Half-year Report

RNS Number : 8352F

Gulf Investment Fund PLC

26 February 2018

 

26 February 2018

Legal Entity Identifier: 2138009DIENFWKC3PW84

Gulf Investment Fund plc

Interim Results for the six months ended 31 December 2017

Nick Wilson, Chairman, said:

"The six-month period was eventful and volatile. Following the travel restrictions and other measures announced by Saudi Arabia, UAE, Bahrain and Egypt on 5 June, the Qatar Exchange Index fell sharply by 23% by the end of November. The subsequent recovery in the Qatar Exchange was spirited, bolstered by optimism on GDP growth and a continuing recovery in the oil price."

Highlights

·      Net Asset Value per Share fell by 1.30% compared to a fall in the Qatar Exchange Index of 5.61%

·      Following a slight narrowing of the discount the shares rose 0.75%

·      Dividend of 3.0 cents per share for the year ended 30 June 2017 was paid on 9 February 2018

·      Change of investment policy from Qatar-focused to broader Gulf focus took effect in December

·      Change of name from Qatar Investment Fund plc to Gulf Investment Fund plc

Nick Wilson added:

"The new investment policy means we have a wider investment universe and more flexibility to identify attractive opportunities in the Gulf Cooperation Council (GCC) region. The fund is still predominantly invested in Qatar over the short term given that Qatar is trading at an attractive valuation compared to other GCC markets. We are monitoring developments in other GCC countries and will be increasing exposure to other GCC countries as we identify attractive investment opportunities. 

"These markets are an attractive long-term investment opportunity. Governments in the region are expanding their non-oil sectors with infrastructure development and investment in the social sectors. This non-oil growth is expected to have increased to 2.6 per cent in 2017 as government budgets improve.  Populations continue to grow, fuelling personal consumption which should benefit domestic consumer and services sector companies"

For further information:

Nicholas Wilson [phone]

Qatar Investment Fund plc

Andrew Potts [phone]

Panmure Gordon

William Clutterbuck [phone]

Chairman's Statement

On behalf of the Board, I am pleased to present the interim results for Gulf Investment Fund Plc for the six-months ending 31 December 2017.

Results

During the six months ending 31 December 2017, Net Asset Value per Share ("NAV") fell by 1.30% compared to a fall in the Qatar Exchange Index of 5.61% and a rise of 14.60% in the MSCI Emerging Markets Index. The S&P GCC Composite Index fell by 1.05%. Following a slight narrowing of the discount at which the shares trade to NAV, the shares rose 0.75%, from US$0.8988 at 30 June 2017 to US$0.9055 at 31 December 2017. At the Annual General Meeting on 16 November 2017, QIF shareholders approved a final dividend of 3.0 cents per ordinary share in respect of the year ended 30 June 2017. The dividend was paid on 9 February 2018 to ordinary shareholders on the register as at 5 January 2018.

The six-month period was eventful and volatile. Following the measures announced by Saudi Arabia, UAE, Bahrain and Egypt on 5 June, the Qatar Exchange Index fell sharply from 9940 to a low of 7664 at the end of November, a decline of 23%. The subsequent recovery was spirited, bolstered by optimism on GDP growth and a continuing recovery in the oil price. At the end of the period, the Company had a total of 20 holdings: 13 in Qatar, 5 in UAE and 2 in Oman.

Change in investment policy

On 16 October, the Board announced its intention to change the investment policy of the Company from a largely Qatar-focused investment strategy to a broader Gulf Cooperation Council ("GCC") investment strategy.

Previously, the investment policy enabled the Company to invest up to 15% of the Company in GCC countries (namely Saudi Arabia, Kuwait, UAE, Oman and Bahrain) other than Qatar.

The change in investment policy removed the 15% limit and enables the Company to increase its investment allocation to other GCC countries and provide the Investment Adviser with a wider investment universe and more flexibility to identify attractive opportunities in the GCC region.

Alongside the amended investment policy the Board put forward a number of proposals including:  

(i)             making a tender offer for up to 10% of the issued Share Capital of the Company

(ii)            cancelling the discontinuation vote that was scheduled for the 2018 annual general meeting and replacing it with a continuation vote for the 2021 annual general meeting and every three years thereafter;

(iii)           making a tender offer to shareholders for up to 100% of the Company's share capital in 2020 subject to Shareholder approval to be sought in 2020; and

(iv)           proposing to change the name of the Company to Gulf Investment Fund plc.

All of these changes were subject to the approval of the Company's shareholders at an Extraordinary General Meeting (EGM), other than the tender offer in 2020 which will be subject to shareholder approval in 2020.  The Extraordinary General Meeting was held on 7 December 2017, at which a poll was called for on 8 December 2017 and all resolutions were passed. 

Tender offer

Following the passing of the resolutions at the EGM on 7 December 2017 to give effect to the Tender Offer, 10,273,471 Shares were tendered under the Tender Offer at the tender offer price of USD0.9933 per share. These shares were cancelled leaving the Company with 92,461,242 Shares in issue (excluding treasury shares).

Related Party Transactions

Details of any related party transactions are contained in the annual report as well as being addressed in note 8 of this interim report

Post balance sheet events

Details of these can be found in note 14 following the accompanying financial statements.

Outlook, risks and uncertainties

Fluctuations in oil and gas prices will continue to impact GCC economies as countries deal with budget deficits. The geopolitics of the region and, in particular, the dispute between Qatar and other members of the GCC brings continuing economic uncertainty.

The Board believes that the principal risks and uncertainties faced by the Company continue to fall in the following categories; geopolitical events, market risks, investment and strategy risks, accounting, legal and regulatory risks, operational risks and financial risks. Information on each of these is given in the Business Review section of our Annual Report each year.

The Board continues to view the future of the Company with confidence expecting healthy if slower growth in the region as a whole, as growth in the non-hydrocarbon sector in a number of GCC members helps to balance their economies.

Nicholas Wilson

Chairman

23 February 2018

Director's Responsibility Statement

The Directors confirm that, to the best of their knowledge:

a)             the condensed set of financial statements has been prepared in accordance with IAS 34;

b)             the interim management report and Chairman's statement include a fair review of the information required by the Disclosure and Transparency Rule 4.2.7R (indication of important events during the first six months and a description of the principal risks and uncertainties for the remaining six months of the year respectively);

c)             in accordance with Disclosure and Transparency Rule 4.2.8R there have been no related party transactions during the six months to 31 December 2017 and therefore nothing to report on any material effect by such a transaction on the financial position or the performance of the Company during that period; and there have been no changes in this position since the last Annual Report that could have a material effect on the financial position or performance of the Company in the first six months of the current financial year.

d)             in accordance with Disclosure and Transparency Rule 6.4.2, the Company confirms that its Home State is the United Kingdom.

The interim financial report has not been audited by the Company's Independent Auditor.

