Half Yearly Report

RNS Number : 5159Q

Qatar Investment Fund PLC

01 March 2016

 

Nicholas Wilson, Chairman of Qatar Investment Fund plc commented:

"Despite the wide-ranging impact of low oil prices on GCC economies, the Qatar market sell-off looks over-done with excessive pessimism priced in. Qatari equities are trading at a marked discount to their historical average. We remain optimistic about growth prospects in the medium to long term.

·    Qatar Investment Fund plc (QIF) net asset value per share (NAV) in the six months ended 31 December 2015 fell 16.3%. Qatar Exchange Index fell 14.5% and MSCI Emerging Markets Index fell 18.6% over the same period.

·    Following a narrowing of the discount, the QIF share price fell 11.1%.

·    During the period a dividend of 4.0c per share was approved by shareholders.

·    A discontinuation resolution at the 2015 Annual General Meeting was defeated.

"The fall in oil and gas prices will continue to impact the Qatari economy as certain lower priority projects may be deferred. However we expect economic growth will continue at over 6% in the coming years, the highest in the GCC region.

"Qatar is the world's largest exporter of LNG and although lower prices have been negotiated, Qatar is defending its market share. The government's diversification policies in recent years have put Qatar in a strong position relative to other Gulf countries. Over 60% of GDP is currently generated by the non-hydrocarbon sector. Further population growth, improving demographics and an extensive infrastructure pipeline should fuel continued growth."

For further information:

Qatar Investment Fund Plc [phone]

Nicholas Wilson

Panmure Gordon [phone]

Richard Gray / Andrew Potts / Atholl Tweedie

Maitland [phone]

William Clutterbuck / Antonia Powell

Chairman's Statement

On behalf of the Board, I am pleased to present the interim results for Qatar Investment Fund Plc for the six-months ending 31 December 2015.

Results

During the six months ending 31 December 2015. Net Asset Value per Share (NAV) fell by 16.3% compared to a fall in the Qatar Exchange Index of 14.5% and a fall of 18.6% in the MSCI Emerging Markets Index. Following a narrowing of the discount at which the shares trade to NAV, the shares fell 11.1%, from US$1.26 at 30 June 2015 to US$1.12 at 31 December 2015.  At the Annual General Meeting on 12 November 2015 a dividend of 4.0c per share was approved by shareholders to ordinary shareholders on the register as at 18 December 2015.

Continuing weakness in the oil price weighed on sentiment during the period as Qatar's GDP growth expectations were revised down. The banking sector, including financial services, remains our largest single sector with a 43.2% exposure on 31 December 2015. At 31 December 2015 we had a total of 17 holdings, all in Qatar.

Discontinuation Vote and Tender offer

The Company's Articles of Association required the Board to put to shareholders a resolution at the 2015 Annual General Meeting that the Company cease to continue in existence (the "Discontinuation Resolution"). In the event that the discontinuation vote was defeated, the Board had put forward a proposal for a further tender offer facility at a 1% discount to Formula Asset Value (Formula Asset Value being net asset value less the costs of undertaking the tender offer)  in the fourth quarter  of 2015. This was subject to the average discount to NAV at which the shares traded in the twelve-month period prior to the tender offer date being greater than 10%. On 15 October, we wrote to shareholders explaining that our average discount during the twelve month period to 8 October 2015 (Calculation Date) had been 14.7% and in accordance with the graduated tender offer proposal announced on 13 April 2015, a tender offer for up to 14% of the Company's share capital would be put forward at an extraordinary general meeting on 12 November 2015, subject to the discontinuation vote not being passed.

At the Annual General Meeting, the Discontinuation Resolution was not passed with 7,949,935 votes in favour and 107,713,073 votes against. At the Extraordinary General Meeting, the resolution to hold the Tender Offer was passed with 109,025,314 in favour and 2,679,019 against.

Managing the discount between the share price and NAV

Discount management remains a priority for the Board and as part of this we continued to make use of the authority granted by shareholders to buy back the Company's shares. During the period 1 July 2015 to 31 December 2015, the Company purchased 963,198 of its ordinary shares for treasury. 313,837 shares had been repurchased in the period ended 31 December 2014 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. 

In addition to the share buybacks, the Board works with our Investment Manager and Company broker, as well as the financial press in order to maintain institutional and private investor awareness of both Qatar and demand for the Company's shares. The Company received significant positive media coverage during the period.

Related Party Transactions

Details of related party transactions are contained in the annual report as well as being addressed in note 14 of this interim report.

Free float calculation

On 22 May 2015 the Company made an announcement regarding its free float calculation regarding Listing Rule 6.1.19R. The Directors believed that following share purchases by certain shareholders that the number of the Company's shares distributed to the public was approximately 21.95%, and therefore below the 25% threshold set out in Listing Rule 6.1.19R.

On 24 August 2015, the Company provided an update in respect of the free float calculation where the Directors confirmed that, to the best of their knowledge, the free float had been restored to above the minimum 25 per cent. threshold required under Listing Rule 6.1.19R, and that they believed that the free float was approximately 27.35% of the Company's issued share capital.

The Directors continue to monitor the free float calculation on an ongoing basis.

Post balance sheet events

Details of these can be found in note 15 following the accompanying financial statements.

Outlook, risks and uncertainties

The sharp fall in oil and gas prices will continue to impact the Qatari economy as certain lower priority projects may be deferred. However, Qatar is the world's largest exporter of LNG and although lower prices have been negotiated, Qatar is defending its market share. In addition, the diversification policies of government over recent years has placed Qatar in a strong position relative to other Gulf countries with arguably over 60% of GDP currently derived from the non-hydrocarbon sector. This, combined with continuing population growth, improving demographics and an extensive infrastructure pipeline, should see continued GDP growth.

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.

Despite the sharp falls in oil and gas prices, the Board continues to view the future of the Company with confidence expecting healthy if slower growth in the Qatari economy, as growth in the non-hydrocarbon sector helps to offset the slowdown in the hydrocarbon sector.  Widespread infrastructure spending underpins economic growth with valuations and dividend yields remaining attractive.

