Half Yearly Report

RNS Number : 4770I

Epicure Qatar Equity Opportunities

12 March 2010

 

12 March 2010

Epicure Qatar Equity Opportunities Plc

Interim Results for the six months ended 31 December 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 region, announces its interim results for the six months ended 31 December 2009.

Highlights

·      Despite another volatile period as a result of fluctuating regional and international sentiment, the Qatar Exchange returned 7.2% over the second half of 2009

·      The Qatari economy is expected to rebound strongly in 2010 on expansion of the country's natural gas sector  and a surge in construction activity, with a project pipeline of $212 billion

·      Inflation continues to be low in the Gulf countries with Qatar's CPI falling by 5.2% in the 11 months to November 2009

·      Forthcoming full year 2009 results for Qatari companies should have a positive impact on market sentiment in coming months

Financial highlights

·      Net asset value at 31 December 2009 of US$187.1 million, or US$0.80 per share

·      Profit after tax of US$8.3 million and basic earnings per share of 3.55 cents

·      Buybacks continued with 1.654 million shares purchased and cancelled during the period

Holdings as of 31 December 2009

·      24 companies in the GCC: 19 in Qatar, four in UAE and one in Kuwait

·      Total market value of investments of US$185.3 million

·      The top five investments constitute 58.2% of the portfolio of the Company

·      Substantially invested in the banking and financial sector, 49.7% of investments

David von Simson, chairman of EQEO, commented: "The period covered by these results broke down into two very different quarters: the third quarter of 2009 was characterised by strong local stock market performances, whereas the fourth was overshadowed by news from Dubai World, although fears of a contagion effect in the region ultimately proved unfounded. There is reason to believe that economic growth will continue to be robust in 2010, driven by the natural gas sector and also the government's continuing investment in the country's infrastructure."

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, Ashton Clanfield

Chairman's Statement

I am pleased to present your Company's interim results for the six months ended 31 December 2009.

Results

As at 31^st December, we had a portfolio of 24 investments in quoted companies in the Gulf, with 19 of them being in Qatar, a further four investments in UAE and one in Kuwait.

Results for the six months ended 31st December 2009 showed a profit after tax of US$8.3 million, resulting from realised gains and fair value adjustments, and equating to basic earnings per share of 3.55 cents.  The net asset value at 31st December 2009 was US$187.1 million, which translates into a net asset value per share of US$0.80, based on 234,174,952 ordinary shares in issue as at that date.

The period covered by these results broke down into two very different quarters: the third quarter of 2009 was characterised by strong local stockmarket performances, such as the 14.2% increase in the Qatar Exchange, whereas the fourth quarter was overshadowed by the news from Dubai World, although fears of a contagion effect in the region ultimately proved unfounded.

Outlook

As detailed in the Investment Adviser and Manager's report there is reason to believe that economic growth will continue to be robust in 2010, driven by the natural gas sector and also the government's continuing investment in the country's infrastructure. Inflation meanwhile continues to be low in the local Gulf economies.

Dividend

The Company's stated objective remains the achievement of capital growth. The Board has nevertheless taken soundings from significant investors, and as a result intends, subject to certain factors and of course market conditions, to institute a distribution policy which will be announced at the time of the full year's results.

Discount to Net Asset Value

The Board is very mindful of 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 continue to be taken.

The Board has continued its policy of share buybacks with 1,654,000 shares purchased and cancelled during the period. We expect the introduction of dividend payments to have a positive impact. The move of trading in the Company's shares to SETS has had a beneficial effect. A member of the Board has day to day responsibility for the share buyback programme and intervenes actively in the market.  At the year-end, the discount was in single figures although this has widened out somewhat at the time of writing.

David von Simson

Chairman

11 March  2010

Report of the Investment Manager and Investment Adviser               

                                            REGIONAL EQUITY MARKET OVERVIEW

During the six months ended 31 December 2009 the Qatar Exchange (QE), formerly named the Doha Securities Market (DSM), underwent another volatile period in line with the regional and international market and global sentiment. On the back of the Dubai debt crisis all the regional markets turned negative.  In the fourth quarter, the QE returned a negative 6.1 per cent and closed with a six month return of 7.2 per cent.