Nicholas Wilson

Chairman

23 February 2018

Regional Market Overview

Report of the Investment Manager and the Investment Adviser

Global stock markets ended 2017 on record highs, gaining US$9.0 trillion in value over the year, led by gains in both emerging as well as advanced markets. The MSCI World index recorded a gain of 20.0 per cent during the year aided by strong emerging market performance (up 34.9 per cent). However, the S&P GCC Composite index closed the year down 0.5 per cent on concerns over recent regional geopolitical tensions and the political purge in Saudi Arabia.

	31-Dec-2016	29-Jun-2017	1H2017	31-Dec-2017	2H2017	FY2017
Qatar (QE)	10436.8	9030.4	-13.5%	8523.4	-5.6%	-18.3%
Saudi Arabia (TASI)	7210.4	7425.7	3.0%	7226.3	-2.7%	0.2%
Dubai (DFMGI)	3530.9	3392.0	-3.9%	3370.1	-0.6%	-4.6%
Abu Dhabi (ADI)	4546.4	4425.4	-2.7%	4398.4	-0.6%	-3.3%
Kuwait (KWSE)	5748.1	6762.8	17.7%	6408.0	-5.2%	11.5%
Oman (MSI)	5782.7	5118.3	-11.5%	5099.3	-0.4%	-11.8%
Bahrain (BAX)	1220.5	1310.0	7.3%	1331.7	1.7%	9.1%
S&P GCC Composite	99.4	100.1	0.6%	98.9	-1.1%	-0.5%
MSCI World	1753.0	1921.5	9.6%	2103.5	9.5%	20.0%
MSCI EM	858.4	1008.8	17.5%	1158.5	14.8%	34.9%
Brent	56.1	47.4	-15.5%	66.9	41.0%	19.1%

Source: Bloomberg, S&P Website

Geopolitical tensions between Qatar and its neighbours and lower oil prices (down 15.5 per cent) were the key concerns for the region during 1H2017. The Qatari market dropped 13.5 per cent since the commencement of the blockade. The S&P GCC Composite index rose marginally during the period. However, Saudi Arabia rose 3.0 per cent in 1H2017, following the news of its inclusion in MSCI Emerging Markets watchlist and the promotion to Crown Prince of former Deputy Crown Prince, Mohammed bin Salman. Kuwait and Bahrain stock markets joined Saudi Arabia and ended the period in green.

During 2H 2017, GCC markets witnessed high volatility, with the S&P GCC Composite index declining by 1.1 per cent as investor sentiment remained subdued. This was primarily due to increased tensions between Saudi Arabia and Iran and the recent political purge in Saudi Arabia. All GCC markets ended in the red, except for Bahrain (up 1.7 per cent) during the 2H 2017. The Saudi, Dubai and Abu Dhabi market dropped 2.7 per cent, 0.6 per cent and 0.6 per cent, respectively. Qatari market gained 10.5 per cent during the month of December, helping it to limit losses to 5.6 per cent for the period. Kuwait was down 5.2 per cent.  Crude prices closed 17 per cent higher in the quarter following the extension to the OPEC agreement to December 2018.

Change of investment policy

The new investment policy removed the 15 per cent NAV ceiling on the Fund investing in GCC countries outside Qatar.  The Investment Adviser now has a wider investment universe in which to identify attractive opportunities in the GCC region. 

The reference index for the Fund is now the S&P GCC Composite Index (previously: QE Index), whilst not being a formal benchmark for the Fund.

The Investment Adviser's task is to identify emerging investment opportunities and positive fundamental factors that have not yet been priced in by the market. The Investment Adviser follows a top-down approach monitoring macro trends and identifying promising sectors and companies in GCC countries.

The new investment policy commenced on 7 December 2017. As at 31st December GIF's allocation to Qatar was 85 per cent. We expect to retain a significant overweight position in Qatar over the short term while Qatar is trading at an attractive valuation compared to other GCC markets. We are monitoring developments in other GCC countries and will be increasing exposure to other GCC countries as we identify attractive investment opportunities.

For the period since the adoption of the new investment policy until 31 December 2017, GIF has outperformed the S&P GCC Composite Index by 5.3 per cent as Qatar outperformed the rest of the GCC.

Looking Ahead - GCC

The Investment Adviser believes that GCC markets are an attractive long-term investment opportunity. Governments in the GCC are expanding their non-oil sectors with infrastructure development and investment in the social sectors.

The Investment Adviser has identified the following key themes for investment in GCC.

·      Banks: The GCC banking sector tends to enjoy strong asset quality and capitalisation, along with government support and growth from infrastructure investments.

·      Real Estate & Housing Finance: Rising population and an undersupplied residential market in most of the GCC countries is expected to create robust demand for residential construction and housing finance.

·      Healthcare & Education: Shortage of medical services and education will continue to create a need for government spending on social development and these sectors have seen high allocations in recent government budgets.

·      Tourism: Governments in the GCC are promoting their countries as tourist destinations. Tourism should drive demand for hospitality, travel and infrastructure sectors and create employment.

·      Retail: Rising population, high spending power and increasing tourism should create opportunities for retail businesses.

·      Industrials: The petrochemical sector contributed c.30 per cent to GDP in 2014 making it a key non-oil GCC export sector. The world petrochemical market is poised to grow at 8.8 per cent annually until 2022.

·      Localisation and Privatisation: GCC countries are encouraging the transfer of knowledge and technology, and creating opportunities in manufacturing, maintenance, repair, research and development. Localization of business activity will be achieved through direct investments and strategic partnerships with leading sector companies.  Privatization can improve productivity and the quality of services in education, healthcare, transportation and utilities.

Several GCC markets have been upgraded to emerging market from frontier market status in recent months.  Across the region governments are seeking to encourage foreign investment. The privatisation of public assets, easing of foreign ownership restrictions and more transparency should accelerate the upgrade of further GCC markets over the next years.

GCC nations are diversifying away from oil and gas.  The US$100 billion Aramco IPO forms the centrepiece of the Saudi non-oil diversification reforms alongside the US$500 billion plan to develop the NEOM business and industrial zone linking with Jordan and Egypt. The UAE plans to invest US$163 billion on renewable energy projects. Qatar is expected to spend over US$200 billion (from 2015 to 2021) on projects ahead of the FIFA World Cup 2022.  As part of the Kuwait Development Plan (KDP), the nation plans to spend around US$160 billion over 500 projects, including infrastructure, utilities and housing investments. Oman plans to invest about US$35 billion on tourism related projects, which is expected to double visitor numbers by 2040.

GCC countries, historically used to large fiscal surpluses, have tightened their belts in recent years following oil price falls. As a result, non-oil growth has started to be impacted. Recent higher oil prices have provided more budget flexibility and as a result non-oil growth is expected to have increased to 2.6 per cent in 2017, from 1.8 per cent in 2016.

Embedded image removed - please refer to the Company's website www.gulfinvestmentfundplc.com for a chart depicting Overall Budgeted Expenditure Levels.

Most gulf economies continue to focus on education and healthcare. Saudi Arabia has allocated 40 per cent of its budget to these sectors, a trend seen across the GCC.

