Gulf Regulatory News (GIF)

Gulf Investment Fund PLC

28 September 2020

Legal Entity Identifier: 2138009DIENFWKC3PW84

Gulf Investment Fund plc

Annual Report for the year ended 30 June 2020

· Net asset value down 8.7% vs benchmark fall of 17.2%.

· Share price down 5.4% (2019: +18.7%).

· Board recommends a dividend for the year of 3c a share (2019: 3c).

· As of 30 June, the Fund's share price was trading at a discount to NAV of 7.5% vs a three-year average discount of 13.0%.

· The fund remains overweight Qatar

Nicholas Wilson, Chairman of Gulf Investment Fund plc, commented:

"It has been a tumultuous year for GCC markets, but the Board of Directors are confident the region's economies are positioned to recover lost ground following the double impacts of the oil price crash and the continuing Covid-19 outbreak.

"The Fund's long-term strategy continues to deliver a solid performance relative to the benchmark. Since the Fund's mandate widened to incorporate the wider Gulf region in December 2018, NAV has increased 31% (dividend included) compared to 13.1% from the S&P GCC total return index.

"The Board and managers are cautiously optimistic for the region's outlook and consider that the prospects for international trade are improving"

Enquiries:

Nicholas Wilson

Gulf Investment Fund Plc

+44 (0) 1624 622 851

William Clutterbuck / Alasdair Lennon

Maitland/AMO

+44 (0) 20 7379 5151

gulfinvestmentfund-maitland@maitland.co.uk

Chairman's Statement

On behalf of the Board, I am pleased to present your Company's thirteenth annual report and financial statements for the year to 30 June 2020.

During the 12 months, the Gulf Investment Fund's Net Asset Value (NAV) per share fell 8.7% to US$123.23 which compares with the S&P GCC composite index which fell 17.2% and the wider MSCI Emerging Markets Index which was down 5.7%. Although the discount at which the fund's shares trade to NAV narrowed, the share price dropped 5.4% from US$1.205 to US$1.140. This was in a year when the price of Brent Crude fell 38%.

At the Annual General Meeting on 8 November 2019, shareholders approved a dividend of 3.0c per share which was paid on 10 January.

In second half of our financial year, Gulf Cooperation Council markets and economies were hit first by a collapse in crude oil prices soon followed by the Covid-19 pandemic.

Results

Results for the year to 30 June 2020 showed a loss of US$8.141m generated from fair value adjustments and realised losses partially offset by dividend income. This is equivalent to a basic loss per share of US$8.80c (2019: profit of US$18.22c per share).

As described in the investment manager's report, the geographical split of the portfolio has changed significantly during the year. That said, Qatar is still overweight at 32.1% of the fund's NAV followed by Saudi Arabia at 31.5%, UAE 14.0%, Kuwait 16.8% and 5.5% of NAV is in cash.

As at 30 June 2020, we had 31 holdings: 13 in Saudi Arabia, 8 in Qatar, 7 in Kuwait and 3 in the UAE. Once again, the biggest sector exposure is financials at 36.1% of the fund.

Kuwait was to be upgraded to emerging market status in May by MSCI but the pandemic saw this delayed until November 2020.

The Company's ongoing charges (formerly total expense ratio) reduced to 1.86% from 1.88% in the previous year.

Change in the presentation of the financial statements

In the current year the Board, in conjunction with the Auditors, has given further consideration to IFRS 10 and, in particular, whether the Company meets the definition of an Investment Entity under that standard. Accordingly, the Company has now applied the requirements of the IFRS 10 Investment Entity Consolidation Exception for the statutory audited financial statements. In accordance with IFRS 10, and consistent with the prior year, the Company financial statements include the investment in subsidiary at fair value through profit or loss. In order to provide continuity for shareholders and other users of the financial statements, consolidated financial information has been presented in the Appendix to this report. The profit/loss and net assets are the same in this consolidated information as in the Company's financial statements - consistent with the prior year. Therefore, this change is presentational only - with no change to the key reported numbers in the prior year.

Proposed dividend

The Board is pleased to recommend to shareholders a dividend of 3c per share (2019 3c per share), subject to shareholder approval at the forthcoming Annual General Meeting. If approved the dividend will be paid in January 2021. Further details on the ex-date, record date and payment date will be announced in due course.

Related party transactions

Details of any related party transactions are contained in note 10 of this 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 governments deal with budget challenges. The geopolitics of the region and, in particular, the dispute between Qatar and other members of the GCC brings continuing economic uncertainty as does the situation with Iran and potential problems in the straits of Hormuz.

Looking to the future, the impact of Covid-19 is highly uncertain and cannot be predicted and there is no assurance that the outbreak will not have a material adverse effect on the Company's investments. The extent of the impact, if any, will depend on future developments, including actions taken to contain the coronavirus. A widespread health crisis could adversely affect the global economy, resulting in an extensive economic downturn that could impact the profitability of many of the companies in which we are invested.

The Board believes that the principal risks and uncertainties faced by the Company continue to be; 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 the Annual Report.

The Board continues to view the future of the Company with confidence expecting healthy 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.

Tender offer and future of the Company

In 2017, the Directors committed to making a tender offer for up to 100% of the share capital in 2020 ("Tender Offer"). This Tender Offer is subject to shareholder approval and a circular setting out details of the Tender Offer and notice of general meeting, will be sent to shareholders in the coming months. The Directors do not believe it is in the best interests of shareholders to be invested in a sub-scale, illiquid fund and are therefore proposing that, should the level of tender acceptances result in the Company having net assets of less than $60m, the Company be put into managed wind down in lieu of proceeding with the Tender Offer.

The Board are aware that discount management and liquidity are a key concern for investors and therefore intend to consult with shareholders on appropriate future discount and liquidity mechanisms and dividend policy, should there be sufficient shareholder support for the Company following the implementation of the upcoming tender offer.

Annual General Meeting

I look forward to welcoming shareholders to our thirteenth Annual General Meeting on 13 November 2020, which will be held at 11.00 am at the Company's registered office at Millennium House, 46, Athol Street, Douglas, Isle of Man. Shareholders are advised that, given current restrictions imposed by the Isle of Man Government in response to the global COVID-19 pandemic, it may not be possible to attend the Annual General Meeting in person. Shareholders are therefore strongly encouraged to appoint the chairman of the meeting as their proxy.

Nicholas Wilson

Chairman

25 September 2020

Business Review

The following review provides information primarily about the Company's business and results for the year ended 30 June 2020. It should be read in conjunction with the Report of the Investment Manager and the Investment Adviser on pages 7 to 16 which gives a detailed review of the investment activities for the year and an outlook for the future.

Investment objective and strategy

The Company's investment objective is to capture the opportunities for growth offered by the expanding GCC economies by investing, through its wholly owned subsidiary, in listed or soon to be listed companies on one of the GCC exchanges.

The Company applies a top-down screening process to identify those sectors which should most benefit from sector growth trends. Fundamental industry and Company analysis, rather than benchmarking, forms the basis for both stock selection and portfolio construction.

The investment policy is on pages 17 to 18.

Performance measurement and key performance indicators

In order to measure the success of the Company in meeting its objectives and to evaluate the performance of the Investment Manager, the Directors take into account the following key performance indicators:

Returns and Net Asset Value

At each quarterly Board meeting the Board reviews the performance of the portfolio versus the S&P GCC Composite Index (local benchmark) as well as the net asset value, income, share price and expense ratio for the Company.

Discount/Premium to Net Asset Value

On a weekly basis, the Board monitors the discount/premium to net asset value. The Directors renew their authority at the AGM in order to be able to make purchases through the market where they believe they can assist in narrowing the discount to net asset value and where it is accretive to net asset value per share.

On 22 February 2017, the Company announced the details of its annual share buy-back programme. During the term of this share buy-back programme, the Company may purchase ordinary shares provided that:

1) the maximum price payable for an ordinary share on the London Stock Exchange is an amount equal to the higher of:

a. 105 per cent. of the average market value of the Company's ordinary shares as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which such share is contracted to be purchased; and

b. In order to benefit from the exemption laid down in Article 5(1) of Regulation (EU) No 596/2014, the Company will not purchase shares at a price higher than the higher of the price of the last independent trade and the highest current independent purchase bid on the trading venue where the purchase is carried out; and

2) the aggregate number of ordinary shares which may be acquired on behalf of the Company in connection with this share buy-back programme shall not exceed 17,548,355 ordinary shares (updated at last AGM to 13,859,940).

Due to the limited liquidity in the ordinary shares, a buy-back of ordinary shares pursuant to the share buy-back programme on any trading day is likely to represent a significant proportion of the daily trading volume in the ordinary shares on the London Stock Exchange (and is likely to exceed the 25% limits of the average daily trading volume as laid down in Article 5(1) of Regulation (EU) No 596/2014 and as such the Company will not benefit from this exemption). The share buy authority resolution is for up to 14.99% of the Company's issued share capital. The Board has no present intention to exercise the authority in full but will keep the matter under review, taking into account the overall financial position of the Company and the discount to net asset value at which the Company's shares trade.

Whilst the Company has the requisite shareholder authority to conduct share buy-backs, the Company has not announced a share buy-back programme since the above programme which expired on 17 November 2017, however this is under regular review by the Board.

The Board is responsible for close monitoring of the Company's share price and working with its broker to buy back shares when the Company believes appropriate so as to manage any discount to net asset value. 

Yield

The Board monitors the dividend income of the portfolio and the amount available for distribution and considers the impact on the Company's annual dividend policy of future progressive dividend payments, subject to the absence of exceptional market events.

Principal risks and uncertainties

The Board confirms that there is an on-going process for identifying, evaluating and managing or monitoring the key risks to the Company. These key risks have been collated in a risk matrix document which is reviewed and updated on a quarterly basis by the Directors. The risks are identified and graded in this process, together with the policies and procedures for the mitigation of the risks. Apart from the key risks outlined below, the possibility of a tender offer up to 100% of the share capital of the Company and the Company's continuation is identified as an ongoing risk.

In addition to the tender offer noted on page 4 the key risks which have been identified and the steps taken by the Board to mitigate these are as follows:

Market

The Company's underlying investments consist of listed companies. There are no investments in companies soon to be listed. Market risk arises from uncertainty about the future prices of the investments. This is commented on in Notes 1 and 2 on pages 47 to 53.

Investment and strategy

The achievement of the Company's investment objective relative to the market involves risk. An inappropriate asset allocation may result in underperformance against the local index. Monitoring of these risks is carried out by the Board which, at each quarterly Board meeting, considers the asset allocation of the portfolio, the ratio of the larger investments within the portfolio and the management information provided by the Investment Manager and Investment Adviser, who are responsible for actively managing the portfolio in accordance with the Company's investment policy. The net asset value of the Company is published weekly.

