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Epicure Qatar Equity (QIF)

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Thursday 03 March, 2011

Epicure Qatar Equity

Half Yearly Report

RNS Number : 2102C
Epicure Qatar Equity Opportunities
03 March 2011

3 March 2011


Epicure Qatar Equity Opportunities Plc

Interim Results for the six months ended 31 December 2010

Epicure Qatar Equity Opportunities Plc ('EQEO' or 'the Company'), the AIM listed fund established to invest in opportunities in Qatar and the Gulf Cooperation Council (GCC) region, announces interim results for the six months ended 31 December 2010.














Holdings as of December 31st 2010





David von Simson, Chairman of EQEO, commented:


"The second half of 2010 was a strong period for Qatar. The Qatar Exchange (QE) Index increased by nearly 26%, Qatar was announced as host of the FIFA Football World Cup in 2022 and the IMF predicted that Qatar will have the fastest growing economy in 2011.  This will further underpin Qatar's high GDP per capita.


"EQEO is well placed to benefit from the economic growth and expected increases to government spending on infrastructure in the years ahead.


"We believe that the proposed move to the main market of the London Stock Exchange will widen the appeal of the company's shares and improve liquidity."


For further information:

Epicure Qatar Equity Opportunities plc - +41 (0) (22) 908 1190

Leonard O'Brien


Oriel Securities - +44 (0) 20 7710 7600

Joe Winkley

Neil Winward

Panmure Gordon - +44 (0) 20 7459 3600

Richard Gray 

Andrew Potts

Maitland - +44 (0) 20 7379 5151

William Clutterbuck

Sam Turvey




Chairman's Statement


The Board is pleased to prsent your Company's interim results for the six months ended 31 December 2010.




Results for the six months ended 31st December 2010 showed a profit after tax of US$52.9 million, largely derived from realised gains and fair value adjustments, and equivalent to basic earnings per share of 22.67 cents.  The net asset value at 31st December 2010 was US$242.3 million, or net asset value per share of US$1.04, based on 233,419,307 ordinary shares in issue as at that date.


The Board has continued its policy of share buybacks with 41,855 shares purchased and held in treasury during the period, at an average price of US$0.72 per share.


As at 31st December, we had a portfolio of 19 investments in quoted companies in the Gulf, with 15 of them being in Qatar, a further three investments in UAE and one in Oman.



The Company's objective remains capital growth. The Board has nevertheless instituted a dividend payment policy which led to a final dividend for the year to 30th June 2010 of 2.5 cents per share being paid in October 2010.


We aim to pay dividends from dividend income received from investee companies. Since Qatari companies pay dividends once a year, the Board does not intend to declare interim dividends.


Move to the Main Market of the London Stock Exchange, proposed name change and other matters


The Board has recently written to shareholders convening an Extraordinary General Meeting to vote on certain proposals.


To prepare the Company for the proposed move to the main market of the London Stock Exchange, which is designed to widen the appeal of the Company's shares and their liquidity, shareholders will be voting on (i) a change of the Company's name to "Qatar Investment Fund plc" in order to more clearly reflect the purpose of the Company, (ii) an amendment of the Company's Articles to incorporate pre-emption rights, and (iii) amendments to the Company's investing policy to permit the investment manager and investment adviser greater flexibility in portfolio composition


Conditional on shareholders' approval of the adoption of the new investing policy, the Company has also agreed changes to the fee arrangements with the investment manager that provide for a relative performance measure as opposed to the current absolute return fee structure.  Fees payable to the investment manager generated by outperformance by the Company of its adopted benchmark will reduce from 20 per cent. to 15 per cent. The Company has also negotiated a cap on any performance fee in respect of each performance period of 1.5 per cent. of net asset value.


Further details of the proposals and the changes to the fee arrangements with the investment manager can be found in the circular to shareholders dated 21 February 2011 that is available on the Company's website and has also been sent to shareholders.


Work is ongoing regarding the proposed move to the main market of the London Stock Exchange and we will update shareholders on progress in due course.


Board of Directors


We have decided to strengthen the Board, and in that regard we are delighted to welcome Neil Benedict to our Board. Neil has a distinguished investment banking career in New York and Tokyo and brings a wealth of experience and contacts which will be of great value to our Company as we look to the next stage of the Company's development and to broaden our shareholder base.


Leonard O'Brien has recently been appointed a director of the investment manager and is now deemed not to be an independent director.



The period under review has seen further strong growth in the Qatar economy. The IMF now predicts that it will be the fastest growing in the world in 2011, with a projected gain of over 18%. It is also predicted that Qatar will reinforce its position as the country with the highest GDP per capita worldwide.


