Final Results

RNS Number : 5898Y

Epicure Qatar Equity Opportunities

07 September 2009

 

7 September 2009

Epicure Qatar Equity Opportunities Plc

Annual Results for the year ended 30 June 2009

Epicure Qatar Equity Opportunities Plc ('EQEO' or 'the Company'), the AIM listed fund established to capitalise on attractive investment opportunities in Qatar and the Gulf Cooperation Council (GCC) region announces its annual results for the year ended 30 June 2009.

Highlights

• Qatar's strong economic fundamentals are underpinned by an increase in LNG exports 

• A fall in regional inflation allows the government of Qatar to focus on growth

• Qatar's real GDP is forecast to grow by more than 6% in 2009

• Share buybacks and other measures being employed to reduce EQEO's discount to net asset value

• Publication of Investing Policy

Financial highlights 

• Net asset value (NAV) at 30 June 2009 of $180.1 million or $0.75 per share

• Loss after tax of $151.6 million resulting from lower portfolio valuations

• Basic loss per share of 62.14 cents

Holdings as of 30 June 2009

• Portfolio of 27 investments in quoted companies in the Gulf, of which 22 in Qatar  

• The top 5 investments constitute 52.6% of the NAV of the Company 

• Substantially invested in the banking and financial sector at 42% of NAV 

David von Simson, chairman of EQEO, commented: 'Since the launch of the Company, it has been possible to observe a close correlation between the crude oil price and the performance of the Doha stock market. This has been characterised by a rise in the first half of calendar 2008, a precipitous fall in the second, and a sustained recovery in the course of this year, which still leaves us, of course, well below the level of 30th June 2008.

The recent increase in oil prices is expected to accelerate the region's economic recovery. Since the date of these results, there have been further increases in net asset value. While the global outlook remains uncertain, we believe Qatar remains an attractive environment for investment'.

For further information

Epicure Qatar Equity Opportunities plc - +41 (0) (22) 908 1190  Leonard O'Brien
Milbourne - [phone] Tim Draper	Panmure Gordon - [phone]  Richard Gray   Andrew Potts

Chairman's Statement

I am pleased to present your Company's Report and Accounts for the year ended 30 June 2009. 

Results

We currently have a portfolio of 27 investments in quoted companies in the Gulf, with 22 of them being in Qatar, a further four investments in UAE and one in Kuwait.

Since the launch of the Company, it has been possible to observe a close correlation between the crude oil price and the performance of the Doha stock market. This has been characterised by a rise in the first half of calendar 2008, a precipitous fall in the second, and a sustained recovery in the course of this year, which still leaves us some way short of the starting point in January 2008 and, of course, well below the level of 30 June 2008.

Results for the year to 30 June 2009, therefore, showed a loss after tax of US$152.1 million, resulting from realised losses and fair value changes as a result of lower portfolio valuations of US$157.8m and equating to a basic loss per share of 62.31 cents. The net asset value at 30 June 2009 was US$180.1 million, which translates into a net asset value per share of US$0.76, based on 235,828,952 ordinary shares in issue as at that date. 

Dividend

The Company's stated objective remains the achievement of capital growth. The Board is therefore not recommending a final dividend, in accordance with the policy set forth in the admission document. As stated below, the Board intends to open a dialogue with significant shareholders to ascertain whether the dividend policy should be amended to conform to current investor preferences for yield.

Outlook

The recent rise in oil prices is expected to accelerate the region's economic recovery. Since the date of these results, there have been further increases in net asset value, which is published weekly. Whilst the global outlook remains uncertain, we believe Qatar remains an attractive environment for investment for the reasons detailed in the Investment Adviser and Manager's report. Moreover, current developments have not been without their positive aspects, such as the significant reductions in inflation in the local Gulf economies.

Discount to Net Asset Value

The Board takes extremely seriously its responsibility to manage and reduce the discount to net asset value, which has been noticeable at the Company in common with almost all closed-ended funds. A number of measures have been and will continue to be taken.

Firstly, the Board sought court approval to cancel its share premium reserve in late 2008. Using the most obvious weapon in its armoury, the Company first waited until all forced sellers had exited as the difficult economic environment forced some investors to sell their positions to meet their own redemptions in the early part of this year, before taking advantage of the discount to NAV that the shares were trading at, by purchasing 11,698,571 of its ordinary shares at an average price of US$0.38, all of which was accretive to NAV per share. The purchased shares have been cancelled on acquisition. There are however limits to what this policy of share buybacks, which the Board expects to continue in the current year, can achieve on its own, in view of the interruptions caused by closed periods, and the tendency of large holders to 'top slice' their holdings. 

In the meantime, other steps will therefore be pursued. The Board has already moved trading in the Company's shares to SETS in order to benefit from more liquid and transparent prices. In the course of the coming months, the Company will also be reviewing the desirability of moving to the main market of the London Stock Exchange. It may, in the light of changed investor preferences, be desirable to instigate a changed dividend policy, resulting in regular distributions. Finally, we look forward to a day when the Doha market is included in wider emerging market indices.

David Von Simson

Chairman

4 September 2009

Report of the Investment Manager and Investment Adviser

REGIONAL EQUITY MARKET OVERVIEW

During the year ended 30 June 2009 the Qatar Exchange, formerly named the Doha Securities Market (DSM), witnessed volatility in line with the international market and global sentiment. During this period the DSM 20 index saw a high of 12,230 in the first week of July 2008 and a low of 4,195 in the first week of March 2009. However we were pleased to see the market bottoming out in March 2009 and have a positive quarter ending June 30 2009. During the last quarter the DSM index returned 32.8% ending the fourth quarter at 6,492 compared to 4,887 at the end of the third quarter. 

Indices	30-Jun-08	30-Jun-09	Change
Qatar (DSM)	11,864	6,492	-45.3%
Saudi (TASI)	9,352	5,596	-40.2%
Dubai (DFMGI)	5,444	1,784	-67.2%
Abu Dhabi (ADI)	4,954	2,631	-46.9%
Kuwait (KWSE)	15,456	8,080	-47.7%
Bahrain (BAX)	2,859	1,582	-44.7%
Oman (MSI)	11,323	5,612	-50.4%

During the period the global financial downturn impacted all the GCC markets including Saudi, Kuwait, Dubai, Abu Dhabi, Bahrain and Oman. At the end of June 30 2009 capitalisation of the Qatar Exchange stood at QR270.2 billion compared to QR494.1 billion at the end of June 30 2008. 

Indices	30-Sep-08	31-Dec-08	31-Mar-09	30-Jun-09	YTD
Qatar (DSM)	-21.5%	-26.1%	-29.0%	32.8%	-5.7%
Saudi (TASI)	-20.2%	-35.6%	-2.1%	19.0%	16.5%
Dubai (DFMGI)	-24.2%	-60.4%	-4.1%	13.8%	9.1%
Abu Dhabi (ADI)	-20.1%	-39.6%	4.1%	5.8%	10.1%
Kuwait (KWSE)	-16.9%	-39.4%	-13.3%	19.8%	3.8%
Bahrain (BAX)	-13.9%	-26.7%	-11.5%	-0.9%	-12.3%
Oman (MSI)	-25.0%	-35.9%	-14.9%	21.2%	3.1%

Source: Qatar Insurance Company, Reuters

We believe that in the medium term the recovery of regional markets will be correlated to that of global markets. 

Macro Update

Despite efforts to diversify economies in the GCC, oil is still the single largest economic driver in the GCC region. The recent increase in oil prices will accelerate recovery in the region's economies, which are already benefiting from an improvement in consumer sentiment. 

