Interim Results
Epicure Qatar Equity Opportunities
14 March 2008
14 March 2008
Epicure Qatar Equity Opportunities Plc
Interim Results for the period 26 June 2007 - 31 December 2007
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 maiden interim results
for the period 26 June 2007 to 31 December 2007.
Highlights
• Second fundraising of US$85 million in December; total capital raised
since launch of US$256 million
• Strong performance of the Doha Stock Market with an annual return of
35.48 percent in 2007
• Liquidity and transaction volumes significantly increased on the DSM
• Speculation that regional currencies will be revalued upward against
their Dollar peg, by between 5 and 30 percent
Financial highlights
• Net asset value at 31 December 2007 of US$ 279.6 million, or $ 1.13 per
share
• Profit after tax of US$ 31.9 million
• Basic earnings per share of 17.7 cents
Holdings as of December 31st 2007
• 27 companies in the GCC: 19 in Qatar and 8 in UAE and Kuwait
• Total market value of investments of US$239 million
• The top 10 investments constitute 57.82% of the NAV of the Company
• Substantially invested in the banking and financial sector at 47.85% of
the NAV
David von Simson, chairman of EQEO, commented: 'There are many reasons to be
optimistic about the future prospects for the GCC region generally, and Qatar in
particular. Our portfolio appears well positioned to generate continuing
positive returns.'
For further information
Epicure Qatar Equity Opportunities plc - +41 (0) (22) 908 1190
Leonard O'Brien
M:Communications - +44 (0) 20 7153 1269 Panmure Gordon - +44 (0) 20 7459 3600
Tim Draper Richard Gray
Marylene Guernier Andrew Potts
Chairman's Statement
I would like to welcome shareholders to the Company and I am pleased to present
your Company's first set of interim accounts. The Company was admitted to
trading on AIM on 31st July 2007 and these therefore cover the period to 31st
December 2007.
Thanks to the Investment Adviser's strong understanding of the local market, and
work performed ahead of the launch of the Company on portfolio construction, the
issue proceeds were rapidly invested, and we were able to take advantage of the
rising local stockmarkets throughout the late summer and autumn. As a result of
further strong demand from investors in the Company we raised, in December,
through a secondary share issue of 76.17 million shares, an additional US$85
million of capital which, together with the initial fund raising of US$171m,
brought the total capital raised to US$256 million.
As more fully described in the Report of the Manager / Investment Adviser, the
Company has built a solid portfolio of 27 investments in GCC companies, with 19
of them in Qatar and a further 8 investments in UAE and Kuwait. As at time of
writing the Company is almost fully invested.
Results
Results for the period show a profit after tax of US$31.9 million, and basic
earnings per share of 17.7 cents. The net asset value at 31st December 2007 was
US$279.6 million and translates into a net asset value of $1.13 per share, based
on 247,527,523 ordinary shares in issue as at that date.
Against a background of what has been a difficult period for the world's
markets, and a period during which the Company has only commenced its
operations, we are pleased with this performance. It is also noteworthy that
although the world markets have remained volatile and difficult thus far in
2008, the performance of the Company has remained resilient, with most recently
published NAV of 6 March 2008 at a level of US$1.1799 per share .
Dividend
The Company's stated objective remains the achievement of capital growth, and it
is thus anticipated that substantially all realised capital gains derived from
the Company's investment portfolio will continue to be re-invested. The Board is
therefore not recommending the payment of an interim dividend.
Outlook
As more fully described in the Report of the Manager / Investment Adviser, there
are many reasons to be optimistic about the future prospects for the GCC region
generally, and Qatar in particular. Our portfolio appears well positioned to
generate continuing positive returns.
David von Simson
Chairman
13 March 2008
Report of the Manager and Investment Adviser
Background to the Investment Opportunity
Epicure Qatar Equity Opportunities plc. ('the Company') was established to
capitalise on attractive investment opportunities in Qatar and the Gulf
Cooperation Council ('GCC') region, due to the economic boom being experienced
in the area. The Company seeks to invest in quoted Qatari equities listed on the
Doha Stock Market ('DSM') in addition to companies soon to be listed, with a
possible allocation of up to 15 percent in regional GCC listed companies.
Epicure Managers Qatar Limited was appointed as the Company's Manager. The
Manager and the Company has engaged Qatar Insurance Company S.A.Q. to act as the
Company's Investment Adviser. A top-down screening process, as well as a
fundamental industry and company analysis is employed. It is not intended that
the Investment Performance is benchmarked to any particular regional index.