The award to Qatar of the FIFA World Cup (football) in 2022 has further added to the positive outlook for the country, and increased public awareness.  The Board believes that the high growth rates of company earnings in Qatar will be maintained in the coming years, and is greatly encouraged by the combination of circumstances which we believe will bode well for the Company under its proposed new name of Qatar Investment Fund.


David von Simson


2 March 2011


Report of the Investment Manager and the Investment Adviser


Looking at the performance of the region after the tepid first half of 2010, signs of economic recovery and cautious optimism emerge. Overall, however, risk appetite has improved and investor interest in GCC stocks has increased.


After a poor first half of 2010 for the GCC regional markets, with equities falling sharply on the back of increasing concerns over the Euro zone crisis, the trend was reversed in the second half of 2010. All the GCC indices registered positive growth for the six month period ended 31 December 2010. Qatar was the best performing GCC market in 2010, with the QE index rising 24.8 per cent. For the second half of 2010, the QE index returned 25.8 per cent. on the back of Qatar's winning bid to host the 2022 Federation International de Football Association (FIFA) World Cup, rising by 6.6 per cent. in December alone.





% change

Qatar (DSM)




Dubai (DSMGI)




Oman (MSI)




Saudi (TASI)




Abu Dhabi (ADI)




Kuwait (KWSE)




Bahrain (BAX)




Source: Reuters, Qatar Insurance Company S.A.Q.


Oman and Dubai were the second best performing markets in the region in the second half of the year, with an 11.5 per cent. return each. Saudi Arabia maintained its positive momentum, returning 8.2 per cent. for the year and 8.6 per cent. for the second half of the year. For the six month period ended 31 December 2010, Abu Dhabi returned 8.2%, the Kuwait market returned 6.3 per cent. whereas the Bahrain market returned 2.6 per cent.


The Investment Adviser believes that the GCC region and in particular Qatar will continue to demonstrate strong economic growth over the coming year on the back of improved economic fundamentals. The Investment Adviser believes that signs of recovery from the slowdown, due to the financial crisis and the subsequent real estate sector fall in the region, have started to appear and expects most of the regional countries to continue their economic expansion.



Macro Update


Qatar to host the 2022 FIFA world Cup

On 2 December 2010, FIFA selected Qatar to host the 2022 World Cup, the preparation for which will underpin infrastructure spending over the next decade. Official estimates put planned spending at around US$55bn, but the analyst community expects the actual cost to be in the range of US$65-100bn.


To put this in perspective, US$65bn of infrastructure spending is equivalent to some 80 per cent. of projects completed in Qatar since 2002 and approximately 150 per cent. of the nominal gross fixed capital formation forecast for 2010. This also represents 53 per cent. of forecast 2010 GDP and 120 per cent. of forecast 2010 non-oil GDP.


Qatar is well into the construction of the first phase of the new US$10bn airport, dubbed the New Doha Airport, which will eventually replace the existing one. The first phase of the project is scheduled to open in late 2011 or early 2012, with later phases being rolled out between 2012 and 2027. Once completed, the new airport will have the capacity to cater for 24 million passengers per annum.


Selected non-hydrocarbon mega projects

Cost ($bn)


Completion Date

Qatar National Railway System


300km Doha metro, light rail, freight and high speed lines, passenger stations


New Doha International Airport


Handle 50 million passengers. Phase 1 expected in 2011 to handle 24 million.


New Doha Port


Port with a capacity of 6 million 20 foot equivalent units




Spread over 750,000 m2, 226 buildings. To house 28,000 residents, parks, schools and hotels with around 700 rooms


Qatar Bahrain Causeway


Road and rail bridge from Qatar to Bahrain


Doha Bay Crossing


12km crossing and associated works


 Source: MEED Projects


Other prominent projects include a US$7bn deep water seaport and a US$1bn crossing to link the new airport with projects in the northern part of Doha. An additional US$20bn will also be spent to build and expand roads. Moreover, there are currently several housing projects underway and plans to start to accommodate Qatar's ballooning population, which at 1.7 million has witnessed a 128 per cent. increase since 2004.


A US$4bn stadium building programme will see the construction of nine new eco-friendly, cutting-edge football stadiums and the expansion of the three existing ones. The programme includes the construction of the 86,000-seater Lusail Stadium, which will host the tournament's opening and final matches.


Additionally, Qatar will build over 80,000 new hotel rooms by 2022. FIFA requires that the host country have a minimum of 60,000 hotel rooms. As Qatar's total room capacity by the end of 2010 was likely to be just 10,000-15,000, Doha has pledged to have 80,000-90,000 available by 2022. Qatar is therefore committed to building more than 70,000 hotel rooms over the next 12 years.


The Investment Adviser believes that the news that Qatar will host the 2022 World Cup is transformational for the equity market, providing comfort that robust economic growth will be higher for longer and muting concerns that Qatar's investment story relates solely to maturing Liquid Natural Gas (LNG) investment.