Embedded image removed - please refer to the Company's website www.gulfinvestmentfundplc.com for a chart depicting GCC Spending on Key Sectors.

Note: Key Sectors includes Education, Health, Infrastructure and other social developments

The International Monetary Fund (IMF) expects the GCC to have a current account surplus in 2017 as oil prices recover. Saudi Arabia's shortfall reached 9 per cent of GDP in 2015, but is expected to record a surplus of 0.6 per cent in 2017.

Embedded image removed - please refer to the Company's website www.gulfinvestmentfundplc.com for a chart depicting GCC Fiscal and Current Account Balance as a per cent of GDP.

Other Recent Developments

India looks to boost Qatar LNG import volume

India's LNG imports are expected to rise by 10 per cent, to over 30 million metric ton per annum (MTPA) by 2020, versus 19 million MTPA in 2016.

India is Qatar's third largest export destination. Currently, the Qatar-India trade is around US$10 - US$10.5 billion, of which US$9 - US$9.5 billion is the value of Qatar's exports to India, mostly LNG and petrochemicals.

Qatar signs 15-year LNG deal with Bangladesh

Qatar's RasGas sealed a 15-year LNG Sales and Purchase Agreement (SPA) with Bangladesh Oil, Gas and Mineral Corporation (Petrobangla). RasGas will supply 2.5 million MTPA of LNG to Petrobangla for 15 years.

Qatargas to deliver 1.5 million MTPA of LNG to Turkey's Botas

Qatargas signed a medium-term SPA with Turkey's Botas to deliver 1.5 MTPA of LNG for three years starting in October 2017.

Qatargas and Shell sign new LNG deal

Qatargas also signed a SPA with Shell to deliver up to 1.1 MTPA of LNG for five years. This deal provides Qatargas with access to Shell's gas sales portfolio in the United Kingdom and continental Europe, as well as the flexibility to manage LNG deliveries to its global client portfolio.

Hamad Port eyes 35 per cent of region's trade in 2 years, says transport minister

The US$7.4 billion Hamad Port, covering 30,000 square kilometres, has already won 27 per cent of the regional trade in the Middle East since opening in December 2015. Part of the port's strategy is to gain 35 per cent of the total regional trade in 2018 thanks to its strategic location and superior facilities.

Qatar's Transport minister has praised the private sector's role in the construction and operation of the Hamad Port, which was responsible for 60 per cent of the work. The private sector will have a major portion of the construction work of the second phase, with projects worth QAR 5 billion to be completed and delivered between 2020 and 2021.

Saudi retail market to top US$142bn in 2021

Saudi Vision 2030 will drive the Kingdom's retail market to a record-high of US$142 billion by 2021, according to Alpen Capital. As a result, research firm AT Kearney says the Kingdom has the third-highest retail potential among emerging markets in Europe, the Middle East, and Africa.

Saudi Arabia pays SAR 525 billion of private sector bills

Saudi Arabia has paid the majority of SAR 525 billion worth of invoices from the private sector received within 60 days of receipt, as the kingdom seeks to settle its dues that have caused mayhem for contractors.

GCC construction projects value hits US$2.4 trillion

BNC Construction Intelligence estimated the total value of 21,893 active construction projects in the GCC at US$2.4 trillion at the beginning of September 2017 as Gulf countries are determined to carry out important infrastructure projects.

The urban construction contracts constitute 80 per cent of the contracts awarded for all sectors in GCC and in dollar terms this translates to 49 per cent of the total contracts awarded. The total value of urban construction projects reached US$1.18 trillion

Dubai's industrial sector to grow by additional Dh18 billion by 2030

According to the Government of Dubai, under the Dubai Industrial Strategy, the industrial sector is expected to grow by an additional Dh18 billion by 2030, creating 27,000 jobs, with exports forecast to increase by Dh16 billion.

Saudi Arabia to spend US$6.9bn on tourism initiatives

Saudi Arabia's National Transformation Program (NTP) 2020 has approved 13 initiatives submitted by the Saudi Commission for Tourism & National Heritage (SCTH) with a budget of over SAR 26 billion (US$6.93 billion). This amount will be allocated to tourism and national heritage projects and initiatives implemented through SCTH and its partners in the public and private sectors.

Moody's downgrades Bahrain, Oman ratings

Moody's Investors Service has downgraded Bahrain's long-term issuer rating to B1 from Ba2 and maintained the negative outlook while Oman's long-term issuer and senior unsecured bond ratings has been downgraded to Baa2 from Baa1 and the outlook changed to negative from stable.

According to Moody's view the credit profile of the Bahrain will continue to weaken significantly in the coming years, predominantly because despite some fiscal reform efforts there is a lack of a clear and comprehensive consolidation strategy. However, the key driver for Oman's rating downgrade was the country's limited than expected progress towards addressing structural vulnerabilities to a weak oil price environment, reflecting institutional capacity constraints to address the large fiscal and external imbalances.

UAE transport projects' valued at US$87 billion in 1H 2017

The total value of 481 active transport projects exceeded AED 321.49 billion (US$87.6 billion) in the first half of 2017, according to BNC Network. Of these, 364 projects with a combined value of $36.5 billion are road projects while 39 projects with a value of $33.9 billion are rail projects.

Moody's puts Qatar's banks on negative watch amid regional dispute

Moody's Investors Service changes its outlook from stable to negative following Qatar's dispute with its Gulf neighbours stating if the current rift between Qatar and its neighbouring Gulf countries is prolonged, it could trigger outflows of foreign deposits and other external funding leading to a liquidity crunch in the banking sector.

The lifting of restriction on women driving in Saudi will have a huge impact on the economy

Female participation in the Saudi workforce stood at just 19 per cent in 2016, compared with 65 per cent for men, according to EFG Hermes. The increase in women in the workforce will increase the disposable incomes thereby increasing the purchasing power in the economy. Saudi Arabia's National Transformation Programme, aims to raise the percentage of the country's women in work to 28 per cent by 2020.

Qatar to comfortably raise US$ 9 billion from bonds, says QFC chief

Yousef Al Jaida, chief executive of the Qatar Financial Centre (QFC) has stated that the Qatari government will comfortably be able to raise US$9 billion through international bond issuance in 2018.

OPEC and Non-OPEC members agreed to extend oil production cut to end of 2018

OPEC and non-OPEC members, including Russia, have agreed to extend oil production cuts until the end of 2018 amid measures to clear global glut of crude oil. The new agreement will be from January 2018 to December 2018 and a review will be conducted in June 2018 to assess the impact.

The deal could support the oil market and help oil prices to maintain their recent strength, resulting in a better outlook for revenue of GCC countries'. 

Global gas consumption set to jump 53 per cent by 2040

Global gas consumption will increase by 53 per cent between 2017 and 2040, according to the Doha-based Gas Exporting Countries Forum. Growth is expected to be led by non-OECD Asia, followed by the Middle East and Africa. The share of natural gas in the global energy mix will increase from 22 per cent in 2016 to 26 per cent in 2040.