Higher oil prices should boost Qatar's fiscal position further given that oil receipts still make up over half of the country's hydrocarbon revenues. Although the general stress on the economy continues, the recovery in the oil price during the second quarter brought relief to the region and may result in Qatar's fiscal balance remaining positive. The Qatari government had forecast a small budget deficit of US$1.6 billion for the fiscal year 2009-10 (starting in April) assuming oil prices averaged US$40/bbl. Oil prices, however, have consistently exceeded the US$50/bbl mark since the beginning of the fiscal year and the general consensus is that the market will average US$70/bbl by Q4 2009.

Further economic relief has come in the form of a fall in inflation in the GCC region. The Qatar Statistics Authority reported that inflation subsided in Q1 2009 with prices actually declining quarter on quarter (q/q) by -6.2%. One of the major components in the CPI index, rents, saw a -11% q/q drop in Q1 2009. Food prices fell by less than two percent. 

Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a graph depicting Quarterly CPI change (%). 

Source: Qatar Statistics Authority, QIC 

The decline in inflation will benefit the Qatari economy as it will make it easier for the authorities to focus on growth. It is, however, worth noting that despite the decline in inflation Qatar is not experiencing the same disinflationary pressures as elsewhere in the region.

Government Actions

During the period Qatar saw more investor-friendly measures from the government. The Qatari government increased its support to the banks' real estate exposure up to a maximum of QR15 billion (US$4.1 billion). The government has implemented a number of measures to shore up liquidity at Qatari banks since the quarter ended December 31 2008, including buying stakes in lenders and purchasing their local equity investment portfolios. The government announced in May 2009 that banks eligible for real estate funding included Qatar National Bank, Qatar's biggest lender, and eight other banks including Commercial Bank of Qatar and Doha Bank. 

Earlier in April 2009, the Prime Minister of Qatar announced that the government has a budget of US$150 billion to spend on local investments until 2012 and is willing to support financial companies and companies outside the banking sector. Allocating US$150 billion over the course of four years means that the government will invest some US$37.5 billion per year. 

Based on 2008 estimates of Qatar's GDP from the IMF, this amount of yearly investment equates to approximately one third of Qatar's GDP. This investment spending is additional to the US$10 billion the country has earmarked for capital spending in its 2009-10 budgets. We feel these investments underpin Qatar's strategy to become a knowledge- based economy and should also help take up most of the slack in the economy, helping Qatar to outperform both on a regional and a global level.

Hydrocarbons and their impact

As we pointed out in the previous Investment Manager's report, the region is expected to experience a difficult year in 2009, with a combination of sharp declines in oil and related product prices, global and regional de-leveraging, unprecedented weakness in global growth and a softening of the real estate sector. Historically, substantial declines in the oil price have been associated with significant contractions in real and nominal GDP. This does not come as a surprise as the GCC economy is predominantly dependent on oil exports. 

Qatar GDP	2007 Q1	2007 Q2	2007 Q3	2007 Q4	2008 Q1	2008 Q2	2008 Q3	2008 Q4	2009 Q1
Oil	15,719	18,020	21,324	25,312	24,862	31,512	30,631	13,159	11,439
Gas	12,909	13,925	15,478	19,624	25,661	29,016	31,790	26,146	17,401
Total GDP	55,209	60,002	66,791	77,409	85,877	96,589	105,366	77,651	70,883

Source: Qatar Insurance Company, Qatar Statistical Authority

The Qatar Statistical Authority released a provisional estimate of Qatar's gross domestic product (GDP) for the first quarter of 2009, measured in current prices, of QR70.9 billion, down 17.5 percent from the revised estimate of QR85.9 billion for the first quarter of 2008. Current price GDP in the first quarter of 2009 was 8.7 percent lower than the fourth quarter of 2008. The main reason for this decrease was the contractionary impacts of the international financial crisis in major export markets and a substantial knock-on effect on demand for Qatar's hydrocarbon related exports. Steep falls in hydrocarbons prices have also dented current price estimates of GDP.

The quarter also reflected the difficult conditions in other areas such as financial services, construction, transport and the wholesale/retail trade. Major construction projects underpinned growth in the construction sector, which recorded a 20.7 percent increase compared to the first quarter of 2008. The underlying trend, however, is for slower growth, with only a 2.9 percent increase recorded over the fourth quarter of 2008. More telling is the figure for government services, which increased by more than 36% year-on-year (81% q/q), strongly suggesting that the authorities are maintaining their liberal fiscal stance, despite weaker oil revenues.

In our view, Qatar remains an attractive macro environment for the following reasons: 

• Qatar's real GDP is expected to grow by more than 6% in 2009.

• Strong economic fundamentals are underpinned by an increase in LNG exports (more stable gas revenues are surpassing oil revenues) 

• Though budgeted revenues (at US$40/bbl) should fall 14% on an annual basis, government expenditure is expected to fall by only 1.5% in 2009, thus providing a strong degree of support to the country's economic activity. Moreover, the oil price is currently higher than the budgeted figures, providing greater comfort to the authorities on spending plans 

• CPI inflation, which reached a high of 17% in Q2 2008, has fallen significantly, recording a 6.2% q/q decline during Q1 2009. Inflation would have been a drag on economic growth and investments

• The long-term nature of LNG contracts means that LNG exports will continue at high levels

In summary, we believe the strength of public finances, an investor-friendly, proactive government, the commitment and willingness to invest, and the long-term nature both of projects underway and of those nearing completion places Qatar advantageously within a global context. 

Company Update

After losing substantial value in the first three quarter of financial year ending June 30 2009, the DSM20 recovered on the back of improved liquidity, better than expected corporate results, strong macro economics and the proactive stance of government that brought confidence to the market. During the fourth quarter of financial year ended June 30 2009, the DSM20 gained 32.8%. As a result of the buoyancy in the market, the Company's NAV also improved to US$0.76 on 30 June 2009 compared to US$0.51 on 5 March 2009.

The Company is invested in 27 companies in the GCC, with 22 of them being in Qatar, four in the UAE, and one in Kuwait. The total market value of investments was $171 million at the end of June 30 2009. At the end of the fourth quarter, the Company reduced its cash holding to 5.6% percent of NAV compared to a cash position of 12.0% at the end of the third quarter of the financial year 2009. A total of US$4.36m was used by the Company during the year to undertake share buy backs.

Corporate Profitability 

The total combined net profit for all companies listed on the Qatar Exchange for the financial year ended June 30 2009 amounted to QR26.8 billion compared to QR27.2 billion year ago, a 1.5% decrease. The drop in net income was mainly attributed to the Insurance and Industries sectors. During the period net income dropped 39.5% and 21.8% respectively for the Insurance and Industries sectors. The Services sector and the Banking sector registered net income growth of 13.8% and 8.3% respectively for this period.

Net profit growth of the Company's top 5 holdings

Top 5 Holdings	LTM 6/30/2008	LTM 6/30/2009	Change
Industries Qatar	7,531.23	5,312.10	-29.47%
Qatar National Bank	3,159.16	3,862.96	22.28%
Qatar Islamic Bank	1,607.37	1,601.64	-0.36%
Commercial bank of Qatar	1,804.77	1,606.59	-10.98%
Rayan Bank	776.07	1,053.40	35.73%

Figures in QR. Million

Source: Qatar Insurance Company, Qatar Exchange

Industry allocation

The Company's largest investments continue to be in the financial services industry, with 42% of the Company's portfolio invested in the banking sector. Although Qatari banks are expected to be impacted by the current slowdown, we believe they are extremely well placed and do not share the liquidity issues that have affected many global banks. 

