TIDMQIF
RNS Number : 7481Y
Qatar Investment Fund PLC
11 September 2015
11 September 2015
Qatar Investment Fund Plc ('QIF' or 'the company')
Final results for the year ended 30 June 2015
Qatar Investment Fund plc (LSE: QIF) invests in Qatar and the
Gulf Cooperation Council (GCC) states, seeking exposure to economic
growth in the area. QIF invests in companies listed on the Qatar
Exchange in addition to companies soon to be listed, with a
possible allocation of up to 15% in other listed companies in the
rest of the GCC region.
Qatar:
-- Qatar was the best performing GCC market over the 12 months,
rising 6.2% despite headwinds from oil prices that nearly
halved.
-- Qatar's inclusion in the MSCI emerging markets index in May
2014 resulted in a strong inflow of foreign funds of US$943 million
in the period.
-- Qatar's economy is forecast to grow 7% in 2015 and 7.5% in
2016. Population continues to increase.
-- The non-hydrocarbon sector is now 62% of the economy, so the
impact of lower oil prices should be limited. Qatar's stock market
remains attractively valued compared to others in the region in
terms of earnings growth and dividend yield.
Qatar Investment Fund plc:
-- Net asset value per share rose 8.4% compared to 6.2% for the
Qatar Exchange and a rise of 4.6% in the MSCI Emerging Markets
Index.
-- Shareholders received a 3.5c per share dividend in January.
-- The Board proposes to pay an increased 4.0c per share
dividend for the period to end June 2015.
-- Profit for the year was US$22.6 million; earnings per share were 15.31 cents.
Proposed Tender Offer and Discontinuation Vote
-- Shareholders will vote on a discontinuation vote and
graduated tender offer at the AGM and EGM respectively
Holdings as of 30(th) June 2015
-- At 30 June 2015 the Company was invested in 20 companies,
with 18 in Qatar and two in the UAE.
-- Exposure to the banking sector stood at 51.4% of NAV at the
end of June 2015. Qatari banking has a record of strong growth and
future growth prospects remain good, fueled by
infrastructure-related expenditure.
Nick Wilson, Chairman of Qatar Investment Fund plc,
commented:
"The performance of the Qatar Exchange was strong despite
headwinds from lower oil prices and the ending of the effect of the
MSCI upgrade which occurred in June last year. Saudi Arabia,
Kuwait, Oman and Bahrain posted negative returns during the period
but the Qatar Exchange remained resilient.
"Looking ahead, the Qatar market is expected to perform well
over the long term on the back of strong fundamentals,
infrastructure spending, non-hydrocarbon sector growth and a rising
population. The liberalisation of rules governing international
investment means that Qatar is well and truly open for
business."
ENDS
For further information please contact:
Nick Wilson
Chairman
Qatar Investment Fund plc
01624 622 851
Panmure Gordon
Andrew Potts
020 7886 2500
William Clutterbuck
Maitland
0207 379 5151
Chairman's Statement
On behalf of your Board, I am pleased to present your Company's
eighth Annual Report and Financial Statements for the year to 30
June 2015.
During the twelve months, your Company's Net Asset Value per
Share ("NAV") rose by 8.4% to US$1.53 which compares with a rise of
6.2% in the Qatari stock market (Qatar Exchange Index) and a rise
of 4.6% in the MSCI Emerging Markets Index. Following a widening of
the discount at which the shares trade to NAV, the shares fell from
US$1.285 to US$1.26, a fall of 1.9%. Shareholders received a
dividend of 3.5c per share with an ex dividend date of 23
December.
Results
Results for the period under review showed a profit of US$22.6m
generated from fair value adjustments, realised gains and dividend
income. This is equivalent to basic earnings per share of 15.31
cents.
The Qatar Exchange performed well during the period despite a
fall of 46% in the price of crude oil, the benchmark for Qatari
crude oil. The continued diversification of the economy was a
positive influence with double digit growth in many non-hydrocarbon
sectors as against a fall in the contribution from oil and gas.
The Company's Ongoing Charges (formerly Total Expense Ratio)
fell to 1.61% from 1.66 % in the previous year. The charges were
calculated in accordance with the methodology recommended by The
Association of Investment Companies.
Managing the Discount between the share price and NAV
Discount management remains a priority for the Board and we
continued to make use of the authority granted by shareholders to
buy back the Company's shares. During the period a total of 890,509
shares were bought back to be held in Treasury. 3,793,272 shares
were cancelled, as they had been held in Treasury for 12 months. In
addition to pursuing an active buyback policy, the Board works with
the Investment Adviser and the broker to raise the profile of the
company, giving frequent interviews to the financial press in order
to raise the profile of the Company with institutional and private
investors.
Proposed Tender Offer
As detailed in the Company's Discontinuation Vote Proposals
announced on 13 April 2015, the Board will give shareholders the
opportunity to vote for a graduated tender offer with the tender
offer size a function of the average discount during the
twelve-month period prior to the tender offer date, as set out in
the table below. Under this Board proposal, the maximum size of the
tender offer would therefore be capped at 15%.
12 month average Tender offer
discount size
Less than 10% Nil
10.00% -10.99% 10.0%
11.00% -11.99% 11.0%
12.00% -12.99% 12.0%
13.00% - 13.99% 13.0%
14.00% - 14.99% 14.0%
15% or greater 15.0%
In addition, and subject to the discontinuation vote not being
passed by shareholders, the Board proposes a further tender offer
facility under the same terms in the fourth quarter of 2016.
Proposed Dividend
We aim to pay dividends from income received from companies in
which the Company is invested. Since Qatari companies only pay
dividends once a year, the Board will continue its policy of only
declaring a final dividend and therefore no interim dividend was
declared this year.
For the twelve months, the Board proposes to pay a dividend of
4.0 cents per ordinary share (2014 - 3.5c per share) and if the
discount test described above is triggered, payable on the post
tender offer share capital, with a record date and payment date
after such tender offer. Subject to shareholder approval at the
forthcoming Annual General Meeting, the dividend will be paid after
the tender offer in 2016. Further details on the ex-date, record
date and payment date will be made in due course.
Post Balance Sheet events
There have been no post balance sheet events.
Outlook, risks and uncertainties
The Qatari economy continues to perform well with the Qatar
National Bank forecasting GDP growth of 7% in 2015 and 7.5% in
2016. With the non-hydrocarbon sector now accounting for 62% of
real GDP, the impact of the lower oil price is likely to be
limited. Qatar's population rose by 4.9% to 2.34 million in the
first half of 2015. Our investment adviser believes that near to
long-term growth prospects should remain healthy driven by a strong
infrastructure pipeline, expansionary fiscal spending and
supportive demographics.
There are, of course, risks to investors. The Board believes
these principally fall in the following categories; geopolitical
events, market risks, investment and strategy risks, accounting,
legal and regulatory risks, operational risks and financial risks.
Information on each of these is given in the Business Review
section of this Annual Report.
Looking to the future, the Board is confident that the Company
is invested in companies with good prospects that are listed on the
Qatar Exchange and elsewhere in the GCC region. The Company offers
international investors one of the few practical ways to gain
investment exposure to Qatar's vigorous economy.
The Board views the future of the Company with confidence and
firmly believes that continued growth in the non-hydrocarbon Qatari
economy combined with improving demographics will lead to
significant improvements in corporate profitability.
Annual General Meeting and Discontinuation Vote
I look forward to welcoming shareholders to our eighth Annual
General Meeting on 12 November 2015, which will be held at 11.00
am, at the Company's registered office at Millennium House, 46
Athol Street, Douglas, Isle of Man.
Shareholders will be aware that a discontinuation vote will be
put to shareholders at the next annual general meeting, in
accordance with the Company's articles of association, and that
certain proposals will be put to shareholders. Shareholders holding
at least 51 per cent. of the ordinary shares must vote in favour of
the discontinuation resolution for it to be passed.
If the resolution is not passed, a similar resolution will be
proposed at every third annual general meeting thereafter. If the
discontinuation resolution is passed, the Directors will be
required to formulate proposals to be put to Shareholders to
reorganise or reconstruct the Company or for the Company to be
wound up.
As part of those proposals, the Board has resolved that it
intends to make available a tender offer to provide shareholders
the opportunity to tender a certain amount of their shareholding at
a price which will reflect a 1% discount to Formula Asset Value per
share (Formula Asset Value being net asset value less the costs of
undertaking the tender offer), as further described above. The
proposed tender offer will be conditional. Inter alia, on the
Discontinuation Vote failing at the Annual General Meeting, which
was the same as the structure of the 2012 tender offer.
The Board continues to look forward to the future with
confidence and on your behalf thanks the advisors and other service
providers who have contributed to your Company's success.
Nicholas Wilson
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Chairman
10 September 2015
Business Review
The following review is designed to provide information
primarily about the Company's business and results for the year
ended 30 June 2015. It should be read in conjunction with the
Report of the Investment Manager and the Investment Adviser on
pages 7 to 16 which gives a detailed review of the investment
activities for the year and an outlook for the future.
Investment Objective and Strategy
The Company's investment objective is to capture, principally
through the medium of the Qatar Exchange (formerly the Doha
Securities Market), the opportunities for growth offered by the
expanding Qatari economy by investing in listed companies or
companies soon to be listed. The Company may also invest in listed
companies, or pre-IPO companies, in other Co-operation Council for
Arab States of the Gulf (GCC) countries.
The Company applies a top-down screening process to identify
those sectors which should most benefit from sector growth trends.
Fundamental industry and company analysis, rather than
benchmarking, forms the basis for both stock selection and
portfolio construction.
The Company's investment policy is on pages 17 to 19.
Performance Measurement and Key Performance Indicators
In order to measure the success of the Company in meeting its
objectives and to evaluate the performance of the Investment
Manager, the Directors take into account the following key
performance indicators:
Returns and Net Asset Value
At each quarterly Board meeting the Board reviews the
performance of the portfolio versus the Qatar Exchange (QE) Index
(local benchmark) as well as the net asset value, income, share
price and expense ratio for the Company.
Discount/Premium to Net Asset Value
At each quarterly Board meeting the Board monitors the
discount/premium to net asset value. The Directors renew their
authority at the annual general meeting in order to be able to make
purchases through the market where they believe they can assist in
narrowing the discount to net asset value. Any purchases will be
made in accordance with the Listing Rules and the Law and
ordinances made thereunder.
A Board member is responsible for close monitoring of our share
price, and working with our broker to buy back shares when we
believe appropriate so as to manage any discount to net asset
value.
Yield
The Board monitors the dividend income of the portfolio and the
amount available for distribution and considers the impact on the
Company's annual dividend policy of future progressive dividend
payments, subject to the absence of exceptional market events.
Principal Risks and Uncertainties
The Board confirms that there is an on-going process for
identifying, evaluating and managing or monitoring the key risks to
the Company. These key risks have been collated in a risk matrix
document which is reviewed and updated on a quarterly basis by the
Directors. The risks are identified and graded in this process,
together with the policies and procedures for the mitigation of the
risks.
The key risks which have been identified and the steps taken by
the Board to mitigate these are as follows:
Market
The Company's investments consist of listed companies. There are
no investments in companies soon to be listed. Market risk arises
from uncertainty about the future prices of the investments. This
is commented on in Note 15 on pages 58 to 62.
Investment and Strategy
The achievement of the Company's investment objective relative
to the market involves risk. An inappropriate asset allocation may
result in underperformance against the local index. Monitoring of
these risks is carried out by the Board which, at each quarterly
Board meeting, considers the asset allocation of the portfolio, the
ratio of the larger investments within the portfolio and the
management information provided by the Investment Manager and
Investment Adviser, who are responsible for actively managing the
portfolio in accordance with the Company's investment policy. The
net asset value of the Company is published weekly.
Accounting, legal and regulatory
The Company must comply with the provisions of the Isle of Man
Companies Acts 1931-2004 and since its shares are listed on the
London Stock Exchange, the UK Listing Authority's Listing Rules and
Disclosure and Transparency Rules ("UKLA Rules"). A breach of
company law could result in the Company and/or the Directors being
fined or the subject of criminal proceedings. A breach of the UKLA
Rules could result in the suspension of the Company's shares. The
Board relies on its Company Secretary and advisers to ensure
adherence to company law and UKLA Rules. The Board takes legal,
accounting or compliance advice, as appropriate, to monitor changes
in the regulatory environment affecting the Company.
Operational
Disruption to, or the failure of, the Investment Manager, the
Investment Adviser, the Custodian or Administrator's accounting,
payment systems or custody records could prevent the accurate
reporting or monitoring of the Company's financial position.
Details of how the Board monitors the services provided by the
Investment Manager and its other suppliers, and the key elements
designed to provide effective internal control, are explained
further in the internal control section of the Corporate Governance
Report on pages 22 to 27.
Financial
The financial risks faced by the Company include market price
risk, foreign exchange risk, credit risk, liquidity risk and
interest rate risk. Further details are disclosed in Note 15 on
pages 58 to 62.
Report of the Investment Manager and Investment Adviser
Regional Equity Market Overview
Indices 30-Jun-14 30-Jun-15 % Change
Qatar (DSM) 11,489 12,201 6.2%
---------- ---------- ---------
Saudi (TASI) 9,513 9,087 -4.5%
---------- ---------- ---------
Dubai (DFMGI) 3,943 4,087 3.7%
---------- ---------- ---------
Abu Dhabi (ADI) 4,551 4,723 3.8%
---------- ---------- ---------
Kuwait (KWSE) 6,971 6,203 -11.0%
---------- ---------- ---------
Oman (MSI) 7,008 6,425 -8.3%
---------- ---------- ---------
Bahrain (BAX) 1,428 1,368 -4.2%
---------- ---------- ---------
Source: Bloomberg
In the twelve months to June 2015 the performance of GCC markets
was mixed. The GCC index (Bloomberg GCC200) fell 3.0%, weighed down
by lower oil prices and regional geopolitical tensions. Qatar was
the best performing market with a rise of 6.2%, followed by Dubai
and Abu Dhabi with each rising over 3.5%. The Qatari market
performance can be attributed to infrastructure spending, economic
diversification, long term gas contracts and a rising population,
as well as the inclusion of two more Qatari stocks in the MSCI
emerging markets index. The performance was despite headwinds from
lower oil prices and the ending of the effect of the MSCI upgrade
that occurred last year. Saudi Arabia, Kuwait, Oman and Bahrain
posted negative returns during the period.
Looking back Qatar's inclusion in the MSCI emerging markets
index in May 2014 provoked a strong inflow of foreign funds to the
tune of US$943 million in the twelve months to June 2015. In the
second half of 2014 alone, Qatar experienced foreign inflows of
US$560 million. This effect reduced in the first half of 2015 with
the months of January, March and June seeing outflows of foreign
funds. Overall, H1 2015 saw US$384 million of foreign inflows.
US$492 million was attracted in May on the inclusion of Qatar
Insurance Company and Ezdan Holding into the MSCI emerging markets
index.
During the period, Saudi Arabia posted a 4.5% decline mainly on
account of a continued weakness in oil prices, despite the opening
up of the Saudi market to foreign investors in June 2015. There was
low uptake of qualified foreign investors (QFIs), which resulted in
just US$5 million of foreign inflows through the direct route. June
2015 witnessed US$222 million of foreign flows out of the Saudi
market.
Dubai and Abu Dhabi rose 3.7% and 3.8%, respectively. Kuwait was
the worst performing market with a decline of 11.0%, followed by
Oman and Bahrain with 8.3% and 4.2% falls, respectively.
In the second half of 2014, Qatar outperformed a lackluster GCC
market. Sharply lower oil prices pared away gains with Saudi
leading the fall. However, in the first half of 2015, most of the
GCC markets made gains excluding Qatar, Kuwait and Bahrain.
Looking ahead, the Qatar market is expected to perform well over
the long term on the back of strong fundamentals, infrastructure
spending, on-time projects completion, non-hydrocarbon economic
growth and a rising population. The Qatari government is set to
continue with its infrastructure spending programme irrespective of
the FIFA World Cup. The majority of these projects were planned
before the World Cup was awarded in 2010. Infrastructure spend
should support economic growth of over 6% per annum until 2017.
