describes some of the ways we engage with our
shareholders:
AGM The AGM provides an opportunity for the Directors to engage with shareholders,
answer their questions and meet them informally. The next AGM will take place
later in the year in the Isle of Man. We encourage shareholders to lodge their
vote by proxy on all the resolutions put forward.
Annual report We publish a full annual report each year that contains a strategic report,
governance section, financial statements and additional information. The
report is available online and in paper format.
Company announcement We issue announcements for all substantive news relating to the Company. You
can find these announcements on the website.
Results announcement We release a full set of financial results at the half year and full year
stage. Updated net asset value figures are announced on a weekly basis.
Website Our website contains a range of information on the Company. Details of
financial results, the investment process and Investment Manager together with
Company announcements and contact details can be found here:
www.gulfinvestmentfundplc.com
Investor relations The Management Engagement Committee evaluates the level and effectiveness of
the handling of investor relations.
Quarterly reports The investment manager produces in depth quarterly investment reports to the
market - these can also be found on the Company's website.
Other Service Providers
The other key stakeholder group is that of the Company's third-party service
providers. The Board is responsible for selecting the most appropriate
outsourced service providers and monitoring the relationships with these
suppliers regularly in order to ensure a constructive working relationship.
Our service providers look to the Company to provide them with a clear
understanding of the Company's needs in order that those requirements can be
delivered efficiently and fairly. The Board, via the Management Engagement
Committee, ensures that the arrangements with service providers are reviewed
at least annually in detail. The aim is to ensure that contractual
arrangements remain in line with best practice, services being offered meet
the requirements and needs of the Company and performance is in line with the
expectations of the Board, Manager, Investment Manager and other relevant
stakeholders. Reviews include those of the Company's custodian, share
registrar, broker and auditor.
Principal Decisions
Pursuant to the Board's aim of promoting the long-term success of the Company,
the following principal decisions have been taken during the year:
Portfolio
The report of the Investment Manager and Investment Adviser on pages 7 to 15
details the key investment decisions taken during the year and subsequently.
The Investment Manager has continued to monitor the investment portfolio
throughout the year under the supervision of the Board.
ESG
As highlighted on page 18, the Board is responsible for overseeing the work of
the Investment Manager and this is not limited solely to the investment
performance of the portfolio companies. The Board also has regard for
environmental, social and governance matters that subsist within the portfolio
companies.
Audit
KPMG Audit LLC was re-appointed as auditor at the last AGM on 22 December
2023.
Long Term Investment
The Investment Manager's investment process seeks to outperform over the
longer term. The Board has in place the necessary procedures and processes to
continue to promote the long-term success of the Company. The Board will
continue to monitor, evaluate and seek to improve these processes as the
Company continues to grow over time, to ensure that the investment proposition
is delivered to shareholders and other stakeholders in line with their
expectations.
Communities and the environment
The Board expects the Manager, supported by its governance function, to engage
with investee companies at the appropriate time on ESG matters in line with
good stewardship practices.
The Board is conscious of the importance of providing an investment product
which meets the needs of its investors, including retail investors and
pensioners.
The Board is also conscious of the need to take appropriate account of broader
ESG concerns and to act as a good corporate citizen.
On behalf of the Board
Anderson Whamond
Chairman
16 October 2024
Board of Directors
Anderson Whamond (Non-Executive Chairman)
Anderson has over 35 years' experience in the banking and financial services
sector. He is a non-executive director of The International Stock Exchange
Group Limited, and a non-executive director of the Irish domiciled Magna
Umbrella Fund and the OAKS Emerging & Frontier Umbrella Fund. Previously,
he was a non-executive director of Cayman Islands-domiciled OCCO Eastern
European Fund.
David Humbles (Non-Executive Director)
David Humbles was born in 1960 and is British. He worked in the downstream oil
industry for 25 years and relocated to the Isle of Man in 1998 as Director of
Total. In 2003, David purchased Abbey Properties Ltd which owns and manages a
property complex in the north of the island. David owns Westminster
Properties Ltd which manages a large portfolio of residential and commercial
properties on the island. David was Managing Director of Oakmayne, a
residential developer in London. He has previously served on the board of two
AIM listed companies.
Patrick Grant (Non-Executive Director)
Patrick was head of the Middle East region at Schroders for 12 years until
2020. He previously held a similar role at JP Morgan Asset Management for a
decade until 2007. His earlier career included working at John Swire and Sons
across Asia (including in Bahrain); this followed 6 years as an officer in the
British Army (Gurkhas). He has a degree in modern history from Oxford
University.
Statement of Directors' responsibilities in respect of the Annual Report and
the Financial Statements
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Company's financial statements
for each financial year. Under the law they have elected to prepare the
company financial statements in accordance with International Financial
Reporting Standards (IFRSs) and applicable law.
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss for that period. In
preparing each of the Company's financial statements, the Directors are
required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable, relevant and
reliable;
· state whether applicable standards have been followed, subject to
any material departures disclosed and explained in the financial statements;
· assess the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
· use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that its financial statements comply with the Companies
Acts 1931 to 2004. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Company and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Directors' Report and Corporate Governance Statement that complies
with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation governing the preparation and dissemination of financial
statements may differ from one jurisdiction to another.
Disclosure Guidance and Transparency Rules responsibility statement
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with
International Financial Reporting Standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company;
· that in the opinion of the Directors, the Annual Report and
Accounts taken as a whole, is fair, balanced and understandable and it
provides the information necessary to assess the Company's position,
performance, business model and strategy; and
· the Business Review, Report of the Investment Manager and
Investment Adviser and the Report of the Directors include a fair review of
the development and performance of the business and the position of the
Company, together with a description of the principal risks and uncertainties
that they face.
On behalf of the Board
Anderson Whamond
Chairman
16 October 2024
Audit Committee Report
An Audit Committee has been established in compliance with the FCA's
Disclosure Guidance and Transparency Rule 7.1, the UK Corporate Governance
Code and the AIC Code of Corporate Governance consisting of independent
Directors. Its authority and duties are clearly defined within its written
terms of reference. David Humbles is Chairman of the Audit Committee, which
also comprises Mr Anderson Whamond and Mr Patrick Grant.
The Committee meets at least two times a year.
The Committee's responsibilities, which were discharged during the year,
include:
• monitoring and reviewing the integrity of the interim and
annual financial statements and the internal financial controls;
• reviewing the appropriateness of the Company's accounting
policies;
• making recommendations to the Board in relation to the
appointment of the external auditors and approving their remuneration and
terms of their engagement;
• reviewing the external Auditor's plan for the audit of the
Company's financial statements;
• developing and implementing policy on the engagement of the
external auditors to supply non-audit services;
• reviewing and monitoring the independence, objectivity and
effectiveness of the external auditors;
• reviewing the arrangements in place within the Administrator
and Investment Manager/Investment Adviser whereby their staff may, in
confidence, raise concerns about possible improprieties in matters of
financial reporting or other matters insofar as they may affect the Company;
• performing the annual review of the effectiveness of the
internal control systems of the Company;
• reviewing the terms of the Investment Management Agreement;
• considering annually whether there is a need for the Company
to have its own internal audit function; and
• review the relationship with and the performance of the
Custodian, the Administrator and the Registrar.
The Audit Committee does not award any non-audit work. The full Board has to
approve any non-audit work and this includes confirmation that in all such
work auditor objectivity and independence is safeguarded.
Owing to the nature of the fund's business, with all major functions being
outsourced and the absence of employees, the Audit Committee do not feel it is
necessary for the Company to have its own internal audit function. This
situation is re-evaluated annually.
