Share Name Share Symbol Market Type Share ISIN Share Description
QANNAS INVESTMENTS LIMITED NEX:QIL.GB NEX Ordinary Share KYG7306P1037
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
- - - -

Qannas Investments Limited Half-year Report

26/09/2019 12:56pm

UK Regulatory (RNS & others)


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TIDMQIL

RNS Number : 8231N

Qannas Investments Limited

26 September 2019

The notification set out below is provided in accordance with the requirements of the EU Market Abuse Regulation.

Qannas Investments Limited

("Qannas" or the "Company")

Unaudited Interim Financial Statements for the Period Ended 30 June 2019

Qannas (AIM:QIL), the closed-ended investment company listed on the AIM market, is pleased to announce the release of its unaudited interim financial statements for the period ended 30 June 2019. Extracts from these statements are enclosed below.

In accordance with AIM Rule 20, the Company confirms that a copy of this interim report is available on the Company's website www.qannasinvestments.com

For further information please contact:

   Qannas Investments Limited             Tel: 01534 844 806 

Nadia Trehiou

   ADCM Ltd. (Investment Manager)     Tel: +971 2 639 0099 

Mustafa Kheriba

   finnCap Ltd                                        Tel: 020 7220 0500 

Henrik Persson/James Thompson (Corporate Finance)

 
 QANNAS INVESTMENTS LIMITED              1. 
 GENERAL INFORMATION 
 
 FOR THE HALF YEARED 30 JUNE 2019 
======================================  === 
 
 
 DIRECTORS                              PRINCIPAL BANKERS 
 Christopher Ward (Chairman)            First Abu Dhabi Bank 
                                        Main Branch 
 Richard John Stobart Prosser           P.O. Box 6316 
                                        Abu Dhabi 
 Mustafa Kheriba                        United Arab Emirates 
 
 
 COMPANY NUMBER                         REGISTRAR 
 CT 286543 (registered in Cayman        Link Asset Services (Jersey) Limited 
  Islands) 
                                        12 Castle Street 
                                        St Helier 
 COMPANY SECRETARY                      Jersey JE2 3RT 
 Walkers Corporate Limited              Channel Islands 
 Cayman Corporate Centre 
 George Town 
 Grand Cayman KY1-9008                  NOMINATED ADVISOR 
 Cayman Islands                         finnCap Ltd 
                                        60 New Broad Street 
                                        London EC2M 1JJ 
 REGISTERED OFFICE                      England 
 Cayman Corporate Centre 
 27 Hospital Road 
 George Town                            NOMINATED BROKER 
 Grand Cayman KY1-9008                  finnCap Ltd 
 Cayman Islands                         60 New Broad Street 
                                        London EC2M 1JJ 
                                        England 
 ADMINISTRATOR 
 Estera Fund Administrators (Jersey) 
  Limited 
 13-14 Esplanade                        LEGAL ADVISORS 
 St Helier                              Appleby 
 Jersey JE1 1EE                         13-14 Esplanade 
 Channel Islands                        St Helier 
                                        Jersey JE1 1BD 
                                        Channel Islands 
 AUDITOR 
 Deloitte LLP                           Herbert Smith Freehills LLP 
 Regency Court                          Exchange House 
 Glategny Esplanade                     Primrose Street 
 GY1 3HW                                London EC2A 2HS 
 Guernsey                               England 
 Channel Islands 
                                        Walkers (Dubai) LLP 
                                        Level 14, Burj Daman 
 INVESTMENT MANAGER                     Dubai International Financial Centre 
 ADCM Ltd ("ADCM")                      P.O. Box 506513 
 Codan Trust Company (Cayman) Limited   Dubai 
 Cricket Square, Hutchins Drive,        United Arab Emirates 
  P.O. Box 2681 
 George Town, Grand Cayman KY1-1111 
 Cayman Islands 
                                        COMPANY WEBSITE 
                                        www.qannasinvestments.com 
 
 
 
 
 QANNAS INVESTMENTS LIMITED              2. 
 CHAIRMAN'S REPORT 
 
 FOR THE HALF YEARED 30 JUNE 2019 
======================================  === 
 

It is with great pleasure that I present my report on the performance of Qannas Investments Limited ("QIL" or the "Company") for the first half of the year 2019, and I am pleased to announce that QIL has successfully taken a significant step in the direction of executing its new investment strategy.

Following negotiations during Q2-2019, QIL has entered into conditional agreements to acquire a portfolio of assets of approximately AED 1.5bn (approximately $417m) and accompanying liabilities of AED 1.1bn (approximately $298m) at a NAV of AED 440 million (approximately $120m) ("Portfolio"). The Portfolio constitutes of GCC listed equities from sectors such as insurance, real estate and maritime shipping services along with some other assets. Due to the nature of the transaction, which is classified as a reverse takeover, QIL shares have been temporarily suspended from trading, pending completion of this transaction and the announcement and publication of an admission document.

Details of the Company's new investment and disposals during the period are contained in the Investment Manager's report, and proceeds of the sales were partly used to pay down $7.5m of debt, leaving an outstanding amount of $10m as at 30 June 2019. QIL's NAV has remained stable at $0.61 per share during H1 2019.

The Board and the investment manager will continuously update the shareholders on the ongoing transaction. As QIL continues to evolve and deliver value to shareholders by adapting to the dynamic global environment, I would like to thank shareholders, the board of directors, service providers, and the investment manager for their continued support.

 
 QANNAS INVESTMENTS LIMITED              3. 
 INVESTMENT MANAGER'S REPORT 
 
 FOR THE HALF YEARED 30 JUNE 2019 
======================================  === 
 

ADCM Ltd. ("ADCM"), the investment manager of QIL, is pleased to present the Investment Manager's report for H1-2019.

Summary

During H1-2019, QIL continued to focus on its investment strategy by investing in high-yield debt instruments and realising proceeds from its investments, whilst adhering to its scheduled debt obligations. During the period, QIL utilised the cash proceeds of $11 million from IFG, $3.6m from Project JODC and $0.3 million from ADCM SPEF distributions towards the following:

                --      $3.5 million in new investments with a yield of 8.5% per annum 
                --      $7.5 million repayment of debt 
                --      $0.5 million in interest and other expenses 

During H1-2019, QIL's NAV has been stable at around $0.61 per share.

Exits in H1 2019

During H1-2019, QIL exited the following investments:

-- Project JODC: QIL has exited its full investment in JODC in Q1-2019 realizing $3.6 million in sales proceeds and, generating an exit IRR of 9.85% (in USD) over the investment period

New Investments in H1 2019

During H1-2019, QIL made the following investments:

                  --      Project Ronin: QIL subscribed to a 5 year Term Investment Certificate worth $3.5m issued by an SPV to acquire an equity interest in a prime real estate luxury hotel in Bahrain at a profit rate of 8.5% p.a. and with a bullet repayment at maturity 

Activities post H1-2019

After the adoption of new investment strategy in FY 2018, QIL has entered into conditional agreements for a reverse takeover to acquire a substantial portfolio of assets of approximately AED 1.5bn (approximately $417m) and accompanying liabilities of AED 1.1bn (approximately $298m) at a NAV of AED 440 million (approximately $120m) ("Portfolio") from a consortium of third-party vendors, in line with its new investment strategy.

The Portfolio includes shareholdings in publicly traded GCC-focused companies, in sectors such as real estate, maritime shipping services and insurance. Further Portfolio assets include two plots of land that have been zoned for commercial or residential development and units of an open-ended fund that QIL is currently invested in.

 
 QANNAS INVESTMENTS LIMITED                 4. 
 INVESTMENT MANAGER'S REPORT - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================  === 
 

Net Asset Value ("NAV") Summary

As of 30 June 2019, QIL's NAV is $36.2 million or $0.61 per share, including cash of $3 million.

 
 Net Asset Value Summary           In $, m 
===========================  ============= 
  Investments                   30-June-19 
 Goldilocks                          $10.3 
 Project Three                        $9.8 
 Project Integration                  $8.0 
 Project Palace                       $6.1 
 Project Adriatic (HRC)               $4.0 
 Project Beast (ADCM SPEF)            $3.6 
 Project Ronin                        $3.6 
 Cash                                 $3.0 
 Non-current Liabilities           ($11.7) 
 Other Net-current Assets           ($0.4) 
  NAV                                $36.2 
===========================  ============= 
  Shares Outstanding                  59.5 
  NAV per share                      $0.61 
---------------------------  ------------- 
 

Investments update

Project Adriatic (HRC)

For the period ending August 2019, Hard Rock Café achieved an EBITDA of EUR 110k, significantly higher than last year's EBITDA of EUR 46k for the same period last year.

HRC Sales increased by more than 15% during the period compared to last year, primarily driven by the additional contribution of merchandise sales.

Project Integration

QIL has invested $18.7 million in 2014 to acquire 47% interest in Integrated Financial Group ("IFG"), a UAE-based holding company with two subsidiaries - Integrated Capital and Integrated Securities.