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Quarterly Performance of Regional Markets
Indices 30-Jun-14 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15
Qatar (DSM) -1.3% 19.5% -10.5% -4.7% 4.2%
---------- ---------- ---------- ---------- ----------
Saudi (TASI) 0.4% 14.1% -23.2% 5.3% 3.5%
---------- ---------- ---------- ---------- ----------
Dubai (DFMGI) -11.4% 27.9% -25.2% -6.9% 16.3%
---------- ---------- ---------- ---------- ----------
Abu Dhabi (ADI) -7.0% 12.2% -11.3% -1.3% 5.7%
---------- ---------- ---------- ---------- ----------
Kuwait (KWSE) -7.9% 9.3% -14.2% -3.9% -1.3%
---------- ---------- ---------- ---------- ----------
Oman (MSI) 2.2% 6.8% -15.2% -1.7% 3.0%
---------- ---------- ---------- ---------- ----------
Bahrain (BAX) 5.2% 3.4% -3.4% 1.6% -5.7%
---------- ---------- ---------- ---------- ----------
Source: Bloomberg
Long term infrastructure projects to give impetus to GDP
growth
Qatar is spending over US$200 billion on infrastructure in the
next seven years, in line with Qatar National Vision 2030. This is
funded by large reserves accumulated from hydrocarbon earnings. We
expect that recent oil price declines should have a limited or
delayed impact on government revenues, given Qatar's long term
liquefied natural gas (LNG) contracts. Qatar's 2016 budget will be
based on an assumed oil price of US$55 per barrel, lower than
current assumed oil price of US$65 per barrel. Spending directly
related to the World Cup is estimated at US$15-16 billion,
representing about 7.5% of total infrastructure spending. While the
FIFA World Cup provides impetus to project activity it is one of
several factors driving infrastructure investment.
Embedded image removed - please refer to the Company's website
www.qatarinvestmentfund.com for a chart depicting Total Planned
Capital Expenditure.
Source: Samba Capital, Gulf Times
According to NBK Capital reports, contracts worth US$29 billion
were awarded in 2014, 30% up on 2013. This momentum is expected to
continue through2015 and 2016. In the coming year contracts valued
at US$70 billion are expected, with over US$13 billion already
awarded in Q1. Further projects in 2015-16 include Qatar Integrated
Railway (US$28.8 billion), local roads and drainage (US$14.6
billion), Lusail Mixed-Use Development (US$33.0 billion), Barzan
Gas Development (US$10.3 billion) and New Doha Port (US$7
billion).
The Investment Adviser believes Qatar's long term infrastructure
spending will continue, driven by low gearing, accumulated budget
surpluses and Qatar having one of the lowest break even oil prices
for its oil production, in the region. Excluding the World Cup
related investment, we believe that Qatar's GDP would still
continue to grow above 5% annually.
Qatar Macroeconomic Update
According to Ministry of Development and Planning (MDPS),
Qatar's GDP increased 4.1% in Q1 2015 vs Q1 2014, using new base
year (2013), driven by non-hydrocarbon growth. Compared to Q4 2014,
GDP grew 3.4%. During Q1 2015, the hydrocarbon sector contracted
0.1% on Q1 2014, while the non-hydrocarbon sector increased 8.9% on
the back of a rise in construction, trading, hospitality and
financial sector activity; and a jump in Qatar's population in Q1
2015. Construction rose 11.4% on a year on year basis, helped by
major public investments. The financial sector (which includes
finance, insurance, real estate and business services) rose 9.8%
while the trade, hotels and restaurants (combined) sector expanded
9.3% vs Q1 2014.
The Investment Adviser believes that these factors should
continue supporting the non-hydrocarbon growth. Additional output
from the Barzan Gas project should further help GDP growth.
Qatar's population increased 4.9% from January to June 2015, to
a total of 2.34 million. Population growth is expected to remain
strong as infrastructure spending attracts expatriate workers. The
Investment Adviser believes that the rise in population should
drive consumption growth, benefiting local consumer companies.
FIFA related projects get priority in the extended state budget
for 2015
Recently, Qatar announced its budget for the extended period of
nine months from 1 April to 31 December 2015. The country will be
following a new January to December fiscal year from 2016, which
required extending the current FY 2014-15 budget to December 2015.
The budget focuses on mega development projects and investments
linked to the 2022 FIFA World Cup. The budget assumes an oil price
of US$65 per barrel; unchanged from the 2014-15 budgets. Revenue is
estimated at QAR169.3 billion, while expenditure is forecast to be
QAR163.8 billion, which translates to a forecast budget surplus of
QAR5.5 billion. Most of the expenditure is slated for the health,
education, infrastructure and transport sectors and projects
related to the 2022 FIFA World Cup.
According to the Qatari Ministry of Finance, estimated revenue
during the 21 month period (1 April 2014 to 31 December 2015) is
expected to reach QAR395.0 billion and total expenditure during the
same period would be QAR382.2 billion, resulting in an estimated
surplus of QAR12.8 billion. The Minister of Finance stated that
preliminary estimates of the budget for FY 2014-15 (1 April 2014 to
31 March 2015) show a surplus of about QAR137 billion.
In the extended budget, allocation to major projects would be at
the maximum of QAR65.6 billion, thus bringing the total allocation
during 21 months for this sector to QAR153.1 billion. The state
budget has kept aside QAR53.4 billion for current expenditure,
increasing total allocation to this sector to QAR124.5 billion in
the full 21 months. Total allocation to salaries and wages is
expected at QAR35.6 billion in the nine months, thus taking the
total allocation to QAR83.1 billion.
Lower oil prices should mean lower budget and current account
surpluses. According to the NBK Capital report, Qatar's budget
surplus is expected to decline from 10.8% of GDP in 2014 to 1.6%
and 2.2% of GDP in 2015 and 2016, respectively,
The current account surplus (as a % of GDP) is forecast to fall
from double-digits in 2010 to 4.4% and 3.1% in 2015 and 2016,
respectively.
Recent Developments
Non-hydrocarbon sector GDP contribution stands at 62%
Qatar is consistently taking steps to reduce its reliance on
hydrocarbon income. Non-hydrocarbons rose from 55% of GDP in 2007
to 62% in 2014. Qatar is continuing to diversify and the share of
the non-hydrocarbon sector in the economy should increase further,
as oil prices remain low.
In real terms the growth of the non-hydrocarbon sector has been
impressive, growing between 10% - 11% per annum since 2011 During
2007-2014, non-hydrocarbon real GDP grew at a CAGR of 12.9%; faster
than the 8.5% CAGR of the hydrocarbon sector.
Strong fiscal balances, healthy current account surpluses and
low inflation levels should help the country continue with its
infrastructure development plan.
Embedded image removed - please refer to the Company's website
www.qatarinvestmentfund.com for a chart depicting Share of
Hydrocarbon in Real GDP.
Qatar's project market to grow fastest in GCC in 2015
According to MEED, Qatar is expected to have the fastest growing
project market in the GCC in 2015, with projects worth US$30
billion planned. A similar number of new projects should be awarded
in 2016. Contracts with a value of US$135 billion are expected
between 2015 and 2020. These contracts would be additional to the
US$100 billion worth of contracts already placed / in execution
since Qatar won the bid for the 2022 FIFA World Cup. In 2015, MEED
expects that the value of contracts placed in the GCC to increase
to US$172 billion.
Private sector credit growth continues
According to Qatar Central Bank (QCB) data, total credit
extended by Qatari banks grew 6.5% between December 2014 and June
2015 (year to date). Public sector credit declined 4.8% while
private sector credit rose 13.5%.
Total deposits grew 7.1% year to date. The banking sector's
loans-to-deposit ratio stood at 108.1% at end of June 2015, lower
than 108.7% reported at the end of December 2014.
Looking ahead, the Investment Adviser believes credit growth
will remain at healthy levels, driven by infrastructure spending,
non-hydrocarbon sector growth and the increasing population.
Qatar Insurance and Ezdan Holding added to MSCI EM Index
In May, MSCI included Qatar Insurance Company and Ezdan Holding
in its MSCI emerging markets index and increased the weighting of
Doha Bank. Qatar's weighting in the MSCI emerging markets index is
now 0.93%. According to Deutsche Bank the inclusion meant Qatar
Insurance Company attracted inflows of US$144 million while Ezdan
Holding attracted US$318 million. The increased weighting attracted
additional foreign funds to Qatar of US$492 million.
The Qatar Stock Exchange is working with listed companies in
order to increase their weighting in the MSCI emerging markets
index. Listed companies including Ezdan Holding, Commercial Bank,
Aamal, Qatar Insurance Company, Doha Bank and Qatar General
Insurance and Reinsurance increased their foreign ownership limit
to 49%. The Investment Adviser believes this is a positive move
with further companies expected to increase their foreign ownership
limits soon. This should help to further improve Qatar's weighting
in the MSCI emerging markets index.
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Recently, the chief executive of the Qatar Exchange stated that
prior to MSCI upgrade the Qatar Exchange's total transactions in
value terms were around QAR250 million per day. Post MSCI
reclassification, the Qatar Exchange's traded value peaked at QAR1
billion, and has been in the range of QAR600-700 million per day.
The Qatar Exchange also plans to launch new products such as margin
trading and exchange traded funds, along with Real Estate
Investment Trusts and may receive regulatory approvals in the third
quarter of 2015.
Changes in QE Index constituents and weights
Following the semi-annual review of the QE indices, from 1 April
2015, Aamal replaced Medicare in the QE Index, with a weight of
2.76%, while all 43 listed companies will remain part of the QE All
Share Index (& related sector index). The Qatar Exchange caps
the maximum weight a single stock can represent at 15% of the QE
Index. Based on 31 March 2015 closing prices, Qatar National Bank,
whose weight was exceeding 15% has been capped at 15% and excess
weight has been distributed proportionately amongst remaining
stocks.
Trading of entitlements to rights issues
The Qatar Exchange (QE) has been planning to introduce trading
of rights issue entitlements for investors. Currently, investors
need to commit additional money to exercise rights, or
alternatively receive no compensation if they do not take up their
rights to subscribe for shares in rights issues. These rights are
generally at a fixed price but may be lower than the market price.
However, according to the Qatar Exchange, if these rights
entitlements are tradable, investors can sell them and receive a
benefit if they choose not to subscribe in the rights issue. The
Qatar Exchange also stated that it is currently working with Qatar
Financial Markets Authority (QFMA), on forming the mechanism for
selling and pricing of rights issue entitlements as a new
instrument in the capital market. As a result, the rights holder
can either exercise the rights by subscribing in the company's
capital increase or can sell the rights fully/ partially.
Valuations
Market Market Cap. PE (x) PB (x) Dividend
Yield (%)
US$ Mn 2015E 2016E 2015E 2015E
------------ ------ ------ ------- -----------
Saudi Arabia 542,079 17.0 18.1 2.6 4.0
------------ ------ ------ ------- -----------
UAE 221,309 14.1 12.5 1.9 4.2
------------ ------ ------ ------- -----------
Qatar 147,257 13.2 12.3 2.3 4.5
------------ ------ ------ ------- -----------
Kuwait 95,206 13.1 11.6 1.6 4.4
------------ ------ ------ ------- -----------
Oman 18,128 10.8 10.8 1.8 5.2
------------ ------ ------ ------- -----------
Bahrain 21,178 9.5 9.2 1.2 6.2
------------ ------ ------ ------- -----------
Egypt 26,300 16.2 11.5 2.8 2.8
------------ ------ ------ ------- -----------
Jordan 22,219 13.5 10.7 1.4 3.3
------------ ------ ------ ------- -----------
Overall MENA 1,093,675 15.2 15.0 2.3 4.2
------------ ------ ------ ------- -----------
Source: Bloomberg Finance LP, Deutsche Bank, Prices as of 29th
June 2015
The Qatar market offers an attractive combination of appealing
valuations and high dividend yields, supported by strong
fundamentals, investment spending and rising population. The Qatar
market is trading at 2015 price to earnings (P/E) of 13.2x, cheaper
relative to its peers such as Saudi Arabia (17.0x) and UAE (14.1x).
The attractive valuation of the Qatar market is well supported by a
significant dividend yield estimated at 4.5% for 2015, one of the
highest dividend yields in the GCC.
Corporate Profitability
Sector Net Profit (QAR '000) LTM 6/30/2014 LTM 6/30/2015 Change
Banks & Financial Services 17,996,541 20,222,243 12.4%
-------------- -------------- -------
Insurance 2,669,057 2,132,421 -20.1%
-------------- -------------- -------
Services & Consumer Goods 1,920,727 1,859,275 -3.2%
-------------- -------------- -------
Industry 12,271,302 12,014,721 -2.1%
-------------- -------------- -------
Real Estate 3,383,488 8,361,471 147.1%
-------------- -------------- -------
Telecoms 2,362,801 1,144,421 -51.6%
-------------- -------------- -------
Transportation 1,826,253 2,281,080 24.9%
-------------- -------------- -------
Total 42,430,169 48,015,632 13.2%
-------------- -------------- -------
*Net profit calculation for the 12 months to 30 June 2014 is
based on restated net profit numbers
Source: Qatar Exchange
For the 12 months to 30 June 2015, net profits of Qatar Exchange
(QE) listed companies rose 13.2% on the 12 months to 30 June 2014.
This performance was fuelled by the real estate banking &
financial services and transportation sectors. The insurance,
services & consumer goods, telecom and industry sectors
reported lower profits.
The 43 companies listed on the QE reported profits of QAR48.0
billion (US$13.2 billion) for the year ended 30 June 2015, (year
ended 2014: QAR42.4 billion (US$11.7 billion)). The real estate
sector reported a powerful profit rise of 147.1% following a 300%
rise in profits from Barwa Real Estate; double digit growth from
United Development Company (profit up 37.8%) and Ezdan Real Estate
(profit up 14.5%). Profits rose 25% in the transportation sector;
and 12.4% in the Banking & financial services sector, mainly
driven by higher profits from Qatari banks (up 13.2%). The banking
& financial services sector heavyweight, Qatar National Bank,
reported an 11.9% rise in profit. Industrials profits declined 2.1%
due to weak performance from Industries Qatar where profits fell
5.7% in the 12 months to 30 June 2015. The Telecom sector profit
declined substantially by 51.6%. Services & consumer goods saw
a 3% profit fall.
Looking ahead, the Investment Adviser believes that earnings
growth in Qatari listed companies will improve, helped by the
infrastructure spending, growing population and developing
non-hydrocarbon sectors mentioned above. With project tendering
remaining strong, domestic companies in the banking, real estate,
consumer and transportation sectors are expected to be the key
beneficiaries.
Net profit growth of the Company's top 5 holdings (in QAR
'000)
Company LTM 6/30/2014 LTM 6/30/2015 Change
Qatar National Bank 9,810,202 10,972,771 11.9%
-------------- -------------- -------
Industries Qatar 6,281,326 5,926,102 -5.7%
-------------- -------------- -------
Masraf Al Rayan 1,785,321 2,096,767 17.4%
-------------- -------------- -------
Commercial Bank of Qatar 1,604,296 1,881,230 17.3%
-------------- -------------- -------
Qatar Islamic Bank 1,430,572 1,771,290 23.8%
-------------- -------------- -------
Source: Qatar Exchange
Company Update
QIF's NAV was up 8.4% to US$1.5336 at the end of June 2015 from
US$1.4142 at the end of June 2014, the Qatar Exchange index gained
6.2%, during the same period. The outperformance was driven by
share price rises from portfolio companies including Qatar National
Bank (up 22.8%), Qatar Islamic Bank (up 36.9%), Qatar Electricity
& Water (up 37.0%), Barwa Real Estate (up 56.9%) and Qatar
Insurance Company (42.5%). As at 30 June 2015, the QIF share price
was at a 17.8% discount to NAV.
Industry Allocation
QIF remains overweight in the Qatari banking sector, with a
weighting (including financial services) of 51.4% of NAV at the end
of Q2 2015 (Q1 2015: 50.8%). Qatar National Bank is QIF's largest
holding (16.9%). Qatari banking has a record of strong growth and
the Investment Adviser believes that future growth prospects remain
good, fueled by the government's infrastructure investment,
subsequent domestic demand for credit and Qatari banks'
international development plans.
Industrials remain the second largest exposure at 25.7% (Q1
2015: 15.2%). During the quarter, the Investment Adviser increased
exposure to Industries Qatar (14.4% of NAV) seeing an upward trend
in petrochemical prices and valuations began looking attractive.