KPMG Audit LLC was re-appointed as auditor at the last AGM on 22 December
2023. The Audit Committee considered the experience and tenure of the audit
partner and staff and the nature and level of services provided. The Audit
Committee receives confirmation from the auditor that they have complied with
the relevant UK professional and regulatory requirements on independence. The
Company's Audit Committee meets representatives of the Administrator, who
report as to the proper conduct of the business in accordance with the
regulatory environment in which the Company, the Administrator, and the
Investment Manager/Adviser operate. The Company's external auditor also
attends this Audit Committee meeting at its request and reports if the Company
has not kept proper accounting records, or if it has not received all the
information and explanations required for its audit. The Audit Committee also
approves a policy regarding non-audit services provided by the auditor.
The Audit Committee also monitors the risks to which the Company is exposed,
provide policy re: non-audit services from the auditor and makes
recommendations as to the mitigation of these risks. This task is facilitated
by using an extensive risk matrix that enables the Committee to make a
quantitative analysis of the individual risks and to highlight those areas
where risk is high or increasing.
This report was reviewed and approved by the Board on 16 October 2024.
David Humbles
Chairman of the Audit Committee
16 October 2024
Management Engagement Committee Report
A Management Engagement Committee has been established in accordance with good
corporate governance. Patrick Grant is Chairman of the Committee, which also
comprises Anderson Whamond and David Humbles.
The function of the Management Engagement Committee is to monitor the
performance of all the Company's service providers and in the particular the
performance of the Investment Manager/Investment Adviser.
The performance of the Investment Manager/Investment Adviser is formally
reviewed annually at the end of the Company's financial year. The Management
Engagement Committee meets quarterly prior to the quarterly Board meetings and
the Chairman of the Management Engagement Committee monitors the performance
periodically during the intervening periods.
As regards the Investment Manager/Investment Adviser, the Committee:
· monitors and evaluates the investment performance both in
absolute terms and also by reference to peer group analysis prepared by the
Investment Manager/Adviser and by the Company's broker;
· reviews the performance fee structure to ensure that it does not
encourage excessive risk and that it rewards demonstrable superior
performance;
· investigates any breaches of agreed investment limits and any
deviation from the agreed investment policy and strategy;
· reviews the standard of any other services provided by the
Investment Manager;
· evaluates the level and effectiveness of any marketing support
provided by the Investment Manager, including but not limited to, their input
into quarterly reports, handling investor relations and website monitoring and
development;
· assesses the level of fees charged by the Investment Manager and
how these fees compare with those charged to peer group companies;
· compares the notice period on the Investment Management Agreement
with industry norms;
· considers any other issues on the appointment of the Investment
Manager.
As regards the other service providers to the Company, the Committee:
· monitors the terms on which they are retained and compares them
to market rates;
· examines the effectiveness of the services provided;
· makes recommendations to the Board where changes are warranted.
At its most recent meeting, the Management Engagement Committee concluded that
the performance of the Investment Manager/Investment Adviser had been
satisfactory. The Investment Manager had adhered to the investment policy and
policy limits.
The Committee was satisfied with the current performance of the Company's
other service providers.
Patrick Grant
Chairman of the Management Engagement Committee
16 October 2024
Directors' Remuneration Report
This report meets the relevant rules of the Financial Conduct Authority and
describes how the Board has applied the principles relating to Directors'
remuneration. An ordinary resolution to receive and approve this report will
be put to the shareholders at the forthcoming Annual General Meeting.
Role of the Remuneration Committee
The role and make-up of the Remuneration Committee is more fully discussed on
page 26.
The committee held two formal meetings during the year, during which it
addressed all the matters under its remit.
Consideration by the Directors of Matters relating to the Directors'
remuneration
As the Board is comprised entirely of non-executive Directors the Board as a
whole consider the Directors' remuneration but it has appointed its
Remuneration Committee to consider matters relating thereto.
Remuneration policy
The Company's Articles of Association limit the basic fees payable to the
Directors to £200,000 per annum in aggregate. Subject to this overall limit
it is the Company's policy that the fees payable to the Directors should
reflect the time spent by the Board on the Company's affairs and the
responsibilities borne by the Directors and should be sufficient to enable
candidates of high calibre to be recruited. The Directors are also entitled to
receive reimbursement of any expenses incurred in relation to their
appointment.
The policy is for the Chairman of the Board and Chairman of the Audit
Committee to be paid a higher fee than the other Directors in recognition of
their more onerous roles and more time spent.
In the year under review the Directors' fees were paid at the following annual
rates: the Chairman £35,000, the Chairman of the Audit Committee £26,250,
the other Director £24,500.
Directors' and officers' liability insurance cover is in place in respect of
the Directors.
Reappointment
It is the Board's policy that non-independent Directors stand for re-election
every year and independent Directors stand for re-election every three years.
Directors' fees
The fees expensed (including additional payments) by the Company in respect of
each of the Directors who served during the year, and in the previous year,
were as follows:
30 June 2024 30 June 2023
£ £
Anderson Whamond (Chairman) 35,000 35,000
David Humbles (Chairman of Audit Committee) 26,250 26,250
Neil Benedict (Chairman of Remuneration Committee and Management Engagement 11,651 24,500
Committee)*
Patrick Grant (Chairman of Remuneration Committee and Management Engagement 18,375 -
Committee)**
91,276 85,750
US$ charge reflected in the financial statements 128,983 103,374
*Resigned 22 December 2023
**Appointed 1 October 2023
Expenses totalling US$14,455 (2023: US$35,498) were incurred by the Directors
and reimbursed during the year.
No other remuneration or compensation was paid or payable by the Company
during the period to any of the Directors.
Directors' and other interests
None of the Directors had any interest during the year in any material
contract for the provision of services which was significant to the business
of the Company.
Director holdings in the Company:
30 June 2024 30 June 2023
Director Shares Shares
Anderson Whamond 50,000 50,000
Patrick Grant 26,178 -
For and on behalf of the Board
Patrick Grant
Chairman of the Remuneration Committee
16 October 2024
Report of the Independent Auditors, KPMG Audit LLC, to the members of Gulf
Investment Fund plc
Our opinion is unmodified
We have audited the financial statements of Gulf Investment Fund plc (the
"Company"), which comprise the statement of financial position as at 30 June
2024, the statements of income, comprehensive income, changes in equity and
cash flows for the year then ended, and notes, comprising material accounting
policies and other explanatory information. These financial statements have
not been prepared on the going concern basis for the reason set out in Note
13.1.
In our opinion, the accompanying financial statements:
· give a true and fair view of the state of the Company's affairs
as at 30 June 2024 and of the Company's profit for the year then ended;
· have been properly prepared in accordance with International
Financial Reporting Standards; and
· have been properly prepared in accordance with the requirements
of the Companies Acts 1931 to 2004.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) ("ISAs (UK)") and applicable law. Our responsibilities are described
below. We have fulfilled our ethical responsibilities under, and are
independent of the Company in accordance with, UK ethical requirements
including the FRC Ethical Standard as applied to public interest entities. We
believe that the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion.
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were
of most significance in the audit of the financial statements and include the
most significant assessed risks of material misstatement (whether or not due
to fraud) identified by us, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these
matters. In arriving at our audit opinion above, the key audit matter was
as follows (unchanged from 2023 barring the removal of the key audit matter
relating to a material uncertainty to going concern as a result of these
financial statements not being prepared on a going concern basis in the
current year):
The risk Our response
Valuation and existence of the Investment at fair value through profit or loss Incorrect valuation and existence: Our procedures Included:
(comprising Investment ln subsidiary)
The investment in subsidiary is stated at fair value of US$97.6m (2023: Control evaluation:
(US$97.6m, 2023: US$96.1m) US$96.1m), based on its net asset value, representing 99.7% (2023: 99.0%) of
total assets. Documenting and assessing the design and implementation of the controls in
Refer to page 26 (Significant Issues considered by the Audit Committee) and
place to record investment transactions and to value the underlying portfolio
note 1 (a) (note relating to investment at fair value through profit or loss, The underlying portfolio of investments held by the subsidiary is stated at of investments held by the subsidiary;
comprising investment in subsidiary) and note 1 (b) (note relating to fair value of US$97.1m (2023: US$94.6m), representing 99.3% (2023: 97.6%) of
financial assets at fair value through profit or loss held by the subsidiary, the Company's net assets on a look -through basis (by value) and is considered Tests of detail:
being investments held by the subsidiary). to be the key driver of the results of the Company.