Post the first half of 2017, Shuaa Capital - a leading investment bank in the UAE acquired Integrated Capital and Integrated Securities.

QIL has received $11m received until 30 June 2019. IFG will be distributing the remaining proceeds over a period ending March 2020.

Project Palace

In Q4 2014, QIL made a commitment of GBP11 million (as part of an overall tranche of GBP50 million) in Palace Preferred Partners L.P., an SPV created for the redevelopment of 1 Palace Street ("1PS").

Of the total commitment of GBP11 million, QIL contributed GBP7.3 million in three tranches with an undrawn commitment of GBP3.65 million.

QIL has already exited GBP3.8 million portion of the GBP7.3 million contribution and GBP3.65 million of its undrawn commitment.

 
 QANNAS INVESTMENTS LIMITED                 5. 
 INVESTMENT MANAGER'S REPORT - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================  === 
 

Investments update - continued

Project Goldilocks

In Q1 2016, QIL had made an equity investment of $6.6 million (in two tranches of $5.5 million and $1.1 million) in Goldilocks Fund, an investment fund primarily focused on publicly listed equities in the UAE.

In FY 2017, QIL has redeemed 25% of its interest in the Goldilocks Fund at a redemption value of $5.8 million, generating an IRR of 160%.

Project Three

In December 2018, QIL participated in "Project Three", a consortium debt investment with an annual interest rate of 9.75% in an independent UAE based Investment Firm for AED 34 million (approx. $9.3 million) of an overall loan of AED 250 million (approx. US$68.1 million).

Subsequent to H1-2019, QIL received $0.56 million profit payment from Project Three

Project Ronin

H Hotels & resorts Management (H Hotels) have signed an operation agreement for the development of the 5 star hotel.

Project Beast

In H1-2019, ADCM SPEF received $172k distribution from Havenvest and $17k from Global Opportunistic Fund-I.

 
  NAV of ADCM SPEF (as of 30 June 2019)                          in $'000 
=========================================================  ============== 
  Fund Name                                                Attributed NAV 
---------------------------------------------------------  -------------- 
 TNI Growth Capital Fund, L.P.                                     $1,808 
 Havenvest Private Equity Middle East L.P. ("Havenvest")           $1,404 
 Global Opportunistic Fund II                                        $228 
 Global Opportunistic Fund I                                          $46 
 SPE Qannas B                                                         $32 
 Net Current Assets (Liabilities)                                     $85 
  NAV                                                              $3,604 
 
 
 
 QANNAS INVESTMENTS LIMITED              6. 
 DIRECTORS' REPORT 
 
 FOR THE HALF YEARED 30 JUNE 2019 
======================================  === 
 

The Directors present their interim report and the unaudited interim financial statements of the Company for the half year ended 30 June 2019.

Principal activities

The Company's principal activity is that of investing in listed equities in the GCC region, with a proportion of funds to be allocated in debt instruments and pre-IPO financing. The core philosophy of the Company continues to be value investing with an investment objective to achieve long-term and sustainable attractive returns through a combination of income generation and long-term capital appreciation.

Responsibilities of the Directors

The Directors are responsible for preparing the annual report and financial statements in accordance with International Financial Reporting Standards as endorsed for use in the European Union ("IFRS"). In preparing these financial statements, the Directors are required to:

   --      select suitable accounting policies and then apply them consistently; 
   --      make judgements and estimates that are reasonable and prudent; 

-- specify which generally accepted accounting principles have been followed, subject to any material departures disclosed and explained in the financial statements; and

-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping accounting records which are sufficient to show and explain the Company's transactions and are such as to disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements prepared by the Company comply with the requirements of the Alternative Investment Market listing rules. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors confirm that they have complied with the above requirements.

By order of the board

Director

Date: ...............................................

 
 QANNAS INVESTMENTS LIMITED                       7. 
 STATEMENT OF COMPREHENSIVE INCOME - UNAUDITED 
 
 FOR THE HALF YEARED 30 JUNE 2019 
===============================================  === 
 
 
                                                        01.01.2019    01.01.2018    01.01.2018 
                                                                to            to            to 
                                               Notes    30.06.2019    30.06.2018    31.12.2018 
                                                                 $             $             $ 
 Income 
 Movement in management and performance 
  fee rebate receivable                         15          26,729       481,337       383,667 
 Interest income on loans receivable            5          651,158       457,124       785,568 
 Realised gain on disposal of investments       4           24,767             -             - 
 Realised gain on repayment of 
  loans receivable                              5                -             -       701,855 
                                                           702,654       938,461     1,871,090 
 Expenditure 
 Secretarial and administration 
  fees                                                   (110,516)      (80,333)     (153,480) 
 Directors' remuneration                        3         (28,955)      (43,678)      (67,068) 
 Insurance expense                                         (3,335)       (3,684)       (6,870) 
 Investment manager fees                       15        (349,959)     (466,952)     (646,663) 
 Movement in performance fees                  15        (340,801)     (109,389)       504,074 
 Legal and professional fees                              (79,936)      (87,173)     (174,210) 
 Audit fees                                               (29,909)      (65,371)     (116,605) 
 Sundry expenses                                           (3,402)       (3,833)       (6,447) 
 Bank charges                                              (1,194)         (785)       (1,999) 
 Realised loss on disposal of investments       4                -     (734,314)     (734,314) 
                                                         (948,007)   (1,595,512)   (1,403,582) 
                                                      ------------  ------------  ------------ 
 
 Net (loss) / profit                                     (245,353)     (657,051)       467,508 
 
 Net movement on changes in fair 
  value of investments                          4          812,766       637,829     (620,589) 
 Net movement on changes in fair 
  value of loans receivable                     5                -     (333,113)     (521,481) 
 
 Impairment losses arising on loan 
  interest receivable                           6         (77,637)      (71,271)     (147,538) 
 
 Finance costs 
 Loan interest payable                                   (547,237)     (679,032)   (1,421,795) 
 (Loss) on foreign exchange                                (1,018)      (37,538)      (27,928) 
 
 Finance income 
 Interest income - cash and cash 
  equivalents                                               34,264           788        54,730 
 (Loss) for the period before taxation                    (24,215)   (1,139,388)   (2,217,093) 
 
 Taxation provision for the period             13                -             -             - 
                                                      ------------  ------------  ------------ 
 (Loss) for the period after taxation                     (24,215)   (1,139,388)   (2,217,093) 
 
 Other comprehensive income                                      -             -             - 
 Total comprehensive (loss) for 
  the period                                              (24,215)   (1,139,388)   (2,217,093) 
                                                      ============  ============  ============ 
 
 Earnings / (loss) per share 
 Basic and diluted EPS on (loss) 
  for the period                               12             0.00        (0.02)        (0.04) 
                                                      ============  ============  ============ 
 

The notes on pages 11 to 29 form part of these unaudited financial statements

 
 QANNAS INVESTMENTS LIMITED                     8. 
 STATEMENT OF FINANCIAL POSITION - UNAUDITED 
 
 AS AT 30 JUNE 2019 
=============================================  === 
 
 
                                                30.06.2019     30.06.2018     31.12.2018 
                                      Notes              $              $              $ 
 Assets 
 Non-current assets 
 Investments at fair value 
 through profit and loss                4       17,822,572     28,397,786     28,536,890 
 Loans receivable at fair value 
 through profit and loss                5       16,465,277      3,713,576    12,965,277 
 Total non-current assets                       34,287,849     32,111,362     41,502,167 
                                             -------------  -------------  ------------- 
 
 Current assets 
 Investments at fair value 
 through profit and loss                4        9,139,404     10,598,520     12,449,911 
 Loans receivable at fair value 
 through profit and loss                5                -     12,956,158              - 
 Trade and other receivables            6        1,988,581      2,342,416      1,348,687 
 Cash and cash equivalents              7        3,044,858      2,303,956        256,920 
                                             -------------  -------------  ------------- 
 Total current assets                           14,172,843     28,201,050     14,055,518 
 
 Total assets                                   48,460,692     60,312,412     55,557,685 
                                             =============  =============  ============= 
 
 Equity and liabilities 
 Equity 
 Management shares                     10                2              2              2 
 Participating shares                  10       59,605,907     59,799,019     59,605,907 
 Retained earnings                     11     (23,370,565)   (22,268,645)   (23,346,350) 
                                             -------------  -------------  ------------- 
 Total equity                                   36,235,344     37,530,376     36,259,559 
                                             -------------  -------------  ------------- 
 
 Liabilities 
 Current liabilities 
 Trade and other payables               8        1,959,746        992,839      1,860,702 
 Loans payable                          9        9,977,133     10,000,000     17,427,652 
                                             -------------  -------------  ------------- 
 Total current liabilities                      11,936,879     10,992,839     19,288,354 
                                             -------------  -------------  ------------- 
 
 Non-current liabilities 
 Trade and other payables               8          288,469      1,997,994          9,772 
 Loans payable                          9                -      9,791,203              - 
                                             -------------  -------------  ------------- 
                                                   288,469     11,789,197          9,772 
 
 Total liabilities and equity                   48,460,692     60,312,412     55,557,685 
                                             =============  =============  ============= 
 
 Net asset value per participating 
  share                                              $0.61          $0.63          $0.61 
                                             =============  =============  ============= 
 

The notes on pages 11 to 29 form part of these unaudited financial statements

The financial statements were approved and authorised for issue by the Board of Directors of Qannas Investments Limited and signed on their behalf by:

........................................ ........................................