Nicholas Wilson

Chairman

29 February 2016

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 2015 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

29 February 2016

Report of the Investment Manager and the Investment Adviser

Market Overview

The performance of the GCC markets is shown below:

Index	30-Jun-15	31-Dec-15	% Change
Qatar (DSM)	12,201	10,429	-14.5%
Saudi Arabia (TASI)	9,087	6,912	-23.9%
Dubai (DFMGI)	4,087	3,151	-22.9%
Abu Dhabi (ADI)	4,723	4,307	-8.8%
Kuwait (KWSE)	6,203	5,615	-9.5%
Oman (MSI)	6,425	5,406	-15.9%
Bahrain (BAX)	1,368	1,216	-11.1%

Source: Bloomberg

The year 2015 was a busy year for global investors with a number of key events unfolding including quantitative easing by the European Central Bank (ECB), growth concerns over Chinese and the global economy, falling commodity prices - especially oil and finally an increase in interest rates by the Federal Reserve (Fed) towards the end of the year. The S&P 500 index declined marginally by 0.7% in 2015, as positive news relating to the recovery in the US economy was offset by increasing concerns over a slowdown in China. In 2015, the MSCI World index declined 2.7%, while the MSCI Emerging Markets index was down 17.0%.

All the GCC markets posted negative returns in 2015, led by Saudi Arabia (down 17.1%) and followed by Dubai (16.5% lower), mainly due to the sharp fall in oil prices (35.0% drop), increased geopolitical tensions and slowing demand from China. The Qatar market fell 15.1% in 2015, with the banking sector declining 12.4% and the industrials sector dropping 21.1%. Telecoms fell 34%. However, transportation, real estate and insurance sectors gained 4.9%, 3.9% and 1.9%, respectively.

During the first half of 2015, all the GCC markets witnessed significant volatility, however, the majority of the markets managed to post positive returns. Saudi Arabia was the top performer with a 9.0% gain, followed by an 8.3% rise in the Dubai bourse. The Qatar market was marginally down by 0.7%, while Kuwait (down 5.1%) was the worst performer during H1 2015. However, during the second half of 2015, all the GCC markets reported a sharp decline, with Saudi Arabia declining 23.9% while Dubai was down 22.9%. Amidst the turmoil, the Qatar market lost 14.5% during H2 2015. The sharp decline in oil prices (41.4% drop) resulted in paring much of the earlier gains in GCC markets, as investors became concerned about growth prospects of the region.

The Qatar market has shown resilience compared to other GCC markets. In the 18 months to 31 December 2015, Qatar fell 9.2% and was the second best performer after Abu Dhabi (down 5.4%). During this period, the price of a barrel of Brent crude fell 66.8%. Over the 18 months, the Saudi market fell 27.3%, Dubai 20.1% and the Oman and Kuwait markets dropped 22.9% and 19.5%, respectively.

The Investment Adviser believes that the Qatar market sell-off is overdone and remains optimistic on Qatar over the medium to longer term because of its superior growth prospects and an expanding non-hydrocarbon sector. The recent 2016 state budget focuses on long term development of the Qatari economy, with capital spending remaining strong. Infrastructure, healthcare and education sectors remain the key areas of focus with over 45% of total budgeted expenditure earmarked for the same. Further, projects worth over US$200 billion have been planned over the next 10 years with US$72 billion worth of government projects already underway. Strong project spending coupled with a steady rise in population should continue fuelling growth in the non-hydrocarbon sector.

Embedded image removed - please refer to the Company's website www.qatarinvestmentfund.com for a chart depicting Performance of Markets since end June 2014.

On the ground: a period of adjustment

Increased worries about the regional as well as global economy, together with falling oil prices continue to weigh on stock markets across the GCC. Oil prices have also hit state finances across the GCC, including Qatar. Qatari companies have started taking cost cutting measures.

The impact on Qatar's state revenues has raised concerns about liquidity. Public sector deposits started to decline, especially through the second half of the year. Loan growth has been significant at 15.2% in 2015, while total deposits have risen by just 8.2%, resulting in liquidity pressures in the banking system. Consequently, loans to deposit ratio stood at 116%, compared to 109% at the end of December 2014. Further, cost of funding is likely to increase due to liquidity concerns, leading to compression in net interest margins (NIMs). Asset prices in Qatar are already at high levels and liquidity tightening might result in increased payment cycles for the contractors segment.

In November 2015, the government of Qatar initiated talks with banks for syndicated loans of US$10 billion to bolster state finances depleted by low oil prices. Recently, the government announced a loan of US$5.5 billion from a consortium of banks, which is expected to ease illiquidity issues to some extent. Moreover, the Investment Adviser expects Qatar may tap international markets for additional sources of funds and issue international bonds.   

The Investment Adviser believes that the liquidity concerns in the Qatari banking system are likely to continue in the near term. However, Qatari banks are expected to slowly overcome these by issuing bonds and as public sector deposits coming back to Qatari banks. The Investment Adviser reassessed valuations in the banking sector and performed its own stress testing on banking models and found that despite liquidity concerns, banking sector valuations appear attractive.

Qatar is well positioned to weather the current oil price environment

As a consequence of oil price falls, GCC countries are opting for reforms such as lowering subsidies and increasing fuel prices. According to reports, energy subsidies account for 3.4% of GDP for GCC countries.

In July last year, the UAE government deregulated fuel prices and introduced a new pricing policy linked to global prices. Recently, Saudi Arabia increased fuel prices by 50%, as the country posted a US$98 billion budget deficit in 2015. Oman is likely to follow suit with the cabinet recently approving, in principle, spending cuts, tax rises and fuel subsidy reforms to cope with the compression of state finances as a result of low oil prices.

Over the past 12 months, LNG spot prices in Asia have declined from around US$10 per million British thermal units (mmbtu) to around US$6.5 per mmbtu, tracking the fall in oil prices together with lower demand from Asia and Europe. This drop in spot market prices for LNG is likely to put additional pressure on long-term LNG contract prices for Qatar. Although the majority of the Qatari LNG production is still bound by secure long-term supply contracts, the recent decline in spot market LNG prices has increased the proportion of short-term supply agreements. Moreover, the recent fall in oil and gas prices has put some pressure on Qatari hydrocarbon revenues. However, Qatar is well positioned to weather the current low oil price environment due to its comparative advantages such as low production cost, long term nature of contracts, excellent geographic location which results in lower transportation costs and easy access to Asian and European markets.

Qatar State Budget for 2016 - focuses on long term infrastructure development

Qatar announced its state budget for 2016 which is aimed at achieving a balance between revenues and expenditure to improve financial stability and achieve economic expansion. It ensures the continued implementation of development projects based on the planned schedule. With an announcement of the budget for 2016, Qatar has shifted its fiscal year end from 31 March to 31 December.