Indices	30-Jun-09	31-Dec-09	Change
Qatar (DMS)	6,491.65	6,959.17	7.2%
Saudi (TASI)	5,596.46	6,121.76	9.4%
Dubai (DFMGI)	1,784.45	1,803.58	1.1%
Abu Dhabi (ADI)	2,631.32	2,743.61	4.3%
Kuwait (KWSE)	8,080.30	7,005.30	-13.3%
Bahrain (BAX)	1,581.67	1,458.24	-7.8%
Oman (MSI)	5,612.21	6,368.80	13.5%

Most Gulf stock markets ended 2009 higher following massive losses in 2008 due to the global economic downturn, but their recovery was interrupted by the Dubai debt crisis.  After slumping to a year low in the first three months of 2009, five of the seven markets made a strong comeback in the third quarter that continued into the start of the fourth quarter, with the Saudi, Dubai and Abu Dhabi bourses each adding more than 30 per cent. With the exception of Kuwait and Bahrain, all the regional bourses ended the year to date in positive territory, led by Saudi Arabia which gained 27.5 per cent. For the six months ended December 2009, five of the seven markets made positive returns. Oman led the table with a 13.5% return followed by Saudi and Qatar.

Capitalising on a high oil price and signs of global recovery, most of the bourses in the energy-rich region reached their highest point of the year in October, after which they started to decline on news of Dubai debt woes and profit-taking. Investment managers, however, remain generally positive about the prospects for the region, and especially Qatar, in 2010. With large inflows of capital from the government's increasing hydrocarbon (particularly gas) revenues, and a highly innovative programme for infrastructure spending, the Qatar stock market is expected to show an improved trend in 2010.

At the end of December 2009 the capitalisation of the Qatar Exchange stood at QR320 billion (US$88 billion) compared to QR270.2 billion (US$74 billion) at the end of June 2009.

Indices	31-Mar-09	30-Jun-09	30-Sep-09	31-Dec-09	YTD
Qatar (DSM)	-29.0%	32.8%	14.2%	-6.1%	1.1%
Saudi (TASI)	-2.1%	19.0%	13.0%	-3.2%	27.5%
Dubai (DFMGI)	-4.1%	13.8%	22.8%	17.7%	10.2%
Abu Dhabi (ADI)	4.1%	5.8%	18.7%	-12.2%	14.8%
Kuwait (KWSE)	-13.3%	19.8%	-3.3%	-10.4%	-10.0%
Bahrain (BAX)	-11.5%	-0.9%	-1.7%	-6.2%	-19.2%
Oman (MSI)	-14.9%	21.2%	17.1%	-3.1%	17.0%

Source: Qatar Insurance Company, Reuters

Macro Update

Qatar's nominal gross domestic product (GDP) grew 11 per cent in the third quarter of 2009 compared to the previous quarter.  The total output of the country in the third quarter hit QR76 billion (US$20.8 billion), compared with QR68 billion in the second, and QR70 billion in the first quarter.

GDP Breakdown	Q1 08	Q2 08	Q3 08	Q4 08	2008	Q1 09	Q2 09	Q3 09
Mining & Quarrying	52,345	63,091	65,344	41,347	222,127	30,662	31,428	36,362
- Oil	24,862	31,512	30,632	13,159	100,165	11,439	15,566	17,854
- Gas	25,661	29,016	31,790	26,146	112,612	17,401	13,990	16,410
Total Industries	74,659	87,765	95,984	68,926	327,334	56,182	57,683	63,192
Total   GDP	85,877	96,589	105,366	77,651	365,483	70,883	67,865	75,521

Source: Source: Reuters, Qatar Statistics Authority, QIC

The third quarter marked a period of slower economic activity due to the summer months and, in 2009, also due to the fact that Ramadan came shortly after the end of summer holidays.  Some key aspects were:

• The contribution from the oil sector grew due to the average price of crude oil rising from US$60 to US$68 per barrel

• The gas sector recovered from the decline seen in the first half of 2009 due to price rises for all major commodities.  LNG prices were around half of the peak level achieved in the fourth quarter of 2008

• Manufacturing showed strong recovery, increasing by 26.5 per cent

• Construction activity slowed with a 1.0 per cent decrease

• The financial, insurance, business and real estate services sector declined by 7.5 per cent

Inflation is coming down

Consumer prices declined on a monthly basis for the sixth consecutive month in November. The decline in the consumer price index (CPI) was driven by lower housing and food prices, which outweighed increases in the other components of the CPI.  Qatar's monthly Consumer Price Index (CPI) fell by 0.4 per cent in November compared to October to stand at 121.8 (2006=100), down 5.2 per cent from the beginning of 2009.