The Qatari government has historically demonstrated its aim of providing assistance to key sectors and firms, especially those of economic importance. The recent government steps that have already been put in place are also expected to benefit the financial sector. We feel that by replacing the real estate assets of Qatari banks with nearly risk-free assets in the form of cash and government assets, the government's support will be beneficial in many ways:

• The move further improves liquidity, particularly through the injection of cash, but also potentially through tradable government bonds

• A reduction of property loan balances eases the loan to deposit ratio of the banks as the move comes at a time when all banks have been under pressure to fix their adverse loan to deposit ratios

• The move also helps to arrest the impact of increasing non-performing loans, especially with the fall in property values and loan to values ratio increasingly becoming an issue

• The substitution of cash and government securities into the balance sheet strengthens capital ratios

The service sector, which is broadly defined and includes companies in telecommunications and utilities, accounted for 26.6% of the Company's portfolio. The Company's exposure to the real estate sector stood at 6.1% at the end of the June 2009. The industries and insurance sectors accounted for a further 15.9% and 3.8% respectively.

Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a pie chart depicting Industry Allocation (% of mkt value). 

Market Values as of 30 June 2009    Source: Qatar Insurance Company S.A.Q.

Portfolio breakdown - top five holdings as at 30th June 2009

Top Five Holdings

Company	Sector	% of NAV
Industries Qatar	Industrials	14.7%
Qatar National Bank	Banks	11.2%
Qatar Islamic Bank	Banks	9.6%
Commercial Bank of Qatar	Banks	9.6%
Rayan Bank	Banks	7.2%

 Source: Qatar Insurance Company S.A.Q.  

 As at 30 June 2009

The top five investments of the Company constitute 55.4% of the portfolio and 52.3% of NAV at 30 June 2009. 

Industries Qatar (14.7% of NAV)

Formed in 2003 by Qatar Petroleum ('QP'), Industries Qatar ('IQ') has emerged as the largest listed company in Qatar in terms of market capitalization. QP divested its 30% stake in favour of Qatari nationals through an IPO in 2004. It has an index weighting of 13.24% of the DSM20. IQ operates through a diversified portfolio of four subsidiaries operating in petrochemicals, fertilizers, fuel additives & steel. IQ's feedstock advantages, as well as the massive expansion to be undertaken by its subsidiaries, are the key growth drivers.

Qatar National Bank (11.2% of NAV)

Established in 1964 as the country's first commercial bank, it is 50% owned by the government of Qatar. Qatar National Bank ('QNB') is the largest commercial bank in Qatar with assets of QR147.1 billion. QNB also has the largest distribution network of 42 branches and offices in addition to 11 Islamic branches and offices, and more than 149 Automated Teller Machines (ATMs). QNB has the highest credit rating among banks in Qatar from leading rating agencies including Standard & Poor's, Moody's, Fitch, and Capital Intelligence.

Qatar Islamic Bank (9.6% of NAV)

Qatar Islamic Bank (QIB) is the pioneer of Islamic banking in Qatar. It was established in July 1982. Over the years, the bank has evolved into the foremost Islamic bank domestically, and is ranked among the top 15 Islamic banks in the world today. QIB provides commercial banking services in accordance with Islamic principles, including consumer finance, corporate finance and real estate financing, with the housing and consumer finance divisions generating maximum business. QIB operates through 24 branches and 92 ATMs across Qatar. QIB's activities are not limited to Qatar alone. It has recently expanded its presence to the Lebanon, Malaysia, Sudan, Yemen, UK and Bahrain.

Commercial Bank of Qatar (9.6% of NAV)

Established in 1975 as the first wholly owned private commercial bank in Qatar, Commercial Bank of Qatar offers a comprehensive range of corporate, retail and investment services through a network of 23 branches. Commercial Bank of Qatar is the second largest bank in the country with assets of QR59 billion. It holds a 40% stake in National Bank of Oman and a 40% stake in United Arab Bank.

Masraf Al Rayan (7.2% of NAV)

Masraf Al Rayan, also known as Al Rayan Bank, is public-listed bank established in January 2006. The bank's operations and services are Shariah-compliant. The bank currently has a network of four branches, including its head office in Doha. The bank was listed on the Doha Securities Market in June 2006. It also has a full-fledged representative office in Libya and created its investment banking division 'Al Rayan Investment' in April 2007, to cater to this rapidly growing segment in Qatar. The bank became the first Islamic financial institution to get a license to operate within the Qatar Financial Centre. The lender also established the Islamic Industrial Fund in Qatar and the Lusail Waterfront Investment Company with Qatari Diar in the Cayman Islands to enable Qatari and other GCC investors to invest in the fund. 

Holdings as of 30 June 2009

The company has invested in 27 companies (2008: 33 companies) in the GCC, with 22 of them being in Qatar and 5 companies in UAE and Kuwait. The total market value of the investments is US$171.0 (2008: US$327.9m). The top 10 investments constitute 83.8% (2008: 76.5%) of the NAV of the Company. The Company is substantially invested in the banking and financial sector at 44.6% (2008: 38.1%) of the NAV as we continue to believe that regional banks are among the top suited to capture the growth in the regional economies. 

Security name	No. of   Shares	US$'000	Region	Sector
Al-Dar Properties (ALDAR UH)	10,000	10	UAE	Real Estate Estatendustry
First Gulf Bank (FGB DH)	95,000	344	UAE	Banks
Tamweel PJSC (TAMWEEL UH)	100,000	-	UAE	Banks
Union Properties Company (UPP UH)	1,625,096	407	UAE	Real Estate
Global Investment House K.S.C.C. (GLOBAL KK)	341,500	149	KUWAIT	Banks
Al Khaleej Bank (KCBK QD)	889,635	3,907	QATAR	Banks
Barwa Real Estate (BRES QD)	853,881	8,008	QATAR	Real Estate
Commercial Bank of Qatar (CBQK QD)	1,013,809	17,365	QATAR	Banks
Dlala Holdings (DBIS QD)	103,134	464	QATAR	Services
Doha Bank (DHBK QD)	368,669	3,754	QATAR	Banks
Gulf International Services (GISS QD)	730,419	5,353	QATAR	Services
Industries Qatar (IQCD QD)	910,840	26,752	QATAR	Industry
Islamic Financial Security (IFSS QD)	16,023	157	QATAR	Insurance
Masraf Al Rayan (MARK QD)	3,933,661	13,014	QATAR	Bank
National Leasing (NLCS QD)	197,623	780	QATAR	Services
Qatar Electricity and Water Co (QEWS QD)	473,786	12,893	QATAR	Services
Qatar Fuel (QFLS QD)	10,000	463	QATAR	Services
Qatar Gas Transport (QGTS QD)	1,467,768	9,669	QATAR	Services
Qatar Insurance (QATI QD)	403,693	6,529	QATAR	Insurance
Qatar Islamic Bank (QIBK QD)	879,100	17,374	QATAR	Banks
Qatar Islamic Insurance (QISI QD)	25,000	197	QATAR	Insurance
Qatar National Bank (QNBK QD)	617,463	20,321	QATAR	Banks
Qatar National Cement Co (QNCD QD)	97,300	2,083	QATAR	Industry
Qatar Navigation (QNNS QD)	533,022	9,071	QATAR	Services
Qatar Real Estate Invest (QRES QD)	392,272	2,573	QATAR	Real Estate
Qatar Shipping (QSHS QD)	62,790	500	QATAR	Services
Qatar Telecom (QTEL QD)	239,811	8,933	QATAR	Services
Total		171,070