   Director                                                                        Date 
 
 QANNAS INVESTMENTS LIMITED                    9. 
 STATEMENT OF CHANGES IN EQUITY - UNAUDITED 
 
 FOR THE HALF YEARED 30 JUNE 2019 
============================================  === 
 
 
                              Management       Participating       Retained 
                               share capital   share capital       earnings         Total 
                                           $               $              $             $ 
 
 At 1 January 2018                         2      59,799,019   (21,129,257)    38,669,764 
 
 Total comprehensive loss                  -               -    (1,139,388)   (1,139,388) 
 
 At 30 June 2018                           2      59,799,019   (22,268,645)    37,530,376 
                              --------------  --------------  -------------  ------------ 
 
 
 At 1 July 2018                            2      59,799,019   (22,268,645)    37,530,376 
 
 Purchase of participating 
  shares                                   -       (193,112)              -     (193,112) 
 
 Total comprehensive loss                  -               -    (1,077,705)   (1,077,705) 
 
 At 31 December 2018                       2      59,605,907   (23,346,350)    36,259,559 
                              --------------  --------------  -------------  ------------ 
 
 
 At 1 January 2019                         2      59,605,907   (23,346,350)    36,259,559 
 
 Total comprehensive loss                  -               -       (24,215)      (24,215) 
 
 At 30 June 2019                           2      59,605,907   (23,370,565)    36,235,314 
                              ==============  ==============  =============  ============ 
 

The notes on pages 11 to 29 form part of these unaudited financial statements

 
 QANNAS INVESTMENTS LIMITED              10. 
 STATEMENT OF CASH FLOWS - UNAUDITED 
 
 FOR THE HALF YEARED 30 JUNE 2019 
======================================  ==== 
 
 
                                               01.01.2019    01.01.2018    01.01.2018 
                                                       to            to            to 
                                               30.06.2019    30.06.2018    31.12.2018 
                                                        $             $             $ 
 
 Operating activities 
 (Loss) for the period before taxation           (24,215)   (1,139,388)   (2,217,093) 
 Net movement on changes in fair 
  value of investments                          (812,766)     (637,829)       620,589 
 Realised (gain) / loss on disposal 
  of investments                                 (24,767)       734,314       734,314 
 Realised gain on repayment of loans 
  receivable                                            -             -     (701,855) 
 Interest income                                (685,422)     (457,912)     (840,298) 
 Loan interest payable                            547,237       679,032     1,421,795 
 Net movement on changes in fair 
  value of loans receivable                             -       333,113       521,481 
 Impairment losses arising on loan 
  interest receivable                              77,637        71,271       147,538 
 Loss on foreign exchange                           1,018        37,538        27,928 
 (Increase)/decrease in trade and 
  other receivables                              (33,340)     (194,981)        70,441 
 (Decrease) / increase in trade 
  and other payables                              377,741      (21,044)   (1,030,112) 
                                             ------------  ------------ 
 Net cash flow from operating activities        (576,877)     (595,886)   (1,245,272) 
                                             ------------  ------------  ------------ 
 
 Investing activities 
 Interest received - cash and cash 
  equivalents                                         236           786        54,730 
 Interest received - loans receivable                   -             -     1,524,534 
 Issue of loans receivable                    (3,500,000)             -   (9,251,701) 
 Repayment of loans receivable                          -             -    12,950,230 
 Purchase of investments                                -             -   (3,500,000) 
 Proceeds from disposal of investments         14,597,584     3,298,636     3,298,636 
 Capital distributions received 
  from investments                                264,774             -       251,087 
                                             ------------  ------------ 
 Net cash flow from investing activities       11,362,594     3,299,422     5,327,516 
                                             ------------  ------------  ------------ 
 
 Financing activities 
 Repayment of bank loan                       (7,500,000)   (5,500,000)   (8,000,000) 
 Loan interest paid                             (497,756)     (616,409)   (1,334,015) 
 Repurchase of own participating 
  shares                                                -             -     (193,112) 
                                             ------------  ------------ 
 Net cash flow from financing activities      (7,997,756)   (6,116,409)   (9,527,127) 
                                             ------------  ------------  ------------ 
 
 Net increase / (decrease) in cash 
  and cash equivalents                          2,787,961   (3,412,873)   (5,444,883) 
 
 Effect of foreign exchange movements                (23)         1,116      (13,910) 
 
 Cash and cash equivalents brought 
  forward                                         256,920     5,715,713     5,715,713 
 
 Cash and cash equivalents carried 
  forward                                       3,044,858     2,303,956       256,920 
                                             ============  ============  ============ 
 

The notes on pages 11 to 29 form part of these unaudited financial statements

 
 QANNAS INVESTMENTS LIMITED                     11. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=============================================  ==== 
 
   1.         GENERAL INFORMATION 

The Company is an exempt closed-end investment company listed on London's Alternative Investment Market ("AIM"), with an unlimited life, incorporated in the Cayman Islands. The registered office of the Company is Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman, KY1-9008, Cayman Islands.

The Company's principal activity is that of investing in listed equities in the GCC region, with a proportion of funds to be allocated in debt instruments and pre-IPO financing. The core philosophy of the Company continues to be value investing with an investment objective to achieve long-term and sustainable attractive returns through a combination of income generation and long-term capital appreciation.

The information presented within these unaudited interim financial statements (the 'financial statements') is in compliance with International Accounting standard ('IAS') 34 'Interim Financial Reporting'. This requires the use of certain accounting estimates and requires that management exercise judgement in the process of applying the Company's accounting policies. The areas involving a high degree of judgement or complexity, or areas where the assumptions and estimates are significant to the interim financial statements are disclosed below in note 2.

   2.         SIGNIFICANT ACCOUNTING POLICIES 

Basis of preparation

The financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments and investments which are included at fair value, and in accordance with applicable International Financial Reporting Standards as endorsed for use in the European Union ("IFRS") and, where applicable, takes guidance from the Association of Investment Companies Statement of Recommended Practice ("AIC SORP"). The principal accounting policies are set out below.

Non consolidation

The company fulfils the definition of an investment entity under IFRS 10 ("Consolidated Financial Statements") and as a result does not consolidate investments in subsidiaries but instead measures its investment at fair value through profit and loss. It also carries its loans receivable at fair value through profit and loss. IFRS 10 defines an investment entity as one that obtains funds from investors for the purpose of providing investors with investment management services, commits to its investors that its purpose is to invest funds solely for returns from capital appreciation, investment income or both and measures and evaluates the performance of substantially all its investments on a fair value basis. The Company considers it meets the definition on the basis it has more than one investment, has more than one investor, including investors that are not related parties and has ownership interests in the form of equity or other similar interests.

Basis of measurement

Financial assets

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

   a)      Classification of financial assets 

Financial assets that are considered to be part of the Company's core investment operations are held at fair value through profit and loss as they are measured on a fair value basis.

Other financial assets that are not part of the core investment operations are measured at amortised cost so long as the below criteria is met:

-- The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

-- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

By default, all other financial assets are subsequently measured at FVTPL.

 
 QANNAS INVESTMENTS LIMITED                                 12. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   2.     SIGNIFICANT ACCOUNTING POLICIES - continued 

Basis of measurement - continued

Financial assets

   (i)    Amortised cost and effective interest method 

At initial recognition financial assets are measured at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. The amortised cost of a financial asset is the financial amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised costs of a financial asset before adjusting for any loss allowance.

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset. For financial assets that have subsequently become credit impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset.

For purchased or originated credit impaired financial assets, the Company recognises interest income by applying the credit adjusted effective interest rate to the amortised cost of the financial asset from initial recognition. The calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently improves so that the financial asset is no longer credit impaired.

Interest income is recognised in profit and loss and is included in the 'interest income' line item.

   (ii)   Financial assets at fair value through profit and loss 

Financial assets that are considered part of the Company's investment operations or do not meet the criteria for being measured at amortised cost (see (i) above) are measured at FVTPL with any fair value gains or losses recognised in profit and loss to the extent they are not part of a designated hedging relationship. The net gain or loss recognised in profit and loss includes any dividend or interest earned on the financial assets. Fair value is determined in the manner described as follows:

Investments are recognised and de-recognised on the trade date; the date on which the Company commits to purchase or sell an investment. Investments are initially recognised at cost. Transaction costs are expensed as incurred in the Statement of Comprehensive Income. Investments are de-recognised when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership.

Subsequent to initial recognition, investments are measured at their fair value. Gains and losses arising from changes in the fair value are presented in the Statement of Comprehensive Income in the period in which they arise.