Accounting, legal and regulatory

The Company must comply with the provisions of the Isle of Man Companies Acts 1931 to 2004 and since its shares are listed on the London Stock Exchange, the UK Listing Authority's Listing Rules and Disclosure Guidance and Transparency Rules ("FCA Rules")' A breach of company law could result in the Company and/or the Directors being fined or the subject of criminal proceedings. A breach of the UKLA Rules could result in the suspension of the Company's shares. The Board relies on its company secretary and advisers to ensure adherence to company law and UKLA Rules. The Board takes legal, accounting or compliance advice, as appropriate, to monitor changes in the regulatory environment affecting the Company.

From 3 July 2016 the Company must also comply with the Market Abuse Regulation (MAR) which contains prohibitions for insider dealing and market manipulation, and provisions to prevent and detect these.

Operational

Disruption to, or the failure of, the Investment Manager, the Investment Adviser, the Custodian or Administrator's accounting, payment systems or custody records could prevent the accurate reporting or monitoring of the Company's financial position. Details of how the Board monitors the services provided by the Investment Manager and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal control section of the Corporate Governance Report on pages 22 to 30.

Financial

The financial risks faced by the Company include market price risk, foreign exchange risk, credit risk, liquidity risk and interest rate risk. Further details are disclosed in Notes 1(c), 2, 6 and 8.

Report of the Investment Manager and Investment Adviser

Regional market overview:

Source: Bloomberg; LTM: Last Twelve Months

Global markets recovered strongly during the 2Q2020, supported by government stimulus measures, gradual economic reopening and hopes for a coronavirus vaccine.

Gulf Cooperation Council (GCC) markets also followed the global market trend and recovered in 2Q2020, reducing 1H2020 losses to 16.1%. Dubai was the worst performing in the region, down 25.3% from January to June 2020. Qatar is the second best performing market after Oman (down 11.7%) with a fall of 13.7%.

The price of oil (Brent) recovered 81% in 2Q2020 after falling 66% in 1Q2020, reaching US$41 per barrel helped by an improving supply demand picture, following the OPEC+ supply agreement.

However, markets experienced a spike in volatility in June 2020 as investors continued to exercise caution amid fears of a second wave of virus spread as new cases started rising once again.

After gaining 9.8% in 1H2019, GCC indices showed mixed performance in 2H2019 with the S&P GCC Index declining 1.4%. Negative performance was led by 4.9% decline by Saudi Arabia market. Kuwait and Bahrain gained the most with 7.7% and 9.5% returns. Dubai, Abu Dhabi and Oman rose 4.0%, 1.9% and 2.5%, respectively. Qatar market remained broadly flat in 2H2019 (down 0.3%).

GCC: Policy response, gradual reopening and economic outlook

2020 saw GCC countries implement widespread policy measures in a bid to limit the spread of coronavirus infection and also support their economies. These measures include large public events cancellations, air travel bans, and schools and government office shutdowns. Large economic stimulus packages have been announced, with a major focus on health spending, social assistance, and private sector (SME) support. Central banks have cut rates in line with emergency cuts by the US Fed. With proactive management of the epidemic, the GCC countries have begun reopening the economy in a phased manner.

GCC: Curve of Covid-19 Cases started to decline

Embedded image removed - please refer to the Company's website www.gulfinvestmentfundplc.com for charts depicting Covid-19 cases in decline.

Over US$200 billion stimulus (over 14.0% of their combined GDP)

Embedded image removed - please refer to the Company's website www.gulfinvestmentfundplc.com for charts depicting stimulus in GCC area.

GCC Reopening plans:

Saudi Arabia executed a 3-phase reopening plan starting in late May 2020, of which the third and last phase started on June 2021, where all curfew restrictions were lifted and the situation was allowed to return to normal. Domestic travel started to return to normal, while bans on international travel and religious pilgrimages were maintained. On 23 July 2020, the authorities announced the opening of land borders with Kuwait, Bahrain and the UAE.

The UAE began gradual reopening of shopping centres and other businesses from the end of April. Several airlines have resumed a limited number of regular passenger flights. Public sector employees returned to work with full capacity from mid-May 2020. Dubai reopened to international tourists from 7 July 2020. Restaurants, coffee shops, cafes and other licensed food outlets in Abu Dhabi are now allowed to operate at 80% capacity.

Qatar charted a plan to reopen the economy in mid-June, where some mosques, stores in malls and selected parks were allowed to open. Further restrictions were lifted in July 2020. Phase 3 of reopening was started on 1 August 2020, permitting flights from low-risk countries as well as the full-reopening of shopping malls. Economic activity is expected to back to normal in phase 4 starting on 1 September 2020.

Kuwait started reopening on 31 May 2020 with a reduction in the curfew to 12 hours. In later phases, it plans to allow gradual opening of public and private sector offices, and then opening of hotels and resorts.

Oman ended the lockdown in Muscat in May 2020 with activity resuming from the start of June 2020. Private sector employees are allowed to return to their offices and government agencies begun their regular operations. In June, the government further opened up commercial and industrial activities.

Bahrain authorities have permitted reopening of retail stores with some strict operational conditions.

OPEC+ and rebalancing the oil market

In April, the OPEC+ countries agreed to a new and much more extensive round of cuts, in an effort to rebalance the market. This has resulted in a supply cut of 9.7 million bpd in May and June 2020. Given these cuts aren't enough to compensate for the short-term demand shock from lockdowns, Saudi Arabia has voluntarily reduced its production by a further 1 million bpd for June. Next phase of OPEC+ deal is expected to see cuts in production narrowing to 7.7 million bpd starting August 1, from the current level of 9.7 million bpd agreed in April. Consensus now expects oil prices to average above US$40 for 2H2020 and average around US$50 for 2021.

Growth is expected from 2021

Against the backdrop of an uncertain global environment, we believe that the regional economies will begin to recover, with focus on fiscal and monetary measures. Stabilization of the oil market post the OPEC+ deal should provide some support, and large capital reserves will help in maintaining key public spending. The IMF expects the region to grow at 2.1% in the year 2021 after contracting by 7.1% in the year 2020.

Source: IMF June 2020 update; GCC Data revised in July 13, Regional Economic Update

GCC countries to curb spending and seek additional revenue

Saudi Arabia announced ~US$26 billion spending cuts on major projects while announcing new fiscal measures to raise more non-oil revenues and rationalize spending. These will mean cuts and delays in capital spending, removal of cost-of-living allowances for public sector workers and VAT hikes from 5% to 15%.

Qatar plans to postpone US$8.2 billion worth of yet to be awarded contracts on capital expenditure projects. Kuwait government also agreed to cut the government budget for 2020-2021 by at least 20%.

Dubai has been hit hard by the outbreak as economic activity in vital sectors such as tourism and transport came to a standstill. Government has asked all agencies to postpone all un-awarded construction projects until further notice and not to allow any cost increases for ongoing construction projects.

Oman announced reduced spending in the 2020 budget by 10%. Bahrain announced that it would cut current spending excluding wages and transfers by around 30%.

Announced measures could help offset losses arising from reduced oil exports but the aggregate GCC deficit is still expected to deteriorate from 2.1 % of GDP in 2019 to 10.5% of GDP in 2020.

Table: Government fiscal balance

Source: Data as per IMF Regional Economic Update April 2020; Saudi Arabia data updated in June 2020; GCC Data revised in July 13, Regional Economic Update

GCC countries financial reserves

GCC countries have built up financial reserves in past decades and now collectively have assets worth over US$3.0 trillion, which is over 200% of their combined GDP. This gives further financial flexibility, if needed.

Countries with fiscal buffers (Kuwait, Qatar, Saudi Arabia, UAE) are better placed to accommodate rising deficits than those with limited space (Bahrain and Oman).

Chart: ~US$3 trillion in SWF and FX Reserves

Embedded image removed - please refer to the Company's website www.gulfinvestmentfundplc.com for charts depicting reserve data.

Regional governments are working hard to soften the blow through fiscal measures and central bank liquidity support. These efforts will be further supported by low debt to GDP ratio and high credit ratings.

This can be witness by successful return of Qatar, Saudi Arabia and the UAE to global capital markets in April, issuing a combined US$24 billion, and recent gains in most GCC equity indices.

The GCC banking system remains solid, with strong liquidity and capitalization, and relatively low non-performing loans. Support measures introduced by GCC authorities to back banking system amount to 10.7% of GDP, or ~US$147 billion.

Industry Consolidation and Diversification

The pandemic has had the effect of hastening consolidation in some sectors with companies seeking to form stronger entities in order to gain market share and improve operational efficiency. Going forward, we believe consolidation is going to accelerate in multiple sectors in order to increase profitability.

We believe that although there are challenges, the worst phase of the crisis is now over and this should present GCC economies an opportunity to accelerate the process of diversification away from oil. Rapid, inclusive and well sequenced policies will help GCC economies emerge stronger and more prosperous.

Risk of second wave and new lockdowns

Fear of a second wave of infection is rising in some countries which are executing reopening plans, such as in some parts of China, India, Europe and the US. Rising infections may trigger new lockdowns and pose a risk to the path of recovery.

Other developments

GCC IPO market

The GCC is expected to see a modest recovery in initial public offerings (IPOs) in the second half of 2020. There were just two in H1. Saudi Arabia and the UAE are expected to lead IPO activity with eight IPOs to be launched by these countries in 2020 or early 2021.

GCC Banking consolidation

The NCB-Samba merger may herald a new wave of bank consolidation as banks seek to improve competitiveness, reduce operating costs and boost capital amid slowing economic growth. The merger will create a national champion with assets of US$147 billion that will be better able to fund Saudi Arabia's massive infrastructure projects. In Qatar Masraf Al Rayan bank and Al Khaleej bank agreed to initiate talks on a possible merger. If agreed, the merger will create the third largest bank in Qatar with an asset base of US$45 billion.

Debt ratings

Moody's has cut Saudi's outlook to "negative" from "stable" while affirming the sovereign credit rating at "A1". Higher fiscal risks due to lower oil prices, and uncertainty about the government's ability to offset the oil revenue losses and stabilize its debt in the medium term has led to the negative outlook.

Fitch has downgraded Bahrain's credit rating to "B+" from "BB-" with a "Stable" outlook. The downgrade reflects the combined impact of coronavirus pandemic and lower oil prices on the economy, which is expected to cause noticeable rises in the budget deficit and government debt and will pressure already low FX reserves, triggering sharp GDP contraction.