Qatar's GDP grows by 21.1 per cent. in Q3


Qatar witnessed an impressive year-on-year economic growth rate of 21.1 per cent. in the third quarter of 2010. Gross Domestic Product (GDP) estimates for Q3 2010 stand at QR111.25bn as against QR91.85bn in Q3 2009.


The Q3 2010 GDP estimates demonstrate substantial economic recovery even when compared to the previous quarter. The third quarter is estimated to have grown by an impressive 13.1 per cent. over the second quarter of 2010, when GDP was estimated at QR98.38bn. The estimate indicates that the mining and quarrying sector, which includes the oil and gas industry, represented over 52 per cent. of GDP and continued to dominate growth in Q3 2010. The noticeable jump in LNG production during the third quarter of 2010 compared to the second was one of the major drivers of economic recovery.


There has been a broad-based increase in the production of hydrocarbon products, with LNG accounting for the largest share of 28 per cent. followed by Natural Gas Liquids (NGL) with 22 per cent.


The Q3 2010 GDP figures show a remarkable increase in real estate, insurance, financial services, manufacturing and construction activities over the corresponding period of the previous year.


Construction picked up marginally, by 1.9 per cent. year-on-year. Quarter-on-quarter, the sector maintained a growth rate of about 3 per cent. The Investment Adviser sees this as a positive development as Doha is pressing ahead with a series of large-scale government-backed construction projects. This is keeping the country's construction sector buoyant, while awards elsewhere in the region are tapering off.


The Investment Adviser anticipates that, going forward, construction sector growth should further accelerate since Qatar is currently tendering contracts totalling more than US$1bn for state-backed construction projects.


Non-oil GDP more generally should show further momentum on the back of increased state spending on the local economy, as evidenced by the growth in the first three quarters of the year. The Investment Adviser views the third quarter GDP performance as positive and expects both the oil and non-oil sectors to accelerate over the first half of 2011.


Overall, Qatar's economy continues to weather the global downturn well and is expected to be again among the fastest growing worldwide in 2011. The IMF estimates 2010 and 2011 real GDP growth at 16 per cent. and 20 per cent. respectively, the highest in the world, thanks to ongoing investment in the LNG industry. It is now confirmed that some of the projects which were put on hold at the peak of the financial meltdown will now be completed in the run up to 2022. Longer term, the government is expected to maintain high levels of capital spending on education, health and transport. Population growth is projected to remain strong because of the infrastructure build up for the World Cup.


Qatar marks LNG milestone, sees more output gains

During the fourth quarter, Qatar hit the landmark of 77 mtpa of LNG production capacity coming online, underscoring its ranking as the world's largest LNG exporter. According to the Energy Minister, Abdullah al-Attiyah, a further increase in capacity of as much as 10 mtpa may be achieved if Qatar can improve efficiency at its production units.


Qatar plans to double condensate output

Qatar plans to double condensate output to some 680,000-750,000 barrels a day by 2014, according to the state-run Qatar News Agency. Qatar currently produces 350,000 barrels of condensate a day. Annual output of liquefied petroleum gas may reach 13 million metric tons by 2014.


Qatar Exchange launches new state of the art trading system

On 5 September, the Qatar Exchange migrated from its existing trading platform Horizon to Universal Trading Platform (UTP). UTP, the 2010 multifaceted trading platform used by NYSE Euronext across Europe and the US provides a resilient, high performance and scalable market platform to Qatar and the global financial community. This event caps a year of progress towards achieving the five year development of the Qatar Exchange project which has also seen the Central Bank of Qatar act as Settlement Bank, the Government giving permission to Qatari banks to join the Exchange, and the modification to the Qatar Exchange's index.


Company Update

At the end of 31 December 2010, the Company's NAV stood at US$1.04 compared to US$0.84 as of 30 June 2010. The Company is invested in nineteen companies in the GCC, with fifteen of them being in Qatar, three in the UAE, and one in Oman (30 June 2010: seventeen in Qatar, four in UAE, one in Kuwait). The total market value of investments was US$242 million at the end of 2010.


Corporate Profitability

Despite the unstable global economic situation, the results of Qatari companies for the first nine months of 2010 were markedly higher than the same period in 2009. The 41 companies listed on the Qatar Exchange reported a net profit QR23.0bn for the first nine months compared to a net profit of QR19.6bn during the same period in 2009, an increase of 18 per cent. It is worth mentioning that Vodafone Qatar, with a fiscal year end of March, has been excluded from this comparison.