Exposure to Gulf International Services remained stable at 6.4%,
while exposure in Qatar Electricity and Water reduced from 5.3% in
Q1 2015 to 4.9% at the end of Q2 2015.
QIF's weighting in the real estate sector was unchanged (8.8% of
NAV). Exposure to the telecom sector reduced from 3.7% in Q1 2015
to 3.4% at the end of Q2 2015. The weighting in transportation
increased to 5.1% in Q2 2015 from 4.7% in the previous quarter.
Embedded image removed - please refer to the Company's website
www.qatarinvestmentfund.com for a chart depicting QIF's Industry
allocation per sector.
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Portfolio Breakdown Top 5 Holdings
Company Name Sector % Share
of NAV
Qatar National Banks & Financial
Bank Services 16.9%
------------------- --------
Industries Qatar Industry 14.4%
------------------- --------
Banks & Financial
Masraf Al Rayan Services 11.3%
------------------- --------
Commercial Bank Banks & Financial
of Qatar Services 8.5%
------------------- --------
Qatar Islamic Banks & Financial
Bank Services 7.2%
------------------- --------
Source: Bloomberg, Qatar Insurance Company
At the end of June 2015, the top five investments on the company
constituted 58.4% of NAV, up from 47.9% as at 30 June 2014. The top
10 holdings represent 83.4% of QIF's NAV (75.4% as at 30 June
2014).
Country Allocation
At the end of June 2015, QIF had 20 holdings: 18 in Qatar and 2
in UAE (Q1 2015: 23 holdings: 21 in Qatar and 2 in UAE). Cash was
2.2% of NAV (Q1 2015: 7.4%). QIF's holdings outside Qatar represent
4.0% of NAV at the end of June 2015.
Qatar remains the Investment Manager's favoured market in the
GCC region due to the relatively stable political environment,
infrastructure spending, non-hydrocarbon sector growth as well as
sizeable hydrocarbon reserves; coupled with attractive valuations
and a healthy dividend yield.
Embedded image removed - please refer to the Company's website
www.qatarinvestmentfund.com for a chart depicting QIF's allocation
by Country.
Qatar National Bank (16.9% of NAV)
Qatar National Bank (QNB) is a high quality proxy stock for
Qatari economic growth, given its strong ties with the public
sector and access to state liquidity. QNB is a dominant state-owned
participant in the banking sector and plays an important role in
the development of the Qatari economy and in funding key
infrastructure projects. The government is strongly committed to
support QNB, thus enhancing its economic importance. The largest
shareholder in QNB is the Government of Qatar, through the Qatar
Investment Authority (QIA), with a 50% equity stake. QNB is the
largest bank in Qatar and MENA, with total assets of QAR510.5
billion (US$140.2 billion) as at 30 June 2015. For the first half
of 2015, QNB reported 10.2% rise in net profit to QAR5.6 billion
(US$1.5 billion) compared to H1 2014. QNB is well positioned to
benefit from the rapid expansion of the domestic economy. QNB
Group, subsidiaries and associate companies, operate in more than
27 countries, through more than 630 branches, supported by
over1,340 ATMs and employing around 14,900 staff.
Industries Qatar (14.4% of NAV)
Industries Qatar (IQ) is the largest publicly traded company in
Qatar. IQ is a holding company with interests in petrochemicals via
80% owned Qatar Petrochemical Co., fertilizers via 75% owned Qatar
Fertilizer Co., steel via a wholly owned subsidiary Qatar Steel Co.
and fuel additives via 50% owned Qatar Fuel Additives Co. For H1
2015, the company's net profit stood at QAR2,423.3 million, against
QAR2,838.8 million in H1 2014, largely due to reduced revenue
arising from the petrochemical segment due to price deflation
following a significant fall in global oil prices and weaker
fertiliser prices. However, the company reported improved sales
volumes (up 17.1% YoY) across all segments, as most of the
company's production facilities were on extensive planned and
warranty maintenance shutdown during H1 2014. Additionally, as for
the group's current projects, Qatar Steel has opted to sell its 50%
stake in the JV Qatar Steel International to Qatar Mining Company,
the other JV partner. However, Qatar Steel will continue to be
involved in the project by providing technical services and
support.
Masraf Al Rayan (11.3% of NAV)
Masraf Al Rayan (MARK) was incorporated as a Qatari Shareholding
Company under Qatar Commercial Company law on 4th January 2006. It
is licensed by the Qatar Central Bank and began commercial
operations in October 2006. The bank has three main business
divisions mainly retail banking, wholesale banking and private
banking. Besides this the bank offers investment banking and
treasury products. Presently MARK has a total of 11 branches in
strategic locations around Qatar, and a total of 62 ATMs. At the
end of June 2015, the bank's financial assets stood at QAR59.5
billion (US$16.3 billion). During first half of 2015, the bank
reported 10.5% rise in net profit to QAR998.3 million (US$274.3
million).
Commercial Bank of Qatar (8.5% of NAV)
Commercial Bank of Qatar (CBQ) was established in 1975 as a full
service commercial bank. CBQ is the second - largest commercial
bank in Qatar, with total assets of QAR119.1 billion (US$32.7
billion) as at 30 June 2015. CBQ offers retail, corporate, Islamic
and investment banking products in Qatar, through its subsidiary in
Turkey and through its associates in the UAE and Oman. The bank has
countrywide network with 32 full service branches and 156 ATMs. In
6M 2015, its net income was flat at QAR964.6 million (US$265.0
million) compared to same period last year.
Qatar Islamic Bank (7.2% of NAV)
Qatar Islamic Bank (QIB) is Qatar's first Islamic financial
institution that follows Shari'a principles. Established in 1982,
the bank commands 36% share of Islamic sector and over 10% share of
the overall banking sector (FY 2014). The bank has over 30 branches
in Qatar and has international presence through affiliates namely
QIB - UK in London, Arab Finance House in Lebanon, Asian Finance
Bank in Malaysia, and QIB Sudan. Apart from core businesses, the
bank has core holdings in QInvest (Investment bank; QIB
subsidiary), Beema (Islamic Insurance Company), Al Jazeera Finance
(Islamic Consumer Finance) and Aqar (Real Estate Investment and
Development). At the end of June 2015, its financing assets stood
at QAR76.6 billion (US$21.1 billion). In the first half of 2015,
the bank's net profit grew 23.4% to QAR895.1 million (US$245.9
million).
Epicure Managers Qatar Limited Qatar Insurance Company
S.A.Q.
10 September 2015 10 September 2015
Investment Policy
Investment Objective
The Company's investment objective is to capture, principally
through the medium of the Qatar Exchange (formerly the Doha
Securities Market), the opportunities for growth offered by the
expanding Qatari economy by investing in listed companies or
companies soon to be listed. The Company may also invest in listed
companies, or pre-IPO companies, in other GCC countries.
The Company applies a top-down screening process to identify
those sectors which should most benefit from sector growth trends.
Fundamental industry and company analysis, rather than
benchmarking, forms the basis of both stock selection and portfolio
construction.
Assets or companies in which the Company can invest
The Company was established to invest primarily in quoted Qatari
equities. The Company invests in listed companies on the Qatar
Exchange in addition to companies soon to be listed. The Company
may also invest in listed companies, or pre-IPO companies, in other
GCC Countries.
Whether investments will be active or passive investments
In the ordinary course of events, the Company is not an activist
investor, although the Investment Adviser will seek to engage with
investee company management where appropriate.
Holding period for investments
In the normal course of events, the Company expects to be
fully-invested, although the Company may hold cash reserves pending
new IPOs or when it is deemed financially prudent. Although the
Company is a long term financial investor, it will actively manage
its portfolio.
Spread of investments and maximum exposure limits
The Company will invest in a portfolio of investee companies
with restrictions in place to ensure a spread of investments and to
ensure that there are maximum exposure limits in place (see
investment guidelines under Investing Restrictions).
Policy in relation to gearing and derivatives
Borrowings will be limited, as at the date on which the
borrowings are incurred, to 5% of NAV. Borrowings will include any
financing element of a swap. The Company will not make use of
hedging mechanisms.
The Company may utilise derivative instruments in pursuit of its
investment policy subject to:
-- such derivative instruments only being utilised in respect of
investments listed on the Saudi Arabian stock exchange;
-- such derivative instruments being designed to offer the
holder a return linked to the performance of a particular
underlying listed equity security;
-- a maximum underlying equity exposure limit of 15 per cent of
NAV (calculated at the time of investment); and
-- a policy of entering into derivative instruments with more
than one counterparty in relation to an investment, where possible,
to minimise counterparty risk.
Policy in relation to cross-holdings
Cross-holdings in other listed or unlisted closed-ended
investment funds that invest in Qatar or other countries in the GCC
region will be limited to 10% of NAV at any time (calculated at the
time of investment).
Investing Restrictions
The investing restrictions for the Company are as follows:
(i) Foreign Ownership Restrictions
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Investments in most Qatar Exchange listed companies by persons
other than Qatari citizens have an ownership restriction wherein
the law precludes persons other than Qatari citizens from acquiring
a certain proportion of a company's issued Share Capital. It is
possible that the Company may have problems acquiring stock if the
foreign ownership interest in one or more stocks reaches the
allocated upper limit. This may adversely impact the ability of the
Company to invest in the local Qatari market and in other GCC
markets.
(ii) Investment Guidelines
The Company has established certain investment guidelines. These
are as follows (all of which are to be calculated at the time of
investment):
-- No single investment position in a QE Index constituent may
exceed the greater of: (i) 15% of the NAV of the Company; or (ii)
125% of the constituent company's index capitalisation divided by
the index capitalisation of the QE Index, as calculated by
Bloomberg (or such other source as the Directors and Investment
Manager may agree);
-- No single investment position in a company which is not a QE
Index constituent may exceed 15% of the NAV of the Company;
-- No holding may exceed 5% of the outstanding shares in any one company; and
-- The Company may hold up to a maximum of 15% of its NAV
outside Qatar, within the GCC region, including investment in
P-Notes or swaps structured financial products for investment in
companies listed on the Saudi Arabian stock exchange.
(iii) Conflicts Management
The Investment Manager, the Investment Adviser, their officers
and other personnel are involved in other financial, investment or
professional activities, which may on occasion give rise to
conflicts of interest with the Company. The Investment Manager will
have regard to its obligations under the Investment Management
Agreement to act in the best interests of the Company, and the
Investment Adviser will have regard to its obligations under the
Investment Adviser Agreement to act in the best interests of the
Company, so far as is practicable having regard to their
obligations to other clients, where potential conflicts of interest
arise. The Investment Manager and the Investment Adviser will use
all reasonable efforts to ensure that the Company has the
opportunity to participate in potential investments that each
identifies which fall within the investment objective and
strategies of the Company. Other than these restrictions set out
above, and the requirement to invest in accordance with its
investing policy, there are no other investing restrictions.
Returns and Distribution Policy
The Company's investment objective is to achieve capital growth.
However the Company paid a dividend for the year ended 30 June 2014
and has instituted an annual dividend policy. The quantum of the
dividend is calculated based on a proportion of the dividends
received during the year, net of the Company's attributable costs.
Any undistributed income will be set aside in a revenue reserve in
order to facilitate the Company's policy of future progressive
dividend payments. This policy will be subject to the absence of
exceptional market events.
Life of the Company
The Company currently does not have a fixed life but the Board
considers it desirable that Shareholders should have the
opportunity to review the future of the Company at appropriate
intervals. Accordingly, at the annual general meeting of the
Company in 2015, a resolution will be proposed that the Company
ceases to continue in existence. Shareholders holding at least 51%
of the ordinary 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
thereafter. If the resolution is passed, the Directors will be
required to formulate proposals to be put to Shareholders to
reorganise, unitise or reconstruct the Company or for the Company
to be wound up.
Report of the Directors
The Directors hereby submit their annual report together with
the audited consolidated financial statements of Qatar Investment
Fund plc (formerly Epicure Qatar Equity Opportunities plc) (the
"Company") for the year ended 30 June 2015.
The Company
The Company is incorporated in the Isle of Man and has been
established to invest primarily in quoted equities of Qatar and
other Gulf Co-operation Council countries. The Company's investment
policy is detailed on pages 17 to 19.
Results and Dividends
The results of the Company for the period and its financial
position at the period end are set out on pages 37 to 46 of the
financial statements.
The Directors manage the Company's affairs to achieve capital
growth and the Company has instituted an annual dividend policy.
The quantum of the dividend is calculated based on a proportion of
the dividends received during the year, net of the Company's
attributable costs. Any undistributed income will be set aside in a
revenue reserve in order to facilitate the Company's policy of
future progressive dividend payments. This policy will be subject
to the absence of exceptional market events.
For the year ended 30 June 2014, the Directors declared a
dividend of US$4,875,007 (3.5c per share) which was approved by
Shareholders and paid by the Company in March 2015.
Directors
Details of Board members at the date of this report, together
with their biographical details, are set out on page 28.
Director independence and Directors' and other interests have
been detailed in the Directors' Remuneration Report on pages 32 and
33.
Creditor Payment Policy
It is the Company's policy to adhere to the payment terms agreed
with individual suppliers and to pay in accordance with its
contractual and other legal obligations.
Gearing Policy
Borrowings will be limited, as at the date on which the
borrowings are incurred, to 5% of NAV (or such other limit as may
be approved by the Shareholders in general meeting). The Company
will not make use of any hedging mechanisms or leveraged derivative
instruments.
There were no borrowings during the year.
Donations
The Company has not made any political or charitable donations
during the year (2014: US$ nil).
Adequacy of the Information Supplied to the Auditors
The Directors who held office at the date of approval of this
Directors' Report confirm that, so far as each is aware, there is
no relevant audit information of which the Company's auditors are
unaware; and each Director has taken all steps that he ought to
have taken as a Director to make himself aware of any relevant
audit information and to establish that the Company's auditors are
aware of that information.
Statement of Going Concern
The Directors are satisfied that the Company and the Group have
adequate resources to continue to operate as a going concern for
the foreseeable future and have prepared the financial statements
on that basis.
Independent Auditors
KPMG Audit LLC has expressed its willingness to continue in
office in accordance with Section 12 (2) of the Companies Act
1982.
Annual General Meeting
The Annual General Meeting of the Company will be held on 12
November 2015 at the Company's registered office.
A copy of the notice of Annual General Meeting is contained
within this Annual Report. As well as the business normally
conducted at such a meeting, Shareholders will be asked to renew
the authority to allow the Company to continue with share
buy-backs.
In addition, shareholders will be asked to vote on the Company's
life. Details of the discontinuation vote are set out below. The
Directors consider that all the resolutions to be put to the
meeting, other than the discontinuation vote are in the best
interests of the Shareholders as a whole and recommend that you
vote in favour of them.
The notice of the Annual General Meeting and the Annual Report
are also available at www.qatarinvestmentfund.com.
Discontinuation Vote
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 2015 a resolution will be proposed that the Company
ceases to continue in existence. Shareholders holding at least 51%
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.
In considering its recommendation to shareholders, the Board has
considered the strategic position of the Company; the long-term
performance of the Company; the services provided to the Company by
its Investment Manager and Investment Adviser; and the prospects
for investment by the Company in Qatar and other GCC countries.
The Company is a closed-ended investment company which was
incorporated in the Isle of Man on 26 June 2007. The investment
objective of the Company is to achieve long-term capital growth by
investing primarily in Qatari equities and in listed companies in
other GCC countries. The Company is one of the largest
London-listed regional funds with net assets of US$213 million as
at 30 June 2015 and represents an actively-managed way to access
the Qatari equity market.
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The Company's investment performance may be measured by
comparing the performance of its NAV to the performance of the
benchmark, the Qatar Exchange ("QE") Index. The table below
illustrates the Company's performance over the relevant periods as
measured by these metrics.
FY 2015 FY 2014 FY 2013 FY 2012 FY2011 FY2010 FY2009 7 February
2008*
to 30
June
2012
QIF NAV
per share +8.4% +21.2% +15.5% -1.9% +22.6% +7.7% -41.8% -12.2%
-------- -------- -------- -------- ------- ------- ------- -----------
QE Index +6.2% +23.6% +14.5% -2.8% +21.2% +6.3% -45.3% -19.0%
-------- -------- -------- -------- ------- ------- ------- -----------
* date fully invested
Discontinuation Vote continued
The Company's Investment Adviser is part of one of the oldest
and largest property casualty insurers in the region. Its
Doha-based investment team manages assets in excess of $US3 billion
around the world, and has over 40 years of regional investment
experience. The Investment Adviser believes that Qatar is well
positioned to maintain its steady economic growth, backed by a
strong fiscal position, higher contributions from the
non-hydrocarbon sector, and significant Government spending on
infrastructure projects.