Only a limited comparison of annual inflation rates can be made, as the new monthly CPI only started in January.  Consumer prices have fallen 5.2 per cent since the start of the year and are down 10.4 per cent compared to the levels prevailing during the fourth quarter of 2008.  In addition, money supply has contracted sharply, with narrow (M1) and broad (M2) money supply down 25.7 per cent and 8.8 per cent respectively year-on-year in September.

Qatari banks have limited Dubai exposure

The Dubai debt standstill announcement rippled across to the QE which managed, nonetheless, to recoup most of its lost ground over the course of the fourth quarter. In due course, all the main listed banks revealed no exposure to Dubai World and its related entities.  The Investment Adviser believed at the time that the fall out of the Dubai debt crisis would have only a limited impact on the Qatari banking sector.

As a result of the crisis, some concerns were also raised over the ability of GCC companies to raise international finance.  However, any such concerns were, in the opinion of the Investment Adviser, likely to be overcome in Qatar given the strength of the domestic economy and public finances. This view appears to have been shared by financial markets which rebounded after an initial slump when the Dubai debt story first broke. Subsequent to the Dubai announcement the Doha stock market initially fell by 8 per cent, but then recovered almost all of the ground lost. In addition, CDS rates on Qatar initially jumped a modest 23 bps, before shedding 15 bps to hold at 104 bps, the lowest in the region after Saudi Arabia.

Qatar economy looking solid

After a modest slowdown in 2009, the Investment Adviser expects economic growth in Qatar to rebound strongly in 2010, thanks to the continuing expansion of the country's natural gas sector and the government's continuing investment in the country's infrastructure. The increase in overall economic activity will continue to be driven by the natural gas sector, as additional LNG output capacity is slated to come online next year.

The state-owned Qatar Petroleum's joint ventures, Qatargas and RasGas, are expected to bring on stream at least two LNG trains in 2010, both with a capacity of 7.8 million tons per annum (mta), which would boost overall production capacity to nearly 70 mta.  Along with Qatar's LNG surge, crude-oil output is expected to grow in 2010 and should no longer be a drag on growth, as it was in 2009.  The government continues to maintain its investments in the hydrocarbon sector, with recently announced petrochemical projects in excess of $3 billion.  The Investment Adviser expects these projects to benefit from cheap feedstock, capitalising on Qatar's natural advantage in this sector.

With large future revenue flows and immediate access to around US$10 billion in funds raised through sovereign bond issues during 2009, the government is well placed to advance its development agenda and diversification efforts during 2010-11.  Spending on infrastructure, construction and public wages is likely to rise rapidly, stimulating robust growth in the non-hydrocarbon sector.

Embedded image removed - please refer to the Company's website www.epicure-quatarequity.com for a pie chart depicting Qatar project pipeline ($212.5 bn)

Source: Meed Projects

Construction activity in particular is expected to surge, with projects worth over US$66 billion currently planned or underway out of a total project pipeline of US$212.5 billion. The financial sector is expected to post sustained growth, with a modest pick-up in credit aided by resumed population growth and rising per capita incomes. Credit growth, however, is unlikely to return to the rapid pre-crisis rates and the real estate sector may continue to drag on the economy as oversupply dampens prospects and prices in 2010.

With the government unveiling emergency anti-crisis measures and, despite lower energy prices, also maintaining strong public spending and investment, the growth of Qatar's non-hydrocarbon sector is expected to continue.  The Qatari government continues to be one of the best capitalised governments in the region and this was further demonstrated by its purchase of 5 per cent of new equity in each of the listed banks (with the exception of Qatar National Bank) during the month of December. 

In spite of the crisis, rating agencies have continued to uphold their ratings on Qatari debt and Qatari companies continue to post healthy results relative to their regional peers.  On the back of a rise in oil revenue and aggressive government spending plans, we believe that a nascent recovery is likely to gain momentum as the year progresses.

Company Update

As of 31 December 2009 the Company's NAV improved to US$0.80 compared to US$0.76 as at 30 June 2009.

The Company is invested in 24 companies in the GCC, with 19 of them being in Qatar, four in the UAE, and one in Kuwait (30 September 2009: 17 in Qatar, four in UAE, one in Kuwait).  The total market value of investments was US$185.3 million at the end of the fourth quarter.  At the end of 2009 the Company was substantially fully invested with cash of 1.7 per cent of NAV.