S&P Global has downgraded Kuwait's long-term sovereign credit ratings to "AA-" from "AA" with a "stable" outlook as low oil prices are expected to have negative economic and fiscal implications given its high reliance on hydrocarbons. Moreover, Kuwait is also lagging in reform momentum when compared to its regional peers. Moody's credit rating for Kuwait maintained at "Aa2" with "under review" outlook. Additionally, Fitch's credit rating for Kuwait was maintained at "AA" with "stable" outlook.

Moody's downgraded Oman's credit rating second time this year to Ba3 and changed its outlook to "negative" citing its low fiscal strength will likely place pressure on its finances. Moody's rating for Oman is now on par with S&P Global Ratings of "BB-" and one level below that of Fitch Ratings of "BB". Both S&P Global Ratings and Fitch Ratings have also downgraded countries rating with "negative" outlook.

UAE to develop new gas field

ADNOC and the Dubai Supply Authority signed an agreement to develop a newly discovered 80 trillion cubic feet gas reservoir in the Jebel Ali area. As UAE is dependent on imported natural gas, successful development could make the Emirates self-sufficient.

Portfolio structure

Country allocation

GIF's weightings in GCC markets are based on the Investment Adviser's assessment of outlook and valuation. Compared to the benchmark, GIF remained significantly overweight Qatar (32.1% of NAV vs. a S&P GCC weighting of 15.0% for Qatar) and overweight UAE (14.0% vs S&P GCC of 11.8%) and Kuwait (16.8% vs S&P GCC of 11.8%). GIF is underweight Saudi Arabia (31.5% vs S&P GCC weighting of 58.2%).

During the 1H2020, the Fund's exposure to Saudi Arabia increased by 5.3%, while exposure to the UAE was reduced by 8.6%. The fund's cash position is now 5.5% as of 30 June 2020 (31 December 2019: 2.3%).

At of 30 June 2020, GIF had 31 holdings: 13 in Saudi Arabia, 8 in Qatar, 7 in Kuwait and 3 in the UAE (vs. 45 holdings in 4Q19: 20 in Saudi Arabia, 10 in Qatar, 9 in Kuwait, 5 in the UAE and 1 in Oman).

Embedded image removed - please refer to the Company's website www.gulfinvestmentfundplc.com for charts depicting Country allocation.

Top 5 Holdings

Source: QIC; as on 30 June 2020

The Investment Adviser follows a detailed bottom-up stock picking strategy, which has led the Fund's outperformance in different economic cycles. In the current scenario, the Investment Adviser believes that markets will remain volatile, and plan to focus on companies with solid balance sheet and stable cash flows, at attractive valuations.

Qatar Gas Transport Co. and Emirates NBD continued to remain GIF's top holdings owing to their strong fundamentals. The investment Adviser increased holdings in Aramex and Gulf International Services Co. and made new investments in Saudi Ceramic Co. as valuations became attractive.

Sector Allocation

Embedded image removed - please refer to the Company's website www.gulfinvestmentfundplc.com for charts depicting sector allocation.

The Financial sector remained the largest sector allocation for GIF at 36.1% of NAV. However, during the period, the Investment Adviser reduced exposure to the sector from 47.3% at the end of 4Q2019. The Investment Adviser believes that most GCC banks have strong capital and liquidity buffers to safeguard them from systematic risk in the current scenario. However, lower interest rates along with an expected increase in non-performing loans could impact profitability in the near term.

Industrials is the second largest exposure in the Fund at 19.8% (up from 7.8% in 4Q2019) as valuations became attractive. Exposure to the Materials sector was reduced to 2.1% of NAV down from 12.1% in 4Q2019.

Top holdings:

Qatar Gas Transport (9.4% of NAV)

Established in 2004, Qatar Gas Transport Company (Nakilat) is a key midstream player in the hydrocarbon sector in Qatar. Nakilat's LNG shipping fleet is the largest in the world, comprising of 69 LNG vessels. It also owns 1 FSRU vessel and four large LPG carriers. Out of the 69 LNG vessels, 29 are wholly owned and 40 are under joint ventures (JV). Nakilat also provides shipping and marine-related services to a range of participants within the Qatari hydrocarbon sector. Nakilat is an integral component of the supply chain of some of the largest, most advanced energy projects in the world undertaken by Qatar Petroleum, Qatargas and their joint venture partners. For 1H2020, Nakilat reported a net profit of US$151 million compared to US$131 million during the same period in FY19, an increase of 15.5%. Going forward, Qatar's North Field expansion plan paves the way for increased transportation of gas, which is expected to benefit the company in the longer run.

Emirates NBD (6.8% of NAV)

Emirates NBD is a leading UAE bank with c.20% market share of the UAE's loans and deposits, as well as strong capital buffers to weather economic challenges and developing regulatory requirements. Being backed by the UAE government, it is one of the largest financial institution in the MENA region. Emirates NBD has delivered strong returns to its shareholders with net profit growth of CAGR 23.1% (period: 2014-2019) with high return on equity (2019: c.22%). Its recent acquisition of Deniz Bank has expanded its geographic reach to 13 countries. Emirates NBD is well placed to fund

Emirates NBD (6.8% of NAV) continued

organic growth and its international expansion strategy through its capital-generative core business. For 1H2020 the bank reported net profit of US$1.1 billion vs. US$2.0 billion for the same period in FY19. 1H2019 had a US$563 million one-off gain from sale of stake in associate "Network International".

Saudi Ceramics (5.7% of NAV):

Saudi ceramics is the second largest ceramic producer in the entire GCC region and largest in Saudi Arabia. It is a leading provider of quality building solutions that include various types of ceramic products (ceramic tiles, porcelain tiles, sanitary wares and accessories), electric water heaters, bathrooms fittings etc. Saudi Arabia imposed anti-dumping duty on tiles from India and China starting from 6 June 2020 which will help the local and GCC manufacturers boost business. For 1H2020, Saudi Ceramics reported a net profit of US$4.6 million compared to a loss of US$11.0 million during the same period in FY19.

Aramex (5.1% of NAV):

Aramex is a global provider of Logistics & Transportation Solutions. The company has diverse business verticals with presence across 65+ countries - International & Domestic Express, Freight Forwarding, Logistics & Supply Chain Management etc. Over the long term, the management intends to have an asset-light model and continue focusing on e-commerce, the growth driver. They have identified three key focus areas for the future - Expand Footprint, Leverage Infrastructure & Organic Growth. The company has been agile in identifying new segments & closing down non-performing markets. For 1H2020, Aramex reported a net profit of US$44.1 million compared to US$63.0 million during the same period in FY19.

Gulf International Services Co. (4.6% of NAV)

Gulf International Services (GIS) Co., through its subsidiaries, operates in four distinct segments - insurance and reinsurance, drilling and associated services, helicopter transportation services and catering services. Gulf drilling international (GDI), a major subsidiary, operates in the onshore and offshore oil and natural gas drilling business in Qatar. GDI currently has direct ownership of 16 drilling rigs (8 offshore rigs and 8 onshore rigs), which are used to drill wells suitable for oil and natural gas extraction, 1 jack-up accommodation barge and 2 lift boats. GDI is currently executing a major drilling contract for Qatar Petroleum relating to North Field Expansion which is expected to boost its earnings in the medium-term. For 1H2020, the Company reported net profit of US$14.8 million vs. US$8.1 million in 1H2019.

Gulf Investment Fund Performance:

YTD NAV was down 11.7% vs. 16.1% decline in S&P GCC. Since the investment mandate widened from Qatari-focused to Gulf-wide in December 2017, NAV has risen 31.0% (dividend included), as against the 13.1% from the S&P GCC total return index. On 30 June 2020, the GIF share price was trading at a 7.5% discount to NAV vs. one-year average discount of 9.6%.

Embedded image removed - please refer to the Company's website www.gulfinvestmentfundplc.com for charts depicting Gulf Investment Fund performance.

GCC Outlook:

As Covid-19 cases are declining in GCC, we believe that economic recovery is now gaining a foothold and will extend into the second half of 2020. Proactive measures taken by the GCC governments to address the pandemic and its economic impact seems to be bearing fruit and all the Gulf states have begun reopening their economy in a phased manner.

We expect GCC economies will begin to recover despite an uncertain global environment, with focus on fiscal and monetary measures. Stabilization of the oil market post the OPEC+ deal should provide some support, and large capital reserves will help in maintaining key public spending. The IMF expects the region to grow by 2.1% in 2021 after contracting by 7.1% in 2020.

The dual shocks of pandemic and lower oil prices have underscored the need for the GCC to accelerate efforts to develop industries that are resilient to energy prices, have high growth potential, foster innovation and therefore guarantee economic diversification. Additionally, the pandemic has thrown open opportunities for many sectors looking for consolidation to form stronger entities in order to gain market share and improve operational efficiency. Going forward, we believe consolidation is going to accelerate in multiple sectors in order to increase profitability.

We continue to remain positive on growth in the region over the long term, led by the planned infrastructure projects and the momentum of reforms across nations. All the GCC nations are executing multiyear infrastructure plans under their respective National Vision programs.

Given the history and strength of GCC states to weather economic storms, current valuation levels offer a good entry point for investors looking for long term exposure to the regional markets. GCC markets are currently trading at attractive valuations compared to their historical average and offer healthy dividend yields.

Valuation:

Source: Bloomberg, as of 11 August 2020; Market Cap. as of 10 August 2020

Environmental, Social and Governance ("ESG") Engagement

While the management of the Company's investments is not undertaken with any specific instructions to exclude certain asset types or classes, the Investment Adviser embeds ESG into its research process. ESG investment is about active engagement, with the goal of improving the performance of assets held in the GCC region.

The primary goal is to generate the best long-term outcomes for the Company in order to fulfil fiduciary responsibilities to the Company. The Investment Adviser sees ESG factors as being financially material and impacting corporate performance. ESG factors put the 'long-term' in long-term investing. So the Investment Adviser focuses on understanding the ESG risks and opportunities of investments alongside other financial metrics to enable it to make better investment decisions. In so doing it for better risk adjusted returns by undertaking informed and constructive engagement with company managements.

Through engagement and exercising voting rights, the Investment Adviser, on behalf of the Company, actively works with companies to improve corporate standards, transparency and accountability. By this means it looks to deliver improved financial performance in the longer term as well as actively contributing to a fairer, more sustainable world.

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

25 September 2020 25 September 2020

Investment Policy

Investment objective

The Company's investment objective is to capture the opportunities for growth offered by the expanding GCC economies by investing, through its wholly owned subsidiary, in listed companies on one of the GCC exchanges or companies soon to be listed on one of the GCC exchanges.

