REG - Gulf Investment Fund - Half-year Report
22/02/2024 07:00
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RNS Number : 9853D Gulf Investment Fund PLC 22 February 2024
Gulf Investment Fund PLC
22 February 2024
Legal Entity Identifier: 2138009DIENFWKC3PW84
Gulf Investment Fund plc (GIF)
Interim report for the six months ended 31 December 2023
- Net Asset Value up 7.60% vs the index which rose 3.20%.
- Final dividend of 4.05c to be paid on 22 March 2024
- GIF shares ended the period trading at a 14% discount to NAV
Anderson Whamond, Chairman of Gulf Investment Fund plc, said:
"The Hamas/Israel war hit GCC markets in October and caused the fund's slight
premium to NAV to widen to a significant discount to NAV. That said Gulf
Investment Fund continued to outperform, with the net asset value of the
shares beating the index by over 4%, and ending the period up 7.60%. The
discount to NAV has narrowed since October, and we hope the twice-yearly
tender offers combined with the long-term outperformance of the fund will
continue this trend.
"For investors this region is now about the traction that GCC governments are
achieving with their economic diversification policies. There are good
signs. While the IMF expects overall GDP growth to be 1.5 per cent and 3.7
per cent in 2023 and 2024 respectively, non-oil GDP growth is expected to be
higher at 4.3 per cent and 4.0 per cent in 2023 and 2024. All this is helped
by major infrastructure projects, tourism initiatives and socio-economic
reforms.
"A final dividend of USD 4.05 cents per ordinary share for the year ended 30
June 2023 was approved under the enhanced divided policy. In December, Jubin
Jose, manager of the fund, stepped down and handed the role to his deputy
Bijoy Joy. Patrick Grant joined the board at the beginning of October 2023,
with his wide experience of the Gulf having spent over twenty years working
with Schroders and JP Morgan Asset Management in the region.
"While global investors generally are underweight Qatar, Kuwait, and Saudi,
the weighting of the GCC in EM indexes will increase as more IPOs are listed,
governments sell stakes, and foreign ownership limits increase."
++
Anderson Whamond
Chairman
Gulf Investment Fund Plc
+44 (0) 1624 692600
William Clutterbuck / Rachel Cohen
H/Advisors Maitland
+44 (0) 20 7379 5151
gulfinvestmentfund-maitland@h-advisors.global
Chairman's Statement
On behalf of the Board, I am pleased to present the interim results for Gulf
Investment Fund Plc (which we also refer to as GIF, the Fund or the Company)
for the six months from July 2023 to the end of December 2023.
Results
The Fund continues to outperform, this time with a 4.4% gain ahead of the
benchmark, the S&P GCC Composite Index, in the six months. In absolute
terms GIF Net Asset Value per Share, excluding dividend, was up 7.60% to US$
2.54 compared to the index which rose 3.20%.
The share price fell 8.4% from US$ 2.38 to US$ 2.18 in the period. This marked
disparity between the NAV rising and the share price falling was mainly caused
by market worries following the outbreak in hostilities in Israel and Gaza. In
June 2023 GIF shares were trading at a 1.1% premium to NAV while in December
2023 the share price was trading close to an historically high discount to NAV
of 14.18%. Despite the outbreak of hostilities in the wider region, equity
markets ended the second half of 2023 up 3.2%. The manager of the fund goes
into more detail about this below.
In the tender process in September 1,397,276 shares (3.37% of the issued share
capital) were tendered and cancelled. On a more positive note we issued
375,000 shares to buyers when the share price was trading at a premium to NAV.
The board has considered introducing a share buy-back scheme but believe that
the twice yearly tenders should mean the discount to NAV narrows over time.
During calendar year 2023 outperformance was 21.40%. Over the past three and
five years GIF has outperformed its benchmark by 44.2% and 84.6% in total
return terms respectively. Since the investment mandate was made Gulf-wide in
2017 the shares have generated annualised returns of 20.52%.
At the Annual General Meeting on 22nd December 2023 a final dividend of USD
4.05 cents per ordinary share for the year ended 30 June 2023 was approved.
This dividend is in line with our enhanced dividend policy and therefore
equates to 4% of the NAV of the fund as at the end of June 2022. The dividend
will be paid on 22 March 2024 to shareholders on the register on 15 February
2024.
In December the lead manager, Jubin Jose, stepped down and handed the role to
his deputy Bijoy Joy. They both worked together for 10 years on the day-to-day
management of the Fund. Bijoy Joy is supported by a team of managers and
research analysts. Also stepping down at the end of December was non-executive
director Neil Benedict. We thank both Jubin Jose and Neil Benedict for their
work and contribution over many years and wish them well in the future.
Patrick Grant joined the board at the beginning of October 2023. Patrick has
wide experience of the Gulf having spent over twenty years working with
Schroders and JP Morgan Asset Management in the region.
Outlook, risks and uncertainties
We continue to see good investment opportunities in the GCC region. The
economic diversification policies that have been adopted across the GCC to
reduce reliance on oil and gas are progressing. Major infrastructure projects,
tourism initiatives and socio-economic reforms all contribute to this positive
outlook. Of course there remain risks and uncertainties. Top of these are
geopolitical risks as to some extent global macro-tensions seem to play out in
the Gulf. These and other risks - market risks, investment and strategy
risks, accounting, legal and regulatory risks, operational risks and financial
risks - are covered in the Business Review section of our Annual Report each
year.
I am pleased to be able to report that at the time of writing the GIF NAV is
now higher than before the Hamas incursion into Israel in October, with the
share price recovered to that level.