In GCC, the combined value of the 361-active oil and gas projects has crossed US$331.4 billion in November 2017, according to the BNC Network, the largest and most comprehensive project research and intelligence provider in the Middle East and North Africa (MENA) region.

Most GCC central banks raise policy rates after Fed rate hike

The central banks of four GCC countries, Saudi Arabia, UAE, Bahrain, and Qatar, increased interest rates after the US Fed raised interest rates by 0.25 per cent.   

Moody's expects performance of the GCC banking sector to be resilient in 2018

Rating agency Moody's expects the banking sector in the GCC to deliver a stable performance in 2018, reflecting strong financial fundamentals, particularly in the UAE and Saudi Arabia. Slow economic growth, fiscal and geopolitical risks are expected to pose challenges to profitability and loan quality of the region's banks, but Moody's expects strong capitalization levels with high loan-loss reserves to provide banks with strong loss-absorption capacity.

Moody's forecasts that real GDP growth in the region will pick up to around 2 per cent in 2018 from 0 per cent in 2017. Although fiscal consolidation efforts in the region will persist, key regional infrastructure projects such as the UAE Expo 2020, World Cup Qatar 2022 and the Saudi National Transformation Programme (NTP) are expected to support capital spending and credit growth, which should expand by 5 per cent in 2018.

GCC consumer prices rise by 1.3 per cent

GCC countries have posted a 1.3 per cent rise in prices for the 12-month period ending October 2017, according to GCC-Stat, the Statistical Centre for Gulf Cooperation Council (GCC) states. The highest rise in prices were recorded for tobacco at 80.5 per cent, miscellaneous 3.7 per cent, education 3 per cent and transport 2 per cent. On the other hand, prices for recreation fell by 3.7 per cent, clothing and footwear fell by 1.4 per cent, and restaurant by 0.4 per cent.

Over the 12 months ending in October 2017, the country-wise contributions to the overall GCC consumer price change were UAE (1 percentage point), Kuwait (0.2 percentage points), Bahrain, Oman and Qatar (0.1 percentage point each), while Saudi Arabia recorded a negative contribution of 0.1 percentage point.

GCC's insurance sector poised for strong growth in next five years

Insurance industry across the GCC is poised for strong growth during the next five years, mainly supported by the economic diversification program undertaken by governments, supportive population dynamics and changing regulations that have introduced mandatory health insurance cover in many countries, according to a recent forecast by Alpen Capital. The forecast projects GCC insurance market to grow at a compounded annual growth rate (CAGR) of 10.9 per cent from US$26.2 billion in 2016 to US$44 billion in 2021.

GCC construction market expands 30 per cent in 2017

The GCC construction market showed relative resilience in its performance, recording a 30 per cent pick-up by the end of October 2017, according to the MENA Research Partners. With the value of total active projects in the GCC at around US$2.6 trillion, equivalent to 160 per cent of GDP, the regional construction market presents sufficient depth and opportunities for investors and regional market participants over the years to come. The UAE and Saudi Arabia together  account  for 70 per cent of the value of active projects. The value of completed projects during 2017 was US$130 billion, versus US$100 billion for the full-year in 2016.

GCC food services sector to grow to US$29 billion by 2020

The GCC food service market is set to grow at a compound annual growth rate (CAGR) of 8 per cent and is tipped to hit the US$29.3 billion mark by 2020, up from US$21.5 billion registered in 2016 and US$20.1 billion in 2015, according to Al Masah Capital Limited. Key drivers include growing population, improving tourism sector, rising disposable income, and changing dietary habits.

US$200 billion projects underway in Gulf hospitality sector

Over 2,000 hospitality and leisure projects are currently underway in the GCC with a combined estimated value of US$200 billion. An estimated US$64 billion worth of related projects are in the construction pipeline stage, highlighting the focus on strengthening the regional tourism ecosystem.

Saudi Arabia reopens October domestic sukuk issue with US$1.78 billion

Saudi Arabia has issued SAR 6.68 billion (US$1.78 billion) of Islamic bonds by reopening a domestic sukuk issue that it originally made in October 2017. The first tranche, amounting to SAR 1.05 billion, matures in 2022. The second tranche, due in 2024, is SAR 3.53 billion, while the third tranche, due in 2027, is SAR 2.1 billion.

Abu Dhabi said to start selling treasury bills in 2018

Abu Dhabi plans to start selling treasury bills for the first time in 2018 as it seeks to develop its local-currency debt market. The government is working with international and local banks on how the notes will be structured. Regular sales could follow once the regulatory structures are in place.    

 Oman to delay VAT implementation until 2019, says local media

Oman's Ministry of Finance has reportedly postponed the implementation of value-added tax (VAT) until 2019, according to Omani media reports. Citing ministry sources, the Times of Oman reported that certain products, such as tobacco and energy and soft drinks, will be taxed from mid-2018. Saudi Arabia and the UAE have implemented VAT from 1 January 2018 at the rate of 5 per cent for majority of goods and services.

Kuwait upgraded to FTSE Emerging Market Index

Kuwait's inclusion in the emerging-markets list by FTSE Russell is anticipated to lead to inflows of c.US$700 million from investors. The final weighting of the country and the stocks to be included will be determined primarily by the liquidity for the period preceding the actual inclusion. The weights will also depend on whether the implementation will be in one or two phases. According to Arqaam Capital Research and EFG Hermes, the weight of Kuwait in the FTSE EM + China A All Cap Index will be around 0.5 per cent.

The move is anticipated to increase the attractiveness of investors not only towards Kuwait but the entire GCC region.

Qatar: Corporate profits down 6.0 per cent in 9M 2017

The combined profit of Qatari listed companies was down 6.0 per cent in 9M 2017 compared to 9M 2016. On a quarterly basis, the combined profit of Qatari listed companies saw a decline of 1.1 per cent in Q3 2017 compared to the same period last year.

Sector Profitability (net profit/loss in QAR 000's)

Sector	9M 2016	9M 2017	% change	Q3 2016	Q3 2017	% change
Banks & Financial Institutions	15,956,630	16,435,121	3.0%	5,263,469	5,634,019	7.0%
Services &Consumer Goods	1,575,139	1,317,356	-16.4%	473,262	454,914	-3.9%
Industry	5,991,646	5,480,100	-8.5%	1,770,002	1,880,189	6.2%
Insurance	999,405	440,884	-55.9%	240,057	(190,183)	-179.2%
Real Estate	3,316,325	3,086,550	-6.9%	796,133	722,638	-9.2%
Telecoms*	1,831,769	1,558,684	-14.9%	369,911	461,904	24.9%
Transportation	1,656,605	1,126,373	-32.0%	502,291	345,522	-31.2%
Total	31,327,519	29,445,068	-6.0%	9,415,125	9,309,003	-1.1%

Source: Qatar Exchange; *Excluding Vodafone Qatar because of 31^st March year end

Profits in the Banking and Financial Services sector rose 3.0 per cent in 9M 2017. Growth was driven by a 3.1 per cent rise in net income of Qatari listed banks. During the first nine months of 2017 credit growth remained healthy, up 6.0 per cent, driven by public sector growth (+12.5 per cent). Profit of conventional banks rose 3.6 per cent during 9M 2017, compared to a 1.6 per cent rise in the profits of Islamic banks. Qatar National Bank (QNB) reported a profit growth of 6.2 per cent in 9M 2017. Qatar Islamic Bank, Al Khalij Commercial Bank, Qatar International Islamic Bank, Ahli Bank and Doha Bank also reported profit growth of 10.6 per cent, 6.7 per cent, 5.1 per cent, 2.9 per cent and 2.9 per cent, respectively. Commercial Bank of Qatar reported a fall in profit, down 48.1 per cent, mainly due to a substantial rise in loan loss provisions, while Masraf Al Rayyan Bank's profit remained almost flat.