Net Profit - Sector wise

9M 2009 (QR mln)

9M 2010 (QR mln)

% change





















Source: Qatar Insurance Company, Qatar Exchange


Thirty companies recorded growth in net profits for the nine months of 2010. Looking at the sector performance of the Qatari market, all four market subsectors reported year-on-year growth in the first nine months of 2010, with the insurance sector being the weakest. The Banking and Financial Institutions Sector, which includes 9 banks, registered growth of 20.6 per cent. in net profit, which amounted to QR9.3bn compared to the QR7.7bn reported during the same period last year.


The five listed insurance companies reported aggregate net profit of QR701.5m in the first nine months of 2010, translating to growth of 6.4 per cent. compared to net profit of QR659.5m in 2009. The industrial sector achieved net profit of QR5.1bn during the first nine months of this year compared to QR4.8bn during the same period in 2009, an increase of 6.6 per cent. Net profits for the services sector grew by 23.4 per cent., the highest growth rate of all, registering net profit of QR7.9bn compared to QR6.3bn last year.


The Investment Adviser does not expect to see any major negative surprises in the Q4 2010 corporate results and expects that most companies will not only track their last quarter results, but also announce an improved outlook for 2011.


Industry Allocation

The Company's industry allocation is largely unchanged compared to the previous period. The Company's largest sector exposure continues to be to the financial services industry. Exposure to the banking sector stood at 54.8 per cent. at the end of 31 December 2010 compared to 54 per cent. at the end of 30 June 2010.


The Investment Adviser maintains a positive outlook on the Qatari banking sector. The benign economic environment (20 per cent. real GDP growth forecast for 2010) in which Qatari banks operate supports our stance. The sector remains sound, with banks having provided comfortably against non-performing loans.


Over the next five years, the Investment Adviser expects government spending on large infrastructure projects to remain the main driver for loan growth. Although such spending currently benefits only the public sector, the Investment Adviser believes it should start to filter into the private sector as soon as the latter part of this year.


The Qatari government has said that it will spend US$50bn (about 95 per cent. of 2009 non-oil GDP) on infrastructure upgrades and US$4 billion to build nine new stadiums and renovate three existing ones in preparation of hosting the World Cup. Qatari banks are logical beneficiaries of World Cup related expenditure and will be heavily involved in financing the upcoming spending spree.


The investment case for Qatari banks is further strengthened by earnings recovery originating primarily from both healthy volume growth and an improvement in asset quality. Qatari banks benefit from attractive valuations and, we believe, are due for a re-rating since World Cup spending plan addresses the key risk behind Qatari banks' growth beyond 2012.


The Investment Adviser believes the sector is set not only for an absolute re-rating but also an upgrade relative to both MENA and GEM banks. Our optimism is based on the fact that Qatari banks still trade at a discount to their historical PE and

PBV multiples, while some banking peers, such as the Egyptian banks, trade at a premium. On 2011 forecast earnings, Qatari banks currently trade at discounts of 22 per cent. and 5 per cent. to their GEM and MENA peers respectively. This is despite lower risk thanks to strong backing from a wealthy government.


The service sector, which is broadly defined and includes companies in telecommunications and utilities, accounted for 20 per cent. of all investments. The Company's exposure to the real estate sector stood at 6 per cent. at the end of the 2010 compared to 5 per cent. at the end of the first half of 2010. The industries and insurance sectors accounted for a further 14.2 per cent. and 5 per cent. respectively.



Embedded image removed - please refer to the Company's website for a pie chart depicting industry allocation as a percentage of market value.


Portfolio Breakdown - Top 5 Holdings


Top Five Holdings




% of NAV

Qatar National Bank



Industries Qatar



Commercial Bank of Qatar



Rayan Bank



Doha Bank



Source: Qatar Insurance Company S.A.Q


As at 31 December 2010, the top five investments of the Company constituted 61.9 per cent. of NAV (59.4 per cent. 30 June 2010).


Profile of Top Five Holdings (As At 31.12.10)


Qatar National Bank (14.9% of NAV)


Qatar National Bank (QNB) is a high quality proxy stock for Qatari economic growth given its strong ties with the public sector and access to state liquidity. The government of Qatar owns 50% of QNB. Market shares are c.56% for loans, c.53% for deposits, and as high as 57% of the asset base of the Qatari Banking sector. This drives high asset quality, with low NPLs, and offers superior visibility on balance-sheet momentum and earnings growth. In addition to an international presence in key financial centres around the world such as London, Paris and Geneva, QNB has been building a network of branches, representative offices and associates (Jordan, UAE, Iraq, and Tunisia) throughout the MENA region.