Investment Overview and Performance
The Company was admitted on AIM on 31 July, 2007 and raised a total of
US$171.355 million, with the Qatar Investment Authority and Qatar Insurance
Company making anchor investments of US$25 million each. The Company
successfully completed a secondary issue in the fourth quarter 2007, of 76.17m
shares at a price of US$1.1170 per share, raising additional capital of US$85.08
million. This brought the total funds raised since inception to US$256.44
million.
Based on the closing price of December 31 2007, the NAV had reached US$1.13 per
share, up 17 percent since inception (with an initial NAV of US$0.9641), even
through the 'ramp-up' investment period. Since inception, our focus has been to
invest a substantial part of the Company's funds within 2007, and we are pleased
with the pace of investments that have taken place. As at the date of writing we
are substantially fully invested.
The global markets experienced substantial volatility during the past few
months. Most markets of the GCC, and in particular the DSM were relatively
stable during this period. In fact we are witnessing significant international
and regional interest in the Qatari stock market, which has driven the stock
market to recent highs, with blue chips gaining during this period. The DSM
ended the year with a strong performance, displaying an annual return of 35.48
percent. Strong fundamentals, in addition to renewed domestic and international
interest, have helped the DSM and other GCC markets post excellent returns for
2007.
With the renewed interest in the stock market, the liquidity in the market
increased significantly, and the average daily volumes showed a marked increase.
The volumes have increased four fold from the first half of the year touching a
high of QR 500 million (US$140 million) per day during the last quarter of the
year. We expect that companies will continue to show growth accordingly. The
next quarter will provide more visibility on performance, when a substantial
number of companies report their earnings, which we believe will cause the
markets to react positively.
We have also initiated investments in two of the regional countries, namely
United Arab Emirates and Kuwait. Under the Investment Guidelines as more fully
set out in the Company's Admission Document, the fund has the ability to invest
up to 15 percent of its assets in countries other than Qatar. Currently 9.34
percent of the investments are in UAE and Kuwait distributed among eight
companies.
The macro story for the region continues to be strong with substantial projects
in the pipeline, which continues to be expanded on a daily basis. We believe
that the positive macro economic trends in the region would continue to be
strong in the medium term. During the last quarter of 2007, several notable
themes have included:
(i) Revaluation of regional currencies
During the fourth quarter we have witnessed increasing speculation that regional
currencies would be revalued upward against their Dollar peg, by anywhere in the
region of 5 to 30 percent. This came to a head during the GCC summit in early
December 2007, as it was expected that the countries concerned would reach
consensus on revaluation. Ultimately there was no outcome, but the Investment
Adviser believes that such a discussion may arise again, especially if the US
undergoes further pressure against global currencies. The Company may benefit
from any such revaluation as all of the investments are held in regional
currencies.
(ii) Leverage
Leverage is being used by companies to finance their growth, both for the
purpose of acquisitions, and as a quasi-hedge against any revaluation of
currency. Despite the credit crunch, we are observing the ability of companies
to raise money at reasonable cost.
(iii) Increasing geographical reach
Either through establishment of direct operational capabilities or through
acquisitions, we continue to see companies strengthen their sustainability and
growth prospects by increasing their geographical reach.
(iv) Reporting season
During the first quarter of 2008, all the companies on the DSM will report their
full year earnings for 2007. The anticipation of stock and cash dividends is
expected to be the driver of performance over the coming months.
(v) Impact of the credit crisis
We do not believe that the sub-prime effects experienced by GCC financial
institutions will match those being felt across the rest of the world. Most of
the financial institutions in the GCC are relatively regionally focused in their
credit exposure horizons. It is our belief that any exposure would be limited in
the larger scheme of the economic growth in the region.
Holdings as of December 31st 2007
The company has invested in 27 companies in the GCC, with 19 of them being in
Qatar and 8 companies in UAE and Kuwait. The total market value of the
investments is US$239 million. The top 10 investments constitute 57.82% of the
NAV of the Company. The Company is substantially invested in the banking and
financial sector at 47.85% of the NAV as we continue to believe that regional
banks are among the top suited to capture the growth in the regional economies.