The 2016 budget focuses on long term infrastructure development ahead of the FIFA 2022 event. The budget assumes an oil price of US$48 per barrel, lower than the US$65 per barrel previously, translating into budgeted revenue of QAR156 billion, a decrease of 30.9% from FY2014-15 (April 2014 to March 2015). Total government spending is expected to decrease 7.3% to QAR202.5 billion, compared to QAR218.4 billion planned in the FY2014-15 budget. As a result, Qatar is expected to report its first fiscal deficit in 15 years estimated at QAR46.5 billion, about 4.8% of GDP. The shortfall is likely to be covered by issuing local and international debt.

The latest budget shows a commitment to sustainable development, with allocation to major projects growing by QAR3.3 billion to QAR90.8 billion in 2016. The majority of capital outlay is for the infrastructure, health and education sectors, representing over 45% of total budgeted expenditure. The budget allocates QAR50.6 billion to the infrastructure sector, about 25% of total expenditure, while the education sector has an increased outlay of QAR20.4 billion. The Qatari government has also earmarked QAR20.9 billion for the health sector, with funds allotted to Sidra Medical and Research Center, Hamad General Hospital and Hamad Medical City. The budget has also allocated QAR2 billion for housing loans through Qatar Development Bank.

Qatar State Budget Highlights

QAR Billion	FY 14-15  (12 months)	Apr-Dec 15 (9 months)	Apr 14- Dec 15 (21 months)	CY 2016
Total Revenues	225.7	169.3	395.0	156.0
Total Expenditures	218.4	163.8	382.2	202.5
Surplus / (Deficit)	7.3	5.5	12.8	(46.5)
Oil Price Assumption ($/bbl)	65.0	65.0	65.0	48.0

Note: From 2016, Qatar will follow the Gregorian calendar

Source: Qatar Ministry of Finance, The Peninsula

Embedded image removed - please refer to the Company's website www.qatarinvestmentfund.com for a chart depicting Reduction in Budgeted Expenditure and Budget Balance as a % of GDP (Year 2016).

The Investment Adviser believes Qatar is better positioned compared to other GCC nations, on account of its better fiscal position. Despite low energy prices, Qatar has maintained its investment spending in the 2016 budget and has not opted for any major subsidy cuts. Funding for major projects increased 3.8% to QAR90.8 billion (US$24.9 billion). Moreover, Qatar has over QAR261 billion of government projects (excluding private sector and energy sector projects) underway, of which over 50% of projects are in the transportation and infrastructure sectors. Furthermore, the deficit remains lower compared to other GCC states.

Embedded image removed - please refer to the Company's website www.qatarinvestmentfund.com for a chart depicting Qatar - Accumulated Budget Surplus.

The Investment Adviser believes that Qatar is well positioned to weather the depressed oil price environment on the back of strong historic fiscal balances, low gearing and low breakeven oil prices. Additionally, ongoing infrastructure spending should continue to fuel the non-hydrocarbon growth and attract new expatriate workers, keeping the population rising. This in turn should maintain impetus for domestic consumption growth.

Macroeconomic Update

Qatar's economy continued to grow in Q3 with GDP rising 3.8%, according to the Ministry of Development Planning and Statistics (MDPS). The non‐hydrocarbon sector GDP grew 7.8%, mainly driven by expansion in construction, trade, utilities and finance sectors. The hydrocarbon sector growth remained flat.

Looking ahead, the Investment Adviser believes that Qatar's real GDP will continue to grow, driven by strong growth in the non-hydrocarbon sector, as investment spending and demand for domestic goods and services remains strong. According to QNB Group, Qatar's real GDP growth is expected to be 4.7% in 2015, accelerating to 6.4% in 2016 and 2017. The non-hydrocarbon sector is estimated to grow c.10% per annum between 2015 and 2017. Hydrocarbon GDP is expected to decline by 0.5% in 2015 as oil fields continue to mature, however, it is estimated to expand 2.7% in 2016 and 2.4% in 2017, on account of increased output from the Barzan project. Qatar has presence across the LNG value chain allowing it to achieve a high level of efficiency which is difficult for other producers to match.

The Qatari population grew 8.3% in 2015. Population growth is expected to continue in the coming years, as project spending related to the FIFA World Cup continues to attract expatriate workers. Population growth should fuel consumption growth, providing an impetus to domestic consumer companies.

Qatari banking sector growth was the fastest in the GCC region

Qatar's banking sector grew at a CAGR of 15.3% from 2010-14. Over the period, banking asset penetration (banking assets as a % of nominal GDP) in Qatar improved from 125% of GDP to 132%. With Qatari banking asset growth expected to remain faster than GDP growth, the asset penetration is likely to continue to increase.

Embedded image removed - please refer to the Company's website www.qatarinvestmentfund.com for a chart depicting GCC Banking Sector Asset Growth (CAGR, 2010-14).

Qatar banking profits remained strong in 2014, with return on average equity of 16.5% and return on average assets of 2.1%. In addition, Qatari banks have been successful in maintaining an efficient cost base and low NPLs (1.7% in 2014).

Banking and financial services sector profit grew 5.7% for the first nine months of 2015, led by a 7.0% rise in banking sector profits. Growth in lending, up 9.1% to September 2015, primarily in the private sector (+17.6%), drove the rise. Qatar National Bank reported an advance in profit of 9.0%, while Qatar Islamic Bank's profits rose 24.8%.

The Qatari banking sector growth is expected to remain healthy, driven by increased lending due to project financing and higher demand from a growing population. With the Qatari government maintaining high project spending credit growth is anticipated to remain healthy. Despite strong growth in lending, asset quality is expected to remain good.

Private sector credit growth remained strong

Credit growth in Qatar remains robust, with loans by Qatari banks growing 15.2% in 2015. Private sector credit rose strong by 23.4%, while public sector loans grew marginally by 1.6% in 2015.

The Investment Adviser believes that credit growth should remain encouraging, underpinned by infrastructure spending, non-hydrocarbon sector growth and a rising population. However, liquidity tightening should increase the cost of funding and put some pressure on overall loan growth.

Recent Developments

Changes to QE Index constituents and weightings

Following the semi-annual review of QE indices, from 1 October 2015, Qatari Investors Group has been replaced by Al Meera Consumer Goods Company.  Ahli Bank has been removed from both the QE All Share Index and QE Banks and Financial Services index. Zad Holding has been included in QE Al Rayan Islamic index bringing its constituents to 18.

FTSE upgrades Qatar to secondary emerging market

FTSE Russell has upgraded the Qatari market to Secondary Emerging Market from the Frontier index, from September 2016. This upgrade will be implemented in two tranches. The first 50% will be implemented during the review of FTSE Global Equity Index Series (GEIS) in September 2016 and the remaining 50% will be included during the March 2017 review.