Industries Qatar (14.2% of NAV)


Industries Qatar (IQ) is the largest publicly traded company in Qatar. IQ is a holding company with interests in petrochemicals via 80% owned Qatar Petrochemical Co., fertilizers via 75% owned Qatar Fertilizer Co., steel via 100% owned Qatar Steel Co. and fuel additives via 50% owned Qatar Fuel Additives Co. Similar to many of its Middle Eastern peers, IQ is one of the lowest cost producers in the industry with operating and net margins in excess of 50-55% compared to global peers with operating margins in the mid-teens. The company procures its natural gas at a price range of US$1.75- 2.25/mmBtu compared to current global natural gas prices in the range of US$5-5.5/mmBtu. With a low and largely fixed-cost structure, any uptick in basic chemical commodity prices should flow straight to the bottom line.


Commercial Bank of Qatar (13.6% of NAV)


Commercial Bank of Qatar (CBQ) represents the higher beta play within the Qatari banking universe having been one of the fastest growing banks in the Middle East from 2004 to 2008, but its growth has been slowed significantly by domestic and global issues. CBQ's investment case lies mostly in the strength of its balance sheet. CBQ can afford to pursue growth opportunities either organically or through acquisition, and will likely remain a generous dividend payer in the near-term. CBQ also has the best funding profile of its peer group, giving it a qualitative advantage in terms of its lending outlook.


Masraf Al Rayan (10.9% of NAV)


Masraf Al Rayan, though relatively young, operates through two branches in Qatar, and provides Sharia compliant commercial banking, asset management, and brokerage services. The bank went public in January 2006 and has existing associates in Pakistan that deal in Takaful (Islamic insurance) and one associate in Saudi Arabia that provides consumer finance. Management aims to grow the bank's presence outside Qatar by obtaining a banking licence for its associate in Saudi Arabia, or possibly by acquiring other banks in the region. The bank's balance sheet and the calibre of its backers underscore its ability to carry out acquisitions. At the end of 2009 the bank's share of the Qatari market stood at 6% of assets, 8% of loans and 8% of deposits.


Doha Bank (8.3% of NAV)


Doha Bank is Qatar's third largest bank with a 10% market share of loans and deposits. The bank has historically focused on 'smaller ticket' segments of Qatar's emerging private economy, namely and increasingly SMEs/family businesses. Doha bank has a strong retail franchise and is well entrenched with the local economy. Doha has almost a pure focus on Qatar and offers a solid capital base along with a high dividend yield.


Regional Allocation

As at 31 December 2010, the Company was invested in fifteen companies in Qatar, three companies in the UAE, and one company in Oman. Investments outside Qatar constituted 1.6 per cent. of the Company's investments. During the period the company invested in the Omani Qatari Telecommunications Company SAOG (Nawras) IPO in Oman. Nawras provides mobile and fixed telecommunication services in Oman. The IPO raised OMR182m for the selling shareholders making it, by value, the largest IPO in Oman since 2005 and the largest in the GCC since July 2009. All selling shareholders, with the exception of Nawras Development LLC, retained a stake in Nawras, including TDC-Qtel MENA Investcom B.S.C., which is controlled by Qatar Telecom (Qtel), the pension funds of the Diwan of the Royal Court, the Ministry of Defence, the Royal Office, the Internal Security Service and the Sultan's Special Force.


Other News Flow


Qatar to implement Basel III proposals for the banking sector by 2013

The Minister of Economy and Finance has announced that the country will be able to implement Basel III proposals for the banking sector by 2013, five years ahead of the stipulated deadline. The Basel III proposals, which aim to improve the banking sector's ability to absorb shocks arising from financial and economic stress, must be implemented by the global financial system no later than 2018.


Qatar invested US$21.7bn around the world in 2010

Qatar's sovereign wealth fund invested US$21.7bn in various assets around the world in 2010 according to the national daily newspaper Al Sharq. Of the total, US$3.9bn was invested between mid-October and 2010 year end. The sectors the QIA chose to invest in included real estate and agriculture, shopping centres, commercial complexes, hotels, tourist resorts, banks and retail businesses, as well as mining rights in several countries. The major investments made by the QIA in 2010 were the acquisition of Harrods in London for US$2.3bn by its investment arm, Qatar Holding, some US$412m in agriculture and animal husbandry in Australia through Hassad Food Company, and Qatari Diar's US$395m investment in the Park House project of London. In addition, some US$2bn was invested by the QIA to purchase shares in General Motors in the United States.


Qatar to extend stock market trading hours

The Qatar Financial Markets Authority (QFMA) announced the intention to extend the trading hours on the Qatar Exchange to bring it closer in line with most other Persian Gulf stock markets. According to the announcement, trading on the Doha Bourse will take place between 06.30-10.00 GMT. The QFMA also said it would change the tick sizes, or the minimum price movement of a stock. The tick size would be one dirham for a stock valued at less than QR25 riyals (US$6.87), five dirhams for a stock priced between QR25-50 and 10 dirhams when a stock price is above QR50. There are 100 dirhams to QR1.