Corporate Profitability

The global recession has affected the profitability of companies listed on the QE. After a long period of growth, the first nine months saw the total profitability of companies listed on the exchange fall year-on-year for the first time in the last four years. The total combined net profit for all companies listed on the QE for the nine months ended 30 September 2009 amounted to QR19.9 billion compared to QR23.8 billion for the comparable period in 2008, a 16.5 per cent decrease.  The Investment Adviser does not expect to see any major negative surprises in the fourth quarter results and expects that most companies will track their last year results with an improved outlook for 2010.

Within the portfolio's major holdings, Industries Qatar, the petrochemical giant, revealed the greatest decline in income due to the price collapse for petrochemical and fertilizer products. The Investment Adviser believes that prices for petrochemicals and other related products have already bottomed and continues to see improving performance from the product portfolio of Industries Qatar.  At current levels of oil prices, the Investment Adviser anticipates that the Company will see the full benefit of planned capacity additions between Q1 2010 and 2011.  The Investment Adviser expects the group's gearing to both an economic recovery and commodity price increases to enhance future earnings. 

                    

 Industry allocation

The Company's largest sector exposure continues to be to the financial services industry.  Exposure to the banking sector stood at 49.7 per cent on 31 December 2009 compared to 43 per cent at 30th June 2009.

We believe the Qatari government have put in place effective liquidity support measures which helped the Qatari banking sector broadly escape unscathed of any major asset quality issues. Key measures included:

Ø Investment of c.$5.3bn by QIA to acquire up to 20% stake in listed banks (excluding QNB which is already 50% owned by QIA) thereby injecting quality capital into the banking system;

Ø Purchase of real estate lending portfolios of up to QAR15bn from Qatari bank balance-sheets. Banks were given liberal options to choose which lending accounts to sell to the state irrespective of those accounts being performing or overdue.

Ø Purchase of Qatar listed equity portfolios off bank balance sheets whereby the government absorbed between QAR1.5-2.5bn of potential losses from banks' equity/income statement. Equity portfolios were paid for in mix of cash and Qatar sovereign bonds and banks are allowed to buyback these portfolios at their original sales price any time within 12m of date of sale (Q1'09) within a maximum period of five years.

The above mentioned proactive measures by the government put in place effective support to the relatively stable Qatari banking sector. We believe Qatari banks, as intermediaries of state-sponsored investments, will be the key beneficiaries of this economic drive. Against robust macro backdrop we expect banks loan growth to be healthy for coming years. During the period, the Investment Adviser increased the allocation to the banking sector to take advantage of the suppressed valuation levels. Exposure to the banking sector stood at 49.7 per cent on 31 December 2009 compared to 43 per cent at 30th June 2009.

The services sector, which is broadly defined and includes companies in telecommunications and utilities, accounted for 23.4 per cent of all investments. The Company's exposure to the real estate sector stood at 5.3 per cent at the end of 2009.  The industries and insurance sectors accounted for a further 16.2 per cent and 4.5 per cent respectively.

Embedded image removed - pleaserefer to the Company's website www.epicure-quatarequity.com for a pie chart depicting Industry Allocation (% of Mkt value).

Portfolio breakdown - top five holdings

Top Five Holdings

Company	Sector	% of NAV
Industries Qatar	Industries	15.1&
Qatar National Bank	Banks	14.6%
Qatar Islamic Bank	Banks	11.8%
Commercial Bank of Qatar	Banks	9.5%
Rayan Bank	Banks	7.2%

Source: Qatar Insurance Company S.A.Q.                                          

 As of 31 December 2009

At the end of the period ended 31st December 2009, Industries Qatar's investment exposure as a % of NAV slightly crossed the maximum individual stock exposure of 15 per cent as set out in the Company's investing policy due to its relative performance in the last week of the quarter. However, in the subsequent week the Investment Adviser took relevant steps to bring down the exposure below the permitted level. At 31 December 2009, the top five investments of the Company constituted 58.2 per cent of NAV (53.2 per cent 30 June 2009).

Industries Qatar (15.1% of NAV) Market Cap (USD) 16,014 mln

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.

(Website: www.industriesqatar.com.qa)

Qatar National Bank (14.6% of NAV) Market Cap (USD) 12,689 mln

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 QR179.3 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.