The Investment Adviser believes that an upgrade by FTSE should enhance liquidity in the Qatari market. A similar trend was seen during past upgrades of the market by MSCI and S&P. By way of example, following the upgrade by FTSE to Secondary Emerging Markets status, it is estimated the Qatari market will attract US$1 billion of inflows as c.US$70 billion worth of funds currently passively track the FTSE Emerging Markets Index.

GCC banks applying for licenses to operate within the region

According to reports, at least ten banks from GCC countries have applied for licenses to the Qatar Central Bank and are expected to receive approval to operate in Qatar by the end of this year. Key applicants include First Gulf Bank from the UAE, Bank Muscat from Oman, in addition to further Saudi and Kuwaiti banks.

Qatar National Bank was recently granted a license to open a branch in Saudi Arabia.

Double-digit growth in Qatar's real estate transactions

The value of Qatar's real estate transactions grew 32.4% to QAR45.9 billion during first nine months of 2015 compared to same period last year. This growth was mainly driven by the government's investment in infrastructure development. By the end of 2015, the total value of real estate transactions is expected to reach QAR70 billion, 25% higher than 2014. The Investment Adviser expects that with continuing commitment from the Qatari government to infrastructure spending, real estate transactions will see growth until 2022.

US$220 billion of projects expected over the next 10 years

According to the latest S&P report, Qatar is expected to award large-scale projects worth US$220 billion over the next 10 years and will prioritize existing development projects as oil prices remain low. Qatar will focus on investment in infrastructure, education and health over the next decade with the majority of projects planned for completion prior to the 2022 FIFA World Cup in Qatar. Continued infrastructure spending will support medium to long term economic growth in the country, however, considering the lower oil price environment there could be a reduction in fiscal and external balances.

Qatar Exchange launched margin trading

In December 2015, the Qatar Exchange announced the introduction of margin trading at the exchange. Margin trading will allow investors to purchase securities that are partially financed by a loan from a margin trading lender. This facility will contribute to the development of the stock market, stimulate trading and liquidity and provide new financing channels for investors. Initially, margin trading shall be applicable only for 20 stocks in the main index.

Moody's expects the Qatari economy to remain resilient in 2016

According to a report by Moody's Investors Service, Qatar's government revenues will be impacted by lower oil prices but large financial assets provide a sizeable buffer. The report stated that, although Qatar's economic growth is expected to remain lower than levels seen in 2004-2011, average real GDP growth would remain robust at around 5% until 2017. The pace of public investments is anticipated to remain healthy which in turn would support the non-hydrocarbon sector growth.

Qatar has US$72 billion (QAR261 billion) worth of ongoing government projects

According to the Finance Minister, the cost of ongoing government projects (excluding private & energy related projects) in Qatar stands at US$72 billion. These projects are mainly focused on transport, water, electricity and sewage, in addition to road expansion projects including the new Al Rayyan Road and Al Khor Road and the development of the Fifth Ring Road in Doha. About US$24 billion has been allocated to the transportation sector and includes new rail projects and port infrastructure. Other infrastructure projects have been allocated worth US$15 billion and water and electricity related projects over US$8 billion. The government has allocated US$7 billion for development of sports infrastructure, which includes the construction of new stadiums for the FIFA 2022 World Cup.

New tenders for Doha Metro and Lusail Tram to be issued in Q1 2016

According to a report, Qatar Rail will issue a new tender for four years until June 2020, for the Doha Metro and Lusail Tram in Q1 2016, as the current contracts with consultants end in July 2016. The second tender for operation and maintenance of Doha Metro and Lusail Tram would be offered in the Q2 2016.

The Doha Metro network will have four lines and be built over two phases. The first phase of the project is anticipated to be completed in Q4 2019 and will cover 80 km across Doha. The Lusail Tram network is expected to be completed in 2020, which would add another 38 km and an additional 37 stations. Once the first phase is completed, the Doha Metro and Lusail Tram, Qatar Rail will offer 600,000 passenger trips per day by 2021.

Qatar: corporate profits up 6.4% during 9M 2015

Qatari listed companies grew profits 6.4% in the first nine months of 2015, driven by growth in the banking & financial, transportation and the real estate sectors. However, profits declined in Q4 by 5.3% compared to Q4 2014.

Sector profitability (net profit/loss in US$000s)

Sectors	9M 2014	9M 2015	% Change	Q3 2014	Q3 2015	% Change
Banking & Financial	4,072,410	4,306,486	5.7%	1,440,854	1,458,461	1.2%
Insurance	310,740	269,148	-13.4%	80,167	42,483	-47.0%
Industrial	2,640,435	2,187,986	-17.1%	966,010	781,280	-19.1%
Services & Consumer Goods	381,777	383,008	0.3%	126,243	128,810	2.0%
Real Estate	641,591	1,506,455	134.8%	231,130	154,112	-33.3%
Telecoms*	571,151	483,005	-15.4%	103,010	207,624	101.6%
Transportation	443,748	508,228	14.5%	160,560	170,637	6.3%
Total	9,061,851	9,644,315	6.4%	3,107,975	2,943,407	-5.3%

* Excluding Vodafone Qatar because of 31 March year end

Source: Qatar Exchange

Insurance sector profits declined 13.4% driven by an 11.1% fall in profits at Qatar Insurance Company. Additionally, Doha Insurance and Al Kaleej Takaful reported 26.2% and 41.6% falls in net profits whilst profits at Qatar General Insurance & Reinsurance Company declined 18.2%, mainly due to fair value losses reported during the period. Qatar Islamic Insurance Company reported a 6.5% profit rise.

Profits in the Industrials sector fell 17.1% during the period. This was mainly due to an 18.9% drop in profit of Industries Qatar (IQ), largely as result of lower revenue arising across all segments due to price deflation. Gulf International Services and Mesaieed Petrochemical Holdings reported 21.0% and 42.9% profit falls.

Profits in the services & consumer goods sector grew marginally by 0.3%, with Qatar Fuel Company reporting a 3.4% growth in profits.

The real estate sector reported the strongest profit growth, up 134.8% compared to the same period last year. Barwa Real Estate Company profits rose 430.7%, with income of QAR2.7 billion from the sale of properties in Q1 2015.

The telecom sector comprises Vodafone Qatar and Ooredoo. Vodafone Qatar was excluded from this profit comparison, since its fiscal year ends on 31 March. Ooredoo reported a 15.4% fall in profit for 9M 2015, mainly due to competitive pressure, adverse currency impact and the challenging economic environment in some of its operating countries.