The Company applies a top-down screening process to identify those sectors which should most benefit from sector growth trends. Fundamental industry and company analysis, rather than benchmarking, forms the basis of both stock selection and portfolio construction.

Assets or companies in which the Company can invest

The Company invests in listed companies on any GCC Exchanges in addition to companies soon to be listed. The Company may also invest in listed companies, or pre-IPO companies, in other GCC countries. The Company will also be permitted to invest in companies listed on stock markets not located in the GCC which will have a significant economic exposure to and/or derive a significant amount of their revenues from GCC countries.

Whether investments will be active or passive investments

In the ordinary course of events, the Company is not an activist investor, although the Investment Adviser will seek to engage with investee company management where appropriate.

Holding period for investments

In the normal course of events, the Company expects to be fully invested, although the Company may hold cash reserves pending new IPOs or when it is deemed financially prudent. Although the Company is a long-term financial investor, it will actively manage its portfolio.

Spread of investments and maximum exposure limits

The Company will invest in a portfolio of investee companies. The following investment restrictions are in place to ensure a spread of investments and to ensure that there are maximum exposure limits in place (see investment guidelines under Investing Restrictions).

Policy in relation to gearing and derivatives

Borrowings will be limited, as at the date on which the borrowings are incurred, to 5% of NAV. Borrowings will include any financing element of a swap. The Company will not make use of hedging mechanisms.

The Company may utilise derivative instruments in pursuit of its investment policy subject to:

· such derivative instruments being designed to offer the holder a return linked to the performance of a particular underlying listed equity security;

· a maximum underlying equity exposure limit of 15 per cent of NAV (calculated at the time of investment); and

· a policy of entering into derivative instruments with more than one counterparty in relation to an investment, where possible, to minimise counterparty risk.

Policy in relation to cross-holdings

Cross-holdings in other listed or unlisted investment funds or ETFs that invest in Qatar or other countries in the GCC region will be limited to 10 per cent. of Net Asset Value at any time (calculated at the time of investment).

Investing restrictions

The investing restrictions for the Company are as follows:

(i) Foreign ownership restrictions

Investments in most GCC listed companies by persons other than citizens of that specific GCC country have an ownership restriction wherein the law precludes persons other than citizens of that specific GCC country from acquiring a certain proportion of a company's issued share capital. It is possible that the Company may have problems acquiring stock if the foreign ownership interest in one or more stocks reaches the allocated upper limit. This may adversely impact the ability of the Company to invest in certain companies listed on the GCC exchanges.

(ii) Investment guidelines

The Company has established certain investment guidelines. These are as follows (all of which calculated at the time of investment):

· No single investment position in the S&P GCC Composite constituent may exceed the greater of: (i) 15 per cent. of the Net Asset Value of the Company; or (ii) 125 per cent. of the constituent company's index capitalisation divided by the index capitalisation of the S&P GCC Composite Index, as calculated by Bloomberg (or such other source as the Directors and Investment Manager may agree):

· No single investment position in a company which is not a S&P GCC Composite Index constituent may at the time of investment exceed 15 per cent. of the NAV of the Company; and

· No holding may exceed 5 per cent. of the outstanding shares in any one company (including investment in Saudi Arabian listed companies by way of derivative investment in P-Note or Swap structured financial products); and

(iii) Conflicts management

The Investment Manager, the Investment Adviser, their officers and other personnel are involved in other financial, investment or professional activities, which may on occasion give rise to conflicts of interest with the Company. The Investment Manager will have regard to its obligations under the Investment Management Agreement to act in the best interests of the Company, and the Investment Adviser will have regard to its obligations under the Investment Adviser Agreement to act in the best interests of the Company, so far as is practicable having regard to their obligations to other clients, where potential conflicts of interest arise. The Investment Manager and the Investment Adviser will use all reasonable efforts to ensure that the Company has the opportunity to participate in potential investments that each identifies that fall within the investment objective and strategies of the Company. Other than these restrictions set out above, and the requirement to invest in accordance with its investing policy, there are no other investing restrictions.

Returns and distribution policy

The Company's primary investment objective is to achieve capital growth. However, the Company has instituted an annual dividend policy to return to shareholders distributions at least equal to reported income for each reporting period. shareholders should note that this cannot be guaranteed and the level of distributions for any period remains a matter to be determined at the discretion of the Board.

Life of the Company

The Company currently does not have a fixed life but the Board considers it desirable that shareholders should have the opportunity to review the future of the Company at appropriate intervals. Accordingly, at the annual general meeting of the Company in 2021, a resolution will be proposed that the Company continues in existence. More than 50 per cent. of shareholders voting must vote in favour for this resolution to be passed. If the resolution is passed, a similar resolution will be proposed at every third annual general meeting thereafter. If the resolution is not passed, the Directors will be required to formulate proposals to be put to shareholders to reorganise, unitise or reconstruct the Company or for the Company to be wound up.

Report of the Directors

The Directors hereby submit their annual report together with the audited financial statements of Gulf Investment Fund plc (the "Company") for the year ended 30 June 2020.

The Company

The Company is incorporated in the Isle of Man and has been established to invest primarily in quoted equities of Qatar and other Gulf Co-operation Council (GCC) countries. The Company's investment policy is detailed on pages 17 to 18.

Results and Dividends

The results of the Company for the year and its financial position at the year- end are set out on pages 42 to 46 of the financial statements.

The Directors manage the Company's affairs to achieve capital growth and the Company has instituted an annual dividend policy. The quantum of the dividend is calculated based on a proportion of the dividends received during the year, net of the Company's attributable costs. Any undistributed income will be set aside in a revenue reserve in order to facilitate the Company's policy of future progressive dividend payments. This policy will be subject to the absence of exceptional market events.

The Directors recommend a dividend of 3 cents per share in respect of the year ended 30 June 2020. For the year ended 30 June 2019, the Directors declared a dividend of US$2,773,837 (3.0c per share) which was approved by shareholders and paid by the Company in January 2020.

Directors

Details of Board members at the date of this report, together with their biographical details, are set out on page 31.

Director independence and Directors' and other interests have been detailed in the Directors' Remuneration Report on pages 35 and 36.

Creditor payment policy

It is the Company's policy to adhere to the payment terms agreed with individual suppliers and to pay in accordance with its contractual and other legal obligations.

Gearing policy

Borrowings will be limited, as at the date on which the borrowings are incurred, to 5% of NAV (or such other limit as may be approved by the shareholders in general meeting). The Company will not make use of any hedging mechanisms.

There were no borrowings during the year (2019: US$ nil).

Donations

The Company has not made any political or charitable donations during the year (2019: US$ nil).

Adequacy of the Information supplied to the auditors

The Directors who held office at the date of approval of this Directors' Report confirm that, so far as each is aware, there is no relevant audit information of which the Company's auditors are unaware; and each Director has taken all steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Statement of going concern

The Directors are satisfied that the Company has adequate resources to continue to operate as a going concern for the foreseeable future and have prepared the financial statements on that basis, however shareholders will be given the opportunity to vote for a 100% tender in 2020 and to vote for the continued existence of the Company at the annual general meeting (AGM) in 2021 and every third AGM thereafter.

Independent Auditors

KPMG Audit LLC has expressed its willingness to continue in office in accordance with Section 12 (2) of the Companies Act 1982.

Annual general meeting

The Annual General Meeting of the Company will be held on 13 November 2020 at the Company's registered office.

A copy of the notice of Annual General Meeting is contained within this Annual Report. As well as the business normally conducted at such a meeting, Shareholders will be asked to renew the authority to allow the Company to continue with share buy-backs.

The notice of the Annual General Meeting and the Annual Report are also available at www.gulfinvestmentfundplc.com.

Corporate governance

Full details are given in the Corporate Governance Report on pages 22 to 30, which forms part of the Report of the Directors.

Substantial shareholdings

As at the date of publication of this annual report, the Company had been notified, or the Company is aware of the following significant holdings in its Share Capital.

The above percentages are calculated by applying the shareholdings as notified to the Company or the Company's awareness to the issued Ordinary Share Capital as at 30 June 2020.

On behalf of the Board

Nicholas Wilson

Chairman

25 September 2020

Millennium House

46 Athol Street

Douglas

Isle of Man

IM1 1JB

Corporate Governance Report

Compliance with Companies Acts

As an Isle of Man incorporated company, the Company's primary obligation is to comply with the Isle of Man Companies Acts 1931 to 2004. The Board confirms that the Company is in compliance with the relevant provisions of the Companies Acts.

Compliance with the Association of Investment Companies (AIC) Code of Corporate Governance

The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and this statement describes how the Company applies the principles identified in the UK Corporate Governance Code which is available on the Financial Reporting Council's website: www.frc.org.uk. The Board confirms that the Company has complied throughout the accounting period with the relevant provisions contained within the UK Code - via examining compliance against the AIC Code of Corporate Governance.

The Board of the Company has considered the principles and provisions AIC Code of Corporate Governance as published in February 2019 (the AIC Code). The AIC Code addresses the principles and provisions set out in the UK Corporate Governance Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company. The AIC Code is available on the AIC's website: www.theaic.co.uk.

The Board considers that reporting against the principles and recommendations of the AIC Code, which has been endorsed by the FRC, will provide better information to shareholders.

The Company has complied with the recommendations of the AIC Code and the relevant provisions of the UK Corporate Governance Code, except the length of service of Mr. Wilson and Mr. MacDonald and as set out below.

The UK Corporate Governance Code includes provisions relating to:

• the role of the chief executive

• executive directors' remuneration

• the need for an internal audit function

• Interaction with the workforce

For the reasons set out in the AIC Guide, and as explained in the UK Corporate Governance Code, the Board considers these provisions are not relevant to the position of the Company, being an externally managed investment company. In particular, all of the Company's day-to-day management and administrative functions, with the exception of portfolio management, risk management and service provider performance management, are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions.

Directors

The Directors are responsible for the determination of the Company's investment policy and strategy and have overall responsibility for the Company's activities including the review of the investment activity and performance.

All of the Directors are non-executive. The Board considers each of the Directors to be independent of, and free of any material relationship with, the Investment Manager and Investment Adviser.

The Board of Directors delegates to the Investment Manager through the Investment Management Agreement the responsibility for the management of the Company's assets in GCC securities in accordance with the company's investment policy and for retaining the services of the Investment Adviser. The Company has no executives or employees.

The Articles of Association require that all Directors submit themselves for election by shareholders at the first opportunity following their appointment and shall not remain in office longer than three years since their last election or re-election without submitting themselves for re-election.