In light of its considerations the Board considers that the
Company's long-term investment objectives remain appropriate and
its structure remains beneficial to all shareholders. The Directors
consider that the discontinuation vote put to the meeting is not in
the best interests of the Shareholders as a whole and recommend
that you vote against such a resolution and the Directors intend to
vote their shares accordingly.
Corporate Governance
Full details are given in the Corporate Governance Report on
pages 22 to 27, which forms part of the Report of the
Directors.
Substantial Shareholdings
As at the date of publication of this annual report, the Company
had been notified of the following holdings in its Share
Capital.
Ordinary Shares
Name %
----------------
City of London Investment Management
Company 29.20*
----------------
Qatar Insurance Company S.A.Q. 18.33
----------------
Qatar Investment Authority 11.34*
----------------
Lazard Asset Management 7.20
----------------
1607 Capital Partners LLC 5.03*
----------------
Advance Frontier Market Fund
Limited 2.94*
----------------
The above percentages are calculated by applying the
Shareholdings as notified to the Company to the issued Ordinary
Share Capital as at 30 June 2015. For those notifications received
prior to the most recent tender offer (*) the percentage
shareholding is based on the disclosure in such notification.
On behalf of the Board
Nicholas Wilson
Chairman
10 September 2015
Corporate Governance Report
Compliance with Companies Acts
As an Isle of Man incorporated company, the Company's primary
obligation is to comply with the Isle of Man Companies Acts 1931 -
2004. The Board confirms that the Company is in compliance with the
relevant provisions of the Companies Acts.
Compliance with the AIC Code of Corporate Governance
The Company is committed to high standards of corporate
governance. The Board is accountable to the Company's shareholders
for good governance and this statement describes how the Company
applies the principles identified in the UK Corporate Governance
Code which is available on the Financial Reporting Council's
website: www.frc.org.uk. The Board confirms that the Company has
complied throughout the accounting period with the relevant
provisions contained within the UK Code.
The Board of the Company has considered the principles and
recommendations of the AIC 2010 Code of Corporate Governance (AIC
Code) by reference to the AIC Corporate Governance Guide for
investment Companies (AIC Guide). The AIC Code, as explained by the
AIC Guide, addresses all the principles set out in the UK Corporate
Governance Code, as well as setting out additional principles and
recommendations on issues that are of specific relevance to QIF
plc.
The Board considers that reporting against the principles and
recommendations of the AIC Code, and by reference to the AIC Guide
(which incorporates the UK Corporate Governance Code), will provide
better information to shareholders.
The Company has complied with the recommendations of the AIC
Code and the relevant provisions of the UK Corporate Governance
Code, except as set out below.
The UK Corporate Governance Code includes provisions relating
to:
-- the role of the chief executive
-- executive directors' remuneration
-- the need for an internal audit function
For the reasons set out in the AIC Guide, and as explained in
the UK Corporate Governance Code, the Board considers these
provisions are not relevant to the position of the Company, being
an externally managed investment company. In particular, all of the
Company's day-to-day management and administrative functions, with
the exception of portfolio management, risk management and service
provider performance management, are outsourced to third parties.
As a result, the Company has no executive directors, employees or
internal operations. The Company has therefore not reported further
in respect of these provisions.
Directors
The Directors are responsible for the determination of the
Company's investment policy and strategy and have overall
responsibility for the Company's activities including the review of
the investment activity and performance.
All of the Directors are non-executive. Save for Leonard
O'Brien, the Board considers each of the Directors to be
independent of, and free of any material relationship with, the
Investment Manager and Investment Adviser.
The Board of Directors delegates to the Investment Manager
through the Investment Management Agreement the responsibility for
the management of the Company's assets in GCC securities in
accordance with the Company's investment policy and for retaining
the services of the Investment Adviser. The Company has no
executives or employees.
The Articles of Association require that all Directors submit
themselves for election by Shareholders at the first opportunity
following their appointment and shall not remain in office longer
than three years since their last election or re-election without
submitting themselves for re-election.
The Board meets formally at least 4 times a year and between
these meetings there is regular contact with the Investment
Manager. Other meetings are arranged as necessary. The Board
considers that it meets sufficiently regularly to discharge its
duties effectively. The Board ensures that at all times it conducts
its business with the interests of all Shareholders in mind and in
accord with Directors' duties. Directors receive the relevant
briefing papers in advance of Board and Board Committee meetings,
so that should they be unable to attend a meeting they are able to
provide their comments to the Chairman of the Board or Committee as
appropriate. The Board meeting papers are the key source of regular
information for the Board, the contents of which are determined by
the Board and contain sufficient information on the financial
condition of the Company. Key representatives of the Investment
Manager attend each Board meeting. All Board and Board Committee
meetings are formally minuted.
Board Composition and Succession Plan
Objectives of Plan
-- To ensure that the Board is composed of persons who
collectively are fit and proper to direct the company's business
with prudence, integrity and professional skills
-- To define the Board Composition and Succession Policy, which
guides the size, shape and constitution of the Board and the
identification of suitable candidates for appointment to the
Board.
Methodology
The Board is conscious of the need to ensure that proper
processes are in place to deal with succession issues and the
Nomination Committee assists the Board in the Board selection
process, which involves the use of a Board skills matrix.
The matrix incorporates the following elements: finance,
accounting and operations; familiarity with the regions into which
the Company invests; diversity (gender, residency, cultural
background); Shareholder perspectives; investment management;
multijurisdictional compliance and risk management. In adopting the
matrix, the Nomination Committee acknowledges that it is an
iterative document and will be reviewed and revised periodically to
meet the Company's on-going needs.
The Nomination Committee monitors the composition of the Board
and makes recommendations to the Board about appointments to the
Board and its Committees.
Directors may be appointed by the Board, in which case they are
required to seek election at the first AGM following their
appointment and triennially thereafter. Directors who are not
regarded as independent are required to seek re-election annually.
In making an appointment the Board shall have regard to the Board
skills matrix.
A Director's formal letter of appointment sets out, amongst
other things, the following requirements:
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-- bringing independent judgment to bear on issues of strategy,
performance, resources, key appointments and standards of conduct
and the importance of remaining free from any business or other
relationship that could materially interfere with independent
judgement;
-- having an understanding of the Company's affairs and its
position in the industry in which it operates;
-- keeping abreast of and complying with the legislative and
broader responsibilities of a Director of a company whose shares
are traded on the London Stock Exchange;
-- allocating sufficient time to meet the requirements of the
role, including preparation for Board meetings; and
-- disclosing to the Board as soon as possible any potential conflicts of interest.
The Board authorises the Nomination Committee to:
-- recommend to the Board, from time to time, changes that the
Committee believes to be desirable to the size and composition of
the Board;
-- recommend individuals for nomination as members of the Board;
-- review and recommend the process for the election of the
Chairman of the Board, when appropriate; and
-- review on an on-going basis succession planning for the
Chairman of the Board and make recommendations to the Board as
appropriate
The Plan will be reviewed by the Board annually and at such
other times as circumstances may require (e.g. a major corporate
development or an unexpected resignation from the Board). The Plan
may be amended or varied in relation to individual circumstances at
the Board's discretion.
Board Committees
The Board has established the following committees to oversee
important issues of policy and maintain oversight outside the main
Board meetings:
-- Audit Committee
-- Remuneration Committee
-- Nomination Committee
-- Management Engagement Committee
Throughout the year the Chairman of each committee provided the
Board with a summary of the key issues considered at the meeting of
the committees and the minutes of the meetings were circulated to
the Board.
The committees operate within defined terms of reference. They
are authorised to engage the services of external advisers as they
deem necessary in the furtherance of their duties, at the Company's
expense.
Audit Committee
The Board has established an Audit Committee made up of at least
two members and comprises Paul Macdonald, Nicholas Wilson and Neil
Benedict. The Audit Committee is responsible for, inter alia,
ensuring that the financial performance of the Company is properly
reported on and monitored. The Audit Committee is chaired by Paul
Macdonald. The Audit Committee normally meets at least twice a year
when the Company's interim and final reports to Shareholders are to
be considered by the Board but meetings can be held more frequently
if the Audit Committee members deem it necessary or if requested by
the Company's auditors. The Audit Committee will, amongst other
things, review the annual and interim accounts, results
announcements, internal control systems and procedures, preparing a
note in respect of related party transactions and reviewing any
declarations of interest notified to the Committee by the Board
each on six monthly basis, review and make recommendations on the
appointment, resignation or dismissal of the Company's auditors and
accounting policies of the Company. The Company's auditors are
advised of the timing of the meetings to consider the annual and
interim accounts and the auditors shall be asked to attend the
audit committee meeting where the annual audited accounts are to be
considered. The Audit Committee chairman shall report formally to
the Board on its proceedings after each meeting and compile a
report to Shareholders on its activities to be included in the
Company's annual report. At least once a year, the Audit Committee
will review its performance, constitution and terms of reference to
ensure that it is operating at maximum effectiveness and recommend
any changes it considers necessary to the Board for approval.
The terms of reference for the Audit Committee are available on
the Company's website www.qatarinvestmentfund.com.
Significant Issues
During its review of the Company's financial statements for the
year ended 30 June 2015, the Audit Committee considered the
following significant issues, in particular those communicated by
the auditor during their reporting:
Completeness, Valuation, Existence and Ownership of
Investments
The valuation of investments is undertaken in accordance with
the accounting policies, disclosed in note 3.3 to the financial
statements. The audit includes independent confirmation of the
existence of all investments from the Company's custodian. All
investments are considered liquid and quoted in active markets and
have been categorised as Level 1 within the IFRS 13 fair value
hierarchy and can be verified against daily market prices. The
portfolio is reviewed and verified by the Manager on a regular
basis and management accounts including a full portfolio listing
are prepared each month and circulated to the Board. The Company
uses the services of an independent Custodian HSBC Bank Middle East
Limited to hold the assets of the Company. The investment portfolio
is reconciled regularly by the Manager and a reconciliation is also
reviewed by the Auditor.
Remuneration Committee
The Company has established a Remuneration Committee. The
Remuneration Committee is made up of at least two members from
amongst the non-executive Directors identified by the Board as
being independent. Its members are Neil Benedict (Chairman),
Nicholas Wilson and Paul Macdonald. The Remuneration Committee
normally meets at least once a year and at such other times as the
chairman of the Remuneration Committee shall require. The
Remuneration Committee reviews the performance of the Directors and
sets the scale and structure of their remuneration and the basis of
their letters of appointment with due regard to the interests of
Shareholders. In determining the remuneration of Directors, the
Remuneration Committee seeks to enable the Company to attract and
retain Directors of the highest calibre. No Director is permitted
to participate in any discussion of decisions concerning their own
remuneration. The Remuneration Committee reviews at least once a
year its own performance, constitutions and terms of reference to
ensure it is operating at maximum effectiveness and recommend any
changes it considers necessary to the Board for approval.
The terms of reference for the Remuneration Committee are
available on the Company's website www.qatarinvestmentfund.com
Nomination Committee
The Company has established a Nomination Committee which shall
be made up of at least two members and which shall comprise all
Independent Directors. The Nomination Committee comprises Nicholas
Wilson (Chairman), Neil Benedict and Paul Macdonald. The Nomination
Committee meets at least once a year prior to the first quarterly
Board meeting and at such other times as the Chairman of the
committee shall require. The Nomination Committee is responsible
for ensuring that the Board members have the range of skills and
qualities to meet its principal responsibilities in a way which
ensures that the interests of Shareholders are protected and
promoted and regularly review the structure, size and composition
of the Board. The Nomination Committee shall, at least once a year,
review its own performance, constitution and terms of reference to
ensure that it is operating at maximum effectiveness and recommend
any changes it considers necessary to the Board for approval.
The Nomination Committee will assess potential candidates on
merit against a range of criteria including experience, knowledge,
professional skills and personal qualities as well as independence,
if this is required for the role. Candidates' ability to commit
sufficient time to the business of the Company is also key,
particularly in respect of the appointment of the Chairman. The
Chairman of the Nomination Committee is primarily responsible for
interviewing suitable candidates and a recommendation will be made
to the Board for final approval.
Management Engagement Committee
The Company has established a Management Engagement Committee
which is made up of at least two members and which shall comprise
independent non-executive Directors. The Management Engagement
Committee members are Neil Benedict (Chairman), Paul Macdonald and
Nicholas Wilson. The Management Engagement Committee will meet at
least quarterly and is responsible for reviewing the performance of
the Investment Manager and other service providers, to ensure that
the Company's management contract is competitive and reasonable for
the Shareholders and to review and make recommendations to the
Board on any proposed amendment to or material breach of the
management contract and contracts with other service providers.
Board Attendance
The number of formal meetings during the year of the Board, and
its Committees, and the attendance of the individual Directors at
those meetings, is shown in the following table:
Board Audit Committee Remuneration Nomination Management
Committee Committee Engagement
Committee
Total number
of meetings
in year 9(9) 6(6) 1(1) 4(4) 3(3)
------ ---------------- ------------------------- ----------- ------------
Meetings Attended (entitled to attend)
------------------------------------------------------------------------------
Nicholas Wilson
(Chairman and
Chairman of
Nomination Committee) 9 (9) 6 (6) 1 (1) 4 (4) 3 (3)
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------ ---------------- ------------------------- ----------- ------------
Neil Benedict
(Chairman of
Remuneration
Committee and
Chairman of
Management Engagement
Committee) 9 (9) 6 (6) 1 (1) 4 (4) 3 (3)
------ ---------------- ------------------------- ----------- ------------
Leonard O'Brien 9 (9) 0 (0)* 0 (0)* 0 (0)* 0 (0)*
------ ---------------- ------------------------- ----------- ------------
Paul Macdonald
(Chairman of
Audit Committee) 9 (9) 6 (6) 1 (1) 4 (4)* 3 (3)
------ ---------------- ------------------------- ----------- ------------
*Not a member of the committee.
The Annual General Meeting was held on 11 November 2014.
Internal Control
The Board is responsible for the Company's system of internal
control and for reviewing its effectiveness. Its review takes place
at least once a year. Such a system is designed to manage rather
than eliminate the risk of failure to achieve business objectives
and can only provide reasonable and not absolute assurance against
material mis-statement or loss. The Board also determines the
nature and extent of any risks it is willing to take in order to
achieve its strategic objectives.
The Board has contractually delegated to external agencies,
including the Managers, the management of the investment portfolio,
the custodial services (which include the safeguarding of the
assets), the registration services and the day-to-day accounting
and Company Secretarial requirements. Each of these contracts was
entered into after full and proper consideration by the Board of
the quality and cost of services offered including the control
systems in operation in so far as they relate to the affairs of the
Company.
The Board, assisted by the Investment Manager and Investment
Adviser, has undertaken regular risk and controls assessments. The
business risks have been analysed and recorded in a risk and
internal controls report which is regularly reviewed. The Board has
reviewed the need for an internal audit function. The Board has
decided that the systems and procedures employed by the Managers,
including its internal audit function and the work carried out by
the Company's external Auditor, provide sufficient assurance that a
sound system of internal control, which safeguards Shareholders'
investments and the Company's assets, is maintained. An internal
audit function, specific to the Company, is therefore considered
unnecessary.
The Board confirms that there is an on-going process for
identifying, evaluating and managing the Company's principal
business and operational risks that have been in place for the year
ended 30 June 2015 and up to the date of approval of the annual
report and financial statements.
Accountability and Relationship with the Investment Manager, the
Custodian and the Administrator
The Statement of Directors' Responsibilities is set out on page
29.
The Board has delegated contractually to external third parties,
including the Investment Manager, the Investment Adviser, the
Custodian and the Administrator, the management of the investment
portfolio, the custodial services (which include the safeguarding
of the assets), the day to day accounting, company secretarial and
administration requirements. Each of these contracts was entered
into after full and proper consideration by the Board of the
quality and cost of the services provided, including the control
systems in operation in so far as they relate to the affairs of the
Company.
