Quarterly Update

RNS Number : 7730V

Epicure Qatar Equity Opportunities

16 July 2009

Epicure Qatar Equity Opportunities plc

Quarterly Update to Quarter End June 2009

Report to Shareholders

A FORMATTED VERSION OF THIS REPORT IS AVAILABLE FROM THE COMPANY ADMINISTRATOR, GALILEO FUND SERVICES LIMITED, ISLE OF MAN UPON REQUEST. PLEASE CONTACT enquiries@galileofs.co.im TO REQUEST A COPY.

Epicure Qatar Equity Opportunities plc

Investment Advisers Report - Quarterly Update to Quarter End June 2009

Investment Objective

Epicure Qatar Equity Opportunities plc ('the Company' or 'EQEO') was established to capitalise on attractive investment opportunities in Qatar and the Gulf Cooperation Council ('GCC') region, resulting from the economic boom being experienced in the area. The Company invests in quoted Qatari equities listed on the Qatar Exchange (formerly the Doha Securities Market 'DSM') in addition to companies soon to be listed, with a possible allocation of up to 15 per cent in regional GCC listed companies. The Investment Adviser invests using both a top-down screening process, as well as fundamental industry and company analysis, and does not benchmark itself to any regional index.

Market Update

The Qatar Exchange, formerly named the Doha Securities Market, swung back into the black in Q2 2009 after recording a heavy loss in the first quarter. The recovery started in March with a rise in the market of 9.0 per cent, with this improvement continuing in April and May with increases of 14.7 per cent and 24.6 per cent respectively. Pressure returned in June, however, with a wave of declines hitting all GCC stock markets, and the Qatar Exchange's main index, the DSM20, retreated 7.0 per cent over the month. The index ended the second quarter at 6,492 compared to 4,887 at the end of the first quarter.

During the second quarter, the most active sectors were services and industrials, the only components of the Qatar Exchange to recover above last year's closing levels. In the first half of 2009, the industrial sector added 2.4 per cent while the services sector gained 10.8 per cent. The exchange's main index, along with the banking & finance and insurance sectors, all ended the half year in losses. Despite the recovery witnessed in the market, the insurance sector still stood 21.6 per cent lower than its level at the end of 2008, while the banking & finance sector lagged by 13.2 per cent.

In the second quarter of 2009 the capitalisation of the Qatar Exchange increased by 28.7 per cent to QR270.2 billion compared to QR210.0 billion at the end of the first quarter.

Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a table depicting GCC Equity Market Performance

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

The Investment Adviser believes that in the medium term the recovery of regional markets will be correlated to that of global markets. Domestically, the forthcoming interim results of Qatari companies will be a major factor in the outlook for the bourse over the coming quarter.

macro update

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

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

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

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

Source: Qatar Statistics Authority QIC

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

government actions

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

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

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

Hydrocarbons and their Impact

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

Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a table depicting Qatar's GDP

Source: Qatar Insurance Company, Qatar Statistical Authority (Figures in QR. Millions)

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

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

In the Investment Adviser's view, Qatar remains an attractive macro environment for the following reasons:

- Qatar's real GDP is expected to grow by more than 6 per cent in 2009;

- Strong economic fundamentals are underpinned by an increase in LNG exports

(more stable gas revenues are surpassing oil revenues);

- Though budgeted revenues (at US$40/bbl) should fall 14 per cent on an annual

basis, government expenditure is expected to fall by only 1.5 per cent in 2009, thus

providing a strong degree of support to the country's economic activity. Moreover,

the oil price is currently higher than the budgeted figures, providing greater

comfort to the authorities on spending plans;

- CPI inflation, which reached a high of 17 per cent in Q2 2008, has fallen

significantly, recording a 6.2 per cent q/q decline during Q1 2009. Inflation would

have been a drag on economic growth and investments;

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

high levels

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

portfolio update

After losing substantial value in the first quarter of 2009, the DSM20 recovered on the back of improved liquidity, better than expected corporate results, strong macro economics and the proactive stance of government, which brought confidence to the market. During the period, the DSM20 gained 32.8 per cent. As a result of the buoyancy in the market, the Company's NAV also improved to $0.78 on 25 June 2009 compared to $0.58 on 2 April 2009.