Fair value
Security name No. of Shares US$'000 Region Sector
-------------------------------------------------------------------------
Qatar National Bank
(QNBK) 436,694 25,997 QATAR Banks
Commercial Bank of
Qatar 518,344 26,527 QATAR Banks
Masraf Al Rayan (MARK) 3,327,845 20,878 QATAR Banks
Barwa Real Estate
(BRES) 994,098 13,944 QATAR Real Estate
Qatar Islamic Bank
(QIBK) 351,818 15,123 QATAR Banks
Qatar Electricity &
Water Co (QEWS) 455,931 13,328 QATAR Services
Qatar Telecom (QTEL) 223,659 13,977 QATAR Services
Qatar Insurance (QATI) 273,673 12,753 QATAR Insurance
Qatar Navigation
(QNNS) 324,222 11,405 QATAR Services
Emaar Properties
Company (EMAAR) 1,910,000 7,746 UAE Real Estate
Fair value
Security name No. of Shares US$'000 Region Sector
-------------------------------------------------------------------------
Qatar Gas Transport
(QGTS) 821,834 6,980 QATAR Services
Qatar Real Estate
Invest (QRES) 353,879 5,788 QATAR Real Estate
Al Khleej Bank (KCBK) 1,266,480 5,066 QATAR Banks
Union Properties
Company 3,058,085 4,270 UAE Real Estate
Qatar National Cement
Co (QNCD) 89,056 4,001 QATAR Industry
National Bank of
Kuwait 490,000 3,678 KUWAIT Banks
Dlala Holdings (DBIS) 268,838 2,408 QATAR Services
Emirates National Bank
of Dubai 688,984 2,719 UAE Banks
Qatar Shipping (QSHS) 127,926 2,306 QATAR Services
The Public Warehousing
Company 285,000 1,433 KUWAIT Services
Global Investment
House K.S.C.C. 242,550 884 KUWAIT Banks
Qatar United
Development Company
(UDCD) 80,720 878 QATAR Industry
Qatar
Ind/Manufacturing
(QIMD) 62,532 844 QATAR Industry
Arabtec Holding
Company PJSC 180,000 457 UAE Real Estate
Qatar Fuel (QFLS) 10,000 413 QATAR Services
Burgan Bank 200,000 729 KUWAIT Banks
----------------------- -------- ---------- ---------- --------
Total 239,189
----------------------- -------- ---------- ---------- --------
Summary :
We are pleased with the performance of the Company to date, and remain
optimistic about the prospects for continued growth of the GCC region in general
and of Qatar in particular. We are confident that the portfolio of investments
acquired is well placed to generate returns for the Company arising from this
opportunity.
Leonard O'Brien Sandeep Nanda
Epicure Managers Qatar Limited Qatar Insurance Company S.A.Q.
Manager Investment Adviser
13 March 2008 13 March 2008
Review report by KPMG Audit LLC to Epicure Qatar Equity Opportunities plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly report for the period from 26 June 2007 (date of
incorporation) to 31 December 2007 which comprises the consolidated income
statement, the consolidated balance sheet, the consolidated statement of changes
in net assets, the consolidated cash flow statement and the related explanatory
notes. We have read the other information contained in the half-yearly report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with the terms of our
engagement. Our review has been undertaken so that we might state to the company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been approved by, the
Directors. The Directors are responsible for preparing the half-yearly report in
accordance with the AIM Rules.
The accounting policies that have been adopted in preparing the condensed set of
financial statements are consistent with those that the Directors currently
intend to use in the next annual financial statements.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express and
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly report for the
period from 26 June 2007 (date of incorporation) to 31 December 2007 is not
prepared, in all material respects, in accordance with IAS 34 and the AIM Rules.