Holdings as of 30 June 2008

Security name	No. of   Shares	US$'000	Region	Sector
Industries Qatar (IQCD)	934,288	46,085	QATAR	Industry
Qatar National Bank (QNBK)	571,934	35,537	QATAR	Banks
Barwa Real Estate (BRES)	1,258,591	29,051	QATAR	Real Estate
Commercial Bank of Qatar (CBQK)	629,097	26,059	QATAR	Banks
Qatar Islamic Bank (QIBK)	596,230	25,591	QATAR	Banks
Masraf Al Rayan (MARK)	3,522,845	21,217	QATAR	Banks
Qatar Insurance (QATI)	340,037	20,757	QATAR	Insurance
Qatar Electricity & Water Co (QEWS)	486,326	20,371	QATAR	Services
Qatar Navigation (QNNS)	444,185	18,496	QATAR	Services
Qatar Telecom (QTEL)	246,024	12,746	QATAR	Services
Qatar Gas Transport (QGTS)	791,834	8,437	QATAR	Services
Al Khaleej Bank (KCBK)	1,736,480	7,808	QATAR	Banks
Emaar Properties Company (EMAAR)	2,210,000	6,526	UAE	Real Estate
Qatar Real Estate Invest (QRES)	287,140	5,196	QATAR	Real Estate
Union Properties Company (UPP)	3,481,893	4,802	UAE	Real Estate
Qatar National Cement Co (QNCD)	109,376	4.692	QATAR	Industry
Emirates National Bank of Dubai (ENDB)	1,409,831	4,605	UAE	Banks
Doha Bank (DHBK)	191,586	4,334	QATAR	Banks
Dlala Holdings (DBIS)	300,084	3,860	QATAR	Services
National Bank of Kuwait (NBK)	539,000	3,689	KUWAIT	Banks
Qatar Shipping (QSHS)	203,748	3,515	QATAR	Services
The Public Warehousing Company (AGLTY)	758,500	3,366	KUWAIT	Services
Burgan Bank (BURG)	652,000	2,403	KUWAIT	Banks
Qatar United Development Company (UDCD)	87,520	1,441	QATAR	Industry
National Leasing (NLCS)	130,000	1,343	QATAR	Services
Global Investment House K.S.C.C. (GLOBAL)	341,500	1,310	KUWAIT	Banks
First Gulf Bank (FGB)	150,000	1,106	UAE	Banks
National Industries Group (NIND)	214,500	1,097	KUWAIT	Industry
Tamweel PJSC (TAMWEEL)	360,000	823	UAE	Services
Qatar Ind/Manufacturing (QIMD)	62,532	801	QATAR	Industry
Qatar Fuel (QFLS)	10,000	532	QATAR	Services
Gulf International Services (GISS)	20,000	252	QATAR	Services
Mobile Telecommunications Company K.S.C (ZAIN)	12,500	75	KUWAIT	Services
Total		327,923

Regional allocation

Currently, the Company is invested in 22 companies in Qatar, four companies in UAE, and one company in Kuwait. As of 30 June 2009, investments outside Qatar constituted 0.50% of the Company's investments by market value. 

Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a pie chart depicting Country Allocation (% of mkt value). 

Market Values as of 30th June 2009    Source: Qatar Insurance Company S.A.Q.

CONCLUSION

Among the GCC markets we hold a bullish view on Qatar. Valuation remains attractive. In addition to this, the DSM20 index remains an overall laggard in the region on a year-to-date basis. This does not reflect the strong economic outlook (real non-oil GDP growth of 6%-7% in 2009) underpinned by sustained high government expenditure. This is reflected in Qatar having the most robust and consistent earnings track record in the Gulf - a feature we expect to stay in place going forward. Performance may well be muted until mid-September (when Ramadan comes to an end), with potential for profit-taking to occur, but we believe Qatar will enjoy a subsequent rally. 

Leonard O'Brien                        Sandeep Nanda

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

Investment Manager                    Investment Adviser

4 September 2009                        4 September 2009

Investing Policy

Investment Objective

The Company's investment objective is to capture, principally through the medium of the Qatar Exchange (formerly the Doha Securities Market ('DSM')), the opportunities for growth offered by the expanding Qatari economy by investing in listed companies or companies soon to be listed. The Company may also invest in listed companies, or pre-IPO companies, in other GCC Countries. 

GCC Countries is defined as countries of the Cooperation Council for the Arab States of the Gulf, and which include Kuwait, Qatar, Oman, the Kingdom of Saudi Arabia, the Kingdom of Bahrain and the United Arab Emirates.

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

Assets or Companies in which the Company can invest

The Company has been established to invest primarily in quoted Qatari equities.

The Company invests in listed companies on the Qatar Exchange (formerly the DSM) in addition to companies soon to be listed.  The Company may also invest in listed companies, or pre-IPO companies, in other GCC Countries. 

It is expected that the Gulf Cooperation Council ('GCC') markets which are most likely to offer such investment opportunities are the United Arab Emirates, Kuwait and Oman.

Whether investments will be active or passive investments

In the ordinary course, the Company is a passive investor, although the Company's Investment Adviser will seek to engage with investee company management where appropriate.

Holding period for investments

In the normal course of events, the Investment Adviser expects the Company to be fully-invested, although the Company may, however, hold cash reserves pending new IPOs. It is expected that the Company will hold positions for the long-term and thus have limited turnover.

Spread of investments and maximum exposure limits

The Company will invest in a portfolio of investee companies. The following restrictions are in place to ensure a spread of investments and that there is maximum exposure limits in place:

No single investment position may exceed 15 per cent. of the Net Asset Value of the Company;  

No holding may exceed 5 per cent. of the outstanding shares in any one company; and 

The Company may hold up to a maximum of 15 per cent. of its Net Asset Value outside Qatar, within the GCC region, if these markets offer more liquid opportunities and/or to capture Qatari themes.

Policy in relation to gearing 

The Company has the capacity to borrow but the Company will not normally borrow for the purpose of making investments, except on a short-term basis and where the investment opportunity is considered to be compelling. Borrowings will in any event be limited, as at the date on which the borrowings are incurred, to 5 per cent. of Net Asset Value.

The Company does not intend to make use of any hedging mechanisms or derivative instruments.

Policy in relation to cross-holdings

The Company does not have a formal policy on cross-holdings, however it is not the Investment Adviser's current intention to invest in other listed or unlisted closed-ended investment funds that invest in Qatar or other countries in the GCC region.

Investing Restrictions

The investing restrictions for the Company are as follows:

(i) Foreign Ownership Restrictions

Investments in Qatar Exchange listed companies by persons other than Qatari citizens have ownership restriction wherein the law precludes persons other than Qatari citizens from acquiring more than 25 per cent. of companies issued share capital. It is possible that the Company may have problems in acquiring stock if the foreign ownership interest in one or more stocks reaches the allocable limit. This may adversely impact the ability of the Company to invest in the local Qatari market.

(ii) Investment Guidelines

The Company has established certain investment guidelines. These are as follows:

No single investment position will exceed 15 per cent. of the Net Asset Value of the Company; 

No holding will exceed 5 per cent. of the outstanding shares in any one company; and 

The Company may hold up to a maximum of 15 per cent. of its Net Asset Value outside Qatar, within the GCC region, if these markets offer more liquid opportunities and/or to capture Qatari themes. It is expected that the GCC markets which are most likely to offer such investment opportunities are the United Arab Emirates, Kuwait and Oman.