Dividend income is recognised in the Statement of Comprehensive Income when the Company's right to receive payments is established.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value of financial assets and liabilities traded in active markets (such as publicly traded securities) are based on quoted market prices at the close of trading on the reporting date. The Company utilises the last traded market price for both financial assets and financial liabilities where the last traded price falls within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Directors will determine the point within the bid-ask spread that is most representative of fair value.

 
 QANNAS INVESTMENTS LIMITED                                 13. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 

2. SIGNIFICANT ACCOUNTING POLICIES - continued

Basis of measurement - continued

Financial assets

   (ii)   Financial assets at fair value through profit and loss - continued 

The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation techniques. The Company uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Valuation techniques used include the use of comparable recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity-specific inputs.

The Company's investments in underlying funds are ordinarily valued using the values (whether final or estimated) as advised to the Investment Manager by the managers, general partners or administrators of the relevant underlying fund. The valuation date of such investments may not always be coterminous with the valuation dates of the Company and in such cases the valuation of the investments as at the last valuation date is used. The net asset value reported by the administrator may be unaudited and, in some cases, the notified asset values are based upon estimates. The Company or the Investment Manager may depart from this policy where it is considered such valuation is inappropriate and may, at its discretion, permit any other method of valuation to be used if it considers that such method of valuation better reflects value generally or in particular markets or market conditions and is in accordance with good accounting practice. In the event that a price or valuation estimate accepted by the Company or by the Investment Manager in relation to an underlying fund subsequently proves to be incorrect or varies from the final published price by an immaterial amount, no retrospective adjustment to any previously announced Net Asset Value or Net Asset Value per Share will be made.

   b)      Impairment of financial assets 

The Company always recognises lifetime expected credit losses for trade receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Company's historical credit loss experience, adjusted for any factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

Cash and cash equivalents

Cash and cash equivalents comprises deposits held on call with banks.

Trade and other receivables

Trade and other receivables are initially recognised at fair value and subsequently carried at amortised cost; their carrying values are a reasonable approximation of fair value.

Trade receivables include the contractual amounts for the settlement of trades and other obligations due to the Company.

Financial liabilities

All financial liabilities are subsequently measured at amortised cost using the effective interest method.

Trade and other payables

Trade and other payables are initially recognised at fair value and subsequently carried at amortised cost; their carrying values are a reasonable approximation of fair value.

Trade and other payables represent contractual amounts and obligations due by the Company.

 
 QANNAS INVESTMENTS LIMITED                                 14. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 

2. SIGNIFICANT ACCOUNTING POLICIES - continued

Basis of measurement - continued

Financial liabilities - continued

Loans payable

Loans payable are measured initially at cost. Subsequent to initial recognition, they are measured at amortised cost using the effective interest rate method. These financial liabilities are recognised when the Company enters into a loan agreement and are de-recognised when the loan agreement is terminated.

The effective interest rate method is a method of calculating the amortised cost of a financial liability and of allocating the interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts over the expected life of the financial instrument, in order that the present value of the future cash flows, including fees or transaction costs, is equal to the carrying amount of the financial instrument.

Finance costs associated with loans payable have been spread on an effective interest rate constant basis over the life of the loan.

Functional and presentational currency

The performance of the Company is measured and reported to the investors in US dollars. The Board of Directors considers the US dollar as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The financial statements are presented in US dollars, which is the Company's functional and presentation currency.

Use of estimates and judgements

The preparation of the financial statements in conformity with IFRS and applicable law requires the Directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates with the most significant effects on the carrying amounts of the assets and liabilities in the financial statements are outlined below:

(i) Valuation of unquoted investments - The fair value of these is determined via valuation techniques. For further details of the judgements and assumptions made see note 4.

(ii) Valuation of loans receivable - Loans receivable are held at fair value through profit and loss. The fair value is determined via valuation techniques. For further details of the investments and assumptions made see note 5.

(iii) Classification as an investment entity - The Directors have reviewed the definition of an investment entity and are satisfied the Company qualifies as such and hence does not consolidate.

Foreign currencies

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign currency assets and liabilities are translated into the functional currency using the exchange rate prevailing at the Statement of Financial Position date.

Foreign exchange gains and losses arising from translation are included in the Statement of Comprehensive Income. Foreign exchange gains and losses relating to cash and cash equivalents are presented in the Statement of Comprehensive Income. Foreign exchange gains and losses relating to the financial assets and liabilities carried at fair value through profit and loss are presented in the Statement of Comprehensive Income within 'net movement on changes in fair value of investments' or 'net movement on changes in fair value of loans receivable'.

 
 QANNAS INVESTMENTS LIMITED                                 15. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   2.      SIGNIFICANT ACCOUNTING POLICIES - continued 

Shares in issue

Management Shares are not redeemable, do not participate in the net income or dividends of the Company and are recorded at $1.00 per share.

Participating shares in issue are not redeemable at the shareholder's option.

Participating shares which are acquired by the Company are recognised at cost and deducted from equity. No gain or loss is recognised in the Statement of Comprehensive Income on the purchase, sale, issue or cancellation of the Company's own equity instruments.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable in the normal course of business. The Company recognises revenue when the amount of revenue can be reliably measured and when it is probable that the future economic benefits will flow into the Company.

Taxation

The Company is tax resident in Jersey, on the basis that board meetings and strategic decisions are undertaken in Jersey. Provision has been made in these financial statements for Jersey income tax at the rate of 0%.

Expenditure and transaction costs

All items of expenditure, including the performance and management fees, are recognised on an accruals basis.

The Company receives rebates for performance and management fees in respect of certain investments. These are included in the Statement of Comprehensive Income on an accrual basis.

Distributions payable

The payment of dividends will depend on the availability of distributable reserves, cash resources and the working capital requirements of the Company. Dividends paid are included in the Company financial statements in the period in which the related dividends are declared.

Going concern

The Directors, after making due enquiries, continue to adopt the going concern basis in preparing the financial statements which assumes that the Company will continue in operation for the foreseeable future. The Company is in the process of realising existing investments in an orderly fashion. As disclosed in note 9, the Company is due to repay $10,000,000 of loans payable during the next 6 months. These repayments will be financed by way of existing cash reserves and the continued realisation of the Company's investments.

Segmental reporting

The Company is operated as one segment by the Board of Directors (which is considered to be the Chief Operating Decision Maker).

Operating segments are reported in a manner consistent with the internal reporting used by the Chief Operating Decision Maker. The Board of Directors is responsible for allocating resources and assessing performance of the operating segments.

The Directors make the strategic resource allocations on behalf of the Company. The Company has determined the operating segments based on the reports reviewed by the Board of Directors, which are used to make strategic decisions.

The Board of Directors is responsible for the Company's entire portfolio. The Board of Directors asset allocation decisions are based on a single, integrated investment strategy, and the Company's performance is evaluated on an overall basis.

The Company trades in a diversified portfolio of securities with the objective of generating value for shareholders.

The internal reporting provided to the Board of Directors for the Company's assets, liabilities and performance is prepared on a consistent basis with the measurement and recognition principles of IFRS.

There were no changes in the reportable segments during the period

 
 QANNAS INVESTMENTS LIMITED                                 16. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   3.      DIRECTORS' REMUNERATION AND INTERESTS 

The remuneration of the individual Directors who served in the half year to 30 June 2019 was:

 
                                  01.01.2019    01.01.2018    01.01.2018 
                                          to            to            to 
                                  30.06.2019    30.06.2018    31.12.2018 
                                           $             $             $ 
 
 Richard John Stobart Prosser         12,722        13,289        26,876 
 Christopher Ward                     16,233        16,432        32,416 
 Richard Green                             -        13,957         7,776 
 Mustafa Kheriba                           -             -             - 
                                ------------  ------------ 
                                      28,955        43,678        67,068 
                                ============  ============  ============ 
 

Directors' interests in the shares of the Company, including family interest, at 30 June 2019 were:

 
                     Share            Nominal   % Held 
 
                     Participating 
 Christopher Ward     shares          100,000    0.17% 
 Richard Prosser     Participating        Nil      Nil 
                      shares 
                     Participating 
 Mustafa Kheriba      shares          461,153    0.77% 
 
 
 QANNAS INVESTMENTS LIMITED                                 17. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   4.     INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS 
 
                                            01.01.2019    01.01.2018     01.01.2018 
                                                    to            to             to 
                                            30.06.2019    30.06.2018     31.12.2018 
                                                     $             $              $ 
 
 Fair value brought forward                 40,986,801    42,391,427     42,391,427 
 Additions                                           -             -      3,500,000 
 Disposals                                (14,597,584)   (3,298,636)    (3,298,636) 
 Realised (losses) / gains                      24,767     (734,314)      (734,314) 
 Capital distributions                       (264,774)             -      (251,087) 
 Net movement on changes in fair 
  value of investments                         812,766       637,829      (620,589) 
                                         -------------  ------------ 
 Fair value carried forward                 26,961,976    38,996,306     40,986,801 
                                         =============  ============  ============= 
 
 Investments comprise:                      30.06.2019    30.06.2018     31.12.2018 
                                            Fair value    Fair value     Fair value 
                                                     $             $              $ 
 Non-current assets 
 ADCM Secondary Private 
  Equity Fund L.P. ("ADCM 
  SPEF")                                     3,478,632     4,160,834      3,579,885 
 SPE Qannas C Limited                                -             -              - 
 EE F&B Holding Limited                        326,917             1        326,917 
 Palace Preferred Partners 
  L.P.                                       6,063,015     5,210,255      5,661,520 
 Integrated Financial 
  Group, LLC                                 7,954,008    19,026,696     18,968,568 
                                         ------------- 
                                            17,822,572    28,397,786     28,536,890 
                                         -------------  ------------  ------------- 
 Current assets 
 Goldilocks Fund                             9,139,404    10,598,520      8,896,152 
 Jabal Omar Development Sukuk 9.85% 
  15-Nov-2023                                        -             -      3,553,759 
                                             9,139,404    10,598,520     12,449,911 
                                         -------------  ------------  ------------- 
 Total                                      26,961,976    38,996,306     40,986,801 
                                         =============  ============  ============= 
 

The investments in Goldilocks Fund and Jabal Omark Development Sukuk are classified as current assets as on each respective reporting date it is anticipated they will be disposed of within the short term.