(Website: www.qnb.com.qa)

Qatar Islamic Bank (11.8% of NAV) Market Cap (USD) 4,341 mln

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 Lebanon, Malaysia, Sudan, Yemen, UK and Bahrain.

(Website: www.qib.com.qa)

Commercial Bank of Qatar (9.5% of NAV) Market Cap (USD) 4,297 mln

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.

(Website: www.cbq.com.qa)

Masraf Al Rayan (7.2% of NAV) Market Cap (USD) 2,577 mln

Masraf Al Rayan, also known as Al Rayan Bank, is a publicly-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 fully-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.

(Website: www.alrayan.com)

Holdings as at 31 December 2009

As at 31 December 2009, the Company was invested in 19 companies in Qatar, four companies in UAE, and one company in Kuwait.  Investments outside Qatar constituted 0.5 per cent of the Company's investments.

Security name	No. of   Shares		US$'000			Region	Sector
Al-Dar Properties (ALDAR UH)	10,000		13			UAE	Real Estate Estatendustry
First Gulf Bank (FGB DH)	95,000		415			UAE	Banks
Tamweel PJSC (TAMWEEL UH)	100,000		-			UAE	Banks
Union Properties Company (UPP UH)	1,625,096		296			UAE	Real Estate
Global Investment House K.S.C.C. (GLOBAL KK)	341,500		111			KUWAIT	Banks
Al Khaleej Bank (KCBK QD)	388,860		1,483			QATAR	Banks
Al Meera Consumer Goods (MERS QD)	10,000		148			QATAR	Services
Barwa Real Estate (BRES QD)	1,067,881		9,642			QATAR	Real Estate
Commercial Bank of Qatar (CBQK QD)	1,056,687		17,834			QATAR	Banks
Doha Bank (DHBK QD)	808,705		9,987			QATAR	Banks
Gulf International Services (GISS QD)	1,148,636		9,741			QATAR	Services
Industries Qatar (IQCD QD)	908,872		28,384			QATAR	Industry
Masraf Al Rayan (MARK QD)	3,645,708		13,407			QATAR	Bank
National Leasing (NLCS QD)	116,123		682			QATAR	Services
Qatar Electricity and Water Co (QEWS QD)	322,725		857			QATAR	Services
Qatar Gas Transport (QGTS QD)	1,644,702		10,742			QATAR	Services
Qatar Insurance (QATI QD)	501,878		8,553			QATAR	Insurance
Qatar Islamic Bank (QIBK QD)	1,037,850		22,045			QATAR	Banks
Qatar Meat and Livestock (QMLS QD)	40,000		194			QATAR	Insurance
Qatar National Bank (QNBK QD)	671,059		27,274			QATAR	Banks
Qatar National Cement Co (QNCD QD)	97,300		2,086			QATAR	Industry
Qatar Navigation (QNNS QD)	329,311		5,802			QATAR	Services
Qatar Telecom (QTEL QD)	162,851		6,445			QATAR	Services
Vodafone Qatar (VFQS QD)	511,250		1,179			QATAR	Services
Total				185,320

CONCLUSION

While the Investment Adviser believes that Qatar will continue to demonstrate strong economic growth over the coming quarters, a further recovery in the stockmarket will be dependent on greater liquidity and improved investor sentiment, which for the time being continues to be negative. The forthcoming full year 2009 results of Qatari companies will, in the opinion of the Investment Adviser, have a positive impact on the outlook for the bourse over the coming months. Among the GCC markets we are bullish on the outlook for Qatar, whose valuation remains attractive. In addition to this, taking into account Qatar's strong macro-economic environment, the DSM20 index remains an overall laggard in the region on a year-to-date basis.

Leonard O'Brien                                                                                  Sandeep Nanda

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

Manager                                                                                                  Investment Adviser

11 March 2010                                                                                                        11 March 2010

Consolidated Income Statement

		(Unaudited)	(Unaudited)
	Note	For the period from 1 July 2009 to 31 December 2009	For the period from 1 July 2008 to 31 December 2008
		US$'000	US$'000
Income
Interest income on cash balances		1	37
Dividend income on quoted equity investments		-	9
Realised gain/(loss) on sale of financial assets at fair value through profit or loss		15,094	(5,217)
Net changes in fair value on financial assets at fair value through profit or loss		(4,739)	(149,433)
Total net income/(expense)		10,356	(154,604)
Expenses
Investment Manager's fees	6.2	1,253	1,453
Audit fees		8	16
Other expenses	6	756	707
Total operating expenses		2,017	2,176
Profit/(loss) before tax		8,339	(156,780)
Income tax expense	11	-	-
Retained profit/(loss) for the period		8,339	(156,780)
Basic and diluted earnings /(loss) per share (cents)	9	3.55	(63.34)