Transportation sector profits climbed 14.5%, with all three companies in the sector reporting higher profits. The largest contributor, Qatar Navigation, increased profits by 16.8%.

Embedded image removed - please refer to the Company's website www.qatarinvestmentfund.com for a chart depicting Country Allocation.

At 31 December, QIF had 17 holdings, all in Qatar. At the end of Q3 QIF had 18 holdings in Qatar and two in UAE. The Investment Adviser closed two positions in the UAE, mainly due to the weakening macroeconomic environment.

Sector Allocation

The overall portfolio allocation by sector as at 31 December 2015 is shown below:

Embedded image removed - please refer to the Company's website www.qatarinvestmentfund.com for a chart depicting Industry allocation (% of gross assets).

QIF remains overweight in the Qatari banking sector (including financial services) at 43.2% of NAV (Q3 2015: 53.7%) compared to a QE banking sector weighting of 40.5%. According to Qatar Central Bank data published in December 2015, banking sector assets have grown 10.8% in 2015, mainly driven by a 15.2% rise in loans. The sector is expected to continue to benefit from government spending, international expansion of Qatari banks and a growing population.

Industrials remain QIF's second largest exposure at 28.0% (Q3 2015: 24.6%), mainly in Industries Qatar (11.9% of NAV). The Investment Adviser reduced exposure to Industries Qatar, while increasing exposure in Gulf International Services, as the latter stock fell 20.8% during the quarter and valuations started looking attractive. QIF also increased exposure to Qatar Electricity & Water Co.

QIF's weighting in the real estate sector increased from 6.6% in Q3 to 9.0% at the end of Q4 2015. Exposure to the telecom sector increased to 4.7%, following substantial improvement in Ooredoo's financial performance in Q3. QIF added exposure to the insurance sector with a 5.1% weighting in Qatar Insurance Company (QIC), as valuations started looking attractive. Further, QIF marginally reduced exposure to transportation and consumer goods & services.

Portfolio Structure

Top 10 Holdings

As at 31 December 2015, the top five investments constituted 57.2% of the Company's NAV , while the top 10 holdings constituted 85.1% of the Company's NAV.

Company Name	Sector	% Share of NAV
Qatar National Bank	Banks & Financial Services	18.2%
Industries Qatar	Industry	11.9%
Masraf Al Rayan	Banks & Financial Services	11.0%
Gulf International Services	Industry	8.4%
Qatar Electricity & Water Co	Industry	7.7%
Qatar Islamic Bank	Banks & Financial Services	7.3%
Commercial Bank of Qatar	Banks & Financial Services	5.7%
Qatar Insurance Company	Insurance	5.1%
Barwa Real Estate	Real Estate	5.1%
Ooredoo	Telecoms	4.7%

Source: Bloomberg, Qatar Insurance Company

In Q4, Qatar Insurance Company and Ooredoo replaced Qatar Gas Transport (Nakilat) and Doha Bank in QIF's top 10 holdings. The Investment Adviser allocated funds to Nakilat in the last quarter, ahead of the MSCI index review in November 2015. The strategy worked as MSCI then included Nakilat in its Emerging Markets index in the review, with the share price rising 4.9% over the quarter. The Investment Adviser took profits and reduced the portfolio weighting. Exposure to Doha Bank has been reduced. The stock fell 11.4% during the quarter.

Profile of Top Five Holdings (As At 31 December 2015)

Qatar National Bank (18.2% 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 government is strongly committed to support QNB, thus enhancing its economic importance. The largest shareholder in QNB is the Government of Qatar through the Qatar Investment Authority (QIA), with a 50% equity stake. QNB is the largest bank in Qatar with total assets of QAR538.6 billion (US$148.0 billion) as at 31 December 2015. For the FY2015, QNB reported a 7.7% growth in net profit to QAR11.3 billion (US$3.1 billion). QNB is well positioned to reap the benefits of the rapid expansion of the domestic economy and has been growing its presence in the overseas markets. The bank, through its subsidiaries and associates operates in more than 27 countries, through more than 635 branches, supported by more than 1,390 ATMs and employing more than 15,200 staff.

Industries Qatar (11.9% of NAV)

Industries Qatar (IQ) is one of the largest publicly traded companies in Qatar. IQ is a holding company with interests in petrochemicals via 80% owned Qatar Petrochemical Co., fertilizers via 75% owned Qatar Fertilizer Co., steel via a wholly owned subsidiary Qatar Steel Co. and fuel additives via 50% owned Qatar Fuel Additives Co. For 9M 2015, the company's net profit declined 18.9% compared to nine months of 2014 to QAR3.8 billion (US$1.1 billion), mainly attributed to fall in revenue across all segments due to product price deflation. Petrochemical and fuel additive products witnessed substantial price deflation following the oil price decline which began in 2014. However, sales volumes were up over last year due to comparatively lower number of maintenance days in the current year as majority of planned and warranty maintenance was completed in 2014.

Masraf Al Rayan (11.0% of NAV)

Masraf Al Rayan (MARK) was incorporated as a Qatari Shareholding Company under Qatar Commercial Company law on 4th January 2006. It is licensed by the Qatar Central Bank and began commercial operations in October 2006. The bank has three main business divisions mainly retail banking, wholesale banking and private banking. Besides this the bank offers investment banking and treasury products. Presently MARK has a network of 12 branches in strategic locations across Qatar, and a total of 62 ATMs. As at the end of December 2015, its financing assets stood at QAR62.3 billion (US$17.1 billion), with government & related agencies segment occupying the largest share of the loan basket (over 50%). In FY2015, the bank's net profit grew 3.6% to QAR2.1 billion (US$0.6 billion).

Gulf International Services (8.4% of NAV)

Gulf International Services (GISS) was incorporated as a Qatari shareholding company on 12 February 2008, by Qatar Petroleum (QP), a wholly-owned Qatari government company. The company has investments in diversified businesses including well support services, offshore and onshore drilling services, helicopter maintenance and transportation services, insurance and reinsurance services, and catering services. GISS acts as a holding company which owns and controls stakes in the following companies: 100% ownership of Al Koot Insurance and Reinsurance Company S.A.Q. (Al Koot); 100% ownership of Gulf Drilling International Limited Q.S.C. (GDI); 100% ownership of Gulf Helicopters Company Q.S.C. (GHC); and 100% ownership of Amwaj Catering Services Limited (Amwaj). For 9M 2015, the company's net profit fell 21.0% to QAR822.3 million (US$225.9 million).