In 2017, the Company elected to write down the holdings by ADCM SPEF and SPE Qannas C Limited in Abraaj exposed funds to $nil. This followed the Investment Manager's observations that it will be challenging to find a willing buyer for the holdings in Abraaj due to uncertainty over the General Partner and the funds' underlying assets. Furthermore, as these funds are in liquidation phase, and as there is no further incentive for the General Partner, the Investment Manager believes that the liquidation of underlying assets could be at a steep discount and could take significant time to realise. The Investment Manager considers the position is unchanged at 30 June 2019.

 
 QANNAS INVESTMENTS LIMITED                                 18. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   4.         INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS - continued 

The fair values of the investments are based on the latest available net asset value reports and / or financial information available of the underlying companies.

 
 Investments at 30 June 2019 comprise: 
                                  Class of         No. of   Percentage           Book 
                                    shares         shares      holding           Cost 
                                                     held 
                                                                                    $ 
 
 SPE Qannas C Limited             Preference     8,039,559        74.3%      7,930,886 
 ADCM Secondary Private 
  Equity Fund L.P.                         -             -        96.5%     17,760,697 
 EE F&B Holding Limited             Ordinary         1,000         100%      1,006,904 
 Palace Preferred Partners 
  L.P.                                     -             -         7.1%      3,460,840 
 Goldilocks Investment 
  Company Limited                      Units     3,541,004           4%      4,094,938 
 Integrated Financial 
  Group, LLC                        Ordinary        73,908        47.4%      7,648,119 
                                                                           41,902,384 
                                                                        ============= 
 

During the half year ended 30 June 2019, the Company undertook the following disposals: -

-- The Company exited a portion of its holding of Integrated Financial Group LLC, generating proceeds of $11,019,058;

-- The Company disposed of its investment in Jabal Omar Development, generating proceeds of $3,578,526, generating a gain on disposal of $24,767; and

-- The Company received capital distributions amounting to $264,774 from ADCM Secondary Private Equity Fund L.P.

The loan due to First Abu Dhabi Bank PJSC is secured by way of a charge over the Company's investment in ADCM Secondary Private Equity Fund L.P., SPE Qannas C Limited, Palace Preferred Partners L.P., EE F&B Holding Limited and Integrated Financial Group LLC. See note 9 for further details, including covenants.

   5.     LOANS RECEIVABLE 
 
                                          01.01.2019    01.01.2018     01.01.2018 
                                                  to            to             to 
                                          30.06.2019    30.06.2018     31.12.2018 
                                                   $             $              $ 
 
 Brought forward                          12,965,277    16,824,208     16,824,208 
 Additions                                 3,500,000             -      9,251,701 
 Loan interest capitalised / (repaid)              -       178,639      (340,776) 
 Repayments                                        -             -   (12,950,230) 
 Gain on repayment                                 -             -        701,855 
 Net movement on changes in fair 
  value of loans receivable                        -     (333,113)      (521,481) 
                                        ------------  ------------ 
 Carried forward                          16,465,277    16,669,734     12,965,277 
                                        ============  ============  ============= 
 

At 30 June 2019, $nil of the above loans were due for repayment within 12 months, and have been classified as current assets (30 June 2018: $12,956,158).

 
 QANNAS INVESTMENTS LIMITED                                 19. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 

5. LOANS RECEIVABLE - continued

At 30 June 2019, loans receivable comprise: -

 
                            Interest      Maturity        Carrying     Carrying 
                                rate          date           value        value 
                                                               CCY            $ 
 
 EE F&B Holding Limited           4%   Not defined    EUR3,480,170    3,713,576 
 Horizon Harbour SPV 
  Limited TIC                   8.5%          2024   USD 3,500,000    3,500,000 
 Kepler Lending Co. 
  Limited                      9.75%          2021   AED34,000,000    9,251,701 
                                                                     16,465,277 
                                                                    =========== 
 

Loan interest in respect of the above loans totalling $651,158 (half year ended 30 June 2018: $457,124; year ended 31 December 2018 $785,568) is included in the Statement of Comprehensive Income for the period.

During the period to 30 June 2019, a new loan was issued to Horizon Harbour SPV Limited TIC.

   6.     TRADE AND OTHER RECEIVABLES 
 
                                        30.06.2019   30.06.2018   31.12.2018 
                                                 $            $            $ 
 
 Current 
 Sundry debtors                                 34           34           34 
 Management fee rebate receivable 
  (note 15)                                550,942      533,096      392,045 
 Performance fee rebate receivable 
  (note 15)                                747,966    1,005,456      880,134 
 Loan interest and income receivable       671,701      793,454       65,147 
 Prepayments                                17,938       10,376       11,327 
                                       -----------  ----------- 
                                         1,988,581    2,342,416    1,348,687 
                                       ===========  ===========  =========== 
 

The performance fee rebate receivable will become due at the time of completion of the liquidation of the funds of Goldilocks Investment Company Limited.

An impairment loss in the amount of $77,637 (half year ended 30 June 2018: $71,271; year ended 31 December 2018: $147,538) was recognised in the period in respect of loan interest receivable from EE F&B Holding Limited as the Directors have concerns over the recoverability of the interest.

The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

 
 QANNAS INVESTMENTS LIMITED                                 20. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   7.         CASH AND CASH EQUIVALENTS 
 
                                         30.06.2019   30.06.2018   31.12.2018 
                                                  $            $            $ 
 
 First Abu Dhabi Bank                       242,315      803,956      256,920 
 Royal Bank of Scotland International             -    1,500,000            - 
 SHUAA Capital psc                           77,747            -            - 
 Gulf Finance Corporation                 2,724,796            -            - 
                                          3,044,858    2,303,956      256,920 
                                        ===========  ===========  =========== 
 

In April 2019, the Company made a short-term AED10 million deposit with Gulf Finance Corporation, generating an interest rate of 6% per annum.

   8.         TRADE AND OTHER PAYABLES 
 
                                    30.06.2019   30.06.2018   31.12.2018 
                                             $            $            $ 
 Non-current 
 Performance fees                      288,469    1,997,994        9,772 
                                   ===========  ===========  =========== 
 
 Current 
 Secretarial, administration and 
  accountancy fees                     110,335       82,391       36,288 
 Director fees                          20,307       40,523       13,968 
 Investment manager fees               349,959      700,428      349,959 
 Performance fees                    1,436,863            -    1,374,759 
 Legal and professional fees             8,802        8,889       27,100 
 Audit fees                             31,725       46,405       57,106 
 Sundry expenses                         1,754        2,910        1,521 
 Loan interest payable                       -      112,292            - 
 Participating shares                        1            1            1 
                                   -----------  -----------  ----------- 
                                     1,959,746      992,839    1,860,702 
                                   ===========  ===========  =========== 
 

The performance fee payable has been allocated between current and non-current in line with the classification of the respective investment / loan to which it relates.

The Directors consider that the carrying amount of trade and other payables approximate to their fair value.

   9.         LOANS PAYABLE 
 
                                  01.01.2019    01.01.2018    01.01.2018 
                                          to            to            to 
                                  30.06.2019    30.06.2018    31.12.2018 
                                           $             $             $ 
  Loan Capital 
  Brought forward                 17,500,000    25,500,000    25,500,000 
  Repayments in the period       (7,500,000)   (5,500,000)   (8,000,000) 
                                ------------  ------------  ------------ 
  Carried forward                 10,000,000    20,000,000    17,500,000 
 
  Issue Costs 
  Brought forward                   (72,348)     (296,056)     (296,056) 
  Amortised during the period         49,481        87,259       223,708 
                                ------------  ------------  ------------ 
                                    (22,867)     (208,797)      (72,348) 
                                ------------  ------------ 
                                   9,977,133    19,791,203    17,427,652 
                                ============  ============  ============ 
  QANNAS INVESTMENTS LIMITED                                                21. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
========================================================================  ===== 
 
 
   9.         LOANS PAYABLE - continued 

The Company has a loan facility with First Abu Dhabi Bank which bears interest at the rate of LIBOR + 3.5% per annum and is repayable in quarterly instalments, with the final instalment due on 31 December 2019.