Anderson Whamond
Chairman
21 February 2024
Director's Responsibility Statement
The Directors confirm that, to the best of their knowledge:
a) the condensed set of financial statements has been
prepared in accordance with IAS 34;
b) the interim management report and Chairman's
statement include a fair review of the information required by the Disclosure
and Transparency Rule 4.2.7R (indication of important events during the first
six months and a description of the principal risks and uncertainties for the
remaining six months of the year respectively);
c) in accordance with Disclosure and Transparency Rule
4.2.8R there have been no related party transactions during the six months to
31 December 2023 and therefore nothing to report on any material effect by
such a transaction on the financial position or the performance of the Company
during that period; and there have been no changes in this position since the
last Annual Report that could have a material effect on the financial position
or performance of the Company in the first six months of the current financial
year.
d) in accordance with Disclosure and Transparency Rule
6.4.2, the Company confirms that its Home State is the United Kingdom.
The interim financial report has not been audited by the Company's Independent
Auditor.
Anderson Whamond
Chairman
21 February 2024
Report of the Investment Manager and the Investment Adviser
Regional overview
Country / Region Index 31-Dec-22 30-Jun-23 1H2023 31-Dec-23 2H2023 FY2023
Qatar DSM Index 10,681 10,075 -5.7% 10,831 7.5% 1.4%
Saudi Arabia SASEIDX Index 10,478 11,459 9.4% 11,967 4.4% 14.2%
Dubai DFMGI Index 3,336 3,792 13.7% 4,060 7.1% 21.7%
Abu Dhabi ADSMI Index 10,211 9,550 -6.5% 9,578 0.3% -6.2%
Kuwait KWSEAS Index 7,292 7,030 -3.6% 6,817 -3.0% -6.5%
Oman MSM30 Index 4,857 4,768 -1.8% 4,514 -5.3% -7.1%
Bahrain BHSEASI Index 1,895 1,958 3.3% 1,971 0.7% 4.0%
S&P GCC SEMGGCPD Index 139 143 2.9% 148 3.2% 6.2%
Brent CO1 Comdty 86 75 -12.8% 77 2.9% -10.3%
MSCI EM MXEF Index 956 989 3.5% 1,024 3.5% 7.0%
MSCI World MXWO Index 2,603 2,967 14.0% 3,169 6.8% 21.8%
Source: Bloomberg
Equity markets in the GCC rose by 3.2 per cent in the second half of 2023. GCC
markets rose sharply towards the final two months of the year, tracking global
optimism. The Hamas-Israel conflict initially caused GCC markets to fall in
October although the region ended up on the six months.
Qatar, Saudi Arabia, Dubai, Abu Dhabi, and Bahrain gained 7.5 per cent, 4.4
per cent, 7.1 per cent, 0.3 per cent and 0.7 per cent respectively. Oman fell
5.3 per cent, and Kuwait was down 3.0 per cent.
Brent crude oil price ended the year at ~US$77 per barrel, up 2.9 per cent in
H2 2023.
GCC becoming more than just oil
The IMF expects overall GCC GDP to grow 1.5 per cent in 2023, non-oil GDP is
expected to be 4.3 per cent and 4.0 per cent in 2023 and 2024 respectively.
Non-energy sectors, notably in Saudi Arabia and the UAE, have seen resurgence
in travel and tourism surpassing pre-pandemic levels. Saudi Arabia recorded a
156 per cent increase in international arrivals in 2023 compared to 2019. The
Saudi government is aiming for tourism to contribute 10 per cent of GDP by
2030.
Real GDP Growth 2019 2020 2021 2022 2023E 2024E
GCC 4.2% -4.7% 3.6% 7.9% 1.5% 3.7%
GCC oil GDP 2.3% -5.4% 0.1% 12.1% -2.8% 3.1%
GCC non-oil GDP 5.9% -4.1% 5.2% 5.3% 4.3% 4.0%
IMF GDP growth forecast
Source: IMF World Economic Outlook and Regional Economic Outlook October 2023
GCC IPOs
There were 46 IPOs in 2023, with Saudi Arabia being home to 35 of these and
UAE raising US$6.1 bn, 56 per cent of the of the total IPO proceeds. This
contrasts with IPOs globally which were down 8% on 2022.
GCC Economy
Saudi Arabia
US$ Billions 2021 2022 2023 2024E
Revenue 257.3 338.1 318.1 312.5
Expenditure 277.1 310.4 340.0 333.6
Surplus/ (Deficit) (19.8) 27.7 (21.9) (21.1)
Nominal GDP 833.6 1,108.5 1,102.9 1,136.3
Public Debt 250.1 264.0 273.1 294.1
Surplus/ (Deficit) - % of GDP -2.4% 2.5% -2.0% -1.9%
Public Debt - % of GDP 30.0% 23.8% 24.8% 25.9%
Source: Saudi Arabia MoF; Table contains budgeted numbers for respective year
The Saudi government plans to continue with its expansionary policy with
expenditures dedicated to education, healthcare and social development
initiatives along with the country's major infrastructure projects.
Saudi Arabia won its bid to host the Expo 2030 which is expected to attract
more than 40 million visitors and is expected to be implemented with a planned
outlay of SAR 29.3 billion (US$7.8 billion). The country was the lone bidder
to host the FIFA World Cup in 2034. This should lead to more event-driven
infrastructure spending.
Saudi Arabia is offering a 30-year tax break to global companies moving
regional headquarters to the country, as part of its Vision 2030 agenda to
diversify its economy away from oil. The package includes a zero per cent rate
for corporate income tax and withholding tax related to approved regional
headquarters activities.
Qatar
US$ Billion 2018 2019 2020 2021 2022 2023E 2024E
Total Revenues 48.1 58.0 58.0 44.0 53.8 62.6 55.5
Total Expenditures 55.8 56.8 57.8 53.5 56.1 54.7 55.2
Surplus / (Deficit) (7.7) 1.2 0.2 (9.5) (2.3) 7.9 0.3
Oil Price Assumption (USD/bbl) 45.0 55.0 55.0 40.0 55.0 65.0 60.0
Source: Qatar MoF; Table contains budgeted numbers for respective year
Qatar's 2024 decrease in revenues is largely on the back of a lower average
oil price assumption of $60 per barrel for 2024 ($65 in 2023). Qatar is set to
invest over USD 19 billion in 395 projects spanning water and electricity
networks, public services, and road infrastructure.