(iii) Conflicts Management

The Investment Manager, the Investment Adviser, their officers and other personnel are involved in other financial, investment or professional activities, which may on occasion give rise to conflicts of interest with the Company. The Investment Manager will have regard to its obligations under the Investment Management Agreement to act in the best interests of the Company, and the Investment Adviser will have regard to its obligations under the Investment Adviser Agreement to act in the best interests of the Company, so far as is practicable having regard to their obligations to other clients, where potential conflicts of interest arise. The Investment Manager and the Investment Adviser will use all reasonable efforts to ensure that the Company has the opportunity to participate in potential investments each identifies that fall within the investment objective and strategies of the Company.

Other than these restrictions set out above, and the requirement to invest in accordance with its investing policy, there are no other investing restrictions.

Returns and Distribution Policy

The Company's objective is to achieve capital growth. It is therefore anticipated that substantially all realised capital gains derived from the Company's investment portfolio will be re-invested. Income received from the Company's investment portfolio may be distributed to Shareholders, dependent on the Company's results, financial position profits available for distribution and other factors regarded by the Directors as relevant at the time.

Life of the Company

The Company currently does not have a fixed life but the Board considers it desirable that Shareholders should have the opportunity to review the future of the Company at appropriate intervals. Accordingly, at the annual general meeting of the Company in 2012 it is intended that an ordinary resolution will be proposed that the Company ceases to continue as presently constituted. If the resolution is not passed, a similar resolution will be proposed at every third annual general meeting thereafter. If the resolution is passed, the Directors will be required to formulate proposals to be put to Shareholders to reorganise, unitise or reconstruct the Company or for the Company to be wound up.

Consolidated Income Statement

	Note	Year ended 30 June 2009	Period from 26 June 2007 to 30 June 2008
		US$'000	US$'000
Income
Interest income on cash balances		38	1,797
Dividend income on quoted equity investments		9,905	6,537
Realised (loss)/gain on sale of financial assets at fair value through profit or loss		(33,194)	8,376
Net changes in fair value on financial assets at fair value through profit or loss		(124,595)	92,300
Total net (loss)/income		(147,846)	109,010
Expenses
Investment Manager's fees	6.2	2,379	3,040
Performance fees	6.2	-	15,434
Audit fees		32	53
Foreign exchange loss		432	283
Nominated Advisor Fees	6.1	77	46
Custodian Fees	6.3	555	850
Administrator and Registrar Fees	6.4	386	367
Other expenses	6	394	724
Total operating expenses		4,255	20,797
(Loss)/profit before tax		(152,101)	88,213
Income tax expense	13	-	-
Retained (loss)/profit for the year/period		(152,101)	88,213
Basic (loss)/earnings per share (cents)	10	(62.31)	40.67
Diluted (loss)/earnings per share (cents)	10	(62.31)	40.63

The Directors consider that all results derive from continuing activities.

Consolidated Balance Sheet

	Note	At 30 June 2009	At 30 June 2008
		US$'000	US$'000
Financial assets at fair value through profit or loss	5	171,070	327,923
Due from broker		814	7,697
Dividends receivable		-	46
Other receivables and prepayments		16	20
Cash and cash equivalents	7	9,289	15,767
Total current assets		181,189	351,453
Issued share capital	8	2,359	2,475
Share premium		-	245,051
Retained earnings		176,770	88,213
Other reserves	9	1,017	(1,241)
Total equity		180,146	334,498
Other creditors and accrued expenses	11	1,043	16,955
Total liabilities		1,043	16,955
Total equity & liabilities		181,189	351,453

The financial statements were approved by the Directors on 4 September 2009 and signed on their behalf by:

Nick Wilson                Leonard O'Brien

Director                    Director

Company Balance Sheet

	Note	At 30 June 2009	At 30 June 2008
		US$'000	US$'000
Financial assets at fair value through profit or loss	5	-	87,814
Due from subsidiary	5	177,683	238,279
Other receivables and prepayments		16	20
Cash and cash equivalents		2,633	8,649
Total current assets		180,332	334,762
Issued share capital	8	2,359	2,475
Share premium		-	245,051
Retained earnings		176,770	88,213
Other reserves	9	1,017	(1,241)
Total equity		180,146	334,498
Other creditors and accrued expenses	11	186	264
Total liabilities		186	264
Total equity & liabilities		180,332	334,762

Impairment of the inter-company balances amounted to US$63,117,305 (2008:US$nil) (primarily as a result of the provisions made against the investments held by the Company's subsidiaries).

The financial statements were approved by the Directors on 4 September 2009 and signed on their behalf by:

Nick Wilson                Leonard O'Brien

Director                    Director

Consolidated Statement of Changes in Equity 

	Share Capital	Share Premium	Retained Earnings	Other reserves (note 9)	Total
	US$'000	US$'000	US$'000	US$'000	US$'000
Balance at 26 June 2007	-	-	-	-	-
Proceeds from shares issued	2,475	253,964	-	-	256,439
Share issue expenses	-	(8,913)	-	672	(8,241)
Foreign exchange translation differences	-	-	-	(1,913)	(1,913)
Retained profit for the period	-	-	88,213	-	88,213
Balance at 30 June 2008	2,475	245,051	88,213	(1,241)	334,498

Balance at 01 July 2008	2,475	245,051	88,213	(1,241)	334,498
Share buy back	(116)	-	(4,393)	116	(4,393)
Transfer to reserves*	-	(245,051)	245,051	-	-
Foreign exchange translation differences	-	-	-	2,142	2,142
Retained loss for the year	-	-	(152,101)	-	(152,101)
Balance at 30 June 2009	2,359	-	176,770	1,017	180,146

* On 20 November 2008 approval was granted by the High Court of Justice in the Isle of Man for the value of the Share Premium account to be cancelled and transferred to distributable reserves. 

Consolidated Cash Flow Statement 

	Note	Year ended 30 June 2009	Period from 26 June 2007 to 30 June 2008
		US$'000	US$'000
Cash flows from operating activities
Purchase of investments		(62,663)	(258,404)
Proceeds from sale of investments		69,599	21,223
Interest received		38	1,797
Dividends received		9,951	6,497
Operating expenses paid		(19,890)	(3,581)
Net cash used in operating activities		(2,965)	(232,468)
Financing activities
Share buy back		(4,393)	-
Proceeds from the issue of shares		-	256,439
Share issue costs		-	(8,241)
Net cash (used)/generated from financing activities		(4,393)	248,198
Net (decrease)/increase in cash and cash equivalents		(7,358)	15,730
Effects of exchange rate changes on cash and cash equivalents		880	37
Cash and cash equivalents at beginning of the year/period		15,767	-
Cash and cash equivalents at end of the year/period	7	9,289	15,767

Notes to the Consolidated Financial Statements

1    The Company

Epicure Qatar Equity Opportunities plc (the 'Company') was incorporated and registered in the Isle of Man under the Isle of Man Companies Act 1931-2004 on 26 June 2007 as a public company with registered number 120108C.

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

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

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

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

In 2009 the Company purchased 11,698,571 of its ordinary shares for a total value of US$4,393,250. The purchased shares have been cancelled upon acquisition. The buy back was effected through retained reserves.

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

Duration

The Company currently does not have a fixed life but the Board considers it desirable that Shareholders should have the opportunity to review the future of the Company at appropriate intervals. Accordingly, at the annual general meeting of the Company in 2012 a resolution will be proposed that the Company ceases to continue as presently constituted. Shareholders holding at least fifty one per cent of the shares must vote in favour of this resolution for it to be passed. If the resolution is not passed, a similar resolution will be proposed at every third annual general meeting of the Company thereafter. If the resolution is passed, the Directors will be required, within 3 months of the resolution, to formulate proposals to be put to Shareholders to reorganise, unitise or reconstruct the Company, or for the Company to be wound up. 