Consolidated Statement of Comprehensive Income
		(Unaudited)	(Unaudited)
		For the period from 1 July 2009 to 31 December 2009	For the period from 1 July 2008 to 31 December 2008
		US$'000	US$'000
Profit/(loss) for the period		8,339	(156,780)
Other comprehensive (loss)/income
Currency translation differences		(119)	1,489
Other comprehensive (loss)/income for the period (net of tax)		(119)	1,489
Total comprehensive profit/(loss) for the period		8,220	(155,291)

Consolidated Balance Sheet

		(Unaudited)	(Audited)
	Note	At 31 December 2009	At 30 June 2009
		US$'000	US$'000
Financial assets at fair value through profit or loss	5	185,320	171,070
Due from broker		825	814
Other receivables and prepayments		29	16
Cash and cash equivalents	7	2,340	9,289
Total current assets		188,514	181,189
Issued share capital		2,342	2,359
Retained earnings		183,928	176,770
Other reserves	8	915	1,017
Total equity		187,185	180,146
Other creditors and accrued expenses		1,329	1,043
Total liabilities		1,329	1,043
Total equity & liabilities		188,514	181,189

Consolidated Statement of Changes in Equity

	Share Capital	Share Premium	Retained Earnings	Other Reserves (note 8)	Total
	US$'000	US$'000	US$'000	US$'000	US$'000
Balance at 01 July 2008	2,475	245,051	88,213	(1,241)	334,498
Total comprehensive income for the period
Loss	-	-	(156,780)	-	(156,780)
Other comprehensive income
Foreign currency translation differences	-	-	-	1,489	1,489
Total other comprehensive income	-	-	-	1,489	1,489
Total comprehensive loss for the period	-	-	(156,780)	1,489	(155,291)
Contributions by and distributions to owners
Transfer to distributable reserves	-	(245,051)	245,051	-	-
Total contributions by and distributions to owners	-	(245,051)	245,051	-	-
Balance at 31 December 2008	2,475	-	176,484	248	179,207

Balance at 01 July 2009	2,359	-	176,770	1,017	180,146
Total comprehensive income for the period
Profit	-	-	8,339	-	8,339
Other comprehensive income
Foreign currency translation differences	-	-	-	(119)	(119)
Total other comprehensive expense	-	-	-	(119)	(119)
Total comprehensive profit for the period	-	-	8,339	(119)	8,220
Contributions by and distributions to owners
Share buy-backs	(17)	-	(1,181)	17	(1,181)
Total contributions by and distributions to owners	(17)	-	(1,181)	17	(1,181)
Balance at 31 December 2009	2,342	-	183,928	915	187,185

Consolidated Statement of Cash Flows

		(Unaudited)	(Unaudited)
	Note	For the period from 1 July 2009 to 31 December 2009	For the period from 1 July 2008 to 31 December 2008
		US$'000	US$'000
Cash flows from operating activities
Purchase of investments		(42,883)	(8,216)
Proceeds from sale of investments		39,740	23,022
Interest received		1	37
Dividends received		-	55
Performance fee paid		-	(15,434)
Operating expenses paid		(2,014)	(2,940)
Net cash used in operating activities		(5,156)	(3,476)
Financing activities
Cash used in share buy-backs		(1,181)	-
Cash held at broker to finance share buybacks		-	(1,900)
Net cash used in financing activities		(1,181)	(1,900)
Net decrease in cash and cash equivalents		(6,337)	(5,376)
Effects of exchange rate changes on cash and cash equivalents		(612)	(77)
Cash and cash equivalents at beginning of period		9,289	15,767
Cash and cash equivalents at end of period	7	2,340	10,314

Notes to the Interim 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.

In the year ended 30 June 2009 the company purchased 11,698,571 of its ordinary shares for a total value of US$4,393,250.

During the period 1 July 2009 to 31 December 2009 the Company purchased 1,654,000 of its ordinary shares for a total value of US$1,180,282. The purchased shares have been cancelled upon acquisition. The buy-back was effected through retained reserves.