Auditing the accounts of the subsidiary as part of the audit of the Company;
The risk Our response
Regarding the underlying portfolio of investments held by the subsidiary, · Assessing the accounting policies adopted by the subsidiary to ensure
incorrect asset pricing or a failure to maintain proper title of assets could these are consistent with the Company's accounting policies. In particular,
have a significant impact on the investment portfolio valuation and the return ensuring that the portfolio of investments held by the subsidiary is stated at
generated for shareholders of the Company. fair value and assessing whether the net asset value of the subsidiary
represents fair value;
Of the investments held by the subsidiary, a total of US$66.4m (2023:
US$52.4m) was held via P--Notes; held to obtain exposure to Saudi Arabia, · Agreeing the valuation of 100 per cent of investments in the
where direct investment in equities is not possible for foreign Investors. subsidiary's portfolio to externally quoted prices (in the case of P-Notes
this represents the quoted price of the underlying equity);
Additional risks arise regarding the P-Notes as follows:
· Assessing the credit worthiness of the P-Note issuers by examining
· they are issued by counterparty financial institutions and therefore their credit ratings and inspecting the P-Note legal instruments to assess
are subject to counterparty risk; and whether they provide the full return of the underlying equity;
· they are classified as level 2 in the fair value hierarchy as there · Agreeing 100 per cent of investment holdings in the subsidiary's
is no quoted price in an active market for the P-Note instrument itself - portfolio to independently received third party confirmations from investment
instead they are priced based on the quoted price of the underlying equity to custodians.
which they relate.
Assessing transparency
· Consideration of the appropriateness, in accordance with the
International Financial Reporting Standards, of the disclosures in respect of
the P-Notes and other investments, including their level ln the fair value
hierarchy.
Our application of materiality and an overview of the scope of our audit
Materiality for the financial statements as a whole was set at US$950,000,
determined with reference to a benchmark of total assets of US$97,888,034,
of which it represents approximately 1.0% (2023: 1.0%).
In line with our audit methodology, our procedures on individual account
balances and disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that individually
immaterial misstatements in individual account balances add up to a material
amount across the financial statements as a whole. Performance materiality for
the Company was set at 75% (2023: 75%) of materiality for the financial
statements as a whole, which equates to US$712,000. We applied this percentage
in our determination of performance materiality because we did not identify
any factors indicating an elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected identified
misstatements exceeding US$47,000, in addition to other identified
misstatements that warranted reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality level specified
above, which has informed our identification of significant risks of material
misstatement and the associated audit procedures performed in those areas as
detailed above.
Fraud and breaches of laws and regulations - ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud ("fraud risks") we
assessed events or conditions that could indicate an incentive or pressure to
commit fraud or provide an opportunity to commit fraud. Our risk assessment
procedures included:
· enquiring of management as to the Company's policies and
procedures to prevent and detect fraud as well as enquiring whether management
have knowledge of any actual, suspected or alleged fraud;
· reading minutes of meetings of those charged with governance; and
· using analytical procedures to identify any unusual or unexpected
relationships.
As required by auditing standards, we perform procedures to address the risk
of management override of controls, in particular the risk that management may
be in a position to make inappropriate accounting entries. On this audit we do
not believe there is a fraud risk related to revenue recognition because the
Company's revenue streams are simple in nature with respect to accounting
policy choice, and are easily verifiable to external data sources or
agreements with little or no requirement for estimation from management. We
did not identify any additional fraud risks.
We performed procedures including:
· Identifying journal entries and other adjustments to test based
on risk criteria and comparing any identified entries to supporting
documentation; and
· incorporating an element of unpredictability in our audit procedures.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected
to have a material effect on the financial statements from our sector
experience and through discussion with management (as required by auditing
standards), and from inspection of the Company's regulatory and legal
correspondence, if any, and discussed with management the policies and
procedures regarding compliance with laws and regulations. As the Company is
regulated, our assessment of risks involved gaining an understanding of the
control environment including the entity's procedures for complying with
regulatory requirements.
The Company is subject to laws and regulations that directly affect the
financial statements including financial reporting legislation and taxation
legislation and we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial statement
items.
The Company is subject to other laws and regulations where the consequences of
non-compliance could have a material effect on amounts or disclosures in the
financial statements, for instance through the imposition of fines or
litigation or impacts on the Company's ability to operate. We identified
financial services regulation as being the area most likely to have such an
effect, recognising the regulated nature of the Company's activities and its
legal form. Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of management and
inspection of regulatory and legal correspondence, if any. Therefore if a
breach of operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk
that we may not have detected some material misstatements in the financial
statements, even though we have properly planned and performed our audit in
accordance with auditing standards. For example, the further removed
non-compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely the inherently limited
procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection
of fraud, as this may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. Our audit procedures
are designed to detect material misstatement. We are not responsible for
preventing non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the annual report but does
not include the financial statements and our auditor's report thereon. Our
opinion on the financial statements does not cover the other information and
we do not express an audit opinion or any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Disclosures of emerging and principal risks and longer term viability
We are required to perform procedures to identify whether there is a material
inconsistency between the directors' disclosures in respect of emerging and
principal risks and the viability statement, and the financial statements
and our audit knowledge. we have nothing material to add or draw attention to
in relation to:
· the directors' confirmation within the Corporate Governance
Report (page 23) that they have carried out a robust assessment of the
emerging and principal risks facing the Company, including those that would
threaten its business model, future performance, solvency or liquidity;
· the emerging and principal risks disclosures describing these risks
and explaining how they are being managed or mitigated;
· the directors' explanation in the Corporate Governance Report (page
23) as to how they have assessed the prospects of the Company, over what
period they have done so and why they consider that period to be appropriate,
and their statement as to whether they have a reasonable expectation that the
Company will be able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
We are also required to review the Corporate Governance Report, set out on
page 23 under the Listing Rules. Based on the above procedures, we have
concluded that the above disclosures are materially consistent with the
financial statements and our audit knowledge.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material
inconsistency between the directors' corporate governance disclosures and the
financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is
materially consistent with the financial statements and our audit
knowledge:
· the directors' statement that they consider that the annual report
and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for shareholders to
assess the Company's position and performance, business model and strategy;
· the section of the annual report describing the work of the Audit
Committee, including the significant issues that the Audit Committee
considered in relation to the financial statements, and how these issues were
addressed; and
· the section of the annual report that describes the review of the
effectiveness of the Company's risk management and internal control systems.
We are required to review the part of Corporate Governance Statement
relating to the Company's compliance with the provisions of the UK Corporate
Governance Code specified by the Listing Rules for our review. We have nothing
to report in this respect.
We have nothing to report on other matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Acts 1931 to 2004 require us to report to you if, in our opinion:
· proper books of account have not been kept and proper returns
adequate for our audit have not been received from branches not visited by us;
or
· the financial statements are not in agreement with the books of
account and returns; or
· certain disclosures of directors' remuneration specified by law are
not made; or
· we have not received all the information and explanations we require
for our audit.