UAE
The UAE has approved a budget for 2024-2026 with a total estimated expenditure
of US$52.3 billion. The 2024 budget, recently endorsed, expects revenues of
US$17.9 billion and expenses of US$17.5 billion, resulting in a projected
surplus of US$0.5 billion.
The UAE economy should continue to see strong non-oil GDP growth into 2024.
The tourism sector achieved a 19.9 per cent year-on-year increase in visitors
to Dubai, totalling 15.4 million during the period of January to November
2023.
The UAE industrial sector's contribution to gross domestic product reached
about AED 197 bn (US$53.6 bn) in 2023 achieving 30 percent of Operation 300
bn's target since it's 2021 launch.
Kuwait
Has approved US$5.6 bn in capital spending to enhance crude output capacity
and develop gas resources. The initiative aims to increase oil production to
3.5 million barrels per day by 2030 and meet domestic gas demand.
It has unveiled a four-year program encompassing 107 major projects, spanning
economic, social, entertainment, and human resources sectors. The ambitious
initiative aims to address demographic challenges by revising residence laws
for foreigners and reducing the expatriate population, which currently
constitutes nearly 70 per cent of Kuwait's 4.5 million residents. Notable
projects include participation in the Gulf Railway, the construction of Kuwait
Airport Terminal 2, and an increase in flight numbers from 240,000 to 650,000.
The program also targets an increase in free natural gas output from 521
million cubic feet to 930 million cubic feet daily at the end of the program.
Oman
Has set a budget for 2024 with total projected revenue of US$28.6 bn, based on
an oil price of US$60/barrel, expenditure of US$30.3 bn, resulting in a
deficit of US$1.7 bn or 1.5 per cent of GDP in 2024. Oil revenues in the 2024
budget constitute 54 per cent of total revenues, while the gas sector's
contribution amounts to 14 per cent and non-oil revenues represent 32 per cent
of total public revenues. The 2024 state budget is geared towards enhancing
the business environment and increasing private sector involvement in economic
development.
Non-hydrocarbon growth accelerated from 1.2 per cent in 2022 to 2.7 per cent
in the January-June period of 2023. This acceleration was attributed to the
recovery of Oman's agricultural and construction activities, along with a
resilient services sector.
Oman is strategically investing over US$30 bn in the hydrogen economy, aiming
to become one of the world's leading hydrogen producers by 2030.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com (http://www.gulfinvestmentfundplc.com) Chart:
GCC countries fiscal breakeven oil price (2024 Est)
Other developments
Saudi minister expects US$600 bn in petrochemical investments by 2030
Saudi Investment Minister Khaled Al Falih announced 14 agreements and
memorandums of understanding between Saudi Arabia and Japan covering various
sectors, including water, telecommunications, information technology, energy,
financial services, and healthcare. 45 major Japanese companies are
participating, offering opportunities for large-scale projects in the Kingdom.
UAE financial sector slated to grow 13 per cent in 2023
The UAE's financial sector grew 30 per cent in Q2 2023, supporting economic
diversification, and is expected to grow by 13 per cent in 2023. The non-oil
sector, comprising 54 per cent of total GDP, increased 12 per cent in Q2.
Qatar PMI
Qatar's non-energy sector experienced improved business conditions towards the
end of 2023, according to the latest Purchasing Managers' Index (PMI) survey
data from the Qatar Financial Centre. The PMI registered 51.5 in November
2023, marking a tenth consecutive month-on-month improvement in business
conditions and the first acceleration in growth since July 2023.
Oman rating upgrade
S&P Global Ratings has raised Oman's long-term foreign and local currency
sovereign credit ratings to "BB+" from "BB" with a stable outlook on
"favourable" oil sector dynamics, along with higher output in the
non-hydrocarbon sector. Moody's has upgraded the credit rating of Oman to
'Ba1', with a stable outlook.
Bahrain rating
S&P Global Ratings has reduced Bahrain's outlook from "positive" to
"stable," citing concerns over spending pressures. S&P maintained its
"B+/B" ratings on the country.
GIF portfolio
Country allocation
Compared to the benchmark, GIF is overweight in Qatar (24.8 per cent vs.
S&P GCC weighting of 10.0 per cent) and Oman (2.2 per cent vs 1.0 per
cent). GIF is underweight Saudi Arabia (59.3 per cent vs benchmark weight of
61.4 per cent), UAE (7.1 per cent vs 17.7 per cent), Kuwait (6.5 per cent vs
9.3 per cent). The fund's cash weighting was 0.1 per cent on 31 December 2023.
During H2 2023, exposure to Kuwait increased by 1.7 percentage points taking
it to 6.5 per cent. A 2.2 per cent allocation to Oman was made during this
period..
The fund's overweight in Qatar arises from Qatar's macroeconomic resilience,
growth prospects and attractive valuations. As of 31st December 2023, Qatar
was trading on P/E multiple of 12.9 times (MSCI EM trades on 15.4 times).
GIF ended the quarter with 28 holdings: 16 in Saudi Arabia, 7 in Qatar, 2 in
the UAE, 2 in Kuwait and 1 in Oman.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com (http://www.gulfinvestmentfundplc.com) for a
chart depicting country allocation 2023.
Top 10 Holdings
Company Country Sector % NAV Weighting
Saudi National Bank Saudi Arabia Financials 9.5%
Middle East Healthcare Saudi Arabia Health Care 6.2%
Saudi Awwal Bank Saudi Arabia Financials 6.1%
Qatar Navigation Qatar Industrials 5.4%
Integrated Holding Company Kuwait Industrials 5.0%
Qatar Insurance Company Qatar Financials 4.7%
Qatar Islamic Bank Qatar Financials 4.4%
Banque Saudi Fransi Saudi Arabia Financials 4.3%
United Electronics Company Saudi Arabia Consumer Discretionary 4.0%
Dubai Islamic Bank (DIB) UAE Financials 4.0%
Source: QIC
Embedded image removed -please refer to the Company's website
www.gulfinvestmentfundplc.com (http://www.gulfinvestmentfundplc.com) for a
chart depicting sector exposure.