The Board meets formally at least 4 times a year and between these meetings there is regular contact with the Investment Manager. Other meetings are arranged as necessary. The Board considers that it meets regularly enough to discharge its duties effectively. The Board ensures that at all times it conducts its business with the interests of all shareholders in mind and in accordance with Directors' duties. Directors receive the relevant briefing papers in advance of Board and Board Committee meetings, so that should they be unable to attend a meeting they are able to provide their comments to the Chairman of the Board or Committee as appropriate. The Board meeting papers are the key source of regular information for the Board, the contents of which are determined by the Board and contain sufficient information on the financial condition of the Company. Key representatives of the Investment Manager attend each Board meeting. All Board and Board Committee meetings are formally minuted.

Board composition and succession plan

Objectives of Plan

· To ensure that the Board is composed of persons who collectively are fit and proper to direct the Company's business with prudence, integrity and professional skills.

· To define the Board Composition and Succession Policy, which guides the size, shape and constitution of the Board and the identification of suitable candidates for appointment to the Board.

Methodology

The Board is conscious of the need to ensure that proper processes are in place to deal with succession issues and the Nomination Committee assists the Board in the Board selection process, which involves the use of a Board skills matrix.

The matrix incorporates the following elements: finance, accounting and operations; familiarity with the regions into which the Company invests; diversity (gender, residency, cultural background); Shareholder perspectives; investment management; multijurisdictional compliance and risk management. In adopting the matrix, the Nomination Committee acknowledges that it is an iterative document and will be reviewed and revised periodically to meet the Company's on-going needs.

The Nomination Committee monitors the composition of the Board and makes recommendations to the Board about appointments to the Board and its Committees.

Directors may be appointed by the Board, in which case they are required to seek election at the first AGM following their appointment and triennially thereafter. Directors who are not regarded as independent are required to seek re-election annually. In making an appointment the Board shall have regard to the Board skills matrix.

A Director's formal letter of appointment sets out, amongst other things, the following requirements:

· bringing independent judgment to bear on issues of strategy, performance, resources, key appointments and standards of conduct and the importance of remaining free from any business or other relationship that could materially interfere with independent judgement;

· having an understanding of the Company's affairs and its position in the industry in which it operates;

· keeping abreast of and complying with the legislative and broader responsibilities of a Director of a company whose shares are traded on the London Stock Exchange;

· allocating sufficient time to meet the requirements of the role, including preparation for Board meetings; and

· disclosing to the Board as soon as possible any potential conflicts of interest.

The Board authorises the Nomination Committee to:

· recommend to the Board, from time to time, changes that the Committee believes to be desirable to the size and composition of the Board;

· recommend individuals for nomination as members of the Board;

· review and recommend the process for the election of the Chairman of the Board, when appropriate; and

· review on an on-going basis succession planning for the Chairman of the Board and make recommendations to the Board as appropriate.

The Plan will be reviewed by the Board annually and at such other times as circumstances may require (e.g. a major corporate development or an unexpected resignation from the Board). The Plan may be amended or varied in relation to individual circumstances at the Board's discretion.

The Board will review Mr. Wilson's position as Chairman after the 100% tender offer in 2020.

Board Committees

The Board has established the following committees to oversee important issues of policy and maintain oversight outside the main Board meetings:

· Audit Committee

· Remuneration Committee

· Nomination Committee

· Management Engagement Committee

Throughout the year the Chairman of each committee provided the Board with a summary of the key issues considered at the meeting of the committees and the minutes of the meetings were circulated to the Board.

The committees operate within defined terms of reference. They are authorised to engage the services of external advisers as they deem necessary in the furtherance of their duties, at the Company's expense.

Audit Committee

The Board has established an Audit Committee made up of at least two members and comprises Paul Macdonald, Nicholas Wilson, Neil Benedict and David Humbles. The Audit Committee is responsible for, inter alia, ensuring that the financial performance of the Company is properly reported on and monitored. The Audit Committee is chaired by Paul Macdonald. The Audit Committee normally meets at least twice a year when the Company's interim and final reports to shareholders are to be considered by the Board but meetings can be held more frequently if the Audit Committee members deem it necessary or if requested by the Company's auditors. The Audit Committee will, amongst other things, review the annual and interim accounts, results announcements, internal control systems and procedures, preparing a note in respect of related party transactions and reviewing any declarations of interest notified to the Committee by the Board each on six monthly basis, review and make recommendations on the appointment, resignation or dismissal of the Company's auditors and accounting policies of the Company. The Company's auditors are advised of the timing of the meetings to consider the annual and interim accounts and the auditors shall be asked to attend the Audit Committee meeting where the annual audited accounts are to be considered. The Audit Committee Chairman shall report formally to the Board on its proceedings after each meeting and compile a report to shareholders on its activities to be included in the Company's annual report. At least once a year, the Audit Committee will review its performance, constitution and terms of reference to ensure that it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

The terms of reference for the Audit Committee are available on the Company's website www.gulfinvestmentfundplc.com.

Significant Issues

During its review of the Company's financial statements for the year ended 30 June 2020, the Audit Committee considered the following significant issue as communicated by the auditor during their reporting:

Valuation and existence of investment in subsidiary

The valuation of the investment in subsidiary, including valuation and existence of the portfolio of investments held by the subsidiary, is undertaken in accordance with the accounting policies, disclosed in Notes 1(a) and 1(b) to the financial statements. All underlying investments are considered liquid and priced based on quoted prices in active markets and have been categorised as Level 1 or level 2 within the IFRS 13 fair value hierarchy. The underlying portfolio is reviewed and verified by the Manager on a regular basis and management accounts including a full portfolio listing are prepared each month and circulated to the Board. An independent custodian, HSBC Bank Middle East Limited, are used to hold the assets of the underlying investment portfolio. The underlying investment portfolio is reconciled regularly by the Manager and a reconciliation is also reviewed by the Auditor.

Remuneration Committee

The Company has established a Remuneration Committee. The Remuneration Committee is made up of at least two non-executive Directors who are identified by the Board as being independent. Its members are Neil Benedict (Chairman), Nicholas Wilson, Paul Macdonald and David Humbles. The Remuneration Committee normally meets at least once a year and at such other times as the Chairman of the Remuneration Committee shall require. The Remuneration Committee reviews the performance of the Directors and sets the scale and structure of their remuneration and the basis of their letters of appointment with due regard to the interests of shareholders. In determining the remuneration of Directors, the Remuneration Committee seeks to enable the Company to attract and retain Directors of the highest calibre. No Director is permitted to participate in any discussion of decisions concerning their own remuneration. The Remuneration Committee reviews at least once a year its own performance, constitutions and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

The terms of reference for the Remuneration Committee are available on the Company's website www.gulfinvestmentfundplc.com.

Nomination Committee

The Company has established a Nomination Committee which shall be made up of at least two members and which shall comprise all independent non-executive Directors. The Nomination Committee comprises Nicholas Wilson (Chairman), Neil Benedict, Paul Macdonald and David Humbles. The Nomination Committee meets at least once a year prior to the first quarterly Board meeting and at such other times as the Chairman of the committee shall require. The Nomination Committee is responsible for ensuring that the Board members have the range of skills and qualities to meet its principal responsibilities in a way which ensures that the interests of shareholders are protected and promoted and regularly review the structure, size and composition of the Board. The Nomination Committee shall, at least once a year, review its own performance, constitution and terms of reference to ensure that it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

The Nomination Committee will assess potential candidates on merit against a range of criteria including experience, knowledge, professional skills and personal qualities as well as independence, if this is required for the role.

Candidates' ability to commit sufficient time to the business of the Company is also key, particularly in respect of the appointment of the Chairman. The Chairman of the Nomination Committee is primarily responsible for interviewing suitable candidates and a recommendation will be made to the Board for final approval.

Management Engagement Committee

The Company has established a Management Engagement Committee which is made up of at least two members who are independent non-executive Directors. The Management Engagement Committee members are Neil Benedict (Chairman), Paul Macdonald, Nicholas Wilson and David Humbles. The Management Engagement Committee will meet at least quarterly and is responsible for reviewing the performance of the Investment Manager and other service providers, to ensure that the Company's management contract is competitive and reasonable for the shareholders and to review and make recommendations to the Board on any proposed amendment to or material breach of the management contract and contracts with other service providers.

Board Attendance

The number of formal meetings during the year of the Board, and its Committees, and the attendance of the individual Directors at those meetings, is shown in the following table:

The Annual General Meeting was held on 8 November 2019.

Internal Control

The Board is responsible for the Company's system of internal control and for reviewing its effectiveness. Its review takes place at least once a year. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Board also determines the nature and extent of any risks it is willing to take in order to achieve its strategic objectives.

The Board has contractually delegated to external agencies, including the Investment Manager and the Investment Adviser, the management of the investment portfolio, the custodial services (which include the safeguarding of the assets), the registration services and the day-to-day accounting and company secretarial requirements. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of services offered including the control systems in operation in so far as they relate to the affairs of the Company.

The Board, assisted by the Investment Manager and Investment Adviser, has undertaken regular risk and controls assessments. The business risks have been analysed and recorded in a risk and internal controls report which is regularly reviewed. The Board has reviewed the need for an internal audit function. The Board has decided that the systems and procedures employed by the Investment Manager and Investment Adviser, including its internal audit function provide sufficient assurance that a sound system of internal control, which safeguards shareholders' investments and the Company's assets, is maintained. An internal audit function, specific to the Company, is therefore considered unnecessary.

The Board confirms that there is an on-going process for identifying, evaluating and managing the Company's principal business and operational risks that have been in place for the year ended 30 June 2020 and up to the date of approval of the annual report and financial statements.

Accountability and Relationship with the Investment Manager, the Custodian and the Administrator

The Statement of Directors' Responsibilities is set out on page 32.

The Board has delegated contractually to external third parties, including the Investment Manager, the Investment Adviser, the Custodian and the Administrator, the management of the investment portfolio, the custodial services (which include the safeguarding of the assets), the day to day accounting, company secretarial and administration requirements. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of the services provided, including the control systems in operation in so far as they relate to the affairs of the Company.

The Investment Manager, the Investment Adviser and the Administrator ensure that all Directors receive, in a timely manner, all relevant management, regulatory and financial information. Representatives of the Investment Manager and the Administrator attend each Board meeting enabling the Directors to probe further on matters of concern.

Continued Appointment of the Investment Manager

The Board considers the arrangements for the provision of investment management and other services to the Company on an on-going basis. The Board reviews investment performance at each Board meeting and a formal review of the Investment Manager (and Investment Adviser) is conducted annually. As a result of their annual review, NAV performance has been found to be satisfactory and it is the opinion of the Directors that the continued appointment of the current Investment Manager (and Investment Adviser) on the terms agreed is in the interests of the Company's shareholders as a whole.