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on 33, the directors are
responsible for: the preparation of the financial statements including being
satisfied that they give a true and fair view; such internal control as they
determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error; assessing
the Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going concern
basis of accounting unless they either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue our opinion in an auditor's report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC's website
at www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) .
The purpose of this report and restrictions on its use by persons other than the Company's members as a body
This report is made solely to the Company's members, as a body, in accordance
with section 15 of the Companies Act 1982. Our audit work has been
undertaken so that we might state to the Company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members, as
a body, for our audit work, for this report, or for the opinions we have
formed.
Edward Houghton
Responsible Individual
For and on behalf of KPMG Audit LLC
Chartered Accountants and Recognised Auditors
Heritage Court
41 Athol Street
Douglas
Isle of Man
IM1 1LA
16 October 2024
Income Statement
Note Year ended 30 June Year ended 30 June
2024 2023
US$'000 US$'000
Income
Net (loss)/income in investment at fair value through profit or (349) 17,060
loss
Dividend received from subsidiary 10,000 -
Interest income on loan 468 206
Total net income 10,119 17,266
Expenses
Expenses 7 681 810
Total operating expenses 681 810
Profit before tax 9,438 16,456
Income tax expense 9 - -
Profit for the year 9,438 16,456
Basic earnings per share (cents) 4 23.38 40.14
Diluted earnings per share (cents) 4 23.38 40.14
The Directors consider that all results derive from continuing activities.
Statement of Comprehensive Income
Year ended 30 June 2024 Year ended 30 June 2023
US$'000 US$'000
Profit for the year 9,438 16,456
Other comprehensive income - -
Items that are or may be reclassified subsequently to profit or loss:
Currency translation differences - -
Total items that are or may be reclassified subsequently to profit or loss - -
Other comprehensive income for the year - -
Total comprehensive income for the year 9,438 16,456
Statement of Financial Position
Note At 30 June 2024 At 30 June 2023
US$'000 US$'000 US$'000 US$'000
Assets
Investment at fair value through profit or loss - comprising: 1(a)
- equity interest in subsidiary 93,419 93,766
- loan to subsidiary 4,160 2,320
97,579 96,086
Other receivables and prepayments 102 60
Cash and cash equivalents 207 881
Total assets 97,888 97,027
Equity
Issued share capital 5 389 411
Share premium - 1,008
Reserves 97,384 95,457
Total equity 97,773 96,876
Current liabilities
Other payables and accrued expenses 6 115 151
Total current liabilities 115 151
Total equity and liabilities 97,888 97,027
The financial statements were approved by the Directors on 16 October 2024 and
signed on their behalf by:
Anderson
Whamond
David Humbles
Chairman
Director
Statement of Changes in Equity
Share capital Share premium Reserves Total
US$'000 US$'000 US$'000 US$'000
Balance at 1 July 2022 411 - 82,853 83,264
Total comprehensive income for the year
Profit for the year - - 16,456 16,456
Total comprehensive income for the year - - 16,456 16,456
Contributions by and distributions to owners
Dividends paid - - (2,882) (2,882)
Shares subject to tender offer (4) - (835) (839)
Tender offer expenses - - (135) (135)
Proceeds from shares issued 4 1,008 - 1,012
Total contributions by and distributions to owners - 1,008 (3,852) (2,844)
Balance at 30 June 2023 411 1,008 95,457 96,876
Share capital Share premium Reserves Total
US$'000 US$'000 US$'000 US$'000
Balance at 1 July 2023 411 1,008 95,457 96,876
Total comprehensive income for the year
Profit for the year - - 9,438 9,438
Total comprehensive income for the year - - 9,438 9,438
Contributions by and distributions to owners
Dividends paid - - (3,305) (3,305)
Shares subject to tender offer (26) (1,914) (4,061) (6,001)
Tender offer expenses - - (145) (145)
Proceeds from shares issued 4 906 - 910
Total contributions by and distributions to owners (22) (1,008) (7,511) (8,541)
Balance at 30 June 2024 389 - 97,384 97,773
Statement of Cash Flows
Year ended 30 June 2024 Year ended 30 June 2023
US$'000 US$'000
Cash flows from operating activities
Interest income from loan to subsidiary 426 212
Loan to subsidiary 8,161 4,180
Operating expenses paid (718) (734)
Net cash generated from operating activities 7,869 3,658
Financing activities
Dividends paid (3,305) (2,882)
Cash used in tender offer (6,001) (839)
Tender expenses (145) (135)
Proceeds from issue of shares 910 1,012
Net cash used in financing activities (8,541) (2,844)
Net decrease in cash and cash equivalents (672) 814
Effects of exchange rate changes on cash and cash equivalents (2) -
Cash and cash equivalents at beginning of the year 881 67
Cash and cash equivalents at end of the year 207 881
Notes to the Financial Statements
1(a) Investment at fair value through profit or loss
30 June 2024 30 June 2023
US$'000 US$'000
Equity interest in subsidiary 93,419 93,766
Loan to subsidiary 4,160 2,320
Total investment in subsidiary 97,579 96,086
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$4,159,606 (2023: US$2,320,179), 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
year-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 30 June 2024 the Subsidiary held 26 P-Notes (2023: 23) with a value of
US$66,357,161 (2023: US$52,441,930), held to obtain exposure to Saudi Arabia.
Purchases and sales of investments are recognised on trade date - the date on
which the Company commits to purchase or sell the asset. Investments are
initially recorded at fair value, and transaction costs for all financial
assets and financial liabilities carried at fair value through profit and loss
are expensed as incurred.
Gains and losses (realised and unrealised) arising from changes in the fair
value of the financial assets are included in the income statement in the year
in which they arise.