The loan is secured by way of a pledge with First Abu Dhabi Bank in respect of the receivable accounts held by the Company and by way of a charge over the Company's investments in ADCM Second Private Equity Fund L.P., SPE Qannas C Limited, Palace Preferred Partners L.P. and Integrated Financial Group LLC.

The loan is measured at its net proceeds with the issue costs being spread at a constant rate using the effective interest rate over the life of the loan.

   10.       SHARE CAPITAL 
 
                                              30.06.2019       30.06.2018       31.12.2018 
 Management shares                                     $                $                $ 
 
 Authorised: 
 2 ordinary non-participating shares 
  of no par value                                      2                2                2 
                                         ===============  ===============  =============== 
 
                                                       $                $                $ 
 Issued and fully paid: 
 2 shares of $1 each                                   2                2                2 
                                         ===============  ===============  =============== 
 
 Participating shares 
 
 Authorised: 
 Unlimited participating shares                        -                -                - 
  of no par value 
                                         ===============  ===============  =============== 
 
 Issued and fully paid: 
 79,331,354 participating shares 
  of 
 no par value at various issue 
  prices                                      76,638,587       76,638,587       76,638,587 
                                         ===============  ===============  =============== 
 
 Treasury shares: 
 19,820,779 (30 June 2018: 19,391,642; 
  31 December 2018: 19,820,779) 
  participating shares of no par 
  value redeemed at various prices          (17,032,680)     (16,839,568)     (17,032,680) 
                                         ===============  ===============  =============== 
 

In addition to the above, the Company has two further share classes - redeemable 'B' and redeemable 'C'. Both of these share classes have an unlimited number of participating shares of no par value authorised for issue. At 30 June 2019, 30 June 2018 and 31 December 2018 no redeemable 'B' shares and redeemable 'C' shares were in issue.

Management shares

The Management Shares carry no right to receive any dividends, whether by way of finance costs, return of capital or otherwise, other than the return (on a winding up) of the issue price paid on such shares, are non-redeemable and are recorded at $1.00 per share.

Participating shares

Participating Shares carry the right to receive a dividend out of the income of the Company in such amounts and at such times that the Directors shall determine, and to receive a dividend on a return of capital of the assets of the Company on a winding up, in proportion to the number of shares held. Participating shares in issue are redeemable at the option of the Company.

 
 QANNAS INVESTMENTS LIMITED                                 22. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   10.       SHARE CAPITAL - continued 

Participating Shares

During the year ended 31 December 2018, the Company repurchased 429,137 participating shares at a price of $0.45 per share. These shares are held as treasury shares and as such are not entitled to any dividends paid or rights to vote at meetings of the Company.

B Shares

This class of share has no rights to receive dividends, to receive notice of or vote at general meetings of the Company or to receive amounts available for distribution on a winding up, for the purpose of a reorganisation or otherwise or upon any distribution of capital.

C Shares

The Directors are authorised to issue C Shares of different classes which are convertible into Participating Shares. If the shares were converted into Participating Shares, then these shares would rank equal to, and hold the same rights attaching to, Participating Shares currently in issue at the date of conversion.

This class of share will be entitled to receive such dividends as the Directors may resolve to pay to such shares out of the assets attributable to this class of share. This class of share carries no right to attend or vote at any general meeting of the Company. The capital and assets of the Company on a winding up or on a return of capital attributable to this class of share shall be divided amongst the shareholders of this class of share according to their holding.

   11.       RETAINED EARNINGS - UNREALISED AND REALISED SPLIT 

Retained earnings at 30 June 2019 comprise the following revenue items, split between realised and unrealised income: -

 
                                          Unrealised       Realised          Total 
                                                   $              $              $ 
 Balance at 1 January 2019              (12,082,866)   (11,263,484)   (23,346,350) 
 Movement in rebate income                    26,729              -         26,729 
 Realised gain on disposal of 
  investments                                      -         24,767         24,767 
 Interest income - loans receivable                -        651,158        651,158 
 Expenditure                                       -      (948,007)      (948,007) 
 Net gains and losses on fair 
  value of investments                       812,766              -        812,766 
 Loan interest payable                             -      (547,237)      (547,237) 
 Loss on foreign exchange                          -        (1,018)        (1,018) 
 Interest income - cash and cash 
  equivalents                                      -         34,264         34,264 
 Impairment of loan interest 
  receivable                                       -       (77,637)       (77,637) 
                                       -------------  -------------  ------------- 
 Balance at 30 June 2019                (11,243,371)   (12,127,194)   (23,370,565) 
                                       =============  =============  ============= 
 

The retained earnings are distributable to the investors at the discretion of the Directors if, in their opinion, the profits of the Company justify such payments. The Directors consider the future requirements of the Company when making such distributions. There are currently no restrictions on distributions for the company save for prior notification of any distribution to being provided to First Abu Dhabi Bank.

 
 QANNAS INVESTMENTS LIMITED                                 23. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   12.       EARNINGS / (LOSS) PER SHARE 

Earnings / (loss) per share is calculated by dividing the loss attributable to the participating shareholders of the Company by the weighted average number of participating shares in issue during the period, excluding the average number of participating shares purchased by the Company and held as treasury shares.

 
                                               30.06.19      30.06.18      31.12.18 
 
 Total profit / (loss) for the period 
  after taxation ($)                           (24,215)   (1,139,388)   (2,217,093) 
 Weighted average number of participating 
  shares in issue                            59,510,575    59,939,712    59,859,767 
 Basic and diluted earnings per 
  share ($ per share)                              0.00        (0.02)        (0.04) 
 

The Company has not issued any shares or other instruments that are considered to have dilutive potential and hence basic and diluted earnings per share are the same.

   13.       TAXATION 

The Company is tax resident in Jersey, on the basis that board meetings and strategic decisions are undertaken in Jersey. Provision has been made in these financial statements for Jersey income tax at the rate of 0%.

   14.     DISTRIBUTIONS 

Distributions of $nil (half year ended 30 June 2018: $nil; year ended 31 December 2018: $nil) were paid during the period.

   15.       INVESTMENT MANAGER AND PERFORMANCE FEES 

The Investment Manager is entitled to a quarterly management fee equal to 0.4375% of the net asset value of the company at each quarter end (being 31 March, 30 June, 30 September and 31 December). $349,959 was recognised during the period (half year to 30 June 2018: $466,952; year to 31 December 2018: $646,663).

In addition to the management fee, the Investment Manager is entitled to a fee based upon the performance of the investments (the "Performance Fee"). The movement in the performance fee payable in the half year was $340,801 (half year to 30 June 2018: $109,389; year ended 31 December 2018: $(504,074)). The calculation for this fee changed in 2014 following the acquisition of interests in ADCM SPEF and SPE Qannas C Limited.

Performance Fee calculation to 27 March 2014

Up until 27 March 2014, the Performance Fee was payable once the Company had made aggregate distributions in cash to the shareholders, in accordance with the following methodology:

The Company firstly had to make distributions to shareholders equivalent to:

   i)              their gross share subscription price paid (the "contributed capital"); and 

ii) a premium of "simple" interest of 7% per annum on the contributed capital (the "preferred return").

 
 QANNAS INVESTMENTS LIMITED                                 24. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   15.       INVESTMENT MANAGER AND PERFORMANCE FEES - continued 

When the thresholds had been met then:

i) on the event of any further cash distributions to shareholders the Investment Manager was entitled to an equal amount until they have received payments which in total are equivalent to 20% of the amounts distributed to the shareholders in excess of the contributed capital.

ii) when the 20% has been achieved, the Investment Manager is entitled to 20% of any further cash distributions.

The above calculation was replaced by a new method of calculation that was applied from 27 March 2014.

Performance Fee calculation since 27 March 2014

Under the new method of calculation, the Investment Manager is entitled to be paid a performance fee in respect of each asset in the Company's portfolio from time to time.

On the disposal by the Company of the whole or part of its interest in any Asset, the Investment Manager shall be entitled to a Performance Fee equal to 15 percent of the amount by which the net disposal proceeds (after deducting the costs incurred and any taxes payable in connection with such disposal) together with the net proceeds of any previous disposal of interests in such Asset (together, the "Total Proceeds") are greater than the cost (including any fees and expenses) of acquiring the Asset (the "Acquisition Cost").

For the unquoted investments of ADCM SPEF and SPE Qannas C Limited, acquired in March 2014, each of their underlying fund investments will be considered as separate Assets. As such the Acquisition Cost in respect of each underlying fund investment shall be deemed to be such proportion of the ADCM SPEF and SPE Qannas C Limited consideration (after being adjusted for the net receivables from ADCM SPEF and SPE Qannas C Limited investors (on an individual basis)) as is attributable to such ADCM SPEF and SPE Qannas C Limited Assets. Similarly, the date of acquisition of any ADCM SPEF and SPE Qannas C Limited asset shall be deemed to be the effective date of 27 March 2014 relating to ADCM SPEF and SPE Qannas C Limited.