GIF expanded its exposure to the Financials, Materials and Healthcare sector
taking advantage of companies with attractive valuations and strong earnings
growth potential.
Exposure to Financials was increased to 46.3 per cent of NAV in Q4 2023 from
35.0 per cent in Q2 2023, with Gulf Bank of Kuwait, Arab National Bank -
Shamal, Dubai Islamic Bank and Bank Muscat added as new holdings to capitalize
on the growth potential and stability offered by these prominent financial
institutions.
Materials exposure increased to 5.5 per cent of NAV in Q4 2023 from 3.0 per
cent in Q2 2023, mainly due to adding new positions in Advanced
Petrochemicals, City Cement and Yamama Cement. With their strategic proximity
and substantial capacity, Yamama and City Cement are poised to capitalize on
demand stemming from major projects.
Exposure to Energy, Real Estate, Utilities, Communication Services and
Industrials sector were reduced to capture better opportunities elsewhere.
Top holdings:
Saudi National Bank (9.5 per cent of NAV)
The Saudi National Bank (SNB) is Saudi Arabia's largest financial
institution and one of its most powerful institutions. SNB will play a vital
role in catalysing the delivery of Vision 2030 of Saudi Arabia and supporting
economic transformation. SNB seeks to leverage the expanded scale and digital
capabilities to provide enhanced products and deliver unparalleled customer
experience. SNB's robust balance sheet, resilient business model, and healthy
liquidity position enhance the bank's capability to compete locally and
regionally.
Middle East Healthcare (6.2 per cent of NAV)
Middle East Healthcare Co (Saudi German Hospitals) (MEH) is one of the largest
hospital chains in Saudi Arabia with nearly 1,300 beds in operation. MEH is
geographically diversified within KSA with growth expected from increasing
utilization rate of new hospitals in Dammam and Makkah, and over 300 beds
expansions upcoming in Riyadh and Jeddah. In FY23, the revenue per patient
from government clients is also expected to improve with continued
accreditations of the facilities while volume flows will increase due to
measures taken for improved patient experience and insurance policy changes.
Saudi Awwal Bank (6.1 per cent of NAV)
Saudi Awwal Bank (SAB) offers integrated financial and banking services,
including corporate banking, investment, private banking, and treasury. SAB is
fifth largest bank in Saudi Arabia with total loans market share of around 10
per cent. SAB is 31 per cent owned by HSBC group and effectively uses the HSBC
backing to capture domestic and international corporate growth. We expect
SAB's EPS expansion will be faster vs other GCC peers mainly driven by strong
margins, elevated loan growth and benign asset quality.
Qatar Navigation (5.4 per cent of NAV)
Qatar Navigation (Milaha) (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. Higher
shipping rates and volumes should drive revenue from container shipping and
logistic business. In Logistic business, new global network partnerships and
work related to NFE project should bring uplift in warehousing and freight
forwarding activities. Ports management (QTerminals) business should also
benefit from volume uptick/phase II expansion at the Hamad Port and growth
associated with the NFE project.
Integrated Holding Company (5.0 per cent of NAV)
Integrated Holding Kuwait is the fourth largest crane rental and leasing
company in the world. It provides services for logistics, heavy lift,
engineering and equipment requirements to MENA region.
GIF Performance
In calendar 2023 GIF NAV grew 32.1 per cent, 22.1 per cent ahead of the index.
Over the past six months, the stock markets in Qatar, Saudi Arabia, and Dubai
rose 7.5 per cent, 4.4 per cent, and 7.1 per cent, respectively. This was
fuelled by economic indicators, government initiatives, and increased investor
confidence. Kuwait and Oman declined 3.0 per cent and 5.3 per cent,
respectively, caused by economic challenges, geopolitical factors, and
specific domestic issues.
Since the investment mandate widened from a Qatari-focus to GCC in December
2017, NAV has risen 197.1 per cent (dividend included), as against the 88.5
per cent returns recorded by S&P GCC total return index. On 31 December
2023, the GIF share price was trading at a 13.2 per cent discount to NAV,
below the five-year average discount of 6.3 per cent.
Embedded image removed - please refer to the Company's website
www.gulfinvestmentfundplc.com (http://www.gulfinvestmentfundplc.com) for a
chart depicting GIF NAV v Reference Index.
GCC Outlook
Gulf Cooperation Council (GCC) is a region with a widespread economic
diversification plans to reduce reliance on oil. Major infrastructure
projects, tourism initiatives and socio-economic reforms all contribute to a
positive outlook for the region. The IMF expects GCC real GDP growth to be 1.5
per cent and 3.7 per cent in 2023 and 2024 respectively. Non-oil GDP growth is
expected to be 4.3 per cent and 4.0 per cent in 2023 and 2024.
Tourism-related industries are a driver of non-energy growth. Qatar saw the
strongest growth, globally, of international tourist arrivals in 2023 compared
to 2019. The country set a visitor record by welcoming 4 million visitors in
2023. Saudi Arabia was second with a 156 per cent increase on 2019. Visitors
to Dubai increased by 19.9 per cent in the Jan-Nov 2023 period, with 15.4
million visitors, surpassing pre-pandemic levels. The Middle East is the only
world region to surpass 2019 levels in this period.
OPEC predicts year-on-year growth of oil demand of 2.5 million bpd in 2023 and
2.2 million bpd in 2024. The IMF projects GCC inflation at 2.6 per cent and
2.3 per cent in 2023 and 2024, providing governments in the region with the
room to increase fiscal spending.