Relations with shareholders

The Chairman is responsible for ensuring that all Directors are made aware of shareholders' concerns. The shareholder profile of the Company is regularly monitored and the Board liaises with the Investment Manager to canvass shareholder opinion and communicate views to shareholders. The Company is concerned to provide the maximum opportunity for dialogue between the Company and shareholders. It is believed that shareholders have proper access to the Investment Manager at any time and to the Board if they so wish. All shareholders are encouraged to attend annual general meetings. Together with the Investment Manager and Investment Adviser, regular investor presentations are held to promote a wider following for the Company.

Viability statement

The Board makes an assessment of the longer term prospects of the Company beyond the timeframe envisaged under the going concern basis of accounting having regard to the Company's current position and the principal risks it faces. The Board does this by performing robust risk assessments using a detailed risk matrix at each of its scheduled audit committee meetings.

The Company is a long-term investment vehicle and the Directors, therefore, believe that it is appropriate to assess its viability over a long-term horizon. The Board considers that assessing the Company's prospects over a period of five years is appropriate given the nature of the Company and the inherent uncertainties of looking out over a longer time period. The Directors believe that a five year period appropriately reflects the long term strategy of the Company and over which, in the absence of any adverse change to the regulatory environment, they do not expect there to be any significant change to the current principal risks and to the adequacy of the mitigating controls in place.

Notwithstanding the above the Company's shareholders will have the opportunity to vote for the cessation of the Company at the annual general meeting in 2021 which will be proposed as an ordinary resolution. In the event that the continuation vote is not passed the Directors will be required to put forward proposals to shareholders to the effect that the Company be wound up, liquidated, reorganised or unitised. If the continuation vote is passed, a further continuation vote will be proposed at every third annual general meeting thereafter. In addition, the Directors are committed to making a tender offer to shareholders for up to 100% of the share capital in 2020 subject to shareholder approval. The directors have a reasonable expectation that the company will continue after the 100% tender offer. However, until the shareholders both vote and tender, the outcome of the tender is impossible to predict.

Promoting the Company's Success

In accordance with corporate governance best practice, the Board is now required to describe to the Company's shareholders how the Directors have discharged their duties and responsibilities over the course of the financial year following the guidelines set out in the UK under section 172 (1) of the Companies Act 2006 (the "s172 Statement"). This Statement, from 'Promoting the Success of the Company' to "Long Term Investment" on page 30 provides an explanation of how the Directors have promoted the success of the Company for the benefit of its members as a whole, taking into account the likely long term consequences of decisions, the need to foster relationships with all stakeholders and the impact of the Company's operations on the environment.

The purpose of the Company is to act as a vehicle to provide, over time, financial returns (both income and capital) to its shareholders.

The Company's Investment Objective is disclosed on page 5. The activities of the Company are overseen by the Board of Directors of the Company. The Board's philosophy is that the Company should operate in a transparent culture where all parties are treated with respect and provided with the opportunity to offer practical challenge and participate in positive debate which is focused on the aim of achieving the expectations of shareholders and other stakeholders alike. The Board reviews the culture and manner in which the Investment Adviser operates at its regular meetings and receives regular reporting and feedback from the other key service providers.

The Company is a long-term investment vehicle, with a recommended holding period of five or more years. It is externally managed, has no employees, and is overseen by an independent non-executive board of directors. Your Company's Board of Directors sets the investment mandate, monitors the performance of all service providers (including the Investment Adviser) and is responsible for reviewing strategy on a regular basis. All this is done with the aim of preserving and, indeed, enhancing shareholder value over the longer term.

Shareholder Engagement

The following table describes some of the ways we engage with our shareholders:

Other Service Providers

The other key stakeholder group is that of the Company's third party service providers. The Board is responsible for selecting the most appropriate outsourced service providers and monitoring the relationships with these suppliers regularly in order to ensure a constructive working relationship. Our service providers look to the Company to provide them with a clear understanding of the Company's needs in order that those requirements can be delivered efficiently and fairly. The Board, via the Management Engagement Committee, ensures that the arrangements with service providers are reviewed at least annually in detail. The aim is to ensure that contractual arrangements remain in line with best practice, services being offered meet the requirements and needs of the Company and performance is in line with the expectations of the Board, Manager, Investment Manager and other relevant stakeholders. Reviews include those of the Company's custodian, share registrar, broker and auditor.

Principal Decisions

Pursuant to the Board's aim of promoting the long term success of the Company, the following principal decisions have been taken during the year:

Portfolio The report of the Investment Manager and Investment Adviser on pages 7 to 16 details the key investment decisions taken during the year and subsequently. The Investment Manager has continued to monitor the investment portfolio throughout the year under the supervision of the Board.

ESG As highlighted on page 16, the Board is responsible for overseeing the work of the Investment Manager and this is not limited solely to the investment performance of the portfolio companies. The Board also has regard for environmental, social and governance matters that subsist within the portfolio companies.

Audit KPMG Audit LLC was re-appointed as auditor at the last AGM on 8 November 2019.

Long Term Investment

The Investment Manager's investment process seeks to outperform over the longer term. The Board has in place the necessary procedures and processes to continue to promote the long term success of the Company. The Board will continue to monitor, evaluate and seek to improve these processes as the Company continues to grow over time, to ensure that the investment proposition is delivered to shareholders and other stakeholders in line with their expectations.

Communities and the environment

The Board expects the Manager, supported by its governance function, to engage with investee companies at the appropriate time on ESG matters in line with good stewardship practices.

The Board is also conscious of the importance of providing an investment product which meets the needs of its investors, including retail investors and pensioners.

The Board is conscious of the need to take appropriate account of broader ESG concerns and to act as a good corporate citizen.

On behalf of the Board

Nicholas Wilson

Chairman

25 September 2020

Board of Directors

Nicholas Wilson (Non-Executive Chairman)

Nicholas Wilson has over 40 years of experience in hedge funds, derivatives and global asset management. He has run offshore branch operations for Mees Pierson Derivatives Limited, ADM Investor Services International Limited and several other London based financial services companies. He is a director of EPE Special Opportunities Limited. He is a resident of the Isle of Man.

Paul Macdonald (Non-Executive Director)

Paul Macdonald qualified as a chartered accountant in 1979. He worked for Pilkington plc for sixteen years, the last seven of these in Germany. In Germany he was Managing Director for Pilkington Deutschland GmbH (holding company) and Managing Director of both Flachglas AG (glass manufacturer) and Dahlbusch AG (property and holding company). For the last fourteen years Paul has been active in the private equity market and has been successful in developing a number of companies covering a number of industries including Sirona Beteiligungs GmbH (Germany), a leveraged buy-out from Siemens. He is currently the Geschäftsführer for Optas GbmH. Paul is a Non-Executive Director of PME African Infrastructure Opportunities plc.

Neil Benedict (Non-Executive Director)

Neil Benedict is based in the USA with over thirty years' experience of financial markets. He was formerly a Managing Director at Salomon Brothers, where he was Head of International Capital Markets, and, prior to that, the founder and head of the worldwide Currency Swaps group. Neil was also a Managing Director at Dillon Read and helped establish their Tokyo office. He is currently a Senior Managing Director at Sonenshine Partners a New York private investment bank. Neil is a fellow member of the Institute of Chartered Accountants in England and Wales.

David Humbles (Non-Executive Director)

David Humbles was born in 1960 and is British. He worked in the downstream oil industry for 25 years and relocated to the Isle of Man in 1998 as Director of Total. In 2003, David purchased Abbey Properties Ltd which owns and manages a property complex in the north of the island. David owns Westminster Properties Ltd which manages a large portfolio of residential and commercial properties on the island. David has been Managing Director of Oakmayne since 2006. This company is a residential developer in London. He has served on the board of two AIM listed companies.

Statement of Directors' responsibilities in respect of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare company financial statements for each financial year. Under the law they have elected to prepare the company financial statements in accordance with International Financial Reporting Standards (IFRSs).

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss for that period. In preparing each of the Company's financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable, relevant and reliable;

· state whether they have been prepared in accordance with IFRSs;

· assess the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

· use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Acts 1931 to 2004. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report and Corporate Governance Statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation governing the preparation and dissemination of financial statements may differ from one jurisdiction to another.

Disclosure Guidance and Transparency Rules responsibility statement

We confirm that to the best of our knowledge:

· the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

· that in the opinion of the Directors, the Annual Report and Accounts taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company's position, performance, business model and strategy; and

· the Business Review, Report of the Investment Manager and Investment Adviser and the Report of the Directors include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that they face.

On behalf of the Board

Nicholas Wilson

Chairman

25 September 2020

Audit Committee Report

An Audit Committee has been established in compliance with the FCA's Disclosure Guidance and Transparency Rule 7.1, the UK Corporate Governance Code and the AIC Code of Corporate Governance consisting of independent Directors. Its authority and duties are clearly defined within its written terms of reference. Paul Macdonald is Chairman of the Audit Committee, which also comprises Mr Nicholas Wilson, Mr Neil Benedict and Mr David Humbles.

The Committee meets at least two times a year.

The Committee's responsibilities, which were discharged during the year, include:

• monitoring and reviewing the integrity of the interim and annual financial statements and the internal financial controls;

• reviewing the appropriateness of the Company's accounting policies;

• making recommendations to the Board in relation to the appointment of the external auditors and approving their remuneration and terms of their engagement;

• reviewing the external Auditor's plan for the audit of the Company's financial statements;

• developing and implementing policy on the engagement of the external auditors to supply non-audit services;

• reviewing and monitoring the independence, objectivity and effectiveness of the external auditors;

• reviewing the arrangements in place within the Administrator and Investment Manager/Adviser whereby their staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters insofar as they may affect the Company;

• performing the annual review of the effectiveness of the internal control systems of the Company;

• reviewing the terms of the Investment Management Agreement;

• considering annually whether there is a need for the Company to have its own internal audit function; and

• review the relationship with and the performance of the Custodian, the Administrator and the Registrar.

The Audit Committee does not award any non-audit work. The full Board has to approve any non-audit work and this includes confirmation that in all such work auditor objectivity and independence is safeguarded.

Owing to the nature of the fund's business, with all major functions being outsourced and the absence of employees, the Audit Committee do not feel it is necessary for the Company to have its own internal audit function. This situation is re-evaluated annually.