Qatar Electricity & Water Co. (7.7% of NAV)

Qatar Electricity & Water Co. (QEWS) was established in 1990 as a first private sector company engaged in electricity production and water desalination businesses. The company is the second largest utility company in North Africa and Middle East region. In Qatar, the company enjoys 62% market share in electricity business while in water desalination business it commands 79% market share. Over the past decade, the company has been the key beneficiary of rapid development in Qatar coupled with growth in population resulting in increased demand for electricity and water. Consequently, the company's revenue grew at a CAGR of 10.3% over the last five years. Additionally, the company has entered into overseas markets with an establishment of Nebras Power Company (60% owned by QEWS), which invests globally in new and existing power generation and water desalination projects. The company has low risk profile due to its exposure in the infrastructure and utilities sector in Qatar. For 9M 2015, the company reported 2.5% decline in its net profit to QAR1.1 billion (US$0.3 billion).

Performance and Portfolio Structure

The net asset value per share net of dividends (NAV per share) decreased by 14.6% to US$1.2824 as at 31 December 2015 compared to US$1.5009 as at 31 December 2014. On 31 December 2015, the QIF share price was trading at a 12.7% discount to NAV per share.

Embedded image removed - please refer to the Company's website www.qatarinvestmentfund.com for a chart depicting Share Price v NAV.

Historic Performance against the QE Index

	2007 5M	2008	2009	2010	2011	2012	2013	2014	2015
QIF NAV*	13.9%	-36.4%	10.4%	29.9%	1.3%	-4.7%	24.2%	20.6%	-14.6%
QE Index	27.0%	-28.8%	1.1%	24.8%	1.1%	-4.8%	24.2%	18.4%	-15.1%
QIF Share Price	15.5%	-67.5%	97.3%	23.0%	-2.3%	2.4%	26.4%	17.4%	-17.0%

* NAV net of dividends

Source: Bloomberg, Qatar Insurance Company

Outlook

The Investment Adviser believes that Qatar is well positioned to continue to grow as macroeconomic fundamentals remain healthy. The 2016 budget maintains spending on major projects showing the commitment of the Qatari government to implement its sustainable development programme. A strong focus on major projects in sectors such as health, education, and infrastructure, coupled with projects related to the 2022 FIFA World Cup, underpin government's efforts to develop the non-hydrocarbon sector, especially the private sector.

Real GDP is expected to rise over 6% in 2016 and in 2017, the highest in the GCC region, driven by double digit growth in the non-hydrocarbon sector. Strong growth in this sector will help to minimise the impact of lower hydrocarbon income, supporting the expansion of financial services, transport, communications and real estate sectors. A steady rise in population, driven by an influx of expatriates, provides impetus to consumer industries. Banking sector growth is likely to be attractive on the back of higher consumer lending and project financing activities.

The Investment Adviser believes that Qatari equities have already priced in excessive pessimism and relative valuations remain attractive. In addition, the Qatari market is trading at a discount to its historical average. The QE Index is currently trading at a trailing twelve months P/E ratio of 10.79x (as at 31 December 2015) vs. its 10-year historical average of 12.63x, a discount of 14.5%, thus providing a good entry point to investors.

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

29 February 2016                                                                                                                   29 February 2016

Consolidated Income Statement
		(Unaudited)		(Unaudited)
	Note	For the period from  1 July 2015 to 31 December 2015		For the period from 1 July 2014 to 31 December 2014
		US$'000		US$'000
Income
Dividend income on quoted equity investments		-		1,077
Realised (loss)/gain on sale of financial assets at fair value through profit or loss		(2,025)		27,612
Net changes in fair value on financial assets at fair value through profit or loss		(25,880)		(7,954)
Commission rebate income on quoted equity investments	7	-		182
Total net income		(27,905)		20,917
Expenses
Investment Manager's fees	6	1,011		1,302
Performance fees	6	-		-
Audit fees		17		29
Other expenses	6	642		659
Total operating expenses		1,670		1,990
(Loss)/profit before tax		(29,575)		18,927
Income tax expense	13	-		-
Retained (loss)/profit for the period		(29,575)		18,927
Basic and diluted (loss)/earnings per share (cents)	10	(21.94)		12.22
Consolidated Statement of Comprehensive Income			(Unaudited)		(Unaudited)
			For the period from  1 July 2015 to 31 December 2015		For the period from 1 July 2014 to 31 December 2014
			US$'000		US$'000
(Loss)/profit for the period			(29,575)		18,927
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Currency translation differences			(35)		(126)
Total items that are or may be reclassified subsequently to profit or loss			(35)		(126)
Other comprehensive expense for the period (net of tax)			(35)		(126)
Total comprehensive (loss)/profit  for the period			(29,610)		18,801

Consolidated Balance Sheet

		(Unaudited)	(Audited)
	Note	At 31 December 2015	At 30 June 2015
		US$'000	US$'000
Financial assets at fair value through profit or loss	5	147,700	206,552
Other receivables and prepayments		71	956
Cash and cash equivalents	8	9,546	5,956
Total current assets		157,317	213,464
Issued share capital		1,184	1,396
Reserves	9	150,729	211,324
Total equity		151,913	212,720
Other creditors and accrued expenses	11	5,404	744
Total liabilities		5,404	744
Total equity & liabilities		157,317	213,464

Consolidated Statement of Changes in Equity

	Share Capital	Distributable reserves	Retained Earnings	Other Reserves (note 9)	Total
	US$'000	US$'000	US$'000	US$'000	US$'000
Balance at 01 July 2015	1,396	131,559	78,866	899	212,720
Total comprehensive income for the period
Loss for period			(29,575)		(29,575)
Other comprehensive income
Foreign currency translation differences				(35)	(35)
Total other comprehensive expense				(35)	(35)
Total comprehensive profit for the period			(29,575)	(35)	(29,610)
Contributions by and distributions to owners
Dividends payable			(4,742)		(4,742)
Shares repurchased to be held in treasury		(1,193)			(1,193)
Shares subject to tender offer	(193)	(25,141)		193	(25,141)
Tender offer expenses		(121)			(121)
Shares in treasury cancelled	(19)			19	-
Total contributions by and distributions to owners	(212)	(26,455)	(4,742)	212	(31,197)
Balance at 31 December 2015	1,184	105,104	44,549	1,076	151,913