Profits in the Services & Consumer Goods sector dropped 16.4 per cent during 9M 2017, primarily due to a decline in profits of Qatar Fuel (-17.0 per cent), following new terms for fuel supplies and an increase in pension contributions. In the same period, Mannai Corporation, Salam International, and Qatar Cinema also reported lower profits. However, Widam, Medicare, and Zad Holding Co. reported a rise in profits in 9M 2017.

Profits in the Industrials sector dropped 8.5 per cent in 9M 2017, as most companies in the sector, excluding Qatar Electricity & Water Co. and Mesaieed Holding, reported reduced profits. Sector heavyweight Industries Qatar's profit fell 13.5 per cent on reduced sales volumes, depressed fertiliser prices, and tightened operating margins.

In 9M 2017, the profit of the Insurance sector fell 55.9 per cent compared to 9M 2016, as Qatar Insurance Company and Qatar General & Reinsurance Company reported profit drops of 57.2 per cent and 81.4 per cent, respectively. Alkhalij Takaful also reported 10.6 per cent fall in net profit during the same period.

Real Estate sector profits in 9M 2017 declined 6.9 per cent, driven by a significant drop in profits of Barwa, United Dev. Company and Mazaya Qatar, but the drop was limited by a rise in profits of Ezdan (up 9.1 per cent).

The Qatari Telecom sector comprises of Vodafone Qatar and Ooredoo. Ooredoo reported a 14.9 per cent fall in profits in 9M 2017, mainly due to higher tax expense, increase in royalties, lower foreign currency gains and challenging market conditions in Qatar. Vodafone Qatar is excluded from this profit comparison, since its fiscal year ends on 31 March.

In the Transportation sector, profits declined 32.0 per cent, as Qatar Navigation Company and Qatar Gas Transport Company reported profit declines of 52.2 per cent and 18.9 per cent, respectively in 9M 2017. However, Gulf Warehousing Company reported a 4.8 per cent growth in profits for the same period.

Portfolio Structure

Country Allocation

As at 31 December 2017, GIF had 20 holdings: 13 in Qatar, 5 in the UAE and 2 in Oman (Q3 2017: 28 holdings: 16 in Qatar, 9 in the UAE and 3 in Oman). The Investment Adviser reduced exposure to UAE to 8.0 per cent of NAV from 10.4 per cent. The cash weighting was 5.1 per cent (Q3 2017: 2.4 per cent).

Embedded image removed - please refer to the Company's website www.gulfinvestmentfundplc.com for a chart depicting Country Allocation (% of NAV).

Embedded image removed - please refer to the Company's website www.gulfinvestmentfundplc.com for a chart depicting Sector Allocation (% of NAV).

The Qatari banking sector (including financial services) is the Fund's largest sector holding at 40.9 per cent of NAV. Qatari industrials is second at 27.2 per cent of NAV (Q3 2017: 25.5 per cent).

Qatar National Bank (QNB) remains GIF's largest holding at 17.4 per cent of NAV.  Other holdings include Abu Dhabi Commercial Bank (2.2 per cent of NAV), Dubai Islamic Bank (2.7 per cent of NAV) and Emaar Properties based in UAE (2.0 per cent of NAV).

Top 10 Holdings

Company Name	Sector	% share of NAV
Qatar National Bank	Banks & Financial Services	17.4%
Industries Qatar	Industrials	9.8%
Masraf Al Rayan	Banks & Financial Services	9.6%
Qatar Electricity & Water Co	Industrials	9.4%
Ooredoo	Telecoms	9.1%
Qatar Gas Transport	Transportation	6.7%
Barwa Real Estate	Real Estate	6.2%
Commercial Bank of Qatar	Banks & Financial Services	6.0%
Gulf International Services	Industrials	4.3%
Qatar National Cement Co	Industrials	3.6%

Source: QIC

GIF's top 10 holdings were unchanged from 3Q 2017.  The holdings in Qatar Gas Transport and Ooredoo were increased while holdings in Qatar National Bank and Masraf Al Rayan were reduced.

Profile of Top Five Holdings:

Qatar National Bank (17.4% of NAV)

Qatar National Bank (QNB) is a high-quality proxy stock for Qatari economic growth given its strong ties with the public sector and access to state liquidity. QNB is a dominant state-owned participant in the Banking sector and plays an important role in the development of the Qatari economy and in funding key infrastructure projects. The largest shareholder in QNB is the Government of Qatar through the Qatar Investment Authority (QIA), with a 50% equity stake. The government is strongly committed to support QNB, thus enhancing its economic importance. QNB is the largest bank in Qatar with total assets of QAR 811.1 billion (US$222.8 billion) as at 31^st December 2017. For FY2017, QNB reported a 6.2% YoY growth in net profit to QAR 13.1 billion (US$3.6 billion). QNB is well positioned to reap the benefits of the rapid expansion of the domestic economy and has been growing its presence in overseas markets as well. The bank, through its subsidiaries and associate companies, operates in more than 31 countries, through more than 1,230 branches, supported by more than 4,300 ATMs and employs more than 28,200 staff.

Industries Qatar (9.8% of NAV)

Industries Qatar (IQCD) is a holding company with interests in petrochemicals via 80% owned Qatar Petrochemical Co., fertilizers via 75% owned Qatar Fertilizer Co., steel via its wholly owned subsidiary Qatar Steel Co. and fuel additives via 50% owned Qatar Fuel Additives Co. For 9M2017, the company's net profit declined 13.5% YoY to QAR 2.4 billion (US$0.7 billion) on reduced sales volumes, depressed fertiliser prices, and tightened operating margins. IQCD expects operational performance to improve with the on-going cost optimization programs.

Masraf Al Rayan (9.6% of NAV)

Masraf Al Rayan (MARK) has three main business divisions, namely retail banking, wholesale banking and private banking. Besides this, the bank offers investment banking and treasury products. MARK had a network of 13 branches in strategic locations across Qatar, and a total of 80 ATMs. As at end December 2017, its financing assets stood at QAR 72.1 billion (US$19.8 billion). In FY2017, MARK reported a net profit of QAR 2.0 billion (US$0.6 billion).