The Investment Manager, the Investment Adviser and the
Administrator ensure that all Directors receive, in a timely
manner, all relevant management, regulatory and financial
information. Representatives of the Investment Manager and the
Administrator attend each Board meeting enabling the Directors to
probe further on matters of concern.
Continued Appointment of the Investment Manager
The Board considers the arrangements for the provision of
investment management and other services to the Company on an
on-going basis. The Board reviews investment performance at each
Board meeting and a formal review of the Investment Manager (and
Investment Adviser) is conducted annually. As a result of their
annual review, NAV performance has been found to be satisfactory
and it is the opinion of the Directors that the continued
appointment of the current Investment Manager (and Investment
Adviser) on the terms agreed is in the interests of the Company's
Shareholders as a whole.
Relations with Shareholders
The Chairman is responsible for ensuring that all Directors are
made aware of Shareholders' concerns. The Shareholder profile of
the Company is regularly monitored and the Board liaises with the
Investment Manager to canvass Shareholder opinion and communicate
views to Shareholders. The Company is concerned to provide the
maximum opportunity for dialogue between the Company and
Shareholders. It is believed that Shareholders have proper access
to the Investment Manager at any time and to the Board if they so
wish. All Shareholders are encouraged to attend annual general
meetings. Together with the Investment Manager and Investment
Adviser, regular investor presentations are held to promote a wider
following for the Company.
On behalf of the Board
Nicholas Wilson
Chairman
10 September 2015
Board of Directors
Nicholas Wilson (Non-Executive Chairman)
Nick Wilson has over thirty years' experience in hedge funds,
derivatives and global asset management. He has established and run
offshore branch operations for MeesPierson Derivatives Limited, ADM
Investor Services International Limited and several other London
based brokerage companies. He was a Non-Executive Chairman of
Alternative Investment Strategies Limited, the longest running
London quoted fund of hedge funds and a constituent of the FTSE All
Share Index. In addition, he sits on the boards of a number of
other public companies, including RAB Special Situations Company
Limited. He is resident in the Isle of Man.
Paul Macdonald (Non-Executive Director)
Paul Macdonald qualified as a chartered accountant in 1979. He
worked for Pilkington plc for sixteen years, the last seven of
these in Germany. In Germany he was Managing Director for
Pilkington Deutschland GmbH (holding company) and Managing Director
of both Flachglas AG (glass manufacturer) and Dahlbusch AG
(property and holding company). For the last fourteen years Paul
has been active in the private equity market and has been
successful in developing a number of companies covering a number of
industries including Sirona Beteiligungs GmbH (Germany), a
leveraged buy-out from Siemens. He is currently the Geschäftsführer
for Helvetica Deutschland GmbH and a Director of Helvetica Services
GmbH and Helvetica Construction GmbH. Paul is a Non-Executive
Director of PME African Infrastructure Opportunities plc.
Leonard O'Brien (Non-Executive Director)
Leonard O'Brien is Managing Director of the Salamander Fiduciary
Services Group, which consists of Salamander Associates Limited and
its two wholly owned subsidiaries. Len has had many years of
experience in the fiduciary services industry including the Silex
Trust Group, the Stonehage Financial Services Group and Barclays
Bank. During this time he has served on the boards of trust
companies in the British Virgin Islands, Jersey and Cayman Islands
and has acted as a Membre de Direction of Barclays Bank (Suisse)
SA, Geneva. Len qualified as a Chartered Accountant with KPMG in
1996. Len is also a Director of the Investment Manager.
Neil Benedict (Non-Executive Director)
Neil Benedict is based in the USA with over thirty years'
experience of financial markets. He was formerly a Managing
Director at Salomon Brothers, where he was Head of International
Capital Markets, and, prior to that, the founder and head of the
worldwide Currency Swaps group. Neil was also a Managing Director
at Dillon Read and helped establish their Tokyo office. He is
currently a Managing Director of Intelligent Edge Advisors, a New
York advisory firm. Neil is a fellow member of the Institute of
Chartered Accountants in England and Wales.
Statement of Directors' responsibilities in respect of the
Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Group and Parent
Company financial statements for each financial year, which meet
the requirements of Isle of Man company law. In addition, the
Directors have elected to prepare the Group and Parent Company
financial statements in accordance with International Financial
Reporting Standards.
The Group and Parent Company financial statements are required
by law to give a true and fair view of the state of affairs of the
Group and Parent Company and of the profit or loss of the Group and
Parent Company for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
International Financial Reporting Standards;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Parent
Company will continue in business.
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The Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time the
financial position of the Parent Company and to enable them to
ensure that its financial statements comply with the Companies Acts
1931 to 2004. They have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing the Directors' Report, the Corporate
Governance Report and the Directors' Remuneration Report that
comply with that law and those regulations.
The Directors confirm that they have complied with the above
requirements in preparing the Annual Report and financial
statements.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation governing the preparation and
dissemination of financial statements may differ from one
jurisdiction to another.
DTR Compliance statement
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with
International Financial Reporting Standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole;
-- that in the opinion of the Directors, the Annual Report and
Accounts taken as a whole, is fair, balanced and understandable and
it provides the information necessary to assess the Company's
performance, business model and strategy: and
-- the Business Review, Report of the Investment Manager and
Investment Adviser and the Report of the Directors include a fair
review of the development and performance of the business and the
position of the Company and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
On behalf of the Board
Nicholas Wilson
Chairman
10 September 2015
Audit Committee Report
An Audit Committee has been established in compliance with the
FSA's Disclosure and Transparency Rule 7.1 and the UK Corporate
Governance Code consisting of independent Directors. Its authority
and duties are clearly defined within its written terms of
reference. Paul Macdonald is Chairman of the Audit Committee, which
also comprises Mr Nicholas Wilson and Mr Neil Benedict.
The Committee meets at least two times a year.
.
The Committee's responsibilities, which were discharged during
the year, include:
-- monitoring and reviewing the integrity of the interim and
annual financial statements and the internal financial
controls;
-- reviewing the appropriateness of the Company's accounting policies;
-- making recommendations to the Board in relation to the
appointment of the external auditors and approving their
remuneration and terms of their engagement;
-- reviewing the external Auditor's plan for the audit of the Company's financial statements;
-- developing and implementing policy on the engagement of the
external auditors to supply non-audit services;
-- reviewing and monitoring the independence, objectivity and
effectiveness of the external auditors;
-- reviewing the arrangements in place within the Administrator
and Investment Manager/Adviser whereby their staff may, in
confidence, raise concerns about possible improprieties in matters
of financial reporting or other matters insofar as they may affect
the Company;
-- performing the annual review of the effectiveness of the
internal control systems of the Company;
-- reviewing the terms of the Investment Management Agreement;
-- considering annually whether there is a need for the Company
to have its own internal audit function; and
-- review the relationship with and the performance of the
Custodian, the Administrator and the Registrar.
The Audit Committee does not award any non-audit work. The full
Board has to approve any non-audit work and this includes
confirmation that in all such work auditor objectivity and
independence is safeguarded.
Owing to the nature of the fund's business, with all major
functions being outsourced and the absence of employees, the Audit
Committee do not feel it is necessary for the Company to have its
own internal audit function. This situation is re-evaluated
annually.
KPMG Audit LLC was re-appointed as auditor at the last AGM on 11
November 2014. The Audit Committee considered the experience and
tenure of the audit partner and staff and the nature and level of
services provided. The Audit Committee receives confirmation from
the auditor that they have complied with the relevant UK
professional and regulatory requirements on independence. The
Company's Audit Committee meets representatives of the
Administrator, who report as to the proper conduct of the business
in accordance with the regulatory environment in which the Company,
the Administrator, and the Investment Manager/Adviser operate. The
Company's external auditor also attends this Audit Committee
meeting at its request and reports if the Company has not kept
proper accounting records, or if it has not received all the
information and explanations required for its audit.
The Audit Committee also monitors the risks to which the Company
is exposed and makes recommendations as to the mitigation of these
risks. This task is facilitated by using an extensive risk matrix
that enables the committee to make a quantitative analysis of the
individual risks and to highlight those areas where risk is high or
increasing.
This report was reviewed and approved by the Board on 10
September 2015.
Paul Macdonald
Chairman of the Audit Committee
10 September 2015
Management Engagement Committee Report
A Management Engagement Committee has been established in
accordance with good corporate governance. Neil Benedict is
chairman of the committee, which also comprises Paul Macdonald and
Nicholas Wilson.
The function of the Management Engagement Committee is to
monitor the performance of all the Company's service providers and
in the particular the performance of the Investment
Manager/Investment Adviser.
The performance of the Investment Manager/Investment Adviser is
formally reviewed annually at the end of the Company's financial
year. The Management Engagement Committee meets quarterly prior to
the quarterly Board meetings and the chairman of the Management
Engagement Committee monitors the performance periodically during
the intervening periods.
As regards the Investment Manager/Investment Adviser, the
Committee:
-- monitors and evaluates the investment performance both in
absolute terms and also by reference to peer group analysis
prepared by the Investment Manager/Adviser and by the Company's
broker;
-- reviews the performance fee structure to ensure that it does
not encourage excessive risk and that it rewards demonstrable
superior performance;
-- investigates any breaches of agreed investment limits and any
deviation from the agreed investment policy and strategy;
-- reviews the standard of any other services provided by the Investment Manager;
-- evaluates the level and effectiveness of any marketing
support provided by the Investment Manager, including but not
limited to, their input into quarterly reports, handling investor
relations and website monitoring and development;
-- assesses the level of fees charged by the Investment Manager
and how these fees compare with those charged to peer group
companies;
-- compares the notice period on the Investment Management Agreement with industry norms;
-- considers any other issues on the appointment of the Investment Manager.
As regards the other service providers to the Company, the
Committee:
-- monitors the terms on which they are retained and compares them to market rates;
-- examines the effectiveness of the services provided;
-- makes recommendations to the Board where changes are warranted.
At its most recent meeting, the Management Engagement Committee
concluded that the performance of the Investment Manager/Investment
Adviser had been satisfactory. The Investment Manager had adhered
to the investment policy and policy limits.
The Committee was satisfied with the current performance of the
Company's other service providers.
Neil Benedict
Chairman of the Management Engagement Committee
10 September 2015
Directors' Remuneration Report
This report meets the relevant rules of the Listing Rules of the
Financial Services Authority and describes how the Board has
applied the principles relating to Directors' remuneration. An
ordinary resolution to receive and approve this report will be put
to the Shareholders at the forthcoming Annual General Meeting.
Role of the Remuneration Committee
The role and make-up of the Remuneration Committee is more fully
discussed on page 25.
The committee held two formal meetings during the year, during
which it addressed all the matters under its remit.
Consideration by the Directors of Matters relating to the
Directors' remuneration
As the Board is comprised entirely of non-executive Directors
the Board as a whole consider the Directors' remuneration but it
has appointed its Remuneration Committee to consider matters
relating thereto.
Remuneration Policy
The Company's Articles of Association limit the basic fees
payable to the Directors to GBP200,000 per annum in aggregate.
Subject to this overall limit it is the Company's policy that the
fees payable to the Directors should reflect the time spent by the
Board on the Company's affairs and the responsibilities borne by
the Directors and should be sufficient to enable candidates of high
calibre to be recruited. The Directors are also entitled to receive
reimbursement of any expenses incurred in relation to their
appointment.
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The policy is for the Chairman of the Board and Chairman of the
Audit Committee to be paid a higher fee than the other Directors in
recognition of their more onerous roles and more time spent.
In the year under review the Directors' fees were paid at the
following annual rates: the Chairman GBP47,500 plus GBP10,000 with
respect to the work involved in the share buy-back programme, the
Chairman of the Audit Committee GBP32,500, the other Directors
GBP30,000.
Directors' and officers' liability insurance cover is in place
in respect of the Directors.
Reappointment
It is the Board's policy that non-independent Directors stand
for re-election every year and independent Directors stand for
re-election every three years.
Directors' fees
The fees expensed (including additional payments) by the Company
in respect of each of the Directors who served during the year, and
in the previous year, were as follows:
30 June 2015 30 June 2014
GBP GBP
---------------------------------------------------------------------------------------- ------------- -------------
Nicholas Wilson (Chairman) 57,500 57,500
Neil Benedict (Chairman of Remuneration Committee and Management Engagement Committee) 30,000 30,000
Leonard O'Brien 30,000 30,000
Paul Macdonald (Chairman of Audit Committee) 32,500 32,500
---------------------------------------------------------------------------------------- ------------- -------------
150,000 150,000
---------------------------------------------------------------------------------------- ------------- -------------
US$ charge reflected in the financial statements 239,169 244,051
---------------------------------------------------------------------------------------- ------------- -------------
Expenses totalling US$103,184 (2014: US$149,171) were incurred
by the Directors and reimbursed during the year. No other
remuneration or compensation (please see note above) was paid or
payable by the Company during the period to any of the
Directors.
Director independence
Except for Leonard O'Brien, the Board considers each of the
Directors to be independent of, and free of any material
relationship with, the Investment Manager and Investment
Adviser.
Directors' and Other Interests
Leonard O'Brien is a Director of the Investment Manager.
Save as disclosed above, none of the Directors had any interest
during the year in any material contract for the provision of
services which was significant to the business of the Company.
Director holdings in Company:
30 June 2015 30 June 2014
Director Shares Shares
------------- -------------
Leonard O'Brien 42,071 26,087
------------- -------------
Nicholas Wilson 50,000 45,000
------------- -------------
For and on behalf of the Board
Neil Benedict
Chairman of the Remuneration Committee
10 September 2015
Report of the Independent Auditors, KPMG Audit LLC, to the
members of Qatar Investment Fund plc
Opinions and conclusions arising from our audit
1. Our opinion on the financial statements is unmodified
We have audited the financial statements of Qatar Investment
Fund plc for the year ended 30 June 2015 which comprise the
Consolidated and Parent Company Income Statements, the Consolidated
and Parent Company Statements of Comprehensive Income, the
Consolidated and Parent Company Balance Sheets, the Consolidated
and Parent Company Statements of Changes in Equity and the
Consolidated and Parent Company Statements of Cash Flows and the
related notes. In our opinion the financial statements:
-- give a true and fair view of the state of the Group's and
Parent Company's affairs as at 30 June 2015 and of the Group's and
Parent Company's profit for the year then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards; and
-- have been properly prepared in accordance with the provisions
of the Companies Acts 1931 to 2004.
2. Our assessment of risks of material misstatement
The risks of material misstatement detailed in this section of
this report are those risks that we have deemed, in our
professional judgement, to have had the greatest effect on: the
overall audit strategy; the allocation of resources in our audit;
and directing the efforts of the engagement team. Our audit
procedures relate to these risks were designed in the context of
our audit of the financial statements as a whole. Our opinion on
the financial statements is not modified with respect to any of
these risks, and we do not express an opinion on these individual
risks.
In arriving at our audit opinion above on the financial
statements, the risk of material misstatement that had the greatest
effect on our audit was as follows:
Carrying amount of quoted equity investments
Refer to page 25 (Significant Issues identified by the Audit
Committee), note 3.3 (accounting policy for financial assets at
fair value through profit or loss) and note 15 (financial risk
disclosures relating to financial instruments).
-- The risk: The Group's quoted equity investment portfolio
makes up 96.8% of total assets (by value) and is considered to be
the key driver of the Group's capital and revenue performance. We
do not consider these investments to be at high risk of significant
misstatement, or to be subject to a significant level of judgment,
because they comprise liquid, quoted investments. However, due to
their materiality in the context of the financial statements as a
whole, they are considered to be the area which had the greatest
effect on our overall audit strategy and allocation of resources in
planning and completing our audit.
-- Our response: Our procedures over the completeness,
valuation, ownership and existence of the Group's quoted equity
investment portfolio included, but were not limited to:
-- documenting and assessing the processes in place to record
investment transactions and to value the portfolio;
-- agreeing the valuation of 100% of portfolio investments to
independent externally quoted prices; and
-- agreeing 100% of portfolio investment holdings to
independently received third party confirmations from the
custodian.
3. Our application of materiality and an overview of the scope of our audit
Materiality is a term used to describe the acceptable level of
precision in financial statements. Auditing standards describe a
misstatement or an omission as 'material' if it could reasonably be
expected to influence the economic decisions of users taken on the
basis of the financial statements. We identify a monetary amount as
'materiality for the financial statements as a whole' based on this
criteria and apply the concept of materiality in planning and
performing the audit, and in evaluating the effect of identified
misstatements on the audit and of uncorrected misstatements, if
any, on the financial statements and in forming our opinion on
them.