KPMG Audit LLC
Chartered Accountants
Douglas
Isle of Man
13 March 2008
Consolidated Income Statement (Unaudited)
Note For the period
from 26 June
2007 (date of
incorporation)
to 31 December
2007
US$'000
--------------------------------------------------------------------------------
Income
Interest
income on cash
balances 1,571
Net changes in
fair value on
financial
assets and
liabilities at
fair value
through profit
or loss 5 36,539
--------------------------------------------------------------------------------
Total net
income 38,110
--------------------------------------------------------------------------------
Expenses
Manager's fees 6.2 1,031
Incentive fees 6.2 4,267
Audit and
professional
fees 8
Other expenses 6 811
--------------------------------------------------------------------------------
Total
operating
expenses 6,117
--------------------------------------------------------------------------------
Profit before
tax 31,993
Income tax
expense 11 -
--------------------------------------------------------------------------------
Retained
profit for the
period 31,993
--------------------------------------------------------------------------------
Basic earnings
per share
(cents) 9 17.70
Fully diluted
earnings per
share (cents) 9 17.70
--------------------------------------------------------------------------------
The accompanying Notes form an integral part of these consolidated accounts
Consolidated Balance Sheet (Unaudited)
Note At 31 December
2007
US$'000
---------------------------------------------------
Financial assets at fair value through profit or
loss 5 239,189
Inter-company balances -
Other receivables and prepayments 76
Cash and cash equivalents 7 66,017
--------------------- ------- ---------------
Total current assets 305,282
--------------------- ------- ---------------
Issued share capital 8 2,475
Share premium 245,623
Retained earnings 31,993
Foreign currency translation reserve (447)
--------------------- ------- ---------------
Total equity 279,644
===================== ======= ===============
Other creditors and accrued expenses 7,547
Due to broker 18,091
--------------------- ------- ---------------
Total liabilities 25,638
--------------------- ------- ---------------
Total equity & liabilities 305,282
===================== ======= ===============
Net asset value per shares (cents) 4 113
--------------------- ------- ---------------
Approved by the Board of Directors on 13 March 2008 and signed on their behalf
by:
Nick Wilson Leonard O'Brien
Director Director
The accompanying Notes form an integral part of these consolidated accounts
Consolidated Statement of Changes in Equity (Unaudited)
Share Capital Share Premium Retained Foreign Total
Earnings Currency
Reserve
US$'000 US$'000 US$'000 US$'000 US$'000
--------------- --------- --------- --------- --------- ---------
Balance at 26 - - - - -
June 2007
Proceeds from
shares issued 2,475 253,964 - - 256,439
Share issue
expenses - (8,341) - - (8,341)
Retained
profit for the
period - - 31,993 - 31,993
Foreign
currency
reserve - - - (447) (447)
--------------- --------- --------- --------- --------- ---------
Balance at 31
December 2007 2,475 245,623 31,993 (447) 279,644
--------------- --------- --------- --------- --------- ---------
The accompanying Notes form an integral part of these consolidated accounts
Consolidated Cash Flow Statement (Unaudited)
Note For the period
from 26 June
2007 (date of
incorporation)
to 31 December
2007
US$'000
--------------------------------------------------------------------------------
Cash flows from operating activities
Purchase of
financial
assets and
settlement of
financial
liabilities (187,691)
Proceeds from
sale of
investments 2,699
Interest
received 1,523
Operating
expenses paid (844)
Foreign
exchange (13)
--------------------------------------------------------------------------------
Net cash used
in operating
activities (184,326)
--------------------------------------------------------------------------------
Financing activities
Proceeds from
the issue of
shares 256,439
Share issue
costs (6,096)
--------------------------------------------------------------------------------
Net cash from
financing
activities 250,343
--------------------------------------------------------------------------------
Net increase
in cash and
cash
equivalents 66,017
Cash and cash equivalents at 26 June 2007 -
--------------------------------------------------------------------------------
Cash and cash
equivalents at
31 December
2007 7 66,017
--------------------------------------------------------------------------------
The accompanying Notes form an integral part of these consolidated accounts
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.
The Company's agents and the Manager perform all significant functions.
Accordingly, the Company itself has no employees.
Duration
The Company currently does not have a fixed life but the Board considers it
desirable that Shareholders should have the opportunity to review the future of
the Company at appropriate intervals. Accordingly, at the annual general meeting
of the Company in 2012 a resolution will be proposed that the Company ceases to
continue as presently constituted. Shareholders holding at least fifty one per
cent of the shares must vote in favour of this resolution for it to be passed.
If the resolution is not passed, a similar resolution will be proposed at every
third annual general meeting of the Company thereafter. If the resolution is
passed, the Directors will be required, within 3 months of the resolution, to
formulate proposals to be put to Shareholders to reorganise, unitise or
reconstruct the Company or for the Company to be wound up.
2 The Subsidiary
During the period the Company established the following subsidiary company:
Country of Percentage of
incorporation shares held
-------------- --------------
Epicure Qatar
Opportunities Holdings British Virgin
Limited Islands 100%
------------------------- -------------- --------------
Epicure Qatar Opportunities Holdings Limited is a wholly owned subsidiary of the
Company, and was incorporated in the British Virgin Islands on 4 July 2007 under
the provisions of the Companies Act 2001, as a limited liability company with
registered number 1415393.