QR46.6bn surplus in Qatar's 09/10 budget

Qatar's 2009/2010 budget achieved a surplus of QR46.6bn compared to QR18.7bn in the 2008/2009 budget, according to the latest Qatar Central Bank (QCB) annual report. The report also showed that Qatar's GDP witnessed for the first time in many years a decline of 11.2 per cent. in nominal value, but that real GDP registered positive growth of 8.6 per cent. during 2009. Real GDP for 2009 (as per 2004 prices) was estimated at about QR254.2bn compared to QR234bn in 2008. The report attributed the fall in nominal GDP in 2009 to the 23.1 per cent. first time decline in the gross product of the petroleum and gas sector.


Qatar Islamic Bank placed US$750 million in its debut Sukuk

Qatar Islamic Bank priced its highly successful debut international Sukuk on 30th September 2010, representing the first international Sukuk transaction from a Qatari financial institution. Investors' strong interest resulted in the order book reaching US$6bn, around 8 times the value of the offer.


Mawashi and Al Meera announce that there will be no merger

The proposed merger of Mawashi and Al Meera was called off citing minimal benefit. The feasibility study pointed towards the lack of synergies of the combined entity and the management of the two companies decided not to pursue the merger.


Qatar Holding buys stake in Brazil bank

Qatar Holding acquired a 5 per cent. stake in Banco Santander through an agreement to purchase US$2.7bn of exchangeable bonds to be issued by the latter. The three year bonds pay an annual coupon of 6.75 per cent. and are exchangeable into Santander Brazil units at a reference price of 23.75 reals per unit.


Qtel - Wataniya Mobile Palestine announces IPO

Qatar Telecom has announced that group member Wataniya Palestine Mobile Telecommunications Public Shareholding Company intends to undertake an Initial Public Offering of 15 per cent. of its authorized share capital followed by a listing on the Palestine Exchange.


QNB sells US$1.5bn bonds

Qatar National Bank completed its debut US Dollar bond international issue on 9 November 2010, amounting to US$1.5bn with a five year maturity and a coupon rate of 3.125 per cent.


Nakilat inaugurates shipyard

Nakilat inaugurated the first three phases of its new, world-class shipyard in the port of Ras Laffan. The Shipyard is located on a 110 hectare site, approximately 8km offshore along the southern breakwater of the expanded port of Ras Laffan. The shipyard has been designed for the repair and maintenance of very large LNG carriers and a wide range of other vessels, as well as for the conversion of tankers to floating production, storage and offloading (FPSO) and floating storage and offloading (FSO) units. It is also capable of constructing a wide variety of ships of up to 120 metres.


Masraf Al Rayan extends QR2bn funding to Al Meera

Masraf Al Rayan has extended QR2bn of funding to Al Meera to finance its development and expansion plans.


Commercial Bank issues CHF275m bond

The issue, which raised CHF275m, is a five-year fixed rate bond with an annual coupon of 3 per cent. The bond, which is the first public bond issue by a Qatari bank in Switzerland, is listed on the SIX Swiss Exchange and has been rated A1 by Moody's and A- by Standard & Poors.


Gulf International Services looking at acquisition

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Al Khaliji and IBQ are in final stages of merger

Al Khaliji and IBQ have announced that the proposed merger between the two companies is now entering the final stages of negotiations, including formal discussions with key regulators.


Qtel, Qatar Investment Authority may set up investment vehicle

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Qatar Exchange Since 2006


Embedded image removed - please refer to the Company's website for a chart depicting Qatar Exchange performance since 2006.


Leonard O'Brien                                                                                  Sandeep Nanda

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

Manager                                                                                                  Investment Adviser

2 March 2011                                                                                          2 March 2011


Consolidated Income Statement





For the period from

 1 July 2010 to

31 December 2010

For the period from
1 July 2009 to
31 December 2009




  Interest income on cash balances



  Realised loss on sale of financial assets at fair value through profit or loss



  Net changes in fair value on financial assets at fair value through profit or loss



  Commission rebate income on quoted equity investments



Total net income




  Investment Manager's fees




  Audit fees



  Other expenses




Total operating expenses



Profit before tax



  Income tax expense




Retained profit for the period



Basic and diluted earnings per share (cents)





Consolidated Statement of Comprehensive Income 



For the period from

 1 July 2010 to

31 December 2010

For the period from
1 July 2009 to
31 December 2009



Profit for the period



Other comprehensive profit/(loss)

Currency translation differences



Other comprehensive profit/(loss) for the period (net of tax)



Total comprehensive profit  for the period




Consolidated Balance Sheet





At 31 December 2010

At 30 June 2010



Financial assets at fair value through profit or loss




Due from broker



Other receivables and prepayments



Cash and cash equivalents




Total current assets



Issued share capital



Retained earnings



Other reserves




Total equity



Other creditors and accrued expenses



Total liabilities



Total equity & liabilities




The accompanying notes form an integral part of these consolidated accounts

Consolidated Statement of Changes in Equity


Share Capital

Retained Earnings

Other Reserves

(note 8)