The materiality for the financial statements as a whole was set
at US$2,100,000. This has been determined with reference to a
benchmark of Group total assets (of which it represents 1%). Total
assets, which is primarily composed of the Group's investment
portfolio, is considered to be the key driver of the Group's
capital and revenue performance and, as such, we consider it to be
one of the principal considerations for members of the Company in
assessing the financial performance of the Group.
We agreed with the Audit Committee to report to it all corrected
and uncorrected misstatements we identified through our audit with
a value in excess of US$106,000, in addition to other audit
misstatements below that threshold that we believe warranted
reporting on qualitative grounds.
Our audit of the Group was undertaken to the materiality level
specified above and was all performed at the head office of the
administrator, Galileo Fund Services Limited, in the Isle of
Man.
4. We have nothing to report in respect of the matters on which
we are required to report by exception
Under ISAs (UK and Ireland) we are required to report to you if,
based on the knowledge we acquired during our audit, we have
identified other information in the annual report that contains a
material inconsistency with either that knowledge or the financial
statements, a material misstatement of fact, or that is otherwise
misleading.
In particular, we are required to report to you if:
-- we have identified material inconsistencies between the
knowledge we acquired during our audit and the directors' statement
that they consider that the annual report and financial statements
taken as a whole is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group's
performance, business model and strategy; or
-- the Audit Committee Report does not appropriately address
matters communicated by us to the Audit Committee.
Under the Companies Acts 1931 to 2004 we are required to report
to you if, in our opinion:
-- proper books of account have not been kept by the Parent
Company and proper returns adequate for our audit have not been
received from branches not visited by us; or
(MORE TO FOLLOW) Dow Jones Newswires
September 11, 2015 02:00 ET (06:00 GMT)
-- the Parent Company's balance sheet and income statement are
not in agreement with the books of account and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
-- the part of the Corporate Governance Report on pages 22 to 27
relating to the Company's compliance with the nine provisions of
the 2010 UK Corporate Governance Code specified for our review.
We have nothing to report in respect of the above
responsibilities.
Respective responsibilities of Directors and Auditor
As explained more fully in the Directors' Responsibilities
Statement set out on page 29, the Directors are responsible for the
preparation of financial statements that give a true and fair view.
Our responsibility is to audit, and express an opinion on, the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors.
Scope of an audit of financial statements performed in
accordance with ISAs (UK and Ireland)
An audit in accordance with ISAs (UK and Ireland) involves
obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that
the financial statements are free from material misstatement,
whether caused by fraud or error. This includes an assessment of:
whether the accounting policies are appropriate to the Group's and
Company's circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant accounting
estimates made by the Directors; and the overall presentation of
the financial statements. In addition we read all the financial and
non-financial information in the Annual Report to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider
the implications for our report.
Whilst an audit conducted in accordance with ISAs (UK and
Ireland) is designed to provide reasonable assurance of identifying
material misstatements or omissions it is not guaranteed to do so.
Rather the auditor plans the audit to determine the extent of
testing needed to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected
misstatements does not exceed materiality for the financial
statements as a whole. This testing requires us to conduct
significant audit work on a broad range of assets, liabilities,
income and expense as well as devoting significant time of the most
experienced members of the audit team, in particular the engagement
partner responsible for the audit, to subjective areas of
accounting and reporting.
The purpose of this report and restrictions on its use by
persons other than the Company's members as a body
This report is made solely to the Company's members, as a body,
in accordance with Section 15 of the Companies Act 1982. Our audit
work has been undertaken so that we might state to the Company's
members those matters we are required to state to them in an
auditor's 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 and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Simon Nicholas
Responsible Individual
For and on behalf of KPMG Audit LLC
Statutory Auditor
10 September 2015
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man
IM99 1HN
Consolidated Income Statement
Note Year ended 30 Year ended 30 June
June 2015 2014
US$'000 US$'000
-------------------------------- ----- -------------- -------------------
Income
Dividend income on quoted
equity
investments 10,054 9,258
Realised gain on sale
of financial assets at
fair value through profit
or loss 47,458 26,510
Net changes in fair value
on financial assets at
fair value through profit
or loss (31,408) 13,737
Commission rebate income
on quoted equity investments 7 282 177
Bond interest 6 - 17
-------------------------------- ----- -------------- -------------------
Total net income 26,386 49,699
-------------------------------- ----- -------------- -------------------
Expenses
Investment Manager's
fees 8 2,409 2,437
Performance fees 8 - -
Audit fees 46 27
Other expenses 8 1,281 1,311
Total operating expenses 3,736 3,775
-------------------------------- ----- -------------- -------------------
Profit before tax 22,650 45,924
Income tax expense 14 - -
-------------------------------- ----- -------------- -------------------
Retained profit for the
year 22,650 45,924
-------------------------------- ----- -------------- -------------------
Basic earnings per share
(cents) 12 15.31 27.76
-------------------------------- ----- -------------- -------------------
Diluted earnings per share
(cents) 12 15.31 27.76
-------------------------------- ----- -------------- -------------------
The Directors consider that all results derive from continuing
activities.
Consolidated Statement of Comprehensive Income
Year ended 30 June 2015 Year ended 30 June 2014
US$'000 US$'000
--------------------------------------------------------------- ------------------------ ------------------------
Profit for the year 22,650 45,924
Other comprehensive income
Items that are or may be reclassified subsequently to profit
or loss:
--------------------------------------------------------------- ------------------------ ------------------------
Currency translation differences (82) (7)
---------------------------------------------------------------- ------------------------ ------------------------
Total items that are or may be reclassified subsequently to
profit or loss (82) (7)
---------------------------------------------------------------- ------------------------ ------------------------
Other comprehensive expense for the year (net of tax) (82) (7)
---------------------------------------------------------------- ------------------------ ------------------------
Total comprehensive profit for the year 22,568 45,917
---------------------------------------------------------------- ------------------------ ------------------------
Company Income Statement
Note Year ended 30 Year ended 30 June
June 2015 2014
US$'000 US$'000
----------------------------- ----- -------------- -------------------
Income
Net change in investment
in and amounts due from
subsidiary 19,182 41,697
Intercompany loan interest 4,502 5,328
Other income - 2
Total net income 23,684 47,027
----------------------------- ----- -------------- -------------------
Expenses
Audit fees 46 27
Other expenses 8 1,070 1,083
Total operating expenses 1,116 1,110
----------------------------- ----- -------------- -------------------
Profit before tax 22,568 45,917
Income tax expense - -
----------------------------- ----- -------------- -------------------
Retained profit for the
year 22,568 45,917
----------------------------- ----- -------------- -------------------
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Company Statement of Comprehensive Income
Year ended 30 June 2015 Year ended 30 June 2014
US$'000 US$'000
--------------------------------------------------------------- ------------------------ ------------------------
Profit for the year 22,568 45,917
Other comprehensive income
Items that are or may be reclassified subsequently to profit
or loss:
Currency translation differences - -
--------------------------------------------------------------- ------------------------ ------------------------
Total items that are or may be reclassified subsequently to - -
profit or loss
--------------------------------------------------------------- ------------------------ ------------------------
Other comprehensive income for the year (net of tax) - -
--------------------------------------------------------------- ------------------------ ------------------------
Total comprehensive profit for the year 22,568 45,917
---------------------------------------------------------------- ------------------------ ------------------------
Consolidated Balance Sheet
Note At 30 June 2015 At 30 June 2014
US$'000 US$'000
---------------------------- ----- ---------------- ----------------
Financial assets at fair
value through profit or
loss 6(a) 206,552 202,703
Other receivables and
prepayments 956 76
Cash and cash equivalents 9 5,956 17,295
---------------------------- ----- ---------------- ----------------
Total current assets 213,464 220,074
============================ ===== ================ ================
Issued share capital 10 1,396 1,589
Retained earnings 210,425 216,938
Other reserves 11 899 788
---------------- ----------------
Total equity 212,720 219,315
---------------------------- ----- ---------------- ----------------
Current liabilities
Other payables and accrued
expenses 13 744 759
---------------------------- ----- ---------------- ----------------
Total liabilities 744 759
---------------------------- ----- ---------------- ----------------
Total equity & liabilities 213,464 220,074
============================ ===== ================ ================
The financial statements were approved by the Directors on 10
September 2015 and signed on their behalf by:
Paul Macdonald Leonard O'Brien
Director Director
Company Balance Sheet
Note At 30 June 2015 At 30 June 2014
US$'000 US$'000
---------------------------- ----- ---------------- ----------------
Due from subsidiary 6(b) 211,063 218,149
Other receivables and
prepayments 542 910
Cash and cash equivalents 9 1,228 366
---------------------------- ----- ---------------- ----------------
Total current assets 212,833 219,425
============================ ===== ================ ================
Issued share capital 10 1,396 1,589
Reserves 211,324 217,726
---------------- ----------------
Total equity 212,720 219,315
---------------------------- ----- ---------------- ----------------
Other payables and accrued
expenses 13 113 110
---------------------------- ----- ---------------- ----------------
Total liabilities 113 110
---------------------------- ----- ---------------- ----------------
Total equity & liabilities 212,833 219,425
============================ ===== ================ ================
The financial statements were approved by the Directors on 10
September 2015 and signed on their behalf by:
Paul Macdonald Leonard O'Brien
Director Director
Consolidated Statement of Changes in Equity
Share Capital Distributable Retained Earnings Other reserves Total
Reserves (note 11)
US$'000 US$'000 US$'000 US$'000 US$'000
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Balance at 01 July 2013 1,839 182,058 20,165 545 204,607
Total comprehensive income for
the year
Profit for the year - - 45,924 - 45,924
Other comprehensive income
Foreign exchange translation
differences - - - (7) (7)
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Total other comprehensive expense - - - (7) (7)
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Total comprehensive income for
the year - - 45,924 (7) 45,917
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Contributions by and
distributions to owners
Dividends paid - - (4,998) - (4,998)
Shares repurchased to be held in
treasury - (4,144) - - (4,144)
Shares subject to tender offer (174) (21,999) - 174 (21,999)
Tender offer expenses - (68) - - (68)
Shares in treasury cancelled (76) - - 76 -
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Total contributions by and
distributions to owners (250) (26,211) (4,998) 250 (31,209)
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Balance at 30 June 2014 1,589 155,847 61,091 788 219,315
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Share Capital Distributable Retained Earnings Other reserves Total
Reserves
US$'000 US$'000 US$'000 US$'000 US$'000
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Balance at 01 July 2014 1,589 155,847 61,091 788 219,315
Total comprehensive income for
the year
Profit for the year - - 22,650 - 22,650
Other comprehensive income
Foreign exchange translation
differences - - - (82) (82)
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Total other comprehensive expense - - - (82) (82)
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Total comprehensive income for
the year - - 22,650 (82) 22,568
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Contributions by and
distributions to owners
Dividends paid - - (4,875) - (4,875)
Shares repurchased to be held in
treasury - (1,169) - - (1,169)
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September 11, 2015 02:00 ET (06:00 GMT)
Shares subject to tender offer (155) (22,998) - 155 (22,998)
Tender offer expenses - (121) - - (121)
Shares in treasury cancelled (38) - - 38 -
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Total contributions by and
distributions to owners (193) (24,288) (4,875) 193 (29,163)
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Balance at 30 June 2015 1,396 131,559 78,866 899 212,720
---------------------------------- -------------- -------------- ------------------ --------------- ---------
Company Statement of Changes in Equity
Share Capital Reserves Total
US$'000 US$'000 US$'000
---------------------------------------------------- -------------- --------- ---------
Balance at 01 July 2013 1,839 202,768 204,607
Total comprehensive income for the year
Profit for the year - 45,917 45,917
Total comprehensive income for the year - 45,917 45,917
---------------------------------------------------- -------------- --------- ---------
Contributions by and distributions to owners
Dividends paid - (4,998) (4,998)
Shares repurchased to be held in treasury - (4,144) (4,144)
Shares subject to tender offer (174) (21,825) (21,999)
Tender offer expenses - (68) (68)
Shares in treasury cancelled (76) 76 -
---------------------------------------------------- -------------- --------- ---------
Total contributions by and distributions to owners (250) (30,959) (31,209)
---------------------------------------------------- -------------- --------- ---------
Balance at 30 June 2014 1,589 217,726 219,315
---------------------------------------------------- -------------- --------- ---------
Share Capital Reserves Total
US$'000 US$'000 US$'000
---------------------------------------------------- -------------- --------- ---------
Balance at 01 July 2014 1,589 217,726 219,315
Total comprehensive income for the year
Profit for the year 22,568 22,568
Total comprehensive income for the year 22,568 22,568
---------------------------------------------------- -------------- --------- ---------
Contributions by and distributions to owners
Dividends paid (4,875) (4,875)
Shares repurchased to be held in treasury (1,169) (1,169)
Shares subject to tender offer (155) (22,843) (22,998)
Tender offer expenses (121) (121)
Shares in treasury cancelled (38) 38 -
---------------------------------------------------- -------------- --------- ---------
Total contributions by and distributions to owners (193) (28,970) (29,163)
---------------------------------------------------- -------------- --------- ---------
Balance at 30 June 2015 1,396 211,324 212,720
---------------------------------------------------- -------------- --------- ---------
Consolidated Statement of Cash Flows
Note Year ended 30 Year ended 30 June
June 2015 2014
US$'000 US$'000
-------------------------------- ----- -------------- -------------------
Cash flows from operating
activities
Purchase of investments (152,247) (74,863)
Proceeds from sale of
investments 163,590 109,575
Interest received - 20
Dividends received 10,054 9,255
Operating expenses paid (3,841) (3,906)
Commission rebate 282 177
-------------------------------- ----- -------------- -------------------
Net cash generated from
operating activities 17,838 40,258
-------------------------------- ----- -------------- -------------------
Financing activities
Dividends paid (4,875) (4,998)
Cash used in tender offer (22,998) (21,999)
Tender offer expenses (121) (68)
Cash used in share repurchases (1,169) (4,144)
Net cash used in financing
activities (29,163) (31,209)
-------------------------------- ----- -------------- -------------------
Net (decrease)/increase
in cash and cash equivalents (11,325) 9,049
Effects of exchange rate
changes on cash and cash
equivalents (14) (11)
Cash and cash equivalents
at beginning of the year 17,295 8,257
-------------------------------- ----- -------------- -------------------
Cash and cash equivalents
at end of the year 9 5,956 17,295
-------------------------------- ----- -------------- -------------------
Company Statement of Cash Flows
Note Year ended 30 Year ended 30 June
June 2015 2014
US$'000 US$'000
-------------------------------- ------ -------------- -------------------
Cash flows from operating
activities
Interest received - 2
Due from subsidiary 31,145 31,966
Operating expenses paid (1,116) (1,170)
Net cash generated from
operating activities 30,029 30,798
---------------------------------------- -------------- -------------------
Financing activities
Dividends paid (4,875) (4,998)
Cash used in tender offer (22,998) (21,999)
Tender offer expenses (121) (68)
Cash used in share repurchases (1,169) (4,144)
Net cash used in financing
activities (29,163) (31,209)
---------------------------------------- -------------- -------------------
Net increase/(decrease)
in cash and cash equivalents 866 (411)
Effects of exchange rate
changes on cash and cash
equivalents (4) (6)
Cash and cash equivalents
at beginning of the year 366 783
---------------------------------------- -------------- -------------------
Cash and cash equivalents
at end of the year 1,228 366
---------------------------------------- -------------- -------------------
Notes to the Consolidated Financial Statements
1 The Company
Qatar Investment Fund plc (formerly Epicure Qatar Equity
Opportunities plc) (the "Company") was incorporated and registered
in the Isle of Man under the Isle of Man Companies Acts 1931-2004
on 26 June 2007 as a public company with registered number
120108C.
Pursuant to an Admission Document dated 25 July 2007 there was
an original placing of up to 171,355,000 Ordinary Shares, with
Warrants attached on the basis of 1 Warrant to every 5 Ordinary
Shares. Following the placing on 31 July 2007, 171,355,000 Ordinary
Shares and 34,271,000 Warrants were issued the warrants expired on
16 November 2012.
The shares of the Company were admitted to trading on the AIM
market of the London Stock Exchange ("AIM") on 31 July 2007, when
dealings also commenced.