3 Significant Accounting Policies
The interim consolidated financial statements of the Company for the period
ended 30 September 2007 comprises the Company and its subsidiaries (together
referred to as the 'Group'). 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 financial information required for full annual
financial statements. The financial statements have been prepared under the
historic cost convention, as modified by the revaluation of financial assets and
financial liabilities held at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use
of certain critical accounting estimates. It also requires the Board of
Directors to exercise its judgement in the process of applying the Group's
accounting policies. The financial statements do not contain any critical
accounting estimates
These consolidated interim financial statements were approved by the Board on 11
March 2008.
3.2 Financial assets at fair value through profit or loss
Investments are designated as at fair value through profit or loss. The Company
invests in quoted equities of Qatar and other gulf co-operations states, for
which fair value is based on quoted market prices. The quoted market price used
for financial assets held by the Group is the current bid price ruling at the
period end without regard to selling prices.
Purchases and sales of investments are recognised on trade date - the date on
which the Group commits to purchase or sell the asset. Investments are initially
recorded at fair value, and transaction costs for all financial assets and
financial liabilities carried at fair value through profit and loss are expensed
as incurred.
Gains and losses arising from changes in the fair value of the financial assets
and liabilities are included in the income statement in the period in which they
arise.
3.3 Foreign currency translation
Qatari Riyal is the currency of the primary economic environment in which the
entity operates ('The functional currency').
US Dollars is the currency in which the interim financial statements are
presented ('The presentational currency').
Monetary assets and liabilities denominated in foreign currencies as at the date
of these financial statements are translated to Qatari Riyal at exchange rates
prevailing on that date. Expenses are translated into Qatari Riyal based on
exchange rates on the date of the transaction. All resulting exchange
differences are recognised in the income statement.
The accounts are presented in US Dollars by translating the assets and
liabilities at the exchange rate prevailing on the balance sheet date. Items of
revenue and expense are translated at exchange rates on the date of the relevant
transactions. Components of equity are translated at the date of the relevant
transaction and not retranslated. All resulting exchange differences are
recognised in equity.
3.4 Interest income and dividend income
Interest income is recognised on a time-proportionate basis using the effective
interest rate method.
Dividend income is recognised when the right to receive payment is established.
3.5 Basis of consolidation
Subsidiaries
Subsidiaries are those enterprises controlled by the Group. Control exists where
the Group has the power, directly or indirectly, to govern the financial and
operating policies of an enterprise so as to obtain benefits from its
activities. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control effectively
commences until the date that control effectively ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains arising from
intra-group transactions, are eliminated in preparing the consolidated financial
statements.
3.6 Segment reporting
The Group has one segment focusing on maximising total returns through investing
in quoted securities in Qatar. 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 2007 is US$1.13 per share based
on 247,527,523 ordinary shares in issue as at that date.
5 Investments
Financial assets at fair value through profit or loss:
Security name Number US$'000
------------------------- -------------- --------------
Arabtec Holding Company (PJSC) 180,000 457
Emaar Properties Company (EMAAR) 1,910,000 7,746
Emirates National Bank of Dubai (ENBD) 688,984 2,719
Union Properties Company (UPP) 3,058,085 4,270
Global Investment House K.S.C.C. (GLOBAL) 242,550 884
National Bank of Kuwait (NBK) 490,000 3,678
The Public Warehousing Company (AGLTY) 285,000 1,433
Burgan Bank (BURG) 200,000 729
Al Khleej Bank (KCBK) 1,266,480 5,066
Barwa Real Estate (BRES) 994,098 13,944
Commercial Bank of Qatar (CBQK) 518,344 26,527
Dlala Holdings (DBIS) 268,838 2,408
Industries Qatar (IQCD) 820,916 34,657
Masraf Al Rayan (MARK) 3,327,845 20,878
Qatar Electricity & Water Co (QEWS) 455,931 13,328
Qatar Fuel (QFLS) 10,000 413
Qatar Gas Transport (QGTS) 821,834 6,980
Qatar Ind/Manufacturing (QIMD) 62,532 844
Qatar Insurance (QATI) 273,673 12,753
Qatar Islamic Bank (QIBK) 351,818 15,123
Qatar National Bank (QNBK) 436,694 25,997
Qatar National Cement Co (QNCD) 89,056 4,001
Qatar Navigation (QNNS) 324,222 11,405
Qatar Real Estate Invest (QRES) 353,879 5,788
Qatar Shipping (QSHS) 127,926 2,306
Qatar Telecom (QTEL) 223,659 13,977
Qatar United Development Company (UDCD) 80,720 878
------------------------- -------------- --------------
Total Investments 239,189
------------------------- -------------- --------------
Net changes in fair value on financial assets at fair value through profit or
loss:
US$'000
--------------------------------- -------------------
Realised 463
Unrealised 36,076
--------------------------------- -------------------
Total gains 36,539
--------------------------------- -------------------
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. Given that the agreement with the
Nominated Advisor is dated 19 July 2007, the first payment of the fee is due on
1 January 2008.
6.2 Investment Manager's fees
In accordance with the terms of the placing, the Investment Manager was paid a
project fee of 3 per cent. of the gross proceeds of the Placing and was
responsible for paying the Placing Agent and the Distribution Adviser for their
services. Fees paid amounted to US$5,225,800 and have been charged to equity as
a share issue expense.