Any Performance Fee payable by the Company to the Investment Manager shall be reduced to the extent required to ensure that, in respect of the Asset to which the Performance Fee relates, an amount equal to a simple 7 per cent per annum return on the Acquisition Cost of such Asset from the date of its acquisition to the date on which the Total Proceeds first exceed the Acquisition Cost has been retained by the Company before the payment of any Performance Fee to the Investment Manager.

Any Performance Fee payable by the Company to the Investment Manager shall be paid to the Investment Manager within 10 days of the receipt by the Company of the relevant disposal proceeds.

As a result of the above-mentioned change in Performance Fee structure, the Performance Fee accrual was reduced by $1,149,109.69 during 2014. The Investment Manager also returned 1,197,945 participating shares for an aggregate price of $1 which were issued under original agreement to the Investment Manager in lieu of management fee before 27 March 2014.

Rebates

In order to prevent the double-charging of Management and Performance Fees, ADCM Ltd (in its capacity as Investment Manager to ADCM SPEF) and ADCM SPEF GP Limited (in its capacity as general partner of ADCM SPEF) entered into an agreement with the Company, such that they shall rebate to the Company any Management Fee or Performance Fee that they receive from ADCM SPEF, which is attributable to the Company's percentage ownership of ADCM SPEF.

In order to prevent the double-charging of Performance Fees, ADCM Ltd (in its capacity as Investment Manager to SPE Qannas C Limited) entered into an agreement with the Company, such that they shall rebate to the Company any Performance Fee that they receive from SPE Qannas C Limited.

 
 QANNAS INVESTMENTS LIMITED                                 25. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   15.       INVESTMENT MANAGER AND PERFORMANCE FEES - continued 

The timing of receipt of the Performance Fee rebate is uncertain and is dependent on the realisation of the underlying investments held by ADCM SPEF and SPE Qannas C Limited. As such, the Performance Fee rebate has been classified as a non-current asset within the Statement of Financial Position.

The Company has accrued Management Fee rebate income in respect of ADCM SPEF of $169,444 at 30 June 2019 (30 June 2018: $349,004 and 31 December 2018: $120,859). The Company has accrued Performance Fee rebate income in respect of ADCM SPEF and SPE Qannas C Ltd of $nil at 30 June 2019 (30 June 2018: $nil and 31 December 2018: $Nil). These are settled when investments are sold and are based on the fair value gains realised on the disposal.

Abu Dhabi Financial Group, the investment manager of Goldilocks Fund, provide a rebate to the company in respect of Management and Performance Fees it charges to Goldilocks Fund. At 30 June 2019, $381,498 (30 June 2018: $184,092 and 31 December 2018: $271,186) was due in respect of Management Fees and $747,966 (30 June 2018: $1,005,456 and 31 December 2018: $880,134) in respect of Performance Fees. These are included in trade and other receivables and are considered a current asset, in line with the investment itself.

A reconciliation of the rebate recognised in the statement of comprehensive income can be seen below:

 
                                   01.01.2019   01.01.2018   01.01.2018 
                                           To           to           to 
                                   30.06.2019   30.06.2018   31.12.2018 
                                            $            $            $ 
 
 Opening performance fee rebate 
  receivable                        (880,134)    (931,903)    (931,903) 
 Opening management fee rebate 
  receivable                        (392,045)    (404,229)    (404,229) 
 Management fee rebate received 
  in the period                             -      278,917      447,620 
 Closing performance fee rebate 
  receivable (note 6)                 747,966    1,005,456      880,134 
 Closing management fee rebate 
  receivable (note 6)                 550,942      533,096      392,045 
                                  -----------  ----------- 
                                       26,729      481,337      383,667 
                                  ===========  ===========  =========== 
 
   16.       FINANCIAL RISK MANAGEMENT 

The Company's activities expose it to a variety of financial risks: market risk (including price risk, interest rate risk and foreign currency risk), credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.

The management of these risks is performed by the Board of Directors. The policies for managing each of these risks are summarised below.

Management of market risk

Price risk

The Company is exposed to market price risk in respect of its portfolio of investments via equity securities price risk. The risk arises from investments held by the Company for which prices in the future are uncertain. Where non-monetary financial instruments are denominated in currencies other than the US dollar, the price initially expressed in foreign currency and then converted into US dollar will also fluctuate because of changes in foreign exchange rates (further details on the foreign exchange risk can be seen later in this note).

The Company mitigates price risk by having established investment appraisal processes and asset monitoring procedures which are subject to overall review by the board. The Company also manages the risk by appropriate diversification of its assets.

Details of the Company's financial assets are given in notes 4, 5, 6 and 7.

 
 QANNAS INVESTMENTS LIMITED                                 26. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   16.       FINANCIAL RISK MANAGEMENT - continued 

Interest rate risk

The Company's interest rate risk principally arises from borrowings in the form of the loan payable (see note 9) and receivables in the form of loans receivable (see note 5).

The Company relies on receipt of investment income and realised gains on investments to meet interest obligations due on the loan payable. The loan payable bears interest at 3.5% plus US LIBOR. The board has, in consultation with the Investment Manager, reviewed the terms of the loan and are satisfied that the risk of significant movements in US LIBOR over the term of the loan is low. Through cash flow projections and the structuring of the Company, the Board of Directors believe the Company will have sufficient cash available to meets its obligations as they fall due and therefore, there is no material interest rate risk.

The loans receivable carry fixed rates of interest and so there is no risk arising from movement in interest rates on income receivable by the Company.

Foreign exchange risk

The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures.

Foreign exchange risk is the risk that the fair value of future transactions, recognised monetary and non-monetary assets and liabilities denominated in other currencies fluctuate due to changes in foreign exchange rates. Trade payables are settled within short time periods in order to minimise the fluctuation between expected and actual expenditure.

The Company's investments in financial instruments are valued in US dollars. The Company holds cash deposits denominated in currencies other than US dollars, the functional and presentational currency. Some of the Company's payables are transacted in currencies other than US dollars.

The significant currency assets of the Company are held in AED, USD, GBP and EUR. The Board considers that its exposure to foreign exchange risk is limited. The AED is 'pegged' to USD and the Investment Manager monitors EUR and GBP currency movements and proposes any action deemed appropriate.

Credit risk

For the Company, credit risk arises from cash and cash equivalents and contractual cash flows of debt instruments as well as credit exposures arising on outstanding trade and other receivables.

The maximum exposure to credit risk on the Company's financial assets is represented by their carrying amount, as detailed in notes 5 to 7.

Cash and cash equivalents

The company seeks to limit the level of credit risk on the cash balances by only depositing surplus liquid funds with counterparty banks with high credit ratings (at least A grade in accordance with Fitch). The company does not hold any derivative financial instruments.

Trade and other receivables

The Company applies the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade and other receivables.

To measure the expected credit losses, trade and other receivables have been grouped based on shared credit risk characteristics and the days past due.

Trade and other receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a counterparty to engage in a repayment plan with the Company, and a failure to make contractual payments in a reasonable time frame.

Impairment losses on trade and other receivables are presented as impairment within loss for the period. Subsequent recoveries of amounts previously written off are credited against the same line item.

 
 QANNAS INVESTMENTS LIMITED                                 27. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   16.       FINANCIAL RISK MANAGEMENT - continued 

Credit risk - continued

Loans receivable

The company mitigates credit risk on loans receivable by only entering into agreements which have sufficient security held against the loans or where the operating strength of the counterparty is considered sufficient to support the amounts outstanding.

Credit risk is determined on initial recognition of each loan and re-assessed at each reporting date. The risk assessment is undertaken by the Investment Manager.

The Board of Directors reviews the position of the counterparty prior to entering into any loan arrangement and the Investment Manager provides subsequent quarterly updates. The Investment Manager's review includes review of financial information in respect of the counterparty. Further disclosure in respect of loans receivable and relevant collateral can be seen in note 5. The Investment Manager is responsible for evaluating and proposing loan proposals, as well as monitoring their recoverability and taking any action on any doubtful amounts.

Loans receivable are held at fair value through profit and loss and the above factors are considered when assessing the period end fair value.

Other assets

The credit risk associated with trading and portfolio investments is considered minimal.

Further, Goldilocks Investment Company Limited is managed by ADCM Altus. The Investment Manager's review includes review of external ratings where available, and financial information in respect of the counterparty. Further disclosure in respect of Goldilocks Fund can be seen in note 4.

The company does not consider that any changes in fair value of financial assets in the period to be attributable to credit risk.

Liquidity risk

The Company seeks to manage liquidity risk to ensure that sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The Company deems there is sufficient liquidity for the foreseeable future. The Company has a strong relationship with various financial institutions and has utilised these relationships to borrow funds when necessary. The Board of Directors is comfortable that the Company has sufficient resources to meet the requirements of the Company.