Investments held by Subsidiary
30 June 2024: Financial assets at fair value through profit or loss; all
quoted equity securities or P-Notes:
Security name Number US$'000
National Commercial Bank* 790,679 7,631
Qatar National Bank (QNBK QD) 1,399,749 5,616
Qatar Navigation (QNNS QD) 1,742,108 5,463
Integrated Holding Company 3,067,353 5,168
Yamama Cement* 561,475 4,940
Mobile Telecommunications Company KWD* 3,078,520 4,466
Saudi British Bank* 430,769 4,375
Saudi Ground Services* 305,695 4,246
Banque Saudi Fransi* 421,112 3,963
Commercial Bank of Qatar (CBQK QD) 3,059,314 3,596
Yanbu Cement* 486,310 3,565
Seera Group Holdings* 486,800 3,348
Saudi Airlines Catering Co* 91,071 3,025
Qatar Insurance (QATI QD) 5,131,406 2,959
Arab National Bank* 543,600 2,927
City Cement* 516,586 2,721
Arabian Centres Limited* 478,100 2,595
The Mediterranean & Gulf Insurance Reinsurance* 357,400 2,587
Qatar Islamic Bank (QIBK QD) 498,373 2,544
Advanced Petrochemicals* 219,302 2,274
Maharah Human Resources* 1,358,795 2,181
Malath Coop Insurance and Reinsurance* 442,500 2,154
Bank Muscat 3,124,909 2,035
Aramex Co USD* 2,859,000 1,930
Aramex (ARMX) 2,723,787 1,839
Saudi Cement Company* 148,326 1,803
Fawaz Abdulaziz Al* 628,081 1,373
Qatar Insurance USD* 1,968,692 1135
Arabian Shield Cooperative* 182,100 1038
Southern Province Cement Co* 94,538 929
Qatar Gas Transport USD* 430,000 548
Beyout Investment Group 322,000 538
Qatar Gas Transport (QGTS QD) 330,000 421
Alef Education Holding 925,000 307
Commercial Bank of Qatar USD* 250,000 294
Saudi Manpower Solns Co* 107,436 252
Agility Global Plc 652,518 210
Rasan Information Tech* 3,150 57
97,053
*P-notes
Investments held by Subsidiary
30 June 2023: Financial assets at fair value through profit or loss; all
quoted equity securities or P-Notes:
Security name Number US$'000
Qatar Gas Transport (QGTS QD) 6,445,120 7,197
Qatar Navigation (QNNS QD) 2,477,030 7,040
National Commercial Bank 626,357 6,140
Middle East Healthcare* 285,754 5,389
Integrated Holding Company 3,297,916 4,648
Seera Group Holdings* 624,400 4,422
United International Transportation Co* 222,799 4,338
Maharah Human Resources* 263,618 3,952
Company for Co-op Insurance* 105,000 3,882
Emaar Properties Company (EMAAR UH) 2,182,000 3,807
Qatar Islamic Bank (QIBK QD) 770,000 3,745
Saudi Ground Services* 384,395 3,512
Emirates National Bank of Dubai (ENBD UH) 827,000 3,332
Yanbu Cement* 255,506 2,917
Saudi British Bank* 279,000 2,828
Gulf Insurance* 299,099 2,521
Arabian Contracting Services* 52,655 2,497
Banque Saudi Fransi* 225,000 2,497
Qatar National Bank (QNBK QD) 563,000 2,384
United Electronics Company* 116,000 2,268
Qatar Insurance (QATI QD) 3,742,999 2,230
Bawan Company* 195,354 1,881
Leejam Sports Co* 54,628 1,874
Commercial Bank of Qatar (CBQK QD) 1,040,462 1,655
Alamar Foods* 41,450 1,446
Bupa Arabia Co* 27,927 1,375
Riyadh Cables* 76,240 1,328
Jahez International* 5,689 956
Emaar Properties Company USD* 485,000 861
Alkhorayef Water and Power Tech* 17,500 742
Qatar Insurance USD* 750,000 474
Emirates NBD USD Stock* 115,000 463
Jamjoom Pharmaceuticals Factory Company* 867 21
94,622
*P-notes
1(c) Risks relating to financial instruments
Risks relating to financial instruments comprise market price risk, credit
risk, interest rate risk, liquidity risk and foreign currency risk. These are
detailed below and in notes 2, 6 and 8.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will
fail to discharge an obligation or commitment that it has entered into with
the Company.
The carrying amounts of financial assets best represent the maximum credit
risk exposure at the statement of financial position date. This relates also
to financial assets carried at amortised cost.
At the reporting date, the financial assets exposed to credit risk comprised
the following:
30 June 2024 30 June 2023
US$'000 US$'000
Loan to subsidiary 4,160 2,320
Cash and cash equivalents 207 881
Other receivables 64 22
4,431 3,223
The maximum exposure to credit risk is represented by the carrying amount of
each financial asset in the statement of financial position. Management does
not expect any counterparty to fail to meet its obligations and there are no
debts past their due dates as at the year-end. All amounts are due within one
month of the year end.
Investments held by the subsidiary are held by the Custodian, HSBC Bank
(Middle East) Ltd.
P-Notes held by the Company's subsidiary are issued by counterparty financial
institutions and therefore the Company is exposed to credit risk in relation
to these financial institutions. The value of P-Notes held at the year-end
is disclosed in note 1(a). The counterparties are Merrill Lynch International
& Co C.V. (guaranteed by Bank of America Corporation), EFG-Hermes MENA
Securities Limited (guaranteed by EFG-Hermes Holding S.A.E.) and HSBC Bank
Middle East (guaranteed by HSBC Bank plc).
The credit ratings of the financial institutions are as follows:
Merrill Lynch International A+
Bank of America Corporation A-
HSBC Bank
plc
A+
The ratings for Merrill Lynch and Bank of America are from Standard and Poors
and the rating for HSBC is from Fitch.
EFG Hermes MENA Securities Limited and EFG Hermes Holding S.A.E. do not have a
credit rating. However, the Board and Investment Advisor have reviewed their
credit worthiness and consider it to be
acceptable.
The investments in P-Notes, which are over-the-counter equity linked
instruments, expose the Company to the risk that the counterparties to the
instruments might default on their obligations to the Company. The Directors
consider the risk to be insignificant.
The Subsidiary uses the banking services of HSBC Bank (Middle East) Ltd and
Barclays (Isle of Man) PLC. HSBC has a credit rating of A2 assigned by Moody
and Barclays has a credit rating of A- from Standard and Poors.
Other receivables principally relate to loan interest receivable from the
Subsidiary.
Interest rate risk
The Company's loan to subsidiary bears interest and is stated at fair value,
which is considered to be equivalent to cost as the loan is repayable on
demand, bears interest at floating rate and there is negligible credit risk.
The underlying portfolio held by the Subsidiary comprises equities or equity
linked securities. Cash held is invested at short-term market interest rates.
As a result, the Company is not subject to fair value interest rate risk due
to fluctuations in the prevailing levels of market interest rates. However, it
is subject to cash flow risk arising from changes in market interest rates
with respect to cash balances held by the Company and the Subsidiary.
The table below summarises the Company's exposure to interest rate risks. It
includes the Company's financial assets and liabilities at the earlier of
contractual re-pricing or maturity date, measured by the carrying value of
assets and liabilities:
30 June 2024 Less than 1month 1-3 months 3 months 1-5 years Over 5 Non-interest Total
to 1 year years bearing
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Financial assets
Equity interest in subsidiary - - - - - 93,419 93,419
Loan to subsidiary 4,160 - - - - - 4,160
Other receivables and prepayments - - - - - 64 64
Cash 207 - - - - - 207
Total financial assets 4,367 - - - - 93,483 97,850
Financial liabilities
Other payables and accrued expenses - - - - - 115 115
Total financial liabilities - - - - - 115 115
Total interest rate sensitivity gap 4,367 - - - -
30 June 2023 Less than 1month 1-3 months 3 months 1-5 years Over 5 Non-interest Total
to 1 year years bearing
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Financial assets
Equity interest in subsidiary - - - - - 93,766 93,766
Loan to subsidiary 2,320 - - - - - 2,320
Other receivables and prepayments - - - - - 22 22
Cash 881 - - - - - 881
Total financial assets 3,201 - - - - 93,788 96,989
Financial liabilities
Other payables and accrued expenses - - - - - 151 151
Total financial liabilities - - - - - 151 151
Total interest rate sensitivity gap 3,201 - - - -
All interest received on cash balances are at variable rates. A sensitivity
analysis for changes in interest rates on cash balances has not been provided
as it is not deemed significant.
2 Fair value hierarchy
IFRS 13 requires the Company to classify fair value measurements using a fair
value hierarchy that reflects the significance of the inputs used in making
the measurements. The fair value hierarchy has the following levels:
• Quoted prices (unadjusted) in active markets for identical assets or
liabilities (level 1).
• Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2).
• Inputs for the asset or liability that are not based on observable market
data (that is, unobservable inputs) (level 3).
The investment in subsidiary held by the Company is classified as level 2 in
the fair value hierarchy - being based on the net asset value of the
Subsidiary.
All the underlying listed equity investments held by the Subsidiary are
classed as level 1 investments. The P-Notes held by the Subsidiary are classed
as level 2. The analysis of investments held by the Subsidiary between level 1
and level 2 is as follows:
Financial assets at fair value through profit or loss at 30 June 2024 Level 1 Level 2 Level 3 Total
US$'000 US$'000 US$'000 US$'000
Assets:
Equity investments 30,696 - - 30,696
P-Notes - 66,357 - 66,357
30,696 66,357 - 97,053
Financial assets at fair value through profit or loss at 30 June 2023 Level 1 Level 2 Level 3 Total
US$'000 US$'000 US$'000 US$'000
Assets:
Equity investments 42,180 - - 42,180
P-Notes - 52,442 - 52,442
42,180 52,442 - 94,622
The fair value of other financial instruments both held by the Company and the
Subsidiary, including cash and short-term receivables and payables is a
reasonable approximation of fair value.