As a result of a further fund raising in December 2007, a
further 76,172,523 Ordinary Shares were issued, which were admitted
for trading on AIM on 13 December 2007.
On 4 December 2008, the Share Premium arising from the placing
of shares was cancelled and the amount of the Share Premium account
transferred to Retained Earnings.
The shares of the Company were admitted to trading on the Main
Market of the London Stock Exchange on 13 May 2011.
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In the year ended 30 June 2015, the Company purchased 890,509 of
its Ordinary Shares for a total value of US$1,168,628 to be held in
treasury. 3,793,272 shares had been repurchased in the year ended
30 June 2014 for treasury but had been held for over a year and
were therefore cancelled in the current financial year. The
buy-backs are effected through retained reserves.
On 23 January 2015 the Company completed a tender offer at a
price of US$1.4859 per share. Under the offer 15,477,601 Shares
were cancelled with US$22,998,167 being paid to participating
Shareholders.
The Shareholders approved a dividend of 3.5 cents per share on
11 November 2014; this was paid to Shareholders on 13 February
2015.
The Company's agents and the Investment Manager perform all
significant functions. Accordingly, the Company itself has no
employees.
Duration
The Company currently does not have a fixed life but the Board
considers it desirable that Shareholders should have the
opportunity to review the future of the Company at appropriate
intervals. Accordingly, at the annual general meeting of the
Company in 2015 a resolution will be proposed that the Company
ceases to continue in existence. Shareholders holding at least 51%
of the shares must vote in favour of this resolution for it to be
passed. If the resolution is not passed, a similar resolution will
be proposed at every third annual general meeting of the Company
thereafter. If the resolution is passed, the Directors will be
required, within 3 months of the resolution, to formulate proposals
to be put to Shareholders to reorganise, unitise or reconstruct the
Company, or for the Company to be wound up.
2 The Subsidiary
The Company has the following subsidiary company:
Country of incorporation Percentage of shares
held
-------------------------------------- -------------------------- ---------------------
Epicure Qatar Opportunities Holdings 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 registration number
1415393.
3 Significant Accounting Policies
The consolidated financial statements of the Company for the
year ended 30 June 2015 comprise the Company and its subsidiary,
Note 2, (together referred to as the "Group").
3.1 Basis of presentation
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") and Isle of Man Companies Act 1931 - 2004. The financial
statements have been prepared under the historic cost convention,
as modified by the revaluation of financial assets held at fair
value through profit or loss and investments in and amounts due
from subsidiary which are stated at fair value.
The accounting policies applied in these financial statements
are the same as those applied in the Group's consolidated financial
statements as at the year ended 30 June 2014.
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 Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries and subsidiary undertakings). Control is achieved
where the Company has power over an investee, exposure or rights to
variable returns and the ability to exert power to affect those
returns.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains
or losses arising from intra-group transactions, are eliminated in
full in the consolidated financial statements.
3.3 Financial assets at fair value through profit or loss
Investments are designated at fair value through profit or loss
on initial recognition. The Group invests in quoted equities and
quoted convertible bonds for which fair value is based on quoted
market prices. The quoted market price used for financial assets
held by the Group is the current bid price ruling at the year-end
without regard to selling prices.
Purchases and sales of investments are recognised on trade date
- the date on which the Group commits to purchase or sell the
asset. Investments are initially recorded at fair value, and
transaction costs for all financial assets and financial
liabilities carried at fair value through profit and loss are
expensed as incurred.
Gains and losses (realised and unrealised) arising from changes
in the fair value of the financial assets are included in the
income statement in the year in which they arise.
3.4 Foreign currency translation
The Qatari Riyal is the currency of the primary economic
environment in which the entity operates ("the functional
currency").
The US Dollar is the currency in which the financial statements
are presented ("the presentational currency").
Monetary assets and liabilities denominated in foreign
currencies as at the date of these financial statements are
translated to Qatari Riyal at exchange rates prevailing on that
date. Income and expenses are translated into Qatari Riyal based on
exchange rates on the date of the transaction. All resulting
exchange differences are recognised in the income statement.
The financial statements are presented in US Dollars by
translating the assets and liabilities denominated in Qatari Riyal
at the exchange rate prevailing on the balance sheet date. Items of
income and expense are translated at exchange rates on the date of
the relevant transactions or an average rate. Components of equity
are translated at the date of the relevant transaction and not
retranslated. All resulting exchange differences are recognised in
other comprehensive income.
3.5 Dividend income
Dividend income is recognised when the right to receive payment
is established.
3.6 Segment reporting
The Group has one segment focusing on maximising total returns
through investing in quoted securities in Qatar and the GCC region.
No additional disclosure is included in relation to segment
reporting, as the Group's activities are limited to one business
and geographic segment.
3.7 Cash and cash equivalents
Cash and cash equivalents comprise cash deposited with banks and
bank overdrafts repayable on demand.
3.8 Investments in and amounts due from subsidiary
Investments in and amounts due from subsidiary in the Company
balance sheet are stated at fair value.
3.9 Future changes in accounting policies
A number of new standards, amendments to standards and
interpretation are not yet effective for year ended 30 June 2015,
and have not been applied in preparing these financial statements.
None of these are expected to have a significant effect on the
measurement of the amounts recognised on the Company's financial
statements; however, IFRS 9, Financial Instruments ("IFRS9") may
change the classification of financial assets. This is first
effective for accounting periods beginning on or after 1 January
2018.
There are no other standards, interpretations or amendments to
existing standards that are not yet effective that would be
expected to have a significant impact on the Company.
4 Net Asset Value per Share
The net asset value per share as at 30 June 2015 is US$1.5336
per share (30 June 2014: US$1.4142) based on 138,709,240 (30 June
2014: 155,077,350) Ordinary Shares in issue as at that date.
5 Fair Value Hierarchy
IFRS 13 requires the Company to classify fair value measurements
using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The fair value hierarchy
has the following levels:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
All the Group's investments are classed as level 1 investments.
The Company's investment in subsidiary and amounts due from
subsidiary are also classified as level 1 investments.
All financial assets and liabilities not stated at fair value in
the financial statements are categorised as level 2 in the fair
value hierarchy.
6(a) Financial assets at fair value through profit or loss
Group
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30 June 2015: Financial assets at fair value through profit or
loss; all quoted equity securities.
Security name Number US$'000
--------------------------------------------- ----------- --------
Emaar Properties Company (EMAAR UH) 2,745,000 5,865
Emirates National Bank of Dubai (ENBD UH) 983,500 2,607
Barwa Real Estate (BRES QD) 651,496 9,367
Commercial Bank of Qatar (CBQK QD) 1,212,892 18,104
Doha Bank (DHBK QD) 757,082 11,009
Gulf International Services (GISS QD) 651,802 13,564
Gulf Warehousing (GWCS QD) 100,388 2,052
Industries Qatar (IQCD QD) 778,999 30,458
Masraf al Rayan (MARK QD) 1,902,372 23,958
Mazaya Real Estate Development (MRDS QD) 25 51
Medicare Group (MCGS) 89,542 4,582
National Leasing (NLCS QD) 350,641 2,034
Ooreedo (ORDS QD) 307,377 7,253
Qatar Electricity and Water (QEWS QD) 166,573 10,366
Qatar Insurance (QATI QD) 10,944 290
Qatar Islamic Bank (QIBK QD) 522,014 15,440
Qatar National Bank (QNBK QD) 682,395 35,050
Qatar Navigation (QNNS QD) 331,809 8,785
Qatar United Development Company (UDCD QD) 518,317 3,456
Widam Food Company (WDAM QD) 132,928 2,261
206,552
--------------------------------------------- ----------- --------
Group
30 June 2014: Financial assets at fair value through profit or
loss; all quoted equity securities:
Security name Number US$'000
---------------------------------------------- ----------- --------
Emaar Properties Company (EMAAR UH) 1,595,000 3,652
Emirates National Bank of Dubai (ENBD UH) 1,283,500 2,813
Mobile Telecommunications Company (ZAIN KK) 549,000 1,206
National Bank of Kuwait (NBK KK) 475,250 1,617
National Industries Group (NIND KK) 630,000 491
Al Batinah Power (BATP OM) 133,202 59
Al Suwadi Power (SUWP OM) 133,518 59
Bank Muscat (BKMB OM) 1,860,388 3,257
Oman Telecom (OTEL OM) 109,418 466
Sembcorp Salalah (SEMB OM) 346,488 1,902
Al Meera Consumer Goods (MERS QD) 96,985 4,503
Barwa Real Estate (BRES QD) 1,597,739 15,347
Commercial Bank of Qatar (CBQK QD) 1,120,878 19,041
Doha Bank (DHBK QD) 936,254 13,926
Ezdan Holdings (ERES QD) 345,391 1,832
Industries Qatar (IQCD QD) 513,757 23,644
Masraf al Rayan (MARK QD) 1,068,065 13,249
National Leasing (NLCS QD) 350,641 2,887
Ooreedo (ORDS QD) 402,207 12,936
Qatar Electricity and Water (QEWS QD) 220,829 10,424
Qatar Gas Transport (QGTS QD) 60,360 335
Qatar Insurance (QATI QD) 632,488 13,886
Qatar Islamic Bank (QIBK QD) 256,911 5,788
Qatar National Bank (QNBK QD) 743,948 33,340
Qatar Navigation (QNNS QD) 420,610 9,846
Qatar United Development Company (UDCD QD) 931,395 5,654
Widam Food Company (WDAM QD) 40,000 543
202,703
---------------------------------------------- ----------- --------
*Bond interest amounting to US$17,401 was received in the year
ended 30 June 2014, and this bond was also disposed of during the
2014 year.
6(b) Due from subsidiary
30 June 2015 30 June 2014
US$'000 US$'000
---------------------------- ------------- -------------
Investment in subsidiary - -
Amount due from subsidiary 211,063 218,149
---------------------------- ------------- -------------
The amount due from the subsidiary is subject to interest on the
aggregate principal amount drawn down from 1 January 2011, at the
US prime rate per annum. All loan repayments made by the subsidiary
will first be deducted from the outstanding loan interest before
being applied to the principal balance. The loan is secured by
fixed and floating charges over the assets of the subsidiary and is
repayable on demand.
7 Commission rebate
During the year the Group received 50% brokerage commission
rebates for all trades done through its Qatar brokers. This
arrangement is set to continue. For the year ended 30 June 2015 the
Group received US$281,829 (2014: US$177,047).
8 Charges and Fees
Group 30 June 2015 Company Group Company30 June 2014
30 June 2015 30 June 2014
US$'000 US$'000 US$'000 US$'000
------------------------------------------- ------------------- -------------- -------------- --------------------
Investment Manager's fees (see below) 2,409 - 2,437 -
------------------------------------------- ------------------- -------------- -------------- --------------------
Performance fees (see below) - - - -
------------------------------------------- ------------------- -------------- -------------- --------------------
Administrator and Registrar's fees (see
below) 308 280 315 277
Custodian fees (see below) 174 2 163 -
Directors' fees and expenses 342 342 393 393
Directors' insurance cover 43 43 43 43
Broker fees 106 106 70 70
Other 308 297 327 300
------------------------------------------- ------------------- -------------- -------------- --------------------
Other expenses 1,281 1,070 1,311 1,083
------------------------------------------- ------------------- -------------- -------------- --------------------
Investment Manager's fees
Annual fees
The Investment Manager was entitled to an annual management fee
of 1.25% of the Net Asset Value of the Group, calculated monthly
and payable quarterly in arrears. The current Investment Management
Agreement was subject to termination on 31 October 2013 with a
revised agreement coming into effect from 1 November 2013. The
revised agreement sees the annual fee reduce to 1.05% of the net
asset value of the Company further reducing to an annual fee of
1.0% of the net asset value of the Company from 1 November
2015.
Annual management fees for the year ended 30 June 2015 amounted
to US$2,408,770 (30 June 2014: US$2,436,928) and the amount accrued
but not paid at the year-end was US$556,692 (30 June 2014:
US$631,046).
Performance fees
The performance fee structure is based upon the relative
performance of the Company against the performance of the QE Index.
The performance fee is payable by reference to the increase in
Adjusted Net Asset Value per Ordinary Share in excess of the Target
Net Asset Value per Ordinary Share (Opening Net Asset Value per
Ordinary Share adjusted by the movement on the Qatar Exchange
Index) over the course of a Performance Period.
The Investment Manager is entitled to a performance fee in
respect of a Performance Period only if the Adjusted Net Asset
Value per Ordinary Share at the end of the relevant Performance
Period, after excluding dividends paid and received, exceeds the
Target Net Asset Value per Ordinary Share.
If the performance test is met, the performance fee will be an
amount equal to 15% of the amount by which the Adjusted Net Asset
Value per Ordinary Share at the end of the relevant Performance
Period exceeds the Target Net Asset Value per Ordinary Share
multiplied by the time weighted average of the number of Ordinary
Shares in issue in the Performance Period together, if applicable,
with an amount equal to the VAT thereon.
In any Outperformance Period which follows any one or more
Underperformance Periods, the performance fee payable shall be
calculated by multiplying X minus Y by 15% (where X is the increase
in the Adjusted Net Asset Value per Ordinary Share at the end of
the relevant Outperformance Period above the Target Net Asset Value
per Ordinary Share for that Performance Period and Y is the
aggregate of the Shortfall Returns for the previous
Underperformance Periods) and multiplied by the time weighted
average of the number of Ordinary Shares in issue in the
Performance Period. If X minus Y is a negative figure, no
performance fee shall be payable.
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If the Adjusted Net Asset Value per Ordinary Share at the end of
the relevant Performance Period is higher than the Target Net Asset
Value per Ordinary Share but is less than the Opening NAV, any
accrued performance fee will be withheld and shall not be payable
and will only become payable in the event that the Target Net Asset
Value per Ordinary Share and the Opening NAV is exceeded in respect
of a subsequent Performance Period. For the avoidance
of doubt, in the event that the Target Net Asset Value per
Ordinary Share and the Opening NAV is exceeded in respect of a
subsequent Performance Period, all accrued but unpaid performance
fee(s) in respect of previous Performance Periods will become due
and payable.
If there has been a Shortfall Return in respect of a Performance
Period and performance fees have been accrued but withheld in
respect of one or more prior Performance Periods, the accrued but
withheld performance fees will be reduced by treating the prior
Performance Period(s) and the current Performance Period as one
Performance Period and calculating any performance fee due over
that aggregated period. For the avoidance of doubt, in the event
that the Target Net Asset Value per Ordinary Share and the Opening
NAV is exceeded in respect of a subsequent Performance Period, all
accrued but unpaid performance fee(s) in respect of previous
Performance Periods will become due and payable.
The Investment Manager will not be entitled to such part of any
performance fee to which it would otherwise be entitled if:
(i) payment of such part of any performance fee would cause the
aggregate performance fee in respect of a Performance Period,
excluding any accrued but unpaid performance fee in respect of
previous Performance Periods, to exceed 1.5% of the Net Asset Value
of the Company at the end of the relevant Performance Period (or,
in the case of the any Performance Period of less than a year, 1.5%
multiplied by the number of days in that Performance Period divided
by 365); or
(ii) payment of such part within the Performance Period would
have caused the performance test or Opening NAV not to be met.
Performance fees accrued but not paid during the year ended 30
June 2015 amounted to US$nil as the performance target was not
reached (30 June 2014: US$nil).
The Investment Manager is responsible for the payment of all
fees to the Investment Adviser.
Investment Management Agreement definitions
Adjusted Net at a particular time, the sum of A plus B minus
Asset Value C minus D plus E where:
per Ordinary (i) A is the Net Asset Value per Ordinary Share
Share at that time calculated on a basis that does not
recognise any liability of the Company to the Investment
Manager in respect of any performance fee that is,
or may become, payable;
(ii) B is the amount by which any corporate action
undertaken by the Company after 1 November 2013
(including, without limit, the issue of Ordinary
Shares or rights to subscribe for, or convert into.