During 2014 the Company entered into a facility for $30 million from First Abu Dhabi Bank, which is repaid quarterly. This repayment will be financed by way of existing cash reserves and the continued realisation of the Company's investments. The Company, as at June 2019, currently has $3,044,858 in cash and cash equivalents in order to meet its $10m loan repayments. In Q3 and Q4 of 2019, the Company intends to realise its investments in IFG, PPP and ADCM SPEF and the Directors are confident that the realisation of these investments will be sufficient to repay the balance of the bank loan by December 2019. Whilst the investments in PPP and ADCM SPEF are illiquid, the investment in IFG is considered liquid with the distributions controlled by the parent company of the Company Investment Manager acting as manager to IFG. Should the projected realisations not occur in the timeframes expected, the Company will look to liquidate a further element of its holding in Goldilocks Investment Company Limited.

Capital risk management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders.

The capital of the Company is represented by the share capital of the Company. The Company has sufficient assets to cover the Company's liabilities at the Statement of Financial Position date and for the foreseeable future. As such the Company had $36,235,344 of capital at 30 June 2019, 30 June 2018: $37,530,376 and 31 December 2018: $36,259,559.

To maintain or adjust the capital structure, the Company may propose dividend payment to the shareholders, buy back shares or issue new shares.

 
 QANNAS INVESTMENTS LIMITED                                 28. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   16.       FINANCIAL RISK MANAGEMENT - continued 

Concentration risk

The Company aims to mitigate concentration risk through investing in companies that operate in a variety of different markets.

   17.       RELATED PARTY TRANSACTIONS 

Richard John Stobart Prosser, a Director of the Company, is also an officer of Estera Fund Administrators (Jersey) Limited, which acts as administrator. Secretarial and administration fees incurred by the Company with Estera Fund Administrator (Jersey) Limited for the half year ended 30 June 2019 were $110,516 (half year ended 30 June 2018: $80,333; year ended 31 December 2018: $182,121), of which $110,335 was outstanding at 30 June 2019 (30 June 2018: $82,391; 31 December 2018: $43,282).

ADCM Ltd, the Investment Manager, owns 2 (30 June 2018: 2; 31 December 2018: 2) management shares in the Company.

Richard John Stobart Prosser, a Director of the Company, is also a director of Palace Investors Holdings Limited and Mustafa Kheriba, a Director of the Company, is also a director of Palace Real Estate Partners GP Ltd. The Company has an investment of $6,063,015 in Palace Preferred Partners LP at 30 June 2019 (30 June 2018: $5,210,255; 31 December 2018: $5,661,520) which hold shares indirectly in Palace Investors Holdings Limited and of which Palace Real Estate Partners GP is the general partner.

Mustafa Kheriba, a Director of the Company, is also a director of SPE Qannas C Limited. The Company has an investment of $nil at 30 June 2019 (30 June 2018: $nil; 31 December 2018: $nil) in SPE Qannas C Limited.

Mustafa Kheriba, a Director of the Company, is also a director of ADCM SPEF GP Ltd. ADCM SPEF GP Ltd is the general partner of ADCM SPEF, an investment of the Company. As at 30 June 2019 this was held at fair value of $3,478,632 (30 June 2018: $4,160,834; 31 December 2018: $3,579,885). Dividends totalling $nil were received from ADCM SPEF during the half year (half year ended 30 June 2018: $nil; year ended 31 December 2018: $nil).

Mustafa Kheriba, a Director of the Company, is also a director of EE F&B Holding Limited. The Company has loan of $3,713,576 at 30 June 2019 (30 June 2018: $3,713,576; 31 December 2018: $3,713,576) and an investment of $326,917 (30 June 2018: $1; 31 December 2018: $326,917) in EE F&B Holding Limited. Accrued interest of $78,632 (half year ended 30 June 2018: $83,087; year ended 31 December 2018: $117,989) was receivable from EE F&B Holding Limited during the period of which $nil (30 June 2018: $nil; 31 December 2018: $nil) remained outstanding at the period end.

The loans receivable from Integrated Eastern European Fund, Lucice Montenegro d.o.o. and Arqutino EAD (the "IEEF") which were repaid during the year ended 31 December 2018 (30 June 2018: $5,538,089; 31 December 2018: $3,359,451), were arranged by Integrated Alternative Finance ("IAF"), a wholly owned subsidiary of Abu Dhabi Financial Group (which is the ultimate parent company of ADCM Ltd, the Company's Investment Manager) and regulated by the Dubai Financial Services Authority. Interest of $253,654 (half year ended 30 June 2018: $179,639; year ended 31 December 2018: $253,654) was recognised in the Statement of Comprehensive Income of the Company in respect of loans to IEEF.

The Company operated an investment account with IC in the period, and originally invested $6,539,918 (AED 24 million) shown as an investment in Goldilocks Fund in note 4. Further, the company is entitled to management fee and performance fee rebates as detailed in note 15. Abu Dhabi Financial Group, LLC ("ADFG") charges 1.5% management fee and 15% performance fee on Goldilocks through its wholly owned subsidiary, ADCM Altus.

Integrated Capital owned 787,408 participating shares in the Company as at (30 June 2018: 787,408 and 31 December 2018: 787,408).

 
 QANNAS INVESTMENTS LIMITED                                 29. 
 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued 
 
 FOR THE HALF YEARED 30 JUNE 2019 
=========================================================  ==== 
 
   17.       RELATED PARTY TRANSACTIONS - continued 

Shuaa Capital acted as arranger and placement agent for an AED 500 million issuance of JODC sukuk in exchange for a fee. Mustafa Kheriba, a Director of the Company, is also a board member of Shuaa Capital. ADFG, the ultimate controlling party of the Company's Investment Manager, has a shareholding in Shuaa Capital.

ADFG, the ultimate controlling shareholder of the Company's Investment Manager, has a 10% shareholding in Integrated Financial Group, LLC. At 30 June 2018, the Company's investment in Integrated Financial Group, LLC was carried at $7,954,008 (30 June 2018: $19,026,696; 31 December 2018: $18,968,568).

The Company redeemed its loan with Capital Hotel d.o.o. during the year ended 31 December 2018, resulting in the receipt of proceeds of $9,931,555 in 2018 and $839,545 of accrued interest.

ADFG owned 11,283,125 participating shares in the Company as at 30 June 2019 (30 June 2018:11,283,125 and 31 December 2018: 11,283,125).

   18.       IMMEDIATE HOLDING COMPANY AND ULTIMATE CONTROLLING PARTY 

In the Directors' opinion there is no controlling or ultimate controlling party.

   19.       EVENTS AFTER THE REPORTING PERIOD 

On 9 July 2019, ADFG acquired a further 33,081,771 participating shares in the Company at a price of $0.63 per share. As a result, ADFG's total direct and indirect interest in participating shares of the Company has increased to 45,152,304, representing 75.87% percent of the voting rights. ADCM Ltd, the Investment Manager, is a wholly owned subsidiary of ADFG.

On 3 September 2019, the Company entered into conditional agreements to acquire a substantial portfolio of attractive investment assets (the "Portfolio") from a consortium of third-party vendors (the "Transaction"). The Portfolio includes shareholdings in a number of publicly traded GCC-focused companies, in sectors such as real estate, maritime shipping services and insurance. Further Portfolio assets include two plots of land that have been zoned for commercial or residential development and units of an open-ended fund that the Company is currently invested in. The Transaction (which remains subject to change, due diligence and market adjustments) attributes a value to the Portfolio of approximately AED 1.5bn (approximately $417m), representing a compelling discount to the market value of the Portfolio as at 31 July 2019 of approximately AED 2.2bn (approximately $600m). The Company will also assume accompanying liabilities of approximately AED 1.1bn (approximately $298m). The Company estimates that it will issue approximately 196 million new ordinary shares of no-par value ("New Qannas Shares") in consideration for the Portfolio, dependent inter alia on the Company's net asset value as of 31 July 2019. The Transaction, therefore, presents the Company with the opportunity to acquire a Portfolio with an estimated net asset value implied by the Transaction of approximately AED 440 million (approximately $120m) on highly attractive terms. The Transaction and subsequent balance of assets across the Company is consistent with the Company's investment strategy and policy. The Transaction is to be implemented by way of a transfer of the legal and/or beneficial interests in the Portfolio and the accompanying liabilities to one or more special purpose vehicles to be established in the UAE by or on behalf of the consortium of third-party vendors. The consortium of third-party vendors will thereafter procure the transfer of the holding companies to Qannas Investments Limited and/or a nominee appointed by the Company, and the Company will issue the New Qannas Shares to the consortium of third-party vendors pro rata to their respective beneficial interest in and to the Portfolio. Details of the Implementation Agreements with regard to the Transaction and certain associated related party transactions are set out in the announcement make to the market on 3 September 2019. The Company will in due course propose certain resolutions to be approved by shareholders with regard to the Transaction and will make further

announcements in due course.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

IR LLFVLAAIRFIA

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