2    The Subsidiary

The Company has the following subsidiary company:

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

Epicure Qatar Opportunities Holdings Limited is a wholly owned subsidiary of the Company, and was incorporated in the British Virgin Islands on 4 July 2007 under the provisions of the Companies Act 2001, as a limited liability company with registered number 1415393. 

3    Significant Accounting Policies

The consolidated financial statements of the Company for the year ended 30 June 2009 comprise the Company and its subsidiary, Note 2, (together referred to as the 'Group'). 

3.1    Basis of presentation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'). The financial statements have been prepared under the historic cost convention, as modified by the revaluation of financial assets held at fair value through profit or loss. 

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

• Basis of consolidation

Subsidiaries

Subsidiaries are those enterprises controlled by the Company. Control exists where the Company has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases. 

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised gains or losses arising from intra-group transactions, are eliminated in the consolidated financial statements. 

• Financial assets at fair value through profit or loss

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

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

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

3.4    Foreign currency translation

The Qatari Riyal is the currency of the primary economic environment in which the entity operates ('the functional currency').

The US Dollar is the currency in which the financial statements are presented ('the presentational currency').

Monetary assets and liabilities denominated in foreign currencies as at the date of these financial statements are translated to Qatari Riyal at exchange rates prevailing on that date. Income and expenses are translated into Qatari Riyal based on exchange rates on the date of the transaction. All resulting exchange differences are recognised in the income statement.

The financial statements are presented in US Dollars by translating the assets and liabilities denominated in Qatari Riyal at the exchange rate prevailing on the balance sheet date. Items of revenue and expense are translated at exchange rates on the date of the relevant transactions or an average rate. Components of equity are translated at the date of the relevant transaction and not retranslated. All resulting exchange differences are recognised in the foreign currency translation reserve.

3.5    Interest income and dividend income

Interest income is recognised on a time-proportionate basis using the effective interest rate method. 

Dividend income is recognised when the right to receive payment is established.

3.6    Segment reporting

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

• Cash and cash equivalents

Cash and cash equivalents comprise cash deposited with banks and bank overdrafts repayable on demand. 

3.8    Investment in subsidiaries

Investment in subsidiaries in the Company balance sheet is stated at fair value. 

3.9    Future changes in accounting policies

Up to the date of issue of these financial statements, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the accounting year ended 30 June 2009 and which have not been adopted in these financial statements.

Of these developments, the following relate to matters that may be relevant to the Company's operations and financial statements:

		Effective for
		accounting periods
		beginning on or after
IFRS 8, Segment reporting		1 January 2009
Revised IAS 1, Presentation of financial statements		1 January 2009
Amendment to IAS 32, Financial instruments: Presentation		1 January 2009
Amendment to IFRS 7, Financial instruments: Disclosures		1 January 2009

The Company is in the process of making an assessment of what the impact of these amendments, new standards and new interpretations is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the Company's results of operations and financial position.

4    Net Asset Value per Share

The net asset value per share as at 30 June 2009 is US$0.76 per share (30 June 2008 : US$1.35) based on 235,828,952 (30 June 2008 : 247,527,523) ordinary shares in issue as at that date.

5    Investments and amount due from subsidiary

Group

30 June 2009 : Financial assets at fair value through profit or loss; all quoted equity securities: 

Security name	Number	US$'000
Al-Dar Properties (ALDAR UH)	10,000	10
First Gulf Bank (FGB DH)	95,000	344
Tamweel PJSC (TAMWEEL UH)	100,000	-
Union Properties Company (UPP UH)	1,625,096	407
Global Investment House K.S.C.C. (GLOBAL KK)	341,500	149
Al Khaleej Bank (KCBK QD)	889,635	3,907
Barwa Real Estate (BRES QD)	853,881	8,008
Commercial Bank of Qatar (CBQK QD)	1,013,809	17,365
Dlala Holdings (DBIS QD)	103,134	464
Doha Bank (DHBK QD)	368,669	3,754
Gulf International Services (GISS QD)	730,419	5,353
Industries Qatar (IQCD QD)	910,840	26,752
Islamic Financial Security (IFSS QD)	16,023	157
Masraf Al Rayan (MARK QD)	3,933,661	13,014
National Leasing (NLCS QD)	197,623	780
Qatar Electricity and Water Co (QEWS QD)	473,786	12,893
Qatar Fuel (QFLS QD)	10,000	463
Qatar Gas Transport (QGTS QD)	1,467,768	9,669
Qatar Insurance (QATI QD)	403,693	6,529
Qatar Islamic Bank (QIBK QD)	879,100	17,374
Qatar Islamic Insurance (QISI QD)	25,000	197
Qatar National Bank (QNBK QD)	617,463	20,321
Qatar National Cement Co (QNCD QD)	97,300	2,083
Qatar Navigation (QNNS QD)	533,022	9,071
Qatar Real Estate Invest (QRES QD)	392,272	2,573
Qatar Shipping (QSHS QD)	62,790	500
Qatar Telecom (QTEL QD)	239,811	8,933
		171,070

Group

30 June 2008 : Financial assets at fair value through profit or loss; all quoted equity securities: 

Security name	Number	US$'000
Emaar Properties Company (EMAAR UH)	2,210,000	6,526
Emirates National Bank of Dubai (ENDB UH)	1,409,831	4,605
First Gulf Bank (FGB DH)	150,000	1,106
Tamweel PJSC (TAMWEEL UH)	360,000	823
Union Properties Company (UPP UH)	3,418,893	4,802
Burgan Bank (BURG KK)	652,000	2,403
Global Investment House K.S.C.C. (GLOBAL KK)	341,500	1,310
Mobile Telecommunications Company K.S.C. (ZAIN KK)	12,500	75
National Bank of Kuwait (NBK KK)	539,000	3,689
National Industries Group (NIND KK)	214,500	1,097
The Public Warehousing Company (AGLTY KK)	758,500	3,366
Al Khaleej Bank (KCBK QD)	1,736,480	7,808
Barwa Real Estate (BRES QD)	1,258,591	29,051
Commercial Bank of Qatar (CBQK QD)	629,097	26,059
Dlala Holdings (DBIS QD)	300,084	3,860
Doha Bank (DHBK QD)	191,586	4,334
Gulf International Services (GISS QD)	20,000	252
Industries Qatar (IQCD QD)	934,288	46,085
Masraf Al Rayan (MARK QD)	3,522,845	21,217
National Leasing (NLCS QD)	130,000	1,343
Qatar Electricity & Water Co (QEWS QD)	486,326	20,371
Qatar Fuel (QFLS QD)	10,000	532
Qatar Gas Transport (QGTS QD)	791,834	8,437
Qatar Ind/Manufacturing (QIMD QD)	62,532	801
Qatar Insurance (QATI QD)	340,037	20,757
Qatar Islamic Bank (QIBK QD)	596,230	25,591
Qatar National Bank (QNBK QD)	571,934	35,537
Qatar National Cement Co (QNCD QD)	109,376	4,692
Qatar Navigation (QNNS QD)	444,185	18,496
Qatar Real Estate Invest (QRES QD)	287,140	5,196
Qatar Shipping (QSHS QD)	203,748	3,515
Qatar Telecom (QTEL QD)	246,024	12,746
Qatar United Development Company (UDCD QD)	87,520	1,441
		327,923

Company

	30 June 2009	30 June 2008
	US$'000	US$'000
Investment in subsidiary	-	87,814
Amount due from subsidiary	177,683	238,279

Amount due from subsidiary is unsecured, interest free, and repayable on demand. 