The GCC countries are actively engaged in transformative socio-economic
reforms. Post-pandemic, there's notable progress in social and
business-friendly reforms, fiscal sustainability, and strategic investments in
digital and green infrastructure.
While global investors generally are underweight Qatar, Kuwait, and Saudi, the
weighting of the GCC in EM indexes is expected to increase as more IPOs are
listed, governments sell stakes, and foreign ownership limits increase.
Valuation:
Market Market Cap. PE (x) PB (x) Dividend Yield (%)
Qatar 153.2 11.16 10.62 1.46 1.39 4.33 4.83
Saudi Arabia 2,998.7 20.11 17.53 2.52 2.37 3.38 3.72
Dubai 156.4 8.76 8.16 1.12 1.04 4.92 5.11
Abu Dhabi 744.8 17.96 17.96 2.34 2.34 3.33 3.33
Kuwait 142.7 14.61 12.33 0.54 N/A 4.28 4.50
S&P GCC 3,809.9 12.60 9.86 1.95 1.82 3.72 4.14
MSCI EM 20,360.3 14.08 11.84 1.60 1.44 3.06 3.09
MSCI World 66,789.4 19.26 17.61 3.06 2.83 1.99 2.10
Source: Bloomberg, as of 28 Dec 2023; Market Cap. as of 31 Dec 2023 for Qatar,
Saudi Arabia, S&P GCC; 29 Dec 2023 for Dubai and Abu Dhabi; 28 Dec 2023
for Kuwait, MSCI EM and MSCI World.
Epicure Managers Qatar
Limited
Qatar Insurance Company S.A.Q.
21 February
2024
21 February
2024
Income Statement
(Unaudited) (Unaudited)
Note For the period from For the period from
1 July 2022 to
1 July 2023 to
31 December 2022
31 December 2023
US$'000 US$'000
Income
Net (loss)/income in investment at fair value through profit or loss (1,151) 203
Distribution received from subsidiary 10,000 -
Interest income on loan 192 131
Total net income 9,041 334
Expenses
Expenses 5 336 384
Total operating expenses 336 384
Profit/(loss) before tax 8,705 (50)
Income tax expense - -
Retained profit/(loss) for the period 8,705 (50)
Basic and diluted profit/(loss) per share (cents) 3 21.26 (0.12)
Statement of Comprehensive Income
(Unaudited) (Unaudited)
For the period from For the period from
1 July 2022 to
1 July 2023 to
31 December 2022
31 December 2023
US$'000 US$'000
Loss/(profit) for the period 8,705 (50)
Other comprehensive income - -
Total comprehensive income/(expense) for the period 8,705 (50)
Statement of Financial Position
(Unaudited) (Audited)
Note At 31 December 2023 At 30 June 2023
US$'000 US$'000
Assets
Investment at fair value through profit or loss - comprising: 1(a)
- equity interest in subsidiary 92,616 93,766
- loan to subsidiary 8,747 2,320
101,363 96,086
Other receivables and prepayments 170 60
Cash and cash equivalents 11 215 881
Total assets 101,748 97,027
Equity
Issued share capital 401 411
Share premium - 1,008
Reserves 101,269 95,457
Total equity 101,670 96,876
Current liabilities
Other payables and accrued expenses 4 78 151
Total current liabilities 78 151
Total equity and liabilities 101,748 97,027
Statement of Changes in Equity
Share capital Share premium Reserves Total
US$'000 US$'000 US$'000 US$'000
Balance at 1 July 2022 411 - 82,853 83,264
Total comprehensive income for the period
Loss for the period - - (50) (50)
Total comprehensive loss for the period - - (50) (50)
Contributions by and distributions to owners
Dividends paid - - (1,443) (1,443)
Shares subject to tender offer (2) - (345) (347)
Tender offer expenses - - (41) (41)
Proceeds from shares issued 1 150 - 151
Total contributions by and distributions to owners (1) 150 (1,829) (1,680)
Balance at 31 December 2022 410 150 80,974 81,534
Share capital Share premium Reserves Total
US$'000 US$'000 US$'000 US$'000
Balance at 1 July 2023 411 1,008 95,457 96,876
Total comprehensive income for the period
Profit for the period - - 8,705 8,705
Total comprehensive income for the period - - 8,705 8,705
Contributions by and distributions to owners
Dividends paid - - (1,681) (1,681)
Shares subject to tender offer (14) (1,914) (1,169) (3,097)
Tender offer expenses - - (43) (43)
Proceeds from shares issued 4 906 - 910
Total contributions by and distributions to owners (10) (1,008) (2,893) (3,911)
Balance at 31 December 2023 401 - 101,269 101,670
Statement of Cash Flows
(Unaudited) (Unaudited)
Note For the period from For the period from
1 July 2023 to 1 July 2022 to
31 December 2023 31 December 2022
US$'000 US$'000
Cash flows from operating activities
Received from investment at fair value through profit or loss 3,765 2,344
Operating expenses paid (408) (470)
Increase in trade and other receivables (110) (150)
Net cash generated from operating activities 3,247 1,724
Financing activities
Proceeds from shares issued 910 151
Dividends paid (1,681) (1,443)
Cash used in tender offer (3,097) (347)
Tender expenses (43) (41)
Net cash used in financing activities (3,911) (1,680)
Net (decrease)/increase in cash and cash equivalents (664) 44
Effects of exchange rate changes on cash and cash equivalents (2) 3
Cash and cash equivalents at beginning of period 881 67
Cash and cash equivalents at end of period 11 215 114
Notes to the Interim Financial Statements
1(a) Investment at fair value through profit or loss
31 December 2023 30 June 2023
US$'000 US$'000
Equity interest in subsidiary 92,616 93,766
Loan to subsidiary 8,747 2,320
Total investment in subsidiary 101,363 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$8,746,777 (30 June 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
period-end bid price of the underlying equity to which they relate. P-Notes
are promissory notes issued by certain counterparty banks that are designed to
offer the holder a return linked to the performance of a particular underlying
equity security or market and used where direct investment in the relevant
underlying equity security or market is not possible for regulatory or other
reasons. To the extent dividends are received on the securities to which the
P-Notes are linked, these are taken to investment income.