Annual fees
The Investment Manager is entitled to an annual management fee of 1.25% of the
Net Asset Value of the Group payable quarterly in arrears.
Annual management fees for the period ended 31 December 2007 amounted to
US$1,030,532, and the amount accrued but not paid at the period end is US$
689,341.
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 2007
amounted to US$4,266,535.
6.3 Custodian fees
The Custodian was entitled to receive fees calculated as 7.5 basis points per
annum of the net asset value of the Group between US$0and US$100 million and 6
basis points per annum of the net asset value in excess of US$100 million,
subject to a minimum monthly fee of US$6,250. The Custodian is also entitled to
an inception fee by reference to time spent subject to a minimum fee of
US$10,000.
Custodian fees for the period ending 31 December 2007 amounted to US$56,538,
being unpaid at the period end.
In addition, sub-custodian fees of US$237,715 have been charged for the period
ended 31 December 2007, with US$98,333 being accrued and unpaid as at that date.
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 Company 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 has also received an inception fee on a time and
charges basis subject to a minimum fee of US$20,000.
The Administrator assists in the preparation of the financial statements of the
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 2007 amounted to
US$120,307, and US$13,753 for additional services.
6.5 Other operating expenses
The costs associated with maintaining the Group's subsidiaries, to include the
costs of incorporation and third party service providers shall be chargeable to
each subsidiary.
7 Cash and Cash Equivalents
31 December
2007
US$'000
------------------------------- ---------------------
Bank balances 40,625
Deposit balances 25,392
------------------------------- ---------------------
Cash and cash equivalents 66,017
------------------------------- ---------------------
8 Share Capital
Share capital
Ordinary Shares of 1cent each Number US$'000
------------------------- -------------- --------------
In issue at the start of the period - -
Issued during the period 247,527,523 2,475
------------------------- -------------- --------------
In issue at 31 December 2007 247,527,523 2,475
------------------------- -------------- --------------
At incorporation the authorised share capital of the Group was US$20 million
divided into 2 billion Ordinary Shares of US$0.01 each.
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. All shares rank equally with regards to the Group's assets.
Warrants
34,271,000 warrants were issued pursuant to the Placing (one warrant for every
five ordinary shares issued pursuant to the initial placing). The warrants
entitle the holder to subscribe for one Ordinary Share of 1 cent each in the
Group in cash on 31 October in any of the years 2008 to 2012 inclusive, at a
price of US$1.25 per Share payable in full on subscription.
9 Earnings per Share
Basic and Fully Diluted
Basic and fully diluted earnings per share is calculated by dividing the profit
attributable to equity holders of the Group by the weighted average number of
ordinary shares in issue during the period
2007
------------------------------- ---------------------
Profit attributable to equity holders of the Company 31,993
(US$'000)
Weighted average number of ordinary shares in issue 180,753
(thousands) ---------------------
-------------------------------
Basic and fully diluted earnings per share (cents per 17.70
share) ---------------------
-------------------------------
There is no difference between the basic and fully diluted earnings per share
for the period. This is as a result of the average share price for the period
being less than the exercise price of the warrants and is thus anti-dilutive.
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 and
additional £7,500 per annum. The Directors are each entitled to receive
reimbursement of any expenses incurred in relation to their appointment. Total
fees and expenses paid to the Directors for the period ended 31December 2007
amounted to US$141,887; with the total amount payable at the year end is
US$95,722.
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 will be zero. The Group will be 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.
Capital gains made by the Group 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.
13 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 Limited is
ultimately owned by Principal Capital Holdings SA, of which Mr. O' Brien is a
minority shareholder.
14 Copies of the Interim Results
The interim results for the period ended 31 December 2007 will be sent to
shareholders and will be available from the Company's registered office at Third
Floor, Britannia House, St George's Street, Douglas, Isle of Man, IM1 1JE.
This information is provided by RNS
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