Market price risk
The Company's strategy for the management of investment risk is driven by the
Company's investment objective. The main objective of the Company is to
capture the opportunities for growth offered by the Gulf Cooperation Council
region ("GCC") by investing in GCC countries.
All investments present a risk of loss of capital through movements in market
prices. The Investment Manager and Investment Adviser moderate this risk
through a careful selection of securities within specified limits. The
Investment Manager and the Investment Adviser review the position on a
day-to-day basis and the Directors review the position at Board meetings.
The Company's market price risk is managed through the diversification of the
underlying investment portfolio held by the Subsidiary. Approximately 99%
(2023: 97%) of the net assets attributable to holders of Ordinary Shares is
invested in equity securities and P-Notes held by the Subsidiary, on a look
through basis.
At 30 June 2024, if the market value of the investment portfolio held by the
Subsidiary had increased/decreased by 5% (as per the movement in the SEMGGCPD
Index post year-end measured at 3 September 2024) with all other variables
held constant, this would have increased/decreased net assets attributable to
shareholders by approximately US$4.85 million (30 June 2023: 1.50%: US$1.42
million). Market price volatility is expected to increase due to geo-political
uncertainty and global inflationary pressures.
3 Net asset value per share
The net asset value per share as at 30 June 2024 is US$2.5105 per share (30
June 2023: US$2.3556) based on 38,946,044 (30 June 2023: 41,125,480) Ordinary
shares in issue as at that date.
4 Earnings per share
Basic and diluted earnings per share are calculated by dividing the profit
attributable to equity holders of the Company by the weighted average number
of Ordinary shares in issue during the year.
30 June 2024 30 June 2023
Profit attributable to equity holders of the Company (US$'000) 9,438 16,456
Weighted average number of Ordinary shares in issue (thousands) 40,376 40,993
Basic and diluted earnings per share (cents per share) 23.38 40.14
5 Share capital
30 June 2024 30 June 2023
US$'000 US$'000
Authorised 500,000,000 Ordinary shares of US$0.01 each 5,000,000 5,000,000
Issued, called-up and fully-paid:
38,946,044 (2023:41,125,480) Ordinary shares of US$0.01 each in issue, with 389 `411
full voting rights
Nil (2023: Nil) Ordinary shares of US$0.01 each held in treasury - -
Issued share capital 389 411
On 27 October 2023 the Company completed the purchase of 1,397,276 Tendered
Shares and on 15 May 2024 the Company completed the purchase of 1,157,160
Tendered Shares. This was in accordance with the Tender Offer launched on 23
November 2020. These Tendered Shares were cancelled. In addition on 12 July
2023 the Company issued 50,000 ordinary shares, on 19 July 2023 the Company
issued 50,000 ordinary shares, on 24 July 2023 the Company issued 50,000
ordinary shares, on 31 July 2023 the Company issued 50,000 ordinary shares and
on 8 August 2023 the Company issued 175,000 ordinary shares. This was in
accordance with the block listing application which became effective on 10 May
2022. The issued share capital is now 38,946,044 shares with no shares held in
treasury. As a result, the total number of shares with voting rights is
38,946,044.
Capital management
The Board's policy is to maintain a strong capital base so as to maintain
investor, creditor and market confidence and to sustain future development of
the Company. The Board manages the Company's affairs to achieve Shareholder
returns
through capital growth rather than income and monitors the achievement of this
through growth in net asset value per share.
Capital comprises share capital and reserves. Neither the Company nor the
Subsidiary is subject to externally imposed capital requirements.
6 Other payables and accrued expenses
30 June 2024 30 June 2023
US$'000 US$'000
Administration fee payable 41 40
Accruals and sundry creditors 74 111
115 151
Liquidity risk
The Company manages its liquidity risk by maintaining sufficient cash for
operations and the ability to realise market positions. The Company's
liquidity position is monitored by the Investment Manager and the Board of
Directors.
The residual undiscounted contractual maturities of financial liabilities are
in the table below:
30 June 2024 Less than 1-3 3 months to 1 year 1-5 years Over 5 years No stated maturity
1 month months
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Financial liabilities
Other creditors and accrued expenses 115 - - - - -
115 - - - - -
30 June 2023 Less than 1-3 3 months to 1 year 1-5 years Over 5 years No stated maturity
1 month months
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Financial liabilities
Other creditors and accrued expenses 151 - - - - -
151 - - - - -
7 Expenses
30 June 2024 30 June 2023
US$'000 US$'000
Administrator and Registrar's fees (see below) 162 160
Audit fees 60 83
Custodian fees (see below) 3 3
Directors' fees and expenses* 129 139
Directors' insurance cover 40 38
Broker fees 52 46
Other expenses 235 341
681 810
*Directors fees amounted to US$114,528 and Directors expenses were US$14,455.
Investment management fees and custodian fees borne by the Subsidiary were
US$790,718 and US$75,426 respectively (2023: US$691,179 and US$90,904
respectively).
Investment manager's fees
Annual fees
The Investment Manager is entitled to an annual management fee of 0.80% of the
Net Asset Value of the Company effective from 1 January 2021, calculated
monthly and payable quarterly in arrears.
Annual management fees for the year ended 30 June 2024 amounted to US$790,718
(30 June 2023: US$691,179) and the amount accrued but not paid at the year-end
was US$207,259 (30 June 2023: US$185,131). 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.
The Administrator assists in the preparation of the financial statements of
the Company and provides general secretarial services.
The Administrator may utilise the services of a CREST accredited registrar for
the purposes of settling share transactions through CREST. The cost of this
service will be borne by the Company. It is anticipated that the cost will
be in the region of £12,000 per annum subject to the number of CREST settled
transactions undertaken.
Administration fees paid for the year ended 30 June 2024 amounted to
US$161,709 and US$17,094 for additional services (30 June 2023: US$159,975 and
US$17,047 respectively). Outstanding Administration fees at the year-end
amounted to US$40,787 (30 June 2023: US$39,996).
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).
Custodian and sub-custodian fees for the year ended 30 June 2024 amounted to
US$78,376 (30 June 2023: US$94,054) and the amount accrued but not paid at the
year-end was US$5,167 (30 June 2023: US$9,091). This fee is borne by the
Subsidiary.
8 Foreign currency translation
The US Dollar is the currency in which the financial statements are presented
("the presentational currency") as reporting to shareholders is in US Dollars
and the shares are quoted in US Dollars. The US Dollar is also the functional
currency.
Monetary assets and liabilities denominated in foreign currencies as at the
date of these financial statements are translated to US Dollar at exchange
rates prevailing on that date. Income and expenses are translated into US
Dollar based on exchange rates on the date of the transaction. All resulting
exchange differences are recognised in the income statement at the exchange
rate prevailing on the statement of financial position date. Items of income
and expense are translated at exchange rates on the date of the relevant
transactions or an average rate.
Foreign exchange risk
The Company's operations, via the Subsidiary, are conducted in jurisdictions
which generate revenue, expenses, assets and liabilities in currencies other
than US Dollar. As a result, the Company is subject to the effects of
exchange rate fluctuations with respect to these currencies. The Company's
policy is not to enter into any currency hedging transactions.