6    Charges and Fees

6.1    Nominated Adviser

As nominated adviser to the Company for the purposes of the AIM Rules, the Nominated Adviser is entitled to receive an annual fee of £40,000 payable twice yearly in advance.

Advisory fees paid to the Nominated Adviser for the year ending 30 June 2009 amounted to US$77,184 (30 June 2008 : US$45,752).

6.2    Investment Manager's fees

In accordance with the terms of the Placing, the Investment Manager was paid a project fee of 3% of the gross proceeds of the initial Placing and 2.5% of the secondary placing and was responsible for paying the Placing Agent and the Distribution Adviser for their services. Project fees paid for the year ending 30 June 2009 amounted to US$nil (30 June 2008 : US$7,352,918, charged to equity as a share issue expense).

Annual fees

The Investment Manager is entitled to an annual management fee of 1.25% of the Net Asset Value of the Group payable quarterly in arrears.

Annual management fees for the year ended 30 June 2009 amounted to US$2,379,130 (30 June 2008 : US$3,040,437) and the amount accrued but not paid at the year end was US$540,028 (30 June 2008 : US$1,113,709).

Performance fees

The Investment Manager receives a performance fee if the following are met:

• a high watermark is exceeded, whereby the adjusted net asset value per Ordinary Share at the end of the relevant performance period must be higher than the high watermark; and

• a performance test must be met where the adjusted net asset value per Ordinary Share at the end of the relevant performance exceeds the target net asset value per Ordinary Share.

If the performance test described above is met and the high watermark described is exceeded, the performance fee will be equal to 20% of the increase in the adjusted net asset value per ordinary share at the end of the relevant performance period above the target net asset value per Ordinary Share multiplied in each case by the weighted average of the number of Ordinary Shares in issue in the performance period. For the first performance period, the target net asset value per Ordinary Share is the Placing price increased by the hurdle rate of 8% pro rata per annum. For each subsequent performance period, the target net asset value per Ordinary Share means the net asset value, adjusted for any prior year performance fees paid, at the start of the relevant performance period as increased by the hurdle rate of 8% pro rata per annum. The performance fee is payable within 21 days of the approval of this annual report at the Company's Annual General Meeting. 

Performance fees accrued but not paid during the year ended 30 June 2009 amounted to US$nil (30 June 2008 : US$15,433,798).

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

Under the terms of an option agreement dated 25 July 2007 the Investment Manager was granted an option to acquire 1,713,550 shares at an option price of US$1.00 per share. The Investment Manager Option Deed provides for the transfer of the options by the Investment Manager to the Distribution Adviser and the Placing Agent.

The option may be exercised by the Distribution Adviser and the Placing Agent in whole or in part at any time before the fifth anniversary of admission to trading on AIM.

The option has been independently valued using a Black-Scholes model giving a fair value of US$672,300 which has been charged to equity as a share issue expense.

6.3    Custodian fees

The Custodian is entitled to receive fees calculated as 7.5 basis points per annum of the net asset value of the Company up to US$100 million and 6 basis points per annum of the net asset value in excess of US$100 million, subject to a minimum monthly fee of US$6,250. The Custodian was also entitled to an inception fee by reference to time spent subject to a minimum fee of US$10,000. Subcustodian fees are also payable.

Custodian and subcustodian fees for the year ending 30 June 2009 amounted to US$554,682 (30 June 2008 : US$849,670) and the amount accrued but not paid at the year end was US$90,925 (30 June 2008 : US$161,561).

6.4    Administrator and Registrar fees

The Administrator is entitled to receive a fee of 15 basis points per annum of the net asset value of the Company between US$0 and US$100 million, 12.5 basis points of the net asset value of the Company between US$100 and US$200 million and 10 basis points of the net asset value of the Company in excess of US$200 million, subject to a minimum monthly fee of US$15,000, payable quarterly in arrears.  The Administrator has also received an inception fee on a time and charges basis subject to a minimum fee of US$20,000. 

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

The Administrator may utilise the services of a CREST accredited registrar for the purposes of settling share transactions through CREST. The cost of this service will be borne by the Company. It is anticipated that the cost will be in the region of £6,000 per annum subject to the number of CREST settled transactions undertaken.

Administration fees paid for the year ending 30 June 2009 amounted to US$350,653 and US$35,568 for additional services (30 June 2008 : US$348,005 and US$19,449 respectively). 

7    Cash and Cash Equivalents

	30 June 2009	30 June 2008
	US$'000	US$'000
Bank balances	6,795	15,766
Deposit balances	-	1
Cash at Broker	2,494	-
Cash and cash equivalents	9,289	15,767

8    Share Capital

Ordinary Shares of 1c each	Number	US$'000
In issue at the start of the year	247,527,523	2,475
Cancelled during the year	(11,698,571)	(116)
In issue at 30 June 2009	235,828,952	2,359

The authorised share capital of the Company is US$5 million divided into 500 million Ordinary Shares of US$0.01 each.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regards to the Company's assets.

Warrants

34,271,000 warrants were issued pursuant to the initial Placing (one warrant for every five ordinary shares issued). The warrants entitle the holder to subscribe for one Ordinary Share of 1 cent each in the Company in cash on 31 October in any of the years 2008 to 2012 inclusive, at a price of US$1.25 per Share payable in full on subscription.

Capital management

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

Group capital comprises share capital, share premium and reserves. Neither the Company nor its subsidiary are subject to externally imposed capital requirements.

9    Other reserves

	Foreign currency translation reserve	Capital redemption reserve	Other reserves	30 June 2009 Total
	US$'000	US$'000	US$'000	US$'000
Balance at 1 July 2008	(1,913)	-	672	(1,241)
Foreign exchange translation differences	2,142	-	-	2,142
Share buy back	-	116	-	116
Balance at 30 June 2009	229	116	672	1,017

10    (Loss)/earnings per Share

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

Basic (loss)/earnings per share

	30 June 2009	30 June 2008
(Loss)/profit attributable to equity holders of the Company (US$'000)	(152,101)	88,213
Weighted average number of ordinary shares in issue (thousands)	244,091	216,922
Basic (loss)/earnings per share (cents per share)	(62.31)	40.67

The difference between basic and diluted ordinary shares in issue arises from the assumption that dilutive share options were exercised (Note 6.2). The warrants (Note 8) are not dilutive in 2009 as a loss was made.

Diluted (loss)/earnings per share

	30 June 2009	30 June 2008
(Loss)/profit attributable to equity holders of the Company (US$'000)	(152,101)	88,213
Weighted average number of ordinary shares in issue (thousands)	244,091	216,922
Adjustment for share options	-	211
	244,091	217,133
Fully diluted (loss)/earnings per share (cents per share)	(62.31)	40.63

11    Trade and other payables

Group

	30 June 2009	30 June 2008
	US$'000	US$'000
Due to broker	158	-
Management fee payable	540	1,114
Performance fee payable	-	15,434
Administration fee payable	66	140
Withholding tax provision*	84	-
Accruals and sundry creditors	195	267
	1,043	16,955

* From the 4th Feb 2008 the Company was liable to withholding tax of 15% on Kuwaiti dividends. This withholding tax was not applied by the custodian until 31 December 2008, giving rise to an outstanding liability of US$84,287.43 in respect of dividends received in 2008.