At 31 December 2023 the Subsidiary held 20 P-Notes with a value of
US$66,498,511, (June 2023 23 P-Notes US$52,441,930) held to obtain exposure to
Saudi Arabia.
Purchases and sales of investments are recognised on trade date - the date on
which the Company commits to purchase or sell the asset. Investments are
initially recorded at fair value, and transaction costs for all financial
assets and financial liabilities carried at fair value through profit and loss
are expensed as incurred.
Gains and losses (realised and unrealised) arising from changes in the fair
value of the financial assets are included in the income statement in the year
in which they arise.
Investments held by the Subsidiary
31 December 2023: Financial assets at fair value through profit or loss; all
quoted equity securities or P-Notes:
Security
Shares US$'000
Saudi National Bank* 937,079 9,645
Middle East Healthcare* 268,499 6,322
Saudi Awwal Bank B12LSY7* 610,669 6,163
Qatar Navigation (QNNS QD) 2,065,757 5,503
Integrated Holding Company 3,070,928 5,085
Banque Saudi Fransi - SHAMAL 05.06.19* 413,512 4,406
Qatar Islamic Bank (QIBK QD) 753,000 4,301
United Electronics Company* 171,500 4,098
Arab National Bank - Shamal* 577,800 3,899
Saudi Ground Services* 384,395 3,701
Qatar Insurance (QATI QD) 5,131,406 3,607
Saudi Airlines Catering Co* 104,803 3,600
Maharah Human Resources* 151,336 3,209
Commercial Bank of Qatar (CBQK QD) 1,797,814 2,948
Seera Group Holdings* 390,400 2,811
Qatar National Bank (QNBK QD) 624,949 2,796
Dubai Islamic Bank USD* 1,700,000 2,643
Jarir Marketing Co* 599,417 2,491
Qatar Gas Transport (QGTS QD) 2,511,933 2,414
Fawaz Abdulaziz Al* 480,816 2,259
Yamama Cement* 243,475 2,214
Arabian Contracting Services* 34,050 2,188
Bank Muscat 3,224,909 2,176
Advanced Petrochemicals* 204,302 2,128
Aramex Co USD* 2,700,000 1,654
Gulf Bank of Kuwait 1,727,272 1,576
Aramex (ARMX) 2,366,616 1,450
Dubai Islamic Bank (DIB) 910,590 1,416
Barwa Real Estate (BRES QD) 1,710,963 1,351
City Cement* 224,000 1,239
Qatar Insurance USD* 1,500,000 1,055
Barwa Real Estate USD* 978,416 772
Total
101,120
*P-Notes
2 Net Asset Value per Share
The net asset value per share as at 31 December 2023 is US$2.5352 per share
based on 40,103,204 ordinary shares in issue as at that date (30 June 2023:
US$2.3556 based on 41,125,480 ordinary shares in issue).
3 Profit per Share
Basic and diluted profit/(loss) per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted average number
of ordinary shares in issue during the period:
31 December 2023 31 December 2022
Profit/(loss) attributable to equity holders of the Company (US$'000) 8,705 (50)
Weighted average number of ordinary shares in issue (thousands) 40,941 41,034
Basic profit/(loss) per share (cents per share) 21.26 (0.12)
4 Other payables and accrued expenses
31 December 2023 30 June 2023
US$'000 US$'000
Administration fee payable 40 40
Accruals and sundry creditors 38 111
78 151
5 Charges and Fees
31 December 2023 31 December 2022
US$'000 US$'000
Administrator and Registrar's fees (see below) 81 81
Audit fees 23 44
Custodian fees (see below) 2 2
Directors' fees and expenses 71 68
Directors' insurance cover 19 22
Broker fees 27 22
Other 113 145
Other expenses 336 384
Investment management fees and custodian fees borne by the Subsidiary were
US$387,869 and US$36,427 respectively (2022: US$346,166 and US$45,546
respectively).
Investment Manager's fees
Annual fees
The Investment Manager is entitled to an annual fee of 0.80% of the net asset
value of the Company.
Management fees for the period ended 31 December 2023 amounted to US$387,869
(31 December 2022: US$346,166) and the amount accrued but not paid at the
period-end was US$198,170 (31 December 2022: US$170,108). This fee is borne by
the Subsidiary.
Custodian fees
The Custodian is entitled to receive fees of US$7,200 per annum and US$25 per
processed transaction.
In addition the Custodian is entitled to receive fees of 8 basis points per
annum in respect of Qatari securities held by the Subsidiary and 10 basis
points per annum in respect of non-Qatari, GCC securities held by the
Subsidiary and $45 per settled transaction (Qatar)/$50 per settled transaction
(GCC excluding Qatar).
Custodian and sub-custodian fees for the period ending 31 December 2023
amounted to US$38,027 (31 December 2022: US$45,546). This fee is borne by the
Subsidiary
Administrator and Registrar fees
The Administrator is entitled to receive a 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.
Administration fees paid for the period ending 31 December 2023 amounted to
US81,245 and US$8,594 for additional services (31 December 2022: US$80,555 and
US$8,594 respectively).
Directors' Remuneration
The maximum amount of remuneration payable to the Directors permitted under
the Articles of Association is £200,000 per annum.
Anderson Whamond as non-executive chairman was entitled to receive an annual
fee of £35,000.
David Humbles as non-executive chairman of the Audit Committee is entitled to
receive an annual fee of £26,250.
Neil Benedict as non-executive director received £24,500 per annum and
retired at the AGM on 22 December 2023.
Patrick Grant as non-executive director, with effect from 1 October 2023,
receives £24,500 per annum.
The Directors are each entitled to receive reimbursement of any expenses
incurred in relation to their appointment. Total fees and expenses paid to the
Directors for the period ended 31 December 2023 amounted to US$71,391 (31
December 2022: US$67,892).