KPMG Audit LLC was re-appointed as auditor at the last AGM on 8 November 2019. The Audit Committee considered the experience and tenure of the audit partner and staff and the nature and level of services provided. The Audit Committee receives confirmation from the auditor that they have complied with the relevant UK professional and regulatory requirements on independence. The Company's Audit Committee meets representatives of the Administrator, who report as to the proper conduct of the business in accordance with the regulatory environment in which the Company, the Administrator, and the Investment Manager/Adviser operate. The Company's external auditor also attends this Audit Committee meeting at its request and reports if the Company has not kept proper accounting records, or if it has not received all the information and explanations required for its audit. The Audit Committee also approves a policy regarding non-audit services provided by the auditor.

The Audit Committee also monitors the risks to which the Company is exposed, provide policy re: non-audit services from the auditor and makes recommendations as to the mitigation of these risks. This task is facilitated by using an extensive risk matrix that enables the Committee to make a quantitative analysis of the individual risks and to highlight those areas where risk is high or increasing.

This report was reviewed and approved by the Board on 25 September 2020.

Paul Macdonald

Chairman of the Audit Committee

25 September 2020

Management Engagement Committee Report

A Management Engagement Committee has been established in accordance with good corporate governance. Neil Benedict is Chairman of the Committee, which also comprises Paul Macdonald, Nicholas Wilson and David Humbles.

The function of the Management Engagement Committee is to monitor the performance of all the Company's service providers and in the particular the performance of the Investment Manager/Investment Adviser.

The performance of the Investment Manager/Investment Adviser is formally reviewed annually at the end of the Company's financial year. The Management Engagement Committee meets quarterly prior to the quarterly Board meetings and the Chairman of the Management Engagement Committee monitors the performance periodically during the intervening periods.

As regards the Investment Manager/Investment Adviser, the Committee:

· monitors and evaluates the investment performance both in absolute terms and also by reference to peer group analysis prepared by the Investment Manager/Adviser and by the Company's broker;

· reviews the performance fee structure to ensure that it does not encourage excessive risk and that it rewards demonstrable superior performance; 

· investigates any breaches of agreed investment limits and any deviation from the agreed investment policy and strategy; 

· reviews the standard of any other services provided by the Investment Manager;

· evaluates the level and effectiveness of any marketing support provided by the Investment Manager, including but not limited to, their input into quarterly reports, handling investor relations and website monitoring and development;

· assesses the level of fees charged by the Investment Manager and how these fees compare with those charged to peer group companies; 

· compares the notice period on the Investment Management Agreement with industry norms; 

· considers any other issues on the appointment of the Investment Manager.

As regards the other service providers to the Company, the Committee:

· monitors the terms on which they are retained and compares them to market rates;

· examines the effectiveness of the services provided;

· makes recommendations to the Board where changes are warranted.

At its most recent meeting, the Management Engagement Committee concluded that the performance of the Investment Manager/Investment Adviser had been satisfactory. The Investment Manager had adhered to the investment policy and policy limits.

The Committee was satisfied with the current performance of the Company's other service providers.

Neil Benedict

Chairman of the Management Engagement Committee

25 September 2020

Directors' Remuneration Report

This report meets the relevant rules of the Listing Rules of the Financial Services Authority and describes how the Board has applied the principles relating to Directors' remuneration. An ordinary resolution to receive and approve this report will be put to the shareholders at the forthcoming Annual General Meeting.

Role of the Remuneration Committee

The role and make-up of the Remuneration Committee is more fully discussed on page 25.

The committee held one formal meeting during the year, during which it addressed all the matters under its remit.

Consideration by the Directors of Matters relating to the Directors' remuneration

As the Board is comprised entirely of non-executive Directors the Board as a whole consider the Directors' remuneration but it has appointed its Remuneration Committee to consider matters relating thereto.

Remuneration policy

The Company's Articles of Association limit the basic fees payable to the Directors to £200,000 per annum in aggregate. Subject to this overall limit it is the Company's policy that the fees payable to the Directors should reflect the time spent by the Board on the Company's affairs and the responsibilities borne by the Directors and should be sufficient to enable candidates of high calibre to be recruited. The Directors are also entitled to receive reimbursement of any expenses incurred in relation to their appointment.

The policy is for the Chairman of the Board and Chairman of the Audit Committee to be paid a higher fee than the other Directors in recognition of their more onerous roles and more time spent.

In the year under review the Directors' fees were paid at the following annual rates: the Chairman £52,500 plus £10,000 with respect to the work involved in the share buy-back programme, the Chairman of the Audit Committee £37,500, the other Directors £35,000.

Directors' and officers' liability insurance cover is in place in respect of the Directors.

Reappointment

It is the Board's policy that non-independent Directors stand for re-election every year and independent Directors stand for re-election every three years.

Directors' fees

The fees expensed (including additional payments) by the Company in respect of each of the Directors who served during the year, and in the previous year, were as follows:

Expenses totalling US$68,045 (2019: US$89,720) were incurred by the Directors and reimbursed during the year.

No other remuneration or compensation was paid or payable by the Company during the period to any of the Directors.

Director independence

Mr Nicholas Wilson and Mr Paul Macdonald have each served as independent Non-executive Directors of the Company for more than ten years, and Mr Wilson has served as non-executive Chairman since 13 November 2012. Notwithstanding the length of their service, Mr Wilson and Mr Macdonald continue to demonstrate their commitment to fulfilling their role as non-executive Chairman and Non-executive Director respectively and satisfy the independence factors set out in the AIC Code of Corporate Governance 16.2.13 except for the length of their service.

They are not involved in the daily management of the Company nor in any relationships or circumstances which might possibly interfere with their exercise of independent judgment. In addition, they continue to demonstrate the attributes of independent Non-executive Directors and there is no evidence that their tenure has had any adverse impact on their independence.

The Board considers each of the Directors to be independent of, and free of any material relationship with, the Investment Manager and Investment Adviser.

Directors' and other interests

None of the Directors had any interest during the year in any material contract for the provision of services which was significant to the business of the Company.

Director holdings in the Company:

For and on behalf of the Board

Neil Benedict

Chairman of the Remuneration Committee

25 September 2020

Report of the Independent Auditors, KPMG Audit LLC, to the members of Gulf Investment Fund plc

1. Our opinion is unmodified

We have audited the financial statements of Gulf Investment Fund plc for the year ended 30 June 2020 which comprise the Income Statement, Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and the related notes and accounting policies.

In our opinion the financial statements:

· give a true and fair view of the state of the Company's affairs as at 30 June 2020 and of its loss for the year then ended;

· have been prepared in accordance with International Financial Reporting Standards; and

· have been properly prepared in accordance with the provisions of the Companies Acts 1931 to 2004.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and we remain independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed entities. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

2. Material uncertainty related to going concern

We draw attention to note 13.1 to the financial statements which indicates that the Company is subject to a tender offer in 2020. This event and condition constitutes a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern.

Our opinion is not modified in respect of this matter.

3. Other key audit matters: our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Going concern is a significant key audit matter and is described in section 2 of our report. We summarise below the other key audit matter in arriving at out audit opinion.

We reported two other key audit matters last year, being the valuation and existence of investments and the carrying value of the Company's loan to and investment in subsidiary. As consolidated financial statements are not presented this year, one other key audit matter has been reported, which amalgamates these two key audit matters into one.

4. Our application of materiality and an overview of the scope of our audit

Materiality for the financial statements as a whole was set at US$1,140,000 (2019: US$1,250,000), determined with reference to a benchmark of Company total assets, of which it represents 1% (2019: 1%).

We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding US$57,000 (2019: US$62,500), in addition to other identified misstatements that warranted reporting on qualitative grounds.

Our audit of the Company and its subsidiary was undertaken to the materiality level specified above and was performed at the Administrator's office in the Isle of Man.

5. We have nothing to report on the other information in the Annual Report

The Directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.

Disclosures of emerging and principal risks and longer-term viability

Based on the knowledge we acquired during our financial statements audit, other than the material uncertainty related to going concern referred to above, we have nothing further material to add or draw attention to in relation to:

· the Directors' confirmation within the Viability Statement on page 27 that they have carried out a robust assessment of the emerging and principal risks facing the Company, including those that would threaten its business model, future performance, solvency and liquidity;

· the Principal Risks disclosures describing these risks and explaining how they are being managed and mitigated; and

· the Directors' explanation in the Viability Statement of how they have assessed the prospects of the Company, over what period they have done so and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Under the Listing Rules we are required to review the Viability Statement. We have nothing to report in this respect.

Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Company's longer-term viability.

Corporate governance disclosures

We are required to report to you if:

· we have identified material inconsistencies between the knowledge we acquired during our financial statements audit and the directors' statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy; or

· the section of the annual report describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee.

We are required to report to you if the Corporate Governance Statement does not properly disclose a departure from the provisions of the UK Corporate Governance Code specified by the Listing Rules for our review.

We have nothing to report in these respects.

6. We have nothing to report on the other matters on which we are required to report by exception

Under the Companies Acts 1931 to 2004, we are required to report to you if, in our opinion:

· proper books of account have not been kept by the Company; or

· the Company's financial statements are not in agreement with the books of account; or

· certain disclosures of directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

We have nothing to report in these respects.

7. Respective responsibilities

Directors' responsibilities

As explained more fully in their statement set out on page 32, the Directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud, or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.

8. The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company's members, as a body, in accordance with Section 15 of the Companies Act 1982. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

Nicholas Quayle

Responsible Individual

For and on behalf of KPMG Audit LLC

Chartered Accountants and Recognised Auditors

25 September 2020

Heritage Court

41 Athol Street

Douglas

Isle of Man

IM1 1LA

Income Statement

The Directors consider that all results derive from continuing activities.

Statement of Comprehensive Income

Statement of Financial Position

The financial statements were approved by the Directors on 25 September 2020 and signed on their behalf by:

Nick Wilson David Humbles

Chairman Director

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

1(a) Investment at fair value through profit or loss

The Company has one subsidiary, Epicure Qatar Opportunities Holdings Limited ("the Subsidiary"), which holds the portfolio of investments and has the investment management and custodian agreements. The investment in subsidiary is stated at fair value through profit or loss in accordance with the IFRS 10 Investment Entity Consolidation Exception. The fair value of the investment in Subsidiary is based on the year-end net asset value of the Subsidiary as reported by the Administrator. The loan to Subsidiary, with an aggregate principal amount of US$63,154,393 (2019: US$63,461,951), is included within this balance. The loan is subject to interest on the aggregate principal amount drawn down from 1 January 2011, at the US prime rate per annum. All loan repayments made by the Subsidiary will first be deducted from the outstanding loan interest before being applied to the principal balance. The loan is secured by fixed and floating charges over the assets of the Subsidiary and is repayable on demand. Additions and disposals regarding the investment in subsidiary are recognised on trade date.