At the reporting date the Company had the following exposure, including assets
and liabilities held by the Subsidiary:
Currency 30 June 2024 30 June 2023
% %
US Dollar 68.25 61.64
Qatari Riyal 21.11 25.89
Kuwaiti Dinar 5.84 4.80
UAE Dirham 2.44 7.40
Omani Riyal 2.08 -
Saudi Arabia Riyal 0.23 0.25
British Pound 0.05 0.02
The following table sets out the Company's total exposure to foreign currency
risk and the net exposure to foreign currencies of the monetary assets and
liabilities, including those held by the Subsidiary:
30 June 2024 Assets Liabilities Net exposure
US$'000 US$'000 US$'000
US Dollar 67,069 (336) 66,733
Qatari Riyal 20,637 - 20,637
Kuwaiti Dinar 5,708 - 5,708
UAE Dirham 2,386 - 2,386
Omani Riyal 2,035 - 2,035
Saudi Arabia Riyal 224 - 224
British Pound 53 (3) 50
98,112 (339) 97,773
30 June 2023 Assets Liabilities Net exposure
US$'000 US$'000 US$'000
US Dollar 60,026 (316) 59,710
Qatari Riyal 25,084 - 25,085
UAE Dirham 7,174 - 7,174
Kuwait Dinar 4,649 - 4,649
British Pound 57 (39) 18
Saudi Arabian Riyal 239 - 239
Omani Riyal 1 - 1
97,230 (355) 96,876
Foreign currency sensitivity risk (Company)
At 30 June 2024 had the US Dollar weakened/strengthened by 1% (2023:
weakened/strengthened 1%) in relation to all currencies, with all other
variables held constant, net assets attributable to equity holders of the
Company would have increased/decreased by the amounts shown below:
Foreign currency sensitivity risk on a look through basis, including the
Subsidiary.
30 June 2024 US$'000
British Pound -
Kuwaiti Dinar 57
UAE Dirham 24
Omani Riyal 20
Saudi Arabia Riyal 2
Effect on net assets 103
30 June 2023 US$'000
British Pound -
Kuwaiti Dinar 46
UAE Dirham 72
Saudi Arabia Riyal 2
Effect on net assets 120
The Qatari Riyal is pegged to the US Dollar.
9 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.
10 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 Subsidiary holds
shares in Qatar Insurance Company S.A.Q. (see note 1(b)). 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 notes 6 and 7.
The Directors are defined as key management personnel and their fees are
deemed as related party transactions.
Epicure Managers Qatar Limited is a wholly owned subsidiary of the Investment
Adviser, Qatar Insurance Company S.A.Q. A dividend of USD 10 million was
declared by the subsidiary during the year and the balance due was added to
the intercompany loan.
11 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 to 2004 on 26 June
2007 as a public company with registered number 120108C.
The shares of the Company were admitted to trading on the Main Market of the
London Stock Exchange on 13 May 2011. On 19 May 2021 the Company transferred
to the Specialist Fund Section of the Main Market of the London Stock
Exchange.
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 Company applied to the London Stock Exchange for a block listing of
2,700,000 ordinary shares of US$0.01 each to be admitted on the Specialist
Fund Segment of the Exchange. This admission became effective on 10 May 2022.
The Company's agents and the Investment manager perform all significant
functions. Accordingly, the Company itself has no employees.
Duration
The Company did not have a fixed life. The Board considered it desirable that
Shareholders could review the future of the Company at appropriate intervals.
It was resolved that shareholders would be able to participate in bi-annual
tender offers for up to 100% of the share capital. As a result of the latest
tender it became clear that the minimum level of ordinary shares would be
breached and the Company consequently invited shareholders to vote for an
orderly liquidation at the extraordinary general meeting to be held on 29
October 2024.
12 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.
13 Material accounting policies
Accounting policies for certain items have been included in the relevant
note.
13.1 Basis of preparation
Principal activities
The Company's principal activities, investment objective and strategy and
principal risks and uncertainties and the planned tender offers in 2024 are
described in the Chairman's Statement, Business Review, Investment Policy and
Corporate Governance Report.
Statement of compliance
These financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") and Isle of Man Companies Acts 1931 to
2004.
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
individual company financial statements only.
Basis of measurement
The financial statements have been prepared under the historic cost
convention, as modified by the revaluation of financial assets held at fair
value through profit or loss, which are stated at fair value.
Use of judgements and estimates
In preparing these financial statements the Company has made judgements,
estimates and assumptions that affect the application of the accounting
policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. The accounting estimates and
assumptions that have a significant risk of causing material adjustment to the
carrying amounts of assets and liabilities are in relation to the financial
assets at fair value through profit or
loss. See note 2 for further information.
Non-going concern basis of preparation
These financial statements have been prepared on a basis other than going
concern because prior to the results of the September tender offer the Company
received irrevocable commitments pursuant to the Tender Offer to tender Shares
which resulted in the minimum size condition in respect of the Tender Offer
(being a post Tender Offer share capital of not less than 38,000,000 Shares)
not being met. As a result, the Tender Offer did not proceed in accordance
with tender terms and conditions set out in the circular of the Company dated
28 November 2023.
As set out in the Circular, the Directors instead put forward proposals to
Shareholders for the Company to be wound up with a view to returning cash to
Shareholders and to enter into a solvent formal liquidation.
The Directors have continued to apply the requirements of IFRS and Isle of Man
Companies Acts 1931 to 2004 taking into account that they do not expect the
Company to continue as a going concern in the forseeable future. There have
been no specific changes to the presentation as a result of the preparation on
a basis other than going concern.
Functional and presentation currency
These financial statements are presented in USD Dollar, which is the Company's
presentational and functional currency. All financial information presented in
USD Dollar has been rounded to the nearest thousand dollar.
Disclosure on changes in significant accounting policies
The accounting policies applied in the Company financial statements are the
same as those applied in the Company financial statements for the year ended
30 June 2023.
There were no new and revised IFRSs, which become effective for annual periods
beginning on or after 1 January 2023, that have been adopted in these
financial statements.
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.
13.2 Consolidated financial statements
Consolidated financial statements have not been presented in order to comply
with the requirements of the IFRS 10 Investment Entity Consolidation
Exception. The Directors have also applied the exemption from the preparation
of consolidated accounts available under the Isle of Man Companies Act 1982,
section 4(2)(i), on the grounds that they would be of no real value to members
of the Company, in view of the insignificant amounts involved. This is on the
basis that the profit and net asset value reported in the consolidated
accounts would be the same as they are reported in the Company accounts.
13.3 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.
13.4 Investment in and loan to subsidiary
Investment in subsidiary is stated at fair value through profit and loss based
on the net asset value of the Subsidiary as reported by the Administrator. The
loan to subsidiary is included within this valuation. Interest income on the
loan to subsidiary is recognised in the Income Statement using the effective
interest method.
13.5 Treasury shares
When shares recognised as equity are repurchased, the amount of the
consideration paid, which includes directly attributable costs, is recognised
as a deduction from equity. Repurchased shares that are not cancelled are
held as treasury shares and have no voting rights and do not receive
dividends. When treasury shares are sold or reissued subsequently, the amount
received is recognised as an increase in equity and the resulting surplus or
deficit on the transaction is presented within reserves.
13.6 Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are
short-term highly liquid investments that are readily convertible to known
amounts of cash and that are subject to an insignificant risk of changes in
value.
13.7 Future changes in accounting policies
New and amended IFRSs in issue but not yet effective and not early adopted
The following new standards, amendments and interpretations are in issue but
not yet effective for these financial statements and have not been early
adopted by the Company. The following amended standards are not expected to
have a material impact on the Company's results:
· Amendment to IAS 1 - Non-current liabilities with covenants -
effective from January 2024.
· Amendments to IFRS 16 - Leases on sale and leaseback - effective
from January 2024.
· Amendment to IAS 7 and IFRS 7 - Supplier finance - effective from
January 2024.
· Amendments to IAS 21 - Lack of exchangeability - effective from
January 2025.