6 Taxation
Isle of Man taxation
The Company is resident for taxation purposes in the Isle of Man by virtue of
being incorporated in the Isle of Man and is subject to taxation at the rate
of 0% in the Isle of Man.
7 Related Party Transactions
Parties are considered to be related if one party has the ability to control
the other party or to exercise significant influence over the other party in
making financial or operational decisions.
The Investment Adviser is Qatar Insurance Company S.A.Q. The Company holds
shares in Qatar Insurance Company S.A.Q. (see note 1(a)). The Investment
Adviser's fees are paid by the Investment Manager.
The Investment Manager, Epicure Managers Qatar Limited, is a related party by
virtue of its ability to make operational decisions for the Company (via the
Subsidiary) and through common Directors. Fees paid and payable to the
Investment Manager are disclosed in note 5.
Epicure Managers Qatar Limited is a wholly owned subsidiary of the Investment
Adviser, Qatar Insurance Company S.A.Q.
8 The Company
Gulf Investment Fund plc was incorporated and registered in the Isle of Man
under the Isle of Man Companies Acts 1931-2004 on 26 June 2007 as a public
company with registered number 120108C.
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 2022 was US$2.0256 per share and
pursuant to the above stated policy, the directors declared a first interim
dividend for the year ended 30 June 2022 of 4.05 cents per ordinary share.
The dividend was paid on 20 October 2023 to ordinary shareholders on the
register as at 15 September 2023 (the "Record Date").
The shareholders also approved a dividend of 4.05 cents per share on 22
December 2023. This will be paid to shareholders in March 2024.
The Company's agents and the Manager perform all significant functions.
Accordingly, the Company itself has no employees.
9 The Subsidiary
The Company has the following subsidiary company:
Country of incorporation Percentage of shares held
Epicure Qatar Opportunities Holdings Limited British Virgin Islands 100%
Epicure Qatar Opportunities Holdings Limited is a wholly owned subsidiary of
the Company and was incorporated in the British Virgin Islands on 4 July 2007
under the provisions of the BVI Companies Act 2001, as a limited liability
company with registration number 1415393. The principal activity of the
Subsidiary is holding investments on behalf of the Company.
10 Significant Accounting Policies
The accounting policies applied by the Company in these condensed interim
financial statements are the same as those applied by the Company in its
financial statements for the year ended 30 June 2023.
10.1 Basis of presentation
These financial statements have been prepared in accordance with International
Financial Reporting Standard ("IFRS") IAS 34 Interim Financial Reporting. They
do not include all of the information required for full annual financial
statements and should be read in conjunction with the financial statements of
the Company as at and for the year ended 30 June 2023.
In accordance with IFRS 10, 'Consolidated financial statements', the Directors
have concluded that the Company falls under the definition of an investment
entity because the Company has the following characteristics:
· the Company has obtained funds for the purpose of providing
investors with investment management services;
· the Company's investing policy, which was communicated directly
to investors, is investment solely for returns from capital appreciation and
investment income; and
· the performance of investments is measured and evaluated on a
fair value basis.
As a result, the Company does not consolidate its subsidiaries, instead it is
required to account for these subsidiaries at fair value through profit or
loss in accordance with IFRS 9, 'Financial instruments' and prepares separate
company financial statements only.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires the Board of
Directors to exercise its judgement in the process of applying the Company's
accounting policies. The financial statements do not contain any critical
accounting estimates.
10.2 Segment reporting
The Company is organised into one operating segment, comprising the investment
in a portfolio of equity securities in the GCC region via the wholly owned
subsidiary. The financial performance of this portfolio is presented to and
monitored by the Board of Directors, being the chief operating decision makers
as defined under IFRS 8. All of the Company's activities are interrelated, and
each activity is dependent on the others. Accordingly, all significant
operating decisions are based upon analysis of the Company as one segment. The
financial results from this segment are equivalent to the financial statements
of the Company as a whole.
11 Cash and Cash Equivalents
31 December 2023 30 June 2023
US$'000 US$'000
Bank balances 215 881
Cash and cash equivalents 215 881
12 Post Balance Sheet Events
There were no post balance sheet events.
Unaudited consolidated financial information
Consolidated Income Statement
(Unaudited) (Unaudited)
For the period from 1 July 2023 to 31 December 2023 For the period from 1 July 2022 to 31 December
2022
US$'000 US$'000
Income
Dividend income on quoted equity 561 1,175
investments
Realised gain on sale of financial assets at fair 9,196 1,108
value through profit or loss
Net changes in fair value on financial assets at fair value through profit or (239) (1,593)
loss
Commission - -
Interest income 11 68
Net foreign exchange loss (12) -
Total net income 9,517 758
Expenses
Investment manager's fees 386 346
Other expenses 426 462
Total operating expenses 812 808
Profit/(loss) before tax 8,705 (50)
Income tax expense -
Profit/(loss) for the year 8,705 (50)
Basic profit/(loss) per share (cents) 21.26 (0.12)
Diluted profit/(loss) per share (cents) 21.26 (0.12)
Notes:
1) Consolidated information has been presented to assist the user in
interpreting the results of the Company and to be consistent with previous
years. This information consolidates the results of the Subsidiary with the
Company. It is based on IFRS requirements that would apply if the IFRS 10
consolidation exception for investment entities did not apply to the Company.
2) Where relevant to understanding the risks of financial instruments
held by the Company certain disclosures relating to the subsidiary's assets
and liabilities have been given in the notes to the Financial Statements and
would be relevant to understanding the consolidated position presented in this
appendix.