1(b) Financial assets at fair value through profit or loss held by the Subsidiary

The Subsidiary holds a portfolio of quoted equities and P-Notes which are classified as fair value through profit or loss. The fair value for quoted equities is based on the current bid price ruling at the year-end without regard to selling prices. The fair value of P-Notes is based on the quoted year-end bid price of the underlying equity to which they relate. P-Notes are promissory notes issued by certain counterparty banks that are designed to offer the holder a return linked to the performance of a particular underlying equity security or market and used where direct investment in the relevant underlying equity security or market is not possible for regulatory or other reasons. To the extent dividends are received on the securities to which the P-Notes are linked, these are taken to investment income.

At 30 June 2020 the Subsidiary held 14 P-Notes (2019: 29) with a value of US$37,048,232 (2019: US$51,109,545), held to obtain exposure to Saudi Arabia where direct investment in equities is not possible for foreign investors.

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

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

Investments held by the Subsidiary

30 June 2020: Financial assets at fair value through profit or loss; all quoted equity securities or P-Notes:

*P-notes

Investments held by Subsidiary

30 June 2019: Financial assets at fair value through profit or loss; all quoted equity securities or P-Notes:

*P-Notes.

1(c) Risks relating to financial instruments

Risks relating to financial instruments comprise market price risk, credit risk, interest rate risk, liquidity risk and foreign currency risk. These are detailed below and in notes 2, 6 and 8.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company.

Credit risk continued

The carrying amounts of financial assets best represent the maximum credit risk exposure at the statement of financial position date. This relates also to financial assets carried at amortised cost.

At the reporting date, the financial assets exposed to credit risk comprised the following:

The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. Management does not expect any counterparty to fail to meet its obligations and there are no debts past their due dates as at the year-end. All amounts are due within one month of the year end.

Investments held by the subsidiary are held by the Custodian, HSBC Bank (Middle East) Ltd.

P-Notes are issued by counterparty financial institutions and therefore the Company is exposed to credit risk in relation to these financial institutions. The value of P-Notes held at the year-end is disclosed in note 1(a). The counterparties are Merrill Lynch International & Co C.V. (guaranteed by Bank of America Corporation) and EFG-Hermes MENA Securities Limited (guaranteed by EFG-Hermes Holding S.A.E.).

The credit ratings of the financial institutions are as follows:

Merrill Lynch international A+

Bank of America Corporation A-

These ratings are from Standard and Poors.

EFG Hermes MENA Securities Limited and EFG Hermes Holding S.A.E. do not have a credit rating. However, the Board and Investment Advisor have reviewed their credit worthiness and consider it to be acceptable.

The investments in P-Notes, which are over-the-counter equity linked instruments, expose the Company to the risk that the counterparties to the instruments might default on their obligations to the Company. The Directors consider the risk to be insignificant.

The Subsidiary uses the banking services of HSBC Bank (Middle East) Ltd and Barclays (Isle of Man) PLC. HSBC has a credit rating of A2 assigned by Moody and Barclays has a credit rating of A- from Standard and Poors.

Other receivables principally relate to loan interest receivable from the Subsidiary.

Interest rate risk

The Company's loan to subsidiary bears interest and is stated at fair value, which is considered to be equivalent to cost as the loan is repayable on demand, bears interest at floating rate and there is negligible credit risk. The underlying portfolio held by the Subsidiary comprises equities or equity linked securities. Cash held is invested at short-term market interest rates. As a result, the Company is not subject to fair value interest rate risk due to fluctuations in the prevailing levels of market interest rates. However, it is subject to cash flow risk arising from changes in market interest rates with respect to cash balances held by the Company and the Subsidiary.

The table below summarises the Company's exposure to interest rate risks. It includes the Company's financial assets and liabilities at the earlier of contractual re-pricing or maturity date, measured by the carrying value of assets and liabilities:

All interest received on cash balances are at variable rates. A sensitivity analysis for changes in interest rates on cash balances has not been provided as it is not deemed significant.

2 Fair value hierarchy

IFRS 13 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The investment in subsidiary held by the Company is classified as level 2 in the fair value hierarchy - being based on the net asset value of the Subsidiary.

All the underlying listed equity investments held by the Subsidiary are classed as level 1 investments. The P-Notes held by the Subsidiary are classed as level 2. The analysis of investments held by the Subsidiary between level 1 and level 2 is as follows:

The fair value of other financial instruments both held by the Company and the Subsidiary, including cash and short-term receivables and payables is a reasonable approximation of fair value.

Market price risk

The Company's strategy for the management of investment risk is driven by the Company's investment objective. The main objective of the Company is to capture the opportunities for growth offered by the Gulf Cooperation Council region ("GCC") by investing in GCC countries.

All investments present a risk of loss of capital through movements in market prices. The Investment Manager and Investment Adviser moderate this risk through a careful selection of securities within specified limits. The Investment Manager and the Investment Adviser review the position on a day to day basis and the Directors review the position at Board meetings.

The Company's market price risk is managed through the diversification of the underlying investment portfolio held by the Subsidiary. Approximately 94% (2019: 93%) of the net assets attributable to holders of Ordinary Shares is invested in equity securities and P-Notes held by the Subsidiary, on a look through basis.

At 30 June 2020, if the market value of the investment portfolio held by the Subsidiary had increased/decreased by 1.80% (as per the movement in the SEMGGCPD Index post year-end measured at 9 July 2020) with all other variables held constant, this would have increased/decreased net assets attributable to shareholders by approximately US$1.90 million (30 June 2019 : 1.90% : US$2.20 million). Market price volatility is expected to increase due to Covid-19 pandemic.

3 Net asset value per share

The net asset value per share as at 30 June 2020 is US$1.2323 per share (30 June 2019: US$1.3504) based on 92,461,242 (30 June 2019: 92,461,242) Ordinary shares in issue as at that date.

4 (Loss)/earnings per share

Basic and diluted (loss)/earnings per share are calculated by dividing the (loss)/profit attributable to equity holders of the Company by the weighted average number of Ordinary shares in issue during the year.

5 Share capital

Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the Company. The Board manages the Company's affairs to achieve Shareholder through capital growth rather than income and monitors the achievement of this through growth in net asset value per share.

Capital comprises share capital and reserves. Neither the Company nor the Subsidiary is subject to externally imposed capital requirements.

6 Other payables and accrued expenses

Liquidity risk

The Company manages its liquidity risk by maintaining sufficient cash for operations and the ability to realise market positions. The Company's liquidity position is monitored by the Investment Manager and the Board of Directors.

The residual undiscounted contractual maturities of financial liabilities are in the table below:

7 Charges and fees

Investment management fees and custodian fees borne by the Subsidiary were US$1,081,354 and US$212,237 respectively (2019: US$1,022,783 and US$135,042 respectively).

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 Company, 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. Under the revised agreement the annual fee reduced to 1.05% of the net asset value of the Company and further reduced to an annual fee of 0.90% of the net asset value of the Company from 1 November 2016. This was due for termination on 31 October 2019 but was rescinded and the fee continues.

Annual management fees for the year ended 30 June 2020 amounted to US$1,081,354 (30 June 2019: US$1,022,783) and the amount accrued but not paid at the year-end was US$262,938 (30 June 2019: US$287,489). This fee is borne by the Subsidiary.

Administrator and Registrar fees

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

This is subject to a minimum monthly fee of US$15,000, payable quarterly in arrears.

The Administrator assists in the preparation of the financial statements of the Company and provides general secretarial services.

The Administrator may utilise the services of a CREST accredited registrar for the purposes of settling share transactions through CREST. The cost of this service will be borne by the Company. It is anticipated that the cost will be in the region of £12,000 per annum subject to the number of CREST settled transactions undertaken.

Administration fees paid for the year ended 30 June 2020 amounted to US$199,151 and US$19,607 for additional services (30 June 2019: US$199,121 and US$19,554 respectively). Outstanding Administration fees at the year end amounted to US$51,910 (30 June 2019: US$51,052).

Custodian fees

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

In addition the Custodian is entitled to receive fees of 8 basis points per annum in respect of Qatari securities held by the Subsidiary and 10 basis points per annum in respect of non-Qatari, GCC securities held by the Subsidiary and $45 per settled transaction (Qatar)/$50 per settled transaction (GCC excluding Qatar). From 1 March 2013 the custodian agreed to a 25% reduction in custodian fees relating to the Qatari market.

Custodian and sub-custodian fees for the year ended 30 June 2020 amounted to US$214,887 (30 June 2019: US$138,467) and the amount accrued but not paid at the year-end was US$20,742 (30 June 2019: US$9,579). This fee is borne by the Subsidiary.

8 Foreign currency translation

The US Dollar is the currency in which the financial statements are presented ("the presentational currency") as reporting to shareholders is in US Dollars and the shares are quoted in US Dollars. The US Dollar is also the functional currency.

Monetary assets and liabilities denominated in foreign currencies as at the date of these financial statements are translated to US Dollar at exchange rates prevailing on that date. Income and expenses are translated into US Dollar based on exchange rates on the date of the transaction. All resulting exchange differences are recognised in the income statement at the exchange rate prevailing on the statement of financial position date. Items of income and expense are translated at exchange rates on the date of the relevant transactions or an average rate.

Foreign exchange risk

The Company's operations, via the Subsidiary, are conducted in jurisdictions which generate revenue, expenses, assets and liabilities in currencies other than US Dollar. As a result, the Company is subject to the effects of exchange rate fluctuations with respect to these currencies. The Company's policy is not to enter into any currency hedging transactions.

At the reporting date the Company had the following exposure, including assets and liabilities held by the Subsidiary:

The following table sets out the Company's total exposure to foreign currency risk and the net exposure to foreign currencies of the monetary assets and liabilities, including those held by the Subsidiary:

Foreign currency sensitivity risk (Company)

At 30 June 2020 had the US Dollar weakened/strengthened by 1% (2019 : weakened/strengthened 1%) in relation to all currencies, with all other variables held constant, net assets attributable to equity holders of the Company would have increased/decreased by the amounts shown below:

Foreign currency sensitivity risk on a look through basis, including the Subsidiary.

The Qatari Riyal is pegged to the US Dollar.

9 Taxation

Isle of Man taxation

The Company is resident for taxation purposes in the Isle of Man by virtue of being incorporated in the Isle of Man and is subject to taxation at the rate of 0% in the Isle of Man.

10 Related party transactions

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

The Investment Adviser is Qatar Insurance Company S.A.Q. The Subsidiary holds shares in Qatar Insurance Company S.A.Q. (see note 1(b)). The Investment Adviser's fees are paid by the Investment Manager.