There are no other standards, amendments or interpretations to existing
standards that are not yet effective, that would have a material impact on the
Company's reported results.
14 Post balance sheet events
On 22 August 2024, the Company announced the launch of a tender offer for up
to 100 per cent. of each Shareholder's holding in the Company. The Company
received irrevocable commitments pursuant to the Tender Offer to tender Shares
which resulted in the minimum size condition in respect of the Tender Offer
(being a post Tender Offer share capital of not less than 38,000,000 Shares)
not being met. As a result, the Tender Offer did not proceed in accordance
with tender terms and conditions set out in the circular of the Company dated
28 November 2023.
As set out in the Circular, the Directors instead put forward proposals to
Shareholders for the Company to be wound up with a view to returning cash to
Shareholders or to enter into formal liquidation.
The Company published a circular on 4 October 2024 setting out details of the
Proposals and to convene a general meeting on 29 October 2024 at which
approval for the Proposals will be sought from shareholders.
Appendix
Unaudited consolidated financial information
Consolidated Income Statement
Year ended 30 June 2024 Year ended 30 June 2023
US$'000 US$'000
Income
Dividend income on quoted equity 3,881 2,895
investments
Realised gain on sale of financial assets at fair 17,663 4,453
value through profit or loss
Net changes in fair value on financial assets at fair value through profit or (10,427) 10,816
loss
Interest income 16 29
Net foreign exchange loss (14) (55)
Total net income 11,119 18,138
Expenses
Investment manager's fees 789 691
Other expenses 805 940
Total operating expenses 1,594 1,631
Profit before tax 9,525 16,507
Income tax expense 87 51
Profit for the year 9,438 16,456
Basic earnings per share (cents) 40.14
Diluted earnings per share (cents) 40.14
Notes:
1) Consolidated information has been presented to assist the user in
interpreting the results of the Company and to be consistent with previous
years. This information consolidates the results of the Subsidiary with the
Company. It is based on IFRS requirements that would apply if the IFRS 10
consolidation exception for investment entities did not apply to the Company.
2) Where relevant to understanding the risks of financial instruments
held by the Company certain disclosures relating to the subsidiary's assets
and liabilities have been given in the notes to the Financial Statements and
would be relevant to understanding the consolidated position presented in this
appendix.
Appendix
Unaudited consolidated financial information
Consolidated Statement of Comprehensive Income
Year ended 30 June 2024 Year ended 30 June 2023
US$'000 US$'000
Profit for the year 9,438 16,456
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Currency translation differences - -
Total items that are or may be reclassified subsequently to profit or loss - -
Other comprehensive income for the year - -
Total comprehensive income for the year 9,438 16,456
Appendix
Unaudited consolidated financial information
Consolidated Statement of Financial Position
At 30 June 2024 At 30 June 2023
US$'000 US$'000
Assets
Financial assets at fair value through profit or loss 97,053 94,622
Other receivables and prepayments 315 328
Cash and cash equivalents 744 2,512
Total assets 98,112 97,462
Equity
Issued share capital 389 411
Share premium - 1,008
Reserves 97,384 95,457
Total equity 97,773 96,876
Current liabilities
Other payables and accrued expenses 339 586
Total current liabilities 339 586
Total equity and liabilities 98,112 97,462
Consolidated Statement of Changes in Equity
Share capital Distributable Reserves Share premium Other reserves Total
reserves
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 July 2023 411 (7,330) 100,940 1,008 1,847 96,876
Total comprehensive income for the year
Profit for the year - - 9,438 - - 9,438
Other comprehensive income
Foreign exchange translation differences - - - - - -
Total other comprehensive expense - - - - - -
Total comprehensive income for the year - - 9,438 - - 9,438
Contributions by and distributions to owners
Dividends paid - - (3,305) - - (3,305)
Shares subject to tender offer (26) (4,087) - (1,914) 26 (6,001)
Tender offer expenses - (145) - - - (145)
Proceeds from shares issued 4 - - 906 - 910
Total contributions by and distributions to owners (22) (4,232) (3,305) (1,008) 26 (8,541)
Balance at 30 June 2024 389 (11,562) 107,073 - 1,873 97,773
Appendix
Unaudited consolidated financial information
Balance at 1 July 2022 411 (6,356) 87,366 - 1,843 83,264
Total comprehensive income for the year
Profit for the year - - 16,456 - - 16,456
Other comprehensive income
Foreign exchange translation differences - - - - - -
Total other comprehensive expense - - - - - -
Total comprehensive income for the year - - 16,456 - - 16,456
Contributions by and distributions to owners
Dividends paid - - (2,882) - - (2,882)
Shares subject to tender offer (4) (839) - - 4 (839)
Tender offer expenses - (135) - - - (135)
Proceeds from shares issued 4 - - 1,008 - 1012
Total contributions by and distributions to owners - (974) (2,882) 1,008 4 (2,844)
Balance at 30 June 2023 411 (7,330) 100,940 1,008 1,847 96,876
Appendix
Unaudited consolidated financial information
Consolidated Statement of Cash Flows
Year ended 30 June 2024 Year ended 30 June 2023
US$'000 US$'000
Cash flows from operating activities
Purchase of investments (128,937) (214,990)
Proceeds from sale of investments 133,463 212,223
Dividends received 3,923 2,746
Operating expenses paid (1,694) (1,599)
Other income 25 -
Interest received 16 30
Net cash generated from/(used in) operating activities 6,796 (1,590)
Financing activities
Dividends paid (3,305) (2,882)
Cash used in tender offer (6,001) (835)
Tender expenses (145) (135)
Proceeds from shares issued 910 1,012
Net cash used in financing activities (8,541) (2,840)
Net (decrease)/increase in cash and cash equivalents (1,745) (4,430)
Effects of exchange rate changes on cash and cash equivalents (23) (9)
Cash and cash equivalents at beginning of the year 2,512 6,951
Cash and cash equivalents at end of the year 744 2,512
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 Annual 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 year 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 year. The inputs that have been used to calculate the ongoing
charges percentage are set out in the following table:
Ongoing charges calculation* 30 June 2024 30 June 2023
US$'000 US$'000
Management fee 789 691
Other operating expenses 805 940
Total management fee and other operating expenses 1,594 1,631 a
Average net assets in the year 98,858 86,063 b
Ongoing charges (c=a/b) 1.61% 1.89% 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 30 June 2024, the share price was US$2.3100 and the audited
NAV per share was US$2.5105, giving a discount of 7.99%. A discount occurs
when the share price (based on the mid-market share price) is less than the
NAV and investors would therefore be paying less than the value attributable
to the shares by reference to the underlying assets.
Year 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 31 December 2023.
The net asset value per share is calculated by dividing 'equity shareholders'
funds' by the total number of ordinary shares in issue. The fall in
year-to-date NAV is set out in the table below:
Date Equity Number of ordinary shares in issue Net asset value per share
31 December 2023 101,672,265 40,103,204 2.5353 a
30 June 2024 97,773,460 38,946,044 2.5105 b
YTD Change in NAV (c=(b-a)/a) -0.98% c
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 (mailto:rns@lseg.com)
or visit
www.rns.com (http://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 (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FLFFSISLRLISRecent news on Gulf Investment Fund
See all newsREG - Stock Exch Notice Gulf Investment Fund - Cancellation - Gulf Investment Fund Plc
AnnouncementREG - Gulf Investment Fund - Result of EGM
AnnouncementREG - Stock Exch Notice Gulf Investment Fund - Suspension - Gulf Investment Fund plc
AnnouncementREG - Gulf Investment Fund - Net Asset Value(s)
AnnouncementREG - Gulf Investment Fund - Net Asset Value(s)
Announcement