Qatar Electricity & Water Co. (9.4% of NAV)

Qatar Electricity & Water Co. (QEWS) was established in 1990 as the first private sector company engaged in electricity production and water desalination businesses. The company is the second largest utility company in the North Africa and Middle East region. In Qatar, the company enjoys a c.62% market share in the electricity business, while in the water desalination business it commands a 79% market share. Over the past decade, the company has been the key beneficiary of rapid development in Qatar, coupled with the growth in population, resulting in increased demand for electricity and water. Additionally, the company is setting up presence overseas, with the establishment of Nebras Power Company (60% owned by QEWS), which invests globally in new and existing power generation and water desalination projects. QEWS has long term purchase agreements with government-owned Kahramaa; hence, the company has a low-risk business model, with secure and visible earnings and cash flows. For 9M2017, the company reported net profit of QAR 1.2 billion (US$0.3 billion).

Ooredoo (9.1% of NAV)

Ooredoo (ORDS) is a leading international communications company delivering mobile, fixed, broadband internet and corporate managed services tailored to the needs of consumers and businesses across markets in the Middle East, North Africa and Southeast Asia. Serving consumers and businesses in 10 countries, Ooredoo delivers leading data experience through a broad range of content and services via its advanced, data-centric mobile and fixed networks. Ooredoo has a presence in several markets such as Qatar, Kuwait, Oman, Algeria, Tunisia, Iraq, Palestine, the Maldives, Myanmar and Indonesia. The company reported revenues of QAR 24.5 billion (US$6.7 billion) and net profit of QAR 1.6 billion (US$0.4 billion) in 9M2017 and had a consolidated global customer base of 150 million customers as at 30 September 2017.

Economic Outlook

GDP growth in the GCC is estimated at 0.5 per cent in 2017. Non-oil growth is expected to increase to 2.6 per cent in 2017 as government budgets improve.  Populations continue to grow, fuelling personal consumption which should benefit domestic consumer and services sector companies.

The IMF expects GDP growth to increase to 2.2 per cent 2018 with non-oil growth easing to 2.4 per cent. Over the medium-term, non-oil growth is projected at 3.4 per cent. The introduction of VAT in the UAE and Saudi Arabia should generate additional government revenues of 1.5-1.6 per cent of their respective GDPs.

Some risks remain.  The recent meeting between GCC officials has made some progress towards a resolution of the seven-month Saudi-led blockade of Qatar. The Investment Adviser believes that the dispute will be resolved eventually but the timing is uncertain. Increased tensions between Saudi Arabia and Iran and the anti-corruption crackdown in Saudi Arabia could lead to short term volatility in capital markets.

Valuations

Market	Market Cap.	PE (x)		PB (x)		Dividend Yield (%)
	US$ billion	2018E	2019E	2018E	2019E	2018E	2019E
Qatar	98.8	10.68	11.34	1.32	1.17	4.69	4.68
Saudi Arabia	450.2	11.63	11.53	1.43	1.43	4.07	4.07
Dubai	80.7	7.63	7.39	1.06	0.93	4.76	4.48
Abu Dhabi	116.9	7.62	9.66	1.28	1.20	5.54	5.46
Oman	14.3	9.48	9.48	0.95	0.95	NA	NA
MSCI EM	10640.1	11.68	11.14	1.51	1.16	2.88	2.65

Source: Bloomberg, Prices as of 04 January 2018

 Epicure Managers Qatar Limited                                                                    Qatar Insurance Company S.A.Q.

23 February 2018                                                                                                  23 February 2018

Consolidated Income Statement

		(Unaudited)	(Unaudited)
	Note	For the period from  1 July 2017 to 31 December 2017	For the period from 1 July 2016 to 31 December 2016
		US$'000	US$'000
Income
Dividend income on quoted equity investments		-	-
Realised loss on sale of financial assets at fair value through profit or loss		(4,979)	(4,719)
Net changes in fair value on financial assets at fair value through profit or loss		3,392	13,417
Commission rebate income on quoted equity investments	12	-	12
Total net (expense)/income		(1,587)	8,710
Expenses
Investment Manager's fees	6	507	710
Other expenses	6	558	556
Total operating expenses		1,065	1,266
(Loss)/profit before tax		(2,652)	7,444
Income tax expense		-	-
Retained (loss)/profit for the period		(2,652)	7,444
Basic and diluted (loss)/earnings per share (cents)	3	(2.60)	6.41

Consolidated Statement of Comprehensive Income

		(Unaudited)	(Unaudited)
		For the period from  1 July 2017 to 31 December 2017	For the period from 1 July 2016 to 31 December 2016
		US$'000	US$'000
(Loss)/profit for the period		(2,652)	7,444
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Currency translation differences		184	85
Total items that are or may be reclassified subsequently to profit or loss		184	85
Other comprehensive income for the period (net of tax)		184	85
Total comprehensive (loss)/profit for the period		(2,468)	7,529

Consolidated Balance Sheet

		(Unaudited)	(Audited)
	Note	At 31 December 2017	At 30 June 2017
		US$'000	US$'000
Current Assets
Financial assets at fair value through profit or loss	1	96,216	102,124
Other receivables and prepayments		2,017	2,468
Cash and cash equivalents	13	3,630	10,670
Total current assets		101,863	115,262
Equity
Issued share capital		925	1,032
Reserves	4	100,489	113,138
Total equity		101,414	114,170
Current liabilities
Other creditors and accrued expenses	5	449	1,092
Total current liabilities		449	1,092
Total equity & liabilities		101,863	115,262

Consolidated Statement of Changes in Equity

	Share Capital	Distributable Reserves	Retained Earnings	Other Reserves (note 4)	Total
	US$'000	US$'000	US$'000	US$'000	US$'000
Balance at 01 July 2017	1,032	86,486	25,425	1,227	114,170
Total comprehensive income for the period
Loss for period	-	-	(2,652)	-	(2,652)
Other comprehensive income
Foreign currency translation differences	-	-	-	184	184
Total other comprehensive income	-	-	-	184	184
Total comprehensive loss for the period	-	-	(2,652)	184	(2,468)
Contributions by and distributions to owners
Dividends payable	-	-	-	-	-
Shares repurchased to be held in treasury	-	-	-	-	-
Shares subject to tender offer	(103)	(10,205)	-	103	(10,205)
Tender offer expenses	-	(83)	-	-	(83)
Shares in treasury cancelled	(4)	-	-	4	-
Total contributions by and distributions to owners	(107)	(10,288)	-	107	(10,288)
Balance at 31 December 2017	925	76,198	22,773	1,518	101,414

* Retained earnings include realised gains and losses on the sale of assets at fair value through profit or loss and net changes in fair value on financial assets at fair value through profit or loss. The level of dividend is calculated based only on a proportion of the dividends received during the year, net of the Company's attributable costs.