* 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 9)		Total
	US$'000	US$'000		US$'000		US$'000		US$'000
Balance at 01 July 2014	1,589	155,847		61,091		788		219,315
Total comprehensive income for the period
Profit	-	-		18,927		-		18,927
Other comprehensive income
Foreign currency translation differences	-	-		-		(126)		(126)
Total other comprehensive expense	-	-		-		(126)		(126)
Total comprehensive profit for the period	-	-		18,927		(126)		18,801
Contributions by and distributions to owners
Dividends payable	-	-		-		-		-
Shares repurchased to be held in treasury	-	(421)		-		-		(421)
Shares in treasury cancelled	(28)	-		-		28		-
Total contributions by and distributions to owners	(28)	(421)		-		28		(421)
Balance at 31 December 2014	1,561	155,426		80,018		690		237,695
Consolidated Statement of Cash Flows					(Unaudited)		(Unaudited)
			Note		For the period from 1 July 2015 to 31 December 2015		For the period from 1 July 2014 to 31 December 2014
					US$'000		US$'000
Cash flows from operating activities
Purchase of investments					(51,004)		(97,633)
Proceeds from sale of investments					82,703		84,676
Dividends received					-		1,077
Operating expenses paid					(1,658)		(1,991)
Commission rebate					-		182
Net cash generated from/(used in) operating activities					30,041		(13,689)
Financing activities
Cash used in share repurchases					(26,455)		(421)
Net cash used in financing activities					(26,455)		(421)
Net increase/(decrease) in cash and cash equivalents					3,586		(14,110)
Effects of exchange rate changes on cash and cash equivalents					3		(29)
Cash and cash equivalents at beginning of period					5,957		17,295
Cash and cash equivalents at end of period			8		9,546		3,156

Notes to the Interim Consolidated Financial Statements

1              The Company

Qatar Investment Fund plc (formerly Epicure Qatar Equity Opportunities 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 2015 to 31 December 2015, the Company purchased 963,198 of its ordinary shares for a total value of US$1,192,903 to be held in treasury. 313,837 shares had been repurchased in the period ended 31 December 2014 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 7 December 2015 the Company completed a tender offer at a price of US$1.3004 per share. Under the offer 19,333,165 shares were cancelled with US$25,140,848 being paid to participating shareholders.

The shareholders approved a dividend of 4.0 cents per share on 12 November 2015; this was paid to shareholders on 13 January 2016.

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

2              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%

3              Significant Accounting Policies

The Interim Report of the Company for the period ending 31 December 2015 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 2015. The interim consolidated financial statements are unaudited.

3.1           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 2015.

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

3.2           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.

4              Net Asset Value per Share

The net asset value per share as at 31 December 2015 is US$1.2829 per share based on 118,412,877 ordinary shares in issue as at that date (excluding 1,539,870 shares held in treasury), (30 June 2015: US$1.5336 based on 138,709,240 ordinary shares in issue, excluding 890,509 shares held in treasury).

5              Investments

31 December 2015 financial assets at fair value through profit or loss: all quoted equity securities

Security name	Number	US$'000
Barwa Real Estate (BRES QD)	693,748	7,584
Commercial Bank of Qatar (CBQK QD)	679,837	8,561
Doha Bank (DHBK QD)	128,035	1,559
Gulf International Services (GISS QD)	883,198	12,454
Gulf Warehousing (GWCS QD)	173,735	2,712
Industries Qatar (IQCD QD)	584,293	17,793
Masraf Al Rayan (MARK QD)	1,585,047	16,263
Medicare Group (MCGS QD)	97,034	3,181
National Leasing (NLCS QD)	1	-
Ooredoo (ORDS QD)	342,377	7,016
Qatar Electricity & Water Company (QEWS QD)	193,273	11,352
Qatar Gas Transport (QGTS QD)	530,138	3,367
Qatar Insurance (QATI QD)	341,667	7,686
Qatar Islamic Bank (QIBK QD)	372,144	10,893
Qatar National Bank (QNBK QD)	564,553	26,949
Qatar Navigation (QNNS QD)	177,241	4,619
Qatar United Development Company UDCD QD)	1,028,961	5,711
		147,700

6              Charges and Fees

	31 December 2015	31 December 2014
	US$'000	US$'000
Investment Manager's fees (see below)	1,011	1,302
Performance fees (see below)	-	-
Administrator and Registrar's fees (see below)	137	162
Custodian fees (see below)	76	98
Directors' fees and expenses	179	172
Directors' insurance cover	22	22
Broker fees	33	55
Other	195	150
Other expenses	642	659

 

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. A new management fee agreement was effective from 1 November 2013 with the fee being reduced to 1.05% of the Net Asset Value of the Group calculated monthly and payable quarterly in arrears. This was further reduced to an annual fee of 1.0% of the net asset value of the Company from 1 November 2015.

Management fees for the period ended 31 December 2015 amounted to US$1,011,421 (31 December 2014: US$1,302,037).

Performance fees

The performance fee structure is based upon the relative performance of the Company against the performance of the QE Index. The performance fee is payable by reference to the increase in Adjusted Net Asset Value per Ordinary Share in excess of the Target Net Asset Value per Ordinary Share (Opening Net Asset Value per ordinary share adjusted by the movement on the Qatar Exchange Index) over the course of a Performance Period.

The Investment Manager is entitled to a performance fee in respect of a Performance Period only if the Adjusted Net Asset Value per Ordinary Share at the end of the relevant Performance Period, after excluding dividends paid and received, exceeds the Target Net Asset Value per Ordinary Share.

If the performance test is met, the performance fee will be an amount equal to 15% of the amount by which the Adjusted Net Asset Value per Ordinary Share at the end of the relevant Performance Period exceeds the Target Net Asset Value per Ordinary Share multiplied by the time weighted average of the number of Ordinary Shares in issue in the Performance Period together, if applicable, with an amount equal to the VAT thereon.

In any Outperformance Period which follows any one or more Underperformance Periods, the performance fee payable shall be calculated by multiplying X minus Y by 15% (where X is the increase in the Adjusted Net Asset Value per Ordinary Share at the end of the relevant Outperformance Period above the Target Net Asset Value per Ordinary Share for that Performance Period and Y is the aggregate of the Shortfall Returns for the previous Underperformance Periods) and multiplied by the time weighted average of the number of Ordinary Shares in issue in the Performance Period. If X minus Y is a negative figure, no performance fee shall be payable.

If the Adjusted Net Asset Value per Ordinary Share at the end of the relevant Performance Period is higher than the Target Net Asset Value per Ordinary Share but is less than the Opening NAV, any accrued performance fee will be withheld and shall not be payable and will only become payable in the event that the Target Net Asset Value per Ordinary Share and the Opening NAV is exceeded in respect of a subsequent Performance Period. For the avoidance of doubt, in the event that the Target Net Asset Value per Ordinary Share and the Opening NAV is exceeded in respect of a subsequent Performance Period, all accrued but unpaid performance fee(s) in respect of previous Performance Periods will become due and payable.