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

2              The Subsidiary

The Company has the following subsidiary company:

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

3              Significant Accounting Policies

The Interim Report of the Company for the period ending 31 December 2009 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 period ended 30 June 2009. The interim consolidated financial statements are unaudited.

The Group applies revised IAS 1 Presentation of Financial Statements (2007), which became effective as of 1 January 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. This presentation has been applied in these condensed interim financial statements as of and for the six months period ended on 31 December 2009. Comparative information has been re-presented so that it also is in conformity with the revised standard.

Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

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 period ended 30 June 2009.

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 2009 is US$0.80 per share based on 234,174,952 ordinary shares in issue as at that date (30 June 2009: US$0.76 based on 235,828,952 ordinary shares in issue).

5              Investments

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

Security name	Number	US$'000
Al-Dar Properties (ALDAR)	10,000	13
First Gulf Bank (FGB)	95,000	415
Tamweel PJSC (TAMWEEL)	100,000	-
Union Properties Company (UPP)	1,625,096	296
Global Investment House K.S.C.C. (GLOBAL)	341,500	111
Al Khaleej Bank (KCBK)	388,860	1,483
Al Meera Consumer Goods (MERS)	10,000	148
Barwa Real Estate (BRES)	1,067,881	9,642
Commercial Bank of Qatar (CBQK)	1,056,687	17,834
Doha Bank (DHBK)	808,705	9,987
Gulf International Services (GISS)	1,148,636	9,741
Industries Qatar (IQCD)	908,872	28,384
Masraf Al Rayan (MARK)	3,645,708	13,407
National Leasing (NLCS)	116,123	682
Qatar Electricity & Water Company (QEWS)	322,725	8,857
Qatar Gas Transport (QGTS)	1,644,702	10,742
Qatar Insurance (QATI)	501,878	8,553
Qatar Islamic Bank (QIBK)	1,037,850	22,045
Qatar Meat and Livestock (QMLS)	40,000	194
Qatar National Bank (QNBK)	671,059	27,274
Qatar National Cement Co (QNCD)	97,300	2,086
Qatar Navigation (QNNS)	329,311	5,802
Qatar Telecom (QTEL)	162,851	6,445
Vodaphone Qatar (VFQS)	511,250	1,179
Total Investments		185,320

6              Charges and Fees

6.1           Nominated Adviser

As nominated adviser to the Group 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 on 1 January and 1 July.

Advisory fees paid to the Nominated Adviser for the period ended 31 December 2009 amounted to US$41,492 (31 December 2008: US$44,265).

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.

Annual management fees for the period ended 31 December 2009 amounted to US$1,252,980 (31 December 2008: US$1,452,982).

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 2009 amounted to US$ nil (31 December 2008: US$ nil).

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 $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. This transfer has now taken place.

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 $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 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 2009 amounted to US$303,829 (31 December 2008: US$261,510).

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 2009 amounted to US$166,076 and US$29,751 for additional services (31 December 2008: US$211,653 and US$28,048 respectively).

7              Cash and Cash Equivalents

	31 December 2009	30 June 2009
	US$'000	US$'000
Bank balances	1,030	6,795
Cash at Broker	1,310	2,494
Cash and cash equivalents	2,340	9,289

8              Other Reserves

	Foreign currency translation reserve	Capital redemption reserves	Other reserves (see note 6.2)	30 June 2009
	US$'000	US$'000	US$'000	US$'000
Balance at 1 July 2009	229	116	672	1,017
Foreign exchange translation differences	(119)	-	-	(119)
Share buy-back	-	17	-	17
Balance at 31 December 2009	110	133	672	915

9              Earnings per Share

Basic and diluted earnings per share

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

	31 December 2009	31 December 2008
Profit/(loss) attributable to equity holders of the Company (US$'000)	8,339	(156,780)
Weighted average number of ordinary shares in issue (thousands)	235,184	247,528
Basic and diluted earnings/(loss) per share (cents per share)	3.55	(63.34)

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. 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 £17,500 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 period ended 31 December 2009 amounted to US$108,834 (31 December 2008: US$79,846).

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 Group 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. In addition capital gains made by the Group on disposal of shares in Qatari companies are not subject to tax in Qatar. Finally 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%.

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. 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.

13            Post Balance Sheet Events

Since the period end the Company has purchased a further 339,835 ordinary shares for a total value of US$235,664.

 

END

 

 

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