	Share Capital	Distributable Reserves	Retained Earnings	Other Reserves (note 4)	Total
	US$'000	US$'000	US$'000	US$'000	US$'000
Balance at 01 July 2016	1,194	103,904	36,177	1,068	142,343
Total comprehensive income for the period
Profit for period	-	-	7,444	-	7,444
Other comprehensive income
Foreign currency translation differences	-	-	-	85	85
Total other comprehensive income	-	-	-	85	85
Total comprehensive profit for the period	-	-	7,444	85	7,529
Contributions by and distributions to owners
Dividends payable	-	-	(4,116)	-	(4,116)
Shares repurchased to be held in treasury	-	(370)	-	-	(370)
Shares subject to tender offer	(141)	(16,817)	-	141	(16,817)
Tender offer expenses	-	(57)	-	-	(57)
Shares in treasury cancelled	(10)	-	-	10	-
Total contributions by and distributions to owners	(151)	(17,244)	(4,116)	151	(21,360)
Balance at 31 December 2016	1,043	86,660	39,505	1,304	128,512

Consolidated Statement of Cash Flows

		(Unaudited)	(Unaudited)
	Note	For the period from 1 July 2017 to 31 December 2017	For the period from 1 July 2016 to 31 December 2016
		US$'000	US$'000
Cash flows from operating activities
Purchase of investments		(33,156)	(26,528)
Proceeds from sale of investments		37,002	45,937
Dividends received		-	-
Operating expenses paid		(1,071)	(1,290)
Commission rebate		-	12
Net cash generated from operating activities		2,775	18,131
Financing activities
Cash used in tender offer		(10,205)	(16,817)
Tender offer expenses		(83)	(57)
Cash used in share repurchases		-	(370)
Net cash used in financing activities		(10,288)	(17,244)
Net (decrease)/increase in cash and cash equivalents		(7,513)	887
Effects of exchange rate changes on cash and cash equivalents		473	3
Cash and cash equivalents at beginning of period		10,670	1,447
Cash and cash equivalents at end of period	13	3,630	2,337

Notes to the Interim Consolidated Financial Statements

1              Investments

Investments are designated at fair value through profit or loss on initial recognition. The Group invests in quoted equities and quoted convertible bonds for which fair value is based on quoted market prices. The quoted market price used for financial assets held by the Group is the current bid price ruling at the year-end without regard to selling prices.

Purchases and sales of investments are recognised on trade date - the date on which the Group commits to purchase or sell the asset. Investments are initially recorded at fair value, and transaction costs for all financial assets and financial liabilities carried at fair value through profit and loss are expensed as incurred.

Gains and losses (realised and unrealised) arising from changes in the fair value of the financial assets are included in the income statement in the year in which they arise

31 December 2017 financial assets at fair value through profit or loss: all quoted equity securities

Security name	Number	US$'000
Qatar National Bank (QNBK QD)	520,872.00	17,570
Qatar Electricity & Water Co (QEWS QD)	200,378.00	9,786
Industries Qatar (IQCD QD)	381,539.00	9,671
Ooredoo (ORDS QD)	373,821.00	9,278
Masraf Al Rayan (MARK QD)	962,055.00	8,922
Qatar Gas Transport (QGTS QD)	1,582,745.00	6,996
Barwa Real Estate (BRES QD)	727,723.00	6,352
Commercial Bank of Qatar (CBQK QD)	781,547.00	6,169
Gulf International Services (GISS QD)	925,137.00	4,493
Qatar National Cement Co (QNCD QD)	217,484.00	3,702
Dubai Islamic Bank (DIB UH)	1,705,000.00	2,873
ABU DHABI Commercial Bank (ADCB UH)	1,243,579.00	2,278
Emaar Properties Company (EMAAR UH)	1,098,408.00	2,072
Bank Muscat (BKMB OM)	2,032,580.00	2,067
Gulf Warehousing (GWCS QD)	122,250.00	1,410
Qatar United Development Company (UDCD QD)	263,727.00	1,038
Emirates National Bank of Dubai (ENBD UH)	300,000.00	670
Union National Bank (UNB UH)	450,000.00	467
Vodaphone Qatar (VFQS QD)	159,869.00	352
Ooredoo (ORDS OM)	36,631.00	50
		96,216

2              Net Asset Value per Share

The net asset value per share as at 31 December 2017 is US$1.0968 per share based on 92,461,242 ordinary shares in issue as at that date (excluding 161,931 shares held in treasury), (30 June 2017: US$1.1113 based on 102,734,713 ordinary shares in issue, excluding 493,445 shares held in treasury).

3              (Loss)/earnings per Share

Basic and diluted (loss)/earnings per share are calculated by dividing the (loss)/profit attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the period:

	31 December 2017	31 December 2016
(Loss)/profit attributable to equity holders of the Company (US$'000)	(2,652)	7,444
Weighted average number of ordinary shares in issue (thousands)	102,065	116,114
Basic (loss)/earnings per share (cents per share)	(2.60)	6.41

4              Other Reserves

	Distributable reserves	Retained earnings	Foreign currency translation reserve	Capital redemption reserve	Total
	US$'000	US$'000	US$'000	US$'000	US$'000
Balance at 1 July 2017	86,486	25,425	(216)	1,443	113,138
Foreign exchange translation differences	-	-	184	-	184
Retained loss for period	-	(2,652)	-	-	(2,652)
Dividends paid	-	-	-	-	-
Shares repurchased into Treasury	-	-	-	-	-
Shares subject to tender offer	(10,205)	-	-	103	(10,102)
Tender offer expenses	(83)	-	-	-	(83)
Shares in Treasury cancelled	-	-	-	4	4
Balance at 31 December 2017	76,198	22,773	(32)	1,550	100,489

5              Trade and other payables

	31 December 2017	30 June 2017
	US$'000	US$'000
Dividend payable*	-	-
Due to broker	-	649
Management fee payable	250	278
Administration fee payable	58	56
Accruals and sundry creditors	141	109
	449	1,092

* a dividend of US$ 0.030 per Ordinary Share was announced, this was approved by shareholders at the Annual General Meeting on 16 November 2017 and was paid on 9 February 2018 to ordinary shareholders on the register as at 5 January 2018 (the "Record Date"). The corresponding ex-dividend date was 4 January 2018.

6              Charges and Fees

	31 December 2017	31 December 2016
	US$'000	US$'000
Investment Manager's fees (see below)	507	710
Performance fees (see below)	-	-
Administrator and Registrar's fees (see below)	114	114
Custodian fees (see below)	53	67
Directors' fees and expenses	167	145
Directors' insurance cover	15	16
Broker fees	26	27
Other	183	187
Other expenses	558	556

 

Investment Manager's fees

Annual fees

The Investment Manager was entitled to an annual management fee of 1.25% of the Net Asset Value of the Group, calculated monthly and payable quarterly in arrears. The Investment Management Agreement was subject to termination on 31 October 2013 with a revised agreement coming into effect from 1 November 2013. The revised agreement sees the annual fee reduce to 1.05% of the net asset value of the Company further reducing to an annual fee of 0.90% of the net asset value of the Company from 1 November 2016 subject to termination on 31 October 2019.

Management fees for the period ended 31 December 2017 amounted to US$506,755 (31 December 2016: US$710,101).