If there has been a Shortfall Return in respect of a Performance Period and performance fees have been accrued but withheld in respect of one or more prior Performance Periods, the accrued but withheld performance fees will be reduced by treating the prior Performance Period(s) and the current Performance Period as one Performance Period and calculating any performance fee due over that aggregated period. For the avoidance of doubt, in the event that the Target Net Asset Value per Ordinary Share and the Opening NAV is exceeded in respect of a subsequent Performance Period, all accrued but unpaid performance fee(s) in respect of previous Performance Periods will become due and payable.

The Investment Manager will not be entitled to such part of any performance fee to which it would otherwise be entitled if:

(i)             payment of such part of any performance fee would cause the aggregate performance fee in respect of a Performance Period, excluding any accrued but unpaid performance fee in respect of previous Performance Periods, to exceed 1.5% of the Net Asset Value of the Company at the end of the relevant Performance Period (or, in the case of the any Performance Period of less than a year, 1.5% multiplied by the number of days in that Performance Period divided by 365); or

(ii)            payment of such part within the Performance Period would have caused the performance test or Opening NAV not to be met.

Performance fees for the period ended 31 December 2015 amounted to US$nil (31 December 2014: US$nil).

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

Investment Management Agreement definitions

Adjusted Net Asset Value per Ordinary Share	at a particular time, the sum of A plus B minus C minus D plus E where: (i)            A is the Net Asset Value per Ordinary Share at that time calculated on a basis that does not recognise any liability of the Company to the Investment Manager in respect of any performance fee that is, or may become, payable; (ii)           B is the amount by which any corporate action undertaken by the Company after 1 November 2013 (including, without limit, the issue of Ordinary Shares or rights to subscribe for, or convert into. Ordinary Shares, the issue of a scrip dividend, or the consolidation or sub-division of Ordinary Shares) results, at the time of calculation, in a dilution to the Net Asset Value per Ordinary Share divided by the number of Ordinary Shares in issue at the time of such corporate action; (iii)           C is the amount by which any accretion to the Net Asset Value per Ordinary Share has arisen solely as a result of the repurchase by the Company of its Ordinary Shares or any return of capital by the Company to its shareholders since 1 November 2013 divided by the number of Ordinary Shares in issue at the time of such repurchase or return of capital; (iv)           D is the sum of all dividends received by the Company since 1 January 2011 divided by the number of Ordinary Shares in issue at the time of each dividend; and (v)           E is the sum of all dividends paid by the Company since 1 January 2011 divided by the number of Ordinary Shares in issue at the time of each dividend,
Performance Period	each period in respect of which the Company produces audited accounts and, if different, the final period for which the Investment Management Agreement subsists or any shorter period where there has been an issue of Ordinary Shares which exceeds 10% of the then existing share capital of the Company, subject always to the discretion of the Board. The first Performance Period commenced on date of the passing of the Resolution (17 March 2011)
Outperformance Period	any Performance Period in which the Adjusted Net Asset Value per Ordinary Share at the end of the relevant Performance Period exceeds the Target Net Asset Value per Ordinary Share
Shortfall Return	the amount by which the Target Net Asset Value per Ordinary Share exceeds the Adjusted Net Asset Value per Ordinary Share in respect of a Performance Period

Custodian fees

The Custodian is entitled to receive fees of US$7,200 per annum and US$25 per processed transaction from Qatar 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 subcustodian fees for the period ending 31 December 2015 amounted to US$75,971 (31 December 2014: US$97,934).

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 2015 amounted to US$136,962 and US$29,451 for additional services (31 December 2014: US$161,653 and US$32,582 respectively).

7              Commission rebate

In previous periods the Company received 50% brokerage commission rebates for all trades done through its Qatar brokers. However, during this period the Company changed its Qatar broker to take advantage of more competitive commission rates. For the period ended 31 December 2015 the Group received US$ Nil (2014: US$182,452).

8              Cash and Cash Equivalents

	31 December 2015	30 June 2015
	US$'000	US$'000
Bank balances	9,546	5,956
Cash and cash equivalents	9,546	5,956

9              Other Reserves

	Distributable Reserves	Retained Earnings	Foreign currency translation reserve	Capital redemption reserves	Total
	US$'000	US$'000	US$'000	US$'000	US$'000
Balance at 1 July 2015	131,559	78,866	(180)	1,079	211,324
Foreign exchange translation differences	-	-	(35)	-	(35)
Retained loss for period	-	(29,575)	-	-	(29,575)
Dividends paid	-	(4,742)	-	-	(4,742)
Shares repurchased into Treasury	(1,193)	-	-	-	(1,193)
Shares subject to tender offer	(25,141)	-	-	193	(24,948)
Tender offer expenses	(121)	-	-	-	(121)
Shares in Treasury cancelled	-	-	-	19	19
Balance at 31 December 2015	105,104	44,549	(215)	1,291	150,729

10            Earnings per Share

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

	31 December 2015	31 December 2014
(Loss)/profit attributable to equity holders of the Company (US$'000)	(29,575)	18,927
Weighted average number of ordinary shares in issue (thousands)	134,803	154,842
Basic (loss)/earnings per share (cents per share)	(21.94)	12.22

11            Trade and other payables

	31 December 2015	30 June 2015
	US$'000	US$'000
Dividend payable*	4,742	-
Due to broker	-	51
Management fee payable	486	557
Administration fee payable	68	75
Accruals and sundry creditors	108	61
	5,404	744

*On 11 September 2015 a dividend of US$ 0.040 per Ordinary Share was announced, this was approved by shareholders at the Annual General Meeting on 12 November 2015 and was paid on 13 January 2016 to ordinary shareholders on the register as at 18 December 2015 (the "Record Date"). The corresponding ex-dividend date was 17 December 2015.

12            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.

Leonard O'Brien 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 2015 amounted to US$178,883 (31 December 2014: US$172,308).

13            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.

Qatar 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 Qatar or doing business in Qatar.

Qatar does not impose withholding tax on dividend distributions by Qatari companies to non-residents.

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

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

Kuwait taxation

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

14            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 Group holds shares in Qatar Insurance Company S.A.Q. (see note 5). It is paid fees 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 and through common directors. 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.

Leonard O'Brien is a director of the Company and of the Investment Manager.

15            Post Balance Sheet Events

Shareholders received a dividend of 4.0 cents per share on 13 January 2016.

 

END

 

 

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