Balance at 01 July 2009





Total comprehensive income for the period






Other comprehensive income

Foreign currency translation differences





Total other comprehensive expense





Total comprehensive profit/(loss) for the period





Contributions by and distributions to owners

Shares repurchased and cancelled





Total contributions by and distributions to owners





Balance at 31 December 2009







Balance at 01 July 2010





Total comprehensive income for the period






Other comprehensive income

Foreign currency translation differences





Total other comprehensive expense





Total comprehensive profit/(loss) for the period





Contributions by and distributions to owners

Dividends paid





Shares repurchased to be held in treasury



Total contributions by and distributions to owners



Balance at 31 December 2010






The accompanying notes form an integral part of these consolidated accounts

Consolidated Cash Flow Statement





For the period from

1 July 2010 to

31 December 2010

For the period from

1 July 2009 to

31 December 2009



Cash flows from operating activities

Purchase of investments



Proceeds from sale of investments



Interest received



Operating expenses paid



Net cash generated from/(used in) operating activities



Financing activities

Dividends paid



Cash used in share repurchases



Net cash used in financing activities



Net increase/(decrease) in cash and cash equivalents



Effects of exchange rate changes on cash and cash equivalents



Cash and cash equivalents at beginning of period



Cash and cash equivalents at end of period





The accompanying notes form an integral part of these consolidated accounts

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 of 1 cent each, with Warrants attached on the basis of 1 Warrant to every 5 Ordinary Shares. Following the placing on 31 July 2007, 171,355,000 Ordinary Shares and 34,271,000 Warrants were issued.


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


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


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


During the period 1 July 2010 to 31 December 2010 the Company repurchased 41,855 of its ordinary shares for a total value of US$30,210. All 41,855 shares have been repurchased and held in treasury bringing the total shares held in treasury at 31 December 2010 to 101,855. The repurchase was effected through retained reserves.


On 22 October 2010 the Company paid a dividend of 2.5 cents per share (US$5,835,483).


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


2              The Subsidiary

The Company has the following subsidiary company:


Country of incorporation

Percentage of shares held

Epicure Qatar Opportunities Holdings Limited

British Virgin Islands



3              Significant Accounting Policies

The Interim Report of the Company for the period ending 31 December 2010 comprises the Company and its subsidiary (together referred to as the "Group"). The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 30 June 2010. The interim consolidated financial statements are unaudited.


3.1           Basis of presentation

These financial statements have been prepared in accordance with International Financial Reporting Standard ("IFRS") IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 30 June 2010.


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


3.2           Segment reporting

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


4              Net Asset Value per Share

The net asset value per share as at 31 December 2010 is US$1.04 per share based on 233,419,307 ordinary shares in issue as at that date (excluding 101,855 shares held in treasury), (30 June 2010: US$0.84 based on 233,461,162 ordinary shares in issue, excluding 60,000 shares held in treasury).


5              Investments

Financial assets at fair value through profit or loss: all quoted equity securities


Security name



Abu Dhabi Commercial Bank (ADCB)



Emaar Properties Company (EMAAR)






Oman Qatari Telecommunication Company (NWRS)



Doha Bank (DHBK)



Doha Insurance (DOHI)



Barwa Real Estate (BRES)



Commercial Bank of Qatar (CBQK)



Gulf International Services (GISS)



Industries Qatar (IQCD)



Masraf Al Rayan (MARK)



National Leasing (NLCS)



Qatar Electricity & Water Company (QEWS)



Qatar Gas Transport (QGTS)



Qatar Insurance (QATI)



Qatar Islamic Bank (QIBK)



Qatar National Bank (QNBK)



Qatar Navigation (QNNS)



Qatar Telecom (QTEL)



Total Investments



6              Charges and Fees


6.1           Nominated Adviser and Joint Brokers


Panmure Gordon (UK) Limited as nominated adviser (for the purposes of the AIM Rules) and joint broker to the Company is entitled to receive an annual fee of £40,000 payable semi annually in advance on 1 January and 1 July.


From 8 September 2010 Oriel Securities Limited were appointed as joint broker to the Company and are entitled to receive an annual fee of £30,000 payable quarterly in advance.


Advisory fees paid to the nominated adviser and joint brokers for the period ended 31 December 2010 amounted to US$57,841 (31 December 2009: US$41,492).


6.2           Investment Manager's fees


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.


Management fees for the period ended 31 December 2010 amounted to US$1,385,425 (31 December 2009: US$1,252,980).