The Company is invested in 27 companies in the GCC, with 22 of them being in Qatar, four in the UAE, and one in Kuwait. The total market value of investments was $177.5 million at the end of quarter. During the quarter, the Company reduced its cash holding to 4.3 per cent of NAV compared to a cash position of 12.0 per cent at the end of the first quarter of 2009.

corporate profitability

The total combined net profit for all companies listed on the Qatar Exchange for the quarter ended 31 March 2009 amounted to QR6.9 billion compared to QR7.2 billion for the quarter ended 31 March 2008, a 5 per cent decrease. On a quarter on quarter comparison all listed companies in the Qatar exchange showed a net income increase of 56.7 per cent (QR6.9 billion net profit in Q1 2009 compared to QR4.4 billion in Q4 2008). All sectors except for services achieved growth in net income.

Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a table depicting the Net Income Growth of the top five holdings

Source: Qatar Insurance Company, Qatar Statistical Authority (Figures in QR. Millions)

industry allocation

The Company's largest investment continues to be in the financial services industry, with 43 per cent invested in the banking sector. Although Qatari banks are expected to be impacted by the current slowdown, the Investment Adviser believes that they are extremely well placed and do not share the liquidity issues that have affected many global banks.

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

- The move further improves liquidity, particularly through the injection of cash,

but also potentially through tradable government bonds;

- A reduction of property loan balances eases the loan to deposit ratio of the

banks as the move comes at a time when all banks have been under pressure to

fix their adverse loan to deposit ratios;

- The move also helps to arrest the impact of increasing non-performing loans,

especially with the fall in property values and loan to values ratio increasingly

becoming an issue;

- The substitution of cash and government securities into the balance sheet

strengthens capital ratios.

The service sector, which is broadly defined and includes companies in telecommunications and utilities, accounted for 26.8 per cent of all investments. The Company's exposure to the real estate sector stood at 6.2 per cent at the end of the second quarter. The industries and insurance sectors accounted for a further 15.9 per cent and 3.8 per cent respectively.

Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a graph depicting the industry allocation of the portfolio (% of mkt)

Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a table depicting the portfolio breakdown - top five holdings

Source Qatar Insurance Company SAQ Market Values as of 30 June 2009

The top five investments of the Company constitute 48.0% of NAV at 30 -06-2009.

regional allocation

Currently, the Company is invested in 22 companies in Qatar, four companies in UAE, and one company in Kuwait. As of 30 June 2009, investments outside Qatar constituted 0.52 per cent of the Company's investments by market value.

Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a graph depicting the country allocation of the portfolio (% of mkt)

important news flow

Qatar government's purchase of banks' property investments

The government of Qatar has bought the real estate investments of local banks after earmarking QR15 billion ($4.12 billion) to buy their portfolios. The government has offered to buy the banks' property portfolios and loans to support a sector suffering from price declines. 'The programme has been implemented, funds have been allocated to eligible banks and payments have been made according to conditions,' Sheikh Abdullah bin Saud al-Thani was reported as saying by the state-run Qatar News Agency. The governor did not specify how much money has been dispensed, which banks have sold their real estate portfolios, or what the terms of the purchases were.

NYSE Euronext buys a 20 per cent stake in the Qatar Exchange

NYSE Euronext agreed to acquire a 20 per cent stake in the Qatar Exchange for $200 million as part of a deal with Qatar Holding. Qatar Investment Authority (QIA) will own the remaining shares in the Qatar Exchange. In June 2008 NYSE Euronext agreed to a strategic partnership aimed at transforming the Gulf state's stock market into an international exchange. Qatar Holding is the direct investment arm of the QIA, the sovereign wealth fund of the Gulf emirate.

Qatar Technical Inspection delisted from Qatar Exchange

The Qatar Exchange delisted the shares of Qatar Technical Inspection Company following its merger with Qatar Fuel Company (Woqod), which reduced the number of listed firms to 42. During the quarter the process of allotting Qatar Technical Inspection shares in Qatar Fuel Company (Woqod) was completed on the basis of an exchange ratio of 5.3 shares in Qatar Technical Inspection for one share in Qatar Fuel.

Alkhaliji's share capital being reduced

The administration of the Qatar Exchange announced a 50 per cent reduction in the share capital of Alkhaliji bank. The bank's share capital is now QR3.6 billion divided into 360 million shares.

QNB -Syria announced IPO

Qatar National Bank-Syria, a private Syrian-Qatari bank, announced the launch of 34 per cent of its total equity in an Initial Public Offering (IPO) which opened to subscribers on 12 July 2009 and closes on 10 August 2009. QNB received approval in 2008 from the Central Bank of Syria to establish Qatar National Bank-Syria as a private stock company. Total paid up capital is SYP5 billion ($100 million). This is divided into 10 million registered shares, with QNB retaining 49 per cent, Syrian government organisations holding 15 per cent and private investors holding 2 per cent. At the IPO, the remaining 34 per cent or 3,400,000 shares will be available for subscription by Syrian private investors at a nominal value of SYP500 per share, putting the total value of shares available for subscription at SYP1.7 billion.