Consolidated Statement of Comprehensive Income
(Unaudited) (Unaudited)
For the period from For the period from
1 July 2022 to
1 July 2023 to
31 December 2022
31 December 2023
US$'000 US$'000
Profit/(loss) for the year 8,705 (50)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Currency translation differences - -
Total items that are or may be reclassified subsequently to profit or loss - -
Other comprehensive income/(expense) for the year (net of tax) - -
Total comprehensive income/(expense) for the year 8,705 (50)
Consolidated Statement of Financial Position
At 31 December 2023 At 30 June 2023
US$'000 US$'000
Assets
Financial assets at fair value through profit or loss 101,120 94,622
Other receivables and prepayments 238 328
Cash and cash equivalents 1,053 2,512
Total assets 102,411 97,462
Equity
Issued share capital 401 411
Share premium - 1,008
Reserves 101,269 95,457
Total equity 101,670 96,876
Current liabilities
Other payables and accrued expenses 741 586
Total current liabilities 741 586
Total equity and liabilities 102,411 97,462
Consolidated Statement of Changes in Equity
Share capital Distributable reserves Reserves Share premium Other reserves Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 July 2023 411 (7,330) 100,940 1,008 1,847 96,876
Total comprehensive income for the period
Profit for the period - - 8,705 - - 8,705
Other comprehensive income
Foreign exchange translation differences - - - - - -
Total comprehensive income for the period - - 8,705 - - 8,705
Contributions by and distributions to owners
Dividends paid - - (1,681) - - (1,681)
Shares subject to tender offer (14) (1,183) - (1,914) 14 (3,097)
Tender offer expenses - (43) - - - (43)
Proceeds from shares issued 4 - - 906 910
Total contributions by and distributions to owners (10) (1,226) (1,681) (1,008) 14 (3,911)
Balance at 31 December 2023 401 (8,556) 107,964 - 1,861 101,670
Balance at 1 July 2022 411 (6,356) 87,366 - 1,843 83,264
Total comprehensive income for the period
Loss for the period - - (50) - - (50)
Other comprehensive income
Foreign exchange translation differences - - - - - -
Total other comprehensive expense - - (50) - - (50)
Contributions by and distributions to owners
Dividends paid - (1,443) - - (1,443)
Shares subject to tender offer (2) (347) - - 2 (347)
Tender offer expenses - (41) - - - (41)
Proceeds from shares issued 1 - - 150 - 151
Total contributions by and distributions to owners (1) (388) (1443) 150 2 (1,680)
Balance at 31 December 2022 410 (6,744) 85,873 150 1,845 81,534
Consolidated Statement of Cash Flows
(Unaudited) (Unaudited)
For the period from For the period from
1 July 2023 to 1 July 2022 to
31 December 2023 31 December 2022
US$'000 US$'000
Cash flows from operating activities
Purchase of investments (65,147) (143,023)
Proceeds from sale of investments 67,852 142,662
Dividends received 744 958
Operating expenses paid (878) (904)
Interest received 36 68
Increase in trade and other receivables (110) (149)
Net cash generated from/(used in) operating activities 2,497 (388)
Financing activities
Proceeds from share issue 910 151
Dividends paid (1,681) (1,443)
Cash used in tender offer (3,097) (347)
Tender expenses (43) (41)
Net cash used in financing activities (3,911) (1,680)
Net decrease in cash and cash equivalents (1,414) (2,068)
Effects of exchange rate changes on cash and cash equivalents (45) 55
Cash and cash equivalents at beginning of the period 2,512 6,951
Cash and cash equivalents at end of the period 1,053 4,918
Alternative performance measures (APM)
An APM is a measure of performance or financial position that is not defined
in applicable accounting standards and cannot be directly derived from the
financial statements. The Company's APMs are set out below and are
cross-referenced where relevant to the financial inputs used to derive them as
contained in other sections of the Interim Financial report.
Ongoing charges ratio
Ongoing charges (%) = Annualised ongoing charges divided by Average undiluted
net asset value in the period
Ongoing charges are those expenses of a type which are likely to recur in the
foreseeable future, whether charged to capital or revenue, and which relate to
the operation of the investment company as a collective fund. Ongoing charges
are based on costs incurred in the period as being the best estimate of future
costs and include the annual management charge. As recommended by the AIC in
its guidance, ongoing charges are calculated using the Company's annualised
revenue and capital expenses (excluding finance costs, direct transaction
costs, custody transaction charges, non-recurring charges and taxation)
expressed as a percentage of the average daily net assets of the Company
during the period. The inputs that have been used to calculate the ongoing
charges percentage are set out in the following table:
Ongoing charges calculation* 31 December 2023 31 December 2022
US$'000 US$'000
Management fee (note 5) 386 346
Other operating expenses 426 462
Total management fee and other operating expenses for the period 812 808
Total annualised expenses 1,624 1,603 a
Average net assets in the period 95,894 85,784 b
Ongoing charges (c=a/b) 1.69% 1.87% c
*Including expenses of the Subsidiary.
Discount and premium
Shares can frequently trade at a discount to net asset value (NAV). This
occurs when the share price (based on the mid-market share price) is less than
the NAV and investors may therefore buy shares at less than the value
attributable to them by reference to the underlying assets. The discount is
the difference between the share price and the NAV, expressed as a percentage
of the NAV. As at 31 December 2023, the share price was US$ 2.2000 and the
unaudited NAV per share was US$ 2.5353, giving a discount of 13.2%. A premium
occurs when the share price (based on the mid-market share price) is more than
the NAV and investors would therefore be paying more than the value
attributable to the shares by reference to the underlying assets.
Period to date net asset value
This is the fall or rise, calculated as a percentage, in value of the
Company's assets attributable to one ordinary share since 30 June 2023. The
net asset value per share is calculated by dividing 'equity shareholders'
funds' by the total number of ordinary shares in issue (excluding treasury
shares). The fall in period to date NAV is set out in the table below:
Date Equity Number of ordinary shares in issue Net asset value per share
30 June 2023 96,875,500 41,125,480 2.3556 a
31 December 2023 101,672,265 40,103,204 2.5353 b
PTD Change in NAV (c=(b-a)/a) 7.63% c
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