Performance fees

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


i)              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

ii)             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. For each subsequent performance period, the target net asset value per Ordinary Share means the net asset value per share, 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.


Performance fees accrued but not paid during the period ended 31 December 2010 amounted to US$ nil (31 December 2009: US$ nil).


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 Group between US$0 and 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. Subcustodian fees are also payable.


Custodian and subcustodian fees for the period ending 31 December 2010 amounted to US$253,729 (31 December 2009: US$303,829).


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 Group between US$0 and US$100 million, 12.5 basis points of the net asset value of the Group between US$100 and US$200 million and 10 basis points of the net asset value of the Group in excess of US$200 million, subject to a minimum monthly fee of US$15,000, payable quarterly in arrears.


The Administrator assists in the preparation of the financial statements of the Group 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 period ending 31 December 2010 amounted to US$186,230 and US$26,767 for additional services (31 December 2009: US$166,076 and US$29,751 respectively).


7              Cash and Cash Equivalents


31 December 2010

30 June 2010



Bank balances



Cash and cash equivalents




8              Other Reserves


Foreign currency translation reserve

Capital redemption reserves

Other reserves

30 June 2010





Balance at 1 July 2010





Foreign exchange translation differences





Balance at 31 December 2010






9              Earnings per Share


Basic and diluted earnings per share

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


31 December 2010

31 December 2009

Profit attributable to equity holders of the Company (US$'000)



Weighted average number of ordinary shares in issue (thousands)



Basic and diluted earnings per share (cents per share)




There is no difference between basic and diluted earnings per share as the warrants and options are not dilutive as the average share price for both periods is less than the exercise price of the warrants and options.


10            Directors' Remuneration


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


David von Simson as non-executive chairman is entitled to receive an annual fee of £45,000 (increased from £42,500 per annum from 1 November 2010).


Nick Wilson as chairman of the audit committee and in respect of his work regarding share repurchases is entitled to receive an annual fee of £42,500.


Leonard O'Brien, Paul MacDonald and Neil Benedict in their capacity as non-executive directors receive £30,000 each per annum (increased from £25,000 on 1 November 2010).


The Directors are each entitled to receive reimbursement of any expenses incurred in relation to their appointment. Total fees and expenses paid to the Directors for the period ended 31 December 2010 amounted to US$144,666 (31 December 2009: US$108,834).


11            Taxation


Isle of Man taxation

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


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 2010 dividends paid on behalf of holdings in Kuwait are to have withholding tax deducted at 15%.


12            Related Party Transactions


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


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


The Investment Manager, Epicure Managers Qatar Limited, is a related party by virtue of its ability to make operational decisions for the Company and through common directors. Fees payable to the Investment Manager are disclosed in note 6.2.


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


Paul Macdonald is currently chief executive officer of Helvetica Deutschland GmbH, which is owned by Unicos Partners LLP ("Unicos"), as is Epicure Managers Qatar Limited (the "Investment Manager").


13            Post Balance Sheet Events


The Company entered into a revised investment management agreement with the investment manager on 21 February 2011 implementing new fee arrangements conditional upon the passing of Resolution 1 at the EGM on 17 March 2011.


The Company has negotiated revised performance fee arrangements whereby the performance fee structure will be based upon the performance of the Company's adjusted net asset value (being net asset value plus dividends or distributions paid by the Company in any performance period in excess of dividends received by the Company from its investments after 1 January 2011) compared to the performance of the Qatar Exchange (QE) Index. Performance fees earned in any period where the Company outperforms the QE Index (but where adjusted net asset value performance is negative) will be accrued but withheld and paid at the end of the next period when the Company's performance exceeds that of the QE Index and the Company's adjusted net asset value per ordinary share increases.


Underperformance compared to the QE Index in respect of previous performance periods must be recovered prior to a performance fee being paid. In addition, if performance fees have been accrued but withheld prior to a performance period during which there has been underperformance compared to the QE Index, the accrued performance fees shall be reduced by aggregating the performance period(s) in respect of which the performance fees have been accrued but withheld and the current performance period of underperformance compared to the QE Index. The performance fee due to the investment manager is then calculated in respect of such aggregated performance period.


The Company has negotiated a reduction in the participation of the investment manager in outperformance by the Company of its adopted benchmark from 20 per cent. to 15 per cent. The Company has also negotiated a cap on any performance fee to the investment manager in respect of each performance period of 1.5 per cent. of net asset value.


The Company has agreed with the investment manager that the annual management fee will remain at 1.25 per cent. of the net asset value of the Company.


Also conditional upon shareholder approval at the EGM on 17 March 2011 is the proposed change of name of the Company to Qatar Investments Fund plc and the implementation of a new investment policy.


The Company is in the process of changing custodian with Anglo Irish Bank Corporation (International) PLC due to be replaced by HSBC.



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