Qatar Islamic Bank affiliate launches sukuk

The Qatar Islamic Bank (QIB), in partnership with its European arm the European Finance House (EFH), launched a Global Sukuk Plus Fund that is Shariah-compliant and regulated by the UK's Financial Services Authority. The Global Sukuk Plus Fund is a weekly traded mutual fund which invests in global sukuk markets. The fund's assets will be invested in sukuk issued by sovereign, quasi-sovereign and corporate issuers and sourced globally.

Qatar German for Medical Devices signs QR33 million deals with European companies

Qatar German for Medical Devices Company announced the signing of an agreement with three European companies worth QR33.0 million to expand and develop its factory as well as introduce more products.

Commercial Bank of Qatar and United Development Company establish joint venture

Commercial Bank of Qatar (CBQ) and United Development Company (UDC) announced the incorporation of a new company that will provide state-of-the-art

payment systems and infrastructure to support a cashless environment. A 50 year joint venture agreement has been signed by CBQ and UDC, the owner and developer of the QR 50 billion ($14 billion) Pearl-Qatar island, to establish the new company with an initial share capital of QR2.6 million, contributed equally by both parties.

New York branch of Doha Bank pays $5m civil penalty to US

The New York branch of Doha Bank agreed to pay $5 million in fines to U.S. authorities for failing to maintain adequate controls to prevent money laundering and other illegal activity. The branch failed to maintain a programme to monitor compliance with record keeping and reporting rules as required by the Bank Secrecy Act.

S&P affirms Qatar Insurance Company 'A' long term rating

Standard & Poor's Ratings Services affirmed its 'A' long-term counterparty credit and insurer financial strength ratings on Qatar Insurance Co. The outlook is stable. S&P observed that the company, like its peers, has not been immune to the deterioration in global investment markets and the global and regional macro-economic downturn. The ratings reflect that its capitalisation remains a relative strength.

Industries Qatar gets state approval for QR1.16bn settlement

Industries Qatar said the government had approved a total of QR1.16 billion ($318.8 million) in settlement for steel prices caps. Industries Qatar said earlier in May it had asked for QR1.8 billion in compensation for the government's capping of steel prices in 2008. Steel prices were capped in Qatar in 2008 to help the country's real estate sector.

BNY Mellon named agent for QIFL's $5bn financing

The Bank of New York Mellon (BNY Mellon) has been appointed Principal Paying Agent and Issuing Agent for Qtel International Finance Limited's ('QIFL') $5 billion GMTN Programme, unconditionally and irrevocably guaranteed by Qtel. This is the inaugural debt issuance for QIFL with net proceeds of the sale of the notes offered used for general corporate purposes, including refinancing existing indebtedness.

Qtel's Omani Unit, Nawras, receives fixed line license

Qtel announced that its Omani unit received a license to provide fixed, data and international telecommunication services and to use its network to offer WiMAX and high-speed downlink packet access, or HSDPA, technology. The license allows Qtel's unit, Nawras, to provide fixed-line services for 25 years.

$3.9bn Ras Girtas Power and Water Project started

Qatar laid the foundation stone of the $3.9 billion Ras Girtas Power and Water Project in Ras Laffan. The project is due to commence its first phase of production in 2010. When completed in April 2011, with a total capacity of 2,730MW of electricity and 63 million gallons per day (MIGD) of potable water, the project will constitute 30 per cent of the electricity and 20 per cent of potable water delivered to the national grid. The Ras Girtas Power and Water Project is the largest power and water plant in Qatar and one of the largest in the region. Qatar Electricity and Water Company owns 45 per cent of the project.

Nakilat raises $949m for LNG fleet expansion

Qatar Gas Transport Co., or Nakilat, raised $949 million in the last tranche of a $6.8 billion financing programme to fund the expansion of its fleet. Nakilat raised the final tranche from 17 banks to complete its acquisition of 25 LNG vessels being constructed in South Korea. The financing included an $803 million senior bank facility with a tenor of 10 years and a $146 million subordinated bank facility with a tenor of 10 years. The company launched the financing programme in December 2006.

Barwa announces acquisition of financial and investment companies

Barwa Real Estate Company announces that the company is undergoing studies for the acquisition of a number of financial and investment companies in Qatar, under the umbrella Barwa Bank. The study will include the acquisition of 'First Finance', 'The First Investor' and 'The First for Renting' companies. Barwa has mentioned that many strategic reasons pushed it to take this step, first of which is to offer integrated financial and investment services which will be added to Barwa Bank and support its services, also to have bigger stake in the market in shorter time.

Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a graph depicting the DSM20 Index since Jan 2005

Source: Reuters

Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a table depicting the NAV performance of the Company (% net in USD).

Source: Galileo Fund Services Ltd

NAV Performance is unaudited

Performance figures are based on the NAV calculated on the last Thursday of each month and published via the regulatory news service of the London Stock Exchange.

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares when redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Additional information regarding policies for calculation and reporting returns is available upon request.

Epicure Qatar Equity Opportunities plc

NAV Update

NAV at launch US$ 0.96

NAV as at 25 June 2009 US$ 0.78

Inception Date 31 July 2007

The NAV is estimated net of fees and expenses every week and announced through the regulatory news service of the London Stock Exchange.

As at 25 June 2009

Market Price -Shares US$0.63

Market Price -Warrants US$0.08

Key Features

Domicile Isle of Man

Shares in Issue 235,828,952

Warrants Issued 34,271,000

Maturity Continuation vote at 2012 Annual General Meeting

Year End 30 June

Management Fee 1.25% of NAV

Performance Fee

The performance fee is 20% of the of the increase in Adjusted Net Asset Value per Ordinary Share above the Target Net Asset Value per Ordinary Share, subject to the achievement of two tests (i) the year end Adjusted Net Asset Value per Ordinary Share is greater than the High Watermark and (ii) the year end Adjusted Net Asset Value per Ordinary Share exceeds the Target Net Asset Value per Ordinary Share during the relevant Performance Period. The Target Net Asset Value per Ordinary Share for the first performance period is the US$1 placing price increased by the hurdle rate of 8% per annum. For further details, please refer to the Company's admission document.

Investment Manager Epicure Managers Qatar Limited

Investment Adviser Qatar Insurance Company S.A.Q

Administrator Galileo Fund Services Limited

Custodian Anglo Irish Bank Corporation, International PLC

Nominated Adviser and Broker Panmure Gordon (UK) Limited

Auditor & Tax Adviser KPMG I.O.M.

Legal Adviser Stephenson Harwood

Ordinary Shares

ISIN IM00B1Z40704

SEDOL B1Z4070

Bloomberg ticker EQEO

Valoren 3268997

Warrants

ISIN IM00B1Z40G96

SEDOL B1Z40G9

Bloomberg ticker EQEW

Valoren 3271492

Exchange Rate US$1.00=QR3.64

Webpage: www.epicure-qatarequity.com

Contacts

Epicure Qatar Equity Opportunities plc

Leonard O'Brien

T: +41 (22) 908 1190

Nominated Adviser & Broker

Panmure Gordon (UK) Limited

Moorgate Hall

London, EC2M 6XB

T: +44(0) 207 459 3600

Administrator & Registrar

Galileo Fund Services Limited

Third Floor

Britannia House

St George's Street

Douglas

Isle of Man, IM1 1JE

T: +44(0)1624 692600

F: +44 (0)1624 692 601

E: enquiries@galileofs.co.im

Custodian

Anglo Irish Bank Corporation (International) PLC

Jubilee Buildings

Victoria Street

Douglas

Isle of Man, IM1 2SH

PR/ Media Contact

Tim Draper

Milbourne

T: +44 20 7153 1267

Tim.draper@milbournegroup.com

1 Ropemaker Street

Fifteenth Floor

London

EC2Y 9HT

Disclaimer

The contents of this document have been prepared by Qatar Insurance Company S.A.Q as Investment Adviser to the Epicure Qatar Equity Opportunities Fund PLC ('the Company'). This document has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of the Investment Adviser or the Company to any person to buy or sell any security or investment product. Any reference to past performance is not necessarily a guide to the future. The information and analyses contained in this publication have been compiled, or arrived at from sources believed to be reliable, but the Investment Adviser does not make any representation as to their accuracy or completeness, and does not accept liability for any loss arising from their use. The investments discussed in this report may not be suitable for all investors. and are provided for information purposes only. The ordinary shares and warrants in the Company have not been, and will not be, registered under the United States Securities Act of 1933 as amended (the 'Securities Act') or qualified for sale under the laws of any state of the United States or under the applicable laws of any of Canada, Australia, Republic of South Africa or Japan and, subject to certain exceptions, may not be offered or sold in the United States or to, or for the account or benefit of, US persons (as such term is defined in Regulation S under the Securities Act) or to any national, resident or citizen of Canada, Australia, Republic of South Africa or Japan. None of the Company, the Manager or any of their respective members, directors, officers or employees, nor any other person, accepts any liability whatsoever for any loss, however arising, from any use of such information or opinions.