Company

	30 June 2009	30 June 2008
	US$'000	US$'000
Administration fee payable	60	101
Accruals and sundry creditors	126	163
	186	264

12    Directors' Remuneration

The maximum amount of remuneration payable to the Directors permitted under the Articles of Association is £200,000 per annum. The non-executive chairman is entitled to receive an annual fee of £42,500 and the non-executive directors receive £25,000 each per annum. The chairman of the audit committee receives an additional £7,500 per annum. The Directors are each entitled to receive reimbursement of any expenses incurred in relation to their appointment. Total fees and expenses paid to the Directors for the year ended 30 June 2009 amounted to US$221,405 (30 June 2008 : US$304,100); with the total amount payable at the year end being US$47,602 (30 June 2008 : US$59,663). 

13    Taxation

Isle of Man taxation

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

Qatar taxation

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

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

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

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

Kuwait taxation

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

14    Financial instruments

The Group's activities expose it to a variety of financial risks: market price risk, foreign exchange risk, credit risk, liquidity risk and interest rate risk.

Market price risk

The Group's strategy for the management of investment risk is driven by the Group's investment objective. The main objective of the Group is to capture the opportunities for growth offered by the expanding Qatari economy by investing in listed companies or companies soon to be listed. This will be principally through the medium of the Doha Securities Market ('DSM'). 

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

The Group's market price risk is managed through the diversification of the investment portfolio. Approximately 95% of the net assets attributable to holders of ordinary shares is invested in equity securities, of which a maximum of 15% is to be invested outside Qatar. Investment opportunities are available in the United Arab Emirates and Kuwait.  

At 30 June 2009, if the market value of the investment portfolio had increased/decreased by 25% with all other variables held constant, this would have increased/decreased net assets attributable to shareholders by approximately US$42.8 million (30 June 2008 : 5% : US$16.4 million). 

Foreign exchange risk

The Group's operations are conducted in jurisdictions which generate revenue, expenses, assets and liabilities in currencies other than Qatari Riyal. As a result, the Group is subject to the effects of exchange rate fluctuations with respect to these currencies. The currency giving rise to this risk is primarily US Dollars.

The Group's policy is not to enter into any currency hedging transactions. 

At the reporting date the Group had the following exposure:

Currency	30 June 2009	30 June 2008
	%	%
US Dollar	1.16	(2.48)
Qatari Riyal	96.46	92.38
Kuwaiti Dinar	1.16	4.08
UAE Dirham	1.22	6.02

The following table sets out the Group's total exposure to foreign currency risk and the net exposure to foreign currencies of the monetary assets and liabilities:

	Monetary Assets US$'000	Monetary Liabilities US$'000	Net Exposure US$'000
30 June 2009
US Dollar	2,950	(885)	2,065
Qatari Riyal	173,947	(158)	173,789
Kuwaiti Dinar	2,088	-	2,088
UAE Dirham	2,204	-	2,204
	181,189	(1,043)	180,146

	Monetary Assets US$'000	Monetary Liabilities US$'000	Net Exposure US$'000
30 June 2008
US Dollar	8,670	(16,955)	(8,285)
Qatari Riyal	309,020	-	309,020
Kuwaiti Dinar	13,637	-	13,637
UAE Dirham	20,126	-	20,126
	351,453	(16,955)	334,498

At 30 June 2009, had the US Dollar weakened by 1% (2008 : increased 5%) in relation to all currencies, with all other variables held constant, net assets attributable to equity holders of the Company would have increased (2008 : decreased) by the amounts shown below:

30 June 2009	US$'000
Qatar Riyal	1,738
Kuwaiti Dinar	21
UAE Dirham	22
Effect on net assets	1,781

30 June 2008	US$'000
Qatar Riyal	15,451
Kuwaiti Dinar	639
UAE Dirham	943
Effect on net assets	17,033

In addition, since QAR is the Functional currency of the fund and USD is the Presentational currency any effect of changes in the foreign exchange rates between these currencies will be included in the translation reserve on consolidation.

Credit risk

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

The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. This relates also to financial assets carried at amortised cost, as they have a short term maturity. 

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

	30 June 2009	30 June 2008
	US$'000	US$'000
Financial assets at fair value through profit or loss	171,070	327,923
Cash and cash equivalents	9,289	15,767
Other receivables	830	7,763
	181,189	351,453

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

Liquidity risk

The Group manages its liquidity risk by maintaining sufficient cash and the ability to close out market positions. 

The Group's liquidity position is monitored by the Manager and the Board of Directors. 

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

30 June 2009	Less than 1 month	1-3 months	3 months to 1 year	1-5 years	Over 5 years	No stated maturity
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Financial liabilities
Other creditors and accrued expenses	1,043	-	-	-	-	-
	1,043	-	-	-	-	-

30 June 2008	Less than 1 month	1-3 months	3 months to 1 year	1-5 years	Over 5 years	No stated maturity
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Financial liabilities
Other creditors and accrued expenses	16,955	-	-	-	-	-
	16,955	-	-	-	-	-

Interest rate risk

The majority of the Group's financial assets are non-interest bearing. Cash held by the Group is invested at short-term market interest rates. As a result, the Group is not subject to fair value interest rate risk due to fluctuations in the prevailing levels of market interest rates. However it is subject to cash flow risk arising from changes in market interest rates. 

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

30 June 2009	Less than 1month	1-3 months	3 months  to 1 year	1-5 years	Over 5 years	Non-interest bearing	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Financial Assets
Financial assets at fair value through profit or loss	-	-	-	-	-	171,070	171,070
Other receivables and prepayments	-	-	-	-	-	830	830
Cash	9,289	-	-	-	-	-	9,289
Total financial assets	9,289	-	-	-	-	171,900	181,189

Financial Liabilities
Other creditors and accrued expenses	-	-	-	-	-	(1,043)	(1,043)
Total financial liabilities	-	-	-	-	-	(1,043)	(1,043)
Total interest rate sensitivity gap	6,827	-	-	-	-	-	-

30 June 2008	Less than 1month	1-3 months	3 months  to 1 year	1-5 years	Over 5 years	Non-interest bearing	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Financial Assets
Financial assets at fair value through profit or loss	-	-	-	-	-	327,923	327,923
Other receivables and prepayments	-	-	-	-	-	7,763	7,763
Cash	15,767	-	-	-	-	-	15,767
Total financial assets	15,767	-	-	-	-	335,686	351,453
Financial Liabilities
Other creditors and accrued expenses	-	-	-	-	-	(16,955)	(16,955)
Total financial liabilities	-	-	-	-	-	(16,955)	(16,955)
Total interest rate sensitivity gap	15,767	-	-	-	-

All interest received on cash balances is at variable rates. Hence no sensitivity analysis regarding changes in value of financial assets or liabilities is required. 

15    Related Party Transactions

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

The Investment Adviser is Qatar Insurance Company S.A.Q. The Group holds shares in Qatar Insurance Company S.A.Q. (see note 5). It is paid fees by the Investment Manager. 

The Investment Manager, Epicure Managers Qatar Limited, is a related party by virtue of its ability to make operational decisions for the Company and through common directors. The director of the Investment Manager is Silex Management Limited, of which Leonard O'Brien is a director. Silex Management does not have any beneficial interest in Epicure Managers Qatar Limited. Fees payable to the Investment Manager are disclosed in note 6.2. 

On 4 June 2009 Leonard O'Brien purchased 500,000 warrants at market value.

16    Post Balance Sheet Events

There are no post balance sheet events that require to be brought to the attention of Shareholders.

 

END

 

 

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