Ordinary Shares, the issue of a scrip dividend,
or the consolidation or sub-division of Ordinary
Shares) results, at the time of calculation, in
a dilution to the Net Asset Value per Ordinary Share
divided by the number of Ordinary Shares in issue
at the time of such corporate action;
(iii) C is the amount by which any accretion to
the Net Asset Value per Ordinary Share has arisen
solely as a result of the repurchase by the Company
of its Ordinary Shares or any return of capital
by the Company to its shareholders since 1 November
2013 divided by the number of Ordinary Shares in
issue at the time of such repurchase or return of
capital;
(iv) D is the sum of all dividends received by the
Company since 1 January 2011 divided by the number
of Ordinary Shares in issue at the time of each
dividend; and
(v) E is the sum of all dividends paid by the Company
since 1 January 2011 divided by the number of Ordinary
Shares in issue at the time of each dividend,
Performance each period in respect of which the Company produces
Period audited accounts and, if different, the final period
for which the Investment Management Agreement subsists
or any shorter period where there has been an issue
of Ordinary Shares which exceeds 10% of the then
existing Share Capital of the Company, subject always
to the discretion of the Board. The first Performance
Period commenced on date of the passing of the Resolution
(17 March 2011).
Outperformance any Performance Period in which the Adjusted Net
Period Asset Value per Ordinary Share at the end of the
relevant Performance Period exceeds the Target Net
Asset Value per Ordinary Share.
Shortfall the amount by which the Target Net Asset Value per
Return Ordinary Share exceeds the Adjusted Net Asset Value
per Ordinary Share in respect of a Performance Period.
Administrator and Registrar fees
The Administrator is entitled to receive a fee of 12.5 basis
points per annum of the net asset value of the Company between US$0
and US$100 million, 10 basis points of the net asset value of the
Company above US$100 million.
This is 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 GBP12,000 per
annum subject to the number of CREST settled transactions
undertaken.
Administration fees paid for the year ending 30 June 2015
amounted to US$308,041 and US$38,837 for additional services (30
June 2014: US$283,249 and US$32,141 respectively).
Custodian fees
The Custodian is entitled to receive fees of US$7,200 per annum
and US$25 per processed transaction from the Company.
In addition the Custodian is entitled to receive fees of 8 basis
points per annum in respect of Qatari securities held by the Group
and 10 basis points per annum in respect of non-Qatari, GCC
securities held by the Group and $45 per settled transaction
(Qatar)/$50 per settled transaction (GCC excluding Qatar). From 1
March 2013 the custodian agreed to a 25% reduction in custodian
fees relating to the Qatari market.
Custodian and sub-custodian fees for the year ending 30 June
2015 amounted to US$176,008 (30 June 2014: US$163,201) and the
amount accrued but not paid at the year-end was US$11,016 (30 June
2014: US$6,998).
9 Cash and Cash Equivalents
Group Company Group Company
30 June 2015 30 June 2015 30 June 2014 30 June 2014
US$'000 US$'000 US$'000 US$'000
--------------------------- -------------- -------------- -------------- --------------
Bank balances 5,956 1,228 17,295 366
--------------------------- -------------- -------------- -------------- --------------
Cash and cash equivalents 5,956 1,228 17,295 366
--------------------------- -------------- -------------- -------------- --------------
10 Share Capital
30 June 2015 30 June 2014
US$'000 US$'000
------------------------------------------ ------------- -------------
Authorised 500,000,000 Ordinary shares
of US$0.01 each 5,000,000 5,000,000
------------------------------------------ ------------- -------------
Issued, Called-up and Fully-Paid:
138,709,240 (2014: 155,077,350) Ordinary
Shares of US$0.01 each in issue, with
full voting rights 1,387 1551
890,509 (2014: 3,793,272) Ordinary
Shares of US$0.01 each held in Treasury 9 38
------------------------------------------ ------------- -------------
Issued share capital 1,396 1,589
------------------------------------------ ------------- -------------
During the year to 30 June 2015 the Company repurchased 890,509
(2014: 3,793,272) Ordinary Shares, to be held in treasury, at a
cost of US$1,168,628 (2014: US$4,143,929) and cancelled 3,793,272
(2014: 7,534,651) Ordinary Shares in treasury which had been held
for more than one year. The Ordinary Shares held in treasury have
no voting rights and are not entitled to dividends.
On 30 January 2015 the Company completed a tender offer at a
price of US$1.4859 per share. Under the tender offer 15,477,601
shares were repurchased and cancelled.
During the year US$120,867 tender expenses were deducted from
equity.
Capital management
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The Board's policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the Company. The Board manages the Group's
affairs to achieve Shareholder returns through capital growth
rather than income, and monitors the achievement of this through
growth in net asset value per share.
Group capital comprises Share Capital and Reserves. Neither the
Company nor its subsidiary is subject to externally imposed capital
requirements. The Company also has an active share buyback
program.
11 Reserves - Group
Distributable Retained Earnings Foreign Currency Capital Redemption 30 June 2015
Reserves Translation Reserve Total
reserve
US$'000 US$'000 US$'000 US$'000 US$'000
-------------------- ------------------- ------------------ ------------------- ------------------- -------------
Balance at 1 July
2014 155,847 61,091 (98) 886 217,726
Dividends paid - (4,875) - - (4,875)
Shares subject to
tender offer (22,998) - - 155 (22,843)
*Tender expenses (121) - - - (121)
Foreign exchange
translation
differences - - (82) - (82)
Retained earnings - 22,650 - - 22,650
Shares in treasury
cancelled - - - 38 38
Share buy-backs (1,169) - - - (1,169)
------------------- ------------------- -------------
Balance at 30 June
2015 131,559 78,866 (180) 1,079 211,324
-------------------- ------------------- ------------------ ------------------- ------------------- -------------
*Exceptional expenses related to tender offer
The capital redemption reserve is created on the cancellation of
shares equal to the par value of shares cancelled. This reserve is
not distributable.
12 Earnings per Share
Basic and diluted earnings per share are calculated by dividing
the profit attributable to equity holders of the Company by the
weighted average number of Ordinary Shares in issue during the
year.
30 June 2015 30 June 2014
----------------------------------------------------------------- ------------- -------------
Profit attributable to equity holders of the Company (US$'000) 22,650 45,924
Weighted average number of Ordinary Shares in issue (thousands) 147,918 165,419
----------------------------------------------------------------- ------------- -------------
Basic and diluted earnings per share (cents per share) 15.31 27.76
----------------------------------------------------------------- ------------- -------------
13 Other payables and accrued expenses
Group
30 June 2015 30 June 2014
US$'000 US$'000
------------------------------- ------------- -------------
Due to broker 51 -
Management fee payable 557 631
Administration fee payable 75 82
Accruals and sundry creditors 61 46
------------------------------- ------------- -------------
744 759
------------------------------- ------------- -------------
Company
30 June 2015 30 June 2014
US$'000 US$'000
------------------------------- ------------- -------------
Administration fee payable 68 75
Accruals and sundry creditors 45 35
------------------------------- ------------- -------------
113 110
------------------------------- ------------- -------------
14 Taxation
Isle of Man taxation
The Company is resident for taxation purposes in the Isle of Man
by virtue of being incorporated in the Isle of Man and is
technically subject to taxation on its income but the rate of tax
will be zero. The Company is required to pay an annual corporate
charge of GBP250 per annum.
The Company became registered for VAT from 1 February 2011.
Qatar taxation
It is the intention of the Directors to conduct the affairs of
the Company so that it is not considered to be either resident in
Qatar or doing business in Qatar.
Qatar does not impose withholding tax on dividend distributions
by Qatari companies to non-residents.
Capital gains made by the Company on disposal of shares in
Qatari companies will not be subject to tax in Qatar.
There is no stamp duty or equivalent tax on the transfer of
shares in Qatari companies.
Kuwait taxation
Since 1 January 2009 dividends paid on behalf of holdings in
Kuwait have withholding tax deducted at 15%.
15 Financial instruments
The Group's activities expose it to a variety of financial
risks: market price risk, foreign exchange risk, credit risk,
liquidity risk and interest rate risk.
Market price risk
The Group's strategy for the management of investment risk is
driven by the Group's investment objective. The main objective of
the Group is to capture the opportunities for growth offered by the
expanding Qatari economy by investing in listed companies or
companies soon to be listed. This will be principally through the
medium of the Qatar Exchange.
All investments present a risk of loss of capital through
movements in market prices. The Investment Manager and Investment
Adviser moderate this risk through a careful selection of
securities within specified limits. The Investment Manager and the
Investment Adviser review the position on a day to day basis and
the Directors review the position at Board meetings.
The Group's market price risk is managed through the
diversification of the investment portfolio. Approximately 99% of
the net assets attributable to holders of Ordinary Shares is
invested in equity securities, of which a maximum of 15% is to be
invested outside Qatar. Investment opportunities are available in
other Co-operation Council for Arab States of the Gulf (GCC).
At 30 June 2015, if the market value of the investment portfolio
had increased/decreased by 9% with all other variables held
constant, this would have increased/decreased net assets
attributable to Shareholders by approximately US$18.6 million (30
June 2014 : 9.0% : US$18.2 million).
Foreign exchange risk
The Group's operations are conducted in jurisdictions which
generate revenue, expenses, assets and liabilities in currencies
other than Qatari Riyal. As a result, the Group is subject to the
effects of exchange rate fluctuations with respect to these
currencies.
The Group's policy is not to enter into any currency hedging
transactions.
At the reporting date the Group had the following exposure:
Currency 30 June 2015 30 June 2014
% %
--------------- ------------- -------------
British Pound 0.01 0.01
Omani Rial 0.04 3.88
US Dollar 0.62 0.18
Qatari Riyal 95.31 89.16
Kuwaiti Dinar 0.00 1.79
UAE Dirham 4.02 4.98
--------------- ------------- -------------
The following table sets out the Group's total exposure to
foreign currency risk and the net exposure to foreign currencies of
the monetary assets and liabilities:
30 June 2015 Monetary Monetary Net Exposure
Assets Liabilities
US$'000 US$'000 US$'000
--------------- --------- ------------- -------------
British Pound 30 (6) 24
Omani Rial 82 - 82
US Dollar 2,009 (738) 1,271
Qatari Riyal 202,796 - 202,796
Kuwaiti Dinar - - -
UAE Dirham 8,547 - 8,547
--------------- --------- ------------- -------------
213,464 (744) 212,720
--------------- --------- ------------- -------------
30 June 2014 Monetary Monetary Net Exposure
Assets Liabilities
US$'000 US$'000 US$'000
British Pound 27 (6) 21
Omani Rial 8,511 - 8,511
US Dollar 1,147 (753) 394
Qatari Riyal 195,532 - 195,532
Kuwaiti Dinar 3,931 - 3,931
UAE Dirham 10,926 - 10,926
--------------- --------- ------------- -------------
220,074 (759) 219,315
--------------- --------- ------------- -------------
Foreign currency sensitivity risk - presentational currency
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At 30 June 2015 had the US Dollar weakened/strengthened by 1%
(2014 : weakened/strengthened 1%) in relation to all currencies,
with all other variables held constant, net assets attributable to
equity holders of the Company would have increased/decreased by the
amounts shown below:
30 June 2015 US$'000
--------------- --------
British Pound -
Omani Rial 1
Kuwaiti Dinar -
UAE Dirham 85
--------------- --------
Effect on
net assets 86
--------------- --------
30 June 2014 US$'000
--------------- --------
British Pound -
Omani Rial 85
Kuwaiti Dinar 39
UAE Dirham 109
--------------- --------
Effect on
net assets 233
--------------- --------
Foreign currency sensitivity risk - functional currency
As 93% of net assets are denominated in QAR and QAR is the
functional currency there is no significant functional currency
risk. The Qatari Riyal is pegged to the USD within a tight band and
therefore it is not included in the sensitivity analysis.
In addition, since QAR is the functional currency of the Group
and USD is the presentational currency any effect of changes in the
foreign exchange rates between these currencies will be included in
the translation reserve on consolidation.
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Group.
The carrying amounts of financial assets best represent the
maximum credit risk exposure at the balance sheet date. This
relates also to financial assets carried at amortised cost.
At the reporting date, the Group's financial assets exposed to
credit risk comprised the following:
30 June 2015 30 June 2014
US$'000 US$'000
-------------------------------- ------------- -------------
Financial assets at fair value
through profit or loss 206,552 202,703
Cash and cash equivalents 5,956 17,295
Other receivables 956 76
-------------------------------- ------------- -------------
213,464 220,074
-------------------------------- ------------- -------------
The maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the balance sheet.
Management does not expect any counterparty to fail to meet its
obligations and there are no debts past their due dates as at the
year-end.
Liquidity risk
The Group manages its liquidity risk by maintaining sufficient
cash for operations and the ability to realise market positions.
The Group's liquidity position is monitored by the Investment
Manager and the Board of Directors.
The residual undiscounted contractual maturities of financial
liabilities are in the table below:
30 June 2015 Less than 1-3 3 months 1-5 years Over 5 No stated
1 month months to 1 year years maturity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------- ---------- -------- ----------- ---------- -------- ----------
Financial liabilities
Other creditors 744 - - - - -
and accrued expenses
---------------------- ---------- -------- ----------- ---------- -------- ----------
744 - - - - -
---------------------- ---------- -------- ----------- ---------- -------- ----------
30 June 2014 Less than 1-3 3 months 1-5 years Over 5 No stated
1 month months to 1 year years maturity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------- ---------- -------- ----------- ---------- -------- ----------
Financial liabilities
Other creditors 759 - - - - -
and accrued expenses
---------------------- ---------- -------- ----------- ---------- -------- ----------
759 - - - - -
---------------------- ---------- -------- ----------- ---------- -------- ----------
Interest rate risk
The majority of the Group's financial assets are non-interest
bearing. Cash held by the Group is invested at short-term market
interest rates. As a result, the Group is not subject to fair value
interest rate risk due to fluctuations in the prevailing levels of
market interest rates. However it is subject to cash flow risk
arising from changes in market interest rates.
The table below summarises the Group's exposure to interest rate
risks. It includes the Group's financial assets and liabilities at
the earlier of contractual re-pricing or maturity date, measured by
the carrying value of assets and liabilities:
30 June 2015 Less 1-3 months 3 months 1-5 years Over Non-interest Total
than to 1 5 bearing
1month year years
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- -------- ----------- --------- ---------- -------- ------------- --------
Financial Assets
Financial assets
at fair value
through profit
or loss - - - - - 206,552 206,552
Other receivables
and prepayments - - - - - 956 956
Cash 5,956 - - - - - 5,956
----------------------- -------- ----------- --------- ---------- -------- ------------- --------
Total financial
assets 5,956 - - - - 207,508 213,464
----------------------- -------- ----------- --------- ---------- -------- ------------- --------
Financial Liabilities
Other creditors
and accrued
expenses - - - - - (744) (744)
----------------------- -------- ----------- --------- ---------- -------- ------------- --------
Total financial
liabilities - - - - - (744) (744)
----------------------- -------- ----------- --------- ---------- -------- ------------- --------
Total interest
rate sensitivity
gap 5,956
----------------------- -------- ----------- --------- ---------- --------
30 June 2014 Less 1-3 months 3 months 1-5 years Over Non-interest Total
than to 1 5 bearing
1month year years
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- -------- ----------- --------- ---------- -------- ------------- --------
Financial Assets
Financial assets
at fair value
through profit
or loss - - - - - 202,703 202,703
Other receivables
and prepayments - - - - - 76 76
Cash 17,295 - - - - - 17,295
----------------------- -------- ----------- --------- ---------- -------- ------------- --------
Total financial
assets 17,295 - - - - 202,779 220,074
----------------------- -------- ----------- --------- ---------- -------- ------------- --------
Financial Liabilities
Other creditors
and accrued
expenses - - - - - (759) (759)
----------------------- -------- ----------- --------- ---------- -------- ------------- --------
Total financial
liabilities - - - - - (759) (759)
----------------------- -------- ----------- --------- ---------- -------- ------------- --------
Total interest
rate sensitivity
gap 17,295
----------------------- -------- ----------- --------- ---------- --------
All interest received on cash balances are at variable rates. A
sensitivity analysis for changes in interest rates on cash balances
has not been provided as it is not deemed significant.
16 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 6).
The Investment Adviser's fees are paid by the Investment
Manager.
The Investment Manager, Epicure Managers Qatar Limited, is a
related party by virtue of its ability to make operational
decisions for the Company and through common Directors. Fees
payable to the Investment Manager are disclosed in note 8.
Epicure Managers Qatar Limited is a wholly owned subsidiary of
the Investment Adviser, Qatar Insurance Company S.A.Q.
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