Performance fees

As a result of the amended Investment Management Agreement which came into effect on 1 November 2016 the Investment Manager is no longer entitled to a performance fee.

The Investment Manager is responsible for the payment of all fees to the Investment Adviser.

Custodian fees

The Custodian is entitled to receive fees of US$7,200 per annum and US$25 per processed transaction from Gulf Investment Fund PLC.

In addition the Custodian is entitled to receive fees of 8 basis points per annum in respect of Qatari securities held by the group and 10 basis points per annum in respect of non-Qatari, GCC securities held by the group and $45 per settled transaction (Qatar)/$50 per settled transaction (GCCC excluding Qatar).

Custodian and sub-custodian fees for the period ending 31 December 2017 amounted to US$53,095 (31 December 2016: US$66,582).

Administrator and Registrar fees

The Administrator is entitled to receive a fee of 12.5 basis points per annum of the net asset value of the Company between US$0 and US$100 million, 10 basis points of the net asset value of the Company above US$100 million.

This is subject to a minimum monthly fee of US$15,000, payable quarterly in arrears. The Administrator receives an additional fee of £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 Group and provides general secretarial services.

Administration fees paid for the period ending 31 December 2017 amounted to US$113,626 and US$33,032 for additional services (31 December 2016: US$113,588 and US$32,129 respectively).

Directors' Remuneration

The maximum amount of remuneration payable to the Directors permitted under the Articles of Association is £200,000 per annum.

Nick Wilson as non-executive chairman is entitled to receive an annual fee of £47,500. He also receives an additional fee in respect of his work regarding the Company's share buy-back programme of £10,000 per annum.

Paul Macdonald as non-executive chairman of the audit committee is entitled to receive £32,500 per annum.

David Humbles and Neil Benedict in their capacity as non-executive directors receive £30,000 each per annum.

The Directors are each entitled to receive reimbursement of any expenses incurred in relation to their appointment. Total fees and expenses paid to the Directors for the period ended 31 December 2017 amounted to US$167,448 (31 December 2016: US$145,068).

7              Taxation

Isle of Man taxation

The Company is resident for taxation purposes in the Isle of Man by virtue of being incorporated in the Isle of Man and is technically subject to taxation on its income but the rate of tax is zero. The Group is required to pay an annual corporate charge of £250 per annum.

The Company became registered for VAT from 1 February 2011.

GCC taxation

It is the intention of the Directors to conduct the affairs of the Company so that it is not considered to be either resident in the GCC region or doing business in the GCC region.

Except for Kuwait the GCC countries do not impose withholding tax on dividend distributions by companies to non-residents.

Capital gains made by the Company on disposal of shares in GCC companies will not be subject to tax in the GCC region.

There is no stamp duty or equivalent tax on the transfer of shares in GCC region companies.

Kuwait taxation

Since 1 January 2009 dividends paid on behalf of holdings in Kuwait are to have withholding tax deducted at 15%.

8              Related Party Transactions

Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence over the other party in making financial or operational decisions.

The Investment Adviser is Qatar Insurance Company S.A.Q. It is paid fees by the Investment Manager.

The Investment Manager, Epicure Managers Qatar Limited, was a related party until 2 November 2017 by virtue of its ability to make operational decisions for the Company and through common directors. Following the resignation of Leonard O'Brien, the Investment Manager is no longer a related party. Fees payable to the Investment Manager are disclosed in note 6.

Epicure Managers Qatar Limited is a wholly owned subsidiary of the Investment Adviser, Qatar Insurance Company S.A.Q.

9              The Company

Gulf Investment Fund plc (formerly Qatar Investment Fund plc) (the "Company") was incorporated and registered in the Isle of Man under the Isle of Man Companies Acts 1931-2004 on 26 June 2007 as a public company with registered number 120108C.

Pursuant to an Admission Document dated 25 July 2007 there was an original placing of up to 171,355,000 Ordinary Shares of 1 cent each, with Warrants attached on the basis of 1 Warrant to every 5 Ordinary Shares. Following the placing on 31 July 2007, 171,355,000 Ordinary Shares and 34,271,000 Warrants were issued; the warrants expired on 16 November 2012.

The Shares of the Company were admitted to trading on the AIM market of the London Stock Exchange ("AIM") on 31 July 2007 when dealings also commenced.

As a result of a further fund raising in December 2007, a further 76,172,523 Ordinary Shares were issued, which were admitted for trading on 13 December 2007.

On 4 December 2008, the share premium arising from the placing of shares was cancelled and the amount of the share premium account transferred to distributable reserves.

The Shares of the Company were admitted to trading on the Main Market of the London Stock Exchange on 13 May 2011.

During the period 1 July 2017 to 31 December 2017, the Company purchased none of its ordinary shares for a total value of US$Nil to be held in treasury. 331,514 shares had been repurchased in the period ended 31 December 2016 for treasury but had been held for over a year and were therefore cancelled in the current financial period. The buy-backs are effected through distributable reserves.

On 8 December 2017 the Company's shareholders approved a change in investment policy from a largely Qatar focussed strategy to one which focusses more on a broader Gulf Co-operation Council strategy.

On 27 December 2017 the Company completed a tender offer at a price of US$0.9933 per share. Under the offer 10,273,471 shares were cancelled with US$10,204,639 being paid to participating shareholders.

The shareholders approved a dividend of 3.0 cents per share on 16 November 2017; this was paid to shareholders on 9 February 2018.

The Company's agents and the Manager perform all significant functions. Accordingly, the Company itself has no employees.

10            The Subsidiary

The Company has the following subsidiary company:

	Country of incorporation	Percentage of shares held
Epicure Qatar Opportunities Holdings Limited	British Virgin Islands	100%

11            Significant Accounting Policies

The Interim Report of the Company for the period ending 31 December 2017 comprises the Company and its subsidiary (together referred to as the "Group"). The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 30 June 2017. The interim consolidated financial statements are unaudited.

11.1         Basis of presentation

These financial statements have been prepared in accordance with International Financial Reporting Standard ("IFRS") IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 30 June 2017.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Board of Directors to exercise its judgement in the process of applying the Group's accounting policies. The financial statements do not contain any critical accounting estimates

11.2         Segment reporting

The Group has one segment focusing on maximising total returns through investing in quoted securities in Qatar and the GCC region. No additional disclosure is included in relation to segment reporting, as the Group's activities are limited to one business and geographic segment.

12            Commission rebate

The Company received 50% brokerage commission rebates for all trades done through its DLALA Qatar brokers. However, during previous periods the Company changed its Qatar broker to AHLI brokers to take advantage of more competitive commission rates and no commission rebate was received. For the period ended 31 December 2017 the Group used a mixture of the DLALA and AHLI brokerages and received US$ Nil (2016: US$ 12,317).

13            Cash and Cash Equivalents

	31 December 2017	30 June 2017
	US$'000	US$'000
Bank balances	3,630	10,670
Cash and cash equivalents	3,630	10,670

14            Post Balance Sheet Events

Shareholders received a dividend of 3.0 cents per share on 9 February 2018.

 

END

 

 

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